Just a month or so after approving a certificate of public convenience and necessity for Cook Inlet Natural Gas Storage Alaska’s planned Kenai gas storage facility, the Regulatory Commission of Alaska has approved an initial tariff for the facility.
In a final order issued Jan. 31 the commission said that it was approving the tariff because all issues raised during a tariff hearing had been resolved. Tariff approval is, however, subject to some adjustments to the tariff’s specification of the gas storage service area.
CINGSA is fast tracking the development of its facility to head off a potential Southcentral Alaska utility gas shortfall in the winter of 2012-13 and the company had asked RCA for tariff approval by the end of January — the company needs RCA approval of its facility and the tariff in order to be able to finalize precedent agreements for facility use by customers and to finance the facility construction.
During the RCA tariff hearing much discussion focused on the question of the cost of gas lost and unaccounted for, a cost traditionally passed through to gas consumers — it is impossible to completely eliminate any gas loss from a storage facility, so that relatively minor gas losses tend to be viewed as part of the cost of doing business. The parties involved in the hearing negotiated tariff language requiring RCA approval for the recovery of the costs of extraordinary gas losses and prohibiting the recovery of the cost of losses resulting from negligence.
However, Commissioner Paul Lisankie disagrees with the approval of the gas losses section of the approved tariff. CINGSA has not been sufficiently specific in stating what gas losses consumers would have to pay for, Lisankie wrote in a minority dissenting opinion.
Other concerns considered during the tariff hearing included the specification of the costs that CINGSA would be able to recover from its gas storage fees, and the manner of reconciling the facility’s initial fees, based in part on cost estimates, with subsequent fees adjusted to reflect actual costs.
In a separate order, also issued on Jan. 31, RCA approved the ability of Enstar Natural Gas Co., CINGSA’s largest customer, to recover gas storage fees from gas consumers — there had been some concern that RCA might approve the gas storage facility but at a later date limit Enstar’s ability to recover its gas storage costs.
