Legislature(2003 - 2004)

03/04/2004 01:43 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 296                                                                                                            
     An Act making an appropriation for the operation of the                                                                    
     Alaska Natural Gas Development Authority; and providing                                                                    
     for an effective date.                                                                                                     
REPRESENTATIVE ERIC CROFT explained  that HB 296 is identical                                                                   
to Senator Therriault's  bill [SB 241]. It  would appropriate                                                                   
$2.15  million   to  the   Alaska  Natural  Gas   Development                                                                   
Authority (ANGDA) so that the  authority can proceed with its                                                                   
work.  He expressed frustration  that neither the legislature                                                                   
nor the  administration has shown  support for  the authority                                                                   
and has  taken six months to  appoint the board and  fund the                                                                   
authority. The  authority received  some funding  in November                                                                   
2003,  a year  after  it was  established,  but  it is  still                                                                   
awaiting  significant funding  to implement  the will  of the                                                                   
Alaska voters.                                                                                                                  
Co-Chair Williams  stated his intention to hear  and hold the                                                                   
bill today.                                                                                                                     
STEVE  PORTER, DEPUTY  COMMISSIONER,  DEPARTMENT OF  REVENUE,                                                                   
acknowledged  that  the  issue  concerns  the  plans  of  the                                                                   
Department of Revenue and ANGDA  for the funding requested in                                                                   
this  legislation. He  noted that  Harold  Heinze, the  Chief                                                                   
Executive   Officer  of  ANGDA,   has  provided   substantial                                                                   
information  to the  committee  on ANGDA's  budget needs  and                                                                   
Mr. Porter  pointed out  that the  Department of Revenue  has                                                                   
compiled a  3-page list of  items requiring funding  over the                                                                   
next  eighteen  months  to  meet   the  requirements  of  the                                                                   
Stranded  Gas Act,  and to allow  ANGDA to  proceed (copy  on                                                                   
file.)   The  department  is  currently responding  to  three                                                                   
stranded gas  applications, and  supporting ANGDA as  well as                                                                   
energy  legislation.  He  explained that  the  department  is                                                                   
cooperating with the Canadian  government on pipeline issues.                                                                   
He gave a breakdown, explaining  that the broad projection in                                                                   
FY 04  and FY 05  with the producers  is about $2.6  million,                                                                   
with MidAmerican at about $450  thousand, the Port Authority,                                                                   
if the application  is approved, at about $700  thousand, and                                                                   
ANGDA  at about  $450 thousand.    Mr. Porter  said that  the                                                                   
energy  bill  in FY  04-  FY 05  could  take  as much  as  $1                                                                   
million.  The total request is $3.48 million.                                                                                   
Mr. Porter  stated that  some these  projected costs  may not                                                                   
actually  have to be  spent because  of potential  negotiated                                                                   
agreements, but he said that the  department needs nearly all                                                                   
of the $3 million that it has recommended.                                                                                      
Mr.  Porter informed  the committee  that  although ANGDA  is                                                                   
earmarked for only  $450 thousand, some of the  benefit ANGDA                                                                   
will  receive   is  through   contracts  the  department   is                                                                   
negotiating on the  Stranded Gas Development Act.    There is                                                                   
about  $200 thousand  spread through  different groups,  with                                                                   
ANGDA  receiving  substantially   more  benefit  than    $450                                                                   
thousand. He said the $450 thousand  is attributable to ANGDA                                                                   
and  it  cannot  benefit the  Stranded  Gas  Development  Act                                                                   
TAPE HFC 04 - 44, Side B                                                                                                      
Representative  Croft questioned  the infrastructure  support                                                                   
for ANGDA in  the department's proposal.  Mr.  Porter replied                                                                   
that  it  is  in  operating  budget  for  the  Department  of                                                                   
Revenue, which includes  a line item for ANDGDA  allocated to                                                                   
the  CEO  and staff.    The  money  in  HB 296  would  go  to                                                                   
contractors  and additional  support.   Representative  Croft                                                                   
asked the  amount.  Mr. Porter  replied that the  details are                                                                   
being worked  out, but  he thought it  would be between  $150                                                                   
and $274 thousand.                                                                                                              
Vice-Chair Meyer  stated that he  is co-sponsoring HB  296 in                                                                   
order  to keep  all avenues  open  for development  of a  gas                                                                   
pipeline.   He asked if  MidAmerica will meet  their contract                                                                   
deadline  by March  12 and  expressed  concern about  getting                                                                   
ANGDA  funded   sooner  if  MidAmerica  does   not  meet  the                                                                   
Mr. Porter  replied that there  is always the  possibility of                                                                   
reaching  agreement  by  March  12  if  the  details  can  be                                                                   
negotiated. For  ANGDA to be  strong and viable,  the funding                                                                   
is needed quickly in order to execute contracts.                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Porter clarified that  he never told the ANGDA  board that it                                                                   
wouldn't get any funding if it  didn't support the $3 million                                                                   
request.   He admitted  making statements  to the board  that                                                                   
the best  way to get funding  for ANGDA and the  Stranded Gas                                                                   
Act  is the  vehicle  the Department  of  Revenue put  before                                                                   
Representative  Croft argued that  a number of  board members                                                                   
have told him that  they heard from Mr. Porter  that this was                                                                   
only  way they  would get  significant funding.   Mr.  Porter                                                                   
replied  he would  clarify it  with the ANGDA  board in  open                                                                   
session during their March 15 meeting.                                                                                          
Representative Hawker asked the  sponsor if the $2.15 million                                                                   
is consistent  with the lapse  date of 2009.   Representative                                                                   
Croft replied  no, that most  of the  money would need  to be                                                                   
spent  soon, and  he chose  2009  as the  expected date  that                                                                   
construction  would  begin.   He  offered  to shorten  it  if                                                                   
Representative Hawker would like.                                                                                               
Representative  Hawker  asked  Co-Chair Williams  to  arrange                                                                   
public testimony  from the ANGDA board because  he is hearing                                                                   
conflicting perceptions.  Co-Chair  Williams affirmed that it                                                                   
could be arranged.                                                                                                              
In response to  a question by Representative  Croft, Co-Chair                                                                   
Williams clarified that more committee  work would be done on                                                                   
the bill to keep the numbers but change the language.                                                                           
Representative Joule  asked Mr. Porter if  ANGDA participated                                                                   
in the budget.  Mr. Porter responded that Mr.  Heinze had not                                                                   
seen this  report. He said  that because Mr.  Heinze's budget                                                                   
does  not include  research costs  for the  Stranded Gas  Act                                                                   
negotiations, the numbers would not necessarily match.                                                                          
Representative Croft  expressed continuing concern  that only                                                                   
a small  portion of  the $3  million would  reach ANGDA.   He                                                                   
stated  that only $450  thousand is  not good  administrative                                                                   
efficiency, and not what he intended  in sponsoring the bill.                                                                   
His  intention  was  that  ANGDA  receive  the  entire  $2.15                                                                   
appropriation.   He  expressed   support  for  the   separate                                                                   
structure  of  the board  to  make decisions  independent  of                                                                   
political administrations or the legislature.                                                                                   
Co-Chair  Williams commented  that  Representative Croft  has                                                                   
not had direct  discussion with the ANGDA board  on a day-to-                                                                   
day basis.                                                                                                                      
HB  296  was   heard  and  HELD  in  Committee   for  further                                                                   

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