Legislature(2013 - 2014)SENATE FINANCE 532

03/06/2013 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 16 BD OF ARCHITECTS, ENGINEERS, SURVEYORS TELECONFERENCED
Moved SB 16 Out of Committee
+= SB 21 OIL AND GAS PRODUCTION TAX TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
Department of Natural Resources
Department of Revenue
EconOne
PFC Energy
Roger Marks
Bills Previously Heard/Scheduled
= SB 23 AIDEA: LNG PROJECT; DIVIDENDS; FINANCING
Moved CSSB 23(FIN) Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                       March 6, 2013                                                                                            
                         9:09 a.m.                                                                                              
                                                                                                                                
9:09:04 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Kelly  called the Senate Finance  Committee meeting                                                                    
to order at 9:09 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Kevin Meyer, Co-Chair                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Margaret  Dowling,  Staff,   Senator  Cathy  Giessel;  Sarah                                                                    
Fisher-Goad,  Executive Director,  Alaska Energy  Authority,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Ted   Leonard,   Executive   Director,   Alaska   Industrial                                                                    
Development  and  Export  Authority; David  Teal,  Director,                                                                    
Legislative Finance Division                                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Don  Habegar, Director,  Division of  Corporations, Business                                                                    
and   Professional   Licensing,  Department   of   Commerce,                                                                    
Community  and   Economic  Development;   Harley  Hightower,                                                                    
Architect,  Anchorage; Colin  Maynard, Civil  Engineer, AELS                                                                    
Board,  Anchorage; Janet  M.  Matheson, Architect,  American                                                                    
Institute  of  Architects,  Fairbanks;  Dale  Nelson,  Civil                                                                    
Engineer,  Chair  of   Alaska  Professional  Design  Council                                                                    
Legislative Committee, Palmer;  David Messier, Tanana Chiefs                                                                    
Conference,  Fairbanks;   Bob  Shefchik,   Chair,  Fairbanks                                                                    
Energy Council, Fairbanks                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB  16    BD OF ARCHITECTS, ENGINEERS, SURVEYORS                                                                                
                                                                                                                                
          SB 16  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and with  a new fiscal impact                                                                    
          note  from the  Department of  Commerce, Community                                                                    
          and Economic Development.                                                                                             
                                                                                                                                
SB  21    OIL AND GAS PRODUCTION TAX                                                                                            
                                                                                                                                
          SB 21 was SCHEDULED but not HEARD.                                                                                    
                                                                                                                                
SB  23    AIDEA: LNG PROJECT; DIVIDENDS; FINANCING                                                                              
                                                                                                                                
          SB 16  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and with  a new fiscal impact                                                                    
          note  from the  Department of  Commerce, Community                                                                    
          and Economic Development.                                                                                             
                                                                                                                                
SENATE BILL NO. 16                                                                                                            
                                                                                                                                
     "An  Act  relating to  the  Board  of Registration  for                                                                    
     Architects, Engineers,  and Land  Surveyors and  to the                                                                    
     Department   of  Commerce,   Community,  and   Economic                                                                    
     Development."                                                                                                              
                                                                                                                                
9:10:10 AM                                                                                                                    
                                                                                                                                
MARGARET DOWLING, STAFF, SENATOR CATHY GIESSEL, explained                                                                       
SB 16. She referred to the Sponsor Statement.                                                                                   
                                                                                                                                
     SB   16   revises    statutes   governing   architects,                                                                    
     engineers, and land surveyors  in Alaska, designating a                                                                    
     full-time  investigator  specifically   for  the  State                                                                    
     Board  of Registration  for Architects,  Engineers, and                                                                    
     Land Surveyors (AELS).                                                                                                     
     The AELS Board's mission, as  defined in statute, is to                                                                    
     protect public  health, safety and welfare  by ensuring                                                                    
     that  those  entering  the practices  of  architecture,                                                                    
     engineering, and land  surveying meet minimum standards                                                                    
     of  competency,  and  maintain those  standards  during                                                                    
     their practice,  by requiring licensure to  practice in                                                                    
     the  state.  The  Board   enforces  the  licensure  and                                                                    
     competency  requirements  and  responds  to  complaints                                                                    
     brought by the public.                                                                                                     
                                                                                                                                
