House Labor & Commerce, 5/14/26, 8am

I call the House Labor and Commerce Committee to order. Members present are Representatives Garrett, Colon, Freer, Fields, and Hall. Um, we are returning to SB 170. We were in the middle of an amendment, and Representative Garrett, do you want to remind us. I think it was your amendment.

And it does. Thank you, Mr. Co-Chair. So we're on Amendment E.20, and just as a reminder, the current version of the bill sets a floor essentially of 10 tablets no matter how small the size of an establishment, and then it goes by square footage for how many tablets are allowed after that, such that the larger the square footage, the more tablets you may have. What this amendment does is it adds a cap so that no matter how large your establishment is, 25 is the maximum. And this applies in this section to licensees, permittees, and vendors.

So a specific set of operations. Okay. Further discussion? Was there any objection? I guess someone objected at some point.

Do you maintain— okay. Representative Klobuchar. I'm just wondering if Sandy Powers is online. I'd like her input on that. She is.

Go ahead, Miss Powers.

Good morning, this is Sandy Powers. I'm the owner-operator of Big Valley Bingo in Wasilla, and, um, our thought originally in the bill was to limit, uh, any establishment that serves alcohol to 10 tablets. And then we didn't want any restriction on any other establishments that didn't serve alcohol because the ones that serve alcohol, we don't want bars becoming mini casinos.

Okay, um, further discussion? So just clarify, this amendment only applies to bars, right? Um, go ahead, represent— or Senator Bjorkman. Yeah. I don't know if we settled the bingo hall thing from yesterday.

Through the co-chair to Representative Colon, no, this amendment would apply more broadly to all licensees. Operators are a licensee along with other people who have a license. It would apply to everyone. Oh. Yeah.

So again, the policy choice here is what I described yesterday as an allocative proposal, and indeed there are other ideas and proposals out there that would allocate the market demand for electronic pull tabs in the other direction. You just heard a description of that. This proposal would say that an establishment can have 10 tablets in operation. They can have more than 10 tablets in operation if their capacity is above 60 Once their capacity goes above 60, then they can increase their tablets until they get to a maximum of 25 tablets in play. And that's how this would apply.

And so it does apply to bars and bingo halls? Yeah, I just want clear. Okay, thank you. That's correct.

I remove my objection. Is there— okay, thank you. Will the secretary call the roll?

Representative McCollum? No.

Representative Sadler? Not present. Representative Freer?

Yes.

Representative Carrick? Yes.

Representative Nelson is not present. Co-chair Fields? Yes. Co-chair Hall? Yes.

4 Yeas, 1 nay.

So by a vote of 4 to 1, um, amendment— was that E.20? E.20 does pass. Are there further amendments?

Yes, um So, Mr. Kocher, at this time I'll offer E.8. I'll object for the purpose of discussion. Okay, so Amendment E.8 is similar to a previous amendment, and what it does is it just removes the word paper on page 18, line 26. What this does functionally is that it requires all pull tabs, whether paper or electronic to be paid upfront by the vendor, and this would help ensure that nonprofits are paid prior to the e-poll tabs being loaded onto the device, which maintains the upfront payment standard that exists for paper poll tabs. The concern here is that if this isn't passed, that vendors could act essentially as operators without some of the same regulatory safeguards in place.

And that's E.8. Thank you. Senator Bjorkman, could you talk through the implications of this amendment, please? Thank you, Co-Chair Fields. The implications of this amendment are as discussed yesterday when we heard a similar proposal.

This would make it very hard for bars to adopt electronic pull tabs at their establishment by requiring them to pay up front. A pull tab series for an electronic— one electronic pull tab game is 15,000 tickets. So to purchase one game, a bar would have to spend $15,000 per game. That would make electronic pull tabs— that's a pretty big disincentive for bars to have electronic pull tabs. There are two things in place for bars to make sure that they pay the money that the charities and nonprofits have coming to them.

And they are— just to reiterate from yesterday— they have to pay or they will have their liquor license revoked. They have to pay, and if they are more than 14 days late, the distributor of that electronic pull tab game will shut off their system. So those are the safeguards in place to make sure that charities and nonprofits get paid. And this, this is a— this is an attempt to make it very hard for bars to have electronic pull tabs and would be damaging to charities and nonprofits and not allow them to raise the funds that they need to. Okay.

Thank you. Is there further discussion?

I think I'll maintain my objection on this one. Further comments, Representative Carrick? Will the secretary call the roll?

Representative Colombe? No.

Representative Carrick? Yes.

Representative Freer? No. Co-chair Fields? No. Co-chair Hall?

No. 1 Yay, 4 nay. By a vote of 1 to 4, amendment— that amendment does— which E.8 does not pass. Are there further amendments, Representative Kiffmeyer? There is.

But I might ask that we just take a brief-a-dees to copy—. Brief-a-dees.

Back on the record, Representative Kerr. Okay, thank you. I'm going to move E.13. I will object for purpose of discussion. And Mr. Kocher, I'm gonna move Conceptual Amendment 1 to E.13.

And okay, seeing no objection, the conceptual amendment is adopted. Do you want to describe what it does? Yes, so I'll first say that Conceptual Amendment 1 just added or clarified the language that's on the amendment saying that on page 10, line 25 of the bill, a manufacturer may only own one distributor, and that's just clarifying language for what the intent of Amendment E. Amendment E.13 is— Amendment E.13 comes at the request of folks that have reached out to our office. Currently, SB 170 contains provisions that will prohibit a manufacturer, parent, affiliate, subsidiary, or owner, director, officer, employee of a manufacturer, or any of their family members from having an ownership interest in a licensed distributor if the manufacturer and distributor wishes to sell or lease electronic pull tabs. Pages 10 through 13 contain most of that language.

So the intent of the bill language is to preserve competition around electronic pull tabs. In reality, because other Alaska distributors have already announced exclusive partnerships with their manufacturers, the current bill language has the potential to shut out others from participating in this business in Alaska who are currently operating here. The current bill language actually reduces competition by eliminating one distributor and one manufacturer from participating, which just leaves the remaining two manufacturers and distributors in the market. And so the amendment revises the ownership prohibitions to allow a manufacturer to have an ownership interest in not more than one Alaska distributor. So it limits common ownership to one manufacturer and distributor and prevents monopoly, but also protects competition by allowing another manufacturer and another distributor to compete for business among Alaska's permittees.

The enhanced competition gives permittees an additional company to choose from and forces the manufacturers and distributors to compete with each other on price and service. So that is meant to benefit Alaska's charities. It also leaves the door open for other distributors to sell their business at some time in the future, allowing those distributors to remain in business and not have to close, thus reducing competition due to the lack of an available buyer. And this amendment did come at the request of a specific Alaska business and its employees who are currently operating and doing so in a legal manner. And out of concern that they might be shut out of the market that they're currently participating in, I've brought this amendment forward.

Um, thank you. Yeah, I will be voting for the amendment, but still want to turn to the bill sponsor to discuss it.

Thank you, Co-Chair Fields. Um, I think it's important that we understand and think about where the process of the creation of this portion of the bill has been. Um, the language in the bill originally started through conversations from stakeholders about what would create the maximum amount of competition. Originally, the bill required complete divestiture of the Wähler from Arrow, the manufacturer, and for all of their paper pull tabs and electronic pull tabs. However, in a compromise position, I included in the bill that they would not have to divest their business if they wanted to continue to sell paper pull tabs They can, and they will remain under the current language in the bill to be able to sell paper pull tabs.

