SUMMARY
Hello, and welcome to the February Manager’s Report. It has been a busy start to the year for HEA, with significant engagement and activity on several operational, legislative, and strategic initiatives. Below is a summary of recent business activities and progress toward our strategic goals. A more detailed report will be provided during the board meeting.
SAFETY
Unfortunately, HEA experienced Occupational Safety and Health Administration (OSHA) recordable incidents in January. The full safety report is included in this month’s Board packet. In addition, our year-end 2024 4th quarter safety scorecard, along with all strategic plan scorecards are included in this month’s Board packet.
FINANCIAL OVERVIEW
FINANCIAL UPDATE – The HEA Finance Department has been actively engaged in year-end closing activities. Unaudited 
financial statements for both Alaska Electric & Energy Cooperative (AEEC) and HEA have been completed, and preparations for the annual audit are well underway. On-site fieldwork is scheduled to begin later this month, as well as a draft audit report will be presented at the March board meeting, and a managing partner from the audit firm, Aldrich CPAs + Advisors LLP, will review audit practices during the executive session.
In December, HEA reported revenues of $13.26 million and a cost of service of $10.54 million, resulting in a positive operating margin of $2.7 million. Unaudited year-to-date total margins for 2025 stand at $4.5 million, with a Modified Debt Service Coverage (MDSC) ratio of 1.56. As of Dec. 31, 2025, HEA’s equity ratio is at a strong 43.9%.
Preparations are underway for the annual independent financial audit by HEA’s new auditing firm, Aldrich Advisors. Thank you to all departments for their support in meeting year-end deadlines by submitting the final 2025 costs to the accounting department in a timely manner.
RELIABILITY
GENERATION – The Nikiski Combined Cycle (NCC) plant remained online and available throughout January. Scheduled Chugach Electric Association (CEA) transmission work required HEA to operate the system in an islanded configuration at times while 115 kV insulators were replaced with 230 kV insulators in the Portage area.
Recent months have brought significant temperature changes, including both record highs and lows. On Jan. 8, system demand reached a new peak of 85.8 MW, driven in part by refinery loads that continue to remain above historical levels. This was the highest system demand recorded since HEA became electrically independent in 2014. Despite the elevated demand, no gas supply interruptions occurred under HEA’s current interruptible gas contract.
Seldovia Unit No. 2 experienced a forced outage following a system fault near the generation facility. Generator relays detected a fault current exceeding 9,000 amps, resulting in damage to the (older) unit. Inspection and repair work is underway.
MEMBER/CUSTOMER SERVICE
ENGINEERING SERVICES, NEW SERVICE APPLICATIONS – The chart below shows the new service applications and provides a historical comparison.
CYBER SECURITY & INFORMATION TECHNOLOGIES
HEA has recently seen an increase in phishing emails that appear to originate from State of Alaska departments. These messages often include links or QR codes that, if opened, may attempt to install malware on a device.
Employees and members are reminded to use up-to-date antivirus software and to remain cautious when opening emails, links, or attachments from unknown or unexpected sources. When in doubt, verify the sender before taking action.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association (APA) Legislative Conference – Chief Operating Officer Rob Montgomery and I, along with Director Duffield, Director McKittrick, and Board President Furlong, traveled to Juneau to attend the APA Annual Legislative Conference. More than 75 APA members from across the state met with lawmakers and state administration officials to discuss energy policy and industry priorities.
Governor Mike Dunleavy addressed the conference, outlining his vision for a long-term state fiscal plan and efforts to attract data center development to Alaska, among other topics. While in Juneau, we met with all legislators representing our members in our service territory, as well as others working on issues that could impact our membership.
Legislators expressed appreciation for updates on several key issues affecting our cooperative, including Cook Inlet fuel supply challenges, support for the Diversified Portfolio Standards (DPS), efforts to reduce utility risk from catastrophic wildfires, and the potential for a Kenai Peninsula Data Center. Included in your board packet is the Legislative Priorities flyer, that was shared with the delegation during our meetings.
State Legislative Activity – As stated above, the Governor recently introduced his proposed fiscal plan for the state. The plan includes six components, all of which will need legislative approval – with one requiring additional approval by Alaska voters – before becoming reality. Several elements of the plan are scheduled for committee hearings next week. To read about the governor’s fiscal plan, visit: https://gov.alaska.gov/governor-dunleavy-introduces-fiscal-plan-legislation/.
The House Energy Committee recently held a hearing on Railbelt gas import facilities. Testimony from the Regulatory Commission of Alaska (RCA) clarified that the Federal Energy Regulatory Commission (FERC) has jurisdiction over siting of gas import facilities, while the RCA regulates gas sales from those facilities to utilities. Additional testimony addressed natural gas supply conditions in the Cook Inlet region. The hearing featured testimony from Sean Kolassa, president of Harvest Midstream, and John Sims, president of ENSTAR Natural Gas, both of whom talked about several aspects of natural gas in the Cook Inlet region. To view the House Energy Committee, visit: House Energy Committee Hearing 1.27.26.
The House Energy Committee also held hearings on House Bill 252, by Rep. Ky Holland, I-Anchorage, relating to electric utility fire prevention plans, and on House Bill 259, by Rep. Donna Mears, D-Anchorage, relating to large energy use facilities. On HB 252, the committee heard testimony from representatives of the Council of State Governments Wildfire and Disaster Preparedness Committee. The presentation outlined wildfire liability/mitigation bills in other states and talked about other wildfire considerations. To view the presentation, click here.
BOARD OF DIRECTORS’ MEETING APPROVALS | FEBRUARY 10, 2026
Regular HEA Board Meeting
- Regular Meeting Minutes of January 20, 2026
- Resolution 45.2026.02, Delegating Authority to Select and Appoint Legal Counsel to the Chief Executive Officer
- Board Policy 301, Corporate Banking – Periodic review completed, and housekeeping revisions approved.
- Board Policy 506, Energy Security and Diversification – Annual review completed, and housekeeping revisions approved.
- Quarterly Board and Chief Executive Officer Expenses
Regular AEEC Board Meeting
- Regular Meeting Minutes of December 9, 2025
- Resolution 01.2026.01, Budget Authorization for the Nikiski Repower Project
- Resolution 01.2026.02, Budget Authorization for the Nikiski Rewind Project
- Resolution 01.2026.03, Certificate of Resolutions and Incumbency