Fee Regulations Questions & Answers

Fee Regulations Questions & Answers - 2014

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Why are fees being revised?

Alaska Statutes (AS) require the Department of Environmental Conservation to evaluate fees for services every four years and revise them if necessary. AS 46.14.240(b) requires the review of permit administration fees, which are found in the Air Quality Regulations at 18 AAC 50.400. AS 46.14.250(g) requires the review of emission fees, which are found in 18 AAC 50.410.

Where can I find information about the new fees?

All of the documents related to the fee study and proposed new fees can be found on the Fee Evaluation & Rule Making page.

Provide the data used to establish the historical program cost and the data used in the linear regression of the historical data referenced in the Final Air Permit Fee Rate Evaluation Report.

We developed a narrative discussion the linear regression that was not used in the final report/narrative but rather was provided as part of the Appendix and supplemental information posted with the public notice documents. The discussion concerning the regression analysis can be found at: Regression Analysis (PDF).

A main contributing factor that ADEC states in the Title V emission fee increase is the unrealized obligations discussed on Page 27 of the Final Air Permit Fee Rate Evaluation. The new Title V emission fee rate is proposed to be set at $33.16 per ton (+$13.84). How did ADEC determine that was an appropriate increase? Please provide the background documentation justifying ADEC’s assumptions for the increase.

The unrealized obligation was included as a fund source change budget request in the Governor’s FY16 operating budget. Title V Emissions Unrealizable Obligation (PDF) explains the methodology and true-up that resulted in this unrealized obligation.

Breakdown the specific tasks associated with the labor and non-labor costs charged to the annual renewal and compliance categories for Coal Fired Power Plants and ORLs listed in the FeesFY14.FinalFeesSpreadsheet.5-21-15. (For example, IT costs associated with non-labor are 12 percent of the total).

DEC IT costs would not have been specific to the individual projects and therefore would not have been coded to the permit renewal code. Those labor charges generally affect the whole program and are therefore charged to the Emission categories. The labor charged to these fee categories were only those that were directly associated with that specific permit. There were no contracts issued from these fee categories for IT work.

Labor charges ($130,099.90) were those specifically to the Title V permit renewal of Coal plants.
Non-labor charges ($54,822.07) included the following:
- Ad Orders: $3,044.70
- Contracts: $51,749.14
- Travel/Transportation: $28.23

Labor charges ($135,074.66) were those specific to routine compliance activities for the specific Coal category.
Non-labor charges ($26,616.89) included the following:
- Ad Orders: $582.00
- Contracts: $23,795.12

Travel/Transportation: $2,239.77

Verify that non-compliance costs were not accidentally added to either the renewal or compliance costs for the Coal Fired Power Plants. The client is aware that these costs are charged as time and material, however, please verify.

Non-routine compliance costs are considered Time & Expense charged in both the current and proposed fee regulations as such. Therefore, the labor and non-labor expenses in each the “renewal” and “compliance” fixed fees include only the costs specific to the permit type that were not otherwise billed directly to the permittee.

Explain the specific costs that the 2010 report estimate failed to categorize with the appropriate individual permit administration efforts as expressed in the contributing factors to general fee increases.

In the years captured in the current fee study, the Division implemented additional tools to streamline and improve the accuracy of timesheet submission. These tools now allow for the identification of incomplete timesheet codes and give us the opportunity to send the timesheet back to the employee to correct to ensure the time they are reporting is captured in the specific fee area they are working on. During the period covered under the 2010 report, this was only a manual process for all 60+ Air Quality employees. What we found with the implementation of automated billing rules was that employees were having trouble selecting the correct activity type specific to their work and often had chosen combinations that were not compatible. An example is when an employee worked on a Title V amendment, while they still coded their time to the correct project, they often coded their time incorrectly to the Title V renewal fee category rather than the Title V amendment category. This is an example of why in these new fee regs we propose to combine those services into the same fee. This process improvement ultimately captured time more accurately to the areas that the work was completed. As stated in the fee narrative, we’ve taken additional steps already through this fee study to reduce the number of fee categories to further assist with reducing the administrative burden on staff to choose the correct combination of activities. In summary, labor costs were more accurately captured in the correct fee categories in this report. The Division took longer to roll this fee update out in order to audit the time entries. Because of the tools available at the time, the 2010 report went through a more manual process.

One more question on the linear regression, is the 12% drop, mentioned on the Regression Analysis document, a 12 percent per year or 12 percent over the predicted timeframe of FY16-FY19?

In the Regression Analysis document, the 12 percent reference is related to the difference between the predicted annual average emissions for the FY16-FY19 period as compared to the actual billed emissions over the past 6 years; i.e. the predicted annual average emissions for FY16 – FY19 are 12% lower than the average annual emissions from the preceding 6 years.

Could we get the data behind the PDF Regression Analysis Tables and Graphs?

The data used for the regression analysis shown in the tables are the emission tonnages that were invoiced/billed for in each of the listed fiscal years, i.e. in FY11, ADEC billed sources for 99,693 tons of Title V emissions and 103,500 tons of Title I emissions. The data used was the combined billed tonnage for all sources.

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