02/16/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| SB149 | |
| SB175 | |
| SB25 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 125 | TELECONFERENCED | |
| += | SB 149 | TELECONFERENCED | |
| *+ | SB 175 | TELECONFERENCED | |
| *+ | SB 25 | TELECONFERENCED | |
| *+ | SB 174 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 16, 2012
1:33 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Joe Paskvan, Vice Chair
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
Senator Linda Menard
COMMITTEE CALENDAR
SENATE BILL NO. 125
"An Act relating to certain vehicles, including trailers; and
relating to motor vehicle dealer advertising, motor vehicle
dealer sales of used motor vehicles, motor vehicle sales
contracts, motor vehicle service contracts, and motor vehicle
sales financing."
- MOVED SB 125 OUT OF COMMITTEE
SENATE BILL NO. 149
"An Act providing a tax credit for certain contributions to a
qualified dog mushing corporation."
- MOVED SB 149 OUT OF COMMITTEE
SENATE BILL NO. 175
"An Act relating to the practice of naturopathy; and providing
for an effective date."
- HEARD & HELD
SENATE BILL NO. 25
"An Act relating to participation by the Alaska Industrial
Development and Export Authority in energy projects."
- HEARD & HELD
SENATE BILL NO. 174
"An Act requiring certain employers in the oil or gas production
industries to report certain job opportunities to the Department
of Labor and Workforce Development as public information and
requiring that information to be posted on the Alaska Online
Public Notice System; and adding to the duties of the Alaska
Workforce Investment Board."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 125
SHORT TITLE: MOTOR VEHICLE TRANSACTIONS
SPONSOR(s): SENATOR(s) MEYER
04/12/11 (S) READ THE FIRST TIME - REFERRALS
04/12/11 (S) TRA, L&C
02/02/12 (S) TRA AT 1:00 PM BUTROVICH 205
02/02/12 (S) Moved SB 125 Out of Committee
02/02/12 (S) MINUTE(TRA)
02/03/12 (S) TRA RPT 5DP
02/03/12 (S) DP: KOOKESH, HUGGINS, MENARD, THOMAS,
EGAN
02/09/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/09/12 (S) Heard & Held
02/09/12 (S) MINUTE(L&C)
02/16/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 149
SHORT TITLE: TAX CREDIT FOR DONATIONS TO DOG MUSHING
SPONSOR(s): SENATOR(s) THOMAS
01/17/12 (S) PREFILE RELEASED 1/13/12
01/17/12 (S) READ THE FIRST TIME - REFERRALS
01/17/12 (S) L&C, FIN
02/09/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/09/12 (S) Heard & Held
02/09/12 (S) MINUTE(L&C)
02/16/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 175
SHORT TITLE: PRACTICE OF NATUROPATHY
SPONSOR(s): SENATOR(s) MCGUIRE
01/25/12 (S) READ THE FIRST TIME - REFERRALS
01/25/12 (S) L&C
02/07/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/07/12 (S) Heard & Held
02/07/12 (S) MINUTE(L&C)
02/09/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/09/12 (S) Heard & Held
02/09/12 (S) MINUTE(L&C)
02/16/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 25
SHORT TITLE: AIDEA SUSTAINABLE ENERGY PROGRAM
SPONSOR(s): SENATOR(s) MCGUIRE
01/19/11 (S) PREFILE RELEASED 1/7/11
01/19/11 (S) READ THE FIRST TIME - REFERRALS
01/19/11 (S) L&C, FIN
02/08/12 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
02/08/12 (S) L&C, FIN
02/16/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR MEYER
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 125.
DANA OWEN, Staff
Senate Labor and Commerce Committee
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained the CS to SB 125.
DR. CAROLYN BROWN, M.D.
Douglas, AK
POSITION STATEMENT: Commented on SB 175.
DR. BOB URATA, M.D.
Juneau, AK
POSITION STATEMENT: Testified against SB 175.
DR. ELIZABETH ROLL
Bethel, AK
POSITION STATEMENT: Opposed SB 175.
JENNIFER YOUNG, representing herself
Chugiak, AK
POSITION STATEMENT: Supported SB 175.
DANIEL YOUNG, N.D.
Eagle River, AK
POSITION STATEMENT: Supported SB 175.
DR. JOSEPH ROTH
Valley Medical Center
Juneau, AK
POSITION STATEMENT: Opposed SB 175 because of ambiguous wording.
DR. LAWRENCE SMITH, M.D.
Eagle River, AK
POSITION STATEMENT: Opposed SB 175.
