Legislature(2011 - 2012)SENATE FINANCE 532

04/14/2011 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 105 SOUTHEAST STATE FOREST TELECONFERENCED
Moved HB 105 Out of Committee
+ HB 24 EXTEND REGULATORY COMM. OF ALASKA SUNSET TELECONFERENCED
Heard & Held
+ HB 126 BOARD EXTENSIONS: NURSE/DENTIST/BARBERS TELECONFERENCED
Heard & Held
+ HB 119 AIDEA: PROCUREMENT; PROJECTS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR HOUSE BILL NO. 24(FIN)                                                                                                 
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Regulatory Commission of Alaska; and providing for an                                                                      
     effective date."                                                                                                           
                                                                                                                                
9:16:16 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  proposed committee substitute,  work draft                                                                    
#27-LS0173/D,   Kirsch/Kane,   4/13/11.   Co-Chair   Stedman                                                                    
OBJECTED for purpose of discussion.                                                                                             
                                                                                                                                
Co-Chair Stedman  explained that  the CS amended  the sunset                                                                    
date  to June  30, 2012  and inserted  intent language.  The                                                                    
Regulatory   Commission  of   Alaska   (RCA)  provided   the                                                                    
legislature  with   a  proposal  to  reduce   the  statutory                                                                    
timeline for tariff  filings. He stated that  he was working                                                                    
with Senator  Thomas to correct  the problem  of excessively                                                                    
long   timelines  and   resolve  late   case  filings.   The                                                                    
compromise  was devised  to provide  RCA  an opportunity  to                                                                    
address the  problem internally and report  to the committee                                                                    
in January 2012. If the  committee remained unsatisfied with                                                                    
the proposal, the issue would be addressed in 2012.                                                                             
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered. Version D was adopted.                                                                            
                                                                                                                                
9:17:49 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KURT OLSON introduced himself and his staff.                                                                     
                                                                                                                                
CONRAD  JACKSON,  CHIEF   OF  STAFF,  REPRESENTATIVE  OLSON,                                                                    
explained   the  CS.   The  bill   extends  the   Regulatory                                                                    
Commission  of Alaska  sunset. The  CS provided  a one  year                                                                    
extension. He felt that the  Regulatory Commission of Alaska                                                                    
continued  to  serve  the public  interest.  The  Regulatory                                                                    
Commission  of  Alaska   provided  continuity  of  utilities                                                                    
balanced  with the  consumer's ability  to pay  a reasonable                                                                    
price. He stated that the  Regulatory Commission of Alaska's                                                                    
job was to protect the public.                                                                                                  
                                                                                                                                
9:19:58 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  mentioned  one Senate  Finance  Committee                                                                    
fiscal  note reflecting  the cost  of $8,932,100  in program                                                                    
receipts  for  a  one  year   extension  of  the  Regulatory                                                                    
Commission of Alaska.  The funding also existed  in the FY12                                                                    
operating budget.                                                                                                               
                                                                                                                                
Senator  Thomas  understood  the  problem  that  had  arisen                                                                    
including the  opening of  documents without  addressing the                                                                    
issue. He wished  to address the issue with a  plan from the                                                                    
Regulatory Commission  of Alaska. He acknowledged  that much                                                                    
of  the  issue  involved   consumer  protection.  He  looked                                                                    
forward  to  better  understanding  and  resolution  of  the                                                                    
problem.                                                                                                                        
                                                                                                                                
9:21:05 AM                                                                                                                    
                                                                                                                                
Senator Ellis expressed confidence  in the current chair Mr.                                                                    
Bob Pickett.  He noted large  improvement over  the previous                                                                    
leadership.                                                                                                                     
                                                                                                                                
Representative Olson expressed  concerns about promises made                                                                    
three and four years ago.  He wished to correct the problems                                                                    
without eradicating the Regulatory  Commission of Alaska. He                                                                    
expressed confidence  in Chair Pickett. He  hoped to balance                                                                    
past  problems  with  the future  Regulatory  Commission  of                                                                    
Alaska.                                                                                                                         
                                                                                                                                
9:22:41 AM                                                                                                                    
                                                                                                                                
Senator McGuire appreciated the clean sunset bill.                                                                              
                                                                                                                                
