2024 Annual Report

Brad Janorschke,
General Manager

Dan Furlong,
President

Message From Board & Management

In business, as in life, milestones are opportunities to reflect on our history and the traditions that shape us. Since 1945, Homer Electric Association (HEA) has grown alongside our communities, overcoming challenges, adapting to change, and staying focused on providing safe, reliable, and affordable electricity to our members.

At the end of 2025, HEA will celebrate 80 years as a cooperative and 75 years of delivering power. This is more than just a milestone; it is a testament to the strength and dedication of the people we serve. In a world where only a fraction of businesses reach their 15th anniversary, HEA’s eight decades of service stand as a symbol of perseverance, progress, and the unwavering support of our members, employees, and board. Each of you has played a vital role in this journey, and we are truly grateful for your trust and commitment.

This legacy was built by those who came before us—visionaries who saw the need for reliable electricity in our region and took action to make it a reality. As we look back on 2024, we recognize not only a year of steady operations and member-focused improvements but also the continuation of the vision set by those who came before us. Their determination laid the foundation for HEA’s success, shaping our past and guiding us forward. Today, we build on their efforts, working to meet the evolving needs of our members while preparing the next generation to carry the cooperative into the future.

Thank you for being part of this journey. Together, we will keep our communities strong, connected, and moving forward—here’s to lighting the way for the next 80 years.

Dan and Brad

District Map, Board of Directors, & Executive Management
Board members standing in a utility yard

HEA’s Board of Directors is elected by the people who matter most – their fellow members. Three members from each of the three districts in HEA’s electric service area are elected to serve as Board Directors. The Board is comprised of leaders who live and work in your communities and have a vested interest in working collectively to represent the best interests of their fellow Members. The board is responsible for setting, reviewing, and revising policy that allows the General Manager and the management staff to conduct the day-to-day operation of the cooperative. They hold meetings on the second Tuesday of each month (except as otherwise noted). For more about your Directors and the Board’s role, please visit Board of Directors.

Board members pose in a large culvert pipe
Board members sitting at a table working

Board of Directors

President Dan Furlong | District 2

Vice-President Robert Wall | District 2

Secretary Jim Duffield | District 1

Treasurer Wayne Ogle | District 1

Director Mike Chenault | District 1

Director Dan Green | District 2

Director Louie Flora | District 3

Director Jim Levine | District 3

Director Erin McKittrick | District 3

Jessica Spuhler | General Counsel

Executive Management

Brad Janorschke | General Manager

Keriann Baker | Chief Strategy Officer

Sheri Gower | Chief Administrative Officer

Sarah Lambe | Chief Financial Officer

Larry Jorgensen | Chief Power Production Officer

John Jungling | Chief Technology Officer

Rob Montgomery | Chief Operating Officer

2024 Year In Review

In 2024, HEA completed numerous projects that improved efficiency, safety, reliability, and customer service across the Southern Kenai Peninsula.

2532

Total Miles of Energized Line

3166

Total Square Mile Service Area

25918

Total Member Owners

34130

Total Meter Locations

Power, Fuels, & Dispatch Highlights (PFD)

Enstar Gas Sales Agreement Extended for 6 Years

When HEA’s gas agreement with Hilcorp expired on March 31, 2024, the cooperative entered a 1-year natural gas contract with Enstar, starting April 1, 2024. That agreement was extended on Dec. 31, 2024, for an additional 6 years beginning April 1, 2025. There are some differences between HEA’s prior firm gas supply agreements and the new agreement, which is interruptible for the first year. If there is a gas supply interruption during the first year, then HEA is responsible for covering that shortfall. As a precaution, HEA has adjusted its use of its Bradley Lake water, holding back some water to use as a backup fuel source during the first year of the agreements and entered into a mutual aid agreement with Chugach Electric Association to provide additional fuel and/or energy in the event of an emergency.

NCC Outage
Significant Upgrades to Nikiski Combined Cycle (NCC) Plant Completed During NCC Planned Outage

This year, HEA completed a major scheduled maintenance project at our Nikiski Combined Cycle Plant to ensure continued reliability and efficiency. As part of this effort, our team replaced key components that had reached the end of their service life and upgraded our control systems to meet current safety and reliability standards. In total, the plant team completed 265 maintenance and repair tasks—ranging from equipment inspections to system upgrades—focused on keeping the plant running safely and efficiently for years to come.

