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Record of Decison Golden Valley Elec N Intertie 1998
DRS 7 tee 7 NT E. le ea if a Lo DIM , Ten Cub ,/ Beey (Ff United States Department of Inteplor BUREAU OF LAND MANAGEMEN Alaska State Office &ska_ Industria Develo 222 W. 7" Avenue, #13 and Export Authority Anchorage, Alaska 99513-7599 z FF09 1732 1793 (910) SEP | 4 1998 Dear Reader: The Bureau of Land Management (BLM) is pleased to present you with a copy of the Record of Decision (ROD) for the Golden Valley Electric Association Northern Intertie Project. The ROD documents the Bureau’s decision to issue a right-of-way grant to GVEA. The mitigation measures which will be developed into stipulations to be incorporated into the right-of-way grant are contained in the ROD. The BLM received 35 written comments from the public and other agencies during the review period on the FEIS. An internal review of the comments received necessitated some minor changes to two of the mitigation measures and deleting one. The changes and deletion are addressed in the ROD. This ROD may be appealed to the Interior Board of Land Appeals, Office of the Secretary as explained at the end of this document. If an appeal is taken, strict adherence to the procedures stated in the ROD must be followed. My thanks to everyone who has provided comments to the BLM during this process. Your comments assisted us in identifying the important issues for the EIS. I also thank the other agencies that have participated in this process. If you have question about this document or the process, please contact Gary Foreman at (907) 474-2339 or 1-800-437-7021. Sincerely, AR da. Tom Allen State Director, Alaska Oe 18 ine- ( ae Ss . Of HR Yas United States Department of the Interior BUREAU OF LAND MANAGEMENT Alaska State Office 222 W. 7th Avenue, #13 Anchorage, Alaska 99513-7599 FF091732 1793 (910) RECORD OF DECISION Right-of-Way FF091732 Golden Valley Electric Association Northern Intertie Project ake INTRODUCTION On May 13, 1996, Golden Valley Electric Association (GVEA) filed an application with the Bureau of Land Management (BLM) for a right-of-way (ROW) grant pursuant to Title V of the Federal Land Policy and Management Act (FLPMA) of 1976 (43 U.S.C. 1761), for the construction, operation, and Maintenance of a 230 kV power transmission line between Healy, Alaska and Fairbanks, Alaska. This power transmission line is referred to in this document as the Northern Intertie Project and is assigned case file number FF091732. The proposed transmission line ROW would generally be 150 ft. wide and between 90-170 miles long depending on the route alternative selected. The width may vary in areas of dense black spruce to protect the line from fire. Tower types, height, and spacing will depend upon access constraints, right- of-way width, and mitigating measures identified for a specific area. A detailed description of the tower assemblies is contained in Chapter 2 of the DEIS. No new access roads are proposed for the construction or maintenance of the line. Existing roads will be used where available. Helicopter supported construction will be used where access is not available. Right-of- way clearing will be kept to a minimum. The line is designed to allow wildfires to “burn through". However, areas of dense black spruce will have to be cleared up to 300 ft. because of the high heat generated when they burn. The line will transmit the power generated in Healy by the Healy Clean Coal Project and that generated in South Central Alaska. The substation in Healy will be modified to accommodate the increased power generation. A new substation will be constructed at the load center in south Fairbanks, the terminus of the line. A 40 megawatt Battery Energy Storage System (BESS) will also be constructed at the terminus site. The existing Intertie is a 138 kV transmission line which operates at near capacity year-round. Construction of a second intertie will meet the increasing demands for power, and improve the transmission reliability of electric service by providing separate transmission lines. The proposed project crosses lands owned by the State of Alaska, State selected lands, lands reserved for military use, and private land. The BLM has management jurisdiction on the military lands on actions not associated with military use. A right-of-way may be granted on these lands with concurrence from the military. The BLM has been tasked with lead agency responsibility for the preparation of the Environmental Impact Statement (EIS) for the entire project, including State lands. The EIS is prepared in compliance with the requirements of the National Environmental Policy Act (NEPA) of 1969 and the Council on Environmental Quality (CEQ) regulation for implementing NEPA (Title 40, Code of Federal Regulations, Parts 1500-1508). The U.S. Army, Alaska (USARAK), the Department of Agriculture, Rural Utilities Service (RUS) are cooperating agencies as defined by NEPA and CEQ. Consulting agencies as defined by NEPA and CEQ include the U.S. Fish and Wildlife Service (USF&WS), State of Alaska, Department of Fish and Game (ADF&G), State of Alaska, Department of Natural Resources (ADNR) and the U.S. Army, Corps of Engineers (COE). These agencies formed an interagency working group which guided the NEPA process on this project. Private land issues will be handled through negotiations between GVEA and the land owner. The EIS has been prepared through a third-party contractor (Dames & Moore) under guidance provided by BLM. The environmental review process for the Northern Intertie project began in February 1994. After meetings with state, local and federal agencies, RUS and GVEA released the Macro-Corridor Study/Project Alternative Report (MCS/PAR) in July 1994. Public meetings were held in September 1994 in Healy, Fairbanks, and Ferry. Based on public input, additional alternatives were developed and the comment period extended. A revised MCS/PAR was issued in December 1994. In response to GVEA's formal application for this power line in May 1996 an Environmental Analysis (EA) was prepared which analyzed the impacts of eight route alternatives and the no action alternative. Public meetings were held in Fairbanks, Healy, and Nenana in August 1996. The final EA was issued in December 1996. Based on concerns expressed by the public and agencies reviewing the EA, it was decided to prepare an EIS in May 1997. Additional scoping meetings were held in Fairbanks, Healy, Nenana, and Anderson in June 1997. Additional public meetings were held in August 1997 to better define the range of alternatives. A Preliminary Draft EIS was issued for agency review in October 1997 with the Draft EIS for public review and comment being issued in December 1997. Public hearings on the Draft EIS were held in February 1998, in Fairbanks, Healy, Nenana, and Anderson. After review of public and agency comments, an abbreviated Final EIS was issued in June 1998 incorporating agency responses to the comments received. alates Alternatives A. Alternative Formulation Alternative identification for the project formally started in 1994 when RUS began a Macro-corridor study. These alternatives were used as a starting point when BLM and RUS jointly developed an Environmental Assessment for the project. During agency coordination and public scoping for the EA the alternatives were refined, and new alternatives suggested. The Rex/South route was developed during these public scoping meetings. When the BLM decided to complete an EIS for the project, the alternatives from the EA were carried forward. Agency coordination and public scoping resulted in further refinement and additions to the range of alternatives. Option B, the Chicken Creek by-pass was developed at this time. To insure that an appropriate range of alternatives was being studied, the BLM held three additional public meetings. The public was asked to assist the BLM in identifying additional viable alternatives, and to identify current alternatives that were redundant, or for other reasons did not merit further study in the EIS. These meetings resulted in three entire route alternatives and portions of a fourth being dropped. No additional routes were suggested. A DEIS which fully analyzed seven route alternatives and the No Action alternative was prepared. During the public comment period for the DEIS some additional routes and segment combinations were suggested. After review by the BLM and other members of the interagency working group, it was determined that the newly suggested alternatives either did not meet the needs of the project or did not resolve issues: already addressed by the existing range of alternatives. B. Alternatives Considered and Analyzed. Alternative routes examined either follow the Parks Highway corridor or utilize portions of the Tanana Flats to the east. All of the alternatives would require a new substation in South Fairbanks (Wilson Substation), and an upgrade to the Healy substation. Alternatives that utilize portions of the Tanana Flats and enter Fairbanks by crossing the Tanana River at Goose Island would provide a direct connection to the new Wilson substation. Alternatives that enter the west side of Fairbanks at the Gold Hill substation would require an additional 20 to 25 miles of new transmission line construction to deliver power to the Wilson substation. Additionally, an upgrade to the Gold Hill and North Pole substations and the development of a new substation at Fort Knox would be required. Following is a listing and brief description of the alternatives that were analyzed in the DEIS and FEIS. A more thorough description of the alternatives can be found in Chapter 2 of the DEIS. No Action Alternative: This alternative assumes that the Northern Intertie would not be constructed. Old Intertie Route: This route would follow the existing 138 kV transmission line to the Gold Hill substation. The route then utilizes the Fort Knox Gold Mine power line, develops a new line to North Pole, then utilizes the existing line from North Pole to Fairbanks and connects to the Wilson substation. Option A - Railroad ROW: This alternative is a refinement to the Old Intertie Route and utilizes the Railroad ROW through the Goldstream Valley and Tanana Valley State Forest and would connect to the Gold Hill substation. The route then utilizes the Fort Knox Gold Mine power line, develops a new line to North Pole, then utilizes the existing line from North Pole to Fairbanks and connects to the Wilson substation. North Route: This route would follow the Nenana River north then would pass the east side of Clear Air Force Station and would cross the Tanana River east of Nenana. The North Route then would go around Ester Dome and connect to the Gold Hill substation. The route then utilizes the Fort Knox Gold Mine power line, develops a new line to North Pole, then utilizes the existing line from North Pole to Fairbanks and connects to the Wilson substation. South Route: The South Route parallels the Nenana River on the east side of the river, through Ferry, and then passes along the east side of Clear Air Force Station. The route then parallels the Tanana River on the south side of the river and crosses the Tanana at the Goose Island crossing. This alternative then connects to the Wilson substation. Rex/South Route: This route runs northeast from Healy past Walker Dome. It then turns generally north and passes along the east side of Clear Air Force Station. The Rex/South route would then parallel the Tanana River on the south side until crossing the Tanana River at Goose Island and connecting to the Wilson substation. Option B - Chicken Creek By-Pass: This is an optional alignment to the Rex/South Route and replaces the section that runs west of Rex Dome. This route would turn to the northwest and pass between Chicken Creek and Windy Creek. It would reconnect to the Rex/South Route near Clear Air Force Station. Tatlanika Route: This alternative passes by Walker Dome and the east side of Rex Dome. It then generally heads north, crossing the Wood River, and would parallel the south side of the Tanana River until the river crossing at Goose Island and connecting to the Wilson substation. Ce Environmentally Preferred Alternative Seven alternatives and two segment options were carried forward for analysis in the EIS. After review of the various alternatives the BLM has determined that the Selected Alternative is also the agency's Environmentally Preferable Alternative. When considering only the physical and biological impacts, a route close or adjacent to the Parks Highway and existing transmission line would be environmentally preferred. However, the entire scope of the Human Environment must be considered. When the impacts associated with residential areas and other private lands, mining operations, archeological/historic sites, and scenic quality, are considered, the Rex/South route becomes an environmentally preferred alternative. Impacts to the biological and physical environment are largely mitigable, whereas the impacts to residential areas and other land use conflicts are difficult to mitigate and in some cases cannot be mitigated. III. Decision The decision of the BLM is to issue a Federal Land Policy and Management Act ROW grant (FF091732) to GVEA. The selected route alternative for the project is the Rex/South route as described in the DEIS and FEIS. This grant pertains only to those lands administered by or under the jurisdiction of the BLM. The Alaska Department of Natural Resources, the Alaska Mental Health Trust Office, and the Fairbanks North Star Borough will issue decisions regarding this project utilizing their particular procedures. The grant will be issued for the purposes of construction, operation, maintenance and termination of one 230 kV transmission line on public lands managed by the BLM. The transmission line will originate at the Healy substation in Healy, Alaska, and terminate at the Wilson substation in Fairbanks, Alaska. The width of the ROW will be 150 feet (75 feet each side of centerline) except where dense stands of black spruce are encountered. In areas of dense black spruce the ROW will be a maximum of 300 feet (150 feet each side of centerline). The term of this ROW grant will be 30 years and is subject to renewal. In accordance with 43 CFR 2801.1-1(i) the grant will require periodic review by the Authorized Officer after the twentieth year and at regular intervals thereafter not to exceed 10 years. As a basis for this decision, the BLM prepared and released the FEIS of June, 1998. The EPA published a notice of availability of the FEIS (EIS NO. 980227) in the Federal Register on June 19, 1998. The ROW grant will be subject to the mitigation measures developed in the FEIS and brought forward and described in this ROD. The grant will also be subject to the appropriate Bureau standard stipulations and conditions contained in Bureau Manual 2801 and BLM Manual Handbook H-2801-1. IMs Mitigation and Monitoring All of the mitigating measures developed in the EIS will be implemented and appropriate stipulations will be included in the ROW grant. Two changes to mitigating measure #31 have been made in response to comments: from USF&WS and USARAK. USARAK was added to the list of agencies that would help develop the monitoring plan. The second change states that GVEA would be required to implement additional mitigation as needed based on the results of the monitoring study. A change has been made to mitigation measure #30 to delete the word "Spheres" after aerial markers. Specific requirements for aerial markers will be defined in the mitigation and monitoring plan and stipulated in the grant. Item 12 of Sec. 2.4.6 of the DEIS will not be carried forward as mitigation for this project. This item is not mitigation, merely a statement of fact. A. Mitigation Measures Incorporated as Design Features: The following features have been incorporated by GVEA into the proposed action in order to reduce the potential for adverse environmental effects during project construction, operation, and maintenance. ile Prior to construction, all personnel will be instructed on the protection of ecological, paleontological, and cultural resources. To assist in this effort, the construction contract will address federal and state laws regarding vegetation (including wetlands), wildlife (including protected species), and cultural resources, as well as stressing the importance of these resources and the purpose and necessity of protecting them. 2. In accordance with state and federal regulations, land managers will coordinate with the State Historic Preservation Office (SHPO). Cultural resources will continue to be considered during project implementation in areas that are classified as having cultural resource potential by the land managers and the SHPO. This will involve surveys to inventory and evaluate cultural resources within the ROW and any impacted areas outside of the ROW, such as access roads and construction equipment yards. In consultation with the appropriate land managing agencies and'the SHPO, specific mitigation measures will be developed and implemented to mitigate any identified adverse impacts. These may include project modifications to avoid adverse impacts, monitoring of construction activities, and data recovery studies. In the event of inadvertent discoveries of cultural or paleontological resources during construction, such construction will be stopped until the resources are evaluated by a qualified specialist. Sp Prior to construction, site-specific fuel hazard reduction criteria will be developed by ADNR Division of Forestry and the BLM Alaska Fire 10. ele 12. a3, 14. Service (AFS) to protect the power line while allowing for burn through. These criteria will suggest the minimum amount of clearing or other treatment needed to protect the line from fire. No construction camps will be established along the ROW. Construction crews are expected to be able to find housing within communities along the Parks Highway, particularly in Healy, Nenana, and Fairbanks. Construction crews will be transported to work sites daily using appropriate vehicles. All construction-related waste, including trash and litter, garbage, other solid waste, petroleum products, and other potentially hazardous materials, will be properly handled in accordance with state and federal regulations and permit requirements and removed to a permitted disposal facility. The areal limits of construction activities and access will be clearly marked. No permanent discoloring agents will be applied to rocks or vegetation to indicate survey or construction activity limits. The ROW will be aligned in coordination with appropriate landowners and managers, including mining and military operations, to minimize the potential adverse effects on current and future land uses. To minimize. potential environmental impacts during construction, vehicle trips along the ROW will be kept to a minimum. To the extent practicable, construction equipment will be left within the project area rather than driven out on a daily basis. Servicing of equipment will be done within state and federal guidelines. Clearing of streamside vegetation (as approved by the authorized officer) will only be done to the extent necessary to allow access for construction and maintenance equipment and to provide clearance for wires. Clearing within these areas will be conducted by hand. Use of the transmission line ROW for access to remote areas will be discouraged by leaving brush within the ROW. Where the ROW crosses streams or trails, a screen of vegetation will be maintained to reduce access to the ROW from these areas. At river and trail crossings, towers will be placed in a manner that will minimize visual impacts. Clearing will be minimized and existing vegetation (excluding tall trees) left within the ROW, where deemed appropriate for mitigation of visual impacts. Care will also be taken to minimize long, straight ROWs, skylining of structures, and other situations which increase visual impacts in areas that are considered to have high visual sensitivity. All trees will be felled and left in place. The appropriate agency will make a determination if a significant salvage value exists and if salvage of the trees will be necessary. In construction areas where ground disturbance is significant or where recontouring is required, surface restoration would occur as required by the land owner or land management agency. The method of restoration would consist of returning disturbed areas back to their natural contour and revegetating with native species. In areas where soils and vegetation are particularly sensitive to disturbance, existing access roads will not be widened or otherwise upgraded for construction and maintenance, except where repairs are necessary to make existing roads passable. If authorization for 15% 16. ae? 18. aoe 20. 21. B. existing access does not exist, then appropriate permits will be obtained. To minimize disturbance to vegetation, drainage patterns, stream channels, and streambanks, new access will be built to the extent practicable at right angles to streams and washes. Crossings of incised streams will be done in a manner which avoids disturbance or sloughing of stream banks. Temporary bridges (structural, snow, or ice) will be employed where bank damage cannot be avoided. Structures will be placed so as to avoid sensitive features as much as possible, including riparian areas, water courses, and cultural sites. The structures will be located 200 feet from named or designated streams where possible; however, at the Tanana River crossing, structures may need to be sited within 200 feet of the Tanana River. The lower 10 feet of guy wires on all towers will be marked with devices to enhance their visibility. Dulled metal finishes will be used on all towers, and on the wires where applicable. GVEA will respond to complaints of radio or television interference generated by the transmission line by investigating the complaints and implementing appropriate mitigation measures. To minimize environmental impacts while maintaining standard operating guidelines, GVEA will visually inspect the route by helicopter twice per year, typically in March and September. Operations and maintenance problems identified on the Tanana Flats will typically be addressed by a small repair crew flown out to the tower site(s) by helicopter before spring thaw or after fall freeze up. With the exception of emergency repair situations, maintenance operations on the Tanana Flats will be avoided or modified during critical periods to minimize impacts on wildlife. GVEA will notify the general aviation public of the presence of the new intertie and ensure that the project is noted on the appropriate Federal Aviation Administration (FAA) aeronautical charts. Special emphasis will be placed on the towers and wires crossing the Tanana and Nenana Rivers. Handouts with a detailed description of the power line routing showing tower size and location of towers over 100 feet will be provided. These handouts would be made available in all flight service stations and fixed base operators at airports throughout the state. Handouts will be placed at aerial ports of entry where aircraft normally clear customs coming from Canada. These handouts will be supplied for a 2-year period. Selectively Committed Mitigation Measures These mitigating measures apply only to specific impact location that were identified in the EIS. 22. 23): No permanent access will be constructed in the Tanana Flats. Winter access for construction will occur only after there is a minimum of 12 inches of snow on the ground and a 12-inch depth of freeze. There will be no blading or disturbance of the vegetation mat. Stream crossings on the Tanana Flats will be accomplished by constructing an ice bridge across the stream or by placing and removing a temporary bridge, such as an open truck bed, across the stream and removing it after construction. 24. 25. 26. 27. 28. 29. 30% = jal 32. ic River crossings will be marked to assure military and civilian aviation safety. Towers from the Tanana River crossing to Salchaket, and as needed from Salchaket to Nenana, will be marked with color/IR reflectors on the south side of the towers. Towers at the Tanana River crossing will be painted red and white, and marked with strobe lights. Raptor surveys will be conducted in identified areas of concern along the selected route prior to construction to document Golden Eagle, Bald Eagle, and other raptor nest locations within 330 feet of the ROW. A 330-foot buffer zone will be identified around all Bald Eagle and Golden Eagle nests. Construction or ground clearing will not be allowed within this buffer zone. Human activities will not be allowed within or through this buffer zone during the nesting period. Construction or ground clearing will not occur within 2 miles of all active Peregrine Falcon nests. Except for emergency repairs, construction and maintenance. activities will not occur from April 15 through June 15 within ROW Segments 7, 16, and 22. Helicopter construction activities will avoid active swan nests from May 1 through August 31 along the entire ROW by a minimum distance of 1 mile. Transmission line design will minimize the potential for Trumpeter Swan and Sandhill Crane collisions by ensuring that: a) transmission line wires (other than the static line) will be strung on one horizontal plane rather than in multiple, vertical stacks; b) phase wires will be of the same diameter; and c) wires will be well marked where they cross major rivers. Other areas identified as having a high potential for conflicts with Trumpeter Swans and other waterfowl will be marked. Aerial Markers will be installed on static wires at spans that cross the Nenana, Tanana, and other named rivers. These markers will be used in other areas when deemed necessary to reduce hazards to aviation and bixds'’. GVEA will conduct a 3-year post-construction monitoring study on selected portions of the transmission line to evaluate bird collision mortality along selected portions of marked and unmarked segments of the transmission line, in consultation with the BLM, USFWS, USARAK, and ADF&G. Following the 3-year monitoring effort, GVEA and the agencies will evaluate the study and determine the need for additional marking devices. GVEA will be required to implement additional mitigation as needed based on the results of the study. Any additional monitoring will be the responsibility of the concerned agency. To allow for safety and engineering concerns, all trees higher than 10 feet may be cleared within 75 feet of the centerline. Clearing to ground level up to 150 feet either side of the centerline will be allowed in areas where large stands of black spruce occur and a danger from forest fires is expected. Additional Mitigation Measures Developed in the EIS. The following mitigation measures were developed during the EIS process and are not part of GVEA's design features. The following mitigation measures will be brought forward as stipulations in the ROW grant. 35s Where necessary, thermosyphons will be used at foundations to stabilize ground temperatures in areas of warm permafrost. 34. Periodic maintenance of cleared segments within the ROW will be limited to winter time activities when there is 12 inches of snow on the ground and 12 inches of freeze in the soil. 355 The edges of the ROW, where cleared, can be undulated to help the cleared areas blend with surrounding vegetative patterns. 36. Where possible, the ROW will use natural openings in the vegetation and reduce the need for clearing. 37. Brush cutting and clearing in wetland areas will be conducted by hydroaxe or hand. S8i, Construction activities near anadromous fish streams will be timed to avoid salmon runs. 39. The ROW should be located at least .75 miles from the boundary of the Larry Drop Zone to ensure jumper safety. Dis Implementation and Monitoring The BLM, after reviewing the mitigation measures developed in the EIS, has decided that all mitigation measures will be implemented. This will be done as stipulations to ROW grant FF091732. These stipulations will be implemented by the BLM on those lands under the administration and jurisdiction of the BLM. Other agencies will be issuing permits for this project on lands within their administration and jurisdiction. These agencies will utilize the mitigation measures developed in the FEIS and implement appropriate mitigation on lands under their administration. This will be done through their decision processes. There has been a great deal of coordination during the EIS process with these agencies, and the mitigation measures were developed as a result of that coordination. The other agencies will determine how implementation will occur on lands within their jurisdiction. Alaska Department of Natural Resources and Alaska Mental Health Trust Office are considering entering into a Memorandum of Understanding with the BLM that would have the BLM monitor and implement the mitigation measures for lands under their jurisdiction. Following is a table that describes how BLM intends to implement and enforce the mitigation for the project. The first column identifies the mitigation measure by number as presented in Sec. IV A, B, and C of this document. The second column describes the timeframe when the measure would be enforced. This is described as preconstruction, construction, and post construction. The third column describes the particular action that will implement the measure. The last column identifies the agencies or entities that will have oversight, or might provide professional and technical expertise to the BLM regarding the implementation of the mitigation measures. A detailed implementation and monitoring plan will be developed. This plan will be developed by the BLM through consultation and assistance from the interagency working group. The details of the monitoring plan will provide the specific stipulations of the ROW grant. Mitigating Timeframe Action Oversight/ Measure # Enforcement Pre-construction Meeting/training BLM/ Contractor Pre-construction Construction Field Survey Monitoring Pre-construction Field Survey BLM/AFS/ADNR-DOF Pre-construction BLM Construction Field Inspection Monitoring Pre-construction Construction Post-construction | Pre-construction Field Inspection Construction 9 Field Inspection Monitoring BLM/USARAK/ADNR Construction Field Inspection BLM Monitoring Pre-construction Field Survey BLM Construction Field Inspection 10 Pre-construction Field Survey BLM Construction Field Inspection a: Pre-construction Field Survey BLM/ Construction Field Inspection Contractor 12 Pre-construction Field Inspection BLM Construction ES} Construction Field Inspection BLM/ Post-construction Monitoring Contractor 14 Pre-construction Field Survey BLM Construction Field Inspection 15 Pre-construction Field Survey BLM Construction Field Inspection 16 Pre-construction Field Survey BLM/ Construction Field Inspection Contractor ey Construction Field Inspection BLM Post-Construction 18 Pre-construction Field Survey BLM/ Construction Field Inspection Contractor 19 Post-Construction Investigation/ Determination | 20 Post-Construction Monitoring BLM 21. Construction Monitoring BLM Post-Construction 10 34 35) Construction Post-Construction Pre-construction Construction Field Inspection Field Survey Field Inspection BLM/ Contractor Post-construction Field Inspection [ 4 i : 22 Pre-construction Field Inspection BLM Construction Monitoring Post-Construction 23 Pre-construction Field Inspection BLM Construction Post-Construction 24 Pre-construction Field Survey BLM/USARAK Construction Field Inspection 25 Pre-construction Field Survey BLM/ Contractor 26 Pre-construction Field Survey BLM/ Construction Monitoring Contractor Post-Construction 27 Pre-construction Field Survey BLM/ Construction Monitoring Contractor 28 Construction Field Survey BLM Monitoring 29 Pre-construction Field Survey BLM Construction Field Inspection 30 Pre-construction Field Survey BLM/USARAK Construction Field.Inspection 31 Pre-construction Field Survey BLM/USF&WS/ADF&G Construction Field Inspection USARAK Post-Construction Contractor Pre-construction Field Survey BLM/AFS Mi Pre-construction Construction Field Survey Field Inspection 38 39 w Ww s oO Pre-construction Construction Pre-construction Construction Post-Construction Construction Pre-construction Construction Vis Rational for the Decision Field Survey Field Inspection Field Inspection Monitoring Field Inspection BLM BLM BLM BLM BLM Field Survey Field Inspection BLM/USARAK In making the decision the BLM took into consideration agency legal mandates and public concerns expressed in the EIS process. 11 The decision to implement the selected alternative meets the described purposes and needs of the project. A. Agency Rational il The selected alternative provides for a second path for electrical power generated at Healy and South-Central Alaska to Fairbanks. De The selected alternative gives a direct route and connection to the applicants load center in south Fairbanks avoiding disruptions to Fairbanks residents who would be directly impacted by routes entering Fairbanks from the west. os The selected alternative avoids disruptions to residents of Nenana, Anderson, and Healy who would be directly impacted by routes following the Parks highway. 4. The selected alternative provides more power to meet the increasing demand in the Fairbanks area. 5. The selected alternative increases reliability of electrical transmission by requiring less reliance on single source generation and equipment. 6. The selected alternative allows for maintenance of equipment without loss of transmission capability. Te The selected alternative reduces dependency and use of local oil fired generation resulting in lower emissions in a non-attainment area. 8. The selected alternative will reduce power line losses from 13 megawatts to 4 megawatts. This is enough electricity to power over 1000 homes. os The selected alternative provides increased capacity sharing and deferral of new generation facility construction. 10. The selected alternative increases access to more economical energy generated in Healy and southcentral Alaska. Las While the selected route does utilize undeveloped land it keeps the project within areas used for commercial timber operations, military uses, trapping, hunting, snowmobile and airboat use. 12; The selected alternative reduces land use conflicts and impacts to private lands in accordance with Executive Order 12630 dated March 15, 1988. The selected alternative also avoids locating a high.energy transmission line near existing residences. iS The selected alternative reduces costs up to $30 million over alternatives that enter the west side of Fairbanks. 14. Through the analysis performed during the development of the EA and EIS it has been determined that no significant impacts are expected to occur as a result of implementing the selected alternative. Mitigation measures that were developed based on public input and assistance from other agencies will further reduce the impacts of the selected alternative. 155 Section 7 consultation with the U.S. Fish and Wildlife Service has determined that no Threatened and Endangered Species will be effected by the selected alternative. 12 16. The selected alternative is not expected to significantly restrict subsistence resources or uses in the area. 1. The selected alternative has less biological impact than the applicants originally preferred route. Even though the selected alternative increases expenses by $1.2 million, the BLM has decided that the reduction in environmental impacts off-sets the additional costs. 18. The selected alternative best meets the needs of the State of Alaska, Department of Natural Resources, which, depending on alternative, manages approximately 51% to 62% of the lands affected by the project. The selected alternative is also the choice of the ADNR. 19. The analysis has shown there are no significant impacts to floodplains and wetlands. The COE and USF&WS were members of the interagency working group for this project and have helped identify impacts and develop mitigation related to floodplains and wetlands concerns. 20. The mitigation listed in Sec. IV A, B, and C, has been developed and adopted to minimize impacts from the project. B. Public Comments on FEIS During the 30 day review period for the FEIS, the BLM received 35 comments on the FEIS. Of these comments, three were from governmental agencies, 13 were in favor of the preferred alternative, and 19 were opposed. A petition with approximately 1,100 signatures was submitted with one of the letters opposing the preferred route. These comments are available for review at the BLM Northern Field Office. Public comments received on the FEIS showed differing views. Some of the commenters felt that the Rex/South route was the best route environmentally while others felt that a route along the existing transmission line would be environmentally preferable. The comments received showed concerns regarding a wide range of issues including, private land conflicts, costs associated with the project, wildlife habitat, aviation safety, use of undisturbed areas, wetlands, scenic views, and recreational values. The comments received on the FEIS were similar to those received on the DEIS and were addressed in the FEIS. There was one newly presented issue regarding one of the mitigation measures. This comment expressed concerns that felling trees and leaving them in place might lead to increased spruce bark beetles around the ROW. Discussions with ADNR Division of Forestry indicate an increase in spruce bark beetles is highly unlikely because the alignment of the Rex/South Route does not impact an appreciable amount of white spruce, which is the forest type primarily attacked by the spruce bark beetle. The spruce bark beetle could be a concern if the transmission line was routed through the Bonanza Creek Experimental Forest (segment 25) due to the higher concentration of white spruce in that area. vI. ANILCA Section 810(a) Finding The proposed action will not significantly restrict subsistence uses. No reasonably foreseeable and significant decrease in the abundance of harvestable resources or in the distribution of harvestable resources, and no reasonably foreseeable limitations on harvester access will result from the proposed action (see attached evaluation). 13 Vanes Appeals Process This decision may be appealed to the Interior Board of Land Appeals, Office of the Secretary, in accordance with the regulations contained in 43 CFR, Part 4 and the enclosed Form 1842-1. If an appeal is taken, your notice of appeal must be filed with the Bureau of Land Management, Alaska State Office, 222 West Seventh Avenue, #13, Anchorage, Alaska 99513-7599, within 30 days from receipt of this decision. Failure to file the notice of appeal with the Bureau within the time allowed is a jurisdictional defect and will result in dismissal of the appeal. In order to avoid dismissal of the appeal, there must be strict compliance with the regulations. The appellant has the burden of showing that the decision appealed from is in error. Copies of the notice of appeal must also be submitted to each party listed below and to the Office of the Regional Solicitor, Alaska Region, U.S. Department of the Interior, 4230 University Drive, Suite 300, Anchorage, Alaska 99508-4626, at the same time the original documents are filed with this office. The Departmental regulations in 43 CFR 4.21 (58 FR 4939, January 19, 1993) provide that parties entitled to file an appeal may file a request for a stay of the effectiveness of this decision during the time that the appeal is being reviewed by the Board. The request for a stay must accompany your notice of appeal submitted to the Bureau of Land Management (BLM) and Regional Solicitor’s Office, and a copy of both documents must be served on the Interior Board of Land Appeals, Office of Hearings and Appeals, 4015 Wilson Boulevard, Arlington, Virginia 22203, at the same time they are submitted to the BLM. A copy of the request for a stay must also accompany each copy of the notice of appeal submitted to the parties listed below as parties to be served. A request for a stay is required to show sufficient justification based on the standards listed below. Standards for Obtaining a Stay If you request a stay, you have the burden of proof to demonstrate that a stay should be granted. Except as otherwise provided by law or other pertinent regulation, a petition for a stay of a decision pending appeal shall show sufficient justification based on the following standards: (1) The relative harm to the parties if the stay is granted or denied, (2) The likelihood of appellant's success on the merits, (3) The likelihood of immediate and irreparable harm if the stay is not granted, and (4) Whether the public interest favors granting the stay. Adverse parties of record who must be served with a copy of the appeal and statement of reasons are: Mr. Mike Kelly Golden Valley Electric Association PO. BOX) 7249 Fairbanks, Alaska 99707 14 VELL Signature This document constitutes my Record of Decision as the Bureau of Land Management Authorized Officer, for the Golden Valley Electric Association right-of-way application FF091732 for the Northern Intertie 230kV Power line Project, in accordance with the Federal Land Policy and Management Act and the regulations under Title 43, Code of Federal Regulations, Part 2800. Aan ble 7 14; Tom Allen State Director, Alaska State Office Bureau of Land Management 5 ANILCA Section 810 Evaluation and Finding Case File: FF091732 EIS Number:EPA# 980227 Applicant: Golden Valley Electric Association, Fairbanks, Alaska. Location: The study area for the proposed action encompasses an area that extends from Healy, just west of the Nenana River to Ferry, then east of the Nenana River to Nenana, north to Goldstream Valley, northeast to the Fort Knox mine and then south to North Pole. The area then cuts diagonally from the North Pole substation, following the Tanana River to Goose Island, then south of the Tanana River nearly to the Wood River, and south to Healy, passing across Walker Dome. The study area is covered on the Livengood, Fairbanks and Healy quadrangle maps. Proposed Action: Construct, operate and maintain a 230kV transmission line from Healy to Fairbanks utilizing the Rex/South Route as described in the Northern Intertie Project DEIS and FEIS. Finding: The proposed action will not significantly restrict subsistence uses. No reasonably foreseeable and significant decrease in the abundance of harvestable resources or in the distribution of harvestable resources, and no reasonably foreseeable limitations on harvester access will result from the proposed action. Fisheries: 1. Expected reduction in harvestable resources. No reduction in harvestable fishery resources is expected due to the proposed action. Construction and maintenance activities at anadromous fish streams will be timed to avoid salmon runs. 2. Expected reduction in availability of resources due to alterations in resource distribution, migration, or location: No alterations in availability of fishery resources are expected to occur from the proposed action. Wildlife: 1. Expected reduction in harvestable resources. No reduction in harvestable wildlife resources is expected due to the proposed action. Construction and maintenance activities in the upland portions of the route will be conducted along existing access and on the lowland portions of the route will be conducted during the winter after there is a minimum of 12 inches of snow on the ground and a 12-inch depth of freeze. Therefore activities related to the proposed action during moose calving will be limited. Exceot for emergency repairs, construction and maintenance activities will not occur from April 15 through June 15 within ROW Segments 7, 16, and 21, which will additionally limit disturbance to calving moose and waterfowl. 2. Expected reduction in availability of resources due to alterations in resource distribution, migration, or location. No reduction in availability of wildlife resources is expected from the proposed action. Distribution and movement patterns may be temporarily disturbed adjacent to the ROW during construction or maintenance, however activity will be of short duration in any one location. Other subsistence resources: 1. Expected reduction in harvestable resources. No reduction in other resources is expected from the proposed action. Some vegetation will be removed from the ROW but will mostly be limited to resources not used for subsistence. Some clearing may increase short term availability of berries. 2. Expected reduction in availability of resources due to alterations in resource distribution, migration, or location. No reduction in availability of other resources is expected from the proposed action. Access: 1. Expected limitation in access of subsistence users resulting from the proposed action. Access may be improved along existing trails and roads in the uplands, however, no new access will be constructed and mitigation measures are designed to minimize the use of the ROW for access. No limitation on access by subsistence users will result. Other lands: Seven route alternatives and a no-action alternative were analyzed in the EIS. The preferred alternative crosses less area used for subsistence purposes than the more western alternatives. Qther alternatives: there is no other mode of construction and maintenance that would have less affect on subsistence uses and resources. The proposed method of construction, operation and maintenance will not significantly restrict subsistence opportunity. Construction, operation and maintenance of the slectrical right-of-way will be done in the most environmentally sound manner. Other comments: Under ANILCA Title VIII uses of subsistence resources by qualified rural residents on federal public lands is mandated. This evaluation includes lands selected by the State of Alaska and selections by Native Corporations under the Alaska Native Claims Settlement Act. The Evaluation and Finding determines that under ANILCA, PL 96-487, subsistence uses would not be significantly restricted by the construction, operation and maintenance of a 230kV transmission line, as proposed. Form 1842-1 (February 1985) 2 UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF LAND MANAGEMENT INFORMATION ON TAKING APPEALS TO THE BOARD OF LAND APPEALS DO NOT APPEAL UNLESS 1. This decision is adverse to you, AND 2. You believe it is incorrect IF YOU APPEAL, THE FOLLOWING PROCEDURES MUST BE FOLLOWED 1. NOTICE OF APPEAL . . 2. WHERE TO FILE NOTICE OF APPEAL SOLICITOR ALSO COPY TO ... . 3. STATEMENT OF REASONS SOLICITOR ALSO COPY TO ... . 4. AOVERSE PARTIES 5. PROOF OF SERVICE Within 30 days file a Notice of Appeal in the office which issued this decision (see 43 CFR Secs. 4.411 and 4.413). You may state your reasons for appealing, if you desire. Bureau of Land Management Alaska State Office 222 W. 7th Ave., #13 Anchorage, AK 99513-7599 REGIONAL SOLICITOR ALASKA REGION U.S. DEPT. OF THE INTERIOR 4230 UNIVERSITY DRIVE SUITE 300 . ANCHORAGE AK 99508-4626 Within 30 days after filing the Notice of Appeal. file a complete statement of the reasons why you are appealing. This must be filed with the United States Department of the Interior. Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203 (see 43 CFR Sec. 4.412 and 4.413). If you fully stated your reasons for appealing when filing the Notice of Appeal, no additional statement is necessary. REGIONAL SOLICITOR ALASKA REGION U.S. DEPT. OF THE INTERIOR 4230 oe DRIVE SUITE ANCHORAGE. AK 99508-4626 Within 15 days after each document is filed, each adverse party named in the decision and the Regional Solicitor or Field Solicitor having jurisdiction over the State in which the appeal arose must be served with a copy of: (a) the Notice of Appeal, (b) the State- ment of Reasons, and (c) any other documents filed (see 43 CFR Sec. 4.413). Service will be made upon the Associate Solicitor, Division of Energy and Resources, Wash- ington, D.C. 20240, instead of the Field or Regional Solicitor when appeals are taken from decisions of the Director (WO—100). Within 15 days after any document is served on an adverse party, file proof of that service with the United States Department of the Interior, Office of the Secretary, Board of Land Appeals, 4015 Wilson Blvd., Arlington, Virginia 22203. This may con- sist of a certified or registered mail ‘‘Return Receipt Card’’ signed by the adverse party (see 43 CFR Sec. 4.401(c)(2)). Unless these procedures are followed your appeal will be subject to dismissal (see 43 CFR Sec. 4.402). Be certain that all communications ure identified by serial number of the case being appealed. NOTE: A document is not filed until it is actually received in the proper office (see 43 CFR Sec. 4.401(a)) SUBPART © Sec. 1821.2-1 Office hours of State Offices. (a) State Offices and the Washington Office of the Bureau of Land Management are open to the public for the filing of documents and inspection of records during the hours specified in this paragraph on Monday through Friday of each week, with the exception of those days where the office may be closed because of a national holiday or Presidential or other administrative order. The hours during which the State Offices and the Washington Office are open to the public for the filing of documents and inspection of records are from 10 a.m. to 4 p.m., standard time or daylight saving time, whichever is in effect at the city in which each office is located. .2--OFFICE HOURS; TIME AND PLAC =OR FILING Sec. 1821.2-2(d) Any document required or permitted to be filed under the regulations of this chapter, which is received in the State Office or the Washington Office, either in the mail or by personal delivery when the office is not open to the public shall be deemed to be filed as of the day and hour the office next opens to the public. (e) Any document required by law, regulation, or decision to be filed within a stated period, the last day of which falls on a day the State Office or the Washing- ton Office is officially closed, shall be deemed to be timely filed if it is received in the appropriate office on the next day the office is open to the public. *U.S. GPO: 1991-573-016/46019 rte SiS V7 MTA aig (es) alt NAW I wi ic VU i ML AS O) A / TONY KNOWLES, GOVERNOR ins | ww i KA / / DEPARTMENT OF NATURAL RESOURCES / net FAIRBANKS, ALASKA 99709-4699 DIVISION OF LAND i Ey CETIVE 451-2740 June 17, 1998 JUN 24 1998 Alsska Industrial D ae levelo Proposed Decision and Export Authori pme Golden Valley Electric Association YY Northern Intertie The Department of Natural Resources, Division of Land (DL) has completed a proposed decision on the Golden Valley Electric Association (GVEA) Northern Intertie Project. Comments must be received at the Northern Regional Office, DL before 5:00 P.M. on July 24, 1998. A final decision will be made after all comments have been reviewed and analyzed. The DL’s proposed decision is based on the Bureau of Land Management’s (BLM) Environmental Impact Statement for the project and uses that information to support the state’s decision for a preferred route. The preferred alternative (Rex-South) in the BLM’s Final Environmental Impact Statement is the DL’s recommended route. Comments must be submitted in writing or sent by e-mail to: Bob_Craig@dnr.state.ak.us. Written comments should be sent to: Bob Craig Department of Natural Resources Division of Land Northern Regional Office 3700 Airport Way Fairbanks, Alaska 99709-4699 If you have any questions on the proposed decision or need further information, please contact me at (907) 451-2722 or write to the above address. a CC ’ V W ae, 7 L bed pe Natural Resource Manager ¥. le _— WN grain t “Develop, Conserve and Enhance Natural Resources for Present and Future Alaskans” Proposed Decision ADL 415854 Golden Valley Electric Association Northern Intertie Proposed Action Golden Valley Electric Association (GVEA) has applied to the Division of Land (DL) for a 150 foot wide public utility right-of-way for a 230 kilovolt transmission line between Healy and Fairbanks. The project is commonly known as the Northern Intertie. Eight alternative routes were under consideration, all of which crossed state lands. Depending on the route, from 50 to 100 miles of state land would be traversed by the line. Some of the proposed routes also cross Ft. Wainwright Military Reservation, which requires the Bureau of Land Management (BLM) to be involved with the project. BLM procedures require that the National Environmental Policy Act be followed, which is in the form of an Environmental Impact Statement (EIS). This proposed decision will be based on information contained in the EIS and will use that information to support the state’s decision for a preferred route. Authority A.S. 38.05.850(a) and (b). The authority to approve a public utility right-of way has been delegated to the Regional Manager. The authority to approve a fee waiver under AS 38.05.850(b) has been delegated to the Director of the DL. Administrative Record Right-of way application, ADL 415854, and BLM’s EIS for the GVEA Northern Intertie Project comprise the administrative record for this case. Legal Description and Location The location of all of the alternative routes are depicted on the maps included with the Draft EIS (Figure 3.9-1). Each route begins in Healy at the GVEA power plant, heads north and terminates at a substation in south Fairbanks. All sections of state land, including waterbodies, crossed by the route are noted on the maps. Right-of-way width for the transmission line will be 150 feet (75 feet either side of centerline). Proposed Decision, ADL 415854 GVEA Northern Intertie Page 2 Planning and Classification All the alternative routes are within the Tanana Basin Area Plan (TBAP). Multiple management units are crossed within Subregions 1, 2, 3, and 4. There is no prohibition in any of the management units against the issuance of a right-of-way for a transmission line. Right-of-way permits are allowed in all of the land classifications. Title State land crossed by the Intertie is a combination of Tentatively Approved and Patented lands. One township (T.6S., R.7W., F.M.) is state selected. BLM will need concurrence from the state, pursuant to ANILCA, Section 906(k) for its permit issuance to GVEA on state selected land. This decision and notice will be made part of the casefile established for the concurrence to BLM. Approximately 8 miles of the route north of Healy crosses Mental Health Trust Lands. These lands are managed by the Alaska Mental Health Trust Land Office and will require a separate permit to be issued by that office to GVEA for the Intertie. Access Access to the project will be along existing roads and trails (see DEIS section 2.4.1 and page 3 of the Executive Summary). Before any new access routes are constructed across state land, the appropriate authorizations will need to be acquired from DL. Temporary construction access may require a land use permit. Environmental Risk Assessment Environmental risks associated with the Intertie and its construction is expected to be low. A formal risk assessment has not been conducted. The applicant has completed an Environmental Risk Questionnaire (ERQ) as part of its right-of way application. Fuels would be used for construction equipment and helicopters. Several areas within Townships 9 & 10 South, Ranges 6 & 7 West have been extensively mined and many of the operations may not have been monitored. The immediate areas around the mining operations could be contaminated. The state will need to be informed of any potentially contaminated sites that are encountered during construction. Survey After a Final Decision is made and the appeal period is completed, an Early Entry Authorization (EEA) will be issued to GVEA to begin construction and survey. A Department of Natural Resources (DNR) approved as-built survey will be required prior to the issuance of the final right-of-way permit. Proposed Decision, ADL 415854 GVEA Northern Intertie Page 3 Performance Guarantee and Insurance The DL has established a performance guarantee matrix to predict the costs of repairing state land if it is damaged or the project is abandoned by the responsible party. After using the performance guarantee matrix, it is estimated that $60,000 would cover the costs associated with the potential damage to state land should GVEA or its contractors not pay for or repair the damage. GVEA itself is bonded and any of its contractors working on the project are required to be bonded. The performance guarantee will be released upon satisfactory completion of the project and submittal of the required survey. A liability insurance policy must be provided by the applicant listing the state as an additional insured party with minimum limits in the amount of $1,000,000 combined single limit per occurrence and $2,000,000 annual aggregate. Term of Permit and Use Fee 11 AAC 05.010(e)(13) states that a public utility right-of-way will be assessed a one time fee of 10 cents per linear foot. A.S. 38.05.850(b) allows right-of-way fees to be waived for a transmission line established by a nonprofit cooperative association for the purpose of supplying power to its members and the waiver is considered to be in the best interest of the state. GVEA is a nonprofit cooperative association and will be supplying power to its members via the Intertie transmission line. The Intertie will benefit the Fairbanks area and railbelt communities by meeting the increased demand for power, improving the reliability of electric service and increasing access to economical energy. Therefore, it is proposed to waive the public utility right-of-way fees to GVEA because the benefits of the transmission line may be in the state’s best interest. If, at any time, the owner/operator of the transmission line does not qualify as a nonprofit cooperative association organized under A.S. 10.25 then the DL reserves the right to assess an annual use fee based on current fee schedules or a fair market value appraisal. It is recommended that the term of the permit be for an indefinite period of time. If the use fee is waived, this will reduce the cost to the state to process a renewal. The permit will be revoked upon abandonment. Public Notice and Agency Review All of the public notices sent out by the BLM for the Intertie EIS included a statement that said the information and comments gathered during the EIS review would be used in the state’s right-of-way decision process. Proposed Decision, ADL 415854 GVEA Northern Intertie Page 4 Public Scoping meetings for the EIS were held in Fairbanks, Healy, Anderson and Nenana from June 23, 1997 through June 26, 1997. Further meetings were held in Healy, Nenana and Fairbanks from August 19, 1997 through August 21, 1997 to provide input on the screening process used to narrow the range of alternatives for evaluation in the EIS. Public Hearings were held in Fairbanks, Nenana, Anderson and Healy from February 9, 1998 through February 12, 1998. Notice of the above meetings and hearings was sent to all parties who commented during the Environmental Assessment (EA) and sent to state and federal agencies, municipalities and various special interest groups. BLM has a list of all parties who received a notice. Notices were also posted in post offices and communities along the Parks Highway from Fairbanks to Healy. Additionally, notice was published in the Fairbanks Daily News- Miner and the Valley Newspaper in Anderson and broadcast over radio stations servicing the area. The public comment period for the DEIS, published in December 1997, ended on March 5, 1998. The DEIS or Executive Summary was sent to all parties who received notice of the above meetings and hearings. Over 600 comments were received by BLM by the time the public comment period ended. The Final EIS (FEIS) contains a list of all substantive comments received and the response to those comments. BLM has a record of all those who received notice or made comments. All parties who received notice or made comments on the EA or DEIS will receive a copy of this proposed decision. In addition, a notice will be published in the Fairbanks Daily News Miner. Discussion The Northern Intertie project is comprised of two basic elements: the construction of a second transmission line (230 kilovolts) between Healy and Fairbanks and the addition of a battery energy storage system (BESS) that will supply 40 megawatts of reserve capacity to the railbelt system for 20 minutes. GVEA applied to the DL in the summer of 1996 for a 150 foot wide right-of-way for the transmission line, which was at the same time the BLM began preparation of an EA for the project. BLM became involved with the Intertie because some of the route alternatives crossed Fort Wainwright Military Reservation. The Rural Utilities Service (RUS) is involved because they are responsible for the approval of any federal funds associated with the construction or operation of the project. Federal procedures require that NEPA be followed, which can be in the form of an EA or an EIS. The EA included eight separate route alternatives plus a “No Action” alternative. The amount of state land that was crossed by each separate route varied from 50 to 100 miles. Proposed Decision, ADL 415854 GVEA Northern Intertie Page 5S Public meetings on the EA were held in August, 1996. Agency meetings were held later that winter. Some of the issues raised were route selection, wildlife, fire management, aviation, military operations, recreation, and visual resources. These and other issues were included and discussed in the EA. The DL worked closely with BLM during the preparation of the EA and in the selection of the preferred alternative. The EA was published in January, 1997 and selected the Rex/South Route as the preferred alternative. Because of substantial public and agency controversy over the significance of impacts and other issues the decision was made to advance the project to the EIS level of assessment. Preparation of the EIS began in Spring 1997. Because of the detailed analysis involved with the EIS and the full public and agency review received during the process, the DL decided to use the information contained in the document as the basis for its proposed decision. The DL use of the EIS as the basis for its proposed decision was included in the public notices sent out and posted for all of the public scoping meetings and public hearings. A DL representative was present at all of these meetings including all of the agency meetings that were held for the project. Scoping meetings for the EIS were held in Fairbanks, Nenana, Anderson, and Healy in June, 1997. All of the routes were again open for consideration plus comments were taken on any new route alternatives. Many issues raised were similar to the issues brought up during the review of the EA. In August further public meetings were held to provide input on the screening process used to narrow the range of alternatives for evaluation in the EIS. Asa result of these meetings two routes were dropped from consideration and a change to the Rex/South route near Chicken Creek north of Healy was added as a new alternative. Seven route alternatives, plus a “No Action” alternative, were examined in the DEIS. All of the alternatives and issues were discussed further in agency meetings held in November, 1997. As part of these meetings design features were discussed and mitigation measures were developed. After all the alternatives were analyzed it was decided to select the Rex/South Route with Option B as the preferred alternative in the DEIS. The DL worked closely with BLM in selecting the preferred alternative. Public hearings were held in February, 1998 in Fairbanks, Nenana, Anderson, and Healy as part of the 60-day public review of the DEIS. There were a large number of comments made in favor of the Rex/South Route, but against the inclusion of Option B (Chicken Creek Bypass) as part of the preferred alternative. Other comments ranged from supporting the use of the existing route to the suggestion of an entirely new route alternative that headed east along the foothills of the Alaska Range to the Richardson Highway then north to Fairbanks. All of these comments plus all written comments (both totaling more than 600) were evaluated by BLM and an analysis is included in the FEIS. After analyzing all the issues and comments and reevaluating the alternative routes the Rex/South Route, without Option B, was selected as the preferred alternative in the FEIS. Proposed Decision, ADL 415854 GVEA Northern Intertie Page 6 As with the EA and DEIS, the DL worked closely with BLM in reviewing and evaluating all of the comments, issues and alternatives and was included in the process to make the decision on the preferred alternative. The design features and mitigation measures included in Sections 2.4.5 and 2.4.6 of the DEIS will be included as special stipulations in the DL early entry authorization and right-of-way permit. To allow for safety and engineering concerns, all trees higher than 10 feet may be cleared within 75 feet either side of the centerline. Clearing to ground level, up to 150 feet either side of the centerline, will be allowed in areas where large stands of black spruce occur and a danger from forest fires is expected. The vegetative mat must remain intact. After a final route is approved, these areas will be identified in consultation with the State Division of Forestry and the Alaska Fire Service. A separate permit is being processed by the Alaska Mental Health Trust Land Office where the transmission line crosses Mental Health lands as required in A.S. 38.05.801 and terms consistent with the Alaska Mental Health Enabling Act. Proposed Decision The DL has determined that the issuance of a 150 foot public utility right-of-way and granting a fee waiver under A.S. 38.05.850(b) to GVEA for the construction of the Northern Intertie transmission line may be in the best interest of the state. The permit will be issued with an indefinite term. The Preferred Route (Rex/South) in BLM’s FEIS is DL’s recommended route. Design features and mitigation measures in Sections 2.4.5 and 2.4.6 of the DEIS will be included as special stipulations in the early entry authorization and right-of-way permit. 4 1 lott £). 6-16 - FE Robert D. Craig J Date Natural Resource Manager i — lb - 16-98 Date Alaska Department of Natural Resources Division of Land, Northern Region 3700 Airport Way Fairbanks, Alaska 99709-4699 5 ALASKA INDUSTRIAL DEVELOPMENT a, AND EXPORT AUTHORITY => ALASKA iE =EENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM TO: D. Randy Simmons Executive Director Keith A. Laufer Financial and Legal Affairs Manager FROM: Dennis V. McCrohan, P.E. Deputy Director - Project Development and Operations DATE: October 21, 1998 SUBJECT: Northem Intertie Procurement and Construction | have revisited the conditions for proceeding with grant disbursement and AIDEA funding. The attached October 8, 1998, letter from Golden Valley Electric Association (GVEA) to Chugach Electric Association, Inc. (CEA) is a preliminary step towards expending grant funds for the procurement and construction of the Northern Intertie. The letter requests each participant to declare whether it wants to remain or withdraw from the Northern Intertie project. The withdrawal provision comes from the Alaska Intertie 1993 Project Participants Agreement Section 4(b)(3). The Project Participants Agreement allows any participant in the Northern Intertie, excluding GVEA, to withdraw from the project up to the “decision date”. The decision date is defined as a date certain after which the Southern Intertie route and cost studies are complete on which a final decision will be made to proceed or not proceed with construction along a specific route. CEA has designated the ENSTAR route for the Southern Intertie. GVEA has selected a decision date of November 1, 1998. We do not know if the Participants Group or GVEA unilaterally determined the decision date. The Alaska Intertie Project Participants Agreement Section 6(e)3, 7, and 8(a)1 require an approved budget and schedule by the Participants for the project prior to proceeding with construction. We do not know if this has occurred. GVEA will want to proceed immediately with procurement when the ROD process is complete and any litigation resolved. The capital cost is anticipated to be about $73M. The primary source of funds for the project is a $43.2M State grant provided by 1993 legislation. According to the Grant Transfer and Administration Agreement, AIDEA is the administrator of this fund. XOS > Memorandum October 21, 1998 Page 2 The main requirements for use of the fund monies are defined in the Intertie Grant Agreement, the 1993 Alaska Intertie Project Participants Agreement, and the Grant Administration Agreement. AIDEA is a signatory to the Intertie Grant, Grant and Administration, and Grant Transfer and Administration Agreements. The additional funding required by GVEA is therefore about $30M. The 1993 legislation authorized AIDEA to issue bonds up to $60M for the Northern Intertie. Foster Pepper's attached draft letter of February 4, 1995, discusses the conditions under which AIDEA could be a fund source and issue bonds for the project. The attached AIDEA letter of July 14, 1995, discusses the requirements for grant disbursement and for financing by AIDEA. The critical issues are: de All utility participants must agree to matters regarding design and construction management including project cost and schedule, oversight, cost control, and financing each participant's share of the project costs. The Intertie Participants Group must submit to AIDEA for approval a proposed budget for procurement and construction. Each utility must demonstrate to AIDEA the ability to raise all amounts necessary for project completion. This condition arises from the Grant Transfer and Delegation Agreement Section 2.4(e). No funds for these purposes may be disbursed until AIDEA approval is obtained. This condition arises from the Grant Administration Agreement Section 4.02(a). Neither has occurred. The utilities must contract with GVEA to design and construct the line. The Agreement intended for this purpose is the Construction Management Agreement, which to our knowledge has not been signed. This condition arises from the Intertie Grant Agreement Section 5. The ownership structure, defined in the Intertie Grant Agreement, must be consistent with the legislation if AIDEA is a funding source. This was a legal opinion of Foster Pepper and has been satisfied by legislation. Each participating utility must have a legal opinion from their respective counsel that each have the requisite intent and legal capacity to enter into a binding obligation to bear their share of the project costs. This condition arises from the Grant and Transfer and Delegation Agreement Section 2.4(e), and the Grant Administration Agreement Section 4.02.(b). This was discussed in the Foster Pepper letter. No action to our knowledge has been taken by the utilities to accomplish this requirement. To the extent required, APUC approval is required prior to the expenditure of the grant monies. This condition arises from the Grant Transfer and Delegation Section 2.4(d) and the Grant Administration Agreement Section 4.01(b) and 4.02(b). AIDEA requested that each utility provide an opinion from their counsel regarding any obligations arising from the Agreements, which require APUC approval. No such opinions have been obtained. However, GVEA has applied to the APUC for blanket approval for all the utilities. The basis for this approach was the withdrawal clause. In summary, the following requirements for grant disbursement have not been satisfied: e Construction Management Agreement not complete; Memorandum October 21, 1998 Page 3 e Budget and schedule for AIDEA approval not submitted; e Binding obligation of each participant not submitted; e Opinions regarding APUC pre-requisite approval not submitted. For AIDEA funding, these same conditions, excluding the Construction Management Agreement, must be satisfied. Attachments Sarre (ethepl (3V de a9 vt bts ry Lo GOLDEN VALLEY ELECTRIC ASSOCIATION INC. PO Box 71249 « Fairbanks, Alaska 99707-1249 * 907-452-1151 October 8, 1998 ce Wilson they hes Dum HAC Gene Bjornstad General Manager - Wwe new nord te Chugach Electric Association, Inc. rou et hore P.O. Box 196300 . ; vibes qe nc Anchorage, AK 99519-6300 vette ddan yr RE: Northern Intertie Dear Gene: The Record of Decision (ROD) for the Northern Intertie was issued by the Bureau of Land Management (BLM) and published in the Federal Register on September 21, 1998. Ona parallel path, the decision to issue the State right-of-way permit was signed by the Director of the Department of Natural Resources on September 29, 1998. Both the ROD and the State ROW permit are subject to appeal for thirty days after issuance. It is likely that the Northern Alaska Environmental Center will appeal both decisions. We are confident that the decisions are sound and will be supported in a timely manner on appeal. We would like to proceed with final design now and begin ordering material and clearing ROW as soon as the appeal process is complete. We anticipate construction to begin in the highlands between the northern foothills of the Alaska Range and Healy during summer 1999. Construction on the westem Tanana flats north of the Alaska Range will begin after freeze-up in 1999. The Intertie and Battery Energy Storage System (BESS) will be energized and placed in service by year-end 2000. In January, 1994 all the Railbelt utilities executed the Intertie Participants Agreement. This agreement and the October, 1993 Intertie Grant Agreement designate GVEA as Construction Manager and obligate each utility to proceed with funding and construction oversight. While each utility is obligated to fund its share of construction cost, the Participants Agreement contains the provision that your utility may opt out after one year of operation. GVEA has no opt-out rights and is ultimately obligated to step up to the shares of any participant who opts out after one year. Although the campaign to build the Northern and Southern Interties was waged on the simple premise that Railbelt utilities could participate in both lines and would enjoy ownership and corresponding rights roughly in proportion to their Bradley Lake shares, the situation has changed. Certain events and conversations that have taken place during the past several years convince us that one or more of the southern utilities may wish to be relieved of all obligations related to the Northern Intertie, including the obligation to participate for the initial year of operation. Vad. AS Letter to: IPG Page 2 October 8, 1998 GVEA’s costs will obviously be far less in the first and subsequent years of operation if all participants stay in. However, we have concluded that attempting to force any utility to participate may delay the project, complicate financing and make governance of the Northern Intertie construction and operation more difficult. Now that the Record of Decision and State right-of-way permit decision have been issued, it is our intent to ask the IPG to meet within three weeks to seek approval to proceed with final design. As soon as the ROD and State ROW permit appeal processes are complete, we will ask the IPG to enter Phase II and to approve material ordering and construction. | would like to be able to report that all the agreements have been executed by all participants and that everyone is excited about beginning construction. However, we recognize that some utilities may wish to reconsider their 1994 decision and not participate. Simply put, it is now time for each of you to decide whether your utility wants to participate in the Northern Intertie project. To assist you in your decision, the GVEA Board has authorized me to discuss with any interested utility means to allow withdrawal prior to financing, construction and completion of the one-year commitment. Conversely, as Construction Manager we are requiring each utility wishing to continue as a participant to execute the Construction Management Agreement immediately. GVEA intends to remain absolutely neutral relative to your participation. While we welcome your participation, we shall bear you no animosity should you withdraw. Please realize that your withdrawal may require the approval of all other participants and that prior to GVEA’s ultimate step-up, other participants may wish to exercise rights to step up to a portion of your share. We now need to move quickly on construction and financing fronts. To stay on schedule and minimize budget impacts of further delay, | need to hear from each of you prior to November 1, 1998, that you are continuing to participate (and have signed the Construction Agreement) or that you want to trigger the process of withdrawing. If you have any questions, please contact me or Ron Saxton. | would appreciate your providing a copy of this letter to your Board Chairman. Aid ‘\ WG Michael P. Kelly President & CEO cc: Robert Hansen Steve Haagenson Ron Saxton, Ater Wynne Randy Simmons, AIDEA ALASKA INDUSTRIAL DEVELOPMENT =x_ AND EXPORT AUTHORITY {= ALASKA z= ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 July 14, 1995 Mr. Thomas R. Stahr General Manager and Chairman IPG Municipal Light & Power 1200 East First Avenue Anchorage, Alaska 99501-1685 Subject: — Intertie Financing Dear Mr. Stahr: | am writing in response to your letter to me dated June 13, 1995, relating to the recent Intertie Participants Group (IPG) action to begin work on the southern intertie. | am pleased with IPG’s desire to initiate work on the southern intertie. Your letter also provides a timely opportunity to assess the progress made to date on the intertie projects. Initially, | would like to note that through informal discussion with the various participants, it is AIDEA perception that although fair progress has been made on preliminary engineering and related tasks on the Northern Intertie, many fundamental issues remain unresolved on both intertie projects. | believe we have reached a juncture where such issues need be specifically addressed and resolved in order to maintain progress on the intertie projects. With the foregoing objectives in mind, | invite you to respond to the following. Ne x > First, my letter to you dated November 2, 1994, addressed the intended scope of the intertie project and confirms the view that the intertie must have the benefits and functionality envisioned under the AEA feasibility study. Your response of January 12 on behalf of the IPG accepted this view in principle, though it left for resolution in “construction agreements" such critical issues as whether such a line would be developed in phases, or to what extent each participating utility would be responsible for project costs. | understand that the referenced agreements have not as yet, been adopted by the participating utilities. | believe a date should be set by which such issues will be resolved, and | invite your suggestion as to an appropriate deadline. Second. In my letter of November 2, 1994, | noted that AIDEA asked its bond counsel, (Foster, Pepper & Shefelman law firm), to address whether the ownership structure provided for under the Intertie Grant Agreement would enable AIDEA to issue bonds to finance all or part of the Participant's share of project costs. | recently received a draft legal opinion which concludes that, for purposes of a public financing, AIDEA would require a legislative revision to the underlying debt-issuance authorization (Sec. 29 and 30, Ch. 18, SLA 1993), since that authorization references intertie ownership by, respectively, Golden Valley Electric Association (GVEA) and Chugach Electric Association (CEA). | add that counsel also notes that the Mr. Thomas R. Stahr July 14, 1995 Page 2 ownership structure set out in the Intertie Grant Agreement would, assuming specific legislative authorization, enhance the use of tax-exempt financing. There are, of course, several different ways to proceed in response to the legal opinion. For example, the utilities may maintain the current ownership structure and simply finance the participant's share absent AIDEA involvement. Alternatively, the utilities may want to revert back to the ownership structure specifically envisioned by the underlying legislation, which would enable AIDEA to be the issuer without further legislative action. Finally, the utilities may prefer that AIDEA seek legislative approval of the requisite revision to Sections 29 and 30. While | believe such approval would be viewed as ministerial if supported by all utilities, | recognize that, particularly absent full consensus among the utilities on the various unresolved issues, the prospect of legislative involvement may be troubling. | would appreciate an immediate response whether the IPG requests that AIDEA seek legislative action to facilitate an AIDEA financing under the current ownership structure. If no legislative action is desired, please advise how the IPG intends to proceed and how each participant intends to finance its proportionate share of costs. Third. Item No. 4 in our respective letters of November 2, 1994 and January 12, 1995, acdressed the enforceability of the various agreements. While | appreciate that final project costs are not as yet known with certainty and, perhaps more importantly, significant issues with subdstantial economic ramifications remain for resolution in the "construction agreements,” nevertheless, | believe it essential to confirm that each of the participating utilities have the requisite intent and legal capacity to enter into a binding obligation to bear their proportionate share of the project costs in accordance with the ownership interests established in the Intertie Grant Agreement and related documents. a As questions continue to arise in informal discussions regarding these matters, | request an unqualified opinion letter from legal counsel for each of the participating utilities confirming the legal capacity of each entity to enter into such agreements and further confirming that the obligations arising under said agreement, including the obligation to bear a proportionate share of project costs, are fully enforceable. | also request that counsel for FMUS and the City of Seward address the applicability of any requirement of voter approval with respect to these financial obligations. Fourth. Both the Grant Administration Agreement and the Grant Transfer and Delegation Agreement envisioned prompt notification of which matters and obligations arising in connection with the development and financing of the interties need be submitted to the Alaska Public Utilities Commission (APUC). As you know, to the extent such approval is required, APUC approval is a precondition to the expenditure of grant monies. | believe it timely to reach a common understanding of prospective APUC matters. Accordingly, counsel for each of the participating utilities should also address in the requested opinion letters of counsel which, if any, of the obligations arising in connection with the various intertie agreement, require APUC consideration. The Authority believes the time has come for the participating utilities to resolve basic questions of ownership, management and participation in the intertie projects. While | appreciate that the “unreasonably delayed” standard under Section 3.03 of the Grant Administration Agreement Mr. Thomas R. Stahr July 14, 1995 Page 3 does not offer a “bright line” test, | am concerned that, absent substantial progress on these core development issues in the near future, the availability of grant monies is subject to review. In light of the foregoing, the Authority believes it would be inappropriate to authorize the release Now of full Phase 1 funding on the southern intertie before core development issues are resolved. | W#€ Accordingly, the Authority will make available $500,000 in grant funds for initial work on the oda southern intertie. No additional funds will be advanced absent settlement of the outstanding | & differences among the participating utilities or, in the alternative, execution of a reimbursement agreement in the event that the final development of the intertie is not undertaken. Similarly, the Authority intends to restrict use of grant funds on the northern intertie to the pending engineering and permitting work, until a comparable resolution of core development issues are resolved. sim | look forward to working with you and the other participating utilities toward development of the intertie projects. Sincerely, William R. Snell Executive Director Ct: Jim Ayers, Chief of Staff, Office of the Governor Wilson Hughes, AIDEA Board Member WRS:bjf:ks hiall\bjflboard\stahripg COMP DENT VE annie alee ianial FOSTER PEPPER & SHEFELMAN A LAW PARTNERSHIP INCLUDING PROFESSIONAL SERVICE CORPORATIONS 1111 THIRD AVENUE SUITE 3490 BELLEVUE. WAS-4INGTON OFFICE SEATTLE. WASHINGTON 98101 PORTLAND. OREGON OFFICE (206: 451-0500 (206) 447-4401 (503) 221-0607 TELECOPIE (206) 455-5487 1 TELECOPIER: (503) 221-1510 pean DIRECT DIAL: (206) 447-8967 (206) 447-9700 - (206) 447-9283 February 8, 1995 EGEIVE William R. Snell at i Executive Director FEB 107995 Alaska Industrial Development & a Export Authority Alaska Industrial Development 480 W. Tudor Road Anchorage, AK 99503 Jonathan Rubini, Esq. . 602 West Fifth Avenue, Suite 500 v ae Anchorage, AK 99501 “Who ak - od i er B Re: Electric Power Intertie Financing Sack y cont: Dear Riley and Jon: Wen WAS Enclosed is a draft letter that summarizes the conclusions we have reached based on our work thus far on the referenced matter. We hope this is in useful form for your purposes, and, in any event, we wanted to provide you with some tangible evidence of our efforts in reviewing these questions. and Export Authority 2/r34> Very truly yours, FOSTER PEPPER & SHEFELMAN William G. Tonkin WGT:djr ce: Hugh Spitzer Dan Dixon 1a ww comme Opie nae Ula Anolvutaon Pv DRAFT February 4, 1995 William R. Snell Executive Director Alaska Industrial Development & Export Authority 480 W. Tudor Road Anchorage, AK 99503 Re: Preliminary Conclusions on Review of Potential Intertie Financing by AIDEA Dear Riley: The purpose of this letter is to briefly summarize the conclusions that our firm has reached following our review of the documents you and Jonathan Rubini furnished to us last fall relating to the electrical transmission interties for which the Alaska Legislature in 1993 SLA CH. 18 (the "bond authorization statute") and 1993 SLA CH. 19 (the "grant appropriation statute"), among other things, authorized AIDEA to issue bonds and appropriated certain grant funds, subject to the terms of those statutes. The documents reviewed included the Intertie Grant dated October 26, 1993, by and among the participating utilities (described below), the State of Alaska, Department of Administration, and AIDEA; the Grant Transfer and Delegation Agreement dated November 5, 1993, by and among the same parties; the 1993 Alaska Intertie Project Participants Agreement (the "Participants Agreement") dated January 24, 1994, by and among Alaska Electric Generation & Transmission Cooperative, Inc., The Municipality of Anchorage d/b/a Municipal Light and Power ("ML&P"), Chugach Electric Association, Inc., The Municipality of Fairbanks d/b/a Fairbanks Municipal Utilities System ("FMUS"), Golden Valley Electric Association, Inc., The City of Seward d/b/a Seward Electric System ("SES") (collectively, the "participating utilities"), and Homer Electric Association, Inc., and Matanuska Electric Association, Inc. (the "additional parties"); and the Grant Administration Agreement dated August 30, 1994, by and among AIDEA and the participating utilities. For convenience, ML&P, FMUS and SES are sometimes referred to as the "municipal utilities," and the participating utilities other than ML&P, FMUS and SES are sometimes referred to as the "private utilities." 0169379.01 William R. Snell February 8, 1995 Page 2 We also made a preliminary review of certain Alaska statutes other than the bond authorization statute and the grant ‘appropriation statute and applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and certain regulations that are currently applicable, or that are proposed to be applicable, to tax-exempt bonds, including the proposed regulations on the definition of private activity bonds under section 141 of the Code that were published in the Federal Register on December 30, 1994. 1. Ownership Structure. The principal question that arises under the bond authorization statute is whether AIDEA is authorized by the terms of that statute to issue bonds to finance the cost of intertie projects that are owned by the participating utilities as tenants in common, with each participating utility holding an undivided percentage ownership interest in all of the real and personal property comprising a project, as required by the Participants Agreement. The question arises because section 29 of the bond authorization statute provides in part that AIDEA may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 138 kilovolts between Healy and Fairbanks and owned, for the benefit of all the utilities participating in the intertie, by Golden Valley Electric Association, Inc. (Emphasis ours.) Similarly, section 30 of the bond authorization statute provides in part that AIDEA may issue bonds to finance the acquisition, design, and construction of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula to be owned, for the benefit of all of the utilities participating in the interties, by Chugach Electric Association, Inc. (Emphasis ours.) At the same time, section 5(a) of the Participants Agreement provides: Ownership As Tenants In Common. The Participants shall be owners of each Segment of the Project (including all personal and real property interests thereof) as tenants in common, with undivided interests and obligations with respect to all Project Segment assets and liabilities in the proportionate amounts of their respective Participants’ Shares. Except as otherwise provided 0169379.01 William R. Snell February 8, 1995 Page Clearly, a hereunder, the Participants shall share in the Project Segments’s benefits, burdens, and risks only in proportion to their respective Participants’s Shares, notwithstanding that the IPG [the Intertie Participants Group] may select one or more individual Participants to manage, design, build, finance, operate, and/or maintain the Project Segment or portions thereof on behalf of the Participants collectively. this provision of the Participants Agreement does not provide or contemplate that Golden Valley Electric Association, ("GVEA"), will "own" the northern segment of the intertie project "for the benefit of" all of the participating utilities, and also does not provide or contemplate that Chugach Electric inc. Association, Inc. ("Chugach"), will “own" the southern segment of the intertie project "for the benefit of" all of the participating utilities. Although the Participants Agreement is not explicit on the point, under general real property law, title to property being acquired by persons as tenants in common would be conveyed to those persons in the names of all tenants in common as to their respective percentage ownership interests. participating utilities. We considered whether it would be possible to interpret the bond authorization statute in a manner that would result in treating ownership of the intertie project by the participating utilities as tenants in common as the legal equivalent of ownership by GVEA or Chugach, as applicable, for the benefit of the However, that interpretation, we believe, would give essentially no meaning to the portion of the bond authorization statute that requires the project to be "owned by" either GVEA or Chugach, as applicable. At a minimum, to invest those words with any meaning, we believe legal title to the real and personal property comprising the projects would have to be taken by either GVEA or Chugach, as applicable, which then would result in each participating utility having a beneficial ownership interest in the project. with projects "on behalf of the Participants collectively," fails t That kind of ownership structure arguably would be consistent the second sentence of section 5(a) of the Participants Agreement, which makes it clear that each participating utility is to share the benefits, burdens and risks of the project only in proportion to its participant’s share (or percentage of ownership). However, even that sentence, though it makes express reference to the fact that one or more participating utilities may be selected to manage, design, build, finance, operate and/or maintain the ° make any reference to the possibility that less than all of tne | participating utilities would hold title to the project. 0169379.01 William R. Snell February 8, 1995 Page 4 We also considered whether treating the existing ownership structure under the Participants Agreement as the legal equivalent of the kind of ownership structure contemplated by the bond authorization statute would be supported by any language contained in the grant appropriation statute, on the theory that both laws were enacted at the same time and both dealt with power transmission interties. However, reference to the grant appropriation statute actually appears to reinforce an »* interpretation of the bond authorization statute that would require the project to be owned by one of the designated participating utilities, rather than by all of the participating utilities as tenants in common. This is because section 1 of the grant appropriation statute provides, e.g., “for payments as a grant under AS 37.05.316 to Golden Valle lectric Association e benefit of all the utilities participating in the intertie...." (Emphasis ours.) As will be discussed below, the ownership structure currently provided by the Participants Agreement is helpful, if not essential, to the ability to reach favorable conclusions on other important legal questions, principally (i) the question whether the provision in section 10(d)(1) of the Participants Agreement requiring each participating utility to meet its Annual Payment Obligations, Energy Charges and Assessments "whether or not the Project is completed or its operation is terminated, interrupted or suspended in whole or in part," is valid under Alaska law, and (ii) the question whether the shares of the project held by the municipal utilities may be financed with tax-exempt bonds. Therefore, we believe it would be preferable to amend the bond | authorization statute in a manner that makes it consistent with the & “existing ownership—structure established by the participating | utilities pursuant+tethe Participants Agreement, rather than to change the ownership structure. For example, the bond authorization statute could be amended to provide that AIDEA may issue bonds to finance power transmission interties "owned by the participating utilities as tenants in common." Absent such a |! change in the bond authorization statute, we would be unable to provide an approving opinion on bonds issued by AIDEA to finance the project having the current ownership structure (which, as noted above, may be the optimum structure for all other purposes), especially in view of the legal standard that bond counsel must apply, i.e., an approving opinion cannot be rendered unless it is determined that it would be unreasonable for a court to hold to the contrary. ~ OF Validity of Section 10(d)(1) of Participants Agreement. As mentioned above, another important legal question is whether each of the participating utilities may lawfully agree, as provided 0169379.01 William R. Snell February 8, 1995 Page 5 in section 10(d)(1) of the Participants Agreement, to make the required annual payments regardless of whether the Project is operational. In Chemical Bank v. WPPSS ("WPPSS"), 99 Wn.2d 772, 666 P.2ad 329 (1983), the Washington Supreme Court held that Washington public utility districts and cities were not authorized to enter into a joint financing agreement similar to the Participants Agreement containing a so-called "dry hole" provision requiring the participants to make payments regardless of whether the projects were operational. In WPPSS, the court reasoned that, while each of the participating municipalities had statutory authority to purchase electricity, the "unconditional obligation to pay for no electricity is hardly the purchase of electricity," but rather was an agreement to purchase project capability. Id. at 784. The Washington municipalities also were authorized under state law to construct, acquire and operate electric generating facilities. However, the Washington court held that these provisions did not authorize the construction or acquisition of "a project in which the participants did not have an ownership interest." Id. at 785. The court noted that, under the participants’ agreement involved in WPPSS, the participating municipalities did not retain an ownership interest in the project. Moreover, based on provisions of the participants’ agreement relating to management of the joint undertaking, the court concluded that the participating municipalities "did not retain sufficient control over the project to constitute the equivalent of an ownership interest." Id, at 785. Thus, the agreements of the municipalities were held to be ultra-vires and void. The participants in the intertie projects here consist of municipal utilities operated by home rule cities and private utilities operated by electric cooperatives. Unlike the municipalities in WPPSS, Alaska hcme rule municipalities have considerable autonomy. In particular, under Article xX, Section 11 of the Alaska Constitution, a home rule city may exercise all legislative powers not prohibited, by law or charter. We have reviewed Alaska statutes and the charters of the municipelities of Anchorage, Fairbanks and Seward, and found no provisions that would prohibit those municipalities from entering into the Participants Agreement. Electric cooperatives are authorized by AS 10.25.020 to "generate, manufacture, purchase, acquire, accumulate, and transmit electric energy." (Emphasis ours.) By analogy to the WPPSS analysis, the electric cooperatives also may be required to have an ownership interest in the project. 