Friday, May 16, 2008

Palin wants to give residents $100 a month to use for energy costs

By SEAN COCKERHAM(05/16/08 00:17:47)

Anchorage - Gov. Sarah Palin is proposing an energy cost relief plan to give Alaskans $100-a-month debit cards and pour state dollars into electric utilities so they'll slash their bills to ratepayers.

Palin's ambitious program, unprecedented in any other state, would last a year and cost $1.2 billion. The money would come out of the huge budget surplus the state government is enjoying because of the same high oil prices afflicting consumers at the pump.

Palin wants the Legislature to approve the plan this summer so it can start in September. She said the utility grants would mean a 60 percent reduction for all ratepayers.

Every Alaskan who qualifies for this year's Permanent Fund dividend check would also be eligible for an "Energy Debit Card" giving them $100 a month from the state.

The cards would have "merchant codes" so they could be used only for energy purchases at gas stations, fuel distributorships, utilities and the like. The $100-a-month for children could be added onto the balance of their parents' cards. Any Alaskan who activates a card would have to pay the federal income taxes on it, but unused balances on the card would roll over from one month to the next.

The plan was announced the same day that Alaska became the first state where the average pump price for a gallon of unleaded gas topped $4, according to the American Automobile Association. It was just under that around Anchorage and Fairbanks on Thursday and much higher across much of the rest of the state.

Palin said it makes sense to return some of the state surplus to the suffering public.
"It's really atrocious, the situation that Alaskans are in today," Palin said. "Where we, as the owners of the energy resources, are paying outrageous prices for use of those resource."


Some legislators were choking on the $1.2 billion price tag for Palin's program.

"It's taking my breath away," said Anchorage Democratic Rep. Harry Crawford. "I don't know what to think about it, it's so huge."

House Speaker John Harris has been pushing for energy cost relief but wasn't sure about debit cards.

"That would be hard to implement," the Valdez Republican said. "I think you'd have a lot of potential for fraud."

Harris said a person could sell their debit card and use the money to buy something else.
Many other legislators said they need more time to digest the governor's plan. Some praised Palin for proposing a solution they felt might work.

"I was very pleased. I like the fact that it's a one-year program and not creating a long-term subsidy," said Eagle River Republican Rep. Nancy Dahlstrom.

The debit cards would be expected to cost the state $729 million. The grants to electric utilities would be another $475 million. Palin said the state can afford it.

Oil prices of around $120 per barrel mean far more money from oil taxes and royalties than the state expected at its last revenue forecast a month and a half ago.

Even if oil prices gradually decline over the next year, the state would wind up with $2.7 billion more than the forecast, said Revenue Commissioner Pat Galvin.

The surplus could go much higher if the stratospheric oil prices of recent weeks continue, Galvin said. He said the state could get $1.8 billion more than expected in just three months if the futures prices that financial markets use for trading turn out to be right.

Anchorage Democratic Rep. Crawford said the state needs to do something to help the needy with high costs. But this windfall can also be saved for the future, he said.

Palin said it's not right to let money pile up in the state treasury while people pay more and more.


It's not clear exactly when the Legislature will consider the governor's proposal.

The governor has already called the Legislature into a special session on the proposed natural gas pipeline to begin June 3. Palin said she might add energy cost relief to those deliberations or have it as the subject of its own special session.

Legislators seem a lot more interested in giving grants to utilities at this point than in issuing debit cards. The grants would be conditional on rates being reduced, a Palin aide said, and state utility regulators would ensure that's what happens.

Under the plan, utilities could also get more state aid if they take conservation measures.

Palin aides said the energy debit cards aren't much different from cards the state already gives people who are on public assistance. The aides conceded that giving them to everybody for energy costs is a unique idea for Alaska.

"I am not familiar with another state in the nation that faces similar energy costs or similar energy wealth," said Palin special assistant Joe Balash.

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