Legislature(1999 - 2000)
02/17/1999 08:05 AM House URS
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON UTILITY RESTRUCTURING
February 17, 1999
8:05 a.m.
MEMBERS PRESENT
Representative Bill Hudson, Chairman
Representative John Cowdery, Vice Chairman
Representative Pete Kott
Representative Norman Rokeberg
Representative Brian Porter
Representative John Davies
Representative Ethan Berkowitz
Representative Joe Green (alternate)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
* HOUSE BILL NO. 62
"An Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 62
SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION
SPONSOR(S): REPRESENTATIVES(S) THERRIAULT
Jrn-Date Jrn-Page Action
1/22/99 68 (H) READ THE FIRST TIME - REFERRAL(S)
1/22/99 69 (H) URS, L&C
2/08/99 172 (H) FIN REFERRAL ADDED
2/17/99 (H) URS AT 8:00 AM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-4797
POSITION STATEMENT: Sponsor of HB 62.
SAM COTTEN, Chairman
Alaska Public Utilities Commission
Department of Commerce & Economic Development
1016 West Sixth Avenue, Suite 400
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Provided information on the Alaska Public
Utilities Commission (APUC).
GEORGE GORDON, President and Chief Executive Officer
College Utilities Corporation;
and Golden Heart Utilities
3691 Cameron Street
Fairbanks, Alaska 99709
Telephone: (907) 479-3118
POSITION STATEMENT: Provided comments on the APUC.
MARK VASCONI, Director
Regulatory Affairs
AT&T Alascom
210 East Bluff, Building MP-389
Anchorage, Alaska 99501
Telephone: (907) 264-7308
POSITION STATEMENT: Testified in support of HB 62.
JIM ROWE, Executive Director
Alaska Telephone Association
201 East 56th, Suite 114
Anchorage, Alaska 99518
Telephone: (907) 563-4000
POSITION STATEMENT: Testified in support of HB 62.
ROBERT LOHR, Executive Director
Alaska Public Utilities Commission
Department of Commerce & Economic Development
1016 West sixth Avenue, Suite 400
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Answered questions of the committee members.
ACTION NARRATIVE
TAPE 99-3, SIDE A
Number 0001
CHAIRMAN BILL HUDSON called the House Special Committee on Utility
Restructuring meeting to order at 8:05 a.m. Members present at the
call to order were Representatives Hudson, Cowdery, Kott, Porter,
and Berkowitz. Representatives Rokeberg, Davies and Green
(alternate) arrived at 8:06 a.m., 8:07 a.m., and 8:10 a.m.,
respectively.
HB 62 - ALASKA PUBLIC UTILITIES COMMISSION
CHAIRMAN HUDSON announced the first order of business is HB 62, "An
Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
CHAIRMAN HUDSON further announced it is not his intention to move
the bill out of committee today. It is his intention to hear from
the prime sponsor of the bill and chairman of the Alaska Public
Utilities Commission (APUC). He called on Representative Gene
Therriault, sponsor of the bill.
Number 0200
REPRESENTATIVE GENE THERRIAULT, Alaska State Legislature, noted
that HB 62 is brief in scope, but purposely has a very broad title.
He read the following sponsor statement into the record:
Under AS 42.05 and 42.06, the Alaska Public Utilities
Commission regulates public utilities by certifying
qualified providers of public utility and pipeline
services. It is designed to ensure that utilities
provide safe and adequate services and facilities at
reasonable rates. The five-member commission also
determines the eligibility and the per kilowatt-hour
support for electric utilities under the Power Cost
Equalization program (AS 42.45)
The Alaska Public Utilities Commission is set to expire
on June 30, 1999 under AS 44.66.010, 'Termination of
state boards and commissions.' If the legislature does
not act to extend the commission, it would have one year,
until June 30, 2000, to conclude its affairs. House Bill
62 will extend the commission for another four years.
The title has intentionally been left broad enough to
allow leeway for discussion of several issues of concern
that have arisen during the past four years of the
commission's existence.
Number 0312
REPRESENTATIVE THERRIAULT referred to the commission's annual
report dated February 11, 1999 and noted that a provision in the
mission statement is misleading - " ... the commission does this by
making timely decisions that balance the competition interests of
various parties fairly, while keeping red tape to a minimum." He
cited in Fairbanks either constituents or local governments have
complained about the lack of timeliness on decisions and referred
to a letter signed by the Interior delegation dated in June of
1997. The letter asked for help in getting to a decision on a
pending solid waste permit costing hundreds of thousands of dollars
if not millions of dollars.
