Legislature(2013 - 2014)HOUSE FINANCE 519

02/26/2014 01:30 PM House FINANCE

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Moved Out of Committee
Moved Out of Committee
Moved CSHB 268(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 26, 2014                                                                                          
                         1:32 p.m.                                                                                              
1:32:16 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:32 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Speaker  Mike   Chenault,  Sponsor;  Sharon   Kelly,  Staff,                                                                    
Speaker Chenault;  Kris Curtis, Legislative  Auditor, Alaska                                                                    
Division of  Legislative Audit; Representative  Mike Hawker,                                                                    
Sponsor;  TW  Patch,   Chairman,  Regulatory  Commission  of                                                                    
Alaska; Commissioner Norman  Rokeberg, Regulatory Commission                                                                    
of Alaska; Daniel George, Staff, Co-Chair Stoltze.                                                                              
PRESENT VIA TELECONFERENCE                                                                                                    
Grant   Lewis,   Tanana    Valley   Sportsman   Association,                                                                    
Fairbanks;  Dan  Jordan,  University  of  Alaska  Fairbanks,                                                                    
Coach,  Nanooks  Rifle  Team;  Mike  Tinker,  Tanana  Valley                                                                    
Sportsman  Association,  Fairbanks;   Mel  Bowen,  Director,                                                                    
Advocates   of   Victims   of  Violence,   Valdez;   Darrell                                                                    
Verfaillie,  Director,  Parks  and Recreation  and  Cultural                                                                    
Services,  Valdez; Joseph  Koss, Tax  Auditor, Tax  Division                                                                    
Department  of  Revenue,  Anchorage; Johanna  Bales,  Deputy                                                                    
Director, Tax Division, Department of Revenue, Anchorage.                                                                       
HB 234    EXTEND REGULATORY COMMISSION OF ALASKA                                                                                
          HB 234 was REPORTED out of committee with a "do                                                                       
          pass" recommendation and with one previously                                                                          
         published fiscal impact note: FN1 (CED).                                                                               
HB 268    BIG BULL MOOSE DERBIES                                                                                                
          CSHB 268(FIN) was REPORTED out of committee with                                                                      
          a no recommendation and with one new zero fiscal                                                                      
          note from the Department of Revenue.                                                                                  
HB 298    CONFIDENTIALITY OF PERFORMANCE REVIEWS                                                                                
          HB 298 was REPORTED out of committee with a "do                                                                       
          pass" recommendation and with one new zero fiscal                                                                     
          note from the Alaska Legislature.                                                                                     
HOUSE BILL NO. 298                                                                                                            
     "An Act relating to confidentiality of performance                                                                         
     review records and reports of the legislature audit                                                                        
1:32:36 PM                                                                                                                    
SPEAKER MIKE  CHENAULT, SPONSOR noted the  legislation was a                                                                    
technical fix to a previous bill.                                                                                               
298  was  a  technical  fix  to  AS  24.20.301(a).  The  fix                                                                    
conformed confidentiality  language for  performance reviews                                                                    
to the same language for  audits. She reminded the committee                                                                    
that  HB 30  [State Agency  Performance Audits]  was adopted                                                                    
into  law in  2013  and  re-established     the practice  of                                                                    
departmental  performance  reviews  to  assist  in  informed                                                                    
budget decision  making. She related that  Legislative Audit                                                                    
discovered  the  discrepancy  while  undertaking  the  first                                                                    
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT,  explained  the technical  request.  The                                                                    
performance review process began  last year and required the                                                                    
need  for Legislative  Audit to  request a  large volume  of                                                                    
information. She  discovered a statutory  difference between                                                                    
the confidentiality  requirements of audits  and performance                                                                    
review records.                                                                                                                 
Representative  Guttenberg  asked  how the  change  affected                                                                    
audits in progress.                                                                                                             
Ms. Curtis noted  that the fix would not  impact audits, but                                                                    
rather  performance   reviews.  The  division   treated  the                                                                    
performance  review information  the same  as audit  records                                                                    
and would continue under HB 298.                                                                                                
Representative Guttenberg asked about  ongoing access to the                                                                    
records. He asked  if the nature of  the confidentiality was                                                                    
changed under the law.                                                                                                          
Ms. Curtis answered that the  legislation clarified that the                                                                    
performance   review    records   were    confidential   but                                                                    
Legislative   Audit   already   treated   the   records   as                                                                    
Co-Chair Stoltze OPENED public testimony.                                                                                       
Co-Chair Stoltze CLOSED public testimony.                                                                                       
Representative  Costello noted  the fiscal  note, FN1  (LEG)                                                                    
with zero fiscal impact.                                                                                                        
Vice-Chair Neuman  MOVED to REPORT  HB 298 out  of committee                                                                    
with  individual recommendations  and the  accompanying zero                                                                    
fiscal note. There being NO OBJECTION, it was so ordered.                                                                       
HB  298 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and  with one new  zero fiscal note  from the                                                                    
Alaska Legislature.                                                                                                             
1:39:49 PM                                                                                                                    
AT EASE                                                                                                                         
1:40:57 PM                                                                                                                    
HOUSE BILL NO. 234                                                                                                            
     "An Act extending the termination date of the                                                                              
     Regulatory Commission of Alaska; and providing for an                                                                      
     effective date."                                                                                                           
1:41:12 PM                                                                                                                    
REPRESENTATIVE  MIKE  HAWKER,  SPONSOR,  presented  HB  234,                                                                    
which  extended  the  termination  date  of  the  Regulatory                                                                    
Commission  of  Alaska (RCA).  He  explained  that the  bill                                                                    
extended the  Regulatory Commission  of Alaska for  a period                                                                    
of  eight  years, which  was  allowable  under statute.  The                                                                    
request  was consistent  with  recommendations  made by  the                                                                    
state  auditor. He  noted  that  the auditor's  requirements                                                                    
were to determine a public  need for the continued existence                                                                    
