August 13, 2024
SUMMARY
It has been a great summer…but seems to have flown by remarkably fast. I hope you have enjoyed the last half of July when the sockeye fishing was terrific. I would suspect our local businesses also benefited, as the number of tourists on the Peninsula was as high as ever.
As we look ahead from a busy summer, we are gearing up for the challenges of a busy fall season as well, which includes the end of our construction season, the beginning of our local neighborhood Community Meetings, Alaska Power Association’s (APA) Annual Meeting in Fairbanks, and the National Rural Electric Cooperatives (NRECA) Region 7/9 Meeting, to name a few.
The following are brief updates on HEA’s current business activities and strategic goals that have taken place over the last month.
SAFETY
HEA staff continue their monthly self-paced online safety training. This program has been a great success, enhancing our overall safety awareness and helping to proactively address potential hazards. However, despite our best efforts, we did have an Occupational Safety and Health Administration (OSHA) recordable incident last month. You can find the full safety report in this month’s Board packet, along with the 2024 Quarter 2 Safety Summary.
FINANCIAL OVERVIEW
Financial Overview – Operating revenue of $8.8M for June falls shy of covering the total cost of service resulting in a net monthly operating loss of $104k….typical for our winter peaking system during our other season – construction! Total year-to-date margins of $1.9M are $1.5M above budgeted expectations and is mainly driven by reduced operations & maintenance and administrative expenses.
Cost of Power Adjustment (COPA) – The third quarter COPA rate, which went into effect on July 1st, was $0.08884/kWh. HEA made an errata filing effective August 1st bringing the rate down to $0.08414/kWh which will remain in effect until the fourth quarter.
Electric Reliability Organization (ERO) Surcharge – Starting August 1, 2024, HEA members will see a new line-item charge on their monthly utility bill called the ERO Surcharge Rate. The ERO Surcharge Rate is $0.000668/kWh which for the average residential member amounts to $0.37 per month. The ERO surcharge rate is based on the member’s monthly kWh usage like most of HEA’s rates. The cost of the RRC is split amongst the Railbelt utilities as mandated by state legislation. For more information and questions about the RRC, please visit www.akrrc.org.
House Bill 307 – was signed into law on July 31, 2024. This bill establishes the integrated Railbelt electric transmission organization within the Alaska Energy Authority, the bill’s stated goal was to reduce power costs for ratepayers in the long term and integrate more renewable energy into the grid. Instead of individual utilities paying for the cost of their individual transmission systems, costs will be pooled at a consolidated level and then charged back to individual utilities based on a share representative of their usage. This bill does not result in any cost savings, but it may change how much any one utility pays for its transmission services.
RELIABILITY
Generation – It continues to be a remarkably busy summer for our Generation group with various maintenance outages and projects. Despite the activity, everything ran smoothly last month except for two forced outages on Bradley Lake Unit 2 caused by generator excitation system control issues, and a BESS Megapack issue. Bradley Lake Unit 2 was placed in a scheduled outage last week for repairs, which have now been completed with a successful test run.
Regarding the BESS Megapack issue, there was a coolant leak on one of the Megapacks, which is scheduled for repair, as well as a transformer failure affecting one Megapack in Group 3 of the BESS.
Lastly, a brief and exciting update to the Nikiski Combined Cycle (NCC) Alaska Pollutant Discharge Elimination System (APDES) permit. I am happy to report that the monthly outfall samples remain in compliance and as of August 1, the new APDES permit is effective. The DEC approved this change due to a successful backsliding request through the administrative process. The new permit has relaxed limits, making it easier for NCC to remain in compliance.
Distribution/Transmission – Earlier this summer, HEA was selected by the Department of Agriculture’s Forest Service for a $2.6 million Community Wildfire Defense Grant. This grant will fund right-of-way (ROW) maintenance and tree clearing. Part of the Bipartisan Infrastructure Law, the program includes $1 billion to reduce wildfire risk over five years. As we continue to experience outages caused by trees outside the ROW each month, these additional funds are vital for helping HEA provide safe, reliable electricity and support ongoing wildfire mitigation efforts.
Currently, and as part of our 2024 ROW Clearing schedule, our ROW clearing contractor has been focusing efforts in the Fritz Creek area in Homer, with approximately 85% of the work completed.
CUSTOMER SERVICE
Engineering Services, New Service Applications – Engineering Services has been busy as evidenced by the 66 new service applications received in July. This is well above the monthly average over the past five years. The chart above shows the new service applications and provides a historical comparison.
Member Services, Meter Changeout Project – HEA’s meter upgrade project started this month. All members impacted were provided with notice that HEA planned to perform a meter changeout at their location. Additionally, when our crews change out a meter, they communicate with the member directly unless the member is not available. If the member is not available, then our crews proceed with the meter changeout and leave notice on the member’s door. The meter changeout schedule is listed below.
- Bernice Lake Substation (Nikiski)
- 2,651 meter changeouts began on August 5, 2024,
- 201 meter changeouts beginning on or around August 10, 2024,
- and ending with 3,500 meter changeouts later in August.
- Kasilof Substation
- 126 meter changeouts began July 8, 2024, and will continue until completion in October 2024.
- Sterling Substation
- 2,326 meter changeouts began July 15, 2024, and will continue until completion in October 2024.
CYBER SECURITY & INFORMATION TECHNOLOGIES
The bad guys, aka those pesky hackers, never let a catastrophe go to waste! Whether it is a natural disaster or a man-made event, always be cautious with unsolicited emails. Within minutes of last month’s global IT outage caused by CrowdStrike, hackers had set up fake helpdesk websites, launched robocalling, and initiated email phishing campaigns. Similar tactics have been used during hurricanes, wars, and other calamities.
If you want to donate to disaster victims, avoid clicking on links in Facebook ads. If you encounter a computer bug, do not call the support line mentioned in an email. Instead, do some research and contact reputable organizations directly. Remember, phishing and other social engineering tactics are still the number one way for attackers to infiltrate your systems. Keep your name off the victim list!
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update – Governor Mike Dunleavy signed three Alaska energy bills into law on July 31, 2024.
- HB 50 creates a regulatory framework for the State of Alaska to utilize its geologic resources for carbon capture, utilization, and storage (CCUS).
- As previously mentioned in this report, HB 307 creates a new entity within HEA and mandates the creation of an Open Access Transmission Tariff with the goal of eliminating wheeling rates along the Railbelt.
- HB 273 establishes the Alaska Energy Independence Fund as a subsidiary of the Alaska Housing Finance Corporation. It will assist in financing sustainable energy development.
- SB 152 creates legislation pertaining to the interconnection of community energy facilities. A signing ceremony is scheduled for August 13, 2024.
BOARD OF DIRECTORS' MEETING APPROVALS | AUGUST 13, 2024
Regular HEA Board Meeting
- Regular Meeting Minutes of July 9, 2024
- Resolution 45.2024.14, Approving the Nikiski Repower and Authorizing the General Manager to Finalize and Execute a Power Purchase Agreement with Solstice Energy, LLC.
- Resolution 45.2024.15, Adopting an Executive Benefits Restoration Plan
- Board Policy 302, Insurance – Periodic review completed, and housekeeping revisions approved.
- Board Policy 308, Risk Management – Periodic review completed, and housekeeping revisions approved.
- Quarterly Board & General Manager Expenses
Regular AEEC Board Meeting
- Regular Meeting Minutes of June 11, 2024
- Resolution 01.2024.04, Approving the Nikiski Repower and Authorizing the General Manager to Finalize and Execute a Power Purchase Agreement with Solstice Energy, LLC.