Legislature(1993 - 1994)

04/06/1993 01:30 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     HOUSE FINANCE COMMITTEE                                   
                          APRIL 6, 1993                                        
                            1:30 P.M.                                          
  TAPE HFC 93 - 95, Side 1, #000 - end.                                        
  TAPE HFC 93 - 95, Side 2, #000 - end.                                        
  TAPE HFC 93 - 96, Side 1, #000 - end.                                        
  TAPE HFC 93 - 96, Side 2, #000 - #386.                                       
  CALL TO ORDER                                                                
  Co-Chair Ron Larson called the meeting of the House  Finance                 
  Committee to order at 1:30 P.M.                                              
  Co-Chair Larson               Representative Brown                           
  Vice-Chair Hanley             Representative Foster                          
  Representative Therriault     Representative Grussendorf                     
  Representative Hoffman        Representative Martin                          
  Representative Navarre        Representative Parnell                         
  Representative MacLean was not present for the meeting.                      
  ALSO PRESENT                                                                 
  Brent Petrie,  Alaska Energy  Authority, Anchorage,  Alaska;                 
  Bob  Martin, Jr.,  General  Manager, Tlingit-Haida  Electric                 
  Authority,  Auke   Bay,   Alaska;  Judy   Mathias,  Aid   to                 
  Representative   Ron   Larson;   Dave  Hutchens,   Executive                 
  Director, Alaska  Rural Electric  Coop Association  (ARECA),                 
  Anchorage,  Alaska; Juanita  Hensley, Director,  Division of                 
  Motor Vehicles, Department of Public Safety.                                 
  SUMMARY INFORMATION                                                          
  HB 216    An Act  relating to  power cost  equalization; and                 
            providing for an effective date.                                   
            HB   216  was   held  in  Committee   for  further                 
  HB 179    An  Act  relating  to  motor  vehicles and  mobile                 
            homes; and providing for an effective date.                        
            HB  179   was  held   in  Committee   for  further                 
  HOUSE BILL 216                                                               
       "An  Act  relating  to  power  cost  equalization;  and                 
       providing for an effective date."                                       
  Co-Chair Larson explained the changes  made in preparing the                 
  work draft #8-LS0010\J, Cramer, dated 4/06/93 to HB 216.                     
  (testified  via  teleconference) noted  that 9.82  cents per                 
  kilowatt-hour  cost  is  based  on  the 1991  calendar  year                 
  residential sales for utilities in Anchorage,  Fairbanks and                 
  Juneau.  This  is the weighted  average retail cost for  the                 
  first 500 kilowatt-hours  per month  which rate payers  paid                 
  for   utilities.     Representative  Brown   questioned  the                 
  information source  used to  determine those  figures.   Mr.                 
  Petrie advised the information was  provided from the Alaska                 
  Energy  Authority electric  power statistic  report directly                 
  originating  from the utilities.   Representative Brown said                 
  the  figures had  not  been reviewed  by  the Alaska  Public                 
  Utilities Commission (APUC).  Mr.  Petrie commented that the                 
  cost  includes   monthly cost  and charges  that  a customer                 
  needs to have service.                                                       
  Representative Hoffman asked how much additional money would                 
  be needed to fully fund the program.   Mr. Petrie noted that                 
  $403 thousand  additional dollars  would be  needed to  fund                 
  both the state offices and facilities.   To include schools,                 
  costs would increase by an additional $566 thousand dollars.                 
  Representative Brown asked how the average cost per kilowatt                 
  hour differed from the retail residential rate.   Mr. Petrie                 
  replied that the consumers cost has no change, whereas,  the                 
  cost to the utility allows for  fund reserves.  He suggested                 
  using  the  rate   would  be  a  more   precise  figure  for                 
  calculation determination.                                                   
  ELECTRIC  AUTHORITY (THREA), JUNEAU,  ALASKA, noted  that he                 
  represented seven  rural communities  in South  East Alaska.                 
