Legislature(2001 - 2002)
02/19/2002 02:00 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR & COMMERCE COMMITTEE
February 19, 2002
2:00 p.m.
MEMBERS PRESENT
Senator Ben Stevens, Chair
Senator Alan Austerman
Senator Loren Leman
Senator John Torgerson
Senator Bettye Davis
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 253
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
MOVED CSSB 253 (L&C) OUT OF COMMITTEE
SENATE BILL NO. 202
"An Act relating to the employment of persons 14 years of age or
older and under 21 years of age on licensed premises, including
hotels, restaurants, or eating places; relating to possession,
control, or consumption of alcoholic beverages by a person under
21 years of age; and relating to hours of work of minors under 16
years of age."
HEARD AND HELD
SENATE BILL NO. 280
"An Act permitting grants to certain regulated public utilities
for water quality enhancement projects and water, wastewater, and
solid waste systems."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 253 - No previous action to record.
SB 202 - See Labor and Commerce minutes dated 4/28/01.
SB 280 - No previous action to record.
WITNESS REGISTER
Ms. Deborah Grundmann
Staff to Senator Stevens
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 253 and SB 202 for sponsor.
Ms. Nan Thompson, Chairman
Regulatory Commission of Alaska (RCA)
701 West 8th Ave., Suite 300
Anchorage, Alaska 99501
POSITION STATEMENT: Supported SB 253.
Ms. Dana Tindell
Vice President Regulatory Affairs
GCI
POSITION STATEMENT: Supported SB 253.
Mr. Steve Conn, Executive Director
Alaska Public Interest Research Group
P.O. Box 101093
Anchorage AK 99510
POSITION STATEMENT: Supported SB 253.
Ms. Kristi Catlin, Director
Government Relations
AT&T Alascom
210 E. Bluff Dr.
Anchorage AK 99501
POSITION STATEMENT: Supported SB 253.
Mr. John Manley
Staff for Representative Harris
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 280 for sponsor.
Mr. Rick Mastriano, Director
Labor Standards and Safety
Department of Labor & Workforce
Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Opposed SB 280.
Ms. Wilda Rodman
Staff to Senator Therriault
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 280 for the sponsor.
Mr. Dan Easton, Director
Facility Construction and Operation
Department Environmental Conservation
410 Willoughby, Ste. 303
Juneau AK 99801
POSITION STATEMENT: Neutral position on SB 280.
Mr. Andy Warwick, Chairman
Board of Directors
Fairbanks Sewer and Water
1416 Gillam Way
Fairbanks AK 99701
POSITION STATEMENT: Supported SB 280.
Mr. Bruce Jones, City Manager
Petersberg AK
POSITION STATEMENT: Opposed SB 280.
ACTION NARRATIVE
TAPE 02-5, SIDE A
Number 001
SB 253-EXTENDING THE REGULATORY COM. OF ALASKA
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 2:00 p.m. and announced SB 253 to be up for
consideration.
MS. DEBORAH GRUNDMANN, Staff to Senator Stevens, said that SB 253
extends the termination date of the Regulatory Commission of
Alaska (RCA) to June 30, 2006. Page 7 of the audit has three
recommendations that Nan Thompson, Chair, RCA, would comment on.
MS. NAN THOMPSON, Chair, RCA, supported SB 253. She informed them
that this is the agency that was reformed in 1999 by the previous
legislature. The APUC was sunset and this is the RCA's first
review. She said that they have managed to reduce the case
backload by hundreds of cases since they started. "Most
importantly, all the new cases we have received are being
processed in a timely manner within deadlines."
The number of substantive decisions issued by the agency has
increased dramatically when compared to previous work of the
agency.
We are taking the time to work on the hard cases, build
records and make decisions. We have spent a lot of time
over the last couple of years designing and
implementing the MIS system that the legislature asked
us to design and work on two years ago and that should
be operational by the end of this month. It should
allow us to operate more efficiently internally and
allow the public to be better informed.
