State resumes rural power subsidy after judge rules against governor

Gov. Mike Dunleavy has decided not to appeal after a judge ruled against his interpretation of state law that would have stopped assistance payments toward utility bills in almost 200 small communities across Alaska.

A state court judge on Aug. 11 sided with a coalition including the Alaska Federation of Natives and electric cooperatives that had sued Dunleavy to force release of the money.

The governor announced the next day he would not appeal the court decision.

This year’s estimated $32 million in payments will help reduce electricity bills for more than 82,000 Alaskans in about 29,000 households, though even with the state aid most of the utility bills are still substantially higher than elsewhere in the state.

Participating Southeast communities include Kake, Angoon, Hoonah, Prince of Wales Island communities and other smaller towns.

The assistance is paid out of the Power Cost Equalization fund, established by the Legislature in 1984 as a matter of fairness after the state had put hundreds of millions of dollars into hydroelectric projects to serve Anchorage, the Kenai Peninsula and Fairbanks, Wrangell, Petersburg, Ketchikan, Kodiak, Valdez and Glennallen.

Superior Court Judge Josie Garton ruled against Dunleavy’s interpretation of state law that the nearly $1.2 billion Power Cost Equalization Endowment Fund was not available for legislative appropriation without a three-quarters majority vote of lawmakers.

Dunleavy, on advice of his attorney general and budget director — both of whom have since left state service — determined in 2019 that the PCE fund would be swept into the state’s budget reserve account, unavailable for general appropriation, unless lawmakers reversed the move each year in a three-quarters vote. His decision was contrary to actions by every governor since the PCE fund was created.

Though many legislators disagreed with the governor’s decision, in 2019 and 2020 lawmakers managed to achieve the three-quarters vote to protect the rural energy payments. However, they failed to win enough votes this year among political squabbles over the size of the Permanent Fund dividend.

The judge rejected the governor’s view, ruling that lawmakers legally appropriated the PCE payments by a majority vote and the money should be distributed.

The state-owned Alaska Energy Authority, which helps administer the program, said Aug. 12 that it would issue payments as soon as utilities submit their applications. The program pays the utilities, not consumers.

Dunleavy’s actions have also blocked payments under a state college scholarship program that serves almost 5,500 students. The governor believes it takes a three-quarters majority vote of legislators to maintain that account, too, but the scholarship program was not part of the lawsuit over the rural energy payments.

The governor did not address the scholarship program when he announced he would not pursue an appeal of the court ruling in the energy subsidies court case.


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