Legislature(1999 - 2000)

04/12/1999 03:12 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    SENATE RESOURCES COMMITTEE                                                                                
                          April 12, 1999                                                                                        
                             3:12 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator Rick Halford, Chairman                                                                                                  
Senator Robin Taylor, Vice Chairman                                                                                             
Senator Pete Kelly                                                                                                              
Senator Jerry Mackie                                                                                                            
Senator Lyda Green                                                                                                              
MEMBERS ABSENT                                                                                                                
Senator Sean Parnell                                                                                                            
Senator Georgianna Lincoln                                                                                                      
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 133                                                                                                             
"An Act creating  and providing for  the Alaska Energy Conservation                                                             
Commission  and transferring  to  it the  powers and  duties of  the                                                            
Alaska  Public  Utilities  Commission and  the  Alaska  Oil and  Gas                                                            
Conservation  Commission;  repealing  the  Alaska  Public  Utilities                                                            
Commission  and the  Alaska  Oil and  Gas  Conservation Commission;                                                             
relating to  regulation of waste collection  and disposal;  relating                                                            
to  the powers  of  the  chair of  the  Alaska  Energy Conservation                                                             
Commission;  relating  to the  appellate  procedures  of the  Alaska                                                            
Energy  Conservation  Commission;  and providing  for  an  effective                                                            
     -HEARD AND HELD                                                                                                            
SENATE BILL NO. 134                                                                                                             
"An Act authorizing  the Alaska Oil and Gas Conservation  Commission                                                            
to determine  the amount  of and to collect  a charge for  operating                                                            
wells  subject to  the commission's  jurisdiction,  and to  allocate                                                            
expenses  of investigation  and hearing, and  repealing the  oil and                                                            
gas conservation tax; and providing for an effective date."                                                                     
     -MOVED CSSB 134(RES) OUT OF COMMITTEE                                                                                      
PREVIOUS SENATE COMMITTEE ACTION                                                                                              
SB 133 - No previous action to consider.                                                                                        
SB 134 - No previous action to consider.                                                                                        
WITNESS REGISTER                                                                                                              
Senator Drue  Pearce                                                                                                            
State Capitol  Bldg.                                                                                                            
Juneau, AK 99811-1182                                                                                                           
POSITION STATEMENT: Sponsor of SB 133 and SB 134.                                                                             
Mr. Robert Christenson, Chairman                                                                                                
Alaska Oil and Gas Conservation Commission                                                                                      
3001 Porcupine Dr.                                                                                                              
Anchorage,  AK 99508                                                                                                            
POSITION STATEMENT: Commented on SB 133 and SB 134.                                                                           
Mr. Eric Yould, Executive Director                                                                                              
Alaska Rural Electric Cooperative Association                                                                                   
703 W Tudor #200                                                                                                                
Anchorage,  AK 99503                                                                                                            
POSITION STATEMENT: Commented on SB 133.                                                                                      
Ms. Ginny Faye, Legislative Liaison                                                                                             
Department of Commerce and Economic Development                                                                                 
P.O. Box 112100                                                                                                                 
Juneau, AK 99811-2100                                                                                                           
POSITION STATEMENT: Commented on SB 133 and SB 134.                                                                           
Mr. Jim Arneson                                                                                                                 
Commercial Refuse, Inc.                                                                                                         
750 E. International Rd.                                                                                                        
Anchorage,  AK 99518                                                                                                            
POSITION STATEMENT: Opposed SB 133.                                                                                           
Mr. Jim Rowe, Director                                                                                                          
Alaska Telephone Association                                                                                                    
201 E. 56th #114                                                                                                                
Anchorage,  AK 99516                                                                                                            
POSITION STATEMENT: Opposed SB 133.                                                                                           
Ms. Heather Grahme                                                                                                              
Waste Management, Inc.                                                                                                          
1031 W 4th Ave.                                                                                                                 
