Legislature(2001 - 2002)
04/18/2001 09:12 AM Senate FIN
| 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
MINUTES
SENATE FINANCE COMMITTEE
April 18, 2001
9:12 A.M.
TAPES
SFC-01 # 76, Side A
SFC 01 # 76, Side B
SFC 01 # 77, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:12 A.M.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice-Chair
Senator Loren Leman
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Lyda Green
Senator Gary Wilken
Also Attending: DAN EASTON, Director, Division of Facility
Construction and Operations, Department of Environmental
Conservation; LARRY MARKLEY, Alaska Rural Electric Cooperative
Association (ARECA), Anchorage; VERN RAUSCHER, General Manager,
Tlingit & Haida Regional Electric Authority, Juneau; DARWIN
PETERSON, Staff, Senator John Torgerson; CAROL CARROLL, Director,
Division of Support Services, Department of Natural Resources.
Attending via Teleconference: From Anchorage: JOE STAM, Fire
Program Manager, Division of Forestry, Department of Natural
Resources; ERIC YOULD, Executive Director, Alaska Rural Electric
Cooperative Association (ARECA); BRENT PETRIE, Project Manager,
Alaska Village Electric Coop (AVEC); DAVID GERMER, Deputy Director,
Alaska Energy Authority (AEA); WILL ABBOTT; From Emonik: MARTIN
MOORE; From Towarik: ISIAH TOWARAK; From Craig: GREG MICKELSON;
From Skagway: DAVID VOGEL, Alaska Power & Telephone; Tok: DON
MAHON, Regional Vice-President, Alaska Power & Telephone;
Unalakleet: DAVID SOULAK; BOB FOOT, Regional Board, ARECA; RUTH
MOTO-HINGSBERGER; ARNIE SATHER, Alaska Power Company; Dillingham:
STEVE BUCHONET; CHUCK DUNGAN.
SUMMARY INFORMATION
SB 148-REMOTE WATER STORAGE FOR FIRE DEPARTMENTS
The Committee heard from the sponsor and the Department of Natural
Resources. The bill was held in Committee.
SB 184-CONSTRUCTION OF WATER & SEWAGE FACILITIES
The Committee heard from the Department of Environmental
Conservation. SB 184 was moved out of Committee.
SB 185-PCE BASED ON HIGHEST COST
The Committee heard from the sponsor, industry representatives and
members of the public. The bill was HELD in Committee.
SENATE BILL NO. 184
"An Act relating to user contributions toward the cost of
construction of certain water and sewage facilities."
Co-Chair Donley advised that the legislation would provide a one-
word change to existing statute. He explained that existing
statute does not require a contribution, by the user, for the cost
of constructing a facility. He noted that SB 184 would simply
remove the word "not" and would leave it up to the budget process
or subsequent legislation to determine if there should be a
contribution. For all other water and sewer projects, a required
local match exists.
Senator Donley believed that requiring a local match would give
communities a "sense of ownership for projects" and have a greater
commitment to the proper maintenance of the projects. He
reiterated that having some degree of local contribution is good
public policy.
DAN EASTON, Director, Division of Facility Construction and
Operations, Department of Environmental Conservation, stated that
the Department opposes the bill for three reasons:
· The Department believes that the bill would not
generate much of a cost savings. Mr. Easton
pointed out that the State has already saved over
$20 million dollars in since FY99.
· The communities already contributed to the projects
and the cost of maintenance was also a contribution
made. The cost of maintaining the facilities is
often extreme. Communities often contribute lands
and rights-of-way for the projects.
· The communities understood that a cash contribution
was not the way to go. He used the example of Good
News Bay. He stated that with a 5 percent match
requirement, the requirement would be $80,000
dollars for the $1.6 million dollars. He noted
that it would save the State $20,000 and the
federal government $60,000. He pointed out that
$80,000 is 40% of Good News Bay's total operating
revenue in any given year.
Mr. Easton stated that the impacts on these communities were
disproportionate to what exists in the larger communities.
