April 8, 2025
SUMMARY
With the snow finally gone and longer days settling in, it’s clear that spring has arrived in South Central Alaska. HEA is actively preparing for what’s expected to be a busy construction season ahead. Since the last board meeting took place just a few weeks ago, this report will be brief and focused, highlighting recent activities and continued progress toward our strategic goals.
SAFETY
March was a strong month for safety at HEA, with no reported personal injuries or incidents involving vehicles, property, or facilities.
FINANCIAL OVERVIEW
Financial Update – Revenues for February totaled just over $9.49 million, with a cost of service of $7.35 million. This resulted in an operating margin of just over $809,000. February operating expenses came in under budget, contributing towards our year-to-date operating margin remains positive at $956,000, putting us ahead of budget expectations.
As a reminder, the 3% base rate increase approved by the Regulatory Commission of Alaska (RCA), along with the updated Cost of Power Adjustment (COPA), went into effect on April 1. While rate increases are never easy, these changes are necessary to keep up with rising costs, ensure we meet our debt covenants, and allow us to continue delivering safe, reliable service to our members.
RELIABILITY
March brought warmer-than-usual temperatures, marking the end of a relatively mild winter. As a result, scheduled islanding was reduced following two months of activity this winter, primarily due to contractor scheduling challenges. While this shift limited some of our planned islanding, it resulted in higher water levels at Bradley Lake—conditions that we can now utilize to optimize generation.
The Nikiski Combine Cycle (NCC) plant continues to operate near peak efficiency, contributing to reliable service across the system. Lake levels across the region remain higher than normal for this time of year. While this presents an opportunity, it also increases the potential for water spillage, requiring all Bradley Lake participants to closely manage their carryover heading into the new water year.
On March 9, NCC experienced a forced outage caused by the failure of a fire damper in a ventilation duct. Thanks to the quick response and skilled troubleshooting by our operators, repairs were completed promptly, and the combustion turbine generator was back online within 12 hours.
Looking ahead, the replacement generator for Seldovia’s Unit #1 is en route and remains on schedule for a May installation. Preparations are also underway for the annual Bradley Lake maintenance outages. Unit 1 will be offline from April 2 to April 13, followed by Unit 2 from April 9 through April 20.
In support of long-term reliability and as a proactive response to concerns over natural gas supply, HEA recently finalized and filed a Mutual Aid and Emergency Service Memorandum of Agreement with Chugach Electric Association, Inc. Under this agreement, either utility may request emergency electric energy or natural gas from the other in the event of a gas supply interruption, helping ensure continued service to native load. The agreement was developed in response to the Regulatory Commission of Alaska’s Letter Order No. 2500042, which raised concerns about the interruptible nature of HEA’s existing arrangement with ENSTAR. HEA acted promptly to secure this five-year mutual aid agreement, which allows for the exchange of electrons or molecules at cost, aligning with the term of the ENSTAR Letter Agreement. More details are available through the RCA’s docket system at Matter No. U-23-074.
Lastly, in response to the elevated alert level for a potential Mt. Spurr eruption, all departments have collaborated to review emergency action plans and ensure that critical supplies are stocked and ready in case conditions change.
CUSTOMER SERVICE
Annual Meeting of the Members – A reminder to mark your calendars: this year’s Annual Meeting of the Members is set for May 1, 2025, at Kenai Central High School. Registration and dinner will begin at 4:30 p.m. in the lobby, followed by the membership meeting at 6 p.m. in the Renee C. Henderson Auditorium. More details are available in this month’s board packet and on the HEA website.
Electrical Safety Posters – HEA staff are currently reviewing safety posters submitted by local third- and fourth-grade students. Winners will be selected for Best Safety Message, Most Creative, and Most Humorous. The winning posters will be featured at the Annual Meeting.
Scholarship Program – All student scholarship applications have been reviewed and scored, and a draft resolution is ready for board consideration this month. Staff will attend scholarship award ceremonies at local schools and recognize each recipient at the Annual Meeting. As a reminder, these scholarships are not funded by HEA members, but through investment earnings with the Alaska Rural Electric Cooperative Association (ARECA).
Youth Rally Program – HEA is once again sponsoring two local high school students to attend the NRECA Youth Rally Leadership Camp, held July 7–11, 2025, in Idaho. This all-expenses-paid leadership experience is open to students in our service area. The application deadline is April 15. For more information, please visit the Youth Rally page on our website. The selection committee will conduct interviews later this month.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Several new strains of ransomware have recently made headlines, highlighting the importance of staying vigilant online. Ransomware is a type of malicious software that locks your files and demands payment to restore access.
To help protect yourself and your information, avoid downloading files or software from unknown sources, and be cautious when opening email attachments. Keeping your systems and software up to date is one of the best defenses, as updates often include critical security patches. Using antivirus software can also help detect and block potential threats.
Most importantly, be sure to back up your important files regularly. Taking a few proactive steps now can go a long way in protecting against ransomware and other cyber threats.
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update— With about six weeks remaining in the 34th Legislative Session, several bills are still under consideration that could affect electric utilities across the state. While it’s too early to know which proposals may ultimately become law, there are a few key developments worth watching:
- Renewable Portfolio Standard (RPS) Legislation – Representative Ky Holland (U-Anchorage) recently introduced House Bill 153, proposing the establishment of a Renewable Portfolio Standard (RPS) for Railbelt utilities. The bill would require utilities to generate at least 40% of electric power from renewable sources by December 31, 2030, and increasing to 55% by December 31, 2035. Utilities falling short of these benchmarks would face a penalty of $45 per megawatt-hour below the target. HB 153 has been referred to three committees: House Energy, House Resources, and House Finance.
A Senate companion bill, Senate Bill 149, was introduced by Sen. Bill Wielechowski (D-Anchorage) and is currently assigned to the Senate Labor and Commerce Committee and the Senate Resources Committee.
- Other Bills of Interest:
- Senate Bill 32 would exempt renewable energy & Battery Energy Storage (BESS) projects under 15 megawatts from RCA oversight.
- House Bill 164 and Senate Bill 150 propose changes to the state’s net metering policies, which could impact how distributed generation is credited on member bills.
HEA will continue to monitor these bills closely and engage where appropriate to ensure the interests of our members and the cooperative are represented.
BOARD OF DIRECTORS’ MEETING APPROVALS | APRIL 8, 2025
Regular HEA Board Meeting
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- Regular Meeting Minutes of March 18, 2025
- Resolution 45.2025.06, Approval of the Sale of Real Property
- Resolution 45.2025.07, Approval of the Sale of Real Property
- Resolution 45.2025.08, Approving the Submittal of a Request to Repurpose Federal PACE Funds in Support of BESS and Solar Investment
- Board Policy 504, Forms of Deposit – Periodic review complete, and housekeeping revisions approved
- Board Policy 602, Annual Meeting – Annual review complete, and housekeeping revisions approved