Senate committee presses regulators on FERC authority, RCA oversight and price caps in phased Alaska LNG plan

Senate majority legal counsel Sonia Kawasaki summarized written responses from the Regulatory Commission of Alaska and told the Senate Resources Committee that the committee had asked whether RCA oversight could be structured in SB 280 so overruns and other project costs would not be passed on to in‑state customers.

Kawasaki said the committee added duties in the Committee Substitute to limit cost recovery to protect in‑state customers, citing proposed price maximums of $12 per unit while gas is delivered in‑state prior to an LNG plant and $5 once the export facility is online. She said the committee sought RCA input on how confidentiality agreements and commercially sensitive documents would affect RCA's ability to vet overruns.

Kawasaki also raised a separate legal question about FERC jurisdiction. The 2020 Federal Energy Regulatory Commission authorization addressed an integrated Alaska LNG project that included pipeline and export facilities. Kawasaki said the committee wanted to know whether FERC's section 3 authorization controls a phased approach in which the pipeline (phase 1) could operate for in‑state deliveries before an export plant is built.

Frank Richards, joining by phone, told the committee that FERC accepted an integrated, phased application in 2020 and that implementation plans for phased construction are now before FERC. He said FERC entertained the concept of phasing and that the agency is considering implementation plans for the interstate portion of the pipeline. Richards said he could not identify a specific statutory or operational trigger that would convert FERC jurisdiction to state RCA jurisdiction if the project ultimately operated solely in‑state for an extended period.

Senators expressed concern that if the committee prescribes legislative approval for certain contracts with foreign entities or price terms that federal law or FERC authority could preempt state action. Kawasaki recommended consulting Department of Law to vet potential conflicts and noted that if a legislative provision is unlawful it could be severed.

Committee members asked whether inserting price caps or detailed maximums in statute would chill information sharing from the project proponent; testimony from project representatives deferred to the proponent for a full answer. The committee concluded with plans to consult Department of Law and to hear Department of Revenue testimony at the next meeting.