Legislature(2003 - 2004)
02/26/2003 03:21 PM House L&C
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ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 26, 2003
3:21 p.m.
MEMBERS PRESENT
HOUSE LABOR AND COMMERCE
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Nancy Dahlstrom
Representative Carl Gatto
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
SENATE LABOR AND COMMERCE
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Gary Stevens
Senator Bettye Davis
Senator Hollis French
MEMBERS ABSENT
HOUSE LABOR AND COMMERCE
All members present
SENATE LABOR AND COMMERCE
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING
Regulatory Commission of Alaska
Dave Harbour - Anchorage
Mark Johnson - Anchorage
- CONFIRMATION(S) ADVANCED
PREVIOUS ACTION
No previous action to record
WITNESS REGISTER
MARK JOHNSON, Appointee
to the Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified as an appointee to the RCA.
DAVE HARBOUR, Commissioner, Chair
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified as an appointed chair of the RCA.
ACTION NARRATIVE
TAPE 03-14, SIDE A [HOUSE L&C TAPE]
CHAIR CON BUNDE called the joint meeting of the House and Senate
Labor and Commerce Standing Committees to order at 3:21 p.m.
Representatives Anderson, Lynn, Dahlstrom, Gatto, Crawford, and
Guttenberg and Senators Bunde, Stevens, Seekins, Davis, and
French were present at the call to order. Representative
Rokeberg arrived as the meeting was in progress.
CONFIRMATION HEARING
Regulatory Commission of Alaska
CHAIR BUNDE announced that the only order of business would be
the confirmation hearing of two new appointees to the Regulatory
Commission of Alaska (RCA): Dave Harbour and Mark Johnson. He
noted that the committee members should have resumes from the
two appointees.
1.20
MARK JOHNSON, Appointee to the Regulatory Commission of Alaska,
began by informing the committee that he was born in Alaska and
spent most of his life in Alaska. He also informed the
committee that he has a degree in economics, has worked for
Congressman Don Young, and then attended law school. For much
of the 1980s, Mr. Johnson said that he worked as legislative
staff in the Alaska State Legislature. In 1988, he accepted a
position with the Municipality of Anchorage and worked a series
of jobs. Subsequently, he worked in the Office of Enterprise
Activities, which was the oversight agency for all of the
municipally-owned utilities in Anchorage. In the aforementioned
office, he was the owners' representatives as related to the
operation of the utilities. During that time, 1982, there was
an effort to privatize the Anchorage Telephone Utility (ATU),
which led to phone wars. After that he was involved in a
variety of matters related to ATU and other agencies. He then
worked in the mayor's office. Since 1996, Mr. Johnson has
worked for United Utilities, which is the local phone provider
for much of Western Alaska. Mr. Johnson said he has a good
background in some of the inner workings of the
Telecommunications Act of 1996 as well as the enormous volume of
material generated relating to the implementation of that Act.
Mr. Johnson clarified that currently he isn't counsel to the
utility in many, if any, regulatory matters, although he is the
attorney for the company and thus provides general legal counsel
on corporate matters. Mr. Johnson related his belief that he
has a good background to deal with a great many of the issues
that the RCA deals with today as well as an exposure to a
variety of regulated utilities. He said he is honored that the
governor nominated him to this position. Mr. Johnson concluded
by stating that he looked forward to serving and he intended to
do the best he could to listen to the facts and apply the law in
order to make the best possible decisions for this state.
Therefore, bringing about a regulated environment that promotes
economic development, quality service, and an eye toward the
cost to the consumer.
7.46
CHAIR BUNDE turned to Mr. Johnson's work with the telephone
utilities and the legislature, and asked if he foresaw any
potential conflicts with the duties of the RCA.
MR. JOHNSON related that the RCA has adopted some fairly strict
rules relating to ex parte contacts by parties outside the
hearing environment. Mr. Johnson said that he was prepared to
abide by those rules and apply the laws as adopted by the
legislature. He answered that he didn't have any current
conflicts, although there will be a period of time in which he
won't be able to hear cases related to his former employer.
9.39
REPRESENTATIVE GATTO asked if Mr. Johnson believes the RCA
should exist.
MR. JOHNSON opined that an agency such as the RCA is necessary.
All states have some sort of public utility regulatory agency.
The RCA was established because of the need [to avoid a]
monopoly provider. He related his belief that there is also a
need to control the rates and regulate the quality of service.
Furthermore, there is a lot of minutia that the legislature
probably doesn't want to tackle. Although he acknowledged that
there is currently a trend to deregulate, which is expanding to
electric power, there is definitely a need for regulation and
this agency, he opined. He mentioned that this business is an
area that's enormously contentious.
