A pending decision from the Regulatory Commission of Alaska could lead to higher rates for South Central natural gas customers.
Underneath Kenai is a big natural gas storage facility. It’s operated by Cook Inlet Natural Gas Storage Alaska or CINGSA. That facility, which is really a repurposed, used natural gas well, stores gas produced throughout the year for use during peak demand during winter. CINGSA wants to upgrade that facility to make sure it can always deliver gas on the coldest of days to its customers, Enstar, Homer Electric Association, and the major utilities around Anchorage.
But CINGSA also wants to make sure that the roughly $41 million it wants to spend can be made back through rate increases in the future. That’s why it asked the regulatory commission for pre-approval. If the commission says ok, it means that the project is in the public interest and CINGSA can up its rates.
The storage facility is important to regional utility companies because day-to-day production from Cook Inlet can’t keep up with demand in the coming months. During five days of testimony to the commission in October, a particularly cold day last January was cited when Enstar pumped 253 million cubic feet of gas to customers in South Central. Forty-percent of that had to come from the storage wells in Kenai. Enstar, which shares management with CINGSA, supports the upgrades and the potential for rate increases.
But representatives for Homer Electric Association argued that the upgrades aren’t necessary. Even on that day in January last year, the storage facility was operating with room to spare. If the commission agrees, it would mean CINGSA couldn’t recoup its investments in the form of rate increases to HEA.