Legislature(2003 - 2004)

04/23/2003 10:00 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 23, 2003                                                                                      
                             10:00 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 62, Side A                                                                                                             
SFC 03 # 62, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair  Gary Wilken convened  the meeting  at approximately  10:00                                                            
AM.                                                                                                                             
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Con Bunde, Vice Chair                                                                                                   
Senator Robin Taylor                                                                                                            
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Also Attending:   MATT ROBUS, Acting Director, Division  of Wildlife                                                          
Conversation,  Department of  Fish and Game;  ERIC YOULD,  Executive                                                            
Director,  Alaska  Rural  Electric  Cooperative  Association,  Inc.;                                                            
KRISTI CATLIN,  Director,  Government Affairs,  AT&T Alascom;  MARIE                                                            
DARLIN,  AARP Capital  City Task  Force; DANA  TINDALL, Senior  Vice                                                            
President,  Legal and  Regulatory  Affairs,  General Communications                                                             
Incorporated;   LEONARD  STIENBERG,   Vice  President  and   General                                                            
Council,   Alaska  Communication   System;   DAVE  HARBOUR,   Chair,                                                            
Regulatory Commission of Alaska;                                                                                                
                                                                                                                                
Attending  via  Teleconference:    From Mat-Su:  ROBERT  DORAN;  PAM                                                          
KRIEBER, Owner, Valley Refuse, Inc.                                                                                             
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 128-COMMON CARRIER LIQUOR LICENSE                                                                                            
                                                                                                                                
The Committee  rescinded its earlier action to report  the bill from                                                            
Committee,  adopted a  committee substitute  and  reported the  bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 147-CONTROL OF NUISANCE WILD ANIMALS                                                                                         
                                                                                                                                
The Committee  heard from  the sponsor, the  Department of  Fish and                                                            
Game and a member of the public. The bill was held in Committee.                                                                
                                                                                                                                
SB 172-LIMIT ON OIL & GAS LEASE ACREAGE                                                                                         
                                                                                                                                
The Committee heard from  industry representatives, the AARP and the                                                            
Regulatory Commission of Alaska. The bill was held in Committee.                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 128                                                                                                        
     "An Act relating to licensing common carriers to dispense                                                                  
     alcoholic beverages; and providing for an effective date."                                                                 
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken informed  that the proposed committee substitute was                                                            
not adopted at the previous hearing as intended.                                                                                
                                                                                                                                
Senator Taylor moved to  rescind the Committee's action in reporting                                                            
the bill from Committee.                                                                                                        
                                                                                                                                
Without objection  the action to report the bill from  Committee was                                                            
RESCINDED.                                                                                                                      
                                                                                                                                
Senator Taylor  offered a motion to report SB 128,  23-LS0757\H from                                                            
Committee.                                                                                                                      
                                                                                                                                
There  was no  objection  and  CS SB  128  (FIN) was  REPORTED  from                                                            
Committee  with individual  recommendations  and a  new zero  fiscal                                                            
note from the Department of Revenue dated 4/22/03.                                                                              
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 147                                                                                                        
     "An Act relating to control of nuisance wild animals; and                                                                  
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  this bill sponsored  by Co-Chair  Green,                                                            
"allows the  Alaska Board  of Game to issue  permits or licenses  to                                                            
control nuisance wild birds or small animals."                                                                                  
                                                                                                                                
Co-Chair  Green informed  that  residents sometimes  incur  nuisance                                                            
"critters" on  their property and are unable or unwilling  to remove                                                            
the animals themselves  without assistance. She stated  that current                                                            
statute  does not  allow another  party,  other than  certain  State                                                            
employees, to  provide such assistance without obtaining  a separate                                                            
permit for each incidence.                                                                                                      
                                                                                                                                
Co-Chair  Green  remarked  that  this  legislation  would  create  a                                                            
professional  license  for  parties  interested  in  providing  this                                                            
assistance  as a service.  She noted  the license  holders would  be                                                            
apprised of pertinent laws  and regulations and would be required to                                                            
uphold those rules.                                                                                                             
                                                                                                                                
Co-Chair Green  opined this license would provide  a "reasonable way                                                            
for people  to control  nuisance critters  and animals around  their                                                            
property."                                                                                                                      
                                                                                                                                
Senator Taylor referenced  language in Section 2 on page 3 lines 3 -                                                            
5, which read as follows.                                                                                                       
                                                                                                                                
     …The commissioner also may issue without cost a permit for the                                                             
     noncommercial control of nuisance wild birds or nuisance wild                                                              
     small mammals…                                                                                                             
                                                                                                                                