0169379.01 William R. Snell February 8, 1995 Page 6 If the tenants-in-common ownership structure currently provided by the Participants Agreement is retained, each participating utility would have an actual ownership interest in the project, and the principal basis for the WPPSS holding would not exist here. If the ownership structure were changed to comply with the bond authorization statute as currently written, the participating utilities other than GVEA and Chugach would not have an actual ownership interest in the project. In that case, an ownership interest might be implied based on the degree of management control over the project exercised by the participating utilities through the Participants Agreement. However, we cannot conclude with certainty that it would be unreasonable for a court to hold to the contrary on that issue. As one of the conditions to the issuance of any bonds to finance the project, AIDEA should require each participating utility to provide to AIDEA an opinion of counsel stating that the participant has full legal authority to enter into the Participants Agreement, and that the terms of the Participants Agreement (including an explicit reference to section 10(d)(1) thereof) represent legal and valid obligations of the participating utility. and are enforceable against it. 3. Potential Tax-Exempt Financing of Portions of the Interties Owned and Used by Municipal Utilities. We believe that the portions of the interties that will be owned and used by the municipal utilities (i.e., by ML&P, FMUS and SES) can be financed with tax-exempt governmental bonds, subject to the favorable resolution of various subsidiary issues that are briefly summarized below. We base this preliminary conclusion primarily upon existing Treasury Regulations § 1.103-7(b)(5) and Example (13) under that regulation, IRS Private Letter Ruling 9247012 (the so-called "Grant County Public Utility District" ruling, and Proposed Treasury Regulations §§ 1.141-6 and 1.141-7. The latter proposed regulations on the definition of private activity bonds provide, in essence, that proceeds of tax-exempt bonds may be specifically allocated to the expenditures for a discrete portion of a mixed use facility, which may consist of an undivided ownership interest in an output facility, distribution facilities or any similar utility systen. The Preamble to the proposed regulations specifically recognizes the changing nature of the electric generation and transmission industry, and notes that the proposed regulations attempt to address those changes by, e-.g., providing guidance on allocations of use of transmission facilities. The following subsidiary federal tax issues would have to be favorably resolved before the issuance of any tax-exempt bonds. First, the exact undivided percentage ownership shares of the municipally-owned portions of the interties would have to be 0169379.01 William R. Snell February 8, 1995 Page 7 finally determined and be reasonably expected to remain fixed in those portions for the term of the bonds. This means that the procedures contained in the Participants Agreement allowing certain utilities to withdraw from participation in one or both segments of the interties, and allowing or requiring other utilities to increase their shares accordingly, must have fully run their course. Only then will it be possible to determine the extent of the discrete portions of the project that are to be owned by the municipal utilities and permitted to be financed with tax-exempt bonds. The use of the project also must be consistent with the percentage ownership interests held by the municipal utilities and financed with tax-exempt bonds. In this respect, we would need to confirm our understanding of the provisions of section 11 of the Participants Agreement, which appear to provide that use of the project, at least when capacity is or may be constrained, must be available to the participating utilities in accordance with their respective participant shares. Thus, it appears that the relative extent of use of the project by private and municipal utilities can be expected to be consistent with the respective ownership shares of the private and municipal utilities, but this would have to be confirmed. The Participants Agreement provides that GVEA will be the O&M Manager of the northern segment of the project and Chugach will be the O&M Manager of the southern segment of the project. GVEA and Chugach are treated as private businesses under section 141 of the Code. Unless it can be determined that neither of the O&M Agreements contemplated by the Participants Agreement constitutes a "management or service contract" for the purposes of the private business use test under Section 141 of the Code, it would be necessary to alter the duration and compensation and termination provisions of those contracts to conform with the requirements of Proposed Treasury Regulations § 1.141-3(c) for “qualified management contracts" that will not be treated as private business use by those O&M Managers. For example, one of the requirements for a management contract providing that 100% of the manager’s compensation during the term of the contract will be based on a periodic fixed fee is that the term of the contract may not exceed the lesser of 50% of the expected useful life of the related property or 15 years. However, it may be possible to determine that neither of the O&M Agreements is a "management contract" for these purposes under Proposed Treasury Regulations § 1.141-3(c) (6) (vi), which provides in part that: 0169379.01 * Se ARN > William R. Snell February 8, 1995 . Page 8 A contract to provide for the operation of a mixed use facility described in 1.141-6(b) (2) (i)(B) (relating to certain undivided ownership interests [in an output facility, distribution facilities or a similar utility system]) is not a management contract if the only compensation is the reimbursement of the actual and direct expenses paid by the service provider. (Emphasis ours.) Section 10(b) of the Participants Agreement provides in part that the project operating budget shall include costs attributable to overhead or administrative and general costs of the O&M Manager...only to the extent that said costs are approved by the IPG before they are incurred, are reasonably incurred for labor directly employed by that O&M Manager in performance of its duties under the O&M Agreement, and would not have been incurred but for the activities undertaken as O&M Manager. It is not entirely clear whether the compensation payable to the O&M Manager pursuant to the O&M Agreement thus contemplated by the Participants Agreement is limited solely to "reimbursement of the actual and direct expenses paid by the service provider [O&M Manager]" as required by the Proposed Treasury Regulations. It does appear, however, that the participating utilities do desire to strictly limit the amounts payable to the O&M Manager, and perhaps the O&M Agreement itself can limit compensation payable to the O&M Manager in a manner that would allow the O&M Agreements to be disregarded for purposes of applying the private business test under section 141 of the Code. As you know, there are numerous other requirements that must be satisfied for interest on bonds to be, and remain, tax-exempt under the Code, and, for the purposes of this preliminary analysis, we assume those other requirements. could be satisfied in ordinary course. These would include all applicable arbitrage requirements, for example. We also would have to confirm, based on opinions of counsel for the participating utilities, that the IPG itself would not be treated as an association taxable as a corporation under the Code, as intended by the participating utilities. Otherwise, the project would be treated as used for a private business use by that association, with adverse consequences for the ability to issue tax-exempt bonds for any portion of the project. 0169379.01 William R. Snell February 8, 1995 Page 9 thn Approval _of Project and Agreements by Alaska _ Public Utilities Commission. Under Section 4.01(b) of the Grant Administration Agreement, _@isbursement of the grant funds is conditioned on receipt by AIDEA of written notice that the participants have determined and agreed upon which contractual obligations related to the Intertie Grants and Intertie Funds must be submitted to the Alaska Public Utilities Commission for its review and approval. Section 4.02(b) of the Grant Administration Agreement also provides that grant funds will not be applied to reimburse costs incurred for Phase II activities, . .. until... (b) final approval, not subject to further judicial appeal, of matters submitted to the Alaska Public Utilities Commission related to the financing or use of the intertie(s). (Emphasis ours.) = As discussed above, the participants consist of municipal utilities and private utilities, both of which may or may not be “public utilities" subject to the jurisdiction of the Alaska Public Utilities Commission (the "PUC") depending on whether the utility meets any of the various requirements for an exemption under the public utilities statute (AS 42.05). Utilities that are generally exempt from the public utilities statute are not exempted from the requirement of a obtaining from the PUC a "certificate of convenience and necessity" under AS 42.05.221 through 42.05.281. AS 42.05.311 provides that a public utility may for a reasonable compensation permit another public utility to use distribution or transmission facilities under certain circumstances. If the public utilities fail to agree upon the joint use or interconnection of facilities or the conditions for compensation, either public utility may apply to the PUC for an order requiring the interconnection. AS 42.05.321. So long as each of the participants agree to the terms of the Participants Agreement, the PUC would not have jurisdiction over the Participants Agreement under this provision. Pursuant to AS 42.05.431(b), any “wholesale power agreement between public utilities is subject to advance approval" by the Puc. Assuming that some (if not all) of the participants are regulated public utilities, the Participants Agreement would be subject to advance approval of the PUC if it is a "wholesale power agreement." Unfortunately, the term "wholesale power agreement" is 0169379.01 William R. Snell February 8, 1995 Page 10 not defined in the statute; nor has it been interpreted by the Alaska courts. To comply with Sections 4.01(b) and 4.02(b) of the Participants Agreement, the participants, among other things, must determine whether a "certificate of convenience and necessity" must be obtained from the pPUC for the intertie projects. The participants also must determine whether the Participants Agreement is a "wholesale power agreement" subject to advance approval of the Puc, and whether any other aspects of the projects are subject to PUC approval. Section 4.02(b) of the Grant Administration Agreement prohibits the disbursement of funds until all required approvals are final, subject to no further judicial appeal, and the same condition should be imposed on the issuance of any bonds to finance the project. 0169379.01 a *™ CITY OF SEWARD @ Main Office (907) 224-3331 @ Police (907) 224-3338 @ Harbor (907) 224-3138 @ Fire (907) 224-3445 Siti @ Fax (907) 224-3248 P.O. BOX 167 SEWARD, ALASKA 99664 January 22, 1997 “IF AP AwRr rm D)le lel Wile dn I\ HEE | i Randy Simmons : Hy a hk l Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Road id Expo { Anch , Alaska 99503 0 { chorage, Alas ce pene aX', Dear Mr. Simmons: Dicuss Several months ago, your predecessor, Mr. Snell, requested the Intertie Participants Group to provide Now him with their position on requesting the legislature to amend the two grants for the Northern and Spied Southern Interties to allow for AIDEA financing. At that time, the IPG felt it would be appropriate to wait until this legislative session to address the issue. Attached is a resolution passed by the Intertie Participants Group (IPG) on January 22, 1997 addressing the possible AIDEA financing issue. We will be checking with the original sponsors of the legislation, Ramona Barnes and Bert Sharp, to insure that they are comfortable with the proposed revision. However, we wanted to make you aware of the IPG action and give you the opportunity to comment. The ideal situation would be for AIDA to sponsor this legislation as an administrative change. Please call me at 224-4071 is you need any additional information. Dave Calvert Chairman, IPG cc: Mike Kelly Gene Bjornstad Tom Stahr Wayne Carmony Norm Story An Act Authorizing Bonds and Loans to Participating Utilities to Finance the Acquisition, Design and Construction of Power Transmission Interties. Be it enacted by the Legislature of the State of Alaska: Section 1. Section 2. Section 3. Section 29 and 30 of 19, SLA 1993 is repealed. The Alaska Industrial Development & Export Authority may issue bonds and enter into loans with the utilities participating in that Intertie (or to such subsidiaries or other entities formed by one or more participating utilities) to jointly finance the acquisition, design, and construction of a power transmission Intertie of at least 138 kV between Healy and Fairbanks. The total principal amount of the bonds and loans may not exceed $60 million. The Alaska Industrial Development & Export Authority may issue bonds and enter into loans with the utilities participating in that Intertie (or to such subsidiaries or other entities formed by one or more participating utilities) to jointly finance the acquisition, design, and construction of a power transmission Intertie of at least 138 kV between Anchorage and the Kenai Peninsula. The total principal amount of the bonds and loans may not exceed $60 million. * ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= ALASKA @@E™ =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 June 20, 1997 Mr. Mike Kelly General Manager Golden Valley Electric Association P.O. Box 71249 Fairbanks, Alaska 99707-1249 SUBJECT: AIDEA Board Update Northern Intertie Dear Mr. Kelly: Our Board has asked that staff provide an update on the status of the Northern and Southern Intertie. | will discuss this matter with Mr. Steve Haagenson. The status report should be at an executive summary level from Golden Valley. Material from Power Engineer's or your IPG monthly reports could be attached if necessary. | suggest a brief discussion including an introduction, budget and schedule, accomplishments to date, and potential critical future milestones or problems which may require interagency, administrative, or legislative guidance or actions. It would be presented in our August Board meeting so a draft is needed by mid July. Please call me if you have any questions. Sincerely, WM Cab— Dennis V. McCrohan, P.E. Deputy Director - Energy icc: D. Randy Simmons, Executive Director Steve Haagenson, GVEA 03/12/97 12:48 5032260079 ATER WYNNE oaz uc do ea S ATER WYNNE i aa HEWITT Portland, Oregon 97203-6618 (303) 226-1191 DopDsON Fax (501) 236-0078 & SKERRITT, LLP ATTORNEYS AT LAW VIA FACSIMILE DUM TO: Randy Simmons AIDEA FROM: Ron Saxton DATE: March 12, 1997 RE: Status of Northern Intertie Environmental Assessment The comment period for the environmental assessment closed Friday, February 21, 1997. BLM received about 100 comments. In addition, they have decided to extend the comment period for an additional two weeks. BLM is currently determining the appropriate next step. We will let you know as we learn more. ec: Keith Laufer, Alaska Attorney General’s Office -i- RLS\238taar.mnem Seattle, Washington (206) 623-4711 Fax 206) 167-8405 = San Francisco, California (415) 421-4143 Fax (415) ¥89-1263 0 {3/12/97 11:47a | AUG 21 ’96 16:28 GCI , » PSoile, August 21, 1996 RAFT is er i Mr. Mike Kelly General Manager Golden Valley Electric Association 758 Diinois Street PO Box 71249 Fairbanks, AK 99707-1249 Dear Mike: In GVEA’s role as project manager for the construction of the Northern Intertie, as an owner and as a major user of the facilities, we ask that you please consider the following proposal for attachment of a fiber optic ground wire (OPGW) to the new Fairbanks - Healy transmission line. First of all, GCI has no interest in its employees or contractors having access to the transmission line towers, nor do we see any need to get on the transmission line towers. Our view is that we would structure an agreement with GVEA as the maintenance contractor for the project to provide maintenance of the OPGW system and its attachment integrity to the towers. Should fiber optic repairs or splicing be required, we would envision that GVEA would provide ends of the cable to be spliced and tested by qualified GCI ground personnel. Reattachment of the spliced cable to the tower(s) would be performed by GVEA personnel (or its approved contractor). A. Capital cost; GCI will pay all incremental capital costs that the project will incur to provide and install an OPGW instead of a static ground wire. This cost would include all materials, installation, and all special attachment hardware associated with attaching the OPGW to the transmission line towers, bringing it down the towers at designated repeater and cable splicing locations, and providing splice boxes on the towers. GCI proposes that this difference cost be determined in one of two ways, at the project manager’s option: 1. Through securing two construction bid proposals for the line, one including the OPGW and one which does not (latter bid to include two static ground wires). 2. By including a line item in the construction bid for a) the static ground wire and b) the OPGW. In the first case the difference cost would simply be the difference in the two bid proposals. In the second case the difference cost would be the cost of the OPGW line item less the cost of the static ground wire line item. GCI would anticipate that we would be involved in the design of the OPGW system and will work with GVEA to determine who (GCI or the contractor) would do actual cable splicing and OTDR (Optical time domain reflectometer) proof-of-performance testing during construction. DRAFT 2550 Denali Street * Suite 1000 * Anchorage, Alaska 99503-2781 » 907/265-5600 AUG 21 ’96 16:28 GCI P.3/3 DRAFT B. Communication Services: GCI proposes that it would provide, for the term of the agreement, all internal communications capacity requirements for the Owner(s) along the Norther Intertie route. Such capacity requirements would be limited to a capacity of 1xD$3 (nominal bit rate of 45 Mb/s) or 1xOC-1 (51.84 Mb/s, SONET rate) and could include any utility internal communication circuits used for voice, video or data communications intemal to any or all Owner(s) utilities that would transit the route of the Northern Intertie. Further, such internal communications circuits and capacities could include those between Owner(s) utilities necessary for the control and operation (including protective relaying, electric load managément,.and supervisory, control and data acquisition to support the power generation and electric transmission facilities) of the Northern and Alaska Interties. These communication services would be provided in exchange for the right to attach to these towers comprising the Northern Intertie. C. Maintenance services:. GCI would enter into a separate maintenance agreement with GVEA for the maintenance services supporting the OPGW and its repair. We ask for your concurrence in this type of agreement structure. Please let me know if we need to modify or amend this approach. Thank you for your prompt consideration. Sincerely, Gene Strid Vice President, Engineering cc: Riley Snell DRAFT Q== Servic (907) 274-1056 tn4 45 1998 KETCHIKAN DAILY NEWS Client No. G20A Date N. Intertu Intertie at issue in Fairbanks City conducts judicial-style hearing Ale Boe 4 Bil ZO FAIRBANKS (AP) — Critics of a new high-voltage line from Healy have appealed to the state's top lands manager for options to running utili- ty towers across the scenic ‘Tanana Flats. The community room at Noel Wien Library served as a makeshift court- room Wednesday while John Shively, commissioner of the _ state Department of Natural Resources, conducted a judicial-style hearing. It centered on challenges raised against the free right-of-way lease his agency had granted for construction of the $45 million Northern Intertie Project. Sylvia Ward, executive director of the Alaska Environmental Center, claimed that the state's support for ° the proposed Rex-South intertie route — delivering power into Fairbanks along a route paralleling the Tanana River — was based on an incomplete review of environmental impacts pre- pared by federal agencies biased in favor of crossing the flats. "We have people who have great economic interest in keeping the land as it is,"’ Ward said. "It's very much in the interest of the state,'’ she said later, ‘to, wher- ever possible, consolidate powerlines into one corridor." Shively, who said he will issue a ruling soon, pressed Ward to elabo- rate on the slant she perceived in the federal Environmental Impact Statement. “What bias do you think the feder- al government would bring which would cause them to choose this Rex- South route over other routes?’’ The bias, according to Ward, rests in the government's acceptance of the utility's rationale for a new pow- erline corridor feeding into South Fairbanks. "Many people believe it was preslected early on,'' Ward said. Golden Valley Electric Association countered, in its legal brief, that the route differs a great deal from the crossing first proposed. Adjustments were made to accommodate the mili- tary as well as the concerns of Parks Highway and Chena Ridge residents, the utility said. That istematit was contested by fellow appelant Edward C. baiapiey, who contended the Environmental Impact Statement downplays the damage the Tanana Flats route will have on property owners along Chena Ridge. "To us the view is priceless; with the Rex-South route it will be worth- less,'' Murphy said. Golden Valley general manager Mike Kelly said homeowners don't appreciate the steps proposed to min- imize the line's intrusion upon the flats’ thus far unsullied landscape. Trees will conceal most of the swath cut for the line's 80-foot-high 'To us the view is priceless; with the Rex-South route it will be worthless. ' — Edward C. Murphy, appelant towers, which further will be camou- flaged as they rust, he told the Fairbanks Daily News-Miner. “I think we'll be able to go out to those homeowners a few years from now and say: ‘Now tell us what did that do to your view.'"’ That doesn't apply to the proposed line's Tanana River crossing into South Fairbanks via a pair of 200-foot towers outfitted with blinking lights. “If you're looking from a high van- tage, you'll see that,'’ Kelly said. '‘But it's right into an urban area." The state permit is one of many needed before construction can begin. None of the primary players at Wednesday's hearing — Shively included — expect the commissioner to have the final word. The Environmental Center also is appealing federal agency rulings in support of the Rex-South route. " ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY = ALASKA @@E™ ENERGY AUTHORITY ———— 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM TO: D. Randy Simmons Executive Director FROM: Dennis MeCrohasppunw™ Deputy Director - Energy DATE: January 15, 1997 SUBJECT: Northern Intertie and MEA Litigation On January 14, 1997, | met with Mike Kelly of GVEA and Ron Saxton of Ater Wynne. As you are aware, there are numerous agreements related to the Northern Inertie project. The critical issues are that the 1993 legislation, conditions set by AIDEA in the project Agreements, and subsequent letters by AIDEA specify criteria which must be met prior to proceeding into Phase 2 procurement and construction, and specify conditions which must met be if AIDEA financing is to be provided for costs above the State grant. The following items were discussed: Northern Intertie GVEA anticipates receiving approval of the Environmental Assessment (EA) this week. There will be a thirty day holding period for appeal. Subsequently, GVEA wants to start procurement followed by construction in the Fall of 1997. The Construction Agreement is not signed. Kelly anticipates some utilities will refuse to sign and will drop out. He believes these to be Seward and AEG&T. GVEA is willing to assume the ownership shares of these utilities who elect not to participate. GVEA intends to seek AIDEA financing for the construction costs above the grant. This is anticipated by me to be about $10 to $30M total depending upon the funding agreements for the battery storage facility. The GVEA plan is to retain the condominium ownership, less those utilities which drop out, as envisioned by the agreements. Based upon AIDEA’s July 14, 1995 letter, additional legislation in 1997 may be required for this ownership structure. The utilities have not provided the legal counsel opinion regarding APUC or local government approval of the Intertie Agreement obligations as requested in AIDEA’s July 14, 1995 letter. X0.S-D-X~ Memorandum January 15, 1997 Page 2 To obtain these opinions at this time from all the participating utilities, GVEA believes will require considerable pressure from AIDEA. GVEA has prepared and will make their APUC filing as soon as the EA finding is received. The other utilities have not even considered or planned their APUC filings. Since GVEA is fully backing the project if the other utilities withdraw, GVEA proposes modifying the precondition of APUC and local government approval by each participant such that it applies only to GVEA since GVEA will assume their shares if these utilities drop out. GVEA feels the project needs AIDEA proactive support and GVEA and AIDEA need to move forward together and in concert in order to assure a start on Phase 2. GVEA wishes to meet as soon as possible to discuss the criteria for release of Phase 2 funds, other utility participation, and the overall time line to complete the prerequisite actions required to release funds for procurement and construction. MEA Litigation GVEA is preparing a letter to AEA proposing to assume the obligations of MEA for the Transmission Agreement. GVEA would like to discuss this option with us. GVEA believes through proper maintenance, currently not being provided by MEA, that most if not all the outages resulting from snow loading could be avoided. | asked that GVEA not send the proposal until after we had met with MEA separately and GVEA subsequently. | explained our situation regarding the MEA lawsuit on rates. We agreed to meet with GVEA on January 31, 1997 in AIDEA offices. Ron Saxton and Mike Kelly will attend. | will try to set up a meeting with Wayne Carmony of MEA on the 23% or 24" of January 1997 to discuss the litigation. Please let me know if any additional information is needed. | will have a packet of background information prepared on each item. CC; Valorie Walker, Deputy Director - Finance Jon Rubini, Esq. Tom Amodio, Esq. Keith Laufer, Esq. QUALITY SERVICES te__ AUS 3.0 1996 Fairbanks Daily News Miner Client no. 7/424 Pick an alternative AIOE 302 3M ¢26A Everyone in Alaska values our wild public bead highly. It is the essence of the state..We all have dif- ferent standards by which we judge proposals that would disrupt that land, but most of us share one prin- ciple: if there is an alternative that preserves our wild land without unreasonable expense, take it. Golden Valley Electric Association has proposed to string a power line from 200-foot towers across one of the most favored and accessible wild lands in the Inte- rior, the Tanana Flats. But there are alternative routes, admittedly more expensive and disruptive, that would follow the already developed road and power systems. One of these alternatives should be chosen. The line will help maintain low power costs in the Fairbanks area long into the future. It’s a good invest- ment. We can make it a little better by keeping it away from the Tanana Flats. In the long term, the few million dollars we add to the project’s $75 million cost will be worth it. It’s tough to put a value on the virtually unbroken view to the Alaska Range that can be enjoyed from ridges around Fairbanks. Or the value of the park-like natural setting to be found on land just a few miles south of town. But they do have value. Many Fairbank- sans will not object to recognizing that value through the tiny upward increment in their power bills associ- ated with an alternative route. Besides, not everyone is convinced that the citizens of the Interior will save money in the long term by routing the line across the flats. Currently, government agencies, for which we all pay, fight fires along the Parks Highway but not in the flats. With a power line, that could change. Even if the lines are strung high and built of impervious metals, critics say, thick smoke can cause arcs. That will create pressure to fight hot fires that approach the area, the skeptics say. This danger at best seems a little far-fetched and at worst would be un- usual, but it could create pressure to fight hot fires that approach the area. It takes only a few fire suppression efforts to spend several million dollars. In many cases, Interior residents are willing to sacri- fice some of the empty lands around us because we have no choice if we want to develop a more diverse, sustainable economy. Maybe an argument could be made that this power line’s routing is such a necessary sacrifice. But with the alternatives that exist and the relatively low power rates we already enjoy, such an ar-. gument isn’t convincing. éwek N. (NTeeNE N.(NTELNE QUALITY SERVICES AUG 08 1996 Date. Fairbanks Daily News Miner Client No._Y20Ar__ Best route To the editor: As a resident of Ferry, I strongly oppose the - North, South, and Tanana Flats pro- posed routes for the Northern In- tertie, which would all pass directly through private resi- dential areas in Ferry. I feel that an intertie through our commu- nity would be an intrusion that would completely alter the char- acter of our community. Homes in the Ferry community are cur- rently electrified through alter- nate energy, wind- and solar- powered systems. Fossil fuel generation, with its attendant large power lines, is spiritually and ethically repugnant to the environmentally friendly lifestyle that we have chosen. After more than a year of careful consideration of all envi- July 31, 1996 ronmental and _ socio-economic factors, GVEA has come up with a preferred route, the Tatlinika Route. This route is a masterful juggling act, which avoids de- struction of our homes and life- style, eliminates EMF health and safety concerns, eliminates ad- verse visual impacts to tourist traffic on the Parks Highway/A- laska Railroad scenic Nenana River Corridor and to the greatest degree, skillfully by- passes sensitive animal popula- tions. We would urge our good, neighbors in Fairbanks who op- pose this route, including the warren of bureaucrats in the Alaska Department of Fish and Game, and the busy folks at the Northern Alaska Environmental Center, to first curb their own vo- racious appetites for fossil fuel- generated electricity. It is grossly hypocritical to rail against the construction of power lines, all the while consuming massive amounts of fossil fuel-generated electricity to churn out reams of memos, faxes, newsletters, direc- tives, etc. On top of this, they demonstrate great cultural insen- sitivity by insisting that we who have chosen a less consumptive, more environmentally friendly al- ternate energy lifestyle, should not only welcome a huge new ‘Clean Coal’ power plant a few miles upwind of us, but should allow large power lines ses our homesteads. ~~ GVEA’s careful and diligent work on the difficult task of route: selection for the new intertie is to be commended, and I urge all parties to support their preferred Tatlinika Route as the alterna- tive that most carefully balances environmental and_ socio-eco- nomic concerns. Thank you, 230 #50R 2/06 _John Dailey 72° Ferry, Alaska QUALITY SERVICES pate_AUG 12 1996 Fairbanks Daily News Miner Client no. 4204 Try again, GVEA Aug. 6, 1996 To the editor: After leaving the public hearing on the proposed GVEA intertie project, I feel my trust in public institutions has been vio- lated. Not by the oral testimony, which was almost unanimous against GVEA’s preferred route across pristine ‘parts of the Tanana Valley, but by the impli- cation that, since the majority of the written testimony was in favor of that route, the decision would be made by the BLM to) allow the required easements across our public lands. -__Now, any one of the 15,000 GVEA customers who took the time to read the brochure and may that GVEA sent them to jus- tify their position on the matter! knows that only the GVEA point of view was presented. That would, of course, explain why more of the close to 400 re- spondents replied in favor of the GVEA preferred route. But I feel; offended that GVEA would frame the issue the way they did. Our American democracy was meant! to work differently. Any decisions made about an issue were to be based on sufficient and accurate information provided to those af- fected by it. GVEA, in’ my opinion, has not done this and has thereby damaged the demo- cratic process. I feel, therefore, that the entire process should be begun over again and that GVEA customers be sent a truly objec- tive statement of all of the in- tertie route options so we can make an informed decision on this very important Alaska issue. Sincerely, BI0E 302366 Frank J. Keim 3/7, 420A Fairbanks - ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= ALASKA im ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 CONFIDENTIAL MEMORANDUM TO: D. Randy Simmons Executive Director Keith Laufer, Esq. Assistant Attorney General Valorie Walker Deputy Director - Finance FROM: Dennis V. McCrohan, P.E. Lin “ArA Deputy Director - Energy DATE: January 31, 1997 SUBJECT: — Northern Intertie Background As requested, | have tried to summarize the background for our meeting at 1:00 p.m. today with GVEA. It is my understanding, after talking to Mike Kelly, that GVEA is preparing to commence procurement and construction this year. GVEA hopes with AIDEA’s cooperation to resolve all precedent conditions for release of Phase 2 funds. Also, GVEA wishes to have AIDEA participate in the financing. This was confirmed by Dave Calvert's January 22, 1997 letter. As background for the meeting, | have summarized below the conditions and agreement references. XC: SD: So Memorandum January 31, 1997 Page 2 Northern Intertie Phase 2 Fund Release Conditions AIDEA’s letter of July 14, 1995, to the IPG discusses outstanding requirements and precedent conditions which must be accomplished to AIDEA’s satisfaction to demonstrate satisfactory progress on the interties. Since the letter was issued, engineering and permitting have progressed satisfactorily. However, the contractual, financial, and ownership issues have not progressed, except for the completion of the Northern Intertie System Agreement which demonstrated concurrence by the Utilities on the benefits of the Intertie. The balance of requirements and conditions which are unresolved are: 1. The Construction Agreement has not been signed. The importance of this Agreement was to address the scope and confirm the benefits and functionality of the Intertie. It was also to demonstrate “peace in the valley” among the Utilities to enhance the feasibility of implementing the condominium ownership plan. 2. The Utilities were advised that to obtain AIDEA financing for the balance of the construction costs would require revisions to Section 29 and 30 of the legislation and that an immediate response was needed from the Utilities to proceed with this option. 3. Each Utility was asked to confirm their requisite intent and legal capacity to enter into a binding obligation to bear their share of project costs and to indicate if voter approval was required. 4. Each Utility was requested to provide opinion letters from counsel regarding any obligations of the various Agreements which require APUC approval. The basis for these conditions are listed below: Construction Management Agreement. To our knowledge the Utilities have not signed the Agreement. It is a required condition of the Intertie Grant Agreement Section 5. APUC Determination. Prior to the disbursement of any grant funds, the Utilities must determine which of the contractual obligations relating to the grants will be submitted to the APUC for approval. Requirement of the Grant Transfer and Delegation Agreement Section 2.4. Utilities must provide written notice to AIDEA of such determination and agreement. Requirement of the Grant Administration Agreement Section 4.01. Demonstration of Financial Capability. Utilities must demonstrate the ability to raise all additional amounts needed to complete construction of the interties prior to disbursement of any grant funds. Requirement of the Grant Transfer and Delegation Agreement Section 2.4 and the Grant Administration Agreement Section 4.01. Memorandum January 31, 1997 Page 3 Limitation on Phase 2 Expenditures. Except as may be approved by the Authority, grant funds cannot be applied to Phase 2 until the Utilities have demonstrated to the satisfaction of AIDEA the ability to raise the additional amounts of money needed to complete the construction. In addition, final approval must be obtained, not subject to further judicial appeal, of matters submitted to the APUC. Requirement of Grant Administration Agreement Section 4.02b. Establishment of Phase 2 Ceiling. The Utilities are required to establish a Phase 2 ceiling for submission to AIDEA for approval. Required by Grant Administration Agreement Section 4.02(a) and Schedule A-1. AIDEA has continued to release Phase 1 funds for preliminary engineering and permitting regardless of satisfaction of these conditions. Please let me know if you have any questions. cc: Jon Rubini, Esq. Quality Services —as =. (907) 274-1056 Date SAN 14 1999 FAIRBANKS DAILY NEWS-MINER Client No. 49 OA Critics sound off on planned intertie route 392 BUSI 330 QE By BRIAN O'DONOGHUE Staff Writer The Northern Alaska Environ- mental Center and other critics of a new high-voltage line to Healy appealed Wednesday to the state’s top lands manager for al- ternatives to stringing power towers across scenic Tanana Flats. The community room at Noel Wien Library served as a court- room while John Shively, Alaska commissioner of Natural Re- sources, conducted a judicial- style hearing on the challenge raised against the free right-of. way lease his agency granted for construction of the $45 million Northern Intertie Project. Sylvia Ward, executive di- rector of the Environmental Center, charged that the state’s support for the proposed Rex- South intertie route—delivering power into South Fairbanks along a route paralleling the Tanana River—is based on an in- complete: review of environ- mental impacts prepared by federal agencies “biased” in favor of crossing the flats. “We have people who have great economic interest ‘in keeping the land as it is,” Ward said of her group’s stand. “It’s very much in the interest of the state,” she added later, “to, wherever possible, consoli- date power lines into one ‘cor- ridor.” Shively, who indicated he will soon issue a ruling, pressed Ward ¢20r4 to elaborate on the slant she per- ceived in the federal environ- mental impact statement (EIS). “What bias do you think the federal government would bring which would cause them to choose this Rex-South route over other routes?” The bias, according to Ward, rests in the government’s accept- ance of the utility's rationale for a new power line corridor feeding into South Fairbanks. “Many people believe it was pre-slected early on,” Ward said. Golden Valley Electric Associ- ation countered, in its legal brief, that the route selected differs greatly from the diagonal flats crossing first proposed. Adjust- ments were made to accommo- date the military, GVEA said, as well as concerns of Parks Highway and Chena Ridge resi- dents. That statement was contested by fellow appelant Edward C. Murphy, who argued the EIS downplays the damage the Tanana Flats route will wreak upon property owners on Chena Ridge. “To us the view is price- less; with the Rex-South route it will be worthless,” said Murphy, ' adding that the federal report also gives short shrift to the local opposition stirred by the pro- posal. GVEA general manager Mike Kelly said later that homeowners don’t appreciate the steps pro- See INTERTIE, Page A-8 INTERTIE: Continued from Page A-1 posed to minimize the line’s in- trusion upon the flats’ unsullied landscape. Tall spruce will conceal most of the horizontal swath cut by the line’s 80-foot-high towers, which will be further camouflaged as they are allowed to rust, he said. “T think we'll be able to go out to those homeowners a few years from now and say: ‘Now tell us what did that do tS your view.’” That doesn’t apply to the pro- posed line’s Tanana_ River crossing into South Fairbanks via a pair of 200-foot towers outfitted with blinking lights. “Tf you’re looking from a high vantage, you'll see that,” GVEA’s manager said. “But it’s right into an urban area.” William Stephenson, an electrical engineer from Cali- fornia who reviewed the project for the Environmental Center, praised the cost-benefit analysis GVEA applied to building a new powerline to Fort Knox mine. But that approach was lacking in the EIS, according to the consul- Maura, Protest tant, who contends more inform- ation is needed concerning past outages to assess the new line’s value to consumers. “Reliability is a commodity and can be evaluated,” he said. Outage specifics were the sub- ject of other reports considered by the EIS team, Kelly said, adding: “They're telling us we don’t know the cause of our out- ages? Are you kidding?” The state permit is one of many needed before construction commences. None of the main players at Wednesday’s hearing, Shively included, expect the com- missioner to have the final word. The Environmental Center is also appealing federal agency rul- ings in support of the Rex-South route. “If we lose on the state or the federal side,” Ward said, “I believe we have the option to go to court.” Years of dickering over the proposed intertie has had: one benefit, GVEA engineer Steven Haagenson said. ‘“‘As the process goes longer and longer, we’re finding better and better routes.” W/ fe actteles fs a, Matt Hage/News-Miner DRAWING THE LINE—Louisa Bolton-Ast, 17, pickets with others protesting the route chosen for the construction of a new power line across the Tanana Flats area before Wednesday’s hearing at the Noel Wien Library Wednesday. About a dozen people joined her, chanting “keep your towers off our flat” as they milled around the library entrance. The state held a hearing on the challenge to the route. } Services (907) 274-1056 pae FEB 0 5 1999 KETCHIKAN DAILY NEWS Client No. YooA Council OKs annexation petition Petition 39E LBlUCR By SCOTT BOWLEN Daily News Staff Writer The Ketchikan City Council has authorized a petition to annex terri- tory north of city limits that includes the proposed Wal-Mart site. Also at its regular meeting Thurs- day, the council heard a presentation by the Ketchikan Electric Company about its proposed Mahoney Lake power project. Council members voted 4-1 to ap- prove submitting the petition for an- nexation by legislative review to the Alaska Local Boundary Commission. The proposed annexation area in- cludes land on both sides of North Tongass Highway stretching about a mile north of city limits to about Mile 4, where several business properties 43¢.4 3/0 “S36 prompted including the potential Wal-Mart site would be annexed also. Wal-Mart proved to be the driving force to start the annexation process because the city calculates it might lose more than $1 million in annual sales tax revenues if the store were built outside of city limits — poten- tially jeopardizing the city's ability to provide some services. Council Member Judy Jenkinson said that, beyond the Wal-Mart issue, annexation is important for providing the infrastructure needed for economic development. Jenkinson and Council Members Bob Norton and Jim Wingren said there also was interest in annex- ing territory farther north. Responding to acomment from Julie Powers, who spoke during the citizen's comment period regarding the poten- tial loss of $40 million in sales to existing local business if Wal-Mart opened here, some council members acknowledged that there would be an impact to existing businesses. But they added that they didn't think it would be as great as $40 million. Council Member Tom Coyne spoke against the annexation petition. Charg- ing cruise ships a debarkation tax on passengers could replace any lost sales tax revenue, he said. Coyne also asked why money would be spent on annexation when a vote on consolidation was going to happen in November. City Mayor Bob Weinstein later re- sponded that a consolidation vote that soon was unlikely. by Wal-Mart's plans to build outside of city limits “T'll be very surprised if there is a consolidation vote in November of 1999," Weinstein said. “It'll be more likely in October of 2000.” Coyne was the sole dissenter in the 4-1 vote. Once the petition is submitted, the Alaska Local Boundary Commission will begin a public process that will include public comment, according to commission information. Mahoney Lake Council Members heard a presenta- tion from advocates of the proposed Mahoney Lake power project Thurs- day. The 10-megawatt project on Cape Fox Corp. land is a development of the Ketchikan Electric Co., ajoint-venture See ‘Council,’ page 5 Council 0375 D262 GIA SI? Sa of the Saxman-based Cape Fox and Alaska Power & Telephone. Addressing the council were Peter Gigante, Cape Fox chief executive of- ficer, and Bob Grimm, president of AP&T and general manager of Ketchi- kan Electric. They told the council that the ap- proximately $20 million, privately fi- nanced project could be completed in 14 months if KPU would agree to purchase Mahoney Lake power in a specific order relative to KPU's other power sources and the proposed Swan Lake-Tyee Lake intertie. Ketchikan Electric is proposing that Mahoney Lake power be used after KPU's other hydro-electric projects in- cluding Swan Lake, and before KPU's diesel generated power and future power from the intertie. Among other potential benefits claimed by Ketchikan Electric, its pro- posed long-term price of 6.5 cents per kilowatt hour is less expensive than the 6.8 cents KPU pays for power from Swan Lake. They say it's also less expen- sive than future power costs from the intertie. Gigante and Grimm reiterated their position that Ketchikan Electric sup- ports the intertie. “We have never taken an adverse position on the intertie,” Grimm said. They requested that the council pro- vide direction that KPU continue to negotiate with Ketchikan Electric to- ward a power sales agreement. KPU General Manager John Magyar said that the council would have to provide direction as to which project— Mahoney Lake or the intertie — should have priority. To require KPU to buy Mahoney Lake power ahead of the intertie power would make it more difficult to obtain state funding for the intertie, he said. “It's going to be difficult to make the intertie happen unless its power takes Bue precedence,” Magyar said. Weinstein said the question of whether Mahoney Lake might damage the chances of funding the intertie is an important one. “Somehow, we need to resolve that dilemma," he said. The Alaska Industrial Development and Export Authority is doing a fiscal analysis of the intertie project that's expected to be complete by March 1, said Weinstein. Jenkinson said she wants the issue to come back to the council after it receives more information. In other business the council: * Approved a $66,000 contract to low bidder Rol-an-Door Enterprises L.L.C. to construct restrooms at the Knudson Cove and Mountain Point launch ramps. ¢ Approved a $67,736 contract to Schmolck Mechanical Contractors Inc. for the replacement of the furnace and part of the air handling system for the Centennial Building. The existing fur- nace is 32 years old. * Approved a KPU Telephone Divi- sion purchase of $59,732 in telephone equipment from Advanced Fibre Com- munications. * Directed KPU to pay for a Alaska Public Utilities Commission-required charge of about 2 percent of telephone billings out of reserves. The commission is requiring the charge to help pay for low-income access to telephone service in the state. The council considered the option of passing the charge on to KPU ratepayers (about 28 cents for basic residential customers and 68 cents for basic business trunk line customers), but voted 5-0 to pay the charge out reserves instead. * Deferred a request from KPU to accept credit card payments for all KPU billings. Currently, about 5 percent of KPU telephone customers use the avail- able option of paying phone bills with a credit card. KPU proposed expanding the credit card payment option to all Continued from page 1 / ineelenie KPU billings forthe services of tele- hone, water, electric, sewer and gar- age collection. The council voted 4-1 to defer the issue out of concern that the cost of processing the credit card pay- ments might run into several hundred thousand dollars annually. Council Member Lew Williams III cast the no vote. The council requested further in- formation from KPU about potential costs. ° Heard from citizen Kurt Gucker about his concern about the safety of pilings installed as part of the ongoing Thomas Basin project. ¢ Commended city crews for their work in keeping streets clear during the recent heavy snowfalls. Council Members Tom Friesen and Joy Butler were absent Thursday. (907) 274-1056 Dae JAN 1 3 1999 FAIRBANKS DAILY NEWS-MINER Client No USoa _ Netten LDrterte How often does toast fail to pop up? Lao BH StS sve Reliable power here belies need for flats intertie Environmental activists fre- quently confront an economic ar- gument that goes something like this: ‘‘Look, we are already re- moving 85 percent of the sulfur from our smokestacks. And, yes, it’s true the technology exists for us to remove another 1 percent. But it’s extremely expensive. It’s just not worth the money.” I think that’s a fair argument. Especially if what’s at stake is public dollars. With all the com- peting public needs—from schools to pot holes—it’s foolish to spend huge sums on projects whose benefit is tiny. But that appears to be exactly what Golden Valley Electric Associa- tion is doing by pushing its Northern Intertie Project. The proposal is to construct a second high-voltage transmission _ line from Healy to Fairbanks. As things stand, GVEA’s plan is to build a line of 80- to 100-foot towers across the Tanana Flats, running alongside the Tanana River in front of Fairbanksans’ view to the south. Opposite Cushman Street, the tower line would cross the Tanana River. And here GVEA would build two huge towers. They could be 200 feet tall—which is about twice the height of the tallest building in Fairbanks—or even taller. They will be painted red and white and topped with flashing strobe lights. Fluorescent orange spheres will hang from the wires. eecH wicl ute As a nonprofit, member-owned cooperative, GVEA is obliged to provide sufficient reliable electrical service at the lowest practical cost. And it has listed “reliability” as a chief reason why the intertie is necessary, and why the alignment cannot simply follow the existing line from Healy, which parallels the Parks Highway, But that justification did not satisfy