Legislature(2005 - 2006)CAPITOL 17
01/26/2005 03:15 PM House LABOR & COMMERCE
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|[the Recording Begins Here]|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 46-WATER/SEWER/WASTE GRANTS TO UTILITIES CHAIR ANDERSON announced that the first order of business would be HOUSE BILL NO. 46, "An Act permitting grants to certain regulated public utilities for water quality enhancement projects and water supply and wastewater systems." TOM WRIGHT, staff for Representative John Harris, Alaska State Legislature, sponsor, announced, on behalf of Representative Harris, that this is a relatively new bill which is limited to privately owned companies that are economically regulated by the Regulatory Commission of Alaska (RCA). CHAIR ANDERSON said that Bonnie Williamson also supports the bill. LORI BACKES, Special Assistant to the Mayor, Fairbanks, said that she was here today to support HB 46. She said that privately held utilities do not have access to certain funds that public utilities have. This bill levels the field by making all funds available to all utility companies. ^[THE RECORDING BEGINS HERE] BENJAMIN BROWN, Legislative Liaison, Office of the Commissioner, Department of Environmental Conservation, described the program as one primarily funded through state monies but there are some smaller communities that are funded by federal funds. Only municipalities are currently eligible right now. Over the last 10 years, 36 local governments have benefited from these grants. There is a local match requirement that is scaled depending on the population of the community because the smaller the community, the less it has to contribute. 3:33:59 PM MR. BROWN explained that the grants are awarded on a competitive basis, taking into account public health and environmental impact of the project, as well as community capacity and a few other factors. It's a typical grant program. MR. BROWN emphasized that are seven staff positions who run this grant program and the same staff administer the winter loan programs. This bill is a policy decision that the legislature needs to make. Both the prior speakers demonstrated the fairness of allowing communities who don't have don't have public utilities to benefit the way communities like Anchorage do. MR. BROWN commented that the only concern he had was that if the bill is passed as written, a third position would have to be added. If everyone who is eligible for the grant took the necessary steps to be considered and subsequently apply for the grant it would be too much work for the current staff. However, the existing staff could be sufficient if the eligibility requirements were modified to reduce the workload. 3:36:08 PM REPRESENTATIVE ROKEBERG asked if Mr. Brown could specify the amounts of the grants. MR. BROWN answered absolutely. REPRESENTATIVE ROKEBERG asked if this information could go back three years. MR. BROWN affirmed that he would be happy to make sure the fiscal notes of the last three years are provided to the committee members. 3:37:45 PM REPRESENTATIVE GUTTENBERG recalled that a few years ago, legislation that allowed privately owned utilities to obtain loans was passed. If the list of these companies was available one could ascertain who was applying for grants as well. MR BROWN affirmed that he would make this list part of the same work request. REPRESENTATIVE ROKEBERG asked if it is correct that there are 193 utilities that qualify. He then asked if there is a list that could be provided. MR. BROWN said Mr. Stranberg from RCA provided the list of unregulated and regulated utilities. REPRESENTATIVE ROKEBERG indicated that Mr. Brown mentioned a modification of the bill that might affect the fiscal note, and then went on the ask if he had any suggestions. MR. BROWN explained that as long as there aren't an excessive amount of people applying for the grants, then the fiscal note will go down to zero. REPRESENTATIVE ROKEBERG stated that the way the finances are going, it probably will go to zero. REPRESENTATIVE GUTTENBERG observed that in the same fiscal note, DEC expects to be administering six grants a year. MR. BROWN stated that there is a numerical typographical error in the fiscal note, and therefore a corrected version as it comes out of this committee. REPRESENTATIVE LEDOUX, looking at page 2 of the bill, indicated that she wanted to clarify that the private utilities being economically regulated by RCA numbered at around 15 or 20. She continued by asking why, according to Mr. Brown, there was 126 that would qualify for the grants. 3:40:50 PM MR. BROWN answered by stating that there were two categories- certificated and uncertificated. An entity that is not certificated could become certificated and not be economically regulated, but it could also request that it be economically regulated and not be certified, thereby making it eligible for this grant program. There are some hoops to jump through, but there is nothing wrong with that. At the end of the day these entities have to agree that they want to be regulated by the RCA. The incentive for doing this is eligibility for these grant funds. CHAIR ANDERSON clarified that this total of 126 represents the most that can possibly be eligible. REPRESENTATIVE LEDOUX pointed out that there are private utility companies out there that are not currently regulated by the RCA, and theoretically, she asked, if they wanted to be eligible, could they ask to be regulated by the RCA. MR. BROWN clarified that such entities are home owner associations and trailer parks and are not in the business of selling utilities service to anyone who wants to buy it. Although these entities have a set level of demands, they can request to be regulated. JIM STRANDBERG, Commissioner, Regulatory Commission of Alaska in Anchorage, said he would discuss very briefly, the number of certificated and economically regulated utilities in the state because this might help provide an understanding of this particular situation. REPRESENTATIVE ROKEBERG highlighted that private utilities currently certified are on a list that is in the file. He mentioned that the Trillium Corporation of Wasilla is a certified sewer and water utility and is associated with the Settlers Bay Development of which his company is a customer and not an owner of the Trillium Corporation. He ends by firmly stating that there is not a conflict of interest. MR. STRANDBERG, explained that the statute specifies that the RCA is responsible for certificating, providing the certificate for public convenience for all public utilities. The process typically involves reviewing a utility as it evolves. 