Legislature(2001 - 2002)
06/13/2002 10:10 AM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE JUDICIARY COMMITTEE
June 13, 2002
10:10 a.m.
MEMBERS PRESENT
Senator Robin Taylor, Chair
Senator Dave Donley, Vice Chair
Senator John Cowdery
Senator Johnny Ellis
MEMBERS ABSENT
Senator Gene Therriault
OTHER LEGISLATORS PRESENT
Senator Gary Wilken
Senator Jerry Ward
COMMITTEE CALENDAR
Regulatory Commission of Alaska
PREVIOUS COMMITTEE ACTION
See Senate Judiciary Committee minutes dated 6/12/02.
WITNESS REGISTER
Mr. Jack Rhyner
TelAlaska
th
201 E. 56 Ave.
Anchorage, AK 99518
Mr. Earle Ausman
No address provided
Mr. George Gordon
Utility Services of Alaska, Inc.
Fairbanks, AK
Commissioner Nan Thompson, Chairwoman
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
Commissioner Bernie Smith
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
Commissioner Pat Demarco
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
Commissioner Will Abbott
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
Commissioner Jim Strandberg
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
Ms. Elizabeth Hickerson
Assistant Attorney General
Department of Law
th
1031 W 4 Ave.
Anchorage, AK 99501-1993
ACTION NARRATIVE
TAPE 02-37, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee
meeting to order at 10:10 a.m.
[THE FOLLOWING IS A VERBATIM TRANSCRIPT]
CHAIRMAN TAYLOR: ...a quorum present, that being Senators Donley,
Ellis, Cowdery and Chair Taylor. Upon recess or adjournment, I
should say, last evening, we had offered an opportunity to
testify to some members of the public who had not been on the
invitation list but did want to testify. The first was Jack.
Where are you at Jack? And he had to leave because of medical -
if you'd come forward please, sir?
SENATOR WILKEN: Senator Taylor?
CHAIRMAN TAYLOR: Yes?
SENATOR WILKEN: This is Gary Wilken and I'm on teleconference
network from Fairbanks and I'll be with you until you adjourn.
CHAIRMAN TAYLOR: Thank you Gary. Good to hear your voice.
SENATOR WILKEN: Thank you, Senator.
CHAIRMAN TAYLOR: Jack - would you raise your right hand please?
Do you swear to tell the truth, the whole truth and nothing but
the truth so help you God to this committee?
MR. RHYNER: I do Senator.
CHAIRMAN TAYLOR: Would you give us your full name and who you're
representing?
MR. RHYNER: My name is Jack Rhyner - R-H-Y-N-E-R. I am currently
employed by TelAlaska, Inc. I am currently employed in the
position of president and CEO, a position I've held for 20 years
and 34 years experience in rural telephony in the state of
Alaska. I am currently serving as director of the Alaska
Telephone Association and the past president of that
organization, also a director of the Alaska Exchange Carriers
Association and I chair the rate development committee for that
organization. Senator, I did send you a letter last week stating
my support for the reauthorization of the Commission.
I have a number of things that I'd like to go over here. While my
company may be a small company in the state of Alaska compared to
the Bell Companies and Horizon, who have millions of access lines
and even in comparison to ACS who have several hundred thousand
access lines, but my company is the third largest telephone
company in the state of Alaska. Investors have $42 million
dollars invested in serving 26 communities throughout the state
of Alaska, which is roughly ten percent of the communities
outside of Anchorage and Fairbanks and Juneau.
With all due respect to the testimony given by Commissioner
Furtchtgott-Roth yesterday, I still think that there's a risk
involved in the certification for USF. The 14 telephone companies
which receive universal service support in the state, if not
certified by the Alaska Public Utilities - RCA - I'm sorry, I've
been doing this too long - would have to apply directly to the
FCC and we would be applying in as yet unknown process to those
very same juvenile delinquents which the Commissioner referred to
yesterday. These are the people that developed the model that
doesn't work and they still promote the use of that model.
They're also the people that promote intellectually bankrupt
concepts like multiple carriers of last resort and competitive
neutrality so I still think that there's a risk involved in not
being certified by a state commission.
SENATOR DONLEY: I think people are having a hard time hearing in
the back.
CHAIRMAN TAYLOR: Well I guess we'll all just have to speak up
because I don't think we have an amplification system - maybe we
do. I've never held a hearing in this room. Annette, before you
dash off could you distribute those letters and e-mails and so on
because I want the committee members to have Jack's letter here
and I'd forgotten to do that before you sat down but Jack had
written to me and I had responded back and so on.
[DUE TO RECORDING DIFFICULTIES, THE COMMITTEE TEMPORARILY WENT
OFF RECORD.]
CHAIRMAN TAYLOR: We are back on record. Apparently the technical
glitch has been taken care of and I had interrupted your
testimony Jack, and the purpose of that was to ask you a question
and we had, as you know, significant testimony on that and I also
wanted to acknowledge and invite to the table Senator Jerry Ward,
who has also joined us. We have Senator Gary Wilken on line, we
have several other, of course, people too, also on line across
the state. Uh, but I wanted to ask you, you've been in business
and were in business, went through this very same agency - went
through its grace period year in 1994.
MR. RHYNER: That's correct.
CHAIRMAN TAYLOR: [Were] universal services available at that time
or were you receiving funding for it?
MR. RHYNER: Yes we were.
CHAIRMAN TAYLOR: Was there any interruption in your receipt of
universal services certification?
MR. RHYNER: No, there was not. The state commissions' did not
certify, uh, the telephone companies for ETC status at that time.
CHAIRMAN TAYLOR: How long ago?
MR. RHYNER: It started last year.
CHAIRMAN TAYLOR: Did you have any problem with it, getting
certified this year?
MR. RHYNER: No, we did not last year.
CHAIRMAN TAYLOR: That is a docket that actually moved quickly on?
MR. RHYNER: Yes.
CHAIRMAN TAYLOR: Any reason to believe they wouldn't move
quickly on it in the future?
MR. RHYNER: Uh, no I don't but there is still an open rule making
docket that the industry participated in and that was to
streamline the process and we all know what the outcome of that
was.
CHAIRMAN TAYLOR: I would hope if, if there is, if anyone takes
that up and is interested in it, it would seem that would make
the process more streamlined this year than it was last when you
had no problems.
MR. RHYNER: That was our hope in getting through that process,
yes.
CHAIRMAN TAYLOR: The only reason I interrupted you, I'd like to
know where this word or rumor, or whatever it is, I can't seem to
track it down, nobody yesterday could seem to tell me. Where are
these statements coming from that somehow, uh, a rubberstamp
operation, like basically the certification that yes, you are a
rural telephone company and yes you should receive these funds -
why in the world would that not occur?
MR. RHYNER: Well, I - first of all it's not a rubberstamp
operation in that the Commission must certify that we're actually
utilizing those funds for the intended purpose so they have to
take some form of evidence to prove that before they make the
statements to certify.
CHAIRMAN TAYLOR: I assume you make that in your application,
don't you?
MR. RHYNER: What I refer to in my letter to you, which I copied
before, was the fact that Chair Thompson at least raises the
question as to whether or not in a wind down year the Commission
would be able to address any new issues, which is what I stated
in my letter.
CHAIRMAN TAYLOR: I think I faxed to you Jack Chenoweth's, uh,
legal opinion which encompassed within it the legal opinion of
the Attorney General in 1994, his staff too, on the very same
subject.
MR. RHYNER: That's true, I don't think that anyone has suggested
that the authority of the agency would be wind-down. I think
that goes more to the resources and the legal obligation to close
open the dockets during that period as to whether or not they
have to go and open new dockets and address new issues.
CHAIRMAN TAYLOR: Well, that is covered in that opinion and they
have such authority to open new dockets and, in fact, we can find
no basis for why they would not, other than a self-inflicted
wound, I guess, if they wish to as Commissioners refuse to take
on new dockets. Uh, I think that would be rather bizarre. I
can't imagine that they would do that but I can't imagine that
the threats being made to utilities such as yourself on
simplistic matters, like certification for purposes of pass-
through of federal funds, I can't imagine that's being done in
good faith either, since it never happened before when they went
through a wind-down.
MR. RHYNER: I guess I wouldn't characterize the statement of
obligations under the wind-down as being a threat, but...
CHAIRMAN TAYLOR: How else did you interpret it that motivated
you to send the letter if you didn't feel that your company would
be in jeopardy of not receiving those funds by such action?
MR. RHYNER: As I stated, I definitely read it as a risk.
CHAIRMAN TAYLOR: Yea, okay, go right ahead. I'm sorry I
interrupted.
MR. RHYNER: The only other issue I had, and what I stated in my
letter was, the Commission has opened a docket and is reviewing
the functionality of the staff within the Commission and I have
been a strong proponent of that for a number of years. In fact,
I worked with Senator Pearce's staff in writing legislation that
created the PAS, the Public Advocacy Section of the Commission.
Unfortunately, at least in my opinion, that wasn't implemented in
line with the intent of the legislation. So I, like the
testimony you heard yesterday from ARECA and AT&T, agree that
what needs to be done, rather than a wholesale change of the
Commission which, by the way, was very disruptive for a number of
years, it takes a new commission a year to eighteen months to get
up to speed with dealing with all these issues from varied
utilities that they have to deal with and that is very
disruptive, especially on the telephone side where things are
moving so rapidly and changing so quickly. So one of the
questions yesterday was specific suggestions for making it
better, uh, I'd like to enter as evidence the comments that were
followed by both the Alaska Telephone Association and Alaska
Exchange Carriers Association as docket R-022. And that ends my
testimony and I'd answer questions.
CHAIRMAN TAYLOR: Jack, I have a couple but - I mean I'll just
start off by saying I want to thank you for the efforts you've
put in because I also worked very closely with Senator Pearce. I
think that's the first time I'd met you and there were several
concerns that the legislature had at the time and doing that
reorganization and probably the biggest concern of all was
timeliness of decisions and streamlining the process in such a
way that there would be a process that you could count upon that
would render a decision within a six month or one-year period at
the latest and that utilities could count on coming in and making
rate filings and being able, within that budgeted year, to be
able to do something. I believe, if I recall, you worked very
hard on specific language that was put in to make certain that
those timelines and timeframes were adhered to. Is that correct?
MR. RHYNER: That is absolutely correct. Over twenty years I have
attempted, on numerous occasions, to get some type of timelines
in place to make the process move faster. It has always been a
problem.
CHAIRMAN TAYLOR: And where are we today as far as adopting any of
those timelines?
MR. RHYNER: There are relatively few timelines that are actually
hard and fast within the process.
CHAIRMAN TAYLOR: And is that encompassed within the
recommendations that you have made?
MR. RHYNER: Uh, no. This has to do more with the organization
and functionality of the staff within the Commission.
CHAIRMAN TAYLOR: Could you define that a little bit more? I
don't know what you mean by…
MR. RHYNER: Uh, the concern that we brought forward to Senator
Pearce when she was doing this legislation was the fact that, at
least in our opinion, there was a considerable amount of ex-parte
contact that went on amongst the staff and the Commissioners on
how to achieve the ability to settle some of the issues at times.
It also put staff in the position where, uh, the new
investigations from the utilities and the opinions for it to the
Commission, which - we are not allowed to cross-examine to check
their authority for whatever position that was taken - they were
not allowed to cross examine them on their supposed expertise on
those issues. What we're suggesting in these comments and in
this docket that all of that functionality be turned over to a
PAS, as it was envisioned, and I think what the intent of that
legislation was so that there would be a party that would be
doing that investigation rather than an internal part of staff at
the Commission. An advisory staff then would be more in the -
their duties would be more like a law clerk than a judge.
CHAIRMAN TAYLOR: Do you think it is important, Jack, that we do
address and take a look at the autonomy of the Commission, both
on ex-parte communication with staff and others and with
conflict. Do you think that's, uh, something we could, should we
insulate them more from the political process and turn them more
into judges because they serve a quasi-judicial function?
MR. RHYNER: I think so.
CHAIRMAN TAYLOR: Good, I agree with that because I have been
concerned too about the frustration I have heard from various
utilities, uh, on ex-parte communication and, in particular,
between staff and Commissioners that no one even knows about or
has an opportunity to address until -poof- it shows up on a
Monday morning and you're told what the order is and so I
appreciate the candor of those comments very much. Senator
Cowdery you had a question. I am sorry, go ahead.
SENATOR COWDERY: Well, getting back earlier to your comments
about, uh, was you disruptive when we did away with APUC and when
this came on, was that, I mean we had new staff and we had new
staff at APUC at one time too, uh, probably several times.
MR. RHYNER: It was very disruptive. There were a number of rule
making dockets that were on-going that languished during the wind
down period. As I remember it, the thing that we all argued
about the most and took up the most time was arguing about the
collection of the RCC charge as to whether or not we should be
actually collecting that for over a whole year or six months or
whether we should collect a year's worth in six months. It was a
lot of wasted time and effort.
SENATOR COWDERY: I'll follow up on that. Would you say that, uh,
not disbanding, not necessarily disbanding this but, that we have
hearings that give more direction and more authority or whatever
is needed to try and find a solution to more timely things
existing. I don't think anybody here is, uh, they wish to stab
the bodies here. I don't think we're to that point or have even
suggested it although I guess that politically they are appointed
positions but, anyway, do you think that this legislature, after
hearing yesterday's testimony, should look into try to find ways
to hurry-up the process? You know we have testimony that six
years, uh, things like that…
MR. RHYNER: Senator, I have always been a proponent of trying to
get some timelines into the process to move the process along
faster.
SENATOR COWDERY: Do you think we can do that in a special session
situation in two or three days or something like that?
MR. RHYNER: Anything can be done. I'd be happy to work on that.
CHAIRMAN TAYLOR: Yes, Senator Ellis?
SENATOR ELLIS: Jack are you, thank you for being here today. Are
you familiar with the timelines that were, in fact, put in the
House version of the legislation that came to this committee
during the regular session?
MR. RHYNER: Uh, yes, I am.
SENATOR ELLIS: And do you have any comments, pro or con, about
those?
MR. RHYNER: Well, we went through those and while we didn't
support that effort completely, we certainly didn't object to it.
SENATOR ELLIS: I just wanted to make the point that that was
discussed in the normal, the regular legislative process, came to
this committee for consideration. Nothing happened until now.
CHAIRMAN TAYLOR: Let me just ask, you said in response to
Senator Ellis's question, uh, you didn't support all of it but
you didn't object. In other words, you knew that things were
needed and can you tell me what parts you didn't?
MR. RHYNER: I don't have it before me.
CHAIRMAN TAYLOR: And I won't put you on the spot, Jack, that's
fine. I just did want to indicate that maybe a good part, and I
think it's going to have to be a good part, of any legislation
that passes on this subject because it's a continuing problem and
has been for years and there needs to be some teeth in that. I
don't know if one hearing, very brief, with, as Eric Yould said,
because he's the one that brought that package forward and I
appreciate that candor on his part. How do we know that's good?
Maybe there are some decisions that do take longer, ya know, and
just doing it in a slash-dash fashion doesn't appear to me to be
a wise thing to be doing with utilities.
MR. RHYNER: I don't think you can do that and I do believe that
it is going to be a balancing act. When you shorten those
timelines, it is probably going to require considerable more
effort to get through the process and that may well require
additional staff at the Commission to be able to do that.
SENATOR COWDERY: When you talk about staff, I think yesterday we
said that APUC, or the complaint was that the lack of staff they
couldn't get things out, they had 41 employees and now I think
they have 61 employees, had the same timelines or something. The
reason I want to, I ask you, do you think like yesterday I know
you had to leave early, but obviously you heard some of the
testimony, do you think that is a ways we should just go on ahead
and reauthorize this for four years or do you think the questions
and testimony yesterday were worthwhile and hopefully the rest of
today is something that should have been done?
MR. RHYNER: One of the things I state in my letter to the Senator
and that I copied you on was the fact this process has been begun
on how to reorganize the staff there. I think that is an issue
that has been a fundamental problem of the state regulatory body
for the twenty years I have been at this level, and if that
process is moving forward, then I would hate to see that stopped
in anyway at all once it's reorganized and it is functioning the
way I believe the intent of the legislation was that authorized
the RCA - and I don't know of any utility, at least on the
telephone side, that would object to additional funding for the
Commission staff if need be once it is reorganized that way.
CHAIRMAN TAYLOR: The Senate's concern about additional funding
is, and it's great that you'd be willing to sacrifice your
subscribers to that level, is that this is all pass through
receipts funding and as a consequence when you say additional
funding that means every person who has a telephone is gonna pay
5 or 10 cents more a month out there to make sure we pass through
from your utility more money to the Commission.
MR. RHYNER: That's true Senator, but as you heard yesterday, uh,
rate cases and the proceedings before the Commission are
extremely expensive and they're extremely time consuming. And, I
think a minimal, uh, percentage charge on monthly service would
be cheaper in the long run than the increase of the rates to pay
for those proceedings.
CHAIRMAN TAYLOR: Understood. Jack, thank you very much. Other
questions? It took a little longer but I think your testimony
was very worthwhile and I appreciate you taking the time to bring
those issues before us. Thank you very much. Earle, yesterday
Earle Ausman, I had said - promised I'd give you a chance to talk
because I jumped over ya on the list and didn't mean to.
MR. AUSMAN: I appreciate it Senator.
CHAIRMAN TAYLOR: If you'll raise your right hand. Do you swear
the testimony you are about to give is the truth, the whole truth
and nothing but the truth, so help you God?
MR. AUSMAN: I do.
CHAIRMAN TAYLOR: Thank you. Proceed.
MR. AUSMAN: My name is Earle Ausman and I'm an engineer. I own
an engineering business here in Anchorage, I've been in
alternative and other kinds of energy business for many years,
started out with the Corps of Engineers back in the '60s on the
Snettisham project. I've been dealing with the Regulatory
Commission - both kinds of it since 1988 when we first tried to
authorize a small hydroplant and I have a series of observations
that I hope you Senators will take into regard and it's going to
be a little bit difficult to present it in a coherent fashion but
I'll start off with one of the things that I'm concerned about.
We do licensing for hydroelectric power plants along with design
of hydroelectric power plants and a lot of work in the villages.
And, Senator Murkowski managed to get through an operation that
allows the state to take over FERC's process from zero to 5000
kilowatts - hydroplants. As I understand it, the Regulatory
Commission was supposed to take over that process. That's a good
idea. We are all for that because it's costing a lot of people a
lot of money to do a lot of things that are not necessary for
very small plants, for example like 40 kilowatts or something -
or if somebody wants something for a lodge or small village or
something else like that if it ends up in the FERC process, as it
currently is, it is very, very expensive and kills a lot of small
projects. The other problem with that though, on the other side
of the coin, is that delay is the death of enterprise and the
Regulatory Commission, if it does take on this process, needs to
do it promptly. It can't be something - and people have to know
what the guidelines are what the timelines are and that brings me
into the next step. We've had a docket before the - action
before the Regulatory Commission since 1996 and that actually
goes back to 1998. It was actually formalized in 1996, February
96, and is still pending. It's never been resolved. We've never
been able to find out what the timeline is on any of this and
everything. Of course things have changed radically in terms of,
its a proposal to supply power to Matanuska Electric and things
have changed radically since that time period, in terms of
economics and regulations and everything else like that and still
it goes on and you can never find an answer to time. We did find
that there was a change in the way the project was looked at when
it went from [RCA] to - the APUC - I am sorry - to [RCA] and
there was actually a change so any change that creates changes in
the personnel of [RCA] is going to cause delay in activities that
go on, so I would like to see a modest extension of [RCA] but I
would also like to see that there be conditions, like - it's been
pointed out in this Commission to make them get some type of
timeline on these things and that they attempt to deal with the
timeline and that they put out the reasons why they can or can
not deal with a timeline so people can make judgments on what
they should do about their businesses. I mean nobody can run a
business like this when you go from 1996 - 1992 - I mean 2002 -
and never get an answer, never get a good answer, so that
basically ends my comments for now.
CHAIRMAN TAYLOR: Thank you very much for coming in. Senator
Cowdery?
SENATOR COWDERY: You know we have, uh, a wind down, they call it
a wind down period, but this is not going to go away for a year
if we don't extend it. Our concern, and the reason for these
hearings, is to try to come up with some idea that we can give
some guidelines during that wind down period and it can possibly
be extended in the next session. You know, uh, as I understand,
when the APUC, they kept on doing business, trying to clean
there, give them an incentive, to clean their records up but
obviously yours from 1990, some of the older ones didn't get
cleaned up. But anyway I'm just - more of a comment, I think we
got an automatic one-year thing here that we're talking about
even if we didn't do anything.
MR. AUSMAN: I am concerned about this wind down because what I'm
concerned about is people are going to leave. Anybody good,
they're going to bail out early because that's good business. I'd
like to see it but I do like to see the organization change. I
think it is the responsibility of the Governor to manage his
organizations and this one is not being managed very well.
That's the fact of the matter. And this organization needs
better management to deal with these problems in terms of timing
and things like that.
CHAIRMAN TAYLOR: Any questions? Earle, thank you very much and I
appreciate you keeping it brief and thank you for coming back
today too. I'd also like to note that the Senate President Rick
Halford has joined us. Senator Halford, do you have it with you,
because I didn't have it to distribute to the committee, a copy
of the letter you sent to Commissioner Duncan on the $300,000
study, where we appropriated the money, uh, a year ago in June?
Could you give that to Annette and I'll have her run off copies
so we can distribute them? Was there any further follow-up
correspondence or…?
SENATOR HALFORD: Well, there was a lot of effort to avoid doing
anything and it's finally getting started.
CHAIRMAN TAYLOR: Yea, I was aware that they tried to send out a
public notice on intent to let the RFP, uh, so hopefully that
$300,000 study will get completed within this next year. The
reason I wanted - go ahead.
SENATOR HALFORD: The letter is a year old.
CHAIRMAN TAYLOR: No, uh, it was last year that we funded it - a
year ago and it was pursuant, I believe, to that letter to get
direction to the department what the legislature was asking for
and the fascinating part, the reason I wanted this committee to
have it available, was that the letter addressed many, many of
the issues that we are finding from testimony yesterday and
already this morning are very important issues that needed to be
investigated and looked at before this Commission went into its
wind down year so that we'd have had the benefit of that study
during the last year. That's why I wanted that letter
distributed and I appreciate you coming in this morning.
Although I didn't have him down yesterday, Dan did you want to
testify too and then we'll get on with the regular agenda here?
MR. DIECKGRAEFF: Senator, I assume since you couldn't pronounce
me - Dan Dieckgraeff with Enstar.
CHAIRMAN TAYLOR: You're going to have to do that again for me.
MR. DIECKGRAEFF: Okay, my name is Dan Dieckgraeff.
CHAIRMAN TAYLOR: Dieckgraeff, okay.
MR. DIECKGRAEFF: With Enstar.
CHAIRMAN TAYLOR: Yes. Okay, raise your right hand please. Do
you swear the testimony you are about to give before this
committee is the truth, the whole truth and nothing but the
truth?
MR. DIECKGRAEFF: I do.
SENATOR COWDERY: Could we have him spell his last name?
MR. DIECKGRAEFF: Yes, I will.
MR. DIECKGRAEFF: My name is Daniel M. Dieckgraeff, D-I-E-C-K-G-
R-A-E-F-F. I'm with Enstar Natural Gas Company, I'm the Vice-
President of Finance and Rates. I've been with Enstar for 20
years. Enstar provides natural gas to about half of Alaska's
population. We have over 109,000 homes and businesses that we
serve. We have service from Kenai-Soldotna to Houston to the Mat
Valley, to Girdwood and to Whittier. And, I thank you for the
opportunity to testify. Enstar Natural Gas Company strongly
supports the reauthorization of the Regulatory Commission of
Alaska. The regulatory oversight allows utilities and pipelines
essential governmental function to both the customers and the
regulated entities. We reviewed the reauthorization bill that
passed the House, the committee substitute HB 333, and we believe
the new timelines for the issuance of final orders in the new
settlement language incorporated in that bill have merit and we
enthusiastically support it. We would like to see the RCA
reauthorized for at least 2 years, preferably 4 more. Frequent
sunset reviews are disruptive, take time and resources away from
the RCA's real business of regulation as we have heard it takes
time and a lot of things are backlogged there. It places more
uncertainty on utility operations; it also proposed uncertainty
on the financial markets. Markets want a stable regulatory
environment and [this] certainly has a negative impact. The
current situation is an issue in the financial markets, um, I
have personally been involved with discussions with analysts,
with lenders, and the sponsors of those lenders and concerning
this current reauthorization and what effect it could or could
not have. And, it is also a topic, frankly, of the investor -
investment boards, for our utility as well as several others.
Changes can be proposed and made to the Commission without
sunsetting it. This legislature has the power and authority to
change the rules for the RCA anytime it wants to and has done
that in the years in the past. The fact that the Commission is
being sunsetted is something that a lot of the financial markets
just doesn't understand. It is alien to them.
SENATOR DONLEY: Can you remember the last time - because I
remember when I first got elected I chaired the Labor and
Commerce Committee and we were, back then, dealing with a sunset
bill and the very first time we put timelines on telephone
decisions was in that sunset bill.
MR. DIECKGRAEFF: Are you talking '94 or '99?
SENATOR DONLEY: I was talking about '88 - '89. Can you remember
the last time we made a change, that either you - the old
Commission or the new Commission, that wasn't in a sunset year,
that was tied to sunset legislation?
MR. DIECKGRAEFF: Frankly I don't. I have not tracked it,
especially on the telephone side.
SENATOR DONLEY: I suspect that although you are technically
correct, the sunset process is a process that is used for making
those kinds of reforms or revisions. That's why we go through
the audit review and see the suggestions. So I think technically
you're correct but I can't remember us really ever making any
changes in other than a sunset format.
MR. DIECKGRAEFF: Uh, I'm not a student of the legislature so I
don't know your exact history but I know you have the authority
to do it.
SENATOR DONLEY: That's true.
MR. DIECKGRAEFF: I do recall the effect of the 1999 changes and
how that affected investors and the financial markets in our
particular case so I do - I am aware of what that impact had.
There are many important issues for the RCA to deal with. Cook
Inlet gas supply and its effect on the gas and electric companies
- electric competition [indisc.] and inter-utility issues and the
safe, reliable and economic utility service to remote areas, also
TAPS and, if we're lucky, TAGS. Probably, you know, I don't know
in my life time or not but hopefully. We would not like to see
the Commission abolished and remade as it was in 1999. The
education process would have to start all over again. That is a
lot of wasted time and lost expertise. It has taken quite a bit
of time for all the utilities to bring this Commission and these
new Commissioners up to speed on the regulatory issues and the
individual issues within the individual utilities. What happens
in the meantime? Cases pile up even more, it takes time to get
up to speed, takes time to understand what's going on. There are
new issues that continue to pop up that must be dealt with. Any
type of a time out could be a real problem for the utilities and
consumers. Enstar strongly supports the reauthorization. We
liked HB 333. We think it worked. We like the procedures the
Commission is going through in their bench bar to solicit
comments from utilities - things to make better - and I thank you
again for the opportunity to testify.
CHAIRMAN TAYLOR: Dan, I, uh, continually hear this mantra for
which we have hired and employed several different attorneys both
within our staff, obviously outside staff for the committee. We
have reviewed every Attorney General's opinion we can find. We
have asked every witness that has appeared that actually worked
for or was with a utility or worked on the Commission - had
testimony yesterday from a lady that was senior staff to the
Commission. The wind-down year did not cause any of the horrors
or problems or the sky is falling attitude, uh, that we have
heard orchestrated both by the Administration and by the
Commission. We can find no source for any of that, uh, paranoia,
with the exception of those two sources. Everyone whose been
through one of those said it worked just fine, business as usual,
uh, and the most dramatic thing we ever did was to redo the
entire Commission and I worked on that with Senator Pearce and
I'm sure that did cause some disruption because you lost all of
the institutional memory. There was a learning curve that had to
go on but I've not heard throughout this entire process, either
in the legislature or among any of my colleagues, any desire to
kill this Commission. That paranoia is only coming from one
place, it is not coming from this legislature and hasn't.
MR. DIECKGRAEFF: I'm glad to hear that first of all. Second of
all, even in the remake of the Commission, as you said, it was
extremely disruptive…
CHAIRMAN TAYLOR: And nobody intends to do that from what I can
tell. We are looking at some timelines. We are looking at some
guidelines. We are trying to analyze what are the major problems
and how the legislature might provide some assistance in that.
