Legislature(1999 - 2000)

03/16/1999 01:38 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         SENATE LABOR AND COMMERCE COMMITTEE                                                                                    
                    March 16, 1999                                                                                              
                      1:38 P.M.                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Jerry Mackie, Chairman                                                                                                  
Senator Tim Kelly, Vice Chairman                                                                                                
Senator Dave Donley                                                                                                             
Senator Loren Leman                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 10                                                                                                               
"An Act extending the termination date of the Board of Certified                                                                
Direct-Entry Midwives; and providing for an effective date."                                                                    
                                                                                                                                
     -MOVED HB 10 OUT OF COMMITTEE                                                                                              
                                                                                                                                
CS FOR SENATE BILL NO. 48(HES)                                                                                                  
"An Act relating to health insurance provided by and provisions                                                                 
relating to the Comprehensive Health Insurance Association."                                                                    
                                                                                                                                
     -MOVED CSSB 48(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 10                                                                                       
"An Act requiring a utility that provides services in a                                                                         
municipality with a population of more than 100,000 to have an                                                                  
ongoing program of placing existing overhead utility lines                                                                      
underground; and relating to rates for recovering the cost of                                                                   
placing existing overhead utility lines underground."                                                                           
                                                                                                                                
     -HEARD AND HELD                                                                                                            
                                                                                                                                
SENATE BILL NO. 88                                                                                                              
"An Act relating to licensure of dietitians and nutritionists; and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
     -SCHEDULED BUT NOT HEARD                                                                                                   
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
HB 10 - No previous action to consider.                                                                                         
                                                                                                                                
SB 48 -  See Hess minutes dated 2/24/99.                                                                                        
                                                                                                                                
SB 10 - No previous action to consider.                                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Representative Bill Hudson                                                                                                      
State Capitol Bldg.                                                                                                             
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT: Sponsor of HB 10.                                                                                           
                                                                                                                                
Ms. Melissa Mayo                                                                                                                
Certified Direct Entry Midwife                                                                                                  
4125 Ruth Dr.                                                                                                                   
Wasilla, AK 99654                                                                                                               
POSITION STATEMENT: Supported HB 10.                                                                                            
                                                                                                                                
Ms. Catherine Reardon, Director                                                                                                 
Division of Occupational Licensing                                                                                              
Department of Commerce and Economic Development                                                                                 
P.O. Box 110806                                                                                                                 
Juneau, AK 99811-0806                                                                                                           
POSITION STATEMENT: Strongly supported HB 10.                                                                                   
                                                                                                                                
Mr. Dave Gray, Aide                                                                                                             
Senator Mackie                                                                                                                  
State Capitol Bldg.                                                                                                             
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT: Commented on SB 48 for Senator Mackie, sponsor.                                                             
                                                                                                                                
MS. Marianne Burke, Director                                                                                                    
Division of Insurance                                                                                                           
Department of Commerce and Economic Development                                                                                 
P.O. Box 110805                                                                                                                 
Juneau, AK 99811                                                                                                                
POSITION STATEMENT: Supported SB 48.                                                                                            
                                                                                                                                
Mr. Bob Niebrugge                                                                                                               
P.O. Box 4187                                                                                                                   
Palmer, AK 99645                                                                                                                
POSITION STATEMENT: Supported SB 48.                                                                                            
                                                                                                                                
Ms. Sandra Cole                                                                                                                 
P.O. Box 874165                                                                                                                 
Wasilla, AK 99687                                                                                                               
POSITION STATEMENT: Supported SB 48.                                                                                            
                                                                                                                                
                                                                                                                                
Mr. Don Edwards, General Counsel                                                                                                
Chugach Electric Association                                                                                                    
5601 Minnesota Dr.                                                                                                              
Anchorage, AK 99519                                                                                                             
POSITION STATEMENT: Opposed SB 48.                                                                                              
                                                                                                                                
Mr. Sam Cotten, Executive Director                                                                                              
Alaska Public Utilities Commission                                                                                              
1016 W 6th                                                                                                                      
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Supported SB 10.                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-7, SIDE A                                                                                                               
Number 001                                                                                                                      
                                                                                                                                
