Legislature(1993 - 1994)
03/01/1993 01:40 PM House FIN
Audio | Topic |
---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE March 1, 1993 1:40 P.M. TAPE HFC 93 - 33, Side 2, #000 - end. TAPE HFC 93 - 34, Side 1, #000 - #694. CALL TO ORDER Co-Chair Ron Larson called the meeting of the House Finance Committee to order at 1:40 P.M. PRESENT Co-Chair Larson Representative Brown Co-Chair MacLean Representative Therriault Vice-Chair Hanley Representative Grussendorf Representative Navarre Representative Parnell Representatives Foster, Hoffman and Martin were not present for the meeting. ALSO PRESENT Jan DeYoung, Administrator/Hearing Examiner, Alaska Labor Relations Agency, Department of Labor, Anchorage via Teleconference; John Abshire, Deputy Commissioner, Department of Labor; John Tillinghast, Chugach Electric Company, Anchorage, Alaska; Raga Elim, Special Assistant to Commissioner Olds, Department of Natural Resources. SUMMARY INFORMATION *hb102 HB 102 An Act relating to the Alaska Labor Relations Agency; and providing for an effective date. CS HB 102 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the House Finance Committee for the Department of Labor. *hb116 HB 116 An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date. 1 HB 116 was placed into subcommittee with Representative Parnell as Chair and with members Representative MacLean, Representative Brown and Representative Hanley. The bill was held in Committee for further discussion. *hb102 HOUSE BILL 102 "An Act relating to the Alaska Labor Relations Agency; and providing for an effective date." JAN DEYOUNG, ADMINISTRATOR/HEARING EXAMINER, ALASKA LABOR RELATIONS AGENCY, DEPARTMENT OF LABOR, ANCHORAGE, ALASKA, testified via teleconference in support of HB 102. Ms. DeYoung explained that the Alaska Labor Relations Agency hears disputes between unions, public employers, individual union members and the unions. The Agency administers the public Employment Relations Act and the Railroad Labor Relations Act. The Agency, created in 1990, over the past two years has experienced a sixty-seven percent workload increase. In 1992, Ms. DeYoung noted, the volunteer board members met a total of thirty-three days for agency business. This workload has created a hardship for board members. Consequently, the Department of Labor has requested that the board be increased in order to share the workload. In addition to increasing the panel, HB 102 would allow for an honorarium with compensation reflected in the $12.8 fiscal note. Co-Chair Larson asked the number of members necessary to be present to form an agency quorum. Ms. DeYoung replied for administrative hearings three members need to be present and two of those members would make a quorum. A public business meeting could not be shared by the panel, consequently both panels would need to be present and a quorum would consist of four members. Representative Hanley recommended that the fiscal note itemize the per diem and travel costs associated with the hire of the additional three board members. Ms. DeYoung pointed out those costs are insubstantial as board members currently reside in Anchorage where all cases are heard. Representative Therriault asked if an appeal right would be granted for a full board hearing if a person was not satisfied with their initial determination. Ms. DeYoung stated the appeal from a panel decision goes directly to the 2 Superior Court. Representative Parnell questioned the honorarium position and asked the criteria used to determine which boards receive honorariums. Co-Chair Larson discussed various boards which do have the honorarium paid positions. Representative Grussendorf echoed his concern regarding the requested honorariums. JOHN ABSHIRE, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR, stated that honorarium positions pay range from $50 - $450 dollars per day and added that the requested $100 dollars per day was a low case medium. Mr. Abshire recommended that all new members to the board continue to reside in Anchorage which would alleviate travel costs. Representative Hanley asked the compensation for the Worker's Compensation Board honorarium. Mr. Abshire replied it was $50 dollar per day with additional per diem. Representative Parnell questioned if board members living in Anchorage receive per diem. Mr. Abshire stated they do not. Representative Grussendorf noted his concern that all board members be residents of Anchorage solely to avoid board and travel costs. Co-Chair MacLean MOVED Amendment #1, the deletion of Section 3, Page 2, Lines 3 through 7 of the proposed legislation which would delete the honorarium position. There being NO OBJECTION, it was adopted. Representative Brown noted with the deletion of Section 3, the fiscal note would be reduced to zero. Co-Chair Larson MOVED CS HB 102 (FIN) out of Committee with individual recommendations and a zero fiscal note. There being NO OBJECTION, it was so ordered. CS HB 102 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the House Finance Committee for the Department of Labor. *hb116 HOUSE BILL 116 "An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date." JOHN TILLINGHAST, CHUGACH ELECTRIC COMPANY, ANCHORAGE, ALASKA, testified in support of HB 116. He commented that 3 Chugach is seeking to introduce