Legislature(1993 - 1994)
04/06/1993 01:30 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
APRIL 6, 1993
1:30 P.M.
TAPE HFC 93 - 95, Side 1, #000 - end.
TAPE HFC 93 - 95, Side 2, #000 - end.
TAPE HFC 93 - 96, Side 1, #000 - end.
TAPE HFC 93 - 96, Side 2, #000 - #386.
CALL TO ORDER
Co-Chair Ron Larson called the meeting of the House Finance
Committee to order at 1:30 P.M.
PRESENT
Co-Chair Larson Representative Brown
Vice-Chair Hanley Representative Foster
Representative Therriault Representative Grussendorf
Representative Hoffman Representative Martin
Representative Navarre Representative Parnell
Representative MacLean was not present for the meeting.
ALSO PRESENT
Brent Petrie, Alaska Energy Authority, Anchorage, Alaska;
Bob Martin, Jr., General Manager, Tlingit-Haida Electric
Authority, Auke Bay, Alaska; Judy Mathias, Aid to
Representative Ron Larson; Dave Hutchens, Executive
Director, Alaska Rural Electric Coop Association (ARECA),
Anchorage, Alaska; Juanita Hensley, Director, Division of
Motor Vehicles, Department of Public Safety.
SUMMARY INFORMATION
HB 216 An Act relating to power cost equalization; and
providing for an effective date.
HB 216 was held in Committee for further
discussion.
HB 179 An Act relating to motor vehicles and mobile
homes; and providing for an effective date.
HB 179 was held in Committee for further
discussion.
HOUSE BILL 216
"An Act relating to power cost equalization; and
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providing for an effective date."
Co-Chair Larson explained the changes made in preparing the
work draft #8-LS0010\J, Cramer, dated 4/06/93 to HB 216.
BRENT PETRIE, ALASKA ENERGY AUTHORITY, ANCHORAGE, ALASKA,
(testified via teleconference) noted that 9.82 cents per
kilowatt-hour cost is based on the 1991 calendar year
residential sales for utilities in Anchorage, Fairbanks and
Juneau. This is the weighted average retail cost for the
first 500 kilowatt-hours per month which rate payers paid
for utilities. Representative Brown questioned the
information source used to determine those figures. Mr.
Petrie advised the information was provided from the Alaska
Energy Authority electric power statistic report directly
originating from the utilities. Representative Brown said
the figures had not been reviewed by the Alaska Public
Utilities Commission (APUC). Mr. Petrie commented that the
cost includes monthly cost and charges that a customer
needs to have service.
Representative Hoffman asked how much additional money would
be needed to fully fund the program. Mr. Petrie noted that
$403 thousand additional dollars would be needed to fund
both the state offices and facilities. To include schools,
costs would increase by an additional $566 thousand dollars.
Representative Brown asked how the average cost per kilowatt
hour differed from the retail residential rate. Mr. Petrie
replied that the consumers cost has no change, whereas, the
cost to the utility allows for fund reserves. He suggested
using the rate would be a more precise figure for
calculation determination.
ROBERT MARTIN, JR., GENERAL MANAGER, TLINGIT-HAIDA RETAIL
ELECTRIC AUTHORITY (THREA), JUNEAU, ALASKA, noted that he
represented seven rural communities in South East Alaska.
He pointed out that his company has been participating in
the Power Cost Equalization Program since it originated
noted that he did not support reducing the kilowatt hour to
"650" per month. He pointed out that the average
consumption for his company is less than 500 kilowatt hours
per month, year round and those averages do not reflect the
differences between the winter and summer month's
consumption. The proposed change will affect the consumers
ability to pay their electric bills.
Mr. Martin urged raising the floor in order to create a more
balanced system. Representative Brown thought the impact of
raising the floor would penalize the more efficient
utilities. She suggested the most equitable system would be
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to lower the ceiling. Mr. Martin argued the most fair
change would be to lower the floor.
Co-Chair Larson asked if the utility has the authority to
average the usage cost during the course of the year. Mr.
Martin stated that they could offer that service. He
recommended that the floor be set at 9.5 cents per kilowatt
hour. He felt this would provide savings. The average
consumption is going down as people are becoming more
conservation minded. Representative Hoffman reminded the
Committee that in the colder sections of the state utility
rates are much higher. He provided the Committee with
handouts. [Attachment #1]. Representative Hoffman
encouraged using the "700" kilowatt hours per month cost
sold.
Mr. Petrie commented that Attachment #1 did not include the
community facilities. The chart indicates only residential
and commercial spaces and excludes the state and federal
facilities.
