Legislature(2023 - 2024)BARNES 124
03/25/2024 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB218 | |
| HB313 | |
| HB324 | |
| HB55 | |
| HB226 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 313 | TELECONFERENCED | |
| *+ | HB 324 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 226 | TELECONFERENCED | |
| += | HB 218 | TELECONFERENCED | |
HB 313-PUBLIC UTILITY REGULATORY COST CHARGE
3:44:43 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 313, "An Act relating to the calculation of the
regulatory cost charge for public utilities and pipeline
carriers; and providing for an effective date."
CHAIR SUMNER noted that HB 313 is by request of the governor.
3:45:16 PM
BECKI ALVEY, Advisory Section Manager, Regulatory Commission of
Alaska (RCA), Department of Commerce, Community & Economic
Development (DCCED), co-provided a PowerPoint presentation
titled "House Bill 313: Public Utility Regulatory Cost Charge,"
dated 3/25, 2024. She turned to slide 2, "Organizational
Structure," and explained that the Regulatory Commission of
Alaska (RCA), comprised of four sections, performs quasi-
judicial and quasi-legislative functions. She explained that
the RCA is comprised of four sections: the Commission Section
with five commissioners appointed by the governor and confirmed
by the legislature, plus staff; the Administrative Law Section
with hearing examiners and paralegals; the Advisory Section
comprised of communication specialists, and tariff, engineering,
and financial analysts, and the Utility Master Analysts.
3:46:12 PM
MS. ALVEY moved to slide 3, "RCA Authority," and noted that the
RCA is created by statute, AS 42.04, and is required by statute
to regulate public utilities and pipeline carriers. She said
the RCA is also required by statute, AS 42.45, to determine the
per kilowatt hour support for eligible customers and electric
utilities under the power cost equalization (PCE) program.
MS. ALVEY displayed slide 4, "What We Do: Regulating Public
Utilities and Pipeline Carriers," and related that the RCA's
core services include certificating applicants that are fit,
willing, and able to provide service, reviewing tariff filings
made by utilities and pipeline carriers, ensuring rates are just
and reasonable, investigating complaints, and calculating PCE
and setting the PCE base rate, also known as the PCE floor.
3:46:57 PM
MS. ALVEY showed slide 5, "Tariff Review Process," and explained
that RCA staff analyzes the filings to determine if the rates
are just and reasonable, and if the tariff provisions are
reasonable and supported. She noted that the slide depicts the
general process of the tariff filing. An entity would make a
tariff filing, the RCA would issue a public notice of the
proposed change, and there is a 45-day review period for
utilities. Prior to the end of that review period the RCA would
approve, reject, or suspend the filing. If the RCA took no
action, which the RCA generally tries to avoid, then the filing
takes effect by force of law. If the tariff is suspended into a
docket for further investigation, the RCA would assign a
commission panel and an administrative law judge, hearings would
be held as applicable, and a final order would be issued with
the RCA's decision. The common timeline for changes to a
revenue requirement or rate design is 450 days and it is 270
days if it is not a change to the revenue requirement.
3:48:02 PM
MS. ALVEY discussed slide 6, "Power Cost Equalization (PCE)
Program." The RCA, she explained, establishes the PCE amounts
for 11 regulated electric utilities and 78 non-regulated
utilities that participate in the PCE programs, which impacts
more than 150 communities. The RCA sets the PCE floor, she
further explained, which is the weighted average cost of the
retail rate in Anchorage, Fairbanks, and Juneau, which is
subject to the statutory ceiling of $1. The PCE program is
administered by the Alaska Energy Authority (AEA), she noted.
3:48:45 PM
MS. ALVEY spoke to slide 7, "Funding of the RCA and RAPA." She
stated that since 1993, the Regulatory Cost Charge (RCC) program
has been the RCA's main source of funding. Beginning in 2005,
she continued, the RCC program also became the main source of
funding for the Department of Law's Regulatory Affairs and
Public Advocacy (RAPA) section. She said the RCA also receives
funds from the AEA through a reimbursable service agreement
(RSA) to offset costs of administering the PCE program. She
noted that no other general fund support is received for RCA
operations. She further noted that regulated public utilities,
telecommunications utilities, and pipeline carriers pay RCCs,
which they are permitted to recover from customers and shippers.
MS. ALVEY addressed slide 8, "Revisions to the RCC." After the
RCA's annual budget is passed by the legislature, she explained,
the RCA is required to notify the public and the regulated
entities of the annual RCC amount. The [RCC] is calculated on
an annual basis, effective July 1 of each year, based on the
formula set out in regulation, and is established by RCA order.