of the  commission and whether  it operated in  an efficient                                                                    
and   effective  manner.   The  auditors   found  that   the                                                                    
commission met all of the  requirements of the extension. He                                                                    
pointed  out  that  issues  existed in  the  past  but  were                                                                    
resolved.  He stressed  the  difference  between the  public                                                                    
disagreeing  with   a  ruling   from  the  RCA   versus  the                                                                    
functionality  of the  commission.  He  reiterated that  the                                                                    
audit demonstrated that the  commission was functioning well                                                                    
and in accordance with statute.                                                                                                 
Representative  Hawker  pointed  to the  appendices  of  the                                                                    
audit (copy  on file) on  pages 23  to 30. He  detailed that                                                                    
the  audit appendices  were a  survey  of the  users of  the                                                                    
agencies. The  surveys showed how the  agencies were serving                                                                    
its  stake  holders  and  were   an  integral  part  of  the                                                                    
reauthorization  audits. He  understood that  the Regulatory                                                                    
Commission of Alaska was  often disliked because individuals                                                                    
disagreed  with its  rulings. He  noted that  the appendices                                                                    
and details in the summary on  page 18 of the audit reported                                                                    
favorable comments and statistics  in their ratings. As many                                                                    
as 70  percent of the respondents  gave a good or  very good                                                                    
rating for the RCA, with  only 8 percent issuing unfavorable                                                                    
ratings.  He   thought  that  the  70   percent  rating  was                                                                    
remarkable   considering    that   the   RCA    dealt   with                                                                    
controversial issues.  He referenced Appendix C,  page 31 of                                                                    
the audit,  which indicated that  "the current  structure of                                                                    
regulatory  cost charges  were sufficient  and adequate  for                                                                    
the  organization  to  function."  He  emphasized  that  the                                                                    
commission  was  operating "in  the  black"  in addition  to                                                                    
meeting  its statutory  obligations  for quality  regulation                                                                    
and protection of the public welfare.                                                                                           
Representative Hawker discussed the  two issues noted in the                                                                    
audit. Item  one was a  perennial issue that  indicated that                                                                    
the commission  needed to undertake better  documentation of                                                                    
its review  process. He pointed  out that  the documentation                                                                    
process was  an internal process  within the agency  and was                                                                    
different than issues about the  outcome of the commission's                                                                    
regulatory  process. The  issue was  a matter  of "improving                                                                    
its paperwork handling." He  read the recommendation, "RCA's                                                                    
chair  should  improve  and enforce  written  procedures  to                                                                    
ensure   case   management."    He   summarized   that   the                                                                    
recommendation was not a criticism  of the commission's work                                                                    
performance or regulatory activities.                                                                                           
Representative Hawker  discussed the  second recommendations                                                                    
which dealt  with regulatory dockets. He  defined regulatory                                                                    
dockets as  "having a question  asked and answered"  as part                                                                    
of  the   regulatory  process.  He  read   from  the  Second                                                                    
recommendation: "The legislature  should consider clarifying                                                                    
AS 42.05.175(e)  to ensure  RCA fulfills  legislative intent                                                                    
when processing regulatory dockets."  He maintained that the                                                                    
RCA  believed it  was  in compliance  with  the statute  and                                                                    
thought the issue  was "a management debate."  He alluded to                                                                    
the historical  problems which lead  to the creation  of the                                                                    
Regulatory   Commission   of   Alaska  and   described   its                                                                    
beginnings as a "bumpy road."                                                                                                   
1:50:40 PM                                                                                                                    
Representative  Hawker acknowledged  it was  a long  road to                                                                    
develop the commission into what  it was today. He asked the                                                                    
committee  to   consider  the  commission  as   it  operated                                                                    
currently and  asked the committee  to help the  RCA improve                                                                    
and address  the issues identified  in the audit.  He argued                                                                    
that  the agency  had  matured and  merited  the eight  year                                                                    
extension.  He  believed  that the  extension  enhanced  the                                                                    
stability  of  the agency  instead  of  operating under  the                                                                    
burden  of   uncertainty  under  one  year   extensions.  He                                                                    
strongly advocated  for setting the agency  free to function                                                                    
with trust for the next eight years.                                                                                            
Vice-Chair  Neuman  asked   about  the  smaller  independent                                                                    
companies  that operated  in the  Cook Inlet  region gaining                                                                    
access  to gaslines  and with  contractual obligations  with                                                                    
utility companies.  He wondered  whether some of  the issues                                                                    
were resolved.                                                                                                                  
Representative Hawker  directed the question to  the RCA. He                                                                    
asked the  committee members to consider  the operations and                                                                    
functioning  of the  commission whether  or not  individuals                                                                    
agreed  or disagreed  with a  ruling of  the commission.  He                                                                    
added that  the approval of  long term gas  supply contracts                                                                    
in Cook Inlet had been problematic  for him in his role as a                                                                    
legislator. He  reminded the committee  that the  Cook Inlet                                                                    
Recovery  Act  [HB 280Natural   Gas: Storage/  Tax  Credits                                                                    
Adopted  2010]   removed  the   block  that   prevented  the                                                                    
commission from  approving long  term gas  supply contracts.                                                                    
The provision  mandated that the  RCA not only  consider the                                                                    
least  expensive  option,  but   examine  how  its  decision                                                                    
impacted the  community. The cited  statute was  included in                                                                    
many contract approvals  published by the RCA  since the law                                                                    
was enacted. He believed that  the commission played a large                                                                    
role in the  recent success of resource  development and gas                                                                    
supply in Cook Inlet.                                                                                                           
Representative Gara  viewed the bill as  a non-controversial                                                                    
agency extension issue.                                                                                                         
