Legislature(2009 - 2010)BARNES 124

04/07/2010 07:00 AM House ENERGY

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07:11:27 AM Start
07:11:55 AM HB182
08:10:51 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed from 4/6/10 Meeting --
Moved CSHB 182(ENE) Out of Committee
          HB 182-RAILBELT ENERGY & TRANSMISSION CORP.                                                                       
7:11:55 AM                                                                                                                    
CO-CHAIR  MILLETT  referred  the  committee  to  a  copy  of  the                                                               
sectional  analysis  for  HB  182  prepared  by  Ron  Miller  and                                                               
provided in the committee packet.                                                                                               
7:12:24 AM                                                                                                                    
RON  MILLER,  Energy  Consultant, House  and  Senate  Leadership,                                                               
Alaska State  Legislature, informed  the committee  the Committee                                                               
Substitute (CS) for  HB 182 was significantly  different than the                                                               
previous  version.   The  CS  provides  for the  organization  of                                                               
energy  and transmission  corporations  by interconnected  public                                                               
utilities, authorizes  the organization  of the  Greater Railbelt                                                               
Energy and  Transmission Corporation (GRETC), and  authorizes the                                                               
Alaska  Energy  Authority  (AEA)  to  contract  with  energy  and                                                               
transmission  corporations to  operate AEA  power projects.   Mr.                                                               
Miller  noted  that Section  1  becomes  effective 1/31/11  under                                                               
Section  5, and  was contingent  on four  or more  interconnected                                                               
utilities   filing   letters   of   intent   under   Section   4.                                                               
Furthermore, this section amends AS 42  to add a new chapter that                                                               
establishes the  purposes, powers,  and duties  of an  energy and                                                               
transmission  corporation  as  follows:    acquire,  operate,  or                                                               
maintain  AEA  projects;  plan for,  recommend,  coordinate,  and                                                               
otherwise  address  power  generation and  transmission  for  the                                                               
electrically   interconnected  service   territories  of   member                                                               
utilities.     Version  P  removes  the   exemption  from  Alaska                                                               
Regulatory Commission  (RCA), Department of  Commerce, Community,                                                               
& Economic Development, oversight,  thus the new corporations are                                                               
subject to RCA regulation.                                                                                                      
7:15:23 AM                                                                                                                    
CO-CHAIR MILLETT asked for confirmation  that that RCA regulation                                                               
and oversight was a permanent addition to the bill.                                                                             
MR. MILLER  said correct.   Returning to  Section 1, he  said the                                                               
section   addresses   the   organization  of   the   energy   and                                                               
transmission  corporations   and  includes:    purposes   of  the                                                               
corporation; composition  of the  board of directors;  conduct of                                                               
board  meetings;  corporate  officers  and  employees;  corporate                                                               
membership; articles of incorporation  and bylaws; general powers                                                               
of  the corporation.   Mr.  Miller pointed  out major  changes in                                                               
version P:  the board of  directors has been expanded  to include                                                               
seven  public  directors in  response  to  public testimony;  the                                                               
public member  appointed by  the governor can  be removed  by the                                                               
governor; by  a clarifying  forthcoming amendment,  the directors                                                               
shall receive  no salary.   Proposed Sec. 42.50.040 has  no major                                                               
changes except that that any  employee of the new corporation may                                                               
not be hired within two years of leaving state employment.                                                                      
7:20:24 AM                                                                                                                    
CO-CHAIR MILLETT asked whether there  was a definition for "state                                                               
employee" in statute.                                                                                                           
MR. MILLER said yes.                                                                                                            
7:20:55 AM                                                                                                                    
CO-CHAIR EDGMON referred to page 4,  line 12, and asked whether a                                                               
qualifying  statement  was  needed regarding  meeting  fees,  per                                                               
diem,  and  travel expenses  that  the  corporation may  pay  its                                                               
MR.  MILLER opined  that would  be a  reasonable addition  to the                                                               
CO-CHAIR EDGMON said he will offer an amendment to that effect.                                                                 
7:22:21 AM                                                                                                                    
