Legislature(2003 - 2004)
03/22/2004 03:30 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 453-JOINT ACTION AGENCIES Number 1528 CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 453, "An Act exempting from regulation under the Alaska Public Utilities Regulatory Act wholesale agreements for the sale of power by joint action agencies and contracts related to those agreements, and joint action agencies composed of public utilities of political subdivisions and utilities organized under the Electric and Telephone Cooperative Act." CHAIR ANDERSON noted that there was public testimony at the previous hearing [3/19/04], and he closed public testimony. Number 1519 REPRESENTATIVE CHERYLL HEINZE, Alaska State Legislature, sponsor of HB 453, offered closing comments. She began by noting that Homer Electric Association, Inc. ("Homer Electric") had said it wasn't included in the process. However, she pointed out a resolution signed by the Alaska Power Association (APA) board of directors of which Homer Electric is a member. The resolution, which is included in the committee packet, supports the authorization of a joint action agency (JAA). Asserting that everyone was part of the process, she remarked, "I have been diligent in talking to everyone to make sure we try to put forward a good piece ... of legislation." She continued: It seems like things have gotten just a little bit muddled, so I want to clarify the intent of House Bill 453. It does not form a JAA. A joint action agency was put in Alaska Statute in 2001. The JAA allows utilities to form a partnership to build generation and transmission facilities. House Bill 453 offers a tool to ensure that the JAA formed by the Railbelt utilities has access to the lowest interest rates ... for borrowed capital to finance [the] high cost of infrastructure projects like replacement, operation, [and] maintenance of our aging Railbelt electrical system, which I think all of you know, from the first time I was here and I had the big map, ... is a problem to the entire state of Alaska. When utilities borrow money, the cost of that money is passed to the ratepayers - all the ratepayers in the Railbelt. Last week we heard Chris Pihl testify that regulatory uncertainty causes higher rates on borrowed capital. And that's very, very important. That is basically the reason for this bill. Miss Pihl has helped finance over $8 billion worth of public utility projects such as this project before us. ... The international rating agency reported that regulatory environment creates uncertainty, thereby raising interest rates to Railbelt borrowers. ... The higher rate will trickle down. All that HB 453 does is allow that certainty by exempting wholesale agreements by the JAA from rate regulation. With lowered interest rates, the Railbelt utilities will be paying the lowest possible price for their wholesale purchase of electricity, and the savings trickle down from Fairbanks to Homer. As an example, the Four Dam Pool JAA has a proven record of providing low-cost, affordable power to its members. House Bill 453 will give the same benefits to the ratepayers in the Railbelt. I've worked diligently on this bill. CHAIR ANDERSON asked Representative Heinze if there were any amendments she wished a member of the committee to propose. REPRESENTATIVE HEINZE replied yes. Number 1340 REPRESENTATIVE GATTO moved to adopt Amendment 1, labeled 23- LS1601\A.1, Craver, 3/2/04, which read: Page 1, line 2, following "agencies": Insert "to public utilities that are parties to the agency agreement, including certain electric cooperatives," Page 2, line 8, following "utilities": Insert "or electric cooperatives, each of whom is a party to the agency agreement" CHAIR ANDERSON objected for purposes of discussion. The committee took an at-ease from 4:29 p.m. to 4:32 p.m. REPRESENTATIVE GATTO explained that although he'd been a vocal opponent of the bill, he and Representative Heinze had talked, and he believes he could support it with these amendments. He said Amendment 1 would allow any utility not a member of the JAA to remain regulated both with regard to the amount it charges and the amount it would pay. He further clarified that as long as a [utility] doesn't join the JAA, it maintains its regulation under the RCA. CHAIR ANDERSON asked if it was Representative Gatto's presumption that parties such as NEA [Naknek Electric Association, Inc.] and Homer Electric in Seward, which were initially averse to HB 453, would now support this [if Amendment 1 were adopted]. REPRESENTATIVE GATTO replied, "I don't presume." Number 1259 REPRESENTATIVE CRAWFORD asked if, for example, a power agreement were sold from Chugach [Electric] to MEA [Matanuska Electric Association], it would still be regulated; however, if Chugach Electric were to sell power to ML&P [Municipal Light and Power], this agreement wouldn't be regulated because [ML&P] would be part of the JAA. REPRESENTATIVE GATTO affirmed the foregoing. REPRESENTATIVE ROKEBERG asked if this is an opt-out provision or is automatic. REPRESENTATIVE GATTO replied that it is automatic. He said, "Until you join the JAA, you're not a member and you simply remain subject to the RCA." REPRESENTATIVE ROKEBERG added that the net effect is that an entity could be receiving wholesale power from the JAA, but that portion of the contract or the agreement between [parties] would still be subject to the RCA oversight and regulation. REPRESENTATIVE GATTO affirmed that. Number 1195 CHAIR ANDERSON removed his objection. He announced that Amendment 1 was adopted. Number 1184 REPRESENTATIVE GATTO moved to adopt Amendment 2, which read [original formatting and punctuation provided]: To page #3 Line 1 After "this chapter" Insert "as specified in AS 42.05.431" CHAIR ANDERSON objected for purposes of discussion. REPRESENTATIVE GATTO explained that Amendment 2 refers to the power of the commission to fix rates, and is proposed for reasons of clarity. REPRESENTATIVE HEINZE remarked, "I think Representative Gatto is making this bill even better. This way, it covers all the parties and, I think, puts to rest any feelings that maybe they somehow might not be an equal party or whatever." REPRESENTATIVE ROKEBERG asked whether it makes a good bill better or a bad bill worse. CHAIR ANDERSON replied, "I think a good bill better." Number 1097 CHAIR ANDERSON removed his objection. Hearing no further objection, he announced that Amendment 2 was adopted. Number 1080 REPRESENTATIVE GATTO referred to notes he'd made on the bill itself, inserting "relating to" on page 1, line 1, where it says "exempting from". He asked whether that had been considered as a conceptual amendment. REPRESENTATIVE ROKEBERG observed that such a change would greatly widen the title. CHAIR ANDERSON recommended against that change. REPRESENTATIVE GATTO agreed. Number 1033 CHAIR ANDERSON moved to report HB 453, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 453(L&C) was reported from the House Labor and Commerce Standing Committee.
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