  He  pointed out that  his company has  been participating in                 
  the  Power Cost  Equalization  Program  since it  originated                 
  noted that he did not support  reducing the kilowatt hour to                 
  "650"  per  month.     He  pointed  out   that  the  average                 
  consumption for his company is less  than 500 kilowatt hours                 
  per month, year round and those  averages do not reflect the                 
  differences   between   the   winter  and   summer   month's                 
  consumption.  The proposed change  will affect the consumers                 
  ability to pay their electric bills.                                         
  Mr. Martin urged raising the floor in order to create a more                 
  balanced system.  Representative Brown thought the impact of                 
  raising   the  floor  would   penalize  the  more  efficient                 
  utilities.  She suggested the most equitable system would be                 
  to  lower  the ceiling.   Mr.  Martin  argued the  most fair                 
  change would be to lower the floor.                                          
  Co-Chair Larson  asked if the  utility has the  authority to                 
  average the usage  cost during the course of the  year.  Mr.                 
  Martin  stated  that  they could  offer  that  service.   He                 
  recommended that the floor be set  at 9.5 cents per kilowatt                 
  hour.   He felt  this would  provide savings.   The  average                 
  consumption  is  going  down  as  people are  becoming  more                 
  conservation minded.   Representative  Hoffman reminded  the                 
  Committee that in the colder  sections of the state  utility                 
  rates  are  much higher.    He provided  the  Committee with                 
  handouts.     [Attachment  #1].     Representative   Hoffman                 
  encouraged using  the "700"  kilowatt hours  per month  cost                 
  Mr.  Petrie commented that Attachment #1 did not include the                 
  community facilities.  The  chart indicates only residential                 
  and commercial  spaces and  excludes the  state and  federal                 
  Representative Grussendorf  MOVED  to adopt  work draft  #8-                 
  LS0010\J as the  version before the Committee.   There being                 
  NO OBJECTIONS, it was so ordered.                                            
  Representative Hoffman asked  the cost savings  in refunding                 
  the program.  Mr. Petrie replied  it would cost $1.1 million                 
  dollars.    Representative  Hoffman   recommended  including                 
  "state" facilities to Page 1, Lines 10 & 11.                                 
  Representative  Brown   asked  the  amount   saved  if   the                 
  consumption  limit  was dropped  to  650 kilowatt  hours per                 
  month.  Mr. Petrie replied the saving would be $260 thousand                 
  dollars  if  the cap  was  dropped.   Representative Hoffman                 
  MOVED  adding  "700"  as   the  cap  on  Page  1,   Line  9.                 
  Representative Brown questioned the impact of the change.                    
  (Tape Change, HFC 93-95, Side 2).                                            
  Mr. Petrie  explained the  proposed change  would create  an                 
  estimated  savings  of  $260 thousand  dollars.    A further                 
  reduction   could   affect   more   residential   customers.                 
  Representative  Brown asked if  the shortfall experienced by                 
  the utility would be passed on to all incremental users.                     
  COOP ASSOCIATION (ARECA), ANCHORAGE, ALASKA, stated that the                 
  legislation is not a subsidy to the utility and it is passed                 
  through to the  consumer on a dollar to dollar  basis.  When                 
  consumption goes above a level  being assisted, the consumer                 
  will pay the price.                                                          
  Representative Parnell asked ARECA's position on  the change                 
  proposed  by Representative  Hoffman.   Mr. Hutchens  stated                 
  that the  Association would not be handicapped  by the "650"                 
  figure.    The primary  effect  of  the change  would  be to                 
  consumers in the regional trade centers where consumption is                 
  higher.    He recommended  using  "700" kilowatt  hour level                 
  which will  not  reduce  the  cost, although  will  cap  the                 
  program  to prohibit future  growth.  He  added, ARECA would                 
  recommend  that  "state  facilities"   be  included  in  the                 
  Representative Martin OBJECTED to the motion of changing the                 
  cap figure.                                                                  
  A roll call was taken on the MOTION.                                         
       IN FAVOR:      Hoffman,    Navarre,   Brown,    Foster,                 
       OPPOSED:       Martin, Parnell, Therriault, Larson.                     
  Representatives Hanley and MacLean were  not present for the                 
  The MOTION PASSED, (5-4).                                                    
  Representative Hoffman MOVED a change on  Page 1, Lines 10 &                 
  11,  and  to Page  2,  Lines 21  &  22, to  add  "state or".                 
  Representative Hoffman explained the  effect of the  change.                 
  Co-Chair Larson felt  that removing  the word "state"  would                 
  shift  a reduction to the PCE program; if "state" is left in                 
  the legislation, there would be  an additional $600 thousand                 
  dollars  in  the PCE  program  which  would not  have  to be                 
  prorated.   Representative Hoffman  advised  that if  "state                 
  facilities"  are removed  then  "federal facilities"  should                 
  also be excluded.  Representative Martin OBJECTED.                           
