Anchorage Daily News

Early freeze-up on the Kuskokwim River has left the village of Kwethluk without diesel fuel needed for the winter after two runs by fuel barges failed this week to get through thickening river slush to the community.

An emergency declaration was adopted Thursday in Kwethluk at a joint meeting of the city council, tribal council and village corporation. Kwethluk is seeking state and federal financial help, warning that its 800 residents face loss of electricity and exposure to extreme cold in another month.

State officials said Friday they are considering a loan to help pay the higher up-front cost of flying fuel oil to Kwethluk, located 18 river miles up from Bethel. Some of the fuel might also be driven by truck up a river ice road later in the winter, officials said.

Meanwhile, in Arctic Village northeast of Fairbanks, a cash flow problem has created a similar fuel problem as winter closes in. Arctic Village officials appealed this week to the state for an emergency loan to help pay the cost of bringing in fuel, which must be flown to the village even in summer and retailed this year for $8.50 a gallon.

The annual challenge of getting the winter's fuel to Alaska's rural villages has been made tougher this year by the rising cost of diesel and the need for cash-strapped communities to raise financing.

Most villages rely on a state program providing up-front loans to purchase bulk fuel. The loans must be paid back as villages sell the fuel to utilities and consumers over the following nine months.

The primary source of funds is a revolving loan program run by the Alaska Energy Authority. It requires that loans be paid off annually. For the handful of villages that fall behind, a backstop program was set up in 2004, run by the non-profit Rural Alaska Fuel Services. The latter organization's loans are tied to administrative assistance and business plans meant to help villages get out of debt.

"The biggest problems come when they don't charge enough because they say they're trying to help the community," said Del Conrad, CEO of the rural fuel program, which serves about 20 villages every year. "They say, 'If I charge them that much, they can't afford it.' I tell them, 'If you don't charge that much, there won't be any service here for them.' "

As an example of a program that works, Conrad said, the Interior village of Chalkytsik has household meters that must be pre-paid to deliver electricity.

"It's so difficult to be the person who goes to turn off Aunt Em's electricity because she hasn't paid her bill," Conrad said.

With fuel costs rising, the Legislature increased the amount of money available for fuel loans this year, Conrad said.

But some villages have found fuel consumption declining, he said, as villagers move away, switch to wood or find other ways to cut corners. A few villages have responded by scaling down their fall orders. They risk running out of fuel by February, which may require more loans to fly in bulk fuel, Conrad said.

Another current problem: world fuel prices are declining, but village tanks are full of high-cost fuel that was shipped from refineries at peak prices.

Kwethluk officials say Crowley Petroleum Services placed them at the end of their delivery schedule, reasoning that Kwethluk was close to Bethel -- only to be caught by the freezing river.

Mark Smith, vice president of sales for Crowley, declined to discuss reasons why the barge run to Kwethluk was scheduled so late. But he said the Kuskokwim ran unusually low this summer -- several upriver communities couldn't be reached at all because of low water -- and freeze-up came earlier than it had for a decade.

Conrad said loan regulations for the state were tightened up in September, requiring villages who wanted to borrow from his last-chance-Texaco program to apply first to the AEA.

"I know for a fact that there were big delays in getting the orders in this year for some villages," he said.

A second Bethel barge owner tried to make a delivery run Wednesday and came within a few miles of the village before giving up, said Kwethluk Mayor David Epchook.

He said the village is hoping for emergency aid from the state or from the Federal Emergency Management Agency.

The state may have money for a bridge loan to help them fly in their fuel, said Mike Black, deputy commissioner of the Department of Commerce and Economic Development.

The school at Kwethluk, which is supplied separately, has fuel for the winter, Epchook said. The joint village resolution notes that the local village corporation has bought some fuel from the school and will distribute 30 gallons to each household as a stopgap.

Arctic Village has been relying on the backstop rural fuel program for several years. In an e-mail to state officials this week, village tribal administrator Margorie Gemmill said they were down to only a few days of fuel.

State officials said Arctic Village still owes $15,000 on a 1997 fuel loan and cannot qualify for AEA funds until that money is paid.

Conrad said the village had managed to pay off a previous $71,000 loan from his organization and will be granted funds to fly in fuel.

The Arctic Village council office could not be reached by phone Friday.

Find Tom Kizzia online at adn.com/contact/tkizzia or call him at 907-235-4244.