June 20, 2008

Governor Palin Pleased with FERC Decision

From a State of Alaska press release:

The Federal Energy Regulatory Commission decided today that the owners of the trans-Alaska oil pipeline - BP Pipelines (Alaska) Inc., ConocoPhillips Transportation Alaska Inc., Exxon Mobil Pipeline Company, Unocal Pipeline Company and Koch Alaska Pipeline Company LLC - failed to prove that their 2005 and 2006 rates were just and reasonable. The FERC ordered refunds to TAPS shippers that are estimated to result in at least $600 million, plus interest, in additional tax and royalty revenues to the state.

"I am pleased that the FERC agreed with the ruling made by our state regulators in 2002, that the rates being charged by the TAPS carriers were not just and reasonable," Governor Palin said. "This decision shows how having a pipeline constructed and operated by the producers can result in inflated tariff rates that cause the State of Alaska significant revenue losses and discourage others who do not own a share of the pipeline from developing the state's oil and gas resources."

The case began in 2004 when the state protested the proposed 2005 rates. Anadarko and Tesoro also challenged the rates. The FERC will set a new rate for future shipments after the TAPS carriers make a compliance filing. The Departments of Revenue and Natural Resources will be able to calculate the total revenue owed to the state after the FERC determines the timing of the refund payments and sets the prospective rate.