Legislature(2009 - 2010)BUTROVICH 205
03/24/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB294 | |
| SB143 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 294 | TELECONFERENCED | |
| *+ | SB 275 | TELECONFERENCED | |
| + | SB 143 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 24, 2010
3:33 p.m.
MEMBERS PRESENT
Senator Lesil McGuire, Co-Chair
Senator Bill Wielechowski, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Hollis French
Senator Gary Stevens
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Bert Stedman
OTHER LEGISLATORS PRESENT
Representative Charisse Millett
Senator Linda Menard
COMMITTEE CALENDAR
SENATE BILL NO. 294
"An Act repealing the termination date of the licensing of sport
fishing operators and sport fishing guides; and providing for an
effective date."
- HEARD AND HELD
SENATE BILL NO. 143
"An Act establishing the Greater Railbelt Energy and
Transmission Corporation and relating to the corporation;
relating to transition, financial plan, and reporting
requirements regarding planning for the initial business
operations of the Greater Railbelt Energy and Transmission
Corporation; relating to a report on legislation regarding the
Regulatory Commission of Alaska and the Greater Railbelt Energy
and Transmission Corporation; authorizing the Alaska Energy
Authority to convey the Bradley Lake Hydroelectric Project and
the Alaska Intertie to the Greater Railbelt Energy and
Transmission Corporation; and providing for an effective date."
- HEARD AND HELD
SENATE BILL NO. 275
"An Act relating to aquatic farming and to payment made to the
Department of Fish and Game for the removal of wild stock of a
shellfish species that exceeds an insignificant amount; and
providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 294
SHORT TITLE: SPORT FISH GUIDE LICENSES
SPONSOR(s): SENATOR(s) MCGUIRE
02/24/10 (S) READ THE FIRST TIME - REFERRALS
02/24/10 (S) RES, FIN
03/18/10 (S) RES AT 3:30 PM BUTROVICH 205
03/18/10 (S) Scheduled But Not Heard
03/22/10 (S) RES AT 3:30 PM BUTROVICH 205
03/22/10 (S) Scheduled But Not Heard
03/24/10 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 143
SHORT TITLE: RAILBELT ENERGY & TRANSMISSION CORP.
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/09/09 (S) READ THE FIRST TIME - REFERRALS
03/09/09 (S) ENE, RES, FIN
03/19/09 (S) ENE AT 11:00 AM BUTROVICH 205
03/19/09 (S) Heard & Held
03/19/09 (S) MINUTE(ENE)
04/06/09 (S) ENE AT 5:00 PM BUTROVICH 205
04/06/09 (S) OPPOSE UN DESIGNATION OF ARCTIC OCEAN
04/09/09 (S) ENE AT 2:30 PM BUTROVICH 205
04/09/09 (S) Heard & Held
04/09/09 (S) MINUTE(ENE)
03/17/10 (S) ENE AT 3:30 PM BUTROVICH 205
03/17/10 (S) Heard & Held
03/17/10 (S) MINUTE(ENE)
03/22/10 (S) ENE REFERRAL WAIVED
03/24/10 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
MIKE PAWLOWSKI
Staff to Senator McGuire
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 294 for the sponsor.
CHARLIE SWANTON, Director
Division of Sport Fish
Alaska Department of Fish and Game (ADF&G)
POSITION STATEMENT: Commented on licensing fees and SB 294.
JENNIFER YUHAS, Legislative Liaison
Alaska Department of Fish and Game (ADF&G)
POSITION STATEMENT: Supported SB 924 and commented on it.
MIKE MCCRARY, representing himself
Anchorage, AK
POSITION STATEMENT: Opposed SB 294.
MELVIN GROVE, charter owner
Valdez, AK
POSITION STATEMENT: Opposed SB 294.
KEN LARSON, Secretary
Prince William Sound Charter Association
North Pole, AK
POSITION STATEMENT: Opposed SB 294.
REED MORISKY
Wilderness Fishing, Inc.
Fairbanks, AK
POSITION STATEMENT: Supported SB 294.
SMOKEY DON DUNCAN, Master Guide
Fairbanks, AK
POSITION STATEMENT: Didn't support SB 294 as written.
JOHN BLAIR, Executive Director
Southeast Alaska Guides Association
Sitka, AK
POSITION STATEMENT: Supported SB 294.
WADE WILLIS
Anchorage, AK
POSITION STATEMENT: Supported extending the program in SB 294
for two more years.
RICKY GEESE, Executive Director
Kenai Sport Fishing Association
POSITION STATEMENT: Supported SB 294.
