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Senate approves in-state gasline bill

Richard Mauer

Update, Saturday 1:15 p.m.: The House voted 34-4 on Saturday to agree to the Senate changes, sending the measure to Gov. Sean Parnell.

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Original story:

JUNEAU -- The state Senate voted Friday night to approve an $8 billion small-diameter in-state pipeline that would bring natural gas from the North Slope to Fairbanks and Southcentral Alaska.

The 15-5 vote to back the project came at 9:45 p.m. The measure now goes back to the House, which approved the bill April 1 in a 30-9 vote, to resolve relatively minor changes made in the Senate.

The Senate approval came after relatively friendly debate in which advocates on either side praised the other.

“For $330 million, this is the state’s chance to move forward,” said Sen. Lesil McGuire, R-Anchorage, referring to the amount of cash the state is putting into the project, with the rest coming from bonds. “For those of us who have been waiting so long to unlock the gas resources on the North Slope, this is a good day.”

But Alaskans, at least in Southcentral Alaska, already get gas, said Sen. Hollis French, D-Anchorage. “We deliver gas out of Cook Inlet,” he said. Consumers aren’t protected in the bill, French said, and they could find themselves paying two or three times for North Slope gas compared to what they’re paying for gas now from Cook Inlet.

The measure doesn’t mandate the project be built, but opens the way for a 36-inch diameter pipeline by making the Alaska Gasline Development Corp., now a subsidiary of the Alaskan Housing Finance Corp., its own state corporation. The bill authorizes the AGDC to finance and design the pipeline, obtain rights of way and material, and negotiate agreements with companies that want to move gas through a line. The project doesn’t require further legislative approval unless more appropriations are required or the state’s pledge is needed to repay the bonds if fees charged to gas line shipper can’t.

The project requires AGDC finding shippers able to obtain gas on the North Slope and pay to move it through the line, neither of which is guaranteed.

The line is independent of the state-supported industrial-scale TransCanada project from the North Slope to Valdez. That 48-inch line is stalled. Sen. Bert Stedman, R-Sitka, said he hoped the vote for House Bill 4 would pressure TransCanada into moving its project forward, turning the AGDC project into a spur from the big pipe and not a stand-alone line.

Before arguments began shortly before 9 p.m. over the bill, Democrats proposed a series of amendments to add oversight provisions to the bill to protect Alaskan consumers and the state as a whole. But bill supporters said the measure already had adequate protections and the amendments were turned aside.

In the first proposed amendment to House Bill 4, French said the bill could hurt Alaska gas consumers by bypassing the oversight of the Regulatory Commission of Alaska. Recalling the beginning of transportation regulation in the United States, French gave a short history lesson of the predatory pricing by the railroads that hauled grain from the Midwest in the 1800s.

The creation of the Interstate Commerce Commission in 1887 established the principle that consumers should be charged “just and reasonable rates,” French said. The gas line bill specifically bypasses the RCA, saying it must automatically assume the rates to transport gas through the line are “just and reasonable” regardless of how they were established, unless laws were broken.

“Anything short of criminal activity must be approved under this bill,” French said. “I think we should go with 125 years of protection.” But McGuire, R-Anchorage, the bill’s floor manager, said the bill already protected consumers.

“We don’t want to revert to an archaic, outdated and frankly broken model,” she said. “Alaskans need energy, they want energy — at a reasonable and fair price — but they want it and need it.”

The initial rate for shipping gas through the line will be based on project cost and will be open and published, she said. Sen. Bill Wielechowski, D-Anchorage, said Alaskans already experienced overcharges in a pipeline — the trans-Alaska oil pipeline — that cost the state billions of dollars in tax revenue.

“This bill is supposed to be about getting low-cost gas to Alaskans,” Wielechowski said. “We don’t do that when we have provision in there that allows companies to charge whatever they want.”

That amendment failed 13-7.

The closest vote — 12-8 — was on an amendment to require AGDC to use Alaska workers and businesses “to the maximum extent possible.”

McGuire said an Alaska hire provision was contained in the non-binding “intent” section of the bill, but Wielechowski, the amendment sponsor, said that wasn’t good enough. “Intent language is relatively meaningless,” Wielechowski said.

The bill’s main authors, Rep. Mike Hawker, R-Anchorage, and House Speaker Mike Chenault, R-Nikiski, watched the vote in the visitor gallery with the aide who did much of the work on the measure, Rena Delbridge.

 

 

Reach Richard Mauer at rmauer@adn.com or in Juneau at (907) 500-7388.


By RICHARD MAUER
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