Becky Bohrer
Associated Press

JUNEAU, Alaska — A coalition that includes the Alaska Federation of Natives and electric cooperatives sued Gov. Mike Dunleavy on Monday to force his administration to release money intended to help lower rural utility costs.

Since the mid-1980s, oil revenues have funded 90 percent of the cost of state government and paid for annual dividends ranging from $300 to $2,000 per resident. Oil revenues also allowed the state to sock away $80 billion in savings.

Now oil revenues have dropped to the point they no longer cover the cost of government. Rather than institute a personal income tax or statewide sales tax, politicians have been slashing government services, and dipping into various funds.

The Power Cost Equalization Endowment Fund is among the pots of money that the Dunleavy administration says can be swept into a budget reserve used to help pay for government. The state Constitution says money taken from the reserve is to be repaid. 

A legislative attorney in 2019 said the sweep happens automatically. Action to reverse it and return funds to their original accounts requires three-fourths support in each the House and Senate. Lawmakers failed to garner the required support last month amid a budget dispute.

Scott Kendall, an attorney for plaintiffs including Native organizations and local and tribal governments, said the issue isn't with the failed vote but with the administration's view that money from the endowment fund can be added to the budget reserve. 

The lawsuit alleges that the Dunleavy administration in 2019 identified without "any legal explanation or justification" a larger list of accounts subject to being swept into the budget reserve than prior administrations, including the power cost equalization fund.

Dunleavy said he supports an expedited court ruling to get clarity on the issue.

"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," he said of the power cost equalization fund.

The program reduces rural customers' electric rates to levels comparable to those paid in urban Anchorage, Fairbanks and Juneau, according to the Alaska Energy Authority, which helps administer the program. Utilities are reimbursed for credits they extend to customers. 

The program serves more than 80,000 Alaskans in communities that are largely reliant on diesel for power generation, according to the energy agency. 

The PCE was created as the Alaska legislature was investing more than $800 million in infrastructure projects to reduce the cost of energy.

It put $328 million into the Bradley Lake Hydroelectric Project, which lowered the cost of energy in Anchorage, Fairbanks, Kenai, and Homer.

The Four Dam Pool cost the state $493 million, and lowered energy costs in Kodiak, Valdez, and towns in Southeast Alaska.

No single infrastructure project could cut energy costs in the villages and towns scattered across rural Alaska. So the state created and put $766.7 million into a Power Cost Equalization Fund to subsidize rural energy costs. 

As of June 30, the power cost equalization fund was valued at about $1.2 billion, according to the Department of Revenue. 

The lawsuit says the Legislature set aside about $32 million for the program for the budget year that started July 1. But the lawsuit says the governor believes no money is available for the program because of the sweep. 

Julie Kitka, president of the Alaska Federation of Natives, said affordable energy "is essential to the survival of Alaska's rural, Native communities, particularly as our families and individuals recover from the pandemic."

She said her group hopes political leaders will support "major federal and state investment into Alaskan communities through affordable energy infrastructure. We must not be left behind in Alaska's energy transition and the profound changes happening now." 

AP Logo little

Indian Country Today National Correspondent Joaqlin Estus contributed to this story.