Senator  Taylor indicated  "small" is also  contained in  conforming                                                            
language on page  3, line 21. He suggested deletion  of "small" from                                                            
the bill, unless  it is a "technical definition of  a classification                                                            
of animals".  He  surmised  that giving  "a broader  perspective  or                                                            
opportunity"  for professionals  to assist  residents with  nuisance                                                            
animals would be preferred.                                                                                                     
                                                                                                                                
Co-Chair  Green  deferred to  the  Department of  Fish  and Game  to                                                            
explain the definition of small mammals.                                                                                        
                                                                                                                                
Senator   Bunde  pointed   out  that  current   State  statute   and                                                            
regulations  refer to  small and large  game animals,  and that  the                                                            
language  in this  legislation  could be  a reflection  of  existing                                                            
definitions.  He stated that currently  Department of Fish  and Game                                                            
or other law enforcement  officials handle incidences  of aggressive                                                            
moose.                                                                                                                          
                                                                                                                                
MATT  ROBUS, Acting  Director,  Division of  Wildlife Conversation,                                                             
Department  of Fish  and Game stated  the clarification  of  "small"                                                            
mammals  is to  limit  the scope  of the  commercial  operators  and                                                            
individual permitees'  activities. He exampled a moose  entangled in                                                            
a  fence and  the  necessity  that professional  biologists  or  law                                                            
enforcement   personnel  with   past  experience   respond   to  the                                                            
situation.  He added that these situations  "usually involve  into a                                                            
public  safety  issue"   in  which  the  Department  currently   has                                                            
statutory jurisdiction.  He noted this legislation would allow other                                                            
nuisance  animals  to be  addressed,  such  as river  otter  raiding                                                            
domestic poultry.                                                                                                               
                                                                                                                                
Mr.  Robus   recommended   retaining  the   language  limiting   the                                                            
provisions of this bill to small mammals and wild birds.                                                                        
                                                                                                                                
Senator   Taylor  was  unsure   why  this   program  would   not  be                                                            
administered  in the same fashion  without the restriction  to small                                                            
animals. He suggested  contracts could be entered  into with private                                                            
individuals to address  situations with large animals and that it is                                                            
not necessary  that action should be limited to State  employees. He                                                            
spoke of road  kill of moose and the distribution  of meat harvested                                                            
from these incidences.                                                                                                          
                                                                                                                                
Mr. Robus  noted that  incidences  with larger  animals cause  pubic                                                            
safety  issues  and  informed  that  the  Department  currently  has                                                            
authority  and  enters  into  contracts  with  private  citizens  to                                                            
address  these situations.  He specified that  the Department  lacks                                                            
authority  to issue permits  to address  incidences involving  birds                                                            
and  smaller mammals.  He  did not  oppose  inclusion  of small  and                                                            
"medium" size animals.                                                                                                          
                                                                                                                                
Senator Taylor  reiterated  the provision should  be broad  to allow                                                            
for unexpected circumstances.                                                                                                   
                                                                                                                                
Mr. Robus then  testified in favor  of the legislation, as  it would                                                            
provide  the  ability  to  address  situations  that  could  not  be                                                            
addressed  in the  past.  He told  of issues  with  migratory  birds                                                            
whereby  the  federal  government  has  requested   assistance  with                                                            
addressing nuisance  birds, although the Department  has been unable                                                            
to issue permits to private parties.                                                                                            
                                                                                                                                
Mr. Robus informed that  the bill contains two "pathways", one being                                                            
a commercial  license  that would  allow  a private  party to  offer                                                            
nuisance  animal control services  to the public.  He noted  the fee                                                            
for this license  would be $100 and that interest  in providing this                                                            
service has  been expressed. He predicted  the program would  have a                                                            
"slow start"  and therefore  incur minimal  Department expense.  The                                                            
second  pathway, he  stated,  would allow  the Department  to  issue                                                            
permits  to private  individuals to  deal with  individual  nuisance                                                            
animal situations.  He noted  this process  would be similar  to the                                                            
Department's  issuance   of public  safety   permit  and  scientific                                                            
educational permits.                                                                                                            
                                                                                                                                
Mr. Robus stated  the Department would  apply the same case-by-case                                                             
guidelines  used  to  determine  "defense   of  life  and  property"                                                            
justifications  in  that  non-lethal  options  would  be  considered                                                            
before a permit would be issued to kill an animal.                                                                              
                                                                                                                                
