ENSTAR asks regulators to fast-track a deal to borrow MEA's gas for this winter

ENSTAR Natural Gas Co. asked the Regulatory Commission of Alaska on Oct. 21 to approve a deal that would bring about 1.2 billion cubic feet of Matanuska Electric Association's gas to ENSTAR this winter, with the cost passed to customers through its gas cost adjustment.

Without the exchange, ENSTAR projects its storage at about 3.7 billion cubic feet on Dec. 31, below its usual target of 6 billion to 7 billion. The utility, which says it serves about 157,000 customers, wants the change effective Oct. 30. It says the gas must be moved and injected under daily limits, so every day before winter counts. In August, ENSTAR President John Sims told a joint legislative hearing the utility was about 3 billion cubic feet, or 18 days, short for a normal winter.

Under the agreement, Hilcorp Cook Inlet would deliver the gas to ENSTAR between Nov. 1 and Dec. 15. MEA had planned to put that gas into storage at Hilcorp Alaska Gas Storage in December and March for its members to use from April 1, 2028, through March 31, 2029. ENSTAR would pay $11.75 per thousand cubic feet: $9 for the gas and a $2.75 fee to Hilcorp. It must return the same volume to MEA's storage account by March 31, 2028, valued at $9, and pay pipeline, fuel, lost-gas and storage charges both ways.

The cost goes into the gas cost adjustment when the gas arrives, and the value of the gas is credited back when it is returned, so ENSTAR says customers pay only the net cost. Calculated from the filing's prices, about $14.1 million would be charged on delivery and $10.8 million credited back, a net of about $3.3 million plus transport and storage charges. The filing states no bill impact. ENSTAR also asks to make gas exchange agreements a standing cost element in its tariff.

ENSTAR says the 2025-2026 winter brought its territory's longest cold stretch in more than 40 years, with demand about 3.1 billion cubic feet above forecast and storage draws about 2.2 billion above plan. BlueCrest postponed drilling to early 2027 for lack of funding. HEX Operating stopped delivering in July and sold gas to others; deliveries resumed Sept. 9 after ENSTAR won emergency arbitration, but the July and August gas never reached storage. ENSTAR has also contracted for trucked North Slope LNG from the Interior Alaska Natural Gas Utility. MEA, which has contracted gas it does not need in the near term, approached ENSTAR about the exchange.

If the gas returns late, a replacement-cost clause covers MEA's purchased power, diesel and LNG costs. The agreement binds ENSTAR only after the commission's approval is final and cannot be appealed. Sims and MEA CEO Tony Izzo signed the filed copy; Hilcorp's signature block is blank.

The commission set a seven-day comment period Oct. 22. Comments are due by 5 pm Alaska time Oct. 29 and must state that a copy was also sent to ENSTAR. The commission has not said whether it will act by Oct. 30.