Number 0450
REPRESENTATIVE THERRIAULT further noted that he is not sure the
commission should be extended. He would leave it up to the
committee, however, to consider any structural changes and/or
policy changes to the commission before it is extended.
REPRESENTATIVE THERRIAULT further stated that an internal report
notes that steps must be taken as early as possible to bring the
backlog under control and address the issue of speedy processing.
The report also addresses the issue of timeliness, problems with
communication between commissioners, and leadership. In addition,
the report addresses the issue of a shift towards policy making and
away from fact finding in traditional rate cases - an issue that
needs to be addressed because the legislature is the appropriate
body for policy making. The report also indicates that the
commission does not work well for "future oriented establishment of
policy." Finally, the report notes that the discontent of the
commission is higher than in the past with a variety of carriers.
The stakeholders are not looking for radical changes, but there is
a growing discontent with the way the commission works.
REPRESENTATIVE THERRIAULT stated, in conclusion, that he hopes the
committee views the bill as a means to address some of these
issues, not just an extension of the sunset date. He announced
that there will be a sunset audit review by the legislature made
available soon that will also be helpful.
CHAIRMAN HUDSON called on Sam Cotten, chairman of the Alaska Public
Utilities Commission.
Number 0909
SAM COTTEN, Chairman, Alaska Public Utilities Commission,
Department of Commerce & Economic Development, announced that he
brought annual reports from other states as well for a comparison
and noted there are a lot of similarities between states because of
the Telecommunications Act of 1996. The APUC's annual report
describes the nuts and bolts of the commission: staffing,
membership, budget and significant events. The commission has
excellent staff that consists of many professionals who are often
named a party to a case when necessary. The commission employees
engineers, certified public accountants, communication specialists,
tariff analysts and many others. In spite of the many distractions
and the increasing workload, he feels that the staff is able to
focus on the tasks at hand. The issue of timeliness and a heavy
workload, is a reoccurring theme in many other states as well. The
commission recognizes that it needs to do a better job. It needs
to be more timely and better able to handle the new issues
presented as a result of the changes in the utility industry. A
management audit by the National Regulatory Research Institute
(NRRI) and legislative auditors suggest a management information
system (MIS), bench-n-bar approach, and a formal identification of
the backlog as means of improvement. The commission is working on
an RFP (request for proposal) for a management information system.
A bench-n-bar approach is an interaction with the industry on a
more informal basis to help get rid of the red tape. It is the
intention of the commission to have these meetings on a regular
basis. The biggest suggestion from the NRRI and the legislative
auditor is an increase in staff because the workload has doubled
over the past five years. Last fall, the commission recommended
adding nine new staff members and proceeded to recruit and hire
when the hiring freeze was effected. The commission, he noted,
does not rely on general fund dollars and its assets cannot be
converted to general fund dollars. For example, money left over at
the end of the year means payments to consumers who fund the budget
will go down the following year.
Number 1352
CHAIRMAN HUDSON asked Mr. Cotten, for clarification, whether the
funds do or do not continue over.
MR. COTTEN replied it depends upon the legislature. The
legislature can appropriate carry-forward funds. The commission
cannot make that decision itself.
MR. COTTEN continued. The commissioners should and can take more
individual responsibilities for the speed and quality of their
work. There are five commissioners and the work is divided
according to the docket. A commissioner is responsible for
following all the motions and hearings of a docket. Paralegals and
hearing officers help produce the orders that correspond to the
motions. The workload has increased and every commissioner has an
extensive portfolio.
MR. COTTEN further stated that each of the states has a utilities
commission and it makes sense to continue it here in Alaska. He
recognized that there are policy issues the legislature may choose
to decide itself and it is not a problem with the commission.
MR. COTTEN further stated, in reference to the legislative audit
report mentioned earlier, the commission will respond to it when it
is released formally. In reference to policy issues mentioned
earlier, the commission is faced with a lot of policy calls because
of new acts such as the Telecommunications Act of 1996. The Act
delegates a lot of decisions to the state commissions. He cited a
recent example of a policy decision related to the length of a
transfer between providers. The commission decided it should take
seven days after hearing both sides, touring the facilities, and
trying to understand what it actually takes to switch a customer.
Those types of "policy decisions" may or may not be suitable for a
legislative resolution.
Number 1566
REPRESENTATIVE DAVIES asked Mr. Cotten to explain the difference
between the definition of the word "policy making" and "rule
making". The NRRI report refers to the term "policy making" when
it seems more like the term "rule making".