Mr. Robus expressed  concern with transitioning this  legislation to                                                            
include  all animals  emphasizing  that  although all  wildlife  has                                                            
value,  larger game  animals  also provide  meat and  have a  trophy                                                            
value. Although  bears, etc,  could be a  nuisance, he assured  that                                                            
other options  are available for dealing with large  problem animals                                                            
safely  and effectively.  He  was reluctant  to place  a  commercial                                                            
operator  in  the  position  of  making  safety  determinations.  He                                                            
appreciated   Senator  Taylor's  efforts   to  provide  flexibility                                                             
although  the  Department's  intent  is to  address  small  nuisance                                                            
animals.                                                                                                                        
                                                                                                                                
ROBERT DORAN  testified via teleconference  from Mat-Su that  he has                                                            
found  that agencies  do  not have  adequate  time or  personnel  to                                                            
address  problems  with  small nuisance  animals  and  the  affected                                                            
public is unable  to take action for various reasons.  He assured he                                                            
did not  intent  to "step  into the  role of biologist"  but  rather                                                            
offer a service to the public to address nuisance animals.                                                                      
                                                                                                                                
Senator Bunde, referencing  Senator Taylor's earlier comments, asked                                                            
if the intent of this legislation  is to cover large killed animals,                                                            
as he  understood a  program already  exists to  remove and  harvest                                                            
meat from animals struck and killed by vehicles.                                                                                
                                                                                                                                
Co-Chair  Green  asserted  her  intent  is to  address  only  living                                                            
nuisance animals.                                                                                                               
                                                                                                                                
Mr. Robus affirmed a system exists to address killed animals.                                                                   
                                                                                                                                
Senator Taylor  spoke of injured large animals and  the inability to                                                            
end suffering  until "someone  with a badge"  arrives. He  suggested                                                            
private  contractors could  be available  to address  the matter  of                                                            
large injured animals.                                                                                                          
                                                                                                                                
Co-Chair Wilken  indicated Mr. Robus could respond  to this query at                                                            
a future hearing on this bill.                                                                                                  
                                                                                                                                
Senator Olson requested an opportunity to offer Amendment #1.                                                                   
                                                                                                                                
Co-Chair Wilken stated the amendment would be addressed later.                                                                  
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 72(L&C)                                                                                             
     "An Act extending the termination date of the Regulatory                                                                   
     Commission of Alaska; and providing for an effective date."                                                                
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  announced  that  Senator  Bunde  would  chair  the                                                            
portion of  the meeting covering this  legislation. Co-Chair  Wilken                                                            
noted  he is involved  with  Fairbanks  Sewer and  Water, an  entity                                                            
regulated by  the Regulatory Commission  of Alaska (RCA).  He stated                                                            
he would not  participate in debate  but retained his right  to cast                                                            
votes pertaining to this bill.                                                                                                  
                                                                                                                                
AT EASE 10:25 AM / 10:25 AM                                                                                                     
                                                                                                                                
ERIC YOULD,  Executive Director, Alaska  Rural Electric Cooperative                                                             
Association,  Inc. (AERCA),  testified that  this trade association                                                             
represents  electric  utilities,  which  generate  approximately  90                                                            
percent  of the electricity  in Alaska.  He reminded  that during  a                                                            
special legislative  session the previous year, the  RCA was granted                                                            
a  one-year  extension   and  established  a  subcommittee   of  the                                                            
"Legislature  or  other  entities"  charged  with  reviewing  issues                                                            
related to the  RCA and issuing a recommendation to  the Legislature                                                            
on methods to  streamline the process. He asserted  such a committee                                                            
was never  established although  the Division  of Legislative  Audit                                                            
conducted  an audit  and concluded  that "amongst  changes that  did                                                            
need  to be  made,"  the Commission  should  be extended  two  years                                                            
rather than the three years proposed in this legislation.                                                                       
                                                                                                                                
Mr. Yould expressed  that the members of ARECA have  "for quite some                                                            
time"  called for  changes  to the  RCA  to streamline  the  process                                                            
relating to  electric utilities. As  a result of these requests,  he                                                            
stated the  RCA held sessions to propose  legislation to  accomplish                                                            
this,  although he  was unsure  whether these  changes would  assist                                                            
other utilities.                                                                                                                
                                                                                                                                
Mr. Yould informed that  ARECA recommendations were submitted to the                                                            
previous  committee that  heard this bill,  although that  committee                                                            
chose to  pass the  Governor's version.  He requested  that if  this                                                            
legislation is not amended,  the RCA be granted a one-year extension                                                            
to allow amendments  to be offered at the expiration  of that sunset                                                            
date.                                                                                                                           
                                                                                                                                
Senator Taylor understood  that a committee was formed, as specified                                                            
in the  special session  legislation  to review the  RCA and  that a                                                            
report has been submitted.                                                                                                      
                                                                                                                                
