Legislature(2015 - 2016)HOUSE FINANCE 519
04/14/2015 08:30 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB105 | |
| HB80 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 105 | TELECONFERENCED | |
| + | HB 80 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 14, 2015
9:05 a.m.
9:05:54 AM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 9:05 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Fred Parady, Deputy Commissioner, Department of Commerce,
Community, and Economic Development; Gene Therriault,
Deputy Director, Statewide Energy Policy Development,
Alaska Energy Authority, Department of Commerce, Community
and Economic Development; Representative Lynn Gattis,
Sponsor; Les Morse, Deputy Commissioner, Department of
Education and Early Development; Steve Ricci, Staff,
Representative Lynn Gattis; Representative Mike Chenault.
PRESENT VIA TELECONFERENCE
Ted Leonard, Director, Alaska Industrial Development and
Export Authority (AIDEA); Joe Griffith, General Manager,
Matanuska Electric Association; Deena Paramo,
Superintendent, Matsu Borough School District.
SUMMARY
HB 80 REPEAL COLLEGE/CAREER READINESS ASSESS.
HB 80 was HEARD and HELD in committee for further
consideration.
HB 105 AIDEA: BONDS; PROGRAMS; LOANS; LNG PROJECT
CSHB 105(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one
previously published zero fiscal note: FN1 (CED).
Co-Chair Thompson reviewed the agenda for the morning
meeting.
HOUSE BILL NO. 105
"An Act relating to the programs and bonds of the
Alaska Industrial Development and Export Authority;
related to the financing authorization through the
Alaska Industrial Development and Export Authority of
a liquefied natural gas production plant and natural
gas energy projects and distribution systems in the
state; amending and repealing bond authorizations
granted to the Alaska Industrial Development and
Export Authority; and providing for an effective
date."
9:06:46 AM
FRED PARADY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, placed himself on the
record.
GENE THERRIAULT, DEPUTY DIRECTOR, STATEWIDE ENERGY POLICY
DEVELOPMENT, ALASKA ENERGY AUTHORITY, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, placed
himself on the record.
Acting Commissioner Parady provided a brief explanation of
the bill. The legislation sought to give Alaska Industrial
Development and Export Authority (AIDEA) the authority to
consider an alternative gas supply to the Interior Energy
Project. He referenced SB 23 [Short Title: AIDEA: LNG
Project; Dividends; Financing] passed in 2013 which
provided funding and specified that a North Slope gas
supply be used. House Bill 105 continued the same funding
authorities but opened the door to consideration of propane
or a Cook Inlet gas supply while retaining the ability to
evaluate further North Slope alternatives.
9:08:27 AM
Co-Chair Thompson MOVED to ADOPT Amendment 1:
Page 2, line 6:
Delete "sec. 9" in both places
Insert "sec. 8" in both places
Page 2, lines 8 - 29:
Delete all material.
Renumber the following bill sections accordingly.
Page 9, line 4:
Delete "Sections 14 and 15"
Insert "Sections 13 and 14"
Co-Chair Neuman OBJECTED for discussion.
Co-Chair Thompson announced that Nick Szymoniak, Ted
Leonard, and Bob Shefchik were online and available for
questions.
Co-Chair Neuman clarified the amendment version was 29-
GH1019\N. Co-Chair Thompson agreed.
9:09:00 AM
Mr. Therriault pointed out that Amendment 1 deleted Section
2 on page 2 which essentially left the Fairbanks utilities
at the same status as other utilities owned by
municipalities across the state. They were exempt from
being regulated by the Regulatory Commission of Alaska
(RCA) unless they opted voluntarily. The language of the
bill placed them into RCA regulation unless a governing
body of a utility removed them. The feedback he received
from municipalities was that they desired to be non-
regulated giving entities more flexibility in the initial
build-out to acclimate rate-payers to rate changes. It
allowed costs to be spread as demand ramped up. In terms of
energy delivery, it was a volume enterprise; the higher the
demand, the lower the per-unit cost. The initial cost of a
new system would likely be high. Therefore, spreading out
the cost over a longer period of time was desirable and
would allow for an enterprise to be installed and
initialized. If the section was removed, it [AIDEA] would
default to the regular statutes as any other utility that
was owned by a political subdivision of the state.
9:10:49 AM
Representative Gara had not followed the controversy that
lead up to the version of the bill in the finance
committee. He asked about the major amendments added by
Representative Hawker in the previous committee.
Mr. Therriault pointed out an addition to the section in
statue that required utilities in Interior Alaska to be RCA
regulated.
9:11:34 AM
Representative Wilson asked about the two utilities in the
Interior staying separate and about Fairbanks Natural Gas
(FNG) being regulated. She wondered if the two utilities
would be handled differently. She wanted to make sure the
committee was not making two classifications.
Mr. Therriault spoke of the pending AIDEA purchase of
Pentex assets; the existing FNG system. If the purchase was
finalized and AIDEA became the new owner, it would not be
regulated. Fairbanks Natural Gas indicated that it had
applied with the RCA for a rate regulation in case the sale
did not materialize.
9:12:28 AM
Representative Wilson was trying to understand the two
different utilities. If the utilities remained separate
would there be less regulation for the Interior Gas Utility
(IGU) as a municipally owned utility or for another reason.
Mr. Therriault pointed out that the existing statutory
exemption from RCA regulation for utilities owned by
political subdivisions would not be available to FNG if it
remained separate under private ownership. It was AIDEA's
intent to eventually blend the two systems together into
one. If the AIDEA purchase moved forward the amendment
would be helpful.
Representative Wilson remarked that she did not understand
but suggested the committee move on.
