Legislature(2023 - 2024)BARNES 124
04/05/2024 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB394 | |
| HB393 | |
| HB388 | |
| HB359 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 393 | TELECONFERENCED | |
| += | HB 388 | TELECONFERENCED | |
| += | HB 349 | TELECONFERENCED | |
| += | HB 394 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 359 | TELECONFERENCED | |
HB 394-RCA REGULATE NATURAL GAS STORAGE FACILITY
3:32:36 PM
CHAIR MCKAY announced that the first 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."
3:33:57 PM
REPRESENTATIVE MEARS moved to adopt Amendment 1 to HB 394,
labeled 33-LS1441\U.1, Nauman, 4/4/24, which read as follows:
Page 1, lines 2 - 3:
Delete "relating to records of the Regulatory
Commission of Alaska;"
Page 2, line 27, through page 3, line 4:
Delete all material.
Renumber the following bill sections accordingly.
Page 4, lines 17 - 27:
Delete all material.
Renumber the following bill sections accordingly.
3:34:02 PM
CHAIR MCKAY objected for the purpose of discussion.
3:34:16 PM
REPRESENTATIVE MEARS stated that Amendment 1 deals with the
section of the proposed legislation concerning required
confidentiality. She argued that the point is mute because the
Regulatory Commission of Alaska (RCA) already has the ability to
make documents confidential and requiring this in statute would
diminish RCA's ability to provide public service.
3:35:02 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, Alaska State
Legislature, on behalf of the sponsor, the House Resources
Standing Committee, of which Representative McKay served as
chair, spoke to HB 394. He expressed the understanding that RCA
would not have an issue with protecting financial records from
the onset, without the petitioning process for confidentiality.
He noted that the main concern is that there would be adequate
gas storage available and engaging the private sector to do
this.
3:36:00 PM
ROBERT DOYLE, Chair, Regulatory Commission of Alaska, answered
questions during the hearing on HB 394. On behalf of RCA, he
expressed support for the proposed legislation and the belief
that having gas shortages is the "new normal." He expressed the
importance of having the private sector involved [in procuring
gas for the state], and he said that having these [records
confidential from the onset would promote this]. He discussed
RCA's process with confidentiality.
COMMISSIONER DOYLE, in response to a question from Chair McKay,
expressed the opinion that Amendment 1 would not be needed;
however, he added it would be a matter of public policy, and the
legislature would need to make the decision.
3:38:08 PM
REPRESENTATIVE MCCABE maintained that the proposed legislation
is designed to create more access to natural gas storage, and it
is not designed to obtain Hilcorp's financial records. He
expressed opposition to Amendment 1.
3:39:00 PM
CHAIR MCKAY removed his objection to the motion to adopt
Amendment 1.
REPRESENTATIVE MCCABE objected.
3:39:30 PM
REPRESENTATIVE MEARS argued that HB 394 would create additional
layers of secrecy in statute for the [gas] industry, of which
more transparency is needed. She continued that RCA already has
mechanisms for confidentiality. She expressed the opinion that
additional confidentiality "above and beyond" what is given to
other utilities should not be provided.
3:40:12 PM
CHAIR MCKAY explained that S corporations are protected by
federal law to have their financial information confidential.
3:40:24 PM
REPRESENTATIVE SADDLER expressed opposition to the proposed
amendment. He pointed out that utilities are publicly regulated
so their financials are available to the public, while liquified
natural gas (LNG) and gas storage facilities would be private
organizations. He opined that transparency for records is
mostly a positive thing; however, competitive businesses would
not want records available to competitors. He pointed out that
RCA, as a trusted public entity and in service to the public
good, would have access to the records.
3:41:41 PM
A roll call vote was taken. Representatives Mears, Armstrong,
and Dibert voted in favor of adopting Amendment 1 to HB 394.
Representatives Wright, McCabe, Saddler, and McKay voted against
it. Therefore, Amendment 1 failed to be adopted by a vote of 3-
4.
3:42:29 PM
REPRESENTATIVE MEARS moved to adopt Amendment 2 to HB 394,
labeled 33-LS1441\U.2, Nauman, 4/4/24, which read as follows:
Page 1, line 2:
Delete "and liquefied natural gas import
facilities"
Page 1, line 7:
Delete "AS 42.05.711(q), (s), and (w)"
Insert "AS 42.05.711(q) and (s)"
Page 3, lines 16 - 18:
Delete all material.
Renumber the following bill sections accordingly.
3:42:35 PM
REPRESENTATIVE MCCABE objected.
3:42:42 PM
REPRESENTATIVE MEARS explained that Amendment 2 would remove the
carveout that directs RCA to oversee imported LNG to the state.
She pointed out that the Federal Energy Regulatory Commission
(FERC) already oversees this. She explained that FERC does not
always provide oversite for setting rates, as its role is to
make certain permitted facilities are safe, while RCA would
provide rate protection. She noted the short timeframe she has
had to examine this, and she expressed unease because parts of
the supply chain might be left out of the regulations.
