Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/25/2018 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB333 | |
| HB374 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 333 | TELECONFERENCED | |
| += | HB 374 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 25, 2018
3:29 p.m.
MEMBERS PRESENT
Senator Click Bishop, Chair
Senator Anna MacKinnon
Senator Lyman Hoffman
Senator Bert Stedman
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 333(CRA) AM
"An Act authorizing a municipality to adopt an ordinance
prohibiting certain uses of cellular telephones while driving in
school zones or on school property."
- MOVED CSHB 333(CRA) AM OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 374(L&C)
"An Act relating to on-bill financing by a utility for certain
energy efficiency and conservation improvements."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 333
SHORT TITLE: MUNI: DRIVER PHONE USE IN SCHOOL ZONE
SPONSOR(s): REPRESENTATIVE(s) BIRCH
02/07/18 (H) READ THE FIRST TIME - REFERRALS
02/07/18 (H) CRA, JUD
04/12/18 (H) CRA AT 8:00 AM BARNES 124
04/12/18 (H) Moved CSHB 333(CRA) Out of Committee
04/12/18 (H) MINUTE(CRA)
04/13/18 (H) CRA RPT CS(CRA) 4DP 1AM
04/13/18 (H) DP: LINCOLN, TALERICO, PARISH, ZULKOSKY
04/13/18 (H) AM: RAUSCHER
04/17/18 (H) DISCHARGE FROM JUD MOTION WITHDRAWN
04/17/18 (H) JUD REFERRAL WAIVED MOTION
04/17/18 (H) SUSTAINED RULING OF CHAIR Y37 N2 A1
04/23/18 (H) TRANSMITTED TO (S)
04/23/18 (H) VERSION: CSHB 333(CRA) AM
04/24/18 (S) READ THE FIRST TIME - REFERRALS
04/24/18 (S) CRA
04/25/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: HB 374
SHORT TITLE: ON-BILL FINANCING OF ENERGY IMPROVEMENTS
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/21/18 (H) READ THE FIRST TIME - REFERRALS
02/21/18 (H) ENE, L&C
03/01/18 (H) ENE AT 10:15 AM CAPITOL 17
03/01/18 (H) Heard & Held
03/01/18 (H) MINUTE(ENE)
03/08/18 (H) ENE AT 10:15 AM CAPITOL 17
03/08/18 (H) Moved CSHB 374(ENE) Out of Committee
03/08/18 (H) MINUTE(ENE)
03/09/18 (H) ENE RPT CS(ENE) 2DP 1NR 2AM
03/09/18 (H) DP: CLAMAN, WOOL
03/09/18 (H) NR: JOHNSON
03/09/18 (H) AM: JOHNSTON, RAUSCHER
03/16/18 (H) L&C AT 3:15 PM BARNES 124
03/16/18 (H) Heard & Held
03/16/18 (H) MINUTE(L&C)
03/26/18 (H) L&C AT 3:15 PM BARNES 124
03/26/18 (H) Heard & Held
03/26/18 (H) MINUTE(L&C)
03/31/18 (H) L&C AT 1:00 PM BARNES 124
03/31/18 (H) Moved CSHB 374(L&C) Out of Committee
03/31/18 (H) MINUTE(L&C)
04/02/18 (H) L&C RPT CS(L&C) NT 4DP
04/02/18 (H) DP: WOOL, JOSEPHSON, EDGMON, KITO
04/09/18 (H) TRANSMITTED TO (S)
04/09/18 (H) VERSION: CSHB 374(L&C)
04/10/18 (S) READ THE FIRST TIME - REFERRALS
04/10/18 (S) CRA
04/11/18 (S) CRA WAIVED PUBLIC HEARING NOTICE, RULE
23
04/12/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/12/18 (S) -- MEETING CANCELED --
04/17/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/17/18 (S) Heard & Held
04/17/18 (S) MINUTE(CRA)
04/18/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/18/18 (S) -- MEETING CANCELED --
04/20/18 (S) CRA AT 3:30 PM FAHRENKAMP 203
04/20/18 (S) -- MEETING CANCELED --
04/25/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
REPRESENTATIVE BIRCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 333.
ASHTON COMPTON, staff to Representative Birch
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on HB 333.
REPRESENTATIVE WOOL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 374.