Mr. Yould admitted the committee met and submitted a report                                                                     
although he had not seen it.                                                                                                    
                                                                                                                                
Senator Taylor requested the witness' proposed amendments for                                                                   
review.                                                                                                                         
                                                                                                                                
[Note: Amendments were not provided at the time of this hearing,                                                                
although are repeatedly mentioned.]                                                                                             
                                                                                                                                
Mr. Yould indicated he would provide them.                                                                                      
                                                                                                                                
KRISTI CATLIN, Director, Government Affairs, AT&T Alascom, read her                                                             
written testimony into the record as follows.                                                                                   
                                                                                                                                
     Thank  you for the opportunity  to testify at this hearing.  As                                                            
     you know,  AT&T Alascom, and  before that, Alascom,  has a long                                                            
     history of  providing telecommunications services  to the state                                                            
     of  Alaska.  In  fact,  it  has  the  longest  history  of  any                                                            
     interexchange  carrier  in the  state today.  It is from  those                                                            
     very  roots,   and  having  witnessed  the  broad   changes  in                                                            
     technology and market  shift over the years, that we would like                                                            
     to offer  our perspective and  respectfully make some  requests                                                            
     for the legislature to consider.                                                                                           
                                                                                                                                
     We  believe that  both telecom  service  providers and  policy-                                                            
     makers have  a two-fold obligation to the constituents  of this                                                            
     state. Those  are: ensuring that basic telecom  services remain                                                            
     affordable   to  everyone  in   the  state;  and  providing   a                                                            
     regulatory  environment  that fosters  continued investment  in                                                            
     the  state  telecom   infrastructure,  thereby   ensuring  that                                                            
     advanced services will reach all parts of the state.                                                                       
                                                                                                                                
     In the early  days, Alascom was the only long  distance carrier                                                            
     in  Alaska, and as  such, the regulated  monopoly. Regulations                                                             
     were  put in place to  ensure that Alascom  did not misuse  its                                                            
     monopoly  power  in  pricing  its  services  to  consumers.  In                                                            
     addition,  in 1991, when intrastate  long distance competition                                                             
     was initiated, additional  regulations were developed to ensure                                                            
     that  Alascom  did not  misuse its  monopoly  power to  subvert                                                            
     competition.  At  the  same  time,  new entrants  to  the  long                                                            
     distance  market were granted  broad and significant  freedoms.                                                            
     And even though the  market was highly competitive in 1995 when                                                            
     AT&T  bought Alascom,  for the most part,  it bought a  company                                                            
     regulated  as though it  were a monopoly.  As we all know,  the                                                            
     regulations  governing utilities with a legal  monopoly work in                                                            
     two  directions: they  protect the  consumer from unreasonable                                                             
     prices  on  one  side  of  the  equation,  and  they  ensure  a                                                            
     reasonable  return for the regulated entity on  the other side.                                                            
     Without  a  reasonable  return,  companies  do not  invest  and                                                            
     services, therefore, do not advance.                                                                                       
                                                                                                                                
     Many of the  regulations which restrict AT&T  Alascom today are                                                            
     vestiges   of  that   monopolistic  environment   I  spoke   of                                                            
     previously.  However, in this  highly competitive marketplace,                                                             
     they do  not serve as an incentive  for investment -  they only                                                            
     serve  to  add cost  and  thereby provide  a  disincentive  for                                                            
     investment.  As far as  protection of  the consumer prices,  we                                                            
     have  almost  20  years  of  empirical  evidence  in  the  long                                                            
     distance  market in the US to show that competition  serves the                                                            
     consumer  well. In  1984, when  AT&T was first  broken up,  the                                                            
     average  discounted corporate  minute  was around $.45.  Today,                                                            
     the average discounted  corporate minute is under $.045. That's                                                            
     a whole  order of magnitude  swing. And  yet, during that  same                                                            
     time   period,   the   long   distance   industry   went   from                                                            
     approximately  $9 -10B to about $90 -110B. It  was deregulation                                                            
     of the industry and  the management of competition that spurred                                                            
     investment. And in  1995, when AT&T fell below 60% market share                                                            
     in  the  Lower  48,  the FCC  ceased  regulating  AT&T  as  the                                                            
     "dominant  carrier" and deemed the market for  long distance as                                                            
     "competitive".                                                                                                             
                                                                                                                                