Anchorage,  Ak 99501                                                                                                            
POSITION STATEMENT: Commented on SB 133.                                                                                      
Ms. Pam Krieber                                                                                                                 
Valley Refuse                                                                                                                   
P.O. Box 879109                                                                                                                 
Wasilla, AK 99687                                                                                                               
POSITION STATEMENT: Opposed SB 133.                                                                                           
ACTION NARRATIVE                                                                                                              
TAPE 99-24, SIDE A                                                                                                            
Number 001                                                                                                                      
                   SB 133-COMBINE APUC AND AOGCC                                                                            
CHAIRMAN HALFORD  called the Senate  Resources Committee  meeting to                                                            
order at 3:12 p.m. and  announced SB 133 to be up for consideration.                                                            
SENATOR PEARCE,  sponsor of SB 133  and SB 134, said she  would give                                                            
an overview  of the two together and  then speak specifically  to SB
134.  She said she would  speak more specifically to the AOGCC side,                                                            
since this was the Resources Committee.                                                                                         
Her  goals  and objectives   in putting  these  bills  together  are                                                            
numerous.  Last summer,  she received a call from Ms. Cammy Oechsli,                                                            
one of the commissioners  of AOGCC, who wanted to talk about funding                                                            
problems the AOGCC is facing.   The AOGCC is loosely attached to the                                                            
Department of  Administration.  It serves a very important  function                                                            
in terms of  conservation in the oil  and gas fields throughout  the                                                            
AOGCC has  a funding mechanism  in statute  that depends on  oil and                                                            
gas conservation  taxes along with a fee for inspection  services of                                                            
wells.  The taxes  and the inspection fees that have  come in to the                                                            
general fund over  past years have exceeded the amount  of money the                                                            
legislature  has appropriated  to the AOGCC.   The number of  active                                                            
wells this  agency is supposed  to oversee  is increasing,  which is                                                            
good, but the  number of employees  the legislature has allowed  for                                                            
that function has substantially decreased, which is not good.                                                                   
After  discussions  with  Ms.  Oechsli,  SENATOR   PEARCE  suggested                                                            
looking at the APUC funding  mechanism, a designated program receipt                                                            
system, making the entities  being overseen directly responsible for                                                            
paying  for that  function.   AOGCC  would not  be  a profit  making                                                            
entity,  but  one that  pays  for  itself.   This  would  allow  the                                                            
Commission  to have the  number of  employees it  needs.  She  added                                                            
that the AOGCC has not been audited since 1991.                                                                                 
SENATOR PEARCE  said she has also heard concerns about  a perception                                                            
of dysfunction  at the APUC.  In thinking  about both entities,  she                                                            
came  up with  the  idea  of putting  the  two  regulatory  agencies                                                            
together in a structure that many other states have.                                                                            
SB 133 combines the AOGCC  and the APUC. It repeals both commissions                                                            
and allows  for a reasonable  transition period.   It requires  that                                                            
all   existing  regulations   and   matters  pending   before   both                                                            
commissions be carried  forward.  She thought this would improve the                                                            
long-term   function,   effectiveness,   and  efficiency   of   both                                                            
commissions in a number of ways.                                                                                                
The new  entity will  be set  up as an  independent, quasi-judicial                                                             
agency of the  State called the Energy Conservation  Commission.  It                                                            
would have seven members  appointed by the Governor and confirmed by                                                            
the Legislature.  The Commission  would nominate to the Governor one                                                            
public member  of the Commission as  the chairperson.  The  Governor                                                            
could then  choose that person or  choose to appoint another  person                                                            
as chair.  The chair would  serve for a term of four years but could                                                            
not be  appointed for  successive  terms.  This  feature is  already                                                            
embodied in the AOGCC statutes  because of concerns about a previous                                                            
The Commission  would be composed  of five members from the  general                                                            
public, one  a petroleum engineer  and one a geologist.   Currently,                                                            
the AOGCC has  a petroleum engineer, a petroleum geologist,  and one                                                            
public  member.   The  APUC currently  has  two public  members,  an                                                            
accountant,   an  engineer  with   electrical  experience,   and  an                                                            
The bill  addresses a number  of other technical  matters such  as a                                                            
time management system  to maintain a record of time that applies to                                                            
all staff  and the administrative  director  and commissioners.   It                                                            
adds  three  junior  positions  to  the  AOGCC  function:  a  junior                                                            
reservoir  engineer,  a  junior petroleum  engineer,  and  a  junior                                                            
