February 13, 2024
SUMMARY
Burrrrr…it was a cold January and as I write this, although still relatively cool, February has started off snowy. On the brighter side, literally, we are now through January, one of the most challenging months. With February comes longer days and cheerful spirits.
I am thrilled to announce that Rob Montgomery has joined Homer Electric as our new Chief Operating Officer (COO). Rob has a broad utility background having worked at South Carolina Electric & Gas Utility, the Tennessee Valley Authority, and most recently serving as the General Manager for the Seward Electric Utility. We look forward to the utility experience Rob brings to Homer Electric.
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! We have worked 117 days without a Lost/Restricted Time incident or an OSHA Recordable incident. The last incident occurred on October 4, 2023. The full safety report, as well as our year-end 2023 4th quarter safety scorecard is included in this month’s Board packet.
FINANCIAL OVERVIEW
The HEA Finance Department has been busy with year-end closing activities. The unaudited financials are complete for both AEEC & HEA. Audit preparations are in full swing and on-site fieldwork begins on February 12, 2024. A draft audit report will be presented at the March Board meeting. Also at the March meeting, a managing partner from our audit firm will be reviewing audit practices during executive session.
Revenues for the month of December were $9.41 million and cost of service was $9.27 million, resulting in an operating margin of $0.145 million.
HEA’s unaudited 2023 year-to-date total margins are $161,753, resulting in a Modified Debt Service Coverage (MDSC) of 1.36. The unaudited financials include $347,415 patronage capital from AEEC margins. As of December 31, 2023, HEA has an equity ratio of 44.5%.
RELIABILITY
Generation - HEA’s generation facilities performed well throughout January, despite encountering some of the coldest temperatures experienced in the past 15 years. The month started relatively mild but took a drastic turn with a cold weather event from January 24th to the end of the month, resulting in increased load and generation demands. The bitter cold experienced during this period led to a significant increase in Heating Degree Days (HDD), totaling 1,700 for the month. Despite this, our system remained stable, with average loads aligning closely with expectations for current temperatures. The following are additional highlights:
- Bradley Lake Management: In response to the cold weather event, we strategically increased our purchases from Bradley to mitigate gas consumption. This decision was supported by a review of our "Executed Gas Emergency Agreement" and "Energy Crisis Guidelines." Additionally, active participation in Energy Watch Group meetings helped us stay informed and coordinated during this period of heightened demand.
- Plant Operations and Maintenance: The winter maintenance outage at the Soldotna Combustion Turbine (CT) plant concluded at the end of January, with no new issues reported and equipment found to be in excellent condition. In addition, preparations were made for the upcoming major outage and the Steam Turbine Generator (STG) Ovation control retrofit at the Nikiski Combined Cycle (NCC) plant. Collaboration with vendors and contractors ensured the procurement of necessary parts for these endeavors. Lastly, NCC staff diligently managed daily operations and completed sixty-two repair and maintenance work orders in January. Looking ahead, preparations are underway for the upcoming spring outage scheduled for March 2-15, 2024, at the Bradley Lake plant. Coordination with various vendors is underway to ensure a smooth outage process. Activities include programming logic for the Power Tunnel switch, DC Battery capacity testing, vibration studies, relay testing, and procurement of necessary parts and materials.
- Environmental Compliance: NCC staff remained vigilant in monitoring and maintaining the outfall composite sampler and associated processes. Our outfall copper tests continued to meet regulatory standards, ensuring compliance with our Alaska Pollutant Discharge Elimination System (APDES) outfall permit. Efforts are ongoing to renew the outfall permit.
Distribution / Transmission - Our distribution system remains resilient, with one notable circuit lockout during January. A feeder out of the Billy Thompson Substation (near the Soldotna airport) experienced an outage due to a tree on the line, resulting in approximately 648 meters without power for about 3 hours. This incident primarily impacted businesses on the south side of Soldotna including the Skyview Middle School. It is worth noting that this same feeder has experienced seven lockouts in the past year, all attributed to trees located outside of the right-of-way. This underscores the critical importance of right-of-way clearing initiatives in safeguarding our infrastructure and ensuring uninterrupted service to our members. Efforts to maintain clear rights-of-way not only enhance system reliability but also mitigate safety hazards and minimize the risk of service disruptions.
