PUBLISHED: 4:54 PM on Wednesday, March 5, 2008
Stevens concerned about future of Denali Commission
U.S. Sen. Ted Stevens says he is deeply concerned about the future of the Denali Commission, the joint federal-state agency that puts $100 million to $150 million a year into community infrastructure projects in recent years, mostly in rural areas.

"I'm very worried about the coming years unless we find a solution," to long-term funding, Stevens said in a Feb. 20 interview.

Stevens created the commission as a means to oversee projects to build and upgrade infrastructure in Alaska communities. For the past decade, Stevens has succeeded in funding the projects with federal money.

But today, federal funds are being cut and the state has put little money into the commission, even though it is intended to be a partnership between the state and federal governments, Stevens said in an interview.

Alaska's governor is co-chair of the commission along with a federal co-chair, and the state works with the commission in selecting projects to be funded.

In places with similar regional development groups, such as the Applachia Commission, on which the Denali Commission is modeled, the states contribute to programs, Stevens said.

Federal agencies have authorization to contribute funding, but annual appropriations still have to be made, the senator said.

The Alaska delegation's muscle in Congress has been the main assurance for the commission's annual funding.

Today, for a lot of reasons - such as the drag on the federal budget by war efforts and the aversion to federal earmarks - obtaining funding for any specially named project, including the Denali Commission, is more difficult.

The commission has about $110 million to spend this year, down from $130 million last year and $150 million three years ago. Federal co-chair George Cannelos is asking the state to step in with $30 million in state funds to replace diminishing federal money.

Cannelos said Gov. Sarah Palin has responded with a statement of support for rural development, but has made no commitments so far.

State budget director Karen Rehfeld, who usually sits on the commission as Palin's representative, was expected to give a more definitive response at the Denali Commission's quarterly meeting, scheduled for Feb. 28 in Juneau.

Last year the state did chip in a $7 million capital budget appropriation approved by the Legislature. It was the first time the state funded Denali Commission projects.

Cannelos said the commission's federal funding comes in separate streams from federal agencies tied to specific programs managed by the commission.

What concerns Cannelos this year is that funding for energy programs has taken a big hit. These funds support long-term programs to upgrade diesel power plants in rural communities, as well as repair aging bulk fuel storage tanks. The organization's new program on renewable energy also could be affected.

For this year, at least, funding is adequate for other commission programs, such as rural health clinics, transportation infrastructure and workforce training. But energy has been one of the commission's major priorities since the group was created a decade ago.

The reduction of Denali Commission energy project funding this year could cut in half the number of rural power plant and fuel storage upgrades that can be done, according to Mike Harper, director of the Alaska Energy Authority, the state agency that manages the facility upgrade projects.

Upgrading small diesel generating plants is important because new plants are more efficient and use less diesel, which reduces fuel bills. The upgrading of fuel storage tanks is important because unless these facilities comply with federal environmental rule, federal laws will not allow barge operators to unload fuel.

The U.S. Coast Guard has withheld a rigid enforcement of the tank farm rules as long as the upgrading program is underway. But if funding is stalled, the agency may have no choice but to enforce the rules and not allow fuel to be unloaded in some rural communities.

Reduced funding for renewable energy is particularly galling in view of high prices for conventional fossil fuels and the priority that both the federal and state governments have put on renewable energy, officials said.

The Denali Commission is helping fund new wind power projects in several communities, including planning for the Fire Island wind project near Anchorage.

The agency has also put money into innovative new forms of renewable energy, such as the Chena Hot Springs geothermal project that is now operating and an experimental river turbine planned for installation on the Yukon River at Eagle this year.