Many measurements of auroral particles, in particular recent measurements from the FAST satellite, indicate that the auroral electron distribution is often broad in energy and field-aligned in pitch angle. Such electrons are seen in conjunction with strong kinetic Alfvén waves with small perpendicular wavelength, and so the aurora produced by these electrons has been termed the "Alfvénic aurora." The Alfvénic aurora is predominant at the polar cap boundary of the aurora as well as in the auroral arc that brightens during substorm onset. The process of forming parallel electric fields in Alfvén waves has been investigated by means of three-dimensional two-fluid simulations. Waves with small perpendicular wavelengths can be produced by phase mixing when perpendicular gradients are present in the plasma. At lower altitudes, Alfvén waves can interact with the ionospheric Alfvén resonator and phase mix to scales of a few kilometers. At higher altitudes, the electron thermal speed becomes comparable or larger than the Alfvén speed, and parallel electric fields due to the Landau resonance can develop. This has been modeled in the fluid code by an approximation to the plasma dispersion function used in kinetic theory. Phase mixing is most effective when there are strong gradients, such as at the plasma sheet boundary layer. Simulations indicate that these processes can produce parallel electric fields on scales of a few kilometers (in the cold plasma case) to a few tens of kilometers (in the warm plasma case), comparable to the scale sizes of auroral arcs.