MS. THOMPSON said they have been very responsive to consumer
complaints and she is proud that the auditor recognized that over
80 - 90 percent of the consumer complaints they receive are
handled within 30 days. Their appeal record speaks well for the
kind of work they have done. Some utilities are not happy with
the RCA's decisions, but noted that she listens carefully. She is
concerned if they are not being treated fairly and she tried to
make adjustments for that, but if it's about results, the
question is whether the RCA is accurately and fairly applying the
law as written by the Legislature and Congress. Their track
record on appeal shows that they have been doing the right thing
there, too. Of the agency decisions since 1999, all four of the
ones that have gone to court have been upheld.
The auditor had three recommendations and the RCA agrees with all
of them and have begun work to implement them.
The first one was at the public advocacy section which
was a new section formed under the legislation in 1999
- adopt regulations to define procedures. We agree that
there should be regulations. It should be clear to all
members of the public and to utilities when they will
be appointed and what their role is in those cases. We
have asked within the agency that the public advocacy
section itself propose regulation and they have given
me a deadline of next month in March to propose those.
They will be put out to comment to the public and to
industry and should be adopted by our agency in full by
the end of this year.
I'm hoping that those regulations do a couple of things
- to clarify the role of the public advocacy section
within our agency - to clarify when they should be
appointed a party and when not and to clarify their
right to ask to participate in proceedings where
they're not appointed by the commissioners and their
rights to appeal.
She hoped to have those implemented by the end of this year.
Another recommendation identified a large number of
uncertificated water and sewer utilities.
Under existing statutes, every utility that serves more
than 10 customers should be certificated by the
commission and the auditor identified about 130 water
and sewer utilities. Many of these are paired in
communities. We're really talking about 65 communities
that don't presently have certificates.
She could not say why, because a lot of them existed before the
RCA existed and they have begun to address the deficiency. She
has identified who these utilities are and within her agency they
are in the process of revising their application process to
tailor one more appropriate for the small systems and rural
utilities that comprise most of the 130 utilities. They made the
decision to wait until they had the application process revised,
which should be later on this spring, to invite all of those
presently uncertificated utilities to join.
The other policy issue is whether small systems owned
by homeowners associations should be exempt under
regulation. We have had a series of cases where
privately owned systems owned by homeowners
associations - one where ratepayers have direct input
into rates because of their participation on a
homeowners association board have asked to be exempt.
We have granted some of those exemptions by case law.
Another issue that we hope to deal with on this is
whether or not we should have a regulation exempting
that class of utilities to make it easier for utilities
in that group going through the process to understand
where they'll fit in.
The third recommendation dealt with notice. All changes
to the terms and conditions under which a utility
offers service has to be put out to public notice and
under our statute and regulations, some are issued by
the utility and some are issued by the agency. What the
auditor identified is that our records for proof of
publication were not as complete as they should be.
Since we received the recommendation, we have
internally remedied that situation already and have
raised within the agency's mind the bigger question of
what's effective public notice and what changes we
might consider in order to make consumers more aware of
the changes. Now many of the notices go on our web page
and we found that to be a more effective way of
noticing the public than some of the newspaper
publications. That third recommendations is pretty much
taken care of and we'll continue to try and work on
more effective notice in the future.
SENATOR LEMAN said it's his opinion that they make it very easy
for small utilities to become certificated. He noted that was one
of the auditor's recommendations.
MS. THOMPSON agreed saying that complying with another set of
regulations can be burdensome. Many of the utilities that are
uncertificated are owned by local government and wouldn't be
economically regulated. Their concern in looking at any small
utility is whether or not there is some process for in put. The
ones owned by local government, the citizens have the opportunity
to have an impact on rates and they don't need the RCA to review
them.
SENATOR LEMAN asked if they were looking for a mechanism to get
some public process involved.
MS. THOMPSON replied yes and of the 130 identified, about 50 of
those are local government owned. The others are generally small
utilities of another sort. If there is an opportunity for input
by the ratepayers on rates already, they don't need the RCA
looking at the rates as well. They are trying to tailor the
application process to reflect that.
CHAIRMAN STEVENS asked when the regulations would be ready for
public comment on the water and sewer.
MS. THOMPSON replied that realistically it would happen in May.
CHAIRMAN STEVENS asked if she was working with the 50
municipalities to write the regulations.
MS. THOMPSON replied when they are put out for public comment,
those utilities will have an opportunity to comment.
Most of those water systems were built with government
funding of one sort or another. So we've worked with
DEC and the federal government agencies to help them
understand that first those utilities are operating
safely now….
