The Weekly Top 3 (3.16.2026)

Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of March 16, 2026.

This week, our top 3 issues are these: 1) we discuss the ongoing debate in the House over the funding source for the FY26 Supplemental (1:54), 2) we explain how, yet again, the House Majority is attempting to Orwellianize the term “fiscally responsible” (16:03), and 3) we discuss the issues involved in the competing LNG import projects (32:19).

The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.

Transcript

Welcome And Where To Listen

SPEAKER_01 0:10

This is Brad Keith Lake, Managing Director of Alaskans for Sustainable Budgets. Welcome to the Weekly Top Three, the Top Three Things on Our Mind here at Alaskans for Sustainable Budgets for the week of March 16th, 2026. The weekly top three is a regular segment on the Michael Duke Show. The show broadcasts on both Facebook Live and YouTube live, as well as via streaming audio from the show's website weekdays from 6 to 8 a.m. I join Michael weekly in the first hour of Tuesday's show from 6.10 to 7 a.m. for a discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, YouTube, SoundCloud, Spotify, and Substack pages, also on the Alaskans for Sustainable Budgets website, as well as the project page on national blog site, medium.com. You can find past episodes of the weekly top three also at the same locations. Keep in mind that in addition to these podcasts, during the week, you can also follow and participate in the discussion with us of these and other issues affecting Alaska's fiscal and economic condition by following us on the Alaskans for Sustainable Budgets Facebook page and through our posts on Twitter. This week our top three issues are these. First, we discussed the ongoing debate over the funding source for the FY26 supplemental. Second, we explain how yet again the House majority has demonstrated it doesn't know what the term fiscally responsible means. And third, we discussed the issues involved in the competing LNG import projects.

Why The FY26 Supplemental Rushed

SPEAKER_00 1:51

And now let's join Michael. There's just so many crazy things going on in the legislature. This whole schooling thing with Yunt and Tobin, we're going to get into later, but that man, I just don't even know how to unpack that at this moment. But you've got uh some topics to uh get us started for the week. Let's start over the debate. Um for the for the supplement. This thing is still going on. I mean, this was a fast track supplemental, right? And they were gonna do it, and then they were gonna, you know, oh, we're out of money. Oh, we're we're now we're not out of money, but we don't know what to do. And all of a sudden, the majority paints themselves as the fiscally conservative ones who are trying to be good about it and everything. It's hilarious, but also not at the same time. What give us the details here?

The CBR Headroom Slush Fund Risk

SPEAKER_01 2:40

Well, the substance of it is that um the the legislature fast tracked a supplemental in part in response to the the contractor industry that is concerned about having funding for the state match of federal funds on roads issues uh to fund uh road repair. And and so the legislature fast tracked this supplemental. They started the fast track uh at a time when, but at a time before the start of the Iran conflict, uh at a time when oil prices were down. Uh the House passed uh a fairly major bill, about$500 million, if I recall correctly, uh, in terms of a supplemental, one of the biggest supplementals we've seen, went over to the Senate. The Senate pared it down to about$370 million, I think it is now, uh, which is which you know they reduced some pieces of it, which was good to reduce spending down. Uh, but the Senate also did uh a BERT trick uh in uh in rewriting the bill. And that is they funded the entire sub they they funded the entire supplemental from the CBR, sort of regardless of what oil prices were and oil revenues were. They came in with with uh full funding from the CBR, full CBR draw to fund it. Which would have likely sort of made sense before the Iraq conflict. But with the Iraq conflict and with the spike in oil prices, there there came to be a real question about uh about whether that the CBR draw is necessary, whether there's going to be adequate revenues from normal revenue sources, including oil, to fund the to fund the supplemental. So this Burt trick of of fully of putting the full$370 some odd million dollars in as funding became a problem uh when it came back over to the House and the impact of the Iran conflict, uh of the Iraq conflict, the Iran conflict, and seeing the impact on oil prices became much more real. Um and all of a sudden, over on the on the House side, I some very sharp people on the House side, I want to give credit to this, to the House minority, some very sharp people saw the potential for this. The potential that the Senate had added this$377 odd million dollars, the Iraq conflict or the Iran conflict was going to explode oil revenues so that the supplemental was no longer net, or so that the CBR draw was no longer necessary. But the$370 million were gonna sit there, it was gonna sit there uh as sort of a what they sometimes call a headroom, like a headroom draw. It was gonna be it's gonna be money that was available um uh sort of regardless from the CBR, sort of regardless of what happened with the oil revenue side.

SPEAKER_00 5:33

Right. A slush fund, as otherwise known as a slush fund.

