February 2024 Back Page – Tariff Rate Changes and Annual Meetings

Posted: February 5, 2024

For the last two years AVEC has been operating at a loss.  Stated another way, the amount of money AVEC collected from its members in rates was not sufficient to pay for its cost of operation.  The biggest cost for AVEC to provide power in Rural Alaska (more than half) is for the fuel it consumes to generate power.  Fuel cost is volatile and the cost to deliver it varies widely by community.  For these reasons fuel cost is calculated separately for each community and is charged as a separate part of everyone’s electric bill.  These fuel costs are tracked and adjusted every couple of months to be sure we are not overcharging or undercharging for fuel.

The other part of electric rates pays for everything else; the “non-fuel costs”.  This part of the rates varies less often, however, this year we are planning to raise non-fuel rates an average of 14.9% system wide.  The cost of everything has gone up over the last few years.  Materials, equipment, labor, lodging, food, transportation, freight, insurance and interest rates have all added to the expense of living  and of doing business in rural Alaska.  AVEC worked with our primary lender, the National Rural Electric Cooperative Finance Corporation, to perform a cost of service study and help devise electric rates that will keep AVEC in a sound financial position.  AVEC continues to control costs and strives to keep rates low but a rate increase is necessary so we can continue to pay our bills and maintain a positive margin.  The new rates, as approved by the board after the public hearing held on January 29, 2024, will go into effect starting in March 2024.

Time is running out for communities to hold their AVEC Community Meeting.  AVEC Community meetings are to be held between the beginning of November and the end of February to elect a delegate and submit resolutions to send to the AVEC Annual Meeting to be held in Anchorage on April 18th, 2024.  If your community has not yet held their meeting, please contact your community chairperson, (or AVEC Member Services for help), to be sure your community is represented at the Annual Meeting.  At the Annual Meeting, delegates meet with the board and staff to help guide the goals and priorities of the Cooperative.

Until next time,

Bill Stamm