Legislature(2005 - 2006)HOUSE FINANCE 519

01/26/2006 01:30 PM House FINANCE


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01:39:03 PM Start
03:17:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 326 POSTING LEWD MATERIAL AS HARASSMENT TELECONFERENCED
<Bill Hearing Postponed>
Overview: Power Cost Equalization Program
and the Low-Income Home Energy
Assistance Program
Bills Previously Heard/Scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 26, 2006                                                                                           
                         1:39 p.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer called the House Finance Committee meeting to                                                                    
order at 1:39:03 PM.                                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Beth Kerttula                                                                                                    
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Jim Dalman,  Division of Public  Assistance, Department of                                                                      
Health and  Social Services; Mary Riggen-ver,  Division of                                                                      
Public Assistance, Department of Health and Social Services;                                                                    
Laura  Baker,  Budget  Chief, Division  of  Administrative                                                                      
Services, Department of  Health and Social  Services; Mike                                                                      
Harper,  Deputy Director  of Rural  Energy, Alaska  Energy                                                                      
Association; Terri  Harper,  Program  Manager, Power  Cost                                                                      
Equalization, Alaska Energy  Authority; Sara  Fisher Goad,                                                                      
Financial Analyst,  Alaska Energy  Authority; Kate  Giard,                                                                      
Chair, Regulatory Commission of Alaska; Felix Meendez, CPA,                                                                     
Utility Financial Analyst; Meera Kohler, President and CEO,                                                                     
Alaska  Village Electric Cooperative;  Representative Mary                                                                      
Kapsner;  Representative Gabrielle  LeDoux; Representative                                                                      
Bill Thomas;  Representative Berta Gardner; Representative                                                                      
Woodie Salmon                                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
None                                                                                                                            
                                                                                                                                
GENERAL SUBJECT(S):                                                                                                           
                                                                                                                                
^                                                                                                                             
 OVERVIEW - POWER COST EQUALIZATION/LOW-INCOME HOME ENERGY                                                                    
                    ASSISTANCE PROGRAM                                                                                        
                                                                                                                                
The following overview was taken in log note format.  Tapes                                                                     
and handouts will be on file with the House Finance                                                                             
Committee through the 24th Legislative Session, contact 465-                                                                    
6814. After the 24th Legislative Session they will be                                                                           
available through the Legislative Library at 465-3808.                                                                          
                                                                                                                              
         LOW INCOME HOME ENERGY ASSISTANCE PROGRAMS                                                                           
                                                                                                                                
 TIME        SPEAKER        DISCUSSION                                                                                      
 1:39:08 PM Co-Chair Meyer  Introduced visiting legislators.                                                                  
 1:40:59 PM JIM     DALMAN, Explained the purpose of the Low Income                                                           
             DIVISION    OF Home Energy Assistance Program (LIHEAP)                                                             
             PUBLIC         run under the Department of Health and                                                              
             ASSISTANCE,    Social   Services   as    the   Heating                                                             
             DEPARTMENT  OF Assistance  Program   (HAP).    It   is                                                             
             HEALTH     AND federally funded by a single block                                                                  
             SOCIAL         grant of close to $12 million.  A                                                                   
             SERVICES       portion of that grant also funds eight                                                              
                            Alaska  Native  organizations that  run                                                             
                            similar programs.                                                                                 
 1:42:50 PM Mr. Dalman      Reported that the program provides a                                                              
                            single  annual  benefit  to  qualifying                                                             
                            households  beginning  on  November  1.                                                             
                            Forty  percent of these  households are                                                             
                            working  people who  are not  receiving                                                             
                            other forms  of public assistance.  The                                                             
                            grants  are typically paid to the  home                                                             
                            energy vendor and vary according to the                                                             
                            size   of  household,  area  where   it                                                             
                            resides,  income,  and the  fuel  type.                                                             
                            The  grants  vary  from  $200  to  over                                                             
                            $1,000 with the average at around $800.                                                             
                            Roughly   10,500  households  will   be                                                             
                            served  this year.  The benefit is  not                                                             
                            intended  to  see  a family  through  a                                                             
                            whole year, but to offset energy costs.                                                           