the more than 1,000 people who signed a petition pro- testing the project. Nor did it sat- isfy an independent electrical engineer named William Step- henson who also reviewed GVEA’s environmental impact study and who is a recognized ex- pert in evaluating electrical reli- ability. “It seems as if the primary impetus for the new line is based on reliability,” writes Stephenson in his comments on the EIS. But, he says, “the value of increased reliability seems to be relatively insignificant.” Unfortunately, GVEA does not provide some of the most obvious data necessary for decision making, like the causes of out- ages experienced in Fairbanks. How many of them, for example, are due to problems south of Healy, which would not be ad- dressed by a second line? How many are due to local distribu- tion problems, like trees falling across distribution lines, which likewise would not be affected by this’ project? Golden Valley de- clined to supply the information in the final EIS, even though it was specifically requested by re- viewers of the draft. Instead, the utility offers such generalities as, “Power outages are expensive to customers ... “‘ Well, yes. But, as Mr. Stephenson patiently notes, so is a $75 mil- lion-$150 million construction job. And ‘“‘some effort needs to be made to put these two ‘expen- sive’ things into a comparable perspective.” Stephenson points out that the average GVEA cus- tomer is without power for 3,2 minutes per year. In other words, the existing system is working 99.9994 percent of the time. Stephenson asks, “Was it made clear (when GVEA solicited sup- port for the project) that some $75 million or more would be spent?” It is equivalent to $2,500 per customer! Like the environmental ac- tivist who would stick the factory owner with a super-expensive smokestack scrubber to remove the last tiny fraction of pollution, Golden Valley would have us pay a staggering sum to secure the last tiny percent of reliability. Most people would not make that choice if they understood the trade-off, says Stephenson. It doesn’t make economic sense. Stephenson concludes, “The filed documentation does not make a case that there is an emerging ‘reliability shortfall’ in the Fairbanks area. On the con- trary, customer outages and in- convenience seem:to be relatively minor.” In spite of all this, the Bureau of Land Management accepted Golden Valley’s EIS and ap- proved its selection of the southern route across the Tanana Flats. The Northern Alaska Environmental Center filed an appeal to the state Divi- sion of Land, which must sign off on the project because it crosses state land. That agency granted the Environmental Center and 67 other appellants—a hearing that will occur today at 1:30 p.m. at the Noel Wien Library. The public is welcome to attend, though only the appellants (in- cluding Mr. Stephenson) and Golden Valley may testify When GVEA marshaled sup- port for the intertie project, many people testified to the ef- fect that electricity was impor- tant and, as one fellow said, they wanted their toast to pop up on time. It was a catchy way to visu- alize the reliability question, and it’s worth extending now, in the same metaphorical spirit. It comes down to a question: If you could improve your chances of timely toast from a reliability level of 99.9994 percent to some- thing like 99.9996 percent, would you put up your permanent fund dividend check, plus another thousand dollars to do it? And, more important, from the standpoint of the public good, is this the best use of $75 million dollars? Dan O'Neill of Fairbanks is an inde- pendent researcher and writer. He is the author of “The Firecracker Boys.” His col- umns appear bi-weekly on the Opinion page. Q= Servives_ © (907) 274-1056 Date APR 16 1995 _ KETCHIKAN DAILY NEWS Client No. GQ0P Council OKs term limits ballot measure Resolution protesting proposed cut to revenue sharing program passes DOE PA 230 200 By SCOTT BOWLEN Daily News Staff Writer City of Ketchikan voters will be considering term limit rules for the mayor and council members on the October general ballot. The Ketchikan City Council voted 6-1 Thursday in favor of a resolution that would repeal the existing term limits effective Jan. 1, 2000, and place it on the ballot for considera- tion by voters. “Let's approve this and move on to the election,” said Council Member Tom Friesen, who supports ending the two-consecutive-term limit that voters imposed by a wide margin in 1990. Friesen said few people are choos- ing to run for city office now, and removal of term limits would help boost the number of candidates and perhaps raise voter participation. The voters can limit a person's term in office simply by voting them out, he said. Council Member Tom Coyne, who ended up voting against the resolu- tion, said voters already have spoken on the issue. “The voters approved the term lim- its, and I don't see any reason for res- urrecting this unless it's for personal reasons,” Coyne said. Term limits have helped the com- munity by allowing people to run without competition from incum- bents, said Coyne. He predicted that between 10-15 people would run in the next council election — which will not have an incumbent on the ballot. “People don't like to run against incumbents," he said. Three council members — Friesen, Judy Jenkinson and Jim Wingren — will conclude their second consecu- tive terms on the council this year. All three have said they are not interested in running again. Jenkinson supported the resolu- tion, agreeing with Friesen that vot- ers already can limit terms by voting people out of office. She said City Council work isn't glamorous and can be stressful due to public pressures. She added that she wouldn't be running again and explained why she ran for office. “It's a public service,” Jenkinson said. “I don’t have a vested interest. I do it because I love Ketchikan and I've been here a long time." And now that voters had a chance to see how the term limit rules have worked, they should have the oppor- tunity to vote on the issue again, said Jenkinson. The general election is scheduled for Oct. 5. Revenue sharing A resolution protesting the state Legislature's proposed cuts to state revenue sharing and safe communi- ties program drew unanimous sup- port from the council. If the cuts stand, the city would lose a total of $607,000 from its gen- eral fund this year. The city also would lose about $95,000 in funding for health care facilities in the com- muni Council Member Bob Norton said the losses would equate to a city property tax increase of about $210 for every $100,000 in assessed value. The resolution was placed on the council agenda by City Mayor Bob See ‘Council,' page 5 HUT DS Council MoE 4WA B10 SB¢ Weinstein, who said the Legislature's After further discussion the council action is cutting critical community voted 7-0 to approve the resolution. services such as police and fire pro- In other business Thursday, the tection rather than cutting state gov- council: ernment itself. © Accepted a $4.44 million grant It also pushes additional tax bur- _ from the Southeast Energy Fund for dens onto the towns, said Weinstein., the proposed Swan Lake-Tyee Lake Coyne said that writing letters to, electrical intertie. The money can be the Legislature isn't going to help and\ used only to help fund the intertie, suggested cutting the cost of local\ and it won't be released until government. Ketchikan Public Utilities has a full Council Member Lew Williams III i funding package in place for the said Ketchikan is in a better financial \intertie’s estimated price of $70 mil- position than many other communi- ion. ties to deal with the state cuts. He The grant must be appropriated by also said that Anchorage should the _ state Legislature. If the shoulder more of the cost of its own Legislature does approve the grant, services by implementing a sales tax. the total amount secured for the intertie project so far would be $25.5 million, according to the agenda statement. © Approved $8,640 lease agreement between KPU and Eichner & Eichner for the storage of electric. ¢ Authorized the surplus of obso- lete KPU equipment for the purpose of sale or disposal. The equipment includes transform- ers, printers, testing equipment and other items. ¢ Authorized the surplus of a for- mer independent tour operator gaze- bo booth. The booth will be given to the First City Ladies and Gents organization, if they can find a suit- able location for the booth off the Continued from page 1 downtown docks by July 1. e Approved a budget amendment that provides supplemental funding for the Knudson Cove Boat Launch Ramp Project, $25,031; phase one of the Ketchikan Waterfront Promenade Project, $90,000; and the Hopkins Alley-Warren/Harding Neighborhood Survey and Inventory Project, $13,970. Also, Weinstein proclaimed April as Child Abuse Prevention Month in Ketchikan. The proclamation document was accepted by a representative of Women In Safe Homes, who encour- aged the public to wear blue ribbons to commemorate the month. (907) 274-1056 MAR 27 1999 KETCHIKAN DAILY NEWS Client No_G20A 2t6M Y2eA 310 330 By RICK DALE It's always better to be part of the solution than it is to be a part of the problem. After attending the recent public in- formational meeting about the possible annexation of the Shoreline Drive area into the City of Ketchikan it appears that the City Council and manager wish to be part of the problem. The City Manager Karl Amylon stated that the issue is a “tax revenue issue.” The city is concerned about the loss of sales and property taxes due to the in- crease of business within the borough Shoreline Drive area and the possible decrease of business inside the city. So they figure that to annex the Shoreline area into the city would help them out by increasing the sales and property tax rates to equal the city’s tax rates and thus increase the city's revenues. Karl's comment was that it is time the borough residents and businesses pay “their fair share” of the city’s infrastruc- ture including: the hospital, police de- partment and other services within the city. —_— like to try to explain to the council and the manager how they have become part of the problem rather than a part a the solution. First raising the taxes of the people and businesses in the Shoreline area is not a good solution to the city’s projected revenue problems. It does the opposite by discouraging future development in the Shoreline area by raising the costs of doing business there. In addition to raising the taxes, future POINT OF VIEW Raising Shoreline area taxes not the solution In an economy already devastated by the closure of the largest private employer i Southeast Alaska, the raising of taxes to the population of the community still trying to operate is not a solution! LID assessments to pay for the new utilities would be looming over the ex- isting property owners’ and future de- velopers’ heads. In an economy already devastated by the closure of the largest private em- ployer in Southeast Alaska, the raising of taxes to the population of the commu- nity still trying to operate is not a solu- tion! In response to Karl's comment about the borough residents’ needing to pay their “fair share” I would like to point out that every time a borough resident buys food, gas, clothes, school supplies, etc. which’ is every day) within the city, they pay a sales tax, a part of which supports the city's infrastructure. In addition, many borough residents also own property in the city and pay their fair share for that. Itemized here are a few possible solutions to the city's di- lemmas. 1. Charge a per head port tax to the tourists that come off the cruise ships. 2. Work with contractors and devel- opers to promote new construction within the city. 3. Use the engineering and the plan- ning departments to help developers solve problems like variances and find solutions to building problems rather than just saying “you can’t do that be- cause the code says so.” 4. Look at developing large areas within the city such as upper Carlanna hillside and upper Bear Valley areas. 5. Offer tax breaks for new construc- tion or for removal and reconstruction of old buildings (after they receive ap- proval to build new) for the period of construction. 6. Work with big business like the semiconductor mine on lower Prince of Wales to encourage them to come to Ketchikan. Others include a possible fish fertilizer plant and the potential Niblack Point mine site. Help them by A. APR 201 1999 L Alaska DEGE ET) Industrial Development and Export Authorit eae the infrastructure to supply their nee _— 7. Work on the Tyee Lake intertie and/or resolve et with Cape Fox and city proposal to put Mahoney e hydro power plant on line and lessen our oe on diesel power generation. also would encourage ae business to come if the utility rates were most cost effective and the steady supply was larger and more de- pendable. 8. Lastly we need to work together as the community of Ketchikan to encour- age any viably profitable business to come into our area, be it the city or the borough. We need to quit squabbling amongst ourselves about which entity gets the potential tax monies and sup- port new business in general for the welfare of all. 9. In this increasing age of environ- mental concern I can only hope that we/ they all use moderate and prudent deci- sion-making practices while weighing the environmentalism and the industri- alism options. For example, use buffer zones of trees to help prevent unsightli- ness. 10. Asa final note, if the people in the community are against the annexation of borough lands just convince your City Council members of this and if four council members vote against the an- nexation, then the proposal will fail. How did this community-dividing scheme get started anyway? (Rick Dale is a borough resident and city property owner.) Q i -) (907) 274-1056 ate APR 9 8 1999 JUNEAU EMPIRE Client No.4 Zok Mahone Ain 4 Pe F Bru! By ROBERT W. LOESCHER Ketchikan is the most fortunate city in Alaska when it comes to electrical energy resources for to- day and the future, if only Ketchi- kan Public Utilities will seize the opportunities before it. These op- portunities are: e The Mahoney Lake Project, to be built by Ketchikan Electric Company with no local or state funding, will provide 10 mega- watts capacity and more than 40 million kilowatt-hours of energy a year at a fixed rate lower than the cost of Swan Lake energy. e A redesigned transmission line between the Swan Lake and the Tyee Lake Hydro Projects, which can be built at 50-60 percent of KPU’s $77 million cost estimate for the intertie. a Last year alone, KPU produced about 27 million kilowatt-hours of energy by diesel generation, dem- onstrating the utility needs hydro- electric generating capability. The Mahoney Lake project will dis- place diesel and allow KPU to meet Ketchikan’s immediate and mid-term electrical needs from re- newable, non-polluting hydroelectricity, including the ex- isting Swan Lake project. Mahoney is privately financed. KPU will have access to Mahoney energy and capacity with no new investment or bond issues, which would be required for the much smaller Connell and Whitman Lakes projects KPU is spending money to investigate. All the investment and risks will be borne by KEC, a private company owned by Cape Fox Cor- poration and Alaska Power & Tel- K Alaska SE Tntertte ow rR 1 < BMG WIE Py LU PY th [ | | U APR 26 1999 — Industrial Developmen and Export Authority | envy Ketchikan sitting on the threshold of these two projects. ephone Company. KEC offered KPU energy at a rate of 6.5 cents per kilowatt-hour, with no escala- tion for the life of the contract, which is contemplated to last for 10-35 years. KPU now pays the Four Dam Pool rate of 6.8 cents for Swan Lake energy, and the Four Dam Pool estimates that rate will rise annually to more than 7.5 cents by the year 2007. The Mahoney Lake Project will begin producing power 14 months after, KPU_ executes _a,, contract. The; Federal Energy Regulatory (Commission has licensed the pra- ject, and KEC can build it for $17.5 million, a bargain for a 10-mega- watt hydro plant. The project is largely on Cape Fox lands, and only four miles of intertie is need- ed to connect it to the KPU system at Beaver Falls. AP&T, Cape Fox’s partner in KEC, built the Black Bear Lake project (serving Prince of Wales Island communities) and Goat Lake project (serving Haines and Skagway) within the past five years, on time and within budget. AP&T provides electric service for 20 communities in Southeast and Interior Alaska, and telephone ser- vice for 19 communities. Mahoney Lake will fill Ketchi- kan’s immediate need for hydro- electric power, and will enhance the viability of the proposed Tyee- Swan Lake intertie, which KPU has been pursuing to meet long- term demand and to connect with an envisioned Southeast Alaska power grid. Recent discussions of the intertie have been too narrowly fo- cused, tending to view the intertie strictly as a source of power for Ketchikan, and Mahoney Lake as an unwanted competitor. It’s more beneficial to seriously consider lo- cal possibilities for hydropower — especially those that are privately financed — and to view the intertie as long-term infrastructure that allows power to flow freely in ei- ther direction throyghout South- east. This is particularly impor- tant to Ketchikan, given that Ma- honey Lake hydropower is cheap- er for Ketchikan consumers than would be Tyee power imported on the intertie. If Mahoney energy is not ac- cessed by KPU ahead of intertie energy, Ketchikan consumers could shoulder a disproportionate share of the risks and costs of the intertie, which would be unfair, given that the intertie is a basic long-term infrastructure invest- ment. Like a highway system, it will benefit all Southeast Alaska communities. Connecting Mahoney Lake via the Beaver Falls transmission line means increased reliability for Ketchikan. If either Swan Lake or the intertie goes down, the Maho- ney line will remain operating. Over the past several years, KPU y Lake, intertie combination are ideal has spent millions of dollars on studies of a traditional high-ten- sion, tall-tower intertie between the Swan and Tyee projects, now projected to cost about $77 million. 1 envy Ketchikan sitting on the threshold of these two projects. Mahoney Lake can provide hydro- power at no public risk and cheap- er than the Four-Dam Pool, within little more than a year. The rede- signed intertie, constructed under a more realistic plan of finance, could be in place within four or five years, when Ketchikan’s growing power requirements will require it. When both projects are completed, Ketchikan’s long-term access to local and regional all-hy- dro energy will put the city in a preeminent position to maintain the lowest achievable cost of liv~ ing, and to attract vigorous. eco- nomic development. . As the CEO of Sealaska Corpo- ration, I manage our considerable investments and jobs in Southeast Alaska, and am responsible for considering future corporate de- velopment in our region. I urge city officials and citizens alike to direct KPU to seize the day, and take advantage of these ripe op- portunities to provide cheap and efficient hydroelectric power as a major incentive for future eco- nomic development in Ketchikan and throughout Southeast Alaska. ecccee Robert W. Loescher is Presi- dent and CEO of Sealaska Cor- poration and a member of the Boards of ctors of the Alas- ka Industrial Development and Export Authority (AIDEA) and the Alaska Energy Authority. hake Date_APK WY ALASKA JOURNAL OF COMMERCE Client No. u| zo Mill closures put economists at odds over future of Southeast towns The Associated Press A recent eco- nomic study says that despite some dire forecasts, the pulp mill closures in Ketchikan and Sitka did not leave the economies of those Southeast communities in tatters. Despite the mill closures and a substantial reduction in tim- ber harvest, the economies of those communities and the entire Panhandle region remain strong and growing, Juneau economist Gregg Erickson says. Economists used an over- simplified economic model to predict doom and gloom, which reinforced the case by politi- cians and the timber industry for increased subsidies and EGE APR 26 1999 ECONOMY more timber to cut, he says. But Erickson’s study has come under attack from the eco- nomic consulting firm that he criticized the most, saying Erick- son misread its findings. And Sen. Frank Murkowski, R-Alas- ka and chairman of the Senate Resources Committee, also dis- agrees with Erickson’s study. “The fact that the economies of the towns have not plummet- ed ... is partly because you've had the tourism lower-wage jobs tak- ing up the slack for higher-pay- ing jobs,” Murkowski’s spokesman, Chuck Kleeschulte, told the Anchorage Daily News. Erickson’s report, “Beyond Tongass Timber,” was paid for by the Southeast Alaska Con- Alaska Industrial Development and Export Authority servation Council, which oppos- es large-scale logging in the Tongass National Forest. The economies are doing well although individual work- ers were hurt by the closures, Erickson says. Before the Alaska Pulp Corp. mill in Sitka closed in 1993, economists predicted it would cost the community 923 jobs — about a 20 percent loss — and cut the Sitka population by 1,900, Erickson said. Nearly 400 people lost their jobs when the mill shut down, but the actual net job loss, his report says, was only 231 before job growth resumed. By 1995, Sitka’s population and unemployment rate were at about the same level as before the mill closed. “Personal income in Sitka has been growing faster than the state as a whole, hardly an indicator of a community in major economic distress,” his report says. The story in Ketchikan is still unfolding. Louisiana-Pacif- ic shut down its Ketchikan Pulp Co. mill there in 1997, laying off about 400 workers. As with Sitka, predictions of economic collapse abounded. Some economists said the community would lose one- quarter of its economy and 400 of its 2,850 students. That has- n't happened, Erickson said. “The economic evidence so far available contains some confusing contradictions, but on balance the Ketchikan econ- omy, like Sitka’s, appears to be doing far better than predict- ed,” Erickson said. The population estimates for Ketchikan have declined slight- ly. School enrollments went down 4 percent in 1997, then rose 3 percent in 1998. Electri- cal hookups also are up, and Ketchikan’s employment rate has increased slightly. The forecasts were overly gloomy because the economists overlooked factors that would offset the loss of timber jobs, such as the growth of other types of businesses, he says. Sitka, for example, gained health care jobs thanks to a timely hospital expansion. Ketchikan’s recent growth includes new medical clinics, a service station and a new motel. Erickson’s report is critical of work done by the McDowell Group of economists, who pro- duced a number of pre-closure analyses under contract to the timber industry and local gov- ernments. The McDowell Group is the most widely known economic consulting firm in Southeast Alaska and its reports prompted herd behavior, Erickson said. “To some extent, where McDowell led, other economists followed,” he says. Jim Calvin, managing part- ner of the McDowell Group, takes issue with Erickson’s char- acterizations. His firm never actually stud- ied the impact of closing the Sitka mill, he said. “We profiled the role of the mill in the economy,” Calvin says. “It’s different.” If McDowell had been asked to predict the impact of closure, then the study would have had to look at other factors, such as the efforts the government would take to mitigate an eco- nomic decline, he said. “He has for some reason decided to take potshots at us for something that isn’t even relevant,” Calvin says. Erickson agreed with Calvin, in part, but said the language of McDowell’s Sitka report blurred the distinction Calvin is now making. “I think any fair-minded per- son ... who read that report would come to the conclusion it was saying that Sitka was at risk of having the heart of its economy cut out if the mill closed down,” Erickson said. But Sitka hasn’t had an easy time of it, according to state Labor Department economists. Former mill workers have had trouble holding steady jobs, and by 1996 they were earning 64 cents for every dollar they earned before the closure. On the other hand, the unem- ployment rate has returned to the level it was before the pulp mill closed, the agency said. And the average monthly wage in the community, which peaked in 1993 at $2,325, had fallen only $3 by 1996. Still, that doesn’t tell the whole story, economist Neal Fried says. The economy may have gained health care jobs, but the pulp mill jobs are still gone. “Those are lost wages to the community regardless,” Fried says. “They are lost, and there was a person tied to those wages and that job.” -" Zon - dna t texponan pl S ee DVM CAC GOLDEN VALLEY ELECTRIC ASSOCIATION INC. PO Box 71249 « Fairbanks, Alaska 99707-1249 * 907-452-1151 March 31, 2000 DECEIVE nl mar 5 2000 LY/ Alaska Industrial Development Randy Simmons and Export Authority Executive Director Alaska Industrial Development and Export Authority 460 West Tudor Rd. Anchorage, AK 99503 Re: Status of Healy-Fairbanks (Northern) Intertie Dear Randy: | am pleased to report that the Healy-Fairbanks (Northern) Intertie (“Intertie”) design and location phase is nearing completion. The right-of-way on federal ground has been approved and we expect the issues surrounding line location on state ground will be settled this spring. We have completed engineering design on the entire proposed route and have purchased 3.8 million pounds of foundation steel. Legislation supported by the Alaska Department of Natural Resources that would allow the Intertie to proceed has been passed by the Alaska Senate and House and is pending signature by the Governor. In accordance with the Grant Administration Agreement, AIDEA will not release funds for “Phase II” construction of the Intertie until two conditions are met: demonstration of the ability to raise all additional amounts needed to complete the Intertie and “final approval of matters submitted to the Alaska Public Utility Commission (now Regulatory Commission of Alaska “RCA”) related to the funding or use of the Intertie.” With respect to funding GVEA’s costs, | am pleased to report that our loan applications to the Rural Utilities Service (“RUS”) and the National Rural Utilities Cooperative Finance Corporation (“NRUCFC”) have been approved by both agencies. RUS will lend GVEA up to $35 million to cover the cost of the Battery Energy Storage System, an integral part of the Intertie. CFC has agreed to provide GVEA up to $50 million through a line of credit to finance GVEA’s share of design and construction costs for the Intertie. With these loan commitments and the grant funds to be provided by the State under SB 186 passed in 1993, the funds available are adequate to allow completion of the Intertie. With respect to gaining RCA approval, GVEA submitted an application to RCA on February 14, 1997 seeking RCA approval of its participation in the Intertie. After discussing the purpose of the filing with RCA Staff, we withdrew the application, based Randy Simmons March 31, 2000 Page 2 on Staff's view that the ultimate wheeling rate, not the construction or ownership of the Intertie, is subject to RCA approval. RCA expects GVEA to file its transmission rate tariffs with RCA for approval once the Intertie nears completion. Our attorneys concur in that result. The amendment to the 1993 Intertie Agreement provides that GVEA “shall provide the other Participants access to capacity in the /ntertie for the purpose of assured access to resources, economy energy transactions and other similar uses under rates and tariffs filed with and approved by the Alaska Public Utility Commission.” SB 186 made the grant appropriation contingent upon the inclusion of this provision in agreements related to the Intertie between the utility participants. In December of last year, GVEA and the other utility parties to the 1993 Alaska Intertie Agreement approved an amendment making GVEA the sole owner of the Intertie. In addition, all the utilities have signed amendments to the Intertie Grant Agreement and the Grant Administration Agreement. While these amendments have been reviewed by AIDEA counsel, Jonathan Rubini, we have delayed submitting them to you for execution, pending the resolution of financing issues and other matters. We believe the current status of GVEA’s activities related to the Intertie merit the State’s completion of those amendments. If you agree, we will forward the two amendments to you for final execution. As you know, the Intertie has been an important GVEA goal during my tenure as CEO of GVEA. On April 1, George Kitchens will assume those duties. Please contact George if you have any issues or questions with regard to the Intertie or other GVEA activities. Randy, | am very pleased that | can end my business relationship with you on a positive note. The Intertie and the Healy project will be major assets to interior Alaska once they are completed and in service. Mike Kelly President & CEO cc: George Kitchens, Golden Valley Electric Association, Inc. GVEA Board Ron Saxton, Ater Wynne LLP Jonathan Rubini, Foster Pepper Rubini & Reeves LLC (907) 274-1056 Dae DEC 19 1999 __ FAIRBANKS DAILY NEWS-MINER Client No_GSOK Worlurwm Lptdce Court ruling delays intertie construction 362 311 310 3306 4279 By BRIAN O'DONOGHUE Staff Writer Construction of the $45 million Northern In- tertie was set back for what’s likely to be at least a year Friday when the Alaska Supreme Court upheld a procedural challenge from the Northern Alaska Environmental Center. The court agreed with the environmental group that the state’s approval of the project—expanding the capacity of the Fairbanks area’s electrical linkage with other Railbelt utilities through a new power line crossing the Tanana Flats—amounts to a public land disposal requiring a “best interest finding” from the state’s Department of Natural Resources. Northern Center spokeswoman Nancy Fresco ap- plauded the court’s decision as a victory for those who would reopen public debate concerning the route planned for the new Fairbanks to Healy in- tertie. “This gives us a good chance to go back to the drawing board with GVEA (Golden Valley Electric Association) and DNR,” said Fresco, whose group has criticized the permitted route as an unneces- sary intrusion on the Tanana Valley’s scenic south- west lowlands. Steven Haagenson, GVEA’s intertie project man- ager, was taken aback by the court’s unexpected de- cision, but he doubts it will have much practical effect beyond delaying erection of the power tower _ components of the $75 million package of Interior utility upgrades funded in 1993. “Absolutely not,” Haagenson said of the pro- spects for reopening discussion of the power line route that emerged from the federal government’s earlier review. Contacted at home in Anchorage, Natural Re- sources Commissioner John Shively said-he heard about the court’s decision, but hasn’t had time to examine it. “We were prepared to do whatever the Supreme Court told us to do and if that means doing a best interest finding—we’ll do a best interest finding. “Obviously that will take some time,” the com- missioner added. “How much? I don’t know. Most See NORTHERN INTERTIE, Page B-5 NORTHERN INTERTIE: Court 302. Bil 3/0 330 422A Continued from Page B-1 of the work is done. We already have a pretty good assessment of the options,” he said, referring to the analysis provided in the fed- eral government’s previous com- parison of environmental impacts posed by various Northern In- tertie routes. “Our cooperation with the federal agencies has probably given us the informa- tion we need.” Tom Waldo, of Earthjustice Legal Defense Fund, which rep- resented the Northern Center in the case, said his reading of the law suggests DNR must now issue its own report comparing potential intertie routes. “They're going to have to hold hearings on that draft finding,” Waldo said, “and this means DNB has to listen to what people have to say.” The Northern Center, which has long maintained that intertie upgrades should be contained as near as possible to the existing Parks Highway powerline cor- ridor, remains hopeful that the court-ordered review will prompt DNR to weigh the potential loss of tourism and _ recreational values, as well as the damage to Fairbanks southeast view, posed by encroaching on the flats. “It’s very important to people of Fairbanks to look out across the flats and see the Alaska range,” Fresco said. “We don’t have some of the majestic views you get closer to the mountains, but we do have a sense of being surrounded in wilderness.” Even after the higher court agreed to hear the Northern Cen- ter’s arguments, Haagenson re- mained confident the _ utility would prevail in its efforts to build the power line this winter. The engineer took that for granted from his reading of an- other provision in state law that appears to exempt transmission lines from the requested review. “Tt’s a major surprise to me, because I read all the filings. I lis- tened to the oral arguments,” Haagenson said. “This project has gone through a four-year public review process. To have it kicked back through a techni- cality like this!” Waldo noted the exemption only exists if GVEA’s new power line qualifies as a “revocable” use of the state lands it traverses. While GVEA maintains that is in- deed the case, because the power towers could be relocated if, for example, an oil field was discov- ered along the intertie’s path, Earthjustice’s counter argu- ments, such as the likelihood of long-term damage to permafrost exposed by ground-cover thin- ning, proved more persuasive to the state’s highest court. The “the permit is not revo- cable in a ‘real world’ sense due to the magnitude and importance of the Northern Intertie,” wrote the Supreme Court, reversing Shively’s approval of the intertie right of way pending the outcome of a best-interest finding. Despite the _ setback, Haagenson said GVEA isn’t likely to slow down other aspects of the project, including the in- stallation of a giant storage bat- tery and a substation planned at the southern terminus in Healy. “There are so many benefits for the people of the Interior,” he said, ‘‘we can’t afford to stop.” (907) 274-1056 Kodiak Daily Mirror Client No_QOOW Novus Inte Court extends construction ban 420H 310 330 ANCHORAGE (AP) — The Alaska Supreme Court has ex- tended a ban on construction of a 97-mile power line across the Tanana Flats. The panel came down on the side of environmen- talists, who had cited wildlife and habitat concerns. Wednesday's decision could prevent the Golden Valley Elec- tric Association from getting started this winter on the state- financed Northern Intertie from Healy to Fairbanks. “Tm cautiously optimistic that this will lead to a rethinking of whether or not this route s in the state’s best interest,” said Tom Waldo of the Earthjustice Legal Defense Fund on Thursday. Waldo and Seattle lawyer Steve Davis represent the North- ern Alaska Environmental Cen- ter and the Sierra Club, which are trying to-block a state-issued right-of-way permit to build the $45 million intertie. Quulity @ (907) 274-1056 Date DEC 10 1999 FAIRBANKS DAILY NEWS-MINER Client No. BA High court extends ban on 2nd intertie 420A 330 302 31/ los 341 By DOUGLAS FISCHER Staff Writer The state Supreme Court indefinitely extended a temporary ban on construction of an second in- tertie across the Tanana flats on Wednesday and asked attorneys on both sides to brief justices on a 1973 trans-Alaska pipeline case one lawyer called “uncannily similar.” At issue is whether the state can issue a truly re- vocable permit for the $45 million project. Attor- neys representing the Northern Alaska Environmental Center and Earthjustice—the Sierra Club’s legal arm—contend that once the high-voltage .power line running from Healy to Fairbanks goes up along the route, state regulators would not be able to revoke the permit. The line is to be built by Golden Valley Electric Association. “It’s really not revocable when you take prac- tical reality into consideration,” said Tom Waldo, an Earthjustice attorney who participated in Wednesday’s hearing. “That’s why the case is so uncannily similar to what the District of Columbia (Circuit Court of Appeals) found in 1973. In that case the Wilderness. Society challenged revocable right-of-way permits issued by the Bu- reau of Land Management for the trans-Alaska pipeline. The appeals court sided with the environ- mentalists, but Congress changed the law shortly. afterward and pipeline construction began. The goal in the intertie case, according to envi- See INTERTIE, Page A-5 INTERTIE: YOR 330 302 Continued from Page A-1 ronmentalists, is to force the state to consider less-intrusive routes north, such as building in existing railroad or highway cor- ridors. The state-suipported route par- alleling the Tanana River into South Fairbanks was favored by the BLM in 1998. The BLM said it was cheaper than other options and would not have a significant impact on re- sources. Environmentalists have appealed that decision and argue that the state both improperly re- lied on a “flawed” federal study and did not do its own indepen- dent analysis of alternative routes. “The state never adequately determined which of these routes for the new line would be best,” said Steven Davis, a private Seat- tle-based attorney who argued the Northern Center’s case. nN lorfurne Tndudu Ban 34 le! BYl But state Superior Court Judge Ralph Beistline ruled against the center in September, saying the state adhered to rele- vant statutes in issuing the right- of-way permits. Mary Lindquist, the assistant attorney general defending the state’s side, declined to comment on the relevance of the 1973 fed- eral case, saying the state would present its argument in its briefs, which are due on Tuesday. The court’s indefinite ‘ban on construction could present a problem for GVEA, which has said each year of delay costs from $3.5 million to $4 million. Some intertie construction would have to be done in the winter, when wetlands in the flats are frozen. The ban, which was to expire on Monday, will remain in effect until justices order otherwise. Officials at GVEA were un- available for comment Thursday afternoon. Q=== tee (907) 274-1056 Date SEP 2 1 1999 FAIRBANKS DAILY NEWS MINER Client No USIOA Northern Judge hears intertie appeal 336 302" 31 420A By BRIAN O'DONOGHUE Staff Writer Five years of high-voltage de- bate between environmentalists and the state over the routing of a new electrical intertie north from Healy short-circuited Monday to a legal appeal wired to the definition of a single three- letter word. The pertinent statutory refer- ence to “the” land, according to Northern Alaska Environmental Center and -Earthjustice Legal Defense Fund, calls for the state to compare economic values among all the intertie routes under consideration, rather than merely evaluate the alternative favored in the federal environ- mental impact statement. “Point to a single case where “the” is a technical term,” de- INTERTIE: 330 302 Bil 420A Continued from Page B-1 permission to build the proposed intertie linking Healy and Fair- banks along a direct diagonal route, crossing undeveloped state and federal lands in the Tanana Flats. The EIS process led federal agencies to reject that proposal in favor of what became known as the Rex-South route—delivering power into South Fairbanks along a route paralleling the Tanana River. Both the Northern Center and the Sierra Club contend the pre- ferred alternative identified in the EIS was based on an incom- plete review of environmental im- pacts prepared by federal agencies “biased” in favor of crossing the flats. Tom Waldo, of Earthjustice, the Sierra Club’s legal arm, said the current appeal is aimed at forcing the state to consider less- intrusive intertie routes, such as building in the existing railroad or power line corridors. According to Haller, each year of delay costs the electric associa- tion from $3.5 million to $4 mil- lion. Those figures are based on the expense of storing steel pur- manded Northern Center at- torney Steve Davis. “It’s simply an expression of speech.” Attorneys representing the state and Golden Valley Electrical Association countered that the Department of Natural Resources expertise in land man- agement ought to count more than the dictionary citations from the groups appealing the state permit. “The court should defer to DNR’s reasonable interpretation of the word ‘the,”” suggested As- sistant Attorney General Mary Ann Lundquist. “It isn’t the only interpretation, but it’s a rea- sonable interpretation.” Peter Haller, GVEA’s at- torney, took the position that the state was never under any obliga- tion to consider alternative Appeal chased for the project, a 3 percent rise in construction costs from in- flation as well as the loss sus- tained by consumers who are missing out on the benefits of cheaper power available from other utilities. The Northern Center contends the utility remains on track to obtain a good portion of the proj- ect’s benefits through planned upgrades to the existing line, and the massive battery facility envi- sioned in South Fairbanks. None of those projects are affected by the appeal, Davis said. routes. The reason that even hap- pened, he said, was due to the en- vironmental impact statement required for the federal lands tra- versed by the project. “Tt has been studied literally to death,” Haller added, noting that the $153 million project has been subject to repeated re- alignment and near continuous public review since 1994. Beistline bristled at the GVEA attorney’s request for a prompt ruling to get work started this winter. ‘“‘You’re roughly the tenth attorney today to tell me they | need an immediate deci- sion,” The judge added, however, that he’s well versed on the is- sues at this point and will rule on the appeal “‘as soon as possible.” Golden Valley initially sought See INTERTIE. Pace B-2 Inver Date HOY-0-6 1999. Anchorage Client No _ GOoA _ Tanana intertie delayed 302 316 31) 330 420A 230 By TONY HOPFINGER cx42~ Daily News reporter Golden Valley Electric As- sociation’s plans to build a 97- mile power line across the Tanana Flats have again been delayed. This week, the Alaska Supreme Court granted a re- quest from environmental groups, to prevent the Fairbanks-based utility from starting construction until af- ter Dec. 13, allowing time for the court to review claims that the high-voltage power line would harm wildlife habitat. The Fairbanks-based Northern Alaska Environ- mental Center and the Sierra Club are seeking to block a right-of-way permit across the flats for the Northern In- tertie. from Healy to Fair- banks. Sandhill cranes and trum- peter swans migrate through the flats, and the intertie would disturb their habitat, said Nancy Fresco of the en- vironmental center. “We’re worried about birds hitting the overhead wires,” she said Friday. Golden Valley president Mike Kelly said he’s confi- dent the Supreme Court will allow the project to move for- ward after Dec. 13. “T have in no way given up on doing construction this winter,” he said, adding that if work begins this year, the intertie would be completed by 2001. The Northern Intertie is partly needed to support ad- ditional capacity being pro- duced at the Healy Clean Coal Project, the $267 million coal plant that is owned by the state and would be run by Golden Valley, Kelly said. It also would allow more elec- tricity to move between An- chorage and Fairbanks, he said. The state supports a feder- al agency’s opinion that the intertie should run along the Tanana River into South Fair- banks. The federal Bureau of Land Management has said the route is cheaper than oth- er options and wouldn’t sig- nificantly harm wildlife or the flats. Environmental groups say the federal study is flawed. “The fact is that a’new line could follow an already de- veloped parallel corridor for the Parks Highway, the Alas- ka Railroad, and the existing power line,” said Dave Allen of the Sierra Club in a news release. Q Reporter Tony Hopfinger can be reached at thopfinger@adn.com. Noethomn lyHer he Ce. DG AUG 21 796 16:28 GCI P.2/3 August 21, 1996 ORAFT ECi Mr. Mike Kelly General Manager Golden Valley Electric Association 758 Diinois Street PO Box 71249 Fairbanks, AK 99707-1249 Dear Mike: In GVEA’s role as project manager for the construction of the Northern Intertie, as an owner and as a major user of the facilities, we ask that you please consider the following proposal for attachment of a fiber optic ground wire (OPGW) to the new Fairbanks - Healy transmission line. First of all, GCI has no interest in its employees or contractors having access to the transmission line towers, nor do we see any need to get on the transmission line towers. Our view is that we would structure an agreement with GVEA as the maintenance contractor for the project to provide maintenance of the OPGW system and its attachment integrity to the towers. Should fiber optic repairs or splicing be required, we would envision that GVEA would provide ends of the cable to be spliced and tested by qualified GCI ground personnel. Reattachment of the spliced cable to the tower(s) would be performed by GVEA personnel (or its approved contractor). A. Capital cost: GCI will pay all incremental capital costs that the project will incur to provide and install an OPGW instead of a static ground wire. This cost would include all materials, installation, and all special attachment hardware associated with attaching the OPGW to the transmission line towers, bringing it down the towers at designated repeater and cable splicing locations, and providing splice boxes on the towers, GCI proposes that this difference cost be determined in one of two ways, at the project manager’s option: 1, Through securing two construction bid proposals for the line, one including the OPGW and one which does not (latter bid to include two static ground wires). 2. By including a line item in the construction bid for a) the static ground wire and b) the OPGW. In the first case the difference cost would simply be the difference in the two bid proposals. In the second case the difference cost would be the cost of the OPGW line item less the cost of the static ground wire line item. GCI would anticipate that we would be involved in the design of the OPGW system and will work with GVEA to determine who (GCI or the contractor) would do actual cable splicing and OTDR (Optical time domain reflectometer) proof-of-performance testing during construction. DRAFT 2550 Denali Street * Suite 1000 « Anchorage, Alaska 99503-2781 © 907/265-5600 AUG 21 796 16:28 GCI P.3/3 B. Communication Services: GCI proposes that it would provide, for the term of the agreement, all internal communications capacity requirements for the Owner(s) along the Northern Intertie route. Such capacity requirements would be limited to a capacity of 1xDS3 (nominal bit rate of 45 Mb/s) or 1xOC-1 (51.84 Mb/s, SONET rate) and could include any utility internal communication circuits used for voice, video or data communications internal to any or all Owner(s) utilities that would transit the route of the Northern Intertie. Further, such internal communications circuits and capacities could include those between Owner(s) utilities necessary for the control and operation (including protective relaying, electric load managément,.and supervisory, control and data acquisition to support the power generation and electric transmission facilities) of the Northern and Alaska Interties. These communication services would be provided in exchange for the right to attach to these towers comprising the Northern Intertie. C. Maintenance services: GCI would énter into a separate maintenance agreement with GVEA for the maintenance services supporting the OPGW and its repair. We ask for your concurrence in this type of agreement structure. Please let me know if we need to modify or amend this approach. Thank you for your prompt consideration. Sincerely, Gene Strid Vice President, Engineering cc: Riley Snell DRAFT ECEIVE)] APR 3 0 1996 \aska Industrial Development NORTHERN INTERTIE PROJECT and Export Authority Status Report The Northern Intertie is a 87 mile, 230 kilovolt electrical transmission line which will provide a second tie between Healy and Fairbanks. The project also includes a 40 MW Battery Energy Storage System. The intertie project will yield several distinct benefits: > It will allow access to the most economical and cleanest energy available from any source along the Railbelt system. Golden Valley’s existing transmission line between Healy and Fairbanks has reached its capacity to deliver needed power to Fairbanks. > Reliability will be increased with the 40 MW Battery Energy Storage System which will provide backup power while alternative generation is brought on-line. The Battery Energy Storage System can provide this capability without the continuous use of fuel. The battery will hold a 20 minute reserve of 40 megawatts. This will provide plenty of time to start existing gas turbines in Fairbanks, unload the battery and keep the system operating. > The Northern Intertie will provide a loop system between Healy and Fairbanks, which will increase reliability from Healy north. The loop facility will result in a net gain of 9 megawatts of power which is currently being lost on the existing heavily loaded line. A cost benefit analysis was conducted for the Northern Intertie Northern Intertie Status April 1996 1 Project and demonstrated approximately $190 million dollars of benefits to be realized by the Participating utilities. The total cost estimate for the project is $75 million dollars, approximately half of which will be supplied by the utilities. Based on total costs the project will realize a benefit to cost ratio of over two and a half. Last year a preliminary Environmental Analysis was completed, but has not been released to the Rural Utilities Services (RUS), formerly the Rural Electrification Administration. This environmental document will be revised to incorporate the recently requested military route adjustments and public comments, prior to release to RUS This Environmental Evaluation clearly concluded that a route through the Tanana Flats was the most desirable among the choices. This shorter preferred route minimizes impacts on developed areas near Healy, Nenana, Ester, and Chena Ridge as well as avoiding Tanana River crossings which pose obstacles to aviation in the area. However, this routing requires crossing approximately 27 miles of Ft. Wainwright Military Training Reservation, south of the Tanana River. To minimize impacts to the greatest extent possible the most direct route was shifted north and west to skirt the edge of the Military Reservation , thereby reducing associated impacts to military training in the area. The Army is currently evaluating the preferred route which skirts the military training area in the flats south of Fairbanks. Some of the issues considered in selecting the preferred route alignment were: military training uses, foul weather aircraft routes, soil stability, river movement, wildlife, and visibility. ee #11996 5 We believe that the Army and Golden Valley have found a win-win solution to remove military concerns regarding the Ft. Wainwright Military Training Reserve. In the near future, Golden Valley will be mailing a briefing statement and map of alternative routes to each member of Golden Valley and the Fairbanks Municipal Utilities System. A comment form will be included in the mailout and all comments will be included in the environmental document as it continues along the environmental review process. Now that the Army is poised to remove their objection to the route across training lands, the Environmental Analysis should be submitted to RUS during the summer of 1996. Based on the summer 1996 submittal date, a Finding of no significant impact (FONSI) could be issued by late 1996, which at best would allow for final design, route selection, clearing, and foundation placement in early 1997. The construction process is expected to take between one year to one and a half years. Based on the prior assumptions, the Northern Intertie could be operational as early as Spring 1998. Fc-@O ALASKA INDUSTRIAL DEVELOPMENT Ps AND EXPORT AUTHORITY = ALASKA @@E_ =EENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM TO: Alaska-Intertie Northern Controller - Golden Valley Electric Association FAx 491 055¢ Alaska-Intertie Southern Controller - Anchorage-Municipal Light and Power Fay 27,.