Two incumbents retain seats on HEA board

Posted: Thursday, May 09, 2002

Homer Electric Association members elected three members of its board of directors and approved a ballot proposition at the cooperative's annual meeting Tuesday evening at Soldotna High School.

HEA also released its annual report for 2001, pointing out fiscal gains and citing the storms during the Christmas holidays as a major cause of more than $1 million of reported losses.

In District 1 (Kenai-Nikiski), incumbent Ruth Fitzpatrick was re-elected to a three-year term, receiving 2,217 votes to opponent Richard DeMello's 939 votes.

Fitzpatrick said she plans to work to stick to the cooperative's core goal of delivering affordable electricity to its members.

"The main thing is keeping costs down," she said.

In District 2 (Soldotna-Sterling), Hugh Chumley of Sterling, a 14-year veteran of the HEA board, regained a seat by defeating candidate Ed Oberts and incumbent board member Jack Hetherton.

"I was pleasantly surprised at the overwhelming amount that I won by," Chumley said.

He received 1,562 votes to Obert's 863 and Hetherton's 851.

Incumbent Mike Pate was re-elected to his District 3 (Ninilchik-Homer) seat, edging out opponent Doug Stark by 123 votes. Stark received 1,523 votes while Pate pulled in 1,646.

Stark, who ran in last year's other District 3 race against board member Roseleen Moore, said the margin of his defeat actually grew.

"Last year, I got 49.3 percent of the votes," he said. "This year, I got about 48 percent. I'm going downhill."

Pate said it was important not to shake up the board's experience level, noting that Chumley, who took a five-year break from the board, would fit in well because of his previous service.

"I'm happy to see change," Pate said. "But the stability on the board is important."

Proposition No. 1 is an amendment to HEA bylaws to require the cooperative to allocate patronage capital (remaining earnings paid out to customers after all payables have been disbursed) to members who purchase either gas or steam. Chugach Electric and Agrium are such customers and are designated as cooperative members to allow HEA to maintain its tax-free, not-for-profit status, said HEA attorney Rick Baldwin.

"If we were to become taxable and there wasn't a clause allowing for this, it would take a lot to change over," Baldwin said.

However, because Chugach and Agrium purchase services from a different unit of the cooperative, they are classified differently than most commercial and residential members and, therefore, receive patronage capital from their own individual pool.

The vote on Proposition No. 1 was 2,311 in favor and 588 opposed.

The annual report showed that HEA concluded the year 2001 with total revenues and non-operating income of $42.1 million. That with a total cost of electric service of $43.1 million resulted in a loss of $1 million.

That loss, said General Manager Norm Story, came primarily from the expenses of the Christmas storm last year.

The storm cost $1.06 million for emergency response, and Story said to return the system back to pre-storm condition was anticipated at another $550,000 in 2002. But he said HEA still enjoyed success in spite of weather setbacks.

"Even though many people were without power because of the storm, we still had 2.1 average outage hours per consumer for 2001," Story said. "That's lower than the 10.6 national average."

HEA saw an 8 percent increase in retail sales over 2000, with 476.8 million kilowatt-hours of electricity in 2001. Energy sales were $40.6 million. The increase was due to large commercial and industrial sales.

The association's equity-to-total-assets ratio, which is the accumulated ownership of the members in the assets of the utility, was 39.6 percent at year end, down 2.7 percent from the previous year. HEA reported, overall, $4 million in positive cash flow in 2001, and in September, the utility issued a total of $1 million in capital credit refund checks to members.

Bill Coghill, a partner of Mikunda, Cottrell and Co., audited the report and confirmed that outcome was positive.

"HEA has had a successful year," he said.

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