Legislature looks at port authority plan

The Alaska Legislature is continuing to do its own review of applications, accepted and rejected, under the governor’s Alaska Gasline Inducement Act.

Legislative Budget and Audit approved contracts and contract extensions to look at AGIA issues Feb. 20. LB&A has already had a number of AGIA applications questions answered by its consultants; reports are available on the committee’s Web site at http://lba.legis.state.ak.us/ under “Gasline Proposals.”

The committee extended contracts for Steve Porter and Dan Dickinson and approved a new contract for Econ One. It approved putting out a request for proposals to financial houses to do an analysis of corporate inner workings and a sole-source contract with John Neri, an expert on tariff rates and ratemaking.

LB&A Chair Rep. Ralph Samuels, R-Anchorage, said that at the request of House Speaker John Harris, R-Valdez, Econ One has already been asked to do an analysis of the Alaska Gasline Port Authority liquefied natural gas project. In oversimplified terms, he said, the port authority has a higher tariff than other projects, but also a higher market price.

Rep. Mike Kelly, R-Fairbanks, wanted an evaluation of whether the higher market price the port authority cited was likely to be long-term, and Samuels said that Econ One had been asked to answer the question of how long the price in the Pacific was likely to stay higher than Henry Hub.

Samuels said the type of questions a financial house could be asked include what are TransCanada’s revenues from its hub; if the project went bad “could it break the back” of ConocoPhillips; could it break the back of TransCanada?

Neri, the rate expert, can talk about ratemaking, whether based on rolled-in costs or rate of return, Samuels said, and Econ One also has someone available for ratemaking, so the committee has the opportunity to do a double check in this area.

—Petroleum News