04/07/2011 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB103 | |
| SB115 | |
| HB24 | |
| HB130 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 115 | TELECONFERENCED | |
| += | HB 24 | TELECONFERENCED | |
| += | HB 130 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 103 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 7, 2011
2:01 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Joe Paskvan, Vice Chair
Senator Linda Menard
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 103
"An Act amending the medical examination requirements for
firefighters entitled to a presumption of compensability for a
disability resulting from certain diseases."
- MOVED CSSB 103(L&C) OUT OF COMMITTEE
SENATE BILL NO. 115
"An Act defining portable electronics insurance and authorizing
the director of insurance to issue a limited producer license to
a person that sells portable electronics insurance."
- HEARD & HELD
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 24(FIN)
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
- HEARD & HELD
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 130(L&C)
"An Act relating to municipal building code requirements for
fire sprinkler systems in certain residential buildings."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 103
SHORT TITLE: WORKERS' COMPENSATION FOR FIREFIGHTERS
SPONSOR(s): JUDICIARY
03/16/11 (S) READ THE FIRST TIME - REFERRALS
03/16/11 (S) L&C, FIN
04/05/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
04/05/11 (S) Heard & Held
04/05/11 (S) MINUTE(L&C)
BILL: SB 115
SHORT TITLE: PORTABLE ELECTRONICS INSURANCE
SPONSOR(s): LABOR & COMMERCE
03/25/11 (S) READ THE FIRST TIME - REFERRALS
03/25/11 (S) L&C, FIN
04/07/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
BILL: HB 24
SHORT TITLE: EXTEND REGULATORY COMM. OF ALASKA SUNSET
SPONSOR(s): OLSON
01/18/11 (H) PREFILE RELEASED 1/7/11
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) L&C, FIN
03/16/11 (H) L&C AT 3:15 PM BARNES 124
03/16/11 (H) Moved CSHB 24(L&C) Out of Committee
03/16/11 (H) MINUTE(L&C)
03/18/11 (H) L&C RPT CS(L&C) 7DP
03/18/11 (H) DP: CHENAULT, THOMPSON, SADDLER,
JOHNSON, HOLMES, MILLER, OLSON
03/22/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/22/11 (H) Moved CSHB 24(FIN) Out of Committee
03/22/11 (H) MINUTE(FIN)
03/23/11 (H) FIN RPT CS(FIN) 8DP 2NR
03/23/11 (H) DP: FAIRCLOUGH, T.WILSON, JOULE,
COSTELLO, EDGMON, DOOGAN, STOLTZE,
THOMAS
03/23/11 (H) NR: GUTTENBERG, GARA
03/28/11 (H) TRANSMITTED TO (S)
03/28/11 (H) VERSION: CSHB 24(FIN)
03/30/11 (S) READ THE FIRST TIME - REFERRALS
03/30/11 (S) L&C, FIN
04/07/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
BILL: HB 130
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS
SPONSOR(s): LABOR & COMMERCE
01/28/11 (H) READ THE FIRST TIME - REFERRALS
01/28/11 (H) CRA, L&C
02/08/11 (H) CRA AT 8:00 AM BARNES 124
02/08/11 (H) Moved Out of Committee
02/08/11 (H) MINUTE(CRA)
02/09/11 (H) CRA RPT 6DP
02/09/11 (H) DP: AUSTERMAN, CISSNA, DICK, FOSTER,
GARDNER, MUNOZ
02/14/11 (H) L&C AT 3:15 PM BARNES 124
02/14/11 (H) Moved CSHB 130(L&C) Out of Committee
02/14/11 (H) MINUTE(L&C)
02/16/11 (H) L&C RPT CS(L&C) NT 7DP
02/16/11 (H) DP: THOMPSON, SADDLER, JOHNSON, HOLMES,
SEATON, MILLER, OLSON
03/11/11 (H) TRANSMITTED TO (S)
03/11/11 (H) VERSION: CSHB 130(L&C)
03/14/11 (S) READ THE FIRST TIME - REFERRALS
03/14/11 (S) CRA, L&C
03/22/11 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
03/22/11 (S) Scheduled But Not Heard
03/29/11 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
03/29/11 (S) Moved CSHB 130(L&C) Out of Committee
03/29/11 (S) MINUTE(CRA)
03/30/11 (S) CRA RPT 3DP 1NR
03/30/11 (S) DP: KOOKESH, MENARD, WAGONER
03/30/11 (S) NR: OLSON
04/07/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CINDI SMITH
Staff to Senator French
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Offered to answer questions on SB 130 for
the sponsor.
