Alaska Administrative Code › Title 11 - Natural Resources › Part 3 - Oil and Gas › Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act › 11 AAC 25.190 - Transportation contracts not at arm's length - pipelines other than the Alaska mainline and Canada mainline

Current through May 31, 2024
(a) If a lessee,
				its marketing affiliate, or any affiliate other than a transportation affiliate
				transports qualified gas on a pipeline other than the Alaska mainline or Canada
				mainline and that pipeline is a transportation affiliate, the cost of
				transportation must be the allowable actual and reasonable cost, as determined
				under (b) - (n) of this section,
				11 AAC 25.160, and
				11 AAC 25.210, of transportation
				provided by the pipeline that is the transportation affiliate. However, if the
				circumstances described in (o) of this section occur, the amount determined
				under that subsection must be used as the cost of transportation.
(b) If calculating allowable actual and
				reasonable cost in accordance with (b) - (n) of this section, the lessee,
				without regard to whether a pipeline is subject to the jurisdiction of the
				Federal Energy Regulatory Commission (FERC), and except as provided in (c) -
				(n) of this section, shall calculate that cost in accordance with the FERC
Cost-of-Service Rates Manual
, dated June 1999, the FERC Order
				Issuing Clarification and Granting Rehearing in Southern Natural Gas Co., 130
				FERC Para. 61,193 (Docket nos. CP09-36-002, CP09-40-001, and AD10-3-000, March
				18, 2010), and the FERC Order Granting Rehearing in Florida Gas Transmission
				Co., 130 FERC Para. 61,194 (Docket nos. CP09-17-001, AC08-161-002, and
				AD10-3-000, March 18, 2010). The FERC documents listed in this subsection are
				adopted by reference for purposes of this section, except as provided in (c) -
				(n) of this section.
(c) The
				applicable costs of transportation are determined for a calendar year by
				calculating the total amount for the year for the following items and
				allocating that total, as provided under this section, to the qualified gas:
(1) an allowance for operating and
				maintenance expenses of the pipeline;
(2) annual depreciation on capital investment
				in the pipeline at original cost;
(3) annual amortization of allowance for
				funds used during construction (AFUDC);
(4) an after-tax return on the sum of capital
				investment in the pipeline at original cost net of depreciation accumulated
				before the year of calculation, and AFUDC net of cumulative AFUDC amortized
				before the year of calculation, with the undepreciated capital investment and
				unamortized AFUDC balances adjusted to account for accumulated deferred income
				taxes and retirements; a return may not be earned on cash working
				capital;
(5) income tax on the
				equity part of the return on capital investment under (4) of this
				subsection;
(6) ad valorem taxes on
				the pipeline;
(7) if specifically
				identified and approved in an applicable tariff for a regulated pipeline, an
				allowance for the cost to dismantle and remove the pipeline and for restoration
				after removal of the pipeline.