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

LaDawn Druce asks Sen. Jesse Bjorkman a question during a town hall event on Saturday, Feb. 25, 2023, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
District unions call for ‘walk-in’ school funding protest

The unions have issued invitations to city councils, the borough assembly, the Board of Education and others

tease
House District 6 race gets 3rd candidate

Alana Greear filed a letter of intent to run on April 5

Kenai City Hall is seen on Feb. 20, 2020, in Kenai, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)
Kenai water treatment plant project moves forward

The city will contract with Anchorage-based HDL Engineering Consultants for design and engineering of a new water treatment plant pumphouse

Students of Soldotna High School stage a walkout in protest of the veto of Senate Bill 140 in front of their school in Soldotna, Alaska, on Wednesday, April 17, 2024. (Jake Dye/Peninsula Clarion)
SoHi students walk out for school funding

The protest was in response to the veto of an education bill that would have increased school funding

The Kenai Courthouse as seen on Monday, July 3, 2023, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Clam Gulch resident convicted of 60 counts for sexual abuse of a minor

The conviction came at the end of a three-week trial at the Kenai Courthouse

The Kenai Peninsula Borough Assembly meets in Seward, Alaska, on Tuesday, April 16, 2024. (screenshot)
Borough awards contract for replacement of Seward High School track

The project is part of a bond package that funds major deferred maintenance projects at 10 borough schools

Kenai Peninsula Education Association President LaDawn Druce, left, and committee Chair Jason Tauriainen, right, participate in the first meeting of the Kenai Peninsula Borough School District’s Four Day School Week Ad Hoc Committee on Wednesday, Jan. 10, 2024, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
4-day school week committee talks purpose of potential change, possible calendar

The change could help curb costs on things like substitutes, according to district estimates

A studded tire is attached to a very cool car in the parking lot of the Peninsula Clarion in Kenai, Alaska, on Monday, April 15, 2024. (Jake Dye/Peninsula Clarion)
Studded tire removal deadline extended

A 15-day extension was issued via emergency order for communities above the 60 degrees latitude line

A sign for Peninsula Community Health Services stands outside their facility in Soldotna, Alaska, on Monday, April 15, 2024. (Jake Dye/Peninsula Clarion)
PCHS to pursue Nikiski expansion, moves to meet other community needs

PCHS is a private, nonprofit organization that provides access to health care to anyone in the community

Most Read