Wednesday, August 06, 2008

Alaska State House Passes Its Own Energy Appropriation, Bumps Resource Rebate Up To $1,200; Showdown With Senate Looms

Update August 8th: State legislature passes final bill. Updated post HERE.

Late on Tuesday August 5th, 2008, the Alaska House of Representatives passed a nearly $1 billion spending bill that includes funding for a potential $1,200 "resource rebate" for Alaskans plus preparations toward a natural gas pipeline. The bill now moves to the Senate, which must act on it before the special legislative session ends at midnight Thursday. Full story published by the Anchorage Daily News.

The bill that passed Tuesday night by a 34-3 vote, HB4001, is an appropriations bill and it doesn't necessarily mean the $1,200 rebate is assured. The full legislature first will need to pass separate energy relief legislation that includes the rebate, and right now lawmakers in the House and Senate are far apart on their ideas for how to help Alaskans struggling with high fuel and other energy costs. Read about the Senate version HERE.

Here's how they voted:

Yeas: Buch, Chenault, Cissna, Coghill, Dahlstrom, Doll, Edgmon, Fairclough, Foster, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Harris, Hawker, Johansen, Johnson, Kawasaki, Keller, Kelly, Kerttula, Lynn, Meyer, Nelson, Neuman, Olson, Ramras, Roses, Salmon, Seaton, Stoltze, Thomas, Wilson

Nays: Crawford, Doogan, Holmes

Excused: Joule, LeDoux, Samuels

Here's the breakdown on the $977.9 million appropriations bill the House passed Tuesday night (the leading allocations):

- $744 million to pay an estimated 620,000 Alaskans a $1,200 rebate.

- $50 million to fund preparations for TransCanada's proposed natural gas pipeline.

- $60 million to continue a popular home weatherization program.

- $53 million would go toward repairing the rough Dalton Highway, an industrial artery leading north of Fairbanks to the North Slope oil fields.

The House spent Wednesday battling over their version of SB4002. Their version is HCS CSSB 4002, viewable HERE. It amends the bulk fuel bridge loan fund and the bulk fuel revolving loan fund; relating to Alaska resource rebates, increases the amount of the 2008 permanent fund dividend to provide that rebate; suspends the motor fuel tax; eliminates the authority to make certain provisions of the heating assistance program retroactive to November 1, 2007; and provides for an effective date.

The last two days of the special session are likely to be tense as leaders try to find a compromise on energy relief. Much of the battle centers on how to spread aid equitably between rural and urban areas.

Some lawmakers don't support subsidies and a $1,200 rebate, the amount Gov. Sarah Palin originally proposed. During a hearing in the House Finance Committee on Tuesday, Rep. Mike Kelly (R-Fairbanks) called such aid "morphine and welfare payments."

Sen. Lyman Hoffman (D-Bethel), a powerful finance leader in the Senate, countered that the state is raking in billions of dollars in surplus oil revenue and can well afford a temporary relief effort to help strapped Alaskans get through the next two winters.

One major component in the Senate's energy relief bill would have the state cover the cost of heating oil above $3 a gallon. Heating oil is widely used in villages and in the coastal communities of Southeast Alaska. However, Rep. Kevin Meyer (R-Anchorage) disagrees, saying fuel sellers would have no incentive to keep costs down knowing the state pays above $3.

But some rural representatives were upset the subsidies fell out of the House bill. "Twelve hundred dollars in one part of Alaska does not meet the same needs that $1,200 in another part of Alaska does," said Rep. Mary Nelson (D-Bethel). Another ADN article entitled "Villagers shudder at fuel prices" explains their objections. For example, a gallon of unleaded gasoline can cost $10, heating fuel can cost up to $9.10 a gallon, and electricity up to $1.17 per kilowatt hour (which is 11 times the national average). The Fairbanks Daily News-Miner published the same article, but the public comments provide extra insight.

The Alaska Federation of Natives (AFN) is hosting a roundtable to brainstorm solutions for rising rural energy costs. Politicians in attendance include Sen. Ted Stevens and Governor Sarah Palin.

And late this evening, the ADN's Alaska Politics blog reported that the Senate leadership answered back, saying the House energy relief plan is too barebones and will leave rural Alaska in the cold this winter. Read this letter Senate President Lyda Green sent to House Speaker John Harris. Top senators including Green and Sen. Lyman Hoffman said the energy bill must include money for greater home heating and electricity subsidies. They say the House plan to simply pay Alaskans a $1,200 “resource rebate” and to suspend the state’s 8-cent tax on gasoline isn’t broad enough to cover needs statewide, especially in the Bush.

Commentary: The problem with the Senate bill is that it's too complicated, and the probem with the house version is that it leaves out the rural subsidization factor. The ideal energy assistance bill would have three key components, with appropriate sunset provisions:

(1). A flat resource rebate payable to every Alaskan. Perhaps this should be adjusted to "per household" rather than "per person", since a four-person household does not necessarily use four times as much energy as a one-person household. The main justification for making it "per person" is simplicity; you tack it on to each person's PFD, no separate bureaucracy is required.

(2). Subsidization payments to energy providers to prevent consumers from paying above a predetermined ceiling for energy. For example, if a $3.00 per gallon ceiling was set on heating fuel, the customer would pay no more that $3.00 per gallon, with state subsidies paid directly to providers accounting for the remainder.

(3). Suspension of the state fuel tax. This should be a no-brainer; with the surplus in our state's treasury fueled by windfall oil prices, we can afford to take this step.

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