SUMMARY
Happy Holidays! As we wrap up another calendar year, it’s remarkable how quickly this year has passed. This season offers a meaningful opportunity to reflect on our accomplishments and express appreciation to our Board of Directors and our dedicated employees who contribute to Homer Electric Association's success.
This year has been exceptionally busy, something I say each year. However, this year was filled with challenges and accomplishments, and I want to acknowledge the Board for your thoughtful leadership and commitment to decisions that prioritize our members’ best interests. To our employees, thank you for your dedication to our mission and your often unseen contributions that strengthen our communities each day.
Looking ahead, we expect another year filled with opportunities to advance the cooperative’s strategic goals. With continued teamwork and a shared focus on our members, I’m confident we’ll make meaningful progress. Below is an overview of HEA’s current business activities and focus areas.
SAFETY
As we close out the year, it’s a good time to reflect on one of our core commitments: safety. Our mission to provide "safe, reliable, and affordable power" begins with maintaining a strong safety culture.
I’m pleased to report that November passed without any recordable Occupational Safety and Health Administration (OSHA) incidents. This milestone highlights our team's dedication to maintaining a safe work environment throughout the year. As we approach a new year, let’s continue to build on this positive momentum. This month's board packet includes the full safety report.
FINANCIAL OVERVIEW
FINANCIAL UPDATE – Total revenue for October was $9.98 million and the cost of service was $10.09 million, resulting in a monthly operating loss of $0.10 million for HEA. Year-to-date operating margins are $0.73 million and total margins are $1.26 million, corresponding to a modified debt service coverage ratio of 1.36. The equity-to-assets ratio remains stable at 44.3%, slightly ahead of last month and within the Board’s target range.
HEA is preparing its quarterly Cost of Power Adjustment (COPA) filing for the Regulatory Commission of Alaska (RCA). Based on information available to date, staff expect the COPA to fall within a range of $0.091 to $0.093 per kWh, effective January 1, 2026. This would constitute a decrease of approximately 13% - 14.9%. COPA is designed to recover the cost of fuel, purchased power (primarily Bradley Lake), and other fuel-related expenses. It is adjusted quarterly and is billed directly to HEA members without any markup.
On November 14th, HEA submitted a Simplified Rate Filing (SRF) to increase base rates by 4.0% effective January 1, 2026, which is currently under review by the RCA. Specific notice of the proposed base rate increase will be provided to every member on their January billing statement. While a base rate increase is never welcome, HEA’s aggressive cost-control measures and operational efficiencies have helped limit the size of the increase despite significant inflation in the cost of goods and services.
The proposed 2026 HEA and AEEC budgets will be presented to their respective Board of Directors for approval at the December board meetings. Many thanks to our employees for preparing prudent budgets that reflect our financial constraints and long-term obligations to our members.
RELIABILITY
GENERATION – In early November, the Nikiski Steam Turbine briefly shut down during a required steam turbine valve test but was safely restored within just over an hour. Railbelt reserves responded as expected, and the system experienced only minor frequency fluctuation. Plant personnel are updating the testing procedure to support long-term reliability and meet insurance requirements. The Nikiski Combined Cycle (NCC) plant otherwise operated normally throughout the month.
Ongoing forced outages at Bernice Lake continue to limit the amount of available system reserves. Staff are prioritizing restoration of these units to ensure adequate support ahead of planned islanding events and major maintenance outages scheduled for early 2026. Repairs to Bernice Lake Unit 4 remain on track, with reassembly expected to begin in mid-December. Bernice Lake Unit 3 also tripped on high vibration during startup; initial inspections found no internal issues, and diagnostics are continuing.
Despite seasonal variability, system loads remained higher than anticipated, with non-refinery demand trending above forecast levels and refinery loads remaining elevated. These higher-than-expected loads underscore the importance of the timely return of Bernice Lake capacity and the ongoing readiness of the Nikiski, Soldotna, and Bradley Lake facilities.
