Legislature(2005 - 2006)BELTZ 211
04/12/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB160 | |
| SB108 | |
| SB157 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 157 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 160 | TELECONFERENCED | |
| += | SB 108 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 12, 2005
1:41 p.m.
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Ben Stevens
Senator Johnny Ellis
Senator Bettye Davis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 160
"An Act relating to a procurement and electronic commerce tools
program for state departments and instrumentalities of the
state; and providing for an effective date."
MOVED CSSB 160(L&C) OUT OF COMMITTEE
SENATE BILL NO. 108
"An Act relating to the regulation of insurance, insurance
licensing, surplus lines, insurer deposits, motor vehicle
service contracts, guaranteed automobile protection products,
health discount plans, third-party administrators, self-funded
multiple employer welfare arrangements, and self-funded
governmental plans; and providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 157
"An Act relating to the maximum annual regulatory cost charge
collected from certain regulated public utilities and pipeline
carriers; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 160
SHORT TITLE: STATE PROCUREMENT ELECTRONIC TOOLS
SPONSOR(s): LABOR & COMMERCE
04/01/05 (S) READ THE FIRST TIME - REFERRALS
04/01/05 (S) L&C, FIN
04/05/05 (S) L&C AT 1:30 PM BELTZ 211
04/05/05 (S) Heard & Held
04/05/05 (S) MINUTE(L&C)
04/12/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 108
SHORT TITLE: INSURANCE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/14/05 (S) READ THE FIRST TIME - REFERRALS
02/14/05 (S) L&C, FIN
03/31/05 (S) L&C AT 1:30 PM BELTZ 211
03/31/05 (S) Heard & Held
03/31/05 (S) MINUTE(L&C)
04/07/05 (S) L&C AT 1:30 PM BELTZ 211
04/07/05 (S) Heard & Held
04/07/05 (S) MINUTE(L&C)
04/12/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 157
SHORT TITLE: REG. COST CHARGES: UTILITIES/PIPELINES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/31/05 (S) READ THE FIRST TIME - REFERRALS
03/31/05 (S) L&C, FIN
04/12/05 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
PATTY ADY, Supply Technician
Sitka Pioneer Home
Sitka AK
POSITION STATEMENT: Opposed SB 160.
BRUCE LUDWIG
Business Manager, Alaska Public Employees Association (APEA)
American Federation of Teachers
Secretary-Treasurer, Alaska AFL-CIO
POSITION STATEMENT: Opposed SB 160.
VERN JONES, Chief Procurement Officer
Division of General Services
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Commented on SB 160.
LINDA HALL, Director
Division of Insurance
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supported SB 108.
KATE GIARD, Chairman
Regulatory Commission of Alaska (RCA)
701 W Eighth Ave Ste 300
Anchorage, AK 99501
POSITION STATEMENT: Supported SB 157.
DAN DICKRAF, Treasurer Manager
Division of Finance and Rates
EnStar Natural Gas Company
3000 Spenard Rd
Anchorage AK 99503
POSITION STATEMENT: Supported SB 157.
ACTION NARRATIVE
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:41:26 PM. Senators Seekins,
Davis, Ben Stevens and Chair Bunde were present. Senator Ellis
arrived at 1:45.
SB 160-STATE PROCUREMENT ELECTRONIC TOOLS
CHAIR BUNDE announced CSSB 160(L&C) to be up for consideration
and that it contains the Alaska bidder preference.
PATTY ADY, Supply Technician, Sitka Pioneer Home, opposed SB
160. She said:
The state is nine months into a two-year pilot
project. There is insufficient data to know what the
long-term outcome will be. A private contractor is in
business to make money, not to provide for all the
different needs of Alaskans. These companies are more
concerned with their profit margins than with the
quality of the products used by frail elders. Our
resident needs are different than the needs of other
areas of the state that could suffer by the decisions
made by people who do not have the experience to deal
with these frail elders.... Our state will lose
approximately 200 jobs, which we can ill afford to be
lost.
1:45:32 PM
SENATOR ELLIS joined the committee.
1:46:05 PM
BRUCE LUDWIG, Business Manager, Alaska Public Employees
Association (APEA), American Federation of Teachers, said he is
also Secretary-Treasurer of the Alaska State AFL-CIO. He said
the pilot program was rushed through in the final days of the
2003 session. There were no measurements of success included nor
benchmarks for comparison. He said the bill title is also
misleading. Alaska Supply Chain Integrators (ASCI) was the only
responsive bidder.
MR. LUDWIG said:
Since the pilot project began, only one quarter of the
work has been audited. The second quarter is in the
process of the audit and the third quarter is just
over and we can presume that that's going to be
started soon. The pilot has until June 30, 2006 until
it expires. As the Department of Administration
testified last week, the jury is still out on the
project. It's too early to extend it. The bill should
be held over while a sufficient record is established
to be able to make a decision on whether or not it's a
success.
