Legislature(2003 - 2004)
02/05/2004 01:40 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
February 05, 2004
1:40 P.M.
TAPE HFC 04 - 20, Side A
CALL TO ORDER
Vice-Chair Meyer called the House Finance Committee meeting
to order at 1:40 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Steven Porter, Deputy Commissioner, Department of Revenue.
PRESENT VIA TELECONFERENCE
Harold C. Heinze, Chief Executive Officer, Alaska Natural
Gas Pipeline Authority (ANGDA).
GENERAL SUBJECT(S):
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 23rd Legislative Session, contact 465-
2156. After the 23rd Legislative Session they will be
available through the Legislative Library at 465-3808.
OVERVIEW: DEPARTMENT OF REVENUE
NATURAL GAS PIPELINE ISSUES
LOG SPEAKER DISCUSSION
TAPE HFC 04 - 20
SIDE A
000 Vice-Chair Meyer Convened House Finance Committee at 1:40
p.m.
015 STEVEN PORTER, Spoke to the Governor's position on the
DEPUTY COMMISSIONER, Stranded Gas Act and the Alaska Natural
DEPARTMENT of Gas Development Authority (ANGDA). To
REVENUE illustrate ANGDA's role, presented an
analogy in which the state owns the field
and leases it to a private party to
produce a product. When the product is
ready for harvest, the owner and the
private party derive revenue. The private
party could take the product to market by
buying the trucks or building the fleet,
or by hiring a trucking company, similar
to the recent proposal by Mid America.
Independent operators could deliver the
product to the smaller communities along
the route. He stated that ANGDA's
greatest strength is to look at the
potential benefits to the state.
458 Mr. Porter Noted that several bills are before the
legislature, with one recommending
funding at $2.15 million.
532 Mr. Porter Recommended that the funding be increased
to $3 million and be expanded to a team
including the Department of Law, the
Department of Natural Resources, and the
Department of Revenue. Explained that
additional work may be required under the
Stranded Gas Act to respond to the
applications. The appropriation would be
housed in the Department of Revenue.
617 Mr. Porter The Alaska Natural Gas Development
Authority was developed with the specific
mission of looking at bringing natural
gas from the North Slope to Valdez with
the possibility of a spur to Cook Inlet.
In hindsight, the Administration believes
that ANGDA should have been an all-Alaska
authority with a focus on independents.
He recommended legislative changes to
address this expansion in ANGDA.
758 Mr. Porter Recommended extending the deadline from
mid-June and directing the ANGDA to focus
on a broader range of issues.
927 HAROLD C. HEINZE, Stated that he feels encouraged that the
CHIEF EXECUTIVE $2.15 million request is being supported.
OFFICER, ALASKA Some of the issues would be brought to
NATURAL GAS PIPELINE the Board, who will make a decision on
AUTHORITY (ANGDA) modifying their mission. He felt that
the Board would look favorably on the
requests brought forth by Mr. Porter.
1055 Vice-Chair Meyer Questioned if the Administration expected
a contract by the end of session or by
mid-June.
1107 Mr. Porter Explained that while the Governor is
committed to expediting the project,
ANGDA would take the time to acquire the
knowledge needed to benefit the state.
The Administration would like to extend
ANGDA's report deadline of mid-June for
the Valdez development plan and other
issues.
1243 Representative Questioned where the extra funding would
Chenault go in the Governor's request for $3
million.
1306 Mr. Porter Explained that the total $3 million would
be spent for different analyses by the
three departments to bring the project
forward. He did not have specifics but
indicated the funding is for
contingencies, for tariff and contract
issues, and for research analysis. The
allocation would be judiciously spent and
would allow options.
1440 Mr. Porter Further clarified that the business plan
presented by Mr. Heinze did not take into
consideration negotiations by the
Governor.
1532 Mr. Porter Stated that there are issues in the
business plan that are not critical to
the next stage of negotiations.
1603 Representative Spoke in support of an all-Alaska
Chenault Authority. He added that all viable
options should be pursued.
1636 Representative Fate Questioned the pursuit of portions,
asking asked how the Authority would work
out the portions to reach their
objective.
1723 Mr. Porter Observed that independents have many
options depending on the commercial
negotiations. ANGDA must do whatever is
necessary to participate in the future
contracts.
