SB 110-ELECTRIC UTILITY LIABILITY  3:34:04 PM CHAIR REVAK announced the consideration of SENATE BILL NO. 110 "An Act relating to liability of an electric utility for contact between vegetation and the utility's facilities; and relating to vegetation management plans." 3:34:26 PM SENATOR PETER MICCICHE, speaking as sponsor of SB 110, stated he was carrying the bill by request. It is about an electric utility's liability when something occurs that is outside its control. He cited a forest fire as an example. He deferred to Ms. Jackson for further introduction. 3:36:21 PM SENATOR KAWASAKI joined the committee meeting. 3:36:34 PM EMMIE JACKSON, Staff, Senator Peter Micciche, Alaska State Legislature, Juneau, Alaska, introduced SB 110 reading the following sponsor statement into the record: Senate Bill 110 will protect Alaska's electric utility ratepayers from increased rates by clarifying in statute when electric utilities are and are not legally liable for damages caused by contact between vegetation and electric infrastructure. Under the provisions in SB 110, a utility would not be liable for damages caused by vegetation outside its easement contacting electric facilities. For vegetation inside an easement, a utility would be liable for damages if the utility did not adhere to its vegetation management plan. SB 110 does not eliminate all liability from electric utilities. Liability would still apply if a utility was found to have failed to follow its own vegetation management plan or if a utility causes vegetation outside the easement to contact electric facilities. The legislation better defines in statute when damages are applicable, setting clear expectations that utilities will implement and follow vegetation management plans or face liability. SB 110 protects electric utilities from being held liable for the cost of damages caused by vegetation that they either cannot control or were not permitted to maintain. This also protects Alaska's electric ratepayers from having to bear the brunt of those costs through their rates, in a State where electric utility service costs are already high 3:38:22 PM CHAIR REVAK turned to invited testimony. 3:38:48 PM CRYSTAL ENKVIST, Executive Director, Alaska Power Association (APA), Anchorage, Alaska, stated APA is a statewide association that represents electric utilities in Alaska. Member companies provide power to more than 0.5 million Alaskans from Utqiagvik to Unalaska, through the Interior and Southcentral, and down the Inside Passage. On behalf of APA, she stated strong support for SB 110, which will protect Alaska ratepayers from increased costs. It provides clear rules about when utilities are liable for damage caused by vegetation coming too close to electric facilities. MS. ENKVIST reported that utility lines are most often located in easements or rights of way across private or public property. They are wide enough to accommodate the lines and allow access for maintenance and repairs, generally 15-20 feet. She opined that wider easements would burden property owners and restrict other uses of that property. She explained that utilities clear vegetation inside these corridors to minimize contact with the electric facilities. She pointed out that vegetation outside the corridor can grow high enough to contact an electric utility's facility, but if the utility cuts this tree or other vegetation, it could be liable for treble damages to the property owner. She described the vegetation outside the easement or right of way as an uncontrollable risk to both the electric utility and its ratepayers. MS. ENKVIST said SB 110 clarifies that utilities are only liable for vegetation outside the utility corridor if the utility itself causes the vegetation to hit the power lines. They control vegetation inside the utility corridor by following their comprehensive vegetation management plan. Each is tailored to the utility's unique circumstances. SB 110 also clarifies that utilities are only liable for damages from vegetation inside the easement or right of way contacting their facilities if they do not have a vegetation management plan or do not follow the plan. She restated the point to emphasize that SB 110 does not eliminate liability. She concluded, "As factors that cause wild fires increase - hotter dryer summers, invasive insects, and longer growing seasons, it is imperative that SB 110 pass to protect Alaska electric utility ratepayers." 3:43:02 PM TRAVIS MILLION, Chief Executive Officer, Copper Valley Electric Association, Glennallen, Alaska, delivered a presentation on vegetation management and utility rights of way. He explained that it is a utility's legal obligation to manage the vegetation within the bounds of the utility right of way. Responsible vegetation management helps to ensure the safety of the public. A tree that comes in contact with a line may cause a wildfire or sag the line to the ground in wintertime and become a hazard for those driving on the rights of way on snow machines. MR. MILLION directed attention to the graph on slide 3 and explained that the width of the right of way is measured on either side of the utility pole, and it is utility specific. Distribution line rights of way are 15 feet on either side of the center of the pole for three-phase lines and 10 feet on either side for single-phase lines. The larger transmission lines typically have a 50 foot right of way on either side of the center line or pole. He clarified that the utility does not own the land inside the right of way. Rather, the state, federal, or private property owner has given the utility an easement for access to the land. The utility cannot legally go outside such easements. 