CHAIRMAN STEVENS asked if the regulations contain maintenance
provisions for the municipality.
MS. THOMPSON replied:
That issue comes up in the context of the requirement
that we determine the utility is fit, willing and able
to operate the utility. Management capacity, which is
what I understand you to be talking about, is one thing
we look at carefully. We ask them to show us that they
have set up an accounting system that will allow them
to collect the money they need to continue to operate,
that they have a qualified management team in place -
that they have qualified engineers to run the system.
Yes we look at those issue in a context of
certification.
CHAIRMAN STEVENS asked if "fit, willing and able" has to do more
with capacity, not addressing the revenue side. She said that was
right. He asked if where additional revenue would come from if it
was needed to operate the facility.
2:16 p.m.
MS. THOMPSON replied that was a good question and the legislature
would be dealing with it over the next few years in the context
of the many new rural water and sewer systems that are being put
in. She said that they could use grants and perhaps a different
type of management structure that would allow them to achieve
efficiencies by combining with other utilities in the region or
community.
CHAIRMAN STEVENS said he assumed the 50 utilities are new and
asked if there was a way they could start to get information to
understand how much they cost to operate once they have been
built.
MS. THOMPSON replied that was the kind of information they get in
reviewing the certification applications and that is an important
thing to look at early on when they are setting up a new utility.
CHAIRMAN STEVENS said that the Denali Commission helps fund the
construction of a lot of these facilities and asked if it has an
operational component.
MS. THOMPSON replied no. They have some training money, but
generally the money from the Denali Commission is for capital
grants, not ongoing operations.
MS. DANA TINDELL, Vice President Regulatory Affairs, GCI, said as
a regulated utility they interact with the RCA on a daily basis.
They were involved in the legislation that constituted the RCA.
"I'm pleased to report to you that from our perspective, the
Regulatory Commission today is a functional body, as opposed to a
dysfunctional body."
As a utility, they are not always pleased with the RCA's
decisions, but they are free to appeal. There have been a lot of
appeals and prior to this commission there was never an order in
which appeal. So, they are much happier with that outcome.
A lot of times the Regulatory Commission is somehow
accused of enacting bad law. I've heard that said. I
wanted to clarify from our perspective, in many cases,
in telecommunications particularly, what the Regulatory
Commission is doing is interpreting federal law and
carrying it out as required by the federal agency. So,
many of the issues that some of the other utilities in
telecommunications industry complain about are not
really issues that are up for state question. They are
proscribed by federal law.
She said that from their perspective it is critical that there be
a Regulatory Commission. Without it, it wouldn't be clear where
the day-to-day decisions would have to be made, possibly the
legislature or the courts. "An expert commission is better able
to deal with these issues and is probably more willing than the
legislature is."
She said as a veteran of eight two-year sunset reviews, it would
be great if they would continue the commission for the four-year
term.
SENATOR LEMAN moved to pass SB 253 from committee with individual
recommendations with the accompanying $6 million fiscal note.
CHAIRMAN STEVENS said they would hold the motion for further
testimony from people on teleconference.
MR. STEVE CONN, Executive Director, Alaska Public Interest
Research Group, said that consumer involvement is critical in the
business of utility regulation and he has seen substantial
improvement in that area. "To cast a member of staff as public or
to cast a position as public or citizen centered is not the same
thing as active involvement by consumers."
At meetings he presses for increased outreach and notice of the
many things that affect Alaska consumers on a day to day basis in
their private and business lives. "All of the advocates who go
before the Regulatory Commission benefit from early on and
informed consumer involvement."
People in Alaska don't want to see brown outs or ideologically or
politically driven Enron-type situations he said. "There is more
interest on the part of consumers in utility matters than ever
before. At this juncture I would hope the legislature would allow
the bill to pass…."
MS. CRISTI KATLIN, AT&T Alascom, supported SB 253 and asked them
to pass it without amendments. "Any efforts to modify or reverse
the jurisdiction of rulings of the RCA should be considered
separately from the sunset review."
SENATOR LEMAN renewed his motion to move SB 253. There were no
objections and it was so ordered.
SB 202-EMPLOYMENT OF PERSONS UNDER AGE 19
CHIARMAN STEVENS announced SB 202 to be up for consideration.
