Saturday, May 16, 2015

Educators misled by the NEA and the Partnership for Public Education

Kara Moriarty

Alaskans deserve facts on all major public policy issues. Sadly, misrepresentations about Alaska’s oil and gas tax credits threaten to turn a situation that requires a thoughtful and fact-based approach into a political skirmish complete with slogans and accusations.

It is impossible for anyone to track every issue, so we tend to rely on media outlets, unions, trade groups, etc., to provide us accurate information that enables us to learn about and take positions on public policies. Unfortunately, in this case, the union representing teachers has let its members down by continuing to spread inaccurate information for the last month -- even after hearing the facts.

The NEA commissioned a poll this spring, in conjunction with the members of the Partnership for Public Education, which include: AFL-CIO; Alaska PTA; Anchorage Polynesian Lions Club; Citizens for the Advancement of Alaska’s Children; NAACP; Polynesian Association of Alaska; and School Business Partnerships. One of the questions asked Alaskans how they felt about oil tax credits, and if the Legislature should revisit oil taxation. Fair question. However, the question as worded was blatantly incorrect. This could have been an honest mistake, but professional standards dictate that when an error is identified, the responsible party is obligated to correct it. To date, the NEA and the Partnership for Public Education refuse to take ownership of their error, which is especially regrettable when you consider this is the union that represents teachers who, more than any other professional, strive for truth in information as they educate the next generation of Alaskans.

More than a month ago, I respectfully presented the correct information from the Department of Revenue to the NEA and the PTA. I asked that they provide the facts to those that received the poll and put a disclaimer on the public results. Several emails and many weeks later, I have been ignored and nothing has been done. The pollster for this organization, Hays Research Group, is also unwilling to correct the record despite what appears to be a clear violation of the ethical guidelines outlined by that profession’s trade organization. As the head of a professional association whose mission is to provide Alaskans with factual, third-party referenced information, this kind of casual attitude toward the truth is unsettling. My professional training is in education; I used to be an elementary school teacher, and an NEA member, and I would be horrified to know my union was consciously choosing to misrepresent an issue that was proven to be false.

The inaccurate statement contained within the poll question posed to Alaskans read like this:

"The state revised its oil tax law in 2013, and Alaskans voted by a narrow margin in August not to repeal the new tax system. At current oil prices, the state gives out more in oil tax credits to the oil industry than it receives in revenue from the oil industry. Would you support the Legislature revisiting the issue of oil credits and taxes in light of the current deficit?"

Who wouldn’t respond with a “yes” to this question as worded? The trouble is, it’s just flat wrong.

In fact, its entire premise is wrong. It is an indisputable fact that the State of Alaska receives billions more in revenues than it pays out to oil companies when you look at all oil revenue sources: royalties (the state’s share as an owner), production taxes, income taxes, property taxes and other fees paid to the state.

Alaskans deserve an honest conversation based on facts as we tackle our fiscal challenges, not half-truths or political spin. No one is served when individuals or organizations throw out inflammatory accusations that are clearly either false or taken out of broader context.

The NEA has every right -- and even the responsibility -- to lobby rigorously for policies that benefit public education and teachers. But it should do so in a way that informs Alaskans with accurate information, not misleads them by spreading false information.

My organization has set up a special page on our website for readers who want more information on oil revenues and tax credits from objective, third-party sources. Visit www.aoga.org and learn about it for yourself.

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Kara Moriarty is executive director of the Alaska Oil and Gas Association, a nonprofit trade association whose mission is to foster the long-term viability of the oil and gas industry in Alaska.

Thursday, May 7, 2015

Pentex purchase could cut ratepayers’ bills immediately

Fairbanks Natural Gas customers could see their heating bills drop immediately if the utility is sold to the Alaska Industrial Development and Export Authority.

“We do believe through the financing tools that AIDEA has, we could reduce the (gas) rate in Fairbanks right away by approximately 14 percent,” former AIDEA director Ted Leonard said at the authority’s April 30 board meeting.

“Rationalizing” the two gas distribution systems being developed by Fairbanks Natural Gas and the Interior Gas Utility and forming one system could provide significant capital and operating cost savings, he said.

Leonard retired as AIDEA executive director earlier this year but has continued to work on the Interior Energy Project because of his extensive experience with the earlier North Slope work.

