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CSSB 133(RLS) AM: "An Act creating and relating to the Regulatory Commission of Alaska and transferring to it certain powers and duties of the Alaska Public Utilities Commission; repealing the Alaska Public Utilities Commission; relating to the powers of the chair of the Regulatory Commission of Alaska; relating to regulatory cost charges for public utilities and pipelines; relating to the appellate procedures of the Regulatory Commission of Alaska; relating to the Alaska Oil and Gas Conservation Commission; and providing for an effective date."

00CS FOR SENATE BILL NO. 133(RLS) am 01 "An Act creating and relating to the Regulatory Commission of Alaska and 02 transferring to it certain powers and duties of the Alaska Public Utilities 03 Commission; repealing the Alaska Public Utilities Commission; relating to the 04 powers of the chair of the Regulatory Commission of Alaska; relating to 05 regulatory cost charges for public utilities and pipelines; relating to the appellate 06 procedures of the Regulatory Commission of Alaska; relating to the Alaska Oil 07 and Gas Conservation Commission; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 42 is amended by adding a new chapter to read: 10 Chapter 04. Regulatory Commission of Alaska. 11 Article 1. Commission and Staff. 12 Sec. 42.04.010. Regulatory Commission of Alaska created. (a) There is 13 created as an independent agency of the state the Regulatory Commission of Alaska. 14 (b) The commission may nominate one of its members to serve as chair. The

01 governor shall designate the chair of the commission, either by selecting the member 02 nominated by the commission or another member. The term as chair is four years. 03 The chair may not be appointed to successive terms as chair. 04 Sec. 42.04.020. Commissioners. (a) The commission consists of five 05 commissioners appointed by the governor and confirmed by the legislature in joint 06 session. 07 (b) The term of office of each member is six years. A commissioner, upon 08 the expiration of a term, shall continue to hold office until a successor is appointed and 09 qualified. 10 (c) A vacancy arising in the office of a commissioner shall be filled by 11 appointment by the governor and confirmed by the legislature in joint session, and, 12 except as provided in AS 39.05.080(4), an appointee selected to fill a vacancy shall 13 hold office for the balance of the full term for which the predecessor on the 14 commission was appointed. 15 (d) A vacancy in the commission does not impair the authority of a quorum 16 of commissioners to exercise all the powers and perform all the duties of the 17 commission. 18 (e) The governor may remove a commissioner from office for cause, including 19 incompetence, neglect of duty, or misconduct in office or because the member, while 20 serving on the commission, is convicted of a misdemeanor for violating a statute or 21 regulation related to public utilities or is convicted of a felony. A commissioner, to 22 be removed for cause, shall be given a copy of the charges and afforded an opportunity 23 to be publicly heard in person or by counsel in the commissioner's own defense upon 24 not less than 10 days' notice. If a commissioner is removed for cause, the governor 25 shall file with the lieutenant governor a complete statement of all charges made against 26 the commissioner and the governor's finding based on the charges, together with a 27 complete record of the proceedings. 28 (f) Members of the commission are in the exempt service and are entitled to 29 a monthly salary equal to Step C, Range 26, of the salary schedule in AS 39.27.011(a) 30 for Juneau, Alaska. The chair of the commission is entitled to a monthly salary equal 31 to Step C, Range 27, of the salary schedule in AS 39.27.011(a) for Juneau, Alaska.

