Lights out for rural Alaska as the PCE endowment faces endangerment

Jul 23, 2019

The Power Cost Equalization Endowment is one of many accounts lost to a budgeting sweep at the end of the year. If funding is not restored, residents in Bristol Bay will have to pay the difference. 

Credit Tyler Thompson

The Power Cost Equalization Endowment helps to alleviate the high cost of energy in rural Alaska. In 2018, $746,000 dollars were subsidized from residents’ bills between Aleknagik and Dillingham alone.

PCE is one of the accounts to lose funds due to yearly budgeting process known as a sweep. Legislators typically vote to restore those funds, but that did not happen this year. Dillingham and Aleknagik are among the 180 communities impacted by the legislature’s sweep of the Power Cost Equalization Endowment. CEO Bob Himschoot said residential members of Nushagak Cooperative are facing a significant increase to their bills.

“So if you’re a residential member, your first 500 kilowatt hours is subsidized at 19.7 cents,” he said. “In affect…that’s $100 a month.”

Most homes use between six and 800 kilowatts a month. The sweep of the PCE is the result of a stalemate in funding between the governor and the legislature. Himschoot said it’s unprecedented.

“There’s not been a situation like this since PCE was first developed as a program in 1985,” he said. “So it’s all uncharted waters.”

While electric bills will increase for the month of July, the PCE could still be saved.

Legislators are working to restore some of line-item vetoes. House Speaker Bryce Edgmon is on the frontlines to restore the fund.

“But that PCE endowment fund, it’s among the many priorities that I’ve got on my plate right now,” he said. “That’s at the top in terms of getting that fund liquidated, getting that money recapitalized, keeping those benefits in place and keeping the endowment going forward in the (sic) perpetuity.”

Legislators are aiming to draw on some of the funds from the Constitutional Budget Reserve through Senate Bill 2002. The bill would restore not only the PCE, but also highway funding, student scholarships and other accounts.

To pass the bill, legislators need a three-quarters majority vote in the house and senate. The bill was approved 29-7 Monday, but fell one vote short of the majority. Four members of the House were absent for the vote. Edgmon says he is committed to holding another vote before August.

“You know if that money isn’t put into place, there will be no PCE payments for the upcoming year…upcoming winter and that will be a huge shock to most people in rural Alaska,” he said. To me, it’s a legacy program that needs to stay in place for rural Alaska in itself, so…very instrumental at people being able to afford staying in smaller communities.”

Legislators are also voting on House Bill 2001 to fund a $1,600 Permanent Fund Dividend and, in turn, restore funds to some of the line-item vetoes. If legislators fail to pass either bill, the PCE could disappear. 

CORRECTION: We originally reported that the PCE was part of the Gov. 182 line-item vetoes. The story has been updated to clarify that PCE funding was lost due to a yearly budgeting sweep. The sweep is an automatic transfer of money from the state’s bank accounts culminated into one account at the end of each fiscal year. Legislators must vote each year on whether to restore those funds or not.

Contact the author at tyler@kdlg.org or 907-842-2200.