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S. HRG. 110–637 

THE IMPACT OF HIGH ENERGY COSTS IN 

RURAL ALASKA NATIVE COMMUNITIES AND 

OPPORTUNITIES FOR ALTERNATIVE AND 

CONVENTIONAL ENERGY DEVELOPMENT 

FIELD HEARING 

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

AUGUST 28, 2008 

Printed for the use of the Committee on Indian Affairs 

( 

(II) 

COMMITTEE ON INDIAN AFFAIRS 

BYRON L. DORGAN, North Dakota, Chairman 

LISA MURKOWSKI, Alaska, Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

DANIEL K. AKAKA, Hawaii 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

JOHN MCCAIN, Arizona 

TOM COBURN, M.D., Oklahoma 

JOHN BARRASSO, Wyoming 

PETE V. DOMENICI, New Mexico 

GORDON H. SMITH, Oregon 

RICHARD BURR, North Carolina 

ALLISON C. BINNEY, Majority Staff Director and Chief Counsel 

DAVID A. MULLON JR., Minority Staff Director and Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on August 28, 2008 ........................................................................... 1 

Statement of Senator Murkowski ........................................................................... 1 

WITNESSES

Andersen, Ralph, CEO, Bristol Bay Native Association; Chairman, Alaska 

Federation of Natives’ Energy Working Group ................................................. 6 

Prepared statement .......................................................................................... 8 

Hoffman, Ron, President/CEO, AVCP Regional Housing Authority; President, 

Association of Alaska Housing Authorities ........................................................ 56 

Prepared statement .......................................................................................... 58 

Leask, Janie, President/CEO, First Alaskans Institute ....................................... 13 

Prepared statement .......................................................................................... 15 

Mello, Chris, Program Manager, Alaska Energy Authority ................................. 21 

Prepared statement .......................................................................................... 22 

Middleton, Dr. Robert W., Director, Office of Indian Energy and Economic 

Development, Department of the Interior .......................................................... 84 

Prepared statement .......................................................................................... 85 

Morello, Steven J., Director, Office of Indian Energy Policy and Programs, 

Department of Energy ......................................................................................... 77 

Prepared statement .......................................................................................... 80 

Naneng, Myron, President, Association of Village Council Presidents ............... 30 

Prepared statement .......................................................................................... 34 

Nicholai, Matthew, President/CEO, Calista Corporation ..................................... 40 

Prepared statement .......................................................................................... 44 

Peltola, Gene, President/CEO, Yukon-Kuskokwim Health Corporation ............. 49 

Prepared statement .......................................................................................... 53 

Williams, Mike, Chairman, Alaska Inter-Tribal Council ..................................... 18 

Prepared statement .......................................................................................... 20 

APPENDIX

AVCP, Calista Regional Energy Plan Draft .......................................................... 106 

Berger, Carl, Executive Director, Lower Kuskokwim Economic Development 

Council, prepared statement ............................................................................... 99 

Bullard, Loretta, President, Kawerak, Inc., prepared statement ........................ 102 

Rural Energy Action Council—Findings and Action Recommendations for 

Governor Frank Murkowski ................................................................................ 147 

Wallace, John, Resident, Bethel, Alaska, prepared statement ............................ 99 

(1) 

THE IMPACT OF HIGH ENERGY COSTS IN 

RURAL ALASKA NATIVE COMMUNITIES AND 

OPPORTUNITIES FOR ALTERNATIVE AND 

CONVENTIONAL ENERGY DEVELOPMENT 

THURSDAY, AUGUST 28, 2008 

U.S. SENATE, 

COMMITTEE ON INDIAN AFFAIRS, 

Bethel, AK. 

The Committee met, pursuant to notice, at 9:30 a.m. on the University of Alaska—Fairbanks Kuskokwim Campus, Hon. Lisa Murkowski, Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Good morning. We’re calling to order this 

meeting of the United States Senate Committee on Indian Affairs, 

a field hearing to be held here in Bethel, Alaska. 

Welcome to you all. I think it is incredibly significant that we are 

gathered here together in Bethel to listen to some individuals that 

will present various perspectives on what the impact of high energy 

costs are having on, not only our communities, but our families, 

and individuals here in Bethel, in the surrounding areas. I do believe that this is the first time that a field hearing of a Senate 

Committee, certainly the Senate Indian Affairs Committee, has 

ever been held out here. So for those of you from the Bethel boarding school here, you’re witnessing history for the first time, so pay 

attention. 

[Laughter.] 

Senator MURKOWSKI. I would like to convey a special welcome to 

a couple of our out of town guests. We are privileged this morning 

to be joined by Representative Nancy Dahlstrom. Representative 

Dahlstrom has been in the Legislature now, I think, six years, and 

represents my old district and has done a good job for us there in 

Juneau. She’s joined by Representative Bob Roses. Bob is also from 

the Anchorage area and you’re working on your fourth year. 

Representative ROSES. Well, hopefully, up until the next election. 

Senator MURKOWSKI. All right. 

[Laughter.] 

Senator MURKOWSKI. A little advertisement there for you. But I 

think it is very important, I think quite significant that we have 

other policy-makers from the state here to just listen, to hear what 

is going on in this region. We recognize that as State legislators we 

2 

represent our own constituency but it is broader than that, and so 

your willingness to observe and to hear the testimony today is 

greatly appreciated and we thank you. 

I also want to acknowledge Senator Lyman Hoffman. Senator, I 

don’t know how long you’ve been serving this district out here but 

it’s been so long and so good that we all forget the number of years. 

Senator HOFFMAN. I’m starting my 23rd year. 

Senator MURKOWSKI. 23rd year, all right. 

[Applause.] 

Senator MURKOWSKI. Well, we truly appreciate that. And we also 

know that it is a challenge for you in a Legislature that is predominately urban legislators. It’s a challenge to explain some of what 

happens in your very extensive district. We’re going to be joined by 

Bob Herron, who we congratulate on your successful election Tuesday. We know that you’ve got a job going down there, but you’ll be 

teaming up with Lyman. We were hoping that Mary Nelson would 

be here with us. I ran into her in the airport, she has done a fine 

job representing you in the Legislature for years and years and we 

wish her well as she moves on. 

We do have a very distinguished panel this morning. I will introduce each of them at the conclusion of my opening remarks and 

give you a little bit of their brief background. 

The hearing here this morning has a very multi-faceted purpose. 

And we recognize that with the high energy prices that we face 

throughout this state and certainly throughout rural Alaska, you 

don’t need me to tell you that we are at all time record highs. We 

know that the prices are so high that it’s making it difficult for 

people to truly survive. Now, I know that we’re going to be receiving very instrumental and helpful testimony this morning. But yesterday when I flew in, I had the opportunity to visit several of the 

grocery stores, to go by the gas station, to talk to people in the grocery stores, to go over to the VFW hall to meet with some of our 

veterans and active Guard folks, and then to meet with some of the 

community leaders at a dinner last night; and I have to tell you, 

when you go to bed thinking about the young woman who’s moved 

in from one of the small villages because she couldn’t live out there 

and she comes into town and she’s excited because she has a job 

and that’s good but she has no place to live, and when you talk to 

the Veteran who’s been here for 44 years and has made the decision that he now has to leave, or when you run into the guy in the 

grocery store who says he’s had a successful business here for 15 

years, but he’s going to have to close; and when you hear the stories about people who deny themselves health care because they 

live in an outlying village and they can’t afford the price of an airplane ticket to come to town and so they wait and they wait and 

they wait until it then becomes an emergency and they’re able to 

be medivac’d in, and YKHC will then pay for that ticket, but they 

put their life at risk because they can’t afford the price of that airplane ticket because of the energy prices. This is a reality that you 

all are living with, that those of us who are not living here day to 

day can’t fully appreciate the extent of. So what I’m hoping that 

we get this morning is a clarification, an explanation of what it is 

so that this becomes part of the United States Senate Indian Affairs Committee record, so that my colleagues, they that might not 

3 

be able to see it for themselves, but they can read it and perhaps 

better appreciate the challenges that you face on a daily basis. 

We’ve got incredible potential here in Alaska when it comes to 

energy resources. It’s kind of the blessing and the curse, you almost 

have so much of it you don’t even know where to begin. 

Now, we’re limited in our time here this morning. We are scheduled to receive testimony from three panels of witnesses. I’ve been 

asked already if others may be allowed time to speak. Under the 

procedures of the Senate and how we operate field hearings, it’s invited testimony, so those people who have been invited to speak 

today as part of these three panels will be the individuals that you 

will hear publicly. But I invite you all, the hearing record will remain open through September 12th, and any one of you is free to 

email or to write, to provide your statements, your comments, and 

those will be made part of the permanent record. The email address is testimony@indian.senate.gov and my staff will give you the 

mailing address after the hearing if you prefer to mail, you know, 

a hard copy. In addition, I will be available after the hearing for 

a little bit, I don’t have to get on the jet until 2 o’clock, so I think 

I’ve got to be out of here by about 1 o’clock, I’ll be available, my 

staff will be available and we will welcome your thoughts. 

I want to recognize my staff that are with me from Washington, 

D.C. To my left I have Chuck Kleeschulte. Mr. Kleeschulte handles 

my energy issues back in Washington. To my right I have Megan 

Alvanna-Stimple. Some of you may recognize her and know her, 

her family is from Nome. Megan is working on the Indian Affairs 

Committee. We have Eamon Walsh to Megan’s right. He is on Senator Dorgan’s committee staff and we welcome him; this is his first 

visit to Alaska, so this is an eye opener for him, and he’s going to 

have an opportunity to tour a little bit this afternoon. I also have 

Nathan Bergerbest, who is back in the corner. Many of you know 

Nathan. He handles my Indian Affairs matters and we greatly appreciate his assistance as well. We have a couple others that were 

supposed to be here but I guess they missed the plane; welcome to 

Alaska, right. 

[Laughter.] 

Senator MURKOWSKI. Now, I’ve mentioned a little bit about my 

experience yesterday going through the stores and just kind of appreciating what it is that you’re paying here as families. I want to 

put some statistics in the record, again, so that not only—not so 

much for your benefit, but for the benefit of those who will be reading the record of this Senate proceeding. According to the Alaska 

Municipal League, Atka holds the record for the highest fuel price 

in Alaska, $8.95 for diesel, $8.65 a gallon for gasoline. When I went 

down to the gas station here, it was $5.99 or 98 cents, right about 

in there. But we recognize that all of Alaska is wobbling under 

record energy prices. Statewide average gasoline price is about 

$4.55 a gallon. For those of you here in Bethel you’re probably 

thinking that that’s a heck of a deal. 

What I’m hoping that we gain from this hearing this morning is 

solid data on how these price increases, the startling price increases, how they’re affecting average Alaskans and Alaskan communities. We hear about these energy refugees, those who flee the 

rural communities for the urban centers where the prices are lower 

4 

because they’re, quite honestly, fearful that they’re not going to be 

able to make it through the winter, they can’t pay for the electricity, they can’t afford the fuel for their vehicles or for their 

ATVs, they can’t get to work, they can’t do their subsistence hunting. The stories out there about what is happening are more than 

just stories, I mean they are real. I had a conversation with a gentlemen with the EPA, a sanitation engineer, who’s been working on 

projects all around rural Alaska, and his observation that we have 

several communities where the individuals aren’t able to pay for 

their water and sewer because they’re having to pay more for their 

fuel and so their utility service is cut off and all the efforts that 

we have been attempting to make when it comes to putting the 

honey bucket in the museum, the old saying, we’re going backwards on it, we’re having communities that are recognizing that 

they’re not able to pay for the systems that we have provided for 

them. Just last evening I heard that in the community of 

Tuntutuliak, the community well, the water service, has been shut 

down. Essentially you’re told, well, you can buy your bottled water 

or you can get water from the river. This should concern us all in 

terms of how we are going backwards, instead of advancing insofar 

as providing, not only services, but for the health and sanitation 

needs of the people in the regional areas. 

I want this hearing to produce, perhaps a true picture of how difficult things have become in rural Alaska, and better yet what the 

witnesses might suggest that we, at the federal level, might be able 

to do to help ease the energy costs. 

I’d like to hear, not only from those from the individual perspective, but what is the impact on the businesses, on the health care 

systems, on the institutions themselves. We all know that energy 

is a key ingredient in the cost of health care in rural Alaska, keeping the village clinics and the hospital heated, the cost of medivacs 

from the villages, we are just hearing terrible horror stories about 

those costs. And while we’re working in Washington to increase the 

funding for IHS, I’m very concerned that what we may be seeing 

are increases that are intended for health services will, of necessity, be diverted to energy costs. We know that rising energy costs 

are making it far more expensive for the entities from the local 

school districts, we heard some of that last night, to the YKHC to 

provide services to the clients, making it a huge challenge to provide existing services to those who need it. 

I am hopeful that at this hearing we’ll be able to provide information about what we, in Congress, should be doing to encourage 

the development of reliable, affordable domestic energy over the 

short-term and over the long-term. We know that we are extremely 

rich in renewable energy resources. We’ve got more than any other 

state out there. You look at the wind, you look at the potential 

through the ocean energy, the hydro-kinetic energy from our rivers. 

Look at what we have in the Southeast in terms of our hydro 

power and what is available there. We have incredible resources 

when it comes to geothermal and our ability to tap the potential 

from under the earth here. We’ve got the potential to do so much 

more when it comes to renewable energy resources, but what we 

need, what we lack is that necessary capital infrastructure to advance these projects. 

5 

* The information referred to is printed in the Appendix. 

Renewables offer us that, hopefully, lower cost alternative. And 

we recognize that when it comes to the sustainable energy out in 

rural Alaska, this is where the future is. 

I do hope that we will hear this morning about the draft AVCP, 

Calista Regional Energy Plan * that emphasizes natural gas, wind, 

hydro, and biomass. All over the state we’ve been seeing efforts at 

the regional level to develop regional energy plans. I know in 

Northwest Alaska, in the NANA region, they recently have developed a plan. The Seward Peninsula has one. Southeast. The Aleutians, they’re in the process of crafting one. And the Interior, Fairbanks, has just finished one. The Kenai Peninsula, along with the 

Mat-Su and Anchorage produced one last year that state administration, of course, is in the process of producing a new statewide 

plan that is likely to be finished this fall. So there’s a lot going on, 

good and interesting concepts. 

And, then, finally, I hope that we’ll hear testimony on what Congress should be doing to help rural residents and Alaska Natives 

tap these energy sources that are located on their own lands, both 

to cut the power costs, but also as an income source for Native corporations and their subsidiaries. 

We’ll have an opportunity to hear from the representatives from 

both the Department of the Interior and the Department of Energy 

in what we can do to get on with funding the policy initiatives that 

were contained in the Energy Act that we passed several years ago 

to help fund the development of Indian Native Energy Projects on 

reservation lands and the Native-owned lands, little of which, quite 

honestly, we have funded, so I look forward to the updates from the 

two federal witnesses. 

There are some initiatives out there. People have said, well, what 

is it that you can do to help, what is out there? We succeeded in 

winning approval for an Alaska Renewable Energy Deployment 

Grant Program for renewable energy projects for the state of Alaska in last year’s Energy Independence and Security Act. Now, the 

problem is you get the authorization for it but we have not yet got 

the appropriation. We’ve got to fund it in order for this authorization to do anybody any good. 

So I’m looking forward to the testimony of the individuals this 

morning for the establishment of a record as to what we’re facing 

out here in terms of the economic, the social conditions that rural 

Alaska is facing caused by these high energy prices, and what the 

Federal Government can do to help alleviate the problems, both in 

the short-term and in the long-term. 

I think we recognize there are no silver bullets. There are no 

quick and easy fixes. The Legislature wrestled with this in their 

special session not more than a month ago, so it’s an initiative that 

we all must be engaged in together. 

With that, and I apologize for taking more than my share of time 

here, but I would like to move to our witnesses and give you a brief 

overview of all of the panels and then we will move to the first 

panel. 

We’re joined this morning by Ralph Andersen. Ralph is the CEO 

of the Bristol Bay Native Association. He’s the Chair of the Alaska 

6 

Federation of Natives Energy Committee. Ms. Janie Leask, the 

President and CEO of the First Alaskans Institute on the Board of 

Trustees there. Mr. Mike Williams, appreciate you joining us here 

this morning, Mike, and your testimony as well. Mr. Chris Mello 

with the Alaska Energy Authority. 

On our second panel this morning, we will hear from Myron 

Naneng who’s President of the Association of Village Council Presidents. Matthew Nicolai, the President and CEO of Calista. Gene 

Peltola, President and CEO of Yukon-Kuskokwim Health Corporation. Ron Hoffman, CEO of AVCP Housing Authority and president 

of the Association of Alaska Housing Authorities. 

And then on our third panel we have our federal witnesses, Mr. 

Steve Morello, whose Director of the Office of Indian Energy Policy 

and Programs out of the Department of Energy in Washington, 

D.C. And joining him is Mr. Bob Middleton who is the Director of 

the Office of Indian Energy and Economic Development in the Department of Interior. 

Unfortunately, as you know, Senate protocol says we ask that 

you try to limit your testimony to five minutes. Your full statement 

will be included as part of the record so if you would like to supplement that through your oral testimony here this morning that’s always most welcome. 

And with that, Ralph, if we can start the first panel off with your 

comments and, again, thank you for joining us this morning. 

STATEMENT OF RALPH ANDERSEN, CEO, BRISTOL BAY 

NATIVE ASSOCIATION; CHAIRMAN, ALASKA FEDERATION OF 

NATIVES’ ENERGY WORKING GROUP 

Mr. ANDERSEN. Good morning. Thank you Madam Chairman. I 

was sitting here, while listening to your remarks, that being the 

lead off speaker, I’m kind of the warm up for this distinguished 

group of panelists and for the whole other panels that will follow 

me. As you said my name is Ralph Andersen, I’m the CEO of the 

Bristol Bay Native Association. I’m here as the Chairman of AFN’s 

Energy Working Group. 

Thank you for holding this hearing today on the extremely important issue of high energy costs in rural Alaska. Alaskans, especially in our rural communities are experiencing an energy crisis 

unlike anything that we’ve seen in the past and it’s not likely to 

improve in the short-term. While all Americans suffer from the rising costs of gas and home heating fuel, the impact is unbelievable 

in our rural communities, threatening the very survival of many of 

our villages. Most of our rural communities are not on any power 

grid, and are dependent on petroleum for three major uses; space 

heat, transportation and electricity. Heating fuel prices in some villages have gone as high as $11 per gallon. In the winter months 

a home can use between 220 or 275 gallons each month. This 

equals to about $2,400 to $3,000 per month per home. We simply 

can’t afford to meet these prices now or over the long-term without 

help. Our regional village economies and everything else are affected by the high cost of fuel. Groceries, fresh milk, a dozen eggs, 

airline tickets, toothpaste, medicine, diapers, clothing, lumber and 

building material, car and truck parts, everything have gone up in 

price. 

7 

The State of Alaska Department of Commerce and Community 

and Economic Development expects the price of heating oil to rise 

from 30 to 50 percent this winter. It is entirely possible that thousands of our fellow citizens will not be able to pay their heating 

and electric bills this winter and still buy food and the other necessities of life without additional emergency relief. Making the situation worse is, for most families, is the price of gas is limiting their 

ability to gather food for the winter, to gather subsistence food. 

Now, with the high cost of gas fewer families can afford to hunt, 

fish, and gather subsistence food and pay their heating and electric 

bills at the same time. For some families it’s become a choice between putting food on the table or heat and electricity in the home. 

We encourage the state of Alaska to adopt a long-term energy 

plan, one that covers every region of the state which has an overall 

goal of equalizing energy costs for all Alaskans. We are hopeful 

that such a plan will be adopted before the end of the year. 

While working to transition to alternative or renewable energy, 

that future is a long ways away. Until then coal and oil and natural gas will remain indispensable to meeting the total projected 

energy demand and Alaska is rich in those resources. We’re going 

to need help during the period of transition. 

Over the summer AFN’s Energy Working Group met four times 

and had very productive meetings. We developed a matrix of shortterm and long-term actions that could be taken by the state and 

Federal Governments by individuals and by private industry. A 

copy of that matrix is attached to my written testimony which I’ve 

submitted. I’d like to list, briefly, the top five recommendations 

that we came up with. 

One, strengthening the Power Cost Equalization Program by 

fine-tuning its mission, adding more resources and expanding the 

eligibility requirements. 

Two, buy down debt of rural utilities in order to reduce costs 

passed on to consumers, and include a price cap on fuel stock purchased prospectively, with a mechanism for reimbursement from 

the state for costs in excess of the cap. 

Three, expand and support bulk fuel purchasing, transportation 

and cooperative purchase agreements and contribute to the Denali 

Commission’s bulk fuel storage program in order to eliminate the 

storage backlog and to complete rural upgrades. 

Four, provide a family fuel subsidy to help meet the immediate 

crisis. 

Five, make a sizeable investment in projects that promote renewable or alternative energy and conservation efforts. 

The Legislature also, at the special session, suspended the state’s 

motor fuels tax for a year and increased the bulk fuel revolving 

loan fund and bridge loan program funding. All of the steps will 

help with the immediate crisis, but fall far short of what is needed 

for the long-term. 

Turning to viable sustainable energy solutions. AFN and its 

member organizations are strong supporters of the development of 

alternative energy resources as an important addition to our country’s fossil energy resources. Many villages in rural Alaska are actively working to develop a wide array of alternative and renewable 

energy projects. 

