Chugach's Beluga River gas price falls to $7.74 instead of rising

Chugach Electric Association's price for Beluga River gas will drop to $7.74 per thousand cubic feet, called Mcf, on Thursday, Oct. 1, reversing the increase Chugach itself had requested from the Regulatory Commission of Alaska. The commission approved the lower price Monday. The cost reaches member bills through Chugach's cost of power adjustment surcharge, which passes fuel costs to members. Chugach serves about 89,000 retail members at 113,000 metered locations across Southcentral Alaska and owns 66.67 percent of the Beluga River field, which Hilcorp operates and partly owns.

Chugach had filed Aug. 17 for $8.14, up 0.1 percent from the current $8.13 price, estimating the change would add about 2 cents a month for a home using 525 kWh. No one commented by the Sept. 3 deadline.

Commission staff sent questions Sept. 2. Chugach's response, sent by regulatory affairs manager David Caye, conceded that "most of what was reported as 'actual' was really the same budget figures used to build TA587-8 back in February," the filing that set the current $8.13 price. Gretchen Larsen, chief of the commission's tariff section, also found that "the 2026 underlift amounts reported on Exhibit 5.1 appear to double count the Q1 underlift CAPEX," plus one expense counted twice; Chugach corrected both. Larsen recommended a different volume forecast, which she said "would result in a more accurate projection, as volumes would no longer be omitted," and Chugach accepted it.

Against Chugach's August filing, projected gas volume rose about 9 percent, from 7,648,470 Mcf to 8,340,877 Mcf, while the revenue requirement, the field costs the price must recover, barely moved, from about $32.7 million to $32.9 million. Against the February figures behind $8.13, costs fell from $35.1 million. Larsen's memo credits "higher production than estimated, and lower operating expenses" than Hilcorp had projected.

The approved $7.74 rate includes field operations charges falling to $3.95 from $4.35, the asset retirement surcharge falling to $0.63 from $0.64, and the capital reserve surcharge rising to $3.16 from $3.14. It is the third decrease since 2021, after April 2022 and October 2024.

Chugach has underlifted more than 8 million Mcf of gas since January 2024, leaving its share in the field for Hilcorp to take and pay for, including 1,953,329 Mcf in the first half of 2026 worth about $5.8 million, to be settled from 2028 to 2032. The field is expected to stop producing in March 2035, with abandonment projected to cost Chugach $104.8 million against a fund holding $46.5 million.

The docket lists no outside parties, and the record gives no bill estimate for the decrease.