Legislature(2013 - 2014)BARNES 124
02/03/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB234 | |
| HB242 | |
| HB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 234 | TELECONFERENCED | |
| *+ | HB 242 | TELECONFERENCED | |
| *+ | HB 141 | TELECONFERENCED | |
HB 234-EXTEND REGULATORY COMMISSION OF ALASKA
3:20:25 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 234, "An Act extending the termination date of
the Regulatory Commission of Alaska; and providing for an
effective date."
3:20:29 PM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, as joint
prime sponsor, stated that HB 234 proposes a reauthorization of
the Regulatory Commission of Alaska (RCA) for eight years,
consistent with the recommendations made by the legislative
auditor. The legislative auditor determined that the RCA has
met all the requirements for the extension. The scope of the
sunset audit is to determine demonstrated public need for the
RCA to continue and if it has been operating in an efficient and
effective manner. Obviously it has since the legislative
auditor has recommended extending the RCA for the maximum
extension time. Others have characterized the bill as being
complex, but it really is a straightforward reauthorization
bill. Differences exist between disagreeing with the outcomes
of a regulatory process, including a specific ruling, and a
dysfunctional agency that is not operating well in accordance
with statutes. He acknowledged that stakeholders often have
disagreements with the RCA's outcomes, although it is
universally recognized that the RCA is operating well in
accordance with statutes.
REPRESENTATIVE HAWKER summarized that this bill recognizes that
the RCA is functioning well and extends the commission for eight
years. He specifically referred to the appendixes on pages 23-
30 of the legislative audit [Audit Control Number 08-20079-13
dated July 19, 2013] in members' packets to the tariff survey
results. This survey provides ratings by the users affected by
the filings and dockets and user responses are very supportive.
More specifically, he turned to pages [18-19] and reported that
70 percent answered that the RCA is operating between "good" or
"very good" with only 8 percent answering "poor" or "very poor."
Again, he said that the RCA has come a long way in maturity,
personnel, and staffing, and its ability to meet the state's
needs. He referred to page 31 of the audit to the financial
analysis emphasizing that it is critical that the commission
operates in a solvent manner. This analysis shows that
regulatory cost charges are sufficient at this time to support
the RCA's operations, he said.
3:23:36 PM
REPRESENTATIVE HAWKER pointed out the legislative audit
identified two issues. He brought up audit recommendation 1,
which read: RCA's chair should improve and enforce written
procedures to ensure case management system data is accurate,
consistent, and complete. He responded that this has been an
ongoing recommendation. In fact, this recommendation identifies
a continuing process for every agency in the state. The
aforementioned audit point is about the paperwork process, not
about the functioning of the organization, how its rulings are
achieved, or a dysfunction in the organization. He acknowledged
that we can all improve, but this recommendation does not speak
to a critical point on the commission's ability to function.
3:24:50 PM
REPRESENTATIVE HAWKER brought up the second audit
recommendation, which read: The legislature should consider
clarifying AS 42.05.175(e) to ensure RCA fulfills legislative
intent when processing regulatory dockets. He offered his
belief that this recommendation represents an honest difference
of opinion between the RCA and its auditors on the
interpretation of the RCA's process. He highlighted the
legislature's prior issues with the RCA were related to the
length of time it took to resolve issues and dockets that come
before the RCA. He recalled in past years hearing constant
concerns on the length of time to process a docket; however, he
has not heard any concerns expressed from stakeholders in many
years. He suggested the commission and auditors should sort out
these details; however he argued that the aforementioned issues
should be considered separate from the reauthorization of the
commission. This audit recommendation raises the issue of
whether the legislature would like to add more statutory
guidance on how the commission operates. He concluded by urging
members to pass out a "clean reauthorization" of the RCA and
advised that any policy issues be addressed in a separate
vehicle.
3:26:25 PM
REPRESENTATIVE MILLETT referred to the second recommendation and
said the legislature has often debated the length of time it
takes the RCA to complete a docket. While she understood the
importance of timely decisions, it's also important to allow the
RCA sufficient time on dockets. She characterized the issue as
one of the toughest decisions for the commission to make, noting
the difficulty the RCA must face to determine the appropriate
time to spend. She said she somewhat disagrees with the
auditors on this recommendation since opinions vary with respect
to the time the RCA should take but, in fact, it's important
that the RCA have sufficient time to thoroughly review dockets
and arrive at the right decisions. She concluded by supporting
Representative Hawker's assessment of the second audit
recommendation.
3:28:34 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, reported that the division
conducted a sunset audit of the RCA, [Audit Control Number 08-
20079-13] dated July 19, 2013. The purpose of the audit was to
determine whether the commission was operating in the public's
interest and if the RCA's termination date should be extended.