--2941- Alaska-Intertie Operating Committee Member Utility Phone Fax John Cooley, Chairman CEA 762-4577 562-0027 Vince Mattola FMUS 456-7981 451-4410 Jim Hall MEA 745-9269 745-9328 Sam Mathews HEA 235-3303 235-3313 Brad Evans GVEA 451-5655 451-0556 Tim McConnell ML&P 263-5450 263-5804 FROMs ( ce a Stan Sieczkowski, AIDEA/AEA 561-8050 561-8998 SUBJECT: Alaska Intertie Circuit Breaker Change out at Teeland Substation DATE: March 8, 1996 The scheduled circuit breaker replacement of Teeland Breaker 538 on March 11, 1996 has been postponed, as requested by a participating Utility, due to: a The inability to feed the Matanuska Electric Association Stevens Substation and Douglas Substation by alternative paths thru the MEA system when the Intertie is taken out of service for the circuit breaker replacement, and 2, The economics of the energy and demand rates quoted to Chugach Electric Assoc. to feed these substations over the Intertie from the northern system. The circuit breaker replacement issue is under review and a new schedule will be developed. | will notify you of the new schedule when it is determined. Cc: Dennis McChrohan, AIDEA c:mem006ai.doc r ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY f= ALASKA me =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 July 17, 1996 Dave Calvert City of Seward P.O. Box 167 Seward, Alaska 99664 Subject: Northern Intertie Invoices No. 16, 17 & 18 Dear Dave: The enclosed invoices were inadvertanlty sent to AIDEA without prior approval by the IPG. Please take the necessary steps to review and approve the invoices and return them to AIDEA for payment. Sincerely; Dan. Daniel W. Beardsley Contracts Manager ALASKA INDUSTRIAL DEVELOPMENT * AND EXPORT AUTHORITY /= ALASKA @@E™ =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 July 24, 1996 Dave Calvert City of Seward P.O. Box 167 Seward, Alaska 99664 Subject: Northern Intertie Invoice No. 20 Dear Dave: The enclosed invoice was sent to AIDEA without prior approval by the IPG. Please review and approve the invoice and return it to AIDEA for payment. Sincerely; Q Daniel W. Beardsley Contracts Manager CG: Jerri McPhearson, GVEA 4 ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= = ALASKA me =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 December 18, 1996 Dave Calvert IPG Chairman City of Seward P.O. Box 167 Seward, Alaska 99664 Mary Ann Pease Municipal Light & Power 1200 East First Avenue Anchorage, Alaska 99501-1685 Subject: New Grant Administrator Northern Intertie Invoicing Process Budgeting - Invoice Issue Dear Dave and Mary Ann: This letter has three purposes: (a) notify you that | will replace Daniel W. Beardsley as grant administrator for the Northern and Southern Interties, (b) verify the invoice approval process for the Northern Intertie, and (c) clarify billings in excess of contract commitments. Approval Process for the Northern Intertie Invoices: To ease my transition as grant administrator, it will be helpful to define the invoicing process. As | understand it, the process we have agreed to is as follows: 1: GVEA will send all reimbursement requests with invoices and backup to Mary Ann Pease (Charlene Cigard) at ML&P for review. 2; After review by ML&P staff, the reimbursement requests and invoices will be submitted to the IPG Chairman, Dave Calvert, for approval. KC: ey We Dave Calvert Mary Ann Pease December 18, 1996 Page 2 3. The IPG Chairman will send AIDEA an approved copy of the invoice plus the spreadsheet listing for those individual invoices less than $10,000 and back up for those invoices $10,000 or greater. 4. Upon receipt of the approved invoice, AIDEA will review the documentation and issue a reimbursement check to GVEA unless there are discrepancies in the invoicing or approvals. 5. In the event there are discrepancies AIDEA will notify the IPG Chairman by letter with copies to Mary Ann Pease and GVEA. 6. Once the discrepancies are resolved, AIDEA will issue a reimbursement check. 7. After the close of the year, the IPG will obtain an independent audit in compliance with 2 AAC 45.010 and submit that audit to AIDEA by April 15. If the process as outlined above is not accurate or there are concerns, please schedule a telephonic meeting with all concerned parties to resolve the process. Billings in Excess of Contract Commitments: Several of the billings have exceeded the line item “Total Contract Commitment” amount. Although the expenditures have been approved by the IPG, our concern is the expenditure is in excess of that authorized by the individual contract. AIDEA does not have a current total budget that assures that the total contract expenditures are within the Phase 1 total approved budget. It is therefore important that a revised budget be submitted as soon as possible. As you are aware, there are certain conditions which must be satisfied prior to exceeding into material procurement and construction. The revised budget will allow us to satisfy our administrative obligations. Thank you for your assistance with the above concerns. Sincerely, LL. Dennis V. McCrohan, P.E. Design/Construction Manager CC; Mike Kelly, GVEA Benefit / Cost Analysis of the Northern Intertie Healy to Fairbanks 230 kV Transmission Line Loss Reduction $38.34 million Reliability $11.50 million Increased Economy Energy Transfers $42.70 million Increased Capacity Sharing $17.32 million Reconstruction Benefits $29.60 million Total Benefits $139.46 million Battery Energy Storage System Transmission Deferrals $15.00 million Increased Transmission Capacity $2.00 million Transmission losses $0.00 million Capacity Deferral $8.80 million Production Expense Savings $5.10 million Increased Reliability $17.50 million Environmental $3.00 million Total Benefits $51.40 million Total Northern Intertie Benefits $190.86 million Total Northern Intertie Estimated Cost: $75.00 million Benefit / Cost Ratio 2.54 Values were taken from two benefit Studies: ae Economic Feasibility of the 138 kV Transmission Lines in the Railbelt. Dec. 1989 ae March 1996 Draft - Energy Storage Systems for the Interconnected Railbelt of Alaska. March 1996 NPV based on 50 year life @ 4.5 % discount rate. NPV based on 20 year life @ 9.0 % discount rate. Value recomputed due to addition of Healy Clean Coal Project and Battery Energy Storage System after initial benefits study was completed. 0 = Z | 0 be |< O qj O ” ” i) < || 2 HN) ‘ao O LJ _ uJ i] > LJ 4) Ee) < > q] Z LJ Qa = O 0 — Ee ao Lid -_ = Zz oo uJ <- e a oO z n E & BE Z q g : z 2 > : DATE: MARCH 1996 No rthern Intertie Proj ect (See project map on opposite side) GVEA, your member-owned cooperative, other Railbelt electric utilities and the State are pro- posing to construct a new intertie from Healy to Fairbanks to provide additional economical power, increase reliability of service, and reduce nuisance outages. GVEA evaluated several al- ternatives to the proposed intertie, including new generators in Fairbanks, energy conservation, and improvements to the current intertie. For over 2 years, GVEA has been conducting an environ- mental review process, under Rural Utilities Ser- vice (RUS), formerly Rural Electrification Admin- istration, to determine the preferred route for the new intertie. The eight routes evaluated are shown on the reverse side. Paralleling the existing intertie route was not se- lected for several reasons. The new intertie will be different from the existing intertie, with higher capacity, higher towers, and a wider right-of-way. Because of the level of development in the exist- ing intertie corridor, including hundreds of homes, the new intertie wouldn't fit into the existing cor- ridor without a great deal of disruption. The new intertie could be placed parallel to the existing intertie in some areas, but in others it would have to be miles away, resulting in impacts to a wide area and the homes and businesses established there. In addition, the reliability of electric ser- vice is increased by having a separate intertie corridor completely removed from the existing in- tertie. A second, or loop, path was recommended by the North American Electric Reliability Coun- cil in 1991. Issues that were evaluated include potential im- pacts on: endangered or threatened species, such as the American Peregrine Falcon; wet- lands; private properties; health and safety; avia- tion; other wildlife, such as Trumpeter Swans and Sandhill Cranes; and many others. The environmental review process began in February 1994 when GVEA invited local, state, and federal agencies to attend a project kickoff meeting. The meeting allowed these agencies to identify issues which they felt needed to be addressed in the environmental review process. In August 1994, a preliminary environmental study was completed and GVEA and RUS held another agency meeting to discuss the prelimi- nary findings. Public meetings were also held in Fairbanks and Healy. Interest in the project was very high in the Ferry area and residents re- quested additional meetings. Based on these public meetings, GVEA agreed to evaluate routes crossing further east of the Parks Highway through the Alaska Range foothills and then across the Tanana Flats (Rex, Jumbo, Walker and Tatlanika Routes). The preliminary environmen- tal study was revised to include these new route alternatives and was reissued in December 1994 to everyone who submitted comments on the original study. The environmental review process continued through late 1995 as GVEA's consultants pre- pared an environmental analysis document. GVEA continues to meet with agencies to dis- cuss the preliminary findings of the environmen- tal analysis and how particular issues had been addressed. Following are the major issues that have been the focus of this study. American Peregrine Falcons: This is the only endangered species within the study area. A field survey was conducted in 1994 to identify active Peregrine Falcon nests along the Tanana River, between Fairbanks and Nenana. The Preferred Route avoids the areas identified as active Per- egrine Falcon nesting habitat. Trumpeter Swans: Minto Flats and the Tanana Flats are major nesting areas for Trumpeter Swans. U.S. Fish and Wildlife Service's Trum- peter Swan survey data was plotted on USGS maps and studies on swan and crane migration were reviewed. Although all routes have some potential to impact Trumpeter Swans during nest- ing and/or migration, the Preferred Route has been designed to avoid concentrations of nest- ing swans in the Tanana Flats. Residential Areas: Private land and residences are concentrated along the Parks Highway be- tween Healy and Fairbanks. Studies were con- ducted to evaluate the number of residences and privately owned parcels impacted by each route alternative. The Preferred Route minimizes im- pacts on residential and private areas. Wetlands: The Tanana Flats area is almost en- tirely wetlands. Each route was studied to iden- tify the types and amounts of wetlands crossed. GVEA proposed to construct the Tanana Flats portion of the line using driven piling during the winter when the area is frozen. Except for one possible pad at the Tanana River crossing, con- struction will not include any fill in the wetlands. Visual Impacts: GVEA will take several steps to minimize visual impact. Visual resources were evaluated in detail from Chena Ridge, the Parks Highway, and other high sensitivity viewpoints. GVEA has proposed mitigation using distance from viewpoints and self-weathering towers which blend into surrounding vegetation. In addition, Clearing of the right-of-way will be limited to ar- eas of tall trees or dense brush and edges of cleared areas will be undulated. The environ- mental analysis contains several photographs which illustrate the Preferred Route’s appearance in the landscape. Construction Methods: Construction in the Tanana Flats would be restricted to winter, when the area is frozen. Construction will consist of driven piles and will likely include helicopter place- ment of towers and wire stringing. No construc- tion access roads will be constructed in the Tanana Flats. Construction in upland areas will occur during other seasons. Most access for these areas is expected to be by existing recre- ation or old mining trails in the Alaska Range foot- hills. Although existing trails will be used for ac- cess in most areas, the right-of-way may be used for access during construction in upland areas. Clearing of the right-of-way corridor will be mini- mized, with only areas of dense vegetation cleared. Low brush and shrubs will 6e left within the corridor to decrease visual impacts. Fragmentation of Habitat: The Tanana Flats is an important habitat for several species of wild- life. However, the vegetation of the Flats is a mosaic of open areas of low shrub, black spruce and other vegetation. In addition, as the area has become more popular for recreation, new trails have been created by snow-machines and airboats. Although the intertie corridor may re- sult in some clearing, these areas will be mini- mized and should not significantly change the mosaic of habitats on the Tanana Flats. Tanana River Crossings: The Tanana River must be crossed to complete the intertie. Some route alternatives crossed the Tanana River three times to avoid wetlands. The Preferred Route crosses the Tanana River once, near Goose Is- land. This crossing minimizes impacts on the Fairbanks International Airport and high recre- ation use areas and is compatible with existing uses near Goose Island. Aviation Impacts: GVEA coordinated with Alaska Department of Transportation and Public Facilities (ADOT/PF), Federal Aviation Adminis- tration, and other aviation groups on the envi- ronmental analysis. Concerns were raised by ADOT/PF regarding highway and river crossings and towers over 200 ft. high. The Preferred Route will minimize aviation impacts by minimizing high- way and river crossings and keeping towers un- der 200 feet. Health & Safety Concerns: Some people have expressed concerns regarding electromagnetic field (EMF) exposure. The Preferred Route avoids populated areas and will not increase EMF ex- posure to residences or businesses Other issues addressed in the environmental analysis include general biological issues (veg- etation, moose, caribou, fish, etc.), recreation use, subsistence, hunting and trapping, fire manage- ment, land use, socio-economics, and the mili- tary mission at Fort Wainwright. Archaeological, geotechnical and other studies have been con- ducted to gather information. SuMMARY: GVEA has worked diligently to re- sponsibly address all issues raised and has de- signed the proposed Preferred Route ( project map on reverse) to meet the project's goals with the least environmental impact. The Preferred Route is one of the shortest routes possible and impacts fewer resources than the other alterna- tives. BLM/RUS are currently reviewing the GVEA document. They will be analyzing all al- ternatives including GVEA's Preferred Route. Your comments are encouraged. The study will be available at all GVEA offices, the Noel Wien Public Library and the Denali Borough office. Please submit written comments by July 31, 1996 © Mr. Gary Foreman « Bureau of Land Management ¢ 1150 University Ave. * Fairbanks AK 99709-3899. Please call Steve Haagenson at GVEA, 451- 5647, or 1-800-770-GVEA (4832) for further in- formation. ‘ COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. BOX 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAx 835-4328 October 21, 1996 D F 6 [E | V F If) CT 23 Mr. Stan Sieczkowski- Alaska Industrial Development Alaska Energy Authority and Export Authority 480 West Tudor Road Anchorage, AK 99503 SUBJECT: FERC Earthquake Reporting Dear Stan: Enclosed is Copper Valley Electric Association, Inc.’s (CVEA) earthquake inspection form. On October 18,1996, Valdez experienced an earthquake that registered 4.5 in magnitude and was approximately 54.5 km north of Valdez.. If you have any questions or comments, please give me a call. Sincerely, 7) Vehitd E fuby Michael E. Easley, P.E. Manager, Engineering Services Enclosure w:\winword\let_mike\me96\96096jn.doc Serving the Copper River Basin and Valdez 10/18/96 18:56 FAX 9078355860 CVEA HYDRO +++ VALDEZ OFFICE 02 ALASKA ENERGY AUTHORITY Report on Seismic Event Date:, LOL r- I¢ PROJECT Project Name: Soloma Gulch FERC Number: 2772 | DESCRIPTION OF EVENT Time of Occurrence: Date: /O/317¢ Time Reported: /$: 7f Time: 45:79 Reported To: _A/~id ru Magnitude: wi Fo] Location of Epicenter: Gf é/ a L746. 35 Ww SA5°KM Distance From Project: Witte Direction: Ra One ce Ose Os Osw Ow Onaw ALARM_SYSTEM Not Activated FY ol Activated Alarm Received __ POST EVENT INSPECTION Time of Inspection: /0 3176 _16;52 Performed by: Gans iG: INSPECTION REPORT Dam and Dikes: __ 27. LOEens (bene Spillways: _AAY wo Péolcems Forwd Intakes and Gates: _QK0/ pobsilsniacciimmaane Power Tunnels and Penstocks: _@*a/ Power House: _g4£77/ i Switchyard Transmission Lines: G47 ¥ Other Facilities: fl sOUsSE _- C047, "VEL TA WAS ~ 2XA; FAX TO: AEA, STAN SIECZKOWSKI -(907) §61-8998 *10/18/96 18:56 FAX 9078355860 CVEA HYDRO +++ VALDEZ OFFICE o3 wot: a= - WORK ORDER REPRINT - PWO: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: RM Material/Labor ROUTINE MAINTENANCE ~ NON 0 EQUIPMENT #: 30095 DESCRIPTION: SOLOMON LAKE DAM LOCATION: SOLOMON LAKE KEY WORD: DAM SAFETY PROCS: NONE PM DESC: PM0152 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:44 PHONE: DUE DATE: 10/08/96 PROBLEM DESCRIPTION ——--——-- SOLOMON LAKE DAM WEEKLY INSPECTION. (TASK 00148) NOTE: “S/C" MEANS SNOW COVERED. REASON FOR INSPECTION: — ° WEEKLY: FLOOD: EARTHQUAKE: ~~ . DATE DONE 19-19 =F, INSPECTOR Gary 1- ACCESS ROADS- GENERAL CONDITION NOTES: (NOTE: IT IS UNDERSTOOD, THAT WINTER CONDITIONS ARE NOT GOOD FOR PICKUP, GRADE FOR PISTEN BULLEY IN WINTER.) i GOOD POOR FROM HIGHWAY TO PIPELINE: _.~ PIPELINE RIGHT OF WAY: ~~ PIPELINE TO STN. 900: Z PIPELINE TO DAM/VHSE: ~~ PIPELINE BAILEY BRIDGE: UPPER PROJECT BRIDGE: Ss RL COMMENTS : 2- GULCH FLOW, (CELL PHONE TO USGS GUAGE) CFS: 3-/ 3- SNOW STAKE LOWER: D UPPER: oO 4- 525’ ELEVATION PRECIPITATION GUAGE READING: aeeee 5- DAM SEEPAGE RECORDINGS: ON SCADA: DAM SEEPAGE READING 43 CFS 8" BYPASS 7.0 CFS DAM SEEPAGE WEIR GAGE: ee INCHES: os” CFS= 4.7 Fs UNABLE TO READ () , WHY 6- OBSERVATIONS: ANY VISIBLE CHANGE IN ALIGNMENT OF ROAD, WAVE WALL OR FENCE? YES No ~“ s/c CONTINUED +10/18/96 18:56 FAX 9078355860 CVEA HYDRO +++ VALDEZ OFFICE o4 WO?: eaaeem " WORK ORDER REPRINT — PWO: PRIORITY: E Page 2 RATING: 10 PROBLEM DESCRIPTION oo (CONT. ) ANY CRUMBLING OR SPALLING NOTED ON ANY CEMENT STRUCTURE? YES NOU} S/C OTHER THAN KNOWN EXPANTION CRACKS, ARE THERE ANY NEW CRACKS EVIDENT? YES No Y s/c DOES ASPHALT FACE SHOW ANY DETERIORATION. YES eS) Cian DOES ASPHALT TO WAVE WALL TAR SEAL SHOW SEPERATION? YES Noy s/c - NOTE ASPHALT FACE SNOW CONDITION WHERE WATER WASH IS USED. DOES RIP RAP FACE SHOW ANY SIGNS OF SLOUGHING OR SETTLING? YES NO. IF S/C, ANY SLIDE ACTION? YES NO OTHER THAN DAM SEEPAGE, IS THERE ANY SEEPAGE FROM LAKE EVIDENT? YES No UW ” 7- ANY SIGNS OF LAND OR SNOWSLIDES INTO LAKE? YES NOL yy " g- ANY SIGNS OF VANDALISM? YES NO 9- BUBBLER CHECKED? YES \~ NO OIL PSI_2o MOTOR SHUT OFF PSI_/O0 10- WHEN THE WEEKLY INSPECTION W/O’S ARE COMPLETED, MAKE COPY FOR CPO. IN MAINTENANCE BINDER, POST IN INDEX AND PUT THE ORIGINALS IN BINDER. COMMENTS : OS DS DS SOD MO - 10/18/96 18:56 FAX 9078355860 CVEA HYDRO 23+ VALDEZ OFFICE os ad - WORK ORDER REPRINT = Pwo: WOF: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: RM Material/Labor ROUTINE MAINTENANCE - NON O EQUIPMENT #: 30109 DESCRIPTION: SOLOMON GULCH VALVEHOUSE LOCATION: VALVEHOUSE KEY WORD: BUILDING SAFETY PROCS: NONE PM DESC: PM0048 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:44 PHONE: DUE DATE: 10/08/96 PROBLEM DESCRIPTION VALVE HOUSE WEEKLY INSPECTION: (TASK 00048) DATE DONE 10-18-96 INSPECTOR Gpnrd 1- AFTER ENTERING, UNPLUG INTRUSION ALARM, PICK UP PHONE AND WAIT TILL HYDRO GETS-ON PHONE. IF THEY DON’T, CALL ON RADIO. NEED TO CONFIRM THAT INTRUSION ALARM WORKED ON ON ENTRY. LOWER LEVEL INSPECTION: 2- CHECK THAT HEATER IS WORKING. 3- CHECK ALL CIRCUIT BREAKERS. 4- REPLACE ANY LIGHTS THAT ARE BURNT OUT. 5- CHECK FOR LEAKS, ALL VALVES, FLANGES, LINES. 6- IF BYPASS VALVE CHANGES ARE NEEDED, CONTACT HYDRO WHEN YOU ARE READY TO ASSIST WITH CHANGE AS NEEDED. 7- WATER WASH SYSTEM IN "DRAINED" MODE: CHECK SUPPLY VALVES AT AIR VALVES FOR "OFF", CHECK DRAIN VALVE FOR OPEN. CHECK FOR OPEN, FEED VALVE TO DAM. WHEN AT DAM, CHECK FEED VALVES FOR OPEN, HOSE VALVE FOR CLOSED. WATER WASH SYSTEM "IN USE" MODE: CLOSE DRAIN VALVE. OPEN SUPPLY VALVES, AT AIR VALVES. CHECK FOR OPEN, FEED VALVE TO DAM. IN BREAKER PANEL "P", TURN PUMP ON TIME ON: WHEN AT DAM, CONFIRM FLOW IN/OUT OF 4" ABS PIPE. SECURING DAM WATER WASH SYSTEM: IN BREAKER PANEL "P", TURN PUMP OFF. TIME OFF: CLOSE SUPPLY VALVES, AT 8" AIR VALVES. OPEN DRAIN VALVE 100% CONFIRM SYSTEM "IS DRAINED" BEFORE LEAVING. UPPER LEVEL INSPECTION: ; 8- QUICK VISUAL OF FIRE EXTINGUISHERS. 9- REPLACE ANY LIGHTS THAT ARE BURNT OUT. CONTINUED -10/18/96 18:56 FAX 9078355860 CVEA HYDRO 22+ VALDEZ OFFICE 06 WO#: 008426 - WORK ORDER REPRINT — Pwo: PRIORITY: E Page 2 RATING: 10 PROBLEM DESCRIPTION _.“10- STAND BY GENERATOR: CHECK AND RECORD FUEL TANK LEVEL. CHECK 5 GALLON CAN, SPARE FUEL. CHECK OIL, WATER LEVELS. CHECK BATTERY WATER LEVELS. CHECK THAT MAIN CIRCUIT BREAKER IS "OFF". en INSPECT BUILDING, INSIDE AND OUT FOR STRUCTUAL OR VALDALISM PROBLEMS. 12- RECORD ANY PROBLEMS, THINGS NEEDED FOR NEXT TRIP ETC. 13- WITH DOOR CLOSED, PLUG IN DOOR ALARM. OPEN DOOR, GO OUT AND SHUT. LOCK DOORS WITH LOCK BAR. COMMENTS: De DS DS DS DG OL DG Od De Dd DM Dd Dd DS Dd Dt Dd DS DE DS DG Dd Od DG DG DG -10/18/96 18:56 FAX 9078355860 CVEA HYDRO ++ VALDEZ OFFICE \Qo7 Wos: oRpmgs - WORK ORDER REPRINT PWO: rerceter E pe 1 RATING: 10 TYPE: PM es P CHG CD: INS Material/Labor INSPECTION EQUIPMENT Po 30457 DESCRIPTION: SOLOMON LAKE SPILLWAY LOCATION: on LAKE KEY WORD: SPILLWAY arust PROCS: _— PM DESC: PMO151 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:45 PHONE: DUE DATE: 10/08/96 wom a ew we = = ee = PROBLEM DESCRIPTION — SOLOMON LAKE SPILLWAY WEEKLY INSPECTION: (TASK 00147) NOTE: IF ANY QUESTIONS, (OTHER THAN #1-) ARE ANSWERED WITH A "YES", DESCRIBE IN DETAIL, WITH TEXT & DRAWINGS. USE BACK OF WORK ORDER IF NEEDED. ALSO, "S/C" MEANS SNOW COVERED AND NOT ABLE TO BE SEEN. DATE DONE _/¢--f-9¢_ INSPECTOR Gary . 1- IS LAKE OVERFLQWING? YES No WHAT IS LAKE LEVEL ON SCADA?__G§/,7_ 2- IF OVERFLOWING, IS SPILLWAY CLEAR OF DEBRIS? IF NOT, EXPLAIN: 3- ARE THERE ANY SIGNS OF WATER UNDER CUTTING ABUTMENTS OR STRUCTURES? YES NO S/C:: IS THERE ANY VISIBLE SEEPAGE UNDER SPILLWAY STRUCTURES? RECORD "SCADA" DIKE SEEPAGE =7/2 CFS) 4— DO CEMENT STRUCTURES SHOW ANY SIGNS OF SPALLING OR EROSION FROM WEATHER, WATER FLOWS ETC? YES NOY“ s/c S- IS THERE ANY SLOUGHING OF EMBANKMENTS OR MAJOR DOWNSTREAM CHANGES IN DOWNSTREAM CHANNEL? YES NO ~~ S/C F 6- IS THERE ANY VISIBLE CHANGES IN SPILLWAY ALLIGNMENT? YES NO s/c 7- ARE THERE ANY NEW CRACKS EVIDENT? YES NO Y/Y S/C 8- IS THERE ANY SIGNS OF VANDALISM, OTHER THAN PREVIOUSLY NOTED, IF ANY? YES No % S/C COMMENTS : -10/18/96 18:56 FAX 9078355860 CVEA HYDRO 22% VALDEZ OFFICE {g08 -WOF: Gees ~ WORK ORDER REPRINT PWO: PRIORITY: E Page 1 RATING: 10 TYPE: PM eeeeeat P CHG CD: INS Material Sant INSPECTION EQUIPMENT vs 30098 DESCRIPTION: SOLOMON LAKE DIKE LOCATION: SOLOMON LAKE KEY WORD: DIKE an PROCS: NONE PM DESC: PM0041 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:45 PHONE: DUE DATE: 10/08/96 + ee ee wr oe oe - PROBLEM DESCRIPTION “ SOLOMON LAKE DIKE WEEKLY INSPECTION: (TASK 00041) (NOTE: ANY "YES" ANSWER REQUIRES WRITTEN DESCRIPTION SKETCHES, MEASUREMENTS ETC.) (NOTE: S/C MEANS SNOW COVERED, UNABLE TO BE SEEN. ) DATE DONE yo -/f-94 INSPECTOR __ Guay 1- ARE THERE ANY SIGNS OF WATER UNDER CUTTING ABUTMENTS OR STRUCTURES? YES_ NO_v_ S/Cin IS THERE ANY VISIBLE SEEPAGE UNDER DIKE STRUCTURES? RECORD "SCADA" DIKE SEEPAGE ~./ CFS. 2- DO CEMENT STRUCTURES SHOW ANY SIGNS OF SPALLING OR EROSION FROM WEATHER, WATER FLOWS ETC? YES No Vw s/c 3- DOES DOWNSTREAM RIPRAP FACE OF DIKE SHOW SIGNS OF SLOUGHING, ROCK OR SNOW SLIDING ACTION, OR SINKHOLES ETC? YES No 4- ARE THERE ANY SPRINGS, WET SPOTS OR INCREASED VEGITATION GROWTH, NEAR OR ON DIKE. YES No YY s/c S- ARE THERE ANY CHANGES IN ALIGNMENT OF ROAD OR WAVE WALL? | YES No Y= s/c 6- WAVE WALL AND ABUTMENTS: ANY NEW CRACKS EVIDENT? ANY CHANGE IN EXISTING CRACKS? YES No “ s/c 7- DOES ASPHALT FACE SHOW ANY DETERIORATION, CRACKING ETC? VYESie wl) no £7 | |s7e TL CHECK ASPHALT TO WAVE WALL SEAL, ANY SEAPERATION BETWEEN THE TWO? | YES NO s/c 9- ANY SIGNS OF VANDALISM? YES_. NO s/c COMMENTS : | -10/18 E 5 IE , aon 18:56 FAA COTEISSEEO CVEA HYDRO +++ VALDEZ OFFICE og ORDER RE - RINT = Pwo: PRIORITY: E Page 1 RATING: 10 TYPE: PM arvet P —= os << Material (Sabor INSPECTION EQUIPMENT #: 30093 DESCRIPTION: #1 PENSTOCK, 48" X 3785’ a UNIT 1 PENSTOCK KEY WORD: PENSTOCK SAFETY lect NONE PM satan PMO0039 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:45 PHONE: DUE DATE: 10/08/96 PROBLEM DESCRIPTION -— PENSTOCK INSPECTION - WEEKLY: (TASK 00039) (NOTE: ANY "YES" ANSWER: REQUIRES DETAILED DESCRIPTION OF PROBLEM. ) DATE DONE _/0 -~/£-96 INSPECTOR Ganf 1- PIPE AND JOINTS; ANY LEAKAGE NOTED? YES NO s/c 2- 3" DRAIN VALVES; ANY LEAKS, OR OTHER PROBLEMS? YES No Y s/c 3- AIR VALVE BOXES; LEAKAGE? SNOW BUILT UP? OTHER PROBLEMS? YES No ~~ s/c 4- PENSTOCK SUPPORTS, ANYTHING ABNORMAL? YES No S/Cc 5- CONDUIT AND CONDUIT SUPPORTS, ANYTHING ABNORMAL? YES NO yY S/C 6- ANY SIGNS OF V. ALISM? YES No s/c 7- ANY GROUND SEEPAGE, EROSION AFFECTING PENSTOCK? YES no VY S/Cc COMMENTS : - 10/18/96 18:56 FAX 9078355860 CVEA HYDRO 222 VALDEZ OFFICE 10 oS: = WORK ORDER REPRINT = Pwo: | ROR STE E Page 1 RATING: 10 TYPE: PM STATUS:P CHG CD: INS , Nateye eee INSPECTION EQUIPMENT #: 30094 DESCRIPTION: #2 PENSTOCK, 48" X 3785° LOCATION: UNIT 2 PENSTOCK KEY WORD: PENSTOCK SAFETY PROCS: NONE PM DESC: PM0039 SUBMITTED: PM SCHEDULE DATE: 10/04/96 TIME: 12:45 PHONE : DUE DATE: 10/08/96 -----—-- PROBLEM DESCRIPTION PENSTOCK INSPECTION - WEEKLY: (TASK 00039) (NOTE: ANY "YES" ANSWER REQUIRES DETAILED DESCRIPTION OF PROBLEM. ) DATE DONE co /%-9% INSPECTOR _ lost? 1- PIPE AND JOINTS; ANY LEAKAGE NOTED? YES NO s/C 2- 3" DRAIN VALVES; ANY LEAKS, OR OTHER PROBLEMS? YES NO VY s/c 3- AIR VALVE BOXES; LEAKAGE? SNOW BUILT UP? OTHER PROBLEMS? YES NOY s/c 4- PENSTOCK SUPPORTS, ANYTHING ABNORMAL? YES No Y s/c 5- CONDUIT AND CONDUIT SUPPORTS, ANYTHING ABNORMAL? YES NO s/c 6- ANY SIGNS OF VANDALISM? YES NO s/c 7- ANY GROUND SEEPAGE, EROSION AFFECTING PENSTOCK? YES No yy s/c " COMMENTS : CONTINUED sienipeineneiieeeptons eee ee ee on oo OO, . finger?quake@giseis.alaska.edu at www-ak.wr.u... Page 1 of 2 {giseis.alaska.edu] Login name: quake In real life: AEIC Public Information Directory: /home/quake Shell: /usr/bin/fingerquake Never logged in. New mail received Fri Oct 18 14:41:21 1996; unread since Sat Oct 5 00:10:29 1996 Plan: ALASKA EARTHQUAKE INFORMATION CENTER (AEIC) PRELIMINARY EPICENTER DETERMINATIONS This listing includes the most recent 100 earthquakes with magnitudes of 2.0 or greater processed by the AEIC, a State of Alaska/USGS cooperative seismic observatory located at the Geophyscial Institute of the University of Alaska Fairbanks. Aleutian earthquakes located outside of the AEIC are based on data obtained from the USGS National Earthquake Information Center (NEIC). QUAL is the location quality where A = good, D = poor, E = error or unknown, and * = NEIC location and magnitude. NEIC magnitudes can be mb, Ms, or Mw. For more information see http://www.giseis.alaska.edu/Seis/ or send Email to aeic@giseis.alaska.edu. A listing that includes magnitudes less than 2.0 can be obtained from "finger allquake@giseis.alaska.edu". UTC DATE UTC TIME LAT. LON. DEPTH MAG QUAL COMMENTS yy-mm-dd hh:mm:ss (deg.) (deg.) (km) (ml) WNW of Valdez N of Valdez SSW of Talkeetna ENE of Pedro Bay ENE of Skwentna WSW of Talkeetna W of Kenai SW of Pump Station #7 SE of Tyonek SW of Pump Station #7 S of Kantishna SSW of Skwentna SSE of Kantishna S of Kantishna SSW of Tatitlek S of Sterling WNW of Kenai ESE of McCarthy S of Willow z NNE of Tyonek 103.3 km SSE of Pedro Bay 60. E of Icy Bay 135 WNW of Ninilchik SL. SSE of Kantishna Bibs WNW of Talkeetna 72. N of Icy Bay 62. ENE of Pedro Bay 44. NNE of Chitina 58s WNW of Anchor Point 35. NNE of Skwentna 46. SE of Kantishna 32. SSW of Kantishna 15. SSE of Talkeetna 30. SSW of Kantishna 13 . NNE of North Pole 7135 WNW of Ninilchik 70. SSE of Pedro Bay 96/10/06 05:34:39 61.36N 147.64W 35. 96/10/06 07:58:06 61.63N 146.43W 30. 96/10/06 15:04:34 62.16N 150.25W - 96/10/06 15:13:08 60.06N 153.11W 124. 96/10/06 20:25:37 62.03N 150.50W 10. 96/10/07 01:16:53 62.18N 150.68W 63. 96/10/07 02:42:12 60.57N 152.18W 84. 96/10/07 07:37:00 65.24N 148.45W 9: 96/10/07 07:58:13 60.96N 150.90W 44. 96/10/07 11:06:58 65.17N 148.54W 11. 96/10/07 11:56:39 63.11N 151.01W 130. 96/10/07 19:03:19 61.52N 151.62W 79. 96/10/08 00:24:41 63.09N 150.71W 116. 96/10/08 01:32:30 63.08N 151.12W 125. 96/10/08 06:59:00 60.17N 147.55W 15. 96/10/08 07:18:32 60.28N 150.74W 43. 96/10/08 12:33:45 60.77N 152.42W 112. 96/10/08 13:11:39 61.02N 141.63W 2. 96/10/08 14:09:54 61.57N 150.01W 34. 96/10/08 15:06:59 61.38N 150.99W 56. 96/10/08 15:49:15 58.87N 153.73W 76. 96/10/08 17:40:51 59.99N 140.59W 6. 96/10/08 18:25:44 60.18N 152.95W 120. 96/10/08 20:27:05 63.10N 150.53W 108. 96/10/08 21:04:22 62.52N 150.98W 85. 96/10/09 02:46:56 60.59N 141.59W 8. 96/10/09 07:55:38 60.01N 153.08W =i 96/10/09 08:47:07 61.87N 144.07W -. 96/10/09 10:50:50 60.01N 152.75W 99. 96/10/09 14:09:52 62.25N 150.93W 63. 96/10/09 14:41:20 63.17N 150.44W 116. 96/10/09 15:39:57 63.23N 151.10W 6. 96/10/09 16:14:06 62.20N 149.96W 57. 96/10/10 07:14:54 63.25N 151.07W Sis 96/10/10 09:13:21 64.86N 147.28W 14. 96/10/10 10:09:12 60.19N 152.95W 106. 96/10/10 15:05:43 59.20N 153.62W 95. 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OeAUNR FR ANWDAUNOYNS SgS8558 BSSS55 55555 DAWARPRODOPRPPIWO 9 OPORPDWODDODOODDUNDAYISLUDOYNRPW> BSS ggs SSSSS5 55555 Page 2 of 2 W of Anchor Point SSE of Atka SE of Talkeetna SW of Cantwell SSW of Talkeetna SSW of Tyonek ESE of Kantishna km E of Kantishna SW of Kantishna SSW of Kantishna SSE of Skwentna SSE of Kantishna E of Skwentna SSE of Tyonek ESE of Pedro Bay km SSE of Kantishna S of Kantishna N of Skwentna N of Valdez N of Valdez SW of Karluk S of Pedro Bay WSW of Klukwan NW of Tyonek NNE of Skwentna SW of Willow SW of Skwentna km WNW of Kantishna N of Kantishna SSW of Pump Station #7 SSE of Cantwell S of Valdez NW of English Bay WNW of Anchor Point W of Ninilchik NW of Tyonek NNW of Talkeetna NNW of Skwentna W of Seward km ENE of Amchitka BSSS5S5S5 5555555555555 555 E of Dawson City SW of Cantwell S of King Salmon SE of Tyonek SSW of Hope SSW of Hope ENE of Icy Bay SE of Kasilof SSW of Kantishna NNE of Sutton ENE of Sutton WNW of Anchor Point WNW of Tyonek W of Ninilchik WSW of Hope W of Ninilchik W of English Bay WSW of Cantwell E of Port Alsworth swW of Kantishna ESE of Port Alsworth E of Minto N of Valdez<__ 5:49:00 PM fs HOBBS) ie” DECEIVE a a JUL 11 1996 Alaska Industrial Developmen Ms. Peggy Sutton and Export Authority President of Board Copper Valley Electric Association ; P.O. Box 45 / ; Glennallen, Alaska 99588 oe. Mb. Re: CVEA’s Need for Lower Cost Power Dee ie E [- Sub: Willingness to Reconsider a Small Coal Fired Cogeneration Plant as a Realistic Alternative Dear Ms. Sutton: Over the past several years we have witnessed a considerable effort put forth in evaluating and proposing various options for meeting the long range power needs of your utility, with little actually being accomplished. These studies have identified CVEA’s aging diesel generation capacity as the major contributor to your high cost of power service. Despite differences I have had with CVEA’s past and present management, I believe that our primary objectives of trying to find an alternative energy source that could reduce the cost of power to CVEA member owners has been the same. With growing uncertainty regarding the approval of the Sutton to Glennallen intertie and CVEA’s recent unexpected negative load growth outlook could make it a good time to reconsider a small (5-10MWe) coal fired cogeneration plant, that could be integrated and operated with your Glennallen diesel plant, as a practical and cost effective alternative that could be implemented within a year or so. Accordingly, I would like to take up where we left off more than three years ago and reaffirm my willingness to begin discussions and to work with CVEA management to try and put together a realistic and economically viable alternative for reducing CVEA’s power production costs. The recently completed power and economic studies that were prepared for evaluating the feasibility of the proposed intertie and various alternatives would provide excellent baseline information for putting together a made to fit alternative project proposal that would meet CVEA’s present need while meeting the review criteria necessary to demonstrate economic viability and financability. A legitimate alternative proposal that was successful in gaining the support of CVEA might also be eligible for financing from the already appropriated $35,000,000 zero interest loan fund which in itself would be a major factor in reducing your power costs. cc: RA pat Dave Can (cram Wall, ( FYI ews) 229 Whitney Road « Anchorage, Alaska 99501 * (907) 278-7283 +» FAX 278-7448 Ms. Sutton/CVEA Coal Alternative July 10, 1996 page 2 The biggest unanswered question is what kind of business relationship would offer CVEA the greatest long range benefit and flexibility to manage its power service business in a deregulated and much more competitive environment. As other utilities are doing in preparing for deregulation, CVEA might strengthen its competitive advantage by teaming with a well positioned private power producer now to create a low cost wholesale power production capability exclusively for itself. This could be accomplished by teaming with a private power producer to form your own wholesale power production company. A private wholesale power company, that had the interests of CVEA at heart, could purchase and upgrade CVEA’s aging Glennallen diesel generation plant by integrating it with a small coal fired cogeneration plant, rejuvenating other areas of the plant and automating the entire facility to create a reliable low cost wholesale power source exclusively for CVEA dispatch. The integration of a small coal fired cogeneration plant with that of the old Glennallen diesel plant would make good use of existing infrastructure, utility services and the aging diesel generators themselves to create a highly reliable and functional utility grade plant at a fraction of the cost of a new plant or other possible alternatives. The coal fired portion of the plant could reliably produce low cost wholesale power on a continual bases to compliment and load share nicely with existing hydroelectric capacity while the diesel generation portion of the plant could be preserved and maintained in a ready to run standby condition for immediate use whenever needed. I believe it is possible to construct a small coal fired cogeneration addition to your existing Glennallen diesel plant and to upgrade and automate the entire facility for less than $15,000,000 from which power could be reliably produced for less than $.06/kwh (excluding levelized or depreciation costs) while also producing marketable heat energy for less than $8/mmbtu. Such a plant would rely on the abundant coal reserves of the nearby Matanuska Valley to provide its primary input energy needs of 10,000 - 20,000 tons of coal per year while also being capable of burning natural gas as well as various alternative fuels such as wood/paper wastes, used oils/fuels and the like in an environmentally sound and approved manner. I am hopeful that this conceptual project proposal will be viewed as a simple and cost effective alternative that has merit for reducing CVEA’s power production costs while providing numerous other worthwhile benefits to the community. However, I realize that such a project is nearly impossible nor worth pursuing without the support and willingness of the CVEA board and management to make it happen. Therefor, I am not willing to spend allot more time or effort pursing this project unless your utility is willing to give it serious consideration as a possible alternative. Ms. Sutton/CVEA Coal Alternative July 10, 1996 page 3 Please call if you are interested in exploring how a simple coal fired cogeneration plant might be the best and most attainable method currently available for reducing your utility’s power costs while providing firm new capacity. Sincerely, Randy Hobbs . President cc: Clayton Hurless - CVEA _ Dennis McCrohan - AIDEA Att: | Power Unleashed 96066.CVE Power Unleashed The coming aia restructuring of the nations electric uti lity industry wil have a profound consequences for the American economy inthe 1990s as the telecommuications revolt tion did int the 980s, his radical restructuring first and foremost involves the proposed deregulation of electricity generation and the collateral ability of consumers to buy power from any broker or supplier — not just from their local, monopoly utility. Today, public utilities commissions in over 20 states, as well as the Federal Energy Regulatory Commission, are considering radical restructuring plans. At the forefront of this restructuring revolution are states such as California and Illinois, where compa- nies like Pacific Gas & Electric, PacifiCorp, and Central Illinois Power are proactively pushing radical restructuring. Such restructuring will mean new markets for electric com- panies, distributors, and equipment manufacturers; new freedom for businesses to buy in an open market; and new opportunities for other industries, such as cable and telecommunications, to enter the power business. To capitalize on these opportunities, forward- thinking and innovative utilities such as American Electric Power, Consolidated Edison, Entergy, the Southern Company, Niagara Mohawk, UtiliCorp, and Washington Water Power are already competing not just on price. They are dramatically boosting customer service and marketing imaginative new products such as real-time pricing and interactive, computer-controlled load management. The obvious question: Will your company be ready for radical restructuring? SPECIAL ADVERTISING SECTION The answer lies in first understanding three major forces driving radical restructuring and then understanding how these forces must shape your strategic actions. The first factor is technological change. ‘Today, electricity generation is no longer a “natural monopoly” in which the cheapest power is generated by the most capital-intensive plants. Instead, smaller, more fuel-efficient technologies such as gas-fired combus- tion turbines and wind turbines have smashed traditional barriers to entry in an industry hitherto the exclusive domain of large coal and nuclear plants. Second, individual states are facing increasing economic competition, not just from global competitors like Japan and Ger- many, but also from adjacent states. In thinking about how to pro- tect and expand their state’s job base, both legislators and regulators have realized just how important electricity prices are in creating — or destroying — competitive advantage. Third, there has been an enormous increase in the number of independent power producers, brokers, and energy marketers competing in the emerging electricity mar- ket. These tough new competitors range from small but aggressive energy brokers such as New Energy Ventures to one of the largest electricity power producers in the world, the Enron corporation. New Energy Ventures (NEV) is a Pasadena-based compa- ny founded by former Southern California Edison President Michael Peevey to chal- lenge high-cost electricity producers on their own turf. NEV is a buyer's agent that helps clients such as the California Retailers Asso- ciation secure the lowest cost and most reli- able electricity supplies available. Because NEV is paid on a percentage-of-the-savings basis, NEV’s incentive is to maximize its client’s electricity cost savings. In a deregulated environment, a buyer’s agent such as NEV can secure power at steep discounts rel- ative to the rates offered by many of the nation’s high-cost utilities. I Us not just small companies nipping at the heels of high-cost electricity producers. At the other end of the spectrum there is the Houston-based giant Enron — the most aggressive indepen- dent power producer in the world today. Enron has been ranked by FORTUNE® as the nation’s most innovative company. It sees participation in the retail electricity power market as a natural extension of its natural gas and wholesale electricity activities. Formed in 1985 from the merger of two gas pipeline companies, Enron has become the world’s largest integrat- ed natural gas company and largest nonregulated wholesaler of electricity in the U.S. WVU Cm Cnt Cdtn MFT altace cy er reb tema y radical restructuring Jeffrey K. Skilling, chairman and CEO of Enron Capital and Trade Resources, the company’s energy products and services busi- ness unit, predicts the emergence of a new energy paradigm, one which will provide savings for consumers and new opportunities for companies such as Enron. Says Skilling: “We'll see a significant and permanent drop in the price of electricity with the advent of retail competition as homes and small businesses begin to enjoy savings that the big utilities now give only to their larger customers.” To Skilling, that’s just the start. He believes the entire energy industry will be transformed in ways that will benefit everyone, and con- sumers will begin to see the innovations almost immediately. For example, Skilling sees the day soon when environmental- ly conscious customers will be able to choose from a menu of elec- tricity sources that includes such “green power” options as wind, solar, or geothermal power. The cost may be higher for this partic- ular service, but that’s a trade-off the customer should have the choice to make. Two recent projects by Enron indicate just how potent competition can be in driving down energy prices. By working with the Archdiocese of Chicago to improve energy management, Enron has helped the Church save $8 mil- lion in energy costs for its churches, schools, and hospitals. In New York City, Enron is offering to replace, at no cost to the school district, 70-year-old coal-fired furnaces with natural gas-fired burners. A contract to sup- ply gas to the schools will repay Enron’s investment; the schools will pay less for the gas than they pay for the coal it replaces, and air pollution will be reduced. “Ultimately,” Skilling predicts, “we'll see integrated energy companies providing both gas and electricity. As the energy system integrates, the market will ensure use of the most economic energy source at any given time. Many of today’s electric utilities will evolve into ‘wire’ companies — focusing only on owning and main- taining a reliable system.” To Skilling, this is not a question of “if” but “when.” “FERC has eliminated barriers to competition in the whole- sale power market, states from New Hampshire and Illinois to Cali- fornia are moving to retail competition, and progressive utilitie voluntarily opening their service areas to competitors,” he explains. “The opposition lies with utilities who have made, by their own admission, $200 billion in noncompetitive investments.” But to Skilling, “this is a time for innovation, not procrastination.” In calling for a faster restructuring pace, Skilling notes the irony of utilities claiming to have the interest of the small consumer at heart while, at the same time, aggressively seeking to tie large industrial users into long-term contracts at favorable rates not offered to homeowners. Says Skilling: “It’s not ‘deregulation’ which is causing these cost shifts to small customers; we haven’t even begun to see widespread customer choice yet. Rather, it’s the absence of choice tor all customers which allows utilities to reduce rates to some customers but not others.” In this emerging world of radical restructuring and innova- tion, utility executives are going to have to quickly adapt or, like dinosaurs, quickly become extinct. In order to adapt, utility execu- tives must stop seeing their mission as one of selling a bulk commodity to a captive cus- tomer. Instead, these executives must learn to aggressively compete on the basis of effi- ciency, price, and innovative, customized services such as “green pricing,” real-time pricing, and two-way interactive customer load management. In order to adapt, utility executives must also better navigate the often rocky shoals of legislative and regulatory reforms. For any utility executive who sits back and simply waits for deregulation to happen is likely to get a form of deregulation that will put his company out of business. he case of Illinova and it principal sub- sidiary, Illinois Power, provides an excellent example of how important itis for = utilities to proactively work with regulators and legislators to move swiftly forward with radical restructuring. As Paul L. Lang, senior vice president of Illinois Power, puts it: “We were the first utility in Illinois to advocate customer choice in March 1995. A year later we were the first utility in the nation to allow customers on an experimental basis to choose their own supplier for a portion of their electric needs.” In 1995, Illinois Power and the Coali- tion for Consumer Choice proposed Energy Choice 2000, a plan to make a gradual transition to competition. Under the plan, large customers will be able to choose their energy supplier beginning in the year 2000, while residential and commercial customers can choose by the year 2005. The guiding principle behind Energy Choice 2000 is summed up by Larry F. Altenbaumer, senior vice president, chief financial officer, and treasurer of Illinois Power: “Energy Choice 2000 is a flexible proposal and a constructive partnership between our business and other stakeholders. As we move forward, we’re seeking the counsel and the advice of experts around the table and from the customers we serve to make further refinements.” As a result of Illinois Power’s proposal, legislators formed the Joint Committee on Electric Utility Regulatory Reform. The goal Veo Roe eC a meer Ceca in ways that will benefit everyone, and consumers will begin Pomme mTOR Fm he SPECIAL ADVERTISING SECTION is to get input from all stakeholders and develop a restructuring bill by November 8, 1996 for the Illinois General Assembly. However, Illinois Power isn’t just waiting for the legis ature to get its structuring ball rolling. In April of this year, Illinois Power began a first-of-its-kind customer choice experiment, allow- ing 20 of the utility’s largest customers the opportunity to pick the supplier of their choice for a portion of their electric needs. History was made at midnight April 24, when two Illinois Power customers, Granite City Steel and LTV Steel, started wheeling a portion of their power from the supplier of their choice. No other utility in the nation, at that time, had given any of its customers this kind of opportunity. As a result of this experiment, Illinois Power is learning