DANA OWEN
Staff to Senator Egan
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Presented SB 115 on behalf of the Labor and
Commerce Committee.
STEVEN MCDANIEL
Asurian Corporation
POSITION STATEMENT: Supported SB 115.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, AK
POSITION STATEMENT: Supported SB 115.
REPRESENTATIVE OLSON
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of HB 24 and HB 130.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Legislative Affairs Agency
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained provisions in HB 24.
PAT LUBY, Advocacy Director
AARP Alaska
Anchorage, AK
POSITION STATEMENT: Strongly supported HB 24.
KRISTIN WINTERS, Director
Regulatory Affairs
Golden Heart Utilities and College Utilities Corporation
Fairbanks, AK
POSITION STATEMENT: Commented on HB 24.
BOB PICKETT, Chairman
Regulatory Commission of Alaska (RCA)
Anchorage, AK
POSITION STATEMENT: Gave a brief overview of the commission and
said he supported only the extension provision in HB 24.
PAUL MICHELSOHN
Alaska State Home Building Association
Anchorage, AK
POSITION STATEMENT: Supported HB 130.
ACTION NARRATIVE
2:01:03 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 2:01 p.m. Present at the call to
order were Senators Paskvan, Menard, Giessel, and Egan.
SB 103-WORKERS' COMPENSATION FOR FIREFIGHTERS
2:01:55 PM
CHAIR EGAN announced SB 103, sponsored by the Senate Judiciary
Committee, to be up for consideration [CSSB 103(L&C), version
27-LS0595\M, was before the committee]. He objected for
questions.
2:02:09 PM
CINDI SMITH, staff to Senator French, said she would be happy to
answer any questions.
2:02:34 PM
SENATOR DAVIS joined the committee.
CHAIR EGAN, finding no questions, withdrew his objection.
SENATOR PASKVAN moved to report CSSB 103(L&C), version M, from
committee with individual recommendations and attached fiscal
note. There were no objections and it was so ordered.
2:03:58 PM
At ease from 2:03:58 PM to 2:04:59 PM.
SB 115-PORTABLE ELECTRONICS INSURANCE
2:04:59 PM
CHAIR EGAN announced SB 115 to be up for consideration.
SENATOR PASKVAN moved to bring CSSB 115(L&C), labeled 27-
LS0609\I, sponsored by the Senate Labor and Commerce Committee,
before the committee for purposes of discussion.
CHAIR EGAN objected.
2:06:29 PM
DANA OWEN, staff to Senator Egan, said the draft before them is
an attempt to bring some order into what is "sort of a frontier
market" for a new kind of insurance for loss or damage to
equipment like cell phones and IPads. He said with expansion of
these kinds of machines in our lives, the market has been
explored by a number of companies. The committee had been
approached by Asurian, one of the major marketers of this kind
of product, in an effort to stabilize this market and to bring
some kind of order to it so that both the consumer has more
faith in the product and the people offering it will know that
their products are both trusted and sought out. That is the
purpose of the bill.
He said Section 1 establishes that portable electronics
insurance is not a service contract. Section 2 adds an applicant
for a license under AS 21.27.150(a)(8); that applies to the
electronics limited producer license. It adds that to the list
of persons to whom AS 21.27.060(d) which requires the successful
applicant for license to sell insurance, to pass an examination.
It means that the person selling insurance under these
circumstances doesn't need to passing an examination.
