SENATE CS FOR CS FOR HOUSE BILL NO. 233(L&C) "An Act relating to giving notice of unclaimed net margin distributions made by electric and telephone cooperatives." DEREK MILLER, STAFF, REPRESENTATIVE KELLY, read from Sponsor Statement: The purpose of HB 233 addresses the sometimes burdensome and ineffective noticing requirements of unclaimed property law regarding capital credits of electric and telephone cooperatives. Electric and telephone cooperative from time to time receive excess revenue from members that exceed the expenses of operations. The cooperative keeps these excess revenues in a member-owned capital account called capital credits, on behalf of the member. Cooperatives may refund a portion of accumulated capital credits, but in some cases the cooperative seeking to refund the capital credits no loner has a valid address for the member. As a result, many go unclaimed. Current Alaska unclaimed property law allows the credits to revert back to the cooperative as long as the cooperative, at least six months prior to the reversion 1) mailed a notice to last known address of the member; 20 publishes a notice of proposed reversion in the same manner required for publishing a service of commons by publication; and 3) publishes a notice of the unclaimed capital credits four times, during four consecutive calendar weeks in a newspaper of local circulation. While mailing to last known address of members sometimes result in finding members, newspaper publication does not result in a significant increase in the number of members who cash their capital credit checks, particularly for rural cooperatives. As a result, cost of compliance with this notice requirement is significant and the effectiveness is questionable. HB 233 allows cooperatives the option of using the internet, instead of newspaper publication, to notify its members of unclaimed capital credits. Alaska is the most "wired" state in the country and this bill allows for cooperative to notify its members using a method most likely to reach them. 1:40:42 PM Co-Chair Stedman inquired how many areas in Alaska do not have internet access and if it is a problem. Mr. Miller referred to Marilyn Leland Executive Director Alaska Power Association to better answer that question. Co-Chair Stedman referenced page 2, line 3, and asked why the posting on the website was for 180 days. 1:41:42 PM Mr. Miller explained that the bill was originally introduced with a thirty day posting then the House Labor & Commerce Committee amended that to 180 days. There has been no objection from cooperatives regarding the change. 1:42:21 PM Senator Dyson asked if consideration was given to the use of the Permanent Fund Division's address list to notify those owed a credit. Mr. Miller responded that it had not been considered but he would look into the possibility. 1:43:04 PM Senator Dyson felt the use of the Permanent Fund Division's address listing was a more effective way to find members and offered to propose an amendment to that effect. 1:43:56 PM Co-Chair Stedman reminded the Committee that this was the first hearing HB 233 and there would be time for questions and concerns to be addressed. Mr. Miller informed the Committee that Chugiak Consumers Consortium reviewed the bill and felt confident the consumers were being adequately notified. 1:44:45 PM Senator Thomas expressed confusion over the term "member" noting that those needing to be contacted would no longer be members. Mr. Miller agreed. 1:45:18 PM Senator Elton asked the notification process used by utility companies that are not cooperatives. Mr. Miller answered that the bill only covers telephone and electric cooperatives and he would need to check into how other private utilities handle notices of unclaimed capital credits. Senator Elton wanted to assure that the state was treating both cooperative and non cooperative utilities equally. He further noted that there may be legal limitations regarding the use Permanent Fund Division information and it may require a change in the law. 1:46:40 PM Co-Chair Stedman suggested that the bill's sponsor check with the Permanent Fund Division regarding legal limitations to release address information. 1:47:09 PM ROBERT WILKENSON, CHIEF EXECUTIVE OFFICER, COPPER VALLEY ELECTRIC ASSOCIATION and VICE PRESIDENT, ALASKA POWER ASSOCIATION testified via teleconference in support of HB 233. He explained that the Alaska electric industry includes municipal utilities and a few investor-owned utilities but was mostly made up of nonprofit electric cooperatives. The distinguishable aspect of cooperatives is that they operate on a nonprofit basis; by law the monies received in excess of the cost of operations are a "contribution of capital" by the member. The utility policy states that the credits are allocated to customers, pending refund. He elaborated that in some cases the refunds may not be made for a generation or even longer, which presents the problem of unclaimed refunds. He indicated that the 180 day notice was arrived at from an existing statute whereby a year after a refund is declared, if unclaimed refunds have been noticed for a year, six months prior to the 180 days those funds may revert to the utilities. He noted staff on both the House and Senate side worked with the utilities to make changes to HB 233. The goal of the utilities is to complete the contract with members and return any capital credits due. Mr. Wilkenson responsed to Senator Thomas' earlier comment regarding "members" said a differentiation could be made by using "members" and "inactive members" terminology. 1:52:38 PM MARILYN LELAND, EXECUTIVE DIRECTOR, ALASKA POWER ASSOCIATION testified via teleconference and commented on the previously asked question regarding the number of companies without internet. She believed most companies had the internet and this bill could be an incentive to use the internet for those who do not already. She further noted that some companies are already noticing members through the internet. She described that the funds, once returned to the utility, are generally given back into the communities. She provided an example of communities using funds for school scholarships. 1:54:55 PM HB 233 was HEARD and HELD in Committee for further consideration. RECESS: 1:55:37 PM RECONVENED: 5:12:58 PM