Palin seeks electric rate help for state

Lawmakers asked to address soaring electricity costs in next special session

Posted: Sunday, July 06, 2008

Gov. Sarah Palin has backed away from a plan she proposed last month to subsidize Alaska electric rates, but the concept is still alive.

A draft bill to be considered at a special session of the Alaska Legislature called for Wednesday no longer includes hundreds of millions of dollars to help lower electric rates, but Palin's staff says electric rate relief is still on the agenda.

Palin's proposal now includes giving every Alaskan who has been here for at least six months $1,200, which might cost the state three-quarters of a billion dollars or more.

State help with electric rates could cost several hundred millions more.

In Alaska's rural villages, the help is desperately needed, said Jodi Mitchell, general manager of the Inside Passage Electric Cooperative, which provides diesel-generated power in Hoonah, Kake and Angoon.

"I'm really worried about our customers," Mitchell said.

A state program called Power Cost Equalization helps subsidize diesel rates for many communities, but only for the residents' first 500 kilowatt-hours each month, and only for residential and community facilities - not for commercial enterprises.

"The businesses are really being hurt, and it's causing inflation throughout the villages at the grocery stores," she said.

Sen. Tom Wagoner, R-Kenai, said he still supports targeting energy rebates to customers through electric-rate reductions. Wagoner is a member of the Senate Republican Minority, and his bill to do that failed to get a hearing.

"It's not about paying the full utility bill," he said. "It's about helping them stave off these high prices of energy until this goes down," he said.

State Rep. Beth Kerttula, D-Juneau, said Alaska needs a short-term solution to help people caught in a crisis situation now and a long-term solution to help avoid future costs.

Fortunately, she said, the state currently has a $6 billion surplus caused by high oil prices, the same high prices that are driving village fuel prices up.

"With that money we've got to build the infrastructure to carry us through the next 50 years," she said.

Steven Haagenson, Palin's energy adviser, is working on a long-term energy plan for Alaska. That is expected to be considered by the Legislature next year.

Kerttula said Alaska should look to places such as Iceland, where they've managed to develop hydroelectric and geothermal resources to become energy self-sufficient.

"We've got to seek out how to survive in the high energy price world in a very cold climate," she said.

Mitchell said she'd like to see electric intertie development through Southeast Alaska, connecting Hoonah to Juneau's hydroelectric power and connecting Kake to Petersburg.

Kerttula said that would be expensive, but if the state is going to subsidize in-state natural gas usage in the Railbelt, it should also subsidize long-term energy solutions while it has got the resources to do so.

"I'd like to see us go for energy independence in Alaska," she said. "Other countries have done it, and we've got the available resources, the tidal, geothermal and hydro," she said.

"We've got to get ourselves away from the high cost energy sources," Kerttula said.

Part of Palin's special session proclamation calls for changes to state law on grants for renewable and alternative energy sources.

That proposal may find a receptive audience in the Legislature. House Speaker John Harris, R-Valdez, was the sponsor of a bill that created a renewable energy grant fund which Palin now wants to expand.

To help solve immediate needs, Palin has added to the call for the special session the issue of the state's Power Cost Equalization program.

Mitchell said the PCE program is facing difficulty itself. Diesel prices are soaring statewide, compounded in rural areas where fuel has increased shipping costs on top of a higher base price.

Power rate assistance is capped at about 52 cents per kilowatt-hour, meaning that any amount above that must be fully paid by the customers. Until recently, that wasn't an issue in Southeast Alaska, she said.

"Further increases won't be covered by PCE. That's very scary," she said.

Mitchell said she'd like to see the cap raised and businesses covered as well.

Wagoner said he's less interested in providing businesses electric rate subsidies because many businesses already pay negotiated rates lower than residential rates.

• Contact reporter Pat Forgey at 523-2250 or

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