05/01/2003 03:14 PM House FIN

HOUSE BILL NO. 119                                                                                                            
                                                                                                                                
     "An Act permitting grants to certain regulated public                                                                      
     utilities for water quality enhancement projects and                                                                       
     water supply and wastewater systems."                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHN COGHILL,  SPONSOR spoke  in support  of                                                                    
the legislation.  The legislation would permit  grants to be                                                                    
offered to utilities that serve  the public (municipally and                                                                    
privately  owned).   The intent  is  to encourage  municipal                                                                    
development.  Section  3 would allow public  water and sewer                                                                    
utilities to be eligible for  projects that are regulated by                                                                    
Regulatory  Commission   of  Alaska.  The   question  arises                                                                    
regarding  whether  those  doing  contract  work  or  own  a                                                                    
utility would be able to a  make profit from the grants.  He                                                                    
stated that  they would  not.  He  referenced a  letter from                                                                    
the Department of Community  and Economic Development, dated                                                                    
April 8,  2002, in  member's packets.   Grants would  be for                                                                    
project expansion and  would not be put into  the asset base                                                                    
that  would be  later sold.    The purchase  price that  the                                                                    
utility  would be  able to  recover would  be regulated.  He                                                                    
stressed that  the legislation seeks  equity. The  intent is                                                                    
not   to  allow   public  money   to   bolster  up   private                                                                    
corporations,  but to  give ratepayers  relief  and to  grow                                                                    
Alaska through an expansion of utilities.                                                                                       
                                                                                                                                
Representative   Coghill  observed   that  the   contributed                                                                    
capital  for the  utilities would  be regulated.   Regulated                                                                    
utilities  would not  be  permitted  to recover  contributed                                                                    
capital  from  its  costumers.  It  would  account  for  the                                                                    
contributed  capital  in a  manner  that  is identified  and                                                                    
outlined  in  the rate  base  under  the uniform  system  of                                                                    
accounts in the  Regulatory Commission of Alaska.   The bill                                                                    
contains  many   safeguards.    He   claimed  that   he  was                                                                    
comfortable  with  the  issue  and  requested  approval  and                                                                    
passage of the legislation.                                                                                                     
                                                                                                                                
Co-Chair  Harris  asked how  many  private  water and  sewer                                                                    
utilities  were  in the  state  of  Alaska.   Representative                                                                    
Coghill  stated that  there  were four  sewer  and 21  water                                                                    
related utilities.  He noted  that in Fairbanks, one company                                                                    
operates two different utilities.                                                                                               
                                                                                                                                
DAN GAVORA,  EXECUTIVE VICE  PRESIDENT, UTILITY  SERVICES OF                                                                    
ALASKA testified via teleconference  in support of the bill.                                                                    
He  stated that  as a  result of  the privatization  process                                                                    
that  Fairbanks ratepayers  had lost  this eligibility.  The                                                                    
source of  the funds that  pay for the grants  are collected                                                                    
from  the taxes  paid by  both municipal  and private  owned                                                                    
utilities.    He  maintained that  to  discriminate  against                                                                    
utilities, which  shared equally  in the burden,  was unjust                                                                    
and  that the  bill  would put  Fairbanks  ratepayers on  an                                                                    
equal level with  others in the state.  He  noted that there                                                                    
were 45 thousand  residents in the state that  are not given                                                                    
the same treatment as the remainder  of the state.  He noted                                                                    
that under  Regulatory Commission of Alaska  regulations all                                                                    
economic  benefits  of  the  grants are  passed  on  to  the                                                                    
ratepayers.  Shareholders receive  no  benefit.   He  stated                                                                    
that the bill would reduce  the burden to ratepayers, and to                                                                    
expand service.                                                                                                                 
                                                                                                                                
Representative   Stoltze  requested   that  the   Regulatory                                                                    
Commission of Alaska testify at a future meeting.                                                                               
                                                                                                                                
HB  119  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.