04/03/2009 01:04 PM Senate FIN

SENATE BILL NO. 88                                                                                                            
                                                                                                                                
     "An  Act   repealing  certain  provisions   relating  to                                                                   
     modifying  the  factors  that  apply  to  calculate  the                                                                   
     amount  of power  cost  equalization;  providing for  an                                                                   
     effective date  by repealing the effective  date of sec.                                                                   
     3, ch.  2, 4SSLA  2008; and  providing for an  effective                                                                   
     date."                                                                                                                     
                                                                                                                                
1:05:40 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman   gave  an  overview  of   history  of  the                                                                   
legislation.                                                                                                                    
                                                                                                                                
JAY  LIVEY,   STAFF,  SENATOR  LYMAN  HOFFMAN,   provided  an                                                                   
overview  of the provisions  of the  Power Cost  Equalization                                                                   
(PCE) program.  The program  makes electricity affordable  to                                                                   
Alaskans. The law stipulates that  up to 500 kWh per month is                                                                   
eligible for PCE  assistance. The program is  administered by                                                                   
both the  Alaska Energy  Authority (AEA)  and the  Regulatory                                                                   
Commission  of  Alaska  (RCA);  RCA  takes  information  from                                                                   
utilities companies  and establishes  the PCE rate  according                                                                   
to statute.                                                                                                                     
                                                                                                                                
Mr. Livey  explained  that the  bottom of the  rate range  is                                                                   
established by  averaging the cost of electricity  in Juneau,                                                                   
Anchorage,   and  Fairbanks;   the  top   of  the  range   is                                                                   
established in statute. The assistance  provided by PCE is 95                                                                   
percent. During  the special session,  a law was  passed that                                                                   
established the  top rate at $1.00  per kWh for one  year. If                                                                   
SB 88 did not pass, the one-year  change would revert back to                                                                   
the statutory  top rate of  $0.52 per  kWh and lower  rate of                                                                   
12.3 cents/kWh. Citizens in villages  would pay full cost for                                                                   
kWh  above  $0.52.  The  current rate  in  many  villages  is                                                                   
approximately  $0.65 to  $0.75. Therefore,  PCE would  make a                                                                   
significant difference  in energy  bills for rural  Alaskans.                                                                   
If SB  88 passes,  the upper rate  of $1.00/kWh would  become                                                                   
permanent  and provide  more dependable  assistance in  rural                                                                   
Alaska.                                                                                                                         
                                                                                                                                
1:10:06 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman noted that the  program applied to the first                                                                   
500 kWh,  the usage amount for  basic electric needs  such as                                                                   
lights  and electric  appliances, and  only a  little bit  of                                                                   
heating cost. Mr. Livey agreed.                                                                                                 
                                                                                                                                
Co-Chair Hoffman MOVED to report  SB 88 out of Committee with                                                                   
individual recommendations and  the accompanying fiscal note.                                                                   
                                                                                                                                
SB  88  was  REPORTED  out of  Committee  with  a  "do  pass"                                                                   
recommendation  and  with attached  new  fiscal  note by  the                                                                   
Department of Commerce, Community and Economic Development.