Legislature(2017 - 2018)BUTROVICH 205
03/20/2017 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Big Game Commercial Services Board | |
| SB58 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 58 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 58-DEPT OF LAW: ADVOCACY BEFORE FERC
3:47:25 PM
CHAIR GIESSEL called the meeting back to order and announced
consideration of SB 58. She said this bill was sponsored by the
Rules Committee at the request of the governor, with the
Department of Law (DOL) as the bill manager. She said the DOL
has its attorneys representing the interests of the consumers,
that being the Alaska public, in proceedings before both the
Regulatory Commission of Alaska (RCA) and the Federal Energy
Regulatory Commissioner (FERC). How that representation is paid
for and will continue to be paid in the face of lower general
fund amounts is the subject of this bill. She welcomed Mr. Ed
Sniffen.
3:48:15 PM
ED SNIFFEN, Assistant Attorney General, Department of Law (DOL),
presented SB 58. As background, he said all public utilities in
Alaska and pipelines that operate in Alaska are regulated by the
RCA; they regulate their rates, terms of service, and a host of
other things. To pay for that regulation, the legislature has
established a regulatory cost charge that is billed to the
utilities and the pipelines, the entities that benefit from the
regulation. It is then generally passed on to customers. That
money pays for the staff of the RCA, all their analysts, and
administrative functions of regulating the utilities and the
pipelines.
The Department of Law has a role in that process. It appears in
matters before the RCA to protect the public's interests. For
example, they represent the ordinary consumer to make sure the
rates are just and reasonable when Enstar wants to raise its
bill. The department's efforts are also paid for through that
same regulatory cost charge.
3:49:54 PM
MR. SNIFFEN said to understand the impact of this bill it is
important to understand what the regulatory cost charge does,
which is the subject of his presentation.
What is the regulatory cost charge (RCC)?
The RCC is a fee assessed on public utilities and
pipelines that are regulated by the Regulatory
Commission of Alaska (RCA). It is created by AS
42.05.254 and AS 42.06.286.
Who Pays RCCs?
Utilities and pipelines that are regulated by the RCA,
including over 125 public utilities and about 20
common carrier pipelines with in-state deliveries.
These utilities and pipelines may pass the charge onto
customers that benefit from RCA regulation. Each year,
the RCA assesses RCCs to utilities and pipelines based
on the amount of work required for each industry
sector. For example, if they are spending most of
their time on electric cases one year, the electric
utilities may pay a little more. It is based on where
their efforts are being focused.
3:51:21 PM
What does the RCC pay for?
The money collected in the RCC provides funding for
the Regulatory Commission of Alaska (RCA), which is
responsible for the economic regulation of public
utilities and intrastate common carrier pipelines in
Alaska, and the Regulatory Affairs and Public Advocacy
(RAPA) section in the Department of Law, which is
charged with advocating for the public interest in
matters related to the economic regulation of public
utilities and pipelines.
The total RCC is capped by the legislature at 0.87 percent of
the adjusted gross revenue (derived from operations in Alaska)
of the regulated utilities and pipelines. That is split between
the RCA and the DOL; 0.7 percent of the adjusted gross revenues
are used to pay the RCA's budget and 0.17 percent is what the
DOL gets.
The Regulatory Affairs and Public Advocacy's (RAPA) section of
the DOL budget for 2017 was $2,333,700. The cap is $2,374,390;
so they are pretty close to the cap. They are not asking to grow
the cap, but the slice of the pie that is spent on pipelines
right now is about 7 percent ($162,591) of the total pie. SB 58
will allow them to just increase the size of the slice of pie.
So, if they are spending more time doing pipeline stuff, they
want the authority to be able to charge to matters that are
coming before the FERC, which authority they do not have right
now.
3:53:09 PM
What would SB 58 change?
This bill does not change the .17 percent RCC cap. It
doesn't create a new authority for the DOL. It just
allows some costs incurred by the department in
matters before FERC (TAPS pipeline tariffs) in the
pipeline to be charged to the RCC.
The actual dollar impact to the different shippers:
If they wanted to burden the pipelines with another
$100,000 of RCC costs, based on most recent
information that would increase the pipeline RCC
surcharge by about .041 percent ($4.10 per $10,000).
Not huge. If that slice were increased by $200,000 it
would be $8.20.
3:54:13 PM
Why now?
There are some suspicions the bill trying to do
something other than what they intend it to do. But
for over 30 years, outside counsel has represented the
state on FERC pipeline matters. That has been an
incredibly expensive contract. To reduce costs, DOL is
developing the necessary expertise and bringing more
of this work in-house. As part of doing that they
found this mechanism to offset some of those costs,
because it's the pipelines that are benefiting from
their work.
3:55:11 PM
This won't impact AKLNG, Mr. Sniffen said. That's an exclusively
FERC regulated pipeline. There is no joint jurisdiction with
RCA. It's a gas pipeline regulated under the Natural Gas Act
unlike TAPS which is regulated under the Interstate Commerce
Act. This is not related to the gas pipeline at all.
3:55:37 PM
Is there a check on the RCC spending? The answer is yes.
1. RCCs to fund RAPA cannot exceed the 0.17 percent
cap.
