Legislators end 2024 session. Incentive for new Cook Inlet natural gas fails

State legislators ended their 2024 legislative session more or less on schedule with the state Senate adjourning a few minutes before a midnight deadline for adjournment with the House continuing to work on bills for a short time.

Despite last minute snags and some tension House and Senate leaders guided the session to an orderly close.

The state budget was agreed on, both the operating and capital budgets, and Permanent Fund Dividend, or PFD, was set at $1,360 for the regular PFD and additional $295 for a special “energy” dividend. Combined, the total is $1,655.

Final amounts may vary because the regular dividend will depend on how many Alaskans actually apply, while the energy dividend will depend on how oil prices my change through the summer.

“I think it was a great session,” said Speaker of the House Cathy Tilton, R-Wasilla. “We’ve taken care of energy … we were able to take care of the correspondence folks. And we had a great crime bill that we passed. So It was a great session. We got a lot done for the people of Alaska.”

“It’s been a pretty successful two years, I believe, in so many ways,” said Senate President Gary Stevens, R-Kodiak. House Minority Leader Calvin Schrage, I-Anchorage, agreed: “I’m proud of the team,” Schrage said, referring to his House Minority members of Democrats and independents.

“At the same time, obviously, there’s some missed opportunities — from defined benefits (in public employee pensions) to the elections bill, and the statutory increase to the BSA,” or Base Student Allocation for schools, he said. “I think those were all things that Alaskans were really clamoring for, and it’s disappointing to see that we weren’t able to take action,” Schrage said.

Major energy legislation was passed but a key bill lowering the state’s royalty on new natural gas developed in Cook Inlet faltered in the Senate Finance Committee after passing the House the day before. House Bill 223, sponsored by Rep. George Rauscher, R-Sutton, would have reduced the royalty for new gas sold to regional utilities from 12.5 percent to 3 percent and, for new oil, from 12.5 percent to 6 percent.

Had it passed, the royalty reduction would have allowed HEX Alaska, owner of the Kitchen Lights gas field in the Inlet, to drill new wells and bring on more gas in time to meet a decline in gas production estimated to begin in 2027, is when gas production will begin declining according to studies by the state Division of Oil and Gas.

Delays in getting the bill out of the state House were a factor in its failure. Senators wanted time to do modeling on the effect of Rauscher’s bill before passing it and there wasn’t enough time to do it on the last day of the session. One factor in delaying the bill was a request by Rep. Ben Carpenter, R-Nikiski, to reconsider his vote for the bill on the House floor. That delayed the bill in moving to the Senate. The bill ultimately passed the House.

The royalty reduction bill was important because the decline in gas production will affect the supply of gas for home and building heat and for power generation. Incentives like royalty reduction are needed to tap known but undeveloped gas resources in the Inlet according to the state Division of Oil and Gas.

On other energy matters, the Legislature approved a bill, House Bill 307, also sponsored by Rauscher, making major changes in how the state regulates power transmitted through long-distance power transmission lines and granting tax reductions to independent power producers, mostly for wind and solar projects.

The electric transmission bill is important because it would set in place a mechanism to establish level rates for power moved up and down the “railbelt” transmission system between Interior and Southcentral Alaska. Currently these rates vary depending on the electric utility that owns the portion of transmission system built though its territory. The piling up of differing rates has become an impediment for renewable energy projects now planned for Interior and Southcentral Alaska.