Legislature(2001 - 2002)
04/10/2002 09:44 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 185
"An Act relating to the basis for determining eligibility for
and the amount of power cost equalization payments; and
providing for an effective date."
This was the third hearing for this bill in the Senate Finance
Committee. CS SB 185, 22-LS0465\U, was drafted to incorporate
amendments adopted at the previous hearing.
AT EASE 11:05 AM / 11:06 AM
Amendment #2: This amendment inserts a new bill section on page 1,
following line 11 of the committee substitute to read as follows.
Sec. 2. AS 42.45.100(a) is amended to read:
(a) The power cost equalization and rural electric
capitalization fund is established as a separate fund for the
purpose of
(1) equalizing power cost per kilowatt-hour
statewide at a cost close to or equal to the mean of the cost
per kilowatt-hour in Anchorage, Fairbanks, and Juneau by
paying money from the fund to eligible electric utilities in
the state; and
(2) making grants to eligible utilities under AS
42.45.180 to improve the performance of the utility.
This amendment also inserts a new bill section on page 2, following
line 10 of the committee substitute to read as follows.
Sec. 4. AS 42.45.110(b) is amended to read:
(b) An eligible electric utility is entitled to receive
power cost equalization
(1) for sales of power to local community
facilities, calculated in the aggregate for each community
served by the electric utility, for actual consumption of not
more than 70 kilowatt-hours per month for each resident of the
community; the number of community resident shall be
determined under AS 29.60.020; and
(2) for actual consumption of not more than 500
kilowatt-hours per month sold to each residential customer [OF
NOT MORE THAN
(A) 450 KILOWATT-HOURS PER MONTH FOR THE MONTHS
OF OCTOBER THROUGH MARCH, AND
(B) 350 KILOWATT-HOURS PER MONTH FOR THE MONTHS
OF APRIL THROUGH SEPTEMBER].
This amendment also inserts a new bill section on page 3, following
line 4 of the committee substitute to read as follows.
Sec. 6. AS 42.45.110(c) is amended to read:
(c) The amount of power cost equalization provided per
kilowatt-hour under (b) of this section may not exceed 95
percent of the power costs, or the average rate per eligible
kilowatt-hour sold, whichever is less, as determined by the
commission. However,
(1) during the state fiscal year that began July 1,
1999, the power cost for which power cost equalization were
paid to an electric utility were limited to minimum power
costs of more than 12 cents per kilowatt-hour and less than
52.2 cents per kilowatt-hour;
(2) during the state fiscal years beginning July 1,
2007, and each following state fiscal year [JULY 1, 2000, AND
JULY 1, 2001], the commission shall adjust the power costs for
which power cost equalization may be paid to an electric
utility based on the weighted average retail residential rate
in Anchorage, Fairbanks, and Juneau; however, the commission
may not adjust the power costs under this paragraph to reduce
the amount below the lower limit set out in (1) of this
subsection; and
(3) DURING EACH FOLLOWING STATE FISCAL YEAR, THE
COMMISSION SHALL ADJUST THE POWER COSTS FOR WHICH POWER COST
EQUALIZATION MAY BE PAID TO AND ELECTRIC UTILITY BASED ON THE
WEIGHTED AVERAGE RETAIL RESIDENTIAL RATE IN ANCHORAGE,
FAIRBANKS, AND JUNEAU, PER KILOWATT-HOUR FOR SALES TO
RESIDENTIAL CUSTOMERS OF 400 KILOWATT-HOURS PER MONTH; THE
COMMISSION MAY NOT ADJUST THE POWER COSTS UNDER THIS PARAGRAPH
TO REDUCE THE AMOUNT BELOW 16.75 CENTS PER KILOWATT-HOUR; AND
(4)] the power cost equalization per kilowatt-hour
may be determined for a utility without historical kilowatt-
hour sales data by using kilowatt-hours generated.
This amendment also inserts a new bill section on page 3, following
line 16 of the committee substitute to read as follows.