Once established by order, she added, tariff sheets are issued
to the regulated entities reflecting the new RCC amount.
3:50:13 PM
MS. ALVEY turned to slide 9, "Statutory Cap," and explained that
the statutory cap for the amount the RCA expects to collect
through the RCC may not exceed the sum of the following
percentages of the total adjusted gross revenue of all regulated
public utilities, certificated telecommunication utilities, and
pipeline carriers: no more than 0.7 percent to fund operation
of the RCA and no more than 0.17 percent to fund operations of
RAPA. She conveyed that these caps were enacted with Senate
Bill 392 and signed into law on 6/25/04. She further informed
the committee that: the statutory cap sets the ceiling of what
the RCA may collect in revenue; the legislature approves the
RCA's operating budget and the RCC formula calculates how much
of the operating budget is needed to be collected from RCCs; and
the RCA is unable to collect more in RCCs than what is set as
the statutory cap.
MS. ALVEY presented slide 10, "Proposed Changes to the Statutory
Cap." She explained that HB 313 proposes to increase the
percentages from 0.7 percent to 0.98 percent to fund operations
of the RCA, and from 0.17 percent to 0.22 percent to fund
operations of RAPA.
MS. ALVEY moved to slide 11, "Alaska Energy Security Task Force
Report." She related that one of the priority actions suggested
in the report is to provide support for the RCA "sufficient to
improve the RCA's ability to respond timely and appropriately to
the complex energy production, generation, and transmission
challenges in Alaska." The task force, she further related,
found that the RCA must be provided sufficient budgetary support
to be able to attract and retain the highly skilled staff
necessary to adjudicate the complex and rapid pace of decisions
that are necessary for Alaska's continued access to affordable,
reliable, and resilient energy.
3:52:22 PM
MS. ALVEY displayed slide 12, "Possible Impacts of an Increase
to the Statutory Cap." She advised that the projected budgets
for the RCA and RAPA will soon exceed the statutory cap, and
without an increase to the statutory cap, the RCA and RAPA may
not be able to collect the amount needed through the RCC to fund
operations. Regarding the potential impact to ratepayers, she
specified that under the statutory cap proposed in HB 313, the
RCC impact on a customer would increase by about 27 cents, going
from about 67 cents to about 94 cents on a 650-kWh monthly
customer bill.
3:53:26 PM
NAOMI JOHNSTON, Administrative Operations Manager, Regulatory
Commission of Alaska (RCA), Department of Commerce, Community &
Economic Development (DCCED), co-provided a PowerPoint
presentation titled "House Bill 313: Public Utility Regulatory
Cost Charge," dated 3/25, 2024. She drew attention to the two
charts depicted on slide 13, "Statutory Cap vs. RCC Revenue."
She explained that both charts, one for RCA and one for RAPA,
present a projected 10-year forecast with the current statutory
cap and with the proposed increased statutory cap. The
fluctuations seen in both charts, she noted, are based on a
five-year historical pattern that shows how the statutory cap
can increase or decrease depending on the gross operating
revenues of the utilities in the prior calendar year. She
pointed out that the blue line on each chart represents the
requested statutory cap with the same fluctuations. Regarding
the RCA chart, Ms. Johnston explained that the green columns
represent the RCA's authorized budget, which is projected by
using an average of the prior five years and is an increase of
roughly 2.11 percent. The orange columns, she continued,
represent the revenue the RCA needs to collect from RCCs, which
can vary depending on the estimated carry forward from the prior
year, whether there are any other sources of revenue, and
whether there are any uncollectable RCCs from the prior year.
The RCA, she added, is not always collecting the full amount in
RCCs that are outlined in the RCA's budget. Regarding the RAPA
chart, she explained that it shows RAPA's projected operating
budget together with the current statutory cap and with the
proposed statutory cap. She noted that in fiscal year 2023 (FY
23), RAPA began to exceed its statutory cap by about $8,700.
3:55:16 PM
REPRESENTATIVE FIELDS posed a scenario in which the committee
deregulates approval of projects that are, say, under 200
megawatts. He asked how much that would save the RCA and
whether that would obviate the need for an increase in fees.
MS. ALVEY responded that she doesn't know how that would impact
the RCA and its operation and whether it would need the
statutory cap.
