July 12, 2022
SUMMARY
Good afternoon! The summer season is in full swing, and the Kenai Peninsula is once again buzzing with activity! I hope all of you are taking advantage of what is turning out to be a beautiful summer. Although, the recent rain has been a welcome sight! These Alaskan summers go by too quickly so please enjoy it while it lasts. Additionally, I hope everyone enjoyed a safe, fun-filled, Independence Day with family and friends.
Last month was yet again another busy month, consisting of various business meetings including the Cooperative Finance Corporation (CFC) Forum 2022 in Boston. The following are brief updates on many of HEA’s current business activities and strategic goals.
SAFETY
Employees continue to participate in our safety program and suggest safety improvements. HEA experienced no Occupational Safety and Health Administration (OSHA) recordable incidents during June. This month included self-paced safety training on the following subjects: bloodborne pathogens, fall protection, cyber security essentials, and forklifts. In addition, our lineworkers completed their annual pole top/bucket truck rescue training.
Lastly, with the Kenai sockeye run quickly approaching and the increased activity in the area, just a friendly reminder to be extra attentive when driving on the congested roadways filled with hundreds of dipnetters from all around the state.
FINANCIAL OVERVIEW
Kilowatt-hour (kWh) sales rebounded slightly during the month of May, which brought in monthly revenues of $8.51 million. The cost of service of $8.29 million, resulted in a monthly operating margin gain of just under $227,000. Year-to-date, we continue to lag behind our budgeted margins by about $1.5 million, driven mainly by lower operating revenues, higher fuel costs, and lower capital credit dividends due to a loss allocation from ARECA.
Good news! HEA’s 3rd quarter Cost of Power Adjustment (COPA) has dropped to $0.07718, a minimal decrease of $0.45 for the average residential member using 550 kWh/month. The change in the COPA rate was effective July 1, 2022.
RELIABILITY
Generation
HEA’s generation facilities operated very well with no unscheduled outages during June. However, it was an eventful month for both the Nikiski Combined Cycle (NCC) plant and Soldotna Combustion Turbine (SCT) plant. It has come to our attention that the water treatment building at the NCC plant needs significant roof repairs from leaks that are damaging the insulation in the roof. Proposals to repair the building were only received from one bidder with repair work starting later this summer. In addition, someone broke into the Soldotna Combustion Turbine (SCT) plant, stole a vehicle, and rammed the main gate to exit the plant. The gate was damaged beyond repair and will have to be replaced. We received quotes for replacement and repairs of the main gate, with the new gate at least 6-8 weeks from delivery. The stolen vehicle has been recovered.
The BESS continued providing system regulation power throughout most of June; however, was removed from service June 27 – June 30 for warranty repairs on the 25 kV switchgear and for transformer maintenance. Parts to complete these warranty repairs have been ordered and we anticipate repairs to be complete by the first of October. In addition to these warranty repairs, an upcoming Tesla maintenance outage of the Megapacks is scheduled for the week of July 25th.
Distribution
The most notable event of the month was the lightning strike to the 115 kV line between Soldotna and Bradley Lake and the 115 kV line between Soldotna and Diamond Ridge at 6:05 a.m. on June 9. The strike disrupted power to 12,952 members from Anchor Point to Soldotna. The south end of the system was islanded from the rest of the Railbelt with power being supplied to the system only by Bradley Lake. Generation, Dispatch personnel and crews worked diligently to restore service as quickly and as safely possible, with restoration to all members by 10:51 a.m.
Energy usage (load) in June was down approximately 3% from weather adjusted expectations, with June Heating Degree Days (HDD) relatively normal though slightly warmer. The last six months have been warmer than 2020 and 2021 but not as warm as 2019.
ENGINEERING SERVICES | New Service Applications
The chart below plots the new service applications, for HEA contractor jobs only, and provides a comparison to the previous four years. Although we received less new service applications than in June, the traditional pattern of a reduction in applications in mid-summer remains consistent. 2021 continues to lead the previous four years with a total of 305 new applications to-date through the end of July
CYBER SECURITY & INFORMATION TECHNOLOGIES
Recently HEA repelled a Crypto Coin mining attack. The attack, if successful, provides miners to covertly use our computer servers and electricity to create crypto currency. In addition, the Cooperative recently secured our AK 220 license from the Federal Communications Commission (FCC), continued work on the Kenai/Nikiski fiber project, and hosted a consultant providing process improvement recommendations.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association (APA) Federal Legislative Conference & APA Annual Meeting
After a three-year, COVID-caused hiatus, HEA staff, APA staff and several other utility members returned to Washington, D.C. for the APA Federal Legislative conference. Conference highlights include meetings with Senators Lisa Murkowski and Dan Sullivan, Federal Energy Regulatory Commission Chairman Richard Glick, the chief of staff to Senator Joe Manchin (D-WV), and officials with the US Department of Energy. The federal conference, one of APA’s most important advocacy events, is a chance to meet face-to-face with lawmakers, regulators and agency staff members who have a significant impact on our industry.
The APA Annual Meeting will take place in Ketchikan on August 16-19, 2022, at the Ted Ferry Civic Center. Registration is now open.
National Rural Electric Cooperative Association (NRECA) & Cooperative Finance Corporation (CFC) Regional Meeting
The NRECA & CFC Regional Meeting in Portland, Oregon is scheduled for September 26-28, 2022.
Legislative Update
Like most summers, there is not much new to report legislatively, however, Governor Dunleavy signed the Fiscal Year 2023 state budget into law on June 28, 2022. We are pleased the approved budget does include $15M of Renewable Energy Fund Round 14 grant funds, plus several other energy-related budgetary items. The FY23 budget became effective on July 1, 2022.
Regulatory Commission of Alaska (RCA)
The RCA opened Docket E-22-001 seeking further input on the application of the Railbelt Reliability Council (RRC) to serve as the Electric Reliability Organization (ERO) for the Railbelt region. The commission received initial public comments both in support of the application and expressing concern. A consumer input hearing is scheduled for 8:30 a.m. on Wednesday, July 20, 2022.
Board of Directors’ Meeting Approvals | July 12, 2022
Regular HEA Board Meeting
- Regular Meeting Minutes of June 14, 2022
- Board Policy 103, Nepotism – Periodic review completed with housekeeping revisions approved.
- Board Policy 706, Employee Training – Periodic review completed with housekeeping revisions approved.