Monthly Manager’s Report

Posted: April 19, 2022 at 9:24 am

 

 

April 12, 2022

SUMMARY


Happy Easter! Easter always seems to be a good indication that winter is over, and that spring has sprung, despite all the snow that remains heaped up in my yard. Regardless, the trees should be budding soon, and we can say we survived another winter.

It is an exceptionally busy time that’s compounded by several energy related issues being discussed in Juneau and Washington, D.C.; travel to various conferences and board meetings, and as expected the Cooperative is actively preparing for a busy construction season that’s quickly approaching. In addition, final planning is being completed for the upcoming Annual Meeting which is less than 3 weeks away!

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


SAFETY


March was a good month for safety at HEA! This month’s report shows no personal injuries and no vehicle, property, or facility accidents. In addition, we expect to have four representatives from HEA in attendance at the Alaska Power Association (APA) Safety Summit later this month, which will encompass two days of electric utility specific safety presentations and open discussions.


FINANCIAL OVERVIEW


March joins February in being a low sales month. Year-to-date kWh energy usage through March is approximately 4.5% under our forecasted expectations.

Revenues for February were just over $7.0 million, and cost of service was $7.4 million, resulting in an operating margin loss of just under $400,000. Even though February’s operating margins are below expectations, our year-to-date operating margins remain positive at $672,000. Please see the graph below showing HEA retail energy usage to date as compared to previous years.

The Regulatory Commission of Alaska (RCA) approved a Cost of Power Adjustment (COPA) in March 2022. The COPA rate for the second quarter of 2022 is calculated to increase from the current rate of $0.07600 to $0.07801 per kilowatt hour (kWh), an increase of $1.11 for the average residential HEA member using 550 kWh per month. The change in the COPA rate is effective April 1, 2022.

As a reminder, a presentation on capital credits and the corresponding resolution will be presented at this month’s board meeting.


RELIABILITY


Distribution

The 2022 distribution and transmission right-of-way clearing schedules are in full swing. Contract crews have been diligently working on clearing in the Beaver Creek area, despite the heavy snow load, and the Ski Hill Road area.

Generation

The generation group had yet another busy month with several projects including the scheduled maintenance outage at Bradley Lake and preparing for multiple upcoming projects at Nikiski Combined Cycle (NCC) facility.

NCC ran the entire month with fuel coming from Hilcorp and Furie via the 414-proxy meter. The new 414 meter was received mid-month and we anticipate meter installation early this month. Additionally, we had three scheduled islanding events during March, with Soldotna Combustion Turbine (SCT) running in support while we fine-tune the battery energy storage system. Historically, we use our stored Bradley Lake water for these types of events, however, with no water available due to the 2021-2022 water allocation plan, economy energy was purchased from Chugach Electric Association (CEA) to minimize generation costs during these events. Lastly, NCC is gearing up for the spring 2022 Borescope outage with accelerated planning to identify and procure critical spare parts affected by material shortages due to supply chain issues.

Battery Energy Storage System (BESS)

The BESS continues to operate in Automatic Generation Control (AGC) providing system regulation power. The BESS was in service during each of the islanding events. During the March 25 event, NCC was the only thermal plant in service and the BESS provided all system regulations and needed reserves. There will be continued refinement of BESS operations and settings as we get closer to the envisioned operation of the grid using this innovative system. Finally, Tesla has scheduled a three-day BESS maintenance outage scheduled to begin April 19 to complete the remaining issues identified during commissioning and testing.


MEMBER / CUSTOMER SERVICE


Engineering Services

The 41 new service applications last month continue to outpace the past five years’ historical data. This bodes well for the upcoming construction season.

Annual Meeting of the Members

It’s that time of year again and the Annual Meeting is just around the corner.  There are two options to participate in this year’s Annual Meeting:

  • Attend the in-person Annual Meeting on Wednesday, May 4, 2022, at Kenai Central High School. The business meeting will begin at 6:00 p.m.
  • View the live stream online
    • There will be a live stream of the meeting for online viewing purposes.

