It Is TAPS Again: Last Two Owners of Trans-Alaska System File Rate Increases That Trigger Protests and Requests for Consolidation

摘要

The State of Alaska recently protested the rate filed with FERC by Koch Alaska Pipeline Co., LLC (Koch) (No. IS10-54), proposed to become effective 1/1/10, for the transportation of petroleum on the Trans-Alaska Pipeline System (TAPS) on the grounds that the rate: (1) impermissibly includes imprudent and unlawful expenditures relating to the Strategic Reconfiguration Program (SRP); (2) may impermissibly include costs relating to the dismantling and removal of TAPS facilities from the right-of-way; (3) assumes a life of the line that is significantly shorter than the actual life of the line; (4) uses an improperly-composed proxy group that artificially inflates the rate of return on equity, (5) fails to adjust the equity return to account for differences in the tax treatment of distributions to Master Limited Partnership (MLP) unit-holders versus corporate dividends, (6) fails to adjust the equity return to account for "anomalous and aberrant" capital market conditions; (7) improperly calculates the capital structure for the oil pipeline proxy group by excluding the current portion of long-term debt from the computation of long-term debt; and (8) may not accurately calculate appropriate operating costs and test period adjustments to those costs.