SPEAKER_01 5:36

Right. And so the and so the the House minority rebelled against that and said, we don't think that we we don't want to create this flush fund. Um and the and the house minor majority has has responded to that with some very humorous quotes. Um, but it's that I'll get to in just a second. But it's I think I think the House minority has done a very good service to the state of preventing the CBR draw as it got constructed in the Senate, as Bert and Lyman constructed it in the Senate. I think the Senate, the House major minority has done a very good job of preventing that CBR draw from sort of setting out there. Now, the Senate majority, excuse me, the Senate and the House majority would say, oh, don't worry about that, because if we don't need that money at the end, if by the end of the legislative year we don't need that money, it will spill, the excess will spill back into the CBR. Well, the minority's response to that, a very good response, is yeah, well, that means that's as long as you don't tag on additional spending through additional bills. The thing about the CBR draw is it takes a three-quarters vote. The thing about the thing about once you've appropriated the CBR, once you've had that three-quarter vote and the CBR is in the is in the revenue pot, it just takes a majority to pass more spending. You know, the governor potentially could veto it, there's all sorts of additional uh fail-safes there, but I think the House minority is doing a good job protecting uh the CBR from being used as sort of a flush fund, as you put it, um going forward. The the humorous quotes um they're there they've they've come from the majority, and one in particular from Calvin Shrage that I flagged flagged, this is from the ADN article on this dispute. But the revenue forecast that Republicans are banking on is not realized money, said Calvin Shrage, an Anchorage independent who co-chairs the finance committee. The minority, he said, was suggesting today that we rely on a forecast, unrealized, unpredictable, uncertain money to finance a budget when industry and Alaskans are asking for certainty. What the heck does he think the the legislature does every year? By relying on oil projections. I mean, we've talked about this on the show before, but by relying on oil projections for uh for a substance for a substantial part of the revenue base. I mean, every year the uh the legislature is relying on a forecast, unrealized, unpredictable, uncertain money to find the budget, finance the budget. So it's it's really sort of humorous to see to see the majority sort of reduced to arguing about the uncertainty of the money when they themselves rely on that uncertain, that uncertain, unpredictable, unrealized money when they when they craft together the uh the annual budget.

SPEAKER_00 8:28

Every year. Every year they rely on it. So I mean let me, I'm gonna, I want to dumb it down just a little bit just for myself, because what you're saying is the majorities are pushing hard for the CBR draw because the the thought is the backhanded the backhanded maneuver here is we can approve the CBR draw for this bill, and then if we end up paying for the bill out of the uh over over the overrealized gains from the Iran War, then we can use that money for something else, essentially. It gives them a$373 million fund to do something else with. So they could still pay for it out of the unrealized gains, but still have access to the$373 million in the CBR to spend on something completely arbitrary. That's that's the problem.

SPEAKER_01 9:17

Yeah. And so the Senate majority and the House majority would say, oh, that's not our intent. Our intent is simply to have this one time to pass the CBR, to have it as a backup, uh, if oil prices don't achieve the the projections, the current projections, to have it as a backup, so it's there to be drawn upon to pay for this stuff. But um it it also could be used to pay for other stuff if the if other stuff got included in in a subsequent bill, in the in the big appropriations bill, for example, where and they went back and did some stuff for FY26 in the big appropriations bill. So it's um it I I think the minority, the House minority has done a very good job picking up on the consequence of what BERT did. I mean, BERT has sort of a benign explanation of, oh, we just want to make sure the money's there, regardless, regardless of whether these all revenues come in. But but that benign exploration, you know, the legislature is often all about tricks, right? And that benign explanation, while it sounds good on the surface, once you dig into it and see how they structured the CBR draw to come into the revenue pot and only to go back out later if if the revenue if other revenues show up or if it's not appropriated out. Uh, once you see how it's structured that way, I think it's the House Minority did a very good job picking up on uh picking up on that trick. Yeah.

Oil Spike Changes The Math

SPEAKER_00 10:39

And again, uh you can see the frustration, even Zach Fields was quoted on Andrew Gray's podcast as calling the minority terrorists, uh, which I had to laugh at because that was the uh that was exactly the words that I used the first time that Bert tried some of these maneuvers on uh uh on the uh on the Senate side, well, especially when he was shutting down the road construction on things like the Canicus Bay Road and others, projects that were already in process and he was shutting, he was threatening to shut them down if he didn't get them to vote his way. Um, but yeah, I mean this is already, you can see the frustration and good on the minority for finding this. And again, going back to the whole point of the administration and the DOT has already said we don't need this fast track. We could already pay for this, just make sure it's included in the regular budget. We're covered, we're good. But somebody wanted to make some hay here, and I think they saw an opportunity to wheedle a little more money out and pull some money out of the CBR in the process.

SPEAKER_01 11:39

Yeah, well, whether whether that was the intent or not, that's been that's been the effect of the way the language came back from uh from the Senate. And I uh and and I as I say I really appreciate the House minority finding that. I mean, all of this, all of this is happening on a very uh very quick track. Not only is the supplemental moving on a fast track, but the consequences of the Iran War and its impact on oil prices are is moving on on a very fast track. It was not apparent at all that that we were set up for this at the time that the bill originally, the supplemental originally went through the House. And it was starting to become apparent, but not fully apparent at the time that it was was in the Senate. As oil prices have sort of exploded over the last week or 10 days or so as the as the war has become more intense, administrative board news has become has come into play, as prices have have risen quickly, and the futures market is saying that they're gonna stay there for a while, at least through the end of this fiscal year. We're only talking about three more three more months. Uh, as as prices have risen, it's it's this issue has come up about why do we need the CBR draw if we're gonna have all this revenue from oil. And so I'd uh credit to the House minority for picking up on that in such a dynamic situation where things are very fluid and moving very quickly.

