00 CS FOR SENATE BILL NO. 213(FIN) 01 "An Act extending the Alaska Public Utilities Commission; relating to regulation 02 of public utilities and to regulatory cost charges; and providing for an effective 03 date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 42.05.141(a) is amended to read: 06 (a) The Alaska Public Utilities Commission may do all things necessary or 07 proper to carry out the purposes and exercise the powers expressly granted or 08 reasonably implied in this chapter, including 09 (1) regulate every public utility engaged or proposing to engage in a 10 utility [SUCH A] business inside the state, except to the extent exempted by 11 AS 42.05.711 [, AND THE POWERS OF THE COMMISSION SHALL BE 12 LIBERALLY CONSTRUED TO ACCOMPLISH ITS STATED PURPOSES]; 13 (2) investigate, upon complaint or upon its own motion, the rates, 14 classifications, rules, regulations, practices, services, and facilities of a public utility 01 and hold hearings on them; 02 (3) make or require just, fair, and reasonable rates, classifications, 03 regulations, practices, services, and facilities for a public utility; 04 (4) prescribe the system of accounts and regulate the service and safety 05 of operations of a public utility; 06 (5) require a public utility to file reports and other information and 07 data; 08 (6) appear personally or by counsel and represent the interests and 09 welfare of the state in all matters and proceedings involving a public utility pending 10 before an officer, department, board, commission, or court of the state or of another 11 state or the United States and to intervene in, protest, resist, or advocate the granting, 12 denial, or modification of any petition, application, complaint, or other proceeding; 13 (7) examine witnesses and offer evidence in any proceeding affecting 14 the state and initiate or participate in judicial proceedings to the extent necessary to 15 protect and promote the interests of the state. 16 * Sec. 2. AS 42.05.253(a) is amended to read: 17 (a) A regulated public utility operating in the state shall pay to the commission 18 an annual regulatory cost charge in an amount not to exceed .8 [.61] percent of gross 19 revenue derived from operations in the state, as modified under (c) of this section if 20 appropriate. An exempt utility shall pay the actual cost of services provided to it by 21 the commission. 22 * Sec. 3. AS 42.05.253(c) is amended to read: 23 (c) In determining the amount of the regulatory cost charge imposed under (a) 24 of this section, 25 (1) a utility selling utility services at wholesale shall modify its gross 26 revenue by deducting payments it receives for wholesale sales; 27 (2) a local exchange telephone utility shall modify its gross revenue by 28 deducting payments received from other carriers for settlements or access charges; 29 (3) an electric utility shall reduce its gross revenue by subtracting 30 the cost of power; in this paragraph, "cost of power" means the costs of 31 generation and purchased power reported to the commission. 01 * Sec. 4. AS 42.05.253(e) is amended to read: 02 (e) The commission shall administer the charge imposed under this section. 03 The Department of Revenue shall collect and enforce the charge imposed under this 04 section. The Department of Administration shall identify the amount of the 05 operating budget of the commission that lapses into the general fund each year. 06 The legislature may appropriate an amount equal to the lapsed amount to the 07 commission for its operating costs for the next fiscal year. If the legislature does 08 so, the commission shall reduce the total regulatory cost charge collected for that 09 fiscal year by a comparable amount. 10 * Sec. 5. AS 42.05.431(a) is amended to read: 11 (a) When the commission, after an investigation and hearing, finds that a rate 12 demanded, observed, charged, or collected by a public utility for a service subject to 13 the jurisdiction of the commission, or that a classification, rule, regulation, practice, 14 or contract affecting the rate, is unjust, unreasonable, unduly discriminatory or 15 preferential, the commission shall determine a just and reasonable rate, classification, 16 rule, regulation, practice, or contract to be observed or allowed and shall establish it 17 by order. [A MUNICIPALITY MAY COVENANT WITH BOND PURCHASERS 18 REGARDING RATES OF A MUNICIPALLY OWNED UTILITY, AND THE 19 COVENANT IS VALID AND ENFORCEABLE AND IS CONSIDERED TO BE A 20 CONTRACT WITH THE HOLDERS FROM TIME TO TIME OF THE BONDS. 21 THE FINANCIAL COVENANTS CONTAINED IN MORTGAGES AND OTHER 22 DEBT INSTRUMENTS OF COOPERATIVE UTILITIES ORGANIZED UNDER 23 AS 10.25 ARE ALSO VALID AND ENFORCEABLE, AND RATES SET BY THE 24 COMMISSION MUST BE ADEQUATE TO MEET THOSE COVENANTS. 25 HOWEVER, A COOPERATIVE UTILITY THAT IS NEGOTIATING TO ENTER A 26 MORTGAGE OR OTHER DEBT INSTRUMENT THAT PROVIDES FOR A 27 TIMES-INTEREST-EARNED RATIO (TIER) GREATER THAN THE RATIO THE 28 COMMISSION MOST RECENTLY APPROVED FOR THAT COOPERATIVE 29 SHALL SUBMIT THE MORTGAGE OR DEBT INSTRUMENT TO THE 30 COMMISSION BEFORE THE INSTRUMENT TAKES EFFECT. THE 31 COMMISSION MAY DISAPPROVE THE INSTRUMENT WITHIN 60 DAYS 01 AFTER ITS SUBMISSION. IF THE COMMISSION HAS NOT ACTED WITHIN 02 60 DAYS, THE INSTRUMENT IS CONSIDERED TO BE APPROVED.] 