Legislature(1993 - 1994)

03/30/1994 01:48 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 S/JUD - 3/30/94                                                               
 CHARGE) before the committee as the next order of business.                   
 JOSH FINK, aide to the Senate Labor & Commerce Committee, addressed           
 changes made to the original bill in the Labor & Commerce CS.                 
 In Section 1, the maximum ceiling on the regulatory cost charge was           
 raised from .61 percent of gross revenues to .8.  The change in               
 Section 1 was necessitated by the change in Section 2.                        
 In Section 2, the cost of power is deleted from electric utilities'           
 gross revenues prior to the application of the regulatory cost                
 charge.  Mr. Fink explained that according to the auditor the                 
 percent workload committed to electric utilities is about 34                  
 percent.  At the time the audit was done, the RCC was at 5.77                 
 percent.  The auditor asserted that $192,000 was over collected               
 from electric utilities, that they were being over collected from             
 and there needed to be an adjustment made.                                    
 Speaking to Section 3, Mr. Fink explained that currently with the             
 regulatory cost there are four quarters that the charges are                  
 submitted by the utilities to the Commission.  The fourth quarter             
 charges come in after the beginning of the new fiscal year, so if             
 the Commission has overcharged on the regulatory cost charge, that            
 money should count against the following year's cost, but instead             
 it has been lapsing into the general fund.  The auditor recommended           
 that the Department of Administration be allowed to earmark that              
 money so that the Legislature can reappropriate in the next fiscal            
 year which will reduce the regulatory cost charge.                            
 Number 308                                                                    
 SENATOR DONLEY asked if the audit report included any other                   
 utilities.  MR. FINK acknowledged that it did, however, the                   
 electric utilities were particularly concerned about the over                 
 collections so the committee felt that should be addressed, but the           
 other utilities did not bring forward any concerns.                           
 Number 370                                                                    
 Addressing Section 4, MR. FINK pointed out that currently, if a               
 regulated utility wants to opt out and 10 percent of the first                
 5,000 and 3 percent after the first 5,000 subscribers sign a                  
 petition, an election will be held.  To opt in to become a                    
 regulated utility, 25 percent of the subscribers must sign a                  
 petition to get an election.  The auditor recommended the opt in              
 and opt out procedures be the same, and the change in Section 4               
 accomplishes that recommendation.                                             
 Section 5 increases the threshold of gross revenues for an electric           
 or telephone utility before a utility needs to be regulated by                
 changing the amount from $325,000 to $500,000.  This was also a               
 change recommended by the auditor, so that small utilities are not            
 as closely regulated as large utilities.                                      
 Section 6 increases the threshold of gross revenues for other                 
 utilities from $100,000 to $150,000 before they need to be                    
 Section 7 increases the threshold of gross revenues for refuse                
 collection utilities from $200,000 to $300,000.  It also applies              
 the same opt in standards provided in Section 4.                              
 Section 8 makes it easier for the consumers to get an election for            
 cable by changing it from 25 percent of the subscribers to 10                 
 percent of the subscribers.                                                   
 Section 9 is a technical conforming section.                                  
 Section 10 raises the regulatory cost charge for pipeline carriers            
 from .61 percent to .8 percent for the same rationale that applies            
 to Section 1.                                                                 
 Section 11 identifies over collection from the pipeline carrier's             
 regulatory cost charge so that it may be applied to the next year             
 to reduce the regulatory cost charge.                                         
 Section 12 is an extension of the Alaska Public Utilities                     
 Commission from June 30, 1994, to June 30, 1998.                              
 Section 13 repeals the sunset of the regulatory cost charges, the             
 rationale being that when the Commission is under sunset review,              
 the regulatory cost charge can be addressed at that time.  When the           
 regulatory cost charge was passed it set a sunset date of December            
 31, 1994, exclusive of the APUC sunset.                                       
 Section 14 staggers the terms of the members of the Alaska Public             
 Utilities Commission.  Currently, two members of the commission               
 terms expire on the same year.  The section was drafted so that it            
 won't affect any current sitting members, but will apply to the               
 next round of appointments.  Right now, one of the consumer seats             
 and one of the engineering seats expire at the same time.                     
 Number 505                                                                    
 DAVE HUTCHENS, Executive Director, Alaska Rural Electric                      
 Cooperative Association, stated that there were issues related to             
 the legislation that he wanted to address.                                    
