Legislature(1995 - 1996)

03/06/1995 02:38 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                          March 6, 1995                                        
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 95-40, Side 2, #000 - end.                                          
  TAPE HFC 95-41, Side 1, #000 - end.                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark Hanley  called  the  House Finance  Committee                 
  meeting to order at 2:38 p.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  David Hutchens,  Executive Director,  Alaska Rural  Electric                 
  Cooperative Association; Joshua  Fink, Staff, Senator Kelly;                 
  Don   Schoer,   Commissioner,   Alaska    Public   Utilities                 
  Commission.                                                                  
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 21     An  Act  relating  to  revocation  of  a  driver's                 
            license   for  illegal  possession  or  use  of  a                 
            controlled  substance  or  illegal  possession  or                 
            consumption of alcohol by a person at least 13 but                 
            not  yet 21  years of  age; and  providing  for an                 
            effective date.                                                    
  HB 108    An  Act  relating  to  claims  on  permanent  fund                 
            dividends   for   defaulted    public   assistance                 
            overpayments.                                                      
                                                                               
            HB 108 was rescheduled to another time.                            
  SB 47     An Act relating  to the extent to which the Alaska                 
            Public  Utilities  Commission  may   exercise  its                 
            powers when regulating  utilities; establishing  a                 
            regulatory  cost  charge on  public  utilities and                 
            pipeline carriers;  relating to the  allocation of                 
            costs  in   hearings  before  the   Alaska  Public                 
            Utilities Commission;  relating to  the method  by                 
                                                                               
                                1                                              
                                                                               
                                                                               
            which utilities are exempted from and made subject                 
            to  regulation  by  the  Alaska  Public  Utilities                 
            Commission; relating to the monetary threshold for                 
            regulation of  certain kinds of  utilities by  the                 
            Alaska Public Utilities Commission;  extending the                 
            Alaska  Public  Utilities Commission;  relating to                 
            staggered terms for  members of the Alaska  Public                 
            Utilities   Commission;   and  providing   for  an                 
            effective date.                                                    
                                                                               
            SB 47 (efd fld) was reported out of Committee with                 
            a  "do  pass"  recommendation and  with  a  fiscal                 
            impact note by the House Finance Committee for the                 
            Department of Commerce  and Economic  Development;                 
            and with two  zero fiscal notes by  the Department                 
            of   Administration,   dated   2/3/95;   and   the                 
            Department of Revenue, dated 2/1/95.                               
  HB 20     An  Act  relating to  rights  in certain  tide and                 
            submerged land.                                                    
                                                                               
            HB 20 was rescheduled to another time.                             
  SENATE BILL NO. 47                                                           
                                                                               
       "An  Act relating  to  the extent  to which  the Alaska                 
       Public  Utilities Commission  may  exercise its  powers                 
       when  regulating  utilities; establishing  a regulatory                 
       cost charge  on public utilities and pipeline carriers;                 
       relating to the allocation of  costs in hearings before                 
       the Alaska Public Utilities Commission; relating to the                 
       method by which  utilities are  exempted from and  made                 
       subject to  regulation by  the Alaska  Public Utilities                 
       Commission;  relating  to  the  monetary threshold  for                 
       regulation of certain kinds of  utilities by the Alaska                 
       Public  Utilities  Commission;  extending   the  Alaska                 
       Public  Utilities  Commission;  relating  to  staggered                 
       terms  for  members  of  the  Alaska  Public  Utilities                 
       Commission; and providing for an effective date."                       
                                                                               
  JOSHUA FINK, STAFF, SENATOR KELLY testified in support of SB
  47.  He  noted that SB 47  is the re-introduction of  SB 213                 
  from the 18th  Legislature.  He  noted that the  legislation                 
  accomplishes two  primary objectives:                                        
                                                                               
       *    1)    It  extends  the  Alaska  Public   Utilities                 
            Commission (APUC) which is currently winding  down                 
            in its sunset year; and                                            
       *    2) It re-enacts  the Regulatory Cost Charge  (RCC)                 
            which expired on December 31, 1994.                                
                                                                               