8 

Alaska is so large and diverse that one village’s alternative resources may not be available elsewhere. There’s no one size fits all 

solution for rural Alaska. There’s no cookie-cutter approach. Making local solutions more specific and more expensive. Because of the 

vastness of Alaska and its virtually unlimited potential Alaska can 

be a model for the rest of the country. Our communities could be 

part of a national demonstration project on alternative energy technologies. We could serve as a proving ground to show our rural 

Alaska Native people and our institutions have the experience, capital and partnership to effectively implement workable solutions to 

the energy crisis. Investing now in renewable energy development 

will bring down energy costs and create jobs. 

In terms of what Congress can do to address the energy crisis we 

have the following suggestions, and there are nine. 

One, provide significant increases in the needs-based Low Income 

Home Energy Assistance program, the LIHEA program and urge 

the state to add its own additional appropriations for this program. 

Two, increase funding for the Denali Commission. 

Three, enact a comprehensive energy bill to decrease energy demand over the long-term and increase energy efficiency. 

Four, fully fund and implement the Energy Independent and Security Act of 2007, which was authorized in 2006. 

Five, provide incentives and funding for the creation of regional 

energy authorities in Alaska. 

Six, increase the supply of energy by encouraging exploration 

and development of private, state and federal lands both on shore 

and off shore. 

Seven, work closely with the state of Alaska to ensure that in the 

development of a natural gas pipeline our communities have access 

to the natural gas that will pass through the pipeline. 

Eight, provide consumers with energy rebates and economic incentives to conserve energy. 

Nine, enact and fund Senate Bill 2232, the Native American 

Challenge Demonstration Project to help us meet our energy needs. 

We request that the committee mark up this bill when it returns 

as part of the strategies to address the energy crisis in rural Alaska. 

Thank you for the opportunity to testify today Madam Chairman. 

Again, the high cost of energy is an enormous issue for us. We 

want to be part of the solution. We look forward to working with 

both Congress and the state to address the issue. 

[The prepared statement of Mr. Andersen follows:] 

PREPARED STATEMENT OF RALPH ANDERSEN, CEO, BRISTOL BAY NATIVE

ASSOCIATION; CHAIRMAN, ALASKA FEDERATION OF NATIVES’ ENERGY WORKING

GROUP

Good Morning. My name is Ralph Andersen. I am the Chief Executive Officer of 

the Bristol Bay Native Association (BBNA), and Chairman of the Alaska Federation 

of Natives’ Energy Workgroup. I also serve as Co-Chair of AFN’s Human Resources 

Committee composed of the Chief Executives of the 12 regional non-profits. BBNA 

is a non-profit tribal consortium that provides vital services to over 30 rural villages 

in southwestern Alaska. Today, I am testifying on behalf of AFN, as Chairman of 

the Energy Working Group. AFN is a statewide Native organization whose membership includes over 200 villages and tribes, 13 regional Native corporations and 12 

non-profit tribal consortia, including BBNA, that contract and run federal and state 

programs. 

9 

I know many of AFN’s member organizations would like an opportunity to provide 

testimony on how the high fuel prices is impacting them, so I request that the 

record be kept open for a period of time to allow our tribes and corporations and 

interested individuals to provide additional written comments. 

Alaska Natives are committed to working with the State and the federal governments, as well as private sector partners, to help meet the energy needs of Alaska 

and the nation. As major landowners, we have resources that can be developed. As 

owners of major corporations, we have the management capacity and organizational 

reach to work with the state and federal governments and private sector investors 

to create new sources of energy. Our federally recognized tribes, our regional housing authorities, our regional tribal consortia all have a strong interest in being part 

of the solution of obtaining affordable energy—to maintain our unique way of life 

and to help meet our national energy needs. 

The rising cost of energy has reached unprecedented proportions in rural Alaska. 

While all Americans suffer from the rising cost of gasoline, the impact is unbelievable in our rural communities, threatening the very survival of many remote villages. Rural Alaska has the highest per capita power and fuel costs in the U.S. 

Most of our rural communities are not on any power grid and are dependent on 

petroleum for three major uses—space heat (homes, public buildings and businesses); transportation (aircraft, snow machines, outboard motors, four-wheelers); 

and electricity (lighting and appliances). Fuel oil prices in some villages have gone as high as $11 per gallon; and in the winter months, a village home can use four 

or five 55-gallon drums of oil for heating each month. This equals $2,000 per home/ 

per month in Arctic Village, $1,650 in Hughes, and $1,375 in Illiamna. These prices 

cannot be met—now or over the long term. Just as significantly, everything in our 

villages is affected by the high cost of fuel, even more so than in our cities because 

of the economies of scale of serving remote locations. Groceries, toothpaste, medicine, diapers, clothes, lumber, automobile and truck parts—everything—has gone up 

in price. This is devastating to individuals and small businesses; especially when 

wages have not gone up in decades. As an example, air cargo prices in one area 

jumped another 32 percent in June after previous increases. 

According to a recent study by UAA’s Institute of Social and Economic Research 

(ISER), people living in remote, rural communities are paying about 41 percent of 

their annual incomes on home energy use, compared to about 4 percent paid by people living in Anchorage. The State of Alaska’s Department of Commerce, Community and Economic Development expects the price of heating oil in remote villages 

to rise from 30–50 percent this winter. It is entirely possible that thousands of our 

fellow citizens will not be able to pay their energy bills this winter and still buy 

food and the other necessities of life without additional emergency relief. Making 

the situation worse is the fact that for some families, the price of gasoline is actually 

limiting their ability to gather food for the winter. Rural families depend on subsistence, and under normal circumstances they are able to put away fish, berries, 

moose, caribou and other resources to meet their food needs throughout the winter. 

We have encouraged the State of Alaska to adopt a long-term energy plan—one 

that covers every region of the State and which has an overall goal of equalizing 

energy costs for all Alaskans. We are hopeful that such a plan will be adopted before 

the end of the year. 

In its recent Special Session, AFN also encouraged the Alaska Legislature to take 

steps to stabilize energy costs and provide immediate relief to individuals, families 

and communities who are the hardest hit by high energy costs. We believe a multifaceted approach must be taken—one that provides reliable, sustainable and affordable energy to all Alaskans; encourages conservation; and promotes economic development opportunities in the process. We also need to continue to invest in conventional oil and gas while working to transition to a low carbon future. That future 

is many years away—until then, coal, oil and natural gas will remain indispensable 

to meeting the total projected energy demand. And, Alaska is rich in those resources. 

Over the summer, AFN’s Energy Workgroup met to identify various options for 

addressing the energy crisis in Alaska. We developed a matrix of short-term and 

long-term actions that could be taken by the state and federal governments, by individuals and by private industry. A copy of that matrix of ideas is attached. 

Today, I would like to briefly cover the recommendations that emerged as our top 

five recommendations for the State’s Special Session and then focus on what we believe Congress can do to address the energy crisis. 

1. Strengthen the Power Cost Equalization Program by fine-tuning its mission, 

adding more resources and expanding the eligibility requirements. Additional funding is critically needed to cover the short-fall expected this year. While the Alaska 

legislature increased the ceiling for entitlement for the program from 52.5 cents to 

10 

$1.00 per kWh, it did so for only one year. It also failed to make schools, health 

clinics and businesses eligible, as the PCE program was originally designed, and it 

did not address the need for increased funding for PCE. Making schools, health clinics and businesses eligible is important because it will focus energy help where it 

is needed, help keep down inflation, and ensure that health and education funding 

goes to those purposes. According the Alaska Native Tribal Health Consortium, as 

much as 33 percent of village health clinic funding is going to pay for electricity and 

increased fuel costs. Our hospitals and schools are places of refuge for people in the 

villages. We need to ensure that the infrastructure we’ve invested in (our schools, 

clinics, hospitals) is maintained. Costs for everything from rubber gloves to patient 

travel, to medivacs have increased. These increases threaten the ability of our 

health care providers to deliver much needed services. As people move in together 

to save costs, there will be huge public health ramifications. 

2. Buy down debt of rural utilities in order to reduce costs passed on to consumers—and include a price cap on fuel stock purchased prospectively, with a mechanism for reimbursement from the State for costs in excess of the cap. Most rural 

utilities generate their power with diesel fuel. According to the Alaska Energy Authority, the cost of diesel fuel for most of these, even at 2007 prices, amounted to 

close to 50 percent or more of the cost of providing power. With the increase in fuel 

prices in 2008, rural utilities will find it difficult to operate and maintain power 

plants, tank farms and distribution lines—not to mention their insurance, interest 

on long-term debt, taxes and general administrative costs. The Alaska Village Electric Cooperative (AVEC), for example, serves 53 villages in rural Alaska, communities that have the lowest per capita cash incomes in the State. Because of the historically high cost of power, residents and businesses in these communities have 

been conserving power for many years, resulting in extremely low electricity consumption. AVEC purchased fuel for its power plants at an average cost of $1.29 per 

gallon in 2002. In 2007, it paid $2.93. Its 2008 deliveries will be at least $4.60 per 

gallon (based on the L.A. Platt’s Fuel Price Index as of May 13, 2008, reporting 

crude oil prices at $132.57). 

Because of these considerations, we advocated for a program that would give relief 

directly to utility companies. We also proposed capping the price of fuel purchased 

prospectively by electric utilities (AVEC has suggested a cap of $10.00 per million 

BTU, which would translate to a price of about $1.30–$1.45 a gallon for various 

fuels, depending on their BTU content.) The fuel supplier would charge the utility 

the mandated price and bill the State for the balance. 

3. Expand and support bulk fuel purchasing, transportation and cooperative purchase agreements—and contribute to the Denali Commission’s bulk fuel storage program, in an effort to eliminate the storage backlog and to complete rural upgrades. 

Communities across Alaska are faced with the costs of storing fuel, once it arrives. 

Fuel tanks are expensive to buy and to maintain—and have to meet stringent government environmental regulations. Many fuel tanks in Alaska are not large enough 

or are in need of upgrades. Federal funds available for the Denali Commission’s energy programs totaled about $23 million for FY 2008, a significant decline from previous years. We encouraged the State to step up as a true partner with the federal 

government in funding for the Denali Commission’s bulk fuel storage program. 

Being able to store more fuel should help stabilize consumer fuel prices. In addition, 

we recommended that the State provide grant funding to create bulk-fuel co-ops 

that combine purchases for utilities, schools, the state (for state facilities) and private businesses, so that individual communities, clusters of communities and/or regions can create economies of scale. A total of $211 million are needed to complete 

the backlog of bulk fuel storage tanks, which are old and unsafe; while $198 million 

are needed to complete small electrical generation upgrades. 

4. Provide a family fuel subsidy to help meet the immediate crisis. The State Legislature voted to provide a ‘‘resource rebate’’ of $1,200 per person to be added to the 

2008 permanent fund dividend payment. The rebate will provide much-needed relief 

to families and individuals, but as a recent ISER study points out, for about half 

of the remote rural households, increased home-energy costs since 2006 will far outweigh the energy rebate ($3,300 for the average-size household). 

5. Make a sizable investment in projects that promote renewable/alternative energy 

and conservation efforts. The Legislature created a Renewable Energy Fund last 

year to be housed in the Alaska Energy Authority and provided $50 million in funding. During its recent Special Session, the Legislature added another $50 million to 

the fund bringing the total available for spending on energy projects this year to 

$100 million. 

The State Legislature also suspended the state’s motor fuels tax for one year, and 

increased the bulk fuel revolving loan fund and bridge loan program funding. All 

11 

of these steps will help with the immediate crisis, but fall far short of what is needed for the long term. 

Turning to viable sustainable energy solutions, AFN and its member organizations are strong supporters of the development of alternative energy resources as 

an important addition to our country’s fossil energy resources. Many villages in 

rural Alaska are actively working to develop a wide array of alternative and renewable energy projects. They see not only the potential for reducing the cost of energy, 

but also the tremendous manufacturing, sales and service components (e.g., the fact 

that wind and solar energy will need tailored products, services and alternative 

building materials; and the fact that plans and supplies for hybrid homes and facilities that are now being developed and manufactured abroad could be developed and 

manufactured in Alaska. Our larger cities are doing the same. 

Alaska is so large and diverse that one Village’s alternative resources may not be 

available elsewhere. Some areas have strong wind for electrical generation; others 

can look to geothermal resources. There is no ‘‘one-size-fits-all’’ solution for rural 

Alaska, making local solutions more specific and expensive. Because of the vastness 

of Alaska and its virtually unlimited potential, Alaska can be a model for the rest 

of the country. Our communities could be part of a national demonstration project 

on alternative energy technologies. We could serve as a proving ground to show how 

Alaska Native people and their institutions have the experience, the capital and the 

community relationships that will be necessary to effectively implement workable 

solutions to the energy crisis. Investing now in renewable energy development will 

bring down energy costs and create jobs. 

The undeveloped energy sources most often discussed for rural Alaska are small 

hydro power (using rivers to provide power to small communities), solar energy, sea 

wave action, biomass, coal, methane and geothermal: 

Wind: Alaska has world-class wind energy resources, especially along the coastal 

and western regions of our state. There are 31 rural Alaska communities that already have good opportunities for wind generation—and 17 more that are ‘‘potentially attractive.’’ There are at least seven projects currently operational and another eight in the planning stages. Congress needs to look at ways to provide incentives to wind developers and to train our citizens to maintain the windmills. 

Hydro: Existing hydro generation produces nearly 25 percent of the state’s electricity. But Alaska also has almost 45 billion watts of large and small hydro potential, more than any other state. 

Solar: Summer in Alaska produces a huge amount of sunlight, but winter darkness is the time of greatest energy demand. Small-scale solar projects have great 

potential, especially if combined with other sources of energy to lower the overall 

cost. Because the homeowner or community must make up-front capital investments, the federal or state governments should provide incentives. 

Ocean Wave Action: Alaska has over 34,000 miles of coastline, and some of the 

highest tides in the nation making it one of the best ocean energy resources in the 

world. 

Geothermal: A recent study points out four potential geothermal areas in Alaska: interior hot springs, southeast hot springs, the Wrangell Mountains, and a combination of the Alaska Peninsula and the Aleutian Chair. The value of geothermal 

power is magnified by the fact that it can produce both heat and electricity. Largescale geothermal electric power generation projects have been proposed that would 

provide power to Unalaska, and Akutan. Naknek Electric Association is actively investigating geothermal potential and the development of a regional electrical transmission system. 

Biomass: Alaska has a great amount of wood, wood waste and sawdust for potential use in space heating and electrical generation. A few villages have begun to talk 

about making wood pellets from plentiful willow brush. Alaska’s fish processing 

plants produce about 8 million gallons of fish oil each year. With some chemical 

changes, this oil can be mixed 50–50 percent with diesel for generation. Community 

waste disposal produces 650,000 tons of garbage in Alaska each year that could be 

used to generate electricity. But, again, design and capital costs are expensive and 

need public incentives. 

Coal: Coal is abundant in Alaska, but has higher CO2 emissions than other energy sources. However, coal can be used to produce synthetic ‘‘natural’’ gas with and 

without carbon capture. The problem is that these gasification technologies are expensive and still under development. 

In terms of what Congress can do to address the energy crisis, we have the following suggestions: 

1. Provide significant increases in the needs-based Low Income Home Energy Assistance (LIHEAP) program and urge the State to add its own additional appropriations for this program. Currently, the only energy aid program Congress has estabVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00015 Fmt 6633 Sfmt 6621 S:\DOCS\45586.TXT JACK PsN: JACKF
12 

lished is LIHEAP. It provides aid to residents whose income is at or below 150 percent of the federally defined poverty level. That program provides approximately 

13,880 qualified Alaskan households with about $730 a year to buy fuel. That, at 

best, only covers about one winter month’s supply of fuel for a typical home at current prices. In many of our villages, it does not even cover one-month’s cost. 

2. Increase funding for the Denali Commission. The congressionally created Denali 

Commission and the Alaska Energy Authority recently awarded $5 million for alternative/renewable energy projects ($4 million from the Denali Commission and $1 

million from AEA. While this was a good start, it only provided funding for 33 

projects out of a total of some 96 proposals. Congress should increase funding to the 

Denali Commission for its energy projects and make a sizeable investment in developing alternative/renewable energy projects. 

3. Enact a comprehensive energy bill to decrease energy demand over the long term 

and increase energy efficiency. As a part of that bill, Congress needs to extend the 

investment tax credit for installing solar energy, the production tax credit for producing wind power as well as the credits for geothermal, wave energy and other 

forms of renewable energy. These critical renewable energy tax credits are set to 

expire at the end of this fiscal year and, if they do, it will mean thousands of jobs 

lost and billions of dollars of investments not made. 

4. Fully fund and implement the Energy Independence and Security Act of 2007, 

which was authorized in 2006. That bill includes a host of provisions to further renewable energy development, including a renewable energy deployment grant program that would provide federal grants for up to 50 percent of the cost of building 

a wide variety of renewable electricity projects, including wind, geothermal, ocean, 

biomass, solar, landfill gas and hydroelectric projects in Alaska. It provides for a 

federal grant program specifically to help with construction of geothermal energy 

projects in areas of high electricity costs like rural Alaska. 

5. Provide incentives and funding for the creation of regional energy authorities in 

rural Alaska. 

6. Increase the supply of energy by encouraging exploration and development of 

private, state and federal lands, both onshore and off-shore. This can be done by providing incentives, such as OCS revenue sharing for Alaska’s coastal communities, 

as has been done for Florida, Louisiana and Texas. AFN supports the right of selfdetermination for our Native communities and urges that leases which have generated a lack of widespread community support be revisited, and discussions opened 

up with affected communities to address their concerns. 

7. Work closely with the State of Alaska to ensure that in the development of a 

Natural Gas Pipeline in Alaska, our communities have access to the natural gas that 

will pass through that pipeline through spur connections; and that ownership, partnership and contracting opportunities for Alaska Native tribes and corporations are 

part of the development plans. Serious training funds should be appropriated for 

workforce development to ensure broad Native participation in the projects. 

8. Provide consumers with energy rebates and other economic incentives to conserve 

energy. Congress should provide homeowners with incentives to shift to supplemental alternative energy, including rebates, tax credits, low interest loans, and 

grants to weatherize homes and install energy saving changes. 

9. Enact and fund S. 2232, the Native American Challenge Demonstration Project 

Act. This bill would create a total of five pilot projects in remote, predominately Native American areas modeled after lessons learned from the U.S. experience in providing foreign aid to the developing world. The project would use a compacting 

model to channel significant development funds to implement locally designed economic development strategies, including energy strategies. The objective would be 

to enhance the long-term job creation and revenue generation potential of Native 

economies by creating investment-favorable climates and increasing Native productivity. 

We thank you for the opportunity to testify today. This is an enormous issue for 

us. We want to be part of the solution and look forward to working with both the 

Congress and the State of Alaska to address this issue. 

Senator MURKOWSKI. Thank you, Mr. Andersen, I appreciate, not 

only your testimony but your leadership. AFN, in their efforts to 

truly shine the spotlight in all corners of Alaska on this issue, I 

think has been very helpful, and the matrix that you’ve provided 

shows the level of detail that you’re going to, which we greatly appreciate. 

13 

Just for the interest of not only the witnesses, but those participants, typically what we do in a Senate hearing is each of the panelists will give their five minute presentation and at the conclusion 

of the presentations I will then ask questions of all of the witnesses 

at that time. 

So with that, Janie, we will go to you, welcome to the Committee. 

STATEMENT OF JANIE LEASK, PRESIDENT/CEO, FIRST 

ALASKANS INSTITUTE 

Ms. LEASK. Thank you. For the record I’m Janie Leask. I’m 

President and CEO of First Alaskans Institute. It’s a statewide Native non-profit which houses the Alaska Native Policy Center. I testified in Juneau on the $1,200 rebate and the energy issues there, 

and one of the things that I will cover today is a little bit of research that the staff has done in the Policy Center really taking 

a look at seven villages and comparing them to the cost of Anchorage on a number of different levels. We really used Anchorage as 

a baseline. 

But first, I would like to thank the Anchorage legislators who are 

here today and thank you for inviting them. As we know, rural 

Alaska does not see legislators out in the rural areas very often, 

and I think that it’s something, especially since the state does have 

a little bit more money, that it would be nice to have rural legislators go to more villages to really see first-hand what’s happening, 

so I really appreciate your invitation to them and for them coming 

today. 

Our Alaska Native Policy Center collected information and we researched the cost of fuel/gas/energy consumption and cost of goods 

in the villages of Emmonak, Elim, Grayling, Kiana, Old Harbor, 

Stebbins and Togiak and these were just randomly selected from 

around the state. We looked at the consumption overall of energy 

in rural Alaska. Rural Alaska consumes less energy, while paying 

more for that energy. I think those of us who have been around 

and on top of that topic, it’s kind of a no-brainer. But over the 

three year period that we tracked these communities, we were able 

to get some data on them from 2005 to 2007, on an average monthly usage, the seven villages surveyed consumed less energy than 

Anchorage. Anchorage households used more than 500 kilowatts of 

electricity while rural households range from 280 to 430 during 

that same time period. Rural residents, as I said, also pay more per 

kilowatt hour than Anchorage residents do, even with the current 

rate of PCE (power cost equalization), rural households in these 

seven communities paid anywhere from 19 to 30 cents per kilowatt 

hour, well above the 9 to 10 cents that Anchorage residents—Anchorage households pay. In some cases the average monthly bill for 

electricity in rural Alaska is twice that of Anchorage. And without 

power cost equalization, the villages that we sampled would pay in 

the range of 50 cents per kilowatt hour, which is absolutely incredible. 