     And  yet, here in  Alaska, where  AT&T Alascom  has 42%  of the                                                            
     long  distance  business   (and  shrinking),  and  our  largest                                                            
     competitor, GCI, has  46-48% of the long distance business (and                                                            
     growing),  AT&T  Alascom   is still  considered   the  dominant                                                            
     carrier,  despite a four-year  attempt to get relief  from this                                                            
     regulation  at the RCA. This  regulation adds substantially  to                                                            
     our   cost  structure   for   tracking,   journalization,   and                                                            
     reporting.   It   also  adds   regulatory   process  that   our                                                            
     competitors don't  have that keeps us from being competitive in                                                            
     the marketplace.  The whole situation really  begs a definition                                                            
     for  "dominance". Additionally,  with  the increased costs  and                                                            
     inability   to   compete  effectively   because   of   outdated                                                            
     regulations,  our ability to attract capital  and invest in the                                                            
     network is severely "hamstrung".                                                                                           
                                                                                                                                
     I  believe that  over the next  12-18 months,  this state  must                                                            
     wrestle  with some difficult  issues of telecom regulation.  At                                                            
     stake  is  the  very  survival  of  an  infrastructure   that's                                                            
     struggling  to keep up with the rest of the country.  In a true                                                            
     free   market,  there  is  less   regulation,  not   more.  And                                                            
     competition,  not regulation,  becomes the  force to shape  the                                                            
     market.                                                                                                                    
                                                                                                                                
     I  would ask  you to carefully  and thoughtfully  consider  the                                                            
     market  dynamics at work here,  and the definitions  of broader                                                            
     market  issues such as "dominance"  and "competition".  I would                                                            
     also ask  you to carefully consider  your role in mandating  an                                                            
     environment  that has  less regulation,  not more, in  order to                                                            
     create  an   maintain  incentives  to  invest   in  the  modern                                                            
     telecommunications infrastructure that all Alaskans desire.                                                                
                                                                                                                                
     As you  consider Senate Bill  72 reauthorizing the RCA,  please                                                            
     know that  AT&T Alascom could  support legislation which  would                                                            
     extend  the RCA for  another 2-4 years,  however, as we  stated                                                            
     last  year - only  if the RCA  is truly  committed to  bringing                                                            
     about  regulatory reform. Status  quo is not an option,  if you                                                            
     intend  to  have a  healthy,  competitive  telecom  market  and                                                            
     infrastructure in  Alaska. We have drafted appropriate language                                                            
     to  assist the  legislature in  defining  "dominance," and  are                                                            
     submitting it for your consideration.                                                                                      
                                                                                                                                
Senator  Bunde   surmised  the  witness   is  requesting   that  the                                                            
Legislature  to  perform  the  RCA's  duties   in determining   rate                                                            
structures.                                                                                                                     
                                                                                                                                
Ms. Catlin  informed that the corporation  has requested  the RCA to                                                            
"deal with  dominance and the entire  issue around market  structure                                                            
in Alaska." She assured  that the proposed amendments would not "set                                                            
rates".                                                                                                                         
                                                                                                                                
Senator Bunde  warned this could be paramount to opening  "Pandora's                                                            
Box,"  suggesting  that once  the Legislature  became  involved,  it                                                            
would begin to set rates.                                                                                                       
                                                                                                                                
Ms. Catlin clarified  the request to have the Legislature  establish                                                            
for  the RCA,  "a definition  to  work with,"  which  the RCA  could                                                            
utilize to make policy.                                                                                                         
                                                                                                                                
Senator Taylor  relayed he has given  considerable consideration  to                                                            
this issue.  He asked if  any Committee member  intended to  sponsor                                                            
the witness's proposed amendment.                                                                                               
                                                                                                                                
Co-Chair Green announced she would offer the proposed amendment.                                                                
                                                                                                                                
Senator  Taylor indicated  he  would also  be willing  to offer  the                                                            
amendment.  He opined it  is time the Legislature  establish  policy                                                            
for the RCA.  He disapproved of a  regulatory board setting  its own                                                            
policy and adopting  regulations to that policy without  legislative                                                            
guidance.                                                                                                                       
                                                                                                                                
MARIE  DARLIN, AARP  Capital City  Task Force,  referenced a  letter                                                            
from the organization  supporting  this legislation. [Copy  on file]                                                            
She expressed  the RCA is  important to all  AARP members and  other                                                            
Alaskan  residents  because it  is  a "place  of last  resort."  She                                                            
explained that  consumers depend on the RCA in events  of unresolved                                                            
disputes with utility companies.  She advocated consumers' rights to                                                            
affordable rates  and access to basic necessities  such as utilities                                                            
and communications.  She noted the organization does  not oppose the                                                            
change of the  termination date from  2007 to 2006 contained  in the                                                            
committee substitute, stressing  the primary concern is that the RCA                                                            
is extended and does not sunset.                                                                                                
                                                                                                                                
