HOUSE SPECIAL COMMITTEE ON UTILITY RESTRUCTURING April 16, 1999 2:08 p.m. MEMBERS PRESENT Representative Bill Hudson, Chairman Representative John Cowdery, Vice Chairman Representative Pete Kott Representative Norman Rokeberg Representative Brian Porter Representative John Davies (via teleconference) Representative Ethan Berkowitz Representative Joe Green (alternate) MEMBERS ABSENT All members present COMMITTEE CALENDAR * HOUSE BILL NO. 183 "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." - MOVED CSHB 183 (URS) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 183 SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION SPONSOR(S): SPECIAL COMMITTEE ON UTIL RESTRUCTURING Jrn-Date Jrn-Page Action 4/09/99 702 (H) READ THE FIRST TIME - REFERRAL(S) 4/09/99 702 (H) URS, L&C 4/14/99 (H) URS AT 8:00 AM BUTROVICH ROOM 205 4/14/99 (H) SCHEDULED BUT NOT HEARD 4/16/99 (H) URS AT 2:00 PM CAPITOL 120 WITNESS REGISTER WALT WILCOX, Legislative Assistant for Representative Bill Hudson Alaska State Legislature Capitol Building, Room 108 Juneau, Alaska 99801 Telephone: (907) 465-6820 POSITION STATEMENT: Introduced HB 183 and provided a sectional analysis. JIM BALDWIN, Assistant Attorney General Civil Division Department of Law P.O. Box 110300 Juneau, Alaska 99811 Telephone: (907) 465-3600 POSITION STATEMENT: Provided clarification on Amendment 3. ERIC YOULD Alaska Rural Electric Cooperative Association, ARECA 703 West Tudor Road Anchorage, Alaska 99503 Telephone: (907) 561-6103 POSITION STATEMENT: Provided clarification on Amendment 5. JIM ROWE Alaska Telephone Association (ATA) 201 East 56th Anchorage, Alaska 99518 Telephone: (907) 563-4000 POSITION STATEMENT: Provided clarification on Amendment 7. BOB LOHR, Executive Director Alaska Public Utilities Commission 1016 West 6th Anchorage, Alaska 99503 Telephone: (907) 276-6222 POSITION STATEMENT: Provided information on the APUC. ACTION NARRATIVE TAPE 99-16, SIDE A Number 0001 [NOTE: This meeting is a continuance of the April 14, 1999, meeting which was recessed to the call of the chair.] CHAIRMAN BILL HUDSON called the House Special Committee on Utility Restructuring meeting to order at 2:08 p.m. Members present at the call to order were Representatives Hudson, Cowdery, Rokeberg, Porter, Davies, and Green (alternate). Representatives Kott and Berkowitz arrived at 2:12 p.m. HB 183 - ALASKA PUBLIC UTILITIES COMMISSION CHAIRMAN HUDSON announced that the first order of business was House Bill No. 183, "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." Number 0163 WALT WILCOX, Legislative Assistant for Representative Bill Hudson, Alaska State Legislature, introduced HB 183 and provided a sectional analysis, which stated: Section 1: A. Gender correction from chairman to chair. B. Makes the chair responsible for the administration of the commission and commission employees. Section 2: No more than 2 members of the commission may be from the same party. Commissioners may not change parties during the year prior. Section 3: The chair, rather than the commission may establish offices for the APUC. Section 4: The chair, rather than the commission may employ temporary legal counsel. Section 5: The chair, rather than the commission may hire outside consultants, and experts with the approval of the commission. Section 6: In addition to the annual report the APUC will present to the Legislature the commission activities, and timeliness of docket activity for the previous year. Section 7: Repealers - removes employee/public category requirements. Number 0428 MR. WILCOX introduced the amendments, which included: Amendment 1 Removal of the commissioner by the Governor. The amendment deletes the requirement that the Legislature approve the termination of a commissioner. Amendment 2 Prohibits commission members from participation in: Political campaigns Partisan fund-raising activities Lobbying activities beyond their duties as a commissioner. Number 0579 REPRESENTATIVE GREEN referred to Amendment 1, line 4, where it reads, "Page 1, following line 9," and pointed out that the amendment would start in the middle of a sentence. MR. WILCOX clarified that rather than have the amendment redrafted, the 3/15/99 version was used. He asked the committee to ignore line 4 of the amendment and he noted that the real interest is the meat of the amendment being inserted in the proper place. REPRESENTATIVE GREEN suggested that "following line 10" be substituted for "following line 9" on line 4 of Amendment 1. REPRESENTATIVE BERKOWITZ made a motion to adopt the technical amendment to Amendment 1. There being no objection, the amendment