Legislature(2003 - 2004)
04/23/2003 10:00 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 23, 2003
10:00 AM
TAPES
SFC-03 # 62, Side A
SFC 03 # 62, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 10:00
AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Robin Taylor
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: MATT ROBUS, Acting Director, Division of Wildlife
Conversation, Department of Fish and Game; ERIC YOULD, Executive
Director, Alaska Rural Electric Cooperative Association, Inc.;
KRISTI CATLIN, Director, Government Affairs, AT&T Alascom; MARIE
DARLIN, AARP Capital City Task Force; DANA TINDALL, Senior Vice
President, Legal and Regulatory Affairs, General Communications
Incorporated; LEONARD STIENBERG, Vice President and General
Council, Alaska Communication System; DAVE HARBOUR, Chair,
Regulatory Commission of Alaska;
Attending via Teleconference: From Mat-Su: ROBERT DORAN; PAM
KRIEBER, Owner, Valley Refuse, Inc.
SUMMARY INFORMATION
SB 128-COMMON CARRIER LIQUOR LICENSE
The Committee rescinded its earlier action to report the bill from
Committee, adopted a committee substitute and reported the bill
from Committee.
SB 147-CONTROL OF NUISANCE WILD ANIMALS
The Committee heard from the sponsor, the Department of Fish and
Game and a member of the public. The bill was held in Committee.
SB 172-LIMIT ON OIL & GAS LEASE ACREAGE
The Committee heard from industry representatives, the AARP and the
Regulatory Commission of Alaska. The bill was held in Committee.
SENATE BILL NO. 128
"An Act relating to licensing common carriers to dispense
alcoholic beverages; and providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken informed that the proposed committee substitute was
not adopted at the previous hearing as intended.
Senator Taylor moved to rescind the Committee's action in reporting
the bill from Committee.
Without objection the action to report the bill from Committee was
RESCINDED.
Senator Taylor offered a motion to report SB 128, 23-LS0757\H from
Committee.
There was no objection and CS SB 128 (FIN) was REPORTED from
Committee with individual recommendations and a new zero fiscal
note from the Department of Revenue dated 4/22/03.
SENATE BILL NO. 147
"An Act relating to control of nuisance wild animals; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained this bill sponsored by Co-Chair Green,
"allows the Alaska Board of Game to issue permits or licenses to
control nuisance wild birds or small animals."
Co-Chair Green informed that residents sometimes incur nuisance
"critters" on their property and are unable or unwilling to remove
the animals themselves without assistance. She stated that current
statute does not allow another party, other than certain State
employees, to provide such assistance without obtaining a separate
permit for each incidence.
Co-Chair Green remarked that this legislation would create a
professional license for parties interested in providing this
assistance as a service. She noted the license holders would be
apprised of pertinent laws and regulations and would be required to
uphold those rules.
Co-Chair Green opined this license would provide a "reasonable way
for people to control nuisance critters and animals around their
property."
Senator Taylor referenced language in Section 2 on page 3 lines 3
5, which read as follows.
?The commissioner also may issue without cost a permit for the
noncommercial control of nuisance wild birds or nuisance wild
small mammals
Senator Taylor indicated "small" is also contained in conforming
language on page 3, line 21. He suggested deletion of "small" from
the bill, unless it is a "technical definition of a classification
of animals". He surmised that giving "a broader perspective or
opportunity" for professionals to assist residents with nuisance
animals would be preferred.
Co-Chair Green deferred to the Department of Fish and Game to
explain the definition of small mammals.
Senator Bunde pointed out that current State statute and
regulations refer to small and large game animals, and that the
language in this legislation could be a reflection of existing
definitions. He stated that currently Department of Fish and Game
or other law enforcement officials handle incidences of aggressive
moose.
MATT ROBUS, Acting Director, Division of Wildlife Conversation,
Department of Fish and Game stated the clarification of "small"
mammals is to limit the scope of the commercial operators and
individual permitees' activities. He exampled a moose entangled in
a fence and the necessity that professional biologists or law
enforcement personnel with past experience respond to the
situation. He added that these situations "usually involve into a
public safety issue" in which the Department currently has
statutory jurisdiction. He noted this legislation would allow other
nuisance animals to be addressed, such as river otter raiding
domestic poultry.