Co-Chair Donley suggested that the legislation would "free up"
additional money for other projects. He asked if the Department
was opposed to that.
Mr. Easton pointed out that the problem is that most of the
communities are not in the position to provide a cash contribution.
Co-Chair Donley questioned if the Department could categorically
say that no communities would be able to contribute one or two
percent toward the projects. He wondered if they had any evidence
that the communities could not afford the contribution. He asked
if they had undertaken an assessment to see if there was possibly
some wealth in the communities in order to be able to contribute.
Mr. Easton replied that the Department had done an assessment to
determine what the impacts would be if a cash contribution was
required.
Co-Chair Donley referred to Mr. Easton's comment regarding
maintenance being considered a contribution. He wondered if
maintenance had been considered as a contribution for the
requirement of local match for Cordova.
Mr. Easton replied it had not. He stated that in Cordova, that the
operation of maintenance was not entirely disproportionate to the
norm. He pointed out that in smaller communities, the operating
and maintenance costs are much higher per person.
Co-Chair Donley commented that it made no sense that the size of
the community should have no impact on the merit of whether to
consider maintenance towards a local contribution.
Mr. Easton explained that the communities consider a contribution
as the cost of maintenance in excess of what would be considered a
normal cost.
Co-Chair Donley argued that the excess cost would be considered the
match.
Mr. Easton agreed.
Co-Chair Donley suggested that the Department was exaggerating, as
almost no one pays for long-term capital project costs in a single-
year assessment on taxpayers.
Mr. Easton commented that he had not exaggerated. He clarified
that the $1.6 million dollars would provide water and sewer to the
entire community of Good News Bay.
Co-Chair Donley requested the percentage clarification. He
stressed that the maximum match for the major urban areas is 30%.
Mr. Easton corrected himself, pointing out that the local match was
five percent. That would mean that the match for Good News Bay
would be $80,000 dollars, which is 40 percent of their annual
revenue.
Co-Chair Kelly stressed that the bill was completely permissive and
would not be damaging to the communities.
Senator Hoffman interjected that he was strongly opposed to the
bill. He pointed out that the bill would affect the smallest
communities in Alaska, those with a population from 25 to 600
people. He commented that those communities were the ones most
dependent upon subsistence. They have the highest water and sewer
costs of anyone in the State. He stressed that rural Alaska is
always targeted through the Legislature. He believed that the bill
was an "economy of scale" issue.
Co-Chair Kelly reiterated that the bill is permissive. The
communities that cannot pay would not be made to pay. The bill
would allow the State to examine the communities that can pay more.
He claimed that there is dignity in participating in our existence,
which the State has robbed rural Alaska of. It is demeaning to
have a State government that is structured to take a certain class
of people and say that they do not have to pay for anything.
Senator Green MOVED to report SB 184 out of Committee with
individual recommendation and with the zero fiscal note.
Senator Hoffman OBJECTED.
Senator Olson interjected his objection, also. He warned that a
bill, which targets citizens or villages and settlements between 25
and 600 persons, creates a "slippery action". He claimed that
other legislatures will eventually change the verbiage and then the
people will suffer. He indicated that polarization will result
through the bill.
Senator Olson understood that the State would take current numbers
which would make further burdens on some of the villages. An
example is the village of Diomede, which instituted a three percent
sales tax last year. They saved $12,000 dollars in revenue from
that tax, and that money has been used for municipal government.
If the State takes that money from a village with only 125 people,
a critical situation will result. People in rural Alaska,
desperately need water and sewer services. He stated that it was
inconceivable that the Committee should consider this legislation.
He reiterated his opposition to the bill.
Co-Chair Kelly asserted that the bill does not take anything from
any communities. The legislation states that the Legislature "may"
examine this concern. He did not think that Diomede would fall
under the bill.
Senator Olson restated his concerns that the bill eventually will
take necessary services such as water and sewer away from small
village areas through actions taken with future legislatures.