01 (g) Each commissioner, before entering upon the duties of office, shall take 02 and subscribe to the oath prescribed for principal officers of the state. 03 Sec. 42.04.030. Principal office; seal. (a) The commission shall establish a 04 principal office and branch offices necessary to discharge its business efficiently. For 05 the convenience of the public or of parties to a proceeding, the commission may hold 06 meetings, hearings, or other proceedings at other locations. 07 (b) The commission shall have an official seal. 08 Sec. 42.04.040. Legal counsel. (a) The Department of Law shall provide full- 09 time legal counsel to the commission. 10 (b) The commission may, subject to the approval of the attorney general, 11 contract for the services of specialized legal counsel or legal consultants. 12 Sec. 42.04.050. Employment of commission personnel. (a) The chair of the 13 commission is responsible for directing the administrative functions of the commission 14 and carrying out the policies as set by the commission. The commission chair may 15 employ engineers, hearing officers, experts, clerks, accountants, and other agents and 16 assistants considered necessary. Employees of the commission who are not in the 17 exempt service under AS 39.25.110, other than legal counsel, are in the classified 18 service under AS 39.25.100. 19 (b) The chair of the commission may enter into a contract for no more than 20 $5,000 to engage the services of a consultant or expert the chair considers necessary. 21 The commission may contract for and engage the services of consultants and experts 22 the commission considers necessary. 23 Sec. 42.04.060. Restrictions on members and employees. (a) A member of 24 the commission or an employee of the commission may not have an official connection 25 with, hold stock or securities in, or have a pecuniary interest in a public utility within 26 the state. Membership in a cooperative association is not a "pecuniary interest" within 27 the meaning of this section; however, a member or employee of the commission may 28 not be an officer, board member, or employee of a cooperative association. A member 29 or employee may not act upon a matter in which a relationship of the member or 30 employee with any person creates a conflict of interest. 31 (b) A member or employee of the commission may not, after leaving the

01 position as a member or employee of the commission, act as agent for or on behalf of 02 a public utility in any matter before the commission that was before the commission 03 during the employee's employment or the member's term of office. A violation of this 04 subsection is a class A misdemeanor. 05 (c) Members and employees of the commission, except clerical and secretarial 06 staff, are subject to AS 39.50. Members and employees of the commission are subject 07 to AS 39.52. 08 (d) A member of the commission is disqualified from voting upon any matter 09 before the commission in which the member has a conflict of interest. 10 Sec. 42.04.070. Powers and duties of commission chair. (a) The chair of 11 the commission shall 12 (1) employ the commission staff; 13 (2) establish and implement a time management system for the 14 commission; 15 (3) assign the work of the commission to members and staff of the 16 commission so that matters before the commission are resolved as expeditiously and 17 competently as possible; when assigning a matter, the chair shall also set a date by 18 which time the matter should be completed. 19 (b) The chair of the commission may appoint a hearing officer to hear a matter 20 that has come before the commission; a member of the commission may serve as 21 hearing officer. 22 (c) The chair of the commission shall direct the public advocacy section to 23 participate as a party in a matter when the chair believes that 24 (1) the matter has major public policy implications; or 25 (2) the financial interest of the public is at stake and the parties to the 26 matter will not adequately represent the public interest. 27 Sec. 42.04.080. Decision-making procedures. (a) Except as provided in 28 AS 42.05.171, when a matter comes for decision before the commission under 29 AS 42.05, the chair shall appoint a hearing panel composed of three or more members 30 to hear and decide the case. The panel shall exercise the powers of the commission 31 with respect to the matter.

01 (b) A decision of a hearing panel under AS 42.05 may be appealed to the 02 commission if there is an allegation in the appeal that action or a decision taken by the 03 commission is contrary to commission precedent and is not based on an intervening 04 change in law. The commission may grant or deny the application to appeal. If a 05 decision of a hearing panel is not subject to appeal to the commission or if the 06 commission denies an application to appeal, the decision of the hearing panel is a final 07 decision for purposes of appeal to the courts. 08 (c) The commission shall adopt regulations by December 31, 1999, that 09 establish standards of timeliness for the types of cases that come before the 10 commission. The commission shall establish standards based in part on degrees of 11 complexity of the cases. 12 Article 2. Communications Carriers Section. 13 Sec. 42.04.100. Communications carriers section. There is established 14 within the commission a communications carriers section that shall develop, 15 recommend, and administer policies and programs with respect to the regulation of 16 rates, services, accounting, and facilities of communications common carriers within 17 the state involving the use of wire, cable, radio, and space satellites. 18 Article 3. Public Advocacy Section. 19 Sec. 42.04.150. Public advocacy section. There is established within the 20 commission a public advocacy section. The section shall participate as a party in 21 matters that come before the commission to represent the public interest when it is in 22 the public interest to do so. The public advocacy section shall operate separately from 23 the rest of the commission. 24 * Sec. 2. AS 29.35.137(6) is amended to read: 25 (6) "local exchange telephone company" means a telephone utility 26 certificated under AS 42.05 [BY THE ALASKA PUBLIC UTILITIES 27 COMMISSION] to provide local exchange service; 28 * Sec. 3. AS 37.05.146(b) is amended to read: 29 (b) The program receipts listed in this subsection are accounted for separately, 30 and appropriations from these program receipts are not made from the unrestricted 31 general fund:

01 (1) federal receipts; 02 (2) University of Alaska receipts (AS 14.40.491); 03 (3) designated program receipts; in this paragraph , "designated program 04 receipts" means money received by the state from a source other than the state or 05 federal government that is restricted to a specific use by the terms of a gift, grant, 06 bequest, or contract; 07 (4) receipts of the following: 08 (A) highway working capital fund (AS 44.68.210); 09 (B) correctional industries fund (AS 33.32.020); 10 (C) loan funds; 11 (D) international airport revenue fund (AS 37.15.430); 12 (E) corporate receipts earned or managed by a public 13 corporation of the state; 14 (F) fish and game fund (AS 16.05.100); 15 (G) school fund (AS 43.50.140); 16 (H) training and building fund (AS 23.20.130); 17 (I) retirement funds (AS 14.25, AS 22.25, AS 26.05.222, 18 AS 39.35, and former AS 39.37); 19 (J) permanent fund (art. IX, sec. 15, Alaska Constitution); 20 (K) public school trust fund (AS 37.14.110); 21 (L) second injury fund (AS 23.30.040); 22 (M) fishermen's fund (AS 23.35.060); 23 (N) FICA administration fund (AS 39.30.050); 24 (O) receipts of the employee benefits program established under 25 AS 39.30.150 - 39.30.180; 26 (P) receipts of the deferred compensation program established 27 under AS 39.45; 28 (Q) clean air protection fund (AS 46.14.260); 29 (R) receipts of the group insurance programs established under 30 AS 39.30.090; 31 (S) mental health trust fund (AS 37.14.031);

01 (T) Alaska children's trust (AS 37.14.200); 02 (U) commercial fisheries test fishing operations 03 (AS 16.05.050(15)); 04 (V) Regulatory Commission of Alaska [PUBLIC UTILITIES 05 COMMISSION] under AS 42.05 and AS 42.06; 06 (5) receipts of or from the trust established by AS 37.14.400 - 07 37.14.450, except reimbursements described in AS 37.14.410. 08 * Sec. 4. AS 39.50.200(b)(24) is amended to read: 09 (24) Regulatory Commission of Alaska (AS 42.04.010) [PUBLIC 10 UTILITIES COMMISSION (AS 42.05.010)]; 11 * Sec. 5. AS 42.05.151(b) is amended to read: 12 (b) The commission shall adopt regulations governing practice and procedure, 13 consistent with due process of law, including the conduct of formal and informal 14 investigations, pre-hearing conferences, hearings, and proceedings, and the handling 15 of procedural motions by a single commissioner. The regulations must provide for 16 the hearing of a matter by a hearing panel and appeal of the matter in 17 accordance with AS 42.04.080. Technical rules of evidence need not apply to 18 investigations, pre-hearing conferences, hearings, and proceedings before the 19 commission. The commission shall provide for representation by out-of-state attorneys 20 substantially in accordance with Rule 81, Alaska Rules of Civil Procedure. 21 * Sec. 6. AS 42.05.171 is amended to read: 22 Sec. 42.05.171. Formal hearings. A formal hearing that the commission has 23 power to hold may be held by or before a hearing panel appointed under 24 AS 42.04.080 [THREE OR MORE COMMISSIONERS], a hearing officer, or an 25 administrative law judge designated for the purpose by the chair of the commission. 26 In appropriate cases, a formal hearing may be held before an arbitrator 27 designated for the purpose by the commission. The testimony and evidence in a 28 formal hearing may be taken by the panel [COMMISSIONERS], by the hearing 29 officer, by the arbitrator, or by the administrative law judge to whom the hearing has 30 been assigned. A commissioner who has not heard or read the testimony, including 31 the argument, may not participate in making a decision of the commission. In