     Currently,   the  AELS   Board  shares   one  part-time                                                                    
     investigator  with  six  other boards  that  oversee  a                                                                    
     total  of 18,095  licensees, of  which 6,439  licensees                                                                    
     are under the AELS Board.                                                                                                  
                                                                                                                                
     According  to  the  board,   because  of  the  negative                                                                    
     economic  conditions in  various  parts  of the  United                                                                    
     States,  a  significant   number  of  corporations  and                                                                    
     individuals  are  relocating  to Alaska  and  many  are                                                                    
     practicing  without proper  licensure  or knowledge  of                                                                    
     applicable  statutes and  regulations.  In 2012  alone,                                                                    
     the  AELS   Board  added  490  new   licensees  to  its                                                                    
     oversight.                                                                                                                 
                                                                                                                                
     In  addition to  the already  growing workload  for the                                                                    
     part-time  AELS  Board  investigator, pressure  on  the                                                                    
     investigator to spend  time on the other  six boards to                                                                    
     which   he  is   also  assigned   is  increasing.   The                                                                    
     efficiency and  effectiveness of the  State's licensing                                                                    
     investigation  process  is   further  reduced  by  only                                                                    
     having a  single shared investigator who  must maintain                                                                    
     knowledge of  the various  statutes and  regulations of                                                                    
     seven different boards.                                                                                                    
                                                                                                                                
     SB  16 also  removes the  constraint that  examinations                                                                    
     for   licensure  be   written.  With   advancements  in                                                                    
     technology,  examinations are  moving to  an electronic                                                                    
     format which will further increase efficiency.                                                                             
                                                                                                                                
     SB  16 will  better equip  the AELS  Board to  maintain                                                                    
     proper oversight  of its licensees, thereby  uphold the                                                                    
     reputation and integrity of  the disciplines within its                                                                    
     purview, and  ultimately ensure its ability  to protect                                                                    
     public health, safety, and welfare.                                                                                        
                                                                                                                                
Ms.  Dowling explained  the fiscal  note. She  stressed that                                                                    
regulatory boards must  be self-supporting through licensing                                                                    
fees. She pointed  out that the board  had sufficient carry-                                                                    
forward program receipts to cover  the initial cost. The new                                                                    
influx  of  revenue  would  be  generated  in  November  and                                                                    
December of 2013, as the  license fees become due. She noted                                                                    
that, currently, the  license fees were $125  for a two-year                                                                    
license. She  remarked that  the fee  could be  increased if                                                                    
needed, but stressed that  an anticipated fee-increase would                                                                    
be minimal.                                                                                                                     
                                                                                                                                
Senator Dunleavy  surmised that  the fee  would pay  for the                                                                    
extra position.  Ms. Dowling agreed,  and stressed  that the                                                                    
fee must pay for it.                                                                                                            
                                                                                                                                
Senator  Dunleavy   wondered  if   the  position   would  be                                                                    
eliminated,  if  the fees  were  not  able  to pay  for  the                                                                    
position. Ms. Dowling deferred to Mr. Habegar.                                                                                  
                                                                                                                                
DON  HABEGAR, DIRECTOR,  DIVISION OF  CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY    AND   ECONOMIC    DEVELOPMENT   (DCCED)    (via                                                                    
teleconference),  replied  that  there was  a  mechanism  by                                                                    
statute  whereby   a  board's  revenue  and   expenses  were                                                                    
annually  reviewed.  He  added  that  every  two  years  the                                                                    
professional  licensing groups  renewed  their licenses.  He                                                                    
stressed that  the annual and  biannual reviews  allowed the                                                                    
division the  ability to adjust  fees according  to statute;                                                                    
and   could  increase   or  decrease   fees  based   on  the                                                                    
equilibrium between revenues and expenses.                                                                                      
                                                                                                                                
