Legislature(1999 - 2000)

10/15/1999 10:10 AM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                                 
                  October 15, 1999                                                                                              
                     10:10 a.m.                                                                                                 
                 Anchorage, Alaska                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Norman Rokeberg, Chairman                                                                                        
Representative Andrew Halcro, Vice Chairman                                                                                     
Representative Tom Brice (via teleconference)                                                                                   
Representative Sharon Cissna                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Representative Jerry Sanders                                                                                                    
Representative Lisa Murkowski                                                                                                   
Representative John Harris                                                                                                      
                                                                                                                                
OTHER HOUSE MEMBERS PRESENT                                                                                                     
                                                                                                                                
Representative John Davies                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
HOUSE BILL NO. 81                                                                                                               
"An Act relating to the provision of electric service in the state;                                                             
and providing for an effective date."                                                                                           
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
(* First public hearing)                                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HB 81                                                                                                                     
SHORT TITLE: ELECTRIC CONSUMER'S BILL OF RIGHTS                                                                                 
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG, Dyson                                                                                  
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/05/99       144     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/05/99       144     (H)  URS, L&C                                                                                            
 2/16/99       228     (H)  COSPONSOR(S): DYSON                                                                                 
 4/21/99               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 4/21/99               (H)  HEARD AND HELD                                                                                      
 4/21/99               (H)  MINUTE(URS)                                                                                         
 4/23/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 4/23/99               (H)  <BILL HEARING POSTPONED TO 4/30>                                                                    
 4/28/99               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 4/28/99               (H)  HEARD AND HELD                                                                                      
 4/28/99               (H)  MINUTE(URS)                                                                                         
 4/30/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 4/30/99               (H)  <PENDING REFERRAL> <BILL HEARING                                                                    
                            CANCELED>                                                                                           
 5/05/99               (H)  URS AT  8:00 AM CAPITOL 120                                                                         
 5/05/99               (H)  MOVED CSHB 81(URS) OUT OF COMMITTEE                                                                 
 5/05/99               (H)  MINUTE(URS)                                                                                         
 5/06/99      1199     (H)  URS RPT  CS(URS) NT 3DP 3NR                                                                         
 5/06/99      1199     (H)  DP: DAVIES, PORTER, HUDSON;                                                                         
 5/06/99      1199     (H)  NR: COWDERY, BERKOWITZ, KOTT                                                                        
 5/06/99      1199     (H)  FISCAL NOTE (DCED)                                                                                  
 5/06/99      1199     (H)  REFERRED TO LABOR & COMMERCE                                                                        
10/15/99               (H)  L&C AT 10:00 AM ANCHORAGE LIO                                                                       
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
JANET SEITZ, Legislative Assistant                                                                                              
   to Representative Norman Rokeberg                                                                                            
Alaska State Legislature                                                                                                        
716 West Fourth Avenue, Suite 640                                                                                               
Anchorage, Alaska  99501-2133 (Interim address)                                                                                 
POSITION STATEMENT: Presented CSHB 81(URS) on behalf of prime                                                                   
sponsor.                                                                                                                        
                                                                                                                                
ERIC YOULD, Executive Director                                                                                                  
Alaska Rural Electric Cooperative Association, Incorporated                                                                     
211 Fourth Avenue                                                                                                               
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT: Testified that although the intent is good and                                                              
some form of consumer protection should be put in place, CSHB
81(URS) is premature.                                                                                                           
                                                                                                                                
DONALD EDWARDS, General Counsel                                                                                                 
Chugach Electric Association                                                                                                    
P.O. Box 196300                                                                                                                 
Anchorage, Alaska  99519-9300                                                                                                   
POSITION STATEMENT: Testified on CSHB 81(URS).                                                                                  
                                                                                                                                
STEPHEN CONN, Executive Director                                                                                                
Alaska Public Interest Research Group                                                                                           
P.O. Box 101093                                                                                                                 
Anchorage, Alaska  99510                                                                                                        
POSITION STATEMENT:  Testified on CSHB 81(URS).                                                                                 
                                                                                                                                
                                                                                                                                
MIKE KELLY, President and Chief Executive Officer                                                                               
Golden Valley Electric Association                                                                                              
P.O. Box 71249                                                                                                                  
Fairbanks, Alaska  99707-1249                                                                                                   
POSITION STATEMENT:  Testified on CSHB 81(URS).  Strongly supported                                                             
the legislature, rather than the RCA, retaining control of the                                                                  
so-called trip wire; generally supported moving the bill forward                                                                
but expressed concern about the speed and care with which it is                                                                 
done.                                                                                                                           
                                                                                                                                
MEERA KOHLER, General Manager                                                                                                   
Municipal Light & Power                                                                                                         
1200 East First Avenue                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Supported the legislature, rather than the                                                                 
RCA, retaining control of the so-called trip wire.                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-60, SIDE A                                                                                                              
                                                                                                                                
[Due to a tape recorder malfunction, the first 15 minutes of the                                                                
meeting were not recorded but were reconstructed from log notes.]                                                               
                                                                                                                                
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                                                                    
Standing Committee meeting to order at 10:10 a.m. at the Anchorage                                                              
Legislative Information Office (LIO).  Members present at the call                                                              
to order were Representatives Rokeberg, Halcro, Brice (via                                                                      
teleconference) and Cissna.  Chairman Rokeberg called an at-ease                                                                
almost immediately because of a malfunctioning tape recorder.  He                                                               
called the meeting back to order at 10:13 a.m.                                                                                  
                                                                                                                                
HB 81 - ELECTRIC CONSUMER'S BILL OF RIGHTS                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG acknowledged that the tape recorder still was not                                                             
functioning.  He announced that the committee would hear HOUSE BILL                                                             
NO. 81, "An Act relating to the provision of electric service in                                                                
the state; and providing for an effective date."  Before the                                                                    
committee was version CSHB 81(URS).                                                                                             
                                                                                                                                
JANET SEITZ, Legislative Assistant to Representative Norman                                                                     
Rokeberg, Alaska State Legislature, gave a brief overview on behalf                                                             
of the sponsor.  In response to a question from Representative                                                                  
Halcro regarding bill amendments, she indicated there was little                                                                
change.                                                                                                                         
                                                                                                                                
REPRESENTATIVE HALCRO expressed concerns about the broad title.                                                                 
                                                                                                                                
[The tape recorder was replaced, and recording began at 10:25 a.m.]                                                             
                                                                                                                                
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG mentioned a contract that the Alaska Public                                                                   
Utilities Commission (APUC) had entered into.  He said this bill                                                                
resulted from testimony in the House Special Committee on Utility                                                               
Restructuring (URS), as well as from conclusions of the court.                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG next discussed three proposed amendments to be                                                                
taken up following testimony.  First, 1-LS0181\K.1 (K.1) clarifies                                                              
the name change from the APUC to the Regulatory Commission of                                                                   
Alaska (RCA).  Second, l-LS0181\K.2 (K.2) speaks to one of the                                                                  
bill's more controversial sections.  Currently, certain public                                                                  
utilities can opt out of economic regulation by the RCA; concern                                                                
had been heard that this bill would mandate that those utilities be                                                             
swept back in under the RCA's regulatory umbrella.  However, there                                                              
could be no true regulation of the competitive marketplace without                                                              
a completely level playing field.  As sponsor, Chairman Rokeberg                                                                
believes all utilities should be regulated similarly in a                                                                       
particular realm if there is a competitive environment created,                                                                 
whether within the entire state, a particular jurisdiction, or a                                                                
particular kind of program.  Changes in proposed amendment K.2                                                                  
therefore clarify language or intent.                                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG told members he expected to hear testimony about                                                              
this being a de facto deregulation bill.  Therefore, amendment                                                                  
1-LS0181\K.3 (K.3) creates a clearer trip wire, although it may not                                                             
go to the degree he would like.  His intention is that regulations                                                              
would not have to be in place until there is a grant by the RCA,                                                                
and/or even action by the legislature, to develop a competitive                                                                 
environment.  He pointed out that the fiscal note for the original                                                              
HB 81 - from the then-APUC, dated April 20, 1999 - indicates this                                                               
bill will cost $207,000.  In his five years in the legislature, he                                                              
didn't recall having a fiscal note over $10,000 and he is almost                                                                
shocked by this.  He hopes RCA personnel will review this matter,                                                               
as he doesn't believe the large number of personnel to develop                                                                  
regulations is entirely justified.  He suggested the current                                                                    
committee discuss it with the RCA in the coming months, and he                                                                  
hopes to hear from the RCA on a revised fiscal note.                                                                            
                                                                                                                                
Number 034                                                                                                                      
                                                                                                                                
ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative                                                               
Association, Incorporated (ARECA), testified via teleconference,                                                                
specifying that he represents the electric utility industry in                                                                  
Alaska.  Although ARECA's membership had supported HB 81 when it                                                                
was in the House URS committee, they currently believe the bill is                                                              
premature.  That decision follows a number of studies, including                                                                
the most recent by CH2M Hill, as well as direct meetings with Karl                                                              
Rabago and others who are giving advice about what is happening                                                                 
with restructuring, primarily in the Lower 48.                                                                                  
                                                                                                                                
MR. YOULD pointed out that Alaska's utility industry is connected                                                               
with neither those in Canada nor the Lower 48.  Furthermore, there                                                              
aren't numerous transmission lines to call upon for either consumer                                                             
choice or emergency needs.  He likened the Railbelt's limited                                                                   
interconnection to an extension cord from Anchorage to Fairbanks,                                                               
saying beyond that, the main interconnected region is the Anchorage                                                             
area.  In the Railbelt area, the only three providers are Golden                                                                
Valley Electric, Chugach Electric and Anchorage Municipal Light and                                                             
Power.  Hence, there aren't the myriad selections that consumer                                                                 
choice would require.  Mr. Yould recalled previous comments of Karl                                                             
Rabago of CH2M Hill indicating that in a robust area, at least                                                                  
eight providers would be needed.                                                                                                
                                                                                                                                