01 determining the place of a hearing , the commission shall give preference to holding 02 the hearing at a place most convenient for those interested in the subject of the 03 hearing. 04 * Sec. 7. AS 42.05.254(a) is amended to read: 05 (a) A regulated public utility operating in the state shall pay to the commission 06 an annual regulatory cost charge in an amount not to exceed the maximum 07 percentage of adjusted gross revenue that applies to the utility sector of which the 08 utility is a part. The regulatory cost charges that the commission expects to 09 collect from all regulated utilities may not exceed .8 percent of the total adjusted 10 gross revenue of all regulated public utilities [DERIVED FROM OPERATIONS IN 11 THE STATE, AS MODIFIED UNDER (c) OF THIS SECTION IF APPROPRIATE]. 12 An exempt utility shall pay the actual cost of services provided to it by the 13 commission. 14 * Sec. 8. AS 42.05.254(b) is amended to read: 15 (b) The commission shall by regulation establish a method to determine 16 annually the amount of the regulatory cost charge for a public utility. If the amount 17 the commission expects to collect under (a) of this section and under AS 42.06.286(a) 18 exceeds the authorized budget of the commission, the commission shall, by order, 19 reduce the percentages determined under (i) [SET OUT IN (a)] of this section so that 20 the total amount of the fees collected approximately equals the authorized budget of 21 the commission for the fiscal year. 22 * Sec. 9. AS 42.05.254(h) is amended by adding a new paragraph to read: 23 (5) "adjusted gross revenue" means the gross revenue of a utility as 24 modified under (c) of this section, if appropriate. 25 * Sec. 10. AS 42.05.254 is amended by adding a new subsection to read: 26 (i) The commission shall by regulation establish a method to determine 27 annually the maximum percentage of adjusted gross revenue that will apply to each 28 regulated public utility sector and the maximum percentage of gross revenue that will 29 apply to the regulated pipeline carrier sector. The method established shall allocate 30 the commission's costs, other than the cost of services provided to exempt utilities, 31 among the regulated public utility sectors and the regulated pipeline carrier sector

01 based on the relative amount of the commission's annual costs that is attributable to 02 regulating each sector. 03 * Sec. 11. AS 42.05.990(2) is amended to read: 04 (2) "commission" means the Regulatory Commission of Alaska 05 [PUBLIC UTILITIES COMMISSION]; 06 * Sec. 12. AS 42.05.995 is amended to read: 07 Sec. 42.05.995. Short title. This chapter may be cited as the Alaska Public 08 Utilities Regulatory [COMMISSION] Act. 09 * Sec. 13. AS 42.06.286(b) is amended to read: 10 (b) The commission shall by regulation establish a method to determine 11 annually the amount of the regulatory cost charge. If the amount the commission 12 expects to collect under (a) of this section and under AS 42.05.254(a) exceeds the 13 authorized budget of the commission, the commission shall, by order, reduce the 14 percentage determined under (f) [SET OUT IN (a)] of this section so that the total 15 amount of the fees collected approximately equals the authorized budget of the 16 commission for the fiscal year. 17 * Sec. 14. AS 42.06.286 is amended by adding a new subsection to read: 18 (f) The commission shall by regulation establish a method to determine 19 annually the maximum percentage of gross revenue that will apply to each regulated 20 public utility sector and the maximum percentage of gross revenue that will apply to 21 the regulated pipeline carrier sector in accordance with AS 42.05.254(i). 22 * Sec. 15. AS 42.06 is amended by adding a new section to read: 23 Sec. 42.06.055. Commission decision-making procedures. The commission 24 shall comply with AS 42.04.080 for matters that come before the commission for 25 decision. 26 * Sec. 16. AS 42.06.305 is amended by adding a new subsection to read: 27 (b) The commission's decision under this section shall be based on the best 28 interest of the state. 29 * Sec. 17. AS 42.06.445(e) is amended to read: 30 (e) A commissioner [, AND THE EXECUTIVE DIRECTOR,] may certify as 31 to all official records of the commission under this section and may certify as to all

