Opinion: After months of LNG hearings, Alaska still deserves answers

For months, including the past 30 days in special session, Alaska legislators have held hearing after hearing on the proposed Alaska LNG project. Committees have taken testimony from the administration, state agencies, consultants, developers, economists, local governments, utilities and advocates. And yet, after all that, Alaskans are still being asked to support a massive tax restructuring for the largest energy project in North America without knowing some of the most basic facts. [Related coverage: ‘A moving target’: Senate members race to finalize Alaska LNG tax breaks as session deadline looms] This is not a debate over whether Alaska needs affordable energy. We do. Interior families know that better than anyone. Fairbanks residents have lived with the reality of punishing heating costs. Southcentral Alaska faces its own looming gas supply challenges. Nobody serious dismisses the need for long-term energy security. But urgency is not an excuse for vagueness. In fact, the larger the promise, the greater the obligation to provide details. And the details are still missing. We still do not know the final cost of the project. We have seen estimates, ranges and assumptions, but not a bankable number the public can rely on. That matters because every other claim flows from the cost. The price of gas, the tax benefit, the investor return, the municipal revenue loss and the state’s ownership value all depend on what this project actually costs to build. We still do not know what Alaska will own when the financing is complete. The state has long been described as holding a 25% position, but if new investors come in, if producers demand their own equity shares or if the state cannot participate in future capital calls, that ownership can be diluted. We still do not know how much more public money may be required. If the state wants to maintain its ownership stake, will it have to contribute additional capital? If it does not contribute, how far is it diluted? We still do not know the real consumer price of in-state gas. Political supporters talk as if cheaper gas is guaranteed. But the actual price depends on project cost, financing terms, pipeline tariffs, gas supply contracts, throughput, export volumes and whether the LNG phase is ever built. We still do not know what happens if only Phase 1 gets built. The pipeline may be discussed as one project, but the economics appear to depend heavily on whether the export phase follows. If the pipeline is built but the LNG export facilities are delayed, downsized or abandoned, who carries the cost? Ratepayers? The state? Utilities? The developer? We still do not know whether the announced buyer agreements are binding, financeable commitments or preliminary expressions of interest. There is a large difference between a press release and a contract strong enough to support billions of dollars in financing. We still do not know how municipalities will be made whole. The proposed tax structure would significantly reduce local property tax revenue from the project. Communities that would host critical infrastructure deserve more than assurances. And perhaps most importantly, we still do not know whether this tax break is necessary, sufficient or simply convenient. If lawmakers are being told the project cannot proceed without it, then Alaskans deserve to see the math proving that claim. Alaskans are not asking for perfection. We understand large projects are complicated. We understand financing evolves. We understand markets change. But when the public is asked to accept a major tax deal, the public should not be told to wait until later for the answers. The Legislature’s job is not to be a cheering section. It is to protect the public interest. Before Alaska signs away revenue, lawmakers should demand the answer sheet: the real cost, the final ownership structure, the consumer price, the municipal impact, the financing plan, the risk allocation and the consequences if the export phase never happens. After months of hearings, the problem is not that Alaskans know too much. It is that we still know far too little. Andrew Halcro is a past executive director of the Anchorage Community Development Authority. He is a former state representative and past president of the Anchorage Chamber of Commerce. The Anchorage Daily News welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.