Legislature(1993 - 1994)
04/15/1993 07:07 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 15, 1993
7:07 p.m.
TAPES
SFC-93, #56, Side 1 (210-end)
SFC-93, #56, Side 2 (end-315)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 8:40 p.m.
PRESENT
In addition to Co-chairs Pearce and Frank, Senators Kelly,
Kerttula, Rieger, and Sharp were present. Senator Kerttula
was not present.
ALSO ATTENDING: Senators Rick Halford and Robin Taylor, Cam
Toohey, staff to Senator Sharp, prime sponsor of SB 106 and
SB 126; Brent Petrie, Manager/Planning & Project
Development, Alaska Energy Authority; Mark Hickey, Contract
Lobbyist for the city of King Cove; David P. Hutchens,
Alaska Rural Electric Cooperative Association; Dave
Tonkovich, Fiscal Analyst, Legislative Finance Division; and
aides to committee members.
SUMMARY INFORMATION
SB 106: An Act authorizing power transmission
interties between Anchorage and the Kenai
Peninsula, between Healy and Fairbanks, and
between the Swan Lake and Tyee Lake
hydroelectric projects, and approving the
design and construction costs of the
interties; and providing for an effective
date.
The committee had adopted CSSB 106(FIN) work
draft and amended it in a prior meeting.
Brent Petrie, Manager/Planning & Project
Development, AEA, spoke to the bill and the
three fiscal notes. CSSB 106(FIN) was
REPORTED OUT of committee as amended with a
"do pass" with zero fiscal notes for DC&ED
component #965 and #373, and a fiscal note in
the amount of $447.0 for DC&ED component
#1232. Co-chairs Pearce and Frank, Senators
Jacko, Kelly, and Sharp signed a "do pass."
Senator Rieger signed a "no recommendation."
Senator Kerttula was absent from the meeting
and did not sign.
SB 126: An Act making special appropriations for
design and construction of power transmission
interties between Anchorage and the Kenai
Peninsula, between Healy and Fairbanks, and
between the Swan Lake and Tyee Lake
hydroelectric projects; and providing for an
effective date.
The committee adopted CSSB 126 (FIN) work
draft "B" and amended it. Testimony was
heard by Brent Petrie, Manager /Planning &
Project Development, AEA, and Mark Hickey,
Contract Lobbyist for the city of King Cove.
Discussion was had by Co-chairs Pearce,
Frank, and Senators Rieger, and Sharp
regarding amendments 1 and 2. CSSB 126(FIN)
was REPORTED OUT of committee as amended with
a "do pass". Co-chairs Pearce and Frank,
Senators Jacko, Kelly, and Sharp signed a "do
pass." Senator Rieger signed a "no
recommendation." Senator Kerttula was absent
from the meeting and did not sign.
CSSB 129(STA): An Act relating to state procurement.
The committee adopted CSSB 129(FIN) work
draft "K" and amended it. CSSB 129(FIN) was
REPORTED OUT of committee as amended with a
"do pass" with zero fiscal notes for the
Department of Administration and the
Department of Transportation & Public
Facilities. Co-chairs Pearce and Frank,
Senators Jacko, Kelly, Rieger, and Sharp
signed a "do pass." Senator Kerttula was
absent from the meeting and did not sign.
SB 163: An Act relating to power cost equalization;
and providing for an effective date.
The committee adopted CSSB 163(FIN) work
draft "J" and amended it to exclude Section 1
and any reference to Palmer, Homer and
Seward. Testimony was heard from David P.
Hutchens, Alaska Rural Electric Cooperative
Association, and Brent Petrie,
Manager/Planning & Project Development,
Alaska Energy Authority. CSSB 163(FIN) was
REPORTED OUT of committee as amended with a
"do pass" with a fiscal note for DC&ED in the
amount of $600.0. Co-chairs Pearce and
Frank, Senators Jacko, Kelly, Rieger, and
Sharp signed a "do pass." Senator Kerttula
was absent from the meeting and did not sign.
These bills were scheduled but not heard:
SB 59 - SCHOOL CONSTRUCTION & MAINTENANCE GRANTS
SB 60 - APPROP:SCHOOL CONSTRUCTION GRANT FUND
SB 76 - CHARITABLE GAMING RESTRICTIONS
SB 88 - CAPITAL PROJECT GRANTS
SB 135 - APPRO: AK RAILROAD EXTENSION STUDY
SB 148 - ALASKA RAILROAD CORPORATION
SB 180 - SCHOOL CONSTRUCTION DEBT REIMBURSEMENT
SB 181 - SCHOOL CONSTRUCTION GRANTS
HB 64 - ANTI-STALKING LAW
HB 96 - EXTEND ALCOHOL BEVERAGE CONTROL BOARD
SENATE BILL NO. 106:
An Act authorizing power transmission interties between
Anchorage and the Kenai Peninsula, between Healy and
Fairbanks, and between the Swan Lake and Tyee Lake
hydroelectric projects, and approving the design and
construction costs of the interties; and providing for
an effective date.