Early registration for Annual Meeting attendance starts April 20, 2022, and will close May 3, 2022, at 4:30 p.m. From https://www.homerelectric.com/my-cooperative/annual-meeting click on the “Register for Homer Electric’s Annual Meeting” button. Early registration streamlines the process for members on the day of the in-person Annual Meeting – no lines to wait in.

The HEA Board of Directors’ election ballots were mailed to the membership on April 4, 2022. Completed and signed ballots must be received by mail no later than the close of business on May 3rd to be validated. Additionally, there may be an opportunity to vote in-person at the Annual Meeting if COVID-19 infection rates within the service territory remain low. While it is our plan to host an in-person Annual Meeting, unfortunately, we cannot guarantee the in-person Annual Meeting and therefore we have strongly encouraged all members to vote by mail.

Lastly, members will have the opportunity to ask a question or leave a comment for consideration prior to the Annual Meeting. A Q&A form has been placed on the HEA website and is open for questions until 5:00 p.m. on May 2, 2022. Questions will be compiled and, to the extent possible, answered during the New Business section.

Electrical Safety Posters

HEA staff has reviewed 55 colorful safety posters illustrated by local third and fourth graders. The winners for Best Safety Message, Most Creative, and Most Humorous posters will be highlighted during the Annual Meeting.

Scholarship Program

All student scholarship applications have been reviewed and graded, which resulted in ten qualifying candidates. A draft resolution is prepared for review and consideration at this month’s board meeting. If approved, ten $1,000 college scholarships will be awarded to students within our communities. Staff will be attending student scholarship award nights, at their respective schools. In addition, we plan to acknowledge each student during the Annual Meeting. As a reminder, the scholarships are not paid for by HEA members, but rather by the earnings on investments with Alaska Rural Electric Cooperative Association (ARECA).

Youth Rally Program

After being cancelled for the past two years, the Youth Rally Leadership Camp is back! The camp dates are July 11-16, 2022, in Caldwell, Idaho. The application deadline was April 1, 2022, with personal interviews the week of April 11, 2022. The Youth Rally participants will be awarded during the Annual Meeting.


CYBER SECURITY AND INFORMATION TECHNOLOGIES


Due to the increase in internal hacking events, recent large scale public attacks, and the Homeland Security “Shields Up” warning, we have increased our cyber security protections. One of the implemented changes was the migration of all HEA email to our cloud-based email system. I believe it was mentioned previously, this is very exciting as we are the first Railbelt utility to completely move our email and office applications to the cloud. If you have not completed the migration process or are having any issues, please let Jenniffer know at your earliest convenience.


STRATEGIC SERVICES


The Railbelt Reliability Council Implementation Committee (RRC-IC) met March 14-15 and incorporated as the Railbelt Reliability Council (RRC), an Alaska non-profit with the goal of becoming the Electric Reliability Organization (ERO) mandated by SB123.

The RRC members gave final approval to the foundational documents (Bylaws, Policies and Rules, IRP process, Compliance Monitoring and Enforcement Plan (CMEP), and as mentioned in last month’s report, the application was submitted at the end of the month to the RCA. The RCA has 6 months to review and possibly approve the application. What is budgeted is a start-up year of $4.6 million, a second year of $10.832 million, of which HEA members pay 10.49%, and approximately $5 million going forward after the first of each study and standard is developed.

