Legislature(2021 - 2022)ADAMS 519
05/17/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB190 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 190 | TELECONFERENCED | |
| += | HB 66 | TELECONFERENCED | |
| + | HB 259 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 17, 2022
1:36 p.m.
1:36:39 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Adam Wool
MEMBERS ABSENT
Representative Steve Thompson
ALSO PRESENT
Senator Robert Myers, Sponsor; Theresa Woldstad, Staff,
Senator Robert Meyers; Kris Curtis, Legislative Auditor,
Alaska Division of Legislative Audit; Representative Zack
Fields, Chair, House Labor and Commerce Committee.
PRESENT VIA TELECONFERENCE
Keith Kurber, Commissioner, Regulatory Commission of
Alaska, Fairbanks; Stuart Goering, Assistant Attorney
General, Department of Law; Kristin Schubert, Commission
Section Manager, Regulatory Commission of Alaska,
Anchorage; Kurt Froening, Alaska Waste, Anchorage.
SUMMARY
HB 66 ELECTIONS, VOTING, BALLOTS
HB 66 was SCHEDULED but not HEARD.
HB 259 PERMANENT FUND DIVIDEND; 25/75 POMV SPLIT
HB 259 was SCHEDULED but not HEARD.
CSSB 190(FIN)
REGULATORY COMMISSION AK/REFUSE UTILITIES
CSSB 190(FIN) was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the agenda for the meeting.
CS FOR SENATE BILL NO. 190(FIN)
"An Act extending the termination date of the
Regulatory Commission of Alaska; relating to
Regulatory Commission of Alaska regulations regarding
refuse utilities; relating to the powers and duties of
the legislative audit division; and providing for an
effective date."
1:37:13 PM
Co-Chair Foster listed individuals available to speak to
the bill. He invited the bill sponsor to begin.
SENATOR ROBERT MYERS, SPONSOR, introduced the bill with
prepared remarks on the sponsor statement:
At its core, SB 190 started out as a relatively simple
bill to extend the termination date of the Regulatory
Commission of Alaska (RCA) until June 30, 2030, in
alignment of the recommendations of the legislative
auditor. The RCA is an independent, quasi-judicial
regulatory body that was formed by the legislature in
1999 to replace the Alaska Public Utilities Commission
(APUC). The RCA monitors active certificates for
public utilities and pipeline. These certificates
cover a broad range of activities from provisional
certificates for small village wastewater to fully
regulated telecom, electric, and natural gas
monopolies.
Changes made in the Senate Finance Committee were
simple housekeeping that addressed the refuse utility
backlog by adding them to the simplified rate filing
procedure and removing an extraneous RCA annual report
review process on the advice of the legislative
auditor.
Changes made in the House Labor and Commerce Committee
are more extensive, obligating the RCA to explicitly
include municipal refuse utilities amongst other
obligations.
1:39:03 PM
THERESA WOLDSTAD, STAFF, SENATOR ROBERT MEYERS, reviewed
the sectional analysis (copy on file):
Section 1:
Page 1, Lines 6-14, Page 2, Line 1
This section adds intent language that the Regulatory
Commission of Alaska shall adopt regulations specific
to refuse utilities to provide for sufficient public
notice and time for ratepayers to meaningfully comment
on rate filings. Additionally adds intent language
relating to information in the decision-making process
of the Regulatory Commission of Alaska and outlining
that it is not the intent of the changes in section 4
to interfere with normal rate-making methodologies.
Section 2:
AS 42.05.381(e) Page 2, Lines 2-12
This section amends AS 42.05.381(e) to include refuse
utilities. AS 42.05.381(e) is the section of law that
provides for a simplified rate filing procedure.
Section 3:
AS 42.05.641 Page 2, Lines 13-20
This section increases the Regulatory Commission of
Alaska's regulatory obligations to explicitly include
municipal refuse utilities.
Section 4: AS 42.05.641 Page 2, Lines 21-31, Page 3
Lines 1-14
This section obligates the Regulatory Commission of
Alaska to oversee the privatization of a municipal
refuse utility and review privatization proposals.
