The state’s largest Alaska Native organization and several other groups are suing the Dunleavy administration for the electricity cost equalization fund that cuts high rural energy prices for some 80,000 Alaskans in nearly 200 communities.
The Alaska Native Federation, power co-ops, rural communities and others argue that Gov. Mike Dunleavy’s administration violated the Alaska Constitution when in 2019 it determined that the Fund for the equalization of electricity costs was to automatically be transferred to the Constitutional Budget Reserve, a key state savings account. .
The effect of this decision this year is that the program was not funded for the fiscal year that began on July 1. Removing the rural electricity fund from the savings account requires a three-quarter vote of every house in the Alaska legislature, a big hurdle the legislature has yet to meet.
The lawsuit was filed Monday in Anchorage Superior Court.
The legislature created the $ 1.1 billion fund in 2000 to help equalize electricity prices in rural areas that do not benefit from state-funded energy projects, such as dams that help reduce electricity costs in major cities across the state. The electricity cost equalization program was created in the mid-1980s.
The lawsuit claims that without a proper explanation, the Dunleavy administration in 2019 took a “very broad view” of the electricity cost equalization fund and other funds, deciding that they should be moved to the constitutional budget reserve .
The lack of funding in July is impacting dozens of utilities across the state that must cover the costs of a program that typically supports a large chunk of their budget, according to utility officials. If the situation is still not resolved, rural residents will ultimately face much higher bills, they say.
“We’re basically giving away free electricity, unless we turn around and add those extra costs to our consumer bases,” said Bill Stamm, general manager of Alaska Village Electric Cooperative, complaining in the complaint. trial. “So next month that would be the full cost of energy and whatever we haven’t billed in the previous month. “
The Alaska Village Electric Cooperative, which supplies power to 59 rural communities, is due this month to cover funds in the amount of about $ 800,000 that were traditionally covered by the state, Stamm said.
The legislature and governor approved $ 32 million in grants for the program this year. The money will be available if the legislature reverses the sweep, or if the plaintiffs succeed.
A similar situation occurred in 2019. Then the rural electricity fund was not funded for a month, but the legislature then found enough votes to cancel the sweep. They also retroactively covered costs, according to utility officials.
The lawsuit argues that the electricity fund is not part of the general fund that needs to be transferred to the savings account, Stamm said.
Instead, Stamm argued that the fund is a single account placed with the Alaska Energy Authority, a quasi-independent state agency, to generate revenue for the equalization of electricity costs.
Dunleavy said in a statement Monday that he had asked his administration to make a swift decision in the matter.
“This issue is too important to delay any further,” the governor said. “A court ruling will help clarify what is in the general fund and what is not in determining what is swept into the constitutional budget reserve to pay it back.” In order for us to meet our constitutional obligations, the executive and legislative branches need to know whether the PCE is subject to scrutiny. “
The Alaska Native Federation said in a statement Monday that the rural electricity fund should not be wiped into the savings account.
“Affordable energy is essential to the survival of rural Alaska Native communities, especially as our families and individuals recover from the pandemic,” said Julie Kitka, AFN President.
Dunleavy has proposed a plan that he says will protect the electricity cost equalization fund, placing it in Alaska’s $ 81 billion permanent fund, according to the statement from the governor’s office.
Former staff of former Alaska Governor Bill Walker helped bring the lawsuit. Jahna Lindemuth, Walker’s attorney general, and Scott Kendall, Walker’s former chief of staff, are two of the attorneys for Holmes, Weddle and Barcott who filed the case. Lindemuth and Kendall provided legal advice to the governor’s recall campaign last year.