AVEC advances BUC takeover

by Ben Matheson on January 14, 2014

AVEC President and CEO Meera Kohler meets with the  Bethel City Council. Photo by Ben Matheson.

AVEC President and CEO Meera Kohler meets with the Bethel City Council. Photo by Ben Matheson.

AVEC is on track for a May 1st takeover of the Bethel Utilities Corporation.AVEC and BUC have been putting their heads together to integrate Bethel’s nearly 2,800 electric services into the system. Customers stand to see a lower electric bill, somewhere around 3 cents a kilowatt hour cheaper, or up to 9 percent cut, according to Meera Kohler the President and CEO of AVEC.

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“It may be smaller, it’s all going to hinge upon what the value of all the assets are transferred on May 1. And how that works into the equation of the there are many components that rate decrease a big part of it we don’t have to pay corporate income taxes, that comes right off the bill,” said Kohler.

AVEC paid BUC 5 million dollars for the assets Bethel will become the coop’s 56th and largest community. The organization is able to cut down on some administrative costs by centralizing them in the system. In Bethel’s case, BUC’s CEO and CFO will be retiring and not be replaced. But a huge portion of a customer’s electric bill comes from each gallon of diesel burned in the power plant.

“And it each village, the fuel charge is reflective of what the actual cost of fuel is in village and the efficient in that village. So no village subsidizes each other in the cost of fuel. There may be some cross subsidy that goes on in terms of non-fuel costs. Some years it’s a plus, some years it a minus, but it all balances out in the long run,” said Kohler.

As for sourcing the fuel, AVEC plans to issue an rfp later this month and solicit from all interested parties. AVEC does a lot of work with Vitus Marine, with whom they run two specialty tug and barges. They have no plans to build a tank farm here. They will maintain an office, but it may not be the current BUC building. AVEC has spoken with AC about a renting a space and is looking for options around town. They will accept credit cards and take payments online.

While BUC was a for profit company, AVEC is a member–owned co-op. That means that any profits made by AVEC go back to the members in capital credits – those can be used for future projects. The board can refund those to members. And customers vote for delegates who meet and elect a board of directors. Kohler says the registration process will begin soon to bring Bethel residents into the fold. Kohler adds that Bethel’s inclusion in the coop could strengthen the region’s voice in matters of energy prices.

“Our communities are being lambasted by the cost of energy. Electric is only ¼ of the BTUs we consume as homeowners, most of our consumption is heating fuel. And there is no a program in the state that deals with that issue. we’re continually at the table begging for scraps and not getting many of them. We believe that by consolidating we can be a better spokesperson for rural Alaska and we can wring better changes into the system,” said Kohler.

That includes a hard look at wind power and other alternative energy. And in the longer term, there is the ambitious Alaska Grid project.

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