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RCA allows ADR for KBPL tariff revision Alternative dispute resolution for Kenai Beluga Pipeline tariff increase; settlement conference, mediator, settlement judge named KRISTEN NELSON Petroleum News
Kenai Beluga Pipeline requested a substantial tariff increase in late May and in early June filed a petition requesting alternative dispute resolution procedures, including appointment of a mediator.
The tariff, an increase from 29.15 cents per thousand cubic feet to 63.98 cents per mcf, was suspended in a late June order and a temporary rate established equal to the filed rate, subject to refund of the difference between the temporary rate and a rate established by RCA at the conclusion of the proceedings.
The new rate went into effect July 1.
The commission, in an Aug. 9 ruling, granted petitions to intervene by Agrium U.S., Tesoro Alaska Co., Enstar Natural Gas Co., Matanuska Electric Association, Homer Electric Association, Alaska Electric Energy Cooperative, Municipal Light and Power, AIX Energy and a late-filed petition to intervene by Chugach Electric Association. RCA had invited the participation of the Alaska Attorney General.
ADR In addition to opposition to the increase in tariff rate, which KBPL told the commission was necessary to recover its $21.45 million cost of service, and said at the current rate of 29.15 cents per mcf it would recover only $9.77 million, an under-recovery of 119 percent, based on project annual throughput of 33,531,740 mcf, the commission also received opposition to the use of ADR. Those opposing included Tesoro, Agrium, the Alaska Attorney General and Homer Electric. Enstar filed partial opposition and ML&P filed non-opposition.
KBPL told the commission its tariff revision was filed in compliance with an existing settlement agreement and said terms were the result of a mediation process instituted by the commission. It said mediation leading to the existing settlement included informal discovery procedures under the supervision of mediator Blythe Marston, and requested that Marston be appointed the mediator in this proceeding and that similar informal discovery procedures be allowed.
Those opposing ADR argued that the request for ADR was premature and that formal discovery and investigation of KBPL’s revenue requirement was necessary prior to attempting ADR process. The commission said they received substantially the same general arguments, in addition to specific arguments from individual parties, that the subject matter was too complex and the timing for the request of ADR did not give the participants the opportunity to adequately prepare.
KBPL’s response KBPL told the commission that if mediation took place only after formal discovery that would eliminate one of the greatest cost-savings to be achieved through mediation, contending that formal discovery is costly because requests can be more broadly worded and burdensome than necessary to obtain required information. It noted that when Enstar filed its most recent rate case it proposed an increase in rate case cost from $1 million in 2014 to an estimated $1.8 million, citing high cost of discovery in the 2014 case, including production of 28,000 pages of documents.
KBPL also noted that RCA has allowed mediation prior to formal discovery in three prior pipeline dockets.
RCA decision RCA said it was not persuaded by arguments against ADR at this stage of the proceedings. “It is difficult to comprehend that it would be beneficial to either the pipeline or its ratepayers to have the parties engage in a lengthy and costly discovery process without first attempting to resolve any or all of the issues through voluntary information exchange and mediation.”
It also said it does not appear that issues in this docket are more numerous or complex than those in proceedings where mediation has been successful.
The commission said KBPL has filed testimony supporting its revenue requirement study and in comments and pleadings parties have identified issues they believe require further investigation. It also said “KBPL has clearly indicated its willingness to provide information necessary to resolve the issues raised in the comments and pleadings and any other issues that may arise in this proceeding.”
The commission said it was granting KBPL’s request for ADL procedures and for the appointment of a mediator. Marston is appointed as mediator, the commission said, is also appointed settlement judge and “authorized to conduct settlement efforts for so long as those efforts are productive in her sole discretion.”
The initial settlement session will begin Sept. 20 and continue, if necessary, through Sept. 23, with further sessions scheduled by the mediator/settlement judge if she believes informal resolution of any or all issues is possible.
The commission said the dates set for the initial session allow parties more than six weeks to prepare for ADR.
The parties have until Sept. 12 to provide Marston with a statement of issues and she will provide a settlement report to the commission within five days of the conclusion of the initial settlement session, to inform the commission of any additional information that should be provided to the commission and whether additional sessions will be scheduled.
If the parties cannot agree on any or all of the issues, the commission requires them to work with Marston to identify unresolved issues for hearing and to agree to a procedural schedule for facilitating resolution of the docket.
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