Legislature(2013 - 2014)SENATE FINANCE 532
04/14/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB239 | |
| HB240 | |
| HB241 | |
| HB242 | |
| HB234 | |
| HB210 | |
| HB378 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 239 | TELECONFERENCED | |
| + | HB 240 | TELECONFERENCED | |
| + | HB 241 | TELECONFERENCED | |
| + | HB 242 | TELECONFERENCED | |
| + | HB 234 | TELECONFERENCED | |
| + | HB 210 | TELECONFERENCED | |
| + | HB 378 | TELECONFERENCED | |
| + | HB 75 | TELECONFERENCED | |
| += | SB 220 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 234
"An Act extending the termination date of the
Regulatory Commission of Alaska; and providing for an
effective date."
9:50:39 AM
REPRESENTATIVE MIKE HAWKER, explained that the legislation
would extend the termination date of the Regulatory
Commission of Alaska (RCA) to June 30, 2022. He noted that
the commission differed from other professional licensing
boards; the commission was one of the state's few
independent, quasi-judicial regulatory commissions. He
stated that the RCA was responsible for ensuring the safe,
adequate and fair public utility and pipeline services
across the state. He explained that the audit objectives in
evaluating the reauthorization of the Regulatory Commission
of Alaska were no different than other boards and
commissions; it must demonstrate a continued need for its
continued existence and show that it has been operating in
an effective and efficient manner. The bill recommended and
8 year extension and was consistent with the recommendation
of the Division of Legislative Audit. He offered a brief
history of the commission. He asserted that the commission
was currently functioning well in discharging its assigned
responsibilities. He shared that legislative auditors had
included an appendix on Pages 23 through 30, which included
information gathered by the auditors from people who had
had dockets dealt with by the RCA. The users of the RCA
proved to be very satisfied with the work performed by the
commission. He pointed out to the committee Page 18 of the
audit, which included a summary pie chart that detailed in
aggregate how the users viewed the RCA's function; 70
percent felt that the commission was operating in a very
good/good rating, with only 8 percent giving a poor rating.
He continued to Page 31 of the audit which showed that the
regulatory cost charge base was sufficient for the
commission to operate. The RCA had maintained an adequate,
but not excessive reserve for operations. He thought that
the commission needed the full year reauthorization period.
9:56:22 AM
Co-Chair Meyer requested further clarification of the
second recommendation in the recent audit.
Representative Hawker deferred to the Division of
Legislative Audit and the RCA chairman.
9:57:10 AM
Senator Hoffman noted page 31, and wondered if there would
be an addition of personal and contract services and what
the cost would be over the next 8 years.
Representative Hawker remarked that the primary fund source
for the RCA was approximately $9 million in RCA receipts.
He said that beyond the recognition that the commission was
a receipt authority, he deferred the question to the RCA
9:59:01 AM
Co-Chair Meyer remarked that the Regulatory Commission of
Alaska chairman.
9:59:53 AM
T.W. PATCH, CHAIRMAN, REGULATORY COMMISSION OF ALASKA,
NASHVILLE (via teleconference), explained that the concerns
regarding the performance of the RCA had been raised by the
committee in 2011. At that time, the committee offered the
commission guidance and set a termination date of June 30,
2014. He said that the RCA, under the guidance of the
committee, provided to the legislature a report on January
16, 2012. The report laid out a program to address utility
company concerns and legislative concerns regarding
discovery regulations, and set out a program to consider
and adopt best practices whereby sooner decisions could be
made in those proceeding wherein a utility proposed a new
revenue requirement or where a utility proposed to adopt a
new rate design. Subsequent to the report the RCA began to
consider several regulation changes; it sought public
comment and implemented new and aggressive internal
protocols to assist rate payers and utility constituencies.
He asserted that the changes were resulting in decisions in
those types of complex cases in just over 300 days, which
was a reduction from the statutory time allowed of 450
days. He said that in reducing the time in which a final
decision in a rate case was derived at, the RCA achieved
the result without enhancement in funding, additional
staffing, new enabling legislation, reported adverse impact
on the utility industry or protestation by rate payers. He
testified that the progress resulted in better credit
ratings for utilities across the state, which resulted in
lower capital costs and lower customer rates. He stressed
that there was a strong relationship between agency
managers and industry. He felt it was important to
recognize that the commission had assisted the legislature
and many other state agencies.
10:04:00 AM
Mr. Patch noted that the commission had worked with the
legislature and the governor on the interior energy project
and the stand along gas pipeline legislation. The
commission was currently assisting Alaska Gasline
Development Corporation on tariff and open season issues as
well as working with the Alaska Energy Authority and the
Alaska Industrial Development and Export Authority on
important planning and development issues. He urged the
committee to approve the extension of the sunset date.
10:05:39 AM
Co-Chair Meyer remarked that the commission was successful.
10:05:53 AM
Senator Hoffman reiterated his previous question.
Mr. Patch responded that there was an authorization for the
collection of approximately $9 million.
Senator Hoffman said that in the budget and reflected in
the fiscal note there was a 20 percent increase in
salaries, he wondered if it reflected an increase for
salaries for management positions. He noted the increase in
contracting services and highlighted that the numbers on
Page 31 of the audit differed from those in the fiscal
note. He understood that there were no general funds
involved but requested justification for the fiscal note
and what the process the board went through when approving
a budget.
Mr. Patch replied that the legislature set an authorized
entitlement to collect and from that entitlement the
commission collected the regulatory cost charges and an
amount of money that was made available to the Regulatory
Affairs and Public Advocacy Section that was generally the
consumer advocate representing rate payers. He added that
when funds were not expended the monies were returned to
rate payers as a credit against the next year's cycle of
calculated regulatory cost charges.