Senator Dunleavy  surmised that  the license fees  would pay                                                                    
for  the  new  position.  Mr.  Habeger  responded  that  the                                                                    
license fees would pay for the position.                                                                                        
                                                                                                                                
9:16:30 AM                                                                                                                    
                                                                                                                                
Senator Dunleavy asked if the  position would be eliminated,                                                                    
if the license fees were not  available to cover the cost of                                                                    
the  position.  Mr.  Habeger   responded  that  the  statute                                                                    
required  the   division  to  collect  revenues   that  were                                                                    
approximately equal  to the fee;  however there may  be less                                                                    
revenue,  which would  cause a  fee  adjustment to  backfill                                                                    
unanticipated  cost.   He  stressed   that  the   fees  were                                                                    
collected two years in advance of expenses.                                                                                     
                                                                                                                                
Senator  Dunleavy   remarked  that  he  was   interested  in                                                                    
monitoring the growth of the operating budget.                                                                                  
                                                                                                                                
Senator   Bishop   wondered   if  the   revenue   adjustment                                                                    
requirement  was  written  in  statute  or  regulation.  Mr.                                                                    
Habeger  responded  that  the   statute  required  DCCED  to                                                                    
collect  revenues   that  approximately   equaled  expenses,                                                                    
followed by  adjusting the fees  through the  regulatory the                                                                    
process. He  stated that there  was an analysis;  followed a                                                                    
presentation to  the board; the  board gives  their approval                                                                    
or feedback;  the regulatory package  is released,  and open                                                                    
to comments; resulting in adjustments or adoption.                                                                              
                                                                                                                                
Senator  Bishop noted  an increase  in the  workload by  116                                                                    
cases, and  wondered if  there were  more fraud  cases since                                                                    
the onset of the recession.  Mr. Habeger replied that he was                                                                    
unsure of  the types of cases  in review, and deferred  to a                                                                    
board member to reply to that inquiry.                                                                                          
                                                                                                                                
Senator  Bishop agreed  to  receive a  response  at a  later                                                                    
date.                                                                                                                           
                                                                                                                                
HARLEY     HIGHTOWER,      ARCHITECT,     ANCHORAGE     (via                                                                    
teleconference),  explained that  the board  was very  large                                                                    
and  complex; and  stressed  that it  was  difficult for  an                                                                    
investigator  to  keep  current  on  all  the  statutes  and                                                                    
regulations.  He  stated  that  he  had  been  a  practicing                                                                    
architect  since  1974.  He  specifically  stated  that  the                                                                    
registration fee was very reasonable.                                                                                           
                                                                                                                                
9:21:05 AM                                                                                                                    
                                                                                                                                
COLIN MAYNARD,  CIVIL ENGINEER,  AELS BOARD,  ANCHORAGE (via                                                                    
teleconference), testified  in support of SB  16. He pointed                                                                    
out that there were  currently 15 engineering licenses which                                                                    
included  landscape   architects  and  land   surveyors.  He                                                                    
explained that there were roughly  2.5 investigators for the                                                                    
board  four  years prior,  but  the  investigators were  now                                                                    
shared between six different boards.  He stressed that there                                                                    
were so many cases, so  the investigations were difficult to                                                                    
complete in  a timely manner.  He stressed that SB  16 would                                                                    
provide  a more  even investigation  and enforcement  of the                                                                    
licensing  laws. He  remarked that  the fees  fluctuate from                                                                    
year to  year, and stressed that  oil money was not  used to                                                                    
support the board.                                                                                                              
                                                                                                                                
