RCA cuts Hilcorp gas storage rates up to 31% on an interim basis

The Regulatory Commission of Alaska ordered cuts of as much as 31 percent to the rates Hilcorp Alaska Gas Storage charges for storing natural gas in the Kenai Gas Field, effective Friday, Oct. 2, 2026. The cuts are interim while the commission investigates the company's rate case, which must be finished by Sept. 24, 2027.

The cuts apply to firm storage contract holders: Hilcorp Cook Inlet, Matanuska Electric, Chugach Electric and Marathon Petroleum. The commodity rate drops from $0.936 to $0.642 per thousand cubic feet, about 31 percent lower; other rates, including withdrawal reservation, injection reservation, capacity and excess charges, also fell by smaller margins.

The new numbers come from Hilcorp Storage's own rate study, required when the commission certificated the company in August 2025. A July 1 filing found the company was collecting about 19.86 percent more than its revenue requirement; a Sept. 1 depreciation study raised that to about 24.97 percent. The dollar amounts remain confidential.

Hilcorp Storage did not seek interim rates and argued against them at a Sept. 29 hearing, asking instead to keep current rates in place and refundable only to the proposed level. Four parties, the Alaska Attorney General's Regulatory Affairs and Public Advocacy Section, Matanuska Electric, Chugach Electric and Marathon Petroleum, sought the lower rates immediately. Marathon and Chugach argued customers might be owed refunds beyond the cut.

The commission declined to make the new rates refundable, stating, "These rates are not refundable as the rates proposed represent a rate decrease." It has not decided whether prior rates were too high.

Matanuska Electric separately asked in June to recover Hilcorp storage costs through an automatic bill adjustment. It is unclear if or when the rate cut will appear as savings for Matanuska or Chugach Electric customers.

Hilcorp has run the Pool 6 storage facility since 2013, converting it to commercial storage under the 2025 certificate.

ENSTAR Natural Gas, which buys 85 percent of its Cook Inlet gas from Hilcorp Cook Inlet under a contract running to 2033, petitioned Sept. 25 to intervene, though it does not store gas there. ENSTAR cited an April 2026 Hilcorp letter stating it would be allocated storage costs of $0.62 per thousand cubic feet, later withdrawn, equal to $620,000 per billion cubic feet; ENSTAR plans to buy 27.83 billion cubic feet from Hilcorp through June 2027. "The episode demonstrates that HAGS rates may directly affect ENSTAR's costs and, ultimately, the costs borne by ENSTAR's customers," ENSTAR wrote.

Hilcorp Storage, in a Friday filing, called ENSTAR's interest indirect and speculative, arguing its gas supply contract, APL-14, is not at issue and that intervention risks competitive harm. The commission has not ruled on ENSTAR's request. A written order will follow.