Plan to eliminate Power Cost Equalization Fund meets resistance

Sen. Natasha von Imhof, R-Anchorage, questions a presenter during a Senate Finance Committee meeting in Juneau on Jan. 16, 2019.
Sen. Natasha von Imhof, R-Anchorage, questions a presenter during a Senate Finance Committee meeting in Juneau on Jan. 16. Von Imhof expressed concern on Monday about Gov. Michael Dunleavy’s plan for eliminating the Power Cost Equalization Fund. (Photo by Skip Gray/360 North)

State senators are pushing back against Gov. Michael Dunleavy’s plan to eliminate a fund that’s intended to equalize the cost of supplying power to rural Alaska. Senators spoke about it in a Finance Committee meeting Monday.

Senators reviewing Dunleavy’s budget proposal said there’s value in keeping the Power Cost Equalization Fund.

Anchorage Republican Sen. Natasha von Imhof said the plan is “short-sighted.” She’s interested in using the $1 billion fund to develop renewable energy projects in rural Alaska.

“I think that we would be cutting our nose to spite our face to remove this fund, when the long-term capability of this to help rural Alaska become more energy-efficient is, to me, a better goal,” she said.

The Dunleavy administration wants to effectively transfer the Power Cost Equalization money to another state savings account: the Constitutional Budget Reserve. That fund has $1.73 billion and has been drained of more than $10 billion over the past five years.

But Sitka Republican Sen. Bert Stedman said the PCE Fund was designed to provide a lasting source of support to Alaskans who don’t benefit from Cook Inlet’s natural gas reserves or the hydroelectric dams along the coast.

“For example, those dams were built and they’re going to stand for 100 years-plus. The gas resources infrastructure’s in place, and it’s going to stand,” said Stedman, who described the PCE Fund as “trying to level out the energy issues around the state.”

The Legislature last revisited how to handle the PCE Fund three years ago. Dunleavy — who was then a state senator at the time — supported using the fund to close part of the annual deficit. Instead, the Legislature passed a law that allows some PCE money to be used to fund community assistance to municipalities across the state. In years when fund earnings are especially high, the law allows PCE money to be used for renewable energy projects. Dunleavy voted for the law.

Bethel Democratic Sen. Lyman Hoffman said the benefits from maintaining the fund could be long-lasting.

“By eliminating this, we have no path forward to try to help high-energy communities in the state of Alaska get off of diesel and look toward developing renewable energy as a source,” Hoffman said.

Instead of having PCE payments come from the fund, Dunleavy has proposed making the payments as part of the annual budget.

The administration has yet to introduce a bill to eliminate the PCE Fund.

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Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

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