HOUSE FINANCE COMMITTEE April 14, 2000 8:55 A.M. TAPE HFC 00 - 118, Side 1. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 8:55 A.M. PRESENT Co-Chair Therriault Representative Foster Vice Chair Bunde Representative Grussendorf Representative Austerman Representative Moses Representative G. Davis Representative Phillips Representative J. Davies Representative Williams Co-Chair Mulder was not present for the meeting. ALSO PRESENT Mike Tibbles, Staff, Representative Gene Therriault; Randy Simmons, Executive Director, Alaska Industrial Development and Export Authority (AIDEA), Department of Community and Economic Development, Anchorage; Keith Laufer, Chief Financial and Legal Affairs Manager, Alaska Industrial Development and Export Authority (AIDEA), Department of Community and Economic Development, Anchorage. TESTIFIED VIA TELECONFERENCE Brian Bjorkquist, Assistant Attorney General, Department of Law, Anchorage. SUMMARY HB 446 An Act establishing and relating to the power cost equalization endowment fund; relating to the power cost equalization and rural electric capitalization fund; authorizing and relating to the sale of the four dam pool hydroelectric project; establishing and relating to joint action agencies created to purchase power projects; and providing for an effective date. CS HB 446 was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Revenue (new) and Alaska Industrial Development and Export Authority (AIDEA) dated 4/12/00. HB 447 An Act making appropriations relating to power cost equalization and the sale of the four-dam pool hydroelectric project and to capitalize funds; and providing for an effective date. CS HB 447 was reported out of Committee with a "do pass" pass recommendation. HOUSE BILL NO. 446 An Act establishing and relating to the power cost equalization endowment fund; relating to the power cost equalization and rural electric capitalization fund; authorizing and relating to the sale of the four dam pool hydroelectric project; establishing and relating to joint action agencies created to purchase power projects; and providing for an effective date. Vice Chair Bunde MOVED to adopt work draft 1-GH2082\D, Cramer, 4/14/00, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. KEITH LAUFER, CHIEF FINANCIAL OFFICIER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT, ANCHORAGE, explained the technical changes which needed for the work draft. ? Section 4, Page 4, list the full names of the entities: Copper Valley Electric Association, the City of Ketchikan, Kodiak Electric Association, the City of Petersburg, and the City of Wrangell. Co-Chair Therriault MOVED to ADOPT that language change. There being NO OBJECTION, it was adopted. Mr. Laufer continued with the proposed changes: ? Page 8, Section 11, a technical change to the statutes, which would only occur in the event that the sale is consummated. In such an event, the inserted bottom lines would not be needed: "For purposes of this section, Tyee Lake, Swan Lake, Solomon Gulch, and Terror Lake hydroelectric facilities are considered to be one power project, and this power project is referred to as the initial project". Representative J. Davies asked why that language should be deleted. Mr. Laufer explained that it no longer applies to the Four Dam Pool projects. Mr. Laufer continued, listing changes to: ? Section 13, adding a new repealler to AS 42.45.07c. Co-Chair Therriault stated that section would only be appropriate when the sale has been finalized. Co-Chair Therriault MOVED to ADOPT the two changes recommended by Mr. Laufer. There being NO OBJECTION, they were adopted. Mr. Laufer noted that the following sections need change: ? Sections 16, 17, and 18 of the bill, refers to the "memorandum of understanding" (MOU) but do not provide a definition. He recommended that there be a reference to another MOU in the bill to be the definition for MOU's in those sections. Co-Chair Therriault suggested that they could refer back to Section 15(d) which provides the definition for the uncodified law in Subsection #11, on Page 10, Line 30. Co- Chair Therriault noted that there could not be a definition that applies to multiple sections. Every time the definition must be repeated. Representative G. Davis suggested that the names should also be changed in the definition section. Mr. Laufer agreed for purposes of the definition, the legal names are appropriate. Co-Chair Therriault MOVED to ADOPT Amendment #3 which would indicate that in the various definition sections, the legal names of the entities be used. There being NO OBJECTION, it was adopted. Co-Chair Therriault referenced Sections 16, 17 and 18. Co- Chair Therriault MOVED to ADOPT Amendment #4 which would instruct the drafters to insert a reference back to the MOU definition sections. BRIAN BJORKQUIST, (TESTIFIED VIA TELECONFERNCE), ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, ANCHORAGE, interjected that amendment should also apply to Section 19 of the bill. Co-Chair Therriault agreed and AMENDED the MOTION to include Section 19. There being NO OBJECTION, all four sections were changed. Mr. Laufer continued: ? Delete Section 21 of the bill, which was a "hold-over" from a very early draft. At that time, AIDEA understood that they needed a delayed repealler. With the current drafting of the bill, that would not be necessary. He noted that Sections #3 and #12 would have the same effective date, July 1st, 2000. Co-Chair Therriault pointed out that there had been discussion on the "findings" section. Representative J. Davies noted for the record that $15.7 would be a subsidy for the residential. He added that having the residential subsidy does help to move the power on the commercial side and it does not subsidize that area. MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIAULT, spoke to the proposed amendment. He noted that since there was a reference to the initial project on Line 20, the option would be to delete all of #525 or put the description that is