ROB EARL, staff to Representative Wool
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on HB 374.
GENE THERRIAULT
Alaska Industrial Development and Energy Authority (AIDEA)
Juneau, Alaska
POSITION STATEMENT: Commented on HB 374.
STUART GOERING, Senior Assistant Attorney General
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Commented on HB 374.
ACTION NARRATIVE
3:29:33 PM
CHAIR CLICK BISHOP called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:29 p.m. Present
at the call to order were Senators Stedman, Gardner, and Chair
Bishop.
3:30:57 PM
SENATOR HOFFMAN joined the meeting.
HB 333-MUNI: DRIVER PHONE USE IN SCHOOL ZONE
3:31:13 PM
CHAIR BISHOP announced consideration of HB 333. [CSHB 333(CRA)
am, version 30-LS1297\D.A, was before the committee.]
REPRESENTATIVE BIRCH, sponsor of HB 333, Alaska State
Legislature, Juneau, Alaska, said HB 333 is enabling legislation
that authorizes a municipality to adopt an ordinance prohibiting
certain uses of cell phones while driving a vehicle through a
school zone or on school property.
The idea for this legislation came from a constituent who
volunteers as a crossing guard at Bowman Elementary School in
South Anchorage, District 26, who in the regular course of his
duties routinely saw dangerous situations with people making
cell phone calls while driving around school children. In
addition, he was rear-ended by someone distracted on a cell
phone while stopping abruptly to avoid hitting a child running
across the street. While the constituent was working with the
Municipality of Anchorage to try to pass an ordinance to
prohibit cell phone use within school zones or on school
property, he learned it was not possible to do this without a
piece of enabling legislation at the state level.
SENATOR GARDNER said this is akin to speed zone differences in
school areas and asked if that is required to be in statute.
ASHTON COMPTON, staff to Representative Birch, Alaska State
Legislature, Juneau, Alaska, said she would get that answer to
her.
SENATOR GARDNER said that wasn't necessary, but she was a little
bit curious.
REPRESENTATIVE BIRCH pointed out that this allows hands free
driving through a school zone or on immediate school property
and has "great support" from the Anchorage School District, AAA,
and the Alaska Municipal League (AML). The AML also appreciates
the opt-in piece.
3:33:30 PM
SENATOR MACKINNON joined the meeting.
3:34:49 PM
CHAIR BISHOP, finding no further questions, opened public
testimony, and finding none, closed it.
SENATOR STEDMAN moved to report CSHB 333(CRA), version 30-LS1297
\D.A, from committee with individual recommendations and
attached fiscal note(s). There were no objections and it was so
ordered.
3:35:47 PM
At ease
HB 374-ON-BILL FINANCING OF ENERGY IMPROVEMENTS
3:37:34 PM
CHAIR BISHOP called the meeting back to order and announced
consideration of HB 374. [CSHB 374(L&C), version 30-LS1333\E,
was before the committee]
SENATOR STEDMAN moved to adopt the SCS CSHB 374( ), version 30-
LS1333\S.
CHAIR BISHOP objected for purposes of discussion.
REPRESENTATIVE WOOL, sponsor of HB 374, Alaska State
Legislature, Juneau, Alaska, said the changes in the committee
substitute (CS) came from Department of Law (DOL) concerns about
consumer protection. Someone who chooses to have an energy
device financed through the utility and then after having the
device installed in their home had a problem with it and didn't
want to continue to pay for it, in doing so, would also lose
their utility, which could be dangerous, especially in the
winter.
As a solution, the bill now offers a warranty or maintenance
package through the utility that the consumer could either
accept or not. It would be like an insurance policy similar to
an appliance extended warranty. If a customer accepts the
policy, they pay a monthly charge, and then if something goes
wrong, it's covered. It will be repaired, and the customer can
continue paying his utility bill, so their utilities won't be
shut off.
3:40:52 PM
SENATOR GARDNER asked if these kinds of warranties are currently
available for the products covered in this bill.
REPRESENTATIVE WOOL replied that most appliances, like a
furnace, have an implicit factory warranty for one or two years.
This would be more of an overall maintenance package and
something a utility would have to acquire. They probably don't
do this right now.
CHAIR BISHOP asked for a sectional analysis of SCS CSHB 374( ),
version S.
