Legislature(2009 - 2010)BUTROVICH 205

04/02/2009 11:30 AM Senate ENERGY

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Heard & Held
Heard & Held
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               SB 162-HEATING FUEL ENERGY RELIEF                                                                            
12:41:32 PM                                                                                                                   
CHAIR MCGUIRE announced SB 162 to be up for consideration.                                                                      
12:42:48 PM                                                                                                                   
SENATOR PASKVAN,  sponsor of SB  162, said  this is a  short term                                                               
solution for  a very serious  issue in Interior  Alaska, although                                                               
this  bill  would  apply  to  rural Alaska  and  to  some  extent                                                               
Southeast   and   Southcentral    Alaska.   He   explained   that                                                               
approximately 80 percent of rural  Alaska and Interior Alaska use                                                               
heating  oil as  their  primary  source of  heat.  He knows  this                                                               
legislation needs more work and he asked for their assistance.                                                                  
SENATOR PASKVAN  said Alaskans  who rely on  heating oil  to keep                                                               
warm during  the winter  need a  specific short-term  solution in                                                               
addition  to the  many other  promising long-term  solutions that                                                               
are being considered.  SB 162 is a short-term  solution; it would                                                               
require  the  State  of  Alaska  to  offset  heating  costs  over                                                               
$2.50/gallon when  the price of  a barrel  of crude rises  to the                                                               
point where  the state  is enjoying a  budget surplus.  The state                                                               
would pay the balance directly to the home heating distributors.                                                                
SENATOR  PASKVAN  said having  a  short-term  solution in  place,                                                               
would free  people to  come up with  a long-term  solution, which                                                               
will  restore   optimism  about  our  economic   future,  protect                                                               
families  and  businesses  and   allow  them  to  concentrate  on                                                               
renewable and sustainable energy solutions for all of Alaska.                                                                   
He  said that  SB  162  is easily  administered.  The dealers  of                                                               
heating  oil  as part  of  their  current reporting  requirements                                                               
already  report to  the  State  of Alaska  in  a  monthly form  a                                                               
breakdown  of the  quantities of  the various  petroleum products                                                               
that  they   sell  and   that  does   include  the   heating  oil                                                               
12:45:32 PM                                                                                                                   
He  said  the  quantities  of  heating  oil  are  verifiable  and                                                               
objectively determinable.  SB 162  does not create  a bureaucracy                                                               
of  paperwork  or  a massive  government  employment  program  to                                                               
operate. And  rather than distributing  checks or debit  cards to                                                               
tens of thousands of individuals,  the state would make a payment                                                               
directly oil distributors.                                                                                                      
SB 162  requires the  consumer price of  heating oil  to increase                                                               
each of  the next three years  to reinforce the need  of Alaskans                                                               
to conserve and to switch to  alternative energies or to find the                                                               
long-term  solutions. His  oil distributors  won't go  to a  home                                                               
unless  they  were  delivering  at  least  100  gallons;  if  the                                                               
consumer didn't  have $450,  there would  be no  delivery. People                                                               
were forced to go  to the gas station with a  five gallon gas can                                                               
to get diesel to try to  make it through a minus-50 degree night.                                                               
Many Fairbanks people  were on the verge of freezing  in the dark                                                               
because of  the $4.50/gallon  price. And  when winter  ended, the                                                               
distributors'  accounts receivable  levels were  at unsustainably                                                               
high amounts.  If prices had not  gone down, they would  have not                                                               
been able  to enter this last  winter by providing any  credit to                                                               
the  consumers,   because  they  couldn't  afford   losing  their                                                               
business. He  said the average  1,400 square ft. home  cost about                                                               
$5,000/year to  heat as  compared to about  $1,200 if  the person                                                               
was on  natural gas.  It's also important  to understand  that in                                                               
Interior Alaska  the per  capita income is  20 percent  below the                                                               
national average. The entire Interior  Alaska could not afford to                                                               
stay in the situation for another year.                                                                                         
SCOTT  RUBY,  Manager,  Division  of  Operations,  Department  of                                                               
Commerce,  Community  and  Economic   Development,  said  he  was                                                               
available to answer questions on SB 162.                                                                                        
CHAIR MCGUIRE  said she  liked the approach  in this  bill rather                                                               
than money  being sent out  as happened  last year, and  said she                                                               
would work with him during the Interim on refining the language.                                                                
SB 162 was held in committee.                                                                                                   

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