Legislature(2005 - 2006)SENATE FINANCE 532
05/06/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB73 | |
| SB157 | |
| HB54 | |
| HB286 | |
| HB98 | |
| HB218 | |
| SB157 | |
| HB147 | |
| HB218 | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 73 | TELECONFERENCED | |
| + | SB 74 | TELECONFERENCED | |
| + | HB 98 | TELECONFERENCED | |
| + | HB 147 | TELECONFERENCED | |
| + | HB 54 | TELECONFERENCED | |
| + | HB 286 | TELECONFERENCED | |
| + | HB 218 | TELECONFERENCED | |
| += | HB 275 | TELECONFERENCED | |
| = | SB 46 | ||
SENATE CS FOR HOUSE BILL NO. 286(RES)
"An Act amending the manner of determining the royalty
received by the state on gas production by directing the
commissioner of natural resources to accept, under certain
circumstances, the transfer price of the gas if established by
transfer price order of the Regulatory Commission of Alaska;
extending and amending the requirements applicable to the
credit that may be claimed for certain oil and gas exploration
expenses incurred in Cook Inlet against oil and gas properties
production (severance) taxes, and amending the credit against
those taxes for certain exploration expenditures from leases
or properties in the state; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE RALPH SAMUELS, the bill's sponsor, informed the
Committee that one component of this bill would address an issue
brought forward by Anchorage Municipal Light and Power (ML&P). That
issue involves how the Department of Natural Resources (DNR) would
value ML&P gas royalty prices. Currently, DNR would establish the
royalty price based upon "the value of a contract that Shell had at
the Beluga River Field with Municipal Light and Power. Municipal
Light & Power then bought Shell's interest in the field itself. DNR
agreed to use the contract price until the contract expired. The
contract expires in 2005 and the language in the bill would allow
DNR to use the transfer price now since there is no longer a sale
going on they own the gas in the field. They are transferring it to
themselves. The transfer price is set by" the Regulatory Commission
of Alaska (RCA). He noted that RCA has voiced its support for this
legislation.
Co-Chair Green understood that the bill's sponsor would appreciate
testimony being presented by the RCA in regards to Section 1, which
is the section that pertains to ML&P.
Representative Samuels affirmed.
10:45:28 AM
MARY JACKSON, Staff to Senator Tom Wagoner and Aide to the Senate
Resources Committee, stated that her comments would address
Sections 2 through 9 of the Senate Resources (RES) Committee
committee substitute before the Committee. The RES Committee
decided to include in this bill the Exploration Incentives Credit
program that originated in HB 71. That bill would, at this time,
remain "in the possession of the Senate Resources Committee".
Ms. Jackson continued that this bill therefore would extend to
Bristol Bay and other areas such as the Healy, Red Dog, and Nenana
Basin, the incentive credits that were initially developed for the
Alaska Peninsula. A different set of incentives, mirroring those
specified in SB 163, would apply to Cook Inlet.
10:46:53 AM
Co-Chair Green ascertained therefore that the provisions included
in this bill are "all recent" events.
Ms. Jackson affirmed. Therefore, this bill would establish a new
set of exploration credits, modeled after the exploration credit
program authorized in the year 2003 in SB 185. She remarked that
the Senate Finance Committee at that time was the first to conduct
hearings on that credit program too.
Ms. Jackson noted that this bill would extend the exploration
credits program to all areas of the State "south of the Brooks
Range". Specific standards and rules for the exploration credit
program would apply to the Cook Inlet Basin because that area "is a
more mature basin." The Senate Resources Committee also altered two
other provisions that were included in the original version of HB
286: they "eliminated the clause that eliminated" the Arctic
National Wildlife Refuge (ANWR). While ANWR had been included in SB
185 in the year 2003, it had been eliminated from the exploration
credit program included in the original version of this bill. The
RES Committee also addressed "some concern" in regards to the
regulation timeline that had been written in regards to SB 185. As
a result, a new set of regulations would be implemented after the
regulations enacted by SB 185 expire in 2007.
Ms. Jackson informed the Committee that there has been a
substantial amount of support for all areas of this legislation
throughout its development.
Co-Chair Green asked whether the Legislature might receive negative
feedback and be accused of "giving away the farm" were it to adopt
this bill.
Ms. Jackson responded that such feedback would be unlikely. The
purpose of the legislation would be "to put some oil in the
pipeline".
Co-Chair Green agreed that an increase in oil production is
"absolutely needed" to refill the pipeline.
Co-Chair Green asked Kate Giard of the Regulatory Commission of
Alaska to comment in regards to the inclusion of the ML&P transfer
price specified in Section 1 of the bill.
KATE GIARD, Chairman, Regulatory Commission of Alaska, Department
of Commerce, Community and Economic Development, shared that due to
the fact that ML&P is a regulated utility, RCA had reviewed the
issue and via an [unspecified] RCA order had conveyed the
methodology that would be acceptable to the RCA in regards to the
transfer price. RCA "has fully vetted" the calculation mechanism
regarding ML&P's transfer price and is "comfortable with this
legislation."
10:50:08 AM
Ms. Giard specified that ML&P would file, on an annual basis, the
transfer price calculation. RCA would review that information and,
were a question or concern to arise, a 30-day comment period would
be established in which people could comment in regards to the
transfer price. In addition, were the Attorney General
"representing the public advocate" concerned about the calculation,
he or she would intervene in the process. This would allow the
public to have an opportunity to get involved in process involving
the calculation of the transfer price. She assured that a process
was in place, the transfer price would be calculated, and the
Department of Natural Resources should not experience any problems
with it. In summary, RCA "fully supports" the legislation.
Senator Dyson noted, for the record, that he had been a member of
the Municipality of Anchorage Assembly during the time that the
original transfer price negotiations had been conducted, and as
such had played a significant but strictly public process role in
the endeavor.
Senator Olson questioned the reason that a specific latitude is
identified in Sec. 3, page three line 23 of the bill. The area in
question is in his election district.
10:51:57 AM
Ms. Jackson responded that the original tax that became effective
with the 2003 legislation is in place in regards to this area. The
language in questions would allow the existing tax codes to be
extended out to the year 2010 for areas south of the identified
latitude.
Senator Olson asked for confirmation that the tax codes are
currently in place.
Ms. Jackson affirmed. The 2003 legislation had established a four-
year incentive program that would be in effect from 2003 to 2007.
ANWR was included in this legislation in order to allow exploration
in that area to qualify. She understood there to be one entity that
is considering conducting seismic studies there.
In response to a question from Co-Chair Green, Ms. Jackson stated
that the new credits provided in this bill would apply to areas
"south of the Brooks Range".
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, SCS HB 286(RES), accompanied by Senate
Concurrent Resolution #16, was REPORTED from Committee with zero
fiscal note #2 dated May 5, 2005 from the Department of Natural
Resources; indeterminate fiscal note #3 dated May 5, 2005 from the
Department of Revenue; and zero fiscal note #4 dated May 5, 2005
from the Department of Commerce, Community and Economic
Development.
10:53:21 AM 10:54:27 AM
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