HEA Member's Forum

Regular HEA/AEEC Meetings

2012-01-10T11:29:00.000-09:00

Regular HEA/AEEC Meetings
Tuesday, January 10, 2012

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Warning: On the meeting calendar page of the HEA website when you "hover" the cursor over a meeting title an incorrect time is displayed. For example, 9:00 AM will be shown as the Operations Committee starting time. Click on the meeting title to get the right time.

Location: Meetings take place in the Kenai Offices at 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street, 907-235-8551. Draft agendas are available on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

. There are sometimes last minute changes in scheduling, so check the website.

Electronic Voting
Resolution 45.2012.02, proposing an amendment to HEA bylaws to allow electronic voting in annual elections is on the January 10 Operations Committee and HEA Board meeting agendas. If passed, an electronic voting option would not eliminate traditional paper ballots. At the October meeting, Operations Committee Chairman Jim Levine reported members' concerns about potential vote tampering. Hopefully, if electronic voting is approved, effective protection against hacking and vote manipulation will be incorporated into the system. If you are interested in this topic you should attend the 10:00 AM Operations Committee Meeting.

Energy from Garbage (thanks to Sustainable Homer for this reminder)
Wednesday the 11^th: REAP Forum: Anchorage Landfill Methane Power Plant Get the live podcast online at: https://www1.gotomeeting.com/register/830056584 to hear from 6-8pm about the latest on Alaska's FIRST EVER Landfill Methane Power Plant, which in 2012 will tap methane produced by the Anchorage Regional Landfill to power Joint Base Elmendorf Richardson (JBER). There are many such plants around the country, but this will be the first in Alaska. Their speaker will be MARK MADDEN, Solid Waste Services Director for the Municipality of Anchorage. More info: 907.929.7770, www.REalaska.org

New HEA Rate Structure
If you received your January HEA bill you probably noticed the new rate structure. The components of residential electric bills include:

New customer charge -- $15.00
New Blended energy charge -- 16.917 cents per kWh (HEA base rate + Cost of Power Adjustment)
Regulatory charge
Sales tax

The $15.00 customer charge is a bit low. It covers less than half the amount the RCA allows a utility to charge for its fixed costs (basically, everything needed to provide service to a customer except the electricity). This leaves HEA still recovering a large part of those fixed costs through the per kWh energy charge. That's why the monthly 150 kWh minimum energy charge was added. The minimum is really just an additional, but variable, customer charge disguised as an energy charge. That's why the RAPA and the RCA were reticent to approve it. When they finally did, the RCA capped the combined minimum energy charge and customer service charge at $38.38. HEA can't exceed that amount no matter how much the per kWh energy rate increases without going back to the RCA.

According to HEA the typical residential member uses an average 630 kWh a month and will see a 7.2% decrease in their bill under the new plan. The lowest consumption members will see an increase in their rates, however. See the news story at http://homernews.com/stories/010412/news_nhrpa.shtml#.TwovSSNqNZg or the HEA press release at http://www.homerelectric.com/ for more information.

Renewable Energy Money for HEA Members
HEA has offered relatively low interest loans (up to $5,000) through its "Line of Credit Program" for a number of years. These are designed to help members upgrade to more efficient appliances, improved electrical and plumbing systems and much more. At the December Board meeting, small scale renewable generation equipment and services were added to the list of acceptable uses for the loans. Learn more about the program athttp://www.homerelectric.com/Residential/HEALoanProgram/tabid/93/Default.aspx.

Heating with Lower Cost Off-peak Electricity
HEA General Manager Brad Janorschke has proposed investigating an Electronic Thermal Storage (EST) pilot program for 2012. It would enable members to offset higher cost propane and fuel oil with lower cost off-peak electricity. Off-peak energy sales allow dispatchers greater flexibility in maximizing system efficiency. For example, shifting demand from peak use hours to lower demand times can avoid the need to fire up additional generation or purchase power from other producers -- both expensive options. This strategy was not a practical option under HEA's present power purchase agreement with Chugach Electric Association, however. Once HEA is generating most of our power, reduced off-peak electric rates become a real possibility.

ETS units are designed to be used as energy storage devices that can help us incorporate fluctuating renewable energy resources like wind power by evening out and balancing energy demand. An out-of-budget expenditure will be presented to the HEA Board for approval prior to proceeding with the project. If you are interested in this kind of project you should attend the 5:30 PM HEA Board meeting to ask questions and tell the Board what you think.

HEA/AEEC Meetings Tuesday, December 13, 2011

2011-12-08T11:44:00.001-09:00

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Warning: On the meeting calendar page of the HEA website when you "hover" the cursor over a meeting title an incorrect time is displayed. For example, 9:00 AM will be shown as the Operations Committee starting time. Click on the meeting title to get the right time.

Location: Meetings take place in the Kenai Offices at 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street, 907-235-8551. Draft agendas should be available prior to meetings on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

. There are sometimes last minute changes in scheduling, so check the website.

Your HEA Account Number is Being Changed
To accommodate the growing number of HEA members all account numbers will gain an additional digit. For example, if your account number was 12345-01 it will now be 12345-001. Check your next HEA statement for your new number and be sure to use it when referring to your account. Don't forget to notify your bank or other bill pay service of the change too. Contact HEA Member Services if you have questions (907-283-5831, 907-235-8551, 800-478-8551).

AEEC Meeting Minutes Now Available
The Alaska Electric & Energy Cooperative, Inc. is HEA's generation and transmission arm. HEA and AEEC Directors are the same people. Most of the major expenses for the Independent Light project have been incurred in the name of AEEC. While HEA Board meeting minutes have been posted for some time, AEEC meeting minutes were not available until now. HEA Members Forum has encouraged HEA staff and Board to post these and other information about AEEC for at least two years. Unfortunately, the minutes do not reflect how individual Directors have voted on various resolutions or include copies of those documents. Without such it is difficult for HEA members to evaluate Director performance but one can at lease get a sense of what transpired and when specific decisions were made. So, Kudos to Directors Debbie Debnam and Jim Levine for helping HEA take this step toward somewhat greater transparency. Go to http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/AEECMinutes/tabid/302/Default.aspx for the minutes.

Monthly HEA Manager's Reports
Remember that you can download copies of Brad Janorschke's short monthly summary of recent coop developments and actions. Each report serves as the core of an update presented to Directors at the monthly HEA/AEEC meetings. While not as detailed as the in-person reports, website versions provide some useful information for any HEA member interested in tracking what management has to say about the coop. Go to http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/ManagersReports/tabid/222/Default.aspx and click on the date of the report(s) you want.

New HEA Rate Plan Coming January 1
There will be a single energy rate for all residential members with a new 150 kWh minimum charge and the present $11 per month customer charge will increase to $15. The HEA billing system may not be ready by then to accommodate the new minimum energy charge. In that case HEA will request a waiver from the Regulatory Commission of Alaska to postpone adding the energy minimum until billing software upgrades are completed.

Grant Lake/ Grant Creek Hydroelectric Project
Over the last four years HEA members have been pressing the coop to add renewable technology options to our energy "portfolio." HEA management and engineers have not appeared overly eager, however, dragging their feet particularly hard with respect to wind power. The controversial Grant Lake/Grant Creek small hydro project is HEA's first serious effort to respond to member desire for renewable energy. The project has been in the news quite a bit -- especially in recent months. Field studies must continue through 2012 and until they are completed a construction license application can't be submitted to the Federal Energy Regulatory Commission (FERC). Nonetheless, Kenai Hydro (HEA) recently submitted a grant request to the Alaska Energy Authority for construction money. That strikes some HEA members as proof that management plans to proceed with the project regardless of what the study data indicates. General Manager Brad Janorschke claims that nothing could be farther from the truth. In a September newspaper opinion piece he stated that, "If the studies show that there would be a serious impact to the overall health of the Kenai River watershed, HEA will not proceed with the project." Critics of the project find that difficult to believe, given the request to AEA for construction funds. And many feel the FERC permitting process is more about enabling projects than actually evaluating them on their merits.

While HEA members seem to want our coop to embrace renewable technology it's probably not just for the bragging rights. Most likely they want to see renewable projects make economic, social, and environmental sense. If built, will the Grant Lake project ultimately prove harmful to the Kenai River watershed ecosystem and the economy of the surrounding area? Or can the project be designed, built, and operated so it doesn't cause undue harm? And either way, will the ultimate cost per kWh be competitive with other options? If you don't know enough about this project to have an opinion why not do a little reading? Then let your HEA Board know how you feel.

Get information and the HEA management perspective.
http://www.kenaihydro.com/index.php or contact Mike Salzetti at 283-2375.

Learn about the Federal Energy Regulatory Commission
(it's mission, and the licensing process)
http://www.ferc.gov/

Get more information and the skeptics' perspective.
Resurrection Bay Conservation Alliance
http://www.rbca-alaska.org/page8/page24/page24.html

Alaska Center For the Environment
http://akcenter.org/forests-and-wildlife/chugach/kenai-hydro

Hydropower Reform Coalition
http://www.hydroreform.org/

Dec. 7 Wind Power in AK Forum

2011-12-06T10:03:00.001-09:00

Fire Island, Kodiak & More

6-8pm * Anchorage Museum * 625 C Street * FREE

Live Podcast: www1.gotomeeting.com/register/287610025

Presenters:

Darron Scott, CEO of Kodiak Electric Association

Suzanne Gibson, CIRI Sr. Energy Development Director

Rich Stromberg, Alaska Energy Authority Wind Program Manager

More info: www.REalaska.org, 907.929.7770

HEA Members Forum Update

2011-08-18T14:38:00.001-08:00

THERE WILL BE A SPECIAL MEETING OF THE HEA BOARD OF DIRECTORS

THURSDAY, AUGUST 25, 2011 at 10:00 a.m.

Notice is hereby given that a Special Meeting of the Board of Directors of Homer Electric Association, Inc., pursuant to Article V, Sections 2, 3, and 6 of the Homer Electric bylaws, will be held at 10:00 a.m. on Thursday, August 25, 2011 at 280 Airport Way, Kenai, Alaska. The purpose of the meeting is to consider authorizing the General Manager to proceed in the application process to seek grant funding for the Kenai Hydro, LLC Hydroelectric Dam Project.

Video conferencing will be available in the Homer Offices at 3977 Lake Street, 907-235-8551.

Information and perspective on this project is available on these websites:

http://www.kenaihydro.com/index.php

http://akcenter.org/forests-and-wildlife/chugach/kenai-hydro

Regular July HEA/AEEC Meetings

2011-07-11T10:05:00.000-08:00

Meetings take place this week at the Homer Offices, 3977 Lake Street. Video conferencing is available in the Kenai Offices at 280 Airport Way, 907-283-5831.

Tuesday, July 12, 2011

10:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Draft agendas are available on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

. There are sometimes last minute changes in scheduling.

Excerpts from the June HEA Manager's Report

Regulatory Commission of Alaska (RCA) Docket regarding the HEA/AEEC relationship – The RCA docket that questions the relationship between HEA and AEEC is still open. The deadline of May 27 was extended until June 27, 2011. It appears that questions posed by the petitioners are related to governance and legal matters. [This matter is the subject of a formal compliant filed by seven HEA members concerned about possible inappropriate management practices.]

Renewables
Tidal Power – HEA staff met with ORPC [Ocean Renewable Power Company] representatives on June 1 to discuss
how to continue to develop a tidal power pilot project in Cook Inlet. The discussion went well as the parties look to conduct research, develop project plans, indentify grid interconnection, update project costs, and establish a legislative strategy prior to the end of this year.

Watana [proposed Susitna Dam] – Alaska Energy Authority and their engineering contractor met with some of the Railbelt engineers June 8 to discuss the proposed project. Most of the discussion centered on establishing the appropriate size of project for the Railbelt. The 600 MW size identified in the Railbelt Integrated Resource Plan appears to be acceptable amongst the utilities.

Fire Island – Based on a June 10 press release, Chugach Electric Association (CEA) and Cook Inlet region, Inc. (CIRI) have come to terms on wind energy output from the Fire Island Project. CEA has agreed to pay CIRI a net cost of $97.00 per MWh for 25 years beginning December 31, 2012. The proposed power purchase agreement will require Regulatory Commission of Alaska (RCA) approval.

Bernice Lake Generation –Chugach Electric Association’s (CEA) board of directors has approved the sale of the Bernice Lake Generation Facility located in Nikiski to AEEC. At this time negotiation of final documents is substantially complete, but the documents have not been executed. Although HEA/AEEC and CEA have agreed to the sale, the final sales transaction is contingent on several things including approval from the Regulatory Commission of Alaska (RCA). Assuming the asset sale takes place, the roughly 67 MW facility will be used to supplement the peaking and backup generation planned for Soldotna. The Bernice Lake generation does not replace the current LM6000 [single cycle gas turbine generator] scheduled for the Soldotna site. [Hopefully this will eliminate future purchase of a second turbine for Soldotna, however.]

HEAMF clarification notes and comment were added in [brackets]. HEA Manager's reports can be downloaded from the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/ManagersReports/tabid/222/Default.aspx.

Election and Meeting Reminder

2011-05-02T15:07:00.000-08:00

A Final Reminder!

2011 Annual HEA Meeting of the Members

Thursday, May 5 at Soldotna High School
Registration 4:30 PM - 6:30 PM, Membership Meeting Starts 6:00 PM

Don't Forget to Vote
District 1: incumbent David Thomas of Kenai
District 2: Dick Waisanen of Soldotna
District 3: Malcolm Gaylord of Homer

HEA must receive mail-in ballots by 4:00 PM, May 4. Members can also vote at the Annual Meeting but need to register there first.

Where is Soldotna High?
425 W. Marydale Ave. Soldotna, AK 99669
907-262-7411

Check out the Google map:
http://high-schools.com/schools/8791/soldotna-high-school.html

Turn west on Maydale Dr. from N. Binkley St. or the Kenai Spur Highway. Continue west to Sohi Ln. and you should be able to see the school. If you come to Ridgewood Dr. or River Watch Dr. you've gone to far.

An Invitation from HEA Members Forum

2011-04-19T16:04:00.000-08:00

Please join us for

Human Rights vs. CORPORATE PRIVILEGE
A discussion of Corporate Personhood and the end of American Democracy

Tuesday April 26
6:00-8:00pm
355 West Pioneer Avenue, Homer Alaska

The underlying problem is that corporations, in addition to having all of the rights of people, have rights people don't have - such as incredibly favorable tax laws and limited liability. The combination of these rights has made the corporations more powerful than We The People.

Gershon Cohen
Featured Speaker and Co- founder of Earth Island Institute’s Ultimate Civics Project

For more information contact: Rob Rosenfeld, (907)388-2683 or (907)235-7528, robrosey@gmail.com

HEA Members Forum Update

2011-04-19T16:02:00.001-08:00

2011 Annual HEA Meeting of the Members
Thursday, May 5 at Soldotna High School
Registration 4:30 PM - 6:30 PM, Membership Meeting Starts 6:00 PM

Other May HEA/AEEC Meetings will take place at the
Homer Offices, 3977 Lake Street.
Video conferencing is available in the Kenai Offices at 280 Airport Way.

Tuesday, May 10, 2011

10:00 AM -- Operations and Special Projects

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Agendas are usually available the day before meetings. There are sometimes last minute changes in the meeting schedule. Check for updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections -- Don't Forget to Vote

District 1: incumbent David Thomas of Kenai

District 2: Dick Waisanen of Soldotna
District 3: Malcolm Gaylord of Homer

HEA must receive mail-in ballots by 4:00 PM, May 4. Members may vote in person at the May 5 Annual Meeting at the Soldotna High School but will need to register there. You can only vote for a candidate in the district where you live.

Rate Decoupling and Energy Efficiency and Conservation Programs Technical Conference
April 19 &20, 9:00 a.m. to 4:00 p.m.
East Hearing Room of the Regulatory Commission of Alaska
701 West Eighth Avenue, Suite 300, Anchorage, Alaska 99501

This technical conference will feature a presentation on the topics of rate decoupling and energy efficiency and conservation programs by Richard Sedano, a Principal and Director of The Regulatory Assistance Project. The presentation on rate decoupling is tentatively scheduled for Tuesday, April 19th, with the presentation on energy efficiency and conservation programs to follow on Wednesday, April 20th. Any entity interested in reviewing transcripts of this technical conference may consult the Commission’s website at http://rca.alaska.gov and type in Docket “I-11-004” in the Find a Matter search box.

Don't Forget the 2011 Business of Clean Energy in Alaska Conference
April 28 & 29 at the Dena'ina Center in Anchorage
For more information, go to www.BCEAconference.com, or contact Renewable Energy Alaska Project (REAP) at info@realaska.org or 907-929-7770.

Regulatory Commission of Alaska Adopts Revised Net Metering Interconnection Rules
Draft rules from January 2011 (RCA Docket R-09-02) were slightly modified to resolve potential conflicts between utility and customer over an "external disconnect switch." In general, these regulations appear to be reasonable and should not impose unnecessary expense to HEA members who wish to participate in net metering. The regulations go to the Department of Law for review but should be finalized without major change by May 5, 2011.

Regulatory Commission of Alaska Reauthorized -- But Only for 2 Years
The Alaska Senate passed HB 24 on April 17, 2011 by unanimous vote, extending the RCA through June 2013. The Senate modified language in HB 24 to require the RCA to provide the Legislature with a proposal to "reduce the statutory timeline for tariff filings that change a utility's revenue requirement or rate design." This must be done by January 17, 2012. Clearly this is a result of utility lobbying to make it easier and faster to increase your rates.

Independent Light $$
A Groundbreaking Ceremony is slated for the Nikiski Combined Cycle Conversion (NCCC) Project April 28, 2011, at 10:00 a.m. At the ceremony, HEA will announce the award of the project contractor and will offer Nikiski Plant tours for anyone interested. If you are interested in attending but don't receive an invitation, contact Joe Gallagher at jgallagher@homerelectric.com.

Cook Inlet Tidal Power
Ocean Renewable Power Company (ORPC) and Homer Electric Association (HEA) announced plans to collaborate on a hydrokinetic power pilot project near the East Forelands. ORPC has been developing unique tidal power systems and projects since 2004. ORPC has a preliminary permit from the Federal Energy Regulatory Commission (FERC) that allows three years to carry out studies and then submit a license application for an actual pilot project of up to 5 megawatts (HEA’s average load is currently 60 megawatts). It's possible that one or more 150-kilowatt generators could be deployed for testing in the inlet as early as 2013. HEA and ORPC are attempting to draft a Letter of Intent which defines the project scope and responsibilities.

HEA Rate Plan
The RCA has granted Land’s End Acquisition Corporation (LEAC) request to intervene in hearings on HEA's plan to restructure electric rates. Remember, the biggest sticking point is the proposed "minimum energy charge" which seems to be in conflict with Alaska Administrative Code. The RCA requested that previous hearing dates be changed to accommodate the Commission’s schedule. Intervening parties, the Attorney General’s Office (RAPA), and HEA have presented a mutually agreed upon revised hearing schedule for RCA consideration. The proposed final hearing would be during the week of September 26th. HEA is waiting for RAPA to reply to its legal brief on the proposed minimum energy charge.

"Watt’s New" -- From HEA
This is a new email public relations effort to deliver up-to-date news to members. It will encourage members to visit the HEA website where more detailed information can be found. The first “Watt’s New” blitz was sent to 7,900 members on April 1 and will be disseminated at least once a month -- more frequently depending on HEA events. It seems like a good idea. Contact Sandra at sghromley@homerelectric.com or 907-283-5831 if you're interested in signing on.

HEAMF Election Update

2011-04-01T15:50:00.001-08:00

HEA Board of Directors Election Ballots will be mailed to members on Friday. Your vte is vitally important. We believe these superior candidates deserve your support:

David Thomas
(District 1: Kenai, Nikiski, parts of Soldotna area)

Dick Waisanen
(District 2: Soldotna, Sterling, part of Kasilof)

Malcolm Gaylord
(District 3: part of Kasilof and south to Kachemak Bay area)

For too many years our electric coop Board was pretty much a closed club simply because few HEA members took much interest. Most didn’t even bother to vote on who would represent them. Consequently, members were provided little information and management did pretty much what it wanted, decisions rubber stamped by the Board. We believe that cost us all a lot of money in the form of higher rates and questionable management practices and almost entangled us in the failed Healy 2 coal plant.

Things have improved since then. The Healy 2 debacle opened a lot of eyes and encouraged many HEA members to speak out for more open governance and better accountability. Over the last three or four years almost all new people have come to serve on the HEA Board of Directors. Communication with the membership is getting better.

But there’s still room for improvement. After Healy 2, the largest change in HEA history was made without significant input from the membership. The Independent Light project committed us to converting our Distribution Cooperative into a Generation and Transmission Cooperative, $180 million in new debt, and continuing dependence on natural gas. Its merits or flaws aside, such a huge change should have been proposed and explained to HEA members in advance and approved or rejected by their vote.

Let’s keep moving toward more open governance and better member involvement by electing Directors truly dedicated to member control -- people capable of independent thinking who will not simply follow management’s lead.

Vote for

David Thomas (District 1) Dick Waisanen (District 2) Malcolm Gaylord (District 3)

HEA Members Forum Update

2011-03-16T10:25:00.004-08:00

Alaska Energy Authority Susitna Dam Public Meeting
Tuesday March 15, 2011
Challenger Learning Center, 9711 Kenai Spur Highway
Open house at 5:30 PM Presentation at 6:00 PM

The Parnell Administration has made the Susitna project a priority and the House Energy Committee already moved HB 103 in support of it. If passed into law, HB 103 would reauthorize the AEA to pursue another large hydroelectric project, much as was done with Bradley Lake. A Susitna Dam project might help meet railbelt energy needs but there are legitimate concerns about its potential to harm fisheries and disrupt both aquatic and terrestrial habitat. These concerns need to be carefully evaluated and addressed before the project is authorized. This is a chance to learn more about the project and associated issues. For two views of Susitna got to http://www.akenergyauthority.org/SusitnaReports.html and
http://akcenter.org/climate-energy/susitna-hydroelectric-project.

Cook Inlet Tidal Power
Tuesday March 22, 2011
10:00 AM-11:30 AM, Cook Inlet Aquaculture Building, 40610 Kalifornsky Beach Road, Kenai
12 Noon - 4:00 PM Homer Electric Association Board Room, 280 Airport Way, Kenai
(you can also via video conference from Homer HEA offices at 3977 Lake Street)

Ocean Renewable Power Co. has applied to the Federal Energy Regulatory Commission for a license to pilot test a tidal power system in Cook Inlet. Learn more about this and the potential of tidal power to offset our reliance on natural gas to generate electricity.

April HEA/AEEC Meetings
These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, April 5, 2011 (tentative)

2:00 PM -- Operations and Special Projects

Tuesday, April 12, 2011

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Agendas are usually available the day before meetings. There are sometimes last minute changes in the meeting schedule. Check for updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections
Six candidates will be on the ballot for the Homer Electric Association Board of Directors 2011 election.
District 1: incumbent David Thomas of Kenai and Kelly Bookey of Kenai.
District 2: incumbent Tim Evans of Soldotna and Dick Waisanen of Soldotna.
District 3: incumbent Mike Wiley of Clam Gulch and Malcolm Gaylord of Homer.

Ballots will be mailed to you on April 1. HEA must receive your completed mail-in ballot by May 4, or you may vote at the May 5 Annual Meeting at the Soldotna High School. You can only vote for a candidate in the district where you live. District boundaries were changed recently -- maps are available on-line at www.homerelectric.com/Board of Directors & Elections/District Map.

Electric Rates Up 21%
HEA has requested Regulatory Commission of Alaska approval of a 3.3 cent per kWh increase in the Wholesale Power Cost Rate Adjustment (WPCRA) as of April 1. HEA’s "blended rate" will jump from 15.5 cents per kWh to 18.8 cents per kWh, a significant increase for all ratepayers. The blended rate is a combination of HEA's energy charge and the WPCRA (what HEA has to pay Chugach Electric Association for energy). According to HEA the average customer’s monthly bill (630 kWh) will increase by $20.84. That's about $250 per year! This is another clear message that we need to make a serious effort to reduce our dependency on natural gas by focusing on boosting energy efficiency/conservation and increasing our use of renewable energy technology.

Independent Light $$
How will Independent Light affect electric rates? HEA members are not yet paying for the cost of upgrading the Nikiski generation plant and substation, or adding a new gas generation plant at Soldotna. We have taken on $180 million in new debt to pay for these upgrades. When these facilities come on line electric rates will be increased in order to start paying down the debt. Prior to the present 3.3 cent per kWh rate increase HEA Director Brad Janorschke had estimated that members could then see rates in the neighborhood of 22 to 24 cents per kWh. What can we expect now?

Work at Independent Light project sites is progressing as planned. Several resolutions authorizing various purchases and contracts were approved at the March 8 HEA/AEEC meetings. See the Manager's Report and meeting agendas on the HEA website for details.

Line Extension Policy Under Review
HEA Directors heard a report from staff recommending changes in the present line extension policy. The upshot is that HEA has been losing a significant amount of money each year. When customers connect to new construction or to a subdivision they typically pay about 40% of the cost. HEA absorbs the other 60%. There are many factors involved and situations vary a lot so there isn't room here to discuss everything. From what staff had to say, this arrangement would not be a problem if new extensions all terminated in an active meter. Unfortunately in a growing number of cases, especially subdivision "backbones," no power is being used following line extension. Consequently, HEA does not recover the 60% capital investment. Staff suggests making several changes to address this problem: set a maximum amount HEA can pay on any line extension to new construction; establish a minimum $500 customer contribution toward the line extension; develop incentives for new continuous use services; eliminate incentives for line extensions to empty lots and subdivision "backbones;" shift all line extension clearing and surveying costs to the customer. The HEA Board deferred action pending further study but will probably take it up again at the April meetings.