MR. YOULD characterized Alaska as a "consumer-owned utility state,"                                                             
having either a cooperative utility in the area served or a                                                                     
municipal utility.  In fact, 90 percent of the retail electricity                                                               
is provided by a consumer-owned utility, with 70 percent from                                                                   
cooperatives, 20 percent from municipals, and only 10 percent from                                                              
investor-owned utilities.  This fosters a philosophy of providing                                                               
electricity as inexpensively as possible and passing savings on to                                                              
consumers, who own the system.  In contrast, an investor-owned                                                                  
utility's overriding objective is to maximize profits for its                                                                   
shareholders, who aren't served by the system itself.  It is                                                                    
primarily the push of the investor-owned utilities in the Lower 48                                                              
that stimulates the desire and need for consumer choice there,                                                                  
although that is not to say there aren't advantages from consumer                                                               
choice, Mr. Yould added, because even Alaskans believe there are                                                                
significant potential advantages.                                                                                               
                                                                                                                                
MR. YOULD pointed out that there has been no public outcry for                                                                  
consumer choice or restructuring of the industry.  He stated, "We                                                               
had a number of meetings in Juneau, and the previous summer there                                                               
were a number of hearings held by a special committee of the                                                                    
legislature.  And, quite frankly, it was very difficult to get the                                                              
person off the street to come in and testify, and, as a matter of                                                               
fact, I can think of only one or two private individuals that came                                                              
in and had anything to say, and I'm not sure that their arm wasn't                                                              
bent up behind their back, either."  He noted that a recent study                                                               
by CH2M Hill basically said restructuring in Alaska - at least as                                                               
it is envisioned in the Lower 48 - may be significantly premature.                                                              
                                                                                                                                
MR. YOULD explained that with all of these things in mind, the                                                                  
utility managers had met that summer, concluding the following                                                                  
about restructuring, if it comes to Alaska.  In rural Alaska, it                                                                
absolutely won't work.  In the Railbelt, it is somewhat                                                                         
questionable whether it can work as a free, open, and                                                                           
technologically available system, primarily because of the                                                                      
transmission line up to Fairbanks and a tenuous transmission line                                                               
down to the Kenai Peninsula.  In Anchorage, it might work, but even                                                             
then, certain things must take place beforehand, not the least of                                                               
which is settling the issue of market presence, ensuring there is                                                               
wholesale competition prior to retail competition; presently, at                                                                
least one utility provides not only its own needs but also the                                                                  
needs of three other utilities that ostensibly would be trying to                                                               
compete with that very utility.                                                                                                 
                                                                                                                                
MR. YOULD concluded that for the foregoing reasons, the utility                                                                 
managers had pretty much directed that although there is value in                                                               
a consumer bill of rights, this bill is premature.  In particular,                                                              
it appears to relegate the responsibility of defining restructuring                                                             
for the state to the new RCA rather than to the legislature.   This                                                             
especially concerns them given that on May 7 the House Special                                                                  
Committee on Utility Restructuring wrote the then-APUC a letter                                                                 
indicating they didn't want to see the regulatory body take                                                                     
responsibility for electric utility restructuring, which they                                                                   
believe is the legislature's purview and jurisdiction.  Likewise,                                                               
the utilities believe elected policy makers can best determine                                                                  
whether electric utility restructuring should come to Alaska, and                                                               
in what form.                                                                                                                   
                                                                                                                                
MR. YOULD noted that furthermore, it isn't known what the                                                                       
competitive market will look like in Alaska.  If it were decided                                                                
that only portions of the state should be subject to electric                                                                   
utility restructuring, then the RCA would find itself trying to fit                                                             
the entire state, when in fact the legislature may well decide that                                                             
only a portion of the state - the Anchorage area or maybe the                                                                   
Railbelt - should be subject to restructuring.  Although the intent                                                             
is good and some form of consumer protection should be put in                                                                   
place, it should occur only when it is better understood what                                                                   
electric utility restructuring should look like for Alaska.                                                                     
                                                                                                                                
Number 113                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG commented about a general consensus throughout                                                                
the industry in Alaska regarding the RCA's authority to undertake                                                               
and grant a certificate for a utility that wishes to compete                                                                    
head-to-head.  He asked whether ARECA agrees now that the                                                                       
commission has the ability to do that without the legislature's                                                                 
approval.                                                                                                                       
                                                                                                                                
MR. YOULD replied that he was stepping out on a limb because he                                                                 
hadn't polled all of the utilities.  However, he had seen briefs                                                                
from their attorneys and discussed the issue with them, and he                                                                  
would say that yes, the public utility commission has a certain                                                                 
amount of authority to bring in some form of utility restructuring                                                              
in the form of customer choice.  "My comment, however, would be                                                                 
that the way that it's levied to them, it's a very cumbersome                                                                   
process, a very awkward process," he added.  "And, as a result,                                                                 
perhaps while they have the legal authority, I'm not sure that they                                                             
would find it feasible to actually try and bring it in without some                                                             
streamlining of their own statutes by the legislature."                                                                         
                                                                                                                                
Number 141                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked whether ARECA would be more comfortable if                                                              
the legislature removed that authority from the RCA through                                                                     
statute, in effect giving the legislature the singular, unilateral                                                              
authority to create restructuring.                                                                                              
                                                                                                                                
MR. YOULD answered that he doesn't know that it is a necessary                                                                  
step.  Although they would prefer that the policy come from the                                                                 
legislature, ARECA has generally seen a willingness by the                                                                      
commission to not move forward in deference to the legislature                                                                  
itself.  If, on the other hand, ARECA saw a general attitude at the                                                             
RCA that "by God, they were going to do restructuring because it                                                                
worked, say, in the telecommunications industry," then yes, ARECA                                                               
would like to see that authority taken away.  Mr. Yould added, "But                                                             
I think we're dealing with responsible people here, and I think                                                                 
that if the legislature came up with a policy that sort of outlined                                                             
the baffle boards of where restructuring go, I think that they                                                                  
would work within those limits, and I think that we could live with                                                             
that."                                                                                                                          
                                                                                                                                
Number 159                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG emphasized that he'd introduced the bill for that                                                             
very purpose, understanding that the regulatory authority had the                                                               
ability to grant a certificate to allow and create competition.                                                                 
Without some guidance from the legislature as to what issues and                                                                
policies should be taken up in the regulatory scheme, he said, the                                                              
legislature would have no input or would be derelict in its duty to                                                             
help protect consumers in Alaska.                                                                                               
                                                                                                                                
MR. YOULD agreed with the rationale.  However, he believes the                                                                  
legislature had let it be known, at least through the letter of May                                                             
7, that this is the legislature's jurisdiction, he said.  As long                                                               
as the legislature is moving forward with trying to establish                                                                   
whether or not there should be restructuring in the state, and in                                                               
what capacity, he believes the RCA will take a back seat but, at                                                                
the same time, will try to work with the legislature and make sure                                                              
they have a lot of input.  "But I don't think that they're going to                                                             
go off half-cocked, frankly," he added.                                                                                         
                                                                                                                                
Number 180                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG suggested he wouldn't be unfair by characterizing                                                             
the attitude of a number of people from rural Alaska, in                                                                        
particular, as fearful of any deregulated, restructured type of                                                                 
environment.  He then asked whether there would be a greater level                                                              
of comfort in ARECA if the legislature prohibited any kind of                                                                   
competitive environment in rural Alaska.                                                                                        
                                                                                                                                
MR. YOULD answered that there probably would be, because he                                                                     
believes they will establish and maintain a pretty strong belief                                                                
that restructuring cannot physically come to rural Alaska, in any                                                               
form, without harming other consumers.  If this bill were to make                                                               
that clear, he believes rural residents would like that.  On the                                                                
other hand, the elements of the bill that would rain down on rural                                                              
Alaska would be somewhat obviated, he said, and should be                                                                       
restricted, then, to the Railbelt area.                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG responded that he believes it is restricted, at                                                               
stage one, to the transmission intertie system in the Railbelt                                                                  
area.  He then asked whether it is fair to characterize ARECA's                                                                 
change of opinion as a delaying tactic.                                                                                         
                                                                                                                                
MR. YOULD replied no.  If anything, the educational process has                                                                 
allowed ARECA to conclude this won't work in rural Alaska.                                                                      
Furthermore, the utilities are not as adamantly opposed to                                                                      
deregulation as they were two years ago.  Especially in Fairbanks,                                                              
however, they want time to fully position themselves to compete.                                                                
He also believes all utilities want to ensure a truly level playing                                                             
field for consumers and utilities, when and if restructuring comes                                                              
along.   Whereas a vote two years ago probably would have been 24-1                                                             
against restructuring, today it would probably be 20 against it,                                                                
with 3 or 4 "maybes" or abstaining votes, and one adamantly in                                                                  
favor of it.                                                                                                                    
                                                                                                                                
MR. YOULD continued, pointing out that larger utilities in the                                                                  
Railbelt itself are the ones looking at the benefits of                                                                         
restructuring and truly trying to decide whether benefits could                                                                 
come to the consumers.  He believes they are making a legitimate,                                                               
good-faith effort to decide whether restructuring should come to                                                                
Alaska.  It has been frustrating for him, he added.  It would be so                                                             
much easier if he could maintain a 24-1 vote and tell the                                                                       
legislature the utilities don't want restructuring.                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG asked whether Mr. Yould believes the legislature                                                              
should put this bill, and this issue, aside and take up the                                                                     
"telecom wars" next session.                                                                                                    
                                                                                                                                
MR. YOULD replied, "We'd love to see that." [There was laughter.]                                                               
                                                                                                                                
CHAIRMAN ROKEBERG mentioned talk that perhaps ARECA members believe                                                             
HB 81 is a backdoor way to establish restructuring in Alaska                                                                    
without sending a signal to the RCA.  He asked if that is a                                                                     
concern.                                                                                                                        
                                                                                                                                
