2015-01-30                     Senate Journal                      Page 0108
SB 34                                                                                                                         
SENATE BILL NO. 34 BY THE SENATE RULES COMMITTEE                                                                                
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
                                                                                                                                
               "An Act relating to investment of the power cost                                                                
              equalization endowment fund; and providing for an                                                                
          effective date."                                                                                                      
                                                                                                                                
was read the first time and referred to the Labor and Commerce and                                                              
Finance Committees.                                                                                                             
                                                                                                                                
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Revenue                                                                                 
                                                                                                                                
Governor's transmittal letter dated January 28:                                                                                 
                                                                                                                                
Dear President Meyer:                                                                                                           
                                                                                                                                
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill relating to the investment of the                                                        
power cost equalization (PCE) endowment fund (AS 42.45.070).                                                                    
                                                                                                                                
The PCE endowment fund provides annual funding for the PCE and                                                                  
rural electric capitalization fund (AS 42.45.100). The primary purpose                                                          
of the PCE and rural electric capitalization fund is to annually fund the                                                       
PCE program, which reduces the cost of energy in areas of the state                                                             
that experience high electric energy costs.                                                                                     
                                                                                                                                

2015-01-30                     Senate Journal                      Page 0109
                                                                                                                                
The bill would amend the powers of the Commissioner of Revenue to                                                               
invest amounts in the PCE endowment fund. Existing law obligates                                                                
the Commissioner of Revenue to invest the endowment fund "in a                                                                  
manner likely to achieve at least a seven percent nominal return over                                                           
time." This investment mandate requires the Commissioner of                                                                     
Revenue to invest with excessive or undue risk in a low-rate                                                                    
environment. The investment strategy also does not enable the                                                                   
Commissioner of Revenue to match the endowment fund's investment                                                                
policy to the needs of the PCE program. The bill would eliminate the                                                            
riskier investment mandate and enable the Commissioner of Revenue                                                               
to establish a more appropriate investment policy by considering the                                                            
amounts of anticipated draws from the endowment fund that would be                                                              
necessary to meet the financial needs of the power cost equalization                                                            
program.                                                                                                                        
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Bill Walker                                                                                                                     
Governor