HEA/AEEC Audit Report
The 2010 Audit Report was presented at the March 8 meetings and Resolution 45.2011.11 accepting it was passed unanimously. Auditors had high praise for the coop's financial staff and their procedures, finding no significant flaws. When asked how HEA members could obtain a copy of the report, HEA Board President Debbie Debnam said she would make sure it was posted on the HEA website.

Reply to Net Metering Interconnection Rules Comments by March 16
Read comments that were submitted and all related documents at http://rca.alaska.gov/RCAWeb/Dockets/DocketDetails.aspx?id=5934c996-b30f-4563-b7e9-956f240fd746. Any replies to these comments you might have can still be submitted at this RCA website address through Wednesday, March 16.

Support the Regulatory Commission of Alaska (RCA)
Wednesday March 16, 2011 House Labor and Commerce Committee Hearing at 3:15 PM
The hearing is scheduled for teleconference -- check your Legislative Information Office:
Homer LIO at 345 West Sterling Highway, 235-7878
Kenai LIO at 145 Main St Lp, Ste 217, 283-2030

The RCA looks out for utility ratepayer interests but is scheduled to terminate on June 30, 2011 unless the present Alaska Legislature votes to keep it going. Attend the hearing or contact Legislators in support of HB 24 (Extend Regulatory Commission of Alaska Sunset).

Labor & Commerce Committee
Chairman: Representative_Kurt_Olson(email @)legis.state.ak.us
Vice-Chair: Representative_Craig_Johnson(email @)legis.state.ak.us

HEA Member Forum Update

2011-02-21T16:24:00.007-09:00

March HEA/AEEC Meetings
These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, March 1, 2011 (tentative)
2:00 PM -- Operations and Special Projects

Tuesday, March 8, 2011
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Agendas are usually available the day before meetings. There are sometimes last minute changes in the meeting schedule. Check for updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections
How satisfied you are with your HEA district’s HEA Director? Do you want to him to serve another 3 year term or would you prefer to elect someone new? Maybe you would even like to run yourself. Members interested in being on the ballot must fill out a candidacy packet and gather at least 15 signatures from valid Homer Electric members living in his or her district. Packets are available at HEA offices in Kenai and Homer and on-line at www.homerelectric.com. The deadline to submit them is 5 PM on March 4, 2011.

Remember, Directors are elected by district -- you can only run or vote for a candidate in the district where you live. This year incumbents David Thomas (District 1, Kenai-Nikiski), Tim Evans (District 2, Soldotna –Sterling - Kasilof), and Mike Wiley (District 3, Ninilchik-Homer-Seldovia) must run to stay on the HEA Board. District boundaries were changed recently -- if you aren't sure of your district, maps are available on-line at www.homerelectric.com/Board of Directors & Elections/District Map.

Ballots will be mailed to you on April 1, 2011. They can be returned by mail or you can vote in person at the HEA annual meeting on May 5 at the Soldotna High School. There will be no ballot propositions included on this year's ballot.

Comment on Net Metering Interconnection Rules by March 11
Since March 2009 the Regulatory Commission of Alaska (RCA) has been considering potential rules governing interconnection of solar arrays, wind turbines and other customer owned generation technology to electric utility systems (Docket R-09-2). Your final opportunity for input has been scheduled and the deadline for comment is 4:00 PM on March 11, 2011. Comments may be submitted via the Internet or by mail. Following a number of technical conferences and public comment periods RCA staff recently produced draft regulations for possible adoption (attached). Unfortunately, utilities in other states have sometimes made such rules unnecessarily burdensome as a way to discourage net metering. While the RCA staff proposal doesn't seem aimed at doing so, some people feel its insurance and disconnect location requirements might impose costs that would render some net metering installations unaffordable. You can find more information and follow this issue by visiting http://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx at the RCA website.

Support the Regulatory Commission of Alaska (RCA)
The RCA is the main agency looking out for utility ratepayers interests but it's scheduled to terminate on June 30, 2011 unless the present Alaska Legislature votes to keep it going. In it's October 16, 2010 audit report the Legislative Budget and Audit Committee found that the RCA does indeed fulfill an important public need and so recommends that it be extended through June 30, 2019. Go to http://www.legaudit.state.ak.us/pages/audits/2011/pdf/20067rpt.pdf for copy of the report. HB 24 (Extend Regulatory Commission of Alaska Sunset) has been introduced in the State House and referred to Labor and Commerce & Finance Committees. It wouldn't hurt to contact some key Legislators and put in a good word for passage of HB 24 to extend the RCA.

Finance Committee
Co-Chairmen: Representative_Bill_Stoltze ( email at @ ) legis.state.ak.us
Co-Chairmen: Representative_Bill_Thomas ( email at @ ) legis.state.ak.us
Vice-Chair: Representative_Anna_Fairclough ( email at @ ) legis.state.ak.us

Labor & Commerce Committee
Chairman: Representative_Kurt_Olson ( email at @ ) legis.state.ak.us
Vice-Chair: Representative_Craig_Johnson ( email at @ ) legis.state.ak.us
Member: Representative_Paul_Seaton ( email at @ ) legis.state.ak.us

HEA/AEEC Proposed Rate Plan
The RCA has scheduled a hearing on HEA's proposed rate plan for Oct. 24 at 9 a.m. in Anchorage. There will be no interim rate change, as originally requested by HEA. You will see the change in your bill when and if the plan is approved by the RCA. Land's End Acquisition Corporation filed a request to intervene (formally participate) in the process and HEA filed a motion opposing that. The RCA has not decided whether or not to approve Land's End's request. Land's End's John Faulkner contends HEA hasn't adequately explained the need for or specific details of the proposed rate changes. If you want more detail, this and related documents are available on the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0.

Independent Light $$
There have been no significant developments since the January 23 HEAMF update. Work at all sites is progressing more or less as planned. Alaska Energy & Electric Cooperative Resolutions 01.2011.05 (Procurement of Emergency Diesel Generator), 01.2011.06 (Procurement of Water Treatment Equipment), and 01.2011.07 (Wholesale Power and Resource Agreement Amendment were approved at the February 8 HEA/AEEC meetings.

Alaska Railbelt Cooperative Transmission and Energy Cooperative (ARCTEC)
This newly formed collaboration between HEA, Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association, and the City of Seward has developed a draft $91,500,000 Capital Budget Request for state funding.

Bradley Lake/Battle Creek Diversion (increase power output) $20,000,000
Mount Spurr Geothermal Commercial Well Test $6,000,000
Seward Power Plant Integration $4,000,000
Assorted Transmission Line Upgrades and Repairs $56,500,000
Railbelt Integration of Renewables Scoping Study $5,000,000

According the HEA General Manager Brad Janorschke, ARCTEC's number one priority is the Susitna hydroelectric project, number two being ORMAT's Mt. Spurr geothermal project.

What About Smaller Renewable Energy Projects?
At the February 8 HEA/AEEC meetings Director Bill Fry Questioned General Manager Janorschke about the apparent slow pace of the cooperative's embrace of small scale renewable energy projects. Directors Jim Levine and Tim Evans added their voices to Fry's question, while Director Mike Wiley expressed his own desire to see more focus on energy efficiency and conservation. Janorschke reviewed the continuing effort to move forward with the Grant Lake small hydroelectric project through expanded studies and design modifications, in part based upon concerns raised by opponents of the the plan. For example, recent design modifications could result in reduction of dam height and minimization of lake level fluctuations to eleven feet. He also told Directors that HEA remains open to participation in potential tidal power pilot projects. On the other hand, it was clear from this discussion that Janorschke continues to have a negative view of wind projects such as Fire Island and Kenai Winds. Director Evans asked if ARCTEC might help with smaller projects but Janorschke and Director Debbie Debnam didn't think it was likely. In the end, it was decided to add the issue of renewable energy and energy efficiency/conservation to the agenda for the upcoming strategic planning session this spring.

2011 Financial Audit
HEA/AEEC will be going through auditing this month. Results will be reported to the Board in March. Contact Finance Director Carrie Buckley at cbuckley ( email at @ ) homerelectric.com for more information on this process.

HEA Members Forum Update

2011-01-24T17:41:00.007-09:00

February HEA/AEEC Meetings

These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, February 1, 2011 (tentative)

2:00 PM -- Operations and Special Projects

Tuesday, February 8, 2011

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Check for meeting calendar updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

2011 HEA Board Elections
The HEA Board election season is coming. The application period for candidates usually starts in February and runs through the first week in March (the 5th, last year). Ballots go out to members about a week after that and can be returned through early May. This year David Thomas (District 1), Tim Evans (District 2), and Mike Wiley (District 3) must run if they want to stay on the HEA Board. In preparation HEA Resolutions 45.2011.02 (Appointment of Election Committee) and 45.2011.03 (Voting Eligibility Record Date) were passed at the January 18 HEA/AEEC meetings. There was some discussion of the the need to prepare ballot Initiatives for HEA members to vote on. Apparently certain bylaws changes sought by the Board must be approved by the general HEA membership. further discussion was moved to the February meetings -- more detail on this will follow then.

Now is the time for you to be thinking about how satisfied you are with your district’s HEA Director. Would you like to see him continue on the Board for another 3 year term or would you prefer to elect someone new? Maybe you would even like to run yourself.

HEA/AEEC Proposed Rate Plan -- HEA reply
Since the RCA suspended the HEA/AEEC request for approval of the plan (Order U-10-97, Order No. 1), the cooperative has submitted a 19 page brief in defense of the minimum energy charge. In part it argues that if, as stated by the RCA suspension order, the minimum energy charge is in conflict with Alaska Administrative Code 3 AAC 48.805 the RCA should waive requirements that the new rate plan comply. If you want more detail, this and related documents are available on the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0.

Independent Light $$
There have been no significant developments since our January 6 HEAMF update. Alaska Energy & Electric Cooperative Resolution 01.2011.01 (Approval of Construction Work Plan) was passed at the January 18 HEA/AEEC meetings. Most of the plan's $200 million expense is for the Independent Light project ($180 million). The remaining $10 million is primarily for work on Sterling and Bernice Lake substations. AEEC Resolutions 01.2011.02 and 01.2011.03 amending HEA/AEEC loans and agreements with the National Rural Utilities Cooperative were passed. These are technical changes needed to accommodate a drop in “margins” expected during construction of Independent Light facilities (margin is the difference between an electric cooperative’s costs and revenues).

New Regional Generation and Transmission Coop
HEA/AEEC joined Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association, and the City of Seward to form the Alaska Railbelt Cooperative Transmission and Energy Cooperative (ARCTEC). Anchorage Municipal Light and Power declined to participate. The Members Forum has long supported greater cooperation between railbelt utilities. Articles of incorporation were filed with the Division of Corporations, business and Professional Licensing (http://www.commerce.state.ak.us/occ/) on December 23, 2010. ARCTEC is an outgrowth of the Greater Railbelt Energy and Transmission Corporation (GRETC) legislation which failed last year. The objective is to have a mechanism to cooperatively pursue projects that are just too large and costly for a single utility. According to HEA manager Brad Janorschke, there will be a strong emphasis on developing large scale renewable energy sources such as geothermal, hydroelectric, and tidal projects. ARCTEC bylaws are presently being developed. HEA Resolution 45.2011.01 (Appointment of ARCTEC Representatives -- Debbie Debnam and Brad Janorschke) was passed at the January 18 HEA/AEEC meetings.

Grant Lake Small Hydro Project
According to General Manager Janorschke the Alaska Energy Authority has approved $1.1 million of a $1.5 million HEA/AEEC grant request for the Grant lake project. He cautioned the Board that this must also be approved by the Legislature, so it’s not a “done deal” yet. This money would help offset ongoing field studies and permit application efforts. The project continues to be very controversial among Moose Pass residents and some HEA members.

Cook Inlet Tidal Power Pilot Project
According to HEA General Manager Brad Janorschke, a hydrokinetic energy company contacted HEA about possible partnership in some kind of pilot project. This could be some place near the Forelands. The company also appears interested in tidal prospects around Kachemak Bay. Janorschke says he was told they would be in touch again soon with some kind of specific plan.

AKPIRG Utility Work
The Alaska Public Interest Research Group (AKPIRG) is taking an interest in utility consumer affairs and has recently hired a young woman named Kathleen Cogan to work with railbelt ratepayers. A main main part of her work will involve helping utility ratepayers from Golden Valley Electric Association to Homer Electric Association elect or reelect good people to the utility Boards. Kathleen works out of the Anchorage AKPIRG office but will travel to other railbelt communities on a regular basis. She will visit Homer this week where she can be reached at the Cook Inetkeeper offices.

Better Record Keeping ?
At the January 18 HEA/AEEC meetings Mike Wiley continued to press for more detailed meeting minutes. David Thomas expressed concern that putting too much detail into the minutes could be counterproductive. He especially doesn’t think various Directors’ comments prior to voting on resolutions should be included. While many Directors express resistance to putting specifics in the minutes, Jim Levine agreed with Mike Wiley and moved that, at the very least, topics of comments made by HEA members attending meetings should be noted in minutes. The motion was passed.

Fewer Secrets, At Least
HEA resolution 45.2011.04 (Approval of the 2011 Equity Management Plan) was approved at the January 18 HEA/AEEC meetings. HEA/AEEC filed a petition with the Regulatory Commission of Alaska in November to classify it’s 2010 Equity Management Plan confidential. In December the RCA denied that petition (U-10-85, Order No. 2). According to General Manager Janorschke the Commission will now probably require a copy of the EMP be provided for interested members of the public with only legitimately sensitive information redacted. Hopefully this will also apply to the 2011 EMP.

HEA Members Forum Update

2011-01-13T12:32:00.003-09:00

January HEA/AEEC Meetings
These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street.

Tuesday, January 18, 2011 (tentative)
10:00 AM -- Operations and Special Projects

1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Check for meeting calendar updates and draft agendas on the HEA website at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.

No More Secrets for Now
Last November HEA/AEEC filed a petition with the Regulatory Commission of Alaska to classify it’s 2010 Equity Management Plan as confidential. This would keep a lot of information about how the coop conducts business out of the hands of HEA members -- or anyone else for that matter. Several HEA members followed up with a request for a stay pending resolution of a previously filed informal complaint. On December 17, 2010 the RCA denied the HEA/AEEC petition for confidentiality (U-10-85, Order No. 2). The coop may reapply if willing to supply meaningful justification for such blanket confidentiality.

HEA/AEEC Rate Plan on Hold
The proposed new rate design was filed with the RCA on November 9, 2010. Under the plan, the present $11.00 monthly residential customer charge would increase to $15.00 and a minimum monthly 150 kWh energy charge would be added. After receiving 22 public comments, all but one opposing the plan, the RCA suspended the HEA/AEEC request for approval (Order U-10-97, Order No. 1). The December 17, 2010 stay requires HEA/AEEC to submit a brief addressing how the proposed “minimum energy charge” complies with relevant Alaska Administrative Code. It also schedules further investigation, invites petitions to intervene from interested parties and participation by the Attorney General, and appoints an administrative law judge to conduct the docket. The deadline for petitions to intervene is 4 p.m., January 18, 2011. A prehearing scheduling conference for the matter will be held in the Commission’s East Hearing Room at 9 a.m. on February 4, 2011. Go to the RCA website at http://rca.alaska.gov/RCAWeb/Entity/EntityDetails.aspx?id=883fd287-5437-45c3-ac93-6611db2d87b0 for documents relating to HEA/AEEC.

WPCRA vs. COPA -- Say What?
Given the RCA stay of HEA/AEEC’s proposed rate plan this might be moot but here goes anyway. One of the complaints against the rate plan was a move to replace the Wholesale Power Cost Rate Adjustment (WPCRA) with a Cost of Power Adjustment (COPA). Remember, the WPCRA is that fluctuating cost HEA has to pay for energy, mostly reflecting the price of natural gas. It’s passed through to you. According to a December 6, 2010 letter from RCA staff, unlike the WPCRA, the COPA would allow HEA/AEEC to change rates associated with fuel and purchased power absent the normal RCA rate proceeding. It looks like going to the COPA would result in an instant rate increase as well. When the new rate plan was presented to HEA members the WPCRA was less than one cent (.00715) per kWh. The figure given for the COPA under the new plan was 2.862 cents per kWh -- much higher. What extra things does it include? While this information has been requested many times, there has as yet been no side-by-side comparison of these two computations. HEA’s Joe Gallagher is trying to get this for us but has so far been unable to deliver.

Independent Light $$
Phase One of the Independent Light project, upgrade of the Nikiski plant, is proceeding as planned according to the December 14, 2010 update from the HEA/AEEC engineering staff. At that time design work was 90 percent complete and construction bids were expected to go out last month. A contract should be awarded in February 2011, work should be completed by 2012, and the new steam turbine should be in commercial operation by the 4th quarter of that year. This upgrade is expected to improve efficiency of the plant by 40 percent without burning any extra fuel, allowing it to generate most of the baseload requirements for the HEA/AEEC service area.

Phase Two of the project, addition of new gas generation facilities at Soldotna to supply “peaking” and reserve energy, is moving forward as well. Additional property has been purchased at the old “Soldotna 1” site, Stanley Consultants was awarded a contract for up to $3,300,000 for facility design, and purchase of one gas turbine generator for approximately $22,700,000 was authorized. HEA/AEEC Directors declined to authorize purchase of two units as originally envisioned by management. Discussion of the enabling resolution (10-34) indicated that some Directors have misgivings about investing so much money in new natural gas hardware and would like to investigate other renewable energy sources. This decision will be revisited in the near future.

Cook Inlet Natural Gas Storage Alaska (CINGSA)
With diminishing Cook Inlet natural gas supplies, keeping the heat and lights on during winter cold snaps is becoming iffy. This is a growing concern for HEA/AEEC, especially with at least one new gas turbine slated for Soldotna. As a partial solution, CINGSA proposes an underground storage facility in Kenai to hold natural gas during times of low demand and then withdraw the gas during peak demand (winter). At the December 14, 2010 HEA/AEEC meetings AEEC Resolution 10-31 was approved authorizing HEA General Manager Janorschke to sign a contract committing HEA/AEEC as a customer of the CINGSA project. Other CINGSA customers include Enstar, Municipal Light and Power of Anchorage, and Chugach Electric Association. If the project is successfully developed HEA/AEEC commits to a 20-year contract. The coop would pay monthly fees for its share of storage capacity and the amounts of gas it injects or withdraws. It will also need to supply (purchase) gas and pay for the energy used to inject or withdraw it. There will be added charges if amounts of gas stored, injected, and withdrawn exceed that allowed by the contract. While speculative, estimates of cost to HEA/AEEC range between $900,000 and $1,988,000 per year.

AEEC Board Meeting Minutes and Voting Record
A small concession was won at the December 14, 2010 HEA/AEEC meetings. In response to a HEAMF request, Directors approved a motion to start posting Alaska Electric and Energy Cooperative Board meeting minutes on the HEA website as is already done for HEA Board meetings. This is important because the minutes contain a record of how Directors vote on various resolutions. It’s one way for HEA members to evaluate Director performance and make good decisions at annual Board elections. But more needs to be done.

Since inception in 2002 the AEEC has been more or less invisible to HEA members. There is little information provided on the HEA website -- only meeting notices and agendas. Considering that the present conversion from a distribution utility to a generation &transmission utility is likely the largest, most costly event in our coop’s history and is being accomplished primarily through the AEEC, this seems like a significant omission. For some time we have requested that HEA fully disclose and explain to members the HEA/AEEC relationship. This should include posting of AEEC organizational documents such as bylaws, Board policies, Board member information, and other pertinent materials on the HEA website -- or on a new AEEC site. HEA members are not also AEEC members. AEEC has no debt limit. Consequently, it should be made clear how HEA members can have a voice in AEEC affairs, what measures are in place to prevent unlimited borrowing through the AEEC, and what checks and balances preclude bad decisions by those who conduct AEEC business.

HEA Members Forum Update

2010-11-23T08:45:00.018-09:00

Last Chance to Comment on the New HEA Rate Plan
The new HEA rate plan was filed with the Regulatory Commission of Alaska on November 2, 2010. It is undergoing a 45-day review by RCA staff. At the end if this period (around December 17) staff will present recommendations to Commissioners and a docket will be open for further investigation. This will likely include a 20-day public review process. Watch for notice of this if you have concerns or suggestions about the proposed rate plan that you would like to bring before the RCA.

Weigh in on New Energy Efficiency Standards
The RCA is considering adoption of new amendments to the Public Utilities Regulatory Policies Act which are intended to encourage energy efficiency, among other things. As might be expected, the RCA staff suggests against adopting the federal standards but does propose some modest increase in state regulatory support for energy efficiency. You have until December 9 to submit comments. See the attached summary for more information and go to the source at http://rca.alaska.gov/RCAWeb/Dockets/DocketDetails.aspx?id=ccbcfb40-5010-41c7-af3d-d2e42b57241d.

Independent Light -- Not the Brightest Bulb
Through it’s shadow corporation, the Alaska Electric and Energy Cooperative, Inc., HEA approved spending another $4.5 million on equipment and design engineering services for the Nikiski facility and old Soldotna 1 site. Most of this, $3.3 million, went to the latter. For the most part people see the logic in spending money to improve efficiency of the Nikiski plant. But to many, in a situation where the natural gas supply is questionable, spending millions on new stand-by gas turbines for Soldotna seems like a bad choice. All the more so, given that Anchorage Municipal Light & Power offered a power purchase agreement that one HEA Board member reputedly deemed “a pretty good deal.” As one former HEA electrical engineer recently pointed out, it’s unlikely we can ever recover the cost of new Soldotna turbines. With no one but ourselves to sell power to, they will stand idle most of the time and never generate revenue.

Alaska Railbelt Cooperative Transmission and Energy Company (ARCTEC)
HEA and other railbelt utilities continue to work on draft articles of incorporation for this potential confederation aimed at improved collaboration. The stated intent is to improve prospects for dealing with natural gas supply problems, better address transmission issues, and pursue utility scale alternative energy opportunities. According to HEA General Manager Brad Janorschke, utilities hope to come to agreement and file the articles by the end of this month (November). We agree that better collaboration will be needed to effectively meet railbelt energy needs in the coming years. Such efforts are to be commended, assuming that ratepayer interests are being taken into consideration. Unfortunately, as is so often the case, this process is being conducted behind closed doors.

Renewable Double Speak
While all of the HEA Directors say they favor adding more renewable energy sources to our energy mix, General Manager Janorschke has joined with other railbelt utility managers in signing the attached letter to the RCA and legislative leaders complaining that integrating renewable energy into the existing generation scheme is just too difficult. While the letter claims it isn’t a rejection of renewable technologies, it sure comes out reading like one. These utilities have failed to work with each other or potential independent power producers like Fire Island Wind (CIRI) or Kenai Winds to find ways to overcome integration challenges. HEA has committed to spending $180 million (plus) on natural gas generation but only $2-3 million on a single, very controversial, small hydroelectric project and not a dime on technology to balance fluctuations from wind generators. Railbelt utilities predict potentially high costs associated with integrating renewable energy but think nothing of increasing our dependency natural gas, even if we need to import it in liquefied form from outside. Wonder what that’s going to cost?

December HEA/AEEC Meetings
These meetings will all take place in Kenai at the Central Peninsula Offices, 280 Airport Way.

Tuesday, December 7, 2010
2:00 PM -- Operations and Special Projects

Tuesday, December 14, 2010
1:00 PM -- Finance Committee
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Download draft agendas at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx. Video conferencing is available in the Homer Offices at 3977 Lake Street -- call either HEA office at 283-5831 (Kenai) or 235-8551 (Homer).

This Week's HEA/AEEC Meetings

2010-09-13T22:13:00.000-08:00

These meetings will take place in Kenai at the Central Peninsula Offices, 280 Airport Way.

Tuesday, September 14, 2010
9:00 AM -- Operations and Special Projects
1:00 PM -- Finance Committee
3:30 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Download draft agendas at http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx.
Video conferencing is available in the Homer Offices at 3977 Lake Street.

Next Week's Area Meetings
The proposed new rate structure will be the main focus of the General Manager's presentation.

Anchor Point, 5:30 PM, Monday September 27, Chapman School
Kasilof, 5:30 PM, Tuesday September 28, Tustumena School
Sterling, 5:30 PM, Wednesday September 29, Senior Center
Nikisiki, 5:30 PM, Thursday September 30, Community Center

These meetings are typically a venue for HEA management to express it's point of view in a controlled situation, absent divergent outlooks. Free food and the promise of drawing prizes seem to be uppermost in attending HEA members' minds. Nonetheless, it is an opportunity for you to raise questions and express your own opinions regarding any HEA issue.

August HEA Meeting Schedule

2010-08-12T15:06:00.001-08:00

All meetings will take place in the Board room of the HEA offices in Homer at 3977 Lake Street. Video conferencing is available at the HEA offices in Kenai at 280 Airport Way. Meeting agendas can be found on the HEA website at http://www.homerelectric.com/. Contact Joe Gallagher at jgallagher (email at) homerelectric.com or 907-283-2324 for more information.

Tuesday, August 17, 2010
10:00 AM -- HEA Operations Committee Meeting
12:30 PM -- HEA Finacne Committee Meeting
3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Wednesday, August 18, 2010
9:00 AM Final Ratemaking Presentation by Consulting Firm RW Beck

HEA Members Forum Update

2010-08-06T14:49:00.000-08:00

HEA Plans Rate Structure Change
Every HEA member has a big stake in this ratemaking process. The outcome will affect the finances of Kenai Peninsula families and businesses for the foreseeable future. Electric rates will increase. They jump two percent this October. They're expected to reach 20-25 cents per kWh by 2014. A new rate structure probably can’t prevent that but HEA members should be wondering just what it might do.

Can it be fair to all classes of ratepayers (residential, commercial, industrial) in all areas?
What will it mean for low wage workers and people on fixed incomes?
Will it promote energy efficiency and conservation?
Can it do anything to stabilize electric rates?
Will it be easy for HEA members to understand?

