December 12, 2023
SUMMARY
Good afternoon and Happy Holidays! Thank you to the board and employees for helping make HEA successful this past year. I hope we end the year with plenty of time spent with family, and friends, and continuing to serve our community. I am proud of the many employees who volunteer their time and money for the benefit of our local schools, sports teams, and non-profit organizations. Those efforts do not go unnoticed. Let’s take time to pause, reflect on our many blessings, and to recognize those who play a significant role in our cooperative. I look forward to the upcoming year and all the opportunities that it presents.
It has been busy the last several weeks with Employee Updates, and several other business meetings this past month. 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
Unfortunately, we did have an Occupational Safety and Health Administration (OSHA) recordable incident in November. The full safety report is included in this month’s Board packet.
FINANCIAL OVERVIEW
Total revenue for the month of October was $8.42M. The cost of service was $8.92M resulting in a monthly operating loss of $0.50M for HEA. Year-to-date operating margins are $0.59M and total margins are $1.32M for a modified debt service coverage ratio of 1.39, compared to 1.31 last year. Equity to assets remain steady at 45%, the same as last month, and within the target range.
HEA is preparing its quarterly Cost of Power Adjustment (COPA) submittal for the Regulatory Commission of Alaska (RCA). The COPA will increase to $0.08868 per kWh on January 1st. The COPA rate was established to recover the cost of fuel, purchased power (primarily Bradley Lake), and other fuel-related expenses. Also, the COPA is adjusted quarterly and is billed directly to HEA members without any markup.
On November 3rd, HEA submitted a Simplified Rate Filing (SRF) to increase the base rate by 3.50 percent effective January 1, 2024. Recently, the RCA approved the base rate increase. Specific notice of the proposed base rate increase will be provided directly to every member in their December billing statement. A base rate increase is never welcome but given the significant increase in the cost of goods and services, I am pleased that HEA’s aggressive cost-cutting measures and operational efficiencies have minimized the amount of the base rate increase.
The proposed 2024 HEA and AEEC budgets will be presented for approval at the December Board of Directors (BOD) meeting. Many thanks to our employees for preparing responsible budgets reflective of our financial constraints this year and to staff for their presentation of the Capital Work Plan (CWP) Budgets at the November Board meeting.
The AEEC Board of Directors will be asked to approve a resolution to support AEEC’s United States Department of Agriculture (USDA) Powering Affordable Clean Energy (PACE) application for the Kenai Renewable Energy Storage (KRES) project in the amount of $100M of which up to 60% of the amount will be eligible for forgiveness. The full loan application is due on January 8th.
RELIABILITY
Distribution – The Hitachi/Siena Tech Outage Management System (OMS) was successfully implemented. The introduction of the new outage map has led to a significant shift in reporting methods, with nearly 40 percent of outage reports now originating from the map. To address challenges faced by Dispatch in Nikiski, OMS has been installed on all Nikiski Dispatchers' laptops, providing them with a comprehensive list of active outages.
Tesla will be on-site in Soldotna this month for BESS Maintenance.
The 2023 Right-of-Way (ROW) Clearing project should be complete by December 15th.
CUSTOMER SERVICE
Engineering Services, New Service Applications - 
the chart (left) plots the current new service applications, for non-HEA jobs only, alongside the previous six years. There were 10 new service applications in November which is below the average of 17 for November over the last 6 years. The number of applications to date in 2023 continues to lag 13-14% behind the last two years for cumulative applications through this month.
Member Relations, Base Rate Adjustment Education – An informational packet on the proposed 3.5 percent base rate increase is attached to this report. The informational packet contains an overview of changes to the base rate and COPA with explanations to help members understand the adjustments.
In true Christmas spirit, every December for the past four years the Member Relations team has launched their HUG (Home Utility Gift) program. Members can nominate a family in need to receive one of ten $100 HUG energy credits by submitting an online nomination form via the HEA website or in-person at one of the HEA offices. Winners are announced each week from December 1 through December 22.
CYBER SECURITY & INFORMATION TECHNOLOGIES
A cyber event is only one click away...
Idaho National Laboratory last month was a victim of a data breach impacting nuclear designs and employee data that popped up on the Dark Web for sale. The cause of the breach, a single click on a link via Microsoft Teams by an outside sender not from Idaho Labs.
Over the last month, HEA has seen several false Microsoft Teams “Meeting” request links impersonating HEA employees. HEA communications via Email or Teams will always use our domain name “@homerelectric.com.” as part of the from email or Teams address. Remember to check to make sure they are an HEA employee before you click!
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association (APA)
The 2024 Alaska legislative session is set to begin on January 16th. Please watch for emailed updates from Alaska Power Association’s (APA) Deputy Director Michael Rovito, who will be keeping us appraised of all state and federal legislative activities.
BOARD OF DIRECTORS' MEETING APPROVALS | December 12, 2023
Regular HEA Board Meeting
- Regular Meeting Minutes of November 21, 2023
- Resolution 45.2023.25, Approval of the 2024 Operating Budget
- Resolution 45.2023.26, Approval of the 2024 General Plant Budget
- Resolution 45.2023.27, Approval of the 2024 Construction Work Plan Budget
- Resolution 45.2023.28, Approval of the 2024 Board of Directors Regular Meeting Schedule
- Resolution 45.2023.29, Establishing Voting Eligibility Record Date of the 2024 Annual Meeting of the Members
- Board Policy 403, Materials and Equipment Sales – Periodic review and housekeeping revisions approved
- Board Policy 505, Renewable Portfolio Goal – Periodic review and recession of policy approved
- Board Policy 506, Energy Security & Diversification Policy – New Policy implementation approved
Regular AEEC Board Meeting
- Regular Meeting Minutes of November 21, 2023
- Resolution 01.2023.06, Approval of the 2024 Operating Budget
- Resolution 01.2023.07, Approval of the 2024 Construction Work Plan Budget
- Resolution 01.2023.08, Approval of the 2024 Generation Project Budget
- Resolution 01.2023.09, Approval of the 2024 Board of Directors Regular Meeting Schedule
- Resolution 01.2023.10, Approving RUS Loan Transaction
- Resolution 01.2023.11, Approving Assignment of USDA Representative-Signature-Certify Security Role