February 11, 2025 • 55 mins
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 February 10, 2025.
This week, our top 3 issues are these: 1) we explain what a difference a week made as we sort through recent developments on the Cook Inlet import projects (2:04), 2) we discuss our thoughts on President Trump's comments on Japan and #AKLNG (19:02), and 3) we discuss the additional disclosure that we think all presentations and op-eds pushing for more state appropriations should contain (36:56).
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top three, the top three things on our
mind here at Alaskans forSustainable Budgets for the week
of February 10th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:32):
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:55):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the project's page onnational blog site mediumcom,
you can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:19):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we explain what
a difference a week makes as wesort through recent
developments on the Cook Inletimport projects.
(01:42):
Second, our thoughts onPresident Trump's comments on
Japan and AKLNG.
And third, we discuss theadditional disclosure that we
think all presentations andop-eds pushing for more state
appropriations should contain.
And now let's join Michael.
Speaker 2 (02:04):
This week's topic.
Let's get started Sorting outthe Cook Inlet.
There's a lot here, Brad,Unpack it for us here.
What do we got?
Speaker 1 (02:12):
So the alternate title to this segment is what a
difference a week makes.
Last week we were complainingabout the RCA not stepped up to
look into what was going on inthe Cook Inlet.
We were complaining, we weresaying where is Chugach and MEA?
In all this, nstar was on trackto sort of an unabated track to
(02:37):
go forward on its talk aboutQuixotic, on its Quixotic effort
to build a new LNG plant onproperty that neither it nor the
person who it proposes to buildthe plant own, without any
existing permits, butnevertheless was on track to do
that.
That's all changed in a weekand the reason I'm wearing the
(02:58):
ray of sunshine is I think it'schanged in a good way.
Two big things, one prettypublic, the other sort of
running under the radar.
The one that's pretty public isthe announcement during the
week by Chugach and HarvestAlaska, which is a subsidiary of
(03:19):
Hillcorp, to buy, for Hillcorpto buy the old Kenai LNG plant.
The existing plant.
The plant that's got theexisting permits to import gas
right now has got the facilitiesmostly in place to do that, has
got existing LNG tanks in placeto store the imported gas, a
(03:44):
lot of the imported gas.
The announcement by Chugach andHillcorp, that Hillcorp's going
to buy that facility fromMarathon and Hillcorp then is
going to sell gas gas that itregasifies out of that plant to
Marathon, who, interestinglyenough, uses a lot of gas or
(04:05):
would like to use a lot of gasto power its refinery and to
sell it to Chugach and to solveChugach's problem in that
fashion.
Nstar talks about 2029, 2030 asa solution to its problem its
(04:27):
plant on land neither it nor theparty with whom it has entered
into a contract own.
While NSTAR talks about thattimeframe, chugach and Hillcorp
are talking about, or Harvest,are talking about a timeframe
much shorter than that, atimeframe that meets Chugach's
uh, and presumably would meetmea's needs and homer's needs
(04:51):
like next year you're talkingabout like 2026 by delivering
some of the first gas, with fullproduction coming up in 28,
right I mean it's?
Speaker 2 (04:58):
it's a fast timeline compared to everything else
we've heard so far it's anexisting plant.
Speaker 1 (05:02):
What you have to do is you have to re-kid it some,
because right now it's stillkitted to export gas, to take
gas in, liquefy it and thenexport it on ships and take it
out.
So you've got to change thatmachinery out to re-gasify the
liquefied gas that's going tocome in, and you've got to get a
(05:23):
permit gasify the liquefied gasthat's going to come in, and
you've got to get a permit.
Right now it's permitted, uh,only to receive gas for sale to
marathon, for marathons needs.
It's not permitted for sale toothers, uh.
But but those things, I don'tthink most analysts think those,
those things are big deal.
Certainly not the, certainlynot the equipment side of it's
not a big deal, and I don'tthink most analysts think the
(05:44):
the permit side is a big deal.
So that's, that's one thing,that's a, that's a.
That's a huge thing that thatwe'll be talking about now in
coming weeks.
The second big thing, uh is thatthe rca stepped in uh and and
put a pause to nstar's'sproposed transaction with
(06:06):
Glenfarn.
Nstar had filed for approval,seeking approval to pass the
costs of its deal with Glenfarnup to a certain point sort of
the beginning stages of it up toa certain point through to its
ratepayers without further RCAreview.
It was essentially an effort toget an approval of its project
(06:31):
in the form of a rate increasewithout asking the RCA to look
at anything else.
The RCA stopped that, suspendedNSTAR's filing and set it for
hearing to look into it.
Now part of what NSTAR hasproposed to do is to.
You know we've talked about thebackstop on the AKLNG project a
(06:53):
lot, the backstop that ADA hasproposed to give to AGDC, so
AGDC can give a backstop toGlenfarn.
Actually NSTAR has a backstop inits deal with Glenn Farn.
It agrees, has agreed to fundif NSTAR has or Glenn Farn has
to do the same sort of FIDanalysis they have to do on the
(07:17):
big line and NSTAR has agreed tobackstop Glenn Farn's costs on
that.
If Glenn Farn does the FID anddecides not to go to FID or the
parties decide not to go to FID,that is, pursue the project,
construct the project.
If Glenn Farn decides not to goto FID, then NSTAR has agreed
(07:38):
to backstop Glenn Farn, to repayGlenn Farn for all the costs
it's incurred, up to $50 million, the same thing as on the AGDC
side and Instar proposed to theRCA to be able to pass those
costs.
If it paid those to Glenfarn,pass those costs through to its
(08:01):
ratepayers through the gas costadjustment mechanism and that
would be a huge sum to try toget through the gca 50 50
million dollars to the ratepayers, just without any further
review.
Speaker 2 (08:13):
Oh, and the rca said what the rca said stop.
Speaker 1 (08:17):
Uh said we're going to have a hearing on this stuff,
and and I and it came rightbefore the announcement of of of
the the chugach and uh harvestdeal, right before the
announcement of the Chugach andHarvest deal, right before it,
like the day before it, that theRCA said stop.
And I don't think the RCA knewabout the Harvest-Chugach deal,
but the two line up very well.
(08:39):
So now what the RCA can do istake that proceeding and turn it
into an analysis of what thehell are we doing here in the
Cook-Ellen.
Do we need two facilities?
Do we need to keep pursuingthis quixotic dream that NSTAR
and Glenfarn have to build aproject on land neither of them
own To?
(09:00):
You know, go down the road withthis project.
Do we need that?
Or can we, you know, collectall of the demand in the Cook
Inlet and come through theexisting Kenai plant?
There is an issue with theexisting Kenai plant and Senator
Giesel is actually, you know,sort of vacillating between good
(09:23):
and bad on this issue.
Senator Giesel actuallyidentified, you know, sort of
vacillating between good and badon this issue.
Senator Giesel actuallyidentified it quickly, although
she identified it in a verynegative way that I don't think
it deserves.
But the problem is is Hillcorphas market power what lawyers
and what antitrust economistswould call market power in the
Cook Inlet and it's nothesitated to use that market
(09:44):
power.
I think what stung Giesel waslast year when Giesel proposed
to close the Hillcorp loophole,the Hillcorp corporate tax
loophole, and Hillcorp came backand said oh yeah, you want to
do that, fine, we'll just stopinvesting in the Cook Inlet.
Basically, basically, you know,threatening and blackmailing
the legislature over the uh,over the proposal that Hillcorp
(10:08):
pay the same taxes as everybodyelse.
Um, and and Giesel, I thinkstung by that um as background,
giesel said you know there's aproblem with this, with this
Hillcorp proposal, which is, youknow, hillcorp's market power.
We've, they have market powernow on the on the produced gas
side.
This would give them marketpower.
They have market power now onthe produced gas side.
This would give them marketpower.
(10:28):
She's concerned.
This would give them marketpower on the imported gas side
and South Central would just betotally at Hillcorp's mercy.
There's a way of dealing withthat and that is to slightly
amend existing utility law inthe state to clarify that an LNG
import facility that resalesgas to utility is in fact a
(10:48):
utility itself.
Right and turn and turn thatenergy LNG facility into uh,
into a utility to the extent ofselling gas to uh, uh to
utilities, and I and I and thatwould, that would, that would
subject Hill Corp that plant toRCA jurisdiction, rate
jurisdiction and and and termsand conditions of service
(11:08):
jurisdiction.
I think that'd take care of theproblem.
But but you know it's, it's anissue that needs to be, it's an
issue that needs to be thoughtthrough at the same time as
we're thinking every, everythrough everything else.
Cause you don't want to, youdon't want to be, you don't want
to have the solution to theHillcorp market power problem be
to give Hillcorp another set ofmarket power.
Speaker 2 (11:29):
You know it's interesting because this whole
thing also is built around thisidea of time compression as a
weapon.
Has NSTAR been delaying thiswhole thing long enough to then
to go to submit to the RCA?
Well, we need to be able to dothis without further review,
because now we're on a timeframe, even though they've been
the one that's delaying.
There was a post on Facebooklast night by somebody who's
(11:49):
done a lot of work with HEA,talking about HEA, because HEA,
homer Electric Association, isthe first utility whose contract
is going to run out next month,and they're talking about
having to get more gas fromNSTAR at triple the the cost
triple the cost of what they'regetting right now to generate
electricity.
Um, and if that doesn't makethe pucker factor go up for
(12:11):
everybody who's on an heaaccount, including me, um then
yeah, you should be looking atthis.
But I think that's part of thething, right, they seems to.
Maybe the delay makes sense now.
They've been delaying thiswhole time, brad, trying to get
this thing done so that theycould then create.
It's a created crisis at thatpoint, right, but the RCA seems
to have adequate service at areasonable cost.
Speaker 1 (12:50):
That's part of their statutory obligation.
In exchange for the monopolythey're given over their service
areas, they're supposed to haveadequate service at a
reasonable cost.
And NSTAR, by this delay, hasnot only maybe tried to put the
RCA in a crammed down positionwith respect to its proposal,
but put the RCA in a crammeddown position with respect to
its proposal, but put the RCA ina crammed down position with
respect to these costs.
I mean, if you have a projectthat doesn't go, a failed
project you're not a utility isnot automatically entitled to
(13:15):
recover those costs.
It's a risk that utilities takeand, as the RCA pointed out in
its suspension order, it gaveNSTAR a healthy rate of return
on equity in order to compensateat some for the risk of supply,
the risk of its supplyobligation.
What NSTAR is really trying todo with this filing is say, look
(13:40):
, we're no risk, you know, ifthe project goes great, we can
pass through the costs.
The project doesn't go and weincur costs because we have this
backstop agreement withGlenfarn.
If the project doesn't go, weget to pass those costs through
the GCA.
And putting the RCA in thistime crunch, frankly, I think
they're trying to leverage.
(14:01):
They were trying to leverageyou know the time crunch as a
way of getting their costsrecovered either way, when they
shouldn't be entitled to that.
So the RCA has put a stop to it.
Yay for the RCA.
Look, we've criticized the RCAa lot.
This is a good job, rca Right.
And yay for the Kenai LNG plant, for somebody stepping up.
(14:26):
Still got an issue to go.
Still got the market powerissue to go.
But somebody stepping up andsaying we're going to use this
existing facility.
Speaker 2 (14:33):
Yeah, Brad, I mean I looked at this and all I could
think of was so that was the endgame.
I mean, literally the lightbulb moment went off for me when
I looked at this and saw whatthey were trying to do with this
rate increase.
And I looked at this and sawwhat they were trying to do with
this rate increase and I waslike they've been delaying this
whole thing so that they couldthen backstop it, put time
compression in there and say wedon't have time to do this
because now we're out of timeand we've got.
You just got to give us the,you just got to write the blank
(14:53):
check and we'll do it.
And, thank God, the RCA saidwhoa, wait a second.
