Senate substitute for gas pipeline bill ties consumer protections to taxes and local impact payments

Senator Giesel, sponsor of the Senate Resources Committee substitute to the governor’s gas-line proposal, said the bill is designed to ‘‘get North Slope Gas to Alaska consumers at the lowest possible cost, to protect Alaska consumers from project cost overruns and tax giveaways, and to protect communities from the damaging effects during construction.’’

The substitute adopts a volumetric tax structure similar to the governor’s proposal but increases the expected full-production property-tax yield to the level committee consultants estimate (the sponsor contrasted the governor’s $74 million figure with recent project estimates near $600 million at full production). It also adds a corporate income tax and ties property-tax inflation adjustments to Anchorage CPI rather than the governor’s proposed 1% annual adjustment.

A notable local-impact provision would create an impact fund seeded by $1,000,000 per pipeline mile installed, ‘‘so local communities could apply to to cover the impact costs they’re realizing,’’ Giesel said. The bill also bars shifting project cost overruns onto the price of gas for consumers and requires maximum use of Alaska businesses and Alaska workers by the project’s contractors.

Committee members told reporters the Senate has retained outside modelers — Gaffney & Cline and Pegasus were named — to test project economics. Asked whether invocation of the federal Defense Production Act could lead to federal control of the project, Giesel said the committee cannot predict federal action and stressed that ‘‘this is Alaska’s gas’’ and the Legislature’s obligation is to maximize benefit for Alaskans.

The substitute extends the Legislature’s window for deciding whether to offer major state investments from six months to 12 months, and it includes a repeal of the law changes adopted for the project if the project does not proceed.

What happens next: the Senate Resources Committee is holding daily hearings and expects additional testimony from consultants and the public before any floor action.