MR. YOULD affirmed that, explaining their fear that if this bill                                                                
passes, it will almost become a fait accompli.  It is a de facto                                                                
policy direction that perhaps the RCA would view as where the                                                                   
legislature wants to go.  He pointed out that page 1 of the bill,                                                               
beginning at line 6, says that as part of any general proceeding to                                                             
investigate electric industry restructuring, the commission shall                                                               
establish by regulation the following things, many of which are at                                                              
the heart of restructuring itself.  Mr. Yould expressed concern                                                                 
that this bill brings them into restructuring without a full                                                                    
debate, in the legislature, on the merits of restructuring; he                                                                  
alluded to its being a wolf in sheep's clothing.  In contrast, HB
248, filed the last day of the session by Representative Kott, he                                                               
would call an up-front restructuring bill.                                                                                      
                                                                                                                                
Number 262                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG indicated one of his proposed amendments resulted                                                             
from previous discussions with Mr. Yould.  He asked whether ARECA                                                               
members would be more comfortable if the bill were modified to                                                                  
clarify the trip wire or trigger, and if regulations wouldn't be                                                                
taken up until the RCA granted a certificate of authority to                                                                    
compete.                                                                                                                        
                                                                                                                                
MR. YOULD replied no, they would rather see a trip wire that                                                                    
regulations shall not be adopted until such time as the legislature                                                             
establishes that they want restructuring, either in part or in                                                                  
total, throughout Alaska.                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG asked whether ARECA would get behind this bill                                                                
again if those two corrections were made:  first, clarifying that                                                               
the legislature had to make a positive step and, second, limiting                                                               
it to the so-called grid.                                                                                                       
                                                                                                                                
MR. YOULD said he doesn't believe it would, because Railbelt                                                                    
members are the most concerned about the bill.  Certainly, he                                                                   
believes they would like it if the legislature came up with a clear                                                             
policy that there would be restructuring, and if this bill, as part                                                             
of that more comprehensive bill, tried to establish ground rules.                                                               
However, ARECA is nervous about a bill going forward that tries to                                                              
establish ground rules when, in fact, it isn't even known what this                                                             
competitive market will look like in the future.                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG asked whether ARECA could support this bill if it                                                             
were amended or attached to another bill that created a pilot                                                                   
program in the Anchorage area, for example.                                                                                     
                                                                                                                                
MR. YOULD answered, "We're adamantly against pilot programs."                                                                   
                                                                                                                                
CHAIRMAN ROKEBERG asked what would make ARECA happy.                                                                            
                                                                                                                                
MR. YOULD suggested the whole issue of restructuring will be at the                                                             
forefront during this legislative session, and there will be public                                                             
debate at that time.  The ARECA members are saying they think this                                                              
bill is too early.                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG replied that based on the position of ARECA, he                                                               
isn't sure he agrees with the statement that this will be in the                                                                
forefront of discussions at the next session.                                                                                   
                                                                                                                                
Number 308                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO indicated the dialogue with Mr. Yould had                                                                 
reinforced his own concerns about the broadness of the title.  The                                                              
bill's intent, as repeated by the sponsor, is to protect consumers,                                                             
but they are discussing deregulation.  He noted that they are                                                                   
requiring the RCA to adopt regulations to provide standards of                                                                  
operation and consumer protection.  Next referring to page 4, he                                                                
said subsection (g) had jumped out at him; it read, "The commission                                                             
shall, by regulation, require reports from electric service                                                                     
providers who are participating in a competitive electric service                                                               
market and establish the contents of the reports."  He asked                                                                    
whether there had been talk within ARECA about specifying the                                                                   
contents of those reports.  For example, are they going to get into                                                             
back-office, proprietary information?                                                                                           
                                                                                                                                
MR. YOULD answered that there has been no discussion.  One ARECA                                                                
member, Matanuska Electric Association, has brought up that                                                                     
specific paragraph, expressing concern about what would be in those                                                             
reports.  Mr. Yould pointed out that in the electric industry, a                                                                
portion - the transmission lines and service territories - would                                                                
probably remain regulated, whereas the generation side would be                                                                 
unregulated.  In the telecommunications industry, there was a                                                                   
requirement that a "Chinese wall" be built between the regulated                                                                
and unregulated parts, meaning separate staff for each portion.                                                                 
Although not too bad for a larger utility such as Golden Valley or                                                              
Chugach Electric Association, that gets very expensive in rural                                                                 
Alaska, where there is minimal staff to start with.  Mr. Yould                                                                  
concluded that although they don't know what reports will be                                                                    
required, the reporting requirements will be greater, and costs to                                                              
small rural utilities will be much more difficult for them to                                                                   
shoulder.                                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG thanked Mr. Yould, then called upon Don Edwards.                                                              
                                                                                                                                
Number 364                                                                                                                      
                                                                                                                                
DONALD EDWARDS, General Counsel, Chugach Electric Association                                                                   
("Chugach"), informed members that generally Chugach supports this                                                              
legislation.  They support the idea of consumer protection and feel                                                             
the bill gives appropriate legislative policy guidance to the                                                                   
regulators.  However, he perhaps would suggest some minor changes                                                               
later, and he would talk about perceived significant problems.  He                                                              
noted that previous testimony that year by Gene Bjornstad, General                                                              
Manager of Chugach, made it clear they regard consumer protection                                                               
as a key element of restructuring.  Therefore, they are pleased to                                                              
see progress on what they view as an important part of the package                                                              
of developing restructuring.  Their concern, however, is with the                                                               
Railbelt.  They have opinions but not a great deal of expertise on                                                              
how things should happen in the Bush, Mr. Edwards noted, nor do                                                                 
they feel it is their place to speak about that.                                                                                
                                                                                                                                
MR. EDWARDS said Chugach believes there is a need to start                                                                      
somewhere, which is why they are supportive of this.  However, this                                                             
bill is "the sound of one hand clapping," introduced to protect                                                                 
consumers in a customer-choice environment, when, in fact, they                                                                 
don't have a choice now.  This is called a "consumer bill of                                                                    
rights," but in their view there is no more fundamental right than                                                              
the right to choose from whom to buy services.  Chugach's primary                                                               
point is to remind everyone that still to come is the main event:                                                               
some action, by some entity with authority - the legislature or                                                                 
possibly even the courts - to allow customers to exercise their                                                                 
fundamental right.   However, they are happy to see these puzzle                                                                
pieces begin to fall into place.                                                                                                
                                                                                                                                
Number 440                                                                                                                      
                                                                                                                                
MR. EDWARDS turned to specific concerns.  First, subsection (c)                                                                 
requires a needs-based rule allowing additional time for payments.                                                              
They operate now under a tariff, approved by the commission, that                                                               
has what they believe are fair rules; problems don't arise out of                                                               
those tariffs in Chugach's situation, nor does he believe many                                                                  
other utilities have problems.  It is legitimate for any consumer                                                               
protection bill to be concerned about a level playing field among                                                               
all service providers.  In addition, there may be some need for                                                                 
uniform payment and service termination provisions for all                                                                      
customers in a competitive environment.  However, he said, there is                                                             
every reason to believe the commission is capable of doing this                                                                 
kind of rule making, after hearings and due deliberation; in                                                                    
contrast, it is not the kind of detailed rule making for which the                                                              
legislature is well suited.  In summary, Chugach would accept a                                                                 
fair set of rules, which they believe they operate under now.  But                                                              
they think it would be a mistake to "hard wire" into a statute a                                                                
needs-based determination requiring the utility to decide who                                                                   
deserves a special break and who does not.  They believe that is                                                                
neither efficient nor required by fairness.  They would rather that                                                             
it be left to the commission, or that it be adjusted somehow, so it                                                             
is not a needs-based determination made by the utility.                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG asked whether the term "economic hardship" was                                                                
what Mr. Edwards was calling "needs-based," even though it might be                                                             
a temporary circumstance.                                                                                                       
                                                                                                                                
MR. EDWARDS affirmed that.                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG noted that it would be defined by the rule-making                                                             
authority of the commission, not the legislature.  He said that is                                                              
the whole idea, to make it broad enough and to give them direction.                                                             
                                                                                                                                
MR. EDWARDS clarified that the only problem Chugach has with it is                                                              
this:  Even if developed by the commission under the policy                                                                     
guidance set out in this draft, the determination would have to be                                                              
needs-based.  If the legislature simply sent the commission off to                                                              
develop fair rules for termination that are uniform for all service                                                             
providers, Chugach would have no problem.  However, having to                                                                   
determine whether people meet income guidelines or qualify for                                                                  
"hardship" status would take a lot of time and effort.  Chugach                                                                 
believes the tariffs contain good and fair provisions for                                                                       
termination and bill payment.  They also believe the commission can                                                             
come up with fair standards without the legislature requiring a                                                                 
needs-based determination.                                                                                                      
                                                                                                                                
Number 509                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO requested confirmation that current                                                                       
guidelines include provisions for handicapped or elderly customers.                                                             
                                                                                                                                
MR. EDWARDS replied:                                                                                                            
                                                                                                                                
     We have very few special provisions.  We do have ... some                                                                  
     special notification of outage provisions, but I'm not                                                                     
     sure that they're actually in our tariffs.  I'd have to                                                                    
     go back and research exactly what kinds of special                                                                         
     provisions we have ... that are in the tariffs, that do                                                                    
     pertain to hardship.  But we have very few there.  But,                                                                    
     like I say, we don't seem to have many problems arising                                                                    
     ... from it.  We have very few complaints ... on those                                                                     
     grounds.                                                                                                                   
                                                                                                                                
REPRESENTATIVE HALCRO suggested the concern with economic hardship                                                              
could be for only one month, for example.  Perhaps a person might                                                               
not want to find the money to pay the electric bill.  To him, that                                                              
represents an economic hardship, whereas to Mr. Edwards that                                                                    
represents somebody who just doesn't want to pay the electric bill.                                                             
                                                                                                                                