REPRESENTATIVE FIELDS related that three projects of about 120-
130 megawatts each are being pursued by Golden Valley Electric
Association (GVEA) and Chugach Electric Association (CEA) [in
Fairbanks and Anchorage, respectively]. The projects are about
the cost of current gas and much less expensive than imported
gas, he further related, plus the cooperatives have boards
elected by voters so there is a high degree of accountability.
He asked how much money would be saved if these three projects
were deregulated.
3:56:39 PM
REPRESENTATIVE RUFFRIDGE asked whether HB 313 would increase the
number of fees that go to operation of the RCA.
MS. JOHNSTON explained that the bill would increase the ceiling
that the RCA can collect to fund its operations. If the current
trajectory continues, she said, the RCA will exceed the current
cap in FY 26.
REPRESENTATIVE RUFFRIDGE, regarding the funding of operations,
inquired whether the RCA currently has vacant positions.
MS. JOHNSTON replied that the RCA has a 33 percent vacancy rate,
about 19 positions.
REPRESENTATIVE RUFFRIDGE asked whether Ms. Johnston is aware of
Resolution 23-18 that was passed by the Alaska Federation of
Natives (AFN) in October [2023].
MS. JOHNSTON answered that she is not aware.
REPRESENTATIVE RUFFRIDGE conveyed that Resolution 23-18 calls
for the State of Alaska to investigate the operations of the
Regulatory Commission of Alaska (RCA) that cause Alaska's rural
residents undue financial hardships that affect their ability to
thrive. He expressed his concern that even though the bill's
proposed increase is small, there are individuals within the
state who are already saying they pay too much.
3:59:15 PM
MS. ALVEY stated she is aware of the resolution. She explained
that there are multiple factors in a customer bill, one being
the RCC if the utility chooses to pass that on to its customers.
She further explained that some of the items happening are
outside of the RCC, such as increases in costs.
REPRESENTATIVE RUFFRIDGE inquired as to what the RCA is doing
about the resolution. Asking to raise the statutory cap seems
odd, he remarked, given that people, and rural Alaskans
specifically, are crying for help. He asked whether the RCA is
really needs that extra money when everyone else is hurting.
4:00:53 PM
REPRESENTATIVE PRAX surmised that more people could be hired if
the RCA received more money. He asked whether hiring more
people would reduce the timeline for docket processing, which he
gathers is almost a year.
MS. ALVEY replied that the timelines are set out in statute, but
that the RCA tries to get things done as efficiently as
possible. The RCA can handle the filings within the usual
tariff process, and it is about 45 days, she explained, but the
longer timelines are when the RCA suspends a filing for further
investigation. The items getting suspended, she continued,
frequently are the revenue requirements of the rate cases, which
can be complex and do need the timeline.
4:02:21 PM
CHAIR SUMNER asked whether the RCA regulates residential trash
pickup.
MS. ALVEY answered that the RCA regulates residential and
commercial trash, except commercial in Anchorage. The Fairbanks
borough, the Mat-Su, and the Kenai are not rate regulated, she
added, but they still are required to do filings with the RCA
CHAIR SUMNER asked whether the RCA regulates residential trash
pickup in the Mat-Su.
MS. ALVEY clarified that the RCA regulates residential trash
pickup across the state.
CHAIR SUMNER inquired about the amount of time spent on this.
MS. ALVEY replied that she is not sure on the number of hours.
She said the RCA accounts for trash as a whole and not just
commercial or residential when keeping track of the RCA's time.
CHAIR SUMNER asked about the number of trash haulers that the
RCA is currently regulating in the Mat-Su.
MS. ALVEY offered her belief that it is about four, but perhaps
a couple more.
4:04:11 PM
REPRESENTATIVE CARRICK inquired about the average percentage or
dollar amount of a utility's cost that the RCC represents.
MS. ALVEY responded that it would depend on the sales of the
utility because it is the number of kilowatt hours that the
utility sells times the rate. It is going to vary between the
smaller utilities and a [large] utility like CEA, she continued,
but probably up to a couple thousand dollars. She said she
would see if the RCA has an average of how many kilowatt hours.
REPRESENTATIVE CARRICK stated that that would be valuable
information for the committee to have.
4:05:33 PM
REPRESENTATIVE FIELDS mused as to whether costs could be cut on
the side of the utilities. He asked whether the RCA has
estimated the administrative costs of Alaska's electric
utilities for staff time and attorney time to go through the
process to permit new generation.