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT discussed  the  RCA  sunset audit,  dated                                                                    
July 2013.  She concurred  that Legislative  Audit concluded                                                                    
that the  RCA served  the public's interest  and recommended                                                                    
the  maximum  8  year  extension  allowed  in  statute.  She                                                                    
restated   the  two   audit  recommendations.   The  auditor                                                                    
discovered  high error  rates in  the commission's  data and                                                                    
recommended improvement. Secondly,  Legislative Audit made a                                                                    
recommendation to  the legislature  concerning clarification                                                                    
regarding  regulatory  dockets.   She  delineated  that  RCA                                                                    
recorded its activity in dockets.  Statutes required the RCA                                                                    
to issue  final orders  in a rule  making docket  within 730                                                                    
days  plus one  90  day extension.  Statutes prohibited  the                                                                    
commission from  "terminating a proceeding  in a  docket and                                                                    
opening a proceeding in another  docket on substantially the                                                                    
same matter."  The audit discovered instances  where the RCA                                                                    
split the rulemaking proceedings into two dockets:                                                                              
   · One docket considered the need for regulations. Once                                                                       
     public testimony was completed the docket was closed                                                                       
   · The second docket considered the adoption of                                                                               
     regulations. This process allowed the Regulatory                                                                           
     Commission of Alaska to take up to four and one half                                                                       
     years to complete proceedings.                                                                                             
Ms.  Curtis   added  that  "RCA  management   believes  that                                                                    
including  clear intent  language in  a regulatory  docket's                                                                    
initiating order makes the  process transparent and complies                                                                    
with Alaska Statutes."   Legislative Audit acknowledged that                                                                    
the commissions  dockets included clear intent  language and                                                                    
was transparent in  that regard. She felt  that the practice                                                                    
evaded the statutory timelines and  it appeared not to serve                                                                    
the   regulatory  community   or   public's  interest.   The                                                                    
legislature  should  consider   clarifying  the  statute  to                                                                    
ensure  RCA  fulfills  legislative  intent  when  processing                                                                    
regulatory dockets.                                                                                                             
1:59:38 PM                                                                                                                    
TW  PATCH,   CHAIRMAN,  REGULATORY  COMMISSION   OF  ALASKA,                                                                    
thanked the sponsors for advancing  HB 234. He reported that                                                                    
he was  elected Chairman of  the commission for 3  terms. He                                                                    
felt that the  agency had earned the  legislator's trust and                                                                    
requested the extension of the  8 year statutory maximum. He                                                                    
appreciated  the   auditor  and   believed  the   audit  was                                                                    
"rigorous and  thorough." He believed the  commission earned                                                                    
the entire  8 year extension.  He understood the  reason for                                                                    
the  previously  shorter  extensions. He  relayed  that  the                                                                    
legislature requested a  report by the commission  on how to                                                                    
improve its  process. The  RCA filed  the report  on January                                                                    
16, 2012 which included its  goals and had complied with all                                                                    
of them. In addition, the RCA  filed a report on January 21,                                                                    
2014.  The report  detailed the  commission's completion  of                                                                    
four  regulations dockets  and how  it worked  cooperatively                                                                    
with parties to  early identify the complex  issues in order                                                                    
to  achieve   a  shorter  timeline  for   the  rulings.  The                                                                    
commission  continued  to   design  and  develop  regulatory                                                                    
practices  that  enabled  generally  shorter  timelines  but                                                                    
still allowed "compilation of a sound statistical record."                                                                      
Mr.  Patch continued  that the  initial report  demonstrated                                                                    
that  the  utility dockets  were  managed  according to  the                                                                    
statutorily  prescribed   timelines  and   completed  within                                                                    
approximately  450  days. He  reported  that  over the  last                                                                    
three  years  the  process  was  greatly  improved  and  the                                                                    
current year's  utility dockets were completed  in 311 days;                                                                    
a reduction of nearly six months.                                                                                               
Co-Chair  Stoltze   asked  if  utility  dockets   were  rate                                                                    
adjustment dockets.                                                                                                             
Mr.  Patch  replied that  the  utility  docket was  when  "a                                                                    
revenue  requirement was  established or  a rate  design was                                                                    
established."  Utility  dockets  created  the  most  anxiety                                                                    
among the  commissions "constituency."  He related  that the                                                                    
regulated  utility companies  acknowledged that  the process                                                                    
was greatly  improved and appreciated. The  company's credit                                                                    
ratings  were  enhanced  by  the  shorter  timeframe,  which                                                                    
created faster  "regulatory and  rate of  return certainty."                                                                    
The RCA  improved its  process without  requested additional                                                                    
funding or staff, enabling  legislation, and without adverse                                                                    
impacts to industry or companies.                                                                                               
Mr. Patch  stated that the  improvements were aided  in part                                                                    
by the  Regulatory Affairs and  Public Advocacy  Sections of                                                                    
the  Department  of  Law  and   the  utility  companies.  He                                                                    
applauded  the administration's  commissioners  and the  RCA                                                                    
staff for  the majority of  the effort. In addition  the RCA                                                                    
routinely assisted the legislature  and other state agencies                                                                    
on  a  number  of   important  policy  matters.  Legislators                                                                    
regularly consulted  with the RCA on  legislation related to                                                                    
regulatory issues without addressing  the "substance" of the                                                                    
bills. He indicated that the  commission had consulted on HB
280 [Natural Gas:  Storage/ Tax Credits Adopted  2010], HB 4                                                                    
[Alaska Gasline  Development Corp; Regulatory  Commission of                                                                    
Alaska  Adopted 2013],  HB 9  [In-State Gasline  Development                                                                    
Corp 2012],  and was currently  consulting on SB  196/HB 340                                                                    
RCA: Railbelt Electric Utility Report.                                                                                          
Mr. Patch  listed the agencies the  Regulatory Commission of                                                                    
