Legislature(2013 - 2014)SENATE FINANCE 532
04/11/2013 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 4 | TELECONFERENCED | |
| + | HB 129 | TELECONFERENCED | |
| + | HB 71 | TELECONFERENCED | |
| + | HCR 6 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 11, 2013
9:23 a.m.
9:23:25 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:23 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Suzanne Armstrong, Staff, Senator Kevin Meyer; Rena
Delbridge, Staff, Representative Mike Hawker; David Teal,
Director, Legislative Finance Division; Jo Ellen Hanrahan,
Director, Division of Administrative Services, Department
of Commerce, Community and Economic Development; Frank
Richards, Alaska Gasline Development Corporation;
Representative Mike Hawker.
SUMMARY
CSSSHB 4(FIN)
ALASKA GASLINE DEVELOPMENT CORP; RCA
SCSCSSSHB 4(FIN) was REPORTED out of committee with a
"do pass" recommendation and with a new fiscal impact
note from the Senate Finance Committee for the Alaska
Gasline Development Corporation, a new fiscal impact
note from the Senate Finance Committee for the In-
state Natural Gas Pipeline Fund, a new fiscal impact
note from the Senate Finance Committee for the
Department of Environmental Conservation, a new
fiscal impact note from the Senate Finance Committee
for the Department of Environmental Conservation, a
new fiscal impact note from the Senate Finance
Committee for the Department of Transportation and
Public Facilities, and a new fiscal impact note from
the Senate Finance Committee for the Department of
Law.
CSHB 71(FIN)
AK REGIONAL ECONOMIC ASSISTANCE PROGRAM
CSHB 71(FIN) was SCHEDULED but not HEARD.
CSHB 129(FIN)
OIL & GAS EXPLORATION/DEVELOPMENT AREAS
CSHB 129(FIN) was SCHEDULED but not HEARD.
CSHCR 6(EDT)
EST. LEG. TASK FORCE ON UNMANNED AIRCRAFT
CSHCR 6(EDT) was SCHEDULED but not HEARD.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 4(FIN)
"An Act relating to the Alaska Gasline Development
Corporation; establishing the Alaska Gasline
Development Corporation as an independent public
corporation of the state; establishing and relating to
the in-state natural gas pipeline fund; making certain
information provided to or by the Alaska Gasline
Development Corporation and its subsidiaries exempt
from inspection as a public record; relating to the
Joint In-State Gasline Development Team; relating to
the Alaska Housing Finance Corporation; relating to
judicial review of a right-of-way lease or an action
or decision related to the development or construction
of an oil or gas pipeline on state land; relating to
the lease of a right-of-way for a gas pipeline
transportation corridor, including a corridor for a
natural gas pipeline that is a contract carrier;
relating to the cost of natural resources, permits,
and leases provided to the Alaska Gasline Development
Corporation; relating to procurement by the Alaska
Gasline Development Corporation; relating to the
review by the Regulatory Commission of Alaska of
natural gas transportation contracts; relating to the
regulation by the Regulatory Commission of Alaska of
an in-state natural gas pipeline project developed by
the Alaska Gasline Development Corporation; relating
to the regulation by the Regulatory Commission of
Alaska of an in-state natural gas pipeline that
provides transportation by contract carriage;
repealing the statutes relating to the Alaska Natural
Gas Development Authority and making conforming
changes; exempting property of a project developed by
the Alaska Gasline Development Corporation from
property taxes before the commencement of commercial
operations; and providing for an effective date."
9:24:34 AM
Vice-Chair Fairclough MOVED to ADOPT the proposed committee
substitute for HB 4, Work Draft 28-LS0021\T (Bullock,
4/10/13) as a working document.
Co-Chair Meyer OBJECTED for the purpose of discussion.
SUZANNE ARMSTRONG, STAFF, SENATOR KEVIN MEYER, discussed
the proposed changes to HB 4 from a document titled
"Proposed Changes in Senate Finance CS for CS SS HB 4
Version 28-LS0021\T" (copy on file). She read from the
document.
Legislative Findings & Intent Section
Page 2, line 25 - 31 to Page 3, line 1
Adds intent language that the Board of Directors of
AGDC commits to governing so as to affect positively
as many Alaskans as possible, including those in rural
and coastal communities and to extend opportunities
for all Alaskans to benefit from the natural gas
resources of the state, including propane and
associated gas-related hydrocarbons.
