Legislature(1999 - 2000)
02/18/1999 01:37 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
February 18, 1999
1:37 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Chairman
Senator Dave Donley
Senator Loren Leman
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Tim Kelly, Vice Chairman
OTHER MEMBERS PRESENT
Senator Pete Kelly
COMMITTEE CALENDAR
SENATE BILL NO. 50
"An Act relating to certain boiler and pressure vessel inspections
and inspectors; and providing for an effective date."
-MOVED SB 50 OUT OF COMMITTEE
SENATE BILL NO. 47
"An Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
-HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SB 50 - No previous Senate action.
SB 47 - No previous Senate action.
WITNESS REGISTER
Mr. Dwight Perkins, Deputy Commissioner
Department of Labor
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Supported SB 50
Mr. Sam Cotton, Chairman
Alaska Public Utilities Commission
Anchorage, AK
POSITION STATEMENT: Supported SB 47.
Mr. James Rowe
Alaska Telephone Association
201 E 56th Ave #114
Anchorage, AK 99507
POSITION STATEMENT: Supported SB 47.
Mr. George Gordon
College Utilities Corporation
Box 80370
College, AK 99708
POSITION STATEMENT: Commented on SB 47.
Mr. Steve Merriam
Copper Valley Telephone Cooperative
PO Box 337
Valdez, AK 99686
POSITION STATEMENT: Supported SB 47.
Mr. Robert Dunn
Telalaska
2121 Abbot Rd
Anchorage, AK 99507
POSITION STATEMENT: Supported SB 47.
Mr. Charles McKee
PO Box 243053
Anchorage, 99524
POSITION STATEMENT: Commented on matters of his concern.
ACTION NARRATIVE
TAPE 99-4, SIDE A
Number 001
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee
meeting to order at 1:32 p.m. Present were Senators Mackie, Leman,
Hoffman and Donley. The first order of business to come before the
committee was SB 50, introduced at the request of the Department of
Labor (DOL).
SB 50-BOILER AND PRESSURE VESSEL INSPECTIONS
MR. DWIGHT PERKINS, Deputy Commissioner, DOL, said SB 50 will allow
the Department to increase efficiency by better utilizing the
skills of existing personnel, who are competent by virtue of their
special training, to perform annual inspections of cast iron
boilers and domestic hot water heaters, an estimated one-half of
the 6,000 boilers overdue for inspection. Limited inspections on
a part-time basis should stop the backlog.
CHAIRMAN MACKIE asked if the fiscal note shows that $40,000 in
receipts will be generated.
MR. PERKINS replied $40,000 is anticipated as additional income to
the general fund.
CHAIRMAN MACKIE questioned why State employees should serve this
function, rather than private sector inspectors.
MR. PERKINS stated the boiler code limits DOL's ability to delegate
authority to municipalities or jurisdictions with a population of
less than one million.
SENATOR LEMAN asked if passage of SB 50 encourages the hire of more
State employees or whether existing personnel will be able to get
the necessary certification.
MR. PERKINS replied DOL currently has three plumbing inspectors.
One has the necessary certification; the other two will require
minimal training to receive the certification, therefore no new
employees will be needed.
SENATOR LEMAN expressed concern that DOL not use this legislation
as a means to hire new inspectors.
CHAIRMAN MACKIE asked Mr. Perkins if he is aware of any opposition
to SB 50.
MR. PERKINS stated he is not, and that DOL sees this measure as one
that streamlines government.
SENATOR LEMAN moved SB 50 and its accompanying fiscal note from
committee with individual recommendations. There being no
objection, the motion carried.
