Examining the Power Cost Equalization Program Funding Formula

A new analysis by ISER researchers Ginny Fay, Alejandra Villalobos Meléndez, and Tobias Schwörer examines how the current Power Cost Equalization (PCE) program formula affects incentives for rural communities to increase their energy efficiency and add renewable energy sources. The state PCE program helps bring the high cost of electricity in small rural places closer to costs in urban areas, by paying eligible utilities part of the costs of the first 500 kilowatt hours of electricity for each residential customer every month. PCE rates are currently linked to fuel costs and use.

The analysis looks at the history of the PCE program and levels and patterns of electricity consumption across regions of Alaska, and assesses how the program affects the price of electricity—which in turn affects incentives for efficiency, innovation and conservation.

See the full report here (3.8MB).

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