MR.  MILLER continued  to page  9,  line 10,  and explained  that                                                               
general  power  paragraph  (9) addresses  the  concern  that  the                                                               
corporation would  compete with  private corporations  in natural                                                               
gas storage, other types of  fuel storage, pipeline companies, or                                                               
oil and gas  companies.  The language, "may not  be procured with                                                               
state  funds" clarifies  that  the new  corporation  can not  buy                                                               
state  leases  or  build  pipelines   to  compete  with  existing                                                               
pipeline  companies,   or  facilitate  natural  gas   storage  in                                                               
competition  with  the  private  sector.     Page  10,  line  24,                                                               
paragraph (24)  addresses the concern that  the new corporation's                                                               
operating standards  could keep independent power  producers from                                                               
connecting  to  the  intertie  system, and  he  recited  the  new                                                               
language which read:                                                                                                            
     Develop operating standards  approved by the Regulatory                                                                    
     Commission of Alaska that are  applicable to all public                                                                    
     utilities  electrically interconnected  to the  service                                                                    
     territory of the corporation.                                                                                              
MR.  MILLER then  pointed out  that the  general power  to create                                                               
subsidiary corporations was deleted.                                                                                            
7:27:33 AM                                                                                                                    
CO-CHAIR MILLETT referred  to page 10, paragraphs 20  and 23, and                                                               
asked whether they  should also be removed as they  relate to the                                                               
general power to create subsidiary corporations.                                                                                
MR. MILLER  explained that the  language in paragraphs 20  and 23                                                               
allows  an  energy  and   transmission  corporation  to  purchase                                                               
equipment  from outside  the  state or  country,  and to  acquire                                                               
licenses for  that equipment.   He then  continued to  changes on                                                               
page 11,  beginning on line 23,  that provide for the  energy and                                                               
transmission  corporation  to  draft integrated  resource  plans,                                                               
long-range  fuel  supply  plans, long-range  capital  improvement                                                               
plans, and  long-range financial management plans.   Language was                                                               
also added to  the CS that the abovementioned plans  will be made                                                               
available to the  general public.  On page 12,  line 29, language                                                               
was  changed  so  that  the corporation  may  use  any  financing                                                               
permitted by law to achieve the  purposes of the corporation.  He                                                               
noted  that  language  on  page  13, line  3,  refers  to  Alaska                                                               
Industrial  Development  and  Export  Authority  (AIDEA)  revenue                                                               
bonds,  and  is identical  to  that  contained in  current  joint                                                               
action  agency   (JAA)  statute.    However,   the  corporation's                                                               
authority  regarding  debt  was  amended due  to  concerns  about                                                               
establishing a  precedent of  the state  underwriting debt  for a                                                               
private non-profit  corporation.  On  page 13, beginning  on line                                                               
5, the language  clarifies that the state is not  going to act to                                                               
impair  the  debt of  the  corporation,  but will  not  guarantee                                                               
repayment of the  corporation's debt.  Also on page  13, line 20,                                                               
he said the additional language should read:                                                                                    
     Nothing in  that section exempted the  corporation from                                                                    
     payment  of taxes,  royalties,  or  assessments of  the                                                                    
     state   applicable  to   natural   gas  storage,   fuel                                                                    
     pipelines,  underground  fuel  resources,  or  fuel  in                                                                    
     other natural storage.                                                                                                     
7:34:46 AM                                                                                                                    
CO-CHAIR MILLETT asked for clarification.                                                                                       
MR. MILLER re-stated  the language should read "or  fuel in other                                                               
storage."   The  exemption also  does  not apply  to a  municipal                                                               
public  utility; for  example,  payment  of applicable  municipal                                                               
utilities' service  assessments will  not be  exempted.   On page                                                               
14, line  6, proposed  Sec. 42.50.190 provides  for the  right of                                                               