Attend the Ratemaking Workshop on Wednesday, August 18
Come to the HEA Homer Board Room at 9:00 AM -- video conferencing available at Kenai HEA offices for central peninsula members. This will be the last opportunity for you to learn more about three potential residential rate options under consideration:

1. Raise the present $11.00 per month residential customer charge to around $90.00 (the estimated monthly cost to HEA to provide service) and lower the per kWh energy charge.

2. Raise the $11.00 customer charge to $15.00 and increase the per kWh energy charge.

3. Raise the $11.00 customer charge to $15.00 and require a minimum monthly energy payment based upon 300 kWh of electricity ($36.26). All residential customers would then pay at least $52 per month.

Those options are at the core of this process but only reflect part of the background discussion. For example, there is the issue of basic kWh rate design -- should it be uniform or variable based upon differing levels of consumption, peak vs. off-peak use, summer vs. winter? There are other issues too but no space for discussion here.

Now is the Time to Get Involved
A draft rate plan is expected by the end of this month. The plan will be presented to members at September HEA regional meetings. By then the opportunity for input will be limited -- final rate design will be adopted in October. If you want to help determine how the final plan looks, go to the HEA website (http://www.homerelectric.com/) and read Rate Design: Making It Fair and Promoting Conservation. Try to attend the August 17 HEA Board meeting. Participate in the August 18 ratemaking workshop. Ask questions, explain your priorities, and make suggestions.

BASICS OF ELECTRIC UTILITY RATEMAKING
Electric utility rates include two basic charges, one for recovering “fixed costs” and the other for recovering “variable costs.” For this discussion let’s ignore the taxes and surcharges typically tacked on to your electric bill.

Fixed Costs
These include expenses the utility incurs by just having a customer tied into the system -- wire, poles, buildings and everything needed to provide basic service. These costs have nothing to do with how much or how little energy a customer uses and do not fluctuate.

Variable Costs
These include expenses the utility incurs for equipment, over and above the basics, required by high demand customers and for acquiring the energy it distributes to us. These costs vary depending upon how “big” a service capacity is installed for the customer and how much energy is consumed each month.

Utilities generally consider it good policy to recover fixed costs through fixed charges (the “customer charge”) and variable costs through variable charges (the “energy charge” or “per kWh” charges).

Rate Design Process

2010-07-13T19:17:00.008-08:00

Attached is HEA General Manager Brad Janorschke's announcement of the the rate design process along with a related discussion of some of the things to be considered in designing a sound rate structure. Don't forget about this week's informational workshop -- open to the membership.

Wednesday, July 14, 10:00 AM, Homer HEA offices -- R.W. Beck Rate Making Workshop
For video conferencing to Kenai HEA Offices contact Teresa Gamble at
tgamble ( email@ ) homerelectric.com

Rate Design Article

HEA Members Forum Update

2010-06-12T14:32:00.000-08:00

Rate Creep
On July 1 rates go up .154 of a cent per kWh. According to HEA that's about 97 cents a month for the "average" member. That's better than the 2 percent increase we were expecting -- stay tuned for that one.

Secret Rate Redesign Process
The HEA Board and management have started the process of redesigning how your electric rates are computed. This summer HEA Directors will have "how to" workshops and background documents on the subject. Unfortunately HEAMF requests to participate in the learning process were turned down. In e-mail and telephone contacts with several HEA Directors we urged that the wider membership be informed of this process and provided an overview of what it’s about and how it will unfold. So far management and most Directors don't seem to want ordinary HEA members involved. One thing under review for sure will be the "customer charge." That's the monthly fee all HEA members pay for just being connected to the system. Management has already advised Directors that the present charge is way too low and needs to be increased.

Alternative Energy Smackdown
In his wisdom Governor Parnell vetoed money the Legislature allocated for community natural gas and alternative energy projects for our state. Among these was the $7 million grant for HEA to utilize wind power from the 14.4 MW Kenai Winds project being pursued by APEX energy. Unfortunately for us, at the June 1 special Board meeting HEA General Manager Brad Janorschke told Directors we should give up altogether on trying to integrate wind energy without the $7 million.

Small Hydro Pumpup
On June 1 a special meeting of the HEA Board was sandwiched between the Alaska Electric & Energy Cooperative(AEEC) and HEA Operations Committee meetings to consider Resolution 10-25, allocation of $2 million from the HEA budget for site studies and completion of the Federal Energy Regulatory Commission (FERC) construction permit application process. After a presentation by HEA engineering staff and several minutes of Board discussion the resolution was approved. This came out of the blue with little or no advance notice -- HEA members and organizations with strong interest in the project such as the Kenai Watershed Forum were not made aware of the resolution. If approved, construction cost is estimated at $30 million and the project would produce about 4.5 MW of electricity. Questions remain regarding potential negative impacts to fish and habitat.

Next Week’s HEA Meetings
Tuesday June 15, 2010, Homer HEA Offices (video conferencing available from the Kenai offices).

Closed Board Workshop 12 Noon
Finance Committee Meeting 3:00 PM
Full Board Meeting 5:30 PM

Agendas have not been posted on the HEA website at this writing. Go to the following pages within the next several days to look for meeting and agenda information.
http://www.homerelectric.com/BoardofDirectorsElections/BoardMeetingInformation/Agendas/tabid/220/Default.aspx
http://www.homerelectric.com/BoardofDirectorsElections/MeetingCalendar/tabid/240/Default.aspx

Kenai Hydro Concerns

2010-05-27T11:08:00.006-08:00

HEA Members form participants favor renewable energy projects and encourage our coop to investigate as many potential options as possible. For most of us, however, that does not mean blanket approval of any renewable energy project regardless of its social, economic, or environmental consequences. Many questions were raised about possible negative affect to Kenai River and it's wider watershed from several small hydroelectric projects proposed by HEA known as Kenai Hydro. Preliminary studies confirmed significant problems for all except the Grant Lake project. To HEA's credit, efforts to move forward those projects were dropped. Now, however, HEA has decided to press on with Grant Lake. The Alaska Center for the Environment, Kenai Watershed Forum, and Friends of Cooper Landing contend that the Grant Lake project proffers the same problems as the discontinued projects and should also be abandoned. HEAMF was contacted and asked to circulate the information below and attached.

HEA Management has been silent regarding this project recently, ostensibly lacking funds to proceed. The sudden effort to move forward on a fast rack came as a surprise to many stakeholders. While HEAMF has not taken a pro or con position with regard to Grant Lake, it is important that the issues surrounding it receive serious consideration well in advance any decision to develop. As an HEA member, you deserve to have an opportunity to understand and weigh in on these issues.

"Keep the Kenai River Wild"

Homer Electric Association is moving forward with plans to put a dam on Grant Lake, a tributary of the Kenai River. The plans call for 3.5 miles of new roads and transmission lines, a 10 foot by 120 foot long dam, a 110 foot high surgetank, penstock and powerhouse. Grant Lake would be flooded and the water flow in Grant Creek would be interrupted. The cost of construction is estimated at 27 million dollars. Alaska Center for the Environment believes that the costs of losing fish habitat in one of Alaska’s favorite and most productive local watersheds is too high of a price to pay for the insignificant amount of power which will be generated as a result of this project. Grant Creek supports anadromous fish species including Chinook, sockeye and Coho salmon as well as resident species including rainbow trout and Dolly Varden. The Kenai River system supports 34 species of anadromous and resident fish.

What Can You Do?
Please attend the FERC Scoping Meeting and Environmental Site Review. The meeting will take place in Moose Pass on June 2, at 7 PM at the Moose Pass Community Hall. It is the only opportunity to meet with Federal Energy Regulatory Commission officials. Laws require the Commission to independently evaluate the environmental effects of issuing an original license for the Grant Lake Project as proposed, and to consider reasonable alternatives to the applicant’s proposal. FERC is seeking information about the possible impacts this project could have. These could include impacts to water quality and quantity, fish and wildlife resources, cultural, recreational, aesthetic and economic impacts, land use, geologic, soil and other terrestrial resources.

Sign petition opposing the dam by visiting:

www.ipetitions.com/petition/keep_the_kenai_wild/

Submit scoping comments to FERC: (due July 6^th, 2010)

*For more information about the process: http://www.kenaihydro.com/documents/GrantLake_Scoping1.pdf

HEAMF Call in Reminder

2010-05-18T15:11:00.005-08:00

DON'T FORGET!!! CALL THE COFFEE TABLE PROGRAM
KBBI/KDLL this Wednesday, May 19 at 9:00 AM

The focus will be all things HEA with guests HEA General Manager Brad Janorschke and Public Relations Coordinator Joe Gallagher.

Call 235-7721 on the southern peninsula, 1-800-979-7405 from elsewhere.

ASK QUESTIONS
TELL THEM WHAT YOU WANT AS AN HEA MEMBER

1. ANTI-COOPERATIVE PRACTICES
Why were HEA members excluded from the planning of the Independent Light project?

Shouldn’t the HEA membership be given a chance to approve, modify, or reject this historic change?

Shouldn’t HEA members have more opportunities for planning and approving or rejecting other proposed projects such as small hydroelectric and wind?

Was the Alaska Electric and Energy Cooperative (AEEC) formed with approval of the HEA membership or simply by the HEA Board and staff?

2. ALASKA ELECTRIC & ENERGY COOPERATIVE (AEEC)
Is it true that HEA members are not also AEEC members? Who is an AEEC member?

Who runs AEEC?

Who is AEEC responsible to?

Does the HEA Tariff also apply to AEEC or does it have it’s own?

3. LEVEL OF DEBT
Is it true that the combined HEA/AEEC debt is or soon will be at $339 million.

Is it true that AEEC is not bound by the $450 million HEA debt cap and has no such limit of its own?

Will $180 million cover all elements of the Independent Light project or will additional debt be required? If more, how much?

How will payment toward interest and debt retirement affect electric rates?

4. INDEPENDENT LIGHT AND OTHER PROJECTS
HEA management asserts that “studies indicate that the cost for HEA to own and operate the new assets will be about the same (perhaps slightly lower) as paying another utility for wholesale power.” Where can HEA members review these studies?

Even though the decision was made without their input, most HEA members seem to support upgrading the Nikiski plant. However, many question the wisdom of buying new gas turbines for Soldotna as the best way to meet peaking, reserve, and contingency demand. Would you be willing to bring the wider HEA membership into the decision process now?

If we invest hundreds of millions in Nikiski AND new gas turbines to meet ALL base load, peak, and emergency demands how will we afford to buy significant amounts of renewable energy as new projects come on line?

The Legislature appropriated $7 million to fund a 5 MW reciprocating generator or a battery bank to allow HEA to integrate the 14.4 MW of power from the Kenai Winds project into the existing grid. Why won’t that solve the problem of “following” this intermittent source of energy?

HEAMF Action Alert

2010-05-18T15:10:00.001-08:00

CALL THE COFFEE TABLE PROGRAM
KBBI/KDLL this Wednesday, May 19 at 9:00 AM

The focus will be all things HEA with guests HEA General Manager Brad Janorschke and Public Relations Coordinator Joe Gallagher.

Call 235-7721 on the southern peninsula, 1-800-979-7405 from elsewhere.

ASK QUESTIONS
GIVE YOUR PERSPECTIVE AS AN HEA MEMBER

While there are many issues affecting rates, quality of service, and other HEA member interests, four are particularly obvious right now:

1. ANTI-COOPERATIVE PRACTICES
2. ALASKA ELECTRIC & ENERGY COOPERATIVE (AEEC)
3. LEVEL OF DEBT
4. INDEPENDENT LIGHT AND OTHER PROJECTS

Want ideas for questions?
Look below (in italics) under each of the four topics, along with a little background information on each.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ANTI-COOPERATIVE PRACTICES
Questions:
Why were HEA members excluded from the planning of the Independent Light project?

Shouldn’t the HEA membership be given a chance to approve, modify, or reject this historic change?

Shouldn’t HEA members have more opportunities for planning and approving or rejecting other proposed projects such as small hydroelectric and wind?

Was the Alaska Electric and Energy Cooperative (AEEC) formed with approval of the HEA membership or simply by the HEA Board and staff?

Background:
The Seven Guiding Cooperative Principles All rural electric cooperatives, including HEA, are supposed to adhere to these principles. Two are of particular interest here:

“Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership.”

“While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.”

With Independent Light HEA has embarked upon the largest, most costly change in its history -- transformation from a simple distribution cooperative to a generation and transmission utility. HEA members remain out of the loop.

The development of and decision to move forward with Independent Light was made exclusively by the HEA management and Board of Directors. The General Manager was authorized to do so on June 24, 2008. A July 9, 2008 press release sketched a general plan. Members were provided little other information until a January 12, 2010 press release describing the complete plan. You were not invited to review and comment on the plan at any point. There was never a vote by the membership to accept Independent Light. This was true for its predecessor, the Healy coal plant plan, and is true for present small hydro and wind proposals.

All generation and transmission projects now take place under the Alaska Electric and Energy Cooperative (AEEC). It is unclear whether or not the general HEA membership voted to approve its formation in 2001.

ALASKA ELECTRIC & ENERGY COOPERATIVE (AEEC)
Questions:
Is it true that HEA members are not also AEEC members? Who is an AEEC member?

Who runs AEEC?

Who is AEEC responsible to?

Does the HEA Tariff also apply to AEEC or does it have it’s own?

Background:
There are many unknowns regarding AEEC. One thing IS clear -- HEA members have no standing. According to HEA staff and Directors, AEEC was formed in 2001 to allow funds to be borrowed at a lower rate of interest. It is a separate generation and transmission cooperative and HEA is the only member. AEEC bylaws do not indicate a limit on how much money it can borrow or spend. In recent months it has authorized borrowing $205 million. AEEC passes all expenses on to it’s one member/customer, HEA. HEA then charges us through our electric rates. Even though the two cooperatives are legally separate entities, HEA Directors also serve as AEEC Directors and HEA staff is tasked with AEEC work. All Alaska utilities operate under a set of rules outlined in a “Tariff “ filed with the Regulatory Commission of Alaska (RCA). It is unclear whether or not AEEC is also covered by the HEA Tariff.

LEVEL OF DEBT
Questions:
Is it true that the combined HEA/AEEC debt is or soon will be at $339 million.

Is it true that AEEC is not bound by the $450 million HEA debt cap and has no such limit of its own?

Will $180 million cover all elements of the Independent Light project or will additional debt be required? If more, how much?

How will payment toward interest and debt retirement affect electric rates?

Background:
According to HEA General Manager Brad Janorschke, the 2009 year end financial audit showed the debt to be $121 million HEA and $38 million for AEEC. In a May 3, 2010 e-mail he stated that when combined with all recently authorized new loans it would bring the total debt burden to $339 million. Bear in mind that only the $121 million in HEA debt counts against the $450 million debt cap. In HEA/AEEC meetings last year, HEA Director of Finance stated that present loans carried a fluctuating interest rate which was at about 4.75 percent at the time.

INDEPENDENT LIGHT AND OTHER PROJECTS
Questions:
HEA management asserts that “studies indicate that the cost for HEA to own and operate the new assets will be about the same (perhaps slightly lower) as paying another utility for wholesale power.” Where can HEA members review these studies?

Even though the decision was made without their input, most HEA members seem to support upgrading the Nikiski plant. However, many question the wisdom of buying new gas turbines for Soldotna as the best way to meet peaking, reserve, and contingency demand. Would you be willing to bring the wider HEA membership into the decision process now?

If we invest hundreds of millions in Nikiski AND new gas turbines to meet ALL base load, peak, and emergency demands what incentive how will we afford to buy significant amounts of renewable energy as new projects projects come on line?

The Legislature appropriated $7 million to fund a 5 MW reciprocating generator or a battery bank to allow HEA to integrate the 14.4 MW of power from the Kenai Winds project into the existing grid. Why won’t that solve the problem of “following” this intermittent source of energy?

Background:
HEA management outlines two phases for Independent Light. We are already committed to the first -- adding a steam turbine to the Nikiski gas plant and associated upgrades to the Nikiski substation. This is intended to meet the needs of so-called “base load and intermediate generation.” The second phase involves acquisition of energy for so-called peaking, reserve, and contingency demand. Three options are suggested by HEA management -- build new gas generators in Soldatna, purchase energy from other producers, buy existing generation facilities from Chugach Electric Association.

HEA management claims that “The ‘Independent Light’ plan, because of its flexibility and sole control by HEA, actually provides a better opportunity to accommodate future renewable energy sources.” This claim refers to increased ability to compensate for variable output from wind turbines. Unfortunately, HEA keeps reducing the amount of wind energy they are willing to utilize from potential sources like the Fire Island and Kenai Winds project.

HEA’s response evades another basic issue. After you’ve spent hundreds of millions on enough gas turbines to meet all base load and contingency needs, what incentive will there be to move to renewables -- and with so much debt, where would the money come from?

At the May 11 HEA Board meeting General Manager Brad Janorschke indicated that he felt it was only feasible to use around 4 MW from any wind farm. He didn’t explain why $7 million would no longer pay for enough standby battery or generation equipment to balance more wind energy as originally planned.

HEA Members Forum Update

2010-05-18T15:07:00.000-08:00

“Deja vu all over again”
HEA plans to apply to the RCA for another 2% rate increase to take effect in July.

Easy Come, Easy Go
According to discussions at the May 11 Board and Committee meetings, 2009 HEA Board expenses exceeded the $30,000 budgeted by over $20,000. This was attributed in part to having so many new Directors needing training and to travel for lobbying and other utility related functions. President Debnam urged Directors to make flight reservations early in future to help reduce travel costs.

At the same time the Board approved plans to increase Director meeting stipends from $200 to $250 or $300 per day as of January 1, 2011. The separate $200 per day travel stipend was also reconfirmed.

The Truth, the Whole Truth
Among several Board Policy updates approved on May 11 was PB 221 Board of Directors Website Content. Under this policy Directors’ expenses will be published quarterly in the Kilowatt Courier and maintained on the HEA website. Other new items to be added to the website include Directors’ meeting attendance and voting records.

Don’t Ask, Don’t Tell
Board Policy 216, Designated Spokespersons, was approved on May 11 as well. This one directs that “All requests to the Board of Directors for information pertaining to action of the Board shall be directed to the President of the Board.” Does this worry you? Does it mean that your Board representatives are discouraged from communicating with you? Board President Debnam claims not -- “This policy was never intended to impede communication between Directors and HEA Members. I am proud to say that we have an extremely ‘member-focused’ board whose door is always open.”
The General Manager is designated spokesperson for anything related to operations of the cooperative.

Takes the Wind Out of Their Sails
HEA claims it would be too technically difficult to use all 14 + MW Kenai Winds LLC hopes to produce from its proposed Nikiski wind farm. Since wind power is intermittent and unpredictable utilities need to have other power to fill in during calm periods. While the $7 million appropriated by the Legislature was meant to provide money for a fix, HEA feels it still won’t be able to use much more that 4 MW of wind energy in the short term. HEA management and some Directors seem now to be leaning toward using the $7 Million to build our own, smaller wind farm -- assuming the Governor doesn’t veto the appropriation. Bait and switch?

Water Torture?
The Kenai Hydro isn’t dead. While it’s been pared down to one element, Grant Lake, HEA management is still hoping to move ahead with the project, in spite of ongoing opposition from area residents, Kenai watershed protection advocates, and a variety of Alaskan conservation groups. The Federal Energy Regulatory Commission has scheduled rush scoping meetings with comments due by early June. Notice includes a list of issues for consideration and a draft schedule for FERC’s analysis of the license application. The full document is available at www.ferc.gov, and has been posted at: http://www.kenaihydro.com/documents/index.php .

Jobs for Who?
As you probably noticed along ago, HEA has been outsourcing member billing. This change eliminated at least two local jobs but has proven efficient and cost effective. Nonetheless, it has caused a lot of heartburn among HEA members. The Board of Directors keeps getting complaints and now feels your pain. They are looking for ways to bring the work back to Alaska without increasing costs exponentially. No solutions yet, though.

Here Comes the Sun (and other stuff)
Don’t forget -- the Alaska Solar tour comes to the Kenai Peninsula tomorrow, Saturday, May 15. Go to http://www.alaskasolartour.org/ for more information.

Electric Coffee Table
Plan to tune in to next week’s Coffee Table Program on KBBI or KDLL (Wednesday, May 19, 9:00 AM). The focus will be all things HEA with guests Brad Janorschke and Joe Gallagher. This is your chance to ask some hard questions. Call 235-7721 on the southern peninsula, 1-800-979-7405 from elsewhere.

A special HEAMF alert will come your way soon with ideas for questions and comments.

Recent News

2010-05-06T13:48:00.000-08:00

Election Disappointment
At yesterday's Annual HEA Meeting incumbent Director Tony Garcia was voted out while Board President Debbie Debnam was reelected by a substantial margin. Debnam is the last of the "old guard" Directors who favored business by executive session while promoting involvement in HEALY 2 and other coal projects. HEAMF supported her opponent Ken Hepner who favors open governance and serious efforts to increase inclusion of alternative energy sources to meet HEA load requirements. William Warren defeated Garcia. HEAMF endorsed Garcia largely because he had shown steady growth in supporting our objectives and we lacked knowledge about Warren. Subsequently, Ken Hepner and others who have known him suggest that Warren will make a good Director who will promote open governance and renewable energy. Bill Fry, the only District 3 candidate on the ballot was easily elected in spite of a write-in campaign.

Total Ballots Cast = 5,141 (23.8% of the 21,586 HEA Members)
Total Ballots Voided for Cause = 163
Total Ballots Counted = 4,978
District 1 -- Warren 918, Garcia 702, write-ins 32
District 2 -- Debnam 1,215, Hepner 592, write-ins 46
District 3 -- Fry 1,350, write-ins 93

Manager's Moment
HEA General Manager Brad Janorschke presented a much better overview than the fiasco of 2009. This time he gave a decent summary of the Independent Light project, a brief discussion of the nature of AEEC (Alaska Electric & Energy Cooperative, Inc.), and provide some updated information on the Kenai Winds, Kenai Hydro, and potential large hydroelectric and geothermal projects that might one day supply railbelt energy. Theoretically, his PowerPoint presentation should be posted to the HEA website some time today (http://www.homerelectric.com/). If you want more detailed information check it out. Several things Janorschke said are worth noting here, however:

Independent Light consists of two phases.

Phase I -- HEA/AEEC has already committed to this. It involves upgrade of the Nikiski plant. Contracts have been awarded for design work ($5,017,900), a GE steam turbine ($9,420,000), and related substation upgrades($3,813,697). This phase addresses "baseload," the ongoing 40 to 70 MW consumed by all HEA members.

Phase II --This phase will address "peaking, reserve, and contingency" power sources. Additional power is needed if energy requirements exceed normal baseload capacity, should the Nikiski plant or Bradley Lake fail or be shut down for maintenance, or during unforeseen situations such as a disaster. Three options are being investigated: build new generating capacity ourselves, buy an existing plant from another utility, purchase agreements for buying power from other power producers. No commitment has yet been made to any one or combination of these.

Independent Light and efforts to adopt renewables are now linked. Janorschke said that whatever HEA/AEEC chooses for phase two of Independent Light, the administration doesn't want it to constrain our ability to adopt new or better options as they become available.

HEA Members' Moment
During his explanation of AEEC Janorschke failed to mention that HEA members are not also AEEC members and, consequently, have no rights or authority with AEEC. During the member comment period I pointed this out as something all members should be aware of. It is a significant problem considering that all decisions about Independent Light are being made by AEEC, including plans to take on over $200 million in debt to finance the project. President Debnam ask HEA attorney Rick Baldwin to elaborate on my statement but he declined, saying that no further explanation was warranted.

Another member made a motion from the floor that Board of Director expenses be published in the Kilowatt Courier from now on. I made a friendly amendment that they also be posted on the HEA website. On a vote of the assembled membership the motion and amendment were passed. If memory serves, these floor votes are considered advisory and the Board may choose to accept or reject them. Stay tuned.

Updates

2010-04-20T12:55:00.003-08:00

Unlimited Debt
While HEA has a $450 million debt cap, it turns out the Alaska Electric and Energy Cooperative (AEEC), HEA's separate generation and transmission corporation. has none.
All major projects such as Independent Light take place under AEEC.

Being a completely separate legal entity, AEEC is not directly accountable to HEA members -- you have no rights or privileges with respect to it. AEEC meeting agendas are not published on the HEA website and, at least recently, most meetings have been closed to HEA members. You can only influence AEEC indirectly through appeal to HEA Directors. In a recent e-mail exchange, one HEA Director wrote, "I'm aware of the smoke-and-mirrors aspect of that distinction with AE&EC being a one-member co-op, but that is the legal structure. That said, HEA+AE&EC's debts don't and won't exceed HEA's debt cap."

Getting Steamed Up
On April 6th AEEC approved a $5,017,900 design contract for addition of a steam turbine to the Nikiski facility. The contract has been awarded to Stanley Consultants, Inc., an Iowa-based company. This is the first step in implementing the Independent Light project. Most sources seem to agree that retrofitting the Nikiski plant for cogenration makes technical and economic sense. There is room, however, for significant disagreement over plans to follow up with installation of two new single cycle natural gas gererators in Soldotna.

HEA Website Upgrades
At the April 6 meeting, the HEA Operations committee approved our request that HEA Board Policies be posted on the website. They are available at http://www.homerelectric.com/ by clicking Board of Directors and Elections/Board Policies on the left side menu. You will see that bylaws, the district map, a meetings calendar and other Board related information are available there as well.

Unfortunately, so far none of our suggestions for improving the Independent Light Frequently Asked Question page have been acted on and our responses to answers posted there have not been addressed.

