Alaska Governor Announces Temporary Energy Relief Plan

May 19, 2008

Alaska Governor Sarah Palin unveiled a short-term energy plan on May 15 to address skyrocketing energy costs in the state. The $1.2 billion package has two parts — returning surplus funds to electric utilities to reduce ratepayer bills, and an energy debit card that can be used by residents during the next 12 months.

"Alaskans are feeling the pinch of high energy costs," Palin said. "The right thing to do is to return surplus monies to the resource owners through energy relief."

Alaska's Energy Coordinator, Steve Haagenson, who is also the executive director of the Alaska Energy Authority, is developing a long-term plan to reduce costs, promote conservation, and secure long-term supply solutions for each part of the state. Results of that work are expected by the end of this year.

"For instance, in Bush Alaska, the best solutions to high diesel prices are to use less and find alternatives," Palin said. "We cannot lose sight of the need for these long-term fixes, but as crude oil prices continue to set daily records, Alaska's families, communities, and businesses cannot afford to wait."

Returning surplus funds through grants to electric utilities is expected to reduce rates by 60 percent and benefit homeowners, renters, schools, governments and businesses. A review by the Alaska Department of Law has indicated there should be no federal income tax consequence because the grants offset the revenue collected by the utilities.

There will also be conservation incentives for the utilities. For every 1 percent reduction in 2008 kilowatt-hour sales from 2007 sales, the state will make a year-end contribution for capital energy projects to the utility.

The energy debit card will be sent to every qualifying Permanent Fund Dividend (PFD) applicant, which includes people who have been state residents for at least 1 year and intend to remain so indefinitely. Alaska established the Permanent Fund through a constitutional amendment that voters approved in 1976. The amendment set aside 25 percent of certain mineral revenues into a public savings account to be invested for the benefit of current and future generations of Alaskans. In 1980, the PFD system was set up to distribute the funds to residents.

The energy debit card benefit will be $100 per month per PFD recipient. Money not used on the card one month will carry over to the next. The amount available to individuals through the card will probably be considered income by the IRS.

The temporary card can be used for purchases from Alaska energy vendors, such as heating oil distributors, natural gas utilities, electric utilities, gas stations and other retail fueling stations.

Source: The governor's May 15 press release.

To read more about renewable energy and energy efficiency projects in Alaska, see: