HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
March 2013

Vol. 18, No. 10 Week of March 10, 2013

RCA OKs CEA/Hilcorp gas supply settlement

Agreement allows Chugach Electric to buy gas for generating Fairbanks power provided supply priorities in Southcentral are met

Alan Bailey

Petroleum News

The Regulatory Commission of Alaska, or RCA, has approved a settlement between Alaska Railbelt utilities and the state attorney general that spells out stipulations for a new contract between Hilcorp Alaska and Chugach Electric Association for the supply of Cook Inlet gas, to enable Chugach Electric to generate electricity for Fairbanks utility Golden Valley Electric Association.

After Chugach Electric announced the new gas supply contract in November, Matanuska Electric Association expressed concern about the impact that the delivery of gas under the contract might have on already tight gas supplies for other Railbelt utilities.

Chugach Electric had said that the contract would enable the generation of much-needed gas-fueled power for Fairbanks, where a high dependence on oil-fueled generation has greatly increased the cost of electricity. Chugach Electric, which has been supplying some power to Fairbanks for a number of years, does not guarantee the delivery of power to Golden Valley, reserving the right to curtail supplies should that prove necessary as a consequence of gas supply constraints in Southcentral.

Priority contracts

Under the terms of the settlement that RCA has now approved, the utilities and the attorney general have agreed that the new gas supply contract with Hilcorp should proceed, provided that certain other contracts take precedence. One of those contracts is an agreement among Railbelt utilities that addresses emergency actions should there be a shortage of natural gas in Southcentral Alaska. The other contracts are Hilcorpís priority contracts, as specified in the new contract between Hilcorp and Chugach Electric and consisting of all of Hilcorpís existing contractual commitments.

The agreement also requires Chugach Electric and Golden Valley to eliminate a clause in their power supply contract that gives Chugach Electric the right of first offer of economy or firm power sales to Golden Valley.

In addition, the agreement waives the need for power load forecasts with Golden Valley as a perquisite of RCA approval of the contract between Chugach Electric and Hilcorp.

And all parties to the settlement have agreed that, overall, the sale of power by Chugach Electric to Golden Valley represents a net benefit to Chugach Electricís customers by improving the economics of Chugach Electricís power generation and thereby reducing the utilityís electricity rates.






Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.