Nothing in the current language in the bill will take away their ability to conduct business in the pull tab market that exists currently. Also, I think it's important to note that as distributors sign contracts with manufacturers those contractual exclusive relationships only go one way. That means to say, if a distributor signs an exclusive contract with the manufacturer— it could be Arrow or Pollard Games or Pilot or whomever— that distributor has often said, "I want to be the only distributor in Alaska to carry your games." That's the exclusive relationship. There is nothing in the law currently that would prevent that same distributor from also carrying Arrow's games or Pollard games or another manufacturer's games.

The commentary on the, on the amendment that was just made seemed to say the opposite of that. That's not how the law works, and that's not how business practice works. You can think about it this way: an archery dealership, they might be an archery dealership for a certain brand of bows. They could have Hoyt bows, and that could be their main brand that they carry or a different brand. But they also might carry PSE bows.

They also might carry Elite Archery equipment. They have exclusive relationships with those manufacturers for typically about a 50 to 100 mile radius around. That is the exclusive relationship that they have for that, for those manufacturers. But they are not precluded from carrying the products of other manufacturers. That's a fact.

So I'll ask, um, Mr. Fisher from Alaska Wholesale to also comment on this amendment. Um, the amendment is a very significant, um, choice that this committee will have to make that will result in significant price differences and competition differences in the market in Alaska. Um, okay, uh, go ahead, Mr. Fisher.

Thank you. First, I would like to just say the requirement to become a pull tab distributor in Alaska is essentially pay $1,000 and you can become a licensed pull tab distributor. There's very little limitations on it. So when this company says they can't find a distributor to carry their product That's simply just false. There are plenty of companies out there that could pay $1,000 for people and start a company.

Minnesota is a market that has limited the distributor and manufacturers being the same. It's a free market. In this market, the company that we selected has 2,800 sites. Arrow has 28 sites. It's not that nobody wants to carry their product.

They just haven't performed with a good product. What it does when you have a local distributor, an Alaskan-based distributor, they look out for the nonprofits and find the best product. What we have happen if a $40 billion equity company is also a distributor is they buy the market, they can run the competition out, they can increase prices, and we've seen this in some of the markets where they have literally bought up distributors. Other manufacturers are not allowed into the market that those distributors used to carry, and this is on the paper side. And we see that limited competition.

Create a good product, you'll find somebody to sell it.

Okay, um, I am going to— well, I guess I'm going to support the amendment because I think there's not that many manufacturers, not that many distributors. There's an existing distributor owned by a manufacturer. I, I don't— I'm not going to vote to put them out of business. I just want to explain my rationale. Um, the goal, the goal of this bill is not to manipulate the market, not to benefit operators over vendors or distributors over manufacturers.

But to maximize benefits for charities. That's just my approach. Um, is there any other discussion before we go to a vote? And I'm going to go, um, at ease to let Representative Hall come back, but we can go through the discussion if there's any further discussion.

Okay, at ease.

Um, back on the record, um, we're on Amendment E.19 or E.13. I remove my objection. Is there further objection to this amendment? Okay, not seeing further objection, Amendment E.13 does pass. Are there further amendments?

Not from me. You have yours. I have my 3. I have 3. Go for it.

Okay, I move E.14. I'll object for purpose of discussion.

So, uh, E.14 is on page 17. We're Deleting the word— the number 90, going to 85. So this amendment lowers the electronic pull tab payout limit from 90% to 85% to ensure digital games stay competitive with the 83% paper average, protecting the traditional sales that many local charities rely on. This change prevents digital e-tabs from having an unfair mathematical advantage, ensuring that one format doesn't immediately cannibalize the other. And maintains a balanced payout structure helps a wider variety of nonprofit organizations and to keep their gaming programs viable alongside new technology.

And I do have a chart that I got from Ms. Powers, if I can hand it out. She just wanted to kind of show the numbers, and I'm sure she'll want to chime in on it. Okay. I have a question on the amendment, actually.

It seems like a lower payout limit would mean that this product would be— you could call it either slightly less engaging, if you wanted to be critical, or slightly less addictive, if you wanted to be complimentary of it. Is that an accurate reading of what the amendment does, because it pays out less frequently? Can I get Ms. Powers to chime in on that? Sure.

Go ahead, Ms. Powers.

Hi, this is Sandy Powers. I own Big Valley Bingo in Wasilla. Currently, paper pools have payout an average of 83% in Alaska. The chart shows on 80% paper that the— for that dollar amount, the percent to charities would be $1,004. At 85%, it would be slightly less.

Um, it would be $753. At 90%, the same dollar spent, the charity would get $502. The state would also be getting about half of what it gets at 80% as well. And with the auto-close feature, the actual 90% ETABS goes up to 92% because it closes before all the tickets are sold. The charity would get $402 for the same dollar spent.

That's about 2.5 times less than they would get at 80%. So we were recommending 85% payout, and it's more in line with what the paper pull tabs go for. And if the payout percentage is exceedingly high for electronic tabs, the paper sales are going to be cannibalized. And it's just kind of the way that it works out.

Thank you. And then the cost of the games at— for the same, say, 17,250-ticket game, the paper ticket would cost $502. At 85%, it is more with electronic pull tabs.

At 25% payout— I'm sorry, I said that wrong. At 25% cost, the ETAB is still a little more expensive. It's $628. But at 35%, those same tickets are $878. It doesn't get cheaper until you get to the 92% payout because the ideal net is so low at that point.

If you look at the line between the wage or excise tax and the percent to charities, the ideal net at 80% is $3,347.

The ideal net at 92% is $1,339. So there's so much less money available at the higher percentages and the higher costs. Okay, thank you, Ms. Powers. Senator Bjorkman.

Thank you, Co-Chair Fields. Um, currently the bill, um, and past practice for decades, there has not been a payout limit on paper pull tabs. Permittees have the ability to choose the games that get played and result in the most money being made from those games because there is that freedom of choice to play games at different percentages based on what the tastes and preferences of their customers are. This change would only put a payout limit on electronic pull tabs. And that electronic pull tab limit, it would limit play.

What the numbers on the chart do not take into account is player behavior and how they choose to interact with pull tabs. This would mean that people playing pull tabs would win less frequently. They would play less, they would raise less money for charity. It's simply a way to limit options that permittees have when they're choosing what games to be played. There was another amendment in the packet that was not offered to reduce, like, have no limit at all in the bill for ETABS.

The 90% limit was a compromise position to allow for some certainty of percentage of payout so people could plan. And so that's why I oppose this amendment. Thank you. Thank you, Representative Carrick. Yeah, uh, Mr. Co-Chair, I had the amendment that I didn't offer to just remove, remove the upper threshold.

And I guess as I look at this, I'm leaning, I think, in favor of keeping it at 90. I guess why I guess this might be a question to the person who was just speaking, but why would we want to— why would we want to go to a lower percent payout threshold instead of letting the market determine if they want to do 85% or 90%? Is it just— is it just a competition aspect? I think, number one, you can shape the market if you want to shape the market. So we do that, or you could, if you're worried about potentially addictive features of electronic pull tabs, then you can limit the addictive risk by having a lower payout percentage and the balance is less money for charity, like Senator Bjorkman said.

