Provide Power Cost Equalization funding

Posted: Sunday, March 05, 2000

Juneau and other urban areas scattered throughout Alaska are blessed with relatively low power costs, especially when compared to our more rural areas. Urban cites throughout the state pay on average 10 cents per kilowatt hour, compared with more than 40 cents on average in the Bush.

For years, however, more than 190 communities, with a population nearing 80,000, have been fortunate to have the Power Cost Equalization program. Established in 1984, the program, as its name implies, helps cover the costs of rural power through credits. But even with the credits, these rural areas still pay more than twice what we do - nearly 21 cents per kilowatt hour.

This fiscal year, which ends June 30, there was $15.7 million budgeted for the program. However, about $8 million didn't show up. Those funds were supposed to come from community impact monies made from leasing tracts of the National Petroleum Reserve-Alaska. Although $40 million is available in grants for rural programs, the total grant package request is nearly $70 million.

In his supplemental budget request, Gov. Tony Knowles is asking the Legislature for a one-time $8 million dividend from the Alaska Industrial Development and Export Authority to cover the program's shortfall. Without it, officials with the Alaska Electric Association fear many communities could very well be in jeopardy.

``Affordable power is the key element needed to change many of the third-world living conditions in rural Alaska,'' ARECA said. ``Without it, modern housing, water and sewer systems, airports and telecommunications would be in jeopardy.''

Association officials also cite a study by the Institute of Social and Economic Research that predicted nearly 80 of the 190 affected communities could fail without adequate funding.

Those are big numbers, and we urge the Legislature to find funding for this program. This is one of those areas where government needs to step in help equalize the playing field. We don't see this as a handout - as communities still pay more than double what urban areas pay. At the same time, the amount of electricity eligible for the equalization funding has already been reduced from 700 kWH per month to 500 kWh per month. Furthermore, schools and commercial customers have been eliminated from the program.

Power officials are continuing to look at cheaper energy sources, although diesel fuel still far exceeds any other source in terms of cost per kilowatt. In addition, rural utilities' operating costs are one-third what they were in 1984 through the utilization of new technologies.

This is a vital program for our rural communities. It is one they need to survive and the state should fund this. At the same time, we urge the Legislature to come up with a permanent funding mechanism for this program, so it does not continually face fiscal jeopardy.

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