HEA Board Perks
You may have read the recent Peninsula Clarion article on HEA Board Reimbursements (April 9 -- $140,000 in director payments in 2009). This is a valid topic for discussion. Throughout the country there have been examples of rural electric cooperative Boards of Directors partaking of unethical and insupportable levels of payment, often amounting to millions of dollars. Is $140,000 excessive? One would need to look closely at how the money was used. HEA Directors are expected to put in an enormous amount of time and asked to travel often on behalf of the cooperative. Most join the Board with limited knowledge of energy issues or the workings of a utility. Professional development workshops and classes help them develop a working understanding to underpin decisions they are asked to make. The $200 per meeting stipend is among the lowest in the state yet the Board recently voted against increasing it. In addition to this stipend, tuition for professional development courses, travel and lodging for HEA business trips and reimbursement of related out of pocket expenses account for part of the money spent on Directors. Can this process be abused? Probably. Perhaps it would be helpful to HEA members concerned about this issue if HEA took steps to clarify how a budget is determined for these activities, how priorities for which events Directors should participate in are set, and what safeguards are in place to guard against abuse.

Net Metering
Although the RCA is still waiting for the State Attorney General to sign of on the Net Metering standards approved in January, HEA is moving to transition from from SNAP to net metering. HEA filed a net metering tariff with the RCA requesting immediate implementation and may be the first railbelt utility to have done so. May 27 is the earliest expected date for RCA approval.

Renewable Energy
An April 6 presentation by Chris Rose of the Renewable Energy Alaska Project (REAP) to the HEA Operatins Committee on Alaska's renewable energy potential was well received. There was specific reference to how HEA and other railbelt utilities can work toward incorporating renewables into their energy mix. HEA Directors showed interest in the potential of Mt. Spurr geothermal and Lake Chakachamna Hydroelectric projects and in tidal generation technology. Unfortunately, there was no discussion of how HEA would integrate the Independent Light project with these sources should they become available. Chris was invited to return and report after taking a first-hand look this spring at a tidal power prototype off the coast of Ireland.

HEA continues to consider how to utilize power from the Fire Island wind farm and Nikiski Kenai Winds projects when they come on line. Because wind power is intermittent it poses problems of load balancing and dispatch that are challenging. Studies of potential sites for small wind projects on the southern peninsula are ongoing. The Grant Lake component of the Kenai Hydro project is still being considered, though it will require additional funding before significant effort can take place.

GRETC on the Ropes
At the April 13 HEA Board meeting the consensus of Directors was that legislation to create a Greater Railbelt Energy & Transmission Corporation (HB 182, SB 143) will not pass the legislature this session. We suspect this is correct. The issue is very complicated, involving a complete reorganization in the way all railbelt utilities and regulators would operate. While both ratepayers and utilities have stated support for the concept of a GRETC, it's become clear that the two interest groups do not agree on some very basic elements and the RCA recently weighed in with it's own questions and reservations. The HEA Board still wants to work with other railbelt utilities and the next legislature on GRETC legislation.

Ken Hepner's HEA Board Campaign Needs Our Help NOW

2010-04-01T16:09:00.002-08:00

It is difficult to unseat an incumbent. Ken is running against HEA Board President Debbie Debnam who supported the Healy 2 coal plant deal and continues to support the questionable Kenai Small Hydro project and lots of Board executive sessions. We are told she is being supported by a powerful group of political insiders including Borough Mayor Dave Carey, Hugh Chumley, and HEA General Manager Brad Janorschke.

HEA Ballots will be mailed tomorrow. Past experience shows that most people mark and return their ballots within to following week or ten days.

Please volunteer to help by placing a Ken Hepner sign on your property (central peninsula folks), or for the phone tree (central AND southern peninsula folks).

Contact Ken or his campaign managers to volunteer.
Ken: hepner(email@)alaska.net or 262-8510
Campaign managers: Dan Chay chay(email@)alaska.com,
Robert Ruffner robert.kwf(email@)gmail.com

Election Update

2010-04-01T16:04:00.002-08:00

HEA Members Forum Supports Ken Hepner and Tony Garcia For HEA Board of Directors

These two candidates support more open governance of our cooperative -- fewer closed-door meetings; more information about operations, plans, problems; responsiveness to member concerns. Both want to embrace renewable energy while making efficient use of remaining natural gas reserves. See their candidate statements below.

HEA Ballots will be mailed to members tomorrow, Friday, April 2, 2010.

HEA District 1 -- Vote Tony Garcia.

HEA District 2 -- Vote for Ken Hepner.

HEA District 3 -- Call central peninsula family, friends, associates and encourage them to Vote for Tony or Ken.

(Bill Fry is running unopposed in District 3 and need not campaign.)

Ken Hepner
I am Ken Hepner, a retired science and math teacher, United Methodist Minister, and an experienced office manager. My wife and I raised our daughter and lived here for 27 years. Transitioning to a renewable future, we should use Cook Inlet natural gas more efficiently and forego coal-fired generation due to costs, regulatory uncertainties and mercury emissions. I am running for the board because I want HEA to pursue cleaner renewable power generation.

HEA sits on world class tidal, wind and geothermal resources. HEA should be installing wind turbines (mature technology), and exploring tidal and geothermal. I bring knowledge about fishery issues, and support hydroelectric projects when appropriate; however, I would not have pursued hydro-development of Ptarmigan Creek in the headwaters of the Kenai River.

During my 16 years of service with the Central Emergency Service board and while
employed with Kenai Peninsula Schools, I worked with multi-million dollar budgets. My work with Native Ministries involved working with a variety of backgrounds and
cultures.

I support more transparency and fewer closed-door executive sessions. HEA should
better educate its members about the challenges ahead and listen to your concerns as we work toward a secure energy future. Thanks for your support!

Tony Garcia
I, Tony Garcia, have been a member of Homer Electric Association
since 2000.

My board experience includes service on the Homer Electric Association board since
2008, Kenai Care Center since 2007, and the Alaska Dare Officers Association since
2004. Additionally, I am the state chairperson for the Elks Drug Awareness committee.

My work experience includes the United States Air Force (retired Senior Non
Commissioned Officer after 21 years of service in 2003) and Soldotna Police Department from 2003 to present, currently serving as a Patrol Sergeant.

If elected to represent the members of Homer Electric Association, my main goal will be to provide the best possible service to all, provide the highest value services at the lowest practical cost, to keep members informed about their co-op’s operations, plans, problems and progress. Promote democratic process ensuring transparency and encourage members’ participation and to diversify our energy portfolio by integrating renewable resources.

HB31 MAY STILL THREATEN NET METERING

2010-02-23T17:29:00.002-09:00

Testimony will be taken Tuesday, Feb. 23th starting at 3pm at the House Special Committee on Energy hearing on HB 31.

Last week's hearing was canceled and significant language changes made to the bill. The Amended version is attached. There are still concerns that this legislation could reduce the ability of net metering proponents to work with the RCA on future improvements to the regulations passed on January 15, 2010. The best place to deal with net metering is the RCA, not the Legislature.

If you plan to attend, please let the LIO know.

Homer Legislative Information Office
345 W Sterling Hwy, Ste 102A
Homer, AK 99603
Phone: 235-7878 Fax: 235-4008

Kenai LIO
145 Main St Lp, Ste 217
Kenai, AK 99611
(907)283-2030/phone (907)283-3075/fax

email: Kenai_Lio(email@)legis.state.ak.us

Recent News

2010-02-16T15:10:00.000-09:00

Hello Net Metering, Goodbye SNAP
Given the recent passage by the RCA of net metering regulations for Alaska, HEA Directors voted at Tuesday's Board meeting to phase out the SNAP program and prepare to accommodate members wanting to enjoy the greater benefits of net metering.

Bad News
HEA's base rate will increase six percent (6%) in April. This could go up another two percent (2%) by early summer. Yes, present low electric rates ARE too good to be true.

Kenai Hydro Slows to a Trickle
HEA is now on it's own with respect to the controversial small hydroelectric projects proposed for the Cooper Landing/Moose Pass area. Partners Cook Inlet Region, Inc. and EnXco have formally withdrawn from the effort. At present, only the Grant Lake component of the project seems to have survived and most study activity for that is on hold while HEA looks for new grant money.

RCA Spooked
On January 28 the RCA dismissed a petition by Cook Inlet Natural Gas Storage, LLC. The company wanted authorization to move ahead with plans for a project to store natural gas on the Kenai Peninsula to supplement high demand during winter cold spells. Commissioners decided they lacked statutory authority to regulate such, and directed proponents of the plan to the Legislature and Supreme Court instead. The storage facility is seen by utilities as vital to maintaining necessary gas and electric supplies to Kenai Peninsula consumers and business (that's us).

High Wattage Independent Light
HEA General Manager Brad Janorschki is quoted in a Feb. 7 Peninsula Clarion story as saying, "...turbines typically cost $1,400 to $1,800 a kilowatt, but that doesn't necessarily take into account the cost of installation." Those figures translate into $1.4 to $1.8 million per megawatt (MW). If we do the whole project it will add another 110 to 112 MW in generating capacity. That will cost us between $154 and $201 million for all the turbines. As Brad says, installation could cost extra. Either way, the price certainly doesn't include ongoing salaries and benefits for those 20 new high-end jobs.

HB31 THREATENS NET ENERGY METERING

2010-02-15T13:12:00.001-09:00

Testimony will be taken Tuesday, Feb. 16th starting at 3pm at the House Special Committee on Energy hearing on HB 31 .

Louie from Representative Seaton's office thinks they plan to try and put the new RCA regulation language into HB 31. That would make net metering entirely voluntary for the utilities. Under HB 31, cooperatives organized under AS 10.25 are exempt but may waive exemption if the majority of its membership votes in favor of the waiver. Louie thinks this is a backhanded attempt by the utilities to undo net metering regulations passed by the RCA January 15.

Net metering fans will want to testify against this.
The utilities previously testified on the record that Net Metering should be investigated by the RCA and not the legislature. This could be brought up if there are a bunch of utilities testifying on the issue.

If you can attend, please let the LIO know.

Homer Legislative Information Office
345 W Sterling Hwy, Ste 102A
Homer, AK 99603
Phone: 235-7878 Fax: 235-4008

Kenai LIO
145 Main St Lp, Ste 217
Kenai, AK 99611
(907)283-2030/phone (907)283-3075/fax

email: Kenai_Lio(email@)legis.state.ak.us

District 3 HEA Directors Meet & Greet

2010-02-15T13:10:00.003-09:00

Thanks to all of you who turned out last night to meet and talk with Bill Fry and Mike Wiley, our two new representatives on the HEA Board. While it was very informal, people felt free to voice some of their interests and concerns about the future of our cooperative. It gave Mike and Bill a preliminary look at the kinds of issues you are interested in and provided an opportunity to give us some sense of their own thinking. It will be important for you all to keep the HEA Board apprised of your feelings as they move forward with the many changes ahead for HEA. Everything they do will affect each one of us -- for better or worse.

As I mentioned at last night's meeting, HEA has made many changes to the website to make it more user friendly and useful to members. There is a new video tour of Nikiski natural gas plant -- one of the topics discussed last night. Try to take some time to check out that and the rest of the website. If you find things that need improvement or have suggestions for other things to add, you can send them to Director of Member and Administrative Services, Chris Kastella (ckastella (email @) HomerElectric.com or 235.3302). Chris has been very good about seeing that member suggestions get plugged in.

Invitation - Pizza, Refreshments, Meet & Greet

2010-02-08T13:10:00.000-09:00

HEA Members Forum will host an informal gathering to welcome new HEA District 3 Board Directors Bill Fry and Mike Wiley. This is a chance for you to get to know your HEA representatives and discuss your feelings about the direction our coop should take.

Please join us.

5:00 PM
Friday, February 12
Homer Chamber of Commerce Visitor Center
201 Sterling Highway
Homer, AK 99603

RCA ADOPTS ALASKA NET METERING REGULATIONS

2010-01-21T10:39:00.000-09:00

On October 14, 2009, the Regulatory Commission of Alaska (Commission) voted to adopt new regulations establishing net metering requirements for economically regulated utilities. A final version of the regulations was formally adopted on January 15, 2010.

Net metering serves as an important incentive for consumer investment in renewable energy generation. It allows a customer of a regulated utility to interconnect eligible onsite generation facilities with their electric utility's distribution system. Customer-generated electricity can then offset electricity consumption on a kilowatt-hour (kWh) basis. In general, the new regulations:

1. Apply to electric systems owned by economically regulated electric utilities with total retail sales of 5,000,000 kWh or more (that includes HEA).

2. Affected utilities are required to interconnect with eligible customer generation systems up to a system-wide total capacity of 1.5% of their average retail demand. Customer interconnection can be refused if it would cause the total net metering capacity to exceed 1.5%.

3. Eligible customer generation systems are limited to a total on-site capacity of 25 kilowatts.

4. Net metering customers are billed for net monthly consumption. If the customer uses 800 kWh and generates 600, he or she will be billed for 200 kWh.

5. When more electricity is generated during a given month than is consumed, the customer is credited for the excess at the wholesale power rate. If the customer uses 800 kWh and generates 1,000, he or she will receive a credit for 200 kWh at the wholesale rate. Credits will be applied to reduce the dollar amount of subsequent monthly billings. Credits do not expire or revert to the utility.

6. The RCA must now establish interconnection requirements for eligible customer generation systems. In early 2010 a workshop will be scheduled on RCA Matter Number: R-09-002, Consideration of the Adoption of Regulations Implementing an Interconnection Standard, to determine what these requirements will be.

7. Technologies eligible for net metering generation are limited to solar photovoltaic, solar thermal, wind, biomass, hydroelectric, geothermal, hydrokinetic, ocean thermal, landfill gas and biogas energy, along with other sources as approved by the commission that generally have similar environmental impact.

This is a good start. There are some exceptions possible as outlined in the "fine print" of the regulations and through an RCA waiver process. It will be important now to assure that the interconnection standards favor individuals and businesses wanting to install alternative energy systems. Find more information at the RCA website (http://rca.alaska.gov/RCAWeb/home.aspx/).

Self Regulation (& more)

2010-01-12T15:42:00.006-09:00

Self Regulation
At last night's meeting the HEA Board voted to indefinitely suspend all efforts to pursue deregulation of our coop. While several Board members expressed continuing interest in looking at the option at some point in the future, all agreed this was not the time to do so. During discussion of the motion the Board acknowledged that questions raised by a number of HEA members made them realize they lacked adequate knowledge of the potential costs and benefits of "self regulation." It was also recognized that there are many more pressing priorities confronting the HEA Board and management in the coming months. Clearly, member knowledge of this issue and willingness of some to communicate questions and concerns made a difference.

Continuing HEA Website Upgrades
Also at last night's meeting the Board approved placing voting records of all Board members on the HEA website. This will be done on a "rolling" three-year basis and will include attendance and absence information. Such information can be valuable if you wish to understand the way a given policy developed and where each Board member stands on important issues. Such knowledge will be especially useful to you during Board elections.

Board Meeting Schedule Revised
The Board of Directors has reduced the number of meetings it will hold in Homer from 6 to 4. They will now meet at the Kenai offices 8 months out of the year. The reason given for this change is that they want to accommodate members from all 3 Board districts equally. One wonders how meeting 8 times in Kenai achieves this goal -- no meetings are planned within the Soldotna/Sterling district. We have been told that the Homer meetings will occur during summer months. Unfortunately, specific dates and locations are yet to be listed on the HEA website.

HEA Energy Fair
HEA will hold the second Energy and Conservation Fair in Home at the Islands and Ocean Center on Saturday, November 14, between 10 AM and 4 PM. There will be presentations, workshops, and a chance to visit with various vendors of energy and conservation goods and services. By all accounts, the first fair held last Saturday in Kenai was well attended and many participants considered it a great success.

HEA Extends Application Deadline for Board Appointments (& more)

2010-01-12T15:38:00.004-09:00

HEA Extends Application Deadline for Board Appointments
At yesterday's HEA Operations Committee meeting the Board voted to extend the deadline to apply for the vacant seats until January 22. So far there are five names on the list of applicants. HEAMF is making an effort to learn enough about each person to recommend which seem most qualified. If you are interested in applying you must be a resident of HEA District 3. Applications are available on the HEA website (http://www.homerelectric.com/) or at HEA offices in Homer and Kenai. They must be returned by Friday, January 22, 2010 at 5 PM. Contact Teresa Gamble at 283-2334 or tgamble(email@)homerelectric.com for additional information.

Net Metering
The Net Metering Regulation adopted by the Regulatory Commission of Alaska (RCA) in October was sent to the Alaska Department of Law for review. It could be signed into law by March 2010. The next step is for the RCA to adopt regulations governing how to tie your alternative energy system to the electric grid. The RCA will probably schedule a workshop on interconnection for some time in February. Public notice must be given 30 days before the workshop. Look for Matter Number: R-09-002, Consideration of the Adoption of Regulations Implementing an Interconnection Standard, on the RCA website (http://rca.alaska.gov/RCAWeb/home.aspx).

Operation "Independent Light"
This is HEA's alternative to the Healy 2 coal plant. The plan includes adding a Steam Turbine Generator (STG) at Nikiski to take advantage of waste heat (formerly used by the now closed Agrium plant). This would greatly increase the electricity produced without burning any added fuel. In addition, a new natural gas fired generation facility would be installed in Soldotna to generate even more power. Finally, appropriate upgrades would be made to existing substations at each location. A pre-bid conference was held for interested vendors in November and bids are due back by January 15. HEA staff hopes to conduct bid evaluations and make a recommendation to the full Board by late January or early February.

None of this comes cheap. HEA will need to borrow as much as $130 million to complete all parts of this proposal. Watch for more information on this in coming updates.

Alaska Railbelt Regional Integrated Resource Plan (RIRP) Report
This study was commissioned by the Alaska Energy Authority to help assess and guide railbelt utility planning for the next 50 years. The report is long and comprehensive but, in addition to recommending that the Healy 2 plant remain mothballed, includes the following among its general recommendations:

1. The State should work closely with the utilities and other stakeholders to make a decision regarding the formation of GRETC [Greater Railbelt Energy and Transmission Company]and to develop the required governance plan, financial and capital improvement plan, capital management plan and transmission access plan, and address other matters related to the formation of the proposed regional entity.

2. The State should establish certain energy-related policies, including:
o The pursuit of large hydroelectric facilities
o DSM/EE [Demand Side Management/Energy Efficiency] program targets
o RPS (i.e., target for renewable resources), and the pursuit of wind, geothermal, and tidal...projects in addition to large hydroelectric projects
o System benefit charge to fund DSM/EE programs and or renewable projects

The whole report can be downloaded from the Alaska Energy Authority website (http://www.aidea.org/AEA/regionalintegratedresourceplan.html).

HEA Board Appointments on Fast Track

2010-01-04T15:00:00.001-09:00

With the recent resignation of long-time HEA Board member Mike Pate, two of three southern Kenai Peninsula seats are vacant. The Board is moving fast to appoint replacements for Brian Hirsch and Mike Pate. With only Jim Levine left to represent HEA members from Kasilof south, the central peninsula now dominates HEA policy. Consequently, the six central peninsula Directors will determine who represents the interests of southern peninsula HEA members.

So far, all previous applicants for Brian Hirsch’s seat are being considered for the vacancies. HEA has also issued a call for others to apply by the end of this week -- Friday, January 8 by 5 PM. The Board plans to conduct interviews and make their decisions by the January 12 full Board meeting.

Given that the Holiday season still isn’t over for some HEA members, this schedule seems short. With all the seasonal celebrating it’s likely that some potentially excellent applicants aren’t even aware of this new opportunity to vie for a Board seat. At least one of the applicants already on the list is traveling and cannot be reached with notification that the appointment process has resumed.

Why not extended the deadline two weeks so that southern peninsula HEA members have more of an opportunity to see the best possible people are appointed to represent them on the HEA Board?

And why not consider throwing your hat in the ring? Applications are available on the HEA website (http://www.homerelectric.com/) or at HEA offices in Homer and Kenai. They must be returned by Friday, January 8, 2010 at 5 PM.

This and other important issues will be discussed at tomorrow’s (January 5) HEA Operations Committee meeting starting at 11 AM. Southern peninsula members can video conference from the Homer HEA offices. If you can’t attend why not take a few minutes to request that the Board extend the application deadline for a couple of weeks.

Deborah Debnam
debbie(email@)debnam.com / 907.262.9277
District 2 - Sterling; Term Expires 2010

Tim Evans
heatde(email@)gmail.com / 907.262.3734
District 2 - Sterling; Term Expires 2011

David B. Thomas
davidthomashea(email@)gmail.com / 907.283.4109
District 1 - Kenai; Term Expires 2011

Eugene "Jim" Levine
jlevine(email@)homerelectric.com / 907.299.0323
District 3 - Homer; Term Expires 2012

Jose "Tony" Garcia
tonygarcia43(email@)hotmail.com / 907.252.7790
District 1 - Nikiski; Term Expires 2010

Alan Bute
byrdave(email@)yahoo.com / 907.776.8115
District 1 - Kenai; Term Expires 2012

Ed Oberts
eoberts(email@)gci.net / 907.398.8039
District 2 - Soldotna; Term Expires 2012

HEA and Self Regulation

2009-10-22T14:05:00.003-08:00

The attached letter went to the HEA Board of Directors and General Manager Janorschke yesterday. I am told that self regulation, or as HEA frames it, "local control" will be discussed at the November 3 Board Meeting in Kenai. Should this issue move forward you will be asked whether or not to give up regulatory oversight of our coop. This would perhaps be the largest structural change in HEA's history. It is in your interest to see that the issue is fully explained to your satisfaction prior to any such vote. One way to do this is to attend the next Board meeting in Kenai or via video conference from the Homer HEA offices.

If you like, you can also e-mail your sentiments regarding the process HEA should use to explore this issue.

Deborah Debnam, President debbie(email@)debnam.com
Tim Evans, Vice President heatde(email@)gmail.com
David B. Thomas, Secretary/Treasurer davidthomashea(email@)gmail.com
Eugene "Jim" Levine, Deputy Secretary jlevine(email@)homerelectric.com
Jose "Tony" Garcia tonygarcia43(email@)hotmail.com
Alan Bute byrdave(email@)yahoo.com
Ed Oberts eoberts(email@)gci.net
J. Michael Pate Mike_Pate(email@)wellsfargois.com

Brad Janorschke, General Manager bjanorschke(email@)homerelectric.com

HEA Considers "Self Regulation"

2009-10-22T13:53:00.001-08:00

The HEA Board is taking steps toward becoming "self regulated." What does that mean? At present HEA, like most moderate to large Alaska electric utilities, operates under the oversight of the Regulatory Commission of Alaska (RCA). The RCA was established to see that utilities adhere to state laws and regulations and operate in a fair and fiscally responsible manner. As part of it's mission, the RCA works to mitigate differences between utilities and help protect consumers. However, Alaska law allows utilities to opt out of RCA oversight by a vote of the member/ratepayers. Under self regulation, the HEA Board would be free to conduct business absent any oversight except that of the member/ratepayers (that's us).

At this month's community meetings HEA members are being asked to complete a short opinion survey (attached) regarding how they might feel about getting the coop out from under RCA purview. Of course, most members probably don't know much about the RCA or what it might mean if they vote to opt out.

This is a significant issue for all HEA members. You should become informed as quickly as possible so that you understand how such a change could affect you.

Is "self regulation" good or bad for us? That probably depends on how much confidence and trust you have in our HEA Board and management.

From discussion at Tuesday's Board meeting, it appears that a majority of the HEA Board favors moving to "self regulation." They feel that our coop could operate more efficently and cost effectively without RCA oversight. To be sure, the workings of the RCA are typically ponderous, time consuming, and sometimes frustrating. Is there anything to lose by dropping out? Perhaps not. Although one thing come to mind right away -- under "self regulation," the new Alaska net metering rule would not apply to HEA. But without more information, it's difficult to know if other problems might arise.

At Tuesday's meeting HEA Board members and General manager Janorschke discussed the importance of providing HEA members with good information about the reasons for, the process, and potential outcomes of a transition to "self regulation." Hopefully this would be more than a sales pitch.

It's up to us to require a frank and open examination of the potential risks and benefits of such an enormous change well before we are asked to vote.

Net Metering

2009-10-22T13:49:00.002-08:00

On October 14, 2009 the Regulatory Commission of Alaska (RCA) approved a net metering rule. While it appears to have some flaws, this is still a great step forward for anyone interested in alternative energy. The final text of the rule is not yet available but a preliminary summary from the RCA is attached.

For the individual or business wanting to install solar panels, a wind turbine, or other type of renewable energy system net metering is far and away superior to HEA’s SNAP program. This is, of course, why HEA has had difficulty getting members to contribute to SNAP. See some important differences between the two in the attached comparison.

The new net metering rule will become effective after final text has been reviewed and approved by the Attorney General and Lt. Governor.

Seldovia HEA Meeting October 23rd

2009-10-13T14:27:00.006-08:00

HEA will hold a community meeting in Seldovia to discuss
current projects and issues on 
Friday, October 23rd at noon.

RCA Net Metering Hearing October 14th

2009-10-13T14:22:00.002-08:00

The Regulatory Commission of Alaska will hold testimony and potentially
adopt a Net Metering rule on Wednesday, October 14th at 9:00 a.m. 

According to RCA staff, the commission may vote yes or no on adopting
net metering regulations based on comments received to date. It is also
possible the commission will request additional comment on a revised
version of proposed net metering regulations.

Teleconferencing can be arranged if
requested in advance of the meeting.

More information may be obtained by calling 1-800-390-2782
or by visiting the RCA website at http://rca.alaska.gov.

The HEA Board will meet Tuesday, September 8,

2009-09-08T15:05:00.002-08:00

in the Kenai Offices, 280 Airport Way, Kenai AK 99611.