Further savings to ratepayers would come from the different business models — moving away from the inherent cost and return requirements in a privately-owned utility structure.

Mark Gardiner, a financial consultant who is working closely with AIDEA on the proposed deal, said that the current rate of $23.35 per thousand cubic feet, or mcf, of gas FNG customers are paying could be $20 next year if the sale goes through. The savings would be even greater if FNG’s pending rate case before the Regulatory Commission of $24.96 per mcf is accepted.

The potential cost savings from the purchase are separate from whether or not the Interior Energy Project moves forward. However, an early projection of $16.80 per mcf in 2020 for all customers of a blended utility was presented to the board.

That estimate assumes liquefied natural gas can be delivered to Fairbanks for the equivalent of $11 per mcf, a midstream price the Interior Energy Project will have to come close to in order to meet the stated goal of the project.

Leonard said North Slope gas trucking project models came in with a comparable price in the $13 to $13.50 per mcf range.

AIDEA projects full buildout of a consolidated Fairbanks gas utility to cost $223 million. To date, the authority has issued $52.8 million in loans for gas distribution from the $332.5 million Interior Energy Project state financing package.

AIDEA announced a preliminary agreement to purchase the parent company to Fairbanks Natural Gas, Pentex Alaska Natural Gas Co., in late January.

That announcement was met with resistance from some Alaska legislators who questioned the premise of the state purchasing outright a private business and how the AIDEA-Pentex sale would affect an earlier agreement for a Hilcorp subsidiary to purchase Titan Alaska LNG — Pentex’s LNG trucks and small Southcentral liquefaction facility.

The 10-year LNG supply agreement Harvest has with Pentex, as part of the Titan sale would remain as well. That agreement is to fuel existing gas customers and does not expand Interior’s natural gas supply.

It’s currently believed the two deals can coexist; AIDEA would purchase Pentex for $54 million and then sell Titan to Harvest Alaska (Hilcorp) for $15.1 million, which is the price Pentex and Harvest originally agreed to.

The AIDEA deal is set to close July 31. The Titan sale is being reviewed by the RCA and Attorney General Craig Richards and has a Sept. 31 financial close date.

If the Titan sale is denied or otherwise fails AIDEA would retain those assets.

Leonard and Gardiner said it is the authority’s intent to sell or otherwise transfer control of Fairbanks Natural Gas within two years to a local entity, most likely IGU, which is owned by the Fairbanks North Star Borough.

Fairbanks Natural Gas President and CEO Dan Britton, who is also a minority shareholder in Pentex, said in an interview that IGU leaders have generally been kept abreast of the negotiations with AIDEA and are supportive of the overall plan.

Fairbanks Natural Gas petitioned the RCA for IGU’s service area and Britton has said two operating gas utilities makes little sense for the small customer base that is the greater Fairbanks area.

IEP gets moving

Now that a bill has passed allowing Cook Inlet gas to be used as a possible supply, it’s full steam ahead for the Interior Energy Project, its manager Bob Shefchik said April 30.

The project team had meetings scheduled the week of May 4 with 15 to 18 parties that have expressed interest in partnering on the Interior Energy Project, Shefchik said.

“Because it’s been such a long process we want to bring them in, talk to them about where we’re headed, what we expect to be in the solicitation and get some feedback,” he told the AIDEA board.

A request for proposal, or RFP, for a private partner to expand Southcentral gas liquefaction capacity should be issued by AIDEA by mid-May and stay open for 30 days, according to Shefchik. Proposals for a small gas pipeline and propane solutions will also be accepted.

He said the board could expect the results of the RFP at its June 25 meeting.

Concurrently, the state Commerce Department along with the Revenue and Natural Resource departments are working on a gas supply solicitation.

Shefchik, a former Interior Gas Utility chair, said the Fairbanks utilities have agreed to participate in the RFP selection process and a range of acceptable gas prices will be worked out earlier than it was during the North Slope supply efforts to keep the utilities on board.

“The thing that has to be avoided is (price) being the last thing decided,” he said.

http://www.alaskajournal.com/Alaska-Journal-of-Commerce/May-Issue-2-2015/Pentex-purchase-could-cut-ratepayers-bills-immediately/