JANET   M.  MATHESON,   ARCHITECT,  AMERICAN   INSTITUTE  OF                                                                    
ARCHITECTS,  FAIRBANKS  (via teleconference),  testified  in                                                                    
support  of SB  16. She  stressed that  the bill  provided a                                                                    
necessary  change to  enforce professional  practice in  the                                                                    
state  for public  safety  reasons,  because the  geographic                                                                    
disparity  of  enforcement   was  currently  difficult.  She                                                                    
reiterated that  the change would be  funded by professional                                                                    
licensing fees.                                                                                                                 
                                                                                                                                
DALE NELSON,  CIVIL ENGINEER,  CHAIR OF  ALASKA PROFESSIONAL                                                                    
DESIGN   COUNCIL   LEGISLATIVE    COMMITTEE,   PALMER   (via                                                                    
teleconference),  testified   in  support   of  SB   16.  He                                                                    
explained  that  the   Alaska  Professional  Design  Council                                                                    
(APDC)   represented  many   different  types   of  licensed                                                                    
professions. He remarked  that details of the  bill had been                                                                    
published in the APDC newsletter,  and presented to the APDC                                                                    
Legislative Committee.  He stressed  that APDC  had received                                                                    
only  positive responses  to the  proposals outlined  in the                                                                    
bill.  He  stated  that  he  had  been  a  practicing  civil                                                                    
engineer   since  1973,   and  had   personally  experienced                                                                    
fluctuating licensing fees.                                                                                                     
                                                                                                                                
9:26:49 AM                                                                                                                    
                                                                                                                                
Senator  Bishop wondered  if the  proposed  position was  an                                                                    
exempt  position.  Ms.  Dowling   deferred  to  Mr.  Habeger                                                                    
responded that the position was not an exempt position.                                                                         
                                                                                                                                
Vice-Chair Fairclough  queried who would be  responsible for                                                                    
the  supervising responsibility  of  the  secretary and  the                                                                    
investigator. She  noted that  the line  of command  for the                                                                    
investigator was placed with the  board, and wondered if the                                                                    
board  would  conduct  an  annual  performance  review.  Mr.                                                                    
Habeger  responded that  there  was administrative  activity                                                                    
with  human resource  support and  evaluations. He  stressed                                                                    
that the  division had  the ability  to discipline,  but the                                                                    
board was  focused on directing where  investigations should                                                                    
occur in the state.                                                                                                             
                                                                                                                                
Vice-Chair   Fairclough  stressed   that  the   fiscal  note                                                                    
reflected  a range  18  position  to conduct  investigations                                                                    
into alleged  violations, and would be  directly responsible                                                                    
and  accountable to  the board.  She wondered  if the  board                                                                    
would be  responsible for  performance reviews.  Mr. Habeger                                                                    
replied that  the board  had an  annual review  process that                                                                    
was presented  to the division,  and was used  as additional                                                                    
guidance.                                                                                                                       
                                                                                                                                
Vice-Chair  Fairclough  wondered  if  the  secretary  was  a                                                                    
shared position.  Mr. Habeger  responded that  the secretary                                                                    
position was dedicated to the board.                                                                                            
                                                                                                                                
Vice-Chair  Fairclough  surmised  that there  would  be  two                                                                    
dedicated positions. Mr. Habeger  agreed that there would be                                                                    
two dedicated positions, if the bill were passed.                                                                               
                                                                                                                                
9:30:08 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough   MOVED  to  REPORT  SB   16  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SB  16  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation and  with a new  fiscal impact note  from the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
SENATE BILL NO. 23                                                                                                            
                                                                                                                                
     "An Act  relating to  development project  financing by                                                                    
     the   Alaska   Industrial    Development   and   Export                                                                    
     Authority; relating  to the  dividends from  the Alaska                                                                    
     Industrial  and   Export  Authority;   authorizing  the                                                                    
     Alaska Industrial  Development and Export  Authority to                                                                    
     provide  financing  and  issue bonds  for  a  liquefied                                                                    
     natural   gas  production   system   and  natural   gas                                                                    
     distribution  system; and  providing  for an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:31:17 AM                                                                                                                    
                                                                                                                                
