082106_PCEEndowment.MP3 (original audio version of the story)

The Power Cost Equalization Endowment Fund is close to almost doubling in size – to the point where its annual earnings could fully fund the P-C-E program at current levels.

An appropriation of 183 million dollars to the fund was included in the F-Y 07 state capital budget, but was dependant upon the enactment of a new petroleum tax. 

Now that Governor Murkowski has signed the tax bill into law, the appropriation is legally clear to proceed…but several factors have clouded the situation, including the partial shutdown of the Prudhoe Bay oil field.

From KIYU in Galena, Tim Bodony has more.

TIM:  

The tax bill signed into law by Governor Murkowski on Saturday retroactively increases taxes due to the State for April, May, and June of this year, and once collected, those taxes are slated to go into the PCE Endowment Fund to the tune of 183 million dollars – bringing the balance of that fund to roughly 370 million dollars. 

But the question is when that will occur.   

Office of Management and Budget Director Cheryl Frasca explains that an ordinary straightforward transfer of funds is now complicated by, among other factors, a provision in the new tax law that gives the oil companies until next March to pay what they owe under the new tax rates. 

"Usually that might not have been such an issue, because we have revenues and payments throughout the fiscal year," explains Frasca. "So we try and manage that cash flow."

"But certainly the other unanticipated event is the BP shutdown / slowdown of oil production on the North Slope. And so what we are doing right now is watching carefully and closely what BP is deciding to do, so then we know what the impact will be on our expected revenues. And we are also analyzing what payments we need to make between now and the end of this fiscal year, and all of that will help us decide how quickly we can make that endowment deposit."

Frasca adds that the Murkowski Administration wants to get the money into the endowment as soon as possible, so it can start amassing earnings and generate revenue that can go into PCE payouts this coming winter.

When the petroleum profit tax bill came to a vote again at the end of the Third Special Session, the prospect of delivering a huge financial windfall to PCE was enough to entice rural legislators, such as District C Senator Albert Kookesh, to vote for it, despite opposition to other portions of the bill. 

"I spent almost a month and a half, and most of us did, in the legislature trying to decide whether we could pass a bill that would be acceptable to both houses, and still do what the ELF can't do anymore," said Kookesh.

"And I think 50 percent of the decision to vote 'yes' on that bill was because 183 million dollars would go into the PCE [Endowment} Fund, and I thought that was really important."

Some legislators and political candidates have said recently that by adding money to the PCE Endowment Fund – to the point where the fund’s earnings could fully cover the 25 million dollars in annual operating expenses  – PCE funding will no longer be a political football in the legislature, kicked back and forth every year. 

But Kookesh does not think that PCE is truly at full funding yet:

 “I am hoping that this isn’t the last money we put into PCE. 368 million dollars will fund it fully, for homes right now. I would love to be able to see the day when we put clinics, schools, and businesses back into the PCE Fund. We would probably have to double the money in there, but I think it is doable.  I think when you look at the amount of money we spend in urban Alasks for the dams and the interties that they have in urban Alaska where they can afford to pay 8 to 12 cents a kilowatt hour because of money the state spent earlier on in our history…400 million more dollars into that fund is not unreasonable.” 

Even if Kookesh refuses to let the battles over funding to the PCE program end completely, he looks at this 183 million dollar deposit as a milestone in the history of the program.

"Absolutely it’s a big deal. You can’t do anything in rural Alaska unless you have affordable energy.  If the people didn’t get that PCe money to help offset their energy costs, you would see a lot of dark homes in rural Alaska, and I don’t think that is something we can stand for in a state that is very wealthy.”