August 9, 2022
Greetings! The summer seems to have flown by remarkably fast. I hope you have enjoyed the several weeks of warm weather and amazing fishing that July brought us, as well as, the periodic rainy days have kept the risk of wildfires to a minimum. Looking forward, we are entering a busy fall season that includes Alaska Power Association’s (APA) Annual Meeting in Ketchikan, Northwest Public Power Association’s (NWPPA) Strategic Planning meeting, the National Rural Electric Cooperatives (NRECA) Region 7/9 Meeting, and our local neighborhood Community Meetings. The following are brief updates on HEA’s current business activities and strategic goals.
Thanks to the continued efforts of employees, there were no Occupational Safety and Health Administration (OSHA) recordable incidents last month. The short safety report is included in this month’s Board packet and as indicated in the report, the last Lost Time Incident was back in April. In addition, year-to-date data is outlined in the Strategic Plan Safety Summary, which is also included in this month’s Board packet.
Year-to-date, operating revenue remains slightly under budget with June revenues of $7.8 million. Total cost of service for the month was $8.4 million, bringing the monthly operating margins to a loss of just under $530,000. Year-to-date operating margins are just over $1.25 million, which remains lower than budgeted projections. The low monthly margins are due to the expectation that generally, we do not anticipate producing large margins during the non-winter seasons and because we have operating expenses that we anticipate being compensated later this year with the sale of the Battery Energy Storage System (BESS). Lastly, the Retail Energy Usage graph can be found at the end of this report.
All departments have reviewed their budgets and submitted mid-year adjustments. At this month’s Board meeting, we will take some time to compare the mid-year budget to actual results.
HEA continues to make progress clearing our distribution facility rights-of-way in the Beaver Creek area (nearly completed) and Kasilof area. Even with clearing efforts, the large trees that toppled on our distribution facilities due to strong winds over recent days demonstrated why keeping our rights-of-way clear is critical to maintaining reliable service, increasing safety, and reducing the fire hazard.
Staff continues to run scenarios in the generation model to assist with generation scheduling and provide insight into potential future generation portfolios. In addition, modeling results will be incorporated into our long-term financial planning efforts.
The BESS performance continues to meet expectations however, we have “governed” the BESS facility to limit how much power can be exported off the Peninsula during unscheduled outage events. As a result, a few of HEA members continue to experience short Load Shed outages due to large grid problems that occur off the Peninsula.
ENGINEERING SERVICES | New Service Applications
Engineering Services continues to stay busy as the summer construction season is in full swing. The New Service Applications chart plots new service applications over the last five years. The 59 new service applications this month is above average for July over the last 5-years. 2022 leads the last 5 years in with 213 total app’s to-date, slightly edging out 2021 that saw 305 through the end of July.
HEA’s Director of Member Relations, Keriann Baker and I are preparing for the first of the area meetings this year. The remaining meetings are planned for October and November.
The August area meeting currently scheduled is as follows:
- Tuesday, August 30, 2022 | Seldovia, Sea Otter Community Center, Luncheon 12-1 p.m.
This year’s Youth Rally Leadership Camp, which is an all-expense paid week at the College of Idaho took place in July. Both of our local high school students, JaLeen Gattenby and Parker Rose earned college scholarships. In addition, JaLeen Gattenby was selected to be the representative for Alaska to go to Washington DC next spring.
Extensive activity continues on our strategic initiatives specific to renewables. The Grant Lake state lease and easements from the Department of Natural Resources (DNR) are in progress, as well as the RFP for Final Design and Build is being finalized. In addition, we have received from RIPP, diagrams delineating proposed siting, design, construction, ownership, and O&M responsibility for their solar project. Lastly, HEA staff and our wind consultant recently visited the proposed met tower locations in Nikiski, Ninilchik and Caribou Hills. Met Tower component orders have been finalized, as well as land use permits, and agreements are being pursued.
Mike Salzetti continues to refine PLEXOS model outputs using 2018 AEEC load, assets, and system constraints plus potential future non-firm generation. One clear conclusion is that, when PLEXOS is allowed to seek the lowest cost to operate the system (and build assets as needed) the economic amount of wind and solar is a strong function of its PPA price. We look forward to a presentation on the PLEXOS model in September.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association (APA) Annual Meeting
As a reminder, the APA Annual Meeting in Ketchikan, Alaska is scheduled for August 16-19, 2022. Currently, the following HEA staff and Board plan to attend: Keriann Baker and Erin McKittrick.
In late July, the U.S. Senate released an updated version of the budget reconciliation bill titled the Inflation Reduction Act of 2022 that Congress has been negotiating for the past year. The text of the bill and high-level summaries can be found here. This bill creates direct incentives to bolster investments in carbon capture, grid modernization, renewables, battery storage and other energy technologies. A few provisions of interest to APA members:
- Direct Pay Tax Incentives: If enacted, electric cooperatives and municipal-owned utilities would have tax parity with our industry counterparts when we deploy new energy technologies, including carbon capture, nuclear, energy storage and traditional renewables. The direct payment would be available for all existing technologies for which clean energy tax credits are currently available and creates a direct payment for a new slate of technologies.
- Grants for Clean Energy Systems: A new $9.7 billion grant and loan program designed specifically for electric cooperatives that purchase or build new clean energy systems. Like the program proposed last year by President Biden, co-ops would be able to receive a grant for as much as 25% of their project cost, with a maximum award of $970 million for any one entity.
Northwest Public Power Association (NWPPA)
This fall, the Northwest Public Power Association’s Northwest Innovations in Communications Conference is headed to Alaska for the first time. The theme is “Embracing the New Frontier in the Last Frontier!” From Sept. 19-22, more than 100 electric utility communicators will gather in Anchorage to learn, share ideas, and network. The conference will include tips for crisis communications plans, recommendations for reaching diverse demographics, guidance for social media policies, and so much more.
In addition to the NIC Conference, NWPPA and APA will be hosting the 2022 Alaska Electric Utility Conference in Anchorage, Alaska, October 31-November 4 at the Dena’ina Center. The AEUC provides a great mix of learning and networking opportunities along with more than 80 trade show booths designed to help you get on top of the challenges, solutions, and opportunities that Alaska electric utilities face. Developed by a dedicated planning committee of Alaska utility employees, along with Northwest Public Power Association and Alaska Power Association staff, this conference proves repeatedly that it is a must-see event for all who provide power to Alaska.
Board of Directors’ Meeting Approvals | August 9, 2022
Regular HEA Board Meeting
- Regular Meeting Minutes of July 12, 2022
- Resolution 45.2022.23, Approval of the Financing Transaction for Required Project Work