Representative Grussendorf MOVED to adopt work draft #8-
LS0010\J as the version before the Committee. There being
NO OBJECTIONS, it was so ordered.
Representative Hoffman asked the cost savings in refunding
the program. Mr. Petrie replied it would cost $1.1 million
dollars. Representative Hoffman recommended including
"state" facilities to Page 1, Lines 10 & 11.
Representative Brown asked the amount saved if the
consumption limit was dropped to 650 kilowatt hours per
month. Mr. Petrie replied the saving would be $260 thousand
dollars if the cap was dropped. Representative Hoffman
MOVED adding "700" as the cap on Page 1, Line 9.
Representative Brown questioned the impact of the change.
(Tape Change, HFC 93-95, Side 2).
Mr. Petrie explained the proposed change would create an
estimated savings of $260 thousand dollars. A further
reduction could affect more residential customers.
Representative Brown asked if the shortfall experienced by
the utility would be passed on to all incremental users.
DAVE HUTCHENS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC
COOP ASSOCIATION (ARECA), ANCHORAGE, ALASKA, stated that the
legislation is not a subsidy to the utility and it is passed
through to the consumer on a dollar to dollar basis. When
consumption goes above a level being assisted, the consumer
will pay the price.
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Representative Parnell asked ARECA's position on the change
proposed by Representative Hoffman. Mr. Hutchens stated
that the Association would not be handicapped by the "650"
figure. The primary effect of the change would be to
consumers in the regional trade centers where consumption is
higher. He recommended using "700" kilowatt hour level
which will not reduce the cost, although will cap the
program to prohibit future growth. He added, ARECA would
recommend that "state facilities" be included in the
legislation.
Representative Martin OBJECTED to the motion of changing the
cap figure.
A roll call was taken on the MOTION.
IN FAVOR: Hoffman, Navarre, Brown, Foster,
Grussendorf.
OPPOSED: Martin, Parnell, Therriault, Larson.
Representatives Hanley and MacLean were not present for the
vote.
The MOTION PASSED, (5-4).
Representative Hoffman MOVED a change on Page 1, Lines 10 &
11, and to Page 2, Lines 21 & 22, to add "state or".
Representative Hoffman explained the effect of the change.
Co-Chair Larson felt that removing the word "state" would
shift a reduction to the PCE program; if "state" is left in
the legislation, there would be an additional $600 thousand
dollars in the PCE program which would not have to be
prorated. Representative Hoffman advised that if "state
facilities" are removed then "federal facilities" should
also be excluded. Representative Martin OBJECTED.
A roll call was taken on the MOTION.
IN FAVOR: Navarre, Parnell, Brown, Foster,
Grussendorf, Hoffman.
OPPOSED: Martin, Therriault, Larson.
Representatives Hanley and MacLean were not present for the
vote.
The MOTION PASSED, (6-3).
Representative Brown MOVED changing Page 2, Line 9, to read
"based on the weighted average cost per kilowatt hour for
residential consumers in Anchorage". Mr. Hutchens suggested
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that the amendment would be contrary to Representative
Brown's intent. The "cost" refers to the cost to the
utility, not the cost to the consumer. "Rate" determines
what the consumer pays.
Mr. Petrie explained the "rate" versus the "cost". He
offered alternative language to Page 2, Line 7, suggesting
to insert the words "rate above" after the word "power" and
delete the language "costs for". Representative Brown
referenced a letter from the Alaska Energy Authority dated
3/31/93. [Attachment #2]. Mr. Hutchens advised that the
language being deleted is the language that APUC identified
as "nonsensible". Representative Larson OBJECTED.
A roll call was taken on the MOTION.
IN FAVOR: Brown.
OPPOSED: Navarre, Parnell, Therriault, Foster,
Grussendorf, Hoffman, Martin, Larson.
Representative Hanley and Representative MacLean were not
present for the vote.
The MOTION FAILED, (1-8).
Representative Parnell asked what "retail residential"
meant. Mr. Petrie said it was a customer class which
utilities use to determine rates.
Co-Chair Larson HELD the bill in Committee for further
discussion.
HOUSE BILL 179
"An Act relating to motor vehicles and mobile homes;
and providing for an effective date."
JUANITA HENSLEY, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF PUBLIC SAFETY, provided the Committee with a
sectional analysis of work draft #8-LS0679\K dated 3/30/93.
Ms. Hensley asked the Committee to make a change to Page 1,
Line 13, deleting the language "but only". Section 1 will
provide $100 thousand dollars revenue for the State which
the Division of Motor Vehicles is currently collecting.
There was no objection to the suggested changes.
(Tape Change, HFC 93-96, Side 1).