Number 1602
MR. COTTEN replied with an example of the electric restructuring
issue. The statutes right now power the commission to determine
whether there should be competition in electricity. If an entity
wants to compete in the electrical markets, it is required to come
to the commission and apply for a certificate. The commission is
suppose to determine whether the entity is fit, willing and able;
the public deems it as a necessity; and it is affirmatively
consistent with the public's interest. An example of a policy
decision that would have to be made with the legislature, is
changing the law to say that there "should" or "must" be
competition. Nevertheless, with the Telecommunications Act of 1996
and other new things coming, the commission is often called upon to
make decisions that often result in a policy call.
Number 1660
REPRESENTATIVE DAVIES asked Mr. Cotten whether his example of
determining the length of a transfer is considered a policy making
decision.
MR. COTTEN replied it is a matter of definition, but he considers
it a policy decision.
Number 1684
REPRESENTATIVE COWDERY asked Mr. Cotten how big the backlog is with
the commission.
MR. COTTEN replied he can't give a good answer right now. For
example, there are probably 25 decisions made by the commissioners
that have not been written by the hearing officer. There is only
one hearing officer, and the commission has asked for another one
that will help with the backlog. The commission is probably a
couple of months behind and with more staff the backlog could be
moved up. He reiterated the commission is in the process of
formally identifying the backlog.
Number 1815
REPRESENTATIVE COWDERY asked Mr. Cotten whether he is saying that
the commission will never get caught up.
MR. COTTEN replied yes.
REPRESENTATIVE COWDERY asked Mr. Cotten the time frame for a
decision made by the commission.
MR. COTTEN replied there is no average decision. There are routine
decisions that are turned around in a relatively short period of
time, such as the resale of telecommunication services. There is
not an average number; it is a factor of how often a request comes
in. There are other decisions that are lengthier requiring filings
and hearings. The commission keeps a weekly report of the number
of orders and he would be willing to get and provide those numbers.
Number 1908
REPRESENTATIVE COWDERY asked Mr. Cotten whether there is a solution
to the commission's dilemma, such as more commission members or
privatization, for example.
MR. COTTEN replied he doesn't think that there needs to be more
commissioners and there has been some success with contracting
services from the private sector. He cited the administrative law
judge is on contract and the arbitrator is paid by the utilities.
REPRESENTATIVE COWDERY asked Mr. Cotten whether it has been
productive.
MR. COTTEN replied there have been some success, but there have
also been some complaints.
REPRESENTATIVE COWDERY asked Mr. Cotten what issue has been before
the commission the longest and how long.
MR. COTTEN replied he doesn't know exactly. There have been a few
issues around for a long time that deal with the Public Utility
Regulatory Policy Act of 1978 (PURPA), a federal law that allows an
entity to sell electricity to an existing utility. There is a lot
of confusion surrounding the federal law and two cases have been
before the commission for a couple of years now.
Number 2032
REPRESENTATIVE ROKEBERG expressed his appreciation to Mr. Cotten in
regards to the self-assessment of the commissioners mentioned
earlier. He asked Mr. Cotten whether the commission believes that
competition in local telephone service is in the public's interest
and whether the commission is ready to take up the issue based
solely on the technical grounds of the Telecommunications Act of
1996.
MR. COTTEN replied he needs to be careful in his response because
the commission is called upon to make objective decisions after an
application has been made. Last year an application was made in
Fairbanks and Juneau and, as a result of the guidance given by the
federal law, the commission said "no" to remove the rural exemption
request mostly due to current regulations that envision a monopoly.
The commission has changed the regulations since then and is
expecting another application to remove the rural exemption.
Number 2141
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether the commission is
waiting on the case in the superior court to take up the issue or
waiting for another application.
MR. COTTEN replied it is out of the hands of the commission now.
GCI appealed the commission's decision to the superior court.
Since the appeal, however, the U.S. Supreme Court has made a
decision that overturned the 8th Circuit Court of Appeals. There
has been a suggestion that the commission committed a procedural
error. It is not known for sure. The Federal Communications
Commission (FCC) said that the states have to place the burden of
proof on the incumbent local exchange carrier, the 8th Circuit
Court of Appeals said that the states have to decide themselves,
and the commission said that the burden of proof had to be on the
competitor. It appears that the U.S. Supreme Court is in agreement
with the FCC. Therefore, the superior court may remand that
decision to the commission, but no one has petitioned for it yet.
Number 2197
REPRESENTATIVE ROKEBERG asked Mr. Cotten how quickly would the
commission take a remand up. There are bills pending in the
legislature that would be moot if it was taken up on a remand.
