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House passes in-state gas pipeline bill

Posted: April 3, 2013 - 12:01am

JUNEAU — A bill aimed at advancing a gas line to meet Alaska’s energy needs passed the state House despite concerns of a lack of oversight for the project and the price customers ultimately pay for gas.

HB4 passed 30-9 late Monday night after hours of debate and failed attempts led by minority Democrats to amend the bill, including one to give the Regulatory Commission of Alaska authority to review and approve contracts to ensure “just and reasonable” gas costs.

Two members of the minority caucus, Reps. Max Gruenberg of Anchorage and Scott Kawasaki of Fairbanks, joined with the majority in voting for the bill. Kawasaki said on the floor that he wasn’t yet sure how he would vote.

Two majority members, Reps. Eric Feige, R-Chickaloon, and Neal Foster, D-Nome, joined the rest of the minority — Reps. Les Gara, Harriet Drummond, Andy Josephson, Beth Kerttula, Jonathan Kreiss-Tomkins, Geran Tarr and Chris Tuck — in voting no.

Supporters see HB4 as providing the tools needed for the Alaska Gasline Development Corp., or AGDC, to get to an open season, the point at which officials could determine if there is sufficient interest for a project to move forward. They see the project as having momentum, and cast it as a way to take care of Alaskans’ needs first, rather than overseas markets.

Critics say they understand the desire to get gas to Alaskans — a stated goal of the bill’s sponsors — but see HB4 as too far-reaching, with too-little oversight. They also say the better project for Alaska would be a major liquefied natural gas project capable of overseas exports being pursued by the North Slope’s three major players — BP, Exxon Mobil Corp. and ConocoPhillips — and TransCanada Corp.

“We don’t have enough information to make reasonable decisions that, at the end of the day, assures that Alaskans get reasonably priced gas. That’s the bottom line,” Kerttula, the House Democratic leader, told reporters Tuesday. “We don’t have that information so we’re not doing our due diligence, you know? That’s the way I feel about it.”

HB4 is seen as one of the major pieces still in play — along with the budgets, an oil tax overhaul and a liquefied natural gas trucking plan — as the legislature nears its scheduled adjournment April 14. It also is a priority for House Speaker Mike Chenault, who took the unusual step of coming down from his presiding seat Monday night to speak to the bill on the floor before its passage. Senate Resources was scheduled to start hearing HB4 on Tuesday afternoon.

Under the bill, AGDC, now a subsidiary of the Alaska Housing Finance Corp., would be made an independent public corporation overseen by a board confirmed by the Legislature. Its powers would include the ability to determine ownership of a pipeline developed by the corporation; plan, finance and build a pipeline system; issue bonds for project financing; and exercise eminent domain to acquire land deemed necessary for the pipeline.

Prior to reaching the floor, the bill was amended to, among other things, try to address concerns about the state’s obligation. Joe Dubler, AGDC vice president and chief financial officer, had told the House Finance Committee that the state’s credit rating could suffer if the state failed to recapitalize a proposed reserve fund to help AGDC meet its debt obligations. It’s not clear to what extent, or whether, the fund might be used. But the latest version of the bill requires legislative authorization of a reserve fund.

The bill also adds two commissioners to the board of directors, though the commissioners of Revenue and Natural Resources could not serve on the board unless the big line has been abandoned or is no longer receiving inducements. TransCanada currently has an exclusive license to advance a major gas line project, and is receiving up to $500 million in reimbursable costs from the state for that effort.

A spokeswoman for Gov. Sean Parnell said Parnell supports the bill in its current form. Parnell had raised concerns about accountability and oversight, but spokeswoman Sharon Leighow said his initial concerns were addressed by the recent amendments.

Rep. Alan Austerman, R-Kodiak, said on the floor Monday night that he wished BP, Exxon Mobil and ConocoPhillips were ready and able to build the large line. But he said he doesn’t see that happening in the near future, and believes the right thing to do is move forward with the in-state line.

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