Legislature(1993 - 1994)

03/03/1994 03:00 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 295 - CREATE CITIZENS' UTILITY BOARD, INC.                                
  Number 461                                                                   
  REP. KAY BROWN, Prime Sponsor of HB 295, said this bill                      
  would establish a voluntary citizen's utility board (CUB)                    
  for the state that would not cost the state any money.  She                  
  said there used to be a program that funded a consumer                       
  advocate to appear before the Public Utilities Commission                    
  (PUC) and represent the viewpoint of consumers.  She said                    
  that item was cut from the budget several years ago and                      
  there is no longer a consumer voice routinely looking into                   
  matters before the commission and making comments.  She said                 
  this was an important function.  She deferred to the public                  
  who had come to testify before the committee.  She stated                    
  there were two amendments that she would like to see                         
  Number 477                                                                   
  STEVE CONN, Executive Director, Alaska Public Interest                       
  Research Group (AKPIRG), testified in strong support of HB
  295.  He said the bill adds Alaska to the 43 states that                     
  currently have an independent consumer advocate in matters                   
  of utilities.  He said before undertaking this campaign, his                 
  group visited more than 15,000 homes to discuss utility                      
  matters, 3,000 letters of support were received, and in                      
  addition to that, he was overwhelmed and educated by the                     
  telecommunications task force that met last summer at the                    
  behest of Ramona Barnes.  He recalled that Ramona Barnes                     
  spoke of the upcoming change in the relationship between                     
  AT&T and Alascom and she said, "While I am not opposed to                    
  increased competition, I believe that the potential impact                   
  of losing the rate subsidy that Alaskans currently benefit                   
  from is tremendous and therefore deserves a policy review                    
  from the legislature."  He said this topic was tackled in an                 
  extraordinary manner last summer by the task force and there                 
  were many questions that arose.                                              
  MR. CONN said, "All of Alaska awaits the outcome of the                      
  secret negotiations between Alascom and AT&T and there is no                 
  question that whatever the outcome, issues will require                      
  steadfast monitoring by consumers and advocacy, and of                       
  course by the legislature."  He posed questions regarding                    
  nationally averaged rates for interstate and intrastate                      
  calls; regulatory rates reflective of both skilled consumer                  
  advocacy as well as market forces; protection of rural                       
  Alaska; and the provision of broad-banned access and                         
  modified satellite technology pertaining to rural areas.  He                 
  said the answers to these questions will ultimately                          
  determine if Alaska finds itself on the information highway                  
  or, as the New York Times recently indicated, on the                         
  information dirt road.                                                       
  MR. CONN said AKPIRG's examination of the current regulatory                 
  process offered by the Alaska Public Utilities Commission                    
  (APUC) suggests that there is no special legal authority to                  
  reach beyond the record to build up a case for consumers.                    
  He said in formal cases, broad classes of consumers need                     
  legal and technical assistance.  He emphasized that, unlike                  
  previous utility advocates, there is no contemplation of                     
  state subsidy because this would be membership funded.                       
  TAPE 94-19, SIDE A                                                           
  Number 001                                                                   
  MR. CONN said when consumers are active participants it                      
  appears from the experience of utilities in Oregon,                          
  Illinois, N.Y. and many other places that the commissioners                  
  are not wondering what new information might be brought to                   
  the record.  He mentioned that several out-of-state people                   
  who had worked to establish CUBs had been encouraged to                      
  Number 019                                                                   
  CHAIRMAN HUDSON interjected and said two such witnesses were                 
  currently on line and out of courtesy, the committee would                   
  hear those witnesses at this time.                                           
  Number 021                                                                   
  BOB JENKS, Executive Director, Oregon Citizen's Utility                      
  Board,  spoke via offnet from Oregon, and said he grew up in                 
  Alaska and was privileged to testify.  He summarized his                     
  written comments, which were available in the packets, and                   
  said this was a way to institutionalize consumer advocacy.                   
