Legislature(2001 - 2002)
04/10/2002 09:44 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 10, 2002
9:44 AM
TAPES
SFC-02 # 52, Side A
SFC 02 # 52, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:44 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Loren Leman
Senator Gary Wilken
Senator Donald Olson
Senator Lyman Hoffman
Senator Alan Austerman
Also Attending: SENATOR GENE THERRIAULT; DENNIS POSHARD,
Legislative Liaison/Special Assistant, Department of Transportation
and Public Facilities; RON SOMERVILLE, Resource Consultant, House
and Senate Majority;
Attending via Teleconference: From Anchorage: FRANK DILLON,
Executive Vice President, Alaska Trucking Association; KEITH BAYHA,
Alaska Public Waters Commission
SUMMARY INFORMATION
SB 226-HIGHWAY DESIGN & CONSTRUCTION
The Committee heard from the sponsor, the Department of
Transportation and Public Facilities and the Alaska Trucking
Association. A committee substitute was adopted and the bill moved
from Committee.
SB 219-FED/STATE NAVIGABLE WATERS COMMISSION
The Committee heard from a resource consultant and the Alaska
Public Waters Commission. The bill was held in Committee.
SB 280-WATER/SEWER/WASTE GRANTS TO UTILITIES
The Committee heard from the sponsor. A new fiscal note was adopted
and the bill moved from Committee.
SB 185-PCE AMOUNT & ELIGIBILITY
The Committee adopted an amendment and the bill reported from
Committee.
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 226(TRA)
"An Act requiring certain highway projects to be designed and
constructed so that the highways will adequately serve
anticipated traffic levels for at least the next 30 years; and
providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Donley, sponsor, testified that the bill relates to the
"design life" of a planned road in urban areas, defined by traffic
engineers as the length of time the schematics of the road should
last. He explained this does not apply to the asphalt construction
but rather, for example, how long a left turn lane is operable
before increased traffic blocks the regular lanes. He expressed his
observations of roads in Anchorage and in other communities that
are no longer adequate for the amount of traffic traveling on them.
Co-Chair Donley indicated that federal law requires the geometry of
a major road project built utilizing federal funds must be
sufficient for "at least 20 years". He also learned that federal
law requires a 50-year design life for bridges. He added that
federal requirements for overall planning in metropolitan areas
request a design life of up to 23 years.
Co-Chair Donley, in describing the current situation, suggested
traffic counts could be incorrect and that the method for
determining the counts should be reassessed. He shared that he
questioned the Department of Transportation and Public Facilities
on this matter and was first told that a designed road might not be
built for up to eight years and thus the actual design life is only
12 years, despite initially being designed to last 20 years. He
pointed out however, that once he introduced this legislation, the
Department informed him this was not the case. He surmised that
once construction begins, such issues as right-of-way or problems
with contractors cause the projects to be delayed beyond the
completion date estimated in the design life. He stated the intent
of this legislation is to avoid repeated reconstruction caused by
outdated designs. He spoke of the consequences of three-year delays
on smaller projects costing less than $1 million with a design life
of only ten years.
Co-Chair Donley referenced a letter from the Federal Highway
Administration [copy on file] indicating the agency does not oppose
this legislation and that it would have no impact on federal
funding.
Co-Chair Donley shared that he originally considered legislation to
require the design life of road projects to be 30 years, which he
pointed out is the maximum allowed in federal law. He indicated
the committee substitute proposes different design life
requirements dependant upon the cost of the project. He detailed
that a ten-year design life would be required for projects with a
cost of less than $1 million, a 20-year design life would be
required for project costing between $1 million and $5 million, and
a 25-year design life would be required for projects with a cost of
over $5 million.
Co-Chair Donley suggested extending the design life requirement to
20 years for the projects costing less than $1 million. He
justified this due to constant road construction occurring during
the short construction season in Anchorage for smaller upgrade
projects. He remarked that fewer road projects would be possible,
but that the public would benefit because there would be less need
for upgrades and roads would be fully operational for longer
periods of time.