9:13:37 AM
Representative Pruitt wanted to understand why the people
of Fairbanks would want a non-regulated utility. He
understood the burden of regulation. However, he wanted to
ensure that the people of Fairbanks were not harmed by
another government agency. He did not want to see a large
burden fall on the user because of initial build-up costs.
He wondered about the costs following build-up. He opined
that he would not want his rates as a consumer set by a
government bureaucracy. He believed that the RCA worked to
do the right thing for the public. He wondered if there was
a way of making RCA the regulatory entity over the project
following the build-up period.
Mr. Therriault reported that a municipally-owned utility
could choose to fall under RCA regulations at any time. The
attempt would be to initially have the additional
flexibility as AIDEA was trying to get the enterprise up
and running. The Interior Gas Utility had a locally elected
board. The reason why a utility owned by a political
subdivision had the option of being exempt by statue was
because an elected board could interact with its
constituency at a local level to determine fair rates. In
the case of the Pentex purchase and the FNG system, the
AIDEA board would be making the decisions, at least for a
period of time, until the utility could be spun off from
the AIDEA board to another utility operation such as IGU.
He did not have any reason to suspect the AIDEA board was
going to somehow savage the constituency of Fairbanks with
unfair rates.
9:16:45 AM
Co-Chair Thompson noted that Speaker Chenault had joined
the audience.
Representative Guttenberg asked about Section 2 which he
suggested separated the IGU from all other municipal
utilities. He wanted to clarify that no other municipal
utility had the obligation to operate under the RCA.
Mr. Therriault responded affirmatively. He added that other
utilities owned by political subdivisions of the state had
the ability to be non-RCA regulated by statute assuming
they had locally elected boards. In other words, a utility
had another body that governed the rates to consumers.
Representative Guttenberg asked about the benefits of
including Section 2. He wondered if they outweighed not
including the section.
Mr. Therriault suggested that the limitation on flexibility
outweighed the benefit of having RCA regulation in place.
Co-Chair Neuman WITHDREW his OBJECTION. There being NO
OBJECTION, Amendment 1 was adopted.
9:18:31 AM
Co-Chair Thompson MOVED to ADOPT Amendment 2:
Page 7, line 15, following "the":
Insert "members of the"
Page 7, line 16:
Delete "approves"
Insert "approve by resolution"
Vice-Chair Saddler OBJECTED for discussion.
Mr. Therriault relayed that AIDEA had suggested the
amendment. There was a desire to have more certainty about
moving the IEP forward. He pointed to Section 11 on page 7,
lines 14-21 of the bill. He explained that, in an attempt
to meet some of the concerns that were brought up in
earlier committees, AIDEA needed to act on an initial set
of criteria prior to utilizing any remaining financing
tools. Amendment 2 clarified who approved the project plan.
Alaska Industrial Development and Export Authority wanted
approval defined by an official action of the board in the
form of a resolution rather than a letter signed by the
chairman or a couple of committee members.
9:20:32 AM
Representative Pruitt commented that the word "Board" was
not included in the language of the bill. He wondered if it
should say "Members of the Board."
Mr. Therriault stated that in the statute establishing
AIEDA the term "board" was not included. Instead it
mentioned "members". The word "resolution" inherently
encompassed the members who acted together as a board. By
using the word "resolution" it assured that it was the
board entity taking an action rather than just the
chairman.
9:21:11 AM
Vice-Chair Saddler asked about the threshold for passing a
resolution. He wondered if it was a simple two-thirds
majority.
TED LEONARD, DIRECTOR, ALASKA INDUSTRIAL DEVELOPMENT AND
EXPORT AUTHORITY (AIDEA) (via teleconference), explained
that AIDEA had a seven member board and in order for a
resolution to pass a majority vote was needed. Four out of
seven board members had to vote in favor in order to
approve a resolution.
9:22:13 AM
Vice-Chair Saddler clarified that the majority meant four
members not just the majority of the members present.
Mr. Leonard believed that it had to be the majority of the
quorum but would verify the information.
Vice-Chair Saddler stated that he would appreciate the
verification.
9:22:38 AM
Representative Gara reported he had just sent a public
information request to Mr. Leonard.
Mr. Leonard reported that four members had to vote in favor
of a resolution in order for it to be approved no matter
the quorum.
Mr. Therriault added that the membership of the AIDEA board
was predominantly public members.
Vice-Chair Saddler WITHDREW his OBJECTION. There being NO
OBJECTION, Amendment 2 was adopted.
9:23:31 AM
Co-Chair Thompson MOVED to ADOPT Amendment 3:
Page 9, following line 4:
Insert a new bill section to read:
"* Sec. 18. Section 16 of this Act is repealed
June 30, 2020."
Renumber the following bill section accordingly.
Vice-Chair Saddler OBJECTED for discussion.
Mr. Therriault encouraged committee members to refer to
Section 16 on page 8 of the work draft which added a new
section establishing a report given quarterly and also
required AIDEA to be prepared to give a briefing at the
request of the Legislative Budget and Audit Committee.
Amendment 3 placed a repealer on the section. Without a
repealer AIDEA would be giving quarterly reports to the
legislature long after financing was completed. AIDEA
understood that the legislature wanted more information in
the early years of financing being utilized. However, he
argued that after a certain period of time it the
obligation would be unnecessary.
Vice-Chair Saddler WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
9:25:48 AM
Co-Chair Thompson MOVED to ADOPT Amendment 4:
Page 3, line 23:
Delete "law"
Insert "the legislature [LAW]"
Vice-Chair Saddler OBJECTED for discussion.