to Amendment 1 was adopted. CHAIRMAN HUDSON indicated that Amendment 1 is before the committee for discussion. REPRESENTATIVE ROKEBERG objected to Amendment 1. He pointed out that the amendment takes away the power of the legislature and grants it to the governor. REPRESENTATIVE PORTER agreed with Representative Rokeberg. He stated that the APUC would be the only commission where the legislature must concur with the termination of a commissioner. He is not aware of any other commission that has that provision. Number 0764 REPRESENTATIVE ROKEBERG stated that for the this commission there are some distinctions made in statute for cause of removal. There is an application in statute as to how to they are treated with regards to appointment, because they can only be removed by cause, whereas other commissioners can be removed for any other reason. He pointed out that there are appointees who are appointed for a term not necessarily consistent with the governor's term of office who can only be removed by cause. REPRESENTATIVE BERKOWITZ indicated that he would have preferred the claim for cause language, but the language in Amendment 1, which reads,"inefficiency, neglect of duty, or misconduct in office, or because the member, while serving on the commission, is convicted of a misdemeanor for violating a statute or regulation related to public utilities or is convicted of a felony," seems to cover cause. REPRESENTATIVE ROKEBERG clarified that the issue is whether the legislature should participate in the removal of a commissioner. Number 0865 REPRESENTATIVE BERKOWITZ pointed out that the governor hires the commissioners and the legislature confirms them, so the governor can fire them. He indicated that he does not think the power of the legislature is being given up. REPRESENTATIVE ROKEBERG disagreed with Representative Berkowitz, because the APUC, Oil and Gas Conservation Commission and the Alaska Royalty Oil and Gas Development Advisory Board have different removal procedures, which means the governor can't fire the commissioners. REPRESENTATIVE BERKOWITZ stated, "But we can." MR. WILCOX explained that the APUC is different in that it is one of the very few, if not the only commission, that requires the legislature to concur with the termination of a commissioner. A question that has been brought up is what happens if the governor decides to terminate a commissioner during the interim. Would there need to be a special session? CHAIRMAN HUDSON stated that is the problem presently. One of two things can be done; one, ignore it, or two, require the relief of legislative oversight or concurrence during an interim proceeding. REPRESENTATIVE PORTER indicated that he could support Amendment 1 the way it is worded. The alternative could be to change the bill so that the Legislative Council could act on behalf of the legislature during the interim. Number 1033 REPRESENTATIVE ROKEBERG agreed with Representative Porter. He said that the erosion of legislative power has been under such attack that he hates to give up anything. REPRESENTATIVE BERKOWITZ expressed his concern involving giving authority to the Legislative Council, because it is not assembled with majority/minority proportionality. CHAIRMAN HUDSON indicated that nobody has made a motion to adopt Amendment 1 and he is leaving it up to the will of the body. Number 1120 REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 1, which read: Page 1, line 2, following ";": Insert "relating to removal of commissioners of the Alaska Public Utilities Commission;" Page 1, following line 9: Insert a new bill section to read: "* Sec.2. AS 42.05.035 is repealed and reenacted to read: Sec. 42.05.035. Removal of commissioners. The commissioner from office only for inefficiency, neglect of duty, or misconduct in office, or because the member, while serving on the commission, is convicted of a misdemeanor for violating a statute or regulation related to public utilities or is convicted of a felony. The governor shall deliver to the commissioner a copy of the charges against the commissioner. The commissioner shall have an opportunity to present a defense in person or through counsel at a public hearing before the governor or the governor's designee. The commissioner shall be informed of the hearing by registered mail at least 10 days before the hearing date. At the hearing, the commissioner may confront and cross-examine adverse witnesses. Upon removal of the commissioner, the findings and a complete statement of all charges made against the commissioner shall be filed in the Office of the Lieutenant Governor." Renumber