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Home My WebLink AboutGalena Waste Heat Correspondence and Memos 1991State of Alaska DN Walter J. Hickel, Governor Alaska Energy Authority A Public Corporation July 30, 1991 Russ Sweetsir, Mayor City of Galena P.O. Box 149 Galena, AK 99741 Re: Request for Waste Heat System Financing Dear Mr. Sweetsir: Thank you for your letter of July 1, 1991. We are currently in the process of developing a bond package for financing of several new waste heat recovery systems. The tentative schedule calls for financing and program development during the fall/winter of 1991, design during the summer of 1992, and construction during the summer of 1993. If you desire to have the Galena project included in this package, we will need to review any design/engineering and economic data that you have available including construction cost estimates and estimates on the quantity of heating fuel that will be displaced. If the engineering and economics prove to be acceptable, we would be willing to include Galena in the bond package. If you have any additional questions, feel free to call me or Brian Gray, Project Manager, at 800-478-7877. DDC: bcg cc: Sue White, Alaska Energy Authority Gary Smith, Alaska Energy Authority Brian Gray, Alaska Energy Authority © GALEBGL1 QO PO. BoxAM Juneau, Alaska 99811 (907) 465-3575 KL PO. Box 190869 701 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Glew. wie City of Galena Antoski Hall * P.O. Box 149 ¢ Galena, Alaska 99741 ¢ Telephone (907) 656-1301 RECEIVED July 1, 1994 JUL g 199] Alaska Energy Authority Mr. Dave Denig-Chakroff Director of Rural Programs Alaska Energy Authority P.O. Box 190869 Anchorage, Alaska 99519-0869 Attn: Mr. Gary Smith, Manager Rural Projects Dear Mr. Denig-Chakroff: 1 The City of Galena respectfully requests your assistance in obtaining $325,000 for the | purposes of installing a waste heat recovery system. Attached for your information is a letter from Mr. Neil Hawthorne, P.E. that outlines our desire to tap into available waste heat for use by city buildings and our local school. Fortunately, all these facilities are located within a central core. With a minimum of effort, a maximum benefit and cost efficiency can be achieved by tying each public facility into a waste heat recovery system powered by our new electrical generators. It is our understanding, based on a conversation between Mr. Gary Smith and our consultant Chuck Gibson, that the Alaska Energy Authority is planning to combine various energy requests into a single bonding effort to be scheduled for this Fall or Winter. Please include our request | for $325,000. Specific engineering details trom NHawthorne -Engineering are available for your files. Please advise if further application procedures are required at this point. Thank you. | Sincerely, CITY OF GALENA Aacee’ Russ Sweetsir Mayor | cc: Neil Hawthorne, P.E. Sackett/Gibson Associates Chris Hladick, City Manager-Galena JuL— i= 3 1 Mon 4-13-1577 SACKETT = ASSOCIATES P.oFs HeaW THORNE OR LAM BE STE448451 PLS —NHAW THORNE-ENGINEERING March 25, 1991 7527 Ore Scwaro Hicuway ANCHORAGE, ALATRA 99518 9OTS44°4711 Mx. Carl Hille, City Manager x Box 142 Galena, Alaska 99742 RE: WASTE HEAT COLLECTION PROJECT Dear Mr. Hille: Now that Galena's new electrical generating plant is on line, the City could make extensive use of the engine heat which 4s being generated and wasted out the radiators, Thousands of dollars in heating costs could potentially be saved each winter month by warming the City and school buildings with this nearly free heat. ~ The schoo] and water plant were previously connected to a rather inefficient waste heat system operating off of the old generators.:. Some benefit was realized but heating costs were still higher than they should have been. By optimizing the design flows and connecting to the new power plant, I have calculated that the two schools, two shops, the water plant and the clinic should be able to cut their heating bills down to one-fourth or less of this past winter's cost. Estimated cost for the waste heat system is $325,000. This figure includes engineering and a 10% contingency. Construction will be by force account. Please let me know if I can be of further help. Sincerely yours Ve NEIL HAWTHORNE, P.E. NHAWTHORNE-ENGINEERING NH/sk & Ne Gry Dior Ch.’ Jit. COrve'’s Meaoick. Steve Cowper, Governor Alaska Power Authority State of Alaska May 30, 1989 Ms. Nancy Gross City Manager City of Galena P.O. Box 149 Galena, AK 99741 Subject: Galena Waste Heat System Assistance Dear Ms. Gross: We apologize for the delay in responding to your letter of April 25, 1989, however, we have been in contact with the consulting engineers, Polarconsult Alaska, Inc., in regards to your request. It is our understanding that your new powerhouse will be located 200 feet from the existing powerhouse; this should be a relatively simple interconnection to your existing heating system. We have not seen the design drawings and are uncertain of the construction schedule for this facility. Has the design consultant included engine manifolding and remote radia- tors in the new powerhouse? We prefer that a design engineer be retained by Galena. Power Authority engineers would meet with designers initially and review drawings provided by designer. You can expect available heat to be 300 to 400 percent more than is presently available with the existing plant. As such, your district system, depending on cost, could be expanded significantly. We look forward to working with your community. Please contact our offices if you have questions. Sincerely, . o 7 ; : Donald L. Shira Director, Program Development and Facilities Operations DLS: it cc: The Honorable Johne Binkley, Alaska State Senator The Honorable Kay Wallis, Alaska State Representative G. Susan White, Alaska Power Authority Marcey Rawitscher, Alaska Power Authority Peter Hansen, Alaska Power Authority (1 PO. Box AM Juneau, Alaska 99814 (907) 465-3575 K PO. Box 190869 701 East Tudor Road = Anchorage, Alaska 99519-0869 (907) 561-7877 5872/DD54(1) EueRso® WASHINGTON Centralia 1713 North Pearl Street Centralia, WA 98531 Truck Service Center 7202 Southcenter Pkwy Tukwila, WA 98188 _ ALASKA Anchorage 200 E. 100th Anchorage, AK 99515 Fairbanks 900 Aurora St. Fairbanks, AK 99701 EMEF.JON G.M. DIESEL, JNC. Distributors for Detroit Diesel Allison Division of General Motors 6851 EAST MARGINAL WAY SOUTH ¢ SEATTLE, WASHINGTON 98108 TELEX 32-1081 TWX 910-444-2023 TEL. (206)764-3850 April 25, 1988 RECEIVED BY ALASKA PF CITY OF GALENA 8 APR 29 AO 32 ATTENTION: MR. J. OLSEN ELECTRIC UTILITY DEPARTMENT P. O. BOX 149 GALENA, AK 99741 DEAR SIR, THIS IS IN REFERENCE TO YOUR BID REQUEST OF JANUARY 1987 FOR 700-800 KW PRIME POWER GENERATORS. WE ARE TRYING TO DETERMINE THE STATUS OF THAT PROJECT. WE ARE NOW ABLE TO OFFER TO UTILITIES IN ALASKA A GENERATOR PACKAGE THAT IS TRULY DESIGNED FOR PRIME POWER APPLICATIONS. THESE ARE MEDIUM SPEED, HIGHLY FUEL EFFICIENT, LONG LIFE UNITS. THEY ARE BUILT BY WARTSILA DIESEL WHICH IS A FINISH COMPANY. WARTSILA DIESEL HAS BEEN IN BUSINESS FOR OVER A HUNDRED YEARS. THEY RECEIVED ONE OF THE FIRST LICENSES ISSUED BY RUDOLPH DIESEL, THE INVENTOR OF THE DIESEL ENGINE. THEIR AMERICAN SUBSIDIARY WARTSILA DIESEL, INC. WAS ESTABLISHED IN 1980. WARTSILA DIESEL, INC. HAS A PARTS WAREHOUSE IN LOUISIANA THAT OFFERS 24 HOUR SERVICE. " IN THE EVENT YOU HAVE NOT ISSUED A PURCHASE ORDER OR MADE A BINDING COMMITMENT WE WOULD LIKE TO SUBMIT AN ALTERNATE PROPOSAL TO YOU. IT WILL BE BASED ON A WARTSILA VASA 6R22 ENGINE DRIVING A KATO RELIANCE GENERATOR. FOR YOUR APPLICATION THE UNIT WILL RUN 900 RPM PRODUCING 835 KWe AT PRIME POWER OUTPUT. IT 1S CAPABLE OF A 10 PERCENT OVERLOAD FOR 1 HOUR EVERY 12 HOURS. THE ENGINE IS CAPABLE OF MULTI FUEL OPERATION USING MDO, HFO OR NATURAL GAS. FOR YOUR APPLICATION IT WILL BE SET-UP TO RUN ON #2 DIESEL FUEL (MDO). AT 835 KWe OUTPUT IT WILL PRODUCE 16.06 KWe PER GALLON (PLUS OR MINUS 5 PERCENT) OF FUEL CONSUMED. THIS ENGINE WILL TYPICALLY RUN 20,000 HOURS BETWEEN MINOR OVERHAULS AND 40,000 HOURS BETWEEN MAJOR OVERHAULS. THIS ENGINE IS IN SERVICE WORLDWIDE IN POWER GENERATION. WARTSILA'S ENGINEERING 1S AVAILABLE TO ENSURE THAT YOUR INSTALLATION IS DESIGNED AND EQUIPPED TO MEET YOUR REQUIREMENTS. OUR INSTATE EXPERIENCE OF 26 YEARS IN POWER GENERATION IS AVAILABLE TO ENSURE PROPER INSTALLATION, MAINTENANCE AND SERVICE. G125 EmeRsO® Page 2 WARTSILA IS PROVIDING A 25 MW POWER PLANT MADE UP OF 5 UNITS FOR THE RED DOG MINE COMPLEX NEAR KOTZEBUE. WE ARE ALSO WORKING WITH ANOTHER ALASKA UTILITY TO PROVIDE THEM WITH A 3 MW UNIT NOW ma A SECOND LATER. IF YOU ARE RECEPTIVE TO A PROPOSAL PLEASE ADVISE US AT YOUR EARLIEST CONVENIENCE. PLEASE ADVISE AS TO HOW SOON YOU REQUIRE THE PROPOSAL AND ALSO REQUIRED DELIVERY. ARE YOUR SPEC'S OF JANUARY 1987 STILL VALID? RESPECTFULLY, Ken dle RON SHAFER GENERATOR DEPARTMENT MANAGER EMERSON DIESEL, INC. CC PETER. HANSEN, APA. RS/rjb G125 expanding or building its district heating system and therefore only the generation plant, and not the heat distribution system, is included in the evaluation. Fixed cost (All costs are calculated in USD at the August 1987 exchange rates). A current price level for plants above 10 MW of around USD 800/kW,,, turn-key, a real interest of 6 per cent at 5 per cent inflation, a write-off period of 20 years and 5,000 operating hours annually result in a capital investment or fixed cost of: USD 0.02/kWh,, To this must be added the cost of land, preparation of site and access roads, connection to the power grid and district heating system, annual insurance cost and some fixed maintenance cost. A reduction is on the other hand to be made for: — Hypothetical hot water plant capacity of 9 MW, otherwise necessary to build. — Hypothetical expansion of 10 MW power capacity to the town, replaced by the plant — Estimated value for the town to have its Own emergency power supply Normally the building site does not require expensive piling and preparation artsila Diesel has been WW sec! to supply the prime movers for the power station at the Red Dog Zinc Mine located at the base of Deadlock Mountain in Alaska. The 25 MW power station will be equipped with five Wéartsila Vasa 16V32 diesel engines coupled with synchronous alternators. The units will be mounted on common steel base frames with vibration dampers. A major part of all diesel engine auxiliaries, exhaust gas waste heat recovery units and generating set controls, will be supplied by Wartsila Diesel as an integral part of the power plant package. The waste heat recovered from exhaust gases and jacket cooling water will be used in the mine as well as for heating buildings and accommodation. High availability of the plant is extremely important in the arctic environment where the ambient temperature sometimes drops below -50 °C. To further contribute to the high reliability of the plant, a complete Wiartsila Diesel Engine Condition Monitoring System, WEnCoM, will be tailored for the installation. This or long transmission lines to the power grid and heat distribution system. Considering additions and reductions from some typical projects, the resulting investment or fixed cost in this case is: USD 0.016-0.0192/kWh,, Operating cost Fuel: At a thermal electric net efficiency of 45 per cent at the bus bar i.e. with reduction for internal power consumption the fuel consumption is: 2.22 kWh/kWhg, At an alpha value of |.1, a heat volume of 0.9 kWh per kWh of electricity is produced. The heat otherwise generated in the hypothetical heat boiler is worth approx. | kWh fuel, assuming a boiler efficiency of 0.9. The "'net’”’ fuel consumption can thus be calculated at: 1.22 kWh/kWhg, For the time being the price for gas is to be regarded as equal to that of oil, as per current branch reports. In our example it is USD 0.016/kWh giving a "net" fuel cost of: USD 0.0195/kWh, Lube oil and maintenance: Experience from several oil and gas-fired power plants give a lube oil and maintenance cost of approx. USD 0.004/kWh,, Personnel attendance: A remote controlled plant of the above size with periodical personnel attendance, type The Red Dog Mine power station in Alaska will be equipped wi generating sets. advanced monitoring system will ensure that routine maintenance can be planned and continuous power