2. RAPA's budget is submitted annually to the RCA for
review of RAPA's certified costs in a public docket
where any interested party can comment.
3:56:25 PM
SENATOR MEYER asked how much unrestricted general funds (UGF) is
spent by DOL annually for FERC work.
MR. SNIFFEN replied outside council has been paid $90 million in
30 years for FERK work on TAPS tariff issues. Some years are a
lot higher when litigation is going on. This year an in-house
assistant attorney general is focused on doing this work but
still relying a little bit on outside counsel (their historical
knowledge is not easily replaced) and they might spend $700,000.
SENATOR MEYER asked if this bill passes will it cause a
reduction in UGF.
MR. SNIFFEN said yes, but it would be a small one.
SENATOR MEYER said he didn't see that reflected in the fiscal
note.
SENATOR MEYER asked how much the DOL currently receives in RCC
for RCA work.
MR. SNIFFEN answered their budget for 2017 was $2,333,700.
3:59:01 PM
CHAIR GIESSEL asked if the Department of Law has the expertise
to completely take over this kind of oversight.
MR. SNIFFEN answered no, but they are getting closer and big
chunks of that work has already been taken over in-house. FERC
work is very specialized and the department hasn't done it for
30 years. When the state had money, it wasn't an issue. Spending
has been reduced by hundreds of thousands of dollars already
this budget year. He added that FERC matters happen in
Washington, D.C. and outside counsel will probably still be
retained an advisory role.
CHAIR GIESSEL asked if this bill would simply allow the
department to do that in a more robust way.
MR. SNIFFEN answered yes; it gives them more flexibility with
using their budget.
4:00:36 PM
SENATOR STEDMAN asked if a previous administration terminated a
long standing relationship with FERC attorneys the state used
back in the early Palin days. Didn't they shift gears to a
different firm?
MR. SNIFFEN said he wasn't aware of any shift. The department
has used different firms for FERC work: Morrison Forrester,
which they currently contract with, and Greenberg Traurig, which
is working on other projects for the state.
SENATOR STEDMAN recalled the later company was the one he was
thinking of and asked if he knew Bob Loeffler.
MR. SNIFFEN answered yes; Bob Loeffler is partner with Morrison
Forrester, who recently retired.
4:01:46 PM
SENATOR WIELECHOWSKI asked what percent of the costs incurred
for this work comes from the general fund (GF) and what percent
is incurred by the people who are being regulated.
MR. SNIFFEN answered right now they are spending at least 90
percent GF money for FERC work, and to the extent they have
direct RCA proceedings that involve a FERC matter they can also
bill to RCCs. Their statute only allows them to recover money
for work before the RCA for the FERC.
SENATOR WIELECHOWSKI asked how much that costs.
MR. SNIFFEN guessed about $500,000 - $700,000 year.
4:03:19 PM
SENATOR WIELECHOWSKI asked if they would have to adjust the bill
to get the companies to repay 100 percent of the costs and how
much has been recovered over the years on these regulatory
matters.
4:03:47 PM
MR. SNIFFEN answered they had recovered over $230 million in the
last several years in direct deposits to the Constitutional
Budget Reserve (CBR) and the General Fund (GF) from work on
pipeline matters involving TransAlaska Pipeline System (TAPS)
tariff rates.
To his first question: what it would take to cover that gap in
completely funding all their work. They gave it some thought and
have to grow the statutory .17 percent statutory cap to .23
percent. That would provide an additional $700,000 and pay in an
average year for all their FERC work.
4:04:43 PM
SENATOR MEYER asked if the statutory formula would have to be
changed from .17 percent to .23 percent.
MR. SNIFFEN answered yes; but just in rough terms. If the state
wanted to recover an additional $700,000 - $750,000 through this
mechanism that cap would have to increase by about .06 percent.
CHAIR GIESSEL asked why that isn't proposed.
MR. SNIFFEN said they didn't want to be greedy, and the
department is still gaining more experience before adjusting
billing.
CHAIR GIESSEL opened public testimony. Seeing none, closed
public testimony.
CHAIR GIESSEL said SB 58 would be held in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Agenda-3-20-17.pdf |
SRES 3/20/2017 3:30:00 PM |
|
| 1. Big Game Commercial Services Board Fact Sheet.pdf |
SRES 3/20/2017 3:30:00 PM |
Big Game Commercial Services Board |
| 2. Big Game Comm Serv Board - Resume - Tiffany.pdf |
SRES 3/20/2017 3:30:00 PM |
Big Game Commercial Services Board |
| 3. SB 58 - Version A.PDF |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 4. SB 58 - Transmittal Letter from Governor.pdf |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 5. SB 58 - Summary Document.pdf |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 6. SB 58 - Hearing Request to Senate Resources Committee.pdf |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 7. SB 58 - Fiscal Note - Dept Law Civil Division - 2 - 13 - 17.PDF |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 8. SB 58 - Presentation to Senate Resources - 3 - 20 - 17.pdf |
SRES 3/20/2017 3:30:00 PM |
SB 58 |
| 9. Big Game Comm Serv Board - Support for Tiffany - Kelly Vrem - 3 - 20 - 17.pdf |
SRES 3/20/2017 3:30:00 PM |
Big Game Commercial Services Board |