  Mr. Fink observed  that the legislation  was the product  of                 
                                                                               
                                2                                              
                                                                               
                                                                               
  numerous   committee   hearings   held   during   the   last                 
  Legislature.    He  maintained  that  the   legislation  was                 
  introduced  to  prevent   unknown  but  potentially  serious                 
  ramifications of allowing the APUC to expire.  He noted that                 
  the current  legislation is  nearly identical  to the  final                 
  version that  would have  reached the  House floor  last May                 
  10th had that body not adjourned before it was taken up.  He                 
  explained  that the RCC has since  expired and is re-enacted                 
  in SB 47.                                                                    
                                                                               
  Mr. Fink noted that another bill  has been introduced by the                 
  Senate  Labor &  Commerce  Committee  that will  incorporate                 
  further amendments affecting the APUC and/or RCC.                            
                                                                               
  Mr.  Fink referenced,  throughout his  statements,  an audit                 
  which was performed  by the  Division of Legislative  Audit.                 
  The audit report was submitted  January 26, 1993, #081404-93                 
  (copy on file).  He reviewed the legislation by section:                     
                                                                               
  *    Section 1:     Replaces    language     granting    the                 
       commission powers which  shall be "liberally construed"                 
       with language allowing the commission to do "all things                 
       necessary  or  proper  to carry  out  the  purposes and                 
       exercise  the powers  expressly  granted or  reasonably                 
       implied".                                                               
                                                                               
  Mr.  Fink  stressed   that  electric  utilities   felt  that                 
  "liberally construed" was too broad,  and in questions where                 
  the commission  did not have  express authority to  act, the                 
  legislature  should make such  policy calls.     He asserted                 
  that the new language strikes an acceptable balance.                         
                                                                               
  *    Sections 2 , 3, 10 and 11:    Re-enacts  the   RCC  for                 
       utilities and  pipelines  without  the  sunset.    This                 
       language  is  identical  to  the  former law  with  the                 
       following exception:  There are  no  sunset  provisions                 
       for the Regulatory Cost Charges.                                        
                                                                               
  Mr.  Fink observed that  this provision was  proposed by the                 
  Auditor and supported  by the APUC.   He stressed that  both                 
  asserted that the Commission's sunset  review is adequate to                 
  address  any  issues  that arise  with  the  Regulatory Cost                 
  Charge.                                                                      
                                                                               
  *    Page 3, lines 11- 13:    Adjusts the allocation  of the                 
       Regulatory  Cost  Charge  for   electric  utilities  by                 
       subtracting  the   cost  of  power  from   their  gross                 
       revenues.                                                               
                                                                               
  Mr. Fink  explained that  the Auditor  recommended the  APUC                 
  periodically  adjust the RCC  allocation among utility types                 
  to  reflect  workload  on  an  industry  by  industry  basis                 
                                                                               
                                3                                              
                                                                               
                                                                               
  utilizing a  time-keeping system.   However, the  commission                 
  argued such a  change would be  complicated and costly.   He                 
  stated  that according  to  the  Auditor electric  utilities                 
  overpaid approximately $190.0 thousand dollars  in FY 93 and                 
  telephone utilities underpaid $800.0 thousand dollars  based                 
  on APUC case time.                                                           
                                                                               
  *    Page 2, line 27 and Page 6, line 4:     Increases   the                 
       Regulatory Cost Charge ceiling for public utilities and                 
       pipeline carriers from .61 percent to .8 percent.                       
                                                                               
  Mr. Fink explained that this change  was added to offset the                 
  subtraction of the  cost of  power from electric  utilities'                 
  gross revenues before application of the  RCC.  The RCC rate                 
  would need  to be increased  roughly 30 percent  to maintain                 
  the same amount  of revenue  for the Commission's  operating                 
  costs.  He emphasized that almost all RCC charges are passed                 
  on through to consumer's utility bills.   He stated that the                 
  additional amount reflected on consumer's monthly bills will                 
  be approximately $0.20 to $0.35 cents.                                       
                                                                               
  *    Page 3, lines 20-24, and Page 6, lines 15-19:                           
       Requires the  Department of  Administration to  earmark                 
       Regulatory  Cost  Charges  over-collected for  possible                 
       appropriation by the  Legislature for the  commission's                 
       next fiscal year.                                                       
                                                                               
  Mr. Fink noted that this  section implements recommendations                 
  by the Auditor.                                                              
                                                                               
