Nushagak Cooperative joins coalition suing the Dunleavy administration over PCE funding cuts

Jul 21, 2021

Over $30 million was originally included in this year’s state budget for the program, which helps lower rural energy costs for tens of thousands of Alaskans. Then, the funding was taken away in a “budget sweep”. The lawsuit argues that sweep is unconstitutional.

Credit KDLG News

  

Nushagak Cooperative in Dillingham is among the group of rural electric cooperatives, communities and Native organizations that are suing the Dunleavy administration over funding cuts to the Power Cost Equalization Program.

The program helps offset the high cost of energy production for residents in rural Alaska.

Over $30 million was originally included in this year’s state budget for the program, which helps lower rural energy costs for tens of thousands of Alaskans. Then, the funding was taken away in a “budget sweep”. The lawsuit argues that sweep is unconstitutional. 

Nushagak Cooperative CEO Bob Himschoot said the program is critical for rural communities. Dillingham and Aleknagik receive about $55,000 a month through the program to help lower the cost of residential bills.

“PCE is at risk and it’s important to our communities," Himschoot said. "It does subsidize our residential and community infrastructure. It’s something we need to address and need to fight for.”

Funding for the billion dollar program was established in 2000 under the Alaska Energy Authority, separate from the state’s General Fund.

In 2019, the Dunleavy administration said the program’s funding could be swept into the Constitutional Budget Reserve. That means the Legislature must decide to restore funding with a three-fourths majority vote to “reverse” the sweep. The Legislature failed to do that this summer.

Scott Kendall, a lawyer working on the case for the coalition, including Nushagak Cooperative, told KTOO’s Andrew Kitchenman that the fund was never meant to be swept.

Himschoot said the lawsuit is a step toward permanent protection.

“The difference between the legislation action and the reverse sweep that we still hope will happen will fix the problem for 2021," he said. "The lawsuit will create a legal determination and hopefully determined in our favor that will keep this endowment from being sweepable into the future both for this administration and future administrations.”

A permanent fix would require legislative action.

In a statement Monday, Governor Mike Dunleavy said “a decision by the court will help clarify what is in the General Fund and what is not to determine what is swept into the budget reserve to repay it.” He also authorized his administration to pursue an “expedited judgment” on the future of the fund.

Dunleavy also proposed to include PCE in a state constitutional amendment that would protect the Permanent Fund and Permanent Fund dividend.

But until the fund is restored, rural residents should expect their bills to vastly increase in the upcoming month. The next legislative session is scheduled for August 2. 

Restoring funding for the PCE program will require a three-fourths majority vote in each chamber. 

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