That's basically the trade-off. Okay. I guess I'm contemplating it out loud, but I still am— I'm not sure that we necessarily must have a limit because I think the market will kind of interact with itself in a way that leads to maximum player usage and therefore maximum benefit to nonprofits. But at the same time, I appreciate the chart that Rep. Colon gave us to, to demonstrate some of the payouts. Okay, well, I guess I'm gonna maintain my objection.

Is there further discussion?

Will the Secretary call the roll?

Representative Carrick? No. Representative Freer? No. Representative Colon?

Yes. Co-chair Fields? No. Co-chair Hall? No.

1 Yea, 4 nay.

By a vote of 1 to 4, E.14 does not pass. Would you like to offer further amendments, Representative Representative Klemm? Yeah, I move E.15. I'll object. Go ahead, Representative Klemm.

So E.15 is changing the number on page 17, line 3, from 35 to 25. This is reducing the maximum price of a manufacturer or distributor can charge from 35 to 25%. Keeps more money in pockets for local charities. Lowers the barrier to entry for smaller organizations by ensuring that digital system fees at fees don't consume the majority of the potential profits, and by capping industry fees, we ensure that charitable part of charitable gaming remains priority in directing funds back into our communities. Um, if, if I could, um, Chair, I'd like to do an amendment to an amendment.

Okay, my amendment, if we could change the number from 25 to 30 Okay. Seeing no objection, Amendment E.15 is conceptually amended so that it would say on line 2, delete 35, and on line 3, insert 30. Yeah, and the reason I did that is just some of the discussions that we've had. This came up in some of the things that Senator Bjorkman had said before. So I think 30 seemed like kind of a middle ground, I guess.

Thank you. Senator Bjorkman. Thank you. Thank you, Co-Chair Fields. This amendment has a very strong relationship to the amendment that you all passed having to do with manufacturers.

And this— so this is exactly why I was against having a manufacturer being able to own a distributor. If you have a small manufacturer trying to enter the market that they're not a massively large multinational gaming corporation. They are not going to be able to offer their product at the same price as an Arrow product. They won't. However, if we set a cap below what an already announced contract is between a distributor and Pilot Games, you essentially create a market distortion where you benefit very wealthy and connected manufacturers who have a product that is unsuccessful in Minnesota compared to their competition.

And then you're not allowing the market to function properly. So I have a chart that people can look at as well with the 35% manufacturer cap. It's in your packet already, but if you need a refresher, I can distribute it. Um, if we— if you think about what these kind of price distortions do to the marketplace, it's a dangerous thing, especially now that you have allowed a manufacturer to own a distributor. Thank you.

So the marketplace in Minnesota, as was stated in testimony earlier, they're allowed to work in much a different way than we now are setting up our marketplace. If you are going to benefit one manufacturer by capping it at a lower rate, it can severely distort the market. I think Matt Fisher could talk, talk to this more, um, as well. So, um, okay, uh, go ahead, Mr. Fisher.

Certainly, as we talk about percentages, it's important to realize what we're trying to do here is take a company— I'll use Pilot, for example. They've been at 31% in Minnesota until recently this last year. They produce ideal net average of $14,000 per site. Another company averages $5,500 per site. We think, we believe Pilot is worth 31%.

They put a lot of money back into their products. People that are saying we should have price caps, they don't understand that I'm switching from a paper distributor that works a few hours a day to a 24-hour business. Hillett spends about $300,000 per game to make a game. They have been producing a game every single week for the Minnesota market. And so what we have is people trying to put price constraints on that don't know what electronic games are.

They don't know the cost and they're trying to put artificial restraints on without any of that knowledge.

Can I hear from Ms. Yeah, and actually, let's, uh, just to mix it up, why don't we go to Dave Lambert, if that's okay? Just another operator. Mr. Lambert, do you want to weigh in on this one?

A 15,000-count game would only cost the bar about $1,100.

He said it would cost them $15,000. Well, hey, Mr. Lambert, we're actually on the, the amendment to go from 35 to 30%.

Do you— would you like to address that amendment?

Uh, let's go to Ms. Powers since we're having some connection issues with Mr. Lambert. Go ahead, Ms. Powers. Hello, am I on?

Okay, you're on, Mr. Lambert. Would you like—. Um, hello, this is Dave Lambert. Go ahead, Mr. Lambert. Can you hear me?

Yes.

You know, I think 30% is a reasonable number to have. When you're dealing with a vendor location, the nonprofit has no choice of what they're going to pay. The distributor makes the contract with the vendor, and the vendor doesn't care what the cost of the ticket is because they're not paying it. So—. I think that's something to consider in the rural areas.

The bigger organizations have an opportunity to negotiate price, but a nonprofit dealing with the vendor or the rural areas do not have any choice.

I'd like to hear from Sam. Okay, um, thank you, Mr. Lambert. Go ahead, Ms. Powers, to share your perspective too, please.

Hi, this is Sandy Powers, and I agree with Dave that the smaller, more rural areas don't have the ability to negotiate price as much as we do, say the larger businesses in the municipalities. And I think that the lower the cost limit is, the better it is for the more rural areas.

You know, I understand the development cost of a game, and if they want to develop a game every week, that's the manufacturer's privilege. But there are many, many games that are developed and can fit into the electronic pull-tab market in Alaska that you don't have to necessarily have the higher cost involved. So I think 30% is definitely better than 35%. Okay, um, thank you for the good discussion. I guess I'm going to remove my objection.

Does anyone else wish to object to this amendment? Mr. Chair, may I speak again? Sure.

As we think about policy choices that we're making to this bill, we've heard a lot from for-profit companies that are speaking to policies that benefit their for-profit business and not necessarily to policy choices that are going to benefit charities and nonprofits. I, I have spent years working on these policy choices and selecting certain levers in this bill that are going to result in the maximum amount of competition in this market so that prices are lower and that more money can be made by charities and nonprofits. If you insert a lower cap on the manufacturer cost, you will distort the market and discourage other manufacturers from entering the market. That's, that's the choice that will be made here if you accept this amendment. Allowing the market to work with a higher percentage can bring more competition, and it will.

So there are agreements already out there that would be nullified essentially by setting the cap at 30%. Yeah. This is a pretty dangerous policy choice that will limit competition and hurt charities and nonprofits. What you're not hearing from are senior centers and Little League teams and kids' sports who— they're not in the weeds on these policies. They don't know how all of the mechanics and policy levers are going to affect them, but the effects of a market distortion like the one we're currently contemplating, they'll be real for them.

And I would encourage the committee to not adopt this amendment. I'm going to object. Okay, um, thanks. Yeah, I appreciate that perspective, and for me it's a tough call. Okay, so there is an objection, and will the secretary call the roll?

Representative Colombe? Yes.

Representative Carrick?

Yes. Representative Freer? No.

Chair Fields? Yes.

Chair Hall? No. 3 Ayes, 2 nays. By a vote of 3 to 2, E.15 as amended does pass. Are there further amendments?

I got one more amendment. I move E.16. Okay, I will object for purposes of discussion. So this amendment, um, removes the, uh, sentence, and an auto-close feature must be disclosed on the electronic game player card with a statement identifying when the game will be closed. So it prohibits the auto-close systems that shut down a game once top prizes are gone, ensuring the game Alaskans are playing remain open and fair until the end.