how competition will work and what benefits it actually brings. The company is also studying the feasibility of offering a similar experiment to other business and residential customers. Illinois Power plans to continue achieving superior financial performance by growing the busi- ness and by aggressively expanding markets. Recognizing that the new opportuni- ties for market growth are primarily outside the traditional electric and natural gas business, Illinois Power has also changed its organizational structure. Its new holding company, Illinova, gives it the flexibility to create unregulated subsidiaries — the flexibility necessary to pursue new areas of opportunity. This structure has made it possible for Illinova to begin aggressively expanding its market. For example, at the end of 1995, Illinova Generating, an independent power subsidiary, had investments totaling more than 300 megawatts of electric-generating capacity in seven differ- ent countries. According to Larry D. Haab, chairman, president, and CEO of Illinova-Illinois Power: “Illinova Generating’s goal is to be among the top independent power producers in the world by the year 2000.” Similarly, Hlinova Power Marketing Inc. has established a toehold in the power marketing business. It began executing wholesale transactions in 1995 and has established a presence in the natural gas market by acquiring 50% of Tenaska Marketing Ventures. This year, Illinova also announced the creation of a new subsidiary, Illinova Energy Partners, that will offer a wide range of customized energy services in the Midwest and western United States. SPECIAL ADVERTISING SECTION Pacific Gas and Electr P acific Gas and Electric Company is a premier example of a utility seeking to swiftly move the legislative and regulatory process forward toward a competitive electric marketplace. On March 29, 1996, PG&E made one of the most aggressive proposals in the nation to accelerate the transition to greater com- petition and customer choice in the electric power industry. The plan would allow cus- tomers to begin taking advantage of compe- tition as soon as 1998, with all customers having the option to purchase from competi- tive suppliers by 2001. As the transition to a competitive market takes place, PG&E is proposing to freeze electric prices for five years and accelerate the depreciation of the company’s Diablo Canyon Nuclear Power Plant and hydroelectric, fossil, and geother- mal generation assets. Since the onset of the restructuring discussions in California in 1994, PG&E has been a leader in advocating customer choice. According to PG&E Chairman and Chief Executive Officer Stanley T. Skinner, “We agree with the California Public Utilities Commission’s vision of a future with a more open and competitive market for electric power. In fact, we think customers would like us to get there more quickly, and the plan we’ve announced is designed to do that. The combination of lower- ing our costs and freezing prices for the next five years would allow transition cost recovery to be completed by 2001, four years sooner than the transition period contemplated by the CPUC. It would also further improve the economic climate in the state of California.” Skinner continues: “This plan will make sure that customers aren’t on a rate roller coaster from now to 2001. It also will mean that, in real terms, PG&E customers will be paying less every year, no matter what happens in electric industry restructuring.” Based on current estimates, the freeze would mean that, on an inflation- adjusted basis, PG&E’s prices in 2001 would be almost 30% less than their high point in 1993. PG&E is also taking a leadership role in working with the CPUC, the Federal Energy Regulatory Commission, and other stakeholders to develop how the new marketplace will operate. Establishing a power exchange and an independent system operator to ensure the continued reliability of California’s electric system are part of the plans. In addition, PG&E is one of the first utilities in the nation to move forward on a voluntary divestiture of its generating plants. From a public policy view, such divestiture is necessary if the newly deregulated generation market is to truly be competitive. Specif- ically, PG&E has agreed to divest at least 50% of its fossil-fueled we PGEE is is one of ; the first utilities in the nation to move forward 4 on a ‘voluntary’ di stiture of its generating lants. generation plants in order to comply with the CPUC’ restructur- ing order. Furthermore, it has retained the investment banking firm of Goldman, Sachs & Co. to help the company evaluate the divestiture of all its power plants except for Diablo Canyon. Skinner believes this action “underscores PG&E’s continuing commitment to a competitive market and our desire to make it happen as soon as possible.” Importantly, PG&E has worked close- ly to bring other stakeholders cooperatively “ss into the restructuring process, including i major customer groups, labor unions, and * environmental groups. For example, Jack McNally, business manager of the Interna- tional Brotherhood of Electrical Workers 1245, has praised the excellent working rela- tionship his local union has had with PG&E and believes that PG&E’s proposal provides for meaningful assistance to employees who will be affected by electric industry restruc- turing. Similarly, Ralph Cavanagh, executive director, Natural Resources Defense Coun- cil, believes that “the PG&E proposal is an important step forward for the company; it also has many of the ingredients for a break- through in California’s contentious electric restructuring process.” The Southern Comp hile companies like PG&E and IIlinova have proactively sought to work with regulators to implement radical restructuring, the Southern Company is fighting hard to eliminate other regulatory roadblocks to fair competition. The Southern Company is the holding company for five electric utilities in the Southeast: Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric. It is the nation’s largest producer of electricity; the company’s stock is one of the 20 most widely held corporate stocks in America and the company ranks No. | in the “most respected electric and gas utilities” category of FORTUNE'’s 1995 and 1996 “Corporate Reputations Survey.” In the emerging wholesale power marketing business, Southern wants to be the No. | power marketer in the Southeast by 1998, among the top ten power marketers nationally by 1997, and among the top five nationally by 2003. The company’s power marketing organization has opened regional offices in San Francisco, Vancouver, Boston, and Concord, NH, as well as 24-hour trading desks in Atlanta. Currently, the Southern Development and Investment Group subsidiary is developing and marketing energy management services and new business lines to help make the Southern Compa- ny more competitive by adding value to the core business services. The subsidiary also provides energy-related consulting services to customers and other utility companies. Its projects include the Good Cents home energy-efficiency program, which is marketed to utilities across the nation; and EnerLink, a computer-based energy management system for large commercial and industrial customers. Southern Development also markets home security systems and is involved in developing flywheel energy-storage technology. In addition, Southern’s fossil-hydro generation group has begun managing each power plant as a business unit, looking at its profit and loss and its contribution to Southern’s bottom line. By next year, each power plant will have a set of financial targets, with goals such as return on equity. Each plant will also look at two sets of financial statements — one based on the current regulatory environment and the other based on projected market revenues that would exist in a deregulated environ- ment. The goal: help employees understand where they need to make changes in opera- tions to enhance profitability and efficiency. Southern is also one of a handful of companies forging ahead into related indus- tries such as telecommunications. In April 1996, the company filed an application with the FCC requesting classification as an exempt telecommunications and information company. This would allow Southern to form a telecommunications and information subsidiary to maximize the value of its telecommunications resources, which include 2,000 miles of fiber-optics across its four-state service territory. The applica- tion was filed after Congress enacted a telecommunications bill that lifted certain restrictions placed on the company by the Public Utility Holding Company Act of 1935 (PUHCA). Southern’s President and CEO A.W. Dahlberg believes repealing PUHCA is an essential ingredient of any successful restruc- turing effort. Only 11 power companies (and three gas companies) out of the hundreds of utilities across the nation are subject to the Act. To Dahlberg, PUHCA “unfairly restricts, prohibits, complicates, and delays a number of activities that could benefit our customers and share- holders. Repealing it is a basic fairness issue.” Dahlberg is also calling for elimination of subsidies and other unfair advantages enjoyed by public power agencies and govern- ment utilities such as the Tennessee Valley Authority. These advantages include freedom from most taxes, access to artificially low-cost capital, freedom from state and most federal regulatory oversight, and government financial backing. Dahlberg “firmly SPECIAL ADVERTISING S “We're working to drive “our costs down and S customer satisfaction up. § We're doing a good job with that, and tothewe're increasing : our efforts.” CTION believes these advantages must be removed to ensure fair competi- tion with the tax-paying private sector. There’s also the question of whether the federal government needs to be in the electric power business in the 1990s.” Dahlberg sums up Southern’s future this way: “We're work- ing to drive our costs down and customer satisfaction up. We're doing a good job with that, and we’re increasing our efforts. Since the mid-’70s, we’ve had to compete in Georgia with other suppliers for new industrial and commercial loads of more than 900 kilo- watts. That competition is fierce. I believe it’s a model for the type of competition other utilities will see.” Niagara Mohawk and Marketin Plum Street Ener At. company forging swiftly ahead to mak e the transition to a competitive marketplace is Niagara Mohawk and its newly created, unregulated subsidiary, Plum Street Enterprises. Plum Street reaches beyond its parent company’s traditional northeastern service area to offer services to national and international markets and create innovative products and services. According to Albert J. Budney, presi- dent of Plum Street Enterprises: “The idea behind Plum Street is that it is free to reinvent itself as required. As president, my challenge to our officers is simple: Pick where you’re gonna play. Play to win. And bring the rest of us along when it makes business sense.” Niagara Mohawk’s spinoff of its new, unregulated divisions is part of a larger program called “PowerChoice.” This is a comprehensive plan for creating a fully competitive marketplace and restructuring the company to compete in the new envi- ronment. A key provision calls for the estab- lishment of an open, competitive electricity generation market in which Niagara Mohawk’ largest customers will be free to choose their own electric supplier. Niagara Mohawk is continually in discussion with unregulat- ed generators and the state of New York to advance PowerChoice and create a mutually beneficial future for all concerned. The pay- off should be more competitive electricity rates and expanded choice for commercial, industrial, and residential customers. “We have no choice but to focus on customers,” believes President Budney. “We no longer own customers by right of fran- chise. If we don’t respond effectively to their needs, they won’t do business with us.” SPECIAL ADVERTISING SECTION n the other side of the country, another innovative utility, Washington Water Power, has likewise formed a new, nonregulated energy services subsidiary, WWP Energy Solutions, to meet the challenges of a changing energy marketplace. Washington Water Power provides electric service to 291,000 customers in eastern Washington and northern Idaho, and provides natural gas service to 227,000 customers in parts of four states — Washington, Idaho, Oregon, and California. According to WWP Energy Solutions Vice President Gerry Crooks, “Deregulation is quickly becoming a reality across the country. The old notion Washington Water Power, WWP Energy Solutions’ parent company, is already anticipating the day when retail wheeling is a reality. Recently, the company filed for approval of an experimental tariff that would allow certain large-use electric customers to choose their own electric supplier to serve a portion of their load. “We embrace the idea of greater customer choice in the utility industry because we believe it will ultimately benefit all of our customers by lowering energy prices and enhancing services,” says Crooks. In concert with this‘effort, WWP Energy Solutions will offer its line of services in much the same way that gas commodity analy- sis now does and help customers determine which is the best deal in the marketplace. of ‘captive’ utility customers is quickly dissolving. In this changing environment, customers are recognizing the cost and efficiency benefits available to them.” Through its line of products and services, WWYP Energy Solutions is introducing local, regional, and national commercial and industrial retail customers to a total package “Customers are demanding supply alternatives, innovative energy solutions, and lower costs. As customers According to Crooks, the WWP Energy Solutions line of products and services provides the variety of choices customers are seeking. “With some of the lowest ener- gy prices in the nation, we can compete on price with just about anybody,” he says, “and our principal strength will come from the strength of the relationships built with customers.” of customer-focused energy solutions. Says Crooks: “Customers are demand- ing supply alternatives, innovative energy solutions, and lower costs. As customers are presented with more and more choices, expectations rise. And customers are not waiting for legislative changes or regulatory approvals to seek opportunities to gain effi- ciencies and to save money on their energy bill.” According to Crooks, WWP’s goal is to “partner with our customers in developing a results-oriented energy management strategy, one which will provide them with the choices they desire and allow them to gain even greater value for their energy investment.” WWP Energy Solutions’ line of services begins with energy information systems. WWP will provide analysis of energy use on an hour-by-hour, even minute-by-minute, basis and link all of a customer’s locations into a single report. Crooks sees these information systems as “the critical enabler” in WWP’s ability to capture market opportunities. Included in the information systems package are real-time energy demand and usage information and information links to all customer locations. Other products and services include resource accounting sys- tems, energy management services, technology assessment services, and electric and natural gas commodity management. For example, WWP Energy Solutions will provide energy analysis of buildings and instruct the company’s employees on how to use energy most efficiently. Similarly, WWP will analyze a company’s current equip- ment and determine whether newer equipment employing emerg- ing technologies would make economic sense for the customer. Yam acon Met more and more choices, expectations rise.” onsolidated Edison Company of New York, Inc. (Con Edison) provides elec- tricity and gas services to much of New York City and most of Westchester County as well as steam to Manhattan. More than eight million people live in Con Edison’s 600-square-mile service area, making it one of the world’s most densely populated geographical regions. Eugene R. McGrath, chairman, president, and chief execu- tive officer, describes Con Edison’s journey toward a more compet- itive energy industry as follows: “We are progressing well with our strategy to control costs, deliver growth opportunities, and serve our customers better than anyone else can. In these efforts, we are leveraging our considerable strengths — including our status as provider of the world’s most reliable electric service — into com- petitive advantage.” Con Edison has adopted a multifaceted strategy which includes: cost reductions, increasing employee productivity through training, pursuing prudent growth opportunities, and strengthening customer relations by providing value-added services. To reduce its costs, Con Edison has also specifically targeted the state’s gross receipt tax and high cost generation. As the highest taxed utility in the nation, Con Edison has been working aggressively with the state’s political leaders. 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PLATE 507 PLUM STREET « SYRACUSE NY 13204 © 315 460 3059 http://www.plomst.com SPECIAL ADVERTISING SECTION Con Edison has also developed a pro- | gram to buy out most of the high-cost nonutility generation contracts the compa- ny was required by state law to enter into. As McGrath notes, “This will save Con Edison customers billions of dollars that would otherwise have to be paid over the lifetime of these contracts.” More broadly, Con Edison has embarked on an aggressive cost-cutting program. Through attrition, Con Edison’s work force has been reduced by 20% over the past decade. As highly skilled employees leave the work force, openings are created and offered to employees who are displaced because of the retirement of older, less-effi- cient generating units. In addition, Con Edison has built a state-of-the-art training facility where employees are encouraged to take a proac- tive role in preparing for new assignments. To date, more than 200 employees have found jobs in other areas of the company by preparing themselves through courses offered at “The L process, coupled with a practice of “rota- arning Center.” This tion” — moving employees around the organization to acquire knowledge and experience in difficult areas — is helping to prepare the company for a more com- petitive future. To take advantage of emerging growth opportunities, Con Edison has created a nonregulated subsidiary company, PROMARK, that buys and sells natural gas. Con Edison is also gaining experience in the wholesale market for electricity through its “Megawatt-Hour Store,” the company’s marketing operation for “bulk power” transactions. In 1995, Con Edison sold 4.3 million megawatt-hours of electric- ity, more than all but one of the country’s top power marketers ranked in a recent industry survey. To leverage its reputation as the world’s most reliable supplier of electricity, Con Edison is offering a menu of products ranging from pump and motor repair for large commercial customers to custom- tailored energy, power quality, and technol- ogy advisory services. At the same time, to strengthen customer relations, Con Edison | | | is developing a force of 60 Customer Account Executives to provide one-stop shopping for large commercial customers. Finally, the company is pursuing pub- lic-private partnerships to foster economic development. An example is the newly opened New York Information Technology Center in lower Manhattan, a “Silicon Alley” for the burgeoning information and technology electronic multi-media indus- tries. The 400,000-square-foot building at 55 Broad Street is more than 50% commit- ted and is expected to have 2,000 people working for the businesses that will be housed there. One-third of these employees will be new to the city of New York. American Electric Power An Electric Power is one of the nation’s largest and most efficient pro- ducers of electric energy. It is one of only two investor-owned utilities in the United States that generates more than 100 billion kilowatt-hours of electricity in a calendar year. It serves 2.9 million customers in Ohio, Virginia, West Virginia, Indiana, Kentucky, Michigan, and Tennessee. On January 1, 1996, AEP adopted a one-company, one-name, one-brand strat- egy to build marketing strength and foster growth in revenues — both inside and outside its service territory. Today, AEP’s operating companies — Appalachian Power, Columbus Southern Power/Ohio Power, Indiana Michigan Power, Wheeling Power, Kingsport Power, and Kentucky Power — no longer are called by their individual names. Instead, they are known as AEP, with the acronym now being used effective- ly to identify the company as “America’s Energy Partner.” In a speech at AEP’s annual share owners’ meeting in April, E. Linn Draper, AEP president, chairman, and chief execu- tive officer, explained that “adopting a single name will make it easier for our shareholders and the financial markets to follow AEP as it moves toward a deregulat- ed environment. A single name will enhance our recognition and promote loyalty among . SPECIAL ADVERTISING SECTION energy users — and we believe it will have the same effect with investors.” ‘To support its one-company, one-name, one-brand strategy, ‘P has completed a functional realignment that includes a Power Generation Group and a separate Energy Delivery & Customer Relations Group and has already begun an aggressive advertising campaign to promote the AEP “brand.” As a complement to this media campaign, AEP has also embarked on an innovative grassroots campaign to position itself as a market leader. While ev yone in the organization plays a role in delivering AEP’s message, much of the weight is carried by newly appointed state presidents. The presidents focus on the needs of AEP customers in their respective states by concentrating on responsiveness and better working relations with customer groups, regulators, legislators, and commu- nity leaders. On the high-technology front, AEP has also completed a successful pilot pro- gram in Indiana, Ohio, and Virginia for TranstexT Advanced Energy Management System, an interactive device and variable rate program that allows residential cus- tomers to better control their electricity costs. On average, customers were able to reduce their annual electricity costs by 15% while maintaining or increasing comfort. After the pilot program was completed, 93% of the participants said they would want a TranstexT system, and AEP plans to make TranstexT available throughout its seven- state service area by the end of 1996. AEP is also reaching out to its indus- trial and commercial customers to promote more efficient energy usage. For example, AEP employees in Kentucky designed and built real-time pricing metering systems to work with Wal-Mart's in-store computerized energy management system and a new tiered electricity pricing structure. The system, being tested at four eastern Kentucky stores, will assist Wal-Mart in more efficiently using electricity and con- trolling energy costs. AEP’s leadership has also recognized the coming convergence of both telecommunications and cable services with electricity. A wholly owned subsidiary, AEP Investments, has invested in Interac- tive Multimedia Network. IMN will install an advanced digital communications network in the Columbus suburb of Upper Arlington. This broad-band network can provide a wide range of communications and interactive media choice, from digital cable television to video-on-demand, high-speed data transmission, and local and long-distance telephone service. Beer Pee wl mt PRM avo platform for Poe Ble (Maho Coico may hom coe) (4 (oe As AEP Investments President Donald M. Cements notes “This investment provides AEP with a research and development platform for potential interactive customer service technologies and also helps our company gain a better understanding of the competitive telecommunications marketplace as our own industry mov toward competition.” Ultimately, all of AEP’s organizational changes and strategic moves have one common goal: to enhance the company’s ability to service and retain existing customers while attracting new ones and improving performance. As Linn Draper puts it: “When retail customers have an opportunity to choose their energy supplier, we want AEP to be the obvious choice. But that won’t happen out of habit or just by taking their orders with a smile. The choice has to be earned. We know that.” CNG Energy Services Corporation NG Energy Services Corporation, headquartered in Pittsburgh, is the full- service energy marketing subsidiary of Consolidated Natural Gas Company. It offers electricity, natural gas, and related services to a broad range of customers across North America. Russell R. Gifford, president of CNG Energy Services Corporation, sees the emerging marketplace this way: “When Einstein stood at his chalkboard and wrote E=MC’, he didn’t come up with separate formulas for electricity, natural gas, and fuel oil. To Einstein, energy was energy.” In Gif- ford’s view, the lesson is that “we are shifting toward a much more integrated marketplace for all forms of energy — one stretching across all of North America. Already, energy is being exchanged and converted from one form to another, both physically and financially.” To compete in this marketplace, Gifford believes that today’s electric and natural gas companies must become the energy companies of tomorrow. CNG’s own strategy is to make itself a “one-stop shop” where customers can obtain all forms of energy and related services. To implement its strategy, CNG has formed an alliance to market energy on a wholesale basis in the northeastern United States with two Canadian companies, Hydro-Quebec and Noverco. One of the strengths of this alliance is its ability to convert energy forms to the customers’ advantage. For instance, excess natural gas supplies are acquired from one customer, then used to fuel an idle independent power plant to provide electricity for another cus- Unbundle. Rebundle Save a bundle. CNG is an aggressive trader in all energy markets. By leveraging the company’s enormous resources, CNG Energy Services offers customers energy solutions that help them manage costs and create opportunities. CNG. More Resources. More Resourceful. CNG Tower, Pittsburgh, PA 15222-3199. (412) 227-1000. http//www.cng.com. CNG is a registered service mark of Consolidated Natural Gas Company. SPECIAL ADVERTISING SECTION tomer. CNG has also entered into a second alliance to sell electrici- ty on a retail basis in a pilot program in New Hampshire. Gifford sees our energy future this wa As regulation is replaced by competition, the power of the customer will be signifi- cantly enhanced. That happened when the telecommunications, trucking, and airline industries were deregulated. What will distin- guish the surviving energy suppliers of the future will be the ability to satisfy the customer on all counts — the ability to offer not only size, financial resources, and energy expertise, but also a commit- ment to innovation and a willingness to enter into a genuine work- ing partnership with the customer.” Cc Util rp United Ue. United is an international, growth-oriented energy and services company based in Kansas City, MO. Since being formed in 1985 from Missouri Public Service Company, UuliCorp has grown through regulated utility acquisitions totaling approxi- mately $2 billion. Over the same period, the company has also spent more than $1 billion on nonregulated energy acquisitions and investments. UtiliCorp Chief Executive Officer Richard C. Green, Jr. is nationally recognized among his peers as one of the industry's true restructuring visionaries, and his company moved early and aggres- | sively to serve as an agent of positive change in an industry not noted for change. “When our management team met several years ago to assess UtiliCorp’s strategic future,” explains Green, “one factor was readi- ly apparent: deregulation is a relentless force dramatically pushing our industry to become customer-focused. We decided right then that rather than sit back and wait for the marketplace to pressure us to change, we would anticipate those changes and reshape our operations.” Green believes that the companies that will survive and pros- per in a restructured industry must change in three basic areas. “They must grow and diversify their customer base, sharpen their focus on product and service quality, and adopt a marketing cul- ture,” he says. Accordingly, last year, UtiliCorp launched EnergyOne™, the first nationally branded line of products and services for electric and gas utility customers. EnergyOne’s portfolio of value-added services and customized energy solutions is playing a key role in establishing UtiliCorp as America’s first truly national uulity com- pany. A UtiliCorp-led consortium has also purchased United Energy, the first Australian utility to be privatized, in a transaction valued at approximately $1.15 billion. UtiliCorp’s focus on operational excellence likewise is unrelenting. Its proposed $3 billion merger with Kansas City Power & Light Company, announced in January 1996, will com- DPELIAL ADVEKIISING SECTION bine the operating quality and financial strengths of KCP&L with UtiliCorp’s more diversified and growth-oriented approach. Green is also instilling a competitive marketing culture in every function of his organization. “Customers — residential, commercial, and industrial alike — clearly want energy providers that will offer a wide range of innovative commodity and noncommodity options and services,” he explains. “They want to make choices among solutions and have more control over the management of their energy needs.” In response, UtiliCorp has realigned its management structure and moved away from traditional administrative hierarchies such as engineering and accounting and instead organized around three distinct busi- nesses: generation and wholesale marketing, energy delivery, and retail marketing. According to Green, UtiliCorp’s new structure “allows us to focus on using tech- nology and innovation to meet customer demand quickly and aggressively, instead of just managing supply. Moreover, we have supplemented our utility management team with senior-level executive talent from a wide range of deregulated industries such as telecommunications, air- lines, financial services, and information technology.” UtiliCorp has also aggressively pursued new technology applications. In a partnership with Novell, Inc., the company has introduced “smart energy” developments designed to provide important competitive leverage for growth through innovation and improvements in customer-focused products and services. Today, Green is aggressively pursuing the UtiliCorp dream of becoming a truly national utility with business risk spread across Deregulation is a relentless force dramatically pushing ama to become customer-focused. broader business segments, regions, climates, and regulatory juris- dictions. Already, UtiliCorp has a strong national presence as a provider of competitive and innovative energy solutions and a growing presence in the international arena. The company has approximately 1.7 million electric and gas utility customers in eight states, one Canadian province, and Australia. It also owns interests in two electric utilities in New Zealand and markets natural gas to wholesale customers in the United Kingdom through joint ventures with British regional electric companies. * Green sums up the company’s approach this way: “The utilities that survive to compete in future decades will be the ones that recognize the new customer-driv- en direction of our industry, and act deci- sively to meet customer needs.” Con In this section, we have looked at ten different power companies whose CEOs have chosen to ride the restructuring wave — to attack and inno- vate in the emerging competitive market rather than defend their own narrow turf and stagnate. What each of these case studies has in common is a commitment by the companies to lower electricity costs, provide expanded services, and swiftly adapt to the emerging competitive environment. Nineteen ninety-six is likely to be a watershed year in radical restructuring, and much is, indeed, at stake. Lower energy costs will make our nation more competitive. This, in turn, will help us with everything from inflation and unemployment to our trade deficit. Will your company be a competitor or a casualty? There’s More Opportunity On-Line ¢ which utility companies are offering customized programs * the fate of stranded costs * power brokers T° keep pace with the opportunities presented by deregulation, Hemisphere Inc. presents the on-line edition of Power Unleashed at our Web site, You're already reading the printed version and there’s no reason to read it again on-line. Instead, what you'll find in the on-line version of Power Unleashed is additional information, in-depth, expansive, and up-to-the-minute. Detailed information about * low-cost suppliers And — more information from participants in the printed version. HEMISPHERE INC: Sits Avan av eno toa l(t ei) Produced by Hemisphere Inc. Written by Peter Navarro Design by McMillin Giacalone Thompson Design Cover Illustration: Theo Rudnak/sis " COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. Box. 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 EGELVE) |) MAY -'7 1996 May 03, 1996 Alaska Industrial Development and Export Authority Mr. Stan Sieczkowski Alaska Energy Authority 480 West Tudor Road Anchorage, AK 99503 SUBJECT: FERC Earthquake Reporting Dear Stan: Enclosed is a copy of Copper Valley Electric Association, Inc.’s (CVEA) earthquake inspection form. On April 30,1996, Valdez experienced a small earthquake that registered 3.9 in magnitude and was approximately 15 miles from Valdez.. If you have any questions or comments, please give me a call. Sincerely, ; /\WA~ Michael E. Easley, P.E. Manager, Engineering Services Enclosure w:\winword\let_mike\me96\96048jn.doc ALASKA ENERGY AUTHORITY Report on Seismic Event Date: S30 a /4 PROJECT Project Name: Soloma) Gukch FERC Number: 2772 DESCRIPTION OF EVENT Time of Occurrence: Date: //32/TC Time Reported: 21: 4° Time: 2/: 3% Reported To: Mier Eisley Magnitude: _ 3-9 Location of Epicenter: _ S-e DElow Distance From Project: |S Miles Direction: on One Ge Ase Os Osw ow onw ALARM SYSTEM ‘Not Activated wv Activated __. = Alarm Received ___ % POST EVENT INSPECTION Zavsa/ Performed by: se Gt <a INSPECTION REPORT Dam and Dikes: chediad _ Veo visable daune e Spillways: - Bae Time of Inspection: “//591% /oz1s Intakes and Gates: _ _V_ Bu Power Tunnels and Penstocks: V Power House: QZ @Ok Switchyard Transmission Lines: -RECHYED —HAY—_4-1996 Other Facilities: _Naluelouse, buboey Wat = pte TVEA Valdez 269 - 3077 FAX TO: AEA, STAN SIECZKOWSKI -(907) 564289936 WOOF: Gece’ oT WORK ORDER = PWO: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: RM Material/Labor ROUTINE MAINTENANCE —- NON O EQUIPMENT #: 30095 DESCRIPTION: SOLOMON LAKE DAM LOCATION: SOLOMON LAKE KEY WORD: DAM SAFETY PROCS: NONE PM DESC: PM0152 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 -------- PROBLEM DESCRIPTION -------- SOLOMON LAKE DAM WEEKLY INSPECTION. (TASK 00148) NOTE: "S/C" MEANS SNOW COVERED. REASON FOR INSPECTION: WEEKLY: FLOOD: EARTHQUAKE: + DATE DONE A - 30 -9l INSPECTOR Bu A Mw ie \u. Qe. 2 1- ACCESS ROADS- GENERAL CONDITION NOTES: (NOTE: IT IS UNDERSTOOD, THAT WINTER CONDITIONS ARE NOT GOOD FOR PICKUP, GRADE FOR PISTEN BULLEY IN WINTER. ) GOOD POOR FROM HIGHWAY TO PIPELINE: _ & PIPELINE RIGHT OF WAY: w PIPELINE TO STN. 900: = PIPELINE TO DAM/VHSE: 11|| pectimekeel | egos dhecceme||ie nea PIPELINE BAILEY BRIDGE: i UPPER PROJECT BRIDGE: = COMMENTS : 2- GULCH FLOW, (CELL PHONE TO USGS GUAGE) CFS: OuT of Seruice 3- SNOW STAKE LOWER: UPPER: 4- 525’ ELEVATION PRECIPITATION GUAGE READING: — 5- DAM SEEPAGE RECORDINGS: ON SCADA: DAM SEEPAGE READING -T CFS 8" BYPASS a CFS DAM SEEPAGE WEIR GAGE: INCHES: CFS= UNABLE TO READ () , WHY 6- OBSERVATIONS: ANY VISIBLE CHANGE IN ALIGNMENT OF ROAD, WAVE WALL OR FENCE? YES No“ s/c PS PS DS DS DS OS OO 9- WOOF? Cont) a WORK ORDER = PWO: PRIORITY: E Page 2 RATING: 10 (CONT. ) ANY CRUMBLING OR SPALLING NOTED ON ANY CEMENT STRUCTURE? YES NO vo S/C_=- OTHER THAN KNOWN EXPANTION CRACKS, ARE THERE ANY NEW CRACKS EVIDENT? YES NO — s/Cy DOES ASPHALT FACE SHOW ANY DETERIORATION. YES NO y S/C_- DOES ASPHALT TO WAVE WALL TAR SEAL SHOW SEPERATION? YES NO. “ ssc — NOTE ASPHALT FACE SNOW CONDITION WHERE WATER WASH IS USED. Clean DOES RIP RAP FACE SHOW ANY SIGNS OF SLOUGHING OR SETTLING? YES NO — IF S/C, ANY SLIDE ACTION? YES No uM OTHER THAN DAM SEEPAGE, IS THERE ANY SEEPAGE FROM LAKE EVIDENT? YES no“ ANY SIGNS OF D OR SNOWSLIDES INTO LAKE? YES NO ANY SIGNS OF DALISM? YES No BUBBLER- CHECKED? YES NO OIL PSI AY MOTOR SHUT OFF PSI * 10- WHEN THE WEEKLY INSPECTION W/O’S ARE COMPLETED, MAKE COPY FOR CPO. IN MAINTENANCE BINDER, POST IN INDEX AND PUT THE ORIGINALS IN BINDER. COMMENTS: WOf: Goes = WORK ORDER = Pwo: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: RM Material/Labor ROUTINE MAINTENANCE - NON O EQUIPMENT #: 30109 DESCRIPTION: SOLOMON GULCH VALVEHOUSE LOCATION: VALVEHOUSE KEY WORD: BUILDING SAFETY PROCS: NONE PM DESC: PM0048 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 per eerisnar aaewe! PROBLEM DESCRIPTION ee VALVE HOUSE WEEKLY INSPECTION: ee 00048) DATE DONE /- 30 -S6 INSPECTOR 1- AFTER ENTERING, UNPLUG INTRUSION ALARM, PICK UP PHONE AND WAIT TILL HYDRO GETS ON PHONE. IF THEY DON’T, CALL ON RADIO. NEED TO CONFIRM THAT INTRUSION ALARM WORKED ON ON ENTRY. LOWER LEVEL INSPECTION: »2- CHECK THAT HEATER IS WORKING. r3- CHECK ALL CIRCUIT BREAKERS. * 4- REPLACE ANY LIGHTS THAT ARE BURNT OUT. -—5- CHECK FOR LEAKS, ALL VALVES, FLANGES, LINES. 6- IF BYPASS VALVE CHANGES ARE NEEDED, CONTACT HYDRO WHEN YOU ARE READY TO ASSIST WITH CHANGE AS NEEDED. Y7- WATER WASH SYSTEM IN "DRAINED" MODE: CHECK SUPPLY VALVES AT AIR VALVES FOR "OFF". CHECK DRAIN VALVE FOR OPEN. CHECK FOR OPEN, FEED VALVE TO DAM. WHEN AT DAM, CHECK FEED VALVES FOR OPEN, HOSE VALVE FOR CLOSED. WATER WASH SYSTEM "IN USE" MODE: : CLOSE DRAIN VALVE. OPEN SUPPLY VALVES, AT AIR VALVES. CHECK FOR OPEN, FEED VALVE TO DAM. IN BREAKER PANEL "P", TURN PUMP ON TIME ON: WHEN AT DAM, CONFIRM FLOW IN/OUT OF 4" ABS PIPE. SECURING DAM WATER WASH SYSTEM: IN BREAKER PANEL "P", TURN PUMP OFF. TIME OFF: CLOSE SUPPLY VALVES, AT 8" AIR VALVES. OPEN DRAIN VALVE 100% CONFIRM SYSTEM "IS DRAINED" BEFORE LEAVING. UPPER LEVEL INSPECTION: 8- QUICK VISUAL OF FIRE EXTINGUISHERS. 9- REPLACE ANY LIGHTS THAT ARE BURNT OUT. - WOF: Caidaidaiiai® PRIORITY: E = WORK ORDER = PWO: Page 2 RATING: 10 10- “ii- 12- 13- x x x x x x Xx = x x x xX * x x , x x x x x x x x x x x x x STAND CHECK CHECK CHECK CHECK CHECK BY GENERATOR: AND RECORD FUEL TANK LEVEL. 5 GALLON CAN, SPARE FUEL. OIL, WATER LEVELS. BATTERY WATER LEVELS. THAT MAIN CIRCUIT BREAKER IS "OFF". INSPECT BUILDING, INSIDE AND OUT FOR STRUCTUAL OR VALDALISM PROBLEMS. RECORD ANY PROBLEMS, THINGS NEEDED FOR NEXT TRIP ETC. WITH DOOR CLOSED, PLUG IN DOOR ALARM. OPEN DOOR, GO OUT AND SHUT. LOCK DOORS WITH LOCK BAR. ' COMMENTS: N, preclen No \, ad . WOF: Genes = WORK ORDER = PWO: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: INS Material/Labor INSPECTION EQUIPMENT #: 30457 DESCRIPTION: SOLOMON LAKE SPILLWAY LOCATION: SOLOMON LAKE KEY WORD: SPILLWAY SAFETY PROCS: NONE PM DESC: PM0151 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 -------- PROBLEM DESCRIPTION —-------- SOLOMON LAKE SPILLWAY WEEKLY INSPECTION: (TASK 00147) NOTE: IF ANY QUESTIONS, (OTHER THAN #1-) ARE ANSWERED WITH A "YES", DESCRIBE IN DETAIL, WITH TEXT & DRAWINGS. USE BACK OF WORK ORDER IF NEEDED. ALSO, "S/C" MEANS SNOW COVERED AND NOT 7 TO BE SEEN. DATE DONE of ~30 INSPECTOR 1- IS LAKE OVERFLOWING? YES NO © WHAT IS LAKE LEVEL ON SCADA?__G2e. 4 2- IF OVERFLOWING, IS SPILLWAY CLEAR OF DEBRIS? IF NOT, EXPLAIN: 3- ARE THERE ANY SIGNS OF WATER UNDER CUTTING ABUTMENTS OR STRUCTURES? YES NO 487/¢ 2-7 IS THERE ANY VISIBLE SEEPAGE UNDER SPILLWAY STRUCTURES? RECORD "SCADA" DIKE SEEPAGE /.5 CFS. 4- DO CEMENT STRUCTURES SHOW ANY SIGNS OF SPALLING OR EROSION FROM WEATHER, WATER FLOWS ETC? YES NO wv S/C_’ Se IS THERE ANY SLOUGHING OF EMBANKMENTS OR MAJOR DOWNSTREAM CHANGES IN DOWNSTREAM CHANNEL? YES NO S/C © 6- IS THERE ANY VISIBLE CHANGES IN SPILLWAY ALLIGNMENT? YES NO S/C___ 7- ARE THERE ANY NEW CRACKS EVIDENT? YES NO S/Cc 8- IS THERE ANY SIGNS OF VANDALISM, OTHER THAN PREVIOUSLY NOTED, a ANY? YES oe s/c COMMENTS: gd WOF = Great - WORK ORDER - PWO: “ PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: INS Material/Labor INSPECTION EQUIPMENT #: 30098 DESCRIPTION: SOLOMON LAKE DIKE LOCATION: SOLOMON LAKE KEY WORD: DIKE SAFETY PROCS: NONE PM DESC: PM0041 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 -------- PROBLEM DESCRIPTION -------- SOLOMON LAKE DIKE WEEKLY INSPECTION: (TASK 00041) (NOTE: ANY "YES" ANSWER REQUIRES WRITTEN DESCRIPTION SKETCHES, MEASUREMENTS ETC.) (NOTE: S/C MEANS SNOW COVERED, UNABLE TO BE SEEN.) DATE DONE of - 30-96 INSPECTOR 1- ARE THERE ANY SIGNS OF WATER UNDER ,CUTTING ABUTMENTS OR STRUCTURES? YES NO v s/c IS THERE ANY VISIBLE SEEPAGE UNDER DIKE STRUCTURES? RECORD "SCADA" DIKE SEEPAGE_!-5 CFS. 2- DO CEMENT STRUCTURES SHOW ANY SIGNS OF SPALLING OR EROSION FROM WEATHER, WATER FLOWS ETC? YES No SiC— 3- DOES DOWNSTREAM RIPRAP FACE OF DIKE SHOW SIGNS OF SLOUGHING, ROCK OR SNOW SLIDING ACTION, OR SINKHOLES ETC? YES NO Vw 4- ARE THERE ANY SPRINGS, WET SPOTS OR INCREASED VEGITATION GROWTH, NEAR OR ON DIKE. YES NO“ s/c 5-, ARE THERE ANY CHANGES IN ALIGNMENT OF ROAD OR WAVE WALL? YES NOs —=—S/C 6- WAVE WALL AND ABUTMENTS: ANY NEW CRACKS EVIDENT? ANY CHANGE IN EXISTING CRACKS? YES NOY s/c_— 7- DOES ASPHALT FACE SHOW ANY DETERIORATION, CRACKING ETC? YES NOI S/G CHECK ASPHALT TO WAVE WALL SEAL, ANY SEAPERATION BETWEEN THE TWO? YES NO s/c 9- ANY SIGNS OF VANDALISM? YES no +— s/c COMMENTS: WO# : @xtetiicaontie = WORK ORDER - PWO: “ PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: INS Material/Labor INSPECTION EQUIPMENT #: 30093 DESCRIPTION: #1 PENSTOCK, 48" X 3785’ LOCATION: UNIT 1 PENSTOCK KEY WORD: PENSTOCK SAFETY PROCS: NONE PM DESC: PM0039 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 ———<——=— PROBLEM DESCRIPTION PENSTOCK INSPECTION - WEEKLY: (TASK 00039) (NOTE: ANY "YES" ANSWER REQUIRES DETAILED DESCRIPTION OF PROBLEM. ) Q DATE DONE 2) - 3. INSPECTOR 1- PIPE AND JOINTS; ANY LEAKAGE NOTED? YES No “ ssc _~- 2- 3" DRAIN VALVES; ANY LEAKS, OR OTHER PROBLEMS? YES No \ S/c 3- AIR VALVE BOXES; LEAKAGE? SNOW BUILT UP? OTHER PROBLEMS? YES no“ s/c 4- PENSTOCK SUPPORTS, ANYTHING ABNORMAL? YES NO. Y S/c 5- CONDUIT AND CONDUIT SUPPORTS, ANYTHING ABNORMAL? YES NO S/C 6- ANY SIGNS OF V. LISM? YES No S/C_ 7- ANY GROUND SEEPAGE, EROSION AFFECTING PENSTOCK? YES No s/c COMMENTS: WOOF 2 Oe = WORK ORDER oS PWO: PRIORITY: E Page 1 RATING: 10 TYPE:PM STATUS:P CHG CD: INS Material/Labor INSPECTION EQUIPMENT #: 30094 DESCRIPTION: #2 PENSTOCK, 48" X 3785’ LOCATION: UNIT 2 PENSTOCK KEY WORD: PENSTOCK SAFETY PROCS: NONE PM DESC: PM0039 SUBMITTED: PM SCHEDULE DATE: 04/19/96 TIME: 09:53 PHONE: DUE DATE: 04/23/96 -------- PROBLEM DESCRIPTION -------- PENSTOCK INSPECTION - WEEKLY: (TASK 00039) (NOTE: ANY "YES" ANSWER REQUIRES DETAILED DESCRIPTION OF PROBLEM. ) p> DATE DONE +f Zo INSPECTOR 1- PIPE AND JOINTS; ANY LEAKAGE NOTED? YES No S/C 2- 3" DRAIN VALVES; ANY LEAKS, OR OTHER PROBLEMS? YES NO s/c 3- AIR VALVE BOXES; LEAKAGE? SNOW BUILT UP? OTHER PROBLEMS? YES Nov s/c 4- PENSTOCK SUPPORTS, ANYTHING ABNORMAL? YES No s/c 5- CONDUIT AND CONDUIT SUPPORTS, ANYTHING ABNORMAL? YES NO s/c ~ 6- ANY SIGNS OF VANDALISM? YES NO s/c x —+> 7- ANY GROUND SEEPAGE, EROSION AFFECTING PENSTOCK? YES No S/C COMMENTS : COPPER VALLEY ELECTRIC ASSOCIATION, INC. P. O. Box 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 ‘ \ ECeIve ft July 22, 1996 Dies WL 29 Seb Mr. Daniel Beardsley AIDEA 480 West Tudor Anchorage, Alaska 99503 SUBJECT: Valdez Fisheries Water Use Agreement Dear Mr. Beardsley: Enclosed you will find copies of the water use agreement for signature by Mr. Snell. After these have been executed, please return them to us so that we can copy and distribute. Thank you for your prompt attention to this. Sincerely Micheal E. Easley, PE Manager, Engineering Services w:winword/meb96/9626.doc Serving the Copper River Basin and Valdez AMENDED AGREEMENT BETWEEN THE ALASKA ENERGY AUTHORITY, COPPER VALLEY ELECTRIC ASSOCIATION, AND VALDEZ FISHERIES DEVELOPMENT ASSOCIATION REGARDING USE OF WATER RESOURCES AT SOLOMON GULCH HYDROELECTRIC PLANT AND MAINTENANCE OF INSTREAM FLOWS IN SOLOMON GULCH CREEK August This Agreement is entered into this [3 day of May, 1996 between the Alaska Energy Authority (hereinafter “AEA”), Copper Valley Electric Association (hereinafter "CVEA”) and Valdez Fisheries Development Association (hereinafter "VFDA"). WITNESSETH THAT: 1. WHEREAS, AEA, CVEA and VFDA on August 7, 1991, entered into an agreement entitled: Agreement between the Alaska Energy Authority, Copper Valley Electric Association, Valdez Fisheries Development Association Regarding the Use of Water Resources at Solomon Gulch Hydroelectric Plant and Maintenance of Instream Flows in Solomon Gulch Creek (“August 1, 1991, Agreement”); and 2. WHEREAS, AEA, CVEA and VFDA desire to extend that August 1, 1991, Agreement for an additional five years under the same terms and conditions; NOW THEREFORE, AEA, CVEA and VFDA do hereby amend and extend that Agreement on the following conditions: A. — The term of this Amended Agreement shall be from August 1, 1996 to July 31, 2001, unless otherwise extended or terminated. B. All other terms of the August 1, 1991, Agreement shall be incorporated and made a part of this Agreement. AMENDED WATER USAGE AGREEMENT Page 1 ALASKA ENERGY AUTHORITY Date: _ B/I3/96 By: William R. Snell Its: Executive Director IN WITNESS WHEREOF, | have hereunto set my hand and affixed the Seal of my Office this /3* day of Lagu , 1996. hare fy, Sto Notary Public in and for Alaska My Commission Expires 3-777" 7? VALDEZ FISHERIES DEVELOPMENT ASSOCIATION Date: 1/12[4 lo By: A Steweel € t.tt— Dave Cobb Its: | Business Manager IN WITNESS WHEREOF, | have hereunto set my hand and affixed the Seal of my Office this 72 day of July, 1996. Notary Public in and for Alaska My Commission Expires _ /0/zi/¥& COPPER VALLEY ELECTRIC ASSOCIATION Date: Sia (8 -9b ep Qian Clayton Hurless General Manager IN WITNESS WHEREOF, | have hereunto set my hand and affixed the Seal of my Office this _‘& day of Tucy , 1996. otary Public in and for lask : My Commission Expires pres AMENDED WATER USAGE AGREEMENT Page 2 AMENDED AGREEMENT BETWEEN THE ALASKA ENERGY AUTHORITY, COPPER VALLEY ELECTRIC ASSOCIATION, AND VALDEZ FISHERIES DEVELOPMENT ASSOCIATION REGARDING USE OF WATER RESOURCES AT SOLOMON GULCH HYDROELECTRIC PLANT AND MAINTENANCE OF INSTREAM FLOWS IN SOLOMON GULCH CREEK di. August This Agreement is entered into this I3~ day of May, 1996 between the Alaska Energy Authority (hereinafter “AEA”), Copper Valley Electric Association (hereinafter "CVEA”) and Valdez Fisheries Development Association (hereinafter "VFDA"). WITNESSETH THAT: ie WHEREAS, AEA, CVEA and VFDA on August 7, 1991, entered into an agreement entitled: Agreement between the Alaska Energy Authority, Copper Valley Electric Association, Valdez Fisheries Development Association Regarding the Use of Water Resources at Solomon Gulch Hydroelectric Plant and Maintenance of Instream Flows in Solomon Gulch Creek (“August 1, 1991, Agreement”); and 2: WHEREAS, AEA, CVEA and VFDA desire to extend that August 1, 1991, Agreement for an additional five years under the same terms and conditions; NOW THEREFORE, AEA, CVEA and VFDA do hereby amend and extend that Agreement on the following conditions: A. The term of this Amended Agreement shall be from August 1, 1996 to July 31, 2001, unless otherwise extended or terminated. B. All other terms of the August 1, 1991, Agreement shall be incorporated and made a part of this Agreement. AMENDED WATER USAGE AGREEMENT Page 1 ALASKA ENERGY AUTHORITY Baad |. za fenave I By: William R. Snel Its: Executive Director IN WITNESS ny oF dae. have hereunto set my hand and affixed the Seal of my Office this 1t day of Qoguch , 1996. Notary Public in oa for Alaska My Commission Expires _3-/¥- VALDEZ FISHERIES DEVELOPMENT ASSOCIATION Date: 9/1212 bo By: AC tob6t- Dave Cobb Its: | Business Manager IN WITNESS WHEREOF, | have hereunto set my hand and affixed the Seal of my Office this 2 day of ae ly , 1996. Notary Public in and for Alaska” My Commission Expires lOl2if/2e COPPER VALLEY ELECTRIC ASSOCIATION Date: =a [§-9f By: ] Deft ( 7 Vee Clayt@n Hurless Its: | General Manager IN WITNESS WHEREOF, | have hereunto set my hand and affixed the Seal of my Office this_“ day of VT , 1996. Notary Public in and for Alas’ My Commission Expires ///1 AMENDED WATER USAGE AGREEMENT Page 2 COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. BOx 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 ALDEZ (907) 835-4301 Fax 835-4328 ECE NYE) 8S we JUN Mike loo June 25, 1996 Alask "27 1900 Davd Ronse and iiestrie De Expory Authoy Pment ‘thority Mr. Riley Snell, Executive Director Alaska Industrial Development and Export Authority Alaska Energy Authority 480 West Tudor Road Anchorage, Alaska 99503-6690 Dear Riley: Subsequent to our conversation, I talked to Dr. Robert Jacobsen, HAARP Program Manager. He has verified the information in this letter to be correct. Therefore, I feel comfortable sending it to you. If you have any questions, please give me a call. Yours truly, bifid Hater Clayton Hurless General Manager Enclosure w:\word\cdh\96-070jw.doc Serving the Copper River Basin and Valdez ‘COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. BOX 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 Fax 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 June 19, 1996 [A E@EIVE if) JUN 27 1996 Alaska Industrie! Development and Export Authority Dr. Robert A. Jacobsen Ph.D HAARP Program Manager Advanced Power Technologies, Inc. 1250 Twenty-Fourth Street N.W. Washington, D C 20037 Dear Dr. Jacobsen: Robert, Mike, and I enjoyed the opportunity to learn of the current status and future plans for the HAARP project during our meeting on June 18. The amount and scope of the electric power requirements for the completed project were of particular interest because of the effect on the feasibility and viability of the Sutton to Glennallen Transmission Line (SGL) project that Copper Valley Electric Association (CVEA) has been working on for the past four years. As we discussed at the meeting, I want to reiterate my understanding of the project characteristics to be certain that I correctly communicate with the Board of Directors and other interested parties. I The general use or "housekeeping" power requirements for the project used for refrigeration to maintain the permafrost plus the heating, lighting, and control operation for transmitter shelters, control rooms, auxiliary power plant facilities, and offices will increase from the current 115 kw demand to between 1000 and 1500 kw demand. For planning purposes, it is reasonable to assume a load factor similar to a commercial office building. Most, if not all, of the buildings will maintain a controlled environment, i.e., heated and cooled as necessary to protect the sensitive control equipment on a year-round basis. The basic project is scheduled to be completed over the next four years. It is anticipated that after completion the overall power requirement will continue to increase due to the addition of diagnostic equipment. The project life is projected to be 20 years. Serving the Copper River Basin and Valdez ¢ ' Dr. Robert A. Jacobsen __ June 19, 1996 Page 2 The project will be limited to five 10-day campaigns annually due to limits of the SO2 emissions of the on-site diesel generating plant. If the SGL is constructed and extended to the project site, it could expand the use of the facility by eliminating the on-site power plant and making it possible, if adequate funding could be obtained, to reach the ultimate goal of one campaign each month. The mode of electrical operation for the project has been designed to ameliorate the problems of the significant modulation inherent to the operation of the transmitters. It is our understanding the modified method would be composed of 5 mw of standby power that will be on approximately 12 hours each day for the duration of the campaign and approximately 5 mw of modulation power. We understand that the application of this modulated power will not be on time scales less than one cycle (16 ms). It is anticipated APTI will be in a position to execute the necessary agreements with CVEA for the upgrading of 16 miles of the existing single-phase 14.4 kv line to three-phase 14.4/24.9 kv by July 15, 1996. CVEA will have the project completed and operable by August 31, 1997. APTI will be able to waive most of the contractual boiler plate language normally required in contracts with the federal government with the exception of the requirements of The Equal Employment Opportunity Act, Vietnam Veterans Employment Act, the Americans with Disabilities Act, and the Age Discrimination Act. APTI will require CVEA to certify that it will comply with all state and federal laws, rules, and regulations that are applicable to the operation of electrical utilities. CVEA will certify that it will use Rural Utilities Service (RUS) approved standard work order accounting procedures to bill APTI for work on the line upgrading project. CVEA will build the project at cost and will not make any profit or margin but will include the standard work order overhead allocation to cover the administration and other project related expenses. APTI has provided CVEA a copy ofa letter from the Department of the Navy that finds the provisions of the Davis-Bacon Act do not apply to the line upgrading project. APTI will contract separately for work to extend the facilities on the project site. CVEA will cooperate and assist APTI where possible to coordinate use of the same contractor to save the considerable mobilization and demobilization cost of bringing in a separate contractor. air Dr. Robert A. Jacobsen “Fane 19, 1996 ' Page3 10. CVEA will bill APTI on a monthly basis for costs incurred. APTI will reimburse CVEA these costs within 30 days. I would appreciate your review of these understandings and correction of any misinterpretations I may have made of what was stated. We are looking forward to working with you on this project. Yours truly, Geteak Clayton Hurless General Manager w:\word\cdh\96-067jw.doc ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY —_ ALASKA @@E™ =EENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 August 15, 1996 Mr. Dave Gray Director of Environmental Economics P.O. Box 91500 Bellevue, Washington 98009-2050 SUBJECT: Invoice N. 3044077 Copper Valley Intertie Dear Dave: We received the attached invoice for services of an unknown nature provided in late April 1996. As we discussed, CH2M Hill had submitted a final invoice inclusive of all services for the study. No additional services were approved. Based upon this invoice, we closed the account in June. We have returned the invoice and will not make payment. Please let me know if you have any questions. Sincerely, ete Cod — Dennis V. McCrohan, P.E. Design/Construction Manager Attachment cc: Clive V. Herrington, Site Construction Manager xe: tile Seattle Office 777 108th Avenue NE, Bellevue, WA 98004-5118 P.O. Box 91500, Bellevue, WA 98009-2050 p AUS 15 ie HEI Economists 8 ME sda‘ . 