Legislature(2001 - 2002)
03/18/2002 03:38 PM Senate RES
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* first hearing in first committee of referral
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SB 280-WATER/SEWER/WASTE GRANTS TO UTILITIES
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:38 p.m. and announced SB 280 to be up for
consideration.
SENATOR TAYLOR moved to adopt the proposed committee substitute
(CS) to SB 280.
CHAIRMAN TORGERSON noted that the committee had already adopted
the committee substitute.
SENATOR TAYLOR withdrew his motion.
SENATOR THERRIAULT, sponsor of SB 280, said the bill was
introduced to allow water and sewer grants to be available to
those communities that have made the decision to sell their
municipal utility into private ownership. Currently, privately
owned public water and wastewater utilities are not eligible to
participate in the grants under AS 46.03.030 (b).
The public policy call that the legislature made a
couple years ago with regards to low interest loan
funds was that the program was to benefit Alaskan
constituents and just because of a decision to sell the
utility, the constituency is still the same. As long as
the availability of the groups that can make access to
the loans or now the grants under this bill are
regulated by the RCA, to insure that the benefits flow
through to the rate payer and don't necessarily accrue
to the owners of the utility. We feel comfortable that
we should make that public policy call to continue to
serve the constituents and we have worked with the
Department of Environmental Conservation on the wording
and the Labor and Commerce Committee adopted wording
that was suggested by the department. The language is
not Fairbanks-specific and would apply to
municipalities who in the future might want to consider
whether they should sell their utility.
SENATOR HALFORD said section 3 limits the private for profit
utilities to only those that are the primary utilities for
municipalities and asked if that's how it was supposed to read.
SENATOR THERRIAULT said yes.
SENATOR HALFORD said that all the private water systems in his
district would be ineligible.
SENATOR THERRIAULT explained that originally it was pretty wide
open, but then it would apply to every trailer park that has a
system. That would mean a lot more new applicants to the pool who
had not participated in this process before and higher
administrative costs.
SENATOR HALFORD said he could see putting a size limitation on
the program, but making grants available at a higher rate of
eligible cost to smaller municipalities. They would be making
smaller grants than would apply to the water system in, for
example, the Municipality of Anchorage, which is much larger than
those in communities with 1,000 people in them. If they were
eligible, they would be under the 50 percent cap because they are
in a larger community. He thought this might be discriminatory
towards the private sector systems that may be very big systems.
SENATOR THERRIAULT said the committee could consider limiting the
grants so that they do not go to small trailer parks, for
instance.
SENATOR HALFORD noted that the initial fiscal note had an
estimate of 50 private utilities but a more recent fiscal note is
zero. He asked if that was the difference.
SENATOR THERRIAULT said it was.
SENATOR TAYLOR said his question regards section 2 that says a
public utility is eligible to apply for a grant if the utilities'
rates are subjected to regulation by the RCA. Other than some
telephone companies in all four of the major communities he
represents, none of them are subject to regulation under the RCA
because they're home ruled municipalities and they operate their
own water, sewer and electrical systems. They would not be able
to apply for any of these grants.
CHAIRMAN TORGERSON explained that he was looking at the Labor and
Commerce committee substitute and that was now in section 3.
MR. DAN EASTON, Director, Division of Facility Construction and
Operations, DEC, said DEC has not taken a position on this bill.
It's a policy issue that DEC can implement either way, with or
without privately owned utilities.
CHAIRMAN TORGERSON said they would start with Senator Halford's
question about limiting municipal eligibility to the primary
utility. He asked if there is a better way to word it to include
some of the larger users that aren't the primary server, but may
serve more than a smaller municipality of 1,000.
MR. EASTON said there is a way to do that. The bill started out
including everybody that was RCA regulated and was down to
basically 10 customers. That added about 30 utilities to the
eligibility pool.
CHAIRMAN TORGERSON asked how many communities are not RCA
regulated, such as Ketchikan.
MR. EASTON replied that the municipal systems generally are not
RCA regulated; they are exempt.
SENATOR HALFORD asked if private systems within a municipality
are regulated.
