CINGSA files for 2% interim increase

Kristen Nelson

Petroleum News

Cook Inlet Natural Gas Storage Alaska, CINGSA, has filed with the Regulatory Commission of Alaska for an interim and refundable tariff increase of 2%, effective Aug. 1, and a proposed permanent rate increase based on the outcome of the proposed cost of service study, an increase which CINGSA President John Sims told RCA in the July 1 filing would be an increase of some $1.9 million or about 10%.

State, federal and RCA precedent entitles CINGSA to rates including a return sufficient to support the company’s continued financial integrity, Sims said, and “rates in effect today do not meet that legal standard.”

He said CINGSA has demonstrated that current rates “are confiscatorily low,” and the Alaska Supreme Court “has held that utilities should be protected against irreparable harm if, in fact, interim and refundable rates are too low.”

Evidence presented by the company shows, Sims said, “that the revenue resulting from CINGSA’s current rates is substantially below the amount necessary for CINGSA to recovery its current costs of providing service (including its opportunity to earn a return on its capital investments).”

The request for the interim 2% increase is based on the likelihood that current rates will remain in effect for 450 days, which is the statutory deadline for adjudicating the case.

He noted that RCA has recognized that CINGSA plays a critical role in the gas deliverability infrastructure in Cook Inlet, and said on April 10, when the Anchorage area was hit by an unseasonal Arctic cold blast, “the supply coming from CINGSA represented 66% of the demand of its largest customer.”

CINGSA currently has three firm storage service and five interruptible storage service customers, Sims said.

- KRISTEN NELSON