Legislature(2023 - 2024)BARNES 124
04/15/2024 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB226 | |
| SB196 | |
| HB394 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 196 | TELECONFERENCED | |
| += | HB 226 | TELECONFERENCED | |
| += | HB 378 | TELECONFERENCED | |
| + | HB 394 | TELECONFERENCED | |
| *+ | HJR 27 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 394-RCA REGULATE NATURAL GAS STORAGE FACILITY
3:42:29 PM
CHAIR SUMNER announced that the final order of business would be
HOUSE BILL NO. 394, "An Act relating to the Regulatory
Commission of Alaska and regulation of the service of natural
gas storage and liquefied natural gas import facilities;
relating to records of the Regulatory Commission of Alaska;
relating to rates established by the Regulatory Commission of
Alaska; and providing for an effective date."
3:42:46 PM
The committee took an at-ease from 3:42 p.m. to 3:51 p.m.
3:51:25 PM
REPRESENTATIVE TOM MCKAY, Alaska State Legislature, on behalf of
the House Resources Standing Committee, sponsor, read the
sponsor statement for HB 394 [included in the committee packet],
which read as follows [original punctuation provided]:
HB 394 is aimed at enhancing the energy security of
Southcentral Alaska by providing a clear regulatory
framework for third-party natural gas storage. This
bill was designed to establish a regulatory framework
that not only encourages the expansion of natural gas
and liquefied natural gas (LNG) storage facilities but
also ensures these critical pieces of energy
infrastructure operate efficiently and remain
economically viable.
HB 394 provides for the Regulatory Commission of
Alaska (RCA) to have clear oversight authority over
natural gas and LNG storage facilities, which will
bring stability and predictability to the sector and
make it more attractive to operators and investors. HB
394 defines principles for the determination of just
and reasonable rates, ensuring that operation costs,
tax incentives, and the fair market value of storage
assets are all considered. This approach aims to
foster fair pricing practices that benefit both
consumers and businesses.
This bill also introduces measures to protect
sensitive financial information, mandating
confidentiality for certain records. This move strikes
a balance between protecting commercial sensitivities
and fulfilling the need for regulatory transparency.
Additionally, the bill recognizes the complexities of
state and federal regulations by exempting LNG import
facilities that are already regulated by the federal
government from state oversight.
HB 394 is a necessary piece of legislation if the
state of Alaska wants to see third-party gas storage
from the private sector. I urge my colleagues of the
33rd legislature to join me in supporting this bill
which represents a decisive step towards reinforcing
Southcentral Alaska's energy infrastructure and
ensuring the well-being of our state.
3:55:30 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, on behalf of the
bill sponsor, the House Resources Standing Committee, on which
Representative McKay serves as chair, began a PowerPoint
presentation, titled "HB 394 - RCA regulation of natural gas
storage facilities." He drew attention to slide 2, which
explained the changes proposed under HB 394 and intended
benefits. He moved to slide 3, which displayed active gas
storage facilities in Southcentral Alaska.
3:57:40 PM
REPRESENTATIVE FIELDS asked for clarification as to the
definition of the term "third party" in the context of slide 3.
MR. JEPSEN replied that HB 394 would address gas storage issues
for companies all throughout Southcentral Alaska.
3:58:50 PM
MR. JEPSEN continued to slide 4, which explained the logistics
and necessity of gas storage and gas storage facilities. He
moved to slide 5, which displayed a list of agency roles that
the Alaska Oil and Gas Conservation Commission (AOGCC),
Department of Natural Resources (DNR), and Regulatory Commission
of Alaska (RCA) all play in gas storage in Alaska. He concluded
the presentation on slide 6, which provided an overview of HB
394 and its policies as they relate to gas storage.
4:02:17 PM
REPRESENTATIVE FIELDS asked Mr. Sims about the fair market value
language in HB 394.
MR. JEPSEN explained that the language is to clarify to the
private industry about fair market value and make companies
aware that things are being considered other than just the point
of sale price.
REPRESENTATIVE FIELDS asked whether the price of gas has any
impact on cost of storage.
MR. JEPSEN answered that he believes that is so.
4:04:57 PM
JOHN SIMS, President, Enstar Natural Gas, proffered that the
challenge of gas pricing is determining when the price was set.
He added that the fluctuation of gas prices makes for a
challenge.
REPRESENTATIVE FIELDS asked for information about cost of
storage and further asked for a comparison about language of
legislation with or without fair market value language.
MR. SIMS replied that it would be difficult to compare such
language and explained how the gas storage rate was first set.
