Regulators cut Chugach's Beluga River gas price after Chugach asked for an increase

Chugach Electric Association's price for gas from the Beluga River field will drop to $7.74 per thousand cubic feet, called Mcf, on Thursday, Oct. 1, instead of the small increase Chugach had asked the Regulatory Commission of Alaska, the state's utility regulator, to approve. The commission approved the lower price Monday. The cost reaches member bills through Chugach's cost of power adjustment, a surcharge that passes fuel costs on to members. Chugach serves about 89,000 members at 113,000 meters across Southcentral Alaska and owns two-thirds of the Beluga River field, which Hilcorp operates and partly owns.

Chugach had filed Aug. 17 for $8.14, up a penny from the current $8.13, estimating it would add about 2 cents a month for a home using 525 kilowatt-hours. No one commented by the Sept. 3 deadline.

Commission staff sent Chugach questions Sept. 2. In response, Chugach's regulatory affairs manager, David Caye, conceded that most of the costs it had reported as actual were really budget estimates from the filing that set the current $8.13 price in February. Gretchen Larsen, chief of the commission's tariff section, also found that Chugach had counted some costs twice, and Chugach corrected them. Larsen recommended a different way of forecasting how much gas the field would produce, which she said "would result in a more accurate projection," and Chugach accepted it.

With those changes, the field's projected production rose about 9 percent, to about 8.3 million Mcf, while the costs the price has to cover barely moved, at about $32.9 million. That's down from $35.1 million in the February figures behind the current price. Larsen's memo credits higher production and lower operating costs than Hilcorp had projected.

In the new $7.74 price, field operating charges fall to $3.95 from $4.35, the surcharge for eventually shutting down the field dips to $0.63 from $0.64, and the capital reserve surcharge rises to $3.16 from $3.14. It is the third decrease since 2021, after cuts in April 2022 and October 2024.

Since January 2024, Chugach has taken more than 8 million Mcf less gas than its share, leaving it in the field for Hilcorp to take and pay for. That includes about 1.95 million 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. Shutting it down is projected to cost Chugach $104.8 million, and the fund set aside for that holds $46.5 million.