Energy woes for the Bush: rural areas suffer from energy shortage due to high cost of oil and transportation.

• Author: Martin, Gary L.
• Position: Alaska Native: BUSINESS NEWS

It might be difficult to understand why Alaska, a state blessed with so many natural resources--especially oil and gas--can have segments of its rural population endure extreme prices and shortages of energy.

Charles Parker, director of the professional services group for the Alaska Village Initiative in Anchorage, says there are communities that can barely afford to pay their energy bills each year. He also says that there have been small villages that have been abandoned due to a lack of affordable energy.

Mike Harper, deputy director for the Rural Energy Group, a wing of the Alaska State Energy Authority, supports that and attributes the situation to the rise in the fuel costs and its transportation to the Bush communities.

"If you live in Anchorage," he said, "you probably pay 10 cents or 11 cents a kilowatt-hour, or between $75 and $100 a month for your electricity. That's because it isn't too expensive to transport fuel from the Lower 48. Now, to take it to the villages, it has to be transported to Bethel, where it is transferred to small barges that can make it up the Kuskokwin River. Many of the rural villages are generally located along the coast or rivers in the northern and western areas.

50 CENTS PER KILOWATT-HOUR

"Those communities can easily pay 50 cents a kwh. And even more for the villages--like Sleetmute--that have to get their fuel by aircraft instead of barges and trucks."

To that, add the upward-spiraling cost of gas and the ballooning price of oil. Just five years ago, the average price of diesel fuel was just below $1.50 a gallon. As of July 15, 2005, that figure had jumped above $9.10.

Once the village pays for the fuel and it is delivered, there is still the cost of maintaining the storage facilities and equipment to run the power plant. Most villages must have enough storage for a year's supply of fuel.

REG PROGRAMS

Harper also said that the REG is involved in many programs to help meet those needs. It has partnered with the Denali Commission to work on projects totaling more than $150 million under the Rural Power System Upgrade, or RPSU, Program.

"Most of that has gone for bulk fuel farms, powerhouse generators and power plant upgrades," he said. "So far we've done that for about 50 villages and we're only about halfway through."

Other programs that REG is involved with include the Power Cost Equalization Program, which offers a grant to help offset the high cost to individual families and businesses, and the...