Senator  Bunde expressed  interest in receiving  feedback  regarding                                                            
the proposed amendments.                                                                                                        
                                                                                                                                
Ms.  Darlin  indicated  the  organization  members  had not  had  an                                                            
opportunity  to review  the proposed  amendments  and therefore  had                                                            
taken no position to date.                                                                                                      
                                                                                                                                
DANA TINDALL,  Senior Vice President, Legal and Regulatory  Affairs,                                                            
General Communications  Incorporated  (GCI) testified in  support of                                                            
extending  the  termination  date  of  the  RCA  and  adopting  this                                                            
legislation  without amendments. She  noted the recent appointments                                                             
of two commissioners,  along with the resignation  of another, would                                                            
result in a 60  percent change to the membership of  the commission.                                                            
                                                                                                                                
Ms. Tindall  encouraged  a four-year  extension,  given the  efforts                                                            
required to  address this matter annually.  She opined the  repeated                                                            
attention has "created a chill on the regulatory agency."                                                                       
                                                                                                                                
Ms.   Tindall   surmised  the   proposed   amendments   are   either                                                            
administrative  changes or are efforts to deregulate  utilities. She                                                            
suggested   the  administrative  changes   could  be  made   without                                                            
statutory  action. She opined  that deregulation  would not  benefit                                                            
the  public  and would  lead  to increased  consumer  rates  or  the                                                            
elimination of competition.                                                                                                     
                                                                                                                                
Senator   Bunde  requested   written   comments   on  the   proposed                                                            
amendments.                                                                                                                     
                                                                                                                                
Senator Bunde asked if GCI and AT&T Alascom are in competition.                                                                 
                                                                                                                                
Ms.  Tindall  clarified  the  two  corporations  along  with  Alaska                                                            
Communications  Systems  (ACS)  compete  to  provide  long  distance                                                            
services.                                                                                                                       
                                                                                                                                
Ms.  Tindall  expressed   opposition  to  the  proposed   amendments                                                            
recommended by AT&T Alascom.                                                                                                    
                                                                                                                                
Senator Taylor  asked the witness'  definition of "dominance  in the                                                            
market" and whether it is based on a percentage of calls.                                                                       
                                                                                                                                
Ms. Tindall  explained dominance "is  based on the amount  of market                                                            
power  a given  carrier  or  utility will  have  in a  market."  She                                                            
explained  that  because  AT&T Alascom  serves  150  communities  in                                                            
Alaska  with a  Federal  Communications  Commission  (FCC)  mandated                                                            
monopoly,  that company  continues  to be  regulated  as a  dominant                                                            
carrier.  She informed  that  as a  dominant carrier,  AT&T  Alascom                                                            
could not increase  rates without  approval from the RCA.  She noted                                                            
that  the proposed  amendments  of AT&T  Alascom  would essentially                                                             
deregulate that carrier  and "free them to increase rates throughout                                                            
the State without RCA approval."                                                                                                
                                                                                                                                
Senator  Bunde   requested  written   comments  from  AT&T   Alascom                                                            
regarding this discussion.                                                                                                      
                                                                                                                                
LEONARD  STIENBERG,  Vice  President  and  General  Council,  Alaska                                                            
Communication  Systems (ACS), testified against the  reauthorization                                                            
of the  RCA without  "further policy  guidance".  He expressed  that                                                            
"great  and severe"  problems exist  in the  local exchange  markets                                                            
that are the result  of "short-sighted and one-sided  pro-regulatory                                                            
policies" set  forth by appointed regulators rather  than by elected                                                            
officials.  He  favored   elected  officials  making   major  policy                                                            
decisions.                                                                                                                      
                                                                                                                                
Mr. Steinberg  asserted  that the  "misguided policies"  of the  RCA                                                            
have resulted  in the "rapid  and significant  erosion [of]  markets                                                            
for  this  company;  but  more  importantly,  harm  to  the  Alaskan                                                            
consumers, as ACS has lost  market share." He detailed the declining                                                            
revenues  and declining return  on investments  and warned  that the                                                            
ACS  returns  are "so  low  today,  that we  really  cannot  justify                                                            
further investment.  We also cannot even maintain  historical levels                                                            
of services."                                                                                                                   
                                                                                                                                
Mr. Steinberg  requested the Legislature  provide guidance  relating                                                            
to how facility  prices should be  set to ensure ACS receive  a fair                                                            
price and are not forced  to lease facilities at an amount below the                                                            
costs. He emphasized  that the Legislature  should not actually  set                                                            
the prices.                                                                                                                     
                                                                                                                                