  A roll call was taken on the MOTION.                                         
       IN FAVOR:      Navarre,    Parnell,    Brown,   Foster,                 
                      Grussendorf, Hoffman.                                    
       OPPOSED:       Martin, Therriault, Larson.                              
  Representatives Hanley and MacLean were  not present for the                 
  The MOTION PASSED, (6-3).                                                    
  Representative Brown  MOVED changing Page 2, Line 9, to read                 
  "based on  the weighted average  cost per kilowatt  hour for                 
  residential consumers in Anchorage".  Mr. Hutchens suggested                 
  that  the amendment  would  be  contrary  to  Representative                 
  Brown's  intent.   The  "cost"  refers  to the  cost  to the                 
  utility,  not the cost  to the consumer.   "Rate" determines                 
  what the consumer pays.                                                      
  Mr.  Petrie explained  the  "rate" versus  the  "cost".   He                 
  offered alternative language  to Page 2, Line  7, suggesting                 
  to insert the words "rate above"  after the word "power" and                 
  delete  the  language  "costs  for".   Representative  Brown                 
  referenced a letter  from the Alaska Energy  Authority dated                 
  3/31/93.   [Attachment #2].   Mr. Hutchens advised  that the                 
  language being deleted is the  language that APUC identified                 
  as "nonsensible".  Representative Larson OBJECTED.                           
  A roll call was taken on the MOTION.                                         
       IN FAVOR:      Brown.                                                   
       OPPOSED:       Navarre,  Parnell,  Therriault,  Foster,                 
                      Grussendorf, Hoffman, Martin, Larson.                    
  Representative Hanley  and Representative  MacLean were  not                 
  present for the vote.                                                        
  The MOTION FAILED, (1-8).                                                    
  Representative  Parnell  asked  what   "retail  residential"                 
  meant.    Mr. Petrie  said  it  was a  customer  class which                 
  utilities use to determine rates.                                            
  Co-Chair  Larson  HELD  the bill  in  Committee  for further                 
  HOUSE BILL 179                                                               
       "An Act relating  to motor  vehicles and mobile  homes;                 
       and providing for an effective date."                                   
  DEPARTMENT OF PUBLIC  SAFETY, provided the Committee  with a                 
  sectional  analysis of work draft #8-LS0679\K dated 3/30/93.                 
  Ms. Hensley asked the Committee to  make a change to Page 1,                 
  Line 13, deleting the  language "but only".  Section  1 will                 
  provide $100 thousand  dollars revenue  for the State  which                 
  the  Division of  Motor  Vehicles  is currently  collecting.                 
  There was no objection to the suggested changes.                             
  (Tape Change, HFC 93-96, Side 1).                                            
  Ms. Hensley continued,  Section 2 would create  ten thousand                 
  plates at $6  dollars each, costing  the State $60  thousand                 
  dollars.    There  will  be  $300 thousand  dollars  revenue                 
  generated.   The State  will develop a  plate which protects                 
  Alaska flora and fauna.                                                      
  Section 3 generates $300 thousand  dollars revenue.  Section                 
  4 will bring Alaska into compliance with the uniform federal                 
  regulation guidelines for the  issuance of handicap  plates.                 
  The standards limit the plates and parking places to persons                 
  with  mobility  handicaps.   This  section  will  generate a                 
  revenue of $16.8 thousand dollars.                                           
  Representative Brown asked if Section 3 was a new  category.                 
  Co-Chair  Larson  explained  this  section  defines  who  is                 
  eligible to park in handicap parking places.  Representative                 
  Brown recommended amending Page 2, Line  28 by deleting "or"                 
  and  adding "and" after "United States".   Ms. Hensley noted                 
  that existing law  has the  original language, although  she                 
  felt the deletion of "or" would be compatible.                               