SPEAKER_00 13:02

Yeah, Brad, at some point, I I mean, I'm just watching this back and forth. You know, they make it sound like the majority makes it sound like that they are um trying to be the fiscal conservatives, that they're trying to be fiscally responsible. And we just the thing is we just know. I mean, you know, we we we just know how they're how they're gonna be. And when you see the shenanigans and this kind of underpinnings, you realize this isn't all an end run to try and and and soak a little bit more money out of the thing to be able to bolster the budget again.

SPEAKER_01 13:40

Yeah, I mean, I it didn't start out that way. I mean, let's let's be fair to them. It didn't start didn't start out that way because of because at that time oil prices were down, and so you weren't seeing this spike on the on the on the traditional revenue side that could take take care of the problem. They wanted they wanted to do the supplemental, and the supplemental passed the house. It passed it with minority support uh the first time through. And and they needed the CBR draw at that point because there weren't there wasn't a projection of revenues coming in on the traditional side. And on the on the Senate, you can you can sort of excuse the Senate because Iraq hadn't be hadn't become fully formed in terms of its impact on oil prices. Iran, yeah. Yeah, Iran. But but by the end, I'm one more late. You're one more back. But but by the end, uh by the end of the time they were handling it, you could start to see this coming. Um and and I I will, you know, because it's so easy to do and so convenient to do, and we do it so often, I will blame Bert for the way he packaged this the CDR revenue coming in as a as sort of a ooh, look at this trick I can do. I could throw all this money in, sort of regardless. So, so you know, you sort of give a pass to the House the first time through, you sort of halfway give a pass to the Senate for because it's still not fully foreign. But when it comes back, you can truly see this going on. Right. And the House Majority's resistance on making an amendment or sending it to conference, sending the bill to conference in a way that would strip out the CBR draw or reduce the CBR draw down to a fairly minimal amount. Uh the House Majority's resistance to that makes you really begin to wonder if the purpose of this isn't to have that additional money that they can that they can budget to cycle.

When “Fiscal Responsibility” Means Spend

SPEAKER_00 15:36

I think it started out as a political stunt, right? Because again, the money was there, the DOT had said it, the administration said no problem, we can still get the match, et cetera, et cetera. But there was so much falderall going on over it. I'm sure that many people are like, this is an election issue. We can say that we saved the federal match. We could, I think that's what it's turned, it started out as. And then when the Iran War broke out, they saw it as an opportunity to get their grubby little hands on more money out of the C VR, which they they really want. We're back, Brad Keithly, Alaskan's four sustainable budgets. We're into the weekly top three. Number two of the weekly top three. The House Majority, again, demonstrates that it really doesn't know. I mean, I keep using that word fiscal conservative, but they really don't know what fiscally responsible means. What are you talking about, Brad?

SPEAKER_01 16:26

So they wrote an they wrote an opinion piece, and it's signed by all the members of the House Bipartisan House Majority Coalition. Um, an opinion piece of the ADN, the title of which is A Fiscally Responsible Approach to Supporting Great Schools. And it goes through and it lists all of the spending additional spending they need, starting with Chuck Kopp's favorite, uh the Defined Benefits Plan, uh, and passing the uh the return to a defined benefits plan for Alaska and uh the Alaska education industry. Uh, and then going on to talk about uh additional bills, uh, sort of ending up talking about, oh, and we need more money in the classrooms, too, by the way. So we need to have more money, more funding coming to the classrooms. We need to inflation proof or inflation adjust the amount of the BSA as it goes to the classroom, so we don't, you know, start losing uh money uh as a result of inflation in the classrooms, which we wouldn't, but but that's their argument. And so it goes through all of these, all of these spends um and and and says, you know, this is what would make Alaska schools great. The headline promises a fiscally responsible approach to supporting great schools, but they've but all they've really got in there are spending. They've got a little bit of revenues, the bill that uh uh that would apply the digital tax, uh, extend the the sales tax to uh or extend the corporate income tax to companies operating in the state digitally. Uh they've got a little bit of revenue in there, but it's not near enough to pay off all of the spending that they that they list in this article. But they try to play like it does. I mean, they that's that's the only revenue they they they they add, or that's the only revenue they're talking about, they talk about, and they use the title a fiscally responsible approach. So they try to play that this revenue that they're talking about, this little bit of revenue that they're talking about, uh, balances out all of the spending. But it doesn't. I mean, I I I'm not sure how many times you can call out somebody for something. I'm gonna try to set the record on it, I guess. Uh when that when somebody writes an op-ed saying, spend, spend, spend, but they don't include a balance of pay, how they're going to pay for it and who is going to pay for it, who's going to bear the burden um uh of that additional spending. Uh it's um uh I mean this is this is one in a long series that we've seen over the last several years. Uh, we need to spend more on this, we need to spend more on that, we need to spend more on the other thing, uh, but without any recognition that they have to pay for it, and there has to have to come revenues. I suppose if you pressed COP uh and others on on how this is fiscally responsible, they would say, well, we're gonna cover the spending through additional PFD cuts because there's still PFD money out there that we haven't spent yet. It's like burning a hole in their pocket, right?