legislation that will help resolve a royalty dispute that Chugach is involved in with the Department of Natural Resources (DNR) concerning the valuation of federal royalties for natural gas that Chugach purchased at the Beluga River field. Chugach thought that this issue had been resolved in 1986 when legislation (AS 38.05.180(aa)) was passed. That legislation provides legislative guidance to DNR in valuing royalties for gas and electric utilities. He added, unfortunately, that the current DNR administration has chosen to interpret the statute verbatim and is now disregarding the legislative intent that was behind the law. In so doing, the current DNR administration has flip-flopped the agency's position and is now apparently in disagreement with the intent behind the legislation which they fully supported in 1986. Mr. Tillinghast added, if DNR prevails in its pursuit of increasing federal royalties for Beluga gas for prior years (1984-1992), electric rate-payers from Homer to Fairbanks will be asked to pay more than $21 million dollars in additional royalties. At issue today are the federal royalties for the years 1984-87 totaling $12.4 million dollars. However, if DNR applies the same logic to future years (1988-1992), Chugach rate payers would be liable for an additional $9 million dollars. Chugach, which is a member owned cooperative, will have no choice but to pass these additional costs on to their ratepayer through some type of rate surcharge. Unfortunately, today's customers would be forced to pay additional royalty payments for inexpensive natural gas that they may not have been there to use. Chugach firmly believes that by making royalty demands that they know will simply be passed on to the consumers, that the agency is actually trying to impose a tax on the Alaska public without any notice to them, and without the Legislature's involvement. Representative Brown referenced a chart on Page 19 of Attachment #1, "An Analysis of the Department of Natural Resources Demand for Additional Beluga River Royalty Payments from Railbelt Utility Consumers". Mr. Tillinghast stated that Chugach is being audited for the period 1984 - 1987. If the State prevails and there is a delinquency assessed, there will be a one time surcharge on residents and businesses. Representative Brown questioned the benefit percentages of the proposed legislation and asked who would receive them. Mr. Tillinghast stated that the business impacts would be 4 substantial. Representative Brown asked if Chugach would object to covering only the Cook Inlet region. Mr. Tillinghast said there would be no objection to that as the greatest impact of the legislation would be experienced in that area. Representative Brown asked for further information as to who would benefit from the proposed legislation. Mr. Tillinghast stated that Chugach would benefit from the bill, and added that all other pricing controversies in Cook Inlet have been settled. Co-Chair Larson questioned if the Power Cost Equalization (PCE) subsidy would be affected by the proposed increase. Mr. Tillinghast stated that PCE is required to fill the gap between power cost expense between the urban centers and rural areas. (Tape Change, HFC 93 -34, Side 1). Representative Brown noted for the record that her husband is one of the five members of the Alaska Public Utilities Commission (APUC). She stressed that the proposed legislation has no effect on PCE until authority is clarified to amend the floor. Representative Grussendorf asked where the State's share of the federal royalty would be distributed. Mr. Tillinghast replied twenty-five percent would go to the Permanent Fund and seventy-five percent would be allocated to the general fund. Representative Grussendorf pointed out that Chugach is asking that the Permanent Fund be reduced in order that sixty percent of their consumers receive benefit. Mr. Tillinghast stated that Chugach is a cooperative and does not pass dividends on to share holders. Cost of direct royalties will be passed on to the consumers. Representative Grussendorf emphasized that the PCE program was a price agreed upon to allow certain areas of the State to benefit from hydroelectric projects. Representative Hanley stated that the policy call made in 1986 states that in State leases, the contract price is the price. The Legislature passed legislation in 1986 which said that the State will accept the contract price on State leases. Representative Hanley further discussed contracts and royalty agreement made with the State. Co-Chair MacLean questioned the 1959 retroactive date. Mr. Tillinghast stated that the audit period in controversy was 1984 -1987, although there is a six year statute of limitation. The federal government can not legally go back to 1959 because of the existing statute. The 1959 date was 5 included because it was the date of statehood at which time revenue sharing began. Co-Chair MacLean asked how Chugach Electric could legally charge for utilities which have not been used. Mr. Tillinghast stated the decision will be made by APUC. DNR proclaimed in 1985, that it is bad public policy to access royalties retroactively against utilities. Co-Chair MacLean inquired if the legislation would be isolated to the use of natural gas for utilities. Mr. Tillinghast