SUMMARY
Hello! I hope you have been able to enjoy the beautiful summer weather and all that the Kenai Peninsula has to offer. August is often one of our busiest months, both for our communities and for HEA, as we continue to focus on maintaining a safe and reliable electric system while preparing for the transition into the fall season.
The following is a brief overview of HEA’s current business activities and strategic initiatives for July. As always, I will provide additional details and answer any questions during the board meeting.
SAFETY
Safety remains a key focus throughout the cooperative as we work to support our employees and maintain a safe working environment.
During July, HEA experienced one OSHA-recordable injury and one equipment/property damage incident. Additional information regarding these incidents is provided in the monthly Safety Report.
FINANCIAL OVERVIEW
For the month of June, HEA received operating revenue of $10.3 million, with a total cost of electric service of $12.5 million, resulting in an operating loss of approximately $2.2 million. Year-to-date, total margins remain positive at $1.0 million but are approximately $1.0 million below budget. While operating revenue continues to exceed budget by approximately $5.5 million year-to-date, the total cost of electric service is also above budget by approximately $6.3 million. This variance is primarily driven by purchased power costs, which totaled $8.9 million for the month and $45.5 million year-to-date.
Simplified Rate Filing (SRF) – HEA is preparing to submit an informational Simplified Rate Filing for the period ending June 30, 2026, measured on a rolling 12-month basis. The filing is projected to reflect a Regulatory Time Interest Earned Ratio (TIER) of 1.98. The difference between HEA's actual TIER of 1.32 and its Regulatory TIER of 1.98 highlights the ongoing challenge of managing rates within the regulatory framework while also meeting annual lender covenant requirements.
The Regulatory TIER calculation continues to benefit from strong electricity sales during the fourth quarter of 2025, which remain within the rolling 12-month measurement period. As those months roll off, HEA will continue to closely monitor the relationship between actual financial performance, regulatory earnings, and debt service coverage to ensure rates remain sufficient to support ongoing operations, capital investments, and lender covenant compliance.
RELIABILITY
GENERATION – Despite cooler-than-normal temperatures throughout much of July, which made it the second-coldest July in the past 15 years, HEA's generation facilities performed reliably and supported the electric system amid several operational challenges, including windstorms, fuel pressure fluctuations, islanding events, and scheduled maintenance.
Generation staff continued to make substantial progress on the Nikiski Combined Cycle (NCC) Repower Project, reaching several key milestones during the month. Work remains on schedule, with multiple major project components advancing as planned. In addition, the air handler replacement project at the plant and a major breaker replacement project were successfully completed. Personnel also addressed a station service electrical equipment failure at the Bradley Lake Hydroelectric project. Repairs are scheduled for completion in mid-August.
HEA also experienced unscheduled islanding events during the month resulting from maintenance activities outside of HEA's system. Personnel responded as needed to maintain reliable service throughout these events.
OPERATIONS – In mid-July, a significant windstorm impacted the northern portion of HEA's service area, resulting in outages affecting more than 4,000 members. Crews responded quickly and safely, restoring service under challenging conditions. I want to thank our line crews and support staff for their professionalism, dedication, and commitment to restoring power for our members as quickly and safely as possible.
MEMBER/CUSTOMER SERVICE
ENGINEERING SERVICES, NEW SERVICE APPLICATIONS – The chart below shows new service applications to date and compares them with the previous five years.
MEMBER RELATIONS – Strategic Communications Coordinator Mary Bowe and I are preparing for HEA's first Community Meetings of the year. The first meeting is scheduled for Wednesday, Aug. 26, in Seldovia from 12:30 to 1:30 p.m., followed by a meeting in Port Graham on Monday, Aug. 31. Additional Community Meetings are planned for October and November.
At the beginning of July, Strategic Communications Coordinator Mary Bowe accompanied three students from the Kenai Peninsula to the Youth Rally Leadership Camp at Northwest Nazarene University in Nampa, Idaho. HEA sponsored Joshua Bolling and Afton Roberts, while last year's HEA participant, Ryder Maguire, returned to the program after being selected as Alaska's Returning Student Representative. The Alaska Power Association, along with other participating electric cooperatives, also provided sponsorship support.
More than 90 students from across the western United States participated in the weeklong program, which focused on leadership development, cooperative education and networking. HEA's students represented the cooperative exceptionally well, earning several scholarships. Joshua Bolling was also elected to serve as Alaska's 2027 Returning Student Representative, continuing HEA's strong representation in the Youth Rally program.
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.
BUSINESS & COMMUNITY RELATIONSHIPS
AK CARE – The Alaska Committee for the Advancement of Rural Electrification (AK CARE) has begun its annual fundraising campaign for the current fiscal year. Established in 1985, AK CARE is a nonpartisan political action committee that supports state candidates who advocate for policies benefiting Alaska's electric consumers and member-owned electric cooperatives. Contributions and expenditures are reported to the Alaska Public Offices Commission in accordance with state law.
BOARD OF DIRECTORS' MEETING APPROVALS | August 11, 2026
Regular HEA Board Meeting
- Regular Meeting Minutes of July 14, 2026
- Resolution 45.2026.18, Approving the Sale of Cooperative Real Property
- Resolution 45.2026.19, Authorizing the Amendment of the 401(k) Pension Plan, Adoption Agreement “A”, RUS#02005-001
- Board Policy 210, Review of Board Member Fees and Expenses - Periodic review completed, and housekeeping revisions approved.
- Board Policy 221, Board of Director Website Content - Periodic review completed, and housekeeping revisions approved.
Regular AEEC Board Meeting
- Regular Meeting Minutes of June 9, 2026
- Resolution 01.2026.05, Approval of Authorized Personnel or CFC e-Pay/Paying Agent Service
- Resolution 01.2026.06, Authorization for Continuation of Work on the Grant Lake Hydroelectric Project