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RCA accepts state, CIPL tariff settlement and new rate of $8.57
Kristen Nelson Petroleum News
The Regulatory Commission of Alaska has accepted a November settlement agreement between the State of Alaska and Cook Inlet Pipe Line LLC.
Cook Inlet Pipe Line LLC, CIPL, is a limited liability company managed by its members and is 100% held by Harvest Alaska LLC, a part of Hilcorp’s midstream company.
Under an existing settlement agreement, in November 2019 CIPL filed a rate increase from $5.61 per barrel to $8.57 per barrel for shipment of crude oil from Granite Point or Trading Bay to the connection with the Swanson River Oil Pipeline.
The state filed a formal complaint and petition to intervene in December 2019.
The commission said it suspended the new rate and established a temporary rate equal to the filed rate and granted intervention by the state.
RCA said the original settlement agreement dates to 2001 and has been amended five times.
On Nov. 17 the parties, CIPL and the state, filed a stipulation resolving all disputed issues, RCA said. The parties also filed to have the docket closed and for expedited consideration of the stipulation, because the original settlement agreement was set to expire Nov. 30, with new rates needing to be filed no later than Dec. 1 to go into effect Jan. 1, 2021, as required by the new settlement agreement.
RCA said the parties agreed that the 2020 rate, calculated under the 2020 settlement, will be $8.57 per barrel. The commission accepted the agreement between the state and CIPL, accepted the $8.57 pr barrel rate for the period beginning Jan. 1, 2020, and closed the docket, effective Nov. 25.
On Dec. 1 CIPL filed an increase from $8.57 per barrel to $12.57 per barrel with an effective date of Jan. 1, 2021.
Stipulation There are no unaffiliated shippers on the CIPL.
In their Nov. 17 stipulation, the parties said Cook Inlet Energy was a party to the previous settlement agreement but has closed its facilities on the west side of the inlet and is no longer a shipper.
The parties said the new settlement updates the terms of the original settlement “to a more modern form of agreement.” The new settlement reduces the life of the line from 2038 to 2034, “as a result of the loss of CIE’s volume of shipments through the pipeline and the substantial and ongoing reduction in oil prices.”
The parties said the new agreement also lowers amounts for the rate of return on equity and cost of debt, revises calculation of the tax allowance and treatment of decommissioned assets.
- KRISTEN NELSON
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