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Economy

Fate Of Power Cost Equalization Program Awaits Court Decision

AVEC power plant in Bethel, Alaska.
Lenny Welch
/
AVEC

Alaska lawmakers will meet in a special session, which is now planned for Aug. 2. In that session they will be developing a budget with pots of state money that include a $1 billion endowment fund built up over many years for the Power Cost Equalization program, which subsidizes the cost of rural electricity.

Gov. Dunleavy is the first governor to allow that endowment to be “swept” into the funds available for spending by the legislature. 

Alaska Village Electric Cooperative President and CEO Bill Stamm said that without the endowment, the cost of electric power for consumers in much of rural Alaska, including the Yukon-Kuskokwim Delta, will increase by around 100% or more.

“It’ll be a little bit different for each community and each user. AVEC serves, I think, 23 communities in the Y-K Delta, and the average cost for electricity for residential service with PCE is about half of what it would be without it. There are parts of the state where fuel costs are higher, and the loss of PCE would have an even more dramatic effect,” said Stamm.

Reversing the sweep allowed by the governor would take a three-quarters vote of both houses of the Legislature unless the courts rule in favor of the Alaska Federation of Natives, AVEC, and 16 other organizations who have filed a suit challenging the governor’s action.  They claim that Dunleavy overstepped his authority when he allowed the endowment fund to be swept into the pot of money available to use for general state spending.

“At the end of every fiscal year, basically appropriated funds that have not been spent get swept back into the constitutional budget reserve. But we feel that the PCE Endowment is a separate fund that has already been appropriated, and that its earnings is what can be considered for how they are spent,” said Stamm.

If the court rules in favor of the plaintiff, the endowment fund will stand. But lawmakers can still vote to eliminate the endowment or use the money it generates for other programs than power cost equalization.