DR. MARY FOLAND
President, Alaska State Medical Association
Past President, Alaska Academy of Family Physicians
POSITION STATEMENT: Opposed SB 175.
JIM JORDAN, Executive Director
Alaska State Medical Association
POSITION STATEMENT: Commented on SB 175.
AMY CHADWICK, N.D.
Palmer, AK
POSITION STATEMENT: Supported SB 175.
CHRISTIN COX, N.D.
Juneau, AK
POSITION STATEMENT: Supported SB 175.
SENATOR LESIL MCGUIRE
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 25.
MICHAEL PAWLOWSKI, Staff
Senator Lesil McGuire
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained SB 25 and the sponsor substitute
for the sponsor.
JOE GRIFFITH, General Manager
Matanuska Electric Association (MEA)
President, Arctec Alaska, Inc.
Palmer, AK
POSITION STATEMENT: Supported SB 125.
BOB GRIMM, CEO
Alaska Power and Telephone (AP&T)
Port Townsend, WA
POSITION STATEMENT: Supported SB 125.
MARK DAVIS, Economic Development Officer
Alaska Industrial Development and Export Authority (AIDEA)
Juneau, AK
POSITION STATEMENT: Supported SB 25.
DUFF MITCHEL, Executive Director
Alaska Independent Power Producers Association
POSITION STATEMENT: Supported SB 25.
PETER NAOROZ, President/General Manager
Kootznoowoo, Inc.
Juneau, AK
POSITION STATEMENT: Supported SB 25.
BOB LOESHER
Alaska Technology Development Group
Alaska
POSITION STATEMENT He supported SB 25.
ACTION NARRATIVE
1:33:44 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Giessel, Paskvan, and Chair Egan.
SB 125-MOTOR VEHICLE TRANSACTIONS
1:35:40 PM
CHAIR EGAN announced SB 125 to be up for consideration.
SENATOR MEYER, sponsor of SB 125, said a good job of reaching a
balance between the auto dealers, the consumers and the Attorney
General's Office had been done with this bill and he was
available for questions.
SENATOR PASKVAN moved to report SB 125 from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
1:36:31 PM
At ease from 1:36:31 to 1:38:03 p.m.
SB 149-TAX CREDIT FOR DONATIONS TO DOG MUSHING
1:38:03 PM
CHAIR EGAN announced SB 149 to be up for consideration.
1:38:17 PM
SENATOR DAVIS joined the committee.
CHAIR EGAN, finding no further questions, asked for a motion.
SENATOR PASKVAN noted for the record he was a lawyer for the
Yukon Quest for many years and sat on the Board of Directors.
With that, he moved to report SB 149 from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
1:39:50 PM
At ease from 1:39:50 to 1:40:47 p.m.
SB 175-PRACTICE OF NATUROPATHY
1:40:47 PM
CHAIR EGAN announced SB 175 to be up for consideration.
SENATOR PASKVAN moved to bring CSSB 175(L&C), version \B, before
the committee [labeled 27-LS1230\B].
CHAIR EGAN objected for purposes of public testimony.
DANA OWEN, staff to the Senate Labor and Commerce Committee,
explained that the committee substitute (CS) inserts Senator
Giessel's amendment from the last hearing. The intent is to
bring statute in line with its original intent.
CHAIR EGAN asked where the amendment was located.
MR. OWEN replied in the second section of the bill.
SENATOR PASKVAN said his understanding is that section 2 returns
the practice to what has historically been done for the last 18
years.
MR. OWEN replied the intent of the amendment was to bring into
statutes the language that was originally covered in regulation.
However, Senator Giessel asked to have several words struck from
her original amendment and the final version of the amendment
that includes those changes.
SENATOR GIESSEL explained that the amendment, on page 2, line 1,
says, a "dietetic remedy" but in regulation it says "dietetic
substance". She changed "substance" to "remedy", but then all of
section (c), lines 3-13, were the amendment. She removed "or
other natural substance" that was in regulation because it
seemed to be a source of confusion.
SENATOR PASKVAN said removing that phrase doesn't change the
practice over the last 18 years.
SENATOR GIESSEL replied that was her discussion with Dr. Jasper
who felt it did not change the practice.
1:45:20 PM
At ease from 1:45:20 to 1:46:11 p.m.
1:46:11 PM
DR. CAROLYN BROWN, M.D., Douglas, said she practices clinical
obstetrics and gynecology, public health and preventive
medicine. Naturopaths have indicated that this measure is needed
because some pharmacies have recently refused to supply them
with natural or herbal medicines and that they are doing so
because of instructions from the Alaska Division of
Corporations, Business and Professional Licensing. That struck
her as a bit unusual and in the spirit of transparency and lack
of any stated documentation of facts or other data that she
could find, she thought it would be good to find just what the
nature of the problem is.