We've heard people testify as though we are going to redo the
entire Commission, throw out all the existing Commissioners. I
don't know where this paranoia comes from but I think it has a
lot to do with bringing pressure upon people like yourself and
other utilities out there so that they will come in and endorse
and support the continued reauthorization. I keep hearing the
phrase ringing in my ears, four years and clean. That means they
don't even get any timeframes like ARECA wanted. Just four years
and clean. That's the Governor's bill that's going to be
presented to us.
MR. DIECKGRAEFF: I can't speak to the Governor's bill because I
didn't propose it and I can't speak for other utilities because
I'm not in their shoes. I watched what happened last time around.
I - that was extremely disruptive and that would be an extreme
problem. That's what I am concerned about. I know how the
[indisc.] impacts and I know how it's impacting my company right
now in the financial markets, the uncertainty. That's a big
concern for Enstar and as you go back and look at it, it is very
possible you could go back. What we have is the most recent
history - is you did remake it and start all over again. That's
not something we want to see. We strongly support the substitute
bill that was passed by the House dealing with timelines and,
most importantly, uh, I as well - was the settlement language -
language to help encourage settlements, which would speed up -
and I know the Commission in its bench bar discussions has had
those types of discussions and that's a very nice way to start
working on it.
CHAIRMAN TAYLOR: Thank you. Are there other questions? Senator
Cowdery?
SENATOR COWDERY: Just yesterday we heard testimony that the -
presently when we had the APUC, they had some delays, were
finding those delays are the same now or even, in some cases,
worse and we had testimony from Chugach Utility that financial
planning, the same thing that you said, because of the delays so,
uh, I guess my question is, do you think that we should just
reauthorize this without any changes or any new guidelines and
just leave it as it is so we continue to have - each of you think
that we should try to work out some language that gives some
timelines we have - that they have to deal with them, they have
to give an answer. Ya know, I mean sometimes we, all sitting up
here, have to make hard decisions and sometimes we'd like to walk
away from a hard decision but it seems to be, to me, that what
we're seeing in this thing is that when it comes to hard
decisions they have big problems with making the decisions. So,
anyway…
MR. DIECKGRAEFF: I can't speak entirely to Chugach's situation
because I'm not working for Chugach. I will note that the case
they are starting with actually started with the old Commission,
it started in 1996. Enstar has had three cases that have been
brought or made started with the new Commission. Its first was a
transfer case, transfer of ownership to [indisc.]. The
Commission responded to that and had an order issued for it
within three and a half months of our application. We had a gas
supply case, first gas supply case for Enstar since 1988, first
real gas supply case in front of APUC or RCA or - probably since
1992. It was done, final order was issued within a year of when
it was filed, which is the timeline that the Commission, the old
Commission actually, established for filing many, many years ago.
We have a rate case that is pending now, that's a complicated
issue. Part of the concern has been that the Commission has to
start all over again. These are absolutely new issues for this
group, nobody's talked about gas supply. There's a lot of
education that's gone on. There are always ways you can improve
things. Again, we are supporting the authorization or the
reauthorization of HB 333, which did include additional timelines
and items. So, to answer your question, yes we do support that.
That's why we do support that version of the bill.
SENATOR COWDERY: We have looked at this here pile of things, or
cases, and timelines and everything that I have looked at and I
think most of the people - I hope- have looked at - been supplied
to them. I appreciate your comments.
MR. DIECKGRAEFF: Thank you.
CHAIRMAN TAYLOR: Senator Donley.
SENATOR DONLEY: You've expressed concern about the time it took
the RCA to get up and running. Do you think it was the right
thing to do, to create the RCA?
MR. DIECKGRAEFF: When I look back, I observed and participated in
a lot of proceedings before the Commission. We had a commission
that, uh, part of its problem was its inability to work together.
That is not an issue with this Commission but, and so, it was a
drastic step and I'm not sure I even supported it at that point
in time because of the institutional memory and the issues saw
coming up before the Commission that [indisc. due to poor sound
quality]. That hand has been dealt. Starting all over again
would be a tremendous problem. Often times they don't get
familiar with an issue until it actually comes before them. They
had no reason to look at gas supply until we brought our gas
supply case because they have a lot of other things - they
inherited, what 500 or 700 cases?
SENATOR DONLEY: I guess I was trying to ask more of the big
picture, do you think it was the right thing to create the RCA?
MR. DIECKGRAEFF: In hindsight, yes, but it was very, very
disruptive.
SENATOR DONLEY: Yea, but in the long run you think it's working
out better?
MR. DIECKGRAEFF: I think it's working out well.
CHAIRMAN TAYLOR: But obviously you support some modifications and
some changes, as an example, the House bill that came over.
MR. DIECKGRAEFF: Yes.
CHAIRMAN TAYLOR: Okay, and I appreciate that very much and thank
you for coming in and taking the time today. We will now turn to
the Commission, um, oh yea, is George Gordon here? Yes, George,
I'm sorry you're okay, right, thank you. We weren't able to get
to you yesterday either on that list and I appreciate your coming
back. If you'd give us your full name please after we swear you
in? Do you swear to tell the truth, the whole truth, and nothing
but the truth so help you God before this committee?
MR. GORDON: I do. My name is George Gordon. I'm President/CEO
of Utilities Services of Alaska, a total service company
providing administrative and customer service support to
regulated entities - Golden Valley Utilities and College
Utilities, who are regulated by the RCA and provide water and
wastewater services to the entire Fairbanks area. Our utilities
do appreciate your efforts, uh, that you devoted to this issue.
It's very important to utilities and maybe our concerns will not
get lost in the normal rush of legislative business. This
testimony is not to be considered approval of how the Commission
has been conducting its business. There are several common
threads that we find when speaking to other utilities. There is
some general dissatisfaction about how the RCA operates. There
is a tremendous reluctance to publicly speak out. There is a
fear that expressing criticism or supporting sunset could result
in negative regulatory action. There appears to be a lack of
concern or awareness on the part of the Commission on the
problems created by their actions or, in some cases, their
inaction, i.e. there is not dialogue. Talking about dialogue,
the ARECA resolution 02-19, seems to be right on point on many of
the issues and I believe that was presented to you yesterday.
Our utilities reluctantly support a one-year, perhaps even less,
extension of the Commission's ability to operate. We believe, in
the short run, a complete sunset at this point may exacerbate
procedural problems. We're not 100 percent sure of that but the
handwriting seems to be on the wall. In this one-year extension
there has to be a concerted effort with industry participation to
address RCA problems and fashion a remedy. Any extension larger
than a year will not create an environment in which effective
change can occur.
MR. GORDON: What do we see as major problems? We think it takes
too long to get action or decisions from the Commission. CS for
HB 333 and the time frames incorporated in that bill are too
long. This bill authorizes by statute the Commission's current
inefficiencies. I don't think we need more time [indisc.].
There does not appear to be a recognition on part of the
Commission that delay translates into lost revenue and lost
opportunities for growing utilities. Delays mean lost revenue
and lost opportunity. That's the long and short. Our utilities
continue to experience substantial delay in processing relatively
routine tariff changes, at least we think they're routine, they
shouldn't take as long. And, this business of just issuing
orders out of the blue and having to have them overturned
frequently with reconsideration options [indisc. due to poor
sound quality] costly and time consuming. There's no advancement
of utility issues. RCA orders and inquiries and requests for
actions on the part of the facility, in response to Commission
staff or PAS, cause a great deal of time spent over what are
really non-issues. It's a waste of time.
CHAIRMAN TAYLOR: George, I'd interrupt you there if I could.
We've talked about orders out of the blue. We have a pile of
matters pending, docketed and so on, and they seem to be taking,
especially in the major cases, utility cases, rate cases, tariff
cases, they seem to be taking forever. What are you talking
about taking orders out of the blue? They're taking on other
things?
MR. GORDON: No. During the conduct of cases, at various points
during the case, there will be an order issued that appears to be
based on little or no information - seeking - going down what I
call rabbit-trails, without dialogue. I know it has happened to
Chugach, to our company, it has happened to other companies. You
have to stop the proceeding your in or put it on hold while you
answer the elements of this order that don't appear to have a lot
of foundation. It takes a lot of time and it costs a lot of money
and the end result is the Commission is forced into the position
to have to reconsider and perhaps do as much as a 180 on the
order that they issued not 45 or 60 days before. It's happened to
us and it's happened to other utilities and I think it's a waste
of time. There used to be more thought given into orders of the
issue.
CHAIRMAN TAYLOR: Thank you for that clarification.
MR. GORDON: There is no one for the utility to talk to and no
way to carry on a dialogue. This commission, I think, is
dialogue-less. Form is elevated over substance. To me, this
creates a lack of ability to fully define the issues. You can dot
all of the Is and dot all the Ts and still not understand what
all of the issues are and then you're working in a vacuum. To me
ex parte should not be a problem. You could schedule meetings
with all parties and talk. Don't screw anybody, don't hold them
without full participation by everybody including consumers so
you can talk and find out what the issues are and a lot of the
hearings that I've been seeing - the issues are not brought to
the - the system seems to be designed not to do that. Because of
the foregoing, the process is too expensive. Rate cases are
incredibly expensive now. I think the last witness just spoke to
that. There is no feeling that the process is fair. While some
will say that this is just dissatisfaction with RCA decisions, I
disagree. I've been in this business over 35 years, far too
long. I recognize you win some and lose some, that's ways of
regulations and I accept that. But you have to have a belief
that the process was fair before you can fully accept an adverse
decision. If you don't feel the process is fair it's very tough.
What do we see as potential solutions that need to be examined in
the perhaps one-year extension? I think there needs to be a new
position created of executive director or chief-of-Staff or
whatever you want to call it to run the day-to-day business
affairs of the Commission. I don't think the Commissioners should
have to do this. I think PAS needs to be reshaped and its mission
defined. Is it there as a consumer advocate or is it supposed to
be objective, acting on behalf of everyone? There should be more
hearing officers - perhaps even contract hearing officers - and
there should be the right and ability to disqualify a hearing
officer the same way you do a judge. There should be shorter
time frames, not longer, for requiring the Commission to do its
work. If the Commission can't get its work done with the staff
it has, then they should be required to demonstrate that and hire
more staff. Delays cost an incredible sum of money and you are
correct, our rate payers do pay a cost to the Commission but they
also pay the cost of the rate case which goes up exponentially
with delay and our customers pay for that also. And I think
lastly, there has to be a mechanism for the solicitation of
comments. You can't be pinned on people so that we can advance
and have frank discussions. This kind of a forum is fraught with
peril for all of us utilities. That is my prepared remarks and I
thank you for your hearing.
CHAIRMAN TAYLOR: Senator Ellis - and could we get a copy of your
prepared remarks? If you'll just give them to Annette, she will
distribute them but before you leave Senator Ellis had a
question.
SENATOR ELLIS: George, you'll remember under the old APUC we had
an Executive Director, and Senator Pearce was the prime architect
[indisc.] RCA legislation and I guess Senator Cowdery and Senator
Taylor worked on that - the detail of that legislation, and the
legislature voted, most of us here if not all of us, voted
explicitly to reject the old Executive Director set up and go to
a managing partner/Commissioner, uh, for management of the
agency. So you prefer the old APUC arrangement that brought a
lot of criticism to the legislature and we explicitly examined
that issue and changed it to what we have now?
MR. GORDON: I think that - my regulation experience goes back a
long time and in ancient history the executive director worked,
the concept worked very well. In recent years, the last years of
the Commission, it didn't work very well and you were right to
throw it out and try something new. I'd represent with - perhaps
some kind of controls, some kind of a manager that's paid to
manage that the utilities can talk to that's not a Commissioner
might be better than what we have now.
SENATOR ELLIS: Thank you.
CHAIRMAN TAYLOR: Senator Donley?
SENATOR DONLEY: Can you spell your last name for me?
MR. GORDON: G-O-R-D-O-N
CHAIRMAN TAYLOR: Can you tell us, in the two utilities that
you're here representing, College and Golden Heart, do you have
matters pending right now and do you have some specifics that you
can address that are frustrating your two utilities?
MR. GORDON: Well, yes we do have matters pending. We have, uh,
routine tariff matters and a rate case, a general rate case
pending for Golden Heart Utilities. And I tried very
specifically to my comments, not to get into difficulties with
cases and I want to be general and speak to procedure and to the
process. I've already tried to speak to the process, how it
works and how it doesn't work. I mean I can be dissatisfied with
the decision if I thought the process was fair and worked -
tough, that comes with our business. Sometimes the chips don't
fall where you want them to but I'm trying to give a flavor of
the failure of the process. I guess we could say that we are in
a rate case that was filed in December 17. We asked for an
interim and emergency refundable interim - to into effect in 30
days. It took 75. We lost two months of revenue, which was near a
quarter million dollars. Real lost opportunities and there's no
reason for that.
CHAIRMAN TAYLOR: I was very concerned by your first comments as
you listed them, not only the dissatisfaction but the question of
intimidation and the - as I mentioned to the committee yesterday
- when I scheduled this thing for the first time in the Senate my
telephone went into meltdown and not one of those people wanted
to come forward and testify but every one of them were from
utilities all across this state. They had horror stories they
wanted to talk about but felt so intimidated by coming forward
and talking before the Commissioners, uh, that somehow
retaliation might occur against their utility.
MR. GORDON: I am not intimidated. I am not an easily intimidated
person but I have a lot of concerns. These commissioners don't
intimidate me. I've been in the business too long for that.
They have an incredible amount of power, maybe even more than
they know. They can draw a line in the sand and you stand toe to
toe and if they don't like where the line is drawn they can
redraw it 10 feet back. You've got no choice but to step back 10
feet. That's problematic. These kinds of things should have
come out during the Legislative Budget and Audit review of the
Commission and they didn't and so utilities are either forced to
either step to the plate or keep their mouths shut. It's tough.
It's very tough. They're our regulators. They have a lot of power
over how we operate, whether we make money or lose money, how our
customers are treated. It is a difficult situation for utilities
and for me personally.
SENATOR DONLEY: When the Legislative Budget and Audit did its
review, were you contacted by them for comment?
MR. GORDON: No, two people in our company contacted them but
they never contacted us.
SENATOR COWDERY: You talked about the management and there's a
need - seems to be poor management with scheduling. Do you have,
is there anything when you, when they have a problem that you're
interested in, do you have any information or have you had any
information of a timeline of when you would have an answer or a
guideline that says, we'll get back with you within 30 days or a
year or five years or anything? Do you know?
MR. GORDON: There doesn't seem to be any. If they are there, I
[indisc.] missing. Actually we're in a general rate case going
on six months and we have yet had a pre-hearing conference and we
asked for one last week. Shouldn't take that long unless it's a
really, really elaborate issue. Most rate cases are not
necessarily elaborate - telephone utilities could be [remainder
of sentence indisc.].
SENATOR COWDERY: So when you, say, when you have a problem, you
communicate with RCA and say here's my problem and I'd like an
answer to this. Do they ever communicate back and say we will
have an answer on this by a certain date or anything like that,
or acknowledge?
MR. GORDON: You have real difficulty trying to communicate.
When you file your case, it's being heard and analyzed by the
staff to come up with initial recommendations at which time the
Commission makes a decision. Then they generally have PAS
appointed as a party and then you can speak to PAS but you can't
speak to the Commissioners and you can't speak to the staff that
wrote up the recommendations. You can't talk to them anymore so
then who can you talk to? PAS, who doesn't have any control, you
can talk to a hearing officer and you can talk to a Commissioner
but you have to be really, really careful what to say because of
ex parte. You're sort of hung out to dry by the process because
there is no dialogue. And, no, we don't get an answer as to when
something will be done.
SENATOR COWDERY: Do you think staff is the largest influence in
RCA?
MR. GORDON: They're big, a big influence. Of course, they are the
preponderance of the people at the Commission. It's probably
backwards. If you are going to have a PAS, they probably ought to
be the people to investigate the staff on being an advisory role
to the Commission, instead it's reversed.
SENATOR COWDERY: Thank you Mr. Chairman.
CHAIRMAN TAYLOR: Senator Donley.
SENATOR DONLEY: As you think of your experience dealing with
cases before the RCA, let's just deal with the RCA right now. And
the reason for delays, do you think that ...[END OF SIDE A]
TAPE 02-37, SIDE B
SENATOR DONLEY: ...let's just deal with the RCA for right now.
The reason for delays - do you think that is the actions of the
parties? What role does the action of the parties - I mean, there
are some parties, I imagine, that it is to their advantage to
delay decisions. How does that relate to your concerns about the
timeliness?
MR. GORDON: It does have some good effect. Interveners, as we
all know, can cause delays. But the Commission has the power to
force - to squash those and not give unlimited standing, for
instance, to interveners who don't bring anything to the table
and they should use that power. Hearing officials have power to
cut off dilatory tactics at the hearings for instance, or rule on
motions that would stop some of the nonsense and instead they
just put it in the [indisc.] and rule at the end and let the
whole process go forward with all this gray matter, this fuzz,
this background noise and that, to me, uh, causes the issues to
be hidden. You have to dig them up and that's not the way it's
supposed to be. There should be x issues. You should stipulate up
front to every possible issue you can with any party. I don't
care if there's five parties. You could stipulate with two - at
least you don't have to argue those two and three can duke it
out. That just isn't done. They've got the power, it's not being
used.
SENATOR DONLEY: Okay, thank you.
CHAIRMAN TAYLOR: Any other questions? Gordon, thank you very much
for coming down from Fairbanks to provide that testimony and I
appreciate your candor in your remarks.
SENATOR DONLEY: Hey, Gordon just for the health of the committee,
do you have a business card because it's kind of hard to read
your address?
CHAIRMAN TAYLOR: I would now like to invite the Commissioners
themselves to come up and testify. We only have one chair.
Yesterday we had a big table and we could spread you all out and
I thought we'd probably have you all come up at once - maybe that
would work, if you want to drag your chairs up there. The
secretary will tell us if we're not getting a good clear record
so at least I've asked her to interrupt us anytime she feels we
are not getting a clean record. All raise your right hand,
please. Do you swear the testimony you are about to give this
hearing is the truth, the whole truth and nothing but the truth
and do you do so aver and swear?
ALL COMMISSIONERS: I do.
CHAIRMAN TAYLOR: Let me start off first. I'll just start at one
end and move through - would you give us your full name please
and maybe a little background?
COMMISSIONER SMITH: My name is Bernie Smith. My background - I
was appointed when the RCA got appointed in '99. I was a project
manager and government affairs person for Tesoro for probably 16-
17 years. Before that I was project engineer for E&C Company -
that's what brought me to Alaska that built the refinery back in
1980. I am a graduate from Texas A&M with a degree in Engineering
Technology.
CHAIRMAN TAYLOR: Well that would certainly provide you with some
assistance in these complex matters I'm sure, and background but
it's primarily in oil, right?
COMMISSIONER SMITH: That's correct.
CHAIRMAN TAYLOR: Bernie, you've heard the testimony of - did you
sit through most of yesterday's testimony?
COMMISSIONER SMITH: Uh, yes I did.
CHAIRMAN TAYLOR: Actually, maybe I ought to start - this one to
me is kind of incredible. We've got matters that have not been
resolved, uh, and testimony to the effect that, as an example,
Chugach Electric is still waiting on a rate filing and working
under a temporary filing now. That is costing them $200,000 and
some thousand dollars a month and it's been over 6 years. How in
the world could all of you take off the entire day yesterday and
sit here with us? I mean maybe you could answer that one for me
first and then I will - is there nothing else to do over there
except come here and listen to and sit behind the people who are
giving testimony?
COMMISSIONER SMITH: Well, it's definitely part of - it's good to
understand what the issues are and I think that was very
educational, for at least myself to sit here and listen to the
testimony. I thought that was well worth it. And I did work
after hours to do some stuff that I needed to do, as we all do.
We all put in long hours.
CHAIRMAN TAYLOR: Bernie we are going to need to move you a little
closer to that microphone or move the microphone to you.
[DISCUSSION ABOUT POSITIONING MICROPHONES.]
SENATOR ELLIS: Mr. Chairman, if I'm not mistaken, you invited the
Commissioners to participate in these hearings.
CHAIRMAN TAYLOR: Oh, I did yes, and they accepted the invitation
and I assume that was so we didn't have to...
SENATOR ELLIS: And if they had not shown up to participate would
you have said that they weren't interested in all the comments
from the utilities?
CHAIRMAN TAYLOR: No, of course not. My concern was only that
they show up when it was necessary for them to testify and they
knew they were not on yesterday. They knew they were on for
today and that's why we published an agenda.
SENATOR ELLIS: I think Bernie gave an excellent answer to your
question.
SENATOR COWDERY: His answer was he wanted to know what the issues
were, as I understand.
COMMISSIONER SMITH: It's important that - we're making decisions
that are affecting the industry that we hear their side of the
story. As you just heard from Mr. Gordon, it's not often that
the industry actually talks to us so yes, it's important to sit
and listen and get feedback from industry. That should be part of
our job also.
CHAIRWOMAN THOMPSON: Senator Taylor? We're prepared to offer a
response to some of the specific issues that were raised
yesterday. We all participate in the decision making process.
[MORE DISCUSSION ABOUT MICROPHONES]
CHAIRWOMAN THOMPSON: Senator Taylor, I would like to let you
know that we came prepared with some testimony to offer in
response to the invitation and we would also like to be able to
respond to some of the individual - the suggestions that were
made yesterday in the testimony. The particular case you just
identified, the Chugach one, would probably be most appropriate
for one of the Commissioners that sat on that panel - would be
best informed to respond to that. I don't believe Commissioner
Smith is on that panel but, and I wasn't either so maybe
Commissioner Abbott or Strandberg or Demarco could address your
concerns about that docket.
SENATOR DONLEY: Mr. Chairman, I also want to say I saw that you
were there yesterday and I appreciate you being here yesterday.
I think it is part of the process we're going through here and I
think we all concerned about have the Commission function well.
But I think we also all appreciate the difficulties you're faced
with, with these complex decisions and dealing with multiple
parties and I'm glad you had the opportunity to come yesterday
and I appreciate that.
CHAIRWOMAN THOMPSON: Thank you.
CHAIRMAN TAYLOR: Back to Bernie, who we started with. Did you
want to instead, Madam Chairman, just give us your prepared
statements first before we ask questions?
CHAIRWOMAN THOMPSON: This is your hearing Senator Taylor. It was
my understanding that that is what you wanted us to do and I am
prepared to do that and I think in the context of those I would
be happy to be interrupted with questions. I think it is good to
have us all sitting here together because we all participate in
the process and different Commissioners can better address
different matters. So I think - I hope we can address all your
concerns. But, yes, given the opportunity I'd like to start off
with my prepared comments.
CHAIRMAN TAYLOR: Why don't we do that.
CHAIRWOMAN THOMPSON: Can you folks hear me in the back? I will
try to speak loudly. I wanted to thank you for the opportunity
to appear before this committee on the issue of reauthorization
of the Regulatory Commission of Alaska. As you know, I'm Nan
Thompson, the Chair of that agency, and I'm appearing here with
the other Commissioners. We are all available to answer
questions. You've heard yesterday, and will probably hear more
today, some anecdotal information from several utilities. That's
important information and I praise them all for being willing to
come forward and testify. I urge you to carefully consider the
agency's entire record when you're making a decision about our
reauthorization. This agency has done a good job. This agency
has done a very good job of working its way out of a mess that we
inherited from the APUC in 1999. Many of you were in the
Legislature and participated actively in the effort to abolish
the APUC and create a new agency, an agency that was empowered
with tools and a directive to do its job better.
In response to complaints from industry in the late 90's, the
National Regulatory Research Institute, an organization that
supports the work of state regulatory commissions nationwide, was
hired to visit the APUC. It was hired to analyze its operation
and to recommend improvements. A year after those recommendations
were continued, the agency had still taken no action on them and
the Legislature stepped in. The position of the Executive
Director was eliminated, a public advocacy section was created,
and the Commission was empowered to hire whatever kind of support
it needed to resolve cases more effectively. A management
information system was funded. The chair was given
administrative authority over the agency's operations. All of
these changes were made in response to the specific problems
identified by the National Regulatory Research Institute (NRRI)
with the agency's operations. It's important to remember that
1999 was not a sunset year for the APUC. The Legislature has the
power in any year to review the operations of any state agency
and change the enabling statute. We don't need to do it only
during a sunset year.
We invited - we being the Regulatory Commission - invited NRRI
back in February of 2000 to see if the problems identified in
1998 had been adequately addressed by the Legislature's changes
and the resulting Commission. The answer was yes. I have copies
of the report available for members of the committee along some
with other documents that I'll provide to you at the conclusion
of my testimony. NRRI found each of the areas identified in the
first review as being in need of attention has experienced
substantial improvements. This impartial body, NRRI, with
expertise in the operations of utility regulatory agencies
nationwide and experience, direct experience, with the problems
that the APUC faced, found that the agency was back on track.
The NRRI study also identified, the 2000 one, several areas of
potential future concerns and we have followed up on their
recommendations. We have invited them back to facilitate the
development of a new mission statement for the agency. We invited
them back again this summer to provide leadership and management
training to staff and section heads. That's scheduled for July.
We'd be happy to invite them back again to analyze and make
recommendations on some of the specific issues that have been
identified in the course of this hearing, such as the continuing
debate about whether we should have an executive director or not,
and looking for ways to reduce the agency's case load.
You've heard anecdotal stories about particular cases that have
been portrayed as examples of the RCA operating poorly and we can
and will address the specific cases that were identified in
yesterday's testimony. I'd also like to share with the committee
important information about how the agency as a whole handles its
workload, which is substantial, as you noted Senator Taylor.
In 1999, when we walked in the door there were more than 500 open
dockets, many had languished for years without action. We set
about a task that I call triage, and see how many of them laugh
when I say that, because what we did was divide those five
hundred dockets by 5 and each got 100. Every Commissioner got an
equal share with a directive to analyze the case and figure out
what it was that needed to be done to move it forward. This was
a daunting task. Each of us had to work our way, sometimes
through a file and sometimes through a file cabinet, for each of
those cases, um, in order to understand the case. Commissioner
Abbott fondly referred to this process as forced to take a drink
of water from a fire hose, I think more than once. The problem
we encountered was one that I don't think any of us anticipated
when we agreed to take these jobs, which was there wasn't really
before then a uniform agency-wide method for tracking filings
within the agency. Shortly after we began, I unearthed a few
hundred more cases or problems that should have been addressed
and docketed and instituted a system to keep track of all the
agency's work load that it would allow everyone in the agency
easy access to a list of open cases and knowledge of who in the
agency was responsible for those filings. Our agency caseload is
now less than 400. From over 700 cases we worked our way down to
400. This has been a substantial challenge because we've been
trying to keep abreast of the current filings and you heard about
some of those that have come in. Those average - we get about
450 filings a month from the various utilities and consumers.
We've been processing those filings timely while working through
our old dockets at the same time and this has been a not
insubstantial challenge. I think each of us individually can
tell you what they do to try and squeeze in the extra hours
required to do this work.
This change in the agency's case load, the reduction to less than
400 open dockets, represents a strong commitment to accomplish
the directive of this legislature, excuse me not this
legislature, that the legislature gave the agency in 1999.
Evidence of that accomplishment is also found by looking at the
number of substantive orders issued by the agency each year.
That number has more than doubled and I prepared a graph to
easily demonstrate that - copies of this are in the packet too.
The previous years are on the right going over to the left, the
last year that's complete, which is Fiscal Year 01, there were
741 substantive orders issued by the Commission. Now a
substantive order is not extending time or something like that,
it is an order where there is a written decision, a discussion,
an analysis and it's prepared and published in written form and
I'll tell you later on in my testimony how those orders get
processed and written. I think that this chart demonstrates a
substantial increase in the volume of work generated by our
agency over time. All of these orders, it is important to know,
are available to the public on our website and that's another
important change that the RCA has instituted. If you haven't had
the opportunity to visit our website, I encourage you to do so.
It is a useful tool to inform the public and keep industry
advised - it's an important part of our process now, it will soon
be modified to include access by the public through our MIS
system to all the filings made with our agency as well.
SENATOR DONLEY: I heard you mention MIS, what does that stand
for?
CHAIRWOMAN THOMPSON: MIS stands for Management Information System
and in 1999 that was one of the things the legislature told us to
do.
SENATOR DONLEY: In rural construction it's major investment
studies so...
CHAIRWOMAN THOMPSON: Oh, okay. How that is defined, I can tell
you a little bit about it and go off script here for a minute if
you're interested, which is when we got that directive we
started, we thought well, gee, what's that? So we contacted
every state commission in every state of the nation and said,
gee, this is what we want to do, we want a system that allows us
to internally manage our process, know where the dockets are,
what's the next step, and we also want a system that's going to
allow the public to have access to the documents that are filed
in front of us. And nobody had the software, nobody else had
done it, so we ended up having the software written and are in
the process - it's not a system that you flip the switch and it's
on or off. Parts of the system are on and active and other parts
are in the process of being tested and will soon become active.