MR. EDWARDS affirmed that, then emphasized the more important                                                                   
point:  The utility would rather not have to make that choice and                                                               
have to examine a customer regarding the needs-based guideline set                                                              
by the commission, which he believes, as this bill is written, the                                                              
commission would be compelled to establish.  Now, in contrast, if                                                               
a customer doesn't pay, the utility must give the customer notice                                                               
in specified ways, providing so many days to cure the problem; if                                                               
unable to work out terms, the utility then is authorized, after                                                                 
specified types of notice, to cut off the service.  The utility                                                                 
doesn't have to determine whether a customer meets needs-based                                                                  
hardship standards.  However, Mr. Edwards pointed out, he doesn't                                                               
know of a utility that doesn't already work with customers to avoid                                                             
cutting off service, which would be hooked up again eventually.                                                                 
Utilities want to figure out payment plans so customers can make                                                                
payments, get caught up, and remain on service.                                                                                 
                                                                                                                                
Number 559                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked whether that is a customary practice or                                                                 
exists in the tariffs, to not cut off people's power in the                                                                     
wintertime.                                                                                                                     
                                                                                                                                
MR. EDWARDS said that is by custom.  There was a proceeding in                                                                  
front of the previous commission to look into it, but that                                                                      
commission decided it wasn't a problem that needed to be fixed.                                                                 
Its survey of utility practices found although it isn't something                                                               
utilities prefer to publish, as a practical matter no utility                                                                   
should cut people off when it is extremely cold.                                                                                
                                                                                                                                
REPRESENTATIVE HALCRO asked whether they couldn't also interpret                                                                
hardship as being seasonal or temperature-related, for example, as                                                              
opposed to being needs-based.                                                                                                   
                                                                                                                                
MR. EDWARDS replied that he'd rather not have to be at the                                                                      
commission saying the legislature didn't really mean money but                                                                  
meant temperature.                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG asked whether Alaska is the only state without                                                                
some type of needs-based criteria and help.                                                                                     
                                                                                                                                
MR. EDWARDS said he hadn't researched that.                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG suggested there is no help for low-income people,                                                             
which most states have in the form of a universal service charge.                                                               
He said he wasn't advocating that, but it is a bit ironic.  He then                                                             
asked if Mr. Edwards thinks it is irresponsible of the legislature                                                              
to ask that the RCA set standards for hardship, which now are based                                                             
only on customary practice.                                                                                                     
                                                                                                                                
MR. EDWARDS responded that he wouldn't say it is irresponsible, but                                                             
the question is a matter of public policy:  What is the best way to                                                             
take care of people with a hardship?  To him, that is not                                                                       
necessarily best addressed by the utility commission in a utility                                                               
tariff.  Ultimately, he believes it comes down to this question:                                                                
How should they fund customers who are more expensive to serve?                                                                 
One way is to put provisions into statute or tariffs that have the                                                              
practical effect of saying that customers who pay on time should                                                                
pay for the cost of customers who don't.  Mr. Edwards suggested                                                                 
that kind of analysis is needed when wanting to set up a system                                                                 
like this.  They need to figure out who should pay for these                                                                    
things, and what public policy sends the right signals to customers                                                             
to help everyone behave in a way that is fair to all.                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG acknowledged there could be a heavy debate over                                                               
that, but suggested moving on.                                                                                                  
                                                                                                                                
Number 636                                                                                                                      
                                                                                                                                
MR. EDWARDS turned attention to subsection (e), which read:  "The                                                               
commission shall, by regulation, provide that an electric service                                                               
consumer in a competitive electric service market may receive only                                                              
one periodic billing for the provision of electric service to a                                                                 
location."   [Beginning comments cut off by tape change.]                                                                       
                                                                                                                                
TAPE 99-60, SIDE B                                                                                                              
Number 001                                                                                                                      
                                                                                                                                
MR. EDWARDS continued with subsection (e), saying it is an area                                                                 
where many competitors could, and presumably would, be available to                                                             
participate.  There is no reason why utility billing services have                                                              
to be bundled together with monopoly services.  Many local and                                                                  
"outside" firms can provide the former; in fact, he indicated, some                                                             
of Chugach's utility billing services now are contracted out.  They                                                             
believe customers should be allowed to buy services in the way they                                                             
feel is most convenient.  He suggested it might be particularly                                                                 
problematic for regulators to manage and police the mixing of                                                                   
various competitors' contributions to the utility bill.                                                                         
                                                                                                                                
MR. EDWARDS pointed out that the legislation now is fairly                                                                      
wide-open, saying one utility must include a competitor's                                                                       
information in the bill.  He cautioned that it could be even to the                                                             
point of advertising.  Once it is clear that competition is allowed                                                             
in unbundled services - which formerly were bundled as generic                                                                  
utility service - it even could become illegal under antitrust law                                                              
to tie billing services to service in which, as a provider, a                                                                   
utility might have too much market power.  It is a problem area                                                                 
that deserves a closer look, Mr. Edwards said.  These aren't huge                                                               
problems, but Chugach isn't comfortable with setting in statute                                                                 
exactly how the billings are done.                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG asked whether that isn't the one area where fraud                                                             
and other problems come into play, as shown particularly in                                                                     
telecommunications.  He suggested there is great potential for                                                                  
abuse to consumers if the billing system isn't regulated some way.                                                              
                                                                                                                                
MR. EDWARDS specified that he doesn't have a problem with                                                                       
regulations aimed at consumer protection, including prevention of                                                               
fraud, and Chugach is generally supportive of that.  As written,                                                                
however, this particular provision seems to allow and require that                                                              
competitors let anyone else place virtually anything into the                                                                   
billing packet.  It also seems to require that the customer can                                                                 
only get the bill one way:  all together on one bill.  However,                                                                 
some customers may choose to buy from different sources and not                                                                 
particularly care whether there is more than one bill.  It is                                                                   
simply a matter of principle, Mr. Edwards concluded, indicating                                                                 
Chugach believes customers should have the choice to buy from                                                                   
whomever they want, regardless of whether the bill is bundled.  It                                                              
is not a huge issue, but rather is Chugach's viewpoint.                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG asked whether there couldn't be a situation,                                                                  
though, where a customer would have to buy from multiple suppliers.                                                             
                                                                                                                                
MR. EDWARDS said he thinks it is conceivable.  But if enough                                                                    
customers want to buy services and see all their utilities bundled                                                              
on one bill, Chugach will try to sell that to them.  The capability                                                             
also exists of bundling together all the utility bills; huge                                                                    
billing companies in the Lower 48, as well as plenty of companies                                                               
in Alaska, have all kinds of billing capabilities.  Chugach                                                                     
believes customers ought to be allowed to choose from whom and how                                                              
they get their bills, letting the market take care of it.                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG agreed, indicating part of the intention was to                                                               
allow outsourcing of the billing, which this legislation doesn't                                                                
prohibit.                                                                                                                       
                                                                                                                                
                                                                                                                                
MR. EDWARDS responded that it says the entire electric bill has to                                                              
be a single bill.                                                                                                               
                                                                                                                                
CHAIRMAN ROKEBERG noted that it says one periodic billing.  He                                                                  
posed a scenario where a "reseller" isn't able to provide power,                                                                
then expressed his understanding that a consumer could be charged                                                               
for multiple utilities.                                                                                                         
                                                                                                                                
MR. EDWARDS suggested that isn't a billing problem, however, but a                                                              
consumer protection problem about regulating various service                                                                    
providers, to prevent fraud and to ensure that customers can                                                                    
determine whether a bill is the entire bill, for example.  He                                                                   
restated that Chugach agrees with those kinds of consumer                                                                       
protections and information disclosure provisions.  They would be                                                               
harmed if fly-by-night operators come in and don't properly                                                                     
disclose information.  They simply are concerned about a hard-wired                                                             
requirement that everything must be bundled into one bill and that                                                              
says a customer can only get a bill in one way.                                                                                 
                                                                                                                                
Number 063                                                                                                                      
                                                                                                                                
REPRESENTATIVE CISSNA asked what Mr. Edwards would eliminate, then,                                                             
in subsection (e).                                                                                                              
                                                                                                                                
MR. EDWARDS said he would want to change it so that it didn't say                                                               
the electric service can only be reflected on one periodic bill.                                                                
                                                                                                                                
REPRESENTATIVE CISSNA indicated her understanding that the one                                                                  
periodic bill is the problem.                                                                                                   
                                                                                                                                
CHAIRMAN ROKEBERG countered that nobody wants to get more than one                                                              
periodic bill.  He said he doesn't understand.                                                                                  
                                                                                                                                
MR. EDWARDS responded that he suspects people will want fewer,                                                                  
rather than more, bills.  However, they ought to be allowed to buy                                                              
from whomever they want, even if it requires an additional bill.                                                                
It is a philosophical issue.  Chugach believes establishing a                                                                   
one-bill rule limits options in ways that might ultimately hurt the                                                             
customers.                                                                                                                      
                                                                                                                                
Number 091                                                                                                                      
                                                                                                                                
MR. EDWARDS addressed subsection (g), which read:  "The commission                                                              
shall, by regulation, require reports from electric service                                                                     
providers who are participating in a competitive electric service                                                               
market and establish the contents of the reports."  Noting Mr.                                                                  
Yould's mentioned of this, Mr. Edwards indicated Chugach feels the                                                              
language is a little too broad.  In principle, the commission                                                                   
already has tremendous authority to require that information.  Mr.                                                              
Edwards recommended addressing three questions:  What exactly does                                                              
the legislature want the commission to be tracking?  What authority                                                             
does the commission have now?  And is there any additional                                                                      
authority that the commission still needs to accomplish these                                                                   
purposes?                                                                                                                       
                                                                                                                                
MR. EDWARDS turned attention to the proposed amendments.  Referring                                                             
to 1-LS0181\K.1, Cramer, 10/4/99 (K.1), he said it was fine.  It                                                                
read:                                                                                                                           
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "Alaska Public Utilities Commission"                                                                           
          Insert "Regulatory Commission of Alaska"                                                                              
                                                                                                                                
MR. EDWARDS addressed the second proposed amendment, 1-LS0181\K.2,                                                              
Cramer, 10/4/99 (K.2), by saying Chugach generally agrees with the                                                              
idea of a level playing field.  That amendment read:                                                                            
                                                                                                                                