MS. DEBORAH GRUNDMANN said that SB 202 is a Senate Labor and
Commerce bill by request of the former chair of the committee.
She said it is a companion to a House bill sponsored by
Representative Harris.
MR. JOHN MANLEY, Staff to Representative John Harris, sponsor of
companion bill, HB 226, said it was introduced at the request of
a constituent in Valdez.
The original intent of the bill was to make it easier
for seasonal employers in the tourist business to be
able to get kids employed on their staff to help out in
the height of the tourist season. If they are under a
certain age, they cannot work in a hotel or restaurant
where alcohol is served because of the laws of the
state. It makes it difficult especially in some of the
smaller areas of the state, like Valdez, to obtain kids
to employ in the summer time.
This bill's hearing in the House Labor and Commerce committee was
not well received, but he understands this hearing was requested
by Senator Green. He pointed out section 4 deals with employment
of children section of the Labor and Worker's Compensation Title
to regulate what time and hours per week minors under the age of
16 could work and changes to conform with federal limits. Section
5 has to do with 14 - 16 years old working at certain sporting
events in school supervised work programs. He would like to see
both of those sections in a committee substitute.
Another issue is the control of alcohol by person under age and
as interpreted by the ABC Board, when they are operating a cash
register and ringing out a tab for someone who might have bought
a beer with their dinner, this is not allowed.
SENATOR AUSTERMAN asked what the definition of premises was.
MR. MANLEY explained that this problem arose at the Totem Inn
that also has a bar. So none of their maids can be minors.
MR. DOUG GRIFFIN, Alcohol and Beverage Control Board, replied
that delivery of alcohol by room service would include the hotel
rooms as well as the bar and restaurant where alcohol is being
served under "licensed premises." "Otherwise you'd run afoul of
taking alcoholic beverages off of the licensed premise and you'd
occur other problems with Title 4…."
CHAIRMAN STEVENS asked what concerns the House had.
MR. MANLEY replied that their concern was that they were
expanding the universe of where teenagers could be in contact
with alcohol and they thought that was not good public policy.
MR. RICK MASTRIANO, Director, Labor Standards and Safety, said
his concerns were that the department currently has a work permit
process for 14 - 16 year olds saying that they are prenotified of
the employment of the child, what they're going to be doing,
where they're going to be working and how much they're going to
be paid and that the parent or legal guardian knows that their
child is in fact going to be working.
Under this bill, the department would not be notified for 10 days
and in some cases there is no requirement that the department be
notified. The department also requires people under the age of 19
to maintain a work permit and this legislation eliminates all of
those requirements.
MR. MASTRIANO said if the ABC Board does not consider the rooms
part of the licensed premises, they would allow a 14 year old to
work in those rooms. If rooms are considered part of a licensed
premise where room service could deliver alcohol, they are not
allowed.
We like some parts of the bill. We like bringing the
bill in line with the federal guidelines for the times
that the kids are going to be working - the 14 and 15
year olds, but we do not like the idea that we're not
notified of what they're going to be doing or that they
have to have a work permit in order to do it. It
conflicts with our 43.10.332, which requires the
commissioner to approve any of those works for people
under the age of 16.
CHAIRMAN STEVENS asked if he had problems with sections 1
and 6, but not 4 or 5.
MR. MASTRIANO replied yes.
MR. GRIFFIN supported Mr. Mastriano's comments. They think
the prior notification and exemption is an important part of
the law. He said more and more studies have come to light
showing a correlation between how soon a young person begins
to consume alcohol and having problems with alcohol abuse
later in life. He said that they don't have the staff to
have oversight of this either.
They allow underage people to operate cash registers and allow
them to handle bills with alcohol on them, but they have had
problems where the restaurants are cafeteria style including
picking up an alcoholic beverage and then paying at the cash
register. That is different because that is where the sale is
being made.
CHAIRMAN STEVENS said this bill wasn't going to move, but they
would work on a committee substitute or a bill that would address
the issues in sections 4 and 5.
SB 280-WATER/SEWER/WASTE GRANTS TO UTILITIES
CHAIRMAN STEVENS announced SB 280 to be up for consideration.