 1:45:56 PM Mr. Dalman      Shared the problems related to an                                                                 
                            increase  in  home heating  costs  this                                                             
                            year.   One  of the  conditions of  the                                                             
                            block   grant  is   that   it  can   be                                                             
                            transferred   to   AHFC    to   augment                                                             
                            weatherization expenses.  Nearly 1/3 of                                                             
                            the  grant gets  distributed to  Native                                                             
                            organizations.                                                                                    
 1:48:22 PM Mr. Dalman      Expressed pride as to how well the                                                                
                            program  is working.   The HAP is  well                                                             
                            run and serves a good purpose.                                                                    
 1:49:26 PM Representative Asked about the range of price per                                                                 
             Joule          gallon of home heating fuel.  Mr.                                                                   
                            Dalman said it ranges dramatically, but                                                             
                            is distributed proportionally.                                                                    
 1:50:32 PM REPRESENTATIVE Pointed out that the federal government                                                            
             MARY KAPSNER   is advocating $100 million more funding                                                           
                            for LIHEAP nationwide.  She inquired if                                                             
                            the benefit to consumers would be about                                                             
                            21 gallons per  household.  Mr. Dalman                                                              
                            replied that it sounds about right.  He                                                             
                            explained how the emergency contingency                                                             
                            fund money is released and distributed.                                                           
1:51:44 PM  MARY    RIGGEN-Added  that  the  state  receives about                                                            
            VER,   DIVISION two-thirds, and the  tribes one-third.                                                              
            OF       PUBLIC She pointed out that even with the                                                                  
            ASSISTANT,      additional funding, the amount is not                                                               
            DEPARTMENT OF equal to last year's funding.                                                                       
            HEALTH     AND                                                                                                      
            SOCIAL                                                                                                              
            SERVICES                                                                                                            
1:52:34 PM  Representative  Requested to know the  amount that the                                                            
            Kapsner         governor is proposing as a state match                                                              
                            of funds.                                                                                         
1:52:46 PM  LAURA    BAKER, Responded  that   the   governor   has                                                            
            BUDGET   CHIEF, proposed $8.8 million in state general                                                              
            DIVISION    OF  funds to supplement the LIHEAP program.                                                             
            ADMINISTRATIVE  A portion  of that  money would  go to                                                              
            SERVICES,       Native tribal programs.                                                                           
            DEPARTMENT OF                                                                                                       
            HEALTH     AND                                                                                                      
            SOCIAL                                                                                                              
            SERVICES                                                                                                            
1:53:05 PM Mr. Dalman       In   answer   to   a   question   from                                                            
                            Representative Kapsner about  how much                                                              
                            of the additional $100 million would go                                                             
                            to the state,  replied that the amount                                                              
                            of the  contingency funding  was about                                                              
                            $300,000.  The state LIHEAP block grant                                                             
                            for the year was $11.9 million.                                                                   
1:53:34 PM  REPRESENTATIVE  Asked  about  the  timing  of  heating                                                            
            BERTA GARDNER   assistance applicants and availability                                                              
                            of funds at the end of the application                                                              
                            period.    Mr.   Dalman  replied  that                                                              
                            everyone who has  applied in  the past                                                              
                            has been served.   It  there were more                                                              
                            applicants than funding available, then                                                             
                            the regulations would require a halt in                                                             
                            services.                                                                                         
1:55:00 PM  Ms. Riggen-ver  Agreed and  added  that  it is  "first                                                            
                            come, first served".                                                                              
1:55:16 PM  Representative  Asked if the agency provides incentives                                                           
            Weyhrauch       for fuel cost savings, such as                                                                      
                            alternative sources of energy.  Mr.                                                                 
                            Dalman replied that indirectly it does.                                                             
                            There is a  provision for the transfer                                                              
                            of some grant funds for  weatherization                                                             
                            of  low-income homes.    There are  no                                                              
