Alaska House panel caps natural gas at $16 per million BTU

The Alaska House Finance Committee voted 6-5 Monday to cap natural gas prices at $16 per million BTU for Alaskans, mirroring a contract Enstar negotiated but codifying it in statute to address lawmakers' concerns that cost overruns could be passed to consumers if the Alaska LNG project moves forward without a signed agreement.

Amendment 14 to House Bill 381, moved by Representative Andy Josephson, sets a statutory ceiling that gas utilities cannot exceed when selling to Alaskans, inflation-adjusted annually from 2026. The cap applies only after gas flows and does not affect construction-phase economics. The amendment adds a consumer price protection to a bill that chiefly restructures the tax treatment of Alaska LNG, replacing the existing 20-mill state property tax on oil and gas property with a volumetric throughput tax.

Co-Chair Calvin Schrage, who offered two conceptual amendments refining the cap's inflation baseline and unit of measurement, argued the cap protects ratepayers while preserving project viability. "What it does do is it protects ratepayers from higher natural gas prices while not interfering with the viability of this project," Schrage said.

Representative Will Stapp said the amendment mirrors terms Enstar testified it had negotiated. "This amendment basically mirrors what we know to be the contract that Enstar already has with the developer based on Enstar's testimony," Stapp said. He opposed the amendment, citing reservations about putting contract details in statute, but acknowledged it does not harm the project.

Representative Alyse Galvin said the cap addresses constituent concerns about cost overruns. "When we heard more information from Glenfarn and particularly John Sims from Enstar, it kind of helped us better articulate to our constituents what they have been wanting to hear, and that is due to cost overruns or other things unknowns, we weren't able to put into on paper that sense of security," Galvin said.

Schrage added that without a signed contract, the statutory cap is the only way to guarantee Alaskans will not pay more than $16 per MMBtu. "Without that contract being signed, this is the only way that today any of us can go back to voters and a guarantee to them that they will not be paying a higher price of gas as a result of this project," Schrage said. Enstar's cost-of-gas charges are reviewed through tariffs approved by the Regulatory Commission of Alaska, which normally allows wholesale cost increases to reach ratepayers. Supporters said the statutory cap would limit that pass-through for Alaska LNG gas.