Legislature(1993 - 1994)

04/15/1993 07:07 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 15, 1993                                        
                            7:07 p.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-93, #56, Side 1 (210-end)                                                
  SFC-93, #56, Side 2 (end-315)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:40 p.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Kelly,                 
  Kerttula, Rieger, and Sharp were  present.  Senator Kerttula                 
  was not present.                                                             
                                                                               
  ALSO ATTENDING:  Senators Rick Halford and Robin Taylor, Cam                 
  Toohey, staff to Senator Sharp, prime  sponsor of SB 106 and                 
  SB   126;   Brent   Petrie,   Manager/Planning   &   Project                 
  Development, Alaska Energy Authority;  Mark Hickey, Contract                 
  Lobbyist  for the  city  of King  Cove;  David P.  Hutchens,                 
  Alaska   Rural   Electric   Cooperative  Association;   Dave                 
  Tonkovich, Fiscal Analyst, Legislative Finance Division; and                 
  aides to committee members.                                                  
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 106:        An   Act   authorizing   power   transmission                 
                 interties  between  Anchorage  and the  Kenai                 
                 Peninsula, between Healy  and Fairbanks,  and                 
                 between   the  Swan   Lake   and  Tyee   Lake                 
                 hydroelectric  projects,  and  approving  the                 
                 design   and   construction   costs  of   the                 
                 interties;  and  providing  for an  effective                 
                 date.                                                         
                                                                               
                 The committee had  adopted CSSB 106(FIN) work                 
                 draft  and  amended  it in  a  prior meeting.                 
                 Brent  Petrie,  Manager/Planning   &  Project                 
                 Development, AEA,  spoke to the bill  and the                 
                 three  fiscal  notes.     CSSB  106(FIN)  was                 
                 REPORTED OUT  of committee as amended  with a                 
                 "do  pass" with  zero fiscal notes  for DC&ED                 
                 component #965 and #373, and a fiscal note in                 
                 the amount  of  $447.0  for  DC&ED  component                 
                 #1232.  Co-chairs  Pearce and Frank, Senators                 
                 Jacko, Kelly,  and Sharp signed a  "do pass."                 
                 Senator Rieger signed a  "no recommendation."                 
                 Senator Kerttula was  absent from the meeting                 
                                                                               
                                                                               
                 and did not sign.                                             
                                                                               
  SB 126:        An  Act  making  special  appropriations  for                 
                 design and construction of power transmission                 
                 interties  between  Anchorage  and the  Kenai                 
                 Peninsula, between Healy  and Fairbanks,  and                 
                 between   the   Swan  Lake   and   Tyee  Lake                 
                 hydroelectric projects; and providing  for an                 
                 effective date.                                               
                                                                               
                 The  committee adopted  CSSB  126 (FIN)  work                 
                 draft  "B" and  amended  it.   Testimony  was                 
                 heard by  Brent Petrie,  Manager /Planning  &                 
                 Project  Development,  AEA, and  Mark Hickey,                 
                 Contract Lobbyist  for the city of King Cove.                 
                 Discussion  was  had  by   Co-chairs  Pearce,                 
                 Frank,   and   Senators  Rieger,   and  Sharp                 
                 regarding amendments 1 and 2.  CSSB  126(FIN)                 
                 was REPORTED OUT of committee as amended with                 
                 a "do  pass".   Co-chairs  Pearce and  Frank,                 
                 Senators Jacko, Kelly, and Sharp signed a "do                 
                 pass."      Senator  Rieger   signed   a  "no                 
                 recommendation."  Senator Kerttula was absent                 
                 from the meeting and did not sign.                            
                                                                               
  CSSB 129(STA): An Act relating to state procurement.                         
                                                                               
                 The  committee  adopted  CSSB  129(FIN)  work                 
                 draft "K" and amended it.   CSSB 129(FIN) was                 
                 REPORTED  OUT of committee  as amended with a                 
                 "do  pass" with  zero  fiscal  notes for  the                 
                 Department   of   Administration    and   the                 
                 Department   of   Transportation   &   Public                 
                 Facilities.    Co-chairs  Pearce  and  Frank,                 
                 Senators  Jacko,  Kelly,  Rieger,  and  Sharp                 
                 signed  a "do  pass."   Senator  Kerttula was                 
                 absent from the meeting and did not sign.                     
                                                                               