MR. COTTEN replied if it is sent back on remand, the commission
would immediately have a pre-hearing conference and set a
procedural schedule to deal with it.
Number 2215
REPRESENTATIVE ROKEBERG asked Mr. Cotten to explain an
advertisement that he saw in a newspaper calling for the
establishment of an Alaskan universal service fund.
MR. COTTEN replied the Telecommunications Act of 1996 instructed
the state commissions to remove implicit subsidies. Alaska
receives between $50 million and $70 million a year in universal
service funds as subsidies to phone companies. For example, the
Matanuska Telephone Association (MTA) receives about $20 million
per year because Alaska is considered a high-cost area. The
subsidies in question are the access charges, the funds that
long-distance companies pay to local companies to terminate a call
on their equipment. The commission, according to law, has made it
an explicit subsidy making it an identifiable target to
investigate/question.
Number 2305
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether it goes into a
fund administered by the state or a federal universal service fund.
MR. COTTEN replied it goes into a state fund.
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether it is a separate
fund from the federal fund.
MR. COTTEN replied yes.
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether it is a new fund.
MR. COTTEN replied yes.
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether there is a risk of
losing federal funding.
MR. COTTEN replied not because of that. The Telecommunications Act
of 1996 also said that there will be subsidies for rural health
care providers, schools and libraries. There is some fear that it
will compete with the universal service funds that Alaska enjoys
benefits from now.
Number 2343
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether the $20 million
received by MTA is in jeopardy of being phased out because of FCC
rulings.
MR. COTTEN replied it is always potentially in jeopardy, but not
because of anything that the state or commission has done. There
is the possibility that Congress could change the rules on how the
funds are distributed or who is eligible to receive them. There is
strong support for the fund, however, from the Alaskan
congressional delegation.
Number 2368
REPRESENTATIVE BERKOWITZ asked Mr. Cotten why and how the APUC was
developed, and what went on before it.
MR. COTTEN replied, in general, utility commissions came about in
exchange for a monopoly. Utilities had to submit to a regulation
of rates, the primary reason why utility commissions came into
existence. Since then, there have been other reasons and functions
that the commissions have fulfilled.
Number 2409
REPRESENTATIVE BERKOWITZ asked Mr. Cotten how a "utility" is
defined and how has the commission evolved over time.
MR. COTTEN replied state law defines a public utility.
REPRESENTATIVE BERKOWITZ explained that he is more interested in
the characteristics of a utility rather than an itemization. For
example, he wondered whether the issue of Internet access could be
construed as a utility.
MR. COTTEN replied a good example is cable television. It is
considered a utility, but it is dealt with differently. The
commission does not regulate cable television unless a community
requests so. Juneau is the only city that has made the request so
far. Other functions that carry forward the idea of a regulatory
commission are defined in AS 42.05.141, "General powers and duties
of the commission." The requirements for obtaining a certificate
are outlined in AS 42.05.221, "Certificates required." There are
also regulations that further define the statutes. Another
function besides rate regulation is to ensure that an entity is
fit, willing and able ....
TAPE 99-3, SIDE B
Number 0021
REPRESENTATIVE BERKOWITZ asked Mr. Cotten what would happen if the
APUC went away.
MR. COTTEN replied, if the APUC went away, the legislature would
have to examine Title 42 and decide who should perform those
functions, if anybody.
CHAIRMAN HUDSON announced the presence of Representative Joe Green.
Number 0055
REPRESENTATIVE GREEN asked Mr. Cotten if he was the chief executive
officer of a corporation and got a report card from a division
director that said slow, unreliable, meddlesome, argumentative and
burdensome, what would he do under those circumstances.
MR. COTTEN replied as a chief executive officer he would have
different choices available to him. Obviously, it would have to be
taken very seriously. The commission's job is to serve the public
and avoid disruption, distraction and concentrate on the business
at hand. He reiterated the commission has outlined the things that
it is doing to address the situations it faces.
Number 0114
REPRESENTATIVE GREEN stated there have been indications and/or
outright accusations of turmoil among the members of the
commissioners delving far too deep into the activities that staff
is suppose to do impeding the progress and slowing the activities.
MR. COTTEN responded it is no secret that there has been less than
unanimity on how the administration of the commission should be
handled. It is difficult to discuss without finger pointing, but
there is potential for improvement in the near future.
Number 0191
REPRESENTATIVE GREEN asked Mr. Cotten the salary of the
commissioners.
MR. COTTEN replied they are equal to a Range 26, Step C in
accordance to statute, about $72,000 a year. There are five
commissioners.
