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RCA accepts parties’ agreement on tariff
Glacier subsidiary Cook Inlet Energy now party to CIPL settlement agreement; cost of cross-inlet pipeline to be spread over 5 years Kristen Nelson Petroleum News
The Regulatory Commission of Alaska has accepted an agreement among the parties amending the Cook Inlet Pipe Line settlement agreement and establishing rates for 2018 and 2019.
RCA said the original settlement agreement between the state and CIPL dates to 2001, establishing a settlement methodology for calculating the annual rates on the CIPL pipeline. The agreement has been amended since, and CIPL has annually filed tariff revisions using the Cook Inlet settlement methodology since 2002.
CIPL filed its 2018 rates Dec. 1, 2017, proposing to increase the intrastate transportation rate for crude from Granite Point to the CIPL Drift River Terminal from $3.35 per barrel to $4.59 per barrel, with a requested effective date of Jan. 1, 2018.
In response to a public notice Glacier Oil and Gas filed comments and requested suspension of the new tariff and an investigation into the proposed rate.
RCA said it suspended the proposed rate and established a temporary rate equal to the filed rate, subject to refund with interest.
Alaska’s Office of the Attorney General, Regulatory Affairs and Public Advocacy Section, RAPA, and Glacier Oil & Gas Corp. chose to participate, and on Dec. 3, CIPL, Glacier and RAPA filed a stipulation, including a joint application for a fifth amendment of the amended 2001 settlement agreement.
The parties told the commission that its acceptance of the stipulation and the fifth amendment would resolve all disputed issues in the proceeding, and filed a motion for expedited consideration, requesting a ruling by Dec. 20. RCA issued its order Dec. 19.
Calendar year 2018 tariff Under the stipulation the transportation rate for 2018 is set at $3.77 per barrel. CIPL said the reduction from the originally requested $4.59 “is primarily a result of extending the projected life of the line from 2026 to 2038” as provided in the fifth amendment to the settlement agreement.
Refunds, with interest, will be payable to CIPL shippers.
The parties also agreed that costs associated with the cross-inlet pipeline project will be amortized over five years beginning in 2019, leveling CIPL’s rates and avoiding a spike in those rates which would have occurred if the cross-inlet costs were included under the terms of the settlement agreement prior to the fifth amendment.
RCA said the agreed-upon starting point for the rate base was the end of 2017, the time period before CIPL incurred the bulk of costs associated with the cross-inlet pipeline project.
Upon RCA acceptance of the fifth amendment and the stipulation, CIPL told the commission it would withdraw its proposed 2019 tariff of $8.98 per barrel and replace it with a rate calculated under the stipulation and the fifth amendment - that rate is anticipated to be $5.61 per barrel.
The fifth amendment adds Glacier’s subsidiary Cook Inlet Energy as a party to the settlement agreement. In the stipulation agreement, the parties said the settlement agreement “provides mechanisms for obtaining advance information about CIPL cost inputs to the Settlement Agreement’s rate methodology and an ability to meet and discuss any disputes about the cost inputs before annual rates are filed, lessening the number of disputes and the need for formal discovery.”
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