2025 Annual Report

Powering Life on the Kenai Peninsula

Message From Board & Management

At Homer Electric Association (HEA), powering life on the Kenai Peninsula means more than delivering electricity. It means supporting the homes, businesses, and communities that make this place unique.

Reflecting on 2025, it was a year of steady progress and purposeful investment. From routine maintenance to major infrastructure improvements, our focus remained clear: keeping the lights on, responsibly managing our business affairs, and strategically planning for the future. We strengthened critical portions of our system, upgraded aging infrastructure, and reduced costs where practical. These efforts are essential to maintaining reliable service in an environment where weather, terrain, and distance present daily challenges.

Behind every mile of line is a team of dedicated employees committed to serving our members. Whether it was our crews safely and effectively responding to outages, our Member Services team assisting and engaging directly with members, or our engineering group managing new service requests, our employees worked tirelessly to deliver superior service throughout the year.

Looking ahead, we remain focused on balancing today’s reliability with tomorrow’s energy needs. Strategic investments in generation efficiency, grid enhancements, and resource diversification are positioning HEA for a resilient and sustainable future. Projects like the Nikiski Combined Cycle (NCC) Repower Project, along with ongoing evaluations of renewable energy opportunities, reflect our commitment to thoughtful, cost-effective planning.

As a member-owned cooperative, we continue to return value directly to our members by retiring capital credits in 2025 – one of the defining benefits of cooperative membership. We also recognize that our role extends beyond electricity. Through youth programs, scholarships, and other community engagement efforts, HEA continues to invest in the next generation and support the communities we are proud to serve.

As we move forward, our priorities remain unchanged: ensuring the safety of our employees and members, delivering reliable service across our system, and responsible stewardship of the resources entrusted to us.

Thank you for your continued trust in Homer Electric Association.

Sincerely,

Dan and Brad

Brad Janorschke
Chief Executive Officer

Dan Furlong
President

Board of Directors

President Dan Furlong
District 2

Secretary Jim Duffield
District 1

Director Mike Chenault
District 1

Director Louie Flora
District 3

Director Erin McKittrick
District 3

Vice President Robert Wall
District 2

Treasurer Wayne Ogle
District 1

Director Dan Green
District 2

Director Jim Levine
District 3

To learn more about your Board, visit Board of Directors .

Interactive District Map

Executive Management

Brad Janorschke | Chief Executive Officer

Rob Montgomery | Chief Operating Officer

Sheri Gower | Chief Administrative Officer

Sarah Lambe | Chief Financial Officer

Larry Jorgensen | Chief Power Production Officer

John Jungling | Chief Technology Officer

Jessica Spuhler | Chief Legal Officer

HEA Fast Facts

2548

Miles of Distribution Line

214

Miles of Transmission Line

84

Peak Demand (MW)

204

Generation Capacity (MW)

25918

Member-Owners

37349

Meter Locations

132

HEA Employees

3166

Square Mile Service Area (Southern Kenai Peninsula)

Built to Keep the Lights On

From routine maintenance to major storm response, HEA continues to work hard to maintain a resilient electric system across our vast and challenging service territory.

Annual Right of Way Clearing

The majority of HEA’s power outages are weather and tree-related. That’s one of the unfortunate realities of living in the beautiful and heavily treed area of Southcentral Alaska. Because of this, HEA has a robust ROW Maintenance program. HEA’s tree trimming program is not random, but by design and strives to be proactive. This program is based on industry best practices designed to prevent dangerous situations and ensure electric reliability. Throughout 2025, HEA cleared 130 miles of distribution rights of way in the South Kachemak Bay and Kalifornsky Beach Road areas.

Additional Clearing

HEA mitigated over 7,100 hazard trees by deploying a pilot program to help landowners reduce wildfire risks in high-outage areas with grant funding.

744

Outages Caused by Hazard Trees

50%

of Total Outages Caused by Hazard Trees

7117

Total Danger Trees Addressed

130

Miles of ROW Cleared

15

Landing Zones Cleared

HEA ran two parallel projects (CWDG & KPB-CWPPi) that were organized to target these trees, which are the primary cause of outages, and utilized $1.5 million of a total of $4 million in funding to address these clearing needs.

This significant increase in danger tree mitigation is due to a specific, targeted effort that the grant funds were intended to address.

This successful collaboration has begun to open new windows of opportunity for additional federal funding for similar projects, while continuing to utilize the remaining funds on clearing projects over the next two years.

Keeping South Kachemak Bay Powered

When outages isolate South Kachemak Bay from the grid, HEA relies heavily on two generators in Seldovia to maintain service. In 2025, the generators supplied more than 650 hours of emergency power, and the replacement of Seldovia Unit #1 further strengthened the reliability of backup generation for the South Kachemak Bay communities.

Turning Risk Into Reliability

As erosion along the Kenai Spur Highway threatened exposed overhead lines, HEA took swift, proactive action. Engineering completed the accelerated design and permitting for relocating 1,700 feet of high-voltage line in just six months, and Operations safely moved the lines across the highway—eliminating the risk and protecting reliable service for our members.

