Editor's note: In a story last week, Alaska Dispatch writer Craig Medred detailed the efforts of Perryville, a village in Southwest Alaska, to develop a cost-effective way to harness the wind for energy by building its own wind farm of turbines originally designed to power American homes. Meera Kohler, president and chief executive of the Alaska Village Electric Cooperative, a nonprofit, member-owned utility supplying power to 53 villages in rural Alaska, responded to the story, challenging some of Medred's points. Here's an exchange between Kohler and Medred from the comments below his original story:
MEERA KOHLER: The Skystream is a great little wind turbine and it certainly serves a useful purpose doing what it was intended to do -- harness the wind in a small, consumer power application. But the numbers bandied around in this article are somewhat dubious.
I have been asking in vain for years for verifiable data on the Perryville project and none has been forthcoming, other than the unsubstantiated numbers reported by Garoutte. FY10 was the first year in many that the Alaska Energy Authority actually reported some data on Perryville, and the numbers in their report indicate 13,361 kWh generated by wind. That would have displaced about 1,100 gallons of diesel (reportedly 23,000 gallons were used for generation last year). The report says the fuel cost $3.15 a gallon, not $6.00.
Generating 4 percent of electricity in Perryville sure doesn't sound like major progress to me.
For some reason, AVEC was liberally slammed in this article, yet we were not even afforded the courtesy of a phone call to determine what our wind philosophy is. Our desire is to replace 20-30 percent of generating fuel in our villages. If Perryville's turbines cost $150,000 (they might have -- not including installation cost), the $5,000 they saved last year equates to a 30-year payback. Our 100 KW machines cost about $1,000,000 installed and have a 15-20-year payback.
The Denali Commission has done amazing work in rural Alaska infrastructure. Their investment in wind turbines has been actually relatively modest -- largely leveraging USDA High Energy Cost Grant funds to assist in building the projects.
And, for the record, AVEC is a nonprofit, member-owned utility. We are not "federally funded." We compete for federal, state and other grant funds so that our villages (which are as poor as any) can get some capital investment that they don't have to pay back. We actually have more than $120 million non-grant-funded utility plant -- and long-term debt -- and competent management.
Next time, come and talk to us. We can not only tell a good story, we have the records to back up our words.
CRAIG MEDRED: AVEC wasn't "slammed." In fact, the story made a point of saying AVEC employs some great technology.
KOHLER: Perhaps AVEC wasn't slammed per se, but there were a number of disparaging remarks denigrating our pioneering and successful projects in rural Alaska.
MEDRED: I'd guess the tribal folks in Perryville know more about what they expect to pay for diesel than someone working for AVEC. If it's getting diesel for $3.15, I'd like some. I just paid more than that for the fuel in my diesel truck here in Anchorage.
KOHLER: The $3.15 a gallon that I quoted came from the Alaska Energy Authority, which reports the numbers provided to them by the utility. No doubt prices are higher today, a year later, but $6 is highly suspect.
MEDRED: Nobody involved with the Perryville project claimed the community was getting all of its energy from wind. It probably gets less than 4 percent on some days. Other days it may get 20 percent or more. There are wind variances and there are seasonal variances. For instance, there are fewer lights on in the summer, and thus there is less demand for power.
KOHLER: Perryville's data as reported to the AEA reflects that 4 percent of their power produced in FY10 came from wind. Not 4 percent one day and 20 percent another day -- 4 percent for the year. Yes, it varies from day to day and season to season, but 4 percent over the year means that 96 percent is generated using diesel.
MEDRED: AVEC is largely government funded. It is "financially backed by Rural Utilities Service, United States Department of Agriculture, and Denali Commission." I don't have a total on how much funding AVEC has received from the Denali Commission over the years, but I know it was up over $100 million a few years ago. The big AVEC investments have largely all been funded by the Denali Commission. And, of course, federal subsidies aren't the only subsidies. AVEC operating revenues do come in part from AVEC members, but the power-cost-equalization subsidy is $32 million per year in state revenues, and Western Alaska lawmakers are proposing to make it a whole lot larger this year.
KOHLER: We are "largely government funded" because we have loans that we are paying for? I'd say that proves that our communities are demonstrating self-sufficiency by borrowing and paying back loans instead of relying on state and federal grants to build our facilities. Yes, AVEC has used money from the Denali Commission for the past 10 years to develop much-needed generation and fuel storage facilities in our 53 communities. More than twice the amount that our communities have received has been invested by the AEA and other partner utilities to develop energy infrastructure in non-AVEC villages. And yes, our members do receive PCE -- as do residents in 178 Alaskan communities. PCE overall pays for less than 20 percent of the cost of providing power in rural Alaska. The rest comes out of the consumer's pocket. The PCE "subsidy" formula remains unchanged. The Legislature increased the endowment fund this month so that we hopefully don't have to do battle every year to obtain full funding of the program. The consumer is not getting more PCE -- it will just be coming out of the endowment fund rather than the general fund.
MEDRED: The cost of AVEC power probably is cheaper than that of Perryville power. That is not something of which to be proud. Lower costs drive up consumption. One of the things Perryville has done is make a concerted effort to drive down consumption. In Perryville, as in much of rural Alaska, there is often a lot more to be gained by power conservation than power production. Some of this conservation, as the story noted, is as simple as unplugging the coffee maker left on all day or turning off the lights when you leave a room. People are a lot more likely to make an extra effort to conserve expensive power than cheap power.
KOHLER: We shouldn't be proud that the cost of our power is cheaper than Perryville's? I'd say that we should be proud. Our members use 390 kWh a month on average. I'd say they're pretty darn conservative already.
MEDRED: I didn't get into AVEC's perspective on Perryville because it isn't an AVEC project. I cited the costs of AVEC projects to illustrate the high cost of wind in most villages. Getting into AVEC issues would have required a lot more space and a lot more exploration into both how AVEC and the Denali Commission work. Is there waste there as in some government programs? Could the Denali Commission run more efficiently? Is it true Denali Commission employees receive memberships to the Athletic Club at the Hotel Captain Cook, and if so why? I know the poor struggling scribes in the private sector here at Dispatch aren't getting offered memberships to any athletic clubs.
KOHLER: We welcome inquiry into how we operate. AVEC is pretty darn transparent. Simply put, we combine our 53 villages to generate economies of scale. We don't rely on the state to provide technical support. We overhaul our engines (all 166 of them), we build new services to connect homes and businesses, we pay our bills. And we most assuredly don't provide our employees with memberships in any athletic clubs.
MEDRED: Lastly, this post kind of shows the biggest problem facing AVEC. The cooperative works out of a box. A suggestion that another village has found a different, cheaper way to do wind that might be worth a look is viewed not as an idea worth examining, but some sort of slam on AVEC. If this is the reaction to the idea there might be cheaper and better ways, how are you ever going to find cheaper and better ways?
KOHLER: AVEC doesn't work out of a box. That's downright laughable. We are nationally recognized for the innovation we have demonstrated time and time again as we pioneer workable solutions for our communities.
Finally, you are now deriding us for being headquartered in Anchorage. Like it or not, Anchorage is Alaska's hub. We are here because it is the most practical and cost-effective location to deliver value to our members in 53 remote locations. I have lived 21 years in rural Alaska. I have walked the walk. AVEC is not the enemy. Please don't treat us as such.
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