petroleum  geologist.    All  three positions  would  be  filled  by                                                            
qualified   professionals   capable  of  moving   into  the   senior                                                            
positions.  One problem  is that the institutional knowledge is only                                                            
one person  deep at  present.  The  people in  the senior  positions                                                            
today are  nearing the end  of their professional  careers  and will                                                            
most likely  retire within the next  five to 10 years.  There  is no                                                            
one backing them up to move into those positions.                                                                               
The joint entity  would add one hearing  officer, which should  help                                                            
the ongoing time constraints  for both commissions.  They have added                                                            
an office manager and eliminated  the executive director position of                                                            
SENATOR  PEARCE  said it  was not  her  intent to  necessarily  save                                                            
dollars, but she thought  over the long term the Commission would be                                                            
more efficient  and provide more effective  services.  She  said she                                                            
deferred to  AOGCC statutes any time  there was a question,  because                                                            
of  the perception  that  it  is working  more  efficiently  at  the                                                            
moment.  The powers and  duties of the Commission have been upgraded                                                            
in that the bill sets up  a system to work like an appeal process in                                                            
a  court  of   appeals.    The  chairperson   would  empanel   three                                                            
commissioners to consider decisions before the Commission.                                                                      
Under  this   bill,  the  chairperson   can  assign  an   individual                                                            
commissioner  to act as a hearing  officer, a procedure used  by the                                                            
AOGCC.   It contains  an appeal  process  that allows  a case  to be                                                            
heard by a larger  number of commissioners if the  entities involved                                                            
want to appeal.  That is  also patterned after the court of appeals.                                                            
SENATOR  PEARCE said she  would like  to add to  the draft that  the                                                            
entity  could ask  for  an appeal  to a  larger commission  and  the                                                            
commission  could decide  whether  or not  to accept  that.  She  is                                                            
having an amendment drafted  that would make the appeal process only                                                            
available  if the opinion  of the panel directly  conflicts  with an                                                            
existing  opinion that was  made by an earlier  PUC.  Appeals  would                                                            
not be granted  under any other circumstances.  Because  it has been                                                            
requested  in every  audit of  the APUC,  she said  the only  policy                                                            
change in the bill is that  it would deregulate the refuse industry.                                                            
Number 250                                                                                                                      
            SB 134-WELL REGULATORY COST CHARGE/CONS TAX                                                                     
SENATOR PEARCE  explained  that SB 134, the  program receipts  bill,                                                            
repeals the existing  oil and gas conservation tax  and institutes a                                                            
stable  funding  source  to  assure the  Commission  is  capable  of                                                            
carrying out its  objective of protecting the public  interest.  Its                                                            
primary goal is  to ensure that no hydrocarbons are  wasted and that                                                            
operations are conducted  in a manner that provides maximum recovery                                                            
of the  resource.   The original  intent of the  Legislature  was to                                                            
have  the  oil  and gas  industry  pay  for  this  function  of  the                                                            
Commission  through the oil  and gas conservation  tax.  The  system                                                            
was adequate  in the past, but it  is no longer sufficient  to cover                                                            
the costs  associated  with the operation  of the  Commission.   The                                                            
conservation  tax  is directly  proportional   to deduction  with  a                                                            
formula  per barrel fee  rate.  The  work of  the Commission  is not                                                            
proportional  to  the production  of  oil and  gas.   Production  is                                                            
declining, but the work of the Commission is not.                                                                               
SB 134  creates a  program receipt  system in  which the  regulatory                                                            
cost charge is  directly associated with the total  volume of fluids                                                            
produced or injected.   This type of system more accurately reflects                                                            
the  factors   directly   associated  with   the  workload   of  the                                                            
Commission.  It would only  assess costs when there is production or                                                            
injection.  Exploratory  wells would not have that burden until they                                                            
begin  production.   It also  contains  a provision  to provide  for                                                            
recovery  of costs  associated  with  an investigation  or  hearing.                                                            
Those costs would  be allocated to the parties involved,  as opposed                                                            
to being allocated across all wells in production.                                                                              
SB 134 creates  a stable funding source that would  enable the AOGCC                                                            
to provide the  monitoring services necessary to protect  the future                                                            
of Alaska's interests.  She said she was unaware of the fact that as                                                            
of June 1 the AOGCC was  going to have to close its doors because of                                                            
a budget shortfall.   The Commission has not received  any money for                                                            
maintenance  of  their  building  in  at least  10  years  and  they                                                            
