Alaska § 42.08.320 - Review of certain contracts by the commission.

§ 42.08.320. Review of certain contracts by the commission.

 (a) An in-state natural gas pipeline carrier shall submit each of its precedent agreements for firm transportation service and any substantial amendments to the commission. A precedent agreement negotiated with an entity that is not a public utility regulated by the commission may be filed under seal. Under AS 42.08.400 , the commission shall keep confidential a precedent agreement filed under seal. Submission of precedent agreements to the commission is permissible before construction of an in-state natural gas pipeline and before a request for certification under this chapter. In this subsection, “substantial amendment” means an amendment that materially changes a rate or term and condition of service.

 (b) In the review of a precedent agreement submitted under (a) of this section or a related contract submitted under AS 42.05.433 (b) or (c), the commission shall        (1) conclude that a precedent agreement or related contract negotiated at arm's length between the parties is just and reasonable unless the commission finds that unlawful market activity affected the rate or unfair dealing, such as fraud or duress, affected the formation of the contract;

 (2) review and may conduct an investigation and hearing to determine whether a contract submitted under (a) of this section is just and reasonable; the commission shall either approve the contract as presented or, if the commission finds that a contract is not just and reasonable, disapprove the contract; if the commission has not acted within 180 days after the submission of a contract, the contract shall be considered approved and shall take effect immediately; a contract that is approved or considered approved under this paragraph and the associated firm transportation service agreement are not subject to further review by the commission.

 (c) For purposes of (b)(1) of this section, and except as provided in (d) of this section, a precedent agreement or related contract is arm's length        (1) if it incorporates the approved recourse tariff; or

 (2) if it does not incorporate the approved recourse tariff,             (A) the precedent agreement or related contract is between two state-owned parties;

 (B) the parties are not affiliated; or

 (C) if the parties are affiliated, the precedent agreement or related contract is substantially similar to a precedent agreement or related contract between unaffiliated parties, and the formation of the precedent agreement or related contract was not affected by unlawful market activity or unfair dealing as described in (b)(1) of this section.

 (d) Notwithstanding (c) of this section, a precedent agreement or related contract with a public utility is not arm's length if the rate paid for transportation on an in-state natural gas pipeline is greater than the recourse tariff rate.

 (e) If a precedent agreement or related contract is not arm's length, the commission shall determine whether the precedent agreement or related contract is just and reasonable using the standards normally applied under AS 42.06.140 . If the commission is reviewing a precedent agreement under (c)(2) of this section, the commission may consider the in-state natural gas pipeline carrier's approved recourse tariff, including the cost data underlying the tariff. When considering whether to approve a contract as just and reasonable under this subsection, the commission shall consider the consequences of failing to approve the contract.