SPEAKER_00 19:25

$685 million that we could spend so many great things on.

SPEAKER_01 19:29

And um, and so we're gonna be fiscally responsible by just taking it out of the pockets by taxing middle and lower income Alaska families. That's how that's why we're fiscally responsible because we've still got that pot of money sitting out there. And parenthetically, oh, and they want to trust us on the CBR, right? They want to have that money in the CBR, but oh no, they're not gonna spend it. But but you know, the money sits in the PFD and they spend that. So they would argue that they're fiscally responsible because there's still unspent, unspent PFD money out there. But it's not. I mean, when you write one of these articles, when you write one of these commentaries, particularly when you headline it with a fiscally responsible approach to whatever, you need to talk both about the spending side and the revenue side and where those revenues are gonna come from and who those revenues are gonna impact. That's fiscally responsible. That's pay as you go. That's balance. That's balancing the budget and a balanced approach by having revenues, by having, by, by talking about revenues of where you're gonna get those revenues from at the same time as you're talking about spending. And the House majority doesn't do it here, they haven't done it before. I mean, in all fairness, there's members of the House Minority, Julie Cologne, uh, who talks about uh, you know, the need for child care, additional spending on child care and tax credits for child care and all that sort of stuff. And she doesn't talk about where the revenues come from either. So it's not, it's not purely one side, but this just stands out because it's signed by all the members of the House majority. It leads with a headline that says fiscally responsible approach. Right. Uh, and yet it fails to achieve that.

SPEAKER_00 21:06

Well, what I found interesting is how cagey they got in it. Uh, they start talking about teacher retention and everything else, and that means that they they passed the House Finance Committee, HB 78, a shared risk retirement plan. That's what they call it. And that goes through the whole thing. They don't call it defined benefits because they know the stigma surrounding defined benefits, but that's the new, the new verbiage is a shared risk retirement plan. And then they go on to talk about the, as you talked about earlier, HB 280, which again applies the income tax on digital sales. Um, and of course, nowhere in here do they remind you that there is no dedicated money. So any money that comes in off this goes into the general fund, but they're making it feel like this is all about propping up brick and mortar schools. This money will go straight to the schools, which again is untrue. Because all the money is general fund money in the end. But this is this these are the games that they play, Brad. This is what they do.

Orwellian Wordplay And The PFD

SPEAKER_01 22:08

Yeah, and and Michael, it's it, you know, to some degree the press falls for this. This is this is on the the Binkley family blog. This is on the ADN op-ed page. And to some degree, the press falls for this and and and lets them get away with it. They let them get away with it in press conferences when they talk about being fiscally responsible. Um and and it's, you know, we've got a press that that doesn't have to use the term, doesn't press very hard on the arguments that uh that legislators are are raising. They view their job more as just repeating those arguments. Uh both the both the minority, both majority and the minority. I will say that that there's a fair number of quotes in the article on the supplemental budget from the minority explaining their position. And so I can't fault them that much. But you know, you get stuff like this this this this headline that says fiscally responsible. And that's, I mean, the ADN reserves the right certainly to change headlines um uh on op-end pieces. They've done it on mine, they've done it on others. And you can say a an approach, you could rewrite this headline and say an approach to supporting great schools, as opposed to a fiscally responsible approach. But then they nonetheless let that let that uh verbiage go go ahead and go. Um but but so it's it's a it's a multi-part problem. It's in part, we have legislators who aren't honest, who aren't transparent, uh, who uh who use words, uh going back to our Orwellian argument that we've made that we've talked about on the show a lot of times. Right. They're orwellianizing these terms uh into meanings that that that they don't commonly mean. I mean, they're used fiscally responsible commonly means balanced. But that's not what it means in the context of this argument. So they're using words for different meanings, for political meanings, um, and and the press is letting them uh more or less have a free ride in how they're and how they're doing it.

SPEAKER_00 24:07

Right. Well, it's frustrating to watch, but you can see again, this gives you a peek behind the scenes as to what what they're thinking, what they're focusing on, the whole our c sorry, I'm having a hard time reading this line. Our caucus organized around fiscal responsibility, supporting a public education and reforming our retirement system. Those things are also dichotomous. I don't know how you can slap them all together in one sentence. But the fact that these were the people that got us to this position of fiscal crisis, now claiming that they're organized around fiscal responsibility, I mean, they're selling it. That's all I guess they're doing. They're selling it. That's that's what's happening.