 The first issue is whether or not the APUC should be extended, and            
 ARECA's view is  that should be. APUC was created with the charge             
 of separating out the service areas and to protect the consumer               
 The second issue relates to the section in the committee substitute           
 which relates to the regulatory cost charge formula.  He said the             
 at the present time, the regulatory cost charge is based on a flat            
 charge per revenue, and the workload and the revenue requirements             
 from RCC don't match very well.  The change to the formula was                
 recommended by ARECA.  He directed attention to and reviewed a                
 handout containing a summary of the changes that would result from            
 changing the RCC.                                                             
 TAPE 94-28, SIDE B                                                            
 Number 010                                                                    
 The third issue relates to Section 1 of the proposed Judiciary CS,            
 which would eliminate the phrase "liberally construed" from the               
 present APUC statute and replace it with the directive that their             
 statutes be "those specifically conferred by statute or necessarily           
 implied by a statutory grant of authority."   ARECA believes that             
 it important that the powers of the Commission be those that the              
 Legislature determines them to be; that the Commission should not             
 be able to expand their authority by interpretation and by                    
 liberally construing their powers.  Mr. Hutchens emphasized that              
 ARECA does not have a problem with the present Commission, but they           
 see this as preventative maintenance to keep from having problems             
 in the future.  Also, he suggested an effective date be added                 
 making Section 1 effective July 1, l995, which would give the                 
 Commission time to come back to the Legislature with a list of  the           
 things that they don't have clear statutory authority to do, but              
 that they are now doing.  The items on that list that the                     
 Legislature agrees with could be enacted next year before this                
 would go into effect.                                                         
 Number 055                                                                    
 DON SCHROER, Chairman, Alaska Public Utilities Commission, stated             
 that aside from the "liberally construed" section, the Commission             
 doesn't have any large objections to the bill.                                
 Number 063                                                                    
 SENATOR TAYLOR asked Mr. Schroer, for the record, except for                  
 Section 1, did APUC agree with the housekeeping measures contained            
 in the committee substitute, and MR. SCHROER acknowledged that they           
 MR. SCHROER said the APUC has no quarrel whether they are financed            
 by RCC or under the general fund.  Their goal is to keep it as                
 simple as possible. They have it working now, and they have done so           
 without asking for additional funding.                                        
 Number 086                                                                    
 MR. SCHROER requested that the following statement on the                     
 "liberally construed" language be included as part of the record:             
 "HB 213 would extend the Alaska Public Utilities Commission and the           
 Regulatory Cost Charge that funds it until 1998.  An amendment may            
 be proposed to delete the phrase "liberally construed" from he                
 Commission's enabling statute.  The Commission opposes this                   
 "Routinely the Commission allows interim rates to go into effect              
 without requiring the utility to escrow funds or pose a bond under            
 AS 42.05.421(c).  It does this by making rates interim refundable,            
 which again benefits the utility.  The authority for this is                  
 "liberally construed."                                                        
 "The courts have not used the term "liberally construed" very often           
 (only eight times).  Where they have, it has been to the benefit of           
 utilities in half of the cases."                                              
 "The Commission itself has only discussed the issue of "liberally             
 construed" nine times in 25 years.  In at least three of these                
 cases, the Commission acted to allow the intention of the utility             
 or applicant for a certificate to be accomplished by waiving                  
 technical irregularities.  In another, the Commission found that it           
 did not have statutory authority to recognize a doctrine of                   
 "retained rights" requested by a telephone utility under statute,             
 despite "liberally construed."                                                
 "Often the Commission has granted "temporary operating authority"             
 to a utility while its application for a certificate is pending               
 Both the customers and the utility benefit, but the authority for             
 temporary certificates is not explicit.  It comes from "liberally             
 "Many utilities face increased competition as the result of changes           
 in technology and federal law.  The Commission needs the                      
 flexibility that "liberally construed" provides to allow existing             
 utilities to compete on an equal footing."                                    
 "Regulatory statutes are generally drafted broadly.  Legislators              
 cannot foresee every problem that will arise in administering a               
 statute and the liberally construed language gives regulators the             
 flexibility to resolve these problems.   The Legislature sets the             
 goals and the policies, leaving the implementation of the program             
 to the commission.  The budget process and the sunset review                  
 process provide plenty of room for legislative oversight."                    
 "Justice Frankfurter recognized that administrative agencies were             
 created to perform a task, which neither courts nor legislatures              
 could accomplish, to regulate the practices of industries in a                
 rapidly changing world.  The same considerations that led to the              
 creation of the Public Utilities Commission led the Legislature to            
 authorize their implied powers to be liberally construed."                    