Co-Chair Kelly strongly disagreed.
Senator Austerman inquired what the mechanism was intended to be
used to make the determination of who would be responsible to pay.
Co-Chair Donley replied that it would be through the budget and
that it would be a case-by-case assessment. He claimed that the
bill would provide flexibility to deal with those that do not have
the capability to pay.
Senator Austerman asked if the intent was to come "to the table"
and discuss projects within the current 25 percent State match and
then make that determination.
Co-Chair Donley responded that was not the intent. He clarified
that the State receives a block of money from the federal
government and then the State matches that.
Senator Austerman asked how it would be determined which
communities pay.
Co-Chair Donley recommended that the agencies would make the
recommendations regarding communities that have the ability to pay.
He hoped that some communities might volunteer that information.
Senator Austerman asked how it would be determined who had the
ability to pay and who did not, other than what the Department
suggests.
Co-Chair Donley advised that the Department currently makes that
determination in distributing the community matching grants.
Senator Hoffman advised that the community matching grants and the
services being discussed are entirely different.
Co-Chair Kelly advised that there was a motion before the
Committee. He asked if the objection was maintained.
Senator Hoffman objected. He reiterated that SB 184 was an unfair
bill. He noted that the communities, which will suffer the most,
are not based on a cash economy but instead are subsistence based.
Senator Olson questioned how the bill's sponsor expected to save
the State $2.7 million dollars.
Co-Chair Kelly explained that it was intended to achieve those
savings. He mentioned that he has heard a lot of inflammatory
language this year that was scaring the village people and that it
was not being appropriately voiced.
Senator Olson interjected that there is valid concern when the
State starts to deal with water and sewer concerns directly
affecting the public health, and that people need to be scared.
Co-Chair Kelly strongly disagreed with the statements made by
Senator Olson.
A roll call was taken on the motion.
IN FAVOR: Senator Leman, Senator Ward, Senator Wilken,
Senator Green, Co-Chair Donley and Co-Chair Kelly
OPPOSED: Senator Olson, Senator Hoffman and Senator Austerman
The motion PASSED (6 - 3)
SB 184 was MOVED out of Committee with "individual recommendations"
and with a fiscal note by Department of Environmental Conservation.
SENATE BILL NO. 185
"An Act relating to the basis for determining eligibility for
and the amount of power cost equalization payments; and
providing for an effective date."
Co-Chair Donley stated that SB 185 would revise the formula under
which Power Cost Equalization (PCE) subsidies are paid, by making
it an equitable program, which adjusts the maximum kilowatt-hours
eligible for the subsidy to more accurately reflect power usage in
PCE communities and at the same time encourages energy
conservation.
During the past twenty years, the State of Alaska has funded
various programs subsidizing electrical rates in rural areas of the
State. The goal of these programs is to provide affordable utility
power to rural Alaskans. Rates in some PCE-eligible communities
pay, and the program fails to do a good job of encouraging energy
conservation.
Senator Donley added that SB 185 corrects the inadequacies and
makes the program what its name implies, equal. The legislation
changes the manner in which the rates are calculated to make
payments more equalized. PCE payments are based on the highest
cost per kilowatt-hour (kWh) charged to a community that is not
eligible for PCE. A review of sixty-eight community's residential
electric rates for FY00 indicates that numerous communities
receiving PCE pay less for their power than those that do not
receive PCE. Of the sampling's, forty-one communities that receive
PCE, twenty-six pay less than individuals in Kodiak for power usage
of 500 kWh per month. If the sampling is representative of all
communities in the State, almost half of PCE-subsidized customers
pay less for their power than customers of the Kodiak Electric
Association.
SB 185 encourages energy conservation by lowering the maximum
number of subsidized kilowatt-hours per month from 500 to 400. A
review of year 2000 usage reveals that the average kilowatt-hours
used per month in communities eligible for PCE is 415 kWh. At the
current 500 kWh level of subsidy, there is no incentive for these
customers to conserve energy. By lowering the maximum to 400 kWh,
individuals will still receive a subsidy for all the kWh needed to
power their home.
