Judge says rural energy fund is protected, cannot be swept into budget reserve fund


An Anchorage Superior Court judge today ruled against Gov. Mike Dunleavy, saying that the Power Cost Equalization Fund is a special fund that cannot be treated as other sub-funds, which are swept at the end of the fiscal year.

The importance of the ruling can’t be overstated. The Alaska Constitution prohibits special funds, unless they are added to the constitution as such. But Garton is taking a strictly literal view of the Power Cost Equalization Fund, separating it off as a special fund that cannot be touched.

“Because the Plaintiffs have demonstrated that they are entitled to a judgment as a matter of law, and because the Defendants have not shown that they are entitled to a judgment as a matter of law, the court GRANTS Plaintiffs’ motion for summary judgment and DENIES Defendants’ Cross-Motion for Summary Judgment. The Department is PERMANENTLY ENJOINED from sweeping the PCE Endowment Fund into the CBR (Constiuttional Budget Reserve) pursuant to article iX, section 17(d) of the Alaska Constitution,” Judge Josie Garton wrote.

She concluded that “the term ‘general fund’ does not include a separate fund of a public corporation. Accordingly, it does not include the PCE Endowment Fund.”

The lawsuit was brought by Recall Dunleavy attorneys Jahna Lindemuth and Scott Kendall on behalf of several village entities and the Alaska Federation of Natives.

Although the state may appeal the ruling, for now rural power companies may draw subsidies from the fund to help lower the cost of electricity in communities outside of the Railbelt.

The Power Cost Equalization Fund is an endowment-type fund set up in the 1980s at a time when communities on the road system were getting hydropower projects to help lower their costs, but rural areas were not able to tap into those projects.

Read: Kendall, Lindemuth sue over power cost equalization


  1. What? Legislating from the bench? Say it isn’t so! A dedicated fund is a dedicated fund per the Constitution. The Alaska Constitution prohibits special funds, unless they are added to the constitution as such. But Garton is taking a strictly literal view of the Power Cost Equalization Fund, separating it off as a special fund that cannot be touched. [Sounds like a dedicated fund to me, but I am not a lawyer or a judge.]

    Take it to the next level and let it be sorted out.

  2. Run it up! The Alaska Supreme Court has already ruled on “funds” and they have interpreted that “funds” are unconstitutional.

  3. Tell the Judge thank you for your opinion but you’re wrong and do it anyway. Time to take a stand againsy Judicial Tyranny and trying to Legislate from the bench. Not in the Alsaka Consitution not a special fund.

  4. Judicial tyranny. Why bother with elections? Why bother with a Constitution? And of course, they must all be progressives by law, which they dutifully follow.

  5. Once again legislating from the Bench, an Alaskan judge completely ignores the AK Supreme opinion making the PFD just another line item in the budget and walls off power cost equalization permanently. Apparently the kritarchy (rule of judges) will continue for a while. And it is nothing any of us voted to install. Time for a constitutional convention. Cheers –

  6. This has amazing implications! Legislators will now set up special funds for school debt service reimbursement, the BSA, the Marine Highway, and on and on. The protected funds will amount to so much money that state general obligation bonds will eventually drop in price (and IRS rules strictly cap how much can be set aside in advance to pay debt service on tax-exempt debt). Every state department will be concocting special funds to protect their general fund budgets, and the Legislature will be contriving devices to now bind future legislatures. The CBR, put into the constitution by Alaska voters, has become moot and powerless. But this ruling will change the state forever. It’s a serious transfer of power.

  7. It seems to boil down to two questions; does calling an appropriation from the General Fund an “endowment” legally distinguish that appropriation from other GF appropriations that are subject to annual lapse, and does the Legislature’s saying that their enactment of the Endowment Fund does not constitute a dedicated fund make it not a dedicated fund? The AKSC has not missed many opportunities to show its antipathy towards the Dunleavy Administration, so we’ll see how it rules. It should be noted that other public corporations operate similar funds. To a logical person, what applies to one should apply to all, but the AKSC often applies “situational logic,” so we’ll see.

  8. The real problem is the “sweep” and the misuse of the CBR, the General Fund, and the PF Earnings Reserve. The Legislature should have taken their deficit spending from the PFER instead of the CBR – creating the requirement for the sweep. The judge tiptoed around the fact that the PCER is “available for appropriation” and is in actuality a sub-fund of the General Fund.

  9. I am not sure why we have this power equalization for the rural areas. Let the loaded with money native cooperation take on this cost.

  10. Art has commented previously that the Railbelt power infrastructure capital cost was repaid by the utilities and ratepayers. I had always assumed that State appropriations contributed to the capital cost without reimbursement (at least in part). I doubt that the PCER would have passed muster in the Legislature if this were not the case and thus justified an equitable endowment for the non-railbelt subsidies of the PCER. One problem I see is that the PCER disincentivizes rural towns from seeking infrastructure efficiency improvements – an example of the perverse incentives created by subsidies.

    • Much of it was, but not all admittedly. Sitka got a bye on repayment, maybe some others at least to some degree.

  11. Shouldn’t a judge say that the PFD is protected and cannot be swept into the budget process as it is formula based…a fund for maximum benefit for the people of Alaska even a greater benefit set aside for the renewed emphasis on resource development. The governments portion (HALF) should be swept into the CBR just as should sweeping a (HALF) for a full PFD to every account that qualifies for residency even our children as it has been for 90% of the time until WALKER or walker VETOED and stuck it to the Alaska People. He could not even be elected dog catcher…

  12. The Dunleavy Derangement Syndrome (sorry for the cliche’) has reached pandemic levels. If it originates from the desk of Dunleavy, we hate it, we fight it, we won’t read it, we won’t look at it, we overturn it, we loophole it, or we mangle it into unrecognizable form, Alaska Constitution and reasoned analysis be damned. Shame on you! One day the shell game will end, and we will all starve and freeze.

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