Monthly Manager’s Report

Posted: March 11, 2022 at 8:24 am

 

 

March 8, 2022

SUMMARY

Another busy month at HEA and for the most part, no complaints as our busy schedule allowed us to successfully navigate another crazy month of winter weather. As mentioned, February was exceptionally productive as we worked with auditors, legislators, lobbyists, contractors, regulators (RCA) and vendors.

I have also been busy attending multiple business meetings virtually which include the following: Alaska Power Association (APA) Railbelt Issues Forum meetings; Railbelt Utility Managers (RUM) meetings, the Bradley Lake Project Management Committee meeting, and several committee meetings. Most recently, I traveled to Virginia for an in-person Cooperative Finance Corporation (CFC) Board Meeting and will be chairing the NWPPA Board of Trustee meeting later this week.

The following are brief updates on HEA’s current business activities and strategic goals.

SAFETY

We did experience one (1) Occupational Safety and Health Administration (OSHA) recordable incident in February, which is about 30 days since the last lost/restricted time incident. A detailed safety report is included in this month’s Board packet.

Just a reminder that as spring break-up approaches, slippery surfaces due to ice will be prevalent on sidewalks and parking lots. As a result, please exercise caution when walking in these areas and use your ice cleats.

FINANCIAL OVERVIEW

2022 is starting off well with kilowatt-hour (kWh) sales through February slightly (0.4%) ahead of last year at this time. Through January, revenues exceeded budgeted expectations by about $400k which offset higher fuel costs and roughly $250k in storm response. As a result, margins tracked close to budget ending the month at almost $1.1 million…a good way to start the new year.

In January HEA also received $595k in Electric Utility Relief Program from the State. These funds were posted directly to members’ accounts and reduced the Cooperative’s bad debt expense. Thanks again to the HEA staff and the office of Senator Peter Micciche leading the effort to create this program.

Our auditors have completed their annual audit and efforts to begin the capital credit retirement process is once again underway. A draft audit report and resolution will be presented to the Board at the March Board meeting. In addition, a presentation on capital credits and corresponding resolution will be presented at the April Board meeting.

RELIABILITY

Distribution

With the construction season quickly approaching, HEA has several projects planned for the upcoming year. In addition to the usual maintenance (underground cable replacement and/or rejuvenation, overhead splice replacement, and pole replacement), crews will remain focused on the overhead reconductoring project along K-Beach Road, new fiber from Kenai to Nikiski, replacing failing poles, and later this year potentially phase 2 of the DOT’s Kenai Spur Highway project.

Generation

The generation group has been remarkably busy this past month with several projects including improving the integration of the Battery Energy Storage System (BESS), developing a generation scheduling model, and conducting a scheduled maintenance outage at Bradley Lake. The Bradley Lake project created an additional workload on the department due to Bob Day’s recent retirement.

The Nikiski Combined Cycle (NCC) facility continues to operate without any issues. In addition, the facility continues to meet the limits of our effluent discharge permit. NCC is scheduled for a maintenance outage May 16-23.

Transmission

HEA has been working with the other Railbelt utilities to identify transmission projects that increases the reliability of the existing grid. Efforts are underway to determine if federal and state funding is available to assist with these important projects. To date, the focus has been “deconstraining” the Kenai Peninsula from the rest of the Railbelt. Specifically, the long-term goal is to convert the existing transmission system from Bradley Lake to Anchorage from 115 kV to 230 kV and add a second intertie off the Peninsula…. possibly a direct current high-voltage line from Nikiski to Beluga. A recent unsolicited study completed by Dave Burlingame (EPS) supports these projects along with a BESS to both improve transmission reliability and to address frequency instability induced by the Bradley Lake Project.

ENGINEERING SERVICES

As illustrated on the graph below, new service applications are already starting to come in. The 40 applications received through February are more than we historically receive during a “typical” year. Also, HEA representatives were requested and will be participating in an upcoming meeting with the Kenai Peninsula Home Builder’s Association to review the line extension process and how to optimize working with HEA.

Relative to Independent Power Producers (IPP’s), staff continues to work with two potential solar companies interested in developing large projects on the HEA system. In both instances, HEA staff need to run the projects through our generation scheduling models to identify the technical and financial impacts on the Cooperative.

MEMBER SERVICES

Our annual report and review of Board Policy 603, Identity Theft Red Flag Prevention is up for Board review at this month’s Board meeting. The policy was established for us to take all reasonable steps to identify, detect, and prevent the theft of our members’ personal information; commonly known as Identity Theft.

