HOUSE BILL NO. 333 An Act extending the termination date of the Regulatory Commission of Alaska; and providing for an effective date. Co-Chair Mulder explained the committee substitute would extend the termination date for the Alaska Regulatory Commission (ARC) to 2006. It would also provide deadlines for the Commission to take action on the petitions. NAN THOMPSON, CHAIRMAN, ALASKA REGULATORY COMMISSION, spoke in support of the legislation. She commented that the bill was the product of discussion between herself and the member's of industry who expressed concerns before the House Labor and Commerce Committee. She stated that it was a good effort and fairly represents the productive changes made to the bill. Ms. Thompson stated that the committee substitute sets deadlines for prosecuting different types of cases. It would allow for exemptions or exceptions to the rule requiring the agency to explain the exceptions when the deadlines are not met. She indicated that would provide more predictability for the industry and accountability for the agency. She added that with those tools, the arguments raised in support of the two-year extension would be weakened. She claimed that the Legislature would be able to get information from the Legislative Budget and Audit (LBA) Committee regularly regarding performance. She noted that the Regulatory Commission should be spending their time working on cases. Ms. Thompson voiced concern having a shorter extension, which prohibits the agency from being able to hire and keeping good staff to work. She applauded the four-year extension recommended by the committee substitute. Ms. Thompson provided the Committee with the auditor's updated recommendations. The audit report was approved for public release in January 2002 and recommends that the agency be continued for four years. Auditors found that most of the consumer complaints had been resolved within thirty days and that most of the tariff filings were processed within the required forty-five days. She noted that the Regulatory Commission has begun the important transitions to the MIS system as requested by the Legislature. It has been extension successful. The auditor did have three recommendations: · The Regulatory Commission should provide small water and sewer utilities to be certificated or exempt. The Commission addressed that item at a recent meeting and asked for industry comments regarding the scope of exemptions. The industry has been working on an application to make the process easier. She noted that they hope to expand and institutionalize the regulations. · Adoption of regulations on the roll of the Public Advocacy section, which was newly created in 1999. The Commission has regulations that were submitted by that section and the Commission voted at a public meeting to put them out for comment. That process will be concluded after the notice period has expired. · Better monitoring publications and notices. She noted that was a complicated process as the regulations require that the Commission notice, however, sometimes the utilities place the notice. The Commission is working on a way to be able to keep better track of the notices in the future. Ms. Thompson offered to answer questions of the Committee and urged passage of the committee substitute. Representative Davies referenced Pages 1 & 2, the list of specific applications. He recommended that "any application" be inserted. Ms. Thompson acknowledged that the application terminology could be confusing. The intent of that section was to grant applications for renewing utility service and that she would not object to deleting them. She recommended consulting Mr. Yould. Representative Davies pointed out that the substance was included in the first four sections. Ms. Thompson explained that the new application would transfer the amendment. An application requiring a controlling interest would be similar to a transfer and that she would not object to deleting #4 & #5. Representative Davies referenced Page 3 and asked about the language that had been added. Ms. Thompson explained that those standards identify whether the settlement has rates that are "just and reasonable". The Commission has the obligation to guarantee that the rates are not discriminatory. Reference to those statutes requires application of the same general rule. Representative Croft commented on whether or not to eliminate #5. Ms. Thompson responded that deleting #5 would be best as there are other items that are processed and handled that could be characterized as applications. That section was intended to address the authority to offer new service, if competition was expanded. The alternative to delete, as recommended by Representative Davies, would be the best. Representative Croft mentioned that current language leaves it open to the unintended consequences and that it needs to be fixed. He pointed out that Page 3, Section 2, would allow them the opportunity to approve a settlement, which meets certain legal standards without having to base it on recorded facts. Ms. Thompson acknowledged that was true, however, the sponsors of the amendment are attempting to allow more flexibility for the Commission. The complaints are that they would have to go through the same "standards of proof" that they would at a hearing in order for it to be approved. In the course of settling, sometimes they compromise and if they