MR. LUDWIG said he has heard many negative things about the
experience. He heard that the purchasing of goods has resulted
in a 20 percent increase in the cost. If that is extended over
the life of the project, it will actually cost the state $2.5
million more for the same goods that would have been purchased
through the state purchasing procedure. He has heard that 1,500
invoices haven't been paid because they don't match up with the
purchase orders.
That's Alaska firms that aren't getting paid. It's
going to affect the state's reputation with its
vendors and it's going to affect those firms that
aren't getting their money timely.
1:49:00 PM
He related how the M/V Kennicott had an engine overhaul and
seven orders were placed for engine parts. Six of the orders
were shipped to Juneau, but the ship was in dry-dock in Portland
and all the heavy parts had to be shipped there. Of the original
$250,000 projected savings, about half was from eliminating the
warehouse, but that has been reinstated. ASCI employees are
working overtime now and the remaining savings might be
nonexistent. In addition, since ASCI does not follow the
procurement code, their procedures do not meet the minimum
requirements for federal purchasing, which are very strict.
Overhead, contract oversight and other things were not budgeted
for. "In summary, it's too early to extend the project...."
1:51:19 PM
CHAIR BUNDE asked him about conflict of interest concerns.
MR. LUDWIG explained he had heard about a conflict of interest
between a state official and someone connected with ASCI, but he
didn't find any connection and the issue should be dropped.
1:52:33 PM
SENATOR SEEKINS moved to pass CSSB 160(L&C) from committee with
individual recommendations and fiscal note.
SENATOR ELLIS objected to ask someone to discuss the audit
report.
VERN JONES, Chief Procurement Officer, Department of
Administration, said the initial audit was done at a time of
lots of transitions and he felt there wasn't a large enough
sample to draw conclusions for the audit.
SENATOR ELLIS asked when the next audit would be available.
MR. JONES replied at the end of this week and he hoped to
conclude the third quarter's audit by end of session.
SENATOR ELLIS again noted the memo from Mr. Barton that has
comparisons.
MR. JONES said memo is technically correct, but he believes
through talking to professionals at the Division of Legislative
Audit that the actual sample was so small, they couldn't
extrapolate any findings that would hold up.
2:00:36 PM
SENATOR DAVIS noted that the bill doesn't have any other
referrals and asked what the hurry is.
CHAIR BUNDE replied that he wanted the bill to move through the
process.
2:01:30 PM
SENATOR ELLIS also asked what's the hurry. They are barely eight
months into the pilot program.
CHAIR BUNDE said he thought progress was being made towards
better service to the state, but the full body makes that
decision.
2:02:56 PM
SENATOR ELLIS said state employees could do a better job if they
were to be provided with the modern tools and techniques that
private industry has. He also appreciated the attention to
detail and urged people who erroneously made references to
conflicts of interest to correct their comments in an
expeditious manner.
CHAIR BUNDE said that had been done.
A roll call vote was taken. Senators Ben Stevens, Seekins, and
Chair Bunde voted yea; Senators Davis and Ellis voted nay; and
CSSB 160(L&C) moved from committee.
SB 108-INSURANCE
CHAIR CON BUNDE announced SB 108 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 108(L&C), version \F.
CHAIR BUNDE objected for discussion purposes and asked Ms. Hall
to explain new language
LINDA HALL, Director, Division of Insurance, explained that new
section 22 on page 13 adds language that deals with owner-
controlled insurance programs and contractor controlled
insurance programs. Today most of this concept is in already in
the Worker's Compensation manual, but it's not part of statute.
Owner-controlled Insurance Programs (OCIP) have been standard in
industry for some time as a way to put all of the costs together
- to provide the safety programs for the project and have that
reflected in the rate. For large construction projects it means
either the owner of the project or a general contractor will buy
the casual insurance - the general liability, workers'
compensation for the entire project. The oil pipeline is an
example of that kind of process. Subcontractors who work on that
type of program have to take out of their own insurance and
therefore they don't have as much of a payroll with which to be
able to negotiate as good a deal for themselves.
Most of the subs support this for large construction projects,
which have a cap of $50 million. This concept has expanded since
1995 into general maintenance and projects and operations, but
she sees a detrimental potential affect on the marketplace. "As
we contract further the amount of premium that's available for
insurance companies, I think that has an overall negative affect
on our marketplace in general."
2:09:01 PM
MS. HALL said this particular section was sponsored by the
independent insurance agents who worked directly with the
consumer who are concerned about markets. The subs are concerned
about their own insurance program. If they have to put $300,000
worth of payroll someplace else, then their own programs suffer
on an on-going basis - as opposed to a one-time project.
2:10:57 PM
CHAIR BUNDE asked if the $15 million is a floor or a cap.
MS. HALL answered a floor.
CHAIR BUNDE added that sections 28 and 29 remain in the bill
after study, although they are acknowledged to be controversial.
