Palin vetoes $26.5 million in MEA grants

July 3, 2007

By Russell Stigall / Frontiersman

MAT-SU - Matanuska Electric Association watched its third strike cross the governor's plate Friday when Gov. Sarah Palin vetoed $26.5 million from the co-op's Railbelt Energy Fund request. The veto was the third time a governor has vetoed MEA.

Member-owners will have to foot the entire bill for select new capital improvements based on Palin's line-item veto from the 2008 state budget of two grants MEA requested from the Railbelt Energy Fund. The grants were part of about $230 million Palin vetoed from the FY 2008 state budget. The trimmed budget totaled $1.6 billion.

Alaska created the Railbelt Energy Fund in 1985 to help electric co-ops along the Railbelt from Fairbanks to Seward and Homer to develop projects that meet increasing energy demands. Golden Valley Electric Association in Fairbanks has been allocated $80 million from the fund and Municipal Light and Power in Anchorage $19 million. MEA's $12.5 million and $14 million grants would have gone to infrastructure improvements and a new transmission line.

MEA spokesperson Lorali Carter said the co-op was surprised and disappointed by Palin's veto.

“The money would have gone to projects critical for the area,” Carter said, adding the grants would not have wholly funded the two projects.

“But they would have significantly helped to cover that cost,” she said. “Now we will need to go to MEA rate-payers.”

MEA is prepared to fund the projects without help, Cater said. But the state started a fund to help co-ops pay for big projects.

“We would be remiss not to ask for our share as well,” Carter said.

Palin is not the first governor to leave MEA empty handed after the co-op lobbied for a portion of the Railbelt funds. Govs. Frank Murkowski and Tony Knowles both vetoed MEA's grant requests; however, Murkowski was later unsuccessful when he tried to overturn his veto.

MEA board member Peter Burchell said the message from Palin, Knowles and Murkowski was for the Railbelt co-ops to cooperate more.

“The fund is for reliable and cost-effective energy all along the Railbelt, not just for MEA,” Burchell said.

At a press conference June 29 Palin said she vetoed MEA's Railbelt grants so the state could wait for the completion of a comprehensive study of the Railbelt's long-term energy needs.

MEA plans to build two new electric generators in the Mat-Su Valley and sever its decades-old contract with Chugach Electric Association when it expires in 2015.

Carter said she does not believe Palin vetoed the co-op's grants as a sign for Railbelt electric co-ops to cooperate more.

“There are areas where the Railbelt utilities can work together,” she said. “We worked with co-ops to come to an agreed-upon distribution of the fund. We are just not working together on a mega-project.”

MEA came under fire during the legislative session for appearing to lobby against the Fire Island Wind Farm cooperative project; however, Carter said MEA helped Chugach get $15 million in Railbelt funds “for their No. 1 priority, the wind farm.”

Burchell said Palin's veto also represents the governor's favorable attention to renewable energy. At MEA's annual meeting Palin talked about alternative and renewable energy options. MEA plans to produce at least 10 percent of its power from renewable resources by 2015, according to the organization's Integrated Resource Plan. The remainder of the power is proposed to come from a coal-fired power plant and a natural gas-fired plant.

In June, MEA General Manager Wayne Carmony sent a letter to Palin “in response to questions posed about Railbelt Energy Fund appropriations approved by the Legislature,” Carmony says in the letter.

The $14 million grant was needed to partially fund a transmission line from Willow to Talkeetna to act as a “frontage road” to Golden Valley Electric Association's new bulk power “super-highway” transmission line, Carmony said. If MEA does not build its new transmission line the bulk line would “cut off affordable service or access to the people along the way.”

MEA's $12.5 million grant would have funded a substation for the co-op's new transmission line feeding Mat-Su Regional Hospital. Carmony also told the governor that MEA's and Chugach Electric's grants would do good by emptying the fund.

“So that the Legislature and administration will not be faced with incessant lobbying for competing uses of these monies,” Carmony said.

An Office of Management and Budget document says Palin could consider the grants in a future budget.

Contact Russell Stigall at 352-2267 or russell.stigall@frontiersman.com