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Legislators Have Many Questions About Additional Susitna-Watana Funding

by Phillip Manning ~ February 25th, 2014

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Last week, Governor Sean Parnell asked for a budget supplement of more than $32 million for the Susitna-Watana Hydroelectric Project.  The nature of the supplement has raised some questions, and it’s not clear at this time whether the state legislature will ultimately approve the additional spending.

At a meeting of the House Finance Committee last week, Karen Rehfeld, Director of the state Office of Management and Budget, fielded a number of questions from legislators regarding the Governor’s request for additional funding for the Susitna-Watana project.  Representative Les Gara of Anchorage compared the potential power output of the proposed dam against the state’s current gas line project.

“We spent $170 million, so far.  Why would we spend another $32 million at the same time we’re working on a large diameter gas line that would provide more energy than we can use–about eight times more energy than we can use–in tight fiscal times?”

Director Rehfeld responded that the Susitna-Watana Project and a gas line are not mutually exclusive, and that the current plan is to develop them as complements to one another, with the gas line providing heating fuel and state revenue in addition to power.

Anchorage Representative Lindsey Holmes raised questions about the nature of the request, specifically why it is coming in the form of a supplement for fiscal year 2014 as opposed to an additional request for the 2015 fiscal year, which begins on July 1st.

“I guess, Mr. Chairman, I’m just wondering if this isn’t a little bit of a shell-game to put next year’s funding into a supplemental [request].  I don’t want to be that blunt, but I guess I’m going to be that blunt.  If we’re putting it into the supplemental, it doesn’t count against this year’s [budget] cap.  Is this really money that’s going to be used in fiscal year ’14, and then why only $10 million for next year?”

Director Rehfeld responded by describing how the funds would be pooled together with remaining funds from the current budget year in order to facilitate this summer’s field season.

“Then they would have not only about $30 million that’s remaining in the existing… appropriations that we have, plus the $32.7, and $10 million in the 2015 budget.  That should allow them to get all the way through next fiscal year.  Then there will be one more year, if everything stays on track, of additional funding necessary to get to the licensing application period.”

That additional year of funding is currently estimated by the state at just over $73 million, with an additional $244 million projected for engineering and pre-engineering work, should the project receive a license from the Federal Energy Regulatory Commission.

On Tuesday of this week, members of the Senate majority held a press conference, and did not answer definitively if the requested $32.7 million could be made available.  Senator Mike Dunleavy of the Mat-Su says that budget constraints mean that the legislature is likely to take a close look at supplemental requests.

“We’re actually looking at every penny we spend from this point forward, and we don’t necessarily want to get into projects that are partially funded with no hope of ever being fully funded or finished, so we’re having those discussions.  We’re really scrutinizing what we’re going to be doing from this point forward.”

Senator Dunleavy also says that the legislature is attempting to determine the answer to Representative Holmes’ question on whether the funds are for projects this fiscal year, or if the request is actually to fund research that would extend into next year’s budget.  Senator Pete Kelly of Fairbanks says that the nature of supplemental requests means that they are already under additional scrutiny.

“Anything that comes in the supplemental [budget] has a higher bar to hurdle to get into the budget because it is a look back in time.  So, we tend to scrutinize particularly large additions to the supplemental maybe at a higher level even than what we do on the current year’s budget.”

The Governor’s recommendation for supplemental funding is contingent upon the Alaska Energy Authority, which oversees Susitna-Watana, obtaining permits to access land owned by six village corporations and Cook Inlet Region, Inc.  AEA says they will have those permits by the end of this month.  Then legislators will have to decide which year the budget request belongs in and, ultimately, what to do about it.

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