Mr. Therriault referred to Section 4 on page 3, line 22
explaining that "the legislature" was substituted for "law"
currently in existing statute. The substitution was an
amendment suggested in the other body. It had been retained
in the House version of the bill. In Section 4 on page 3,
line 23 there was another reference to "law." Amendment 4
made the two lines read the same, changing the word "law"
to "the legislature."
Vice-Chair Saddler WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
Co-Chair Thompson WITHDREW Amendment 5.
9:27:16 AM
Co-Chair Thompson MOVED to ADOPT Amendment 6:
Page 7, following line 31:
Insert a new bill section to read:
"* Sec. 14. Section 2(a), ch. 27, SLA 1993, as
amended by sec. 19, ch. 111, SLA 1996, and sec.
10 of this Act is repealed June 30, 2019."
Renumber the following bill sections accordingly.
Page 9, line 4:
Delete "Sections 14 and 15"
Insert "Sections 15 and 16"
Vice-Chair Saddler OBJECTED for discussion.
Mr. Therriault explained that in the proposed committee
substitute (CS) a project from an old AIDEA bond
authorization for a bulk commodity loading facility
somewhere in Cook Inlet was removed from the repealer
section of the bill, refreshed, and reinserted into Section
10 at the top of page 7. He explained that after a certain
number of years if the refreshed authorization was not
utilized, it would automatically be repealed. In the past,
AIDEA's bonding authorizations or possible loans were
passed without a repealer. If they were never used, they
were still seen by rating agencies as potential obligations
on AIDEA's books. As a result, AIDEA's rating evaluations
were affected. If bonding authorizations were not used by a
certain time, AIDEA needed to clean them off of its books
by incorporating automatic repealers. For any new projects
in which authorizations were granted AIDEA was asking
proposers to include an automatic repealer to avoid any
accumulation of old, unused authorizations. The amendment
established a new sunset for a refreshed bond
authorization.
Representative Pruitt asked about all of the repealers
included in the bill. He noted a repealer for the bulk
commodity loading ship terminal in Point MacKenzie, one for
the Sweetheart Lake [Hydroelectric Project], and one for
the Waterfall Creek Hydroelectric Project in King Cove. He
wondered if there were things that were not specified in
the bill that would be repealed.
Mr. Therriault was looking for the Governor's original
transmittal letter which explained the meaning of each of
the repeals. There were a number of projects that, for
various reasons, never went forward. He referred to the
sectional analysis that explained that there was one for
the processing facility for seafood, the Kodiak launch
complex facilities, the Red Dog port, the Nome port
facility, the development at Hatcher Pass, and the port
facilities in Lynn Canal. Some of the projects dated back
to 1993, 1995, 1998, 2004, and 2006. The projects were old
enough that AIDEA would not be using the bonding
authorizations.
9:31:24 AM
Representative Pruitt wondered if the authorization for the
Red Dog Mine had been utilized in part or at all.
Mr. Therriault replied that it was in the repealer because
it had not been utilized at all. If it had been partially
utilized it would have appeared in the bill with a
different structure to remove the unused portion.
Representative Pruitt wondered if there was a repealer
associated with the current IEP project. If so, he inquired
about the dates.
Mr. Therriault invited Mr. Leonard to answer Representative
Pruitt's question.
9:32:15 AM
Mr. Leonard responded that under SB 23 he believed and
would confirm that there was a five-year sunset on bond
authorizations. He would get the information and bring it
back to the committee.
Representative Wilson asked if the five years started upon
the passing of the current bill or prior. She wondered if
other projects were included in the bill aside from the
IEP.
Mr. Therriault believed there would be a repealer on all
new authorizations contained in the bill.
Co-Chair Thompson asked Mrs. Leonard if he had found the
information requested by Representative Pruitt.
Mr. Leonard was looking for it in SB 23 and would find it.
Representative Pruitt did not want to hold up the meeting,
but the information would be helpful.
Vice-Chair Saddler WITHDREW his OBJECTION. There being NO
OBJECTION, Amendment 6 was adopted.
9:34:12 AM
Vice-Chair Saddler MOVED to ADOPT Amendment 7:
Page 1, line 11, following "project;":
Insert "authorizing the Alaska Industrial
Development and Export Authority to issue bonds
to finance the infrastructure and construction
costs of rebuilding transmission between the Hope
substation and Portage, rebuilding transmission
between Powerline Pass to Indian, and the Eklutna
hydroelectric transmission system upgrade
project;"
Page 2, line 6:
Delete "sec. 9" in both places
Insert "sec. 11" in both places
Page 8, following line 11:
Insert a new bill section to read:
"* Sec. 15. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
LEGISLATIVE APPROVAL; ALASKA RAILBELT COOPERATIVE
TRANSMISSION AND ELECTRIC COMPANY. (a) The Alaska
Industrial Development and Export Authority may
issue bonds to finance the infrastructure and
construction costs for
(1) rebuilding transmission between the Hope
substation and Portage by the Alaska
Railbelt Cooperative Transmission and
Electric Company;
(2) rebuilding transmission between
Powerline Pass to Indian by the Alaska
Railbelt Cooperative Transmission and
Electric Company; and
(3) the Eklutna hydroelectric transmission
system upgrade project by the Alaska
Railbelt Cooperative Transmission and
Electric Company.
(b) The projects listed in (a) of this section
shall be owned and operated by the authority or
financed under AS 44.88.172.
(c) The principal amount of the bonds provided by
the authority for the projects in (a)(1) and (2)
of this section may not exceed a combined total
of $107,100,000, and may include the costs of
issuing bonds considered reasonable and
appropriate by the Alaska Industrial Development
and Export Authority.