SARAH   FISHER-GOAD,  EXECUTIVE   DIRECTOR,  ALASKA   ENERGY                                                                    
AUTHORITY,  DEPARTMENT OF  COMMERCE, COMMUNITY  AND ECONOMIC                                                                    
DEVELOPMENT, introduced herself.                                                                                                
                                                                                                                                
TED   LEONARD,   EXECUTIVE   DIRECTOR,   ALASKA   INDUSTRIAL                                                                    
DEVELOPMENT AND EXPORT AUTHORITY, introduced himself.                                                                           
                                                                                                                                
Ms. Fisher-Goad explained that there  was new information in                                                                    
response to questions that were  offered the week prior. She                                                                    
pointed  out that  the fiscal  notes were  recently revised.                                                                    
One  fiscal note  was in  respect to  the Alaska  Industrial                                                                    
Development  and Export  Authority  (AIDEA) operations.  She                                                                    
noted  that  the original  fiscal  note  showed revenues  to                                                                    
AIDEA, but  it was determined  that the revenue  should show                                                                    
revenue to the  State of Alaska. The new  fiscal note showed                                                                    
revenues to  the State of  Alaska through  dividend payments                                                                    
from AIDEA. She  pointed out the two-year  lag, with respect                                                                    
to how the AIDEA dividend  was calculated. She looked at the                                                                    
comprehensive spreadsheet  that was  attached to  the fiscal                                                                    
note, which  showed the various  pieces of  the legislation;                                                                    
the  interior   energy  plan;  the  other   aspects  of  the                                                                    
legislation  that were  independent of  the interior  energy                                                                    
plan;  and  showed a  comprehensive  look  at the  different                                                                    
aspects  of   the  legislation  and  other   issues  in  the                                                                    
operating and capital budgets. She  addressed the new fiscal                                                                    
note  which   showed  the  FY   14  governor's   request  to                                                                    
capitalize  the Sustainable  Energy Transmission  and Supply                                                                    
Development  Fund (SETS).  She  concluded  that both  fiscal                                                                    
notes  reflected the  $50  million to  AIDEA  for the  power                                                                    
plant.                                                                                                                          
                                                                                                                                
9:33:55 AM                                                                                                                    
                                                                                                                                
DAVID  MESSIER,  TANANA  CHIEFS CONFERENCE,  FAIRBANKS  (via                                                                    
teleconference),  spoke in  support  of SB  23. He  remarked                                                                    
that the total  economic effect of Natural Gas  on the rural                                                                    
communities was unclear;  but the hub would  result in lower                                                                    
energy costs  in Fairbanks and the  surrounding communities.                                                                    
He  pointed  out that  roughly  half  of the  Tanana  Chiefs                                                                    
Conference  members lived  in and  around Fairbanks,  and he                                                                    
believed that the  project would have a  positive benefit on                                                                    
the  local  economy. He  remarked  that  access to  low-cost                                                                    
energy   had  led   to  increased   economic  activity   and                                                                    
opportunity, and  believed that access to  lower cost energy                                                                    
in  Fairbanks would  produce  similar  results. He  stressed                                                                    
that  the legislation  would only  augment, but  not replace                                                                    
other alternative energy and weatherization funding.                                                                            
                                                                                                                                