CUSTOMER SERVICE
Engineering Services, New Service Applications - The chart (to the right) plots new service applications since 2017. There were 19 new service applications in January which is above the average of 17 for January over the last 7 years.
Member Services - In collaboration with Operations and Carlos Tree Service, we have been diligently preparing for the 2024 distribution clearing. A significant aspect of this effort involved updating the Rights-of-Way (ROW) mailer which is sent to landowners and members. This updated mailer aims to enhance communication and transparency regarding our clearing activities.
To ensure our team is well-equipped for the task ahead, we have scheduled training sessions with Operations and the Member Service Representatives (MSRs) in late February. These sessions will provide essential insights and tools to facilitate smooth interactions with members and landowners throughout the clearing process. The 2024 clearing schedule (see map below) encompasses the areas of Fritz Creek (area in blue on map below) and the South Kachemak Bay area (area is red on map below).
Lastly, this year’s scholarship program is now available. Like last year, the updated scholarship program provides a meaningful opportunity to support students pursuing both traditional academic study and trade-based programs that better reflect the needs of our diverse student population and community. In addition, we have also made it easier for students to apply for our scholarship online by using a QR code to submit an online application. The deadline to submit scholarship applications has been extended to April 1, 2024. In addition, the Safety Poster contest and Youth Rally Leadership camp will continue as part of our ongoing community outreach efforts.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Four years ago, during a “Scared Straight” presentation, we implemented training to defend against Artificial Intelligence (AI) driven DeepFake videos & phone calls. Fast forward to 2023, Deepfake fraud is the fastest growth area for cyber criminals. On February 2, 2024, a Vice-President (VP) of finance of a multinational firm paid $25 Million to fraudsters using a deepfake video meeting posing as the company’s Chief Financial Officer (CFO). Beware of phone, video & calls especially if it looks or sounds like a family member. Share a “safe word” with family and friends so you confirm the person’s identity! CBS news via YouTube has a good example of this technology and how to protect yourself > https://www.youtube.com/watch?v=pJZYd_65xs4.
BUSINESS & COMMUNITY RELATIONSHIPS
Alaska Power Association Legislative Conference - Keriann Baker, Chief Strategy Officer, and I, along with Director Levine travelled to Juneau recently for the Alaska Power Association’s annual Legislative Conference. The trip went very well and while in Juneau, we had the opportunity to visit with each of the legislators’ representing members in our service territory. In addition, we had the chance to visit with several legislators located off the Peninsula but working on issues that can impact our membership. As expected, the legislators appreciated keeping them up to speed on issues that impact our cooperative, including energy diversification projects and the Cook Inlet fuel supply issue.
Alaska State Legislature - Lawmakers considered Gov. Mike Dunleavy’s Executive Order 128 (EO 128) in the Senate State Affairs Committee this week. While legislators appear supportive of creating a new, separate board for the Alaska Energy Authority (AEA), they seemed skeptical of doing so through an executive order. This followed a legal opinion from the legislature’s attorney declaring that since an AEA board does not already exist, EO 128 unconstitutionally creates a board and exceeds the governor’s power to amend statutes as necessary to reorganize the executive branch. To watch a recording of the Senate State Affairs Committee, visit: EO 128 Senate State Affairs Committee Hearing.
The Senate Labor and Commerce Committee held the first hearing on Senate Bill 152, by Sen. Bill Wielechowski, D-Anchorage, on Monday. The bill requires certain electric utilities in the state (Railbelt) to make community energy programs available to subscriber organizations that request interconnection, among many other requirements. Sen. Wielechowski’s staff gave an overview of the bill, and, under questioning from committee members, said the senator wants to work with electric utilities to make sure they are happy with the bill. To watch a recording of the committee hearing, visit (SB 152 begins at 1:46:41 mark): SB 152 Senate Labor and Commerce Committee Hearing
As mentioned last month, please be sure to 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. In addition, he also has a very popular APA Legislative Update Conference call every Friday at 9:00 am. Please let Jenniffer Rosin know if you are interested in being added to the call.
BOARD OF DIRECTORS' MEETING APPROVALS | February 13, 2024
Regular HEA Board Meeting
- Regular Meeting Minutes of January 9, 2024
- Board Policy 601, Member Information Inquiries – Annual review completed, and housekeeping revisions approved.
Regular AEEC Board Meeting
- Regular Meeting Minutes of December 12, 2023