  *    Sections  4, 8 and 9:    Provides  that  subscribers of                 
       small utilities  or  utilities  otherwise  exempt  from                 
       regulation can petition  for an  election to place  the                 
       utility  under regulation under the same procedures the                 
       subscribers of a regulated utility  can petition for an                 
       election to remove the utility from regulation.                         
                                                                               
  Mr.   Fink    noted   that    this   provision    implements                 
  recommendations made  by the  Auditor and  supported by  the                 
  commission.   The Auditor  recommended the  procedures   for                 
  subscribers  to  opt-in or  opt-out  of economic  regulation                 
  should be  easier.  These  sections provide that  opt-in and                 
  opt-out procedures are identical.                                            
                                                                               
  *    Sections 5, 6, and 7:    Gives   more   consumers   the                 
       option to deregulate by raising maximum amount of gross                 
       revenues  a   utility  may  receive  under   which  the                 
       consumers may elect for deregulation.                                   
                                                                               
  Mr.  Fink  observed  that  no  existing utilities  would  be                 
  affected.  These provisions were  recommended by the Auditor                 
  and supported by  the commission.   He maintained that  they                 
                                                                               
                                4                                              
                                                                               
                                                                               
  increase the consumer's options to deregulate.                               
                                                                               
  *    Section 12:    Extends the  sunset date of the  APUC to                 
       June 30, 1999.                                                          
                                                                               
  Mr. Fink stressed that the  Auditor recommended an extension                 
  to the year  2003.  It  was felt a  four year extension  was                 
  ample.                                                                       
                                                                               
  *    Section 13:    Staggers the terms of the members of the                 
       commission.                                                             
                                                                               
  Mr. Fink explained that  the terms of the consumer  seat and                 
  the  engineering  seat currently  expire  at the  same time.                 
  This provision would stagger the terms.  It would not affect                 
  the terms of any of the current commissioners.                               
                                                                               
  *    Section 14 and 15:  Provides  that  the  change in  the                 
       commission's powers as amended in  section 1 apply only                 
       to proceedings begun on or  after the effective date of                 
       section 1, which is set in section 15 as July 1, 1996.                  
                                                                               
  Mr. Fink noted that the effective date failed in the Senate.                 
                                                                               
  DAVID HUTCHENS,  EXECUTIVE DIRECTOR,  ALASKA RURAL  ELECTRIC                 
  COOPERATIVE ASSOCIATION testified  in support of SB  47 (efd                 
  fld).   He urged the continuation of  the APUC.  He observed                 
  that border wars  between adjacent utilities existed  before                 
  the creation of  the APUC.  He stressed that SB 47 (efd fld)                 
  is a good compromise.   He expressed support for  section 1.                 
  He maintained  that "liberally construed" is too  broad.  He                 
  suggested  that  the  new  language   is  adequate  for  the                 
  Commission.  He  maintained that the new  language instructs                 
  the  court  that any  decision  to broaden  the Commission's                 
  powers should be made by the Legislature.                                    
                                                                               
  Mr. Hutchens spoke  in support  of changes made  on page  3,                 
  lines 13 - 15.  He observed that electric utilities would be                 
  allowed to  deduct  the cost  of power  from their  revenues                 
  before  deducting the  RCC.    He  observed that  the  prior                 
  formula was based on  the retail revenues of all  utilities.                 
  He  asserted that the prior method was not a good measure of                 
  the  regulatory responsibilities  of  the  Commission.    He                 
  acknowledged that there is a "rough" correlation between the                 
  number of consumers and the regulatory responsibility of the                 
  Commission.   He maintained that  revenues vary dramatically                 
  from  one  kind  of utility  to  another.    He stated  that                 
  telephone utilities' local  service charges, subject  to the                 
  RCC, amount to less  than $10 dollars a month  per customer.                 
  Electric   utilities'   average   residential   revenue   is                 
  approximately  $70  dollars  a  month.    He  stressed  that                 
  electric  utilities  must generate  the  power that  is then                 
                                                                               
                                5                                              
                                                                               
                                                                               
  provided.                                                                    
                                                                               
  Representative  Brown  asked  if  the  change in  section  1                 
  addresses a  specific case or problem.   Mr. Hutchens stated                 
  that the  Healy Clean Coal Project presented a difference of                 
  opinion  among the  Commission in  regards to  the scope  of                 
  their authority.                                                             
                                                                               
