Combining direct grants to utilities with subsidies for every Alaskan, Gov. Sarah Palin unveiled a $1.2 billion one-year plan on May 15 designed to use an unexpected budget surplus to offset sharp increases to the cost of energy around the state.
The plan calls for issuing $475 million to utilities across the state with the goal of seeing a 60 percent reduction in costs for consumers, businesses, schools and government buildings, while also rewarding utilities for reducing customer demand.
Next, the plan would issue $729 million in debit cards to every Alaskan to be used exclusively for energy-related products like gasoline, fuel oil, natural gas and electricity. The card would go to every qualifying permanent fund dividend applicant, including children, and would provide $100 per month for one year.
“We have the opportunity to return some of that surplus back to the people, the owners of the non-renewable resources that are making so much money for the state,” Palin said.
Because the fiscal year 2009 budget is based on oil prices in the high $80 range, the state is facing an unprecedented surplus over the coming year. The delivered price of Alaska North Slope crude oil closed at $124.12 on May 15.
Even if the price falls over the coming year to the levels projected in the budget, the state will bring in $2.7 billion more than originally forecasted, according to Revenue Commissioner Pat Galvin.
Applying crude oil futures prices on the New York Mercantile Exchange to state production would mean a $1.8 billion surplus for the state over just the first quarter of the year, Galvin said.
At the same time, household energy costs across the state have increased, although far more in rural areas than in urban areas.
Note: See story in May 18 issue of Petroleum News, available to subscribers online on Friday, May 16, at www.PetroleumNews.com.