While the Alaska Village Electric Cooperative (AVEC) provides power to just more than 4 percent of Alaska’s population, its service map stretches over a remarkably large portion of the state—from as far northeast as Kivalina to as far southeast as Yakutat. So how does a small electric co-op, employing less than 160 full-time and part-time employees throughout the state, manage to thrive as the largest of its type in the nation? Part of the explanation can be found in the cooperative spirit that characterizes rural Alaska.

AVEC was first incorporated in 1967 and officially began operations in 1968. The first three member villages were Hooper Bay, Nulato, and Old Harbor.

Today, as AVEC celebrates its 50th anniversary, that membership has bloomed into fifty-eight villages consisting of a combined population of more than 33,000. As geographically, economically, and culturally diverse as this base is, the common thread tying them together is a close-knit sense of community.

“When your heart is in the right place, [the villages] absolutely open their arms and absorb you into the extended family there. That sense of community and belongingness is something you don’t get in any urban setting—I don’t care where that urban setting is,” says Meera Kohler, AVEC’s president and CEO.

Kohler experienced this firsthand when she emigrated from her native India to the United States with her then-fiancée. Their first stop: Cordova, Alaska.

“I was accepted. I was different, I was a lot darker then, I had a thick accent. I looked different, I spoke different, I thought different. And yet I was immediately a part of the family. You get that anywhere you go in rural Alaska.”

Kohler became the first bookkeeper of a newly formed cooperative in Cordova that had recently acquired the assets of the city’s electric utility. It sparked a life-long career in electricity. She became that co-op’s CFO, was then recruited as the CEO of Naknek Electrical Association, became general manager for Anchorage’s Municipal Light & Power, and was attracted back to the electric co-op world a couple of years later when AVEC’s CEO position opened. For Kohler, it was an ideal fit.

“Most of my electric career really has been in rural Alaska. I don’t live in rural Alaska now, but my heart is in rural Alaska; I raised my kids in rural Alaska. So to me, the sustainability of rural Alaska is number one. The cultures there are so special that for me, to think about losing one of those cultures really is painful. I think that everyone in Alaska should treasure those cultures and recognize that is what makes Alaska, Alaska.

“As far as the electric utility is concerned, electricity is the underpinning of all economic life. Without reliable, affordable electricity, nothing will happen. It’s not an entitlement, but it is a must-have if you’re going to thrive in any way—in any community. I just see this natural connection with electricity and rural Alaska. It could be because of my unique perspective but nonetheless it’s a very important thing we’re doing out there.”

Prior to AVEC’s service offerings, incorporating modern amenities like electric power into village life proved difficult at best.

“In the 1960s, virtually no villages had central station electricity. It was very much still a subsistence-dependent lifestyle and families would still burn whale or seal oil for light. You had no sanitation [services], so illness and other constraints were more prevalent. So a task force was appointed by the Governor of Alaska, Walter Hickel, during his first term as governor, to look into what could be done to bring electricity to rural Alaska.”

This task force explored different options, including private, investor-owned utilities, municipal utilities, and cooperatives. Matanuska Electric Association (MEA) was the first co-op to emerge in the state.

“I believe that MEA truly had that pioneer spirit. Their board and management were very supportive of helping other co-ops become co-ops. I think it was with their help that quite a number of co-ops started up in Alaska,” says Kohler.

The first inherent challenge when forming electric co-ops in Alaska’s villages was that no single community was large enough to be a viable location for a self-sustaining utility. As a result, an amalgamated model was required. However, the subsequent challenge with employing such a model had to do with geography—these disparately located communities could not feasibly be connected to the same grid; each village would need
to generate its own power.

Fortunately, a $5 million loan from the federal government’s Rural Electrification Administration (now called the Rural Utilities Service) was granted to AVEC to accomplish the task of building generation systems to serve each member community. In the 1960s, according to Kohler, it cost approximately $90,000 to build a generation system.

For the purpose of centralized and efficient administrative operations, the co-op established its headquarters in Anchorage. In late 1968, its first three villages (the aforementioned Hooper Bay, Nulato, and Old Harbor) were energized. AVEC membership proceeded to expand at breakneck speed as it energized ten to fifteen villages a year.

