June 11, 2024
SUMMARY
Congratulations, we’ve made it to June, which brings the promise of another beautiful summer season! I hope everyone is enjoying the start of summer in Alaska - that special time of year when we all strive to balance our work responsibilities with our favorite outdoor activities. For those who love spending time on or around water, please remember to wear a life jacket to stay safe.
This last month has been particularly busy, filled with travel, meetings, and as I mentioned, opportunities to enjoy the magnificent Alaskan outdoors. Last week, I had the privilege of attending the Alaska Power Association Federal Legislative Conference in Washington, D.C., alongside several colleagues from the Railbelt. The conference was excellent and plays a crucial role in our federal government relations efforts, allowing us to effectively communicate the key issues faced by Alaska's electric utilities. The insights and connections gained from this event will be invaluable as we move forward.
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
June is National Safety Month, a time to focus on keeping each other safe at work, on the road, and in our homes and communities. We are committed to promoting a culture of safety and encourage our employees to stay vigilant to ensure a safe working environment for everyone. We look forward to using this month as an opportunity to reinforce our dedication to safety in all aspects of our lives.
However, it is important to note that we experienced an Occupational Safety and Health Administration (OSHA) recordable incident last month. The complete safety report is included in this month’s Board packet. This incident highlights the importance of our ongoing efforts and dedication to improving safety standards and practices.
FINANCIAL OVERVIEW
Financial Overview – In April, revenues reached $9.75 million, while the cost of service amounted to $9.85 million, resulting in an operating margin loss of $101,763. Our year-to-date operating margins remain ahead of budget. In addition (as referenced in the graph below) year-to-date kilowatt hour (kWh) sales are up by 3% compared to last year.
Simplified Rate Filing (SRF) Year End March 31, 2024 – HEA made an informational SRF filing for the test year ending March 31, 2024. HEA’s times-interest-earned ratio (TIER) was 1.158.
2023 Capital Credit Allocations – The 2023 Capital Credit Allocations were completed in May. Active members will see messaging on their June bills, and inactive members will receive a notification letter by mid-July. A total of $161,753 was allocated to 28,146 members.
Disclosure Statements – Lastly, all members of the Board of Directors, General Manager, Department Directors, and other key management personnel with signing authority of $25,000 and above at Homer Electric Association, Inc. will be asked to complete the annual Disclosure Statement this month. This statement provides critical information required for annual reporting to the Internal Revenue Service (IRS) and complies with Board Policies 104, Conflicts of Interest and 723, Control and Disclosure of Related Party Transactions.
RELIABILITY
Generation – The month of May was extremely busy for the Generation Department, with significant activities and maintenance work at the Nikiski Combined Cycle (NCC) plant. The plant was offline for the entire month due to a scheduled major outage. During this period, Soldotna Combustion Turbine (SCT) operated as baseload for over 1,000 hours without any issues, while Bernice Lake (BCT) provided backup support.
All NCC operators worked tirelessly from April 22 through June 3, undertaking major overhauls on both turbines, the Steam Turbine Generator (STG) Emerson Control retrofit, and the STG Bleed Steam Non-Return Valve (NRV) replacement. Additional tasks included STG oil accumulator replacements, rebuilding and refurbishing several pumps and motors, conducting an Arc Flash Incident Energy Analysis, performing breaker maintenance and testing, inspecting, and repairing the Heat Recovery Steam Generator (HRSG), and calibrating instruments and valves. On June 1, the combustion turbine successfully restarted following the outage and rotor replacement.
In other updates, Tesla began replacing battery modules, following the plan mentioned in last month's report, completing the Group 2 module replacements on May 31. The remaining replacements are scheduled for completion between June and July. Currently, 32 of 37 Megapacks at the Battery Energy Storage System (BESS), are in service and operating.
On May 25, an unexpected hydrocarbon leak at the Marathon Refinery prompted the evacuation of all site personnel and contractors from NCC. Nikiski Dispatch operations were transferred to the Alternate Dispatch location in the Kenai office, and the NCC site was vacant for approximately 45 minutes – the first time in its history.
Lastly, as another sure sign of summer, the Battle Creek diversion was put into service on June 1, though road access remains hindered by large snow drifts.
CUSTOMER SERVICE
Engineering Services – Engineering Services has been busy, with an early start to the construction season. In May, HEA received 61 new service applications, well above the monthly average for May over the past five years. The chart below shows the new service applications and provides a historical comparison.
