|
Alaska bound by TAPS settlement, can’t lower tariff, says governor TAPS tariffs not discussed in March 27 meeting with slope producers Kristen Nelson Petroleum News Editor-in-Chief
Alaska Gov. Frank Murkowski said in a March 28 press conference that the state cannot lower the tariff on the trans-Alaska oil pipeline at this time because it is bound by terms and conditions of a 1986 settlement agreement.
In a mid-March press conference the governor said he was going to talk to the North Slope producers who own TAPS about the tariff when he met with them in late March about a proposed natural gas pipeline from the North Slope. But on March 28, Murkowski said the subject was not discussed at the March 27 gasline meeting, although he said state Attorney General Gregg Renkes did make “a very brief comment” about the tariff issue. In mid-March, Democrats in the Legislature cited a November ruling by the Regulatory Commission of Alaska that found intrastate tariffs on the pipeline to be excessively high.
Democrats asked the governor ask the Federal Energy Regulatory Commission to apply the RCA ruling to interstate transportation of oil. They said that if the RCA ruling was applied to interstate oil, it could save the state some $100 million a year in lost revenues.
The governor said “I think there's an anticipation out there that the state is about to see a windfall or could pick up a windfall and I don't want to mislead anybody. That process, you know, is within the decision of the RCA.” There is a trigger date for renegotiations in the agreement, Murkowski said, unless the parties agree collectively to reopen negotiations.
Renegotiating the tariff “is pretty much tied to the contractual terms and you just can't go in and change contractual terms because you feel like it. You've got to have a reason. You've got to have a breach,” he said.
The November RCA decision involves oil that goes to in-state refiners as opposed to oil in interstate commerce, where the FERC regulates tariffs. Tariffs have been set according to the settlement agreement; prior to that tariffs were litigated. RCA decision appealed The decision of the RCA has been appealed and the state is involved in that appeal on the side of the pipeline owners.
Murkowski and Renkes said in February that the administration's appeal of the RCA's decision is “narrowly focused to target important policy issues of concern to the state,” including “the need for the state to be a full participant in cases that have a significant effect on the future of the state; protection of the state's ability to negotiate settlements with industry to increase fiscal certainty for all parties; assurance that the intrastate tariff structure is consistent with antitrust laws and can be reconciled with federal tariff requirements; and protection of the state from the adverse financial consequences that may result from the decision.”
Murkowski said March 28: “It's an issue that is legitimate and the state's going to involve itself in that issue and we'll have to see what comes out of it.
“But I don't see prospects for a windfall that I'd go out and spend,” the governor said.
| 