Battery Modules Installed in the 46.5 MW Battery Energy Storage System
New Battery Modules Installed in the 46.5 MW Battery Energy Storage System (BESS)

HEA worked together with Tesla to address a warranty issue affecting the battery system at our BESS site. As part of this effort, Tesla replaced all battery modules across the entire system at no cost to the cooperative. The replacement process took approximately three months, culminating in the installation of 508 brand-new battery modules. This upgrade enhances the longevity of the BESS, ensuring it remains a reliable asset for grid stability, reliability, frequency regulation, and outage reduction for our members.

Electrical Safety Program Finalized & Training Provided to Generation Employees

Developed over the past 2 years, HEA’s PFD Department finalized a new Electric Safety Program in 2024. In partnership with our insurance carrier, the team provided in-depth safety training to 29 employees at no cost to the cooperative. Over the next year, the program will continue to grow, with plans to incorporate even more advanced training to ensure HEA’s safety practices remain strong and on par with industry standards.

Engineering Highlights

Upgrades to the Bernice Lake Facility

In 2024, HEA’s Engineering Department completed key improvements at the Bernice Lake Facility. The team identified and replaced a failing electrical breaker, which was safely brought online in August. As part of ongoing efforts to strengthen cybersecurity and improve system communications, HEA also installed a Real Time Automation Controller (RTAC) at the facility. This technology helps dispatchers remotely monitor equipment and troubleshoot issues more efficiently.

Systemwide Load Balancing Progress

HEA is working toward balancing electric load across its entire system, a step that improves efficiency, supports reliability, and helps control costs for members. This year, the team successfully balanced the load on one circuit serving the Kasilof Substation, making important progress toward this long-term goal.

Operations Highlights

HEA Develops Pilot Program To Help Landowners Reduce Wildfire Risks in High-Outage Areas With Kenai Peninsula Borough Funding

HEA has identified high outage density areas located in Kenai primarily along the Kalifornsky Beach Road and surrounding areas as a target area for a wildfire mitigation pilot program. This area has experienced a significant increase in outages over the past few years, the majority being caused by dead trees from outside the rights of way falling onto the lines. With the KPB grant funding, HEA developed a pilot program to communicate with and educate landowners in the target area about wildfire risks on their property. HEA will also help identify and address these hazards, reducing outages and minimizing wildfire threats.

HEA Secures Millions of Dollars in Federal Funds for Wildfire Mitigation

In 2022, HEA partnered with stakeholders, including the Kenai Peninsula Borough (KPB) to help create a Community Wildfire Protection Plan (CWPP) assessing the risks of wildfire across the Kenai Peninsula. The CWPP documented the extensive devastation to vegetation caused by the spruce bark beetle infestation. Using the CWPP, HEA secured a $2.6 million dollar grant from the United States Department of Agriculture to fast-track additional right of way clearing across South Kachemak Bay, which is scheduled to occur in 2025. The KPB also obtained a $1.5 million dollar grant from the United States Forest Service for wildfire mitigation efforts and plans to use $1 million of these funds to clear dead trees on borough-owned land, allocating the remaining $500,000 to assist landowners with mitigating hazards on private property.

HEA Cleared 85 Miles of Its Distribution Rights of Way (ROW) & Mitigates Over 1,600 Hazard Trees

Every year, HEA spends anywhere from $1 to $1.5 million dollars to clear its rights of way, touching every inch of its distribution lines at least once every 7 years. Maintaining our rights of way prevents trees from growing into our power lines and ensures access to all areas on our system. In 2024, HEA cleared 85 miles of line in Homer and Anchor Point.

HEA mitigated over 1,600 hazard trees across the HEA service area. A hazard tree is a tree that is located outside of a right of way that poses an imminent threat to the powerline. Realizing that not everyone has the same resources or abilities, HEA offers to serve our membership in addressing these out of easement hazards. Upon a report from a member, HEA will inspect the reported tree to determine if the tree poses a hazard to the powerlines. If the tree is determined to be a hazard tree, and the landowner grants permission, HEA will take down the hazard tree, leaving it for the landowner.

1598

Beetle Kill Trees Cleared

686

Outages Caused by Hazard Trees

85

Miles of Trees and
Brush from ROW

60%

of 2024 Outages Caused by Hazard Trees/Beetle Kill

HEA Formalizes Outage Response Plan

HEA developed a formal Outage Response Plan to improve coordination, communication, and efficiency across departments during large scale outages and storm events. This plan defines roles and responsibilities across departments, establishes response triggers, and results in consistent communication with the members during outages. It also ensures a structured work schedule to prevent employee exhaustion, ultimately increasing the safety of our employees, improving power restoration efforts and increasing reliability for our members.