She said Senator McGuire indicated that SB 175, would not expand
the scope of practice, but rather protect the practice. She
asked what needs protection in statute that is not provided in
regulatory language that has an 18-year history.
DR. BROWN said of the thousands of biopharmaceuticals, many are
from concentrates and extracts for which the Food and Drug
Administration has authority and it would be very helpful to
know which specific drugs, medicines and pharmaceuticals the
naturopaths wish to have prescriptive authority for. Do they
want prescriptive authority for everything in the Physician Desk
Reference (PDR)? Almost everything in the PDR has at one time
been a natural drug. She said there is a lack of documentation
about why a change in statute or regulation is really needed.
1:53:23 PM
DR. BOB URATA, M.D., Juneau, testified against SB 175, because
it would expand the scope of practice of naturopathy by giving
them prescriptive authority for prescription drugs. Because it
isn't specific and could be interpreted broadly, they will be
able to prescribe penicillin and cephalosporin antibiotics which
are derived from fungus, streptomycin and genomycin,
tetracycline antibiotics and the macrolide antibiotic which come
from the actinomycetes fungus. He mentioned other FDA-controlled
medicines that could be prescribed by naturopathic doctors if
this passes, which is not the intent of this bill.
DR. URATA said some of his patients go to naturopaths and that
is fine with him, but he did have patient once on a strong
chemotherapy drug for cancer. During the time when his white
blood cell count was at its lowest he was getting colonics from
naturopathic doctor to reduce its side effects. This is a
dangerous procedure and unfortunately it caused a serious blood
infection called Sepsis, requiring the patient to get
hospitalized. He has done well, but ever since he asked patients
not to get colonics while they are on chemotherapy. Patient
safety must be the utmost concern in this bill. This means
doctors of any kind must practice within the scope of their
education, training and experience, and allowing naturopathic
doctors to prescribe prescription drugs controlled by the FDA is
a dangerous expansion of their scope of practice.
SENATOR PASKVAN said he understands that pharmacies have stopped
distributing products to naturopaths in a manner they had done
for the prior 18 years and asked if that was his understanding
as well.
DR. URATA replied that he wasn't familiar with that.
SENATOR GIESSEL asked if he was the person prescribing the
oncologic drug.
DR. URATA replied yes along with the oncologist; family practice
doctors work with closely with the specialist in order to
provide the care patients need rather than having to move out of
town away from their homes, friends and support.
SENATOR GIESSEL said access to care is the key.
DR. URATA agreed.
1:58:19 PM
DR. ELIZABETH ROLL, Bethel, said she is a family practice
physician and opposed SB 175. She said naturopathic doctors
should not be able to prescribe drugs that are regulated by the
FDA, because they have not had the training in them. She said
the intent of the bill is not to expand their scope of practice,
but that is exactly what it does. It doesn't clarify what drugs
they could and couldn't prescribe. She had seen several
instances where bad things had occurred.
SENATOR PASKVAN asked if she was aware that pharmacies stopped
distributing products they were distributing for the last 18
years.
DR. ROLL replied that she hadn't heard that.
2:01:01 PM
JENNIFER YOUNG, representing herself, Chugiak, said she is a
cardiac nurse and a patient of Dr. Daniel Young; she said she
sees the benefits of both allopathic and naturopathic medicine.
Often she thinks having both would make a patient's outcome
better than using just one of them. Naturopathic doctors in this
state have had rigorous training in order to serve their
patients, and she asked that they be allowed to use the tools of
their trade to give Alaskans health care choices. Without
putting this regulation into law their choices will become
severely limited.
She said she is married to Dr. Young who is a naturopath and had
been helped by naturopathic medicine. What bothers her is that
medical doctors don't have the training in natural substances
that naturopathic physicians do and that these are very helpful
and the choice of many people who need care. That choice should
not be taken away because of fear and bias.
2:03:24 PM
DANIEL YOUNG, N.D., said he had practiced in Eagle River for 17
years and supported SB 175. He said it is disturbing that
another profession can "just dictate" what another profession
does. He has 26 years of education and attended a naturopathic
medical school that is accredited by the Council of Naturopathic
Medical Education that is overseen by the U.S. Department of
Education. This is the same body that accredits allopathic and
osteopathic medical educations. There is no doubt that
naturopathic doctors are the experts in the practice of their
naturopathic medicine.
