Alaska Energy Authority seeks extra funds as RTO legal costs, PCE exposure and major projects press budget

Curtis Thayer, executive director of the Alaska Energy Authority, told the House Finance DCCED subcommittee on Feb. 24 that AEA needs modest additional operating and capital authority this year to finish regulatory work for the Rail Belt Transmission Organization and to accept large new federal grants for rural fuel infrastructure.

"We also do the power cost equalization program. It's a $46,000,000 program," Thayer said, adding the program serves 188 rural communities, 81 electrical utilities and roughly 81,000 Alaskans. He told lawmakers that a legislative increase in allowable household kilowatt credits and rising fuel prices have created a potential PCE shortfall of about $3,400,000, with final exposure dependent on actual fuel costs in rural Alaska.

Why the RTO ask now, lawmakers asked. Co-chair Representative Holland pressed why the RTO component would increase while the organization’s initial work was underway. Thayer said AEA is in the middle of a multi‑week hearing at the Regulatory Commission of Alaska (RCA), that 15 interveners require responses, and that AEA’s share of regulatory, legal and consultant costs is roughly one‑sixth of the total. AEA’s FY27 request includes roughly $923,000 for staff and contractual work and an additional $250,000 to handle post‑hearing tariff implementation and related accounting obligations.

"Once the tariff filing's done and once we have the RCA order...then when it is fully implemented, the utilities will be covering the cost," Thayer said, describing the requested money as a bridge while the tariff and rate‑based revenues are established.

Thayer also described several capital matters. The Bradley Lake expansion is estimated at about $400 million; AEA is researching whether the project could qualify for up to $100 million in federal investment tax credits and has filed related materials with the Federal Energy Regulatory Commission (FERC). He said transmission infrastructure south of the plant dates to earlier generations, limiting the ability to transmit an immediate 50% increase in annual energy without multi‑year upgrades.

On the Cook Inlet PowerLink (a 38‑mile subsea cable), Thayer said AEA holds a $206 million Department of Energy grant and has put up $50 million in bonds, but remains roughly $142 million short of planned financing. He said low‑cost loan options exist but DOE cannot cover the residual gap because it already has major funds committed to the project.

The committee also heard that AEA worked with the Denali Commission and a Native health consortium to secure $100 million in federal funds (no state match) for bulk fuel tank farm work. AEA expects to do roughly half the work and said it will need approximately $25 million in additional federal receipt authority to accept and manage that award.

Thayer repeatedly emphasized the scale of deferred maintenance in rural fuel infrastructure, citing an inventory of roughly 400 tanks and very large deferred‑maintenance totals described in the presentation. He warned of environmental risks: recent storms and erosion have moved some tank farms dangerously close to rivers, requiring emergency relocations to prevent spills.

Committee members pressed for follow‑up details on PCE calculations, the RTO budget trajectory and the schedule for transmission upgrades to take full advantage of hydropower growth. Chair Representative Galvin closed the hearing by reminding members the subcommittee’s final DCCED session is scheduled for March 3 to consider governor amends and member amendments.

The AEA presentation and the committee’s questions will inform final subcommittee deliberations on FY27 operating and capital requests.