SENATE COMMITTEE ON BUSINESS AND ECONOMIC DEVELOPMENT

 

 

May 31, 2005                                                                                                          Hearing Room B

1:00 P.M.                                                                                                                      Tapes 76 - 79

 

MEMBERS PRESENT:         Sen. Rick Metsger, Chair

Sen. Bruce Starr, Vice-Chair

Sen. Jason Atkinson

Sen. Ryan Deckert

Sen. Laurie Monnes Anderson

 

GUEST MEMBER:               Sen. Vicki Walker

 

 

STAFF PRESENT:                 Theresa Van Winkle, Committee Administrator

James Goulding, Committee Assistant

 

 

MEASURES/ISSUES HEARD:

                                                HB 2017A – Public Hearing and Work Session

                                                SB 408A – Work Session

                                                HB 3273A – Public Hearing and Work Session

                                                SB 572 – Work Session

                                                SB 672 – Work Session

 

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 76, A

003

Chair Metsger

Calls the committee to order at 1:05 p.m.  Opens a public hearing on HB 2017A. 

HB 2017A – PUBLIC HEARING

013

Darrell Fuller

Oregon Automobile Dealers Associations.  Presents written testimony in favor of HB 2017A (EXHIBIT A).

030

Chair Metsger

Closes public hearing on HB 2017A.  Opens a work session on HB 2017A.

HB 2017A – WORK SESSION

034

Sen. B. Starr

MOTION:  Moves HB 2017A to the floor with a DO PASS recommendation.

036

 

VOTE:  3-0-2

EXCUSED:  2 - Atkinson, Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

SEN. B. STARR will lead discussion on the floor.

039

Chair Metsger

Closes the work session on HB 2017A.  Opens a work session on SB 408A.

SB 408A – WORK SESSION

049

Chair Metsger

Explains the prior commentary on SB 408A.  Reiterates the discussion of Portland General Electric (PGE) and the regulatory powers of the Oregon Public Utility Commission (PUC).

058

Dexter Johnson

Staff, Legislative Counsel.  Discusses the provisions of the –A8 amendment (EXHIBIT B).

083

Johnson

Discusses the sections of the amendment.

098

Chair Metsger

Asks Mr. Johnson to explain where the changes came about.

106

Johnson

Replies in detail to the changes from the previous –A7 amendment heard during the last meeting.

140

Johnson

Talks about the tax structure changes. 

160

Johnson

Relates income taxes paid by a utility.

188

Chair Metsger

Observes that the previous language worked, but is now more clearly stated.

192

Johnson

References the clarifying changes made from the previous version.  Points out that no retroactive rate making is going on.

230

Johnson

Discusses subsection 5 of the –A8 amendments. 

249

Chair Metsger

Considers if the changes solve the depreciation issue.

255

Johnson

Observes putting into law current practices.

259

Chair Metsger

Points out rate setting and taxation scenarios.

263

Johnson

Concurs with his examples.  Begins outlining subsection 6 of the amendment. 

290

Chair Metsger

Summarizes the functioning of the automatic adjustment clause.

297

Sen. Vicki Walker

Senate District 7.  Wonders if there is a definition for “material adverse affect”.

303

Johnson

Replies there is not an existing definition in statute. 

307

Sen. Walker

Relates the difficulty of trying to define it in statute.

315

Johnson

Remarks on the definitions.

322

Chair Metsger

Asks if all the definitions were in the prior amendment.

327

Johnson

Provides that the definition of “tax” is new.  Continues his explanation of the provisions in the measure.

340

Sen. Walker

Wonders why they couldn’t ask for the tax report to be filed immediately.

345

Johnson

States it would be a new report.  Talks about the need for the PUC to have time to assess the situation.

367

Johnson

Concludes his description of the –A8 amendments.

387

Chair Metsger

Applauds Dexter Johnson’s long hours of work on this measure.  Talks about the various approaches they have taken to address this problem.  Notes the intense difficulty in creating any kind of consensus on a solution.