REPRESENTATIVE GREEN asked Mr. Cotten what the cost is for the
staff.
MR. COTTEN replied the commission's budget is under $5 million.
There are now 41 people on staff and the commission has been
authorized for 56. There are five vacant positions and nine new
positions. In addition, there are contractual funds and other
expenses that are outlined in the annual report. The commission is
also assigned to the Department of Law for legal advise.
Number 0225
REPRESENTATIVE GREEN asked Mr. Cotten whether he is aware of the
varying testaments on the cost of delayed decisions to the
utilities.
MR. COTTEN replied yes. In the case of Fairbanks, mentioned by
Representative Therriault earlier, the commission was regularly
reminded of the disposition of the utility by the city.
REPRESENTATIVE GREEN asked Mr. Cotten whether the additional costs
become part of the rate base, or do the utilities eat it.
MR. COTTEN replied it could become part of the rate base. However,
in the case of Fairbanks, the city informed the commission of its
lost money, but the utility didn't suffer any rate-based elements.
Number 0285
REPRESENTATIVE GREEN asked Mr. Cotten, in relation to the turmoil
and accusations of the commission, whether there is any merit to
sun setting the commission and starting over. He noted, however,
that in a monopolistic utility regulation is needed.
MR. COTTEN replied, "It's a policy call." He reiterated the
commission is making steps toward improvements. He believes that
the commission can get there and will get there. It is hard to be
objective about it from his position, but it would be a drastic
step and he does not believe it is necessary.
REPRESENTATIVE GREEN asked Mr. Cotten whether it is personalities.
MR. COTTEN replied it is some of that.
Number 0382
REPRESENTATIVE PORTER asked Mr. Cotten, referring to a conversation
about a year ago regarding additional staff, whether the commission
has been able to do any expansion in the last year.
MR. COTTEN replied some paralegals have been hired. Paralegals
start at a Range 13 and after a year they can go to a Range 16.
The last two people hired had law degrees and were looking for
better jobs. He noted it isn't easy to keep people at that pay
range. The other employees hired deal with the administrative
functions. The commission now is asking for professionals.
Number 0433
REPRESENTATIVE PORTER asked Mr. Cotten how long the nine positions
have been available.
MR. COTTEN replied those positions were just recently authorized by
the Office of Management and Budget when the hiring freeze hit.
Number 0450
REPRESENTATIVE PORTER asked Mr. Cotten whether the commission has
asked for an exception to the hiring freeze.
MR. COTTEN replied yes. Most people understand that the commission
does not affect the general fund, but the legislature still has to
answer to the total number of employees requiring caution even from
agencies that are not funded from the general fund.
Number 0491
REPRESENTATIVE PORTER stated, looking from the outside, it seems
that some of the backlog is the result of a few major decisions
being held off an inordinate length of time.
MR. COTTEN responded that sounds logical. The internal decision
making process is probably a little more unusual than most people
realize. The commission deliberates in an adjudicatory setting in
private, and there are times when it is difficult to arrive at a
decision.
Number 0579
REPRESENTATIVE PORTER asked Mr. Cotten whether he is aware of
another system that would avoid those kinds of problem.
MR. COTTEN replied he is convinced that the management information
system will be a major help in identifying the categories of work
ahead. As chairman, it will make his job easier and prevent things
from falling through the cracks.
Number 0636
REPRESENTATIVE PORTER asked Mr. Cotten whether the management
information system would help a lot or would a change of
commissioners help.
MR. COTTEN replied the commission is about to issue an RFP for a
management information system. He is unsure about answering the
second part of the question.
REPRESENTATIVE PORTER asked Mr. Cotten what future events is he has
referring to that would help the backlog.
MR. COTTEN replied there could be some turnover that might assist
the commission. He doesn't want to make any negative comments
about anybody, however.
Number 0694
REPRESENTATIVE KOTT applauded the efforts of the commission and
recognized that it is not an easy job. He asked Mr. Cotten whether
the legislative audit report recommended increasing the
commission's staff.
MR. COTTEN replied the audit recommendations have not been
delivered; they are still being formulated. However, an initial
response from an audit that was contracted out indicated the
commission needs more resources. It is his understanding that the
legislative auditors have been more cautious about recommending
more staff, perhaps they are more politically sensitive.
Number 0759
REPRESENTATIVE KOTT stated the NRRI study indicated there are
internal problems across the board and the commission should follow
an administrative model allowing the commissioners greater access
to staff experts. According to his understanding, there appears to
be a rigid wall between the commissioners and the technical
experts.