Section 3 adds a vendor that sells or offers portable
electronics insurance to the list of persons to whom the
director of the Division of Insurance may issue a license, in
this case, a portable electronics limited producer license. This
section also allows an employee or authorized representative of
the licensee to transact portable electronic insurance at each
site that the licensee does business. Additionally, under this
section, an employee or representative of a licensee need not
themselves be licensed provided certain criteria are met.
Section 4 establishes the conditions under which portable
electronics insurance may be sold and defines the term "portable
electronics insurance" and "vendor" for the purposes of this
section of statute.
At ease from 2:09:11 PM to 2:09:38 PM.
2:09:38 PM
STEVEN MCDANIEL, Asurian Corporation, said are the leading
provider of this mobile device protection in the country and
supported SB 115. He said Asurian has been working with states
across the country to implement a framework for how this product
is offered to consumers and they feel SB 115 is a good balance
between consumer protections. It requires disclosures and
specifically requires refunds to be provided to consumers at any
time when they cancel with pro-rated refunds to be paid. It also
requires training of employees that are offering it. The gist of
the framework is that it creates a license that is done at the
wireless carrier level. So, the AT&Ts of the world will be
licensed to offer the product in their stores. It is consistent
with the national trend because 12 - 14 states currently have a
law similar to this and bills are pending in over 20 other
states.
SENATOR PASKVAN asked what types of disclosures he would be
offering the consumer in Alaska.
MR. MCDANIEL replied one of the disclosures is that it may
provide duplicate coverage, that you can cancel at any time and
the refund requirement, the premium to be paid, the benefits
that are offered under the coverage and any sorts of exclusions
that would apply to coverage under the policy.
SENATOR PASKVAN asked since he said this is a growing trend
nationally, are there greater disclosure requirements under
other state statutory schemes than under Alaska's and if so,
what is it that other jurisdictions have wanted to impose.
MR. MCDANIEL replied that this is model language that is
consistent with the disclosures that are being required in the
other states.
SENATOR GIESSEL asked if this legislation fixes a problem and
what it would be.
MR. MCDANIEL replied that this legislation is to create
regulatory certainty around how the product is offered to ensure
that "fly-by-nighters" stay out of this market and that
consumers know when they purchase a product that at the end of
the day when they make a claim that someone is there to pay it.
SENATOR GIESSEL asked if there have been problems.
MR. MCDANIEL replied there have been no complaints, but it's not
clear how these products should be regulated. It is an approach
that creates an even playing field so that people who come into
the field know the playing rules.
SENATOR GIESSEL asked to have Ms. Hall come forward.
CHAIR EGAN replied certainly.
SENATOR PASKVAN said he still had questions and asked Mr.
McDaniel if he sells his products to all telecommunication
companies. Who is the market and how do they market their
product?
MR. MCDANIEL replied Asurian has relationships with all the
major wireless carriers: AT&T, Verizon and T-Mobile. Their
product is a master policy that is issued to the wireless
carrier and the consumer can choose to enroll under that master
policy. The point of sale is at the wireless carrier.
SENATOR PASKVAN asked if all telecommunication companies in
Alaska are unified in working through Asurian.
MR. MCDANIEL answered that ACS and AT&T are both clients of
Asurian's.
CHAIR EGAN asked if there have been problems in other markets.
MR. MCDANIEL answered no, but this legislation is to assure that
the fly-by-night companies that are pushing them out know that
it's a regulated product.
SENATOR MENARD asked if it's fair to say Asurian is the largest
in the world.
MR. MCDANEL replied yes.
SENATOR MENARD asked if he felt that regulation of this
insurance would somehow lessen the cost of the device.
MR. MCDANIEL replied he didn't think it lessened the cost of the
device, since it is set by the wireless carrier and pretty
heavily subsidized in the carrier's contract.
2:16:35 PM
SENATOR DAVIS said this bill was introduced by this committee,
and asked the chair why he thought it was needed.
CHAIR EGAN replied that carriers in the state were concerned
about people entering the market and trying to sell insurance
from different cell phone providers that aren't affiliated and
the cell phone market is rapidly expanding.
