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Enstar rate increase hearing hits bump State attorney general objects to filing of additional cost items gas utility wants to include in argument for increasing fees Alan Bailey Petroleum News
As a rate case before the Regulatory Commission of Alaska moves forward, in which Enstar Natural Gas Co. wants to increase the fees it charges for shipping gas through its pipeline network, parties in the case have been jostling over the scope of evidence that Enstar can use to justify its position.
The Southcentral Alaska utility, the primary supplier of natural gas for residents and businesses in the region, wants to increase its transportation rate by 20.3 percent - the commission has already allowed a 3.75 percent interim increase that would be refunded if the rate increase is ultimately denied.
Enstar filed its tariff advice for the rate increase in September, saying that this would be the first increase in its rates since 2010 and that, given new costs that the utility has had to incur, the rate increase would restore the company’s return on its equity to the level approved in its last rate increase.
The rate increase relates to Enstar’s transportation fees and is separate from the cost of the gas that the utility ships through its pipelines.
Additional costs On April 1 Enstar filed some additional costs that it wants to be considered as part of its case. But the state attorney general objected to this filing, saying that there was insufficient time for the state’s Regulatory Affairs and Public Advocacy section to evaluate the new cost data, given the hearing schedule.
“Adding this substantial amount of new information at this late date prejudices RAPA by greatly reducing the time period for RAPA to investigate, including shortening the time for conducting sufficient discovery along with any needed follow-up discovery,” wrote Steve DeVries, chief assistant attorney general, in an April 3 filing with the commission.
Chugach Electric Association and Matanuska Electric Association subsequently registered their support for the attorney general’s position.
The commission had previously set a schedule for the tariff hearing, with a closing date of April 27 for interested parties to obtain documents and information from Enstar, and a date of May 13 for filings by the attorney general and other responders in the case. Enstar will then have an opportunity to investigate claims made by the attorney general and others before replying to those claims by June 26.
In its original tariff filing Enstar said that additions to its “rate base,” the costs used to justify rate levels, include the cost of improvements to the utility’s pipeline infrastructure; some upcoming upgrade projects; the cost of storing gas in the Cook Inlet Natural Gas Storage facility on the Kenai Peninsula, and the required replacement of a portion of a pipeline between Kenai and Anchorage. In its April 1 filing the utility asked to add final cost estimates for three projects which had previously been listed in prefiled testimony. The utility also wanted to add the estimated cost of a project for the construction of a pipeline to provide a new connection between the Kenai Peninsula storage facility and Enstar’s pipeline network - Enstar says that it had also provided information about this project in prefiled testimony.
In addition, Enstar said that in October it had to replace the gas pipeline crossing of the Beluga River, after discovering that river erosion had exposed the existing pipeline. The cost of that project should be included in the tariff case, Enstar argued.
Commission order On April 16 John Wood, chief administrative law judge for the commission, issued an order saying that Enstar’s April 1 filing should be struck from the record for the case, unless Enstar was willing to allow an extension to the statutory deadline by which the tariff hearing must be completed. And on April 24 Enstar declined to consent to the deadline extension, thus causing the April 1 filing to be removed from consideration. While objecting to the terms of Wood’s April 16 order, Enstar said that a delay to the commission proceedings would perpetuate the under recovery of Enstar’s costs.
“In striking this testimony, the commission is denying Enstar the opportunity to introduce relevant evidence of over $7 million of capital expenditures incurred on plant that will be in service well prior to the statutory deadline applicable to this case,” wrote Matthew Findley, Enstar’s attorney.
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