SPEAKER_01 24:48

Well, it's what's really somewhat humorous about this is they would explain, Calvin Shrage and others would explain that they're fiscally responsible because they have balanced budgets, and they have balanced budgets because they cut the PFD to whatever level it needs to be to balance the budget. They essentially tax the PFD, tax middle and lower income Alaska families to create enough revenue to balance the budget at whatever level of spending they decide. That's their that's their term of fiscal responsibility. And then they say, oh, and we're gonna be fiscally responsible because we're gonna take these revenues and we're gonna designate them for education uh and and spend it only on education, and so it's it's it's a good thing we're spending it on good things. But they don't give the same respect to an existing statute that's that was followed for decades up until the mid-20 teens. They don't give respect to a statute that says we designate these funds that you're they're now cutting. Right. Uh we designate these funds for the permanent fund dividends. So it's all it's all wordplay, it's all Orwellianism uh that uh that we fall into in Juneau.

SPEAKER_00 25:52

Final thoughts on number two, Brad, as we get ready to wrap up here. The the fiscally responsible coalition in the legislature uh, of course, uh is the majorities. They they're they'll tell you that at a drop of a hat, but the proof is in the pudding at this point, right?

SPEAKER_01 26:08

Yeah, I I should and I and I probably will at some point in one of the landline columns talk about fiscal responsibility, using the term fiscal responsibility and what it means, you know, before it before it's Orwellianized, what it means. It means balancing uh uh spending with revenues. And if you propose new spending, you need to propose new revenues uh uh to pay for that spending. Um and that's I mean, we need to we need to use terms in the manner in which they're intended, as opposed to as opposed to Orwellianizing these terms and using them and saying, oh, they it means this now. It means we can ignore a statute, ignore the statute we don't like, uh, and use funds out of that statute in order to support a statute we do like um and uh and and designate funds uh uh under that statute. We need to we need to sort of call this stuff out wherever wherever it occurs.

SPEAKER_00 27:05

Ben Carpenter, uh the former legislator host of uh Oversight Live said yesterday in the morning DOR said we have more oil money. Yesterday in the afternoon, OMB said we spent it on the operating budget, even sent supplemental requests after the statutory deadline. This legislature is a joke. Uh I mean, they're making up the rules as they go along, right, Brad? I mean, they just, you know, like you said, they can't even acknowledge or or or or uh follow the statute that we had to begin with. Only when it's convenient do we follow, oh now it's a statute. We've got to do it. It's uh, you know, it's this is where we're at, right?

SPEAKER_01 27:45

Yeah, exactly. Right. I mean, it's just it's so um, yeah. So if Ben, if if what if what if I'm interpreting what Ben's saying, that the administration is submitting additional supplemental requests uh after the deadline on top of the supplemental request that's already had in, um, then it's the administration that's that's participating in this in this uh in this problem as well uh by saying, oh, we got more money now. We got the CBR in the general fund. So now we uh now we just you know we got some more supplemental requests to take to take care of. Um it's at some point you gotta stop. At some point you gotta say, look, you know, if you want more spending, fine. Justify the additional spending, but come up with the revenues for the additional spending. Stop the drain on the PFD. Respect statutes. Um I remember Josh Rivak when Rivak was a senator. I had a conversation with him early on about the PFD. And he said his defense of supporting PFD cuts was, well, if they thought the PFD was so important, why didn't they put it in the Constitution? And my response was, well, because they thought you would respect statutes, because they thought you would follow the law.

SPEAKER_00 29:05

They thought statutory was enough. I mean, because you know, that's the law, but uh no.

SPEAKER_01 29:12

Uh and and you know, his response was, well, you know, it's not in the constitution, so we we don't have to do it. Well, okay, so you're saying that you, the legislature, can just, you know, willy-nilly violate the law. It it you can just apply these terms that that you know, we don't have to follow the law with respect to appropriations, but we do have to follow the law. It is important to set up this education fund and we're and we're gonna designate funds to it, and we're gonna follow the law on that. It's just, you know, it's it's the it's the Orwellianization, it's the lack of consistency, the lack of transparency, the lack of respect for uh statutes, for things written in the law that just you know really frustrates you and makes and makes the legislature and the administration, if they when they engage in it, make them untr untrustworthy. Right.

SPEAKER_00 30:05

Well, I mean, since it is St. Patty's Day, I can I can invoke the uh the whole phrase of the Irish democracy, right? Because when you get a legislature that just starts passing laws that don't matter or just ignore the laws on their own, willy-nilly, it it it it reduces the respect of all for the rule of law. And you know, they have the ability to change it. They have the ability to change the law. Instead, they leave the dueling statutes on the books because it behooves them to create that kind of chaos.

SPEAKER_01 30:36

And they aren't even dueling statutes. I mean, uh I once spent an um well, I've spent more than one column in the landmine as a lawyer digging into the statutes. They don't conflict. They didn't in when they passed that statute, the the the POMV statute in 20, yep, yep, in 2018, they didn't describe that they were creating a a conflict. They were describing it as a consistent step uh on top of the existing existing statutory framework.

SPEAKER_02 31:11

Yeah.

SPEAKER_01 31:11

Um, and and they don't conflict. I mean, what they say in in very stark terms is the PFD will come out of the POMV draw and the PFD will be calculated the way it's always been calculated. That statute's still on the books and come out of the POMV draw. There's not a conflict, it's only a conflict when the legislature wants to spend a whole bunch of money and doesn't have the money to pay for it, and all of a sudden an Orwellianization occurs. Oh, there's a conflict in this statute uh between various provisions of it. Wasn't there when they created it, but all of a sudden got there uh when uh when they wanted the money, when they didn't want to pass new revenue bills and they wanted money to pay for additional spending.

