Southcentral Alaska utilities warn gas shortages could raise heating and power costs this winter

Southcentral Alaska’s primary natural gas utility is warning that tightening Cook Inlet supplies could raise heating costs over the next several winters and make it harder for regional utilities to maintain power generation during extreme cold.

Enstar officials said July 28 that gas deliverability is becoming less reliable as local production and storage margins tighten. The warning affects residents, businesses and public agencies in Anchorage, the Mat-Su Valley and the Kenai Peninsula, where an interconnected gas system supports home heating and much of the region’s electric generation.

The warning concerns winter 2026-27 planning and possible future conditions. No rolling blackout, household gas shutoff or current service interruption was reported in the cited coverage, and no new household rate has been approved based on Enstar’s warning.

Why energy costs could rise

Enstar President and CEO John Sims said the utility’s current weighted average gas cost is about $10.80 per thousand cubic feet. He said imported liquefied natural gas could cost roughly $22 per thousand cubic feet.

Those are utility-provided estimates of gas commodity costs, not complete household bill amounts or approved customer rates. If Enstar must purchase more expensive supplies, however, the added cost could put upward pressure on heating bills. Higher energy expenses could also affect businesses, public agencies and municipal budgets.

Enstar serves more than 150,000 Southcentral customers and has said Cook Inlet is no longer a dependable long-term source by itself. The utility is seeking available production and evaluating additional supply, storage and import options.

Why electric utilities are involved

Southcentral’s major utilities rely on an interconnected, pressurized natural gas system. Enstar’s network serves Anchorage, the Mat-Su Valley, the Kenai Peninsula and Whittier, while gas from the system also fuels power plants operated by utilities including Chugach Electric Association, Matanuska Electric Association and Homer Electric Association.

That interconnection means a utility can have sufficient gas under its own contracts but still face regional problems if pressure in the shared system falls. The amount of exposure varies by utility because contracts, fuel mixes, storage access and backup generation differ.

Storage matters because gas can remain underground while still being difficult to deliver if the system lacks enough pressure. Cook Inlet Natural Gas Storage Alaska, known as CINGSA, is one of the region’s most important storage facilities. Utilities have said a cold spring drew down storage, while limited Cook Inlet production has slowed the refill process.

What a difficult winter could look like

Utilities are planning a sequence of responses rather than reporting that emergency measures are underway. They could first ask customers to conserve during peak demand, including lowering thermostats or reducing electricity use.

Utilities could also share gas supplies or shift some electric generation from natural gas to diesel. Chugach and MEA have backup-generation options, while Homer Electric has fewer alternatives because of its reliance on gas-fired power, according to reporting on the regional planning.

MEA’s Energy Watch program uses Green, Yellow and Red alert levels to communicate conservation requests. Its contingency plan divides members into nine groups for temporary rolling service interruptions if an energy emergency leaves too little fuel for generation. Under the plan, an affected group could experience an outage of about 30 to 45 minutes roughly once every five hours.

MEA says activation is extremely unlikely because of its backup systems. The rolling-interruption plan is an emergency preparation, not a current outage schedule.

Enstar storage proposal remains disputed

The supply warning comes as Enstar challenges a decision involving a proposed storage project in Kenai. In a July 8 order, the Regulatory Commission of Alaska denied Enstar’s request for an advance determination that the proposed Kenai Loop Pool project would be a prudent investment and closed the docket.

The proposed project would convert a depleted reservoir leased and operated by AIX Energy into a gas-storage facility. Enstar estimated the project would cost about $240 million, potentially the largest capital investment in the utility’s history.

According to reporting on the order, the commission cited unresolved questions about whether the reservoir was technically capable of serving as storage, competing applications involving the site, the timing of Enstar’s need for additional capacity, financing and the potential effect on customers. The denial was not a final finding that the proposed purchase or storage project itself would be imprudent.

Enstar filed a reconsideration petition July 24. The commission has 30 days to respond; if it takes no action, the petition is automatically denied, according to Alaska Public Media’s report on the filing. The petition remained active as of August 15, 2026.

What residents should watch next

The immediate question is whether utilities can maintain adequate supply and pressure through the coming winter without buying substantially more expensive fuel or asking customers to conserve during peak periods.

Residents should monitor Enstar, their electric cooperative or municipal utility for any official Energy Watch or conservation alert during extreme cold. Households and businesses will not all face the same exposure because utility contracts, fuel mixes, storage access and backup generation are different across Southcentral Alaska.

The longer-term options remain unsettled. Enstar is pursuing reconsideration of the storage decision and evaluating other supply choices, including imported LNG. A possible Alaska LNG project would require additional regulatory, financing and construction steps and is not a confirmed near-term solution.

Sources

Look for updates to this story

Discover more from Interactive News

Subscribe to get the latest posts sent to your email.