Legislature(2009 - 2010)BARNES 124
04/07/2010 07:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB182 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 182 | TELECONFERENCED | |
HB 182-RAILBELT ENERGY & TRANSMISSION CORP.
7:11:55 AM
CO-CHAIR MILLETT referred the committee to a copy of the
sectional analysis for HB 182 prepared by Ron Miller and
provided in the committee packet.
7:12:24 AM
RON MILLER, Energy Consultant, House and Senate Leadership,
Alaska State Legislature, informed the committee the Committee
Substitute (CS) for HB 182 was significantly different than the
previous version. The CS provides for the organization of
energy and transmission corporations by interconnected public
utilities, authorizes the organization of the Greater Railbelt
Energy and Transmission Corporation (GRETC), and authorizes the
Alaska Energy Authority (AEA) to contract with energy and
transmission corporations to operate AEA power projects. Mr.
Miller noted that Section 1 becomes effective 1/31/11 under
Section 5, and was contingent on four or more interconnected
utilities filing letters of intent under Section 4.
Furthermore, this section amends AS 42 to add a new chapter that
establishes the purposes, powers, and duties of an energy and
transmission corporation as follows: acquire, operate, or
maintain AEA projects; plan for, recommend, coordinate, and
otherwise address power generation and transmission for the
electrically interconnected service territories of member
utilities. Version P removes the exemption from Alaska
Regulatory Commission (RCA), Department of Commerce, Community,
& Economic Development, oversight, thus the new corporations are
subject to RCA regulation.
7:15:23 AM
CO-CHAIR MILLETT asked for confirmation that that RCA regulation
and oversight was a permanent addition to the bill.
MR. MILLER said correct. Returning to Section 1, he said the
section addresses the organization of the energy and
transmission corporations and includes: purposes of the
corporation; composition of the board of directors; conduct of
board meetings; corporate officers and employees; corporate
membership; articles of incorporation and bylaws; general powers
of the corporation. Mr. Miller pointed out major changes in
version P: the board of directors has been expanded to include
seven public directors in response to public testimony; the
public member appointed by the governor can be removed by the
governor; by a clarifying forthcoming amendment, the directors
shall receive no salary. Proposed Sec. 42.50.040 has no major
changes except that that any employee of the new corporation may
not be hired within two years of leaving state employment.
7:20:24 AM
CO-CHAIR MILLETT asked whether there was a definition for "state
employee" in statute.
MR. MILLER said yes.
7:20:55 AM
CO-CHAIR EDGMON referred to page 4, line 12, and asked whether a
qualifying statement was needed regarding meeting fees, per
diem, and travel expenses that the corporation may pay its
directors.
MR. MILLER opined that would be a reasonable addition to the
language.
CO-CHAIR EDGMON said he will offer an amendment to that effect.
7:22:21 AM
MR. MILLER continued to page 9, line 10, and explained that
general power paragraph (9) addresses the concern that the
corporation would compete with private corporations in natural
gas storage, other types of fuel storage, pipeline companies, or
oil and gas companies. The language, "may not be procured with
state funds" clarifies that the new corporation can not buy
state leases or build pipelines to compete with existing
pipeline companies, or facilitate natural gas storage in
competition with the private sector. Page 10, line 24,
paragraph (24) addresses the concern that the new corporation's
operating standards could keep independent power producers from
connecting to the intertie system, and he recited the new
language which read:
Develop operating standards approved by the Regulatory
Commission of Alaska that are applicable to all public
utilities electrically interconnected to the service
territory of the corporation.
MR. MILLER then pointed out that the general power to create
subsidiary corporations was deleted.
7:27:33 AM
CO-CHAIR MILLETT referred to page 10, paragraphs 20 and 23, and
asked whether they should also be removed as they relate to the
general power to create subsidiary corporations.
MR. MILLER explained that the language in paragraphs 20 and 23
allows an energy and transmission corporation to purchase
equipment from outside the state or country, and to acquire
licenses for that equipment. He then continued to changes on
page 11, beginning on line 23, that provide for the energy and
transmission corporation to draft integrated resource plans,
long-range fuel supply plans, long-range capital improvement
plans, and long-range financial management plans. Language was
also added to the CS that the abovementioned plans will be made
available to the general public. On page 12, line 29, language
was changed so that the corporation may use any financing
permitted by law to achieve the purposes of the corporation. He
noted that language on page 13, line 3, refers to Alaska
Industrial Development and Export Authority (AIDEA) revenue
bonds, and is identical to that contained in current joint
action agency (JAA) statute. However, the corporation's
authority regarding debt was amended due to concerns about
establishing a precedent of the state underwriting debt for a
private non-profit corporation. On page 13, beginning on line
5, the language clarifies that the state is not going to act to
impair the debt of the corporation, but will not guarantee
repayment of the corporation's debt. Also on page 13, line 20,
he said the additional language should read:
Nothing in that section exempted the corporation from
payment of taxes, royalties, or assessments of the
state applicable to natural gas storage, fuel
pipelines, underground fuel resources, or fuel in
other natural storage.
