March 18, 2025
SUMMARY
Good afternoon! With this month’s board meeting pushed later because of spring break, I trust you all had a wonderful and refreshing month. It has been another busy month with auditors on-site, ongoing preparations for the HEA Annual Meeting and Board Election; and participation in key industry events, including the Northwest Public Power Association (NWPPA) Board of Trustees meeting in Vancouver, Washington; a Cooperative Finance Corporation Board Meeting (CFC); and the National Rural Electric Cooperative Association (NRECA) PowerXchange 2025 Annual Meeting in Atlanta.
Below is a summary of HEA’s recent business activities and progress toward our strategic goals.
SAFETY
There were no Occupational Safety and Health Administration (OSHA) recordable incidents in the month of February!
FINANCIAL OVERVIEW
Financial Update – Revenue for January came in just under $10.0 million, with a cost of service of $9.8 million, resulting in a monthly operating margin of just over $160,000. The Board approved a 3.0% rate increase, set to take effect April 1, 2025, pending Regulatory Commission of Alaska (RCA) approval. This adjustment will help ensure HEA meets its debt covenants while keeping up with rising maintenance and operating costs due to inflation.
Additionally, our annual independent financial audit is nearing completion. Joy Merriner from BDO USA, LLP will present the findings of the Independent Auditor’s report on the consolidated financial statements at the upcoming Board of Directors’ meeting.
RELIABILITY
Generation – Our Enstar Gas Sales Agreement (GSA) was approved by the Regulatory Commission of Alaska (RCA), with a requirement to submit details by mid-March outlining how curtailments would be managed in the event of a gas supply restriction. At the same time, staff has been actively engaged in responding to Railbelt Reliability Council (RRC) and Railbelt Transmission Organization (RTO) activities, ensuring HEA remains aligned with regulatory and operational developments.
System loads have remained lower than usual due to warmer-than-normal temperatures. Additionally, for much of the month, we operated as an islanded system due to ongoing transmission line work between Sterling and Quartz Creek. Despite this, the system performed well without the need to run additional facilities. The only notable issue was a temporary communication problem between the Nikiski plant Distributed Control System (DCS) and the System Control and Data Acquisition (SCADA) system, which lasted a few days but has since been resolved.
Bradley Lake energy played a critical role throughout the islanding period, which began on January 6 and ended on February 24. Looking ahead, depending on interconnection availability over the next month, HEA is now expected to end the water year with some water reserves rather than the previously forecasted deficit.
Work is progressing on key projects across all generation facilities. Following the Board’s approval of funding for the Nikiski Repower project last month, we are working with our vendor to secure a Combustion Turbine in the manufacturing queue, ensuring a place in the manufacturer’s production schedule. Meanwhile, materials and parts for the upcoming Nikiski outage in May are arriving as anticipated. Lastly, the kitchen area in the Crew Quarters at Bradley is being remodeled, with completion expected by the end of March.
Operations – The Operations team took part in a joint operational exercise with the Kenai Peninsula Borough (KPB) Office of Emergency Management (OEM) to enhance coordination and response capabilities. As part of the exercise, KPB hosted an AK Volcano Observatory advisory and information-sharing session following Mt. Spurr’s recent shift into the cautionary category.
CUSTOMER SERVICE
Member Services - Our annual report of Board Policy 603: Identity Theft Red Flag Prevention is scheduled for review at this month’s Board meeting. This policy was established to ensure we take reasonable steps to identify, detect, and prevent the theft of our members’ personal information, commonly known as identity theft.
Additionally, in accordance with Board Policy 723, annual Disclosure Statements (Conflict of Interest) will be distributed at Tuesday’s meeting. If you would prefer a fillable PDF version for electronic submission, please contact Jenniffer or let her know during the board meeting.
Engineering Services, New Service Applications – The chart below illustrates new service applications and provides a historical comparison.