REUBEN HANKIE, representing himself
Owner and operator of a small Kenai River fishing business
POSITION STATEMENT: Supported SB 294.
DAVE GOGGIA, President
Kenai River Professional Guide Association
POSITION STATEMENT: Supported SB 294.
JIM STRANDBERG, Project Manager
Alaska Energy Authority
POSITION STATEMENT: Explained and supported SB 143.
BRIAN BJORKQUIST, Senior Assistant Attorney General
Department of Law (DOL)
POSITION STATEMENT: Explained and supported SB 143.
ACTION NARRATIVE
3:33:53 PM
CO-CHAIR BILL WIELECHOWSKI called the Senate Resources Standing
Committee meeting to order at 3:33 p.m. Present at the call to
order were Senators Wagoner, French, Stevens, McGuire, and
Wielechowski.
SB 294-SPORT FISH GUIDE LICENSES
3:34:55 PM
CO-CHAIR WIELECHOWSKI announced SB 294 to be up for
consideration.
3:35:02 PM
CO-CHAIR MCGUIRE, sponsor of SB 294, explained that it would
repeal the termination date for the program they created to have
licensing of sport fish operators and sport fishing guides. The
original bill passed in 2004. Since then the program has proven
beneficial to both the industry and resource managers. It's
estimated that over 1.8 million clients were served taking more
than 460,000 guided fishing trips in Alaska annually; 88 percent
of them were non-residents. Sport fishing is an integral part of
Alaska's economy; in 2007 non-residents brought in over $650
million. An average of 1670 sport fishing licenses and 1981
sport fishing guide licenses that include regular training and
safety briefings have been issued. The guides have said the
training is a real important part of keeping a standard in the
industry. She said in 2009 the termination date was extended for
one full year and now they are proposing the permanent repeal of
the termination date.
3:37:09 PM
MIKE PAWLOWSKI, staff to Senator McGuire, mentioned that a copy
of the original HB 452 was in their packets in case there were
questions about the original law.
SENATOR STEVENS said Alaskans pay a different license fee for
commercial fishing than non-residents do and he asked if there
is any differentiation between instate and out of state license
fees for guides.
3:38:48 PM
CHARLIE SWANTON, Director, Division of Sport Fish, Alaska
Department of Fish and Game (ADF&G), said resident and non-
resident guides don't have a difference in fees. A guide
business operator/owner license fee is a $100 fee and it's $50
for a guide.
CO-CHAIR WIELECHOWSKI asked if the department supported the
bill.
3:39:38 PM
JENNIFER YUHAS, Legislative Liaison, Alaska Department of Fish
and Game (ADF&G), explained that this legislation was introduced
at the request of the department and it has been a pleasure to
work with the Senate on this issue over the last two years. This
is the second time it has been introduced and it is identical to
what was introduced last year. It passed this committee and the
full Senate. It was later amended in the House to have the one-
year sunset and the Senate actually accommodated the concurrence
vote before adjourning last year.
She explained that the logbook program provides for data
collection that is necessary for information needed for state
fisheries management. The process has recently been streamlined
by the use of new "scanable" sheets instead of the large
cumbersome logbooks that salt-water guides had to write in.
MS. YUHAS said this program exempts guides from the National
Salt Water Angler Registry that is being implemented in the rest
of the United States. She said that some of the guides have
testified that they would rather fall under that because it
costs $25 rather than $100, but that program doesn't provide any
of the data the department needs to manage its fisheries. That
data is the most important part of the logbook program. What the
guides receive for their $100-fee is not simply a sticker for
their boat, but the ability to utilize this resource to earn an
income. She said everything is paid for by program receipts for
anglers and through the guide fee and that Mr. Swanton would
speak to the zero fiscal note.
3:41:12 PM
SENATOR HUGGINS joined the committee.
SENATOR FRENCH asked what the resistance to extending the sunset
for more than one year was in the other body.
MS. YUHAS replied that she couldn't speak to the logic that
Representative Neuman used in requesting that.
3:42:19 PM
MIKE MCCRARY, representing himself, Anchorage, Alaska, said SB
294 tries to do too many things. He said this bill came about
because more information on the numbers of guides and their
activities was needed and the data needed to be comprehensive
and credible. Those goals were accomplished, but nothing more
than minimum standards were established to actually be a guide.
From his point of view outfitting, charter boats, air taxis, and
water taxis are businesses, but guiding is an occupation. This
bill should not be put into place forever because the actual
occupational licensing of all classes of guides needs to be
separated from the business aspects - reducing speculative entry
of businesses into the commerce stream and enhancing the
profession of guiding. There should be one occupational
licensing board for guides like hairdressers and barbers have.