Alaska   routinely  assisted:   The  Alaska   Oil  and   Gas                                                                    
Conservation   Commission,   Department   of   Environmental                                                                    
Conservation  (DEC)  on   capacity  development  and  public                                                                    
health issues  and procured funding  from the  rural utility                                                                    
service; Department of Natural  Resources (DNR), Oil and Gas                                                                    
Division,  and  oversaw   the  state's  pipelines  regarding                                                                    
safety  conditions.  The  RCA assisted  the  AGDC  with  the                                                                    
development of its tariff.                                                                                                      
Mr. Patch strongly disagreed  with the second recommendation                                                                    
of  the  audit  that  the  legislature  should  clarify  the                                                                    
timeline  statute. He  referenced  a letter  he wrote  dated                                                                    
September 4, 2013 stating the  reasons he disagreed with the                                                                    
2:10:12 PM                                                                                                                    
Mr.   Patch  cited   docket  R-10-002   from  a   regulatory                                                                    
proceeding,   and   recounted   that  the   subject   matter                                                                    
considered the need for  regulations involving discovery. In                                                                    
a subsequent  docket, the subject  matter was a  proposal of                                                                    
specific  discovery regulations.  He stressed  that the  RCA                                                                    
and Department  of Law (DOL)  considered the  subject matter                                                                    
"two  distinctly   different  questions."  He   assured  the                                                                    
committee   that  the   commission   had   not  evaded   the                                                                    
legislature's requirements. Both dockets  were resolved in a                                                                    
timely manner. He  explained that the RCA  had not developed                                                                    
a  process to  gather  preliminary information  in order  to                                                                    
make a  decision. The commission changed  the process before                                                                    
the audit and  instituted a new docket called  an "I docket"                                                                    
or "information  docket." The  information dockets  were now                                                                    
regularly  employed for  preliminary  scoping and  decisions                                                                    
and subsequently  preceded to a  regulations docket  for the                                                                    
adoption  of regulations.  He  concluded  that he  disagreed                                                                    
there was a need for legislative action.                                                                                        
NORMAN  ROKEBERG,  COMMISSIONER,  REGULATORY  COMMISSION  OF                                                                    
ALASKA, echoed the  testimony of the Chairman  Patch and the                                                                    
sponsor.   He believed  that the operational  progress under                                                                    
the  leadership of  the  chairman  earned the  legislature's                                                                    
confidence in  the ability  of the  commission to  carry out                                                                    
its work. He  offered that the commission was  able to carry                                                                    
out  its statutory  mandates  and the  policy  calls of  the                                                                    
legislature.   He  urged   for   adoption   of  the   audits                                                                    
recommendation to grant the 8 year extension.                                                                                   
Co-Chair Stoltze asserted that he  did not always agree with                                                                    
every decision the  RCA made but had much  confidence in the                                                                    
commission's competence and decision making process.                                                                            
Vice-Chair  Neuman  noted the  mission  of  the RCA  was  to                                                                    
oversee   regulation  of   public  utilities   and  pipeline                                                                    
carriers.  He questioned  whether  the commission  addressed                                                                    
issues of pipeline access by smaller utility companies.                                                                         
Mr. Patch replied  that access to pipelines  was carried out                                                                    
in  a non-discriminatory  manner. He  assured the  committee                                                                    
that  there   was  no  difficulty  in   terms  of  accessing                                                                    
pipelines. He  shared that the commission  was considering a                                                                    
matter  regarding   the  consolidation  of   the  ownership,                                                                    
management, and  rate structure of Cook  Inlet pipelines. He                                                                    
did  not  know  of  any difficulty  with  small  exploratory                                                                    
companies accessing  pipelines for  the use  of transporting                                                                    
its product.  He thought that  the question asked  was about                                                                    
small  producer's access  to  markets,  which was  different                                                                    
than  pipeline  access.  He shared  that  the  RCA  received                                                                    
comments  from  small  producers  regarding  the  access  to                                                                    
markets.  In   addition,  the  commission   was  considering                                                                    
another open  docket in a  preliminary stage, with  the same                                                                    
companies  that  expressed   dissatisfaction  with  lack  of                                                                    
market  access. He  suggested that  the legislators  examine                                                                    
"texts", pronouncements  by commissioners  on their  view of                                                                    
market access in  RCA rulings. He offered to  provide a link                                                                    
for the  open docket  case to  examine public  materials. He                                                                    
was unable to comment further on the open docket cases.                                                                         
2:20:02 PM                                                                                                                    
Vice-Chair  Neuman asked  about  the  relationship with  the                                                                    
Division of Oil  and Gas and small companies  in Cook Inlet.                                                                    
He had  heard of unfair  treatment and wondered  whether the                                                                    
commission was familiar with the issue.                                                                                         
Mr.  Patch  clarified  that he  was  unaware  of  complaints                                                                    
against the RCA or the Division of Oil and Gas.                                                                                 
Mr.  Rokeberg followed  up on  the question  related to  gas                                                                    
supply contracts  in Cook Inlet.  He expounded that  the RCA                                                                    
role  was to  approve or  disapprove of  the contracts.  The                                                                    
commission was  prohibited to comment  on issues  related to                                                                    
an active docket. He offered  to provide members with copies                                                                    
of his  concurrence on issues  related to tariff  filings on                                                                    
sales of  gas by  Hilcorp to  Enstar, and  Chugach Electric,                                                                    
and  a  recent  docket  filing  related  to  the  issues  of                                                                    
independent exploration,  development, and  sales of  gas in                                                                    
Cook Inlet.  The concurrence included  a 20 year  history of                                                                    
the  legislature's  involvement  to incent  Cook  Inlet  gas                                                                    
development.  He  noted  the concurrence  included  multiple                                                                    
comments regarding  open access  to the gasline  between one                                                                    
carrier  and   another.  He  informed  the   committee  that                                                                    
Chairman  Patch  alluded to  the  outstanding  docket on  an                                                                    
Enstar  tariff filing  that  concerned smaller  independents                                                                    
