Legislature(1999 - 2000)
04/12/1999 03:12 PM Senate RES
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* first hearing in first committee of referral
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SB 133-COMBINE APUC AND AOGCC
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:12 p.m. and announced SB 133 to be up for consideration.
SENATOR PEARCE, sponsor of SB 133 and SB 134, said she would give
an overview of the two together and then speak specifically to SB
134. She said she would speak more specifically to the AOGCC side,
since this was the Resources Committee.
Her goals and objectives in putting these bills together are
numerous. Last summer, she received a call from Ms. Cammy Oechsli,
one of the commissioners of AOGCC, who wanted to talk about funding
problems the AOGCC is facing. The AOGCC is loosely attached to the
Department of Administration. It serves a very important function
in terms of conservation in the oil and gas fields throughout the
State.
AOGCC has a funding mechanism in statute that depends on oil and
gas conservation taxes along with a fee for inspection services of
wells. The taxes and the inspection fees that have come in to the
general fund over past years have exceeded the amount of money the
legislature has appropriated to the AOGCC. The number of active
wells this agency is supposed to oversee is increasing, which is
good, but the number of employees the legislature has allowed for
that function has substantially decreased, which is not good.
After discussions with Ms. Oechsli, SENATOR PEARCE suggested
looking at the APUC funding mechanism, a designated program receipt
system, making the entities being overseen directly responsible for
paying for that function. AOGCC would not be a profit making
entity, but one that pays for itself. This would allow the
Commission to have the number of employees it needs. She added
that the AOGCC has not been audited since 1991.
SENATOR PEARCE said she has also heard concerns about a perception
of dysfunction at the APUC. In thinking about both entities, she
came up with the idea of putting the two regulatory agencies
together in a structure that many other states have.
SB 133 combines the AOGCC and the APUC. It repeals both commissions
and allows for a reasonable transition period. It requires that
all existing regulations and matters pending before both
commissions be carried forward. She thought this would improve the
long-term function, effectiveness, and efficiency of both
commissions in a number of ways.
The new entity will be set up as an independent, quasi-judicial
agency of the State called the Energy Conservation Commission. It
would have seven members appointed by the Governor and confirmed by
the Legislature. The Commission would nominate to the Governor one
public member of the Commission as the chairperson. The Governor
could then choose that person or choose to appoint another person
as chair. The chair would serve for a term of four years but could
not be appointed for successive terms. This feature is already
embodied in the AOGCC statutes because of concerns about a previous
chair.
The Commission would be composed of five members from the general
public, one a petroleum engineer and one a geologist. Currently,
the AOGCC has a petroleum engineer, a petroleum geologist, and one
public member. The APUC currently has two public members, an
accountant, an engineer with electrical experience, and an
attorney.
The bill addresses a number of other technical matters such as a
time management system to maintain a record of time that applies to
all staff and the administrative director and commissioners. It
adds three junior positions to the AOGCC function: a junior
reservoir engineer, a junior petroleum engineer, and a junior
petroleum geologist. All three positions would be filled by
qualified professionals capable of moving into the senior
positions. One problem is that the institutional knowledge is only
one person deep at present. The people in the senior positions
today are nearing the end of their professional careers and will
most likely retire within the next five to 10 years. There is no
one backing them up to move into those positions.
The joint entity would add one hearing officer, which should help
the ongoing time constraints for both commissions. They have added
an office manager and eliminated the executive director position of
APUC.
SENATOR PEARCE said it was not her intent to necessarily save
dollars, but she thought over the long term the Commission would be
more efficient and provide more effective services. She said she
deferred to AOGCC statutes any time there was a question, because
of the perception that it is working more efficiently at the
moment. The powers and duties of the Commission have been upgraded
in that the bill sets up a system to work like an appeal process in
a court of appeals. The chairperson would empanel three
commissioners to consider decisions before the Commission.
Under this bill, the chairperson can assign an individual
commissioner to act as a hearing officer, a procedure used by the
AOGCC. It contains an appeal process that allows a case to be
heard by a larger number of commissioners if the entities involved
want to appeal. That is also patterned after the court of appeals.