        HB 10-EXTEND CERTIFIED DIRECT-ENTRY MIDWIVES BD                                                                         
                                                                                                                                
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee                                                                  
meeting to order at 1:38 p.m. and announced HB 10 to be up for                                                                  
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE HUDSON, sponsor of HB 10, explained that it extends                                                              
the very important Board of Certified Direct Entry Midwives for                                                                 
another four years to June 30, 2003.  This is valuable to the                                                                   
State, because their services under the Medicaid rates cost the                                                                 
State about half of what it costs through normal                                                                                
hospitalization/nursing type of procedure.                                                                                      
                                                                                                                                
MS. MELISSA MAYO, Certified Direct Entry Midwife, said she works in                                                             
a free-standing birth center in the Palmer/Wasilla area.  They                                                                  
provide a different type of care for women than the medical type.                                                               
Certified Direct Entry Midwives are able to work one-on-one with                                                                
pregnant women and make a big difference in their lives -                                                                       
especially working with pregnant teens. They work on nutrition,                                                                 
healthy babies, and parenting. They are able to spend more time                                                                 
with a client and the service is half the price.                                                                                
                                                                                                                                
MS. CATHERINE REARDON, Director, Division of Occupational                                                                       
Licensing, supported HB 10.                                                                                                     
                                                                                                                                
CHAIRMAN MACKIE noted there was a zero fiscal note and that the                                                                 
program was funded through program receipts.                                                                                    
                                                                                                                                
SENATOR KELLY moved to pass HB 10 from committee with individual                                                                
recommendations.  There were no objections and it was so ordered.                                                               
                                                                                                                                
                  SB 48-STATE HEALTH INSURANCE                                                                                  
                                                                                                                                
MR. DAVE GRAY, Aide to Senator Mackie, sponsor, explained that the                                                              
Comprehensive Health Insurance Association (CHIA) was established                                                               
in 1992 by the legislature.  It's made up of insurers and is a                                                                  
pooled health insurance system that was established for Alaskans                                                                
who couldn't get insurance anywhere else, because their health                                                                  
condition was uninsurable and who could not otherwise find adequate                                                             
health coverage.  The legislation mandated that all providers of                                                                
health insurance in the State must participate in the pool.  The                                                                
Association, then, makes health insurance available to Alaska                                                                   
residents who are high risk or are federally defined eligible                                                                   
individuals.  These people typically suffer the most severe health                                                              
conditions and face insurmountable costs in medical treatment and                                                               
care.  In addition to operating the insurance pool, the Board of                                                                
Directors of CHIA, is directed to periodically report on the                                                                    
effectiveness of the association in promoting rate stability,                                                                   
product availability, and affordability of coverage, and to make                                                                
recommendations on further legislative or administrative                                                                        
improvements.                                                                                                                   
                                                                                                                                
SB 48 is a direct result of the efforts by the Association to make                                                              
the program work better and is supported by the Division of                                                                     
Insurance.  It amends AS 21.55 to do the following: 1. It allows                                                                
the Board greater flexibility to design more cost effective health                                                              
insurance plans for individuals eligible for coverage under the                                                                 
CHIA plan.  2.  It increases the number of potential administrators                                                             
by CHIA by eliminating the requirement that the administrator be an                                                             
insurer. 3.  It allows greater flexibility in evaluating an                                                                     
administrator and in setting terms of the administrative contract.                                                              
4.  It simplifies administration by decreasing the number of                                                                    
declinations required for eligibility.  5.  It makes technical                                                                  
corrections relating to the determination of premium rates,                                                                     
terminology, premium payment modes, board member terms, and voting                                                              
by members.  6.  It gives the Director of the Division of Insurance                                                             
a more effective and appropriate mechanism to enforce the                                                                       
requirement that members pay their share of CHIA assessments on a                                                               
timely basis.                                                                                                                   
                                                                                                                                