access. He  expressed concern over  the lack  of opportunity                                                                    
for small  gas producers to  sell into the market  place. He                                                                    
expressed additional concern about  a "floor" for gas prices                                                                    
to  rate payers  in Cook  Inlet that  was part  of a  recent                                                                    
contract between a number of utilities and Hilcorp.                                                                             
Representative  Gara   wondered  whether   the  commission's                                                                    
shorter time  period for final  rulings harmed  the interest                                                                    
of the consumer.                                                                                                                
Mr. Patch responded that the  primary mandate of the RCA was                                                                    
rate   regulation.   The  commission   considered   consumer                                                                    
interests  when  determining  rates.  He  explained  that  a                                                                    
primary consumer  interest was low  rates and the  other was                                                                    
dependable,  quality utility  delivery.  He understood  that                                                                    
most people  would prefer lower  utility bills. He  sought a                                                                    
balance between  "a just and  reasonable rate."  He measured                                                                    
the needs of  the utility company and the  needs and quality                                                                    
of service for  the consumer. He thought that the  RCA did a                                                                    
good job with rate regulation.                                                                                                  
Representative Gara thanked the  RCA commissioners for their                                                                    
hard work.                                                                                                                      
2:30:09 PM                                                                                                                    
Mr. Patch  returned the compliment  and thanked  the members                                                                    
for their hard work.                                                                                                            
Co-Chair  Stoltze asked  about  oversight  of water  utility                                                                    
regulation. He remarked that  often mayors of municipalities                                                                    
tried  to  force  individual's  participation  in  municipal                                                                    
water systems.  He viewed  the RCA as  a force  for consumer                                                                    
protection    to   avoid    "being    force   fed    utility                                                                    
participation." He asked for the  commissioner's view on the                                                                    
issue as a former legislator.                                                                                                   
2:32:14 PM                                                                                                                    
AT EASE                                                                                                                         
2:32:22 PM                                                                                                                    
Mr. Rokeberg  replied that  his former  district as  well as                                                                    
Representative  Costello's  had  3,000  to  5,000  residents                                                                    
served by water  wells or small water systems  that were not                                                                    
part  of the  municipal  utility. The  situation was  common                                                                    
throughout the state. He related  the difficulty for the RCA                                                                    
to assist small  utilities. He felt that  further policy was                                                                    
needed  related to  rate  regulation  of smaller  utilities.                                                                    
Rate  regulation by  the  RCA was  burdensome  and could  be                                                                    
expensive  for   a  small  group.  He   suggested  that  the                                                                    
legislature may  want to address  the issue and to  give the                                                                    
commission the ability to create  a tier system. He detailed                                                                    
that many  small water utilities  wanted to qualify  for the                                                                    
federal  Safe Drinking  Water  Act  funding, which  mandated                                                                    
regulation  by  the commission  to  qualify.  The desire  to                                                                    
provide  safe   drinking  water   drove  the   utility  into                                                                    
regulation  that  they may  not  want  or could  afford.  He                                                                    
thought that many of the  legislators were familiar with the                                                                    
Co-Chair Stoltze asked whether  the commission could address                                                                    
the  issue  within  the commission  structure  and  was  not                                                                    
seeking an "outside solution."                                                                                                  
Mr.  Patch answered  that the  commission  had adopted  some                                                                    
measures  to  address  smaller  water  utilities  water  and                                                                    
wastewater   concerns.  The   RCA   offered  a   provisional                                                                    
certification  that was  available  for  rural areas.  There                                                                    
were  certain  things  the  commission  could  do,  but  the                                                                    
commission  lacked the  statutory authority  to "revise  the                                                                    
state drinking  water act or  to federal funding."  He vowed                                                                    
to  discuss the  issue  with members  of  the rural  utility                                                                    
service  Division   of  the  United  States   Department  of                                                                    
Agriculture and DEC.                                                                                                            
Co-Chair Stoltze  reiterated his belief that  the RCA played                                                                    
a   major   role   in  the   consumer   protection   against                                                                    
consolidation of municipal water utilities.                                                                                     
Representative Guttenberg asked how the  RCA came to the IGU                                                                    
[Interior Gas Utility] ruling.                                                                                                  
Mr.  Patch suggested  that the  discussion take  place at  a                                                                    
later time in a different  forum after both parties read the                                                                    
RCA's final order.                                                                                                              
Vice-Chair Neuman discussed  that Talkeetna received federal                                                                    
funds  for   safe  water  and  sewer,   but  struggled  with                                                                    
continued  financing for  the water  and  sewer utility.  He                                                                    
wondered  what  role  the  commission  played  in  assisting                                                                    
communities with similar issues.                                                                                                
Mr. Patch restated  that consumer protection was  one of the                                                                    
commission's major  concern. He was not  prepared to address                                                                    
the issue at present but would respond by letter shortly.                                                                       
2:43:52 PM                                                                                                                    
Co-Chair Stoltze OPENED public testimony.                                                                                       
Co-Chair Stoltze CLOSED public testimony.                                                                                       
Representative  Costello  discussed  the  fiscal  note,  FN1                                                                    
(CED)  for  the  extension  of  the agency.  In  FY  15  the                                                                    
expenditure was $9.430.8 million  for 58 full time positions                                                                    
and  4 temporary  positions. In  FY 16  the expenditure  was                                                                    
$9294.5 million for  58 full time positions  and 3 temporary                                                                    
positions. The fiscal impact repeated  itself for the fiscal                                                                    
years through 2020.                                                                                                             
In response to a question  by Representative Gara, Mr. Patch                                                                    
