Legislature(2009 - 2010)BUTROVICH 205
04/02/2009 11:30 AM Senate ENERGY
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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 classification. 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.