CEA wants to increase Beluga gas price

Alan Bailey

for Petroleum News

Anchorage-based Chugach Electric Association has filed a request with the Regulatory Commission of Alaska for approval of an increase in the price of the fuel gas that the utility obtains from the Beluga gas field. Chugach Electric wants to increase the price of the gas from $3.64 to $4.50 per Mcf. As majority owner of the Beluga field, the utility can obtain relatively cheap gas from the field for its power generation. The utility passes the cost of the gas through to its customers as a component of the price of its electricity.

Hilcorp Alaska, the other field owner, operates the field.

Chugach Electric’s Beluga gas price is determined using what is referred to as the gas transfer price, or GTP. The components of the GTP include the utility’s share of the cost of operating the gas field, a margin for the investment in the field, interest expenses, and the recovery of costs assigned to the future anticipated field dismantlement, removal and restoration.

The result of the requested GTP increase would be a 1.7% increase in the residential electricity bills in Chugach Electric’s South District, and a 1.9% increase in the North District. The price impact for retail customers in the City of Seward would be consistent with the impact to the utility’s retail customers in Anchorage, Chugach Electric told the commission.

In its RCA filing the utility said that it needs to increase the GTP in part because a recent study has projected lower remaining gas reserves in the Beluga field and, hence, a shorter economic field life. In addition, the estimated costs of future field dismantlement, removal and restoration have increased, while a loss during 2022 in the investment fund holding the savings to cover these costs has also impacted the needed level of contributions to this fund.

On the other hand, anticipated increases in Beluga field operating costs will be offset by higher field production levels, Chugach Electric told the commission.

In May the RCA approved on an interim basis a GTP increase to $3.64 per Mcf to cover the cost of the forward funding of Beluga field capital improvement projects.

- ALAN BAILEY