HomeMy WebLinkAboutRes 2014-03_PCE_RegulationsResolution 2014-03 Memo
May 27, 2014
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MEMORANDUM
TO: Board of Directors
Alaska Energy Authority
FROM: Sara Fisher-Goad
Executive Director
DATE: May 27, 2014
RE: Power Cost Equalization (PCE) Program Regulations
The Alaska Energy Authority (“AEA” or “Authority”) proposes to adopt and amend regulations
dealing with the eligibility requirements for community facilities under the Power Cost Equalization
Program.
Residential customers and community facilities are eligible for the PCE program; however, schools,
commercial customers, state and federal customers are ineligible. The PCE statutes define an
eligible community facility to include buildings and facilities whose operations are not paid for by
the state, the federal government or private commercial interests.
Historically, AEA has relied upon Attorney General Opinions to interpret eligibility of community
facility customers without going through the public regulatory process to codify the eligibility
determination. This regulation change is needed to clarify when various types of state of federal
funds are deemed to have “paid for” operations of a community facility.
PCE regulations also define “community building,” in part, to be a building “open to the general
public.” Certain types of buildings providing substantial public benefit to a community may be
closed to the general public for safety, security, or other reasons. The proposed regulation changes
clarify that such community buildings will be eligible for PCE.
Although AEA staff has identified other needed PCE regulation changes, Resolution 2014-03 is
limited to the community facility eligibility determination. Other changes will be included in a
future regulation package.
A. Power Cost Equalization (“PCE”) Program Background
The purpose of the Power Cost Equalization (PCE) program is to equalize power cost per kilowatt-
hour statewide at a cost close to or equal to the mean of the cost per kilowatt-hour in Anchorage,
Fairbanks, and Juneau. The PCE program provides economic assistance to communities and
residents of rural electric utilities where the cost of electricity can be three to five times higher than
for customers in more urban areas of the state. PCE is a core element underlying the financial
viability of centralized power generation in communities.
Resolution 2014-03 Memo
May 27, 2014
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Under Alaska Statutes 42.45.100-170, the Authority determines eligibility of community facilities
and residential customers and authorizes payment to the electric utility.
B. PCE Proposed Regulations
The Authority proposes to amend existing regulations in Title 3 of the Alaska Administrative Code
as well as incorporate a new article to the same.
Description of Regulations and Changes. The following describes the program’s current
regulations and includes the Authority’s initial publicly noticed draft regulations.
3 AAC 107 is amended by adding a new section. Section 107.267 will address the state or federal
funding of community facilities. The regulation clarifies that the receipt of state or federal
government payments is not considered state or federal government payment of operating costs if the
local community receives the benefits of the power cost equalization payment rather than the federal
government. The regulation identified the conditions used to determine whether the local community
receives the benefit and requires the community facilit y to certify that the receipt of the state or
federal funding satisfies each of the allowable conditions.
3 AAC 107.270 (b). This section currently defines a “community building” as a facility that is (1) not
operated for profit; (2) is open to the general public; (3) complies with 3 AAC 107.260(1); (4) makes
timely payments to the utility for electric power consumed; and (5) complies with 3 AAC
107.260(3). AEA proposes to amend 3 AAC 107.270(b)(2) to read that a community building is
“operated for the benefit of” the general public rather than being “open” to the general public.
C. Public notice and comment
Public notice was published by newspaper and on the State of Alaska Online Public Notice System.
The notice was also sent to all participating utilities of the Power Cost Equalization Program as well
as those individuals subscribed the Power Cost Equalization email Listserve. A public hearing was
held on April 11, 2014.
The public notice period closed April 21, 2014. Comments received by the Authority are provided in
an attached report.
D. Conclusion
Staff recommends adoption of the proposed regulations.