MR. YOUNG said naturopaths have practiced in Alaska for 26 years
and have an excellent safety record. The current statute is not
a good one, but they have made due. On several occasions over
the past few years they have tried to make it commensurate with
their education only to be stonewalled by the opposition that
disseminates misinformation based on opinion, bias, ignorance
and fear. This bill does nothing more than preserve the current
practice of naturopathic medicine in Alaska and allows the
thousands of patients they serve to continue their right to
choose their form of medicine.
Naturopaths practice from their heart a medicine that they
believe in and know will work and improve the lives of their
patients. Naturopathic medicine is safe and effective and
affordable. They do not wish to write for antiquated natural
substances such as penicillin or digitalis, quinine or some
anticancer medications because quite frankly they have better
things to offer.
2:06:11 PM
DR. JOSEPH ROTH, Valley Medical Center, said he is a family
doctor in Juneau. He said he was against SB 175 mainly because
the prescriptive substance wording is very ambiguous.
SENATOR PASKVAN asked if he was aware that pharmacies are not
distributing the products they had been distributing for the
last 18 years.
DR. ROTH replied that he was not aware of that, but wasn't
surprised. He knows from some of the committees he sits on at
the hospital that there are concerns about "creep" of what
naturopaths are starting to prescribe and that their level of
education isn't appropriate for, like digitalis and synthroid, a
thyroid medication.
SENATOR PASKVAN asked if he knew the source of the pushback.
DR. ROTH replied that he didn't, but one of his committees had
to review a complaint about a naturopath for using a substance;
he didn't know if it was from a group or an individual.
DR. LAWRENCE SMITH, M.D., Eagle River, said he had served as a
physician in the Army and for Alaska Native Health Care and
continues to serve in private practice in his community now. He
said he didn't hold any animosity toward those practicing
naturopathy, but he wanted to urge them to carefully consider
the wording of SB 175. The word "prescription" can mean many
things. It's generally considered an order or a request to
another party to respond by fulfilling that request. It can
range from a prescription for eye glasses to recommendations for
an exercise or wellness program.
DR. SMITH said he believed that the prescribing of drugs and
pharmaceutical preparations that require a prescription should
be limited to those whose training is designed for such a
practice and that allopathic training provides for the
prescribing of such medications. He didn't presume to have the
knowledge of naturopathic preparations to the same degree as
those trained in naturopathic medicine and makes no such claims
to his patients. Likewise, if individuals want to prescribe or
dispense prescription medications, they should attend medical
schools that confirm an M.D. or a D.O. degree.
He didn't think that "naturally derived substances" was
adequately defined as many drugs that require prescriptive
authority have their basis in naturally occurring substances. If
the FDA or the DEA requires a prescription to be written in
order for a substance to be dispensed, then this should be left
in the hands of those trained in allopathic medicine. Ultimately
their main concern should be for patient care. Patients make
many choices about where to receive care and limitations need to
exist on scope of practice and delivery of care for all levels
of health care providers.
He urged them to not blur the lines of distinction past the
point of safety for patients and said that limiting naturopaths
to natural substances is a step in the right direction.
2:12:15 PM
DR. MARY FOLAND, President, Alaska State Medical Association,
said she is a family practitioner and works at Primary Care
Associates in Anchorage. She said she is a past president of the
Alaska Academy of Family Physicians; both of those have the
health of Alaskans as their primary concern. She said not to
interpret the lack of calls and letters from physicians and
patients as disinterest in this bill that has the potential to
have tremendous and irreversible impact on patient safety. It is
not an issue of turf protection or competition.
DR. FOLAND said the stated goal of this bill to preserve the
status quo is not as straight forward as it seems, but its
language would actually expand the prescriptive privileges
beyond what is currently legal and to a nebulous limit. The
phrase "any natural substance" is vague and includes things that
were mentioned already. It would be helpful to have a "wish
list" of what naturopaths want to prescribe and then doctors
could evaluate and research each thing on that list
scientifically.
She has heard of vitamin B12, Vitamin C, saline and capsaicin in
certain percentages, and the general opinion of the doctors she
has talked to is that those would be fine. Medications listed by
the FDA as prescription drugs, which by definition require a
prescription by a licensed physician, would not be okay. It has
never been the intent of the State Medical Association or the
Academy of Family Physicians to restrict or shut down the
practices of naturopaths. They really want to clarify what
substances specifically can be used within an appropriate scope
of practice for future reference.
2:17:11 PM
SENATOR PASKVAN asked if she was aware that other natural
substances language had been removed.
