SENATE BILL NO. 115 "An Act creating a rural community energy assistance program; and providing for an effective date." JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, SPONSOR, explained that SB 115 temporarily establishes the rural community assistance program. The intent of the legislation is to provide relief to Alaskan residents who are struggling to pay heating costs this winter. Most residents of rural Alaska heat their homes with fuel oil. The price of oil has increased in rural Alaska, even though the price of a barrel of oil has decreased. Most of the oil for the coming winter was delivered prior to the decline of fuel oil prices. Mr. Livey reported that there is not a lack of fuel in rural Alaska except in a few isolated instances. Most of the fuel stocks are adequate; however, many people do not have enough money to purchase fuel, electricity, and other necessities. He pointed to a Division of Community and Regional Affairs report, "Current Community Conditions: Fuel Prices Across Alaska, November 2008 Update" (Copy on File). Out of 100 communities surveyed, 27 pay more than $7 per gallon for heating fuel. 9:09:03 AM Mr. Livey explained that a person burning 800 gallons of fuel each year--a fairly conservative amount--will spend approximately $5700 per year to heat their home. In 2007, the Institute of Social and Economic Research (ISER) reported that the average per capita income for small villages around Bethel was approximately $16,000 ("Understanding Alaska's Remote Rural Economy, by Scott Goldsmith, UA Research Summary No. 10" Copy on File). Consequently, over 35 percent of an average individual's income can be used for heating fuel alone. In addition, the 2007 ISER report noted that Bethel fuel costs were 92 percent higher than Anchorage costs. The ISER report also covers food costs in rural Alaska. Mr. Livey described other methods of distributing energy assistance, including the Bulk Fuel Loan Program, Bulk Fuel Bridge Loan Program, and the governor's emergency fuel program; the programs are designed primarily to help communities purchase fuel when there is a shortage. The sponsors believe SB 115 would function differently. There is enough fuel, but people cannot afford to buy it. Mr. Livey added that the legislation is not intended to fix the income problems in rural Alaska or to address long-term fuel issues in rural Alaska. The intent is to provide people with a way of getting through the rest of the current heating season. 9:12:40 AM Co-Chair Stedman clarified that the provision would be repealed June 30, 2010. He asked about language on line 12 of the bill referring to departmental regulations. Co-Chair Hoffman informed the committee that his staff is looking at ways to change the legislation so it would not be necessary to go through the regulatory process. The goal is to make cash available immediately. Co-Chair Stedman reiterated that the intent is to get immediate relief for the coming winter. He referred to an impending fiscal note by the Department of Commerce, Community and Economic Development. Co-Chair Stedman opened public testimony. 9:14:15 AM REGAN MATTINGLY, STATE AFFAIRS COORDINATOR, ALASKA PRIMARY CARE ASSOCIATION (APCA), ANCHORAGE (testified via teleconference), testified in support of SB 115. The association represents 26 community health center organizations operating 141 clinics across the state. Clinic directors have increasingly reported that revenues intended for patient services are being crowded out and redirected to cover high energy costs in facilities. Patient access could be affected; APCA is requesting that non-profit community health center organizations and other primary care safety net providers as well as local tribal community health center organizations be considered eligible for assistance under the program. PAT LUBY, ADVOCACY DIRECTOR, ALASKA ASSOCIATION OF RETIRED PERSONS, ANCHORAGE (AARP) (testified via teleconference), reported that AARP strongly supports SB 115. Many of the younger people have had to leave rural communities, leaving communities dominated by older people and children, the people most susceptible to hypothermia. TOM LAKOSH, SELF, ANCHORAGE (testified via teleconference), had concerns about the bill supplying energy subsidies for communities rather than individuals in need. He asked that the bill be specifically amended to provide subsidy for individuals and/or organizations in direct need rather than a wholesale subsidy of communities. He thought the state had indebted itself through the resource rebate the previous year. 9:19:19 AM Senator Thomas pointed out that the legislation is waiting for language to assure dispersion of funds to individuals in communities. MELODY NIBECK, TRIBAL ENERGY PROGRAM MANAGER, BRISTOL BAY NATIVE ASSOCIATION (BBNA), DILLINGHAM (testified via teleconference), testified in support of the legislation. She said the communities of Bristol Bay are facing high fuel prices that impact electric, gas, and food bills. People often have to choose between paying for fuel and other basic necessities. She stressed that Dillingham heating fuel costs $6.10 per gallon and food is 220 percent of Anchorage prices. Small villages pay more. The association is committed to being part of finding a long-term solution to energy challenges in rural Alaska and recognized that the bill was providing one-time assistance. Ms. Nibeck informed the committee that the Bristol Bay Region has one first-class city, 12 second-class cities, and 18 unincorporated communities. Since all communities equally face high prices, BBNA hopes the bill will clearly define "rural community." NORMAN ANDERSON, ECONOMIC DEVELOPMENT PROGRAM MANAGER, BRISTOL BAY NATIVE ASSOCIATION, DILLINGHAM (testified via teleconference), spoke in support of the legislation. He reported that increased assistance has been needed because of economic challenges, including low salmon prices. He explained that the people in the region are proud and rarely ask for assistance. The people have done everything they possibly could to be able to sustain themselves, but the increasing price of fuel has made it more and more difficult to make ends meet. He spoke for the more remote villages in the region where people cannot find jobs and the necessary income. 9:24:51 AM MYRON NANENG, PRESIDENT, ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS, YUKON-KUSKOKWIM DELTA REGION (testified via teleconference), spoke in strong support of SB 115. He reported that fuel costs range from $6 to $11 per gallon, a high amount for people in the village with limited resources. The fuel is needed for gathering subsistence resources. In the villages a gallon of milk can cost up to $13 a gallon. People have to choose between fuel and food. He emphasized the hardships in the region and the real need for the energy assistance. The association has provided many with low-income energy assistance, but it is not enough to buy the necessary fuel. Mr. Naneng added that people in the region have lost their economic base due to poor management of fisheries. He stated that if the fisheries had been managed well, some people would have been able to manage through the winter. The people are bearing the burden of conservation as well as providing for their families. Co-Chair Stedman closed public testimony. 9:29:28 AM Co-Chair Stedman raised the issue of fuel delivery in Western Alaska. Co-Chair Hoffman noted that SB 115 was designed only to get Alaskans through the following winter. He stressed that there is need for a long-term solution. He referred to legislation from the previous year for capping fuel prices. He acknowledged that price capping might not be an ideal solution. He thought SB 115 could be fine-tuned and implemented. He reiterated his intent that the legislation be as broad as possible to include all people in Alaska, and his desire to avoid the time-consuming regulations process. Co-Chair Stedman asked about the status of ports in the region. Co-Chair Hoffman answered that ice-free ports begin below Naknek. He added that the delivery schedule is the problem as many communities did not get their fuel and had to have it flown in. 9:32:03 AM Senator Ellis stated support for the legislation. He asked whether clinics were considered for fuel relief. Co-Chair Hoffman hoped to have the issue addressed. Senator Ellis emphasized need in rural health clinics. SB 115 was HEARD and HELD in Committee for further consideration.