01 official acts of the commission under this chapter. 02 * Sec. 18. AS 42.06.630(2) is amended to read: 03 (2) "commission" means the Regulatory Commission of Alaska 04 [PUBLIC UTILITIES COMMISSION] (AS 42.04.010) ; 05 * Sec. 19. AS 42.45.020(b) is amended to read: 06 (b) Subject to AS 42.45.060, the department may make loans from the rural 07 electrification revolving loan fund to electric utilities certified under AS 42.05 [BY 08 THE ALASKA PUBLIC UTILITIES COMMISSION]. A loan from the fund may be 09 made only for the purpose of extending new electric service into an area of the state 10 that an electric utility may serve under a certificate of public convenience and 11 necessity issued under AS 42.05 [BY THE ALASKA PUBLIC UTILITIES 12 COMMISSION]. A loan may be made from the fund to an electric utility if the utility 13 invests the money necessary to provide one pole, one span of line, one transformer, 14 and one service drop for each consumer for whom immediate service would be 15 provided by the extension of electric service. However, a loan may not be made from 16 the fund unless 17 (1) the loan is recommended by a loan advisory committee appointed 18 under AS 42.45.030; and 19 (2) the extension of electric service would provide immediate service 20 to at least three consumers. 21 * Sec. 20. AS 44.66.010(a)(4) is amended to read: 22 (4) Regulatory Commission of Alaska (AS 42.04.010) [PUBLIC 23 UTILITIES COMMISSION (AS 42.05.010)] -- June 30, 2004 [1999]; 24 * Sec. 21. AS 44.83.425(3) is amended to read: 25 (3) "qualified utility" means an electric utility or an electric operating 26 entity established as an instrumentality of two or more electric utilities certified under 27 AS 42.05 [BY THE ALASKA PUBLIC UTILITIES COMMISSION] to serve all or 28 part of a market area that is served or will be served by the power project, that the 29 authority determines is capable of operating and maintaining the power project. 30 * Sec. 22. AS 46.04.020(i) is amended to read: 31 (i) The superior court and, with respect to intrastate voyages, the Regulatory

01 Commission of Alaska [PUBLIC UTILITIES COMMISSION,] under AS 42.05.361 - 02 42.05.431, have concurrent jurisdiction to review and enjoin a charge, contract term, 03 or financial responsibility requirement described under (h) of this section at the request 04 of a vessel owner, operator, or charterer. Except as provided in this subsection, 05 nothing in this section affects the jurisdiction of the Regulatory Commission of 06 Alaska [PUBLIC UTILITIES COMMISSION]. 07 * Sec. 23. REPEAL OF STATUTES. AS 39.25.120(c)(6); AS 42.05.010, 42.05.020, 08 42.05.030, 42.05.035, 42.05.040, 42.05.050, 42.05.071, 42.05.081, 42.05.091, 42.05.101, 09 42.05.111, 42.05.121, 42.05.123, and 42.05.131 are repealed. 10 * Sec. 24. REPORT CONCERNING RESTRUCTURING OF THE ALASKA OIL AND 11 GAS CONSERVATION COMMISSION AND THE REGULATORY COMMISSION OF 12 ALASKA. The Legislative Budget and Audit Committee shall prepare a report considering 13 the functions of the Regulatory Commission of Alaska and the Alaska Oil and Gas 14 Conservation Commission. The report must address whether it is in the best interest of the 15 state to merge the Regulatory Commission of Alaska and the Alaska Oil and Gas Conservation 16 Commission into a single commission and whether it is in the state's best interest to 17 restructure the functions of the two commissions. The governor shall appoint one member 18 from the Regulatory Commission of Alaska and one member from the Alaska Oil and Gas 19 Conservation Commission to work with the Legislative Budget and Audit Committee on the 20 report. The report shall be delivered to the governor and the legislature by the first day of the 21 second session of the Twenty-First Alaska State Legislature. 22 * Sec. 25. MANAGEMENT INFORMATION SYSTEM. The Regulatory Commission of 23 Alaska shall develop its management information system and make the system accessible to 24 the general public through the Internet for the purpose of tracking, scheduling, and managing 25 all dockets within the commission. 26 * Sec. 26. LOCATION OF THE ALASKA OIL AND GAS CONSERVATION 27 COMMISSION. (a) The principal office of the Alaska Oil and Gas Conservation 28 Commission shall move to the same location as the principal office of the Regulatory 29 Commission of Alaska as soon as feasible, but in any case, no later than July 1, 2000. 30 (b) As soon as the Alaska Oil and Gas Conservation Commission moves to the same 31 location as the Regulatory Commission of Alaska, the two commissions shall share record