9:36:47 AM                                                                                                                    
                                                                                                                                
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
explained that the analysis was  a way of separating the gas                                                                    
project from  other impacts  of the  fiscal note.  He stated                                                                    
that  the  fiscal  notes included  use  of  other  financing                                                                    
mechanisms, so  the analysis  looked at  the gas  project in                                                                    
isolation  to  compare the  cost  to  the state  versus  the                                                                    
benefits  to  consumers.  He  pointed out  the  top  of  the                                                                    
analysis, which  was $50  million in  cash from  the general                                                                    
fund;  $30 million  in tax  credits; and  $125 million  from                                                                    
additional state expenditures.  The total state contribution                                                                    
to  the legislation  was $205  million. He  stated that  the                                                                    
money could earn $8.2 million  at 4 percent earnings, if the                                                                    
$205  million were  not  spent. He  stressed  that the  $8.2                                                                    
million  loss  in  revenue  was  the  opportunity  cost.  He                                                                    
pointed out that the $125 million  in the SETS fund would be                                                                    
loaned  by AIDEA  to the  participants in  the project,  and                                                                    
approximately 3  percent interest  that would  generate $3.5                                                                    
million interest earnings  of which AIDEA could  pay back to                                                                    
the state in  dividends. He looked at the  7800 customers of                                                                    
AIDEA that would save an average  of about $3000 per year in                                                                    
fuel,  giving   a  customer  benefit  of   approximately  $3                                                                    
million,  resulting in  a benefit-cost  ratio  of $3.50.  He                                                                    
remarked   that   more  sophisticated   benefit-cost   ratio                                                                    
analysis was required for past  energy projects, and many of                                                                    
those  projects resulted  in a  benefit-cost ratio  that was                                                                    
less  than one  dollar.  He furthered  that consumers  would                                                                    
incur some costs,  because they needed to pay  to convert to                                                                    
a  natural gas  system. He  pointed out  that if  a consumer                                                                    
borrowed a 4  percent to pay for a $10,000  system, the loan                                                                    
would cost $1200 a year over  ten years. He stressed that he                                                                    
did  not have  a position  on the  bill, but  he was  merely                                                                    
sharing his analysis.  He pointed out that  the analysis did                                                                    
not  include   secondary  impacts   like  propane,   or  the                                                                    
potential for the  gas to be used by the  utilities to lower                                                                    
the cost of electricity.                                                                                                        
                                                                                                                                
9:42:22 AM                                                                                                                    
                                                                                                                                
Senator Olson wondered if there  the propane availability in                                                                    
rural  communities  would  materialize. Mr.  Teal  responded                                                                    
that the question was beyond his level of expertise.                                                                            
                                                                                                                                
Senator  Olson specifically  queried the  cost-benefit ratio                                                                    
to  the rural  communities. Mr.  Fisher-Goad responded  that                                                                    
AIDEA  was examining  that issue  through  the Rural  Energy                                                                    
Program. She pointed  out that the AEA intended  to ensure a                                                                    
positive  impact wherever  propane would  be available.  She                                                                    
specifically remarked that the  Northwest Arctic Borough had                                                                    
worked extensively  on ensuring that propane  had a positive                                                                    
impact  on rural  communities for  consumers. She  furthered                                                                    
that liquid natural gas (LNG)  should also be made available                                                                    
to the rural communities.                                                                                                       
                                                                                                                                
Senator Olson wondered if there  was input from the refiners                                                                    
in  Fairbanks regarding  LNG. Ms.  Fisher-Goad replied  that                                                                    
there AIDEA had conversations  with LNG refiners. She stated                                                                    
that the  Golden Valley Electric Association  in Flint Hills                                                                    
had partnered to potentially develop  the mechanism that the                                                                    
bill would  contain. She furthered that  the association was                                                                    
no longer  a partner as  a project proponent, but  felt that                                                                    
Flint  Hills  was expected  to  be  a viable  customer.  She                                                                    
stressed  that the  LNG availability  to  rural areas  would                                                                    
benefit Flint  Hills' operational costs. She  added that the                                                                    
LNG proposal  was a part  of the due diligence  process that                                                                    
the AIDEA technical team was  examining to ensure that there                                                                    
would be customers to fulfill the industrial load.                                                                              
                                                                                                                                