As to the status today, I can check, but basically it's a design
to help us do our work better. So it's a tool, a technological
tool, to cope with the workload. One of the important
responsibilities we have is to review tariff changes for
economically regulated utilities, and there was some confusion I
believe, or perhaps after Ms. McPherren's testimony about what
regulated and not regulated is, um, I like to think of utilities,
they're regulated if they are required to have a certificate but
they are not economically regulated unless we have powers to
review their rates but, anyway, any utility that is economically
regulated has to file a request to change either its rates or
terms of service with the RCA. Last year we got 576 of those
requests, 85% of those were resolved within 45 days. Within that
45-day period, what happens is, the public is notified of the
change, the staff analyzes the proposed filing, discusses any
questions they may have with the utility, comments filed by the
public are reviewed, a recommendation is written and presented to
the Commissioners, the five Commissioners meet and vote and an
order is issued.
And I have a chart that illustrates tariff, the pace of tariff
filing to the - if you total those lines together it is about 576
filings. The first line, the long line, are the number of those
filings that are handled within 45 days. The ones that aren't
concluded within 45 days are ones that need further analysis for
some reason - those that are suspended for further investigation.
Filings can be suspended if they raise significant issues that
can't be adequately analyzed because we don't have the
information from the utility or just don't have time to go
through it. An example there is the Chugach filing in July of
last year requesting a rate increase you heard a little bit
about. I don't know if Joe Griffith is still here but I'd say
that was at least two feet, probably three feet, high when we got
it and there were a lot of significant issues and a lot of
comments on that filing. When we get comments and we get
requests to intervene from other parties, especially ratepayers,
Chugach's ratepayers are Homer Electric, MEA - on the wholesale
rate - large very sophisticated other utilities and they often
comment and frequently comment in those filings. We have
hearings so we can hear their perspective on the issues and allow
them to comment on some of the policy issues raised in the
filing. We have hearings to build an adequate record for making
a good decision.
Another important responsibility the agency has is handling
consumer complaints. We receive an average of more than 600 a
year; those are people from, who call because they're having
trouble with one of their utility companies. Our number's on the
bill and they call us if they can't work it out themselves with
the utilities. Now, of those consumer complaints, um, our role
is to investigate. We first contact the utility for comment and
relay what we've heard from the consumer, ask for input and then
our staff will look at the relevant tariff law or tariff and the
relevant law and work to resolve the complaint. This is one of
the processes the legislative auditor looked at in detail and the
legislative auditor found that the agency is quite responsive to
consumer complaints. Of those more than 600 complaints, most are
resolved in the first 15 days and I have a chart, by type of
complaint, that illustrates that - it shouldn't have been all
yellow, I guess it didn't get printed as well - but basically the
big part of the pie chart on all these are the ones that are
resolved in 15 days. I also want to show you how those
complaints are divided by industry and the big stripe on this
chart is telecommunications. Eighty percent of the complaints we
get from consumers are from consumers of telecommunication
services and that is an interesting fact to note. Soon after
Congress decided there should be competition in that industry in
1996, the agency saw a dramatic increase in complaints. This
illustrates how this agency's role changes as markets move to
competitive. We have regulations that expedite the process for
approving changes for rates in competitive markets. We spend
less time monitoring their prices when consumers have real
choices and more time addressing the consequences for consumers
of competitive markets.
SENATOR COWDERY: Go back to something you said earlier about
working or having hearings or discussing, do you discuss with the
utility personally, discuss the problem to have a better
understanding of what it is or do you do it as a group or
individually or do the utilities have to deal with staff and
never get you guys ear or how does that work?
CHAIRWOMAN THOMPSON: Well, probably the answer is all of the
above. To your question though, you ask it depending on what the
complaint is. For example I mentioned tariff filings, those are
the requested change rates for terms of service. Before that
tariff filing is determined by the Commission, it would be to a
staff person that someone from the utilities would talk and they
might get a call from staff saying, gee, I don't understand this
or this spreadsheet doesn't tie out with what you filed in your
other report - explain this difference to me and that's who
they'd hear from. In a case that has been, a tariff that has
been suspended, then we move into another role the agency has or
acting like a judge and a concern is with ex parte contact. It
is important when the parties want the process to be fair that
all the information we have in front of us is available to
everybody. It's not appropriate for any of us individual
Commissioners to talk to a company about a case, an issue in a
case, where there is an open docket. Any communications between
the utility and the Commission has to be in a form that all
parties are present; otherwise it is inappropriate, it's not fair
to the other parties.
SENATOR DONLEY: Does the RCA function under your own
administrative review guidelines there or are you under just the
standard administrative procedures act when it comes to sitting
in a quasi-judicial function?
CHAIRWOMAN THOMPSON: Uh, under the standard administrative
procedures act, we don't have specific ex-parte regulations and
it's something I thought might be a good idea for some time and
listening to the testimony of yesterday there is a lot of
confusion and frustration with either us talking to people we
shouldn't be talking to or not talking to people we shouldn't be
talking to and I think it would be helpful for us as an agency to
have regulations that clarify that for industry. The standard
line on the standard procedure for all of us it that it is okay
for any of us to talk with anybody about process or general
policy questions at any time but it is not okay to talk about the
issues in any specific cases, just because it's not fair if there
is a contested case. That's a really difficult line to draw, as
you can imagine.
SENATOR DONLEY: Does the Department of Law say you have the
authority under existing law to adopt regulations to facilitate
what you're just discussing there?
CHAIRWOMAN THOMPSON: Um, they're here, they can speak for
themselves but I don't know why we wouldn't. They are shaking
their heads, so yes we could. It's a matter of time and
priorities, quite frankly. Again, priorities may be readjusted
as a result of this process. When you think of our agency, you
should think of us as a referee. We don't make the laws.
CHAIRMAN TAYLOR: Maybe I'm confused but I thought your answer
was that you were under the Administrative Procedures Act.
CHAIRWOMAN THOMPSON: Like any other agency we operate under the
administrative - there are other laws that apply too but Senator
Donley asked specifically if we had - I thought the question was,
do we have other separate rules that govern just our agency for
operation. And we have, there's a lot of regulations that govern
operation of our agency but we are also subject to the APA.
CHAIRMAN TAYLOR: As far as I know, you're exempt.
CHAIRWOMAN THOMPSON: From the APA?
CHAIRMAN TAYLOR: Yes, and your counsel back there is nodding
yes.
CHAIRWOMAN THOMPSON: Okay, whatever my counsel says.
CHAIRMAN TAYLOR: Senator Donley's question, the answer should
then be no and then the answer should be we haven't adopted any
regulations yet internally on that issue. I think that would be
correct.
CHAIRWOMAN THOMPSON: I think there is some confusion about the
question. I didn't intend to mislead the committee; it is true
that we don't have our own internal regulations on ex parte
contact.
SENATOR DONLEY: This sounds strange to have the attorney in the
background here.
CHAIRWOMAN THOMPSON: Would be helpful to have her come to the
table and [indisc.]
SENATOR DONLEY: Just so I understand better, so you're not
subject to the standard Administrative Procedures Act that most
of the committees - or commissions and government that serve this
quasi-judicial function, are subject to. You have the power to
adopt your own regulations and haven't fully developed those
regulations yet. Is that the status?
CHAIRWOMAN THOMPSON: I think I am understanding where you're
going a little bit better now. We have, um, extensive
regulations that govern our procedures within our agency. They
talk about hearing processes, they talk about what utilities are
required to file with certain - they want certain types of
action, they set procedures for our own hearings. There are no
ex parte regulations that are a part of that. It is something we
could do and probably should do.
SENATOR DONLEY: And the reason you have the authority to do that
is because you're exempt from the other provisions or the
administrative procedures act?
CHAIRWOMAN THOMPSON: I'm gonna get in trouble with my lawyers
again if you make me answer a legal question.
MS. HICKERSON: Thank you. I am Elizabeth Hickerson from the
Attorney General's Office and actually substituting for Virginia
Rush. I have represented the Commission over the years, um,
previously the APUC and from time to time the RCA.
CHAIRMAN TAYLOR: We need to make a note that you should consider
yourself sworn in and, as an officer of the court, I will accept
that.
MS. HICKERSON: Thank you very much. Uh, specifically under AS
42.05.161, the administrative adjudication procedures of the APA
do not apply. Those of you that are familiar with APA know that
there are very specific terms and conditions contained and the
Commission is not subject to that.
SENATOR DONLEY: One of the reasons I asked because under that
it'd be very difficult to develop an ex parte communication
scheme that would be unique and separate, where if you had powers
intended for [indisc.] you might be able to do that.
MS. HICKERSON: Right, and Senator, through the Chair, certainly
the APUC does have authority to adopt regulations, have extensive
regulations on procedures. The general due process requirements
that govern all administrative bodies govern the Commission.
They are very concerned about affording due process to all
parties, it has been my experience and while members of the
public, perhaps utilities might wish to have more direct contact
on a one-to-one communication, general procedures require that
fairness prevail and that there are no inappropriate ex parte
communications and actually they don't even have to have a
regulation for that to apply, that is just general administrative
law that applies to all their proceedings.
CHAIRMAN TAYLOR: Who enforces that?
MS. HICKERSON: Well, as far as enforcement goes, the Commission
enforces its own procedures. In the event a party might feel that
they are in anyway not being afforded due process, they can bring
that to the attention of the Commission, um, and ask for an
audience on the issue, if you will, by motion.
CHAIRMAN TAYLOR: So the answer to the question is, the Commission
decides if the Commission has had improper ex parte
communication.
MS. HICKERSON: Well, in a way it would be. The Commission is
the body that renders decisions and if any party felt they were
being denied due process, it would be appropriate and the remedy
would be to bring a motion before the Commission on that very
issue and for a proceeding to be held that is necessary to
determine whether or not there was any inappropriate conduct. If
a party then felt that the Commission failed to adequately -
failed to address the question, they could appeal to court. But
generally, it's the Commission that is required to enforce their
own rules.
CHAIRMAN TAYLOR: How would anybody ever know?
MS. HICKERSON: How would anyone ever know what?
CHAIRMAN TAYLOR: If ex parte communication was or was not going
on? How would you know that?
MS. HICKERSON: Well I think, as in any other administrative
proceeding, as would be in court, it would be a party that would
bring the issue before the body, before the Commission, before
the court.
CHAIRMAN TAYLOR: So some other party, other than the one
obviously doing the ex parte communications, would have to know
of it or know that communication had taken place and they would
have to raise the issue before the very panel that has had the
communication.
MS. HICKERSON: Well, as basically, the rules of procedures that
apply to all proceedings that if there is an alleged wrong doing,
you bring it to the entity who has the jurisdiction to correct
the problem. Certainly if any individual Commissioner had a
concern, if the PAS has a concern, if any utility, a member of
the public, you know the forum is there. Strict rules of
procedures don't apply but the intent is so as not to prevent
someone from having access. The intent is to provide a fair
environment for all people to have their views reviewed.
SENATOR DONLEY: I just wanted to have a better understanding -
we had witnesses yesterday and today talk about the desire for
the ability to more informally address the Commission and I
wanted to understand and explore the legal [indisc.]
possibilities for that, so I think I got my question answered.
MS. HICKERSON: Okay.
SENATOR HALFORD: To close that, the provisions against improper
ex parte communication are a matter of court cases, law, they are
established, they are fairly clear, regardless of whether there
is any administrative action by this entity or not. They are a
principle of due process?
MS. HICKERSON: Yes, sir.
SENATOR HALFORD: They are there regardless of what is adopted?
MS. HICKERSON: That is right.
SENATOR HALFORD: The questions that we have been dealing with
are the questions of how that is implemented in a commission or
how you have information and so forth, but the principles are
clearly established by court cases with regard to improper ex
parte communications as a basic standard.
MS. HICKERSON: That is correct.
CHAIRMAN TAYLOR: One last thing, the distinction here is that in
a court case you can preempt that judge and you can appeal that
case to a higher authority if, in fact, you believe you've not
received a fair and impartial hearing on the disqualification of
that judge. What standards do we have for the disqualification
of a Commissioner?
MS. HICKERSON: Well, certainly if an entity felt it was not
receiving fair review they could bring a challenge to the
Commission and the Commission has the jurisdiction, primary
jurisdiction, over administrative law in this whole area and if
an entity felt that they were not receiving fair treatment, they
could go to court immediately so there are remedies that are
inherent with administrative law and court review.
CHAIRMAN TAYLOR: How long have you been advising them?
MS. HICKERSON: How long have I? I started out advising the APUC
in 1997. I previously represented consumers back in '81 before
the Commission. I represented the Commission, I think, for six
and a half years. I've consistently been brought back to help
assist the old APUC as far as the RCA.
CHAIRMAN TAYLOR: And in that history how many times was a
commissioner ever disqualified or ever recused themselves?
MS. HICKERSON: To my knowledge I don't have any specifics. I
think if there was ever - I can recall from time to time a
commissioner not sitting on a panel because of a perceived
conflict that they would bring themselves.
COMMISSIONER SMITH: I happen to be one of those commissioners. If
you did remember one confirmation for myself in '99, I was asked
on the floor - or not me, but it was asked on the floor, would I
recuse myself from any case that Tesoro had been involved with
and I stated I would and I have not been on any case that Tesoro
has been involved with so just, as a point, I have recused myself
from every issue.
MS. HICKERSON: Thank you.
CHAIRWOMAN THOMPSON: It's important to note also we have, in
terms of talking to the Commission, there's a public meeting a
couple of times a month depending on what the schedule is and
what's on the calendar. Any party is free to offer any testimony
they want to us then. As Commissioner Smith testified, there's
been a practice in assigning cases to not - it's been my practice
to apply the rules that apply to judges, in other words, not
assign folks to cases where either they've asked to recuse
themselves because of their connection with one of the parties or
it's one where they've had experience, extensive experience, and
knowledge that they might bring to bear that would be off the
record that might taint the process somehow. That decision has
been the source of some friction, but our process is different.
It's not - when we're making cases on decisions, it's not a
political process. It's not one like you folks experience in
Juneau where anybody that has an interest in something or wants
to convince you of something can knock on your door and talk to
you as long as you'll open it. At least when we're going through
the process of decision making, we talk to each other, we talk to
the staff that's supporting us in the analysis of the case and
the only other information we have about the case is information
that's in the record and the record is set up so that everybody
knows all of what we're going to consider. That's an important
part of fairness in the process.
SENATOR COWDERY: In staff recommendations - how often do you
follow their recommendations?
CHAIRWOMAN THOMPSON: Sometimes. I don't know if I can
characterize it by percentage.
SENATOR COWDERY: A majority of the time?
CHAIRWOMAN THOMPSON: Oh probably a majority of the time we do
follow staff recommendations, but we don't always agree with
them. Commissioner Demarco said that we often modify them, which
is true. We'll put our own twist to what we've heard but staff's
the one that spent - I mean they have fewer cases and more
responsibility for doing a thorough analysis and making a
recommendation to us. Senator Halford?
SENATOR HALFORD: So, just as a matter of policy, when you have
these cases that are ongoing for years, you kind of have to treat
them - everything as ex parte communication unless it comes
before some kind of a formal hearing or something like that?
You're kind of stuck with that standard for as long as those
cases are open?
CHAIRWOMAN THOMPSON: Yes. When you're talking about
communications, specifically about the issues in that case. As
many utilities have testified, they have more than one thing
going before us at any given time and we may be able to talk to
them about something else but we can't talk to them about that
case. It would be an inappropriate ex parte contact.
CHAIRMAN TAYLOR: How would we ever know?
CHAIRWOMAN THOMPSON: Commissioner Demarco - do you want to help?
COMMISSIONER DEMARCO: We take an oath to be fair and honest and I
think all of us take that very seriously and I think without an
understanding by the public, by the utilities that we regulate,
and by everyone else, that we do adhere to high standards of
ethics in conducting this business. It doesn't work. You could
not possibly either second guess people who are dealing with a
three foot drawer full of records or people who are trying to
cope with issues of this detail without having a certain element
of trust that the process is being conducted fairly and according
to the proper rules. We couldn't possibly have enough policing to
do that.
CHAIRMAN TAYLOR: What I'm referring to - as the Chairman has
mentioned three or four times now, that we still have ongoing
communication between commissioners and, what I would call,
litigants or applicants, I guess may be a better term - but we
only talk about process, we never talk about the case or the
specifics, and just the answer to Senator Halford, since there
may not have been a hearing for some lengthy period of time where
you could officially have the parties testifying in front of you.
And my question to that was how would we ever know? How would
anybody ever know whether or not the fine line between talking
about the case and talking about the procedure on the case is not
crossed?
CHAIRWOMAN THOMPSON: Well you've identified what's a very real
problem for all of us and it's choices that we've all made
individually as commissioners. Some have chosen to just not to
talk to folks at all and are subject to criticism, some of which
you've heard in your hearings about being unavailable and
unapproachable because they're uncomfortable about the line.
Others of us have chosen to communicate in an effort to be
responsive and understand industry's concern and have to be put
in the uncomfortable position personally of drawing the line when
the utility goes over it because I think we all carefully explain
when we have communications that this is a conversation about
process, this is a conversation about policy. It's not a
conversation about open docket. And sometimes you have to stop
people in midstream and say we can't talk about that and the
other commissioners can speak to their own personal experiences
with that problem but it's a tough call and one choice you can
make is just to not talk to anybody and being willing to be
subject - or not to talk to any of the parties in industry and be
willing to be subject to the criticism of being unavailable and
unresponsive.
CHAIRMAN TAYLOR: And these communications would probably be
oral? You run into somebody on the street?
CHAIRWOMAN THOMPSON: Uh huh.
CHAIRMAN TAYLOR: They're certainly not written, I would imagine,
because unless they're written about what is the process and when
will the process take place on my case and, if they are, I
imagine those are shared, we probably also - do these people
communicate also by e-mail?
CHAIRWOMAN THOMPSON: Sometimes.
CHAIRMAN TAYLOR: So that would reflect whether or not
communication was going on.
COMMISSIONER STRANDBERG: Senator Taylor - I'd like to - I am Jim
Strandberg. Just to amplify a little bit on what Nan was saying -
at a practical level, my personal feeling is that we really can't
do our business as commissioners without talking to industry and
I've - there are significant problems and you have to watch very
carefully about ex parte - the potential for having an ex parte
conversation because I think all of the parties in any of these
cases watch us very, very closely and I mean they watch our body
language in public meetings and in hearings and I just wanted to
tell you that it's my mind, you know coming from private
enterprise where I could pick up the phone and find something out
in an engineering business, but here the ex parte rules are very,
very important. Indeed if we don't live up to them, we can get
into serious difficulties in any of these proceedings and so all
I can say...
CHAIRMAN TAYLOR: What ex parte rules are we talking about? I
thought that in the discussion that none [indisc] that the only
ones that existed were those within existing case law within
administrative...
CHAIRWOMAN THOMPSON: Well those are very real and I think at this
time that - Senator Halford is shaking his head. He understands
them as well. We don't have separate regulations specifically for
our agency but we have - we're bound by the same principles that
would apply to general administrative proceedings.
CHAIRMAN TAYLOR: And staff is also bound by those?
CHAIRWOMAN THOMPSON: Staff's role is different. Staff is not the
ultimate decision maker. In many cases they can and are free to
talk to industry more than us because they don't call the shots,
we do.
CHAIRMAN TAYLOR: So staff goes and talks to industry, makes a
decision, and then you and staff sit down and make the decision
on the issue - right?
CHAIRWOMAN THOMPSON: Well it's - you're confusing two different
cases or maybe I was confusing your earlier question. Staff talks
to industry before. In a tariff filing, before it's suspended,
when it's still under consideration, staff talks to industry
openly and that's very useful. There are no other parties to the
docket at that point in time. The agency - the Commissioners have
not yet considered it. They talk to industry freely in order to
fully understand the filing and be able to make a recommendation.
Their recommendation is reduced to writing, it's available to the
public before the tariff action meeting at which we make a
decision, and then we deliberate in public and make a decision on
those matters. After a case has been suspended, staff's ability
to communicate with industry is compromised because of the issue
that you were insinuating at - that they would improperly
influence staff who would communicate to us. Once a proceeding
has been suspended and we have an open adjudicatory docket,
everything is on the record. With regulations dockets, it's a
little different. Regulations dockets - we're policy makers.
We're acting more like the legislature does when it adopts
legislation and there are communications between staff and
members of industry about issues in those regulations dockets
and, I imagine, perhaps with commissioners and members of
industry about regulations dockets as well. The outcome is
different. It's not one party versus another. In regulations
dockets, we're implementing policies that will apply to every
utility in the state.
CHAIRMAN TAYLOR: And I'm sure we understand that this week.
Senator Ellis?
SENATOR ELLIS: Nan, on the subject of contact with you and other
Commissioners, you know I can understand - there's millions of
dollars at stake, utilities wanting to affect your opinions.
What's been your experience with the Governor and legislators? Do
you receive contacts from anyone other than the interested
parties as utilities?
CHAIRWOMAN THOMPSON: I've never received a communication from the
Governor or anybody in the Executive Branch about any open docket
and the other Commissioners should be allowed to answer that
question for themselves.
SENATOR ELLIS: Do legislators try and affect decisions?
CHAIRWOMAN THOMPSON: I've gotten calls from legislators. I have
attributed that effort to a lack of understanding about the
specific processes, which are complex. You can't be expected to
know whether it's an R docket or a U docket, a distinction that's
important in our minds but perhaps not in theirs. In many cases,
the communication comes in the form of an e-mail or a letter and
the appropriate way to address it is just to put that in the
record and make it available to all of the other parties - make
copies to other parties. If it isn't a written communication,
I'll write or reduce the communication to writing and put that
written record or that evidence of the communication in the
record as well if it's a U docket that I got the communication
about. I guess, again, that's something the other Commissioners
may be able to answer or should be able to answer for themselves.
They may answer differently or not. I don't know.
COMMISSIONER DEMARCO: I don't have any legislator calls.
SENATOR ELLIS: Thank you.
CHAIRWOMAN THOMPSON: Okay. This...
CHAIRMAN TAYLOR: I'm assuming, though, you've had significant
contact with the Governor's Office over the last month, month and
a half. I see some old friends sitting out here and kind of
wonder who they're being paid by but I - there certainly has been
an extreme effort, to say the least, to go out publicly and to
talk with utilities and others about the substance of this
hearing today.
CHAIRWOMAN THOMPSON: I believe that the Governor recognizes the
importance of this agency's work for the economy of the state and
I believe that he understands the complexity of the cases that we
handle and the importance that continuing the agency, in effect,
and not subjecting us to a sunset year has. I think he
understands clearly the disruption that it would bring to our
ability to get our work done. I think he also understands because
he's probably reviewed the annual report to the Legislature and
some of the other information that's been provided about the
volume of work we handle and this process has been very
disruptive to our workflow. I believe that the Governor sincerely
wants to avoid any further disruption. He wants us to be able to
get back and do our work, to be able to do what the utilities
that have testified before this committee have said is important,
which is to process the cases timely.
CHAIRMAN TAYLOR: Senator Ward?
SENATOR WARD: Thank you Mr. Chairman. Through the Chair - I have
a letter here from Senator Halford that refers to an
appropriation that was made by not this legislature but the
legislature before in May of 2001. When did you become aware of
this appropriation for an outside audit to be done and who
contacted you and is there some kind of a record?
CHAIRWOMAN THOMPSON: I honestly don't remember how I became aware
of it. It was after the Legislature adjourned and then I remember
being asked what it was for and I said I don't know and then
being shown a copy of Senator Halford's letter sometime later.
SENATOR WARD: And then, if I might, Mr. Chairman, who asked you
that? Who did you discuss it with?
CHAIRWOMAN THOMPSON: As best I can recall, and it wasn't, well -
as best I can recall, it was probably somebody from the
Governor's Office but I'm not sure.
SENATOR WARD: Would you happen to know who - would you have an e-
mail? As a Commissioner would you make a documentation of that
discussion?
CHAIRWOMAN THOMPSON: Well, it wouldn't be an ex parte
communication that I would have put in the record because there
is no open case.
SENATOR WARD: That's not what I was asking. Is there a
documentation as to when the first discussion was held - I'm
trying to find...
CHAIRWOMAN THOMPSON: I don't know Senator Ward. I don't know if
there is or not.
SENATOR WARD: Okay. Then I might ask any of the other
Commissioners - have any of you had any discussion concerning the
request for audit from the Legislature last year and, if so, who
with?
CHAIRWOMAN THOMPSON: The request for audit? Are you talking about
the referral to the Legislative Budget and Audit Committee or
Senator Halford's letter?
SENATOR WARD: No, I mean the audit.
CHAIRWOMAN THOMPSON: The telecommunications study?
SENATOR WARD: The telecommunications study.
CHAIRWOMAN THOMPSON: Okay.
SENATOR WARD: All right. Are we unconfused now?
CHAIRWOMAN THOMPSON: Okay.
SENATOR WARD: Who first contacted you about it? You don't
remember but does anybody else remember?
CHAIRWOMAN THOMPSON: I think my answer was I'm not sure that I
remember specifically, but it was probably somebody from the
Governor's Office because it showed up in the budget when they
were reviewing it shortly after the session adjourned.
SENATOR WARD: And do you recall any kind of discussion as to
implementing this whatsoever?
CHAIRWOMAN THOMPSON: The appropriation was to the Department of
Administration.
SENATOR WARD: I'm aware of that but since they contacted you and
since it does have - referred to one of the things that was going
to do - that's agency performance, they almost would have to
contact you in that case and it appears that they have and since
we can't remember who it was I was wondering if there might be
some documentation as to that contact or if any of the other
Commissioners - have any of the other Commissioners had any
contact about this appropriation? Have you?
AN UNIDENTIFIED MALE COMMISSIONER: I remember when it was going
through the legislation at the time. It was at the very end of
the session but I didn't have any contact. I just remember about
it.
SENATOR WARD: So we would have to ask the Governor's Office if
they could recall who first approached you on it and what that
discussion was and if there was any conclusions on it?
CHAIRWOMAN THOMPSON: Um hum. I'm trying to...
CHAIRMAN TAYLOR: What we're trying to figure out is how come the
Legislature appropriates $300,000 for a study on basically
telecommunications and this Commission and it gets so slow rolled
by the Administration that Commissioner Duncan doesn't even put
th
out the RFP till the 15 of April with a response date the day
after the next legislature adjourns. We're trying to figure out
why that happened and who slowed it.
CHAIRWOMAN THOMPSON: I think that talking to Commissioner Duncan
from the Department of Administration is the way to get the
answer to that question. I don't know.
SENATOR WARD: Well, Mr. Chairman, all I was - I was just asking
who you had contact with - if it was Commissioner Duncan then
that would be fine but since you don't recall...
CHAIRWOMAN THOMPSON: I remember talking with Commissioner Duncan
later. Your question was focused on the days right around after
it was passed and I don't remember when it was, but some months
later I remember hearing from Commissioner Duncan about it.
CHAIRMAN TAYLOR: Did you participate in meetings with Mr. Duncan
or any other party relative to that expenditure and did you have
discussions with anyone in this last year about whether or not
that expenditure would occur and how it would occur and so on?
CHAIRWOMAN THOMPSON: Yes.
CHAIRMAN TAYLOR: With whom?
CHAIRWOMAN THOMPSON: I - when the process of issuing the RFP
began, I was asked because of expertise in telecommunications to
try to articulate, you know, what the study would look at and I
participated with a group of people in a conference call where we
were looking at a draft of the RFP. The effort was made to be
responsive to the concerns raised in Senator Halford's letter and
word the RFP in a way that we were responsive.
SENATOR WARD: Mr. Chair, if I could? And if you could, could you
tell me when that teleconference was and who was on line?
CHAIRWOMAN THOMPSON: I can't, sitting here, tell you I'm going to
remember everything exactly. It was relatively, well, it was
within the last couple of months and there was a group of folks
on line.
SENATOR WARD: And would you happen to have a log of who those
people may be?
CHAIRWOMAN THOMPSON: I'm sure that the Department of
Administration would because this RFP was their responsibility
and they're really the ones that have the information that you
seem to be seeking about it rather than this agency.
SENATOR WARD: You do not have it?
CHAIRWOMAN THOMPSON: No.
SENATOR WARD: Thank you Mr....
CHAIRMAN TAYLOR: And apparently that's the first discussion you
recall having with either the Administration, Mr. Duncan, about
this study?
CHAIRWOMAN THOMPSON: I got a letter from Senator Halford at some
time earlier that I'm not entirely clear what prompted but he was
suggesting that the money had been appropriated to the Department
of Administration and that was the appropriate agency to handle
it.