the general public, members, and  ratepayers to examine books and                                                               
records of  the corporation.  On  page 18, line 5,  the effective                                                               
date was changed  to December 31, 2010, in order  to allow AEA to                                                               
promulgate  regulations.    Mr.  Miller opined  Sec.  4  is  very                                                               
important to  the bill because  the effective date  is contingent                                                               
on Sec.  3 and  Sec. 4; in  fact, the bill  will not  take effect                                                               
unless four  or more of  the Railbelt utilities deliver  a letter                                                               
to  AEA meeting  certain  criteria established  in regulation  by                                                               
AEA.  Furthermore,  the membership date was moved  to January 31,                                                               
2011.  On page 18, line  27, language was changed to reflect that                                                               
Sec.  1, regarding  the review  of continued  RCA oversight,  was                                                               
removed and the effective date was changed to January 31, 2011.                                                                 
7:41:42 AM                                                                                                                    
REPRESENTATIVE TUCK  referred to  page 4,  line 12,  and recalled                                                               
version A  limited payments  to directors  for meeting  fees, per                                                               
diem, and travel  expenses.  He asked why was  this provision was                                                               
MR.  MILLER assumed  the restriction  was removed  to "allow  the                                                               
corporation to act more like a corporation."                                                                                    
REPRESENTATIVE  JOHANSEN  pointed  out Mr.  Miller's  commendable                                                               
work ethic.                                                                                                                     
7:43:35 AM                                                                                                                    
REPRESENTATIVE  TUCK returned  attention to  page 5,  lines 21-23                                                               
and asked whether an employee of  a member utility could serve as                                                               
chief executive officer.                                                                                                        
MR. MILLER said there was no prohibition on that.                                                                               
7:44:43 AM                                                                                                                    
CO-CHAIR EDGMON  surmised shareholders of a  member utility would                                                               
not allow an employee to have two jobs.                                                                                         
MR. MILLER  agreed that the CEO  would become a sole  employee of                                                               
the  new  corporation.    Furthermore,  the  utilities  may  have                                                               
restrictions on previous employees' employment.                                                                                 
7:45:52 AM                                                                                                                    
REPRESENTATIVE TUCK  asked for the  type of member  benefits that                                                               
are referred to on page 6, line 6.                                                                                              
MR. MILLER stated that the  benefits are not employment benefits,                                                               
but are  benefits and services  that the energy  and transmission                                                               
corporation provides to its utility members.                                                                                    
7:46:53 AM                                                                                                                    
REPRESENTATIVE TUCK assumed the  benefits could include corporate                                                               
insurance benefits.                                                                                                             
MR. MILLER agreed, adding that  the legislature would not want to                                                               
prevent the corporation from participating in an insurance pool.                                                                
7:47:47 AM                                                                                                                    
CO-CHAIR MILLETT  invited the committee  to offer  amendments and                                                               
follow-up comments.                                                                                                             
CO-CHAIR EDGMON moved Amendment 1.                                                                                              
REPRESENTATIVE JOHANSEN objected for the purpose of discussion.                                                                 
CO-CHAIR  EDGMON explained  Amendment 1  replaces the  words "may                                                               
not receive a"  with "shall receive no"  on page 4, line  12.  He                                                               
said  the purpose  is to  clarify  that directors  are unable  to                                                               
receive a salary.                                                                                                               
REPRESENTATIVE JOHANSEN  removed his  objection.  There  being no                                                               
further objection, Amendment 1 was adopted.                                                                                     
7:50:12 AM                                                                                                                    
CO-CHAIR EDGMON offered Conceptual Amendment 2.                                                                                 
CO-CHAIR MILLETT objected for the purpose of discussion.                                                                        
CO-CHAIR EDGMON said Conceptual  Amendment 2 inserts "reasonable"                                                               
before "meeting fee" on page 4, line 13.                                                                                        