SENATOR PEARCE said she would like to add to the draft that the
entity could ask for an appeal to a larger commission and the
commission could decide whether or not to accept that. She is
having an amendment drafted that would make the appeal process only
available if the opinion of the panel directly conflicts with an
existing opinion that was made by an earlier PUC. Appeals would
not be granted under any other circumstances. Because it has been
requested in every audit of the APUC, she said the only policy
change in the bill is that it would deregulate the refuse industry.
SENATOR PEARCE said, at the moment, regulated pipelines are under
the PUC. The intent of SB 133 is to move the regulation of those
to the oil and gas folks in the larger commission so they could use
their expertise in the industry to do the regulations for the
pipelines. She asked Commissioner Christenson what kind of hours
he and the other commissioners work.
COMMISSIONER CHRISTENSEN answered that they basically work from 8
to 4:30.
SENATOR PEARCE asked if they work longer hours sometimes.
COMMISSIONER CHRISTENSON said they are pretty much on schedule on
an average, but they are not as timely as they should be sometimes.
CHAIRMAN HALFORD asked where he would put oil and gas pipelines if
he could put them anywhere he wanted between the PUC and the AOGCC.
COMMISSIONER CHRISTENSON answered that engineering would have a
good idea of the technical part. The tariffs and accounting sides
would have to have people with that expertise which they don't have
on staff right now.
TAPE 99-24, SIDE B
Number 590
CHAIRMAN HALFORD said he was worried about infecting the new
commission with the maladies that run amok in the various battles
on public utilities. He didn't know the answer to that. Pipeline
regulation will get much bigger as we see less competition and less
of the natural tendency to gather information from the competing
interests.
SENATOR MACKIE asked what Mr. Christenson thought about merging the
two commissions.
COMMISSIONER CHRISTENSON answered that he understood the AOGCC
would move intact. He would not change the daily operations and
they would perhaps improve as new folks came in to handle the work.
He is less sure of the impact on how the commission would work.
SENATOR MACKIE asked if he would be doing utility stuff, too.
COMMISSIONER CHRISTENSON responded that he didn't know.
SENATOR PEARCE pointed out that there are no utility people on the
Commission. It is her intent to empanel three people for any oil
and gas or pipeline measure that comes before them. Two of the
people have to be the engineer and the geologist. It is not
necessarily their intent that it is always the same third person.
SENATOR MACKIE asked if the five public members would handle any of
the utility questions.
SENATOR PEARCE answered that is right.
SENATOR MACKIE asked if the two other members of the Commission
could participate in those.
SENATOR PEARCE answered that the chairman of the Commission could
always empanel the full seven person Commission if there was a big
enough issue. She thought smaller panels in most cases could get
the work done a lot more efficiently.
SENATOR MACKIE asked why they are merging the two, if they are not
going to be two entities combined into one.
SENATOR PEARCE said the two entities will be combined into one. Her
original idea was not to specify a geologist or an engineer, but
the oil and gas industry thought that was very important. She
thought they would find the greatest efficiency within the staffing
area - two hearing officers instead of one. She thought they would
see actual decisions coming out in a more efficient manner. She
expects there is room in the present building where the APUC is for
the AOGCC to move in.
Number 513
MR. ERIC YOULD, Executive Director, ARECA, said he is also the
statewide Association Executive Director of the Electric Utility
Industry which provides about 95 percent of the electricity
throughout the state. His members recently adopted a resolution
supporting the continuation of the APUC primarily because of issues
on the horizon that relate to restructuring and deregulation. It
is the general consensus of the industry that changes could be made
to APUC to streamline the process. Their sole objective is to get
APUC to operate better so it can get dockets out more timely, their
biggest frustration. Their second biggest frustration is the
associated cost but those are basically passed through to the
customers.
SB 133 addresses many things that are in their own resolution, such
as use of limited panels of three commissioners, use of different
settlement techniques, better use of hearing officers to hear cases
and recommend decisions, and more frequent use of special masters
to expedite procedural issues. It will help make the APUC a more
responsive entity.
Their biggest question is how the two commissions will mesh
procedurally and whether they will be compatible. They are
concerned about the potential for restructuring the electric
utility industry itself.