9:23:15 AM                                                                                                                    
                                                                                                                                
KRISTIN    WINTERS,    GOLDEN     HEART    UTILITIES    (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
She supported  the reduction of  the statutory  timeline for                                                                    
rate  filings. She  informed that  she was  the director  of                                                                    
regulatory   affairs  for   Golden   Heart  Utilities.   She                                                                    
explained  that  Golden  Heart Utilities  filed  rate  cases                                                                    
annually  beginning  in  1999.  She  pointed  out  that  she                                                                    
continued to  have increased operating,  infrastructure, and                                                                    
investment costs without a growing  customer base. She noted                                                                    
the need  to file rate  cases annually. The  consequences of                                                                    
regulatory  lag  resulted  from excessively  long  statutory                                                                    
periods to resolve rate case  filings. She believed that the                                                                    
reasonable time for  the filing of a rate case  was 9 months                                                                    
and the process in use  expanded to fill the available time.                                                                    
The rate setting  process in Alaska was  outdated and failed                                                                    
to reflect  the changing nature  of the utility  industry or                                                                    
the  rapidly  changing  economy.  She pointed  out  that  27                                                                    
states were required  to conclude rate cases in  9 months or                                                                    
less.  The  lag  means  that the  Regulatory  Commission  of                                                                    
Alaska  had  not  decided  disputed   issues  prior  to  the                                                                    
utilities  filing their  next  rate  case. Thus,  subsequent                                                                    
rate filings include the disputed  issues, which led to more                                                                    
disputed issues,  inefficiencies, and increased cost  as the                                                                    
parties  continued  to  debate  the  undecided  issues.  The                                                                    
result was  high rate case  costs. She urged support  of the                                                                    
reduction in  the statutory timeline. She  advocated for the                                                                    
commission to issue  a final order for a  tariff filing that                                                                    
changed  the utilities  revenue requirement  or rate  design                                                                    
from 450 days to 270 days.                                                                                                      
                                                                                                                                
9:29:09 AM                                                                                                                    
                                                                                                                                
BOB PICKETT,  REGULATORY COMMISSION, ALASKA  CHAIRMAN, spoke                                                                    
about   the  Regulatory   Commission   of  Alaska's   recent                                                                    
legislative audit. He stated  that the Regulatory Commission                                                                    
of  Alaska  was at  a  critical  point  in its  history  and                                                                    
confronted with  large issues.  He explained  his work  on a                                                                    
procedural  schedule  offering   Alaskan's  the  ability  to                                                                    
participate   in  solving   the  Regulatory   Commission  of                                                                    
Alaska's  issues.   Part  of   the  responsibility   of  the                                                                    
Regulatory Commission of Alaska was  to work with the Alaska                                                                    
Energy Authority  (AEA) on the  administration of  the Power                                                                    
Cost  Equalization program  (PCE). The  PCE was  critical to                                                                    
the  health of  the  rural communities.  Some  of the  rural                                                                    
utilities   were   struggling.   Capable,   confident,   and                                                                    
committed  staff was  necessary  to ease  the struggles.  He                                                                    
expressed  concern with  the one  year  extension given  the                                                                    
fact   that   the   Department   of   Administration   (DOA)                                                                    
classification study  from last August resulted  in the loss                                                                    
of 100 percent of the  tariff staff. Commissioners and staff                                                                    
would interpret a  one year extension as a wind  down of the                                                                    
commission and would make personal decisions accordingly.                                                                       
                                                                                                                                
9:34:52 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  stated that he  had no intent to  move the                                                                    
bill from the committee. He  wished to provide adequate time                                                                    
for   Mr.  Pickett   to  review   the  CS   and  allow   for                                                                    
communication.                                                                                                                  
                                                                                                                                
Co-Chair Hoffman requested further  dialog with the chairman                                                                    
regarding water and sewer rates  in rural Alaska. He did not                                                                    
view  the one  year extension  as  intent to  wind down  and                                                                    
terminate the commission.                                                                                                       
                                                                                                                                
9:36:34 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  concurred that  there was no  intention of                                                                    
winding down the Regulatory Commission of Alaska.                                                                               
                                                                                                                                
Senator  McGuire echoed  the comments  of the  chairman. She                                                                    
commented  on  the  viability of  Regulatory  Commission  of                                                                    
Alaska  as discussed  in years  past.  She complimented  Mr.                                                                    
Pickett on  his leadership  since 2008. She  appreciated his                                                                    
communication with the lawmakers.                                                                                               
                                                                                                                                