Senator Ward commented that before this legislation was introduced,
he was unsure why roads did not last longer, because he assumed
such a process already was in place. He opined that roads in other
states operate longer.
Senator Ward assumed there would be some "strain" on smaller
projects and suggested further discussion on the matter.
Co-Chair Donley clarified this bill only applies to road
construction projects located in federally recognized metropolitan
planning areas, which are larger communities. He furthered this
legislation would not apply to locally funded projects, which would
allow communities the option to undertake smaller projects without
these requirements. He informed the Anchorage Metropolitan Area
Transportation Study (AMATS) does not generally undertake projects
of less than $1 million.
Senator Austerman commented that the "economy of scale" must also
be considered. He explained that when spending less than $1 million
on a project, an extensive design time might not be prudent.
Co-Chair Donley replied that Federal Highway Administration
authorities "seem to pretty confident about their 20 year plan
process." He admitted that 25-year design time projects have not
been implemented to date and that it does become more difficult to
accurately predict traffic patterns and traffic load. However, he
pointed out that federally funded bridge construction projects must
have a 50-year design life. He noted that right of way acquisition,
particularly in urban areas, "have become a real major inhibitor to
getting these projects done."
Senator Olson predicted that longer design life stipulations would
require increased consulting efforts and would incur additional
expenses. He also noted that with the construction of a natural gas
pipeline, the population of the State and the subsequent traffic
loads would increase. He asked the anticipated increased design and
planning costs this legislation would impose.
Co-Chair Donley was unsure that design expenses would increase
because the same design life process would occur. He admitted that
project costs would increase because the roads must be designed to
last longer. He reiterated that fewer projects would be possible,
but that the finished roads would last longer. He addressed the
impact of the natural gas pipeline, stating that it is uncertain
whether it would generate a significant influx of people into the
State. He hoped the pipeline construction would be undertaken
utilizing local labor and corporations and benefit the existing
economy.
Senator Hoffman asked if this legislation would apply to the City
and Borough of Juneau.
DENNIS POSHARD, Legislative Liaison/Special Assistant, Department
of Transportation and Public Facilities, answered that Anchorage is
the only community in Alaska with a federally recognized
metropolitan planning area. He qualified that although Fairbanks
and the Mat-Su areas are close to receiving a designation, neither
community has 50,000 residents "within an urbanized area", which is
one criterion.
FRANK DILLON, Executive Vice President, Alaska Trucking
Association, testified via teleconference from Anchorage to thank
Co-Chair Donley for his efforts on this bill. He stressed the need
to address road infrastructure. He intended the road design to be
feasible as long as possible.
Co-Chair Donley proposed an amendment to the proposed committee
substitute to stipulate that all major upgrades and new
construction projects with a cost of under $5 million must have a
design life of 20 years.
Senator Leman objected to the proposed amendment because many
seemingly small projects have a significant cost. He gave as
example of the installation of a stoplight on a secondary road in
Anchorage at a cost of one-half million dollars. Therefore, he was
unsure "we want to tie the hands of planning" for projects in areas
where a 20-year design life is unnecessarily.
Co-Chair Donley stated it is "a close call" and he would defer to
Senator Leman.
Co-Chair Donley moved for adoption of CS SS SB 226, 22-LS0993/B as
a working draft.
Without objection the committee substitute was ADOPTED as a working
draft.
Co-Chair Donley moved "the committee substitute for sponsor
substitute for Senate Bill 226, the Utermohle 4/9/02 version from
Committee with forthcoming zero fiscal notes I believe … with the
fiscal notes that are advanced."
There was no objection and CS SB 226 (FIN) with forthcoming zero
fiscal note from the Department of Transportation and Public
Facilities 4/17/02, MOVED from Committee.
AT EASE 10:08 AM / 10:15 AM
CS FOR SENATE BILL NO. 219(RES)
"An Act establishing and relating to the Joint Federal and
State Navigable Waters Commission for Alaska; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
RON SOMERVILLE, Resource Consultant, House and Senate Majority,
testified to the bill. He referenced the supporting documents
before the members, specifically information from the Department of
Law [copies on file].