3:41:55 PM
ROB EARL, staff to Representative Wool, Alaska State
Legislature, Juneau, Alaska, explained the changes from version
E to version S. Language on page 2, line 6, inserts a
requirement that a customer must be offered by the utility in
writing the option to purchase a maintenance agreement for the
energy improvement or else the on-bill financing agreement will
not be valid. Under this provision, the utility would be able to
work with an insurance provider that offers this type of
maintenance product.
Subsection (e) on page 2, line 20, inserts a requirement that if
the customer refuses the maintenance agreement, he must agree to
pay off the remaining balance of the on-bill financing
agreement. However, a situation could be possible where the
interest rate on the on-bill financing agreement is lower than
the interest rate on a mortgage. So, a subsequent purchaser can
waive that requirement.
3:43:17 PM
On page 3, lines 8-9 are conforming language allowing a periodic
fee for the maintenance agreement to be rolled into the loan to
be recovered by the utility as part of the meter conservation
charge. An insertion on page 4, lines 7-9, makes sure that the
existence of a maintenance agreement is included in the
notification requirements of the bill.
The last changes from "purchaser or purchasers" to "owner or
owners" is the only change not requested by the Department of
Law (DOL). It is just clean-up language. There are five other
instances of this language on pages 3 and 4.
3:44:17 PM
CHAIR BISHOP asked if the Department of Law was fine with this
version, because their goal is to protect the consumer, at the
end of the day.
MR. EARL answered yes. Consumers are protected.
SENATOR MACKINNON said language on page 2, line 2, says interest
rates must be clearly stated and asked if there is any cap on
the interest rate. It would be a willing customer and she thinks
of rural Alaska and the cost of the smaller utilities whose
overhead costs are extreme would be allowed to perform these
renewable tasks.
MR. EARL answered said an earlier version of the bill had a
provision that the utilities cannot charge more than 2 points
over prime and through feedback from a utility they didn't want
to have that restriction. They further reasoned that nobody
would use it if it was an onerous interest rate.
3:47:34 PM
CHAIR BISHOP opened public testimony.
GENE THERRIAULT, Alaska Industrial Development and Energy
Authority (AIDEA), Juneau, Alaska, referenced Senator
MacKinnon's last question saying he looked at a number of
potential sources of federal funds from the USDA Rural Utilities
Services (RUS) and the Rural Energy Savings Program specifically
makes reference to a loan that is repaid by an addition to an
electric bill. If their payment is not made, shutting off the
utility is an important component in order to bid competitively
for some of the federal sources. Because the federal sources are
low cost sources of capital, use of RUS monies restricts
interest rates to no more than 3 percent. However, a utility may
work with a local lender as a source of capital.
3:50:20 PM
SENATOR MACKINNON noted that a bill from last year has the same
issues as this bill. A utility is not responsible for lending,
underwriting, or credit determination. So, this bill is allowing
utilities to issue money without any of the restrictions or the
ability or capability to actually collect, because language on
page 3, line 27, explicitly states that they don't have to
comply: "If the billing and collection of a meter conservation
charge does not subject a utility to laws that regulate
financial institution escrow depositories or collection
agencies." So, the utility is going to make a loan for a product
that it can't remove and then the utility and its ratepayers are
subject to paying for. Then page 4, line 2, says: "Notice under
this subsection does not constitute a lien on the property." She
asked how if someone isn't paying for their meter and is being
charged interest ever recover once they get behind and it can't
be removed. They can't remove the meter based on not paying for
the charge. "Help me understand."
MR. THERRIAULT explained that, similar to the PACE legislation
last year, which used the property tax as a means of assuring
the obligation is ultimately paid for, this obligation attaches
to the utility meter. So, the utility service at that residence
can be terminated until that bill is paid. That is the mechanism
that allows these programs to have very low default rates across
the nation where they have been applied.
The language on page 3 saying this program is not to be
considered lending is to make sure that the utility doesn't come
under Dodd Frank restrictions. No utilities would want to offer
their bill as a collection means: the money comes to the utility
then is passed back to the entity that provided the funds for
the loan. Utilities would not offer that service if they were
going to be treated like a lender.
SENATOR MACKINNON asked if one has to be a property owner to
apply for the loan or can a renter do that.