(d) The principal amount of the bonds provided by
the authority for the project in (a)(3) of this
section may not exceed $20,400,000 and may
include the costs of issuing bonds considered
reasonable and appropriate by the Alaska
Industrial Development and Export Authority.
(e) This section constitutes legislative approval
required by AS 44.88.095(g)."
Renumber the following bill sections accordingly.
Page 9, line 4:
Delete "Sections 14 and 15"
Insert "Sections 14 - 16"
Co-Chair Thompson OBJECTED for discussion.
Vice-Chair Saddler explained his amendment which would
authorize AIDEA to issue up to $127 million in bonds to
finance some additional critical state electrical
transmission upgrades. He relayed that the Bradley lake
power transmission system in the Kenai area provided power
for the entire Homer to Fairbanks Railbelt. However, it was
constrained by inadequate old lines and transmission
towers. These inhibited the development of big
hydroelectric projects in the Railbelt and made the
transmission of power less reliable and less efficient.
There was an Alaska Energy Authority (AEA) study two years
previously that showed the state was potentially losing
more than $100 million worth of energy efficiency as a
result of inadequate transmission lines. The $127 million
in projects would be bonded through the amendment and would
take care of much of the Anchorage-to-Kenai limitations
although not the entire problem. He spoke of two major
elements that the authorization would fund including an
upgrade of the Quartz Creek to the Anchorage and Kenai
transmission lines at a cost of about $107 million. The two
segments were from the Hope substation to Portage and from
Power Line Pass to Indian that would replace 50-year old
transmission lines. Also, towers with higher capacity lines
would be upgraded from 115 kilovolts to 230 kilovolts. The
study from AEA indicated that there would be a cost-benefit
ratio of 1 to 4.6, meaning that for every dollar in capital
expenditures the state contributed the state received
nearly $5 in benefits to consumers along the Railbelt from
Anchorage to Homer and Fairbanks to Kenai in terms of more
economical and reliable power. The second portion that
would be funded was a $20 million project called the
Eklutna Hydroelectric Transmission System that would
improve the connections between the existing Municipal
Light and Power (MLP) plants in Muldoon with the Matanuska-
Susitna Electric Association's (MEA) new Eklutna generation
station. The project would have a cost benefit ratio of $1
to $23. He suggested that with a little bit of input from
bonding there would be tremendous benefits of an entire
state transmission system; improved reliability of a
transmission system and improved use of the Bradley Lake
Hydroelectric System that Railbelt rate payers were already
paying for. He remarked that the project fell squarely in
the tradition of some of the other state projects to
generate hydroelectric and improve transmission. He
encouraged members to support the amendment.
Co-Chair Thompson informed the committee that Joe Griffith,
the general manager of Matanuska Electric was online to
answer any questions.
9:36:48 AM
Representative Wilson was not aware of the project. She
wanted to know if the bonds were going directly to the
utility and whether the utility would be the entity
requesting the bond. She was assuming AIDEA would be
providing due diligence.
Mr. Therriault deferred to Mr. Leonard who could better
speak to the AIDEA process.
Mr. Leonard stated that the bonds allowed under SB 23 had a
sunset date of June 30, 2018.
Mr. Therriault interjected that Mr. Leonard's answer was in
response to Representative Pruitt's question.
He responded to Representative Wilson's question. He
explained that before AIDEA issued bonds for a project,
such as the one being discussed, full due diligence was
required in order to issue bonds. Alaska Industrial
Development and Export Authority's process would be the
same in issuing any other bond authorizations that came
before the committee.
9:38:27 AM
Representative Wilson asked about due diligence and if
there was discussion about the use of transmission lines
for other projects.
Mr. Leonard specified that for a project owned by AIDEA or
financed through AS 44.88.172 there was usually language
that dealt with how the process could incorporate other
entities using the lines as long as the lines were owned or
the project was financed by AIDEA.
Representative Wilson asked where the funds where coming
from and whether they came from other hydro power funds.
Mr. Leonard clarified that all the bond authorization would
allow AIDEA to utilize bonding as a tool when examining a
project for financing or owning the project and issuing
bonds. In the due diligence process of evaluating a project
AIDEA would be looking at its capacity and the type of
bonds that would best serve the project like revenue bonds
or general obligation bonds. The evaluation process would
determine whether AIDEA would finance the project, and what
type of bonds would be utilized for financing.
9:41:22 AM
Representative Wilson asked why it [the bond authorization]
was in the bill and whether the amount was a factor. She
suggested that in the case of a lesser amount legislation
was not needed.
Mr. Leonard concurred. He stated that based on state
statutes, a project financed through AS 44.88.172 AIDEA
currently had to have an authorization for bonds issued
over $10 million.
9:41:59 AM
Vice-Chair Saddler wanted to clarify that the Eklutna Hydro
facility was an existing and very old facility. His
amendment proposed AIDEA issuing bonds to finance
transmission lines which would connect the old Eklutna
facility with the new power generation facility at Muldoon
and to the new Eklutna generation station, MEA's gas-fired
plant being constructed. He pointed out it was not a new
hydro facility.
Representative Wilson mentioned that she was just talking
about transmission lines. As the state installed more of
them she suggested they could be shared with other entities
to reduce costs.
9:42:43 AM
Representative Pruitt responded that the amendment would
benefit more than just one or two of the utilities.