desperately  need  a new  roof  because  they  have leaks  that  are                                                            
causing them to cover their  desks with visqueen at night.  They are                                                            
concerned  about losing many  of the records  that they are  charged                                                            
with keeping by statute.                                                                                                        
The proposed  CS (N version  by Mr. Chenoweth)  changes language  on                                                            
page 2, line 18 to "calendar  year" because the industry reports are                                                            
done by  calendar year.   This  reflects the  legislature's and  the                                                            
AOGCC's  intent to  have the flexibility  to  assess the  regulatory                                                            
cost charge by field, pool, or well.                                                                                            
Also,  language on  page 4,  lines  11-17, contains  new  transition                                                            
language  that  will allow  them  to continue  the  regulatory  cost                                                            
charge until the new regulations take effect under SB 133.                                                                      
CHAIRMAN  HALFORD asked if  the new mechanism  would generate  about                                                            
$2.3 million per year while the old one generates about $1.5.                                                                   
SENATOR PEARCE  answered that the new mechanism could  generate more                                                            
than that.                                                                                                                      
Number 320                                                                                                                      
SENATOR  MACKIE moved  to adopt the  CS (LS0259/N  Chenoweth)  to SB
134. There were no objections and it was so ordered.                                                                            
COMMISSIONER CHRISTENSON,  Chairman of the AOGCC,  said their job is                                                            
to  watch the  subsurface  estate for  the State  of  Alaska and  to                                                            
settle  disputes on  property, etc.  The AOGCC controls  all  of the                                                            
drilling done in the State.   It also keeps track of all records for                                                            
the wells drilled in the  state since it started.  It keeps track of                                                            
production, voidage  and pressure of reservoirs.   It sets up all of                                                            
the rules for production  at Prudhoe Bay, the production limits that                                                            
provide  maximum  recovery  from  the  resource.    The  AOGCC  also                                                            
provides for the  inspection of rigs from a conservation  and safety                                                            
standpoint on  the North Slope. It inspects on the  Slope 24 hours a                                                            
day, seven  days a week,  checking drilling  rigs to make sure  they                                                            
meet  safety   requirements.    It   does  surface  and   subsurface                                                            
inspections  on safety  valves and  a secondary  blowout  prevention                                                            
system.    He  added  that Alaska  has  a  very  good  position  and                                                            
excellent  record regarding  the  amount of  wells  drilled and  the                                                            
amount of blowouts that  have happened with five gas blowouts in the                                                            
total time  drilling has  occurred in  Alaska and  no fluids  on the                                                            
tundra.  It believes the current systems are working.                                                                           
With the current budget  problems, the Commission has been forced to                                                            
give inadequate  attention to things  like reservoir management  and                                                            
inspections  for proper compliance.   The  budget mechanism  is very                                                            
important.   The current system  is set up  on a declining  scale so                                                            
AOGCC gets  less and less  money as production  goes down but,  more                                                            
importantly, it does not  represent the AOGCC's workload.  The wells                                                            
in the fields last 20-25  years and the Commission conducts numerous                                                            
operations  on them from  the time they are  spudded until  they are                                                            
closed out and abandoned.                                                                                                       
CHAIRMAN HALFORD  asked him what his plan was for  the month of June                                                            
if they didn't get a supplemental passed.                                                                                       
COMMISSIONER  CHRISTENSON   said  the  plan  was  to  be  the  least                                                            
interruptive  as possible to the total  scheme. The inspection  team                                                            
is on a three-week  schedule and accumulates  overtime and  actually                                                            
trades it in for comp time.   Because they are on that schedule, the                                                            
AOGCC  will have  to make  sure  it doesn't  have  an overtime  cost                                                            
impact on June  1.  They will change  their schedules on  the Slope.                                                            
On  June  4,  the  three   commissioners,  the  three  professional                                                             
engineers, and the four  inspectors will be put on leave without pay                                                            
status.   One lady  is on maternity  leave.   They will continue  to                                                            
receive  production  reports and  do the  data gathering  and  those                                                            
kinds of things.   The effect is that  no new work will be  going on                                                            
from June 4 until July 1.                                                                                                       
CHAIRMAN  HALFORD asked  what the plan  for the roof  is and  who is                                                            
responsible for it.                                                                                                             
COMMISSIONER CHRISTENSON  answered that they hadn't found anyone who                                                            
would  take responsibility  for it  and the  AOGCC's budget  doesn't                                                            
cover any maintenance.                                                                                                          
CHAIRMAN HALFORD  asked if they had  money, would they get  to spend                                                            