SENATOR PASKVAN asked if this would create monopolistic
capacities for Asurian.
MR. MCDANEIL replied no; they have worked through language with
their biggest competitor to create certainty about how the
product is offered. The bill doesn't provide any financial
obstacles; it just ensures that consumers are made aware of what
they are buying.
SENATOR PASKVAN asked if the contracts Asurian enters into with
the companies are exclusive or can others in the industry also
enter into contracts with them.
MR. MCDANIEL replied when a contract is in place he didn't think
that another provider could be offered in a given state. He
didn't know the exactly if it's state by state or national.
SENATOR GIESSEL said she didn't see this is exclusively for cell
phones; it says "portable electronic devices."
MR. MCDONEIL replied that is right, but the product started with
cell phones.
SENATOR MENARD asked if the cost is under $10.
MR. MCDANIEL replied on average it's from $4 to $7.
SENATOR PASKVAN asked if premium sharing is part of the
contractual relationship.
MR. MCDANIEL replied that the premium passes through to the
insurance company that is underwriting the program.
SENATOR PASKVAN asked if the contractual relationship has any
premium sharing components.
MR. MCDANIEL replied no.
2:21:09 PM
SENATOR GIESSEL asked Ms. Hall if she supported SB 115.
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), replied
she supports the bill. She said she worked with staff and Mr.
McDaniel on it and changed language to better fit into Alaska's
regulatory scheme. The bill's two major parts outline some
consumer protections; one is in AS 21.27, the licensing chapter.
She explained that this licensing pattern kind of replicates
what they do with rental cars where you have an overall vender
who gets a license called a limited lines license, but each
counter person then works under that license rather than having
to go through a continual stream of licensees. So, this vendor
becomes responsible for the behavior of those counter agents.
She said under SB 115 the vendor would have a license with her
department but the people working under that would not be
required to have a license while they are transacting business;
it's an incidental to a different product that they are selling.
But they do have training requirements; they require a register
of all employees working under a license so if she gets a
complaint they know where to go.
MS. HALL said also that Alaska's Trade Practices Act is under AS
21.36 and this is where fraud and misrepresentation are found.
It outlines what has to be disclosed in writing to the consumer
when they enroll in the product. She thinks it's important to
know the premium, what the product covers, how a claim would be
handled, and things like that.
CHAIR EGAN thanked her for testifying and finding no further
comments, he held SB 115 for another meeting.
HB 24-EXTEND REGULATORY COMM. OF ALASKA SUNSET
2:24:58 PM
CHAIR EGAN announced HB 24 to be up for consideration [CSHB
24(FIN) was before the committee].
REPRESENTATIVE OLSON, sponsor of HB 24, said it is a sunset
extension of the Regulatory Commission of Alaska (RCA). The
audit came in with an eight-year extension, but the House
Finance Committee cut it back to four years primarily because
there were a few outstanding recommendations. Chairman Pickett
of the RCA has committed to having those finished next year, but
the upcoming FERC TAPS balancing meetings are at the top of his
agenda for the next two and a half months.
SENATOR PASKVAN asked if the House compressed the period of time
before a decision is rendered or were other issues added in.
REPRESENTATIVE OLSON replied that a bill in his committee
addressed timeline issues, but the RCA unfortunately has an open
docket on that particular utility that has been an ongoing
concern for eight or ten years and he didn't think it would be
appropriate for him to hear the bill until after that docket is
closed out.
He added that two years ago, both he and Representative Seaton
had net metering bills with slightly different spins before the
RCA. Within a day of the RCA opening up a docket on net metering
they pulled the bills, but fortunately all the issues were
addressed.
SENATOR PASKVAN said he was trying to figure out the interim
period of time in the 400-plus day process where the Division of
Regulatory Affairs and Public Advocacy (RAPA), Department of Law
(DOL), participates.
REPRESENTATIVE OLSON responded that he was trying to keep a
clean sunset bill.
2:29:23 PM
SENATOR DAVIS said she wanted to hear about the audit.