MR. EASTON replied that they are if they serve more than 10
people.
SENATOR STEVENS said he heard in the Labor and Commerce Committee
that 36 communities are regulated now and this bill would add
another 50. The concern was that by almost tripling the pool, the
size of the grants would go down. He asked how big the grant pool
is.
MR. EASTON replied that there are 20 existing non-municipal RCA
regulated water and sewer utilities. DEC estimates that another
30 are subject to regulation, but aren't currently regulated by
the RCA. The total pool of non-municipal privately owned water-
sewer utilities would be about 50. Thirty-six municipalities in
the last 10 years participated in the program. He surmised, "So,
it involves an increase from 36 to 86 in the eligibility pool."
SENATOR HALFORD asked if the legislature opens it up to cover any
private utility, would DEC establish some kind of criteria for
rating the proposals. He thought as long as DEC uses criteria to
rate them, all of their constituents should be in the same pool
and have the same opportunity.
MR. EASTON responded that if you increase the pool of applicants
and shift it toward the small grant recipients, it creates work
for his division and that would require another position.
CHAIRMAN TORGERSON asked how many utilities serve 10 to 50
customers.
MR. EASTON replied about 20 of the total 50 are larger ones and
about 30 serve less than 100 customers.
SENATOR HALFORD asked how they choose between the grant
applications now.
MR. EASTON explained that they are ranked and scored on the basis
of public health impact, environmental impact, community
operation maintenance capacity and a number of lesser factors.
DEC assigns a numerical rank based on those factors.
SENATOR HALFORD asked if DEC could score the other private
utilities in the same way.
MR. EASTON replied yes.
SENATOR HALFORD said the operational fiscal note will be
different if they try to make it apply to everybody. He asked
what the operational fiscal note would be.
MR. EASTON said $94,000.
SENATOR TAYLOR said a lot of trailer courts out there serve more
than 10 customers, but if the service is included in the rental
fee, they aren't regulated by anyone except DEC, who forces them
to check their water and chlorinate and do other things. He asked
if DEC expects the pool to expand with those who might wish to be
regulated if they had this advantage.
MR. EASTON replied yes. "These grant programs could serve as an
incentive to become RCA regulated."
SENATOR TAYLOR said:
That's going to automatically preclude all the systems
that I have the most concern about right now. That is
Wrangell, Petersburg, Sitka and Ketchikan are not going
to be able to apply for any of these funds, whereas
those other utilities that are now regulated by RCA
would be able to apply. It becomes kind of a separate
old boys club over here that the rest of the
communities can't get into. I'm wondering if there's
some reason why we need to use that as the definition
point on who gets access to the funds.
MR. EASTON replied that the municipalities would remain eligible
for the grants.
So, Sitka, Ketchikan and Juneau would continue to be
eligible for the grants. The reason for requiring RCA
economic regulation, I believe, is that any advantage
that is earned by virtue of receiving the grant is
passed on to the ratepayers. That's a function of RCA
regulation.
4:05 p.m.
SENATOR TAYLOR noted that language on page 2, line 17, says that
a utility not only has to be the primary utility for a
municipality, but "and" is inserted to add, "its rates are
regulated." He asked how the communities in his district will
qualify for the grants.
MR. EASTON pointed out that they would qualify under section
1(b), which deals with municipalities. Section 3(i) only applies
to privately owned utilities.
SENATOR HALFORD moved on page 2, line 17 to delete "it serves as
the primary utility for a municipality and," so it would say, "A
public water and sewer utility is eligible for a grant for
projects described in (b)(1)-(3) of this section if its rates are
regulated by the Regulatory Commission of Alaska."
SENATOR THERRIAULT pointed out that basically takes them back to
the original bill.
There were no objections and amendment 1 was adopted.
SENATOR TAYLOR moved to pass CSSB 280(RES) from committee with
individual recommendations.
SENATOR WILKEN stated that this bill has an affect on a utility
of which he is a shareholder and it also has a positive affect
for constituents that he represents.
There were no further comments and CSSB 280(RES) passed from
committee.
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