02/23/2009 09:00 AM Senate FINANCE

SENATE BILL NO. 115                                                                                                           
                                                                                                                                
     "An Act creating a rural community energy assistance                                                                       
     program; and providing for an effective date."                                                                             
                                                                                                                                
JAY LIVEY, STAFF,  SENATOR LYMAN HOFFMAN,  SPONSOR, explained                                                                   
that  SB  115 temporarily  establishes  the  rural  community                                                                   
assistance  program.  The intent  of  the legislation  is  to                                                                   
provide  relief to Alaskan  residents  who are struggling  to                                                                   
pay  heating  costs  this winter.  Most  residents  of  rural                                                                   
Alaska heat their  homes with fuel oil. The price  of oil has                                                                   
increased in rural Alaska, even  though the price of a barrel                                                                   
of oil has decreased.  Most of the oil for the  coming winter                                                                   
was delivered prior to the decline of fuel oil prices.                                                                          
                                                                                                                                
Mr. Livey reported that there  is not a lack of fuel in rural                                                                   
Alaska except in  a few isolated instances. Most  of the fuel                                                                   
stocks are adequate; however,  many people do not have enough                                                                   
money to purchase  fuel, electricity, and  other necessities.                                                                   
He pointed  to a Division  of Community and Regional  Affairs                                                                   
report,  "Current Community  Conditions:  Fuel Prices  Across                                                                   
Alaska,  November 2008  Update" (Copy  on File).  Out of  100                                                                   
communities  surveyed, 27  pay more  than $7  per gallon  for                                                                   
heating fuel.                                                                                                                   
                                                                                                                                
9:09:03 AM                                                                                                                    
                                                                                                                                
Mr.  Livey explained  that a  person burning  800 gallons  of                                                                   
fuel  each  year--a fairly  conservative  amount--will  spend                                                                   
approximately  $5700 per year  to heat  their home.  In 2007,                                                                   
the  Institute   of  Social  and  Economic   Research  (ISER)                                                                   
reported  that  the  average  per  capita  income  for  small                                                                   
villages    around   Bethel    was   approximately    $16,000                                                                   
("Understanding  Alaska's  Remote  Rural  Economy,  by  Scott                                                                   
Goldsmith,  UA  Research  Summary  No.  10"  Copy  on  File).                                                                   
Consequently,  over 35  percent  of an  average  individual's                                                                   
income can be  used for heating fuel alone.  In addition, the                                                                   
2007  ISER  report  noted  that Bethel  fuel  costs  were  92                                                                   
percent  higher than Anchorage  costs.  The ISER report  also                                                                   
covers food costs in rural Alaska.                                                                                              
                                                                                                                                
Mr.  Livey described  other  methods of  distributing  energy                                                                   
assistance, including  the Bulk Fuel Loan Program,  Bulk Fuel                                                                   
Bridge  Loan  Program,  and  the  governor's  emergency  fuel                                                                   
program;  the   programs  are  designed  primarily   to  help                                                                   
communities  purchase  fuel when  there  is  a shortage.  The                                                                   
sponsors believe SB 115 would  function differently. There is                                                                   
enough fuel, but people cannot afford to buy it.                                                                                
                                                                                                                                
Mr. Livey added  that the legislation is not  intended to fix                                                                   
the income problems  in rural Alaska or to  address long-term                                                                   
fuel issues in rural Alaska. The  intent is to provide people                                                                   
with  a  way of  getting  through  the  rest of  the  current                                                                   
heating season.                                                                                                                 
                                                                                                                                
9:12:40 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  clarified  that  the  provision  would  be                                                                   
repealed June  30, 2010. He asked  about language on  line 12                                                                   
of the bill referring to departmental regulations.                                                                              
                                                                                                                                
Co-Chair  Hoffman informed  the committee  that his  staff is                                                                   
looking at ways to change the  legislation so it would not be                                                                   
necessary to go  through the regulatory process.  The goal is                                                                   
to make cash available immediately.                                                                                             
                                                                                                                                