SB 47-ALASKA PUBLIC UTILITIES COMMISSION
MR. SAM COTTEN, Alaska Public Utilities Commission (APUC) Chair,
said the APUC has an excellent professional staff comprised of
CPAs, engineers, tariff analysts, and others, and, despite an
increasingly large workload, staff has been able to focus on the
tasks at hand. Every state utility commission in the country is
experiencing an increased workload, primarily as a result of the
1996 Telecom Act. Last year APUC hired the National Regulatory
Research Institute (NRRI) to evaluate APUC operations. At the same
time, legislative auditors contracted with a private CPA firm to
audit APUC. Both audits came to similar conclusions: one being the
need to create a management information system for the APUC to
better track applications before it. The APUC also initiated a
"bench and bar," in which people who practice in front of the
Commission are invited to informal sessions to discuss ways to
improve APUC operations.
A second recommendation suggested the APUC's backlog be clearly
identified; that project is underway at this time. Despite
improvements the APUC has initiated, it needs more help, he said.
The APUC approved an increase of nine staff members last fall, a
process that required OMB approval. Those positions remain vacant
because of the hiring freeze. APUC, in coordination with Senator
Leman, has commissioned a study on electric industry restructuring;
that study is in progress.
MR. COTTON stated APUC members need to take more individual
responsibility for the speed and quality of their work. He urged
committee members to support SB 47.
CHAIRMAN MACKIE asked Mr. Cotton to describe APUC's backlog and the
current staffing situation regarding vacancies.
MR. COTTON replied the APUC has 41 staff members but is authorized
to have 55. The nine new positions that were recently approved
have not been filled; the other five vacancies are not professional
positions. One of the vacancies is for a new engineer to assist
APUC's four engineers who are at least a few months behind. The
engineers review all applications and make recommendations to the
commissioners. The consumer protection section has two staff
members and needs one more. The communications section accounts
for a large part of APUC's workload and is understaffed. Three
people are designated as common carrier specialists who handle the
ground breaking issues that APUC deals with in the field of
telecommunications.
MR. COTTON said the identification of APUC's backlog has not been
completed at this time, but he would provide it as soon as it is.
CHAIRMAN MACKIE asked Mr. Cotton to respond to complaints that APUC
is unable to decide matters in a timely manner.
MR. COTTON admitted problems have occurred during meetings due to
personality conflicts, however he hopes they will be minimized in
the future.
Number 256
SENATOR LEMAN stated his appreciation for APUC's cooperative stance
taken in its work with the Joint Electric Utility Restructuring
Committee. He asked Mr. Cotton if he is aware of any changes that
could be made to the APUC's structure that might reduce its cost
and size.
MR. COTTON replied some commission members would suggest a smaller
commission, or that the whole function be transferred to a line
agency. Most states have a commission about the same size as the
APUC. Much of APUC's work needs to be done by commissioners so
fewer commissioners would require a larger workload for each, which
would increase the backlog. The APUC has only one hearing examiner
who is primarily responsible for writing orders once decisions have
been made. No commissioner has individual staff, which would help
to monitor the paper flow.
Implementing the recommendation from both audits for more
electronics will help the APUC do a better job without adding
personnel, Mr. Cotton said. The APUC needs more professional staff
right now. The promise of the 1996 Telecom Act is that APUC's
workload should decrease in the future because more competition
will decrease the need for regulation, but APUC is in a transition
period which has increased its workload.
SENATOR LEMAN asked if some functions can be transferred to local
governments, for example refuse regulation, to free up some of
APUC's time to deal with the more contentious issues.
MR. COTTON said, in his personal opinion, he believes that is a
great idea, however controversy exists about how that would take
place. He believes local governments could probably make better
decisions than the APUC about local garbage regulation as well as
water and sewer regulation, although water and sewer regulation is
a small part of APUC's business.
SENATOR LEMAN encouraged Mr. Cotton to pursue that route because
cost of service studies are expensive for the regulated entities.
Number 332
SENATOR PETE KELLY joined the committee to participate in the APUC
discussion. He asked about regulations promulgated by the APUC
last year regarding universal services and access charges.
MR. COTTON replied APUC has some other regulatory projects in
progress, but the APUC identified those two areas as needing
completion by this session of the Legislature.
SENATOR PETE KELLY asked if those regulations have been completed.
MR. COTTON said they have.
SENATOR PETE KELLY asked if an applicant were to reapply to the
APUC today, such as GCI, how long the application period would
take.