Co-Chair Donley continued, the legislation indirectly encourages
everyone with the State to continue to find ways to generate
cheaper, more cost-effective power. As the cost for power
decreases in non-PCE eligible communities, the power costs for PCE
communities will automatically decrease as well. He believed that
it would be an equitable way to assist those hardest hit by the
cost of power without providing them with special benefits denied
to others.
Revising PCE to be more equitable is estimated to reduce required
funding by approximately $9 million dollars, which would eliminate
the need for the Governor's FY02 request to appropriate $7.8
million dollars to pay for PCE subsidies. Additionally, if the
entire income of the Power Cost Equalization/Rural Electric
Capitalization Fund is not needed to pay the subsidy each year, the
fund would grow through interest income, making more income
available in future years to help pay future PCE/REC needs.
Senator Hoffman interjected that rural Alaska is already conserving
the most because their costs are so high and their consumption
rates are some of the lowest in the State. He maintained that the
proposed legislation was yet another attempt to get closer to
hurting rural Alaskan residents. Senator Hoffman reiterated that
rural residents are paying often four times as much as urban
Alaskans. He added that the intent of the PCE work was an attempt
to make rural Alaskans closer to those living in the urban areas in
what they pay for utilities.
SFC 01 # 76, Side B 09:59 AM
Senator Hoffman continued. He stressed that only 31% percent of
the power sold in rural Alaska is eligible for PCE. The bill is an
attempt to balance the fiscal gap by targeting rural Alaskans.
Co-Chair Donley replied that there is a lot of Alaska that is rural
that does not receive PCE. He recommended that the definition
should be the non-PCE communities versus PCE eligible communities.
He added that rural versus urban is an inaccurate statement.
Co-Chair Kelly asked the consumption average in Anchorage and
Fairbanks.
LARRY MARKLEY, Alaska Rural Electric Cooperative Association
(ARECA), Anchorage, responded that it was a little over 700 kWh.
Senator Austerman asked the charge per hour in Anchorage.
Co-Chair Kelly replied that it was about ten cents or a little more
per kilowatt-hour.
Mr. Markley corrected that the average in the Anchorage, Fairbanks,
and Juneau areas is about twelve cents per kWh.
Co-Chair Donley interjected that at 500 hours, the base declines,
as the numbers are based on consumption.
Co-Chair Kelly pointed out that the data was built by using Kodiak
as an example.
Co-Chair Donley commented that the Kodiak average was about twenty-
two cents per hour.
Senator Austerman commented that was based on an infrastructure
built around providing the services. He voiced his hesitation to
get involved with the proposed bill as he represents a number of
PCE communities around the Kodiak area. Most of those communities
start out with a base rate of about forty cents per kWh. Until the
rest of Alaska is on a grid system, PCE should exist. In the last
couple years, the Legislature has brought down some of the expense
associated with the PCE. He reminded members that the endowment
process is currently being addressed to handle some of the concerns
voiced by the legislation.
Senator Green acknowledged that although the Rail belt does provide
an advantage, she has many constituents in the Mat-Su that do not
have access to that power.
VERN RALPHER, General Manager, Tlingit and Haida Regional
Electrical Authority (THREA), Juneau, voiced concern that this
legislation had surfaced again. He noted that his company had
provided an analysis, indicating how the legislation will impact
the communities. The average residential service is closer to 500
kWh, and would create a 30% increase.
Mr. Ralpher addressed the concept of conservation and the wise use
of electricity. He pointed out the amount of lights being used in
the Committee room for a daylight meeting.
Co-Chair Kelly announced that SB 185 would be HELD in Committee.
Co-Chair Donley commented that there are a lot of options for the
State and that SB 185 presents the fairest option. He stated that
it is poor public policy to generically base discriminatory State
payments on community size rather than true need. By making
reforms, the State could end up with a better program. He
commented on the need to get the cost down in the program so that
the endowment is not being drained and making the program self-
sufficient would be a positive fiscal outlook for the program.
