Providence withdraws from Beluga hearing

ALAN BAILEY

Petroleum News

Providence Health and Services, the owner of Providence Hospital and its associated medical services, has informed the Regulatory Commission of Alaska that it is withdrawing from the commission docket reviewing Municipal Light & Power and Chugach Electric Association’s proposed purchase from ConocoPhillips of part of the Beluga River gas field in Cook Inlet. ML&P and Chugach Electric have asked the commission for expedited approval of their gas field purchase.

Providence, a major consumer of electricity in ML&P’s service area, had filed to participate in the docket but now says that the expedited schedule does not allow sufficient time to resolve an issue relating to contracting legal counsel in the case. Apparently, the company’s existing counsel has a conflict of interest in the case, as have other Anchorage-based lawyers with appropriate experience. There is insufficient time to bring a new counsel up to speed in the issues involved, Providence told the commission.

Providence questions the advisability of using an ML&P accumulated revenue fund to purchase some of ConocoPhillips’ Beluga field interests, especially given the cost of building a new ML&P power plant in Anchorage. The cost of the new plant will increase Providence’s electricity rates by 90 percent in the next two years - the fund would be better used to relieve that rate shock rather than for the gas field purchase, Providence told the commission. Providence also questioned the way in which the expedited schedule would move the Beluga purchase case ahead of another case involving the use of the ML&P fund.

ML&P and Chugach Electric see their purchase of part of the Beluga gas field as bringing long term benefits to their customers through the consequent availability of fuel gas for power generation at below market pricing. ML&P has already owned a part of the field since 1996 and has said that this ownership has resulted in an estimated savings for its ratepayers of $239 million in fuel costs.

In requesting an expedited decision in the Beluga field purchase case, the utilities told the commission that an early decision was needed to satisfy the timing conditions of the purchase; to enable Chugach Electric to use some gas production tax credits to the benefit of its customers; to gain operational benefits from the transition of the operatorship of the field from ConocoPhillips to Hilcorp Alaska; and to enable the capture of the benefits of field acquisition as soon as possible.