HOUSE JOINT RESOLUTION NO. 58 Respectfully requesting the members of the Alaska Congressional delegation to sponsor and support passage of an amendment to the statute relating to the disposition of federal funds received by the state from oil and gas leases in the National Petroleum Reserve - Alaska to authorize use of the funds for the state's power cost equalization program. Co-Chair Mulder explained that the resolution requests Congress to amend federal statutes to allow National Petroleum Reserve Alaska (NPRA) funds to be used to fund Power Cost Equalization (PCE). He observed that under federal statutes NPRA funds can be used for: planning, construction, maintenance and operation of essential facilities, and other necessary provisions of public service. Federal statutes also provide that the state in allocation of such funds shall give priority to use by subdivisions within the state most directly or severely impacted by development of oil and gas leasing. He explained that there is currently $40 to $41 million dollars in the NPRA account and gave a brief history of NPRA funding. Co-Chair Mulder emphasized that it is time to establish a long-term solution to fund PCE through an endowment, which would spin off interest each year. He acknowledged that the North Slope Borough would not support the approach. He provided members with a list of projects listed on the North Slope Borough's Impact Mitigation Program application (copy on file). He stressed that a funding mechanism for PCE would be in the interest of all of rural Alaska. The NPRA funding provides an opportunity to develop an endowment for PCE. He maintained that the projects requested by the North Slope Borough, while worthy, do not come to the same level of prioritization as PCE. He maintained that all rural Alaska should share the benefits of NPRA leasing and drilling. Representative Grussendorf spoke in support of the resolution. He pointed out that it could take time to get the changes past Congress and questioned what other sources of funds are being considered. Co-Chair Mulder observed that changes to the federal statute would not be needed if the North Slope Borough concurred with the use of NPRA funds for an endowment. Representative J. Davies felt that language on page 3, line 18 was ambiguous: "to authorize annual appropriation of money received from this source". He questioned if the intent is to have a mechanism to allocate the money that is available to the state of Alaska. He asked if all the money available from the source would be appropriated. Co-Chair Mulder responded that the intent is to appropriate the entire $41 million dollars to be part of an endowment. He discussed the overall proposal. He estimated that resolution of the Four Dam Pool would result in funding for use in a PCE endowment. He estimated that an endowment using NPRA funds and money from the sale of the Four Dam Pool could total $120 - $125 million dollars. This would provided $8 to $10 million dollars a year in interest. In addition, there is a possibility of assistance from the Alaska housing authorities. The housing authorities are willing to be part of a long-term solution. A portion of the AIDEA dividend could be used to fill in the gap between the endowment and the $15.7 million dollars needed to fund PCE. He clarified that interest from the $41 million dollars will generate approximately $2.5 to $3 million dollars a year. Combined with funding generated from the Four Dam Pool or from its sale to the communities would provide the additional amount. Co-Chair Therriault explained that there would be an annual appropriation from the interest on the $41 million dollars in NPRA funds. Representative J. Davies questioned if there would be additional funds. Co-Chair Mulder could not say if there would be future funds available. He suggested that "annual" could be deleted to allow additional appropriations. Representative J. Davies agreed with the deletion of "annual" on line 18, page 3 and suggested that "the" be added before "money". Co-Chair Therriault MOVED to ADOPT Amendment 1: that "annual" be deleted from line 18, page 3 and "the" be added before "money". There being NO OBJECTION, it was so ordered. Representative Austerman recalled that Senator Stevens indicated that the issue of PCE funding is an Alaskan problem. Co-Chair Mulder responded that Alaska is not asking the federal government to fund PCE. Representative Austerman pointed out that the resolution asks the federal government to step into the issue. Co-Chair Mulder stressed that Alaska should have a voice in how the money is spent. Representative Austerman clarified that he is a strong supporter of the endowment concept for PCE. Co-Chair Therriault suggested that Senator Stevens would consider the rest of Alaska's plan regarding PCE funding. Representative Austerman noted that the plan is not beyond the conceptional stage. Co-Chair Mulder spoke in support of developing a plan. He stressed the need to address the issue. Representative J. Davies pointed out that NPRA land is part of the federal public domain. Co-Chair Mulder observed that the federal government gives the state 50 percent of the revenue and reiterated that the state should have some say over how the money is spent. Co-Chair Therriault pointed out that there is a zero fiscal note. Co-Chair Mulder MOVED to report CSHJR 58 (FIN) out of Committee with the accompanying fiscal note. Representative J. Davies OBJECTED. He questioned if anyone opposing the bill had been contacted. Co-Chair Therriault responded that no one contacted his office. A roll call vote was taken on the motion. IN FAVOR: Austerman, Bunde, Davis, Foster, Phillips, Williams, Moses, Therriault, Mulder OPPOSED: Davies, Grussendorf The MOTION PASSED (9-2). CSHJR 58 was REPORTED out of Committee with a "no recommendation" and with a zero fiscal note by the House Finance Committee.