availability guaranteed. All Wartsila Diesel equipment for the Wartsila Vasa 32:s pasted Al Skultuna, requires 1.5 man per year outside above maintenance cost: USD 0.00I/kWh,, Total operating cost: USD 0.0245/kWh,,; Total fixed and operating cost: USD 0.0405-0.0437/kWh,, The above evaluation is based on 5,000 hours of operation at full electric and heat load. The plant is fully financed within these operating conditions. If arrangements are made to operate for an additional number of hours at full electric output, evacuating the heat gradually, the total cost of this additional power generation comprises fuel, lube oil and maintenance alone. Other evaluation criteria Energy taxes and other governmental regulations are different for each country and must ultimately be taken into account in a feasilibity study. This also applies to the power supply contract with the local power utility, which in turn is subject to governmental regulations and directives. The feasibility of a cogeneration plant of the above type therefore depends to a large’ extent on political decisions regarding each country’s energy structure, and its financing and taxation over the write-off period. & five Wartsila Vasa 16V32 | power plant will be installed in a premanufactured module, thus forming a complete power plant that will be transported up to the mine site with specially designed equipment. Mf 21 EmeRso® WASHINGTON Centralia 1713 North Pear! Street Centralia, WA 98531 Truck Service Center 17202 Southcenter Pkwy. Tukwila, WA 98188 ALASKA Anchorage 200 E. 100th Anchorage, AK 99515 Fairbanks 900 Aurora St. Fairbanks, AK 99701 EMEnSON G.M. DIESEL, INC. Distributors for Detroit Diesel Allison Division of General Motors 6851 EAST MARGINAL WAY SOUTH ¢ SEATTLE, WASHINGTON 98108 TELEX 32-1081 TWX 910-444-2023 TEL. (206)764-3850 RECEIVED BY April 13, 1988 ' ALASKA “93 APR 18 PIZ:04 MR. PETER N. HANSEN ALASKA POWER AUTHORITY P. O. BOX 190869 ANCHORAGE, AK 99519 DEAR SIR, THE ENCLOSED INFORMATION IS PROVIDED TO INFORM YOU THAT EMERSON DIESEL, INC. IS ASSUMING RESPONSIBILITY FOR MARKETING WARTSILA DIESEL ENGINES FOR THE STATE OF ALASKA. WE ARE VERY PLEASED WITH THIS OPPORTUNITY BECAUSE OF THE REPUTATION OF THEIR PRODUCTS. THIS GIVES US THE ABILITY TO OFFER A MEDIUM SPEED DIESEL WITH A PROVEN HISTORY AS A PRIME POWER GENERATOR ENGINE. WE ARE IMPRESSED WITH THEIR LIST OF ELECTRIC UTILITY POWER PLANT INSTALLATIONS. THEY OFFER A FULLY FACTORY PACKAGED GENERATING UNIT WITH A WIDE RANGE OF OPTIONS INCLUDING FULL HEAT RECOVERY. MR. TORSTEN ASTROM OF WARTSILA DIESEL, INC. AND | WERE IN ANCHORAGE ON APRIL 7 & 8TH. WE DID TRY TO GET IN TOUCH WITH YOU AT THAT TIME, BUT YOU WERE NOT AVAILABLE. WE WILL ATTEMPT TO SCHEDULE A MEETING DURING HIS NEXT TRIP OUT HERE WHICH SHOULD BE SOMETIME IN LATE MAY OR EARLY JUNE. BECAUSE OF OUR NEW INVOLVEMENT WE AT EMERSON DIESEL, INC. ARE INTERESTED IN THE CURRENT STATUS OF THE PROJECT AT CITY OF GALENA. 1S THERE ANY CHANCE WE CAN SUBMIT A PROPOSAL TO PROVIDE UNITS FOR THAT LOCATION? WITH THE WARTSILA ENGINE WE CAN NOW OFFER UNITS CAPABLE OF 15 PLUS KW PER GALLON IN THEIR SMALLER SIZES TO 20 PLUS KW PER GALLON AS THEY GET LARGER. IT IS A LINE OF ENGINES THAT GIVES EXCEPTIONAL HOURS BETWEEN OVERHAULS. THEIR UNIQUE OPERATING QUALITIES ALLOW A WIDE RANGE OF FUELS. THEY CAN AND DO RUN ON NO. 6 (BLACK OIL) OR CAN BE CONFIGURED FOR 95% NATURAL GAS/5% DIESEL FUEL. THEY HAVE GIVEN APPROVAL FOR ONE INSTALLATION RECENTLY TO RUN ON NO. 2 WITH 5% FILTERED AND BLENDED WASTE DIESEL ENGINE OIL. THEY TOPPED THAT OFF WITH PERMISSION TO ADD 10% FISH OIL. G111 Emensos YES! HAVE Page 2 WE ARE ENTHUSIASTIC ABOUT THE ENGINES AND CERTAINLY FEEL THEY A DEFINITE PLACE IN A UTILITY POWER PLANT. WE LOOK FORWARD TO DISCUSSING THEM WITH YOU IN THE NEAR FUTURE. RESPECTFULLY, (en RON SHAFER GENERATOR DEPARTMENT MANAGER EMERSON DIESEL, INC. RS/rjb G111 City of Galena . ALASKA ENERGY ote AUTHORITY __ Antoski Hall ¢ P.O. Box 149 e Galena, Alaska 99741 © Telephone (907) 656-1301 August 11, 1989 PROGRESS SINCE JULY 18, 1989 ON ELECTRICAL UPGRADE INCLUDING SERVICE TO THE U.S. AIR FORCE AUGUST 11, 1989 -Replacement and compaction of material for power house foundation is now complete. -The power house building will be delivered to Galena in mid Septemer with construction to be completed this fall. -Forms for footings for the power house under construction. Foundation concrete to be placed on August 12 and 19. -Transformer bid documents were issued for bid. -Staking of transmission line complete, necessary materials for ADOT/PF being; compiled. -Generator units are scheduled to arrive in Galena on August 14 and will be transported to the site. -Bidding document for supplying gravel material for tank fourdation will be issued in mid-August. -Field work on Air Force audit of Request for Equitable Adjustrent completed. -No word on request to the Air Force for time extension for project compietion to january 1990. -Project is scheduled for review at the Alaska Energy Authority beard nceting on August 16, where it is hoped that the Alaska Energy Authority will agree to sell our bonds, con:ingent upon the time extension from the Air Force for completion. -Discussions with two banks regarding interim financing for the project in progress. Interim financing contingent upon the time extension from the Air Force and the agreement by the AEA board. -Funding is rapidly being depleted. The need for interim construction financing is becoming critical. If no additional source of funds is forthcoming by mid September it will be necessary to stop work on the project. “Ge: ftir Hansen Moaey oe K Mites mda, Cott re Co : City of Galena Antoski Hall ¢ P.O. Box 149 * Galena, Alaska 99741 © Telephone (907) 656-1301 December 2, 1986 RECEIVED ay SLASKA FE ANITLAD Gwen Obermiller, Research Analyst Alaska Power Authority 86 ner P.O. Box 190869 6 DEC -8 P1:40 Anchorage, AK 99519-0869 Dear Gwen: Here is the information that you requested in your letter of November 13, 1986 regarding our cost of service study. This information is based on our fiscal year 7/1/85 - 6/30/86. 1. We have one customer class. It is charged 40.9¢/KWH, and receives a credit of 17.87¢/KWH (PCE) and .004¢/KWH (Fuel Surcharge Adjustment). We service approximately 295 customers. During fiscal year 1986, we sold 2,168,390 KWH. The total revenue based on electricity sales was $881,995. 2. Our only source of nonsales revenue comes from Interior Telephone Co. in the amount of $500.00 yearly. 3. The system peak occurred in November of 1985. We sold 218,117 KWH. 4. See attachment A, reports compiled by our auditors, regarding the expenses pertaining to power production, transmission, distribution, customer accounts, and administrative. ‘ 5. & 6. Please consult Peter Hanson regarding the forecast of customers and consumption, as well as the projected capital costs for replace- ments, extensions, and improvements. 7. We have the long term debt as a result of the purchase of the utility from the former private owner. This is a monthly payment of $5,358.41. 8. We charge a city sales tax of 3%. If you have any questions, please contact John Harfst or myself at 656-1301. Sincerely,, — . (Fen al. CNHancbec_lacsi Linda A. Chamberlain Assistant Bookkeeper Enclosure January 19, 1988 U.S General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D. C. 20548 Reference: Protest No. 229918 Protest No. 229918.2 Subject: Alaska Power Authority's Relationship to the City of Galena Gentlemen: In accordance with the State of Alaska's State Legislative Authorization SLA 87, Chapter 3, page 31, line 22, the Alaska Power Authority offers technical assistance to rural Alaskan utilities. Such assistance is based on requests from the utility involved and consequently the nature of the assistance has varied from simple engineering advice provided over the phone to complete projects including feasibility analysis, design, solicitation, construction management, etc. Galena Power Company is a certificated public utility owned by the City of Galena and thus it clearly qualifies for technical assistance form the Rural Technical Assistance Program. Regardless of the nature of the assistance, the Alaska Power Authority does not enter into any contract with any utility concerning future availability of Rural Technical Assistance. As the assistance is provided in the order in which requests are received and only as person- nel availability permits, such contracts would not be appropriate. Accordingly the Alaska Power Authority has not entered into any contract with the City of Galena or Galena Power Company to provide continued assistance. The amount of assistance provided is normally weighed against the potential benefits from the task for which assistance is requested. Due to the rising costs of consumer subsidies for electrical power in rural areas in Alaska, the State of Alaska through the Alaska Power Authority offers technical assistance in order to promote efficient and economical utility operations. This in return enables the utilities to lower prices to the consumers with subsequent reductions in the need for consumer subsidies. For Galena Power Company the addition of Galena Air Force Station as a major consumer will mean lower prices to all 1354/811/2 rayo « consumers in Galena (including Galena AFS) simply due to the economies of scale involved, It should be noted that the Alaska Power Authority did not provide assistance to Galena Power Company based on a perception of insufficient local expertise. On the contrary, it is unlikely that the Alaska Power Authority would have provided assistance if Galena Power Company had not been perceived as being capable of handling the project. As it is clearly detailed in the Request for Proposals, inabilities to perform as specified could result in economic penalties for Galena Power Company. This would adversely affect its other consumers and the State's dis- bursements for consumer subsidies would very likely increase. Based on the above, it should be evident that the Alaska Power Authority does not in any way have any “Parent Company" relationship to the City of Galena or to Galena Power Company. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, (A, Op ca Peter N. Hansen Rural Systems Engineer 1354/811/3 City of Galena Antoski Hall « P.O. Box 149 « Galena, Alaska 99741 © Telephone (907) 656-1301 7 May 1988 Mr. Robert E. LeResche Executive Director Alaska Power Authority P.0. Box 190869 Anchorage, Alaska 99519-0869 Reference: Request for Proposal APA 87-R-015 Dear Mr. LeResche: As you know The City of Galena was awarded the contract to provide electric power to the Galena Air Force station. We recently received the notice to proceed on this project. Mr. Peter Hanson was instrumental in developing the request for proposal for the generating units and has been an adviser to the City in the development of this project. We are herein requesting the assistance of Mr. Peter Hanson, Rural Assistance Engineer, in our negotiations for four diesel engine driven generators and ancillary equipment with Craig Taylor Company in Renton, Washington on 16 May 1988. Mr Hansons’ assistance in the final negotiations for the purchase and later with the acceptance testing of the prime movers and alternators is highly desireable and would be greatly appreci- ated by the City of Galena. Sincerely yours Lee A. Wyat! City Manager Steve Cowper, Governor Alaska Power Authority State of Alaska July 12, 1988 Mr. Lee A. Wyatt City Manager City of Galena P.O. Box 149 Galena, Alaska 99741 Dear Mr. Wyatt: I am writing in response to your letter of May 7, 1988. As you are probably aware, the Alaska Power Authority has been providing extensive technical assistance to the City of Galena for the past three years. I am pleased we have been in the position to provide the City with assistance on the waste heat system, the loan application process and the Galena Air Force bid preparation. As you mentioned, Mr. Peter Hanson has provided a great deal of assistance to the City of Galena. Mr. Hanson's technical expertise is an asset to both the Alaska Power Authority and the many villages he assists. I regret that Peter was not able to accompany you to Renton, Washington to participate in your meeting with the Craig Taylor Company. Unfortunately, he was needed in Anchorage to work on other village