This legislation will allow the Board to manage the Association and                                                             
insurance plan in a more cost effective and efficient manner.                                                                   
Also, it is particularly important in light of new federal                                                                      
requirements in the use of CHIA as a mechanism to guarantee                                                                     
portability of health insurance coverage to federally eligible                                                                  
individuals.                                                                                                                    
                                                                                                                                
CHAIRMAN MACKIE asked for a list of illnesses that CHIA deals with.                                                             
                                                                                                                                
MR. GRAY deferred to the Division of Insurance for that                                                                         
information.                                                                                                                    
                                                                                                                                
MS. MARIANNE BURKE, Director, Division of Insurance, explained that                                                             
individuals who turn to CHIA for insurance coverage are dealing                                                                 
with truly life-threatening situations like dying of cancer to                                                                  
hemophilia, to AIDS, and severe heart problems and diabetes, high                                                               
blood pressure and cholesterol.  These are not rich or poor people,                                                             
but individuals who are facing devastating health costs.  CHIA                                                                  
gives them the opportunity to participate in the cost of their own                                                              
coverage.  A middle class family who has a son with hemophilia                                                                  
faces a $2,000 - $4,000 per month medical cost which for most of us                                                             
isn't possible.  With CHIA a person can pay what is still a very                                                                
high premium, but those premiums pay for only 20 percent of the                                                                 
actual costs that are incurred by this mechanism.  The additional                                                               
80 percent is assessed against the insurance companies who write                                                                
insurance in the State of Alaska.  We all basically pick up a                                                                   
portion of the cost.                                                                                                            
                                                                                                                                
MS. BURKE explained that the individuals pays a premium, not a                                                                  
sliding scale, based on their age and what they choose as a                                                                     
deductible they can live with from $200 - $10,000 deductible.                                                                   
                                                                                                                                
CHAIRMAN MACKIE asked how SB 48 would make her job easier and save                                                              
money.                                                                                                                          
                                                                                                                                
Number 200                                                                                                                      
                                                                                                                                
MS. BURKE explained that currently CHIA pays four times as much for                                                             
administrative services as any other state in the nation.  The                                                                  
reason is because the Board's hands are tied.  They have to select                                                              
as an administrator one of the insurance companies that writes in                                                               
this state.  Since its inception there has been only one company                                                                
who has been willing to provide this service, Aetna.  This bill                                                                 
would create an immediate cost reduction if we could apply good                                                                 
business practices and put an RFP out for an administrator who                                                                  
would do this appropriately, yet cost effectively.                                                                              
                                                                                                                                
Additionally, since every insurance company that does business in                                                               
this state must pay their fair share based on the premium dollars                                                               
that they write, they all should pay and pay promptly.  Currently,                                                              
there are some who are less than prompt and there is nothing she                                                                
can do to encourage them to make their payments on a prompt basis.                                                              
This legislation would allow her to fine them if they do not pay in                                                             
accordance with a reasonable time table. It also exempts companies                                                              
who may write such a small amount that it's not really cost                                                                     
effective for the Division to assess them.  If their portion is                                                                 
$10, it costs more to collect that than $10.  SB 48 provides                                                                    
flexibility in providing more response to the customers who are                                                                 
seeking this coverage in that they can be offered a greater range                                                               
of options.  If they are willing to take managed care, for                                                                      
instance, it's their choice and that can help save money.                                                                       
                                                                                                                                
Number 250                                                                                                                      
                                                                                                                                
MR. BOB NIEBRUGGE supported the CHIA program and the amendments                                                                 
which fine-tune the original bill.                                                                                              
                                                                                                                                
MS. SANDRA COLE, Mat-Su Board member, said she has 26 years of                                                                  
medical experience and a law degree.  She said this program is                                                                  
vital to the people of the State of Alaska.  She was disabled from                                                              
an accident a year and a half into her law practice and she could                                                               
testify to what sudden illness and loss of a job does to you in                                                                 
terms of your ability to get health insurance.  Most of the changes                                                             
in the bill keep lowering the continually raising costs of health                                                               
care and she added that many people cannot afford the program as it                                                             
is now.  No one is choosing a $200 deductible because it is too                                                                 
costly.                                                                                                                         
                                                                                                                                