This new section also outlines the contents required
in the proposals including consideration of consumers'
rates, a business plan that lists perspective vendors,
projected cost of privatization compared to continued
municipal operations for 10 years, and potential
conflicts of interest by municipal officers. The
proposals also must include proposed methods for
evaluating the utilities performance to avoid
diminished service quality, interruption, or stoppage
of work by the contactor, ways to encouraging
completion, monitoring contactor issues relating to
contract renewals, and address municipal employee
displacement.
This section also provides a definition of privatize.
Section 5: AS 42.05.990(6) Page 3, Lines 15-31, Page
4, Lines 1-14
This section adds municipal refuse utilities to the
definition of "public utility" or "utility" found in
AS 42.05.990(6).
Section 6: AS 44.66.010(a)(3) Page 4, Lines 13-15
This section extends the termination date for the
Regulatory Commission of Alaska until June 30, 2030.
Section 7: AS 24.20.271(11) Page 4, Line 16
This section repeals AS 24.20.271(11), a requirement
for the legislative audit division to conduct an audit
every two years of information found in the annual
reports regarding compliance by the Regulatory
Commission of Alaska.
Section 8: Page 4, Line 17
This section establishes an immediate effective date.
1:41:56 PM
Co-Chair Foster indicated the committee would hear from
three invited testifiers. He hoped to move the bill out of
committee. He noted the RCA was set to expire in June of
2022; the bill would extend the RCA eight years. He invited
Ms. Curtis to provide testimony.
1:42:41 PM
Co-Chair Foster indicated Representative Josephson and
Representative Wool had joined the meeting.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, highlighted the sunset audit report
dated September 2021 in members' packets (copy on file).
The audit concluded the RCA was operating effectively and
serving the public's interest. The report recommended an
eight-year extension and had one recommendation shown on
page 9. She explained the recommendation was administrative
in nature and pertained to the RCA's monthly meetings. She
explained that RCA's regulations required the commission to
meet twice a month. She detailed that in instances when
there were no agenda items, the RCA had been canceling the
meetings. The audit had found that 25 of 88 scheduled
meetings had been canceled, including 6 consecutive
meetings. She elaborated that according to RCA management
their regulations allowed them to waive a requirement by
their own motion. The audit agreed and noted the motion had
to be official. She expounded that an official motion had
not been made; therefore, it was essentially a
technicality. She agreed it was reasonable to cancel a
meeting when there were no agenda items. The audit
recommended the RCA clarify its regulations. She concluded
the audit was very clean overall and an eight-year
extension was recommended.
1:44:01 PM
Representative Wool asked Ms. Curtis to comment on the
refuse portion of the bill.
Ms. Curtis responded that she did not have a comment on the
issue, which had not been part of the audit.
Representative Wool asked when the last time another area
of regulation had been added to the RCA similar to refuse.
He asked what rates the RCA regulated.
Ms. Curtis replied that the RCA would have the most
knowledge of what it regulated. She stated the organization
and functions section addressed what the organization did
at a high level. She noted that pages 6 and 7 addressed
what regulation and statutory changes happened during the
audit period at a high level.
Representative Wool commented that people associated with
the RCA with utilities. He surmised that refuse was
counting as a utility. He wondered about the last time
something was added.
1:45:46 PM
Co-Chair Foster invited testimony from the RCA.
KEITH KURBER, COMMISSIONER, REGULATORY COMMISSION OF
ALASKA, FAIRBANKS (via teleconference), introduced himself
and shared he had been the RCA commissioner for the
previous 14 months. He was available for questions.
Representative Wool asked what utilities the RCA currently
regulated and when the last utility had been added.
Mr. Kurber responded that the commission regulated waste
utilities presently. He detailed there were unregulated
waste utilities. He stated it was effectuated by amount of
gross income on a yearly basis. He explained the initial
amendment been introduced in the Senate to allow for a
simplified rate filing for the RCA for waste utilities that
were rate regulated by the RCA. He offered that the
amendment passed in the House Labor and Commerce Committee
related to municipal utilities.
Representative Wool referenced Mr. Kurber's testimony that
the RCA currently regulated a certain kind of waste. He
stated his understanding that municipal waste collection
had been added in the House Labor and Commerce Committee.
He did not understand the difference.
