Chugach Electric Association said today it has secured a new supply of natural gas to fuel its Anchorage-region power plants, signing a seven-year contract with Conoco Phillips, a major gas producer in Cook Inlet. The contract will mean Chugach has enough gas to meet all its needs through April 2011, half its needs from June 2011 through 2015, and about one-quarter of its demand in 2016, the Anchorage electric company said.

In all, Chugach expects to buy 66 billion cubic feet of gas under the contract.

Most of the gas will be priced according to a Lower 48 index, Chugach said. Local natural gas prices once were independent of Lower 48 prices, but in recent years the gas producers have tried, with some success, to link the Alaska price to what historically have been higher Lower 48 prices. Utility companies that buy natural gas, such as Chugach, pass the price along to their customers. Chugach said the price it negotiated "will result in the most competitive price, on average, of any price formula presented to the RCA (the state regulators) during the past decade for a major gas contract."

As part of its deal with Conoco, Chugach has agreed to withdraw its appeal of last year's federal approval for Conoco and its partner Marathon Oil to continue exporting liquefied natural gas from a plant at Nikiski, Chugach said. That plant is the largest consumer of Cook Inlet-area natural gas, and Chugach had argued that Southcentral Alaska natural gas needs should be ensured before exports are allowed. If the LNG plant isn't taking gas, Chugach might get a lower price for the gas it buys.

State officials helped mediate the contract terms, Chugach and the governor's office said.

The Regulatory Commission of Alaska must approve the new contract.

Chugach is the state's largest electric company. It serves homes and businesses in parts of Anchorage and sells electricity to other power companies from Homer to Fairbanks.

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