it or  would  DOT take  it and  then give  it to  the Commission  to                                                            
COMMISSIONER CHRISTENSON  said DOT would take if first and then give                                                            
it back.                                                                                                                        
Number 420                                                                                                                      
SENATOR  PEARCE  commented  that  the  building  is  in  a  part  of                                                            
Anchorage   that  is  unsafe  at   night  according  to   staff  and                                                            
CHAIRMAN  HALFORD  asked if  the AOGCC  would  move  its offices  to                                                            
another location if it had the financial resources.                                                                             
COMMISSIONER CHRISTENSON  said it would and that the  State needs to                                                            
make a decision  about that building, because it is  old and needs a                                                            
lot of work. It  doesn't meet any OSHA requirements  for ventilation                                                            
and the  boilers were  basically condemned  in 1996.   He thought  a                                                            
downtown location would be better.                                                                                              
CHAIRMAN  HALFORD  asked in  terms  of AOGCC's  workload,  what  Mr.                                                            
Christenson thought about the BP/ARCO merger.                                                                                   
COMMISSIONER  CHRISTENSON  replied there  is little  doubt that  all                                                            
State oversight  agencies  on oil  and gas have  benefited from  the                                                            
fact that the large operators  have been paying very close attention                                                            
to what the  others are doing.  He  thought the State would  have to                                                            
expand  its vigilance  to  watching  these activities.    He saw  an                                                            
addition to the inspection  force and another engineer.  He said the                                                            
driving force  behind the merger is  to reduce the production  costs                                                            
up there.                                                                                                                       
CHAIRMAN  HALFORD  asked  if $2.3  million  was  enough to  do  that                                                            
COMMISSIONER  CHRISTENSON  answered  there  would be  an  additional                                                            
requirement  for more  inspectors and  engineers.   They would  also                                                            
need contractual money to hire people with specific expertise.                                                                  
CHAIRMAN  HALFORD asked  if  this mechanism  is flexible  enough  to                                                            
generate  the  revenue  needed  if  they  get  the  program  receipt                                                            
authority in the budget document.                                                                                               
COMMISSIONER CHRISTENSON said it is.                                                                                            
Number 535                                                                                                                      
SENATOR  MAKCIE   moved  to  pass  CSSB  134(Res)  with   individual                                                            
recommendations.   There were no objections  and it was so  ordered.                                                            
SENATOR PEARCE  said, at the moment,  regulated pipelines  are under                                                            
the PUC.  The  intent of SB 133 is  to move the regulation  of those                                                            
to the oil and gas folks  in the larger commission so they could use                                                            
their  expertise  in the  industry  to do  the regulations  for  the                                                            
pipelines.   She asked Commissioner  Christenson what kind  of hours                                                            
he and the other commissioners work.                                                                                            
COMMISSIONER  CHRISTENSEN answered  that they basically work  from 8                                                            
to 4:30.                                                                                                                        
SENATOR PEARCE asked if they work longer hours sometimes.                                                                       
COMMISSIONER  CHRISTENSON said they  are pretty much on schedule  on                                                            
an average, but they are  not as timely as they should be sometimes.                                                            
CHAIRMAN HALFORD  asked where he would put oil and  gas pipelines if                                                            
he could put them anywhere  he wanted between the PUC and the AOGCC.                                                            
COMMISSIONER  CHRISTENSON  answered that  engineering  would have  a                                                            
good idea of the  technical part.  The tariffs and  accounting sides                                                            
would have to have people  with that expertise which they don't have                                                            
on staff right now.                                                                                                             
TAPE 99-24, SIDE B                                                                                                            
Number 590                                                                                                                      
CHAIRMAN  HALFORD  said  he  was worried  about  infecting  the  new                                                            
commission  with the maladies that  run amok in the various  battles                                                            
on public utilities.   He didn't know the answer to  that.  Pipeline                                                            
regulation will get much  bigger as we see less competition and less                                                            
of the  natural tendency  to gather information  from the  competing                                                            
SENATOR MACKIE asked what  Mr. Christenson thought about merging the                                                            
two commissions.                                                                                                                
COMMISSIONER  CHRISTENSON  answered  that  he understood  the  AOGCC                                                            
would move  intact.  He would not  change the  daily operations  and                                                            
they would perhaps improve  as new folks came in to handle the work.                                                            
He is less sure of the impact on how the commission would work.                                                                 
SENATOR MACKIE asked if he would be doing utility stuff, too.                                                                   
COMMISSIONER CHRISTENSON responded that he didn't know.                                                                         
