March 21, 2023
SUMMARY
Good afternoon. It seems like it has been some time since we had a Board meeting. With this month’s board meeting pushed later because of spring break, I trust you all had a wonderful week. It has been a typical start to the spring season, with most of us looking forward to it, but as usual Mother Nature has other plans, reminding us that we are still in March and winter is not quite over. We continued to stay busy with the auditors on-site last month; planning the HEA Annual Meeting and Board Election; attendance at the National Rural Electric Cooperative Association (NRECA) PowerXchange 2023 annual meeting, and a Cooperative Finance Corporation board meeting (CFC) in Nashville, Northwest Public Power Association (NWPPA) Board of Trustees meeting in Sacramento, weekly outreach and events in Seward, and multiple other business meetings.
The following are brief updates on HEA’s current business activities and strategic goals that have taken place over the last month. As always, a more detailed report will be given on the day of the meeting.
SAFETY
There were no Occupational Safety and Health Administration (OSHA) recordable incidents in the month of February! Just a reminder that as spring break-up approaches, slippery surfaces due to ice will be prevalent on sidewalks and parking lots. As a result, please exercise caution when walking in these areas and use your ice cleats.
FINANCIAL OVERVIEW
2023 is starting off well! Revenues for the month of January were approximately $10.0 million and cost of service was $8.8 million, resulting in an operating margin of just over $1.2 million. It is always nice to start the year off with margins that are slightly ahead of the previous year and ahead of budgeted expectations. As indicated on the graph at the end of this report, retail energy sales are tracking historical averages.
Our auditors have completed their annual audit and a draft audit report and resolution will be presented to the Board during the March Board meeting.
RELIABILITY
Generation
Nikiski Combined Cycle (NCC) is beginning their outage preparation planning for the Borescope project scheduled for May. As for the rest of the generation assets, all systems ran smoothly with little to no interruptions during the month.
Distribution
The construction season is quickly approaching, and we already have several projects planned for the upcoming year. In addition to the usual maintenance (underground cable replacement, overhead line excessive splice replacement, and pole replacement), crews will remain focused on replacing failing poles. Later this spring, two Department of Transportation (“DOT”) pending projects may proceed and include Sterling Highway upgrades between miles 157-169 and the Homer Airport improvements.
MEMBER/CUSTOMER SERVICE
Engineering Services – New Service Applications
The chart below plots new service applications, for member jobs only, over the last six years. As indicated in the chart, historically requests for new service have been very seasonal in nature.
Member Services
Our annual report and review of Board Policy 603, Identity Theft Red Flag Prevention is up for Board review at this month’s Board meeting. The policy was established for us to take all reasonable steps to identify, detect, and prevent the theft of our members’ personal information; commonly known as Identity Theft.
CYBER SECURITY & INFORMATION TECHNOLOGIES
GoDaddy, one of the world’s largest web and domain hosts was attacked in December with the threat actors gaining access to extensive credentials and account information. Although HEA’s internal database was not impacted, many local Peninsula businesses use GoDaddy’s web designers. This is a reminder to change your passwords for email, websites, and vendors at least once per year and use the free service https://haveibeenpwned.com/ to check if your cell phone or email address have been compromised.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska State Legislature
The legislative session has just passed the eight-week mark and the pace is picking up. We continue to proactively engage with the legislators in HEA’s service territory.
Governor Dunleavy issued Administrative Order 344 establishing the Alaska Energy Security Task Force. According to the governor’s office, the task force will identify policies, programs, regulatory changes, and funding that could accelerate the adoption of energy strategies identified by the task force. The report from the task force, which is due by May 19, 2023, could be used as the basis for future legislation or regulatory changes.
The House Energy Committee unanimously moved House Bill (HB) 74 from committee on March 7, 2023. The bill updates the definition of geothermal resources to lower the temperature definition, increases the time available for exploration from three years to five years, and doubles the acreage limit for geothermal projects from 51,000 to 100,000 acres. The bill also changes the current permit system to an exploration license system like oil and gas exploration. HB 74 was filed by Alaska Gov. Mike Dunleavy and is identical to legislation filed during the previous legislature that did not pass before session adjourned. The next stop for HB 74 is the House Resources Committee. Companion Bill SB 69 has not been heard yet.
House Bill 62, which extends the Renewable Energy Grant Fund (REF) for 10 years, moved out of the House Finance Committee on March 15, 2023. The next stop for HB 62 will be the House Floor. Since there is an identical bill in the Senate, if the House bill passes first, it will become the vehicle for the legislation. Senate Bill 33, the Senate’s version of the REF extension bill, is still waiting for a hearing in the Senate Finance Committee, its last committee of referral.
Finally, a Renewable Portfolio Standard (RPS) for Railbelt electric utilities was recently introduced via SB 101. The RPS includes compliance benchmarks of 25% by the end of 2027, 55% by the end of 2035, and 80% by the end of 2040.
Alaska Energy Authority
Applications for EV Charging Site Hosts – The Alaska Energy Authority (AEA) and the Department of Transportation & Public Facilities (DOT&PF) have released a Request for Applications (RFA) to solicit electric vehicle (EV) charging station site hosts as part of Alaska’s EV Infrastructure Deployment Plan (The Plan). The RFA is the first step in initiating Phase 1 of The Plan. Application packages are due back to AEA by May 1, 2023, at 4 p.m.
Utilizing National Electric Vehicle Infrastructure (NEVI) formula funding, Phase 1 of The Plan focuses on building out EV charging infrastructure along Alaska’s Alternative Fuel Corridor (AFC), the 355-mile stretch of road that connects Fairbanks to Anchorage. Alaska was granted an exception to the 50-mile requirement for the section of road between Denali State Park and Cantwell since there is no existing electric infrastructure there.
For more information about the NEVI RFA and to apply, click here. (Source: Alaska Energy Authority)
Board of Directors’ Meeting Approvals | March 21, 2023
Regular HEA Board Meeting
- Regular Meeting Minutes of February 14, 2023
- Resolution 45.2023.04, Acceptance of the 2022 Audit Report
- Resolution 45.2023.05, Approval of the Acquisition of the City of Seward’s Electric Utility System Pursuant to the Terms and Conditions of the Asset Purchase Agreement
- Resolution 45.2023.06, Approval of Proposed Amendments to the Bylaws to Create a Fourth Voting District Following HEA’s Acquisition of the City of Seward’s Electric System
- Board Policy 603, Identity Theft Red Flag Prevention – Annual review completed, and housekeeping revisions approved.
