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RCA approves Koch TAPS rate increase
State regulators have approved Koch Alaska’s request for higher shipping rates on the trans-Alaska oil pipeline, the third such increase for the company since December 2008.
The temporary increase went into effect on Oct. 1 and will last at least through April 1, 2011, while the Regulatory Commission of Alaska reviews Koch’s application.
If RCA rejects the application, Koch would have to refund the additional rates.
Koch can now charge $2.87 to ship a barrel of oil from the North Slope to North Pole, and $4.49 or $4.51 to ship to Valdez, depending on the final destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)
That is roughly a 12.5 percent increase over its previous rates of $2.55 per barrel to ship to North Pole and about $3.98 or $4 per barrel to ship to various points in Valdez.
Koch previously said it needed the increase to offset declining throughput on the pipeline, and that the rate increase would bring in an additional $3.4 million a year in revenue.
130 percent jump since 2008 The increase is Koch’s third in less than two years, a 130 percent jump since December 2008. Currently, all three increases are temporary and could be subject to future refunds. The most recent permanent rates approved by RCA are from 2002. Those 2002 rates, calculated under a new methodology, charge $1.25 to ship a barrel of oil from the North Slope to North Pole and $1.96 to ship to various points in Valdez.
In late August, RCA approved a near identical rate increase for ConocoPhillips, also the third in less than two years. Union Oil Co. of California and ExxonMobil currently have two temporary (and identical) rate increases each on the books. BP, the fifth and largest owner of the pipeline, did not request an increase and is still using the 2002 rates.
Earlier this year, RCA consolidated the eight rate cases from 2008 and 2009. Koch has asked that the two rate cases from this year be added to that consolidated docket.
Subsidiaries of BP, ConocoPhillips, ExxonMobil, Union Oil Co. of California and Koch each own an undivided share of the pipeline. Koch owns 3.08 percent of the pipeline.
Koch Industries also owns the Flint Hills refinery in North Pole, a facility that depends on oil from the pipeline and that has been struggling with poor economics in recent years.
—Eric Lidji
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