Overall, the audit concluded that the RCA is operating in the
public's interest and the division determined the commission
fulfills a public need and is serving Alaskans. The legislative
audit recommended extending the RCA's termination date the
maximum eight years until June 30, 2022. The audit does include
two recommendations, but neither impacted the recommendation for
extension.
MS. CURTIS reviewed the two recommendations. First, the audit
found the commission only partially resolved a prior audit
recommendation the RCA improve its case management system data.
Essentially, auditors reviewed the data and found high error
rates, that the audit recommended improvements.
MS. CURTIS informed members that the sunset audit made a new
recommendation to clarify statutory timelines on rulemaking
proceedings. Currently, the statutes require the RCA to issue a
final order on a rulemaking docket no later than 730 days after
complete petition for a regulatory change is filed or after the
commission issues an initiating order for such proceedings. The
statutes contain a provision for one 90-day extension for good
cause; however, the statutes prohibit the RCA from terminating a
proceeding and a docket and subsequently opening a proceeding in
another docket on essentially the same matter. Auditors used
statutory criteria to provide guidance when conducting the
audit. The legislative auditors found that at times the RCA
will split rulemaking proceedings into two dockets. First, the
RCA will open a docket and consider whether a need for
regulation exists in an area of interest and then close the
docket after receiving testimony and comments. In instances in
which the RCA determines regulations are needed, the RCA will
open a second docket to consider adopting regulations. The
auditors found this practice allows the RCA to take up to 4.5
years to complete its proceedings. However, the RCA's
management has argued that including intent language in a
regulatory docket's initiating order makes the process
transparent and complies with statutes. Granted, the
legislative audit confirmed that the RCA included intent
language as part of its dockets, which provides transparency;
however, the sunset audit raises this issue for legislative
consideration because it appears this practice evades the
statutory timelines; however, it does not appear to serve the
regulated community or the public's interest. She paraphrased
the audit's second recommendation, which read: The legislature
should consider clarifying AS 42.05.175(e) to ensure RCA
fulfills legislative intent when processing regulatory dockets.
3:31:40 PM
REPRESENTATIVE HERRON asked whether the legislature has tried to
clarify this provision.
MS. CURTIS answered that she did not know.
3:32:02 PM
REPRESENTATIVE REINBOLD acknowledged that exceeding the 720 days
by taking up to 4.5 years on dockets could potentially be
excessive. She asked whether this needs to be addressed by the
legislature immediately or if the review could wait.
MS. CURTIS responded that the timing is up to the legislature to
decide. She clarified that the legislative auditor raised the
issue since during the audit the auditors test the RCA's dockets
for compliance with statutes. In this regard, the statutes are
open to interpretation, which highlights an area to further
consider, she said.
3:33:02 PM
CHAIR OLSON remarked that the RCA's timeline was adjusted
several years ago. He recognized that representatives of
several regulated utilities are present today, as well as the
RCA's chair. He deferred to the RCA's users and the RCA to
testify on whether the process is working. He recalled
complaints that were registered a number of years ago, in
particular, one docket continued for a considerable time,
somewhere between six and eight years. He further recalled a
new timeline was started when each action taken on the
aforementioned dockets; however, he has not received any recent
complaints. He asked whether the audit would capture any
complaints.
MS. CURTIS answered that a survey is conducted with stakeholders
as part of the sunset audit and the results were overwhelmingly
positive, which was reflected in the eight-year recommendation
for the RCA's extension.
3:34:11 PM
REPRESENTATIVE JOSEPHSON asked whether the legislative auditor
has any sense on whether rulings are typically issued within 18
months, which then lead to a second phase that subsequently
results from facts.
MS. CURTIS reiterated that the RCA will open a docket to
consider whether there is a need for regulation and once
testimony is taken and reviewed, that docket is closed. At
times, if regulations are needed the RCA will open a subsequent
docket, she said.
3:34:59 PM
REPRESENTATIVE JOSEPHSON remarked that it appears as if the
parties had a resolution on the dispute and the question is
whether some regulation should be adopted to apply to all
parties, which is the reason for the second docket.
MS. CURTIS elaborated that the RCA has four types of dockets,
including complaints and regulatory dockets. She clarified that
the second audit recommendation is solely related to regulatory
dockets.
3:35:35 PM
REPRESENTATIVE MILLETT questioned the need for the second audit
recommendation since there haven't been any recent complaints on
lengthy decisions.