REPRESENTATIVE  MILLETT  removed  her   objection.    Hearing  no                                                               
further objection, Conceptual Amendment 2 was adopted.                                                                          
7:50:50 AM                                                                                                                    
REPRESENTATIVE PETERSEN offered Amendment 3.                                                                                    
REPRESENTATIVE JOHANSEN objected.                                                                                               
REPRESENTATIVE  PETERSEN said  Amendment  3  would allow  persons                                                               
whose  only  employment with  the  state  is through  a  military                                                               
organization, to be employed by the corporation.                                                                                
7:52:18 AM                                                                                                                    
BRIAN BJORKQUIST,  Senior Assistant  Attorney General,  Labor and                                                               
State Affairs  Section, Department of  Law (DOL), in  response to                                                               
Co-Chair  Millett,  said he  was  unsure  whether National  Guard                                                               
members are considered state employees.                                                                                         
7:53:33 AM                                                                                                                    
REPRESENTATIVE PETERSEN  asked whether there was  a definition of                                                               
"state employee" in statute.                                                                                                    
7:53:40 AM                                                                                                                    
CO-CHAIR EDGMON  suggested that this question  could be addressed                                                               
by the next committee of referral.                                                                                              
7:54:15 AM                                                                                                                    
REPRESENTATIVE  PETERSEN  asked  Legislative Legal  and  Research                                                               
Services,  Legislative Affairs  Agency, to  provide an  answer to                                                               
his question.  He withdrew Amendment 3.                                                                                         
7:54:32 AM                                                                                                                    
CO-CHAIR  MILLETT informed  the  committee of  an amendment  that                                                               
allows  [Doyon Utilities]  to form  within GRETC.   She  said the                                                               
amendment will  be forwarded to  the House Standing  Committee on                                                               
Labor & Commerce with the bill.                                                                                                 
7:55:43 AM                                                                                                                    
The committee took an at-ease from 7:55 a.m. to 7:57 a.m.                                                                       
7:57:43 AM                                                                                                                    
BRUCE TANGEMAN,  Chief Financial  Officer, Doyon  Utilities (DU),                                                               
informed  the  committee  DU  was  representing  the  Army.    He                                                               
referred to page 6, lines  9-10, and said after "corporation" the                                                               
amendment replaces "if approved by  a two thirds majority vote of                                                               
the board" with "upon application  for membership."  Also on page                                                               
6, line  11, after  "be" the amendment  replaces "a  municipal or                                                               
cooperative"  with "an"  which will  open the  membership to  any                                                               
electric utility interested in joining.   Further on page 6, line                                                               
17, after  "(c)" the amendment  replaces "an  affiliated electric                                                               
utility"  with  "any  other  entity"  may  become  "an  affiliate                                                               
member"   and  adds   after  "section,"   "but   shall  have   no                                                               
representation on  the board of  directors in accordance  with AS                                                               
42."   On line 19,  after "(d)"  the amendment replaces  "a" with                                                               
"any."  Continuing  to page 7, line 1, Mr.  Tangeman advised that                                                               
after "remain" the  amendment adds "(a)n affiliate,"  and on page                                                               
7, line 7, after "board" the  amendment adds "as of the effective                                                               
date of the  withdrawal."  The amendment also  adds the following                                                               
subsection:   (h) Notwithstanding  the foregoing  provisions, the                                                               
corporation,  by a  majority vote  of  the board,  may waive  any                                                               
notice  periods in  this  section.   On  page  16,  line 14,  the                                                               
amendment removes  the municipal  or cooperative  requirement and                                                               
opens the  provision to any  electric utility.  Finally,  on page                                                               
17, after line  18, and on page 18, after  line 16, the amendment                                                               
adds a seventh utility, Doyon Utilities, LLC.                                                                                   
8:01:10 AM                                                                                                                    
CO-CHAIR EDGMON did not express  an opinion on the amendment, but                                                               
he  supported passing  the amendment  to the  next committee  "so                                                               
