SSTA - 3/9/95 SB 54 ELECTRIC UTIL & SOLID WASTE REMOVAL CHAIRMAN SHARP calls the Senate State Affairs Committee to order at 3:35 p.m. and brings up SB 54 as the first order of business before the committee. The chairman calls the first witness. Number 018 JIMMY JACKSON, Attorney for GCI, testifying from Anchorage, states GCI is in favor of competition, particularly in local exchange telephone service. GCI was concerned that SB 54 would promote the idea that competition was not viable other than in long-distance telephone service. GCI has been working on adding intent language to SB 54 saying the bill would apply only to electric utility service, and in no way implies that any other utility has exclusive service area. GCI supports such language, and with the addition of such language, the bill would not affect GCI's interests' one way or the other. CHAIRMAN SHARP notes the committee does have a committee substitute for SB 54 which would incorporate language. Number 052 SENATOR DONLEY has questions about the bill that he wants answered before the cs is adopted. He would like to know who requested the legislation be introduced. Number 075 DAVE HUTCHENS, Alaska Rural Electric Cooperative Association (ARECA), states ARECA was the requestor of SB 54. SENATOR DONLEY asks Mr. Hutchens why ARECA wants SB 54. MR. HUTCHENS responds, "...several years ago there was legislation enacted that attempted to accomplish much the same thing that was introduced as a House Labor & Commerce Committee bill, chaired by then Representative Donley. Unfortunately when the bill got to the senate, there was an amendment put in that Section 2 uh, would, would take out, and uh, then the Section 1 of the bill, uh excuse me, in the cs it would be Section 2, that uh, it would, is the new statement here to make it clear, just to clearly state the policy, and so Section 3 would be the amendment to the legislation that you, Representative Donley at that time, had sponsored, to get it back to the original language of your bill." SENATOR DONLEY again asks Mr. Hutchens why he wants SB 54. MR. HUTCHENS says he will be glad to submit testimony at the appropriate time. CHAIRMAN SHARP states he would like to finish with the people on teleconference first, then Mr. Hutchens can testify. Number 112 SENATOR RANDY PHILLIPS asks Mr. Latcham if he has seen the latest cs for SB 54. MR. LATCHAM does not know if he has for sure. Number 125 CHAIRMAN SHARP states there is a cs dated 3/7/95 by Cramer. MR. LATCHAM responds he has that version. CHAIRMAN SHARP informs Mr. Latcham that is the version the committee is looking at; it has not been adopted yet, but it is the result of the work that has been done so far. RAY LATCHAM, President of Northern Eclipse, Incorporated, testifying from Anchorage, states Northern Eclipse, Inc. is a natural gas concern. Northern Eclipse, Inc. opposes SB 54, and has sent a letter of opposition to the committee. Mr. Latcham believes all committee members have received a copy of the letter. Mr. Latcham states he was involved in the original legislation to which Mr. Hutchens referred. Mr. Latcham thinks the electric utilities are probably the most inefficient group of utilities, and they have been very resistant to new technology. If SB 54 is passed, it will preclude Northern Eclipse, Inc. from getting its' electricity from an independent power producer. Electric companies do have the benefit of economy of scale, and if they cannot compete with an independent power producer, they have a problem. SENATOR RANDY PHILLIPS asks Mr. Latcham if he has the cs in front of him. MR. LATCHAM responds he does. SENATOR RANDY PHILLIPS asks Mr. Latcham if he still opposes SB 54 in that form as well. Number 175 MR. LATCHAM replies he certainly does. The words, "and presently or formerly served by" were part of the compromise worked out several years ago. Now the electric companies are trying to un-do the compromise. Number 180 CHAIRMAN SHARP asks Mr. Latcham what stage the Point MacKenzie development is at. MR. LATCHAM responds the land has been acquired. It is a pilot project; it is a 10,000 gallon a day liquefaction unit. Liquid natural gas (lng) will be transported by truck to markets within the state. CHAIRMAN SHARP asks Mr. Latcham if his company has a gas source. MR. LATCHAM responds it is Beluga River. Number 210 MR. HUTCHENS states ARECA is interested in SB 54 because the utility business is an inherent monopoly. The investment a utility must have in a distribution system is not conducive to duplicate facilities. However, the staff at APUC wants to encourage regulated competition. Mr. Hutchens does not know how that could be done. He wants a clean statement giving direction to the commission, and that is what SB 54 would do. Number 265 SENATOR DONLEY comments he is starting to remember the issues. MR. HUTCHENS states the idea is to prevent a company from providing power just to the most desirable customers. People could still generate their own power, but a business couldn't just provide power to the most desirable customers. SENATOR DONLEY states he understands SB 54 now, and has no objection to the cs. Number 287 SENATOR LEMAN asks if a store owner who generates his own power could sell power to eight other customers, and still be consistent with SB 54. MR. HUTCHENS responds, no, not if it is within a certificated service area to a utility. The language "ten or more" applies to all other kinds of utilities. Mr. Hutchens, in responding to Mr. Latcham, states Mr. Latcham's company will be required to contact Matanuska Electric and negotiate a rate. That rate would then have to be approved by the APUC. Mr. Hutchens is confident Matanuska Electric would be able to effectively compete with any independent power producer. He does not think SB 54 would interfere with Mr. Latcham's proposal. Number 320 SENATOR RANDY PHILLIPS makes a motion to adopt the committee substitute for SB 54. CHAIRMAN SHARP notes that the cs adds the intent language that has been worked out to satisfy the telephone companies concern that somehow SB 54 would affect the telephone companies. There was also an omission on line 10 which has been corrected, adding the word "electric." The chairman, hearing no objection, states the committee substitute for SB 54. Number 348 SENATOR RANDY PHILLIPS makes a motion to discharge SB 54 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, orders SB 54 released from committee with individual recommendations.