Regulators approve ENSTAR deal to borrow MEA gas this winter, passing costs to customers

The Regulatory Commission of Alaska on Friday approved a deal letting ENSTAR Natural Gas take about 1.2 billion cubic feet of gas from Hilcorp this winter and repay Matanuska Electric Association by March 31, 2028.

ENSTAR signed the agreement Oct. 10 and filed it Oct. 21, asking the commission to fast-track its review, as Alaska News reported Oct. 25. The approval took effect Friday, the date ENSTAR had requested.

ENSTAR's roughly 157,000 customers will carry the cost. The commission also approved tariff changes adding exchange costs to ENSTAR's gas cost adjustment surcharge, which passes gas costs through to bills. Under the commission's public notice, the initial cost and a later credit for returned gas both flow through it.

ENSTAR pays Hilcorp $11.75 per thousand cubic feet: $9 for the gas and a $2.75 fee Hilcorp charges to arrange the deal. MEA pays ENSTAR $9 per thousand cubic feet for the payback gas. The agreement says MEA should end up no worse off than if the exchange had not happened.

Hilcorp is to deliver the gas between November and Dec. 15, according to ENSTAR's filing. ENSTAR said the gas would help refill its storage. It projected that without the exchange, stored gas would fall to about 3.7 billion cubic feet by Dec. 31, below its usual target of 6 to 7 billion cubic feet for that time of year.

ENSTAR President John Sims told the Alaska State Senate Finance Committee on June 9 how the utility relies on stored gas. "So we're purchasing gas from the producers, injecting it so that we can pull it out during those colder times when the demand increases in the wintertime," Sims said.

MEA said in September it had secured all of its natural gas for this winter. MEA has also said it can switch its Eklutna Generation Station from natural gas to diesel to reduce gas use, and that ENSTAR reimburses the added diesel cost if ENSTAR requests the switch.

The commission received one public comment on the proposal, a letter of support from Homer Electric Association, an ENSTAR gas customer.