MS. WILDA RODMAN, Staff to Senator Therriault, sponsor of SB 280,
explained that it allows privately owned public water and waste
water utilities to apply for water and waste water grants under
AS 46.03.030 if they are regulated by the Regulatory Commission
of Alaska (RCA). The regulation requirement ensures that all the
economic benefits of the grants guarantees that the benefits of
the grants would be passed on to the ratepayers. Currently, only
municipalities can apply for these grants, making it unfair to
all. This would allow privately owned utilities to make utility
infrastructure improvements without forcing ratepayers to pay the
full burden through increased rates.
Additionally, the bill would increase the ability of the utility
to expand in areas that are on the peripheral of existing systems
thereby providing water and waste water services to families that
are currently on wells and septic systems. There was a letter in
support from the Fairbanks North Star Borough attesting to the
fact that there are at least two areas in Fairbanks that would
benefit from being able to have services expanded to their areas.
SENATOR LEMAN said he thought this made sense, but he was
concerned about the fiscal note from DEC that adds another
position in Construction Facility and Operation from the general
fund. He thought they needed to look at that.
MS. RODMAN said that she understood the fiscal note was because
the smaller utilities might not be as savvy as the municipal
utilities in applying for these grants, so it would take more
staff time to prepare them.
SENATOR LEMAN responded that he would like to see something
similar to the RCA, that the utilities requesting this pay a fee
rather than it just coming out of the general fund.
SENATOR AUSTERMAN said page 2, section 2, talks about prorating
and asked if municipalities have the same ratio.
MS. RODMAN said that is the same.
CHAIRMAN STEVENS asked what was the total number of utilities
that could be eligible for this.
MS. RODMAN replied according to DEC it would increase by 50 and
currently there are 35 municipalities that can apply. Of the 50,
15 are water, about 5 in sewer…[END OF TAPE]
TAPE 6, SIDE B
2:48 p.m.
CHAIRMAN STEVENS asked what size grant they can currently apply
for.
MR. DAN EASTON, Director, Facility Construction and Operation,
DEC, replied about $2 million per year. He said their mission is
to assist communities in improving sanitation conditions. They do
that by providing both grants and low interest loans to
communities and this bill deals with one of their grant programs
- the Municipal Water, Sewer and Solid Waste Matching Grant
Program. They do not have a position on it, since it deals with
policy issues, but he had information that he thought would be
helpful.
He explained that they make grants to communities for things like
replacing water and sewer lines, building new water and sewer
lines to serve new areas, building or upgrading sewage treatment
plants, building or closing or adding on to landfills and
building things like water storage tanks - capital projects.
He said the program is primarily state funded and in FY 03 the
budget is $24 million. He said they are allowed to use some
federal grant funds in some of the smaller communities. Of the
$24 million, $8.5 million is federal grant funds. The balance is
from the state. Currently, only municipalities are eligible to
participate in the grant program. In the last 10 years, 36
municipalities have received grants from them. There is a local
match requirement that varies from 15 - 50 percent depending on
population. Grants are made on a progress reimbursement basis.
They do not give the people the money ahead of time. There is a
10 percent holdback until the project is completed including a
satisfactory audit and every project is audited. Their two
programs are staffed entirely with seven positions: four
engineers, a management position, an internal auditor and a
program coordinator.
MR. EASTON said there is a sequence every year that they go
through distributing applications to municipalities. When the
applications are returned, they are ranked in priority by public
health and environmental impacts and communities' capacity to
operate and maintain the sanitation systems. The list of projects
is the basis for the governor's capital budget proposal. Once a
fiscal year budget has passed, grant offers are made and accepted
and the division administers the grants.
He said the bill would extend eligibility in the program to non-
municipal, but RCA regulated, utilities and there are about 50 of
those. Thirty-six currently participate in the program. With the
exception of Fairbanks, the 50 new non-municipally owned
utilities are largely private systems that serve subdivisions and
trailer parks. There is a fiscal note for a single engineer
position from the general fund, although there could be different
ways to come up with the funding. They see an increase in the
number of grants managed by their engineers from $8 million per
engineer in FY 98 to $12 million in FY 03. This is one of their
budget performance measures.
SENATOR AUSTERMAN said they were talking about a potential 86
utilities asking for loans under this program. Mr. Easton
acknowledged that was correct. He asked if there would be a
dwindling amount of money for the individual utilities and that
they should be looking at more money for the program.