Mr. Somerville gave history of the issue beginning at statehood in
1959, when Alaska acquired title to the approximately 60 million
acres of submerged lands in the State. He informed that court
decisions have affirmed this acquisition; however there has been
difficulty in determining what constitutes as navigable waters.
Mr. Somerville listed three issues involved in the determination of
navigable waters, the first being a federal "quiet title Act",
which provides a mechanism by which a state could acquire title to
navigable waters. He stated that the courts have ruled that the
federal defendants in these matters could be involved in
adjudicating a disputed title in which the federal government
claims an interest. However, he qualified that in instances where
the federal government "refuses" to claim an interest, the court
has ruled that the federal government has no jurisdiction in the
matter. He characterized this situation as a "catch-22" because the
State could file a 180-day notice for quiet title to particular
submerged lands and if the federal authorities do no contest the
claim, the courts could refuse to rule on the claim.
Mr. Somerville spoke to the next issue as the navigable criteria.
He explained that in Alaska, as in most states, the courts
primarily determine the navigability on a case-by-case basis
utilizing established criteria. He detailed a case that established
precedent involving an area near Gulkana where the lands in
question are submerged part of the year, but exposed other parts of
the year. He informed that it was determined that the land is
navigable because the waters were used for purposes of commerce at
the time of statehood, whether by raft, canoe or other means.
Mr. Somerville shared that the Alaska Department of Law submitted
to the US Department of the Interior, a list of approximately 200
identified rivers or areas that met the criteria established in the
Gulkana court decision and that should be declared navigable
waters. He stated that it was decided the State would litigate to
obtain the status of navigable waters for three rivers: Black,
Kandig and Nation. After nine years and approximately $1 million in
th
expenses, he stated the federal 9 Circuit Court of Appeals ruled
that two of the rivers are navigable because the federal government
had claimed an interest. However, he pointed out, the court
determined it did not have jurisdiction over making a determination
with regards to the Black River because the federal government had
not claimed an interest in that area.
Mr. Somerville continued with the third issue, which he pointed out
is unique to Alaska, and relates to the obligation of the federal
Bureau of Land Management to "meander" the boundaries of bodies of
water of a certain size and to make navigability determinations. He
stated that prior to 1983, this did not occur and that as a result,
a significant amount of land was conveyed, which the State asserts
are navigable waters and should not have been conveyed. He noted
that a 1983 administrative agreement ordered that a manual survey
by conducted, which was affirmed by the US Congress in 1988.
Mr. Somerville continued that since statehood, 13 rivers have been
affirmed as navigable by federal courts. He noted the approximately
22,000 rivers in the State, which could be disputed for
navigability, and approximately one million lakes and other bodies
of water of a significant size. He calculated the current rate of
determination of navigability is too slow and too expensive.
Mr. Somerville asserted the State must hold title over these
navigable waters in the event the State decides to use, lease or
claim management jurisdiction over the areas.
Mr. Somerville stated the intent of this legislation is to expedite
the identification of navigable and non-navigable water bodies to
allow a certification process by the US Secretary of the Interior
or Congress.
Mr. Somerville addressed the proposed committee substitute, 22-
LS0965\J. He relayed a conversation between Senator Halford and the
US Secretary of the Interior relating to possible administrative
processes that could expedite the identification. As a result of
this information, Mr. Somerville informed that the proposed
committee substitute provides for a joint commission comprised of
State and federal agencies, although it specifies the commission
would exist even if the federal government chose not to
participate. He noted the original version of the bill provides
that the commission would not exist without federal participation.
He surmised the inclusion of federal agencies on the commission
would give the body a higher status and would allow the federal
agencies more input into the determination of navigability.
Senator Austerman asked if a unilateral commission would have the
same authority as a joint commission that included federal agency
participation.