Page 3, lines 17-21
Adds intent language that AGDC and its subsidiaries
will wind up and dissolve when no bonds, notes, or
other obligations are outstanding and AGDC or its
subsidiaries are no longer engaged in the development,
financing, construction, or operation of an in-state
natural gas pipeline.
Section 3: Amending the Structure of the Corporation
Established by Chapter 25
Page 4, lines 27-31
Provides that the corporation may dissolve when no
bonds, notes, or other obligations of the corporation
or subsidiary of the corporation are outstanding and
is no longer engaged in the development, financing,
construction, or operation of an in-state natural gas
pipeline.
Corporation Purpose; Beginning on Page 7, line 22
Provides that the purpose of the corporation is
established for the benefit of the state.
Page 8, lines 1 - 2 and lines 7 -8
Provides that the corporation shall endeavor to
develop a natural gas pipeline or other transportation
mechanism to deliver natural gas and to develop a
natural gas pipeline or other transportation mechanism
that offers commercially reasonable rates for shippers
and access for shippers who produce natural gas.
Corporation Powers & Duties: Beginning on page 8
At line 18, provides that the corporation may plan,
finance, construct, develop, acquire, maintain, and
operate a pipeline system or other transportation
mechanism to facilitate the production, transportation
and delivery of natural gas or other related natural
resources. This provision also applies to the creation
of subsidiaries by AGDC to carry out the same
activities (found at page 14, line 28).
Page 9, line 30-31- Page 10, line 1
Removes language from the previous version of the bill
that would limit AGDC's ability to borrow money for a
construction project that may last multiple years.
Page 10, line 13-18
New subsection (g) [corrected to subparagraph 22] was
added to provide AGDC with the opportunity to sway,
hedge, cap, or other enter into other contracts
providing for payments based on levels of or changes
in interest rates or indices or in the cost or price
of any commodity, supply or expense expected to be
used or incurred in connection with the acquisition,
construction, or operation of any facility or property
owned, leased or operated by the corporation.
Ms. Armstrong noted the error after "Page 10, line 13-18",
new subsection (g) should read, "Subparagraph 22." She
continued with the explanation of changes.
Page 10, beginning line 19-30
Provides that upon commencement of construction of an
in-state natural gas pipeline, the corporation shall
analyze potential natural gas pipelines and other
transportation mechanisms in other regions of the
state, and that, if the method is in the best interest
of the state, may move forward with financing,
constructing, or operating a natural gas pipeline or
other transportation mechanism.
Page 11, lines 13- 16
Provides that after the conclusion of an open season,
if the corporation determines that the commitments
received during the open season are not sufficient to
allow the corporation to move forward with the
development or construction of a natural gas pipeline,
the corporation shall report to the Legislature within
30 days. The subparagraph also discusses what the
corporation shall do if commitments are received to
acquire firm transportation capacity during an open
season.
Ms. Armstrong reiterated that notification of the open
season's results will be forwarded to the President of the
Senate, the Speaker of the House, and the public within ten
days of accepting and executing the agreements. She
continued her discussion.
Page 11, lines 17-26
Provides that the corporation shall, without delaying
the progress of an in-state natural gas pipeline
project or without causing the in-state natural gas
pipeline project to become a competing project under
AGIA, coordinate with developers of a large-diameter
in-state natural gas pipeline by planning for the
development and use of common pipeline facilities from
the North Slope to the Livengood area, and for a
pipeline which may be constructed south to tidewater
either in Prince William Sound or Cook Inlet.
Refunding Obligations of the Corporation: Beginning on
Page 23
Page 24, lines 8-11
Removes the limitation that was currently in the bill
on AGDC investing bond proceeds in U.S. Treasury
bills. Removal of the language allows increased
flexibility for AGDC.
General Provisions Pertaining to the Corporation
Page 26, lines 1-5
Provides that after a decision of the corporation to
dissolve, the corporation shall provide a final report
to the Governor, the Legislature, and the public that
summarizes the reasons for dissolution of the
corporation. A statement by an independent outside
auditor for the corporation and the subsidiaries must
accompany the final report, indicating that no bonds,
notes, or other obligations are outstanding.