2:12:31 PM At ease 2:12:58 PM
CHAIR BUNDE said he would hold the bill until Thursday for a
potential amendment.
SB 157-REG. COST CHARGES: UTILITIES/PIPELINES
CHAIR CON BUNDE announced SB 157 to be up for consideration.
KATE GIARD, Chairman, Regulatory Commission of Alaska (RCA),
said that SB 157 is in response to complaints about the RCA's
lack of transparency, its being non-responsive and creating a
burdensome regulatory environment because of the time it takes
to make decisions. She ran for the position of chairman to
resolve that problem.
2:17:52 PM
The reason dockets sit is because the RCA has no mechanism to
tell her, as chair, what her staff of 56 people are doing on a
regular basis.
I don't know what they do; I can't account for their
time, because we have no time management system. The
industries that file with us don't know whenever we're
going to get an answer to their questions.... People
don't know what we're doing and when we're doing it.
The systems are developed and are out there that can
assist the RCA in certainly being more prompt, being
more transparent, but we' don't have them here.
2:21:36 PM
CHAIR BUNDE asked if she hears general agreement or opposition
from the utilities on this bill.
MS. GIARD replied that Chugach Electric, ML&P, ConocoPhillips,
AT&T Alas COM, ACS, GCI, Alaska Power Association, all strongly
support it. "They think that it's long overdue." She has not
heard from anyone that this is a bad idea.
2:23:11 PM
CHAIR BUNDE said she indicated in a letter to the legislature
that the bottom line is with the consumer and if a consumer uses
three regulated services - telephone, gas and electric - that
the total impact of this legislation is estimated to be $6.48
for three years; then this rate increase would go away.
MS. GIARD replied that is correct. She explained that she did
not ask for this money to be put into a capital plan, because it
is needed in the form of a range of monies. At first, she
estimated her plan would cost $1.5 million. But upon seeing
that, Chugach Electric recommended that she form an advisory
group, which she did in January 2005. It was comprised of
Chugach ML&P, AWWU and GCI all of which dedicated their time and
IT resources to help formulate the budget. They came up with a
budget range of $2 million to $3 million. Because of the unique
way the RCA statute is written, the money would come into the
operating budget and if it is not all spent, it will offset the
RCC calculation for the next year. If it went to the capital
budget and wasn't spent, it would sit there and the RCA could
use it for something else in the future. "That's not beneficial
to rate-payers."
2:26:04 PM
CHAIR BUNDE referenced her letter again that says the money
would be spent on creating a staff and time management system.
He asked if she planned to add staff.
MS. GIARD responded.
What I mean is I don't know what they do with their
time. So, I'd like to know their time resource, where
they spend it. Do they spend it on electric utilities?
Do they spend it on telephone? Are they doing admin
seven hours a day? It's not likely, but because
there's no real reporting, I don't know where our
resources are going. So I can't tell you what the
optimal staffing level is...whether we need more staff
or fewer staff. I suspect if we get these systems in
place, we should be able to operate with fewer staff
and we actually recently reduced our staff size from
62 to 56 - because our docket load is approximately
125 dockets.
2:27:18 PM
CHAIR BUNDE continue saying that the second item in the letter
says she would use the monies for a system to receive, store and
retrieve data filed with the RCA electronically.
MS. GIARD replied yes and that most utilities are now computer
savvy.
2:28:36 PM
DAN DICKRAF, Treasurer and Manager, Division of Finance and
Rates, EnStar Natural Gas Company, said he has dealt with
regulatory matters for years and supported the efficiencies and
funding mechanism in SB 157. It would make information available
easier and faster for the commission, utilities and customers.
It would save on paper, storage, filing costs and is ecological
in that respect, as well. Rate payers will save and get better
regulation.
2:30:34 PM
CHAIR BUNDE said this is straight-forward, but not knowing RCA
issues, he wanted to hold the bill until the next committee
meeting.
SENATOR ELLIS asked, "What's the time frame for some sort of net
benefit to consumers?"
MR. DICKRAF replied that he is not the person to ask because he
doesn't know what the delivery times to the RCA are for the
individual systems. They will create costs as they come on line.
Filing costs, for example, if that can be done electronically,
would be an immediate savings on paper copies, a courier, et
cetera. As a practical matter, a utility's rate might not drop
until it comes in for a rate case or it may not have to ask for
additional cost at some point in the future. The timeframe would
depend on the individual utility.
SENATOR ELLIS asked if before the next meeting Ms. Giard could
provide the committee with a better understanding of the phase-
in of the new systems and technologies that will save money down
the line. He also wanted to know when the benefits of paying
more would catch up to the consumers.
MS. GIARD responded that she would be happy to do that.
CHAIR BUNDE said he would set SB 157 aside until Thursday and
adjourned the meeting at 2:35:41 PM.
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