Legislature(2003 - 2004)

03/11/2004 01:30 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                 SB 337-ENERGY PROGRAMS & FUNDS                                                                             
CHAIR CON BUNDE announced SB 337 to be up for consideration.                                                                    
MS.  BECKY GAY,  Project Manager,  Alaska Industrial  Development                                                               
and Export  Authority (AIDEA) and Alaska  Energy Authority (AEA),                                                               
said  Jim  McMillan,  Deputy  Director  of  Credit  and  Business                                                               
Development, Mike  Harper, Deputy  Director of Rural  Energy, and                                                               
Sarah  Fisher-Grove, Financial  Analyst,  would  help her  answer                                                               
MS. GAY said that SB 337 amends the AEA program.                                                                                
     The first  program affected is  the Power  Project Fund                                                                    
     loan program  (PPF). The PPF program  provides loans to                                                                    
     local  utilities,  local  governments  and  independent                                                                    
     power  producers  for  the development  or  upgrade  of                                                                    
     power projects.  SB 337 proposes to  amend this program                                                                    
     by  expanding  the  definition   of  power  project  to                                                                    
     include energy  efficiency projects. Under  the current                                                                    
     statutory  definition  of  eligible  project,  AEA  has                                                                    
     actually  denied   loan  applications   for  worthwhile                                                                    
     projects such  as lighting  retrofits. In  addition, SB
     337  proposes   to  repeal  the  loan   committee  that                                                                    
     approves  loans  from  this   fund.  AEA  will  instead                                                                    
     utilize  the same  credit approval  process that  AIDEA                                                                    
     has  successfully  utilized  for  its  credit  program,                                                                    
     which  includes  an appeals  process  to  the board  of                                                                    
     The next  program affected is  the Bulk  Fuel Revolving                                                                    
     Loan  Fund program.  This  program provides  short-term                                                                    
     loans to  assist small rural communities  in purchasing                                                                    
     annual  bulk fuel  supplies.  SB  337 authorizes  loans                                                                    
     from this fund to  other entities such as corporations,                                                                    
     cooperatives and joint ventures.  The Department of Law                                                                    
     recently interpreted  the current  statutorily eligible                                                                    
     borrowers to be only  communities and natural persons -                                                                    
     that  is  private  individuals. This  change  will  not                                                                    
     expand the  definition of eligible borrower  beyond the                                                                    
     long-standing interpretation and  practice that already                                                                    
     includes other entities such as corporations.                                                                              
     SB  337 also  provides that  AEA may  invest the  Power                                                                    
     Development  Fund  and  with  the  concurrence  of  the                                                                    
     Department of  Revenue, the Power Development  Fund has                                                                    
     been invested by AEA since  1993. This bill proposes to                                                                    
     affirm this long-standing  arrangement by providing AEA                                                                    
     the statutory  authority to invest  the fund.  Then AEA                                                                    
     would continue  to remit all  earnings of this  fund to                                                                    
     the general fund.                                                                                                          
     The  general  [indisc.]  of  AEA  are  proposed  to  be                                                                    
     amended  by clarifying  that AEA  has the  authority to                                                                    
     manage various programs and  projects by issuing grants                                                                    
     and interim contracts. By acting  as an agent for rural                                                                    
     communities,  AEA  manages  power projects,  bulk  fuel                                                                    
     projects   and   alternative   energy   projects.   The                                                                    
     Legislature   has  authorized   AEA  to   manage  these                                                                    
     projects through  the appropriate process  by providing                                                                    
     AEA authority to receive and  expend federal funds from                                                                    
     entities  such as  the Denali  Commission and  the U.S.                                                                    
     Department of Energy.                                                                                                      
     In  addition, SB  337  specifies  that AEA's  statutory                                                                    
     mandate  to provide  technical  assistance  may not  be                                                                    
     used  on  an  independent   basis  for  tort  liability                                                                    
     against  AEA.  AEA  will  continue  to  be  liable  for                                                                    
     negligence  if  it  fails to  use  reasonable  care  in                                                                    
     providing the technical assistance, however.                                                                               
     And  last, this  bill proposes  to repeal  the inactive                                                                    
     Electrical  Service Extension  Fund. That  concludes my                                                                    
     comments.... I  urge your favorable support  and action                                                                    
     on this bill.                                                                                                              
CHAIR  BUNDE asked  if there  is an  actual size  designation for                                                               
small rural communities in the bulk fuel program.                                                                               
MS. GAY  replied that small  rural communities have  a population                                                               
of 2,000 or less.                                                                                                               
CHAIR  BUNDE asked  if she  knew of  any small  rural communities                                                               
that are excluded.                                                                                                              
MR.   JIM  MCMILLAN,   Deputy  Director,   Credit  and   Business                                                               
Development, AIDEA, said  he didn't have that  information at his                                                               
fingertips, but he would get it for the committee.                                                                              
CHAIR BUNDE said that Bethel comes to mind.                                                                                     
MR. MCMILLAN  agreed with  Bethel, but didn't  want to  venture a                                                               
guess on others.                                                                                                                
SENATOR HOLLIS  FRENCH asked for  clarification of  the provision                                                               
that repeals the committee that approves loans from the fund.                                                                   
MR. MCMILLAN explained:                                                                                                         
     When  we assumed  the rural  energy  programs from  the                                                                    
     Department of Community  and Regional Affairs, Division                                                                    
     of Energy, in 1999, the  loan committee was part of the                                                                    
     statutory process at  that time - that  the Division of                                                                    
     Energy used  for approval of power  project fund loans.                                                                    
     We  [AEA]  elected  at  that time  not  to  change  the                                                                    
     process  and go  with  the  established statutory  loan                                                                    
     committee. We have  been doing that since  1999, but it                                                                    
     was always our intent to  try and meld the rural energy                                                                    
     programs and  the process for  approval into  the long-                                                                    
     standing process  that we have  used on the  other side                                                                    
     with   Alaska   Industrial   Development   and   Export                                                                    
     In the  internal loan committee, we  have the expertise                                                                    
     on  staff  and  an  appeal  process  to  the  board  of                                                                    
     directors.  So, what  this is  doing  is repealing  the                                                                    
     statutory  loan committee,  which is  comprised of  the                                                                    
     director  of OMB,  the executive  director  of AEA  and                                                                    
     three  public members  from various  judicial districts                                                                    
     appointed  by  the  governor  - in  moving  it  to  the                                                                    
     internal process similar to AIDEA.                                                                                         
CHAIR BUNDE asked if the  loan committee's duties are being moved                                                               
to  another already-existing  credit committee,  why is  there no                                                               
change in  the fiscal note. He  thought savings would be  seen at                                                               
least with per diem.                                                                                                            
MR. MCMILLAN  replied that is correct,  but for the past  year or                                                               
two,  all of  the  meetings have  been conducted  telephonically.                                                               
There  have been  no  requests for  payment of  per  diem by  the                                                               
committee members. The meetings last about an hour or less.                                                                     
CHAIR BUNDE said he was glad  he gave Mr. McMillan an opportunity                                                               
to brag  about the  committee's efficiency and  said that  SB 337                                                               
would be held for a later meeting.                                                                                              

Document Name Date/Time Subjects