Regulators fix math errors in AVEC power subsidy, raising credits in most villages

Households in most villages served by the Alaska Village Electric Cooperative will get a bigger state credit on their electric bills after regulators found the numbers used to set it were wrong.

The credit comes from Power Cost Equalization, a state program that helps pay for electricity in rural Alaska. In many villages, power comes from diesel generators, and the Alaska Energy Authority says it can cost three to five times as much as in the state's cities. The program narrows that gap. It pays part of each home's bill so that rural residents pay closer to what people in Anchorage, Fairbanks and Juneau pay, on up to 750 kilowatt-hours a month. The more expensive power is in a village, the bigger the credit, up to a limit.

AVEC, a nonprofit cooperative owned by its members, serves 59 communities stretching from Kivalina to Old Harbor and from Gambell to Minto. Those communities run on 46 separate, isolated power systems, with a few neighboring villages sharing one.

In July, the credits for those systems were set using figures that "were developed using incorrect data inputs," Regulatory Commission of Alaska analyst Oz Tremblay wrote in a staff memo. He traced the problem to multiple formula errors in an annual report file for AVEC. Staff redid the calculations using 2024 cost data AVEC had given the Energy Authority, and AVEC agreed with the result. The commission approved the new credits Sept. 24, and they apply to bills starting Sept. 25.

For most AVEC villages, the credit is now about 57 cents per kilowatt-hour, and in 37 of the 46 systems it went up by at least 10 cents. The biggest change was in Stebbins and St. Michael, where the credit nearly doubled from about 29 cents. For a household using 500 kilowatt-hours a month, that means a credit of about $283 instead of about $144.

Two villages go the other way. In Ambler, the credit drops from about 72 cents to 57 cents, and in Noatak from about 76 cents to 57 cents. For the same 500-kilowatt-hour household, that's about $79 less a month in Ambler and about $97 less in Noatak.

Bethel and Yakutat, where AVEC's rates are lower, get smaller credits: about 42 cents in Bethel and 52 cents in Yakutat. The credit can't be larger than the gap between a community's own rate and the urban benchmark.

That benchmark went up this summer. Each year the commission resets it based on average home electric rates in Anchorage, Fairbanks and Juneau, and on July 1 it rose about 7%, to 21.85 cents per kilowatt-hour.

The corrected credits still use AVEC's fuel costs from 2025. The cooperative will work with commission staff to update them in its next filing. AVEC has to notify its customers of the new amounts, and it has until Oct. 9 to ask the commission to reconsider.