MS. CURTIS explained that the audit recommended extending the
RCA for eight years, which definitely reflects the positive
responses. She explained the process, such that auditors are
required to determine whether the commission is serving the
public's interest. The sunset audits typically accomplish this
in different ways, and testing compliance with the statutory
timeline is one. She pointed out that timelines are an
important part of the RCA's statutes. More specifically, the
aforementioned audit recommendation is not addressed to the
commission but to the legislature. It highlighted the issue so
the body can decide if it wants to clarify the timeline based on
legislative intent. If the legislative intent was for a docket
to be completed within 730 days with one 90-day extension from
beginning to end, well, that is not happening. However, if
policymakers are satisfied with the RCA's interpretation of the
statutes then no action will need to be taken.
REPRESENTATIVE MILLETT reiterated her point that there isn't any
complaint and the process seems to be working so the matter
doesn't seem to need to be addressed.
MS. CURTIS emphasized that the legislative audits will always
highlight instances in which legislative intent does not appear
to be met.
3:37:57 PM
T. W. PATCH, Commissioner, Chair, Regulatory Commission of
Alaska (RCA), Department of Commerce, Community & Economic
Development (DCCED), commended Ms. Curtis on the audit team's
rigor and fairness. The first finding is simple and the RCA's
response is included in members' packets. He said, "We can all
do better." In fact, the RCA has been editing, revising, and
cross training its staff on policies and procedures.
Additionally, the RCA has been working on a new manual that will
allow the RCA to accept tariff filings electronically, which
should be completed later this year or early next year. He
acknowledged that the change will save the regulated utilities
time and money, as well as aid the RCA in the processing of its
documents. He stated the electronic filing change has been more
troublesome than he thought it would be; however, it is in
process.
3:40:30 PM
MR. PATCH agreed that the second recommendation is made to the
legislature; still, the RCA takes note of it. The enabling
statutory provision dealing with timelines for the processing of
dockets and AS 42.05.175(l) reads, "The commission may not evade
the requirement of this section by terminating a proceeding in a
docket and opening a proceeding in another docket on
substantially the same matter." He contended that the
consideration of a docket as to whether the need exists for
additional regulation is one matter; whereas the consideration
of the specific regulations to achieve an objective is another
matter. He offered his belief that the RCA has not done
anything to evade the legislative intent. He highlighted the
specific case that led to this recommendation. He related a
scenario in which Representative Gruenberg once remarked that
the discovery process made it easier for everyone. He agreed
with Representative Gruenberg so the RCA subsequently opened a
docket to consider whether the commission should adopt written
regulations to set forth the RCA's discovery process. He
recalled that the regulatory institution prior to the RCA, the
Alaska Public Utilities Commission (APUC), also had discovery
rules, but its rules were not written in regulation. The RCA
responded to a subsequent legislative audit recommendation and
opened a docket to consider whether the RCA should adopt
regulations and if the commission should codify its existing
practices in regulation or if it should identify the regulatory
language. The RCA obtained public comment and the regulated
utilities, and for purposes of clarity, terminated the first
docket timely, and opened a new docket to adopt specific
regulations.
3:44:11 PM
MR. PATCH concluded that the RCA and the Department of Law
agreed that the RCA did not evade the legislature's intent. He
further reported that the RCA ultimately adopted its regulations
well within the timeline for the second docket. Certainly the
process the RCA uses for its timeline could exceed the limits,
but the RCA strives for appropriate timeliness. He
characterized this issue as something the legislature doesn't
need to worry about. Additionally, the RCA has adopted its own
regulation that allows the RCA to gather information. He
assured members that the RCA's record speaks for itself and the
public is served.
3:46:49 PM
MR. PATCH detailed that reports to the legislature highlight
that the timeline was cut to less than 300 days without the need
for additional funding, staff, or authority. He offered his
belief that there has not been any adverse impact to present a
rate case, nor has there been any deterioration of the RCA's
protection obligation for consumer impact. Therefore, for the
most part, the RCA has reduced any regulatory risk. The
consequences have resulted in improved credit ratings for larger
public utilities, which in turn have improved the borrowing
power for every business in Alaska. He encouraged members to
review the report. He concluded that he hoped members would
recognize the RCA's progress and vote to extend the RCA for
eight years.
3:49:49 PM
REPRESENTATIVE HERRON asked whether Mr. Patch would object to
clarification of "Recommendation No. 2."
MR. PATCH answered that he does object.
3:50:49 PM
TED MONINSKI, Attorney, Alaska Communications Systems (ACS),
provided his background, noting he spent 10 years serving on the
Alaska Public Utilities Commission - five as executive director
- with an additional 22 years spent representing
telecommunication companies including Alascom, the Anchorage
Telephone Utility, and ACS before state and federal regulators.
He offered Alaska Communications qualified support for HB 234.