technical assistance projects. Currently, we have a large number of ongoing and pending new technical assistance projects and a limited budget to meet these demands during FY89. Although we were not able to comply with your last request for Mr. Hanson's assistance, we will continue to provide technical assistance to the City whenever possible. Please remember that it is the Power Authority's policy to address rural technical assistance requests on a first-come first-serve basis. With our ever increasing number of requests from rural villages and utilities across the State, it is important that we follow this policy as closely as possible. It is the Power Authority's goal to continue to assist as many villages as our budget will allow. O PO. Box AM Juneau, Alaska 99811 (907) 465-3575 BR PO.Box 190869 701 EastTudorRoad }~=— Anchorage, Alaska 99519-0869 (907) 561-7877 3257/881/1 Mr. Lee A. Wy July 12, 1988 Page 2 Thanks again for your letter. If you should have any questions in regards to these matters, please do not hesitate to contact me. Brent N. Petrie pA Director of Agency Operations GSW: BNP:t1j cc: Senator John Binkley, Alaska State Senate Representative Kay Wallis, Alaska State House of Representatives Susan White, Alaska Power Authority 3257/881/2 April 3, 1987 Mr. Michael Castro President Castrolyn Construction, Inc. P.O. Box 23-1709 Anchorage, AK 99523 Dear Mr. Castro: Thank you for your letter regarding the Alaska Power Authority's technical assistance to the City of Galena. It is my understanding that the Alaska Power Authority provided technical assistance to the City of Galena as required by state statutes. Legally, the agency is required to provide such assistance to the Alaska Public Utilities Commission (APUC) certified regulated and/or non-regulated utilities operating in the state. The City of Galena, operating its municipally owned utility, is eligible for the level of technical assistance which was provided by the Alaska Power Authority. The Power Authority clearly stated that they were in no way attempting to disenfranchise the other interested parties from the private sector bidding on the Galena Air Force Base power project proposal. The manner in which the Galena was handled does not appear to be different from other loans the agency has granted and administers. The financing provided by APA through the Power Project Loan Fund, was extended only after the City of Galena complied with APA's statutory loan reauirements and hoard approval was granted. With regard to your concern relating to the current physical condition of the Galena's power plant, APA engineering staff advise that while additional capacity is needed and planned, no emergency, such as the power plant failing, exists. APA also commented on the available bulk fuel storage facilities in Galena. It is my understanding that the 1.2 million gallon storage facility is privately owned and located three miles from the City of Galena owned power plant. The City of Galena has estimated that they will realize substantial savings through the construction of their own bulk fuel storage facility due to the increase in the number of potential fuel suppliers. Additionally, the City also estimates the cost of truck transfer from the bulk fuel storage facility to the power plant, as presently required, will be saved. Mr. Castro -2- April 3, 1987 APA technical staff who assisted with the City of Galena's loan application advised that the issues which you commented on in your letter were thoroughly examined and the purpose of the loan had been well defined by the City of Galena in the loan applica- tion. Based on mv information from the APA, it appears that the level of assistance provided to the City of Galena was not rendered in a preferential manner and the APA staff complied with the agency's statutory mandate. Members of the APA Board have advised me that, in the future, they will request that staff analysis explicitly identify any private sector conflicts which might occur through APA action. This step will not remedy the Galena situation, but it will cause us to examine more closely the impacts on private ventures in the future. Again, I thank you for your taking the time to express your views to me. If I may be of further assistance to you, please do not hesitate to contact me. Sincerely, S]S Steve Cowper Steve Cowper Governor bec: Bob LeResche Alaska Power Authority SC:SW:tb A Don Shira g at Alaska Energy Authority Shy State of Alaska << e P.O. Box 190869 Anchorage, AK 99519-0869 RE: Application for grant for use of wast heat generated by Galena Electric Utility Dear Mr Shira: Last night on August 22, 1989 the Galena City Council directed me to apply on behalf of the city for a waste heat grant so that the city may use heat generated from the new power plant for the School, City Hall, Health Clinic, two Equipment Garages, the Police Station, and the Mental Health Clinic. ' Now that the generating capacity and the amount of power will be approximately tripled due to the city's meeting the requirements of the U.S. Air Force the usage of waste heat should also approximately triple, remitting in substantial annual cost savings to the city and school district. Stone and Webster, our construction management firm for the power system has given us a $70,000 estimate for engineering design and construction management of the waste heat system. This includes the additional engineering and design required for the heating of oil from the storage tanks. Our application for funds is comprised of an initial request for an amount of up to $250,000 to handle the waste heat engineering and a second amount to be based upon the engineer's actual construction. We would expect to use Stone and Webster for the waste heat design because this is a relatively small engineering job in a remote area. It would be difficult to interest firms into making knowlegeable proposals because they would have to make disproportionate investment in travel to the site and in becoming familiar with the power plant project. Stone and Webster is already familiar with the site and power plant project because of the presence of their on-site construction manager during power plant construction. This person has the responsibility to execute the work plan and manage all elements of procurement, contracting, quality control, scheduling, cost control and constructing supervision, responsibilities which could be extended to the installation of the waste heat system. * The construction cost would depend upon the capacity of the waste heat distribution lines, possible modifications to existing building systems and extension of heat to new buildings such as the equipment warehouse and city hall. Most of the city buildings are equipped to take waste heat from our smaller power plant. The April 6, 1989 Moolin & Associates report states on page 12: "It appears that if all the buildings in the area were connected, all of the waste heat available in the winter months could be utilized...... In order for this amount to be distributed, the existing system needs to be upgraded in size. Modifications to the connected buildings will also be required including limited modifications to the buildings now equipped to take waste heat." The city estimates that, based on present City loads and the minimum Air Force load, (4,680,000 kwh as compared to existing demand of about 6,000,000 kwh) the energy requirements for a typical coldest month will be approximately 1,000,000 kwh or approximately 1,500 kw of sustained power production throughout the month. Theoretical waste heat available from jacket water heat recovery at this rate will be approximately 5.1 million BTU per hour (BTUH). If 50% of the rejected jacket water heat is recoverable, then 2.5 million BTUH could be distributed for heating. Of this, roughly 100,000 BTUH, or about 4% would be dedicated to the fuel tank farm heating, leaving 2.4 million BTU for other purposes. With the ~ exception of the tank farms, (Moolin used more conservative numbers: setting energy required for typical coldest month at 750,000 kwh or 1000 kw demand; 1.8 million BTUH with 1.7 million BTUH for other purposes. See Moolin Report, p.10) specific loads for potential users was not calculated. Installed boiler capacity at the two schools was checked and totaled 2.6 million BTUH, not including standby boilers. Including additional smaller buildings near the generator site, the total installed capacity in the area (not including standby boilers) is slightly over 3.0 million BTUH..... During warmer weather, the use of waste heat will drop off in proportion to the decrease in heating-degree days and would approach no usage in warm weather. See the attached table for an analysis of possible usage each month based on a peak of 1.7 and 2.4 million BTUH usage each hour during the winter months. Based on Moolin's conservative estimate of 15,000 heating-degree days per year, one could conservatively expect that 5.1 billion BTU of waste heat could potentially be used over the year. ( 11.39 billion BTU if you rely on the table of the City's estimate of available heat). Based on $1.00/gallon for heating fuel and 80 percent boiler efficiency, this would result in fuel Savings to the users of approximately 48,400 per year. This value could increase if more than the minimum Air Force load is use. The amount that could actually be billed might be somewhat less than this depending on agreements reached. About 4% of the waste heat will be used to heat oil from the storage tanks by recirculating the oil from the tanks to the powerhouse to be warmed by a heat exchanger. The amount of waste heat needed for this purpose will increase in the coldest months, increasing the need for other sources of heat in the city's buildings during this time. The tank farm will contain two 65,000 gallon horizontal tanks and the 336,000 gallon and 247,000 gallon vertical tanks from Campion, for a total of 713,000 gallons. The dikes will be lined with a polyvinylcholoride rubberized liner, conforming to EPA criteria. The grades of fuel and the substantiation for their use are addressed elsewhere in this report, but for purposes of this section, we feel there should be a 65,000 gallon tank of No. 1 grade fuel for extreme low temperature contingency. The main fuel system will utilize No. 2 grade fuel with a heat exchanger located inside the powerhouse building. Thus, heated fuel will be circulated in an insulated 65,000 gallon tank and one insulated 336,000 gallon tank. In addition to the heated tanks there will be an unheated No. 2 Artic 247,000 gallon tank for warm weather use. The buried insulated line from the powerhouse to the end of the existing Utilidor would be approximately 500' between new power plant building to end of Utilidor, approximately 600' between new power plant and tie-in to existing 4" waste heat piping feet in length. The existing utilidor is 500 feet long running from just behind the Health Clinic building to the School building. It may be necessary to reconstruct portions of the utilidor to get the insulated waste heat line inside or it might be better to lay the new line alongside the utilidor. Temperatures generated with jacket water waste heat are sometimes too low to meet peak loads in buildings designed for their own boilers. Modifications to the building heating systems to reset their temperature downward as weather warms is needed for maximum waste heat utilization. The distances of new and existing lines would be: from Powerhouse to Utilidor (new) 600 feet. from proposed mainline to City Hall 250 feet. from proposed mainline to City Garage 110 feet. from Utilidor to City Health Clinic 50 feet. from Utilidor to City Police Station 150 feet. However, because of the additional heat that would become available to the users, it might be necessary to install larger waste heat pipes to the buildings and to the school. To date, our methods for measuring use of waste heat have been rough. If we capture waste heat from the new power plant we would, of course use the methodology prescribed by the Alaska Energy Authority and your form waste heat agreement in measuring use of power by the city's various users. However, we have enough experience with waste heat to say that capture of the new powerplant heat would probably result in the