  SB 163:        An Act  relating to power  cost equalization;                 
                 and providing for an effective date.                          
                                                                               
                 The  committee  adopted  CSSB  163(FIN)  work                 
                 draft "J" and amended it to exclude Section 1                 
                 and  any  reference  to  Palmer,  Homer   and                 
                 Seward.   Testimony was  heard from  David P.                 
                 Hutchens, Alaska  Rural Electric  Cooperative                 
                 Association,      and      Brent      Petrie,                 
                 Manager/Planning   &   Project   Development,                 
                 Alaska Energy Authority.   CSSB 163(FIN)  was                 
                 REPORTED OUT of committee  as amended with  a                 
                 "do pass" with a fiscal note for DC&ED in the                 
                 amount  of  $600.0.    Co-chairs  Pearce  and                 
                 Frank,  Senators  Jacko,  Kelly, Rieger,  and                 
                 Sharp signed  a "do pass."   Senator Kerttula                 
                                                                               
                                                                               
                 was absent from the meeting and did not sign.                 
                                                                               
  These bills were scheduled but not heard:                                    
                                                                               
       SB  59 -  SCHOOL CONSTRUCTION & MAINTENANCE GRANTS                      
       SB  60 -  APPROP:SCHOOL CONSTRUCTION GRANT FUND                         
       SB  76 -  CHARITABLE GAMING RESTRICTIONS                                
       SB  88 -  CAPITAL PROJECT GRANTS                                        
       SB 135 -  APPRO: AK RAILROAD EXTENSION STUDY                            
       SB 148 -  ALASKA RAILROAD CORPORATION                                   
       SB 180 -  SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                        
       SB 181 -  SCHOOL CONSTRUCTION GRANTS                                    
                                                                               
       HB  64 -  ANTI-STALKING LAW                                             
       HB  96 -  EXTEND ALCOHOL BEVERAGE CONTROL BOARD                         
                                                                               
                                                                               
  SENATE BILL NO. 106:                                                         
                                                                               
       An Act authorizing power transmission interties between                 
       Anchorage and  the Kenai  Peninsula, between Healy  and                 
       Fairbanks,  and  between the  Swan  Lake and  Tyee Lake                 
       hydroelectric  projects, and  approving the  design and                 
       construction costs of the interties; and providing  for                 
       an effective date.                                                      
                                                                               
  CO-CHAIR DRUE PEARCE  announced that  the CSSB 106(FIN)  had                 
  been adopted in  a prior meeting, and  invited Brent Petrie,                 
  Manager  /Planning  &  Project  Development,  Alaska  Energy                 
  Authority,  to join  the committee members  at the  table to                 
  speak to the bill and the three fiscal notes.                                
                                                                               
  BRENT  PETRIE  said  that  CSSB  106(FIN)  was  complex  and                 
  affected three components  of the budget.   He said the  PCE                 
  administration component would be reduced  by about $4M over                 
  a twenty-year period  by the  bill, and the  PCE grant  line                 
  from the general fund reduced  allocations by $272M over the                 
  same twenty year period.  He explained  that funding sources                 
  would be changed from the general  fund to the new revolving                 
  fund.    The  third  component   is  the  agency  operations                 
  component  and   in  FY  94,   the  agency  would   need  an                 
  appropriation of $447.0  to start  the interty  work.   That                 
  money  would  come  back  to  the  agency  to  initiate  the                 
  negotiation with the utilities for design, construction, and                 
  financing for the projects.                                                  
                                                                               
  Senator  Sharp  MOVED  for  passage  of CSSB  106(FIN)  from                 
  committee with  individual recommendations.   No  objections                 
  being heard,  CSSB 106(FIN)  was REPORTED  OUT of  committee                 
  with  a  "do pass,"  and  with  three fiscal  notes  for the                 
  Department of Commerce & Economic Development - two zero and                 
  one for $447.0.  Co-chairs Pearce and Frank, Senators Kelly,                 
  Sharp,  and Jacko signed  "do pass."   Senator Rieger signed                 
                                                                               