He said this bill tries to do too many things and extending it
without termination is premature.
3:45:51 PM
MELVIN GROVE, charter owner, Valdez, Alaska, said he opposed SB
294. His biggest concern is that they are being taxed,
basically, to pay for the logbook program. And even though he
believes in data collection, they hadn't seen any harvesting
improvements as a result of it. They had seen reduced bag limits
instead.
He said contrary to what Ms. Yuhas said, registering for the
National Salt Water Angler Registry is free according to Forbes
Darby. And anyone using their service in federal waters
wouldn't have to register, because data would be collected in
state waters. This data should be shared with the feds, but we
shouldn't use that to justify collecting a $100 fee. He said he
couldn't even keep a fish while fishing with clients any more.
If they pass SB 294, he urged them to please keep the sunset in
it.
3:49:48 PM
KEN LARSON, Secretary, Prince William Sound Charter Association,
North Pole, Alaska, opposed SB 294. They do not object to the
data collection, but between the sport license fees that both
instate and out-of-state residents pay and guide fees, they
aren't getting much for their money. ADF&G needs to look at
other funding sources, anyway. He said he saw no funding support
from NOAA for the logbook data that they use.
MR. LARSON said sport fish license fee funding has been reduced
because of the economy and other influences. For instance,
revenues are down because of the one-fish limit on halibut,
revenues from license sales and King salmon stamps were down 12
percent in 2009 and 5 percent in 2008, and it's probably going
to go down in 2010; in 2011 the Limited Entry Program for
halibut charters is going to eliminate 38 percent of the halibut
charter fleet in Alaska. Scanning logbook data is a good idea as
many data entry errors have been found during the ongoing
Limited Entry Program process. But those cost reductions should
mean position reductions in ADF&G if nothing else. At any rate,
he said, the funding needs to be looked at and that's why they
asked for the sunset to occur last year and that's why they are
asking for it again this year.
3:52:54 PM
REED MORISKY, Wilderness Fishing, Inc., Fairbanks, Alaska,
supported SB 294. He said this will be his 26th summer operating
in Fairbanks. He believes the logbook information is needed for
documenting consistent use and access to the resource. This act
would ensure clients that minimum standards are met.
Improvements have been made to the logbook program, as well,
that allow the guide-supplied information to be scanned.
3:54:02 PM
SMOKEY DON DUNCAN, Master Guide 136, Fairbanks, Alaska, didn't
support SB 294 as written. He wanted to see the program
sunsetted if the following amendments were not adopted: an
exemption from the licensing fee for fish guide businesses and
sport fish guides who do not operate from a city, a town,
village or permanent lodge, and an exemption from fees for camp-
based or float-trip based guides and from multiple daily logbook
recordings for camp-based and float-trip based guides. Further
he said the regulations should be changed to filling in the
logbook within 24 hours and he wanted ADF&G to provide water
proof containers for the logbook if requested. He also wanted
the Coast Guard requirement deleted, because they are entirely
absent from areas north of the Alaska Range.
MR. DUNCAN said this program has done nothing but cost him time,
money and headaches. He recruits all of his clients with no help
from the state, he pays land use fees, client day fees and he
and his clients buy fishing licenses. He said "the state does
virtually nothing to help promote or support the hunting and
sport fishing guide industries." He said further that guides
already pay enough for a business license, so why do they have
to buy two licenses?
3:57:03 PM
JOHN BLAIR, Executive Director, Southeast Alaska Guides
Association, Sitka, said he supported SB 294 for three reasons.
First, because it is a clear-cut example of a program that
actually works and does something right. Since its inception,
the logbook program has successfully provided accurate and
timely information for use by the Board of Fisheries and ADF&G.
Second, the log book program has become the only effective means
of collecting data on the sport fishing industry in an objective
and unbiased manner. Having independent and non-industry based
collection and enforcement insures credibility of the
information, so the information is dependable. Third, these data
are essential to ensure conservation and sustainability of our
fisheries. Without the logbook program there would be no quality
data and science that have become the foundation of sound
fisheries management. Alaskans pride themselves on their
fisheries management based on facts and science.
3:58:35 PM
SENATOR WAGONER asked how many members are in his group in
Southeastern Alaska.
MR. BLAIR answered that it represents over 100 vessels and lodge
owners throughout the region.