Currently, there was a bottleneck for energy produced at
Bradley Lake Hydroelectric Plant. The lines could not
accommodate additional power. If there were any problems
with the lines the gas-fired generation plants such as the
one in Beluga would be turned on. He understood that all
six of the utilities on the Railbelt benefited from the
energy at Bradley Lake. However, if the line could not
transmit the affordable energy then no one benefitted. The
utilities in the valley, Fairbanks, and Anchorage would all
benefit greatly from the expansion of the transmission
lines in the critical connecting sector between the Kenai
area and Anchorage. He believed Fairbanks would benefit
from low-cost power by improving the Bradley Lake
transmission system.
Co-Chair Thompson suggested that the rate-payers would be
the beneficiaries.
9:44:10 AM
Representative Guttenberg asked for more information about
the Alaska Railbelt Cooperative Transmission Company
(ARCTEC). He was not familiar with the entity. He
understood about the transmission bottleneck but wondered
about who would be paying for the improvements and who
would benefit. He wanted to assure parity across all users.
Mr. Therriault answered that ARCTEC was a creation of four
Railbelt utilities. It was an entity created by the parties
to work together, particularly on transmission. In answer
to Representative Wilson's question, as part of AIDEA's due
diligence board members would look at what kind of traffic
would be expected if a line was created. They would also
consider whether it would be operated under an open access
tariff. More business would be anticipated with a line with
commonly understood reliability standards. He acknowledged
the legislature's interest in making sure a governance
structure was in place for the entire Railbelt. He
commented on the savings numbers Representative Saddler
noted explaining that the numbers came from an AEA study
done on the entire Railbelt system. Alaska Energy Authority
and its consultant suggested there would be a substantial
savings from de-bottlenecking the system. He reported that
his staff compared the suggested project to the project
list from AEA's study and found all components were
recommended for upgrades.
9:46:33 AM
Representative Guttenberg restated his question regarding
equitability across the project.
Mr. Therriault suggested that as the lines were improved
and debt was accumulated there would be a cost built into
the tariff. Therefore, anyone shipping power across a
particular portion of the system would pay an equal tariff.
9:47:14 AM
Vice-Chair Saddler thought Mr. Therriault's answer was
"yes." He asked Mr. Therriault to explain the Bradley Lake
funding model including how different utilities shared
expenses and how that example might parallel the
transmission line work.
Mr. Therriault was uncertain of the comparison to Bradley.
He explained that, in terms of Bradley Lake, the state
provided a portion of the funding. The utilities bonded
through the state for the remaining funds. As power was
produced there was a cost associated with repaying the
bonds. Once the bonds were paid back, the charge for the
power continued until the state recuperated its investment;
anywhere from 25 to 30 years.
Vice-Chair Saddler suggested that Joe Griffith with ARCTEC
was on the line and could answer Representative
Guttenberg's questions about the organization and the
potential benefits of the upgrades.
9:48:30 AM
JOE GRIFFITH, GENERAL MANAGER, MATANUSKA ELECTRIC
ASSOCIATION (via teleconference), explained that ARCTEC was
created in 2010 or 2011 to principally deal with the
generation and transmission [G&T] issues in the Railbelt.
The company's thrust over the previous five years had been
on transmission that would de-constrain the Bradley Lake
delivery method. It was a huge benefit for the Railbelt.
9:49:49 AM
Representative Gara stated that obviously the legislature's
job was to support the entire state. He indicated that he
was concerned about the resistance from other Anchorage
legislators earlier in the session. He wanted to know if
Alaska Energy Authority had future plans to expand the
production at Bradley Lake. It was clean and cost-efficient
power. He thought the energy would go all the way to
Fairbanks. He was wondering about a plan for Bradley Lake.
Mr. Therriault relayed that the utilities had been working
closely with AEA on a project called the Battle Creek
Diversion which would put more water behind Bradley Lake
damn to generate more power. The de-bottlenecking would
ensure that the power could get to the utilities along the
Railbelt at the optimum time of the day to achieve the
largest benefit for the consumer as far as the cost of
power. It was his understanding that an application had
been filed with the Federal Energy Regulatory Commission
(FERC) for Bradley Lake to add the Battle Creek diversion.
He stressed that AEA was working closely with the utilities
to get more power out of the existing infrastructure.
9:52:06 AM
Representative Gara stated that it was important and would
also reduce reliance on natural gas in Cook Inlet.
Co-Chair Thompson WITHDREW his OBJECTION. There being NO
OBJECTION, Amendment 7 was adopted.
Co-Chair Thompson MOVED to ADOPT Amendment 8:
Page 2, line 6:
Delete "sec. 9" in both places
Insert "sec. 11" in both places
Vice-Chair Saddler OBJECTED for discussion.
Mr. Therriault indicated that the amendment was a
conforming amendment. In the bill there was language that
clarified that the IEP and the Sustainable Energy
Transmission and Supply Development Funds (SETS) were to be
used only for the IEP. He stated that the drafters
identified a change needed on page 2, line 6 to incorporate
the addition rolled into the CS.
Vice-Chair Saddler WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
9:53:56 AM
Co-Chair Thompson commented that members of the House
expressed concerned with AIDEA getting too stretched in its
ability to bond. He asked for Mr. Leonard's remarks.
Mr. Leonard reported that the authorizations were just
endorsements that allowed AIDEA to utilize the tools. If
AIDEA's capacity was ever pushed to a point where board
members did not feel AIDEA had the bonding capacity
available, then the authorizations would not be used. He
added that as AIDEA went forward in examining several of
the larger energy projects it would be looking at more than
just the general obligations but also at revenue bonds. In
using revenue bonds based on the revenues from a
transmission line, for example, they would not count
against AIDEA's bonding capacity because revenue from a
project would be used to back the bonds. Several of the
projects would likely use revenue bonds which would not
affect AIDEA's capacity. He reiterated that the
authorizations allowed AIDEA to utilize bonds as a
financing tool.