Speaker 1 (15:13):
We're in charge here and Chugach.
I think that's one of thereasons why Chugach kind of
broke faith with them here awhile ago and said, no, we're
going off in another direction,because I think they could see
the way things were going.
I mean this mightAR it metNSTAR's needs because NSTAR is
the last, the last to run out ofthe Hillcorp contracts.
They're the last to run out ofthe Coquitlam contracts.
But it didn't meet Chugach'sneeds.
I mean, giesel said somethingthat that just that bugged.
Well, everything Giesel saysbugs me in one way or another.
(15:38):
But Giesel said something thatjust bugs me.
She was criticizing Chugach aspart of her attack on on, you
know, the the hillcourt marketpower thing.
She was criticizing chugach forhaving broken off from nstar,
having broken off from theunified effort to find a
solution to the cookie.
That's not what happened.
What happened is nstar broke offfrom chugach, nstar was coming
(16:00):
up with a solution and and Ithink part of the motivation
here, michael, is nstar wastrying to limit its exposure,
right, and you can see that inthe filing.
Nstar is saying look, if theybuild it, we get to recover the
cost, if they don't build it, weget to recover the cost, we
don't have to incur any costs.
So, as part of NSTAR lookingout for itself you know one
perspective on this is it leftChugach high and dry and Chugach
looking out for itself?
(16:20):
You know one perspective onthis is it left chugach high and
dry and chugach, looking outfor itself, said, hey, we need
to find another solution.
And what about this existing lgplant over there, right, right,
um, and so you know it's not.
Speaker 2 (16:36):
It is not chugach breaking off from nstar, nstar
breaking off from chugach andgoing in a way that helps nstar
but not chugach and everybodyelse too, right, I mean because
this only served them.
This didn't serve any of theother utilities GVEA, mea, hea
it didn't help any of the other.
This was strictly what was bestfor NSTAR at that point.
And they may say, well, heylook, we ended up not having to
(17:00):
pay.
The rate payers are going tohave to pay.
So they weren't really evenlooking out for their own rate
payers at that point.
Speaker 1 (17:07):
The whole thing is just astonishing.
I got one comment as I wasasking around about the Hillcorp
deal or the Harvest deal that Ifound fascinating.
You know, why is this Hillcorpbuying this as opposed to Instar
?
And the response was well, onlycertain people came to the data
room, uh to, to look at buying,at buying the plant.
(17:33):
The implication was and I don'tknow this to be absolutely true
, but the implication was instardidn't even go look at the
existing plant.
They were off in their own offin their own world.
Again, this, this, this entire,you know mindset of instar to
not have any risk, to avoid anyrisk, because if they would have
bought the plant and somethingwould have gone wrong, then
they're at the cost of the plant.
On the way they're doing thiswith Glenfarn, they're trying to
(17:56):
be riskless, they're trying tojust avoid any exposure
themselves.
Speaker 2 (18:00):
Right, it's astonishing.
Two sidebar comments.
First of all, frank has thisevery week and I know it's not
really your bailiwick, but doyou think Brad will ever address
legislative funding forcommercial fish?
I know it's only tens ofmillions of dollars.
Small fish I guess that's notreally your bailiwick, but have
you looked at anything with thefishing or commercial fishing in
the state?
Is that anything you're workingon?
Speaker 1 (18:27):
state.
Is that anything you're workingon?
It's not, Michael.
I look at it from time to timein the context of the budget and
whether it can be a contributorto the budget, but the tax
rates you'd have to impose oncommercial fish are huge for
them to even be a materialcontributor to the budget.
Speaker 2 (18:37):
So it's not something .
Speaker 1 (18:38):
I've spent a lot of time on.
Speaker 2 (18:40):
Anthony says.
I feel bad for Brad.
Sometimes being part ofAlaskans for Sustainable Budget
has to feel like going to beingin the Alaskans for the
Domestication of Bigfoots groupTheoretically possible but
realistically never going tohappen.
Chin up, brad, and that's whatI feel.
Sometimes it's like we'rechasing the inevitable who's he?
(19:00):
What's it that nobody believesin Brad Keithley on to number
two of the weekly top three andwe're working our way through
this stuff.
Japan and LNG this was the bigsurprise.
On Friday.
I was actually sitting at mydesk monitoring my own radio
station, listening to this whenthe president had this press
conference and I was like what?
Alaska, lng as a?
(19:22):
What national security Japan?
And I thought, well, we talkedabout this, we predicted it.
Is it really going to come true?
Brad, your thoughts on Japanand Alaska, lng and the federal
government what are we lookingat here?
Speaker 1 (19:35):
So here's what's happening with the LNG project
and it's interesting to see howit's twisting Dan Sullivan's
doing this project.
And it's interesting to see howit's twisting Dan Sullivan's
doing this and Trump certainlydid it on Friday.
They're twisting the projectfrom a commercial project, a
project that is designed to makea lot of money for whoever
(19:59):
builds it.
They're twisting because thathasn't worked out much.
I mean, nobody can run numbers,you can't even do fantasy
numbers that make that true.
They're twisting it into anational security issue and
twisting it into isn't this agreat solution to keep Japan
tied to Alaska, to the UnitedStates?
(20:22):
Isn't this a great solution tokeep Korea tied?
And they're saying things thatare sort of funny.
They're saying, oh, you know,we're only an ocean away, or you
don't have to go through thePanama Canal, there's no
security risks, and you know,lng is a great way to link into
their security, to providesecurity to them.
At the same time as some ofthese same people are saying, oh
(20:44):
, we wouldn't want Alaska to bedependent on LNG, we wouldn't
want to bring LNG up to the, youknow, because Chinese
submarines might, you know, takedown all of the LNG tankers.
But now you know LNG tankers inJapan and Korea are secure, but
they're twisting.
They're twisting therationalization and the project.
(21:05):
Then let's go down that road.
And if Japan and Korea thinkthat's a rationalization for the
project, then let's go down theroad.
(21:27):
But here's the deal.
Alaska shouldn't be paying forit.
It's not commercial to Alaska.
We don't make money.
In fact we lose money.
By the time you look at all thesubsidies that the AKL and AGDC
are assuming that the statewould throw in to get the
project even down to the costthat they claim would be
(21:50):
competitive.
Alaska is losing money on thisproject, clearly losing money on
this project, money on thisproject.
So it's not commercial.
The new mantra is not acommercial mantra.
It's not that you're going tomake money out of this project.
So it's a thing to do Now.
It's national security and ifit's national security, then the
(22:13):
nation ought to pay for it.
The federal government ought topay for it.
I mean, nobody would expectAlaska to pay for Coast Guard
ships, ice-breaking Coast Guardships, although they're most
important to Alaska.
Nobody would expect the stateto pay for that national
security device.
Nobody expects Alaska to payfor the jets up at Eielson that
defend us.
Nobody expects us to pay forthe troops that are up at
(22:35):
Wainwright, that are prepared todefend, you know, the Arctic,
the Arctic portion of the U?
S?
Which, right, not amoney-making operation which?
Which is Alaska?
Right, they're all nationalsecurity issues.
And so if this is, if, if thisnow is a national security issue
, great, but the feds ought topay for it.
And there's precedent for this.
(22:55):
In world war two, ii, we had aproblem, the nation perceived a
problem getting oil, which wasimportant to the war, that was
taking oil from the Southwest,from Texas and Louisiana, which
(23:23):
is where the oil was to the EastCoast refineries, primarily in
Philadelphia and the New Yorkarea.
And the concern was that wewere putting the nation at risk.
And so, as a national securityevent, the country built, the
country federal government builttwo pipelines, one's called the
Big Inch and the other's.
The country federal governmentbuilt two pipelines, one's
(23:44):
called the big inch and theother is called the little inch,
and they're still in operationtoday.
One's in operation as a, as agas pipeline, the other is an
operation as a, as a productspipeline I think an oil products
pipeline now, but they're stillin operation today.
And the country built them,created a corporation that was
(24:06):
that had a lot of parts to it,but some of the parts were the
oil companies who were capableof building this thing.
The company the country formeda corporation built the
pipelines.
It was built as a nationalasset, as a defense asset, as a
national strategic asset.
Now, after the war was over andnobody was concerned about
(24:27):
German U-boats anymore, theywere sold into the private
sector as part of the surplus,the war surplus sales.
They were sold into the privatesector and became part of the
private sector.
But at the time they were builtthey were perceived as national
strategic assets and built as aas as national, as national
(24:48):
pipeline.
So if that's, if that's how weperceive, is that, if that's how
we're now perceiving the, theAKLNG project, if that's the
push that Dan Sullivan's puttingbehind it, then you know my
response is put your money whereyour mouth is.
If it's a national strategicasset, put it through the
defense budget or put it throughsome other budget, uh, to go
(25:09):
ahead and and build the pipeline, um, and and go forward with it
.
Uh, go forward with it that way.
Don't just like you wouldn'task Alaska to pay for the planes
up at Eielson or the troops upat Wainwright, uh, or the coast
guard, or the coast guard shipsthe Kodiak.
Don't ask Alaska to pay for it.
Don't force this national, thecost of this national strategic
(25:33):
asset on one state.
Spread it broadly, uh, throughthe, through the federal budget,
and I and I think that's youknow, I think that's the, I
think that's the way if we'regoing to go down this road.
I think that's the way to goforward.
No one, you can't make acommercial case for this
pipeline.
You just can't.
I mean, agdc has tried andtried repeatedly to make a
(25:54):
commercial case for it.
You just can't in the currentenvironment.
Right, if you look, if you lookat you know environment.
If you look at all of the LNGthat's coming on the, all the
tidewater LNG that's coming onthe market throughout the nation
.
If you look at the forwardfutures prices for LNG, the
AKLNG project just can't competecommercially.
Speaker 2 (26:10):
If you look at their own study, which has some of the
rosiest assumptions theWood-McKenzie report, which even
the rosiest assumptions, is an80% subsidy and it still
delivers gas at 30% above marketvalue.
I mean that's an 80% subsidy onwhat they're still using
numbers from the Walkeradministration of $44 billion
(26:31):
you know it's probably 60 or 70billion now by the time, with
all the inflation and everything.
But the rosiest assumptionsat44 billion with 80% subsidy is
a 30% over market value.
You just you can't make ithappen and this is what you and
I have been going on about formonths.
Finally, I noticed thisHillcorp article that was
talking about Hillcorp.
(26:51):
They finally quote Kathy Tilton.
At the end it says well, ofcourse Alaskans would prefer to
drill their own gas, but theonly solution is him.
I mean we've been talking aboutthis for months that this is
the only solution.
Why is it that we're the onlyones that?
I mean they finally came aroundto our point of view because of
time, essentially at this point.
Speaker 1 (27:10):
Well, michael, it's because, it's because we run
spreadsheets, it's because weactually take the numbers and
calculate the market effects.
I mean a lot, a lot of this.
A lot of the legislaturecertainly runs, as you have
correctly pointed out time andtime again, on emotion, the
emotion of oh, it's gotta beAlaska gas, it's gotta be, you
know right, and and.
(27:31):
But when you put it inspreadsheets as I do often, when
you put it in spreadsheets, itdoesn't, it just doesn't
calculate.
And the same thing's now trueof the, of the, of the big line.
It just, it just doesn'tcalculate.
If it did, it would have beenbuilt already.
If it did, we would have morepeople than just Glen Farn, a
(27:54):
small cap, inexperiencedoperator trying to trying to hit
it big.
We'd have more than Glen Farn,uh, trying to pursue this
project.
What do you think?
But it just doesn't.
Speaker 2 (28:06):
What do you think the possibility is that this
actually becomes a nationalsecurity, a national strategic
asset issue where they actuallywill break off some money.
I mean, do you, do you thinkit's going to happen?