MS. ALVEY answered that typically the RCA does not see new
projects come in for project pre-approval; the RCA sees the
costs for a project when a utility files its rate case. But,
she noted, that will change with the large project pre-approval
statutes that currently operate under the electric reliability
organization (ERO).
REPRESENTATIVE FIELDS surmised that RCA staff spent as many
hours on CEA's two community solar applications as did CEA. He
said minimizing administrative burden for Anchorage's electric
utility is something he is thinking about.
4:07:41 PM
REPRESENTATIVE SADDLER put forth his understanding that HB 313
is a formulaic and housekeeping bill for how RCA and RAPA can
get the funds they need for doing their job of regulating the
utility situation right now. He questioned whether it is fair
to be getting into the larger issues of energy policy when Ms.
Alvey and Ms. Johnston are before the committee to discuss
funding in the bill.
CHAIR SUMNER remarked that the bill has an interesting title.
4:08:25 PM
REPRESENTATIVE RUFFRIDGE agreed with Chair Sumner. He asserted
that when RCA asks for an increase to the statutory cap, it puts
everything that RCA does under the microscope as far as, "Should
that cost that, and should those people do that?" He asked how
many people are currently employed under the sphere of the PCE
program with RCA.
MS. ALVEY replied that the majority of one financial analyst's
part is dealing with rural non-regulated PCE; the tariff section
currently has three of its four positions filled that deal with
calculation of power cost equalization in addition to the other
items; and the RCA has some clerical staff that helps with the
clerical pieces of it.
4:09:47 PM
REPRESENTATIVE CARRICK asked which vacancies the RCA would fill
should the cap increase be passed.
MS. ALVEY responded that the RCA would fill the currently vacant
analyst and support staff positions.
4:10:38 PM
The committee took a brief at-ease.
CHAIR SUMNER passed the gavel to Vice Chair Ruffridge.
4:11:11 PM
REPRESENTATIVE CARRICK requested further specifics regarding
RCA's personnel needs.
MS. ALVEY explained that everything comes into the RCA through
the Records and Filing Section. She further explained that
there are a few vacancies in the Advisory Section where the
analysts are and potential energy issues [are handled by]
engineering. She said everything with PCE has so far been
handled by current RCA staff.
4:12:46 PM
VICE CHAIR RUFFRIDGE asked why an increase is needed with a 33
percent vacancy rate and whether some other cost will be
significantly altered in the coming two years. He further asked
whether more people will be needed in addition to the
approximately 20 vacant positions.
MS. ALVEY replied that depending on what comes out of the
legislative session, RCA will potentially have some additional
needs for personnel. She said RAPA is currently at its
statutory cap and RAPA will intervene in cases before the
commission as part of ensuring the public interest. She stated
that she is unclear whether there will be additional needs in
the future outside of what has been projected in RCA's budget,
but based on projections RCA will exceed its current statutory
cap. She noted that RCA is working to fill its vacancies.
4:14:40 PM
MS. JOHNSTON pointed out that over the last couple years, some
of RCA's fixed costs over which it has no control have increased
significantly, which has increased RCA's budget by an unexpected
amount. She said the proposed [statutory cap] increase would
allow flexibility in RCA's budget to prepare for future
replacement of RCA's case management software and digitizing its
records, which would make those records available.
VICE CHAIR RUFFRIDGE suggested that potentially there could be a
capital request for reaching those efficiencies rather than a
long-term statutory cap increase, which would negate the need to
pass this along to Alaskan residents.
4:16:13 PM
VICE CHAIR RUFFRIDGE announced that HB 313 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB313 PowerPoint Presentation for HL&C.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 ver. A.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Transmittal Letter.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Sectional Analysis ver. A.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB313 Fiscal Note DCCED-RCA.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 313 |
| HB 324-Sponsor Statement.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB 324 Sectional Analysis.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB 324 Supporting Documents-State Map.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| HB233 Support Letter - Chair of Automative and Diesel Tech UAA.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 233 |
| UA TVEP_HLC Committee_3-25-24.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| 2024 UA TVEP Reauthorization Report.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| FY23 AWIB Technical and Vocational Report.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| AWIB Resolution Supporting Reauthorization of TVEP-docx.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 55 |
| B.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| Summary of Changes HB 324 – Bill Ver A to B.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 324 |
| 20240325 AK HB 226 COA support.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 226 |
| HB218 Amendments.pdf |
HL&C 3/25/2024 3:15:00 PM |
HB 218 |