CHAIRMAN TAYLOR: What I've been trying to figure out is how come
right at the end of the legislative session the Administration
was strongly encouraging members of the House Finance Committee
to reappropriate the $300,000 over to a suicide prevention fund.
CHAIRWOMAN THOMPSON: Senator, I don't know anything about that.
I'm sorry I can't answer your question. Well, we're an
independent agency. We're not the Governor's Office and that ties
right into - if you're done with that line of inquiry - to the
next - where I was going to go next.
CHAIRMAN TAYLOR: I have a meeting at noon across the street and
the hour has hit and I think it's appropriate we take a break
right now and we'll return about 1:30.
CHAIRWOMAN THOMPSON: We'll be here Senator. Thank you.
CHAIRMAN TAYLOR: We'll get all of our affairs in order. We'll
stand in recess until 1:30. [END OF TAPE]
TAPE 02-38, SIDE A
1:40 p.m.
CHAIRMAN TAYLOR: The committee meeting will come back to order.
There being a quorum present, that being Senators Donley, Ellis,
Cowdery and Chair Taylor. The Commissioners are back before us
and I remind you - still under oath. You have not had a chance to
complete your opening statement. We interrupted you with some
questions. If you would complete your statement and wrap up in
five or ten minutes because I'm sure there's a lot of questions
that members have.
CHAIRWOMAN THOMPSON: I'll do that. Thank you Senator Taylor. It
sounds like the sound system is working differently. I don't see
a mic, but I don't think I need one right now. The RCA is a
referee, and that is how folks should understand what we do. We
don't make the laws, we apply them. It's our job to implement the
directives reflected in the work of this Legislature and Congress
that we get in the form of laws. We make sure that those laws are
fairly applied and in that process there are winners and there
are losers. Utilities and consumers are not always happy with the
results. Our job is to make good decisions based on information
presented to the agency that are consistent with the law and most
of the companies that we regulate would probably agree with what
Ms. [indisc] for AT&T Alascom said yesterday. They don't always
like the results they get but they recognize the need to have a
referee to make a decision and they believe that we're doing a
good job as a referee.
Some of those companies testified in the House proceedings and
many sitting in the audience of this proceeding have written
letters of support. I have a group of those letters to give you
and material to give out at the conclusion of my testimony. Some
of those letters are from people who are here to testify.
There's one from a fellow named Bill Nugent. He is the president
of NARUC, the National Association of Regulatory Utility
Commissioners. I don't know if you received that directly in your
offices as well. I believe it was sent earlier this week. But he
offered for the Legislature's information the importance of
regulatory commissions in states and the roles that they play
nationwide. Dave Wirick, the auditor of the National Regulatory
Research Institute, and Kathy Abernathy, the current FCC
Commissioner, all wrote letters urging the reauthorization of the
Commission. We also have letters from some of our more important
consumers from industry - both large utilities, like Enstar,
Waste Management, and smaller ones, like TelAlaska, that you
heard from in the form of Jack Rhyner earlier today and Colville.
For me, the most extraordinary letter in the packet is the one
that was signed by 18 attorneys that consulted and regularly
practice in front of us. It amazes me that this group of people
who spend their lives disagreeing with each other in our hearing
room all agreed on one thing and they all signed the same letter
urging this Legislature to reauthorize us. The epic battles in
both the telephone and electric industries were raised before the
RCA and they are going to continue long after us. Our job is to
protect the public interest.
CHAIRWOMAN THOMPSON: The public needs us to make sure that their
interests are protected while these businesses are wrestling with
their competitors and would-be competitors. We are the agency
with the expertise to understand what people are fighting about
and why and to make sure it's a fair fight and minimize
collateral damage to consumers. Any effort to eliminate the
agency because they have lost a round of the fight is like
killing the referee, because they ruled against you. If any
utility doesn't like our resolution, they have a remedy under the
current process. There are several. First, they can ask for
reconsideration and under the amendment to the statute in 1999,
all five commissioners sat to rethink the entire record for the
decision and decided if they, as well as any additional
information provided by the utility or the plaintiff - and
decided they agreed with what the previous panel thought. The
decisions on reconsideration are due within 30 days of getting a
request.
If the utility still thinks that we misapplied the law, they can
appeal to the courts. The courts have reviewed 10 of the RCA's
decisions - 10 decisions that we've rendered since the agency
started operating as a group. In nine out of 10 cases, our
decisions have been affirmed. That means that in nine out of 10
cases, we correctly applied the law. Yesterday, Mr. Furchtgott-
Roth said that you should judge our effectiveness by the
standards of administrative liberty and he defined that as
consistently and fairly applying the law. I suggest that that
record of nine out of 10 decisions affirmed proved that we are
fairly meeting that test.
The process that the agency operates under has improved
considerably and will continue to do so. The way we operate as an
agency is fundamentally different now than how the APUC operated.
The filings are transmitted and shared electronically within the
agencies, the model that's been issuing orders has been addressed
by changes in that process that are designed to improve both the
quality and the quantity of our orders. With the elimination of
the executive director's position, sections have more
responsibilities and more opportunities to develop
professionally. We emphasize training and encourage supervisors
to address and identify specific needs. The consolidation of
administrative functions in the chair has enabled the other
commissioners to focus on the substance of work at the agency and
being more productive.
We've used the tools given to us by the legislature in 1999
effectively. We adopted regulations to put a dispute resolution
process in place with strict deadlines in place to resolve
disputes between telecommunications carriers. We actively
encourage utilities to work with each other to resolve disputes
that avoid expensive delays and litigation. Chugach Electric is a
recent example to be commended for resolving a long-standing
dispute with its wholesale customers by agreeing to a
recommendation of an impartial expert they jointly hired. Golden
Valley Electric, which hadn't been in for rate review for 18
years, faced a monumental task in preparing the rate case. They
successfully filed it and settled with the public advocacy
section, the other party in the docket, shortly before the
hearing was to begin. We have consistently encouraged parties to
actively work together to resolve their disputes.
The agency's processes will always be a work in progress. As the
markets we regulate change, we need to change in response. We've
actively sought input from industries in the bench and bar
conferences. Mr. Yould noted those yesterday and several others
have referred to them as well. We will continue that effort and
can assign more time to the process as a result of that process.
This process is an agreement that the commission needs to spend
more time processing, working on its process and less time doing
cases.
The balance we have struck as a group was based on the
legislative priority to clean up the backlog and our efforts
there have been successful. If the committee wants specific
issues addressed, like the possibility of an E.D., we can invite
merely to return and offer a recommendation from an expert, an
impartial point of view. A review of the agency's processes by
representative companies with filings pending before the
commission for decision would be awkward and inappropriate. Mr.
Yould had a suggestion that I know was offered in that effort to
be helpful, but we are very different from the private sector for
one very fundamental reason. We don't always have control - in
fact we usually don't over our workload. As an engineer in a
private consulting firm, you put out a request for proposal and
you can control what's on your plate. We don't. We do what the
legislature through statute and the utilities through filings ask
us to do. In order to be most useful, anyone reviewing the
agency's processes and making recommendations needs to be
impartial and knowledgeable about how agencies like ours operate.
Part of the process has been designed to produce fair and
reasoned decisions. The committee has heard testimony that our
process takes too long in some cases. I want to explain to you
what the process is so you can understand why some cases take
longer than others. When we adjudicate disputed cases, we act as
[indisc.] and interested parties can participate either by
attending hearings or filing comments or intervening as a party.
We make our decisions based on facts in the record that parties
have access to and we make all of our decisions as a group. We,
as a commission, meet every week to discuss cases that are ripe
for a decision. The docket managers, and that is individual
commissioners, are responsible for putting the cases on a
calendar and presenting them for discussing during our weekly
meetings. We openly debate the possible result. Sometimes staff
is present if necessary to answer questions and the attorney
general is present to answer questions on whether the proposed
result is consistent with the legal standards we have to apply.
This is a great process because it allows each to bring our
individual backgrounds to bear to resolve the difficult issues we
face. After the discussion the panel members vote and a drafting
assignment is made. Sometimes commissioners draft the orders and
sometimes it's staff. All the orders are edited by paralegals and
by an attorney. They are circulated amongst the panel. Each panel
member must decide separately whether they want to sign up on the
decision or not. Sometimes we change our minds when the decision
that's circulating - we see it reduced to writing. Any
commissioner who doesn't agree with the end result is free to
write his own opinion. This process works effectively to render
group decisions.
The last point I wanted to address before responding to concerns
raised yesterday was the one that has been the subject of much
debate during the process and that is what will happen on June
30, 2003 if the agency is not reauthorized. The language in the
statute is clear and that's where I would go for insight rather
than [indisc.]
CHAIRMAN TAYLOR: I'm sorry, you said June 30, 2003?
CHAIRWOMAN THOMPSON: 2002 is what I meant. I'm sorry. It says
that the agency expires on that date if not reauthorized and the
next sentence says that upon termination, it can essentially
continue until June 30 of the next succeeding year while
concluding its affairs. I know you are all familiar with the AG
opinion and I saw it in the packet distributed yesterday that
quoted from it. The conclusions of that opinion are pretty clear.
It says that we have an obligation under the law to plan to
conclude the agency's operation at the end of the year following
termination and that's what we'll do. In the letter I wrote to
you, Senator Taylor, toward the end of the session. I explained
that how we would go about that would be to have some type of
public process [indisc.] how they should set, how we should set
the priorities for that concluding year and discuss it amongst
ourselves [indisc.].
We recognize that during that concluding year we'll probably have
to make adjustments. Staff that we have may seek more stable
employment opportunities and may leave and our ability to handle
cases may be diminished. While some of the [indisc.], we all
recognize the importance of [indisc.]. They are and we'll do
everything we can to make sure that that's done, but all of my
staff [indisc.]. We are responsible to the FCC under recently
adopted regulations. They were adopted after [indisc.] and he may
not have been aware of it, but we have to certify that each
[indisc.] is appropriately using it. In order for us to sign a
certification, we need to do an honest job of reviewing
information to make sure that we can sign that certification.
The RCA plays a crucial role in the state's economy. Allowing the
agency to terminate by not reauthorizing it will at best create
chaos; it will destroy the progress of the last three years and
produce negative collateral damage. We've heard testimony this
morning from a representative from one company about the
disruption to their financial markets. I can assure you, these
are often how our decisions have an impact there and I'm sure
yours would as well. Most importantly, the legislature does not
need to terminate the agency to affect a change. We could provide
[indisc.] for specific changes to the agency, but this body, the
legislature, has the power to do that regardless of whether it's
a sunset year or not. We are a creature of statute and the
legislature makes those statutes. As it did in 1999, the
legislature can change the agency's [indisc.] or in statute
without sunsetting the agency.
Another final important impact is funding. This is a year for the
legislature to face a challenge with funding for all programs.
None of our agency's budget comes from general funds. We're 100
percent funded by the regulatory cost charge collected from all
utilities' consumers. If this agency is no longer in existence
and some of its programs are transferred elsewhere in state
government, the agencies to which they transfer will have to hire
staff funded by general funds to perform the same duties. PTE is
a good example of that.
CHAIRMAN TAYLOR: Let me stop you right there. Find that same
sentence again - If this agency isn't funded and/or if this
agency has to convey work to other agencies, they would have to
receive that funding? Why do you think in the budget that we just
passed fully funded you for the next year?
CHAIRWOMAN THOMPSON: I'm talking about after the end of the
sunset year.
CHAIRMAN TAYLOR: At the end of the sunset year you would
terminate, you would totally go out of business, you would no
longer exist? That means that the next legislature and next
governor who, after a four-month session of reviewing this,
chooses to terminate this commission. I have heard no one suggest
termination of this commission and if you can name a person who
has suggested terminating this commission, I would appreciate it,
because I'll call him in here to testify in front of this group.
I think you're the only person suggesting this.
CHAIRWOMAN THOMPSON: Senator Taylor, I was referring to the words
of the statute. The statute is very clear. The statute says, 'The
agency will expire…' then it goes on to talk about the year
following termination.
CHAIRMAN TAYLOR: How many more people do we need to have assure
you that you are fully capable of continuing in your business as
usual and we've had attorney general's opinions, we've had
legislative legal's opinion's on it. We've had one witness after
another who went through the sunset year on the APUC and the most
they said was that the executive branch, the commissioners
themselves, might have had to contemplate, if everything else
falls apart, a disaster plan for the end of it, because nobody
even at that time contemplated removing or using the words you
do, terminate, die, these other emotional terms. Nobody has
suggested that except you and this governor and I don't
understand why you're doing this self-inflicted wound not only on
yourselves, but on every one of these utilities.
CHAIRWOMAN THOMPSON: Senator Taylor, I'm sure you've had the
opportunity to read the statute too, and the words 'expire and
terminate' are in the statute. There is the AG opinion that
you've cited is one and it was also quoted by leg audit's
opinion. I think the last paragraph has a conclusion in it [that]
states very clearly what is to happen and it's consistent with
what our message has been. It says, 'We conclude that the impact
of AS 44.66.010(a)(4) on the Alaska Public Utilities Commission
is to impose an additional duty to prepare for closing, but not
to eliminate the commission's power to conduct its regulatory
function,' and we agreed. We will still have the power to do our
job. The commission should comply with sunset law by preparing
for the contingency that it may be required to cease all
activities, lay off all staffing and close the store at the end
of the next fiscal year. That would be 2003. We've suggested that
the commission could examine the time demands of their current
workload and determine what additional investigations can be
accomplished by the end of the sunset year. We're supposed to
figure out what we can actually finish before the end of the
year, to develop a plan to conclude as many matters as possible
before the end of the year and publicize plans to wind down and
phase out by June 30, 1995 - this was written some years ago. We
emphasize that how to do this is within the commission's
discretion, since the statutes offer little guidance. We take
that as being our responsibility under the law to develop a plan
to wind down the agency's operation.
CHAIRMAN TAYLOR: So, it's your responsibility under the law to
tell people like Jack Rhyner and, in fact, you use the very same
words, just a moment ago on universal services, we will try our
best, but we might not be able to get to it. That is a level of
coercion that is amazing to me that you would even be suggesting
that to these people reliant upon those federal dollars for
universal services in many of our rural communities and that the
threat of not being able to get to that certification is
obviously very real. Mr. Rhyner is very concerned about it. I'm
concerned about it and why do you find it necessary to use those
kinds of terms when no agency like you who has had to go through
this process in the past has done so? I think it's very unusual
and I'd like your explanation.
CHAIRWOMAN THOMPSON: I think Mr. Rhyner understood the process
well. I've explained, and I will again, that I am relying on the
words in the statutes and the opinion of the Attorney General. I
think it's important and it's part of our responsibility to the
public that we serve, which is the utilities and the consumers,
to inform them of the possible conflict. It's what the letter
said and what I've said here in testimony is that we would
develop a plan for the agency's final year. We have scheduled a
bench and bar. It was scheduled for shortly after the legislature
was intended to adjourn thinking the matter might be resolved in
special session. That was June 5, I think, and we canceled it
after the legislature didn't address our bill during special
session, but it's our plan to talk to them. We believe you've
heard the testimony from many utilities that stability and
knowing what the rules are helps them do business and we think
it's part of our responsibility to help them understand what the
process is going to be like so that they can prepare for the next
year.
SENATOR DONLEY: You've done all the duties you're charged with in
this annual review process and the universal fee service is
exactly the kind of thing that what you just read from instructed
you to continue to do. So it seems like putting down a list was a
red herring that would send up a scare to people that shouldn't
have been scared even by the guidelines you were given by the
Attorney General.
CHAIRWOMAN THOMPSON: At the time that letter was written, the
threat to the agency, it wasn't clear and I'm glad we can clarify
with you in here that no one has an intention to get rid of the
agency. I have faith sunsetting the agency would indicate an
intention to get rid of it.
CHAIRMAN TAYLOR: No one has ever indicated in the past, in the 14
different times the legislature has taken it up, is that the next
legislature could do a thorough review of that agency. The number
of agencies actually terminated you could count on one hand with
a lot of fingers left over. So, to suggest that because it might
have been a possibility, that we have to go into this death
spiral attitude and inform everyone of it seems awfully unique in
that it seems like an attempt by the administration to merely
pressure the legislature and justify the calling of the session
when in fact we have a $300,000 study out there we would like to
have concluded and at least have the benefit of that information
before moving forward and, believe me, I don't intend to be part
of that process. I only get back there by losing. Many of these
people get back there by winning and they're now involved in
campaigns. I don't intend to be part of that process and I trust
the next legislature and the next governor to carry that out.
The amazing part to me is that you keep saying that we could do
these things, but, and then you come up with a scenario that I
think any reasonable business person would be frightened of. I
know of a gentleman sitting in the back room. All he needs is a
simple little approval by you people to transfer and sell his
business on the North Slope where he's got like 16, 17 customers.
There is no protest; it should involve a very ministerial
function, but he's been told by you that he will not, maybe, be
able to that, don't know if we can get to it. That dramatically
impacts their financing right now on their ability to sell -
solely because of the self inflicted wounds being caused by you
as commissioners when you go out and tell people that you're
going out of business and you won't be able to take their work
up. We have a hard time understanding that when others have not
had to do that in their grace period year.
CHAIRWOMAN THOMPSON: Senator Taylor, when you raised our issues
in our testimony there, and I don't know who the gentlemen in the
back of the room is, I haven't talked to anyone from the North
Slope about selling a business, but perhaps I can get a chance to
talk to him later. But, as I explained, we're going to do the
best job we can under these circumstances to fulfill our
obligations. [Indisc.] I think everyone in here doesn't want to
be part of any political process where the administrative agency,
we don't operate politically, whether or not anyone is running
for office has nothing to do with how utilities are regulated in
the state.
What we're concerned about - and you heard testimony earlier
today about the volume of cases that we handle - our workload is
extraordinary; we can barely keep on top of it. This process that
you identified sitting in the hearing all day yesterday, as
important as it was to the agency, our presence indicates its
importance, was problematic for each one of us. This whole
process has taken a lot of time away from what we've heard
testimony that the utilities want us doing, which is processing
cases. We need to be able to be free to do our own job and not
have to spend another year spending as much time trying to
justify our existence as we have during the last two months.
We're very happy to work on processes. We instituted our own
proceedings for doing that and we plan to continue and can
accelerate this stage if that's needed, but you don't have to
sunset us to make changes to our process. The legislature
independently, any time it wants, can change our authorizing
statutes and I hope that if there are concerns, they will be
aired and studied at hearings and policy decisions fully
discussed where we have an opportunity to hear both sides of the
case.
SENATOR DONLEY: I know you've said that three times now that it's
in the Constitution. It would take two-thirds of the legislature
to do that if the governor didn't want to do it.
CHAIRWOMAN THOMPSON: Okay Senator Donley, I'll move on if I'm
repeating myself...[END OF SIDE A]
TAPE 02-38, SIDE B
SENATOR DONLEY: ... that it's not just up to the legislature, the
Governor's involved in this process too under the Constitution -
any type of reorganization. If you had a governor that didn't
want to do it, then it would take two-thirds of the legislators
to do it. And also, I really think that that is not that
convincing an argument because the track record, possibly with
the exception of '99 - where everybody agreed we had a
dysfunctional APUC and that something had to be done - has not
indicated that the legislature or the governor has been able in
non-sunset years to make systemic changes to the process very
successfully. That was one of the questions I asked earlier. I
just don't think that's occurred that frequently over the last
couple of decades. Typically it occurs in a sunset - in a sunset
context.
CHAIRWOMAN THOMPSON: Well, thank you for your clarification.
I'll move on. I didn't mean to be repeating myself. We have
accomplished - the focus of my testimony before was to highlight
how we have accomplished the legislature's objectives in 1999 and
I'll move on and respond to some of the specific issues that were
raised in testimony yesterday and let some of my other
Commissioners respond as well on some of them.
CHAIRMAN TAYLOR: Senator Cowdery had a question. I'm sorry.
SENATOR COWDERY: I'd just like - you know you've made your - I
think - your opening remarks and I have a lot of questions and I
think maybe the rest of us have but maybe individually could
respond to before we run out of time here.
CHAIRMAN TAYLOR: Let's let her respond to the ones that she has
raised [indisc.].
CHAIRWOMAN THOMPSON: One of the issues raised yesterday was about
temporary rates. There was an allegation that we set temporary
rates many, many years ago and hadn't fixed them. I looked at the
order. It was entered in December of 1996 - that predates us
obviously by some number of years - and the temporary rates
referred to were the original UNE rates approved in a grant
between ATU and GCI. In 1997, shortly after the
Telecommunications Act was passed - actually it started before
the AGC negotiated payment rate, and that process was formalized
and they were described as temporary at the time because the FCC
had not set out the rules for the Commission to do exactly what
it did at the time. ACS bought ATU in 1999 and they bought those
UNE rates and that contract along with it and they have a right,
under that order, to come back at any time they wanted the
Commission to reexamine the rates - to do that. And they did
that. It wasn't until the year 2000 that ACS came in and asked
for an increase.
Since then, there's been a lot of debate and a docket about what
standards to use and we've heard Commissioner Furchtgott-Roth
testify yesterday about the model that we use. I have in your
materials packet some information about models that other states
have used. It's a very complex issue and is why it has been
decided when litigated. There has been a case out of the United
States Supreme Court issue, Verizon versus FCC, in which the
FCC's method for determining pricing in the case was upheld where
the question was: What standard should the information before the
FCC [be that] you need to stop the prices that a competitor pays
for the use of the incumbent's network? State commissions were
given that responsibility under the Act. So to characterize that
as some temporary rates that we set in 1996 that haven't been
resolved yet is unfair. The truth is that it was the year 2000
that we were asked to reexamine the question. The docket was open
and active still.
CHAIRMAN TAYLOR: So it's been two years?
CHAIRWOMAN THOMPSON: Yes. Some of the legal issues were resolved
last month by the Supreme Court and that should help.
CHAIRMAN TAYLOR: Let me ask you about one of those legal issues.
th
Has this Commission yet adopted the 8 Circuit ruling on burden
of proof?
CHAIRWOMAN THOMPSON: That issue is being litigated before the
Supreme Court now. We believe we have, and that was in another -
that was an opinion. We believe that we have followed the law.
ACS believes that we have not and they appealed our decision to
the Alaska Supreme Court where it is pending for resolution.
th
CHAIRMAN TAYLOR: I thought the 8 Circuit had ruled on that
issue and so had the Supreme Court in their determination to take
that issue up but to decide the case of Verizon on other issues,
which gave clarification to some price setting but confirmed the
th
8 Circuit, which had been a consolidated case we were told
yesterday of several states and several other utilities that were
trying to decide the very same issue of who bears the burden of
proof and they came down with a totally different result than
what you had come down with in that very case you're talking
about.
CHAIRWOMAN THOMPSON: The issue you've outlined is not that clear.
We made our decision based on a ruling from state court and we
believe we had the legal authority to do that. One of the parties
thinks we didn't and that ruling has been appealed and is pending
before our state supreme court.
CHAIRMAN TAYLOR: I wasn't asking you if the Commission didn't
th
have legal authority to differ from the FCC or from the 8
Circuit. I was asking you why - not whether or not you had the
th
authority - why are you differing from the 8 Circuit and why
are you not adopting their decision?
CHAIRWOMAN THOMPSON: We explained that reasoning in our ruling
and I can provide you with a copy if you would like, and that...
CHAIRMAN TAYLOR: Sure. Did you have other matters you wanted to
...?
CHAIRWOMAN THOMPSON: I do. There was much discussion yesterday
about the Chugach case and one of the other Commissioners can
probably better address that than I because I'm not on that
panel. If I could [indisc.] Commissioner Abbott ...
CHAIRMAN TAYLOR: Commissioner Abbott?
COMMISSIONER ABBOTT: Senator Taylor. I'm the docket manager on
the Chugach case and as Commissioner Thompson said, when we
arrived there, we divvied up some 500 dockets and, you know, I
ended up with that one and it really is like drinking out of a
fire hose but I had this big case to deal with that's been
sitting there since 1996, just as Chugach had said. We came there
in '99. It took a couple of months because we had a court case
that we thought was going to affect it. It was pending from the
old commission. We finally took that whole thing on. Over about
the next, about 18 months, we dealt with three test years for
three years of rates that Chugach had. This whole thing came
about from a settlement agreement that the utilities - three of
the utilities - Chugach, Matanuska and Homer, had signed which
they were than unable to execute their own settlement agreement
so we ended up being the battleground for that disputed
settlement. Once we went through those, and each one of them had
to have a hearing and we did that, we rendered the decisions on
that and we got those finally out. The one decision that Chugach
talked about, which was late, the six months, that was mine. That
was a late decision - I'll 'fess up to that one. But, it all came
out. Subsequent to getting those things done, then Chugach,
properly so, then filed for a rate increase and, if I remember
right, the number's about six percent, we did the interim
refundable hearings on that - or the determination, not hearing,
and we had about 45 days to do that and when you're looking at a
stack of paper about that deep and trying to wade through that
and determine whether or not the rates are justifiable and
interim refundable. We made one determination and Chugach
contested that. We relooked at it again. We said okay, we'll
wait on some of these things. We'll give you the interim
refundable and we'll wait until we get the hearing to make a
final determination on that. So we gave them about four percent -
a rate increase that was interim and refundable and shortly after
that we had a hearing - we had a meeting, what we call a
scheduling meeting, and we all sat down around and we worked out
a schedule for how that docket was going to go, all of the
parties that were a part of it. Now people will tell you that the
phone wars are the big ones here in town but I'm here to tell you
that the utility wars in Southcentral Alaska are equally as big.
They're very contentious and there's just paper flying around on
those constantly - we get motions and petitions and what-not to
do that. When we set that up, we made a decision, you know a lot
of people talk about our progress on our process, well in that
one we did, I think. For the first in the Commission's history,
we limited the discovery. We said you only have so long and you
only have so many discovery issues to bring up. Even that - it
still ends up just as Chugach talked about - we end up with boxes
of discovery and how we get total control over that - what I
would say almost abuse of the discovery process, I don't know. It
works all ways. It's not just one utility doing it - it works all
ways. So, we tried it. We got that and it must have been
successful because it made everybody unhappy but we're pressing
along with that.
CHAIRMAN TAYLOR: Let me suggest something to you.
CHAIRMAN ABBOTT: [Indisc.].
CHAIRMAN TAYLOR: The court system faced exactly the same thing
years ago. Carl Johnstone, judge, was called upon the Supreme
Court to try to get some handle on it and my dear old friend,
Murphy Clark was probably one of the great advocates for - but
you got in a case with Murphy what you could expect in the mail
was 350 interrogatories, even though you might be representing a
man in a personal injury case or a woman, let's say, in a
personal injury case, Murphy would still want to know all about
the lady's military background for about ten pages worth of
questions. And they became so abusive that the Supreme Court had
to step in and do something about it and they did. They came down
with rules that very clearly established how many questions you
got to ask, when you got to ask them and why in the world you
can't do that - why this is such an extraordinary thing when
we're hearing about cases involving about 600,000 pages and a
staffer explaining to me they're sending people out to copy
43,000 documents because somebody intervened in a rate filing,
somebody who may not have much to do with a rate filing and has
now made some requests.
COMMISSIONER ABBOTT: And that's kind of this model that we used
when we went to that so we did limit it down. The other thing
that we put in there, which I believe the courts do use sometimes
also, we put in a discovery master. We said the disputes over
discovery will be resolved by the discovery master so they don't
have to come to the whole panel of Commissioners. We have that
discovery master. They have a dispute, a couple of days later
they're sitting in front of her, she makes the determination on
the discovery issues. Still it's not perfect. It's working better
but...
CHAIRMAN TAYLOR: What you're explaining is a very difficult and
complex case and we all understand that. It's been difficult and
complex, apparently, since 1996 and yes, there have been some
subsequent things occurred and some new filings. Our primary
concern is that when the legislature, in 1999, created you, one
of the major intents of that legislation was that a timeline and
a timeframe system would be created. Why hasn't that been created
yet, three years later?
COMMISSIONER ABBOTT: Senator Taylor, part of the problem is - and
I'll move back to what Commissioner Thompson spoke of earlier, is
that we really sit as referees, if you will, and we are decision
makers and in a very complex case, occasionally we are not able
to completely control the time if we get significant numbers of
petitions, if we get one party that's - the process is such that
people can slow it down and occasionally, and I'm not saying that
anybody is slowing any of these cases down, it is fraught with
those sorts of difficulties and it does take some very, very hard
management in order to keep on any sort of time schedule and
still afford people their right to disagree, to make filings, to
demand equal time. I think what we're seeing is, especially in
this case, we have extremely sophisticated customers, if you
will, that want to look very carefully at many, many issues and
when you get into those situations at a practical level to really
push a proceeding like this, we have to deal with those issues.