REPRESENTATIVE GATTO posed a situation in which Mr. Johnson is
part of the RCA and the Alaska Communications Systems (ACS) is a
major provider. Furthermore, there are some regulations that
have resulted in ACS giving up some of its business to three
other phone companies. Representative Gatto surmised that at
some point the regulator would need to say that competition does
exist. At what point does one determine that competition does
exist, he asked.
MR. JOHNSON pointed out that sections 251 and 252 of the
Telecommunications Act of 1996 establish the rules upon which
there would be a transition to a deregulated market. For
example, there is an exemption to the reach of deregulation as
it relates to utilities that provide services in rural areas.
He noted that the Act also contains some exemptions that
establish the pricing and thus allow people to engage in
competition through the resale of some elements of the plan or
acquiring those elements wholesale and then selling them to the
consumer. The rules are established at the federal level
through the Federal Communications Commission (FCC) and the RCA
does its best to apply those rules. With regard to how well
that framework is working, the legislature is free to review
that. Mr. Johnson commented that it's complicated and thus
there aren't quick and easy answers.
Number 14.48
REPRESENTATIVE CRAWFORD asked if Mr. Johnson had any bias to
unbridled competition as opposed to regulated competition.
MR. JOHNSON answered that he has no preference. Certainly, the
federal legislation has established a preference toward
deregulation in the provision of local telephone services if
certain market conditions exist. By and large, the state
commissions have been left, on a case-by-case basis, to
determine whether those conditions occur. Personally, Mr.
Johnson said that competition has resulted in some fairly
significant benefits to consumers. There are probably a greater
array of services available today than five years ago and at
costs that are significantly cheaper than five years ago. The
aforementioned competitive environment was the desire of
Congress when enacting the Telecommunications Act of 1996. He
pointed out that the following areas have faced deregulation:
long distance traffic, cell phones, and directories. He opined
that operator services seem to be moving toward deregulation.
Mr. Johnson stated that there are services and markets for which
competition is appropriate and for which he supports. However,
one has to recognize that competition occurring in an
environment that isn't appropriate for the marketplace can be
destructive and the RCA's job is try to balance that.
REPRESENTATIVE CRAWFORD commented that decisions of the RCA can
sometimes result in the economic life or death of the entities
regulated by the RCA. He asked how Mr. Johnson would feel if a
company went out of business if the conditions mandated that the
company was no longer profitable.
MR. JOHNSON replied that one must be concerned that too much
attention is being given to the result. All the RCA can do is
establish rules that make sense. How companies operate and
whether they're ultimately profitable is their business. At the
same time, Mr. Johnson said that he didn't believe the long-term
interests of consumers would be well served by major providers
leaving the market at this time. Competition is present and
[the RCA] needs to ensure that the playing field is level, he
said. Mr. Johnson said that he didn't want providers to leave
the market because he didn't believe it would benefit anyone in
Alaska.
20.30
REPRESENTATIVE LYNN remarked that as a legislator and a consumer
he wants the phone to work and be fixed without hassle, and work
with the lowest rates possible, all under a level playing field.
He inquired as to Mr. Johnson's general comments on the
aforementioned subjects and noted his support of Mr. Johnson's
appointment.
CHAIR ANDERSON informed everyone that yesterday in the Senate
Labor and Commerce Standing Committee meeting ACS and AT&T
Alascom testified that the regulatory policy on implementing
telephone competition has resulted in investment dollars drying
up. He asked if Mr. Johnson viewed this investment problem as
serious and if so, what would he, as a commissioner, do to
prevent it.
MR. JOHNSON acknowledged that telecommunications providers in
Alaska are free to discuss with the legislature their view of
what the policy in terms of intrastate provision of
telecommunications service should be. Its up to the legislature
to determine policy prospectively with regard to whether the
rules should be changed. Personally, Mr. Johnson related his
belief that regulated utilities are an important component of
the infrastructure of this state and there is a need to ensure
that investment dollars continue to flow to that component in
the years ahead. As a member of the RCA, he said it would be
his job to apply the policy set forth by the legislature. Mr.
Johnson commented that he is sensitive to the argument, but
specified that it would require a review of the facts.
24.13
SENATOR FRENCH highlighted that one of the more heated points of
the GCI ACS debate hinges on the connection between the home and
the power pole outside. He related that ACS complains that it
is forced to provide access at far below its cost whereas GCI
points out that the Telecommunications Act of 1996 requires
such. He asked if Mr. Johnson could shed any light on that.
MR. JOHNSON related his understanding that the initial rates for
unbundled local telecommunications were established through an
arbitration proceeding between ACS and GCI in 1997.
Subsequently, there have been a series of proceedings that have
ultimately led to issuance of orders by the RCA, but those
orders have been appealed and are pending in both the state and
federal courts. One way or another, he predicted that the issue
would come before the RCA. Mr. Johnson pointed out that
nationwide there is enormous debate with regard to how the
pricing of the local loop should take place and what the
economic underpinnings of that pricing methodology are. He
identified the aforementioned as the core of much of what the
RCA does. There is no easy answer, he said.