Mr. Somerville replied it would be beneficial to have both federal
and state government involved. He noted this legislation is
patterned after the Federal State Land and Planning Commission that
was created under the Alaska Native Claims Settlement Act (ANCSA).
He stated that even without federal participation, the proposed
commission would compile a list of identified navigable waters for
submission to the US Secretary of the Interior.
Senator Austerman referenced a statement issued by the Alaska
Public Waters Commission on SB 219, Establishing and Relating to
the Navigable Waters Commission for Alaska, [copy on file] and
distributed by Senator Wilken. He noted the statement offers
recommendations and asked the witness to address these.
Mr. Somerville responded that the costs of the Land Use Planning
Commission are considerably higher than the proposed commission, in
part because the mandate of the proposed commission is "much
narrower" than the original commission.
Mr. Somerville spoke to the opportunities to review the proposed
commission's activities and expenses in the future. He surmised
that the cost would be more expensive than the amount proposed in
the accompanying fiscal note. However, he asserted that if the
navigability of only ten rivers were resolved, the financial
benefit would be greater than the current method.
KEITH BAYHA, Alaska Public Waters Commission, testified via
teleconference from Anchorage, to reference the written testimony
he submitted.
Senator Hoffman referenced the first paragraph of the sponsor
statement, which states that the commission would become a reality
only if Congress could provide authorization in federal law. He
asked where this language is contained in the legislation.
Mr. Somerville corrected that the proposed committee substitute
does not contain this language and that such congressional
authorization would not be necessary.
Senator Hoffman next asked if the proposed committee substitute
would only designate those navigable waters that were used for
commercial efforts at the time of statehood.
Mr. Somerville affirmed this is one of the criteria for
establishing navigability.
Senator Hoffman asked where this language is contained in the
committee substitute.
Mr. Somerville replied this criterion is established in federal
law.
Senator Hoffman requested the language of the federal law.
Senator Leman clarified that an act of Congress would not be
required for the commission to take affect, although such and act
would be necessary if the commission were to be jointly comprised
of federal and state agencies.
Mr. Somerville affirmed.
Senator Leman asked if Mr. Bayha had advice as to how the governor
should appoint members to the commission, noting that the Alaska
Public Waters Commission written testimony states that the members
should possess a technical background rather than be appointed only
for political reasons.
Mr. Bayha replied the organization has not identified specific
individuals to nominate for the positions on the proposed
commission. However, he qualified that the commission had
speculated on whom the governor might appoint. He expressed concern
that if all members were "previous political personalities" the
proposed commission might not contain sufficient technical
knowledge necessary to be effective. Therefore, he relayed that the
commission recommends a combination of political and technical
perspectives.
Senator Leman attempted to ascertain whether the legislation should
contain provisions requiring that appointees must possess certain
technical knowledge on the matter.
Mr. Bayha replied that if legislative intent were clarified,
changes to the bill would not be necessary.
Senator Leman expressed his intent that only those with adequate
technical ability served on the commission.
Mr. Somerville reminded that the proposed commission is patterned
after an existing commission, which does follow criteria for
technical expertise of appointees.
Senator Wilken asked the influence Governor Tony Knowles' action of
not appealing Katie John vs. State of Alaska to the US Supreme
Court has had on this legislation.
Mr. Somerville stressed this legislation "does not in any way
overturn, or in any way interfere, with the federal government
claiming its Federal Reserve water rights."
Senator Leman directed attention to page 3, line 11 of the proposed
committee substitute pointing out the requirement that at least one
member of the commission must be an Alaskan Native. He asked if
this legislation applies state statute defining Alaskan Native as a
person with at least one-quarter-blood quantum, or "the looser
definition" utilized for qualification of medical benefits and
other governmental services.
Mr. Somerville was unsure and again noted the bill is patterned
after the Federal State Land Planning Commission, which contains
the requirement that at least one member be an Alaskan Native. He
stated the qualification of Alaskan Native under the provisions in
ANCSA, is one-quarter blood quantum.