2:29:51 PM
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Legislative Affairs Agency, related that they conducted a
sunset review and because the RCA fulfills a public policy need
and serves Alaskans they recommended that the termination date
be extended to June 30, 2019. The prior audit recommended that
RCA develop regulations that would enhance the transparency,
accountability and the efficiency of its decision-making
processes. RCA had partially implemented this recommendation,
but the portion it is still working on is related to developing
the regulations to establish standards for certain aspects of
the discovery process.
In making their eight-year extension recommendation, Ms. Davis
pointed out that there is a new audit requirement associated
with the annual reports of the RCA; in particular Legislative
Audit needs to audit those annual reports every two years.
Included in those annual reports is whether or not the RCA has
met the statutory timelines. This is an opportunity to give the
legislature assurance about whether RCA is meeting its statutory
timeline obligations as well as how they are progressing on
their goals as set up in the Missions and Measures. This is a
way to communicate on a more continual basis with the
legislative with regard to the RCAs activities, which is why
they made the eight-year extension recommendation.
SENATOR DAVIS asked if she still stands by her 2019 date rather
the 2015 date.
MS. DAVIDSON replied that the audit recommended 2019, but it's
always up to the legislature to find its own comfort level in
the extension periods.
SENATOR DAVIS said she wanted to hear from the sponsor about why
they decided on a 2015 extension.
SENATOR GIESSEL asked if Legislative Audit has the authority to
institute the audit of annual reports every two years.
MS. DAVIDSON replied that a bill passed about three years ago
put language in statute for audits of the RCAs annual report to
be done every two years.
2:33:19 PM
REPRESENTATIVE OLSON said he preferred an eight-year extension,
but the House Finance Committee was more comfortable with four
years.
2:34:28 PM
PAT LUBY, Advocacy Director, AARP Alaska, strongly supported HB
24. He said that Alaska needs a regulatory authority that is
independent, fully funded and adequately staffed. The RCA is the
only organization in our state that protects residential and
consumer ratepayers. It's empowered to initiate investigations,
enforce laws and regulations, and his experience with it has
been very positive. They have gone out of their way to have
public hearings in local areas so that the rate paying public
will not have to travel to attend a hearing that deals with
their own utilities. The RCA is the only game in town when it
comes to utility oversight.
SENATOR GIESSEL said when the AARP's letter of support was
written it was for a two-year extension and she wanted to know
if he supported the four-year extension.
MR. LUBY replied that they were actually supportive of the eight
years.
2:36:03 PM
KRISTIN WINTERS, Director, Regulatory Affairs, Golden Heart
Utilities and College Utilities Corporation, stated that along
with their administrative services company, Utility Services of
Alaska, they serve more than 8500 accounts and a population of
more than 50,000 in the greater Fairbanks area. They have been
making these comments many times in past meetings and letters.
They understand that change can be slow, but in the meantime the
absence of change is costly. She said they had filed rate cases
almost annually beginning with test year 1999, again in 2000
with incremental increases approved in 2003 and 2004. They have
filed for test years 2004, 2005, 2006, and 2008 and are required
to file again for test year 2010. The cost drivers behind their
filings have not changed; they still have increasing operating
costs, increasing infrastructure investment needs and their
customer base is not growing. Their neighbor in Anchorage, AWWU,
has testified to the RCA of their need to file rate cases almost
annually, as well, for the very same reasons.
She said they have experienced first-hand the consequences of
regulatory lag resulting from excessively long statutory periods
to resolve rate case filings and they firmly believe that a
reasonable time line for resolution of a rate case is nine
months and that the current process simply expands to fill the
available time.
MS. WINTERS said the rate setting process in Alaska is outdated
and has not evolved to reflect the changing nature of the
utility industry or the rapidly changing economy. According to
the National Association of Water Companies, Alaska's 15-month
statutory timeline in a rate setting filing is the longest in
the nation, and it can be extended as well. Twenty-seven other
states are required to conclude their rate cases in nine months
or less. The length of the entire process is leading utilities
to file "pancaked" rate cases because one case is not resolved
before rapidly escalating costs require a second rate
adjustment. This lag means that the commission has not decided
the disputed issues before the utility files its next rate case.