the following bill sections accordingly. Page 2, following line 21: Insert a new bill section to read: "*Sec. 7. The provisions of AS 42.05.035, repealed and reenacted by sec. 2 of this Act, apply to a member of the Alaska Public Utilities Commission serving on the effective date of this Act. This Act is intended to extinguish any existing right of a sitting commissioner to the removal procedure specified in former AS 42.05.035." Renumber the following bill section accordingly. REPRESENTATIVE ROKEBERG objected. REPRESENTATIVE DAVIES (via teleconference) stated that another reason to support Amendment 1 is that it makes the removal from the APUC consistent with the way all other commissions are done; the APUC is the only commission presently that requires legislative approval. REPRESENTATIVE ROKEBERG stated that he could support Amendment 1 if the bill was changed so the Legislative Council could act on behalf of the legislature during the interim. CHAIRMAN HUDSON asked if that would be a conceptual amendment. REPRESENTATIVE BERKOWITZ stated that it goes to the Labor and Commerce Committee next. A roll call vote was taken. Representatives Berkowitz, Cowdery, Davies, Kott, Porter and Hudson voted for the amendment. Representative Rokeberg voted against it. Therefore, Amendment 1 passed by a vote of 6-1. Number 1267 REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 2, which read: Page 1, line 12, following "members.": Insert "relating to political conduct by members of the Alaska Public Utilities Commission;" Page 1, line 12, following "members.": Insert "(a)" Page 2, following line 1: Insert a new subsection to read: "(b) A member of the commission may not participate in (1) political management or in a political campaign for a candidate for election to federal, state, or local office regardless of whether the campaign is partisan or nonpartisan or for passage or defeat of a ballot measure of any type; (2) the campaign of, or attend campaign fund-raising events for, a candidate for governor or the legislature; (3) a fund-raising event held on behalf of a political party or attend a political party fund-raising even; or (4) lobbying activities that would require a person to register as a lobbyist." REPRESENTATIVE PORTER objected for the purpose of discussion. REPRESENTATIVE BERKOWITZ stated that if the committee is going to ensure that there isn't going to be any partisanship then he feels some of the restrictions that are applied to the Ethics Committee should be applied to the APUC as well. REPRESENTATIVE PORTER wondered if the language is in addition to as opposed to replacing the language in HB 183. REPRESENTATIVE BERKOWITZ replied yes. Number 1308 CHAIRMAN HUDSON clarified that there can be no more than two members of any one political party, which is already stated in the bill, and those members would be subject to the provisions outlined by Amendment 2. He asked if there was any objection to the motion to adopt Amendment 2. REPRESENTATIVE PORTER removed his objection. CHAIRMAN HUDSON stated that there being no objection, Amendment 2 is adopted. Number 1349 REPRESENTATIVE ROKEBERG made a motion to adopt a conceptual amendment, "to remove Section 2 as amended in its entirety." REPRESENTATIVE PORTER objected. REPRESENTATIVE BERKOWITZ said that he considered Representative Rokeberg's amendment to be a friendly amendment. REPRESENTATIVE ROKEBERG clarified that it was a friendly amendment. Number 1388 CHAIRMAN HUDSON explained that the conceptual amendment would remove the political qualifications all together by removing Section 2 as amended. REPRESENTATIVE PORTER stated that his objection was maintained. A roll call vote was taken. Representatives Berkowitz, Davies, Kott, Rokeberg and Hudson voted for the amendment. Representatives Cowdery and Porter voted against it. Therefore, Amendment 3 was adopted by a vote of 5-2. REPRESENTATIVE PORTER requested clarification on whether adopting Amendment 3 returns them to the original criteria that exists in statute now. REPRESENTATIVE DAVIES clarified that it does. REPRESENTATIVE ROKEBERG said that it doesn't. REPRESENTATIVE PORTER stated that indeed it does, because the elimination of the original criteria that exists in statute was taken out by adopting Amendment 3. CHAIRMAN HUDSON indicated that by the removal of Section 2, which repealed and reenacted, they are back to the original statutory language. REPRESENTATIVE PORTER pointed out that the members of the commission can now all be from the same party. REPRESENTATIVE DAVIES agreed with Representative Hudson that the adoption of Amendment 