3:58:55 PM
WADE WILLIS, Anchorage, Alaska, said he used to be a guide and
he was concerned about the sustainability of the state's
fisheries. The state needs to look further down the road and
develop an occupational licensing board that licenses all
occupations that can insure that the quality of the guiding
industry is as good as it can be. He supported extending the
program for two more years.
4:01:22 PM
RICKY GEESE, Executive Director, Kenai Sport Fishing
Association, supported SB 294. He said the data has become an
extremely useful tool for the department to use for management
of the resources. He concurred with the need for an occupational
board to set minimum standards.
4:02:32 PM
REUBEN HANKIE, owner and operator of a small Kenai River fishing
business, supported SB 294. He pointed out that hunters need
licenses in the field. Collecting the data had some problems at
first, but those are getting ironed out. He said that he didn't
have any problem filling out his logbook in the rain, and data
collection is of utmost importance to the fishing industry.
4:04:21 PM
DAVE GOGGIA, President, Kenai River Professional Guide
Association, said he is an owner of a small guide service on the
Kenai River, and supported SB 294. He said he tries to keep his
logbook as dry as possible and that seems to work for him. Board
of Fisheries members want accurate data, and to him that is
important to making any kind of decisions that affect everybody
in the state.
4:05:38 PM
MS. YUHAS stated that the department is very happy with the
version before them. Should the legislature decided to audit or
repeal this program at any point in the future, they can do that
without a sunset.
MR. SWANTON said the logbook started out being 11.5X17 inches
and those have been reduced to a standard 8.5X11 inches that is
scanable. Access to that data will be reduced from eight to nine
months down to one to two weeks. These were some of the major
criticisms they had in the past from the public. They are
planning to do the same thing with the fresh water logbook
program starting this fall; that program will be scanable in
2011. He said this data collection program has been reviewed by
national experts who found that Alaska sets the standards for
quality and statistical precision.
4:08:00 PM
CO-CHAIR WIELECHOWSKI closed public testimony. He said he
intended to hold the bill and asked for amendments by tomorrow
at noon.
SB 143-RAILBELT ENERGY & TRANSMISSION CORP.
4:08:23 PM
CO-CHAIR WIELECHOWSKI announced SB 143 to be up for
consideration.
CO-CHAIR MCGUIRE moved to adopt CSSB 143(), 26-LS1041\S, for
discussion purposes only. There were no objections and it was so
ordered.
4:09:08 PM
CO-CHAIR WIELECHOWSKI objected for an explanation.
4:09:37 PM
JIM STRANDBERG, Project Manager, Alaska Energy Authority, said
he was happy to be here discussing the Greater Railbelt Energy
Transmission Corporation (GRETC) bill. He said that last week he
provided an overview of it. He is now back with the CS in hand.
MR. STRANDBERG said they worked collaboratively with the
utilities using two key documents to create the statute: the
REGA study (business study) and Integrated Railbelt Resource
Plan. What keeps coming back is the capital shortfall. It the
state may in some way be involved financially, it would make
sense that the vehicle they construct for that should be done in
a partnership fashion between the state and the utilities so it
can handle the money.
4:13:26 PM
SENATOR FRENCH said he didn't understand how combining six
utilities makes them stronger. Their assets don't go up and
their balance sheet doesn't get any better. But he could see how
adding state money would make a difference.
MR. STRANDBERG answered REGA projected that if utilities joined
together, that would provide more efficient use of
infrastructure and get financing on better terms. Appendix B
done by Seattle Northwest discusses that.
SENATOR FRENCH asked if there is a multiplier effect.
MR. STRANDBERG replied that the company is designed to
capitalize itself through equity injections from, perhaps, the
state. When you build a company you need a certain amount of
skin in the game. If you do that you are able to borrow money.
First they need bylaws and a board and then it needs to create
equity so they can borrow money. This bill is a framework
through which these processes can occur. When the company sells
bonds, they are rated and the lower the risk the lower the
interest rate.
4:16:59 PM
MR. STRANDBERG explained that the other question is why not
allow the utilities to form a joint action agency (JAA), an
existing business structure. A fully functional generation and
transmission entity in a mature network should be able to do
four tasks: manage the transmission system, evolve towards
regional economic dispatch so that the generators are used most
efficiently, be able to have long range regional planning for
major projects, and do joint project development. In many ways
the JAA language is focused on the fourth element, joint project
development. A portion of the JAA language is relatively open
architecture; so there are ways for the utilities to use that to
move forward to do things together. But GRETC is really designed
to embrace those four elements of the future network in an
ordered fashion and in a manner that the utilities are
comfortable with. It is a more complete solution.