CHAIRMAN MACKIE asked Ms. Burke if there was any opposition to this                                                             
bill.                                                                                                                           
                                                                                                                                
MS. BURKE responded that there is not.  All of the insurance                                                                    
companies who comprise the largest writers in the State are on the                                                              
Board and crafted this legislation.                                                                                             
                                                                                                                                
SENATOR KELLY moved to pass CSSB 48(L&C) with individual                                                                        
recommendations.  There were no objections and it was so ordered.                                                               
                                                                                                                                
                                                                                                                                
         SB 10-APUC JURISDICTION: UNDERGROUND UTILITIES                                                                         
                                                                                                                                
CHAIRMAN MACKIE announced SB 10 to be up for consideration.                                                                     
                                                                                                                                
SENATOR DONLEY, sponsor, said that SB 10 requires that the                                                                      
utilities in a community over 100,000 people have an ongoing                                                                    
program for placing overhead utility lines underground.  Currently,                                                             
it would only apply to the Municipality of Anchorage.                                                                           
                                                                                                                                
Through technological advances over the past number of years,                                                                   
underground utilities are much easier to maintain and less costly.                                                              
They are aesthetically more pleasing.  Having a minimum amount that                                                             
utilities can contribute to a long range plan of putting existing                                                               
overhead lines underground levels the economic playing field so                                                                 
there isn't the disincentive of competition where if one utility                                                                
does it and another utility doesn't do it, they can charge lower                                                                
rates.  Unless there are mandates to protect the public interest                                                                
and to encourage undergrounding, all incentive will be lost to do                                                               
it.  Many cities require "undergrounding" for new developments.                                                                 
The problem in Anchorage is that all new developments are                                                                       
"undergrounded," but the neighborhoods that were built before the                                                               
law went into place have overhead utilities.  Some areas of                                                                     
Anchorage that have two power deliverers have overhead power lines                                                              
running down both sides of streets and it's a mess.                                                                             
                                                                                                                                
The City tried to address this issue with an ordinance requiring                                                                
utilities to have a 10-year plan for an ongoing program of                                                                      
"undergrounding" overhead lines.  It requires utilities to spend up                                                             
to four percent of their gross revenues per year towards                                                                        
"undergrounding."  However, because of the words "up to" there's no                                                             
minimum amount, so they spend nothing towards it.  In the amendment                                                             
he is asking for just one percent; he would be happy with even a                                                                
half percent.  Just so there is some established minimum towards an                                                             
ongoing program of "undergrounding."                                                                                            
                                                                                                                                
SENATOR DONLEY said in the past objections from the utilities has                                                               
been that the APUC would make them go through all kinds of                                                                      
reporting hoops and may not allow them to spend the money or charge                                                             
for it in a rate base. When asked, the APUC commissioners have said                                                             
they wouldn't do that.  They think that underground is a great                                                                  
idea.  That is why he exempts APUC totally from the process.                                                                    
SENATOR DONLEY said he thought it was important to make a public                                                                
policy "call" in this direction.                                                                                                
                                                                                                                                
SENATOR LEMAN said he knows that cost of service studies for                                                                    
utilities are very expensive, even $1 million.  He thought it was                                                               
wrong for the APUC to require such an expensive exercise.  He                                                                   
didn't know if one percent was a good amount, but it didn't sound                                                               
like a lot.  He asked if Senator Donley wanted to add the one                                                                   
percent as a surcharge.                                                                                                         
                                                                                                                                
SENATOR DONLEY answered that they would just roll it into the rate                                                              
base which is what they do with their current "undergrounding"                                                                  
programs.                                                                                                                       
                                                                                                                                
Number 405                                                                                                                      
                                                                                                                                
MR. DON EDWARDS, General Counsel, Chugach Electric Association,                                                                 
said they are not opposed to "undergrounding" per se.  It's a                                                                   
matter of cost and reliability.  Reliable systems are built both                                                                
overhead and underground.  There are more underground distribution                                                              
lines than overhead lines.  It boils down primarily to the cost.                                                                
                                                                                                                                