Senator Wilken suggested that research go back a couple years to
see what efforts have been made to avert some of the wealth of the
National Petroleum Reserve-Alaska (NPR-A) into the PCE fund as
promised.
Senator Austerman agreed that he would like to hear from NPR-A.
Senator Hoffman interjected that there had been dialogue regarding
the NPR-A issue on the House side. The intent of the federal
legislation regarding the use of the NPR-A funds was specific for
use for those communities impacted by developments of the NPR-A.
SB 185 was HELD in Committee. It was reconsidered later in the
hearing.
SENATE BILL NO. 148
"An Act relating to remote water storage for fire
departments."
DARWIN PETERSON, Staff, Senator John Torgerson, explained that SB
148 would instruct the Department of Natural Resources to construct
remote water storage sites for fire protection. The sites would
consist of 10,000-gallon underground storage tanks with a pump and
a hydrant. The Department will solicit applications for the remote
storage tanks from all the organized fire service areas statewide.
The Department will rank the applications and based upon
appropriations, construct as many as they could afford. The
applications would be ranked by the following factors:
· Distance from an adequate water supply;
· Number of buildings to be protected;
· Extent of spruce bark beetle infestation;
· Ability of fire service to provide matching funds,
maintain and operate the remote water storage site;
and
· Other pertinent factors.
Mr. Peterson discussed the need for remote water storage sites,
which is evident in many areas of the State, especially where
beetle infested timber greatly increases the risk of catastrophic
wildfire. The legislation would help protect the lives of those
people living on the fringe of fire service areas. It would also
reduce property loss and possibly lower water rates for the
residents.
Senator Leman interjected that the requirement for matching funds
leads to a "slippery slope". In Section 2, the language reads
"may" require organized matching funds of up to 50%.
Mr. Peterson commented that the intent of that language provides
the Department the opportunity to decide who the "more needy"
groups would be. The Department would fund the first two sites
completely and the third site would be asked to put up some
matching funds.
Senator Leman asked if other options have been considered such as
tax credits for property owners.
Mr. Peterson responded that option had not yet been taken into
consideration.
Senator Green asked why the tanks would be underground.
Mr. Peterson explained that the fire service areas which
participated in the drafting of the legislation, submitted a number
of options for developing the remote water storage sites. Of all
the options proposed, the underground one was the most cost
effective.
Senator Green asked if the facility would be a permanent site.
Mr. Peterson replied it would.
Senator Green inquired if it could be a mobile unit.
Mr. Peterson explained that would be a very expensive option. He
suggested that if it would alleviate Committee members concern, the
language could be changed from saying that the storage "must be"
10,000-gallon underground storage tanks, to "may be".
Senator Green agreed that would be a better option. She suggested
that language provided more flexibility.
Senator Olson voiced concern that the tank would only hold 10,000-
gallons of water and asked how that amount would contain a vast
fire.
Co-Chair Kelly responded that the intention of the legislation was
to address smaller fires.
CAROL CARROLL, Director, Division of Support Services, Department
of Natural Resources, indicated that Joe Stam was on-line to
comment on that concern.
JOE STAM, [Testified via Teleconference], Fire Program Manager,
Division of Forestry, Department of Natural Resources, Anchorage,
stated that intent of the bill is to aid fire departments in
suppressing structure fires in remote areas of the State. There
are a lot of areas that are not served by water systems of any
kind. The tanks would be located in proximity of subdivisions and
clusters of structures where there is not a water supply. The
intent of the underground tank is to be useful all year round.
There are a number of these tanks in existence in Alaska in the
Mat-Su Valley and in Fairbanks. Those are facilitated by donations
of tanks from the railroad, cars which were buried.
Mr. Stam continued, the Department would use those in the Division
of Forestry for putting out wild fires, but not as much as the fire
departments would use them. The tanks will hold 10,000 to 20,000
gallons of water. The Division has received requests from several
fire departments with no water systems, who are interested in
obtaining the tanks.
