Homer Electric reports $2.2 million June operating loss as purchased power costs run over budget

Homer Electric Association lost about $2.2 million on its June operations, according to the cooperative's August report to members, wiping out the margin it had built up over the first five months of the year.

Through May, HEA was $600,000 ahead of budget with year-to-date operating margins of $3.1 million. After June, those margins stand at $1.0 million, about $1.0 million behind budget. That is a $2.1 million swing in a single month.

June brought in $10.3 million in revenue against $12.5 million in costs. Revenue is actually running about $5.5 million ahead of budget for the year, but costs are running $6.3 million ahead. The co-op attributes most of the gap to what it pays for power, $8.9 million in June and $45.5 million so far this year.

There is also a gap between HEA's real numbers and the ones in its rate filing. The co-op is preparing a filing that projects an earnings ratio of 1.98, a measure of how many times over earnings cover interest payments, which lenders require the utility to keep above a floor. Its actual ratio is 1.32. The report says the higher figure still benefits from strong sales in late 2025 that remain inside the rolling 12-month window used for the filing, and that the co-op will watch what happens as those months drop out. HEA says it will keep rates "sufficient to support ongoing operations, capital investments, and lender covenant compliance."

The co-op's July report, covering May, had called its financial position sound. The August report offers no such assessment.

Members' rates did fall over the same stretch. HEA cut its cost of power charge 5.5 percent on July 1, worth about $3.30 a month to a household using 550 kilowatt-hours. Kenai Peninsula residential rates still average about 29 cents per kilowatt-hour, roughly 79 percent above the national average, on bills near $145 a month.