DR. FOLAND replied yes; but there is still room for
clarification.
SENATOR PASKVAN asked if she was aware that pharmacists are not
distributing products as they have done over the last 18 years
with respect to naturopaths.
DR. FOLAND replied yes.
SENATOR PASKVAN asked what the reason is for pharmacies to stop
doing that.
DR. FOLAND replied when the Division of Corporations, Business
and Professional Licensing was looking into the issue, they
found prescriptive practices that made them uncomfortable.
SENATOR PASKVAN asked if she was saying the source of the
pharmacies ceasing to distribute products is the division.
DR. FOLAND replied that was her understanding.
SENATOR DAVIS asked her to expand on what the division did. They
had the information, and what did they do when they found out?
Did they tell her, or did they send letters out to stop the
practice?
DR. FOLAND replied that she just heard that in the last week's
testimony.
SENATOR DAVIS said they had asked the division and they denied
it and asked Dr. Foland if she had inside information.
DR. FOLAND replied that she didn't have inside information. She
just listened to the previous hearings on the bill.
SENATOR DAVIS said she understood that Dr. Foland was told there
was reason why the division had a concern and that something was
sent out. Therefore the prescriptions were not filled for
naturopaths.
DR. FOLAND said the only information she has is from listening
to testimony at the previous hearings.
2:20:20 PM
JIM JORDAN, Executive Director, Alaska State Medical
Association, said he hadn't seen the CS to SB 175, so he didn't
want to offer an opinion on it. But he did suggest defining
"prescription drug" using the definition found in FDA statutes
and regulations, because it would make their application more
consistent between the medical community and the pharmacies.
2:22:07 PM
SENATOR GIESSEL said the reference to prescription drug occurs
in things that a naturopath cannot do and the CS might assuage
some of his concerns.
MR. JORDAN responded that he also believed that the FDA
definitions would apply to other areas of drugs that do not need
prescriptive authority.
2:23:21 PM
AMY CHADWICK, N.D., Palmer, said a naturopath's
education is extensive in human anatomy, physiology, disease and
the use of natural medicine and all they are asking for is to
maintain the current standard of practice they have had for the
last 18 years, not expand their scope of practice. She remarked
that many of the examples of medications used here were
antiquated and wouldn't be used anyway by a responsible
physician.
2:24:28 PM
CHRISTIN COX, N.D., Juneau, said she has practiced safely in
Juneau for the last 10 years under the current statute and
regulations and they are just trying to move current regulations
into statute. None of the horror stories have come to pass for
the last 18 years, and she did not see why anything would change
from moving regulation language into statute.
MS. COX said she has served 564 patients in the City of Juneau
safely without any problems. It's frustrating that in a day when
people need access to safe, affordable, health care that they
are fighting to preserve their already limited scope of
practice. A Wall Street Journal article said that there will be
a shortage of 30,000 general practitioners in the U.S. in the
next couple of years. The reason there is a shortage is because
general medicine doesn't pay like specialties do. Naturopathic
doctors choose to be general practitioners, and they go into
this field knowing they will never make the kind of money that
medical doctors do, and they provide access to care that
patients don't otherwise have and oftentimes can't afford.
CHAIR EGAN closed public testimony saying he would hold this
bill until Tuesday.
SENATOR PASKVAN said he was willing to pass it today, but if
they wait until Tuesday, his focus would be on getting some
answers from the Division of Corporations. He said:
I'll make it even a little more focused. In other
words, my perception is that the pharmacies have
ceased distributing products to naturopaths as they
have done for the last 18 years. If the division
hasn't done anything to correct what appears to be a
wrong, then the question is how long do they do
nothing before they become an active participant in
that wrong. That's the first question, and then the
second question is how long can the division do
nothing before their plausible deniability erodes to
nothing. I want to have answers to those questions.
CHAIR EGAN said he wanted Mr. Habegar and Ms. Chambers back on
Tuesday to answer questions that have been brought up twice.
[SB 175 was held in committee.]
SB 25-AIDEA SUSTAINABLE ENERGY PROGRAM
2:29:44 PM
CHAIR EGAN announced SB 25 to be up for consideration [SSSB 25,
labeled 27-LS0290\D was before the committee].
SENATOR MCGUIRE, sponsor of SB 25, said they initially
envisioned this as being part of their Senate's energy package
that it passed; it's a missing link.
She said they created the wildly successful weatherization and
home energy rebate program that focuses on individual Alaskans
and their residences; the feedback has been wonderful from
Alaskans who have become educated about energy conservation.