Senator  McGuire  asked  about South-central  Alaska,  where                                                                    
many  gas  contracts were  not  approved  by the  Regulatory                                                                    
Commission of  Alaska. She stated  that the  contracts would                                                                    
have provided  a healthy supply  of natural gas to  the Cook                                                                    
Inlet. The  failure to approve the  contracts contributed to                                                                    
the  situation of  "rolling blackouts."  She wondered  about                                                                    
action taken  by Regulatory Commission of  Alaska to improve                                                                    
the situation.                                                                                                                  
                                                                                                                                
9:38:57 AM                                                                                                                    
                                                                                                                                
Mr. Pickett  answered that five  gas supply  agreements were                                                                    
approved in  the last 26  months. The situation  was tenuous                                                                    
and  deteriorating during  the  last 10  years. He  admitted                                                                    
difficulty  approving  capital  expenditures  and  including                                                                    
them  into the  rate  base.  He intended  to  hold a  public                                                                    
meeting with the utilities regarding  the import of gas into                                                                    
Cook Inlet.  The area  required a source  of natural  gas to                                                                    
fuel the gas  generation equipment. He stated  that he could                                                                    
not speak to the dynamics  of past gas supply agreements. He                                                                    
noted that the role of  the attorney general and interveners                                                                    
must  be  thought of  in  terms  of system  reliability.  He                                                                    
stated that the Regulatory  Commission of Alaska was charged                                                                    
to ensure just  and reasonable rates for  rate payers, along                                                                    
with reliable utility service.                                                                                                  
                                                                                                                                
9:40:40 AM                                                                                                                    
                                                                                                                                
Senator  McGuire asked  if the  statute must  be changed  to                                                                    
reflect the necessary balance.                                                                                                  
                                                                                                                                
Mr. Pickett responded  that changes in the  statutes lead to                                                                    
conflicts.  He  opined  that addressing  the  extension  and                                                                    
policy issues separately was a  sound method of tackling the                                                                    
problem.                                                                                                                        
                                                                                                                                
Senator McGuire  asked about the issue  of renewable energy.                                                                    
She stated  the strong approach for  adding renewable energy                                                                    
as a  portion of the  portfolio of available  energy supply.                                                                    
She  explained  that  the  intention  was  not  to  supplant                                                                    
hydrocarbons,    but    to    provide   an    option.    The                                                                    
"incentivization"   produced  results.   She  credited   Mr.                                                                    
Pickett with excellent communication.                                                                                           
                                                                                                                                
9:43:19 AM                                                                                                                    
                                                                                                                                
Mr. Pickett stated that the role  of the board was to review                                                                    
the  power  sale  agreement between  the  independent  power                                                                    
producer and  the regulated utility.  He mentioned  that the                                                                    
legislature  created  an  exemption  for  Fire  Island  from                                                                    
certification  requirements. He  noted that  a power  supply                                                                    
agreement for Fire Island would be reviewed.                                                                                    
                                                                                                                                
Senator   McGuire  asked   about   a  conversation   between                                                                    
Commissioner Guierd and Armstrong Oil and Gas.                                                                                  
                                                                                                                                
Mr.  Pickett  explained  that  he   was  not  privy  to  the                                                                    
conversation.   He   noted   the   great   impact   of   the                                                                    
conversation.   He  admitted   to   reading   part  of   the                                                                    
conversation transcript.                                                                                                        
                                                                                                                                
Senator  McGuire requested  a  question  and answer  process                                                                    
with  Commissioner Guiard  regarding  the conversation.  She                                                                    
opined  that  the  conversation   provided  a  deterrent  to                                                                    
development in  the state. She requested  a written response                                                                    
regarding the commissioner's response.                                                                                          
                                                                                                                                
Mr.  Pickett  agreed. He  informed  the  committee that  the                                                                    
commissioners on the panel worked  diligently to achieve the                                                                    
operating  authority approved  and he  reported that  gas is                                                                    
flowing through the pipeline.                                                                                                   
                                                                                                                                
9:47:00 AM                                                                                                                    
                                                                                                                                
PAT DAVIDSON, DIVISION OF  LEGISLATIVE AUDIT, explained that                                                                    
the  evaluation  of  the  Regulatory  Commission  of  Alaska                                                                    
identified no  new recommendations. The  division encouraged                                                                    
the  Regulatory   Commission  of  Alaska  to   continue  its                                                                    
implementation of the prior  audit recommendation, which was                                                                    
to develop regulations that  would enhance the transparency,                                                                    
accountability,  and  efficiency   of  the  decision  making                                                                    
process.  She  stated  that  the  Regulatory  Commission  of                                                                    
Alaska   partially  implemented   the  recommendation.   The                                                                    
portion that  remained outstanding, was the  work related to                                                                    
developing  regulations to  establish standards  for certain                                                                    
aspects  of discovery.  The audit  made a  recommendation to                                                                    
extend the Regulatory Commission  of Alaska for eight years.                                                                    
A  new  audit  requirement   states  that  the  division  of                                                                    
legislative audit must review  the accuracy and completeness                                                                    
of  Regulatory Commission  of Alaska's  annual report  every                                                                    
two  years.  The  annual  report  required  compliance  with                                                                    
statutory timelines. The  audit requirement supplemented the                                                                    
sunset review leading to the eight year recommendation.                                                                         
                                                                                                                                