MR. COTTEN responded that the commission often has to name its
staff a party to a case as an advocate. In those cases, the staff
named are off-limits, otherwise it would be an ex parte
communication. Before he was on the commission, the entire staff
was named an advocate. Now, only part of the staff is named and
the rest is available to advise the commissioners. It is a matter
of choice, however, to take advantage of the expertise that is
available.
Number 0911
REPRESENTATIVE KOTT referred to a resolution passed recently by the
commission titled, "Structural Changes, Redefinition of Roles, and
Altering Lines of Responsibilities". It appears that there is a
greater degree of control over the executive director as supervisor
of Agnes Pitts.
MR. COTTEN noted that is correct.
REPRESENTATIVE KOTT stated the resolution indicates the executive
director will not have any contact with the news media, unless
directed by the majority of the commissioners, yet Ms. Pitts is not
under the same constraints.
MR. COTTEN replied it doesn't make any sense to him either.
REPRESENTATIVE KOTT asked Mr. Cotten whether the resolution was
passed via a vote.
MR. COTTEN replied it passed by a vote of 3-2.
REPRESENTATIVE KOTT noted the resolution suggests that there are
still some internal personnel issues.
MR. COTTEN explained a commissioner was unhappy about a personnel
matter that occurred earlier with a difficult employee. The
commissioners went into an executive session to discuss the matter
with the executive director after which the motion showed up on the
agenda at the next public meeting. In his opinion, the resolution
is a displeasure of how the executive director handled that
employee situation.
Number 1055
REPRESENTATIVE KOTT asked Mr. Cotten, in regards to the issue of
electric utility restructuring, whether the commission's position
would be in front of the legislature, aligned with the legislature,
or would the commission wait for the legislature for guidance.
MR. COTTEN replied the commission has worked with the legislature
on this issue. The APUC put up $200,000 to fund a study to learn
more about electric restructuring. Aurora Power (Aurora), the
company proposing a pilot project, has an application before the
commission now and a schedule for filings and hearings has been
made. The commission and all parties involved expect to benefit
from the study. He doesn't have an opinion on it right now because
as a commissioner he is suppose to wait and hear the parties
involved before making a decision. The commission is suppose to
determine whether a person is fit, willing and able, and whether
the public's interest requires a utility to operate. Until an
entity comes before the commission and applies to provide
electricity in a service area that already has electricity, the
commission won't face the question. When it is faced with the
question, the commission will require the entity to show why it
would be in the public's interest. For example, what would happen
to the stranded investments - the same question(s) the study will
address.
Number 1336
REPRESENTATIVE KOTT asked Mr. Cotten whether the commission will
render a final decision regarding Aurora's application before the
independent study has been completed and provided.
MR. COTTEN replied the hearing will take place in November and a
decision should be made soon afterwards. However, it is his
understanding that the commission will be able to enjoy the study
beforehand.
Number 1425
REPRESENTATIVE DAVIES asked Mr. Cotten whether there is an
application now or has there ever been an application before the
commission for an electrical utility to compete in the service area
of another electrical utility.
MR. COTTEN replied not to his knowledge.
Number 1449
REPRESENTATIVE ROKEBERG asked Mr. Cotten whether the commission has
had dockets before it asking for one utility to sell power in
another service area.
MR. COTTEN replied Chugach Electric Association Inc. (Chugach) and
Municipal Light & Power (ML&P) have been disagreeing on whether
Chugach has the inherent right to compete, but no application has
come before the commission. The ML&P complained to the commission
that Chugach was attempting to sell power to its customers.
Chugach argued that it had a right without the permission of the
commission and now the issue is in superior court.
Number 1496
REPRESENTATIVE GREEN asked Mr. Cotten whether the disputed lines
between Chugach and ML&P in the 1980's was decided by the APUC or
was it cooperatively arrived at between the two parties.
MR. COTTEN replied there was legislative involvement and the APUC
played a role, but he cannot give a better answer because he wasn't
with the commission at that time.
CHAIRMAN HUDSON opened the meeting up to the teleconference
network.
