A federal commission says the oil companies that own the trans-Alaska pipeline can’t raise rates to cover cost overruns for an upgrade that went horribly over-budget.
The plan to upgrade four pump stations was projected to cost $242 million and to be finished in 2005.
Instead, it cost nearly three times that much and still isn’t fully complete.
The ruling by the Federal Energy Regulatory Commission is a victory for the state of Alaska, which can collect more tax on oil if the cost of transporting it is lower.
It’s an even bigger win for independent companies like Anadarko and Tesoro, that use the pipeline but don’t own a stake in it.
The pipeline is primarily owned by BP, ConocoPhillips and Exxon.
The federal commission said there’s “serious doubt” they performed a reasonable cost-benefit analysis, so pipeline users shouldn’t bear the price.
The federal commission, among other duties, regulates rates for oil and natural gas pipelines. Its decisions can be appealed in federal court.
Liz Ruskin is the Washington, D.C., correspondent at Alaska Public Media. Reach her at lruskin@alaskapublic.org. Read more about Liz here.
