Alaska editorial: Governor's energy relief plan expensive, counterproductive

Posted: Sunday, May 25, 2008

Gov. Palin's $1.2 billion energy relief plan is probably good politics, but it's a hideously expensive, dangerously short-sighted use of the state's surplus oil money.

Giving every Alaskan - man, woman and child - an extra $1,200 for energy bills in the coming year follows a familiar political formula: Put money in voters' hands and hope they remember you at election time.

Steering $475 million of the surplus to Alaska utilities, as Gov. Palin proposes, is another clever political stroke. It gives businesses that have lobbyists and political clout a stake in the plan and improves the odds of passage.

Gov. Palin is right about one thing: Today's astronomically high energy prices are putting the hurt on many Alaskans.

But pandering to Alaskans, in the expensive way the governor proposes to do, will silence the message that high energy prices are sending us, as individuals and as a nation.

Those high prices are the free market's way of telling us we should cut our dependence on these dangerously insecure and highly polluting energy sources. Masking those high prices with huge new subsidies only postpones the adjustments we need to make. It's like handing an alcoholic more money for booze instead of steering him toward the wagon of sobriety.

A sober energy policy would target financial help directly to those who suffer the most from high energy prices. And Alaska has done that. For the first time, the Legislature used state money - $10 million - to supplement a long-underfunded federal program that helps needy people pay their energy bills.

The state has another generous program, power cost equalization, that helps offset the high cost of electricity in the state's smaller, more isolated communities. Lawmakers might need to raise the aid formula in that program and increase its funding, but doing so won't cost hundreds of millions of dollars.

A sober energy policy would invest heavily in steps that help Alaskans save energy for years to come. And Alaska has done that. This year, the Legislature set aside $200 million for weatherizing homes and gave the state's housing finance agency another $100 million to fund other energy efficiency measures.

A sober energy policy would take some of today's temporary state surplus and invest in renewable energy projects, which cost more up front, but save money in the long run through lower fuel bills.

And the Legislature has done that. It committed $250 million over five years to a renewable energy fund. This year's budget includes another $30 million for wind energy projects, including $25 million toward the wind farm proposed for Anchorage's Fire Island.

It's true, these responsible, long-term energy measures won't dent most people's energy bills right away. Understandably, Alaskans would like to see a more immediate benefit from at least some of the money Gov. Palin and lawmakers spend on energy relief.

But paying people to keep on buying the same amount of ever-more expensive energy is the wrong way to go. Instead, the state should pay Alaskans to invest in energy-saving alternatives.

Instead of a debit card for paying energy bills, give Alaskans a debit card that can be spent on things that cut their energy bills long into the future, like weatherizing materials, insulation, night-time setback thermostats, energy-saving light bulbs and bus passes. If the lawmakers are feeling especially generous, give Alaskans rebates for buying highly efficient home furnaces and appliances and automobiles.

As Gov. Palin noted, the same high oil prices that are filling the state treasury are also draining Alaskans' pocketbooks. Don't forget, though, that those high oil prices are helping boost the Permanent Fund dividend. Higher prices put more money into the Permanent Fund. The more money in the fund, the more it earns. The more it earns, the higher the dividend. This year's payout will be close to $2,000 a person - about $350 more than last year. When it arrives this fall, it will help ease the sting of high energy prices, just as the winter heating season gets under way.

Combine the upcoming dividend with other longer-term investments the Legislature and Gov. Palin have made, and the state is providing meaningful, yet responsible energy relief. There's no need to throw another $1.2 billion into payments that feel great today but leave Alaskans worse off when the money runs out.

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