Operations Committee 11:00 AM
Finance Committee 2:00 PM
Regular Board Meeting 5:30 PM

Meeting agendas are now available on the HEA website:

http://www.homerelectric.com/nbsp/BoardMeetingInformation/Agendas/tabid/220/Default.aspx

Please consider attending one of these sessions.
It remains important that some regular members attend Board Meetings to show ongoing interest with our electric cooperative's affairs.

If you would like to attend but cannot travel to Kenai, consider asking the meeting to be teleconferenced to the Homer office.
Homer Office (907) 235-8551 -- Kenai Office (800) 478-8551

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

HEA PRESS RELEASE: AUGUST 28, 2009

HEA anticipates a rate reduction beginning October 1

Homer Electric Association’s blended rate is anticipated to go down by 12.57 percent for the fourth quarter of 2009. The new rates are scheduled to go into effect for all billings starting on October 1.

The reduction is the result of a 55.7 percent decrease in the wholesale power cost rate adjustment (WPCRA), from 4.439 cents to 1.966 cents under terms of a filing that will be submitted on August 31 to the Regulatory Commission of Alaska (RCA).

The WPCRA is adjusted quarterly to reflect changes in the cost of power purchased from Chugach Electric Association. Homer Electric is under contract to purchase its power from Chugach Electric through 2013. Natural gas is the fuel used to generate more than 90 percent of the power sold to Homer Electric.

In addition, Homer Electric submitted a Simplified Rate Filing on August 14 to the RCA requesting a 1.83 percent increase to the energy base rate. For residential members, this will be an increase from 13.296 cents per kilowatt hour to 13.539 cents per kilowatt hour in the fourth quarter.

If approved by the RCA, the decreased WPCRA rate, combined with the increase of HEA’s base rate, sets the new overall blended rate at 15.505 cents per kilowatt hour; a 12.57 percent reduction from the previous rate of 17.735 cents per kilowatt hour.

The new rate will mean a monthly savings of $14.05 for the average Homer Electric residential member using 630 kilowatt hours per month. The new rates for Homer Electric members are planned to go into effect starting with all billings as of October 1.

Solar Tour

2009-08-11T16:14:00.001-08:00

Saturday, August 15, 2009
The Alaska Solar Tour
10am to 4pm including Kenai Peninsula sites

The ALASKA SOLAR TOUR is a free self directed tour from 10am to 4pm at 25 different sites around the state. The Alaska Solar Tour is sponsored by the Alaska Center for Appropriate Technology in conjunction with the American Solar Energy Society.

The Alaska Solar Tour will feature home and business sites in our community that showcase installations of Solar thermal, Photovoltaic, and green building features. Find out how your neighbors are trimming their energy bills, generating their own electricity, and improving the future of our planet by living sustainably today.

No registration required. View the map of host sites at www.AlaskaSolarTour.ORG and get a carload of friends to visit a few of your neighbor’s open house sites. Communities involved include: Anchorage, Mat-Su, Kenai/Soldotna/Kasilof, Fairbanks/Delta Junction, Nome, Homer, and Kalgin Island. Join us in tribute to these trail blazer Alaskans who have ventured out ahead of the crowd using a cleaner, safer, and renewable source of energy.

In the Kenai/Soldotna/Kasilof area we have 2 sites; the 1^st site; (open from 10am-Noon) is the Fox Farm on K-beach and Old Timer Rd. It has a newly installed 700 watt PV system that produces 50% of the power needed for this small home. There will be refreshments and a performance by Amy Hettinger* at 11am. Amy is a folk singer and a volunteer for Bioneers in Alaska. Also present will be Timothy Oliver – the Kasilof artist who was commissioned to paint the artwork for the 2009 poster.

From Noon - 4pm Ionia will provide a home grown vegetarian buffet while sustainable energy seekers are energized by the angelic sounds of Amy Hettinger* on the guitar from 1- 2pm. Ionia will provide tours of their community demonstrating their focus on sustainability. A high efficiency wood fired Garn boiler and 4 large Heliodyne flat plate solar collectors provide hot water for domestic use as well as space heating. Each year Ionia continues to get closer to the sustainability goal we all strive for. This organic community has replaced $12,000 per year of propane and $3,000 per year of heating oil with clean, safe, and renewable energy.

*Amy Lou Hettinger
Born and raised in a log cabin her parents built in the knobs of Kentucky, singer-songwriter Amy Lou grew up 'porch pickin' and singin' with an amazing family of musicians. Three years ago, she began to write her own songs and migrated north, where she promptly fell in love with the Alaskan mountains and people. Just back from completing an intense Masters in Education at Harvard, she's glad to be home. Amy Lou’s fresh and uplifting music has been called “edifying,” and her voice, “lilting” and “angelic.” You can get a taste of Amy Lou's music, and see a schedule of upcoming shows,
at www.myspace.com/amylousings.

July 16th Update

2009-07-16T13:07:00.005-08:00

HEA Board Vacancy Update

The following people applied to fill Brian Hirsch's Board seat:

Rick Foster
Robert "Bob" Burns
Douglas "Doug" Stark
Don Seelinger
Steve Franklin

Applicant interviews were conducted on Monday, July 13. As of the July 14 Board meeting no selection had been made. There appears to be significant disagreement among sitting Board members over which applicant is best qualified.

HEA Board Meeting
Representative Paul Seaton attended the July 14 Board meeting to discuss contents of his May 13 letter to the Board. In essence, he stated that the letter was not meant as a criticism of HEA policy but rather was notification that he would no longer attempt to explain HEA policy to irate constituents. Seaton explained that he and his staff lacked the expertise needed to clarify actions and intent of HEA Board and management so would refer all future inquiries directly to HEA.

General Manager Brad Janorschke provided a copy of his July 14 report (see below) to the Board from the July 14 meeting. It gives an overview of some things discussed. We have circled items of special interest in red. Perhaps most notable is the news of rapid progress on the Mt. Spur geothermal lease potential evaluation.

HEA Website Redesign
There has been a good deal of work done to improve the HEA website. Many changes reflect input of HEA members and will make the site more user friendly. Check it out at http://www.homerelectric.com/ and if you have comments or other suggestions contact Joe Gallagher at jgallagher( email @) homerelectric.com or 283-2324.

2009-07-16T12:45:00.006-08:00

HEA MANAGER’S REPORT
July 14, 2009

Wow, what a terrific summer we are having. I hope all of you have been taking advantage of this weather before the reduction in daylight hours becomes too easily noticeable. With the recent warm weather, it has been unseasonably dry so please keep this in mind as there has been a rash of wildland fires lately that have been assisted by the dry conditions. Although many of our employees have been busy with summer vacations, we have still managed to keep projects moving toward completion.

Some of the highlights over the past few weeks include the following:

1. Financial Update – HEA’s May, 2009 monthly margin of just over $309,800 reflects a rebound in our year to date margins to $1.4 million. The new total is within approximately 14% of forecasted margins of $1.7 million.
Members have been informed on their June and July bills about the new rates going into effect July 1, 2009. Press releases have also been issued explaining the 1.84% decrease in Base Rates, the WPCRA increase from 3.970 cents to 4.439 cents per kWh and the Regulatory Cost Charge (RCC) increase from .0362 cents to .0432 cents per kWh.

2. Alaska Energy Authority (AEA) Railbelt Integrated Resource Plan (RIRP) – AEA held their Technical Conference July 8th and 9th. As of this writing, I attended the first day of the program that included a status report on the Regional Integrated Resource Plan (RIRP) from AEA and Black & Veatch, reports from representatives of Chugach Electric Association and an update from Usibelli Coal. Several HEA Directors, along with myself, will have additional comments on this conference at the Board Meeting. Some interesting tidbits presented include:

By the end of 2010, enough data will have been collected to indicate whether a 100 MW geothermal project is a viable option on Mount Spur;

400 MWs of new generation will be required to replace the currently aging fleet over the next 15 years;

Tidal and wave technology is expected to be commercialized within the next 5-7 years;

The South Central Alaska Power Project (SCAPP or South Anchorage) is expected to be online sometime in 2013 at a cost of $450M;

Stored hydro electric energy used to meet demand during peak periods is extremely valuable;

Long term, we must reduce our expose to the price volatility of natural gas;

Natural gas will continue to be a significant component in meeting our future energy
needs.

3. Natural Gas Supply Company – As I mentioned last month, representatives from HEA met with the Alaska Natural Gas Development Authority (ANGDA) about the creation of the Natural Gas Supply Company (NGSC). We recently received a Confidentiality Agreement from NGSC which would permit disclosure of confidential information that has been acquired by ANGDA. By next week staff should have a recommendation on HEA’s membership in the not-for-profit natural gas supply and/or services cooperative.

4. Power Supply Update – Great news! HEA was able to secure the services of the Owner’s Engineer position with the individual mentioned last month. We are excited to bring Mr. Flynt on board and we expect his arrival around or before mid August. Filling this position at the present time is key if we are to stay on schedule. In addition to filling this position and working on several other related tasks, we have initiated the process of obtaining required environmental permits. As with any generation project, obtaining permits in a timely manner will be critical.

5. Renewables Update:

Wind Power Update – Significant activity continues on two projects in particular. The first being Fire Island whereby Wind Energy Alaska (WEA) continues their efforts to obtain the permits necessary to expand the project to roughly 50 MWs and work out the challenges of integrating the non-firm source of energy into the transmission grid. Last I heard the completion date has been pushed back to 2011.
The other wind project that is gaining momentum is the Kenai Winds (i.e. BQ Energy) Project located in Nikiski. Compared to Fire Island, this project is much smaller and therefore should be much easier to integrate with the existing electrical infrastructure. This project is expected to be on-line before Fire Island and is worth getting excited
about.

Small Scale Hydro (Kenai Hydro, LLC) Update – Field data collection activities continue at Grant Lake and Falls Creek. As mentioned last month, these activities will include foot surveys for fish aggregation, stream gauging and instantaneous water flow measurements. Data collected over the next 4 months will assist in re-establishing stream hydrology and assist with building the stream flow model required by the agencies to determine project impact. In addition, work continues on two FERC required documents (Notice of Intent and the Preliminary Application Document). The permit application is lengthy and I would anticipate that if after two years of analysis and successful receipt of all required permits, the economics of these projects will be the same as almost all other hydro projects. Grant funding, or some creative financing, will be necessary to make them economically viable. Updates on this hydro project can be found at www.kenaihydro.com.

6. BOD Workshop – Special thanks to all the directors who found time to attend the Board Workshop held two weeks ago. Mr. Aadland had nothing but complements describing the participating Directors and I was very pleased with the questions and discussion during the afternoon session that I attended. I hope everyone in attendance felt the workshop was a good use of their time.

7. Chugach Electric Association (CEA) Rate Case – It appears CEA is projecting the following
increase to their members:
CEA Retail customers 5.4%
HEA 7.8%
MEA 2.0%
Seward 9.7%
MEA’s projected increase is lower because:

Their increase was larger in the previous rate case and as a result, CEA sees us as just “catching-up”; and

HEA’s load has not materially increased, while MEA’s has. As a result, MEA has more kWh & W to spread the fixed costs over. There are decided advantages to a growing electrical system. CEA is very interested in settling the issues between us. They realize how beneficial it was in the previous rate case. There will be $450,000 included in the 2010 budget for the CEA rate case.

8. Facilities Plan – At the July Operations Committee meeting, I anticipate having a Facilities Evaluation/Plan completed for Committee review. Our goal is to continue with ongoing required maintenance between now and 2014 with the intent of not making any significant investment in building facilities until after our new generation resources have been constructed.

9. HEA Rate Case Update – The Depreciation Study, the first component of the Rate Case, is finalized and upon acceptance by the Board of Directors will be filed with the RCA. As a result of the Study, we anticipate a reduction in depreciation expense in future years. Data collection continues for the Equity Management Plan which is the second component of the Rate Case. Using projected power costs, load forecasts and our long range capital plan, RW Beck will forecast our equity levels over the next 10 years. This is an essential tool needed to determine our revenue requirements portion of the HEA Rate Case. RW Beck will present an update of the Equity Management Plan at the August Board meeting. The Cost of Service and Rate Design elements follow the Equity Management Plan for presentation later this fall.

As usual, please feel free to give me a call anytime with questions. I look forward to seeing you next Tuesday evening in Homer.

Thanks,
Brad

Net Metering Comments Needed

2009-07-02T10:29:00.002-08:00

Alaska State Net Metering Standards Proposed
The Regulatory Commission of Alaska (RCA), seeks comment (Docket R-09-001).

Your input is needed by 4:00 PM Monday, July 13, 2009

Proposed Net Metering Standards require HEA and other large utilities to allow you to reduce home or business electric bills by installing wind turbines, solar panels, or other alternative technologies.

How does net metering work?
Your renewable energy system is connected to the HEA grid. You save money by subtracting the value of the energy you create from your utility bill. If you produce more energy than you use, you receive a credit for the next billing cycle.

Write your comments today -- request these 3 changes:

No special charges for customers who produce renewable energy. As proposed, standards allow utilities to charge net metering customers an added fee. This undermines the point of net metering and will discourage participation.

Adopt an annual billing cycle for net metering. The proposed billing cycle is monthly. It should be annual to give you maximum benefit from high seasonal solar and wind production peaks.

Cap the number of renewable energy systems based on peak demand. The proposed standards limit net metered energy to 1.5% of the utility’s average demand. Total capacity limit for net metered systems should be set at 1% of the utility’s peak demand (when power use is highest). A larger cap means more people benefit and it will allow our renewable energy economy to grow.

Submit your comments to:
https://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx.
(scroll down to R-09-001 and click far right box, “submit comments”) or mail them to:

The Regulatory Commission of Alaska
701 W. Eighth Ave. Suite 300
Anchorage, Alaska, 99501

For alternative communication formats to comment, please contact Joyce
McGowan at (907) 276-6222, toll-free at 1-800-390-2782, or TTY (907) 276-4533, or
send a request via electronic mail to rca.mail (email @) alaska.gov

COMMENTS MUST BE RECEIVED NO LATER THAN MONDAY, JULY 13 at 4 PM.

HEAMF Letter to the HEA Board‏

2009-05-21T16:00:00.004-08:00

HEA Members Forum- 3734 Ben Walters Lane - Homer, AK 99603

May 20, 2009 (Sent electronically)

Board of Directors
Homer Electric Association
3977 Lake Street
Homer, AK 99603

Dear HEA Directors:

On behalf of all HEA Members Forum (HEAMF) participants I want to express appreciation and support for your May 12 vote to "transition our cooperative away from involvement in HCCP." From subsequent discussion with several of you and through Director Evans' public statements, it is clear that the primary motivation was to protect HEA members from unnecessary financial risk. You are to be commended for taking your fiduciary responsibilities seriously. As you know, we had great concern involvement with the project was likely to increase our electric rates in the long run and perhaps involve our coop in protracted litigation over permitting disputes.

We realize that, given previous commitments to participate in restarting Healy 2, this was not an easy decision and that there will likely be pressure from both AIDEA and GVEA for you to reconsider. HEAMF participants will stand behind you in resisting any effort to coerce HEA into reversing the May 12 decision. We feel that AIDEA and GVEA obtained former commitments from our coop through obfuscation. Had they been ¬more candid about the many technical and regulatory challenges of a restart, we suspect that HEA may have been reticent to participate at a much earlier date. Fortunately you ultimately obtained the back ground needed to make an informed decision.

Thanks to each of you for your work on this important matter. There are many other options to be considered now in seeking sources for safe, dependable, affordable energy. HEAMF participants believe that each potential technology or specific project deserves a deliberate, fact-based evaluation of potential costs and benefits before being embraced.

We look forward to supporting you in this work.

Most sincerely,
Mike O'Meara,
Spokesman HEA Members Forum
399-4022

cc:
HEA General Manager Brad Janorschke
HEA Outreach Coordinator Joe Gallagher

The HEA Board Needs Our Support

2009-05-19T14:53:00.012-08:00

The May 12 vote against further participation in plans to restart the Healy 2 coal plant was both prudent and courageous.

By refusing to be manipulated into taking the risk and paying the costs for GVEA to acquire the Healy 2 plant, the HEA Board:

* Saved $47.5 million of HEA members’ money,

* Eliminated risk of significant added costs due to new mercury and CO2 emission control requirements,

* Avoided long-term electric rate hikes due to rising coal prices.

Unfortunately, the Alaska Industrial Development & Export Authority really wants to dump Healy 2 on someone else. Under a 2006 agreement with AIDEA, HEA committed to managing work required for restarting the plant. It's unclear how this will be resolved. AIDEA might use that agreement to pressure HEA to reconsider the May 12 vote. Our Board needs to know we are behind them 100% in withdrawing from Healy 2.

Please send HEA Board members a short message thanking them for their decision to drop Healy 2 and letting them know that you will stand behind them during the process of pulling out.

Alan Bute, District 1, byrdave (EMAIL @) yahoo.com or (907) 776-8115
Jose (Tony) Garcia, District 1, tonygarcia43 (EMAIL @) hotmail.com or (907) 252-7790
David B. Thomas, District 1, davidthomashea (EMAIL @) gmail.com or (907) 283-4109
Deborah Debnam, District 2, debbie (EMAIL @) debnam.com or (907) 262-9277
Tim Evans, District 2, heatde (EMAIL @) gmail.com or (907) 262-3734
Ed Oberts, District 2, eoberts (EMAIL @) gci.net or (907) 398-8039
Brian Hirsch, hirsch (EMAIL @) alaska.net or (907) 235-7164
Jim Levine, District 3, jlevine (EMAIL @) jaybrant.com, (907) 299-0323
J. Michael Pate, Mike_Pate (EMAIL @) wellsfargois.com or (907)-235-8105

HEA General Manager, bjanorschke (EMAIL @) homerelectric.com

Joe Gallagher, HEA Outreach jgallagher (EMAIL @) homerelectric.com

Update from Board Meeting!

2009-05-12T22:19:00.000-08:00

Today (May 12, 2009) the HEA Board of Directors voted to "...direct the
General Manager to cancel the RFP for the Power Supply Study and
transition our cooperative away from involvement in HCCP" [the Healy 2
coal plant]. The process of withdrawing from preliminary commitments to
Healy 2 may require a little time but, when questioned about it, 2 board
members confirmed that the intent is to end HEA's involvement with plans
to restart the Healy 2 plant.

Director Tim Evans made the motion to start the process of disengaging
from the Healy 2 project. It was adopted by a vote of 8 to 1. The single
opposing vote represented concern over discontinuing the Power Supply
Study and did not reflect support for Healy 2.

Member/Owners Needed to Attend Meeting

2009-05-12T15:21:00.003-08:00

Tuesday (May 12) starting at 5:30 PM in the Homer Offices.
(HEA Board Meetings will be held at the Homer offices May through August)

It would be good for the HEA Board to see a number of ratepayer/members at Tuesday’s meeting.

The Board needs to know that we are not satisfied with Brad Janorschke’s failure to provide good information on the status of Healy 2 negotiations, the Power Supply Study, and small hydroelectric proposals at the Annual Meeting of members. Just see you there reminds them that we are still watching.

It would also be a good opportunity to welcome the newly elected Board Members and encourage them to support more open governance of our coop. You can talk to anything on the agenda early in the meeting (agenda item 4). Other comments will need to wait until later (agenda item 11).

Tuesday’s meeting agenda is pasted below. Hope some of you will find time to join us.

HOMER ELECTRIC ASSOCIATION, INC.
REGULAR BOARD MEETING
May 12, 2009
5:30 p.m.
Homer, Alaska

A G E N D A
1.Call to Order
A)Pledge of Allegiance
B)Roll Call
C)Election of Officers (if needed)

2.Changes to the Agenda

3.Business of Visitors

4.HEA Member Comments upon Matters on the Agenda

5.Adoption of the Consent Agenda
A)Approval of Minutes: Regular Meeting of April 14, 2009
B)Resolution 09-21, Capital Credits Payment to Estates

6.Correspondence

7.Manager's Report (no exhibit)

8.Committee Reports
A)Operations and Special Projects, David Thomas, Chair
B)Finance, Audit, Rate and Planning, Don Seelinger, Chair
C)APA Report, Debbie Debnam, Board Member (remittance options)
D)Railbelt Utility Task Force, Mike Pate or Tim Evans

9.Unfinished Business
A)Acceptance of February Financial Reports
B)Audio Conferencing Options (presentation)
Board Meeting Agenda Homer Electric Association, Inc. Page 2

10.New Business
A)Resolution 09-22, Scholarship Winners
B)Resolution 09-23, Simplified Rate Filing for the Test Year Ending March 31,
2009

11.General Comments of HEA Members

12.Comments and Discussion by Board Members

13.Calendar Review

- May 12, 2009 / Homer Board Room
12:30 p.m. - Lunch
1:30 p.m. - RW Beck Workshop
3:30 p.m. - AEEC Annual Meeting
3:40 p.m. - AEEC Board of Directors' Meeting
5:30 p.m. - Board of Directors' Meeting

- June 9, 2009 / Homer Board Room
2:00 p.m. - Operations Committee Meeting
3:30 p.m. - Finance Committee Meeting
5:30 p.m. - Board of Directors' Meeting

- July 14, 2009 / Homer Board Room
2:00 p.m. - Operations Committee Meeting
3:30 p.m. - Finance Committee Meeting
5:30 p.m. - Board of Directors' Meeting

- August 11, 2009 / Homer Board Room
2:00 p.m. - Operations Committee Meeting
3:30 p.m. - Finance Committee Meeting
5:30 p.m. - Board of Directors' Meeting

OTHER MEETINGS

- May 27, 2009............................................
4:00p.m. - CEA Board Meeting

- June 24, 2009...........................................
4:00p.m. - CEA Board Meeting

- August 5-7, 2009 - Kenai/Soldotna...... APA Annual Meeting

14. Adjournment

Alaska Coal Workshop

2009-05-04T10:00:00.007-08:00

Wednesday May 6th, 2009
Homer
Islands and Ocean Visitors Center 7-9 PM

Join Goldman Prize award winner Judy Bonds and acclaimed lawyer Joe Lovett as they share lessons learned from fighting the destructive impacts of coal strip mining and coal power plants in Appalachia and the Southeast United States. Bonds and Lovett will pull back the curtain on the myth of “clean coal.”

Get information and tools needed to protect our lands, waters, fisheries and sustainable jobs.

Invite family and friends along to hear these two remarkable speakers discuss the true costs of coal!

HEA Board candidate Jim Levine

2009-05-03T10:03:00.004-08:00

HEA Board candidate Jim Levine shares HEA Members Forum’s two major objectives:

1. Replace the present policy of exclusion and secrecy by HEA Management and Board with open governance offering greater opportunity for member participation.

2. Move HEA toward a fossil fuel free grid through increased efficiency, embrace of renewable energy technology, prompt phase-out of natural gas & oil, rejection of coal, and greater collaboration with other “railbelt” utilities.

Jim also has the professional expertise and organizational experience to effectively advocate for us during HEA Board policy discussions.

If you haven’t already done so, you can vote for Jim Levine at the Annual HEA Meeting on Thursday, May 7 at Homer High School.

Please Attend the Annual HEA Meeting

2009-05-03T10:00:00.006-08:00

Thursday, May 7
Homer High School

Registration 4:30 – 6:30 P.M.
Business meeting starts at 6:00 P.M.

A large number of HEA members are needed to support passage of a resolution from the floor to
limit the Board’s ability to sign any binding agreement for purchase of power from the Healy 2 coal plant.

Still haven’t voted for your HEA Board representative? You can do so at the Annual Meeting.

You must register at the beginning of the meeting in order to vote on either issue.

Please write letters to the editor NOW (talking points below)

2009-04-07T10:00:00.005-08:00

We need media coverage about permitting problems with Healy Coal Plant No. 2 through letters to the editor and op-eds from citizens who want to assure that Healy’s operations will not harm air quality or pose a danger to public health.

Messages should not focus on wholescale abandonment of the project, but rather that, if Healy 2 ever does start up, it must have proper technology and its operations must be consistent with Clean Air Act requirements in order to protect human health and safety and environmental quality.

Please write letters to the editor NOW (talking points below).

Asking DEC and EPA to make sure the Healy permits are stringent enough to comply with the Clean Air Act and protect public health and the environment.

Demanding that the plant not be allowed to renew and apply its outdated existing permit, which was granted 10 years ago, to a different plant, with different combustion technologies.

Demanding that GVEA and AIDEA apply for new permits that comply with Clean Air Act requirements in the interests of public health and the environment.

Contacts:
Peninsula Clarion
Dori Lynn Anderson, Editor
http://www.peninsulaclarion.com/feedback/directory.shtml

Cinthia Ritchie, Seward Phoenix Log
critchie (emailAT)alaskanewspapers.com

Jenny Neyman, Redoubt Reporter
redoubtreporter (emailAT)alaska.net
phone: 394-6397

Homer News
Lori Evans, Editor
lori.evans (emailAT)homernews.com

Homer Tribune
Editor
spearson (emailAT)homertribune.com

Talking Points

Alaskans have a right to breathe clean air. Healy was designed to burn waste coal under a permit that was granted more than 10 years ago. The only way to ensure that air quality and public health are protected is to subject the plant to a new permitting process that fully analyzes the proposal and ensures current, more-protective standards are met. Coal is dirty. Burning coal releases mercury and carbon dioxide emissions into our air, into our lungs, and into our food supply. GVEA is taking the position that no new permit is required to begin operating Healy Coal Plant No. 2. Without proper permitting, air quality and public health will be compromised.

The Healy Plant has been closed for ten years. The technology is questionable. It’s just common sense to ask to ensure that public health, clean air and clean water are protected from outdated technology.
The Healy plant has been closed for 10 years and its decade-old technology was not designed to mitigate the more recent health concerns of mercury and carbon dioxide emissions. Healy’s technology was not clean 10 years ago – that’s part of the reason the plant never started up full operations –and is not clean today. Under these circumstances, it is logical that new permits are issued before this plant can operate safely.

