TransCanada VP says Alaska bill may violate gas pipeline license

The Anchorage Daily NewsApril 5, 2011 

JUNEAU — TransCanada Corp. on Monday disputed the legality of a bill that's a first step toward dumping the state-subsidized natural gas pipeline project.

TransCanada Vice President Tony Palmer said it appears to violate the license the state gave his firm under the Alaska Gasline Inducement Act.

"It appears to violate the AGIA license agreement, it appears to change the rules," Palmer argued. "It raises uncertainty about the state's support of (the project) at a critical time."

Palmer told the House Finance Committee the work toward a $40 billion natural gas pipeline to the Lower 48 is moving forward. Many legislators think it's not going to happen, and a consultant testified Monday that the project isn't economical.

Legislators are growing increasingly frustrated with their obligation to reimburse TransCanada up to $500 million in state money under AGIA. Several suggest it's about time to pull the plug on the effort.

Don Bullock, an attorney for the Legislature, told the finance committee he does not think the bill breaches the state's contract with TransCanada. All the bill does is request information, Bullock said.

The bill says "it is rebuttably presumed that the project is uneconomic" if TransCanada doesn't have agreements with gas shippers by July 15 that are adequate to support construction of the project.

The state commissioners of revenue and natural resources would then have to submit a report saying whether they have any evidence the project is economical. The Legislature would use the report in deciding whether to continue to appropriate money for the project. The state has reimbursed TransCanada $50 million so far and anticipates spending about another $75 million by July.

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