SENATE FINANCE COMMITTEE April 9, 2013 3:34 p.m. 3:34:19 PM CALL TO ORDER Co-Chair Meyer called the Senate Finance Committee meeting to order at 3:34 p.m. MEMBERS PRESENT Senator Pete Kelly, Co-Chair Senator Kevin Meyer, Co-Chair Senator Anna Fairclough, Vice-Chair Senator Click Bishop Senator Mike Dunleavy Senator Lyman Hoffman Senator Donny Olson MEMBERS ABSENT None ALSO PRESENT William Walker, Attorney, Walker Richards LLC; Craig Richards, Attorney, Walker Richards LLC; Stewart Goering, Assistant attorney General, Department of Law; Representative Mike Hawker; Representative Mike Chenault SUMMARY CSSSHB 4(FIN) ALASKA GASLINE DEVELOPMENT CORP; RCA CSSSHB 4(FIN) was HEARD and HELD in committee for further consideration. CSHB 30(FIN) STATE AGENCY PERFORMANCE AUDITS CSHB 30(FIN) was REPORTED out of committee with a "do pass" recommendation and two previously published zero fiscal notes: FN1(GOV) and FN2(LEG); and with previously published fiscal impact note: FN3(LEG). CS FOR HOUSE BILL NO. 30(FIN) "An Act relating to performance reviews, audits, and termination of executive and legislative branch agencies, the University of Alaska, and the Alaska Court System; and providing for an effective date." 3:35:53 PM Vice-Chair Fairclough highlighted fiscal note #3. She relayed that the legislation initiated annual performance audits and reviews of Executive Branch agencies beginning with calendar year 2014, continuing annually on a 10-year cycle. 3:36:50 PM Co-Chair Meyer stated that the note represented the basic costs and expenses associated with performing the numerous audits of state agencies. 3:37:03 PM Vice-Chair Fairclough MOVED to REPORT HB 30 out of committee with individual recommendations and the accompanying fiscal note(s). There being NO OBJECTION, it was so ordered. 3:37:18 PM Co-Chair Meyer noted that Co-Chair Kelly had joined the meeting. CSHB 30(FIN) was REPORTED out of committee with a "do pass" recommendation and two previously published zero fiscal notes: FN1(GOV) and FN2(LEG); and with previously published fiscal impact note: FN3(LEG). 3:37:26 PM AT EASE 3:40:21 PM RECONVENED CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 4(FIN) "An Act relating to the Alaska Gasline Development Corporation; establishing the Alaska Gasline Development Corporation as an independent public corporation of the state; establishing and relating to the in-state natural gas pipeline fund; making certain information provided to or by the Alaska Gasline Development Corporation and its subsidiaries exempt from inspection as a public record; relating to the Joint In-State Gasline Development Team; relating to the Alaska Housing Finance Corporation; relating to judicial review of a right-of-way lease or an action or decision related to the development or construction of an oil or gas pipeline on state land; relating to the lease of a right-of-way for a gas pipeline transportation corridor, including a corridor for a natural gas pipeline that is a contract carrier; relating to the cost of natural resources, permits, and leases provided to the Alaska Gasline Development Corporation; relating to procurement by the Alaska Gasline Development Corporation; relating to the review by the Regulatory Commission of Alaska of natural gas transportation contracts; relating to the regulation by the Regulatory Commission of Alaska of an in-state natural gas pipeline project developed by the Alaska Gasline Development Corporation; relating to the regulation by the Regulatory Commission of Alaska of an in-state natural gas pipeline that provides transportation by contract carriage; repealing the statutes relating to the Alaska Natural Gas Development Authority and making conforming changes; exempting property of a project developed by the Alaska Gasline Development Corporation from property taxes before the commencement of commercial operations; and providing for an effective date." 3:41:34 PM WILLIAM WALKER, ATTORNEY, WALKER RICHARDS LLC, requested permission to speak to the sponsor's response following the presentation. He noted that he a supported pipeline project; however, he could not support the project proposed in HB 4. 3:42:52 PM Mr. Walker began a presentation titled "City of Valdez- Presentation on the In-State Gas Pipeline Bill (HB 4)" (copy on file). He shared that in crafting the presentation he had drawn upon his knowledge of TAPS. He discussed Slide 2, "Problems with HB 4 and AGDC Concept": •Cheaper Alternatives Like LNG Import •Unclear Whether AGIA Violated by H.B. 4 •Circumvents Existing Regulatory Structure •FERC open season regulations •RCA and not FERC regulated •No common carriage in-state •Just and reasonable rates not required •Expansion costs on new entrants •Cost Estimate Not Transparent •Wrong Project Scope •State Loses if H.B. 4 Structure Used for Big Project 3:44:41 PM Mr. Walker addressed Slide 3, "Background - HB 369." He related that HB 369 had been the predecessor to HB 4: •HB 369 Sec. 4. AS 38.34.099 to read: "(1) 'in-state natural gas pipeline' means a pipeline for transporting natural gas that runs from the North Slope to tidewater in the state" •HB 369 Sec. 9. Amended AS 41.41.990(3)to read: "'project' means the gas transmission pipeline, together with all related property and facilities, to extend from the North Slope of Alaska or other regions of the state to a market in the state, or be available to a market in the state, and to tidewater at a point on Prince William Sound or Cook Inlet, and includes planning, design, and construction of the pipeline and facilities as described in AS 41.41.010(a)(1)-(5)." Mr. Walker stated that a direction of HB 369 had been for the state to participate in an export process; to encourage the application for a license, or to encourage those with a license to get an extension. He said that with the passage of HB 369 it had been anticipated that a large volume line would be built that could provide for all of Alaska. Additionally, the bill discussed adding an export piece, should the increased volume lower the cost of energy to Alaskan consumers. 3:46:45 PM Mr. Walker spoke to Slides 4 and 5, "Potential Benefits to Alaskans from a Large Volume State-Owned Gasline/LNG Project by PDC Harris Group LLC (November 3, 2011)," which highlighted the cost of energy to Alaskans outside of the Rail belt: vs