most cost-efficient and cost saving municipal waste heat system in Alaska. Here are some rough figures, the city now spends the following amounts for heat: Fuel Oil: Credit for Waste Heat: Total: School $ Other $ Totals $ The generating capacity and anticipated generation of electricity of our present power plant compared to the new power plant are: Installed Capacity Annual Kwh Annual BTU's Present Plant New Power Plant The BTU's are based upon a generator efficiency of 10,000 (this is BTU's to general electricy not the BTU's that can be captured as waste heat ) BTU/Kwh of delivered energy (Moolin report, p.4) and an aSsumption that 50% of these BTU's can be captured as waste heat. The annual kwh is based on the City's July 1,1988 - June 30,1989 production of 2.3 million kwh and U.S. Air Force projected demand of six million kwh per year which is close to its present estimated requirements (Moolin report, p.10) Based on the assumptions that each gallon of fuel oil purchased by the city during the period July 1, 1988 to June 30, 1989 generated 76,800 BTUH the following possible savings can be estimated: Oil Heat Waste Heat Total Present Plant In Gallons In BTUH New Power Plant In Gallons In BTUH The engineer would of course be able to arrive at better numbers which you could use in evaluating our request for construction money. The Alaska Energy Authority is familiar with our power plant since it has loaned us $1,645,000 and is now considering the sale of an additional $2,000,000 in bonds to finance its completion. Use of BTUH in millions (1.7 million British Thermal Units per hour available) Moolin Estimates in Million City Estimated in Million (1.7 million BTUH available) (2.4 million BTUH available) BTUH BTUH December 1.7 2.4 February 1.7 2.4 March 1.7 2.4 April 1.2 1.5 May 4 4 June wl 1 July wl el August ll wl September 4 4 October 1.0 1.0 November 1.7 2.4 December 17. 2.4 Average .98 * 24 = 26.4 million per day * 365 days = 9.636 billion per year. Total (5.1 billion BTU's of waste heat over the year?) Moolin, p.12 We are also sending you: (1) plot plan showing location of municipal buildings and utilidor in relation to new power plant, (2) drawings showing use of waste heat for recirculation of oil in bulk Storage tanks, (3) Pages 12-13 on waste heat from report entitled Examination of Financing, Scope and other issues related to the Electrical Upgrade Project, April 6, 1989 prepared for City of Galena by Frank Moolin and Associates. If you need any further information to evaluate this request please call me or Ross Klooster. Sincerely, Gary Thurlow City Manager DEPARTMENT OF THE AIR FORCE } HEADQUARTERS ALASKAN AIR COMMAND : ELMENDORF AIR FORCE BASE, ALASKA 99506-5001 (AUG 18 1087 AUG | 4 1987 Directorate of Contracting P.O. Box 758 a Elmendorf AFB AK 99506-5320 RECEIVED BY ALASK? SUBJECT: Extension to Proposal Acceptance Period (F65501-87- RO002 ‘g7 AUG 28 Al 02 City of Galena ATTN: Ms Pat Myers P.O. Box 149 Galena, AK 99741 I. We have forwarded our contracting documents for the Galena AFS power plant to Headquarter's Air Force, thereby starting the review/approval process. We have been informed that Congressional notification will require an additional 22 days following Air Force/Secretary of Defense approval. 2. The proposal acceptance period presently expires on 30 September 1987. We request your proposal acceptance period be extended to 31 October 1987. 3. Please notify our office not later than 30 September 1987 of your intent to extend your proposal acceptance period. Failure to respond by this date will render your proposal non-responsive for further contract consideration. Questions may be directed to Captain Mark Davis or the undersigned at 907-552-2420. AMES Contracting Officer City obGalena Antoski Hall ¢ P.O. Box 149 ¢ Galena, Alaska 99741 * Telephone (907) 656-1301 August 27, 1987 Vac PECEIVED BY 87 «AUG 31 P2:39 Directorate of Contracting PO Box 758 Elmendorf AFB, Alaska 99506-5320 Attn: Captain Mark Davis Subject: Extension to Proposal Acceptance Period (F65501-87-R0002) Dear Captain Davis: The City hereby extends its proposal acceptance period to October 31, 1987. However, the City of Galena may have difficulty granting extensions past October 31, 1987. Sincerely, CITY OF GALENA “gt =) Myers City Manager DEPARTMENT OF THE AIR FORCE HEADQUARTERS ALASKAN AIR COMMAND ELMENDORF AIR FORCE BASE, ALASKA 99506-5001 From: Directorate of Contracting PO Box 758 JUN 39 1987 Elmendorf AFB AK 99506-5320 Subject: Extension to Propo@adelnGeept ance Period (F65517-87-R0002) ALASKA PAE A To: City of Galena ATTN: Ms Pat Myers =» a . lees ee | eet ee Galena, AK 99741 1. We are proceeding with the selection process to make an award on the Galena Electric Power Project. Following our selection, approvals are required by Headquarter's Air Force and the Office of the Secretary of Defense along with Congressional notification. : 2. The proposal acceptance period presently expires on 23 July 1987. We do not anticipate an award being made by that date. We request your proposal acceptance period be extended to 30 September 1987. 3. Please notify our office by 23 July 1987 of your intent to extend your proposal acceptance period. Questions may be directed to Captain Mark Davis at 552-2420. JAMES D. ROWELL Contracting Officer Alaska Power Authority State of Alaska July 7, 1987 Ms. Pat Myers City Manager City of Galena P.O. Box 149 Galena, AK 99741 RE: Alaska Power Authority Resolution No. 1987-01 Dear Pat: This is in confirmation of our recent phone conversation. The date by which the City must receive notice of award of the Air Force contract per Alaska Power Authority Resolution No. 1987-01 has been extended to September 30, 1987, to correspond to the request of the Air Force that the proposal acceptance period be extended to that date. Robert E. LeResche Executive Director REL: cb cc: Gloria Manni 22/301 — PO. Box AM - PD Bey 1908469 Alaska 99814 (907) 465-3575 Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 SS-Oo. Lace Leos cnr b Eichler ark pert? at ms > Pat DEPARTMENT OF THE AIR FORCE HEADQUARTERS ALASKAN AIR COMMAND ELMENDORF AIR FORCE BASE, ALASKA 99506-5001 “HOPE GCCN ((907) 562-3110) MAY - 6 joge Meeting to Discuss Concerns Regarding Galena Power Support, Contract F65517--87-C--0001 m Mr. Lee Wyatt c/o City of Galena P.O. Bor, TAD Galena, AK 99741 1. Per our conversations on 5 May 68, you stated you had received our TFLEFAXed copy of the Notice to Proceed on the date issued, 3 May 88. You indicated there were concerns regarding the total costs of the effort due to the extended delays between the date of proposal preparation and the date of the notice referenced above. At your request, L have arranged to meet with your personnel on 11 May at 1330 in our conference room. In order tu maximize the effectiveness of this meeting, the following information is requested at least two days prior: a. An update of the production plan/critical path chart should be prepared to indicate your performance capability based upon the 3 May Notice to Proceed, L would recommend this be presented using two scenarios. First, a production plan to meet the current contract completion date of 30 Sep 89. Second, a production plan with a recommended extension of the completion date that would optimize cost effectiveness. b. ALI cost impact issues should be individually specified and supported. for example, if the cost of material is in question, current quotes from the prospective suppliers should be cited. 2. Upon receipt of the above information, I will handcarry the data to our engineering personnel for review in preparation for the 11 May meeting. I wish to emphasize this meeting is for the purpose of reviewing your concerns regarding the completion ef the contract in a timely fashion and within the costs anticipated at the time of your last axtension of proposal through Dec 31 87. The data provided must be specific and show the impact has occurred since 1 Jan 88. Top Cover for America Let 20 ERR co ictwuRKr Hee Rott? He} 3. The meeting is not intended to modify the contract completion date or funding. [ft sufficient evidence is provided to warrant such action, additional Governnent reviews and approvals may be raquired to implement the necessary modifications. Until otherwise modified, the current contract performance requirements are in effect and every effort on the part of the Contractor to meet those requirements must be pursued, 4. J] have attached a copy of a request from our engineering personnel regarding a by-pass connection at the At plant. Please review this request. and be prepared to discuss in our 11 May meeting the impact of implementing this initiative. 5. Jt has been a pleasure to work with you on the many issues that have already arisen on this contract. Please contact ine if you have any questions on the above or if you run into any difficulties with the meeting next week. IT will look forward to seeing you then. ERIC M. HODGES, Major, USAl L.Atch Contracting Officer Revised Connection at Galena Ars OF. Go. 136 12: 2 ERFE ELMEMDORr ARE AKAs #4 So; Soe 2206 oh BY-PASS CONNECTION FOR COMMERCIAL POWER AT GALENA AFS It 1s recommended that the equipment to be provided for connecting the incoming commerical power at the Air Force Plant be arranged so that a dual (parallel) cable run with 5 KV elbow type connectors can be plugged in to feed directly into the Air Force electrical distribution system. This can probably be done in the initial design of the connecting facilities for virtually no additional cost. Such terminals may simplify the actual connection to the plant bus by allowing the plant switchgear to be completely deenergized while. the connections and associated work is being done. The connections would provide for totally by-passing the plant. This would permit continuing service direct to the Air Force distribution system in event there 1s any problems in the Air Force plant or for maintenance or repair of the plant switchgear. The connection point should be on the load side of the metering and on the supply side of the tie breaker so that the incoming power would be isolated from the Air Force bus. It is envisioned that the connection would be made using temporarily installed cables; however, it would be possible to make it a permanent arrangement. Contact Maj Hodges, HQ AAC/LGCCN, 907 552-4146 or Capt Richard Henry, HQ AAC/DEMU, 907 552-4148 1f there are any questions on this recommendation, DEPARTMENT OF THE AIR FORCE HEADQUARTERS ALASKAN AIR COMMAND ELMENDORF AIR FORCE BASE, ALASKA 99506-5001 From: Directorate of ContractimgcElvVEeD BY PO Box 758 SLASKA PO ingity SUL | 1987 Elmendorf AFB AK 99506-5320 Subject: Financial otind twee Meee 7 A093 0002) To: City of Galena ATTN: Ms Pat Myers PO Box 149 Galeha AK 99741 As defined in the RFP at Section L, paragraph 34.3.3.1, on page L-ll, request you provide a "commitment" of funds dedicated to this project. Please include contingencies, stipulations, and all limitations. Also indicate the degree of assurance that project financing requirements are available. The purpose of this request is to assure that you have acquired adequate funding to meet contractual terms. Please provide this information by 15 July. Should you have questions, please contact Captain Mark Davis at 552-2420. JAMES D. ROWELL Contracting Officer BN Alaska Power Authority To: eae Coty Mate Date: 6lrale7 mpi o% (4H Cokrna, Maka I714 Subject: Closing Paperwork for Your Alaska Power Authority Loan Please complete the following items as indicated: gl Agreement--Sign and noterize the document where marked and return to my attention at the Power Authority. ( Promissory note--Fill in the amount initially requested, sign arc A the document and return to my attention at Power Authority. ( L oan Progress Report--Must accompany request for disbursement and promissory note: expenditures shown must at least equal the amourt of disbursement requested. If an advance disbursement of funds is requested, identify this amount separately from paid expenditures in section I (D) and include support (e.g., purchase orders) as en AIG In to the Loan Progress Report. ( Legal opinion--Prior to the initial disbursement of loan proceeds, the Power Authority must be provided with the opinion described ‘nr Sec- tion 8 of the Loan Agreement. (F others