04/09/2016 03:23 PM Senate FIN

SENATE BILL NO. 196                                                                                                           
                                                                                                                                
     "An Act relating to the use of certain unexpended                                                                          
     earnings from the power cost equalization endowment                                                                        
     fund."                                                                                                                     
                                                                                                                                
3:26:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  MOVED to ADOPT the  committee substitute for                                                                    
SB 196, Work Draft 29-LS1383\V (Nauman, 4/9/16).                                                                                
                                                                                                                                
Co-Chair MacKinnon OBJECTED for DISCUSSION.                                                                                     
                                                                                                                                
3:26:59 PM                                                                                                                    
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR ANNA MACKINNON,  explained the                                                                    
difference between version F and  version V of the bill. She                                                                    
looked  at  page 1,  line  12,  following the  reference  to                                                                    
reference to AS 42.45.080c. She  announced that the number 1                                                                    
was inserted, which referenced the  above section on line 7.                                                                    
She  stated   that  the  language,  "for   the  fiscal  year                                                                    
beginning  the following  July 1."  She  announced that  the                                                                    
version  read, "c.1  may be  appropriated for  the following                                                                    
purposes."  She looked  at page  2, subsection  d, following                                                                    
the  statute  reference  AS 42.45.080c,  the  number  2  was                                                                    
inserted. The  number 2 referenced Section  1, subsection 2.                                                                    
She shared  that page 2,  line 11,  following "appropriation                                                                    
under  (a) of  the  section" inserted  the  phrase "for  the                                                                    
current  fiscal year."  She stated  that  it had  previously                                                                    
read,  "for  the  previous fiscal  year."  She  shared  that                                                                    
following the  statute reference on line  13, AS 42.45.080c,                                                                    
the number 2  was inserted, which referenced  Section 1. She                                                                    
looked  at   subsection  1,  line  16,   which  allowed  for                                                                    
appropriating 30 percent or $30  million, whichever is less,                                                                    
to  the Community  Revenue Sharing  or Community  Assistance                                                                    
Fund. The following subsection  allowed for appropriation to                                                                    
the  Renewable Energy  Grant Fund,  and the  committee added                                                                    
"Bulk Fuel Revolving Loan Fund"  and the "Rural Power System                                                                    
Upgrades."  The percentage  changed  from 30  percent to  20                                                                    
percent.  She   furthered  that   $25  million   was  added,                                                                    
whichever was less. She announced  that an effective date of                                                                    
June  30 of  the current  year was  added to  the bill.  She                                                                    
shared that  any excess earnings  would either return  to or                                                                    
stay in the Power Cost Equalization (PCE) Endowment Fund.                                                                       
                                                                                                                                
Co-Chair  MacKinnon REMOVED  her OBJECTION.  There being  NO                                                                    
further  OBJECTION, the  proposed  committee substitute  was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair  MacKinnon  queried the  impact  of  the change  to                                                                    
Power Cost  Equalization in the  numbers that  were included                                                                    
as maximums that could be withdrawn from the fund.                                                                              
                                                                                                                                
3:31:18 PM                                                                                                                    
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, looked                                                                    
at   the  spreadsheet   titled,  "Power   Cost  Equalization                                                                    
Endowment  Fund -  Impacts of  SB  196" (copy  on file).  He                                                                    
remarked that the  purpose of the bill was  to determine how                                                                    
to  manage excess  earnings to  the PCE  Endowment Fund.  He                                                                    
noted that Section  3, subsection d outlined  the action for                                                                    
the  excess  earnings.  The  noted  the  highlighted  yellow                                                                    
columns, which showed the repeat  of experience from 2004 to                                                                    
the  current day.  It was  not intended  as a  prediction of                                                                    
interest rates, rather it was  an example of some higher and                                                                    
negative rates.  The column showed years  of excess earnings                                                                    
and years of insufficient earnings.  He looked at Section 3,                                                                    
which stated that "if the  5 percent payout was insufficient                                                                    
to pay the Power Cost  Equalization amount", as listed under                                                                    
program  costs   in  the   spreadsheet,  "then   Power  Cost                                                                    
Equalization will  be prorated." He furthered  that if there                                                                    
was insufficient  funds, then there  was no  money available                                                                    
for  Community  Assistance  or  Rural  Energy  programs.  He                                                                    
stated that,  if there was  excess money, 50 percent  of the                                                                    
amount available  for allocation  would be put  in Community                                                                    
Assistance.                                                                                                                     
                                                                                                                                
Co-Chair  MacKinnon queried  comments for  the committee  to                                                                    
consider. Senator Hoffman replied  that the CS was improved,                                                                    
especially when examining the available scenarios.                                                                              
                                                                                                                                
SB  196  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.