7:34:46 AM
CO-CHAIR MILLETT asked for clarification.
MR. MILLER re-stated the language should read "or fuel in other
storage." The exemption also does not apply to a municipal
public utility; for example, payment of applicable municipal
utilities' service assessments will not be exempted. On page
14, line 6, proposed Sec. 42.50.190 provides for the right of
the general public, members, and ratepayers to examine books and
records of the corporation. On page 18, line 5, the effective
date was changed to December 31, 2010, in order to allow AEA to
promulgate regulations. Mr. Miller opined Sec. 4 is very
important to the bill because the effective date is contingent
on Sec. 3 and Sec. 4; in fact, the bill will not take effect
unless four or more of the Railbelt utilities deliver a letter
to AEA meeting certain criteria established in regulation by
AEA. Furthermore, the membership date was moved to January 31,
2011. On page 18, line 27, language was changed to reflect that
Sec. 1, regarding the review of continued RCA oversight, was
removed and the effective date was changed to January 31, 2011.
7:41:42 AM
REPRESENTATIVE TUCK referred to page 4, line 12, and recalled
version A limited payments to directors for meeting fees, per
diem, and travel expenses. He asked why was this provision was
removed.
MR. MILLER assumed the restriction was removed to "allow the
corporation to act more like a corporation."
REPRESENTATIVE JOHANSEN pointed out Mr. Miller's commendable
work ethic.
7:43:35 AM
REPRESENTATIVE TUCK returned attention to page 5, lines 21-23
and asked whether an employee of a member utility could serve as
chief executive officer.
MR. MILLER said there was no prohibition on that.
7:44:43 AM
CO-CHAIR EDGMON surmised shareholders of a member utility would
not allow an employee to have two jobs.
MR. MILLER agreed that the CEO would become a sole employee of
the new corporation. Furthermore, the utilities may have
restrictions on previous employees' employment.
7:45:52 AM
REPRESENTATIVE TUCK asked for the type of member benefits that
are referred to on page 6, line 6.
MR. MILLER stated that the benefits are not employment benefits,
but are benefits and services that the energy and transmission
corporation provides to its utility members.
7:46:53 AM
REPRESENTATIVE TUCK assumed the benefits could include corporate
insurance benefits.
MR. MILLER agreed, adding that the legislature would not want to
prevent the corporation from participating in an insurance pool.
7:47:47 AM
CO-CHAIR MILLETT invited the committee to offer amendments and
follow-up comments.
CO-CHAIR EDGMON moved Amendment 1.
REPRESENTATIVE JOHANSEN objected for the purpose of discussion.
CO-CHAIR EDGMON explained Amendment 1 replaces the words "may
not receive a" with "shall receive no" on page 4, line 12. He
said the purpose is to clarify that directors are unable to
receive a salary.
REPRESENTATIVE JOHANSEN removed his objection. There being no
further objection, Amendment 1 was adopted.
7:50:12 AM
CO-CHAIR EDGMON offered Conceptual Amendment 2.
CO-CHAIR MILLETT objected for the purpose of discussion.
CO-CHAIR EDGMON said Conceptual Amendment 2 inserts "reasonable"
before "meeting fee" on page 4, line 13.
REPRESENTATIVE MILLETT removed her objection. Hearing no
further objection, Conceptual Amendment 2 was adopted.
7:50:50 AM
REPRESENTATIVE PETERSEN offered Amendment 3.
REPRESENTATIVE JOHANSEN objected.
REPRESENTATIVE PETERSEN said Amendment 3 would allow persons
whose only employment with the state is through a military
organization, to be employed by the corporation.
7:52:18 AM
BRIAN BJORKQUIST, Senior Assistant Attorney General, Labor and
State Affairs Section, Department of Law (DOL), in response to
Co-Chair Millett, said he was unsure whether National Guard
members are considered state employees.
7:53:33 AM
REPRESENTATIVE PETERSEN asked whether there was a definition of
"state employee" in statute.
7:53:40 AM
CO-CHAIR EDGMON suggested that this question could be addressed
by the next committee of referral.
7:54:15 AM
REPRESENTATIVE PETERSEN asked Legislative Legal and Research
Services, Legislative Affairs Agency, to provide an answer to
his question. He withdrew Amendment 3.
7:54:32 AM
CO-CHAIR MILLETT informed the committee of an amendment that
allows [Doyon Utilities] to form within GRETC. She said the
amendment will be forwarded to the House Standing Committee on
Labor & Commerce with the bill.