CO-CHAIR DRUE PEARCE announced that the CSSB 106(FIN) had
been adopted in a prior meeting, and invited Brent Petrie,
Manager /Planning & Project Development, Alaska Energy
Authority, to join the committee members at the table to
speak to the bill and the three fiscal notes.
BRENT PETRIE said that CSSB 106(FIN) was complex and
affected three components of the budget. He said the PCE
administration component would be reduced by about $4M over
a twenty-year period by the bill, and the PCE grant line
from the general fund reduced allocations by $272M over the
same twenty year period. He explained that funding sources
would be changed from the general fund to the new revolving
fund. The third component is the agency operations
component and in FY 94, the agency would need an
appropriation of $447.0 to start the interty work. That
money would come back to the agency to initiate the
negotiation with the utilities for design, construction, and
financing for the projects.
Senator Sharp MOVED for passage of CSSB 106(FIN) from
committee with individual recommendations. No objections
being heard, CSSB 106(FIN) was REPORTED OUT of committee
with a "do pass," and with three fiscal notes for the
Department of Commerce & Economic Development - two zero and
one for $447.0. Co-chairs Pearce and Frank, Senators Kelly,
Sharp, and Jacko signed "do pass." Senator Rieger signed
"no recommendation." Senator Kerttula was absent from the
meeting and did not sign.
SENATE BILL NO. 126:
An Act making special appropriations for design and
construction of power transmission interties between
Anchorage and the Kenai Peninsula, between Healy and
Fairbanks, and between the Swan Lake and Tyee Lake
hydroelectric projects; and providing for an effective
date.
Co-chair Pearce announced that CSSB 126(FIN) "B" work draft
was before the committee. Senator Sharp MOVED for adoption
of the "B" version of CSSB 126(FIN). Hearing no objections,
IT WAS SO ORDERED.
Senator Sharp MOVED for adoption of amendment 1 deleting
Sec. 8 (copy on file). Co-chair Pearce OBJECTED for
discussion purposes. Senator Sharp said that the CSSB
126(FIN) assumed an additional $9,300.0 was needed to fund
the new revolving fund so that it could accomplish the
intent of $1.1 that stated as far as the financing over the
twenty year period. That appropriation from the general
fund is no longer required. Co-chair Pearce REMOVED her
objection. Hearing no other objections, amendment 1 was
ADOPTED.
Senator Sharp spoke to each of the sections of CSSB
126(FIN).
Co-chair Pearce announced that amendment 2 (copy on file)
was before the committee and invited Cam Toohey, staff to
Senator Sharp, prime sponsor of SB 126 and Brent Petrie,
Manager/Planning & Project Development, Alaska Energy
Authority to join the committee at the table to speak to
amendment 2. Co-chair Pearce spoke to amendment 2 and said
that the amount that was in the Governor's request to the
legislature had been reduced by about 40 percent.
Senator Kelly OBJECTED, and asked for an explanation of the
last two sections on page of 2 of amendment 2. BRENT PETRIE
said that the requests in the last two sections of amendment
2 were prior requests made under the normal budget process
and had been approved by the Governor's office and were to
be requested by AEA as program receipt authority. In the
case of the first section, AEA has received monies from
utilities and other parties over time to blend with other
monies that have been appropriated for AEA to complete a
project. He explained that sometimes it is necessary to
cost-share a project. The way the revolving fund
legislation is written if money came into the fund, AEA can
receive it but the legislature must authorize AEA to expend
it. This section gives the authority to expend such funds.
In answer to Co-chair Pearce, Mr. Petrie said that it was
standard practice that every couple of years, this authority
was requested from the legislature.
Senator Rieger asked if the $4.3M was appropriated from the
general fund. He also asked if the numbers were in the
Governor's capital budget request. Co-chair Pearce answered
affirmatively that higher numbers were in the Governor's
capital request. Senator Rieger asked if those requests
were appropriated to the Alaska Energy Revolving fund in the
Governor's request. Mr. Petrie said that the original
capital budget requested a significant amount of those funds
come from the power development revolving loan fund which
was reporting of quote receipts. With CSSB 126, it was felt
that about $2.1M could come from the revolving fund and the
other amounts although worthy projects, would have to come
from the general fund as a supplement to the revolving fund.
