Legislature(2005 - 2006)BELTZ 211

01/26/2006 03:30 PM STATE AFFAIRS


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03:38:25 PM Start
03:38:25 PM SB214 || SB215
05:14:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 214 APPROP FOR ENERGY DIVIDEND & ASSISTANCE TELECONFERENCED
Heard & Held
*+ SB 215 ENERGY DIVIDEND: INCREASE 2005 PFD TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        January 26, 2006                                                                                        
                           3:38 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gene Therriault, Chair                                                                                                  
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Charlie Huggins                                                                                                         
Senator Bettye Davis                                                                                                            
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 214                                                                                                             
"An Act making appropriations for energy assistance and                                                                         
weatherization; and providing for an effective date."                                                                           
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 215                                                                                                             
"An Act relating to the energy dividend for 2005; and providing                                                                 
for an effective date."                                                                                                         
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 214                                                                                                                  
SHORT TITLE: APPROP FOR ENERGY DIVIDEND & ASSISTANCE                                                                            
SPONSOR(s): SENATOR(s) THERRIAULT, KOOKESH                                                                                      
                                                                                                                                
01/09/06       (S)       PREFILE RELEASED 12/30/05                                                                              
01/09/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/09/06       (S)       STA, FIN                                                                                               
01/26/06       (S)       STA AT 3:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 215                                                                                                                  
SHORT TITLE: ENERGY DIVIDEND: INCREASE  2005 PFD                                                                                
SPONSOR(s): SENATOR(s) THERRIAULT, KOOKESH                                                                                      
                                                                                                                                
01/09/06       (S)       PREFILE RELEASED 12/30/05                                                                              
01/09/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/09/06       (S)       STA, FIN                                                                                               
01/26/06       (S)       STA AT 3:30 PM BELTZ 211                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Jim Dalman, Program Officer                                                                                                     
Division of Public Assistance                                                                                                   
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT:  Outlined the Alaska Heating Assistance                                                                   
Program                                                                                                                         
                                                                                                                                
Brian Butcher,                                                                                                                  
Governmental Relations and Public Affairs Director                                                                              
 Alaska Housing Finance Corporation (AHFC),                                                                                     
POSITION STATEMENT:  Provided information about the AHFC                                                                      
administered weatherization program                                                                                             
                                                                                                                                
Debbie Joslin                                                                                                                   
Eagle River Forum                                                                                                               
Delta Junction, AK                                                                                                              
POSITION STATEMENT:  Spoke in support of SB 214 & SB 215                                                                      
                                                                                                                                
Todd Honer, Energy Efficiency Specialist                                                                                        
Golden Valley Electric Association                                                                                              
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Described SB 214 & SB 215 as well intended                                                               
but a short term solution                                                                                                       
                                                                                                                                
Viann Nations                                                                                                                   
Copper River Native Association                                                                                                 
Copper Center, AK                                                                                                               
POSITION STATEMENT:  Stated support for SB 214 & SB 215                                                                       
                                                                                                                                
Sharon Barton, Director,                                                                                                        
Permanent Fund Dividend Division                                                                                                
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT:  Answered questions related to using the                                                                  
Permanent Fund data and computer system for an energy dividend                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR GENE THERRIAULT called the Senate State Affairs Standing                                                                
Committee meeting to order at 3:38:25 PM. Present were Senators                                                               
Bettye  Davis, Kim  Elton, Thomas  Wagoner,  Charlie Huggins  and                                                               
Chair Gene Therriault.                                                                                                          
                                                                                                                                
         SB 214-APPROP FOR ENERGY DIVIDEND & ASSISTANCE                                                                     
           SB 215-ENERGY DIVIDEND: INCREASE  2005 PFD                                                                       
                                                                                                                                
3:38:25 PM                                                                                                                    
                                                                                                                                
CHAIR  THERRIAULT announced  SB  214 and  SB 215,  to  be up  for                                                               
consideration and  that he  and Senator  Albert Kookesh  were the                                                               
sponsors. He  intended to  introduce the  bills and  take initial                                                               
public  comment, but  he didn't  intend to  take any  action that                                                               
day.                                                                                                                            
                                                                                                                                