  Representative Brown pointed out that the Commission did not                 
  do  anything  to   expand  their  powers.      Mr.  Hutchens                 
  maintained  that  the  "liberally  construed"  standard  has                 
  allowed the Commission to do things that  were not expressly                 
  granted or reasonably implied in statute.                                    
                                                                               
  Representative Brown suggested that the  change in section 1                 
  is likely to result in additional  litigation.  Mr. Hutchens                 
  doubted that litigation would be significant.                                
                                                                               
  Representative  Brown  recalled  that  Mr.  Lohr,  Executive                 
  Director,  Alaska Public Utilities Commission (APUC) did not                 
  agree with the Auditor's assessment on which  the changes in                 
  the RCC were based.  She  noted that Mr. Lohr estimated that                 
  the reduction in Regulatory Cost Charge payments by electric                 
  utilities would be approximately 45 percent.                                 
                                                                               
  Mr. Hutchens stated that the Auditor's report indicated that                 
  the APUC  workload for  electric utilities  had declined  to                 
  less than  30 percent.  He  maintained that the cost  of the                 
  RCC to electric utilities has  steadily increased each year.                 
  He asserted that electric utilities are paying 45 percent of                 
  the total cost of operating the Commission.                                  
                                                                               
  Mr. Hutchens clarified  that 45 percent of  present revenues                 
  earned by electric  utilities would  be deducted before  the                 
  RCC is calculated.  The net change would be  a reduction for                 
  the electric utilities  of 31 percent.   The portion of  the                 
  RCC that electric utilities would pay is also 31 percent.                    
                                                                               
  Representative  Brown asked  the rationale  for establishing                 
  different thresholds for different utilities.   She asked if                 
  the electric cooperatives  would support a  higher threshold                 
  for exemptions of $500.0 or less unless petitioned.                          
                                                                               
  Mr.  Hutchens  explained  that  the  rationale  for  opt-out                 
  provisions  for the electric cooperatives is not a matter of                 
  size, but is a matter of governance.  The  rationale is that                 
  the consumers  own the cooperatives  and elect the  board of                 
  directors.    Therefore,  they  have  a  direct say  in  the                 
  policies pursued  by the  utilities.   He  stated that  they                 
  would oppose any amendment which would deprive telephone and                 
  electric cooperatives of the  right to have a vote  if their                 
  consumers decide if they should be regulated.                                
                                                                               
                                6                                              
                                                                               
                                                                               
  Representative  Brown  did  not  feel  her  amendment  would                 
  deprive the  electric utilities.   She  noted that  electric                 
  cooperatives under $50.0  thousand dollars are exempt.   Mr.                 
  Hutchens clarified  that  electric  utilities  whose  retail                 
  revenue is less  than $50.0 thousand  dollars a year do  not                 
  need  a certificate to  serve.  He  noted that  there are no                 
  electric cooperatives that small.                                            
                                                                               
  Mr. Hutchens  noted that  the certification  requirement was                 
  adopted in the  early 1980's.   He noted  that an  inflation                 
  adjustment may  be  warranted.   He stated  that they  would                 
  oppose any major increase in the threshold for regulation.                   
                                                                               
  Representative  Brown  provided  members  with  Amendment  1                 
  (Attachment 1).  Amendment  1 would delete the  new language                 
  "all things  necessary or proper  to carry out  the purposes                 
  and  exercise the  powers  expressly granted  or  reasonably                 
  implied"  and  retain   the  current  language,   "liberally                 
  construed" in section 1.   She maintained that there  are no                 
  specific  examples  illustrating why  the  change  should be                 
  made.  She suggested that the  new language will cause legal                 
  problems.                                                                    
                                                                               
  Co-Chair Hanley disclosed that  his mother is on  the Alaska                 
  Public Utilities Commission.                                                 
                                                                               
  Co-Chair Hanley  stated his  objection to  Amendment 1.   He                 
  stressed that it is appropriate  for the legislature to make                 
  policy decisions.                                                            
                                                                               
  Representative  Brown MOVED  to adopt  Amendment 1.   A roll                 
  call vote was taken on the MOTION.                                           
                                                                               