stated yes. DNR took great care in assuring that the legislation in 1986 was confined to sales for gas and electric utilities. Representative Brown pointed out that DNR did not strongly support the initial legislation. She stated that the law does not clarify who qualifies as a gas utility. Representative Brown noted her concern that the legislation addresses gas pipelines. She suggested the word "customer", primarily being residential, versus the word "consumer", primarily interpreted as a pipeline customer, should be more clearly defined. Her concern would be to limit the legislation to current production and have some protection from the granting of an unfair competitive advantage. Co-Chair MacLean expressed concern with the federal government establishing the value of the leases. Mr. Tillinghast explained that the bill only deals with federal leases. The feds will be establishing the value because it is their land. Representative Brown provided the Committee with Amendment Tillinghast stated that Chugach Electric has endorsed Representative Brown's recommendation to confine the legislation either to Cook Inlet or to fields that are currently in production. DNR is currently trying to get the federal government to retroactively access royalties by disregarding the contract price. Mr. Tillinghast said if the amendments proposed by Representative Brown were adopted, they will kill the bill. Representative Brown reiterated her concern that the entity benefitting from the legislation be residential. Mr. Tillinghast recommended the removal of "gas utility" language from the bill leaving the remaining standards. Representative Brown agreed noting her concern with "gas utility" and who can become one. Mr. Tillinghast commented that the legislation does not make policy but rather extends the 1986 decisions to include something overlooked. If the bill does not pass, Golden Valley Electric Company will be asked to pay a surcharge for the years in which they did not buy electricity. 6 Representative Brown asked how the surcharge would be distributed. Mr. Tillinghast added that decision would be decided by APUC. RAGA ELIM, SPECIAL ASSISTANT TO COMMISSIONER OLDS, DEPARTMENT OF NATURAL RESOURCES, testified that DNR's position on HB 116 is neutral. He added that DNR has deferred to the Legislature to decide if the policy should be changed. He added that the case addressed is currently worth $10.5 million dollars with interest accruing. Co-Chair Larson placed HB 116 in a subcommittee to be Chaired by Representative Parnell with members Representatives Hanley, MacLean and Brown. HB 116 was HELD in Committee for further discussion. * ADJOURNMENT The meeting adjourned at 3:05 P.M. HOUSE FINANCE COMMITTEE March 1, 1993 1:40 P.M. TAPE HFC 93 - 33, Side 2, #000 - end. TAPE HFC 93 - 34, Side 1, #000 - #694. CALL TO ORDER Co-Chair Ron Larson called the meeting of the House Finance Committee to order at 1:40 P.M. PRESENT Co-Chair Larson Representative Brown Co-Chair MacLean Representative Therriault Vice-Chair Hanley Representative Grussendorf Representative Navarre Representative Parnell Representatives Foster, Hoffman and Martin were not present for the meeting. ALSO PRESENT Jan DeYoung, Administrator/Hearing Examiner, Alaska Labor Relations Agency, Department of Labor, Anchorage via Teleconference; John Abshire, Deputy Commissioner, Department of Labor; John Tillinghast, Chugach Electric Company, Anchorage, Alaska; Raga Elim, Special Assistant to 7 Commissioner Olds, Department of Natural Resources. SUMMARY INFORMATION HB 102 An Act relating to the Alaska Labor Relations Agency; and providing for an effective date. CS HB 102 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the House Finance Committee for the Department of Labor. HB 116 An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date. HB 116 was placed into subcommittee with Representative Parnell as Chair and with members Representative MacLean, Representative Brown and Representative Hanley. The bill was held in Committee for further discussion. HOUSE BILL 102 "An Act relating to the Alaska Labor Relations Agency; and providing for an effective date." JAN DEYOUNG, ADMINISTRATOR/HEARING EXAMINER, ALASKA LABOR RELATIONS AGENCY, DEPARTMENT OF LABOR, ANCHORAGE, ALASKA, testified via teleconference in support of HB 102. Ms. DeYoung explained that the Alaska Labor Relations Agency hears disputes between unions, public employers, individual union members and the unions. The Agency administers the public Employment Relations Act and the Railroad Labor Relations Act. The Agency, created in 1990, over the past two years has experienced a sixty-seven percent workload increase. In 1992, Ms. DeYoung noted, the volunteer board members met a total of thirty-three days for agency business. This workload has created a hardship for board members. Consequently, the Department of Labor has requested that the board be increased in order to share the workload. In addition to increasing the panel, HB 102 would allow for an honorarium with compensation reflected in the $12.8 fiscal 8 note. Co-Chair Larson asked the number of members necessary to be present to form an agency quorum. Ms. DeYoung replied for administrative hearings three members need to be present and two of those members