SUMMARY

Fall has arrived on the Kenai Peninsula, bringing crisp mornings, shorter days, and a steady pace of cooperative activity. This month’s Strategic Planning Update in Seldovia will focus on reviewing progress under the 2024-2026 plan and outlining priorities to successfully complete the current cycle. Work on the next three-year plan, covering 2027–2029, will begin next fall.

Area meetings across the HEA’s service territory have provided an opportunity to connect with members, share updates, and hear feedback on ongoing projects. We look forward to the remaining meetings later this month and continuing those important conversations with members.

The following provides a snapshot of HEA’s current business activities and progress on key strategic initiatives over the past month.

SAFETY

September was a strong month for HEA’s safety performance. The cooperative has now worked 50 consecutive days without any Occupational Safety and Health Administration (OSHA) recordable incidents or lost-time injuries. This continued focus on safety reflects the commitment of our crews and staff to maintaining a safe work environment across all operations.

FINANCIAL UPDATE – I am pleased to share that operating revenue for August reached $10.7 million, enabling us to cover the total cost of service and resulting in a net monthly operating margin of $780,00. HEA’s August $9.9 million cost of service consisted of $4.0 million in fuel, $2.9 million in generation & transmission, and $7.0 million in distribution expenses. Year-to-date margins of $1.31 million place HEA in a favorable financial position as temperatures drop and residential kWh sales increase.

The Cost of Power Adjustment (COPA) rate increased 2.3% from 10.69 to 10.94 cents per kilowatt-hour, effective October 1. This will result in a $1.36/month increase on the average residential monthly bill with usage of 550 kWh. This increase is mainly driven by an increase in the WACOG (Weighted Average Cost of Gas) price passed through HEA’ gas services agreement with Enstar.

RELIABILITY

GENERATION – Generation facilities operated reliably through most of September. The Nikiski Combined Cycle Plant (NCC) had a scheduled unit outage on Sept. 29th to have a contractor evaluate the combustion turbine step-up transformer for work to be done next spring. During the Nikiski outage, the Soldotna Combustion Turbine (SCT) provided baseload generation, and a Bernice Lake Combustion Turbine (BCT) provided peaking generation. Bernice Unit 4 remains out of service following a fault that occurred during a routine test run early in October. Contractors are assisting with diagnostics and repair planning of the Bernice Unit that is expected to be ready for service later this month.

Industrial demand remained higher than normal, while non-industrial loads were slightly lower due to warmer temperatures. Wet weather led to increased inflows into both Bradley Lake and from Battle Creek.

Commissioning of the Seldovia Unit 1 generator continues. Generation staff also advanced the Nikiski Repower Project, reviewed environmental requirements, and updated pricing. The team held an engineering kickoff meeting for major components and continued coordinating with environmental contractors for repowered unit permitting.

DISTRIBUTION/TRANSMISSION – The Hatfield 312 (South Kachemak Bay) project, funded through a Community Wildfire Defense Grant, is nearing completion and recently received a positive evaluation from the U.S. Department of Agriculture. The Kenai Peninsula Borough danger tree and fuel mitigation project is approximately 75% complete. Operations teams are also coordinating targeted transmission right-of-way clearing from Homer to Ninilchik and continuing to work with federal partners to address environmental concerns in State Park areas.

 A windstorm that swept through the central peninsula this week caused widespread outages, most of which were the result of trees located outside the maintained right-of-way. Tree-related outages continue to trend higher this year, with 337 reported year-to-date, compared to 306 in 2024 and 98 in 2023. To date, 144 service orders have been issued for tree clearing, addressing more than 550 trees — the majority identified as beetle-killed. Right-of-way clearing remains a key focus as crews work to reduce vegetation-related reliability risks across the system.

MEMBER/CUSTOMER SERVICE

ENGINEERING SERVICES, NEW SERVICE APPLICATIONS – The chart below shows the new service applications and provides a historical comparison.

PUBLIC RELATIONS AREA MEETINGS – The remaining Area meetings in Anchor Point, Funny River, and Sterling are scheduled for later this month. The Sterling Community Area Meeting will take on a new format this year, held at 10 a.m. at the Sterling Senior Center as a coffee-style gathering. The event will still include a CEO presentation, and as always, members in attendance will have the opportunity to participate in the energy credit prize drawings. In addition to the dates listed at the end of this report, event details are available in the BoardVantage app and on the HEA website homepage.

CYBER SECURITY & INFORMATION TECHNOLOGIES

Happy Cyber Security Month! Cyber security is not only a shared responsibility, but also an individual responsibility. If everyone does their part―implementing stronger security practices, raising community awareness, educating vulnerable audiences, and training employees―our interconnected world will be safe and more secure for everyone.

Hackers recently breached a Salesforce system connected to Google, resulting in phishing attempts that used fake login pages to capture user credentials. In response, Google advised users to change passwords and enable two-factor authentication.

BUSINESS & COMMUNITY RELATIONSHIPS

Alaska Legislative session – The 2026 legislative session in Juneau may feel far away, but January 20 will be here before we know it. The Alaska Power Association has already identified several pieces of proposed energy-related legislation to keep an eye on heading into the 2026 legislative session that could affect HEA’s operations, rates, and resource planning:

• Net Metering (HB 164) and (SB 150 – Senate companion)
• Renewable Energy Fund (REF) (HB 196) – Discussion continues around strengthening funding for the REF (Renewable Energy Fund) and exploring the reestablishment of the Emerging Technology Fund, with an emphasis on pre-deployment validation of new energy solutions rather than early-stage research.
• State Energy Development Resolution (HJR 27) – An economic development proposal intended to promote discussions on statewide energy growth, community affordability, and investment opportunities.
• Utility Right-of-Way (New Bill) – A new version of the Utility ROW (Right-of-Way) bill from prior sessions is expected to include more balanced provisions addressing both utility benefits and responsibilities. It may also include requirements for wildfire mitigation and vegetation management plans, assessments of line hazards outside the ROW, and improved communication with property owners.

BOARD OF DIRECTORS’ MEETING APPROVALS | OCTOBER 14, 2025

Regular HEA Board Meeting

• Regular Meeting Minutes of September 9, 2025
• Board Policy 707, Employee Vacations – Periodic review completed, and housekeeping revisions approved.
• Board Policy 708, Holidays – Periodic review completed, and housekeeping revisions approved.