CHAIRWOMAN THOMPSON: It's important to remember that Chugach has
- the customers are Matanuska Electric and HEA. Chugach, as Joe
Griffith identified yesterday, is a wholesale power producer. It
produces mostly electricity generated in the Railbelt and so the
impact of these decisions are very significant to consumers all
up and down the Railbelt because these costs are passed on
through by these wholesale purchasers. It's, as you identified, a
very complex matter.
COMMISSIONER ABBOTT: And you know, that's all right. That's our
job. We need to deal with those and we'll get there. We'll get
this out and I think in a fairly reasonable time compared with
all of the complexities that have come about with it. I mean,
th
it's like Joe Griffith mentioned yesterday, April 15, they put
a little additional filing in there. Well, that - a little
additional filing that $180 million bond refinancing it and they
- tens of millions of dollars reconstruction of the Beluga power
plant in there which is certainly going to effect rates, and they
actively reduced the amount of rate interest that they wanted.
Well, that's, that's fine. We're glad that they brought that in.
Now we've got the whole thing in there, but you know, we've still
got to give the other parties a chance to look at that. So, it's
going to delay it a couple of months to get to that. I wish it
didn't. But I wish we'd have had the whole thing to start with.
And we'll get through that. There is a schedule out there for
that too. I want to make that point clear too. Each of us, as
docket managers, try to put out that schedule and we had
scheduled meetings with the parties at the start of these
processes.
CHAIRMAN TAYLOR: I guess I'm confused. Because when I looked
through the report that was done up on the pending cases - I
don't have the thing right in front of me but it's a big thick
thing and we've all got a copy of it - it appeared to me that
we've got lots and lots of dockets that are being closed that if
you really look at them they are nickel/dime stuff somebody
calling in and this docket gets created. Then it gets closed out
when somebody responds back. I can walk you through several of
them, but the one with some, some party writes a letter to the
commission saying, 'We'd like that our responses be kept
confidential.' That's assigned a docket number. And a week
later, or ten days later, when somebody from the Commission
writes back and says, 'Yes, it will be confidential.' That's a
closed docket. So it appears to me that we've got a whole lot of
these maybe individual docket things. I don't know your
business, but to me it sure looks like somebody is padding the
sucker when you're trying to justify how many things we've really
done and how many things of substance we've really done. I'll
make you a bet, Chairman, that that's one of the substance things
that you take credit for in doing this year because the entire
panel had to decide whether or not that would be kept
confidential, which seems like a routine kind of thing to me.
COMMISSIONER ABBOTT: The confidential thing is controversial by
itself. We had one company take us to court over the confidential
issue, so we have to be sensitive to that and many of them are
because of competitive concerns on their part. Usually, the
confidential thing comes because they've already filed for
something to be...
CHAIRMAN TAYLOR: Commissioner Abbott, I'm not talking about the
substantive aspect of it. I'm talking about whether or not there
are mainly ministerial aspects that get assigned a docket number
and they seem to get taken care of and we take credit for it.
CHAIRWOMAN THOMPSON: You acknowledged that, you know, we
understand the process better than you and it's important to us
that you do understand it. Ministerial things don't get assigned
a docket number. A docket number gets assigned if there's a
formal complaint, not for every letter that comes in. Informal
complaints, consumer complaints, don't get docket numbers.
There's a procedure under our regulations for formal complaints.
Those get docket numbers. If a matter is suspended, a tariff
filing is suspended at the end of the 45-day period instead of
ruled on. That gets a docket number. If something comes in, a
proposal from the utilities to adopt regulations on something,
that gets assigned a docket number but just to keep track of
things that come in - confidentiality requests, sometimes those
do or don't depending on whether there is already an open docket.
We have a responsibility to maintain those records separately and
we do that through a docket number system. We don't want - we
want to be able to make sure that we're maintaining the
confidentiality of all filings where we've been asked to do so
and our process requires us to then use the docket system but
most of the docket numbers that come in are for substantive
cases. It is not every piece of paper that comes into the agency.
The tariff filings don't get docket numbers until they're
suspended.
CHAIRMAN TAYLOR: Let me just give you an example. Docket 91500
2000 - it took to 12/18 to get it resolved. It was assigned
docket number U 00132, and it was docket type A and it says 'The
Fox Run Campground Enterprises APLNF/NEW CPCMM to provide for a
private pay telephone 1.' There's a docket number. What's the
action being taken on one private pay telephone? I'm sure that
shows up as a substantive matter within your...
CHAIRWOMAN THOMPSON: Well you're right that that's a pretty small
case probably but I'm sure that case is very important to the
owner of that campground.
CHAIRMAN TAYLOR: Well, no. As I go down through here I find lots
and lots of that kind of thing and it just seems odd to me that
we have cases of, what you said, is very important stuff and I
agree with you and that is we have 58 suspended tariff cases and
all 58 of those - timeline didn't mean anything. Every one of
them got extended. They all got extended for quote, good cause.
That's something we discussed yesterday and I think it's part of
the reason there's a lot of angst and frustration out there in
the regulated community is that when you got 58 tariffs suspended
and they all get deferred off on good cause so that your time
frames don't mean anything, where is there stability in the
industry and what can they count on?
COMMISSIONER ABBOTT: Senator Taylor, if I could respond to that?
We sit in tariff action meetings and typically we'll review a
tariff and we - in that meeting we can either approve the tariff
or suspend it for further investigation and I know - this is the
way I feel and I believe there's similar feelings - whenever we
look at the possibility of suspending a tariff - you know I look
at every time we open up a docket, it costs money and, I mean, if
you look at it like business, you'd think well, you know there's
an overhead associated with that - and I think oftentimes,
especially for the tariffs, because of our rules we need to ask
the utility to extend the time for consideration if there are
concerns that we may be able to get resolved just by asking
questions. We work to try to minimize the number of dockets that
we actually open. I believe that - that's an important point here
is that if we didn't run the system right, we could just go
huckledy-buck and have hundreds of dockets open. It would be very
- I think inside of our organization we do work very hard not to
see this number of dockets expand unreasonably.
SENATOR COWDERY: On that issue, there's 58 by the information I
got - of these extended for good cause. That's causing the
utility to lose dollars while these are in suspension. How many
times do you need - it seems to me that maybe this good cause
clause is being abused? Do you think - how many times do you
think, how many times have you, do you do things? Why do we go
on? I thought that we had eighteen months or something, or six
months rather, and could somebody respond to that?
COMMISSIONER ABBOTT: Senator Cowdery, the timelines that ARECA
is proposing - I think it had fifteen months to full-scale rate-
case. That would mean that we would extend that tariff three
times, and with a six month timeline if we were to extend it
three months, for three times and we only do it for six months at
a time so we get it out there. So if we took the whole fifteen
months, which is the time it would be, we'd end up on paper,
extending that three more times.
COMMISSIONER DEMARCO: May I clarify, Sir? The problem is that
when you suspend a tariff, and it's a two and a half, three foot,
eight inch pile, you need to have time for a pre-hearing
conference to establish a schedule for the filing, and hold a
hearing to allow for digestion of all of that material. There
isn't time within the six months, or within the first period
sometimes, for all of that to happen. And it's a considerable
amount that has to happen. Sometimes the extensions for good
cause are at the request of parties. I have one of those cases.
It's a small utility. They have requested, I think, for eight
total extensions, and we have honored them, at their request.
They are attempting to sell the company. They don't want to have
a rate case going on while they are trying to sell the company
and we have extended their tariff a number of times at their
request. So just looking at extension for cause doesn't
necessarily tell you the entire complexity of the issue. For
these small companies, we would rather give them time to complete
an audit, you know, or to complete a filing at their request.
Many of those extensions are done at the utility's request or at
the request of one of the parties so that we can have the due
process completed in a proper manner. You know, it's a balancing
act and we have on the one hand the need for expeditious
treatment of cases and resolution to order, but we also have a
requirement for due process, and they are both important.
CHAIRMAN TAYLOR: I understand anecdotally that those things can
occur, and that those are good considerations and I applaud you
for doing that sort of thing. It certainly doesn't explain what
appears to be a trend when you get up to 58 of them. And
suspending a tariff is different, isn't it, than extending a
tariff or are they the same thing? Under one, doesn't - if you
extend it, doesn't it continue to be a tariff that they can bill
out, and if you suspend it, it is no longer a tariff that they
can bill out?
CHAIRWOMAN THOMPSON: Suspended just means that the filing - we
use the term suspension when there's a filing made and we're not
ruling within the 45-day period. We want to continue to consider
it longer. I think that Commissioner DeMarco may have used the
wrong word and confused people, but that's okay.
CHAIRMAN TAYLOR: It gets marked as a TA, right on your...?
CHAIRWOMAN THOMPSON: TA stands for tariff action and we assign
numbers to filings when they come in - TA numbers so that we can
keep track of which utility filed it, and which, by number, and
how many that they filed over time.
COMMISSIONER SMITH: If I may?
CHAIRMAN TAYLOR: Yeah, go ahead.
COMMISSIONER SMITH: Through the Chair, Senator Cowdery. When we
suspend a tariff, oftentimes there is not a rate involved.
Occasionally, there's terms and conditions and we find oftentimes
a suspension is indeed just to make sure the rights of the
consumer are protected. Typical suspensions involve long-term
contracts for telecommunications services, which if a customer
would break out early they would get charged a large amount. I
mean it's that sort of detail level that we deal with when we
look at these tariffs; it's not always a rate. And more often
than not, it is these terms and conditions to protect the
consumers...
SENATOR COWDERY: This oftentimes, does that mean 50 percent of
the time - 10 percent of the time - 80 percent of the time? What
do you think?
COMMISSIONER DEMARCO: The rate? Gosh, it varies a lot.
CHAIRWOMAN THOMPSON: Yeah, it varies a lot. I want to go back
and address a misconception about losing money because I heard
some testimony that indicated that yesterday, and you repeated
that today. It's not - I think that the testimony that you're
referring to is probably from Gene Bjornstad from Chugach. I
think he said that they were losing money. What he was talking
about was the difference between what they asked to be able to
recover and what we held, based on evidence that they had filed
on a interim and refundable basis, they were entitled to. Until
they have - we're not allowed under the statute to approve the
rates until we make a finding that they are just and reasonable
and in order to make that finding, we need a complete record. In
Chugach's case, it has many customers that are actively involved
in the case. You probably heard more about that Chugach case
than you ever wanted to.
SENATOR COWDERY: They were sworn though to tell the truth, and
you're saying now that they wasn't truthful?
CHAIRWOMAN THOMPSON: I'm saying his idea of losing money is based
on an expectation that they might have been awarded the full
amount that they asked for immediately. What we did was we went
in and looked at what they filed and said, we know enough based
on what you filed to give you on an interim basis until the case
is over, at least this much. And under our standard, we are
required - we are allowed to give out as much as we're pretty
sure they are going to recover in the end. We make it interim
and refundable because if we're wrong, if the evidence in the end
proves it out after everybody has had their say, that they were
entitled to more, then they get more. If they were entitled to
less they have to refund the difference
CHAIRMAN TAYLOR: There is no retroactivity.
CHAIRWOMAN THOMPSON: No.
CHAIRMAN TAYLOR: That is what he was referring to. Because
there is no retroactivity their case may be very bona fide and
that you, as a Commission, may all vote unanimously, who knows
when, some distance time in the future, that this thing is now
resolved and yes, they were entitled to that. And the customers
and the ratepayers at Chugach lost $276,000 a month while that
went on.
CHAIRWOMAN THOMPSON: I think it's the utility's responsibility.
None of them expect the rate filing the size of what they file
and they acknowledged yesterday it was done in 45 days as was
pointed out. In the ARECA deadline, it was 15 or 18 months, I
don't remember. Anyway, it takes time. And they need to plan
ahead enough to make the necessary filing…
CHAIRMAN TAYLOR: Wasn't ARECA's deadline something that was
negotiated by you, the Administration and other people involved
in this, participated in on the House side, weren't you consulted
on that?
CHAIRWOMAN THOMPSON: I was. The administration wasn't involved.
I worked with Eric Yould from ARECA directly. There were other
industry representatives, Mr. Rowe from the Alaska Telephone
Association was also involved in those discussions and folks from
Senator - Representative Mulder's office were involved. And what
we came up with was a set of deadlines that met the industry's
concern about wanting predictability, wanting certainties, they
wanted to know when the decision was made, and our concerns about
making sure we had a complete record before the clock started
ticking and that's the way the statute was written. They were
deadlines we felt we could live with.
CHAIRMAN TAYLOR: The political compromise worked out between
you, the Administration and Mr. Mulder, whoever the lobbyists
were involved at the time, that's who came up with the compromise
of 15 months. That's why the testimony we've had is, by several
people, yes, that's a good start but not exactly where we wanted
to go. And, in fact, the word political compromise was used in
some of the testimony. Is that correct?
CHAIRWOMAN THOMPSON: There were no lobbyists involved. I
believe my testimony was the discussions were between industry
representatives, Mr. Yould for the electric, Mr. Rowe
participated some, although it was most actively Mr. Yould and I
facilitated by someone in Representative Mulder's office that
came up with these deadlines. Again, they are ones we felt we
could live with and meet, and industry thought would address
their concerns.
CHAIRMAN TAYLOR: What about other aspects of this? I mean,
basically, I think you've kind of thrown the whole thing open and
said that - I mean, in your comments to the press and to
utilities, you've indicated, we might be disbanded and they might
throw us all out and get new Commissioners. How in the world we
could do that I don't know, but that's been the indication. So I
guess that everything that has anything to do with the RCA is now
on the table, and I would imagine that you and the other
Commissioners have been consulted with, at least by the
Administration, as to things to look out for, or look for. You
have met with your attorneys, haven't you? You have two
attorneys assigned to you.
CHAIRWOMAN THOMPSON: We actually have three attorneys assigned
to the agency.
CHAIRMAN TAYLOR: Just for this.
CHAIRWOMAN THOMPSON: Oh no, not just for this. There are two
here that are attending today. Our regular AG is on vacation so
we have a substitute and she has a helper.
CHAIRMAN TAYLOR: And have you had discussions with the
Administration on what they're willing to live with? I mean, I'm
hearing four and clean. I don't know what you're hearing, but I
assume that someone over there on your side of the table is
participating in a process that's going on.
CHAIRWOMAN THOMPSON: I think those discussions are best had with
the Administration.
CHAIRMAN TAYLOR: No. What I mean is asking you if you have had
such discussions with the Administration, or with anybody in the
Administration.
CHAIRWOMAN THOMPSON: I don't know what the Administration's
current position is on that. I think you should ask them that.
CHAIRMAN TAYLOR: I'm not asking for their position. Let me be
real clear on the question. I don't want to confuse you.
CHAIRWOMAN THOMPSON: That would be helpful.
CHAIRMAN TAYLOR: Have you had discussions, have you talked, had
discussions with individual members representing or actually
officers within the Administration about where this legislation
is going and what your strategy is going to be?
CHAIRWOMAN THOMPSON: Strategy for the special session - strategy
for the hearings? I'm still not clear on your question. I'm not
trying to play games with you. I want to be responsive, but I
don't understand. What are you really trying to get me to say?
CHAIRMAN TAYLOR: With whom of the Administration have you been
working with and strategizing on what's going on right here? And
have you had those types of discussions with those people?
That's all I'm asking for.
CHAIRWOMAN THOMPSON: I've been talking to folks from the
Governor's office about the fact that there was going to be
hearings. We worked with them to try to get information about
what the agenda would be, about what witnesses would be called so
that we could adequately prepare for the hearing.
CHAIRMAN TAYLOR: And could you tell me who those people were?
CHAIRWOMAN THOMPSON: There's the attorneys that are sitting in
the back of the room. I don't know if that's part of the
Administration you're speaking of, have been involved in
preparing.
CHAIRMAN TAYLOR: No.
CHAIRWOMAN THOMPSON: Okay.
SENATOR COWDERY: We're talking about people who are going to
have some impact upon this process, not somebody who was told to
go write a brief. So, what are the names of those people with
whom you've had these discussions?
CHAIRWOMAN THOMPSON: I have personally, I don't know about the
other Commissioners, they can speak for themselves. I have
talked with Mr. Abbott, Mike Abbott, who is legislative liaison
for the Administration, and Cindy Smith, who is the Boards and
Commissions representative, when it was in the scope of her
responsibilities as also being concerned about what's going to
happen to the agency as a result of this process and work with
them.
CHAIRMAN TAYLOR: Anyone else?
CHAIRWOMAN THOMPSON: Some of the communications have been by
telephone and people on speakerphone. I don't know who else is
always in the room in Juneau because I'm not there so I can't
swear that nobody else has ever been in the room. I haven't
talked to the Governor recently, but towards the end of the
legislative session I talked to him about this, or received a
call from him about what would happen to the agency and what his
plans were for calling a special session.
CHAIRMAN TAYLOR: In your retention of documents that we
discussed earlier you talked about how you keep and record
various ex parte communications. So those - would those
conversations have been logged, or...?
CHAIRWOMAN THOMPSON: Well, they're not about cases. My
discussion before was, and my practice is, and I assume my
colleagues' is, but again, they can speak for themselves, I
carefully record conversations with anyone about cases. And I
wasn't talking about cases with the Governor. I never have
discussed any cases with the Governor or anybody from his office.
CHAIRMAN TAYLOR: These would be - was there e-mail on this stuff
going back and forth?
CHAIRWOMAN THOMPSON: What is 'this stuff,' Senator?
CHAIRMAN TAYLOR: Well, the discussions that you're having with
these people within the Administration about this 'special
session' and the outcomes of it.
CHAIRWOMAN THOMPSON: There's probably e-mail. I'm sure there is
because that's a way that I use to communicate often with members
of the Administration about the fate of this agency and the
legislative process. Yes.
CHAIRMAN TAYLOR: Would any of those e-mails be from interested
parties other than the Administration?
CHAIRWOMAN THOMPSON: Certainly. I received e-mails from the
utilities, many of whom have testified here today. There's a lot
of parties interested in the outcome of this legislation. [END OF
SIDE A]
TAPE 02-38, SIDE B
CHAIRWOMAN THOMPSON: I think the attendance here is evidence of
that.
CHAIRMAN TAYLOR: Were any of those - again, we're walking that
fine line, aren't we, between what is a call having to do with
this process and what is a call that has to do with a specific
matter before you.
CHAIRWOMAN THOMPSON: This is not - this matter - what's going on
in this legislative process was not an open docket before, and
I've talked to many utilities about this process.
CHAIRMAN TAYLOR: I know, and that's the substance of what I've
been trying to get to for some time here. I'm sitting on the
North Slope and I know I need to have your approval before I can
sell my business. And you contact me, whether I file this filing
or not you know the filing is coming, you contact me and say,
'Bob, don't know if we're going to be able to get to this if you
don't support us on this extension.' Now are we taking about -
are you talking at that point about just the extension of the
RCA, which is a quote political matter? Or are you talking his
specific case and whether or not it will receive treatment in
time for his business needs?
CHAIRWOMAN THOMPSON: As I explained before, I haven't had
contact with any North Slope utility, and I don't know who you're
talking about, but the example you pose, it would be - I would
agree it would be inappropriate for me to call up a utility that
had a matter pending in front of me and encourage them in the
context - of the same conversation saying, 'Gee, you have an
application pending in front of us. Won't you come testify?' I
didn't have any of those conversations.
CHAIRMAN TAYLOR: But you do draw a distinction apparently
between the ones you have something pending in front of you, as
you said, and those you know are coming before you. Because Mr.
Rhyner certainly was told by you that his certification for
essential services funds from the federal government might very
well be in jeopardy should this Commission not be extended. So,
it's okay apparently to in essence coerce him to get his support,
but it wouldn't be okay if there was a matter pending before you.
Is that correct?
CHAIRWOMAN THOMPSON: I believe that the answers I gave before
would require a little further clarification of your
characterization, which is - I explained that I won't talk to any
utility about a matter - about a case that is actively pending
before us. I see these people on the street and I see them other
times and I say hello. There's other things we talk about, even
though we don't talk about cases. And I don't think there's
anything inappropriate with those contacts. In fact, those
contacts are helpful. We've heard a lot about the agency needs
to be responsive to industry and it's difficult for me to
conceive of how we're going to understand utilities' concerns if
we never talk to them. We don't talk to any utility about open
dockets. I don't have conservations with a utility about a
particular - either representing a particular position in a
legislative hearing or something else in exchange for a decision
on a docket. We just don't do that.
CHAIRMAN TAYLOR: But apparently those things that you know are
coming to you, Mr. Rhyner's filing as an example, filings by
people at ARECA - you certainly have contacted each of those
people, and contacted them personally, asking for their support
and to write letters. In fact, I've received unsolicited letters
from FCC Commissioners. I don't even know this lady and out of
the blue she writes to me to tell me in glowing detail what a
great job you're doing and how concerned she is in Washington,
D.C. that somehow this Commission might not be extended
[indisc.]. I'm not sure where she got my address or name, but I
can only assume that it's either you, or one of your
Commissioners, or it's one of the lobbyists here in the room, or
it's one of the utilities here in the room that may happen to
know her very well and call for her assistance. The point I was
trying to get at with you is at what point does this become an ex
parte discussion? Is it when there is a specific docket pending
and you tell them that their docket may not be heard in time if
this Commission isn't extended?
CHAIRWOMAN THOMPSON: No, and I would be happy to explain the
origin of the letter from Commissioner Abernathy. She's someone
that sits on the joint board with me and I've had occasion to
miss some of the meetings because I was involved in responding to
requests for - I think the last one was a couple of weeks ago,
and I wasn't able to attend and in explaining that, I explained
what was going on here and she said, 'What can I do to help?'
And I said, 'Letters of support.' We have on our website,
because we've been asked by so many folks about what's happening,
an update that's been updated regularly since we had information
when the hearings would be held, as our bills through session and
progressed or not, and as hearings were scheduled after the
session in special session. That web site is available to
anybody in the public. I didn't call Jack Rhyner, but Jack
Rhyner may have looked at our website. He may do it on a regular
basis. There's a lot of people - we, as an agency, try to share
information that we have with everybody in the public. I believe
that my letter to you was also on the website and was seen by -
could be available to anybody there.
CHAIRMAN TAYLOR: That letter, as an example, that was an action
taken by the Commission?
CHAIRWOMAN THOMPSON: It was something that was done with the - I
signed the letter. I'm the only one that signed the letter.
CHAIRMAN TAYLOR: No, but I mean was it, did you bring this up in
a meeting of the Commission? Read the letter and share it with
your members? And then sign it and send it? Or was this an
individual act on your part?
CHAIRWOMAN THOMPSON: The letter wasn't signed by the other
Commissioners. It was written over the weekend and sent off
Monday because of timing. It was reviewed and approved by the
Attorney General's office, but it wasn't signed by all five
Commissioners. You can see that on the signature line.
CHAIRMAN TAYLOR: I don't read that part.
CHAIRWOMAN THOMPSON: It was written by me.
CHAIRMAN TAYLOR: Well, I was surprised by your answer just then
because I assumed that you had shared that - stating a position
on behalf of the Commission. Let me get back to the point I was
trying to make earlier and that is, I sat for six years as a
district court judge. I had to run for retention elections. Do
you think there would have been anything ethically questionable
about my conduct had I called up all the attorneys practicing in
front of me and said to them, 'I need your recommendation. I
need your support. I want you to go out there and support me. I
want you to write letters to the newspaper?' Do you think there
would be anything unethical about me doing that?
CHAIRWOMAN THOMPSON: Senator, I know there are judicial canons
of ethics and you, as someone who's practiced as a judge, are
more familiar with those than I. And that's where I'd go for the
answer to your question. I just don't know off the top of my
head.
CHAIRMAN TAYLOR: Well, that's why I'm asking you is I have a
hard time understanding why I have heard from so many of the
people either wanting to testify or wishing they could but
frightened to do so - why these people have been called upon by
you? Because they're the very people who have to stand in front
of you in judgment on their rate cases, and to suggest that there
is no quid pro quo assumes a level of naïveté that, believe me, I
can't accept. I'll go out and call up only the people over whom
I have life and death authority and ask for their support and
then they will - I will see who is going to show up, who is going
to testify. That's why I think it's an interesting line or
distinction that you have drawn in determining what
communications are ex parte and have to be disclosed to people
and what communications are not. Because every one of these
people that you regulate eventually will have a case in front of
you, won't they?
CHAIRWOMAN THOMPSON: But these proceedings are not an open
docket in front of us. I've explained before. I didn't - you
know, the folks that are here to testify - I think that you
underestimate the fortitude of some of the utilities and the
parties that regulate here in front of us when you suggest that
we're able to intimidate them. I think that just like this
situation where you're…
CHAIRMAN TAYLOR: Those aren't my words. Believe me, those
aren't my words. Those are the words of about five different
people from the utilities that have testified and each one of
them have said, 'We're very concerned about doing this but we
think it's important enough that we're willing to risk this.'
That's shocking testimony to me.
CHAIRWOMAN THOMPSON: We think that...
CHAIRMAN TAYLOR: No, go ahead.
CHAIRWOMAN THOMPSON: I've heard from folks who were intimidated
about coming to testify before this committee who had said to me,
'We support you, but we were afraid to go. We were afraid to
testify because the questions that are going to be asked of us by
the committee. We're uncomfortable.' You're a judge, you
understand that when you're sitting behind the bench and you're
running the proceeding that others may feel uncomfortable. I'm
sure you did special things in your courtroom to accommodate
people. But it takes some courage to testify. I think there has
been - I have personally overheard two people who said to me that
they were uncomfortable testifying because of what other members
of the association or other utilities might do to them as a
consequence of saying something contradictory to their position.
But that's not really the point here.
CHAIRMAN TAYLOR: No.
CHAIRWOMAN THOMPSON: At all.
CHAIRMAN TAYLOR: The point is the ethical question of which
communications you determine to be ex parte and involved in a
pending case and which communications are not ex parte, but are a
request for help, or something else. And for me, as a former
judge, that's very difficult to understand because that very same
person that I'm asking for their help on that retention election
may very well be standing in front of me on a DWI the next day,
and to assume that there's no quid pro quo involved here I think
is really rather naïve. Those who step forward and support will
be supported. Those who have the courage to step forward and
testify against, will not and that is a very real perception that
these people under oath have testified to.
CHAIRWOMAN THOMPSON: We heard the testimony about retaliation too
but you can ask us each individually. We don't have favorites, we
don't retaliate. That's part of the benefit of the group process
that I described. If one particular - we're all humans and
someone may be offended or put off by something that's happened.
I think the impact of our decision process involves three folks
and involves the full discussion and circulation of the written
order - would tend to mitigate that type of fact. I'm confident
that none of us are going to retaliate against any of the
utilities because of anything they've said or not said in these
proceedings.
CHAIRMAN TAYLOR: Well I'm glad to hear that and I appreciate it
but let's go back to that comment you just made about three of us
always make a decision on something. In fact though, you break up
things among your different commissioners. You sit on every
panel, don't you?
CHAIRWOMAN THOMPSON: No, I don't. I'm not on the Chugach case for
example, the one we've just been talking about.
CHAIRMAN TAYLOR: There are three members on that case?
CHAIRWOMAN THOMPSON: Yes there are. I believe Commissioners
Strandberg, Demarco and Abbott are deciding that case.
CHAIRMAN TAYLOR: And to get back to your point that we don't play
favorites - I asked your former employee the same question
yesterday. There are three different statutes under which your
Commission members and yourself are regulated and I think those,
if I remember right - I had some citations here, Alaska statute
39.52, which is the ethics law, 39.50 - conflict of interest, and
42.04.060, which is a further definition on the conflict of
interest. That one says something very interesting. It says, a
member - one of you folks - may not sit upon a matter in which a
relationship, or someone with a relationship to the member, with
any person, creates a conflict of interest and I want to skip -
if you or one of your Commissioners have a relationship, that can
be friends, it could be anything, but you can't sit on that
matter. The other two statutes that I mentioned to you actually
involve monetary benefits flowing to individuals, whether they be
- especially over $150 is kind of a value set as a benchmark and
then whether or not those things are received. They're not
supposed to be in the first place but if, in fact, someone has
received something like that they're duty bound to give notice of
that to their supervisor and to make a report. So let me start
off with Bernie. Bernie have you ever filed such a report or had
to recuse yourself in a case because of that ethical standard?