indicated  that the  RCA  was funded  by  a regulatory  cost                                                                    
charge, and  not by  the general fund.  He explained  that a                                                                    
small  component  charge  was  added to  each  utility  bill                                                                    
collected by  the utilities and forwarded  to the Department                                                                    
of Revenue  for the commission's expenditures.  In addition,                                                                    
the commission  may charge uncertificated utilities  for the                                                                    
commission's actual time. He stated  that the charge was not                                                                    
placed on the rate payers.                                                                                                      
Representative  Costello noted  that  the  commission had  a                                                                    
surplus.  She  questioned  whether the  surplus  funds  were                                                                    
expended by the RCA.                                                                                                            
Mr.  Patch   replied  that  the   surplus  was   rebated  to                                                                    
ratepayers  as   part  of  the   RCC  calculation   for  the                                                                    
subsequent year.                                                                                                                
2:50:17 PM                                                                                                                    
Vice-Chair Neuman  MOVED to REPORT  HB 234 out  of committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB  234 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation  and  with  one previously  published  fiscal                                                                    
impact note: FN1 (CED).                                                                                                         
2:51:52 PM                                                                                                                    
AT EASE                                                                                                                         
2:53:38 PM                                                                                                                    
HOUSE BILL NO. 268                                                                                                            
     "An Act relating to big bull moose derbies."                                                                               
2:53:46 PM                                                                                                                    
Representative  Tammy Wilson  discussed the  bill. She  read                                                                    
from the Sponsor Statement (copy on file).                                                                                      
     House Bill 268 would  allow the Tanana Valley Sportsmen                                                                    
     Association to  raise funds for their  organization and                                                                    
     the   University  of   Fairbanks  Nanooks   Rifle  team                                                                    
     equally.   The big bull  moose derby would  be operated                                                                    
     much   like  other   contests  already   allowed  under                                                                    
     statute.  This will take  place during the annual moose                                                                    
     season,  by  individuals  that have  acquired  all  the                                                                    
     proper documentation  already implemented by  the State                                                                    
     of Alaska  to stay within  the legal boundaries  of the                                                                    
     moose  season.    Participants must  purchase  a  derby                                                                    
     ticket prior to the open day of the season…                                                                                
     The Tanana  Valley Sportsmen's Association (TVSA)  is a                                                                    
     nonprofit   organization   that  hosts   training   and                                                                    
     completion events for  the nationally ranked University                                                                    
     of Alaska Nanooks Rifle Team  as well as the local high                                                                    
     House  Bill 268  would allow  the raising  of funds  to                                                                    
     further the use of the  TVSA club house and support the                                                                    
     efforts  of the  nationally  ranked  UAF Nanooks  Rifle                                                                    
Representative Wilson  explained that  the rifle team  had a                                                                    
fire in  its facility  several years ago  and was  trying to                                                                    
recover.  Most of  the team's  funding was  provided through                                                                    
community support.  She wished to provide  opportunities for                                                                    
the  team to  raise money  without having  to ask  for state                                                                    
assistance.  She noted  that  HB 268  was  changed from  the                                                                    
original  version  to include  the  Snow  Town Ice  Classic,                                                                    
operated by the Advocates for Victims of Violence (AVV).                                                                        
Representative   Costello  MOVED   to  ADOPT   the  proposed                                                                    
committee  substitute  for  HB  268 (FIN),  Work  Draft  28-                                                                    
LS085\P   (Martin    2/25/14).   Representative   Guttenberg                                                                    
OBJECTED for discussion.                                                                                                        
DANIEL  GEORGE,  STAFF,   CO-CHAIR  STOLTZE,  discussed  the                                                                    
committee  substitute   (CS).  He  explained  that   the  CS                                                                    
contained  changes  to  Section   4  and  Section  6,  which                                                                    
resulted  in a  title change.  He read  the addition  to the                                                                    
title on page 1, lines 1 to 2:                                                                                                  
     "…and  relating  to permits  for  games  of chance  and                                                                    
     contests of skill."                                                                                                        
The title change was generated  by the changes to Section 4,                                                                    
page 3, lines 20 through 26:                                                                                                    
     … (big)  bull moose derbies, and  king salmon classics,                                                                    
     a permit may not be issued  for an activity [MAY NOT BE                                                                    
     LICENSED] under  this chapter unless it  existed in the                                                                    
     state in substantially the same  form and was conducted                                                                    
     in  substantially the  same  manner  before January  1,                                                                    
     1959. A  permit may  not be issued  for a  snow machine                                                                    
     classic  [MAY  NOT  BE  LICENSED]  under  this  chapter                                                                    
     unless  it has  been  in existence  for  at least  five                                                                    
     years  before  the  permit  is  issued  [LICENSING].  A                                                                    
     permit may  not be  issued for  an [AN]  animal classic                                                                    
     [MAY NOT BE LICENSED] under this chapter.                                                                                  
Mr. George  furthered that references to  "permits" replaced                                                                    
preferences to  "licensed." The Department of  Revenue (DOR)                                                                    
advised that the language was  more consistent with existing                                                                    
statute. He  noted that in  Section 6,  page 4, line  16 the                                                                    
words "for harvesting bull moose"  were removed and the word                                                                    
"moose" prior to the word "antlers" was added.                                                                                  
Co-Chair Stoltze OPENED public testimony.                                                                                       
2:59:53 PM                                                                                                                    
GRANT LEWIS, TANANA  VALLEY SPORTSMAN ASSOCIATION, FAIRBANKS                                                                    
(via teleconference), spoke in  favor of the legislation. He                                                                    
recounted   that  the   club  was   founded  in   1911.  The                                                                    
association was  incorporated as  a non-profit in  1937. The                                                                    
association hosted the local high  school team practices and                                                                    
competitions and  had its own  youth shooting club  with 100                                                                    