                            funds for alternative energy sources.                                                             
1:56:55 PM  Representative  Asked how  the payment  is made.   Mr.                                                            
             Weyhrauch      Dalman replied that the grant is set up                                                             
                            as a credit on the customer's home                                                                  
                            energy  bill, and as cash  for renters.                                                             
                            Representative Weyrauch asked if it  is                                                             
                            a  problem keeping track of whether the                                                             
                            cash   is   used   for   home   heating                                                             
                            assistance.   Mr. Dalman  explained the                                                             
                            process  when cash  is used for  direct                                                             
                            payments to  the provider.  Ms. Riggen-                                                             
                            ver  further explained that the program                                                             
                            would  pay for up to  a year's electric                                                             
                            credit before issuing cash.                                                                       
 1:58:48 PM Mr. Dalman      Added that often special funding is                                                               
                            received  later  in the  year  and  can                                                             
                            provide   supplemental  funding  to   a                                                             
                            supplier.                                                                                         
 1:59:30 PM  Representative Asked why the money is not given to the                                                           
             Stoltze        landlord.  Mr. Dalman replied that                                                                  
                            heating  expenses are  built into  rent                                                             
                            increases   and   the  program   serves                                                             
                            renters.                                                                                          
 2:00:46 PM  Representative Suggested  that the  renter would  have                                                           
             Kapsner        the lower income and qualify, not the                                                               
                            landlord.  Ms. Riggne-ver agreed.                                                                 
 2:01:20 PM  Representative Asked if there is any tracking of money                                                           
             Joule          spent on weatherization.  Ms. Riggen-                                                               
                            ver replied that Alaska Housing Finance                                                             
                            Corporation  (AHFC)  has  some  of  the                                                             
                            figures,  but  they  are  difficult  to                                                             
                            track.                                                                                            
                                                                                                                                
                            POWER COST EQUALIZATION PROGRAM                                                                 
 2:03:11 PM  KATE    GIARD, Introduced the presenters and described                                                           
             CHAIR,         how the Price Cost Equalization (PCE)                                                               
             REGULATORY     program is delivered. The PCE program                                                               
             COMMISSION  OF is  administered jointly by the  Alaska                                                             
             ALASKA         Energy   Authority   (AEA)    and   the                                                             
                            Regulatory Commission of  Alaska (RCA).                                                             
                            AEA administers the overall program and                                                             
                            the  funding, and  RCA administers  the                                                             
                            calculations  of   the  reimbursements.                                                             
                            She  referred to a handout published by                                                             
                            the  Regulatory  Commission  of  Alaska                                                             
                            (RCA)  entitled "Certificated Utilities                                                             
                            by   Legislative  District"  (copy   on                                                             
                            file.)                                                                                            
 2:06:16 PM Ms. Giard       Referred to a handout "Power Cost                                                                 
                            Equalization Costs and  Rates" (copy on                                                             
                            file.)                                                                                            
 2:07:15 PM  FELIX MEENDEZ, Explained how PCE  is administered.  He                                                           
             CPA,   UTILITY referred  to  a   set  of  slides  "PCE                                                             
             FINANCIAL      Program Overview for the House Finance                                                              
             ANALYST        Committee" (copy on file.)  He                                                                      
                            described the process that RCA  uses to                                                           
                            review  reports to  verify  compliance                                                              
                            with  efficiency  standards   to  find                                                              
                            eligible costs.                                                                                   
2:12:11 PM Mr. Meendez      Related how PCE rates are determined.                                                             
2:13:00 PM Mr. Meendez      Shared rate statistics.  He provided                                                              
                            statistics regarding the  mean  of the                                                              
                            cost per kWh  in Anchorage, Fairbanks,                                                              
                            and Juneau (copy on file.)                                                                        
2:15:10 PM  REPRESENTATIVE  Asked if the rate is based on the urban                                                           
            WOODIE SALMON   area average.  Mr. Meendez replied that                                                             
                            is one of the considerations in the way                                                             