1825 Representative Fate Asserted that there are portions of the
initiative itself [Ballot Measure 3] that
cannot be negotiated.
1921 Mr. Porter Explained that the Stranded Gas Act as it
exists does not allow the Authority to
participate as thoroughly as it would
like. The tax-exempt status, the
financing issues and the benefits
analysis have been identified and should
be thoroughly evaluated.
2044 Mr. Heinze Gave examples of significant new
opportunities for the Authority to carry
out its basic mission. Stated that it is
essential to understand the benefit to
Alaskans. Analysis of a couple of the
opportunities is contemplated, with
further support from the Legislature.
2234 Mr. Heinze Continued, there are opportunities to
improve the likelihood of success. The
next Board meeting would review the
issues, and make a decision on shifting
energies to address alternatives that
didn't exist a month ago.
2350 Representative Observed that the $2.15 million for ANGDA
Hawker would be increased to $3 million to
accomplish the work of ANGDA. Questioned
if there are activities that would
supplant ANGDA's previous outline of
activities, or if new activities would be
added and prioritized.
2522 Mr. Porter Explained that the intent is to look at a
different approach, amounting to $3
million and taking into account
contingencies. Emphasized the multi-
billion dollar scale of the project and
the importance of being prepared.
2708 Representative Observed that there were a number of
Hawker activities relating to project viability
in Mr. Heinze's previous presentation.
Noted that items for $500 thousand and
$750 thousand seemed related to project
construction. He questioned if the intent
of the Authority would be to focus on
viability issues rather than
construction.
2837 Mr. Porter Agreed that the focus is on project
viability issues, especially if the
issues complement the proposed gas
pipeline on the Alaska Highway route, and
if the issues bring resources to the
table to decrease the cost of service
while increasing the benefits to
Alaskans.
2914 Mr. Porter In response to a question by
Representative Hawker about integrating
the proposals, pointed out that the
result cannot be chosen.
2942 Vice-Chair Meyer Asked if the funding request would be
added to a supplemental budget.
3002 Mr. Porter Explained that legislation before the
Senate could provide the funding to the
Department of Revenue. The department
recommends revising the bill to include
the increase.
3030 Representative Croft Questioned why ANGDA was not mentioned in
the Governor's speech to the Joint
Session [2/2/04].
3103 Mr. Porter Replied that the Governor's focus was on
the Stranded Gas Act while ANGDA is
focused on implementation.
3141 Representative Croft Asked why there should be more confidence
in giving the funding directly to the
Department of Revenue, given that the
Governor's attitude has not been
supportive of ANGDA.
3300 Mr. Porter Pointed out that the Governor was silent
during the negotiations because the
Administration was not able to share
information with the public. He added
that ANGDA would be part of the team to
move the project forward. The Governor is
supportive of ANGDA, which he needs for
the feasibility analysis.
3520 Representative Croft Questioned why the Governor took six
months to appoint the ANGDA Board.
3544 Mr. Porter Argued that the Governor did not delay.
3617 Representative Croft Summarized that the funding would be
disbursed through the Governor, and
stated that it is important to know if
ANGDA would be provided with the funding
needed to support its mission. He
expressed that the Administration
actively opposed ANGDA for the first 6
months to a year and only provided
sufficient funding to support the hiring
of Mr. Heinze.
3753 Mr. Porter Pointed out that he has been the liaison
for ANGDA since it was created and
unwavering in his support. Continued,
the Governor supported the additional
$200 thousand appropriation [through the
Legislative Budget and Audit Committee]
last fall. He maintained that the
Administration was supportive when ANGDA
was focused on viability issues.
3920 Representative Croft Continued to question the Governor's
intent.
4009 Mr. Porter Emphasized that the independent ANGDA
Board must decide if they are confident
in the Governor's support. Mr. Porter
will make the same recommendation at the
board meeting on 2/9/04.
4132 Representative Croft Reiterated that Mr. Porter's
recommendation would increase the funding
from $2.15 to $3 million, move beyond the
Valdez project to consider all Alaskan
routes, and change the reporting deadline
of mid-June.
4201 Mr. Heinze Stated that he would recommend the
contracts that would be needed and Mr.
Porter would continue in his role of
contract reviewer. Asserted that he had
confidence in his working relationship
with Mr. Porter and emphasized the need
to move forward.
ADJOURNMENT The meeting was adjourned at 2:26 P.M.
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