Thus, in subsequent rate filing, in order to preserve all
rights, the utility includes the disputed issues which then lead
to inefficiencies and increased costs as the parties continue to
debate these undecided issues.
All of this has resulted in rate case costs skyrocketing into
the millions of dollars. For example, circumstance required that
GHU and CUC file a rate case proceeding with the RCA in October
2005 using a required historic test year of 2004. The statutory
timeline of 15 months then started. A final decision was issued
on January 8, 2007 and the resulting approved rates were based
on 2004 costs which no longer reflected current 2007 conditions.
Because of the extreme lag, the utility filed for additional
relief in the meantime in June 2006, which included many of the
disputed undecided issues from the previous case.
2:40:35 PM
She said the excessive length of time to issue an order
determining rates has many negative impacts including increased
costs to the utility and ultimately the rate payer and the
restriction of capital investments to stimulate utility growth
within a community.
MS. WINTERS urged them to support reducing the statutory
timeline for the RCA to issue a final order for a tariff filing
that changes the utilities revenue requirement or rate design
from 450 to 270 days. The commission has stated that the goal of
cost-base rate making is not to cover past costs, but to predict
the rates necessary to yield revenue adequate to cover the
utilities' costs and to provide the opportunity to earn a
reasonable return on investment during the future period when
rates will likely be in effect (from Docket U-05-4344, Order
15). Rapidly rising costs and the need for infrastructure
investment coupled with a statutory timeline of 15 months
precludes the commission from meeting the above stated goal.
MS. WINTERS summarized that this issue is not new and she has
brought it forward many times over the last six years. During
the 2007 legislative session, the RCA chair provided testimony
on HB 209 stating that the RCA considered the issue of reducing
the regulatory lag to be very important and that the RCA fully
intends to move forward on the docket to shorten the timelines
as the public utilities and public advocate recommends. But , it
is now 2011 and the statutory timeline has not been considered
and the issue of regulatory lag has not been resolved. The
continued health of the state's utilities balanced with
providing protection to the ratepayer demands that this issue be
addressed.
2:42:41 PM
SENATOR DAVIS asked if another bill in the House is addressing
this issue.
MS. WINTERS replied yes, but according to Representative Olson,
he does not see forwarding that bill at this time to be
appropriate.
SENATOR DAVIS said she knew one was over there and the Senate
doesn't have one like it.
MS. WINTERS replied there is one in the House but they are
trying this avenue on the Senate side.
SENATOR DAVIS said she thinks this issue is valid and should be
addressed, but she wasn't sure it needed to be in this bill,
because it is just an extension.
MS. WINTERS responded that the purpose of a sunset review is so
issues can be aired and it is in the public's interest and that
of their ratepayers to reduce the costs.
SENATOR DAVIS said she appreciates the fact that she is here
putting the issue before them.
2:45:20 PM
SENATOR PASKVAN asked her to explain the "interim step."
MS. WINTERS replied that the current statutory timeline is now
450 days. The commission typically takes the first 45 days to
review the filing before them and make a determination whether
or not they are going to approve the filing, reject it or
suspend it for further investigation. If they suspend it for
further investigation, interveners (if any) are then asked to
come forward. Typically the Regulatory Affairs Public Advocacy
Group in the Attorney General's Office comes forward and
intervenes in the docket. They are the ones, then, that do the
full review of the filing before the commission. This is where a
majority of the time is taken. A discovery process is followed;
they can ask discovery questions to which the utility has 10
days to reply. Then they file their testimony and make
recommendations. The commission then reserves the last 90 days
of the hearing process to review all of the evidence before them
and make their decision. So, by reducing the timeline from 450
days to 270, the commission would still have the first 45 days
for review and the last 90 days for review of the evidence.
However, the time in the middle would be shortened; this is
where costs can escalate, because as a quasi-judicial process,
they hire attorneys, they carry the burden of proof, they hire
expert witnesses; RAPA hires witnesses as well.
