SUMMARY
Good afternoon. It is amazing that we are already into September, with the feel of fall in the air! Our fall schedule is underway, beginning with our first Community Area Meeting in Seldovia. We are also looking forward to celebrating Member Appreciation Month in October and continuing our Community Area Meetings throughout the service territory.
This month, the Board and executive team will also come together for our Strategic Planning Workshop. We will review progress under the 2024–2026 Strategic Plan, wrap up the current planning cycle, and begin developing HEA’s next three-year Strategic Plan for 2027–2029.
The following provides a snapshot of HEA’s current business activities and progress on key strategic initiatives over the past month.
SAFETY
HEA experienced one OSHA-recordable incident in August. Fortunately, although the incident had the potential to be more serious, the employee received medical treatment and returned to work. This month’s Board packet includes a complete safety summary.
FINANCIAL OVERVIEW
For July, HEA recorded operating revenue of $10.9 million and a total cost of electric service of $10.7 million, resulting in an operating margin of approximately $0.2 million. Year-to-date total margins of $1.2 million are approximately $0.6 million below budget. A $5.7 million favorable variance in operating revenue was more than offset by a $6.0 million unfavorable variance in the total cost of electric service, primarily attributable to purchased power.
The purchased-power variance largely reflects amounts billed by AEEC, HEA’s wholly owned generation subsidiary, and does not represent a comparable cost overrun on a consolidated basis. AEEC is performing well, with year-to-date net margins of $4.5 million significantly exceeding budget. Under the current accounting structure, AEEC’s margins are not recognized by HEA until year-end, when they are recorded as Generation and Transmission Capital Credits on HEA’s December Form 7. Consequently, HEA’s interim results reflect the higher purchased-power expense without the corresponding recognition of AEEC’s margins, causing the current year-to-date budget shortfall to understate the strength of the consolidated organization.
HEA’s standalone financial indicators remain stable. Year-to-date MDSC improved to 1.38 from 1.32 at the same time last year, while margins and equities increased to 44.2% of assets from 43.6%. Overall, HEA and AEEC are tracking toward a stronger-than-budgeted year on a consolidated basis. Recognition of AEEC’s margins in December is expected to substantially offset HEA’s year-to-date purchased-power variance and bring full-year results in line with, or more than likely ahead of, budget.
RELIABILITY
GENERATION – August operations experienced normal weather patterns and continued increased power demand from the refinery. Overall generation performance was challenged by simultaneous forced outages involving three generation units.
Nikiski Combined Cycle (NCC) experienced an outage due to lube oil heat exchanger contamination and failures of control system components. Bernice Combustion Turbine (BCT) #3 experienced high vibration issues, while BCT #4 experienced an exciter control failure. Despite these challenges, system load was maintained without interruption through the strategic purchase of additional Bradley Lake generation capacity.
Corrective actions have since been completed at NCC and BCT #4, and both units have safely returned to service. Internal resources also remain heavily focused on advancing the NCC repower and Soldotna Combustion Turbine compressor addition projects, requiring extensive weekly coordination to maintain project schedules.
MEMBER/CUSTOMER SERVICE
ENGINEERING SERVICES, NEW SERVICE APPLICATIONS – The chart adjacent shows the new service applications and provides a historical comparison.
PUBLIC RELATIONS COMMUNITY MEETINGS – HEA’s annual Community Area Meetings are underway, providing opportunities to connect directly with members, share updates on cooperative activities, and highlight HEA’s strategic priorities. Our first fall meeting was held in Seldovia last week.
Additional meetings are scheduled from September through November in Port Graham, Nikiski, Funny River, Anchor Point, Sterling, and Homer, as well as presentations at local Chamber luncheons. These gatherings remain an important opportunity to hear directly from our members and strengthen HEA’s connections throughout the communities we serve.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Browser extensions continue to be an emerging cybersecurity risk for both organizations and individual users. Over the past year, researchers have identified hundreds of malicious browser extensions in official web stores, including fraudulent artificial intelligence tools designed to collect passwords, browsing activity, and other sensitive information. Some extensions were originally legitimate before later being compromised or changing ownership.
HEA continues to emphasize cybersecurity awareness by encouraging employees to use only approved browser extensions and to regularly review and remove extensions that are no longer needed. Maintaining strong cybersecurity practices remains an important part of protecting the cooperative’s systems and information assets.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Protect Your Verification Codes. A six-digit verification code may be the last thing standing between an attacker and your account. Cybercriminals increasingly pose as legitimate support representatives and send fake alerts about suspicious account activity. They then attempt to convince users to provide the verification code sent to their phone.
No legitimate bank, help desk, coworker, or company representative should ask you to read, text, or forward a verification code. If you receive a code you did not request, do not share it. Treat it as a warning that someone may be attempting to access your account and change your password immediately.
BUSINESS & COMMUNITY RELATIONSHIPS
ALASKA POWER ASSOCIATION (APA) ANNUAL MEETING – The APA Annual Meeting in Anchorage is quickly approaching. I plan to attend along with several HEA staff members. Special thanks to Chugach Electric Association for serving as this year’s host.
NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION (NRECA) REGIONAL MEETING – The NRECA Regional Meeting is scheduled for Oct. 5–7, 2026, in Salt Lake City, Utah. I plan to attend on behalf of HEA.
BOARD OF DIRECTORS’ MEETING APPROVALS | SEPTEMBER 8, 2026
Regular HEA Board Meeting
- Regular Meeting Minutes of August 11, 2026
- Resolution 45.2026.20, Establish Date, Time, and Location of the 2027 Annual Meeting of the Members
- Resolution 45.2026.21, Authorization for Continued Work Toward the Installation of the Grant Lake Hydroelectric Project