The Going Live podcast, launched in January, is the one and only podcast made for our members by our members. The podcast will include topics about industry specific trends, energy savings, renewables, safety generation, and will feature professionals from our industry. The first podcast, Energy Savings with Colleen Fisk (of REAP) can be listened to online on our Going Live site. Congrats to our Member Relations team! I encourage you to give it a listen if you have not already.

Lastly, the Board scholarship committee, along with Homer and Kenai area community volunteers are scheduled to meet this month to review all student applications. A Scholarship Program report is provided in this month’s Board packet.

CYBER SECURITY | COMMUNICATIONS | INFORMATION TECHNOLOGIES

The last few weeks have been extraordinarily busy for HEA computer gurus. As you may have read, the Russian conflict has significantly increased web traffic. I have asked John Jungling to provide a short update (5-10 minutes) at the Board meeting.

STRATEGIC PLAN INITIATIVES

Railbelt Energy Fund (REF) – HEA submitted five (5) applications for various renewable energy projects including a landfill gas project and four wind turbine metrological data collection towers on the Peninsula which are currently being evaluated by AEA. HEA will be ordering long-lead-time items soon to prepare for this year’s building season.

Electric Reliability Organization (ERO) – The Lieutenant Governor recently approved the proposed ERO regulations, and the Regulatory Commission of Alaska (RCA) is accepting applications for organizations interested in becoming the ERO. The Railbelt Reliability Council Implementation Committee (RRC-IC) of which HEA is a member, continues to refine their Bylaws and Policies for final acceptance and incorporation by mid-March. Sticking points between the utilities and the non-utilities remain, but the plan is to file an ERO application with the RCA on March 28.

Web-Based Energy Estimator – This project will be completed over the next two months and is scheduled to be on-line in time for HEA’s Annual Meeting in early May.

LEARNING & GROWTH | INNOVATION

Battery Energy Storage System (BESS) Project

As mentioned in last month’s report, the BESS has been online since January 19. We continue to monitor its responses to system disruptions and thus far, the BESS is proving to be a viable asset for HEA and the other Bradley Participants as it has reduced frequency deviation (caused by small runner pits at Bradley Lake), assists with spinning reserve requirements, and enables the integration of non-firm renewable resources.

In other BESS news, Tesla Corporation made a special trip to the Kenai Peninsula this winter to feature HEA’s BESS project for their Tesla Megapack promotional video. Special thanks to Keriann Baker, Director of Member Relations and Joe Halstead, Info Services Analyst, for assisting Tesla in accomplishing their video goals while on the Peninsula and to Jeff Leete, Substation Maintenance Foreman and Leo Grasso, Metering/Apparatus Tech, for their cameo appearance in the video. The video is featured on Tesla’s website at https://www.tesla.com/videos/alaska-megapack.

BUSINESS & COMMUNITY RELATIONSHIPS

Legislative Update

HEA staff continues to work with APA on several electric energy-related bills in the Alaska legislature that may potentially impact the electric utilities. The most impactful of these bills include HB 29 (electric utility liability) and SB 179 Utilities: Renewable Portfolio Standard. In addition to these two bills, Senator Dunleavy’s micronuclear bills, SB 177 and HB 299, are getting significant attention in the legislature. The micronuclear bills remove legislative siting authority and exempts micronuclear reactors from a slew of required studies if the micronuclear reactor is less than 50 MW. Details of these and other bills are summarized and distributed during the session every Friday from Michael Rovito. Please let Jenniffer know if you are not receiving these APA Bill Tracker updates.

As a reminder, APA is also hosting their weekly, timely and informative legislative teleconferences on Friday mornings at 9:00 a.m. If you are interested in participating, please contact Jenniffer Rosin for details.

Regulatory Commission of Alaska (RCA)

Lastly, in an APA E-flash, SB 190 was filed on February 15 extending the RCA’s termination date by eight years to 2030. This is a clean extension of the date and does not include any other changes to the status governing the RCA.

BOARD OF DIRECTORS’ MEETING APPROVALS | MARCH 8, 2022

Regular HEA Board Meeting

  • Regular Meeting Minutes of February 8, 2022
  • Resolution 45.2022.05, Acceptance of 2021 Audit Report
  • Board Policy 603, Identity Theft Red Flag Prevention – Annual review completed, and housekeeping revisions approved.