                                                                                                                                
SFC 03 # 62, Side B 10:48 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Steinberg  continued that in fully competitive  markets, such as                                                            
Anchorage,  where ACS  only holds  approximately  50 percent of  the                                                            
market,  the   burdens  of  regulation   are  "probably   no  longer                                                            
appropriate and the Legislature  should take a deregulatory stance."                                                            
                                                                                                                                
Senator  Bunde asked clarification  whether  the Legislature  should                                                            
sit as the RCA or to provide guidance.                                                                                          
                                                                                                                                
Mr.  Steinberg  responded the  Legislature  should  provide  further                                                            
guidance  to the  RCA. He  noted legislation  would  be required  to                                                            
allow this  to occur. He  clarified the Legislature  should  not set                                                            
prices or adjudicate matters.                                                                                                   
                                                                                                                                
Senator Taylor  requested the witness  explain proposed amendments.                                                             
[Note: amendments not provided.]                                                                                                
                                                                                                                                
Mr. Steinberg  addressed  two provisions contained  in the  proposed                                                            
amendments,  one  pertaining  to  regulated  proceedings  for  State                                                            
pricing  purposes   and  leasing   of  facilities.  He  stated   the                                                            
depreciation rates allowed  "in those contexts" should be the amount                                                            
allowed  by the  Internal  Revenue  Service  (IRS) for  federal  tax                                                            
purposes.  He asserted, "This  is a fair and  equitable way  to deal                                                            
with depreciation."   He  relayed "some  very negative experiences"                                                             
with  the  RCA  concerning  how  ACS  facilities  are  depreciated,                                                             
stressing the  Commission "is going  off in the wrong direction  and                                                            
this is an area where policy guidance would be appropriate."                                                                    
                                                                                                                                
Mr. Steinberg  spoke to the  second part  of the proposed  amendment                                                            
relating to the  pricing of the facilities, the mechanisms  of which                                                            
are somewhat  complicated. He explained  that the obligation  of ACS                                                            
to share  its facilities  are contained in  federal law, which  also                                                            
establishes  "some  very broad"  pricing  guidelines  that leave  "a                                                            
great  deal of  discretion  to  the States."  He  suggested  further                                                            
guidance is appropriate in this matter.                                                                                         
                                                                                                                                
DAVE  HARBOUR,  Chair,   Regulatory  Commission  of   Alaska  (RCA),                                                            
supported  the legislation  to extend  the termination  date of  the                                                            
RCA. He noted  the testimony at this hearing was given  by lobbyists                                                            
proposing  changes that  would benefit  their  companies. He  opined                                                            
that the proposed amendments have "important frailties".                                                                        
                                                                                                                                
Mr. Harbour reiterated  earlier comments that the goal of the RCA is                                                            
to protect  consumers, and  added that the  RCA is also required  to                                                            
ensure  that the  utilities  have  the opportunity  to  make a  fair                                                            
return. He emphasized the  RCA is not intended to guarantee returns,                                                            
but  rather has  an obligation  to  provide opportunity  to  achieve                                                            
returns.                                                                                                                        
                                                                                                                                
Mr. Harbour referenced  the Darby report and took issue with some of                                                            
its findings  contained in the Senate  portion. He pointed  out that                                                            
the RCA was not  consulted in the research process  and as a result,                                                            
updated  information  readily  available  on  the Internet  was  not                                                            
included.                                                                                                                       
                                                                                                                                
Mr.  Harbour  informed  that the  recommendations  made  in  reports                                                            
issued by the Division  of Legislative Audit are more helpful to the                                                            
RCA. He  assured that the  suggestions for  improvement proposed  in                                                            
the previous  two audits  have been  accepted and  have either  been                                                            
implemented or are in the process of implementation.                                                                            
                                                                                                                                
Mr. Harbour  addressed the IRS depreciation  rates and dominance  of                                                            
market, stating  "this puts us in  a little bit of a disadvantage,"                                                             
as the lobbyists "well  know" that open dockets are currently before                                                            
the  Commission  relating  to these  issues,  and  that the  RCA  is                                                            
committed  to being unbiased  and fair in  making determinations  on                                                            
those  dockets.  Therefore,  he  stated  he  could  not  testify  to                                                            
"legislative  principles"  that  could pertain  to  the subjects  of                                                            
these dockets.  He asserted, "In general I will tell  you that there                                                            
is more than meets  the eye in a few innocent looking  paragraphs of                                                            
amendments."                                                                                                                    
                                                                                                                                