MR. EDWARDS explained that roughly, as a rule-of-thumb, on the                                                                  
Chugach system, you can assume it would cost from $700,000 -                                                                    
$1,000,000 per distribution line mile to do underground                                                                         
distribution.  There are 334 line miles in their entire                                                                         
distribution system.  Chugach Electric's gross is around $140                                                                   
million.  Transmission is considerably more expensive to                                                                        
"underground" because of the high voltage use and having to use                                                                 
fluid-filled cables.                                                                                                            
                                                                                                                                
Capital expenditures is the more important consideration.  There                                                                
are some savings one might expect to get on operation and                                                                       
maintenance, but they are dwarfed by the capital expenditures.                                                                  
They are very sensitive to their customers' concern for cost since                                                              
they are a member-owned association.  He recommended making very                                                                
sure customers want to buy this kind of "undergrounding."   Also,                                                               
the legislation might require "undergrounding" of perfectly good                                                                
overhead lines which have not yet been depreciated.  This could                                                                 
degrade equity levels and damage the organization financially.                                                                  
                                                                                                                                
MR. EDWARDS advised the committee to have their lawyers look at the                                                             
constitutionality of the "cap" on the amount of recovery that is                                                                
allowed to the extent that expenditures of money are required to                                                                
implement this legislation.                                                                                                     
                                                                                                                                
SENATOR DONLEY responded that the cap only applies to the                                                                       
regulatory powers of the APUC.                                                                                                  
                                                                                                                                
MR. EDWARDS replied that to him the cap means the annual recovery                                                               
of revenue for "undergrounding" may not exceed 10 percent of a                                                                  
utility's annual gross income.                                                                                                  
                                                                                                                                
SENATOR DONELY said it doesn't say that; it says the exception to                                                               
the Commission's regulation only applies to the first 10 percent                                                                
and after that it would be subject to regulation by the Commission.                                                             
He said he would ask the drafters to make that clear.                                                                           
                                                                                                                                
MR. EDWARDS said he thought discussions should take place among the                                                             
utilities about what might be doable, but as it stands, Chugach                                                                 
would not support this legislation.                                                                                             
                                                                                                                                
Number 471                                                                                                                      
                                                                                                                                
CHAIRMAN MACKIE asked if it was true that a majority of their lines                                                             
are underground now and asked if that included high voltage                                                                     
distribution lines.                                                                                                             
                                                                                                                                
MR. EDWARDS replied no and explained that they make a distinction                                                               
between lower voltage distribution lines and higher voltage                                                                     
transmission lines.  More than half of their distribution lines are                                                             
underground now and all new distribution lines are underground.                                                                 
Burying transmission cable is much more expensive, because it is                                                                
fluid-filled cable which are higher maintenance and are much more                                                               
expensive to install.                                                                                                           
                                                                                                                                
CHAIRMAN MACKIE asked if any transmission lines were underground                                                                
now.                                                                                                                            
                                                                                                                                
MR. EDWARDS answered a few of them are and the main one is the                                                                  
submarine cable that cut across from the west side of Cook Inlet to                                                             
a point close to the Anchorage airport.  There is probably 8 - 12                                                               
miles on the entire system of "undergrounded" transmission lines.                                                               
                                                                                                                                
CHAIRMAN MACKIE asked if they are putting transmission lines                                                                    
underground now in new developments.                                                                                            
                                                                                                                                
MR. EDWARDS answered no, because transmission lines are expensive                                                               
to put underground and there is a serious earthquake hazard.                                                                    
                                                                                                                                
SENATOR KELLY asked what fluid-filled cable was like.                                                                           
                                                                                                                                
MR. EDWARDS explained that a hollow cable has fluid in it that                                                                  
seeps through the conductor that is in segments.  The fluid                                                                     
impregnates paper that is wrapped in many layers of thin sheets and                                                             
has to be under light pressure at all times to make sure the paper                                                              
stays impregnated and impervious to elements.  Outside of that                                                                  
there are all kinds of armoring to try to keep the cable safe,                                                                  
particularly during installation.  The fluid pressure has to be                                                                 
monitored constantly.                                                                                                           
                                                                                                                                