9:48:13 AM                                                                                                                    
                                                                                                                                
Senator  Olson  wondered what  efforts  were  being made  to                                                                    
ensure that the refineries  remained viable. Ms. Fisher-Goad                                                                    
replied  that this  issue was  currently under  examination.                                                                    
She  pointed out  that  the  high cost  of  diesel fuel  had                                                                    
eroded  the market  share and  customers. She  stressed that                                                                    
the  purpose of  SB  23  was to  impact  as  many people  as                                                                    
possible. She felt  that the alternative-doing nothing-would                                                                    
impact the  overall economics in  Alaska, including  the LNG                                                                    
refineries and customers.                                                                                                       
                                                                                                                                
Senator  Olson  specifically  looked   at  the  heating  oil                                                                    
distributors,  and  wondered  how the  administration  would                                                                    
deal with  out of  work, skilled employees  being unemployed                                                                    
due  to a  competitive  product.  Ms. Fisher-Goad  responded                                                                    
that  the  package addressed  the  operational  cost of  the                                                                    
refiners. She stressed that the  intention of the refiner to                                                                    
be a  customer would  lower their costs.  She felt  that the                                                                    
erosion of the  heating oil industry in  interior Alaska was                                                                    
a concern, regardless of LNG availability.                                                                                      
                                                                                                                                
9:52:17 AM                                                                                                                    
                                                                                                                                
Senator Olson  stressed that  he was  not opposed  to making                                                                    
energy prices  more economical in interior  Alaska, but felt                                                                    
that there  were many  people who could  not have  access to                                                                    
the LNG. He wondered if  there was a consideration for those                                                                    
individuals and  businesses that  could not access  LNG, and                                                                    
would  potentially  suffer  as  a  result.  Ms.  Fisher-Goad                                                                    
responded   that    legislation   addressed    the   current                                                                    
individuals and businesses that did  not have access to LNG.                                                                    
She  stated that  the rural  energy  programs would  address                                                                    
those that could not have access to lower heating options.                                                                      
                                                                                                                                
Senator  Olson commented  that he  had not  seen any  effort                                                                    
form  the administration  to mitigate  the circumstances  of                                                                    
the unintended consequences of the bill.                                                                                        
                                                                                                                                
BOB  SHEFCHIK, CHAIR,  FAIRBANKS  ENERGY COUNCIL,  FAIRBANKS                                                                    
(via   teleconference),   stated   that  the   Flint   Hills                                                                    
refinery's main product  was jet fuel. He  stressed that the                                                                    
bill  would  benefit  them,  more   than  harming  them.  He                                                                    
explained   that   the   Petro  Star   refinery   was   more                                                                    
complicated, because  they provided jet fuel  to Eielson Air                                                                    
Force  Base   and  heating  fuel   in  Fairbanks;   but  the                                                                    
availability  of LNG  should assist  the economics  of their                                                                    
refineries. He  shared that Petro  Star had not  indicated a                                                                    
position saying that the bill  would harm their business. He                                                                    
shared that the  gas utility was currently  working toward a                                                                    
wide  LNG  distribution  network.   He  concluded  that  the                                                                    
perception  that  there  would   be  a  negative  impact  on                                                                    
delivery jobs  and distribution was  accurate, but  would be                                                                    
offset by  a large number  of trucking jobs  bringing trucks                                                                    
to and from town.                                                                                                               
                                                                                                                                
9:57:44 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:59:37 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair   Fairclough  wondered   how  the   dividend  was                                                                    
affected inside  the bill, and  would change  in description                                                                    
net income. Ms. Fisher-Goad replied  that it was a technical                                                                    
change, and the dividend calculation would not change.                                                                          
                                                                                                                                
Mr.   Leonard   explained   reiterated   Ms.   Fisher-Goad's                                                                    
statement.                                                                                                                      
                                                                                                                                
