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RCA wants TAPS tariff hearings in Alaska Regulatory Commission of Alaska says parties to case broke procedure by going to FERC first, and that the existing schedule puts RCA at a disadvantage By Eric Lidji For Petroleum News
State regulators say they’ll hold joint hearings with their federal counterparts to discuss shipping rates on the trans-Alaska oil pipeline, but only if the hearings are held in Alaska.
The Regulatory Commission of Alaska and the Federal Energy Regulatory Commission are separately considering whether and how costs from a major upgrade to the 800-mile pipeline should be included in the fees shippers pay to move oil through the system.
The companies that own shares in the pipeline, all major North Slope oil producers, and several third parties requested a joint hearing earlier this year, but made the request to FERC before making it to RCA.
That move upset several RCA commissioners. RCA procedure requires requests for concurrent hearings to be filed with FERC and RCA at the same time.
FERC regulates interstate shipments, while RCA regulates intrastate shipments.
In Alaska? Or in D.C.? A majority of the commissioners said the hearings were too important to Alaska not to be held in the state. Chairman Robert Pickett noted that State of Alaska revenues are overwhelmingly dependent on the pipeline system, and that the decisions made in this and future tariff cases “will strongly influence the economics of Alaska’s petroleum industry.”
He also noted that RCA and FERC signed a memorandum of understanding in January 2003 to address coordination when issues involve both commissions.
RCA Commissioner Kate Giard took a stronger stance.
“The professionals that represent the pipelines and the interveners in these proceedings know they are supposed to file motions concurrently,” Giard wrote in a concurring statement to the decision. “Yet they filed their petition with FERC first, setting out a schedule that arguably denies RCA meaningful participation in these cases.”
Giard wrote that without proper planning, joint hearings between the commissions would be “filled with awkwardness, repetition and many, many, many procedural hurdles.”
FERC proposed an eight-week hearing in Washington D.C. followed by a one-week hearing in Anchorage, but RCA believes that schedule doesn’t give its commissioners “the opportunity to actively and meaningful participate” in the proceedings. RCA agreed to holding the concurrent hearings, but only if they were held entirely in Alaska.
Commissioner Janis Wilson dissented from that view, though. “I do not believe it a wise course to commit five commissioners to sit through a lengthy hearing on complicated issues when the task could be delegated to the commission’s well-qualified pipeline administrative law judge for proposed decision, as is our usual practice,” Wilson wrote.
The concurrent hearing would consider how the costs of Strategic Reconfiguration would be included in shipping rates. Strategic Reconfiguration is a multi-million dollar effort to upgrade pipeline operations, but the project is past due and over budget.
In a motion filed in January, the pipeline owners and several third parties looking to keep rates as low as possible, including the State of Alaska, proposed a concurrent hearing as a way to simplify the proceedings, saying many issues before FERC and RCA are identical.
Even if RCA and FERC can agree on where to hold the hearings, though, the issue won’t be resolved for some time. The schedule established by FERC calls for holding hearings in late 2011 and early 2012, and issuing an initial decision in June 2012.
CPAI gets third rate increase RCA also temporarily approved higher shipping rates for ConocoPhillips.
The new rates increase ConocoPhillips’ shipping rates for Alaska markets by 12 percent.
Now, the cost to ship a barrel of oil from the North Slope to North Pole is $2.86, while shipping to various locations in Valdez is about $4.50, depending on the final destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)
ConocoPhillips can collect the new rates on a refundable basis until Feb. 22, 2011, while RCA investigates whether those rates are justified. ConocoPhillips said the rates are justified because pipeline throughput is declining while operating costs are on the rise.
The previous rates were $2.55 per barrel to North Pole and $3.98 per barrel to Valdez, but those represent temporary rates as well.
The request is ConocoPhillips’ third over the past 21 months and represents a 130 percent jump in tariffs since October 2008.
ConocoPhillips’ last permanent rates, set in 2002, charge $1.25 to ship a barrel of oil from the North Slope to North Pole and $1.96 to ship to various points in Valdez.
The company, along with three other owners of the pipeline, asked for rate increases in late 2008 and again in 2009. RCA recently consolidated those eight cases.
Subsidiaries of BP, ConocoPhillips, ExxonMobil, Union Oil Co. of California and Koch own an undivided share of the pipeline. All of those companies except BP, which owns nearly half of the pipeline, have been increasing rates in lockstep since 2008.
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