Attorney General Says Rates Are Too High
December 16, 2004
The pipeline owners filed their proposed 2005 interstate tariffs Dec. 1, governing the charges for shipping a barrel of oil from Pump Station No. 1 on the North Slope to the port of Valdez for delivery out of state. Each of the five pipeline owners files its own tariff each year, with the proposed 2005 rates ranging from $3.52 to $3.98 per barrel.
"These rates stand in stark contrast to the rates set by the Regulatory Commission of Alaska for oil used in Alaska. Our 1985 settlement agreement with the pipeline owners prohibits discrimination in the rates. We have protested this discrimination and seek an order from FERC that would eliminate the discrimination by lowering the interstate tariff," said Attorney General Gregg Renkes in announcing the state's protest, which was filed today at FERC offices in Washington, D.C. "The largest of the increases is 28 percent, and the state believes that is too much," Renkes said.
The state looked at some of these same issues last year and initially protested the 2004 tariffs before FERC on narrower grounds.
"We resolved the issues last year in part on the understanding that the owners and the state would attempt during the year to negotiate a successor agreement to the existing 1985 TAPS Settlement Methodology, to remove uncertainty in the future," Renkes said. "Unfortunately, we were not successful this year in reaching an agreement. We hope the parties will continue to talk, but in the meantime I have informed the owners that I must protect the state's interests and revenues. We recognize the litigation track may be slow, but it does not preclude simultaneous discussions with the owners."
"The state remains open
to solutions that will bring down the tariffs, promote exploration
and increase throughput," the attorney general said. "When
throughput is increased, the costs of pipeline operation and
maintenance are spread over more barrels, which can lead to lower
tariffs. And lower tariffs would increase the state's revenues
and make additional exploration more economic. Ultimately, this
should be everyone's goal," Renkes said.
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