Governor Mike Dunleavy met with legislators and local officials in Nome on Friday, June 23 to sign Senate Bill 98 into law.
The bill will transfer management of the Power Cost Equalization endowment fund, which is currently worth about $1 billion, to the Alaska Permanent Fund Corporation. It will also mandate regular reporting to the legislature regarding asset value and income.
The bill also calls for the endowment fund to be managed “using the same investment objective and asset allocation as the corporation uses in managing the Alaska Permanent Fund.”
According to the Alaska Energy Authority, a state agency, the PCE program provides economic assistance to communities and residents that use a rural electric utility, where the cost of electricity can be “three to five times higher” than for customers in more urban areas of the state.
The bill was referred to the legislature by the Senate Finance Committee.
House Finance co-chair Rep. Neal Foster says the bill will protect the corpus of the endowment from legislators that might want to tap into it for other projects.
“It’s good for Alaska because the power cost equalization program, of course, helps to subsidize electricity in rural Alaska,” Foster said. “Every single household receives anywhere from $700 to $2,000 annually. And what this bill is going to do is going to help to protect it. It will do two things … it will maximize the returns that it receives and it also will help to protect it, because some years we get legislators who want to maybe take some of the billion dollars that’s currently sitting there for rural Alaska and use it for other purposes.”
Rep. Bryce Edgmon, also a co-chair of House Finance, says the bill will allow the endowment to grow year-over-year, the way the Permanent Fund does.
“I’d say this is historic bill because it takes the Permanent Fund Corporation and allows the power cost equalization program to be managed alongside it,” Edgmon said. “The Permanent Fund Corporation is one of the best managed funds in the entire globe. So, this takes a billion dollar endowment fund and allows it to be managed in a way that gets more reward along with maybe a little more risk, but it grows the fund over a period of time, and then hopefully along the way to grow the PCE endowment.”
Sen. Donny Olson is one of the three co-chairs of Senate Finance. He says keeping power rates low in rural Alaska can be a matter of grave importance if people have to leave small towns or villages and move to urban areas.
“When you have such expensive costs for electricity out in rural Alaska, like we have down there in Golovin, it’s one of those things that takes the edge off,” Olson said. “What we’ve seen in other communities is that people that cannot afford to live in rural Alaska, they are the ones that go down to Anchorage and become part of the homeless population. And so that’s why I think it’s such an important issue for people in rural Alaska, especially those that are having such a hard time making ends meet out there.”
After signing the bill, the governor remarked about how, without people being able to afford to live in rural Alaska, there isn’t much of an Alaska.
“When people say this is a subsidy, no way, it’s not, it’s really converting oil money into a usable method by which people especially rural Alaska, where the costs are high because of small-scale transportation, et cetera, enables the people in rural Alaska to at least be able to afford to live in rural Alaska. And you don’t have much of Alaska unless you have a rural Alaska.”
Additionally, House Finance co-chair Delena Johnson and Sen. Lyman Hoffman attended the bill signing event.
Image at top: Gov. Mike Dunleavy signs Senate Bill 98 on Friday, June 23, as Reps. Delena Johnson, Bryce Edgmon, Neal Foster, and Sens. Lyman Hoffman and Donny Olson watch. Photo by Greg Knight/KNOM