|
Pipeline tariffs and dismantling charges under attack Regulatory Commission of Alaska begins hearing on Tesoro protests against rates for shipping oil in trans-Alaska pipeline Kristen Nelson PNA Editor-in-Chief
The Regulatory Commission of Alaska has begun a hearing on 1997 protests by Tesoro against tariffs and dismantling, removal and restoration charges for shipping oil through the trans-Alaska pipeline.
Since a 1985 settlement between the state and the pipeline owners each owner or “carrier” of oil sets the tariff for oil it ships and submits the rates to the commission. Those rates are based on the 1985 “Taps settlement methodology” — an agreement reached between the carriers and the state of Alaska that settled years of litigation with a number of compromises, and established the method by which future tariffs would be set.
Tesoro Alaska Petroleum Co. objected to the 1997 tariff rates. Tesoro has been joined by Williams Alaska Petroleum Inc. and the Public Advocacy Section of the Regulatory Commission of Alaska.
The carriers have been joined by the state of Alaska; Williams Alaska Pipeline Co. is represented separately.
In opening arguments April 9, the trans-Alaska pipeline carriers told the RCA that tariff rates are “just and reasonable” and lower than they would have been without the 1985 settlement agreement. The other side, the carriers said, is trying to “cherry pick” pieces of the settlement which favor their position. The carriers said there is no legal justification for selective enforcement of the settlement because it was negotiated as a package and outside the package its separate elements have no meaning.
State wants to stick with settlement The state of Alaska, aligned with the carriers, told the RCA the state wants the settlement to continue. The settlement, which followed years of litigation over tariff rates between the carriers and the state, achieved what the state wanted, setting a ceiling for tariffs, and the state said the methodology has performed better than it expected in 1985.
The state also said that while the commission has the right to challenge the rates, if it does so, it has to start from scratch and set rates — it can’t just pick parts of the settlement agreement.
Are rates just and reasonable?
Tesoro said it is asking the commission for just and reasonable rates and said the Taps methodology settlement is only involved because the carriers have brought it into the proceeding. Tesoro is not part of the settlement, it told the RCA, and said as a shipper it wants the commission to set the rates.
Williams Alaska Petroleum told the commission its argument was not the same as Tesoro’s. Williams said it is asking the RCA to look at the settlement. The carriers have recovered their investment in the pipeline already, Williams argued, and the tariff should now be changed and based on a management fee.
Williams noted a number of issues including: throughput higher than projected in 1985, life of pipeline will be longer; and inflation rate needs to be changed to actual. Settlement not approved by commission The Public Advocacy Section of the RCA said the commission was being told that without the methodology settlement there will have to be a rate case. But that’s where this is headed, the section said.
The commission’s legal authority to change the settlement was questioned, but its advocacy section told it a court will not second guess a decision in the “zone of reasonableness” — if you do it right, the court will defer to you.
The staff of the RCA’s predecessor, the Alaska Public Utilities Commission, opposed the 1985 settlement, but was ignored because it did not have a vested economic interest.
But, the advocacy section argued, we have a professional interest in accurate rate making.
| 