Two LNG Import Plans Collide

SPEAKER_00 31:54

Yeah. Well, and we often I remember back in the day we thought that Willowkowski was the hero for stepping up and trying to fight this in court. And then we realized later on, I think later on, that he understood the situation better than we did, and it was a way to lock in the legislature's ability to basically raid the permanent fund dividend. That's what it was about in the long run. So it's uh it's crazy, but here we are. Brad Keithly uh joins us. The weekly top three continues on to number three of this. This is a Wowser kind of week. The comp the competing LNG import products projects. Now, Brad, we talked about this earlier before this ever came about. We were like, what are these what are these utilities doing? What is going on? What's happening back and forth here? Why is this? And then two gotch electric pulled out of the consortium of uh of of utilities and said, You guys are crazy. We need to just do something, right? I mean, because that's how it felt. I mean, I'm paraphrasing, but that's what it felt like. It felt like you guys are sitting around with your thumbs up your bums. We're gonna go do something because we're gonna run out of gas. And now we've got competing projects. Let's let's walk through this.

SPEAKER_01 33:05

So we've talked about this before on the show, the the the import LNG projects, the the facilities, the projects that would build facilities or have facilities for the importation of LNG into the uh into the South Central. And Chugatch um is differently situated than some of the other utilities, particularly NSTAR, because Chugach's contract with Hillcorp runs out before the NSTAR contract runs out. And Hillcorp has said it's not going to extend or not gonna renew any of those contracts. So Chugach is facing a gas shortage, uh a shortage under existing contracts, um uh earlier than NSTAR is. So Chugatch has been motivated to get out in front of this issue. And one of the reasons they broke out of the consortium is the course consortium, excuse me, excuse me, the consortium didn't seem to have the same incentives or the same motivation to solve this problem in the near in the near term. But that result is we've ended up with two with two projects. Uh one is the conversion of the old Kenai LNG plant, the the LNG plant that was built uh by Conico Phillips back in the day, or Phillips actually back in the day, to uh to export excess uh gas that was being produced from the Cook Inlet, um, export that to the to Japan. Um and that facility uh exists, continues to exist. And what Hillcorp has done is Phillips had it, then they sold it to Marathon. Phillips kept it in, Conco Phillips kept it in uh and maintained it and kept it in uh condition that it could be brought back into service. Then Marathon, who owns the refinery next door to the LNG plant, bought the facility with the thought that they would import LNG in order to supply gas to the refinery that the refinery uses for uh for fuel. But Marathon never stepped up and and Marathon got the permits from the FERC and others to do that conversion, to convert it from an export project to an import project, essentially turn it around. Uh, but uh Marathon never did that. And so as the Cook Inlet issue has developed, the Cook Inlet gas shortage issue has developed, uh uh Hill Corp has come in and bought the facility from Marathon uh and is in the process and got the permits that Marathon had gotten to convert the facility and is in the process of converting the facility uh and has entered into contracts with ChuGatch to supply ChuGatch from that facility. Separately, NSTAR, who also has a LNG, uh a cooking and gas problem. Separately, NSTAR has also landed on the fact that we're gonna need imported LNG uh in order to solve South Central's needs, at least in the near term. Um and L and NSTAR uh uh uh went down the road of having uh negotiations with various providers at one time that we're gonna have a floating LNG plant up uh up in Matsu or up by the the port, the Matsu port. Uh but that sort of fell through, and other other projects have fallen through. And ultimately NSTAR landed on this sort of joint venture with Glenfarn uh to build a grassroots, a new LNG importation facility uh in Kenai on the Cook Inlet, uh, with the thought that that facility could be turned around at some point if a big line was built and we entered into contracts, export contracts uh for LNG, Alaska LNG to the Far East, that that kind of that that facility could be turned around and turned into an export facility uh at some point. So they've been working with with gunfire. But the the net result is that you got two, you got a relatively small market. Uh Cookingland is a relatively small market, uh, LNG or uh gas consumption market. And you got two competing facilities that are costly, right? Uh uh uh trying to import a relatively small amount of of LNG, at least to start. Uh, and uh and and each proposing two gatch uh through uh through the purchase was from from Hill Corp and NSTAR with his project with Glenfarm, each proposing to essentially bill the cost of those facilities through uh to customers. And the RCA quite rightfully has raised the issue about wait, do we really need to be doing this? Do we really need to be burdening uh uh uh consumers with two sets of LNG import facilities?

SPEAKER_00 37:37

Right. Well, especially since uh especially since the NSTAR project is is going to be built, its joint venture would be built on the backs of ratepayers uh more than anything else. I mean, and Chugatch, that's a con that's that's more with uh Hill Corp. Hill Corp is shouldering most of the burden on that. So, I mean, either one, again, you've got ratepayers that are gonna be paying for a lot of this stuff out of the thing. They're the ones that are gonna feel the pain on this.

