Legislature(2013 - 2014)BELTZ 105 (TSBldg)
04/03/2014 03:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB32 | |
| HB276 | |
| HB234 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 32 | TELECONFERENCED | |
| + | HB 276 | TELECONFERENCED | |
| + | HB 234 | TELECONFERENCED | |
HB 234-EXTEND REGULATORY COMMISSION OF ALASKA
3:50:56 PM
CHAIR DUNLEAVY reconvened the meeting and announced the
consideration of HB 234. "An Act extending the termination date
of the Regulatory Commission of Alaska; and providing for an
effective date." This was the first hearing.
3:51:12 PM
REPRESENTATIVE MIKE HAWKER Alaska State Legislature, Juneau,
Alaska, as joint prime sponsor, stated that HB 234 extends the
termination date of the Regulatory Commission of Alaska (RCA)
from June 30, 2014 to June 30, 2022. The Legislative Budget and
Audit Agency conducted an audit and recommended the eight-year
reauthorization consistent with the findings that the agency has
been operating in an efficient and effective manner. He pointed
out that the appendixes to the audit include ratings by the
stakeholders that demonstrate overwhelming support for how well
the agency is functioning. The analysis on page 31 of the audit
shows that the regulatory cost charges are sufficient to support
the RCA's operations. He concluded that what the RCA needs more
than anything else is long term future stability and that is the
reason for the recommendation for an eight-year extension.
CHAIR DUNLEAVY asked if the fiscal note has changed.
REPRESENTATIVE HAWKER explained that it's the original fiscal
note that shows receipts, primarily from regulatory cost
charges, of about $9 million per year. The other charges are I/A
and CIP receipts that are essentially fees for services.
3:53:46 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, Juneau, Alaska, reported that
the division conducted an audit of the RCA dated July 2013. The
purpose was to determine whether the commission was serving the
public's interest and whether its termination date should be
extended. Overall, the audit concluded that the RCA is operating
in the public's interest and that the termination date should be
extended for eight years, until June, 2022. She noted that the
audit includes two recommendations, but neither impacted the
recommendation for the extension.
The first recommendation is to a repeat of a prior audit
recommendation for the RCA to improve its case management
system. The 2013 audit found there were still high error rates
in the case management system and again recommended
improvements.
MS. CURTIS reported that the sunset audit also made a new
recommendation for the legislature to consider clarifying the
statutory timeline for rulemaking proceedings. The statutes
currently require the RCA to issue a final order on a rulemaking
docket no later than 730 days after a petition for a regulatory
change is filed or after the commission issues an initiating
order for such proceedings. A provision in the statutes allows
one 90-day extension for good cause, but prohibits the RCA from
terminating a proceeding in one docket and opening a proceeding
in another docket on substantially the same matter.
The audit found that on occasion the RCA has split rulemaking
proceedings into two dockets. First, the RCA will open a docket
to consider whether there is a need for regulation in an area of
concern or interest and then close it once public testimony and
comments are taken. If the record indicates a need for a
regulation, the RCA may open a second docket to consider
adopting the regulations. The audit found that this process
allows the RCA to take up to 4.5 years to complete its
proceedings, but the RCA management has argued that including
clear intent language in a docket's initiating order makes the
process transparent and complies with statute. The auditors
confirmed that the RCA was including clear intent language in
the docket, which provides transparency, but determined that
this was an issue for legislative consideration because it
appears that this practice evades the statutory timelines and
does not appear to serve the regulated community or the public's
interest. She restated the recommendation for the legislature to
consider clarifying the statute to ensure that the RCA complies
with legislative intent when processing regulatory dockets.
3:57:20 PM
T.W. PATCH, Commissioner and Chair, Regulatory Commission of
Alaska, Department of Commerce, Community and Economic
Development (DCCED), stated that it is the position of the
Commission that it has earned the trust of the legislature, has
met its obligations, and should be extended for the eight-year
statutory maximum. Complying with prior legislative guidance,
the RCA filed a report with the legislature on January 16, 2012
and promised a further report. That report outlined the process
to address concerns regarding the length of time it took for the
commission to decide cases involving rate changes and certain
other matters. The commission filed a second report on January
21, 2014 that documented that the commission had significantly
reduced the timeline for rate cases from 450 days to 300 days.
This was done without requesting any additional funding, staff,
or authority. Although it has stressed the agency and the
regulatory affairs and public advocacy section of the Department
of Law, the commission is holding that timeline and will do its
best to continue to hold that timeline. He warned that the
stresses may mount as the RCA is being asked to undertake new
and complex matters. He cited work with AGDC, AOGCC, the
governor's Interior gas project, and the pending matters related
to transmission that may come before the commission in the near
future.
MR. PATCH addressed the audit report. The RCA concurs and has
taken steps to address the first recommendation that the Chair
of the RCA should improve and enforce written procedures. The
manuals have been updated and new manuals are being written. He
expressed confidence that there would be measurable enhancement
in this area.