COMMISSIONER SMITH: Well, I file a APOC report every year that
asks, you know, do I have stock in companies that I regulate and
I don't anymore. So, no, I've never received the benefit over
$150 that I had to report on the APOC report. And yes, I have
recused myself as I stated earlier for all cases that deal with
any past knowledge that I would have ...
CHAIRMAN TAYLOR: I'm not referring to our APOC reports. We all
have to fill that out and that's about how we make a living and
what investments we have and so - what I am referring to is the
gift report of a client has to be made to your supervisor if, in
fact, someone is giving you a gift of hospitality - travel,
lodging, whatever.
COMMISSIONER SMITH: No I have never had to.
CHAIRMAN TAYLOR: Okay. Commissioner? No? Commissioner?
CHAIRWOMAN THOMPSON: I have.
CHAIRMAN TAYLOR: You have? Okay. Commissioner?
COMMISSIONER ABBOTT: No.
COMMISSIONER DEMARCO: I did one. I have a small consulting
contract for a quarterly, usually, telephonic board meeting in
Connecticut not related to anything here. It's advisory, usually
verbal.
CHAIRMAN TAYLOR: And who provides for the travel or
transportation or benefits there?
COMMISSIONER DEMARCO: They do. Eastern Connecticut or I take
personal time. I do not ...
CHAIRMAN TAYLOR: It's by an agency or group?
COMMISSIONER DEMARCO: It's a university.
CHAIRMAN TAYLOR: University group? Uh huh. And you file a report
on that?
COMMISSIONER DEMARCO: Yes.
CHAIRMAN TAYLOR: And you said, Commissioner, you had a report
that you had filed also?
CHAIRWOMAN THOMPSON: Oh there's several.
CHAIRMAN TAYLOR: Who do you file those with?
CHAIRWOMAN THOMPSON: I file them with the Ethics Officer that I'm
assigned to which is in the Governor's Office. His name is
Michael Nizich.
CHAIRMAN TAYLOR: Michael Nizich?
CHAIRWOMAN THOMPSON: Um hum.
CHAIRMAN TAYLOR: Would Michael Nizich have copies of those?
CHAIRWOMAN THOMPSON: I assume he would.
CHAIRMAN TAYLOR: You do also? Can we obtain copies?
CHAIRWOMAN THOMPSON: I probably have copies of all of them.
CHAIRMAN TAYLOR: And when did you file your first one?
CHAIRWOMAN THOMPSON: I don't remember well enough without going
back and digging out the file and what succession there were. I
can tell you generally that at least three or four that deal with
speaking engagements. I've gone to Florida State University and
New Mexico State to speak and present to either classes or forums
of some sort and accepted no speaker's fee but they paid for my
hotel and travel to go down there. I do that because it's a way
of receiving training that benefits - it's an education
enhancement for me at no cost to the Commission because the
travel is paid by somebody else. I've been a speaker at the
National NCTA - the cable association convention one year and the
same thing - they paid my airfare and hotel to go. I've gone to
Telecommunications Policy Institute in California and I filed a
report over that.
CHAIRMAN TAYLOR: Were there any others you filed a report on?
CHAIRWOMAN THOMPSON: I also filed a report - there was in the
summer of 2000, I, at the request of Senator Steven's office to
work and meet with the new telecommunications policy aide, Lisa
Sutherland, I went to a fishing lodge owned by GCI in Western
Alaska but that was not a gift. It was originally reported as a
gift, but I paid for the trip. When it was originally arranged, I
thought it was going to be more policy discussion and it ended up
being more fishing than policy discussion so I paid for the trip
myself.
CHAIRMAN TAYLOR: When did you make that decision and pay for the
trip?
CHAIRWOMAN THOMPSON: It was within a week or so after I went and
it was in the summer of 2000. I'm sorry I don't remember the
exact date. It was probably July because there were kings.
CHAIRMAN TAYLOR: Did you take anyone else with you?
CHAIRWOMAN THOMPSON: My children went with me. There were kids
from - I don't remember if Lisa's kids were there or not too, but
there were other kids there.
CHAIRMAN TAYLOR: How long were you out there?
CHAIRWOMAN THOMPSON: I would think it was - it was at least - I
think it was two days. I remember going out there that the flight
got cancelled so there was some delay in getting out there but I
think we were out there a couple of days.
CHAIRMAN TAYLOR: And this - your travel out back and your
expenses had been paid by GCI?
CHAIRWOMAN THOMPSON: And I wrote a check to reimburse GCI
because, like I said, when I got back I realized that it was more
of a fishing trip. I went at the request of Senator Stevens'
office to meet with - to take advantage of the opportunity, which
for me was a good one, because Senator Stevens' office has been
very helpful to the state on telecommunications policy. He had
Lisa Sutherland, who had been doing appropriations work for him
was recently reassigned to do telecommunications and she was
going to be out there and that's why I went so I could talk to
her and give her background on telecommunications policy issues
in the State of Alaska.
CHAIRMAN TAYLOR: And when it turned out not to be that, you
reimbursed them. Can you remember or recall what the
reimbursement was?
CHAIRWOMAN THOMPSON: No, but I'm sure I've got a copy of the
check somewhere.
CHAIRMAN TAYLOR: Would you mind providing that along with a copy
of the report?
CHAIRWOMAN THOMPSON: No, I wouldn't.
CHAIRMAN TAYLOR: The reason I ask is because it's just to make
sure that we're talking about the same thing and if, in fact,
that went on and Lisa was there, did she make the same
determination, I'm wondering?
CHAIRWOMAN THOMPSON: I don't know what Lisa paid for the trip.
CHAIRMAN TAYLOR: Well, that's what I'm getting at. Who else was
there besides Lisa?
CHAIRWOMAN THOMPSON: There were - there were a couple of folks
from GCI - Jimmy Jackson, who is their attorney was out there and
Dana Tindall, who - I don't know what Dana's title is but she's
in senior management at GCI. Her children were there too.
CHAIRMAN TAYLOR: Senator Cowdery, did you have a question?
SENATOR COWDERY: Yea. Did you, on this trip, you said you paid,
but these lodges or stuff - pretty spendy I understand, a
thousand bucks a day or so. Did you pay the full retail price?
CHAIRWOMAN THOMPSON: I paid - it was - it's a privately owned
lodge and I paid the rate, the same rate that Lisa Sutherland
paid. We were told what the rate was because Lisa, as I
understood it, as a congressional employee had an ethical duty
to, you know, pay for it herself. So they told us what the rate
was and that's what I paid.
SENATOR COWDERY: Do you think you had special rate over anybody
else that went there?
CHAIRWOMAN THOMPSON: I don't know. I asked for what the rate was.
We asked as I recall and we were given the same answer and that's
what we paid. I don't know how that compares to what anybody
else pays. I don't know if anybody else even pays when they go
out there.
SENATOR COWDERY: But you knew this was owned by GCI?
CHAIRWOMAN THOMPSON: Yes I did.
SENATOR COWDERY: When you went did you deal with GCI?
CHAIRWOMAN THOMPSON: Yes I did.
SENATOR COWDERY: And you talked with attorneys out there for GCI?
CHAIRWOMAN THOMPSON: I didn't talk about any particular cases. I
spoke to Mr. Jackson.
SENATOR COWDERY: No, I mean you talked with attorneys?
CHAIRWOMAN THOMPSON: Yep. Mr. Jackson is an attorney and I talked
to him while I was out there.
SENATOR COWDERY: I find this pretty incredible but you know,
we're subject to the same ethics thing, but different maybe than
the Administration, but we're held to a pretty tight thing.
CHAIRMAN TAYLOR: It's a totally different standard. It was favor
disclosure because of the quasi-judicial nature of their duties
and the ... yes, Senator Ellis?
SENATOR ELLIS: To the Commissioners I would just sort of - leads
us into the whole subject of why we're dragged in here today and
yesterday had a lot to do with charges floating around that you
all maliciously or intentionally or through effect are out to get
ACS or run them out of business or ruin them financially. Can we
just bring it all here in the public and have you respond to
those charges that I think have sort of pushed these committee
hearings yesterday and today?
SENATOR COWDERY: Mr. Chair, if I could just respond?
CHAIRMAN TAYLOR: Yes.
SENATOR COWDERY: We're not here - this hearing is not here for
ACS or GCI. I think most of this time's been taken up by other
utilities from Fairbanks, from Chugach Electric. I mean we're not
focused on one thing. I think that's another thing, if somebody's
trying to put some words or why we're here I don't think that's -
that's not my intention or my - the reason I'm here.
CHAIRWOMAN THOMPSON: We're not here for ACS or GCI either.
CHAIRMAN TAYLOR: None of us are, but I'll guarantee you there's
been enough money spent on lobbyists and other attorneys and
other folks floating around here just by GCI and probably about
the same amount by ACS, that it's certainly - it certainly
indicates to me that the Governor has a very strong reason for
calling this special session and, for the life of me, I'm still
trying to figure out why, other than the horror stories I keep
hearing that you people are circulating, which amazes me that
you're doing that but...
SENATOR ELLIS: So, Mr. Chairman, my question and the ability of
the Commissioners to respond I think is just as legitimate as
fishing trips and catching king salmon.
CHAIRMAN TAYLOR: Go ahead. Well I don't know, not if you're
filing reports on it, it isn't. But go right ahead. I think your
question's real legitimate, Senator Ellis, and I didn't mean to
demean it in any way. Commissioner, go right ahead.
SENATOR ELLIS: Thank you.
CHAIRMAN TAYLOR: Senator Donley?
SENATOR DONLEY: Well I was just...
CHAIRMAN TAYLOR: I wasn't sure what the question was, but if
he...
SENATOR ELLIS: Yes, I wanted to give the Commissioners an
opportunity to respond to the charges flying around that the
Commission has taken some sort of inappropriate action through
intentional action or affect of their actions trying to harm ACS
as a business operating in our state.
UNIDENTIFIED MALE COMMISSIONER: I'll take a first crack at it.
I'm certainly not offended by it because that's why we're sitting
in this position and I was going to hear allegations like that.
But I've been around far too long to try to sit in a position
like this and not keep my objectivity. If I did not have my
objectivity, I would recuse myself from the process.
SENATOR ELLIS: Thank you.
COMMISSIONER STRANDBERG: I will speak next. I was honored to be
asked to serve and I hold the duties and our obligations very
close to my heart. I am both - I am in the business of being a
decision maker of making decisions on a record that - of solving
problems and certainly I never came into this with any
preconceived notions or any leanings for any one of these
companies that are before us.
CHAIRWOMAN THOMPSON: Go ahead Pat.
COMMISSIONER DEMARCO: I'm a scientist by training and my interest
in most cases that come before me are that our decisions and our
orders be very well documented so that if there were a need to
reexamine them, they have the basis of our orders well defined in
writing in plain English. This has been a challenge as you might
imagine when you have a full docket. The other concern is that
the consumers, or our silent participants, be protected because a
lot of times they are not at the table. The PAS can only
represent a fraction of the issues that necessarily could be
raised if we had the public. I'm sure you have heard so many more
of the general public in these proceedings than we often get in
the case before us. The average small business spends 25 to 30
percent of their operating costs on utilities - necessary utility
services. We hear from very, very few of them in our proceedings.
And if you talk about being concerned for those who are
intimidated by any of these procedures, my concern is for the men
in the street and the women in the shop who have no clue that
this is going on and that our proceedings and the utilities
before us affect their daily life. So, yeah, I come to it with a
bias for the small business customers, for the residential
customers of the state, not for any particular company.
SENATOR COWDERY: Did you go on this fishing trip?
COMMISSIONER DEMARCO: Me?
SENATOR COWDERY: Yes.
COMMISSIONER DEMARCO: You don't want me around trying to fish and
my husband will testify to that. I do fish on occasion, but ...
SENATOR COWDERY: But you didn't go to fish up...
COMMISSIONER DEMARCO: No, and I must tell you, I forgot, I did
attend the ATA Symposium as a speaker. They paid for my travel
and my hotel, but I paid for the rest of it and I didn't pay for
the bouquet of flowers that I received for my birthday.
CHAIRMAN TAYLOR: Just to get back ... Who invited you on this
trip?
CHAIRWOMAN THOMPSON: I don't remember. I think it was - I think
the contact was from GCI. I remember talking to Lisa about the
fact she was going to be there too, but I don't remember. I think
it was probably GCI that called me first. And I'd like to answer
...
CHAIRMAN TAYLOR: From Dana or one of the other...?
CHAIRWOMAN THOMPSON: It was probably Dana. It was probably either
Dana or Jimmy Jackson - Dana Tindall. I'd like to get a chance to
respond to Senator Ellis's question and give Commissioner Smith
one as well, which is I've never had any intention to harm or
particularly benefit any company. We've explained, I hope in
enough detail so folks can understand what the process is we have
here and we all understand the importance of the process. It's
just the fact that there's so much testimony and so much
controversy about the way we do business I think underscores how
important it is that we be fair and we make every effort to be
fair and I don't have any particular bias and as I said I
certainly have no intention to harm any particular company. I
don't know if Commissioner Smith wants to respond to that
question as well.
COMMISSIONER SMITH: I'm not here to harm any companies. I would
like to be here to make sure the companies have a fair chance of
surviving, especially when they're competing with each other. I'm
not here to harm anybody. I'm here to make decisions based on the
record, that's it.
SENATOR ELLIS: So you would say that ACS and GCI have been
treated fairly by the Commission?
COMMISSIONER SMITH: Yes, based on the record that they have
presented to us.
SENATOR ELLIS: Thank you.
SENATOR DONLEY: I want you to know, Mr. Chairman, I just feel
like I should say I went on a trip to see the Red Dog Mine last
year and we were hoping to go fishing, but we didn't get a chance
to and, I don't know, I also feel like I should mention that I've
known Bernie and Patty for years and that I consider them friends
of mine. So I feel a little uncomfortable with all of this.
CHAIRMAN TAYLOR: Well, I do too. That's why I went through the
questions to see if anybody had any because they're held to a
different standard than you and I are and it's a significantly
different standard because of the quasi-judicial nature of their
work. And, several times, both from the utilities and from the
commissioners themselves we've heard that this is a difficult
line to determine and I think there are concerns there. I think
they're valid concerns when we find the Commission itself going
out and recruiting assistance from the very people that have to
stand before it and then insisting that those people need to
respond to this legislature in a certain fashion. I think that is
probably epitomized by what happened in the legislative process
this last year. The small utilities were very concerned, and are
very concerned, and there are deadlines and docketing and other
things that were supposed to have been done three years ago have
not been done. And when you start participating in the political
process, then you do subject yourself to that same political
examination and I think that's a fair examination, no matter how
far that needs to go. I appreciate your candor in responding.
I'll appreciate receiving a copy of each of those filings that
you have made and I - yes, Senator Cowdery?
SENATOR COWDERY: Yes, I'd like an answer - this here. I have
heard, and of course rumors are pretty rapidly [indisc.], have
there been any recommendations recently or in the past from
either inside or outside the Commission to replace the Chair
before the four-year term?
CHAIRWOMAN THOMPSON: That's something you should probably go -
it's been the subject of discussion amongst the Commissioners and
I suggest you ask somebody other than me.
SENATOR COWDERY: I'll just ask you directly. Do you know of any
of that type of discussion?
CHAIRWOMAN THOMPSON: There was discussion of that issue.
SENATOR COWDERY: I'm not doing this to embarrass you. I'm just
asking.
CHAIRWOMAN THOMPSON: Yes. I think I answered you twice, sir. I
wasn't very clear.
SENATOR COWDERY: Okay.
CHAIRMAN TAYLOR: I don't know what that means but I'll just start
at this end. What are we talking about here?
COMMISSIONER SMITH: Well, there were discussions amongst the
Commissioners of how to, at least in discussion form, how to
resolve the issue before we came to this hearing. If we could get
something resolved within our own Commission, hopefully we would
just have - not a hearing.
CHAIRMAN TAYLOR: Was that put in any kind of draft form?
COMMISSIONER SMITH: There were some drafts circulated. That's
correct.
CHAIRMAN TAYLOR: Do you have a copy of any one of them? Could you
provide us with a copy?
COMMISSIONER SMITH: I probably would not because it was
confidential. It was meant to only be circulated for discussion
purposes. I guess you can arrest me. I can tell you the gist of
it. I'd be happy to do that. The gist was again, to try to
resolve these hearings and get finality within the sunset bill.
And there were three things in there that were basically talked
about. One was to extend us for at least a year, possibly two
years, with a new administration and a new legislature to review
the situation so that we remove ourselves from the sunset trials.
The reason for that - the main reason for that - is not for the
Commissioners, it was for staff. It is very difficult for staff
to have this uncertainty that they have knowing that possibly
they are going to be out of a job 14 months - 13 months, whatever
the time is.
SENATOR COWDERY: I know the feeling.
CHAIRMAN TAYLOR: What else was discussed?
COMMISSIONER SMITH: And let me finish up with the staff part. I
worked in private industry pretty much all of my life except for
this last two and a half, three years. We have an extremely
talented and very dedicated staff and it's very difficult to find
staff to replace when somebody leaves. So that, I think, is the
main reason in doing this. The second thing was, I personally,
and other Commissioners have different opinions, but I personally
did not have a problem of having an oversight committee that was
non-partisan and non-industry to come in here and look at our
business procedures. We've had them before. We've had - NRRI came
in here and did it. We had a legislative audit. Each time we did
it, we learned something. We improved. So I don't have a problem.
We do our job good. We work hard. We do a good job. So, I don't
have a problem putting that on the table to say. And the third
thing was to rotate the Chair and that...
CHAIRMAN TAYLOR: Who was that correspondence to be addressed to,
or that draft to be given to?
COMMISSIONER SMITH: It was addressed to the Commissioners and
addressed to the Governor if the Commissioners would agree to it,
but it wasn't going to go out without the rest of the
Commissioners agreeing to it and they didn't.
CHAIRMAN TAYLOR: Let me just ask. You had certainly agreed to it
and worked on this draft as you said, Commissioner. Did you?
COMMISSIONER ABBOTT: No.
CHAIRMAN TAYLOR: And since you were being replaced as Chair in
this thing, I don't imagine you agreed with it. Commissioner?
COMMISSIONER STRANDBERG: I agreed with some parts of it. I
thought that, at this time, I had to weigh the consideration of
what effect this sunsetting would have, not only on the
Commission but on industry and what I was weighing was really
whether if we were able to make some changes within the
Commission we wouldn't lose our talent but we [indisc.] might be
able to avoid a disruptive process here because, you know, it
really does - it really is affecting the work process and,
indeed, with Commissioner Smith I was quite concerned about
retention of staff because it's very hard to get good people and
to keep them, even under the best of circumstances. So those were
the issues I was weighing but I - in the end, I did back off from
it. But again, it's an internal deliberation within the
Commission. It's a proper thing to do to consider what we might
be able to do to assist in the particular circumstance we are in
right here and it's a deliberative process.
CHAIRMAN TAYLOR: Changing the Chair was seen as at least a
partial solution or a solution that might be offered?
COMMISSIONER STRANDBERG: Well that was one of the considerations
here.
CHAIRMAN TAYLOR: Ms. Demarco?
COMMISSIONER DEMARCO: It's difficult when you have a collegial
group of people who have constraints on the circumstances in
which they may all sit down and talk about things. Any time you
have three or more Commissioners together in a room, it's
considered a public meeting and, except for adjudicatory
deliberations, we have restraints upon that. Sometimes in order
to have a discussion go forward, you float a trial balloon and
circulate it in writing as an internal draft memorandum for
purposes of discussion among the Commissioners. It didn't get all
the way around to all five Commissioners before it left the
Commission. And I regret that the thing ever was remanded to
writing and I'm sorry that it has caused grief and aggravation in
these quarters. To me, it is necessary sometimes for the
Commissioners to talk among each other, especially about matters
that have to do with pending legislation and other such things.
Unfortunately, our attorneys have advised that such kinds of
discussions are a public matter and must happen in a public
meeting. How to have a collaborative process with five people -
and three of them together constituting a public meeting is very,
very frustrating. And I don't know that you have those kinds of
constraints. You have caucuses of all sorts. We have this Public
Meetings Act and we try to adhere to it to the point of pain and
this is one of those points of pain. I did not and would not sign
such a thing.
CHAIRMAN TAYLOR: Well, how much longer are you with the
Commission?
COMMISSIONER DEMARCO: My term officially expires at the end of
this month.
CHAIRMAN TAYLOR: And what are your plans?
COMMISSIONER DEMARCO: I am making prudent contingency plans. I
have requested reappointment in formal writing by a letter to the
Governor in January and I await his disposition.
CHAIRMAN TAYLOR: Are you actively pursuing the job of Director of
Science and Technology?
COMMISSIONER DEMARCO: I became aware that Jamie Kenworth has
announced his retirement. I have inquired. I have not done
anything further about it. I was a candidate for that position
before.
CHAIRMAN TAYLOR: And that position is still open, isn't it?
COMMISSIONER DEMARCO: It has not been posted.
CHAIRMAN TAYLOR: How did you come to Alaska? What brought you
here?
COMMISSIONER DEMARCO: The very short version - my husband's plant
closed and he had a buy-out from General Motors and said he was
going to Alaska for the rest of his life fishing and if I wanted
to come we'd get married. [Laughter] The process involved looking
for a job in Alaska from Connecticut, which, as you might
imagine, is extremely difficult given the circumstances of
Alaska. The Alaska Science and Technology Foundation position was
posted in the Wall Street Journal. My son sent me the ad. I sent
in an application. I came here three different times for a
vacation and twice for interviews. By the second visit, I was
sure I would never leave. In fact, the time I came for a vacation
I extended my stay by 48 hours twice, so that the company that I
was working for asked me if I planned to come back and I told
them only long enough to resign, which I did. We drove here
leaving via Pittsburgh on Labor Day of 1995 - arrived here just
before the frost and I applied for the Anchorage Economic
Development Corporation position, [indisc.] and I got that
position and there we are.
CHAIRMAN TAYLOR: Who was on the board at that time?
COMMISSIONER DEMARCO: Of the AEDC?
CHAIRMAN TAYLOR: Um hum.
COMMISSIONER DEMARCO: I believe the Chairman was Max Lowe,
Carpenters, Phil Thingstad (ph), Denise Owens, Ernie Hall, Mel
Nickels (ph), Mike Brady, Ron Duncan, Lee Gorsuch, Jan Fredericks
and Mayor Mystrom. There had been some changes in the board over
the time I was there.
CHAIRMAN TAYLOR: And when you were recommended to the Governor
for the position you currently hold, was Mr. Duncan one of those
recommendations also?
COMMISSIONER DEMARCO: I believe I had a lot of recommendations. I
did not lobby for this position and I told all of the people who
talked to me, which included Mr. Gordon from Fairbanks, whom I
have never met, that, you know, in fact I would consider it. I
did not lobby for the position. I was honored to be asked and
I've been honored to serve, not the least of which because these
people are wonderful colleagues. It has been a good experience to
work with them.
CHAIRMAN TAYLOR: Did you understand my question though?
COMMISSIONER DEMARCO: Yes.
CHAIRMAN TAYLOR: So Mr. Duncan was one of the people recommending
you for the position?
COMMISSIONER DEMARCO: I believe so but I didn't ask him to.
CHAIRMAN TAYLOR: This draft we were talking about of a letter to
the Governor calling for the changing of the Chair - did you have
a discussion about that with the Chair?
COMMISSIONER DEMARCO: I did.
CHAIRMAN TAYLOR: And what was the substance of that discussion?
COMMISSIONER DEMARCO: I found out that she had received it after
I had been away at lunch and I apologized that it had gone out of
the office.
CHAIRMAN TAYLOR: Under oath, that's all that you said? That's all
that took place?
COMMISSIONER DEMARCO: I don't know. I think I was crying at the
time so I don't remember exactly the entire content and I
consider it privileged discussions - discussions within the
Commission to be privileged and that would be one of them.
CHAIRMAN TAYLOR: Well, I'm shocked about this and from Senator
Cowdery's question that - apparently several, at least three of
the members here felt that the Commission could be improved by
rotating the Chair and if we're looking for solutions to problems
within RCA and how to benefit and help this Commission, if
rotation of the Chair is something that at least three of you
believed might be beneficial, I would certainly hope that you
would - that you would reaffirm that statement if, in fact, that
was seen as one possibility.
COMMISSIONER DEMARCO: And we have to be clear to you. This was a
document put forward as a discussion tool, not as an expression
of opinion or affirmation. I did not sign it. It was not signed -
as I explained to you, a point of discussion that we wished to
have that we could not have with five people in the room.
CHAIRMAN TAYLOR: No, I understand that. All I'm talking about is,
it was obviously seen as a matter that should be discussed and it
was put in draft form and if, in fact, rotation of the Chair on a
more frequent basis than every four years - I am taking this from
the positive aspect, not from the negative, that something was
attempted that never occurred. I'm looking at it as to how we can
best assist this Commission in being a better Commission in the
future and if rotation of the Chair on one or two or three years,
as opposed to the current four year rotation, is something that
some of you as Commissioners believe is a good idea, I would hope
you'd share that with us other than just say, well it's something
we discussed but since we never signed it, it doesn't mean
anything.
COMMISSIONER DEMARCO: The discussion didn't go far enough to have
an opportunity for resolution, so I don't think it's appropriate
to talk about it.
SENATOR DONLEY: Instead of trying to dive into some internal
thing - because I would feel the same way. If I had a discussion
with you Senator Taylor, you know, that was, you know, off the
record to explore a concept, I wouldn't want to go through the
full details as if it was an idea that I was fully endorsing. But
we could discuss it as a theoretical idea towards the sunset
issue that's before the Committee, I would think and I would...
CHAIRMAN TAYLOR: That's what I'm trying to get back to.
SENATOR DONLEY: ...and not ask people, you know, any particular
conversations they had but, on the other hand, I think it would
be appropriate to have their opinion whether they thought
rotation of the Chair was a good idea or not.
CHAIRMAN TAYLOR: That's what I...
SENATOR DONLEY: ... sound fair to other members of the committee?
I mean is that a more ...?
CHAIRMAN TAYLOR: ...because rotation of the Chair has not been
mentioned by any of the witnesses so far and if it's something
that you guys had at least contemplated or thought about a little
bit, whether it came to fruition or not, I mean do you think
rotation of the Chair is a good idea on a more frequent basis
than every four years?
COMMISSIONER DEMARCO: I said I hadn't thought about it.
CHAIRMAN TAYLOR: You don't?
AN UNIDENTIFIED COMMISSIONER: No.
CHAIRMAN TAYLOR: You think a strong Chair that continues to sit
is better? More consistent and all that?
COMMISSIONER STRANDBERG: I'm not sure that I've seen enough to
come to that conclusion. I believe that the Commission really has
worked very well and we do have a very solid Chair now. I believe
that time will tell and I don't think we've given us enough time.
I want to be really frank in explaining to you - the reason why I
considered that option was to resolve a political issue. I think
the current Chair is functioning very, very well. I believe we
have, you know, good relations but our relationships between
Commissioners are continuing to evolve also. I think we should
give it some time.
CHAIRMAN TAYLOR: Commissioner, how do you feel about rotating the
Chair?
AN UNIDENTIFIED COMMISSIONER: More frequently.
CHAIRWOMAN THOMPSON: I'd probably say the same thing as Patty,
which is I think it's not something I thought about enough to
express an opinion.
CHAIRMAN TAYLOR: Did you have a strong opinion on it when you
found the letter was being circulated that might go the Governor
asking for your resignation as Chair?
CHAIRWOMAN THOMPSON: Not about that aspect of the letter but I
did have a strong opinion about the letter.
CHAIRMAN TAYLOR: And what was that?
CHAIRWOMAN THOMPSON: The way that the oversight committee was
explained in the letter, as I recall, had our operations reviewed
by representatives of industry and as I testified earlier today,
I think that's inappropriate to have folks who have cases pending
in front of us trying to help us revise our process. I am, and I
remain, open to suggestions about how our process can improve.
I've explained, very carefully in testimony how we've done that
in interactions with industry and how we've continued to involve
NRRI, which is a consultant that works lots of the regulatory
industries nationwide to help us improve our processes. But I
don't think that an industry oversight committee is the right way
to do it.
COMMISSIONER ABBOTT: I think it was a wise decision to make a
strong Chair. I think four years is an appropriate timeframe to
do that. I have no problem with the Chair whose sitting there. A
more rapid turnover is going to cause more turbulence within the
staff and staff is going to end up looking forward to the changes
or what might come down. I think a four-year is entirely
appropriate. Bernie?
COMMISSIONER SMITH: First off, on the oversight committee that
was drafted, it was nonpartisan and non-industry people, and it
was based on non-regulation. In other words they would have no
authority over the regulation or our decisions on regulation and
it would be just to look at our business procedures to improve
within our agency. So, it wasn't any industry recommendation that
I came up - maybe somebody out of the University - or NRRI is a
good one for me and I have no problems with it Senator Taylor.
