CINGSA appeals Regulatory Commission decision

Editor’s note: this story has been changed to remove an incorrect citation of Alaska State Code and to correct inaccurate information about the division of profits between CINGSA and its clients in the appealed Regulatory Commission decision. 

Cook Inlet Natural Gas Storage Alaska (CINGSA) is contesting a revenue-sharing scheme that would allow it to sell 2 billion cubic feet of natural gas found in its underground storage facility if it gives 61.1 percent of the revenue to its client utilities.

CINGSA is appealing for the Alaska Superior Court to overturn a Dec.4, 2015 decision by the Regulatory Commission of Alaska, the state entity that monitors public utilities. The Regulatory Commission allowed CINGSA to sell 2 billion cubic feet of the 14.5 billion cubic feet of gas it had discovered while drilling a storage well in 2012 and keep 13 percent of the profits. The rest would be divided among the four utilities that hold 20-year contracts to store gas in the CINGSA facility — Homer Electric Association, Anchorage’s Municipal Light and Power, Chugach Electric Association, and CINGSA’s sister company ENSTAR — according to the percentage of stored gas each owns.

CINGSA representatives had earlier argued before the Regulatory Commission that their company had sole property rights over the gas and could sell it as they wished, and later presented a scheme in which CINGSA split profits with its clients half and half. The Regulatory Commission rejected both after hearing arguments from the client utilities that their investments in CINGSA storage contracts had made the facility — and the discovery — possible, and that the removal of the found gas would decrease well pressure required to extract stored gas, constituting a risk deserving a return in revenue from the gas sale.

CINGSA and ENSTAR spokesperson Lindsay Hobson said CINGSA would argue its original contention: that it has a right to all the revenue from the gas it found.

“We’re appealing on the basis of our litigation position, and our litigation position was 100 percent of the proceeds of CINGSA’s asset to remain with CINGSA as the property owner,” Hobson said.

CINGSA’s statement of points on appeal contends that in creating the revenue-sharing scheme it did, the Regulatory Commission “effectuated an unconstitutional taking without just compensation by ordering CINGSA to distribute to third parties proceeds of the sale of assets undisputedly owned by CINGSA” and that it did so “without reference to any law or legal principle.”

The appeal was filed Jan. 4 and initially assigned to Judge Catherine Easter, who was peremptorily disqualified after a motion by CINGSA attorney Matthew Findley. Alaska court rule allows a party to a lawsuit to disqualify a judge. The case was then assigned to Judge Pamela Washington, who was similarly disqualified by a motion from ENSTAR attorney David Shoup. As of Tuesday afternoon, the case is assigned to Judge Eric Aarseth.

Hobson said CINGSA had not estimated the value of the 2 billion feet of natural gas.

“Right now, with prices, it’s too speculative for us to say the value of something we can’t sell today,” Hobson said.

 

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

More in News

Sen. Shelley Hughes, R-Palmer; Senate President Peter Micciche, R-Soldotna; Sen. Gary Stevens, R-Kodiak and Sen. Click Bishop, R-Fairbanks, spoke to reporters Tuesday, Jan. 25, 2022, immediately following Gov. Mike Dunleavy’s State of the State address. Members of the Senate Republican leadership said they appreciated the governor’s optimism, and hoped it signaled a better relationship between the administration and the Legislature. (Peter Segall / Juneau Empire)
Lawmakers welcome tone change in governor’s address

With caveats on financials, legislators optimistic about working together

COVID-19. (Image courtesy CDC)
COVID deaths, hospitalizations climb statewide

The total number of statewide COVID deaths is nearly equivalent to the population of Funny River.

A fisher holds a reel on the Kenai River near Soldotna on June 30, 2021. (Photo by Ashlyn O’Hara/Peninsula Clarion)
Restrictions on sport fishing announced

The Alaska Department of Fish and Game announced summer sport fishing regulations Wednesday

Community agencies administer social services to those in need during the Project Homeless Connect event Soldotna Regional Sports Complex in Soldotna on Wednesday, Jan. 26, 2022. (Camille Botello/Peninsula Clarion)
‘It’s nice to be able to help folks’

Project Homeless Connect offers services, supplies to those experiencing housing instability

Kenai Peninsula Borough Mayor Charlie Pierce attends the March 2, 2021, borough assembly meeting at the Betty J. Glick Assembly Chambers at the Borough Administration Building in Soldotna, Alaska. (Photo by Ashlyn O’Hara/Peninsula Clarion)
Former talk-show host to manage Pierce gubernatorial campaign

Jake Thompson is a former host of KSRM’s Tall, Dark and Handsome Show and Sound-off talk-show

Deborah Moody, an administrative clerk at the Alaska Division of Elections office in Anchorage, Alaska, looks at an oversized booklet explaining election changes in the state on Jan. 21, 2022. Alaska elections will be held for the first time this year under a voter-backed system that scraps party primaries and sends the top four vote-getters regardless of party to the general election, where ranked choice voting will be used to determine a winner. No other state conducts its elections with that same combination. (AP Photo/Mark Thiessen)
How Alaska’s new ranked choice election system works

The Alaska Supreme Court last week upheld the system, narrowly approved by voters in 2020.

Gov. Mike Dunleavy speaks to a joint meeting of the Alaska State Legislature at the Alaska State Capitol on Tuesday, Jan. 25, 2022, for his fourth State of the State address of his administration. Dunleavy painted a positive picture for the state despite the challenges Alaska has faced during the COVID-19 pandemic and its effects on the economy. (Peter Segall / Juneau Empire)
Gov points ‘North to the Future’

Dunleavy paints optimistic picture in State of the State address

A COVID-19 test administrator discusses the testing process with a patient during the pop-up rapid testing clinic at Homer Public Health Center on Tuesday, Jan. 25, 2022. (Photo by Sarah Knapp/Homer News)
Free rapid COVID-19 testing available in Homer through Friday

A drive-up COVID-19 testing clinic will be held at Homer Public Health Center this week.

In this Sept. 21, 2017, file photo, former vice presidential candidate Sarah Palin speaks at a rally in Montgomery, Ala. Palin is on the verge of making new headlines in a legal battle with The New York Times. A defamation lawsuit against the Times, brought by the brash former Alaska governor in 2017, is set to go to trial starting Monday, Jan. 24, 2022 in federal court in Manhattan. (AP Photo/Brynn Anderson, File)
Palin COVID-19 tests delay libel trial against NY Times

Palin claims the Times damaged her reputation with an opinion piece penned by its editorial board

Most Read