July 9, 2024
SUMMARY
Greetings! I hope everyone enjoyed a safe and fun-filled holiday celebrating Independence Day with family and friends. This holiday is a wonderful reminder of the freedoms we cherish, and the sacrifices made to secure them. Summer is in full swing, and the Kenai Peninsula is buzzing with activity - it’s the perfect time to make the most of the summer season before it passes.
Last month was another busy month, consisting of various business meetings including the Cooperative Finance Corporation (CFC) 2024 Forum in Indianapolis, as well as some personal leave. The following are brief updates on many of HEA’s current business activities and strategic goals.
SAFETY
We had a good month for safety. HEA experienced no Occupational Safety and Health Administration (OSHA) recordable incidents in June. The full safety report is included in this month’s Board packet.
FINANCIAL OVERVIEW
Financial Overview – For the month of May, our operating revenue stands at $8.99 million, with a total cost of electric service of $9.54 million, resulting in an operating margin loss of $0.55 million. This reflects the seasonal pattern of decreased energy sales in the warmer months compared to power costs. Our healthy year-to-date operating margins of $1.61 million remain ahead of budget expectations at $0.98 million.
Through the end of May, total kWh sales were running 5% ahead of budget, thanks to special contracts exceeding projections. The graph below (that excludes special contracts), updated with June activity, reflects retail energy sales with a continued strong showing.
Lastly, we received excellent news at the end of the month! The United States Department of Agriculture (USDA) selected Alaska Electric and Energy Cooperative, HEA’s G&T subsidiary, to receive $100 million in funding through the USDA Powering Affordable Clean Energy (PACE) Program. The PACE funding will support the installation of a 45-megawatt, four-hour battery energy storage system (BESS) adjacent to our existing BESS at the Soldotna Substation. This project will allow us to integrate additional non-firm generation options into the grid. In addition to receiving the full amount of funding requested, HEA also qualified for loan forgiveness at the maximum level of 60%.
RELIABILITY
Generation – The Nikiski Combined Cycle (NCC) came out of major outage at the beginning of the month and resumed operations as HEA’s baseload plant. Post-outage, the generation staff worked closely with contractors and vendors to review operational reports and restock inventory.
Relative to the Battery Energy Storage System (BESS), 32 out of 37 megapacks are currently operational. Throughout June, Tesla made progress in replacing battery modules on megapacks, although work was limited to a few megapacks at a time to ensure adequate reserves. Tesla is currently in the process of completing Group 3, with completion of this group expected in early to mid-July.
Distribution/Transmission – On Saturday, June 29, Nikiski Dispatch and HEA Operations received notification from the U.S. Division of Forestry and the Kenai Peninsula Borough’s Office of Emergency Management regarding a wildfire near Tustamena Lake. At the request of the Incident Command Team, HEA de-energized sections of the 115 kV line within the Kenai Wildlife Refuge to ensure the safety of firefighters. The fire was approximately 0.75 miles east of the 115 kV line and was de-energized for approximately three hours. There was no disruption of service to our members. The cause of the fire has not been determined; however, it appears not related to electric facilities.
HEA's right-of-way clearing program is essential in fire mitigation, especially given the challenges posed by Spruce Bark Beetle-infested dead trees. Regularly maintaining and clearing vegetation around power lines and infrastructure reduces the risk of wildfires ignited by electrical equipment. This proactive approach not only enhances the reliability of our service but also significantly boosts the safety of our community and helps preserve our natural environment.
CUSTOMER SERVICE
Engineering Services, New Service Applications –
The chart adjacent shows new service applications to date and provides a comparison to the previous five years.
Member Services – The Metering group and Member Services Department are collaborating on a significant project to replace several thousand Cannon meters with Two-Way Automated Communications System (TWACS) meters in the Kasilof, Sterling, and Bernice Lake (Nikiski) areas over the next two months. Members in these areas have received notifications about this upcoming change. Additionally, members will see a brief outage (less than ten minutes) during the change-out process.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Vishing is a form of Phishing where scammers leave a short voice mail or call, asking to verify personal information while impersonating an individual or agency to extort money or gift cards. The threat actors are using this as an opportunity to record your voice and use Artificial Intelligence (A.I.) to target family members or are even impersonating law enforcement officials to execute this fraud. For more details on how this fraud is currently affecting Alaskans, check out this link: https://www.alaskasnewssource.com/2024/06/05/summer-scam-apd-warns-sophisticated-phone-scams-rise/
Stay vigilant: never respond to voicemails from unknown individuals. If you do not recognize the caller ID, do not answer the phone. Always be cautious of who you are speaking to, especially in this age of deepfakes and A.I. impersonations.
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update – Alaska Governor Mike Dunleavy signed the FY25 operating and capital budgets on June 27, 2024. The operating budget funds state departments and programs, while the capital budget primarily supports infrastructure projects across the state. The governor has the authority to line-item veto individual appropriations, reduce funding amounts, or veto the entire budget.
Governor Dunleavy used this power to remove $3.7 million from the Renewable Energy Fund (REF) Round 16 projects appropriations. The legislature included $14,310,158 for the Round 16 projects, which is now reduced to $10,521,836. According to veto backup documents, the reduction aims to “preserve general funds for savings and fiscal stability.”
BOARD OF DIRECTORS' MEETING APPROVALS | JULY 9, 2024
Regular HEA Board Meeting
- Regular Meeting Minutes of June 11, 2024
- Board Policy 101, Policy Development, Adoption and Distribution – Periodic review completed, and housekeeping revisions approved.
- Board Policy 211, Appointments to Committees & Affiliated Associations – Periodic review completed, and housekeeping revisions approved.