Senator Green asked if the tanks would be used to store water to be
placed into fire trucks.
Mr. Stam explained that the tanks would be located on the road net.
They would use the underground tanks to fill the off-road vehicles
to go to the remote fire areas. The tanks would be dual-purpose.
Senator Ward inquired if there were fire trucks that could move on
open terrain, not needing a road.
Mr. Stam responded that a variety of different fire apparatuses are
used for different situations.
Senator Ward asked how many gallons of water would a non-wheel
vehicle carry.
Mr. Stam replied that the ones that the Division has are 500-gallon
tanks. He added that they do contract with the private sector for
the majority of that type of equipment use.
Senator Wilken commented that an above ground tank would have the
problems of maintenance and thievery. The purpose of having it
underground would be to provide an "out of sight, out of mind"
facility.
Co-Chair Kelly moved to adopt a conceptual amendment, Page 2, Line
11, deleting, "capable of storing at least 10,000 gallons of water
and a pump, hydrant, and associated piping".
There being no objection, the amendment was ADOPTED.
Co-Chair Kelly stated that the bill would be HELD in committee.
SENATE BILL NO. 185
"An Act relating to the basis for determining eligibility for
and the amount of power cost equalization payments; and
providing for an effective date."
This bill was held from earlier in the meeting.
ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative
Association (ARECA), testified via teleconference from Anchorage,
requested that the bill not be passed out of the Committee. He
stressed how important the issues of the bill are. He reiterated
that this is a major and important piece of legislation. The
program has had significant "stream-lining" over the years. It
started in 1980 as the Power Cost Assistance Program. He listed
various State projects undertaken. At that time, energy was four
cents per kWh and at this time it is nine cents per kWh. In rural
Alaska, it was forty cents per kWh and today it is still that
price. Over the years, the program has changed. In 1985, it was
changed to the Power Cost Equalization (PCE) Program, at which
time, the formula was significantly changed. In 1993, it was
changed again.
Co-Chair Kelly requested that Mr. Yould testify to the specifics of
the bill. He commented that the Committee would hear the bill at a
later date and more testimony could be taken at that time.
Mr. Yould noted that the specifics of the bill are to set the stage
for some of questions. Anchorage and Fairbanks cost is roughly
nine cents per kWh and in rural Alaska that cost is roughly forty
cents per kWh. Even with PCE, for those that the program reaches,
the cost is twenty-five cents per kWh, which on the average, is
above the cost of various communities. Some communities were
recipients of major funding projects such as the Four Dam Pool.
SFC 01 # 77, Side A 10:48 AM
MARTIN MOORE testified via teleconference from Emonik and voiced
opposition to SB 185. He stated that the bill would reduce the PCE
program entitlement and subject older and disabled persons to risk
of health and well-being. The legislation does not offer a list of
affordable power benefits for the rural areas. He urged that the
bill not pass from Committee.
ISIAH TOWARAK testified via teleconference from Towarik, to urge
fully funding the PCE program. He suggested a tax credit for the
oil companies to help fully fund the program.
GREG MICKELSON testified via teleconference from Craig that SB 185
would drastically affect his customers creating a 28% increase in
utility costs. The smaller communities would suffer an even more
dramatic increase. He added that none of the customers on Price of
Wales Island are paying less than the twelve-cent per kWh rate.
Most of them are currently paying around thirteen and one half
cents per kWh after PCE. The Island has some of the highest
unemployment rates in Southeast Alaska at 22%. He asked that
members consider the impact to the economy in that area, as power
is a major part of everyone's life.
Co-Chair Kelly commented that the Committee would be checking the
end costs to the residential users. That should be a factor in
whether to support the bill.
DAVID VOGEL, Alaska Power & Telephone, testified via teleconference
from Skagway to voice his concern with the legislation and how it
would affect his customers who live on a fixed income. Those
people would be taking the "brunt" resulting from the legislation.