According to the Division of Community and Regional Affairs, 

the Director’s report, the average statewide price for heating fuel 

#1, the heating fuel used to heat homes, in June of this year was 

about $5.51 per gallon with prices for heating oil ranging from 

$1.30 to over $9 per gallon. 

14 

The seven communities are paying more than the average price, the average price for a gallon of gas was $5.35 at the time that we 

did this study, and, again, the seven communities are above that 

average with prices ranging up to $8.35 per gallon for gas. I’m sure 

that has probably come down some with the decrease in gas prices. 

We then took a look at what the USDA and the University put 

together, a marketbasket of goods, and we sent a list out, faxed a 

list out to the villages and asked them, could you please go to the 

grocery store and take a look at these goods and we compared them 

with Anchorage, and we were able to get a majority of the villages 

returning our faxed list. Then we compared the cost of food and 

non-food items to the same ones in Anchorage. We found that it 

cost between $69 and $120 more to buy the same basket of goods 

in the communities that did respond over Anchorage. Results published by the Department of Labor and the University of Alaska— 

Fairbanks also paralleled these findings. 

Just as an aside, I met with a group of outside funders that traveled to Alaska at the invitation of the Rasmuson Foundation. They 

flew from Seattle out to Bethel and then out to—traveled to some 

of the communities and were just shocked at the prices that were 

in the stores. I’m always really glad that outside funders and outside public policy makers and people who contribute to our state 

are able to do that and really see what the real prices are. 

We also took a look at travel. The average airfare prices, beginning in July 2008, we found the average roundtrips between Anchorage and the seven communities ranged between $709 from 

Stebbins to $1,220 from Elim. 

Senator MURKOWSKI. From Elim to Anchorage? 

Ms. LEASK. From Elim to Anchorage, roundtrip. One of our staff 

members is a recent—came into Anchorage, moved his family last 

fall, about a year ago and he’s from Mekoryuk, and he was saying 

that a roundtrip for him to go into Anchorage from Mekoryuk was 

well over a thousand dollars, for one person, not the entire family, 

just one person. He cut back his subsistence, he was going to go 

out, his mother asked him to come out to the village to help her 

with gathering fish for her fortunately he had an older brother living in the village. He just couldn’t pay the price for an airline ticket to go out to help his mother gather food for the wintertime. So 

the increasing cost of flying in and out of rural Alaska really 

hinders rural residents ability to come in, as you had mentioned for 

services, and also for shopping, for a lot of other trips and for 

health. It makes the cost of doing business in rural Alaska even 

more expensive. 

I had the, I don’t know if it was privilege, but when I was on 

the board of Commonwealth North we did an urban/rural study, 

and one of the things that we came out with was the inter-dependency of rural Alaska and urban Alaska in our state. One of the 

things that the report stated is that, and it’s a quote, ‘‘a basic element of the envisioned social and economic partnership between 

urban and rural Alaska is the recognition of people’s right to support their families in the manner they choose and in the location 

of their choice.’’ It further said, ‘‘likewise, an equally important goal 

is to foster understanding of the economic, political and social 

inter-dependence of rural and urban Alaska, so that all Alaskans 

15 

truly understand that Alaska’s future depends on cooperation between urban and rural Alaska.’’ I think that this just points out 

that Anchorage is Alaska’s largest port, it’s the gateway to shipping goods to rural Alaska, a healthy economy of rural Alaska 

bodes well for urban Alaska and I think that we know that. The 

cost of subsistence gathering and people are making choices of 

whether or not that they can afford to go out and go fishing or 

whether or not they can afford to fuel up their ATV to go out subsistence hunting and collecting berries. As store bought food becomes more unaffordable and subsistence becomes more expensive 

and out of reach for the local people, you have to ask the question, 

okay, what’s left? It’s a really tough question. I hear around in conversations and I read in the Anchorage paper people saying that 

rural people have a choice, you know, what if they just pack up 

their bags and move if it’s too expensive. The response that I say 

is, yes, we do have a choice, but, yes, we choose to live in our homelands and where our grandparents grew up and this doesn’t mean 

that we’re not interested in cost savings, in doing what we can in 

rural villages to make life affordable. Out-migration is very real, 

we’re seeing it, I talked to people who serve Alaska Natives in Anchorage and the infrastructure there is bulging at the seams and, 

you know, quite frankly I think it’s going to get even worse once 

the Permanent Fund and the Energy Rebates come out and hit. I 

think people may use that money to move, we’ve also heard that, 

although that’s not a statistic that we can prove at this point in 

time. But in the long-term, I thought the rebate was necessary in 

order to address what happens at the first freeze, but at the same 

time is not a long-term solution and I think that we, as Alaska Native people, state of Alaska and certainly the Federal Government, 

we all need to work together in collaborating and come up with 

some long-term solutions. I’ve got some ideas that I jotted down 

and I’ll wait until the rest of the panel has spoken. 

Thank you. 

[The prepared statement of Ms. Leask follows:] 

PREPARED STATEMENT OF JANIE LEASK, PRESIDENT/CEO, FIRST ALASKANS INSTITUTE

Thank you for the opportunity to testify at today’s field hearing regarding the effects of the energy crisis on Alaska people, especially in rural Alaska. 

My name is Janie Leask. I’m President/CEO of First Alaskans Institute, a statewide Alaska Native 501(c)(3) non-profit organization whose mission is to advance 

Alaska Natives through community engagement, information and research, collaboration, and leadership development. First Alaskans has three major focus areas– 

leadership development, community investments and public policy research for, and 

on behalf of, Alaska Native Peoples through the Alaska Native Policy Center. I’m 

here today to provide testimony on the effects of high energy costs on the Alaska 

Native village lifestyles and Native institutions in light of the current energy crisis. 

In light of the energy crisis in rural Alaska and its detrimental effect on the wellbeing of rural residents, Native and Non-Native alike, households, and key infrastructure, FAI is on record advocating assistance—be it state or federal—by the 

‘‘First Frost’’ (winter freeze up). 

When I refer to ‘‘rural’’ in this testimony, it’s important to recognize the term 

‘‘rural Alaska’’ encompasses both Native and non-Native people with non-Natives 

making up the majority (60 percent) of the population. 

It’s imperative that we as a state make the investment in short-term aid while 

looking for long-term solutions to our current situation because our communities 

will be facing immediate problems once the first frost occurs. 

I’d like to take some time to speak to this crisis, and the information First Alaskans has put together. We’ve collected and analyzed data and information from 

16 

seven villages across the state. This data describes the state of economic conditions 

in rural Alaska and provides a comparison to urban Alaska, using Anchorage as a 

baseline. 

Through our snapshot we have verified the obvious for those familiar with rural 

Alaska—economic conditions in rural Alaska are under-developed while the cost of 

living is high. 

Economic Conditions in Rural Alaska Are Under-developed 

Rural Alaska is largely remote, disconnected from the road system, and faces extreme and changing environmental conditions. Villages in rural Alaska have an underdeveloped cash economy and a high unemployment rate—May 2008 Department 

of Labor data shows that 17 out of 27 Boroughs and Census Areas have unemployment above the state average of 6.7 percent, and with some like the Wade Hampton 

Census Area, it’s as high as 22.6 percent. 

The Median Household Income for these seven communities surveyed is well 

below that of Anchorage and the state average. Conditions are compounded by the 

high cost of energy, transportation, and the high cost of living. 

The Cost of Living in Rural Alaska Is High 

The staff of our Policy Center researched the cost of fuel, gas, energy consumption, and cost of goods, in villages of Emmonak, Elim, Grayling, Kiana, Old Harbor, 

Stebbins, and Togiak. These communities were randomly selected and are located 

in various regions of the state. Although each community is different in its traditions, culture, and environment, they all share the same issue of the current energy 

crisis, which is creating a real sense of uncertainty for the coming winter. 

According to the data we collected, rural Alaska consumes less energy while paying more for that energy. Over a three-year period from 2005–2007 on an average 

monthly usage, the seven villages surveyed consumed less energy than Anchorage. 

Anchorage households used more than 500 kWh, while rural household usage 

ranged from about 280 to 430 kWh during that same time period. 

Rural residents also pay more per kWh than Anchorage residents. Even with the 

current rate of PCE, rural households in the sample communities pay from 0.19 to 

0.30 cents per kWh, well above the 0.09 to 0.10 cents that Anchorage households 

pay. In some cases the average monthly bill for electricity in rural Alaska is twice 

that of Anchorage. Without PCE, the villages sampled would pay in the range of 

0.50 per kWh. 

According to the Division of Community and Regional Affairs, Director’s report— 

the average statewide price for heating fuel (#1)—the heating fuel that’s used to 

heat homes—in June of this year is $5.51 per gallon with prices for heating oil ranging from $1.30 to $9.10 per gallon ($3.36 without the North Slope subsidy to residents). According to our recent survey, all the seven communities are paying more 

than the average price. The average statewide price for a gallon of gas is $5.35, and 

again all seven communities are above the average with prices ranging from $3.45 

to $8.35 per gallon. 

First Alaskans Institute looked at the USDA and UAF basket of goods and compiled an abbreviated list using goods (food and non-food items) that are commonly 

consumed in rural Alaska and asked the seven communities to price the abbreviated 

basket of goods. Four of the seven villages responded with prices and quantities for 

goods. We then compared the cost of food and non-food items to the average cost 

of the same items in Anchorage and adjusted the basket of goods for missing items. 

We found that it cost between $69 and $120 dollars more to buy the same basket 

of goods in the four responding communities than it does in Anchorage. Results recently published by the Department of Labor and the University of Alaska Fairbanks parallels these findings. 

Having noted these price differentials, it’s important to acknowledge that the pur- chasing power of $1,200 in rural Alaska is not the same as $1,200 in urban communities. 

The Policy Center also looked at the cost of getting to and from the seven villages 

surveyed. Staff looked at a ‘‘snapshot’’ of airfare prices at the beginning of July 

2008. We found that roundtrips from Anchorage to the seven communities ranged 

between $709 (Stebbins) to $1,220 (Elim). 

The increasing cost of flying in and out of rural Alaska hinders rural residents’ 

ability to come to urban areas for services, makes the cost of doing business in rural 

Alaska more expensive and could potentially impact the long-term economy of urban 

Alaska. 

The Human and Cultural Importance of Rural Alaska 

Rural Alaskans add rich diversity to the fabric of the state of Alaska. In 2000, 

the U.S. Census reported that the population of the rural areas was comprised of 

17 

about 60 percent White alone and in combination with other races. The Census 

showed about 38 percent Alaska Native alone and in combination with other races, 

and about two percent was made up of other racial combinations. 

We have learned that migration to and from rural areas is not a one-time event. 

Rather, migration is a process in which people move at different times and for different reasons, and it is often a reoccurring event in the life of Alaskans. Alaska 

Natives living in rural areas live on lands defined as theirs by their ancestors, histories and deep cultural roots. In rural Alaska, residents use both ancient traditions 

and the more modern ways of living in their daily lives. This is true for Alaska Native and non-Native alike. Each community has seasonal subsistence gathering, and 

for this, residents use tools and motorized vehicles as well as traditional means of 

hunting and gathering. 

As the energy crisis continues to escalate, rural residents are increasingly unable 

to sustain themselves by subsistence activities alone. For some families, the price 

of gas is cost-prohibitive and precludes the gathering of food. Rural families depend 

on subsistence. Under normal circumstances, a family can store fish, birds, berries, 

caribou, moose, reindeer, and much more for their livelihood. Every seasonal activity 

and food gathering is tied to the fact that people need to live and survive. As storebought food becomes unaffordable and subsistence becomes more expensive and out 

of the reach of local people—what is left? 

Items such as freezers, four wheelers, out-board motors, and store-bought goods, 

purchased in urban areas for a fairly decent price, can be shipped to rural Alaska. 

But these items are flown and barged in at an extraordinarily high price because 

the cost of fuel it takes to ship them. 

We’ve heard over the years how rural and urban Alaska remain dependent on 

each other. Commonwealth North—a statewide public policy ‘‘think tank’’—published the ‘‘Urban Rural Unity Study’’ in 2000. As part of that study, they described 

an ‘‘ideal’’ Alaska and cited a number of characteristics of that society which would 

honor and respect the diversity of its people and recognize the many areas where 

urban and rural interests coincide. 

The report stated: 

‘‘A basic element of the envisioned social and economic partnership between 

urban and rural Alaska is the recognition of people’s right to support their families in the manner they choose and in the location of their choice. For this reason, one of the goals is to encourage the economic viability of the smaller ‘rural’ 

locations in Alaska and to maintain the diversity of cultures and lifestyles in 

the state. Likewise, an equally important goal is to foster understanding of the 

economic, political, and social inter-dependence of rural and urban Alaska, so 

that all Alaskans truly understand that Alaska’s future depends on cooperation 

between urban and rural Alaska.’’ 

Anchorage is Alaska’s largest port and is the gateway to shipping goods to rural 

communities. Anchorage, Fairbanks and other major hub communities are also the 

headquarters of a number of businesses and corporations which provide goods and/ 

or services to rural Alaska. The healthy economies of urban and rural Alaska are 

inter-dependent. 

I’ve heard such statements as ‘‘why don’t rural residents just leave their 

villages... they have a choice of where they want to live.’’ Yes, we have a 

choice—we choose to remain in the lands of our ancestors which doesn’t mean we’re 

not interested in living smarter through alternative forms of fuel, winterizing and/ 

or upgrading housing which is better suited for the conditions found in our communities, and making better use of the resources we have. But this will take time— 

which is why we support a short-term ‘‘fix’’ while also supporting an accelerated 

look for sound, practical and affordable energy alternatives for all communities of 

our state. 

In the short term, I don’t think any rural hub—whether it’s Bethel, Anchorage, 

Fairbanks or the Valley—is prepared for a mass influx of rural residents and the 

subsequent impact on their community’s infrastructure. And rural residents don’t 

want to leave their homelands. So we need to work together—across party lines and 

with all Alaskans at the table. 

First Alaskans Institute is among several Native organizations that are in support of the recently passed ‘‘Alaska Resource Rebate Program.’’ 

In addition to the testimony I’ve offered today, I also want to voice our support 

of the Alaska Federation of Natives’ top 5 priorities: 

1. Strengthen the Power Cost Equalization Program by fine-tuning its mission, 

adding more resources and expanding the eligibility requirements; 

18 

2. Buy down debt of rural utilities in order to reduce costs passed on to consumers and include a price cap on fuel stock purchased prospectively. 

3. Expand and support bulk fuel purchasing, transportation and cooperative 

purchase agreements. 

4. Provide a family fuel subsidy to help meet the immediate crisis. 

5. Make a sizeable investment in projects that promote renewable/alternative 

energy and conservation. The high cost of fossil fuel is not going to go away. 

We need to start investing in alternative/renewable energy now. 

Based on the evidence we found, we believe there is compelling evidence that families in rural Alaska need the additional monetary income to offset the increasingly 

high cost of energy and its subsequent impact felt at the local level. 

We also believe by working together to make this a better state, we will improve 

our collective future. Again, I thank you for the opportunity for this testimony and 

urge you, Senate Committee on Indian Affairs, to provide energy assistance or a 

similar piece of action which will provide a much-needed short-term solution to the 

energy crisis facing our state. 

Senator MURKOWSKI. Okay, thank you, Janie. And next we will 

turn to Mike Williams. Mike is currently the Chairman of the Alaska Inter-Tribal Council, along with many other notable distinctions, but we’re pleased to have you with us this morning, Mike. 

STATEMENT OF MIKE WILLIAMS, CHAIRMAN, ALASKA INTER– 

TRIBAL COUNCIL 

Mr. WILLIAMS. Senator Murkowski, I’d like to welcome you to our 

homelands here and the other staff, welcome home Megan, I know 

I met you over there, and Chuck. And welcome, finally, to you Mr. 

Walsh to our lands. I live 30 miles in a small village with my family, my grandkids and my dogs as well—— 

Senator MURKOWSKI. Your dogs. 

Mr. WILLIAMS.—in the village of Akiak. I’d like to thank 

Asa’carsarmiut Native Council for allowing us to do business today 

in their land here in Bethel. 

Again, my name is Mike Williams, I’m currently the Chairman 

for Alaska Inter-Tribal Council, which is a consortium of federally 

recognized tribes from throughout Alaska, and there’s 229 federally 

recognized tribes. And I also am the area Vice President for the 

National Congress of American Indians and also president for our 

school district board of education. And also vice chair of the Rural 

Community Action Program, which provides a lot of services out in 

rural Alaska. And this area, of course, is the poorest of the poor 

in the nation per capita. And I agree with some of the comments 

that Janie and Ralph have made. 

You know I just have a few comments and I’ll make my comments short. 

We have sustained ourselves here in rural Alaska for thousands 

of years. I remember as a child growing up in a small village, we 

had only two or four hours a day of electricity with no other appliances that we have today. We did not have electricity in the summer months. We utilized our ways of preserving fish, game and 

what we gathered throughout the summer. I remember we had a 

small windmill in Akiak to provide electricity to our small hospital. 

Times have changed very quickly. When we have all the appliances 

that we have in our communities and our homes, our villages are 

providing electricity and oil and gas for motors and snowmachines 

to engage in subsistence activities. We have over 200 tribal commuVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00022 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
19 

nities throughout Alaska that are experiencing problems of providing sustainable power fuel to our members, or having that access to conduct these activities in each community. 

I wanted to make a few recommendations and these are not all 

the recommendations, the resolutions that Inter-Tribal Council had 

and the National Congress of American Indians in our energy resolutions, I will have them forwarded before September 12th to your 

office and they’ll be on record and I cannot cover those in five minutes. 

One, we need immediate relief for our fuel, which the costs have 

skyrocketed in the last year. We need to do assessments on each 

of our community’s needs and you need to consult with each tribal 

government. We are fortunate here in our areas in Alaska, in our 

villages, the tribal governments are the ones who are providing all 

of the services that our tribal citizens need for basic services at this 

time. 

Two, the federal and state governments need to take immediately action to subsidize transportation of all fuel to rural Alaska. 

You know, how can we get around that? We need to, you know, the 

transportation of goods coming into Akiak have also skyrocketed 

and, you know, it’s just really hard to get the goods from Anchorage or Seattle or elsewhere. 

Three, we need immediate capital to harness the wind, solar, biomass, hydro, and have each tribal government develop their alternative energy. This can be done right now with that capacity and 

with the right kind of training for each community. Because I 

agree each community has its own unique needs and we need to 

do a thorough assessment and we can develop these alternative energies right now for each community. In my community hydro 

power is available right now but we have no such capital to start 

right now. So I think things that we can do to cut those costs can 

be done right now. 

Four, we need immediate relief for operations of our schools, 

community buildings, clinics and other public facilities to include 

them in the power cost equalization model that we currently receive. That is a good program but I think we need to expand it 

more if we are going to be sustainable. For example in Yupiit 

School District we have to cut $800,000 from our operations. Because of the cost of fuel this year, we had to cut from the 30 percent of the budget to meet our budgetary needs to provide education for our children. So everybody’s being hit by the cost, and 

especially our schools and I wanted to lay that example. So cutting 

about a million bucks from our education budget in a district is a 

huge hit that I think it’s going to have ripple effects throughout 

rural Alaska, which we are trying to provide quality education and 

the kids deserve that quality education. 

Five, we need immediate capital to consolidate power generation 

with several villages to connect them to cut costs and make them 

sustainable into the future. Right now each community is providing 

their own with the exception of the Bethel to, for example, Bethel 

to Napaskiak, Bethel to Napakiak or to the local immediate areas. 

But I think we have cluster of the villages—that are in clusters 

that can provide in cooperation with each other to provide one sysVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
20 

tem to provide power to each community; that will cut operation 

costs and other costs. 

So I think these things that we can do in the immediate future. 

And I really appreciate the opportunity to have field hearings 

and consultation in Bethel right now, today. I really appreciate 

that and we’ve been trying to suggest that these ongoing consultations with the federally recognized tribes be ongoing every year to 

find out where each of the communities are before any more outmigration happens. 

I really appreciate and thank you for listening to my tribal concerns about the energy issues that have profound effects on our 

lives every day in rural Alaska. And I just suggest, again, to have 

ongoing dialogue with each community and do things right now to 

have our villages sustain themselves now and into the future. So 

we need short-term relief and we need to do some long-term planning and I think those are on the way. 

I really appreciate the five minutes Honorable Senator Murkowski. 

Thank you. 

[The prepared statement of Mr. Williams follows:] 

PREPARED STATEMENT OF MIKE WILLIAMS, CHAIRMAN, ALASKA INTER-TRIBAL

COUNCIL

Greetings! My name is Mike Williams, currently Chairman of the Alaska InterTribal Council, Area Vice President for the National Congress of American Indians, 

President of Yupiit School District Board of Education, Vice President of Rural Community Action Program, Akiak Native Community Tribal Council. 