Mr. Robus recommended retaining the language limiting the
provisions of this bill to small mammals and wild birds.
Senator Taylor was unsure why this program would not be
administered in the same fashion without the restriction to small
animals. He suggested contracts could be entered into with private
individuals to address situations with large animals and that it is
not necessary that action should be limited to State employees. He
spoke of road kill of moose and the distribution of meat harvested
from these incidences.
Mr. Robus noted that incidences with larger animals cause public
safety issues and informed that the Department currently has
authority and enters into contracts with private citizens to
address these situations. He specified that the Department lacks
authority to issue permits to address incidences involving birds
and smaller mammals. He did not oppose inclusion of small and
"medium" size animals.
Senator Taylor reiterated the provision should be broad to allow
for unexpected circumstances.
Mr. Robus then testified in favor of the legislation, as it would
provide the ability to address situations that could not be
addressed in the past. He told of issues with migratory birds
whereby the federal government has requested assistance with
addressing nuisance birds, although the Department has been unable
to issue permits to private parties.
Mr. Robus informed that the bill contains two "pathways", one being
a commercial license that would allow a private party to offer
nuisance animal control services to the public. He noted the fee
for this license would be $100 and that interest in providing this
service has been expressed. He predicted the program would have a
"slow start" and therefore incur minimal Department expense. The
second pathway, he stated, would allow the Department to issue
permits to private individuals to deal with individual nuisance
animal situations. He noted this process would be similar to the
Department's issuance of public safety permit and scientific
educational permits.
Mr. Robus stated the Department would apply the same case-by-case
guidelines used to determine "defense of life and property"
justifications in that non-lethal options would be considered
before a permit would be issued to kill an animal.
Mr. Robus expressed concern with transitioning this legislation to
include all animals emphasizing that although all wildlife has
value, larger game animals also provide meat and have a trophy
value. Although bears, etc, could be a nuisance, he assured that
other options are available for dealing with large problem animals
safely and effectively. He was reluctant to place a commercial
operator in the position of making safety determinations. He
appreciated Senator Taylor's efforts to provide flexibility
although the Department's intent is to address small nuisance
animals.
ROBERT DORAN testified via teleconference from Mat-Su that he has
found that agencies do not have adequate time or personnel to
address problems with small nuisance animals and the affected
public is unable to take action for various reasons. He assured he
did not intent to "step into the role of biologist" but rather
offer a service to the public to address nuisance animals.
Senator Bunde, referencing Senator Taylor's earlier comments, asked
if the intent of this legislation is to cover large killed animals,
as he understood a program already exists to remove and harvest
meat from animals struck and killed by vehicles.
Co-Chair Green asserted her intent is to address only living
nuisance animals.
Mr. Robus affirmed a system exists to address killed animals.
Senator Taylor spoke of injured large animals and the inability to
end suffering until "someone with a badge" arrives. He suggested
private contractors could be available to address the matter of
large injured animals.
Co-Chair Wilken indicated Mr. Robus could respond to this query at
a future hearing on this bill.
Senator Olson requested an opportunity to offer Amendment #1.
Co-Chair Wilken stated the amendment would be addressed later.
Co-Chair Wilken ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 72(L&C)
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken announced that Senator Bunde would chair the
portion of the meeting covering this legislation. Co-Chair Wilken
noted he is involved with Fairbanks Sewer and Water, an entity
regulated by the Regulatory Commission of Alaska (RCA). He stated
he would not participate in debate but retained his right to cast
votes pertaining to this bill.