2:48:27 PM
BOB PICKETT, Chairman, Regulatory Commission of Alaska (RCA),
gave a brief overview of the commission saying he would address
previous comments after that. He said they are a five-member
commission, an independent agency in the Department of Commerce,
Community and Economic Development (DCCED). All of the
commissioners are appointed for a six-year term by the governor
and confirmed by the legislature. They regulate utilities and
pipeline companies in the state under AS 42.05, the Utilities
Act, and AS 42.06, the Pipeline Act. they also have other
responsibilities, for example, relating to the Power Cost
Equalization Program (PCE) with the Alaska Energy Authority and
with a wide range of enterprises from electric utilities,
natural gas distribution, water/sewer companies, a variety of
telecommunications. It's fair to say at this point that they
have as many challenges as the APUC or the RCA has ever had.
Some of the major issues before them are looking at $1.5 billion
in capital investment by utilities in the Railbelt, alone. Those
decisions are being made as they sit here; some have already
been made. Over the next 36 months the rate making environment
will be shaped for probably the next 20-30 years, he said, and
that will have a direct impact on ratepayers pocketbooks, the
health of the utilities and many of the issues Ms. Winters
identified. This applies to a variety of other utilities, too.
MR. PICKETT said of all the things before them, the TAPS rate
case is "front and center." There are 12 rate cases currently
with strategic reconfiguration. In 2003 the commission worked
out an MOU with the Federal Energy Regulatory Commission (FERC)
with the idea they would coordinate and consolidate their
proceedings to avoid duplicative expense for the pipeline
carriers to the greatest extent possible. hearings in Washington
D.C. and Anchorage happen this fall and will be quite important
to the future of the TAPS.
He said he didn't disagree with many of the things Ms. Winters
said. He was appointed to the commission in January of 2008, but
he has become familiar with some of the later rate cases. He is
restricted with certain things he can say about a remand from
the Superior Court so he can't get into those details. He
couldn't say that he supports or opposes a reduction of the
statutory deadline from 450 to 270 days or to 280 as some states
have, but he could say that it's important to "unpack" and
identify the reasons for these frustrations and delays.
MR. PICKETT said obviously the RCA is not the only player and
doesn't have total control under the current statutes over all
the moving pieces. They are called to be the final judge and to
balance the interests and contrary to what some folks think,
it's not always the lowest rates that they think about. They are
very concerned with healthy utilities along with just and
reasonable rates; the public has to have confidence in the
process. They are currently involved with discovery regulations
and that's a very interesting process they will be reporting to
the legislature on.
He said from a regulatory paradigm standpoint, the commission
can do some things and it has started an inquiry to look at how
other states handle some of the things that have been litigated
in the past few years to get to where litigation is the last
thing to use. Mediation works in many cases.
Things can change, Mr. Pickett said. When he first came on the
commission, there was an extended period of time where no gas
supply agreements were approved and that was after very
expensive litigation. But over the past couple of years, even in
the tariff period, they have been able to approve five
contracts.
MR. PICKETT said he strongly supported HB 24 and would be happy
to answer questions.
2:54:28 PM
SENATOR MENARD said she was still trying to understand what Ms.
Winters said about the 90 days being the most difficult time and
asked him to argue the point that Alaska has the longest wait
for resolution in the nation.
MR. PICKET replied that that 450 days appears to be the longest
time for resolution in the nation.
SENATOR MENARD said everyone knows that government tends to move
slow and that the RCA had recently lost some long term employees
and realizes that it is reasonable for him to ask for more
people.
MR. PICKET responded that he thinks they have to look at the
regulatory process as a system; there is a 45 day period at the
front end that they are in total control over, then there is the
90-day period reserved for adjudication and writing a "sound
order," but the period in-between would take cooperation of all
the parties and identification of how they are approaching the
public interest - because at the end of the day, the public has
to have confidence in this process.
SENATOR GIESSEL said she appreciates the work the RCA does in
protecting the public and yet at the same time an expedient
regulatory process also protects the public. So she sees that
some balance needs to be achieved. Perhaps his task is too large
and maybe he needs more staff - something they should look at -
with the purpose of protecting the public.