     Page 4, lines 10 - 12:                                                                                                     
                                                                                                                                
          Delete "This section may not be applied to result in                                                                  
     a utility that is not otherwise subject to economic                                                                        
     regulation by the commission becoming subject to economic                                                                  
     regulation by the commission."                                                                                             
                                                                                                                                
          Insert "This section applies to a utility operating                                                                   
     in a competitive electric service market.  If a utility                                                                    
     is exempt from the provisions of this chapter other than                                                                   
     AS 42.05.221-42.05.281, the commission may not apply this                                                                  
     section to make the utility subject to other provisions                                                                    
     of this chapter."                                                                                                          
                                                                                                                                
Number 098                                                                                                                      
                                                                                                                                
MR. EDWARDS pointed out that the third proposed amendment,                                                                      
1-LS0181\K.3, Cramer, 10/4/99 (K.3), is a serious problem because                                                               
it is a big step backwards.  It read:                                                                                           
                                                                                                                                
     Page 1, line 6 - 8:                                                                                                        
                                                                                                                                
          Delete "As part of any general proceeding to                                                                          
     investigate electric industry restructuring, the                                                                           
     commission shall establish by regulation"                                                                                  
                                                                                                                                
          Insert "After the commission has determined that a                                                                    
     competitive electric service market should be established                                                                  
     by law in the state, the commission shall adopt                                                                            
     regulations for electric consumer protection standards.                                                                    
     The competitive electric service market may not be                                                                         
     implemented until after the regulations take effect.  The                                                                  
     regulations must establish"                                                                                                
                                                                                                                                
Mr. Edwards explained that under Chugach's view of the law now, the                                                             
legislature never has prohibited competition.  From his                                                                         
understanding, this provision would be interpreted as the following                                                             
statement from the legislature:  "Well, we may never have said it                                                               
before, but starting now we are prohibiting competition."  Chugach                                                              
urges the legislature not to include any amendment that would say                                                               
competition is not allowed.  Mr. Edwards suggested consumer                                                                     
protection is a good (indisc.), but that now they need the whole                                                                
opera.  They need to allow customers to actually choose, and to                                                                 
figure out exactly how that will happen.  He would just hate to see                                                             
amendment K.3, a step backwards, he concluded.                                                                                  
                                                                                                                                
Number 117                                                                                                                      
                                                                                                                                
REPRESENTATIVE DAVIES asked Mr. Edwards to amplify about how                                                                    
proposed amendment K.3 would be read to prohibit competition.                                                                   
                                                                                                                                
MR. EDWARDS noted that there would be an oral argument about it in                                                              
front of the judge that very afternoon.  He indicated AS 42.05.221                                                              
is the only current statute containing a reference to competition,                                                              
then explained:                                                                                                                 
                                                                                                                                
     It says that you can prevent competition once it's                                                                         
     started, and once the commission has determined that                                                                       
     there's a problem with it; and at that point, then, the                                                                    
     commission can remedy that problem.  Nowhere in the                                                                        
     statutes does it say competition is not allowed.  If you                                                                   
     put in a provision such as this, it says, "After the                                                                       
     commission's determined that ... a market should be                                                                        
     established, the commission shall establish protection                                                                     
     measures."  That presumes that competition can't occur                                                                     
     until after the commission says it can.  And we don't                                                                      
     agree with that.  And that's why ... it's in the courts                                                                    
     now.  The commission does agree with that. ... They think                                                                  
     it's implied that no competition ... can occur until they                                                                  
     say that it can, and we simply disagree with that, on the                                                                  
     basis, as I said, that the only explicit reference is the                                                                  
     reverse of that:  that it can happen until you stop it.                                                                    
                                                                                                                                
     It's not that the commission has no authority.  It's just                                                                  
     that the commission's authority is an after-the-fact,                                                                      
     rather than a prior restraint.  And that's what the                                                                        
     debate this afternoon will be about, and that's why I                                                                      
     don't want to see anything which supports the idea, in                                                                     
     the statute, that there is a prior restraint, because ...                                                                  
     there's no explicit prior restraint in the statutes now.                                                                   
     I don't want to see anything that lends supports to the                                                                    
     idea that there's a prior restraint.                                                                                       
                                                                                                                                
Number 140                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG inquired whether that is a docket before the RCA                                                              
or is in the courts.                                                                                                            
                                                                                                                                
MR. EDWARDS clarified that it is on appeal to the superior court,                                                               
to be argued that very afternoon.  It had been a docket before the                                                              
commission asking them to establish access charges over the                                                                     
Municipal Light and Power (ML&P) system.  The theory and argument                                                               
were what he had just laid out.  However, the commission had denied                                                             
that, believing the commission has an implied authority to prevent                                                              
competition unless and until a utility comes before them asking for                                                             
an expansion to the certificate of the service territory.                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG suggested it is a theory of prior restraint, in                                                               
a nutshell, because the statutes are silent.                                                                                    
                                                                                                                                
MR. EDWARDS affirmed that.  He referred to an antitrust law                                                                     
interconnection that he'd apparently discussed at length before but                                                             
wouldn't address that day.  In response to Chairman Rokeberg's                                                                  
mention of the "Portland Steel case," he noted that it is the                                                                   
"Columbia Steel case."                                                                                                          
                                                                                                                                
Number 155                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO referred to the language in K.3 that says,                                                                
"After the commission has determined that a competitive electric                                                                
service market should be established by law ...."  He then referred                                                             
to the May 7 letter from the URS committee that basically tells the                                                             
then-APUC it should remain the domain of the legislature to set                                                                 
policy with respect to opening up markets.  He requested                                                                        
clarification.                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG referred to an opinion from the attorney general,                                                             
then expressed his understanding that the general legal opinion                                                                 
indicates the RCA would have the right, as Mr. Edwards had just                                                                 
said, to grant a competitive service situation.  The letter from                                                                
the URS committee was a signal to the RCA:  "Please don't do that                                                               
until we act on it as a matter of public policy."  He asked                                                                     
Representative Davies whether that is a fair characterization.                                                                  
                                                                                                                                
                                                                                                                                
Number 171                                                                                                                      
                                                                                                                                
REPRESENTATIVE DAVIES affirmed that, adding that it has no force of                                                             
law.  It is just a letter, and a political message.                                                                             
                                                                                                                                
MR. EDWARDS, in response to a comment of Chairman Rokeberg,                                                                     
clarified:                                                                                                                      
                                                                                                                                
     We're on the side of explicit interpretation of the plain                                                                  
     words of the statute.  It's the commission and our                                                                         
     opponents who are saying, "Well, no, no, no.  You can't                                                                    
     read just the explicit statement.  You have to ... see                                                                     
     that there's some implied authority here, even though the                                                                  
     only reference to competition says that you can't stop it                                                                  
     unless it's started and there's a problem with it."                                                                        
     That's what the words say.  The commission's view is,                                                                      
     "Well, but there must be an implied power for us to                                                                        
     prevent it in the first place."  And that's what the                                                                       
     argument is about.                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG suggested that is based upon their certification                                                              
process.                                                                                                                        
                                                                                                                                
MR. EDWARDS affirmed that, adding that it is based upon their                                                                   
authority to determine "whether you're fit, willing and able to                                                                 
serve."                                                                                                                         
                                                                                                                                
REPRESENTATIVE DAVIES commented that there are other explicit words                                                             
in the statutes regarding territories, et cetera.  Those need to be                                                             
read in (indisc.) value, as well.                                                                                               
                                                                                                                                
MR. EDWARDS disagreed, stating that the explicit words regarding                                                                
"service area" are in the provision that says it can be limited if                                                              
it is occurring and has been determined to be a problem.  He                                                                    
explained:                                                                                                                      
                                                                                                                                
     That's where it says that you can impose service                                                                           
     territory restrictions, and that has, in fact, happened                                                                    
     in Anchorage many years ago.  There are service                                                                            
     territories that are established ..., in our view, to                                                                      
     prevent duplication of ... plant.  And that's what's                                                                       
     changed, and that's why this has come up.  It is now                                                                       
     technologically feasible and practical for people ... to                                                                   
     compete just for the sale of the commodity.  It used to                                                                    
     be that ... the sale of the commodity and the service                                                                      
     over the lines [were] so bound together that, ...                                                                          
     practically speaking, you couldn't sell them separately.                                                                   
     So, it didn't come up as an issue.  Once the service                                                                       
     territory or distribution plant issue was decided, it                                                                      
     naturally followed that, well, people weren't going to be                                                                  
     competing.  Well, that's not true anymore. ... There are                                                                   
     a number of areas, as I said, ... in which you could                                                                       
     possibly compete.  And so that's why we're where we are.                                                                   
                                                                                                                                
MR. EDWARDS restated that Chugach is glad to see this bill brought                                                              
forward, and glad to see something get done on an important piece                                                               
of the package.  If this passes, they can mark this off the list of                                                             
reasons why customers aren't allowed to choose, and they are                                                                    
looking forward to that.                                                                                                        
                                                                                                                                
Number 220                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG expressed his understanding that if K.3 were                                                                  
redrafted to specify the legislature's authority, Mr. Edwards would                                                             
still find it objectionable because it would be even stronger.                                                                  
                                                                                                                                
MR. EDWARDS affirmed that they would if it applied to the Railbelt.                                                             
They have always taken the position that they are happy with a                                                                  
compromise which deals only with Anchorage, but the Railbelt would                                                              
be fine.  However, for the reasons he'd stated, he would hate to                                                                
see any bolstering of the argument that competition is prevented in                                                             
the Railbelt area.  Mr. Edwards suggested an acceptable compromise                                                              
would be to have the "non-interconnected areas," except the                                                                     
Railbelt, subject to this kind of provision.  After Chairman                                                                    
Rokeberg questioned the use of the term "non-interconnected area,"                                                              
Mr. Edwards indicated he would try to come up with a better phrase                                                              
but for now that is the best he can do.  He explained, "You have                                                                
the Railbelt, and then you have a couple of other areas of the                                                                  
state that are interconnected by transmission lines.  So, you'd                                                                 
have to be careful to make sure you caught the right fish in your                                                               
net."                                                                                                                           
                                                                                                                                