He informed  committee members that  the idea for the  bills came                                                               
from  two public  forums  he  attended last  fall  to discus  the                                                               
potential impact on Alaskans from high energy costs.                                                                            
                                                                                                                                
3:41:24 PM                                                                                                                    
                                                                                                                                
He  explained that  Representative  Jay Ramras  called the  first                                                               
meeting after  a number of  Interior fuel  distributors expressed                                                               
concern that  a growing number  of their customers were  going to                                                               
have   difficulty  paying   their  winter   fuel  bills.   Alaska                                                               
Industrial Development  & Export  Authority (AIDEA)  and Interior                                                               
lending institutions  also attended the meeting  because the fuel                                                               
distributors weren't sure they could  extend sufficient credit to                                                               
carry their customers  through the winter and also  pay their own                                                               
fuel bills to the refiners.                                                                                                     
                                                                                                                                
Discussion regarding which assistance  programs were available to                                                               
the  end  users  initially  focused  on  the  Low  Income  Energy                                                               
Assistance Program (LIHEAP) but  distributors stated concern that                                                               
many customers wouldn't qualify for  the program even though they                                                               
would be squeezed financially.                                                                                                  
                                                                                                                                
3:42:11 PM                                                                                                                    
                                                                                                                                
The second  forum was a radio  talk show. A caller  expressed the                                                               
opinion that the State of Alaska  set the high price of energy in                                                               
Interior Alaska. He contended that if  the state were to sell oil                                                               
to the refiners at half  price, the savings would ultimately flow                                                               
to the end  consumer. A back-and-forth discussion  ensued and the                                                               
caller ultimately suggested that  politicians don't tend to think                                                               
outside the  box. He charged that  more often than not  they tell                                                               
you what they can't  do for you rather than what  they can do for                                                               
you.                                                                                                                            
                                                                                                                                
CHAIR  THERRIAULT said  he decided  the caller  had a  legitimate                                                               
point so  he talked with his  staff about a creative  way to help                                                               
citizens with the  price of energy. He is using  the generic term                                                               
because  of the  variability  in  the types  of  energy used  and                                                               
reasons for its  use. The constant is that all  energy costs have                                                               
gone up  and no one will  get through the Alaskan  winter without                                                               
paying for the energy they use.                                                                                                 
                                                                                                                                
The proposal is for a  one-time distribution to help with current                                                               
costs  and to  encourage  individuals to  step  forward and  take                                                               
conservation  measures that  will  pay  cost-saving dividends  in                                                               
years  to come.  Consumers should  not  expect that  this is  the                                                               
beginning of an ongoing program, he warned.                                                                                     
                                                                                                                                
Data from the  2005 Permanent Fund Dividend  application was used                                                               
to come up with the  anticipated distribution of $250 per person.                                                               
However,  because there  are potential  problems associated  with                                                               
that   data,  updated   information   from   the  2006   dividend                                                               
applications  may be  needed as  well. Because  of the  potential                                                               
legal issues associated with the  distribution, he stated that he                                                               
is open to suggestions.                                                                                                         
                                                                                                                                
The  bill has  two additional  components to  direct more  of the                                                               
earnings surplus to the constituency  with the greatest need. The                                                               
first proposes to put an  additional $5.7 million into power cost                                                               
equalization  to make  up the  FY06 budgetary  shortfall and  the                                                               
second  adds   $10  million  to  the   low-income  weatherization                                                               
program.                                                                                                                        
                                                                                                                                
He explained  that SB 214 sets  up the appropriations and  SB 215                                                               
relates  to the  mechanism by  which the  distributions would  be                                                               
made.                                                                                                                           
                                                                                                                                
He questioned  the $655,000 fiscal  note from the  Permanent Fund                                                               
Dividend Division.                                                                                                              
                                                                                                                                
3:51:46 PM                                                                                                                    
                                                                                                                                
SENATOR CHARLIE  HUGGINS aired the  view that people  are excited                                                               
that the money would be distributed directly to the people.                                                                     
                                                                                                                                
CHAIR THERRIAULT acknowledged that has  been a criticism as well,                                                               
but it  comes down  to the fact  that you can't  go very  long in                                                               
Alaska without  paying your energy  bills so whether the  bill is                                                               
paid  with  the  money  distributed  by the  state  or  from  the                                                               
individual's  paycheck doesn't  matter.  Energy bills  ultimately                                                               
must be paid.                                                                                                                   
                                                                                                                                