Mr. Kurber clarified that two amendments were adopted
outside of the clean RCA extension bill. The first
amendment had been adopted by the Senate that included a
simplified rate filing opportunity for rate regulated waste
utilities. He explained it was typical in Alaska that
utilities were not rate regulated by the RCA. Under the
amendment added by the House Labor and Commerce Committee,
filing reviews made by a municipality would be moved from
the municipality's control to an independent entity or
contractor. He noted that an assistant attorney general was
available online for more detailed information.
1:49:30 PM
STUART GOERING, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW (via teleconference), addressed Representative Wool's
question about whether the RCA currently regulated refuse
utilities owned by municipalities. He explained they were
currently defined as public utilities under AS
42.05.990(6)(f). The definition covered refuse utilities
owned by municipalities and privately owned refuse
utilities. The amendment in the House Labor and Commerce
Committee did not change the definition but included
municipally owned utilities under the definition. He
relayed there was currently no ambiguity about the issue in
existing law. He stated that as far back as 1992, the
Alaska Supreme Court ruled that municipally owned refuse
utilities were required to have certificates from the APUC
at the time [later renamed the RCA]. He clarified that the
amendment did not add anything to the definition of public
utility, and it did not change the way the commission would
relate to municipally owned refuse utilities generally in
terms of their having a certificate and so forth.
Co-Chair Foster heard the bells announcing House floor
session. He relayed the committee would have to wrap up
soon.
Representative Wool paraphrased his understanding of Mr.
Goering's statements. He surmised the provision was
somewhat redundant.
Mr. Goering agreed. He explained that municipally owned
public utilities that furnish refuse collection and
disposal were already covered by the Public Utilities Act;
therefore, the addition of the definition was redundant.
1:52:40 PM
AT EASE
2:01:46 PM
RECONVENED
2:02:18 PM
Co-Chair Foster OPENED public testimony.
KRISTIN SCHUBERT, COMMISSION SECTION MANAGER, REGULATORY
COMMISSION OF ALASKA, ANCHORAGE (via teleconference), was
available for questions.
2:02:57 PM
KURT FROENING, ALASKA WASTE, ANCHORAGE (via
teleconference), addressed the amendments that had been
included in the bill. He indicated that refuse utilities
were excited about the simplified rate filings process. The
change would shorten the amount of time it took to get
rates approved. He did not like the amendment adopted in
the House Labor and Commerce Committee, which was different
and addressed municipal waste utilities. He explained there
was a difference between the way a municipal trash utility
was regulated and the way Alaska Waste was regulated. He
remarked that much of the issue had to do with accounting.
He highlighted that one of the provisions was to make sure
that if a municipality wanted to privatize its refuse
utility there were costs that would be looked at to make
sure what the rates would be for a 10-year window. He
elaborated that the accounting practices Alaska Waste had
to go through to get its rates approved with the RCA were
very different than what a municipality had to do. Alaska
Waste was concerned that the cost comparisons may not be a
true apples-to-apples comparison. He stated that municipal
refuse utilities did not have the same accounting system.
He could not speak to what the municipal accounting systems
were, but the rate setting system for Alaska Waste was
intricate and in depth.
Mr. Froening expounded that often times when a municipality
wanted to privatize something they were looking for a
different level or type of service from what they provided
in the past. He stated it was unclear who would decide how
to value that in a "go forward" situation. He stated it
appeared that the amendment was put in at the last minute,
and more discussion and clarification was needed.
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster he asked if Representative Zach Fields
wanted to explain the rationale behind the amendment made
in the House Labor and Commerce Committee.
2:06:02 PM
REPRESENTATIVE ZACK FIELDS, CHAIR, HOUSE LABOR and COMMERCE
COMMITTEE explained the amendment adopted in the House
Labor and Commerce Committee. He detailed that when the
bill had arrived in committee it already included the
addition of refuse collection utilities. He elaborated that
the committee had received a request from the Alaska Public
Interest Research Group (AKPIRG) to add language including
a review so that in the event a municipality wanted to sell
or outsource management of refuse collection services, the
RCA would do a review to ensure consumers would not be
adversely impacted under a privatization scenario compared
to a scenario in which there continued to be public
management. He highlighted that over the last 40 years many
jurisdictions had privatized public services. He elaborated
that some jurisdictions had gone back and insourced the
public services because they found privatization was more
expensive to consumers. He represented Anchorage and shared
that Anchorage had very economical services provided by
Solid Waste Services; the employees were treated well and
had good wages, benefits, and a pension.