would make a quorum. A public business meeting could not be shared by the panel, consequently both panels would need to be present and a quorum would consist of four members. Representative Hanley recommended that the fiscal note itemize the per diem and travel costs associated with the hire of the additional three board members. Ms. DeYoung pointed out those costs are insubstantial as board members currently reside in Anchorage where all cases are heard. Representative Therriault asked if an appeal right would be granted for a full board hearing if a person was not satisfied with their initial determination. Ms. DeYoung stated the appeal from a panel decision goes directly to the Superior Court. Representative Parnell questioned the honorarium position and asked the criteria used to determine which boards receive honorariums. Co-Chair Larson discussed various boards which do have the honorarium paid positions. Representative Grussendorf echoed his concern regarding the requested honorariums. JOHN ABSHIRE, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR, stated that honorarium positions pay range from $50 - $450 dollars per day and added that the requested $100 dollars per day was a low case medium. Mr. Abshire recommended that all new members to the board continue to reside in Anchorage which would alleviate travel costs. Representative Hanley asked the compensation for the Worker's Compensation Board honorarium. Mr. Abshire replied it was $50 dollar per day with additional per diem. Representative Parnell questioned if board members living in Anchorage receive per diem. Mr. Abshire stated they do not. Representative Grussendorf noted his concern that all board members be residents of Anchorage solely to avoid board and travel costs. Co-Chair MacLean MOVED Amendment #1, the deletion of Section 3, Page 2, Lines 3 through 7 of the proposed legislation which would delete the honorarium position. There being NO OBJECTION, it was adopted. Representative Brown noted with the deletion of Section 3, the fiscal note would be reduced to zero. Co-Chair Larson 9 MOVED CS HB 102 (FIN) out of Committee with individual recommendations and a zero fiscal note. There being NO OBJECTION, it was so ordered. CS HB 102 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the House Finance Committee for the Department of Labor. HOUSE BILL 116 "An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date." JOHN TILLINGHAST, CHUGACH ELECTRIC COMPANY, ANCHORAGE, ALASKA, testified in support of HB 116. He commented that Chugach is seeking to introduce legislation that will help resolve a royalty dispute that Chugach is involved in with the Department of Natural Resources (DNR) concerning the valuation of federal royalties for natural gas that Chugach purchased at the Beluga River field. Chugach thought that this issue had been resolved in 1986 when legislation (AS 38.05.180(aa)) was passed. That legislation provides legislative guidance to DNR in valuing royalties for gas and electric utilities. He added, unfortunately, that the current DNR administration has chosen to interpret the statute verbatim and is now disregarding the legislative intent that was behind the law. In so doing, the current DNR administration has flip-flopped the agency's position and is now apparently in disagreement with the intent behind the legislation which they fully supported in 1986. Mr. Tillinghast added, if DNR prevails in its pursuit of increasing federal royalties for Beluga gas for prior years (1984-1992), electric rate-payers from Homer to Fairbanks will be asked to pay more than $21 million dollars in additional royalties. At issue today are the federal royalties for the years 1984-87 totaling $12.4 million dollars. However, if DNR applies the same logic to future years (1988-1992), Chugach rate payers would be liable for an additional $9 million dollars. Chugach, which is a member owned cooperative, will have no choice but to pass these additional costs on to their ratepayer through some type of rate surcharge. Unfortunately, today's customers would be forced to pay 10 additional royalty payments for inexpensive natural gas that they may not have been there to use. Chugach firmly believes that by making royalty demands that they know will simply be passed on to the consumers, that the agency is actually trying to impose a tax on the Alaska public without any notice to them, and without the Legislature's involvement. Representative Brown referenced a chart on Page 19 of Attachment #1, "An Analysis of the Department of Natural Resources Demand for Additional Beluga River Royalty Payments from Railbelt Utility Consumers". Mr. Tillinghast stated that Chugach is being audited for the period 1984 - 1987. If the State prevails and there is a delinquency assessed, there will be a one time surcharge on residents and businesses. Representative Brown questioned the benefit percentages of the proposed legislation and asked who would receive them. Mr. Tillinghast stated that the business impacts would be substantial. Representative Brown asked if Chugach would object to covering only the Cook Inlet region. Mr. Tillinghast said there would be no objection to that as the greatest impact of the legislation would be experienced in that area. Representative Brown