fiend, Fundha thus will he a vialabhe fa (, 1287 Upon receipt of all required documents, ! will insert the effective dates in the body of the loan agreement and promissory notes, and present the loan agreement to the Executive Director for signature. When sianed, I will mai? you a copy of the completed documents and a State warrant will he mailed to the above address. Please feel free to call me if you have questions about any of the closing procedures or requirements. Sincerely, Za E.R. Whitney Senior Auditor " ERW:tg cc: H. Choe, .'aska Power Authority Pi Hansen APA 9385/711/1 PO. Box AM Juneau, Alaska 99811 (907) 465-3575 PO Box 190869 704 East Tudor Road Arcnorage, Alaska 99519-0869 = (907) 561-7877 CTS: * J TAGE MYC CUEL November 3, 1987 Mr. Max Huhndorf, President Gana-a' Yoo, Ltd. Box 38 Galena, AK 99741 Dear Mr. Huhndorf: Thank you for your letter regarding the Galena Air Force Base Power Generation Project bid. I apologize for the delay in responding. I have been aware of the proposed power generation project bid since the Air Force solicitation earlier this year. It is my understanding that the Alaska Power Authority provided financial assistance to the City of Galena in the form of a loan from the Power Project Loan Fund as authorized by State statutes. Leaal- ly, the agency is authorized to provide such assistance to Alaska Public Utilities Commission (APUC) certified regulated and/or non-regulated utilities operating in the State of Alaska. The Power Authority Board of Directors approved the City's loan at a market rate of interest, as they had met all loan qualifications necessary as required by law. Concerning the Air Force bid award date, the Power Authority has informed me that they are unaware of political pressure that may have been directed towards the Air Force by the City. Further, the Power Authority has been informed by the City of Galena that the new date for bid award is now set for December 31, 1987. The City of Galena has recently received communication from the Air Force that the delay is due to normal procedures and pending approval from Air Force headquarters on the east coast, and that the original bid award date as anticipated by Air Force personnel in Alaska was not accurate. With regard to the City being the lowest bidder, the Power Authority has not been able to ascertain this information from the Air Force, as limited information is available for release at this time. It is my understanding that City of Galena and the Power Authority share your concern for the continued bid award delay. I am pleased to know that Gana-a' Yoo, Ltd. has bid on the project and applaud your corporation's efforts in attempting to participate in projects benefitting the economic development and workforce of your local area. Although it is not my role as Governor to attempt to impact the bid award, I would hope that the Air Force is fully evaluating all of the bids equally on an unbiased and individual merit basis and that the award will go to the most technically qualified party. In closing, thanks again for sharing your concerns with me. I hope the information I have provided is helpful. Please let me know if I may be of additional assistance to Gana-a' Yoo. Sincerely, Steve Cowper Governor SC:SW January 19, 1988 U.S. General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D.C. 20458 Reference: Protest No. 229918 Protest No. 229918.2 Gentlemen: Please find attached a copy of a loan commitment confirmation recently requested by and submitted to the City of Galena. In accordance with Alaska Statute 44.82.170 the Alaska Power Authority offers and administers loans to certificated private and public util- ities throughout Alaska from the Power Project Loan Fund, which has been established by the Alaska Legislature. These loans are specifically for power projects such as transmission lines, fuel tanks, generation facilities, and other projects relating to the utility's activities. Galena Power Company is a certified public utility owned by the City of Galena and thus it clearly qualifies for loans from the Power Project Loan Fund. The Alaska Power Authority is fully aware that funds from this loan fund will be used to expand Galena Power Company to the extent necessary to supply Galena Air Force Station with electrical power. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, A 4 (es Peter N. Hansen Rural Systems Engineer Pe a ee Attachment as stated. 1354/811/1 Steve Cowper, Governor Alaska Power Authority State of Alaska January 19, 1988 U.S. General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D.C. 20458 Reference: Protest No. 229918 Protest No. 229918.2 Gentlemen: Please find attached a copy of a loan commitment confirmation recently requested by and submitted to the City of Galena. In accordance with Alaska Statute 44.82.170 the Alaska Power Authority offers and administers loans to certificated private and public util- ities throughout Alaska from the Power Project Loan Fund, which has been established by the Alaska Legislature. These loans are specifically for power projects such as transmission lines, fuel tanks, generation facilities, and other projects relating to the utility's activities. Galena Power Company is a certified public utility owned by the City of Galena and thus it clearly qualifies for loans from the Power Project Loan Fund. The Alaska Power Authority is fully aware that funds from this loan fund will be used to expand Galena Power Company to the extent necessary to supply Galena Air Force Station with electrical power. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, 7 (Ah Me rere Peter N. Hansen Rural Systems Engineer Attachment as stated. 1354/811/1 OPO. Box AM Juneau, Alaska 99814 (907) 465-3575 OPO. Box 190869 701 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Steve Cowper, Governor N Alaska Power Authority State of Alaska January 19, 1988 U.S General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D. C. 20548 Reference: Protest No. 229918 Protest No. 229918.2 Subject: Alaska Power Authority's Relationship to the City of Galena Gentlemen: In accordance with the State of Alaska's State Legislative Authorization SLA 87, Chapter 3, page 31, line 22, the Alaska Power Authority offers technical assistance to rural Alaskan utilities. Such assistance is based on requests from the utility involved and consequently the nature of the assistance has varied from simple engineering advice provided over the phone to complete projects including feasibility analysis, design, solicitation, construction management, etc. Galena Power Company is a certificated public utility owned by the City of Galena and thus it clearly qualifies for technical assistance form the Rural Technical Assistance Program. Regardless of the nature of the assistance, the Alaska Power Authority does not enter into any contract with any utility concerning future availability of Rural Technical Assistance. As the assistance is provided in the order in which requests are received and only as person- nel availability permits, such contracts would not be appropriate. Accordingly the Alaska Power Authority has not entered into any contract with the City of Galena or Galena Power Company to provide continued assistance. The amount of assistance provided is normally weighed against the potential benefits from the task for which assistance is requested. Due to the rising costs of consumer subsidies for electrical power in rural areas in Alaska, the State of Alaska through the Alaska Power Authority offers technical assistance in order to promote efficient and economical utility operations. This in return enables the utilities to lower prices to the consumers with subsequent reductions in the need for consumer subsidies. For Galena Power Company the addition of Galena Air Force Station as a major consumer will mean lower prices to all 1354/811/2 QO PO. Box AM Juneau, Alaska 99814 (907) 465-3575 OPO. Box 190869 704 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 U.S. General / ounting Office January 19, 1988 Page 2 consumers in Galena (including Galena AFS) simply due to the economies of scale involved. It should be noted that the Alaska Power Authority did not provide assistance to Galena Power Company based on a perception of insufficient local expertise. On the contrary, it is unlikely that the Alaska Power Authority would have provided assistance if Galena Power Company had not been perceived as being capable of handling the project. As it is clearly detailed in the Request for Proposals, inabilities to perform as specified could result in economic penalties for Galena Power Company. This would adversely affect its other consumers and the State's dis- bursements for consumer subsidies would very likely increase. Based on the above, it should be evident that the Alaska Power Authority does not in any way have any "Parent Company" relationship to the City of Galena or to Galena Power Company. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, (Gi fe Ger Peter N. Hansen Rural Systems Engineer 1354/811/3 Steve Cowper, Governor Alaska Power Authority State of Alaska January 19, 1988 U.S. General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D.C. 20458 Reference: Protest No. 229918 Protest No. 229918.2 . Gentlemen: Please find attached a copy of a loan commitment confirmation recently requested by and submitted to the City of Galena. In accordance with Alaska Statute 44.82.170 the Alaska Power Authority offers and administers loans to certificated private and public util- ities throughout Alaska from the Power Project Loan Fund, which has been established by the Alaska Legislature. These loans are specifically for power projects such as transmission lines, fuel tanks, generation facilities, and other projects relating to the utility's activities. Galena Power Company is a certified public utility owned by the City of Galena and thus it clearly qualifies for loans from the Power Project Loan Fund. The Alaska Power Authority is fully aware that funds from this loan fund will be used to expand Galena Power Company to the extent necessary to supply Galena Air Force Station with electrical power. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, pe pp Peter N. Hansen Rural Systems Engineer Attachment as stated. 1354/811/1 OQ PO. Box AM Juneau, Alaska 99814 (907) 465-3575 {9 PO. Box 190869 704 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Steve Cowper, Governor iN Alaska Power Authority State of Alaska January 19, 1988 U.S General Accounting Office Procurement Law Control 441 G Street, Room 4133 Washington D. C. 20548 Reference: Protest No. 229918 Protest No. 229918.2 Subject: Alaska Power Authority's Relationship to the City of Galena Gentlemen: In accordance with the State of Alaska's State Legislative Authorization SLA 87, Chapter 3, page 31, line 22, the Alaska Power Authority offers technical assistance to rural Alaskan utilities. Such assistance is based on requests from the utility involved and consequently the nature of the assistance has varied from simple engineering advice provided over the phone to complete projects including feasibility analysis, design, solicitation, construction Management, etc. Galena Power Company is a certificated public utility owned by the City of Galena and thus it clearly qualifies for technical assistance form the Rural Technical Assistance Program. Regardless of the nature of the assistance, the Alaska Power Authority does not enter into any contract with any utility concerning future availability of Rural Technical Assistance. As the assistance is provided in the order in which requests are received and only as person- nel availability permits, such contracts would not be appropriate. Accordingly the Alaska Power Authority has not entered into any contract with the City of Galena or Galena Power Company to provide continued assistance. The amount of assistance provided is normally weighed against the potential benefits from the task for which assistance is requested. Due to the rising costs of consumer subsidies for electrical power in rural areas in Alaska, the State of Alaska through the Alaska Power Authority offers technical assistance in order to promote efficient and economical utility operations. This in return enables the utilities to lower prices to the consumers with subsequent reductions in the need for consumer subsidies. For Galena Power Company the addition of Galena Air Force Station as a major consumer will mean lower prices to all 1354/811/2 Ol PO. Box AM Juneau, Alaska 99814 (907) 465-3575 {1 PO. Box 190869 704 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 U.S. General /..