He stated  his belief  that the spiraling  cost of  energy caught                                                               
people off guard. When the  Legislature developed its oil and gas                                                               
tax system,  it wasn't  anticipated that oil  would reach  $60 or                                                               
$70  per barrel.  But because  prices have  risen to  that point,                                                               
it's now clear  that State of Alaska has an  unusual situation in                                                               
that  what is  good for  the state  treasury is  harmful for  the                                                               
individual.  To address  the situation  he  contended that  using                                                               
approximately 10 percent of the  anticipated budget surplus for a                                                               
onetime program warrants consideration.                                                                                         
                                                                                                                                
3:55:04 PM                                                                                                                    
                                                                                                                                
SENATOR THOMAS  WAGONER cautioned  that oil prices  aren't likely                                                               
to  drop in  the near  future  and although  everyone likes  free                                                               
money,  there is  a real  and  stated concern  that this  program                                                               
could become an entitlement.                                                                                                    
                                                                                                                                
3:56:44 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  said he could  understand his point  and that's                                                               
one  reason  he  wanted  to base  the  distribution  on  existing                                                               
programs or  data. Although nothing prevents  a future legislator                                                               
or future  Legislature from  considering a  similar distribution,                                                               
nothing in the current proposal carries forward.                                                                                
                                                                                                                                
SENATOR HUGGINS remarked teaming  with another legislator to look                                                               
for a positive solution is a good thing.                                                                                        
                                                                                                                                
3:57:50 PM                                                                                                                    
                                                                                                                                
SENATOR  KIM  ELTON  said  he had  several  questions  about  the                                                               
distribution mechanism. First, how much  of the money would leave                                                               
the state and second, how much  would go to families that have no                                                               
energy  cost  associated  with  their  housing.  Referencing  the                                                               
latter, he  said he was  thinking about military  families living                                                               
in military housing.                                                                                                            
                                                                                                                                
3:58:52 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  reiterated he is open  to suggestions regarding                                                               
a different distribution mechanism.                                                                                             
                                                                                                                                
3:59:53 PM                                                                                                                    
                                                                                                                                
SENATOR ELTON clarified  he didn't mean to focus  on the military                                                               
because  college  students who  live  in  dorms also  have  fewer                                                               
energy challenges.                                                                                                              
                                                                                                                                
4:00:59 PM                                                                                                                    
                                                                                                                                
JIM  DALMAN,  Program  Officer, Division  of  Public  Assistance,                                                               
Department of  Health and Social Services  (DHSS), explained that                                                               
the  division  administers  the state's  low-income  home  energy                                                               
assistance block  grant. The heating assistance  program operates                                                               
under the  state portion of the  block grant and its  mission and                                                               
purpose is  to help low-income Alaskans  offset high home-heating                                                               
costs.                                                                                                                          
                                                                                                                                
CHAIR  THERRIAULT  interjected to  explain  that  the program  is                                                               
established on the federal level.  Federal funds flow through the                                                               
state budget and  are subsequently administered by  the state and                                                               
some Native entities.                                                                                                           
                                                                                                                                
He  asked whether  state or  federal law  establishes eligibility                                                               
criterion.                                                                                                                      
                                                                                                                                
MR. DALMAN  replied it's both.  The low-income  energy assistance                                                               
block grant  is federally  funded on  an annual  basis and  has a                                                               
provision  for  direct funding  for  Native  entities. In  Alaska                                                               
there are eight Native  organizations, four regional non-profits,                                                               
and  a number  of small  tribal or  community organizations  that                                                               
receive direct funding.  DHSS shares some of its  funding so that                                                               
all entities are able to offer comparable benefits.                                                                             
                                                                                                                                
A  maximum  eligibility  provision  exists  that  amounts  to  60                                                               
percent of  median income  adjusted by state.  In Alaska  a lower                                                               
standard  is used,  which is  150 percent  of the  Alaska poverty                                                               
standard  or   $36,000  per  year   for  a  household   of  four.                                                               
Individuals are  income-tested against that  qualifying guideline                                                               
on  a  monthly  income  basis.   Tribal  organizations  have  the                                                               
latitude  to deviate  to set  up their  own delivery  methods and                                                               
eligibility criteria.                                                                                                           
                                                                                                                                
Alaska received about $12 million  in block grant money this year                                                               
and about one-third went to  Native organizations. The department                                                               
expects  to   serve  about  10,500  households   and  the  Native                                                               
organizations might serve between 3,000 and 4,000 households.                                                                   
                                                                                                                                
Applications are made  in the fall and the  program's early focus                                                               
is on  the elderly,  the disabled,  families with  children under                                                               
age six, and  people living in rural areas.  The program operates                                                               
September  thru  May  and  has never  relied  on  state  funding.                                                               
Federal guidelines  allow 10 percent  maximum utilization  of the                                                               
block  grant   money  for   administration,  which   requires  an                                                               
efficient operation. The result is  that most of the benefit goes                                                               
to those who are eligible for the service.                                                                                      
                                                                                                                                
Applicants receive  a one-time annual  grant the amount  of which                                                               
is driven  by household size,  income, and location.  Location is                                                               
modeled to take into consideration  heating degree-days and local                                                               
fuel  costs. As  a result,  the grants  vary widely.  The average                                                               
payment this year is just  over $800 per qualifying household and                                                               
the range is from $200 up to $1,000 in some areas.                                                                              
                                                                                                                                
About 60  percent of the  qualifying households receive  no other                                                               
form of public  assistance, but the application  volume has risen                                                               
about  18 percent  so far  this year.  Buying power  is down  and                                                               
applicants  have  expressed  increased concern  that  their  fuel                                                               
dollar isn't stretching very far.                                                                                               
                                                                                                                                
4:08:22 PM                                                                                                                    
                                                                                                                                
A provision in  the block grant allows states to  set aside up to                                                               
15 percent  of their  LIHEAP (Low  Income Home  Energy Assistance                                                               
Program)  block grant  for low-income  home weatherization.  Each                                                               
year  a certain  portion  of  the funds  is  transferred to  AHFC                                                               
(Alaska Housing  Finance Corporation)  to supplement  the state's                                                               
low-income  residential  weatherization  program.  He  said  they                                                               
intend to do that in some  measure again this year simply because                                                               
it's a good way to defray costs in the long term.                                                                               
                                                                                                                                
He  recapped; the  program is  income tested  and the  benefit is                                                               
delivered  directly.  Typically  more  than  90  percent  of  the                                                               
benefit goes  directly to the  individual's home  energy supplier                                                               
with the  primary focus  on home heating  needs. Renters  are not                                                               
excluded.  If heat  and electricity  is included  in the  rent an                                                               
individual could still qualify for the program.                                                                                 
                                                                                                                                
4:10:52 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  asked if the  $12 million he mentioned  for the                                                               
LIHEAP funding included tribal payments.                                                                                        
                                                                                                                                
MR. DALMAN turned to an audience member for verification.                                                                       
                                                                                                                                
UNIDENTIFIED SPEAKER gave an inaudible response.                                                                                
                                                                                                                                
SENATOR ELTON  questioned whether it  would work to use  the data                                                               
from  the  Permanent  Fund   Dividend  Division  then  distribute                                                               
through the federally funded heating assistance program.                                                                        
                                                                                                                                
4:13:25 PM                                                                                                                    
                                                                                                                                
LAURA BAKER, Budget  Chief, DHSS, clarified that  the needs could                                                               
not be met  without supplemental state assistance  this year. She                                                               
informed  members  that the  governor's  office  has submitted  a                                                               
supplemental  bill that  includes an  additional $8.8  million in                                                               
state funds to supplement the  heating assistance program for the                                                               
year.  About $2.8  million will  go  to the  Native entities  and                                                               
about $5.9 million will go to the state program.                                                                                
                                                                                                                                
SENATOR ELTON asked  if there is any problem  associated with the                                                               
supplemental state  money being  counted as household  income and                                                               
therefore  making  some  individuals ineligible  because  of  the                                                               
increase.                                                                                                                       
                                                                                                                                
MS. BAKER deferred to Mr. Dalman.                                                                                               
                                                                                                                                