27.14
DAVE HARBOUR, Commissioner, Chair, Regulatory Commission of
Alaska, informed the committee that he began on the payroll of
the RCA the first week in February, pending legislative
confirmation. He commented on the challenge he has faced as a
new commissioner and how his life has changed. For instance, he
no longer has lunch with his friends in the regulated companies
because he believes whether or not the situations are legal, the
appearance and questioning would occur from competitors. Mr.
Harbour said he hopes the legislature will find in him what he
has found in those serving the RCA now: unbelievable dedication
and public service. Having analyzed the situation for three
weeks or so, he felt confident saying that the RCA is about nine
months away from being at critical mass with regard to its
cases.
MR. HARBOUR, in response to the question of whether he is bias,
answered that he is biased in favor of free enterprise, freedom,
and economic competition. He noted that he has always had
concern with regard to too much regulation and too much
government. He informed the committee that during the
[interview] for this position he told staff that if there was
the desire for a particular result for a particular company or
industry, then someone else should be chosen. He explained that
the only way he could face the challenge this position embodies
is to review the record and the evidence in order to make a
logical and fair decision. He mentioned that he was honored to
have been appointed. In conclusion, Mr. Harbour related that
the homework it takes to do this job will be reflective of the
homework he has done with every job he has had.
34.05
CHAIR BUNDE asked if the legislature needs to provide the RCA
with more tools or guidance.
MR. HARBOUR answered, "There may very well be." He pointed out
that legislative hearings on various issues identify areas of
possible improvement.
MR. HARBOUR, drawing on his three weeks of experience with the
RCA, related that he has no criticism to offer. Mr. Harbour
opined that [the legislature] is appointing private citizens
with no more than their reputation to gain or lose to listen to
all the arguments and render a decision. The reality is that
there are many types of industries throughout the state,
although most conversations related to the RCA involve telephone
services, and there is no single answer to every utility. He
mentioned the Public Advocacy Section (PAS) of the RCA, a
separate part of the RCA, which represents the public. He noted
that PAS observes ex parte rules.
CHAIR BUNDE surmised that Mr. Harbour didn't want any help from
the legislature at this time.
38.57
REPRESENTATIVE ROKEBERG asked if PAS is slowing down the
process. He requested that Mr. Harbour discuss the merits and
demerits of this section.
MR. HARBOUR related his observation that PAS has a full plate.
However, by law, the chair of the RCA has the ability to make
assignments to PAS in order to manage its workload. There is no
reason for PAS, which is aided by professional attorneys
general, to be involved in every docket. Therefore, it becomes
a management decision with regard to which dockets they are
involved in. Technically, if a professional public advocate was
assigned to every single docket, the process would be slowed.
However, he believes it has been judiciously assigned. He said
that he hasn't seen any cases in which PAS has slowed the
decision-making. However, he has seen the parties slow the
process by making motions that lengthen the process, which is
similar to what occurs in the courtroom. Although it's in
management's ability to manage the workload of PAS, it is not in
management's ability to manage the position or outcome of the
work.
REPRESENTATIVE ROKEBERG recollected that in the last couple of
years about 19 new staff members have been added to the RCA. He
asked if Mr. Harbour has been there long enough to determine
whether more help is necessary.
MR. HARBOUR mentioned the difficulties faced by the RCA with
regard to obtaining and keeping good employees. He suggested
that perhaps in the future the legislature will look toward
classifying the positions in agencies such as the RCA in order
to ensure that continuity with staff is kept. Mr. Harbour
stressed that the regulated community wants knowledgeable,
unbiased people who don't have to spend hours to catch up with
their predecessor's knowledge of a case.
44.21
REPRESENTATIVE ROKEBERG asked if Mr. Johnson has had a chance to
review the FCC's ruling, which he understood to grant more
regulatory power to the states, last week. If so, will it have
a negative impact, he asked.
MR. JOHNSON related his understanding, via a press release, that
the FCC met in public session. To his knowledge, the order that
was supposedly adopted isn't out yet. From his experience, what
is in the order is what counts and until the order is out it's
unwise to speculate. However, he related his belief that this
commission has sufficiently dealt with the issues addressed in
the FCC's order and thus it won't impose an unnecessary burden.
From the press release, Mr. Johnson gathered that it may be more
of a clarification of where the FCC thought the decision-making
process should take place. Mr. Johnson echoed his earlier
testimony regarding his sensitivity to the need for investment
in the state's regulated utilities, however, based on his
efforts so far he didn't believe that the order approved by the
FCC would result in a significant impact.