  IN FAVOR: Brown                                                              
  OPPOSED:  Grussendorf,  Kelly,   Kohring,  Martin,   Mulder,                 
  Parnell,       Therriault, Foster, Hanley                                    
                                                                               
  Representative Navarre was absent for the vote.                              
                                                                               
  Representative  Brown MOVED to adopt Amendment 2 (Attachment                 
  2).    Representative  Mulder  OBJECTED.    She  noted  that                 
  Amendment 2 would  delete (3), page  3, line 11, and  insert                 
  ".61" and delete ".8" on page 2, line 27 and page 6, line 8.                 
  She explained that the amendment would return the RCC to .61                 
  percent and delete the adjustment for  the cost of power for                 
  electric utilities.  She asserted  that the bill, unamended,                 
  would  shift  the  tax burden  to  the  oil  industry.   She                 
  observed that the Auditor's findings  have been contradicted                 
  by  Mr. Lohr  in his  previous testimony.   During testimony                 
  given to the House Finance  Committee meeting on 2/2/95, Mr.                 
  Lohr stated  that he did not believe  that there had been an                 
                                                                               
                                7                                              
                                                                               
                                                                               
  overpayment by the electric utilities that justified the tax                 
  shift.    Representative Brown  quoted  from the  1993 audit                 
  report:  "In the absence of  verifiable data such as utility                 
  or  industry codings  on payroll sheets,  we were  forced to                 
  approximate  the workload  by using  rough estimates,  which                 
  were provided on  an unofficial basis by  commission staff."                 
  She stressed the  lack of  substantiation of overpayment  by                 
  electric utilities.                                                          
                                                                               
  Co-Chair  Hanley  suggested  that   testimony  by  Mr.  Lohr                 
  indicated that the electric utilities overpaid.                              
                                                                               
  Representative  Brown  noted   that  the  Auditor   did  not                 
  recommend  statute  changes.     He  recommended  that   the                 
  Commission institute a time-keeping  system.  She  suggested                 
  that the simple cut  of gross revenues is a  reasonably fair                 
  way to access the tax.                                                       
                                                                               
  (Tape Change, HFC 95-41, Side 1)                                             
                                                                               
  DON  SCHOER, CHAIRMAN,  ALASKA  PUBLIC UTILITIES  COMMISSION                 
  responded  to  questions  by   Representative  Brown.     He                 
  estimated that the percentage of  time the Commission spends                 
  on cases  pertaining to the  electric utilities is  the same                 
  now as when the  audit was completed in 1993.   He could not                 
  say if electric  utilities were  over or under  paying.   He                 
  maintained  that all  the costs  are  passed through  to the                 
  consumer.  He  estimated that  there would be  a 31  percent                 
  shift between utilities.   He stated that  the Commission is                 
  neutral in regards to the shift in RCC funding.                              
                                                                               
  A roll call  vote was taken on the MOTION to adopt Amendment                 
  2.                                                                           
                                                                               
  IN FAVOR: Brown                                                              
  OPPOSED:  Grussendorf,  Kelly,   Kohring,  Martin,   Mulder,                 
  Therriault,         Foster, Hanley                                           
                                                                               
  Representatives  Parnell and  Navarre  were absent  for  the                 
  vote.                                                                        
                                                                               
  The MOTION FAILED (1-8).                                                     
                                                                               
  Representative Brown MOVED to adopt Amendment  3 (Attachment                 
  3).    She  explained  that  Amendment  3  would  raise  the                 
  threshold for those  exempt from regulation.   The amendment                 
  would deregulate the smaller utilities.  The amendment would                 
  also   provide  the  same  level  between  utility  sectors.                 
  Utilities  with  under  $500.0  thousand  dollars  in  gross                 
  revenues would  be exempt, unless the subscribers petitioned                 
  under AS 42.05.712.                                                          
                                                                               
                                                                               
                                8                                              
                                                                               
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Schoer did not think that any utilities would be affected by                 
  the changes made in section 4.  He explained that section  4                 
  allows smaller utilities to  opt out if they want  to, based                 
  on their gross revenues.                                                     
                                                                               
  Representative  Brown  referred to  section  5.   Mr. Schoer                 
  stated that very few utilities would be affected  by section                 
  5.  He clarified that all  utilities with over ten customers                 
  that are being paid monthly must be certified.                               
                                                                               