4:19:14 PM
BRIAN BJORKQUIST, Senior Assistant Attorney General, Department
of Law (DOL), said he has represented the AEA and the AIDEA for
about 13 years and has been involved with the acquisition of the
Snettisham Hydro Electric Dam and the financing of that, the
divestiture of the Four Dam Pool by the AEA and the financing of
that by AIDEA, AEA's Bradley Lake Hydro Electric Project and the
Alaska Intertie. He explained that the corporation in the CS is
modeled after a generation and transmission (G&T) cooperative, a
type of entity where utilities get together to jointly provide
for their generation and transmission needs. The utilities in a
G&T-type format are still the distribution element; so the
utilities would take wholesale power from the G&T cooperative
and then sell it to their retail customers.
The original bill created one specific corporation. This bill
has been changed to provide a general law for creation of a form
of energy and transmission corporation. Within it there are
limitations on who can form. It has to be four or more municipal
or cooperative utilities and there has to be approval by law for
the formation.
The bill has the actual authorization for the formation and is
modeled similar to the one used in AS 42.310 to form a JAA
(Joint Action Agency) requiring legislative approval for the
acquisition of a project from the AEA.
This legislation subtly shifts from the original bill that was a
little more of a quasi-public corporation with the corporation
anticipated to take on more of a function for the Railbelt
region, in particular. This bill provides a little bit more
flexibility for the utilities. They are not required at any
point, and there is no expectation that they have to, to obtain
all their power from this one entity. The last bill had an
implication that they would. It still has elements of being a
quasi-public entity as this entity would be performing public
services for the region that is serves.
4:23:11 PM
MR. BJORKQUIST said this draft also reflects a combination of
long work with the task force, the utilities, and most recently
with the DOL and Legislative Legal and attempts to clean up the
language and achieve the intent. He said this draft responds to
every question that was raised with one exception at Legislative
Legal's suggestion - to clarify that there is no issue with some
of the rate regulation exemption provisions and how they can
apply.
4:24:14 PM
He elaborated that sections 1, 4, and 5 deal with exemptions
from rate regulation. These three sections will become effective
in 2015 after which there will be five years of regulation under
the Regulatory Commission of Alaska (RCA) and then rate
regulation takes place. The rate regulation provisions exempt
this corporation from regulation by municipalities and the RCA.
Provisions in the Municipal Code and RCA statutes basically
provide that if an entity is exempt from regulation by RCA, a
municipality, city or borough can regulate. This exempts it from
municipal and RCA regulation in combination.
SENATOR FRENCH asked him to explain why that is a good idea.
MR. BJORKQUIST answered that they would hear from the utilities
that the cost of regulation outweighs the benefits, and that a
G&T cooperative-type model elsewhere is not subject to rate
regulation. And for a variety of reasons they would also hear
from them why that might be appropriate.
SENATOR FRENCH said he would flag that issue for later.
4:26:16 PM
CO-CHAIR WIELECHOWSKI asked him about the practical impact of
the five-year exemption and if that would apply to projects that
were built during that five years or projects that were
permitted during that five years.
MR. BJORKQUIST replied during the first five years it would
apply to any business that the corporation would be involved
with whether it was with an existing asset that they acquired or
a new asset that was built during the five year period of time.
The contemplation in the formation of the corporation is that
there may not be many assets put into the corporation early on,
because the utilities have the flexibility to retain the current
assets. But the bill also contemplates that the GRETC might not
need to acquire title to an asset in order to exert operational
control over it like Mr. Strandberg talked about. For the first
five years it is going to be subject to rate regulation no
matter what, but after that it would be exempt from regulation
from basically any power that it sold.
CO-CHAIR WIELECHOWSKI asked if Chugach Electric owned a
generation plant under its name and the board wanted to get a
rate approved they would still have to go through the RCA
process, but if they put the asset into GRETC then they are
exempt for five years.
MR. BJORKQUIST answered for the first five years they are
subject to rate regulation, but not after five years.
CO-CHAIR WIELECHOWSKI asked if GRETC wanted, in six years from
passing the bill, to go out and build Susitna Hydro to provide
electricity for the entire Railbelt, then they wouldn't have to
go before the RCA.
MR. BJORKQUIST replied yes.
CO-CHAIR WIELECHOWSKI asked but if they want to do it in year
five, they have to go to the RCA.
MR. BJORKQUIST answered at least for that one year of operation.
SENATOR FRENCH asked if rate regulation means going before the
RCA to get approval for rates.