MR. THERRIAULT replied originally the bill was available to
renters who had the utility in their name, but due to concerns
about how that would work, the prime sponsor removed that
section. Now, one can only get this mechanism by being the owner
of the properties with the utilities in his name. Some states
do allow renters to apply.
3:54:38 PM
CHAIR BISHOP asked how many other states have a version of this
bill.
MR. THERRIAULT said he wasn't sure, but HB 374 is modeled after
South Carolina's legislation. A number of states have done it by
just having their utility commission approve it or they have
done it in statute.
SENATOR GARDNER asked if the person who is financing this loan
is a lender and the utility company is processing the loan
payments instead of going through bank.
MR. THERRIAULT replied that the loan could be done a couple of
different ways and explained that the utility may strike a deal
with a local lender to provide the funds or it may be able to
tap into some of the RUS funds, and if so, they would have an
obligation to pay back the RUS, but the source of the funds
would not be the utility. It is just a means of using an
existing relationship in the monthly bill that goes out to the
consumer as a convenient way to do the collection, and the power
to terminate the service guarantees that the payments are made
and that the obligation is ultimately paid off. A utility could
come up with funds of their own, but that is very unlikely.
CHAIR BISHOP asked the assistant attorney general if he wanted
to add anything.
3:56:22 PM
STUART GOERING, Senior Assistant Attorney General, Department of
Law (DOL), Anchorage, Alaska, answered yes. He said his staff
had asked earlier today if version \S addressed their concerns
in a letter signed by the Deputy Attorney General, Ed Sniffen,
on the previous version of the bill, and the simple answer to
that is yes. He offered to explain why this bill version
addresses those concerns.
CHAIR BISHOP asked him to go ahead.
MR. GOERING said the initial concern was that consumers could be
exposed to a couple different potential problems that they might
not have a remedy for, one of which would be that they would
have to pay a financing charge on their bill for an improvement
that no longer worked, which is not typically what happens when
getting a service from a utility; usually if you pay the bill
the utilities work.
The second concern was because the obligation to pay the meter
conservation charge could be passed on to a subsequent
purchaser, that someone who did not make the initial decision to
install the energy efficiency device might have an obligation to
pay for something they either didn't want or that was no longer
working. This bill addresses that in two important ways. First,
it gives the consumer a mechanism to make sure that their energy
efficiency and conservation improvement continues to work
throughout the entire duration of the financing. The mechanism
for that is the provision of repair and maintenance agreement,
which has been characterized as insurance, but the idea is that
someone is available to make sure this device continues to work
for as long as the customer has financed it. It's important for
a consumer to know that even if they decline to buy it, just the
offer helps the consumer understand the life-time cost of the
energy conservation or improvement device that they are
installing instead of having the information about the upfront
costs and not knowing what the maintenance of it is likely to
be. This is not the sort of purchase, unlike a motor vehicle or
a refrigerator that people do routinely, that people have a lot
of experience with. Knowing what life cycle costs will likely be
is very helpful even if they choose not to take the repair and
maintenance agreement.
Secondly, if the repair and maintenance agreement is declined,
the subsequent owner of the property would not have the
consequences of the decision to decline that coverage while at
the same time having the obligation of paying for the no-longer
functional improvement.
SENATOR MACKINNON said lenders have reasons for having rules for
loans: one is consumer protection, and another is the lender's
protection. She is also a big supporter of renewable projects
and wants to reduce carbon emissions wherever possible. Then she
asked what the terms for these loans are. For instance, if it
was a bond for a maintenance project, one couldn't pay off the
maintenance project before the life cycle was complete. She
didn't see any of that in this bill.
4:04:19 PM
REPRESENTATIVE WOOL said he understood her concern. This bill is
very broad in terms of products - a solar panel might have a 30-
year life-span and a heat pump which may have a 10-year life
span - and the length of the loan will not extend beyond the
expected life of the product. This legislation came about
envisioning conversion from heating oil to gas in the Interior,
and since this covers a broad range of products they didn't
insert a defined length of term on the loan. He would think that
the parties involved in the transaction would all be aware of
these parameters and structure the loan accordingly. He pointed
out that it is optional for the utilities to enter into the
transaction as well as the consumer.
He also stated that the Department of Law mentioned a new owner
wouldn't want to buy a house that they would have to make
payments on that had an appliance that didn't work. If something
doesn't work between a buyer and seller either it's not paid for
or it's repaired.