members.   The    association   taught   gun    safety   and                                                                    
marksmanship. In  addition, three other high  school and two                                                                    
middle school  shooting clubs used  the facility.  The money                                                                    
earned from  the derby would  be split between the  club and                                                                    
the University to help maintain  the facility and to support                                                                    
the youth programs.                                                                                                             
DAN JORDAN,  UNIVERSITY OF ALASKA FAIRBANKS,  COACH, NANOOKS                                                                    
RIFLE TEAM  (via teleconference), testified in  favor of the                                                                    
legislation. He  stated that the club  won multiple national                                                                    
championships.  He stated  that  over the  years seven  team                                                                    
members had  participated in the Olympics.  Team members won                                                                    
medals  in the  last Olympic  Games.  He noted  that he  was                                                                    
always  searching  for new  ways  to  find funding  for  the                                                                    
program and  was working on  the derby concept for  9 years.                                                                    
He  thought  teaming up  with  TVSA  and  the youth  in  the                                                                    
community was a "win-win" situation.                                                                                            
Representative Guttenberg expressed  congratulations for the                                                                    
team's  national  qualification.  He   asked  how  the  team                                                                    
planned to operate the derby.                                                                                                   
Mr. Jordan replied that team  would work in conjunction with                                                                    
TVSA  and use  its  gaming  permit. He  hoped  to develop  a                                                                    
website and organize  the derby in a similar  fashion as the                                                                    
halibut derby in Valdez.                                                                                                        
MIKE TINKER, TANANA  VALLEY SPORTSMAN ASSOCIATION, FAIRBANKS                                                                    
(via   teleconference),   testified    in   favor   of   the                                                                    
legislation. He was  a supporter of the  university team. He                                                                    
noted that  TVSA had other  gaming permits in the  past. The                                                                    
association  diligently   prepared  for   the  legislation's                                                                    
gaming  permit. The  association enthusiastically  supported                                                                    
the  event and  was looking  forward  to the  next step.  He                                                                    
appreciated the committee's consideration of HB 268.                                                                            
Co-Chair  Stoltze  commended  the association's  process  to                                                                    
ensure the legislation was properly vetted.                                                                                     
MEL  BOWEN, DIRECTOR,  ADVOCATES  FOR  VICTIMS OF  VIOLENCE,                                                                    
VALDEZ (via teleconference),  supported the legislation. She                                                                    
described  the   program.  The  Advocates  for   Victims  of                                                                    
Violence  (AVV) was  one of  twenty  programs that  provided                                                                    
services  for  victims  of   domestic  violence  and  sexual                                                                    
assault for  18 communities  from Glennallen to  Valdez. The                                                                    
programs costs had  risen over $20 thousand  within the last                                                                    
year. State funding  was divided between 20  programs in the                                                                    
state.  The program  would need  an additional  $25 thousand                                                                    
over the current state funding  level. She hoped to meet the                                                                    
projected  shortfall  with  eligibility to  receive  funding                                                                    
from the snow  classic. She wanted to avoid  cuts to program                                                                    
services or turning away victims.                                                                                               
DARRELL   VERFAILLIE,  DIRECTOR,   PARKS,  RECREATION,   AND                                                                    
CULTURAL SERVICES, VALDEZ  (via teleconference), voiced that                                                                    
the City of  Valdez would not receive any  revenues from the                                                                    
event. The  department would coordinate and  assist with the                                                                    
event on behalf of AVV.  The classic would help generate AVV                                                                    
revenues and bolster the department's winter offerings.                                                                         
3:11:07 PM                                                                                                                    
Co-Chair Stoltze CLOSED public testimony.                                                                                       
JOSEPH  KOSS,  TAX  AUDITOR,  TAX  DIVISION,  DEPARTMENT  OF                                                                    
REVENUE,  ANCHORAGE  (via   teleconference),  discussed  the                                                                    
changes  in the  CS. He  explained that  the gaming  statute                                                                    
contained three sections and all  three were contained in HB
268, which listed the legal  gaming activities in the state.                                                                    
The   first  two   sections   concerned  permitting   gaming                                                                    
activities and  the third section  dealt with  licensing. He                                                                    
delineated   that  DOR   licensed   operators  who   conduct                                                                    
activities on  behalf of permittees  and granted  permits to                                                                    
organizations to conduct the  gaming activities. The changes                                                                    
allowed consistency between Section 3 and Sections 1 and 2.                                                                     
Co-Chair  Stoltze stated  that a  description of  the gaming                                                                    
activity  was  typically  described  in  statute.  He  asked                                                                    
whether the description was contained in the bill.                                                                              
Mr.  Koss  replied  that  the  Snow  Town  Ice  Classic  was                                                                    
included in  the basic ice  classic definition in  Section 5                                                                    
of the legislation.                                                                                                             
Representative  Guttenberg referred  to  the many  different                                                                    
classics events  in the state.  He indicated that  the moose                                                                    
derby involved hunting big game.  He asked if the Department                                                                    
of Fish and Game (DFG) was consulted.                                                                                           
Representative Wilson clarified that  DFG was consulted. The                                                                    
derby  would take  place during  the  regular moose  hunting                                                                    
season. Participants  could guess the spread  of the antlers                                                                    
without hunting.  The event was taking  advantage of hunting                                                                    
that  was   already  going   on.  She   mentioned  extensive                                                                    
discussion  in  the  House Resources  Committee.  The  event                                                                    
could merely  be a  game of  chance based  on the  data from                                                                    
hunters after  they documented their  moose and did  not add                                                                    
additional work for the department.                                                                                             
Representative  Guttenberg clarified  that  his concern  was                                                                    
whether hunting behavior would be changed.                                                                                      
Representative Wilson  understood that the  hunting patterns                                                                    
were   currently  tracked   by  the   department  and   much                                                                    
discussion regarding  the issue  took place in  the previous                                                                    
committee. She surmised that if  a hunter was trophy hunting                                                                    