Replacement of 6,500 Meters in Nikiski, Sterling, & Kasilof

HEA is in the process of performing systemwide meter upgrades, replacing outdated and failing Cannon AMR meters with new Aclara Two-Way Automated Control System (TWACS) meters. The Aclara meters offer real-time, 2-way communication, enhanced billing, outage detection, load management, and remote disconnect/reconnect capabilities, improving efficiency and reducing labor costs. HEA plans to replace all Cannon meters with Aclara meters by the end of 2026.

Strategic Plan & Renewable Highlights

Renewables

Net Metering

In 2024, HEA net metering program’s total generating capacity reached 3,792.8 kW. The total energy supplied to HEA’s system from net metering facilities during calendar year 2024 was 1.6 million kWh.

38

NEW Net Metering Installations in 2024

Two Light Detection & Ranging (LiDAR) Units Installed to Gather Wind Data

HEA installed a LiDAR unit on a Cook Inlet Platform owned by Hilcorp and at its Bernice Lake Facility in Nikiski. These units will gather wind data to assess feasibility for wind resources at these locations. In 2025, HEA plans to deploy a LiDAR unit at Bradley Lake, as well as meteorological evaluation towers (MET), another resource that measures and gathers data on wind, in the Happy Valley and Caribou Hills areas.

LiDAR ON PLATFORM

HEA Completes Interconnection Studies for Potential Geothermal Resources at Mt. Spurr & Augustine Island

HEA received 2 renewable energy fund grants from Alaska Energy Authority (AEA) in 2023 which it used to study interconnection options for potential geothermal resources. These studies are complete and will be shared with AEA and the grants will be closed in early 2025.

Technology & Automation

Outage Map Upgraded to Incorporate Estimated Length of Time for Power Restoration

The HEA Outage Map displays outage information for our members in real time. The outage information displayed comes directly from HEA’s internal systems, providing members with the number, location, and cause of outages, 24-hours a day. In addition, as a collaborative effort between various departments, the map now offers estimates for the length of an outage and approximate time of restoration, based on the type and cause of the outage, repairs needed, and crew assignments. The HEA Outage Map works together with HEA text message updates to help keep members informed during outages. .

Screenshot of the Outage Map system

System Upgrade Improves Grid Management

The Technology Department upgraded HEA’s cybersecurity and SCADA (Supervisory Control and Data Acquisition) systems. The SCADA upgrade provides additional tools for HEA to manage the grid more efficiently, operating our systems in a more seamless fashion and leading to faster identification, diagnosis and dispatch of repairs during outages.

Increased Cybersecurity Protections and Provided Cybersecurity Training to All Employees, Other Cooperatives and Community Stakeholders

The Technology Team provided training to over 1,000 people including all HEA employees, Board members, other cooperatives, and community stakeholders at the local, state and national levels.

250000+

Session Attacks Per Day

1500

Cyber Computer
Assets Protected

1.4

Petabytes of Data Storage
Under our Watch & Protection

0

Cyber Events

Member Relations Highlights

Heat Pump Incentive Program Progresses

In 2024, the Heat Pump Incentive Program, which offers a $500 rebate to the member and an additional $500 to a licensed installer, saw the highest rate of participation since its inception. This program benefits cooperative members in that it helps lower heating costs and reduce reliance on expensive fuel sources – an important benefit for members of Homer Electric Association.

HEA Returns $3.37 Million Dollars to Members

In September 2024, the HEA Board of Directors voted to retire $3.37 million dollars in capital credits to members active in 1992 and 1993. These were paid as energy credits to active member accounts and checks to inactive members in December of 2024. Capital credits reflect each members’ ownership in the utility and are one of the benefits of being a member of an electric cooperative like HEA. As a reminder, it is critical for HEA to have a valid address on file for all active and former members to ensure delivery of future capital credits.

HEA Continues To Modernize Member Technology Expanding Options for Electronic Signatures

The Member Service Team continues to incorporate options for electronically signing HEA documents through electronic signature capabilities for online forms. This project has streamlined how members interact with HEA, saving them time and money.