  He said when other states, like Oregon, Washington, and                      
  Idaho formed their consumer advocacy programs about a decade                 
  ago, there were two central issues, and those issues are                     
  even more relevant today.  He said the first issue is that                   
  utility matters have become increasingly technical and in                    
  resolving these issues it is critical that the residential                   
  customer and the small business customer have access to                      
  experts on technicalities in these proceedings.  The second                  
  issue was the increased number of special interests                          
  participating in utility hearings.  He explained that as                     
  rates have increased, businesses have found it financially                   
  beneficial to hire attorneys to fight or negotiate the rate                  
  hikes.  He said Oregon CUB is unique in that it was set up                   
  by the legislature.  He explained that Oregon's initiative                   
  stated the following three reasons to form a CUB:  1) To                     
  create an organization to represent consumers, 2) To give                    
  that organization the right to represent rate payers for the                 
  PUC, the courts and the legislature, and 3) It created a                     
  mechanism to allow for consumers to conveniently and easily                  
  join CUB.  He pointed out that they were not trying to                       
  change the PUC process, but to contribute to it by allowing                  
  for the consumer to have a professional and competent                        
  hearing.  He explained that if the Oregon PUC made a                         
  decision which was not grounded in the records, that                         
  decision would be overturned in court.  Therefore, he said,                  
  the CUB helps build that record by submitting evidence which                 
  the PUC legally needs.  He said that in his written                          
  statement there is a quote from the PUC to an Oregon                         
  legislative committee regarding the CUB, and essentially it                  
  says that the CUB has presented thought provoking and                        
  insightful testimony.  He noted that he also included a list                 
  of some of the cases CUB has impacted and the results of                     
  those cases.                                                                 
  MR. CONN explained that since 1987, when the CUB was                         
  created, it has been involved in five utility refunds, the                   
  most recent of which was last October.  He explained the                     
  refund negotiation process between the Oregon CUB and US                     
  West, which resulted in a refund of $11.00 to every                          
  residential customer and $26.00 per line to every business                   
  MR. CONN asserted that consumer representation is critical                   
  because the next few years will determine the shape of the                   
  telecommunications systems for the next thirty years.  He                    
  said there are different models that could be used such as                   
  the state hiring a consumer representative, or like                          
  Washington has done, funding of consumer participation, but                  
  he believes that CUB is the most sensible approach.  He                      
  explained that CUB is directly accountable to citizens who                   
  wish to join it and it is not financed by tax dollars but is                 
  funded by voluntary citizens.  He added that there is very                   
  little risk in forming a CUB because if it is not                            
  successful, consumers would not continue to contributing to                  
  it.  He said his opinion was that it be successful and                       
  Alaskans would see a considerable savings on their utility                   
  Number 127                                                                   
  CHAIRMAN HUDSON asked abut the membership fee and the                        
  representation in Oregon.                                                    
  Number 130                                                                   
  MR. JENKS said membership was not a huge percentage of the                   
  total population and was approximately 20,000 members out of                 
  an estimated one million households.  He said by law, the                    
  individual membership fee was set at a minimum of $5.00 and                  
  could not exceed $100.00.  He stated that the average                        
  contribution received was about $20.00.                                      
  Number 146                                                                   
  REP. PORTER asked if Mr. Jenks was familiar with the                         
  legislation under consideration because he wondered if there                 
  was a model statute on CUBs.                                                 
  Number 151                                                                   
  MR. JENKS said he thought the different approaches were all                  
  fairly similar.  He stated that what was most important was                  
  the inclusion of the three fundamental points he mentioned                   
  previously which were:  forming the organization, setting up                 
  a funding mechanism so citizens could join the organization,                 
  and authorizing the organization to represent consumers                      
  before the PUC.  He said Alaska's legislation addresses                      
  these concerns.                                                              
  Number 161                                                                   
  PHYLLIS TURNER, Director, Citizen's Utility Board Organizing                 
  Project, testified from Washington, D.C.  She acknowledged                   
  that utility companies sometimes spend hundreds of thousands                 
  of dollars of rate payer money to advocate their interests                   
  before PUCs and legislatures.  She asserted that residential                 
  consumers, as a group, have a substantial interest in these                  
  issues, but lack the resources, organization, and expertise                  
  to effectively advance their position and to respond to                      
  utility company arguments.  She pointed out that while large                 
  industrial companies have their own attorneys and economists                 
  representing their interests, the complexity of the process                  
  often prohibits individuals from participating at all.  She                  
  explained that it was actually in the APUC's interest to                     
  have effective advocacy on behalf of the smaller rate payer                  
  rather than an informal and unprofessional approach.                         
