Legislature(1993 - 1994)
03/03/1994 03:00 PM House L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 addressed. 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 testify. 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 customer. 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 bills. 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 consumers. 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 issues. 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 available. 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 public. 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 change. MR. CONN said he understood that to obtain standing to intervene requires a court rule change of 2/3 of the legislature. 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 outreach. Number 509 CHAIRMAN HUDSON asked what other states do, without a PFD list. 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.