AT EASE 10:25 AM / 10:25 AM
ERIC YOULD, Executive Director, Alaska Rural Electric Cooperative
Association, Inc. (AERCA), testified that this trade association
represents electric utilities, which generate approximately 90
percent of the electricity in Alaska. He reminded that during a
special legislative session the previous year, the RCA was granted
a one-year extension and established a subcommittee of the
"Legislature or other entities" charged with reviewing issues
related to the RCA and issuing a recommendation to the Legislature
on methods to streamline the process. He asserted such a committee
was never established although the Division of Legislative Audit
conducted an audit and concluded that "amongst changes that did
need to be made," the Commission should be extended two years
rather than the three years proposed in this legislation.
Mr. Yould expressed that the members of ARECA have "for quite some
time" called for changes to the RCA to streamline the process
relating to electric utilities. As a result of these requests, he
stated the RCA held sessions to propose legislation to accomplish
this, although he was unsure whether these changes would assist
other utilities.
Mr. Yould informed that ARECA recommendations were submitted to the
previous committee that heard this bill, although that committee
chose to pass the Governor's version. He requested that if this
legislation is not amended, the RCA be granted a one-year extension
to allow amendments to be offered at the expiration of that sunset
date.
Senator Taylor understood that a committee was formed, as specified
in the special session legislation to review the RCA and that a
report has been submitted.
Mr. Yould admitted the committee met and submitted a report
although he had not seen it.
Senator Taylor requested the witness' proposed amendments for
review.
[Note: Amendments were not provided at the time of this hearing,
although are repeatedly mentioned.]
Mr. Yould indicated he would provide them.
KRISTI CATLIN, Director, Government Affairs, AT&T Alascom, read her
written testimony into the record as follows.
Thank you for the opportunity to testify at this hearing. As
you know, AT&T Alascom, and before that, Alascom, has a long
history of providing telecommunications services to the state
of Alaska. In fact, it has the longest history of any
interexchange carrier in the state today. It is from those
very roots, and having witnessed the broad changes in
technology and market shift over the years, that we would like
to offer our perspective and respectfully make some requests
for the legislature to consider.
We believe that both telecom service providers and policy-
makers have a two-fold obligation to the constituents of this
state. Those are: ensuring that basic telecom services remain
affordable to everyone in the state; and providing a
regulatory environment that fosters continued investment in
the state telecom infrastructure, thereby ensuring that
advanced services will reach all parts of the state.
In the early days, Alascom was the only long distance carrier
in Alaska, and as such, the regulated monopoly. Regulations
were put in place to ensure that Alascom did not misuse its
monopoly power in pricing its services to consumers. In
addition, in 1991, when intrastate long distance competition
was initiated, additional regulations were developed to ensure
that Alascom did not misuse its monopoly power to subvert
competition. At the same time, new entrants to the long
distance market were granted broad and significant freedoms.
And even though the market was highly competitive in 1995 when
AT&T bought Alascom, for the most part, it bought a company
regulated as though it were a monopoly. As we all know, the
regulations governing utilities with a legal monopoly work in
two directions: they protect the consumer from unreasonable
prices on one side of the equation, and they ensure a
reasonable return for the regulated entity on the other side.
Without a reasonable return, companies do not invest and
services, therefore, do not advance.
Many of the regulations which restrict AT&T Alascom today are
vestiges of that monopolistic environment I spoke of
previously. However, in this highly competitive marketplace,
they do not serve as an incentive for investment they only
serve to add cost and thereby provide a disincentive for
investment. As far as protection of the consumer prices, we
have almost 20 years of empirical evidence in the long
distance market in the US to show that competition serves the
consumer well. In 1984, when AT&T was first broken up, the
average discounted corporate minute was around $.45. Today,
the average discounted corporate minute is under $.045. That's
a whole order of magnitude swing. And yet, during that same
time period, the long distance industry went from
approximately $9 10B to about $90 110B. It was deregulation
of the industry and the management of competition that spurred
investment. And in 1995, when AT&T fell below 60% market share
in the Lower 48, the FCC ceased regulating AT&T as the
"dominant carrier" and deemed the market for long distance as
"competitive".