  Section 5 ends a loophole in  current law which allows motor                 
  vehicle dealers to display one license plate on a car.  With                 
  the proposed change, a dealer would be required to place two                 
  plates on  each car.   Section  6 removes  the authority  to                 
  issue vehicle titles  to mobile homes.   The Division  wants                 
  mobile  homes to be treated as  real estate property instead                 
  of  vehicles.    This section  does  not  cover recreational                 
  travel trailers.  The proposed  change will decrease revenue                 
  by $15 hundred dollars per year  to the Department of Public                 
  Ms. Hensley continued,  Section 7 will remove  the ambiguity                 
  addressing   senior   citizens  exemptions   and  associated                 
  problems.  The amendment will allow senior citizens only one                 
  vehicle exemption per year.  Section 8 adds a $10 dollar fee                 
  for those individuals who do not renew their registration by                 
  mail.    This  section  will   provide  $2  million  dollars                 
  additional revenue to the State.                                             
  Section 9 requires a business to register their vehicle as a                 
  commercial vehicle.  The section will generate $400 thousand                 
  dollars  additional  revenue.     Representative  Therriault                 
  questioned what criteria will be used to determine whether a                 
  vehicle  is a  business  or personal  vehicle.   Ms. Hensley                 
  noted it would be necessary for the  party to declare if the                 
  vehicle   would   be    used   for   commercial    purposes.                 
  Representative Brown questioned the effect of the amendment.                 
   She  asked  the amount  that  a commercially  used vehicles                 
  would be charged.   Ms. Hensley  replied a car is  currently                 
  charged  $35   dollars  registration   fee;  with  the   new                 
  legislation the charge will be $51 dollars.                                  
  Representative Brown pointed  out the loop hole used on Page                 
  4, Line 13, in the usage of the word "or".  She advised that                 
  many employees, as  a part of their job  are required to use                 
  their personal  vehicle for  commercially related  purposes.                 
  Ms. Hensley said  that the language  proposed is not new  to                 
  the legislation and currently is in statute.  A personal car                 
  would  not  be required  to  be registered.   Representative                 
  Brown MOVED to delete  "or" and insert "and" after  the word                 
  Committee discussion followed regarding  the recommendation.                 
  Representative Hanley OBJECTED.                                              
  A roll call was taken on the MOTION.                                         
       IN FAVOR:      Brown, Hoffman.                                          
       OPPOSED:       Parnell,  Therriault,   Hanley,  Martin,                 
  Representatives Foster, Hanley, Navarre and MacLean were not                 
  present for the vote.                                                        
  The MOTION FAILED, (2-5).                                                    
  Ms. Hensley stated that Sections 10 - 13 would address motor                 
  vehicle  municipality registration tax which the Division of                 
  Motor Vehicles  currently collects  for the  municipalities.                 
  These sections were not  in the original bill and  they were                 
  amended in the Labor and Commerce Committee  to increase the                 
  motor vehicle registration tax.                                              
  (Tape Change, HFC 93-96, Side 2).                                            
  Ms. Hensley indicated  that the  proposed legislation  would                 
  increase the motor  vehicle tax seventy percent in  the next                 
  two years.  Section 10 increases the tax thirty-five percent                 
  the first year.   Section  11 is an  additional increase  of                 
  thirty-five  percent   the  following  year.     Section  12                 
  increases  the administrative  fees  which  the Division  of                 
  Motor  Vehicles  would  pay,  from  five to  eight  percent.                 
  Section 13 will establish the motor vehicle registration tax                 
  which the Division collects from the municipalities based on                 
  computations  from  the Department  of  Labor which  will be                 
  finalized in 1998.                                                           
  Section 14 is a cross reference  to the section dealing with                 
  handicap plates.  Section 15 defines "vehicle".   Section 16                 
  is the  repealer of mobile home areas  indicated in statute.                 
  Section 17 -20  clarifies the  effective dates the  previous                 
  Ms. Hensley summarized the  additional revenues which  would                 
  be generated  from  the proposed  version.    Representative                 
  Martin  thought  the   State  was  taking  funds   from  the                 
  municipalities.  Ms. Hensley pointed out this would increase                 
  what  the State  remits  back to  the  municipalities.   The                 
  Committee discussed the  impact on  local government and  to                 
  Representative Hanley MOVED to delete Section 13 and Section                 
  20.  These two sections address  the automatic COLA which is                 
  in statute.  It allows  departments to increase fees without                 
  coming  back to the  Legislature.  Ms.  Hensley replied that                 
  the Department would support the amendment.  There being  NO                 
  OBJECTION, it was adopted.                                                   
  Discussion  followed regarding the  changes proposed  in the                 
  legislation.  Co-Chair Larson noted his concern with raising                 
  the motor vehicle  registration fees seventy percent  in the                 
  next two years.                                                              
  HB 179 was HELD in Committee for further discussion.                         
  The meeting adjourned at 4:00 P.M.                                           

Document Name Date/Time Subjects