As routine operations progress, planning efforts also continue on several long-term initiatives. Coordination with vendors remains a focus as HEA advances planning for several capital projects, including the Repower project. Additionally, Generation staff are preparing for spring maintenance outages and scheduled islanding events, with an emphasis on system reliability and maintaining sufficient reserves as project activity increases in 2026.
DISTRIBUTION/TRANSMISSION – I am pleased to report that all 2025 right-of-way re-clearing, Community Wildfire Defense Grant (CWDG) work, and Kenai Peninsula Borough Community Wildfire Protection Plan (CWPPi) clearing, and danger tree mitigation efforts are now complete. This is a significant accomplishment for the cooperative, and we appreciate the strong partnerships & efforts.
MEMBER/CUSTOMER SERVICE
ENGINEERING SERVICES, NEW SERVICE APPLICATIONS – The chart below shows the new service applications and provides a historical comparison. Year-to-date we are running slightly below average.
MEMBER SERVICES - Member Services recently mailed letters asking members to review and confirm their contact information. The details included in the mailing reflect each member’s primary address on file. This outreach is the first step in a two-part campaign to improve the accuracy of our records and strengthen member engagement. The effort is being conducted in December to avoid potential postal rate increases and to ensure updated information is available ahead of the election season. The primary goals are to verify member addresses and contact information and to support more proactive communication, including outreach related to capital credits.
In the spirit of the holiday season, the Member Relations team continues its tradition of spreading cheer with the HUG (Home Utility Gift) program. Each December, members can nominate a family in need to receive one of ten $100 HUG energy credits. Nominations can be submitted through an online form on the HEA website or in person at any HEA office. Two winners, one from the north end and one from the south end, are announced weekly through December 26, bringing a little extra warmth and support to families during the holiday season.
CYBER SECURITY & INFORMATION TECHNOLOGIES
As holiday travel increases, members and employees are reminded to use caution when connecting to public Wi-Fi networks in places such as airports, hotels, and coffee shops. These networks are often unsecured and can expose sensitive information to unauthorized access. When possible, avoid accessing important accounts over public Wi-Fi. If secure access is necessary, consider using a virtual private network (VPN), a mobile hotspot, or waiting until you are connected to a trusted network.
BUSINESS & COMMUNITY RELATIONSHIPS
ALASKA POWER ASSOCIATION (APA) – As mentioned in last month’s report, the 2026 Alaska legislative session is set to begin on January 13, 2026. Please watch for emailed updates from Alaska Power Association’s (APA) Lobbyist Michael Rovito, who will keep us apprised of all state and federal legislative activities. Please let Jenniffer know if you would like to join APA’s legislative email updates.
As usual, HEA plans to host our annual Legislative Dinner, and we will provide more details as this popular event comes together. We look forward to another good turnout at the dinner and conference. Please let the HEA Board President know if you anticipate attending the APA Legislative Conference. We plan to make personal visits with all our local representatives.
BOARD OF DIRECTORS' MEETING APPROVALS | DECEMBER 9, 2025
Regular HEA Board Meeting
- Regular Meeting Minutes of November 12, 2025
- Resolution 45.2025.34, Approval of the 2026 Board of Directors Regular Meeting Schedule
- Resolution 45.2025.35, Approval of the 2025 Operating Budget
- Resolution 45.2025.35, Approval of the 2025 General Plant Budget
- Resolution 45.2025.35, Approval of the 2025 Construction Work Plan Budget
- Board Policy 209, Board Member Fees and Reimbursement of Expenses - Annual review completed, and housekeeping revisions approved.
- Board Policy 403, Material and Equipment Sales - Annual review completed, and housekeeping revisions approved.
- Board Policy 503, Energy Conservation - Periodic review completed, and housekeeping revisions approved.
- Board Policy 722, Safety Program - Periodic review completed, and housekeeping revisions approved.
Regular AEEC Board Meeting
- Regular Meeting Minutes of November 12, 2025
- Resolution 01.2025.06, Approval of the 2026 Board of Directors Regular Meeting Schedule
- Resolution 01.2025.07, Approval of the 2025 Operating Budget
- Resolution 01.2025.08, Approval of the 2025 Construction Work Plan Budget