SENATOR PEARCE  pointed out that there are no utility  people on the                                                            
Commission.   It is her intent to  empanel three people for  any oil                                                            
and gas  or pipeline  measure that  comes before  them.  Two  of the                                                            
people  have to  be  the engineer  and  the geologist.    It is  not                                                            
necessarily  their intent that it  is always the same third  person.                                                            
SENATOR MACKIE asked if  the five public members would handle any of                                                            
the utility questions.                                                                                                          
SENATOR PEARCE answered that is right.                                                                                          
SENATOR  MACKIE asked  if the two  other members  of the  Commission                                                            
could participate in those.                                                                                                     
SENATOR PEARCE  answered that the  chairman of the Commission  could                                                            
always empanel  the full seven person Commission if  there was a big                                                            
enough issue.   She thought smaller  panels in most cases  could get                                                            
the work done a lot more efficiently.                                                                                           
SENATOR MACKIE  asked why they are merging the two,  if they are not                                                            
going to be two entities combined into one.                                                                                     
SENATOR PEARCE said the  two entities will be combined into one. Her                                                            
original  idea was not to  specify a geologist  or an engineer,  but                                                            
the oil  and gas  industry  thought that  was very  important.   She                                                            
thought they would find  the greatest efficiency within the staffing                                                            
area - two hearing officers  instead of one.  She thought they would                                                            
see actual  decisions coming  out in a more  efficient manner.   She                                                            
expects there is room in  the present building where the APUC is for                                                            
the AOGCC to move in.                                                                                                           
Number 513                                                                                                                      
MR. ERIC  YOULD,  Executive Director,  ARECA,  said he  is also  the                                                            
statewide  Association Executive  Director  of the Electric  Utility                                                            
Industry  which  provides  about   95 percent   of  the electricity                                                             
throughout  the state.   His members recently  adopted a  resolution                                                            
supporting the continuation  of the APUC primarily because of issues                                                            
on the horizon  that relate to restructuring  and deregulation.   It                                                            
is the general consensus  of the industry that changes could be made                                                            
to APUC to streamline  the process.  Their sole objective  is to get                                                            
APUC to operate better  so it can get dockets out more timely, their                                                            
biggest  frustration.    Their second  biggest  frustration  is  the                                                            
associated  cost  but those  are  basically  passed through  to  the                                                            
SB 133 addresses many things  that are in their own resolution, such                                                            
as use of limited  panels of three  commissioners, use of  different                                                            
settlement techniques,  better use of hearing officers to hear cases                                                            
and recommend  decisions, and more  frequent use of special  masters                                                            
to expedite  procedural issues.  It  will help make the APUC  a more                                                            
responsive entity.                                                                                                              
Their  biggest  question  is  how  the  two  commissions  will  mesh                                                            
procedurally  and  whether  they  will  be  compatible.    They  are                                                            
concerned  about  the  potential  for  restructuring   the  electric                                                            
utility industry itself.                                                                                                        
On the positive side, he  said, this is a good working document with                                                            
positive things  in it.  He would  like to see SB 133 continue  as a                                                            
working document  to see how they can flesh out the  best out of it.                                                            
Number 447                                                                                                                      
MS.  GINNY  FAYE,  Department  of  Community  and  Regional  Affairs                                                            
(DCRA),  complimented   Senator  Pearce  for  bringing   this  issue                                                            
forward. DCRA is always  interested in good ideas especially if they                                                            
offer  consolidations  and ways  of saving  money.   DCRA's  primary                                                            
concern is  that the integrity  of these  two important agencies  be                                                            
maintained  because they have significant  oversight of issues  that                                                            
affect the State and almost everyone who lives in Alaska.                                                                       
MS.  FAYE said  DCRA preferred  a  five member  instead  of a  seven                                                            
member commission  in the  spirit of keeping  costs down.   They are                                                            
also reviewing  how moving from a three panel field  to a five panel                                                            
field will  work.   DCRA has not  come to a  decision about  what it                                                            
would mean to  deregulate the refuse industry, although  she thought                                                            
the bill  doesn't necessarily  deregulate  it, but  passes it  on to                                                            
local governments,  some  of which may  be more  or less capable  of                                                            
doing that.  DCRA is also looking  at the advocacy function  and how                                                            
it will  work to assign  staff as opposed  to assigning to  contract                                                            
employees.   The final issue  of how attorneys  will be selected  to                                                            
represent the Commission  differs from how that is done now in these                                                            
agencies.    She said  it  is  a good  bill  that  offers  a lot  of                                                            
SENATOR PEARCE  said the way the bill is drafted,  the Department of                                                            
Law should  provide full-time legal  counsel in the same  fashion it                                                            
currently  does for the AOGCC.   One ongoing  fight within  the APUC                                                            
appears to be over how  legal counsel gets assigned to it. The AOGCC                                                            
doesn't have that disagreement.                                                                                                 
On the question  of the advocacy staff, the APUC is  the entity that                                                            
watches over  consumer rates.  Staff  members who work for  the APUC                                                            
are asked to  act in an advocacy role  to represent the public  rate                                                            
payers,  but they many  not have that  role in  another case.   They                                                            
have to play two  different functions and there is  a question about                                                            
how effective they can be.                                                                                                      
CHAIRMAN HALFORD asked who the attorneys are for the APUC.                                                                      
SENATOR PEARCE answered that Ron Zobel is one.                                                                                  
Number 375                                                                                                                      
MR.  JIM ARNESON,  Commercial  Refuse, Inc.,  said  he is  concerned                                                            
about the proposed  deregulation of  refuse in this bill.   If there                                                            
was ever a  time the refuse industry  needed to be regulated,  it is                                                            
now.  Over the last couple  of years, Waste Management, Inc. came to                                                            
Alaska and "gobbled up 95% of all business up here."                                                                            
MR. JIM  ROWE, Director,  Alaska Telephone  Association (ATA),  said                                                            
ATA is  apprehensive about  the impact of  this legislation  because                                                            
the  Telecommunications  Act of  1996 has  increased  the number  of                                                            
issues before  the APUC and some of them are new social  policy.  He                                                            
thought  creating a  new Commission  would  set things  back by  two                                                            
years and more for the  issues that need to be resolved quicker.  He                                                            
thought there  are very good aspects of restructuring  in this bill,                                                            
but it is not a simple thing to do.                                                                                             
MS. HEATHER  GRAHME said  she was available  to answer questions  on                                                            
CHAIRMAN  HALFORD  asked if  the APUC  deregulates  refuse,  whether                                                            
municipalities will have  the authority to pick up refuse regulation                                                            
under Title 29.                                                                                                                 
MS. GRAHME answered that  municipalities have that power under Title                                                            
29.  She said it is the  view of Waste Management that refuse should                                                            
not  be deregulated,  but  that  controlled  refuse  collection  and                                                            
disposal should be handled  at the local level rather than the state                                                            
Number 247                                                                                                                      
MS.  PAM KRIEBER,  Valley  Refuse,  opposed  language  that  removes                                                            
garbage  hauling from  statewide regulation.   Sections  2,3,  and 9                                                            
propose to remove it from  the jurisdiction of the new Alaska Energy                                                            
Conservation  Commission.   She said  the committee  would not  hear                                                            
from other  companies, because  95 percent  of the companies  in the                                                            
entire  state were bought  up by  U.S.A. Waste  of Alaska, a  wholly                                                            
owned  subsidiary  of Waste  Management,  Inc.,  the  largest  waste                                                            
hauling  conglomerate  in  the  world.    She  said  that  statewide                                                            
oversight  would ensure impartial  pricing  structures and  fair and                                                            
equitable  business  practices.    Placing   the responsibility   of                                                            
regulations on local governments  would make them bear the financial                                                            
and legal  responsibilities  for regulation.   This would equate  to                                                            
higher  taxes and user  fees for  citizens who  would end up  paying                                                            
more money  for the same services.   If local governments  choose to                                                            
not regulate  refuse at all,  the door is  left wide open for  Waste                                                            
Management  to charge  fees  that would  provide  them the  greatest                                                            
possible profit margin.                                                                                                         
MS. KRIEBER said that starting  a garbage collection company is hard                                                            
work.    It  requires  a large  investment   in equipment,   working                                                            
capital, and time  to develop a reliable customer  base large enough                                                            
to pay the  bills.  This is the reason  large companies buy  smaller                                                            
ones; it is the most cost effective thing to do.                                                                                
CHAIRMAN HALFORD  thanked everyone for their comments  and said they                                                            
would continue to work on this bill.                                                                                            
Number 247                                                                                                                      
He adjourned the meeting at 4:30 p.m.                                                                                           

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