On the positive side, he said, this is a good working document with
positive things in it. He would like to see SB 133 continue as a
working document to see how they can flesh out the best out of it.
Number 447
MS. GINNY FAYE, Department of Community and Regional Affairs
(DCRA), complimented Senator Pearce for bringing this issue
forward. DCRA is always interested in good ideas especially if they
offer consolidations and ways of saving money. DCRA's primary
concern is that the integrity of these two important agencies be
maintained because they have significant oversight of issues that
affect the State and almost everyone who lives in Alaska.
MS. FAYE said DCRA preferred a five member instead of a seven
member commission in the spirit of keeping costs down. They are
also reviewing how moving from a three panel field to a five panel
field will work. DCRA has not come to a decision about what it
would mean to deregulate the refuse industry, although she thought
the bill doesn't necessarily deregulate it, but passes it on to
local governments, some of which may be more or less capable of
doing that. DCRA is also looking at the advocacy function and how
it will work to assign staff as opposed to assigning to contract
employees. The final issue of how attorneys will be selected to
represent the Commission differs from how that is done now in these
agencies. She said it is a good bill that offers a lot of
opportunities.
SENATOR PEARCE said the way the bill is drafted, the Department of
Law should provide full-time legal counsel in the same fashion it
currently does for the AOGCC. One ongoing fight within the APUC
appears to be over how legal counsel gets assigned to it. The AOGCC
doesn't have that disagreement.
On the question of the advocacy staff, the APUC is the entity that
watches over consumer rates. Staff members who work for the APUC
are asked to act in an advocacy role to represent the public rate
payers, but they many not have that role in another case. They
have to play two different functions and there is a question about
how effective they can be.
CHAIRMAN HALFORD asked who the attorneys are for the APUC.
SENATOR PEARCE answered that Ron Zobel is one.
Number 375
MR. JIM ARNESON, Commercial Refuse, Inc., said he is concerned
about the proposed deregulation of refuse in this bill. If there
was ever a time the refuse industry needed to be regulated, it is
now. Over the last couple of years, Waste Management, Inc. came to
Alaska and "gobbled up 95% of all business up here."
MR. JIM ROWE, Director, Alaska Telephone Association (ATA), said
ATA is apprehensive about the impact of this legislation because
the Telecommunications Act of 1996 has increased the number of
issues before the APUC and some of them are new social policy. He
thought creating a new Commission would set things back by two
years and more for the issues that need to be resolved quicker. He
thought there are very good aspects of restructuring in this bill,
but it is not a simple thing to do.
MS. HEATHER GRAHME said she was available to answer questions on
refuse.
CHAIRMAN HALFORD asked if the APUC deregulates refuse, whether
municipalities will have the authority to pick up refuse regulation
under Title 29.
MS. GRAHME answered that municipalities have that power under Title
29. She said it is the view of Waste Management that refuse should
not be deregulated, but that controlled refuse collection and
disposal should be handled at the local level rather than the state
level.
Number 247
MS. PAM KRIEBER, Valley Refuse, opposed language that removes
garbage hauling from statewide regulation. Sections 2,3, and 9
propose to remove it from the jurisdiction of the new Alaska Energy
Conservation Commission. She said the committee would not hear
from other companies, because 95 percent of the companies in the
entire state were bought up by U.S.A. Waste of Alaska, a wholly
owned subsidiary of Waste Management, Inc., the largest waste
hauling conglomerate in the world. She said that statewide
oversight would ensure impartial pricing structures and fair and
equitable business practices. Placing the responsibility of
regulations on local governments would make them bear the financial
and legal responsibilities for regulation. This would equate to
higher taxes and user fees for citizens who would end up paying
more money for the same services. If local governments choose to
not regulate refuse at all, the door is left wide open for Waste
Management to charge fees that would provide them the greatest
possible profit margin.
MS. KRIEBER said that starting a garbage collection company is hard
work. It requires a large investment in equipment, working
capital, and time to develop a reliable customer base large enough
to pay the bills. This is the reason large companies buy smaller
ones; it is the most cost effective thing to do.
CHAIRMAN HALFORD thanked everyone for their comments and said they
would continue to work on this bill.
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