Under Section 11: Covenants Required to be in a Lease
to a Natural Gas Pipeline that is a Contract Carrier
Page 32, lines 25-28
Clarifies that a lease for state land for a right-of-
way for which an applicant has applied as a contract
carrier for a natural gas pipeline valued at $1
million or greater may be granted to a lessee, as long
as the lessee does not construct or expand a natural
gas pipeline that would compete with a project
licensed under AGIA.
9:33:07 AM
AT EASE
9:34:18 AM
RECONVENED
Ms. Armstrong continued to discuss the proposed changes in
the new CS.
General Powers & Duties of the Regulatory Commission
of Alaska
Beginning at Page 40, lines 29-31
Provides that the RCA may not investigate a dispute
under (b) (3) - found at Page 39, lines 5-26 - if a
complete formal complaint has not been filed with the
commission within 60 days after the event occurs which
gives rise to the complaint.
Contract Review; Contract Carriage Certificate; Open
Seasons
Beginning at Page 42, line 6 - 8
Clarifies that a carrier shall publish notice in
advance of an open season and that the notice shall
state the methods for awarding capacity set out in the
carrier's recourse tariff and whether pre-subscription
agreements have been executed.
Page 42, line 11-12
Clarifies that presubscription agreements are subject
to the methods for awarding capacity, which are set
out in the open season notice.
Page 42, lines 18-24
Clarifies that an open season for an expansion of a
pipeline system when it has received one or more
requests for firm transportation service from
potential shippers and that expansion of the pipeline
system will not cause it to be a competing natural gas
pipeline project under AGIA.
At Page 42, line 31- Page 43, line 1-8
Provides that if precedent agreements are received,
the carrier shall within 10 days after accepting and
executing the agreements, inform the public of results
and include the name of each prospective shipper, the
amount of capacity allocated, and the period of
commitment. Also provides that if the carrier does not
receive sufficient commitments during the open season
to continue the development or construction of an in-
state natural gas pipeline, the corporation will
notify the RCA within 30 days.
Review of Certain Contracts by the RCA - Rate Payer
Protection Measure
Page 45, lines 2 - 4
Provides that a precedent agreement or a related
contract public utility is not considered arm's length
if the rate paid for transportation on an in-state
natural gas pipeline is greater than the recourse
rate. The issue/circumstance was discussed in a
previous committee of referral that a public utility
might try and negotiate a higher rate than the
recourse tariff rate, which would result in higher
prices for utility customers. This change would make
public utility contracts that are for a greater rate
than the recourse rate to automatically fail meeting
the RCA's arm's length standard. If this does occur,
the contracts would be evaluated by the RCA on a
heightened review standard (the same standard used
between affiliated parties.)
Initial or Revised Rates
Beginning on Page 48, line 3
Provides that the review and notice period for the
review of initial recourse rates runs concurrently
with the timeline for the RCA to make a decision on
the recourse rate. The timeline on decision for the
tariff was established at 90 days, the change in the
Senate Finance CS under the Initial Review and Revised
Rates provides that the review and notice period
occurs during the same timeframe.
Page 48, line 28
Provides that the RCA may initiate a suspension period
of no longer than 30 days from the day the initial
recourse tariff would otherwise go into effect.
Provides that the RCA must hold a hearing on the
suspended recourse tariff filing and issue its order
before the end of the suspension period.
Expansion; Dispute Resolution
Page 50, line 19-22
Provides that an in-state natural gas pipeline carrier
may enter into a contract for expansion, as long as
the expansion would not cause it to be considered a
competing natural gas pipeline project under AGIA.
Investigations
Page 53, lines 14-19
Provides that in conducting an investigation related
to a timely filed dispute, the RCA shall issue a final
order within 150 days after a formal complaint is
filed with the RCA, except for disputes related to
open seasons. In the case of open season, the final
order must be issued within 60 days.
Definitions that Pertain to the Title 42, Chapter 8 -
In-State Pipeline Contract Carrier Page 55, lines 29 -
31, Page 56, lines 1 - 5
Provides a definition of "affiliated" or "affiliated
interest" Previous versions of the bill did not
include a definition of "affiliated" or "affiliated
interest". While there is a definition under RCA
statutes, it was thought wise to include one
specifically in the Title and Chapter pertaining to
In-State Pipeline Contract Carrier and will provide
more explicit direction to the RCA.
