House committee votes to extend life of RCA

Posted: Tuesday, May 13, 2003

JUNEAU (AP) A House committee backed away from several amendments aimed at the state agency that regulates utilities Monday and instead voted to simply extend the Regulatory Commission of Alaska for another four years.

It stripped several provisions of the bill spawned by grievances from utilities and instead gave Gov. Frank Murkowski the bill he requested. The agency was to be phased out June 30, and Murkowski wanted it extended.

Before voting, the House Finance Committee heard testimony from representatives of some of the state's largest utilities, including large communication companies such as General Communications Inc. and Alaska Communications Systems Inc., who came at the issue from opposing positions.

A so-called phone war'' between those two companies played out last session over the same issue and resulted in a special session. Ultimately, the Legislature voted to extend the life of the regulatory agency for another year.

On Monday, ACS vice president Leonard Steinberg encouraged the panel to allow the regulatory agency to be phased out. He described RCA's policies as broken and in need of repair.

ACS has no incentive to invest because it can't make any money under today's rules,'' he said. The regulatory process is not only burdensome but inhibits competition.''

ACS is forced by regulation to lease its facilities below cost, an act that essentially amounts to subsidizing the competition, Steinberg said.

The telephone company has complained bitterly about the rates the agency set for competitor GCI to use its lines to serve individual customers. GCI says the wholesale rates are fair, and the proposed changes would mean higher rates for consumers.

GCI spoke in favor of the bill.

Dana Tindall, senior vice president of legal affairs for GCI, said the RCA provides a valuable service. When consumers have a problem, they can go to the agency, she said. When there are failures in the market, the agency steps in.

The RCA is the agency that can handle these issues,'' Tindall said. It is time to let the RCA do its job.''

Joe Griffith, CEO for Chugach Electric Co., spoke out against extending the RCA. He said the agency has been incapable of doing its job, and that has resulted in costing the company millions of dollars.

They are not capable of doing the work we expect of them,'' he said.

Rep. Ethan Berkowitz, D-Anchorage, asked the panel to put more time into considering the amendments that were stripped from the bill. The amendments allowed for shorter depreciation on equipment so that ACS can raise rates for wholesale and retail customers. They also mandated that ACS could recover all of its costs for providing facilities to GCI, along with a reasonable profit.

The amendments were broadly seen as a boost to Anchorage-based ACS in its battle with GCI for local telephone customers.

Assistant Attorney General Daniel Patrick O'Tierny, addressing the panel by phone, cautioned them that the amendments could lead to complex and lengthy litigation implicating federal law.

Rep. John Harris, R-Valdez, who voted in favor of the simpler version of the bill, sought assurances from O'Tierny that if the bill became law the administration would work with aggrieved companies to address their concerns.

The answer is yes,'' O'Tierny said.

Berkowitz and Beth Kerttula, D-Juneau, were the only ones to vote against moving the bill out of committee.

This isn't the last stop,'' Rep. Bill Williams, R-Ketchikan, assured Berkowitz.

The Senate Finance Committee on Tuesday is expected to consider a simple bill to extend the commission for three years.

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