  Representative  Brown  asked   how  the  opt-out  procedures                 
  differ.  Mr. Schoer noted that 25 percent of the rate payers                 
  must sign a  petition to opt-in.  He  could not elaborate on                 
  the different procedures for opting-out.                                     
                                                                               
  Representative  Brown  asked Mr.  Schoer  to respond  to the                 
  proposal to raise  the threshold  for regulation from  $50.0                 
  thousand  dollars  to  $500.0  for  electric  and  telephone                 
  utilities.    He  stated that  the  Commission  supports the                 
  higher threshold to allow smaller utilities to  opt-out.  He                 
  had no  comment on  raising  the next  category from  $500.0                 
  thousand dollars  to $1.0 million dollars.  He stressed that                 
  it is  expensive for  small utilities  to appear  before the                 
  Commission.    He  could  not  comment  on  the  reason  for                 
  establishing different thresholds for different utilities.                   
                                                                               
  Representative  Brown  WITHDREW Amendment  3.   She stressed                 
  that  more consideration  of the  issue is  warranted.   She                 
  asked for more  information regarding who would  be affected                 
  by the bill.  She suggested that  it makes sense to have the                 
  same rule apply across the board to all utilities.                           
                                                                               
  Representative Martin expressed concern with the fiscal note                 
  accompanying the legislation.   He asserted that  the fiscal                 
  note is accelerated beyond the population  of the state.  He                 
  noted  that  there is  a  $1.4 million  dollar  increase for                 
  operation of the  Commission over  a five year  period.   He                 
  referred to the use of  software to reduce the  Commission's                 
  time-keeping costs.   He stressed that there  should be some                 
  kind of monitoring when there is a monopoly utility.                         
                                                                               
  Representative Brown  MOVED to adopt Amendment 4 (Attachment                 
  4). She noted that the legislation  would set up a procedure                 
  that would  require a  majority of those  voting to  approve                 
  regulation, instead  of allowing regulation  upon request of                 
  25 percent of the  subscribers, as is  in current law.   She                 
  noted that garbage utilities are  treated differently in the                 
  legislation.  She observed that  the largest subscribers are                 
  being given total  control through  their ability to  change                 
  their  status,  on line  24,  page  5.   She  questioned why                 
  garbage utilities are  being treated differently.   She also                 
                                                                               
                                9                                              
                                                                               
                                                                               
  asked why a  shift is being  instituted to give  subscribers                 
  controlling  gross revenues as  opposed to  all subscribers,                 
  the authority to make the change.                                            
                                                                               
  Mr.  Fink noted  that the  language in  section 7  is  a re-                 
  enactment of  current statute,  which was  requested by  the                 
  Revisor.  He stated that the statute was adopted in response                 
  to the  refuge situation on the North  Slope.  He noted that                 
  some of the oil  companies represent over 50 percent  of the                 
  gross revenues  but only  have one  vote in  the  case of  a                 
  deregulation election.                                                       
                                                                               
  Mr. Fink noted that currently 10  percent of the first 5,000                 
  subscribers of  a regulated  utility and  3  percent of  the                 
  remaining subscribers may petition for an election to remove                 
  a utility within certain revenue parameters from regulation.                 
  However,  for  subscribers to  petition  for an  election to                 
  place  an unregulated  utility  under regulation  they  must                 
  gather the signatures of 25 percent  of the subscribers.  He                 
  stated that the legislation would apply the provisions of AS                 
  42.05.712 which allows  for a deregulation election  with 10                 
  percent  of  the  subscribers.     He  maintained  that  the                 
  legislation would  make  the process  for  deregulation  and                 
  regulating the same.                                                         
                                                                               
  Mr. Fink reiterated that the legislation states that "unless                 
  the subscribers petition the Commission for regulation under                 
  AS 42.05.712(h)."   He observed that AS  42.05.712(h) allows                 
  for 10 percent of the first 5,000 subscribers of a regulated                 
  utility  and  3  percent  of  the remaining  subscribers  to                 
  petition for  an election.    He stressed  that the  Auditor                 
  recommended the change.                                                      
                                                                               