SENATOR THOMAS WAGONER asked how  much it costs to administer the                                                               
grant.                                                                                                                          
                                                                                                                                
MR.  DALMAN responded  administrative  costs amount  to about  10                                                               
percent.                                                                                                                        
                                                                                                                                
4:15:53 PM                                                                                                                    
                                                                                                                                
SENATOR  BETTYE  DAVIS  asked  Mr.   Dalman  to  comment  on  the                                                               
advisability of earmarking the proposed  funds to the established                                                               
program  so that  the money  gets to  those that  really need  it                                                               
rather than distributing $250 to  every Alaskan who qualifies for                                                               
a Permanent Fund Dividend.                                                                                                      
                                                                                                                                
MR.  DALMAN  responded whatever  the  Legislature  decides to  do                                                               
could be  accommodated, but he  would reserve  judgment regarding                                                               
the best  mechanism. He emphasized  that there is need  out there                                                               
and  he welcomes  the notions  about  giving relief  to those  in                                                               
need.                                                                                                                           
                                                                                                                                
4:18:06 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT asked how many tribal providers there are.                                                                     
                                                                                                                                
MR. DALMAN replied  there are eight Native  entities that receive                                                               
direct  federal  LIHEAP block  grant  funding.  They are:  Tanana                                                               
Chiefs, Association  of Village  Council Presidents  from Bethel,                                                               
Kuskokwim Native  Association, Orutsararmuit  Native Corporation,                                                               
Seldovia, Kenaitze Indian Tribes,  Tlingit Haida Central Council,                                                               
and the Aleutian/Pribilof Islands Association, Inc.                                                                             
                                                                                                                                
CHAIR  THERRIAULT  asked if  there  are  nine different  sets  of                                                               
criteria.                                                                                                                       
                                                                                                                                
MR. DALMAN replied  not all programs deliver  payment directly to                                                               
the provider.                                                                                                                   
                                                                                                                                
MARY RIGGEN-VER,  former Heating Assistance  Program Coordinator,                                                               
DHSS,  said she  thought that  most Native  grantees provide  the                                                               
grants directly to energy suppliers.                                                                                            
                                                                                                                                
CHAIR THERRIAULT  questioned whether  payment always goes  to the                                                               
vender.                                                                                                                         
                                                                                                                                
MS. RIGGEN-VER said  not always. Over 90 percent of  the grant to                                                               
the state goes directly to  the vendors, but in certain instances                                                               
heat  and  electricity  is  included  in the  rent  so  there  is                                                               
provision for a cash grant.                                                                                                     
                                                                                                                                
CHAIR  THERRIAULT asked  if there  are different  income criteria                                                               
among the nine different grantees.                                                                                              
                                                                                                                                
MS. RIGGEN-VER  explained that the  federal maximum is  either 60                                                               
percent of  median or  150 percent of  the Alaska  poverty level.                                                               
The former  is a  bit higher  for lower  household sizes  and the                                                               
latter is higher for larger households.                                                                                         
                                                                                                                                
CHAIR THERRIAULT  questioned how the supplemental  funds would be                                                               
spent.                                                                                                                          
                                                                                                                                
MS.  RIGGEN-VER  replied  the additional  money  would  primarily                                                               
address  the increased  costs  that people  are  facing that  the                                                               
current  grant  doesn't address.  The  LIHEAP  grant hasn't  been                                                               
increased  for three  years because  the  federal funding  hasn't                                                               
increased.                                                                                                                      
                                                                                                                                
CHAIR THERRIAULT summarized the same clientele would be served.                                                                 
                                                                                                                                
MS. RIGENBEAR  agreed provisionally  because the program  has had                                                               
more applicants due to increased energy costs.                                                                                  
                                                                                                                                
CHAIR  THERRIAULT   said  that's   part  of  his   concern.  Fuel                                                               
distributors have  indicated that some households  are struggling                                                               
to  pay  for  their  energy   yet  they  don't  qualify  for  the                                                               
assistance program.                                                                                                             
                                                                                                                                
MS. RIGGEN-VER agreed it is a problem.                                                                                          
                                                                                                                                
4:23:48 PM                                                                                                                    
                                                                                                                                
SENATOR  DAVIS questioned  whether  receiving  benefits from  the                                                               
proposed  energy  dividend  could  cause  individuals  to  become                                                               
ineligible for the low-income heating assistance program                                                                        
                                                                                                                                