SENATOR MICCICHE asked if there were serious data issues
associated with the business of the RCA or simple errors that
were identified during the audit.
MR. PATCH replied the issues weren't quantified, but he doesn't
believe the commission would have been faulted on simple
transposition errors in their database.
CHAIR DUNLEAVY asked Ms. Curtis to quantify the errors.
4:02:59 PM
MS. CURTIS directed attention to page 11 of the audit and noted
that this is the fourth time this been before the legislature.
It is a reoccurrence from the two prior audits of the annual
report and the prior sunset audit. The audit examined 26 of 261
tariff filings and 41 of 171 utility dockets and found error
rates of 27 percent in 20 percent of the respective sample. When
the audit mentions error rates it is talking about information
like open and close dates included in the annual report. That is
the nature of the errors, she said.
SENATOR MICCICHE asked if any of the errors were associated with
the calculation of tariffs.
MS. CURTIS replied the nature of the errors related to
descriptive information in an annual report as opposed to
anything that would have affected a decision.
CHAIR DUNLEAVY asked who follows up on the corrective actions.
MS. CURTIS said the recommendation was directed to the RCA Chair
who is responsible for ensuring it occurs.
SENATOR MICCICHE summarized that the errors were clerical in
nature.
MS. CURTIS said most likely the errors were data input and those
can be associated with a lack of procedures in entering the
data. These are things that can be addressed by adequate
training and procedures and a quality control procedure at the
commission for continuous review to ensure that the information
is being gathered and entered accurately, she said.
4:06:19 PM
MR. PATCH said the commission is in the process of changing
policies and procedures to address the 2-3 day discrepancy
between the date on a letter or document that comes to the
commission and the date it is entered into the database. A
tariff filing that isn't addressed within 45 days is given the
force of law on day 45, so that two or three day difference has
a legal consequence in favor of the utility applicant. He agreed
with Ms. Curtis that it has taken the commission some time to
address this issue, and noted that adopting electronic filing
measures has helped in its resolution.
MR. PATCH asked the committee to consider the second audit
finding by reviewing page 3 of his response to the audit because
it may affect another matter. He posed a hypothetical example to
illustrate how it might happen that the RCA would open a docket,
close the docket to stay within the statutory timeline, and then
open a second docket 10 months to four years later on a
substantially similar question. He stated that it is RCA's
belief that to open a docket to consider the need for a
regulation is entirely different than opening a docket to
consider a specific regulation and how it may address a problem.
"In this case, I do not think her recommendation need concern
this legislature with respect to my agency's sunset extension,"
Mr. Patch stated.
4:11:28 PM
SENATOR OLSON asked how long he has been Chair of the RCA.
MR. PATCH replied it will be three years on June 30, 2014.
SENATOR OLSON asked if he served on the RCA before that.
MR. PATCH relayed that he was appointed by Governor Parnell in
2010.
SENATOR OLSON asked how he managed to reduce the timeline from
450 days to 300 days.
MR. PATCH replied it was a matter of diligence, clear expression
of desire for a cooperative process, early meeting between the
RCA's administrative law judges and the parties to set
procedural schedules for discovery, careful employment of the
RCA assets, and honest and open conversation with parties in the
dockets regarding requests for additional time.
SENATOR OLSON asked if anything was compromised in the time
reduction.
MR. PATCH said he didn't believe anything was compromised.
SENATOR OLSON asked if he anticipates that the RCA will regulate
the gas pipeline.
MR. PATCH said the agency's engineering, pipeline, technical,
and legal staff is actively engaged in the process of getting
ahead of the AGDC tariff issues. The RCA should be able to
decide a filing in a timely fashion, he said.
4:16:26 PM
SENATOR MICCICHE said he'd like to talk off the record about the
second recommendation, because the issue won't go away in future
audits if the discrepancy isn't resolved.
MR. PATCH said the RCA has a solution that he believes is
acceptable to Ms. Curtis. The RCA adopted an additional
information gathering "I" docket to receive and store
information. This docket has no statutory timeline. If there is
need for a regulation that addresses the concern in the "I"
docket the RCA could move forward to an R docket, which is
subject to the timeline.
SENATOR MICCICHE observed that one is an application process and
the second starts the 730 day timeline.
MR. PATCH agreed.
CHAIR DUNLEAVY suggested that after the discussion he make a
statement that his concerns have been addressed.
SENATOR MICCICHE asked Ms. Curtis to comment on the proposed
solution.
MS. CURTIS said the division's opinion is based on field work
and extensive work, and does not factor in what management might
do to address an audit recommendation. It's a matter of
appearing and being independent as auditors. She restated that
the recommendation is to the legislature to consider clarifying
the statute to address the issue. If the legislature doesn't
take any action on this recommendation, she said she will be
reluctant to pursue it again.
4:21:21 PM
CHAIR DUNLEAVY announced that he would hold HB 234 in committee
for further consideration. Public testimony was open.