Providing coverage of Alaska and northern Canada's oil and gas industry
September 2019

Vol. 24, No.35 Week of September 01, 2019

State, PTE Pipeline, agree on tariff, settlement methodology

Kristen Nelson

Petroleum News

The Regulatory Commission of Alaska said in Aug. 27 order that it has accepted a settlement agreement on the Point Thomson Export Pipeline tariff. The settlement was filed by pipeline owner PTE Pipeline LLC and, on behalf of the state, the Office of the Attorney General.

A stipulation resolving disputed issues between PTE Pipeline and the state was filed with RCA Aug. 1.

RCA said PTE Pipeline filed a requested increase in its rates for the PTEP last July. Last August, RCA established a temporary and refundable rate as proposed and granted intervention to the Office of the Attorney General Regulatory Affairs & Public Advocacy Section on behalf of the state.

There are both intrastate and interstate tariffs on the PTEP, with the interstate rates regulated by the Federal Energy Regulatory Commission. In January RAPA advised RCA that settlement discussions in the related FERC case showed progress and RCA extended suspension of its docket.

The state and PTE Pipeline filed a stipulation resolving all issues on Aug. 1, requesting RCA acceptance of the settlement agreement.

“If all parties join in a stipulation, we can terminate the proceeding if we do not find that the public interest requires the proceeding to continue. If we accept a stipulation, the parties are bound by its terms,” RCA said in its Aug. 27 order.

The commission said it reviewed the settlement agreement and found “that the public interest does not require further proceedings in this docket,” which it closed.


PTE Pipeline filed a revenue requirement study with RCA in July 2018, proposing an increase for intrastate shipments from $12.09 per barrel, a tariff established by an earlier settlement, to $20.84 per barrel.

That same month PTE Pipeline filed with FERC to increase the rate for interstate transportation from $12.09 per barrel to $19.49 per barrel. The proposed increases reflected what the PTE Pipeline described as a substantial decrease in the pipeline’s current and projected throughput compared to assumptions on which the 2016 settlement rate was based.

The state protested the FERC filing and moved to intervene in that docket, an intervention which FERC accepted.

The initial tariff for the pipeline was filed with the RCA in September 2015, with the state and ConocoPhillips Alaska (then a working interest owner at Point Thomson) intervening. There were negotiations and RCA accepted a proposed settlement agreement which set the rate at $12.09 beginning April 1, 2017, and ending when PTE Pipeline placed superseding rates in place, but not later than July 1, 2019.

PTE Pipeline filed a new tariff with RCA in July 2018, concurrent with a FERC filing, with a revenue requirement study based on a 2017 test year, seeking an increase to $20.84 per barrel, effective Sept. 1, 2018. PTE Pipeline’s proposed intrastate rate increase “reflected a substantial decrease in PTEP’s then-current and projected throughput,” the company said in its RCA filing.

In August 2018 the state filed a protest and petition to intervene.

In January of this year the parties advised RCA that settlement discussions in the related FERC case showed signs of progress and requested that RCA, which had already suspended its docket based on the FERC discussions, suspend it for another six months.

FERC agreement

The parties reached an agreement in principle with FERC in June of this year, and subsequently entered into a settlement agreement which incorporates settlement of PTE Pipeline interstate and intrastate rates for Sept. 1, 2018, through Dec. 31, 2018, “based on PTEP’s actual throughput, costs and revenues for that period.” The settlement also provided that PTE Pipeline implement a variable tariff methodology to govern interstate and intrastate rates effective Jan. 1, 2019, for an initial period of three years with automatic three year renewals unless either party provides advance notice of withdrawal.

Within 30 days after the final order PTE Pipeline is to pay refunds for Sept. 1, 2018, through Dec. 31, 2018, based on the difference between the $19.49 per barrel filed with FERC and the settlement rate for the period of $13.11 per barrel.

PTE Pipeline will calculate cost of service and develop a settlement rate for calendar year 2019 not later than April 30, 2020, using the PTEP Settlement Methodology set out in the agreement and make refunds for the differences between that rate and FERC and RCA interim rates collected by PTE Pipeline, subject to refund, in 2019.

By Dec. 1, 2019, PTE Pipeline is to calculate and file a rate no higher than the applicable maximum, rate defined in the settlement agreement effective for calendar year 2020.

For each year of the agreement PTE Pipeline will file interstate and intrastate rates by Dec. 1 for the following year.

With specific exceptions, the state may not protest rates so long as the rates are in compliance with the agreement and do not exceed the maximum rate level generated by the methodology.


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