NEWS BULLETIN

June 11, 2004 --- Vol. 10, No. 56June 2004

RCA rules against 2001-2003 tariffs

The Regulatory Commission of Alaska has ruled against the owners of the trans-Alaska pipeline system, finding their intrastate rates for shipping oil from 2001 through 2003 to be unreasonably high.

The commission has established lower, permanent post-2000 intrastate rates and ordered the TAPS carriers to refund the difference, with interest, to the shippers from Jan. 1, 2001, to June 30, 2003.

RCA’s June 10 order, which can be found online at http://www.state.ak.us/rca/orders/2004/p03004_34.pdf, was in response to a June 3, 2003, rate filing by the TAPS carriers that used a methodology established in a 1986 settlement between the carriers and state and federal regulators.

The commission, which is mandated by state statute to keep oil and gas transportation rates “just and reasonable” for both the owners and the shippers, ruled in November 2002 that the 1986 TAPS settlement methodology allowed for excessively high rates. RCA said that rates charged between 1977 and 1996 provided TAPS carriers “with the opportunity to recover $9.9 billion more than the reasonable cost of providing service.”

The commission said maximum rates filed by the carriers for intrastate service from 1997 through 2000 exceeded cost based rates by an average of 57 percent.

In its June 10 order, RCA said that the current rates “will be permanent for 2001, 2002, 2003, 2004 and the future until we approve revised rates pursuant to AS 42.06.” Those rates are: GVEA $1.25, Petro Star $1.96, and Valdez $1.96.

In comparison, the highest rates charged by any carrier came from BP: $1.56 (GVEA) $2.45 (Petro Star) $2.46 (Valdez). And the lowest rates came from Unocal: $1.18 (GVEA) $1.87 (Petro Star) $1.88 (Valdez).

The carrier-owners named in RCA’s order are Amerada Hess Pipeline, BP Pipelines (Alaska), ExxonMobil Pipeline, Phillips Transportation (Alaska), Unocal Pipeline and Williams Alaska Pipeline.

See complete story in June 20 issue of Petroleum News.


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