Prohibiting these systems removes the need for complex autoclose disclosures on digital screens, making the gaming experience more straightforward to the public. And by removing the autoclose feature, we treat digital games more like traditional paper games where players expect a clear and predictable start and finish.

Um, not seeing questions this time. Senator Bjorkman. Thank you, Co-Chair Fields. This amendment would simply make people lose more often.

The amendment would— would it make people lose more? And so if you want people to play pull tabs and have less enjoyment, less entertainment, and lose more, you should pass this. If you want to make more money for charities and nonprofits, you should vote no.

Okay. Or Powers or somebody? Sure, let's go Sandy Powers. Feel free to weigh in on this amendment.

By removing the autoclose feature, it makes the experience more like paper pull tabs because we don't just— we don't just throw out the rest of the game when all the big winners are gone. They play all the paper pull tabs pull tabs in the jar until the end of the game. So by having the game close when the big winners are gone, you're actually taking part of the profit out that would be sold. The player isn't going to notice a big difference between whether the auto-close feature is on or off. There will be access to more big winners with the auto-close feature, but you're essentially throwing out part of the profit by utilizing the auto-close feature.

And that money would be going to the charities. Okay. I think I'm going to maintain my objection. Is there further discussion? Not seeing any.

Will the Secretary call the roll?

Representative Colon. Yes.

Representative Freer. No. Representative Carrick. No.

Representative Nelson. Yes.

Co-chair Fields. No. O Chair Hall. No. 2 Yeas, 4 nays.

By a vote of 4 to 2, E.16 does not pass. Are there further amendments? I am done. All right. I think that brings us to action on the bill.

Is there further discussion before we take action on this bill?

I would like to hear from Senator Bjorkman. In wrap-up, Senator Bjorkman.

Thank you for your consideration of this bill.

Appreciate the committee's time and work on it. I have pretty significant policy concerns about how the system will function with the amendments that were adopted. You have, you have created some danger in allowing one manufacturer to completely control the market in Alaska by allowing that manufacturer a very significant level of price advantage for their product by owning a distributor. And then you further reduce competition in that space for manufacturers by limiting the price that they can charge on percentage of the ideal net. I want to make it very clear that the bill will still work.

Like, the bill will still work. The system of electronic pull tabs will still work. But because of policy choices made in the bill through amendments, you've created a system that is going to significantly allow one manufacturer to have a very big comparative advantage in the marketplace. That's the result of allowing the ownership of one distributor and then bringing that cap on manufacturer price that they're able to recover down to 30%. So the bill will still work.

It'll still make money for charities and nonprofits. That will be fine. We've added some additional safeguards with signers to make sure that servers and folks are getting tips and other things, that's fine. The policies that I selected and worked on for many months and years with the two items that I just described, however, they're big protections for charities and nonprofits, and I want you guys to think about that. So it's, uh, it is what it is, and as we go forward, I think it's important that we make decisions that are going to benefit charities and nonprofits and not corporations from outside of Alaska.

I understand that the whaler is a local business and they've run locally and they've operated for years. They were recently purchased by Arrow. However, Arrow is not, and they still would have a marketplace under the bill as it was before it was amended. They still would be able to operate They could choose a number of ways to divest or separate themselves from the whaler if they wanted to carry electronic pull tabs. So like, those are, those are policy choices that I want us to think about and consider.

And so as I, as I crafted the bill with input from many folks, the goal is always how do we make sure that charities and nonprofits get the most money. Not how do we make it easier for or harder for for-profit businesses to have maximum benefit, which is some people's desire, which I understand, everybody likes to make money. But we allow charitable gaming in the state of Alaska for the express purpose to make money for charities and nonprofits. That's what the system will do if enacted under this bill. It will, but it won't work as well as it could.

Or it probably should with the result of the amendments that were passed. But I appreciate the time and consideration that the committee has taken on this item. I appreciate that, um, you all were willing to sit with me in committee and work on it for quite a while and get your questions answered. And I appreciate, uh, your— all of your time and support. Thank you.

Representative Club. So Senator Bjorkman, are you saying you don't want us to pass it out of committee? No, absolutely not. Through the chair to Representative Klobuchar, no, I think the bill will still work. I think the bill can move forward in the process.

The system of electronic pull tabs will still benefit charities and nonprofits, but through the two amendments that you adopted today, it won't work as well as it could have. And the amendments— yeah, I want you to, I want you to move the bill. I'd like the bill to pass, but policy choices in the bill are significant, and it's unfortunate. So that's, that's all. Like, I just want to put it out there the way I see the process from what I've learned.

Like, if we want, if we want the best bill that we can, um, you might think about that. Thank you. Yeah, my take is that those— some of those policy choices are hard, like the 35 to 30%. I think there's strong arguments on both sides. Um, same for how you minimize monopolization or oligopolistic action in the marketplace.

I think those are hard choices too. Representative Carrick. Um, thank you, Mr. Kocheri. I just want to thank the bill sponsor for such a significant amount of work on this issue and I know there were amendments adopted that the sponsor would prefer not have happened, but I, I guess to just speak to my motivation working on this bill and getting to work with the committee and the sponsor is I am generally okay and on board at this point with a pretty big expansion of how charitable gaming is going to look and feel in Alaska. With ePoll tabs, but trying to, I guess, preserve some of the market dynamics that exist right now.

And so that's why, even though we're making this new format available to more— to people, that we're trying to preserve essentially how the market performs currently. And I recognize the hesitation around that, but I have been really grateful to work with the sponsor on these and other amendments and tried to restrain from offering a lot of other amendments that I think would have really radically altered the scope of the legislation and gotten away from the intent, which, as the sponsor said, I think we all share the goal of maximizing funding for nonprofits as much as we possibly can here. So I am grateful for folks' work on it.

Okay. Not seeing further discussion, would you like to make a motion, Representative?

Mr. Co-chair, I move work order— I move Senate Bill 180, Work Order 34-LS0819/i, as amended, out of committee with Madam Chair, you said it was SB 180. We are on SB 170. Oh, good Lord. Thank you.

Excuse me. I'm looking at the wrong bill. All right. I will start all over again. Thank you, Representative Clark.

Mr. Co-Chair, I move Senate Bill 170, Work Order 34-LS, 0213/E as adopted with individual recommendations and attached fiscal notes.

Uh, not seeing any objection, SB 170 does pass from committee. We will sign the paperwork and transition to Senate Bill 180. At ease.

On the record, next up is Senate Bill 180. We left off in the middle of Amendment 2, or I.5. At this time, I'm going to withdraw Amendment I.5 so we can return to action on a previously adopted amendment. Representative Hoffman.

Thank you, Co-Chair Fields. Regarding Amendment Number 1, um, when Amendment Number 1 was brought up before the Labor and Commerce Committee last month, we had the impression that it was a straightforward solution to an issue with our regulatory timelines that were raised by the executive branch. Subsequent stakeholder outreach has brought concerns about the timelines to light, making it clear that we need to have a more full legislative conversation about the change. The underlying issue that the amendment sought to fix still exists. The fact is, Alaska has the longest decision timelines in the nation when it comes to the RCA decisions, and these RCA timelines affect more than just our Standard Proctor regulatory risk ratings.

They create a regulatory lag that places undue cost and uncertainty on projects. 450 Days to approve a tariff filing is far longer than any other state. Alaska does not need to have the shortest timelines, but in a state that is already inherently difficult to invest in, it doesn't make sense to impose an unusually burdensome barrier on ourselves. So with that, um, the intent— my intent is to address the RCA timelines during the interim and to have a more robust and full legislative discussion during the next legislature. Thank you, Mr. Co-chair.

