AFN and other groups sue Governor over cuts to PCE

The Alaska Federation of Natives and several rural municipalities and rural utilities on Monday filed a law suit 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.

The lawsuit was brought by AFN, First Alaskan Institute, Alaska Village Electric Cooperative, which serves communities in the Norton Sound/Bering Strait region, Unalakleet Valley Electric Coop, Northwest Arctic Borough, Kotzebue Electric Association and other villages and electric coops.

The City of Nome and Nome

Joint Utilities are not part of the lawsuit.

The lawsuit maintains that the PCE Endowment Fund, it’s principal worth more than $1 billion, is not subject to the transfer to the Constitutional Budget Reserve. The Power Cost Equalization Endowment Fund was established in 2000 to provide stable funding for the program, which had been the subject of annual legislative debate. The PCE payments to approximately 82,000 rural households are not made from the principal fund but earnings of the investment. The Legislature appropriated $32.4 million in the budget for power cost equalization.

The court complaint says that the Governor’s decision to sweep the Power Cost Equalization Endowment Fund into the Constitutional Budget Reserve was unconstitutional and that the Governor’s act to transfer funds out of the PCE Endowment Fund without an appropriation infringes on the legislature’s appropriation power and therefor is unconstitutional. The lawsuit seeks an order from the judge to declare it unlawful for the governor to sweep the PCE fund into the general fund and demands that all the funds are returned to the PCE account.

“Affordable energy is essential to the survival of Alaska’s rural, Native communities, particularly as our families and individuals recover from the pandemic,” said Julie Kitka, AFN President. “We urge the court

to confirm the PCE is not subject to a sweep and let our people continue with their lives.”

The Governor responded that he authorized to pursue an expedited judgement on the future of the Power Cost Equalization Endowment Fund. “This issue is too important to delay any further,” said Governor Dunleavy. “A decision by the court will help clarify what is in the General Fund and what is not to determine what gets swept into the Constitutional Budget Reserve to repay it. In order for us to fulfill our constitutional duties, both the executive and legislative branches need to know if the PCE is subject to the sweep.”

The House of Representatives’ Bush Caucus, including Rep. Neal Foster (D-Nome) expressed in a statement their “appreciation for the organizations who took the bold step of seeking injunctive relief through the Court system to make sure that thousands of Alaskans won’t see their electricity bill double or triple as cold weather approaches in the not too distant future.”

They said they were grateful for AFN and co-plaintiffs asking the Court to intervene and declare that PCE should not be subjected to the sweep-ability provision and should be appropriated like other standard budget items. “The PCE benefits are critical to the well-being of remote communities in Alaska and need to be preserved just as the legislature has fought for natural gas tax credits, hydro funding, and other energy infrastructure items that have lowered the cost of residential energy bills in many communities throughout the state,” the Bush Caucus wrote.

The governor called the legislature into a special session beginning on August 2 to consider “making appropriations from the Earnings Reserve account, including for the payment of Alaska Permanent Fund dividends, and making appropriations from the Constitutional Budget Reserve Fund.”