TAPE 77, A

003

Chair Metsger

Notes the presence of a –A9 amendment authorized by Sen. Bruce Starr (EXHIBIT C).  States they will discuss it later in the hearing.  Asks Mr. Meek to testify.

007

Dan Meek

Attorney, Portland.  Testifies in regard to the changes made in the –A8 amendment.   

035

Meek

Observes various purchase scenarios of a utility. 

063

Meek

Relates his interpretation of the sections of the measure.

077

Meek

Talks about the definition of “tax” provided in the –A8 amendment.

097

Chair Metsger

Offers the importance of Mr. Meek’s comments for the legislative record.

103

Meek

Relays he has no further comments at this time.

109

Melinda Davison

Industrial Customers of Northwest Utilities.  Voices her support for the measure as amended by the –A8 amendments.  Explains why she feels this is a good solution to the problem.

133

Chair Metsger

Asks for her view on the –A9 amendment.

136

Davison

Relates strong disagreement to the –A9 amendments.  Voices the stark contrast between the –A8 and –A9 amendments.

160

Davison

Feels the –A9 would create a true-up out of all utility costs.  Offers this would be a fundamental change in utility regulation. 

185

Sen. Atkinson

Requests clarification of her previous comment of “politically sustainable”.

193

Davison

Notes the political component of citizens voicing objection to rate and tax practices.

200

Sen. Walker

Considers if there is any other language in the –A8 amendment that needs refinement.

203

Davison

Feels there are some minor details that could be cleaned up.  Reiterates that she supports –A8 the amendments as they are.

210

Chair Metsger

Wonders if her industrial customers will be better off under this measure.

219

Davison

Offers the “loop hole” will be fixed and benefits will be passed on to ratepayers.

233

Teresa Miller

PGE.  Feels the –A9 addresses the tax issue in a fairer way than the      –A8.  Explains the tax structure differences.  Notes PGE does not support the –A8 amendments.

254

Randy Dahlgren

PGE.  Offers his observation that there are strong ties between revenues, costs, and income taxes paid.  Feels the –A9 amendments better reflect those ties.

265

Gary Bauer

Northwest Natural.  Voices opposition to the –A8 amendments.  States that tax liabilities are influenced by other costs.

280

Chair Metsger

Asks about the current mechanism to enable the PUC to adjust rates based on costs. 

290

Dahlgren

Talks about the mechanism to adjust costs.

312

Chair Metsger

Relays the public view on taxes and rates.   Offers taxes should be treated differently than others costs.

337

Bauer

Shares Sen. Metsger’s frustration on the income tax issue.  Offers that income taxes are part of a larger formula and not itemized. 

356

Miller

Points out a lot of these problems originated with PGE’s ownership by Enron.  Offers that PGE will soon be deconsolidated from Enron and subject to paying state taxes.

365

Chair Metsger

Voices that they can’t predict what will occur with PGE.  Feels some rules need to be in place to protect the public interest.

375

Sen. Atkinson

Wishes to understand the concept of “fairness” previously offered.

390

Dahlgren

Relates the situation to filing personal income taxes after an unanticipated expenditure.

392

Sen. Atkinson

Clarifies that he wants to understand it from a business standpoint.

396

Dahlgren

Notes the unforeseen expenses and taxability of a utility business.

412

Sen. Atkinson

Wonders if under the –A8 amendments a publicly regulated company could increase costs to decrease tax liability.

TAPE 76, B

012

Dahlgren

Observes the company responsible for extra costs, would need tax benefits.  Replies he is unsure of the financial benefit.

020

Sen. Atkinson

Asks that with the –A8 amendments, could a company drive up expenses to lower tax liability.

024

Bauer

States that a company could do that but it would not make financial sense.  Points out the tax rate would be set by revenue earned.

035

Sen. Walker

Considers how much PGE ratepayers contribute for taxes Enron doesn’t even have to pay.

038

Miller

Replies that she doesn’t know the figure offhand.