Strengthening the Grid, Mile by Mile

HEA upgraded nearly 1.7 miles of power line along Guffers Road in Homer by replacing older wire and adding new poles to increase reliability. These improvements reduce the risk of outages during heavy snow and storms and were completed under budget—helping to keep power reliable while controlling costs. HEA is completing line upgrades like these across multiple areas of our service territory—replacing aging equipment, reinforcing power lines for harsh weather, and reducing outage risk. These investments help maintain a strong, reliable electric grid while responsibly managing costs for our members.

A Year of Power

99

Business Hour Outages

780

After Hour Outages

554

Completed Operations Jobs

Example: New Service, Pole Replacements

1158

Completed Service Orders

Example: Outages, Trees on Line, Damaged Equipment

403

New Service Applications

The People Behind the Power

Behind every mile of line and every restored outage is a person committed to doing the work safely, efficiently, and correctly.

HEA line crews completed advanced trainings, including wilderness survival and long-line operations, to ensure they are ready to respond safely and effectively to emergencies across the remote and challenging conditions of HEA’s service territory.

Working Together

The HEA Operations department is deepening partnerships with emergency response agencies and nonprofit partners like Watch Duty to strengthen emergency planning, fire mitigation, and coordinated risk reduction across the Kenai Peninsula. Real-time data sharing improves safety and response efficiency, reflecting our proactive approach to partnerships that benefit our members and communities.

HEA Fleet developed a valuable partnership with Altec Mobile Service to support our specialized equipment needs. In an industry where technology changes quickly, training can become outdated, and equipment downtime can impact reliability and safety. By working with Altec, we’re able to keep critical equipment in service while focusing our in-house training on long-term, high-value skills—ensuring our crews have the tools they need, and our members receive reliable service.

HEA and other Railbelt utility staff have been called on to assist the Railbelt Reliability Council (RRC) and Railbelt Transmission Organization (RTO) in developing standards, tariffs, and other regulations. Throughout 2025, a significant amount of staff time has been spent on contributing industry insights during the RRC and RTO’s process of developing standards and regulations.

Employee Retirements & Anniversaries

Behind every milestone are the employees whose years of service and commitment shaped HEA. We are grateful for their lasting contributions.

Retirements

Employee Service Awards

Members at the Center

As a member-owned cooperative, everything HEA does is guided by the needs of those we serve.

Capital Credit Retirement

$29 million

Capital Credits Retired Since 2015

In 2025, the HEA Board of Directors voted to retire

$3.36 million

in capital credits to members active in 1993 and 1994.

These were paid as energy credits to active member accounts and checks to inactive members in December. 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.

Ensuring Accurate Usage Information

Replacement of

6893 meters

in Kenai, Kasilof, Anchor Point, and Homer.

The new meters offer members detailed usage reports, allowing Member Service Representatives to assist members with understanding their usage.

HEA is performing systemwide meter upgrades, replacing outdated and failing Cannon AMR meters with new Aclara Two-Way Automatic Communication System (TWACS) meters. The Aclara meters offer real-time, two-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.

Youth Programs & Community Engagement Reflect HEA’s Commitment to Cooperative Principal #7, Concern for Community

Youth Programs

Youth Rally Leadership Camp

“I am looking forward to other people getting to experience the same things that changed my life… The number of connections I made there was remarkable. I could name at least a dozen other attendees that I still talk to on a weekly basis, and I know that I gained at least a handful of lifelong friendships from this event.”

2025 Youth Rally Attendee, Shauna Koch

Youth Rally Leadership Camp

Scholarships

HEA awarded $12000 in scholarships to

12 students across the HEA territory.

Scholarships

Engineering Week

In cooperation with other industry partners, HEA engineers visit schools across the Southern Kenai Peninsula, presenting different engineering principals and running students through an educational activity.

Electrical Safety Poster Contest

Community Outreach

Planning Ahead, Powering Tomorrow

Serving members today also means preparing for the energy needs of tomorrow.

Strategic Priorities

2024 to 2026

1. Innovative Energy Solutions

We Power Tomorrow. HEA will adapt to the evolving energy landscape through technology & strategic partnerships.

2. Energy Resource Diversification

We Power Innovation. HEA is committed to diversifying energy sources for the peninsula with cost-effective, flexible options.

3. Capturing Emerging Market

We Power Progress. HEA will expand its services to provide power to emerging markets fostering economic development in our communities.

4. Member-Centric Modernization

We Power You. HEA is committed to enhancing member experience with seamless, technology-driven access to services and information.

Diversification in Action

Solar

In 2025, the HEA net metering program’s total generating capacity reached 4,387 kW. The total energy supplied to HEA’s system from net metering facilities during calendar year 2025 was 1.78 million kWh.

57

New Net Metering Installations in 2025

591

Net Metering Installations Since 2015

Wind

Completed wind data acquisition on the Dillion Platform and retrieved the Light Detection and Ranging (LiDAR) unit from the Platform. Processing the data and generating a final report for this project.