                                                                               
  "no recommendation."   Senator Kerttula was absent  from the                 
  meeting and did not sign.                                                    
                                                                               
                                                                               
  SENATE BILL NO. 126:                                                         
                                                                               
       An  Act making  special appropriations  for  design and                 
       construction  of  power transmission  interties between                 
       Anchorage and  the Kenai  Peninsula, between  Healy and                 
       Fairbanks,  and  between the  Swan  Lake and  Tyee Lake                 
       hydroelectric projects; and  providing for an effective                 
       date.                                                                   
                                                                               
  Co-chair Pearce announced that CSSB  126(FIN) "B" work draft                 
  was before the committee.  Senator  Sharp MOVED for adoption                 
  of the "B" version of CSSB 126(FIN).  Hearing no objections,                 
  IT WAS SO ORDERED.                                                           
                                                                               
  Senator Sharp  MOVED for  adoption of  amendment 1  deleting                 
  Sec.  8  (copy  on  file).    Co-chair Pearce  OBJECTED  for                 
  discussion  purposes.    Senator Sharp  said  that  the CSSB
  126(FIN) assumed an  additional $9,300.0 was needed  to fund                 
  the  new revolving  fund  so that  it  could accomplish  the                 
  intent of $1.1 that stated as far as the financing over  the                 
  twenty year  period.   That appropriation  from the  general                 
  fund is  no longer  required.  Co-chair  Pearce REMOVED  her                 
  objection.   Hearing no  other objections,  amendment 1  was                 
  ADOPTED.                                                                     
                                                                               
  Senator  Sharp  spoke  to  each  of  the  sections  of  CSSB
  126(FIN).                                                                    
                                                                               
  Co-chair Pearce announced  that amendment  2 (copy on  file)                 
  was before  the committee and  invited Cam Toohey,  staff to                 
  Senator Sharp,  prime sponsor  of SB 126  and Brent  Petrie,                 
  Manager/Planning  &  Project   Development,  Alaska   Energy                 
  Authority to join  the committee  at the table  to speak  to                 
  amendment 2.  Co-chair Pearce spoke  to amendment 2 and said                 
  that the amount  that was in  the Governor's request to  the                 
  legislature had been reduced by about 40 percent.                            
                                                                               
  Senator Kelly OBJECTED, and asked for  an explanation of the                 
  last two sections on page of 2 of amendment 2.  BRENT PETRIE                 
  said that the requests in the last two sections of amendment                 
  2  were prior requests made  under the normal budget process                 
  and had been approved  by the Governor's office and  were to                 
  be requested by  AEA as program  receipt authority.  In  the                 
  case of  the first  section,  AEA has  received monies  from                 
  utilities and  other parties over  time to blend  with other                 
  monies that  have been  appropriated for  AEA to  complete a                 
  project.  He  explained that  sometimes it  is necessary  to                 
  cost-share  a  project.     The   way  the  revolving   fund                 
  legislation is written if money came  into the fund, AEA can                 
                                                                               
                                                                               
  receive it but  the legislature must authorize AEA to expend                 
  it.  This section gives the  authority to expend such funds.                 
  In answer to  Co-chair Pearce, Mr.  Petrie said that it  was                 
  standard practice that every couple of years, this authority                 
  was requested from the legislature.                                          
                                                                               
  Senator Rieger asked if the $4.3M  was appropriated from the                 
  general  fund.   He also asked  if the  numbers were  in the                 
  Governor's capital budget request.  Co-chair Pearce answered                 
  affirmatively  that higher  numbers were  in the  Governor's                 
  capital request.   Senator  Rieger asked  if those  requests                 
  were appropriated to the Alaska Energy Revolving fund in the                 
  Governor's  request.    Mr. Petrie  said  that  the original                 
  capital budget requested a significant amount of those funds                 
  come from the  power development  revolving loan fund  which                 
  was reporting of quote receipts.  With CSSB 126, it was felt                 
  that about $2.1M could come from  the revolving fund and the                 
  other amounts although  worthy projects, would have  to come                 
  from the general fund as a supplement to the revolving fund.                 
                                                                               