CHAIRMAN ROKEBERG mentioned Southeast Alaska, then referred to his                                                              
earlier discussion with Mr. Yould about applying some first-aid to                                                              
this bill to generate support.  He noted that Mr. Edwards objected                                                              
to the legislature's taking back authority, to limiting it to the                                                               
Railbelt, and to creating a pilot program.  He asked, "If you took                                                              
all those things together, would it be more acceptable to you,                                                                  
then, as a compromise-type of a situation?"                                                                                     
                                                                                                                                
MR. EDWARDS answered yes, restating Chugach's ongoing willingness                                                               
to compromise to the point of just letting them begin in Anchorage.                                                             
What they propose is simple and not that difficult.  It is retail                                                               
competition; they haven't proposed to do anything at all about the                                                              
competition that may exist at the wholesale or bulk power level.                                                                
Retail competition means that customers in one part of town can buy                                                             
from a supplier in another part of town.  It is neither complicated                                                             
nor radical.  They don't have to create an independent system                                                                   
operator, nor any kind of a generation pool or transmission pools.                                                              
They just let a customer in Muldoon buy from ML&P or vice versa.                                                                
Mr. Edwards suggested potential compromise would allow competition                                                              
and customer choice to begin in Anchorage.  Again mentioning the                                                                
concept of one hand clapping, he emphasized that missing from this                                                              
consumer rights bill is the most important right of all:  the right                                                             
of consumers to choose.                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG suggested this legislation likely would die                                                                   
without some compromises.                                                                                                       
                                                                                                                                
MR. EDWARDS reaffirmed Chugach's openness to compromises,                                                                       
specifying that their bottom line is simply that it needs to allow                                                              
competition to begin in Anchorage.                                                                                              
                                                                                                                                
Number 269                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO referred to the analogy of one hand clapping,                                                             
then mentioned comments in this committee and the URS committee                                                                 
that the bill is premature because they are developing guidelines                                                               
in spite of not knowing what restructuring will look like.  As an                                                               
example, he directed attention to page 3, lines 12 through 15,                                                                  
which read:  "(7) refrain from imposing unreasonable terms and                                                                  
conditions, including service connect or disconnect fees, as a                                                                  
precondition to providing service that meets generally accepted                                                                 
industry standards to a consumer in a competitive electric service                                                              
market."  Representative Halcro pointed out that when the day comes                                                             
for restructuring, there must be certain items addressed, including                                                             
transition costs.  California has transition costs, for instance.                                                               
Someone who has gone through a regulated market with one provider,                                                              
but decides a second provider offers a lower cost per kilowatt                                                                  
hour, owes the previous provider a certain amount for transition                                                                
costs.  Although in certain states that have undergone this                                                                     
restructuring there are associated costs, Alaskan legislators don't                                                             
know if those will come into play.  With this legislation they are                                                              
already saying, "We're going to exclude certain things," when they                                                              
don't know what the whole picture looks like.  That is part of his                                                              
own concern, he added.                                                                                                          
                                                                                                                                
Number 293                                                                                                                      
                                                                                                                                
MR. EDWARDS noted that there are probably three or four important                                                               
basic components to restructuring, including consumer protection                                                                
and the stranded investment provision just mentioned.  Chugach has                                                              
always supported the idea that legislation is a fine way to deal                                                                
with stranded investments, at least in providing policy guidance to                                                             
allow the commission to exercise judgment about who will be allowed                                                             
stranded investment recovery.  Although Chugach may have some                                                                   
stranded investments, they have protected themselves by contracts                                                               
with their large wholesale customers, Matanuska Electric                                                                        
Association, Inc. (MEA) and Homer; the contracts require that those                                                             
large customers buy their power from Chugach.                                                                                   
                                                                                                                                
MR. EDWARDS noted that he hadn't planned to comment on this                                                                     
specific provision today, and indicated he might provide written                                                                
comments.  He stated that although he believes it could use a bit                                                               
of tightening, he doesn't think it really deals with the stranded                                                               
investment issue.  Rather, it deals simply with creating a level                                                                
playing field, ensuring that customers are protected from harm by                                                               
"sharp business practices" in the termination process.  Noting the                                                              
importance of electric service, and that sometimes extraordinary                                                                
consumer protections must be provided for such service, he                                                                      
concluded, "I think this simply says you can't abuse the customer                                                               
in the connecting and disconnecting process, and I think that's                                                                 
where we're trying to go with that, and so we would be supportive                                                               
of that idea."                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG indicated termination fees are a key element that                                                             
may have negative impacts.  This wasn't intended to pick up the                                                                 
entire area of stranded costs, he said.  He looks at this bill as                                                               
an incremental part of the whole puzzle, not the whole thing.  He                                                               
asked if there were further questions, then thanked Mr. Edwards.                                                                
                                                                                                                                
Number 339                                                                                                                      
                                                                                                                                
STEPHEN CONN, Executive Director, Alaska Public Interest Research                                                               
Group (AKPIRG), came forward on behalf of AKPIRG, Alaska's largest                                                              
consumer group, with 3,000 members statewide.  He praised Chairman                                                              
Rokeberg for spotting this early-on as a critical component of the                                                              
coming wave of electric deregulation, then educating himself and                                                                
the public on the issue.  The emerging bill comes from a detailed                                                               
consideration of this subject, Mr. Conn pointed out, and is                                                                     
entirely appropriate as a building block in the process of electric                                                             
deregulation.  He indicated he has had an ongoing opportunity to                                                                
speak with people experiencing electric deregulation in the Lower                                                               
48, including California, New York and Pennsylvania.  Furthermore,                                                              
a great deal has been learned from telephone deregulation, both for                                                             
long-distance and local service.                                                                                                
                                                                                                                                
MR. CONN referred to Mr. Edwards' comments, noting that consumer                                                                
advocates in this country don't actually believe it is the retail                                                               
consumer who is pushing for electric deregulation; that hasn't been                                                             
demonstrated in statistics for California and other places.  He                                                                 
indicated AKPIRG's mode tends to be more defensive than offensive,                                                              
essentially trying to hang on to what existed under regulation and,                                                             
in some cases, building on those.  He expressed optimism in that                                                                
regard.                                                                                                                         
                                                                                                                                
MR. CONN expressed concern about so-called cherry picking, however,                                                             
to the degree that it will shift costs to the residential rate                                                                  
payer; he suggested that in some ways reflects the rural utilities.                                                             
That competition will not be serious, full-fledged competition,                                                                 
residence by residence, business by business, he said, but rather                                                               
will be partial competition.  He indicated he has spoken about that                                                             
with various committee chairmen and is still concerned about it.                                                                
This falls under the question of what kind of guarantee will be                                                                 
provided to the consumer in the area.                                                                                           
                                                                                                                                
Number 402                                                                                                                      
                                                                                                                                
MR. CONN remarked that the language still seems a little "squishy,"                                                             
then drew attention to page 2, (b)(2) and (b)(3).  He paraphrased                                                               
from (b)(2), commenting that it makes sense for the provider.                                                                   
Paragraph (b)(2) read:                                                                                                          
                                                                                                                                
     (2) offer electric service to any consumer in the area                                                                     
     served by the electric service provider so long as                                                                         
     providing the service is technically feasible at a                                                                         
     reasonable cost to the provider;                                                                                           
                                                                                                                                
He then read from paragraph (b)(3), which stated:                                                                               
                                                                                                                                
     (3) provide the same electric service choices and pricing                                                                  
     options to all consumers;                                                                                                  
                                                                                                                                
He suggested that is still a little off the mark, because he is                                                                 
thinking they would offer him, in his house, the same rate as they                                                              
would offer a large grocery store up the street.  His concern is                                                                
that rates offered in a competitive marketplace be for everyone in                                                              
that marketplace, not just for a favored few; he asked the                                                                      
committee to look at that.  Referring to the phrase "pricing                                                                    
options" and the word "option," he said maybe the word he is                                                                    
looking for here is "price."  He said he also thinks - although he                                                              
doesn't believe the rural electric utilities necessarily agree with                                                             
him - that that would be "sort of a poison pill to cherry picking."                                                             
                                                                                                                                
MR. CONN also expressed concern on behalf of consumers about the                                                                
"ultimate price issue."  He reminded members that if all utilities                                                              
were known and trusted - as are Chugach or ML&P - maybe the                                                                     
consumer situation wouldn't be so disconcerting.  However, people                                                               
are likely to move in who are essentially aggregators, buying up                                                                
service and reselling it.  A lot of the need for a bill that looks                                                              
out for consumers is because of not only existing players but also                                                              
new, unknown players; that area of major concern created                                                                        
unanticipated problems in California, he noted.                                                                                 
                                                                                                                                
MR. CONN turned to the issue of need.  He suggested perhaps Mr.                                                                 
Edwards was correct about isolating the word "economic"                                                                         
exclusively.  Mr. Conn said he would offer, at the end of his                                                                   
testimony, a copy of New York's Home Energy Fair Practices Act (on                                                              
the Internet at www.dps.state.ny.us/p11res.html), which passed some                                                             
time ago as a utility consumers' bill of rights.  In New York, he                                                               
noted, they are trying to hold the line on maintaining that statute                                                             
in a competitive marketplace.  In examining need, as determined in                                                              
New York's legislation, Mr. Conn pointed out that the focus is on                                                               
other areas, including elderly and disabled people, as well as                                                                  
people on life-support systems.  There may be a panoply of needs                                                                
that aren't exclusively economic but that should be examined.                                                                   
                                                                                                                                