CHAIR BUNDE noted that there has been discussion of changing the
structure of the RCA by the addition of an executive director.
TAPE 03-14, SIDE B [HOUSE L&C TAPE]
MR. HARBOUR acknowledged that the agency had that [structure] in
the past. The way in which the RCA works now is that the
commissioners function as fairly independent commissioners
within the agency and use paralegals and other staff offices to
do research, formulate orders, maintain schedules, et cetera.
Mr. Harbour suggested that if the commissioners saw the need for
a chief of staff to help with the coordination process of
dealing with the staff, the legislature would be well-advised to
obtain that counsel from the commissioners rather than impose it
on the commission by law.
MR. JOHNSON said that he hasn't had the benefit of working at
the RCA and thus wouldn't know how the current situation works.
He suggested moving slowly and noted that he was prepared to
live in either environment.
44.26
SENATOR DAVIS recalled that one of the appointees mentioned that
the cases are assigned by the chair of the [RCA]. She indicated
that such is a new process. In the past, she recalled that the
person chosen [as chair] was chosen by the members of the
commission and the chair's position didn't carry the
responsibility that it does now. She inquired as to the
thoughts of the appointees on this matter.
MR. HARBOUR recalled that the governor used to appoint the chair
of the RCA, but the legislature changed it such that the members
elect the chair on an annual basis. By statute, the chair has a
lot of flexibility in areas such as assigning the dockets. Mr.
Harbor explained that the chair assigns the dockets and with
five commissioners dealing with approximately 160 dockets a
year, [a commissioner] knows that he/she will be a docket
manager for about a third of those and serve as a panel member
for other dockets. The panel itself isn't given full credit for
all the work done because the commission acts as a whole.
MR. JOHNSON said that he doesn't know enough to comment.
MR. HARBOUR said he could see why this organization would be of
legislative interest. He remarked that as a new person he was
more concerned with understanding the issues.
41.35
REPRESENTATIVE ROKEBERG asked if there is any room for
electrical deregulation in Alaska. He also asked if either
appointee knew why electrical deregulation worked in
Pennsylvania but failed in California.
MR. HARBOUR turned to California and remarked that some say
partial deregulation isn't deregulation. He noted that experts
have different views on this based on the level of knowledge of
the situation. Mr. Harbour pointed out that he would have to
become intimate with the water and sewer situation in a village
in order to make a decision on a docket.
MR. JOHNSON, with regard to whether there is room for
deregulation of electrical service in Alaska, acknowledged that
it's a hot topic in the Lower 48. However, he said he
understood the provision of power in the Lower 48 to be
fundamentally different because the grid is more developed than
in Alaska. The Lower 48 truly has a grid whereas Alaska has a
series of appendages. He characterized electrical service
deregulation as the next wave. As in the case of telephone
service, [the state] should be alert to those circumstances and
market places where it makes sense to explore deregulation. The
only thing that Mr. Johnson had heard about electrical
deregulation in California was that it was done in the worst
possible way.
REPRESENTATIVE ROKEBERG noted that the old Alaska Public
Utilities Commission and the legislature commissioned a study on
the issue [of electric utility deregulation]. He said it would
be worth some review. Representative Rokeberg related the
request from the electrical utilities to split the RCA into two
separate entities, one which would deal with (indisc.) cases and
dockets and the other would handle electrical dockets. He
inquired as to the opinions of the appointees.
MR. HARBOUR opined that the legislature is well served in having
an independent agency to regulate the details. The job of the
regulatory agency is to issue a certificate of public
convenience and necessity based on the applicant being fit,
willing, and able to provide the service and regulate it over
time. If there was complete deregulation, who would one call
with a complaint, he questioned. The regulatory agency tries to
protect the interest of the consumer and ensure that there is
viable competition in the marketplace. Therefore, one hopes
that the person making the decisions is beyond influence.
MR. JOHNSON, in regard to splitting the agency, said that it's
the legislature's call. However, he said he believes it would
result inefficiencies. The RCA is a good collection of
professionals. Although the telecommunications issues are
contentious, he expressed his hope that it would produce fewer
dockets in the years ahead. He mentioned that is one of his
goals is to look at ways in which rules can be established in a
marketplace such that companies will be able to move forward
without constantly coming to the RCA. He suggested that a
commission that only reviewed telecommunications matters would
be extremely narrow in focus and could create more work.
31.13
CHAIR BUNDE reminded the committee that forwarding these names
to the joint session for confirmation doesn't reflect the intent
of any member's vote. [Although there was no formal motion, the
names of Mark Johnson and Dave Harbour were treated as advanced
from the House and Senate Labor and Commerce Standing
Committees.]
ADJOURNMENT
There being no further business, the joint meeting of the House
and Senate Labor and Commerce Standing Committees was adjourned
at 4:23 p.m.
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