Legislature(2011 - 2012)CAPITOL 120
03/16/2011 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB114 | |
| Alaska Judicial Council | |
| HB175 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 114 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 175 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 114 - OPT-OUT CHARITABLE GIVING PROGRAM
1:34:30 PM
CHAIR GATTO announced that the first order of business would be
HOUSE BILL NO. 114, "An Act relating to an opt-out charitable
giving program offered by an electric or telephone cooperative."
[Before the committee was CSHB 114(L&C).]
1:35:13 PM
REPRESENTATIVE THOMPSON, speaking as the sponsor, explained that
the concept of HB 114 was brought to his attention by the Golden
Valley Electric Association (GVEA), noting that such "opt-out"
charitable giving programs have been around for many years, and
that more than 250 electric cooperatives across the country have
implemented similar programs - generally referred to as "round-
up" programs. Such programs enable individuals to contribute
small amounts of money to help build strong, local communities.
The program proposed by HB 114 is consistent with one of the
seven principles espoused by cooperatives, that being concern
for the community, which involves working for the sustainable
development of the community through policies approved by the
membership. The proposed program would allow a cooperative to
round up a member's monthly bill to the next dollar, so the
member's monthly charitable contribution could be as low as $.01
or as high as $.99. Such contributions, though small, add up
quickly, and funds collected are dispersed to qualified
organizations and individuals within the cooperative's service
district. These organizations and individuals are encouraged to
compete and to submit written applications outlining their level
of need and the possible benefits that could be obtained through
receipt of such funding - for example, an exam table for a
health clinic, new computers for a library, a microscope for an
elementary school, a vehicle for a fire department, grants for a
recreational center, et cetera.
REPRESENTATIVE THOMPSON relayed that most cooperatives
distribute such funds via the board of a separately-created
501(c)(3) nonprofit corporation; such boards represent a cross
section of the membership, with each voting district being
represented. Most of the more than 250 cooperatives with a
charitable giving program have adopted an "opt-out" program
rather than an "opt-in" program, because research indicates that
opt-out programs have significantly higher member involvement,
with [up to] 90 percent member participation. He relayed that
under the bill, members can opt out of the program at any time -
either in person, in writing, or via the telephone or Internet -
and can request a refund of their donations for the prior three
years. The changes proposed by HB 114 would clarify a potential
conflict with AS 45.45.930, which pertains to opt-out marketing
plans. The bill would require cooperatives to obtain membership
approval before implementing an opt-out charitable giving
program, and require that the amount added to the monthly bill
be clearly identified on the monthly statement along with
information on how to opt out of the program. He noted that
CSHB 114(L&C) now contains language - in Section 2 - authorizing
an electric cooperative to provide weatherization and energy
efficiency products and services to members.
CHAIR GATTO said he isn't in favor of opt-out programs because
they can be easily abused, particularly with elderly customers,
and indicated that he would be voting against the bill. He said
he feels strongly that charitable giving programs shouldn't be
an opt-out program, because a person may not be aware enough of
the situation to opt out. Under the bill, he surmised, a member
of a cooperative would have to take an additional action in
order to prevent the cooperative from taking extra money from
him/her to fund a charity of its own choosing.
1:42:26 PM
JOE GALLAGHER, Public Relations Coordinator, Homer Electric
Association, Inc. (HEA), referring to Section 2 of CSHB
114(L&C), noted that Alaska's Electric and Telephone Cooperative
Act - AS 10.25 - currently allows cooperatives to finance the
purchase of electrical and plumbing appliances, equipment,
fixtures, and apparatus, and that the HEA has established a
"line of credit" program that's been in place for at least 20
years, allowing members to finance the purchase of eligible
items under the Act. Under the HEA's existing program, members
can borrow up to $5,000, pay the same amount of interest that
the HEA pays when it borrows money, have payments deducted
directly from their bank account, and must purchase products
from a vendor located within the HEA's service area and that is
also a member of the HEA.
MR. GALLAGHER relayed that over the last couple of years, the
HEA has been very active with its membership in promoting energy
efficiency, particularly given that 90 percent of the HEA's
product is generated from natural gas and is therefore subject
to rising fuel costs. As a result of increased electrical
rates, many of the HEA's members have been taking steps to make
weatherization and energy-efficiency improvements, and have been
expressing interest in using the HEA's line of credit program to
finance those improvements. Unfortunately, because of how the
Electric and Telephone Cooperative Act is currently worded, the
program cannot be used to finance weatherization and energy
efficiency products and services. [Section 2's proposed change
to AS 10.25.20(2)] would be very good for the HEA's members, he
concluded.