Meteorological Evaluation Towers (MET) were installed in the Happy Valley and Caribou Hills areas to gather wind data that will assist in wind feasibility assessments on the Kenai Peninsula.

Looking Ahead

HEA completed a Value Engineering Study on the Grant Lake Hydroelectric Project and will continue assessing the viability of various potential projects.

Enhance Efficiency

Nikiski Combined Cycle (NCC) Plant Repower Project

The engineering and vendor coordination for the NCC Repower Project continued in 2025. This project is projected to reduce fuel consumption by 19%, increasing the efficiency of the largest natural gas-powered generation facility on our system.

Investing in Cost-Effective Power Delivery

In 2025, HEA began designing an improvement to the Hatfield feeder serving South Kachemak Bay. This project will add equipment designed to reduce power delivery costs for members in the area while strengthening overall system performance. The investment is expected to pay for itself within five to seven years, reflecting HEA’s continued focus on managing costs and delivering reliable, efficient service to our members.

HEA installed a 69kV ABB breaker on Unit 4 at the Bernice Lake Power Plant. This additional breaker makes it possible for HEA to isolate all the units individually for maintenance purposes without creating a plant wide outage.

Protecting Power

Increased cybersecurity protections and provided cybersecurity training to all employees

300000+

Session Attacks per Day

1500

Cyber Computer Assets Protected

1.5

Petabytes of Data Storage Under our Watch & Protection

0

Cyber Events

The Power of Financials

Treasurer’s 2025 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 its members to provide electric service at the lowest possible cost, any excess revenue, or margins, is used to fund system growth and maintenance before ultimately being returned to members through capital credit retirements. Ownership equity, in the form of member capital credits, is a fundamental tenet of the cooperative model. In 2025, the Board of Directors authorized the ninth consecutive year of general capital credit retirements, returning nearly $3.4 million to 9,440 current and former members.

In 2025, HEA’s financial position remained stable, with kilowatt-hour sales decreasing by less than 1% compared to the prior year. Through diligent monitoring and expense management, HEA continued to meet the financial obligations required by its lenders. Our highest priority remains providing safe, reliable electricity at fair and reasonable rates to our members.

HEA concluded 2025 with total consolidated operating revenues of $123.7 million. After deducting consolidated costs of electric service of $119.9 million, the Cooperative recorded positive operating margins of $3.8 million. Non-operating margins of $0.7 million increased total net margins to $4.5 million. The following is a summary of HEA’s financial performance for the year.

Jim Duffield
Treasurer

Energy Sales

HEA sold 487 million kilowatt-hours of electricity in 2025, representing a 0.1% decrease from 2024 and an 8% increase from 2023. Kilowatt-hour sales declined slightly from the prior year across all classes of service except industrial.

Cost of Power Adjustment (COPA)

The variable cost of fuel and other power supply resources used to generate electricity is reflected on member bills through the Cost of Power Adjustment (COPA). This rate is typically adjusted quarterly and is driven primarily by changes in fuel costs and power supply mix. During 2025, the COPA rate ranged from 8¢ to 10.9¢ per kilowatt-hour

Average Residential Member Monthly Bill

(Based on 550 kWh usage as of December 31, 2023 to 2025)

Graph showing average residential monthly year by year. The Customer Charge is at $20 for all three years at $20. The Base Energy charge has increased each year from $88.42, to $91.52, then $94.26 for 2025. COPA went from $45.05, to $49.98, then $60.15 in 2025.

Revenues

Revenue generated from energy sales totaled $122.5 million, an increase of 7.4% over the previous year. Other operating revenue totaled $1.2 million and included items such as property and fiber leases and transmission support services. In addition, HEA recorded $0.7 million in non-operating margins from interest income and capital credit allocations from other organizations, all of which contributed to net margins.

Expenses

In 2025, total cost of electric service was $119.9 million, a 5.4% increase from 2024. Fuel and purchased power costs, which represented 40.3% of total cost of electric service, increased by $4.1 million, while other operating costs increased by $2.0 million.

Where Your Dollar Went

Dollar divided up into 40 cents Fuel and Purchase power, 25 cents production and transmission, 22 cents Distribution, 10 cents Administrative and General, and 3 cents Consumer Accounts and Service

Key Ratios

The equity-to-total-assets ratio measures the percentage of total assets owned by members and is one indicator used to monitor the Cooperative’s financial health. HEA’s equity ratio was 43.8% at year-end, compared to 44.0% in the prior year, ith both years remaining well above the 40% target. The same ratio for Alaska Electric & Energy Cooperative, Inc. (AEEC), HEA’s subsidiary that holds the generation and transmission assets, was 23.7% in 2025, up from 23.0% in 2024. Consolidated long-term debt decreased by $7.8 million from the prior year.

Financial Goals

In conclusion, Homer Electric Association met its financial goals in 2025 by achieving positive margins and maintaining required loan agreement ratios. Sound financial management and strong operating performance allow the Cooperative to continue meeting the energy needs of its members through innovative energy solutions while maintaining fair and reasonable rates.

Financial Report (PDF)