206 453-5000 ska Industrial Development FAX 206 462-5957 and Export Authority Alaska Industrial Development and a tN August 13, 1996 Export Authority royect NO. 117526.CO 480 West Tudor Road Client Ref. No.: 44639 Anchorage, Alaska 99503-6690 Invoice No.: 3044077 Contract No. MM98616PSC INVOICE For consulting on April 24 and 25, 1996, to answer new questions regarding the feasibility of the Copper Valley Intertie. Professional Services: ECO7 D A Gray 4.0 hrs @ $127.79 $511.16 AA55S J A Larson 1.2 hrs @ $40.22 $48.26 $559.42 Expenses: Communication Charges $7.60 $7.60 TOTAL AMOUNT DUE THIS INVOICE. .........0.2 eee eeeee $567.02 ite 0 dad \y Col JU117626.4SGE AND PAYABLE ON RECEIPT OF INVOICE. FINANCE CHARGES WILL BE ASSESSED AT 1 PERCENT PER MONTH (OR MAXIMUM PERMISSIBLE UNDER STATE LAW) ON ALL ACCOUNTS OVERDUE UNLESS STATED OTHERWISE IN OUR CONTRACT. CH2M HILL IS INCORPORATED. STATE OF ALASKA ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY NOTICE TO PROCEED AND INVOICE SUMMARY NTP NO: Six (6) AGREEMENT NO: 95-010 PROJECT NO: N/A PROJECT TITLE: Professional Architectural and Multi-Discplined Engineering Services CONTRACTOR: CH2M Hill INSTRUCTIONS AND PAYMENTS EXPLANATION ON REVERSE. NOTICE TO PROCEED (NTP) IN ACCORDANCE WITH OUR AGREEMENT FOR THE ASOVE PROJECT, PROVIDE THE FOLLOWING SERVICES (OR SERVICES AS DESCRIBED ON THE FOLLOWING REFERENCED ATTACHMENT):Contractor to provide professional services to update Sutton-Giennallen Intertie construction cost estimates, perform cost risk analysis and compile a qualitative summary of the environmental and social impacts of altemative power supplies. Scope of services are further defined in Mr. Dennis V.McCrohans letter of February 27, 1996 and CH2M Hills letter of February 15, 1996 (attached). ‘ : COMPENSATION FOR THE ABOVE SERVICES, BY THE METHOD(S) OF PAYMENT SPECIFIED IN OUR AGREEMENT SHALL NOT EXCEED: : WHICH INCREASES THE TOTAL AUTHORIZED AMOUNT TOz ' ISSUING OFFICER (PROJECT MANAGER) = od ides pom AW 2:-23-F SIGNATURE DATE NAME: Tommy G. Heinrich P.E. 9 PHONE:(907) 561-8050 afd J. Damron, P.E. PHONE:(S07) 278-2551 ADORESS: 480 West Tudor Road /. Northem Lights Bivd., Suite 601 Anchorage, Alaska 99503-6690 Afchorage , Alaska 99503-2662 INVOICE SUMMARY FOR AGREEMENT SEQUENTIAL INVOICE NUMBER FOR THE AGREEMENT: CONTRACTOR'S INVOICE NUMBER: METHOD OF PAYMENT AUTHORIZED AMOUNT PREVIOUS INVOICES JHISINVOICE § TOTALSTODATE BALANCE AUTHORIZED \ FIXED PRICE(S) $s ; $ $ UNIT PRICE(S) $ $30,000 DIRECT NON-SALARY $ COSTS PERSONNELRATES = $ / JE00b. 3lg SUT. 0R $ 96513. Bs YAO. GA $s NEGOTIATED MARKUP $ COST PLUS FIXED FEE $ (SALARY) (s (NON-SALARY) (S$ (INDIRECT) (s (s $30,000 PAYMENT APPROVED (AUTHORIZED OFFICER) ees : SiGNATURE . 1 NAME:! NAME-Millam R. Snell PAYMENT RECOMMENDED (PROJECT MANAGER) SIGNATURE DATE NAME: Tommy G. Heinrich _PHONE:(907) 561-8050 NTPANVOICE : . AIDEA/JAEA PAGE 1 OF 2 JULY 1994 PM-BTR THRU 28-JUN-1996 - Run 13-AUG-1996 PAGE 1 MODULE-VERSION: CHPABTRA-A. CH2M HILL INC PM-BILLING TRANSACTION REGISTER 037420.CO-COPPER VALLEY INTERT ALASKA IND. DEV. & EXPORT AUTHORITY LLBU: PROJECT NUMBER: REPORT/INV LOC: SEA PROJECT MGR/LOC: GRAY, DAVID A./SEA PROJECT ACCT/LOC: SZWED, JULIE M./SEA DESIGN MGR/LOC: CLIENT SERV MGR/LOC: SR CONSULTANT/LOC: NWE10 ENVIRONMENTAL 117526 CO COPPER VALLEY INTERT LABOR -EXPENDITURE- - EXPEND PA ‘TRANSFER QUANTITY/ BILL BILL PERIOD GROUP/FICHE CLASS/GRADE NUMBER DATE DATE PROJECT# INVOICE# UNITS RATE AMOUNT —LOC/RECOV# PROFESSIONAL 00760 GRAY, DAVID A. LABOR EC 07 CO.2Z 26-APR-96 10MAY 4.00 HOURS 127.79 511.16 ETSL294730-3100 SUPPORT 08020 LARSON, JOYCE A. LABOR AA 55 CcO.2Z 28-JUN-96 28JUN 1.20 HOURS 40.22 48.26 ETSL347382-3550 LABOR TOTAL $.20 559.42 NON-LABOR |--------- EMPLOYEE- - ------- | |--22222--------- EXPENDITURE---------------- |TASK EXPEND PA _——‘ TRANSFER QUANTITY/ BILL BILL PERIOD GROUP/FICHE NUMBER NAME TYPE NONLBR RES/VENDOR NUMBER DATE DATE PROJECT# INVOICE# UNITS RATE AMOUNT — LOC/RECOV# 00760 GRAY, DAVID A. COMMUNICATION CHARGES TELECOMMUNICATIONS C0.ZZ 26-APR-96 10MAY 4.00 HOURS 7.60 , 00760 GRAY, DAVID A. OUTSIDE SERVICES-OTHER VALUE MANAGEMENT CO CO.ZZ 15-JAN-96 O3MAY 9601 1,347.50 SEA4460D3 00760 GRAY, DAVID A. OUTSIDE SERVICES-OTHER R.W. BECK & ASSOCIA C0.10 15-APR-96 24MAY 09999A 6,907.85 SEA3497B1 NON-LABOR TOTAL 8,262.95 EVENTS TASK COMPLETION BILL PERIOD EVENT TYPE DESCRIPTION NUMBER DATE AMOUNT INVOICE REDUCTION PREBILL RW BECK #09999A co 26-APR-96 <6,907.85> INVOICE REDUCTION PREBILL VM CONSULTING #96-01 co 26-APR-96 <1,347.50> INVOICE REDUCTION ALREADY BILLED co 28-JUN-96 <247.66> MARKUP OUTSIDE SERVICES MARKUP OUTSIDE SERVICES co 28-JUN-96 247.66 EVENTS TOTAL <8,255.35> * CO TOTAL COPPER VALLEY INTERT 567.02 037420.CO-COPPER VALLEY INTERT TOTAL CHEM HILL TIME SHEET 04/26/96 GRAY, DAVIDA. _ SEA. __ 00760 | WORK SCHEDULE [A] B C WEEK ENDING - NAME (PLEASE PRINT) LOCATION == EMPLOYEENUMBER —_(Santa Ana Office only): (Circle one) PROJECT NUMBER H&S | TOTAL CLIENT OR DESCRIPTION PROJECT TASK CODE |HOURS| saT | SUN | MON | TUE | WED | THU | FRI 1 | TIME OFF WITH PAY 100000 /|30.95 3.0 3 2 |SICK LEAVE 100000 | 31.95 1.0 1 3 |HOLIDAY 100000 | 32.95 133231 |CU.C1 9.0 4 1 1 2 1 114716 |NB.IC 6.0 2 i 1 2 113601 |BO.ZZ 10.0 1 3 3 2 1 106176 |A0.2Z 2.0 2 _| _| 132627 |UT.AK 4.0 1 2 1 9 |AIDEA--INTERTIE 117526 |CO.ZZ " 4.0 2 2 132627 |OP.AK 1.0 1 REGULAR HOURS (40.0) 40.0 TOTAL DAYS WORKED (FOR ACCOUNTING USE ONLY) 5 OVERTIME HOURS TOTAL HOURS 40.0 8 8 8 8 8 re EXPLANATION (If required) - FOR ACCOUNTING USE ONLY . Please refer to Section 7 of the Policies and Procedures Manual for time reporting policies. Use INK to make corrections and to sign the time sheet. Use single line to line out incorrect items. Do not use whiteout or corrective tape to make correct- ions. Initial all corrections or write-overs. Copies: Supervisor SIGNATURE ON FILE _SIGNATURE ON FILE U Office copy APPROVED/REVIEWED BY SIGNATURE, REV 1/96 FORM 12/12A (ETSACCT 4.0) (optional) ontrol # 2017371481 Page 1 CH2M HILL TIME SHEET 06/28/96 LARSON, JOYCE A. SEA 08020 WORK SCHEDULE [A] B C WEEK ENDING NAME (PLEASE PRINT) LOCATION EMPLOYEE NUMBER (Santa Ana Office only): (Circle one) PROJECT NUMBER H&S | TOTAL CLIENT OR DESCRIPTION PROJECT TASK CODE |HOURS| saT | SUN | MON | TUE | WED | THU | FRI 1 | TIME OFF WITH PAY 100000 | 30.95 2 |SICK LEAVE 100000 |31.95 3 |HOLIDAY 100000 | 32.95 135561 |A1.03 0.3 0.3 135450 |A0.ZZ 0.5 0.5 132353 | AD.OS.48 0.6 0.6 113601 |BO.ZZ 1.3 1.0 0.3 | 8 |FEASIBILITY STUDY 117526 |C0.ZZ he 1:2 — 132406 |AD.SM.48.AQ 0.5 0.5 106848 | SD.33 2.1 2.1 134187 |00.PM 0.3 0.3 106356 | 13.01 0.6 0.6 111783 | 96.ZZ 0.4 0.4 114680 |DA.ZZ 4.3 0.5 0.6 1.3 1.9 134891 |AD.48 0.3 0.3 116184 | G3.06 0.3 0.3 133355 |A0.ZZ lal 141 132376 |PS.ZZ 0.3 0.3 115938 |C0.03.01 0.3 0.3 133802 | UT.HY 0.7 0.7 132701 |MF.MP 4] 41 106488 |NO.02 0.5 0.5 REGULAR HOURS (40.0) TOTAL DAYS WORKED (FOR ACCOUNTING USE ONLY) 4 OVERTIME HOURS TOTAL HOURS Continyed on the next page. ie EXPLANATION (If required) - FOR ACCOUNTING USE ONLY Please refer to Section 7 of the Policies and Procedures Manual for time reporting policies. Use INK to make corrections and to sign the time sheet. Use single line to line out incorrect items. Do not use whiteout or corrective tape to make correct- ions. Initial all corrections or write-overs. Copies: U Supervisor Continued on the next page. Continued on the next page. U Office copy APPROVED/REVIEWED BY IGNATURE REV 1/96 FORM 12/12A (ETSACCT 4.0) (optional) ‘ontrol # 0382778090 Page 1 CHEM HILL TIME SHEET 06/28/96 LARSON, JOYCE A. SEA 08020 —_—workscHenute [A] B c WEEK ENDING NAME (PLEASE PRINT) LOCATION EMPLOYEE NUMBER (Santa Ana Office only): (Circle one) PROJECT NUMBER H&S | TOTAL CLIENT OR DESCRIPTION PROJECT TASK CODE |HOURS| saT | SUN | MON | TUE | WED | THU | FRI 132445 |NW.ZZ 4.3 2.0 2.3 134150 |AA.03 0.2 0.2 133206 |AQ.ZZ 0.3 0.3 106356 |04.31 eG 1.3 133227 |C1.01 Ars) 1.5 106356 |01.02 0.9 0.9 101053 | 99.48 ae lel 132627 | UT.OW 0.5 0.5 132353 |AD.OS.48 2.2 ae REGULAR HOURS (40.0) 32.0 TOTAL DAYS WORKED (FOR ACCOUNTING USE ONLY) 4 OVERTIME HOURS TOTAL HOURS 32.0 8.0 8.0 8.0 8.0 tne EXPLANATION (If required) - FOR ACCOUNTING USE ONLY Please refer to Section 7 of the Policies and Procedures Manual for time reporting policies. Use INK to make corrections and to sign the time sheet. Use single line to line out incorrect items. Do not use whiteout or corrective tape to make correct- ions. Initial all corrections or write-overs. SIGNATURE ON FILE SIGNATURE ON FILE APPROVED/REVIEWED BY SIGNATURE REV 1/96 FORM 12/12A (ETSACCT 4.0) Page 2 “O7ALL6 23:18 ID:CVEA FAX: PAGE, 2 CYEAR fe Sanit VALLEY ELECTRIC icadminiannonialul INC. P.O, BOX He GLENNA: EN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 Fax 835-4328 July 12, 1996 William R. Snell, Executive Director Alaska Industrial Development & l’xport Authority 480 West Tudor Road Anchorage, Alaska 99503 Dear Riley: We have finalized the plans for an informational meeting to be presented by Dr. Robert Jacobsen of Advanced Power 'lechnologies Inc, (APTI). The U. 8. Government has contracted with APTI to construct and manage the High Frequency Active Auroral Research Program (HAARP) located at the old Over-the-Horizon Backscatter Radar Site near Gukona, Alaska. Dr. Jacobsen, AP II's program manager, is responsible for the project. The mecting will begin at 12 noon on Wednesday, July 31, at the Carriage House in Gakona with lunch hosted by Copper Valley Hectric Association. Following lunch, Dr. Jacohsen will provide an overview of the project status and expected completion schedule for the project, I have asked that he also pravide an estimate of the power requirements of the project. I3r. Jacobsen will answer questions. Following lunch and the bricfing, we will procecd ta the praject site (o sce the prototype antenna array and control modules. Dr, Jacobsen or one of his stall will further explain the operational aspecis of the project. At the conclusion of the tour, the mecting will adjourn. We would appreciate having an estimate of the number of State agency representatives who will be attending by Friday, July 19. You can gither call me or my sceretary Jeanie with the information. | believe this meeting can provide valuable information to people working on the review of the Sutton ta Glennallen transmission line relative to the electrical requirements of the project. ‘The meeting will also provide useful information regarding the purpose and use of the project to advance man’s scientific knowledge und understanding of the aurora and the ionosphere. 1 hope that all the members of the Interagency Review Panel and the Governor, or some representative Serving the Capper Rha Basin and Valdez 7/12/96 11:22a .* OF-1196 23:18 ID:CVEA FAX: PAGE 3 Riley Snell July 12, 1996 Page 2 from his staff, will be able to attend. [ also believe some of Commissioner Irwin's and your key staff would benefit from attending. If you have any questions, please give me a call. If you need any hotel accommodations, you should secure them early as hotel space in this area is limited. Attached is a list of the hotels and a map directing the participants to the Carriage Tlouse. Yours truly, Chaff SPrsbe Clayton Murless General Manager ce: Bob Evans Board of Directors w:\word\cdh\96-077}w.doc 7/12/96 11:22a | Q (907) 274-1056 Dare DEC 0 9 1996 ALASKA JOURNAL OF COMMERCE Client No. 420A Copper Valley electric co-op drops intertie push Copper Valley Electric Association is dropping its push for a Sutton-Glennallen power line and negotiating with the Petro Star refinery in Valdez to build a new tur- bine generator there, planning to buy fuel from the refinery and sell back steam pro- duced from the generator’s waste heat. A smaller turbine would be installed in Glennallen under the plan. The proposal calls fora $15 million state grant for the generators instead of the $35 million interest-free loan that the Legisla- ture set aside for the intertie line in 1993. Robert Wilkinson, interim manager of Copper Valley Electric, says the utility's plan could cut the high electric rates for its 3,100 customers by as much as 20 percent. That would stimulate economic develop- ment and attract new customers, bringing costs down, he said. Wilkinson's plan calls for the co-op to build a 15-megawatt turbine generator at the Petro Star refinery. A big blow to the intertie deal was Petro Star's announcement last spring thatit would withdraw from theco-op and generate its own power. Without Petro Star, said Mike Irwin, the state commissioner of regional and community affairs, the intertie doesn’t make economic sense. SY (907) 274-1056 Date ‘DEC 04 1996 Frontiersman Client No._{l 204 CVEA intertie 2o2 31 feA 2IcE 200 By LAURA MITCHELL HARRIS Frontiersman reporter The Sutton-to-Glennallen In- tertie took another major hit last week when its biggest backer pulled its sup- port from the pulls plug this time,” Wilkinson said. “It doesn’t look good for the intertie,” said David Ramseur, deputy chief of staff for Gov. Tony Knowles. “It will be politi- cally troublesome to get a pro- posal like this through the Leg- islature with ‘The board decided sme of the pro- project. ponents of the And local op- the Copper Valley intertie in- ponents of the | intertie is not the volved.” 135-mile elec- CVEA has tric line that would have zig-zagged through a rela- tively undevel- oped part of the Valley say this means the in- tertie is a dead issue. Copper Valley Electric Asso- ciation’s Board of Directors de- cided last month to withdraw its support of the project and now wants to install four new diesel generators to power its customers in the Copper River basin, the utility’s interim gen- eral manager Robert Wilkinson said Monday. “The board decided the Cop- per Valley intertie is not the best electric power supply for us at this time.’ best electric power supply for us at Robert Wilkinson waited for sev- eral years for the state to de- cide whether to offer the utility a $35 million in- terest-free loan to pay for con- structing the power line, which would hook it up to the state’s main power grid, the Railbelt system. During that time, an active group of local residents calling themselves Alaska Citizens for Responsible Energy Develop- ment (ACRED) has doggedly resisted the proposal. ACRED supporters contend the intertie is a financial boondoggle that See INTERTIE, Page A11 INTERTIE: CVEA offers power plan Jor tl 420A AISNE 200 Continued from Front Page would harm the undeveloped wilderness stretching from Sut- ton to Glennallen. , CVEA administrators, includ- ing recently resigned general manager Clayton Hurless, have backed the intertie for years to cut their customers’ high elec- tric bills. After Hurless’ resigna- tion in October, CVEA’s admin- istration conducted a compre- hensive internal review. With those findings in hand, the board decided the time had come to try a new tact, Wilkin- son said. The board identified three main obstacles to developing the intertie as poor economic feasibility, significant political and economic factors and the recent movement toward build- ing a trans-Alaska natural gas pipeline. As an alternative to the inter- tie, CVEA will ask the state for a $15 million grant to develop 20 megawatts of combustible turbine capacity, Wilkinson said. ' One generator would be built in Glennallen and three others would be installed in Valdez, adjacent to Copper Valley’s biggest customer, the Petro Star oil refinery. Petro Star’s involvement in CVEA’s new plan is more than just as a possible consumer. The utility is working with the oil refinery to make use of the waste heat produced during the electricity generation process. CVEA would purchase fuel from Petro Star, which in turn would use the waste heat to fire its crude heater, Wilkinson said. Wilkinson said if all goes well in negotiations with Petro Star this, along with reduced main- tenance costs on the old genera- tors, will translate into savings for CVEA customers, who pay some of the highest power rates in the state. Wilkinson, Ramseur and sev- eral Knowles’ representatives scheduled a meeting Dec. 3 to discuss CVEA’s alternative power plan. Ramseur said the governor probably would not make a concrete decision on how next to proceed until the start of the Legislature’s season in January. “Tm ecstatic that they’ve seen the light,” Rep. Scott Ogan, R- Palmer, said. “No matter how hard they tried, it didn’t pencil out to spend that much money for 3,000 customers.” But Ogan added that getting the Legislature to come up with the $15 million might be a tough sell, since the money ear- marked for the intertie project is designated as Railbelt energy money. Q Quality Services (907) 274-1056 Date NOV 30 1996 Daily Sentinel (Sitka) Niro & Client No. Hor Copper Valley Co-Op Drops Push for Intertie Awe ANCHORAGE (AP) — Copper Valley Electric Association is drop- ping its push for a Sutton-Glennallen power line and negotiating with the Petro Star refinery in Valdez to build a new turbine generator there, plan- ning to buy fuel from the refinery and sell back steam produced from the generator’s waste heat. A smaller tur- bine would be installed in Glennallen under the plan. The proposal calls for a $15 million state grant for the generators instead of the $35 million interest-free loan that the Legislature set aside for the “‘intertie’’ line in 1993. Democratic Rep. Gene Kubina of Valdez says he’ll push the Legislature to make the change, but he acknowl- edges there are ‘‘lots of political prob- to with the idea. “*The plan is to see if we can’t turn the $35 million loan back and then get a $15 million grant,’’ Kubina said. “*That’s going to take a lot of work and people coming together.’” : The intertie loan was approved by the Legislature as part of a package that included money for upgrading lines from Anchorage to the Kenai Peninsula and from Healy to Fair- banks. A prime backer of the interties was Republican Rep. Ramona Barnes, then speaker of the house. : ‘I don’t think those turbines do anything for the Railbelt integrated energy system, and that was the pur- a of the loan in the first place,’’ Barnes said Wednesday. : “‘If they need those generators, they should seil bonds to pay for them. My thing was not to give them money. My thing was to tie together an ener- gy grid,’’ said Barnes. . Robert Wilkinson, interim manager of Copper Valley Electric, says the utility’ s plan could cut the high elec- tric rates for its 3,100 customers by as much as 20 percent. That would stim- ulate economic development and at- tract new customers, bringing costs down, he said. “The thing that’s cited over and over is people won’t locate here be- cause our electric rates are so high,’’ said Wilkinson. ‘‘Our hope is we can install additional debt-free capacity, arrange a favorable contract with Petro Star, and be in a position to re- duce the rates further in the future.’’ Wilkinson’s plan calls for the co-op to build a 15-megawatt turbine gener- ator at the Petro Star refinery. “‘We’ve met with Petro Star on several occasions over the last several weeks,’” Wilkinson said ‘‘The discus- sions have been very positive. We’re discussing a whole host of issues with them, and we hoping we can do some things jointly that work for both par- ties.”” “We're trying to achieve a trade- off — waste heat for fuel,’’ Wilkinson told the Valdez Star newspaper. Petro Star’s chairman, Steve Lewis, didn’t return a call to the company’s Anchorage headquarters Wednesday. A big blow to the intertie deal was Petro Star’s announcement last spring that it would withdraw from the co-op and generate its own power. Without Petro Star, said Mike Ir- win, the state commissioner of re- gional and community affairs, the in- tertie doesn’t make economic sense. “If they weren’t on the line, we’ve said all along that tips the scale to make the line economically unfeasi- ble,’’ said Irwin. He’s involved in the matter because the intertie legislation includes a proviso that the commis- sioner must certify the line is econom- ically viable before the loan money can be released. Q) Quality Services “ (907) 274-1056 Date OCT 09 1996 _ Frontiersman Client No. Yo A. Jor ZH 23 E d2cA By PAUL STUART Frontiersman reporter SUTTON — Fans of the pro- posed Sutton-to-Glennallen in- tertie proposal are becoming fewer and harder to find. Rep. Scott Ogan, R-Palmer, at a meeting in Sutton Thursday, publicly requested the Depart- ment of Community and Re- gional Affairs delay any deci- sion to build the electric inter- te. Ogan wants to wait until re- sults are in on test drilling for shallow-depth natural gas in the Copper River Basin. He said he would like to see a small portion of the $35 million earmarked for the intertie used to explore for the gas. If found in usable quantities, a geologist said the gas could be used both to power genera- tors to produce electricity, and later to directly heat homes. Momentum for that approach appeared to be developing rapidly last week across pacly lines, as Democrats — includ- ing Rep, Gene Kubina, the rep- resentative from the Copper River area — agreed with the Republican promoting the idea. he request was made by Ogan to Bert Tarrant, an official of the DCRA’s Energy Division, at an informational meeting at- tended by about 60 people at the Sutton Community Hall. A meeting will be scheduled within the next two weeks in the Glennallen area, Ogan said, where area residents and busi- ness people will have a chance to give input, and to find out more about the possibility local- ly available natural gas could rovide a cheap energy source in the region. If the gas is avail- able and were to be developed, Ogan’s office pointed out, it would also create a large num- ber of at least temporary jobs in a region experiencing high un- employment. A crowd of Sutton area resi- dents on hand — many of whom have been vocal for more than a year in opposition to the intertie plan — continued their stand. And many want Gov. Tony Knowles to kill the intertie plan, whether or not test drilling was done for gas. Knowles and DCRA Commis- sioner Mike Irwin have been sitting for almost a year on a decision to build an intertie that would run from Glennallen, through Eureka Pass, and on to Sutton, linking the power grids of the Copper River Basin and the Mat-Su Valley. Much of the opposition from residents on the Mat-Su end of the proposed route has had more to do with spoiling scenery and possibly harming wildlife, than simple economics. A $35-million, interest-free loan has been sitting in state cof- fers for about four years, desig- nated to go to Chugach Electric Association (CEA) or another utility to build the intertie. The pressure from Copper Valley interests to construct the power link is motivated by a desire for cheaper electricity in the region. But Donna Tollman, executive director of the Cop- per River Economic Develop- ment Council, has said she is willing to look at the option of shallow gas development. She says the residents in the area would prefer whatever would bring them the cheapest electricity prices, and, like Ku- bina, they would be willing to scrap the intertie plan, if there were a better way to get cheap power. OCRA asked to wait on intertie decision The Department of Natural Resources three years ago is- sued a report that stated natural gas in the Copper River Valley id not appear to be available in amounts and deposits that would make commercial pro- duction practical. Matanuska Electric Associa- tion (MEA) spokesman Bruce Scott at Thursday’s meeting cit- ed the DNR study to the press. MEA and CEA are among six respondents to a request for buy-out proposals from the Copper Valley Electric Associa- tion (CVEA). As of Sept. 23, CVEA’s board of directors at an executive ses- sion took the offers under ad- visement. QUALITY SERVICES Date OCT 2 2 1996 Anchorage Daily News Client No. “wr Electric utility chief resigns Hurless.a backer of intertie Bon ayisisEe 420A By S.J. KOMARNITSKY Daily News reporter PALMER — Clayton Hurless, Copper Val- ley Electric Association’s general manager for the past five years and a key proponent of a controversial proposed power line between Sutton and Glennallen, has resigned. mas Neither board officials nor staff at the util- ity would say what prompted the resignation, which was announced at a board meeting last Wednesday. But they said it did not signal a change in the utility’s support for the esti- mated $54 million power line, also known as an intertie. “It’s absolutely not going to change any- thing regarding the intertie,” said board member Paul Holland. “It’s clear to the board of directors and upper level staff at CVEA that the intertie is the number one answer for power supply for the long term.” Please see Page D-5, ELECTRIC ELECTRIC: Copper Valley association general manager resigns aFOX Fp P19 42074 Continued from Page D-1 Hurless did not return phone calls to his home in Glennallen on Monday. He has been a staunch supporter of the power line proposal, which would allow Copper Valley to tap into the vast power supply of the Railbelt. Copper Valley currently re- lies on aging diesel genera- tors and a’ hydro-electric power plant. Its customers pay about 20 cents a kilowatt hour, nearly twice the rate Anchorage consumers pay for electricity. The power line, ‘however, comes with a price — a $35 million interest-free loan from the state and up to $25 million ,” in state-issued bonds. It has been opposed by environmen- tal groups and residents ‘of . Sutton, who say there are bet- . ter alternatives that would not mar the scenic beauty of the Matanuska Valley. The project is on ‘hold while Gov. Tony Knowles de- cides whether to approve’ or kill funding for the project. Knowles spokesman Bob King said Monday he did not know when that decision will be made. Opponents of the power line said they were disap- pointed the board is not con- sidering other alternatives, but they said they were hap-! "py to see Hurless leave. “I think of this as good news since (Hurless) was so. personally attached to the project,” who heads an anti-intertie group called Alaska Citizens. . : for Responsible Energy De- velopment. “It gives us some- said Chris Rose,” . woman for Copper Valley. . Robert Wilkinson, the head _ one else to talk to.” - Hurless joined the utility as general manager in 1991. ... He plans to.move to Idaho, said Colleen Granger, spokes- of administration and finance, will serve as an interim man- ager until ‘the board selects a new manager, he said. »» CVEA serves about 3,000 *-, customers in the Glennallen and Valdez areas. . Q Quality Services (907) 274-1056 JUL 2 4 1996 Date Frontiersman Client No. Y 2%~¢4 | . Do the Intertie - Editor: I’ll probably get hell from some of my friends, but the Copper Center Intertie seems like a good idea to me. I was welcomed to these parts back in the ‘50s by the old timers, who wanted to share this great land with anyone who had the moxie to make a go of it. I did-} n’t, at that time, but when I came back to stay, in the ‘70s, the ‘same attitude was present. There are 200 or 300 miles of highway frontage that could be opened up to modern day “set-' tlers” if there was cheap electric- ity or the possibility of it. If tourists don’t like the looks of a power line, I say let them park their campers and take a hike, or - better still, pay the price (to some of our -tourist-dependent neighbors) for a real wilderness adventure. 302 211 AINE 420A Art Carni Wasill COPPER VALLEY ELECTRIC ASSOCIATION, INC. P.O. Box 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 Fax 835-4328 er ECEIVE SEP - 3 1998 Alaska Industriel Development and Export Authority Mr. Stan Sieczkowski Alaska Energy Authority 480 West Tudor Road Anchorage, AK 99503 SUBJECT: FERC Earthquake Reporting Dear Stan: Enclosed is Copper Valley Electric Association, Inc.’s (CVEA) earthquake inspection form. On August 27,1996, Valdez experienced a small earthquake that registered 3.6 in magnitude and was approximately 34 miles from Valdez.. If you have any questions or comments, please give me a call. Sincerely, Slt Ebey Michael E. Easley, P.E. Manager, Engineering Services Enclosure w:\winword\let_mike\me96\96085jn.doc Serving the Copper River Basin and Valdez. Oct-17-96 O01:30P CVEA/General Manager 907 822 3056 Pp -O1 CVEA News Release Contact Person: Callen Granger Manager, Member Services Copper Valley Hectic Assoc. PO Bax 45 Glennailen, AK 99588 (907) 622-3211 (907) 835-4301 FOR IMMEDIATE RELEASE OCTOBER 16, 1996 Tne Board of Directors at Copper Valley Electric Association announced the resignation of General Manager Clayton Hurless. The Board appointed Robert A. Wilkinson (CVEA's Manager, Administration and Finance) as the interim General Manager. Copper Valley Electric Association a rural electric Cooperative serving the Copper River Basin and Valdez Q) gets Services oy === (907) 274-1056 Date _AUG 07 1996, Valdez Vanguard Re : pat ina shares his thou ep. 2028 BYSA 206 302 306 ZOE YACA Commentary As the days of the flowing black gold start to disappear, so goes the © days of pumping large sums of money into the operations of state government and into new capital projects. Legislator’s are no longer the heroes for bringing millions of new dollars into their district. Instead they fight to keep what is already theirs. Therefore, my toughest battle during this last session was to guard the district’s existing Tesources and to combat the numer- ous attempts to move rural Tesources to the urban areas. Since the current legislature is predomi- nantly from urban Alaska, we are seeing more and more attacks on tural areas of the state. For example, there was talk of closing down several of the district LIO’s and also an attempt to close both the Delta and Glennallen dis- patch offices. Luckily, we were successful in blocking both those attempts. ; ai At the same time that I was fighting to keep existing positions, there was also a critical need for additional positions. I worked hard to convince the administration of the need for a Juvenile Probation officer and an additional Fish & Wildlife Protection officer for our region. These positions were included in the budget and will be stationed in our district during FY 97, which started July 1, 1996. I also continued the fight for Harborview Developmental Center, which in its current form, is in the process of being phased out. This forced us to look for alter- native uses of the facility and is the reason why I fought so hard to make sure that we secured $250,000 during the special ses- sion. The Department of Corrections Drug/Alcohol Treatment proposal is currently the most viable option. However, there are still many peo- ple within the legislature and the administration that feels the cost is still too high. Therefore, our job is to find a way to bring this cost down. We must all work together to find a way utilize the entire facil- ity before the Governor submits his budget to the legislature on December 15th. I also struggled to secure funds for the Valdez Ferry Terminal. I was successful in getting $250,000 included in Statewide Improvement Transportation Program (STIP) for design work this fiscal year, and currently the City is working with the Department of Transportation on the design concept, a work plan, and a timetable for the terminal. Once that is complete, we can apply for additional funds through the federal DOT Ferryboat Discretionary Program, to begin the next phase of the project. The Department is committed to this project and has made it one of its top priorities. Understanding the reality of the legislature, I did not introduce a lot of legislation that I knew would not go anywhere. Instead, I introduced a piece of legislation that I believed’ would make it through the legisla- tive process, one that I believed would receive bi-partisan support, and one that I believed would pro- vide economic benefits and jobs for our region. That is why I sponsored HJR 54. House Joint Resolution 54 urges the lessees of Alaska’s North Slope natural gas reserves to reach an agreement to market and sell its gas. Once built, this gas line would provide approximately $300 mil- lion annually to the state and would provide several hundred vie Alaskans. HJR 54 did receive bi- partisan support and passed both the House and the Senate unani- mously. I believe this project has a better chance of being built than many people realize. When not spending time getting HJR 54 through the process, of fighting to keep our existing resources, my time and effort was spent on blocking bills that would have had a negative impact of our district. SB 70 and SB 280 are per- fect examples of bills that would have produced such an impact. It took a real team effort to block these bills, but in the end we were successful. -Senate Bill 70 would have altered the public school founda- tion program, and by doing so, would have cost the City of Valdez approximately $3.5 million dollars. Thankfully, teamwork paid off and that bill died in the Senate. Senate Bill 280 was the other bill where teamwork prevailed. SB 280 would have required us to form a borough, which would have cre- ated another level of bureaucracy that we do not need. Fortunately, due to the tremendous amount of opposition that was voiced during the hearings, that bill also died. Another major issue we are still dealing with is the intertie. With the administration remaining “cool” on the project, and with the Petro Star’s recent decision to self-gen- erate, we as a community need to ghts on a tough legislative session spend time re-analyzing this pro- ject. The community as a whole, the city officials, the administra- tion, and Copper Valley Electric, all need to ban together to come up with a plan before the next legisla- tive session. If an intertie is not the answer, then what is? Even though the $35 million loan was specifically dedicated to the intertie, I believe we have a strong argument for keeping a large portion of that money to fund what- ever plan we come up with that will reduce the electrical rates in Valdez and the Copper Basin. As the state continues to reduce the budget, legislators are divided over whether to raise taxes, or to cut the budget even further. I believe there is a third choice. Therefore, my number one priority for the next session will be to posi- tion the state so that the gas line can become a reality. I assure you that I will continue to fight to save what is rightfully ours and will also continue to block the attempts to take from the rural areas of the state. I know that if we work together, we can make a dif- ference. Working together we can protect our existing resources and move forward. I will continue to work hard as your representative and will make sure that your voice is heard in Juneau. Gene Kubina, D-Valdez, is state representative of District 35. es ) Q Quality Services (907) 274-1056 Date OCT 0 2 1996 Frontiersman Client No._f 24 Intertie meeting slated 302 3 420A WOE A large gathering of Sutton residents is expected to attend a meeting tomorrow, Oct. 3, at 7 -m. at Pie Sutton Community Fiat to discuss a proposed Sut- ton-to-Glennallen electrical in- tertie. Elected state officials and a representative from the Depart- ment of Community and Re- ional Affairs (DCRA) will be on eS ind to discuss the possibility of shallow natural gas deposits providing a cheap power source ‘or power generation there. ov. Tony Knowles has the fi- nal say in whether the intertie will be built. The purpose of the intertie’ is ‘to ‘provide potentially lower electric rates to residents of the Copper River Basin re- gion. Residents there pay some of the state’s highest rates. (907) 274-1056 Date _SEP 27 886 __ Frontiersman Client No. 20 Shik Co-generation may stop intertie Natural gas deposits found in Copper River may factor in decision By PAUL STUART >> 37) Frontiersman reporter is Mf Y¥20A Another ent for pulling the plug on a Sutton-to-Glen- nallen electric intertie pape was put on the table Tuesday by Rep. Scott Ogan, R-Palmer. Extensive natural gas de- osits in the Copper River asin — with the potential for providing cheap, locally pener- ated electricity — could be the needed factor to tip the balance on the long-postponed decision on whether to keep or sack the intertie, Ogan said. Based on this, Ogan has invited the top state official in on the decision- making process — Commis- sioner Mike Irwin of the De- artment of Community and egional Affairs — to a new meeting on the subject at the Sutton Community Council. Ogan also feels the economic potential for gas production there could end up providing the viable tax base that will be needed if the region is to be- come an organized borough. An interest-free, $35-million state loan is still on the books to be made available for construc- tion, if the intertie were to get a green light. But Ogan now feels conditions favoring the project are disappearing so fast, he ex- pects the Legislature may be reappropriating the $35 million for other purposes during the next session. Last April, Petro Star in Valdez decided it would gener- ate its own power. The compa- ny’s previous value as a poten- tial customer of the Copper Val- ley Electric Association (CVEA) was a major factor in the inter- tie feasibility study. Earlier this month, Gov. Tony Knowles said another reason he thought it prudent to delay the intertie decision was to find out first what kind of financial plan Chugach Electric Association (CEA) had in mind, regarding its possible desire to purchase CVEA. Matanuska Electric As- sociation (MEA) also submitted a response to CVEA’s irwitation for purchase proposals. But Ogan thinks the develop- ing natural gas situation, which he feels could result in inexpen- sive co-generation of power by companies or individuals tap- ping into the gas in the future, would make obsolete virtually all reasons for the intertie. Armed with this new infor- mation, Ogan said he has invit- ed Department of Community and Regional Affairs Commis- sioner Mike Irwin to another hearing, probably within two weeks, at the Sutton Communi- y Council. Irwin is technically e decision-maker on the Sut- ton-Glennallen intertie. At a similar meeting in Sutton last December, Irwin listened to a number of objections to the in- tertie, many based on aesthetic as well as economic arguments. Ogan’s information is based in part on a survey reported in 1985 by Pierre Saint-Armand, a registered geologist and geo- physicist. The study indicates the likelihood of significant amounts of panes oe at shal- low depths ina ni T of loca- tions along the Copper River , Valley. One location that produced huge amounts of methane is only a few miles from Glenn- allen. The gas deposits were first detected in the 1970s. But at the time, million-dollar state bond regulations and fees kept flere away from exploration. A bill sponsored by Ogan and signed into law this year cut the bonding and fee costs from $1 million to only $25,000, in the case of shallow gas deposits, putting such projects within reach of small business specula- tors. Ogan is also planning a pre- sentation in mid-Octaber in Glennallen to make local busi- nesses aware of the new law and the potential for applying it to local gas deposits in the area. Donna Tollman, executive di- rector of the Copper River Eco- nomic Development Council, said she is interested. One of Tollman’s main goals for years has been cheaper electric power for the Copper River Basin. This caused her and others in the area to initially look favorably upon the intertie plan. But Tollman said if local gen- eration of power using natural gas would be cheaper, she would favor that. aa” fii aS COPPER VALLEY ELECTRIC ASSOCIATION, INC. . P.O. Box 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 April 20, 1995 Mr. Dennis Lewis, Chairman Project Management Committee P.O. Box 329 Petersburg, Alaska 99833 SUBJECT: Alaska Energy Authority Lawsuit Dear Dennis: I have briefed both Copper Valley Electric Association’s General Counsel Richard Huffman and our Board of Directors concerning the lawsuit filed by some of the utilities against the Alaska Energy Authority (AEA). Although my opinions were clearly stated at the various PMC meetings on April 11 and 12, I would like you to know for the record, counsel and our board are likewise opposed to the suit and we will not be intervening in the proceeding. In their rush to judgment, I believe the purchasers who are party to the suit have overlooked the very important consideration of who is going to pay the legal fees associated with this action. Clearly the plaintiff in this action is not the PMC, and in fact, the action has not even been brought before the Committee. In this regard, there are no funds budgeted to prosecute this case, and since none are likely to be provided over AEA’s assumed budget veto, I would suggest that those purchasing utilities who are plaintiffs in this case should pay all associated fees and costs. Likewise, any costs incurred to date specifically related to preparation of the complaint by the PMC should be reimbursed by those participating in the suit. Serving the Copper River Basin and Valdez Alaska Energy Authority Lawsuit April 20, 1995 Page 2 At the next PMC meeting, I would like to see an accounting of all fees and expenses previously paid to Ater Wynne et al and others in connection with this action. In this regard, please place this item on the agenda for discussion at the May 24, 1995, PMC meeting in Seattle. Thank you for your attention to this matter. Sincerely, . (Coun fink Robert A. Wilkinson, CPA PMC Voting Delegate cc: Clayton Hurless CVEA Richard Huffman CVEA Counsel Dave Carlson Petersburg Walter Sapp Kodiak Warren Edgley Wrangell Tom Stevenson Ketchikan DennisMcCrohan AIDEA/AEA Ron Saxton Ater Wynne w:\word\raw\95-086nh.doc EGEIVE! APR 2 41995 Alaska Industrial Development and Export Authority FI 4 ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= ALASKA @@— ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 January 15, 1998 David Gray CH2M Hill P.O. Box 91500 Bellevue, WA 98009-2050 Re: AIDEA Contract No. 93-010, NTP 6 (Sutton-Glennallen Intertie) Dear Mr. Gray: It is my understanding that the above referenced project is now complete. Since the project is 100% complete, the NTP will be closed 14 days from the date of this letter. After close out, no further invoices will be paid on this NTP. Please sign the acknowledgement below and returm this letter within 10 days to: Christel Petty AIDEA 480 W. Tudor Road Anchorage, AK 99503. DUM Col< Dennis McCrohan Project Manager (Ces Curt Sullivan Christel Petty Elaine McCambridge Acknowledgement of NTP Close-out This project is now complete and no further invoices will be submitted on the above referenced NTP. The attached invoices are the final invoices on the above referenced NTP. The total billed against this NTP is Signature Date UNITED STATES OF AMERICA al U BEFORE THE JUN 2 3 iS9/ FEDERAL ENEGRY REGULATORY COMMISSION aska Industrial Develasman Copper Valley Electric Association FERC PROJECT NO* PPS GOH Response to Allison Lake Preliminary Progress Report Dated May 19, 1997 The above-mentioned progress report contains some statements which require a response from Copper Valley Electric Association, Inc. (CVEA). Paragraph 3 of the May 19, 1997, report states: This project has been delayed pending completion of a study of the merits of a release of funds to build an electric intertie from Sutton to Glennallen, Alaska. A recommendation to the governor was made that such funds not be released, due to uncertainty concerning a reliable market for the power. Thereafter, the utility withdrew its support for the intertie and has chosen to arrange other power supply sources. CVEA response: CVEA is not aware of a formal recommendation to the Governor not to approve the project based on an unreliable power market. The specific project in question, the Sutton to Glennallen transmission line, has numerous obstacles to its construction. Those include marginal economics, political and environmental concerns, and long-term economic viability. CVEA completed an extensive re-assessment of the intertie project, and in November 1996 elected to not further pursue the project at this time. Instead, CVEA identified another alternative, specifically, a combustion turbine cogeneration project with our largest customer, the Petro Star Valdez Refinery. For the past seven months, CVEA has been working on developing the cogen project with Petro Star. In 1993 the 18 Alaska Legislature appropriated $35 million for construction of the intertie. As of