1:49:36 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division (Anchorage),
Department of Law (DOL), in response to questions, explained
that because provisions of AS 45.45 make it illegal to offer or
engage in an opt-out marketing plan to sell goods or services,
the question was raised regarding whether charitable donations
would be considered a good or service that's prohibited under AS
45.45. [When asked by the GVEA,] the DOL issued an informal
opinion indicating that such donations probably would be
prohibited, and so the GVEA developed the concept of HB 114 -
with help from the DOL regarding specific language - in order to
resolve that potential conflict in favor of allowing opt-out
charitable giving programs.
MR. SNIFFEN said that although opt-out programs are generally
considered bad things in terms of consumer protection, the type
of program authorized by HB 114 is very different, containing
none of the ills associated with traditional opt-out programs
but providing fairly significant protections to consumers. For
example, under HB 114, if a member finds out later that he/she
has been giving money mistakenly, he/she can get a refund. In
response to a question, he offered his hope that HB 114 wouldn't
be seen as authorizing any other type of opt-out program,
surmising that any such would have to be vetted by the
legislature first. He went on to say that one of the problems
with HB 114 is that although the GVEA has given this issue a lot
of thought and is a responsible company and has a model plan in
place that it intends to go forward with, a lot of the things
that the GVEA would be doing under its plan aren't required
under the bill, and the other cooperatives might not administer
their programs in the same way, and so it could take a while to
see whether those other cooperatives were trying to abuse the
system via such programs.
CHAIR GATTO expressed disfavor with authorizing any type of opt-
out program.
1:56:07 PM
GENE THERRIAULT, Vice President, Resource Development, Golden
Valley Electric Association (GVEA), assured the committee that
the program the GVEA's membership has approved is not an opt-out
marketing plan. He relayed that the GVEA has spoken with the
sponsor of the legislation that prohibited opt-out marketing
plans selling goods or services, and the sponsor indicated that
his legislation was not intended to also prohibit opt-out
charitable giving programs. Mr. Therriault confirmed that the
DOL had issued an opinion indicating that an opt-out charitable
giving program might conflict with provisions of AS 45.45, and
relayed that the GVEA, via HB 114, is simply asking for a
clarification. He proffered that one of the things that
differentiates the proposed program from an opt-out marketing
program is that a round-up opt-out charitable giving program
such as would be authorized by the bill could only be
implemented after an affirmative response from a cooperative's
membership. In the case of the GVEA, 70 percent of its
membership voted in favor of starting a round-up opt-out
charitable giving program. Furthermore, the bill only applies
to electric or telephone cooperatives, which already have
statutory standards in place for polling members.
MR. THERRIAULT, in response to a question, indicated that the
GVEA chose an opt-out program rather than an opt-in program
because research indicated that the level of participation was
greater with an opt-out program.
CHAIR GATTO acknowledged that an opt-out program would be more
successful at raising funds.
MR. THERRIAULT, too, noted that the bill also requires a
cooperative to clearly notify its members regarding how to opt
out, and requires that a member's contributions for the prior
three years be refunded if he/she requests. He offered his
belief that the bill's requirements would ensure that only those
charities that have broad support in a community would get
chosen as a recipient by the board responsible for distributing
the funds.
CHAIR GATTO recounted how his mother, an elderly widow with some
dementia living alone in New York City, was taken advantage of
by a telephone utility through the use of an opt-out program.
His concern, he relayed, is that people won't take the steps to
opt out even though they don't want to be participating in a
particular program. Opting in is the better approach, he
opined, since even now utilities take advantage of their
customers through the use of opt-out programs.
MR. THERRIAULT offered his belief that the requirements of the
bill would limit the types of abuse that could occur. For
example, under the bill, people could either officially opt out
or just choose not to pay the extra, rounded up amount listed on
their monthly statements. In response to a question, he noted
that the bill would only apply to cooperatives, which are
controlled by their membership.
CHAIR GATTO announced that [CSHB 114(L&C)] would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB114 Fiscal Note CS(LC)-LAW-CIV-03-11-11.pdf |
HJUD 3/16/2011 1:00:00 PM |
HB 114 |
| HB114 Supporting Documents-Article Goodcents 03-2011.pdf |
HJUD 3/16/2011 1:00:00 PM |
HB 114 |
| HB175 Proposed Amendment A.1 03-14-11.pdf |
HJUD 3/16/2011 1:00:00 PM |
HB 175 |
| Donald J. Haase Campaign Information.pdf |
HJUD 3/16/2011 1:00:00 PM |
|
| Donald J. Haase Eagle Forum Posts.pdf |
HJUD 3/16/2011 1:00:00 PM |
|
| Donald J. Haase Judicial Council Composition.pdf |
HJUD 3/16/2011 1:00:00 PM |
|
| Donald J. Haase Resume.pdf |
HJUD 3/16/2011 1:00:00 PM |