Sec. 8. AS 42.45.110(d) is amended to read:
(d) An electric utility whose customers receive power
cost equalization under AS 42.45.100 - 42.45.150 shall set out
in its tariff the rates without the power cost equalization
and the amount of power cost equalization per kilowatt-hour
sold. The rate charged to the customer shall be the difference
between the two amounts. Power cost equalization paid under AS
42.45.100 - 42.45.150 shall be used to reduce the cost of all
power sold to local community facilities, in the aggregate, to
the extent of 70 kilowatt-hours per month per resident of the
community, and to reduce the cost [TO EACH RESIDENTIAL
CUSTOMER] of the first 500 [NOT MORE THAN 450] kilowatt-hours
per residential customer per month [FOR THE MONTHS OF OCTOBER
THROUGH MARCH, AND NOT MORE THAN 350 KILOWATT-HOURS PER MONTH
FOR THE MONTHS OF APRIL THROUGH SEPTEMBER].
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Donley moved for adoption.
The amendment was ADOPTED without objection.
Co-Chair Donley moved "the Finance Committee version for SB 185
from Committee with accompanying Senate Finance Committee fiscal
note."
Senator Wilken objected to make a comment regarding discussions
held on the matter of funding the Power Cost Equalization (PCE)
program in the Committee during the years 1999 and 2000. He
referenced Senate Finance Committee minutes from April 13, 2000
[copy on file], whereby former Committee member Senator Al Adams
indicated intent that National Petroleum Reserve-Alaska (NPR-A)
funds would be divided between the permanent fund, the school
public trust fund and the PCE fund. Senator Wilken remembered that
Senator Adams promised to convince villages in the North Slope
Borough to "relinquish" claim to the NPR-A funds in order to
benefit PCE.
Senator Wilken reminded that at the previous hearing on this bill,
he had asserted that the projects funded with NPR-A funds are
"essentially fluff projects". He referenced a list of eight
projects funded with $1.79 million of NPR-A funds [copy on file]
and surmised they were not necessitated by the impacts of oil
development.
Senator Wilken noted that in other boroughs in Alaska, similar
projects are instead funded with borough funds. He predicted if the
communities that currently receive NPR-A funds for these projects
were to forgo receiving the funds, that the North Slope Borough
would provide funds to undertake the projects.
Senator Wilken asserted that the promise made in the year 2000 is
still pertinent and the Committee should attempt to convince those
villages to authorize use of the NPR-A funds for the PCE program.
Senator Hoffman countered that the statements made during the April
2000 meeting related to an amendment containing standard budgetary
language. This language, he explained, clarified that the NPR-A
funds would be divided to the permanent fund, the public school
trust fund and the PCE fund according to a formula. He stressed
there is a priority for the allocation of the funds, which has been
practiced accordingly.
Senator Wilken removed his objection to reporting the bill from
Committee.
Senator Austerman understood the NPR-A funds are federal funds and
that established criteria in federal law provides how they could be
spent. He was unsure how state statutes could overrule the federal
law on this matter.
Senator Wilken described how the federal government collects 50
percent of NPR-A production funds with the remaining 50 percent
"for the benefit of the people of Alaska." He continued that of the
50 percent allocated for Alaska, one-half is guaranteed to the
North Slope Borough. He detailed the State's ability to appropriate
the remaining 25 percent.
Co-Chair Kelly ruled the discussion about the impact of NPR-A funds
is out of order due to the motion on the table.
Without objection CS SB 185 (FIN) with a zero fiscal note for the
Department of Community and Economic Development, authored by the
Senate Finance Committee 4/2/02, MOVED from Committee.
Senator Austerman realized the issue of NPR-A fund appropriation is
"a thorn in the side" of some Committee members. He predicted the
discussion would continue as to Senator Adam's assertions unless
the statute is changed. He listed other issues instituted by past
legislatures, including grain elevators in the Matanuska-Susitna
Valley and the rocket launch facility in Kodiak. He suggested
reaching a resolution on the PCE matter.
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