MR. COTTON stated the APUC is required by federal law to make
decisions within 120 days of application.
SENATOR PETE KELLY asked if APUC has already opened a docket on the
PTI sale.
MR. COTTON said five dockets are running a parallel track: three
pertain to the acquisition application by ALC to purchase PTI, TUA,
and TUNI; two pertain to the purchase of ATU and ATU Long Distance.
SENATOR PETE KELLY asked if it is possible to "piggyback" the issue
of a rural exemption in those dockets.
MR. COTTON said it is possible, however there may be legal
questions. The issue of removing the rural exemption is actively
in front of the APUC at this time and an order should be produced
relatively soon on that question. There has been a motion by those
parties to affirmatively define the issues in that case, and other
interested parties have responded to that motion.
SENATOR PETE KELLY asked what the rural exemption, in practical
terms, will do to the 120 day time frame.
MR. COTTON replied he expects a decision to be made on those
dockets in less than 120 days. APUC has scheduled a hearing within
the next five or six weeks. The applicant does an initial filing
to which interested parties have 30 days to respond. The applicant
must reply within a certain amount of days, and then a hearing is
held.
SENATOR PETE KELLY referred to a decision which placed the burden
of proof on an existing phone company to prove that competition
would create a burden on it, and asked whether APUC can act on that
case before it comes back from court or the company reapplies.
MR. COTTON said one or the other would have to happen.
SENATOR PETE KELLY asked what mechanism the court uses.
MR. COTTON replied the court would remand to the regulatory body.
He explained APUC made a ruling on GCI's application regarding the
burden of proof. GCI appealed the ruling to the Superior Court,
that case is under consideration at this time. Meanwhile, the FCC
promulgated rules requiring the burden of proof to be with the
incumbent. The U.S. Eighth Circuit Court overturned that rule and
gave the states the power to make their own rules. APUC then chose
to assign the burden on the competitor. The United States Supreme
Court recently overturned the Eighth Circuit Court decision and
stated the FCC was correct. It is likely the Alaska court will
remand the GCI case to the APUC.
SENATOR PETE KELLY asked Mr. Cotton how long the remand might take.
MR. COTTON said he did not know. The APUC, or any of the parties,
could request a remand but the APUC has elected not to do so.
Also, the judge could independently choose to remand the case.
CHAIRMAN MACKIE asked if the APUC could act on the case now.
MR. COTTON said he could not comment on the case at the moment
because the APUC is about to issue an order.
CHAIRMAN MACKIE asked if the APUC can make no ruling until the
court remands or a new application is filed.
MR. COTTON said that is correct. He added if the case is remanded
to the APUC, he would anticipate an almost immediate pre-hearing
conference during which a new procedural schedule will be set.
CHAIRMAN MACKIE asked if the APUC will have to hold another hearing
and place the burden of proof on the incumbent.
MR. COTTON said that is what he anticipates.
CHAIRMAN MACKIE asked if the incumbent would have to prove the
competition would provide an undue economic hardship.
MR. COTTON said yes. He noted some people might continue to argue
the issue of a 25 day time period for argument as the U.S. Supreme
Court decision travels back to the Eighth Circuit Court.
CHAIRMAN MACKIE asked which method would be more expeditious:
reapplying to the APUC, or going through the remand procedure.
MR. COTTON said he thought the time period would be about the same
if both were before the APUC at the same date. He repeated that
although the Telecom Act allows the APUC 120 days to make
decisions, it does not necessarily take that long.
Number 441
SENATOR PETE KELLY asked why the APUC chose to place the burden on
the challenger when it made its ruling, since it seems more
difficult to prove.
MR. COTTON said he could not recall the rationale for that ruling
and would have to check the record.
SENATOR PETE KELLY said he thought it was unfair to ask the APUC to
make that call because determining whether competition is in the
best interest of the state is a policy question, not a regulatory
issue.
SENATOR DONLEY asked if anything would prevent APUC from moving
ahead with the decisions on competition now.