Representative Fields explained that the amendment added by
the House Labor and Commerce Committee had been drafted in
consultation with the Department of Law and RCA and
required that RCA review a proposed privatization, look at
the business model, and ensure that consumers would not be
adversely impacted. He clarified that the amendment did not
prevent privatization, but he believed it ensured that if
privatization occurred, consumers would be held harmless.
Co-Chair Foster indicated that Representative Carpenter,
Representative Rasmussen, Vice-Chair Ortiz, and Co-Chair
Merrick had joined the meeting.
Representative Wool understood some of the motivation
behind the amendment in wanting to keep good paying jobs
for services provided by the city. He knew there was
substantial movement towards privatization over the last
couple of decades of various services the municipalities
and companies provided. He asked if the RCA evaluated the
move from public to private and assessed the service, rate,
transition, and impact.
2:09:04 PM
Mr. Kurber thought Mr. Goering could answer the question.
Mr. Goering responded that if any public utility, including
a certificated municipal public utility, wanted to transfer
ownership, the RCA had to approve the transfer in advance
under AS 42.05.281. The review that the commission did was
to ensure that the new owner of the utility was
financially, managerially, technically fit, willing, and
able to perform the public utility services and that the
public convenience and necessity still required the service
offered under the certificate. He explained it included a
very wide range of considerations. The certificate
transfers were noticed to the public, so the public had the
opportunity to make comments if there were unique aspects
of the transfer that were of interest to the public
including organizations like AKPIRG.
Mr. Goering noted that organizations and consumers
frequently commented on certificate transfer applications.
The RCA did not currently make any attempt to project
future rate impacts of the acquisition of a certificate
because utilities were entitled to set their rates and the
commission reviewed the rates to determine whether they
were just and reasonable. He stated that what constituted a
just and reasonable rate for one owner may differ from what
was just and reasonable for another owner based on the rate
of return they would be able to earn.
Representative Wool stated his understanding that if a
public utility wanted to go private, the RCA reviewed the
process to ensure it was fair and equal. He asked whether
the utility was beyond regulation once it became private.
For example, he asked if the RCA had any input if a private
contractor took over waste management in Anchorage and
doubled its rates two years later. Alternatively, he
wondered if it was out of the RCA's hands at that point. He
provided another scenario where the private contractor
doubled the rates because they were paying employees
substantially more money. He wondered if that would be a
justification for the increase.
Mr. Goering replied that there was a distinction being lost
in the current discussion. He clarified that the term
public utility referred to the service being offered, not
to the ownership of the utility. He expounded that there
were privately owned public utilities such as Alaska Waste,
and publicly owned public utilities such as Solid Waste
Services. He explained that privately owned and publicly
owned public utilities were required to have the same kind
of certificate from the RCA and had to go through the same
certificate transfer process if the utility was sold
(whether it was from a public owner to a private owner or a
private owner to a public owner). The primary difference
was that currently all municipally owned public refuse
utilities were exempt from economic regulations. He
elaborated that municipally owned public refuse utilities
did not have to maintain their books and records in a
particular format and did not have to seek approval from
the RCA for their rates. The municipalities did not
currently have any economic supervision by the RCA. Whereas
privately owned public utilities like Alaska Waste had to
receive approval by the RCA for rate increases or rate
changes. He clarified that if a municipality were to sell a
refuse utility to a private entity there would be more
oversight over the private owner's rates than the public
owner's rates.
Co-Chair Foster indicated Representative LeBon had joined
the meeting. He provided a recap of the bill for
legislators who were just joining the meeting. The
committee was currently discussing the addition of refuse
utilities by the House Labor and Commerce Committee.
2:15:03 PM
Representative Johnson had significant experience with the
topic, and she understood refuse was a lucrative business.
She asked if there was an opinion [on the change made by
the House Labor and Commerce Committee] by the Alaska
Municipal League or any municipal governments. She looked
at Section 3 of the bill and remarked it was a significant
shift if the RCA started overseeing everyone with one
garbage truck in Alaska.
Representative Fields responded that the House Labor and
Commerce Committee did not add the section including refuse
utilities under the RCA extension. He noted the particular
section had been added in the Senate. He deferred to the
bill sponsor on that topic. He explained that the Labor and
Commerce Committee had added the review of privatization.
