Legislature(2011 - 2012)BELTZ 105 (TSBldg)
03/15/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: "how Equality Policies Work to Strengthen Economies and the Labor Force." | |
| SB28 | |
| HB267 | |
| SB116 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 267 | TELECONFERENCED | |
| += | SB 116 | TELECONFERENCED | |
| = | SB 28 | ||
SB 28-PRICE GOUGING INVOLVING ENERGY RESOURCES
2:05:47 PM
CHAIR EGAN announced consideration of SB 28.
SENATOR WIELECHOWSKI, sponsor of SB 28, said he had received
many phones calls and emails in support of SB 28 and none
opposing it.
2:07:32 PM
SENATOR GIESSEL asked Mr. Sniffen, Department of Law, if he had
investigated fuel prices in the past.
ED SNIFFEN, Assistant Attorney General, Department of Law, said
his responsibilities include enforcement of anti-trust and
consumer protection statutes. In that role, he had investigated
fuel prices in the last decade.
SENATOR GIESSEL asked if he found any issues.
MR. SNIFFEN replied that pricing investigations are tricky,
because anti-trust law requires finding evidence of collusion or
coordinated conduct. The department has retained experts to look
at fuel pricing in the State of Alaska, the details of which are
confidential, but they have released a couple of reports setting
out their findings. No evidence of illegal activity - any
collusion or coordinated conduct - had been found of among the
refiners, distributors or retailers in the state.
He said one of the good things about this particular bill is
that it would remove the requirement to actually find collusion
or coordinated conduct. They could look at conduct that is just
"unconscionable." But the tricky thing would be if determining
unconscionable would be any easier than determining collusion or
coordinated conduct.
SENATOR GIESSEL asked if he knew of a definition of
unconscionable.
MR. SNIFFEN responded that case law provides some guidance on it
using words like excessive or exorbitant. In discussions with
Senator Wielechowski's office, they decided that unconscionable
would be slightly easier to identify than collusion or
coordinated conduct, only because a couple of cases actually
define what that means, although he didn't know how it would
apply in Alaska. For example, in Pennsylvania and Ohio they say
unconscionable means something that affronts the sense of
justice, decency and reasonableness. Senator Wielechowski
pointed out that in most states, price gouging laws require a
declared state of emergency before the laws kick in; then you
have a baseline. You could point out a company that had raised
its price by 300 percent only because Hurricane Katrina came in
and wiped out a lot of people. But because of Alaska's lack of
competition, distributors and refiners can charge what they like
without a declared state of emergency, and he had never had to
look at an unconscionable price.
SENATOR GIESSEL remarked that he just said he didn't have a
determination of "unconscionable price."
MR. SNIFFEN replied that was right, and he would have to come up
with a test if this bill passed. Also, if you are going to tell
somebody they can't charge something, the follow-up might be
having to tell them what they can charge. An accounting would be
required to determine what their costs are, what their
investment risks are and what their return on capital is. Then
it starts to look a lot like regulation, which is what the RCA
does.
SENATOR GIESSEL said page 2, line 2, refers to "fuel for space
heating." In Anchorage that fuel is natural gas; in other areas
it's diesel. What does this refer to and who regulates that
price?
MR. SNIFFEN answered most diesel fuel that is used for heating
(delivered by a tank wagon or a truck) is the kind of space
heating fuel that would be covered by this bill, but natural gas
could also be used, and that is regulated by the RCA. The RCA
does not regulate prices for fuel oil.
SENATOR GIESSEL asked if this language conflicts with the RCA's
regulatory authority over natural gas.
2:15:09 PM
MR. SNIFFEN replied maybe, but by default, it would only apply
to the commodity that is regulated by the RCA. He didn't know if
there would be an actual conflict in the sense that the RCA
would not attempt to regulate this kind of fuel product.
SENATOR WIELECHOWSKI responded that this provision was added in
a committee several years ago by the Senate Energy Committee; at
that time, Senator Hoffman and Senator Stedman were concerned
about high costs in rural and Southeast Alaska, particularly, in
areas that use diesel oil for heating. It was never the intent
to regulate an energy source that is currently regulated by the
RCA.
SENATOR PASKVAN asked Mr. Sniffen to comment on the difficulty
in applying a collusion or coordinated conduct standard in a
smaller limited market where there could be either an oligopoly
or a monopoly.
MR. SNIFFEN answered that it's very difficult to find illegal
collusion or coordinated conduct in a smaller market, because
prices are displayed for everyone to see. There is no need for
competitors to engage in illegal conduct, because everyone knows
what everyone else is doing. Even in Anchorage, where there is
robust competition for gasoline, collusion between retailers is
very difficult to uncover. Several years ago, the Attorney
General's Office found evidence that some retailers had meetings
and agreed to fix the price on gasoline, and he took action by
shutting the stations down. But absent a "mole" or "whistle
blower" who is at those kinds of meetings, it is very difficult
to find.
