|
AIDEA Interior energy bill moves in House
Kristen Nelson Petroleum News
House Bill 105, the bill on Alaska Industrial Development and Export Authority loan and bond authority and the Interior energy project, passed the House Resources Committee April 8 with amendments, a number of which administration representatives opposed.
The portion of the bill related to Interior gas changed a requirement in Senate Bill 23, passed in 2013, which required that the North Slope be the source of natural gas for a liquefied natural gas project serving Interior Alaska.
The majority of amendments - all of which were adopted - were by Rep. Mike Hawker, R-Anchorage. The first amendment, to which the administration did not object, requires that AIDEA deliver quarterly written reports to the Legislature on Interior energy projects. There was also no objection to an amendment offered by co-Chair Dave Talerico, R-Healy, requiring that monies authorized only be used for an Interior energy project.
Fred Parady, deputy commissioner of the Alaska Department of Commerce, Community and Economic Development, said there was no intention to use the money for anything else.
Administration objects The administration did object to requirements that an Interior energy project be regulated by the Regulatory Commission of Alaska, that AIDEA receive legislative approval for the Interior energy plan, including sources of the natural gas, estimated project cost and estimated price of natural gas under the project for utilities in Fairbanks and that natural gas contracts must be between a producer and a distribution utility.
On the requirement that the project be subject to rate regulation under RCA, Parady said that under existing statute the Fairbanks North Star Borough can seek regulation if in its best interest, with the FNSB Assembly the governing body.
Rep. Paul Seaton, R-Homer, said the goal was a project which moved rapidly, and involving RCA could put a damper on that forward motion. Hawker said the intent was to protect ratepayers, because if the Interior energy project was owned by AIDEA it would be exempt from rate regulation.
State oil and gas company? Hawker said that as a policy call, legislators don’t want AIDEA to become a state-owned oil and gas company, so he proposed an amendment that AIDEA “may not purchase or acquire gas reserves or a gas lease or become a working interest owner of a natural gas lease” without legislative approval. He said he was concerned because he was hearing about folks from the administration talking to energy companies in Cook Inlet about acquiring gas reserves in the ground. Nothing, he said, prohibits the Interior utilities from buying natural gas, but he said he didn’t think it was a good idea to allow the state, with its heavy hand of regulation, to step in and compete against utilities for gas purchases.
John Springsteen, AIDEA executive director, said he was concerned the amendment would present a hurdle to financing small developments since resources are often a part of financing. He said often AIDEA was provided a lease as security. Jim Hemsath, the agency’s project development and asset management director, said when AIDEA did the deal on Mustang it came away with a 20 percent working interest ownership and said working interest is very important as collateral.
Hawker said he understood the issue, but said he believes it remains crucial that we tell those who have been out negotiating for Cook Inlet gas that legislative approval will be required, and said he would work with AIDEA as the bill moved forward.
The bill goes next to House Finance. Senate Bill 50, the companion legislation, is in Senate Finance and as of April 9 was fairly close to the administration’s proposed bill.
|
