Power Cost Equalization

The Power Cost Equalization Program provides economic assistance to communities and residents of rural electric utilities where the cost of electricity can be three to five times higher than for customers in more urban areas of the state.

The program’s purpose is to equalize power costs to near the average cost of power in Anchorage, Fairbanks, and Juneau. Residential and community facility buildings in nearly 200 communities are eligible for the reduced rate.

The Regulatory Commission of Alaska (RCA) determines if a utility is eligible to participate in the program and calculates the rate that the PCE program reimburses each eligible utility. The Alaska Energy Authority (AEA) determines the eligibility of community facilities and residential customers and provides reimbursement to the electric utility for the PCE credits extended to customers.

The PCE Program is funded by earnings of the PCE Endowment Fund. AS 42.45.085 provides that five percent of the PCE Endowment Fund’s three-year monthly average market value may be appropriated to the PCE Program. It has only been in recent years that the five percent draw on the endowment has been sufficient to fully fund PCE payments.

AEA regulations define a community building as one that operates for the benefit of the general public and to address the state or federal funding of community facilities. This regulation clarifies that the receipt of state or federal government payments is not considered state or federal payment of operating costs if the local community receives the benefits of the power cost equalization payment rather than the state or federal government.

For an up-to-date snapshot of AEA’s Power Cost Equalization (PCE) program activities, please see our downloadable Factsheet.