Senator Rieger said that a lot of money was put into the
energy authority and it looked as if even more funds were
going into the energy equation. Mr. Petrie agreed that
these amounts would be general funds going into the
revolving fund. Mr. Petrie said that he and Ron Garzini,
Executive Director, AEA, were trying to come up with some
kind of transitional effort during the first year if this
legislation passes. Senator Rieger said that there had not
been enough time to sort through what the AEA has done with
their own money. Senator Rieger questioned the wisdom of
transferring a funding source to the general fund when the
general fund is already under so much pressure for capital.
It would seem to put more burden on the general fund.
Senator Sharp felt that in future years everyone would be
funded out of the new account that is being set up and these
amounts requested by AEA was originally $12M. The amount
had now been reduced to $4M for the transition.
Mr. Petrie said that in an earlier version of SB 126, an
estimated $10M from the general fund might be required to
make the revolving fund work. This is substantially less
than that amount. Discussion followed between Senator Kelly
and Co-chair Pearce regarding the additional projects added
to SB 126.
Senator Kelly asked who was going to do the bulk fuel system
upgrade -- the Coast Guard, DEC, or DC&RA. He asked if it
was an AEA project. Mr. Petrie said that about two years
ago regulations mandated that fuel deliveries could not be
made to a number of rural communities and a bulk fuel
assessment was initiated through the Energy Authority for
many rural communities. Since last year funds were
appropriated for AEA to do repairs and upgrades for these
systems, a part of small diesel systems in villages. It is
not something new that AEA is doing but felt that it should
be elevated in importance. DEC is involved in the
regulatory because of the statutory arrangement - they
regulate the larger tanks. The Coast Guard is involved in
regulating any fuel facility where fuel deliveries come by
vessel. The AEA has no regulatory authority but they have
some technical abilities to make the corrections that are
necessary.
Senator Rieger asked if the $4.3M would be appropriated into
the Alaska Energy Revolving Fund and appropriated back out
to the projects as outlined, basically capital
appropriations except that the funding source has changed.
Mr. Petrie said that the money would be allocated and money
would drawn from those funds for those projects up to the
maximum limit authorized by the legislation. The Governor's
budget there were over $3.5M in general fund requests for
capital projects for the AEA.
Co-chair Pearce invited Mark Hickey, Contract Lobbyist for
the city of King Cove, to join the committee at the table.
Mark Hickey said that $250.0 was not adequate to complete
the King Cove hydroelectric project, and that $500.0 was
needed to complete the budget which would bring the state's
contribution to $3M, half of which was funded last year.
That amount is being matched by approximately the same
amount, $2.7M (a loan of $2M, $250.0 cash contributions from
the Aleutians East Borough and $450.0 cash contribution from
the city of King Cove). $500,000 is the remaining amount
needed. He said that $3M was the amount that the state
expected to spend when the study was first done for this
facility.
Co-chair Pearce announced that CSSB 126(FIN) would be held
and brought up again later in the meeting.
Note: The following section for CSSB 126(FIN) was moved so
that the minutes for CSSB 126(FIN) are in the one place.
Senator Sharp MOVED to amend amendment 2 by reducing (1)
Rural Power Systems Upgrade to $650,000, (6) Alternative and
Applied Energy Technology Development to $350,000, and
increase (7) King Cove Hydroelectric Project to $500,000.
Senator Kelly withdrew his objection to the amended
amendment. No other objections being heard, amendment 2 was
ADOPTED.
Senator Sharp MOVED for passage of CSSB 126(FIN) as amended
from committee with individual recommendations. No
objections being heard, CSSB 126(FIN) was REPORTED OUT of
committee with a "do pass". Co-chairs Pearce and Frank,
Senators Kelly, Sharp, and Jacko signed "do pass." Senator
Rieger signed "no recommendation." Senator Kerttula was not
present at the meeting and did not sign.
CS FOR SENATE BILL NO. 129(STA):
An Act relating to state procurement.
Co-chair Pearce announced that CSSB 129(FIN) work draft "K"
was before the committee. Senator Frank MOVED for adoption
of the "K" version of CSSB 129(FIN). Hearing no objections,
IT WAS SO ORDERED.
Co-chair Frank MOVED for adoption of amendment 3 revised
(copy on file). No objections being raised, amendment 3
revised was ADOPTED.
Co-chair Frank MOVED for passage of CSSB 129(FIN) as amended
from committee with individual recommendations. No
objections being heard, CSSB 129(FIN) was REPORTED OUT of
committee with a "do pass," and two zero fiscal notes for
the Department of Administration and the Department of
Transportation and Public Facilities. Co-chairs Pearce and
Frank, Senators Kelly, Sharp, Rieger, and Jacko signed "do
pass." Senator Kerttula was not present at the meeting and
did not sign.