CHAIRMAN TAYLOR: What about rotating the Chair?
COMMISSIONER SMITH: Rotating the Chair? I have the greatest
respect for Nan. She is a very intelligent person. She's a
workaholic. She works probably night and day but in this case, I
think a rotation of the Chair is not a bad idea because she has
so many duties, especially with the FCC and other committees that
she's involved with and also having the administration portion of
this plus the dockets that she's on. I think rotation of the
Chair is not a bad idea.
CHAIRMAN TAYLOR: The Chair decides, apparently, from earlier
testimony, all contracts?
COMMISSIONER SMITH: No. That's not true either. The Chair - if
it's under $5,000 she has the right to do that...
CHAIRMAN TAYLOR: But has that been the case in [indisc.] that you
voted you voted on?
COMMISSIONER SMITH: I know I voted on some contracts that were
issued in public meetings, I know that.
CHAIRMAN TAYLOR: Maybe - let me rephrase the question. Are there
contracts of which you are aware that were greater than $5,000
that you never voted on?
COMMISSIONER SMITH: I don't know.
CHAIRMAN TAYLOR: You don't know or you don't recall or ...?
COMMISSIONER SMITH: I really don't know. I mean if there was, it
wasn't shared with me. I want to make one other point here and
that's on the letter that she wrote to you. It kind of implies -
and you have implied it yourself - that it's the Commission that
agreed to that letter and that's not true.
CHAIRMAN TAYLOR: She clarified that.
COMMISSIONER SMITH: I know but you said a couple of times, and
she's the one who wrote the letter. I personally don't agree with
the process that she has laid out in that letter. I am going back
to the attorney general's [indisc.] and Jeff Landry's summary
that was issued in '95 - '94 that basically says we have the
discretion to carry our business on as is and toward the end, you
might have to make arrangements to sunset, but I disagree that we
are going to put industry in a box and basically not do what
needs to be done in a timely manner. I don't agree with that at
all. So, I just want to make sure that letter was not part of -
whether all of the Commissioners agreed - you'd have to ask them.
CHAIRMAN TAYLOR: Even when the Chair doesn't apparently sit on
every single three-person group, doesn't the Chair make the
assignment on all of the cases?
COMMISSIONER SMITH: Oh sure.
CHAIRMAN TAYLOR: So knowing how fellow Commissioners may or may
not view a particular subject, that's a tremendous power that the
Chair has, isn't it? What about travel? Do you all travel about
the same? Do you all go...?
COMMISSIONER SMITH: We've had a very strict travel budget and we
do travel. There's a traveling - I committee meetings -
conferences once a year and I rotate with Bernie and Patty. We
do, you know, we travel. Actually, two years ago in our budget we
asked for a higher travel budget just because of that reason so
that the Commissioners could get out especially not only in
visiting with other state's regulatories and also within our own
state to places that we could see.
CHAIRMAN TAYLOR: Part of the concern that I have, and I think
has been expressed, is that once this Commission was started,
just three short years ago that, with the exception, I guess, of
you Chair Thompson, there was very little knowledge or expertise
of regulating telephone companies, regulating electrical
companies and so on.
COMMISSIONER DEMARCO: I did work for the Connecticut Commission
for a number of years and I worked for the Connecticut Municipal
Electric Energy Cooperative for five years. I was a loaned
executive by them to a company that I was serving [indisc.].
CHAIRMAN TAYLOR: So you had some background in the electric?
COMMISSIONER DEMARCO: About 12 years.
CHAIRMAN TAYLOR: Did you have background in some utility
management?
COMMISSIONER STRANDBERG: Only as an engineering design consultant
but nothing in the regulatory...
CHAIRMAN TAYLOR: Nan, you've worked there for how long? You were
a staffer over there for a long time.
CHAIRWOMAN THOMPSON: No I wasn't a staffer. My background is as a
practicing attorney and that's - 20 years ago I graduated from
law school and have been probably half the time in private and
half in public. I served once before on the Public Utilities
Commission for 14 months, I believe, and you may recall because I
think you were in the legislature at the time of the controversy
with Tim Cook. As I committed to the legislature when I was
confirmed, the day that the Supreme Court ruled that the job
wasn't mine, I left and went back to the practice of law. I've
had - when I was in private practice represented utilities at
various times during that 20 years.
CHAIRMAN TAYLOR: But you didn't have any particular background
either then in utility management?
CHAIRWOMAN THOMPSON: Well, as you know, because you practiced law
for many years too, Senator Taylor, is that you learn a lot about
your clients' business when you represent them and I had clients
who were different types of utilities - telecommunications
utilities, refuse utilities, I did some work for a number of
utilities. One of the private firms I practiced with had many
utility clients. I had in fact practiced in front of the
Commission for several years at the time, years ago when I
practiced.
COMMISSIONER ABBOTT: The only thing I ever regulated was a
fighter aircraft, Senator, but I don't know, I guess within about
six months or something like that after I came on to the
Commission I went to a one-week training program back in Chicago
and that was part of the drill to try to get us up to speed. Some
of the others went to, what is called, Camp Nara (ph) for a
couple of weeks.
CHAIRMAN TAYLOR: Bernie had already answered that question and I
appreciate all of your answers but people have testified
repeatedly that it took awhile to get everybody kind of up to
speed in the background of these very technical matters. Have you
had a chance to go to any other schools because that was
something I was concerned about?
COMMISSIONER ABBOTT: I didn't request to go to any of the other
schools for a number of reasons. One is I am pretty busy where I
am and, you know, going away - to go off to a one-week, two-
weeks, stuff like that gives you a great background but it
doesn't give you that experience as sitting there working stuff
at your desk and we're here. So I do not feel that I have been
slighted as far as my ability to go to training or the
opportunity to go to other training.
CHAIRMAN TAYLOR: The point I was trying to make was that as we
contemplate some changes, and there has been almost unanimous
testimony that the ARECA timelines are something you've
compromised with and agreed upon and that others say may have to
be in there. Some are talking about an oversight committee, as
you mentioned in your letter, a proposed draft to the Governor.
It just seemed to me that since there is such a level of
sophistication in this field, that maybe we also need to consider
the level of training and expertise and background. If we're
going to rewrite this thing, maybe we need to rewrite it so that
you end up with - much like we do at the Oil and Gas Commission
and we have great arguments about who is a down-hole engineer and
who isn't a down-hole engineer, maybe we need people with more
expertise and background in these fields so that they won't take
so long and maybe we also need a bigger travel and training
budget too at the same time.
CHAIRWOMAN THOMPSON: A bigger travel and training budget we
wouldn't turn away. I think it's important to note that one of
the ways we try and use our travel money efficiently as a state
agency is to bring experts in. That way we can have all of our
staff and all of the Commissioners have the benefit of training.
We've done that on several occasions. On the telecommunications
field we hired someone. We hired, I'm embarrassed to say, Arthur
Andersen to come up and do our rate case training that we allowed
members of industry to attend also. So we've tried - it would be
great to have more of a travel and training budget. There's no
doubt. But we've had, just because folks haven't traveled to it,
doesn't mean they haven't gotten it. We've provided opportunities
here as well.
SENATOR COWDERY: I would like to make you go through - you know
when we talked about a possible conflict of Nanette going to a
lodge with her family. Even though she paid, we don't know if she
paid retail or what, but I'd just like to ask each one of the
members of their thoughts on if you had had that opportunity,
would you have went or do you think of rethinking it?
COMMISSIONER SMITH: Well, I would say - I don't know if I
wouldn't have went to that fishing lodge but I would have
definitely - if Senator Stevens' called - the NRRI staff had
called me and said I really want you to introduce yourself to my
telecommunications person, I would make every effort to do that.
Maybe not go to that particular fishing lodge but...
SENATOR COWDERY: But you didn't need a vacation to get that
introduction, you would have tried to use other means to get that
introduction?
COMMISSIONER SMITH: I don't know that Commissioner Thompson
thought it was a vacation either.
SENATOR COWDERY: Well, she took her family, that's why I say
that. Will, what do you think of that?
COMMISSIONER ABBOTT: As Bernie said, if Senator Stevens' office
calls and says that they want to go - whether Senator Stevens'
office or Senator Murkowski's office or your office - calls me
and says you ought to go fishing this person and see if you can
hook up, I would certainly do that. Whether I'd go out there to
- knowing I was going out to GCI's lodge or not, well, that would
be a tough call, I would probably say no, but I'm not telling you
right now that I'm committed to that.
COMMISSIONER STRANDBERG: That's a tough call. You all know the
Senator Stevens' connection is important and it really helps the
state when we are able to relate to these people. As far as, you
know a, an invitation to go out to the fishing lodge, I think I'd
have to agree with Commissioner Abbott on, that would be a tough
call for me. [END OF TAPE]
TAPE 02-39, SIDE A
COMMISSIONER DEMARCO: Senator Stevens likes to have people from
Washington experience the real Alaska and making arrangements to
meet with people in an environment that's conducive to that
wouldn't surprise me on his part. Again, it is very difficult to
say no to Senator Stevens because he's so generous to the state
and is so committed to having people understand Alaska. It would
be very hard to make that decision. I think all the ramifications
wouldn't immediately occur to me, it would occur to me first,
Senator Stevens is trying to get this person here and we want to
accommodate them and worry about the rest of it later and I think
that's exactly what Nan did.
CHAIRMAN TAYLOR: Well that would be true if, in fact, that's who
invited her. It isn't. Her testimony is that she was invited by
Dana and, at that point, finds out that Lisa is going to be there
and it would be a good opportunity to meet and work with her.
Dana initiated that, isn't that correct?
CHAIRWOMAN THOMPSON: Almost. When the initial - when the
invitation was originally extended, it was made clear to me what
the purpose of the trip was and I was able to verify that
independently.
CHAIRMAN TAYLOR: So, as I said, Dana calls you, or contacts you,
and lets you know that this would be a good opportunity to meet
with Stevens' staff, right? That's how you find out about it,
then you confirm it later by making another call.
CHAIRWOMAN THOMPSON: I wanted to make sure that it was - the
opportunity that had been represented to me to be available and
that the request that had been extended through her was actually
being made - that there really, there was reason for me to
believe that this was something that Senator Stevens' staff was
recommending happen, that I meet with her and talk with her about
the Alaska Telecommunications Act.
CHAIRMAN TAYLOR: So it wasn't a call from Senator Stevens or his
office to you that initiated this, it was a call from Dana who
asks you to go and says that Lisa is going to be there. You then
confirmed that with subsequent phone calls, right?
CHAIRWOMAN THOMPSON: That's correct.
CHAIRMAN TAYLOR: Okay, so it isn't Ted Stevens calling up and
saying let's get together as everyone has answered.
Unfortunately, I think it's a difficult decision ethically. It's
one that we're going to have further information on and we can
discuss later, I guess. It's a long ways of water under the
bridge, as far as I'm concerned. We're supposed to be here to
find out what's happening to RCA and whether or not these people
are properly insulated from the types of conflicts that can occur
in a small state like ours where we have a close relationship
with these people. I think we ought to discuss these things
openly as we have and I appreciate very much your candor on this.
But is that necessarily, and that's why I had a legal opinion
drafted on it, is that necessarily something that we should
consider in legislation? Should we provide the commissioners
with some greater level of safeguards and standards for that
purpose, much like we do with judges. For those times when you
sit as judges, shouldn't you have the same kind of protections
that we provide judges with? And so I appreciate that discussion
very much.
CHAIRMAN TAYLOR: I do have a concern about the question of email.
And I have one example here that was provided to us. And
basically - well maybe I should just hand this to you and you can
explain what this one's all about. Because I don't understand
why, from my impression, it appears as though the person sending
the email is a Jennifer Robertson who works for RCA. Excuse me,
let's back this thing up, Robin Boyson, who works for RCA, GCI
and Ms. Boyson is indicating that she "was reviewing this filing
with Lori and she suggested that you might want to know that ACS
recently has been restricting their TLS bandwidth availability.
In two different filings they basically made 1.5 unavailable as
well as 20 and 50 kbps. Though we are actually glad to see more
available at the lower levels available to customers, we thought
you should be aware of the trend."
[Indisc.]
CHIARMAN TAYLOR: My concern is it appears from that email that
we have a staff person sending what may be proprietary
information within these filings, if these filings are
confidential, and indicating to the competitor that they should
be aware of these trends. How do you sign up for that service?
CHAIRWOMAN THOMPSON: Senator, there's nothing in the filing or
this email that indicates that its proprietary information at
all. I will certainly check.
CHAIRMAN TAYLOR: That's my first question is, is that proprietary
information within those filings or are they confidential?
CHAIRWOMAN THOMPSON: I would believe, I don't - I will be happy
to go back to this particular TA file, the reference is a TA
number, so that indicates to me that this is a tariff filing, and
that this is an instance of a staff person, Robin Boyson,
communicating with Jennifer Robertson via her GCI email address,
but a lot of people do. I don't know where she works, I don't
know Jennifer Robertson. And I'm assuming that the information
that she is sharing with her is public information. The terms
and conditions, the type of information that's here, two
different filings, the filings that they made would be public.
The would be public record available to anybody who comes to our
office to request a copy or who collected the information over
the internet. If it's something that's filed with us, a request
for rate increase, that's public information. And what she's
describing here are terms and conditions that describe services
that they have. I would be happy to verify, and I can by
reference to this TA number, what it is that you are talking
about. But I am confident, knowing Robin Boyson to be a person
of integrity, that she is not sharing confidential information
with somebody from another company. That would be cause for
serious, certainly cause for concern for me, if that's happening.
But I have no reason to believe, based on what you showed me,
that it is. It looks to me that she's giving her information
about something that's already under public records.
SENATOR COWDERY: But why would she do that? What was the purpose
of giving this information if it was?
CHAIRWOMAN THOMPSON: Because of the standards by which we review
- as I explained, when we're looking at filings by a utility
company in a competitive environment, one of the standards for
reasonableness, rather than requiring them to submit the pricing
information that they normally would have to submit in support of
a request to make a particular offering, we look at what the
market says, we use as our standard of reasonableness whether or
not it's within the range of prices that other people are
offering the same services for. So we're not knowing anything
more about this than what I read right here. That's what she's
doing, she's giving this other person an indication of what the
market information is and what type of standards she's going to
be applying when she evaluates the filing to make her
recommendation to us. I would be happy to submit, to pull this
file, and submit an explanation to the committee in writing.
CHAIRMAN TAYLOR: Her second paragraph, it sounds as though Ms.
Boyson is a staff person and she is a staff person who apparently
makes recommendations to you, as commissioners, on cases -
pending cases. Her concluding sentence of paragraph two is, "At
this point I would have to recommend suspension of that aspect of
the tariff, pending clarification."
CHAIRWOMAN THOMPSON: What she's doing is communicating with the
utility about - and this is again - before this has come to us in
a TA meeting. I can verify that by looking at the dates, and I
have the dates it was acted on when I get back to the office, but
this type of communication is the one that staff regularly has
with any utility that has a tariff filing pending. Robin is
trying to understand the terms of it and she's telling the
utility what her recommendation might be. What she sees when she
reads that's going to cause her concern in her recommendation to
us and she's providing an opportunity for the utility to clarify
or consider changing that term in order to avoid a suspension.
SENATOR COWDERY: Do you, just following up on this, do you advise
ACS of any GCI trends or have you ever did that in your office?
CHAIRWOMAN THOMPSON: I don't personally because I don't handle, I
don't see these TA filings, they are processed by staff until
they come to a recommendation. But I am certain that staff would
do the same thing.
SENATOR COWDERY: They do that, too?
CHAIRWOMAN THOMPSON: Yes.
SENATOR COWDERY: They advise ACS of the trends of GCI?
CHAIRWOMAN THOMPSON: I would feel confident that would happen.
And I would happy to go back and try and dig out an example of
that if that would be help you, Senator Cowdery.
SENATOR COWDERY: That would be helpful, I would appreciate that.
CHAIRWOMAN THOMPSON: Pardon me, I didn't understand.
SENATOR COWDERY: Examples or copies of where they did that.
CHAIRWOMAN THOMPSON: Okay. I'll add it to my list.
CHAIRMAN TAYLOR: That would be probably done the same way,
through an email.
CHAIRWOMAN THOMPSON: Yes. Our staff uses email to communicate a
lot just because people are away - it's just an easier and more
effective way and that way we have a written record of what the
communications are.
SENATOR COWDERY: Who is the records custodian of RCA emails?
CHAIRMAN TAYLOR: Or do you have one?
SENATOR COWDERY: Or do you have one?
CHAIRWOMAN THOMPSON: We have a records custodian for the agency,
I don't know that it's any different for email. We have a
records and filing section that keeps track of all the paper that
goes through the agency.
SENATOR COWDERY: They're stored somewhere else?
CHAIRWOMAN THOMPSON: I don't know where the emails are stored.
CHAIRMAN TAYLOR: I think the question had been asked earlier,
maybe I'm wrong, has there been, to your knowledge, any attempt
to erase or delete email?
COMMISSIONER DEMARCO: No. [Indisc.]
CHAIRMAN TAYLOR: What I'm talking about is emails that are
communications between the Commission and other parties.
COMMISSIONER DEMARCO: If you look at the very top line, where it
says subject, it says "For the Mailsheet." That would say to me
that, you know, this was entered by the staff person into the
docket records for that date. Every day, we have posted on the -
I don't know, it goes on our computer, the mailsheet for the day,
which is every document that comes into this agency which is
pertaining to dockets. If, for example, you make an electronic
ruling on a motion and say yes we grant you ten more days to get
in your answer or yes we accept your late file thing as you
requested. The person who makes that ruling, either a paralegal
or staff member or the lawyer, will put a note like this in the
file saying, you know, posted to this docket on the mailsheet, we
made this ruling telephonically, here's the email transcript so,
it becomes part of the docket record. It looks like that's what
she did with this email.
CHAIRMAN TAYLOR: So this one is part of the docket record?
COMMISSIONER DEMARCO: Yes. It says for the mailsheet and the TA
number. So I would presume that that's what this was.
COMMISSIONER SMITH: When the TA's actually comes to us for
approval, we would have a packet for that TA number and it would
have emails that were sent back and forth to try to get
information back from the utilities. So that the TA's -
CHAIRMAN TAYLOR: So the TA's a Tariff -?
COMMISSIONER SMITH: Tariff action. So we get the information that
we need to make the decision. And that's one of the few times
that our advisory staff actually gets to talk directly to the
industry to work out the differences and get the information so
that we can make the proper decision. Once it is suspended as
you heard before it goes into a docket and it gets more difficult
for our advisory staff to communicate back and forth to industry.
CHAIRMAN TAYLOR: From the judicial aspect, [indisc.] we go
through that ex-parte discussion again. As you indicated, I do
all my own email, too. I'm sitting there and I'm typing away and
I get some spam and I delete that stuff and then I type away and
I send a little message back to a friend. And then I do another
thing and it goes to the secretary or somebody to type up. Not
all email correspondence goes on this mail sheet, right?
CHAIRWOMAN THOMPSON: It does if it relates to a docket, and
that's why she has a TA number referenced here. It was probably
off the mail sheet that the ACS legal department got this.
CHAIRMAN TAYLOR: Say I type up and say, 'Commissioner Demarco,
love to take you lunch, see you over at the Cook at noon' and I
send that to her at 10 o'clock. And she comes in and says, 'Hi
Robin, yeah great, meet you at lunch.' That one does not go on
the mail sheet, does it?
CHAIRWOMAN THOMPSON: No. It doesn't relate to a docket.
CHAIRMAN TAYLOR: Right. Like the communication that you had with
all the utilities about what might happen with them in the
future. That wasn't on a docket, was it?
CHAIRWOMAN THOMPSON: No.
CHAIRMAN TAYLOR: Was that done, some of it, through email?
CHAIRWOMAN THOMPSON: Probably. I remember communicating with -
I communicated with ATA and their representatives via email.
CHAIRMAN TAYLOR: Would you provide that to the committee please?
CHAIRWOMAN THOMPSON: Sure. And like I said, I think what I
communicated in that form would probably be very similar to
what's available, and they're probably still up, it says flashing
sunsets highlights or sunset updates or something, on our website
that's got current information about the process that the agency
was going through.
CHAIRMAN TAYLOR: Let's go back to about the time the special
session was [indisc.]. Senator Halford, do you have a question?
SENATOR HALFORD: Well, it's a different topic. Going back to the
letter a year ago, it took apparently eight or ten months before
there was a meeting that you participated in by teleconference to
try and decide what to do with the money. It sounds like you said
only a couple of months ago that you actually were in that
teleconference.
CHAIRWOMAN THOMPSON: Only a couple of - pardon me, what?
SENATOR HALFORD: It sounded like awhile ago you said it was only
a couple of months ago that that teleconference on what to do
with that study occurred?
CHAIRWOMAN THOMPSON: As best as I recall, yes, we received a
communication from the Department of Administration about that.
And, like I said before, I think they're the - that's the best
place to focus your questions about...
SENATOR HALFORD: Who do you recall being in that teleconference?
CHAIRWOMAN THOMPSON: Well, Jim Duncan was in it. I think Larry
Walsh, who's also in Department of Administration.
SENATOR HALFORD: Were you the only member - the only person on
the Commission side?
CHAIRWOMAN THOMPSON: Yes.
SENATOR HALFORD: Was it all Department of Administration people,
or Governor's office, or anybody from outside the state
government, or what?
CHAIRWOMAN THOMPSON: Nobody from outside of state government, I
don't remember anybody from the governor's office about
participating in the call.
SENATOR HALFORD: I'm curious how it took so long to get
everything going on this study.
CHAIRWOMAN THOMPSON: I wish I could answer your question, Senator
Halford, but I can't, I'm sorry.
CHAIRMAN TAYLOR: On the study, does the Commission support it?
CHAIRWOMAN THOMPSON: I think it's a good - well, let me just
start over here - I think it's a good idea to get advice about
what policies should be implemented within the state to encourage
the goals of affordable telecommunications statewide.
CHAIRMAN TAYLOR: Shouldn't we have that information before we
proceed to draft statute law concerning your Commission on those
very subjects?
CHAIRWOMAN THOMPSON: I don't think that that's necessary, because
the question asked by the study talks about policy in general, it
doesn't talk about whether or not we should have a regulatory
agency to help regulate telecommunications. As I said before,
the legislature's authority to modify our enabling statute is not
limited to sunset years.
CHAIRMAN TAYLOR: That isn't the question. The question is,
should or shouldn't we have the information available to us, the
study that you support, shouldn't we have that available to us
before we draft legislation that may very well affect
telecommunications? Because we're talking about timelines within
which you have to do things that could be something that has a
significant effect. I don't know, I don't do telecommunications.
CHAIRWOMAN THOMPSON: I think it would be a good idea to get and
consider advice before you draft legislation that affects
telecommunications. I agree.
COMMISSIONER SMITH: But I might add, I agree with that also, but
to tie that into the sunset I think is kind of illogical. I
believe, if you want to tie it into something, give us a year,
give us two years, and then have the study, have this oversight
committee, and then have that information come back to you. But
to put the industry and our staff in a position that they
perceive, I don't personally perceive it that way, but they
perceive that is a difficult decision to make if we start losing
people. Our industry starts - investors start dropping out who
invest in the industry. So, I think it's a compromise;
legislation is a compromise most of the time as you well know.
Give us a chance to get the sunset out of the way, get these
studies done, get this oversight committee, if that's what you
decide to do, put it in there, and let's get on with our
business. [Indisc.]
COMMISSIONER STRANDBERG: Indeed. We can oftentimes make changes
within the enabling statutes. It may well be that there are
things that come up with that report that we could, with the
letter, we could implement new regulations without changing the
statute, we don't know that.
CHAIRWOMAN THOMPSON: Your small water and sewer regs project is
probably a good example of that. It may be helpful to explain
what that's all about and how that might respond to some of the
comments yesterday.
CHAIRMAN TAYLOR: From the testimony we have, if you have the
right banker show up next to your subdivision - that you and the
local folks paid to put in a water system unregulated by this
Commission - decides then to file an application with the
Commission and the Commission jumps through hoops for about two
or three years trying to figure out how they can then regulate
that and provide him with that water. That's the testimony we
heard. And then we find out that half the water and sewer
systems in the state aren't regulated, but arbitrarily the other
half are. And there doesn't seem to be any distinction between
who gets regulated and who doesn't. Maybe you could explain that
one for us.
SENATOR ELLIS: Mr. Chairman, is that the Ed Grasser testimony
from yesterday? Is that what you're referring to?
CHAIRMAN TAYLOR: Mr. Stancliff.
UNIDENTIFIED SPEAKER: Oh, Mr. Stancliff.
COMMISSIONER STRANDBERG: As a matter of fact, I wanted to
directly address that. I did make some copies of the actual
Crimson View order. And I did give that to your assistant there,
and I made copies so, if you wouldn't mind, could you distribute
this packet? And in as much as I am the docket manager for the
small water regulations project that we have going right now, and
I just happen to have been the docket manager for that Crimson
View project, I thought it would be good to talk you through this
really quickly, maybe from a slightly different perspective. I
wanted to express to you that we inherited that docket from the
APUC, and so it was one of the first dockets that we got when we
hit the ground running. And I'll be the first to say that, as an
engineer, I didn't have a lot of regulatory experience and I read
the statute and you know our statute right now is certainly not
perfect. Clearly, the outfit had more than ten people and really
did comply with what our definition of what a public utility is.
But the reality of the situation is that many, many of these
small systems are - we don't know about them and they're in
operation. Some of them work well, some of them don't work so
well. We hear about some of them in our formal complaint
process. But the net effect is that we went through a process
with the Crimson View people and the adjoining utility wanted to
create a slightly larger utility and have centralized facilities,
which, as an engineer, that seemed reasonable to me. Well, we
went through a long process and it became clear that the two
groups just didn't want to co-exist. And in the order, we
basically declined jurisdiction because what happened is they got
into arguments with a lot of other issues and it really became
clear that the public utility issue was only a small part of
that. It was early in our tenure. That was about our first year.
So, I think our decision worked. You know, they were able to go
forward and settle their problems and not have a regulatory yoke
around their head. And maybe it did take us a little bit too
long on that, to come to that realization, but again we were just
coming into being a commission. Since that time, we have been
working with a number of small water systems and the concept of
exempting homeowners - homeowner associations from our
regulation, even though they may comply with the definition of a
public utility, we've talked about that a lot within the
commission. In fact, there's been at least two cases where we've
done just that in the recent past. And our reasoning is we want
to make sure that the rate payer is really protected but we want
to let these people go do their business without a regulatory
yoke.
Oftentimes, I characterize our jurisdiction and our power, if you
will, with a great big shovel in gardening where you can move big
mounds of dirt, but when you just want to tend around a small
flower, it's kind of hard to use that big shovel. Clearly there
is a - we've come to the grave realization that we have to use
that power with great restraint.
CHAIRMAN TAYLOR: Additional testimony yesterday was that
Representative Ogan had filed legislation and that legislation to
deregulate was pending and that the commission, through the
administration, basically negotiated a resolve with
Representative Ogan that you hadn't made up your mind yet about
what size of water and sewer utility - water utility I guess this
is - that you wanted to regulate, that that was still kind of in
the mix and that he then withdrew that bill upon the order of
declining jurisdiction coming up. And that was the testimony; at
least, I stand corrected if somebody thinks it was different.
COMMISSIONER STRANDBERG: My best recollection of our
deliberations was I believe that we heard that there was
legislative viewing of this. But in our deliberations, truly, we
were looking at this, scratching our heads and you know it's this
big shovel in a garden, we were really feeling that and seeking a
way to equitably - to equitably reach a decision that would
benefit those people. I think that's where we were at in our
deliberations.
CHAIRMAN TAYLOR: I just wanted to let you know what all he said.
COMMISSIONER STRANDBERG: Since that time, there's been a federal
act, the Safe Drinking Water Act of 1996. Some would call these
unfunded mandates where there's significant tightening
restrictions on basic water quality for all of our water systems
and these homeowners' associations fall under this federal
mandate. And not only is the federal government going to require
strict water testing, but they're also going to require that
these utilities, small associations, comply with technical,
managerial, and financial standards meaning that they're not only
going to tell them, you make the water good, but they're going to
tell them how to do it - and their hammer is that they're coming
down through Alaska Department of Environmental Conservation with
revolving loan funds, and if they don't comply with the basic
standards, the money doesn't come. And so we assume that these
small utilities are going to come under the yoke of these federal
programs. We have instituted a notice of inquiry and we, on our
own actions, have begun a process to develop reasonable
regulations so that we can allow these organizations to continue
to make water for their residents and to have appropriate yoke -
very, very light yoke, or no yoke at all - depending on if we can
work it out so that the public's protected. Anyway, this order
02-04 in it also considers whether to exempt homeowners'
associations completely from our regulations. We're seeking
inquiry on that. And I think this is an example of how the
commission is growing and maturing in our thought processes and
realizing just how big that damn shovel really is. So you have a
copy of this order right here.