Hilcorp Dominance And Open Access

SPEAKER_01 38:03

Exactly right. And Chugatch, I mean, Hill Corp's gonna build Chugach, and Chugach is gonna build those costs through to ratepayers. So it's not that it's not that ratepayers avoid avoid the problems with one um uh by you know going with uh with with with one facility uh with the hill with the with a Chugatch facility because Chugach is or with a Till Corp facility because Hillcorp's gonna be building this cost through. Excuse me, look getting to me. Um NSTAR has raised some one point that I think is a particularly good point, and I don't think is getting addressed in in all of this. NSTAR, one of NSTAR's points is look, you know, Hill Corp has a monopoly, essentially a monopoly position, dominant position at least, in the Cook Inlet gas market now. And look what they've done to us. They've not developed additional supplies, they've not uh uh extended their contracts. At one point, uh you'll recall a couple of years ago when the legislature was considering uh uh tax reform for the the Hill Corp loophole on corporate income taxes, Hillcorp uh uh threatened to not invest in the in the Cook Inlet anymore as a way of manipulating the legislature on the on the corporate uh corporate tax issue. So because of their dominant position, they got up, they had the power to do that. And so NSTAR is raising the issue. Look, we've we've had enough of Hill Corp's dominance and the effect it's had on us. So the fact that that Hillcorp is going to be, you know, extend that dominance by having the LNG facility, we don't really want to be part of that because we've been the the tail on the dog that that that Hillcorp's wagged uh either the past decade and a half. And that's actually a very good point. I mean, Hillcorp's not been the world's greatest actor uh in in this situation. Uh you can say, well, they they it wasn't economic to go develop additional supplies. Um that's pro that that may be true. Uh, but that thing with the legislature they did a couple of years ago has really stung me in terms of what they're what they're willing to do with their dominance uh in the in the Cook Inland. So I think NSTAR raises a good point. What that should lead to, though, is instead of building a whole new plant with Glen Farn that will become a white elephant, frankly, if the big line is never built, which it likely won't be. And so we'll have this big LNG plant that is brand spanking new with all the brand spanking new costs of it. Rather than rather than NSTAR focus on uh uh this new plant, we ought to be focusing on Hillcorp's dominance and how we deal with that dominance. And there are ways to do it. I wrote a column a few months ago, or a few years ago, maybe, maybe a couple of years ago, uh, that uh that that talked about the dominance that Hillcorp would have as a result of acquiring the LNG facility for Marathon and ways to deal with it, requiring that that facility, for example, be an open access facility. That is, that anybody could buy LNG, a tanker load of LNG, and bring it to the facility and toll it, pay for, pay for the cost of regasifying it, but not have Hillcorp be the dominant seller uh out of that facility. I think that's where the RCA and others should focus their attention, how to reduce or how to mitigate Hill Corps' dominance in having the Kenite LNG facility. I think the Kenite LG LNG facility, frankly, it's an existing facility. You don't have to, you don't have to rebuild it. Uh, it is scalable, you can build additional facilities on on top of it for additional demand. I think that makes the most sense in terms of in terms of efficiency and cost effectiveness of uh of having an LNG import facility, not having this new build out there with with uh with uh uh Glenfarn. But you've got to address the issue of Hill Cork dominance and what that means for the for the Cook Inlet long term before you really can say, okay, this is the solution to go with the uh to go with the Kenai LNG plan.

SPEAKER_00 42:18

Yeah, having that sole source contractor out there providing gas in the inlet or providing an an inlet for imported gas um could spell uh a challenge for trouble. What uh we got about a minute left here. What do you think the RCA is gonna do now that they they're taking these questions and asking these hard questions? What do you think is gonna happen?

SPEAKER_01 42:38

I think they're gonna take some time with it. Uh unfortunately, the commissioner who knows the most about this, Bob Pickett, has rotated off. Uh he served since Sarah Palin was governor. He was a Sarah Palin appointment, and he's known the most about this issue over the years, understood it the best. He's rotated off. So we've got a little bit of a green RCA uh uh dealing with the issue. But I think, as I say, I think that they ought to be focused on uh the Hill Corp dominance issue uh and and addressing that and and dealing with that as they as they come to grips with the with the situation.

SPEAKER_00 43:13

Quite honestly, I don't understand the this this appears to be like bickering siblings between Chukach Electric and NSTAR, why they couldn't come together and uh and come together with one plan instead of creating this kerfluffle for both of their ratepayers. That's what kind of blows my mind at this point.