Number 1559
GEORGE GORDON, President and Chief Executive Officer, College
Utilities Corporation and Golden Heart Utilities, noted that the
regulated industry doesn't want to cause difficulties with the
people who regulate it as well as the people who legislate it. The
legislature has a strong role in providing possible solutions to
some of the difficulties experienced at the commission. He urged
the legislature to exercise its oversight authority since the
commission is a quasi-judicial agency. The content review process
is the only opportunity to provide help to the commission at this
juncture. College Utilities Corporation has been in business and
regulated by the commission for over 30 years. Its relations are
good with the APUC. Golden Heart Utilities, recently acquired by
the city of Fairbanks, is struggling to provide services in an
efficient and cost-effective manner, and needs good and efficient
regulations. He referred to the NRRI report and the timeliness
issue and suggested streamlining procedures so that the simple and
non-contested issues are not weighed the same as the extensive
issues. He urged the committee members to read the comments found
in the appendix of the NRRI report regarding delays and noted some
result in higher costs to the rate payers and those costs are
sometimes hidden in the consumer rates. Furthermore, even though
the budget is being cut, it shouldn't affect the APUC because it is
in essence funded by utility rate payers. The hiring freeze
mentioned earlier probably should not apply to the commission. It
is apparent that the commission doesn't have the resources
necessary to tackle the problems, especially when it appears that
there will be more demands on it because of the continuing issues
associated with telephone utilities and the pending potential
competition issue with electric utilities. He noted that the
commission is run by a committee which poses difficulties and urged
the legislature to take a strong role in scrutinizing an
appointment to ensure that they are hard working and good. It is
also appropriate that the legislature consider giving more
authority to the chairman to exercise more control over the staff
and the workings of the commission itself.
Number 2068
REPRESENTATIVE ROKEBERG asked Mr. Gordon if the chairman was
elected by the commissioners rather than the governor would that
create a natural level of authority.
MR. GORDON replied he is not sure, but the chairman needs to have
more authority over staff, rules and regulations, not decisions.
Number 2130
CHAIRMAN HUDSON noted that the issue needs to be articulated in
statute. Somebody needs to be held accountable. It is something
that this committee needs to take a look at.
Number 2214
MARK VASCONI, Director, Regulatory Affairs, AT&T Alascom, stated
that Alascom supports the extension of the sunset date and HB 62 as
written. Alascom also supports the commission's request for more
resources given the backlog of cases. While the rate payer is the
ultimate source of funding, Alascom has never received a complaint
from customers regarding the level of the regulatory cost charge
and commended the commission for keeping it at a reasonable level.
Number 2304
REPRESENTATIVE ROKEBERG asked Mr. Vasconi whether he thinks the
APUC is within its statutory authority to set up an Alaskan
universal service fund.
MR. VASCONI replied according to an opinion rendered by the
Department of Law it is a close call but on legal grounds.
Number 2376
REPRESENTATIVE ROKEBERG asked Mr. Vasconi whether AT&T is one of
the largest payers of universal service and access charges for
subsidized rates. He also asked whether AT&T has a corporate
policy for universal services.
MR. VASCONI replied AT&T's corporate policy is to ensure that
universal services continue. Yes, AT&T is the largest payer of all
long-distance companies in the state. He is not sure, however, if
it is the largest of local exchange carriers.
Number 2480
JIM ROWE, Executive Director, Alaska Telephone Association, stated
the association supports HB 62 in its present form.
TAPE 99-4, SIDE A
Number 0001
MR. ROWE continued. In reference to sun setting the commission
mentioned earlier, he is afraid of the industry spending too much
time on the bill instead of servicing its customers. He commended
the staff of the APUC and reiterated that the commission should be
re-authorized earlier rather than later in session.
Number 0128
CHAIRMAN HUDSON announced it is not his intention to let the bill
lie around until May.
Number 0140
REPRESENTATIVE ROKEBERG stated that the legislature is looking at
the bill as an opportunity to reform the APUC to better serve the
utilities and asked Mr. Rowe whether he has any suggestions.
MR. ROWE replied he appreciates the fact that there is a special
committee dedicated to utility restructuring, and that there is a
bill taking up the issue early in session. He agrees that
timeliness is a key issue with the APUC, but also noted that the
industry is always going to complain because it will always want
timely service. He said, "Timeliness is very important, but
rushing to make the wrong decision is devastating to the industry."
He appreciates that the commission looks at issues and listens to
the multitude of sides before making a decision.
Number 0309
REPRESENTATIVE GREEN asked Mr. Rowe whether he is suggesting that
taking longer makes a better decision or whether there is an avenue
for streamlining the process for some decisions. He cited a
decision that should have been made by the time the legislature
reconvened this year.
MR. ROWE replied he is not aware of the decision Representative
Green is referring to.
REPRESENTATIVE GREEN noted that is has to deal with HB 416 from
last year. The commission said it would have an answer before the
legislature reconvened.