We have sustained ourselves here in Rural Alaska for thousands of years. I remember as a child growing up in a small village that we had only 2–4 hours a day 

of electricity, with no other appliances that we have today. We did not have electricity in the summer months. We utilized our ways of preserving our fish, game 

and what we gathered throughout the summer. I remember we had a small wind 

mill in Akiak to provide electricity to our hospital. Times have changed very quickly 

when we have all the appliances that we have in our communities and our villages 

are providing electricity and oil and gas for our motors and snowmachines to engage 

in subsistence activities. We have over two hundred Tribal Communities throughout 

Alaska that are experiencing problems of providing sustainable power, fuel to our 

members. 

I want to make a few recommendations. 

1. We need immediate relief for our fuel which the cost have skyrocketed in the 

last year. We need to do assessments on each of our communities needs and 

you need to consult with each Tribal Government. 

2. The Federal and State Governments need to take immediate action to subsidize transportation of all fuel to rural Alaska. 

3. We need immediate capital to harness the wind, solar, biomass, hydro, and 

have each Tribal Government develop their alternative energy. This can be done 

right now. 

4. We need immediate relief for operations of our schools, community buildings, 

clinics, and other public facilities to include them in Power Cost Equalizations 

model that we currently receive. 

5. We need immediate capital to consolidate power generation with several villages to connect them to cut costs and to make them sustainable into the future. 

I recommend that we have ongoing consultation with each of Alaska’s Federally 

Recognized tribes every year to review our status. 

I really appreciate and thank you for listening to our Tribal concerns about the 

energy issues that have profound affect on our daily lives in Rural Alaska. Thank 

you. 

21 

Senator MURKOWSKI. Thank you, Mike, appreciate it. Appreciate 

your leadership on so many different levels. 

And now with us this morning we have Chris Mello, who is with 

the Alaska Energy Authority, we welcome you and look forward to 

your comments. 

STATEMENT OF CHRIS MELLO, PROGRAM MANAGER, ALASKA 

ENERGY AUTHORITY 

Mr. MELLO. Well, thank you, Madam Chair. For the record I’m 

Chris Mello. I’m Program Manager with the Alaska Energy Authority. I oversee design and construction of energy projects in 

rural communities throughout the state. 

I wanted to talk about how the state is moving rapidly to help 

reduce the dependence on fossil fuels. House Bill 152 establishes a 

renewable energy fund and initially there is $100 million available 

for the development of renewable energy projects with continued 

funding over the next five years. The request for application was 

originally scheduled to be issued on the 29th but that schedule has 

slipped a little bit and it will be out next week. The advisory board 

has been named and is working on draft regulations right now. The 

advisory board will review the applications and prepare recommendations for consideration and award by the Legislative 

Budget and Audit Committee, and we expect that this process will 

be completed in the late fall. The selection criteria for these grants 

is based upon economic and technical feasibility, energy cost per 

capita and statewide balance and matching funds. 

From the State’s perspective, continued federal support is critical 

to help us meet the challenge of high energy costs. Federal funding 

of the Denali Commission has been in steady decline over the last 

several years. The Alaska Energy Authority has constructed about 

60 bulk fuel storage facilities and 32 powered generation facilities 

in Bush communities throughout the state in partnership with the 

Denali Commission using federal funds, and, however, these programs have not yet been completed. We all know that it’s important to reduce our dependence upon diesel for heating and power 

generation in rural communities, but it’s not possible at this time 

and in the foreseeable future to completely eliminate the need for 

diesel fuel in Bush Alaska. Small communities that are off the grid 

that have hydro and other alternative energy potential must have 

a modern diesel powerplant with modern controls into which those 

alternative energy resources can be integrated. 

You just can’t run a village on wind and you just can’t run it on 

hydro. 

And the same thing can be said for tank farms. The best way for 

a community to get full value out of every gallon of diesel is not 

to lose any through leaks and spills. So energy conservation for fuel 

starts with a tank farm that does not leak. And energy efficiency 

in a community starts with a diesel powerplant with a modern control system that shows about a 26 percent increase in efficiency 

over the previous powerplant. It also helps to provide stack and 

jacket heat recovery systems that can provide clean heat and continuous heat for schools, health clinics and other public facilities. 

Also from the State’s perspective the Congress has approved Renewable Energy Deployment Grant Program last year and it auVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
22 

thorized up to a 50/50 matching grant to pay for construction of renewable energy projects in Alaska. This program needs to be implemented by the Department of Energy and it needs to be funded. 

Likewise with the Authorized Energy Policy Act of 2005. There are 

potential renewable energy projects on Native lands throughout the 

state, including very viable potential projects right here in the 

Bethel region for wind and biomass. 

Lastly, we’d like to see support for the Regional Biomass Energy 

Partnership. The Department of Energy eliminated its funding for 

this program in 2006. The Alaska Energy Authority has continued 

development in this area on a lower level and recent works include 

developing small cleaning burning wood boilers to heat schools and 

community facilities, helping the city of Craig do a sawmill waste 

fired heating system and testing biodiesel and assisting fish processors in development of portable fish oil rendering module. 

And with that I want to thank you for the opportunity to give 

testimony and my testimony is complete. 

[The prepared statement of Mr. Mello follows:] 

PREPARED STATEMENT OF CHRIS MELLO, PROGRAM MANAGER, ALASKA ENERGY

AUTHORITY


828a1.eps
23 

Senator MURKOWSKI. Thank you, I appreciate that. And let me 

just start with my questions to you first and follow up with some 

of the comments that you have made there. 

We recognize that we have some funds available at the state 

level through the Renewable Energy Grant Program and I think 

that that’s considerable opportunity for us and we look forward to 

all that being set in place so that communities can begin to get 

moving. What kind of response do you anticipate that you will receive from the Native communities, from places like here in the region in terms of requests for assistance for those renewable energy 

grant funds? 

Mr. MELLO. Yes, overwhelming. We’ll receive overwhelming response. 

Senator MURKOWSKI. And I appreciate that you’re still putting in 

place kind of the procedures and the mechanisms, but is this going 

to be a situation where you’ve got to evaluate, you’ve got your pot 

of money, you’ve got your $100 million, and you’ve got to evaluate 

from a cost benefit perspective where we’re going to get the most 

bang for the buck, if you will, is that going to disadvantage smaller 

communities from being successful applicants to those grant monies? 

Mr. MELLO. Well, at the risk of speaking for the advisory committee, I think that is going to be one of the criteria, to see to it 

that that does not happen. 

The first part of your question is what sort of response we’re 

going to get. Earlier this year we had a $5 million request for proposals from the Denali Commission for renewable energy projects. 

We received applications in excess of $2 billion for that. 

Senator MURKOWSKI. Right. 

Mr. MELLO. So I would expect that this won’t go unnoticed. I 

would expect that we will receive grant applications. 

Earlier this week I was traveling in Copper Center, Gulkana, 

Gakona and communities in that region talking about wood heating biomass projects, and they’re very enthusiastic and they’re 

looking to put their grant applications together. I think smaller 

communities that have potential are going to receive a good review 

and a fair judgment on that. One of the criteria that the advisory 

committee is looking at is a statewide balance. 


828a2.eps
24 

Senator MURKOWSKI. Yes. 

Mr. MELLO. So it doesn’t just go to—weighted to one region or 

another, there are small communities throughout the state that 

have great needs and also have good energy potential and I don’t 

think that that will be overlooked. 

Senator MURKOWSKI. What kind of technical assistance, you 

know, can you offer? You look at a community like in Anchorage 

or Fairbanks or some that have—they’ve got government systems 

in place, they’ve got grant writers, they’ve got analysts, they’ve got 

their projects ready to go yesterday and they’ve got it fully mapped 

out and they’d be ready to submit an application, but if you’ve got 

a—you know, let’s take Mike’s community here, at Akiak, you 

know, you say you’ve got wind potential and you had windmills in 

the past so you know you’ve got an opportunity, you know you’ve 

got the resource there, but you don’t have the technical expertise 

to submit your grant yet, is the State going to be helping to facilitate anything in that vein to help these smaller communities? 

Mr. MELLO. The short answer is yes. 

Senator MURKOWSKI. Okay. 

Mr. MELLO. And how that assistance is going to be provided is 

yet to be sorted out, we are a small agency. But a lot of the information about what resources are available for all sorts—all disciplines within the greater subject of renewable energy, that information does exist within the Department of Natural Resources and 

the Alaska Energy Authority. 

Senator MURKOWSKI. Right. 

Mr. MELLO. So there’s a pretty good sense of what the wind resources are—— 

Senator MURKOWSKI. Right. 

Mr. MELLO.—the hydro resources are, geothermal resources are, 

and so I think that that assistance is going to be provided. It just 

doesn’t make sense to overlook a community because they didn’t 

have the wherewithal—— 

Senator MURKOWSKI. Right. 

Mr. MELLO.—to get their application filled out right. 

Senator MURKOWSKI. And perhaps we’ll hear from our federal 

witnesses whether there is opportunities for this kind of technical 

assistance, if you will, to help facilitate these communities, get to 

that level where they’re able to compete with some of the bigger 

dogs that are seeking those same sources of funding. But it’s important as we move forward that these processes are in place—— 

Mr. MELLO. Yes. 

Senator MURKOWSKI.—and that they work equitably, urban 

versus rural, big community versus smaller community. I wanted 

to ask the question because each of you in one way or another 

spoke to the issue of conservation, whether it’s making sure that 

you have fuel storage tanks that don’t leak or what you can do 

within respective communities. I was out in Dillingham earlier this 

year and I was there the week after the spring barge had arrived 

and the sticker shock for the people in Dillingham was just, you 

know, phenomenal because the price had literally had gone up well 

over a dollar just literally overnight. And I was talking to a couple 

there living on a fixed income and I said, well, you know, conservation, this is really going to be the most immediate thing that we 

25 

can do and the response to me was, Lisa, you don’t think that 

every morning we don’t think about how to conserve energy and 

you don’t think we haven’t been doing this for years. So the question to you is, you have been conserving, you have been thinking 

smart, we’re now to a point where, talking to the folks here in 

Bethel, what you saw from just last month’s utility bill, seeing, you 

know, an increase that is almost double what you paid last month 

for your utility, how can we provide all these people in this room 

here some further tips on what more can you do as a family, as 

a community, as an agency, from AFN’s perspective, from the Native Corporation’s perspective, what can you provide in terms of additional suggestions that, you know, maybe don’t cost a lot of 

money, but that you can implement today? 

Anybody have any suggestions? 

Ralph. 

Mr. ANDERSEN. Thank you, Madam Chair. 

I think in a lot of cases it’s not so much additional information 

but getting basic information out. 

Senator MURKOWSKI. Does AFN do anything like that currently? 

Mr. ANDERSEN. AFN hasn’t yet started anything like that but 

we’re planning to have, as part of our convention, a whole section 

focused on energy, including booths and information—— 

Senator MURKOWSKI. Well, isn’t Alaska Marketplace looking at 

specifically giving grants to renewable energy ideas throughout 

Alaska? 

Mr. ANDERSEN. Yes. 

Ms. LEASK. Yes. 

Senator MURKOWSKI. Can you speak to that? 

Mr. ANDERSEN. Janie can probably speak to it better than I because, you know, I’m with the energy working group. 

Senator MURKOWSKI. Right. 

Mr. ANDERSEN. But I did receive information on the recent call 

issued by the Marketplace with the real strong preference for those 

that—for the proposals that do encourage either conservation and 

development of alternatives or some other energy or some other energy related project that helps us reach our solution. 

And I guess it really depends, Senator, on what level. 

Senator MURKOWSKI. Yes. 

Mr. ANDERSEN. At the family level, I think, it’s like the couple 

told you in Dillingham, my home town, that we have been practicing energy conservation for a long time. I think that tips can be 

provided in brochures. Those are things that we’re, in our region, 

are beginning to look at. 

I think the bottom line, though, is that—and as you mentioned 

in your opening remarks, there are a number of regions and areas 

that have developed energy plans and strategies and policies and 

those activities such as outreach and such as providing information 

are an essential part of those. I mean Bristol Bay, we have a plan, 

I’ve submitted a copy to your staff earlier. But I think the real 

problem is in the implementation. 

Senator MURKOWSKI. Yes. 

Mr. ANDERSEN. Is with funding, especially. Mike and others may 

have mentioned, you know, that we do have these policies and 

plans but really it’s how do we take the next step, okay, with the 

26 

BIA/TPA funding, for example, being absolutely flat for the past 20 

years, that causes problems in being able to develop new programs. 

I met, or just spoke briefly with Bob Middleton a minute ago because at BBNA we’re trying to—and other regions as well, are trying to develop tribal energy programs but that we don’t have funding to implement them. We can develop the plans and strategies 

and policies and mission statements and goals and outcomes but 

kicking them into gear takes money which we don’t have. 

Senator MURKOWSKI. Yes. 

Mr. ANDERSEN. And I think the solutions to getting more information out can be done at different levels and I think we all need 

to, you know, become more aware of the need for that. 

Senator MURKOWSKI. Well, and I think that is something that we 

can do whether it’s AFN or First Alaskans or, I know, AEA, the 

tribal councils, we’ve got our own communication networks. I know 

that on my website we’ve got a conservation tip of the week, and 

we just solicit ideas from people around the state and we post 

them. I mean it’s nothing earth-shaking. But I think part of the 

frustration is, is that everyone thinks that we have to have a big 

energy plan in place before we can start implementing things, and 

the reality is is that each one of us can be doing small things within our own home, within our own businesses that cumulatively can 

make a difference. And I think it helps when we share those ideas, 

and help to facilitate kind of that community action from a volunteer perspective first, and then we can work on that bigger—can 

you speak to the Alaska Marketplace and what they are doing with 

urging innovation in renewable energy areas? 

Ms. LEASK. I got the same email that Ralph got. 

Senator MURKOWSKI. Okay. I saw the advertisement in the ADN 

so—— 

Ms. LEASK. But I know that energy is one of the four categories 

that they’re looking for for innovative projects for the rural Alaska 

Marketplace, which will be announced during the AFN Convention. 

I know it’s a relatively short timeframe but I know that that’s one 

of them. 

Speaking to what people can do, I think RurAL CAP has done 

a really good job through its weatherization program in trying to 

be proactive and getting tips out to people on ways people can save 

money by weatherstripping or by programmable thermostats or 

maybe even going to what Juneau had to do, which brought a smile 

to my face, when, I mean nobody likes to see anybody suffer or go 

without, but at the same time they unplugged everything in their 

house and then they started plugging things in to see what took 

juice and then what they really needed to have plugged in, so I 

think that that is one area, you know, that people can do. 

You know, but I think we need—the Interior Regional Housing 

Authority is doing a terrific job in trying to build a house for rural 

Alaska. Many of the HUD houses that we have in the villages, the 

design came from out of state and didn’t take any consideration in 

of our winters, of our climate, or where the house was going, it was 

just a cookie-cutter, here’s a design so I think that the Interior Regional Housing Authority is doing a prototype that I think can be 

used and I think we can put some more money into retro-fitting 

houses and glass or putting what—another thing that people can 

27 

do is to, during the wintertime, is to put either foam or something, 

curtains, at a minimum, over windows, which are the source of big 

energy leaks in housing. 

But I think in any of this, we do need to have weatherization, 

we do need to have collaborization but we also need to have jobs 

in rural Alaska and whether those are seasonal jobs or whether 

those are related to the pipeline or the CDQs on fisheries, but we 

really do need to have rural Alaska in order to stem the tide because you do get the young people going back to their villages very 

idealistic and really wanting to go to work there but there’s really 

not the jobs that’s available so we can talk weatherization and we 

can talk about providing and saving money and fuel to make villages more affordable but we also have to talk about the jobs, too. 

And, finally, I think that whatever we do, we need to bring state 

dollars to the table, we need to bring federal dollars to the table, 

we need to bring non-profit dollars to the table, regional corporations. One of the things that we’ve decided that we’re going to do 

at First Alaskans is try to be a clearing house for what everybody 

is doing with respect to affordable energy and renewable energy. I 

didn’t know, for instance, that in the Bering Straits region, Bering 

Straits Native Corporation put $6 million into windmills in their 

area, you know, and to try to share information among different 

Native organizations and groups. 

Senator MURKOWSKI. I think that we can gain so much from the 

work that has been done in other parts of the state where maybe 

different challenges—— 

Ms. LEASK. Yes. 

Senator MURKOWSKI.—but still challenges nonetheless, and to 

hear that First Alaskans will assume that role as a clearing house, 

I think, is good, it’s very important because I think we need to recognize that through the sharing of the information we’re probably 

going to be a step ahead when we start in some other areas, perhaps from the mistakes or the successes. 

Mike, I wanted to ask you, you made the comment about the 

need, and I don’t want to misinterpret your words, but to subsidize 

fuel to rural Alaska was what I wrote in my notes. One of the 

things that kept coming about repeatedly yesterday in my conversations with people, whether it was in the grocery store or talking at dinner, was the fact that, here, in the region, everything 

comes to you by either air, very expensive, or your goods come up 

via barge, and the prices that you have to pay are now even higher 

because in order for that barge to get there they got to fuel the 

barge and that’s expensive and so the cost that is added on to the 

goods is just that more. You think about the rest of the state and 

the infrastructure that is provided to them, through federal or 

state dollars, whether, you know, you’ve got the railbelt, you got a 

railroad, you got roads that connect from Seward up to the Interior 

area; in Southeast you’ve got the Alaska Marine Highway System 

that in a lesser extent is kind of their highway, but here, you really 

don’t have your transportation infrastructure that is your state or 

your federal infrastructure. You’ve got your barge company that’s 

bringing the goods up, whether it’s the materials to build your 

home or the food supplies that you feed your family with. Anybody 

have any suggestions as to how we can, you know, you say subVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00031 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
28 

sidize fuel costs, I guess I’m looking at the situation of how you 

move things to the region as being a major impediment and a cost 

multiplier. 

Mr. WILLIAMS. Yes, first of all before I answer that question, as 

vice chair for Rural Community Action Program and I’ve been on 

that board for the past 15 years working on weatherization projects 

and also working on the portable homes for rural Alaskans. And 

I commend RurAL CAP for providing tips and information how we 

can conserve fuel in each community, and to cut down on or do 

some assessments on green house gases and et cetera, on how 

much carbon you produce in each household. I think more weatherization programs in each community must be implemented and if 

we’re going to do an impact on cost reduction or saving energy in 

rural Alaska we need to do that and we need to provide funding 

to each community because we’re doing several projects here and 

there. 

And I would also recommend that each housing authority, that 

they build these energy—five star energy efficient homes right now. 

It can be done. For example there is Tim Meyers from Bethel that 

has been doing some stuff to do minimum fuel consumption to each 

house and he’s done quite a few things right now and I think it 

can be implemented with all of these housing projects that are 

going on each day in our areas and I think Janie alluded to these 

designs are being built or being copied from, for instance, from 

New Mexico. 

Senator MURKOWSKI. Yes. 

Mr. WILLIAMS. So I just wanted to put in that many rural community action programs here in Alaska, our Native communities 

are doing the same. So I think in terms of the transportation costs, 

I think it’s stemming from—I just hate to point fingers at anybody 

but I think, you know, we have a Federal Government that sets 

policy and, you know, why are we in an energy crunch right now 

in this nation, you know, we’re not just the only ones who are paying the price right now. I think that with all the profits that are 

going on with the only companies and we read it every day in 

newspapers, that enormous profits are being made and who’s paying the costs, we are. 

In terms of providing trans goods from Seattle and Anchorage 

through air and through shipping, I just, you know, wonder how 

we can, you know, provide lower costs of the transportation of 

flour, rice, et cetera. But I think the leadership of this nation must 

take action right now to make, no matter where you live, that you 

make everything sustainable into the future or else, you know, if 

we do not, you know, where do we find funding for all of these 

projects and these trust programs; it’s from the Federal Government. And I think it’s the trust responsibility of the Federal Government to the tribes here in Alaska and in each village, it is the 

responsibility to provide that. But, you know, I think right now 

with the limited amount of funding that we have it’s been—we’ve 

been trying to extend the value of the dollar. So I also agree with 

Ralph’s comments on those flat funding, you know, we’ve been—the 

funding has been going down and/or flat and the value of the dollar 

has gone down as well but, you know, I was trying to think of how 

we can get assistance for this and I think we can somehow but we 

29 

know the cost of war, we know the disasters that are happening, 

you know, we’re providing money for those issues that are going on. 

But I think this can be done but, you know, those were my recommendations that—— 

Senator MURKOWSKI. Thank you. 

Mr. WILLIAMS.—we need to do something. For example, the bypass mail. We’ve been depending on the fruits of the bypass mail 

but when I hear that it’s going to be on the line and if we lose it 

then how can we transport a thousand pounds to Akiak at reduced 

costs, and if we pay the same amount of cost of that thousand 

pounds, then we can’t afford it. 

So I really wanted to see—throwing that out on helping us sustain ourselves out here for the transportation costs because—— 

Senator MURKOWSKI. Well, we have so much that we could talk 

about all morning and each issue will take us even further. We do 

need to move on to the next panel. 

Before we do, though, your comments remind me, though, you’re 

talking about the federal role and I’m sitting here in my federal capacity, most certainly, but I think we also recognize as Alaskans, 

that it is not just the oil companies that are standing to benefit 

from the high prices of oil, the state of Alaska and our treasury 

and our people are benefitting a great deal. I view this as an opportunity for us, as a state, as our treasury gains $12 billion from last 

year because of the high prices of oil, that this is our opportunity 

to invest in ourselves, to take that resource from a finite resource, 

if you will, and help develop that infrastructure, the clean renewable energy resource that will take this state into the future for as 

long as we will be around. I view that as our opportunity to invest 

in ourselves and feel that that challenge is there for us, it is not 

just the Federal Government, it is not just the local community, it 

is all of us and we’ve all stated that, but we’ve got an opportunity 

now as a state to be very proactive in making this happen. 

