Legislature(1999 - 2000)
05/16/1999 09:25 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSSSSB 10(FIN) - UNDERGROUND UTILITIES CO-CHAIRMAN HALCRO announced the first order of business is CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 10(FIN), "An Act requiring an electric or telephone utility that provides services in a municipality with a population of more than 200,000 to have an ongoing program of placing existing overhead utility distribution lines underground; and relating to rates for recovering the cost of placing existing overhead utility distribution lines underground." SENATOR DAVE DONLEY, Alaska State Legislature, came before the committee as sponsor of the bill. He noted that the bill only applies to communities [with a population] over 200,000. In those communities, the utilities would have to have an ongoing program of undergrounding utility lines in which they would be required to invest at least 1 percent of their retail revenues a year towards that program. The reason that this is a state issue is because, before deregulation of utilities, the utilities had monopolies and they were doing this because there were a lot of good reasons to do so. He stated that such a program reduced maintenance costs, improved reliability of service, and the communities looked much nicer. But when deregulation came along they quit doing it because if somebody else did it there were disadvantages and vice versa. Therefore, the bill creates a level playing field in a deregulated market. He noted that in the rest of the United States all new lines in communities are required to be underground because of public policy reasons. He cited that Anchorage requires all new lines to be underground and even has an ordinance that suggests and recommends up to 4 percent a year of the revenues ought to be placed towards under-grounding. He further noted that the Municipality of Anchorage supports the bill, and in working with ML&P [Municipal Light and Power] and other utilities, he has a proposed amendment that clarifies how the costs would be shared with the various utilities. Number 0251 REPRESENTATIVE DYSON asked Senator Donley why Anchorage can't do this themselves. SENATOR DONLEY replied it's a state responsibility because it has fostered the deregulation climate. There is a solid argument in the major urban areas for a baseline. In addition, Anchorage is not just a government; it is a market participant. Therefore, it's difficult to ask it to bear the full responsibility for regulation when it is one of the competitors - one of the reasons why the assembly passed a resolution supporting the bill. Number 0329 REPRESENTATIVE DYSON asked Senator Donley whether Anchorage has the legal authority to do this. SENATOR DONLEY replied, yes, they do have the legal authority to do this. In fact, he would encourage them to look at an increased amount. They have an ordinance that suggests 4 percent. Number 0366 CO-CHAIRMAN HALCRO asked Senator Donley why the 200,000 figure for population has been inserted in the title. What about communities like Fairbanks, Juneau and Kenai that have the same problems associated with a growing population? SENATOR DONLEY replied he's not familiar with the problems in the other communities. It's a good question, and he hopes that once this is in place other communities might recognize the need for something like this. Right now, however, he doesn't know of any community in the state that has asked for this. Number 0416 CO-CHAIRMAN HALCRO noted that the bill says, "...at least one percent of the utility's annual gross revenue from retail customers..." He clarified as to whether it's safe to assume that the cost would be passed on to the consumers. SENATOR DONLEY replied currently ML&P does in excess of 1 percent, which is part of their rate base. It has always been part of their rate base. For many, many years all utilities were doing this. When there was a monopoly ML&P was complying with the municipal ordinance of 4 percent. But as things got more competitive, less and less was done to avoid allowing competitors to gain an advantage. The advantage of a level playing field is that it would save the consumer money in the long run because the cost of maintenance goes down with lines underground and the reliability of service goes up because of a decrease in vandalism and other weather outages. Number 0506 REPRESENTATIVE DYSON stated that it is also safer. He asked Senator Donley whether he explored financial incentives for companies to do this as opposed to requiring them. SENATOR DONLEY replied it's a neat idea, but he hasn't figured out how to do it. REPRESENTATIVE MURKOWSKI asked Senator Donley what sort of comments have there been from private companies, especially in regards to the addition of the term "cable" in the proposed amendment. SENATOR DONLEY replied he has a letter from ML&P and Mr. James Rowe from the Alaska Telephone Association, endorsing the proposed amendment. Number 0618 CO-CHAIRMAN HALCRO asked for clarification as to whether the proposed amendment incorporates cable providers. SENATOR DONLEY replied the proposed amendment says that while an electric or telephone utility is placing an overhead line underground they would coordinate their activities and bear the cost for putting their own line or cable underground. Basically, the electric and telephone utilities own the easements and when they come along and place existing overheard lines underground, that activity will be coordinated with others. But each utility would bear its own costs. Number 0691 CO-CHAIRMAN HARRIS moved Amendment 1. There being no objection, it was so adopted. Amendment 1 reads as follows: Page 2, following line 12: Insert a new subsection to read: "(j) When an electric utility or a telephone utility is implementing a program to place existing overhead utility distribution lines located in a municipality underground, any other overhead line or cable in the same location shall be placed underground at the same time. Each entity whose lines or cables are placed underground shall pay the cost of placing its own lines or cables underground." Number 0704 CO-CHAIRMAN HARRIS noted that the assembly resolution mentions 100,000 and the bill mentions 200,000. He asked Senator Donley whether the bill was written so that it is site-specific. SENATOR DONLEY replied the "folks from Fairbanks" asked that it be amended to make it clear that it only applies to Anchorage because they want to deal with it separately. Number 0750 CO-CHAIRMAN HALCRO closed the meeting to public testimony. Number 0757 CO-CHAIRMAN HARRIS made a motion to move CSSSSB 10(FIN), as amended, from the committee with individual recommendations and the attached fiscal note(s). There being no objection, HCS CSSSSB 10(CRA) was moved from the House Community and Regional Affairs Standing Committee. The committee briefly stood at-ease.
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