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They're not contingencies. That's one message TransCanada's Tony Palmer wanted to get across yesterday when he presented his company's gas line proposal to the Senate Resources Committee, referring to suggestions in the application that the US government pay for cost overruns and/or pipeline tariffs under certain conditions. Palmer brought them up in an effort to clarify questions floating around, later when he talked about the federal role, and again in his conclusion.

AGIA doesn't allow applications to be contingent on the state or feds doing anything extra, and there's been some discussion over whether TransCanada's application had contingencies. Palmer clearly tried to put the issue to rest. Ditto with the potential $9 billion liability.

Palmer spent a good chunk of time just talking about his company and trying to show it has the experience and financial clout to take on a project as big as the Alaska gas line.

He also addressed the question of competition in AGIA. He said what the gov and some lawmakers have said, that the competitive part already took place, and it didn't really matter than only his company's application was deemed complete.

"I expected there to be comprehensive competition, and that's clearly how TransCanada bid," he said. "We bid to win. . . . We stretched in a number of ways."

The issue came up again later when Sen. Bert Stedman asked Palmer how the state could possibly determine the TransCanada proposal was in the state’s best interest when it was the only proposal. Essentially, how do you do a fiscal comparison when there's nothing to compare against?

It's an interesting question. Maybe MidAmerican has some new technique for laying pipe that saves construction costs, which would ultimately make its pipeline better for the state than TransCanada’s. Or maybe BG’s global LNG infrastructure would give it an advantage.

But then, MidAmerican and BG didn't apply. So the idea of comparing the TransCanada proposal against other proposals is problematic. A MidAmerican pipeline, as nice as it might be, isn't an option. (You could argue that the AGPA proposal is an option, because the entity might have submitted a complete application with a little more time. But companies that didn't apply have so far pointed to hurdles in the project itself, not the AGIA application process.)

Palmer answered by saying the state could always study the applications that were submitted and deemed incomplete. But those aren’t really options, either.

The only way that incomplete applications and applications not submitted (including ConocoPhillips’) can be considered options is if you’re willing to give up on some or all of the AGIA must-have requirements. If you stick with AGIA, the question is not, Is TransCanada’s application better than MidAmerican’s? but, Is TransCanada’s application good enough? Still a tough question.