He offered two specific recommendations. First, given the
importance of the RCA's work and the dynamics of utility
regulation, it is imperative that the legislature review the
performance of the commission at least every four years.
MR. MONINSKI stated the second recommendation is driven by the
highly competitive nature of telecommunications markets in
Alaska. He urged the legislature to take a meaningful step and
relieve a significant paperwork burden on the RCA and regulated
utilities by removing mandatory written tariffs and special
contracts. He said that utilities require some level of
government oversight, in particular, since monopolies have
dissolved, the need for regulation has lessened and eventually
will be eliminated. He provided background information on
telephone markets, such that even the Federal Communications
Commission (FCC) recognizes that Alaska has robust local
competition. In response to the changing circumstances, the RCA
has made limited procedural modifications to its regulations
governing tariff filings, which became effective in 2005, he
said.
3:53:46 PM
MR. MONINSKI explained that by allowing tariffs and contracts to
go into effect more quickly, the regulations continued the
requirement, that virtually every aspect of local exchange
operations and pricing be supported by a currently effective
tariff. In addition to preparing and filing these special
contracts, the RCA and regulated companies must maintain
virtually "thousands of pages of tariff documents" and update
them each time a change is made. However, in the ten years
since regulations were modified there hasn't been any consumer
complaint on tariff filings and only limited request for
clarification from the RCA's staff. He asked, "What's the
problem?" He answered the aforementioned question by stating
that in highly competitive markets with satisfied consumers,
companies must document every aspect of their businesses and
spend countless hours of unnecessary preparation time. Further,
the RCA must use its scarce resources and also maintain its
tariff documents. He urged the legislature to alleviate this
issue and modify the RCA's enabling statute to remove tariff
requirements in instances in which market forces are at work
through competition. He concluded that with these qualifiers,
the Alaska Communications supports the reauthorization of the
RCA.
3:56:14 PM
MARK MODEROW, Senior Counsel, Legal & Regulatory Department,
GCI, indicated that the RCA has built a solid record of
performance and responsiveness under the timelines adopted. He
testified in support of HB 234 as written. He said the new
issue raised by ACS of an apparent de-tariffing seems premature.
He highlighted that ACS hasn't brought this issue to any
industry discussion nor has it availed itself of any agency
process. Based on his 23 years of working within this industry,
the level of competition varies greatly by geographic and
project market, even within Alaska. He asserted that in terms
of telecommunications, Alaska does not have a uniform playing
field. He further said that determinations and assessments are
based on facts, appropriately made by the RCA, which is a
process that is functioning quite well.
MR. MODEROW noted that de-tariffing at the state level is not
entirely covered by the state jurisdiction and depending on the
issue may still be directed by the federal jurisdiction, which
would take the RCA out of this equation. In those instances,
the companies would lose local control and be guided by the
federal jurisdiction. He concluded that the RCA has built a
solid record and performance; thus, GCI supports "a clean
extension" bill.
CHAIR OLSON reiterated that the committee has established a
record by keeping sunset bills clean. He said he plans to
continue do so. Other issues are best placed on "stand alone"
bills.
4:00:12 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 235.
REPRESENTATIVE REINBOLD indicated the ACS testified and
requested reducing unnecessary paperwork. She asked whether
there is any way to streamline this process.
MR. PATCH answered that he did not come prepared to discuss the
ACS tariff today. He offered that Mr. Moninski could bring
petition to the RCA to deregulate any specific market that was
adequately competitive, on the basis of fact determination. He
recalled an instance of the RCA deregulating competitive refuse
collection utility services, which has worked well. He
anticipated the same for deregulated telecommunication markets.
He further anticipated that handling tariff filings
electronically will also help, but that effort is still in
testing. He hoped to move towards electronic filings, which may
not eliminate the concern, but will be a positive step.
4:04:09 PM
MR. PATCH offered to further consider how to reduce unnecessary
paperwork.
REPRESENTATIVE REINBOLD remarked that anything that can be done
to modernize the process and not burden businesses would be
appreciated.
MR. PATCH responded that one benefit of written tariff books is
that it is informs the RCA and the public. It provides a
promise to ratepayers and customers how business will operate.
He assured members that having rules in writing provides
business clarity and customer protection; however, that doesn't
mean additional improvements can't be made.
4:05:51 PM
REPRESENTATIVE REINBOLD remarked that she enjoyed visiting the
RCA and thanked Mr. Patch.
MR. PATCH responded that he could not do anything without his
tremendously dedicated staff.
4:06:47 PM
REPRESENTATIVE REINBOLD moved to report HB 234 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 234 was reported from the
House Labor and Commerce Standing Committee.