Governor, legislators propose protecting the Power Cost Equalization Fund. Here’s what it does

ANCHORAGE, Alaska (KTUU) - Alaska Gov. Mike Dunleavy is encouraging the Legislature to constitutionally protect the payments that help lower energy costs for rural Alaskans.

On Wednesday, Dunleavy proposed moving the state’s $1 billion Power Cost Equalization Fund, or PCE, into the principle of the Permanent Fund. Protecting it through an amendment to the Alaska Constitution would ensure money drawn from the endowment’s earnings go where intended — to help offset energy costs in rural Alaska.

Approximately $30 million is paid out each year to about 200 rural communities to help balance the cost of electricity across the state, according to the Alaska Energy Authority. In 2020, about $29 million was paid out to 192 communities that participated, according to as statistical report from the Alaska Energy Authority.

“It just provides stability and part of an energy policy that we need as the state to make sure that we take care of all of our residents, especially the 88,000 that are not connected to a power grid like like the rest of Alaska in urban Alaska,” Curtis Thayer, executive director of the Alaska Energy Authority, told Alaska’s News Source Thursday.

“The state’s invested billions of dollars in Anchorage and Fairbanks, Southcentral Alaska to help them on their energy costs, whether it be the Cook Inlet gas subsidies for finding natural gas or hydro projects,” Thayer continued. “In rural Alaska, they don’t have those opportunities.”

The program, originally called Power Cost Assistance, started in 1981, and is paid for through the earnings of a dedicated fund that’s grown to be worth $1 billion.

Thayer said the program offers about $30 to 35 million in subsidies each year.

Where the average price of power in Anchorage, Fairbanks and Juneau is about 20-22 cents per kilowatt hour, in rural Alaska costs be as high as $1 an hour or more, he said. PCE payments help lower the cost on the first 500 kilowatt hours of a residential customer’s bill.

“It allows them to be on equal footing for power costs that we enjoy here on the rail belt or more in urban Alaska,” Thayer said.

Alaska state Sen. Lyman Hoffman, D-Bethel, said at a governor’s press conference Wednesday that legislative battles over the payments have been the equivalent of “political football.”

In 2019 Dunleavy himself vetoed, then restored, the payments.

“It’s an essential piece of the energy puzzle in rural Alaska,” Hoffman said, calling constitutional protections a good idea to “protect those dollars from greedy legislators.”