Co-Chair Kelly commented it is inappropriate to appoint members to
a panel on the basis of race. He indicated he would offer an
amendment to remove this restriction from the proposed committee
substitute.
Co-Chair Kelly also voiced concern with inclusion of Governor Tony
Knowles in the appointment process. Co-Chair Kelly remarked, "We
have found over a period of time in his actions and him not
pursuing court, Supreme Court cases and other actions that are…"
SFC 02 # 52, Side B 10:37 AM
Co-Chair Kelly continued, "… designed to protect the sovereignty of
Alaska is not there." Co-Chair Kelly expressed he would be
concerned about a commission appointed by the current governor. He
furthered, "We've not seen a lot of results from the task forces
and commissions that he's appointed in the past actually solve
problems, but they're usually used as public relations vehicles and
they become very contentious and they rarely solve anything. They
just create new problems." Co-Chair Kelly indicated he would hold
the bill in Committee to restructure the appointment process and
also to address the effective date.
Senator Hoffman requested a fiscal note from the Department of
Natural Resources, as the Department would be impacted.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 280(RES)
"An Act permitting grants to certain regulated public
utilities for water quality enhancement projects and water
supply and wastewater systems."
This was the second hearing for this bill in the Senate Finance
Committee.
SENATOR GENE THERRIAULT, sponsor, reminded that questions were
raised during the previous hearing regarding whether grants
received could be "charged off" to rate-paying customers, as well
whether stockholders of a utility would benefit from grants
received in the event of the sale of that facility.
Senator Therriault informed the Regulatory Commission of Alaska
(RCA) submitted a letter dated April 8, 2002 [copy on file] that
clarifies the matters in that it essentially answers no to both
questions. He indicated an enclosed graph further explains the
method in which rates are set.
Senator Hoffman asked if 36 communities participate in this program
Senator Therriault stated he would provide a list of those
communities.
Senator Austerman referenced the first paragraph of the
aforementioned letter that states that the grant funds could not be
used to assess the new value through the utility; however,
elsewhere the letter states that the value is set based upon cash
flow. He suggested this is a contradiction because if the facility
were doubled utilizing the grant funds, the cash flow would also
double.
Senator Therriault clarified the cash flow is the rates the utility
is allowed to charge and that the RCA only allows rates based on
the private capital contributed. Therefore, he explained if more
customers were served, but the private investment was not
increased, the RCA would require the rates to be lowered. He
furthered that the purchaser, in the event of the sale of the
utility, would examine the cash flow, which would be based only on
the private investment. He pointed out that the purchaser would not
pay for the "transparent assets" because those assets could not be
recouped. He emphasized that the RCA is directed to require the
utility to charge rates only to cover the actual debt and to allow
for "an ongoing economic enterprise".
Co-Chair Kelly understood that a purchaser would establish a
capitalization rate, which would "ultimately be tied to the dollar
amount" customers could be charged. He explained that if the grant
revenues could not be charged back to the customers, the grant
funds invested in the expansion of the utility would never "flow
back" and be available for reinvestment in the business or as
profit.
Senator Therriault affirmed and reiterated that the transparent
asset, which is the "product of the grant" could not be "built
into" the rates.
Co-Chair Kelly furthered this is despite an increased number of
customers.
Senator Austerman understood the utility could double in size
although the rate structure could not be increased. However, he
asserted that because the facility has doubled, the cash flow would
increase because of the increased number of customers paying the
existing rate structure.
Senator Therriault responded the RCA would require the utility to
reduce the rates so individual ratepayers rather than the
shareholders who have not increased their investment would realize
the benefit of the grant.
Senator Therriault again referenced the letter, pointing out that
if a utility is sold, at the time of the facility's overall rate
review, the RCA is directed by statute to establish a new rate
based on the purchase price or the "book value", whichever is
lower. He defined book value as that portion of the capital that
was contributed by private industry. Therefore, he noted, if the
purchaser buys the facility at an amount lower than the book value,
the RCA would require rates based on the "good deal" obtained;
however, he noted if the purchase overpaid for the facility, the
RCA would only allow a rate structure based on the private capital
investment. He suggested that an overpayment of a utility could be
rejected by the RCA if it determines the utility would be an
"unworkable business operation."
