SUMMARY OF: A Sunset Review of the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska, October 20, 2006.

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 or commission). Under AS 44.66.050(a), the legislative committees of reference are to consider this report during the legislative oversight process to determine whether the commission should be reestablished. Currently, AS 44.66.010(a)(3) requires the commission to terminate on June 30, 2007. If the legislature takes no action to extend the termination date, the commission will have one year from that date to conclude its operations.

Report Conclusions

In our opinion RCA meets a valid public policy need and is serving Alaskans by: (1) assessing the capabilities of utility and pipeline companies to safely and capably serve the public; (2) evaluating tariffs and charges made by regulated entities; (3) verifying the pass-through charges to consumers from electric and natural gas utilities; (4) adjudicating disputes between ratepayers and regulated entities; (5) providing consumer protection services; and, (6) performing financial review for the State’s power cost equalization program. RCA has demonstrated the commission serves a public need. Under AS 44.66.010(a)(3), RCA is scheduled to terminate June 30, 2007. We recommend the legislature adopt legislation extending RCA’s termination date to June 30, 2015.

Findings and Recommendations

In our previous sunset audit we made three recommendations. The first recommendation was for RCA to propose legislation to clarify statutes imposing statutory timelines on certain proceedings. In legislation extending the termination date for RCA, the legislature adopted statutes setting specified timelines for the commission to follow in making certain kinds of decisions. The statutory timelines apply to about half of the regulatory decisions made by the commission. In Recommendation No. 1 of this review, we recommend the commission consider adopting further timelines for other actions not covered in statute.

A second recommendation stated RCA’s chair should ensure that publication of notices of formal proceedings is monitored. While there are still some operational deficiencies with ensuring all public notices have appropriately been made, RCA consistently meets basic public notice requirements related to its decision making process. The concerns related to this prior audit recommendation have substantially been addressed.

The third prior recommendation suggested RCA either require smaller water and sewer utilities to be certificated or establish a meaningful exemption system by regulation. RCA adopted the necessary regulations in February 2004.

The following recommendation is based on the current sunset review.

Recommendation No. 1

RCA should proceed with the development of regulations that would enhance the efficiency, accountability, and transparency of the commission’s decision making process.

In late 2004, RCA held public meetings that invited comments on possible regulation changes that would improve the way in which the commission operated. In the early part of 2005, based on comments from staff in addition to those received from regulated utilities and pipeline companies at the 2004 meetings, RCA adopted a regulation projects plan. This work plan is reviewed on a regular basis. Many of the projects would establish more accountability standards for RCA operations.

In the course of our review, we identified three areas where adoption of regulations would promote improved efficiency, accountability, and transparency of RCA’s decisions. All areas we identified for improvement were included in the commission’s 2005 regulation projects plan – although, as of the date of this report, the commission has not started the process of developing the necessary regulations. Our identified improvement areas include: (1) establishment of additional timelines; (2) adoption of rules related to discovery; and, (3) defining when a record is considered complete and the given timeline starts.

The commission has been very proactive in soliciting feedback from the public, and the utility and pipeline companies, which are involved with RCA on an ongoing basis. While this process has identified key areas where RCA could improve its operations, the priority for implementation has to date been given to other matters. For the three issues discussed—directly related to promoting efficiency, accountability, and transparency of RCA’s decision making—we recommend that the commission take the next step and schedule the necessary hearing dockets.