Co-Chair Thompson discussed that SB 23 contained certain
restrictions. The original legislation removed four words,
"On the North Slope". He stated that the AIDEA board was
initiated by the legislature to take the politics out of
the equation. However, he felt that HB 105 had turned into
a political football. He pointed out that projects of which
the AIDEA board had performed its due diligence were
profitable and successful. He added that the only projects
that had failed were those that the legislature interfered
with by directing AIDEA. He reiterated his disappointment
in the politicizing of the current legislation before the
committee.
9:57:23 AM
Vice-Chair Saddler MOVED to REPORT CSHB 105 (FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 105(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one previously published zero
fiscal note: FN1 (CED).
9:57:57 AM
AT EASE
10:00:49 AM
RECONVEYNED
Co-Chair Thompson reviewed the list of testifiers online
and invited Representative Gattis, the sponsor of the bill,
to make her presentation.
HOUSE BILL NO. 80
"An Act repealing the requirement for secondary
students to take college and career readiness
assessments."
10:01:10 AM
REPRESENTATIVE LYNN GATTIS, SPONSOR, explained that HB 80
was a repeal of the mandate from the previous year's
omnibus education bill, HB 278. School districts were
required to facilitate the mandate for all secondary
students to take the American College Testing (ACT),
Scholarship Aptitude Test (SAT), or WorkKeys exam. Last
session HB 278 had provisions for funding for the purchase
of the exam within the Department of Education and Early
Development (DEED). However, school districts were left
with an unfunded mandate. She pointed out that testing took
instruction time away between teachers and students and
created an administrative burden for school districts to
coordinate and provide testing. She argued that HB 80 would
relieve school districts from an administrative obligation
and would save DEED $525 thousand per year. School
districts supported the elimination of all unfunded
mandates due to the current budget crunch. The testing was
an additional hurdle for students that had fulfilled all of
the other criteria necessary to graduate. She pointed out
that the packet she had distributed to members included
several letters from school districts detailing the burden
of providing the testing to students. She concluded that HB
80 would remove the new testing mandate before it became an
expected tradition.
10:04:27 AM
Representative Gara reported that he had been contacted by
a number of school officials about the possibility of
administering an annual exam once every four years. He
could not recollect the name of the test. In changing the
time between testing the state would save a significant
amount of money. He wondered if Representative Gattis knew
the name of the test.
Representative Gattis believed he was speaking of the
Alaska Measures of Progress (AMP) test which was not part
of the current legislation. She had thought of including
the AMP test in the bill and went so far as having a
committee substitute drafted, but felt limited on time.
There were other issues having to do with the AMP test
including federal funding that needed to be thoroughly
investigated which would take time. Therefore, she left it
out of the bill. She added that the Senate had a bill
currently being vetted regarding the AMP test. She
summarized that HB 80 was limited to the ACT, the SAT, and
the WorkKeys exam.
10:05:45 AM
Representative Gara wanted to hear from DEED about the AMP
test because of the potential cost savings.
10:06:12 AM
Representative Wilson clarified the version of the bill for
consideration. She asked about what happened to the test
information once a student completed one of the three
exams.
Representative Gattis did not know but the department would
be able to answer the question.
Representative Wilson wanted to know the answer. She also
wanted to know about any requirements in terms of providing
exam locations. She wanted to know how the state benefited.
Co-Chair Thompson relayed that Deena Paramo from the
Matanuska Borough School District was available for
questions as well as Les Morse with DEED available.
10:07:40 AM
LES MORSE, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, reiterated that the question was how the
data was used. He stated that for the particular assessment
the department received the data for the purpose of
verifying student participation. The state also took the
number of participating students and calculated the
percentage of students participating within the state's
school rating system to determine whether students were
taking the assessment. The exam was the means of
determining college career readiness and the state's school
accountability system.
10:08:57 AM
Representative Wilson asked if the state was grading its
schools based on whether students participated in the
assessment test rather than student performance.
Mr. Morse responded that the exam was a participation
requirement. He added that the state used other assessments
for achievement and performance. The test was used to
determine performance for the Alaska Performance
Scholarship but not for state purposes of accountability.
Representative Wilson wanted to hear from the Matsu
superintendent. She relayed her personal experience taking
the ACT. She wondered if the school districts were required
to administer the test during the school day.
DEENA PARAMO, SUPERINTENDENT, MATSU BOROUGH SCHOOL DISTRICT
(via teleconference), indicated that the current discussion
was what the district had evidenced in the current year.
She pointed out some of the unintended consequences;
additional work for counselors, lost instruction time in
the classroom because of assessments being administered
during school hours, and a significant amount of paperwork.
The fact that students could choose one of three different
tests also complicated the process. Another downside was
that students were given one attempt. If, for example, a
student was ill on the day of the exam, changing the date
required completing a hurdle of paperwork. It also meant
that a student would have to register on a weekend day on
their own time. She added that ACT, SAT, and WorkKeys
scores remained with a child's transcript.
10:11:15 AM
Representative Wilson understood that the primary reason
for the test was to satisfy a requirement for the Alaska
Performance Scholarship. She thought the fee to take the
test was minimal. She was concerned with the costs and the
classroom time lost because of the test requirement.
10:11:50 AM
Vice-Chair Saddler asked about the second repealer that
repealed AS 14.03.75(b) regarding students that did not
qualify for a diploma because of failing to take a college
and career assessment. He wanted to know the practical
result if the bill was amended and the statute repealed. He
wanted to clarify that if a student did not take the test
they could still receive a diploma.
