August 8, 2023
SUMMARY
Good afternoon! I hope everyone is enjoying our sporadically warm summer, even with the cooler weather it seems to have flown by remarkably fast. Looking ahead, our fall schedule is filling up with the Alaska Power Association’s (APA) Annual Meeting, National Rural Electric Cooperative Association (NRECA) and Cooperative Finance Corporation (CFC) Regional meetings, and Northwest Public Power Association Board of Trustee meeting…..not to mention the yet to be scheduled HEA Area Meetings.
The following are brief updates on HEA’s current business activities and strategic goals that have taken place over the last month. As always, a more detailed report will be given on the day of the meeting.
SAFETY
We had another good month for safety. HEA experienced no Occupational Safety and Health Administration (OSHA) recordable incidents in July. The full safety report is included in this month’s Board packet.
FINANCIAL OVERVIEW
Operating revenue in the amount of $8.7M for the month of June falls shy of covering total cost of service resulting in a net operating loss of $352k….typical for most electric utilities. Monthly losses are expected when electric usage falls during warm summer months and summer maintenance activities begin in earnest. Total year to date margins of $1.9M result from a combination of factors. Some, like the timing of right of way clearing, building maintenance, and unbilled revenue adjustments are likely to catch up by year end, but some savings are expected to be retained through year end including those attributed to open positions and the dedication of HEA crews to capital projects through the end of June.
In April, HEA adopted a credit card cap that limited the use of all credit cards to payments totaling $20k per member, per month in part to allow the reinstatement of Mastercard as a payment option. We are happy to report that by restricting the number of high balance credit card transactions, HEA has saved its members $130k through the month of June and will likely save more than $250k over prior year expenses.
Chugach Electric Association (CEA) completed its initial filing of its rate case with the Regulatory Commission of Alaska (RCA) in late July. Of particular concern to HEA, is the increase in transmission wheeling rates from $11.16/MW for an hour of non-firm point-to-point capacity to $14.12/MW constituting a 26.5% increase. This is partially driven by Chugach’s proposal to raise its G&T TIER (Times Interest Earned Ratio) from 1.35 to 1.75. The increase in transmission wheeling rates is likely to affect HEA’s ability to complete off system sales to other Railbelt utilities if the transmission wheeling rates applied to those sales makes CEA uncompetitive. Public comments close August 4th with August 17th being the decision date when the RCA formally suspends the filing into a docket of investigation. The following week a conference will be held for approval of the interim tariff sheets so rates can be in effect September 1st. By the time of this conference, potential intervenors will need to have filed with the RCA for this status.
RELIABILITY
Generation – Staff met with Emerson about the STG (steam turbine generator) controls replacement project and reviewed proposals for the STG outage contract. Staff reviewed and started implementation of RedTag Pro Enterprise Edition that will help to standardize LOTOs (lock-out, tag-out’s) across all generation facilities.
Distribution – The Meter department addressed open service orders and focused on converting nonfunctioning Canon meters to the new TWACS (Two-Way Automated Communication System). A power factor test was performed at the Beaver Creek substation which tested the station transformer and all associated alarms and protective devices. Tesla staff were onsite at the BESS from July 10 – July 19 performing annual maintenance. HEA also asked a state vessel inspector visit and inspect the air tanks on all oil circuit breakers at Bernice Lake and Soldotna substations. He found two pressure relief valves that need to be replaced.
CUSTOMER SERVICE
Engineering Services – New Service Applications
The chart below plots new service applications, for member jobs only, since 2017. There were 42 new service applications in July which is well below the average of 55 for this month over the last 6 years. Applications for new service continue to be 7-10% below the cumulative number of applications through July compared to the previous two years.
Member Services
Reviewed several Board Policies that are on the Board agenda this month. In addition, worked on several federal and state legislative and grant opportunities.
Cyber Security & Information Technologies
Microsoft recently indicated that Chinese hackers breached their systems but have since mitigated the attack with software patches. If you use Microsoft products such as Office, Windows, or Cloud services we recommend you update your software as soon as possible. After completing the update, you will need to change your passwords on all Microsoft services and devices using Microsoft software.
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update – On July 14, Governor Mike Dunleavy announced the appointment of Doug Tansy to the Alaska Gasline Development Corporation’s board of directors. Mr. Tansy joins the board effective immediately.
In July, the State of Alaska adopted regulations to streamline the regulatory process for communities wanting to provide low-cost and clean energy by nuclear microreactor power generation. The regulations stem from Senate Bill (SB) 177 which Governor Dunleavy signed into law in 2022 updating Alaska Statute (AS) 18.45.
On July 19, the U.S. Department of Energy presented “A Conversation with Alaskans on the Grid Resilience State and Tribal Formula Grants”. The webinar provided additional information about the amended grant application process, which now allows a group of Indian Tribes, including Alaska Native Corporations, to submit a single application as a tribal consortium. The amendment also extends the application deadline for tribes to August 31, 2023.
BOARD OF DIRECTORS’ MEETING APPROVALS | August 8, 2023
Regular HEA Board Meeting
- Regular Meeting Minutes of July 11, 2023
- Board Policy 210, Review of Board Member Fees & Expenses – Annual review completed, and housekeeping revisions approved.
- Board Policy 215, General Manager Search & Selection – Annual review completed, and housekeeping revisions approved.
- Board Policy 219, General Manager Succession – Annual review completed, and housekeeping revisions approved.
- Board Policy 221, Board of Director Website Content – Annual review completed, and housekeeping revisions approved.
- Board Policy 306, Corporate Services Contracts – Annual review completed, and housekeeping revisions approved.
Regular AEEC Board Meeting
- Regular Meeting Minutes of June 13, 2023
- Resolution 01.2023.05, Grant Funding Authorization for Central Peninsula Landfill Gas Project Construction