And yet, here in Alaska, where AT&T Alascom has 42% of the
long distance business (and shrinking), and our largest
competitor, GCI, has 46-48% of the long distance business (and
growing), AT&T Alascom is still considered the dominant
carrier, despite a four-year attempt to get relief from this
regulation at the RCA. This regulation adds substantially to
our cost structure for tracking, journalization, and
reporting. It also adds regulatory process that our
competitors don't have that keeps us from being competitive in
the marketplace. The whole situation really begs a definition
for "dominance". Additionally, with the increased costs and
inability to compete effectively because of outdated
regulations, our ability to attract capital and invest in the
network is severely "hamstrung".
I believe that over the next 12-18 months, this state must
wrestle with some difficult issues of telecom regulation. At
stake is the very survival of an infrastructure that's
struggling to keep up with the rest of the country. In a true
free market, there is less regulation, not more. And
competition, not regulation, becomes the force to shape the
market.
I would ask you to carefully and thoughtfully consider the
market dynamics at work here, and the definitions of broader
market issues such as "dominance" and "competition". I would
also ask you to carefully consider your role in mandating an
environment that has less regulation, not more, in order to
create an maintain incentives to invest in the modern
telecommunications infrastructure that all Alaskans desire.
As you consider Senate Bill 72 reauthorizing the RCA, please
know that AT&T Alascom could support legislation which would
extend the RCA for another 2-4 years, however, as we stated
last year only if the RCA is truly committed to bringing
about regulatory reform. Status quo is not an option, if you
intend to have a healthy, competitive telecom market and
infrastructure in Alaska. We have drafted appropriate language
to assist the legislature in defining "dominance," and are
submitting it for your consideration.
Senator Bunde surmised the witness is requesting that the
Legislature to perform the RCA's duties in determining rate
structures.
Ms. Catlin informed that the corporation has requested the RCA to
"deal with dominance and the entire issue around market structure
in Alaska." She assured that the proposed amendments would not "set
rates".
Senator Bunde warned this could be paramount to opening "Pandora's
Box," suggesting that once the Legislature became involved, it
would begin to set rates.
Ms. Catlin clarified the request to have the Legislature establish
for the RCA, "a definition to work with," which the RCA could
utilize to make policy.
Senator Taylor relayed he has given considerable consideration to
this issue. He asked if any Committee member intended to sponsor
the witness's proposed amendment.
Co-Chair Green announced she would offer the proposed amendment.
Senator Taylor indicated he would also be willing to offer the
amendment. He opined it is time the Legislature establish policy
for the RCA. He disapproved of a regulatory board setting its own
policy and adopting regulations to that policy without legislative
guidance.
MARIE DARLIN, AARP Capital City Task Force, referenced a letter
from the organization supporting this legislation. [Copy on file]
She expressed the RCA is important to all AARP members and other
Alaskan residents because it is a "place of last resort." She
explained that consumers depend on the RCA in events of unresolved
disputes with utility companies. She advocated consumers' rights to
affordable rates and access to basic necessities such as utilities
and communications. She noted the organization does not oppose the
change of the termination date from 2007 to 2006 contained in the
committee substitute, stressing the primary concern is that the RCA
is extended and does not sunset.
Senator Bunde expressed interest in receiving feedback regarding
the proposed amendments.
Ms. Darlin indicated the organization members had not had an
opportunity to review the proposed amendments and therefore had
taken no position to date.
DANA TINDALL, Senior Vice President, Legal and Regulatory Affairs,
General Communications Incorporated (GCI) testified in support of
extending the termination date of the RCA and adopting this
legislation without amendments. She noted the recent appointments
of two commissioners, along with the resignation of another, would
result in a 60 percent change to the membership of the commission.
Ms. Tindall encouraged a four-year extension, given the efforts
required to address this matter annually. She opined the repeated
attention has "created a chill on the regulatory agency."
Ms. Tindall surmised the proposed amendments are either
administrative changes or are efforts to deregulate utilities. She
suggested the administrative changes could be made without
statutory action. She opined that deregulation would not benefit
the public and would lead to increased consumer rates or the
elimination of competition.
Senator Bunde requested written comments on the proposed
amendments.
Senator Bunde asked if GCI and AT&T Alascom are in competition.