So I know Janie, you’re itching, but very, very, very short. 

Ms. LEASK. Very, very quick. And I just wanted to say on that 

line, at an AFN leadership meeting that was held on energy a couple of weeks ago, one of the speakers who happens to be on our 

board of trustees challenged the Governor to set aside, I think it 

was $200 million a year, toward finding solutions and coming up 

with innovative sources of renewable energy and start implementing that. 

Senator MURKOWSKI. We can do it. 

Ms. LEASK. $200 million a year for five years. 

Senator MURKOWSKI. Yes. 

Ms. LEASK. And, you know, I totally agree with you, I think the 

state of Alaska with our money, we’re giving out lots of different 

things but we’re not really addressing the core. 

Senator MURKOWSKI. We’re not investing in ourselves and providing for the long-term solutions. 

Ms. LEASK. Yes. 

Senator MURKOWSKI. I want to thank each and every one of you 

for your testimony. Please know that if there’s anything further 

that you would like included, that you can also submit addendums 

to your statement. With that we can close out this panel and bring 

up Panel No. 2, please. 

30 

Mr. WILLIAMS. Thank you very much. 

Senator MURKOWSKI. Thank you. 

[Applause.] 

Senator MURKOWSKI. I will apologize for not giving everyone a 

stretch break but we ran over a little bit with that first panel and 

we don’t want to short change Panel No. 2 here, so we’ll just keep 

moving. If those of you need to get out and stand up, it’s a little 

bit warm in here, but without disturbing the proceedings here, we 

would encourage you to do that. We’re joined again this morning, 

Panel No. 2, by Mr. Myron Naneng, Matthew Nicolai, Gene Peltola 

and Ron Hoffman. Gentlemen, I welcome all of you, appreciate all 

that you do in your respective capacities. And, Myron, if you would 

like to lead off, Myron, of course, is the president of the Association 

of Village Council Presidents located here in Bethel, thank you, 

and good morning. 

STATEMENT OF MYRON NANENG, PRESIDENT, ASSOCIATION 

OF VILLAGE COUNCIL PRESIDENTS 

Mr. NANENG. Good morning. Quyana (In Native) Chairman Murkowski, welcome and welcome to all the staff and people who are 

here today to hear testimony regarding an issue that’s really affecting each and every one of us in our own communities. It’s nice to 

have you back here in Bethel, Senator Murkowski. 

Senator MURKOWSKI. Thank you. 

Mr. NANENG. And it’s the hub of the Yukon-Kuskokwim Delta. 

The Association of Village Council Presidents is a non-profit human 

and social service entity that represents 56 federally recognized 

tribes that make up the region. You have brought the committee 

here because while the energy crisis affects America, it is crushing 

Alaskan villages. Current prices, as of this week, updated from my 

written submission, written testimony, we called around yesterday, 

the Lower Kuskokwim averages, from Bethel, we have $5.98 per 

gallon for gas, which is up 63 cents since June 25th. $6.43 per gallon for heating fuel, which is up $2.02 per gallon. The Upper 

Kuskokwim averages $6.30 per gallon for gasoline, $6.60 per gallon 

for heating fuel. Lower Yukon averages, and we got these from 

Emmonak, $7.25 per gallon for gasoline which is up $1.34 per gallon since June 25th, and $7.83 a gallon for heating fuel, which is 

up $2.98 per gallon. 

Senator MURKOWSKI. From June? 

Mr. NANENG. From June. The Middle Yukon averages, and these 

are from the village of Marshall, $6.41 per gallon for gasoline, 

which is up 28 cents per gallon and $7.15 per gallon for heating 

fuel and this is up 39 cents per gallon since June. And on the 

coastal villages, Chevak and Scammon Bay, pay $6.50 per gallon 

for gas, $6.61 per gallon for heating fuels. 

Those are the prices that are currently being paid by people in 

our villages. 

The irony of the situation, this national energy crisis and debate 

focuses on Alaska, while rural Alaskans cannot afford to heat our 

homes, drilling in the Arctic National Wildlife Refuge is being debated and it has been debated for a long time, especially in Washington, D.C. With the energy crisis it’s more of a hot button issue 

in this election year, especially in other rural areas of the Lower 

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48 states. A Republican in Colorado has toured ANWR this week 

to make her decision about it in her race against her opponent who 

opposes drilling. Missouri voters are asking their congressman 

what he thinks about drilling in his bid for Governor. So other 

parts of the country are talking about what they can get out of 

Alaska. But this does not even matter that the rise of oil prices 

have enriched Alaskan treasure, it still cuts the throat of many 

who live in Alaskan villages, especially in rural Alaska, even with 

the resource rebate. The State approved a bonus of $1,200 along 

with the Permanent Fund Dividend for each resident to help relieve some of the energy burden, our people expect things to get 

much worse. Last years fuel prices in our communities on the average 60 cents higher than the U.S. average. With each successful 

seasonal fuel shipment the cost always increases. There’s never a 

decrease in fuel prices when they deliver them. And our first snow 

is barely two months away and we’re going to have a critical winter, we can anticipate one. 

Citgo Native American Heating Program gave our villages some 

relief last winter and it’s going to be needed again. 

A University of Alaska study published in May showed that rural 

Alaskans will spend 40 percent of their annual income on energy 

this winter compared with four percent for average Alaskan households, that means the urban areas. Our winters are brutal, the 

winds and elements plus our aging and poorly constructed early 

BIA HUD homes, commercial properties and public and tribal facilities, energy upgrades for older facilities will make the most immediate and sustainable impact on energy costs. 

Fuel price and other energy costs and use. Prices for residential 

heating and regular gasoline increased over 100 percent since 2007 

in many of our villages and the estimation does not include taxes. 

Alaska Village Electric Cooperative, which serves 53 small villages 

in Western Alaska, or most of them in Western Alaska had a fuel 

bill that went up $26 million from $14 million last year. Village 

residents are paying an average of $300 a month in electric bills 

with an average household income of 17,500. Many families are unable to maintain their livelihood and support their households. Locally owned utilities face power shut-downs and brown-outs 

throughout the winter in order to conserve fuel and save energy 

costs. Some of the villages have not increased their fuel prices because they’re trying to help their residents in their communities. 

The quotes that I submitted for sample fuel prices per village 

from the Tundra Drums from January is no longer in effect. I’ve 

stated the increases that I just noted for parts of the areas within 

our region, and you can see the big difference of that, they’ve increased substantially. 

Taking charge biennial energy plan for 2008 and 2010. AVCP, 

Calista working with the organizations that are represented here 

are working to create the regional energy plan through Nuvista 

Light and Power Cooperative in order to conduct energy feasibility 

studies for the region and for the developing project at Donlin. The 

energy study was completed by Nuvista in 2002 and was followed 

up with a feasibility study in 2004. Nuvista is now engaged in energy planning and development for the process for the AVCP 

Calista region. One of our partners, a village located in (In Native), 

32 

Chaninik Wind Group received 4.8 million grant in 2008 to develop 

energy projects and determine feasibility of subregional wind energy for four villages. 

Regional wholesale cooperative is being considered for many of 

the organizations within the region as well as the villages because 

like the previous people that commented, some of the school districts are having to reduce the salaries of their teachers in order 

to meet their energy costs for the winter, and that’s going to be the 

same for many of the village businesses. 

Energy planning for the subregion. AVEC has established three 

wind energy—wind generation projects, one in Toksook Bay and 

one in Hooper Bay and in Kasigluk. Hooper Bay is revitalizing the 

wind energy that they used to have in the community many years 

ago before even talked about wind energy. I grew up in a house 

that had wind generation on top of the house and we lit our homes 

with one light bulb before we had a generator in the community, 

a diesel generator in the community. So other wind energy projects 

are feasible along the Bering Sea Coast, the Lower Kuskokwim and 

the Bethel area. In heavily treed areas of the Middle Kuskokwim 

and Lower Yukon biomass projects could provide community facilities with heating needs with biomass boilers and wood chippers 

that would provide feed stock for these and a variety of community 

facilities and home heating boilers. 

In-stream turbines in other areas of the Kuskokwim and Yukon 

Rivers and more powerful tributaries are worth investigating as is 

ocean wave energy along the Bering Sea Coast. But we know that 

ice conditions can limit some of that ability. There is a geothermal 

potential at the NYAC mine with the hot springs along with inriver hydroelectric potential for nearby communities. 

We have also identified two potential targets for hydrocarbon exploration. On top of supporting more energy sourcing exploration, 

the plan considers an inter-tie to the railbelt based on the economic 

development potential for projects such as Donlin Creek Mine. 

Developing fish oil and bio diesel from off shore-based and floating salmon processors on the Kuskokwim and Yukon using the 

Morse engine generator at a 50/50 raw fish oil-diesel blend. 

Regional energy coalition is being talked about right now. It is 

imperative to call for development of a regional energy coalition 

that includes all utilities, major electrical consumers, fuel operators 

in the region. And such a coalition would enable regional electrical 

utilities and fuel agreements in order to achieve energy cost savings and efficiencies. A bulk fuel cooperative by the regions most 

solid businesses and institutions would hold an immediate shortterm solution that could bring sustained savings. Right now nonprofits are able to buy fuel for their facilities at lower costs than 

those in communities that have to buy it for their member villages. 

Oil and gas exploration are conditionally green lighted. The 

tribes within our region for the first time recently rescinded a longstanding resolution that banned oil and gas exploration. A change 

of heart came as a result of the energy crisis. However, the technologists have dramatically changed that since the destructive and 

crude exploration and discovery processes first threatened our perception of land and subsistence food resource safety. Along with 

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leges of each land owner, stakeholder directly involved in the utilization and development of renewable resource energy on their 

property, the communities have to have a say in what goes on with 

their renewable energy projects, including oil and gas exploration. 

What the state should do and can do. Provide a renewable resource deployment assessment of the regions based on the MM/ 

BTU cost. This mandate will help us ascertain the development 

and deployment of renewable energy projects based upon available 

renewable energy resource in the region. State financing should 

lead to local takeover of energy distribution and management. 

A continuation of the Power Cost Equalization Program and improving its qualifying requirements to include schools and other 

government facilities affected by the current energy crisis would 

address immediate and dire needs and current budget constraints. 

State of Alaska should create a Department of Energy cabinet office that includes regional representation for direct support, training and technical assistance. 

The State should establish a dedicated Renewable Energy Deployment/Energy Efficiency Equipment Loan and Grant Fund in 

coordination with statewide and local banking and financing institutions. 

The AVCP region supports the planning, development and utilization of North Slope gas for rural Alaskan communities. 

The creation of more bulk fuel refineries in rural outposts such 

as those as Flint or Nikiski to meet heating fuel, gasoline, diesel, 

aviation and propane needs in a way that minimizes the costly 

shipment demands. 

In closing. We’d like to thank the Committee on Indian Affairs 

and you and your staff for coming all the way from Washington, 

D.C., to address a very critical issue in a very remote and challenging part of the country during our energy crisis that affects us 

all. 

Alaska may be the only state out of many you serve to hear our 

needs and attempt to address our concerns but we are grateful and 

earnest in helping you to build the record that will hopefully result 

in actions. 

I understand that some of the members of the Alaska Legislature 

and other concerned citizens and business owners throughout this 

state are in the audience today and I hope that this testimony has 

brought you into agreement that the wealth of the state of Alaska 

does not translate into a wealth of infrastructure in most of rural 

parts of Alaska. We should have had these—I know the energy 

issue had come up over and over again throughout the last 20 or 

30 years and we don’t want to shame Alaska or any of the urban 

areas anymore about this, we want action, we want investments 

and we want returns in the form of stable and sustainable energy 

source. 

Alaska is a massive state with innumerable natural resources 

and alternative energy options that we should be striving hard to 

develop and utilize. Protecting our way of life in the face of developing more responsible energy use and consumption should be possible in this day and age. 

34 

We look forward to working with you to continue to press this 

issue and seek solutions to make day to day living possible in one 

of the most unique parts of the world. 

With that, thank you. 

[The prepared statement of Mr. Naneng follows:] 

PREPARED STATEMENT OF MYRON NANENG, PRESIDENT, ASSOCIATION OF VILLAGE

COUNCIL PRESIDENTS


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Senator MURKOWSKI. Thank you, Myron. Appreciate your leadership on behalf of so many in so many villages. 

[Applause.] 

Senator MURKOWSKI. Matthew Nicolai. Matthew it’s always a 

pleasure to be with you. Thank you for all that you do and your 

comments this morning. 

STATEMENT OF MATTHEW NICHOLAI, PRESIDENT/CEO, 

CALISTA CORPORATION 

Mr. NICOLAI. Thank you, Madam Chair. We appreciate being invited to address the Senate Indian Committee on Indian Affairs. 

Welcome to Bethel and I hope that you had a good and joyful night 

and got to visit with a lot of the people here in Bethel. 

We want to present our views regarding high fuel prices and the 

effect to our shareholders and also to Calista. I have been president 

of Calista for the past 13 years. I’m a 33 year employee of the company. 


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Something that we want to share with you that’s very important 

for the Federal Government to understand is we have regional statistics of the region that the U.S. Senate must understand. We 

have two census bureaus, Bethel and the Wade Hampton. The statistics in our region gathered in the year 2000 and 2002, when we 

look at the poverty level on the national scale and also on the state 

scale, Bethel Census Bureau has 20 percent that has the impoverished district in the Bethel Census. Wade Hampton is the most impoverished, is the Emmonak area, where the average salary per 

capita in our region is $8,717, while the state median income is 

$22,660. That’s considered the most impoverished district in the 

country. And the reason we want to share this with you, we’ve 

gathered information that Mr. Naneng read to you regarding the 

fuel prices in our region, when you consider what was being presented by a lot of the shareholders over the rest of the summer 

that we just passed through, the subsistence hunting and fishing 

activities, a lot of the shareholders in our region has been curtailed 

as a result of high fuel prices. We’re hearing from, village by village, that families could not gather the foods that they needed because of high gasoline prices. I made multiple trips throughout the 

region and I hear that in the Yukon River and the Kuskokwim 

River. We’re going to see this winter a result of high gasoline 

prices, many families that may be without subsistence hunting and 

the foods that they’ve gathered this summer. 

Removing subsistence will definitely have a major impact and 

this is the reason why Calista, you know, we’ve always said that 

at AFN and we’ve always said that to you and we’ve always said 

that to any candidate, Calista is the only regional corporation that 

spent $4.8 million. We put in Title VIII of ANILCA, no one did, 

we’re the region that worked with AVCP president, then Carl Jack, 

and we worked hard to make sure Title VIII was protected. Because the effect of subsistence is very important to our people. 

Calista, even though we’re a profit corporation, it was number 1 

agenda, that we protect the subsistence economy in our region. 

That’s the reason why the high gasoline prices are impacting the 

people that we serve. 

For Calista, the energy costs that we’re seeing this year, we’re 

seeing the exploration of our subsurface properties curtailed. Each 

summer we have programs, I want to walk through the past 12 

years that I’ve been president, seeing exploration programs on our 

subsurface properties, the highest number of employment that we 

offered one summer was a little over 690 shareholders those were 

exploration jobs in NYAC, in Donlin, in Goodnews Bay and New 

Stuyahok, these are the four major exploration areas that we have. 

This summer the junior companies that we’re used to seeing explore our lands did not show up. This summer we only had 135 employees actually work at projects that we had and those are mainly 

Donlin Creek. So we’re seeing that effect of high diesel cost that 

the exploration companies need for them to look at our properties 

that we have. 

Under ANCSA VII (i), Calista is holder of 6.5 million acres of 

subsurface properties. It is our duty and the director’s understanding and our vice chair is here, Willie Kasayulie and one of our 

directors, also George Guy and John are here, their duty is to make 

42 

sure that we meet the requirements of VII (i) to ensure that we explore our properties are for future value and the future value of 

high diesel cost this year has been curtailed for future generations 

because any time when we’re not spending money looking at our 

subsurface properties it curtails down into the future that future 

jobs are at stake. Donlin, right now, one major issue for Donlin 

Creek and 190 million has been invested Barrick and NovaGold 

were up to last year, where we haven’t seen the new numbers for 

this year, if energy was resolved to Donlin it would be a mine 

today, it would have been in operation by 2008. If the mine became 

a project, if Donlin became a project it would employee 500 people 

in our region. Right now we can’t deliver the project because of one 

major issue, energy. With the recommendations that we want to 

offer to you, especially this committee, has a trust responsibility to 

Alaska Natives and Native Americans, we appreciate that you 

came here to listen to our views and I hope that the committee 

does move forward on the recommendations that you heard this 

morning to the tribes and also to the regional corporations. 

Something that’s very important, as I read the policies of the 

Federal Government, when I try to understand how the Office of 

Indian Energy addresses Alaska Native organizations, something 

the village corporations have tried in our region to apply for funds 

through that organization, they’re not eligible because of the language that’s in that program. And the reason why I say the village 

corporations in our region, we have 17 utility companies and I have 

to speak for them, they’re the owners of the surface properties, 

under the agreement of the Office of Indian Energy, the TERA, 

Tribal Energy Resource Agreements, do not include village corporations in Alaska. That means in my village George Guy runs a utility company, he cannot apply for funds for planning purpose that 

he wants to address for wind power or down in (In Native), those 

four communities, cannot get those federal funds because one, 

they’re not eligible. So because a surface owner is a village corporation, they should be eligible to receive those monies. So I do hope 

that this committee looks at addressing that issue. 

I’m one that generally does a lot of research on information on 

energy and something that we want to see in a long-term basis 

that we hope that the State and also the Federal Government address on the issue in developing a partnership that can address 

and resolve energy problems to the Bush Alaska. This has been 

done before. Historically, when you look at the Appalachian Commission, it developed the Tennessee Valley Electric Association 

that resolved energy to 16 states. And that was a partnership of 

16 states that basically addressed energy and this is the 16 states 

even smaller than Alaska. So you look at Alaska, you have to look 

at it as a multiple state even though we’re one state, we’re the size 

of those 16 states. So I hope you carry that forward to the Senate 

Affairs, Indian Committee members that you cannot look at Alaska 

as one, you have to look at Alaska as multiple states with energy 

problems that can be resolved. 

One major issue for regional corporations, we hold a lot of the 

subsurface properties that we want to look at alternatives. I hear 

from our neighbors up in NANA, that they want to address western coal. Imagine if they’d be able to turn biomass of that facility 

43 

and develop gas out of that that can be used in light of Western 

Alaska. We can’t do that today because so many barriers that 

NANA has to go through to develop coal. We try to introduce coal 

into this region, we got shot, saying our people are going to die 

from black lung, you go to Salt Lake City, no one’s dying from 

black lung. Right by the airport is a major coal facility, it doesn’t 

even drop one single iota of pollution. The only pollution that they 

have is C02, and you know how the greenies talk about C02, that 

we’re lighting up the world and we’re having problems with what 

you call greenhouse effect and it’s affecting the Arctic. That’s the 

politics that we hear out of the greenhouse issues on pollutants 

that come out of coal. Coal is a major resource in Western Alaska 

owned by a regional corporation that will benefit 223 village corporations, 12 regions because of the VII (i) agreement if it was developed into a major energy source, and I’m just explaining one 

project that can have a multiple impact to the people that we serve. 

So what we’re asking you, I hope that you take into consideration, and you’ve heard some recommendations made this morning, 

we would like to see a partnership that you in the US Senate could 

offer to this Governor that we have, and we just had an energy conference in Anchorage that Senator Stevens, Senator Inouye and 

Governor Palin listened to the concerns that we had in AFN and 

I was very happy that Ralph Andersen carried those forward and 

those are the same messages that we heard. We want to see public 

private partnership to resolve rural energy. 

Anchorage, I’ve lived there 33 years, I have the cheapest power, 

guess where I get my power from, rural Alaska. I get it there. 

North Slope Borough, everybody in Anchorage thinks it’s part of 

Anchorage, it’s not, it’s rural Alaska providing power to Anchorage 

and we get the greatest subsidy that we resolve from oil tax subsidies that we got this huge money for cheap energy for urban communities and guess what urban communities do, they don’t want 

to hear problems, and I’m glad Nancy’s here, they don’t want to 

hear about rural problems. This is the reason why I’m stating this. 

This is something that you, as a leader of the committee, can offer 

a public private partnership with this Governor. This Governor appointed a very good person, Steve Haggenson to lead energy direction and he’s looking for alternatives that will resolve problems 

that we have. 

We’ve been studied to death. 

When we hired Bob Charles in the back, back there, to lead 

Nuvista Light and Power on behalf of this group, we found $25 million worth of studies came to our region and not even one resolution yet, $25 million of state money and not even one resolution. 

We hired one individual, Frank Bettine, that’s the father of that 

Railbelt Energy, he recommended a railbelt to be addressed to 

Fairbanks, we hired him and he found through the records what 

we need to address regionally, that’s the reason why this body here 

is working together and we’ve submitted to you 13 recommendations that we have, I’m not going to go through those, in the energy 

plan that we have. This plan is still in a draft plan, we gave it to 

you in rough draft form with many deletions in there so you could 

understand the working committee here, we are trying to address 

the problems but we need your help. The committee can be of asVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
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sistance to us in resolving energy problems—resolving energy problems, Madam Chair, will spur economic development and create 

jobs and I do hope that you carry forward that to the chair, who 

I’m very happy sent letters to us and said we want to read your 

recommendations and we are going to be moving those forward. 

