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Carriers seek 2011 interstate rate hikes Anadarko Petroleum, State of Alaska protest higher tariff filings by two owners, ConocoPhillips, Koch, on trans-Alaska oil pipeline Rose Ragsdale For Petroleum News
The Federal Energy Regulatory Commission issued an order May 26 that accepted and suspended proposed interstate tariff increases for 2011 on shipments of petroleum via the trans-Alaska oil pipeline.
Two of the pipeline’s five owners, ConocoPhillips Transportation Alaska Inc. and Koch Alaska Pipeline Company LLC filed FERC tariffs April 28 and May 11, respectively, increasing the rates almost 16 percent on their share of the pipeline’s capacity for oil and natural gas liquids transported outside Alaska.
ConocoPhillips, which holds a 28.29 percent interest in the pipeline, asked to increase its tariff to $5.05 from $4.36 per barrel, effective May 29, while Koch, a minority owner with a 3.08 percent interest, sought an effective date of June 5 for boosting its tariff to $5.05 from $4.37 per barrel. The 800-mile pipeline moves petroleum from Alaska’s North Slope oil fields to a tanker loading terminal near Valdez. Though its total capacity exceeds 2 million barrels per day, the conduit currently transports about 630,000 bpd of crude and NGLs.
Shippers protest Responding to protests from Anadarko Petroleum Corp. and the State of Alaska, the commission also ruled that the tariff hikes are subject to refunds and consolidated them with similar proposals filed by the pipeline’s owners for 2009 and 2010 rates that now await judicial hearing.
Anadarko and Alaska argued that the proposed rate increases have not been shown to be just and reasonable, and they raised numerous issues in their protests similar to concerns expressed about the pipeline carriers’ tariff increase requests filed in 2009 and 2010.
In addition to seeking a hearing of the latest tariff filings, the shipper and Alaska urged the commission to consolidate various “strategic reconfiguration” issues in the case with the SR phase of the consolidated 2009 rate proceeding currently pending in Docket No. IS09-348-004, et al. The commission’s chief administrative judge earlier severed the issues in the pending TAPS rate cases into SR and non-SR phases.
Strategic reconfiguration, or SR, refers to a costly multiyear renovation and modernization program undertaken by the pipeline’s operator Alyeska Pipeline Service Co. in the early 2000s. The pipeline’s owners and shippers dispute how these costs should be allocated and to what extent they should be recovered in ongoing tariffs.
The protestors also requested that the non-SR-related issues be held in abeyance pending resolution of similar issues in the non-SR phase of the commission’s consolidated proceeding now pending in BP Pipelines (Alaska) Inc., IS09-348-000, et al.
Reacting to Alaska and Anadarko’s protests, Conoco and Koch filed responses in which they contended that the protestors made substantially the same arguments that they put forward with respect to the 2009 and 2010 tariff filings by the pipeline carriers, and they asked the commission to accept their latest rate filings, subject to refund. The pipeline owners also did not object to the protestors’ requests to consolidate the SR issues in existing proceedings and to hold the non-SR-related issues in abeyance pending the resolution of the relevant issues.
Cost of service issues In its order, the commission said the latest filings involve the same cost of service issues now under consideration in both IS09-348-000 and IS09-348-004, et al. Further, the SR phase of the case, IS09-348-004, et al., is still in the discovery phase, and consolidating the SR issues in the instant filing in the 004 sub-docket “would cause no significant delay or other hardship on the parties,” the commissioners wrote.
Addressing the non-SR issues, however, has progressed much faster, and the commission said its presiding judge issued his initial decision March 10.
“Thus, consolidating the non-SR issues from this filing into the ongoing non-SR phase of the consolidated 2009 TAPS rate case in Docket No. IS09-348-000, et al. would delay that proceeding with no benefit to the parties,” the commissioners added.
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