MEA board lets ENSTAR negotiate its gas supply for after Hilcorp contract ends in 2029

Matanuska Electric Association's board has approved an agreement letting ENSTAR Natural Gas Company find and negotiate natural gas supplies on MEA's behalf after MEA's Hilcorp contract ends in March 2029, MEA announced Tuesday.

The agreement is not a final contract. Once ENSTAR secures commitments from suppliers, MEA and ENSTAR will finalize a separate gas sales agreement and submit it, along with any related rate filings, to the Regulatory Commission of Alaska.

Natural gas is the main fuel MEA burns to make electricity: Cook Inlet gas produced 84% of its power, the utility told state lawmakers in June. MEA serves more than 58,000 members in the Mat-Su Borough, Eagle River and Chugiak. It cited concerns about how much Cook Inlet gas will be available and rising energy costs across Southcentral Alaska.

In that June presentation, MEA projected that imported liquefied natural gas after 2029 could raise average residential monthly bills by $21 to $31.

Under the new agreement, MEA's gas needs are combined with ENSTAR's, so ENSTAR's buying experience and larger purchase volumes work for MEA too, the utility said. MEA can also change how much gas it needs as electricity demand shifts or new power sources come online.

"Securing reliable natural gas supply beyond 2029 is critical, but we also want to preserve MEA's flexibility to pursue new generation resources and diversify our energy supply," MEA CEO Tony Izzo said in the release.

MEA said that for four years, at the board's direction, it has worked with ENSTAR, other utilities and agencies on the options: more Cook Inlet gas, imported LNG or North Slope gas. In January, MEA extended its Hilcorp contract through March 2029 and added a gas storage agreement.

MEA has not disclosed the agreement's length, volumes, what ENSTAR will be paid or which suppliers it will approach.

The two companies already share one gas deal. Under an exchange ENSTAR, MEA and Hilcorp signed in October, 1.2 billion cubic feet of MEA's Hilcorp gas goes to ENSTAR. ENSTAR returns it by March 31, 2028. The commission approved the exchange Oct. 30. MEA estimates it will save members about $2 million, subject to implementation.

MEA is also shopping for electricity. It asked independent power producers on Sept. 22 for proposals to sell it energy and capacity. Two more power supply requests are out to bid.