Vice-Chair   Fairclough   commented   that  there   was   no                                                                    
conversation    regarding   capital    costs   related    to                                                                    
transportation   costs,   and    wondered   if   there   was                                                                    
anticipation  to increase  capital maintenance  of the  road                                                                    
from  the  North  Slope.  Mr.  Leonard  responded  that  the                                                                    
initial  projection was  approximately 20  to 25  trucks per                                                                    
day,  and the  capitalization  was built  into  cost of  the                                                                    
trucks.  He   furthered  that  there   was  work   with  the                                                                    
Department   of   Transportation   and   Public   Facilities                                                                    
(DOT/PF), and DOT/PF  felt that the proposal  would not have                                                                    
a significant impact on the capital.                                                                                            
                                                                                                                                
Senator  Bishop  shared  that   he  had  conversations  with                                                                    
distributors that  felt that LNG could  "save Fairbanks." He                                                                    
stressed  that many  distributors  had large  sums on  their                                                                    
books  that had  still  not been  collected from  consumers,                                                                    
because the consumers  were unable to pay the  cost of fuel.                                                                    
He wondered if there would  be due-diligence to determine if                                                                    
the bill  was economical. Mr. Leonard  agreed, and furthered                                                                    
that  it  was important  for  the  bill to  be  economically                                                                    
viable to  the community  and would  pay for  the investment                                                                    
from AIDEA.                                                                                                                     
                                                                                                                                
10:06:56 AM                                                                                                                   
                                                                                                                                
Senator Bishop  commented that one  of his  constituents had                                                                    
and $8000 a week fuel  bill, others were desperate for lower                                                                    
heating costs.                                                                                                                  
                                                                                                                                
Vice-Chair Fairclough MOVED to REPORT  CS SB 23 (FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SB  23  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and with  two new  fiscal impact  notes from                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
SENATE BILL NO. 21                                                                                                            
                                                                                                                                
     "An  Act relating  to  appropriations  from taxes  paid                                                                    
     under the  Alaska Net Income  Tax Act; relating  to the                                                                    
     oil and gas  production tax rate; relating  to gas used                                                                    
     in the state; relating  to monthly installment payments                                                                    
     of the oil and gas  production tax; relating to oil and                                                                    
     gas  production  tax  credits for  certain  losses  and                                                                    
     expenditures; relating  to oil  and gas  production tax                                                                    
     credit  certificates; relating  to nontransferable  tax                                                                    
     credits based  on production; relating  to the  oil and                                                                    
     gas tax  credit fund; relating to  annual statements by                                                                    
     producers and explorers;  relating to the determination                                                                    
     of annual  oil and gas production  tax values including                                                                    
     adjustments  based on  a percentage  of gross  value at                                                                    
     the  point   of  production  from  certain   leases  or                                                                    
     properties;    making   conforming    amendments;   and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
SB 21 was SCHEDULED but not HEARD.                                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:11:16 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:11 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB 16 - AELS Board Position Paper on Investigator - January 18, 2013 - Copy.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Letter of Support - AIA.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Letter of Support - Burdett Lent.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Letter of Support - Harley Hightower.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Letter of Support - Richard Heieren.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Sectional Analysis.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 - Sponsor Statment 012913.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 DCCED Senate LC Follow up 021113.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
3 6 13 SB23 Gas in FBX.pdf SFIN 3/6/2013 9:00:00 AM
SB 23
SB023CS(LC)-DCCED-AIDEA-03-05-13.pdf SFIN 3/6/2013 9:00:00 AM
SB 23
SB023CS(LC)-DCCED-AIDEA-03-05-13B.pdf SFIN 3/6/2013 9:00:00 AM
SB 23
SB016-DCCED-CBPL-03-06-13.pdf SFIN 3/6/2013 9:00:00 AM
SB 16
SB 16 Senate FIN Follow up 03-07-13.pdf SFIN 3/6/2013 9:00:00 AM
SB 16