CYBER SECURITY & INFORMATION TECHNOLOGIES
Credit card skimmers are small, illegal devices that criminals attach to payment terminals, such as gas pumps or ATMs, to steal credit or debit card information. When a card is inserted, the skimmer reads the magnetic strip, chip, or tap and stores the information. The criminals then use this information to make fraudulent purchases or clone the card. It's crucial to be vigilant and check for signs of tampering before using a payment terminal.
Nationwide, gas pump skimming has increased 367% from 2022 to 2023, with a noticeable uptick during the summer on the Kenai Peninsula. Recently, a gas station attendant in Kenai observed someone attempting to break into a pump to install a skimmer.
The safest way to protect yourself from gas station credit card fraud is to avoid using the pump and pre-pay inside.
BUSINESS & COMMUNITY RELATIONSHIPS
Northwest Public Power Association (NWPPA) Board & Annual Meeting – I had the opportunity to attend NWPPA’s Board & Annual Meeting in Salt Lake City, Utah. The well-attended event included multiple speakers from across the industry discussing several relevant and timely topics. While the presentations provided useful information, the greatest value came from interacting with my peers and learning the latest ideas they are implementing at their utilities.
Legislative Update – The Alaska legislature adjourned sine die, or indefinitely, on Wednesday, May 15 amid a flurry of activity to secure language in bills before the constitutional deadline. Bills that did not pass during the session are now dead unless brought up in a special session. Lawmakers also passed the FY25 state operating and capital budgets. The governor controls the fate of passed legislation and budget bills and has 20 days, excluding Sundays, to act on bills transmitted to him by the Legislature for signature.” The clock does not start ticking until the body holding the bill transmits the bill from that body (House or Senate) to the Governor for his signature. For example, the Governor has asked the House to hold HB307 and not to transmit it to him for signature because the Department of Law is working on an Opinion Letter and needs time to review it. There are a number of other bills that the Legislature has not transmitted for signature, including the budget, because they are determining items to veto in the budget.
Alaska Sustainable Energy Conference – HEA staff and board members attended the Alaska Sustainable Energy Conference in Anchorage last month. Staff worked in the HEA booth, attended multiple presentations, and networked with many colleagues and vendors from across the state. HEA’s electric vehicles (Ford Mustang, Chevy Bolt, and Ford Lightning truck) were displayed in the vendor hall. The conference attracted a large group of legislators, executive cabinet members, U.S. Department of Energy staff, and many others who work in the energy sector.
BOARD OF DIRECTORS' MEETING APPROVALS | JUNE 11, 2024
Regular HEA Board Meeting
- Regular Meeting Minutes of May 2, 2024 and May 14, 2024
- Resolution 45.2024.04, Appointment of Alaska Power Association (APA) Government Affairs Committee Representatives - 1 Year Term
- Resolution 45.2024.05, Appointment of Alaska Power Association (APA) ACRE/CARE Representatives - 1 Year Term
- Resolution 45.2024.06, Appointment of Alaska Power Association (APA) Railbelt Issues Forum Representatives - 1 Year Term
- Resolution 45.2024.07, Appointment of Alaska Power Association (APA) Ad Hoc Scholarship Representatives - 1 Year Term
- Resolution 45.2024.08, Appointment of ARECA Educational Foundation, Inc. (AEF) Representatives - 1 Year Term
- Resolution 45.2024.09, Appointment of National Rural Electric Cooperative Association (NRECA) Voting Delegates - 1 Year Term
- Resolution 45.2024.10, Appointment of National Rural Utilities Cooperative Finance Corporation (CFC) Voting Delegates - 1 Year Term
- Resolution 45.2024.11, Appointment of Northwest Public Power Association (NWPPA) Voting Delegates – 1 Year Term
- Resolution 45.2024.12, Appointment of Alaska Electric & Energy Cooperative, Inc. (AEEC) Voting Delegate
- Resolution 45.2024.13, Destruction of Election Ballots
- HEA Board Committee Assignments
- Board Policy 104, Conflict of Interest – Periodic review completed, and housekeeping revisions approved.
- Board Policy 725, Code of Ethics – Periodic review completed, and housekeeping revisions approved.
AEEC Annual Meeting of the Member
- Annual Meeting Minutes of June 13, 2023
Regular AEEC Board Meeting
- Regular Meeting Minutes of May 9, 2024
- AEEC Board Officers:
- Wayne Ogle, President
- Erin McKittrick, Vice President
- Jim Duffield, Secretary/Treasurer
- Jim Levine, Deputy Secretary
- Resolution 01.2024.01, Appointment of National Rural Utilities Cooperative Finance Corporation (CFC) Voting Delegates
- Resolution 01.2024.02, Appointment of National Rural Electric Cooperative Association (NRECA) Voting Delegates