Thank you, Madam Chair. 

[The prepared statement of Mr. Nicolai follows:] 

PREPARED STATEMENT OF MATTHEW NICHOLAI, PRESIDENT/CEO, CALISTA

CORPORATION


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Senator MURKOWSKI. Thank you so much, Matthew. 


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[Applause.] 

Senator MURKOWSKI. I Appreciate your leadership. We also have 

with us this morning Gene Peltola. Gene has done wonderful work 

in the area of health care as the President and CEO of the YukonKuskokwim Health Corporation, so if you can enlighten us on 

what’s happening in the health care world as a result of higher energy prices. 

STATEMENT OF GENE PELTOLA, PRESIDENT/CEO, YUKON– 

KUSKOKWIM HEALTH CORPORATION 

Mr. PELTOLA. Okay, good morning, Madam Chair. I’m Gene 

Peltola, for the record, president and CEO of the YukonKuskokwim Health Corporation. And we thank you for bringing 

this forum out to us here in rural Alaska. 

The Yukon-Health Corporation has been contracting with Indian 

Health Service since before the enactment of the Indian Self-Determination Act. Today we provide comprehensive health care to 

28,000, largely Yup’ik Eskimo people across a roadless area larger 

than the size of Oregon. 

Where the average per capita income is less than 15,000. Gas in our hub city of Bethel, as stated earlier, is almost $6 per gallon. 

In our villages it’s approaching $8 a gallon, the same price we pay 

for milk. When considering the high energy food and personnel 

costs against the IHS appropriation that does not allow for mandatory medical inflation costs, providing health care for our 58 tribes 

is a daily and extraordinary challenge. For the past three years 

YKHC has accommodated for dramatic energy increases. Regarding 

utility costs in fiscal year 2000 YKHC saw a 21 percent increase 

or a $1.1 million increase over anticipated utility costs. Fiscal years 

2007 and 2008 YKHC utility costs increased on an average of 8 

percent or half a million dollars. The fiscal year 2009 budget includes an anticipated 22 percent increase or another $1.4 million 

worth of utility costs. The total increase in utility costs for the last 

three fiscal years total over $3 million. 

Increases related to fuel have also been dramatic. For fiscal year 

2009, our freight, patient and corporate travel costs will increase 

over $700,000. YKHC is committed to delivering health care at a 

high level and expanding services where they are needed and/or financially feasible. However, with relatively flat revenues and substantially increase in expenses, the delivery of health care cannot 

help but be affected out here. 

Although YKHC’s budget amounts, our corporate totals, we 

should notify you of our increased costs at the village level. One of 

YKHC’s main partners, our tribal and city governments in our 50 

YKHC communities are suffering too. In our member villages, either the tribe or city governments own their respective health clinics. The governments receive a monthly rental fee from YKHC that 

is used for their rent, fuel, janitorial services and general upkeep. 

This is called an IHS Village Built Clinic Lease Program. According 

to IHS, current lease funding covers only 55 percent of operating 

costs. Many tribes and cities are requesting increased rental payments for clinics to accommodate expected utility increases. YKHC 

is tentatively expecting 30 percent or $187,000 to subsidize these 

increases. 

50 

For organizations that compact or contract IHS and BIA programs an energy solution exists that is already authorized by law, 

the full funding of contract support costs. 

And just to give you a head’s up, if Congress were to fully fund 

or negotiated contract support costs over 50 percent of those funds 

nationwide would come back to Alaska. We’re so advanced over the 

Lower 48 in assuming IHS and BIA programs. 

Over 20 years ago former Chairman Inouye of this committee 

wrote that the single greatest impediment to the success of tribal 

self-determination was a failure of the Indian Health Service to pay 

contract support costs. I can testify that what Chairman Inouye 

said in 1987 is just as true today. In Fiscal Year 2007 YKHC’s annual true shortfall exceeded $10 

million for the very first time. It has gone up approximately one 

million each year as we seek to take on ever growing IHS programs 

in a climate of ever rising costs. This is truly a crisis. To give you 

an idea, that $10 million is true costs, it’s cost of utilities, it’s cost 

of workman’s comp, it’s cost of personnel benefits, and where do we 

make up those costs, we have to cover those costs from third-party 

revenues. Most people hear about contract support costs and their 

eyes glaze over but these are very real costs. Either the fixed costs 

of our overhead, such as utilities or else the cost of providing workman’s compensation insurance, as I said, and health and retirement benefits to our staff, that’s what contract support cost, they 

are fixed and they are real. 

In 1992 and 1993, when we began operating the IHS hospital here in Bethel, we suffered a shortfall of over $2.2 million on contract support costs. The impact to YKHC and the region and the 

people we served was immediate. Over 40 positions were laid off 

within months after hospital operations began. Subsequent rounds 

of reduction in force and layoffs occurred in 1997, 2006, 2007. 

These events have had a very severe impact on the quality of 

health care that YKHC can provide, however, the impact is not just 

measured by the $10 million shortfall. As a result of this underpayment YKHC cannot employ as many primary care providers or 

provider teams. The care that those teams provide to our patients 

is typically billed to Medicaid, Medicare or third-party private insurance payors. The result is that the $10 million in reduced direct 

care services translates into approximately an additional $6 million 

in lost revenue from these sources. So the real loss is at least $16 

million to our programs, to the people we serve, and the tribal governments that we serve. And even more when you consider that we 

direct those lost third-party revenues back into staffing additional 

teams throughout our villages. 

I have four recommendations today. 

First, the committee should consider requesting additional funding for energy efficiency and conservation projects for aging federal 

facilities like the Yukon-Kuskokwim Delta Regional Hospital. Our 

hospital is now over 30 years old. And we have done the necessary 

study, the environmental work, the engineering work, we have a 

membrane roof on our hospital. It’s patched, it’s leaking all over 

again, and we have determined that at a cost of $1.2 million we 

can replace that membrane, we can insulate that roof, put some additional insulation in the roof and we’d have a cost savings in our 

51 

heating bills immediately of $120,000 a year. But the mere funds 

that are appropriated by Congress to renovate and upgrade federal 

facilities, that type of funding is not available to Alaska. Funding 

for research and deployment of realistic long-term energy technologies should also be considered, especially when Alaska’s potential for wind, hydro, geothermal and tidal solutions is tremendous. 

YK, like has been said, is one of the four partners who’s been 

working along with Calista and AVCP and our housing authority 

in developing a regional energy plan. Matthew referred to the draft 

version that we made available to you. There’s a couple action 

plans in there that I want to speak about. 

One is that we’ve decided to go forward and look at creating a 

fuel purchasing cooperative, made up of not only the four of us, of 

the CDQs, municipalities, our school districts, our utilities, our village corporations. Hopefully, we can achieve economy of scale and 

bring the cost of fuel in the YK-Delta down. Another thing we’ve 

been talking about, and I relate back to a discussion I had with 

Senator Stevens in Anchorage last winter, we were talking about 

the ever increasing cost of fuel and the cost of utilities in rural 

Alaska, and he made the comment that, Gene, what we need in 

rural Alaska is a refinery. And I thought to myself and for some 

time I gave it a lot of thought and I didn’t believe then that the 

volume was out here in rural Alaska, in Western Alaska to be able 

to sustain a refinery. And just recently as the four groups were 

meeting, we’re discussing the opportunity that the Aleut Corporation has in Adak. Basically all the supportive infrastructure for a 

refinery exists in Adak, along with over 20 million gallons of storage facilities already in place. They have a deep sea port. They 

have some of the longest runways in the state of Alaska. They’re 

geometrically located where they can purchase fuel from Indonesia, 

the Sulkan Islands or Valdez. If the Chukchi leases that were just 

given out ever go into production for a small window during the 

summer, you could tanker crude right directly to them, I mean you 

still have to look at the volume to sustain it. They’re geographically 

located so they could—fishing vessels in that portion of the Aleutian Chain and the Bering Sea don’t have to go back up to Adak 

to fuel up, they are just north of the east/west North Pacific shipping lanes. And you take a look at it and not looking at longitude 

and latitude, but just looking at a map, they’re as close or closer 

to Hawaii and the South Pacific Islands than the West Coast of the 

United States is and that’s where they’re barging their fuel in. And 

with the military requirements at Guam, I think then that you 

have the volume to be able to sustain an operation like that. And 

if our regional corporations from NANA, Bering Straits, Calista, 

Bristol Bay and Aleut could get together, I think a feasibility study 

should be determined whether that’s economically feasible. 

Second, the committee should consider directing the General Accountability Office to study the actual impact of the continuing 

shortfalls tribes are suffering in their contract payments. I am sure 

that YKHC’s experience is not unique. And hopefully a GAO report 

will help energize Congress to do its part in remedying the situation. As part of the GAO study some examination should be made 

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tract or compact operation regardless of circumstance and notwithstanding Congress making available up to $5 million for this purpose every year. The current situation is bringing to a stop all forward progress in tribal self-determination and self-governance nationwide. 

Third, the committee should examine why the IHS Village Built 

Clinic Lease program is currently not eligible for contract support 

costs and why lease funding has remained virtually the same since 

1989. This is especially disheartening given tribal compactors and 

contractors subsidize the lease program with their own health care 

monies due to the sharply increasing energy costs. 

Finally. I would ask the committee to look into the status of 

pending contract support litigation. After 12 years of litigation 

YKHC recently settled its old claims, but this is an exception. For 

other tribes with old and new claims, litigation is grinding on in 

various courts and boards. 

The fairest approach would be for Congress to extent the statute 

of limitations for all tribal contractors to pursue their claims over 

historic IHS underpayment for prior years. 

A more comprehensive approach would be a Legislative fix to create a new claim payment mechanism that would permit all tribes 

to receive appropriate compensation through the Judgment Fund 

without draining litigation that takes years to resolve. 

Ultimately, receiving full contract support costs is not about 

money, for tribal organizations like YKHC it means being able to 

systematically address cancer, suicide and other major challenges 

like high energy costs. 

It is the ability to hire a provider to perform portable 

mammographies in our villages to detect breast cancer early in 

Stage 1 when the five year survival rate is over 90 percent versus 

a later stage. Or our ability to hire a counselor to deploy to our 

communities wide behavioral health initiatives in order to save a 

teenager from taking their own life. 

Most importantly, receiving full contract support costs is an ability to provide an array of health services to a population suffering 

dramatic health disparities and even pay our light bill. In an environment without full contract support costs, flat IHS appropriations and dramatically increasing energy costs, eventually YKHC, 

as well as other health providers in our state will have to decide 

on which services to cut in order to pay our light bills and fuel 

bills. 

The funding for full contract support costs, and more importantly 

it’s relationship to directly improving American Indians and Alaska 

Native Health’s status is a matter entirely within Congress’ power 

to address. 

And I’d like to say that full funding of contract support costs is 

one small step for Congress but it’s one giant leap in addressing 

the health care of Native Americans nationwide. 

I want to thank this opportunity to thank you for bringing this 

committee to Bethel and giving me the honor of addressing you. 

Thank you. 

[Applause.] 

Senator MURKOWSKI. Thank you for your leadership on the issue 

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tify on this issue several times and I think it’s been very enlightening, very helpful for the committee. 

Mr. PELTOLA. And I won’t give up. 

[The prepared statement of Mr. Peltola follows:] 

PREPARED STATEMENT OF GENE PELTOLA, PRESIDENT/CEO, YUKON–KUSKOKWIM

HEALTH CORPORATION


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Senator MURKOWSKI. Last on the panel here this afternoon is 

Mr. Ron Hoffman. Ron is the CEO of AVCP Housing Authority and 

he’s also President of the Alaska Housing Authority, so, welcome. 

STATEMENT OF RON HOFFMAN, PRESIDENT/CEO, AVCP 

REGIONAL HOUSING AUTHORITY; PRESIDENT, ASSOCIATION 

OF ALASKA HOUSING AUTHORITIES 

Mr. HOFFMAN. Thank you, and good morning. For the record my 

name is Ron Hoffman, I am the President and CEO of AVCP Regional Housing Authority and of the Statewide Association of Alaska Housing Authorities. 

I’d like to welcome each and every one of you to Bethel. 

I wanted to express a special thank you and welcome to you, 

Senator Murkowski. Thank you for holding this hearing on an 

issue that is a crisis for the people of rural Alaska. I hope the information you gather can be used to craft legislation that provide both 

immediate relief to desperate rural Indian families and long-term 

solutions to the unbelievable high costs of energy in rural Alaska. 

Our Regional Native Housing Authorities were created to provide 

safe, sanitary and affordable housing, in particular, to rural Alaska. 

For example, my housing authority serves Bethel and the Wade 

Hampton census district area representative Alaska off the road 

system. We are this committee’s people. The Bethel census district 

population is approximately 78 percent Alaska Native; Wade 

Hampton’s population’s about over 90 percent Alaska Native. 

We also have unemployment rate at more than 15 and 23 percent respectfully. Looking at the numbers, the Native people of 

rural Alaska are living with the highest unemployment at poverty 

rates in the country. Factor in the crisis and you begin to have a 

picture of the critical need for immediate relief and a long-term solution. 

Off the road system, in Hooper Bay, with a population approaching 2,000, gasoline is at $7.24 per gallon. Heating fuel is at $7.37 

per gallon. In the village of Kakhonak on Lake Iliamna the gas is 

nearly $9 a gallon, with heating fuel at 9.25. 

In May the Institute of Social Economic Research at the University of Alaska reported that in 2000, an Anchorage family spent 5.5 

percent of its income on energy, while a family in rural Alaska 

spent 16 percent. By 2008 the Anchorage family was spending nine 

percent of its income on energy, the family in rural Alaska had to 

spend 47 percent of its family income on energy. Imagine that. The 

gap between the two families has more than tripled. The rural families is spending one-half of its family income on energy. Beyond 

the direct impact on families, energy affects the cost of doing business with increases passed on to its residents, air fares, groceries, 

our electric bills are through the roof. These costs are passed on to 

an Alaska Native population that simply cannot support them. 

For the people of rural Alaska to survive two things need to happen; unemployment and poverty numbers must be brought down 

through funding of training for current and future jobs. 

Second, we must explore all energy possibilities, including development of alternative sources of energy. 

57 

As one example, the Alaska Electrical Cooperative is using wind 

through lower costs and reduced dependency on fuel, projects like 

this should be supported by funding and tax credits. 

Other solutions for consideration. 

Expediting a gas pipeline from the North Slope with Alaska access to that particular energy source. 

Legislation to allow and require the refining of Alaska oil here 

in Alaska with a product accessible to all Alaskans. 

Other proposals to consider, opening ANWR for exploration and 

drilling. 

Relaxing the excess tax on fuel for rural Alaska. 

Energy and transportation subsidy for rural Alaska. 

I would like to expand on this just briefly. The Housing Authority recently, or this spring procured construction materials for our 

housing development, the transportation cost was roughly 40 percent of the actual cost. 

And the development of a central bulk fuel area, such as Gene 

related to Adak Naval Base. 

In some places in this country, the high cost of fuel is inconvenient, in rural Alaska this winter, our families will have to decide 

between feeding their children or keeping warm. 

This winter hundred dollar barrel oil will begin to take not just 

livelihood but the lives of rural Alaska. 

I ask you to come up with immediate relief and a short-term solution that will allow us to get more from our present resources 

while we explore new technologies for safe, clean and affordable energy. 

Thank you for the opportunity to testify. 

[Applause.] 

[The prepared statement of Mr. Hoffman follows:] 

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PREPARED STATEMENT OF RON HOFFMAN, PRESIDENT/CEO, AVCP REGIONAL

HOUSING AUTHORITY; PRESIDENT, ASSOCIATION OF ALASKA HOUSING AUTHORITIES


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Senator MURKOWSKI. Thank you. I have a whole series of questions that intended to ask, unfortunately I’m not going to be able 

to do as many as I would like because it’s already 11:45 and we 

still have our last panel to hear from. So what I intend to do is 

submit those questions to you and ask that you respond to them 

as part of the record. 

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servation. And we recognize that when it comes to our housing 

there are things that we can do, the programs that the State has 

with weatherization, the energy assistance programs that are out 

there, but to be eligible for at least one of the state programs, an 

energy audit is required. Do I understand that AVCP is working 

to train auditors, do we have any auditors out here, can we even 

take advantage of these State funds out in the rural areas right 

now? 

Ron. 

Mr. HOFFMAN. Please allow me to respond to that. 

Senator MURKOWSKI. Yes. 

Mr. HOFFMAN. Over the past couple months the Housing Authority has been actively supporting and sponsoring training for our 

residents, and we do have certified individuals right now that are 

able to conduct energy audits. 

Senator MURKOWSKI. How many do you have, do you know? 

Mr. HOFFMAN. It’s well over 10. 

Senator MURKOWSKI. Well, the word that I hear in Anchorage is, 

yes, we’ve got energy auditors, but we don’t have enough and it is 

fully a six month wait to get an energy auditor into your home and, 

of course, you’ve got timelines that are at play. So we set up programs with all wonderful intentions and then we don’t have the individuals that can move through the eligibility requirements. So 

I’m pleased to know that there’s 10. I’m hopeful that they’re actually able to get out and to respond to the community needs. 

Mr. HOFFMAN. Yes. We plan to expand that training program for, 

you know, our region, but we are establishing other training programs. In fact, the Association of Alaska Housing Authorities plan 

to go ahead and sponsor such a training program. 

Senator MURKOWSKI. That would be helpful. 

Mr. HOFFMAN. The legislative appropriation for the weatherization, you know, came forth very quickly and I’d like to thank and 

recognize Senator Hoffman for his sincere efforts in expediting this 

process. Then we were under emergency regulations in May, then 

we finally got the final regulations, so that there impacted as to 

how we do business. And, of course, one of the mandates was that 

we have an energy audit or an assessment on a unit prior to utilizing those dollars. But I feel confident that we will overcome this 

and we will, you know, renovate and weatherize the homes that 

are badly needed, especially in our region. 

Senator MURKOWSKI. Gene, I wanted to ask you one quick question. Back in Washington several months ago, you indicated to me 

that one of your concerns about your increasing costs was what 

you—what YKHC would anticipate spending for medivac’s because 

of the cost of fuel to fly the medivacs. What have you experienced 

this summer in terms of your costs due to increased fuel for your 

medivac operation? 

Mr. PELTOLA. Senator. Our medivac costs of this summer, since 

the advent of fuel being barged out here this spring, has gone up 

significantly. And like you said earlier, we’re finding that the acuity of the medivacs coming in from the villages to our hospital are 

greater because they can’t afford to come in when—— 

Senator MURKOWSKI. So they delay care. 

Mr. PELTOLA. Pardon? 

76 

Senator MURKOWSKI. They delay care coming into town. 

Mr. PELTOLA. Yes. And then we ship a medivac out when acuity 

gets to the point that they need to be medivac’d into Bethel or on 

to Anchorage. 

Senator MURKOWSKI. So not only are you seeing increased costs 

to your budget, but you’re seeing patients coming in that are probably higher risk than they would have been? 

Mr. PELTOLA. Yes. And then another step we’re working on is we 

anticipate our efforts between Providence Alaska and their LifeGuard Program and our AeroMed Program, we’ve been working for 

a number of months now to merge those two into one comprehensive effort, medivac operation, and achieve economy of scale and 

that should take place around November 1st this year. 

Senator MURKOWSKI. Good. Hopefully that will make a difference. I want to applaud AVCP and Calista and those that are 

part of the regional plan here for really taking that initiative and 

setting forth proposals. I think as the State works through its plan 

and incorporating the various regional plans that have been proposed, that’s how we get the best operations put together, is when 

it comes from the ground up. You know better out here what works 

rather than us in Washington saying, we think that, you know, the 

entire state of Alaska needs to be powered by X, Y or Z. The solutions coming from the ground up are very important so I appreciate 

your leadership on that. 

With that, I’ll thank the members of the panel and you can look 

forward to my questions and, again, if you’d like to supplement 

your testimony we welcome that. 

And we will come to the final panel please. 

[Applause.] 

Senator MURKOWSKI. Gentlemen, thank you for coming so far to 

be with the committee here today and to be with the people of 

Bethel and the region. I think you’ve heard from the previous two 

panels that there is no issue that is more paramount in the minds 

and in the lives of those out in the region, whether it’s individuals 

or whether it’s from the health care, education perspective, energy 

is it. We welcome you today. Appreciate the fact that you have 

traveled from Washington, D.C., to present your testimony. Again, 

the easy thing for this committee to do in a field hearing would 

have been to stay in Anchorage but I don’t think that you get the 

full perspective by staying in Anchorage, so I think the extra flight 

out here allows you an opportunity to see another part of our incredible state and to perhaps gain a deep appreciation of what we 

face here. 

We will start here this morning with Mr. Steve Morello, who is 

director of the Indian Energy Policy and Programs with the Department of Energy. Mr. Morello, we’ve had an opportunity to have 

many conversations before, appreciate your leadership and if you 

can provide your testimony to the committee. 

Thank you. 

77 

STATEMENT OF STEVEN J. MORELLO, DIRECTOR, OFFICE OF 

INDIAN ENERGY POLICY AND PROGRAMS, DEPARTMENT OF 

ENERGY 

Mr. MORELLO. Thank you, Madam Vice Chairman. My name is 

Steven J. Morello. I am the Deputy Assistant Secretary for Intergovernmental and External Affairs at the Department of Energy 

and I’m also the director of the Office of Indian Energy Policy and 

Programs. I’m a proud citizen of the Bawating Anishinabeg people, 

the first people of the rapids, federally recognized as the Sault Ste 

Marie Tribe of Chippewa Indians. I’m delighted to be here to have 

this opportunity to discuss with you energy solutions for Alaska 

Native communities. 

And before I turn to my prepared remarks, I want to take an opportunity to thank Dr. Robert Middleton, who has been my partner 

during the past year that I have been in office, the Department of 

Interior has worked very, very closely with the Department of Energy and we have tried to marshal our resources so that together 

we’re more powerful than if we were separated for the benefit of 

Indian country and for the Alaska Native people. 

Since Secretary Bodman named me to be the first Director of the 

Office of Indian Energy Policy and Programs just a year ago in 

September of 2007, I have made it a personal priority to visit Indian country and Alaska in order to assess the serious energy challenges facing tribes and Alaskan Natives, while also exploring the 

tremendous opportunities for the development of renewable energy 

resources. This trip marks my fourth visit to Alaska in my capacity 

as director and during each of these trips I have had the privilege 

of meeting Alaska Native people and understanding their issues. 

Clearly, the most pressing issue facing the Interior villages is the 

high cost of energy. My real concern is that if we do not find a way 

to provide affordable energy to these villages, we could face, as 

soon as this winter, an out-migration of huge scale. 

The best hope for long-term relief is to implement a portfolio approach using various renewable technologies, including biomass, 

geothermal, solar, wind and hydro. In tandem, a robust regional 

transmission grid could allow Alaskans to be energy independent 

and lead to a net export of some excess electricity. Likely shortterm solutions are the combination of conservation and energy efficiency measures with small localized biomass generators located in 

the Interior villages to replace the diesel powered generators currently being used there. Additionally, some villages may well generate electricity from hydro, solar or wind as well. 

The role of private investment in the success of these energy solutions is important because if the power generating projects have 

customers much of the power generating capacity can be financed 

privately. Since my time as director, I have worked closely to try 

to bridge the gap between Native people seeking out sources of investment funding and private sources who recognize that assisting 

Indian Country and Native Alaska is just good business. 

The Department of Energy is committed to being a good partner 

in search for a solution to the energy shortfalls in the rural Alaska 

Native villages. For example, the Tribal Energy Program within 

the Office of Energy Efficiency and Renewable Energy is currently 

78 

soliciting requests for information to identify ways to accelerate renewable energy development in the Alaska Native villages. 

I’d like now to provide more specific details regarding the types 

of renewable energy projects that could help solve the energy crisis 

in Interior Alaska. 

I’ll begin with Biomass. 

Interior Alaska is well situated for using biomass resources because of its tremendous supply of wood waste and fish oil processing at the villages. The development of a model project to demonstrate the success of biomass in Alaska is essential. Furthermore, Alaskan villages could employ local people to participate in 

the entire production chain from the cultivation and harvest of the 

biomass material to the building, operation and maintenance of the 

generation facility. 

I’m pleased to report that just this month the Department of En- ergy announced plans to make available up to $2.2 million for two 

renewable energy project awards selected for negotiation, pending 

further collection of data and environmental review, based on this 

competitive solicitation. One of which is aimed at advancing biomass in an Alaskan village and serving as the model project demonstrating the viability of this technology in rural Alaska. The 

Council of Athabascan Tribal Governments, under the Fort Yukon 

Wood Energy Project, plans to use wood fuel from a region rich in 

forest resources to displace diesel fuel being used for heating. The 

project plans to displace up to 30,000 gallons of fuel oil annually, 

typically flown or barged into this community by using biomass to 

heat the Ft. Yukon school and gym. 

The prospect of stand-alone biomass units are another area of potential for Alaska. Portable generating units that rely on biomass 

may be ideally situated for power production in the remote villages 

of Alaska. I’m hopeful that future progress will make this a viable 

option for Alaska villages in the short-term. 

Geothermal. 

Geothermal’s another renewable energy resource that is found in 

many Native American lands and Alaskan lands as well. According 

to the geothermal resource map of Alaska, there’s a geothermal resource belt located throughout the NANA region. 

The Department of Energy is funding a feasibility study that is 

currently underway with the NANA Corporation in attempting to 

ascertain the geothermal power generation potential for remote offroad village scale application. 

Further, the Department of Energy’s Geothermal Program has 

provided $565,000 and $1.2 million respectively for a geothermal 

resource assessment and technology demonstration of low temperature geothermal power plant in Alaska at Chena Hot Springs outside of Fairbanks. 

Solar. 

The promise of solar power is another important consideration 

for Alaskan Natives. The Department of Energy has funded several 

feasibility studies on the potential of solar power for off grid use 

in the remote villages. And I want to also commend the efforts of 

the Cold Climate Study Group at the University of Alaska-Fairbanks, because they are studying—leading the way in Alaska in 

studying the various applications of solar throughout the state. 

79 

Wind. 

The State of Alaska has wind resources that could allow cost 

competitive wind energy production. The Department has supported five wind feasibility projects including the Sealaska Native 

Corporation, among others, here in the state. And I recently met 

with representatives of the American Wind Power Association who 

expressed that many of their commercial members are seriously interested in pursuing wind projects here in Indian Country and in 

Alaska. My role will be to continue to forge these partnerships between commercial entities and tribal constituencies. 

Transmission issues. 

An essential part of a long-term solution to the problem of power 

in Alaska’s Interior villages and elsewhere for that matter is a regional power grid. I have become aware of an important study by 

the Southeast Conference to address the concept of building a network of power transmission lines connecting most of the communities in the region. This Southeast Alaska Inter-Tie study includes 

the delivery of hydro generated electricity to several of the Alaska 

Native villages in the region. The Department of Energy officials 

from the Office of Energy Delivery and Energy Reliability provided 

technical assistance to the researchers, and we believe this report 

could provide important data regarding transmission requirements 

in Alaska and we look forward to reviewing the findings. 

I also want to bring to the committee’s attention to what’s being 

to other states for leading the country with regard to renewable energy as a potential road map for what might be done here in Alaska. 

California’s Renewable Energy Transmission Initiative (RETI) is 

a statewide program to help identify the transmission projects 

needed to accommodate renewable energy goals, support the future 

energy policy and facilitate transmission corridor designation, 

siting and permitting. The RETI will assess all competitive renewable energy zones that can provide significant electricity to California’s consumers by the year 2020, and will identify those zones 

that can be developed in the most cost effectively and environmentally benign manner. 

In Texas, the Competitive Renewable Energy Zones (CREZ) are 

being designated in the most viable areas of the state. An electric 

transmission infrastructure will be constructed to move renewable 

energy from those zones to markets where people use the energy 

the most. The state’s transmission operator is charged with collecting wind data and nominating a number of CREZ’s based on 

the transmission cost calculation for each CREZ. In other words, 

they are putting the transmission where the renewable energy is 

and not expecting that you can’t build renewable energy in a certain place because there is no transmission. 

The Department of Energy has long recognized the renewable energy production potential on American Indian and Alaska Native 

land. We look forward to continued successful relationships with 

tribal governments as we work together to meet the growing demand for affordable, clean and reliable energy, especially in the 

midst of the particular crisis of energy costs here in Alaska. 

This concludes my statement, and I would be pleased to answer 

any questions the committee may have. 

80 

[The prepared statement of Mr. Morello follows:] 

PREPARED STATEMENT OF STEVEN J. MORELLO, DIRECTOR, OFFICE OF INDIAN

ENERGY POLICY AND PROGRAMS, DEPARTMENT OF ENERGY

Vice Chairman Murkowski, I am Steven J. Morello, Deputy Assistant Secretary 

for Intergovernmental and External Affairs, Director of the Department of Energy’s 

Office of Indian Energy Policy and Programs, and a proud citizen of the Sault Ste 

Marie Tribe of Chippewa Indians. I would like to thank you for the opportunity to 

discuss energy solutions for Alaskan Natives. 

Introduction 

Since Secretary Bodman named me to be the first Director of the Office of Indian 

Energy Policy and Programs in September 2007, I have made it a personal priority 

to visit Indian Country and Alaska in order to assess the serious energy challenges 

facing Tribes and Alaskan Natives while also exploring the tremendous opportunities for the development of renewable energy resources there. This trip marks my 

4th visit to Alaska in my capacity as Director. During each of these trips I have 

had the privilege of meeting Alaskan Native people and understanding their issues. 

Clearly the most pressing issue facing the interior villages is the high cost of energy 

needed to heat and light their homes and workplaces. My real concern is that if we 

do not find a way to provide affordable energy in these villages we could face, as 

soon as this winter, an out migration of huge scale. 

The best hope for a long-term relief is to implement a portfolio approach using 

various renewable technologies including biomass, geothermal, solar and wind. In 

tandem, a robust, regional transmission grid could allow Alaskans to be energy 

independent and lead to a net export of some excess electricity. Likely short term 

solutions are the combination of conservation and energy efficiency measures with 

small localized biomass generators located in the interior villages to replace the diesel power generators currently being used almost exclusively. Additionally, some villages may well generate electricity from hydro, solar or wind sources as well. 

The role of private investment in the success of these energy solutions is important because if the power generating projects have customers much of the power 

generating capacity can be financed privately. Since my time as Director, I have 

worked closely to try to bridge the gap between native people seeking out sources 

of investment funding, and private sources who recognize that assisting Indian 

Country and Native Alaska is just good business. 

The Department of Energy is committed to being a good partner in searching for 

a solution to the energy shortfalls in rural Alaskan Native villages. The Tribal Energy Program within the Office of Energy Efficiency and Renewable Energy is currently soliciting information to identify ways to accelerate renewable energy development in Alaskan Native villages. The deadline for this Request for Information 

is September 19, 2008. 

I’d now like to provide more specific details regarding the types of renewable energy projects that could help solve the energy crisis in interior Alaska. 

Biomass 

Interior Alaska is well-situated for using indigenous biomass resources because of 

its tremendous supply of wood, wood waste, and fish oil processing at the villages. 

The development of a model project to demonstrate the success of biomass in Alaska 

is essential. Furthermore, Alaskan villages could employ local people to participate 

in the entire production chain from the cultivation and harvest of the biomass material to the building, operation, and maintenance of the generation facility. 

I’m pleased to report that just this month, the Department of Energy announced 

plans to make available up to $2.2 million for two renewable energy project awards 

selected for negotiation, pending further data collection and environmental review, 

based on a competitive solicitation, one of which is aimed at advancing biomass in 

an Alaskan village and serving as the model project demonstrating the viability of 

the technology in rural Alaska. The Council of Athabascan Tribal Governments 

(CATG), a consortium of ten remote villages along Alaska’s Yukon River, under 

their Fort Yukon Wood Energy Project plans to use wood fuel from a region rich 

in forest resources to displace diesel fuel used for heating. The project plans to displace 30,000 gallons of fuel oil annually, typically flown or barged in to this community, by using biomass to heat the Fort Yukon School and gym. The award will be 

cost-shared, with the Council of Athabascan Tribal Governments providing a proposed $1.1 million and DOE providing up to $1.0 million. 

The prospect of stand-alone biomass units are another area of potential for Alaska. I am aware of on-going efforts in the private sector to pilot the use of wood chips 

81 

to produce biomass off the grid. Portable generating units that rely on biomass unit 

may be ideally situated for power production in the remote villages of Alaska. I’m 

hopeful that future progress will make this a viable option for Alaskan villages in 

the short term. 

Geothermal 

Geothermal is another renewable energy option on many Native American lands. 

According to the geothermal resource map of Alaska, there is a geothermal resource 

belt located in the Northwest Alaska Native Association (NANA) region. The communities of Deering, Buckland, Kotzebue, Shungnak, Ambler and Kobuk may have 

access to this resource. Local knowledge of geothermal pools in the vicinity of 

Deering, Buckland and Shungnak, coupled with exploratory wells in Kotzebue documenting hydrothermal resources at 160 degrees Fahrenheit further indicate that 

there is geothermal power generation potential in the NANA region. 

As a result of Department of Energy funding for a feasibility study that is currently underway, the NANA Regional Corporation (NRC) is attempting to ascertain 

the geothermal power generation potential for a remote, off-road, village-scale application. 

Further, the Department of Energy’s Geothermal Program has provided $563,000 

and $1.2 million respectively (53 percent of the total cost) for a geothermal resource 

assessment and technology demonstration of a low-temperature geothermal power 

plant in Alaska at Chena Hot Springs Resort outside of Fairbanks. The 400kW geothermal power plant, designed and built by United Technologies Corporation, was 

brought online in July 2006 and is pushing the envelope for low-temperature power 

generation. Again, this and other projects like it will act as models for the deployment of renewable energy heat and/or power systems throughout the State. 

Solar 

The promise of solar power is another important consideration for Native Alaskans. The National Renewable Energy Laboratory estimates that there is potential 

from ten to fourteen kWh/m2/day of solar use during the summer months in portions 

of northwestern and southern Alaska. 

DOE has funded several feasibility studies on the potential of solar power for offgrid power use in remote villages. One such study addresses the villages of Venetie 

and Arctic, located above the Arctic Circle in northeast Alaska. These villages studied the feasibility of powering the villages using solar energy during the season of 

the midnight sun. The solar electric photovoltaic systems currently installed are replacing diesel generator power during the summertime, and proving solar can be a 

viable option in rural Alaska. 

Wind 

The State of Alaska has wind resources that could allow cost competitive wind 

energy production, especially along its coasts and western regions, many of which 

exist in rural Alaskan tribal communities. The National Renewable Energy Lab estimates that at least 30 communities have wind energy production potential. The Department has supported five wind feasibility-related projects including the Sealaska 

Native Corporation, the Yukon-Kuskokwim Health Corporation, the Bristol Bay Native Corporation, the Kenaitze Indian Tribe, and the Aleutian Pribilof Islands Association. 

I recently met with representatives of the American Wind Power Association who 

expressed that many of their commercial members are seriously interested in pursuing wind projects in Indian country. My role will be to continue to forge partnerships between commercial entities and tribal constituencies. 

These projects are just a few examples of renewable energy options. Please see 

the attachment, Table 1, which lists all Alaskan Native renewable energy projects 

funded through DOE’s Tribal Energy Program. 

Transmission Issues 

An essential part of a long term solution to the power problem in Alaska’s interior 

villages, and elsewhere for that matter, is a regional power grid. 

I have become aware of an important study by the Southeast Conference to address the concept of building a network of power transmission lines connecting most 

of the communities in the region. This Southeast Alaska Intertie Study includes the 

delivery of hydro-generated electricity to several of the Alaskan Native Villages in 

the region. DOE officials from the Office of Electricity Delivery and Energy Reliability provided technical assistance to the researchers. We believe this report could 

provide important data regarding transmission requirements in Alaska, and look 

forward to reviewing the findings. 

82 

California’s Renewable Energy Transmission Initiative (RETI) is a statewide program to help identify the transmission projects needed to accommodate renewable 

energy goals, support future energy policy, and facilitate transmission corridor designation, siting, and permitting. RETI will assess all competitive renewable energy 

zones that can provide significant electricity to California consumers by the year 

2020, and will identify those zones that can be developed in the most cost effective 

and environmentally benign manner. 

In Texas, Competitive Renewable Energy Zones (CREZ) are being designated in 

the most viable areas in the state. An electric transmission infrastructure will be 

constructed to move renewable energy from those zones to markets where people 

use the most energy. The state’s transmission operator is charged with collecting 

wind data and nominating a number of CREZs based on transmission cost calculations for each CREZ. 

EPAct 2005 and The Energy Security and Independence Act (EISA) of 2007 contain initiatives, to be implemented by DOE’s Office of Electricity Delivery and Energy Reliability, to bolster transmission development and modernization. EPAct 

2005 contains several transmission-related initiatives, one of which required the Department to designate National Interest Electric Transmission Corridors, which will 

help to put transmission development on an equal footing with other alternatives 

to relieving electric transmission congestion by giving the Federal Energy Regulatory Commission (FERC) back-stop siting authority. Title 13 of EISA has provisions furthering the development of a Smart Grid as well as Energy Storage technologies, helping to foster the type of modernization our existing transmission will 

need to keep pace with rapidly growing energy demand and a changing fuel supply 

mix. 

EPAct 2005 also required the Department to work with other federal Agencies to 

designate energy transport corridors. The Office of Electricity Delivery and Energy 

Reliability recently begun scoping for the designation of energy transport corridors 

in the Eastern States, Alaska, and Hawaii. A Notice of Intent to conduct a Programmatic Environmental Impact Statement regarding corridor designations in 

these remaining 39 States will soon be published by the Agencies. 

Also, as the challenges to continued electric reliability are not only technical, but 

also structural, DOE is also working to harmonize the multitude of State and Federal regulatory rules such that they complement, rather than conflict with each 

other. Today, a key challenge to timely development of the appropriate network of 

wires and other facilities required to reliably deliver new electricity to American 

consumers is the rigorous and lengthy State and Federal authorization requirements. Hopefully, addressing these regulatory rules will provide us with solutions 

to apply in Alaska. 

Conclusion 

The Department of Energy has long recognized the renewable energy production 

potential on American Indian and Alaskan Natives land. We look forward to continued successful relationships with tribal governments as we work together to meet 

the growing demand for affordable, clean and reliable energy, especially in the midst 

of the particular crisis of energy costs in Alaska. This concludes my prepared statement and I would be pleased to answer any questions the Committee may have. 

83 

Senator MURKOWSKI. Thank you, Mr. Morello, appreciate your 

traveling all the way. 

And now the last individual to speak before us this afternoon, 

Mr. Bob Middleton, who’s the director of Indian Energy and Economic Development at the Department of the Interior. Welcome 

Mr. Middleton. 


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STATEMENT OF DR. ROBERT W. MIDDLETON, DIRECTOR, 

OFFICE OF INDIAN ENERGY AND ECONOMIC DEVELOPMENT, 

DEPARTMENT OF THE INTERIOR 

Mr. MIDDLETON. Thank you, Madam Chair. And thank you so 

much for inviting the Department of Interior to this important field 

hearing. 

I’m going to keep my remarks very short. We have the written 

statement that we put forward. I know that we’re under a little bit 

of time constraint, so I just want to mention a few things. 

I’ve been fortunate enough as a career Department of Interior 

employee to travel to Alaska quite a bit, probably over 20 times 

during my career and I’ve seen energy issues in Alaska go from 

being an inconvenience to a concern, and then most recently from 

being a concern to being a crisis. And it’s not a crisis of dollars and 

cents so much as a crisis of social and cultural issues. When we see 

the out-migration from villages to more urban areas, we see a destruction of the social fabric in many areas. And I believe that this 

is unacceptable in 21st Century America. 

I have several programs that we manage at the Department of 

the Interior that I think could be of benefit and provide some solutions. But as Mr. Morello pointed out, we’ve been working very 

closely in partnership since he took office because I believe that we 

do need these partnerships, and it needs to be more than the Department of Interior and the Department of Energy. We need to include USDA, we need to include Department of Commerce, Small 

Business Administration, as well as the corporations, the State, 

Congress and the Native villages themselves. But I think that a 

partnership that comes together to look at the various programs 

that we all could bring to bear would be able to allow us to find 

solutions to the crisis that we’re now facing. 

Three programs that I’d like to point out that are in my office 

that I think could come to bear and provide some of those solutions 

are a Work Force Training and Development Program. Most of the 

Alaska Native villages participate in the Public Law 102–477 program, which allows the participants to commingle federal dollars 

that come from the Department of Commerce, HHS as well as the 

Department of Interior to provide work force training, and up to 25 

percent of those funds can, in fact, be used for economic development activities. 

As we face solutions in Interior Alaska on the energy issues, I 

would really like to see my program being used in such a way that 

we train folks, in fact, address the energy issues that are facing the 

remote areas, providing the training needed to be able to either 

build, manage or operate remote energy systems. I think this is one 

solution. It also will keep the dollar cycling in the villages as opposed to hiring somebody from the outside to come in to either repair or manage these systems. 

We have the Guaranteed Loan Program in my office. It provides 

an opportunity, where we can, to be able to use the Guaranteed 

Loan Program to provide the capital investment for developing renewable energy resources. We think there are opportunities for us 

to be innovative in this so that we can, in fact, look at the savings 

that may come from putting in a remote—a renewable energy sysVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00088 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
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tem and use that to service loans that would be able to put these 

facilities in place. 

We’re currently working with the city of Nome, looking at the 

wind energy project they have there and we’re also working with 

the city of Hoonah, or the village of Hoonah to look at the InterTie program. I was just down there last month talking with them 

about that and we’re trying to find innovative ways to use that. 

And then, of course, I have an Energy and Minerals Development 

Program. And we have several projects that are going on in Alaska 

looking at geothermal resources, looking at wind resources to try 

and find the resources that could be put in place that will allow 

us to do some of this renewable energy development to defray some 

of the costs. 

Economic development for us means not only finding ways to find 

jobs and businesses to create economies but also cost avoidance and 

this is a very important issue. 

With that, I’d like to close my remarks. I thank you again for the 

opportunity and I’m willing to take some questions to see if we 

could find additional solutions. 