CYBER SECURITY & INFORMATION TECHNOLOGIES
QR codes offer a quick and convenient way to access information, but they also come with potential security risks. Cybercriminals can create fraudulent QR codes that appear legitimate but redirect users to fake websites designed to steal personal information or install malicious software on their devices. These deceptive codes can be found in public places, on flyers, or even embedded in emails and text messages.
To protect yourself, always verify the source of a QR code before scanning it. After scanning, carefully review the URL before entering any personal information. If something seems suspicious, close the page immediately and report it if possible. Staying cautious and aware of these risks allows you to safely enjoy the convenience of QR codes without compromising your security.
For a deeper dive into cybersecurity threats, Chief Technology Officer John Jungling will present his annual Scared Straight presentation to the board on Tuesday. Get ready to be SCARED STRAIGHT!
BUSINESS & COMMUNITY RELATIONSHIPS
Legislative Update—The legislative session reached the six-week mark in early March, leaving approximately six weeks until the standard 90-day adjournment. However, if extended to the full 121 days, the session would conclude on May 21. A new bill filed in the Alaska Senate on March 12 would create the Alaska Gasline Finance Corporation with the purpose of financing a natural gas pipeline in the state. The bill, Senate Bill 125 by Sen. Robert Yundt, R-Wasilla, has been referred to the Senate Resources Committee and the Senate Finance Committee.
According to SB 125, the Alaska Gasline Finance Corporation would be required to offer shares of a natural gas pipeline to the public with a minimum investment of $2,500. However, the bill states that at the time of the initial share offering, the corporation shall offer shares of a natural gas pipeline with no minimum or maximum investment amount.
SB 125 also would require the Permanent Fund Dividend application to allow an applicant to direct their dividend payment to be invested in shares of a natural gas pipeline. A purchase of shares under the PFD provision must be for the full PFD amount, according to the bill. To read SB 125, visit: https://www.akleg.gov/PDF/34/Bills/SB0125A.PDF
One other notable bill under discussion is House Bill 119, sponsored by Rep. Will Stapp, R-Fairbanks, which would require an in-state natural gas pipeline to include a spur to Fairbanks. Rep. Stapp introduced the bill after finding it unreasonable that current pipeline plans route it just 32 miles west of Fairbanks without a connection to the city.
Due to time constraints, the initial hearing on HB 119 was brief. However, Rep. Ashley Carrick, D-Fairbanks, who chairs the House State Affairs Committee, is a co-sponsor of the bill. While HB 119 has a strong chance of advancing out of the committee, its ultimate outcome remains uncertain. To view a recording of the hearing, visit: House State Affairs Committee Hearing 3-6-25
Department of Natural Resources, Division of Forestry & Fire Protection (Kenai-Kodiak Area) | Early Fire Season Declared in Parts of Alaska – Burn Permits Required Starting March 17 – Due to warm temperatures and low snowpack, wildfire risk is rising across southern and coastal parts of Alaska. The Alaska Division of Forestry & Fire Protection (DOF) has declared an early start to fire season in areas within the Division of Forestry Coastal Region and Southeast Alaska. Burn permits will be required starting March 17, 2025.
Affected areas include:
- Mat-Su DOF protection area
- Kenai-Kodiak DOF protection area
- McGrath-Southwest DOF protection area
- Copper River-Valdez DOF protection area
- All of Southeast Alaska
Permits are required for all state, private, and municipal lands in these areas. Learn more about burn permits, safe burning, and how to prevent human-caused wildfires at: dnr.alaska.gov/burn.
Read the full Public Order: https://aws.state.ak.us/OnlinePublic.../Notices/View.aspx.
BOARD OF DIRECTORS' MEETING APPROVALS | MARCH 18, 2025
Regular HEA Board Meeting
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- Regular Meeting Minutes of February 11, 2025
- Resolution 45.2025.04, Acceptance of the 2024 Audit Report
- Board Policy 603, Identity Theft Red Flag Prevention – Annual review complete, and housekeeping revisions approved.