MR. COTTON replied only in that no petition to remove the rural
exemption is in front of the APUC right now.
SENATOR DONLEY asked if the other obstacles in place last year have
been removed.
MR. COTTON said the APUC identified some obstacles, and made an
effort to remove those. The case still has to be brought back and
heard before the APUC can determine that the test has been met to
remove the rural exemption.
SENATOR DONLEY asked whether the APUC's position on the presumption
issue was done by regulation or by a decision.
MR. COTTON replied that was done via a decision.
SENATOR DONLEY asked if the U.S. Supreme Court's decision will
require the APUC to formally change anything, such as a regulation.
MR. COTTON said no, the APUC will be guided by the FCC regulation
upheld by the U.S. Supreme Court.
SENATOR DONLEY asked what the APUC's position is on competition.
MR. COTTON said the APUC does not begin to review a case with a
position on that question. It is guided by statute and federal law
as to how it is to operate and receive petitions and make
decisions.
CHAIRMAN MACKIE announced he would take public testimony.
Number 489
JAMES ROWE, Director of the Alaska Telephone Association (ATA), a
trade association representing the incumbent in the aforementioned
case, stated ATA supports SB 47. A lot of work has come along with
the deregulatory Telecom Act. The APUC has spent a lot of time on
the changes required by that act, and the dockets completed this
year were time consuming for everyone. Many behind-the-scenes
workshops were held. He stated the APUC is understaffed, and he
would like activities to move in a more timely manner. He stated
Alaska has more utility work to do than most other states, given
the number of rural communities. He asked the Legislature to
recognize the importance of the work done by the APUC.
GEORGE GORDON, President and CEO of College Utilities Corporation
and Golden Art Utilities, stated industry has been somewhat
frustrated about getting orders and work out of the APUC. Industry
participants are often reluctant to voice their frustrations for
fear of negative repercussions from the APUC and/or Legislature.
He commended the NRRI report, specifically the statement on page
19, that said, "Many APUC members referred, with dismay, to a lack
of timeliness in the decisions, a concern that staff felt was
shared by the regulated industries." He stated the Legislature has
a strong role to play in the sunset review and reauthorization of
the APUC and can help the APUC do its job better. He urged the
Legislature to exercise its oversight authority over the APUC
because it is the only body that can do so, especially in the arena
of providing adequate resources including staff. He suggested
giving Chairman Cotton the authority to hire and fire staff. He
noted a number of APUC seats will become vacant, and his utility
suggests that the Legislature find hardworking, knowledgeable
commission members. He encouraged the Legislature to exercise its
oversight ability on the Governor's appointments.
TAPE 99-4, SIDE B
Number 000
STEVE MERRIAM, Commercial Manager of Copper Valley Telephone
Cooperative, testified in support of SB 47. The Cooperative
believes APUC is uniquely qualified to analyze complex technical
and regulatory issues brought about by the Telecommunications Act
of 1996. No other neutral organization has personnel knowledgeable
about those issues. He felt assured the APUC will view changes
from a pro-competition and pro-consumer perspective.
Number 556
ROBERT DUNN, a regulatory analyst with Telalaska, testified in
support of SB 47. The importance of reauthorizing the APUC is
evident in the ever increasing amount and complexity of
telecommunications issues coming before it. The applications
before the APUC have grown from adjudicating annual intrastate
access charge filings, local rate cases, and tarriffing of new
services to extremely important issues, such as local competition,
access charge reform, local market structure, and universal service
funding. The Telecom Act of 1996 has created an enormous amount of
work and new obligations for all public utility commissions to deal
with.
CHARLES MCKEE, representing himself, testified on issues of
personal concern regarding intellectual property rights.
Number 530
SENATOR DONLEY asked Chairman Cotton for his personal suggestions
regarding restructuring of the APUC to improve its functions.
MR. COTTON said he does not have any other recommendations at this
time. He felt Mr. Gordon's comments were good, and that the
Legislature can examine future nominees for commission vacancies.