MR. ROWE replied it is his understanding that the Lieutenant
Governor has signed the final regulations regarding HB 416.
Number 0448
REPRESENTATIVE KOTT asked Mr. Rowe whether it is fair to assume
that he would rather see the bill pass in its current form than to
attach other issues to it risking it from passing. He further
asked what would the reaction be within the industry.
MR. ROWE replied, yes, he would like to see the bill passed so that
the industry knows there will be a commission, not a perfect
commission, but one that will deal with issues relating to the
telephone industry. If the commission needs tweaking there is a
committee established to address those issues.
Number 0529
REPRESENTATIVE DAVIES noted that most of the solutions are outside
a statutory fix such as the issue of staffing. However, the
suggestion of realigning the duties of the chairman relative to
staff is a statutory fix. He asked Mr. Rowe whether that is
something he would support.
MR. ROWE replied that is a very appropriate item for this committee
to look at.
Number 0600
REPRESENTATIVE COWDERY asked Mr. Cotten when the APUC will vote on
the purchase of ATU.
MR. COTTEN deferred the question to Mr. Lohr of the APUC.
ROBERT LOHR, Executive Director, Alaska Public Utilities
Commission, Department of Commerce & Economic Development, said he
does not have the exact date, but it is coming up and the
municipality has insisted on closing in April. The commission will
have to decide before then.
MR. COTTEN noted that it involves five dockets and is on an
expedited schedule.
Number 0680
REPRESENTATIVE THERRIAULT referred to the management information
system mentioned earlier, and read from a report indicating that a
computer cannot set priorities and that the equipment available to
the APUC should not be directly blamed. The commission is up to
date on computer quality and speed, an issue that the Department of
Commerce & Economic Development finance budget subcommittee will
have to consider.
Number 0792
REPRESENTATIVE THERRIAULT referred to the issue of sun setting
mentioned earlier, and suggested looking at a shorter sunset
extension tied to some structural changes. There has also been a
suggestion of reducing the commissioners from five to three or
sub-panels of three, for example. A report also illustrated a
number of comments regarding the absence of commissioners at
meetings which needs to be looked at as well. He suggested asking
for attendance records to determine the validity of those
statements. The rate payers are paying for a decent salary and
should expect that the commissioners are showing up for work. The
committee should also get involved in selecting and recommending
any replacement of new commissioners.
Number 0868
REPRESENTATIVE ROKEBERG stated that he would also like to look at
vacation times of the commissioners in response to comments from
the public relating to the inability to make decisions because of
their in availability. He asked Representative Therriault his
opinion on the hiring freeze in relation to positions funded by
program receipts.
Number 0941
REPRESENTATIVE THERRIAULT replied the Governor indicated that it is
not an absolute hiring freeze. The Governor would look at allowing
hiring while at the same time remaining sensitive to the total
state employee count. The Administration also indicated that the
quasi-judicial or quasi-private entities should also be sensitive
to the state's fiscal policy and be frugal in their requests.
Number 1000
REPRESENTATIVE ROKEBERG stated that he hopes the legislature and
the Governor do not indulge themselves in a general body count when
allocating monies and positions. "We shouldn't be making decisions
based on numbers. We should be making decisions based on need and
so forth," he stated.
Number 1027
REPRESENTATIVE THERRIAULT responded he doesn't disagree and has
cautioned the majority members to be careful when using just body
count figures. There needs to be a better understanding of what is
behind the numbers.
Number 1041
CHAIRMAN HUDSON noted, in accordance to the public's best interest,
the commission needs additional staff. He hopes that the House
Finance Committee will take that into consideration. He requested
the chairman put in writing the commission's need for additional
staff for this committee to look at and other committees down the
line.
Number 1080
REPRESENTATIVE GREEN asked that the chairman also include the
streamline procedures in its report.
MR. COTTEN indicated that he has communicated with the commissioner
of the Department of Commerce & Economic Development on the need
for additional staff and can get that information immediately.
Number 1134
REPRESENTATIVE DAVIES noted that this is an example of being
careful when looking at just body count numbers. All general fund
spending isn't bad. Some spending actually promotes the general
welfare of the state, the interest of business, and improves the
economy.
Number 1200
REPRESENTATIVE ROKEBERG asked Mr. Cotten to bring forward
recommendations to the committee about enhancing his position and
management changes that might need statutory authority.
CHAIRMAN HUDSON indicated that the bill will be held over for
further consideration.
ADJOURNMENT
Number 1220
CHAIRMAN HUDSON adjourned the House Special Committee on Utility
Restructuring at 9:57 a.m.
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