A potential solution to meet expected natural gas shortages in the state's most populated area hit a bump this week, leaving the future of storage facilities in Alaska lawmakers' hands -- and with that, the future of natural gas to meet power and heat needs in Southcentral.

Deciding it doesn't have clear authority over natural gas storage facilities in existing statutes, the Regulatory Commission of Alaska is asking the Legislature for direction. Should a new facility that warehouses natural gas for electric utilities and distributor Enstar be rate-regulated, or not?

Answering that question is going to take time and could spur a new political debate this session, which has the potential to delay a company's plan to build a storage facility that could be operational by winter 2012-13, when Southcentral's customers may face shortages without a solution. Regulation is seen by some as a way to protect consumers footing the bill for power and heat, and by others as an unnecessary step in a process that already offers protection through utility oversight.

Already, there's division among lawmakers. Sen. Hollis French, D-Anchorage, said that natural gas storage should be regulated by the RCA. But Rep. Mike Hawker, R-Anchorage, said that's not necessary because consumers are already offered protection through regulation of electric utilities and gas distributor Enstar's rates. Both lawmakers have sponsored bills offering incentives to companies that build storage. Sen. Tom Wagoner, R-Kenai, advocates for regulation.

Hawker and aide Larry Persily avoided the issue of RCA regulation when drafting the Cook Inlet Recovery Act, co-sponsored by House Speaker Mike Chenault, R-Nikiski, to encourage storage and production.

"All the stakeholders we talked with, there was universal alignment that establishing significant storage capacity was ‘mission critical'," Hawker said. "We consciously avoided opening up the issue of whether the RCA has regulatory authority ... If we open that can of worms we guarantee that nothing is going to get started, and the whole planning process is going to be delayed until the issue gets resolved."

French called the RCA's decision, issued Thursday, "stunning," and said the Legislature better get in gear to find a fix. That may not be too difficult, he added.

"It's a non-controversial position," French said. "It's just a matter of getting it done."

A TransCanada subsidiary, Cook Inlet Natural Gas Storage LLC, or CINGS, wants to turn a nearly depleted natural gas reservoir near Kenai into an underground warehouse that could hold 1.9 billion cubic feet of gas. Cook Inlet gas producers could feed the product into the storage center when consumer demand is low, and utilities could draw on the supplies to help meet peak demand in the coldest days of winter.

Southcentral's 350,000 or so people rely on natural gas for 90 percent of the region's electricity and to heat homes and businesses, but use about 14 times as much gas in the cold, dark winter as they do in summer.

Utilities, state regulators and politicians have been warning of likely gas shortages in the next few winters as Cook Inlet production slumps.

For a while, that gap in deliverability has been covered by ConocoPhillips, which tapers off its take for liquefied natural gas exports to help meet demand at peak times. But ConocoPhillips' federal permit allowing LNG exports expires in March 2011, and the company hasn't announced its plans for the future.

In late December, CINGS asked the RCA to issue a judgment on whether gas storage will be regulated. They also asked that the commission rush a decision, which can take up to six months. A quick response could help CINGS get started on the project this summer in hopes of being operational by winter 2012-13.

"We need to have surety ... before we can close on some of the properties and move forward with some of the construction," CINGS' Bob Gibb told Alaska Dispatch in December. "It is critical."

At the center of the issue is whether the RCA has jurisdiction over gas storage projects. That's never come before the commission.

Reaching a consensus among the five-member group proved difficult. Chairman Bob Pickett said storage doesn't seem to fall under two likely statutes, because CINGS isn't a utility supplying gas to ratepayers, and isn't a pipeline carrier.