They have also created a renewable energy grant fund that
started helping particularly smaller communities transition to
cleaner sustainable energy that is non-diesel and hopefully will
help them survive into the next 100 or 200 years. They also
passed an energy omnibus bill that created an emerging energy
technology fund and a suite of programs that are now really
starting to take effect.
When they went over the energy package, she came at it from a
few angles: direct grants as in the emerging energy technology
fund, direct partnerships as in the weatherization program, and
a loan component with commercial loans in other areas. But SB 25
is really the missing piece in order to get more energy
infrastructure and projects going in the state.
SENATOR MCGUIRE said they had also rejuvenated the Cook Inlet
with new tax incentives and started work on an in-state gas
pipeline and the Susitna dam. But Alaskans know the energy
challenges are still as dire as ever and this year the average
price of oil is the highest it has been since 1860. While the
state enjoys its surpluses, Alaskans continue to be strangled by
these energy costs.
She said she introduced SB 25 because she believes they have an
opportunity to put some of the state's savings to work in Alaska
by making capital available for energy projects. Today utilities
and developers borrow money from out of state when they can get
the credit to build projects and they must pay interest to
investors which everyone ultimately pays in their rates. Then
they leave Alaska. SB 25 is not just about getting more energy
projects in Alaska, but it's also about getting Alaskans to
invest in Alaska. Currently those loan interest payments are
paid to out of state corporations, but why not leave them here
at home inside AIDEA which pays back dividends to the state that
go into the general fund?
SENATOR MCGUIRE said the state invests its surpluses and savings
in stocks, bonds, real estate and infrastructure outside of the
state in the Permanent Fund. Alaska is a big facilitator of a
lot of energy projects throughout the U.S. and the world, but
not right here in our own state. She noted that Territorial
Governor Ernest Gruening recognized this fundamental problem
with Alaska's economy when he said, "Too much is going out and
not enough is staying here in Alaska."
She said she introduced SB 25, Alaska's Sustainable Strategy for
Energy Transmission and Supply (ASSETS), to try to chip away at
this colonial model Alaska is still stuck in 52 years after
statehood. She said to her AIDEA has been the most successful of
all the state's investment programs. It has returned almost the
entire principle of $390 million. Last year alone it returned
almost $28 million. So she decided to put this energy program to
work under that rubric as opposed to AEA or some other agency,
because it has a credit worthy sustainable model.
2:35:04 PM
MICHAEL PAWLOWSKI, staff to Senator McGuire, said he would hit
the highlights of his power point presentation on SB 25 that was
also available in members' packets. He said the reports they
gave the committee are largely energy reports that identify a
lot of projects, but this bill does not endorse any particular
project. It is about how to finance all and any projects and to
let the best ones move forward.
He said the basic challenge is that a lot of money will have to
be spent in the next 10 years on energy in the state of Alaska.
The pathway document was prepared in 2010 and identified almost
$2 billion in capital spending in the next 10 years. The Greater
Railbelt Integrated Resource Plan (GRETC) identified between
$13.6 and $21 billion in spending over the term of that
document. The recently released Southeast Integrated Resource
Plan identified up to $1.4 billion in relative near term
spending that has to happen. The point of these reports is to
point out that a lot of investment will need to be made in
energy infrastructure, and the question before the legislature
is whether, given declining oil production, the available
revenue is enough to help these projects go forward.
MR. PAWLOWSKI said this became a larger issue because last year
this body included language in the capital budget that
explicitly expressed legislative intent that the state's capital
investment in energy generation projects not exceed 50 percent
of the total investment required to fully complete those
projects. That means 50 percent of the project will have to be
borrowed and financing has been identified as one of the
greatest challenges facing the energy system in the state.
There is a huge gap between what is needed and what can be
financed, the point being that with the small population and
with a limited rate base, the capital expenditures will exceed
the Railbelt's debt capacity. Financing is an important part of
the revenue stream in any energy project. For instance, the debt
service on a 100 percent debt financed Southeast hydro-project
is 78.1 percent of the revenues. All the rates the consumers pay
go to paying debt service and that money leaves the state.
ASSETS says this is a big problem and the legislature has said
tackle it and provide an upper limit on grants and go forward.
MR. PAWLOWSKI said the governor and the legislature tried to
deal with this a few times but were unsuccessful in a couple of
bills. SB 143 tried to get the Railbelt together and offer some
financing, but failed to pass in 2009/2010. The governor then
brought in SB 42 last year that had increased financing
authorities for AEA, but those were taken out in the Senate
Resources Committee and the bill ultimately passed the
legislature but was limited to a Susitna dam power project. SB
25 was introduced at the same time SB 42 was but was deferred
until SB 42 worked its way through the legislature.
