RCA orders ML&P gas price hearing

The Regulatory Commission of Alaska has ordered a hearing into a request by Municipal Light & Power for authorization of a change to the way in which the Anchorage electricity utility calculates the price of its natural gas supplies from the Beluga River gas field. Pending the results of the hearing the commission is allowing the new pricing formula to go into effect on an interim and refundable basis.

The gas pricing in question, referred to as the gas transfer price, or GTP, is the internal price that ML&P uses for the gas that the utility obtains from its ownership interest in the gas field, on the west side of the Cook Inlet. The price of the gas, which ML&P uses to fuel its gas-fired power stations, impacts the price that the utility charges its customers for electricity. The GTP is calculated from the field’s revenue requirement.

As reported in the Aug. 14 issue of Petroleum News, ML&P wants to ensure a return on its investment from its recent purchase of a portion of ConocoPhillips’s interests in the gas field by including field depreciation and depletion costs in the formula for calculating the field’s revenue requirement. And, after the debt incurred from ML&P’s original purchase in 1996 of one-third of the field is paid off in 2018, the utility wants to switch to a new revenue requirement formula using the field’s rate base.

The state attorney general’s office and Providence Health and Services Alaska, a major ML&P ratepayer, have questioned ML&P’s GTP change request.

- ALAN BAILEY