Or does this new Chugach HillCorp harvest thing, does that
submarine it?
I mean what?
What do you think Are they?
Are they hell bent for leatherto get it done?
Speaker 1 (28:25):
or you know what's your, what's your take on this?
Now, chugach Hill Corp, uh, uh,even the NSTAR deal does not
affect the big line, does notaffect the international nature
of the, of the big line, I meanthe.
The in-state demand isminuscule compared to, compared
(28:46):
to the size of that line andcompared to what they need to
make it.
To make it, uh, to make it work, Um, does, does.
Does the nationalization of it?
Um, uh, does that work?
You know, with Trump, you neverknow.
I mean tomorrow Trump may wakeup and say, yes, it's important
that we have this tie to Japan,it's important that we have this
tie to Korea.
I mean, who knows what Kim Jong, whichever one it is in North
(29:10):
Korea, is going to do tomorrow?
And you know, and perturb Trump, and his response would be X, I
mean.
But that's the case.
They're making for it, that'sthe case Dan Sullivan's been
making for it, that's the casethat Trump himself made for it.
On Friday, you know, john Simstried to do that with the whole
(29:34):
Cook Inlet incentives deal.
At one point he said well, youknow, we got a military base, we
got J-Bear, we don't want itdependent on imported gas.
And he tried to turn that intoa national issue and the
response was okay.
If it's a national issue, ifit's a national security issue,
if it's important that J-Bearhave Alaska gas, then J-Bear can
pay for it.
And you know, that sort of diedout fairly quickly, right.
Speaker 2 (29:58):
So you know maybe.
Speaker 1 (30:00):
Maybe if we say in the federal government can pay
for the big line, maybe that'lldie out fairly quickly.
Speaker 2 (30:04):
Yeah, and still no talk of maybe a Jones acts
exemption, a little bit of moneyto dredge out up North to do
tankers, or I mean there youknow there could be other
solutions.
But here we are.
Here we sit, wondering whereit's going to happen, but at
least we're further ahead thisweek than we were last week.
Like you said earlier.
What a difference a week makesone minute.
Speaker 1 (30:23):
I mean Trump, trump's opened, and you know Dan
Sullivan had been trying to kickthat door open about.
You know, the national securityissues, this whole.
This all is justified bynational security, but Trump
just blew it open, as as Trumpdoes when when he gets into an
area.
He just blew it open on Friday.
And so, okay, let me thinkabout this as a national
(30:43):
security issue.
And the first thing that cameto my mind seriously shows you
how bizarre, how twisted I am.
First thing that came to mymind as I was reading the
articles okay, big inch andlittle inch, we've done this
before, Right, we?
You know that's how part of thepipeline, the, the, the, the
Southwest East Coast pipelineindustry got started.
(31:05):
We've done this before, solet's let's do it again.
I mean, if that's what we'retalking about, it's a strategic
issue, then the federalgovernment ought to step in and
do it.
Speaker 2 (31:13):
Well, I won't hold my breath, but I will be watching
with interest at this point tosee where things are going.
You know, I don't think a lotof people really understand and
I've come to understand moreabout Trump here in the last
three or four weeks than I everhave before and realizing that
this guy is transactional.
(31:34):
Dan Bongino has been talkingabout him being a transactional
president and in a lot of waysthat's true.
I didn't think about him as thebusinessman who comes in as a
negotiator, because he's one ofthe best negotiators out there.
You can love him or hate him,but what he does is he walks
into a room and he stakes out aposition way over here.
He only really wants to getabout halfway there, but he
(31:58):
stakes out a position way overhere and so everybody loses
their mind and they're like oh,it's a shock and awe value,
right, that's what he does witheach and every one of these
things.
And you saw again, not a fan oftariffs here, but he's utilized
tariffs as a bludgeon.
Look what he did with Mexico.
Look what he did with Canada.
Oh, you don't like it?
Well, we'll just put tariffs oneverything.
And they immediately.
(32:18):
You know, oh, you don't like it.
Well, we'll just put tariffs oneverything and they immediately
.
You know well, what would youlike us to do?
We'll stop immediately.
You will do, you know, and sothat's.
It's a genius maneuver, itreally is, he is.
He walks into a room and saysthis is what I want, and he's
really happy to get half that ifthat from time to time.
But that's where that's whathe's doing here.
(32:40):
I just hope that maybe you knowan Alaska LNG line as a
national security issue.
Maybe he's serious about it.
I don't know, but we'll bewatching closely, I guess.
Speaker 1 (32:49):
Well, you know, I, I think, I think you know it may
have merit as a nationalsecurity issue.
It may have merit, but as anational security issue it
shouldn't be Alaska's burden.
Just like the coast guardcutters, just like you know, the
the the coast guard, thepresence of the coast guard,
just like the presence of, of,of the planes up at Eielson and
(33:12):
the troops at Jay or at that atat Wainwright.
It shouldn't be, it shouldn'tbe an Alaska burden.
It should be a national burden.
If that's the justification forit, it should be a national
burden.
And rather than going to AGDC,rather than going and making all
these presentations to thelegislature as if it's a
(33:32):
commercial project it's just awaste of time they ought to be
going to Dan Sullivan.
Dan Sullivan ought to besetting up hearings before the
Armed Services Committee orbefore other committees in DC to
have AGDC make the presentationthat it's a national security
asset.
Speaker 2 (33:49):
That does raise other issues, though.
Right, because now you have anequity and fairness issue with
other gas patches and thingslike that around the country who
are saying, well wait, where'sthe federal government to build
out our infrastructure at thesame time, absolutely right, and
we've already seen a lot ofthat, a lot of that pushback.
Speaker 1 (34:06):
But Trump says and there's some merit for this
Trump says the Alaska project isthe only American West Coast
project.
There isn't a project, willnever be a project, in
Washington, oregon or California, because the way those states
view this sort of infrastructureor that sort of continuation of
the gas economy, the only placeit's ever going to happen is in
(34:29):
Alaska.
And Trump's made a big deal Imean link this back in Trump's
made a big deal about the PanamaCanal and how strategic the
Panama Canal is and howimportant it is that America.
Well, this is the.
You know, the only way you getthere from the Gulf Coast
economically, from the GulfCoast LNG plants, is through the
Panama Canal.
So Alaska is different if whenyou view it through a national
(34:51):
strategic asset lens, alaska isin fact different because it's
on the West Coast and it's gotthose advantages in terms of in
terms of time and linkage toJapan and Korea.
So you blow back and you say youknow, look, I mean there was
the same complaint during worldwar II.
The shipping industry and somesmaller uh ways of getting oil
(35:13):
from the Southwest to the Eastcoast blew back in the in world
war II and said wait, wait, youshouldn't be building this net,
these pipelines.
In World War II and said wait,wait, you shouldn't be building
these pipelines.
You know we got ways to do this.
You're taking away ourcustomers.
And the nation said, nope, it'sin the national interest to
build these pipelines.
So there is, you know, auniqueness to Alaska.
(35:34):
It's just not commercial,though.
I mean we can't make money offof this.
So, given all the other demandson our money, we should not be
spending money on it.
Speaker 2 (35:48):
Well, and the big question of course is and Frank
asked it is who pays?
Well, that would be you and me.
Baby, the whole country willpay, although somebody else
pointed out that there's still$600 billion.
Who pointed it out, Chris?
There's $600 billion, who's?
Who pointed out, chris, there's600 billion dollars left in the
infrastructure.
There you go, take 10 of that,fix it, get it done.
(36:08):
I mean the greenies wouldprobably roll over, but I mean,
well, or just let elon musk andmusk and doge continue to go
through usa and everything elseand look through.
They'll find that 70 billiondollars to do the pipeline here
pretty quick if they need.
But I mean again, if I wasgoing to complain about anything
that the federal government wasgoing to do, building
infrastructure would be the lastthing that I would complain
(36:30):
about.
Maybe I complain about thecosts or the overrun or the
inefficiency, but at that pointif they were going to build on
something that was at leastinfrastructure bridges, dams,
pipelines uh, I mean that wouldprobably be the last thing that
I would complain about at thatpoint.
Speaker 1 (36:44):
Final thought brad 30 seconds and trump's talking
about sovereign wealth fund.
This is this would be a hell ofa lot better asset to have in
the us sovereign wealth fundthan tiktok.
Um, it'd be.
It'd be much more useful to thenation all right, brad keith
lee.
Speaker 2 (36:58):
and the weekly top three continues on to number
three.
We're going to finish up here.
The story of the missingparagraph.
This sounds like anencyclopedia Brown mystery, but
here we go Nancy Drew and theHardy Boys.
What is the missing paragraph?
What are we talking about here,brad?
Speaker 1 (37:20):
Doesn't really go down that track, but it's a good
track to go down.
Speaker 2 (37:25):
I just loved the title, so I'm running with it.
Go ahead.
Speaker 1 (37:29):
So part of my career as a lawyer I had to deal with
SEC issues, the Securities andExchange Commission issues.
It was related to oil and gasdisclosures and related to what
oil and gas companies had to sayin their SEC disclosures.
But part of my career wasfocused on SEC and what SEC
rules say and all the SEC reallydoes is require you to disclose
(37:55):
information.
All the SEC Act and the SECregulatory agency really do is
require you to discloseinformation and then they leave
it to investors to evaluate thatinformation.
If the disclosure is, thisproject may never happen.
You may never get your moneyback.
The SEC is satisfied.
(38:15):
It's up to investors to decidewhether they want to go down
that road and it's really aninformation disclosure
obligation that the SEC has InAlaska.
What I'm beginning to thinkthat we need when I see
(38:36):
headlines this was generatedthis week by headlines that an
opinion piece in the ADN thatsays why Alaska must invest in
public education now, and thenanother one that says Alaska
contractors warn of alarmingoutlook for 2025 road
construction season and there'squotes in there about that.
(38:57):
They need $300 million orsomething out of the legislature
to get them through this comingconstruction season or in the
Alaska beacon University ofAlaska president, highlights
impact on workforce research andeconomy and address, but Pat
Pitney says the university isfacing headwinds from federal
(39:18):
executive orders and potentialbudget cuts.
You know, it's just headlineafter headline after headline of
we need more money and we needit from the legislature.
And here's the missingparagraph.
I mean, if I'm thinking aboutthis in SEC terms and I'm
sitting there as a legislator, Iwould say when you come to make
(39:41):
a presentation to me or whenyou write an op-ed that you're
hoping would influence me, youneed to include a paragraph.
And the paragraph needs to saytwo things.
It needs to say how you proposeto pay for it.
Three things how you propose topay for it, whatever you're
(40:02):
asking who pays for it andwhether you're willing to be one
of those people paying for it.
The thing that really triggeredthis was this opinion piece by
a bunch of people, includingJake Metcalf, who's former head
of one of the public employeesunion.
(40:22):
That was titled why Alaska MustInvest in Public Education.
Now it's this long piece abouthow important public education
is, how the state needs to befunding public education, this
additional you know, theadditional funding that's
absolutely crucial to make surethat our kids are looked after,
and you get all the way to thebottom and there's nothing in
(40:43):
there about either a how are yougoing to pay for it?
B who pays for it?
Under under this proposed,under your how are you going to
pay for it?
Approach and see whether you'rewilling to pay your
proportionate part uh of of thecost.
It's just all of these are.
We need more spending, but youknow, I don't know how to pay
(41:06):
for it.
We need more spending.
I assume it's going to comefrom PFD cuts and guess what?
I don't have to pay since I'min the top 20%.
All of these people who werewriting these articles are in
the top 20%.
I'm in the top 20%.
I get to escape if we push itoff on PFD cuts.
I want a paragraph that requirespeople to explain how they're
(41:28):
going to pay for it.
I think it would be useful.
I think it'd be useful, justlike SEC disclosures are useful,
in telling investors what's themotivation you know, what's the
commercial, what's thecommercial outlook for this
project, what's the you know theimpacts of this project.