                            the rate is determined.    The purpose                                                              
                            of the  program  is to  close the  gap                                                              
                            between urban and  rural expenses, and                                                              
                            the program  doesn't kick in  until 12                                                              
                            cents per kWh is exceeded.                                                                        
2:16:01 PM Mr. Meendez      Explained the average split of power                                                              
                            cost per kWh.                                                                                     
2:17:25 PM  Ms. Riggen-ver  Called attention  to  the spreadsheet,                                                            
                            which   clarified   the    impact   of                                                              
                            hydroelectric power or other alternate                                                              
                            types of fuel on the average fuel cost                                                              
                            of utilities.                                                                                     
2:18:06 PM Mr. Meendez      Explained the average cost trend of                                                               
                            fuel in the last five years.                                                                      
2:18:51 PM  Representative  Asked if the cost included cleanup from                                                           
            Stoltze         spills.  Mr. Meendez clarified that                                                                 
                            costs included fuel  delivery, and the                                                              
                            costs for  spills may be  covered, but                                                              
                            only  if   there   is   no  negligence                                                              
                            involved.                                                                                         
2:20:26 PM Mr. Meendez      Shared the graph on power cost per kWh,                                                           
                            the average of  which is 42  cents per                                                              
                            kWh.  There are many utilities that do                                                              
                            not fall within the eligibility rate of                                                             
                            38 cents or more per kWh.                                                                         
2:22:25 PM  Representative  Asked if the  rate included tax.   Mr.                                                            
            Kapsner         Meendez replied that property tax and                                                               
                            income  tax   are   included  in   the                                                              
                            utilities'  revenue.     Representative                                                             
                            Kapsner  expressed  that  Napakiak  is                                                              
                            paying more than 68  cents per kWh due                                                              
                            to sales  tax  costs.   Ms. Riggen-ver                                                              
                            clarified that if a utility pays a tax,                                                             
                            then that is included in the cost base.                                                             
                            She  said  Representative  Kapsner  is                                                              
                            correct in her assumption.                                                                        
2:24:20 PM Mr. Meendez      Referred to the spreadsheet "Power Cost                                                           
                            Equalization Costs and Rates" (copy on                                                              
                            file), which shows  the wide  range of                                                              
                            what utilities are charging.                                                                      
2:24:55 PM  Representative  Asked   how   communities  with   wind                                                            
             Joule          generation would be reflected on this                                                               
                            chart.  Mr. Meendez replied that Wales,                                                             
                            Kotzebue,  and  Sand  Point  have  wind                                                             
                            generators  and  are  included  on  the                                                             
                            chart.                                                                                            
 2:25:53 PM  Ms. Riggen-ver  Referred Representative Joule  to  the                                                           
                            second  page of  the spreadsheet.   She                                                             
                            explained that those villages have less                                                             
                            than  half of their fuel  costs covered                                                             
                            because they  do have alternative power                                                             
                            sources.                                                                                          
 2:27:12 PM Mr. Meendez     Discussed the graph on out of pocket                                                              
                            expenses   for   a    500   kWh   bill.                                                             
                            Representative  Joule  asked  how  much                                                             
                            usage 500 kWh  equals.   Ms. Riggen-ver                                                             
                            gave  examples of  two households  that                                                             
                            use 500 kWh.                                                                                      
 2:28:56 PM  Representative Asked if facility charges are included.                                                           
             Stoltze        Mr. Meendez explained utility bill                                                                  
                            charges.                                                                                          
 2:30:34 PM Mr. Meendez     In response to a question from                                                                    
                            Representative Salmon, related that the                                                             
                            utilities that are eligible for federal                                                             
                            monies  use  diesel fuel  and  are  not                                                             
                            connected  to  a  central power.    Ms.                                                             
                            Riggen-ver  explained  that  there  are                                                             
