Agreement reached on Cook Inlet Pipe Line

Cook Inlet Pipe Line Co., Cook Inlet Energy, the state of Alaska and the Regulatory Affairs and Public Advocacy Section in the Alaska Attorney General’s office have reached agreement on a revised tariff for the Cook Inlet Pipe Line.

The Regulatory Commission of Alaska said in a Nov. 3 order that it has accepted a stipulation between the parties, as well as the third amendment to the settlement agreement between CIPL and the state.

CIPL, owned by Hilcorp subsidiary Harvest Alaska, filed an annual rate revision for 2016 in December 2015, increasing the rate for transportation from Granite Point to the Drift River Terminal from $3.76 to $4.47 per barrel based on the 2001 Cook Inlet Settlement Methodology as amended. That methodology was based on an end of life for the pipeline of 2014 and included a 60 cent per barrel surcharge for dismantlement, removal and remediation.

Cook Inlet Energy protested the new rate and RAPA filed to participate in the docket. RAPA told RCA in January that the parties were engaged in discussions which might resolve the issues, and RCA stayed action to allow settlement discussions.

In a Nov. 3 order accepting the settlement reached by the parties in early October, RCA said it was also accepting the third amendment to the settlement agreement between CIPL and the state.

The stipulation from CIPL, CIE, the state and RAPA reduces the tariff from $4.47 per barrel to $3.18 per barrel, effective April 1, 2016. The parties said the amount was calculated using the settlement methodology with an adjusted end of life and termination of the DR&R allowance, changing the end of life for the pipeline for ratemaking purposes from 2014 to 2026 and reducing the DR&R allowance to zero, effective April 1, 2016.

RCA accepted a permanent rate of $4.47 per barrel from Jan. 1 to March 31, 2016. Beginning April 1, 2016, the rate of $3.18 is established as the permanent per barrel tariff rate.

- KRISTEN NELSON