00                             HOUSE BILL NO. 271                                                                          
01 "An Act relating to the royalty rate for the Kitchen Lights Unit; and providing for an                                  
02 effective date."                                                                                                        
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
05 to read:                                                                                                                
06       LEGISLATIVE FINDINGS. The legislature finds that                                                                  
07            (1)  the Kitchen Lights Unit, located in the Cook Inlet, is an important source                              
08 of natural gas for the Southcentral region of the state;                                                                
09            (2)  without a modification of the royalty rate, production from the Kitchen                                 
10 Lights Unit is not economically feasible because of declining production and rising costs;                              
11            (3)  gas production in Cook Inlet is necessary to ensure reliable and affordable                             
12 energy supply for Southcentral utilities and ratepayers, to protect jobs, and to avoid reliance                         
13 on imported fuels; and                                                                                                  
14            (4)  granting royalty modification for certain Kitchen Lights Unit leases is in                              
01 the best interests of the state because a royalty modification is projected to extend gas                               
02 production from the leases for use by state residents and to maximize economic benefits to the                          
03 state, when compared with no modification.                                                                              
04    * Sec. 2. AS 38.05.180 is amended by adding a new subsection to read:                                              
05 (mm)  Under (j) of this section, beginning January 1, 2026, the commissioner                                            
06 shall modify the leases within the Kitchen Lights Unit so that the royalty rate for                                     
07 leases within the Kitchen Lights Unit is three percent each month of the gross value of                                 
08 production from the lease. Royalty calculations may be audited by the department at                                     
09 any time. The royalty modification under this subsection may be terminated if the                                       
10 commissioner determines that the royalty modification was assigned without approval                                     
11 of the commissioner, consistent with (j)(5) of this section. In this subsection, "Kitchen                               
12 Lights Unit" means leases with division of lands numbers 389196, 389197, 389198,                                        
13       389507, 389514, 389515, and 389923.                                                                               
14    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to                          
15 read:                                                                                                                   
16       RETROACTIVITY. This Act is retroactive to January 1, 2026.                                                        
17    * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).