── Municipality of Anchorage, formerly d/b/a Municipal Light & Power Department v. State of Alaska, Department of Revenue ──
Court: Alaska Supreme Court
Date: April 17, 2026
Category: General
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
[email protected].
THE SUPREME COURT OF THE STATE OF ALASKA
MUNICIPALITY OF ANCHORAGE, )
)
formerly d/b/a Municipal Light & Supreme Court No. S-18923
Power Department, )
) Superior Court No. 3AN-21-07457 CI
Appellant, )
) OPINION
v. )
) No. 7807 – April 17, 2026
STATE OF ALASKA, DEPARTMENT )
OF REVENUE, )
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Kevin M. Saxby, Judge.
Appearances: Dean D. Thompson and Paul J. Jones,
Kemppel, Huffman and Ellis, P.C., Anchorage, for
Appellant. Mary Hunter Gramling, Chief Assistant Attorney
General, and Treg Taylor, Attorney General, Juneau, for
Appellee.
Before: Carney, Chief Justice, and Borghesan, Henderson,
and Pate, Justices. [Oravec, Justice, not participating]
BORGHESAN, Justice.
INTRODUCTION
This appeal involves a dispute over how to calculate tax credits for the
Municipality of Anchorage’s production of natural gas. Alaska law taxes the
production of natural gas, while also allowing gas producers to claim tax credits based
on the costs of producing that gas. The law’s formula for calculating tax credits entails
subtracting certain production costs from the amount of taxable gas produced. The law
defines what gas is taxable for purposes of this scheme. The tax credits are intended to
create incentives for gas producers to invest in producing more gas.
When the dispute began, the Municipality owned one-third of a natural
gas field in Cook Inlet. It used most of that gas to make electricity for its residents,
selling only small amounts to third parties. A law specific to municipal governments
provided that the Municipality had to pay production taxes on only the amount of gas
it sold to others yet was eligible for tax credits “to the same extent as any other
producer.”
When the Municipality applied for tax credits, it calculated them based on
costs for producing all of its gas against the very small amount of gas it actually paid
taxes on. This calculation yielded sizeable tax credits. The Department of Revenue
rejected this calculation. It took the position that the tax credit calculation should be
based on the value of all the gas it produced, which met the statutory definition of
taxable, even though most of this gas was not actually taxed under the special rule for
municipalities. Therefore, it awarded the Municipality tax credits in far smaller
amounts than the Municipality had claimed. The superior court affirmed the
Department’s decision. The Municipality appealed to us.
The dispute boils down to what the legislature meant when providing that
municipal gas producers are eligible for tax credits “to the same extent as any other
producer.” We conclude that the legislature meant for a municipal gas producer’s tax
credits to be calculated according to the value of gas that the tax credit statutes define
as taxable, rather than according to the value of gas that is actually taxed under the
special rule that applies only to municipal producers. Although the statutory text is
ambiguous, the legislative history supports this interpretation, and it is more consist