SB 190-REGULATORY COMMISSION AK/REFUSE UTILITIES  3:39:38 PM CO-CHAIR FIELDS announced that the next order of business would be CS FOR SENATE BILL NO. 190(FIN), "An Act extending the termination date of the Regulatory Commission of Alaska; relating to Regulatory Commission of Alaska regulations regarding refuse utilities; relating to the powers and duties of the legislative audit division; and providing for an effective date." 3:39:46 PM The committee took a brief at-ease. 3:40:24 PM SENATOR ROBERT MYERS, Alaska State Legislature, as the prime sponsor, he testified that CSSB 190(FIN) would extend the termination date of the Regulatory Commission of Alaska (RCA) until 6/30/30, in alignment with the recommendations of the legislative auditor. He explained that the RCA is an independent, quasi-judicial regulatory body formed by the legislature in 1999 to replace the Alaska Public Utilities Commission. The RCA, he continued, monitors active certificates for public utilities and pipelines, with these certificates covering a broad range of activities from provisional certificates for small village water and wastewater systems to fully regulated telecommunications, electric, and natural gas monopolies. He noted that the changes made in the Senate Finance Committee were simple housekeeping that he supports as they address the refuse utility backlog by adding them to the simplified rate filing procedure and removing an extra RCA annual report review process on the advice of the legislative auditor. 3:41:58 PM DAWSON MANN, Staff, Senator Robert Myers, Alaska State Legislature, on behalf of Senator Myers, prime sponsor, provided the sectional analysis for CSSB 190(FIN). He spoke from the written sectional analysis titled "SB 190 Ver. W Sectional Analysis," which stated [original punctuation provided]: Section 1: Page 1, Lines 6-11  This section adds intent language that the Regulatory Commission of Alaska shall adopt regulations specific to refuse utilities to provide for sufficient public notice and time for ratepayers to meaningfully comment on rate filings. Section 2: AS 42.05.381(e) Page 1, Lines 12-14, Page  2, Lines 1-8  This section amends AS 42.05.381(e) to include refuse utilities. AS 42.05.381(e) is the section of law that provides for a simplified rate filing procedure. Section 3: AS 44.66.010(a)(3) Page 2, Lines 9-11  This section extends the termination date for the Regulatory Commission of Alaska until June 30, 2030. Section 4: AS 24.20.271(11) Page 2, Line 12  This section repeals AS 24.20.271(11), a requirement for the legislative audit division to conduct an audit every two years of information found in the annual reports regarding compliance by the Regulatory Commission of Alaska. Section [5]: Page 3, Line 13 This section establishes an immediate effective date. 3:42:37 PM CO-CHAIR FIELDS asked what prompted the addition of the language in Section 1 on page 1, lines 6-11. MR. MANN offered his understanding that the intent language was added [in the Senate Finance Committee] to make clear that the RCA was going to adopt internal rules to make sure there is public notice in relation to refuse utilities as per the change made in Section 2. MR. MANN returned to the sectional analysis and pointed out that the inclusion of refuse utilities in Section 2 was an addition made in the Senate Finance Committee. He further pointed out that the repeal in Section 4 of the audit under AS 24.20.271(11) was added by the Senate Finance Committee on recommendation of the legislative auditor. 3:44:59 PM CO-CHAIR FIELDS asked whether the intent language was prompted by rates going up sharply somewhere in the state. SENATOR MYERS replied that this is not due to a jump in waste utility rates, but rather to waste utilities trying to expand outside some of their traditional areas within city limits but the regulations have not been allowing them to do so. Currently, he explained, due to the way waste utilities are regulated, it takes about two years to go through the entire process to update a utility's rates. He deferred to the RCA and the legislative auditor to expand further. 3:46:01 PM CO-CHAIR FIELDS opened invited testimony. 3:46:25 PM KRIS CURTIS, CPA, CISA, Legislative Auditor, Division of Legislative Audit, provided invited testimony during the hearing on CSSB 190(FIN). She spoke from the written audit report in the committee packet titled "A Sunset Review of the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska (RCA)," dated 9/21/21. [Referring to pages 3-4 of the report], she said the audit concluded that RCA operated in an effective manner and served the public's interest by: assessing the capabilities of utility and pipeline companies to safely serve the public; evaluating tariffs and charges made by regulated entities; verifying the pass-through charges to consumers from electric and natural gas utilities; adjudicating disputes between ratepayers and regulated entities; providing consumer protection services; and conducting financial reviews as part of the power cost equalization program. She stated that the division is therefore recommending the maximum eight-year extension. MS. CURTIS discussed the survey conducted by the division as part of the sunset audit (Appendix B pages 19-20). She said the survey was sent to 188 stakeholders that were party to a docket or a tariff filing during the audit period, with 59 responding. She noted that by far the responses to the survey questions are positive or