MR. BJORQUIST answered yes.
SENATOR FRENCH asked if GRETC would sell power to individual
customers or through Chugach, ML&P and Golden Valley.
MR. BJORKQUIST replied that the contemplation as he has heard
from the task force is that most of the power will be sold at
whole to individual utilities. The corporation has the authority
to sell power to industrial customers with some limitations. It
cannot sell power to an industrial customer in a service
territory of another public utility unless that public utility
consents (AS 42.50.090 (24)).
SENATOR FRENCH asked if Homer Electric decides to participate in
GRETC, can they participate as much or as little as they like.
Can they decide what portion of their association's assets they
want to turn over to GRETC or not?
MR. BJORKQUIST answered that it doesn't work exactly that way.
SENATOR FRENCH asked what you have to pay to get into GRETC.
MR. BJORKQUIST answered nothing has to be paid to become a
member. Those that provide a sufficient letter of intent to AEA
by the deadline can become a member. There is no obligation for
a member to acquire any level of services or anything else.
Getting to the point of what assets would be in and what assets
would be out, it's not just a matter of what the utility would
desire but also a negotiation with the corporation, itself. The
utility might not want to provide the best of assets and GRETC
would want the best.
CO-CHAIR WIELECHOWSKI said he thought the utilities would have a
very high burden to prove why not being regulated after five
years is a good thing. But they would testify tomorrow.
MR. BJORKQUIST said section 2 would become effective in 2015 and
provides that a wholesale agreement for the sale of power from
GRETC to a utility is not subject to approval or review by the
RCA until all the long term debt incurred for the project is
retired. This provision currently applies to the Bradley Lake
Hydro Electric Project and Swan Lake and Lake Tyee, two of the
Four-Dam Pool project,. Its purpose is to assist in financing
projects by helping with a reliable source of repayment. This
provision does that.
CO-CHAIR WIELECHOWSKI asked him to explain what kind of
contracts they would have for storage in Section 2.
MR. BJORKQUIST said the language there is similar to the
exemption language for Bradley Lake and Four Dam Pool. It might
be storage of electricity, but the only part of the system in
the Railbelt that he is familiar with is Golden Valley that has
a BESS system. It also might be water storage in a dam.
CO-CHAIR WIELECHOWSKI asked if that would apply to gas storage.
MR. BJORKQUIST answered that it potentially could.
CO-CHAIR WIELECHOWSKI asked if this might be exempting them from
gas storage regulation.
MR. BJORKQUIST answered this would be an exemption from the
wholesale contract between GRETC and the public utility for that
service.
4:35:23 PM
MR. STRANDBERG added that this was not meant for gas or fuels.
It is for repurchase of power and power is electricity.
SENATOR FRENCH said he was considering an amendment to insert
"electric" in front of "power" on line 16, to make it clear.
4:36:28 PM
MR. BJORKQUIST went to Section 6 on page 3 that is the bulk of
statutory section for an energy and transmission corporation.
Lines 16-19 speak of four or more electric utilities if
authorized by law can form a corporation. Lines 20-25 outline
why the corporation is formed: to acquire, operate or maintain
projects from the AEA, and for planning, coordinating and
addressing generation and transmission concerns of the region.
He highlighted a few of the purposes on page 3, line 30; one was
to be a primary recipient of state financial assistance for G&T
projects in the region. This is not a legal obligation, but for
a decade the Railbelt utilities have been told that they need to
organize and coordinate with each other if they are going to get
access to the Railbelt Energy Fund. This is the mechanism for
them to organize to get access to those funds.
4:37:38 PM
CO-CHAIR WIELECHOWSKI said on page 3, line 13-19, it says "four
or more municipal or cooperative public utilities may organize
an energy and transmission corporation." So, it appears there
could be multiple corporations.
MR. BJORKQUIST pointed out that line 18 also says "if first
authorized by law." So the legislature would have to allow that
to happen.
SENATOR FRENCH asked if something else was needed in terms of
authorization language.
MR. BJORKQUIST replied that the authorization that is required
by law is in Section 13. It authorizes four or more of the
listed Railbelt public utilities to form a G&T corporation, the
GRETC. Section 14 provides for the letter of intent to the AEA
for a conditional membership.
SENATOR FRENCH asked if subsequent legislation is necessary in
order for GRETC to form itself.
MR. BJORQUIST answered not with this bill.
CO-CHAIR WIELECHOWSKI asked why not say "organize the Greater
Railbelt Energy and Transmission Corporation" just so they are
perfectly clear on page 3, line 18.
