AVEC to takeover Bethel utility pending commission approval

by Kyle Clayton on July 3, 2013

Bethel, Napakiak and Oscarville residents could pay less for their electric bills next year if the final stages of the Alaska Village Electric Cooperative buyout of Bethel Utility Corporation go through.

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AVEC is a non-profit electric utility currently providing service to 55 villages throughout costal and western Alaska and it’s been interested in buying Bethel utilities for 40 years. This past March the utility arranged the terms of purchase from BUC.

On July 1, the Bethel City Council unanimously approved a resolution supporting AVEC’s purchase of BUC.

“The resolution supporting that effort will go to the Regulatory Commission of Alaska as part of a positive statement that we’re in support of the certificate being transferred from BUC to AVEC.”

That’s Bethel City Manager Lee Foley and he says that transfer hinges on the RCA’s approval of what’s called a Certificate of Public Convenience and Necessity—a standard procedure required whenever a public utility is transferred.

If and when it’s approved, President and CEO of AVEC Meera Kohler says AVEC will have about 90 days to transfer the utility and establish BUC’s final billing date for Bethel customers which, if there aren’t any hiccups, would occur this time next year.

“At the point that it becomes and AVEC electric utility we would then institute a different rate structure and that would reflect, I think the number is, a 9.5 percent decrease in the cost of power essentially across the board,” Kohler says.

That reduction is possible because, as a cooperative, AVEC pays a gross receipts tax on total revenues, or kilowatt-hour sales. The co-op isn’t liable for any local or state taxes.

“So that means that the sales tax that is currently being charged on the fuel that we buy would no longer be applicable and so it lowers that cost of fuel,” Kohler says.

Five city buildings will also have the added benefit of re-connection to waste heat, a heating method BUC disconnected more than five years ago after a dispute with Bethel officials about who would be liable for maintenance on the lines.

Utilizing waste heat converts energy from the utility’s diesel generators water-cooling system. It’s like a car engine, but instead of excess heat being pumped through a radiator, it’s instead directed through pipes that can heat buildings around town and it will likely save city dollars on energy costs.

A long-term energy option the city is pursuing is wind energy. Foley says BUC told the city there can be only one 100 KW wind generated source.

“So we don’t have anything else coming to us from wind energy until AVEC looks at the whole process and sees what they can and cannot do,” Foley says. “But they’re very open and very amenable to looking at what they can do because they see this as a viable source as we go on into the future.”

Kohler says there’s no way of knowing when AVEC would be able to plug wind energy into the grid and a more thorough understanding of the infrastructure will be required.

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