3:44:00 PM
MR. JEPSEN stated that there is concern that FERC would not
regulate some situations where a facility is importing LNG. He
opined that if RCA was removed as a regulator as well, there
would be no regulation of the facility. After some research, he
stated that he obtained a legal memo, of which he read, as
follows:
The Nikiski LNG import terminal would be subject to
the exclusive jurisdiction of the Federal Energy
Regulatory Commission under the Natural Gas Acts
[sic]. State regulation of those facilities is
preempted by federal law. The Natural Gas Act has
long been recognized as a comprehensive scheme of
federal regulation of all wholesale of natural gas in
interstate commerce, which ... confers upon for
exclusive jurisdiction over the transportation and
sale of natural gas in interstate commerce for resale.
Where state regulation affects ability of FERC to
regulate comprehensively of the transportation,
storage, and sell of natural gas to achieve
uniformity, which was an objective of the Natural Gas
Act, or presents the prospect of interference with
federal regulatory power, the state law has been
preemptive.
MR. JEPSEN reiterated that FERC has total jurisdiction over the
subject, and this amendment would clarify this so there is no
confusion. He stated that FERC would have power in any scenario
where gas was imported, transported, or sold.
3:45:44 PM
CHAIR MCKAY expressed the understanding that Amendment 2 would
be redundant.
MR. JEPSEN expressed the opinion that the amendment is
unnecessary.
3:46:13 PM
COMMISSIONER DOYLE expressed opposition to Amendment 2, as the
carveout would be appropriate.
3:46:31 PM
REPRESENTATIVE MEARS expressed the belief that her point was
made in the [memo read to the committee]. She opined that if
there were an overlap, FERC would have jurisdiction and primacy;
therefore, the carveout would be unnecessary.
3:46:52 PM
MR. JEPSEN expressed disagreement.
REPRESENTATIVE MCCABE maintained his objection to the motion to
adopt Amendment 2.
3:47:03 PM
A roll call vote was taken. Representatives Armstrong, Mears,
and Dibert voted in favor of adopting Amendment 2 to HB 394.
Representatives Saddler, Wright, McCabe, and McKay voted against
it. Therefore, Amendment 2 failed to be adopted by a vote of 3-
4.
3:47:56 PM
REPRESENTATIVE MEARS withdrew Amendment 3.
3:48:08 PM
REPRESENTATIVE MEARS moved to adopt Amendment 4 to HB 394,
labeled 33-LS1441\U.4, Nauman, 4/4/24, which read as follows:
Page 1, lines 3 - 4:
Delete "relating to rates established by the
Regulatory Commission of Alaska;"
Page 2, lines 3 - 26:
Delete all material.
Renumber the following bill sections accordingly.
Page 4, lines 9 - 16:
Delete all material.
Renumber the following bill sections accordingly.
3:48:16 PM
REPRESENTATIVE MCCABE objected.
3:48:19 PM
REPRESENTATIVE MEARS explained that RCA code already covers fair
market value, so the amendment would remove this language from
the proposed legislation. She noted that the language in
proposed legislation only concerns the oil and gas fields, and
not the equipment, which would be considered in depreciation
schedules. She noted the fluctuation in the fair market value
of oil and gas fields; therefore, should not be included in the
calculations.
3:49:17 PM
MR. JEPSEN explained that the fair market value language was
added to the bill to signal to the private sector that it would
not be told the value of its assets, as there would be an
evaluation process. He argued that if the private sector is to
engage in gas storage, these companies must be treated fairly.
He referenced the subjectivity in determining the fair market
value, as no sales would be taking place; however, he expressed
the belief that this would be appropriate.
3:50:14 PM
COMMISSIONER DOYLE pointed out the natural gas shortages in the
state and the need for the public to have adequacy. He
reiterated that there will be a "new normal," and new procedures
will need to be considered, with fair market value being part of
the new process. He pointed out that fair market value is based
on selling an asset on the open market, and when something is
new, RCA would look at the date of the investment, the cost of
the asset, and how it would be put into the system. He stated
that the consideration would be how the fair market value would
change these things. He stated that if this were the policy,
RCA would make sure it is done in a prudent, just, and fair
manner. Because more storage is needed, he expressed opposition
to removing this as a consideration. He suggested that to have
more gas storage in the older gas fields, depreciation of these
fields would need to be considered and a new system would need
to be created to assess this. He reiterated that RCA would take
the legislature's direction in this.
3:52:17 PM
REPRESENTATIVE SADDLER expressed opposition to Amendment 4. He
opined that deleting the fair market value language would risk
leaving the value of assets constant. He continued that values
would be set at the beginning of a contract and never adjust
while the price of gas would fluctuate.
3:53:07 PM
REPRESENTATIVE MEARS noted that the commissioner touched on the
fact that these are already considered as capital investments;
therefore, there would already be a consideration of the fair
market value under other utilities RCA is regulating. Because
of this, she argued that the language on fair market value does
not need to be in the proposed legislation.
Representative McCabe maintained his objection to the motion to
adopt Amendment 4.
3:53:44 PM
A roll call vote was taken. Representatives Armstrong, Mears,
and Dibert voted in favor of adopting Amendment 4 to HB 394.
Representatives Saddler, Wright, McCabe, and McKay voted against
it. Therefore, Amendment 4 failed to be adopted by a vote of 3-
4.
3:54:35 PM
REPRESENTATIVE MCCABE moved to report HB 394 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 394 was reported out of the
House Resources Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AM1 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM2 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM3 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM4 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM1 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM2 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM3 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM1 HB 388.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 388 |