Legislature(2001 - 2002)

06/13/2002 10:10 AM JUD

Audio Topic
* first hearing in first committee of referral
+ 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                                                                                                                 
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                                                                                                               
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                                                              
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                                                              
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,                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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,                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
CHAIRWOMAN THOMPSON: MIS stands for  Management Information System                                                              
and in 1999 that was one of the things  the legislature told us to                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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.                                                              
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.                                                                    
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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,                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
CHAIRMAN TAYLOR: When  did you make that decision  and pay for the                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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."                                                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
CHAIRWOMAN  THOMPSON: That  was one  of  the reasons  the MIS  was                                                              
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                                                              
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                                                              
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                                                              
[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                                                              
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                                                              
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.                                                              
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?                                                                                        
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                                                              
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                                                              
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.                                                                    

Document Name Date/Time Subjects