Cordova Electric Cooperative has joined with several other electric cooperatives, the Alaska Federation of Natives, and others in suing the Dunleavy administration over the current lack of funding critical for subsidizing energy costs in rural Alaska.
The lawsuit filed on Monday, July 19, in Alaska Superior Court in Anchorage, challenges Gov. Mike Dunleavy’s decision to transfer over $1 billion in the Power Cost Equalization Endowment Fund, within the Alaska Energy Authority, to the Constitutional Budget Reserve. Such action interferes with the Legislature’s appropriation power in violation of the separation of powers in the Alaska Constitution, the lawsuit contends.
The case is assigned to Superior Court Judge Josie Garton.
“The problem,” said Cordova Mayor Clay Koplin, who also is the chief executive officer of the Cordova Electric Cooperative, “is we think the governor and the Legislature will work this out, but it could take several months and what happens to our rate payers in the meantime?”
CEC has tried hard to keep its rates in line, and only receives half as much as it used to, but it is still a very important part of Cordova residential customers’ bills, he said.
The plaintiffs also include the city governments of Adak, Kake, Sand Point and Saint Paul, the Aleutians East and Yakutat boroughs, the Association of Village Council Presidents and First Alaskans Institute. They are seeking injunctive relief to prevent what they describe as catastrophic increases in energy costs for tens of thousands of Alaskans.
Funds from the Power Cost Equalization Endowment Fund, established in 2000, have been paid out to qualified entities every year since inception, notes Anchorage attorney Scott Kendall, who served as chief of staff for former Gov. Bill Walker. The PCE subsidy is normally paid monthly and shows on every ratepayer’s statement, Kendall said. The plaintiffs are represented by Kendall, along with Anchorage attorneys Jahna Lindemuth, Sam Gottstein, John Andrew Leman and Erik Groves.
Plaintiffs are asking the Superior Court for rapid imposition of a preliminary injunction within two weeks to force the administration to keep PCE functioning while the litigation is resolved, as well as “for a summary judgment on the issue of sweepability, seeking permanent protection of PCE from the sweep,” Kendall said.
One thing the plaintiffs and Dunleavy agree on is the need for quick action.
“This issue is too important to delay any further,” the governor said. “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.” The governor said he is proposing to protect the Permanent Fund, the Permanent Fund dividend and PCE in the state constitution through two constitutional amendments, which will be before the next special session of the Legislature, beginning on Aug. 2.
The Alaska House Bush Caucus meanwhile praised all the plaintiffs for filing the litigation.
“Since the creation of the Power Cost Equalization program in 1984, the Alaska Bush Caucus has had to fight virtually every year to get it funded,” they said. “When oil prices dipped in the ‘90s, the program did not get funded. In 2000, as surplus monies began to flow back into the treasury, the PCE Endowment was created to provide a separate source of funding and one that could be independent of the annual pressures of the budget,” they said.
Now with the endowment having grown to over $1 billion, and expanded to fund community assistance and energy programs, a new problem has arisen: the reverse sweep that requires a three-fourths majority each from the House and Senate before funding can be appropriated annually from the endowment. This year the vote failed as legislators attempted to leverage PCE and other statewide accounts for their own purposes, the caucus said.
PCE benefits are critical to the wellbeing 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 caucus said.