Co-Chair  Hoffman  asked if  the  one  year extension  would                                                                    
require an audit review.                                                                                                        
                                                                                                                                
Ms. Davidson  responded that when  a board or  commission is                                                                    
extended for  one year, she  consulted with the  chairman of                                                                    
the  budget and  audit committee  to determine  the type  of                                                                    
audit needed.                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman  asked  about  possible  language  in  the                                                                    
extension that deletes the requirement for an audit.                                                                            
                                                                                                                                
Ms. Davidson responded yes.                                                                                                     
                                                                                                                                
9:49:46 AM                                                                                                                    
                                                                                                                                
HB  24  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
CSHB 126(FIN) Sponsor Statement.pdf SFIN 4/14/2011 9:00:00 AM
HB 126
HB 105 Transmittal.pdf HFIN 3/22/2011 1:30:00 PM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 AFA Letter of Support 1.12.2011.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 BOF Support Letter 4-1-11.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Coffman Cove Letter of Support.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 JCB Letter of Support.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Land Ownership and Mill Status.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Parcel Maps 12.20.2010.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 RDC Letter of Support.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 SAF Letter of Support.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Value Added 3.30.2011.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Vicinity Map.pdf SFIN 4/13/2011 9:00:00 AM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB126 HFIN CS Changes.pdf SFIN 4/14/2011 9:00:00 AM
HB 126
HB24 Sponsor Statement ver B.pdf SFIN 4/14/2011 9:00:00 AM
HB 24
HB24 Supporting Documents - Leg Audit #08-20067-11 Summary.pdf SFIN 4/14/2011 9:00:00 AM
HB 24
HB24 Supporting Documents - Email Mike O'Meara 3-15-2011.pdf SFIN 4/14/2011 9:00:00 AM
SFIN 4/16/2011 10:00:00 AM
HB 24
HB24 Supporting Documents - Leg Audit #08-20067-11.pdf SFIN 4/14/2011 9:00:00 AM
HB 24
HB24 Supporting Documents - Fax AARP 3-14-2011.pdf SFIN 4/14/2011 9:00:00 AM
HB 24
HB24 Supporting Documents - Letter GCI 3-15-2011.pdf SFIN 4/14/2011 9:00:00 AM
HB 24
HB126 BBH Auditor Cover Ltr.pdf SFIN 4/14/2011 9:00:00 AM
HB 126
HB126 BDE Auditor Cover Ltr.pdf SFIN 4/14/2011 9:00:00 AM
HB 126
SEAALASKA McDowell Group studies.pdf HRES 2/14/2011 1:00:00 PM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB 105 Public Briefing 1.24.2011.pdf HFIN 3/22/2011 1:30:00 PM
SFIN 4/14/2011 9:00:00 AM
HB 105
HB126 BON Auditor Cover Ltr.pdf SFIN 4/14/2011 9:00:00 AM
HB 126
HB 119 - CSC CSHB119 Questions and Answers.pdf SFIN 4/14/2011 9:00:00 AM
SFIN 4/15/2011 9:00:00 AM
HB 119
HB 119 - SCS CSHB119 Explanation of Changes.pdf SFIN 4/14/2011 9:00:00 AM
SFIN 4/15/2011 9:00:00 AM
HB 119
HB 119 - SCS CSHB119 Sectional Analysis.pdf SFIN 4/14/2011 9:00:00 AM
SFIN 4/15/2011 9:00:00 AM
HB 119
HB 119 - 1.21.11 Gov Transmittal LTR.pdf SFIN 4/14/2011 9:00:00 AM
HB 119
HB 119 - SCS CSHB119_Hearing_Information.pdf SFIN 4/14/2011 9:00:00 AM
HB 119
HB 24 - Letter from Kate Giard.PDF SFIN 4/14/2011 9:00:00 AM
SFIN 4/16/2011 10:00:00 AM
HB 24