Now that the financing gap still exists, he said a sponsor
substitute for SB 25 was introduced and brought forward. The
back three sections are probably the most important - 10, 11 and
12 - but the earlier sections are a lot of conforming language.
First, Mr. Pawlowski said, SB 25 creates the Sustainable Energy
Transmission and Supply Development Program and Fund (SETS)
within the Alaska Industrial Development and Export Authority
(AIDEA) (Sections 10 and 11). The bill proposes that the SETS
fund be capitalized with $250 million (in section 2). This
becomes the core capital that becomes the money that AIDEA can
borrow against or lend out to energy projects. Then the larger
portion of the bill in section 3 is conforming language adding
the word "energy" into AIDEA's enabling statutes about their
mission to clarify that the legislature is asking AIDEA to take
an active role in energy as an economic development tool.
Section 6 makes changes to the loan participation program and
this section is intended to make sure that sections 10 and 11
don't unfairly compete with the private sector. AIDEA currently
offers a program where commercial lending institutions work with
the private sector but AIDEA comes behind them to participate in
the loans. The purpose of broadening "transmission" to "an
energy project" is to make sure if someone did want to work with
a commercial lending institution to develop a project that it's
not unfairly being competed with by the SETS program.
2:41:00 PM
MR. PAWLOWSKI said another important point within that section
is the inclusion of AIDEA's ability to participate in a loan
participation program to finance energy efficiency improvements.
Typically, AIDEA can buy up to 90 percent of a loan and section
6 proposes up to 100 percent for an energy efficiency project.
That is to try and get out of the problem the legislature has
poked at for three years: primarily that we have weatherization
for homes, the energy efficiency revolving loan fund for public
facilities, but we have very little for the commercial sector.
So if a local business wants to make their business more energy
efficient they could work with their local banks and AIDEA could
step in to help the banks reduce the risk of that loan.
2:41:48 PM
Finally renewable energy projects were added to the existing
incentive interest rate program that AIDEA has for its programs
that apply only to economic or rural development projects in
section 9.
MR. PAWLOWSKI said important powers were added in section 10, on
page 8, lines 3-28. Unlike AIDEA's existing program, the
separate fund has the power to finance projects, ensure project
obligation, guarantee loans or bonds or establish reserves, but
also to defer principal payments or capitalize interest on
project financing to finance projects of a term up to 30 or 50
years for hydroelectric or transmission. AIDEA can currently do
50 years on transmission, but hydro projects are long term
projects with long term payouts, and the longer you can stretch
the term out the better rates the customers ultimately will pay.
Senator McGuire wanted to be sure there was an appropriate
legislative role in the decisions to finance projects, so
limitations were placed on the power of AIDEA to engage in these
projects. If AIDEA wants to finance more than one-third of the
capital cost of an energy project or guarantee a loan that
exceeds $20 million that would have to come back to for
legislative approval. The $20 million is a number that exists in
current AIDEA programs; the one-third number is really because
50 percent would be 50 percent grant/50 percent loans and the
point was to insure that there was some other financing involved
in the decision process. So another third party group is doing
some due diligence here.
2:43:43 PM
MR. PAWLOWSKI reiterated that the reason the bill was put into
AIDEA was that unlike typical revolving loan funds, in theory,
the bill should actually generate revenues for the state as
AIDEA's earnings increase. That would return money to the
treasury that the legislature could decide to fund other
programs with. Since it has been capitalized, AIDEA has paid
$324,500,000 in dividends and in 2011 it was almost $20 million.
MR. PAWLOWSKI explained how SETS would work within AIDEA. First
the legislature would capitalize the SETS fund; AIDEA would use
the SETS fund to facilitate the financing of energy projects;
those projects through the rates would repay the loans or the
investments from AIDEA; AIDEA would then have the ability to
also reach out to the capital markets to backfill the fund by
using the loans as an asset. It's really setting up an
investment vehicle that can perpetuate itself and grow, so that
20 or 30 years from now the funding will exist to build the
infrastructure to replace the infrastructure built with this
fund.
He said it's important to note that SB 25 is not the answer to
Alaska's energy challenges. There will always be a role for the
legislature simply because of the small population, but it does
provide a tool that is missing from all the work the legislature
has done.
SENATOR DAVIS moved to the adopt CS, version D [SSSB 25, 27-
LS0290\D].
CHAIR EGAN objected for discussion.
