Judge rules that PCE endowment is not sweepable

Last week Superior Court Judge Josie Garton ruled that the state Office of Management and Budget is permanently prohibited from sweeping the PCE endowment fund into the Constitutional Budget Reserve. “Because the Power Cost Equalization Endowment Fund is not in the general fund, it is not subject to the sweep provision,” Judge Garton wrote. The implication is that the over $1 billion endowment is now off limits to be swept into a constitutionally created savings account from which the Legislature can borrow money, which must be repaid.

The Alaska Federation of Natives and several rural municipalities and rural utilities filed a lawsuit against Governor Mike Dunleavy and the State of Alaska maintaining that it was unconstitutional that the Power

Cost Equalization Fund was swept into the Constitutional Budget Reserve at the end of the fiscal year. This left the Power Cost Equalization account empty, effectively doubling rural Alaskan’s electricity bills without the monthly subsidy that is meant to level the cost of electricity from cheaper – and subsidized – urban power prices to rural power bills.

Rural utility customers saw an increased utility bill as the PCE was not applied. For Nome, the amount not applied to NJUS customers was $48,205. NJUS Manager John Handeland said that the amount will retroactively be applied. “While we have not heard directly from Regulatory Commission of Alaska, I expect PCE will be back as a normal credit starting on the next (August 31, 2021) utility statement. The July credit was computed, as directed by RCA, and they will likely allow that retroactive credit to also be applied this month,” Handeland said in an email to the Nugget.

The Superior Court’s ruled that payments for the PCE program, approximately $31 million that were authorized by the legislature and signed into law by Governor Dunleavy, can go out immediately to the utilities that provide electricity to rural Alaskan families and businesses in 192 Alaskan communities.

Governor Dunleavy said he would not appeal the Court ruling.

“I’m glad the court ruled that Governor Dunleavy cannot withhold energy assistance to 80,000 rural Alaskans. This is effectively what happened when he designated PCE a “sweepable” fund. As we head into fall and winter, the PCE program is critically important to help keep homes warm and the lights on,” said Rep. Neal Foster.

“We are pleased that Judge Garton agreed with AFN that the PCE is not subject to a sweep, and that the decision was expedited so the legislature would not have to decide whether to fund the program during the upcoming special session,” said Julie Kitka,

AFN President.

While the court ruling solved the PCE issue, other accounts that were swept into the CBR and not being paid out are funds meant to support University students for medicine and Alaska Scholarship fund recipients.