  Senator Rieger  said that  a lot of  money was put  into the                 
  energy authority and  it looked as  if even more funds  were                 
  going into  the energy  equation.   Mr.  Petrie agreed  that                 
  these  amounts  would  be  general   funds  going  into  the                 
  revolving fund.   Mr. Petrie said  that he and Ron  Garzini,                 
  Executive Director,  AEA, were trying  to come up  with some                 
  kind  of transitional effort  during the first  year if this                 
  legislation passes.   Senator Rieger said that there had not                 
  been enough time to sort through what the  AEA has done with                 
  their  own money.   Senator Rieger questioned  the wisdom of                 
  transferring a  funding source to the general  fund when the                 
  general fund  is already under so much pressure for capital.                 
  It  would  seem to  put  more  burden on  the  general fund.                 
  Senator Sharp felt  that in future  years everyone would  be                 
  funded out of the new account that is being set up and these                 
  amounts  requested by AEA  was originally $12M.   The amount                 
  had now been reduced to $4M for the transition.                              
                                                                               
  Mr. Petrie  said that in  an earlier  version of SB  126, an                 
  estimated $10M from  the general fund  might be required  to                 
  make the  revolving fund work.   This is  substantially less                 
  than that amount. Discussion followed  between Senator Kelly                 
  and Co-chair  Pearce regarding the additional projects added                 
  to SB 126.                                                                   
                                                                               
  Senator Kelly asked who was going to do the bulk fuel system                 
  upgrade -- the Coast Guard, DEC,  or DC&RA.  He asked if  it                 
  was an  AEA project.  Mr.  Petrie said that  about two years                 
  ago regulations mandated  that fuel deliveries could  not be                 
  made  to  a number  of  rural  communities and  a  bulk fuel                 
  assessment  was initiated through  the Energy  Authority for                 
  many  rural  communities.    Since   last  year  funds  were                 
  appropriated for  AEA to do  repairs and upgrades  for these                 
  systems, a part  of small diesel systems in villages.  It is                 
                                                                               
                                                                               
  not something new that AEA is doing  but felt that it should                 
  be  elevated  in  importance.     DEC  is  involved  in  the                 
  regulatory  because  of  the statutory  arrangement  -  they                 
  regulate the larger tanks.   The Coast Guard is  involved in                 
  regulating any fuel  facility where fuel deliveries  come by                 
  vessel.  The AEA  has no regulatory authority but  they have                 
  some technical abilities  to make  the corrections that  are                 
  necessary.                                                                   
                                                                               
  Senator Rieger asked if the $4.3M would be appropriated into                 
  the Alaska Energy  Revolving Fund and appropriated  back out                 
  to   the    projects   as   outlined,    basically   capital                 
  appropriations except that  the funding source  has changed.                 
  Mr. Petrie said that the money  would be allocated and money                 
  would drawn from  those funds for  those projects up to  the                 
  maximum limit authorized by the legislation.  The Governor's                 
  budget there  were over $3.5M  in general fund  requests for                 
  capital projects for the AEA.                                                
                                                                               
  Co-chair Pearce invited  Mark Hickey, Contract  Lobbyist for                 
  the city of King Cove, to  join the committee at the  table.                 
  Mark Hickey said  that $250.0 was  not adequate to  complete                 
  the King  Cove hydroelectric  project, and  that $500.0  was                 
  needed to complete the budget  which would bring the state's                 
  contribution to $3M,  half of  which was  funded last  year.                 
  That  amount  is  being matched  by  approximately  the same                 
  amount, $2.7M (a loan of $2M, $250.0 cash contributions from                 
  the Aleutians East Borough and $450.0 cash contribution from                 
  the city of  King Cove).   $500,000 is the remaining  amount                 
  needed.   He  said that $3M  was the  amount that  the state                 
  expected to spend  when the  study was first  done for  this                 
  facility.                                                                    
                                                                               
  Co-chair Pearce announced  that CSSB 126(FIN) would  be held                 
  and brought up again later in the meeting.                                   
                                                                               
