The $16 Gas Promise Comes With Fine Print

The $16 gas price has become the number that sells the Alaska LNG pipeline to Southcentral families — a firm ceiling, the pitch goes, in a region staring down the decline of Cook Inlet gas. But a consumer watchdog told the Senate Finance Committee that the promise comes with fine print, and that the number on the marquee may not be the number on the bill.

The Alaska Public Interest Research Group raised three practical catches. First, the $16 is quoted per million BTU, while utilities bill customers in thousand-cubic-feet — a conversion that makes the real starting figure closer to $16.59 per mcf. Second, the price carries an annual inflation escalator that runs before the first gas is delivered, which AKPIRG projects could lift it to roughly $18 per mcf by 2029 and about $20 by 2033. Third, it's unclear whether the cost of the required Fairbanks spur line is baked into that figure or added later as a surcharge on top.

AKPIRG's sharpest point was about the referee. The Regulatory Commission of Alaska must approve the contract and decide whether its prices are "just and reasonable" — but there's no competing pipeline to measure against, and the commission is currently missing all three of its top analyst positions and its deputy director. A complex, 30-year, three-part deal, the group warned, is a lot to judge with no benchmark and a short bench.

The case on the other side is that a firm ceiling is exactly the point. ENSTAR has told the committee the $16 is not exposed to construction cost overruns — the central risk on a multibillion-dollar megaproject — and that the honest comparison isn't to today's Cook Inlet gas but to what replaces it when Cook Inlet falls short: imported LNG, which the utility has estimated could run $16 to $22 per MMBtu before delivery and storage charges. By that logic, a capped $16 is protection, not a markup, and ENSTAR notes it is putting no equity into the project.

The state's own numbers sit uneasily in the middle. Department of Revenue modeling shown to lawmakers found the delivered utility price landing above $20 per mcf by 2033 in nearly every Phase 1 scenario — beating that mark only if in-state demand grows dramatically. In other words, both the warning and the reassurance have support; the real price depends on assumptions no one can lock down until gas is flowing.

Lawmakers are weighing the gas-line tax bills during the special session. Whatever they pass, the RCA still has to approve any contract before a single customer is charged.