being deleted under AS 44.83.398. Mr. Laufer asked to consult Mr. Bjorkquist regarding that change. Mr. Laufer suggested the reference to the initial project was no longer necessary. Mr. Bjorkquist advised that provision would not be applicable after the sale of the Four Dam Pool. It should only be applicable to other contracts. If it does not apply to other power projects, then the entire section should be deleted. He reiterated that there should be no reference to initial project. Mr. Laufer asked if Mr. Bjorkquist thought that language would work. Mr. Bjorkquist replied that it would work. Mr. Laufer clarified the language: ? "A power sales agreement for the sale of power from a project financed with a loan under AS 44.83.510"; including the rest of the provision as written and then deleting the new language at the bottom. Co-Chair Therriault MOVED to ADOPT Amendment #5 the above language. There being NO OBJECTION, it was adopted. Representative Foster MOVED to report CS HB 446 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 446 (FIN) was reported out of Committee with a "do pass" recommendation and with a new fiscal note by Department of Revenue and a note by the Alaska Industrial Development and Export Authority dated 4/12/00. HOUSE BILL NO. 447 An Act making appropriations relating to power cost equalization and the sale of the four-dam pool hydroelectric project and to capitalize funds; and providing for an effective date. KEITH LAUFER, CHIEF FINANCIAL OFFICIER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), ANCHORAGE, advised that there had been a change made to Section 1 of the bill. Monies that were appropriated for the Southeast inter-tie loans in Section 5, Chapter 19, were appropriated under the bill, some to Alaska Energy Authority (AEA) for cost of the sale and the bulk to the Power Cost Equalization (PCE) endowment fund. That language has been rewritten under Section 1(a) of the bill. The original appropriation for the Southesat inter-tie loan lapses back to the Railbelt Energy Fund, Sections (b) & (c) and would be appropriated from the Constitutional Budget Reserve (CBR). Representative J. Davies asked the amount expected to be lapsed to that fund. Mr. Laufer replied $20 million dollars. Vice Chair Bunde MOVED to ADOPT the work draft #1-GH2083\D, Cramer, 4/13/00, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. Representative Phillips questioned if the interest would be going into the endowment. Co-Chair Therriault replied that it has been accruing into the general fund. Mr. Laufer advised that there were no other changes to the bill except the recommendation to Section 5 to add the legal names of each entity. Representative J. Davies referenced Page 2, Line 10, "purchasing the utilities". He believed that the previous version contained a definition of that language. BRIAN BJORKQUIST, (TESTIFIED VIA TELECONFERNCE), ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, ANCHORAGE, acknowledged that the other bill had a definition of "purchasing utilities". Picking up that definition would insert after "Wrangle" the language "purchasing a utility,". To Page 2, Line 27, Co-Chair Therriault MOVED to ADOPT the proposed Amendment #1, the language recommended by Mr. Bjorkquist. There being NO OBJECTION, it was adopted. Representative Austerman MOVED to ADOPT Amendment #2, which would delete "$19.5 million dollars" and would insert "$100,000,000". [Copy on File]. Representative Austerman noted that the amendment would fully fund a Power Cost Equalization (PCE) endowment fund so that it would not need to be addressed every year. Representative J. Davies voiced support for the amendment. Co-Chair Therriault asked if the amendment were to pass, would it cause technical problems with HB 446. Mr. Laufer replied that it would reduce the dividends that flow from the endowment, however, it would not impact HB 446. Vice Chair Bunde pointed out that there is a statutory limit for $17 million dollars. The current scheme does not fully fund PCE. There would continue to be a need for a smaller amount to fund that. He noted concern that even with the amendment, there would most likely be additional funding requests for unanticipated growth. RANDY SIMMONS, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (AIDEA), ANCHROAGE, advised that the statutory language states that a minimum of $17.3 million dollars in that language would be taken from the 1993 Act. The current formula in statute is for $17 million dollars. Mr. Bjorkquist interjected that in Chapter 18, SLA 1993, there is legislative intent that provides funding remain at a minimum of $17 million dollars. Co-Chair Therriault asked if that was considered intent language. Mr. Bjorkquist replied it was. Vice Chair Bunde reminded members the value of intent language. Representative Bunde suggested that the amendment could be a partial solution to the problem. Co-Chair Therriault asked if the current statutory formula drives that number. He noted that language would not modify the passage of either of the bills; instead, it calls for proration. Representative J. Davies agreed that the amendment would not fully fund the endowment. He stated that if the next legislature were to appropriate more or less, it would give strong statutory support. He emphasized that it would not bind future legislatures. Representative Phillips spoke in favor of the amendment. She stated that it would bring the issue of the PCE battle "off the table". A roll call vote was taken on the motion. IN FAVOR: Austerman, Bunde, J. Davies, G. Davis, Foster, Grussendorf, Moses, Phillips, Williams OPPOSED: Therriault Co-Chair Mulder was not present for the vote. The MOTION PASSED (9-1). Representative Foster MOVED to report CS HB 447 (FIN) out of Committee with individual recommendations. There being NO OBJECTION, it was ordered. CS HB 447 (FIN) was reported out of Committee with a "do pass" recommendation. ADJOURNMENT The meeting adjourned at 9:35 A.M. H.F.C. 7 4/14/00 a.m.