MR. BJORKQUIST replied there are two interrelated reasons for
having an active general law. As Legislative Legal pointed out
it helps address that potential constitutional problem. And, the
task force changed the bill to make GRETC a little bit less of a
quasi-public corporation and a little bit more of a private
corporation. He explained that the original bill was modeled
after CFAB, which is a quasi-public type organization that is
private in many ways, but serves a public function.
4:41:18 PM
Provisions on page 4, lines 3-21, focus on the detail of the
planning that this corporation would provide. Some general
provisions are similar to the original bill as to what the
powers, intentions and purposes for the corporation are. Page 4,
lines 28 through page 5, line 1, subsection (g) has language
emphasizing that this corporation provides interconnection-type
services. Other provisions in the bill talk about it providing
operating standards. That is important particularly in the
Railbelt, because the current operating standards between
utilities is partially voluntary and partially by contract.
MR. BJORKQUIST said the Alaska Intertie Agreement includes
reliability and operating standards that are supposed to apply
to the Railbelt. Not all the utilities in the Railbelt are
signatories to them, but several of the utilities voluntarily
follow those standards. That agreement is scheduled to terminate
in October. So, a GRETC formed under this legislation will fill
a void that otherwise would be missing as to liability and
interconnection standards.
4:42:33 PM
He also pointed out that (b)(2) in Section 8 on page 18 amends
AS 42.50.100 (that takes effect in 2015) to clarify that this
organization would not be able to preclude independent power
producers (IPP) from getting access to the transmission system.
This means that the RCA's jurisdiction over joint use and
interconnection would continue over this organization even after
it is no longer subject to regulation. This is the one point
that Legislative Legal suggested and that is the intent.
4:44:41 PM
CO-CHAIR WIELECHOWSKI said you have an IPP, Fire Island for
instance, and they want to put their power into this system, how
would the interconnection work? What if they can't come up with
an acceptable cost agreement?
MR. BJORKQUIST replied that two statutes under RCA regulation
are cited in that section; one provides an obligation on
utilities to negotiate for joint use and interconnection. The
second reference says that if utilities don't negotiate an
adequate deal that the RCA can step in and order joint use and
interconnection as well as establish rules that would apply to
that.
CO-CHAIR WIELECHOWSKI asked the question again - how (b)(2) on
page 18, lines 7-9, prevents exclusion of an IPP, because he
thought this would be a big issue down the line.
MR. BJORKQUIST responded that AS 42.05.311 requires utilities to
negotiate joint use and interconnections so that an IPP can put
its power onto a transmission system for sale to its purchaser.
The utilities have an obligation to negotiate that to happen,
and if they fail to do that, the second statutory provision is
when the RCA steps in and orders that to happen with the terms
and conditions that would be applicable.
CO-CHAIR WIELECHOWSKI asked if that would happen after a
comprehensive hearing with the RCA.
MR. BJORKQUIST answered that he had only been involved with
joint use and interconnection in one context and that had to do
with the 19 miles of the original Alaska Intertie that was
subject to contract between the AEA and Matanuska Electric.
Matanuska Electric terminated the contract, and in order to not
allow a disruption of services, the other utilities went to the
RCA to get joint use and interconnection. Negotiations happened
for a period of time, followed by a hearing before the RCA that
ordered joint use and interconnection with the terms and
conditions.
4:47:14 PM
MR. BJORKQUIST said language on page 5 explains the makeup of
the board of directors. Each public utility GRETC member will
have two directors, the governor will select another one from a
list of directors submitted by the public utility members.
He said language on page 7, line 17, describes membership. There
are two types of members of a G&T corporation - the two public
utility director representatives and then members who are other
entities that purchase power services from that, but they do not
have representative directors. The qualifications for membership
as a public utility member include: it has to be a municipal or
cooperative and it has to be electrically interconnected. It
excludes affiliates of public utility members so there aren't
duplicate voting rights.
CO-CHAIR WIELECHOWSKI assumed that the membership definition
includes the seven Railbelt utilities.
MR. BJORKQUIST answered that originally section 13 listed six
eligible Railbelt utilities that could become a member that
don't go through this process. If they satisfy the condition
under Section 14 they will become an original public utility
member as well. Others would have to satisfy those criteria and
then be approved for membership by a two-thirds vote of the
board of directors.
CO-CHAIR WIELECHOWSKI asked if his definition of a public
utility member starting on page 7, line 23, included the six
public utilities.
