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NEWS BULLETIN

October 10, 2003 --- Vol. 9, No. 98October 2003

Court rejects state request for stay in TAPS tariff case

The Alaska Superior Court has denied a motion for a stay by the state of Alaska on an order by the Regulatory Commission of Alaska that found intrastate tariffs on the trans-Alaska pipeline to be excessive. A decision by the commission in favor of Williams Alaska Petroleum Inc. and Tesoro Alaska Co. is being appealed in Superior Court.

The state of Alaska moved for a stay of the commission's order.

The commission, in Order 151, agreed with Williams and Tesoro that intrastate tariffs were excessive, and ordered reductions and refunds. The state of Alaska participated on the side of the pipeline owners subsidiaries of major oil companies to protect its royalty interest. The tariffs rates at issue are based on a settlement agreement reached between the state and the pipeline owners.

The court said the state moved for a stay of Order 151, "by which it appears to mean an injunction against utilization by the RCA of that order's underlying methodology for rate computation, and an interim imposition of the pre-existing rate structure found by the RCA to be excessive."

The court said the state alleges it will suffer irreparable harm absent a stay and "foresees circumstances under which its royalties could decrease, if the carriers successfully petition the Federal Energy Regulatory Commission for an offsetting increase in the interstate TAPS tariff, to recoup any decrease in the intrastate tariff."

The court said such FERC action "is speculative." And, it said, while the state argues that it has contracted away its ability to resist such a FERC outcome, that "was a freely dickered business decision; the state now posits that the very eventuality it accepted in settlement should be deemed to constitute irreparable harm."

And, the court said, "it is not at all clear that the carriers would undergo the substantial downside risk of stirring the FERC pot."

The court noted that the state has aligned itself with one commercial interest group and against another, arguing that this maximizes its royalties. The public interest, however, "is to collect a royalty based on a fair and just transportation rate structure. The public interest will be served however this case is determined."

The court denied the state's motion for stay, noted that the record is now complete and set a Nov. 7 date for briefs by appellants.

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