asked for further information as to who would benefit from the proposed legislation. Mr. Tillinghast stated that Chugach would benefit from the bill, and added that all other pricing controversies in Cook Inlet have been settled. Co-Chair Larson questioned if the Power Cost Equalization (PCE) subsidy would be affected by the proposed increase. Mr. Tillinghast stated that PCE is required to fill the gap between power cost expense between the urban centers and rural areas. (Tape Change, HFC 93 -34, Side 1). Representative Brown noted for the record that her husband is one of the five members of the Alaska Public Utilities Commission (APUC). She stressed that the proposed legislation has no effect on PCE until authority is clarified to amend the floor. Representative Grussendorf asked where the State's share of the federal royalty would be distributed. Mr. Tillinghast replied twenty-five percent would go to the Permanent Fund and seventy-five percent would be allocated to the general fund. Representative Grussendorf pointed out that Chugach is asking that the Permanent Fund be reduced in order that 11 sixty percent of their consumers receive benefit. Mr. Tillinghast stated that Chugach is a cooperative and does not pass dividends on to share holders. Cost of direct royalties will be passed on to the consumers. Representative Grussendorf emphasized that the PCE program was a price agreed upon to allow certain areas of the State to benefit from hydroelectric projects. Representative Hanley stated that the policy call made in 1986 states that in State leases, the contract price is the price. The Legislature passed legislation in 1986 which said that the State will accept the contract price on State leases. Representative Hanley further discussed contracts and royalty agreement made with the State. Co-Chair MacLean questioned the 1959 retroactive date. Mr. Tillinghast stated that the audit period in controversy was 1984 -1987, although there is a six year statute of limitation. The federal government can not legally go back to 1959 because of the existing statute. The 1959 date was included because it was the date of statehood at which time revenue sharing began. Co-Chair MacLean asked how Chugach Electric could legally charge for utilities which have not been used. Mr. Tillinghast stated the decision will be made by APUC. DNR proclaimed in 1985, that it is bad public policy to access royalties retroactively against utilities. Co-Chair MacLean inquired if the legislation would be isolated to the use of natural gas for utilities. Mr. Tillinghast stated yes. DNR took great care in assuring that the legislation in 1986 was confined to sales for gas and electric utilities. Representative Brown pointed out that DNR did not strongly support the initial legislation. She stated that the law does not clarify who qualifies as a gas utility. Representative Brown noted her concern that the legislation addresses gas pipelines. She suggested the word "customer", primarily being residential, versus the word "consumer", primarily interpreted as a pipeline customer, should be more clearly defined. Her concern would be to limit the legislation to current production and have some protection from the granting of an unfair competitive advantage. Co-Chair MacLean expressed concern with the federal government establishing the value of the leases. Mr. Tillinghast explained that the bill only deals with federal leases. The feds will be establishing the value because it is their land. Representative Brown provided the Committee with Amendment 12 Tillinghast stated that Chugach Electric has endorsed Representative Brown's recommendation to confine the legislation either to Cook Inlet or to fields that are currently in production. DNR is currently trying to get the federal government to retroactively access royalties by disregarding the contract price. Mr. Tillinghast said if the amendments proposed by Representative Brown were adopted, they will kill the bill. Representative Brown reiterated her concern that the entity benefitting from the legislation be residential. Mr. Tillinghast recommended the removal of "gas utility" language from the bill leaving the remaining standards. Representative Brown agreed noting her concern with "gas utility" and who can become one. Mr. Tillinghast commented that the legislation does not make policy but rather extends the 1986 decisions to include something overlooked. If the bill does not pass, Golden Valley Electric Company will be asked to pay a surcharge for the years in which they did not buy electricity. Representative Brown asked how the surcharge would be distributed. Mr. Tillinghast added that decision would be decided by APUC. RAGA ELIM, SPECIAL ASSISTANT TO COMMISSIONER OLDS, DEPARTMENT OF NATURAL RESOURCES, testified that DNR's position on HB 116 is neutral. He added that DNR has deferred to the Legislature to decide if the policy should be changed. He added that the case addressed is currently worth $10.5 million dollars with interest accruing. Co-Chair Larson placed HB 116 in a subcommittee to be Chaired by Representative Parnell with members Representatives Hanley, MacLean and Brown. HB 116 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 3:05 P.M. 13
Document Name | Date/Time | Subjects |
---|