Legislature(1993 - 1994)
04/19/1994 08:30 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 213 - APUC EXTENSION AND REGULATORY COST CHARGE Co-chair Pearce directed that SB 213 be brought on for discussion and referenced proposed amendments. She then spoke specifically to Amendment No. 1, requested by Anchorage Municipal Light and Power, and noted that since no one had furthered need for the amendment, the assumption is that it will not be offered. No one indicated to the contrary. Co-chair Pearce next directed attention to Amendment No. 2, proposed by GCI and supported by Co-chair Frank. Senator Rieger OFFERED Amendment No. 2 for discussion purposes. He then questioned the following language: Bonds or other debt issued to finance unregulated, competitive ventures by a municipally owned utility shall not be incurred in a manner that would permit a creditor, on default, to have recourse to the assets of the basic regulated utility business. advising that while it appears, on balance, to be good policy, arguments could be made either way. He suggested that it would require much stricter separation of an entity "that has a regulated monopoly power." Senator Sharp voiced need for a clear understanding that the legislative intent is not to allow shifting of costs to any portion of a regulated monopoly. He said that was the basis of his support for the amendment. Co-chair Pearce called for a show of hands on adoption of Amendment No. 2. Amendment No. 2 was ADOPTED with all four members present indicating support. Co-chair Pearce announced that while Amendment No. 3 was logged in, it does not reflect an actual amendment. Committee attention was directed to Amendment No. 4 by Senator Sharp. Senator Sharp OFFERED Amendment No. 4 for discussion purposes. Co-chair Pearce OBJECTED. Senator Sharp said that he met with APUC representatives and other interested parties in an attempt to develop "more gentle, kinder wording" to that inserted by Senate Judiciary. Research on wording in authorizing statutes from New York and Wisconsin produced the language proposed in Amendment No. 4. It is intended to provide APUC the tools it needs to properly regulate and make emergency decisions on service areas. Senator Rieger said he was comfortable with existing language. He then suggested that if the amendment is to be adopted, the word "necessarily" should be deleted and "reasonably" inserted in lieu thereof. APUC has given reasonable examples of need to go beyond the express granting of power in statute. Senator Rieger then formally MOVED to change "necessarily" to "reasonably." Co-chair Pearce called for objections. None were raised, and the Amendment to Amendment No. 4 was ADOPTED. [Co-chair Frank arrived at this time.] FORMER REPRESENTATIVE ALYCE HANLEY, Alaska Public Utilities Commission Member, and BOB LOHR, Executive Director, Alaska Public Utilities Commission, came before committee. Mr. Lohr said that language within Amendment No. 4 "looks better" following the adopted language change. He referenced earlier submission of six versions of sample language based on other utility commissions nationwide as well as language designed to address environmental issues and ensure that they do not "come up" as implied powers. They have to be explicitly granted by the legislature. As an alternative to Amendment No. 4, Mr. Lohr advised that existing statutory language could simply be amended by placing a period after the citation to AS 42.05.711. (See CSSB 213 (Jud), page 1, line 9.) Senator Sharp referenced recent judicial decisions stemming from lack of specificity in terms of powers and duties for various agencies. Under that decision making process both the legislature and agencies lose control. He voiced a preference for inclusion of language that "at least gives some direction and some legislative intent on what the duties are . . . ." Co-chair Frank stressed need for reasonable middle ground and voiced his belief that language within Amendment No. 4 meets that goal. [Senator Kerttula arrived at this time.] Co-chair Pearce called for a show of hands on adoption of Amendment No. 4. The motion CARRIED on a vote of 5 to 1 (Senator Kerttula was opposed), and Amendment No. 4 was ADOPTED. Senator Kelly explained that Amendment No. 5 would delete language mandating cable television regulation by APUC. He suggested that the issue represents a policy call that should be made on its own merits rather than as part of sunset legislation. At the present time, cable television may be regulated if regulation is requested. Co-chair Pearce voiced support for Senate Judiciary inclusion of cable television regulation. She further advised that the sunset process is specifically designed to bring policy calls back before the legislature. Senator Kelly MOVED for adoption of Amendment No. 5. Co-chair Pearce OBJECTED. Mrs. Hanley voiced her understanding that Amendment No. 5 would maintain the status quo. Cable television has not been regulated unless subscribers petition the commission for regulation. Co-chair Frank voiced his understanding that in situations where competition cannot be achieved and the result is a monopoly provider, regulation is somewhat reluctantly endorsed since it provides a measure of protection to the public. He then inquired concerning the philosophy behind deregulation of cable television. Mr. Lohr said that regulation is less compelling for television because it is not an essential service as is water or electricity. The monopoly status is no longer as natural as it once was in that there is limited competition and alternative ways of delivering signals. Many local exchange companies nationwide are "looking at providing cable service" through fiber optic telephone lines. At that point, there will be substantial competition for cable services. Mr. Lohr next spoke to the implications of excluding basic tier cable service from regulation. That is the only issue in question. The federal cable reregulation act of 1992 preempts state regulation of anything (premium channels) above the basic tier. If the state were to statutorily exclude basic tier regulation, the federal government, in regulations under new federal legislation, would preempt the state, and the FCC would assume jurisdiction over basic tier channels. Mr. Lohr voiced his understanding that the amendment would continue to allow subscribers in Alaska to petition for regulation by APUC. However, if opportunity for petition is closed, the federal government would preempt state regulation and would regulate basic tier service from Washington, D.C., through a cumbersome complaint process that is not adaptable to local conditions. Co-chair Frank voiced his understanding that Amendment No. 5 would leave petition opportunities in tact. Mr. Lohr concurred. Co-chair Frank said he had heard no good reasons for exempting cable television from regulation. Senator Kelly noted that premium channels are regulated by federal law. Co-chair Frank asked if the federal government also regulates basic tier service. Mr. Lohr responded affirmatively, explaining that federal regulation applies in "any community where effective competition is not found to exist." Co-chair Pearce voiced her understanding that while the cost of basic service decreased following passage of federal law, the package most people subscribe to, which includes "some sort of a premium channel," increased. Regulation thus resulted in higher fees. Mr. Lohr explained that the complex federal formula said that the average monthly revenues of a cable utility could not increase. However, the formula allows cable companies to shuffle rates within that package. Since that time, the FCC issued a subsequent order resulting in an average 7% reduction. It was recognized that the original intent of federal legislation was not being accomplished. Discussion followed concerning the number of subscribers needed to petition the APUC for regulation. Further discussion followed regarding the cost of cable television regulation. Mr. Lohr explained that regulation for basic tier would make the company's basic tier gross revenues subject to the regulatory cross charge of 4/10 of a percent. Senator Kelly voiced concern raised by utilities that in addition to the RCC rate, they expend thousands of dollars for attorneys to put rate-case packets together. The cost to businesses is higher than merely the RCC rate. Mr. Lohr concurred that preparation of rate cases involves both attorneys and accountants. Senator Kelly noted that this cost is passed on to the consumer. Co-chair Frank voiced concern that regulation would prevent additional competition in the market. Further noting the costs involved and the fact that federal regulation is in place, the Co-chair voiced support for Senator Kelly's amendment. In final comments on the issue, Senator Kelly voiced his understanding that new federal regulations cover all cable television premium channels. Mr. Lohr explained that the regulations apply to all premium channels "for which there is not effective competition." Co-chair Pearce called for a show of hands on adoption of Amendment No. 5. The motion CARRIED on a vote of 4 to 2 (Co-chair Pearce and Senator Rieger were opposed), and Amendment No. 5 was ADOPTED. Senator Kelly MOVED that CSSB 213 (Finance) pass from committee with individual recommendations. No objection having been raised, CSSB 213 (Finance) was REPORTED OUT of committee with zero fiscal notes from the Dept. of Revenue and the Dept. of Commerce and Economic Development. Co- chairs Pearce and Frank and Senators Kelly, Rieger, and Sharp signed the committee report with a "do pass" recommendation. Senator Kerttula signed "no recommendation."