DEC has an obligation to make sure its permits protect public health and ensure clean air and water .
DEC is obligated to protect public health and the environment through its permitting process for the Healy Coal Plant No. 2. Before the plant is allowed to operate, DEC must carefully review its permits to make sure air quality protections under the Clean Air Act are guaranteed. The Healy plant can pull the switch only when it can be shown that its permits meet Clean Air Act standards and requirement.

Communities and park lands are at risk from air pollution unless we make sure Healy runs clean.
GVEA and AIDEA have a moral obligation to ensure that Healy is properly permitted in a manner that protects public health – particularly pregnant women, the young and the elderly – clean air and clean water from mercury emissions and other toxic pollutants.

GVEA will pass additional costs of start up and environmental compliance onto ratepayers. Ratepayers should know how much their rates will go up and what they will have to pay for permitting the plant to comply with new environmental standards, and other start up costs. Ratepayers have the right to know how their rates will be affected before HEA commits to a power sharing agreement.

Your vote is very important

2009-04-01T10:00:00.006-08:00

HEA Board Elections Are Coming Up!

Mail-in Ballots will be sent to you soon.

Your vote is very important.

It's your chance to reform the way our coop does business.
Take time to learn which candidates share your concerns.

District 1: Alan J. Bute, Andrew Patrick
District 2: Jim Fassler, Terrance L. Johnson, Edward (Ed) V. Oberts, William (Bill) H. Tappan (incumbent)
District 3: Stephen (Steve) A. Franklin, Eugene (Jim) Levine, Peter (Pete) Roberts, Donald P. Seelinger (incumbent), Doug Stark
(ballot statements available at http://www.homerelectric.com/)

Which candidates support HEA Members Forum objectives?

Let's take a look, starting with District 3 (Clam Gulch, south). We'll look at Districts 1 & 2 soon.

Jim Levine says:

To achieve our goal of stable rates and clean, reliable energy we must eliminate our dependence on fossil fuels.

Jim Levine favors:

• Developing a diversified mix of renewables
• HEA taking a more active role to promote energy conservation
• Establishing policies for openness and transparency.

Jim Levine clearly shares HEAMF concerns and priorities!

Pasted below is a brief message I received from Jim. My apologies if you already received it directly from him.

Mike

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Hi Everyone,

As some of you are aware, I am running for the Homer Electric Association Board of Directors position. I feel very strongly that HEA should be taking a more in depth look at renewable energy generation systems before getting involved in a coal generation system in Healy. I have put together a website, LevineForHEA.com, that includes a few papers that I have prepared outlining my position regarding electrical power generation, and links to sites that show some of the potential we have for renewable energy systems here in Homer. In preparing for this election I have come to realize that we have so much potential to produce, and conserve, so much energy right here on the Kenai Peninsula. I have also included a site that shows one small portion of the problems that are posed by coal generation systems.

If you would like to be a part of this campaign, please call me at 299-0323, or email me at jlevine(emailAT)jaybrant.com. I would be glad to talk to you about all the exciting possibilities for the Kenai Peninsula in regards to electrical power generation.

Jim Levine

Legislative Hearing on Net Metering

2009-03-24T15:55:00.002-08:00

March 24 at 3pm, House Special Committee on Energy

HB 31 “An Act relating to net energy metering..."

Net metering advocates need to testify in favor of this bill's strong points and against its weakness. You can testify at the Homer Legislative Affairs office. Call the Kenai LIO (907-283-2030) if you would like to attend there. Or call 1-888-295-4546 when the meeting starts and explain that you are interested in testifying on HB 31.

SUPPORT An annual accounting period over monthly accounting to maximize benefit from renewable energy installations.

OPPOSE The exemption of Rural Electrical Cooperatives pending member approval.

ENCOURAGE In creasing the installation size limit from 25 KW to 100 KW to better accommodate participation by businesses. Final language that will establish true net metering for all railbelt utilities in a timely fashion.

Additional Info

HB 31 is one of two Net Metering Bills (the other is HB 66) brought before the House of Representatives.

*Negatives of HB 31*
HB 31 UNDERMINES the momentum toward net metering in AK by exempting electric coops from the bill's net metering rule. Many electric utilities in Alaska, including the largest ones, are coops. Electric coops are key to the effectiveness of the rule and need to be included. (The coops can waive the exemption, but only after the membership takes a vote, which can't happen until the RCA enacts a regulation setting forth the procedure for such a vote. All this will waste ratepayers' and RCA's time while delaying any decision on net metering for years.)

HB 31 also exempts utilities that generate 100% of power with alternative energy systems - ie exempts southeast utilities using hydro. Southeast residents have also sought the benefits of net metering and should not be excluded regardless of their utilities' source of power.

*Positives of HB31*
Annual accounting period (which allows a better payback on renewable systems than, say, a monthly accounting period). With annual accounting, excess generation from wind turbines during high seasonal wind cycles or from solar arrays during sunny seasons can offset lower production during periods of low wind or shorter days.

Unlike HB 66, HB 31 does not have a 1% aggregate limit on net metered generation. (This is a feature that the utilities tend to like because it limits thetotal number/power generation of net metering participants).

Want to Help Reform HEA and Get Paid for It?

2009-02-27T15:22:00.003-09:00

HEA Board Candidate Jim Levine Needs a Campaign Manager.

This will be a paid, temporary, part-time position with fluctuating hours.

Good writing, speaking, and computer skills are required. Community organizing experience would be an asset.

Jim is running for the HEA Board District 3 seat -- everything south of Kasilof

Jim advocates finding new and better ways to provide electricity to HEA members as part of a coordinated strategy to bring rates under control. He supports greater openness and transparency in the governance of our coop.

Contact Jim Levine for more information: 299-0323, jlevine(emailAT)jaybrant.com

If you're not interested, please pass this information on to people you know.

KBBI Coffee Table February 25th

2009-02-24T18:35:00.012-09:00

Tomorrow's KBBI Coffee Table Program Will Feature HEA Management's Perspective

9:00 AM - 10:00 AM
Wednesday, February 25, 2009

KBBI-AM 890, Homer
KDLL-FM 91.9, Kenai

HEA General Manager Brad Janorschke and Public Relations Coordinator Joe Gallagher will be the only guests.

KBBI News Director Casey Kelly chose not to invite any guests with differing perspectives:

I made that decision because there are so many issues surrounding HEA right now. I felt like the best thing to do was to have Brad come on and answer questions about everything from the rate increase to Healy to the power supply study to board elections and member relations.

But the fact is, no one is being given a soapbox. It's my position that a talk show is a dialogue between host, guests, callers, and listeners. No one element is given greater weight than another.

Nobody will be there to represent your concerns -- it's up to you to call in and express yourself.

Some basic talking points follow.

--------------------------------------------------------------------------------------------------------------------
Talking Points:

Independent Power Source Study:
HEA should stop negotiations with GVEA for a Healy 2 Power Sales Agreement pending the outcome of the recently announced power source study.

Right-to-Know:
HEA is a member-owned cooperative. Members have a right to know about HEA actions that will affect our utility rates. HEA must improve the ways members are informed. Why weren’t recent huge, mid-winter, rate hikes announced farther in advance? How come rate increases weren’t made in small increments over several months? Is HEA considering salary and benefits adjustments for its top management? Why do closed-door power sales agreement negotiations between HEA and GVEA continue? How will we be kept informed of progress and findings of the power source study and other projects?

High Risk:
The Healy Coal Plant faces significant and unknown costs from anticipated greenhouse gas and mercury rules. The Obama Administration is committed to enacting new rules that will limit emissions of greenhouse gasses, and the EPA is re-writing new, tougher rules on mercury emissions. These new rules will add significant Healy 2 startup and operating costs while increasing liabilities from litigation. AIDEA and HEA refuse to consider any of this in estimating costs. Such factors must be quantified before HEA commits us to any contract with GVEA.

Mounting Cost:
The Healy Coal Plant is a black hole for public money. Test runs in 1999 proved the facility could not provide reliable, “clean” power at a competitive cost. Despite this fact, the recent agreement on Healy 2 will retain its faulty technology. After pouring $300 million into this coal experiment how much more state money will a restart really take? The legislature will soon consider a bill to consolidate all railbelt utilities. Does HEA support this approach? What would consolidation mean for the Healy 2 agreement?

Higher Rates:
The Healy Coal Plant is likely to increase your electricity costs. HEA has lamented the 30 year contract with Chugach for natural gas since long before the gas cost spike. We got stuck with that contract because HEA thought gas would always be plentiful and cheap. Why does HEA think that, in the face of rising international demand, coal prices won't increase? Alaskan coal deposits may be vast but coal prices have never been stable. That’s because international markets dictate Alaska coal prices. International coal traders predict a 20% to 30% increase in just the coming six months. Under the current terms, HEA ratepayers will be forced to buy 1⁄2 the power from Healy, regardless of the cost.

Stable Rates:
HEA must look forward to renewable power, not backwards to coal. Alaska boasts enormous renewable energy resources that promise clean, fixed-cost power and sustainable jobs. After construction costs, renewable energy systems produce power on a fixed-cost basis, avoiding the market swings and pricet increases of fossil fuel. The Bradley Lake hydropower facility in Kachemak Bay is an excellent example, producing power at less than half the rate GVEA predicts for Healy 2. And it’s clean, reliable, fixed-cost power indefinitely. What ever happened to the idea of a gas-fired turbine on the Kenai Peninsula to bridge the gap until we can develop our renewable energy sources?

The Regulatory Commission of Alaska (RCA) Has Opened New Net Metering Dockets

2009-02-22T20:22:00.004-09:00

Net Metering would allow you to sell excess energy produced by your own solar panels, wind turbine, or other renewable technology back to HEA at the retail rate. Unlike the "SNAP" program, no member contributions are required.

Draft RCA Net Metering proposal:
Size Limit For Individual Renewable Energy System: 25 KW
Overall Renewable Energy Systems Limit Per Utility: 1% of utility’s peak demand
Net Metering Accounting Period: Monthly*
Treatment of Monthly Net Excess Power: Paid at utility’s non-firm avoided cost*
Renewable Energy System Types Allowed: Solar, Wind, Hydro, Biomass, Tidal, Ocean Thermal, Wave, Landfill Gas

The RCA will only establish an Alaskan Net Metering rule if ratepayers demand it.

*Monthly accounting is a bad idea. Excess energy production should be applied over a twelve month period. A solar array will produce most energy in late spring and summer when days are longest. Monthly won't let you use that excess production to offset fall and winter consumption.

*Payment at the utility’s “non-firm avoided cost” is a bad idea too. The utility charges you retail for the power but only credits your excess production at the wholesale price.

“Technical” conferences have been scheduled by the RCA for:
March 4, 2009 (Net Metering Standards, Docket R-09-1) and
March 18, 2009 (Interconnection Standards, Docket R-09-2).
Both will be held at the Commission’s East Hearing Room, suite 300, 701 West Eighth Avenue in Anchorage.

Persons planning to participate in one or both conference must file notice of intent by:
4:00 PM, February 27, 2009 for Net Metering Standards, Docket R-09-1
4:00 PM, March 13, 2009 for Interconnection Standards, Docket R-09-2
Notice must indicate whether you intend to appear in person or telephonically. Contact Joyce McGowan at 1-800-390-2782 or send to rca.mail@alaska.gov at least three days before the technical conference.

For More Information:
Regulatory Commission of Alaska

701 West Eighth Avenue, Suite 300
Anchorage, Alaska 99501-3469
In Anchorage: (907) 276-6222
Toll Free: 1-800-390-2782 (outside Anchorage, within Alaska)

E-mail: rca.mail@alaska.gov

Website: https://rca.alaska.gov/RCAWeb/home.aspx

Congratulations Everyone!

2009-02-13T10:02:00.005-09:00

After a rather contentious start, Tuesday’s HEA Board meeting resulted in action to respond to member concerns over the proposed Healy 2 deal with AIDEA and GVEA.
At least 55 members crowded Homer and Kenai HEA offices to express their views. In over two hours of testimony, all but three or four opposed involvement with Healy 2 for a variety of reasons, from environmental to public health and economic questions. Many thanks to all of you who were able to participate and to everyone who sent comments to the Board.

It was a long meeting but, in the end, the HEA Board passed a motion by David Thomas to issue an RFP for a comprehensive, third-party, revised power supply study. It will examine Healy in relationship to all other power options available for meeting HEA’s power needs. Cost/benefit assessment of the various options will be an element of this study. Future fuel costs, regulatory issues, reliability, and potential impact on rates will be among the things considered.

In response to a recommendation by General Manager Brad Janorschke, this process will be conducted by the Generation Committee. Two Board members and three member/ratepayer representatives (1 from each Board district) will work with HEA staff to develop and oversee the RFP and the estimated six month power supply study process.

Unfortunately, the Board did not preclude continuing contract negotiations for a Power Sales Agreement between HEA and GVEA. Still, it would be hard to imagine HEA attempting to sign such a document absent results of the completed study.

Many significant issues remain regarding the way our electrical cooperative does business but HEA Board members deserve words of encouragement for taking a significant step in response to member concerns.

Mike

Feb 11 HEA Press Release - Homer Electric to Study Power Supply Options

2009-02-13T10:00:00.004-09:00

HEA
3977 Lake Street, Homer, AK 99603 (907) 235-8167
280 Airport Way, Kenai, AK 99611 (907) 283-5831

PRESS RELEASE - February 11, 2009

Homer Electric to Study Power Supply Options

The Homer Electric Board of Directors will be seeking proposals from power supply consultants to evaluate all possible power generation sources that may be available to the cooperative. The decision was made at the February 10th board meeting, following nearly two hours of comments from Homer Electric members.

The goal of the independent, third-party study will be to provide the HEA board with a complete cost-benefit analysis of different generation sources including natural gas, coal, and various types of renewable energy.

The study will be coordinated by the Homer Electric Board of Directors, with input from three members of the cooperative. The board will select a member from each of the three districts in the cooperative to participate in the design and implementation of the power supply study.

Board President Debbie Debnam said the results of the power supply study will be critical to determining HEA’s future power generation decisions.

"The Homer Electric board is committed to finding a mix of generation sources that will provide our members with reliable, affordable energy. We need to know, as best as possible, what the choices are and what each of them will mean to our rates. This study will give us direction on how to proceed with some very important decisions," said Debnam.

The timeline for completion of the power supply study is approximately six months, although it is possible it could be completed earlier.

There were several comments at Tuesday night’s board meeting regarding the possibility of Homer Electric purchasing power from the Healy Clean Coal Project (HCCP).

Homer Electric recently approved a Term Sheet with the state’s Alaska Industrial Development and Export Authority and Golden Valley Electric Association to purchase half of the power from HCCP, but a binding Power Sales Agreement has not been negotiated.

"The goal of the power supply study is to find out what our best options are. The study will consider all factors involved in power production, including possible future fuel costs, regulatory issues, reliability, and most importantly, the impact it will have on the rates paid by our members," said Debnam.

Debnam said the board hopes to be able to send out a request of proposals for a power supply study by the end of February.

For additional information regarding this press release, please contact Joe Gallagher, HEA public relations coordinator, at 907-283-2324

Your Help Is Needed

2009-02-09T21:19:00.003-09:00

HEA Members in Kenai, Soldotna, Nikiski, Sterling and other parts of Board Districts 1 and 2 only:

Good candidates are needed to run against Bruce Passe (HEA District 1) and William Tappan (HEA District 2) in the HEA Board election.

Both these incumbent Board members support the Healy 2 deal.

If you are willing to be a candidate or help to find and support someone else who will, please contact fellow Kenai HEA member Jerry Brookman.

Gerald Brookman brookman (emailAT) alaska.net

Time is short -- candidate applications with at least 15 HEA member signatures (one per household) are due by February 27.

Homer Area Members Wanting to Attend the HEA Board Meeting

2009-02-09T21:13:00.001-09:00

Homer Area Members Wanting to Attend the HEA Board Meeting
Tuesday, February 10, 2009 -- 5:30 PM -- in Kenai:

There will be a van leaving Homer at 3:30 PM to take HEA members to the HEA meeting in Kenai – please respond Bob Shavelson if you can join! Space is limited.

It's still important to have a good turnout at the Homer office as well.

More Electric Rate Increases? Count on it!

2009-02-09T21:11:00.001-09:00

If HEA signs with AIDEA and GVEA to restart the failed Healy 2 coal plant HEA members will be required to:

Reimburse GVEA for purchase and startup costs
Pay for any new pollution control equipment and operations
Pay for potential new litigation costs
Pay for increases in the price of coal

Those costs will be added to your electric rates.

Attend the HEA Board Meeting
Tuesday, February 10, 2009 -- 5:30 PM -- 280 Airport Way in Kenai
Or by video conference at the Homer HEA office

HEA members may speak for 3 minutes at the beginning of the meeting on any topic on the agenda. The Healy 2 issue is listed under Item 9, Unfinished Business, (B) Revised Power Supply Study (no exhibit).

Tell the Board why you think Healy 2 is a bad idea.
Request a competent, third-party power source option assessment and cost/benefit analysis.
Ask them not to sign a contract unless these studies support Healy 2.

Numbers count.
Only a large turnout of HEA members at both offices is likely to get the HEA Board’s attention.

Love or Hate Coal, Healy 2 is a bad deal for HEA members.

2009-02-09T21:05:00.001-09:00

AIDEA gets rid of a costly white elephant.
GVEA gets another coal plant.
HEA members get to pay the bills.

Take 3 steps to avoid unnecessary rate hikes:

1. Contact HEA Board members.
Tell them you don't want them to sign a contract with AIDEA and GVEA under terms they approved last month.

Debbie Debnam President (Sterling): 262-9277
Donald Seelinger, Secretary/Treasurer (Seldovia): 399-7573
Bruce Passe, Deputy Secretary (Kenai): 283-4617
William "Bill" Tappan (Kenai): tappassoc (EMAIL@)acsalaska.net; 260-6961
Tim Evans (Kenai): heatde (EMAIL@) gmail.com; 262-3734
Jose (Tony) Garcia (Nikiski): 394-2489
Brad Janorschke, General Manager: bjanorschke (EMAIL@) homerelectric.com; 235-8551

2. Write a letter to the editors.
Tell Peninsula newspapers why you oppose the proposed Healy 2 deal.

Peninsula Clarion, Anderson, Dori Lynn (Editor), dorilynn.anderson(EMAIL@)peninsulaclarion.com
Homer News, Letters to the Editor, letters(EMAIL@)homernews.com
Homer Tribune, Letters to the Editor, letters(EMAIL@)homertribune.com
Seward Phoenix Log, Cinthia Ritchie, critchie(EMAIL@)alaskanewspapers.com
Redoubt Reporter, Jenny Neyman, redoubtreporter(EMAIL@)alaska.net

3. Plan to attend the February 10 HEA Board meeting.
Bring your friends and neighbors. The meeting will be at 280 Airport Way in Kenai (5:30 PM). It will be video conferenced to the Homer office.

HEA General Manager Brad Janorschke claims the plant will produce power at a competitive price but there has been no third party assessment of:

Technical feasibility
Healy 2 relative to other power source options available to HEA
Potential costs and benefits of the proposed agreement

There is nothing to support Janorschke’s assertion.

To Recap Recent Events - January 27th

2009-02-09T20:58:00.000-09:00

Homer Electric Association is not yet legally committed to the proposed deal with GVEA and AIDEA to restart the Healy 2 coal plant. What the HEA Board voted to approve earlier this month was a set of terms to be used in drawing up a contract. There is still time to stop the Healy 2 boondoggle.

As many of you know, at the January 22 special Board meeting Brian Hirsch, Mike Pate, and David Thomas hoped to have the HEA Board approve that a 3rd party analysis be done for power supply options to see where Healy fits in. Through procedural shenanigans, the Board President prevented such a vote. All this was covered fairly well in the Peninsula Clarion.

Had Brian, Mike, and David been successful, this analysis would have slowed the movement toward a contract. If no contract is voted on by August 1, then everything re-sets. They will now try to bring this issue to a vote at the February 10 Board meeting in Kenai (5:30 PM). The meeting will be video conferenced to the Homer office.

Brian, Mike, and David need our continuing support. This is how you can help:
The following HEA Board representatives voted in favor of the Healy 2 agreement terms. If any of them represent your district please keep urging them to reconsider or at least support a 3rd party analysis of present and potential future power supply options. Even if you have already contacted them, try again. Be reasonable and polite but firm.

Debbie Debnam President (Sterling): 262-9277
Donald Seelinger, Secretary/Treasurer (Seldovia): 399-7573
Bruce Passe, Deputy Secretary (Kenai): 283-4617
William "Bill" Tappan (Kenai): tappassoc (EMAIL@)acsalaska.net; 260-6961
Tim Evans (Kenai): heatde (EMAIL@) gmail.com; 262-3734
Jose (Tony) Garcia (Nikiski): 394-2489
Brad Janorschke, General Manager: bjanorschke (EMAIL@) homerelectric.com; 235-8551

Plan to attend the February 10 Board meeting to express your concerns about Healy 2 and your support of Board members Hirsch, Pate, and Thomas. Having a standing room only crowd at both Kenai and Homer offices will send a powerful message that HEA members from all three Board districts want a change in course.

HEA Board Elections and Annual Meeting
March 6 -- Board candidate "petitions" are due. These Board members terms are up and may seek reelection.

Bruce Passe, District 1
William Tappan, District 2
Don Seelinger, District 3

Think about whether or not you want to see them reelected. If not, the best strategy is to field ONE good opposition candidate from each district.

April 3 -- Ballots are mailed to all members. Joe Gallagher tells me that most of them are returned within the first week.

May 6 -- Mail-in ballots must be received (not postmarked) by 5:00 PM. On that last day, ballot boxes are set up at both the Homer and Kenai offices for people who forgot to mail their ballots.

May 7 -- The Annual Meeting will be held starting at 5:00 PM at Homer High School. Anyone who failed to return Mail-in ballots will be able to vote at the meeting.

Healy "clean' Coal Info

2009-02-09T20:50:00.000-09:00

Tired of Skyrocketing Electricity Costs?
Tell HEA! Stop the Secret Meetings! No Coal!
Support Fixed-Cost Renewable Energy!

THE PROBLEM: The Homer Electric Association (HEA) Board will meet THIS Thursday (Jan. 22) to reconsider its vote to help re-start the long-defunct Healy Coal Plant 2 outside Denali. The meeting will take place behind closed doors during an “executive session.” We need your voice to tell HEA to stop the secret meetings and to say “no” to costly coal and “yes” to fixed-cost renewable power!

What YOU Can DO:

Contact HEA Boardmembers & the HEA General Manager:

Debbie Debnam President (Sterling): 262-9277
Donald Seelinger, Secretary/Treasurer (Seldovia): 399-7573
Bruce Passe, Deputy Secretary (Kenai): 283-4617
William "Bill" Tappan (Kenai): tappassoc (EMAIL@)acsalaska.net; 260-6961
Tim Evans (Kenai): heatde (EMAIL@) gmail.com; 262-3734
Jose (Tony) Garcia (Nikiski): 394-2489
Brian Hirsch (Homer): hirsch (EMAIL@) alaska.net; 235-6842
J. Michael Pate (Homer): Mike_Pate (EMAIL@) wellsfargois.com; 235-8105
David B. Thomas (Kenai); davidthomashea (EMAIL@) gmail.com; 283-4109
Brad Janorschke, General Manager: bjanorschke (EMAIL@) homerelectric.com; 235-8551

Talking Points:

* Right-to-Know: HEA has concealed its actions on the Healy Coal Plant through a series of secret negotiations and closed-door executive sessions. HEA is a member-owned cooperative and HEA members have a right-to-know about HEA decisions that will affect our utility rates far into the future. HEA must hold a public forum before moving ahead with any Healy Coal contracts with GVEA and/or AIDEA.

* High Risk: The Healy Coal Plant faces significant and unknown costs from anticipated greenhouse gas and mercury rules. The Obama Administration is committed to enacting new rules that will limit emissions of greenhouse gasses, and the EPA is re-writing new, tougher rules on mercury emissions from coal plants. These new rules will add significant costs that AIDEA and HEA have yet to consider in the final operating costs, and they expose HEA to increased liabilities from litigation. These costs must be quantified before HEA enters any contract with GVEA and/or AIDEA.

* High Cost: The Healy Coal Plant is a black hole for public money. Test runs in 1999 proved the facility has fatal design flaws, and could not provide reliable, low cost and “clean” power. Despite this fact, the recent agreement on HCP will retain this faulty technology. After pouring $300 million into this coal experiment, it makes little sense to throw good money after bad. The HEA Board should review and address the factual basis for GVEA’s original rejection of the Healy Coal Plant before moving forward.
(over)
* Higher Rates: The Healy Coal Plant will expose HEA ratepayers to rising electricity costs. Because international markets dictate Alaska coal prices, HEA ratepayers will be subject to the vagaries of fluctuating market conditions. Under the current terms, HEA ratepayers will be forced to buy ½ the power from Healy, regardless of the cost. HEA must evaluate the projected costs for Healy Coal power and how such costs will impact HEA ratepayers before moving forward.

* HEA must look forward to renewable power, not backwards to coal. Alaska boasts enormous renewable energy resources that promise clean, fixed-cost power and sustainable jobs. After capital costs, renewable energy systems produce power on a fixed-cost basis, avoiding the market swings and cost increases that accompany fossil fuel usage. The Bradley Lake hydropower facility in Kachemak Bay is an excellent example how renewable energy can provide clean, fixed-cost power indefinitely. HEA should invest in clean, renewable, fixed-cost power instead of coal.

