Alaska’s Resource Rebate: Is it enough to cover energy costs?
Governor Palin’s proposed $500 per person energy rebate morphed into a $1,200 per person resource rebate in July, with the hope of allowing Alaskans to decide how to spend their share of excess revenues from development of the state’s resources.
A recent ISER publication compares the proposed rebate with the increase in household energy costs for residents throughout the state. As with the earlier study mentioned in this blog, the energy costs include electricity and heating, but not vehicle fuel costs and other energy needs. What it finds is that virtually all of the households in Anchorage (97 to 99 percent) would collect more from the rebate than their energy costs had increased from 2006 to 2008. The numbers are similar for the increase in energy costs from 2000 to 2008: 87 to 94 percent of households would be overcompensated.
Residents in other road communities and more developed areas of the state would fare similarly. Households in the Mat-Su and Kenai Peninsula Boroughs would be overcompensated by 77 to 91 percent (or 62 to 81 percent for 2000 to 2008 increases). Households in Fairbanks, Juneau, and elsewhere would be overcompensated by 70 to 73 percent (2006-2008) and 47 to 59 percent (2000-2008).
In rural Alaska, however, the rebate would cover energy cost increases from 2006 to 2008 in about half of households, and would only cover the energy cost increases from 2000 to 2008 in about one-third of households.
Based on ISER’s findings, for the majority of households in the state, the rebate by far exceeds the increases in energy costs. Only communities in rural parts of the state have experienced increases in energy costs compared with the amount of the rebate.
Alaskans would be wise to spend their rebates carefully, however, as the less-mentioned effect of increasing fuel costs is the impact it has on the price of transporting food to and within our great state. The U.S. Postal Service increased shipping costs in May due to increased fuel prices. Along with the penny per stamp increase faced by consumers around the nation, bypass mail rates went up 9.5 percent, a cost passed on to rural customers of the AC Store, according to the Seward Phoenix LOG. As noted in the article, this increase follows increases in bypass mail rates of 12 percent and 7 percent in the prior two years.
The impact of higher transportation costs on food prices was covered in the July 2008 issue of Alaska Economic Trends. While Anchorage’s inflation rate was only 2.2 percent in 2007, during the first three months of 2008 data collected on food costs suggests that food prices increased 10 percent. Areas with air and seasonal barge access face the most expensive food.
It remains to be seen how quickly, or if, the resource rebate checks will start to arrive in mailboxes, but one thing is clear: whether it be food or fuel, Alaskans are paying more for many of the items they purchase on a regular basis.
July 28th, 2008 at 8:13 am
he wind does not blow often enough and/or strong enough for it to be a consistent and reliable source of power. There has been study after study to prove this fact. So why would a company like Nushagak want to invest in wind energy when its customers demand constant and reliable energy? To prove this point the one person in this town that has put up the wind mills has not disconnected his service. So now here is the bigger problem for the community; those wind mills are too expensive for most people in this town. So the few that can afford to put them up, now want to make money by selling electricity. This may sound ok but here is the issue. As mentioned before wind is unreliable. So when the wind is blowing enough for this one individual to actually produce a surplus it isn’t enough power for Nushagak to pull a generator off line which means its operating cost do not go down.—————————————johnsmith
Alaska Treatment Centers
August 14th, 2008 at 1:18 pm
Rebates are like a painkiller; you don’t feel the pain as much for now but the cause of the pain is only masked and may be getting worse.
If the State provides subsidies it only raises the floor. Those who can’t pay for energy should find other means to reduce their energy costs. In the classic supply and demand curve, rebates and subsidies only shift the curve – prices can now be $1,200 higher before people start to find alternatives.
Wind, geothermal, waves, hydrogen and even solar can contribute to bring down overall costs. If we can diversify our financial portfolio it should be obvious to diversify our energy portfolio. Consumers should spend the $1,200 on insulation; the State would be better off encouraging alternative energy sources.
July 22nd, 2009 at 7:44 pm
I think it is fantastic how the stimulus funds are making a difference. They are being taken advantage of all the time with the installation of geothermal heat pumps to replace high energy heating and cooling systems.