                            rural   electric  utilities  that   are                                                             
                            excluded  from  the   program  for  not                                                             
                            filing.                                                                                           
 2:32:49 PM Mr. Meendez     Related how rates are calculated for                                                              
                            Andreanof Electric Corporation as shown                                                             
                            on the spreadsheet.                                                                               
 2:34:48 PM  Ms. Riggen-ver Explained  that the  last column  shows                                                           
                            the amount of the customer bill for 500                                                             
                            kWh.                                                                                              
 2:35:38 PM  Representative Inquired  why the  current PCE rate  is                                                           
             Holm           greater than the cost per kWh in many                                                               
                            instances.    Ms. Riggen-ver  explained                                                             
                            the process.                                                                                      
 2:37:30 PM                 At-Ease                                                                                           
                                                                                                                              
                                                                                                                                
                            ALASKA ENERGY AUTHORITY                                                                         
 2:38:47 PM                 Reconvene                                                                                         
 2:38:56 PM  MIKE   HARPER, Introduced himself and  his staff, Sara                                                           
             DEPUTY DIRECTOR Fisher Goad and Terri Harper.                                                                    
             OF       RURAL                                                                                                     
             ENERGY, ALASKA                                                                                                     
             ENERGY                                                                                                             
             AUTHORITY                                                                                                          
 2:40:21 PM Mr. Harper      Provided an overview of PCE in rural                                                              
                            Alaska,  which  affects  86  utilities,                                                             
                            spread  over 183 communities, and  over                                                           
                            20,000 customers.  He stated that there                                                             
                            are  over  400  million  kWh  sold  by                                                              
                            utilities in the bush,  with about 1/3                                                              
                            eligible for PCE.                                                                                 
2:41:17 PM Mr. Harper       Noted that Governor Murkowski is in                                                               
                            support of the program.  He thanked the                                                             
                            legislature for  funding  last  year's                                                              
                            costs.  Full  cost coverage  has  been                                                              
                            requested  in  the  FY06  supplemental                                                              
                            budget of  $5.7 million.   The request                                                              
                            for FY07 is for $25 million to approach                                                             
                            full funding.                                                                                     
2:41:58 PM  SARAH   FISHER-Spoke   to  the  endowment,  which  was                                                            
            GOAD,    ALASKA created in FY01.   The fund is managed                                                              
            INDUSTRIAL      by the Department of Revenue and it                                                                 
            DEVELOPMENT AND managed to earn 7 percent over time.  7                                                             
            EXPORT          percent of the 3-year monthly market                                                                
            AUTHORITY       value is available for the program.                                                                 
                            The  earnings rate  in  FY05 was  8.78                                                              
                            percent above the  7 percent statutory                                                              
                          requirement.                                                                                        
2:43:25 PM Ms. Goad         Commented that for FY07, $11.67 million                                                           
                            dollars is available for the program.                                                             
2:43:49 PM  Representative  Asked for  further clarification about                                                            
            Kapsner         the endowment.                                                                                    
2:44:16 PM Ms. Goad         Replied that the endowment is set up as                                                           
                            a percent of  market value fund.   She                                                              
                            explained how it works and the current                                                              
                            earnings rate.                                                                                    
2:45:08 PM Ms. Goad         Related that the current endowment fund                                                           
                            balance is over  $179 million dollars.                                                              
                            The fund is doing very well.                                                                      
2:45:30 PM  Representative  Inquired if it is still growing at 1.78                                                           
            Kapsner         percent each year.  Ms. Goad explained                                                              
                            the average earnings and the statutory                                                              
                            requirement.   She summarized that the                                                              
                            fund is earning as anticipated.                                                                   
2:46:35 PM  Representative  Recalled that  when the  endowment was                                                            
            Kapsner         created in FY01 it was capitalized at                                                               
                            $180 million.   She asked if  the $250                                                              
                            million  is  now needed  in  order  to                                                              
