01/24/2013 01:30 PM Senate LABOR & COMMERCE

          SB  14-ELECTRIC/TELEPHONE COOPS: BOARD TERMS                                                                      
                                                                                                                                
CHAIR MIKE  DUNLEAVY announced  the consideration  of SB  14, "An                                                               
Act relating to  the term of office of directors  of telephone or                                                               
electric cooperatives." He stated that  his intention was to hear                                                               
and move  the bill from committee  today if that was  the will of                                                               
the committee.                                                                                                                  
                                                                                                                                
1:31:16 PM                                                                                                                    
SENATOR FRED DYSON,  sponsor of SB 14, introduced  SB 14 speaking                                                               
to the following sponsor statement:                                                                                             
                                                                                                                                
     Senate  bill   14  will  change  the   term  limit  for                                                                    
     directors  on  the  boards of  telephone  and  electric                                                                    
     cooperatives.  Current  statute, AS  10.25.160,  states                                                                    
     that terms for  directors can only be  three years, and                                                                    
     this bill will allow  cooperatives to lengthen director                                                                    
     terms   to  four   years.   This   change  will   allow                                                                    
     flexibility  among cooperatives  and will  increase the                                                                    
     effectiveness  of   this  important  industry   in  the                                                                    
     following ways:                                                                                                            
                                                                                                                                
     Longer terms  will allow more stability  and continuity                                                                    
     to  each cooperative  board;  each  director will  have                                                                    
     more  time to  be  productive after  going through  the                                                                    
     learning  curve  of  the industry.  It  will  give  the                                                                    
     additional  option of  having  elections for  directors                                                                    
     [every   two  years],   potentially  saving   money  on                                                                    
     elections for  cooperatives that  choose to do  so. The                                                                    
     change  in  term  length  will  not  be  mandatory  for                                                                    
     cooperatives  that prefer  to  maintain the  three-year                                                                    
     terms for directors.                                                                                                       
                                                                                                                                
     Senate  Bill 14  will amend  current Alaska  Statute to                                                                    
     provide  more  flexibility  to telephone  and  electric                                                                    
     cooperatives  by  giving  the option  to  lengthen  the                                                                    
     terms for directors allowing them  to be more effective                                                                    
     in their industry.                                                                                                         
                                                                                                                                
SENATOR  DYSON  noted  that  the  packets  contained  letters  of                                                               
support from  a number  of utilities. He  said his  staff, Joshua                                                               
Banks, was available to answer questions from the committee.                                                                    
                                                                                                                                
CHAIR  DUNLEAVY  opened  public   testimony  and  recognized  Mr.                                                               
Steyer.                                                                                                                         
                                                                                                                                
1:32:51 PM                                                                                                                    
PHIL   STEYER,  Director,   Government   Relations  &   Corporate                                                               
Communications, Chugach Electric  Association ("Chugach"), stated                                                               
that  the  board  of  directors  of  Chugach  was  interested  in                                                               
changing  the   statute  relating   to  electric   and  telephone                                                               
cooperatives.  It  was  specifically interested  in  amending  AS                                                               
10.25.160 to  allow a director to  serve up to four  years rather                                                               
than  the current  statutory limit  of three  years. He  said the                                                               
statute further  provides that  the terms  of directors  shall be                                                               
staggered so that [not all terms expire at the same time.]                                                                      
                                                                                                                                
MR.  STEYER  explained that  a  seven-member  board of  directors                                                               
governs Chugach. Its  bylaws comply with the  current statute and                                                               
state that  directors will be  elected to a three-year  term, and                                                               
may  run for  three terms.  Elections are  held annually  and the                                                               
election pattern is that three  directors run the first year, two                                                               
run the  second year,  and two  run the  third year.  The pattern                                                               
repeats every fourth year.                                                                                                      
                                                                                                                                
He  informed the  committee that  Chugach initiated  the proposed                                                               
statutory change primarily  to give the board  more stability and                                                               
continuity, because  it can be  destabilizing to turn  over three                                                               
of  seven directors  in one  year. The  situation is  exacerbated                                                               
when  an  additional member  leaves  the  board unexpectedly.  He                                                               
noted  that  this  circumstance had  occurred  twice  during  his                                                               
tenure with  Chugach; both times it  was a year that  three seats                                                               
were  up for  election. The  board  agreed that  having four  new                                                               
members on a seven-member board can  induce a lot of change in an                                                               
organization. He  said that with  four-year terms,  Chugach would                                                               
have an  annual election pattern of  two, two, two, and  one with                                                               
the pattern repeating every fifth year.                                                                                         
                                                                                                                                
MR. STEYER relayed that in  addition to providing more stability,                                                               
the  board  felt  that  serving  a  four-year  term  would  allow                                                               
directors to be  more productive; the learning  curve wouldn't be                                                               
as steep.  He highlighted that  the bill provided  flexibility. A                                                               
cooperative  that did  not want  to hold  annual elections  would                                                               
have the option of electing half its members every other year.                                                                  
                                                                                                                                
He  said  he  had  spoken   with  other  electric  and  telephone                                                               
cooperatives and  had found no  opposition to the bill.  He noted                                                               
that  there was  at  least one  other letter  of  support in  the                                                               
packets.                                                                                                                        
                                                                                                                                
1:37:11 PM                                                                                                                    
SENATOR MICCICHE  asked if members  elected to a  three-year term                                                               
would automatically have  an additional year added  to their term                                                               
if the bill were to pass.                                                                                                       
                                                                                                                                
MR. STEYER  said no;  each cooperative would  have to  change its                                                               
bylaws before  the term limits  could be extended to  four years.                                                               
The proposed  statutory change  simply provides  cooperatives the                                                               
option  of   putting  a  change   to  their  bylaws   before  the                                                               
membership.                                                                                                                     
                                                                                                                                
SENATOR MICCICHE asked if a  cooperative would have the option of                                                               
not changing its  bylaws and keeping election terms  that did not                                                               
exceed three years.                                                                                                             
                                                                                                                                
MR. STEYER said  yes; the language in the bill  is permissive and                                                               
does not  compel a cooperative  to do anything different  than it                                                               
is doing today.                                                                                                                 
                                                                                                                                
CHAIR DUNLEAVY found  no further public testimony  and closed it.                                                               
Finding no further questions or  discussion, he asked the will of                                                               
the committee.                                                                                                                  
                                                                                                                                
1:40:14 PM                                                                                                                    
SENATOR  MICCICHE moved  to report  SB  14, labeled  28-LS0269\U,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR DUNLEAVY announced that without objection, SB 14 moved                                                                    
from the Senate Labor and Commerce Standing Committee.