MR. DALMAN replied there is  a hold harmless provision related to                                                               
the  Permanent Fund  Dividend and  the  proposed energy  dividend                                                               
could probably be defined in a similar fashion.                                                                                 
                                                                                                                                
4:25:06 PM                                                                                                                    
                                                                                                                                
SENATOR  DAVIS  asked  about  the cost  of  increasing  the  hold                                                               
harmless provision.                                                                                                             
                                                                                                                                
MR. DALMAN surmised it wouldn't be a direct budget issue.                                                                       
                                                                                                                                
SENATOR ELTON suggested  that if most of the  money goes directly                                                               
to  the  venders,  most  applicants   would  avoid  the  problems                                                               
associated with increased individual income.                                                                                    
                                                                                                                                
MR. DALMAN  agreed; the current  benefit is excluded  from income                                                               
calculation.                                                                                                                    
                                                                                                                                
4:27:04 PM                                                                                                                    
                                                                                                                                
SENATOR HUGGINS asked about the 15  percent that is set aside for                                                               
weatherization.                                                                                                                 
                                                                                                                                
MR. DALMAN informed  him that is the maximum  allowable under the                                                               
block  grant  provisions. So  far  this  year $600,000  has  been                                                               
allocated.                                                                                                                      
                                                                                                                                
SENATOR HUGGINS  asked how  long it  takes to  get weatherization                                                               
help after completing an application.                                                                                           
                                                                                                                                
MR. DALMAN deferred response to the AHFC representative.                                                                        
                                                                                                                                
4:28:31 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  asked Mr. Butcher  to come forward  and explain                                                               
how  the low-income  weatherization  works and  the payment  that                                                               
comes from LIHEAP funds.                                                                                                        
                                                                                                                                
BRIAN   BUTCHER,  Governmental   Relations  and   Public  Affairs                                                               
Director,  Alaska Housing  Finance  Corporation (AHFC),  outlined                                                               
the  low-income  weatherization  program   and  stated  that  its                                                               
purpose  is   to  provide  cost  effective   energy  improvements                                                               
primarily to low-income families.                                                                                               
                                                                                                                                
This fiscal year  the funding to non-profits across  the state is                                                               
$1.8 million from  the federal government and $3  million in AHFC                                                               
dividend.  He noted  that the  Municipality of  Anchorage is  the                                                               
only  government  entity  in  the state  that  operates  its  own                                                               
program. He explained  that over 1,900 clients in  615 homes were                                                               
served last year.                                                                                                               
                                                                                                                                
To  demonstrate  that the  weatherization  program  is geared  to                                                               
needy families he made the following points:                                                                                    
                                                                                                                                
    ƒOver 50 percent have children under age six.                                                                              
    ƒOver 25 percent have a disabled family member.                                                                            
    ƒOver 25 percent have elderly family member(s).                                                                            
                                                                                                                                
For every million dollars in  funding approximately 150 homes are                                                               
weatherized. The program provides an  economic boost to the local                                                               
community as well  as the family because local  vendors are hired                                                               
by the non-profits to do the weatherization work.                                                                               
                                                                                                                                
A  positive  aspect to  the  program  is  that the  benefits  are                                                               
enduring.  Once  a house  is  weatherized  there is  a  long-term                                                               
energy  savings  benefit to  the  family  and the  community,  he                                                               
concluded.                                                                                                                      
                                                                                                                                
4:32:47 PM                                                                                                                    
                                                                                                                                
CHAIR   THERRIAULT  used   the  previously   cited  figures   and                                                               
calculated  that  the  average  home  could  be  weatherized  for                                                               
between $6,000 and $7,000.                                                                                                      
                                                                                                                                
MR. BUTCHER  responded the  cost varies  widely depending  on the                                                               
home and  its location,  but the  average weatherization  cost is                                                               
between $4,000 and $4,5000 per  home. An additional point is that                                                               
as energy  costs go up the  price of materials increase  as well.                                                               
The  AHFC  program  manager estimates  that  materials  increased                                                               
between 30 and  40 percent since last year.  Therefore, a similar                                                               
increase in the program is needed to maintain equilibrium.                                                                      
                                                                                                                                
