04/03/1996 03:55 PM Senate RES

                                                                               
          SB 284 FOUR DAM POOL: RELATED FUNDS & BONDS                         
                                                                              
 SENATOR LEMAN announced  SB 284  to be up for consideration                   
                                                                               
 RANDY SIMMONS, AIDA, said he was available to answer questions.  He           
 said his letter addressed Senator Halford's concern with the                  
 legality of entering into an agreement and they sent the committee            
 six different alternatives showing the cost and annual debt service           
 payment over different scenarios.                                             
                                                                               
 SENATOR LEMAN said he agreed with him that a maximum 10-year term             
 with a one year payment deferral would be the best alternative.               
 MR. SIMMONS replied that they have no reason to want to go longer             
 than 10 years.  The only concern he has is that a lot of this is              
 market driven.  He said they could report to Legislative Budget and           
 Audit, but they would like to have the flexibility.                           
                                                                               
 SENATOR TAYLOR said the Four Dam Pool group indicated they wanted             
 no term longer than eight years.  He didn't know what triggering              
 device would make certain that divestiture actually occurs other              
 than to leave the hammer of self help in the hands of the people              
 who would need it for the purposes of maintaining and repairing               
 their facilities. He said he would like to see something in there             
 that gives comfort to the Four Dam Pool communities that if the               
 State does not act in good faith and does attempt to just delay               
 this divestiture discussion, they will once again have those self             
 help rights.                                                                  
                                                                               
 MR. SIMMONS responded that this bill does allow them to exercise              
 their self help right for the amount that is not being used for the           
 debt service payment.  Without the utilities agreeing that the                
 amount that needs to be set aside for the payment of the bond, they           
 would probably not be able to sell the bonds.                                 
                                                                               
 MR. SIMMONS said the utilities requested to go back to the table              
 for further negotiations and AIDA agreed.  The utilities actually             
 asked to have the divestiture negotiations be put aside.  Also the            
 term of the debt, whatever it may be, does not affect the utility             
 repairs at all.  It may affect the citizens of Alaska, however.               
 They have had discussions about the length of the bond.  In those             
 discussions they had to have a shorter term.  They signed an                  
 agreement, though, that allowed the term to be anywhere up to, but            
 no more than 25 years.  Some members of the utility wanted a 25               
 year term because they felt if they actually did the divestiture              
 they might want to reserve the bonds.                                         
                                                                               
 They agree that the shorter time was best.  Before they were to               
 float any bonds, members of the utilities will be consulted as part           
 of the agreement.                                                             
                                                                               
 SENATOR TAYLOR said the agreement is centered around taking away              
 their self help right.  The only thing he heard from members was              
 seven to eight years was plenty and they wanted to get it paid off            
 quickly.  There is an impact on the rate payer to the extent that             
 we take money out of the Four Dam Pool stream and dedicate those              
 monies to the bond reimbursement.  Those monies are not available             
 to go back into the Four Dam Pool Transfer Fund (Southeast Energy             
 Fund).  He wanted to see divestiture expedited or he wanted some              
 assurances that divestiture would occur or this legislation goes              
 away.                                                                         
 MR. SIMMONS responded that the problem with waiting for divestiture           
 means that the repairs won't happen this year because there are a             
 lot of property transfers that have to take place which would take            
 from 12 to 18 months during which nothing could be done.                      
                                                                               
 SENATOR TAYLOR said that was not correct because even without a               
 bill, self help is still available giving them $11 million worth of           
 resources which is more than they are intending to put forward in             
 this construction season on the repairs.  They could exercise their           
 self help clause and do the repairs.                                          
                                                                               
 MR. SIMMONS said with bonds they would have most of the repairs               
 done this construction season.  With self help they would have to             
 do the repairs over a two to three year period.                               
                                                                               
 SENATOR TAYLOR said he wanted to make sure that all alternatives              
 were considered including power cost equalization.                            
                                                                               
 Number 212                                                                    
                                                                               
 SENATOR TAYLOR asked if the divestiture plan they have provides               
 funding for PCE out of the income stream they receive?  MR. SIMMONS           
 said it didn't; and that is a decision made by the Governor and the           
 Legislature.                                                                  
                                                                               
 MR. SIMMONS said that the State was willing to go back to the table           
 and negotiate.                                                                
                                                                               
 SENATOR TAYLOR said he had to see something that would show him               
 that closure will occur within this process in a given period of              
 time.  He wanted it to be fully understood that at the end of the             
 time if divestiture does not occur that the full opportunity of               
 self help comes in.                                                           
                                                                               
 MR. SIMMONS said he wanted to make it clear that they are not                 
 taking the self help right away from the utilities.  All they want            
 the utilities to do is to limit their right to the amount of bond             
 payments only.  They still have their self help right up to $7                
 million per year.                                                             
                                                                               
 SENATOR LEMAN said he wanted to work on amendments to the bill                
 before moving it from committee.