-sunting Office January 19, 1988 Page 2 consumers in Galena (including Galena AFS) simply due to the economies of scale involved. It should be noted that the Alaska Power Authority did not provide assistance to Galena Power Company based on a perception of insufficient local expertise. On the contrary, it is unlikely that the Alaska Power Authority would have provided assistance if Galena Power Company had not been perceived as being capable of handling the project. As it is clearly detailed in the Request for Proposals, inabilities to perform as specified could result in economic penalties for Galena Power Company. This would adversely affect its other consumers and the State's dis- bursements for consumer subsidies would very likely increase. Based on the above, it should be evident that the Alaska Power Authority does not in any way have any "Parent Company" relationship to the City of Galena or to Galena Power Company. If you have any questions in reference to this subject, please do not hesitate to contact the Alaska Power Authority. Sincerely, Peter N. Hansen Rural Systems Engineer 1354/811/3 Steve Cowper, Governor Alaska Power Authority State of Alaska January 6, 1988 Mr. Lee Wyatt City Manager City of Galena P.O. Box 149 Galena, Alaska 99741 Subject: Loan Committment--Power Project Fund Dear Lee: This is in confirmation of our recent conversation. The Power Authority has committed and has available for disbursement $1,350,000 as proceeds of a loan approved by our Board of Directors on February 5, 1987. The City of Galena has met the terms of its loan committment from the Authority because the U.S. Air Force awarded the power contract to the City prior to December 31, 1987. eae , VA > l {fi (ye E. R. Whitney Loans Officer cc: Peter Hansen, Alaska Power Authority Capt. Mark Davis, Headquarters Alaska Air Command Directorate of Contracting P.O. Box 758 Elmendorf Air Force Base Alaska 99506 1300/811/1 <= PO. Box AM Juneau, Alaska 99814 (907) 465-3575 = PO. Box 190869 704 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 SENT BY:Xerox Telecopier 7d20 +1°%"7U-OY + 1U+1 1AM FALAaKA ruWeR AU inns oelevivewss al = WAUKESHA ALASKA, CORP. 1301 HUFFMAN ROAD P.O. BAX 111MAR ANCHORAGE, ALAS ; Set em 4 PHONE: (907) 345-8800 Telex: 902-5204 Governor Steve Cowper September State of Alaska oct g° 1987 PO Box A J , AK #9881 nina GOVERNOR'S OFFICE Subject: State competion with private enterprise Galena AFS Electrical Power Sollcitation # F65517-87-RB802 t Dear Governor Cowper: I understand that the State of Alaska is competing against private enterprise by subsidizing the City of Galena bid for this project. The Alaska Power Authority reportediy Is providing technical/financlal/political assistance in pursult of this project; and that lower than market rate capital from the State Cor an agency of the State) is avallable to the City to construct/aperate the facility. : The State of AlasKa should not be directly or indirectly competing with private enterprise. Conversely, the State should welcome taxpaying private sector companies, capital and jobs. A private company, GALENA ENERGY CORP, has submitted a competing proposal to the US Airc Force to design, build and operate this electrical power plant at Galena AFS. This company Is funded with private sector capital. GALENA ENERGY CORP Is a Joint venture consisting of Onsite Energy Corp (subsidiary of PacifiCorp), Kinetic Energy Systems Inc, Gana’ Yoo Ltd (Village Corp), and Waukesha Alaska Corp. We have the experience, talent and funds avallable to execute this important project, and we naturally want to win the bid award. The object of this letter is not to atmply diacuss the relative mecits of free enterprise verses competing government agencies and subsidy. I would like to Know what can be done on this project to eliminate the competing Influence of the State Government. . Very truly yours, Do Sn tne] RE RT Waukesha —@cGrre 2 a Se Compressed 20 Es Ww ot nC MITSUBISHI Equipment pooktel TROCKE Lee 2 ee kta. Catan @ Dantel « laara « Sarvice SENT BY:Xerox Telecopier 7020 +1°"°U-67 FTUsTIAM rALASRA FPUNEA mu inune™ Ovievivestin 9 WAUKESHA ALASKA, CORP. (907) 345-6800 : v PHONE: 1301 HUFFMAN ROAD P.O. BAX 111MAR Telex: 902-5204 ANCHORAGE, ALASt©® as Aaa of / Prealdent: ROGER A. HAXBY, B.M.E., P.E. fs G fs i W is D Governor Steve Cowper September 24,LM487 _ State of Alaska oct g° 1997 PO Box A Tee GOVERNOR'S OFFICE Subject: State competion with private enterprise Galena AFS Electrical Power Solleltation # F65517-87-RB802 e Dear Governor Cowper? I understand that the State of Alaska is competing against private enterprise by subsidizing the City of Galena bid ¢or this proJect. The Alaska Power Authority reportediy Is providing technical/financlal/political assistance In pursult of this project; and that lower than market rate capital from the State Cor an agency of the State> is avallable to the City to construct/aperate the facility. : . The State of Alaska should not be directly or indirectly competing with private enterprise. Conversely, the State should welcome taxpaylng private sector companies, capital and jobs. A private company, GALENA ENERGY CORP, has submitted a competing proposal to the US Alc Force to design, build and operate this electrical power plant at Galena AFS. This company Is funded with private sector capital. GALENA ENERGY CORP is a Joint venture consisting of Onsite Energy Corp (subsidiary of PacifiCorp), Kinetic Energy Systems Inc, Gana-A’ Yoo Ltd (Village Corp), and Waukesha Alaska Corp. We have the experience, talent and funds available to execute this important project, and we naturally want to win the bid award. The object of this letter is not to atmply discuss the relative merits of free enterprise verses competing government agencies and subsidy. I would like to Know what can be done on this project to eliminate the competing Influence of the State Government. . Very truly yours, Dil Roger R Haxby gett Waukesha —@LctetZ renee Pa - . co ar EW 2 peaioey.(r MITSUBISHI Equipment rooKiet rrvcas 2 ee ee 2 tbe atin. Catae « Rantal « Laasa « Service 44S — Fatlena— VY ALASKA POWER AUTHORITY WEST 5th AVENUE - ANCHORAGE, ALASKA 99501 Phone: (907) 277-7641 mil i (907) 276-0001 June 27, 1985 Conservation & Renewable Energy Division United State Department of Energy P. 0. Box 550 Richland, Washington 99352 Attention: Kathy Vega Reference: Phone conversation of June 25, 1985 Subject: Galena Waste Heat Recapture Project Dear Ms. Vega: As you requested during your phone conversation on June 25, 1985, with Peter Hansen, I hereby submit to the U.S. Department of Energy an outline of the background for the Alaska Power Authority's involvement in this project. Also, included in this letter you will find a detailed description of the project changes proposed by the Power Authority. A Technical Assistance report was prepared in May of 1983 for the Galena City School District by Sunfair Engineering of Fairbanks, Alaska. In the report, the consultant concluded that if the existing waste heat recapture system in Galena were expanded to provide waste heat to the School, an additional 11,116 gallons of fuel could be saved per year. Based on this study, a grant application was filed with the U.S. Department of Energy's Institutional Conservation Program, which is administered by the State of Alaska, Department of Community and Regional Affairs. The grant application was approved and, through a mixture of State and Federal grants to the Galena City School District and to the City of Galena, a total of $311,216 was made available for an expansion of the existing waste heat system. Contract documents for the waste heat system expansion were pre- pared by Crews, McInnes, Hoffman/Vitro Engineering of Anchorage; project documents were issued for bidding in August of 1984. In the first bidding process, the low bid was $477,006, meaning sufficient funds were not available to complete the process. As a result no contract was awarded. On March 1, 1985, the City of Galena submitted a request to the Alaska Power Authority for additional funding in the range of $50,000 - $100,000. The Power Authority requested that the initial bid documents be made avail- able for a technical review which was subsequently performed by 9922/365 Ms. Kathy Ve-- June 27, 19€ Page 2 in-house staff. In the meantime another bid Process was initiated and the lowest bid received by the closing date in early April 1985 was $344,000. Minor changes to the scope of work reduced the cost estimate to $316,000, which was agreeable to the low bidder. Miscellaneous additional costs for attorneys fees, engineering fees, administrative costs, utilidor tie-down, and project manage- ment were estimated at $35,000; thus, a shortage of more than $40,000 was evident. During discussions between Power Authority and City of Galena staff, it was made clear to the City of Galena that the Power Authority felt a major design revision was warranted. Especially the following points were noted by the Power Authority: 1. The engineer's estimate for heat availability was in error. This was caused by a faulty assumption for a specific generator set's coolant heat rejection per kilowatthour produced. 2. Three more buildings were to be connected to the waste heat system according to the plans and specifications for the project. Based on the Power Authority staff's calculations, not enough heat would be available to supply these buildings as well as the school. In addition, the incremental fuel savings produced by connecting these buildings would not justify the extra expenses. 3. The method of connection to the school was judged to be inappropriate by the Power Authority staff. Heat would be delivered to the school crawl space only through 12 unit heaters and regardless of the amount of waste heat available at any given time, the rest of the school's heating load would still have to be met with conventional means. 4. The piping and controls concept was judged by the Power Authority staff to be over designed and inefficient resulting in high operating costs. As a result of discussions between the Power Authority and City of Galena staffs, it was proposed by the City of Galena that the Power Authority take over the project, re-design and install it to Power Authority standards. A total of approximately $311,000 would be made available by the Galena City School District and the City of Galena. It was, of course, realized by all parties involved that the necessary clearances would have to be obtained from the State of Alaska and the U.S. Department of Energy for the mixing of funds for a project of this type. This concept was later accepted by the Power Authority Board of Directors, the Galena City Council, and the Galena City School 9922/365 Ms. Kathy Veoa June 27, 19 Page 3 District Board of Directors. The Power Authority was requested to initiate contact with the U.S.DOE to obtain approval of scope changes and billing procedures for the portion of the project that involved funds provided by the U.S.DOE. The following sections outline the project scope and billing procedures as proposed by the Alaska Power Authority. PROJECT SCOPE: The Power Authority proposes to design and construct the following: Power Plant: Upgrade of existing flat plate heat exchanger to closer approach temperatures and lower pressure drops. Connection to all three generators through common cooling manifold. Also connection to existing vertical core radiators which will be equipped with appropriate temperature controls for fan motors to reduce station service loads. Installation of appropriate temperature controls for district heating loop in order to prevent back feeding from buildings connected to the system. Utilidor System: Installation of 4-inch insulated supply of return lines from the power plant to the school with a branch line to the adjacent garage. Installation of capped branch Tee's for future connection to the new school addition under construction. Garage: Connection to existing boiler through a flat plate heat exchanger. Alternatively, installation of three unit heaters. ‘ School: Connection to existing boiler system through large flat plate heat exchanger. Connection to existing hot water heating system through double loop flat plate heat exchanger. Possibly installation of one unit heater in crawl space in vicinity of district heating pipe wall penetration. Clinic: Modification of existing controls on waste heat recapture system connection to prevent back feeding. Water Treatment Plant: Modification of existing controls on waste heat recapture system connection to prevent back feeding. 