KOTZEBUE -- Former state lawmaker Al Adams, who died on Aug. 13 after a long illness, was one of the state legislature’s prime architects of Alaska’s Power Cost Equalization program, which provides lower electric rates for rural Alaskans.
Thanks to a legislative compromise in the 1980s that established PCE in perpetuity, most rural Alaskans today continue to pay reduced electric rates, but many urban Alaskans also came away from the deal with clear energy-cost advantages.
Many consider Alaska’s Power Cost Equalization program one of Adams’ signature legislative accomplishments and most enduring legacies.
In the 1980s, urban lawmakers needed Bush support for proposed hydroelectric projects in the Railbelt and southeast Alaska.
Adams recognized the opportunity to benefit both rural and urban Alaska in the coming decades, using Power Cost Equalization as the trigger: Alaska’s cities and Railbelt would enjoy lower electric bills in part through government-subsidized hydro-power, while the rural areas received subsidized electric bills as part of the deal.
According to a March 2012 study by the Institute of Social and Economic Research (ISER) at the University of Alaska Anchorage, some hydro-powered communities, particularly in southeast Alaska, today in fact do enjoy “notably low” electric rates.
“Customers (in hydro communities) are not paying the full, true cost of power because the cost of construction was heavily subsidized by state and federal governments,” says the ISER report, thanks in part to the PCE deal. As a result, “The Railbelt and Southeast regions have the lowest average residential electric rates.”
Meanwhile, rural Alaska’s PCE program has re-distributed Alaska’s state energy funds through annual utilities savings going directly to consumers, including $30.6 million sliced off electric bills in 2010 alone. ISER also stresses that while PCE has increased rural Alaskans’ quality of life, the program has not fostered “excessive” rural electricity use -- perhaps due to still-high electric rates even with the subsidy.
Because big government subsidies also helped create the Railbelt’s electrical interties and Alaska’s hydro-rich areas, the state’s three largest cities of Anchorage, Fairbanks and Juneau were excluded from the PCE program when Adams helped establish it in its present form in the mid-1980s. Unfortunately for interior Alaska, though, the once-bright days of relatively cheap energy in Fairbanks have turned dark in recent years from skyrocketing oil prices.
“Trouble is, Fairbanks doesn’t belong in the gang of three” anymore, Fairbanks Daily News-Miner columnist Dermot Cole wrote in February while advocating that the Fairbanks area be added to the rural PCE program. That’s because the Interior’s electric costs now align more with the Bush’s skyrocketing rates than with Alaska’s two other major urban centers.
“The exclusion of Fairbanks from the power subsidy program made sense when electric rates here were closer to those in Anchorage and Juneau,” writes Cole. “It makes no sense today.”
Were Al Adams still a state leader today, with his characteristic statewide vision, he likely would have championed just this sort of deal with Fairbanks area lawmakers: Extend PCE to include Interior ratepayers, as Adams might once again reach across the state’s notorious rural-urban divide and cut a deal to benefit all sides.
Susan Andrews and John Creed have taught in the humanities at Chukchi College, the Kotzebue branch of the University of Alaska Fairbanks, since the late 1980s. This story originally appeared in the Arctic Sounder and is republished here with permission.