Crawford: Looking for $1 billion for budget? Power Cost Equalization Fund has it – Must Read Alaska


“Defunding power cost equalization would gut a lifeline for rural Alaska” was published by the Anchorage Daily News on Nov. 10.  Meera Kohler (chief executive officer of Alaska Village Electric Cooperative) expertly laid out the history and purpose of the Power Cost Equalization Program.  

The op-ed was beautifully written and very persuasive. But it missed the point of advocates to end the unconstitutional appropriations of dedicated funds.  

No one is attempting to stop the appropriation of funds for Power Cost Equalization. Those of us advocating consolidation of agency funds to the Constitutional Budget Reserve want to solve the current fiscal crisis by using unspent, appropriated funds that are currently restricted by the Legislature. These appropriations exceed the needs of their programs and earn huge profits for their agencies.  

The Power Cost Equalization Fund was established by the Legislature in 1981 as a fund of the Alaska Energy Authority.  The AEA audited financial statement lists the balance of the fund, $1.06 billion, as restricted. But Article 9 of our Alaska Constitution bans restricted or dedicated funds. No appropriation except those specifically authorized by an Amendment to the Alaska Constitution, federal appropriations or funds existing prior to statehood are allowed by the Alaska Constitution. No other appropriations can be restricted to a special interest. 

Dedicated funds are, per the Alaska Constitution, illegal.  

PCE has not been approved by the people at a statewide vote as an Amendment to the Constitution, is not a federal appropriation, nor did it exist prior to statehood.  Last year, PCE earned $74 million dollars.  And it paid recipients throughout Alaska $30 million.  And made a profit of $44 million to grow more agency. 

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I have no objection to the appropriation and payment of funds to help equalize costs of power in villages throughout Alaska.  During the Palin Administration, my Fairbanks friend and I convinced the governor to add $1,000 to each Alaska Permanent Fund dividend for power cost equalization.  

The equitable argument of urban areas having access to cheap hydro power through construction of dams throughout Southcentral and Southeast is persuasive.  But should a needed appropriation of $30 million for a worthy purpose like PCE hold hostage over $1 billion dollars owned by all Alaskans?  I think not.

That billion dollars and other excess capital should be transferred to the Constitutional Budget Reserve as required by the Constitution and the statute which created the CBR.  

All dedicated funds not in compliance should be liquidated and saved to the Constitutional Budget Reserve.  The CBR requires a 75% vote of each house to use so the money can be protected from wild spenders.  With those funds, the budget deficit disappears.  And the regional internecine wars in the Legislature can end.

We can bridge the fiscal gap by using the available assets of the State and push for new production in the oil, gas, mining, and investment sectors.  The crude producers, old and new, have identified over 1 million barrels per day of new production which can add to the production of existing legacy fields.  

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The producers and the State must realign their interests and advocacy for new production for the health of the state.  With nearly 60% of Alaskan voters defeating the tax increase in Prop 1, the decks are clear to resume the Renaissance of the North Slope.  Let us accelerate our production.  

My mother taught me that if I got in trouble, I had to work my out of it.   “Produce your solution, son.”  Good advice. My family has been here since 1898. We’ve all worked through worst crises than we now face.  We can rebuild our economy and protect our familys’ health.  

Power Cost Equalization is an honest and honorable goal.  We can support annual appropriations for the costs of the program.  We, however, cannot set aside all Alaskan’s money for one region’s benefit. 

Advocacy for preserving PCE is now an organizing call for the next Legislature. It should not be. Republicans and Democrats and independents, conservatives, and liberals understand that the crushing cost of energy must and should be addressed annually.  

Different approaches are all open to discussion. Some believe that new roads or expansion of major projects can solve the regional high cost through industry. Some believe that subsidizing power cost is currently insufficient. 

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These matters can be reconciled with good will in an open discussion of the state’s priorities.  But first, we must follow the Constitution and not restrict appropriated money for special needs.   

Alaskans can pull back from the brink of fiscal instability. We just need to use our assets wisely, not squirrel away money we need today as illegal dedicated funds.   

Jim Crawford is a third-generation Alaskan entrepreneur who resides in Anchorage with his bride of 37 years, Terri.  The Alaska Institute for Growth is a local think tank which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy.  Crawford known as the Permanent Fund Defender was a member of the Investment Advisory Committee, appointed by Gov. Jay Hammond to plan and execute the Alaska Permanent Fund Corporation.


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