May 13, 2025
SUMMARY
Good afternoon! It was a pleasure to host another successful Annual Meeting. There’s always a sense of accomplishment after such a significant event, and this year was no exception. We saw strong member turnout, and the meeting ran smoothly—thanks to the hard work and dedication of our employees who made it possible.
Congratulations to Dan, Erin, and Wayne on their re-election to the Board. I’d also like to thank all the candidates who ran for a seat this year. Your participation highlights the strength and cooperative spirit that makes HEA unique!
Because of last week’s membership presentation, I will keep this month’s report brief.
SAFETY
Unfortunately, we did experience an Occupational Safety and Health Administration (OSHA) recordable incident in April. Details are outlined in the safety report in this month’s Board packet. Also enclosed are the Quarter 1 safety scorecard and strategic plan scorecards for your review.
FINANCIAL OVERVIEW
Financial Update – Operating revenues for March came in just shy of $9.9M, contributing towards year-to-date revenues totaling $ 29.3M. Through the close of the first quarter, increased use of Bradley Lake and reduced fuel consumption allowed for a lower than budgeted Cost of Power Adjustment (COPA) rate and, therefore, lower than budgeted COPA revenues. With the other components of total cost of service largely tracking with budget, March operating margins of $262k positively contributed to YTD operating margins of $1.2M.
At the Board’s direction, AEEC submitted its 500-character statement to repurpose its Rural Utilities Service PACE (Powering Affordable Clean Energy) award:
“AEEC’s PACE project initially planned a 45MW, 4-hour BESS to regulate 30MW solar and 60MW wind. A 30MW solar PPA was secured and submitted to Alaska’s Regulatory Commission, but the investor withdrew on 2/13/25 for economic reasons. With proven expertise, AEEC will redirect PACE funds to reconfigure its existing 46.5MW BESS and build and own a 30MW+ solar farm, boosting generation capacity, stabilizing rates, enhancing energy reliability, and diversifying the system for cooperative members.”
The Fourth Amended and Restated Agreement between HEA and Tesoro Alaska Company, LLC became effective April 1, 2025. Tesoro’s May billing for April’s usage will be the first billing subject to the newly negotiated rates. The parties have agreed to a pricing structure that, over the course of the 7-year contract, brings Tesoro more in line with their allocated cost of service while mitigating the effects of rate shock. The new contract provides discounts in relation to Tesoro’s power factor, which, when achieved, reduces fuel consumption and provides relief to HEA’s membership via its COPA mechanism.
RELIABILITY
Generation – Homer Electric’s generation facilities operated smoothly throughout April. The Nikiski Combined Cycle (NCC) plant remained online with no interruptions, and environmental testing continued to meet all permit standards, which is great news! In early May, we began a scheduled maintenance outage at the Nikiski facility. NCC staff have been preparing for weeks, gathering equipment and coordinating with dispatchers to ensure a safe and efficient process. This planned work includes a wide range of inspections and repairs, such as inspections of turbine components, repairs to key systems, and upgrades that support the long-term performance of the plant. These upgrades and maintenance help keep the plant running reliably and efficiently for our members.
With no major system interruptions expected until 2026, HEA has resumed using power from Bradley Lake to help reduce demand during high-usage periods. We’re closely monitoring forecasts for the upcoming season, although early signs suggest water levels feeding Bradley Lake may be lower than normal, though lake levels are currently higher than usual for this time of year. An updated forecast is expected in May and will help us plan accordingly.
Lastly, Marathon Refinery informed us that one of their generators will be out of service for some time. This will increase our system load, and we are adjusting forecasts and schedules to account for this.
CUSTOMER SERVICE
Engineering Services – Through the month of April, 123 new service applications were received by the Engineering Services department.
Annual Meeting of the Members – As noted earlier, both the Annual Meeting of the Members and this year’s election were successful. We’ve compiled the member satisfaction survey results, along with historical voting data and detailed election reports, all of which will be shared with the Board for review.
If you have any suggestions or feedback—whether your own or from members—for improving next year’s 76th Annual Meeting, we welcome your input.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Using passphrases instead of traditional passwords is a simple yet effective way to enhance account security. A passphrase—such as “SunnyDaysAreGreatForPicnics!”—is a sequence of words that’s easy to remember but difficult for others to guess.
Passphrases are naturally longer and often include a combination of letters, numbers, and special characters, making them more resistant to brute-force attacks. In addition to improving security, they can also make it easier to meet complex password requirements without relying on hard-to-remember combinations.
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update—As the Alaska Legislature approaches the end of its regular session, lawmakers continue to navigate tough budget decisions and work to advance high-priority legislation. While it remains uncertain what will be accomplished before adjournment, efforts are underway to move as many bills forward as possible. Any legislation that does not pass this session will carry over and resume from its current position in the 2026 session.
On April 15, the Alaska State Senate unanimously passed its version of the FY26 capital budget—a $2.9 billion package that now heads to the House for consideration. As is customary, the capital budget originated in the Senate. Meanwhile, the House continues to debate more than 80 proposed amendments to the FY26 operating budget. Once each chamber has passed its version of both budgets, conference committees will be appointed to reconcile the differences.
Also included in the capital budget was $6.3M for Round 17 of the Renewable Energy Fund (REF), matching the amount proposed by Governor Dunleavy in December. This funding is expected to cover the first six projects on a list of 18 eligible proposals. The REF Round 17 list can be found here: Renewable Energy Fund Round 17 Projects List.
Lastly, the capital budget also included several appropriations for Alaska Energy Authority (AEA) initiatives, including $6 million for the Dixon Diversion project at Bradley Lake. To view the full FY26 capital budget (Senate Bill 57), visit: https://www.akleg.gov/PDF/34/Bills/SB0057B.PDF.
BOARD OF DIRECTORS’ MEETING APPROVALS | MAY 13, 2025
Regular HEA Board Meeting
- Regular Meeting Minutes of April 8, 2025 & May 1, 2025
- Special Meeting Minutes of May 1, 2025
- Resolution 45.2025.09, Capital Credit Payment to an Estate
- Resolution 45.2025.10, Capital Credit Payment to an Estate
- Resolution 45.2025.11, Capital Credit Payment to an Estate
- Resolution 45.2025.12, Establish Date, Time, and Location of the 2026 Annual Meeting of the Members
- Resolution 45.2025.13, Approving the Reversion of Unclaimed Capital Credits and the One-time Contribution of $150,000.00 to the ARECA Educational Foundation
Regular AEEC Board Meeting
- Regular Meeting Minutes of February 11, 2025
- Official Notice of the AEEC Annual Meeting