CHAIR THERRIAULT  pointed out that  the bill proposal is  for $10                                                               
million and  he was  interested in an  estimate of  the program's                                                               
capacity for "getting the money out door."                                                                                      
                                                                                                                                
MR. BUTCHER replied  the money wouldn't hit the  street the first                                                               
year; it would likely take two  to three years to get the program                                                               
to the point  that it could handle the increase.  Also, having no                                                               
assurance of a follow-up program would create some difficulty.                                                                  
                                                                                                                                
CHAIR THERRIAULT asked whether complaints  are handled locally or                                                               
whether they get back to him.                                                                                                   
                                                                                                                                
MR.  BUTCHER  replied  AHFC  isn't  involved  in  the  day-to-day                                                               
workings, but  hopefully complaints  related to  unnecessary work                                                               
would get back to the corporation.                                                                                              
                                                                                                                                
CHAIR  THERRIAULT noted  that  the funding  is  a combination  of                                                               
federal and  state funds  and he was  curious about  the latitude                                                               
for changing eligibility criteria.                                                                                              
                                                                                                                                
MR. BUTCHER  responded there is  no latitude with  federal money,                                                               
but  there  is considerable  flexibility  with  state funds.  One                                                               
reason for state latitude is  that it benefits the corporation if                                                               
people don't lose their homes.                                                                                                  
                                                                                                                                
CHAIR  THERRIAULT asked  him to  review  the federal  eligibility                                                               
requirements  and  to explain  the  decision  making process  for                                                               
determining  whether  federal  or  state  money  is  used  for  a                                                               
particular weatherization project.                                                                                              
                                                                                                                                
MR. BUTCHER  explained that federal  funds take care of  the very                                                               
low income and the rest are  paid from the AHFC dividend program.                                                               
With regard  to income  criteria, he explained  that a  family of                                                               
four qualifies at $43,000.                                                                                                      
                                                                                                                                
4:38:27 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT opened teleconference testimony.                                                                               
                                                                                                                                
4:38:42 PM                                                                                                                    
                                                                                                                                
DEBBIE  JOSLIN,  Eagle  Forum Alaska  Representative  from  Delta                                                               
Junction, testified via  teleconference in support of  SB 214 and                                                               
SB 215. She  explained that the forum  represents families across                                                               
Alaska and  the bills  are definitely  family friendly  and offer                                                               
welcome relief.                                                                                                                 
                                                                                                                                
4:41:08 PM                                                                                                                    
                                                                                                                                
TODD  HONER,  Energy  Efficiency  Specialist  for  Golden  Valley                                                               
Electric  Association  in  Fairbanks,  and Chair  of  the  Policy                                                               
Advisory   Council  for   the   Alaska  Weatherization   Program,                                                               
testified  via teleconference  to report  that energy  efficiency                                                               
programs have been his forte since  the late 1970s when he became                                                               
an  energy auditor  under Governor  Hammond's administration.  He                                                               
described SB 214 and SB 215  as well intended and a fast response                                                               
but, in  the long run,  a short-term  solution to a  problem that                                                               
will plague Alaska far into the future.                                                                                         
                                                                                                                                
He suggested  that the state should  lead the way in  looking for                                                               
long-term  solutions  to  the  energy   problems  that  face  the                                                               
residents  of  Alaska. Previous  experience  tells  him that  the                                                               
current proposal might not bring the needed relief.                                                                             
                                                                                                                                
He  reviewed  calculations  he   had  made  to  demonstrate  that                                                               
investing   in  energy   efficient   devices   such  as   compact                                                               
fluorescent lights result in a  substantial return on the initial                                                               
investment.  He further  suggested addressing  energy consumption                                                               
behavior,   addressing   building    codes,   addressing   energy                                                               
efficiency  codes.  Instead  of addressing  cost,  let's  address                                                               
efficiencies, he concluded.                                                                                                     
                                                                                                                                
4:55:00 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  responded he has  made changes to  increase the                                                               
energy efficiency of  his home in Fairbanks and  he would support                                                               
others increasing efficiency. The question is how to get there.                                                                 
                                                                                                                                