039

Sen. Walker

Notes it is a considerable amount of money.  Wonders about their objection to the automatic adjustment clause.

045

Miller

Notes the change in language to the –A8, and that they no longer object to that portion of the amendment.

047

Sen. Walker

Contends that the main issue is collecting for taxes that aren’t owed.

053

Sen. B. Starr

Describes the contentions of the measure.  Wishes for an explanation of why the –A8 amendments aren’t “fair” and the –A9 are.

072

Dahlgren

Outlines the changes of revenues and costs affected.  Feels the –A8s aren’t fair to utilities or customers.

081

Sen. B. Starr

Feels this problem is resolved in the –A8.

085

Dahlgren

Discusses the potential economic effects on rates.  Expresses that the   –A9 amendments take revenue changes into account.

098

Sen. B. Starr

Points out under the –A9 amendments the customers would not have to pay higher rates for both increased utility costs and increased tax rates.

103

Dahlgren

Concurs.

105

Sen. Deckert

Outlines that he hasn’t heard the full explanation of this argument.  Feels the customers are being clear on their wishes.

135

Dahlgren

Replies the entity that incurs the costs should get the appropriate taxation based on those costs.

140

Sen. Deckert

Replies he is grappling with the tax issue in regards to rate setting.

148

Miller

States that taxes are derived from costs and revenues.  Feels that taxes can’t be examined separately.

157

Bauer

Expound upon previous statements and changes in costs.

172

Sen. Monnes Anderson

Brings up the shareholder issue.  Considers the correlation between shareholders and taxes.

193

Dahlgren

Defines balancing expense levels with the recovery of debt and equity financing.

221

Sen. Monnes Anderson

Observes the costs not included in rates.

227

Dahlgren

States there is a component in rate setting related to shareholders.

230

Chair Metsger

Asks Ms. Fisher and Mr. Eisdorfer to come forward and comment on the –A8 and –A9 amendments.

238

Anne Fisher

Building Owners and Manager’s Association of Portland.  Talks about the problem of rate collection not paid to any governmental entity.  Details the rate setting scenario. 

290

Fisher

Supports the –A8 amendments, notes some potential tweaks that could be implemented from the –A9 amendments.

330

Fisher

Voices her proposed changes to the –A8 amendments. 

370

Fisher

Talks about how the PUC would have greater ability to regulate the taxation.

385

Jason Eisdorfer

Citizens Utility Board (CUB).  Supports the –A8 amendments and feels that it has all the elements needed.  Testifies in opposition to the –A9 amendments.

TAPE 77, B

005

Eisdorfer

Relates the big differences observed between the –A8 and –A9 amendments.

030

Eisdorfer

Feels the –A9 amendments force the customer to take on all the risk. 

040

Sen. Walker

Appreciates the clarification on the –A9 amendments.

048

Sen. B. Starr

Asks if Ms. Fisher was present at the last committee meeting.

050

Fisher

Replies she wasn’t, but heard the testimony.

051

Sen. B. Starr

References Pamela Lesh’s rate scenarios provided during the previous hearing.

055

Fisher

Offers her observations on Ms. Lesh’s testimony.

080

Fisher

Relates that the –A8 amendments should correct many of Ms. Lesh’s concerns.

083

Chair Metsger

Invites further comments from Mr. Meek.

087

Dan Meek

Comments on the –A9 amendment.  Feels there are relations between the –A7 and –A9 amendments.  Notes the –A8 removed elements that were comparing estimates to actuals.  Observes the scenarios for income tax payment based on what rate payers actually pay.

120

Meek

Reserves judgment on –A9 amendments, as he is still looking them over.

123

Chair Metsger

Remarks on the need to move this forward.  Summarizes the debate on the measure.  Feels this is a crucial component for protecting the ratepayer.

137

Sen. Monnes Anderson

MOTION:  Moves to ADOPT SB 408A-A8 amendments dated 5/31/05.

145

Sen. Deckert

Believes they should move this measure forward.  Concedes the –A8 amendments may not be perfect, but fix a number of current problems.

