HEA Members Forum Update

HEA/AEEC Meeting ChangeThis month's meetings are scheduled for
Tuesday, November 6, 20129:00 AM -- Finance Committee
1:00 PM -- Operations and Special Projects 

3:00 PM -- AEEC Board Meeting
5:30 PM -- HEA Board Meeting

Meetings normally take place on the second Tuesday of each month.

Location: Kenai Offices at 280 Airport Way. Video conferencing is available in the Homer Offices at 3977 Lake Street, 907-235-8551. Draft agendas are now 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.

2013 Budget (finance committee meeting)
Staff will present a Draft 2013 Budget for Board consideration in preparation for a November 27 budget workshop at 10 AM in the Kenai Board Room.

HEA/AEEC Loan Balances (finance committee meeting)
There will also be discussion of the cooperatives' indebtedness as of September 30, 2012.

Changes to HEA/AEEC Meetings Framework (operations committee meeting)
The Board is considering changing the times and format of future committee and Board meetings. One idea would involve combining AEEC committee with AEEC Board meetings and HEA committee with HEA Board meetings. The two would then be scheduled during the work day to eliminate the 5:30 evening meeting time.  

Alaska Railbelt Cooperative Transmission & Electric Company (operations committee meeting)
There also will be an update on ARCTEC and HEA participation.

Natural Gas Supply (HEA Board meeting)
HEA Member Tom Patmor will make a presentation on the Natural Gas Supply issue.

Don't Forget the HEA Energy and Conservation Fair

HEA Members Forum Update

Regular HEA/AEEC Meetings
Tuesday, October 16, 2012
10:45 AM -- Operations and Special Projects

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

Location: Starting this month 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 now 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.

HEA Energy and Conservation Fair
Saturday November 3, 2012, 10:00 AM to 4:00 PM, Kenai Middle School
Saturday November 10, 2012, 10:00 AM to 4:00 PM, West Homer Elementary School
Workshops, demonstrations, speakers, and exhibitors related to all aspects of energy alternatives and conservation.

Rate Increase
As of October 1 the Cost of Power Adjustment (COPA) increased from 3.603 to 4.884 cents per kWh. This raised your blended rate from 16.362 to 17.643 cents/kWh, or about $8.07 for a member using 630 kWh/month.The increase is due to lower than anticipated power availability from Bradley Lake due to maintenance work and improvements requiring longer than expected, increasing purchase of more expensive natural gas based energy.

Expected Rate Increase
If HEA decides to participate in Chugach Electric Association's new Southcentral Power Project, our wholesale cost of power is expected to increase by almost 5%. Pending RCA approval, the increase could be expected as of January 1, 2013. This is a first taste of how construction of new generation assets will begin increasing your electric rates in the near future.

HEA Line Extension Change
A Design and Engineering Agreement and Construction Agreement along with associated language for the proposed new line extension tariff has been filed with the RCA. A decision was expected as of October 8, 2012 but there is no word from HEA yet. Go to http://www.homerelectric.com/NewsEvents/CurrentNews/tabid/125/Default.aspx to download highlights of the proposed changes and RCA/HEA filing documents.

HEA Members Forum Update

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

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

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).

Recent News

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

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.

The HEA Board Needs Our Support

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!

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

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

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

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

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)

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.

Want to Help Reform HEA and Get Paid for It?

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

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

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!

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

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

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.