7:55:43 AM
The committee took an at-ease from 7:55 a.m. to 7:57 a.m.
7:57:43 AM
BRUCE TANGEMAN, Chief Financial Officer, Doyon Utilities (DU),
informed the committee DU was representing the Army. He
referred to page 6, lines 9-10, and said after "corporation" the
amendment replaces "if approved by a two thirds majority vote of
the board" with "upon application for membership." Also on page
6, line 11, after "be" the amendment replaces "a municipal or
cooperative" with "an" which will open the membership to any
electric utility interested in joining. Further on page 6, line
17, after "(c)" the amendment replaces "an affiliated electric
utility" with "any other entity" may become "an affiliate
member" and adds after "section," "but shall have no
representation on the board of directors in accordance with AS
42." On line 19, after "(d)" the amendment replaces "a" with
"any." Continuing to page 7, line 1, Mr. Tangeman advised that
after "remain" the amendment adds "(a)n affiliate," and on page
7, line 7, after "board" the amendment adds "as of the effective
date of the withdrawal." The amendment also adds the following
subsection: (h) Notwithstanding the foregoing provisions, the
corporation, by a majority vote of the board, may waive any
notice periods in this section. On page 16, line 14, the
amendment removes the municipal or cooperative requirement and
opens the provision to any electric utility. Finally, on page
17, after line 18, and on page 18, after line 16, the amendment
adds a seventh utility, Doyon Utilities, LLC.
8:01:10 AM
CO-CHAIR EDGMON did not express an opinion on the amendment, but
he supported passing the amendment to the next committee "so
they can have a larger discussion [that] I think is warranted."
8:02:02 AM
REPRESENTATIVE DAHLSTROM said she was willing to send the
amendment to the next committee, or incorporate a conceptual
amendment; however, she opined it was vital to include the Army.
8:03:00 AM
CO-CHAIR EDGMON pointed out there may be outstanding questions;
in fact, including the amendment now would be without a full
understanding of the ramifications.
8:03:28 AM
REPRESENTATIVE DAHLSTROM said she would not make a motion.
8:03:41 AM
CO-CHAIR MILLETT advised that the next committee will have the
amendment on its agenda.
8:03:54 AM
REPRESENTATIVE TUCK stated he had no opposition to DU
participating as "one of the seven, I suppose, but I'm not sure
if I'm comfortable with them being one of the four minimum
[needed] to require the [formation of the] corporation." Also,
he opined the affiliated members should be limited in scope to
utilities.
8:05:05 AM
REPRESENTATIVE DAHLSTROM pointed out that the military and DU
have created a utility.
8:05:17 AM
REPRESENTATIVE TUCK agreed that the military and DU are an
electric utility; however, the amendment replaces "affiliated
electric utility" with "other entity."
8:06:15 AM
REPRESENTATIVE JOHANSEN expressed confidence that this issue
will be addressed by the next committee. Furthermore, he
reminded the committee of its choices on the "individual
recommendations" document.
8:07:09 AM
CO-CHAIR EDGMON noted the presence of the House Labor and
Commerce Committee chief of staff.
8:07:23 AM
REPRESENTATIVE PETERSEN recalled that the committee has not
heard comments from the other utilities regarding DU's proposed
participation in GRETC.
8:07:44 AM
CO-CHAIR MILLETT agreed, and expressed her disappointment with
the lack of attendance by the utilities at the hearings; in
fact, only three have given testimony. She said the committee
has not heard from Golden Valley Electric Association, Homer
Electric Association Inc., or Anchorage Municipal Light & Power.
She questioned whether there is a need for the bill since
comments have not been received by three of the affected
utilities. Co-Chair Millett welcomed the participation by DU
"so we could have the assurances that ... the governor's bill is
actually going to do something." She closed public testimony.
8:10:28 AM
CO-CHAIR EDGMON moved to report the Committee Substitute for HB
182, version P, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
CSHB 182(ENE) was reported out of the House Special Committee on
Energy.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Sectional CS HB 182 version P 4-7-10.pdf |
HENE 4/7/2010 7:00:00 AM |
HB 182 |
| CS HB 182 (ENE) version P 4-6-10.PDF |
HENE 4/7/2010 7:00:00 AM |
HB 182 |
| Summary of Changes CS HB 182 (ENE) version P.pdf |
HENE 4/7/2010 7:00:00 AM |
HB 182 |
| Leg. Legal Memo CS HB 182 version P 4-6-10.PDF |
HENE 4/7/2010 7:00:00 AM |
HB 182 |
| Amendments 1,2 CS HB 182 (ENE) 4-7-10.PDF |
HENE 4/7/2010 7:00:00 AM |
HB 182 |