Okay, briefities. Back on the record. So, Mr. Co-chair, I move to rescind Amendment Number 1. Is there objection? Not seeing any objection, Amendment Number 1 is rescinded, which brings us back to other amendments.

Before us at this time, I am going to move Amendment I.7. Object. Amendment I.7 would direct the Alaska Energy Authority to the maximum extent possible to proceed with development of the Susitna River Hydroelectric Project. I think members are probably aware that the 4 utilities have expressed clear support for advancing Susitna-Watana Federal Hydroelectric and investment tax credits expire for projects that have not commenced by 2033, given permitting timelines. If we're going to do this project, it needs to advance as soon as possible.

If advanced, it would be the cheapest power in the rail belt.

If the gas line advances, Sisseton Wahpeton would work very well in conjunction with it. If the gas line, for economic reasons, ultimately fails to advance, We will have a catastrophic energy crisis starting in 2033 with the expiration of NSTAR's contract with, with, uh, Hilcorp. And for that reason, um, we have an energy bill before us. I believe we should act on energy security, and that is why I'm offering this amendment. Is there discussion?

Representative Carrick. Um, thank you, Co-Chair Field. So I have a couple of questions. Um, it would be good to hear from the bill sponsor if she is available, or her staff. But I think, um, as a first question, I know we've got amendments before us on the capital budget, um, in the coming hours that will add funding potentially for, um, a Susitna-Watana development.

How does adding this to the RCA scope help facilitate quicker development of this project? And I'm just trying to get a sense of— we're not adding funding here, we're adding language, but what, what is going to functionally change about potential development here? Yeah, this is direction to the Alaska Energy Authority. The Alaska Energy Authority has the authority to pursue this, um, the Susitna River hydroelectric project. I also support adding money for planning in the capital budget, um, either or both.

Both would be the most expeditious way to pursue it. If we, for example, legislated it but failed to adopt the amendment in the capital budget, utilities would recover those costs from ratepayers versus using state general funds. Ultimately, the result would be the same. Thank you to the staff for Senator Giesel for being here. And I don't know if you have any comments on Senator Giesel's support or lack of support for pursuing Sisseton Wahpeton as part of her bill.

For the record, Paige Brown, staff to Senator Giesel. Senator Giesel is supportive of this amendment.

Okay, I think that explanation is helpful.

I do just want to note to the committee, I guess, I'm supportive of Susitna Watana being developed, but I— this bill has one line in it originally, and we are we are entering the arena of very significantly expanding this bill, and I, I just hesitate to go down that road. So, um, I guess I'm just going to register that hesitation and call it good. Yep. I wish we had 3 energy bills that we could pass, uh, but there's one. Go ahead, Representative Kollum.

Yeah, I wanted to say thank you for bringing this forward. So, sit-in at Watana is really important, um, To be clear with ratepayers, it is very stable energy and it is cheap energy in the long run. In the short term, it's not. I still support it because I'm all about hydro and any kind of energy source we can have. So thanks for putting it forward.

Go ahead, Representative Nelson. Thank you, Mr. Co-chair. I also share what Representative Carrick said of just the expansion of this and My question really is, um, reason why, uh, there wasn't a bill put forward previously in this legislature, uh, since you seem so motivated about this. Just wanted to get your thought process on this. Yeah, I learned more when Curtis Thayer with AEA visited the Capitol and explained both the expiration of the ITC in 2033, how that relates to FERC timelines, permitting, planning, and the fact that under existing federal law, the federal government through tax credits would essentially pay for half of this.

So those would be tax credits sold by the utilities. So I think it's been a dynamic environment around Sisseton Wahpetonah, and I would say the combination of a federal environment where we can have the feds pay for half, the expiration of the IDC in 2033, and the crisis in cook and light gas, all of those things came together. And if I had learned, um, 18 months ago what I recently learned from AEA, I would have introduced a bill, but I figure better late than never. Thank you. Chair, can you explain what ITC is?

ITC is investment tax credit. So under HR 1, hydroelectric tax credits expire for projects that have not commenced by 2033. Hydroelectric projects have very challenging planning and permitting timelines, especially with FERC. So 2033 may seem like a long time off. It's really close in hydroelectric.

Yeah. Um, time frames. Okay, thank you. Yeah. Is there further objection to Amendment I.7?

Okay, seeing none, Amendment I.7 passes. At this time, I will move Amendment I.5. Is there objection, Representative Hall? Um, so at this time, I'm going to move a conceptual amendment to I.5 that would change 8,000 kilowatts on lines 13 and 16 to 10,000 kilowatts or 10 megawatts. Is there objection to that change?

Object. Thank you, Representative Hall. Um, briefities.

Okay, um, back on the record. Um, Miss Brown. Does Senator Giesel support moving this from 8,000 to 10,000 kilowatts? For the record, Paige Brown, staff to Senator Giesel. Senator Giesel does not support moving this from 8 megawatts to 10 megawatts.

Got it. Okay. Um, Trish Baker with CEA is online. Miss Baker, could you address, um, why Chugach has endorsed this policy and wants to expedite, um, small-scale hydro and other renewable projects, please? Yes, I'd be happy to.

Yes, I'd be happy to. This is Trish Baker, senior manager for government affairs at Chugach Electric. The original idea for this bill was to be under 15 megawatts, and that number was selected because the Rail Belt Reliability Council, which is the ERO, the Electric reliability organization for Alaska that was put into place in 2020 occupies the space 15 megawatts and over. So the idea was the space below that. For projects that are small, what the, what the bill would do, or this amendment would do, is limit it in scope to a single action, just transferring rate recovery authorization for renewable energy and battery energy storage projects of a limited size.

And from— instead of from the RCA, it would be to a duly elected electric cooperative's board of directors, which would thereby improve efficiency and responsiveness. Nothing else would change. No operational or reliability or tariff. Nothing else would change. It's just transferring the rate recovery authorization.

For the project. Okay, thank you. Is there further discussion? Yes, Chair. Go ahead, Representative Kalem.

So the amendment is allowing a board to do what the RCA should do, and that's regulate rates. So this amendment is adding— it's basically increasing rates to users. By the board for renewable and battery storage? Um, Representative Kolumba, I think these projects actually would reduce rates and protect against rate increases that would otherwise result from imported LNG. But Miss Baker, maybe you could talk about price points for the hydro and solar projects that CA is working on and how you all have run the numbers to protect against what would otherwise be rate increases as the cost of imported LNG escalates?

Yes, I'd be happy to. Again, this is Trish Baker with Chugach Electric. I'll first start off by saying the majority of electric co-ops nationwide don't have— are not rate regulated. They rely on a duly elected board of directors for all of those decisions. This amendment is only for the small projects.

So in answer to Representative Fields' question, we actually have a 10-megawatt solar installation that we're planning for, for the Beluga area across the inlet in Chugach territory over there. And we are also looking at preliminarily at 4 potential hydro sites, all small. The largest one is 18 megawatts, one is 16 megawatts, one is 8.5 megawatts, and one is 6 megawatts. And those are in the preliminary stages for those small projects.

