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

Signs protesting the annexation petition proposed by the City of Soldotna are seen along the Kenai Spur Highway, in Soldotna, on Tuesday, Oct. 21. (Photo by Brian Mazurek/Peninsula Clarion)
Annexation decision could go to voters

Boundary commission opens 7-day comment period on whether or not to send annexation to ballot box

COVID-19. (Image via CDC)
State reports more than 200 new cases, again

DHSS announced 215 new COVID-19 cases in Alaska on Wednesday.

Emergency worker Melanie Chavez takes a COVID-19 test sample at the Juneau International Airport screening site on Monday, Oct. 12, 2020. The City and Borough of Juneau raised its health alert level Tuesday as the number of cases grows locally and statewide. (Peter Segall / Juneau Empire)
Increase in COVID cases could overwhelm hospitals, experts warn

Mask now so businesses stay open later, they say.

This graphic shows the Kenai Peninsula Borough School District risk levels associated with different numbers of new COVID-19 cases. (Image courtesy Kenai Peninsula Borough School District)
With COVID cases rising, district focusing on flexibility

Central, eastern and southern peninsula schools are now all at high-risk levels.

Alyse Galvin (courtesy photo)
Election 2020: A conversation with Alyse Galvin

Galvin is challening Rep. Don Young for Alaska’s seat in the U.S. House of Representatives.

COVID-19.
11 new cases on the peninsula, borough’s positivity rate passes 7%

DHSS announced 200 new COVID-19 cases in Alaska on Monday.

A screenshot from the Kenai Peninsula Borough School District’s COVID-19 dashboard shows current case trends and threat levels as of Monday, Oct. 19, 2020. (Screenshot courtesy Kenai Peninsula Borough School District)
Southern peninsula schools go to remote learning after increase in COVID-19 cases

Increase in COVID-19 cases pushes Southern Kenai Peninsula into high-risk category

The sign outside Soldotna City Hall is seen here on July 16, 2020. (Photo by Brian Mazurek/Peninsula Clarion)
Soldotna’s disaster declaration extended to Dec. 31

The resolution originally extended the declaration by 90 days.

A biker leads a line of cars driving off the Homer Spit at about 1:30 p.m. Monday, in Homer after a tsunami evacuation order was issued for low-lying areas in Homer. (Photo by Michael Armstrong/Homer New)
Large quake prompts tsunami warning

A tsunami warning was issued at about 12:55 p.m. for low-lying areas in Homer and Kachemak Bay.

Most Read