 "Deletion of this phrase would lead to strict construction of                 
 implied powers.  This means that legislation would be required                
 whenever a court finds a gap in an agency's power.  This forces the           
 Legislature back into the regulatory role that they sought to                 
 escape by creating the Commission in the first place.  Removing               
 "liberally construed" from the Commission's powers and duties                 
 section would have impacts well beyond statutory construction in              
 the courts."                                                                  
 Number 090                                                                    
 Mr. Schroer recommended that if the "liberally construed" language            
 is removed from the bill that other changes be made in the statute.           
 If that language is removed, the Commission will not be able to               
 give any temporary operating authority as they have done in the               
 past.  Also, when a utility asks for a rate increase, the APUC                
 makes them in term refundable.  The law provides for them to be in            
 term, but then the utility must put up a bond or set up an escrow.            
 The Commission liberally construes that's not necessary.                      
 Mr Schroer stated he doesn't believe that any utility has ever                
 suffered because of the "liberally construed" language, and he                
 doesn't see any reason to change it when there hasn't been any                
 problem with it.                                                              
 Number 150                                                                    
 SENATOR TAYLOR asked if there was a motion to adopt the Judiciary             
 SENATOR HALFORD moved that CSSB 213(JUD) be adopted.  SENATOR                 
 DONLEY objected and asked that the differences in the committee               
 substitute be outlined.                                                       
 Number 180                                                                    
 There was discussion on adding an effective date to the                       
 legislation, as well as discussion on the section relating to                 
 staggered terms.                                                              
 Number 235                                                                    
 SENATOR DONLEY maintained his objection to the adoption of CSSB
 213(JUD) stating he agrees with Mr. Schroer that the APUC needs the           
 "liberally construed" authority.  SENATOR HALFORD suggested adding            
 the one-year delayed effective date so that APUC could come back              
 with a proposal.  The Chairman called for a roll call vote on the             
 motion to adopt the committee substitute:  Senators Halford, Jacko            
 and Taylor voted "Yea" and Senators Little and Donley voted "Nay."            
 The Chairman stated the motion carried.                                       
 Number 285                                                                    
 SENATOR Taylor moved that an effective date of July 1, 1994 be                
 added to the committee substitute.  Hearing no objection, the                 
 amendment was adopted.                                                        
 Number 306                                                                    
 SENATOR DONLEY moved that Section 1 of the committee substitute be            
 deleted.  SENATOR HALFORD objected.  The roll was taken with the              
 following result:  Senator Donley voted "Yea" and Senators Jacko,             
 Little, Taylor and Halford voted "Nay."  The Chairman stated the              
 motion failed.                                                                
 Number 335                                                                    
 SENATOR HALFORD moved that an effective date for Section 1 of July            
 1, 1995 be added.  Hearing no objection, the Chairman stated the              
 amendment was adopted.                                                        
 Number 372                                                                    
 SENATOR DONLEY proposed a conceptual amendment to set out a                   
 separate section for cable television regulation that would                   
 automatically put cable television under the APUC except if they              
 follow the opt-out procedure.  SENATOR HALFORD voiced his concern             
 with regulating cable television and what the cost of it would be.            
 The committee then discussed a conceptual amendment that would take           
 away cable television's monopoly.  SENATOR TAYLOR stated the                  
 conceptual amendment was to remove from regulation cable                      
 television, which would remove from the authority of the APUC the             
 opportunity to regulate the geographic area, or the basic package,            
 or entry.  SENATOR DONLEY questioned how this would affect FCC                
 requirements.  SENATOR TAYLOR directed staff to request a legal               
 opinion as well as draft language on the conceptual amendment.                
 Number 540                                                                    
 SENATOR DONLEY said he wanted to propose a conceptual amendment to            
 delete the portions of the bill that create a dichotomy between               
 electrical utilities and other utilities.  He then moved to delete            
 Sections 2, 3 & 11 of the draft committee substitute.  SENATOR                
 JACKO objected.  The roll was taken with the following result:                
 Senator Donley voted "Yea" and Senators Jacko, Little, Taylor and             
 Halford voted "Nay."  The Chairman stated the motion failed.                  
 There being no further amendments to the bill, SENATOR TAYLOR                 
 stated SB 213 would be held to get a response back on the question            
 of cable television, as well as additional drafting to the                    
 committee substitute.                                                         

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