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St. Paul Island City Officials Fight To Restore Power Cost Equalization Funding

St. Paul, Alaska
John Ryan

In a letter addressed to St. Paul community members, city officials recently urged residents to take energy-saving measures after Gov. Mike Dunleavy allowed funds from the Power Cost Equalization Program to be swept into the state's general funds.

"Reduce TV watching time, lower your thermostat by a couple degrees, wash laundry in cold water," are a few of the tips listed in the letter.


The loss of the program could drastically increase energy prices in many parts of rural Alaska, including the Pribilofs, where local leaders worry it could have cascading effects for the local economy.

The billion-dollar state program is designed to offset the high costs of energy production in Alaska, such as the Bering Sea community of St. Paul — where remote geographic location makes generating electricity expensive.

The City usually receives about $200,000 from the PCE fund each year. City officials say that credit essentially cuts residents' electricity rates in half — at least for the first 500 kilowatt hours.

Community members generally pay about 41 cents per kilowatt hour — that's cut down to about 20 cents with the PCE credit. 

Starting with July's electricity bill, St. Paul community members will not receive PCE credits.

Phyllis Swetzof retired from her position as St. Paul's City Clerk a few years ago. She's lived in St. Paul since she was 11 and worked for the city since 1975. Swetzoff said she's seen the community survive cutbacks, relying on community programs like food banks or doing more subsistence fishing, but she says the loss of PCE funding will be really hard for many people.

"If you're getting $100 a month in PCE credits, that's $1,200 a year you can spend on fuel or groceries or something else that you might need," she said.

The loss of the PCE credit means people will have to start making financial cuts in other places. Swetzof said that will start with food, which has to be barged or flown in and can be very expensive on the remote island. 

"A can of soup can cost $4.49. Green peppers can cost $7 for each pepper," Swetzoff said. "Go ahead, buy a green pepper for $7 and decide how many meals you're going to cook with that. It can be tough out here." 

Jacob Merculief, a longtime resident and current mayor of St. Paul, echoes Swetzof's concerns, adding that the repercussions of losing the funding won't stop at food.

"When people are faced with a lot of unknowns [and] they don't think they're going to be able to work and make money and support their families, people have a tendency to move off-island," Merculief said.  

Fewer than 400 people live on St. Paul Island. If a family with children leaves the island, that means fewer children in the school, which leads to less funding for the district. St. Paul City Manager Phillip Zavadil said less money in the school district would affect the entire community.

"That would mean less money circulating in the community," Zavadil said. "They would not be shopping at the local store or contributing to employment there — plus tax dollars come back to the city for sales tax on [local] goods and services."

The City of St. Paul joined in a lawsuit earlier this month along with the Alaska Federation of Natives, rural power providers and other municipalities to keep the funding for the PCE program.

The lawsuit asserts that it's unconstitutional for Gov. Dunleavy's administration to drain money from the PCE Endowment Fund and "sweep" it into the Constitutional Budget Reserve so that it could be used for other government programs.

The St. Paul City Council appropriated $5,000 to pay for legal fees for the lawsuit. Zavadil said the cost is worth it, especially in comparison to the loss of $200,000 in annual credits. 

The PCE Endowment Fund was established in 2000. But in 2019, Dunleavy's administration said that the Legislature can make an annual vote to decide whether or not to fund the program.

Zavadil said residents have been receiving credits since the program's foundation, except for last year when the city was worried that the fund would be cut. In response, city officials removed the credit for about a month before restoring it.

Now, Zavadil said he hopes this lawsuit will get the credits back to St. Paul community members as soon as possible. But he said he also hopes it can provide legal stability moving forward so lawmakers can no longer sweep funds from the PCE, and residents won't have to worry about losing these credits every year.

Dunleavy asked for an expedited decision for the case, and the next hearing is scheduled for Aug. 5. 

In order to reverse the sweep of the PCE program funds, both legislative chambers will need a three-fourths majority vote in the upcoming legislative session. 

Mayor Merculief said he's optimistic that legislators will vote to restore the PCE funds.

"I'm crossing my fingers and hoping that they do," he said.


Hailing from Southwest Washington, Maggie moved to Unalaska in 2019. She's dabbled in independent print journalism in Oregon and completed her Master of Arts in English Studies at Western Washington University — where she also taught Rhetoric and Composition courses.
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