3:45:36 PM MR. MILLION directed attention to slides 4 and 5 that illustrate the mechanical means typically employed to clear rights of way in Alaska. These methods include the use of a bucket truck and telescoping chainsaw that can be used to clear branches of trees outside the right of way that encroach inside the right of way and may contact the utility line. Copper Valley and other utilities also use sky trims or drafts for clearing purposes. These vehicles have a telescoping arm with a radial arm saw blade at the end so limb trimming can be done from the ground. Importantly, the utility easement allows clearing from ground to sky so limbs inside the easement may be trimmed. Trees growing outside the ROW cannot be cut down. An additional clearing method is to use a brush hog to mow and chip all limbs and other vegetation, which can then be left to cover the ground in the right of way. 3:47:24 PM MR. MILLION pointed to the image on the left side of slide 6 that shows a utility right of way that is very green. He said wildfires are not the primary concern in these situations. Rather, the risk is from trees outside the right of way and/or people traveling in the right of way coming in contact with the lines. He said the picture on the right shows a 100-foot transmission line ROW that is cleared from ground to sky. All vegetation in the ROW has been cut, chipped, and is used as mulch. He directed attention to slide 7 and explained it is an example of a 30-foot distribution ROW before, during, and after clearing. He said the final slide shows a typical distribution line after the vegetation has been cleared ground to sky within the ROW. He said what is important to note is that any of the 80100-foot trees on either side just outside the ROW could fall and easily contact the utility line. 3:50:04 PM MR. MILLION began his prepared testimony. He stated strong support for SB 110, which would clarify in statute that an electric utility may not be held liable for property damage, death, or personal injury that results from contact between vegetation outside a utility's ROW and the utility infrastructure. This protects ratepayers, which in Alaska most often are the member owners of an electric cooperative that serves a municipality. He emphasized that CVEA has been very aggressive in the last five years to reestablish and maintain their ROWs. This is legally and morally the utility's responsibility, but it can be hard work in areas such as Southeast and Valdez where the vegetation grows as fast as it is cleared. MR. MILION reported that CVEA has developed a comprehensive vegetation management plan that describes the width of ROW that can be cleared for both distribution and transmission lines, the mechanical and hand methods to clear the ROW, and the rotation and frequency for clearing feeders in any given year. He reported that CVEA has reestablished nearly the entire length of its 106-mile transmission line since 2016, despite it running through some of the roughest terrain in Alaska. He opined that if the utility is doing due diligence to follow its vegetation management plan, it does not seem right to hold it responsible if a tree outside the ROW were to come into contact with the lines and cause a fire. The utility does not have the legal right to remove such trees. MR. MILION pointed out that remotely isolated utilities face the risk of having to shut down the power system if a lawsuit were to bankrupt the utility. In these situations, the member owners have the most to lose, not the stakeholders like in a for-profit electric utility. He maintained that without SB 110, there are few cost-effective options for a utility to mitigate these risks without passing the burden on to the member owners. He noted the increasing risk of wildfires and urged the committee to pass SB 110 to protect Alaska electric utilities and their member owners. 3:53:19 PM SENATOR KAWASAKI asked if CVEA works with property owners to mitigate the risk from leaning trees that are outside the ROW. MR. MILLION answered CVEA has notified member owners that the utility will clear dangerous trees free of charge that the property owner has identified. Further, if the utility is in the area and sees a tree that may endanger the line, they will work with the property owner to remove the tree. 3:54:23 PM JOHN BURNS, President and Chief Executive Officer, Golden Valley Electric Association, Fairbanks, Alaska, stated GVEA is a not- for-profit electric cooperative serving Interior Alaska communities from Cantwell to Delta Junction, including Fairbanks and North Pole. This 5,973 square mile service area has about 2,600 miles of right of way easement that the utility is responsible for clearing. This is done on a 7-year rotating cycle, so about 370 miles is cleared every season, consistent with the established vegetation management plan. He reported that GVEA spends about $3 million every year on these clearing efforts. MR. BURNS described SB 110 as vital to protect the interests of all Alaska ratepayers from increased costs associated with wildfires and other damages caused by vegetation outside the ROW easements, and over which GVEA and other utilities have no control. He said GVEA has some of the highest electric rates in the Railbelt, and lawsuits for damages caused by vegetation outside the ROW and outside GVEA's right to control would further raise costs for ratepayers. He reiterated that SB 110 is important to protect all electric ratepayers from bearing additional costs resulting from lawsuits related to things outside the utility's control. He confirmed previous testimony that a utility is not allowed to enter property outside the legal ROW without the consent of the property owner. Doing so exposes the utility to liability for trespass. Reason dictates that a utility should not be liable for that over which it does not have control he said. It is neither fair nor just to impose liability on an electric utility for damage caused by vegetation outside the ROW that falls into or otherwise makes contact with the utility infrastructure. MR. BURNS said SB 110 clarifies in statute that electric utilities would not be liable for damages caused by vegetation outside the easement that contacts the utility facilities. Inside the easement, the electric utility would only be liable if it had not followed its established vegetation management plan. Importantly, he said SB 110 does not eliminate liability for electric utilities; it simply clarifies when liability does and does not apply when damage arises from vegetation contacting electric infrastructure. He described increased maintenance challenges attributed to climate change and urged the committee to pass SB 110 and provide electric utilities with a modicum of protection. 