Legislature(2003 - 2004)
03/16/2004 05:45 PM House EDT
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 449-AIDEA BONDS FOR GAS PUBLIC UTILITIES CHAIR HEINZE announced that the next order of business would be HOUSE BILL NO. 449, "An Act relating to the contracting and financing authority of the Alaska Industrial Development and Export Authority; authorizing the authority to issue bonds in a principal amount not to exceed $76,000,000 to finance the acquisition, design, construction, inventory, and operation of natural gas, propane air, or manufactured gas public utility facilities; and providing for an effective date." Number 0630 PETER FELLMAN, Staff to Representative John Harris, Alaska State Legislature, presented HB 449 on behalf of its sponsor, Representative Harris, by request of the Alaska Intrastate Gas Company. He announced that Representative Harris is supportive of any efforts to develop the natural resources of the state. Furthermore, Representative Harris recognizes the need to develop infrastructure in order to utilize those developing resources. He explained that regardless of the viability of the project, new project ideas are important to resource development. Mr. Fellman related that Representative Harris is a firm believer in the people's legislature and allowing the committee process to be utilized to bring forth new ideas. He then deferred to Mr. Rusanowski. Number 0735 PAUL RUSANOWSKI, Vice President, Alaska Intrastate Gas Company (AIGC), informed the committee that AIGC is in the process of developing gas utility service to 17 communities throughout Southeast Alaska and the Gulf of Alaska. Currently, AIGC's efforts are focused on obtaining financing and the placement of a bond issue to begin construction of a utility in the near future. This legislation addresses a concern that the communities have by expanding the financing opportunities to those communities. The AIGC and AIDEA have agreed upon an initial development program involving conduit bond financing, which is moving forward now. The aforementioned will cover the startup of the project and financing for the first two to three communities. However, the remaining 14 communities still need to be brought on line in the future years. Therefore, this legislation provides a mechanism for communities working with AIGC to consider various options suited for development of the utility within each of these communities. Although the development finance program may or may not be a suitable option in the future, he highlighted that all 17 communities are part of one project. If the entire project is fully built out as planned, it will exceed $100 million. He explained that legislative approval is required for AIDEA to consider a development finance program for any communities because currently there is a $10 million cap, which this legislation would remove by granting approval for the 17 communities to proceed with the development finance project, if viable. Furthermore, the legislation includes $76 million in bond authority and a sunset of July 1, 2009. In conclusion, Mr. Rusanowski urged passage of HB 449. MR. RUSANOWSKI, in response to Chair Heinze, confirmed that HB 449 would allow AIDEA the opportunity to use the development finance program. He reiterated that AIDEA is already assisting with financing the project through conduit bond financing, which doesn't require legislative approval. In further response, he also confirmed that the total project is $100 million and the bond limit is $76 million. Number 0988 REPRESENTATIVE KOHRING informed the committee that some want a minor tweak to HB 449 because of the belief that this legislation would benefit the City of Seward. Therefore, he noted that he has an amendment to offer on that matter. Number 1076 BOB VALDETTA said that natural gas should be brought to Seward for industrial and consumer use. PHILIP SHEALY, City Manager, City of Seward, informed the committee that the City of Seward supports bringing gas to communities such as Seward, which [aren't connected with] conventional gas supply systems. Therefore, he requested that Seward be certified as the eighteenth community in the proposal encompassed in this legislation. REPRESENTATIVE CISSNA inquired as to the benefits of including the City of Seward. MR. SHEALY informed the committee that the heating source in Seward is fuel oil, which is approximately double the cost of fuel provided through natural gas. Therefore, there would be a cost savings to the community. Additionally, natural gas is more environmentally friendly that fuel oil. Mr. Shealy related the belief that access to natural gas would [help] with the community's environmental development efforts. Number 1190 WILLARD DUNHAM, Member, City Council, City of Seward, related his support of Seward being added to the list of communities included in HB 449. For many years, Seward has tried to get natural gas to Seward. However, for one reason or another each attempt hasn't come to fruition. This legislation is the first opportunity Seward has seen to be tied into a barge service. Mr. Dunham said he believes this is critical for Seward to have a better alternative fuel than diesel. It would be a large cost savings to switch the diesel backup generating plants to gas fired generators. Therefore, he urged the committee to look favorably on including Seward in this legislation. Number 1293 LOUIS BENCARDINO informed the committee that he is representing the Mayor of the City of Seward who supports [inclusion of Seward in HB 449]. The community of Seward needs [the ability to use natural gas]. Furthermore, he opined that it's time that the state utilized some of its own fuel. Number 1362 REPRESENTATIVE KOHRING moved that the committee adopt Amendment 1, which read: Pg. 1 Line 13 insert [city of Seward] after Sitka REPRESENTATIVE KOHRING said that natural gas is important for any community and for more than heating homes. Natural gas is important for industry as well. He highlighted that Seward is an important industrial port that receives a lot of goods and services that benefit areas beyond Seward. Therefore, what will benefit Seward will benefit many others in the state. [Amendment 1 was treated as adopted.] Number 1430 REPRESENTATIVE KOTT asked if the adoption of Amendment 1 impacted the bonding amount of $76 million. REPRESENTATIVE KOHRING said he didn't know. MR. SHEALY informed the committee that [the City of Seward] has been advised by Mr. Francis Avezac, Chairman of the Board, AIGC, that he will work with the City of Seward so that it can be included in the financial parameters that have been outlined. Number 1472 REPRESENTATIVE McGUIRE moved to report HB 449, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 449(EDT) was reported from the House Special Committee on Economic Development, International Trade and Tourism.
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