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ANGDA asks for pipeline statute hearing Board asks RCA to begin public process for proposed changes to open season provisions of statutes for North Slope gas pipeline Kristen Nelson Petroleum News Editor-in-Chief
The Alaska Natural Gas Development Authority has asked the Regulatory Commission of Alaska to consider changes the authority’s board believes are necessary to statutes governing a natural gas pipeline from the North Slope. The authority is particularly concerned about the in-state open season process and about how rates for intrastate transportation would be set. It is also recommending that if a line were built by a public utility, that utility should be exempt from RCA regulation.
Andy Warwick, the board’s chairman, said at the board’s Aug. 1 meeting that the authority has been “looking at issues that may be impediments” to either a spur line to Cook Inlet from a North Slope gas pipeline or the fallback position the authority is looking at in the event no major North Slope gas pipeline is built — a smaller line from the North Slope to Cook Inlet.
Initially, said Deputy Commissioner of Revenue Steve Porter, ANGDA looked at changes that would exempt it, as another state body, from the RCA’s authority.
Porter said he asked Harold Heinze, the authority’s chief executive officer, to look at changes to meet the needs of other entities as well as ANGDA. In July correspondence to the RCA Heinze listed entities such as the state as a limited liability corporation, electric utilities and future gas distribution or electric utilities in communities along the main or spur gas lines.
The commission’s chair, Kate Giard, attended the Aug. 1 meeting. She told the board that the commission would public notice proposed statutory changes, ask for comments, hold a hearing and at the end consider all the information it received and vote on whether to recommended changes in statute to the Legislature. Proposed statutory language is necessary, she said, in order to get meaningful public response.
Heinze said the authority would like to have proposed changes to take to the Legislature in the special session that considers a contract, and Giard said the commission would work with the authority to begin its public process as quickly as possible, although she said completing work before a special session is called depends on when the session occurs. Heinze said the authority could get proposed statutory language drafted by Aug. 5, and Giard said she would get the process on the commission’s calendar. State pipeline act concerns The concerns the authority has are in the state’s pipeline act, AS 42.06. The first issue Heinze noted in correspondence to the commission is that when the commission issues a certificate of public convenience and necessity authorizing construction of a North Slope natural gas pipeline, that certificate sets out the total amount of gas the line is allowed and required to transport, an amount which is dependent on response to an RCA open season and is based largely on firm transportation commitments.
But, Heinze said, some communities in Alaska that might make use of natural gas in the future might not be in a position to sign gas supply contracts today. And under state statute once the amount of gas to be transported is established in the certificate, any decision to increase the amount of gas to be transported rests entirely with the pipeline owner/operator. Heinze noted that if, for example, Fairbanks 10 years down the road establishes an extensive gas distribution system, it could have problems getting gas.
A second issue is that current statute requires that intrastate rates be set as if the intrastate portion of the pipeline were a utility. “It is unclear exactly how this provision would operate or what it is intended to guard against,” Heinze said. He said ANGDA is considering a rate design for a spur pipeline “never implemented or proposed by any 42.05 utility in the state. Pipelines transporting North Slope natural gas should have as many creative financing and cost recovery options available as possible,” he said.
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