Alaska Federation of Natives sues governor over draining of rural power bill fund

Alaska State Capitol in Juneau, Alaska.
Alaska State Capitol in Juneau, Alaska.(KTUU)
Published: Jul. 20, 2021 at 3:40 PM AKDT
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JUNEAU, Alaska (KTUU) - The Alaska Federation of Natives has filed a lawsuit along with several local governments and electric cooperatives against Gov. Mike Dunleavy’s administration, demanding that monthly payments go out to subsidize power bills in rural Alaska.

The Power Cost Equalization Endowment Fund is at risk because the Legislature failed to pass a procedural vote known as the “reverse sweep” before the end of the last fiscal year. Three-quarters of legislators will need to vote to keep the fund full and ensure that payments go out on time.

The lawsuit challenges why power cost equalization is at risk at all. Former Alaska Attorney General Kevin Clarkson wrote to legislators in 2019 arguing for the first time that the fund was subject to the sweep.

Clarkson sent the letter as the governor unsuccessfully pushed to have the fund turned into an annual appropriation. That idea has worried rural legislators who feared it would be the first step to ending the subsidies.

Since heated budget battles in early 2019, Dunleavy has changed tack. He has pledged to protect the PCE Fund and put it in the Alaska Constitution alongside a new Permanent Fund dividend formula.

The governor’s office released a statement on Monday afternoon welcoming the lawsuit, saying that it would provide clarity for the roughly 84,000 rural Alaskans who rely on power cost equalization.

“I have authorized my administration to pursue an expedited judgement on the future of the Power Cost Equalization Endowment Fund,” Dunleavy said. “This issue is too important to delay any further.”

Power cost equalization began in the mid-1980s as a way to compensate rural Alaska for the infrastructure investments made on the Railbelt. That annual appropriation was turned into an endowment in 2000, growing to over $1.1 billion.

The fund now also provides funding for community assistance programs and renewable energy projects across Alaska.

Jodi Mitchell, CEO of the Inside Passage Electric Cooperative, says the monthly power bill payments are critical for the roughly 1,400 members who rely on them in communities like Hoonah and Klukwan.

The cooperative received just over $1.6 million last year to disburse among its members. Without the payments, average power bills could double, increasing by roughly $188 per month, Mitchell added.

The Alaska Energy Authority manages the fund and subsidies. It is urging utilities to keep filing their paperwork so that impacted Alaskans can quickly be back paid when the PCE Fund issue is resolved.

The longer that there is no resolution, the more pressure is put on utilities which may not be able to cover the gap, said Curtis Thayer, who heads the energy authority.

Rep. Bryce Edgmon, I-Dillingham, says the timing of this uncertainty is bad. Freezers are at full bore being filled with fish across rural Alaska and it will soon be time to hunt for caribou, moose and birds.

The payments cover the first 500 kilowatt-hours used in rural Alaska homes to make power bills roughly equivalent to what is paid in Anchorage, Fairbanks and Juneau. Edgmon said while that may not cover a typical household’s total power needs, it makes a big difference.

“It is a lifeline, having some sort of a normal existence,” he added.

The Legislature is set to reconvene for a special session on Aug. 2 to try to forge a permanent fiscal plan. Legislators across the aisle say the reverse sweep will pass, eventually, but it has been spoken about by House Republicans as a bargaining chip.

“We still have the three-quarter vote ahead of us,” said Rep. Cathy Tilton, R-Wasilla, in June. “And we’re going to hold onto that.”

The Alaska Federation of Natives is striving to take the fund permanently off the negotiating table. Judge Josie Garton has not yet scheduled another hearing in the case, but both the state of Alaska and the plaintiffs are asking for a decision to be made before mid-August.

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