JUNEAU, Alaska (AP) — A state court judge on Wednesday sided with a coalition including the Alaska Federation of Natives and electric cooperatives that had sued Gov. Mike Dunleavy to force the release of money intended to help lower rural utility costs.

Superior Court Judge Josie Garton barred the state from sweeping the nearly $1.2 billion Power Cost Equalization Endowment Fund into a budget reserve account. She also said program funds that were appropriated by lawmakers but held up amid the dispute are to be distributed.

The Alaska Department of Law, which defended the administration, was reviewing the ruling.

Under the state constitution, money taken from the constitutional budget reserve is to be repaid. For years, lawmakers have relied on the reserve to help fund state government amid deficits. Dunleavy’s administration in 2019 found the Power Cost Equalization fund was among the pots of money subject to being swept into the reserve at the end of a fiscal year.

Then-Attorney General Kevin Clarkson said the intent of the budget reserve would be circumvented if lawmakers could “simply create accounts within public corporations and then appropriate revenues to those accounts” to avoid paying the budget reserve back.

A legislative attorney has said the sweep happens automatically. Action to reverse it and return funds to their original accounts requires three-fourths support in each the House and Senate. Lawmakers have previously supported doing this, including in 2019.


This year, however, lawmakers failed to garner the required support.

The Alaska Energy Authority, a public corporation of the state, helps administer the power cost equalization program. The authority says the program reduces rural customers’ electric rates to levels comparable to those paid in urban Anchorage, Fairbanks and Juneau. Utilities are reimbursed for credits they extend to customers.

Plaintiffs’ attorneys argued the Dunleavy administration in 2019 identified without “any legal explanation or justification” a larger list of accounts subject to being swept into the budget reserve than prior administrations, including the power cost equalization fund. They said the endowment fund is not subject to the sweep, in part, “because it is a separate fund that exists outside of the general fund.”

Attorneys for the Department of Law said the 2019 review took into account a prior state Supreme Court decision.