01 keeping facilities and clerical staff. 02 * Sec. 27. REGULATORY COMMISSION OF ALASKA EMPLOYMENT OF HEARING 03 OFFICER. To the extent that sufficient funds are appropriated for the purpose, during the 04 state fiscal year ending June 30, 2000, the Regulatory Commission of Alaska shall employ, 05 in addition to the hearing officers that the former Alaska Public Utilities Commission was 06 authorized to employ on June 30, 1999, an additional hearing officer. 07 * Sec. 28. INITIAL TERMS OF MEMBERS OF THE REGULATORY COMMISSION 08 OF ALASKA. Notwithstanding AS 39.05.055, the terms of the initially appointed members 09 of the Regulatory Commission of Alaska shall be set by the governor as follows: 10 (1) one member shall serve a five-year term; 11 (2) one member shall serve a four-year term; 12 (3) one member shall serve a three-year term; 13 (4) one member shall serve a two-year term; and 14 (5) one member shall serve a one-year term. 15 * Sec. 29. TRANSITIONAL PROVISIONS. (a) Litigation, hearings, investigations, and 16 other proceedings pending under a law repealed or amended by this Act, or in connection with 17 functions transferred from the Alaska Public Utilities Commission to the Regulatory 18 Commission of Alaska by this Act, continue in effect and may be completed notwithstanding 19 a transfer or repeal provided for in this Act. 20 (b) Regulations in effect on June 30, 1999, that were adopted to implement a function 21 that is transferred by this Act remain in effect and shall be enforced by the Regulatory 22 Commission of Alaska, as appropriate, until amended by the appropriate commission. 23 (c) Wherever in Alaska Statutes affected by this Act there is a reference to regulations 24 adopted under a section of law and there are no regulations adopted under that section because 25 previous regulations adopted under another section are being enforced under (b) of this 26 section, the reference shall be construed to refer to the previously adopted regulations until 27 they are amended by the new agency. 28 (d) Contracts, rights, liabilities, and obligations created by or under a law repealed or 29 amended by this Act, and in effect on June 30, 1999, remain in effect notwithstanding this 30 Act's taking effect. 31 (e) Records, equipment, appropriations, and other property of the Alaska Public

01 Utilities Commission shall be transferred to the Regulatory Commission of Alaska to 02 implement the provisions of this Act. 03 * Sec. 30. FIVE-YEAR SUNSET. The amendment to AS 44.66.010(a)(4), made by 04 sec. 20 of this Act, is made notwithstanding AS 44.66.010(c). 05 * Sec. 31. REVISOR INSTRUCTIONS. (a) In the following statutes, the revisor of 06 statutes is instructed to change "Alaska Public Utilities Commission" to "Regulatory 07 Commission of Alaska": 08 (1) AS 29.35.131(c); 09 (2) AS 29.35.137(5); 10 (3) AS 38.35.120(a) in three places; 11 (4) AS 38.35.230(2); 12 (5) AS 42.05.141(a); 13 (6) AS 42.05.325(c); 14 (7) AS 42.05.381(f) in both places; 15 (8) AS 42.05.712(c); 16 (9) AS 42.05.712(d); 17 (10) AS 42.45.010(e); 18 (11) AS 42.45.110(a); 19 (12) AS 42.45.170(a); 20 (13) AS 42.45.170(e); 21 (14) AS 43.55.150(b); 22 (15) AS 43.56.210(7); 23 (16) AS 44.83.090(b) in both places; 24 (17) AS 45.50.473(a); 25 (18) AS 45.50.473(b); 26 (19) AS 45.50.475(b); 27 (20) AS 45.50.475(c); and 28 (21) AS 45.63.080(12). 29 (b) In the following statutes, the revisor of statutes is instructed to change "Alaska 30 Public Utilities Commission" to "former Alaska Public Utilities Commission or the Regulatory 31 Commission of Alaska":

01 (1) AS 09.65.085(a); 02 (2) AS 10.25.020(6); and 03 (3) AS 18.57.020(c). 04 (c) In the following statutes, the revisor of statutes is instructed to change "by the 05 Alaska Public Utilities Commission" to "by the former Alaska Public Utilities Commission 06 or by the Regulatory Commission of Alaska": 07 (1) AS 29.35.050(b) in both places; 08 (2) AS 29.35.050(c); 09 (3) AS 29.35.060(a); 10 (4) AS 29.35.060(b); and 11 (5) AS 42.45.200(e). 12 * Sec. 32. This Act takes effect July 1, 1999.