instead of hunting  for food the hunter  already was engaged                                                                    
in that type  of behavior. She thought that  the event would                                                                    
not alter hunting behavior.                                                                                                     
Representative  Guttenberg   asked  whether   guided  trophy                                                                    
hunters would be eligible.                                                                                                      
Representative  Wilson relayed  that only  employees of  DFG                                                                    
were ineligible  to participate. The operator  of the gaming                                                                    
event had the prerogative to exclude any group.                                                                                 
Co-Chair    Stoltze   commented    that   the    legislature                                                                    
conventionally included the rules  of conduct in statute. He                                                                    
wished  to  see  a  description of  the  activities  in  the                                                                    
legislation. He  thought that  Alaskans were  hesitant about                                                                    
gaming expansions  although non-profit games of  chance were                                                                    
generally accepted.                                                                                                             
3:20:05 PM                                                                                                                    
Representative  Gara asked  whether  DFG  would discuss  the                                                                    
potential game population impacts.                                                                                              
Co-Chair Stoltze answered  that the premise of  the bill was                                                                    
a function of DOR concerning  gaming and games of chance. He                                                                    
wondered  why  the legislation  was  referred  to the  House                                                                    
Resources  Committee since  it did  not pertain  to resource                                                                    
management issues.                                                                                                              
Representative Wilson  addressed the ice classic  portion of                                                                    
the  legislation.  She  pointed   out  that  the  event  was                                                                    
described  on  page  3  of the  legislation.  She  read  the                                                                    
     "…ice classic" means a game  of chance where a prize of                                                                    
     money is awarded for the  closest guess of the time the                                                                    
     ice  moves in  a body  of water  or watercourse  in the                                                                    
     state and is limited to  the Nenana and Chena Ice Pools                                                                    
     in the same…"                                                                                                              
Representative Wilson added that  the event was very similar                                                                    
to the Nenana Ice Classic.                                                                                                      
Representative   Wilson   addressed  Representative   Gara's                                                                    
question. She  detailed that  DFG examined  the bill  due to                                                                    
the  title   and  found  the  legislation   acceptable.  She                                                                    
restated that the  bill would not affect any  changes in the                                                                    
way the department carried out  moose hunts nor would it add                                                                    
any  additional permits.  She  reiterated  that most  people                                                                    
hunt  for meat  and  a few  might hunt  for  trophy but  she                                                                    
didn't believe  the bill would change  any hunting behavior.                                                                    
She relayed that DFG had not raised any objections.                                                                             
3:23:16 PM                                                                                                                    
Representative   Gara  wondered   whether  DFG   would  have                                                                    
authority  to   cancel  the  derby  to   protect  the  moose                                                                    
population in a time of shortage.                                                                                               
Co-Chair Stoltze deduced  that DFG managed game  and not the                                                                    
gaming regulation portion of the derby.                                                                                         
Representative  Wilson  stated  that  the  moose  population                                                                    
would  determine  the  number  of  permits.  The  department                                                                    
routinely provided  permits based  on the  moose population.                                                                    
She  stated  that DFG  historically  had  closed areas.  She                                                                    
emphasized that the  derby could not increase  the amount of                                                                    
hunters  or  effort  due  to the  limited  number  of  moose                                                                    
hunting  permits.  The  department  would act  in  the  best                                                                    
interest  of the  resource  for the  state  regardless of  a                                                                    
Vice-Chair Neuman  remarked that the  Board of Game  set the                                                                    
allowable harvest  within certain regions of  the state. The                                                                    
bill merely  allowed community members  to enter  the derby,                                                                    
support the organizations, engage  in family activities, and                                                                    
enjoy the outdoors.                                                                                                             
Representative Wilson concurred.                                                                                                
JOHANNA BALES, DEPUTY DIRECTOR,  TAX DIVISION, DEPARTMENT OF                                                                    
REVENUE,  ANCHORAGE  (via  teleconference),  clarified  that                                                                    
Representative Wilson explained  exactly how the legislation                                                                    
would  work.  She  concurred  that  the  definition  of  ice                                                                    
classic was included in the bill  and that the derby did not                                                                    
affect the permitting process with DFG.                                                                                         
3:28:58 PM                                                                                                                    
Representative  Costello noted  that the  new Department  of                                                                    
Revenue fiscal note showed no fiscal impact.                                                                                    
Vice-Chair Neuman MOVED to REPORT CSHB 268(FIN) out of                                                                          
committee   with   individual    recommendations   and   the                                                                    
accompanying zero fiscal note.                                                                                                  
CSHB 268(FIN) was REPORTED out of committee with a no                                                                           
recommendation and with one new zero fiscal note from the                                                                       
Department of Revenue.                                                                                                          
3:30:39 PM                                                                                                                    
The meeting was adjourned at 3:30 p.m.                                                                                          

Document Name Date/Time Subjects
HB 298 Sponsor Statement.doc HFIN 2/26/2014 1:30:00 PM
HB 298
HB 298 Original Legislation HB 30.pdf HFIN 2/26/2014 1:30:00 PM
HB 30
HB 298
HB 234 RCA Sunset Audit 2013.pdf HFIN 2/26/2014 1:30:00 PM
HB 234
HB 234 RCA-Summary of Efforts 01-2014.pdf HFIN 2/26/2014 1:30:00 PM
HB 234
HB 234 Sponsor Statement.pdf HFIN 2/26/2014 1:30:00 PM
HB 234
HB234 Supporting Documents-Letter AML 2-3-2014.pdf HFIN 2/26/2014 1:30:00 PM
HB 234
CSHB 268 Big Bull Moose Derbies and Ice Classics.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
CSHB 268 Sectional Analysis.docx HFIN 2/26/2014 1:30:00 PM
HB 268
CSHB 268 Sectional Analysis.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Big Bull Moose Derbies Original Bill.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Big Bull Moose Sponsor Statement.docx HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Big Bull Moose Sponsor Statement.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 TVSA club house picture.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Letters of Support.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Nanooks news article 1.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Nanooks news article 2.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Nanooks picture 1.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 268 Nanooks picture 2.pdf HFIN 2/26/2014 1:30:00 PM
HB 268
HB 298 -NEW-FN LegAudit-2-21-14.pdf HFIN 2/26/2014 1:30:00 PM
HB 298
HB 268 CS WORKDRAFT FIN P-version.pdf HFIN 2/26/2014 1:30:00 PM
HB 268