Co-Chair  Stedman  reiterated  that  the  intent  is  to  get                                                                   
immediate  relief for the  coming winter.  He referred  to an                                                                   
impending  fiscal   note  by  the  Department   of  Commerce,                                                                   
Community and Economic Development.                                                                                             
                                                                                                                                
Co-Chair Stedman opened public testimony.                                                                                       
                                                                                                                                
9:14:15 AM                                                                                                                    
                                                                                                                                
REGAN MATTINGLY,  STATE AFFAIRS  COORDINATOR, ALASKA  PRIMARY                                                                   
CARE   ASSOCIATION    (APCA),   ANCHORAGE    (testified   via                                                                   
teleconference),  testified   in  support  of   SB  115.  The                                                                   
association   represents    26   community    health   center                                                                   
organizations operating 141 clinics  across the state. Clinic                                                                   
directors have  increasingly reported that  revenues intended                                                                   
for patient services are being  crowded out and redirected to                                                                   
cover high energy  costs in facilities. Patient  access could                                                                   
be affected;  APCA  is requesting  that non-profit  community                                                                   
health  center organizations  and other  primary care  safety                                                                   
net  providers  as  well as  local  tribal  community  health                                                                   
center organizations  be considered  eligible for  assistance                                                                   
under the program.                                                                                                              
                                                                                                                                
PAT LUBY,  ADVOCACY DIRECTOR,  ALASKA ASSOCIATION  OF RETIRED                                                                   
PERSONS,  ANCHORAGE  (AARP) (testified  via  teleconference),                                                                   
reported  that AARP  strongly supports  SB 115.  Many of  the                                                                   
younger people  have had to leave rural  communities, leaving                                                                   
communities  dominated  by  older people  and  children,  the                                                                   
people most susceptible to hypothermia.                                                                                         
                                                                                                                                
TOM LAKOSH,  SELF, ANCHORAGE (testified via  teleconference),                                                                   
had concerns  about the bill  supplying energy  subsidies for                                                                   
communities rather  than individuals  in need. He  asked that                                                                   
the  bill be  specifically  amended  to provide  subsidy  for                                                                   
individuals and/or  organizations in direct need  rather than                                                                   
a wholesale subsidy of communities.  He thought the state had                                                                   
indebted  itself through  the  resource  rebate the  previous                                                                   
year.                                                                                                                           
                                                                                                                                
9:19:19 AM                                                                                                                    
                                                                                                                                
Senator Thomas  pointed out that  the legislation  is waiting                                                                   
for language to assure dispersion  of funds to individuals in                                                                   
communities.                                                                                                                    
                                                                                                                                
MELODY  NIBECK, TRIBAL  ENERGY PROGRAM  MANAGER, BRISTOL  BAY                                                                   
NATIVE   ASSOCIATION   (BBNA),  DILLINGHAM   (testified   via                                                                   
teleconference),  testified in  support  of the  legislation.                                                                   
She said the communities of Bristol  Bay are facing high fuel                                                                   
prices  that impact  electric,  gas, and  food bills.  People                                                                   
often have to choose between paying  for fuel and other basic                                                                   
necessities. She stressed that  Dillingham heating fuel costs                                                                   
$6.10  per  gallon  and  food is  220  percent  of  Anchorage                                                                   
prices.  Small   villages  pay   more.  The  association   is                                                                   
committed to  being part of  finding a long-term  solution to                                                                   
energy  challenges in  rural Alaska and  recognized  that the                                                                   
bill was providing one-time assistance.                                                                                         
                                                                                                                                
Ms.  Nibeck  informed  the committee  that  the  Bristol  Bay                                                                   
Region has one first-class city,  12 second-class cities, and                                                                   
18 unincorporated communities.  Since all communities equally                                                                   
face high  prices, BBNA  hopes the  bill will clearly  define                                                                   
"rural community."                                                                                                              
                                                                                                                                