  Note:  The following section for  CSSB 126(FIN) was moved so                 
  that the minutes for CSSB 126(FIN) are in the one place.                     
                                                                               
  Senator  Sharp MOVED  to amend amendment  2 by  reducing (1)                 
  Rural Power Systems Upgrade to $650,000, (6) Alternative and                 
  Applied  Energy  Technology  Development  to  $350,000,  and                 
  increase (7)  King Cove  Hydroelectric Project to  $500,000.                 
  Senator   Kelly  withdrew  his   objection  to  the  amended                 
  amendment.  No other objections being heard, amendment 2 was                 
  ADOPTED.                                                                     
                                                                               
  Senator Sharp MOVED for passage of CSSB  126(FIN) as amended                 
  from  committee   with  individual   recommendations.     No                 
  objections being heard,  CSSB 126(FIN)  was REPORTED OUT  of                 
  committee with  a "do  pass".   Co-chairs Pearce  and Frank,                 
  Senators Kelly, Sharp, and Jacko signed  "do pass."  Senator                 
  Rieger signed "no recommendation."  Senator Kerttula was not                 
  present at the meeting and did not sign.                                     
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 129(STA):                                             
                                                                               
       An Act relating to state procurement.                                   
                                                                               
  Co-chair Pearce announced that CSSB  129(FIN) work draft "K"                 
  was  before the committee.  Senator Frank MOVED for adoption                 
  of the "K" version of CSSB 129(FIN).  Hearing no objections,                 
  IT WAS SO ORDERED.                                                           
                                                                               
  Co-chair Frank  MOVED for  adoption of  amendment 3  revised                 
  (copy  on file).   No  objections being raised,  amendment 3                 
  revised was ADOPTED.                                                         
                                                                               
  Co-chair Frank MOVED for passage of CSSB 129(FIN) as amended                 
  from   committee  with   individual  recommendations.     No                 
  objections being heard,  CSSB 129(FIN)  was REPORTED OUT  of                 
  committee with a  "do pass," and  two zero fiscal notes  for                 
  the  Department  of  Administration  and the  Department  of                 
  Transportation and  Public Facilities.  Co-chairs Pearce and                 
  Frank, Senators Kelly,  Sharp, Rieger, and Jacko  signed "do                 
  pass."  Senator Kerttula was not  present at the meeting and                 
  did not sign.                                                                
                                                                               
                          Recess 7:40pm                                        
                        Reconvene 8:00pm                                       
                                                                               
  Note:  The part of this meeting that took place at this time                 
  is incorporated under CSSB 126(FIN) above.                                   
                                                                               
                                                                               
  SENATE BILL NO. 163:                                                         
                                                                               
       An  Act  relating  to  power  cost   equalization;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce announced that CSSB  163(FIN) work draft "J"                 
  was before the committee.  She said that there were proposed                 
  amendments to SB 163  that had been added to  CSSB 163(FIN).                 
  Section 1 adds Palmer, Homer and  Seward.  She invited Brent                 
  Petrie, Manager  /Planning  &  Project  Development,  Alaska                 
  Energy Authority, to join the members at the table and speak                 
  to the bill.                                                                 
                                                                               
  BRENT  PETRIE said that  Section 1  added Palmer,  Homer and                 
  Seward, three additional  utilities to  the method in  which                 
  the base calculation is made for the power cost equalization                 
  program.  These utilities represent  about 30 percent of the                 
  energy sales in the railbelt.  Those utilities that would be                 
  added for the purpose of making a calculation  will probably                 
  be  Matanuska Electric  Assoc., Homer  Electric Assoc.,  and                 
                                                                               
                                                                               
  Seward Electric System.                                                      
                                                                               
  End SFC-93 #56, Side 1                                                       
  Begin SFC-93 #56, Side 2                                                     
                                                                               
  Co-chair Pearce  said public  schools would  be exempt,  and                 
  still receive the PCE, but, referring  the committee to page                 
  2, line 6 and 7, pointed out that state and  federal offices                 
  do not receive a PCE under this legislation.                                 
                                                                               