PAM  KRIEBER,   Co-Owner,   Valley  Refuse,   Inc.,  testified   via                                                            
teleconference  from Mat-Su  to voice support  for extension  of the                                                            
RCA and to  request continued regulation  of refuge services  by the                                                            
Commission. She referenced  written testimony she submitted [copy on                                                            
file] and read another statement into the record as follows.                                                                    
                                                                                                                                
     I  own Valley  Refuse, Inc.  Valley  Refuse is  a small  refuse                                                            
     utility in the Mat-Su  Valley. My business partner, Phil Horton                                                            
     and  I are 20-year  Alaskans.  We've been in  business now  for                                                            
     over  nine years  and we have  over 3,000  satisfied  customers                                                            
     here  in the  Valley,  the majority  of which  are residential                                                             
     households.                                                                                                                
                                                                                                                                
     The Regulatory  Commission oversees  utilities in the  state of                                                            
     Alaska,  as we all know. That's  why we're here today.  The RCA                                                            
     ensures that utility  rates charged to customers are fair, just                                                            
     and reasonable. The  RCA also ensures that fair trade practices                                                            
     are followed  by utilities operating  in competition  with each                                                            
     other.  The RCA  is charged with  this duty  because, by  State                                                            
     statutes,  certificated utilities  are exempt from State  anti-                                                            
     trust  laws  and  the  jurisdiction   of  the  Alaska  Attorney                                                            
     General.                                                                                                                   
                                                                                                                                
     Garbage  companies are regulated  utilities. Waste Management,                                                             
     Inc.   owns  the  largest  refuse   hauling  utility   in  each                                                            
     geographic  region  of Alaska.  Waste Management  is a  Houston                                                            
     Texas  based company and  is the largest  refuse hauler  in the                                                            
     United States. When  you compare the refuse companies currently                                                            
     operating in Alaska,  in terms of gross operating revenues, net                                                            
     income,  value of  assets available  in  the State,  purchasing                                                            
     power  for  new equipment  and  availability  of  expert  legal                                                            
     council, Waste Management has no peers.                                                                                    
                                                                                                                                
     Valley Refuse  competes against Waste Management  in the Mat-Su                                                            
     Borough through economically  regulated competition. This means                                                            
     that  the Regulatory  Commission reviews  the rates charged  by                                                            
     both Valley  Refuse and Waste  Management to ensure  that these                                                            
     rates are based on  the costs incurred in providing service. In                                                            
     other  words, economic  regulation  means  that utilities  with                                                            
     overlapping  service areas cannot  lower their rates  to levels                                                            
     below the cost of providing that service.                                                                                  
                                                                                                                                
     Please, I ask you,  do not allow language into this bill, which                                                            
     would  provide  for  a  blanket deregulation   of any  and  all                                                            
     utilities  in areas where competition  is currently  managed by                                                            
     the Regulatory  Commission. RCA rate reviews  prevent predatory                                                            
     pricing.  Waste Management  has tried  repeatedly for  the last                                                            
     five years to deregulate  refuse hauling. To date their efforts                                                            
     have failed.                                                                                                               
                                                                                                                                
     In my letter  of April 18, I outlined the repeated  attempts, I                                                            
     will not  reiterate them in this testimony but  I will add that                                                            
     I  have copies of  all the  public documents  cited and  I will                                                            
     gladly provide copies upon request.                                                                                        
                                                                                                                                
     If you can imagine  it would certainly be in Waste Management's                                                            
     best interest to be  exempt from the scrutiny of the Regulatory                                                            
     Commission  and the State of Alaska Attorney  General. If there                                                            
     were  no  State  oversight  of  this  monster   company,  Waste                                                            
     Management  could price  their service  well below the  cost of                                                            
     providing that service,  even providing free refuse service and                                                            
     operate  at a loss  long enough  to drive  a competitor  out of                                                            
     business  in any region they  chose to target. This  would take                                                            
     less time then you  might imagine, at the most 12 to 18 months.                                                            
     Then   with  their   competition   eliminated   and   potential                                                            
     competitors  intimidated,  they would be  free to increase  the                                                            
     rates  to  levels  high  enough  to  make  up  for  the  losses                                                            
     sustained  and maximize their  profits. The end result  of this                                                            
     would be Alaskan citizens  paying inflated rates for the refuse                                                            
      services and bankruptcy for smaller Alaskan businesses.                                                                   
                                                                                                                                
     Please  take a stand  for these small  Alaskan businesses  like                                                            
     mine. Do not deregulate refuse hauling.                                                                                    
                                                                                                                                
Senator Bunde ordered the bill HELD in Committee.                                                                               
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Vice-Chair Bunde adjourned the meeting at 11:01 AM                                                                              

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