155

Sen. Atkinson

Wonders why they would move this forward when it is not technically accurate.  Asks that they not move bills forward when they know there is still work to be done.

157

Chair Metsger

Observes that the measure accomplishes the task.  Feels that some have a different opinion on the matter.

160

 

VOTE:  3-2-0

AYE:               3 - Deckert, Monnes Anderson, Metsger

NAY:               2 - Atkinson, Starr B.

 

Chair Metsger

The motion CARRIES.

163

Sen. Monnes Anderson

MOTION:  Moves SB 408A to the floor with a DO PASS AS AMENDED recommendation.

165

 

VOTE:  3-2-0

AYE:               3 - Deckert, Monnes Anderson, Metsger

NAY:               2 - Atkinson, Starr B.

 

Chair Metsger

The motion CARRIES.

SEN. METSGER will lead discussion on the floor.

167

Sen. Atkinson

Serves notice of a possible minority report.

173

Chair Metsger

Closes the work session on SB 408A.  Opens a public hearing on HB 3273A.

HB 3273A – PUBLIC HEARING

176

Jerod Broadfoot

Plumbing and Mechanical Contractors Association.  Testifies in favor of the measure with the -A3 amendments (EXHIBIT D).  Observes the technical fixes made by the amendments.

190

Chair Metsger

Closes the public hearing on HB 3273A.  Opens a work session on HB 3273A.

HB 3273A – WORK SESSION

211

Sen. B. Starr

MOTION:  Moves to ADOPT HB 3273A-A3 amendments dated 5/26/05.

213

 

VOTE:  5-0-0

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

215

Sen. B. Starr

MOTION:  Moves HB 3273A to the floor with a DO PASS AS AMENDED recommendation.

217

 

VOTE:  5-0-0

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

SEN. B. STARR will lead discussion on the floor.

219

Chair Metsger

Closes work session on HB 3273A.  Opens a work session on SB 572.

SB 572 – WORK SESSION

224

Theresa Van Winkle

Committee Administrator.  Explains the measure and the provisions of the -14 (EXHIBIT E) and -15 (EXHIBIT F) amendments.  Notes the amendments are identical with the exception that the -15 amendments would remove home health care from the measure.

235

Chair Metsger

Reiterates the difference between the amendments.

TAPE 78, A

005

Brian DeLashmutt

Oregon Nurses Association.  Explains the elements deleted and revised from previous amendments.  Notes the measure no longer has the law enforcement component.

040

DeLashmutt

Offers that it allows the nurse involved to call law enforcement as necessary.   Advocates the -14 amendments be adopted.

055

Sarah Reeder

Oregon Association for Homecare.  Opposes the -14 amendments and supports the -15 amendments.  Talks about the difficulties associated with the home health component.

072

DeLashmutt

Relates a membership poll describing incidents in home health care situations.  Supports the -14 amendments.

080

Sen. Atkinson

Asks for clarification on the section that is different between the -14 and -15 amendments.

085

DeLashmutt

Clarifies the differences.

090

Sen. Atkinson

Wonders who is going to read the incident reports when they are filed.

095

DeLashmutt

Offers it will be the employee and employer primarily, but it could be a variety of law enforcement or state officials.

115

Chair Metsger

Asks Mr. Bishop for his opinion.

117

Bruce Bishop

Oregon Association of Hospitals.  Discusses the changes made in the -14 and -15 amendments.  Feels these amendments substantially lighten the burden.  States his belief that hospitals are already taking the needed steps.   Believes this measure is not needed, but notes his objections have been reduced.

140

Chair Metsger

Solicits opinions from the committee members.

147

Sen. Monnes Anderson

Relays her experiences in both public and home health.  Feels the inclusion of home health is needed.  Supports the adoption of the -14 amendments.

165

Sen. Atkinson

Supports the -15 amendments.

175

Sen. B. Starr

Notes he also prefers the -15 amendments.

180

Sen. Deckert

Concurs with Senator Monnes Anderson’s support for the -14 amendments.