  Representative Martin questioned  if one  group that has  at                 
  least 25 percent  of the use  of the utility could  petition                 
  for an election.                                                             
  Mr. Fink restated that there are two ways that a call for an                 
  election can be made.  The second method allows a subscriber                 
  that represents 25 percent of the  gross revenue to call for                 
  an  election.  The  first method is under  AS 42.05.712.  He                 
  reiterated that the second method is current law.                            
                                                                               
  Co-Chair  Hanley   clarified  that   this  portion  of   the                 
  legislation was based on the Auditor's Recommendation Number                 
  2, page 9.    Discussion ensued  in regards to the  drafting                 
  language contained on page 5, lines 22 -26.                                  
                                                                               
  Mr.  Fink observed that  the Auditor  did not  recommend the                 
  deletion of the provision to allow an entity with 25 percent                 
  of the utility's gross revenues to petition for an election.                 
                                                                               
  Representative Brown pointed out  that previously 25 percent                 
                                                                               
                               10                                              
                                                                               
                                                                               
  of the subscribers could opt for  regulation.  A petition of                 
  25 percent of  the subscribers  would result in  regulation.                 
  Under the provisions of  SB 47 (efd  fld) 10 percent of  the                 
  subscribers would be needed for a petition, which would then                 
  require  an  election  in which  50  percent  would  need to                 
  approve.  She maintained that SB  47 (efd fld) would make it                 
  more difficult to opt in.                                                    
                                                                               
  Representative   Martin  restated   his  concern   with  the                 
  accompanying fiscal note.   He maintained  that the cost  of                 
  the Commission  can be  decreased through  the use  of time-                 
  keeping technology.                                                          
                                                                               
  Mr.  Schoer observed  that  the  fiscal  note  is  based  on                 
  projections for increases in population by the Department of                 
  Commerce and Economic Development.  He  pointed out that the                 
  Commission's tariffs  have increased 74 percent  and dockets                 
  64 percent over five years while the Commission's budget has                 
  been decreased by $250.0 thousand dollars.                                   
                                                                               
  Representative Brown emphasized that the legislation changes                 
  the  requirement  for  regulation  from  25 percent  of  the                 
  subscribers to a majority of the subscribers.                                
                                                                               
  Mr. Schoer agreed that  current law allows a petition  of 25                 
  percent of the subscribers to opt for regulation  without an                 
  election.                                                                    
                                                                               
  Representative Brown  noted that  the fiscal note  estimates                 
  that  $60.7  thousand  dollars  will be  needed  to  pay the                 
  Department of  Law to  handle legal  analysis and  increased                 
  litigation concerning the new powers  and duties language in                 
  section 1 of the bill.                                                       
                                                                               
  In response to  concerns by Representative Martin,  Co-Chair                 
  Hanley noted that the fiscal note could be amended to delete                 
  increases due to population.                                                 
                                                                               
  Representative  Brown MOVED to  adopt Amendment  4.   A roll                 
  call vote was taken on the MOTION.                                           
                                                                               
  IN FAVOR: Martin, Brown                                                      
  OPPOSED:  Kelly,  Kohring,   Mulder,  Parnell,   Therriault,                 
  Hanley                                                                       
                                                                               
  Representative Foster, Grussendorf  and Navarre were  absent                 
  for the vote.                                                                
                                                                               
  The MOTION FAILED (2-6).                                                     
                                                                               
  Representative Mulder MOVED to report SB 47 (efd fld) out of                 
  Committee  with  individual  recommendations   and  with  an                 
                                                                               
                               11                                              
                                                                               
                                                                               
  amended  fiscal  note  for the  Department  of  Commerce and                 
  Economic Development, reflecting a flatline of  $3.789.7 for                 
  FY 96 - 2001; and the  other accompanying zero fiscal notes.                 
  Co-Chair Hanley explained that funding in the amended fiscal                 
  note will be at  the same level for FY 96 -  FY 2001.  There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  SB 47 (efd  fld) was reported  out of Committee  with a  "do                 
  pass"  recommendation and with  a fiscal impact  note by the                 
  House Finance Committee  for the Department of  Commerce and                 
  Economic Development; and with two  zero fiscal notes by the                 
  Department   of  Administration,   dated  2/3/95;   and  the                 
  Department of Revenue, dated 2/1/95.                                         
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:17 p.m.                                           
                                                                               
                                                                               
                               12                                              

Document Name Date/Time Subjects