Senate looking to lower fuel costs

Committee taking bids for $150,000 contract to study a wide range of energy issues before the next legislative session

Eric Lidji

For Petroleum News

With an eye toward the next legislative session, the Senate Finance Committee is hiring a consultant to recommend ways to lower the cost of gasoline and heating fuel in Alaska.

While previous attempts to tackle the issue have left lawmakers and policymakers floating on a sea of reports, the current effort aims to take a particularly broad look at the issue, covering almost the entire supply chain from production to residential efficiency.

A request for proposals issued in late June considers a range of energy concerns.

The final report would quantify fuel usage and pricing across Alaska over the past decade, and also compare it to markets in Washington state and the country as a whole.

The report would also examine the Alaska refining market, with an eye toward margins in recent years. Additionally, the report would consider issues such as price gouging, price regulation, economic and regulatory hurdles and potential public-private partnerships. It would also look at fuel cooperatives and the impact of bulk storage.

While those issues have been considered before, some as recently as a 2008 and 2010 state Attorney General investigation into fuel pricing in rural Alaska, the request for proposals also asks for information regarding a host of other recent hot button issues.

The contractor would also be asked to consider whether the gas processing facilities at the Prudhoe Bay unit could be reconfigured to recover propane for in-state use without harming the volumes of miscible injectant operator BP uses to enhance oil recovery. It would also consider whether BP is required to provide those volumes under its leases.

The Alaska Oil and Gas Conservation Commission recently held a hearing on that topic.

The report would also consider alternative transportation fuels in Alaska, such as the widespread use of compressed natural gas, liquefied natural gas, propane or electricity.

Following efforts in recent years to reduce consumption through efficiencies, the report would gauge the effectiveness of a weatherization program, looking both at the amount of energy saved and the number of homes still in need of weatherization work. Along similar lines, the report would study the Home Energy Rebate Program, the Low Income Heating Assistance Program and the Alaska Affordable Heating Assistance Program.

Finally, the report would consider a public program to reduce gasoline and heating fuel costs in rural areas through a program similar to Power Cost Equalization, a subsidy that aims to create parity by connecting electricity costs in urban and rural parts of the state.

The Senate Finance Committee is requesting the report through its Energy Working Group. The group will take proposals through July 19, award the $150,000 contract by Aug. 10, review drafts and comments in the fall and release a final report in January.

When the working group announced the project in April, Sen. Johnny Ellis, D-Anchorage, said previous attempts to address the issue had been “unsuccessful” because they weren’t broad enough. With the new proposal “we envision going beyond the normal channels, or what we’ve done in the past, to have a more robust aggressive look at this to get somewhere rather than just spinning our wheels with the administration.”