I think it would be useful tohave a required disclosure in
(41:51):
legislative presentations and inop-eds, and designed to
influence legislators that sayshow are you going to pay for
this project, how are you goingto pay for this spending, how
are you going to pay for thisspending and are you willing to
pay your proportionate part ofthe costs of that spending?
And I bet we wouldn't see asmany presentations if we had
(42:11):
that.
Required disclosure, just likethe SEC.
Disclosure rules frankly push abunch of people, push a bunch
of projects out because peopledon't want to make those
disclosures.
They know if they make thosedisclosures, nobody's going to
invest in them.
So they just end up not makingthose.
Those.
Those proposals, just like theSEC rules, protect against,
(42:34):
against these fly-by-nightoperations.
That sort of disclosure rule infront of the legislature, I
think would protect against alot of these people coming up
and and and asking for money.
Or if they did, at least you'dhave them on the record saying
yes, you're going to.
You're either a you wantsomebody else to pay for it,
yeah, go away.
Or B okay, you're ready to payyour proportionate part of it.
(42:55):
Great, let's get you on therecord.
Let's get you on the recordsaying that how you're going to
pay for it and that you'rewilling to pay your
proportionate part of it.
These, these, these, just youknow, throw it into the air.
I want more money.
I want more money for K through12.
I want more money forconstruction.
I want more money for theuniversity.
(43:17):
Just throw it into the airstuff, that's just.
It's not working for me.
It for the university?
Just throw it into the air.
Stuff.
That's just.
It's not working for me.
It's not, and it shouldn't beworking for the legislature.
They should have these peoplestand up and say and yes, this
is how I'm going to pay for itand yes, I'm willing to pay my
proportionate part of that.
Speaker 2 (43:33):
Well, and of course, the problem is is you've got a
public that is woefully educatedon how the process works.
And so all you see and I wasgoing to do a show on this and I
decided not to, but there was Ihad a half a dozen different
Facebook posts from thesedifferent local groups,
community groups, where peoplewere just we need to fund
education more, we need to keepour schools open, we need to do
(43:54):
this, and nobody is asking, orif somebody does ask, they get
shouted down.
How do we pay for it?
The state is out of money, thestate is broke, there's nothing
left.
They'd have to take the entirePFD and nobody is, and nobody's
mentioning that.
Because of the illiteracy of thepublic on how the process works
.
It's.
I'm not criticizing them, I'mjust saying they're not taking
(44:16):
the time to understand how theprocess works.
They don't understand.
We have a declining enrollment.
That's the biggest problem isthat there's fewer students,
fewer butts in the seats, sothat's why they're getting paid
so much less and the COVID moneywhich they used inappropriately
, and now all those chickens arecoming home to roost, but
nobody understands that, and sothe discussion is not even being
(44:37):
had.
It is we need to fully fundeducation.
We've been fully fundingeducation.
Speaker 1 (44:47):
The discussion's not being had.
I mean, we have thisconversation occasionally and I
think it's a useful one.
The discussion's not being hadbecause people aren't being
forced to confront who pays forit.
They aren't being forced toconfront that it's middle and
lower income Alaska familiesthat are paying for this stuff.
I mean, the top 20% get awaywith writing op-eds like this
and, when asked who's going topay for it or how it's going to
(45:09):
be paid for the PFD cuts, well,you know, charlie, what that
means is you're not paying forit.
You're pushing the costs off onthe very people you're claiming
to help.
You're pushing the people,you're pushing the costs on
middle and lower income Alaskafamilies, and and they're
getting away with doing thatbecause they don't have to
confront who pays for it.
They don't have to confront youknow how it, how it's going to
(45:31):
be paid.
They just assume this moneycomes off, comes out of of the,
comes off the trees.
I mean, I I have thesediscussions occasionally on
facebook or twitter or inpersonal discussions about you
know.
Somebody says, well, we justgot to increase k through 12 and
I said, okay, well, how are yougoing to pay for it?
Well, I'm willing to give up apiece of my pfd.
You know in my responses.
(45:53):
You know how much of a piece ofyour pfd is of your income.
It's like 0.00001.
But you know how much it ismiddle income family.
You know how much of a piece ofyour pfd is of your income.
It's like point zero, zero,zero, zero, one percent but you
know how much it is middleincome family.
You know how much it is to a lowincome family, yeah, and they
say, well, we'll address thatother ways, we'll deal with that
.
We'll deal with that, otherwiseit's all proportionality right
now let's deal with it throughan income tax.
You want to pay for it then, oryou want to do this, then you
(46:16):
have to pay a proportionate partof it, and let's do this.
Oh no, we can't do that.
We can't do it through anincome tax.
Speaker 2 (46:21):
Well, it's all about proportionality.
At that point, what is the costto you as proportion of your
entire income versus you knowwhat is it to somebody else?
But I mean, that's the thingthat just blows me away is
people are just like, oh, justfund it, just fund it, the well
is.
She is dry, there is not muchleft.
And what you do if you did tryto fund it and drain the PFD
(46:42):
down to zero, what happens next?
And nobody's asking thosequestions.
Uh, I mean, there are a fewlegislators that bring it up,
but for the most part nobody'sasking those questions, and they
are the loudest voices outthere right now.
Speaker 1 (46:54):
Those, those, those legislators are the ones are,
are the ones that are stayingquiet, are the ones that are
pushing for this combination ofthe corpus and the earnings
reserve so they can start goinginto the corpus to pay for it.
Speaker 2 (47:08):
Final thoughts.
Speaker 1 (47:08):
Brad Final thoughts is it's a little bit sunnier
this week.
Cook Inlet's on an upswing, onan upswing.
Uh, we've got good news on CookInlet in the form of Hillcorp
and or in the form of the KenaiLNG plant and in the form of uh,
uh, of uh, of Chugach's, uh,step Um, and, and we got, but we
(47:29):
still got other issues.
Speaker 2 (47:31):
That's the thing, brad.
I mean.
I literally was pulling throughthese groups in the Mat-Su, in
Fairbanks, in Homer, down on thepeninsula, and everybody's like
don't close my schools, justfully fund it.
The legislature should just dotheir job and they should just
fully fund.
They are fully funding it,they're funding it according to
the formula and they're givingmoney on top of it and have been
(47:53):
.
But the biggest problem herethat nobody's talking about is
the declining enrollment 15%.
In Fairbanks their enrollmentdropped in one year 15%.
And they're not talking aboutthat.
And they're not talking aboutthe continued projected decline
that it's just going to getworse.
These school districts havebeen running deficits for years
(48:14):
and the answer is just ask UncleSugar for more money.
Uncle sugar is broke, there isno more money.
But nobody seems to acknowledgethat.
It's just always oh, just pullit, it's.
We're so disconnected from howthis whole thing works.
Speaker 1 (48:28):
It's, it's just amazing we are.
I've been reminded of that.
I've been visiting my mother inIllinois a lot and uh and and
I've reconnected with some ofthe you know some of the people
I grew up with and I've beenreminded of how local schools
are in Illinois because they'refunded largely through through
local school districts and taxeson local school districts.
(48:48):
The state funds a portion of it, makes some contribution to it,
but but the primary funder isthe local school district and so
in Illinois people are verythis isn't true in Illinois
about everything, but inIllinois people are very focused
on being cost-conscious aboutschool districts, making sure
school districts are at thelowest cost.
(49:11):
Rural part of Illinois there'sthere's pushes to consolidate
because they recognize that thatthe tax base that's there just
can't support.
You know these, the smallerschool districts that that we
used to have and so we have.
You know people.
We have school districts thatare much bigger now.
It's because it's we had schoolclosures and school districts
(49:33):
are much bigger.
School districts are muchbigger it's because it's locally
funded, it's because peoplehave to confront the funding
themselves, it's because theyhave to pay and so they get
involved in keeping the cost.
Speaker 2 (49:53):
Yeah, they're invested in it and we here,
we're just.
I mean again, look at thecomments.
I was going to just read thecomments for an hour, because
people obviously don'tunderstand what's going on in
the state and our legislatorsare not doing anybody favors by
continuing to lie.
Gary Stevens got caught in thewhole lie of the 40 students per
classroom thing and everythingelse, and it's just.
It doesn't matter to them.
(50:14):
They just want to protect whatthey need to protect and they'll
do whatever.
But the people don't understand, and that's the problem.
If the people truly understoodwhat was happening with this,
they would be up in arms aboutit.
They would be up in arms aboutthe way the spending is going,
but they're totally disconnectedbecause it comes from a
permanent fund and they neversee it.
Speaker 1 (50:35):
I think part of the solution, I think part of the
solution to K-12, I think partof the solution to education, is
increased local funding,increased required minimum
(51:02):
funding and however that and theimpact because it impacts them.
I think Alaska has become tooremote in that sense it's
somebody else's responsibility.
I mean, this was the wholeproblem with building new school
buildings, right, I mean, let'sbuild a new school building?
Oh, that's a great idea.
The state will fund 90% of it.
You know, let's add this, thisgizmo and that gizmo to the new
(51:25):
school building, cause thestate's going to pay, pay 90% of
it.
We need to.
I think part of the solution,frankly, is to localize the
funding more, and and the way wewould do that in Alaska is
increase the required localcontribution, and then we'd see
all sorts of things.
Then we'd see people inFairbanks going oh, we need to
(51:46):
consolidate these schools.
Speaker 2 (51:51):
Yeah, let's find some cost savings, because I think
there's only one or twodistricts in the whole state
that are anywhere near the localcap.
I know Juneau is but Fairbanksand I think but Fairbanks, and I
think both Fairbanks and Mat-Suhave got a pretty good sized
chunk that they could go to ifthey really wanted to do it.
But then people would be likewait, you mean we have to pay.
Yes, that's how it works.
You have to pay If you want achicken in every pot and you
(52:15):
want every school to remain open.
There's a cost to that.
Speaker 1 (52:21):
So yeah, yeah, and that's sort of what I mean by
the missing paragraph.
Let's put in the payment whatpayment you're proposing and
let's localize it in terms ofyou have to pay.
Are you willing to step up andpay your proportionate part?
And the answers are going to bedifferent than what we're
getting now when somebody elsehas to pay.
Are you willing to step up andpay your proportionate part?
And the answers are going to bedifferent than what we're
getting now when somebody elsehas to pay yes, I want you to
(52:42):
spend more money on this becauseI don't have to pay for it.
Speaker 2 (52:44):
Everybody else has to pay for it and it's so
infuriating to see them buy intothe narrative.
Well, you flat-funded education.
No, they haven't.
The BSA the base formula hasbeen fairly flat, but they've
been spending hundreds ofmillions of dollars every year
on top of that.
You just seem like you forgotabout that.
No, they intentionally havebeen misled by legislators, the
(53:06):
NEA, the education complex, Imean that's who they've been
misled by, and they're justparroting the talking points
instead of looking at it andthey don't understand.
That's the bottom line.
I read all these comments and Irealize none of these people
understand how this processworks.
Speaker 1 (53:23):
Yep, and it's because of the remoteness, michael.
I mean it's because it'sbecause the dollars are remote
from them.
They don't have to pay them.
And you know, for the top 20%they even when they do pay them,
it's a very, very, very smallpart of their income and so it's
just, you know.
Sort of like someone criticizedme for the second segment about
let the federal government fundthe pipeline, I mean the
(53:46):
criticism is well, you don'thave to pay for it.
Then I mean you're trying toshove the costs off on somebody
else.
But that's what we have a lotin this state.
We have people saying I needmore for education, I need more
for construction, I need morefor the university.
Somebody else pay for it, right?
Speaker 2 (54:03):
No, it's insane.
All right, brad, thank you somuch, you, ray of sunshine.
You Thank you for coming onboard and we'll talk to you next
week, okay.