Yeah, and, um, Ms. Baker, so my understanding is the Beluga Solar project comes in at the equivalent of the current cost of Cook Inlet natural gas. So as costs escalate, the energy from Beluga Solar will be cheaper. Is that an accurate description? In other words, the lines and costs are crossing where, as we bring on renewables right now, they save money anticipating future cost escalation? That's our estimate.

Um, yeah, within that project, we had not brought that one before the RCA yet, but that's our— that is our estimate. So, Representative Kolumba, I think the previous cook and let prices gas was cheaper with price escalation. The lines have crossed and some of these small renewable projects are cheaper. That seems to be the economic environment that we're in, and that's why I was offering the amendment. Do you have further questions?

Yeah, I guess I haven't seen that renewables really bring the cost of anything down. They're very subsidized, and I don't agree with switching it from RCA to the board. I still haven't figured out Why don't you just go through the RCA process? Why do we allow the board to do that? Great question, Representative Kolumb.

And maybe I'll turn back to Ms. Baker. Just, Ms. Baker, could you talk about when a utility is pursuing a project, how does additional permitting and time affect the cost of the project, viability of projects, and things like that? Yes, I'd be happy to. Trish Baker, Chugach Electric. I guess by way of example, we had 5 or 6 years ago had planned for a community solar project.

Not the one we have now, but an earlier one that's actually just like it, a half a megawatt project. And it took a couple of years and quite a bit of time, and at the end of the day it was not accepted, so not built. And then a substantially similar project with a different makeup of the RCA was put forward, and that one is the one that we have in South Anchorage. We simply couldn't get it through for whatever reason back 5 or 6 years ago. Yeah, so Ms. Baker, did it not get through because the RCA wouldn't approve the rates?

Uh, through the chair, as Senator or Representative Kwon, yes, Trish Baker with Two Gatsch. That is correct, we couldn't get approval for rate recovery from the RCA for that project. Okay, which speaks to what I'm talking about. I'm sorry, but they— yeah, and I've talked to Ms. Baker about this. I—.

Right now, as Chugash Board stands, they are not protecting the ratepayer, in my opinion. So I oppose the amendment. I think it should go through the RCA, even if it takes longer. Okay, well, I certainly appreciate that. Is there further discussion?

Representative Nelson. Are we still on the conceptual amendment or on the underlying? We are, we are on the conceptual amendment from 8 to 10. And I guess I should explain, Chugach is currently pursuing 4 small hydro projects. 2 Of those are sub-10 megawatts, and that was the reason for the conceptual amendment.

I think we've seen hydro projects have the ability to hold down costs over time. That's why I made the conceptual amendment. Perfect. Thank you. Yep.

Not seeing further discussion, I think there's enough disagreement about this. I'm going to withdraw the conceptual amendment, withdraw the underlying amendment. I don't have further amendments to offer. Is there further discussion before we move this bill?

Okay.

Thank you, Miss Brown, for being here. Any closing comments? Um, thank you, co-chairs Fields and Hall, for hearing the bill. Okay.

Mr. Co-chair, I move SB 180, Work Order 34-LS0819/i, from committee as amended with individual recommendations and attached fiscal notes. Okay, not seeing any objection. Senate Bill 180 is reported from committee. Thank you, Commiss Brown. We'll take an— and he's to go to the next bill.

Thank you. Back on the record. Next up is House Bill 385. I believe we have some testifiers here from utilities. Please come forward, and sorry for the chaotic schedule last couple days.

So in very brief summary, House Bill 385 is a committee bill to explore the concept of a simplified rate filing process. It was introduced at the request of utilities. Um, this schedule has been challenging over the last couple days, so we want to take advantage of the utilities presence. So thank you for being here today, and please explain why several utilities are asking the committee to consider a simplified rate filing process. Thank you very much.

My name is David Persinger. I am the general manager of Anchorage Water and Wastewater Utility. I'm here today to express my support for House Bill 385, allowing more public utilities to use simplified rate filing. AWW is Alaska's largest water and wastewater utility. We've We provide clean drinking water to about 230,000 Alaskans, including Anchorage and critical infrastructure like the Don Young Port of Alaska in Anchorage and the Ted Stevens Anchorage International Airport.

On the wastewater side, we serve about 400,000 Alaskans. We serve all of Anchorage as well as Joint Base Elmendorf-Richardson and a significant portion of the Matanuska-Susitna Borough and the Kenai Peninsula Borough through, uh, septic receiving. Aww provides service to roughly a third of the state's population for drinking water and over half for wastewater services. We are a department within the municipality. I report to the mayor of Anchorage and have legislative oversight by the Anchorage Assembly.

A little bit about rate cases with Anchorage Water and Wastewater Utility. Even though we're a department within the municipality, we are regulated by the Regulatory Commission of Alaska, and they set our water and wastewater tariff rules, which include our rates. Generally, AWWU submits a rate increase every year, and a rate case before the RCA, as you're aware, is a complicated process. It's a lengthy process. Not only do we have to make our case to the RCA, we also have the Regulatory Affairs and Public Advocacy group of the Attorney General's Office, which oppose those rates or those tariff changes.

And so For us to do a rate case, we have a staff of— I have a group of 4 regulatory affairs folks, plus folks like myself and some of the directors that provide testimony. And of course, the state has staff with the RCA as well as RAPA. We also have to hire expert witnesses on things like bond ratings, return on equity, depreciation, et cetera, as well as legal counsel. So all in, For the utility side, a rate case can exceed $1 million, and those costs are passed on to the consumers. In addition, they also pay a regulatory charge, which pays for the regulatory commission, and then there are also costs associated with the Attorney General's office.

Altogether, these make it a very expensive and time-consuming process. You heard earlier a little bit about the regulatory timeline. So for example, my 2026 rates that I put in at the beginning of the year, those are based on financial statements from 2024. So my known cost from 2024, if I go through all the way through a hearing, it could be March of 2027 before that rate case is finalized. So in essence, utilities are floating that, uh, those known and measurable costs that they accrued for up to 3 years.

And that can be significantly challenging when you have escalating costs of, uh, things like energy and parts and chemicals that we need to treat drinking water and provide wastewater services. So why would we want to do something about this? Well, again, you know, it is a fairly complex regulatory regime, and, you know, we recognize that it's in place for a reason. And so rather than coming in and trying to fundamentally change state statutes, we are looking at implementing simplified rate filing for all public utilities, including water and wastewater utilities. Currently, that's limited to electric co-ops and telecom utilities.

And what that allows is for, with the guardrails of the RCA and with the RAPA still representing consumers, it allows for a simplified process with guardrails on it as far as the number of rate increases, the timeline and whatnot. And what that allows is us to put known and measurable costs, like for example this year when, you know, fuel costs have doubled, we could put those into rates much more efficiently. And it still provides the oversight. Frees up a lot of resources on our side. It would ultimately, we believe, will reduce costs to the ratepayers because they'll have a consistent rate and consistent rate increases.

It's not, you know, we're not going up and down a lot and allows both our staff, RAPA, and the commission to focus on, you know, pressing issues for the state. You're hearing a lot about the natural gas price line. Obviously, energy is a huge challenge and water and wastewater utilities are We're a fairly steady business. There's not a lot of things that change a lot on us, but things like chemicals and parts and equipment and labor are things that we have a challenge with controlling. And then if you look at, you know, some of the other regulatory regimes that are out there like plant— plant replacement and improvement surcharge mechanisms, those could probably go away as part of this and implement the simplified rate filing.

