October 8, 2024
SUMMARY
Good afternoon! I hope you are enjoying the vibrant colors of fall in Southcentral Alaska as much as I am. However, the transition to winter is just around the corner. This month, our team has been busy preparing for the changing seasons, ensuring our operations are ready to meet the challenges ahead.
As is often the case, the combination of hunting season and travel for various affiliate meetings has made the past month fly by. I had the opportunity to attend the Alaska Power Association (APA) Annual Meeting in Fairbanks, the National Rural Electric Cooperative Association and Cooperative Finance Corporation Region 7 and 9 Meeting in Sacramento, California, and a CFC Board Meeting in Dulles, Virginia. Each of these experiences was invaluable.
Looking ahead, we have our community meetings scheduled for later this month, providing excellent opportunities to connect with our members and address their needs as we transition into this critical time of year.
Below, you will find brief updates on Homer Electric Association’s current business activities and strategic goals from the past month.
SAFETY
We had another strong month in safety, with HEA working 70 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.
FINANCIAL OVERVIEW
Financial Update – I am pleased to share that operating revenue for August reached $9.1 million, enabling us to cover the total cost of service and resulting in a net monthly operating margin of $131,100. As temperatures drop and kilowatt-hour (kWh) sales begin to rise, we are grateful for the opportunity to continue providing reliable service to our members.
Year-to-date margins are now near $1.5 million, which is about $1.8 million above our budgeted expectations. This positive trend is primarily attributed to reduced operating and maintenance (O&M) and administrative expenses, which are effectively offsetting higher purchased power costs.
The fourth quarter Cost of Power Adjustment (COPA) rate, which took effect on October 1, is set at 8.997 cents per kWh.
Capital Credit Retirement – In September, the Board approved a general retirement of capital credits totaling $3.37 million for 2024, which will be applied as energy credits in December. This retirement will fully address margins from 1992 and a portion of 1993. We will advise members to be mindful when reviewing their January bill, as it may appear significantly higher than their December bill due to the energy credits applied. Typically, their usage will remain consistent, so this increase is solely a reflection of the credit adjustment.
Lastly, our staff has been working hard to prepare a draft 2025 budget for Board review and consideration later this month at the Budget Workshop.
RELIABILITY
Generation – The Nikiski Combined Cycle (NCC) plant operated as the baseload source for our energy needs throughout September. However, the steam turbine (ST) experienced brief trips on September 18 and September 20. Plant operators identified the cause as a failing temperature sensor monitoring a generator bearing. We modified the Distributed Control System (DCS) logic to prevent future trips until the generator can be taken offline and the faulty sensor replaced. Because of the ST trips, Soldotna Combustion Turbine (SCT) and a unit at Bernice Lake were operated to support system operations. SCT also experienced a trip due to erratic operation of the gas chromatograph (an analytical instrument that separates and measures chemical compounds), which was improved to prevent unnecessary trips caused by erroneous parameters.
Generation staff have been busy with plant cleanup and inventory, alongside the AEGIS (Associated Electric & Gas Insurance Services Limited) risk assessment, which remains a primary focus. AEGIS will be onsite for the annual risk assessment on October 24. Additionally, the Alliance Technical Group will conduct Environmental Protection Agency emissions testing onsite on October 23.
At the Battery Energy Storage System (BESS), the Tesla service scheduled maintenance originally planned for August was postponed to the week of September 30 due to Chugach Electric Association’s islanding for transmission work. Tesla has rescheduled maintenance for later in October due to labor shortages.
I am excited to announce the completion of the purchase for the Seldovia Unit 1 replacement. HEA has acquired a new 1 MW Caterpillar C32 generator, featuring the highest duty generator end available. Construction is planned to begin in April 2025 and should wrap up by June of 2025. In addition, we are currently working on finalizing details for the Port Graham Controls Upgrade. Installation of the controls is planned for November 2024.
Lastly, on September 14, Bradley Lake levels reached 1,175 feet, which is the designated “Pending Spill” level. All utilities are expected to maximize their hydro generation to minimize spill potential, which occurs at 1,180 feet. HEA maximized its use of Bradley generation until the pending spill ended on September 25, with lake levels dropping to 1,174.9 feet.
Distribution/Transmission – We continue to experience a significant impact on outages caused by trees located outside the designated right-of-way. These trees, while not on our property, can still pose a serious risk to our power lines and infrastructure, especially during severe weather conditions.
To help minimize the risk of outages, we encourage our members to take proactive measures regarding tree maintenance. Here are some ways members can assist:
- Identify Problematic Trees: Members should regularly inspect their property for trees that may be leaning toward power lines or showing signs of decay. Pay close attention to branches that may break off during storms or high winds.
- Report Hazardous Trees: If you notice trees outside your property that pose a risk to our power lines, please report them to us. We can assess the situation and work with the appropriate landowners to address any potential hazards.
CUSTOMER SERVICE
Engineering Services, New Service Applications – The chart illustrates the new service applications and provides a historical comparison.
CYBER SECURITY & INFORMATION TECHNOLOGIES
During this election season, it is crucial to remain vigilant about cybersecurity to protect your personal information and ensure the integrity of your vote. One of the simplest yet most effective steps you can take is to be cautious with the emails and messages you receive. Phishing attacks and misinformation campaigns are common during this time.
Be on the lookout for signs of suspicious activity, such as urgent language or unfamiliar links. If you are unsure about a message, refrain from clicking any links or downloading attachments. Instead, visit official websites directly by typing the URL into your browser. If a message seems too good to be true or overly sensational, it is best to delete it and move on.
By taking these precautions, you can help safeguard your information and contribute to a secure electoral process.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Energy Authority (AEA) – Recently AEA announced the members of its newly constituted board of directors today. Among the eight-person board are three APA members: Tony Izzo, CEO of Matanuska Electric Association, Clay Koplin, CEO of Cordova Electric Cooperative, and Robert Siedman, CEO of Southeast Alaska Power Agency. The AEA board of directors was established in House Bill (HB) 307, which passed on the final day of the most recent Alaska legislative session. Prior to HB 307 became law, AEA shared a board with the Alaska Industrial Development and Export Authority (AIDEA).
Alaska State Legislature – As mentioned earlier in this report, the election season is upon us, and we look forward to working with our new and/or re-elected legislators. HEA’s lobbyist, Pat Carter, and Alaska Power Association’s (APA) Director of Member & Public Relations, Michael Rovito, are keeping us appraised of all state and federal legislative activities. As a reminder, please be sure to watch for emailed updates.
Cooperative Family Fund & America’s Electric Cooperative Political Action Committee (PAC) – I want to briefly highlight the Cooperative Family Fund, which plays a vital role in supporting children of electric cooperative employees who face the loss of a parent while actively employed at a cooperative. This year, we have approved budget of $1,000 to contribute to this fund, which will be distributed later this month.
I also encourage all Directors to consider donating to the PAC. NRECA’s PAC supports political candidates who advocate for and protect the interests of electric co-ops and their member-owners. Your contributions, no matter how small, can significantly impact our collective efforts to promote policies that benefit our cooperative and the communities we serve. For more information, visit https://www.electric.coop/pac.
BOARD OF DIRECTORS’ MEETING APPROVALS | OCTOBER 8, 2024
- Regular Meeting Minutes of September 10, 2024
- Resolution 45.2024.17, Establish Date, Time, and Location of the 2025 Annual Meeting of the Members.
- Board Policy 206, Board Meeting and Minutes – Periodic review completed, and housekeeping revisions approved.
- Board Policy 220, Director Authority; Statement and Acts of Same; Objective – Periodic review completed, and housekeeping revisions approved.