September 10, 2024
SUMMARY
Good afternoon! Just like that…the fishing season has given way to hunting season and cooler weather. As summer winds down, we are gearing up for one of our busiest times of the year. Fall always brings a rush to beat the freeze for new services and the excitement of preparing next year’s budget! We’re especially looking forward to celebrating Member Appreciation Month in October, hosting local Community Area Meetings, and diving into the Board Budget Workshop. The following are brief updates on HEA’s current business activities and strategic goals that have taken place over the last month.
SAFETY
We had a strong month in safety, with HEA working 40 days without an Occupational Safety and Health Administration (OSHA) recordable incident in August. You will find the full safety report in this month’s Board packet.
I am pleased to share that several of our Generation staff completed the National Fire Protection Association’s (NFPA) 70E Electrical Safety Training as part of our ongoing Electrical Safety Program. This training is vital for our Operators, who regularly work with high-voltage equipment and face unique electrical hazards. Congratulations to all who completed the course!
As we move into fall and wrap up the construction season, I want to remind everyone to stay mindful of safety on the job and in your everyday activities. Stay safe out there!
FINANCIAL OVERVIEW
Financial Update – Operating revenue for July came in at $9.45M, falling shy of covering the total cost of service, resulting in a net monthly operating loss of $639,900. However, our margin-building months are still ahead of us as the colder weather arrives and revenues once again outpace summertime levels of operation and maintenance spending. Total year-to-date margins of $1.3M, remain strong and are $1.2M above budgeted expectations, thanks to reduced operations & maintenance and administrative expenses, putting HEA in a favorable position as we move into fall.
Simplified Rate Filing (SRF) Year End June 30, 2024 – HEA made an informational SRF filing for the test year ending June 30, 2024 (rolling twelve months) with a Regulatory TIER of 1.013. For the purpose of rate making, we may not be above a Regulatory TIER of 2.0, but there is no floor. HEA’s debt covenants and, therefore, margin requirements are based on a Modified Debt Service Coverage (MDSC), with a minimum MDSC of 1.35 with HEA achieving of 1.56 through June 30, 2024.
Capital Credit Retirement – Lastly, the Board will consider the retirement of capital credits to our members this month. Last year the Board approved a $3.34M retirement on a First-In, First-Out (FIFO) basis, representing a 30-year rotation and clearing all capital credits before 1992. The 2024 budget suggests $3.37M be retired to maintain the 30-year rotation.
RELIABILITY
Generation – We spent much of the month islanded, with the tie to Anchorage out of service. During this time, we successfully completed the borescope and annual maintenance outage on the Soldotna Combustion Turbine (SCT) and later began the same maintenance work on the Bernice Lake Combustion Turbines (BCT). While islanded, we also took Bradley Unit #2 offline to diagnose a persistent excitation issue that has led to several forced outages.
Distribution/Transmission – Successful collaboration between operations and the substation/metering group has kept maintenance efforts well-coordinated with substation upgrades at both Bernice Lake and Soldotna, ensuring everything stayed on track.
Lastly, a brief update on our 2024 ROW Clearing schedule, efforts in the Fritz Creek area in Homer are now 100% complete, and we have started clearing in the Diamond Ridge area.
CUSTOMER SERVICE
Engineering Services, New Service Applications – The chart below shows the new service applications and provides a historical comparison.
Member Services, Meter Changeout Project Update – As mentioned in last month’s report, our meter upgrade project continues at the Sterling and Bernice Lake substations. I’d like to recognize the teamwork and commitment displayed by multiple departments—Accounting, Operations, Member Services, Facilities, and Information Services. Their collaboration and communication have been key to providing quality service and timely responses to our members as we progress through this important project.
Public Relations, Community Meetings – I’m excited to announce the upcoming annual Community Meetings, a highly anticipated event that takes place every fall. These meetings serve as a valuable platform for us to connect with our members and provide essential updates on our cooperative’s activities, ongoing projects, and our strategic goals for the upcoming year. Like last year, the Community Meetings will feature our expert panels – HEA’s knowledgeable professionals who specialize in areas related to Member Services/Billing, Net Metering, Operations & Outages, Engineering, and Community Engagement. We look forward to meetings beginning in October and continuing to early November in Seldovia, Sterling, Anchor Point, Funny River, Nikiski, and local Rotary & Chamber luncheons.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Protecting our elderly family members from social engineering scams is crucial. Scammers use various tactics, often posing as a trusted person or organization to manipulate and deceive them into sharing personal information or transferring money. It is essential to educate elderly loved ones about these tactics and encourage them to be cautious when receiving unsolicited calls, emails, or messages.
Take a moment to discuss the risks of social engineering scams with your elderly relatives and the importance of staying vigilant. Encourage them to reach out to you or another trusted person if they ever feel unsure about a request for information or money. Together, we can help them feel secure and supported, reducing their risk of falling victim to these harmful schemes.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association (APA) Annual Meeting – As a reminder, I will be joining this month’s board meeting via Teams from Fairbanks as I will be attending the APA Annual Meeting. I look forward to seeing Directors McKittrick, Ogle, Wall & President Furlong at the meeting. I truly appreciate the support and attendance by our staff and our Board of Directors, thank you.
National Rural Electric Cooperative Association (NRECA) & Cooperative Finance Corporation (CFC) Regional Meeting – Looking ahead, I will be attending the NRECA & CFC Region 7/9 Meeting in Sacramento, California, scheduled for September 23-26, 2024.
BOARD OF DIRECTORS’ MEETING APPROVALS | SEPTEMBER 10, 2024
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- Regular Meeting Minutes of August 13, 2024
- Resolution 45.2024.16, Retirement of Capital Credits and Capital Credits Retirement Method
- Board Policy 202, Functions of the Board of Directors – Periodic review completed, and housekeeping revisions approved.
- Board Policy 204, Oath of Office – Periodic review completed, and housekeeping revisions approved.
- Board Policy 205, Board Officers – Periodic review completed, and housekeeping revisions approved.
- Board Policy 309, Capital Credits – Annual review completed, and housekeeping revisions approved.