Agency asks for comments on DR&R

Does Alaska need regulations governing regulatory and accounting treatment of dismantlement, removal and restoration funds for the state’s oil and natural gas pipelines? The Regulatory Commission of Alaska is addressing this issue, and is asking for public comment by June 28 at 4 p.m.

Dismantlement, removal and restoration funds are the money needed at the end of a pipeline’s life — money included in the tariffs charged to move product.

Because the commission is involved in tariffs, it is involved in DR&R, and is asking “whether a greater degree of regulatory certainty and transparency will be achieved through the adoption of regulations which set out the regulatory and accounting treatment for DR&R” and whether “adoption of regulations would limit our ability to exercise discretion in appropriate cases.”

The commission said it has “decided how DR&R obligations will be met in individual pipeline rate cases,” and said the issues “are often disputed by the parties and can involve significant financial obligations for certificated pipeline owners and operators.”

Shippers, the commission said, “are interested in ensuring that amounts collected for DR&R through intrastate rates are accounted for appropriately and that any refunds can be paid,” while the pipeline owners “seek certainty of their obligations so they can plan for future development.”

The Federal Energy Regulatory Commission and the Nuclear Regulatory Commission have DR&R regulations, and one area in which the Regulatory Commission of Alaska is asking for comments is whether it should adopt regulations that mirror those federal regulations.

The commission also asks if regulations should adopt the principles and requirements of the Financial Accounting Standards Board, which in 2001 established a standard treating DR&R as a type of asset retirement obligation, with obligations associated with retirement of a tangible long-lived asset.

The commission said it will post copies of all filed comments on its web site.