Senator Olson asked for clarification about the length of
time the Regulatory Commission of Alaska (Regulatory
Commission of Alaska) had to investigate a complaint from
the time of the event. Ms. Armstrong replied that the CS
stipulated that the date began when the dispute was filed
with the RCA and had 150 days to issue a final order.
Senator Olson asked for further clarification about the 60
day investigative period for the RCA on page 40 of the
legislation. He inquired whether the 60 day period was a
similar length of time in other jurisdictions nationwide.
RENA DELBRIDGE, STAFF, REPRESENTATIVE MIKE HAWKER, answered
that she did not know about other jurisdictions. She
explained that the provisions regarding dispute resolution
on page 39 of the bill pertained to the types of disputes
the RCA could hear. Most disputes would be governed under
contractual dispute resolution mechanisms. In the case of
an open season, if a complaint was lodged against the
carrier by a non-contractual party there was the potential
to hold up further progress. If the RCA discovered that the
open season process was unfair the open season might be
repeated.
Senator Bishop queried whether there needed to be a written
complaint in order for the RCA to investigate. Ms.
Delbridge replied in the affirmative and that a formal
complaint must be lodged within 60 days of the action.
9:43:01 AM
Co-Chair Meyer WITHDREW his OBJECTION.
There being NO OBJECTION, Work Draft 28-LS0021\T was
ADOPTED.
Co-Chair Meyer MOVED to ADOPT Amendment 1.
Amendment 1
OFFERED TO SENATE FINANCE
TO: SCS CSSSHB 4 (Fin)/T
Page 8 line 1 after pipeline Delete "or" Add "and"
Page 8 line 7 after pipeline Delete "or" Add "and"
Page 8 line 18 after system Delete "or" Add "and"
Vice-Chair Fairclough OBJECTED for the purpose of
discussion.
Ms. Armstrong related that Amendment 1 corrected a drafting
error in the CS. The error was discovered by Senator
Hoffman's staff.
Vice-Chair Fairclough WITHDREW her OBJECTION.
There being NO further OBJECTION, AMENDMENT 1 was ADOPTED
9:44:38 AM
Ms. Armstrong explained the six new fiscal notes attached
to the bill. She relayed that the first fiscal note for
Department of Commerce, Community and Economic Development
(DCCED) appropriated to the Alaska Gasline Development
Corporation in the amount of $4,058.3 for FY 2015. The
fiscal note reflected a fund source change from CIP
(capital improvement projects) receipts to the new Instate
Natural Gas Pipeline Fund created in the legislation on
page 14, lines 16 through 25. She pointed to the new fiscal
note from the Department of Law (DOL) appropriated to the
Civil Division in the amount of $102.3 in FY 2014 for one
permanent full-time position. She turned to the fiscal note
for the Department of Transportation and Public Facilities
(DOT) appropriated to Design, Engineering and Construction
in the amount of $711.8 in FY 2014 for three permanent full-
time positions. She moved to the fiscal note for the
Department of Environmental Conservation (DEC) appropriated
to Environmental Health in the amount of $54.6 for FY 2014.
She cited the fiscal note for DEC appropriated to the
Division of Water in the amount of $236.2 for FY 2014 for
two permanent full-time positions. The last fiscal note was
for a Fund Capitalization into the Instate Natural Gas
Pipeline fund for the amount of $330,000.0.
9:48:19 AM
AT EASE
9:50:31 AM
RECONVENED
Ms. Armstrong directed attention to the analysis on page 2
of the DCCED fiscal note. She explained that the total for
all departments in FY 2014 was $5.163.2 with increases
projected in the out years. She alerted the committee that
the increases will appear in future budgets.
Senator Hoffman wondered why the capitalization of the fund
was not included in the total on the fiscal note. Ms.
Armstrong replied that the fund capitalization was not
considered an operating budget expense.
Senator Hoffman understood that fund capitalization was an
expenditure.
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
confirmed that the fund capitalization was an expenditure.
He added that the fiscal note reflected the appropriation
that capitalized the fund.
9:54:11 AM
AT EASE
9:55:02 AM
RECONVENED
Co-Chair Meyer announced that DCCED wanted to add another
fiscal note.
