RCA to hold conference on CI gas

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The Regulatory Commission of Alaska is holding a technical conference on Cook Inlet natural gas pricing, to address issues that have arisen in recent years regarding RCA approval of utility gas supply contracts. The conference, targeted at entities involved in or interested in the Cook Inlet gas industry, will start at 9:30 a.m. on Sept. 16 in the commission’s east hearing room.

Since 2001 the commission has only approved one Southcentral Alaska utility gas supply contract, with several contracts being rejected as containing, in the commission’s view, gas pricing that was unacceptably high. The rejection of contracts has resulted in regulatory uncertainty regarding what contracts the commission may approve, in a situation where contract negotiation and approval may take a year or two to achieve, at great expense, at a time when Southcentral utility gas supplies are becoming extremely tight.

“The purpose of the technical conference is the voluntary exploration of regulatory approaches that will make the RCA review process for natural gas supply contracts more predictable and straightforward for utilities and producers,” RCA Chairman Robert Pickett said in announcing the conference. “Participants are encouraged to be prepared to discuss natural gas pricing guidelines that would allow a predictable regulatory review process while also ensuring affordable prices for natural gas consumers.”

Possible approaches to regulating gas prices include the adoption of a “safe harbor” pricing mechanism, the use of gas price indices to specify Cook Inlet gas prices, allowing seasonal adjustments to gas prices and allowing add-on prices for producer-operated gas storage.

Conference participants could also discuss potential changes to state statutes that govern the review of gas supply contracts, with one possibility being a request that legislators specify a gas pricing methodology for future RCA guidance, Pickett said.

—Alan Bailey