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NEWS BULLETIN

August 25, 2009 --- Vol. 15, No. 62August 2009

RCA approves Chugach Electric Association gas supply contract

The Regulatory Commission of Alaska has approved Chugach Electric Association’s new gas supply contract with ConocoPhillips. The contract, the first utility gas supply contract that RCA has approved since 2001, will cover Chugach’s unmet needs through April 2011, about half of the utility’s unmet needs between June 2011 and December 2015 and about 25 percent of unmet needs in 2016.

The contract involves pricing for base load gas supplies indexed to a basket of prices from gas producing areas in the Lower 48, with separate pricing provisions, indexed to the price of Cook Inlet LNG exported to Japan, for gas required to meet peak loads.

The commission has rejected contracts between various producers and Enstar Natural Gas Co. in recent years, saying that gas prices indexed to “city gate” market prices in those contracts were too high. And Chugach has spent several years seeking new supply contracts, given that it has had no contracts for supplies extending beyond 2011.

In late 2008, in an Enstar gas supply contracts case, the commission proposed a price cap involving a similar production basin price index to that in the now-approved Chugach contract. However, gas producers ConocoPhillips and Marathon rejected the price cap proposal.

Editor’s note: Watch for full story in the Aug. 30 edition of Petroleum News, which will be available online Aug. 28, at noon Alaska-time, at www.petroleumnews.com.

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