ISER: Different impacts for different folks

As Legislature begins consideration of $1,200 rebate, study estimates it wouldn’t cover energy increases for majority of Alaskans

By Kristen Nelson

Petroleum News

As the Alaska Legislature began consideration of a proposal by Gov. Sarah Palin to provide a $1,200 one-time energy rebate to Alaskans, the Institute of Social and Economic Research at the University of Alaska Anchorage published a report looking at whether the proposed payments would cover increases in household energy costs.

What they found is that the impact would be regional: In Anchorage the proposed payments would cover recent increases in home-energy costs for almost all households because natural gas prices haven’t increased as much as diesel.

But for about half of remote rural households, “increased home-energy costs since 2006 outweigh the proposed payments.”

The authors of the report, Ben Saylor and Steve Colt, note that the numbers are only estimates because there isn’t much current information on types and amounts of energy used by Alaska households.

Their estimates are based on an average $3,300 energy rebate per household and household data from the 2000 U.S. census, allowing an estimate of costs by region and income.

The bill provides that those eligible for the 2008 Permanent Fund Dividend would be eligible for the energy rebate, the House Community and Regional Affairs Committee was told by administration officials July 15.

Some 600,000 Alaskans have already qualified for the PFD and if the Legislature approves the bill distribution to those individuals would be in August. Another 20,000 are expected to qualify for the PFD, and checks would be distributed to those as they qualified.

In addition, some 45,000 individuals are expected to qualify if resident in the state for six months beginning April 1. An application would be available in October.

Energy costs up 180%

Estimated median annual energy costs are:

• $1,800 in 2000 for home energy; $2,853 with gasoline included;

• $2,464 in 2006 for home energy; $4,652 with gasoline included; and

• $3,504 in 2008 for home energy; $7,954 with gasoline included.

The figures are not adjusted for inflation.

“Alaska households overall are paying about 70 percent more for home-energy and gasoline now than in 2006 and 180 percent more than in 2000,” the authors said, based on the same energy consumption as in 2000. They acknowledge that many households probably use less energy now than in 2000 because of the increased cost, but said current data is not available.

The proposed state payments would cover the increases since 2006 in home energy costs and gasoline for some 38 percent of Alaska households, but would be less than the increase for 62 percent.

Anchorage has access to natural gas, as do about half the residents of the Kenai Peninsula and the Matanuska-Susitna boroughs, and natural gas prices have not risen as far as diesel prices.

Elsewhere in Alaska most households rely on diesel and home energy costs vary by the severity of the winters, the report said. Juneau and some other places use diesel for heating but have hydro-powered electricity, reducing costs somewhat.

Results by region

“For about half the remote rural households at all income levels, increased home energy costs since 2006 outweigh the proposed payments,” the study found.

Elsewhere in the state, the payments would cover increased home energy costs, not including gasoline, for 70 to 90 percent of households. The report says that while it uses 2007 prices for natural gas and diesel, and those prices have increased, the point remains that diesel in remote Alaska communities is about four times more expensive than natural gas in Anchorage, on an energy-equivalent basis.

One hundred gallons of fuel oil in Bethel cost $459 in 2007; the equivalent energy from natural gas in Anchorage cost $120.