MR.  HONER said  the way  the market  runs, consumers  would make                                                               
efficiency  changes  faster  if  the consumer  knew  that  energy                                                               
prices weren't going  to drop and that neither the  state nor the                                                               
federal government was going to offer relief.                                                                                   
                                                                                                                                
4:58:35 PM                                                                                                                    
                                                                                                                                
VIANN NATIONS, Copper River  Native Association (CRNA), testified                                                               
that CRNA supports the bill.                                                                                                    
                                                                                                                                
5:02:56 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT asked Sharon Barton about the fiscal note.                                                                     
                                                                                                                                
SHARON  BARTON,  Director,   Permanent  Fund  Dividend  Division,                                                               
stated  there would  be no  problem using  the dividend  division                                                               
database. If  the energy  dividend were  combined with  an annual                                                               
Permanent Fund dividend  payment, the fiscal note  would be zero.                                                               
A problem does arise, however, if  there is an extra payment. The                                                               
mainframe/server system  is old and specifically  designed to pay                                                               
each individual just one check  per year so rebuilding the system                                                               
to  accommodate a  second payment  would result  in a  very large                                                               
fiscal note.                                                                                                                    
                                                                                                                                
The division estimates that a  second payment would cost $400,000                                                               
for  changes to  the system  and  $255,800 in  other costs.  With                                                               
apologies she  presented the $655,800  fiscal note for  a special                                                               
payment.                                                                                                                        
                                                                                                                                
5:05:57 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  admitted he didn't  anticipate that  the system                                                               
would require  reprogramming so he  would likely  have additional                                                               
questions before taking final action on the bill.                                                                               
                                                                                                                                
He questioned  how quickly the  2006 application data  is updated                                                               
and how many applications have been verified to date.                                                                           
                                                                                                                                
MS.  BARTON  replied  approximately  150,000  records  have  been                                                               
updated to the mainframe but  they haven't been adjudicated. Over                                                               
230,000 online  applications and 100,000 paper  applications have                                                               
come in,  but most  of the  paper applications  are still  in the                                                               
mailroom.  The speed  with which  the information  could be  made                                                               
available depends  on how complete you  might want it to  be, she                                                               
said. Typically the  file isn't finished until it  is locked down                                                               
about Sept  1 for  direct deposit  reconciliation. At  that time,                                                               
between  98 and  99 percent  of the  processing is  done although                                                               
there  are always  several thousand  files  that aren't  complete                                                               
until well into the next application period.                                                                                    
                                                                                                                                
5:09:37 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT mused 2005 payments are still being made.                                                                      
                                                                                                                                
MS. BARTON said that's correct.                                                                                                 
                                                                                                                                
CHAIR  THERRIAULT stated  that although  some legal  issues might                                                               
need  to be  addressed, that  particular database  is undoubtedly                                                               
the best in the state on who qualifies as a resident.                                                                           
                                                                                                                                
MS. BARTON cautioned  that if a special payment were  to be made,                                                               
the division estimates that it would  take three months to do the                                                               
work.                                                                                                                           
                                                                                                                                
SENATOR WAGONER  questioned why the  energy dividend  wouldn't go                                                               
to  each household  rather than  to each  resident. He  asked Ms.                                                               
Barton if the permanent fund data could be sorted that way.                                                                     
                                                                                                                                
MS. BARTON replied  the list wouldn't be  accurate. Some families                                                               
file under  a family  packet and  the payments  are made  to that                                                               
address,  but all  the family  members  don't necessarily  reside                                                               
under one roof.                                                                                                                 
                                                                                                                                
5:13:19 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT remarked he gave  that idea some thought, but it                                                               
could have inequities as well.                                                                                                  
                                                                                                                                
5:13:45 PM                                                                                                                    
                                                                                                                                
MR.  DALMAN  clarified  that  the  energy  dividend  for  heating                                                               
assistance  could,  through  regulation  or  bill  amendment,  be                                                               
defined as excluded income.                                                                                                     
                                                                                                                                
CHAIR THERRIAULT  announced he would  hold SB  214 and SB  215 in                                                               
committee.                                                                                                                      
                                                                                                                                
There being nothing  further to come before  the committee, Chair                                                               
Therriault adjourned the meeting at 5:14:22 PM.                                                                               
                                                                                                                                

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