MR. CONN next addressed billing, especially bundling.  This                                                                     
legislation discusses in some detail the prototype contents of any                                                              
utility bill, he noted.  In the world, down the road, electric                                                                  
utilities will sell telephone service or cable service, for                                                                     
example.  As consumer advocates, AKPIRG is concerned that choice be                                                             
maintained without consumers being forced to buy bundled services,                                                              
of any sort, in order to get the best choice in any discrete area.                                                              
An affirmative right of a consumer, in a consumer-choice-driven                                                                 
market, is the ability to buy unbundled services without one being                                                              
conditioned upon the purchase of another; furthermore, consumers                                                                
should not have to buy, unwittingly, a bundled service for which                                                                
multiple bills are issued.                                                                                                      
                                                                                                                                
MR. CONN referred to pages 21 and 22 of New York's Home Energy Fair                                                             
Practices Act.  He told the committee a possibility, not reflected                                                              
in the current legislation, is an annual notification to consumers                                                              
of their rights, which would include the following:  a description                                                              
of complaint-handling procedures at the utility and the commission;                                                             
the rights and obligations of residential customers regarding                                                                   
payment of bills, termination of service and reconnection of                                                                    
service; a description of special protections afforded people who                                                               
are elderly, blind, disabled or experiencing medical emergencies,                                                               
or those receiving public assistance, Supplemental Security Income                                                              
(SSI) benefits, or additional state payments (also, perhaps persons                                                             
in two-family dwellings, which Mr. Conn said he wouldn't address                                                                
that day); a request that residential customers who qualify for                                                                 
some of those considerations inform the utility; notification of a                                                              
person's right to designate a third party to receive copies of                                                                  
notices related to termination; and a few others, including billing                                                             
information in a language other than English where it applies.  Mr.                                                             
Conn said it is not a bad idea to keep complexity to a minimum.                                                                 
                                                                                                                                
MR. CONN indicated he would share a book on how to compare prices                                                               
and shop for electric suppliers, produced by the Pennsylvania                                                                   
Office of Consumer Affairs; he suggested either the RCA or some                                                                 
division of the Department of Law might think about doing that.  He                                                             
noted that the current bill's provisions addressing clarity and                                                                 
billing are aimed at what he believes the utilities would like to                                                               
see too, which is an ability of the consumer and rate payer to do                                                               
head-to-head comparisons.  This would conceivably take a certain                                                                
financial burden off of the private utilities.  If information were                                                             
sent to the RCA, and if the RCA were given appropriations to                                                                    
generate a book of this sort for availability to the public, there                                                              
would be one-stop shopping that Mr. Conn believes would enhance                                                                 
competition.                                                                                                                    
                                                                                                                                
Number 566                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO agreed such a book might help a few, but                                                                  
expressed doubts that anybody would actually call to request one,                                                               
then read it before making a decision to switch.  He recalled that                                                              
during the so-called telecom wars, a person could almost count on                                                               
the telephone ringing nightly, with a salesperson trying to pitch                                                               
a deal.  He referred to page 4 of the bill, subsection (f), which                                                               
read:                                                                                                                           
                                                                                                                                
     The commission shall, by regulation, require that, in a                                                                    
     competitive electric service market, a customer's                                                                          
     electric service provider may only be changed with the                                                                     
     written authorization of the customer.                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO said he supports that, because a person might                                                             
receive a telephone call that sounds too good to be true, for                                                                   
example, and then sign up, only to discover the bill doesn't seem                                                               
to add up correctly because of what it includes.  His thought is                                                                
not only for the utility to have to send the customer a form or                                                                 
card to sign and submit.  The utility would also have to show the                                                               
comparison between what the consumer currently gets and what the                                                                
utility offers.  Whether the next day or week after the initial                                                                 
sales call, the potential customer could then compare utilities to                                                              
see what the savings, as represented by the utility, would be.  He                                                              
asked whether Mr. Conn believes that would be helpful.                                                                          
                                                                                                                                
[MR. CONN appeared to answer in the affirmative, but his answer was                                                             
cut off by the tape change.]                                                                                                    
                                                                                                                                
                                                                                                                                
TAPE 99-61, SIDE A                                                                                                              
Number 007                                                                                                                      
                                                                                                                                
[Unusually long blank tape at beginning]                                                                                        
                                                                                                                                
MR. CONN continued, mentioning extremely deceptive advertisements                                                               
regarding telephone service.  Possible ideas include the book                                                                   
mentioned earlier or a site on the World Wide Web.  He said he is                                                               
scouting for "wheels that have already been invented," rather than                                                              
trying to come up with something new.  It would be an improvement                                                               
- over what is being seen in New York and elsewhere - to have                                                                   
utilities conform to a standardized approach, comparing incumbent                                                               
service with proposed service, for example, which would be worked                                                               
out through regulatory hearings with the RCA.  "This is good                                                                    
thinking on your part, sir," Mr. Conn concluded.                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG asked if there were further questions, noting                                                                 
that his own could be discussed later.  He thanked Mr. Conn, then                                                               
called upon Mr. Kelly in Fairbanks.                                                                                             
                                                                                                                                
Number 068                                                                                                                      
                                                                                                                                
MIKE KELLY, President and Chief Executive Officer, Golden Valley                                                                
Electric Association (GVEA), spoke via teleconference from                                                                      
Fairbanks.  He referred to comments before the URS committee,                                                                   
indicating that committee had set no clear course.  He voiced                                                                   
strong support for the legislature rather than the RCA having                                                                   
control of the so-called trip wire.  Because of "the ex parte                                                                   
problem and their vary quasi-judicial constitution," he said it is                                                              
difficult to have the kind of dialogue with the RCA that is                                                                     
possible with legislators.  Furthermore, GVEA wouldn't consider it                                                              
bad news if the legislature determined a two-year moratorium should                                                             
occur.  On the other hand, he hopes legislators still have copies                                                               
- which GVEA can furnish - of the "competitive 'we believes'" that                                                              
state GVEA's board's position on that.                                                                                          
                                                                                                                                
MR. KELLY suggested the committee might spend time in the future                                                                
determining exactly what they want to do.  He believes creating                                                                 
opportunities for new players shouldn't get much attention because                                                              
there are probably no more than ten new players out there.                                                                      
Instead, the focus should be on the consumer.  He noted that Mr.                                                                
Edwards had seen one real consumer at a hearing, whereas he himself                                                             
hadn't seen any.  "We've not had a clamor for this," he added.                                                                  
                                                                                                                                
MR. KELLY mentioned other approaches.  If the legislature wants to                                                              
create more consumer protection, he said, he submits that it is                                                                 
already well in place with the commission, and he agrees with Mr.                                                               
Edwards that the RCA's system works; he suggested letting the RCA                                                               
handle that if the legislation moves forward.  Mr. Kelly continued:                                                             
                                                                                                                                
     If you want to let the big guys feed, that will probably                                                                   
     work pretty well too.  Turn them loose in Anchorage if                                                                     
     you want.  You could say that you turned them loose in                                                                     
     Fairbanks.  There used to be two of them; now there's                                                                      
     one.  Do we have more competition or less?  That's a good                                                                  
     question for you to ponder sometime when you wake up                                                                       
     early in the morning.                                                                                                      
                                                                                                                                
     If you really want savings for the consumer as your                                                                        
     overall bottom line, then why don't you ... consider to                                                                    
     take Seward, Homer, Matanuska, Chugach and ML&P, and                                                                       
     eliminate all the separateness of them, and create one                                                                     
     utility?  I can guarantee a savings that would dwarf most                                                                  
     other considerations.  However, I've never heard that                                                                      
     that's what the people want.  And every time somebody                                                                      
     tries to pick off the other guy down there, the consumers                                                                  
     seem to rise up. ... If you're trying to save money, it                                                                    
     might lead you in a different direction.                                                                                   
                                                                                                                                
     The thought about having the members choose:  Since, for                                                                   
     example, everybody north of the range up here belongs to                                                                   
     a cooperative, and they elect the directors, maybe a                                                                       
     thought is that they ought to choose whether they want to                                                                  
     open their territory up or not.  That might lead to some                                                                   
     interesting discussion.                                                                                                    
                                                                                                                                
     The question about whether the elements of competition                                                                     
     are ... present:  Eric [Yould] mentioned that the CH2M                                                                     
     Hill report talked about eight providers being the basic                                                                   
     minimum.  One wouldn't argue that it takes at least two.                                                                   
     We think that the basic elements of competition in Alaska                                                                  
     are something that has to be carefully considered.  So,                                                                    
     we want you to hold on to the reins on this thing, and if                                                                  
     this old horse goes slowly, we smile.                                                                                      
                                                                                                                                
Number 069                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked if Mr. Kelly believes the legislature's                                                                 
time would be better spent investigating such concepts as "economic                                                             
dispatch and power pooling."                                                                                                    
                                                                                                                                
MR. KELLY answered no, that CH2M Hill and Black and Veatch had                                                                  
shown "there's a scrawny little one-and-a-half percent in there."                                                               
He added, "We're doing it pretty well and improving it all the                                                                  
time, without a lot of help from anybody.  So, no, I think that                                                                 
isn't where I would put much of your time."                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked about some type of distribution authority                                                               
in the state to ensure that the intertie lines are properly managed                                                             
and operated.                                                                                                                   
                                                                                                                                
MR. KELLY responded that it isn't broken, and no help is needed                                                                 
there either.  In response to a question by Representative Halcro,                                                              
he said slowing this down is certainly among the options that make                                                              
sense.  Roughly half of the states have had real opportunities to                                                               
look at this, and Pennsylvania is doing some interesting things;                                                                
however, Alaska is unique.  Mr. Kelly expressed appreciation for                                                                
Chairman Rokeberg's and the committee's sensitivity that acting too                                                             
hastily could be a real problem in the state.  He concluded by                                                                  
stating general support for moving the legislation forward.                                                                     
However, he voiced concern that the legislature hold on to the                                                                  
reins and take it carefully.  He also expressed hope that his other                                                             
comments were helpful and not taken as critical.                                                                                
                                                                                                                                