Speaker 1 (54:12):
Michael, good to see you.
Well, that's a wrap for anotherweek's edition of the Weekly
Top Three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,Managing Director of Alaskans
(54:35):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top three, the top three things on our
mind here at Alaskans forSustainable Budgets for the week
of February 10th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:32):
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:55):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the project's page onnational blog site mediumcom,
you can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:19):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we explain what
a difference a week makes as wesort through recent
developments on the Cook Inletimport projects.
(01:42):
Second, our thoughts onPresident Trump's comments on
Japan and AKLNG.
And third, we discuss theadditional disclosure that we
think all presentations andop-eds pushing for more state
appropriations should contain.
And now let's join Michael.
Speaker 2 (02:04):
This week's topic.
Let's get started Sorting outthe Cook Inlet.
There's a lot here, Brad,Unpack it for us here.
What do we got?
Speaker 1 (02:12):
So the alternate title to this segment is what a
difference a week makes.
Last week we were complainingabout the RCA not stepped up to
look into what was going on inthe Cook Inlet.
We were complaining, we weresaying where is Chugach and MEA?
In all this, nstar was on trackto sort of an unabated track to
(02:37):
go forward on its talk aboutQuixotic, on its Quixotic effort
to build a new LNG plant onproperty that neither it nor the
person who it proposes to buildthe plant own, without any
existing permits, butnevertheless was on track to do
that.
That's all changed in a weekand the reason I'm wearing the
(02:58):
ray of sunshine is I think it'schanged in a good way.
Two big things, one prettypublic, the other sort of
running under the radar.
The one that's pretty public isthe announcement during the
week by Chugach and HarvestAlaska, which is a subsidiary of
(03:19):
Hillcorp, to buy, for Hillcorpto buy the old Kenai LNG plant.
The existing plant.
The plant that's got theexisting permits to import gas
right now has got the facilitiesmostly in place to do that, has
got existing LNG tanks in placeto store the imported gas, a
(03:44):
lot of the imported gas.
The announcement by Chugach andHillcorp, that Hillcorp's going
to buy that facility fromMarathon and Hillcorp then is
going to sell gas gas that itregasifies out of that plant to
Marathon, who, interestinglyenough, uses a lot of gas or
(04:05):
would like to use a lot of gasto power its refinery and to
sell it to Chugach and to solveChugach's problem in that
fashion.
Nstar talks about 2029, 2030 asa solution to its problem its
(04:27):
plant on land neither it nor theparty with whom it has entered
into a contract own.
While NSTAR talks about thattimeframe, chugach and Hillcorp
are talking about, or Harvest,are talking about a timeframe
much shorter than that, atimeframe that meets Chugach's
uh, and presumably would meetmea's needs and homer's needs
(04:51):
like next year you're talkingabout like 2026 by delivering
some of the first gas, with fullproduction coming up in 28,
right I mean it's?
Speaker 2 (04:58):
it's a fast timeline compared to everything else
we've heard so far it's anexisting plant.
Speaker 1 (05:02):
What you have to do is you have to re-kid it some,
because right now it's stillkitted to export gas, to take
gas in, liquefy it and thenexport it on ships and take it
out.
So you've got to change thatmachinery out to re-gasify the
liquefied gas that's going tocome in, and you've got to get a
(05:23):
permit gasify the liquefied gasthat's going to come in, and
you've got to get a permit.
Right now it's permitted, uh,only to receive gas for sale to
marathon, for marathons needs.
It's not permitted for sale toothers, uh.
But but those things, I don'tthink most analysts think those,
those things are big deal.
Certainly not the, certainlynot the equipment side of it's
not a big deal, and I don'tthink most analysts think the
(05:44):
the permit side is a big deal.
So that's, that's one thing,that's a, that's a.
That's a huge thing that thatwe'll be talking about now in
coming weeks.
The second big thing, uh is thatthe rca stepped in uh and and
put a pause to nstar's'sproposed transaction with
(06:06):
Glenfarn.
Nstar had filed for approval,seeking approval to pass the
costs of its deal with Glenfarnup to a certain point sort of
the beginning stages of it up toa certain point through to its
ratepayers without further RCAreview.
It was essentially an effort toget an approval of its project
(06:31):
in the form of a rate increasewithout asking the RCA to look
at anything else.
The RCA stopped that, suspendedNSTAR's filing and set it for
hearing to look into it.
Now part of what NSTAR hasproposed to do is to.
You know we've talked about thebackstop on the AKLNG project a
(06:53):
lot, the backstop that ADA hasproposed to give to AGDC, so
AGDC can give a backstop toGlenfarn.
Actually NSTAR has a backstop inits deal with Glenn Farn.
It agrees, has agreed to fundif NSTAR has or Glenn Farn has
to do the same sort of FIDanalysis they have to do on the
(07:17):
big line and NSTAR has agreed tobackstop Glenn Farn's costs on
that.
If Glenn Farn does the FID anddecides not to go to FID or the
parties decide not to go to FID,that is, pursue the project,
construct the project.
If Glenn Farn decides not to goto FID, then NSTAR has agreed
(07:38):
to backstop Glenn Farn, to repayGlenn Farn for all the costs
it's incurred, up to $50 million, the same thing as on the AGDC
side and Instar proposed to theRCA to be able to pass those
costs.
If it paid those to Glenfarn,pass those costs through to its
(08:01):
ratepayers through the gas costadjustment mechanism and that
would be a huge sum to try toget through the gca 50 50
million dollars to the ratepayers, just without any further
review.
Speaker 2 (08:13):
Oh, and the rca said what the rca said stop.
Speaker 1 (08:17):
Uh said we're going to have a hearing on this stuff,
and and I and it came rightbefore the announcement of of of
the the chugach and uh harvestdeal, right before the
announcement of the Chugach andHarvest deal, right before it,
like the day before it, that theRCA said stop.
And I don't think the RCA knewabout the Harvest-Chugach deal,
but the two line up very well.
(08:39):
So now what the RCA can do istake that proceeding and turn it
into an analysis of what thehell are we doing here in the
Cook-Ellen.
Do we need two facilities?
Do we need to keep pursuingthis quixotic dream that NSTAR
and Glenfarn have to build aproject on land neither of them
own To?
(09:00):
You know, go down the road withthis project.
Do we need that?
Or can we, you know, collectall of the demand in the Cook
Inlet and come through theexisting Kenai plant?
There is an issue with theexisting Kenai plant and Senator
Giesel is actually, you know,sort of vacillating between good
(09:23):
and bad on this issue.
Senator Giesel actuallyidentified, you know, sort of
vacillating between good and badon this issue.
Senator Giesel actuallyidentified it quickly, although
she identified it in a verynegative way that I don't think
it deserves.
But the problem is is Hillcorphas market power what lawyers
and what antitrust economistswould call market power in the
Cook Inlet and it's nothesitated to use that market
(09:44):
power.
I think what stung Giesel waslast year when Giesel proposed
to close the Hillcorp loophole,the Hillcorp corporate tax
loophole, and Hillcorp came backand said oh yeah, you want to
do that, fine, we'll just stopinvesting in the Cook Inlet.
Basically, basically, you know,threatening and blackmailing
the legislature over the uh,over the proposal that Hillcorp
(10:08):
pay the same taxes as everybodyelse.
Um, and and Giesel, I thinkstung by that um as background,
giesel said you know there's aproblem with this, with this
Hillcorp proposal, which is, youknow, hillcorp's market power.
We've, they have market powernow on the on the produced gas
side.
This would give them marketpower.
They have market power now onthe produced gas side.
This would give them marketpower.
(10:28):
She's concerned.
This would give them marketpower on the imported gas side
and South Central would just betotally at Hillcorp's mercy.
There's a way of dealing withthat and that is to slightly
amend existing utility law inthe state to clarify that an LNG
import facility that resalesgas to utility is in fact a
(10:48):
utility itself.
Right and turn and turn thatenergy LNG facility into uh,
into a utility to the extent ofselling gas to uh, uh to
utilities, and I and I and thatwould, that would, that would
subject Hill Corp that plant toRCA jurisdiction, rate
jurisdiction and and and termsand conditions of service
(11:08):
jurisdiction.
I think that'd take care of theproblem.
But but you know it's, it's anissue that needs to be, it's an
issue that needs to be thoughtthrough at the same time as
we're thinking every, everythrough everything else.
Cause you don't want to, youdon't want to be, you don't want
to have the solution to theHillcorp market power problem be
to give Hillcorp another set ofmarket power.
Speaker 2 (11:29):
You know it's interesting because this whole
thing also is built around thisidea of time compression as a
weapon.
Has NSTAR been delaying thiswhole thing long enough to then
to go to submit to the RCA?
Well, we need to be able to dothis without further review,
because now we're on a timeframe, even though they've been
the one that's delaying.
There was a post on Facebooklast night by somebody who's
(11:49):
done a lot of work with HEA,talking about HEA, because HEA,
homer Electric Association, isthe first utility whose contract
is going to run out next month,and they're talking about
having to get more gas fromNSTAR at triple the the cost
triple the cost of what they'regetting right now to generate
electricity.
Um, and if that doesn't makethe pucker factor go up for
(12:11):
everybody who's on an heaaccount, including me, um then
yeah, you should be looking atthis.
But I think that's part of thething, right, they seems to.
Maybe the delay makes sense now.
They've been delaying thiswhole time, brad, trying to get
this thing done so that theycould then create.
It's a created crisis at thatpoint, right, but the RCA seems
to have adequate service at areasonable cost.
Speaker 1 (12:50):
That's part of their statutory obligation.
In exchange for the monopolythey're given over their service
areas, they're supposed to haveadequate service at a
reasonable cost.
And NSTAR, by this delay, hasnot only maybe tried to put the
RCA in a crammed down positionwith respect to its proposal,
but put the RCA in a crammeddown position with respect to
its proposal, but put the RCA ina crammed down position with
respect to these costs.
I mean, if you have a projectthat doesn't go, a failed
project you're not a utility isnot automatically entitled to
(13:15):
recover those costs.
It's a risk that utilities takeand, as the RCA pointed out in
its suspension order, it gaveNSTAR a healthy rate of return
on equity in order to compensateat some for the risk of supply,
the risk of its supplyobligation.
What NSTAR is really trying todo with this filing is say, look
(13:40):
, we're no risk, you know, ifthe project goes great, we can
pass through the costs.
The project doesn't go and weincur costs because we have this
backstop agreement withGlenfarn.
If the project doesn't go, weget to pass those costs through
the GCA.
And putting the RCA in thistime crunch, frankly, I think
they're trying to leverage.
(14:01):
They were trying to leverageyou know the time crunch as a
way of getting their costsrecovered either way, when they
shouldn't be entitled to that.
So the RCA has put a stop to it.
Yay for the RCA.
Look, we've criticized the RCAa lot.
This is a good job, rca Right.
And yay for the Kenai LNG plant, for somebody stepping up.
(14:26):
Still got an issue to go.
Still got the market powerissue to go.
But somebody stepping up andsaying we're going to use this
existing facility.
Speaker 2 (14:33):
Yeah, Brad, I mean I looked at this and all I could
think of was so that was the endgame.
I mean, literally the lightbulb moment went off for me when
I looked at this and saw whatthey were trying to do with this
rate increase.
And I looked at this and sawwhat they were trying to do with
this rate increase and I waslike they've been delaying this
whole thing so that they couldthen backstop it, put time
compression in there and say wedon't have time to do this
because now we're out of timeand we've got.
You just got to give us the,you just got to write the blank
(14:53):
check and we'll do it.
And, thank God, the RCA saidwhoa, wait a second.
Speaker 1 (15:13):
We're in charge here and Chugach.
I think that's one of thereasons why Chugach kind of
broke faith with them here awhile ago and said, no, we're
going off in another direction,because I think they could see
the way things were going.