they can have a larger discussion [that] I think is warranted."                                                                 
8:02:02 AM                                                                                                                    
REPRESENTATIVE  DAHLSTROM  said  she  was  willing  to  send  the                                                               
amendment  to the  next committee,  or  incorporate a  conceptual                                                               
amendment; however, she opined it was vital to include the Army.                                                                
8:03:00 AM                                                                                                                    
CO-CHAIR EDGMON  pointed out there may  be outstanding questions;                                                               
in  fact, including  the amendment  now would  be without  a full                                                               
understanding of the ramifications.                                                                                             
8:03:28 AM                                                                                                                    
REPRESENTATIVE DAHLSTROM said she would not make a motion.                                                                      
8:03:41 AM                                                                                                                    
CO-CHAIR MILLETT  advised that the  next committee will  have the                                                               
amendment on its agenda.                                                                                                        
8:03:54 AM                                                                                                                    
REPRESENTATIVE   TUCK  stated   he  had   no  opposition   to  DU                                                               
participating as "one  of the seven, I suppose, but  I'm not sure                                                               
if  I'm comfortable  with  them  being one  of  the four  minimum                                                               
[needed] to require  the [formation of the]  corporation."  Also,                                                               
he opined  the affiliated members  should be limited in  scope to                                                               
8:05:05 AM                                                                                                                    
REPRESENTATIVE  DAHLSTROM pointed  out that  the military  and DU                                                               
have created a utility.                                                                                                         
8:05:17 AM                                                                                                                    
REPRESENTATIVE  TUCK  agreed that  the  military  and DU  are  an                                                               
electric  utility; however,  the  amendment replaces  "affiliated                                                               
electric utility" with "other entity."                                                                                          
8:06:15 AM                                                                                                                    
REPRESENTATIVE  JOHANSEN  expressed  confidence that  this  issue                                                               
will  be  addressed  by  the next  committee.    Furthermore,  he                                                               
reminded  the  committee  of  its   choices  on  the  "individual                                                               
recommendations" document.                                                                                                      
8:07:09 AM                                                                                                                    
CO-CHAIR  EDGMON  noted  the  presence of  the  House  Labor  and                                                               
Commerce Committee chief of staff.                                                                                              
8:07:23 AM                                                                                                                    
REPRESENTATIVE  PETERSEN  recalled  that the  committee  has  not                                                               
heard comments  from the other utilities  regarding DU's proposed                                                               
participation in GRETC.                                                                                                         
8:07:44 AM                                                                                                                    
CO-CHAIR MILLETT  agreed, and  expressed her  disappointment with                                                               
the  lack of  attendance by  the  utilities at  the hearings;  in                                                               
fact, only  three have given  testimony.  She said  the committee                                                               
has  not heard  from  Golden Valley  Electric Association,  Homer                                                               
Electric Association Inc., or Anchorage  Municipal Light & Power.                                                               
She  questioned  whether there  is  a  need  for the  bill  since                                                               
comments  have  not  been  received  by  three  of  the  affected                                                               
utilities.   Co-Chair  Millett welcomed  the participation  by DU                                                               
"so we could have the assurances  that ... the governor's bill is                                                               
actually going to do something."  She closed public testimony.                                                                  
8:10:28 AM                                                                                                                    
CO-CHAIR EDGMON moved  to report the Committee  Substitute for HB
182, version P, out of  committee with individual recommendations                                                               
and the  accompanying fiscal  notes.   There being  no objection,                                                               
CSHB 182(ENE) was reported out  of the House Special Committee on                                                               

Document Name Date/Time Subjects
Sectional CS HB 182 version P 4-7-10.pdf HENE 4/7/2010 7:00:00 AM
HB 182
CS HB 182 (ENE) version P 4-6-10.PDF HENE 4/7/2010 7:00:00 AM
HB 182
Summary of Changes CS HB 182 (ENE) version P.pdf HENE 4/7/2010 7:00:00 AM
HB 182
Leg. Legal Memo CS HB 182 version P 4-6-10.PDF HENE 4/7/2010 7:00:00 AM
HB 182
Amendments 1,2 CS HB 182 (ENE) 4-7-10.PDF HENE 4/7/2010 7:00:00 AM
HB 182