He noted there were two methods of privatization. First, an
entity could just sell. Second, an entity could outsource
provision of services while maintaining municipal
ownership. He stated that the Labor and Commerce Committee
language provided some consumer protections under the
latter scenario where the certificate was not sold but
services were contracted out.
Representative Johnson asked if Representative Fields was
familiar with pre-statehood and post-statehood types of
services within the municipalities.
Representative Fields replied, "No."
Representative Johnson asked if Representative Fields was
suggesting that a municipality established before statehood
should now be overseen by the RCA.
Representative Fields clarified that the House Labor and
Commerce Committee did not add the language including
refuse utilities under the RCA purview. He deferred to the
bill sponsor on the nature of that debate. He stated that
the Labor and Commerce Committee took on a much smaller
issue of looking at review of proposed privatization.
Representative Johnson thought there was a significant
amount to unpack in a short period of time. She stated she
had some real challenges with the language. She detailed
that the City of Palmer had spent thousands of dollars in
attorney fees dealing with the refuse. She relayed it gave
her pause when starting to get into municipal business. She
heard what Representative Fields was saying but remarked
there was a lot more going on than what she could see right
off.
Representative Fields replied that the Labor and Commerce
Committee had not taken a position on the underlying issue
of adding refuse collection utilities under RCA
jurisdiction. The committee had taken the bill as it was
given to the committee and made what he viewed to be one
small change.
2:18:15 PM
Senator Myers clarified that Section 3 was added in House
Labor and Commerce and Section 2 was added in the Senate
Finance Committee. He explained that the inclusion of the
language in Section 3 adding the municipal refuse utilities
in total to the RCA's purview had been added in the Labor
and Commerce Committee.
Representative Johnson was hearing Senator Meyers say that
the provision had been added in the Labor and Commerce
Committee.
Senator Myers responded affirmatively.
Co-Chair Foster indicated that Representative Edgmon had
joined the meeting.
Senator Meyers added that his office was still trying to
work through all of the policy and legal implications of
the amendment inserted in the Labor and Commerce Committee.
He stated the amendment was much wider ranging and he would
prefer to see it in a separate bill. He elaborated it was a
large policy call compared to the initial bill and the
version passed by the Senate. His office was still working
to understand all of the details in consultation with the
RCA. He relayed the amendment had been brought relatively
late in the game in the Labor and Commerce Committee and
the RCA did not have a chance to do a thorough review
before it had been passed out of committee.
Co-Chair Foster indicated that Conference Committee [on the
operating budget] would be meeting shortly, and members
would need to leave. He suggested it would be an
opportunity for the committee to determine what direction
to move.
Representative Rasmussen asked if there was any concern
with considering returning to the prior version of the bill
given the large policy call in the [House Labor and
Commerce Committee] version currently before the committee.
Senator Myers indicated he would be amenable to returning
to the previous version of the bill.
Co-Chair Foster thought it was best for members to
contemplate what they wanted to do with the bill. The
committee would recess to a call of the chair.
CSSB 190(FIN) was HEARD and HELD in committee for further
consideration.
[Note: the meeting never reconvened.]
ADJOURNMENT
2:21:19 PM
The meeting was adjourned at 2:21 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 259 Letters of Opposition, received as of 3.15.22.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 259 |
| HB 259 Presentation 5.16.22.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 259 |
| HB 259 Letters of Support, received as of 3.15.22.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 259 |
| HB 259 Sponsor Statement v. A.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 259 |
| HB 259 Sectional Analysis v. A.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 259 |
| CSSB 190 v. O Sectional Analysis.pdf |
HFIN 5/17/2022 1:30:00 PM |
SB 190 |
| SB 190 Explanation of Changes House L&C.pdf |
HFIN 5/17/2022 1:30:00 PM |
SB 190 |
| SB 190 Sponsor Statement.pdf |
HFIN 5/17/2022 1:30:00 PM |
SB 190 |
| SB 190 Support Document- Legislative Audit RCA Sunset Review 9.21.21.pdf |
HFIN 5/17/2022 1:30:00 PM |
SB 190 |
| HB 226 Public Testimony Rec'd by 051722.pdf |
HFIN 5/17/2022 1:30:00 PM |
HB 226 |