9922/365 Ms. Kathy Veaa June 27, 19€ Page 4 General: The above mentioned scope does not include connection to the New Garage, the City Offices, or the Public Safety Building. Power Authority staff believes that a design made within this scope will provide a good and reliable waste heat recapture system which will benefit the School significantly more than the initial design, as it was presented to the Power Authority. MEMORANDUM OF AGREEMENT: Prior to design and construction of this project, the parties involved will enter into an agreement outlining areas of respon- sibility, billing procedures, and terms for future heat sales from the City of Galena to the Galena City School District. BILLING PROCEDURES: The Power Authority proposes the following billing procedures: 1. Contractor submits invoice to the Power Authority with a separate estimate of the amounts resulting from work on: 1. The School - The Garage - The Clinic The Water Treatment Plant .- The Utilidor System The Power Plant 2 3 4 5 6 2. Power Authority staff reviews and verifies the invoice.and, based on additional information from field inspections and internal cost estimates, determines the percentage of the invoice to be paid by: 1. The City of Galena 2. The Galena City School District 3. The Power Authority submits copies of the Contractor's invoice to the City of Galena and the Galena City School District with a request for immediate payment to the Contractor. 4. The City of Galena and the Galena City School District pay the Contractor their respective percentages of the invoice within seven working days of receipt of Request for Payment and simultaneously submit proof of payment to the Power Authority. 5. Prior to or after payment of their respective percentages of the invoice, the City of Galena and the Galena City School District request and receive payment from their respective 9922/365 his. Kathy Veca June 27, 1 Page 5 grantors, i.e. the State of Alaska and the U.S.DOE. It is the responsibility of the City of Galena and the Galena City School District to secure the availability of funds for timely payment of invoices. It is the hope of the Power Authority that the principles of the Scope Change, Memorandum of Agreement, and Billing Procedures are agreeable to the U.S.DOE. The Power Authority feels that the principles as outlined above will serve all parties involved by securing a responsive and responsible solution to the problems that have stalled the Galena Waste Heat Project. As time is of the essence for a successful completion of the project within this construction season, we urge the U.S.DOE to approve these princi- ples in writing as soon as possible. If you have any questions in regards to this project, please do not hesitate to contact Peter N. Hansen, Rural Systems Engineer, at (907) 276-0001. Sincerely, an D. Heath Executive Director PNH/RDH/amh cc: Ms. Pat Meyers, City of Galena Mr. Harry Purdue, Galena City School District Ms. Cheryl Cole, State of Alaska, Department of Community and Regional Affairs. 9922/365 TIS — fhtings recieved requ E Fran the City of Galena School Di ; reqarding our taking over sucdqest that we ASAP have ai meetina with derrey Larson and Edweed Morris in order tea: Lo omaneacey 4. # BPA invel olan of attack iqgest that we set up th for this afternoon if all ivelved parties are in the of fice. rack e/g 730 -hWAdLTe Mece MEMORANVDUM State of Alaska TO: FROM: 02-001A(Rev. 10/79) Lee Nunn, Chairman pate: May 2, 1985 Board of Directors Alaska Power AUthority FILE NO: TELEPHONE NO: 1 Ayes SUBJECT: Robert Arnold Galena Waste Heat Vice-Chairman, Finance Committee The Finance Committee of the Alaska Power Authority met at 2:30 P.M. in the Conference room on the 9th floor of the State Office Building in Juneau. Mr. Harrison had to leave by the time this item came up. Mr. Hufman was excused. In summary, the City of Galena and Galena City School District propose to transfer funds to the Power Authority to complete a waste heat system. Approximately $300,000 would be transfered. Power Authority staff asked permission to enter into an agreement to accept such funds when formally offered and to allocate up to $20,000 internally from general waste heat appropriations for redesign and project management. A quorum of the Committee was not present so we did not vote. Mr. Allison and myself endorsed the concept and I said I would convey this to the full board at their regular meeting. FINDINGS AND RECOMMENDATIONS FOR THE GALENA WASTE HEAT RECOVERY EXPANSION PROJECT A. Action Item Consideration of Findings and Recommendations for the Galena Waste Heat Recovery Expansion Project. Background A Technical Assistance report was prepared in May of 1983 for the Galena City School District by Sunfair Engineering of Fairbanks, Alaska. In the report, the consultant concluded that if the existing waste heat recap- ture system in Galena were expanded to provide waste heat to the School, an additional 11,116 gallons of fuel could be saved per year. Based on this study, a grant application was filed with the federal Department of Energy's Institutional Conservation Program, which is administered by the Department of Community and Regional Affairs. The grant application was approved, and through a mixture of State and federal grants to the Galena City School District and to the City of Galena, a total of $311,216 was made available for an expansion of the existing waste heat system. Contract documents for the waste heat system expansion were prepared by Crews, McInnes, Hoffman/Vitro Engineering of Anchorage; project documents were issued for bidding in August of 1984. In the first bidding process, the low bid was $477,006, meaning sufficient funds were not available to complete the process. As a result no contract was awarded. On March 1, 1985, the City of Galena submitted a request to the Alaska Power Authori- ty for additional funding in the range of $50,000 - $100,000. The Power Authority requested that the initial bid documents be made available for a technical review which was subsequently performed by in-house staff. In the meantime another bid process was initiated and the lowest bid received by the closing date in early April 1985 was $344,000. Minor changes to the scope of work reduced the cost estimate to $316,000, which was agreeable to the low bidder. Miscellaneous additional costs for attorneys fees, engineering fees, administrative costs, utilidor tie-down, and project management were estimated at $34,000; thus, a shortage of more than $40,000 was evident. During discussions between Power Authority and City of Galena staff, it was made clear to the City of Galena that the Power Authority felt a major design revision was warranted. The City of Galena and the Galena City School District agreed to let Power Authority staff perform an on-site review of the existing system and the proposed expansion project; a site visit took place on April 30, 1985. During the review it became clear to staff that a major revision was indeed needed, since the existing system was operating poorly and would provide the basis for the proposed expansion. During discussions subsequent to the review, it was proposed by the City of Galena that the Alaska Power Authority take over the project and 9297/375 JNU. 401REGLR55285 design and construct it to Power Authority standards. The project would be based on funds that would be transferred from the City of Galena and the Galena City School District to the Power Authority. In a joint teleconference on May 1, 1985 between the City of Galena, the Galena City School District and the Power Authority, this proposal was discussed and all parties were agreeable to the concept. C. Issues 1. Waste Heat Recapture Recovery Expansion Project Funding. The City of Galena and the Galena City School District have obtained some federal and state grant monies to construct a waste heat project, but grant awards do not cover total project costs to the low bid contractor and to the City. = If additional funding is not obtained from state or local sources, previously awarded grant monies could be lost. Galena has requested additional financial assistance through the Power Authority. 3. Power Authority staff have reviewed the design and contract docu- ments and believe the system is too extensive to make use of the waste heat potential available. 4. The Power Authority can provide $60,000 from SLA 82, Chapter 141 as a grant to the City of Galena to complete the waste heat project already designed. 5. The Power Authority can take over the project and redesign and construct it for funds made available through the City of Galena and the Galena City School District. D. Costs If the findings and recommendations are approved, up to $20,000 will be spent from the Waste Heat Appropriation for expenses in connection with redesign and project management of the Galena Waste Heat Recovery Expansion Project. It is at this time not envisioned that additional funding will be needed for the actual construction of the project. The expenses will be taken from SLA 82, Chapter 141, Section 262, loans or grants to qualified communities for waste heat projects. E. Options 1. Approve the Findings and Recommendations, including the expenditure of $20,000 for the redesign and project management of Galena Waste Heat Recovery Expansion Project. 2. Modify and approve the Findings and Recommendations. 3. Disapprove the Findings and Recommendations. 9297/375 4. Approve a grant to the City of Galena for $60,000 to complete the Waste Heat Recovery Expansion Project as originally designed. F. Recommendation Power Authority staff recommends the approval of Option 1, Approval of the Findings and Recommendations with the expenditure of $20,000 for redesign and project management purposes. 9297/375 GALENA WASTE HEAT RECAPTURE PROJECT FINDINGS AND RECOMMENDATIONS Executive Summary Two major recommendations for Alaska Power Authority action are listed below. More detail concerning each recommendation follows the Executive Summary. 1. The Power Authority should perform a detailed design revision in order to make the design meet Power Authority standards for cost effectiveness and reliability. 2. Upon request from the City of Galena, the Power Authority should take over the project and construct it for funds made available to the Power Authority through the City of Galena and the Galena City School District. I, Introduction These Findings and Recommendations are based on the following informa- tion available to the Power Authority: 1. Technical Assistance Report submitted to the Galena City School District by Sunfair Engineering of Fairbanks, May 1983. 2. Construction Documents, "City of Galena and Galena City School District Waste Heat Recovery Expansion," as submitted by Crew McInnes Hoffman/Vitro Consulting Engineers of Anchorage, Janu- ary 1985. 3. Letter from the City of Galena to Alaska Power Authority dated March 1, 1985. 4. Power Authority staff communication with: City of Galena staff Crews McInnes Hoffman/Vitro Consulting Engineers staff N.C. Machinery, Fairbanks staff Department of Community and Regional Affairs staff Senator Sackett's Office Staff 5. Power Authority staff on-site review of existing conditions and the proposed expansion. The City of Galena owns and operates the Galena power plant which is presently providing heat for the Galena Utilidor System, the Water Treatment Plant, and the Health Center. The City of Galena in conjunc- tion with the Galena City School District plans to expand the waste heat recapture and distribution system to accommodate the High School, the new City Garage, the old City Garage, the City Hall, the Public Safety Building, and the new school to be completed in 1986. 