JO ELLEN HANRAHAN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, explained that AGDC was not exempted from the
Executive Budget Act in the current version of the CS. As
part of DCCED and included in the Executive Budget Act, AGDC
must participate in the cost allocation plan stipulated in
the law. The corporation needed the authority to pay the
costs to the department. The new fiscal note would include
the increased costs for AGDC.
Co-Chair Meyer inquired how much the fiscal note increase
was. Ms. Hanrahan replied that the increase was
approximately $120 thousand.
Co-Chair Meyer inquired whether the amount should be
included. Mr. Teal responded that the issue was whether
DCCED needed to add new staff. He offered that if DCCED
could handle the transfer of AGDC to the department with
existing staff the fiscal note would be a net zero. The
department would charge AGDC $120 thousand and reduce the
collections from other divisions and agencies. Technically
a fiscal note was not necessary to collect the funds from
AGDC.
Ms. Hanrahan agreed that a fiscal note was not necessary
but AGDC needed the authority to pay the funds to DCCED.
Mr. Teal commented that any charges AGDC had to pay in
interagency receipts would come out of its existing
appropriation. He advised that AGDC report, for the record
the amount AGDC had to pay to DCCED for administrative
services and clarify what services they would receive.
FRANK RICHARDS, ALASKA GASLINE DEVELOPMENT CORPORATION,
stated that the expectation was that AGDC would not have
any administrative expenses under DCCED; therefore the
corporation was exempted from the Executive Budget Act in
previous versions of the bill. Without the exemption, AGDC
incurred the $120 thousand administrative expense for
annual budget preparation that was not included in the
original calculation.
Co-Chair Meyer did not believe that another fiscal note was
needed. Mr. Richards answered that the amount would be
deducted from the fund capitalization money.
Ms. Hanrahan concurred with the comments from Mr. Richards.
Senator Hoffman cited the $330,000 as an expenditure in FY
2014 to point out the expenditure's inclusion in the FY
2014 spending plan. He felt that the $5.163.2 amount cited
earlier, which did not include the $330,000 was misleading.
He supported the bill but wanted clarity about the
expenditure.
Co-Chair Meyer appreciated the comments of Senator Hoffman
and remarked that the funds were being appropriated from
the Alaska Housing [Alaska Housing Capital Corporation]
fund established in 2008. The purpose of the fund was for a
gas pipeline or other capital items. He believed the fund
source was an "excellent" choice.
Senator Hoffman wanted assurance that any further "and"
"or" errors would be corrected while drafting the final
version of the CS. Ms. Armstrong replied that she sent
instructions to the legal drafters to correct any
additional errors.
Senator Olson requested an explanation of what the
amendment actually accomplished. Ms. Armstrong related that
the references deleted "or" and added "and" on page 8
before the words, "other transportation mechanisms to
deliver natural gas to communities in the state."
Vice-Chair Fairclough MOVED to REPORT SCSCSSSHB 4(FIN) out
of committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCSCSSSHB 4(FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new fiscal impact note from
the Senate Finance Committee for the Department of
Commerce, Community and Economic Development, a new fiscal
impact note from the Senate Finance Committee for a Fund
Capitalization, a new fiscal impact note from the Senate
Finance Committee for the Department of Environmental
Conservation, a new fiscal impact note from the Senate
Finance Committee for the Department of Environmental
Conservation, a new fiscal impact note from the Senate
Finance Committee for the Department of Transportation and
Public Facilities, and a new fiscal impact note from the
Senate Finance Committee for the Department of Law.
10:05:01 AM
AT EASE
10:16:27 AM
RECONVENED
10:17:16 AM
ADJOURNMENT
The meeting was adjourned at 10:17 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 4 SCS for CS for SS HB 4 work draft version T.pdf |
SFIN 4/11/2013 9:00:00 AM |
HB 4 |
| HB 4 summary of changes senate finance.pdf |
SFIN 4/11/2013 9:00:00 AM |
HB 4 |
| HB 4 Amendment 1 Meyer.pdf |
SFIN 4/11/2013 9:00:00 AM |
HB 4 |
| HB 4 Opposition Letter - Roberts.pdf |
SFIN 4/11/2013 9:00:00 AM |
HB 4 |