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NEWS BULLETIN

February 28, 2014 --- Vol. 20, No. 13February 2014

FERC requires refunds for Strategic Reconfiguration costs

The Federal Energy Regulatory Commission is requiring the owners of the trans-Alaska oil pipeline to refund a portion of the interstate shipping rates collected over the past six years, saying that the Strategic Reconfiguration upgrading initiative was “imprudent.”

According to the evidence from a long hearing, “the project is not used and useful and does not provide any discernable benefits to shippers through personnel reductions, reduced major maintenance, enhanced reliability, additional throughput capability, or any other criteria. The project does not provide an enhanced level of service to ratepayers,” FERC Administrative Law Judge Carmen Ana Cintron wrote in a Feb. 27 ruling.

The ruling gives the TAPS owners 30 days to establish new rates and issue refunds.

The cost of the Strategic Reconfiguration program currently stands at some $750 million, which is three times the initial estimate, according to the ruling. The FERC decision requires the TAPS owners to refund most of the cost overruns to date and going forward.

The Regulatory Commission of Alaska is considering the same facts for the purposes of establish intrastate shipping rates and is expected to release its ruling in the near future.

—Eric Lidji

See more in March 9 issue, available online Friday, March 7 at 11 a.m. at www.PetroleumNews.com

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