2:46:11 PM
JOE GRIFFITH, General Manager, Matanuska Electric Association
(MEA) and President of Arctec Alaska, Inc., Palmer, said they
supported SB 25. He said Mr. Pawlowski was right on point and
this is a step that will contribute to a more sustainable energy
future for the state. He said the energy industry is the world's
biggest industry and the most capital intensive. In spite of a
lot of heroic efforts by a small number of people that run this
industry in the state, they do achieve high levels of
reliability, but the system is old and needs a lot of "tender
loving care." It never was completed properly because of the
lack of capital. It is only through astute balancing of the
costs of doing business that they are able to keep working as
well as they do. Electrical energy is the grease for the
economy, and SB 25 would help the state leverage several billion
dollars. The numbers are staggering, and utilities working
together do not have the fiscal strength to do what is
necessary.
2:48:49 PM
BOB GRIMM, CEO, Alaska Power and Telephone (AP&T), Port
Townsend, WA, said SB 25 is a good tool to assist getting the
stranded energy resources of Alaska to market and put them to
work for Alaskans. He asked that consideration be given to the
projects in the rural areas and wanted the amount to capitalize
the fund increased from what is being proposed. Further he
advised the sponsor to investigate the program to ensure the
AIDEA can cooperate with other federal loan guarantee programs
like the BIA to reduce the state's risk.
2:49:57 PM
MARK DAVIS, Economic Development Officer, AIDEA, supported SB 25
but said the administration has no position on it. It's much
better than the earlier draft, because it creates a new
financing program. That is important to ADIEA, because the new
program would separate these potential loans from the current
revolving loan fund and preserve its current financial ratings.
A technical issue is that the interest rate on a loan is not set
and there is no explicit authority to make a loan; neither is
there explicit authority to issue a bond and there is no
reference to revenue bonds. So a little more work needs to be
done to make it better.
SENATOR GIESSEL asked if he will be offering those amendments or
working with the sponsor.
MR. DAVIS replied that he has been authorized to make technical
assistance, but the administration has no position on this
measure.
2:51:11 PM
DUFF MITCHEL, Executive Director, Alaska Independent Power
Producers Association, supported SB 25. He added that this
allows private entrepreneurs to create jobs and a lot of them
would occur where the energy is created, which would be in a
rural area.
2:52:21 PM
PETER NAOROZ, President/General Manager, Kootznoowoo, Inc.,
supported SB 25. However, he said he wanted to see the initial
capitalization number higher. But for now $250 million can go a
long way. The point is to leverage state assets not only to do
good work but to bring private capital into the state, because
it can't fund everything it needs itself. He said Kootznoowoo is
the village corporation for Angoon and the recipient of the
state's largesse, and they really appreciate that, but big
projects in their area need to get done. Those are the ones that
will finally make the state mature. SB 25 will allow for
Kootznoowoo to invest in the state, as well as mining interests
in projects that aren't feasible right now and timber.
2:54:27 PM
BOB LOESHER, Alaska Technology Development Group, said he has
been involved in infrastructure development in Southeastern
Alaska for many years. He supported SB 25. He served on the
AIDEA board for six years and is familiar with the protocols and
even-handedness of investment decisions AIDEA makes. Adding this
fund would stimulate investment in energy and other economic
development that will create jobs. Adding this to ADIEA would
also strength its portfolio and make investment from the Alaska
participation greater; it is the best instrument to facilitate
this kind of investment.
CHAIR EGAN said that completed public testimony. [SB 25 was held
in committee.]
2:57:05 PM
There being nothing further to come before the committee, Chair
Egan adjourned the Senate Labor and Commerce Standing Committee
meeting at 2:57:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Sponsor Statement Senate Bill 25 Feb 2012.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| Sectional Analysis SB 25 version D.PDF |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| 101909_Draft_E_policies.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| 2010EnergyPathway8-12Press.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| 12-23-2011_Vol1_SoutheastAlaskaIRP.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| 2011AIDEAAnnualReport.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| RIRP Executive Summary.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| SB 25 Power Point Presentation S L&C.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 25 |
| SB 174 Sponsor Statement.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB174 Sectional Analysis.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB 174 Excerpt Report McDowell.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB 174 Excerpt DOL Report.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB174-DOLWD-CO-2-13-12.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB 174 Legal Opinion 090211.pdf |
SL&C 2/16/2012 1:30:00 PM |
SB 174 |
| SB 175 list of medications, CW Jasper 021612.PDF |
SL&C 2/16/2012 1:30:00 PM |
SB 175 |