CIPL defends shipping rate increase

Cook Inlet Pipe Line Co. is standing by its recent rate increase.

The Hilcorp Alaska LLC subsidiary believes the Regulatory Commission of Alaska correctly approved the increase despite the objections of Cook Inlet Energy LLC.

The higher rates went into effect at the start of 2015.

A 2010 settlement required Cook Inlet Energy to “make good faith efforts to avoid litigation” - something that never happened, according to Cook Inlet Pipe Line.

The commission approved the increase because the 2010 settlement between Cook Inlet Energy and Cook Inlet Pipe Line prevented Cook Inlet Energy from challenging any changes to shipping rates calculated under the terms of a 2001 settlement agreement.

Cook Inlet Energy disagreed. Because the 2010 settlement agreement expired at the end of 2014, the provision requiring the company to accept rates was no longer in effect.

But because Cook Inlet Pipe Line proposed its rate increase in mid-December, two weeks before the settlement expired, the company believes Cook Inlet Energy was bound by those terms at the time. “A good faith attempt to avoid litigation was in effect at the time (Cook Inlet Energy) filed its comment, and (Cook Inlet Energy) neither made a good faith attempt nor explained why it thought it was no longer obligated to do so,” Harvest Alaska LLC Commercial Manager Rich Novcaski wrote to the commission on Jan. 13.

Harvest Alaska is a Hilcorp transportation subsidiary.

- Eric Lidji