SPEAKER_01 43:30

Well, NSTAR, I mean, I think there's two things motivating NSTAR. They they want the big line, because that's the that's Alaska Gas, and John Sims has been clear that's what he would prefer. Uh they want the big line, and the and the the the grassroots LNG import facility is a little bit of a pre build to the big line. It's a little bit of let's get this, let's get this started by building the LNG facilities that can then be turned around to export facilities. Um, and it sort of helps in a way. Particularly if they can get their ratepayers to subsidize it, it helps in a way sort of getting a bit of the kit for the LNG export project underway. And that's sort of been John's, one of John's uh themes. And the other one is I think I think NSTAR truly believes that they've been stung by Hillcorp dominance uh and and doesn't wants to find a way to get away from that dominance. And having their own LNG import facility that's not owned and controlled by Hillcorp uh is the way to do it. And I and I I I place a lot of weight on that. I think that's I think that's a valid, a valid concern. But I don't think that that justifies building a grassroots, expensive uh sort of uh uh we hope we get the cost uh uh down because we'll have the big line, but maybe it won't happen, we'll have to bear all those costs. I don't think it justifies building a whole new facility. I think instead what it justifies is is attacking is dealing with the Hill Corp dominance issue uh that's been created by Hill Corp acquiring the uh the marathon LNG facility. And and there's, you know, some will argue, oh, well, we can't do that because of federal law. Federal law creates exclusivity by the FERC over the over the Hill Corp facility and LNG import facility. My my response to that, and I've dealt with this with a lot of years, I've dealt with this when I was in practice. My response to that is that that's supposed to deal with the physical activities of importation. It's not supposed to deal with the economic activities related to importation as they as they relate, particularly where where those where those volumes are not gonna go in interstate commerce, but are just gonna stay in intrastate commerce. There's a specific exclusion in the in the Natural Gas Act that carves out state regulatory jurisdiction over facilities built for intrastate commerce. So um I think that I think there are ways to deal with this. It's gonna take an RCA that understands the issue and and is aggressive in dealing with the issue and aggressive in standing up with Gil Corp. Maybe that means the administration behind them that's aggressive in doing that. But I think that's the right way to attack this issue as opposed to let letting competing facilities and two sets of costs uh being built out there.

SPEAKER_00 46:16

Well, I mean, at least they're taking a look at it at this point. I mean, I guess I will give the RCA credit for that. At least they're taking a look at this. The question is, what will they actually do with it, you know, once that they've got that in their in their corner? Uh, I mean, do they basically just tell uh, you know, do they basically just tell uh Chugach, sorry, you know, you can't do it, or do they tell NSTA sorry can't do it? And then where does that leave the other party?

SPEAKER_01 46:42

Yeah, I would say, I would say, I would say they ought to include Hill Corp. They ought to open and docket on Hillcorp. The problem also, there's a problem also, the legislature hasn't clearly passed enabling authority for the for for the for the RCA to regulate the Hill Corp facility, the the LNG import facility, the economic aspects of the of the import facility. And so the RCA would likely say, oh, the legislature hasn't authorized us to do that. It's just, I mean, this is one of those situations where I can see a path to a solution. Um, and the solution is to deal with the Hill Corp dominance issue and then use the P9 LNG facility. You can see a path to that solution, but but everybody's just sort of you know tiptoeing around the the perimeter of it and not taking the steps necessary to enable the RCA to do that or to push the RCA to do that. So we may be we may be stuck in this for a year. I hope to heck the RCA doesn't authorize each of them to start throw flowing through costs from their own separate facilities. Yeah. That would that would be that would I mean talk about economic burdens on South Central, that would increase the economic burdens on South Central.

SPEAKER_00 47:53

Yeah, it's a pretty significant lift. I mean, it's we're talking about facilities that cost a quarter of a billion dollars, right? I mean, these are not these are not cheap facilities to uh to build, especially the N-Star one being a full facility versus a rebuilt. But I mean it's a it's a significant amount of money that would all go to the uh to the just right to the ratepayers in the long run.

SPEAKER_01 48:14

Yeah, yeah. I think there's a path, I think there's a path to success, but the path to success requires dealing with the Hill Corp dominance issue. I mean, I'm concerned about Sugatch and the Hill Corp dominance issue. What do you what's ChuGatch going to do if Hill Corp says, oh, the cost is$15 an MCF? When the world price is 10, what's Hill Corp going to do? What's ChuGatch gonna do when Hill Corp says, or when Hill Corp says it's$15 an MCF? They've they they've linked themselves. I mean, there's not any other suppliers out there they can go to because Hill Corp now owns the LNG facility, Hill Corp now owns all the production facilities out in the inlet. You're sort of stuck. And that's and that's and that's what that's the issue that the RCA needs to address.

SPEAKER_00 48:56

It's the vertical integration problem that we're talking about there, that they when you own everything, you can call the you can call the plays as as you know, kind of how you want at that point. And that's that is the danger, uh, as it is uh for right now. Yep. All right, uh Brad Keithly, hope you feel better, my friend. And I hope you enjoy the concert tonight. Um, and uh we're we're all living vicariously through you uh through through your fun times. I hope you enjoy it. Martin, Martin Hayes, right? I'm gonna have to go back and look him up and see what he has. Pure Drop. All right. Martin Hayes, Pure Drop, exactly. Thanks, Brad. Appreciate it, my friend. Enjoy yourself. We'll see you next week. Look forward to it, Michael.

What To Watch Next Week

SPEAKER_01 49:38

Well, that's a wrap for another week's edition of the weekly top three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, SoundCloud, Spotify, and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week for another edition of the Weekly Top Three.