Legislature(2001 - 2002)
02/21/2001 01:38 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 84-PUBLIC UTILITY JOINT ACTION AGENCIES
SENATOR COWDERY moved to adopt CSSB 84 (JUD), version 22-LS0504\J,
Cramer, as a working draft. There being no objection, the motion
carried.
MR. MICHAEL SCHRADER said he was with the law firm Ater Wynne,
which represents the Four Dam Pool Project Management Committee.
The Four Dam Pool purchasing utilities were authorized by
legislation last year to purchase Four Dam Pool projects from
Alaska. The vehicle to purchase the projects is a Joint Action
Agency (JAA), which was authorized under prior Alaska law. There
was a supplement to the statute allowing formation of a special
purpose JAA that is the entity that will be purchasing the Four Dam
Pool projects. In the process of forming JAA, the five member
utilities ran into a number of issues in terms of the negotiation
of the JAA agreement - the document that creates this entity and a
number of technical issues. Some of the issues were resolved just
by the terms and negotiations of the agreement - others were
resolved by either federal or state law.
MR. SCHRADER said SB 84 would address a number of these issues,
resolve them and allow the divestiture of the Four Dam utilities to
go forward. Being a tax-exempt entity, both state and federal, is
a key factor for JAA and for the economics of divestiture. It is
essential for the purchasing utilities that JAA be characterized as
a governmental unit, exempt from restrictions of federal tax law.
A key factor in having that governmental status is eminent domain
or condemnation powers that are granted to JAA. SB 84 makes an
amendment to existing law providing JAA expanded eminent domain or
condemnation powers, subject to significant limitations but with a
sufficient grant of power to assist in its application to the
Internal Revenue Service.
Number 300
CHAIRMAN TAYLOR said the first four sections of the work draft are
existing law; the only change is to add a new section entitled (o).
Sections 6 and 9 cover eminent domain, tax exemption, and make JAA
a governmental body.
MR. SCHRADER agreed that the federal and state issues are addressed
in these sections. Another issue that arose when going through the
formation of JAA had to do with JAA's status as a regulated entity
by the Regulatory Commission of Alaska (RCA). Currently, four of
the five member utilities are exempt from regulation by the RCA.
The power sales agreement is also exempt from review and approval
by RCA. There was a disconnect between the provision in Title 42,
the RCA provision, in terms of the regulatory status of JAA. On
one hand there were provisions that said the power sales agreement
is exempt from review and approval by the RCA but on the other hand
there was not a provision covering the other aspects of regulation
by the RCA. SB 84 that creates consistency in terms of the
regulatory status of JAA - this has been reviewed and approved. As
long as JAA has outstanding indebtedness to the state, in
connection with the acquisition of the projects, JAA would be
exempt from regulation by the RCA. When the indebtedness is paid
in full, JAA becomes subject to regulation under existing
provisions of statute.
Number 503
SENATOR COWDERY asked if SB 84 addresses Kodiak.
MR. SCHRADER said SB 84 does not address the regulatory status of
the underlying member utilities. Of the five purchasing utilities
only the Kodiak Electric Association is a regulated utility. SB 84
says the organization that is formed is exempt.
MR. SCHRADER noted another concern arose about the pass-through
liability of JAA. It is essential to the member utilities that JAA
operate as a separate and distinct legal entity. This is provided
for in statute, but the concern is that any claims or liabilities
of JAA would be passed-through to the member utilities. The member
utilities obligations to JAA are defined by the power sales
agreement, a long-term agreement that has been in place and will
continue to be in place following the divestiture transaction.
Additional language in SB 84 makes absolutely clear that there is
no pass-through liability - a claim against JAA cannot be asserted
as a claim against the member utilities. This is referred to in
sections 6 and 13.
Number 631
CHAIRMAN TAYLOR said if these sections had not been added to SB 84,
communities could have assumed large liabilities, which would have
prevented the project from coming together.
MR. SCHRADER said this was a key factor in forming SB 84.
Number 776
MR. BRIAN BJORKQUIST, Attorney General with the Department of Law
(DOL) in Anchorage, said his primary client agency is the Alaska
Energy Authority. In working with attorneys and the Four Dam Pool
utilities on SB 84, DOL's concern with the previous version have
been worked through and addressed. DOL supports CSSB 84 and will
continue to work with the utilities and their attorneys as the
process goes forward.
SENATOR COWDERY moved CSSB 84 (JUD) from committee with individual
recommendations. There being no objection, the motion carried.
| Document Name | Date/Time | Subjects |
|---|