Electricity cost equalization is more than money
Most Alaskans are not familiar with the Electricity Cost Equalization Program, or PCE, and its funding, so it is important to understand that the Alaska State Legislature established the PCE program and, more late, the endowment to fund the PCE, as a fair compromise for rural Alaskans to balance the commitment of public funds used for energy projects and programs that continue to lower the cost of electricity for residents on the Railbelt , on the highway system and in Southeast Alaska.
The stated intention of the PCE program is to further align the cost of electricity for rural consumers with the costs of electricity in Anchorage, Juneau and Fairbanks. For the majority of Alaskans, the cost of electricity is around $ 0.20 / kwh, well above the national average of $ 0.14 / kwh, but significantly lower than typical electricity rates in rural Alaska, which averages $ 0.50 / kwh or more.
For some, the disparity is easily justified by the simple assumption that with a greater concentration of people, the cost of electricity decreases. It’s certainly a component of energy costs, but that doesn’t explain the whole story. Great credit for the “low” cost of electricity in the rail belt and southeastern Alaska goes to previous Alaska legislatures who committed funds to build projects that lower the cost of electricity. electricity. Projects such as the construction of dams and hydropower plants and the construction of power connection lines to transmit energy to share energy at low cost. From Homer to Fairbanks, and to Valdez, Kodiak and Southeast Alaska, the cost of electricity has been reduced by the commitment of state funds.
Unfortunately, these large projects do not reach the small isolated communities that are home to over 80,000 Alaskans. To be fair, previous legislatures have also agreed to set aside a fund, separate from the general fund, an endowment, to finance PCE from its revenues; a fair trade for the substantial public funds that are committed to building physical projects and providing ongoing grants that keep the cost of electricity lower for communities connected to those projects.
The actions of the current legislature to allow the PCE endowment fund to be swept into the constitutional budget reserve and not immediately reverse the sweep cripples the PCE program. This is the same as triggering an avalanche that destroys the Tyee Intertie or starting a forest fire that interrupts the interconnection that allows cheap electricity from Bradley Lake Hydro to reach population centers in Alaska, dramatically increasing the cost of electricity when these publicly funded projects are offline.
The unfortunate nature of the PCE Endowment Fund is that it is a financial instrument and not a physical project. The legislature was unable to muster the three-quarters majority vote necessary for the annual reinstatement of the PCE endowment and other funds “sent” to the constitutional budget reserve at the end of the last fiscal year. The endowment is being held hostage by lawmakers who see it simply as a pawn in their quest to wrest budget reconciliations for their constituents.
Meanwhile, rural residential customers and community facilities can expect their electricity rates to double and even triple, compromising the operation of water and sewer facilities, straining already municipal funds. tight, taking an even larger share of family budgets, jeopardizing hard-earned harvests. sitting in electric freezers.
Everything in rural Alaska costs more: food, transportation, shelter, heat. PCE is at least a small attempt to provide some equity in the cost of electricity, a fair trade to balance funds committed elsewhere in the state to reduce the cost of electricity. The majority of rural homes heat with oil, at a cost per gallon two to three times that of oil on the road network, and four to six times the cost of natural gas heating available in Cook Inlet. The state is giving up millions of dollars in oil and gas tax credits to help Cook Inlet gas remain marketable, at a price that also contributes to the low cost of gas-generated electricity on the Railbelt .
The state has done a lot to make Alaska a hospitable place with revenue from the state’s resource development. Lawmakers should be vigilant to protect these gains and defend projects and programs that make the cost of electricity reasonable for everyone in the state. They should not, through inaction or indifference, disrupt the projects and programs that are so vital to the infrastructure of our communities and the livelihoods of our citizens. The PCE endowment fund, just like physical projects, should not be taken lightly and should be protected for the benefit of Alaska.
Bill Stamm is President and CEO of the Alaska Village Electric Cooperative.