3 brings them back to the original statutory language on qualifications. Number 1555 REPRESENTATIVE HUDSON called an at-ease at 2:35 p.m. and called the meeting back to order at 2:36 p.m. Number 1570 REPRESENTATIVE ROKEBERG stated that the intention of the conceptual amendment was to remove lines 12, 13, and 14 on page 1, and line 1 on page 2 of HB 183. The intent was not to replace the AS 42.05.040 as is in the current statute. He added that his intention was to take out the political partisanship aspects. REPRESENTATIVE DAVIES asked Representative Rokeberg if he wanted Section 2 to read, "AS 42.05.040 is repealed." REPRESENTATIVE ROKEBERG replied yes. REPRESENTATIVE GREEN stated that AS 42.05.040 is gone, which means that there are no qualifications for any commissioners. REPRESENTATIVE PORTER informed the committee that if the intent of Amendment 3 is to remove any qualifications for members of the commission, he cannot support it. Number 1766 REPRESENTATIVE ROKEBERG made a motion to rescind Amendment 3. He explained that his intention with regards to Amendment 3 is to remove the political considerations. The professional type qualifications have already been repealed in HB 183. He commented that he appreciates Representative Porter's explanation, but he still believes that the legislature has the right to have consent to the appointment of the commissioners. REPRESENTATIVE PORTER asked the committee to consider what the check and balance would be if the majority of the legislature and the governor were of the same party. CHAIRMAN HUDSON stated that if there is no objection, Amendment 3 is again before the committee. MR. WILCOX requested clarification on whether Amendment 2 is still incorporated in Amendment 3. CHAIRMAN HUDSON stated that Amendment 3, which was explained by Representative Rokeberg, will repeal Section 2, as amended. Number 1933 JIM BALDWIN, Assistant Attorney General, Civil Division, Department of Law, requested clarification on whether Representative Rokeberg's motion is to insert a repeal of Section 42.05.040, which would wipe out the language that amends AS 42.05.040, or repeals and reenacts it, and just repeal it all together. REPRESENTATIVE GREEN asked, "If we say yes to this, we leave what is in statute?" CHAIRMAN HUDSON responded that if the committee adopts Amendment 3 what is in statute will be taken out. Both AS 42.05.040 and Sec. 42.05.040 will be repealed. A roll call vote was taken. Representatives Davies and Rokeberg voted for the amendment. Representatives Cowdery, Green, Kott, Porter and Hudson voted against it. Therefore, Amendment 3 failed by a vote of 5-2. REPRESENTATIVE DAVIES made a motion to adopt the original version of Amendment 3, call it Amendment 4, which would delete Section 2 as amended from the bill. REPRESENTATIVE PORTER objected. REPRESENTATIVE HUDSON pointed out that Representative Davies was making the same motion that was made originally. REPRESENTATIVE DAVIES responded that it is not the same motion. He stated that by deleting Section 2 of HB 183 the existing language in statute would remain. His intention is to take out the political qualifications, but leave in the existing qualifications in AS 42.05.040. REPRESENTATIVE PORTER maintained his objection. A roll call vote was taken. Representative Davies voted in favor of the amendment. Representatives Cowdery, Green, Kott, Porter, Rokeberg and Hudson voted against it. Therefore, Amendment 4 failed by a vote of 6-1. Number 2167 MR. WILCOX introduced Amendment 5, which reads: Page 2, line 19: Delete "considered [IT CONSIDERS]" Insert "the commission [IT] considers" REPRESENTATIVE ROKEBERG offered another way to do the amendment, which would be to insert, after the word necessary, "by the commission." REPRESENTATIVE PORTER pointed out that the amendment is trying to keep the chair from making the final decision. He said that the committee might want to consider inserting, "the commission may employ" and deleting, "the chair of the commission may employ." Number 2291 ERIC YOULD, Alaska Rural Electric Cooperative Association, ARECA, provided information via teleconference from Anchorage. He stated that he believes the committee and the legislature is trying to empower a little more administrative authority in the chair, without giving the chair all the authority. Instead they want to see the chair acting on behalf of the commission. He recommended inserting, "by the commission," after the word, "necessary," on line 19, page 2. REPRESENTATIVE PORTER said that the wording proposed by Mr. Yould would only allow the commission to determine that there