10:08:20 AM
Senator Hoffman queried whether there would be an increase
in salaries that would total over $1 million in the
proposed personal services. Mr. Patch replied that there
was not an authorization to increase salaries; rather,
there was approval for additional staff.
10:09:23 AM
Co-Chair Meyer remarked that the fiscal note did not
reflect an increase in staff numbers.
Representative Hawker interjected that it was important to
notice that the governor's request was for FY15, the most
recent numbers in the unaudited schedule of revenues and
expenditures was for FY12, and was 3 years out-of-date. He
noted that the commissioner's salaries were established in
statute and could not be increased without a statutory
change. He highlighted that the fiscal note included a $1.3
million Department of Law Regulatory Affairs and Public
Advocacy transfer, which would need to be included in
additional expenditures and was, undoubtedly, the largest
share of the reconciling item.
10:11:15 AM
AT EASE
10:11:45 AM
RECONVENED
10:11:48 AM
Representative Hawker spoke to the difference between the
numbers on Page 31 of the audit and the fiscal note. He
stated that the transfer to the Department of Law
Regulatory Affairs and Public Advocacy was noted on the
bottom Page 31 of the audit. The transfer was included in
the fiscal note and made up a significant amount of the
contract services differential.
Co-Chair Meyer CLOSED public testimony.
10:13:21 AM
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, stated that the audit of the commission
had found that the RCA was working in the public interest
and reiterated the recommendation for the 8 year extension.
She highlighted two audit recommendations; first, it was
recommended that the RCA continue to improve its case
management data, as the division had encountered high error
rates when running tests in 2013. Secondly, the division
recommended that the legislature consider clarifying
statutory timelines for rule making, or "regulatory,"
proceedings. She stated that statutes required RCA to issue
a final order in a rule making docket no later than 730
days after completer petition for a change was filed, or
after the commission initiated proceedings. There was a
provision for one 90 day extension for good cause; statutes
prohibited RCA from terminating a proceeding in a docket,
and then opening a proceeding in another docket on
substantially the same matter. The audit had found that on
occasion the RCA had split rule making proceedings into two
dockets, the first to consider whether there was a need for
regulations in an area of concern or interest. Once public
testimony and comments were obtained regarding the
potential regulations, the docket was closed. If the record
indicated a need for regulations, RCA opened a second
docket to consider adopting the regulations. The division
found that the process allowed the RCA to take up to 4.5
years to complete proceedings. She said that RCA management
believed that including clear intent language in the
dockets initiating order made the process transparent and
complied with statute. The division had found that RCA was
including clear intent language in the dockets and in that
regard the process was transparent. The division wanted to
raise the issue for legislative consideration because the
process appeared to evade statutory timelines and did not
appear to serve the regulated community or the public
interest. The recommendation was for the legislature to
consider clarifying statutes to ensure RCA complied with
legislative intent when processing regulatory dockets.
10:16:00 AM
Co-Chair Meyer believed that the recommendation would have
to be implemented through a new and separate piece of
legislation.
Representative Hawker said that the legislature could do
anything it chose; however, there had been a long history
of keeping reauthorization bills "clean".
10:16:37 AM
Mr. Patch disagreed with the audit recommendation. He
stated that the orders of the commission, as regulatory
proceedings were opened and closed, contained very clear
and explicit statements of the RCA's intention as it
engaged in the process. He noted that one of the matters
before the committee in past RCA sunset extension hearings
was the matter of discovery; should the RCA have an
articulated discovery concern, after consideration the
consensus had been that the commission should adopt a
discovery regulation. He stressed that decided whether the
commission should adopt discovery regulations was different
that deciding what the language of the regulations would
contain and how it would allow parties to discover
information. He did not believe that it was necessary to
change the law for two reasons: first, the current
statutory prohibition states that the commission would not
seek to evade the legislature's intent; secondarily,
subsequent to the last reauthorization the commission had
adopted a procedure that allowed the commission to consider
and obtain matters of public opinion in an informational
docket which had no timeline.
10:20:36 AM
Senator Hoffman looked at the fiscal note and Appendix C of
the audit, and remarked that in FY11 there was
approximately $62,000 of revenue that came from the Power
Cost Equalization Program (PCE) that had jumped up to
$93,000 FY12. He requested clarification as to the
breakdown of the revenue.
Mr. Patch replied that Alaska Energy Authority (AEA) had
provided yearly grants of $140,000. The commission had
certain responsibilities under the PCE program and billed
against the grant for quantification, analysis and
community assistance in obtaining the benefits of the
program. He stated that the numbers cited in the fiscal
note was the funds that the commission had expended in past
years against the grant.
10:22:16 AM
Senator Hoffman wondered if Ms. Curtis could respond to the
$30,000 increase from FY11 to FY12.
Ms. Curtis replied that she could not. She pointed out that
the numbers listed in Appendix C had been unaudited and
that the figures had been provided by the commission for
inclusion into the report for informational purposes.
10:23:00 AM
Senator Hoffman requested that the auditor or the chairman
of the commission provide a copy of the grant to the
committee.
10:23:24 AM
Representative Hawker announced that the line item was an
on-demand type of spending activity; the commission had not
spent the entire $140,000 in each year and in the 9 months
of FY13, the expenditure had been only $55,000.
10:24:19 AM
Co-Chair Meyer remarked that the fiscal note was
substantial, but it had been adequately justified.
10:24:39 AM
HB 234 was HEARD and HELD in committee for further
consideration.