08-20021-03

Purpose of the Report

In accordance with Title 24 and Title 44 of the Alaska Statutes (sunset legislation), we have reviewed the activities of the Regulatory Commission of Alaska (RCA). The purpose of this audit was to determine if there is a demonstrated public need for the continued existence of this Commission.

In a special session in June 2002, legislative committees conducted extensive oversight hearings that focused on RCA’s workload and the utilities’ complaints of slow processing of their requests. The legislature responded to these complaints by enacting statutory deadlines for RCA decisions in several categories of cases. The governor signed that legislation in August.

As the new timelines are just now beginning to take effect, it is premature to conduct a workload study of RCA processes or survey utility companies on whether they believe RCA has improved. These issues will be included in the next sunset audit of RCA.

Legislative intent requires consideration of this report during the legislative oversight hearings to determine whether the termination date of the Regulatory Commission of Alaska should be extended. The law currently specifies that the Commission will terminate on June 30, 2003.

Report Conclusions

Except for the limitation discussed above, we conclude that RCA is operating in an efficient and effective manner and the public interest is being served by requiring public utilities and pipelines to be certificated and economically regulated by RCA. The regulatory process stabilizes the availability of utility services. Economic regulation by the Commission ensures that, despite the absence of competition, utilities provide service at reasonable rates.

In two years, the impact of the new statutes on both the utilities and the public can be meaningfully evaluated. We thus recommend that Alaska Statute 44.66.010(a)(4) be amended to extend the termination date of the Regulatory Commission of Alaska to June 30, 2005.

Findings and Recommendations

In our previous sunset audit, we made three recommendations. We noted RCA’s lack of published procedures and criteria as to when its public advocacy section would be assigned to a case and how its intervention would be accomplished. RCA has now considered public comments and drafted proposed regulations that adequately address our concerns. We recommend that RCA diligently pursue its current plan to forward the proposed regulations to the Department of Law regulations attorney by December 2002.

We also reported last year that 65 piped water systems and 65 piped sewer systems did not have the required certificate to operate a utility. RCA indicates its intention to ultimately address this matter through regulations that distinguish among the requirements imposed upon water-related utilities of various sizes and settings.

We further recommended that RCA improve its procedures for assuring that the newspaper notices of its formal proceedings are printed in an accurate and timely manner. Our fieldwork shows that this problem remains uncorrected.

Finally, an outstanding recommendation from our 1998 sunset review concerned the implementation of a management information system with a number of components. This recommendation was subsequently incorporated as a requirement within RCA’s enabling legislation. The management information system has now been substantially implemented, though on a piecemeal basis spread among a variety of systems rather than on a single, fully-integrated mainframe. This overall system also included an employee time tracking component mandated by statute.

1. RCA should propose legislation to clarify statutes enacted last session.
2. RCA’s chair should ensure that the publication of notices of formal proceedings is monitored.
3. RCA should either require smaller water and sewer utilities to be certificated or establish a meaningful exemption system by regulation.