Senate might abandon $1,200 checks

Energy rebates would be replaced with oil subsidies under proposal

Posted: Friday, August 01, 2008

Powerful Alaska senators are looking at eliminating Gov. Sarah Palin's proposed $1,200 "resource rebate" checks, but replacing them with a beefed up heating oil subsidy.

Senate Finance Committee co-chairs introduced a new version of the energy bill Thursday that eliminates the rebate checks in favor of heating help.

"How do we do what we can to make sure the homes in the state of Alaska are heated this winter?" asked Sen. Bert Stedman, R-Sitka, one of the chairmen.

The committee's proposal: Cap heating oil bills at $3 a gallon for the first 600 gallons of fuel used in each of the next two winters.

"The high cost of fuel in rural Alaska has gone out of control," said Lyman Hoffman, D-Bethel, the other Finance co-chairman.

For some, that could amount to more than the Palin checks, but overall it would cost the state far less. The average amount of heating fuel used each year by Alaska households is 1,000 gallons, according to the Alaska Energy Authority.

While the statewide average fuel price is $5.15 per gallon, it can be dollars above the average in some rural areas. Under the committee's proposal, the state would pay the difference between $3 and the actual cost.

Only individuals, not businesses or government agencies, would be eligible for the 600 gallons each, according to the draft bill.

Sen. Kim Elton, D-Juneau, said he liked what he saw so far, but expects changes to be made.

"I like the approach," he said.

Elton had been critical of the rebate checks, but said that while they are not in the bill the Senate is considering, some cash amounts may well wind up in the final package that may address multiple topics.

A version of the bill introduced in the House Finance Committee on Thursday reduces the resource rebate to $1,000, and adds it to the dividend.

Finance Committee staff estimated that about half the state's 230,000 households used natural gas for heat, but most of the remaining homes use oil. Others use wood, electric and propane, but the program's cost estimates are based on an estimated 115,000 households qualifying.

Stedman said he's also exploring a possible way of providing energy relief to those people who heat their homes with natural gas, mostly in Southcentral.

The House of Representatives also has looked at scaling back eligibility for Palin's payments. A House committee has limited the checks to people who qualify for the Alaska Permanent Fund dividend, excluding an estimated tens of thousands of people new to the state from receiving the payments.

The House also is looking at additional parts of the energy relief, such as Power Cost Equalization for electric costs, which appears to have wide support.

Another part of Palin's energy relief proposals was raising more concerns.

Alaska charges 8 cents per gallon for road gasoline, and less for marine and aviation fuel.

Rep. Harry Crawford, D-Anchorage, said he was afraid that a gas tax savings wouldn't get to consumers but would instead be gobbled up by the refiners and retailers.

"They're going to take that 8 cents, and put it in their coffers," he said.

"If we want this money to actually get to the consumer, we need to find another way than suspending this gas tax," he said.

Palin assistant Randy Ruaro acknowledged that the tax suspension was an imperfect way of delivering help to people, but said he expected competition in the marketplace would result in most or even all of it being passed along.

"The only guarantee is that if we don't suspend the tax, the public will go on paying it," he said.

Rep. Mike Hawker, R-Anchorage, said he wanted to make sure any tax reduction would be passed along, and the bill might have to be revised to do that effectively.

"We have a long way to go with this bill to meet these objectives," he said.

• Contact reporter Pat Forgey at 586-4816 or

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