So what we're asking for is for water and wastewater utilities, all public utilities, including water and wastewater utilities, be included along with our friends over at the electric and telecom co-ops.

Mr. Persing, I really appreciate you being here in person, and thanks for working with our schedule. Are there questions for Mr. Persing here? Go ahead, Rep. Plumb. Thank you, Chair, through the Chair. So is there something about the water utility, let's say, in the last 5 years that are making prices— your expenses more volatile, and this is needed?

Because you have been out of this for a long time. I don't know if this has always been an issue or is it an issue recently. Through the co-chair, this has been a longstanding issue for utilities. It's gotten, you know, the post-COVID volatility with particularly supply and demand has been challenging, but it's been something that's been a challenge for a long time. It's something that's part of our strategic plan to look at more simplified, simple rate-making processes with the ultimate goal of of holding cost to a minimum to our ratepayers.

Can I have a follow-up? Yes. So I'm still wrapping my head around the simplified rate process. So you're saying you can slowly increase rates while you— you kind of do it and then get RCA approval, or how does RCA interact with that? So currently when you do a rate filing, it can turn into a very lengthy process.

What this allows is basically it's under a tariff filing, which is a much shorter timeline. Commission staff reviews it to make sure it complies with all the statutes, and then ultimately the Commission still approves the— these increases as they go through. And then over time, at some point you have to come back and do a full rate case. So typically, I think the electric co-ops, some of those are in the, you know, 5 to 6 year range when they come back for a full rate case. Okay, thank you.

Okay, are there further questions for Mr. Persinger? Just one. Go ahead, Representative Carey. Thank you. Through the co-chair, How frequently are utilities currently required to have a full rate case completed?

Through the co-chair, I'm not sure what the requirement is for when they have a rate case. If you file a rate case, that's generally up to the utilities. And we, you know, we make a determination whether we will do a rate increase based on our, you know, where we're at on costs and whatnot. But it's generally, I think, up to the utilities to file a rate case. So if you want to increase rates or change your tariff, it's incumbent upon the utilities to initiate that.

And I guess not required, but how frequently does that typically occur for Anchorage Wastewater, as an example? Through the co-chair, for Anchorage Water and Wastewater, generally we do a rate increase every year.

So, but a full rate case every year? Yes, we do a full rate case every year. Sometimes those rate cases are approved without going through a full hearing. That's the 450-day timeline is when you go through a full hearing, but we have gone through those. Last year, I think we were— our rates were approved outright, but this year they were suspended and interim rates approved.

Okay. Thank you.

Okay. Thank you, Mr. Persinger, for being here today. We are going to take a brief at ease and transition to the next bill.

Back on the record. Thank you for being here. Yeah, please introduce yourself and explain your support for this bill and why the utilities asked the committee to consider it. Excellent. Well, thank you.

I know you guys are busy, so thanks for fitting us in. My name is Oren Paul. I'm the president of Fairbanks Sewer and Water, and I am here speaking on— for support of House Bill 385, which does expand SRF to all public utilities. Fairbanks is the second largest water and wastewater utility in the state, although you kind of have to take a zero off our numbers to match Anchorage. They obviously are the big player here.

I would say though that rate cases cost us just the same amount as they do Anchorage. You know, we spend typically kind of in the north of $1 million range on those. And so this is even more applicable to smaller utilities, like for example, NUS in Anchorage, who has just like 10,000 customers, right? It's super onerous for them to file a rate case. So we serve about 9,400 customers.

We serve indirectly the whole Fairbanks area through hauled water and through septic services. We have some very large customers, namely the Army at Fort Wainwright, the University of Alaska for water and wastewater, the hospital. And so I'll just break this down quickly into what SRF would do for customers, the commission, and for the utilities. For the customers, as David said, it would smooth rates. Right now, you know, we typically file on a 3-year cycle, and so you're seeing something on the order of 18% increase.

That's this big step change every 3 years for customers. Right now, with SRF, it would just kind of every quarter or twice a year we would be ticking those up slightly. So it creates stability and predictability for the customers. There is protections in place, as David said. You have to file a full rate case.

The commission approves the changes in the meantime. It also aligns the cost causer with the cost payer. When you have all this rate case lag, you know, the people that have caused the costs are not necessarily the people paying for it going forward. So I think, you know, from a customer standpoint, they're protected. It's smooth rates.

And I guess the big thing is if you're able to cut these rate cases expenses down, you know, Anchorage is filing annually. We file every 3 years. You know, when you have a million-dollar rate case on your side, you have the Attorney General also in the mix. I'm not sure what they spend, but I assume it's kind of equal and opposite the Commission costs. And so, I mean, the opportunity to reduce costs to the customers I think is very significant if you could push these timelines out to say 5 or 6 or 7 years.

For the Commission, it still maintains strong regulatory oversight for them. They have, as I said, staff reviews and they approve these kind of interim administrative filings. And I think it really would free up commission time. You know, water and wastewater we think is pretty vanilla. You know, we're trying to get the cost of our chemicals recovered, cost of salary increases and that sort of thing.

And you know, as a Fairbanksian paying whatever I pay, 27 cents a kilowatt hour for electricity, I think there are very important things for the commission to work on. For the utilities, it significantly reduces our lag. You know, it's tough when you have to invest capital. We all have tons and tons of aging infrastructure. You know, Fairbanks has 50 miles of wooden sewer mains still in the ground.

And when your capital gets spent and you don't get a— that in rates for 3 years or 2 years, it's hard. Sometimes it's hard to attract that capital. So it would allow us to get expenses in a much more timely manner. So just in closing, SRF works very well for the utilities that use it. You know, we've talked to our co-op in town, works great for them.

It's not an issue. If it gets extended to other utilities, it will significantly reduce our costs, costs passed on to customer by us and by agencies. I think it'll free up commission time that's very valuable, smooth costs to customers, still protects them. And one thing I didn't talk about, I mean, David has a staff of 4 or 5 people working on this full-time. Like, it is an administrative, just a massive burden to our utilities.

And the opportunity cost that we spend focusing on filing these rate cases rather than, you know, optimizing our utility is very significant. It does also create regulatory parity, right? We have, you know, when we're looking at our neighbor utilities, it's like, well, you know, you provide electricity, very important. We think water and sewer is very important, you know.

I think it creates a parity there. And again, I think that the SRF would ameliorate these timeline issues that other, you know, that you were just talking about earlier, right? Yeah, you have to file a rate case, but once you get that in place, You know, you're good for years. And so thank you very much. Thank you.

I do have a couple questions. Have the utilities engaged or attempted to seek input from ACPRG or other consumer groups that sometimes weigh in on rate cases with the RCA to see if there's any alignment around SRF?

Through the chair— to the chair, I guess, so we have just talked among our fellow utilities. We did sit down and discuss this with the Commission. They, you know, appear to be neutral on it. You know, they're careful kind of to say how they actually feel. But we haven't talked with other agencies or, for example, the Attorney General about it.

I would appreciate if you all would approach— I mean, ACPR is really the only broad consumer group that weighs in across different types of rate cases and seek input, and if there's alignment with stakeholders, I think that would be certainly helpful for expediting the bill. Um, and before we go, Representative Kerry, I just had one more question. Are you able to quantify what percentage of your overhead costs are associated with legal expenses, administrative expenses associated with more complex rate filings? Well, I mean, I just You know, I guess just kind of in very round numbers, if you're, you know, we spend roughly $1.2 million on a rate case. We have about $400,000 a year in Fairbanks in rates for those rate case costs.

