Municipal group urges expansion of power subsidies

Program subsidizes residential electric rates for rural areas

Posted: Tuesday, November 18, 2008

FAIRBANKS - The nonprofit association representing Alaska cities, villages and boroughs is urging the state to expand state subsidies that lower the high cost of electricity in rural areas.

The Alaska Municipal League last week approved a resolution urging that Power Cost Equalization be expanded to cover health clinics, schools and certain businesses.

Communities representing 97 percent of Alaskans are part of the municipal league.

According to the state Alaska Energy Authority, electric rates in rural communities are three to five times the price of urban regions. Power in most villages is generated by burning diesel fuel.

Power Cost Equalization is a state program that subsidizes residential electric rates and the power bills of community buildings.

The AML board, meeting Friday in Ketchikan, urged the state to expand the program to health clinics, schools and some businesses.

"This thing is not going to go away, and I think people are, fairly, looking for a resolution to high fuel prices," said Kathie Wasserman, AML director.

Under an expanded program proposed by the board, entities would get help with electric bills only on the first 500 kilowatt-hours they use per month.

Wasserman said that provision was aimed at critics in the Legislature who say the cost-equalization program encourages rural residents to use energy inefficiently.

Community leaders debated whether the program should be expanded to allow larger communities such as Fairbanks to participate. The board rejected that proposal.

Tim Beck, a Fairbanks North Star Borough assemblyman and past president of the AML board, said he expects the group will revisit the issue later this year.

"It's clear that Juneau and Anchorage both have relatively inexpensive costs associated with generating their electricity while we in Fairbanks have the same problems that many of the Bush communities do, which is the high cost of fuel oil," Beck said.

The cost of expansion needs more study, Beck said.

"We're getting hammered because of these high fuel costs," Beck said. "One-third of my electric bill is fuel surcharge costs."

The board suggested the proposed power cost program expansion should be based on needs and applied only during times when energy costs are "burdensome." The group did not define burdensome.

Wasserman said her organization wanted to leave details of its proposal fluid before the next legislative session, which begins in January.

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