Representative Gattis stated that essentially the state
mandated each student to take one of three tests, whether
or not they passed it, in order to get a diploma. She
emphasized that even if a student did all the required
course work and passed all of the associated assessment
measures, they could not receive a diploma unless they took
the ACT, SAT, or WorkKeys exam. Simply stated, HB 80
allowed students who had completed their course work and
received all of their credits to receive their diploma.
10:12:55 AM
Representative Gara understood that the tests would become
voluntary. He wanted to know why Representative Gattis
removed the provision that the state or the school district
could pay for the testing.
Representative Gattis responded, "That is an interesting
word, whether they can or they shall."
Representative Gara clarified that currently it was
"shall."
Representative Gattis stated he was correct. She added, "It
must. The state must pay for it. This is mandated."
10:13:48 AM
Representative Gara asked Representative Gattis why she was
deleting the provision for the state to pay for testing for
students that wanted to go to college or to pursue higher
education through vocational training.
Representative Gattis responded that she deleted it so the
state would not have to bear the cost of the testing. The
student would pay to take one of the three exams rather
than the state having to pay for it. She pointed out that
there was a provision for students who could not afford to
pay for the testing. Her staff would explain.
10:14:28 AM
STEVE RICCI, STAFF, REPRESENTATIVE LYNN GATTIS, indicated
that there was a provision for a waiver for low-income
students. The College Board, the company that sells and
distributes the ACT and SAT, reported that for students who
received a waiver they would also receive additional
benefits that were not available through the state. He
suggested that, for instance, low-income students would
receive four free college application waivers. He
highlighted that low-income students benefited more by
attaining the waiver from the College Board than receiving
the testing from the state.
10:15:31 AM
Representative Gara understood that free college
application waivers were available. However, he wondered if
a student could get a waiver for the fees associated with
taking the ACT, SAT, or WorkKeys exam. He asked if there
was a WorkKeys waiver. He also asked if there was an ACT
and SAT waiver based on income.
Representative Gattis stated there was a waiver for the ACT
and SAT exams through the College Board. The WorkKeys test
was available through the Department of Labor and Workforce
Development (DOLWD).
Representative Gara wondered why Representative Gattis
removed the regulations for people with disabilities and
referred to AS 14.07.165.
Mr. Ricci asked Representative Gara to repeat his question.
Representative Gara indicated that the statutes addressed
regulations the department was allowed to adopt to assist
students with disabilities. He wondered why the legislature
would take away the power to grant assistance to students
with disabilities.
Mr. Ricci offered to do additional research. His
interpretation was that people with disabilities would
still have the ability to test, but it was not explicit
that it was mandatory that the state provide the testing.
10:17:04 AM
Representative Gara commented that it was not the way he
read it but thought more information was necessary. He had
one question for Ms. Paramo regarding the AMP test. He
purported that it costed school districts a significant
amount to provide the test on an annual basis. He asked for
her thoughts on alternatively providing the test once every
four years. He wondered if it would save her school
district money.
Ms. Paramo emphatically supported a four-year rotation for
the AMP test. Additionally, the test provided similar
information about schools rather than about individual
children's learning. There were other assessments that were
more informative that parents and teachers relied on as
well as school districts in making daily decisions. She
would also support eliminating the AMP test completely.
Representative Gara asked about the potential savings from
moving the test from an annual exam to a test administered
once every four years.
Ms. Paramo relayed that the state paid for the cost of
testing materials. The school district spent approximately
$15 Thousand per testing session for additional staffing to
accommodate and process the assessment.
10:19:10 AM
Representative Guttenberg wondered what the state would
lose in terms of test scores. He suggested that the bill
would change the demographics of students taking the test
regardless of the availability to students who could not
afford it. He wanted to know if there was something the
state needed or required to determine a student's grade
which the state would no longer have access to with the
passing of HB 80.
Representative Gattis verified that he was talking about
the ACT and SAT exams versus the AMP test.
Representative Guttenberg confirmed he was talking about
the ACT and the SAT.
Representative Gattis tried to paraphrase Representative
Guttenberg's question about those students that did not
take any of the tests. She clarified that in the current
statute if a student did not take one of the three tests,
they would not graduate. She wondered if Representative
Guttenberg's question had to do with determining the
purpose of the testing mandate.
Representative Guttenberg responded in the negative. He
discussed the ranking of states in terms of how they are
doing in educating students. He suggested that by changing
the way Alaska was doing its testing the numbers would be
skewed one way or another. He wondered if Alaska would lose
credibility with a scoring system.
Representative Gattis remarked that because it was the
first year there were no numbers to lose or gain. She was
looking to eliminate the test before the state utilized the
initial data. She was unaware of what the state would do
with the testing numbers being a new mandate.
Mr. Morse indicated that currently the state used the
information to verify participation. He did not anticipate
any loss of credibility with any ranking organization. All
students chose to take one of three assessments. The
legislation was brought forward to create a college or
career readiness environment within schools. With the state
covering the costs associated with the testing it broadened
student access and helped students to meet requirements
associated with the Alaska Performance Scholarship. He
reiterated that waivers for the ACT and SAT exams were
available to low-income students and helped to preserve
student access to testing.
Mr. Morse anticipated a loss in the number of testing
sites. He relayed that without a state contract testing
could not be conducted during school hours, thus, reducing
the number of testing sites. He stressed that the main
question was whether the test should be required to receive
a diploma. He conveyed that DEED did not have a strong
feeling about the issue one way or another. He confirmed
that the department thought it was good to take the test.