2:18:51 PM
SENATOR WIELECHOWSKI said originally the bill had a specific
trigger of 10 percent higher than Seattle gas prices. Refiners
didn't like that; it was too specific, even though the two
prices had tracked for years. Then they tried using "excessive"
or "exorbitant" and were finally advised by attorneys that using
"unconscionable" was a better standard, because it is used in
other states and in regulatory hearings and has a body of case
law behind it. The Attorney General has reported investigating
this issue twice, but they have been limited to collusion and
anti-trust issues; they have not investigated whether or not the
prices are unconscionable.
SENATOR WIELECHOWSKI pointed out that all this bill does is
empower the Attorney General, if he believes there is evidence
of very high prices without warrant, to investigate, and if he
finds evidence, he can file a lawsuit. He explained that
originally the bill was drafted so that anyone could file a
lawsuit. Tesoro said that their main concern was that they
didn't want to fight 100 lawsuits. He was told by the
representative that if that provision were changed to only allow
the Attorney General to file a lawsuit, they would not oppose
the bill. The next day after he made the change, Tesoro came in
and opposed the bill. So there are tight restrictions on this
bill; it is designed to protect Alaskan consumers.
SENATOR WIELECHOWSKI stated that he was not saying anyone was
acting other than they would in a free market; people are going
to try to make as much money as they possibly can. The problem
in the State of Alaska is there is no free market here, and that
situation allows legal price gouging. This bill just says that
in that situation the Attorney General is empowered to
investigate and if they find evidence of gouging with
unconscionable prices, they have the ability to file a lawsuit.
2:22:12 PM
SENATOR GIESSEL moved conceptual Amendment 1 as follows:
I move that SB 28 be amended to include health care
(from both providers and facilities), rental housing,
and the sale of grocery food items. That they be
covered by and subject to the same anti-gouging
provisions as the refiners, distributors and retailers
of certain energy resources.
She apologized for the conceptual form and said her amendment
was still in drafting. She explained that the Department of
Administration was struggling to contain the accelerating health
care costs. Alaskans pay 50 percent more for health care than
people in Seattle. In fact, many insurers are sending their
beneficiaries to Seattle for health care services, because the
prices are so high in Alaska. She had heard the same about
rental housing and grocery prices in some locations.
SENATOR DAVIS asked the sponsor if this amendment would affect
the title and what his thoughts were on it.
SENATOR WIELECHOWSKI replied the amendment would require a title
change; he had additional problems with it, because he didn't
think the state should be in the business of regulating the free
market unless it's absolutely necessary. The significant
difference between groceries, for instance, and gasoline prices,
is that there is one place to buy gasoline; one refiner refines
80 to 82 percent of gasoline, and another refines 10 percent.
There is an oligopoly when it comes to gasoline and heating in
the State of Alaska, but if he doesn't like what he is charged
for a dozen eggs or a carton of milk at Safeway, he can go to
any of another dozen stores that are around. If he doesn't like
what his doctor at Providence charges, he can go to other health
care providers. He has hundreds of choices in rental property.
There is a free market for those items; there is not a free
market for gasoline. That is the major difference.
SENATOR GIESSEL said many Alaskan communities have extremely
limited grocery and housing opportunities and certain groups
offer specialized health care. So it does apply to these other
vendors.
SENATOR WIELECHOWSKI said Senator Giessel was correct and that
would be an excellent bill for to file on her own and take
through the committee process.
2:26:47 PM
SENATOR MENARD said she had one strong concern with the
amendment and that was that it had not had due process. She knew
the direction in which Senator Giessel was going and wanted to
hear from those other industries about why citizens of Alaska
feel gouged, but it's way too late in the session to tackle this
amendment.
SENATOR PASKVAN objected to the amendment. A roll call vote was
taken. Senator Giessel voted yea; Senators Menard, Davis,
Paskvan and Egan voted nay. Therefore, the amendment failed.
2:29:05 PM
SENATOR PASKVAN moved to report SB 28 from committee to the next
committee of referral with individual recommendations and
attached fiscal note, if any. Senator Giessel objected. A roll
call vote was taken: Senators Menard, Davis, Paskvan and Egan
voted yea; and Senator Giessel voted nay. Therefore, SB 28
passed from the Senate Labor and Commerce Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 116 lttr opposing, WCCommittee of AK 030512.pdf |
SL&C 3/15/2012 1:30:00 PM |
SB 116 |