Legislature(1995 - 1996)

04/13/1995 02:55 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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  SENATE BILL NO. 54                                                           
                                                                               
       An  Act  relating   to  exclusive  service   areas  for                 
       utilities  certificated  to  provide  electric  utility                 
       service and to  the definition of 'general  public' for                 
       utilities furnishing electric service.                                  
                                                                               
  Co-chairman  Halford directed that  SB 54 be  brought on for                 
  discussion and noted prior  (4-12-95) adoption of Amendments                 
  1 and 2  to CSSB 54 (L&C).   He further noted  a request for                 
  exemption  of  APUC expert  witnesses  from  the Procurement                 
  Code.                                                                        
                                                                               
  DAVE   HUTCHENS,   Alaska    Rural   Electric    Cooperative                 
  Association,  came  before committee.    Co-chairman Halford                 
  noted  that  the  requested  exemption  is  similar  to  one                 
  provided to the Dept.  of Law for similar experts.   Senator                 
  Sharp  MOVED to amend the bill to  allow APUC to hire expert                 
  witnesses without  Procurement Code  restrictions.   Senator                 
  Rieger asked  if the  cost of  the expert  witness would  be                 
  borne by the  regulated utility.   Senator Sharp voiced  his                 
  understanding that the utility is assigned the total cost of                 
  regulatory  hearings.   Senator  Rieger  suggested that  the                 
                                                                               
                                                                               
  commission already has authority to declare that the service                 
  is unique  and will thus  not be put out  to bid.   He noted                 
  that budget detail  indicates that  expert witness fees  are                 
  "really high," and  he expressed concern that  the exemption                 
  might create a blank  check.  Senator Phillips concurred  in                 
  that concern.                                                                
                                                                               
  Senator  Zharoff   voiced   his   understanding   that   the                 
  procurement code  has  caused problems  in  securing  expert                 
  witnesses in a  timely manner.   Similar problems have  been                 
  noted by ASMI in association with advertising contracts.  He                 
  then  voiced  support for  the  judgment of  the commission,                 
  stating  that failure to do so  may result in undue costs to                 
  utilities and consumers.                                                     
                                                                               
  Senator  Sharp  advised that  tariff cases  in which  he was                 
  involved had a substantial amount of lead time from the time                 
  the  tariff  was  filed  and  a   hearing  was  set  by  the                 
  commission.  These cases continue for  six months to a year.                 
  Procurement under the code can  be obtained within a shorter                 
  period of time.                                                              
                                                                               
  BOB  LOHR,  Executive  Director,  Alaska  Public   Utilities                 
  Commission,  spoke via  teleconference from  Anchorage.   He                 
  explained  that   the  commission  has   run  into  problems                 
  procuring  expert  witnesses  in a  timely  manner.   Docket                 
  deadlines  often  do   not  allow  sufficient  time   for  a                 
  successful  bidder to be put  in place unless the proceeding                 
  is  delayed  90  to  120  days   to  allow  for  the  normal                 
  procurement  process.   The  choice  is delay  of regulatory                 
  decisions while complying  with procurement requirements  or                 
  an expedited means of  getting consultants in place.   It is                 
  only  in  this  special  instance,  rather  than  day-to-day                 
  procurement, that the commission seeks an exemption.                         
                                                                               
  Senator Sharp inquired  concerning the  normal time lag  for                 
  setting  a docket on a  tariff filing, giving public notice,                 
  hearing,  etc.    Mr.  Lohr  said  it would  vary  with  the                 
  complexity  of the  proceeding.   The  commission  generally                 
  issues a  notice and  allows   30 days  for public  comment.                 
  While  that  is  happening, the  commission  is  preparing a                 
  procedural order to set a schedule  for the hearing.  Actual                 
  deadlines in the  schedule vary with  the complexity of  the                 
  proceeding and  the time needed  by the utility  to prepare.                 
  Once the utility  deadline is set, the commission  must file                 
  its reply testimony  30 days thereafter.   That is the  time                 
  when  the  work  result  from  expert witnesses  is  needed.                 
  Contractors  cannot be  performing the necessary  work while                 
  the procurement process is ongoing.                                          
                                                                               
  Senator Rieger  asked who  pays for  expert witnesses.   Mr.                 
  Lohr explained that the regulatory  cost charge is collected                 
  from  utilities  and  passed  through  to customers.    That                 
  includes the cost of expert witnesses.  There is, however, a                 
                                                                               
                                                                               
  provision that would  allow the  commission to assign  those                 
  costs to other  parties to  a proceeding that  might not  be                 
  paying the regulatory cost charge.                                           
                                                                               
