SB 284 FOUR DAM POOL: RELATED FUNDS & BONDS  SENATOR LEMAN announced SB 284 to be up for consideration RANDY SIMMONS, AIDA, said he was available to answer questions. He said his letter addressed Senator Halford's concern with the legality of entering into an agreement and they sent the committee six different alternatives showing the cost and annual debt service payment over different scenarios. SENATOR LEMAN said he agreed with him that a maximum 10-year term with a one year payment deferral would be the best alternative. MR. SIMMONS replied that they have no reason to want to go longer than 10 years. The only concern he has is that a lot of this is market driven. He said they could report to Legislative Budget and Audit, but they would like to have the flexibility. SENATOR TAYLOR said the Four Dam Pool group indicated they wanted no term longer than eight years. He didn't know what triggering device would make certain that divestiture actually occurs other than to leave the hammer of self help in the hands of the people who would need it for the purposes of maintaining and repairing their facilities. He said he would like to see something in there that gives comfort to the Four Dam Pool communities that if the State does not act in good faith and does attempt to just delay this divestiture discussion, they will once again have those self help rights. MR. SIMMONS responded that this bill does allow them to exercise their self help right for the amount that is not being used for the debt service payment. Without the utilities agreeing that the amount that needs to be set aside for the payment of the bond, they would probably not be able to sell the bonds. MR. SIMMONS said the utilities requested to go back to the table for further negotiations and AIDA agreed. The utilities actually asked to have the divestiture negotiations be put aside. Also the term of the debt, whatever it may be, does not affect the utility repairs at all. It may affect the citizens of Alaska, however. They have had discussions about the length of the bond. In those discussions they had to have a shorter term. They signed an agreement, though, that allowed the term to be anywhere up to, but no more than 25 years. Some members of the utility wanted a 25 year term because they felt if they actually did the divestiture they might want to reserve the bonds. They agree that the shorter time was best. Before they were to float any bonds, members of the utilities will be consulted as part of the agreement. SENATOR TAYLOR said the agreement is centered around taking away their self help right. The only thing he heard from members was seven to eight years was plenty and they wanted to get it paid off quickly. There is an impact on the rate payer to the extent that we take money out of the Four Dam Pool stream and dedicate those monies to the bond reimbursement. Those monies are not available to go back into the Four Dam Pool Transfer Fund (Southeast Energy Fund). He wanted to see divestiture expedited or he wanted some assurances that divestiture would occur or this legislation goes away. MR. SIMMONS responded that the problem with waiting for divestiture means that the repairs won't happen this year because there are a lot of property transfers that have to take place which would take from 12 to 18 months during which nothing could be done. SENATOR TAYLOR said that was not correct because even without a bill, self help is still available giving them $11 million worth of resources which is more than they are intending to put forward in this construction season on the repairs. They could exercise their self help clause and do the repairs. MR. SIMMONS said with bonds they would have most of the repairs done this construction season. With self help they would have to do the repairs over a two to three year period. SENATOR TAYLOR said he wanted to make sure that all alternatives were considered including power cost equalization. Number 212 SENATOR TAYLOR asked if the divestiture plan they have provides funding for PCE out of the income stream they receive? MR. SIMMONS said it didn't; and that is a decision made by the Governor and the Legislature. MR. SIMMONS said that the State was willing to go back to the table and negotiate. SENATOR TAYLOR said he had to see something that would show him that closure will occur within this process in a given period of time. He wanted it to be fully understood that at the end of the time if divestiture does not occur that the full opportunity of self help comes in. MR. SIMMONS said he wanted to make it clear that they are not taking the self help right away from the utilities. All they want the utilities to do is to limit their right to the amount of bond payments only. They still have their self help right up to $7 million per year. SENATOR LEMAN said he wanted to work on amendments to the bill before moving it from committee.