Senator Leman clarified that operation expenses resulting from an
expansion are recoverable, although capital expansion costs could
not be recuperated.
Co-Chair Donley asked what would happen if a utility went out of
business and the assets were liquidated.
Senator Therriault replied that most assets are "pipes in the
ground", and that only a utility operator would be interested in
purchasing them.
Senator Hoffman asked about property owned by the utility.
Senator Therriault answered that the utility does not generally own
the land where pipes are located. He doubted grants would be
awarded for the construction of office buildings and other
facilities not directly related to actual utility delivery.
Senator Ward and Senator Therriault next discussed privatization,
competition and a monopoly.
Senator Therriault stated the utilities are regulated service
providers.
Senator Ward suggested that if established utilities were awarded
these grants, there would be no possibility of another operator
entering the market and competing to provide the services.
Senator Therriault informed there is no prohibition from
undertaking the process to start competition and qualifying to
receive the grants. He predicted this would not occur because this
legislation only applies to water and sewer utilities and the rate
base could only "support so much".
Senator Hoffman asked if other utility providers benefit from a
similar grant program.
Senator Therriault answered that some electric utility providers
participate in a grant program.
Senator Leman clarified these are cooperative utility companies.
Senator Hoffman specified privately owned utility companies.
Senator Austerman commented he would not oppose reporting this bill
from Committee although he was not convinced to vote for its
passage from the Senate.
Senator Leman moved to "report SB 280 from Committee with
individual recommendations and I don't agree with the fiscal notes,
I'll read them, move them along and recommend appropriate action be
taken at the time when fiscal notes are passed."
Senator Ward objected to comment on separate legislation that was
passed from a different committee with "an understanding that when
they bought it they knew what they were getting. And I allowed that
one to go back. I certainly am going to remove my objection and let
this one go out at this time, but I just want the Committee to know
when people buy stuff, and they know what they're buying, I think
that's a pretty fair indication as to they're sophisticated buyers
and then to come back in either case and ask the public to then
change the agreement to purchase I think that there has to be a
clear public purpose in there. And I'm not saying that there isn't
in this case and the previous one, but I'm not quite there where I
see it yet."
Senator Ward removed his objection to the motion to report the bill
from Committee.
Senator Leman WITHDREW his motion to report the bill from Committee
at the request of Co-Chair Kelly for the purpose of addressing the
fiscal note.
Co-Chair Kelly moved to adopt a forthcoming zero fiscal note for
the Department of Environmental Conservation.
There was no objection and a new fiscal note was ADOPTED.
Senator Leman re-offered his motion "with the revised fiscal note."
Senator Wilken informed that he owns ten percent of the utility
this legislation specifically would impact. He stated the
ratepayers would benefit from this bill, as savings from lower
operating costs would be passed along to the customers. He also
noted that Fairbanks Water and Sewer is one of the first private
utility operators in the United States, and therefore the processes
are new. He supported this legislation.
Senator Hoffman agreed with Senator Wilken's assessment, which is
why he asked about the possibility of privatized electric utilities
participating in a grant program. He surmised if all utilities were
funded with grants, operating costs would be reduced, resulting in
less dependence on the Power Cost Equalization (PCE) program.
Co-Chair Donley commented that to be successful rates must be
reduced. He spoke of the Anchorage Water and Sewer utility and the
lower percentage of per capita financial assistance it has received
over ten years compared to other areas of the State.
Senator Hoffman again requested the list of utilities. He pointed
out his water and sewer expenses in Bethel of approximately $270
per month are considerably higher than that of any other Committee
member.
There was no objection and CS SB 280 (RES) MOVED from Committee
with a zero fiscal note written by the Senate Finance Committee
4/10/02 for the Department of Environmental Conservation.
