Coalition sues to fund power subsidies for rural Alaskans

Over a dozen Alaska Native entities sign on to lawsuit

The Alaska Federation of Natives and more than a dozen predominantly Alaska Native entities filed a lawsuit against Gov. Mike Dunleavy Monday over the governor’s actions regarding the state’s rural electrical subsidy program, the Power Cost Equalization fund.

Dunleavy was the first governor to argue that PCE funds were covered under a state accounting mechanism known as the sweep which empties several state accounts at the end of each fiscal year. The sweep requires a high vote threshold in the Legislature to reverse — a three-quarter vote in each body — and PCE funding has been jeopardized by deep divisions among lawmakers.

The lawsuit contends that PCE should never have been swept in the first place, and that it wasn’t until 2019 when the Dunleavy administration and former Attorney General Kevin Clarkson incorrectly reasoned that they were.

“Previous administrations had identified only 32 out of 71 subfunds (and some only partially) as being subject to the sweep,” the lawsuit says. “Without any legal explanation or justification, the Dunleavy Administration identified a different, larger list of 54 funds and subfunds as being subject to the sweep.”

The lawsuit asks for a court order declaring the governor’s decision to sweep PCE funds be declared unconstitutional.

“Affordable energy is essential to the survival of Alaska’s rural, Native communities, particularly as our families and individuals recover from the pandemic,” said Julie Kitka, AFN President in a statement. “We urge the court to confirm the PCE is not subject to a sweep and let our people continue with their lives.”

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In a statement, Dunleavy said he instructed his administration to pursue an expedited judgment on the PCE fund.

“This issue is too important to delay any further. 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,” Dunleavy said. “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.”

Dunleavy amended his longstanding proposals for resolving the state’s fiscal issues in May to include constitutionalizing the PCE fund.

Deep divisions within the Legislature nearly led the state to a partial government shutdown earlier this summer and the three-quarter vote to reverse the sweep remains a critical bargaining chip for the Republican Minority in the House of Representatives. The Legislature is set to meet for the third special session of the summer on Aug. 2, and a special workgroup has been tasked in the interim with crafting policy recommendations for solving the state’s budget deficit.

In addition to AFN, 16 additional plaintiffs joined the lawsuit including the Organized Village of Kake, the Aleutians East Borough, the Association of Village Council Presidents and nine regional electrical cooperatives. Cited in the lawsuit are the governor, the Department of Administration and the Office of Management and Budget.

Former Alaska Attorney General Jahna Lindemuth and attorney Scott Kendall are among the lawyers representing the plaintiffs. Lindemuth and Kendall both represented the Recall Dunleavy campaign in that organization’s lawsuit against the governor.

The PCE program serves more than 80,000 Alaskans in communities that are largely reliant on diesel for power generation, according to the Alaska Energy Authority, the Associated Press reported.

According to AP, as of June 30, the Department of Revenue valued the power cost equalization fund at about $1.2 billion. 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.

Joel Jackson, president of the Organized Village of Kake, told the Empire in an interview Monday the village joined the lawsuit because the PCE fund needs to be protected.

“We’re not like other people who can just up and leave, that’s not who we are,” Jackson said. “We’re tightly interwoven with the land and our waters.”

• Contact reporter Peter Segall at psegall@juneauempire.com. Follow him on Twitter at @SegallJnuEmpire.

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