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Alaska special session possible this summer House Speaker expects lawmakers to reconvene for gas line contract Larry Persily Petroleum News Government Affairs Editor
The speaker of the Alaska House said he did not expect MidAmerican Energy Holdings Co. would meet its March 12 target date for a fiscal contract with the state, setting out a schedule of payments in lieu of taxes for a North Slope natural gas pipeline. As such, a special session of the Legislature is possible this summer.
“I’m not sure when the gas line contracts are coming,” Speaker Pete Kott, R-Eagle River, said March 8.
The state was continuing to negotiate with MidAmerican in the days before the company’s self-proclaimed target date, Deputy Revenue Commissioner Steve Porter said March 9. Company and state officials were meeting in Anchorage.
Alaska’s Stranded Gas Development Act requires a 30-day public comment period after the state and a contract applicant reach an agreement, with legislative approval the final step. The Legislature faces a May 12 adjournment deadline, and lawmakers have said they want sufficient time to go through the details of the contract before taking a vote.
MidAmerican submitted its Stranded Gas Act application to the state just seven weeks ago, and Kott said he’s skeptical the state and MidAmerican can so quickly negotiate all of the provisions of a long-term contract in lieu of state and municipal taxes on the multibillion-dollar pipeline project.
The first face-to-face meeting of the state’s expanded municipal advisory group was just held March 10 in Anchorage. The communities are there to watch out for their own interests in a contract that would set up a system of payments in lieu of municipal property taxes. Speaker sees summer session If the deal isn’t finished soon, Kott expects lawmakers will need to reconvene. “I would hope the administration would call us into special session if that contract is available and ready for scrutiny sometime over the summer months.
“It behooves everybody to get it ratified,” Kott said.
MidAmerican officials told legislators Feb. 25 the Des Moines, Iowa-based natural gas pipeline and utility company needs state approval of its contract this spring so as not to lose time in the field this summer in Alaska. There is nothing in state law, however, that would prevent MidAmerican from doing field surveys or other preliminary work for the proposed pipeline project before reaching a fiscal deal with the state.
The company filed its application under the Stranded Gas Act on Jan. 22, a week after the major North Slope producers filed their own application for a natural gas pipeline fiscal contract.
The producers have been careful not to announce any target dates for concluding their contract talks with the state, which have been ongoing for several weeks. State contract one step in decision Neither MidAmerican nor the producers have said they definitely would build the pipeline from the North Slope to feed North American markets, even if they are successful in negotiating a fiscal contract with the state. Both applicants point to federal tax and loan incentives in the stalled energy bill as key to their decision, and MidAmerican has said it would need the producers or others to sign ship-or-pay contracts to guarantee revenue for the line before committing to construction.
MidAmerican’s pronouncement of a March 12 completion date “was based on … them getting everything they want” in the negotiations, Kott said. “I’m sure the administration is not going to give them everything they want.”
Porter declined to discuss specific issues in the negotiations. A MidAmerican official did not return a phone call for this story.
And while negotiating terms of the long-term fiscal contract, the state also is negotiating a reimbursement agreement with MidAmerican to cover the state’s costs in the Stranded Gas Act negotiations — something the producers already have signed but MidAmerican still had not accepted as of March 9, Porter said. The law only says the Revenue commissioner may require a reimbursement agreement; it does not mandate that applicants cover the state’s costs. State still looks to recover costs As of early March, the state had spent $170,000 on its contract negotiations with MidAmerican, Porter said. The state has spent $270,000 on its negotiations with the producers, billing the companies for the full amount as per the reimbursement agreement. In addition to forecasting a summertime special session, which Kott said could last a week, the speaker said the House is considering setting up a special committee to manage legislative review of the deal.
The committee could contract for experts to help lawmakers analyze the contract, he said. And although he said House leaders are considering a joint committee with the Senate, the House could go it alone if need be.
“I just wasn’t sure what another committee brings,” said Senate President Gene Therriault, R-North Pole. The Stranded Gas Act already directs the Legislative Budget and Audit Committee to coordinate public review of a draft contract, he said, and the standing committees of Finance, Resources and perhaps Judiciary also would get a look at the deal.
Therriault said he remains hopeful that state negotiators and MidAmerican can put a deal before lawmakers with enough time left in the session for legislative action.
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