Published in the Juneau Independent, March 22, 2026. Full Article Here.
By Jason Custer
Alaska is once again riding high on the strength of oil revenues, with a possible $545 million flowing into state coffers during the current fiscal year due to higher oil prices. This is welcome news for policymakers and residents alike. But it also presents a familiar and uncomfortable paradox; the very forces boosting state revenue are poised to inflict serious economic pain on many Alaskans, particularly those in rural communities.
As oil prices rise, so too will the cost of energy across much of rural Alaska, which continues to depend heavily on diesel-fired generation of electricity. While there may be a lag before these increases reach consumers due to FIFO-style pricing methods, the direction is clear. Households and small businesses in remote communities like Kotlik, Nome, Allakaket, Gambell and Atka — already paying some of the highest energy costs in the nation — will soon face another wave of price shocks. These will not be minor fluctuations, but the kind of sustained cost pressures that can destabilize family budgets, strain local economies, and deepen inequities between urban and rural Alaska.
For years, the Power Cost Equalization (PCE) program has served as a critical buffer, helping to offset high electricity costs in eligible communities. But that buffer is now stretched to its limits. Even before oil prices surged, the fund was operating at the ceiling of its annual payout. It currently lacks the capacity to absorb another surge in costs. In short, the safety net is still there, but it will not stretch any further.
This moment calls for more than short-term patchwork. It calls for foresight.
The Renewable Energy Fund (REF) offers a path to stability. Designed to support projects that reduce long-term energy costs and increase local resilience, the REF has already helped bring hydro, wind, solar, and other innovations to communities across the state. These investments are not just environmentally sound; they are economically prudent and subject to third-party verification by the Alaska Energy Authority’s energy engineering and finance professionals. By reducing dependence on imported diesel, REF projects insulate communities from the very volatility we are now confronting.
The fiscal case for continued investment is compelling. Per the Alaska Energy Authority’s website, REF-funded projects currently offset an estimated 13 million gallons of diesel each year. Valued at an extremely conservative rate of $4 per gallon, that equates to approximately $52 million in avoided fuel cost statewide. That cost-savings figure exceeds the current annual payout capacity of the Power Cost Equalization (PCE) Endowment and is more than a 5% annual draw on a $1 billion fund.
The question, then, is not whether Alaska can afford to invest more in the REF; it is whether we can afford not to.
There are $41.2 million in total Renewable Energy Fund requests this year that have been successfully vetted by the Alaska Energy Authority. Allocating a portion of the $545 million in additional revenue to the REF would be a strategic use of windfall funds. It would convert short-term gains into long-term stability, and recurring cost-savings. It would acknowledge that while the state may benefit from high oil prices today, many of its residents will pay the price tomorrow.
Alaska has been here before — caught between boom and bust, between revenue and risk. The difference now is that we have better tools and clearer investment opportunities. We can continue to react to crises as they unfold, or we can invest in solutions that reduce the severity of those crises in the first place.
Dedicating a portion of this unexpected revenue to the Renewable Energy Fund would not solve every challenge overnight. But it would mark a meaningful step toward a more stable, more equitable energy future for rural Alaska.
The state is benefiting tremendously from volatility. It should also help protect those who are most vulnerable to it.
Jason Custer is the VP of Corporate Development at Alaska Power & Telephone and serves on the Southeast Conference Board of Directors.