neutral, with only a small percent negative. She listed the four questions that were asked: Overall, how satisfied are you with the following services provided by RCA? To what extent do you agree that RCA acts in the public's interest? Based on your experience, how often does RCA meet its statutory timelines? To what extent do you agree that RCA effectively communicates? MS. CURTIS returned to page 4 of the audit report. She said the division concluded that RCA resolved most of its consumer complaints within its internal, non-statutory, measure of 30 days. To provide an idea of the types of complaints received by RCA, she drew attention to the listing of consumer complaints in Exhibit 3 on page 5. She revisited page 4 and said the division also concluded that RCA processed tariff filings and dockets within the statutory and regulatory timelines. MS. CURTIS turned to page 9 of the report and pointed out that the audit makes one administrative recommendation, which is related to RCA's monthly meetings. Regulations for RCA require meetings twice a month, she said, but in instances where there are no agenda items RCA has been cancelling the meetings. During the audit period, she related, 25 of 88 scheduled meetings were cancelled, including six instances where meetings were consecutively cancelled. According to RCA management, she related, regulations require the meetings, but regulations also allow RCA to waive a regulatory requirement by its own motion. Auditors confirmed that there is an ability to waive but that it must be an official motion, she continued, so these were cancelled without official motion. It is certainly reasonable to cancel a meeting when there is nothing on the agenda, she allowed, but it does not explicitly comply with the regulations, so this was brought to RCA's attention. MS. CURTIS directed attention to pages 23-26 and stated that both the DCCED commissioner and the RCA board chairman are supportive of the eight-year extension. 3:50:51 PM The committee took a brief at-ease. 3:50:57 PM CO-CHAIR FIELDS requested background on the integration of expansion of refuse collection and utility service areas into the bill. 3:51:27 PM KEITH KURBER, Commissioner, Regulatory Commission of Alaska (RCA), responded that two separate issues were brought up by Senator Myers. Regulated and non-regulated utilities require a Certificate of Public Convenience and Necessity (CPCN), he explained, and an expansion of service area is typically done through amendment of a CPCN. It is routine and not time consuming, he stated, the commission just revalidates the utility's previously validated fitness, willingness, and ability to accomplish its task. He said he doesn't know what prompted [the Senate Finance Committee's] change, but that RCA Chairman Picket stated in his testimony on the Senate side that this is not a difficult task for the commission to re-do a regulation docket to assess and modify the commission's regulations to allow for simplified rate filing for refuse utilities. Mr. Kurber specified that both full-blown rate cases and simplified rate filings require standard public notice requirement, with timelines typically shorter for simplified rate filings and hence the term simplified. Quite a bit of expense can be involved in doing a full-blown rate case, he noted, and smaller utilities, whether electric cooperatives in rural areas or refuse utilities, may not have the staff to do some of the calculations necessary to produce the final result. He said he therefore speculates that this could be an assistance to some of the smaller rate regulated refuse utilities. 3:54:24 PM SENATOR MYERS added that refuse utilities, for the most part, have existed and operated within a city - the city requires residential trash pickup, so the rates reflect that basically everybody is getting trash pickup. Refuse utilities are trying to expand outside of the city limits, he explained. For example, in Fairbanks they are trying to expand north of the city limits and pick up more customers, which requires experimenting with their rates to make them work. The problem, he said, is that the current process for altering rates takes about two years. So, if the utility picks a number that is too high or too low it takes a long time for that to get fixed and creates a backlog within the RCA to address those changes. Hence, he continued, the suggestion was made in the Senate Finance Committee to put it into the simplified rate filing process so that those changes can be addressed within a few months rather than about two years. 3:55:48 PM REPRESENTATIVE MCCARTY asked whether this [proposed] process will allow for people in the expanded service area to have feedback on whether they want to be part of a collection. SENATOR MYERS answered that the proposed new process does not require somebody to be a refuse customer, as opposed to people living within city limits being required to sign up. Simplified rate filings still provide time for public feedback as the rates change, he explained, but because the simplified rate process is a shorter time period there are also limits as to how much the rate can change within that time period. A refuse utility wanting a larger change, he specified, would have to go through the original longer process. In further response, Senator Myers confirmed that this would not force people to pay a business, they could choose to take their garbage to the dump themselves. 3:57:37 PM [CSSB 190(FIN) was held over.]