Village solar power

A group of visitors stands next to three new solar arrays in the Northwest Alaska village of Buckland, Oct. 15, 2018. The city of Kotzebue, 75 miles northwest of Buckland, plans to install the largest solar project in rural Alaska, and second statewide to the 1.2-megawatt solar farm in Willow. (Photo by Nat Herz/Alaska’s Energy Desk)

The Alaska Federation of Natives plus several electric cooperatives and small communities are suing the Dunleavy administration over management of an energy fund that reduces high electric bills for rural ratepayers.

In rural and remote Alaska, power costs are significantly more than what consumers pay in urban areas that include Fairbanks, Anchorage and Juneau. The power subsidy program benefits 84,000 residents in 194 communities across Alaska.

The plaintiffs seek “to prevent catastrophic increases in energy costs for tens of thousands of Alaskans,” according to the lawsuit, which was filed this week in superior court.

The First Alaskans Institute, the Association of Village Council Presidents and nine nonprofit electric cooperatives are among the 18 plaintiffs claiming that the Dunleavy administration violated the Alaska Constitution by moving the Power Cost Equalization Fund into a budget reserve account.

The move means that the rural energy program is not funded this fiscal year, which started July 1, after the Legislature failed to replenish the Constitutional Budget Reserve, a yearly housekeeping measure that requires a three-quarters vote in both chambers.

They argue that the Power Cost Equalization Fund is “protected from such budget maneuvers,” according to the Alaska Federation of Natives, the state’s largest Native organization. More than $32 million budgeted by the Legislature for power subsidies this fiscal year should be paid, the plaintiffs said.

“This year, the Legislature appropriated $32.355 million from the PCE Endowment Fund … Importantly, that appropriation was not vetoed by the governor,” according to the lawsuit.

The lawsuit questioned the governor’s authority in 2019 to move the Power Cost Equalization Endowment Fund from the Alaska Energy Authority to the Constitutional Budget Reserve, which is subject to yearly approval by a three-quarters vote in both the House and Senate.

“Affordable energy is essential to the survival of Alaska’s rural, Native communities, particularly as our families and individuals recover from the pandemic,” said Julie Kitka, president of the Alaska Federation of Natives. “We urge the court to confirm the [Power Cost Equalization Fund] is not subject to a sweep and let our people continue with their lives.”

Kitka was referring to the so-called reverse sweep, which lawmakers in both chambers failed to pass. The procedural measure enables the Constitutional Budget Reserve to continue funding specific programs for the new fiscal year, which includes the Power Cost Equalization Fund. Other initiatives impacted include college scholarships for Alaska’s high school seniors and partial funding of the Permanent Fund dividend.

The Legislature will be back in special session starting Aug. 2 to address fiscal planning and policies, which may include the Constitutional Budget Reserve and impacts of the reverse sweep. 

The governor has proposed protecting the $1 billion Power Cost Equalization Fund by placing it in the Alaska Permanent Fund, now valued at more than $80 billion. 

In a statement released Monday, Gov. Mike Dunleavy said: “I have authorized my administration to pursue an expedited judgement on the future of the Power Cost Equalization Endowment Fund.”

“In order for us to fulfill our constitutional duties, both the executive and legislative branches need to know if the [Power Cost Equalization Fund] is subject to the sweep.”

Kitka of the Alaska Federation of Natives also urged the governor and congressional delegation to support federal and state investment of "affordable energy infrastructure" for Alaska communities. 

“We must not be left behind in Alaska’s energy transition and the profound changes happening now,” Kitka said. 

Contact Linda F. Hersey at 907-459-7575 or follow her at twitter.com/FDNMpolitics