190

Chair Metsger

Declares a potential conflict of interest as his company represents health industry workers.

195

Sen. B. Starr

MOTION:  Moves to ADOPT SB 572-15 amendments dated 5/31/05.

197

 

VOTE:  2-3-0

AYE:               2 - Atkinson, Starr B.

NAY:               3 - Deckert, Monnes Anderson, Metsger

 

Chair Metsger

The motion FAILS.

200

Sen. Monnes Anderson

MOTION:  Moves to ADOPT SB 572-14 amendments dated 5/31/05.

205

 

VOTE:  3-2-0

AYE:               3 - Deckert, Monnes Anderson, Metsger

NAY:               2 - Atkinson, Starr B.

 

Chair Metgser

The motion CARRIES.

209

Sen. Deckert

MOTION:  Moves SB 572 to the floor with a DO PASS AS AMENDED recommendation.

213

Sen. B. Starr

Clarifies his preference to remove the home health portion.  States that    he will support moving the measure forward.

217

 

VOTE:  4-1-0

AYE:               4 - Deckert, Monnes Anderson, Starr B., Metsger

NAY:               1 - Atkinson

 

Chair Metsger

The motion CARRIES.

SEN. MONNES ANDERSON will lead discussion on the floor.

223

Chair Metsger

Closes work session on SB 572.  Opens a work session on SB 672.

SB 672 – WORK SESSION

220

Van Winkle

Explains the provisions of the -5 amendments (EXHIBIT G) to SB 672.

255

Chair Metsger

Asks Mr. Carlson to further explain the amendments.

265

Eric Carlson

Senate Majority Office.  Details the provisions of the measure and the amendments worked out through the work group.

300

Carlson

Explains the agreements and recommendation of the work group.

325

Richard Vial

Attorney, Vial Fotheringham LLP.  Notes the rapid growth of this sector of housing.  Testifies in support of SB 672 with the -5 amendments.

348

Chair Metsger

Considers the importance of moving this measure forward.

350

Vial

Discusses the clarification and changes made to statutes. 

383

Sen. Monnes Anderson

Asks about electronic voting and the potential for fraud.

388

Vial

Notes there must be prior consent for anyone voting electronically.

400

Sen. B. Starr

MOTION:  Moves to ADOPT SB 672-5 amendments dated 5/31/05.

403

 

VOTE:  4-0-1

EXCUSED:  1 - Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

405

Sen. B. Starr

MOTION:  Moves SB 672 to the floor with a DO PASS AS AMENDED recommendation.

410

Sen. Atkinson

Contends he doesn’t feel they need legislation to allow condominium associations to act like governments.

415

Vial

Notes his feelings that these associations are like mini-municipalities.  Talks about the vast amount of homes covered by the association and the need for provisions supplied by this measure.

430

Chair Metsger

States the committee is at ease for a moment due to technical issues.

TAPE 79, A

003

Chair Metsger

Observes the committee is back on the record.  Reiterates the motion before them is to pass the measure as amended by the -5 amendments.

005

 

VOTE:  3-1-1

AYE:               3 - Monnes Anderson, Starr B., Metsger

NAY:               1 - Atkinson

EXCUSED:     1 - Deckert

 

Chair Metsger

The motion CARRIES.

SEN. METSGER will lead discussion on the floor.

012

Chair Metsger

Makes concluding comments and an overview of the next meeting.  Closes the work session on SB 672.  Adjourns the committee at 3:15 p.m.

 

 

EXHIBIT SUMMARY

 

  1. HB 2017A, Written testimony, Darrell Fuller, 1 p
  2. SB 408A, -A8 amendments, staff, 6 pp
  3. SB 408A, -A9 amendments, staff, 3 pp
  4. HB 3273A, -A3 amendments, staff, 1 p
  5. SB 572, -14 amendments, staff, 5 pp
  6. SB 572, -15 amendments, staff, 4 pp
  7. SB 672, -5 amendments, staff, 26 pp