I mean this mightAR it metNSTAR's needs because NSTAR is
the last, the last to run out ofthe Hillcorp contracts.
They're the last to run out ofthe Coquitlam contracts.
But it didn't meet Chugach'sneeds.
I mean, giesel said somethingthat that just that bugged.
Well, everything Giesel saysbugs me in one way or another.
(15:38):
But Giesel said something thatjust bugs me.
She was criticizing Chugach aspart of her attack on on, you
know, the the hillcourt marketpower thing.
She was criticizing chugach forhaving broken off from nstar,
having broken off from theunified effort to find a
solution to the cookie.
That's not what happened.
What happened is nstar broke offfrom chugach, nstar was coming
(16:00):
up with a solution and and Ithink part of the motivation
here, michael, is nstar wastrying to limit its exposure,
right, and you can see that inthe filing.
Nstar is saying look, if theybuild it, we get to recover the
cost, if they don't build it, weget to recover the cost, we
don't have to incur any costs.
So, as part of NSTAR lookingout for itself you know one
perspective on this is it leftChugach high and dry and Chugach
looking out for itself?
(16:20):
You know one perspective onthis is it left chugach high and
dry and chugach, looking outfor itself, said, hey, we need
to find another solution.
And what about this existing lgplant over there, right, right,
um, and so you know it's not.
Speaker 2 (16:36):
It is not chugach breaking off from nstar, nstar
breaking off from chugach andgoing in a way that helps nstar
but not chugach and everybodyelse too, right, I mean because
this only served them.
This didn't serve any of theother utilities GVEA, mea, hea
it didn't help any of the other.
This was strictly what was bestfor NSTAR at that point.
And they may say, well, heylook, we ended up not having to
(17:00):
pay.
The rate payers are going tohave to pay.
So they weren't really evenlooking out for their own rate
payers at that point.
Speaker 1 (17:07):
The whole thing is just astonishing.
I got one comment as I wasasking around about the Hillcorp
deal or the Harvest deal that Ifound fascinating.
You know, why is this Hillcorpbuying this as opposed to Instar
?
And the response was well, onlycertain people came to the data
room, uh to, to look at buying,at buying the plant.
(17:33):
The implication was and I don'tknow this to be absolutely true
, but the implication was instardidn't even go look at the
existing plant.
They were off in their own offin their own world.
Again, this, this, this entire,you know mindset of instar to
not have any risk, to avoid anyrisk, because if they would have
bought the plant and somethingwould have gone wrong, then
they're at the cost of the plant.
On the way they're doing thiswith Glenfarn, they're trying to
(17:56):
be riskless, they're trying tojust avoid any exposure
themselves.
Speaker 2 (18:00):
Right, it's astonishing.
Two sidebar comments.
First of all, frank has thisevery week and I know it's not
really your bailiwick, but doyou think Brad will ever address
legislative funding forcommercial fish?
I know it's only tens ofmillions of dollars.
Small fish I guess that's notreally your bailiwick, but have
you looked at anything with thefishing or commercial fishing in
the state?
Is that anything you're workingon?
Speaker 1 (18:27):
state.
Is that anything you're workingon?
It's not, Michael.
I look at it from time to timein the context of the budget and
whether it can be a contributorto the budget, but the tax
rates you'd have to impose oncommercial fish are huge for
them to even be a materialcontributor to the budget.
Speaker 2 (18:37):
So it's not something .
Speaker 1 (18:38):
I've spent a lot of time on.
Speaker 2 (18:40):
Anthony says.
I feel bad for Brad.
Sometimes being part ofAlaskans for Sustainable Budget
has to feel like going to beingin the Alaskans for the
Domestication of Bigfoots groupTheoretically possible but
realistically never going tohappen.
Chin up, brad, and that's whatI feel.
Sometimes it's like we'rechasing the inevitable who's he?
(19:00):
What's it that nobody believesin Brad Keithley on to number
two of the weekly top three andwe're working our way through
this stuff.
Japan and LNG this was the bigsurprise.
On Friday.
I was actually sitting at mydesk monitoring my own radio
station, listening to this whenthe president had this press
conference and I was like what?
Alaska, lng as a?
(19:22):
What national security Japan?
And I thought, well, we talkedabout this, we predicted it.
Is it really going to come true?
Brad, your thoughts on Japanand Alaska, lng and the federal
government what are we lookingat here?
Speaker 1 (19:35):
So here's what's happening with the LNG project
and it's interesting to see howit's twisting Dan Sullivan's
doing this project.
And it's interesting to see howit's twisting Dan Sullivan's
doing this and Trump certainlydid it on Friday.
They're twisting the projectfrom a commercial project, a
project that is designed to makea lot of money for whoever
(19:59):
builds it.
They're twisting because thathasn't worked out much.
I mean, nobody can run numbers,you can't even do fantasy
numbers that make that true.
They're twisting it into anational security issue and
twisting it into isn't this agreat solution to keep Japan
tied to Alaska, to the UnitedStates?
(20:22):
Isn't this a great solution tokeep Korea tied?
And they're saying things thatare sort of funny.
They're saying, oh, you know,we're only an ocean away, or you
don't have to go through thePanama Canal, there's no
security risks, and you know,lng is a great way to link into
their security, to providesecurity to them.
At the same time as some ofthese same people are saying, oh
(20:44):
, we wouldn't want Alaska to bedependent on LNG, we wouldn't
want to bring LNG up to the, youknow, because Chinese
submarines might, you know, takedown all of the LNG tankers.
But now you know LNG tankers inJapan and Korea are secure, but
they're twisting.
They're twisting therationalization and the project.
(21:05):
Then let's go down that road.
And if Japan and Korea thinkthat's a rationalization for the
project, then let's go down theroad.
(21:27):
But here's the deal.
Alaska shouldn't be paying forit.
It's not commercial to Alaska.
We don't make money.
In fact we lose money.
By the time you look at all thesubsidies that the AKL and AGDC
are assuming that the statewould throw in to get the
project even down to the costthat they claim would be
(21:50):
competitive.
Alaska is losing money on thisproject, clearly losing money on
this project, money on thisproject.
So it's not commercial.
The new mantra is not acommercial mantra.
It's not that you're going tomake money out of this project.
So it's a thing to do Now.
It's national security and ifit's national security, then the
(22:13):
nation ought to pay for it.
The federal government ought topay for it.
I mean, nobody would expectAlaska to pay for Coast Guard
ships, ice-breaking Coast Guardships, although they're most
important to Alaska.
Nobody would expect the stateto pay for that national
security device.
Nobody expects Alaska to payfor the jets up at Eielson that
defend us.
Nobody expects us to pay forthe troops that are up at
(22:35):
Wainwright, that are prepared todefend, you know, the Arctic,
the Arctic portion of the U?
S?
Which, right, not amoney-making operation which?
Which is Alaska?
Right, they're all nationalsecurity issues.
And so if this is, if, if thisnow is a national security issue
, great, but the feds ought topay for it.
And there's precedent for this.
(22:55):
In world war two, ii, we had aproblem, the nation perceived a
problem getting oil, which wasimportant to the war, that was
taking oil from the Southwest,from Texas and Louisiana, which
(23:23):
is where the oil was to the EastCoast refineries, primarily in
Philadelphia and the New Yorkarea.
And the concern was that wewere putting the nation at risk.
And so, as a national securityevent, the country built, the
country federal government builttwo pipelines, one's called the
Big Inch and the other's.
The country federal governmentbuilt two pipelines, one's
(23:44):
called the big inch and theother is called the little inch,
and they're still in operationtoday.
One's in operation as a, as agas pipeline, the other is an
operation as a, as a productspipeline I think an oil products
pipeline now, but they're stillin operation today.
And the country built them,created a corporation that was
(24:06):
that had a lot of parts to it,but some of the parts were the
oil companies who were capableof building this thing.
The company the country formeda corporation built the
pipelines.
It was built as a nationalasset, as a defense asset, as a
national strategic asset.
Now, after the war was over andnobody was concerned about
(24:27):
German U-boats anymore, theywere sold into the private
sector as part of the surplus,the war surplus sales.
They were sold into the privatesector and became part of the
private sector.
But at the time they were builtthey were perceived as national
strategic assets and built as aas as national, as national
(24:48):
pipeline.
So if that's, if that's how weperceive, is that, if that's how
we're now perceiving the, theAKLNG project, if that's the
push that Dan Sullivan's puttingbehind it, then you know my
response is put your money whereyour mouth is.
If it's a national strategicasset, put it through the
defense budget or put it throughsome other budget, uh, to go
(25:09):
ahead and and build the pipeline, um, and and go forward with it
.
Uh, go forward with it that way.
Don't just like you wouldn'task Alaska to pay for the planes
up at Eielson or the troops upat Wainwright, uh, or the coast
guard, or the coast guard shipsthe Kodiak.
Don't ask Alaska to pay for it.
Don't force this national, thecost of this national strategic
(25:33):
asset on one state.
Spread it broadly, uh, throughthe, through the federal budget,
and I and I think that's youknow, I think that's the, I
think that's the way if we'regoing to go down this road.
I think that's the way to goforward.
No one, you can't make acommercial case for this
pipeline.
You just can't.
I mean, agdc has tried andtried repeatedly to make a
(25:54):
commercial case for it.
You just can't in the currentenvironment.
Right, if you look, if you lookat you know environment.
If you look at all of the LNGthat's coming on the, all the
tidewater LNG that's coming onthe market throughout the nation
.
If you look at the forwardfutures prices for LNG, the
AKLNG project just can't competecommercially.
Speaker 2 (26:10):
If you look at their own study, which has some of the
rosiest assumptions theWood-McKenzie report, which even
the rosiest assumptions, is an80% subsidy and it still
delivers gas at 30% above marketvalue.
I mean that's an 80% subsidy onwhat they're still using
numbers from the Walkeradministration of $44 billion
(26:31):
you know it's probably 60 or 70billion now by the time, with
all the inflation and everything.
But the rosiest assumptionsat44 billion with 80% subsidy is
a 30% over market value.
You just you can't make ithappen and this is what you and
I have been going on about formonths.
Finally, I noticed thisHillcorp article that was
talking about Hillcorp.
(26:51):
They finally quote Kathy Tilton.
At the end it says well, ofcourse Alaskans would prefer to
drill their own gas, but theonly solution is him.
I mean we've been talking aboutthis for months that this is
the only solution.
Why is it that we're the onlyones that?
I mean they finally came aroundto our point of view because of
time, essentially at this point.
Speaker 1 (27:10):
Well, michael, it's because, it's because we run
spreadsheets, it's because weactually take the numbers and
calculate the market effects.
I mean a lot, a lot of this.
A lot of the legislaturecertainly runs, as you have
correctly pointed out time andtime again, on emotion, the
emotion of oh, it's gotta beAlaska gas, it's gotta be, you
know right, and and.
(27:31):
But when you put it inspreadsheets as I do often, when
you put it in spreadsheets, itdoesn't, it just doesn't
calculate.
And the same thing's now trueof the, of the, of the big line.
It just, it just doesn'tcalculate.
If it did, it would have beenbuilt already.
If it did, we would have morepeople than just Glen Farn, a
(27:54):
small cap, inexperiencedoperator trying to trying to hit
it big.
We'd have more than Glen Farn,uh, trying to pursue this
project.
What do you think?
But it just doesn't.
Speaker 2 (28:06):
What do you think the possibility is that this
actually becomes a nationalsecurity, a national strategic
asset issue where they actuallywill break off some money.
I mean, do you, do you thinkit's going to happen?
Or does this new Chugach HillCorp harvest thing, does that
submarine it?
I mean what?
What do you think Are they?
Are they hell bent for leatherto get it done?
Speaker 1 (28:25):
or you know what's your, what's your take on this?