3:45:27 PM MR. STRANDBERG continued by stating that the universe of utilities is relatively large. The other tasks that the RCA performs is for a subset of that large group. These groups submit cost information to the RCA which sets a rate it can charge for its services. MR. STRANDBERG noted that this bill specifies that any economic activity that is regulated by the RCA, is eligible for the grants. MR. STRANDBERG stated that although the RCA certifies a large number of utilities, currently, it only economically regulates a few utilities in the state. This occurs when the RCA perceives that the utility has become a monopoly. 3:47:34 PM MR. STRANDBERG said that there were a number of numbers mentioned. In the fiscal note, there were 193 non-municipal utilities that could be eligible for these grants. The question, he said, is how many of them would actually come in for the grants. He then went on to say that the RCA has a zero fiscal note on this bill mainly due to the fact that many of these utilities would come under economic regulation at a later date. REPRESENTATIVE GUTTENBERG mentioned page 2 on the fiscal note provided by RCA where the witness spoke referenced reduced regulation programs, and asked for an expansion of the programs description. When this is implemented, some utility groups may want to be regulated at a higher level, he surmised. He ended by asking Mr. Strandberg if he could talk about this and describe what is being done with the reduced regulation program. MR. STRANDBERG answered that the RCA has been working for years on this part of the RCA's operation, which began, he said, with an audit action item in 2000 that required us to be more active in utilities. Since that time, the RCA has provided alternative certification programs for small utilities. The RCA is bringing more utilities under this provisional certification program. MR. STRANDBERG stated that additionally, he said that RCA currently has an open regulation docket and an active stakeholder working group to change the way that RCA economically regulate to make it more affordable and more effective. REPRESENTATIVE GUTTENBERG asked what the regulation break up point is. MR. STRANDBERG stated that is to be determined. Currently RCA have assembled stake holders and are awaiting their analysis. REPRESENTATIVE ROKEBERG, referring back to Representative Guttenberg's statement, stated that when this process is completed, there is a different method of regulating smaller utilities which are less of a burden. He ends by asking if this is the objective. MR. STRANDBERG replied yes and announced that the goal of his agency was to lessen the cost of regulation and make it more effective. He then stated that whatever the rule is that the RCA develops will represent full economic regulation but a different set of rules will be configured for smaller utilities. REPRESENTATIVE ROKEBERG asked if this included all the class A, B, and C water utilities. MR. STRANDBERG announced that his group spent lot of time on this indulgence and all known small utilities were included. REPRESENTATIVE ROKEBERG took this further by asking whether they regulate both the A and B classes. MR. STRANDBERG stated that this includes any utilities that provides service to 10 or more customers. REPRESENTATIVE ROKEBERG asked if there are still three different categories of water utilities still. MR. STRANDBERG answered that the Department of Environmental Conservation has this nomenclature and this has more to do with water quality. The RCA has a different set of definitions under which it operates. REPRESENTATIVE ROKEBERG asked if private utilities are regulated if they are monopolies in their area. MR. STRANDBERG stated this is correct. 3:55:26 PM CHAIR ANDERSON closed public testimony. REPRESENTATIVE ROKEBERG inquired as to how the RCA handles grants and how this legislation affects rate setting. MR. STRANDBERG answered that the RCA has regulatory tools, and therefore it has the ability to not allow a privately owned utility to enrich its shareholders from the provision of an infrastructure grant like this. The utility cannot earn a return on the grant and it cannot have the customer pay back the money gained by the grant contribution. KARA MORIARTY, President, Greater Fairbanks Chamber of Commerce, announced her support for HB 46 and the idea that all utilities should be on the same level playing field. Currently the only utilities that are eligible for these grants are public owned utilities. The grants are primarily used for infrastructure development and upgrades. She noted that the shareholders cannot receive returns on investments. The ratepayers and citizens are the only ones who can receive benefits from the grants. MS. MORIARTY then went on to say that all utilities in Fairbanks, Alaska are either privately owned or are a cooperative. She continued by stating that businesses and residents where are at a disadvantage compared to other Alaskan residents. The cost of doing business, she said, is great in Fairbanks. The problem of connection to major utility lines hampers economical development, even downtown near the city center. She concluded by reiterating that private and cooperative utilities should have access to the grants. CHAIR ANDERSON, upon determining that no one else wanted to testify, closed public testimony. 4:01:50 PM REPRESENTATIVE ROKEBERG moved to report HB 46 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, it was so ordered.