NORMAN  ANDERSON,   ECONOMIC  DEVELOPMENT   PROGRAM  MANAGER,                                                                   
BRISTOL  BAY NATIVE  ASSOCIATION,  DILLINGHAM (testified  via                                                                   
teleconference),  spoke  in support  of  the legislation.  He                                                                   
reported that  increased assistance  has been needed  because                                                                   
of  economic  challenges,  including low  salmon  prices.  He                                                                   
explained that the people in the  region are proud and rarely                                                                   
ask  for assistance.  The people  have  done everything  they                                                                   
possibly  could to  be able  to sustain  themselves, but  the                                                                   
increasing price of fuel has made  it more and more difficult                                                                   
to make ends meet.  He spoke for the more remote  villages in                                                                   
the region  where people cannot  find jobs and  the necessary                                                                   
income.                                                                                                                         
                                                                                                                                
9:24:51 AM                                                                                                                    
                                                                                                                                
MYRON  NANENG,  PRESIDENT,  ASSOCIATION  OF  VILLAGE  COUNCIL                                                                   
PRESIDENTS,  YUKON-KUSKOKWIM   DELTA  REGION  (testified  via                                                                   
teleconference),  spoke  in  strong  support of  SB  115.  He                                                                   
reported that fuel  costs range from $6 to $11  per gallon, a                                                                   
high  amount   for  people  in   the  village   with  limited                                                                   
resources.  The  fuel  is needed  for  gathering  subsistence                                                                   
resources. In  the villages a gallon  of milk can cost  up to                                                                   
$13 a  gallon. People have to  choose between fuel  and food.                                                                   
He emphasized the  hardships in the region and  the real need                                                                   
for the energy assistance. The  association has provided many                                                                   
with low-income  energy assistance, but  it is not  enough to                                                                   
buy the necessary fuel.                                                                                                         
                                                                                                                                
Mr. Naneng  added that people  in the region have  lost their                                                                   
economic base due to poor management  of fisheries. He stated                                                                   
that  if the  fisheries had  been managed  well, some  people                                                                   
would  have  been able  to  manage  through the  winter.  The                                                                   
people  are bearing  the burden  of conservation  as well  as                                                                   
providing for their families.                                                                                                   
                                                                                                                                
Co-Chair Stedman closed public testimony.                                                                                       
                                                                                                                                
9:29:28 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  raised  the  issue  of  fuel  delivery  in                                                                   
Western Alaska.                                                                                                                 
                                                                                                                                
Co-Chair Hoffman noted  that SB 115 was designed  only to get                                                                   
Alaskans  through  the  following winter.  He  stressed  that                                                                   
there  is  need for  a  long-term  solution. He  referred  to                                                                   
legislation from  the previous year for capping  fuel prices.                                                                   
He  acknowledged that  price capping  might not  be an  ideal                                                                   
solution.  He   thought  SB  115  could  be   fine-tuned  and                                                                   
implemented.  He reiterated his  intent that the  legislation                                                                   
be as broad as possible to include  all people in Alaska, and                                                                   
his desire to avoid the time-consuming regulations process.                                                                     
                                                                                                                                
Co-Chair  Stedman asked  about  the status  of  ports in  the                                                                   
region. Co-Chair  Hoffman answered that ice-free  ports begin                                                                   
below  Naknek. He  added that  the delivery  schedule is  the                                                                   
problem as  many communities did  not get their fuel  and had                                                                   
to have it flown in.                                                                                                            
                                                                                                                                
9:32:03 AM                                                                                                                    
                                                                                                                                
Senator Ellis  stated support  for the legislation.  He asked                                                                   
whether  clinics were  considered for  fuel relief.  Co-Chair                                                                   
Hoffman  hoped to  have the  issue  addressed. Senator  Ellis                                                                   
emphasized need in rural health clinics.                                                                                        
                                                                                                                                
SB  115  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.