SENATOR KELLY asked how much of their system is transmission line                                                               
versus distribution line.                                                                                                       
                                                                                                                                
MR. EDWARDS said he didn't even have a ballpark figure on that.                                                                 
                                                                                                                                
Number 531                                                                                                                      
                                                                                                                                
SENATOR LEMAN said he thought Senator Donley was referring to the                                                               
distribution lines and asked if Mr. Edwards had identified his                                                                  
costs, breaking them down into generation, transmission, and                                                                    
distribution and what the distribution costs are in Anchorage.                                                                  
                                                                                                                                
MR. EDWARDS answered yes, they have distribution and transmission                                                               
cost data, but they have not really broken it down to residents                                                                 
within Anchorage, although he didn't think it would be difficult to                                                             
do.                                                                                                                             
                                                                                                                                
Number 565                                                                                                                      
                                                                                                                                
MR. SAM COTTEN, Executive Director, Alaska Public Utilities                                                                     
Commission, said the Commission decided to take a neutral position                                                              
on this policy call.  However, they have a couple of technical                                                                  
concerns.  They suggested using the term "revenue" instead  of the                                                              
term "annual gross income" so there is no question about what money                                                             
they are talking about.   MR. COTTEN explained that the full actual                                                             
cost might involve the potential for cost shifting.  Typically, a                                                               
utility has to justify cost and there is a prudency standard that                                                               
has to be met, but in this case it wouldn't be.  His staff                                                                      
recommended going with a surcharge rather than increasing rates,                                                                
because it would be simpler to manage administratively.  For                                                                    
instance, there are a couple of utilities that operate within the                                                               
Municipality of Anchorage and it's only a small part of their                                                                   
business.  Matanuska Electric and Matanuska Telephone provide                                                                   
service to Eagle River, which is part of the Municipality, so the                                                               
rates for those people in Eagle River would be affected, whereas if                                                             
they lived in Palmer or Wasilla, they wouldn't be affected (under                                                               
this bill).  Rather than doing a rate redesign, a simpler method                                                                
would be to add a surcharge to the affected members.                                                                            
                                                                                                                                
MR. COTTEN reported one commissioner was interested in knowing who                                                              
would be responsible for setting the standards they deal with in                                                                
cost cause or cost repair.  This bill  leaves it unclear who is                                                                 
responsible.                                                                                                                    
                                                                                                                                
TAPE 99-7, SIDE B                                                                                                               
Number 590                                                                                                                      
                                                                                                                                
MR. COTTEN said the fiscal note the Commission endorsed is $91.8                                                                
thousand for a half-time engineering analyst.  Not all the members                                                              
agreed that there was a high risk of litigation, but they allotted                                                              
$54,000 per year for three years for it.                                                                                        
                                                                                                                                
SENATOR DONLEY responded that the bill says the APUC would have no                                                              
role in the one percent, so he didn't understand what the fiscal                                                                
notes are for.                                                                                                                  
                                                                                                                                
MR.  COTTEN asked how the actual cost would be placed on the rates.                                                             
                                                                                                                                
SENATOR DONELY answered that the utilities would make that                                                                      
assessment themselves and if it's under the cap that's in the bill,                                                             
the APUC would just accept those numbers.                                                                                       
                                                                                                                                
MR. COTTEN replied that he understands that, but the Commission                                                                 
approved the proposition that they would have to be involved in                                                                 
establishing rates regardless of the wording.  He asked if Senator                                                              
Donley meant for the surcharge to be added on to what the                                                                       
Commission approves as a rate.                                                                                                  
                                                                                                                                
SENATOR DONLEY replied that is what he intends.                                                                                 
                                                                                                                                