4:08:25 PM
SENATOR MACKINNON said another concern she had is because the
utility is being used as a conduit for payments no matter who
finances it and it's not subject to financial documentation of
any kind, if you owe something and your property is being held
as the backer of that, it would be listed on a plat note as a
lien against the property. How would a future owner know that
there is a lien against the property as the utilities transfer?
That is not part of the closing process.
REPRESENTATIVE WOOL agreed that it's not on the deed and a title
search wouldn't turn it up. He would hope the buyer would be
aware of this contract through some contractual mechanism.
4:09:22 PM
MR. GOERING added that he could cut through this discussion
quickly for Senator MacKinnon. Language on page 3, line 29 and
following, and the new section AS 42.05.752 provides that the
utility has to place a notice in the recording district in which
the residence or building is located and it has to include that
there is a meter conservation charge, what the balance owed is,
whether or not the system or device is covered by a repair and
maintenance agreement and the length of time that the meter
conservation charge is expected to remain in effect. This would
be sufficient to notify a subsequent purchaser.
4:10:29 PM
SENATOR MACKINNON said she appreciated that it is noticed, but
language on page 4, line 2, saying that the notice does not
constitute a lien on the property doesn't mean there isn't a
lien on their utility bill.
MR. GOERING agreed that the notice is similar to a lien in the
sense that a bill is going to be collected over the objection of
the purchaser. However, two things protect the customer in this
case. The first is that a lien can be foreclosed on by the
lender and sold to satisfy the debt. HB 374 says it's not a lien
so it's not subject to those provisions. But secondly, the
person who agreed to install the energy efficiency device for
improvement has committed in writing to pay off the loan prior
to transferring the property to a subsequent purchaser. So, if
the subsequent purchaser doesn't waive that requirement, that
meter conservation charge will never apply to them. That
provision is found on page 2, line 23, of the bill (in AS
42.05.750 (e)).
SENATOR MACKINNON remarked: So, they get a notice if everything
goes as planned in this bill.
MR. GOERING replied that would be correct. Another provision
satisfied them that this is not an issue and that is if the
utility doesn't file a notice correctly, then they wouldn't be
able to collect the meter conservation charge from a subsequent
purchaser.
SENATOR MACKINNON thanked him for those comments and said if
it's not a lien, the potential new owner doesn't have a lot of
recourse. Her experience in closing on a few homes over long
periods of time is that people sign a lot of paperwork without
reading it.
CHAIR BISHOP commented that a home purchase has to have an
appraisal. Years ago, when he purchased a home in Fairbanks,
banks required a new sewer system before providing a new home
loan.
4:14:21 PM
SENATOR GARDNER wanted to know if she got it right. Language on
page 2, line 23, says at the time of transfer of ownership of a
home if she hasn't explicitly waived a requirement that the
original purchaser pays the balance, then she is not assuming
the balance owed and is responsible for the utility only.
CHAIR BISHOP responded that at that point, the title agency
would be double-checking that box, because they don't want you
to have a clouded title.
REPRESENTATIVE WOOL said that is correct; a title search will
show this item.
SENATOR GARDNER asked if this means she cannot be surprised that
there is this extra little charge. The utility has to be told in
writing that a purchaser is willing to take over those charges.
SENATOR MACKINNON wanted the DOL to confirm that.
MR. GOERING said that is correct. The meter conservation charge
can't be collected from a subsequent purchaser unless they have
explicitly waived in writing the requirement for it to be paid
off. If for some reason it wasn't paid off in closing by the
previous purchaser, that would be a matter between the utility
and the original owner of the property because that is who the
utility contracted with.
SENATOR MACKINNON asked who owns the device at the point at
which the property is sold and someone else is still making
payments on it.
MR. GOERING answered most of these devices, probably 100 percent
of them, would be considered fixtures, which would make them
part of the real estate. So, if the seller transferred title to
the real estate, the improvement would be part of that, and the
subsequent purchaser would own everything.
4:19:31 PM
CHAIR BISHOP closed public testimony and said HB 374 would be
held in committee. He asked that any amendments be submitted by
tomorrow at 9 a.m.
4:20:27 PM
CHAIR BISHOP adjourned the Senate Community and Regional Affairs
Committee meeting at 4:20 p.m.