The members of the ERO are:

  • Stakeholder Class 1, Cooperatives (4 seats) – Chugach Electric Association, Matanuska Electric Association, Homer Electric Association, and Golden Valley Electric Association.
  • Stakeholder Class 2, Municipal – Seward
  • Class 3, Distribution at large – Doyon
  • Class 4 Provider / State – Alaska Energy Authority
  • Class 5, IPP (2 seats) – CIRI (alternate RIPP) and Polar Consulting (alternate Delta Winds)
  • Class 6, Consumer (Small) – AKPIRG
  • Class 7 Consumer, (Large) – Alaska Native Medical Center
  • Class 8 Consumer (Environmental Advocate) – REAP
  • Independent Director – Hank Koegel
  • Non-voting RCA representative – RCA
  • Non-voting AG/RAPA representative – Jeff Waller


BUSINESS & COMMUNITY RELATIONSHIPS


Alaska Power Association (APA)

As mentioned in the most recent APA/AIE monthly report, the Alaska Center for Energy and Power (ACEP) is offering the Alaska Sustainable Energy Conference at the Dena’ina Center in Anchorage on May 24-26, 2022. This workshop will build on the foundation established at the Electrify Alaska! Conference in Cordova last October. For more information on the conference or workshop series, visit the conference website.

Northwest Public Power Association (NWPPA) Board Meeting

One of my out-of-state travel opportunities last month was to attend the NWPPA Board meeting. Much of the focus was on reviewing and approving the 2022 slate of resolutions that are used to identify priorities for the Association’s federal legislative visit. In addition, the Board accepted several committee reports including proposals from the Nominating Committee (Board seat recommendations) and the Awards Committee (presented at the Annual Meeting next month).

Legislative Update

Like many Alaskans, I was saddened to receive the news of Congressman Don Young’s passing. The Congressman was an avid supporter of the Alaska electric industry – wholeheartedly upholding industry issues and utility driven power projects. He was passionate about energy; specifically, hydropower, and was dedicated to finding ways to lower the cost of electricity in our state. In fact, he was scheduled to receive the National Hydropower Legislator of the Year award just days after his passing.

It’s been a busy month legislatively both in state and at the national level. Alaska Governor Mike Dunleavy submitted legislation to the state legislature that appropriates the initial funding Alaska is anticipated to receive from the federal Infrastructure Investment and Jobs Act (IIJA). The bills SB 241 and HB 414 distribute funds in five categories (IIJA Federal Programs & Match, IIJA State Support of Federal Programs, FY22 Congressional Earmarks, IIJA Coordination & Implementation, and IIJA Opportunity Investments). A IIJA Grants Symposium and Alaska Infrastructure Planning and Assistance workshop hosted by Senator Lisa Murkowski is being held in Anchorage early this week (April 11 – April 12) where several HEA staff are in attendance.

State legislation to note, includes, the bill dealing with micronuclear reactors (SB 177, HB 299), which continues to gain traction with numerous hearings; and House Bill 301, which mandates a renewable portfolio standard (RPS) in the Railbelt, has had four hearings in the House Energy Committee. I had the opportunity to travel to Juneau in mid-March and speak on behalf of the Railbelt Utility Manager’s group during one of the House Energy Committee meetings as we discussed Railbelt transmission needs that would enable increased dependence on non-firm energy sources. In addition, HEA staff took the opportunity to visit most of the Kenai Peninsula delegation and visit with House Energy Chair, Representative Calvin Schrage.

Regulatory Commission of Alaska (RCA)

Lastly, in an APA E-flash, the Alaska Senate passed SB 190, the RCA extension bill, on Friday, April 8, 2022. The bill extends the termination date of the RCA to June 30, 2030.


BOARD OF DIRECTORS’ MEETING APPROVALS | APRIL 12, 2022


Regular HEA Board Meeting

  • Regular Meeting Minutes of March 8, 2022
  • Resolution 45.2022.06, Retirement of Capital Credits and Capital Credits Retirement Method
  • Resolution 45.2022.07, Annual Scholarship Awards
  • Resolution 45.2022.08, Approval of the Sale of Property
  • Board Policy 504, Forms of Deposit – Periodic review completed, and revisions approved.
  • Board Policy 707, Annual Leave – Periodic review completed, and revisions approved.
  • Board Policy 723, Control and Disclosure of Related Party Transactions – Periodic review completed with no new revisions.