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Regulatory commission working on changes RCA’s goal to be more responsive to industry, ratepayers and state of Alaska; one area of focus pipelines Kristen Nelson Petroleum News Editor-in-Chief
The Regulatory Commission of Alaska is working on making changes, including changes in its internal processes and changes in how it works with the utilities and pipelines it regulates, the commission’s chair, Kate Giard, told legislators Feb. 11.
The commission plans to bring some minor changes to the Legislature this year, with more major changes next year, but is concerned about what the Legislature may do once it has proposed RCA changes before it.
The commission is working with regulated utilities, ratepayers and state agencies on what changes are needed, Giard told the Alaska Legislature’s Senate and House Resource committees at a joint meeting in Kenai, and wants to find a way to work with the Legislature on implementing necessary statutory changes, she said. Commissioners ready to make changes Giard said that when she ran for chairman of the commission last year — the five commissioners select one of their number as chairman each year — it “was because I saw the regulatory agency of Alaska as being an agency that had tremendous potential but missed the mark almost all the time.”
The present commissioners — two accountants, an engineer, a lawyer and an oil and gas industry expert — “are ready and committed to making the changes necessary to make the Regulatory Commission of Alaska far more responsive to the needs of industry, to the needs of the ratepayers and to the needs of the state of Alaska,” Giard said.
Since she became chair on July 1 the commission has created a “2005 improvements initiative” and is working on internal improvements, on improvements that affect utilities and on improvements that affect pipelines.
Giard talked to the legislators, who were in Kenai to hear from the Cook Inlet oil and gas industry, about the pipeline initiatives.
Starting in October, Giard went out and met with companies involved in pipelines in Alaska.
“I started with John Barnes (of Marathon Oil),” she said. “And it was a very challenging conversation because he’s quite frank about the cost of the regulatory environment in the state of Alaska.”
Giard said she also had “a challenging conversation” with the owners of the trans-Alaska oil pipeline. Challenges identified In early December the commission held a scoping meeting, inviting chief executive officers of pipelines and oil and gas shippers as well as state agencies. At that meeting, Giard said, “we presented to them our proposal for how we should work together and some of the challenges that I heard about talking to them.” Those challenges include: overlapping jurisdiction between RCA and state agencies; concurrent jurisdiction with the Federal Energy Regulatory Commission; role of the RCA in state-negotiated rate stipulations; lack of clarity in the tariff process; regulatory costs; lack of regulatory framework; and standards for intervention.
The commission may need the Legislature’s help to resolve overlapping jurisdiction with state agencies, she said. Once the governor’s office has approved state agency participation there will be a jurisdictional review. Likely agencies include RCA, the departments of Natural Resources and Revenue, the Joint Pipeline Office and the Attorney General. Industry partners will provide a white paper on specific areas of overlap for analysis.
RCA staff is meeting with FERC to identify overlap issues and to determine where FERC jurisdiction ends and state jurisdiction begins, “so that there aren’t any areas that are not covered by some type of regulatory oversight.”
Within the state, Giard said, there is a lack of clarity in the tariff process: It can take years and can cost millions. That process needs to be improved, she said, “so that pipeline companies when they go to make an investment, already know in advance some of the key criteria” that will go into setting a tariff. Pipeline companies filing tariffs today have “no known framework” for some of the calculations that go into the tariff.
RCA commissioners will be meeting again with the industry group to form working committees and identify timelines, she said, and regulations working groups will begin meeting in February. Internal work Over the next nine months the commission will be working with industry, ratepayers and the public to determine “what do we need to do to improve the regulatory environment.”
In addition to a jurisdictional review between state agencies and identifying areas where “RCA could sit concurrently with FERC,” the commission also told industry it would make changes within RCA “in 2005 to make the regulatory environment better.”
One thing the commission will look at is alternative dispute resolution. The FERC uses this, she said, but RCA does not.
The changes RCA plans this year are in its internal processes, she said: The commission needs a software system for its caseload.
“I can’t tell you as the chairman of the regulatory commission how many cases we have on any given day, who’s assigned and what our staff are doing.”
This year the commission will bring the Legislature “very minor changes in statute” including a funding mechanism for a system at the commission. The commission is required by law to have a time management system, she said: “We don’t. We’re trying to come into compliance with the law, but we need to buy one…” Major changes next year In 2006, Giard said, the commission would bring to the Legislature needed statutory changes identified in its work with industry, ratepayers, the public and state agencies.
And that, she said, makes the commission nervous. The Legislature, she noted, discussed disbanding the commission in 2003, but instead gave the commission a four-year sunset. The commission fears that when it comes to the Legislature next year to ask for statutory changes, “that all of a sudden the door is opened” and “there will be a Christmas tree approach” to changes.
What the commission wants to do, she said, is to bring some minor changes forward this year, with more major changes to follow next year. The commission wants to find a mechanism to work with the Legislature based on the working group it has formed.
“We are working with the industry,” she told legislators. “We understand those problems in the regulatory commission. These are the steps that we would like to take to fix those problems.”
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