Recess 7:40pm
Reconvene 8:00pm
Note: The part of this meeting that took place at this time
is incorporated under CSSB 126(FIN) above.
SENATE BILL NO. 163:
An Act relating to power cost equalization; and
providing for an effective date.
Co-chair Pearce announced that CSSB 163(FIN) work draft "J"
was before the committee. She said that there were proposed
amendments to SB 163 that had been added to CSSB 163(FIN).
Section 1 adds Palmer, Homer and Seward. She invited Brent
Petrie, Manager /Planning & Project Development, Alaska
Energy Authority, to join the members at the table and speak
to the bill.
BRENT PETRIE said that Section 1 added Palmer, Homer and
Seward, three additional utilities to the method in which
the base calculation is made for the power cost equalization
program. These utilities represent about 30 percent of the
energy sales in the railbelt. Those utilities that would be
added for the purpose of making a calculation will probably
be Matanuska Electric Assoc., Homer Electric Assoc., and
Seward Electric System.
End SFC-93 #56, Side 1
Begin SFC-93 #56, Side 2
Co-chair Pearce said public schools would be exempt, and
still receive the PCE, but, referring the committee to page
2, line 6 and 7, pointed out that state and federal offices
do not receive a PCE under this legislation.
Senator Kelly asked the net result of adding Palmer, Homer,
and Seward to the bill. Mr. Petrie said that he did not
know the exact amount of the net result but it would raise
the base on which the PCE was calculated because all those
utilities have higher rates than the other utilities in the
railbelt, approximately 11 cents a kilowatt-hour. He felt
it would raise the PCE to about 10 cents per kilowatt-hour.
He recommended that the base remain at 9.82 cents per
kilowatt-hour for this year because he was aware that the
Golden Valley Assoc. had lowered their rates. Senator Jacko
asked why these utilities had been added to the legislation.
Senator Rieger asked for an explanation of the last phrase
on page 2, lines 13 through 16, "less than 52.5 cents per
kilowatt-hour." Mr. Petrie said a utility would not be
reimbursed over 52.5 cents per kilowatt-hour, and would be
reimbursed 95 percent of the eligible costs between 9.82
cents and 52.5 cents per kilowatt-hour.
In answer to Senator Kelly, Co-chair Pearce said that AEA
had requested the addition of Palmer, Homer and Seward
utilities to the legislation. Mr. Petrie answered for the
record that AEA had not requested the addition of those
utilities to the legislation.
DAVID P. HUTCHENS, Alaska Rural Electric Cooperative
Association, said that adding Palmer, Homer and Seward would
have the affect of increasing the average cost for that base
slightly the first year to about 10 cents per kilowatt-hour
based on 1991 year end calculations. He agreed with Mr.
Petrie's recommendation to leave the rate at 9.82 cents the
first year because the following year's calculation would be
very close to the 9.82 cents (since Golden Valley Assoc. had
lowered their rates). In answer to Senator Jacko, Mr.
Hutchens' said that he had not recommended that the three
utilities be added to the legislation.
Mr. Petrie said that when HB 216, Power Cost Equalization,
was dealt with a week ago, a question had been raised
regarding the calculation of the PCE rate. He said he gave
out information regarding the five utilities, including
Anchorage, Fairbanks, and Juneau, that were involved in that
calculation. He said someone had asked him if Palmer was in
the calculation and as a result he gave out the names of the
utilities that were not included, including Palmer, Homer
and Seward. He said that the addition of these three
utilities may have resulted from a misunderstanding from
that discussion but that AEA did not recommend adding those
three communities to the calculation. Discussion was had by
Senator Jacko, Mr. Petrie, Co-chair Pearce and Senator Kelly
regarding the addition of Palmer, Homer and Seward utilities
to the legislation.
Senator Jacko MOVED that CSSB 163(FIN) be amended by
deleting Section 1 on page 1, and deleting the words
"Palmer, Homer, and Seward" from page 2, line 20. No
objections being heard, the amendment was ADOPTED.
Senator Kelly MOVED for passage of CSSB 163(FIN) as amended
from committee with individual recommendations. No
objections being heard, CSSB 163(FIN) was REPORTED OUT of
committee with a "do pass," and a fiscal note for the
Department of Commerce & Economic Development in the amount
of $600.0. Co-chairs Pearce and Frank, Senators Kelly,
Sharp, Rieger, and Jacko signed "do pass." Senator Kerttula
was absent from the meeting and did not sign.
ADJOURNMENT
The meeting was adjourned at approximately 9:25 p.m.
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