The Valdez Star - Serving Prince William Sound and Copper River Basin

State settles for $165 M with pipeline shippers after prolonged disputes

Companies expected to pay the tax bills by buying tax credits that the state owes


January 3, 2018

(AP) Alaska expects to collect about $165 million its owed in back taxes from companies that paid to ship oil down the Trans-Alaska Pipeline after a settlement was reached on rates.

The payments primarily from oil companies operating on the North Slope are not expected to be made in cash but through tax credits, Alaska's Energy Desk reported.

The settlement reached in December came after years of disputes over the rates set by the pipeline owners.

Dozens of rate cases were filed in 2009-15, causing the state and the independent shippers to file corresponding protests with state and federal regulators, said John Ptacin, a chief assistant attorney general over state regulatory affairs.

Valdez Star file photo

The Valdez Marine Terminal marks the end of the trans-Alaska pipeline – and last month marked the end of a dispute between shippers and the state.

Ptacin said regulators determined that the rates were too high, and his office sorted through the open cases to come to an agreement. Under the settlement, a new rate calculation will be put in place and the state can collect its taxes.

The companies are expected to pay their tax bills by buying tax credits that the state owes to other companies.

From the cash-for-credits program the Legislature ended last year, the state owes nearly $1 billion to small oil and gas companies. The law that ended the program included a provision allowing companies to buy the credit and use them for owed taxes.

"Because of that, we believe companies are going to purchase - major producers are going to purchase - about $100 million worth of these tax credits that are in the hands of the smaller companies," said Ken Alper, director of the state Department of Revenue Tax Division.

The settlement still requires approval by the Regulatory Commission of Alaska and the Federal Energy Regulatory Commission.


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