And so, and roughly about the same in RCC charges that are coming through from the commission and the attorney general. Okay. So $400,000 per year. And how many customers do you have? So we have about 9,400 connections, 9,400 customers.

Like I said, some of those are very large. Sure. Okay. Representative Carrick. Yeah, just really quickly, thank you very much for being here, Mr. Paul.

I really appreciate you hanging in with the committee today. I'm really supportive of the bill. I'm just curious if you happen to know, and it's okay if you don't, anything about why this inequity exists in the first place. Why would our water utilities be treated any differently than our electric utilities? Through the chair to Representative Carrick.

You know, we have— we don't know. You know, this has been in place for decades for the co-ops, and we really don't know. And it's just— it's kind of funny. You know, we have reached the point in Fairbanks of this just being very, very difficult. And we ended up kind of in aisle 6 and saw Anchorage in aisle 6.

In the south with the same issue. And so we're both— that's kind of where— why we're here. I don't know. I don't know why the electric co-ops have it and other utilities don't. Well, I'll also say I'm strongly supportive, Mr.

Chair, because our electric utility did a full rate case for the first time in a number of years just this last year, and it causes huge headaches for customers because then your rates go up very significantly in a short period of time, and that's not really our electric utility's fault. But I would not like to see the same thing happen with people's water if possible. So I feel like this bill helps address potentially that issue too.

Go ahead. No, no further comment. Okay, is there further discussion? Um, thank you again, Mr. Paul and Mr. Persinger, for being here to offer invited testimony. I really appreciate you all bringing this issue to our attention and working with our schedule.

We're going to take a brief at ease.

Okay, um, back on the record. Senate Bill 111 is the Senate companion for the House digital repair bill of Representative Dybert that we heard previously. We heard a lot of public testimony on this bill at the last hearing. We set an amendment deadline. We have an amendment before us.

Mr. Halen, do you just want to very briefly describe what this bill does, and then we'll proceed to amendments? Uh, thank you, Mr. Chairman. This bill, uh, is very almost identical to the bill that you heard from Representative Dybert. Uh, it addresses obstacles to repair imposed by certain digital product manufacturers, uh, in this version only of consumer electronic devices, aligning with Alaska's tradition and need for self-sufficiency and control over their own property, their own things that they've bought. Will save Alaskans money.

It'll keep— reduce e-waste, keep waste out of our environment, and facilitate in-state small business repair ecosystem rather than being reliant on large corporations from out of state. Okay, thank you, Mr. Chair. Thank you. Are there questions before we proceed to amendments?

If not, I will move Amendment 1, or O.A. Or O.A.1. Object. Thank you. Um, we heard in public testimony several testifiers suggested that homes security systems would— should be excluded from the purview of this bill because allowing a non-company representative to access those systems could allow them to intrude on other individuals' home security systems by learning more about software and hardware of, say, a Ring camera or other products out there.

So I found that testimony compelling and offer this amendment to exempt home security systems, and I'm happy to entertain discussion.

Um, I think Representative Hall objected. Do you maintain your objection? I do not maintain my objection. Okay, so ODAH 8.1, not seeing further objection, does pass from committee, which brings us to the underlying bill. Is there further discussion any discussion on Senate Bill 111 before we take action?

Okay, well, thank you to the bill sponsor and thank you to Representative Diver. Oh, we're going to now open public testimony. Is there public testimony in the room?

Not seeing any. I'm going to go online. No one is online, so I'm going to close public testimony. We previously took public testimony on the House bill. Thank you for the reminder to open public testimony on the Senate bill, Representative Hall.

Do you have a motion? Mr. Co-chair, I move to report SB 111, work order 34-LS0560/o.a, out of committee as amended with individual recommendations and accompanying fiscal notes. Objection. Thank you, Representative Colon. Would you like to speak to your objection?

Yeah, I think the bill has a lot of concerns for me. I want people to be able to fix their stuff, but, um, there, there's a lot of implications with this bill. It's pretty broad. The exemptions are few. I don't think that, uh, I don't know if I really disagree with the concept.

I think the bill needs more work. I don't, I don't think we really understand what the, the implications of this. I, I'm glad you put forward the amendment around the security cameras, but there's a lot of problems with, um, you know, allowing people people to— or making companies do what the bill is trying to make them do. It's going to increase costs. And I, I do— the one thing that I do like is that it probably would reduce e-waste.

But I just think— I, I think the bill still has a lot of issues. So that's why I objected. Thank you, Representative Kulonga. Representative Nelson. Yeah, I will, uh, reiterate what Representative Kulonga concept, you know, it is good, uh, idea.

But once we get into practicality and look at this specific piece of legislation, it is a very broad term. And as we heard from consumers, or from public testimony last week, there was a lot of, uh, need, but it was very directed to certain consumer, uh, electronics. So overall, the concept is good, but I do think we need to work on it a little bit more and go through with a little bit more of a fine-tooth comb. So. OK. Yeah, and I kind of agree.

It's a complicated and challenging bill. And it's the nature of big tech companies that they use patents to create monopolies. So how do we balance companies' proprietary information versus an interesting competition? Consumers' ability to repair, I think it's almost inexorably difficult. So appreciate the bill sponsors for taking on that very difficult challenge.

I would say too, Chair, I actually liked the— so last time we adopted the CS, I actually liked the bill as it came out of the prior committee. I thought there were some good amendments to try to address those things, and so it kind of lost me when when we did the CS. So, got it. Okay, further discussion?

Yeah, go ahead, Representative. Yeah, to the sponsor, to the chair, to the sponsor's staff. We've heard the sponsor say several times this only affects things you buy at the store, and I had this concern when we first heard that. I'm not seeing where— and maybe you can point where in the bill it specifically lays out and defines consumer goods you buy at the store. Thank you, Representative Sadler.

Through the chair, On page 5, line 2, where we define the definition of digital product to mean a product that is sold at retail for personal, family, or household use. That retail word refers to that thing that you can buy from a store versus like ordering custom installed from a company like a security system. Oh, I'm sorry, page 5, line 2 of version OA? Which one? Version O.

Version O. Or OA. It's the same in this. And I'm sorry. Line 2.

Yeah, like line 17. Okay. Yeah, you said line— find line 2. Sorry. Yeah, well.

At retail. Okay. Okay. Very good. So with that, will the Secretary call the roll?

Representative Sadler. Uh, pass. Representative Kellum. No. Representative Freer.

Yes. Representative Carrick. Yes. Representative Nelson. No.

Representative Sadler. No. Co-chair Fields. Yes. Co-chair Hall.

Yes. 4 Yeas, 3 nays.

So by a vote of 4 to 3, SB 111 does pass from committee. Uh, please sign the paperwork. That completes our work this morning. The— what the— um, yeah, so, um, I realize that there's one more bill that we'd hope to get to We have to go to a joint session in caucus shortly, so the House Labor and Commerce Committee will—. Mr.

Chair, you might want to restate that motion that it passed as amended with fiscal notes. Okay. Just to be safe. SB 111 does pass as amended with accompanying fiscal notes and individual recommendations.

There was one bill that we did not have time to get to, so the House Labor and Commerce Committee will recess to the call of the chair.