Ms. Hensley continued, Section 2 would create ten thousand
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plates at $6 dollars each, costing the State $60 thousand
dollars. There will be $300 thousand dollars revenue
generated. The State will develop a plate which protects
Alaska flora and fauna.
Section 3 generates $300 thousand dollars revenue. Section
4 will bring Alaska into compliance with the uniform federal
regulation guidelines for the issuance of handicap plates.
The standards limit the plates and parking places to persons
with mobility handicaps. This section will generate a
revenue of $16.8 thousand dollars.
Representative Brown asked if Section 3 was a new category.
Co-Chair Larson explained this section defines who is
eligible to park in handicap parking places. Representative
Brown recommended amending Page 2, Line 28 by deleting "or"
and adding "and" after "United States". Ms. Hensley noted
that existing law has the original language, although she
felt the deletion of "or" would be compatible.
Section 5 ends a loophole in current law which allows motor
vehicle dealers to display one license plate on a car. With
the proposed change, a dealer would be required to place two
plates on each car. Section 6 removes the authority to
issue vehicle titles to mobile homes. The Division wants
mobile homes to be treated as real estate property instead
of vehicles. This section does not cover recreational
travel trailers. The proposed change will decrease revenue
by $15 hundred dollars per year to the Department of Public
Safety.
Ms. Hensley continued, Section 7 will remove the ambiguity
addressing senior citizens exemptions and associated
problems. The amendment will allow senior citizens only one
vehicle exemption per year. Section 8 adds a $10 dollar fee
for those individuals who do not renew their registration by
mail. This section will provide $2 million dollars
additional revenue to the State.
Section 9 requires a business to register their vehicle as a
commercial vehicle. The section will generate $400 thousand
dollars additional revenue. Representative Therriault
questioned what criteria will be used to determine whether a
vehicle is a business or personal vehicle. Ms. Hensley
noted it would be necessary for the party to declare if the
vehicle would be used for commercial purposes.
Representative Brown questioned the effect of the amendment.
She asked the amount that a commercially used vehicles
would be charged. Ms. Hensley replied a car is currently
charged $35 dollars registration fee; with the new
legislation the charge will be $51 dollars.
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Representative Brown pointed out the loop hole used on Page
4, Line 13, in the usage of the word "or". She advised that
many employees, as a part of their job are required to use
their personal vehicle for commercially related purposes.
Ms. Hensley said that the language proposed is not new to
the legislation and currently is in statute. A personal car
would not be required to be registered. Representative
Brown MOVED to delete "or" and insert "and" after the word
"business".
Committee discussion followed regarding the recommendation.
Representative Hanley OBJECTED.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Hoffman.
OPPOSED: Parnell, Therriault, Hanley, Martin,
Larson.
Representatives Foster, Hanley, Navarre and MacLean were not
present for the vote.
The MOTION FAILED, (2-5).
Ms. Hensley stated that Sections 10 - 13 would address motor
vehicle municipality registration tax which the Division of
Motor Vehicles currently collects for the municipalities.
These sections were not in the original bill and they were
amended in the Labor and Commerce Committee to increase the
motor vehicle registration tax.
(Tape Change, HFC 93-96, Side 2).
Ms. Hensley indicated that the proposed legislation would
increase the motor vehicle tax seventy percent in the next
two years. Section 10 increases the tax thirty-five percent
the first year. Section 11 is an additional increase of
thirty-five percent the following year. Section 12
increases the administrative fees which the Division of
Motor Vehicles would pay, from five to eight percent.
Section 13 will establish the motor vehicle registration tax
which the Division collects from the municipalities based on
computations from the Department of Labor which will be
finalized in 1998.
Section 14 is a cross reference to the section dealing with
handicap plates. Section 15 defines "vehicle". Section 16
is the repealer of mobile home areas indicated in statute.
Section 17 -20 clarifies the effective dates the previous
sections.
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Ms. Hensley summarized the additional revenues which would
be generated from the proposed version. Representative
Martin thought the State was taking funds from the
municipalities. Ms. Hensley pointed out this would increase
what the State remits back to the municipalities. The
Committee discussed the impact on local government and to
individuals.
Representative Hanley MOVED to delete Section 13 and Section
20. These two sections address the automatic COLA which is
in statute. It allows departments to increase fees without
coming back to the Legislature. Ms. Hensley replied that
the Department would support the amendment. There being NO
OBJECTION, it was adopted.
Discussion followed regarding the changes proposed in the
legislation. Co-Chair Larson noted his concern with raising
the motor vehicle registration fees seventy percent in the
next two years.
HB 179 was HELD in Committee for further discussion.
ADJOURNMENT
The meeting adjourned at 4:00 P.M.
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