Attachments
Proposed regulation changes, public comments and response matrix
ALASKA ENERGY AUTHORITY
RESOLUTION NO. 2014-03
RESOLUTION OF THE ALASKA ENERGY AUTHORITY
ADOPTING POWER COST EQUALIZATION REGULATIONS FOR
THE AUTHORITY
WHEREAS, AS 42.45.100 – 42.45.190 establishes the Power Cost Equalization
and Rural Electric Capitalization fund and program (“PCE”);
WHEREAS, AS 42.45.110(b)(1) provides for the payment of PCE for certain local
community facilities;
WHEREAS, AS 42.45.150(1) defines “community facility” to mean, in part,
buildings and facilities “whose operations are not paid for by the state, the federal
government, or private commercial interests,” but does not clarify when various types of
state or federal funds are deemed to have “paid for” operations of a community facility;
WHEREAS, the Authority has relied upon Attorney General Opinions interpreting
that state or federal funds have “paid for” operations of a community facility if the state or
federal government, rather than the local community, benefits from the PCE payment;
WHEREAS, the Authority has not previously codified this interpretation;
WHEREAS, 3 AAC 107.270(b) defines “community building,” in part, to be a
building “open to the general public;”
WHEREAS, certain types of buildings may be closed to the general public for
safety, security, or other reasons, but still provide substantial services to the community
and should remain eligible for PCE;
WHEREAS, the Authority desires to provide greater clarity for implementing the
PCE program;
WHEREAS, the Authority’s provided public notice of the proposed regulations,
solicited public comment through April 21, 2014, conducted a public hearing on April 11,
2014, and otherwise followed procedures required by the Administrative Procedures Act;
WHEREAS, the time period for public comment has passed, and the Authority has
reported about the oral and written public comment received and the consideration the
Authority gave to each public comment received; and
WHEREAS, the proposed regulations attached as Exhibit A reflect the originally
proposed regulations, as revised by the Authority in response to public comments and
further evaluation by the Authority.
NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY
AUTHORITY AS FOLLOWS:
Section 1. The Board of Directors of the Authority adopts as regulations of the
Authority 3 AAC 107 .267 and 3 AAC 107 .270(b), a copy of which is attached as Exhibit A.
Section 2. The Executive Director of the Authority is authorized and directed to
file the regulations with the lieutenant governor, and take other steps necessary or
desirable under the Administrative Procedures Act to make the regulations become
effective .
Section 3. This Resolution shall become effective immediately upon its
passage and approval.
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Chairman
Secretary
AEA Reso l ution No. 2014-03 Page 2
Register ____, __________ 2014 COMMERCE, COMMUNITY, AND EC. DEV.
3 AAC 107 is amended by adding a new section to read:
3 AAC 107.267. State or federal funding of community facilities. (a) A
community facility is not eligible for power cost equalization if the costs of operating the
community facility, or eligible portion of the community facility, are paid for by the state,
federal government, or private commercial interests.
(b) As used in (a) of this section, the receipt of state or federal government funds
by a community facility is not state or federal government payment for the costs of
operating the community facility if the local community will receive the benefits of the
power cost equalization payment, rather than the state or federal government. The local
community receives the benefits of the power cost equalization payment if
(1) the state or federal government does not direct the community facility to
spend the state or federal government funds on operating costs of the
community facility, and
(2) the power cost equalization payment will not reduce the amount of state
or federal government funding provided to the community facility.
(c) For all or a portion of a community facility that receives state or federal
government funds to be eligible for power cost equalization payment under the criteria
established in (b) of this section, the community facility must certify on a form
acceptable to the authority that the receipt of state or federal government funding satisfies
each condition of (b) of this section.
Authority: AS 42.45.100 AS 42.45.110 AS 42.45.120
AS 42.45.130 AS 42.45.140 AS 42.45.150
AS 42.45.160 AS 42.45.170 AS 44.83.080
Register ____, __________ 2014 COMMERCE, COMMUNITY, AND EC. DEV.
3 AAC 107.270(b) is amended to read:
(b) As used in AS 42.45.150(1), "community building" means a community
facility that
(1) is not operated for profit;
(2) is operated for the benefit of [OPEN TO] the general public;
(3) complies with 3 AAC 107.260(1);
(4) makes timely payments to the utility for the electric power consumed; and
(5) complies with 3 AAC 107.260(3). (Eff. 2/16/96, Register 137; am 3/25/2005,
Register 173; am __/__/__, Register ___)
Authority: AS 42.45.100 AS 42.45.110 AS 42.45.120
AS 42.45.130 AS 42.45.140 AS 42.45.150
AS 42.45.160 AS 42.45.170 AS 44.83.080