was a need for a particular position and still allow the chair to make the final selection. Number 2355 MR. YOULD clarified that any administrative body has a hiring process and the chair would not unilaterally go out and use his own criteria to make the selection. The commission needs to be able to give some basic policy direction to the chair and then allow the chair to exercise his executive duties on behalf of the commission. MR. BALDWIN confirmed that the language does set up a requirement that first the commission has to decide the services necessary, but the chair is actually given the power to do the employing. CHAIRMAN HUDSON asked if it is the interest of the committee to have the chair take action at the approval of the commission. TAPE 99-16, SIDE B CHAIRMAN HUDSON inquired as to what that would allow. MR. BALDWIN explained that before the chair could hire someone, there would have to be a determination by the commission that such action is necessary. Mr. Baldwin indicated that he respected Mr. Yould's opinion. Number 2448 REPRESENTATIVE ROKEBERG moved that the committee adopt Amendment 5 which reads as follows: Page 2, line 19 after "necessary" Insert "by the commission" MR. YOULD pointed out that on page 2, line 17, the language says "the commission may employ". If Amendment 5 is adopted, Mr. Yould recommended that "may" be changed to "shall". CHAIRMAN HUDSON relayed Representative Rokeberg's concern that if the language is changed from "may" to "shall", there could be unintended budget consequences. MR. YOULD said that he could not advise the committee on that matter as well as Mr. Baldwin could. Mr. Yould agreed with Representative Rokeberg and stated that the "may" language should remain. CHAIRMAN HUDSON asked if there were any objections to Amendment 5. There being no objection, Amendment 5 was adopted. MR. WILCOX requested that the committee consider inserting an effective date clause due to the reinstatement of the removal provision. CHAIRMAN HUDSON clarified that an immediate effective date would be necessary for the adopted removal clause. Number 2334 REPRESENTATIVE ROKEBERG moved that the committee adopt Section 8, the immediate effective date, Amendment 6. MR. WILCOX pointed out that the committee packet includes a zero fiscal note and two pages from Representative Rokeberg. CHAIRMAN HUDSON asked if there was objection to Amendment 6. There being no objection, Amendment 6 was adopted. REPRESENTATIVE GREEN noted that he had given the chair an unnumbered amendment which he assumed would be Amendment 7. Amendment 7 would return subsection (b) to the way it is currently in statute. This change was due to Mr. Rowe's testimony regarding the ability of the chair to utilize his staff, but acquiring consultants should be a function of the commission as is the case currently. Representative Green stated that Amendment 7 would do the following: Page 2, line 22 Delete, "the" Insert, "its" Delete, "chair of the" REPRESENTATIVE GREEN explained that Mr. Rowe was concerned that giving the chair of the commission the ability to acquire consultants could skew things as opposed to the desires of the commission. REPRESENTATIVE ROKEBERG objected in order to ask if Mr. Rowe agreed with Amendment 7. JIM ROWE, Alaska Telephone Association, ATA, testified via teleconference from Anchorage. He said that he believed the committee addressed this two weeks ago by changing the language on page 2, lines 23 and 24 to read, "the commission considers necessary." Mr. Rowe stated that he was probably satisfied with the current language. REPRESENTATIVE GREEN withdrew Amendment 7. Number 2134 REPRESENTATIVE ROKEBERG noted that the purpose of his memorandum was to receive comments from the committee members regarding issue raised by the ATA White Paper and/or the National Regulatory Research Institute (NRRI) report. Firstly, the staff to the commissioners "may be too big of a bite." Perhaps, a "light" version of HB 183 would be more appropriate. Secondly, the advocacy issue seems to be in control and does not necessarily need to be addressed. Thirdly, the issue of timeliness seems to be one which everyone agrees, but the manner in which to achieve such is not certain. Representative Rokeberg added that the types of dockets should be analyzed. He suggested that House Labor & Commerce Standing Committee could review this in order to determine if there is any mechanism that could be utilized. REPRESENTATIVE PORTER pointed out that there is an additional provision requiring reporting back to the legislature. CHAIRMAN HUDSON clarified that HB 183 requires that the