August 2021 Back Page – Power Cost Equalization in the News Again

Posted: August 2, 2021

By the time this article reaches you there may or may not be some definitive action by court that would substantially affect the existence of the PCE Endowment, how it will be treated in the future, and its availability to fund the PCE program.

The Power Cost Equalization program is Administered by the Alaska Energy Authority (AEA) with the statutory purpose of bringing the cost of electricity in isolated rural communities more in-line with electrical costs in Anchorage, Fairbanks and Juneau. The justification for the program is that the State has spent and does spend a lot of money making power less expensive for residents on the Railbelt, and in other communities where large hydro and transmission projects help lower costs. No such mega-dollar infrastructure project can be built to assist all the isolated communities around Alaska, so the Legislature devised a program and a formula to help buy down the cost of power in small communities as a fair trade for the money spent to lower electrical costs elsewhere.

Since its inception in the mid-1980’s there was an annual struggle to fund PCE. Forward-thinking legislators in the early 2000’s remedied this by making a series of deposits into a PCE Endowment that was invested to generate earnings that would pay for the PCE program. That endowment is now more than $1B and its earnings have consistently paid for the program. Unfortunately, starting in 2019 the Dunlevy Administration began including the PCE Endowment in the annual cleanup of “left-over” funding that they move into the CBR. Without a three-quarters majority vote by both houses of the legislature to restore the Endowment there is no funding for PCE.

The lawsuit points out that the PCE Endowment was established as a separate fund that is not available for appropriation and asks the court for immediate action to restore the fund. Unless the Endowment is restored there will be little hope that PCE credits will be honored and paid by the State. Watch your electrical usage and stay tuned to

the news on PCE. We’ll post the periodic updates on our website, and Facebook page.

Power Cost Equalization (PCE) is in the news again, and again, funding for the program is in jeopardy. This year AVEC, the Alaska Federation of Natives (AFN) and a host of other communities and utilities have joined to file a lawsuit in Superior Court to restore the PCE Endowment Fund and prevent it from being swept into the Constitutional Budget Reserve (CBR) at the end of every fiscal year.

Until next time,

Bill Stamm