  MS. TURNER said that beyond APUC's purview, Alaskans need                    
  expert representation in proceedings that address utility                    
  and telecommunications issues.  She said Alaska is one of                    
  only seven states that does not have a utility consumer                      
  advocate within its governmental structure.  She relayed                     
  membership and organizational information of consumer                        
  advocacy in other states, such as Oregon, California,                        
  Illinois, and New York.  She said, like the APUC, CUB has a                  
  sunset clause, but it is not built in by legislation.  She                   
  concurred with Mr. Jenks and said, if a CUB is not doing its                 
  job, people would simply stop funding it.                                    
  MS. TURNER then mentioned the importance of the conflict of                  
  interest provision in HB 295 as a protective measure                         
  ensuring that CUB would not be taken over by any special                     
  interest.  She pointed out that HB 295 helps to advance                      
  civic democracy and the state does not have to pay a dime.                   
  She confirmed that HB 295 is fairly typical of other CUB                     
  legislation.  She said CUBs have been very effective and she                 
  gave the example of the Illinois CUB's landmark billion-                     
  dollar settlement with Commonwealth Edison.  In conclusion,                  
  Ms. Turner said a CUB is essential in helping Alaskans to                    
  help themselves.                                                             
  Number 280                                                                   
  CHAIRMAN HUDSON asked if representation in other states was                  
  similar to Oregon's estimated membership of one out of 50                    
  MS. TURNER said she did not know, but would check into it.                   
  CHAIRMAN HUDSON referred to the amendment providing for the                  
  inclusion of cable television, waste material collection,                    
  waste material disposal, and sewage and manufactured gases,                  
  and he asked if this was typical in other CUBs.                              
  Number 295                                                                   
  MS. TURNER replied that some CUBs were involved with cable                   
  issues and she regarded this as an important inclusion                       
  because cable is a growing concern.  She said she believed                   
  involvement with waste materials was a fairly recent                         
  addition, and she remarked that the San Diego CUB, at the                    
  request of their membership, was involved in insurance                       
  Number 314                                                                   
  REP. PORTER observed that having lived in Chicago for a                      
  year, he would like to think that Alaska does not have the                   
  regulatory problems that exist in Illinois.                                  
  Number 320                                                                   
  THOMAS WILLIAMS, Director, Permanent Fund Dividend Division                  
  (PFD), Department of Revenue, testified in support of a CUB.                 
  He said his only concern was the provision in the bill                       
  requiring the division to include an enclosure with PFD                      
  applications.  He said they have a zero fiscal note, based                   
  on the assumption that the Department of Revenue would be                    
  reimbursed by the CUB for all associated costs.  He said                     
  this obviously assumes that sufficient funds would be                        
  MR. WILLIAMS said one approach would be to stuff an addition                 
  into the booklet.  He explained that this would not be                       
  consistent with how the booklets are currently printed, as                   
  they are printed out-of-state and are then mailed directly                   
  from the printer to the various distribution sites.  He said                 
  the other approach would be to print something as part of                    
  the booklet, as is currently done with the voter                             
  registration form and the advanced college tuition program.                  
  MR. WILLIAMS said more importantly than the method used,                     
  there is concern with using the dividend mailing booklet as                  
  a vehicle for distributing public information, regardless of                 
  the merits of what is being distributed.  He pointed out the                 
  importance of keeping the booklet simple and concise,                        
  thereby avoiding the potential for turning it into a                         
  catalogue.  He said the purpose of getting information to                    
  and from dividend applications needs to remain clear.                        
  Number 367                                                                   
  REP. BROWN asserted that CUB was distinguishable from other                  
  non-profits and she did not see who they would be "throwing                  
  the door open to."  She asked if there was a particular                      
  group Mr. Williams had in mind.                                              
  Number 376                                                                   
  MR. WILLIAMS said he did not have any in mind.  He repeated                  
  his concern that this could set a precedent.  He said the                    
  division has received numerous inquiries regarding inclusion                 
  of various items and they have historically maintained a                     
  very pointed focus and have not wanted to confuse the                        
  REP. MULDER commented to Ms. Brown that he worked on the                     
  voter registration issue and they did not like that either.                  
  Number 389                                                                   
  CHAIRMAN HUDSON asked MArk Foster for comment.                               
