CSHB 233(L&C)-UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS    2:07:54 PM CHAIR ELLIS announced CSHB 233(L&C) to be up for consideration. DEREK MILLER, staff to Representative Kelly, sponsor of HB 233, explained that it addresses the sometimes burdensome and ineffective noticing requirements of unclaimed property law regarding capital credits of electric and telephone cooperatives. From time to time these cooperatives receive excess revenues from its members that exceed the expenses of operations. They hold funds in member-owned capital accounts called capital credits (sometimes called "net margins") on behalf of the member. These coops may refund a portion of these accumulated credits, but in some cases the cooperative seeking to refund the capital credits can no longer find the member through their last known address. As a result, many credits go unclaimed. Current unclaimed property law allows the credits to be reverted back to the cooperative as long as it has mailed a notice to the last known address at least six months prior to the reversion and published a notice in a newspaper of general circulation. It has been found the newspaper notification has not significantly increased the number of members who cash their capital credits; as a result the cost of compliance of that part of the law is significant, while the effectiveness is questionable at best. HB 233 allows cooperatives the option of using the Internet instead of newspaper publications to notify its members of these unclaimed capital credits. He noted that Alaska is one of the most wired states in the nation. As an example, Mr. Miller noted Alaska Village Electric Cooperative (AVEC) serves 52 villages and spends many thousands of dollars to publish in several different newspapers, but they also have a website where the names of unlocated members are continuously published. MR. MILLER said this legislation is supported by the Alaska Power Association as well as several other rural coops and individuals. 2:11:07 PM SENATOR HOFFMAN asked how many newspapers AVEC advertises in. MR. MILLER didn't know that answer. SENATOR STEVENS said they are talking primarily about people who have moved; if they are still customers, it's relatively easy to locate them. He asked how many people they are talking about. MR. MILLER said other folks could better answer that. The problem is that the cost of complying with the law is more than the actual amounts that are in the accounts. 2:12:27 PM DARREN SCOTT, CEO, Kodiak Electric Association, supported HB 233. He said the association spends about $4000 per year to advertise in the newspaper and it's very ineffective. Using the Internet to contact people works a lot better. 2:13:49 PM RON VACERA, Director, Member Services, Chugach Electric Association, supported HB 233. He explained that a lot of Anchorage people move and Chugach Electric pays capital credits on a regular basis. It spends about $55,000 annually for publishing names in the newspaper, and it typically takes up 16- 20 pages in the paper. It ends up issuing 2500 - 3000 checks to about 15-20 percent of the names listed, which indicates some success, but a lot are left listed. He said that using the Internet was much more economical and the list could remain on line for an extended period of time unlike the newspaper. 2:16:16 PM ROBERT WILKINSON, CEO, Copper Valley Electric Association, supported HB 233. He agreed with all the previous testimony in support of this bill and said they had been advertising for invalid addresses on their website already for a number of years. People who work with it have told him it is more successful than newspaper advertising. He added that a majority of the Alaska coops use these credits for scholarships for youth of member owners. Copper Valley Electric over the past 15 years, had put over $100,000 into scholarships. 2:18:14 PM MARILYN LELAND, Executive Director, Alaska Power Association, supported HB 233. She said this process would be more effective for locating former customers who are owed capital credits. In addition it would save them and their customers many thousands of dollars in advertising expense. The current method of publishing names four times in local newspapers is cumbersome, expensive and not even terribly effective in most small Alaskan communities, where even if their names are published, they don't live there any more and aren't likely to see it. She said that using the Internet for notice already has some precedence in Alaska's unclaimed property statutes and that the Department of Revenue already gives notice to owners of unclaimed property using an Internet website. SENATOR BUNDE assumed that the expense of the publishing is passed on as an operating expense to the consumer. MS. LELAND answered that was her understanding. SENATOR STEVENS asked how she tries to contact someone who has left the community, whose physical address no longer exists, by using the Internet. MS. LELAND answered rather than advertising a long list of names four times there would be a smaller advertisement in the paper that would direct people to the Internet where they could look at the names. She mentioned that finding one's name in the newspaper is a hit or miss proposition, but it would be on the coops' websites all the time. 2:22:04 PM RAY CRAIG, Chair, Chugach Consumers and Advocacy Group for Electric Utility Customers, supported HB 233 for all the previously mentioned reasons. However he was concerned that it went too far by not putting any minimum requirements on what kind of an advertisement the utilities would do. A utility could possibly bury a fine print ad in the back of the legal notices of the paper out of the view of the public - in light of the fact that utilities can keep unclaimed capital credits. He suggested a possible fix to require a minimum size display ad four times a year with an attention-getting headline like "Do we owe you money?" He reminded them that the newspaper advertising does allow thousands of people to recover their capital credits. 2:25:57 PM CHAIR ELLIS asked Mr. Miller if he had heard this suggestion before. MR. MILLER replied it was new to him, and he offered to work on it. CHAIR ELLIS said he would be interested in seeing a CS with a minimum size ad and possibly a requirement that the utility collect the email address of the consumers. He held HB 233 in committee.