SENATE BILL NO. 185
"An Act relating to the basis for determining eligibility for
and the amount of power cost equalization payments; and
providing for an effective date."
This was the third hearing for this bill in the Senate Finance
Committee. CS SB 185, 22-LS0465\U, was drafted to incorporate
amendments adopted at the previous hearing.
AT EASE 11:05 AM / 11:06 AM
Amendment #2: This amendment inserts a new bill section on page 1,
following line 11 of the committee substitute to read as follows.
Sec. 2. AS 42.45.100(a) is amended to read:
(a) The power cost equalization and rural electric
capitalization fund is established as a separate fund for the
purpose of
(1) equalizing power cost per kilowatt-hour
statewide at a cost close to or equal to the mean of the cost
per kilowatt-hour in Anchorage, Fairbanks, and Juneau by
paying money from the fund to eligible electric utilities in
the state; and
(2) making grants to eligible utilities under AS
42.45.180 to improve the performance of the utility.
This amendment also inserts a new bill section on page 2, following
line 10 of the committee substitute to read as follows.
Sec. 4. AS 42.45.110(b) is amended to read:
(b) An eligible electric utility is entitled to receive
power cost equalization
(1) for sales of power to local community
facilities, calculated in the aggregate for each community
served by the electric utility, for actual consumption of not
more than 70 kilowatt-hours per month for each resident of the
community; the number of community resident shall be
determined under AS 29.60.020; and
(2) for actual consumption of not more than 500
kilowatt-hours per month sold to each residential customer [OF
NOT MORE THAN
(A) 450 KILOWATT-HOURS PER MONTH FOR THE MONTHS
OF OCTOBER THROUGH MARCH, AND
(B) 350 KILOWATT-HOURS PER MONTH FOR THE MONTHS
OF APRIL THROUGH SEPTEMBER].
This amendment also inserts a new bill section on page 3, following
line 4 of the committee substitute to read as follows.
Sec. 6. AS 42.45.110(c) is amended to read:
(c) The amount of power cost equalization provided per
kilowatt-hour under (b) of this section may not exceed 95
percent of the power costs, or the average rate per eligible
kilowatt-hour sold, whichever is less, as determined by the
commission. However,
(1) during the state fiscal year that began July 1,
1999, the power cost for which power cost equalization were
paid to an electric utility were limited to minimum power
costs of more than 12 cents per kilowatt-hour and less than
52.2 cents per kilowatt-hour;
(2) during the state fiscal years beginning July 1,
2007, and each following state fiscal year [JULY 1, 2000, AND
JULY 1, 2001], the commission shall adjust the power costs for
which power cost equalization may be paid to an electric
utility based on the weighted average retail residential rate
in Anchorage, Fairbanks, and Juneau; however, the commission
may not adjust the power costs under this paragraph to reduce
the amount below the lower limit set out in (1) of this
subsection; and
(3) DURING EACH FOLLOWING STATE FISCAL YEAR, THE
COMMISSION SHALL ADJUST THE POWER COSTS FOR WHICH POWER COST
EQUALIZATION MAY BE PAID TO AND ELECTRIC UTILITY BASED ON THE
WEIGHTED AVERAGE RETAIL RESIDENTIAL RATE IN ANCHORAGE,
FAIRBANKS, AND JUNEAU, PER KILOWATT-HOUR FOR SALES TO
RESIDENTIAL CUSTOMERS OF 400 KILOWATT-HOURS PER MONTH; THE
COMMISSION MAY NOT ADJUST THE POWER COSTS UNDER THIS PARAGRAPH
TO REDUCE THE AMOUNT BELOW 16.75 CENTS PER KILOWATT-HOUR; AND
(4)] the power cost equalization per kilowatt-hour
may be determined for a utility without historical kilowatt-
hour sales data by using kilowatt-hours generated.
This amendment also inserts a new bill section on page 3, following
line 16 of the committee substitute to read as follows.