3:59:58 PM JIM BUTLER, Counsel, Homer Electric Association (HEA), Homer, Alaska, said the previous testimony did a good job of outlining the rational and importance of SB 110. He related that HEA is a nonprofit electric utility that is governed by an elected board that is held accountable by the paying members. HEA's service area covers nearly 32,000 miles from east of Sterling, north to Nikiski, and down to and across Kachemak Bay. The utility represents 24,338 member owners. MR. BUTLER reported that HEA has just over 2,700 miles of energized line; there are about 1,400 miles of overhead distribution line, 1,000 miles of underground distribution line, and 300 miles of transmission line. In general, homeowners tend to own the land under distribution lines and the state or federal government owns the land below transmission lines. MR. BUTLER said HEA has had a right of way management plan for many years, and they value the input of landowners when clearing the more than 1,500 miles of ROW. This maintenance is important to prevent damage to the electric facilities and to ensure that work crews are able to quickly and safely access lines that may be down due to seasonal whether events or other causes and restore power to the consumers. 4:02:45 PM SENATOR BISHOP joined the committee meeting. MR. BUTLER advised that HEA notifies member owners when they are clearing the ROW and they have found that with the infestation of spruce bark beetles, people are interested in HEA's support to take down dangerous and dead trees. He clarified that HEA works collaboratively with the landowners, but is not in the position to assume the landowner's responsibility of monitoring and managing hazardous trees on private property. He reported that HEA spends from $1.2 million to $1.6 million each year to implement its right of way management plan. The board is briefed on the areas that will be cleared according to the revolving plan and they support the expenditure when they approve the annual budget. MR. BUTLER echoed previously stated reasons to support SB 110 and added that it provides an incentive for utilities to adopt best practices and develop ROW vegetation management plans that are unique to the service area. Hopefully, landowners are also incentivized to be aware that this is a shared responsibility. He said it is also important to understand that more than liability itself, the arguments over liability can cause a utility to incur significant expense. He emphasized the importance of clarifying the rules of engagement, incentivizing best practices, and working with member customers to mitigate hazards of not only fire but also for those who use rights of way in the winter. 4:07:23 PM CHAIR REVAK opened public testimony on SB 110. 4:07:46 PM LYN ELLIOT, Assistant Vice President of State Government Relations, American Property Casualty Insurance Association (APCIA), Denver, Colorado, stated APCIA represents about 50 percent of the property casualty insurance market in Alaska as well as family, communities, and businesses in the state. She said APCIA appreciates the importance of having robust policies on wildfire mitigation practices, but they have a concern with granting immunity when the state does not have a specified standard for vegetation management plans. She said APCIA sees a need for compliance with such plans as a condition for partial immunity. This will strike a balance that takes into account the needs of the utilities, the property owners, and the insurers. SB 110 does not achieve this balance, she said. 4:09:36 PM CHAIR REVAK found no one else who wished to comment, and closed public testimony on SB 110. 4:10:04 PM SENATOR KIEHL mentioned the importance of having a robust vegetation management plan and expressed interest in learning what those standards look like. He also asked if homeowner's insurance generally covers an [electrical] fire that is the result of a tree falling on the house or if the homeowner would be uncovered and without the utility to look to. 4:11:11 PM ANDY LEMAN, General Counsel, Alaska Power Association, Anchorage, Alaska, offered his understanding that the reason for having homeowner's insurance is to cover property damage caused by fires, whether it is vegetation in contact with a power line or the myriad of things that can lead to a fire. MS. ELLIOT agreed that insurance policies generally are in place to protect the homeowner or business owner in the event of loss. She said one concern with SB 110 is that without an established standard for a vegetation management plan, the insurers could lose their subrogation rights. She explained this is the ability to recover costs on behalf of the homeowner or property owners who are insured by an insurance company. SENATOR KIEHL asked if the property owner is liable for damages from any tree that is rooted on their property 4:13:41 PM MR. BURNS answered that the property owner whose tree falls on a neighbor's fence is responsible for that fence. Thus, the homeowner would typically be responsible for damages from a tree that falls into the utility line from outside the ROW. The utilities' concern is being faced with defending against a situation over which it had no control to begin with. This bill does not shift responsibility to the property owner because the property owner already has the responsibility of maintaining their own property. SB 110 makes it very clear the circumstances under which a utility would have liability and when it would not have liability. He said it is a clear demarcation. 4:15:23 PM SENATOR MICCICHE related the experience of his insurance company saying the healthy tree on his property that fell during a windstorm was an act of God. The insurance company said he was not responsible for the tree but the damage it caused was not covered. He offered his view that SB 110 only clarifies what a utility is responsible for when damage that occurs is beyond the utility's control. He described this as a matter of fairness and said he intended to reach out to Ms. Elliot and the other testifiers to find a solution that fairly protects both property owners and utilities. 4:18:26 PM CHAIR REVAK announced he would hold SB 110 in committee for future consideration.