By Larry Persily

While legislators this week work to settle their budget fights with Gov. Mike Dunleavy, Skagway residents last week received higher electric bills after the governor’s office essentially drained the account that helps subsidize power bills in rural communities.

The July bills to residential customers in Skagway were as much as $8.50 higher because of the loss of funding through the state’s Power Cost Equalization (PCE) program, said Darren Belisle, power operations manager in Skagway for Alaska Power and Telephone (AP&T).

If lawmakers and the governor can agree to restore the PCE endowment fund, customers would see an adjustment in their next bill to return the extra payment, Belisle said July 19.

The state Senate approved the fix on Saturday. The House failed to reach the three-quarters majority for approval on Sunday and again on Monday, but still has options this week to resolve the budget battle.

The PCE program, established in 1984, uses state money to subsidize high rural electricity costs. More than 190 communities across Alaska, with about 83,000 residents, now participate, according to the Alaska Energy Authority (AEA), which administers the program.

The monthly payments, which go to utilities, vary with fuel prices. Statewide, the total annual PCE subsidy has ranged between $26 million and $31 million in 2016 through 2018.

The program gets its money from the earnings of the $1 billion PCE endowment. This year, however, the Legislature has failed to reach the three-quarters majority vote needed every year to ensure that the endowment remains a separate account from other state funds. That failure has been wrapped up in the Legislature’s inability to settle on an amount for this year’s Permanent Fund dividend, which has prompted much of the House Republican minority to withhold their votes on the annual accounting exercise.

Lacking legislative action during the regular session or first special session, the governor’s budget office decided that the PCE endowment would be swept into the state’s Constitutional Budget Reserve Fund, where it will remain unless lawmakers manage a three-quarters vote to restore the endowment as a separate account.

Without the endowment to make the payments, the checks to utilities stopped this month, boosting electricity bills in participating communities statewide. “At this time, there is no funding for us to pay PCE,” Curtis Thayer, AEA executive director, told the Anchorage Daily News on July 12.

It’s the same political stalemate that has stopped state scholarship payments from a special account to thousands of Alaska university students. Senate and House leadership have been working hard to gather enough votes to restore the PCE endowment, college scholarship fund and other accounts taken away by the governor’s office.

In Skagway, which gets most of its electricity from hydroelectric plants at Goat Lake and Kasidaya Creek, the PCE program covers 1.73 cents per kilowatt hour for residential customers and community buildings such as the school and borough hall. Commercial accounts are not eligible. It’s the same subsidy rate in Haines. The subsidy is limited to 500 kilowatt hours per month — anything over that is charged at full price.

The PCE subsidy in other AP&T communities is significantly higher than in Skagway, according to the company’s filings with state regulators. The state payments cover almost 50 cents per kilowatt hour in Healy Lake, southeast of Fairbanks, and 51 cents in remote Alatna and Allakaket, almost 200 miles northwest of Fairbanks.