  Senator Rieger asked if billings  from most expert witnesses                 
  total  less  than  $25.0.   Mr.  Lohr  responded negatively,                 
  saying  that  the   typical  expert   witness  contract   is                 
  considerably  higher, ranging from $35.0 up  to a maximum of                 
  $150.0.  Senator Rieger acknowledged that small procurements                 
  could  not  be used  for  those  amounts but  asked  why the                 
  commission   does   not    utilize   36.33.010,    emergency                 
  procurements.  Mr. Lohr answered that the situation does not                 
  constitute  an  emergency,  although  it   can  be  a  major                 
  inconvenience to both the  utility and conduct of the  case.                 
  The commission is placed in  a difficult position in wanting                 
  to  expedite  the proceeding  and  "get the  decision made."                 
  That in itself  does not constitute impracticability  in the                 
  eyes of state procurement officers.   Senator Rieger advised                 
  that he was  unsure whether he  would be comfortable with  a                 
  blanket release  from the  procurement act.   Mr.  Lohr said                 
  that  the  commission  had discussed  emergency  procurement                 
  provisions with the chief procurement  officer and the Dept.                 
  of Administration and considered various options  that might                 
  be available to achieve temporary  relief in order to secure                 
  witnesses more timely.  Impracticability was  not one of the                 
  options suggested.                                                           
                                                                               
  Senator Zharoff asked if exemption from the procurement code                 
  would result in a cost savings.  Mr. Lohr advised that there                 
  may be  a  financial incentive.   He  described the  current                 
  method which requires  expert witnesses to work  quickly and                 
  expedite their work  once they are  hired.  That means  that                 
  commission staff  and the  project director  have to  do the                 
  same.  That type of crunch would  be much more manageable if                 
  there was more time.   The primary purpose of  the exemption                 
  is  to get the  job done right  and place the  best possible                 
  evidence before the commission.                                              
                                                                               
  Co-chairman  Halford  called  for  a show  of  hands  on the                 
  amendment to exempt commission hire of expert witnesses from                 
  the procurement code.  The motion  failed on a vote of 2  to                 
  3.                                                                           
                                                                               
  Co-chairman Frank MOVED to remove Sec. 3, the prohibition on                 
  garbage deregulation.   That would maintain the  status quo.                 
  The Co-chairman advised that he saw  no reason for a special                 
  exception for refuse collection.  Co-chairman Halford voiced                 
  concern  regarding  what municipalities  might  do in  light                 
  thereof.    Co-chairman  Frank advised  of  his  belief that                 
  problems would be handled at the local level.                                
                                                                               
  JERRY  REINWAND,  representing the  Alaska  Refuse Utilities                 
  Association, came before  committee.  He explained  that the                 
  amendment was added in Senate Labor and Commerce.  He voiced                 
                                                                               
                                                                               
  a  preference  for  repeal  of   07.11  (d)  entirely,  "for                 
  everybody."   That  portion  of the  statute  says that  the                 
  commission can do whatever it wants in the way of exemptions                 
  at any time,  if it  deems the  action to be  in the  public                 
  interest.  The public policy issue on deregulation should be                 
  decided by the legislature rather  than the commission.  The                 
  above-cited  statute,  in   effect,  gives  the   commission                 
  legislative  authority.   That  is wrong.   The  only reason                 
  language in Sec. 3 was narrowed to refuse utilities was that                 
  the  commission  opposed  total  repeal  of 07.11(d).    Mr.                 
  Reinwand explained that  while the  commission has taken  no                 
  stance on the exception for refuse, Chairman Schroer said it                 
  was personally acceptable to him.                                            
                                                                               
  DON SCHROER,  Chairman, Alaska Public  Utilities Commission,                 
  next spoke via teleconference  from Anchorage.  He  voiced a                 
  preference for retaining 07.11(d) within  statutes.  Were it                 
  to be eliminated, it would greatly impact commission ability                 
  to function.  He agreed that if solid waste collection is to                 
  be deregulated, it should be done legislatively.                             
                                                                               
  Senator Randy Phillips  referenced page 1  of CSSB 54  (L&C)                 
  and inquired  concerning lack  of a  definition for  "public                 
  interest."  Mr. Schroer said that he had not  raised that as                 
  an issue  of concern.   The  commission was  opposed to  the                 
  initial bill as introduced.                                                  
                                                                               
  Co-chairman Halford called for a show of hands on the motion                 
  to delete Sec. 3 (the  prohibition on a regulatory exception                 
  for refuse utilities).  The motion failed on a vote of  2 to                 
  4.                                                                           
                                                                               
  Senator Sharp MOVED  that CSSB 54 (Fin)  pass from committee                 
  with individual recommendations and  the accompanying fiscal                 
  note.  No  objection having been  raised, CSSB 54 (Fin)  was                 
  REPORTED OUT of committee  with a zero fiscal note  from the                 
  Dept.  of  Commerce  &  Economic  Development (APUC).    Co-                 
  chairman  Halford and  Senator  Sharp  signed the  committee                 
  report with a "do pass"  recommendation.  Senators Phillips,                 
  Rieger, and Zharoff signed "no recommendation."  Co-chairman                 
  Frank signed "Do not pass without amendments."                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 3:30 p.m.                         
                                                                               

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