However, it also understood the current financial climate.
Returning to Representative Guttenberg's question, he did
not believe there would be a loss of credibility.
10:24:20 AM
Representative Guttenberg asked if the waiver applied to
the fee or having to take the test.
Mr. Morse clarified that if students met a low-income
requirement, the non-profit companies, ACT and the College
Board, would give those students a fee waiver to allow them
to take the test without cost.
10:24:54 AM
Representative Munoz mentioned getting rid of the high
stakes exam, the High School Graduation Qualifying Exam
(HSGQE) in the previous year and replacing it with the
three choices of exams. She wanted to make sure that
students did not have to pass the exam to get a diploma,
they simply had to take it. She asked if she was correct.
Mr. Morse responded in the affirmative. He added that
taking any of the three tests (ACT, SAT, or WorkKeys) would
satisfy a student's participation requirement.
Representative Munoz asked the sponsor about whether she
had considered also removing the testing requirement for
the Alaska Performance Scholarship (APS) and rather relying
on a student's grade point average for qualification of the
APS.
Representative Gattis responded that she had not thought of
Representative Munoz's idea. She reported that the feedback
she received from different people was that they would find
the funding for their children to take the exam. She spoke
of her first two years as the Education Committee Chair.
She had asked school districts to provide her with unfunded
mandates so she could address them. In the current year
schools were focused on eliminating unfunded mandates. She
opined that the testing detracted from the state's main
mission. She also offered that the testing results did not
help the school districts teach kids adding that many kids
were moving to different areas. She believed she had
addressed and discussed the issue of folks not being able
to afford an exam. She conveyed that if school districts
had kids that could not afford the test but wanted to take
one they would find a way to fund the testing.
10:27:06 AM
Vice-Chair Saddler asked about the way in which students
with disabilities were treated. He wanted to know whether
students with disabilities who wanted to take career
assessment tests, even in the absence of a mandate, would
be able to do so. If so, he wondered if the schools would
be required to accommodate disabled students with special
needs by state policy.
Representative Gattis relayed that schools already made
accommodations for students on a daily basis as part of
their Individualized Education Program (IEP). In terms of
testing, schools would continue to make necessary
accommodations. She stipulated that she was basing her
answer on her own life experience.
Vice-Chair Saddler specifically asked if schools would be
mandated to accommodate disabled students. He restated his
first question which was whether disabled students who
wanted to take the assessments in the absence of the state
mandate be allowed to do so.
Mr. Morse responded in the affirmative.
Vice-Chair Saddler asked if schools, by policy, would be
obligated to accommodate the special needs of students with
disabilities.
Mr. Morse specified that if the testing was not state
mandated the testing would not be administered during
school hours. The testing would not be run by the schools
but by either the non-profit for SAT [ACT] or College Board
for SAT. Both assessments allowed for accommodations and
were made available to students that needed them.
10:29:14 AM
Vice-Chair Saddler clarified that schools would not have to
make accommodations but the College Board or the ACT
authority would make accommodations.
Mr. Morse responded affirmatively.
10:29:26 AM
Vice-Chair Saddler wanted to clarify a question asked by
Representative Munoz. He wondered if it was correct that in
order to qualify for the APS a student had to take one of
the assessments.
Mr. Morse responded positively.
10:29:42 AM
Representative Gara referred to the disability provision in
AS 14.07.165 (a)(5) and (b). Currently, for a student with
a disability the department was required to adopt
regulations that might address the conditions, criteria,
procedure and scheduling of the assessment, things needed
to accommodate someone with a disability and required to
adopt regulation. He asked why it was no longer needed.
Mr. Morse stated that the reason it would no longer be
needed was that the schools would not be doing the
assessment. The College Board and ACT would be responsible
for conducting assessments and providing necessary
accommodations provisions. He elaborated that the current
statute was mandating schools to follow the same provisions
laid out by ACT and SAT. He concluded that the world would
not change for students with disabilities.
10:30:59 AM
Representative Gara asked about WorkKeys.
Mr. Morse's understanding was that WorkKeys was part of ACT
and the same accommodations would be provided. However,
WorkKeys was not conducted in the same type of setting
where there were certain test days.
Representative Gara asked what AMP stood for and where he
would find it in the statutes.
Mr. Morse answered that AMP stood for Assessment Measures
of Progress. It was the standards-based assessment required
in statute, also required under federal law, and was the
assessment used for state accountability given in grades 3
through 10.
10:32:42 AM
Representative Gara asked if the state would incur a
federal penalty if the legislature decided to move the AMP
to being administered every four years.
Mr. Morse confirmed that there would be a federal penalty.
He elaborated that the $97.5 million the state received for
the elementary and secondary education act would be at
risk.
Co-Chair Thompson stated that HB 80 would be brought up
again at 1:30 pm at which time public testimony would be
heard.
ADJOURNMENT
10:33:46 AM
The meeting was adjourned at 10:33 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB80 Supporting Documents - Becoming an SAT test center is easy.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB80_SupportDocuments_Matsu.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB80_SupportDocuments_Dr. Paramo.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB80 Supporting Documents - Letter Sara Moore.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB80 Supporting Documents - Letter Griffin.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB 105 PP slides.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 4.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 3.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB80 Supporting Documents -ASA Resolution Opposing Unfunded Mandates 3-8-2015.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 80 |
| HB 105 Amendment N 5.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| Hb 105 Amendment N 10.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 AMENDMENT N.9.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 8.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 7.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 6.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |
| HB 105 Amendment N 4.pdf |
HFIN 4/14/2015 8:30:00 AM |
HB 105 |