Senate approves dam sale, rejects additional money

Posted: Thursday, April 27, 2000

JUNEAU (AP) -- The Senate approved a plan to sell four state-owned hydroelectric plants and set up an endowment to pay electrical subsidies in the Bush, but balked Wednesday at putting an additional $100 million into the fund from the state's reserves.

Without money from the Constitutional Budget Reserve, the Power Cost Equalization endowment fund would be about $100 million, too small to earn the $15.7 million spent annually to subsidize electric rates for about 78,000 Alaskans in 193 villages.

Tapping the $2.6 billion reserve takes a three-quarters vote in the House and Senate. The House approved the money earlier this month, but it fell four votes short in the Senate.

''Endowing one function of government over all others raises questions,'' said Sen. Rick Halford, R-Chugiak, one of nine senators who opposed the draw.

The bill was held for another vote, and Democrats said they remained hopeful they could sway dissenting lawmakers as deals are made on other issues in the session's closing days.

''We need to solve it long-term, but first we need to wheel and deal on it,'' said Sen. Al Adams, D-Kotzebue.

Finding a stable source of money to lower rural power rates has been a top issue for rural legislators.

Without subsidies, some villagers could pay five times the electric rates of larger communities. Rural utilities burn expensive diesel fuel in their generators.

The PCE program lowers electric rates to roughly double the rate paid in Alaska's cities, but the discount applies only to the first 500 kilowatt hours each month. That's less than the average Alaska household's consumption of 700 kilowatt hours.

The plan passed by the House differed somewhat from Gov. Tony Knowles' original proposal to underwrite the PCE program with a $120 million endowment fund.

Both plans count on $73 million from the sale of hydroelectric projects in the Four Dam Pool serving Ketchikan, Wrangell, Petersburg, Kodiak, Valdez and Glennallen. Utilities in those communities would buy the dams and generators. A reclaimed loan, the projects' insurance fund, and debt payments from utilities were to provide the rest of the $120 million, an amount that would earn about $8 million a year.

Knowles also called for spending up to $9 million annually from earnings of the Alaska Industrial Development and Export Authority, a state agency that encourages economic growth and diversification through loans and assistance to businesses.

The House replaced that money by enlarging the endowment. Fully capitalizing the fund, they reasoned, would avoid an annual political fight over spending the AIDEA dividend, which is traditionally used to pay for capital projects.

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