TAPS owners respond to rate challenges

The owners of the trans-Alaska pipeline have responded to complaints from the state of Alaska and Anadarko Petroleum over revised rates for shipping oil through the pipeline. The owners had filed new rates in compliance with an order from the Federal Energy Regulatory Commission in a ruling over the recovery of costs from the strategic reconfiguration project, a major upgrade project for the pipeline. The commission had ruled that the strategic reconfiguration project had been imprudent and had ordered the owner companies to remove much of the cost of the project from rates for the years in which those costs had been recovered.

But the state and Anadarko have claimed some of the costs now included in the revised rates are inadmissible.

The new rates include costs relating to the upgrade of pump station 1, an upgrade which the complainants argue was part of strategic reconfiguration. Not so, say the owners: The pump station 1 upgrade was carried out after the period considered in the strategic reconfiguration rate case. The upgrade, therefore, lies outside the scope of that case and would require a separate determination, if challenged, the owners say.

The owners reject another claim, that they have included some supplementary property taxes that were prohibited from the revised rates. The tax payments in question were not considered as part of the rate case, the owners say.

The owners also say that there is a no basis for claiming that some of the costs included in the revised rates consist of pipeline dismantlement expenses already accounted for as part of the pipeline dismantlement, removal and restoration components of the rates.

The owners have also pushed back on a request from Anadarko for documentation that would substantiate the strategic reconfiguration case litigation costs that the owners have included in the revised rates. Because the veracity of the litigation costs will be investigated as part of a formal FERC investigation of the revised rates, it would be wasteful and inefficient to establish a separate procedure to furnish Anadarko with the documentation it has requested, the owners say.

- ALAN BAILEY