commission provide a summary of activities during the previous year, report on the evaluation of the commission's timeliness with dockets during the previous year. REPRESENTATIVE ROKEBERG indicated the need to develop a mechanism that could develop universal currency without hindering the commission. With regard to timeliness, Representative Rokeberg commented on the three member quorum and the use of leave time of the commissioners. Some of the commissioners have been around long enough to take up to seven or eight weeks of leave. The commission does not take up dockets if all five members are not present. He suggested that the commission could take testimony with less than five members before a ruling is made. Representative Rokeberg said that he was looking for suggestions regarding whether that should be statutorily mandated. REPRESENTATIVE ROKEBERG continued with the fourth issue listed in his memorandum. The commission should have the ability to hire its own legal counsel rather than rely on the Department of Law. REPRESENTATIVE PORTER expressed concern with the fiscal ramifications. The cost of the commission are returned to the consumers. He acknowledged that there have been some increases in staff, but he was not sure if all the staff had been hired. Representative Porter did not think it an appropriate time to add more staff positions. Number 1989 REPRESENTATIVE ROKEBERG explained that currently the commission relies on the Department of Law and the attorney general. The counselors work for the attorney general not for the chairman or the commission, therefore there could be potential conflicts. Representative Rokeberg believed that the counselors should work for the commission. However, Representative Rokeberg agreed with Representative Porter that if the commission cannot hire and replace people with regard to costs, that is not a good idea. The fifth issue is regarding consumer complaints and enhancing the use of administrative hearing officers. The sixth issue was throwing it off the books which has already been addressed. Representative Rokeberg stated that the biggest thing he is hearing is the desire for legislative intent language. That the management information system be implemented somewhat like the BASIS system is now. REPRESENTATIVE GREEN asked, "Under the current system, if we're using the AG [attorney general] Department of Law; do they RSA [reimbursable services agreement] costs that could be offset by having our own counsel? Or are these costs that they are going to occur anyway?" MR. BALDWIN believed that there was an RSA for two positions. He deferred to Mr. Lohr. BOB LOHR, Executive Director, Alaska Public Utilities Commission (APUC), testified via teleconference from Anchorage. He informed the committee that currently the commission has a reimbursable services agreement with the Department of Law for $268,000 which covers two full-time assistant attorney generals. There is a separate RSA for one associate attorney position for the commission. CHAIRMAN HUDSON inquired as to whether Mr. Lohr was able to secure the services of the third member from the private sector. MR. LOHR said that he believed that currently any procurement of attorneys by the commission would require approval by the attorney general under the general provisions of the Procurement Act. REPRESENTATIVE GREEN asked if the work load is such that those two attorneys and the one extra are kept busy or is the work load cyclical requiring more attorneys at some time while none at other times. MR. LOHR said that the two attorneys are extremely busy. If there was a third attorney present, the cyclical situation might be of consideration. He was not sure that three full-time attorney's would be kept busy all the time. Number 1767 CHAIRMAN HUDSON asked if the attorneys are paid for through Regulatory Cost Changes(RCC) or through general funds. MR. LOHR stated that the attorneys are paid for through the RCCs. The commission does not have any general funds in its budget at all. CHAIRMAN HUDSON informed the committee that he would like to move HB 183 without any further changes and then the committee could offer Representative Rokeberg guidance in the House Labor & Commerce Committee. Number 1703 REPRESENTATIVE COWDERY moved to report HB 183 out of committee with individual recommendations and the zero fiscal note. Representative Cowdery requested unanimous consent. There being no objection, it was so ordered. ADJOURNMENT There being no further business before the committee, the House Special Committee on Utility Restructuring meeting was adjourned at 3:15 p.m.