COMMISSIONER DEMARCO: You're also eligible to comment on our
dockets. Any member of the public, and if you have opinions
about that that you think would be valid or helpful, we'd be
happy to hear from you.
CHAIRMAN TAYLOR: Commissioner Demarco, that would be more than
the blind trying to lead the blind, I guarantee you. I appreciate
the depth of work you obviously put in on that file, it's an
incredible opinion. But, in essence, you guys just haven't made
up your mind about whether you're going to regulate or not
regulate and what sizes you're going to regulate. Are you kind
of waiting for DEC to figure out what they're going to do and
then you guys will kind of figure out what you're going to do on
this?
COMMISSIONER STRANDBERG: We have made our mind up on two early
cases where we looked at specific circumstances and did agree to
exempt. Now we're seeking to see if we can widen that into a
regulation and resolve that issue.
CHAIRMAN TAYLOR: Are there further questions for the
Commissioners?
SENATOR DONLEY: I had a couple real quick. Yesterday there was a
discussion - and I forget who mentioned it - about the regulatory
charges that go on consumers' bills and that not all - I got the
impression, okay - that not all consumers were being charged the
bill for that. Did I misunderstand that somehow?
CHAIRWOMAN THOMPSON: The utilities, I guess I don't remember the
testimony exactly, but the way the statute reads, and the way the
obligations are, the utility is required to remit it. We
calculate the amount that they each owe based on their gross
revenues, the standards are different depending on the industry -
for electricity, it has to do with the amount of power. Anyway,
we figure out based on the number of hours our staff spends and
they keep track of that in-house, to allocate the agency costs
according to these different standards amongst the industries.
They can charge the customers, and most of them do, put it on the
bill as a separate line item regulatory cost charge. If they
want to pay it elsewhere, they can but the ...
SENATOR DONLEY: But are all utilities doing that? Are there
small utilities that are being regulated that aren't charging?
CHAIRWOMAN THOMPSON: Now I understand. There's an exempt - some
utilities are exempt under 711, because they're...
SENATOR DONLEY: When you say 711?
CHAIRWOMAN THOMPSON: 42.05.711 has the standards for exemption.
For example, it is a matter of policy, the legislature decided
some years ago that municipally-owned utilities did not need to
be regulated because there was enough input and protection for
consumers through that public process. Utilities can vote to
become deregulated. I can remember - we just did Tatitlek, there
was an election up on the North Slope for a telephone company
recently. Any time the consumers - and there are standards and
statutes for what the votes have to be and to make sure that the
ballots are delivered - they can decide, as members of a
community not to have - as utility rate payers - not to have that
utility regulated.
SENATOR DONLEY: But are there any that are regulated that are not
participating in paying for the cost of the regulation?
CHAIRWOMAN THOMPSON: No. I think that the issue raised yesterday
was cost allocation in dockets and some suggested that we weren't
allocating cost when we could. Is that what you're talking
about?
SENATOR DONLEY: Uh, yeah, I think that was part of it.
CHAIRWOMAN THOMPSON: Okay, and that was Ms. McPherren's
testimony. Recently, we have tried to get our old accounting
records cleaned up as well and, in closing old dockets, there are
some that were many years old where the parties didn't have fair
notice for the Commission's incurred costs. The one that I can
think of as I'm sitting here had to do with the acquisition of
the utilities in Fairbanks. At the end of any case, we look at
our costs and we allocate them. If the utility is already paying
regulatory cost charges, we absorb the cost. In other cases,
where a party may represent the public interest, we also
sometimes absorb the cost. In several recent cases, because the
dockets were so old, we felt like it wasn't fair to send somebody
a bill for thousands of dollars after the fact, we also agreed to
absorb the cost. But generally, when we close dockets, we go
back and look, and by costs in this case I mean things like court
reporter fees if there was a hearing, or any special travel
expenses incurred. I think that was why the bill was so high in
connection with the Fairbanks proceeding because, again, it
wasn't us, it was the previous commission, so that tells you how
old the bill was, flew to Fairbanks had had hearings on that
docket. But we charge the cost of our - the cost that we can
fairly allocate and document and collect them from parties who
don't pay regulatory cost charges. If they're already paying it,
we figure they're paying their share already.
SENATOR DONLEY: So, I think I feel I got my question answered. I
want to make sure that there is nobody out there that is using
the services of the Commission that isn't part of the statutory
scheme for paying for these services.
CHAIRWOMAN THOMPSON: Right. In things like - there are a lot of
unregulated utilities that, for example, do PCE filings. Well,
they write a check, every time they send in their PCE filing. We
bill them. Many of those are small utilities, owned and run by
the community, and they're not economically regulated, so they
don't pay RCC but they pay for us to process their filing.
CHAIRMAN TAYLOR: Let me just follow up on that for a minute.
42.05.254, right? And you cited us to (d)?
CHAIRWOMAN THOMPSON: 711(d). 42.05.711(d), is the exemption
provision.
CHAIRMAN TAYLOR: Where the 711 comes in, I'm not in on that one,
I guess. I'm on 42.05.254. What I'm curious about is, how do you
disregard (a) because (a) specifically says, 'An exempt utility
shall pay the actual cost of services provided to it by the
commission.' And, in fact, the APUC had done that. And those
legislative words are shall, they're not you may do it.
CHAIRWOMAN THOMPSON: I think I just explained, in response to
Senator Donley's question, that we do that on a regular basis
when there are specific services we perform for unregulated
utilities, they pay the cost.
CHAIRMAN TAYLOR: But you're not doing that in all instances
because that's the testimony we had from staff yesterday.
CHAIRWOMAN THOMPSON: I don't believe that's exactly what she
said. I believe Ms. McPherren's testimony was that she had not
recently been involved in our adjudicatory deliberations and she
wasn't fully aware of that. If - I would like to have the
opportunity to ask - I don't know off the top of my head - I
don't have in front of me the statute you're reading from,
Senator, so I can't really respond to the question and I would
like to have the opportunity to ask the AG if there are other
statutes that apply as well before I answer your question. I was
talking about a different statute.
CHAIRMAN TAYLOR: The reason I was the question is because it had
been raised in discussions and in testimony yesterday and I know
for a fact that Fairbanks didn't pay. Tlingit-Haida, on their
electric dispute, didn't pay. And both of those were very
expensive matters. Somebody had to make the decision; I'm going
to enforce this law against this group, I'm not going to enforce
this law against that group. And if the legislature says shall
pay, I'd like to know where the discretion comes on the part of
you as chair or the commission itself to arbitrarily make
decisions among who's going to pay and who isn't going to pay.
And if you need the Attorney General to assist you on that, that
would be fine too.
CHAIRWOMAN THOMPSON: Actually, I'd like to look in the statute
too. But, in Fairbanks, the utility that purchased the Fairbanks
utilities are economically regulated and do pay regulatory
charges. You heard from one of them today, Golden Heart
Utilities.
CHAIRMAN TAYLOR: Before they were purchased, wasn't there a case
that they were not charged for?
CHAIRWOMAN THOMPSON: Why don't you just answer?
COMMISSIONER SMITH: I believe it was - FMUS was one of the
parties and...
SENATOR DONLEY: I'm sorry, what is FMUS?
CHAIRWOMAN THOMPSON: Fairbanks Municipal Utilities Service.
COMMISSIONER SMITH: That was the actual Fairbanks Municipal
Utility Commission, which was an arm of the City of Fairbanks and
they sold the system to Golden Heart Fairbanks Sewer and Water.
And there was a question about whether or not they should absorb
costs and, to be frank with you, I don't recall - I think there's
actually two separate statutes where you go back and forth
between those. I think that we just need time to respond to -
CHAIRWOMAN THOMPSON: I'd be happy to look up the orders. you said
the [indisc.] case and that Fairbanks case -
CHAIRMAN TAYLOR: And the other was the Tlingit-Haida - that was
U94-002, the City of Fairbanks was U96-114. And basically,
because the decision was made not to make any attempt to have the
non-regulated industry contribute to the budget, all of those
that are regulated had to subsidize that cost as against their
utility ratepayers. I don't know why that was being done. And
that was the reason for the question.
CHAIRWOMAN THOMPSON: Senator Taylor, I'd like to have the
opportunity to look up the order and review the record completely
so I can provide you with a good answer to your question. I would
be happy to do that in writing.
SENATOR DONLEY: I'd like to know that too, because I want to make
sure that my constituents aren't paying for services received by
somebody else. I think they're paying for the services they
receive, but they're entitled not to have to pay for somebody
else to get the services.
CHAIRMAN TAYLOR: Senator Donley, that's exactly the subject that
came up three years ago when we created this RCA, that telephones
were paying more than electric utilities, who were paying
different from water and sewer, and that we ought to keep track
of that and that's why I think the MIS was created, wasn't it?
So you could keep track of times and who was spending it on what
case.
CHAIRWOMAN THOMPSON: That was one of the reasons the MIS was
created.
CHAIRMAN TAYLOR: That was one of the reasons, the other of course
was timelines, as we've discussed. But did either of you have a
comment on that question of subsidizing these non-regulated. You
were kind of nodding your head -
COMMISSIONER SMITH: I was just going to make the same couple of
comments that one of them made about the PCE program and our
staff does non-regulated PCE requirements. I just wanted to let
you know that that has happened.
CHAIRMAN TAYLOR: So the PCE kicks in. But apparently these two
didn't, and so if you can follow up with us on that and just let
us know how come because it is a point that was raised earlier
about are we're doing it one way or another and we ought to be
consistent. However we're going to do it, we ought to do it the
same way. Go ahead, Senator Donley.
SENATOR DONLEY: On these streamlining process issues that have
come up over the last couple of days, we talked a little bit
about the reduction in discovery. The other two items that I had
some notes on were focusing on key issues, trying to keep
extraneous issues out of these rate cases, and also, some sort of
definitive timeline so that all of the parties know that unless
something gets done by a certain time, they're not going to be
happy with what happens, I mean, so that everybody has a stake in
getting the thing resolved within a certain amount of time. I'm
really interested in these. I strongly understand it's better to
have a good delayed decision than a prompt bad decision. I
understand that concept but at the same time I'd like to explore
this kind of possibility, as we're going through the sunset
process here, of how to streamline that process. We talked a
little bit earlier today about limits on discovery. What kind of
limitations did you institute on discovery and that process?
COMMISSIONER SMITH: We told them they could have, in that
particular case, they could have two rounds of discovery with
thirty - discovery and thirty interrogatories, thirty productions
and thirty interrogatories. And to comment on your thing about
timelines - one reason I don't mind the timelines, and I think
they might be helpful to us, is that part of that process is that
if we've got a statute behind us, it's harder for people to argue
that we're pushing too hard for discovery when we've got a
statutory timeframe that we must comply with. So, that really
doesn't bother me at all, that timeline, and we can just push on
and it's going to impact the other parties but that's fine, it
gets everybody.
UNIDENTIFIED MALE COMMISSIONER: It's so well defined, I mean I
agree. You called it a negotiation, which it probably was,
there's nothing wrong with negotiations, truly. And it serves
the purpose of forcing the parties to adhere to the timeline. And
it also forces our staff and forces us to make decisions. So, I
think that's a good thing.
SENATOR DONLEY: Do you have any suggestions about this idea of
focusing on the key issues? We heard a lot a lot about that
yesterday where the parties would try to put a lot of extraneous
issues into cases, slow the process down for somebody's
advantage, whoever perceived it. Do you have any ideas about
that?
CHAIRWOMAN THOMPSON: I think some of the procedures that have
been used in the court system we've done in a couple of cases,
sometimes with success and sometimes not. And that's holding
pre-hearing conferences that require the parties to come forward
and identify the issues early in the case. Senator Taylor will
tell you too, it makes you think your case through and figure out
what's really important early. And I think that's a good
practice. That's a process we talked about in the bench and bar
conference that we had with industry about ways to improve our
processes a couple of months ago. And that's something we've
talked about internally instituting, having regular pre-hearing
conferences after a TA has been suspended within a regular
interval and then having one of the items on the agenda be
identifying issues early so the parties will know what it is
they're supposed to be litigating.
SENATOR DONLEY: And obviously, from our point of view, to craft
something like that in the statute, we'd need some guidance about
what cases that would make sense in and what small little cases
you don't have to go through that process on.
CHAIRWOMAN THOMPSON: Right. There's a lot of small utilities
and small cases that appear in front of us, and we're very
conscious of making our processes so complex that we're going to
keep people away that need help. And you're exactly right in the
significance of making the processes appropriate for all the
types of cases that we handle.
COMMISSIONER SMITH: Another point is that it's a bit confusing
within the industry of stipulations and we have a bench and bar I
think that cleared up some of that. If the industry can get
together, competing parties and stipulate, that's a very good way
to handle that. Of course now, you've got to have the staff, in
this case the PAS, to be able to handle this kind of work - the
piles and piles of information so that they can get ready to
stipulate. But that is something that's been brought up by the
industry and I think it's something that we're working on to try
to have the ability to do that.
COMMISSIONER ABBOTT: I did hear about one of - a due process
problem that we had and that was one of those was mine again.
What I was doing was trying to get to where we could reach an
agreement with the utility on their rates without having to go to
a hearing, without having to go through all the [indisc.]. They
give us their filing, we work through the filing and work out an
agreement with them. And the problem with that good idea, if we
had made it, it was a great idea - the trouble is we ran into a
couple of spots where we just couldn't agree. So, then it says
okay now we've got to have a hearing and do all this and they
came rolling in and said, due process, we've got to have cross-
examination of the staff and all this other kind of stuff. What I
had done is I just pushed that a little too hard trying to get to
finish there and I didn't make it, but that's a process that I
think we need to be perfect. And I don't know if there's any way
we can write statute or regulation to get us closer to that and
not butt up against peoples', the parties', due process in there.
If there's a way, that's a big help. You know. It's just like Mr.
Gordon was talking about. We need to be able to talk to staff and
work this through. We can keep to them a little longer with a
reasonable assurance that we can get to a finality within the
staff, then once we turn it loose from the staff, then the staff
has to stay out of it and once it becomes, you know, turn it over
the public advocacy section and all that, then, staff has to stay
out of it.
COMMISSIONER DEMARCO: Also, you have to careful with
stipulations, because we had a case recently where the parties
stipulated to a whole bunch of issues, and then there were a
number of others that were litigated during a case. We issued an
order with a focus on those issues that had been litigated. We
didn't deal too thoroughly with the ones that had been
stipulated, because they weren't contested during the case.
The customers had issues with some of those stipulated matters
that could not be raised during the stipulation and we had to
reconsider and open it and do a whole bunch of stuff afterwards,
because the customers had weighed in on something after the fact.
This is a problem we find quite often - is the customers don't
get involved until the effect of the whole thing is over and I
don't know whether it's because the notice process is as good as
it could be or it could be because people just aren't - you know,
they're all running around running their lives. Utilities aren't
the top issue on their agenda. So, situations have to be examined
pretty carefully and justified substantively in the order, even
if they are accepted as stipulations. We want to make sure that
everybody involved knows what's going on so it's a mess
sometimes.
SENATOR DONLEY: One of the drafting problems we've encountered
when we've tried to set deadlines for RCA action before APUC
action because what's the penalty, what's the deterrent? I mean,
okay you've got to get done in two years. What happens if it
doesn't get in two years has always been the most challenging
problems.
[GENERAL NOISE]
COMMISSIONER ABBOTT: I guess the thing is we have to sit in front
of you like today.
CHAIRMAN TAYLOR: Because you've been through three different
admonitions - or amendments just on Chugach alone. So, I mean
that doesn't cut it. In fact, Senator Donley and I had
legislation pending the last couple of years on how do we get the
Supreme Court to issue orders and have worked very closely with
Dana and others there to try and improve that process. They have
now set up their own internal timelines and I think are getting
better at it. With judges, we don't pay them. If it's more than
six months that they've had it under advisement, they have to
file an affidavit to get their paycheck and, if they can't file
the affidavit, they don't get paid. If we are serious about these
timelines, and if you're serious about ARECA and serious about
the ones they put in on the House side, let's put some teeth in
it. If it's over six month, it's, you know, you've been assigned
it and you haven't been able to get to a decision, yet, you don't
get paid. It acts as a very significant motivator to try and get
things resolved, both on the part of the Commission and, I would
think, on the part the parties, if you start enforcing the
discovery rules.
SENATOR DONLEY: I guess I could ask for your suggestions. We're
going back to Juneau in a couple of weeks here it looks like and
I'd appreciate any guidance you all could give me on those kind
of questions we've been going through here. I'd appreciate your
thoughts on them. There have been challenges we've faced on them
for over a decade, I know, but I'd like some ideas on how to
reasonably craft something along those lines of things you think
would help you.
CHAIRWOMAN THOMPSON: We'll think on it.
SENATOR ELLIS: We may provoke a no per diem for legislators who
don't get their business finished. You might want to be careful
with that.
CHAIRMAN TAYLOR: You might want to figure out who made them late.
We could all assess the penalty on somebody on the third floor.
SENATOR DONLEY: [Indisc.] reserve.
CHAIRMAN TAYLOR: Did you have any further questions?
SENATOR DONLEY: No.
CHAIRMAN TAYLOR: Just to clarify, I have asked you, and I'm not
sure if you said yes or no, if you have a draft of a letter you
were sending to the governor, I'm requesting a copy of it.
COMMISSIONER STRANDBERG: I said no.
CHAIRMAN TAYLOR: Ms. Demarco, I was talking with you about a
conversation you had where you said you were in tears. I'm going
to make a suggestion that that conversation was a threatening one
and that...
COMMISSIONER DEMARCO: It was not a threatening conversation. It
was a frustration on my part.
CHAIRMAN TAYLOR: Did it not involve discussion of your future?
COMMISSIONER DEMARCO: No.
CHAIRMAN TAYLOR: Would you like to elaborate further or do you
wish to keep that one, as you said earlier, confidential?
COMMISSIONER DEMARCO: I was embarrassed and one of the ways I
being embarrassed is that I cry. I don't want to elaborate any
more or you'll find the experience in your lap.
SENATOR DONLEY: If we get into the phone war battle issue, I'd
like some guidance from you all about - do you have an on-going
docket on this issue that we heard from yesterday on this model
that seems to be the root of this problem, somehow? Are we
allowed, under the Administrative Act, what are the barriers that
we have in discussing that?
CHAIRWOMAN THOMPSON: I don't know whether it's under the
Administrative Act...
SENATOR DONLEY: Any time you've got a judicial question under
consideration, you've got limitations about who you can talk to.
CHAIRWOMAN THOMPSON: We don't discuss open dockets with anybody
but each other or staff or the parties if we're in a setting
where all the parties are present.
SENATOR DONLEY: So, there may be somehow a legal barrier between
you all and us, a legal barrier. It's not your fault; it's not
our fault. It's just part of the rules that the courts have
adopted in dealing with those kind of issues as a quasi judicial
body on trying to explore the merits of the some of the testimony
we heard yesterday on structuring, this model and some of those
issues that we have been seeing in the press too.
CHAIRWOMAN THOMPSON: Yes. There would be. We'd be happy to - I
can provide you with a record of the case so far. I don't know
how deep that one is. If that would be helpful, we can tell you
where we've gotten so far but we can't discuss any of the issues
that are currently pending on the docket.
SENATOR DONLEY: Okay, so that's one of the reasons I have to
restrain myself from asking you about some of the testimony
yesterday because I thought we might be running into that
problem.
CHAIRMAN TAYLOR: Nothing prevents this Commission from revisiting
on its own - that issue - sua sponte - you can take it up, you
can make a decision that that model is a model that does not work
and that whole matter becomes resolved, doesn't it? The
litigation becomes moot.
CHAIRWOMAN THOMPSON: The issue of choice of an appropriate model
is still pending before us.
CHAIRMAN TAYLOR: That's what I meant. Since it is still pending.
CHAIRWOMAN THOMPSON: We don't have to do it on our own. It's
already before us. The parties have ...
CHAIRMAN TAYLOR: If it's already pending, you could take that up
and make that decision and thus the issue being litigated would
be moot, wouldn't it?
COMMISSIONER SMITH: It's in our hands right now. We've taken it
up.
CHAIRMAN TAYLOR: I know, but it's also being litigated at the
Supreme Court level.
CHAIRWOMAN THOMPSON: That's a different issue. That's the burden
of proof issue that you're talking about.
SENATOR DONLEY: I know I've said this before, but I do have
another issue. Earlier, when we discussed how you all work among
yourselves, which of course to lawyers is always fascinating
because the Supreme Court - same issue, right? At what point do
the justices - you know - do they talk one on one? Do they talk
as a group? Could you give me a little more insight on how the
Commission is functioning now? I mean how do you all handle that
when you get to that decision making point.
CHAIRWOMAN THOMPSON: I think the answer might be different for
each of us so, I suggest that you ask folks differently, but at
least on cases where I'm docket manager, I work, I have a
paralegal to support me in that endeavor to make sure that when a
case is ripe for a decision, it's brought for decision and all
the relevant documents are put in a packet that we all get before
the adjudicatory meeting. I try and read through the record and
the motions, the briefs both ways and think through what my
decision is going to be. And then, I don't generally talk to
people before the adjudicatory - the other Commissioners or the
adjudicatory member about - meeting about what my recommendation
might be. I tend to give it to the whole group at the same time
and then we discuss it.
SENATOR DONLEY: Do you have like a panel of three?
CHAIRWOMAN THOMPSON: Usually, for efficiency purposes, we all
kind of sit there, even if it's not your docket, you're sitting
through the discussion and sometimes participate. You have the
opportunity and some Commissioners do regularly and some don't
regularly to read everything that's going to be discussed. You
just can't vote if you're not on the panel but there's
participation in the discussion sometimes.
SENATOR DONLEY: So if you're the person who has that docket, it's
almost like something I could relate to more and how a court of
appeals would work, a multiple member court of appeals. That's
kind of like whoever is in charge of the court of appeals assigns
writing the case to a particular justice. So, it's sort of like
you've been the justice assigned to write that decision.
CHAIRWOMAN THOMPSON: Exactly.
SENATOR DONLEY: Then at that point, once you've got that, then
you show it to the other members and they either like it or don't
like it. They comment on it, make suggestions?
CHAIRWOMAN THOMPSON: It gets circulated. It's - you know -
probably more often staff drafts than Commissioners and the - all
orders after they're drafted get reviewed by the paralegals to
make sure they're in the right format and citation formats, and
all that, the AG looks at it for writing style. Again, we've
tried to improve the quality. One of the things that's important
for us to do in all our decisions is to explain why and how the
decision can be supported by the record and that's what the AG
does says you didn't explain that well enough, you know, I don't
want to have to defend this one if it gets appealed and sends it
back and it gets more reasoning added and then it gets circulated
and every panel reads the order, puts in the edits they want to
into it or not and signs off or not. If they don't agree, they
can write a separate opinion or a dissent.
CHAIRMAN TAYLOR: Thank you.
COMMISSIONER SMITH: A lot of that happens during adjudication and
points that are brought in adjudication can change panel members'
minds and people may come in with one set idea. In adjudication,
when you bring up all the points that are out there, somebody
else might have a different point of view and then things change.
So...
SENATOR DONLEY: Some of you were expressing concern earlier about
the challenges of living within the Open Meetings Act and still
trying to get a decision where you reach a consensus.
COMMISSIONER SMITH: The problem I have - this draft letter - it
was one on one and then one on another and then another on one
and that kind of thing. You couldn't meet together. What I would
prefer to have done is had a public meeting and invited - posted
it the seven days in advance and have industry come in here and
make their comments in five minutes or whatever time you want to
have them and then have us discuss it in, you know, amongst the
public. That's the correct way of doing it. And that's probably
what we will do after we decide, after you all decide which way
we're heading - sunsetting or giving us an extension. I would
have preferred to do that prior to the sunset so everybody
understands where different commissioners may or may not be.
SENATOR DONLEY: Oh, I see. Now you're discussing the letter about
what the ramifications might be.
COMMISSIONER SMITH: Right.
CHAIRMAN TAYLOR: Any further questions?
SENATOR DONLEY: No.
CHAIRMAN TAYLOR: It's been a long afternoon and I really
appreciate your patience and your candor with us on all the
different subjects, many of which were difficult. I also want to
take the time to thank you for your service to the state for the
last three years. I'm not really sure why we find ourselves here,
but somebody motivated the Governor, hence he has now called us
and I think it's a bit arrogant of those who called the special
session to merely assume that we're going to rubber stamp some
early extension for four years and not take up the other problems
that have been addressed for the last two days and I assume will
be addressed at future hearings. We can't, in good conscience,
take up the question of extension of the RCA without taking up
the very serious concerns that have been raised by the different
utilities. So, I'm assuming that whatever legislation may come
out of this special session is going to be a reworking of this
Commission, at least modified as significantly as ARECA has
indicated or as others have suggested. Maybe we'll rotate the
chair, as your letter indicated; maybe we do other things, but to
suggest that we're all going to be dashed back to Juneau just to
rubber stamp so you get four years extension, I think is rather
naïve and I think it's also somewhat arrogant to disregard the
significant level of testimony that we've had already heard in
this matter. So, I'm appealing to each of you to provide us, the
legislature, with your very best recommendations on those matters
that need to be resolved. If you want a timeline, give us a
timeline - ARECA already has - and tell us which one you'll
support. If you want to rotate the chair, three of you do or two
of you don't, we need to know that. If there are other procedural
things that we can assist you as a legislature by doing, that
will expedite the cases in front of you, then we need that
information. Without it, we will be acting without the benefit of
your assistance. I think that would be dangerous. You're the
people who have the greatest expertise on this. So, any
suggestions you have for us, we'd be happy to accept them and I'm
happy to have legislation drafted that will comport with those
ideas. Thank you very much. [END OF SIDE A]
TAPE 02-39, SIDE B
CHAIRMAN TAYLOR: ...the benefit of your assistance and I think
that would be dangerous. You're the people who have the greatest
expertise on this so any suggestions you have for us we'd be
happy to accept them. Thank you very much. We appreciate your
good work. Anything further you wish to say? If not, we...
CHAIRWOMAN THOMPSON: Senator Taylor there's a number of documents
you asked for and there was also a document I cited earlier in my
testimony and I'd be happy to provide those along with a written
copy of my comments and the ones - because of the hour we won't
be able to get to today. I'll get them to your office in
Anchorage? Your office in Juneau, wherever...
CHAIRMAN TAYLOR: Just submit them to Senator Cowdery's office -
we're using him, his staff and so on to circulate stuff. And that
would be fine.
CHAIRWOMAN THOMPSON: All right, thank you.
CHAIRMAN TAYLOR: And we'll decide whether or not we need to get
back into that once we've had a chance to review those documents,
but we're both faced with a very brief timeframe. We've got
between now and the 24th to really do anything that we're going
to do on this subject and I realize it affects you guys and it
certainly affects us, but thank you again for that cooperation. I
appreciate it very much. Anything further, Madame Chair?
CHAIRWOMAN THOMPSON: No.
CHAIRMAN TAYLOR: Commissioners? Members?
[No]
CHAIRMAN TAYLOR: We're going to take about a 10-minute break and
we've been here for far too long. When we come back, GCI will be
up and then ACS.
SENATOR DONLEY: It's the main event.
CHAIRMAN TAYLOR: We're at ease.
[Meeting reconvened]
CHAIRMAN TAYLOR: Back to order. We had no idea that the
discussions would last as long as they have today and many people
have indicated to me their difficulties in staying longer this
evening, plus staff and then I'm losing part of a quorum, too -
they had dinner plans and other things. What we will do is we
th
will recess the meeting to the 20, at which time we will
reconvene for through the 20th and the 21st and if we will keep
with the same schedule as far as the people listed yet to be
heard from and right now such other matters as occur at that time
and those people who have already signed up on the sign up sheets
will be accommodated a first priority at that time also so your
time will not be totally wasted today. I thank you all for
appearing.
SENATOR COWDERY: I just hope that the information that we had
requested today and yesterday will be in our hands prior to that.
That would be very helpful.
CHAIRMAN TAYLOR: Yep. Anyone wishing to further supplement the
record send [the] written testimony to Senator Cowdery's office
here in Anchorage and his office will make distribution for the
committee. Anything further? We are recessed until the 20th.
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