4:08:04 PM
REPRESENTATIVE CARRICK asked why HB 394 would make records
confidential when companies can already request confidential
records.
MR. JEPSON replied that companies must make the prices
confidential to attract business in Alaska.
4:09:10 PM
ROBERT DOYLE, Chair, Regulatory Commission of Alaska, stated
that the RCA is in support of HB 394 because it would convert a
legacy field into a storage facility.
REPRESENTATIVE CARRICK asked Mr. Doyle whether the current
confidentiality process is sufficient.
MR. DOYLE answered that the current system for confidentiality
records is sufficient and is based off of a "mighty mite"
standard that protects the confidentiality of records if there
is any chance of a breach of confidentiality in the process of
attaining said confidentiality.
4:12:05 PM
REPRESENTATIVE SADDLER pointed to Section 4 of HB 394 and asked
about the difference between a financial statement and a
financial assurance statement.
MR. DOYLE explained that it depends on how far a person wants to
go into the finance records and directed his answer to Becki
Alvey.
4:13:11 PM
BECKI ALVEY, Advisory Section Manager, Regulatory Commission of
Alaska, explained the differences between a financial statement
and a financial assurance statement. In response to a follow-up
question, she explained that a financial assurance agreement is
the agreement that is obtained when a third party backs a
financial investment of a company.
REPRESENTATIVE SADDLER asked how far the confidentiality of
records for companies would extend.
MR. DOYLE said that the committee is talking about S-
Corporations and would need to seek legal counsel to answer
Representative Saddler's question.
4:16:09 PM
REPRESENTATIVE MCKAY emphasized that Alaska is in need of
additional gas storage beyond current capacity and explained
that the confidentiality language is in the bill to retain
access to current and future storage opportunities.
4:16:44 PM
REPRESENTATIVE FIELDS asked Mr. Nottingham about confidentiality
agreements between the State of Alaska and gas companies.
4:17:33 PM
DEREK NOTTINGHAM, Director, Division of Oil & Gas, Department of
Natural Resources, answered that the purpose of the
confidentiality agreement is to show that the investing company
has the financial backing to support its investment. He added
that the Department of Natural Resources (DNR) is looking at
making sure said company could not leave the state high and dry
with old equipment and failed payments.
REPRESENTATIVE FIELDS asked why there are two different
confidentiality provisions under HB 394.
MR. NOTTINGHAM explained that there are current statutes that
protect the confidentiality of those records and explained how
HB 394 would affect those statutes.
REPRESENTATIVE FIELDS asked whether the language in HB 394 goes
further than existing statute surrounding confidentiality.
MR. NOTTINGHAM said he could not comment.
4:20:38 PM
REPRESENTATIVE RUFFRIDGE asked the bill sponsor if there is
enough storage during peak demand times in winter and asked how
the proposed legislation would get the state access to more gas
storage.
REPRESENTATIVE MCKAY replied that the state currently has access
to only one storage facility and added that the three Hillcorp
fields are not available until the company agrees with the
state. He reiterated that the goal of HB 394 is to prepare
Alaska for a possible need to import gas in the future.
REPRESENTATIVE RUFFRIDGE asked about repeal language in Section
5 of HB 394.
4:23:40 PM
MR. JEPSEN responded that current gas storage and transfer
action is regulated under Title 42 of Alaska Statute and the
repeal language being questioned is merely conforming language.
REPRESENTATIVE RUFFRIDGE clarified Mr. Jepson's answer and asked
about language in Section 5 and Section 7 of the bill.
MR. JEPSEN explained that Section 5 of HB 394 is referencing
language in Chapter 6, Title 42 of Alaska Statute.
REPRESENTATIVE RUFFRIDGE asked why the State of Alaska would
make North Slope natural gas different from that of the other
carriers.
MR. JEPSEN deferred the question to Becki Alvey.
4:26:20 PM
MS. ALVEY, in response to Representative Ruffridge, answered
that it is not unusual to see a specific definition or statute
relating to North Slope gas companies.
4:27:40 PM
REPRESENTATIVE MCKAY clarified that HB 394 is only related to
Cook Inlet gas companies, not North Slope companies.
REPRESENTATIVE RUFFRIDGE remarked that it seems out of line to
carve out a section of bill language for specific companies that
would not be impacted by the proposed legislation.
4:29:41 PM
MR. JEPSEN said that he would do more research to get a better
answer to the committee.
REPRESENTATIVE MCKAY explained that the state must regulate all
gas pipelines, regardless of their length, especially assuming
importation of LNG that could start in 2030.
