Dunleavy declines to appeal judge’s ruling in favor of rural power subsidy

Alaska Gov. Mike Dunleavy’s administration will not appeal a court ruling that upheld the funding of Alaska’s rural subsidy for home electric power, it said in a written statement Thursday afternoon.

The announcement came a day after Anchorage Superior Court Judge Josie Garton ruled that the administration acted incorrectly when it determined that the subsidy’s billion-dollar endowment could be drained into a state savings account.

The decision, and the governor’s choice not to appeal, means roughly 82,000 rural Alaskans will continue to receive subsidized home electricity. Some of those Alaskans began receiving bigger bills earlier this month, but many utilities had delayed billing until the result of the lawsuit.

The Alaska Energy Authority operates the subsidy program, formally known as Power Cost Equalization, and authority director Curtis Thayer said the public corporation is ready to reimburse utilities under its regular procedure.

“We have access to the money, and we’ll be processing as they come in to request the funding,” he said.

Without an Alaska Supreme Court order, it wasn’t immediately whether Garton’s interpretation of the law will be applied to similar state funds that pay for a variety of programs, including college scholarships, antismoking efforts and oil spill response.

“The administration is evaluating how the ruling may impact other funds, but the permanent injunction only applies to the PCE,” said Jeff Turner, a spokesman for the governor.

Those other funds are slated to be drained under the administration’s interpretation of a 1990 amendment to the Alaska Constitution. The amendment says money remaining in the state’s general fund, and available for appropriation at the end of the fiscal year, should be automatically swept into the Constitutional Budget Reserve if the reserve has been recently used.

In 2019, the Dunleavy administration significantly expanded the list of accounts subject to the automatic sweep, adding the Power Cost Equalization endowment and other funds.

State legislators voted to reverse the sweep in 2019 and 2020 but failed to do so in 2021. Republicans in the state Legislature proposed to fund Power Cost Equalization without the endowment, but that proposal also failed.

After the Legislature failed to reverse the sweep, the Alaska Federation of Natives and other plaintiffs sued the state, arguing that the PCE fund should not be emptied.

Attorney Scott Kendall, whose firm represented the plaintiffs in the lawsuit, said that even without a Supreme Court decision to establish a firm legal precedent, he believes other judges will take Garton’s ruling into account if a similar case arises.

In the governor’s written statement, Dunleavy encouraged passage of a proposed constitutional amendment to guarantee PCE payments and the Permanent Fund dividend. Without a guarantee, he said, Garton’s ruling leaves the PCE fund open to spending by the Legislature with a simple majority vote.