were forced to put in the evidence, they could not be able to agree. She pointed out that would undermine the terms of the settlement. The concern of the Commission is that there is enough for the record that would not undermine their efforts for settlement. It is important to have enough of a record to use as a basis. The language represents a compromise that would allow the Commission to do what it needs to do in order to decide things that are important. Representative Croft agreed that concern was valid, however, asked if it was fair to the other unrepresented public parties. Ms. Thompson agreed commenting on the difference between the Commission and the Court when the settlements are approved. Often what occurs happens is a conflict between two utilities. It is the work of the Commission to look at the interest of the industry and the public so that both are protected. That is why it is important that the Commission not approve just any settlement. The Court could have different interests. It is important that the settlement be consistent with the statute which protects other interests. Vice-Chair Bunde MOVED to ADOPT committee substitute #22- LS1289\F, Craver, 4/16/02, as the draft before the Committee. There being NO OBJECTION, it was adopted. ERIC YOULD, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC COOPERATIVE ASSOCIATION (ARECA), ANCHORAGE, testified in support of the legislation. He noted that all of the utilities associated with ARECA work closely with the Alaska Regulatory Commission (RCA). In 1999, the Legislature changed the regulatory Commission of Alaska and through SB 133, the Legislature recreated the current form. At that time, when the statutes were moving through the Legislature, ARECA took it seriously. He acknowledged that the current form of the bill is significantly better than it was before. Mr. Yould voiced his concern with how long it takes to "get things done". He pointed out the caseload backlog, which is frustrating to the industry. He pointed out that the Legislature had authorized nine new positions to the Commission to address that backlog. A year later, five new positions were authorized. As of January 2002, with all the new cases coming in, there still remains 608 that are unaddressed. He added that the time-lines that have been proposed are achievable. At the same time, the current time-lines provide a standard that RCA can work with. He reiterated that ARECA supports the proposed time-lines. The only thing that ARECA does not agree with in the bill is the portion that extends the sunset of 2006. He added that ARECA's Board of Directors believe that it is important to bring them back before the Legislative Body in 2004. Representative Davies referenced Page 2, Line 3, and asked if Mr. Yould would object to deleting that language. Mr. Yould agreed that it was appropriate to delete it. DANA TINDALL, SENIOR VICE PRESIDENT OF REGULATORY AFFAIRS, GCI, ANCHORAGE, testified in support of the legislation. She noted that GCI was active in the legislation that created RCA. Ms. Tindall stated that no utility is in favor of letting the Commission sunset. Once an order is issued, the industry is free to appeal to a higher court. The four- year sunset extension would be a compromise. She mentioned that GCI would like to see the sunset extended to 2010. Every sunset provides an opportunity for amendments. Ms. Tindall voiced support for the committee substitute. TAPE HFC 02 - 86, Side A  Ms. Tindall noted the importance for the State to have a Regulatory Commission. Without RCA, there would be no one to enforce consumer issues, pointing out that in the telephone industry, there are many consumer issues. Competition creates many issues that need to be negotiated by RCA. Without that entity, the consumers will suffer. In response to a question by Representative Davies, Ms. Tindall noted that GCI supports the Committee substitute and the reauthorization of RCA. She urged that the bill be passed from Committee. She added that GCI does not object to the deletion of subsection 5. JIM ROWE, EXECUTIVE DIRECTOR, ALASKA TELEPHONE ASSOCIATION (ATA), ANCHORAGE, testified in support of the legislation. He commented that the Commission was comprised of ethical individuals and is a professional group of people. This year, telephone companies in the State received around $72 million dollars for services. Each year, there should be a State Commission to declare that the companies requesting the funding are eligible tele-communication carriers. They also have to declare that the companies are utilizing that funding in a way that it should be utilized. He spoke in support of the committee substitute. Representative Croft asked when the expiration date should be. Mr. Rowe responded that he would like to see a four-year sunset date. Representative J. Davies MOVED an amendment to Page 2, Line 3, deleting the language "(5) any other application required or permitted under this chapter." There being NO OBJECTION, the amendment was adopted. Representative J. Davies MOVED an amendment to Page 1, Line 3, inserting "to June 30, 2006", after the word "date". There being NO OBJECTION, the amendment was adopted. Representative Foster MOVED to report CSHB 333 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 333 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal note #1 by Department of Community & Economic Development.