                            sustain the fund over time.                                                                       
2:46:58 PM Ms. Goad         Replied that $300 million would provide                                                           
                            7%  over  time.   It  depends  on  the                                                              
                            investment level.                                                                                 
2:47:26 PM Representative Asked if it should be at $300 million.                                                              
            Kapsner                                                                                                             
2:47:41 PM Ms. Goad         Replied that full funding of the                                                                  
                            program  is  $25  million  right  now.                                                              
                            There are variables at play.                                                                      
2:48:16 PM  Representative  Asked what the number should  be.  She                                                            
            Kapsner         noted past confusion by members.  She                                                             
                            asked,  for the record  if it is  fully                                                             
                            endowed.                                                                                          
 2:48:47 PM Ms. Goad        Responded that the original fund was a                                                            
                            $15.7   million  appropriation.     The                                                             
                            endowment was set up  and the 7 percent                                                             
                            was  assumed  to  provide approximately                                                             
                            $13  million for  the  program.   On  a                                                             
                            historical   level  the  endowment   is                                                             
                            producing as anticipated.                                                                         
 2:49:50 PM Representative Asked if it could be inflation proofed.                                                            
             Joule                                                                                                              
 2:50:01 PM Ms. Goad        Replied that no additional funds go                                                               
                            into   the  endowment.     It  is   not                                                             
                            inflation proofed.                                                                                
 2:50:19 PM TERRI   HARPER, Offered to answer questions.                                                                      
             PROGRAM                                                                                                            
             MANAGER, POWER                                                                                                     
             COST                                                                                                               
             EQUALIZATION,                                                                                                      
             ALASKA ENERGY                                                                                                      
             AUTHORITY                                                                                                          
                                                                                                                                
                            ALASKA VILLAGE ELECTRIC COOPERATIVE                                                             
 2:51:05 PM  MEERA  KOHLER, Provided members with  a handout "Power                                                           
             PRESIDENT    & Cost    Equalization   -   Myths    and                                                             
             CEO,    ALASKA Realities" (Copy on File).  She                                                                     
             VILLAGE        provided an overview on PCE.                                                                      
             ELECTRIC                                                                                                           
             COOPERATIVE                                                                                                        
 2:52:15 PM Ms. Kohler      Shared the history of PCE.  In 1977                                                               
                            there  was  almost no  transmission  of                                                             
                            oil,  diesel fuel was the  prime source                                                             
                            of  fuel,  and  there was  very  little                                                             
                           hydropower.                                                                                        
 2:53:27 PM Ms. Kohler      Once the oil started flowing down the                                                             
                            pipeline, the state began  to spend its                                                             
                            newfound  wealth.  A  transmission line                                                             
                            to Fairbanks was started.                                                                         
 2:54:32 PM Ms. Kohler      The first assistance program began in                                                             
                            1979  as oil prices peaked  and diesel-                                                             
                            fueled  utilities were hit  hard.   The                                                             
                            legislature   established   the   Power                                                             
                            Production Cost Assistance Program.                                                               
 2:55:38 PM Ms. Kohler      In 1984, consultants admitted defeat                                                              
                            and  the legislature  established Power                                                             
                            Cost Equalization.  The limit was based                                                             
                            on  700  kWh  for  each member  of  the                                                             
                           community.                                                                                         
 2:57:54 PM Ms. Kohler      Pointed out that the guideline from                                                               
                            1984  that 75 percent of  a community's                                                             
                            energy had to  come from diesel fuel is                                                             
                            still in place today.                                                                             
 2:58:30 PM Ms. Kohler      Shared the current situation in 2006:                                                             
                            the floor has been raised to 12 cents,                                                              
                            eligible electricity has  been reduced                                                              
                            to 500 kWh, only one meter per resident                                                             