Sec. 8. AS 42.45.110(d) is amended to read:
(d) An electric utility whose customers receive power
cost equalization under AS 42.45.100 - 42.45.150 shall set out
in its tariff the rates without the power cost equalization
and the amount of power cost equalization per kilowatt-hour
sold. The rate charged to the customer shall be the difference
between the two amounts. Power cost equalization paid under AS
42.45.100 - 42.45.150 shall be used to reduce the cost of all
power sold to local community facilities, in the aggregate, to
the extent of 70 kilowatt-hours per month per resident of the
community, and to reduce the cost [TO EACH RESIDENTIAL
CUSTOMER] of the first 500 [NOT MORE THAN 450] kilowatt-hours
per residential customer per month [FOR THE MONTHS OF OCTOBER
THROUGH MARCH, AND NOT MORE THAN 350 KILOWATT-HOURS PER MONTH
FOR THE MONTHS OF APRIL THROUGH SEPTEMBER].
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Donley moved for adoption.
The amendment was ADOPTED without objection.
Co-Chair Donley moved "the Finance Committee version for SB 185
from Committee with accompanying Senate Finance Committee fiscal
note."
Senator Wilken objected to make a comment regarding discussions
held on the matter of funding the Power Cost Equalization (PCE)
program in the Committee during the years 1999 and 2000. He
referenced Senate Finance Committee minutes from April 13, 2000
[copy on file], whereby former Committee member Senator Al Adams
indicated intent that National Petroleum Reserve-Alaska (NPR-A)
funds would be divided between the permanent fund, the school
public trust fund and the PCE fund. Senator Wilken remembered that
Senator Adams promised to convince villages in the North Slope
Borough to "relinquish" claim to the NPR-A funds in order to
benefit PCE.
Senator Wilken reminded that at the previous hearing on this bill,
he had asserted that the projects funded with NPR-A funds are
"essentially fluff projects". He referenced a list of eight
projects funded with $1.79 million of NPR-A funds [copy on file]
and surmised they were not necessitated by the impacts of oil
development.
Senator Wilken noted that in other boroughs in Alaska, similar
projects are instead funded with borough funds. He predicted if the
communities that currently receive NPR-A funds for these projects
were to forgo receiving the funds, that the North Slope Borough
would provide funds to undertake the projects.
Senator Wilken asserted that the promise made in the year 2000 is
still pertinent and the Committee should attempt to convince those
villages to authorize use of the NPR-A funds for the PCE program.
Senator Hoffman countered that the statements made during the April
2000 meeting related to an amendment containing standard budgetary
language. This language, he explained, clarified that the NPR-A
funds would be divided to the permanent fund, the public school
trust fund and the PCE fund according to a formula. He stressed
there is a priority for the allocation of the funds, which has been
practiced accordingly.
Senator Wilken removed his objection to reporting the bill from
Committee.
Senator Austerman understood the NPR-A funds are federal funds and
that established criteria in federal law provides how they could be
spent. He was unsure how state statutes could overrule the federal
law on this matter.
Senator Wilken described how the federal government collects 50
percent of NPR-A production funds with the remaining 50 percent
"for the benefit of the people of Alaska." He continued that of the
50 percent allocated for Alaska, one-half is guaranteed to the
North Slope Borough. He detailed the State's ability to appropriate
the remaining 25 percent.
Co-Chair Kelly ruled the discussion about the impact of NPR-A funds
is out of order due to the motion on the table.
Without objection CS SB 185 (FIN) with a zero fiscal note for the
Department of Community and Economic Development, authored by the
Senate Finance Committee 4/2/02, MOVED from Committee.
Senator Austerman realized the issue of NPR-A fund appropriation is
"a thorn in the side" of some Committee members. He predicted the
discussion would continue as to Senator Adam's assertions unless
the statute is changed. He listed other issues instituted by past
legislatures, including grain elevators in the Matanuska-Susitna
Valley and the rocket launch facility in Kodiak. He suggested
reaching a resolution on the PCE matter.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:17 AM
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