9297/375 Project History A Technical Assistance Report was prepared in May of 1983 for the Galena City School District by Sunfair Engineering of Fairbanks, Alaska. In the report the consultant concluded that if the existing waste heat recapture system in Galena were expanded to provide waste heat to the School, an additional 11,116 gallons of fuel could be save per year. This assumed that the old City Garage was also connected to the system. Based on this study, a grant application was filed with the Federal Department of Energy's Institutional Conservation Program, which is administered by the Department of Community of Regional Affairs. The grant application was approved and, through a mixture of State and Federal grants to the Galena City School District and to the City of Galena, a total of $311,216 was made available for an expansion of the existing waste heat system. Contract documents for the waste heat system expansion were prepared by Crews, McInnes, Hoffman/Vitro Engineering of Anchorage. Project documents were issued for bidding in August of 1984. In the first bidding process the low bid was $477,006, meaning sufficient funds were not available. As a result, no contract was awarded. On March 1, of 1985 the City of Galena submitted a request to the Alaska Power Authority for additional funding in the range of $50,000-$100,000. The Power Authority requested that the initial bid documents document be made available for a technical review which was subsequently performed by in-house staff. Another bid process was initiated, and the lowest bid received by the closing date in early April 1985 was $344,000. Minor changes to the scope of work reduced the cost estimate to $316,000, which was agreeable to the low bidder. Miscellaneous additional costs for attorneys fees, engineering fees, administrative costs, utilidor tie-down, and project management were estimated at $35,000: thus, a shortage of more than $40,000 was evident. During discussions between Power Authority and City of Galena staffs, it was made clear to the City of Galena that the Power Authority felt a major design revision was warranted. The City of Galena and the Galena City School District agreed to let Power Authority staff perform an on-site review of the existing system and the proposed expansion project; a site visit took place on April 30, 1985. During the review it became clear to staff that a major revision was indeed needed, since the existing system was operating poorly and would provide the basis for the proposed expansion. During discussions subsequent to the review, it was proposed by the City of Galena that the Alaska Power Authority take over the project and design and construct it to Power Authority standards. The project would be based on funds that would be transferred from the City of Galena and the Galena City School District to the Power Authority. In a joint teleconference on May 1, 1985 between the City of Galena, the Galena City School District and the Power Authority, this proposal was dis- cussed and all parties were agreeable to the concept. 9297/375 Il. Findings: The Waste Heat Recovery Expansion Project as presented to the Power Authority does not meet Power Authority standards for rural waste heat recovery systems. Based on the information presented to the Power Authority, it is not possible to confirm feasibility of the project. Power Authority staff finds that several options do exist for improving the technical feasibility of the project. Power Authority staff have reviewed the design and contract documents and believe that the system is too inefficient and too extensive to make use of the waste heat potential available. If the community does not obtain additional funding or revises the project to be constructed within the current funding level, they will be in danger of losing Federal grant monies. III. Recommendation for Power Authority Action: It is recommended that, upon written request from the City of Galena and the Galena City School District, the Alaska Power Authority takes over the Galena Waste Heat Recovery Expansion Project for redesign and construction. Funding for construction will be provided through the City of Galena and the Galena City School District; funding for redesign and project management will be provided by the Alaska Power Authority. 9297/375 GALENA WASTE HEAT RECAPTURE SYSTEM EXPANSION PROJECT MANAGEMENT PLAN AND PRELIMINARY SCHEDULE Project History A technical Assistance Report was prepared in May of 1983 for the Galena City School District by Sunfair Engineering of Fairbanks, Alaska. In the report the consultant concluded that if the exist- ing waste heat recapture system in Galena was expanded to provide waste heat to the School, an additional 11,116 gallons of fuel could be saved per year. Based on this study a grant application was filed to the Institu- tional Conservation Program, which is administered by the Depart- ment of Community and Regional Affairs. The grant application was approved and through a mixture of State and Federal grants to the Galena City School District and to the City of Galena a total of $311,216 was made available for an expansion of the existing waste heat system. Contract documents for the waste heat system expansion were pre- pared by Crews, McInnes, Hoffman/Vitro Engineering of Anchorage, and the project documents were issued for bidding in August of 1984. In the first bidding process the low bid was $477,006 and thus sufficient funds were not available. On March 1, 1985 the City of Galena submitted a request to the Alaska Power Authority for additional funding in the amount of "$50,000 - $100,000". The Power Authority requested that the bid documents be made available for a technical review which was subsequently performed by in-house staff. Another bid process was initiated and the lowest bid received by the closing date in early April of 1985 was $344,000. Through minor changes to the scope of work, a reduction to $316,000 was agreed to by the low bidder. Miscellaneous costs for attorneys fees, engineering fees, administrative costs, utilidor tie down, and project management were estimated at $35,000 and thus a short- age of more than $40,000 was evident. Through discussions between Power Authority and City of Galena staff it was made clear to the City of Galena that the Power Authority felt a major design revision was warranted. The following key points were noted by the Power Authority: 220/412 Page 1 1. The engineer's estimate for heat availability was in error. This was caused by a faulty assumption for a specific genera- tor sets coolant heat rejection per kilowatt hour produced. 2. Three more buildings were to be connected to the waste heat system according to the Plans and Specifications for the project. Based on Alaska Power Authority staff's calcu- lations, not enough heat would be available to supply these buildings as well as the school and the incremental fuel savings produced by connecting these buildings would not justify the extra expenses. 3. The method of connection to the school was judged to be inappropriate by the Power Authority staff. Heat would be delivered to the school crawl space only through 12 unit heaters and regardless of the amount of waste heat available at any given time, the rest of the school's heating load would still have to be met with conventional means. 4. The piping and controls concepts were judged by Power Authori- ty staff to be over designed and inefficient resulting in high operating costs. As a result of discussions between the Power Authority and City of Galena staffs, it was proposed by the City of Galena that the Power Authority take over the project, revise the design and install it to Power Authority standards. A total of approximately $311,000 would be made available by the Galena City School District and the City of Galena. It was, of course, realized by all parties involved that the necessary clearances would have to be obtained from the State of Alaska, Department of Community and Regional Affairs and the U.S. Department of Energy for the mixing of funds for a project of this type. This concept was later accepted by the Power Authority Board of Directors, the Galena City Council and the Galena City School District Board of Directors. The Power Authority was requested to initiate contact with the U.S. Department of Energy (U.S. DOE) to obtain approval of scope changes and billing procedures for the portion of the project that involved funds provided by the U.S. DOE. This approval was received by telephone on July 11 and a written approval would be mailed to the Power Authority within a week, A Project Agreement outlining the responsibilities of the Power Authority, the City of Galena and the Galena City School District was prepared by Power Authority personnel. At this time, this Project Agreement has been signed by the City of Galena and the Galena City School District. 220/412 Page 2 Due to accounting problems within the Galena City School District, the available funding was somewhat over estimated. Actual funding available is now $273,000. Power Authority staff feels that it is likely that the design revisions, made in-house, will make it possible to construct the project for this funding. As approved by the Alaska Power Authority Board of Directors, a reserve fund for $20,000 will be established within account 930. Personnel services and travel expenses in connection with this project will be charged to this reserve fund. Power Authority staff proposes that this construction project is undertaken as a joint effort between all three Directorates. The following personnel will be assigned to the project: Project Manager: Jerry Larson Assistant Project Manager: Peter N. Hansen Contracts Administrator: Tom Andreola Draftsperson: Ron Jobmann RESPONSIBILITIES: Jerry Larson 7 Prepare Invitation For Bid Perform bid opening, evaluation and verification Issue Notice of Intent to Award construction contract Notice to proceed with construction Provide contractual clarifications to contractor Maintain necessary contact with other government agencies, Dept. of Labor etc. Assist in construction inspections Handle change orders and claims Approve invoices from contractor Monitor contractor's compliance with the construction contract i Perform contract close-outs oo 000 ooo°o Peter N. Hansen 7 Redesign of project with drawings and technical specifications i Negotiations of project agreement with the City of Galena and the Galena City School District i Negotiations with the U.S. DOE for approval of concept change and billing procedures ql Contracting with Polarconsult for professional review of redesign Assist in preparation of Invitation for Bid Assist in contract award Provide technical clarifications to contractor Review submittals oo 00 220/412 Page 3 Perform construction inspections Assist in review and evaluation of invoices Assist in change order and claims handling Provide start-up and run-in assistance to contractor Be contact person to and provide progress reports to the City of Galena, the Galena City School District, the Department of Community and Regional Affairs, and to the U.S. Department of Energy eo 0000 Tom Andreola > Tssuance of specifications and drawings ° Assist in general correspondence Procedural assistance Ron_Jobmann ° Prepare drawings ° Proof read specifications Assist in submittal approval process as needed PRELIMINARY SCHEDULE: ° Invitation For Bid advertisements out in newspapers 7/24 Issuance of plans and specifications begins 7/25 Bid opening 7 8/8 Contract Award 8/25 Review of shop drawings starts 9/2 Construction starts 9/9 Project start up 12/1 MAN POWER REQUIREMENTS: of full time: 7/1-7/25 =7/25-8/8 8/8-8/25 8/25-9/2 9/2-9/9 9/9-12/1 JL 10 20 75 20 20 20 PNH 100 75 50 30 100 50 TA A) 10 10 10 10 10 RJ 50 10 0 5 5 5 220/412 . Page 4 The following signatures indicate concurrence with this action: Assoc te Executive Director/Planning Mord rent N. Petrie Director/Systems Planning IP. eter N. Hansen Rural Systems Engineer theridge ate Executive Associ Rural Projects Manager Lah om Andreola Contracts Administration Officer se i \G Z hap } l am H. Batt Associate Executive Director Finance/Administration obert D. Hea Executive Director 220/412 Page 5 1) ct oO ate LL2g/ PS ate 4/24 (35 ate e 27S a A a ate W24/ §) e