  Number 391                                                                   
  MARK FOSTER, Past Commissioner, Alaska Public Utilities                      
  Commission, said he also served as the president of the                      
  Western States Conference of Utility Commissioners which                     
  represented the 13 western states, and also as the chairman                  
  of the Western Conference Telecommunications Committee.  He                  
  said that based on his experience in those capacities, it                    
  was his opinion that PUCs and legislators benefit                            
  tremendously from having a CUB because they provide an                       
  excellent point of view, and they bring evidence onto the                    
  record that would otherwise not be available.  He pointed                    
  out that when coming before a utilities commission, one                      
  generally finds specialized technical and legal issues, and                  
  a CUB would enable consumers to have a focused point of                      
  view.  He concluded his comments by mentioning Chugach                       
  Electrical Association's proposed acquisition of Matanuska                   
  Electrical Association.  He said in such a situation, this                   
  kind of board would be very valuable.                                        
  Number 421                                                                   
  REP. PORTER asked what responsibility CUB would have that                    
  AKPIRG does not currently provide.                                           
  Number 430                                                                   
  MR. CONN replied that AKPIRG is funded differently and has a                 
  particular agenda and works that agenda.  He said AKPIRG                     
  lacks the technical expertise to be utility advocates at                     
  this point.                                                                  
  Number 454                                                                   
  REP. PORTER repeated his question and asked what would                       
  prevent AKPIRG or anyone else from forming a nonprofit                       
  organization under existing laws, charging a fee, and then                   
  representing consumers.                                                      
  Number 457                                                                   
  MR. CONN mentioned that utilization of former state mailings                 
  or mailings of regulated utilities to reach the broadest                     
  number of people needs to be done through a state vehicle.                   
  He said there were a series of technical things, including                   
  the right to appeal, that were also important.                               
  REP. PORTER asked for more information about the                             
  "intervening activity of the CUB" requiring a court rule                     
  MR. CONN said he understood that to obtain standing to                       
  intervene requires a court rule change of 2/3 of the                         
  REP. PORTER asked whether this issue was pivotal to the CUB                  
  having power.                                                                
  MR. CONN replied in the affirmative, and said the potential                  
  to intervene straight up leads to settlements.                               
  Number 473                                                                   
  CHAIRMAN HUDSON asked for more information about the                         
  relationship between the utilities and the CUB.  He referred                 
  to the incident of APUC acting on behalf of consumers                        
  regarding the cable issue.                                                   
  Number 491                                                                   
  MR. CONN replied that it was important to offer APUC the                     
  opportunity to achieve its mandate of balancing a number of                  
  factors in a well-argued case.                                               
  Number 500                                                                   
  MR. FOSTER added that with respect to the cable rate issue                   
  in Juneau, a considerable number of consumers testified and                  
  were quite clear in their advocacy.  He said they did not                    
  have background in the legal language or in the technical                    
  financial issues that were before the commission.  He said                   
  it was helpful that consumers testified and said, in effect,                 
  "our rates are too high," but this did not address the                       
  question of setting the rates at $12.00, $10.00, or $8.00 a                  
  month.  He said CUBs really help with the details necessary                  
  to the decision making process.  He explained that CUBs                      
  accumulate this expertise because they deal regularly with                   
  the commission, thereby learning the language and the                        
  issues.  Mr. Foster said, in a broader sense, some utility                   
  commissions come to rely upon CUBs as a valuable form of                     
  Number 509                                                                   
  CHAIRMAN HUDSON asked what other states do, without a PFD                    
  Number 510                                                                   
  MR. FOSTER said the utility bills are a typical way of                       
  disseminating the information.                                               
  Number 511                                                                   
  REP. BROWN said she thought the PFD would be the best list                   
  to use because of its wide distribution in Alaska.  She said                 
  it would help to advertise the CUB's existence and would                     
  also invite people to participate.                                           
  Number 512                                                                   
  REP. PORTER asked the commission's position on this.                         
  Number 513                                                                   
  MR. FOSTER said it was his understanding that the commission                 
  was scheduled to meet next week to determine their position                  
  on the CUB.                                                                  
  Number 513                                                                   
  REP. BROWN said in the past, they have testified in favor of                 
  the function of a consumer advocate.                                         
  CHAIRMAN HUDSON said he would like to hear from the APUC and                 
  would hold HB 295 in committee for another hearing.                          
  CHAIRMAN HUDSON adjourned the meeting at 5:30 p.m.                           

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