Now, chugach Hill Corp, uh, uh,even the NSTAR deal does not
affect the big line, does notaffect the international nature
of the, of the big line, I meanthe.
The in-state demand isminuscule compared to, compared
(28:46):
to the size of that line andcompared to what they need to
make it.
To make it, uh, to make it work, Um, does, does.
Does the nationalization of it?
Um, uh, does that work?
You know, with Trump, you neverknow.
I mean tomorrow Trump may wakeup and say, yes, it's important
that we have this tie to Japan,it's important that we have this
tie to Korea.
I mean, who knows what Kim Jong, whichever one it is in North
(29:10):
Korea, is going to do tomorrow?
And you know, and perturb Trump, and his response would be X, I
mean.
But that's the case.
They're making for it, that'sthe case Dan Sullivan's been
making for it, that's the casethat Trump himself made for it.
On Friday, you know, john Simstried to do that with the whole
(29:34):
Cook Inlet incentives deal.
At one point he said well, youknow, we got a military base, we
got J-Bear, we don't want itdependent on imported gas.
And he tried to turn that intoa national issue and the
response was okay.
If it's a national issue, ifit's a national security issue,
if it's important that J-Bearhave Alaska gas, then J-Bear can
pay for it.
And you know, that sort of diedout fairly quickly, right.
Speaker 2 (29:58):
So you know maybe.
Speaker 1 (30:00):
Maybe if we say in the federal government can pay
for the big line, maybe that'lldie out fairly quickly.
Speaker 2 (30:04):
Yeah, and still no talk of maybe a Jones acts
exemption, a little bit of moneyto dredge out up North to do
tankers, or I mean there youknow there could be other
solutions.
But here we are.
Here we sit, wondering whereit's going to happen, but at
least we're further ahead thisweek than we were last week.
Like you said earlier.
What a difference a week makesone minute.
Speaker 1 (30:23):
I mean Trump, trump's opened, and you know Dan
Sullivan had been trying to kickthat door open about.
You know, the national securityissues, this whole.
This all is justified bynational security, but Trump
just blew it open, as as Trumpdoes when when he gets into an
area.
He just blew it open on Friday.
And so, okay, let me thinkabout this as a national
(30:43):
security issue.
And the first thing that cameto my mind seriously shows you
how bizarre, how twisted I am.
First thing that came to mymind as I was reading the
articles okay, big inch andlittle inch, we've done this
before, Right, we?
You know that's how part of thepipeline, the, the, the, the
Southwest East Coast pipelineindustry got started.
(31:05):
We've done this before, solet's let's do it again.
I mean, if that's what we'retalking about, it's a strategic
issue, then the federalgovernment ought to step in and
do it.
Speaker 2 (31:13):
Well, I won't hold my breath, but I will be watching
with interest at this point tosee where things are going.
You know, I don't think a lotof people really understand and
I've come to understand moreabout Trump here in the last
three or four weeks than I everhave before and realizing that
this guy is transactional.
(31:34):
Dan Bongino has been talkingabout him being a transactional
president and in a lot of waysthat's true.
I didn't think about him as thebusinessman who comes in as a
negotiator, because he's one ofthe best negotiators out there.
You can love him or hate him,but what he does is he walks
into a room and he stakes out aposition way over here.
He only really wants to getabout halfway there, but he
(31:58):
stakes out a position way overhere and so everybody loses
their mind and they're like oh,it's a shock and awe value,
right, that's what he does witheach and every one of these
things.
And you saw again, not a fan oftariffs here, but he's utilized
tariffs as a bludgeon.
Look what he did with Mexico.
Look what he did with Canada.
Oh, you don't like it?
Well, we'll just put tariffs oneverything.
And they immediately.
(32:18):
You know, oh, you don't like it.
Well, we'll just put tariffs oneverything and they immediately
.
You know well, what would youlike us to do?
We'll stop immediately.
You will do, you know, and sothat's.
It's a genius maneuver, itreally is, he is.
He walks into a room and saysthis is what I want, and he's
really happy to get half that ifthat from time to time.
But that's where that's whathe's doing here.
(32:40):
I just hope that maybe you knowan Alaska LNG line as a
national security issue.
Maybe he's serious about it.
I don't know, but we'll bewatching closely, I guess.
Speaker 1 (32:49):
Well, you know, I, I think, I think you know it may
have merit as a nationalsecurity issue.
It may have merit, but as anational security issue it
shouldn't be Alaska's burden.
Just like the coast guardcutters, just like you know, the
the the coast guard, thepresence of the coast guard,
just like the presence of, of,of the planes up at Eielson and
(33:12):
the troops at Jay or at that atat Wainwright.
It shouldn't be, it shouldn'tbe an Alaska burden.
It should be a national burden.
If that's the justification forit, it should be a national
burden.
And rather than going to AGDC,rather than going and making all
these presentations to thelegislature as if it's a
(33:32):
commercial project it's just awaste of time they ought to be
going to Dan Sullivan.
Dan Sullivan ought to besetting up hearings before the
Armed Services Committee orbefore other committees in DC to
have AGDC make the presentationthat it's a national security
asset.
Speaker 2 (33:49):
That does raise other issues, though.
Right, because now you have anequity and fairness issue with
other gas patches and thingslike that around the country who
are saying, well wait, where'sthe federal government to build
out our infrastructure at thesame time, absolutely right, and
we've already seen a lot ofthat, a lot of that pushback.
Speaker 1 (34:06):
But Trump says and there's some merit for this
Trump says the Alaska project isthe only American West Coast
project.
There isn't a project, willnever be a project, in
Washington, oregon or California, because the way those states
view this sort of infrastructureor that sort of continuation of
the gas economy, the only placeit's ever going to happen is in
(34:29):
Alaska.
And Trump's made a big deal Imean link this back in Trump's
made a big deal about the PanamaCanal and how strategic the
Panama Canal is and howimportant it is that America.
Well, this is the.
You know, the only way you getthere from the Gulf Coast
economically, from the GulfCoast LNG plants, is through the
Panama Canal.
So Alaska is different if whenyou view it through a national
(34:51):
strategic asset lens, alaska isin fact different because it's
on the West Coast and it's gotthose advantages in terms of in
terms of time and linkage toJapan and Korea.
So you blow back and you say youknow, look, I mean there was
the same complaint during worldwar II.
The shipping industry and somesmaller uh ways of getting oil
(35:13):
from the Southwest to the Eastcoast blew back in the in world
war II and said wait, wait, youshouldn't be building this net,
these pipelines.
In World War II and said wait,wait, you shouldn't be building
these pipelines.
You know we got ways to do this.
You're taking away ourcustomers.
And the nation said, nope, it'sin the national interest to
build these pipelines.
So there is, you know, auniqueness to Alaska.
(35:34):
It's just not commercial,though.
I mean we can't make money offof this.
So, given all the other demandson our money, we should not be
spending money on it.
Speaker 2 (35:48):
Well, and the big question of course is and Frank
asked it is who pays?
Well, that would be you and me.
Baby, the whole country willpay, although somebody else
pointed out that there's still$600 billion.
Who pointed it out, Chris?
There's $600 billion, who's?
Who pointed out, chris, there's600 billion dollars left in the
infrastructure.
There you go, take 10 of that,fix it, get it done.
(36:08):
I mean the greenies wouldprobably roll over, but I mean,
well, or just let elon musk andmusk and doge continue to go
through usa and everything elseand look through.
They'll find that 70 billiondollars to do the pipeline here
pretty quick if they need.
But I mean again, if I wasgoing to complain about anything
that the federal government wasgoing to do, building
infrastructure would be the lastthing that I would complain
(36:30):
about.
Maybe I complain about thecosts or the overrun or the
inefficiency, but at that pointif they were going to build on
something that was at leastinfrastructure bridges, dams,
pipelines uh, I mean that wouldprobably be the last thing that
I would complain about at thatpoint.
Speaker 1 (36:44):
Final thought brad 30 seconds and trump's talking
about sovereign wealth fund.
This is this would be a hell ofa lot better asset to have in
the us sovereign wealth fundthan tiktok.
Um, it'd be.
It'd be much more useful to thenation all right, brad keith
lee.
Speaker 2 (36:58):
and the weekly top three continues on to number
three.
We're going to finish up here.
The story of the missingparagraph.
This sounds like anencyclopedia Brown mystery, but
here we go Nancy Drew and theHardy Boys.
What is the missing paragraph?
What are we talking about here,brad?
Speaker 1 (37:20):
Doesn't really go down that track, but it's a good
track to go down.
Speaker 2 (37:25):
I just loved the title, so I'm running with it.
Go ahead.
Speaker 1 (37:29):
So part of my career as a lawyer I had to deal with
SEC issues, the Securities andExchange Commission issues.
It was related to oil and gasdisclosures and related to what
oil and gas companies had to sayin their SEC disclosures.
But part of my career wasfocused on SEC and what SEC
rules say and all the SEC reallydoes is require you to disclose
(37:55):
information.
All the SEC Act and the SECregulatory agency really do is
require you to discloseinformation and then they leave
it to investors to evaluate thatinformation.
If the disclosure is, thisproject may never happen.
You may never get your moneyback.
The SEC is satisfied.
(38:15):
It's up to investors to decidewhether they want to go down
that road and it's really aninformation disclosure
obligation that the SEC has InAlaska.
What I'm beginning to thinkthat we need when I see
(38:36):
headlines this was generatedthis week by headlines that an
opinion piece in the ADN thatsays why Alaska must invest in
public education now, and thenanother one that says Alaska
contractors warn of alarmingoutlook for 2025 road
construction season and there'squotes in there about that.
(38:57):
They need $300 million orsomething out of the legislature
to get them through this comingconstruction season or in the
Alaska beacon University ofAlaska president, highlights
impact on workforce research andeconomy and address, but Pat
Pitney says the university isfacing headwinds from federal
(39:18):
executive orders and potentialbudget cuts.
You know, it's just headlineafter headline after headline of
we need more money and we needit from the legislature.
And here's the missingparagraph.
I mean, if I'm thinking aboutthis in SEC terms and I'm
sitting there as a legislator, Iwould say when you come to make
(39:41):
a presentation to me or whenyou write an op-ed that you're
hoping would influence me, youneed to include a paragraph.
And the paragraph needs to saytwo things.
It needs to say how you proposeto pay for it.
Three things how you propose topay for it, whatever you're
(40:02):
asking who pays for it andwhether you're willing to be one
of those people paying for it.
The thing that really triggeredthis was this opinion piece by
a bunch of people, includingJake Metcalf, who's former head
of one of the public employeesunion.
(40:22):
That was titled why Alaska MustInvest in Public Education.
Now it's this long piece abouthow important public education
is, how the state needs to befunding public education, this
additional you know, theadditional funding that's
absolutely crucial to make surethat our kids are looked after,
and you get all the way to thebottom and there's nothing in
(40:43):
there about either a how are yougoing to pay for it?
B who pays for it?
Under under this proposed,under your how are you going to
pay for it?
Approach and see whether you'rewilling to pay your
proportionate part uh of of thecost.
It's just all of these are.
We need more spending, but youknow, I don't know how to pay
(41:06):
for it.
We need more spending.
I assume it's going to comefrom PFD cuts and guess what?
I don't have to pay since I'min the top 20%.
All of these people who werewriting these articles are in
the top 20%.
I'm in the top 20%.
I get to escape if we push itoff on PFD cuts.
I want a paragraph that requirespeople to explain how they're
(41:28):
going to pay for it.
I think it would be useful.
I think it'd be useful, justlike SEC disclosures are useful,
in telling investors what's themotivation you know, what's the
commercial, what's thecommercial outlook for this
project, what's the you know theimpacts of this project.