“It’s fun to plow through the minutes from the meetings held in those early years. We’re talking ten to twelve hours a day of board meetings that would last for days.”

Despite rapid growth, AVEC’s first decade tested its resilience. The cost of electricity paid by customers was not enough to cover AVEC’s total cost of operations. The oil embargo of 1973 only made things more difficult, as the price of diesel—a chief ingredient in rural Alaska’s generation of electricity skyrocketed. The co-op entered into an agreement with the Bureau of Indian Affairs, which at the time governed village school systems, that guaranteed AVEC a certain amount of revenue each month. These long-term contracts made it possible to provide electricity to residential users at a slightly lower rate, but AVEC was still on the brink of bankruptcy many times throughout the 1970s.

A major turning point came with the introduction of the state’s Power Production Cost Assistance program in 1980, which helped offset the high cost of the diesel component of electric power, meaning AVEC could charge a reasonable rate to its members while still being able to pay for operations. Over the next few years, the program morphed into today’s Power Cost Equalization program, which now accounts for approximately one-third of AVEC’s revenue.

“It has really made all the difference to make [electricity] affordable,” says Kohler.

AVEC has also focused on achieving greater efficiencies. In 1990, it was selling approximately 10 kilowatt-hours (kWh) per gallon of diesel. Today, it sells about 13.5 kWh per gallon, a 35 percent efficiency improvement.

In recent years, AVEC has maintained its goal to decrease diesel dependence. In fact, AVEC is on the leading edge of micro-hybrid technology in rural Alaska. It has looked to a renewable source of energy that western Alaska has in abundance: wind power.

AVEC currently boasts eleven wind farms in the state with a combined thirty-four wind turbines, the largest fleet in Alaska.

“In some communities with an excellent wind regime, we displace almost 40 percent of the diesel fuel that would otherwise be required for electricity. That’s very remarkable. That’s about the highest penetration you can achieve in a system.”

Two more turbines are being installed, and they are big. Last year AVEC purchased two 900 kW turbines that were installed this summer in Bethel and St. Mary’s. Nome, Kotzebue, and Delta Junction are the only other rural communities in Alaska with similar turbines.

That is not to say that AVEC plans to cut ties with fossil fuels altogether; in 2010 it made the decision to construct two tug and barge sets. The vessels were built in Texas and subsequently chartered to Vitus Energy Services to provide fuel delivery to Western Alaska. The move resulted in a deep­er pool of fuel transportation competition in a region where there is little to none. According to Kohler, the Vitus alternative has saved AVEC approximately $0.5 million to $1 million annually.

Another by-product of this endeavor is the introduction of a new type of skilled workers to fall under the AVEC umbrella. And when it comes to its people and the skills they possess, the co-op recognizes its brightest spots.

More than physical capital, Kohler points to AVEC’s human assets as a source of brilliance.

AVEC strives to foster growth in its constituents, especially future generations. Accordingly, it offers a scholarship program to help students from rural Alaska access secondary education or vocational training opportunities that will lead to a reinvestment in the community. Applicants who can describe how their learned skills will benefit rural Alaska are awarded up to $5,000 to be applied toward their studies. Students have pursued numerous and relevant vocations ranging from welding to aviation to nursing.

As for stakeholders that are already employed by AVEC, their abilities remain highly valued and recognized at every level of the co-op. It’s because of their efforts that AVEC is on the Alaska Business Top 49ers list for the second consecutive year.

“I think that we’ve sort of just been a quiet, on-the-sidelines, ‘put your head down to the ground and just push’ [kind of company], and I think that is an attitude that is inherent within AVEC. We’re just quiet, hard workers, and we try and do the best that we can for our members at a practical cost.”

As Kohler sees it, that kind of scrappiness and can-do attitude is a definite point of pride within AVEC’s ranks.

“I never fail to marvel at what my guys can do with ‘bailing wire and bubblegum.’ It’s just incredible,” she laughs.

Drawing on a spirit of resiliency forged in rural Alaska’s stern—yet rewarding—environment, the co-op has not forgotten the reason for its continuing efforts.

“We have a very strong, innate sense of pride in what we do and who we do it for. I don’t think you’ll find one AVEC employee that doesn’t absolutely respect rural Alaska and the folks that we serve out there.”