Ms. Tindall clarified the two corporations along with Alaska
Communications Systems (ACS) compete to provide long distance
services.
Ms. Tindall expressed opposition to the proposed amendments
recommended by AT&T Alascom.
Senator Taylor asked the witness' definition of "dominance in the
market" and whether it is based on a percentage of calls.
Ms. Tindall explained dominance "is based on the amount of market
power a given carrier or utility will have in a market." She
explained that because AT&T Alascom serves 150 communities in
Alaska with a Federal Communications Commission (FCC) mandated
monopoly, that company continues to be regulated as a dominant
carrier. She informed that as a dominant carrier, AT&T Alascom
could not increase rates without approval from the RCA. She noted
that the proposed amendments of AT&T Alascom would essentially
deregulate that carrier and "free them to increase rates throughout
the State without RCA approval."
Senator Bunde requested written comments from AT&T Alascom
regarding this discussion.
LEONARD STIENBERG, Vice President and General Council, Alaska
Communication Systems (ACS), testified against the reauthorization
of the RCA without "further policy guidance". He expressed that
"great and severe" problems exist in the local exchange markets
that are the result of "short-sighted and one-sided pro-regulatory
policies" set forth by appointed regulators rather than by elected
officials. He favored elected officials making major policy
decisions.
Mr. Steinberg asserted that the "misguided policies" of the RCA
have resulted in the "rapid and significant erosion [of] markets
for this company; but more importantly, harm to the Alaskan
consumers, as ACS has lost market share." He detailed the declining
revenues and declining return on investments and warned that the
ACS returns are "so low today, that we really cannot justify
further investment. We also cannot even maintain historical levels
of services."
Mr. Steinberg requested the Legislature provide guidance relating
to how facility prices should be set to ensure ACS receive a fair
price and are not forced to lease facilities at an amount below the
costs. He emphasized that the Legislature should not actually set
the prices.
SFC 03 # 62, Side B 10:48 AM
Mr. Steinberg continued that in fully competitive markets, such as
Anchorage, where ACS only holds approximately 50 percent of the
market, the burdens of regulation are "probably no longer
appropriate and the Legislature should take a deregulatory stance."
Senator Bunde asked clarification whether the Legislature should
sit as the RCA or to provide guidance.
Mr. Steinberg responded the Legislature should provide further
guidance to the RCA. He noted legislation would be required to
allow this to occur. He clarified the Legislature should not set
prices or adjudicate matters.
Senator Taylor requested the witness explain proposed amendments.
[Note: amendments not provided.]
Mr. Steinberg addressed two provisions contained in the proposed
amendments, one pertaining to regulated proceedings for State
pricing purposes and leasing of facilities. He stated the
depreciation rates allowed "in those contexts" should be the amount
allowed by the Internal Revenue Service (IRS) for federal tax
purposes. He asserted, "This is a fair and equitable way to deal
with depreciation." He relayed "some very negative experiences"
with the RCA concerning how ACS facilities are depreciated,
stressing the Commission "is going off in the wrong direction and
this is an area where policy guidance would be appropriate."
Mr. Steinberg spoke to the second part of the proposed amendment
relating to the pricing of the facilities, the mechanisms of which
are somewhat complicated. He explained that the obligation of ACS
to share its facilities are contained in federal law, which also
establishes "some very broad" pricing guidelines that leave "a
great deal of discretion to the States." He suggested further
guidance is appropriate in this matter.
DAVE HARBOUR, Chair, Regulatory Commission of Alaska (RCA),
supported the legislation to extend the termination date of the
RCA. He noted the testimony at this hearing was given by lobbyists
proposing changes that would benefit their companies. He opined
that the proposed amendments have "important frailties".
Mr. Harbour reiterated earlier comments that the goal of the RCA is
to protect consumers, and added that the RCA is also required to
ensure that the utilities have the opportunity to make a fair
return. He emphasized the RCA is not intended to guarantee returns,
but rather has an obligation to provide opportunity to achieve
returns.
Mr. Harbour referenced the Darby report and took issue with some of
its findings contained in the Senate portion. He pointed out that
the RCA was not consulted in the research process and as a result,
updated information readily available on the Internet was not
included.