Member holding an electronic ballot
Electronic voting

HEA Outreach Programs – Building Tomorrow’s Leaders

At HEA, investing in the development of future talent is at the heart of our mission:

Employee Retirements & Anniversaries in 2024

As we celebrate another year of progress, we would also like to take a moment to honor those who have made it possible. Their years of service, hard work, and commitment have left a lasting impact on HEA, and we thank them for their invaluable contributions to our cooperative community.

Retirements:

Randall Parrett | 25 Years
Michael Dunn | 18 Years
Colleen Vance | 11 Years
Robert Larson | 5 Years

Employee Service Awards:

April Skorski | 10 Years of Service
Andrew Patrick | 10 Years of Service
Christopher Edgar | 10 Years of Service
Ed O’Connor | 10 Years of Service
Eli Bryant | 10 Years of Service
Heath Strausbaugh | 10 Years of Service
Kraig Anthony | 10 Years of Service
Nathan Elerick | 10 Years of Service
Bobby Taylor | 20 Years of Service
Brad Janorschke | 20 Years of Service
Jeff Leete | 20 Years of Service
John McCullough | 20 Years of Service
Nathan Smith | 20 Years of Service

Financials

Treasurer’s 2024 Annual Report

Organized as a rural electric cooperative, Homer Electric Association, Inc. (HEA) operates as a not-for-profit entity under section 501(c)12 of the Internal Revenue Code. Established by the members to provide service at the lowest possible cost, any excess revenue (or margin) is used to fund growth and maintenance before it is eventually returned to members in the form of capital credit retirements. Ownership equity in the form of member capital credits is a fundamental tenet of the cooperative model. In 2024, the Board of Directors authorized the eighth consecutive year of general retirements, returning nearly $3.4 million dollars to 10,700 current and former members.

In 2024, the financial position of HEA improved with kilowatt hour sales increasing 8% over the prior year. With diligent monitoring and expense management, we continue to meet financial obligations required by our lenders. Our number one priority is to provide safe, reliable electricity at fair and reasonable prices to you, our members.

HEA concluded the year 2024 with total consolidated operating revenues of $115 million dollars. That total less consolidated costs of electric service of $113.8 million dollars, resulted in positive operating margins of $1.2 million dollars. Non-operating margins of $1.1 million dollars brought net margins to $2.3 million dollars. The following is a financial summary for the year.

Energy Sales

HEA sold 490 million kilowatt-hours of electricity in 2024, which is an 8% increase from the year 2023 and a 7% increase from the year 2022. Kilowatt-hours (kWh) sold increased from the prior year for all classes of service except sales for resale to other utilities.

Jim Duffield,
Treasurer

Cost of Power Adjustment (COPA)

The variable cost of fuel and other sources of power used to generate your electricity are reflected on your bill as  the COPA charge. This rate is typically adjusted quarterly primarily based on the cost and source of fuel used. During the year the COPA rate ranged between 8.4 and 9.0 ¢ per kWh.

Average Residential Monthly Bill

REVENUES

Revenue generated from energy sales totaled $114 million dollars, an increase of 6.6% over the previous year. Other operating revenue of $1 million dollars, which includes rentals and fees, plus $1 million dollars from non-operating interest income and capital credit allocations from other organizations, all contribute to net margins.

Expenses

In 2024, total cost of electric service was $113.8 million dollars, a 5.7% increase from 2023. Fuel and purchased power costs (39% of the total) increased $4.4 million dollars, while other operating costs increased $1.7 million dollars.

$0.03 Consumer
Accounts
and Service

$0.09 Administrative and General

$0.23 Distribution

$0.28 Production and Transmission

$0.37
Fuel and Purchased Power
$0.03 Consumer Accounts and Service

$0.09 Administrative and General

$0.23 Distribution

$0.28 Production and Transmission

$0.37 Fuel and Purchased Power
KEY RATIOS

The equity-to-total-assets ratio measures the percentage of total assets owned by members and is one of the indicators used to monitor the Cooperative’s financial health. HEA’s equity ratio was 44% at year-end, compared to 45% in the prior year, both well above the 40% target. The same ratio for Alaska Electric & Energy Cooperative (AEEC), HEA’s subsidiary that holds the generation and transmission assets, was 23% in 2024. This is up from 22% in 2023. The consolidated long-term debt decreased $5.1 million dollars from the prior year.

Financial Goals

In conclusion, Homer Electric Association met its financial goals with positive margins and required loan agreement ratios in 2024. The financial management and resulting financial performance allow the Cooperative to continue meeting the energy needs of our members through innovative energy solutions, while ensuring fair and reasonable rates.