Number 561                                                                                                                      
                                                                                                                                
SENATOR DONELY moved to delete "income" on page 1, line 9 and page                                                              
2, line 1 to "revenue".  There were no objections and it was so                                                                 
ordered.                                                                                                                        
                                                                                                                                
MR. COTTEN commented additionally that the FY2000 budget for the                                                                
Commission proposed by the Governor includes some new positions and                                                             
they feel if that budget is approved, "they could get by with the                                                               
resources contained in that budget."  This was an effort by the                                                                 
staff and Commission to identify the cost a account for it.  If the                                                             
budget were approved, the Commission could agree to a zero fiscal                                                               
note.                                                                                                                           
                                                                                                                                
CHAIRMAN MACKIE asked if the Commission would have to review the                                                                
rate increases if they occur.                                                                                                   
                                                                                                                                
MR. COTTEN replied that he wasn't clear how that would work.  The                                                               
Commission is still responsible for approving rates and he would                                                                
review the issue again knowing what Senator Donley's intent is.                                                                 
                                                                                                                                
CHAIRMAN MACKIE asked if he would have problems with the bill if                                                                
there was clarification of the intent in the bill.                                                                              
                                                                                                                                
MR. COTTEN replied that if it's as simple as Senator Donley thinks                                                              
it is, he couldn't imagine any expense for the Commission other                                                                 
than the potential for litigation which he didn't think existed.                                                                
He said he would work with Senator Donley on clarifying the rate                                                                
issue.                                                                                                                          
                                                                                                                                
SENATOR DONLEY proposed further clarifying language on page 1, line                                                             
14.  He moved to replace the last sentence of the bill with, "This                                                              
Section only applies to undergrounding programs that do not exceed                                                              
five percent of the utilities' annual gross revenue."  This makes                                                               
it really clear there is no cap on what they do for                                                                             
"undergrounding" and limiting the APUC jurisdiction up to five                                                                  
percent.  There were no objections and it was so ordered.                                                                       
                                                                                                                                
SENATOR LEMAN wanted to see the distinction between distribution                                                                
versus generation and transmission revenues.  This legislation                                                                  
would make more sense to know what revenues come from distribution.                                                             
 He thought they wanted to address situations like the ones on                                                                  
Northern Lights Blvd. and Muldoon Rd.                                                                                           
                                                                                                                                
SENATOR LEMAN suggested on line 9 after "utilities annual gross                                                                 
revenue from" insert "distribution to".  He said they are only                                                                  
talking about electric lines now, but there are probably some                                                                   
telephone cable that are not distribution lines.  He wanted to                                                                  
limit the revenues to only those that are associated with the                                                                   
distribution instead of the generation and transmission.                                                                        
                                                                                                                                
SENATOR DONLEY agreed with that change saying that it clarifies his                                                             
intent.                                                                                                                         
                                                                                                                                
SENATOR LEMAN moved that as a conceptual amendment.                                                                             
                                                                                                                                
SENATOR KELLY shared Senator Leman's concern, but hesitated because                                                             
he thought they had to differentiate between high voltage                                                                       
transmission lines and all other distribution lines which are                                                                   
basically low voltage and could include telephone, electric, and                                                                
cable.  However, he thought the committee should figure out if they                                                             
really want high cost transmission lines buried.  They don't know                                                               
how many transmission lines there are or how they are defined.                                                                  
                                                                                                                                
SENATOR LEMAN explained that there is a break point of kilovolts                                                                
and then it drops down and go to distribution.                                                                                  
                                                                                                                                
SENATOR DONLEY said it's clear with Chugach's numbers, it would                                                                 
take over 100 years to get to the point where they have to deal                                                                 
with transmission lines even if they were covered by the bill.  The                                                             
other issue is that there may be some perfectly good overhead lines                                                             
and they would want to wait for them to depreciate before doing                                                                 
this.  There is probably 150 years of flexibility here.                                                                         
                                                                                                                                
CHAIRMAN MACKIE asked for a committee substitute to be prepared for                                                             
further discussion with that language in it and adjourned the                                                                   
meeting at 3:40 p.m.                                                                                                            
                                                                                                                                
                                                                                                                                

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