MR. EASTON replied that there is a pie sharing element to it. On
the other hand he pointed out that by virtue of their size the
grants to the municipalities would be larger than the ones to
subdivisions and trailer parks since the magnitude of their needs
would be different.
SENATOR AUSTERMAN asked if the general fund contributed $15.5
million to the fund. Mr. Easton said that was correct.
CHAIRMAN STEVENS asked what the benefit would be from going
independent.
MR. EASTON replied that most of them don't have a choice to hook
up. It's a matter of distance and it's simply being cost
prohibitive.
CHAIRMAN STEVENS asked if there was any reaction from the
existing 36 grantees of this program to this bill.
MR. EASTON replied that he hadn't heard much so far.
MR. ANDY WARWICK, Board Chairman, Fairbanks Sewer and Water, said
they are a privately built company that was formed in 1996 to
acquire from the City of Fairbanks its water and waste water
utility. The city was participating only minimally mainly because
there weren't many grants available. Now, grants for water and
sewer projects are increasing in importance.
Because Fairbanks has privatized its utility, we are
the only community in the state that is ineligible to
participate with the exception of some of the smaller
utilities you've been discussing. SB 280 remedies this
inequity by allowing privately owned public utilities
that are regulated by the RCA to apply for grants under
AS 46.03.030 (b). This puts Fairbanks ratepayers right
there in the same position as ratepayers in every other
community in the state. I want to stress that under RCA
regulations all the economic benefits of the grants are
passed on to the ratepayers. Our company gets no rate
of return on the plant built by the grants and we get
no depreciation of the grant included in our rates.
Economic regulation essentially may turn companies
economically neutral. However, the benefits to the
ratepayers are obvious. SB 280 will reduce the burdens
to our ratepayers and improvements we made to our water
and waste water system. It will also increase the
ability of the utility to expand its water and waste
water system to include families and businesses that
currently use utilize wells and septic systems. The
vast majority of Fairbanks residents are not hooked up
to a public utility water and waste water system which
in some cases results in sanitary problems that could
be resolved by connecting to our utility system.
MR. BRUCE JONES, City Manager, Petersberg, opposed SB 280. I
worked with a DEC workgroup on capacity and development, which
ended up supporting that part of the public utility have access
to loan funds for both the drinking water and waste water.
The bill's sponsor statement said that by not having
access to matching grant funds, the privately owned
utilities are at a disadvantage. I disagree. There is
now way to fairly compare the two. Privately owned
utilities operate on profit and loss. Most utilities
like Petersberg, if required to operate the same way
would be considerably more expensive. The
municipalities are lucky to break even. The grant
program and the low interest loan program will not be
able to respond to infrastructure needs and in most
cases cannot account for depreciation. The sponsor goes
on to say that the bill would increase the ability of
the utility to expand into areas that are on the
peripheral of existing systems, thereby providing water
and waste water services to families that are currently
on well and septic systems. This is a business decision
faced by every utility. Every utility wants to sell
more service because it increases revenue, but at what
cost?
MR. JONES continued saying that if private facilities have access
to these funds, there will be even less for the municipal
projects. "In my mind, this is not an appropriate use of public
funds."
CHAIRMAN STEVENS asked if there were any private utility
providers in the City of Petersberg with water and sewer.
MR. JONES replied no.
SENATOR LEMAN asked him if he heard him say that decisions on
expansion for utilities shouldn't be made on the basis of whether
or not you get grant funds.
MR. JONES replied yes.
SENATOR LEMAN responded that probably every utility in Alaska is
making its decisions on whether or not it can get grant funds. He
thought Petersberg residents had done that consistently, too.
Possibly Mr. Jones was wondering if a publicly owned utility
should be allowed to do that and not a privately owned one.
MR. JONES agreed that they all make those decisions.
MR. TIM ROGERS, Legislative Program Coordinator for the
Municipality of Anchorage, said he is also the Public Works
Subcommittee Chair for the Alaska Municipal League. Their concern
is that there are limited source of funds for these grants and
further diluting the pot is going to create some concerns and
some problems for municipalities around the state. Their water
and waste water utility last year received $2.75 million in funds
for projects working out to a little over 11 percent of the total
amount available in the grants. For FY 03 they are up to $3
million, which works out to 12.8 percent.
