HB 150-POWER COST EQUALIZATION   9:14:38 AM CO-CHAIR HERRON announced that the next order of business would be HOUSE BILL NO. 150, "An Act repealing certain provisions relating to modifying the factors that apply to calculate the amount of power cost equalization; providing for an effective date by repealing the effective date of sec. 3, ch. 2, 4SSLA 2008; and providing for an effective date." 9:15:07 AM BOB CHARLES, Energy Coordinator, Association of Village Council Presidents, noted that he provided written testimony to the committee entitled "AVCP Calista Region's Energy Costs." He informed the committee that the Calista region's residential heating oil and regular gasoline prices have increased well over 100 percent in the last couple of years. In fact, when home heating fuel was delivered in the spring of 2008, the cost had risen to $8.00 a gallon. He pointed out that he provided the committee with a table specifying fuel prices at the end of February ranging from $6.00-$8.00 per gallon. As 2009 began, electric utility rates in the region were between $.53 and $.65 per kilowatt hour (kWh). Electric bills in the region have averaged $342-$360 per month prior to power cost equalization (PCE). With PCE, the electric rates are around $.33-$.44 per kWh and the billings amount to $176 to $200. Usage has ranged from 530 kWh to 750 kWh per household. Local utility administrators have observed that a number of households have much lower usages, in the range of 200 kWh to 400 kWh and the billings ranging from $120-$150 per month. The increases in the rates are reflective of the higher delivered fuel costs in recent years, he said. The PCE program has been paramount in helping to make electric rates affordable. He recalled testimony at a prior hearing that Newtok had one of the highest rates prior to PCE with billings around $150-$400. The usage in Newtok ranges from 300-400 kWh [per month]. Mr. Charles opined that energy costs account for a large portion of a household's disposable income, with it amounting to 60-70 percent. The aforementioned can primarily be attributed to the price hikes in the energy costs. Any further increases in electric rates or fuel costs will result in fuel and electricity becoming unaffordable. He related that recent energy studies conducted by Nuvista Light and Power 2002 and 2004 have illustrated that lower income residents devote larger amounts of their disposable income to energy and use less. MR. CHARLES then related that the unemployment rates in the Bethel and Wade Hampton census districts currently range from 16.6-22.8. However, the jobless rate is a more significant and relevant indicator of the economic condition in the region. In the Bethel and Wade Hampton districts the jobless rate is 38.5 percent and 43.3 percent, respectively. The median income in the Bethel census district is about $45,200, which amounts to an average monthly income of about $2,700. In the Wade Hampton census district the median income is about $36,600, which amounts to an average monthly income in the amount of $1,750. He then noted that the fish income in the [Kuskokwim] area doesn't provide much income for the year. In the Kuskokwim area about 500,000 salmon were caught, which amounts to about $1.5 million and about $3,200 per permit holder. He reminded the committee that in 2007 there wasn't much of a fishery, save a couple of coho fishing periods that provided about $300,000 for the entire region. The Yukon didn't have a summer chum king salmon fishery, but did have a fall chum coho fishery that caught 312,513 salmon by 444 permit holders. The aforementioned totaled about $1.4 million and broke down to about $3,000 per permit holder. Comparing the aforementioned income to fuel, electric, and food costs, one can see that lower income people can't afford many groceries and have to use less energy. He opined that this is an indicator that populations throughout the region are very vulnerable to increasing energy costs. Moreover, the region's economy is fragile and susceptible to further increases to fuel and electric rates. Mr. Charles concluded by relating support for HB 150, specifically keeping the eligible cost rate at $1 and continuing the PCE program. 9:24:11 AM ERIN HARRINGTON, Staff, Representative Alan Austerman, Alaska State Legislature, speaking on behalf of the sponsor of HB 150, explained that the purpose of HB 150 is to perpetuate the $1.00 ceiling in order to reflect the true cost of power generation in Alaska. With the continuation of the ceiling, the program will continue to reflect the true costs of power generation in Alaska. By keeping the ceiling at $1.00, the state isn't obligated to anything during times of low energy prices. However, when prices are high, the $1.00 ceiling provides power cost equity for rural communities that haven't been able to benefit from the long-term investments in power generation infrastructure in certain areas of the state. 9:26:11 AM REPRESENTATIVE GARDNER inquired as to how much power an average household uses in rural Alaska as compared to urban Alaska. MS. HARRINGTON explained that PCE covers the first 500 kWh in a residential area. Typical power usage in rural areas is around 500 kWh per household, but it's a bit higher for urban areas where the electrical usage is closer to 700 kWh. 9:27:13 AM CO-CHAIR HERRON, upon determining no one else wished to testify, closed public testimony. 9:27:18 AM CO-CHAIR MUNOZ moved to report HB 150 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, it was so ordered.