Regulatory Commission of Alaska

Technical Conference on Natural Gas Pricing

At its July 29, 2009 public meeting, the Regulatory Commission of Alaska (RCA) announced its intent to hold a technical conference on natural gas pricing.  We contacted affected and interested entities by email to assess their interest in and availability for the technical conference.  This letter clarifies the RCA's purpose for holding a technical conference to discuss natural gas pricing, and sets the date and time for the technical conference.

The purpose of the technical conference is the voluntary exploration of regulatory approaches that will make the RCA review process for natural gas supply contracts more predictable and straight-forward for utilities and producers.  Participants are encouraged to be prepared to discuss natural gas pricing guidelines that would allow a predictable regulatory review process while also ensuring affordable prices for natural gas consumers.   While participants are invited to propose alternative approaches to natural gas pricing, possible approaches may include:

·     adopting a “safe harbor” pricing mechanism that allows contracts falling within pre-defined limits to be approved with minimal RCA review;

·     adopting rate indices that serve as a benchmark for Cook Inlet gas;

·     allowing the use of seasonal pricing for natural gas; or

·     the possibility of price add-ons for storage capacity provided by a producer.

Participants are also invited to discuss the possibility of potential legislative changes to RCA enabling statutes governing the review of natural gas supply contracts.  One alternative is to jointly request that the legislature review pricing mechanisms for Cook Inlet gas and adopt a pricing methodology to guide future RCA review of natural gas supply contracts.

The RCA has chosen the technical conference format to facilitate an informal and open exchange between utilities and natural gas producers of appropriate guidelines for natural gas supply contracts.  This format should provide interested and affected entities the opportunity to express their concerns and suggestions regarding the regulatory review process.

The technical conference will be held September 16, 2009 at 9:30 a.m. in the RCA's East Hearing Room, located at 701 West 8th Avenue, Suite 300, Anchorage, Alaska. Telephonic participation is available for those that cannot attend in person.  The duration of the technical conference will depend on the level of participation, with the possibility of continuing late into the afternoon.