08/31/2009 10:04 AM Senate FIN

                  SENATE FINANCE COMMITTEE                                                                                      
                      August 31, 2009                                                                                           
                          10:05 AM                                                                                              
                       Teleconference                                                                                           
                                                                                                                                
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 10:05 am from Sitka.                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Karla Shoefield, Legislative Affairs  Agency; Nick Szymoniak,                                                                   
Institute of Social and Economic  Research, (ISER) University                                                                   
of Alaska, Anchorage.                                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
^RSA FOR ISER FUEL COST STUDY                                                                                                   
                                                                                                                                
[Due  to technical  difficulties  no audio  is available  for                                                                   
this meeting.]                                                                                                                  
                                                                                                                                
Co-Chair Stedman  explained that  the purpose of  the meeting                                                                   
was  to  consider  a  reimbursable  service  agreement  (RSA)                                                                   
between  the Senate Finance  Committee  and the Institute  of                                                                   
Social and  Economic Research,  (ISER) University  of Alaska,                                                                   
Anchorage.  The  RSA would  transfer  $49,958  to update  and                                                                   
expand the previous "Component  of Fuel Costs" study of 2008.                                                                   
The report would be due on January  19, 2010, but the project                                                                   
would remain  open until  April, 18, 2010  in case  there are                                                                   
questions by the committee.                                                                                                     
                                                                                                                                
Co-Chair  Hoffman MOVED  to  approve the  scoop  of work  and                                                                   
budget for  the components  of fuel cost  number three  to be                                                                   
performed by  the Institute of  Social and Economic  Research                                                                   
in  the amount  of  $49,958.  Co-Chair Stedman  OBJECTED  for                                                                   
purpose of discussion.                                                                                                          
                                                                                                                                
Senator Huggins  clarified that  the funding source  would be                                                                   
the Senate Finance Committee.  Co-Chair Stedman confirmed and                                                                   
explained  that appropriations  over $25.0  need approval  by                                                                   
the  full committee.  He observed  that  the expansion  would                                                                   
also  include propane.  The intent  is to  look at  petroleum                                                                   
energy sources  with a holistic  view of the entire  state by                                                                   
region  since each  region  operates under  different  market                                                                   
prices. He  observed that oil  prices have topped $70  in the                                                                   
recent past.                                                                                                                    
                                                                                                                                
Senator  Huggins  spoke  in  support   of  the  proposal  and                                                                   
questioned if it should be liaise  with a look at instate gas                                                                   
by  Harry  Noah  since  their  tasks  are  similar.  Co-Chair                                                                   
Stedman  observed that  the  intent is  to  look at  existing                                                                   
forces such as pricing and market  forces, margins, shipping,                                                                   
and  any  inequities   or  inefficiencies  rather   than  new                                                                   
sources.  Senator Huggins  pointed out  that identifying  the                                                                   
baseline  price   would  help  to  establish   what  is  cost                                                                   
effective, which is one of the tasks given to Harry Noah.                                                                       
                                                                                                                                
Senator Ellis relayed that he was in support of the motion.                                                                     
                                                                                                                                
Senator Egan asked  if there were any fuel  distributors that                                                                   
were not included.                                                                                                              
                                                                                                                                
NICK SZYMONIAK,  INSTITUTE OF  SOCIAL AND ECONOMIC  RESEARCH,                                                                   
UNIVERSITY  OF ALASKA, ANCHORAGE  noted that  not all  of the                                                                   
small distributors  were included in the proposal,  but added                                                                   
that he would look into them.                                                                                                   
                                                                                                                                
Co-Chair Stedman  referred to  a breakdown in  contract costs                                                                   
provided by  ISER (copy  on file).  Four hundred dollars  was                                                                   
included  for long  distance  phone charges.  He  asked if  a                                                                   
line-item  phone  bill  would  be  submitted.  Mr.  Szymoniak                                                                   
explained  that the phone  charges would  be incurred  by his                                                                   
office   to   contact   communities  in   order   to   update                                                                   
information.                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked for more information  on the expected                                                                   
$10.0 contract activities of Mark  Smith (formerly of Crowley                                                                   
and Yukon  Fuel). Mr.  Szymoniak observed  that the  contract                                                                   
amount  and   activities  of   Mr.  Smith  are   still  being                                                                   
negotiated  and that  any surplus  would be  returned to  the                                                                   
Senate Finance Committee.  He stressed that Mr.  Smith is the                                                                   
best available expert.                                                                                                          
                                                                                                                                
Co-Chair Hoffman stated he looked  forward to a more detailed                                                                   
report.                                                                                                                         
                                                                                                                                
A roll  call  vote was  taken on  the motion  for the  Senate                                                                   
Finance Committee to enter into  a RSA with the University of                                                                   
Alaska's ISER in  the amount of $49,958 for the  purpose of a                                                                   
fuel cost study.                                                                                                                
                                                                                                                                
IN FAVOR: Egan, Ellis, Huggins, Hoffman, Stedman                                                                                
OPPOSED: None                                                                                                                   
                                                                                                                                
Senators Thomas and Olson were absent from the vote.                                                                            
                                                                                                                                
The MOTION PASSED (5-0).                                                                                                        
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:12 AM