MR. PICKETT responded that staffing is part of it. An RCA task
force several years ago addressed some of the staffing issues.
Unfortunately, those recommendations weren't fully addressed,
but with a new commissioner and deputy commissioner at the
Department of Administration (DOA) he saw some positive movement
and he hoped that would continue. But sometimes it's not just
throwing more people at it; it's stepping back and asking if
what they are doing actually makes sense. In litigation lawyers
strongly influence how the process unfolds and in some cases it
is absolutely necessary. It probably isn't appropriate in all
cases, and he thought they needed to figure out how those things
get sorted out through a rule making process. One of the
commissioners was sent to California last fall to see how they
approach water and sewer utilities and how they can be settled
through arbitration.
2:59:54 PM
SENATOR GIESSEL said she thought California may be the worst
place to go.
MR. PICKETT said he understood her apprehension and had similar
thoughts, but California has some processes for smaller water
utilities that make some sense.
SENATOR PASKVAN said it seems to him that it's the 315-day
interim, RAPA's portion, of the 450 day process that is the
problem and asked what communications have transpired between
him and the Department of Law (DOL) over the years on how to
improve the process from their end.
MR. PICKETT answered that the communication at front end with
RAPA is typically they are invited to participate in certain
dockets of critical public importance. But in a sense if it goes
to suspension, they just become another party in the eyes of the
commission. So, they aren't really communicating. RAPA is
critical and also has staffing constraints.
SENATOR PASKVAN made an "attorney comment." The RCA is the final
decider, but it seems like the 315-day RAPA process is where the
due process component of the entire procedure is played out. The
question is how much due process is appropriate. If the process
is working better elsewhere, that is where Alaska should find a
better way to do that portion of the process.
MR. PICKETT agreed with that, but added that it starts with the
statutes and the regulations that the commission promulgates to
implement those statutes and RAPA has to stay within those
boundaries. It would behoove them "to sort of step back and
look." Last fall they had a series of public meetings with
different industry groups trying to identify specific regulatory
or statutory conflicts. A couple of areas came up, but it was a
little disappointing because people were used to a certain way
of doing things.
SENATOR MENARD said that it's to the detriment of people who are
suffering because the time isn't shortened and that could be
done legislatively.
3:05:14 PM
MR. PICKETT said he thought the sunset is an appropriate time to
discuss these issues.
SENATOR MENARD asked if he supported bill.
MR. PICKETT answered that he supported the part that extends the
commission.
CHAIR EGAN asked if he supported the extension to 2019 if that
happened.
MR. PICKETT replied yes.
CHAIR EGAN said he would hold HB 24 and take it up again at a
later date.
HB 130-RESIDENTIAL SPRINKLER SYSTEMS
3:08:02 PM
CHAIR EGAN announced HB 130 [CSHB 130(L&C), 27-LS0332\B] to be
up for consideration.
REPRESENTATIVE OLSON, sponsor of HB 130, explained that this
measure died in both the House and Senate with exactly the same
verbiage last session. He acknowledged that the heavy work on
this bill wasn't done by him but by one of the members of his
committee and one in the House that were able to work out a
reasonable agreement amongst the State Realtors Association, the
State Fire Chiefs Association and the Homebuilders Association.
It establishes a noticing requirement on any municipality that
switches over to mandating sprinklers in one and two-family
dwellings. The intent of the law is to get the community to be
aware of any changes to the building code. He said the "heavy
lifting" on this bill took the entire session last year for a
final agreement, but it is extremely non-controversial this
year.
3:10:39 PM
PAUL MICHELSOHN, Alaska State Home Building Association, said
they support HB 130. He said that 42 other states have passed
similar legislation and three others are in the process.
CHAIR EGAN closed public testimony and said HB 130 would be held
for another meeting.
3:12:14 PM
Finding no further business to come before the committee, Chair
Egan adjourned the meeting at 3:12 p.m.
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