Mr. Harbour informed that the recommendations made in reports
issued by the Division of Legislative Audit are more helpful to the
RCA. He assured that the suggestions for improvement proposed in
the previous two audits have been accepted and have either been
implemented or are in the process of implementation.
Mr. Harbour addressed the IRS depreciation rates and dominance of
market, stating "this puts us in a little bit of a disadvantage,"
as the lobbyists "well know" that open dockets are currently before
the Commission relating to these issues, and that the RCA is
committed to being unbiased and fair in making determinations on
those dockets. Therefore, he stated he could not testify to
"legislative principles" that could pertain to the subjects of
these dockets. He asserted, "In general I will tell you that there
is more than meets the eye in a few innocent looking paragraphs of
amendments."
PAM KRIEBER, Co-Owner, Valley Refuse, Inc., testified via
teleconference from Mat-Su to voice support for extension of the
RCA and to request continued regulation of refuge services by the
Commission. She referenced written testimony she submitted [copy on
file] and read another statement into the record as follows.
I own Valley Refuse, Inc. Valley Refuse is a small refuse
utility in the Mat-Su Valley. My business partner, Phil Horton
and I are 20-year Alaskans. We've been in business now for
over nine years and we have over 3,000 satisfied customers
here in the Valley, the majority of which are residential
households.
The Regulatory Commission oversees utilities in the state of
Alaska, as we all know. That's why we're here today. The RCA
ensures that utility rates charged to customers are fair, just
and reasonable. The RCA also ensures that fair trade practices
are followed by utilities operating in competition with each
other. The RCA is charged with this duty because, by State
statutes, certificated utilities are exempt from State anti-
trust laws and the jurisdiction of the Alaska Attorney
General.
Garbage companies are regulated utilities. Waste Management,
Inc. owns the largest refuse hauling utility in each
geographic region of Alaska. Waste Management is a Houston
Texas based company and is the largest refuse hauler in the
United States. When you compare the refuse companies currently
operating in Alaska, in terms of gross operating revenues, net
income, value of assets available in the State, purchasing
power for new equipment and availability of expert legal
council, Waste Management has no peers.
Valley Refuse competes against Waste Management in the Mat-Su
Borough through economically regulated competition. This means
that the Regulatory Commission reviews the rates charged by
both Valley Refuse and Waste Management to ensure that these
rates are based on the costs incurred in providing service. In
other words, economic regulation means that utilities with
overlapping service areas cannot lower their rates to levels
below the cost of providing that service.
Please, I ask you, do not allow language into this bill, which
would provide for a blanket deregulation of any and all
utilities in areas where competition is currently managed by
the Regulatory Commission. RCA rate reviews prevent predatory
pricing. Waste Management has tried repeatedly for the last
five years to deregulate refuse hauling. To date their efforts
have failed.
In my letter of April 18, I outlined the repeated attempts, I
will not reiterate them in this testimony but I will add that
I have copies of all the public documents cited and I will
gladly provide copies upon request.
If you can imagine it would certainly be in Waste Management's
best interest to be exempt from the scrutiny of the Regulatory
Commission and the State of Alaska Attorney General. If there
were no State oversight of this monster company, Waste
Management could price their service well below the cost of
providing that service, even providing free refuse service and
operate at a loss long enough to drive a competitor out of
business in any region they chose to target. This would take
less time then you might imagine, at the most 12 to 18 months.
Then with their competition eliminated and potential
competitors intimidated, they would be free to increase the
rates to levels high enough to make up for the losses
sustained and maximize their profits. The end result of this
would be Alaskan citizens paying inflated rates for the refuse
services and bankruptcy for smaller Alaskan businesses.
Please take a stand for these small Alaskan businesses like
mine. Do not deregulate refuse hauling.
Senator Bunde ordered the bill HELD in Committee.
ADJOURNMENT
Vice-Chair Bunde adjourned the meeting at 11:01 AM
| Document Name | Date/Time | Subjects |
|---|