We have worked very hard to ratchet up the amount of
money that's available for capital projects through
this program and we see this dilution as a concern to
amount of money that will be available to us for those
projects.
MR. ROGERS said there is one very large multi national
corporation [Waste Management] that deals in the solid waste
services that would also be eligible for this fund and it would
be tough for municipalities to compete with a $12 billion a year
organization for these funds.
SENATOR DAVIS said she is concerned that there is only one
particular agency that is really interested in this legislation,
the group from Fairbanks and the fact that they are private and
not public. She thought that something needed to be done about
their needs without bringing in the 86 other groups.
CHAIRMAN STEVENS asked if another source of funds existed for
utilities and if there were figures on what percentages of monies
go to water systems, waste water systems and solid waste.
MR. EASTON said he guessed that most of the funds would go to
drinking water and then waste water and then solid waste.
CHAIRMAN STEVENS asked if the $24 million feeds all of those
functions and if there was one dominant area.
MR. EASTON replied that drinking water projects tend to compete
better, because they have a bigger public health impact. Of the
$24 million, more drinking water projects get funded.
SENATOR THERRIAULT, sponsor, said:
I didn't anticipate opening this up to any large multi
national, that being Waste Management. So if there's a
way to easily carve them out of the participation, I
would certainly be amenable to that.
With regard to the concern of any municipality being
opposed to anyone else being in the pool competing,
certainly the residents in the Fairbanks utility were
in that pool up until the time that the decision was
made to sell the utility. I think the community made a
wise decision in moving in that direction. In fact, I
think across the nation, municipalities and
constituency groups are considering that - private
management versus the public management of water
systems. I don't know, though, that having made that
decision that the residents in the Fairbanks area are
any less deserving of having access to safe water and
sewer systems than anyone else in the State of Alaska.
So, I think the public policy call we need to make is
how do we use limited funds to benefit the overall
constituency in the State of Alaska as far as the
attainment of safe water and sewer systems.
I don't know that we should penalize communities or
restrict or try to deter them from making the decision
of whether they want to sell their utility. I can see
if any other group is making a pitch for the purchase
of a municipal system, privatizing a municipal system,
that it would be brought up - well, you do that and
you're going to cut off any access to state grant
funds. I'm not sure that's the type of system that we
want to put in place here. Hopefully, with these grant
funds we're able to serve the largest number of the
most deserving citizens in the State of Alaska and we
do that through a sort of scoring system in the grant
process, not necessarily differentiating [between
private and municipal systems].
SENATOR AUSTERMAN asked him to comment on Senator Davis' idea
about dealing with Fairbanks on its own and leaving the grant
program alone.
SENATOR THERRIAULT replied that he would consider those
discussions, but they would still be excluding a large number of
Alaskans from even being considered for participation. The vast
majority of systems are very small. So the impact on the grant
funds would be "fairly diminimous." He thought there would be
some that wouldn't even be sophisticated enough to apply.
SENATOR AUSTERMAN said that the issue of profiting from state
funding needed to be answered.
SENATOR THERRIAULT agreed. He said that was brought up when
access to the loan funds was considered. The legislature made a
determination that they should serve the citizens of Alaska with
access to the loan fund.
By linking it to the regulated utilities, we have tried
to make sure that you're not pumping up the profits so
that the dividend on a yearly basis, which is the way
the gentleman from Petersberg portrayed it, would be
pumping up dividends paid to shareholders every year.
With regulated utilities, they would not be able to
build into their rate base a return of that capital. It
is not capital that they as shareholders brought into
the system. So, by having them come under the
regulation of the RCA, I don't believe that they are
able to reap a benefit that they would then pay a
dividend back to the shareholders on a yearly basis.
SENATOR THERRIAULT said he asked the RCA that question and they
should have their response in their packets.
SENATOR LEMAN asked if the private utility gets to book that
investment as equity.
SENATOR THERRIAULT replied he understands that it would become
overall equity, just like it becomes equity of the municipal
system, too.
SENATOR LEMAN said he could understand people's concern.
CHAIRMAN STEVENS said they would hold SB 280 for further work to
make the parameters "more refined."
SENATOR THERRIAULT agreed.
CHAIRMAN STEVENS adjourned the meeting a 3:25 p.m.
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