He repeated he is hopeful the function of the APUC will improve in
the near future.
SENATOR DONLEY asked Mr. Cotton about the conflict between the
APUC's neutral position toward competition and the federal pro-
competition policy. He questioned whether it would be more
consistent for the APUC to recognize and implement the federal
policy.
MR. COTTON replied there is some logic to that and I don't disagree
with it, but we are guided by state statute. The whole act
suggests pro-competition. Earlier GCI petitioned to remove a rural
exemption. The federal law says, "within 120 days after the State
Commission receives a notice of the request, the State Commission
shall terminate the exemption, if the request is not unduly
economically burdensome, is technically feasible, and is consistent
with Section 254," - universal service. One hundred and twenty
days is accurate, and secondly, when you place a burden of proof in
a sentence like that it's not clear s who ought to have the burden
and they made a decision.
CHAIRMAN MACKIE commented if somebody petitioned for the removal of
the exemption, either that happens, or if it's remanded to the
APUC, it will happen within 120 days, unless the APUC rules
otherwise.
MR. COTTON said the State Commission is to terminate the exemption
within 120 days unless the request is unduly burdensome,
technically infeasible, or inconsistent with Section 254.
CHAIRMAN MACKIE asked what happens if the APUC does not do anything
within 120 days because of a backlog.
MR. COTTON replied the federal act suggests the applicant could
take it to the FCC if the APUC failed to act.
CHAIRMAN MACKIE asked if that provision automatically kicks in.
MR. COTTON said no. He noted the Telecommunications Act is one of
those laws in which one can find an argument in favor or against
the same thing.
Number 475
SENATOR PETE KELLY asked for clarification of the rural exemption.
MR. COTTON explained every applicant starts with a rural exemption,
but can petition to remove that exemption.
SENATOR PETE KELLY said he wanted to switch his positives to
negatives in his previous questions for the record, and that he did
not mean to be critical of the APUC's ruling.
CHAIRMAN MACKIE asked if the court remands a ruling back to the
APUC, that action serves as a notice.
MR. COTTON said he would presume so, although it is not clear.
CHAIRMAN MACKIE asked if GCI were to reapply tomorrow, a rural
exemption would be granted within 120 days unless the APUC ruled
otherwise.
MR. COTTON said yes.
CHAIRMAN MACKIE asked what would happen if the ruling was remanded
tomorrow.
MR. COTTON said the APUC would immediately hold a pre-hearing
conference with the parties to allow those parties to express their
opinions about what would have to happen.
CHAIRMAN MACKIE asked if it is safe to assume the APUC would take
less time to make the ruling since it has had the application
before it's ready.
Number 429
MR. COTTON said that is possible, but one of thing that happens at
a pre-hearing conference is a schedule is agreed to. The parties
might not need as much time or the opposing party might request a
longer schedule. All of those considerations are discussed.
SENATOR HOFFMAN asked Mr. Cotton to comment on a previous witness's
recommendation to give the Chairman more authority to hire and fire
staff.
MR. COTTON replied the APUC statute gives the Governor the
authority to appoint the Chairman and commission members. The
Commission hires an executive director who handles administrative
matters. He suggested the Commission should not be involved in a
lot of details, although they have elected to do so in some cases.
He would hesitate to add that authority to the bill.
SENATOR DONLEY asked Mr. Cotton if he is happy with the level of
service the APUC receives from the Department of Law.
MR. COTTON said he is. The APUC has two full-time attorneys
assigned to it. Some Commission members have made an effort to
evaluate the need for additional outside legal counsel, and the
APUC is in the process of doing an RFP, which the Attorney General
will have to agree to.
SENATOR DONLEY asked if any of the APUC's backlog has been caused
by a lack of assistance from the Department of Law.
MR. COTTON said it has not.
SENATOR HOFFMAN requested that committee members be provided with
copies of the NRRI report.
There being no further business to come before the committee,
CHAIRMAN MACKIE announced SB 47 would be held over for further
work, and he adjourned the meeting at 2:40 p.m.
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