04/15/1993 07:07 PM Senate FIN

                                                                               
  SENATE BILL NO. 163:                                                         
                                                                               
       An  Act  relating  to  power  cost   equalization;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce announced that CSSB  163(FIN) work draft "J"                 
  was before the committee.  She said that there were proposed                 
  amendments to SB 163  that had been added to  CSSB 163(FIN).                 
  Section 1 adds Palmer, Homer and  Seward.  She invited Brent                 
  Petrie, Manager  /Planning  &  Project  Development,  Alaska                 
  Energy Authority, to join the members at the table and speak                 
  to the bill.                                                                 
                                                                               
  BRENT  PETRIE said that  Section 1  added Palmer,  Homer and                 
  Seward, three additional  utilities to  the method in  which                 
  the base calculation is made for the power cost equalization                 
  program.  These utilities represent  about 30 percent of the                 
  energy sales in the railbelt.  Those utilities that would be                 
  added for the purpose of making a calculation  will probably                 
  be  Matanuska Electric  Assoc., Homer  Electric Assoc.,  and                 
                                                                               
                                                                               
  Seward Electric System.                                                      
                                                                               
  End SFC-93 #56, Side 1                                                       
  Begin SFC-93 #56, Side 2                                                     
                                                                               
  Co-chair Pearce  said public  schools would  be exempt,  and                 
  still receive the PCE, but, referring  the committee to page                 
  2, line 6 and 7, pointed out that state and  federal offices                 
  do not receive a PCE under this legislation.                                 
                                                                               
  Senator Kelly asked the net  result of adding Palmer, Homer,                 
  and  Seward to the  bill.  Mr.  Petrie said that  he did not                 
  know  the exact amount of the  net result but it would raise                 
  the base on which  the PCE was calculated because  all those                 
  utilities have higher rates than  the other utilities in the                 
  railbelt, approximately 11  cents a kilowatt-hour.   He felt                 
  it would raise the PCE to  about 10 cents per kilowatt-hour.                 
  He  recommended  that the  base  remain  at  9.82 cents  per                 
  kilowatt-hour for this  year because he  was aware that  the                 
  Golden Valley Assoc. had lowered their rates.  Senator Jacko                 
  asked why these utilities had been added to the legislation.                 
                                                                               
  Senator Rieger asked for  an explanation of the last  phrase                 
  on page  2, lines 13  through 16, "less than  52.5 cents per                 
  kilowatt-hour."    Mr. Petrie  said a  utility would  not be                 
  reimbursed over 52.5  cents per kilowatt-hour, and  would be                 
  reimbursed 95  percent of  the eligible  costs between  9.82                 
  cents and 52.5 cents per kilowatt-hour.                                      
                                                                               
  In  answer to Senator  Kelly, Co-chair Pearce  said that AEA                 
  had  requested  the  addition of  Palmer,  Homer  and Seward                 
  utilities to the legislation.   Mr. Petrie answered for  the                 
  record  that AEA  had not  requested the  addition of  those                 
  utilities to the legislation.                                                
                                                                               
  DAVID  P.   HUTCHENS,  Alaska  Rural   Electric  Cooperative                 
  Association, said that adding Palmer, Homer and Seward would                 
  have the affect of increasing the average cost for that base                 
  slightly the first year to about 10  cents per kilowatt-hour                 
  based on 1991  year end  calculations.  He  agreed with  Mr.                 
  Petrie's recommendation  to leave the rate at 9.82 cents the                 
  first year because the following year's calculation would be                 
  very close to the 9.82 cents (since Golden Valley Assoc. had                 
  lowered  their rates).    In answer  to  Senator Jacko,  Mr.                 
  Hutchens'  said that he  had not recommended  that the three                 
  utilities be added to the legislation.                                       
                                                                               
  Mr. Petrie said that when  HB 216, Power Cost  Equalization,                 
  was  dealt  with a  week  ago,  a question  had  been raised                 
  regarding the calculation of the PCE  rate.  He said he gave                 
  out  information  regarding  the five  utilities,  including                 
  Anchorage, Fairbanks, and Juneau, that were involved in that                 
  calculation.  He said someone had asked him if Palmer was in                 
  the calculation and as a result he gave out the names of the                 
                                                                               
                                                                               
  utilities that  were not  included, including Palmer,  Homer                 
  and  Seward.   He  said  that  the addition  of  these three                 
  utilities  may have  resulted from  a misunderstanding  from                 
  that discussion but that AEA did not recommend adding  those                 
  three communities to the calculation.  Discussion was had by                 
  Senator Jacko, Mr. Petrie, Co-chair Pearce and Senator Kelly                 
  regarding the addition of Palmer, Homer and Seward utilities                 
  to the legislation.                                                          
                                                                               
  Senator  Jacko  MOVED  that  CSSB  163(FIN)  be  amended  by                 
  deleting  Section  1  on  page 1,  and  deleting  the  words                 
  "Palmer,  Homer,  and Seward"  from  page  2, line  20.   No                 
  objections being heard, the amendment was ADOPTED.                           
                                                                               
  Senator Kelly MOVED for passage  of CSSB 163(FIN) as amended                 
  from  committee   with  individual   recommendations.     No                 
  objections being heard,  CSSB 163(FIN)  was REPORTED OUT  of                 
  committee  with  a "do  pass,"  and  a fiscal  note  for the                 
  Department of Commerce & Economic  Development in the amount                 
  of  $600.0.   Co-chairs  Pearce  and Frank,  Senators Kelly,                 
  Sharp, Rieger, and Jacko signed "do pass."  Senator Kerttula                 
  was absent from the meeting and did not sign.                                
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 9:25 p.m.