MR. BJORKQUIST answered yes. He added that language starting on
page 9, line 25, listed most of the powers of electric
cooperatives as the general powers of the corporation. He
highlighted that section (a)(8) on page 10, line 13, allows for
sales to industrial customers if it is to a public utility with
a service territory, and that section (a)(15) on page 11, line
8, is the power to exercise eminent domain. This power is
granted to every public utility but it has a limitation. GRETC
cannot exercise eminent domain to take generation or
transmission assets from another public utility. So, it has
lesser powers than a public utility has, but no more.
Language on page 12, lines 10-14, contains a limitation to
protect the GRETC members' preclusion from having bilateral
contracts with others for a power sale or wheeling.
4:51:41 PM
Four sections starting on page 12, line 21 provide for regional
planning, one of the areas where GRETC may provide some
significant advantages. Rate regulation generally doesn't
address rate issues until after a project is built; so you miss
an opportunity to pick between alternatives. He said that the
best opportunity to save money for ratepayers frequently is
before it is spent constructing a project, a point in time where
the best choice can be decided upon. Having regional planning
can be effective in a number of ways to help that process.
First, the information is available to the corporation and
members to help them make better decisions. But the ratepayers
will have the information as well as the legislature, which will
have that information both for oversight activities and in
dealing with state financial assistance to the corporation. If
there are choices being made in the regional planning that the
legislature would question, that will come up when the state
financial assistance is being discussed.
SENATOR WAGONER asked why have GRETC be capable of exercising
the power of eminent domain if all the member organizations
already have it and they are much more answerable to the
constituents that live in that district where eminent domain is
going to be used. He said he has always had trouble with taking
private property for a public purpose, and he wasn't comfortable
with that section.
MR. BJORKQUIST replied that the purpose of this section is to
give the entity that would be needing the property to be able to
develop their project the power to achieve that. If the
corporation did not have that power, it would have less power
than any other public utility and arguably wouldn't be able to
develop a project unless some other entity would be willing to
exercise its powers of eminent domain. It might create problems
also because eminent domain requires paying for what is being
taken. There is a synergy to having the entity that is
developing the project and going to be responsible for the
payment having that power.
4:55:02 PM
SENATOR WAGONER said he hated to argue the point, but some
property owners haven't always been paid what they think their
property is worth, and he thought they were "going a step too
far with this eminent domain." He could envision Homer Electric,
for instance, objecting to a project in their area and hiding
behind this organization that is taking property through eminent
domain. A lot of people wouldn't understand this organization.
4:57:00 PM
MR. STRANDBERG said he shared his concern about "the heavy hand
of government taking away land for public purposes." But one of
the most difficult parts of the company is going to be securing
property so it can actually build transmission lines. The AEA
has been working with ML&P on a new transmission line from
Hatcher Pass down to Knik where they face those issues. While
the eminent domain power is there, he said, in practice "we do
not even look at going there." And it is very common for G&T
organizations throughout the United States to have some form of
eminent domain power. The hope is to have the right board
structure and the right governance so that concerns from the
retail customer flow up into the governance of the new company.
4:58:18 PM
CO-CHAIR WIELECHOWSKI said it would be a policy call.
MR. BJORKQUIST said this bill contemplates that state financial
assistance will be provided and that language in AS 42.50.150 on
page 14, lines 11, listed types of state financial assistance
that the corporation may obtain. He pointed out that nothing in
this bill obligates the state to provide any financial
assistance and neither does it limit the strings the legislature
can impose with any state financing that is provided. There is
also every expectation that there will be negotiations about
terms and conditions that are going to be attached to it. This
bill is just a starting point for a lot of the terms and
conditions that might be imposed more specifically on a project
by project basis.
5:00:00 PM
Going back to page 12, lines 25-30, Mr. Bjorkquist pointed out
that in the integrated resource plan and the long-range fuel
supply plan, the corporation is obligated to evaluate and
consider state energy plans or other plans, and if they chose to
deviate from them they have to include a report explaining the
differences. This is important because it creates transparency
and political accountability. He said the many other terms and
conditions in the bill tie to corporate type functions while
some are unique to GRETC. He offered to answer questions about
details.
5:02:55 PM
CO-CHAIR WIELECHOWSKI said they really appreciated his testimony
and that SB 143 would be held for further work. He said they had
a lot to digest and adjourned the meeting at 5:02.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 275 - Bill Packet.pdf |
SRES 3/24/2010 3:30:00 PM |
SB 275 |
| SB 143 - S Version.pdf |
SRES 3/24/2010 3:30:00 PM |
SB 143 |