03 * Sec. 6. AS 42.05.431 is amended by adding new subsections to read: 04 (i) A municipality may covenant with bond purchasers regarding rates of a 05 municipally owned utility, and the covenant is valid and enforceable and is considered 06 to be a contract with the holders from time to time of the bonds. Rates set by the 07 commission must be adequate to meet those covenants. However, the commission is 08 not required to set rates for services regulated by the commission to recover the 09 allocated costs and coverage requirements of services that are not regulated by the 10 commission. Bonds or other debt issued to finance unregulated, competitive ventures 11 by a municipally owned utility may not be incurred in a manner that would permit a 12 creditor, on default, to have recourse to the assets of the basic regulated utility 13 business. 14 (j) The financial covenants contained in mortgages and other debt instruments 15 of cooperative utilities organized under AS 10.25 are also valid and enforceable, and 16 rates set by the commission must be adequate to meet those covenants. However, a 17 cooperative utility that is negotiating to enter a mortgage or other debt instrument that 18 provides for a times-interest-earned ratio (TIER) greater than the ratio the commission 19 most recently approved for that cooperative shall submit the mortgage or debt 20 instrument to the commission before the instrument takes effect. The commission may 21 disapprove the instrument within 60 days after its submission. If the commission has 22 not acted within 60 days, the instrument is considered to be approved. 23 * Sec. 7. AS 42.05.711(e) is amended to read: 24 (e) Notwithstanding any other provisions of this chapter, any electric or 25 telephone utility that does not gross $50,000 annually is exempt from regulation under 26 this chapter unless [25 PERCENT OF] the subscribers petition the commission for 27 regulation under AS 42.05.712(h). 28 * Sec. 8. AS 42.05.711(f) is amended to read: 29 (f) Notwithstanding any other provisions of this chapter, an electric or 30 telephone utility that does not gross $500,000 [$325,000] annually may elect to be 31 exempt from the provisions of this chapter other than AS 42.05.221 - 42.05.281 under 01 the procedure described in AS 42.05.712. 02 * Sec. 9. AS 42.05.711(g) is amended to read: 03 (g) A utility, other than a telephone or electric utility, that does not gross 04 $150,000 [$100,000] annually may elect to be exempt from the provisions of this 05 chapter other than AS 42.05.221 - 42.05.281 under the procedure described in 06 AS 42.05.712. 07 * Sec. 10. AS 42.05.711(i) is amended to read: 08 (i) A utility that [WHICH] furnishes collection and disposal service of 09 garbage, refuse, trash, or other waste material and has annual gross revenues of 10 $300,000 [$200,000] or less is exempt from the provisions of this chapter, other than 11 the certification provisions of AS 42.05.221 - 42.05.281, unless [25 PERCENT OF] 12 the subscribers [OR SUBSCRIBERS REPRESENTING 25 PERCENT OF THE 13 GROSS REVENUE OF THE UTILITY] petition the commission for regulation under 14 AS 42.05.712(h). Notwithstanding AS 42.05.712(b) and (g), if subscribers 15 representing 25 percent of the gross revenue of the utility petition the commission 16 for regulation, the utility is subject to the provisions of this chapter. 17 * Sec. 11. AS 42.05.711(k) is amended to read: 18 (k) A utility that [WHICH] furnishes cable television service is exempt from 19 the provisions of this chapter other than AS 42.05.221 - 42.05.281 [,] unless [25 20 PERCENT OF] the subscribers petition the commission for regulation under the 21 procedure described in AS 42.05.712. 22 * Sec. 12. AS 42.05.712(h) is amended to read: 23 (h) A utility or cooperative that is already exempt from regulation under this 24 section or that is exempt from regulation under AS 42.05.711(e), (i), or (k) may 25 elect to terminate its exemption in the same manner. 26 * Sec. 13. AS 42.06.285(a) is amended to read: 27 (a) A pipeline carrier operating in the state shall pay to the commission an 28 annual regulatory cost charge in an amount not to exceed .8 [.61] percent of gross 29 revenue derived from operations in the state. A regulatory cost charge may not be 30 assessed on pipeline carrier operations unless the operations are within the jurisdiction 31 of the commission. 01 * Sec. 14. AS 42.06.285(c) is amended to read: 02 (c) The commission shall administer the charge imposed under this section. 03 The Department of Revenue shall collect and enforce the charge imposed under this 04 section. The Department of Administration shall identify the amount of the 05 operating budget of the commission that lapses into the general fund each year. 06 The legislature may appropriate an amount equal to the lapsed amount to the 07 commission for its operating costs for the next fiscal year. If the legislature does 08 so, the commission shall reduce the total regulatory cost charge collected for that 09 fiscal year by a comparable amount. 10 * Sec. 15. AS 44.66.010(a)(4) is amended to read: 11 (4) Alaska Public Utilities Commission (AS 42.05.010) -- June 30, 12 1998 [1994]; 13 * Sec. 16. REPEAL OF SUNSET OF REGULATORY COST CHARGES. Sections 22, 14 26, 36, and 38, ch. 2, FSSLA 1992, are repealed. 15 * Sec. 17. APUC STAGGERED TERMS. Notwithstanding AS 42.05.030(a), after the 16 expiration in 1999 of the term of the member of the Alaska Public Utilities Commission with 17 a major or experience in engineering, the vacancy shall next be filled for a term of four years 18 in order to adjust the staggering of the terms of the members of the commission so that no 19 more than one commission member's term expires each year. 20 * Sec. 18. APPLICATION TO ONGOING PROCEEDINGS. The amendment to 21 AS 42.05.141(a), made by sec. 1 of this Act, applies to proceedings begun on or after the 22 effective date of sec. 1 of this Act. 23 * Sec. 19. Section 1 of this Act takes effect July 1, 1995. 24 * Sec. 20. Except as provided in sec. 18, this Act takes effect July 1, 1994.