MR. JEPSEN reiterated that HB 394 was created specifically for
Cook Inlet gas companies.
4:31:27 PM
REPRESENTATIVE RUFFRIDGE shared his understanding that HB 394
would prohibit certain companies from falling under the RCA's
Chapter 5 of Title 42 of Alaska Statute.
4:32:22 PM
REPRESENTATIVE CARRICK asked how many natural gas facilities in
Alaska would be exempt from Chapter 6 under HB 394.
MR. JEPSEN answered that there aren't many companies that would
be exempt and pointed to a current project in Cook Inlet that
would fall under the exemption section of the proposed
legislation.
4:35:24 PM
MS. ALVEY explained that Alaska Statute (AS) 42.06.630 currently
defines what a pipeline facility and pipeline carrier are as
defined by the pipeline act and explained how other statutes in
AS title 42 interact with each other and the proposed
legislation.
REPRESENTATIVE SADDLER asked for an example of a pipeline
facility operated by a pipeline carrier.
MS. ALVEY said that a pipeline facility is the facility where a
pipeline is operated by a pipeline carrier. In response to
follow-up questions, she said that a pipeline carrier is the
owner of the pipeline, while a pipeline facility is the place
where the pipeline operates.
4:38:07 PM
MR. SIMS used Harvest Midstream as an example of a pipeline
facility operated by a pipeline operator.
4:38:40 PM
REPRESENTATIVE FIELDS asked Representative McKay what the
definition of "fair return" is in statute.
MR. JEPSEN deferred the question to Robert Doyle.
4:39:24 PM
MR. DOYLE said that coming up with a fair and justifiable rate
is a process that would not be determined by legislation but
would be done by the RCA on the record.
REPRESENTATIVE FIELDS asked what the RCA sees as "revenue
requirements" and gave a hypothetical situation related to the
term.
MR. DOYLE explained that the company under scrutiny for its
pricing would have to justify the price before any regulatory
action is taken on setting a price.
REPRESENTATIVE FIELDS asked whether other ways to create storage
had been considered.
4:43:04 PM
MR. JEPSEN shared the bill sponsor's belief that crafting a
piece of legislation is the most prudent and effective method of
getting more private sector gas storage online.
4:43:41 PM
REPRESENTATIVE SADDLER commented that a fair rate is not
determined by legislation and asked Mr. Doyle if the RCA makes
allowable rate of return rate decisions and further questioned
what is considered "fair" by the RCA.
MR. DOYLE answered that there needs to be a utility that can be
viable over time and a good return margin to the ratepayer.
REPRESENTATIVE SADDLER said that the RCA is already doing that
and clarified the intent of his question.
4:46:35 PM
CHAIR SUMNER announced that HB 394 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR27 Supporting Document_New Trade Regime Can Counter Chinese Supply Chain.pdf |
HL&C 4/15/2024 3:15:00 PM |
HJR 27 |
| HJR27 Supporting Document_Greenhouse Gas Lifecycle Assessment.pdf |
HL&C 4/15/2024 3:15:00 PM |
HJR 27 |
| HJR27 Sponsor Statement.pdf |
HL&C 4/15/2024 3:15:00 PM |
HJR 27 |
| SB196 Sponsor Statement Version A.pdf |
HL&C 4/15/2024 3:15:00 PM |
SB 196 |
| SB196 Sectional Analysis Version A.pdf |
HL&C 4/15/2024 3:15:00 PM |
SB 196 |
| SB196 Fiscal Note-DOLWD-WH 03.02.24.pdf |
HL&C 4/15/2024 3:15:00 PM |
SB 196 |
| SB 196 Support letters recevied as of 03082024.pdf |
HL&C 4/15/2024 3:15:00 PM |
SB 196 |
| AK House Labor and Commerce Slides 4.15.24.pdf |
HL&C 4/15/2024 3:15:00 PM |
HJR 27 |
| ASMA support HB 226 PBM.pdf |
HL&C 4/15/2024 3:15:00 PM |
HB 226 |
| URAC Comments on AK HB 226.pdf |
HL&C 4/15/2024 3:15:00 PM |
HB 226 |
| HB226 Explanation of Changes Ver. S to Ver. R.pdf |
HL&C 4/15/2024 3:15:00 PM |
HB 226 |
| R.pdf |
HL&C 4/15/2024 3:15:00 PM |
HB 226 |
| ANTHC HB226 LOS 4-17-24.pdf |
HL&C 4/15/2024 3:15:00 PM |
HB 226 |