[The prepared statement of Dr. Middleton follows:] 

PREPARED STATEMENT OF DR. ROBERT W. MIDDLETON, DIRECTOR, OFFICE OF INDIAN

ENERGY AND ECONOMIC DEVELOPMENT, DEPARTMENT OF THE INTERIOR


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Senator MURKOWSKI. Well, thank you. I appreciate your involvement in not only the energy issues, but from the perspective of the 

Interior and your focus on some of our challenges that we face here 

in the state. 

Let me ask both of you, in terms of the technical assistance that 

might be made available to areas such as the Bethel region here, 

you had an opportunity to hear the comments from the other panelists. We’ve got programs within the state, we heard from the 

Alaska Energy Authority in terms of what may be available there, 

the fact that the State has just recently established a renewable 

energy fund, so we’re putting together the pieces, where it seems 

like we could use a little more help to facilitate is how we bring 

this all together. Do you have within the respective departments, 

Energy and Interior, programs or opportunities that could be made 

available to provide for the technical assistance? Let’s say we get 

beyond identifying where the resource is, you’ve spoken of some of 

the geothermal projects that you’re working out on the Aleutian 

chain, what can you offer in terms of ideas and concepts from the 

federal perspective that we could dovetail more closely with what 

is available at the State, for both of you? 

Mr. MIDDLETON. Both of our programs can provide technical assistance. We have geoscientists that can provide some of the same 

skills necessary that the Department of Energy could bring to bear, 

but we also have other programs that, I think, are greatly in need. 

One of the technical assistance aspects that was raised today was 

the need for grant writing. And we actually have a number of programs we started in my office to look at bringing in academia to 

help tribes and we’ve been taking advantage of it mostly in the 

Lower 48 but we’ve formed business partnerships with many of the 

leading business schools across the United States, where we provide some funding to a tribe to, in fact, hire a top notch graduate 

student and their faculty advisors to come in and develop economic 

models, to look at business plans, to develop the financial instruments that tribes need to take to the capital investment market, 

and it’s worked very well. We’ve had close to eight or nine projects 

that we’ve moved forward over the last couple of years that have 

shown some great results. As a matter of fact the model is so good 

we’re moving that to the engineering schools and we’re going to be 

working with academic engineering schools to be able to provide 

the tribes with that skill that they need to look at for civil engineers for community planning or electrical engineers for utility 

work and many of the tribes are very interested in this opportunity. 

But we also have the opportunity to, in fact, provide the wherewithal for tribes or Native Alaska villages to bring in the experience they need to start looking and applying for grants. 

Senator MURKOWSKI. Do you get many requests from the tribes 

in Alaska for assistance? 

Mr. MIDDLETON. We have not to this point but—— 

Senator MURKOWSKI. Why do you assume that is? 

Mr. MIDDLETON. I think it’s simply that they’re unaware of the 

program right now. My office really was only put into effect in 2005 

and so we’re still expanding and we’re still getting the word out the 

capabilities our programs can bring. I have had a chance to talk 

94 

to a number of folks in Alaska over the last couple of years and 

we’re getting an increase in interest and we’re finding ways to 

make our programs better known. 

Senator MURKOWSKI. Are you planning on attending the AFN 

Convention this year? 

Mr. MIDDLETON. Yes. I was there last year and I plan on getting 

up there, unfortunately there is a conflict with NCAI also this year. 

Senator MURKOWSKI. I’m just thinking out loud here that it 

would be a good opportunity to spread the word in terms of the 

availability of these grant opportunities, these training programs 

because I think this is an area where we do recognize there’s a gap 

there and we’re not quite able to figure out how we get from where 

we are over here to access whether it’s those federal grant monies, 

so just making that more readily known, I think, it would be helpful and I would encourage you to do that. 

I’m assuming that you heard the comment that Matthew Nicolai 

made in stating the concern that village corporations can’t access 

certain energy grants. Can either one of you speak to that issue 

and tell me what it is that we need to do to make sure that there 

is the ability to access. 

Mr. MIDDLETON. I think he was specifically referring to Title V 

of the Energy Bill 2005, which is part of my programs, the Tribal 

Energy Resource Agreements that can be developed. And unfortunately the legislation specifically excluded Alaska villages and corporations from the activities under that provision of the bill. I’m 

not exactly sure why, I wasn’t working on that at the beginning 

when the legislation started. But I think that early in the 2000s 

when the legislation was being developed and starting to be incorporated into the previous energy bill that people were focusing in 

on more of fossil fuels, oil, gas and coal, and they really weren’t 

thinking in terms of renewable energy resources, which I believe 

the—if included in Title V would be available to Alaska Native villages, but unfortunately as the legislation moved through the process, they were excluded. 

Senator MURKOWSKI. That was in the 2005 Energy Act. In the 

most recent energy independence, is there anything that we included in that that would provide for greater access? 

Mr. MIDDLETON. No. But beyond being specific to Title V of the 

Energy Bill of 2005, I mean there are opportunities for the Alaska 

villages and corporations to take advantage of some of our other 

programs that would deal with energy issues. 

Senator MURKOWSKI. Well, and, of course, part of that problem, 

though, is providing the funding—— 

Mr. MIDDLETON. Yes. 

Senator MURKOWSKI.—so that the Native corporations could 

avail themselves of that—— 

Mr. MIDDLETON. Yes, sure. 

Senator MURKOWSKI.—and that’s something that we would certainly like to work with you on is to ensure that we don’t just put 

the authorizing language into play but then have nothing to show 

for it as a consequence of that. 

Mr. MIDDLETON. Yes. 

95 

Senator MURKOWSKI. I think in order for these programs to have 

success, we’ve got to put our money where we’ve said there was a 

priority there. 

Mr. Morello, can you speak to what might be available through 

the Department of Energy that could be made available, whether 

it’s technical assistance, grant writing assistance, is it pretty much 

in line with what Mr. Middleton has stated here? 

Mr. MORELLO. Well, one of the—or four or five of the crown jewels of the Energy Department are technology labs, our Los Alamos 

Lab, our Sandia Lab, our Idaho National Lab, NREL lab that we 

have in Golden, Colorado, each of these labs are hot houses of scientific research in various aspects of energy also including renewable energy. And while these labs don’t offer grants, what they do 

offer is, in their contracts with the Department, is the opportunity 

for tribes and Alaska Native villages and other organizations to approach them with technical problems. They will seek to provide solutions to these technical problems without charge. And we have a 

tribal liaison at each of the labs and I’d be happy to assist anybody 

that has a technical problem that wants to go into the lab for assistance. But a perfect example of this is the Desert Rock Project, 

the coal to electric project that the Navajo Nation just had permitted by the EPA. One of the outstanding issues with that permit 

was how to sequester carbon, and we have is a lab that is studying 

that very diligently and is working with that tribe on carbon sequestration techniques. The same kind of issue comes up when you 

want to do coal to liquid, which is a very viable option here in Alaska, which has recently been announced as a project that the Crow 

Nation is going to undertake in Montana. There’s a concern that 

in the coal to liquid process there may be some carbon released so 

we’re looking at ways to capture that carbon and sequester it in the 

ground. 

Those are technical advisory services which our labs can provide 

to Indian Country and to Native Alaska and which we’re delighted 

to do. 

Senator MURKOWSKI. So if you wanted to provide for some 

hydrokinetic energy project in a river, tap the currents there but 

the concern is we don’t want to interfere with the fish in the river, 

obviously a huge subsistence resource here—— 

Mr. MORELLO. Sure. 

Senator MURKOWSKI.—you’re not going to trade your energy for 

your food source. 

Mr. MORELLO. Right. 

Senator MURKOWSKI. Are you saying that we could tap the 

brains there at Sandia and Los Alamos and say, help us figure out 

a way that we can have the energy resource without impacting the 

fishery resource? 

Mr. MORELLO. Yes. If there is a technical question with regard 

to how to do that project, we’ll find an expert somewhere in our 

labs and put them to work on it to assist the—— 

Senator MURKOWSKI. All right. We’ll work with you because we 

need to figure out a way to get there without impacting the fisheries resource there. 

I think the concern that I have heard from Alaskans is we’ve got 

the resource back in Washington, D.C., through Energy, through 

96 

Interior but we don’t see how it translates out here in Alaska, we 

don’t see how it translates out into rural Alaska. You’ve given some 

examples of where you are working with us on various projects, of 

course, we know the geothermal up in Chena Hot Springs, but, 

again, the issue is, well, you’ve got $563,000–$565,000 here, you’ve 

got a million dollars there, but as you can see the need here is 

enormous and the initiatives that we will have to undertake in 

order to allow for a level of energy security in this, in all parts of 

the state, I think, are going to be challenging, so we need to work 

with you to make sure that the funding is there for the good programs that we have put in place. We’ve been very frustrated that 

the Indian Energy Programs as authorized under the Energy Act 

in 2005 just, we haven’t seen that momentum, and it’s not just 

here in Alaska, it’s all over Indian Country. And I think that is a 

reality that we should not have accepted. And I think we’re now 

seeing, because of the high energy prices, a push on a lifestyle, a 

subsistence lifestyle, a culture that has been part of this land from 

time immemorial, and we kind of reach a tipping point, if you will, 

and I think we’re seeing out here in many parts of Alaska that you 

will have that destruction of a culture brought about by energy 

that is not accessible unless we all act, and we is everyone in this 

room. It’s those at the federal level, it’s those at the State level, at 

the local and the tribal and the personal, the individual in their 

home, their families. 

I will tell you I’m very concerned with where we are as a nation 

right now in terms of our energy insecurity. We’ve got challenges, 

we’re going to be working on those when we get back to Washington, D.C., but from a state perspective I’m very concerned about 

the people that I represent and how many of those people—how 

many of them and their families are going to make it through the 

winter. And I know they’re going to be calling me, I know they’re 

going to be calling Bob and Nancy and Lyman and our new representative here, and they’re going to be seeking quick and easy 

answers and we simply have quick and easy answers. 

We need to be working with you for these longer term solutions. 

And they’re difficult and they’re often very, very costly. But the 

consequence, I think, of inaction is not acceptable. The answer is 

not for the people in this region to move to town, and we should 

not have situations in place where people are forced to leave their 

home land, leave the land that they grew up on and their grandfathers and their great-grandfathers grew up on because they simply can no longer afford to live here and because their subsistence 

lifestyle is no longer sustainable. So we’ve got a lot of work to do. 

[Applause.] 

Senator MURKOWSKI. I will work with all of you. We will work 

with all of you. 

I want to thank all of the witnesses that have joined with us this 

morning. Many of you have come from quite a ways away but it 

was, again, very significant to be here in Bethel. 

I want to thank the University of Alaska, the Kuskokwim campus, I want to thank AVCP, the Native leadership here in the YK– 

Delta. I also want to thank Senator Dorgan, the Chairman of this 

Committee, Senator Dorgan has been a wonderful Chairman to 

work with on the Indian Affairs Committee. He has some chalVerDate Aug 31 2005 09:40 Dec 29, 2008 Jkt 045586 PO 00000 Frm 00100 Fmt 6633 Sfmt 6601 S:\DOCS\45586.TXT JACK PsN: JACKF
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lenges in his home state of North Dakota as well and we have an 

opportunity to talk about those challenges. I keep telling him that 

one of these days I’m going to go visit some of the reservations in 

North Dakota and I’d like to be able to bring him here and introduce him to some of you fine people. 

Again, we do invite any written comments and testimony that 

people would care to submit. 

I apologize that our forum doesn’t allow for additional oral testimony but all of the comments that you have heard today, as well 

as any supplements that they might be willing to submit, will be 

part of the official record. The hearing record will be kept open 

until, as I said, Friday, September 12th. And your comments will 

be printed in the official record, the government printing office will 

print this up sometime in the next couple months, copies will be 

made available free of charge, all you need to do is contact our office, we’ll make sure that you receive that. Your comments can be 

emailed to testimony@indian.senate.gov, and, then, again, if you 

would prefer to submit comments by mail we will give you an address to send them in. 

I do hope that from this hearing this morning, we have spurred 

people’s creative juices. We’ve caused you to think about, not only 

the problems, but what the potential solutions may be. I firmly believe that with all of the challenges that we face in this state 

brought about by Mother Nature and our beautiful geography, and 

all that it has to offer, our problems are all solvable, that we have 

more options and certainly more options when it comes to energy 

sources than any other state in the union, and it’s just up to us 

to figure out how we use our creative juices to tap into them. And 

we haven’t had to over these past years because we’ve been able 

to just—families have been able to get by, now we’re at that point 

where it’s much more difficult and we need to be more creative and 

we need to be more collaborative. But I fully believe that even with 

these very large challenges that face us, we can figure out the path 

forward to sustainable communities brought about because we have 

sustainable renewable affordable energy. So that’s what we’re 

going to be working for. 

I have a huge action list after my 24 hours in Bethel and I thank 

you for what you have given me, and I thank you for what you 

have given to the Committee by sharing the record today. 

And, with that, we will adjourn the hearing and thank you for 

your participation. 

[Whereupon, the Committee was adjourned.] 

(99) 

A P P E N D I X 

PREPARED STATEMENT OF CARL BERGER, EXECUTIVE DIRECTOR, LOWER KUSKOKWIM

ECONOMIC DEVELOPMENT COUNCIL

Thank you for the opportunity to submit written testimony for inclusion in the 

field hearing, regarding the effects of the energy crisis on Alaska’s people, especially 

in rural Alaska and across the Yukon Kuskokwim Delta. 

My name is Carl Berger, for 16 years I have been the executive director of 

LKEDC, one of eleven Alaska regional economic development organizations 

(ARDORs) representing most areas of Alaska. Organized as a 501(c)(3) non- profit 

organization, our mission is to advance Alaska natives and rural residents of the 

Y–K Delta toward economic self sufficiency, by promoting small business and economic development activities in Bethel and 26 surrounding villages. 

An ongoing problem toward local enterprise and small business development in 

our region are the high costs of electricity, motor gas and diesel fuel used for home 

heating throughout our region of mostly treeless tundra. With the most recent increases in these product costs, the problems to local residents are greatly exacerbated. Though the State of Alaska has maintained a Power Cost Equalization program for a number of years, its benefits do not extend to small businesses, who have 

to pay the full cost of power, currently 0.36c/kWh in Bethel and much higher in the 

surrounding villages. Likewise, an energy rebate to all Alaskans eligible for the Permanent Fund Dividend, recently granted by the state legislature in the amount of 

$1,200 is woefully inadequate to rural residents, who will be paying over $6–8/gal 

for motor gas and diesel home-heating fuels. Maintaining heat in all the sub-standard housing throughout our region at these prices will certainly be a budget buster 

for most of us. Finally, the proposed energy rebate paid out in this way is subject 

to federal taxes, further diminishing its effect. 

The following are recommendations, for the Senate Indian Affairs Committee’s 

consideration: 

1. The United States and State of Alaska governments need to take immediate 

action to subsidize transportation of all fuel types to rural Alaska. 

2. Ongoing renewable energy project grants need to be provided to rural communities, in order to harness wind energy, biomass, solar and hydro power as 

available, and assist the tribal governments to develop their alternative energy. 

3. The SOA Power Cost Equalization program needs to be modified to include 

commercial small business users in its energy savings plan. 

4. Buy down the debt of rural utilities in order to reduce costs passed on to consumers and include a price cap on fuel stock purchased. 

5. Expand and support bulk fuel purchasing, transportation and cooperative 

purchasing agreements. 

6. Invest some of our excess earnings throughout Alaska toward projects that 

promote renewable or alternative energy and conservation. 

Thank you for the opportunity to provide this testimony. I urge you, the Senate 

Committee on Indian Affairs, to provide increased energy assistance or other similar 

actions, which will provide a much-needed solution to the energy crisis now facing 

our state and its citizens. 

PREPARED STATEMENT OF JOHN WALLACE, RESIDENT, BETHEL, ALASKA

I appreciate this opportunity to record my comments concerning the effect of high 

energy prices on our Native communities in rural Alaska. 

I have lived in rural Alaska for the majority of my life. I am not an Alaska Native 

by blood history. I am married to a lady from Nunapitchuk and we are living and 

raising our family in Bethel. 

100 

As part of my life history, I have had many opportunities to travel extensively 

throughout the Yukon-Kuskokwim region of Alaska. As an Alaska National Guard 

search and rescue crewchief, I flew to almost all of the villages in the area. Presently I operate a small business, Alaska Technologies, providing technology assistance and Internet installations in the whole of the area. In other words, I have 

spent a great deal of time with ‘‘boots on the ground’’ in the villages. 

I want to share just a few of my experiences of the effects of energy prices in the 

towns and villages of rural Alaska. 

I would like to begin by saying that although the nation now is experiencing high 

energy prices; we in rural Alaska have had to deal with this issue for the last 8 

years or so. 

When the local retailer in our area sold to an Australian conglomerate, our fuel 

prices rose 40 percent in one day!! I will never forget the year that my wife and 

I were so excited because our kids would both be in school and we could count on 

the added money in our pockets because we wouldn’t have to deal with childcare. 

Our joy was short lived because that year the price of fuels rose $1.00 as the barge 

delivered fuel. The price increase took all of the money we would have saved plus 

extra. 

As the fuel wholesalers have changed hands over the years we have had to deal 

with price increases that include a more than 340 percent increase in the cost of 

fuel since 1996. I have attached the cost calculation from the Alaska Cooperative 

Extension service for the committee members. The point is that though this issue 

is at the forefront on the national stage, it has been an issue for several years in 

rural Alaska. 

I would like to share an experience that I have never forgotten: In the Y–K Delta, 

as in many areas of rural Alaska, residents do not have jobs per se. Many subsist 

off the land as the seasons roll through the year. I was in Tuntutuliak, Alaska, 

waiting for my ride to the Village Office in which I would be working. As I sat waiting near the local Fuel Sales business, an old man pulled in with an 18 foot skiff 

loaded with his family. I said Hi and asked where he was going. He said they were 

headed berry picking. He told the Fuel guy that he needed to fill up, but the pump 

wasn’t working. The Fuel guy told him that it worked, but he would have to pay 

before he could fill his boat. There was also no more credit available, so he would 

have to pay cash. 

The old many reached into his pocket and pulled out twenty dollar bill. He asked 

if it would fill his boat. Unfortunately it would only buy a couple of gallons, not 

enough for the berry picking venture. The man went back to the boat and drove 

back to his parking spot. Berry picking would not happen today. 

That story has never left my memory. That family would have been doing three 

things that are very important to village life. 

1) Conducting and passing on the tradition of subsistence. 

2) Providing important foodstuffs that are an important part of the native lifestyle as well as not having to live on processed and imported foods. 

3) Conducting an activity. This simple task of having something to do is important to every human. It is this or sitting around. Rural Alaska has a great suicide rate. Doing instead of sitting is very important. 

But of all the problems of life in rural Alaska, what would be the solution? 

My opinion is that it cannot be in the form of cash payments to residents. Band 

aid approaches have never worked and will never work. Turning on the money hose 

and hosing the area down with money will not work. Whatever form of aid is giving 

has to be well thought out and long term so that the aid will incentivize the aid. 

A friend of mine, a river boat captain, and I were hauling fuel to the villages one 

winter. The village tanks at the time were too small to hold an entire fuel supply 

because the Government had added more and more housing without a tank farm 

with enough supply to keep the homes heated for the year. That coupled with funding that was bi-annual, made it so we had to haul fuel in the dead of winter with 

small trucks. A very inefficient form of transportation, but it was the only alternative. We were taking break one afternoon and we saw a mink scurry around. I 

asked him why people didn’t trap them anymore because they are the most desirable mink in the world. ‘‘Too damn easy to go to the Post Office,’’ he said. I asked 

what he meant and he said that it was too easy to go to the Post Office and get 

a check rather than do something productive. A hardnosed evaluation maybe, but 

it has some validity. Whatever aid is produced needs to be evaluated to make sure 

it has the desired effect. 

The best example of this kind of aid actually comes from Germany. In Germany, 

the Government provided 50 percent instant tax rebates for all alternative energy 

101 

installations. They made it a huge incentive for a person or business to reduce their 

energy use. Germany went from one of the largest consumers of energy in Europe 

to one of the smallest. 

Lastly I want to mention one impact of high energy prices that is probably the 

most insidious of all of them. High energy prices have begun to start an exodus of 

sorts from rural Alaska. Anchorage School District has had to hire 18 positions more 

than they anticipated because of the influx. As more and more people leave rural 

Alaska, the problems in rural Alaska will be exacerbated. 

Due to the large area of Alaska and the lack of residents, we are considered 

‘‘Rural.’’ But for all intents and purposes, each village is a Micro-Urban environment. Each village, as a unit, depends upon its residents for its survival. Villages 

as little tribal elements cannot survive if there is a great out flux of people. The 

impact of this is that the many unique aboriginal traditional elements of the native 

tribes will be eliminated. This above all may be the worst impact of the high energy 

costs. 

The Yupik/Cupric culture is one of the last in the country that still survives in 

language and tradition. Yes it is changing, but to see it destroyed would be a true 

tragedy. 

I would like to thank the committee for the opportunity to make these comments. 

I would especially like to thank Senator Lisa Murkowski for bringing the hearing 

to rural Alaska. Her insight into our lives has been truly beneficial for Alaska and 

the Nation at large. 


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PREPARED STATEMENT OF LORETTA BULLARD, PRESIDENT, KAWERAK, INC. 


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