He noted that he strongly opposed SB 185.
DON MAHON, Regional Vice-President, Alaska Power & Telephone,
testified via teleconference from Tok that his company served ten
remote communities in Interior Alaska. He noted his concern for
the customers living in those communities. Lowering the PCE to 400
per kWh would increase bills on an average of $24 dollars per
month. That additional expense is not available to most of these
people. He added that it is important to consider the energy
required on the new homes being built in the remote communities.
He urged that there be additional hearing on the legislation.
DAVID SOULAK testified via teleconference from Unalakleet in
opposition to the legislation. He pointed out that the possible
cost to the City of Unalakleet for the year, if the legislation was
passed, would be $24,710 dollars. The increase will deplete any
funds in the City's bank account.
BOB FOOT, Regional Board Member, ARECA, testified via
teleconference from Unalakleet, and voiced opposition to the
proposed legislation.
RUTH MOTO-HINGSBERGEN testified via teleconference from Unalakleet,
that the village pays thirty-eight cents per kWh, which is the
average monthly usage for residential customers. She voiced strong
opposition to the proposed legislation.
ARNIE SATHER, Alaska Power Company, testified via teleconference
and echoed the concerns voiced by the other testifiers. Mr. Sather
recommended that the Committee continue to hold hearings on the
bill.
STEVE BUCHONT testified via teleconference from Dillingham to
advise that SB 185 was narrowly focused for the impact that it
would have. He added that the State needs to have a more
comprehensive plan to address rate increases. He pointed out that
there is expected to be an additional increase in fuel prices this
year.
BRENT PETRIE, Project Manager, Alaska Village Electric Cooperative
(AVEC), testified via teleconference from Anchorage that AVEC
serves fifty-one villages in Western Alaska. The per capita income
in those communities is approximately one-third what it is in
Anchorage. The medium household income is about fifty percent less
than it is in Anchorage. He stressed that there is a need. When
the large difference in income is noted given the cost of
electricity and other energy forms, the difference becomes even
greater.
The average use for the residential customer is a little over 400
per kWh. Ten years ago, it was about 330 per kWh. The increase is
due to the fact that now some people are hooked up to water and
sewer systems and to keep those running in the winter, they need
electric heat traces on the lines coming into their houses. Mr.
Petrie added that electric heat has been actively discouraged in
all homes and that they are being responsible from a conservation
point of view. Fuel costs have increased over the past couple
years and amount to over 30% of the operating costs.
Mr. Petrie advised that stability is important at this point in
time. Many changes have been made to the program in the last year
in cooperation with the Legislature, the utilities and the
residents. He recommended that stability be maintained as the Four
Dam Pool is being sold and the endowment is being consummated.
DAVID GERMER, Deputy Director, Alaska Energy Authority (AEA),
testified via teleconference from Anchorage and voiced concern with
the proposed legislation. He stressed that the legislation would
have dramatic consequences for rural Alaska. Raising the rate from
twelve to twenty cents would result in increased costs to residents
in rural Alaska of approximately $6.9 million dollars.
Mr. Germer pointed out that community facilities make up 26% of
total eligible kilowatts for FY00. Raising the base rate would
result in an increased cost of an estimated $2.4 million dollars
per year for community facilities alone. Buildings that are not
operated for profit will experience a huge impact from the proposed
changes.
AEA has major concerns regarding the effect of the bill on rural
Alaska as well as urban Alaska. He encouraged members to
reconsider the bill and the effects on all Alaskans.
WILL ABBOTT testified via teleconference from Anchorage,
recommended that the Committee reconsider the passage of the
proposed legislation. He offered to answer any questions of the
Committee.
CHUCK DUNGAN testified via teleconference from Unalakleet to voice
opposition to the proposed legislation. He commented that
unemployment is high and any cost increase to consumers would be a
severe burden.
Co-Chair Kelly stated that SB 185 would be HELD in Committee for
further consideration.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:15 AM.
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