                            is allowed, 6,000 commercial customers                                                              
                            are ineligible, there is chronic under-                                                             
                            funding, annual fuel  cost has doubled                                                              
                            in 15 years, non-fuel costs  are up 50                                                              
                            percent,   current    funding   ($18.7                                                              
                            million) is  at the 78  percent level,                                                              
                            and more utilities are crossing through                                                             
                            the 52.5 cent ceiling.                                                                            
3:00:05 PM Ms. Kohler       Spoke about Alaska Village Electric                                                               
                            Cooperative (AVEC), which  consists of                                                              
                            52 villages,  a population  of 22,000,                                                              
                            with 94 percent Alaska Native.                                                                    
3:00:52 PM Ms. Kohler       Pointed out the location of the                                                                   
                            villages on the  slide.  Most  are not                                                              
                            accessible in the winter.                                                                         
3:01:22 PM Ms. Kohler       Spoke to AVEC's system statistics: 48                                                             
                            power plants,  160+ diesel generators,                                                              
                            500+ fuel tanks, and 5 million gallons                                                              
                            of fuel burned.                                                                                   
3:01:49 PM Ms. Kohler       Provided the 2004 overview with 7,122                                                             
                            residential and commercial services and                                                             
                            with $24.7  million in revenues.   PCE                                                              
                            equals 26% of revenue, which is modest                                                              
                            usage.                                                                                            
3:02:56 PM Ms. Kohler       The biggest creditor is the AEA.                                                                  
3:03:28 PM Ms. Kohler       Referenced the slide indicating the                                                               
                            1973-2004 fuel prices.                                                                            
3:04:23 PM Ms. Kohler       Highlighted the graph of historical                                                               
                            costs.  With the  exception of 1995, a                                                              
                            year  in  which   costs  dropped,  the                                                              
                            profits are modest.  In the most recent                                                             
                            three years, the gross has risen to $28                                                             
                            million dollars because of the raise in                                                             
                           fuel costs.                                                                                        
3:05:24 PM Ms. Kohler       Provided information on the loss of                                                               
                            usage.  The gross revenue has increased                                                             
                            since 2004.  Projected margins for 2006                                                             
                            are $0.                                                                                           
3:06:02 PM Ms. Kohler       Identified some of the challenges faced                                                           
                            by the plant in Gambell.                                                                          
3:06:53 PM Ms. Kohler       Clarified Myth # 1 - PCE reduces rural                                                            
                            power cost to urban levels.                                                                       
3:07:33 PM Ms. Kohler       Showed the cost of 700 residential kWh                                                            
                            for various communities. She dispelled                                                              
                            Myth # 2 - PCE discourages conservation                                                             
                            and innovation.                                                                                   
3:09:49 PM Ms. Kohler       Highlighted AVEC costs from the 2004                                                              
                            report.  Dispelled Myth #  3, that PCE                                                              
                            villages have no plant investment, and                                                            
                            Myth #4, that PCE is abused.                                                                      
 3:12:30 PM Ms. Kohler      Explained Myth #5 - PCE money would be                                                            
                            better spent on alternative energy is                                                               
                           incorrect.                                                                                         
 3:14:18 PM Ms. Kohler      Showed an aerial view of the new power                                                            
                            plant, tank farm, and wind turbines in                                                              
                            Selawik.                                                                                          
 3:15:10 PM Representative Spoke about the addition of Teller.                                                                
             Stoltze        Ms. Kohler provided the history of                                                                  
                            Teller.                                                                                           
 3:17:07 PM Representative Praised Ms. Kohler's work with the                                                                 
             Kelly          Alaska Village Electric Cooperative.                                                              
 ADJOURNMENT                                                                                                                  
                                                                                                                                
 The meeting                                                                                                                    
 was                                                                                                                            
 adjourned                                                                                                                      
 at 3:19 PM                                                                                                                     
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects