ENERGIZING RURAL ALASKA SINCE 1968

C I T Y AND BO RO UG H O F YAKUTAT

D E C E M B E R 1 8 , 2 0 1 4 YAK U TAT, AL AS K A

ALASKA VILLAGE ELECTRIC COOPERATIVE

Meera Kohler, President/CEO Alaska Village Electric Cooperative

About AVEC

A non-profit member-owned electric cooperative providing electric service to 56 communities Population of 30,000 – 4th largest community in Alaska 44% of Alaska’s village population Shageluk 76 Hooper Bay 1,134 Bethel 6,278 Average village: 420 Anchorage 301,134 Juneau 33,064 Fairbanks 32,204

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System Information

74 Anchorage-based employees 16 Bethel-based employees 10,000 services 49 power plants 172+ diesel generators 95 village technicians 500+ fuel tanks 8.5 million gallons of diesel 34 wind turbines serving 15 villages Two tug and barge sets

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AVEC’s kWh Sales in 2013

KWh sales in 55 villages Residential 30.8 million Commercial 13.9 million Street Lights 0.6 million Public Buildings 28.3 million TOTAL 73.6 million Bethel sales 40.4 million

Average per village 1,338,000 Huffman Carr’s 2,600,000

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AVEC’s Revenue in 2013

Revenue from all 55 villages Residential $18.8 million Commercial $7.2 million Street Lights $0.5 million Public Bldgs $15.2 million Service Charges $0.5 million TOTAL $42.2 million Bethel $23.5 million

Average per village $767,300

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What the Consumer Paid in Cents/kWh 7

Fuel 30.35 Power Production 13.00 Admin and General 3.94 Depreciation 3.39 Consumer Accounts 2.19 Distribution 1.70 Interest 1.50 Taxes 0.56 Margins 0.68 Total 57.31

ASSETS 8

Total Utility Plant 132,352,737 Accumulated Depreciation 73,018,890 Net Utility Plant 59,333,847 Other Prop/Investments 7,643,787 Current Assets 46,630,941 Deferred Debits 876,832 TOTAL ASSETS 114,485,407

LIABILITIES 9

Equities 43,286,742 Long Term Debt 53,715,582 Current Liabilities 16,451,501 Deferred Credits 1,031,582 Total Liabilities 114,485,407

Equities as Percent of Assets 37.81% Return on Equity 1.16%

AVEC recently acquired Bethel 10

The Office we Inherited in May, 2014 11

Inside the Office 12

The New Office in the AC Store 13

A nicer place to work! 14

Since our Bethel Takeover… 15

We have a brand new office Just installed the first in Alaska “Cash Kiosk” 8.35% rate reduction effective May 7 New fuel contract = 5% rate reduction this month Refunded $700,000 in customer deposits Contracted TDX to investigate wind readiness City transferred $3 million wind grant to AVEC New metering installation imminent Seeking REF grant to evaluate enhanced heat recovery

Starting Commercial Energy Audits 16

Awarded $200,000 USDA Rural Business Enterprise Grant (RBEG) on July 23, 2014

Covers 42 Commercial Energy Audits Available to all 56 communities Minimum of 2 per community First come, first serve 33 grants committed, audits begin Jan. 2015 If demand >42, will seek more grants

AVEC Projects in progress 17

Stebbins - St. Michael Intertie New Stuyahok - Ekwok Intertie Emmonak Tank Farm Emmonak Power Plant New plant and tank farm for Teller Wind Studies underway in 6 communities Wind to Heat being developed in 4 communities Heat Recovery – New Stuyahok, Noorvik, Stebbins Old Harbor Hydro

Governance Changes Underway 18

By-law changes have been proposed by the Board Directors (all at-large) to be elected by members Nomination Committee develops slate of

geographically dispersed nominees One delegate per community to meet at Annual

meeting to conduct other business

Tariff Changes Underway 19

Street Lights to be LED only Installation cost reduced from $750 to $550 200+ lights being installed in NANA communities

Wind Cost charge to be added Annual cost of $350,000 = 7 cents/kwh produced Surcharge to be added in wind communities – 1/1/2015

Average fuel charge across 55 villages = 32 cents Fuel Charge in Savoonga/Toksook Bay = 24 cents With wind cost, Fuel Charge = 26 cents Savings from wind still 6 cents/kwh

We have challenged RCA on PCE 20

Background: The Commission decided that INN’s “dump energy” sales shall be treated in the same manner that sales of waste heat from diesel generators has been treated in the past for PCE purposes. The Commission determined INN’s eligible PCE costs should be reduced by the revenue produced from “dump energy” sales.

From a Recent Alaska Dispatch Article 21

…because the plant is so efficient and produces excess power, they receive less funding from the state’s power cost equalization program. The PCE program is designed to bring rural energy prices more in line with what people in Alaska’s urban areas pay. In Iliamna, the PCE program covers 19 cents of the cost for every kilowatt hour, which retails at about 60 cents. In nearby Igiugig, they get a PCE that covers 53 cents for every kWh, even though at 81 cents a kWh it costs more to produce. With the PCE factored in, INN customers pay 41 cents per kWh compared to Igiugig's 27 cents..

Alaska Statute 42.45.130 22

Each eligible electric utility shall cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation. (b) In this section, "energy conservation measures" include weatherization and other insulating methods, utilization of waste heat, appropriate sizing of new generating equipment, and other programs of the state or federal government intended and available for energy conservation.

We are Shooting Ourselves in the Foot 23

“Preferred Practice” was established back when PCE was chronically underfunded. Commission’s objective was to divert support toward neediest consumers. More competent operations paid the tab through the “preferred practice” penalty. Why should non-regulated utilities see their eligible costs reduced by revenues that are already serving to keep electric rates down?

What Happens When… 24

Chaninik Wind Group wind-to-heat sales mature? Wind dump energy is sold at interruptible rates to

promote economic development and heating fuel displacement?

More waste heat is recovered for district heat sales? kWh sales decline as energy efficiency increases? AVEC sold 300,000 kWh less in 2013 We have installed TEDs in 4,000 homes!

Making consumers pay more through lower PCE rates has the unintended effect of discouraging such measures!

PCE is fully funded in FY2016 budget 25

Rural legislators have succeeded in creating and capitalizing the PCE Endowment Fund

Balance at 11/31/2014 = $973 million Available for PCE = 7% = $68.1 million FY15 PCE appropriation = $41.4 million

Thank you!

Meera Kohler

President and CEO Alaska Village Electric Cooperative

(907) 565-5531 mkohler@avec.org