Number 100                                                                                                                      
                                                                                                                                
MEERA KOHLER, General Manager, Anchorage Municipal Light & Power in                                                             
Anchorage, noted support for the concept of consumer protection.                                                                
She indicated the importance of consumer protection with any                                                                    
utility restructuring that occurs, in that no consumer should be                                                                
harmed.  She believed that the bill sets out to do just that.  She                                                              
also believed that the proposed amendments are good, which we                                                                   
[Municipal Light & Power] support generally.  Ms. Kohler concurred                                                              
with regard to the prior comments that the trip wire should be                                                                  
retained by the legislature rather than the utility commission.                                                                 
She said that it is in the realm of the legislature to determine                                                                
if, when, and how any restructuring should occur.  Therefore, that                                                              
should be the trip wire to stimulate some form of consumer                                                                      
protection.  She also believed that the ARECA utilities would                                                                   
generally support the concept of carving out the noninterconnected                                                              
utilities early on.  Ms. Kohler stated that the committee may want                                                              
to consider proposing this consumer protection bill as a general                                                                
utility consumer protection bill.  The electric utility industry is                                                             
not the only industry nor the only utility in this state that is an                                                             
essential service.  She provided examples of other essential                                                                    
services such as water, sewer, basic telephone service, et cetera.                                                              
Ms. Kohler believed that a consumer's bill of rights would                                                                      
potentially receive broad acceptance if such contained underlying                                                               
elements that should be included in any consumer protection                                                                     
process.  In conclusion, Ms. Kohler said that we [Municipal Light                                                               
& Power] continue to support [the legislature's] efforts to promote                                                             
consumer protection laws.                                                                                                       
                                                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG expressed concern with the fiscal note that would                                                             
result from applying this legislation to all utilities, although it                                                             
did sound intriguing.  He informed the committee that although                                                                  
there would be a fiscal note, the general fund would not be                                                                     
assessed as it comes from the regulatory cost charge (RCC).  The                                                                
consumer actually pays for the RCC.                                                                                             
                                                                                                                                
REPRESENTATIVE HALCRO inquired as to the percentage of energy                                                                   
dollars spent on electricity.  He clarified that he was interested                                                              
in a household's expenditure on energy.                                                                                         
                                                                                                                                
MS. KOHLER pointed out that, obviously, it would depend upon one's                                                              
location in the state.  She informed the committee that a homeowner                                                             
in the Railbelt spends, on average, about $200 per month on energy.                                                             
Of course, that expenditure would probably be significantly higher                                                              
in Fairbanks.  Therefore, Ms. Kohler estimated that one spends                                                                  
about 5 percent of his/her household expenditures on energy per                                                                 
month.                                                                                                                          
                                                                                                                                
MR. CONN informed the committee that the Governor's Commission on                                                               
Power Cost Equalization did a report, and therefore would know how                                                              
much people are spending in rural and urban Alaska.  The commission                                                             
also included average household incomes in the report.  He directed                                                             
the committee to the Department of Commerce.                                                                                    
                                                                                                                                
MS. KOHLER commented that, in her experience in Naknek, those in                                                                
Bush Alaska spend 15-20 percent of the household's monthly                                                                      
disposable income on energy.  Therefore, the Railbelt spends a much                                                             
smaller component.                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG turned to the hardship issue.  He asked if each                                                               
utility's tariff reflects how that utility handles the hardship or                                                              
is that a uniform rule.                                                                                                         
                                                                                                                                
MS. KOHLER replied that there is no uniform rule.  She explained                                                                
that some utility tariffs address specific scenarios under which                                                                
hardship is triggered.  Typically, each utility is left to construe                                                             
the internal regulations in order to deal with the issue of                                                                     
hardships.  She pointed out that the hardship issue consumes an                                                                 
inordinate percentage of time.  She noted that the utilities are                                                                
very responsive and only with the greatest reluctance will a                                                                    
utility disconnect a consumer for nonpayment.  Ms. Kohler                                                                       
interpreted the intent of the bill to ensure that a hardship                                                                    
customer will always be provided a basic human service, which is                                                                
electricity.  When there are utilities that are no longer the                                                                   
sole-serving utility, there could be very little incentive to serve                                                             
those customers.  As noted earlier, the commission did perform a                                                                
comprehensive survey of all the utilities in the state in order to                                                              
determine whether the commission should institute regulations in                                                                
statute which would require certain hardship non-disconnects.  Ms.                                                              
Kohler felt such would be remiss.  She posed an example in which                                                                
the commission dictated that if the ambient temperature is below 32                                                             
degrees or 20 degrees Fahrenheit, the utility shall not disconnect                                                              
consumers.  One size does not fit all.  There are many consumers                                                                
that would take advantage of such a dictate and cause hardship to                                                               
the utility.  Therefore, [the cost of those taking advantage of the                                                             
system] would be spread throughout those who do not take advantage                                                              
of the system.                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG surmised then that the problem is the lack of a                                                               
uniform rule.  However, if a criteria is established then there is                                                              
more of an opportunity to take advantage of the system.                                                                         
                                                                                                                                
MS. KOHLER indicated agreement.                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG commented that having the legislature dictate                                                                 
this seems to be a common sense approach.  However, the legislature                                                             
runs the risk of having people use the dictate as a loophole to                                                                 
escape their responsibility.                                                                                                    
                                                                                                                                
MS. KOHLER suggested that the legislature could essentially dictate                                                             
that each utility must develop internal rules to address those                                                                  
issues without specifying the parameters.                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG noted that some states have a differential tariff                                                             
for disabled elderly people or lower income people.  Chairman                                                                   
Rokeberg asked Ms. Kohler if she was aware of the legislation                                                                   
introduced by Senator Murkowski [U.S. Senator Frank Murkowski].                                                                 
                                                                                                                                
MS. KOHLER informed the chair that Senator Murkowski had not yet                                                                
introduced the legislation, which is currently in draft.  She noted                                                             
that the draft legislation is on the Senate Energy & Resources                                                                  
Committee website.  Compared with Representative Joe Barton's [U.S.                                                             
Representative Joe Barton] legislation which was introduced a                                                                   
couple of weeks ago, Senator Murkowski's legislation is more                                                                    
streamlined.  Senator Murkowski's legislation supports state's                                                                  
rights with regard to restructuring and proposes to repeal the                                                                  
Public Utilities Holding Companies Act (PUHCA) and the Public                                                                   
Utility Regulatory Policies Act of 1978 (PURPA).                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG pointed out that Senator Murkowski's bill would                                                               
delete the requirement under PURPA to take any power generated.                                                                 
                                                                                                                                
MS. KOHLER explained that PUHCA would basically allow companies to                                                              
merge.  With regard to PURPA contracts, some utilities are paying                                                               
providers of co-generated power or power generated by alternative                                                               
means two to three times what it would cost the utility to purchase                                                             
or generate that utility elsewhere.  Therefore, Senator Murkowski's                                                             
legislation would lighten that requirement.                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked if, under PURPA, utilities have to take the                                                             
power at the cost at which it was generated.                                                                                    
                                                                                                                                
MS. KOHLER interjected, "The utilities avoided cost.  In some cases                                                             
that would include avoided new generation capacity that would have                                                              
to develop at some stage down the road."                                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG surmised then that it would have a higher rate                                                                
potential.                                                                                                                      
                                                                                                                                
MS. KOHLER replied, "Yes or the most expensive alternative form of                                                              
generation, for example."  She explained that one would take the                                                                
most expensive generation plant and project that...                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG understood then, "So even if they had a surplus                                                               
of power, they would even have to shut in their own generation                                                                  
(indisc.)"                                                                                                                      
                                                                                                                                
MS. KOHLER interjected, "They would have to buy the co-generated                                                                
power first."                                                                                                                   
                                                                                                                                
CHAIRMAN ROKEBERG commented that the co-generated power would have                                                              
to be purchased first even if it is at a higher tariff.  Chairman                                                               
Rokeberg mentioned that is overcome for some folks with the                                                                     
separate green power tariff.  In other words, those that want green                                                             
power pay a higher rate.                                                                                                        
                                                                                                                                
MS. KOHLER noted that the alternative power is offered as an option                                                             
by specific utilities, especially in the deregulated states.  Under                                                             
President Clinton's proposed bill, it was proposed that about five                                                              
percent of generation, nationally, would be through renewable                                                                   
resources such as wind.  One issue with that proposed bill was that                                                             
hydropower was excluded from being considered green power.  Ms.                                                                 
Kohler felt that ridiculous because hydropower is the most viable                                                               
green power that Alaska has.                                                                                                    
                                                                                                                                
MS. KOHLER informed the committee that Senator Murkowski's draft                                                                
bill also specifically excludes Alaska from having to be covered by                                                             
the Federal Energy Regulatory Commission (FERC) jurisdiction with                                                               
regard to reliability standards.  She said that Alaska was                                                                      
concerned because the "one size fits all" reliability standards                                                                 
that apply to the large interconnected systems in the Lower 48                                                                  
could simply not apply in Alaska.                                                                                               
                                                                                                                                
MS. KOHLER said, "There is no question that there is not going to                                                               
be a federal restructuring bill this year."  In response to                                                                     
Chairman Rokeberg, Ms. Kohler reiterated that both Senator                                                                      
Murkowski and Representative Barton have introduced legislation.                                                                
Representative Barton's legislation is HR 2944.                                                                                 
                                                                                                                                
Number 301                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked if there were any questions.  There being                                                               
none, he thanked Ms. Kohler and commented that he was intrigued by                                                              
her suggestion of a uniform bill.  He announced that this would                                                                 
conclude this portion of public testimony and HB 81 would be held                                                               
over.  Chairman Rokeberg was concerned about the third amendment,                                                               
and therefore was uncertain with regard to taking action to create                                                              
a committee substitute.  After determining that Representative                                                                  
Brice was no longer present, he announced that there was not a                                                                  
quorum and the amendment would not be taken up.                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG announced that the committee would be taking up                                                               
HB 207 on October 21, 1999, at 10:00 a.m. and at 1:30 p.m. on the                                                               
same day the committee will hear HB 190.  The committee will also                                                               
meet on October 22, 1999, at 10:00 a.m. in order to take up HB 211.                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor & Commerce Committee meeting was adjourned at 12:15 p.m.                                                                  

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