The Regulatory Commission of Alaska (RCA) opened an investigation into ENSTAR Natural Gas Company’s proposed gas cost adjustment (GCA) increase earlier this year, stemming from concerns over potential cross-subsidization linked to a special contract with Homer Electric Association (HEA). ENSTAR filed tariff revision TA355-4 on May 15, 2025, seeking to raise the GCA from $9.0716 to $10.1091 per thousand cubic feet (Mcf) for the period from July 1, 2025, to June 30, 2026, citing higher gas purchase prices and storage costs. The case, docketed as U-25-021, was triggered by RCA’s prior approval of ENSTAR’s contract with HEA in February 2025, where regulators worried that treating HEA as a gas sales customer could burden other consumers with costs tied to HEA’s supply needs, especially amid declining Cook Inlet gas volumes.
The commission suspended the filing on June 30, 2025, and later vacated interim approval, issuing detailed questions in orders dated August 13 and October 16, 2025. Key inquiries focused on whether to include HEA in the GCA created subsidies (estimated by RCA at up to $13.6 million annually for 2025-2026 and $78.8 million over five years thereafter) and if a separate GCA for HEA was warranted to prevent undue preferences.
ENSTAR responded on September 12 and November 6, 2025, asserting no unreasonable subsidization occurred, as HEA’s inclusion spreads fixed costs, benefiting all customers by reducing average consumer bills. The company disputed RCA’s subsidy calculations, arguing they relied on flawed assumptions like inflated gas prices, and opposed a separate GCA, citing tariff requirements for uniform rates. “Inclusion of HEA increases GCA by $0.013/Mcf or 0.1%, but this is reasonable under tariff and law,” ENSTAR stated in its filing.
Several entities intervened: the Attorney General’s Regulatory Affairs and Public Advocacy Section (RAPA) on October 20, HEA on October 27, Tesoro Alaska Company on October 30, and Chugach Electric Association on October 30.
As of December 16, 2025, the case remains active with a public hearing underway through December 19 in Anchorage. A final order is due by February 9, 2026, amid ongoing scrutiny of Alaska’s energy costs.