Legislature(1993 - 1994)

04/13/1993 03:00 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HB  50 AUTHORIZING POWER TRANSMISSION INTERTIES                              
  HB  51 APPROP: POWER TRANSMISSION INTERTIES                                  
                                                                               
  REPRESENTATIVE RAMONA BARNES, SPEAKER OF THE HOUSE, spoke on                 
  behalf of HB 50 and HB 51 and gave the following summary of                  
  the history of the energy fund:                                              
                                                                               
  "In 1981, SB 25 and 26 created the energy plan for Alaska.                   
  This plan included the 4 Dam Pool, Power Cost Equalization                   
  and a clause that was known as the blackmail clause.  This                   
  clause in essence said that the grants that were given to                    
  the 4 Dam Pool would be paid back to the state, plus                         
  interest, if by the year 1991 there was less than $1 billion                 
  to construct Susitna/Watana Dam and an intertie system for                   
  the railbelt.                                                                
                                                                               
  "In 1984, the representatives of the 4 Dam Pool came back to                 
  Juneau seeking to have the blackmail clause removed from the                 
  statutes due to cost overruns that would require additional                  
  funds.  Their claim was that unless the state gave them                      
  another outlay of cash they would not be able to bond at a                   
  favorable rate due to the existence of the blackmail clause                  
  in statute.                                                                  
                                                                               
  "The Railbelt then gave up the blackmail clause with the                     
  understanding that in exchange there would be $200 million                   
  per year appropriated in the same manner as the Senior                       
  Citizens Longevity Bonus, as an example.  In addition to                     
  that appropriation, there was to be $100 million deposited                   
  into the Bradley Lake Dam account.  At that time, we also                    
  increased the per kilowatt amount to be subsidized by Power                  
  Cost Equalization.                                                           
                                                                               
  "This then, became law.  Although this continuing                            
  appropriation was no different from any other that is                        
  required annually, the environmental community took it to                    
  court and a ruling was made that one legislature could not                   
  bind another, even though it was no different than numerous                  
  other annual appropriations.  That first $200 million plus                   
  the $100 million for Bradley Lake Dam were the only funds                    
  ever deposited into the energy account.                                      
                                                                               
  "In 1990, a deal was cut to raid the fund, and approximately                 
  $123 million was spent on various capital projects, very few                 
  of which had anything to do with energy.  There is currently                 
  $123 million in an intertie reserve account.  These two                      
  bills contain funding for a Northern and Southern intertie                   
  at $55 million for one and $40 million for the other, which                  
  only pays for 1/2 of each project.  The utilities themselves                 
  would bond for the other half of the money.                                  
                                                                               
  "We must look to the needs of the whole state.  HB 50 and 51                 
  contain not only the Northern and Southern interties, but                    
  funding for Tyee, Swan Lake, and Sutton to Glennallen.                       
                                                                               
  "There is a portion of the bill that has an ongoing                          
  appropriation of $800,000 to the Alaska Energy Authority.                    
  The Speaker suggests that the Alaska Energy Authority has                    
  outlived its usefulness, and that when the bills finally get                 
  to the floor, that the appropriation to the AEA be deleted                   
  and the money to go directly to the utilities involved."                     
                                                                               
  Number 190                                                                   
                                                                               
  SPEAKER BARNES also suggested that Power Cost Equalization                   
  be addressed under the Department of Community and Regional                  
  Affairs.  The Speaker believed that the Department of                        
  Community and Regional Affairs better knows the needs of                     
  rural Alaska and that the money saved by not funding the                     
  energy authority could be used by the rural communities.                     
                                                                               
  Number 210                                                                   
                                                                               
  MIKE KELLEY, GENERAL MANAGER, GOLDEN VALLEY ELECTRIC                         
  ASSOCIATION, testified that the previous speaker gave an                     
  excellent history of the railbelt fund.                                      
                                                                               
  MR. KELLEY asked that the committee pass HB 50 and HB 51 out                 
  to Finance to be fine-tuned and eventually passed into law.                  
                                                                               
  Number 222                                                                   
                                                                               
  CLAYTON HURLISS, GENERAL MANAGER, COPPER VALLEY ELECTRIC,                    
  stated that his organization was very pleased that these                     
  bills were going forward and would work together with the                    
  members of the legislature to make sure these bills go                       
  through in the best form possible.                                           
                                                                               
  MR. HURLISS stated that his group was concerned about the                    
  order of priorities.  Mr. Hurliss said that projects ought                   
  to be considered and funded on the basis of whether they are                 
  ready and to go and if there is enough time to build them.                   
                                                                               
  Number 240                                                                   
                                                                               
  REP. MACKIE asked Speaker Barnes if she had problems with                    
  Tyee and Swan Lake being in the bill.                                        
                                                                               
  SPEAKER BARNES responded that she supports Tyee and Swan                     
  Lake, as well as the Sutton to Glennallen interties.                         
                                                                               
  Number 250                                                                   
                                                                               
  REP. MACKIE stated that the legislature should look at these                 
  projects with a statewide prospective, which also includes                   
  Power Cost Equalization.                                                     
                                                                               
  Number 264                                                                   
                                                                               
  REP. PORTER stated that he would be supportive of moving the                 
  bills out of committee.                                                      
                                                                               
  Number 285                                                                   
                                                                               
  SPEAKER BARNES asked the record to reflect that it is true                   
  that one legislature cannot bind the next and that there are                 
  many new people in the legislature, but that she has been in                 
  the legislature all the years referred to above.  Speaker                    
  Barnes added that the agreements she made in previous years                  
  that relate to the energy package before this committee has                  
  borne out her support for Power Cost Equalization.                           
                                                                               
  Number 295                                                                   
                                                                               
  REP. GREEN inquired about the funding sources for these                      
  projects.                                                                    
                                                                               
  SPEAKER BARNES responded that each of the interties will be                  
  bonded separately.                                                           
                                                                               
  Number 324                                                                   
                                                                               
  SPEAKER BARNES stated that the difference between HB 50 and                  
  HB 51 and the proposal the Alaska Energy Authority came up                   
  with is that their bill would have used all the Railbelt                     
  energy money.                                                                
                                                                               
  Number 350                                                                   
                                                                               
  REP. MACKIE clarified his position on this issue.  Rep.                      
  Mackie stated that it was his view that Power Cost                           
  Equalization not be tinkered with and that the energy needs                  
  of Southeast Alaska be included in the statewide perspective                 
  of this bill.                                                                
                                                                               
  Number 368                                                                   
                                                                               
  SENATOR ROBIN TAYLOR echoed Speaker Barnes' comments and                     
  added that these bills are the culmination of a lengthy and                  
  arduous process over many years.  Sen. Taylor believes that                  
  we are now in a place where we can put our differences aside                 
  and put forth a bill that would put some good projects on                    
  line.                                                                        
                                                                               
  SEN. TAYLOR stated he believes the state will eventually be                  
  relieved of the burden of Power Cost Equalization when all                   
  these projects come on line.                                                 
                                                                               
  Number 408                                                                   
                                                                               
  THOMAS STEVENSON, MANAGER, KETCHIKAN PUBLIC UTILITIES,                       
  testified that HB 50 and HB 51 are necessary ingredients for                 
  the economic development of the state.                                       
                                                                               
  Number 429                                                                   
                                                                               
  REP. MACKIE moved HB 50 and HB 51 with individual                            
  recommendations.  No objections were heard; it was so                        
  ordered.                                                                     

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