ADDITIONAL INFORMATION:

SUMMARY: On January 13, 2009, the Homer Electric Association (HEA) Board of Directors met in a closed-door executive session to consider a deal to re-start the problem-plagued Healy Coal Plant No. 2 just outside Denali National Park. The very next day, HEA staff attended a press conference in Anchorage, where the Alaska Industrial Development & Export Authority (AIDEA) announced an agreement where AIDEA will sell the facility to Golden Valley Electric Association (GVEA) for $50 million and HEA will purchase ½ the power it produces – regardless how much that power costs! The HEA Board and staff rushed this decision through after a series of closed-door meetings, and without considering the significant financial and technological hurdles presented by the facility’s dubious technology. If you care about rising utility rates, make time NOW to call your HEA representatives and attend the HEA Rally!

BACKGROUND: The Alaska Industrial Development and Export Authority (AIDEA) owns the Healy Coal Plant No. 2 (HCP) (often referred to as the Healy “Clean Coal” Plant (HCCP)) located just outside the boundaries of Denali National Park. The U.S. Department of Energy selected the HCP as a demonstration project in 1989 to test alternative coal-burning technologies. The HCP was designed to burn coal in stages to minimize the formation of nitrogen and sulfur oxides and particulate matter to reduce air pollution. This decade-old technology, though less polluting than its predecessors, was not designed to mitigate the more recent concerns of mercury and greenhouse emissions. Construction of the 50 megawatt (MW) facility was completed in 1997, and test runs occurred for approximately 6 months in 1998-1999. However, “scaling up” the facility’s laboratory design into an operating power plant proved highly problematic, resulting in frequent shut-downs and various operational disruptions. In 1999, the plant failed a 90 day test to gauge reliability and economic feasibility, and the plant has been shut down since January 2000, because safe, reliable and economic operation was not possible with the experimental technology. Despite over $300 million in capital investments in the HCCP, AIDEA had been engaged in protracted litigation with Golden Valley Electric Association (GVEA) over power purchase, operations and related issues, and the facility remains idle.

Recent Media Links:

Andrew Halcro, Healy: The Art of the Shady Deal: www.andrewhalcro.com/healy_the_art_of_a_shady_deal

Greg Erickson, State scrambles to help Healy beat emission upgrades (Editorial)
http://www.adn.com/opinion/comment/erickson/story/658558.html

Anchorage Daily News Editorial, Our View: Another Healy Deal:
http://www.adn.com/opinion/view/story/659371.html

For more information:
Mike O’Meara, HEA Members Forum: 907.399.4022; mikeo (EMAIL@) cosmichamlet.net

Narrative Statement of Facts (Healy Coal)

2009-02-08T12:34:00.008-09:00

This legal document was submitted to an Alaskan court by Golden Valley Electric Association in support of its case against the Alaska Industrial Development & Export Authority. GVEA filed suit against AIDEA in May of 1998 over problems with the Healy 2 coal plant. By early 2009 litigation between the parties was still pending.

Origins of the HCCP Project

1. The Healy Clean Coal Project (“HCCP”) grew out of the US Department of Energy (“DOE”) Clean Coal Technology Demonstration Program which encouraged development of new technologies to foster secure and reliable energy from coal combustion that met environmental regulations and were economically competitive.

2. In 1989, Usibelli Coal Mine (“UCM”), in an attempt to expand its domestic market for coal produced from its Healy mines, applied to the program for funding for a coal drying facility. UCM’s original coal drying facility concept morphed over time into a full scale coal fired power plant. UCM and the Alaska Industrial Development and Export Authority (“AIDEA”) became
partners with AIDEA taking the lead in UCM’s request for DOE funding.

3. Golden Valley Electric Association (“GVEA”) was at that time operating a 25 megawatt coal fired plant in Healy (“Healy #1) that GVEA had constructed in 1967. It burned coal purchased from Usibelli and produced 33% of the power then used by GVEA’s customers.

4. As part of its DOE grant application, AIDEA assembled a team of engineers and equipment suppliers to design and supply the experimental equipment to the proposed project – Healy Clean Coal Project (“HCCP”). AIDEA approached GVEA to purchase HCCP’s output for transmission over the then existing intertie between Healy and GVEA’s customers in interior Alaska.

5. GVEA declined to purchase the power or be otherwise involved in the project because it had just been ordered by the Regulatory Commission of Alaska (“RCA”) (then known as the Alaska Public Utilities Commission), under the federal law known as “PURPA”, to enter into a contract whereby GVEA would purchase the output of a plant proposed to be built by an independent power producer, if and when the PURPA plant was actually built. GVEA also declined to be involved in the proposed experimental plant because GVEA needed to acquire a base load facility with steady, economical, long term reliable power.

6. AIDEA then shopped its proposal to sell HCCP’s output to the Anchorage based utilities. They were not interested because HCCP’s economics could not match the low cost of the electricity already being generated by the Anchorage area’s natural gas power plants. In fact GVEA was at that time purchasing power from those same gas power plants, and had been since 1984, at a price much lower than HCCP could sell its power.

7. Without a power purchaser and a long term power sales agreement, AIDEA had no viable business plan to operate HCCP and could not effectively issue bonds for the state’s portion of the costs. AIDEA needed to raise money to fund the state’s portion of the cost of HCCP. Even if AIDEA sold “general obligation” bonds, neither bond buyers nor the state legislature would provide funds for a project that didn’t have at least a perceived stream of income from power sales to be a source of repayment.

8. AIDEA therefore approached GVEA again and asked GVEA to purchase HCCP’s output. GVEA told AIDEA in no uncertain terms that, while it was interested in expanding its base load capacity because of GVEA’s future load growth projections, it had absolutely no interest in the experimental “clean coal” technology or in paying any price premium for the power from HCCP.
AIDEA and GVEA enter into a Power Sales Agreement and proceed to get approvals necessary to build HCCP

9. AIDEA worked with GVEA to mitigate GVEA’s concerns over the economics, reliability and safety of the experimental plant by contractually addressing each issue in the terms and conditions of a proposed Power Sales Agreement (“PSA”) between the parties. In the PSA, which was executed on December 6, 1991 and a number of ancillary and related agreements, AIDEA agreed to a price for HCCP’s power that would meet or beat the price of the Anchorage
based gas plants -- GVEA’s other principal options for its projected future base load capacity. In the PSA AIDEA fully assumed all risks of the successful operation of HCCP’s experimental technology.

10. HCCP would be built by AIDEA, who bore the entire risk of any cost overruns in design and construction. The technology demonstrations required by the federal DOE grant would be done by the scientists and engineers either from the DOE or those on AIDEA’s teams. All of the experimentation testing was to be completed during the plant’s “start up” period. After that was all done, HCCP was required to pass a 90 day reliability test. The test specifically agreed to in the PSA was to be rigid and strict, more so than was typically required in the power industry. The plant had to pass that test before GVEA was obligated to take over and run the plant or to purchase electricity from the plant. The PSA said that HCCP had to pass the test before December 31, 1999.

11. The rigid test requirement was insisted on by GVEA, and agreed to by AIDEA, because of HCCP’s remote location, severe working environment, sensitive regulatory restrictions and GVEA’s need that HCCP be a true base load facility and not a source of intermittent back-up power. GVEA insisted, and AIDEA agreed, that in the event the experimental technology caused the plant to fail the 90-day test, AIDEA’s project budget would include the full estimated costs to convert the experimental plant’s equipment to a conventional “low NOx” combustion burner technology. Further, the parties agreed that a “retrofit” to the conventional technology must be an explicit part of the permitting for HCCP that would have to be issued by the Alaska Department of Environmental Conservation (“DEC”) before HCCP could be built.

12. Not only did AIDEA agree to these two specific conditions regarding the retrofit, but AIDEA’s project budgets actually provided a separate line item for the costs of retrofit – right up until AIDEA’s financial management of the project began to spin out of control with huge cost overruns.

13. The inclusion of this specific budget item showed that AIDEA knew the conversion to low NOx burners was difficult and costly. It also shows that AIDEA fully understood and supported a retrofit if HCCP failed to pass its rigid commercial operating test.

14. In a similar fashion, the permitted emission levels for nitrogen oxides (“NOx”)
in the Alaska Department of Environmental Conservation (DEC) air permit were set at a level that would accommodate a retrofit of HCCP to low NOx burner technology.

15. With these agreements in hand and its concerns allayed, GVEA became an active participant, supporter and advocate for the development of the HCCP project.

16. The federal grant was approved in January 1991 and $120 million was committed by DOE to help fund design and construction. The Alaska legislature, looking at the whole project including the retrofit obligation and budget, appropriated $25 million to the project. AIDEA issued $85 million in bonds backed by the good faith of the State of Alaska to fund its obligations to HCCP.

17. The PSA committed GVEA to operate HCCP in a manner consistent with sound utility practices, to purchase coal and all of the other things necessary for operation, and to pay AIDEA $4.3 million per year, which AIDEA planned to use to repay the bonds it issued to fund the state’s portion of the construction.

18. Two sites were considered for HCCP. One was near Usibelli’s coal mine and the other was where the plant is now located -- immediately adjacent to GVEA’s Healy #1 plant. The present site was chosen by AIDEA. AIDEA expressed its conclusions that a true “combined operation” of both plants would almost necessarily result in fewer workers and was the only way that HCCP could be operated to achieve the lower cost power to GVEA that, in the PSA, AIDEA had promised to both GVEA and to the RCA in its
proceedings to secure RCA approval of GVEA entering into the PSA. A single plant manager, a single operations control room, a single coal pile and feeder system, a single water system, coordinated dispatch, all, along with a number of other unities, were anticipated by AIDEA to result in cost savings compared to operating two completely separate plants.

19. The resulting combination of the plants and their physical systems was only a
savings to AIDEA. The combination did not save GVEA anything because Healy #1 already had all of those systems in place. GVEA did not need AIDEA to build any of those systems for Healy #1 if HCCP had never been built.

20. GVEA’s Healy #1 had all necessary environmental permits to operate for the rest of its useful life. Before it could build and operate HCCP, AIDEA needed to secure discharge and emissions permits from DEC and the federal Environmental Protection Agency (EPA). This would typically entail a lengthy EIS process. AIDEA and GVEA determined that the most streamlined permitting strategy was for AIDEA to “piggyback” on GVEA’s permits by seeking to simply expand the limits of GVEA’s permitted discharges and emissions to accommodate the additional waste streams anticipated to be generated by HCCP.

21. The air permit was questioned by the National Park Service and some environmental groups. These challenges were withdrawn when concessions were made. AIDEA agreed to pay for some of these concessions, but all of them affected GVEA and its ability to operate Healy #1, making it more difficult and expensive. To assist AIDEA’s successful application, GVEA was required to install additional controls for the emissions of NOx and SO2. GVEA was also required to change the way Healy #1 was operated on an hour by hour basis. These changes ultimately required GVEA to buy and use TRONA to meet the SO2 standards at a cost of hundreds of thousands of dollars per year.

22. Based upon AIDEA’s assurances that HCCP would operate economically and otherwise in accordance with the provisions of the PSA (which provided GVEA would not be required by AIDEA to purchase power at uneconomical prices) the RCA approved GVEA entering into the PSA. It found that the PSA was in the best interest of interior Alaskan ratepayers. HCCP Construction and experimental technology testing

23. Because the project was being overseen by a governmental body, which had never developed or built a power plant before and because it was being built for any number of different purposes – science experiment, engineering product development and base load electricity plant -- management of the project understandably (but inexcusably) floundered and then almost collapsed.

24. HCCP’s burner and related technology was conceived by engineers who professed to have a developed technology that they simply needed to "scale up" from a laboratory size to a full power plant size. When the project was first started, the engineers planned to build an “intermediate step” in the “scale up” process. As part of another DOE grant, a boiler using the same technology, but significantly smaller than the 8 foot diameter boiler proposed to be installed in HCCP, was to be built in a project in Orange and Rockland, New York for testing purposes. The “intermediate step plant” was planned to be completed well before HCCP and was supposed to help in the development of HCCP’s final full size boiler design. This intermediate step boiler was never actually built. This change in the overall engineering plan and the
“jump” from laboratory size to a full sized boiler added substantially to AIDEA’s risk that HCCP’s technology would fail to operate as planned.

25. In the middle of the development, when the project budget began to climb seemingly out of control, AIDEA approached GVEA and Usibelli seeking “capital” contributions from them to allow HCCP to be completed. Rather than tell AIDEA to simply issue more bonds, GVEA agreed to use $7 million of its own dollars to help the complete the plant. GVEA did insist that all of the dollars it contributed must be used for required elements of the work that related directly to GVEA’s role in the project.

26. GVEA advised AIDEA that a “contribution to the general fund of the project” would have been contrary to the terms of the RCA’s approval of the PSA and beyond GVEA’s authority on behalf of its ratepayers, because it was very uncertain at that time whether HCCP would ever effectively operate as anything other than a science experiment. GVEA used its $7 million contribution to fund work that was required to be done at Healy #1 as part of completing the overall project. AIDEA gladly agreed to those conditions because the monies GVEA was contributing would have to have been paid in by AIDEA in any event to finish the job.

27. AIDEA continued with construction and completed HCCP sufficiently so that the scientists could begin to test the experimental technology beginning in mid 1998. While this testing was going on, AIDEA continued to try to get the construction of the plant finished.

28. During the engineers’ testing of the technology, and as each major system was verified and brought on, it became clear to GVEA that HCCP had no chance of actual commercial operation using the experimental technology within the time frame allowed in the PSA. In addition, the numerous uncontrolled “trips” HCCP suffered during this testing greatly impacted GVEA members both in the number and duration of power outages they were subject to. HCCP tripped off-line 79 times during its first year of operation. GVEA paid the costs of keeping its North Pole facilities in a state of “spinning reserve” to attempt to mitigate some of the effects of these outages. GVEA
was afraid that, contrary to the agreements AIDEA made in inducing GVEA to enter the transaction, AIDEA would use the funds, that had been specifically budgeted for the low NOx retrofit, to cover AIDEA’s costs of basic construction and engineering overruns pursuing the experimental technology.

Disputes arise between GVEA and AIDEA about the operation of HCCP

29. Because of that fear, in 1998 and 1999, GVEA requested AIDEA to declare that the experimental technology was not commercially feasible. GVEA wanted AIDEA to immediately commence planning and implementation of the retrofit to low NOx burners as soon as possible. GVEA made this suggestion so that GVEA could take over HCCP sooner rather than later, and make the economic and dependable power with the proven retrofit technology that the parties had agreed to. Had AIDEA followed GVEA’s advice, operation of HCCP would have begun to generate a significant stream of payments -- millions of dollars per year -- to AIDEA under the PSA in 1999 or 2000.

30. The parties began negotiations in this direction, then AIDEA abruptly left those negotiations and proceeded to hire additional contractors and workers and hurriedly attempted to get HCCP ready for commercial testing in mid 1999. Just as GVEA had feared, AIDEA used the budgeted low NOx retrofit funds to pay for this basic construction completion effort in AIDEA’s “last
gasp” attempt to make the experimental technology work. AIDEA put all of its eggs in one basket – if AIDEA could cause HCCP to make electricity for just 90 days, then it might be able to legally force GVEA to take over the risk of the experimental technology working for the remaining 30 -- 40 years of HCCP’s expected life.

31. AIDEA’s gamble failed. At the end of 1999, AIDEA had spent all of the project funds (including the retrofit budget) and HCCP was still not finished. There was millions of dollars worth of work yet to be completed. The plant had failed to pass the commercial operation test. HCCP was “shuttered” and has been sitting in that condition for 6 years.

GVEA sues AIDEA for breach of the parties’ agreements

32. In the late spring of 1998, when the construction of HCCP had been completed to the point that the experimental tests called for in the federal grants could be run, AIDEA advised GVEA that it did not intend to conduct or evaluate the required 90 day performance testing in such a way as to meet all of the requirements of both the PSA and the parties’ other agreements.
Because of AIDEA’s actions, which GVEA believed breached the parties’ contracts, GVEA filed suit against AIDEA in Fairbanks in May 1998 (“the 1998 suit”).

33. In the 1998 suit, GVEA explained the dispute about AIDEA’s obligations to conduct a complete 90 day test and asked the court to read and interpret the contracts and tell the parties who was right.

34. For more than a year the parties engaged in litigation and discovery. The parties also had discussions where GVEA tried to convince AIDEA to have AIDEA’s test engineers evaluate HCCP with a “complete test” that showed not only that HCCP could “make electricity”, but that it also was properly and completely constructed, that it was safe and reliable and that the testing
engineers knew of no reason why the plant wouldn’t continue to work in that manner for its 30 year useful life. AIDEA resisted having the test engineer make any of these determinations.

35. AIDEA was required by the PSA to successfully complete the 90 day test and get an independent engineer’s report before December 31, 1999. Because HCCP was still incomplete in its construction through the summer of 1999, AIDEA did not even propose to start the 90 day test until September 1999 thereby allowing barely enough time to complete even the “stripped down” test AIDEA was willing to do.

36. On July 31, 1999, GVEA filed a motion for summary judgment asking Judge Green to read the contracts and tell the parties what the “90 day test” engineer should look at, evaluate and report on. AIDEA filed a cross motion for summary judgment seeking to have Judge Green declare that the test engineer was only required to determine essentially “whether the plant made electricity” at particular cumulative levels.

37. On December 6, 1999, the Court granted GVEA’s motion and directed the test engineer to consider the obligations and standards in all of the GVEA/AIDEA contracts, including the PSA and the Construction Agreement, in reaching his conclusion whether HCCP met the standards for the “90 day test”.

38. On December 28, 1999, the test engineer hired by AIDEA, Harris Group, issued its report stating that HCCP had failed the 90 day test. 39. AIDEA’s reaction to the failure, and to its own engineer’s report, was extreme. AIDEA tried to prevent the Court from even considering the Harris Group’s report in connection with then pending motions. AIDEA resisted GVEA’s
attempts to have the court decide the case in a logical sequence. AIDEA sought “an extension” of the contract date and asked the Court for a “second chance” to conduct “another” 90 day test after the contract deadline. AIDEA sought a change of venue to Anchorage, claiming GVEA had tainted the jury pool by making the Harris Group report public. AIDEA’s efforts were rejected
by Judge Green.

40. During January and February 2000 the parties negotiated a settlement of their obligations under the contracts and the claims each had made against the other in the then pending litigation.

41. On March 7, 2000, the parties submitted a joint stipulation for dismissal of the suit telling the court that “they have entered into an agreement fully resolving the disputes which have been the subject of this case”.

42. That “agreement” was the Settlement Agreement dated March 8, 2000 that is attached to the complaint filed by AIDEA in this suit. The claims made by AIDEA in the 1998 lawsuit (which were “fully resolved” in the Settlement Agreement) included numerous additional costs of construction, but also “an amount in excess of $85,000,000 to compensate AIDEA for its investment in HCCP” as well as an amount in excess of $6,000,000 to compensate AIDEA
for its contribution to work that improved or enhanced GVEA’s Healy # 1 plant.

The Settlement Agreement

43. The Settlement Agreement in broad terms accomplished a number of things.

44. It settled and mutually released the pending multi-million dollar claims and
counterclaims asserted in the 1998 suit.

45. It anticipated and specifically provided that the two parties would work together on a solution to get HCCP completed, operated by GVEA and producing electricity safely and dependably as soon as possible, and that whatever solution was chosen would be executed in a timely manner.

46. While it preserved the PSA (at least for time), it terminated the parties’ obligations under a number of prior agreements including the Construction Agreement and the Ground Lease, rendering those agreements null and void.

47. It contained a number of “agreements to agree” in the future on items that were uncertain at the time the Settlement Agreement was entered into. Those items include a joint operation Agreement and an Amended Ground Lease.

48. It contained an agreement for maintenance and upkeep of HCCP.

49. It contained a roadmap and agreed upon procedure to approach getting HCCP to be a plant that operated as originally intended by the parties, either through a “limited retrofit” of the existing experimental technology to make it economic, reliable and safe enough for GVEA’s purposes or through a “full retrofit” to a “proven” technology, such as a low NOx burner, if that was required to assure economic, safe, reliable and long-term dependable operation of HCCP.

50. The Settlement Agreement contained obligations for each party in regard to each of these elements. Not the least of those obligations was the parties’ agreements to seek and cooperate in obtaining regulatory approval of these retrofits in a cost effective and timely manner.

51. The situation that the parties faced at the time of the Settlement Agreement was serious. HCCP did not work the way it was intended. AIDEA had no other buyer for the power, even if it could have operated HCCP to make some electricity. AIDEA needed someone to provide heat to HCCP and to do custodial work on HCCP so that the equipment stayed viable and operable.
GVEA had cooperated in the installation of a number of “cross connected” and integrated systems that either ran through or used portions of the HCCP plant. GVEA needed to run and maintain those systems in AIDEA’s plant so that Healy #1 could continue to operate.

52. GVEA and AIDEA had a complicated, interdependent relationship that required each to regard and cooperate with the other. AIDEA’s primary interest was to salvage some economic value from HCCP. GVEA’s primary interest was to have the operation of HCCP, however it ultimately occurred, have no impact, or at least the most minimal possible impact, on the
economic, safe and reliable operation of Healy #1 and on Golden Valley’s member-owners.

53. The Settlement Agreement called for an initial shutdown period wherein GVEA took over custodial care of HCCP which allowed AIDEA to reduce its site staff to essentially zero. It was anticipated the shutdown period would be no more than 1 year. GVEA continues to act as custodian of HCCP today, almost 6 years after the Settlement Agreement, however since August 8, 2001, those activities have been pursuant to a separate Custodial Agreement.

54. The Settlement Agreement called for the parties to enter into an Amended Ground Lease for the HCCP plant because the prior Ground Lease had terminated. The amended lease was to provide AIDEA site access and have only a nominal rent payable to GVEA prior to the termination of the PSA, if that occurred.

55. During the initial shutdown period, Duke Engineering was to be jointly hired by the parties to evaluate the feasibility of a “full retrofit” to a proven technology, such as low NOx burners. Dr. Bill Steigers, an engineer and formerly part of the engineering team that had designed HCCP’s experimental technology, was to be appointed by AIDEA to provide environmental consulting and from that perspective compare the environmental performance of the technology selected as the most cost effective and reliable with what Steigers thought could be achieved by HCCP operating with its existing experimental burners using waste coal.

56. During the initial shutdown period, GVEA was to pursue (with AIDEA’s full cooperation) regulatory approval of a full retrofit to a proven technology such as low NOx burners. The Settlement Agreement gave GVEA the ability to decide which retrofit scenario (limited or full) to pursue. Various funding formulas and payment schedules would be applied depending on which
scenario was chosen by GVEA. Page 10 302979_2/GRH/052273-1044

57. The Settlement Agreement also gave GVEA the unfettered right to terminate its efforts to seek any retrofit. If GVEA chose that course of action, then the PSA was irrevocably terminated upon GVEA’s notification to AIDEA of that decision. In the event of GVEA’s termination of the PSA, GVEA was to turn over HCCP to AIDEA and AIDEA could then pursue other financial
agreements regarding HCCP.

58. The Settlement Agreement provided that if GVEA terminated the PSA, then AIDEA could decide whether it wanted to attempt to have HCCP operate, dismantle HCCP or otherwise dispose of the plant. If AIDEA decided to try to operate HCCP, and if GVEA said it wanted to be the operator of HCCP, then the parties agreed to negotiate a contract for the joint operation of HCCP and Healy #1 (because of the numerous joint systems). If GVEA and AIDEA were unable to reach acceptable terms, then they were to arbitrate their differences and have an arbitrator decide what the terms of the joint operation agreement should be for an initial 3 year term.

59. The parties agreed to cooperate in entering into future agreements that were necessary and appropriate for AIDEA to realize the economic utility of HCCP while being consistent with GVEA retaining the full economic benefits of operating Healy #1.

Actions taken in seeking a retrofit
60. Following execution of the Settlement Agreement, GVEA and AIDEA jointly executed an agreement with Duke Engineering to have Duke perform an engineering and economic feasibility study of both a “full” and “limited” retrofit of HCCP. The purpose was to determine the consequences and requirements of each of the courses of action.

61. Duke issued its report on February 8, 2001. It recommended that the full retrofit to a proven technology was feasible and was the best option for long term economics, reliability and safety of HCCP. Full retrofit would achieve the goal of reducing to the greatest extent possible the cost, power outage and safety risks to GVEA’s member-owners. The principal requirements to achieve those objectives were regulatory approval, construction, funding,
power sales price and a fuel source contract.

62. The regulatory requirements of a full retrofit principally concerned getting approval from DEC to carry through on the retrofit planned. This involved an administrative modification of DEC’s prior approvals. The terms of GVEA’s air permit stated that the emissions of nitrogen oxides from HCCP were to be controlled using the “TRW Entrained Combustion System”. GVEA proposing changing the language to require HCCP to meet the permitted levels of NOx
emissions using a proven technology. The permit then in effect allowed certain levels of each of a number of substances to be present in the exhaust stream from each of Healy #1 and HCCP, or from the combined plants where the discharge itself was combined. GVEA was not seeking any increase in the overall level of permitted emissions.

63. The Denali National Park supported the proposed changes when GVEA volunteered to reduce the rate of NOx emission from HCCP even below the level that DEC had originally permitted. Despite its agreement as part of the Settlement Agreement to cooperate in the retrofit, AIDEA opposed the administrative changes that GVEA was seeking. AIDEA’s opposition was difficult to understand in light of the fact that the low NOx retrofit technology was expected to function at least as cleanly as the projected performance of the experimental technology GVEA was seeking to replace.

64. In 2000 and 2001, GVEA sought modifications of the permits as “administrative” changes to its already permitted discharges. Seeking an administrative change rather than filing a new permit application should have accelerated the review and approval process.

65. To further support its request, GVEA conducted an analysis of the projected emissions under conditions that simulated a “Best Available Control Technology” (BACT) analysis, even though that was not required by DEC’s regulations. This was done to assure DEC and the citizens of Alaska that the full retrofit technology did not increase emissions at all and that it was the
most economical and technologically advanced alternative.