  Senator Kelly asked the net  result of adding Palmer, Homer,                 
  and  Seward to the  bill.  Mr.  Petrie said that  he did not                 
  know  the exact amount of the  net result but it would raise                 
  the base on which  the PCE was calculated because  all those                 
  utilities have higher rates than  the other utilities in the                 
  railbelt, approximately 11  cents a kilowatt-hour.   He felt                 
  it would raise the PCE to  about 10 cents per kilowatt-hour.                 
  He  recommended  that the  base  remain  at  9.82 cents  per                 
  kilowatt-hour for this  year because he  was aware that  the                 
  Golden Valley Assoc. had lowered their rates.  Senator Jacko                 
  asked why these utilities had been added to the legislation.                 
                                                                               
  Senator Rieger asked for  an explanation of the last  phrase                 
  on page  2, lines 13  through 16, "less than  52.5 cents per                 
  kilowatt-hour."    Mr. Petrie  said a  utility would  not be                 
  reimbursed over 52.5  cents per kilowatt-hour, and  would be                 
  reimbursed 95  percent of  the eligible  costs between  9.82                 
  cents and 52.5 cents per kilowatt-hour.                                      
                                                                               
  In  answer to Senator  Kelly, Co-chair Pearce  said that AEA                 
  had  requested  the  addition of  Palmer,  Homer  and Seward                 
  utilities to the legislation.   Mr. Petrie answered for  the                 
  record  that AEA  had not  requested the  addition of  those                 
  utilities to the legislation.                                                
                                                                               
  DAVID  P.   HUTCHENS,  Alaska  Rural   Electric  Cooperative                 
  Association, said that adding Palmer, Homer and Seward would                 
  have the affect of increasing the average cost for that base                 
  slightly the first year to about 10  cents per kilowatt-hour                 
  based on 1991  year end  calculations.  He  agreed with  Mr.                 
  Petrie's recommendation  to leave the rate at 9.82 cents the                 
  first year because the following year's calculation would be                 
  very close to the 9.82 cents (since Golden Valley Assoc. had                 
  lowered  their rates).    In answer  to  Senator Jacko,  Mr.                 
  Hutchens'  said that he  had not recommended  that the three                 
  utilities be added to the legislation.                                       
                                                                               
  Mr. Petrie said that when  HB 216, Power Cost  Equalization,                 
  was  dealt  with a  week  ago,  a question  had  been raised                 
  regarding the calculation of the PCE  rate.  He said he gave                 
  out  information  regarding  the five  utilities,  including                 
  Anchorage, Fairbanks, and Juneau, that were involved in that                 
  calculation.  He said someone had asked him if Palmer was in                 
  the calculation and as a result he gave out the names of the                 
                                                                               
                                                                               
  utilities that  were not  included, including Palmer,  Homer                 
  and  Seward.   He  said  that  the addition  of  these three                 
  utilities  may have  resulted from  a misunderstanding  from                 
  that discussion but that AEA did not recommend adding  those                 
  three communities to the calculation.  Discussion was had by                 
  Senator Jacko, Mr. Petrie, Co-chair Pearce and Senator Kelly                 
  regarding the addition of Palmer, Homer and Seward utilities                 
  to the legislation.                                                          
                                                                               
  Senator  Jacko  MOVED  that  CSSB  163(FIN)  be  amended  by                 
  deleting  Section  1  on  page 1,  and  deleting  the  words                 
  "Palmer,  Homer,  and Seward"  from  page  2, line  20.   No                 
  objections being heard, the amendment was ADOPTED.                           
                                                                               
  Senator Kelly MOVED for passage  of CSSB 163(FIN) as amended                 
  from  committee   with  individual   recommendations.     No                 
  objections being heard,  CSSB 163(FIN)  was REPORTED OUT  of                 
  committee  with  a "do  pass,"  and  a fiscal  note  for the                 
  Department of Commerce & Economic  Development in the amount                 
  of  $600.0.   Co-chairs  Pearce  and Frank,  Senators Kelly,                 
  Sharp, Rieger, and Jacko signed "do pass."  Senator Kerttula                 
  was absent from the meeting and did not sign.                                
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 9:25 p.m.                         
                                                                               

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