I think it would be useful tohave a required disclosure in
(41:51):
legislative presentations and inop-eds, and designed to
influence legislators that sayshow are you going to pay for
this project, how are you goingto pay for this spending, how
are you going to pay for thisspending and are you willing to
pay your proportionate part ofthe costs of that spending?
And I bet we wouldn't see asmany presentations if we had
(42:11):
that.
Required disclosure, just likethe SEC.
Disclosure rules frankly push abunch of people, push a bunch
of projects out because peopledon't want to make those
disclosures.
They know if they make thosedisclosures, nobody's going to
invest in them.
So they just end up not makingthose.
Those.
Those proposals, just like theSEC rules, protect against,
(42:34):
against these fly-by-nightoperations.
That sort of disclosure rule infront of the legislature, I
think would protect against alot of these people coming up
and and and asking for money.
Or if they did, at least you'dhave them on the record saying
yes, you're going to.
You're either a you wantsomebody else to pay for it,
yeah, go away.
Or B okay, you're ready to payyour proportionate part of it.
(42:55):
Great, let's get you on therecord.
Let's get you on the recordsaying that how you're going to
pay for it and that you'rewilling to pay your
proportionate part of it.
These, these, these, just youknow, throw it into the air.
I want more money.
I want more money for K through12.
I want more money forconstruction.
I want more money for theuniversity.
(43:17):
Just throw it into the airstuff, that's just.
It's not working for me.
It for the university?
Just throw it into the air.
Stuff.
That's just.
It's not working for me.
It's not, and it shouldn't beworking for the legislature.
They should have these peoplestand up and say and yes, this
is how I'm going to pay for itand yes, I'm willing to pay my
proportionate part of that.
Speaker 2 (43:33):
Well, and of course, the problem is is you've got a
public that is woefully educatedon how the process works.
And so all you see and I wasgoing to do a show on this and I
decided not to, but there was Ihad a half a dozen different
Facebook posts from thesedifferent local groups,
community groups, where peoplewere just we need to fund
education more, we need to keepour schools open, we need to do
(43:54):
this, and nobody is asking, orif somebody does ask, they get
shouted down.
How do we pay for it?
The state is out of money, thestate is broke, there's nothing
left.
They'd have to take the entirePFD and nobody is, and nobody's
mentioning that.
Because of the illiteracy of thepublic on how the process works
.
It's.
I'm not criticizing them, I'mjust saying they're not taking
(44:16):
the time to understand how theprocess works.
They don't understand.
We have a declining enrollment.
That's the biggest problem isthat there's fewer students,
fewer butts in the seats, sothat's why they're getting paid
so much less and the COVID moneywhich they used inappropriately
, and now all those chickens arecoming home to roost, but
nobody understands that, and sothe discussion is not even being
(44:37):
had.
It is we need to fully fundeducation.
We've been fully fundingeducation.
Speaker 1 (44:47):
The discussion's not being had.
I mean, we have thisconversation occasionally and I
think it's a useful one.
The discussion's not being hadbecause people aren't being
forced to confront who pays forit.
They aren't being forced toconfront that it's middle and
lower income Alaska familiesthat are paying for this stuff.
I mean, the top 20% get awaywith writing op-eds like this
and, when asked who's going topay for it or how it's going to
(45:09):
be paid for the PFD cuts, well,you know, charlie, what that
means is you're not paying forit.
You're pushing the costs off onthe very people you're claiming
to help.
You're pushing the people,you're pushing the costs on
middle and lower income Alaskafamilies, and and they're
getting away with doing thatbecause they don't have to
confront who pays for it.
They don't have to confront youknow how it, how it's going to
(45:31):
be paid.
They just assume this moneycomes off, comes out of of the,
comes off the trees.
I mean, I I have thesediscussions occasionally on
facebook or twitter or inpersonal discussions about you
know.
Somebody says, well, we justgot to increase k through 12 and
I said, okay, well, how are yougoing to pay for it?
Well, I'm willing to give up apiece of my pfd.
You know in my responses.
(45:53):
You know how much of a piece ofyour pfd is of your income.
It's like 0.00001.
But you know how much it ismiddle income family.
You know how much of a piece ofyour pfd is of your income.
It's like point zero, zero,zero, zero, one percent but you
know how much it is middleincome family.
You know how much it is to a lowincome family, yeah, and they
say, well, we'll address thatother ways, we'll deal with that
.
We'll deal with that, otherwiseit's all proportionality right
now let's deal with it throughan income tax.
You want to pay for it then, oryou want to do this, then you
(46:16):
have to pay a proportionate partof it, and let's do this.
Oh no, we can't do that.
We can't do it through anincome tax.
Speaker 2 (46:21):
Well, it's all about proportionality.
At that point, what is the costto you as proportion of your
entire income versus you knowwhat is it to somebody else?
But I mean, that's the thingthat just blows me away is
people are just like, oh, justfund it, just fund it, the well
is.
She is dry, there is not muchleft.
And what you do if you did tryto fund it and drain the PFD
(46:42):
down to zero, what happens next?
And nobody's asking thosequestions.
Uh, I mean, there are a fewlegislators that bring it up,
but for the most part nobody'sasking those questions, and they
are the loudest voices outthere right now.
Speaker 1 (46:54):
Those, those, those legislators are the ones are,
are the ones that are stayingquiet, are the ones that are
pushing for this combination ofthe corpus and the earnings
reserve so they can start goinginto the corpus to pay for it.
Speaker 2 (47:08):
Final thoughts.
Speaker 1 (47:08):
Brad Final thoughts is it's a little bit sunnier
this week.
Cook Inlet's on an upswing, onan upswing.
Uh, we've got good news on CookInlet in the form of Hillcorp
and or in the form of the KenaiLNG plant and in the form of uh,
uh, of uh, of Chugach's, uh,step Um, and, and we got, but we
(47:29):
still got other issues.
Speaker 2 (47:31):
That's the thing, brad.
I mean.
I literally was pulling throughthese groups in the Mat-Su, in
Fairbanks, in Homer, down on thepeninsula, and everybody's like
don't close my schools, justfully fund it.
The legislature should just dotheir job and they should just
fully fund.
They are fully funding it,they're funding it according to
the formula and they're givingmoney on top of it and have been
(47:53):
.
But the biggest problem herethat nobody's talking about is
the declining enrollment 15%.
In Fairbanks their enrollmentdropped in one year 15%.
And they're not talking aboutthat.
And they're not talking aboutthe continued projected decline
that it's just going to getworse.
These school districts havebeen running deficits for years
(48:14):
and the answer is just ask UncleSugar for more money.
Uncle sugar is broke, there isno more money.
But nobody seems to acknowledgethat.
It's just always oh, just pullit, it's.
We're so disconnected from howthis whole thing works.
Speaker 1 (48:28):
It's, it's just amazing we are.
I've been reminded of that.
I've been visiting my mother inIllinois a lot and uh and and
I've reconnected with some ofthe you know some of the people
I grew up with and I've beenreminded of how local schools
are in Illinois because they'refunded largely through through
local school districts and taxeson local school districts.
(48:48):
The state funds a portion of it, makes some contribution to it,
but but the primary funder isthe local school district and so
in Illinois people are verythis isn't true in Illinois
about everything, but inIllinois people are very focused
on being cost-conscious aboutschool districts, making sure
school districts are at thelowest cost.
(49:11):
Rural part of Illinois there'sthere's pushes to consolidate
because they recognize that thatthe tax base that's there just
can't support.
You know these, the smallerschool districts that that we
used to have and so we have.
You know people.
We have school districts thatare much bigger now.
It's because it's we had schoolclosures and school districts
(49:33):
are much bigger.
School districts are muchbigger it's because it's locally
funded, it's because peoplehave to confront the funding
themselves, it's because theyhave to pay and so they get
involved in keeping the cost.
Speaker 2 (49:53):
Yeah, they're invested in it and we here,
we're just.
I mean again, look at thecomments.
I was going to just read thecomments for an hour, because
people obviously don'tunderstand what's going on in
the state and our legislatorsare not doing anybody favors by
continuing to lie.
Gary Stevens got caught in thewhole lie of the 40 students per
classroom thing and everythingelse, and it's just.
It doesn't matter to them.
(50:14):
They just want to protect whatthey need to protect and they'll
do whatever.
But the people don't understand, and that's the problem.
If the people truly understoodwhat was happening with this,
they would be up in arms aboutit.
They would be up in arms aboutthe way the spending is going,
but they're totally disconnectedbecause it comes from a
permanent fund and they neversee it.
Speaker 1 (50:35):
I think part of the solution, I think part of the
solution to K-12, I think partof the solution to education, is
increased local funding,increased required minimum
(51:02):
funding and however that and theimpact because it impacts them.
I think Alaska has become tooremote in that sense it's
somebody else's responsibility.
I mean, this was the wholeproblem with building new school
buildings, right, I mean, let'sbuild a new school building?
Oh, that's a great idea.
The state will fund 90% of it.
You know, let's add this, thisgizmo and that gizmo to the new
(51:25):
school building, cause thestate's going to pay, pay 90% of
it.
We need to.
I think part of the solution,frankly, is to localize the
funding more, and and the way wewould do that in Alaska is
increase the required localcontribution, and then we'd see
all sorts of things.
Then we'd see people inFairbanks going oh, we need to
(51:46):
consolidate these schools.
Speaker 2 (51:51):
Yeah, let's find some cost savings, because I think
there's only one or twodistricts in the whole state
that are anywhere near the localcap.
I know Juneau is but Fairbanksand I think but Fairbanks, and I
think both Fairbanks and Mat-Suhave got a pretty good sized
chunk that they could go to ifthey really wanted to do it.
But then people would be likewait, you mean we have to pay.
Yes, that's how it works.
You have to pay If you want achicken in every pot and you
(52:15):
want every school to remain open.
There's a cost to that.
Speaker 1 (52:21):
So yeah, yeah, and that's sort of what I mean by
the missing paragraph.
Let's put in the payment whatpayment you're proposing and
let's localize it in terms ofyou have to pay.
Are you willing to step up andpay your proportionate part?
And the answers are going to bedifferent than what we're
getting now when somebody elsehas to pay.
Are you willing to step up andpay your proportionate part?
And the answers are going to bedifferent than what we're
getting now when somebody elsehas to pay yes, I want you to
(52:42):
spend more money on this becauseI don't have to pay for it.
Speaker 2 (52:44):
Everybody else has to pay for it and it's so
infuriating to see them buy intothe narrative.
Well, you flat-funded education.
No, they haven't.
The BSA the base formula hasbeen fairly flat, but they've
been spending hundreds ofmillions of dollars every year
on top of that.
You just seem like you forgotabout that.
No, they intentionally havebeen misled by legislators, the
(53:06):
NEA, the education complex, Imean that's who they've been
misled by, and they're justparroting the talking points
instead of looking at it andthey don't understand.
That's the bottom line.
I read all these comments and Irealize none of these people
understand how this processworks.
Speaker 1 (53:23):
Yep, and it's because of the remoteness, michael.
I mean it's because it'sbecause the dollars are remote
from them.
They don't have to pay them.
And you know, for the top 20%they even when they do pay them,
it's a very, very, very smallpart of their income and so it's
just, you know.
Sort of like someone criticizedme for the second segment about
let the federal government fundthe pipeline, I mean the
(53:46):
criticism is well, you don'thave to pay for it.
Then I mean you're trying toshove the costs off on somebody
else.
But that's what we have a lotin this state.
We have people saying I needmore for education, I need more
for construction, I need morefor the university.
Somebody else pay for it, right?
Speaker 2 (54:03):
No, it's insane.
All right, brad, thank you somuch, you, ray of sunshine.
You Thank you for coming onboard and we'll talk to you next
week, okay.
Speaker 1 (54:12):
Michael, good to see you.
Well, that's a wrap for anotherweek's edition of the Weekly
Top Three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,Managing Director of Alaskans
(54:35):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
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