66. After the Duke report was issued, GVEA took the recommendations and identified the required modifications to the existing HCCP equipment that would be needed to convert to lox NOx burners. GVEA developed rough estimates of the work and established a “worst probable case” cost estimate of $80 million for the full retrofit to an acceptable level of economic, reliable
and safe performance. During this period and up to the spring of 2002, AIDEA and GVEA used that estimate as the projected cost of a full retrofit in seeking appropriation of federal funding to pay for the retrofit.

67. The Duke report also indicated the costs expected in completing a “limited” retrofit by reworking, but not replacing, the experimental technology. Based on the Duke report, GVEA estimated the cost of that work to be approximately $32 million. AIDEA stated that it had estimates as low as $9 million to complete that work.

68. Because of the uncertainty of other issues, such as the permitting, no formal construction drawings or specifications were ever prepared by either GVEA or AIDEA for any retrofit configuration.

69. During this time, GVEA, working through then Senator Frank Murkowski’s office, secured inclusion of an appropriation of $125 million in low interest loan funds for AIDEA to fully retrofit HCCP and to repay some of AIDEA’’s bonds. The appropriation was part of a comprehensive federal Energy Bill. This would have saved AIDEA significant amounts of money by lowering the
interest rate and other borrowing costs AIDEA was incurring for HCCP related bonds, and allowing ADIEA to pay off the existing bonds. AIDEA never supported these efforts despite the savings it would realize.

70. The request for an appropriation for HCCP stayed in the Energy Bill from its introduction in 2001 through its passage in 2005. The original request for $125 million was intact until the spring of 2005. Under pressure to reduce the overall amount of the bill, Senator Lisa Murkowski reduced this line item from $125 million to $80 million. In response to inquiries, AIDEA continuously stated that it would not ask for the loans even if the money for them was
appropriated by Congress. GVEA persisted in seeking inclusion of the retrofit funds in a sufficient amount to actually retrofit the plant to a proven technology as was always intended.

71. GVEA continuously tried to get AIDEA to support the federal funding request reasoning that, even if AIDEA did a limited retrofit to the experimental technology, AIDEA could use that portion of the appropriated funds necessary for the work. In 2005, AIDEA finally agreed to that logic. Inexplicably, two days later, while the 2005 energy bill was in conference committee, AIDEA announced publicly that it only needed $25 million and not the $80 million that was already in the bill. The committee left the entire $80 million in the final bill that became law, but designated the potential borrower not to be AIDEA but rather “the owner of HCCP”.

72. When the Settlement Agreement was signed, GVEA had no agreement with Usibelli to purchase coal to run HCCP after the full retrofit was completed. During the period from March 2000 through the spring of 2002 , GVEA negotiated with Usibelli to arrive at a coal purchase contract. By June 2002, the parties had an agreement in principal that was only awaiting DEC’s
regulatory approval of the permit modifications for finalization and execution.

73. The Settlement Agreement provided that the PSA that had been signed during the initial development of HCCP, would remain in effect unless GVEA decided to stop all efforts to have a retrofit approved and built. In connection with the full retrofit scenario, GVEA sought to modify the PSA to reflect the then current projected operating conditions and the power market. The
modifications would be effective if and when the plant was retrofitted and operating.

74. GVEA and AIDEA worked on this issue for over a year. GVEA developed a draft agreement and sent it to AIDEA, but it was never agreed to by AIDEA.

75. As set forth above, on receipt of the Duke Engineering report, GVEA proceeded on all fronts to get the pieces in place that would allow the completion of HCCP and successful operation and power generation. The least certain and most important piece was always regulatory environmental approval. Until about 2002, AIDEA kept an ancillary role and generally
supported GVEA’s efforts to modify the GVEA permits to include a retrofit forHCCP.

76. In March 2002, the Trustees for Alaska contested GVEA’s permit modification request with DEC. In April 2002 DEC rejected GVEA’s request for an administrative permit modification, finding instead that a full permit process would be required even though the original permits were issued in such a way that would accommodate a retrofit to low NOx burners.

77. Following this denial, GVEA elected to have no further participation in the retrofit of HCCP in accordance with its rights under the Settlement Agreement. GVEA gave notice of that fact and that notice terminated the PSA, again in accordance with the specific terms of the Settlement
Agreement.

78. In late April 2002, a meeting was organized by Senator Stevens about HCCP. GVEA expressed clearly that it was interested in and committed to the long term operation of HCCP as part of its mix of generating assets, but that it could not continue seeking a retrofit under the protocols of the SettlementAgreement.

79. At about this time a number of articles appeared in the press in which AIDEA questioned GVEA’s commitment to successful operation of HCCP.

80. GVEA responded to AIDEA with a time proven set of four industry standards or “must have” characteristics for a successful operation of a generating plant. These included (1) the plant must be safe to operate (alluding to a near fatality caused by an explosion that had occurred during the 90 day test, rapid deterioration of equipment which forced workers to weld and reinforce equipment while it was running during the 90 day test, and other instances);
(2) the plant’s operations must be reliable (alluding to the uncontrolled outages that occurred during the 90 day test and the numerous uncontrolled “trips” during the experimentation period); (3) the plant must be viable over the long term (alluding to the refusal of the test engineer to certify the long term reliability of HCCP following the 90 day test); and (4) the plant must be economical and produce power at a competitive rate (alluding to the fact that
the plant had not been tested during the 90 day period with the “waste coal” it was supposed to burn, and had not been operated with the appropriate staffing levels).

81. GVEA sent these points directly to AIDEA numerous times seeking to start a dialog on how HCCP could be made productive and safe. AIDEA ignored GVEA’s offers. AIDEA proceeded ahead with trying to raise funds for a limited retrofit of HCCP.

82. In October 2002, AIDEA contracted with Capital Energy to study the condition of the plant and to recommend steps to bring it into operation. Without even waiting to receive any report from Capital Energy, AIDEA applied for a grant from DOE for funding of work on HCCP. GVEA was not copied on the grant application so that GVEA could understand AIDEA’s plans and how they might affect Healy #1. When GVEA asked for copies of the grant application and for AIDEA’s contract with Capital Energy, AIDEA refused. When GVEA attempted to secure a copy of the application using the Alaska Open Governmental Records Act, AIDEA denied GVEA access. AIDEA’s grant application was ultimately denied by DOE.

83. During November 2002 AIDEA and GVEA met to discuss what protections or assurances GVEA would need for the operations of Healy #1, in the event that a third party was hired by AIDEA to operate HCCP. AIDEA refused to give any such assurances.

84. After hearing AIDEA several times assert that the experimental technology had not been adequately tested, GVEA said and wrote in a letter to Governor Murkowski in December 2002, that if more testing was desired to start the plant and operate it, then GVEA would fully participate so long as GVEA, its owner-members and the operations of Healy #1 are not impacted by that decision and GVEA was otherwise held harmless by AIDEA. GVEA
explained what had happened to Healy # 1 during the experimental operations of HCCP. GVEA explained the cost and system impacts to its owner-members when HCCP tripped off line 78 times during the first year of operation, causing GVEA to run the North Pole turbine to prevent systemwide blackouts. GVEA offered specific proposals by which GVEA accepted that HCCP would be less reliable than Healy #1. Both in this meeting and in a subsequent meeting between AIDEA and GVEA, AIDEA rejected all of these proposals.

85. Upon Governor Murkowski’s election in November 2002, GVEA contacted the new governor and updated him on the status of HCCP.

86. In February 2003 Ron Miller was appointed to head AIDEA. Almost immediately after his appointment, GVEA contacted him in writing about HCCP and sent him a four page paper about the project and what GVEA’s concerns were. In the paper GVEA reiterated its four points of “must have” elements of proper power plants. GVEA stated its preference for a full retrofit
but also suggested numerous alternatives including just starting the plant up with minimal repairs and modifications and having AIDEA thereafter simply fix whatever breaks. GVEA explained in the paper the difficulty of AIDEA simply providing monetary indemnity to GVEA. That scenario is not a particularly good substitute for keeping the power on reliably to GVEA’s members.

87. Based on review of the available options in the Settlement Agreement and AIDEA’s opposition to the request for administrative changes to the DEC air permit to allow retrofit, in April 2003 GVEA formally terminated the PSA by letter to AIDEA. In the same letter GVEA asked to have the Boards of Directors of both GVEA and AIDEA meet jointly to discuss the situation and to try to find a way to resolve the issues and get HCCP operating again.

88. During the entire time, from 2000 on, GVEA, not AIDEA, had been in contact with Senators Frank and later Lisa Murkowski to seek federal funding to AIDEA for repairs to HCCP to get it operating again. AIDEA never supported those efforts and the funds were finally included in the sum of $80 million in the Energy Bill just passed in 2005, essentially over AIDEA’s objection.

89. On April 28, 2003, GVEA’s President and Board Chairman met with AIDEA where AIDEA stated that AIDEA wanted to get out of the electricity business, that AIDEA won’t spend another nickel on HCCP, that AIDEA didn't want a new Power Sales Agreement with GVEA and all AIDEA wanted to do was sell the plant to GVEA. Shortly thereafter AIDEA sought legislation that would have required the Alaska Energy Agency or another Railbelt utility, or a
consortium of Railbelt utilities, to “acquire” HCCP from AIDEA so that AIDEA could resume its more accustomed role as a lender rather than an owner. The legislation concerning transfer of HCCP didn’t pass but it showed that AIDEA lacked any real commitment to seeking a long term solution of HCCP, preferring to put the problems of HCCP’s ownership onto anyone else it could
find.

90. In the summer of 2003 Governor Murkowski called AIDEA and GVEA representatives together and told them jointly that he wanted the plant to begin operating and that these two entities should get together and make that happen within 6 months. AIDEA took up GVEA’s earlier suggestion. The Boards of AIDEA and GVEA met jointly and toured the site. They tried to set up a format to work out their differences of opinion about the future of HCCP.

91. In the fall of 2003 a second meeting was held with Governor Murkowski where the parties reported on what had happened since the prior meeting. Representatives of Alaska DEC are also present. The governor directed AIDEA to work with DEC and GVEA to get the full retrofit permitted by DEC.

92. As a result of that meeting and after much effort by DEC and GVEA, GVEA submitted a joint air permitting plan to DEC in February 2004. The significance of the timing of the filing of such a plan was that on July 1, 2004, significantly more stringent air quality regulations were to go into effect.

93. GVEA and DEC continued to process these applications throughout 2004 right up to June 29th when AIDEA appeared at a GVEA Board meeting. AIDEA then presented GVEA with 2 letters.

94. One letter was addressed to GVEA and said that if GVEA continued to pursue the air permit applications, AIDEA would oppose them. Despite the letter, GVEA had made a commitment to the governor to work with DEC and AIDEA for a retrofit air permit. GVEA fulfilled that commitment by filing the air permit application on time as agreed.

95. AIDEA’s second June 29th letter was sent directly to DEC asking DEC to suspend the air permit application to allow the full retrofit the governor had directed the parties to pursue.

96. The net result of these actions was that AIDEA lost its “grandfathered rights” status, which allowed it to operate HCCP under the requirements in place when the plant was designed and built. The loss of these rights increased the costs to AIDEA of any retrofit by $15 million because selective catalytic reduction (“SCR”) then became a regulation requirement. This decision by
AIDEA immediately devalued HCCP by the $15 million of otherwise unnecessary costs that would now have to be spent by anyone trying to restart HCCP’s operations. The parties jointly hire an expert to advise them how to solve the problems of HCCP and get it operating again.

97. Prior to the second meeting with the governor in the fall of 2003, and as a result of the joint Boards meeting on almost a monthly basis, AIDEA and GVEA acknowledged that one of the hurdles to agreeing on the future operations of HCCP was that each party disagreed with the set of “facts” that was being used by the other on which that party’s decisions were being
made.

98. In an effort to get both sides to be looking at the future with a common fact set that both parties agreed to, AIDEA and GVEA decided to get an independent third party to identify where AIDEA and GVEA were in disagreement on the basic facts, thereby helping to bring a consensus. Both parties agreed to jointly hire Financial Engineering Company, to, among a number of tasks, do a detailed analysis of the costs of operating HCCP over its projected operating life and to make a recommendation, among a number of possible scenarios. Financial Engineering was jointly requested to tell the parties what to do.

99. In December 2003, after the parties had met for a second time with the governor, Financial Engineering released its report and recommendation. The report found that, while the limited retrofit had a lower initial capital cost, the long term performance risk was much higher. The report recommended the full retrofit option because, despite its higher initial capital cost, the long term performance risk was much lower. AIDEA became upset with the conclusions of the joint expert. AIDEA immediately withdrew its active support for GVEA’s air permitting plan despite its specific agreement with the governor and with GVEA to cooperate and support the plan.

100. Also in reaction to the Financial Engineering report, AIDEA requested all of the rail belt utilities to submit an offer to AIDEA to simply buy HCCP from AIDEA.

101. In response to this request, on March 17, 2004, GVEA submitted an offer to buy HCCP. GVEA’s offer was based upon the assumptions and figures used in the Financial Engineering report.

102. GVEA Board members went to the AIDEA Board meeting 3 days later, on March 20th, to answer any questions AIDEA might have about GVEA’s proposal. During the meeting AIDEA indicated that it would prepare a counter offer.

103. On April 30th the Boards met jointly again and AIDEA announced its rejection of the purchase offer, without any counter offer, or further discussion of any options that would work for AIDEA.

104. Shortly after AIDEA’s unilateral actions in jeopardizing effective permitting for a retrofit, and in another meeting with the governor, this time attended also by legislators from interior Alaska, the governor announced that the state was “taking over the plant” and that GVEA was “no longer in the picture” and that “this relationship is over”.

105. This meeting and the governor’s comments started discussions between AIDEA and GVEA about physical separation of HCCP and Healy #1 into two completely independent plants and the fact that this would cost AIDEA something approaching $20 million before a dime was spent to make the experimental technology work properly. The separation would negate all of the cost and operational advantages that the combined plants were designed to capture.

106. On August 11, and again on August 30, 2004, GVEA told AIDEA that it was withdrawing its offer to buy HCCP made earlier that year. GVEA also expressed formally its intention to be the joint operator of the two plants -– HCCP and Healy #1 – as provided for in the Settlement Agreement.

107. In September 2004 AIDEA announced its intention to start up HCCP using the existing technology. In response, GVEA told AIDEA there were a number of issues that needed to be worked out so that GVEA can operate the two plants. AIDEA responded that GVEA was not the joint operator and that GVEA’s correspondence pointing out the practical and logistical problems in starting up HCCP as a separate plant was sent in bad faith, showed that GVEA lacked faith in the experimental technology and that AIDEA would contract with someone else who had such faith and commitment.

108. Upon the announcement by AIDEA at GVEA’s Board meeting on June 29, 2004 that AIDEA would oppose the air permit application, GVEA immediately complained to the governor’s office about AIDEA reneging on its promises butto no avail. GVEA advised the governor’s office of the severe cost impact of retrofitting HCCP ($20 million of needless additional cost) if the air permit application was not presented before July 1st and the requirement of installing SCRs was later imposed. There was no response from the governor.

109. Regardless of AIDEA’s actions, GVEA still filed the air permit application before July 1st. DEC, despite its commitment to the governor to work with GVEA on its air permit application, apparently stopped all action on the application that GVEA had filed and that was needed for a full retrofit. Ground lease negotiations

110. The Settlement Agreement provided that the parties would, shortly after its execution, enter into an amended ground lease. Few details of that lease were provided for in the Settlement Agreement. Since the Settlement Agreement did not require AIDEA to pay any rent for HCCP until a new Ground Lease had been established (it being anticipated that GVEA would
physically occupy and operate HCCP), AIDEA has paid nothing to GVEA for the acres of GVEA’s property on which HCCP is located.

111. An amended lease was not negotiated or prepared in 2000 (or thereafter) because the parties were busy pursuing a full retrofit of the plant until 2002 (and even until mid 2004 at the direction of the governor). During those periods it was unclear what type of lease was going to be appropriate.

112. Upon announcing that it intended to start the plant with existing technology in
September 2004, AIDEA requested that GVEA immediately agree to an amended ground lease and allow numerous environmental consultants hired by AIDEA to roam around GVEA’s property drilling holes and doing other testing. At the time AIDEA made these requests to GVEA, AIDEA didn’t even know what it intended to do or what it needed to do to “start up the existing technology” or what facilities would be needed to affect a physical separation.

113. AIDEA thereafter convened a technical review session. It invited Railbelt utilities, engineering firms and some private energy companies (but not GVEA) to a technology meeting to educate interested parties about the HCCP technology and what needed to be done to start the plant with the existing technology. This session was held in December 2004. At that time AIDEA was still requesting a lease from GVEA despite the fact that AIDEA had no idea of what physical ground or access was needed to begin operations at HCCP as a separate power plant.

114. In December 2004 AIDEA and GVEA met several times to discuss how HCCP could be operated with a separate operator other than GVEA and what additional property would be needed by AIDEA to allow HCCP to operate in that manner. This “physical unwinding” was required because HCCP had been constructed in such a way that it shared numerous joint systems and joint operation capabilities with Healy #1. If AIDEA was proposing to have a
third party separately operate HCCP, then physical and operational separation of these systems was required.

115. Three months later with no further discussion, in March 2005, AIDEA sent GVEA a “Memorandum of Understanding”. Included with the Memorandum was a draft of ground lease “talking points” prepared by AIDEA. It included a plan showing that AIDEA proposed to occupy more than ½ of the remaining site owned by GVEA. The plan purported to locate new HCCP facilities in areas actively being used by GVEA and also in areas which GVEA had already planned for use for future Healy #1 operations.

116. GVEA responded in writing to the Memorandum and the lease proposal saying that with the then pending Annual, GVEA’s staff was tied up but that GVEA would meet with AIDEA after the GVEA Annual General Membership meeting (held near the end of April) to discuss the Memorandum of Understanding. GVEA sent AIDEA a footprint of the land available on the site
that would not conflict with GVEA’s present and future uses. GVEA also offered to meet later that summer, after the brunt of its busy construction season schedule was over, and to work with AIDEA to reach an acceptable amended ground lease. GVEA offered to set up such a meeting in August and reiterated GVEA’s availability for an August meeting in letters over the
balance of the summer.

117. Shortly after the exchange of letters in the spring of 2004, AIDEA apparently became aware of the significance of the fact that all of the combined plant permits were in GVEA’s name. AIDEA intervened in GVEA’s routine federal water discharge permit renewal process and sought to have the EPA deny GVEA’s permit renewal which could have shut down Healy #1. AIDEA alleged that GVEA’s permit contained 10 errors, all of which were untrue.

118. When that proved unsuccessful, AIDEA requested that it be established as the co-permittee of GVEA’s federal EPA NPDES permit dealing with water discharges. GVEA asked for AIDEA’s operating plan for HCCP and how AIDEA would handle waste water to insure that HCCP’s operations would not impact Healy #1 before GVEA would agree to a co-permittee status for
AIDEA.

119. GVEA reiterated on more than one occasion that it had no objection to AIDEA being a co-permittee, but that GVEA had to know how AIDEA proposed to operate the joint systems so that GVEA would know whether the two operations would be compliant with the terms of the NPDES permit. Rather than work with GVEA or tell GVEA anything about its plans for HCCP, AIDEA sent a letter directly to EPA asking for identification of AIDEA as a copermittee with GVEA. AIDEA’s actions did nothing to further the process and simply caused more time and money to be spent by all the parties and had the potential of adversely impacting GVEA’s excellent relationship with EPA.

HEA Healy Editorial

2009-01-31T12:39:00.000-09:00

AN OPEN LETTER TO HEA MEMBERS REGARDING THE HEALY CLEAN COAL PROJECT (A similar letter was delivered earlier to representatives of Homer Electric Members Forum in response to questions about the Healy Clean Coal Project.)

To Homer Electric Members:

One of the principles of a cooperative is member participation and there is no doubt that Homer Electric is committed to that ideal. Recently, there has been much discussion, sometimes heated, about a decision to restart the Healy Clean Coal Project (HCCP). This discussion comes at the same time that Homer Electric members are feeling the effects of significant rate increases. While we may not have consensus on how to move forward with the Healy Clean Coal Project, there is no doubt in my mind that all involved have the same goal: reliable energy at an affordable price. The following is a synopsis of Homer Electric’s involvement with the Healy Clean Coal Project. As with any large project, there are some unanswered questions, but the following is what we know at this time.

BACKGROUND
Let me begin by telling you that it is HEA’s mission to provide its own independent generation starting in January, 2014. This means that in less than five years, HEA will have to obtain or construct approximately 70-80 MWs of new generation. In achieving this goal, HEA is seeking to diversify its generation portfolio to reduce our dependence on natural gas and the volatility associated with the pricing of this fuel source. To this end, HEA is pursuing renewable energy generation alongside more traditional generation technology, such as coal-fired power production.

Given HEA’s relatively short time to acquire new generation, HCCP has the advantage of being an existing facility. Upon acquiring HCCP from the Alaska Industrial Development and Export Authority (AIDEA), Golden Valley Electric Association (GVEA) expects to bring the facility online in approximately eighteen months to two years. GVEA has given HEA the opportunity to purchase, at cost, up to 50% of the power it generates from the plant. The contract to purchase power from GVEA will satisfy a portion of HEA’s need for new generation and will fulfill the goal of diversifying our generation portfolio. In the larger view, the GVEA transaction would provide approximately 22.5% of the 120-130 MWs of capacity that HEA will require in 2014.

A significant advantage to the GVEA transaction is that it provides HEA with needed capacity but requires no new capital (debt or equity) from HEA. According to HEA’s current power supply study, without the capacity provided by GVEA, HEA would strain its borrowing ability in order to acquire sufficient additional resources. As a result, HEA would not have the capital to use on other energy sources; including developing its own renewable opportunities.

TECHNOLOGY
HCCP was originally designed to burn “waste” coal, essentially a very low BTU content coal that contained a significant amount of impurities that caused undue wear and tear on the system. Complications associated with burning “waste” coal were at the heart of the dispute between GVEA and AIDEA. In spite of burning “waste” coal, the original HCCP did operate successfully for almost two years at full generation capacity. By contrast, when HCCP is restarted it will burn higher quality coal and will no longer try to burn “waste” coal.

As originally designed, HCCP employs an advanced slagging combustor technology that enables burning of the coal in stages to minimize the formation of nitrogen and sulfur oxides. Emissions are further reduced by injection of limestone downstream of the combustion process in conjunction with a Spray Dryer Absorber (SDA). At the time of its conception, it was on the leading edge of technology.

In preparation for restarting HCCP, HEA and AIDEA selected a nationally known engineering firm (Shaw) specializing in coal-fired power plants to perform a comprehensive assessment detailing all work necessary to restart HCCP. Shaw identified systems and tasks that needed modifications and updates prior to restart, but was confident that the plant could be successfully restarted and operated safely and reliably. Through Shaw’s comprehensive assessment of the present status of the plant, we are confident that the plant can be operated successfully.

REGULATIONS
HEA is aware that future regulations will likely affect HCCP; however, these regulations will take several years to develop and implement. In addition, future regulations can and will affect other forms of generation. The Environmental Protection Agency’s (EPA’s) latest attempt at regulating mercury emissions failed in the courts and the EPA is working on a redraft of these regulations. Under the failed regulations, HCCP would likely have qualified as a “low mass emitter” and would not have been required to implement any mercury removal technology. We are fortunate that Usibelli coal is relatively low in mercury content compared with Lower 48 sources of coal. Future regulations would have some impact on coal-fired generation, and perhaps other fossil fuel generation as well, but that impact is a matter of speculation at this time. What is likely to happen is that HCCP will operate, with or without HEA participation, under its existing permits.

Technology and equipment does exist for removing mercury from stack emissions. These technologies are effective and efficient and, if necessary, HEA is confident that mercury removal would not cause an unacceptable increase in the price of power out of HCCP.

On the subject of greenhouse gas emissions, HEA is aware that there may be future regulations. The technology to capture and sequester greenhouse gases is in its early developmental stage and a proven technology has not emerged. How any regulations, if implemented, might affect HCCP in the future is not known and HEA cannot quantify the cost of these regulations at this time. One must also recognize that if HCCP is not used to generate the required energy, that energy would be replaced with the use of gas fired generation. Gas fired generation, although it does not have as large a carbon footprint as coal, still has a significant impact on the total amount of emissions. Diversity of location and diversity of sources can only assist in making the emissions impact as small as possible. In a perfect world there would be a source that we could depend on for the base load energy requirements of our members that would have little or no carbon footprint. Unfortunately, that technology is not available at this time.

COAL PRICES
While coal is a non-renewable resource, Alaska is blessed with an abundance of coal resources. In fact, the source for HCCP’s coal (Usibelli Mine) is located in Healy and is expected to last at least 150 years, which is well beyond the expected life of HCCP. HEA, and our experts, expect less volatility in the price of coal than from other fuels such as gas or oil. While the price of coal will reflect the current economic conditions and trends, coal is insulated from radical price fluctuations because of the terms and long duration of typical coal purchase contracts. While coal may never be as cheap as state or federally subsidized hydroelectric power, it is not likely to exceed the price of natural gas or oil fired generation. Hence, HEA expects that HCCP will, over the long term, provide a stabilizing influence on our price of power. Again, this perfectly matches HEA’s strategy of balancing its generation portfolio to achieve stable long term rates for our members.

Your HEA Board and management are doing their best to bring HEA ratepayers the most cost effective and stable power possible. This challenge involves balancing a complex blend of interests, relationships and technologies. By agreeing to equally share both the cost and power output from HCCP with GVEA, HEA is effectively splitting any future risk for its members.

I appreciate the interest and concerns of all HEA members and hope this information will give you confidence that the HEA Board is making the best possible decision based upon solid engineering recommendations with due consideration given to future risks. While you may not be completely in support of the HCCP project, I hope you will find reason to support the Board’s action in delivering a project that provides diversity and long term stability to our average price for power.

Sincerely,
Brad Janorschke
General Manager
Homer Electric Association, Inc.