Alaska's cost of electricity is about 16 cents/kWh, which is nearly half the cost of electricity here on the Big Island.
Despite the fact that they have oil, they are looking at geothermal as a source of energy, as well. The main challenge there is that they have small populations and long transmission distances.
The Alaska Legislature set 1.75 percent as the royalty charge for the first 10 years, and 3.5 percent thereafter. That was probably what they thought the industry could bear under their economic conditions.
In Hawai‘i, our royalty charge is 10 percent.
From Alaska Business Monthly, April 1, 2011:
...Alaska legislators last session passed a bill sponsored by State Sen. Lesil McGuire, which established a 1.75 percent royalty obligation for gross revenues derived from the production, sale or use of geothermal resources under a lease during the first 10 years immediately after the geothermal resource first generates gross income. After that first 10 years, the royalty obligation would rise to 3.5 percent of the gross revenues. The bill also transferred authority from the Department of Natural Resources to the Alaska Oil and Gas Conservation Commission over permitting and inspection of geothermal wells, and provided for a regulatory cost charge for geothermal wells. The bill, signed into law, took effect July 1, 2010....