Solution for PCE proves elusive

Funding for rural power subsidies again in jeopardy

Posted: Sunday, March 19, 2000

The future of a program that keeps electric rates reasonable in the Bush is looking dimmer as the Legislature moves into the second half of this year's session.

Administration officials and lawmakers are still looking for a way to fund Power Cost Equalization, referred to as PCE, but frustration is building as possible solutions fall through.

Disappointment came with U.S. Sen. Ted Stevens' visit to the Capitol last week. Stevens told the Legislature he wouldn't support changing federal rules on how money from development of the National Petroleum Reserve-Alaska is doled out.

``It certainly has dampened by desire to find a long-term solution,'' Rep. Eldon Mulder said.

Under federal law, some money generated by development of the oil reserve is put into a community impact grant program and made available to nearby North Slope villages. About $40 million is available for the grants this year, but more than $70 million of grant proposals have been received, leaving nothing left for PCE.

Mulder, an Anchorage Republican and co-chairman of the House Finance Committee, wanted the rules changed so money could be used to help pay the nearly $16 million annual state payment for PCE. He'd been led to believe last year the impact money would cover $8 million of the program for the current fiscal year. That now appears unlikely, although no final determination has been made.

Sen. Al Adams, a Kotzebue Democrat and staunch supporter of the power cost program, continues to work over the funding problem. He's looking beyond the community impact cash, thinking the Alaska Industrial Development and Export Authority could help. The quasi-state organization runs credit, bond and loan programs.

``PCE still can be solved by taking the AIDEA dividends each year,'' Adams said. He said about $8 million in AIDEA cash would cover the hole in PCE funding left by the lack of community impact cash.

The idea makes sense, Adams said, because development of resources from rural Alaska generates a big hunk of the money AIDEA is giving back to the state.

Without PCE, he said, there'll be little hope of economic development in rural Alaska because of the astronomical cost of electricity there without the state subsidy.

While the oil-reserve development money may not be a long-term solution, Adams said he's still trying to get some of the grant money to give PCE a bit of a cushion.

Adams' idea, however, doesn't fly past Mulder. He's taken the lead on trying to find a long-term funding solution for the program for the House majority.

When Adam's line of thinking was run by him, Mulder said ``no.''

``The problem is it's business as usual,'' Mulder said. Rather than a year-to-year budget item, he's looking for an endowment, a self-sustaining pool of cash that can be set aside that will handle the cost of PCE. Having to find $16 million in general funds each year isn't a workable way to do things, Mulder said.

He supports, however, using a one-time $8 million bonus dividend from AIDEA to cover the cost of PCE through June - to the end of this fiscal year.

As far as he's concerned, the North Slope communities should ask for less in grants to allow NPR-A cash to pay for the program. If the North Slope doesn't fight for PCE, he said, the program could well die. The North Slope enjoys relatively inexpensive electricity, compared to other rural areas. Mulder said the region's communities would help anyway. He though they'd pledged to do just that last session.

``Many people felt we had a deal last year,'' Mulder said. ``There are a number of us (lawmakers) who feel burned on this issue.''

His constituents, he said, don't particularly care how much power costs in the Bush.

``We're still working on something here at AIDEA,'' said Randy Simmons, the organization's executive director. But on Friday that was about as much as he was willing to say. He's working on a plan involving ``sale of assets'' and ``pots of money,'' but he said discussing details could disrupt his negotiations.

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