the end of the first session of the 20" Alaska Legislature, those Junds remain available for construction of that project should someone other than CVEA choose to take it forward. Paragraph 4 of the May 19, 1997, report states: Meanwhile, the State of Alaska has determined to sell the existing hydroelectric facility, used by the utility as its chief power source. This too will influence the economic viability of this project. CVEA response: In 1993 the 18" Alaska Legislature passed legislation restructuring the Alaska Energy Authority. Authority for managing certain energy projects, including the group of state-owned hydroelectric projects known as the Four Dam Pool, was transferred to the Alaska Industrial Development and Export Authority. AIDEA interpreted the intent of the legislation to mean the state of Alaska should get out of the business of owning and operating energy infrastructure projects. The Four Dam Pool is a rather unique arrangement of four hydroelectric projects serving three municipal and two cooperative electric utilities. The pool is managed by representatives from the five utilities and the state of Alaska. This management group is known as the Project Management Committee (PMC). In 1995 the PMC and AIDEA began discussions of divesting ownership of the Four Dam Pool to the utilities. Negotiations have been off and on since August 1995 and recently have increased in intensity. The utilities are currently preparing a formal offer for purchase of the projects which is expected to be submitted to AIDEA by July 31, 1997. If this offer is deemed acceptable by AIDEA, it will be formulated into a formal proposal to be submitted to the 20" Alaska Legislature for approval. It remains to be seen whether a sale can be consummated. Paragraph 5 of the May 19, 1997, report states: Accordingly, we have continuing discussions with Clayton Hurless and Robert Wilkinson of Copper Valley Electric Association concerning possible interconnect and power sales agreement terms. Now that Mr. Hurless has retired, these discussions are expected to continue with Mr. Wilkinson during the ensuing six-month period. CVEA response: Mr. Wilkinson, the current General Manager of CVEA, has not had continuing discussions with Alaska BIDCORP regarding interconnection or power sales agreement terms. Current management at CVEA has no knowledge of discussions between Clayton Hurless, the former General Manager, and Alaska BIDCORP. During his tenure at CVEA, Mr. Hurless strongly supported the intertie alternative and was never seen as a proponent of the Allison Lake project. CVEA Page 2 FERC Project No. 11510-000 Conclusion: CVEA is pursuing a combustion turbine cogeneration project with the Petro Star Valdez Refinery. Recent studies have shown this to be the economically viable alternative. Dated this 20" day of June, 1997. Respectfully Submitted, Robert A. Wilkinson General Manager Subscribed and sworn to before me this Att day aD fA 1997. CH Aud a, ble: db ber besgs Notary Public 667 the State o a My commission expires: CVEA Page 3 FERC Project No. 11510-000 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed to the following addresses this ~ day of , 1997. Ms. Lois D. Cashell, Secretary Office of the Secretary Federal Energy Regulatory Commission 825 North Capitol, N.E. Washington, D.C. 20426 Mr. Fred G. Brown Alaska Business and Industrial Development Corp. 1459 Holy Cross Drive Fairbanks, Alaska 99701 Director, Division of Project Licensing Federal Energy Regulatory Commission Room 1027 825 North Capitol, N.E. Washington, D.C. 20426 Michael Spencer Office of Hydropower Licensing Federal Energy Regulatory Commission 825 North Capitol, N.E. Washington, D.C. 20426 Director, Division of Project Review Federal Energy Regulatory Commission Room 1027 825 North Capitol, N.E. Washington, D.C. 20426 Randy Simmons, Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Road Anchorage, Alaska 99503 Keith Laufer Assistant Attorney General 1031 West Fourth Avenue, Suite 200 Anchorage, Alaska 99501 CVEA Page 4 can FERC Project No. 11510-000 * G8 ENERGY AUTHORITY coe @ ALASKA INDUSTRIAL DEVELOPMENT “i ke Y AND EXPORT AUTHORITY /= «==> ALASKA * * 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM TO: Jim Ayers, Chief of Staff Office of the Governor FROM: Brenda J. Fuglestauzxa Assistant to Randy Simmons DATE: October 28, 1997 SUBJECT: Copper Valley Intertie - Revised Memorandum Attached is a corrected version of the October 24, 1997, memorandum on the above referenced subject. Please discard the previous version and replace with the attached October 28"" memorandum. Thank you. * BEES» ENERGY AUTHORITY * * * © ALASKA INDUSTRIAL DEVELOPMENT | ; y 4 AND EXPORT AUTHORITY / «== ALASKA xk * 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM TO: Jim Ayers, Chief of Sta Office of the Govermor : FROM: D.R s Cutive Director Alaska Industrial D¢velopment and Export Authority DATE: October 28, 1997 SUBJECT: Copper Valley Intertie Revised Background In 1993, the State Legislature appropriated $35 million from the Railbelt energy fund to the DCRA power project fund to be used for a zero-interest, 50-year loan for construction of a power transmission line (Intertie) linking Alaska’s Railbelt region to the service area of Copper Valley Electric Association (CVEA). The appropriation was made subject to two conditions. First, the appropriation was contingent on “the completion of a feasibility study and finance plan satisfactory to [DCRA].” Second, the appropriation was contingent on the execution of a loan agreement between DCRA and the utilities participating in the Intertie. A feasibility study was completed in April 1994. The Commissioner of DCRA approved the report, which found the Intertie feasible. The $35 million was transferred to the power project fund, despite the fact that the appropriation conditions had not been fully satisfied (no loan agreement had been executed). Action on the Intertie was delayed for many months while DCRA and CVEA negotiated the required loan and security agreements necessary to consummate the loan. Because of the long delay and because conditions had significantly changed since the feasibility study was completed, DCRA asked AIDEA to update the feasibility study. An Administration Working Group was assembled to oversee the feasibility study update. The Working Group consisted of the commissioners from DOT/PF and DNR and the AIDEA Executive Director. AIDEA engaged a consultant to update the feasibility study and conducted four public hearings to elicit public opinion on the project. Substantial objections to the Intertie were raised by environmental organizations. DRAFT CONFIDENTIAL Deliberative Process Jim Ayers, Chief of Staff October 28, 1997 Page 2 In November 1995, the Feasibility Study Update was issued. Based upon that report, the Working Group found the Intertie to be feasible, but only if certain preconditions could be satisfied. The preconditions were that: (1) Chugach Electric Association or other railbelt energy suppliers participate in the Intertie’s construction costs, O&M costs, and risks, (2) CVEA enter into power sales agreements with key industrial power consumers to insure that these consumers continue to purchase power from CVEA and not pursue independent generation alternatives, (3) that DCRA approve a plan of finance for the project, and (4) CVEA be obligated to repay the State funds even if the project did not proceed. Immediately after the Working Group issued its findings, it became apparent that the preconditions could not be satisfied. For example, Chugach Electric Association failed to extend commitments to participate in the Intertie’s funding. Later in 1996, CVEA notified the State that CVEA no longer wished to construct the Intertie. Although the $35 million appropriation was specifically for the Intertie loan, CVEA and others have proposed alternative uses for the funds. These uses included mid-size combustion turbines, small diesel generators as part of an industrial facility, a hydroelectric project, and other uses. None of these alternative uses are being actively pursued at this time. Another alternative that had been proposed is power generation by Alyeska Pipeline Company at the Valdez terminal. Alyeska has the capability of producing power in excess of its requirements. That power could be sold into the CVEA system. The original Intertie feasibility studies indicated that Alyeska generation could reduce CVEA’s power cost without the Intertie. In the past, however, Alyeska has not been interested in providing generation. Recently, it appears that Alyeska may be interested and CVEA and Alyeska have initiated discussions regarding the possibility. With the exception of a two mile transmission line to interconnect Alyeska’s facility with the CVEA system, little capital investment would be required in order to implement this alternative. Currently, the Commissioner of DCRA has not made a final decision regarding the Intertie’s feasibility. Issues At this time, the only issue is if and when the Commissioner of DCRA declares that the appropriation conditions have not been satisfied. We see the following options: 1. Do Nothing. Absent action by the Commissioner, the $35 million dollar appropriation will remain in limbo, unless and until the bill re-appropriating the money becomes law. At this time, it appears that there is little legislative will to consider re- appropriation of the funds. 2. DCRA Commissioner Declares the Conditions Unsatisfied. DRAFT CONFIDENTIAL Deliberative Process Jim Ayers, Chief of Staff October 28, 1997 Page 3 Conclusion Currently neither of the two conditions contained in the appropriation has been satisfied. The DCRA Commissioner has the flexibility to point to either of the conditions as the reason for taking action. If the Administration wished to avoid making a final determination on Intertie feasibility, the DCRA Commissioner could declare that the loan agreement condition has not been satisfied and that CVEA’s notice that they will not be proceeding with the Intertie indicates the condition will never be met. Upon such a declaration, it is unclear what should happen to the funds. Ordinarily, if an appropriation lapses or fails because appropriation conditions are not satisfied, the funds remain in their original source. In this case, however, the funds appear to have transferred before the appropriation conditions were met. The Administration could take the position that because the appropriation conditions were never met, the transfer to the power project fund was improper and therefore should be reversed, retuming the money to the Railbelt energy fund. Alternatively, the Administration could take the position that, as the funds are in the power project fund and will not be used for the purpose intended, the legislature must take action to re-appropriate the funds for some other purpose. Promote an Altemative Energy Project for the Copper Valley Area. In conjunction with declaring the appropriation conditions unsatisfied, the Administration could take the opportunity to promote an alternative energy project for the area. Depending upon the particular project, the Administration could propose re-appropriation of some or all of the $35 million to the project. And, if the Administration were to promote the Alyeska generation alternative, it appears that little of the $35 million would need to be re-appropriated for that project. Therefore, the funds could be freed up for other Administration priorities while still providing the Copper Valley area with the additional power they need. Neither condition for the $35 million dollar Intertie loan appropriation has been satisfied. Regardless of which approach the Administration takes, the legislature will ultimately be forced to consider if and where the funds should be appropriated. The Administration is free to force the issue by declaring that the feasibility, loan agreement or both conditions have not been satisfied. Moreover, the Administration could establish the framework for legislative debate by proposing an alternative energy project or some other use for the funds. DRS:bjf h:all\keith\copper valley it cc: David Ramseur, Deputy Chief of Staff, Office of the Governor Pat Pourchot, Legislative Director, Office of the Governor Annalee McConnell, Director, Office of Management & Budget Mike Irwin, Commissioner, Community & Regional Affairs DRAFT CONFIDENTIAL Deliberative Process Jim Ayers, Chief of Staff October 28, 1997 Page 4 bec: Lamar Cotten, Deputy Commissioner, Community & Regional Affairs Dennis V. McCrohan, Deputy Director — Project Development & Operations Keith A. Laufer, Financial & Legal Affairs Manager DRAFT CONFIDENTIAL Deliberative Process QUALITY SERVICES Date__JAN 15 1997 Valdez Vanguard Client No._720 A _ CVEA proposes mobile generation units for city 2/(0E Y20A 345A By Tony Bickert Valdez Vanguard Copper Valley Electric Association has unveiled an experi- mental idea to generate cheaper pow- er: diesel engines housed in connex- es whose waste heat would be provided free to city-run buildings such as the airport, hospital — possi- - bly the high school. In turn, the city would pay CVEA an undetermined ager Mike Easley told Valdez City Council members at a work session Monday that the four 14-feet by 40- feet Utilitymaster power modules, currently leased by the Petro Star Valdez Refinery, could theoretically replace CVEA’s aging diesel plant on West Egan Drive, or at least and help the struggling electric co-op to offset the cost to run it. Easley said up to $40,000 worth of heat per year, per unit could be uti- amount for installation. lized by the city, although the city CVEA engineering services man- See CVEA, page 4 CVEA is pushing the experimen- _ because Petro Star is not utilizing CVEA ... 210E€ ¥20AR 345A tal idea as part of a deal struck with Petro Star Valdez Refinery. CVEA From page 1 and Petro Star partnered up last month to propose the building of a would notneed all ofthe heat. turbine plant adjacent to the Dayville ‘We would expect that the city help in thei 3 ae en Road refinery. CVEA would trade — Sie heat” he, fie Waste heat to Petro Star for cheap ea WyOUiG get the wasp Neat fuel to generate ae However, the : n ; idea hinges on a $15 million state zoning law changes and public hear. [2% CVEA hopes to acquire from ings would. be required, said a. » With lobbying support from ns Development Director" GVEA said the turbines would be D oe el. a quicker and cheaper solution than a member Lynn i the proposed Sutton-Glennallen inter- the public. Mayor Dave Cobb was in i Which has been mothballed for favor of the idea, which the council OW: The CVEA-Petro Star joint ven- will discuss in more detail at ‘*e would lower residents’ electric Monday's meeting bills — at present among the highest “If the city a in concept that in the U.S. — by 20 percent, said it’s a good idea, = nwe'llcome back CVEA general manager Bob with some specific locations and Wikenson. acl numbers,” Easley said. Easley said utilizing the mi dule units would also benefit both entities them. Under the plan, CVEA would take over lease payments in return for cheap fuel from the refinery to run them. “That allows us to generate cheap- er power and everybody wins,” Easley said. Similar units are in operation in other parts of Alaska, said Easley, who added that the units run quietly. Chrystal said to expect strong opposition from the public, especial- ly if the proposed sites include the school. He said homeowners who live nearby might also object. “The re-sale value of houses would go down the toilet,” he said. CVEA said the proposed sites would not be close to homes and, if a problem arose, the units could be moved fairly easily. Easley said when and if the turbine plant is built on Dayville Road, the units would no longer be necessary. 7 a * @ ALASKA INDUSTRIAL DEVELOPMENT y 4 AND EXPORT AUTHORITY f= «= ALASKA EEE ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 MEMORANDUM = (Reactive Director evelopment and Export Authority 10: Jim Ayers, Chief of S Office of the Goy r FROM: D. Alaska Industrial DATE: October 24, 1997 SUBJECT: Copper Valley Intertie Background In 1993, the State Legislature appropriated $35 million from the Railbelt energy fund to the DCRA power project fund to be used for a zero-interest, 50-year loan for construction of a power transmission line (Intertie) linking Alaska’s Railbelt region to the service area of Copper Valley Electric Association (CVEA). The appropriation was made subject to two conditions. First, the appropriation was contingent on “the completion of a feasibility study and finance plan satisfactory to [DCRA].” Second, the appropriation was contingent on the execution of a loan agreement between DCRA and the utilities participating in the Intertie. A feasibility study was completed in April 1994. The then Commissioner of DCRA, Edgar Blatchford approved the report, which found the Intertie feasible. The $35 million was transferred to the power project fund, despite the fact that the appropriation conditions had not been fully satisfied (no loan agreement had been executed). Action on the Intertie was delayed for many months while DCRA and CVEA negotiated the required loan and security agreements necessary to consummate the loan. Because of the long delay and because conditions had significantly changed since the feasibility study was completed, DCRA asked AIDEA to update the feasibility study. An Administration Working Group was assembled to oversee the feasibility study update. The Working Group consisted of the commissioners from DOT/PF and DNR and the AIDEA Executive Director. AIDEA engaged a consultant to update the feasibility study and conducted four public hearings to elicit public opinion on the project. Substantial objections to the Intertie were raised by environmental organizations. In November 1995, the Feasibility Study Update was issued. Based upon that report, the Working Group found the Intertie to be feasible, but only if certain preconditions could be Jim Ayers, Chief of Staff October 24, 1997 Page 2 satisfied. The preconditions were that: (1) Chugach Electric Association or other railbelt energy suppliers participate in the Intertie’s construction costs, (2) CVEA enter into power sales agreements with key industrial power consumers to insure that these consumers continue to purchase power from CVEA and not pursue independent generation alternatives, (3) that DCRA approve a plan of finance for the project, and (4) CVEA be obligated to repay the State funds even if the project did not proceed. Immediately after the Working Group issued its findings, it became apparent that the preconditions could not be satisfied. For example, Chugach Electric Association failed to extend commitments to participate in the Intertie’s funding. Later in 1996, CVEA notified the State that CVEA no longer wished to construct the Intertie. Although the $35 million appropriation was specifically for the Intertie loan, CVEA and others have proposed alternative uses for the funds. These uses included mid-size combustion turbines, small diesel generators as part of an industrial facility, a hydroelectric project, and other uses. None of these alternative uses are being actively pursued at this time. Another alternative that had been proposed is power generation by Alyeska Pipeline Company. Alyeska has the capability of producing power in excess of its requirements. That power could be sold into the CVEA system. The original Intertie feasibility studies concluded that Alyeska generation was the preferred alternative. In the past, however, Alyeska has not been interested in providing generation. Recently, it appears that Alyeska may be interested and CVEA and Alyeska have initiated discussions regarding the possibility. With the exception of a one mile Intertie to interconnect Alyeska’s facility with the CVEA system, little capital investment would be required in order to implement this alternative. Currently, the Commissioner of DCRA has not made a final decision regarding the Intertie’s feasibility. Issues At this time, the only issue is if and when the Commissioner of DCRA declares that the appropriation conditions have not been satisfied. We see the following options: le Do Nothing. Absent action by the Commissioner, the $35 million dollar appropriation will remain in limbo, unless and until the bill re-appropriating the money becomes law. At this time, it appears that there is little legislative will to consider re- appropriation of the funds. es DCRA Commissioner Declares the Conditions Unsatisfied. Currently neither of the two conditions contained in the appropriation has been satisfied. The DCRA Commissioner has the flexibility to point to either of the conditions as the reason for taking action. If the Administration wished to avoid making a final determination on Intertie feasibility, the DCRA Commissioner DRAFT CONFIDENTIAL Deliberative Process — * Jim Ayers, Chief of Staff October 24, 1997 Page 3 Conclusion could declare that the loan agreement condition has not been satisfied and that CVEA’s notice that they will not be proceeding with the Intertie indicates the condition will never be met. Upon such a declaration, it is unclear what should happen to the funds. Ordinarily, if an appropriation lapses or fails because appropriation conditions are not satisfied, the funds remain in their original source. In this case, however, the funds appear to have transferred before the appropriation conditions were met. The Administration could take the position that because the appropriation conditions were never met, the transfer to the power project fund was improper and therefore should be reversed, returning the money to the Railbelt energy fund. Alternatively, the Administration could take the position that, as the funds are in the power project fund and will not be used for the purpose intended, the legislature must take action to re-appropriate the funds for some other purpose. Promote an Alternative Energy Project for the Copper Valley Area. In conjunction with declaring the appropriation conditions unsatisfied, the Administration could take the opportunity to promote an alternative energy project for the area. Depending upon the particular project, the Administration could propose re-appropriation of some or all of the $35 million to the project. And, if the Administration were to promote the Alyeska generation alternative, it appears that little of the $35 million would need to be re-appropriated for that project. Therefore, the funds could be freed up for other Administration priorities while still providing the Copper Valley area with the additional power they need. Neither condition for the $35 million dollar Intertie loan appropriation has been satisfied. Regardless of which approach the Administration takes, the legislature will ultimately be forced to consider if and where the funds should be appropriated. The Administration is free to force the issue by declaring that the feasibility, loan agreement or both conditions have not been satisfied. Moreover, the Administration could establish the framework for legislative debate by proposing an alternative energy project or some other use for the funds. DRS:bjf h:all\keith\copper valley it oe David Ramseur, Deputy Chief of Staff, Office of the Governor Pat Pourchot, Legislative Director, Office of the Governor Annalee McConnell, Director, Office of Management & Budget Mike Irwin, Commissioner, Community & Regional Affairs DRAFT CONFIDENTIAL Deliberative Process ” Jim Ayers, Chief of Staff October 24, 1997 Page 4 bcc: Lamar Cotten, Deputy Commissioner, Community & Regional Affairs Dennis V. McCrohan, Deputy Director — Project Development & Operations Keith A. Laufer, Financial & Legal Affairs Manager DRAFT CONFIDENTIAL Deliberative Process 01/27/37 09:43 ID:Konica-7310 FAK: PAGE 2 COPPER VALLEY ELECTRIC ASSOCIATION, INC. P. 0. Box 45, GLENNALJEN, ALASKA 99588 (907) 822-3211 Fax 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 FOR IMMEDIATE RELEASE JANUARY 23, 1997 WILKINSON NAMED TO TOP POSITION / / Last night, Copper Valley Electric Association Board of Directors unanimously voted to rescind a motion made at the November board meeting to go out for a National Rural Electric Cooperative Association Manager's Search. Its next action was to offer Robert Wilkinson the position of General Manager with a three year contract, the particulars being worked out with Mr. Wilkinson, the Board, and corporate counsel. Wilkinson accepted the position, Robert A. Wilkinson, 43, is a Certified Public Accountant, who began with CVEA in September of 1986, A long time resident of the state of Alaska, he graduated from West High in Anchorage and went on to receive his degree from Western Washington University in Bellingham, Washington. He has held the number two position at the utility since he began as the Manager of Administration and Finance, over 10 years ago. Robert and Jeanmaire, his wife of 23 years, live near Copper Center. They have two sons: Jacob, 18, who is pursuing a degree in Civil Engineering at Oregon State University; and Benjamin, 14, who is a freshman at Glennallen High School. Robert has been active in the communities served by CVEA for many years, After accepting the position, Wilkinson thanked the Board for its vote of confidence. He said, “I believe CVEA is going in the right direction, a lot has happened in the last couple of months and it has been a team effort to get us to this point. There is a lot of work to do in the next six months, and with the support of the staff, | believe we can deliver.” ae OW Dar Serving the Copper River Basin and Valdez (Re7/976:32a | Q) Quality Services ) (907) 274-1056 Dace NOV 2 9 1996 Anchorage Daily News Client No.4 204 Intertie loses backer Utility seeks aid for 4 generators 302 31 240E 420A By S.J. KOMARNITSKY Daily News reporter PALMER — The main pro- ponent of the proposed $53 million powerline between Sutton and Glennallen says it no longer supports building the controversial line. Officials with the Copper Valley Electric Association said Wednesday they have withdrawn their support for the project and instead will ask the state for a $15 million grant to buy four new diesel generators. Opponents of the power- line, which include environ- mental groups and some Matanuska Valley residents, hailed the utility’s decision, saying it signaled the pro- ject’s death. “There’s absolutely noth- ing supporting this project now,” said Chris Rose, a Sut- ton resident and co-founder of Alaska Citizens for Re- sponsible Energy Develop- ment. Bob King, a spokesman for Gov. Tony Knowles, said the administration had not yet seen the details of the utili- ty’s proposal, and that it was unclear what effect it would have. But, he added, if the main proponent is dropping out, “that’s obviously trau- matic.” The project has been on hold for nearly two years while the Knowles adminis- tration reviews whether to approve a_ $35 million interest-free loan and up to $25 million in state-issued bonds to build the line. Mike Irwin, commissioner of the state Department of Community and Regional Af- fairs, plans to meet with Cop- per Valley officials sometime LINE: Utility wants new generators, drops intertie support Joe 3H 2I0nE& YWwA Continued from Page D-1 next week to discuss the plan, King said. The utility’s about-face comes after years of staunch support for the powerline as a way to reduce electric rates in the Copper River basin. It also came just weeks after the resignation of general manager Clayton Hurless, a strong proponent of the pro- ject. Glennallen residents pay about 20 cents per kilowatt- hour for power, nearly twice what Anchorage residents pay. The powerline, which would stretch 135 miles from Sutton to Glennallen, would allow Copper Valley to tap into the vast and relatively cheap power supply of the Railbelt utilities. Robert Wilkinson, the utili- ty’s acting general manager, said the change was prompt- ed in part by an internal re- view that showed the intertie would be too expensive, faced public opposition, and might not mean lower rates for customers. Also crucial was renewed hope for a trans-Alaska gas pipeline, he said. The gas line has been talked about for the past two decades. Recent dis- cussions have focused on a startup date of 2005. If the pipeline is built, the utility could tap into it and gain a cheap source of power, Wilkinson said. In the meantime, he said, it makes more sense to go with something small instead of the $53 million intertie. Rep. Gene Kubina, D- Valdez, said he will push the Legislature to make the change, but he acknowledges there are “lots of political problems” with the idea. “The plan is to see if we can’t turn the $35 million loan back and then get a $15 mil- lion grant,’ Kubina said. “That’s going to take a lot of | work and people coming to- gether.” | The intertie loan was ap-, proved by the Legislature as’ part of a package that includ- ed money for upgrading lines from Anchorage to the Kenai Peninsula and from Healy to Fairbanks. That loan is con- tingent on a finding by the Knowles administration that the project is economically feasible. A prime backer of the in- tertie was Rep. Ramona Barnes, R-Anchorage, then speaker of the House. “T don’t think those tur- bines do anything for the Railbelt integrated energy system, and that was the pur- pose of the loan in the first place,” Barnes said Wednes- day. “If they need those gener- ators, they should sell bonds to pay for them. My thing was not to give them money. My thing was to tie together an energy grid,” Barnes said. While the utility’s current proposal is sketchy, Wilkin- son said it would include pur- chasing four generators, and placing some of them next to the Petro Star refinery in Valdez. The new generators would replace the aging diesel gen- erators the utility relies on to produce about a third of the power for its 3,100 cus- tomers. They would save the utility money by allowing it to elim- inate some positions, Wilkin- son said. Lower fuel costs could result if the utility were to buy fuel from Petro Star and then pump waste heat to the refinery, he added. Petro Star also may re- main a Copper Valley cus- tomer, Wilkinson said. The company had an- nounced earlier this year that it planned to produce its own power — the second time of- ficials have said it would do so. But Wilkinson said the company has not yet started to produce its own power, and recent talks with compa- ny officials indicate they might stay on line. Petro Star officials did not return calls left Wednesday at the company’s Anchorage office. The refinery is the utility’s biggest customer, ac- counting for about a quarter of the power usage. U The Associated Press contributed to this report. COPPER VALLEY ELECTRIC ASSOCIATION, INC. P. O. Box 45, GLENNALLEN, ALASKA 99588 (907) 822-3211 FAX 822-5586 VALDEZ (907) 835-4301 FAX 835-4328 October 16, 1996 E ¢ E l V E OT 24 1996 Mr. Stanley E. Sieczkowski Alaska Industrie! Development Director/Facilities Operations & Engineering and Export Authority Alaska Energy Authority P.O. Box 190869 Anchorage AK 99519-0869 Dear Stan: Enclosed is a copy of Copper Valley Electric Associations 1996 Substation Maintenance Request for Proposals. If you have any questions, please do not hesitate to contact me. Sincerely, “MM wehagl Eaate ey by GORA hes Michael E. Easley, P.E. Manager, Engineering Services Enclosure Mr.w:/winword/let_mike-me96/96094 ij Serving the Copper River Basin and Valdez COPPER VALLEY ELECTRIC ASSOCIATION March 29, 1996 Request for Proposals ae Pere Keds pee yorwmny opreee nn 1] ¢ prs me Rene re wenteoes rs |. INTRODUCTION A. Purpose B. General Description of RFP C. Due Date for Proposals and Company Contact D. Maintenance Start and Completion Dates E. Right of Rejection Il. REQUESTED INFORMATION Ill. GENERAL INFORMATION A. System Description B. List of Facilities and Locations C. Maintenance History IV. SCOPE OF WORK A. Reporting B. Control and Instrumentation C. Substation Devices V. CVEA EQUIPMENT TO BE SERVICED Vi. CVEA’S RESPONSIBILITIES A. Switching and Clearances B. Lodging and Transportation Vil. APPENDIXES A. System Oneline B. System Area Maps C. Control/Metering/Relaying Equipment Listing D. Substation Device Listing E. Sample Substation Maintenance Services Contract proves eons gon E Introduction A. Purpose Copper Valley Electric (CVEA) is requesting proposals to conduct substation maintenance for its entire system in June of 1996. Maintenance, will be conducted on all substation transformers, OCBs , and OCRs. Single phase distribution OCR as well as selected 24.9/12.47 distribution step-down transformers will also be maintained. A separate contract for testing and calibration of selected relays, metering equipment, and OCR controllers will also be issued. This RFP outlines CVEA’s minimum requirements for substation maintenance, however we encourage respondents to suggest alternatives to CVEA’s Scope of work. CVEA will select a contractor based on the proposals received. The Contractor will be compensated on a time and material bases, as set forth in the Substation Maintenance Services Contract. A sample Contract that will be entered into by CVEA and the Contractor is included in Appendix E. B. General Description of RFP This RFP is separated into two classes of work, (1) Substation device maintenance & ground grid testing, and (2) Control/Meter/Relay maintenance. You may propose to complete either or both classifications of work. If separate contractors are selected by CVEA to complete the separate classes of substation work, coordination of work will be required by the individual contractors. We have included in this RFP four main topics: General information describing CVEA’s system and maintenance history. Information that CVEA is requesting Scope of work for Substation devices and Control/Meter/Relay Listing and descriptions of CVEA’s equipment that will be maintained CVEA’s responsibilities during maintenance activities Appendixes NvwPyvne c. Due Date for Proposals and Company Contact Proposals must be received by CVEA no later than Noon April 15, 1996. If you need additional information or have questions concerning this RFP you may contact either; Michael Easley, P.E., Manager of Engineering Services or Ray DeStefano, Jr. Engineer In Valdez at (907)835-4301. Send proposals to: Michael Easley, PE Manager, Engineering Services Copper Valley Electric Association PO Box 3293 Valdez, Alaska 99686 0 ROL ree et pprnvesn pens Fafa l vere D. Maintenance Start and Completion Dates The maintenance activities will commence about June 10, 1996 and will be completed on or before July 5, 1996. The actual start date will be dependent on the operational status of the Solomon Gulch Hydro Plant and will be determined on or before May 15, 1996. ES Right of Rejection CVEA reserves the right to reject any and all proposals. Preparation costs associated with the proposals shall be born by the proposer. ll. | Requested Information CVEA will select a contractor for this work based on the contractor’s hourly rates, skills and experience of personnel, and suggested procedures. We are primarily concerned that thorough and professional work will be performed, at a reasonable cost, and in a timely manner. The completion of work in a timely manner is important because supplemental diesel generation may be required during maintenance work. Because diesel generation displaces the less costly hydro generation, CVEA desires to keep supplemental generation to a minimum. As a minimum proposals shall include the following: Hourly Rates (broken down by job classification) Description of Personnel (Resumes) Composition of Crew (Number and classifications of personnel) Estimated Cost to Complete all Substation Device Maintenance Estimated Cost to Complete all Control/Meter/Relay Maintenance Time required to complete Substation Device Maintenance (in work days) Time required to complete Control/Meter/Relay Maintenance (in work days) Changes, suggestions, or additions to the scope of work Examples and outline of maintenance reports that CVEA will receive from the contractor List of equipment to be used to complete the work oe] " 1 ry gorse Ror pes Ill. General Information A. System Description Copper Valley Electric Association (CVEA) is located in South-central Alaska, serving the City of Valdez and the region known as the Copper River Basin. CVEA is headquarted in Glennallen and has a district office in Valdez, where operations and engineering are managed. The service territory is 160 miles long and 81 miles wide. CVEA has 3,178 services in place, averaging 8.8 consumers per mile of line. Approximately 8,000 people are served by 361 miles of energized distribution line. The Copper Basin district distribution area consists of three main feeders, following generally the corridors of the Glenn, Richardson, and Edgerton Highways. The west line extends a distance of 80 miles from Glennallen to Sheep Mountain on the Glenn Highway. The north line has two branches. One follows the Trans-Alaska pipeline corridor to mile 156 on the Richardson Highway. The shorter branch follows the Glenn Highway 12.5 miles north of the Gakona Junction. The south line extends a distance of 55 miles from Glennallen to Emestine, and beyond Kenny Lake on the Edgerton Highway. The Valdez district distribution area consists of three feeders supplying the Valdez city center and one feeder following the Richardson Highway fifteen miles from downtown. All distribution facilities in this district are located within the Valdez city limits. As an isolated utility, CVEA produces all of its power requirements from three generating plants. The 12 megawatt Solomon Gulch Hydroelectric Project in Valdez produces nearly all needed power from May-October. In the winter, diesel plants in Valdez and Glennallen contribute to the load. The diesel generating facilities have an installed capacity of 26.9 megawatts (mw) and a continuous operating capacity of l6mw. The two districts are connected by a 106 mile, 138 kV state owned transmission line. The Solomon Gulch hydroelectric project is also owned by the State of Alaska and, along with the transmission line, is operated by CVEA under a long-term contract with the Alaska Energy Authority (AEA). A system oneline and area maps for the Copper Basin and Valdez are attached in Appendixes A and B. werner ~y on — pr pr pone eg B. List of Facilities and Locations All of the locations listed below will be visited by the Contractor to perform testing and maintenance services. The device listings that are given in Appendix C and D refer to the abbreviation for each location. e Valdez Diesel Plant (VDP) and Don Smith (DS) Substation - W. Egan St. Valdez e Meals Substation (Meals) - Next to Alyeska Pipeline near the Lowe River crossing of the Dayville Rd. Petro Star Switch Station (Petro Star) - Dayville Road Mile 3 Solomon Gulch Hydro Plant (Hydro) - Dayville Road Mile 5 Glennallen Diesel Plant and Substation (GDP) - Glennallen, Mile 187 Glenn Hwy. Sub Station #11 (SUB 11) - Glennallen near Alyeska Pump Station 11 Sub Station #12 (SUB 12) - Mile 65 Richardson Highway near Pump Station 12 C. Maintenance History Substation maintenance was performed on CVEA’s system in 1994 by Power Engineers and Specialty Engineering in 1992. Power Engineer’s work focused on substation devices and OCR controls. Specialty’s work focused on substation devices only. Reports for this maintenance are available for your review. All of the substation devices that will be maintained this spring have had biannual maintenance performed on them. Control/Meter/Relay testing and maintenance has been performed sporadically over the past years. Most of these devices have had some sort of test and calibration performed in the last five years. To our knowledge, ground grid and distribution device (OCRs, regulators, step-down transformers) testing has not been performed in the last fifteen years. al sete ma rine een IV. Scope of Work A. Reporting As the final product delivered to CVEA, we will require neat, well organized, and detailed maintenance reporting. Reports should include as minimum: e Testing worksheets for all equipment tested including “as found” and “as left” info. e Written narrative summarizing findings for substation and control/meter/relay equipment. B. Control and Instrumentation The Contractor will perform testing and preventive maintenance in the field on mechanical and electronic protective relays, substation revenue meters, substation indicating meters and M.E. OCR controllers. All devices will require physical inspection, cleaning and assessment of the general condition. Inspection will look for presence of moisture and foreign material, tightness of mounting hardware, condition of glass covers etc. To the extent possible, the following tasks will be completed. RELAYS e Test each operating element’s pick-up parameters e Test operation of auxiliary contacts ¢ Test for three points on the time dial curve ¢ Other tests based on the manufacture’s instructions METERING Test full load and light load by secondary injection method Calibrate to one percent on Watt and Var. functions Check P.T. and C.T. ratios - insure that scaling is appropriate for the application Test and Calibrate indicating meters, and transducers in like manner OCR CONTROLLERS e Inspect and test battery Control operation tests - phase and ground Minimum trip tests - phase and ground Test control response time and recloser clearing time Test for three points on the T.C.C. SCADA RTU’s (LANDIS AND GYR 5500 SERIES) ¢ Calibrate Analog to Digital converter cards wl vrsnere one ape a | eee eo 110% fr ree CG; Substation Devices The Contractor will perform testing and preventive maintenance in the field on power transformers, reactors, 24.9kv circuit reclosers, and 138kv OCB’s. Single phase distribution OCRs and voltage regulators will be tested at CVEA’s warehouse in Valdez and Glennallen. Distribution step-down transformers (24.9/12.47kv single phase) will require testing in the field. There a five such transformers in Valdez (none in Glennallen), two of which can be de-energized for testing and maintenance. The applicable tests for these transformers will be limited by there location and whether they are energized. All devices will require physical inspection, cleaning and assessment of the general condition. Inspection will include adjustment, lubrication and cleaning of operating mechanisms. Look for presence of moisture & foreign material, tightness of electrical connections, and signs of fatigue, corrosion, & arcing. To the extent possible, the following tasks will be completed. POWER TRANSFORMERS Insulation Power Factor Excitation Current Tests we Insulation Resistance (mega-ohm testing) Pr al Turns Ratio Test at ro Winding Resistance tests Vas oe Bushing C. T. tests (ratio, polarity, and saturation) Check nitrogen blanketing, temperature and liquid level systems eoeee#ee#eee a—Cibsample e Bus PT tests ¢ Oil dielectric test, oil color, and filtering (as needed) 138kv OCBs Contact Time-travel Analysis Contact Resistance Insulation Resistance (mega-ohm testing) Bushing CT tests (ratio, polarity, and saturation) Oil dielectric test, oil color, and filtering (as needed) Check trip and close coil resistances Insulation Power Factor Test operation by current injection cmos oo ere ge prereener 24kv OCRs Contact Time-travel Analysis Contact Resistance Insulation Resistance (mega-ohm testing) Bushing CT tests (ratio, polarity, and saturation) Oil dielectric test, oil color, and filtering (as needed) Check trip and close coil resistances Insulation Power Factor Test operation by current injection GROUND GRID TESTING ¢ Three point fall-of-potential test on substation ground mat ¢ Measure step and touch potential resistance values ¢ Verify grounding conductors continuity to ground grid v. | CVEA Equipment To Be Serviced Provided in appendixes C and D are listings of all control/meter/relay and substation equipment that will be serviced. We have undoubtedly omitted equipment that will require servicing. The listings will most likely be expanded once the contractor is in the field maintaining the equipment. Vi. CVEA’s Responsibilities A. Switching and Clearances CVEA line crews will perform all switching and grounding needed to establish clearances for maintenance work. The contractor is expected to plan out work so as to minimize switching requirements. Line crews will typically work a ten hour day, and work should be scheduled so that switching can be completed within this time frame (when it makes sense to do so, the line crew will be held late to complete switching outside the normal work day). Clearances will be returned to the “normal position” each evening so that all supplemental generation can be discontinued for the night. B. Lodging and Transportation CVEA will provide Company vehicles for use by the contractors. Lodging will be provided or arranged by and direct billed to CVEA. All other expenses, including air transportation will be reimbursed. vl pore eq re pee Vil. Appendixes A. mos 9 Bb System Oneline System Area Maps Control/Metering/Relaying Equipment Listing Substation Device Listing Sample Substation Maintenance Services Contract ag penn pom pen MATCH MATCH 1551 TO SHEEP MT. TO SOURGOUGH TO GULKANA 90 MP 120 Pu —----------- 7 F4l2t 3/0 ACSR 24.9/14.4KV @F422/24 MP 196.5 Fi ) Faas il 1421 (SOLOMON FEEDER) reeves eatinad | we PF422/23 MP 1485 | 2 TO RGV 104 | “@ra2e/e2 MP 1625 eee 1462 | | @F422/21 MP 182.5 F421 1471 04 ped 1421 | 1461 | Pott ttt - - 4 - - - + - - - - - - - 4-- - a D@raarar I | | } TD ALYESKA . o> (a) $9) | stl - | | | 2 | 2 2 a | | 5 a & = \ : 3 ; i coms Bee g ! ! sy Ele 4 ENS 3 » 2 3 | . . 1451 | | STATION POWER 43 3 & | un SOLAR UNIT #2 if I | Gees I DS I oe | SOLAR UNIT + on | o++ — G46s } 6467 \ oO CIRCUIT BREAKER | | | (> F421/22 (NOD isa || @@ OWL CIRCUIT RECLOSER,S# | | f | iy || @ OIL CIRCUIT RECLOSERA® | | Gi6e2 cie1 | 1} _\_ pisconnect switcy | | 1S. | | Gus Gin10 I | FUSED DISCONNECT,HOOK | | | FUSED DISCONNECT | | : aman ee teat \ | METERING POINT | 5 2 & 2 : 2 9 3 3 e | | | & 3 & 3 3 3 S 3 S I \ LIGHTNING ARRESTER | | I 138KV CIRCUIT SWITCHER | | ap @ | Feaevel — Feaei/oi | | | j cae GROUP OPERATED DISCONNECT SWITCH | es RTON | GENERATING PLANT | -----------------—-— — — — — — — ee ee 4 @ reaar/ee Feae/e3 Feet Feepee TOA resKA State of Maske SN Alaska Energy Authority P.O Box 190869 701 East Tudor Road Anchorage, Alaska 99519-0869 Project SOLOMON GULCH 10 CoRR HYDROELECTRIC PROJECT AEA. No. Scate:_N.T.S. of é v375 LEGEND V369A 4 369 F424/86 v320 4 KV x @ va7i Faz47e4 ; Loar ROAD = p——})\4 AIRPORT F. /85 F424/83 4 a ll a $ 125KV i va37e \ F424/53 4 Resi aiavaes ee BIG WHEEL Fae4/s2 g v373 ROBE RIVER SUBD. ae || pares WEST> V366 of v365 Fes +. ROBE RIVER SUBD. fe Faea/er ASTD v374 }-—@————— ane voons susp r [= F4ae4set : v368 be 367 pee i v3e4 Fa2asn 'x 7 oon om om om hums MoM on nn i = 1 | | | | ! | 1 | ! | | | | | | | | | v3ee | |S. | | | | | 1 | | | | | | | | | | | | | | | F424/61 M468 bat 467 . 424 maneng g pry 7 | | | | | | | | | | | | | | | | | ! | | | ! | | | | 4 | | | ! | Faiass |x : | S456 i | ma7e M451 T t t m5S2 4553 I | | Fn I F414 Faiasas, | a MSIL @ Mel. x x x x & ! if iy f= — 3458 S455 fea ssa Faesea* wage 3 M463 f f 3 t ! | sate sala | | mae 3 | = gQ 414746 ! ! E = @3 | ! E | $453 I | Mavi | be | 6 3 faa _x = cd i Faiz/41 413/42 ' (ir . MEALS SUB 3 $457 T s4s2 S451 M462 Ma6i e x | sat sa13 | | Maal ! | 2 set 1 | I & ~ 0 L--~~~~~~~~~~~~~~~~-~-~~~~~-~--~~~~~---~-~----- 4 | xk | Alaska Energy Authorit 2 1 I laska Energy Au y E ro mE | | Anchorage, Alaska 99519-0869 | I SOLOMON GULCH SOLOMON GULCH HYDRO HYD! TO PETRO STAR ROELECTRIC PROJECT Ke ee a) ae il Valdez One—Line Diagram AEA. No. HO1—D—53—VO064—R49 FILE NAME: Iline_VZ Date 6-4-90 | Sheet —— of —_ freee em ae ed r cl a 12 _ GLENALLEN OFFICE \ GDP apse couse us : % pt = P4 SUBIL —\ carrer TAILINA, ss 0 — os “oe — om (COPPER CENTER eS ad er ™ ” us — LAE Ss % a ene SUBI12 a ENGINEER! PE ee = ancy COPPER VALLEY ELECTRIC ASSOC. FILE=95-96\WP\GLN_WP.DWG 4 — P.0. BOX 46 frome) [—] pesicver DRAFTSPERSON .0. = eel GLENNALLEN, ALASKA 99588 _-}-————} | ~] “crecces____“oraaven ROOT Reece COPPER BASIN ELECTRICAL DISTRIBUTION SYSTEM DRAWING NUMBER GLNKEY.DWG srreseon, BLUBERRY HILL SUBD. PORT VALDEZ VALDEZ VALDEZ AR MAP KEY VALDEZ DAYVILLE ROAD PETRO MEALS SUBSTATION COPPER VALLEY ELECTRIC ASSN, INC. VALDEZ AREA DISTRIBUTION SYSTEM MAP KEY DESN BY:___ CKED BY:__s DATE: | PROJECT a DRFT Sine APRV By ene See pern es EL CVEA Substation Equipment Listing 3/27/96 file=server\excel\Substation Equipment:Substation Equipment page 1 of 2 Number] Type MFR _ Serial # Loc. CVEA# Owner Fluid Vol Yr. MODEL KV MVA Cool Vent Tanks 2210 TRN LM 1790880 GDP CVEA OIL 0 1980 25 0.33 0 382 TRN WEST ~ UAV6055-01 GDP CVEA OIL 0 1975 25 2.5 0 390 TRN WEST UAV6055-02 GDP CVEA OIL 0 1975 25 2.5 1 46 TRN LM 1790881 GDP CVEA OIL 0 1980 25 0.333 ) 47 TRN LM — » 1790879 GDP CVEA OIL 0 1980 25 0.333 0 48 TRN LM -» 1790878 GDP CVEA OIL 0 1980 25 0.33 0 49 TRN AC — 3803326 GDP CVEA OIL 0 1970 25 0.333 1 50 TRN AC ~ 3803327 GoP CVEA OIL 0 1970 25 0.33 0 54 TRN AC ~ 3803328 GDP CVEA OIL 0 1970 25 0.33 0 52 TRN WEST ~UAV6055-04 GDP CVEA OIL 0 1975 25 25 0 53 TRN WEST =“ UAV6055-03 GDP CVEA OIL 0 1975 25 25 0 6421 OcR MCGE 2646 GDP G421 CVEA OIL 4 1980 RVE 0 G422 OCR MCGE 2647 GDP G422 CVEA OIL 41 1980 0 G423 OCR MCGE 2648 GDP G423 CVEA OIL 41 1980 RVE 0 2603 TRN FUGI \— AHN69056-T1 HYDRO AEA OIL 0 0 0.3 0 2604 TRN WEST -SGV8414-0101 HYDRO AEA OIL 0 0 75 GAS-BLANKET 1 2605 TRN WEST -SGV8414-0201 HYDRO AEA OIL 0 0 7.5 OA GAS-BLANKET 0 $411 ocB SIEMENS “39972-4 HYDRO S411 AEA OIL 55 SDO-23-500 25 23 ) $412 OcB SIEMENS 39972-3 HYDRO S412 AEA OIL 55 SDO-23-500 25 23 0 $413 ocB SIEMENS 39972-2 HYDRO S413 AEA OIL 55 SDO-23-500 0 S414 ocB SIEMENS ~ 39972-1 HYDRO S414 AEA OIL 55 $DO-23-500 23 0 2606 TRN WEST ~— UCS2789-1 MEALS AEA OIL 9799 1980 SL 138 25 ON/FA/FA — GAS-BLANKET 0) 2607 LTC WEST “ UCS2789-1L MEALS. AEA OIL 360 1980 138 25 0 M421 OCR MCGE 2239 MEALS M421 AEA OIL 53 2000 VWVE 0 M422 OCR MCGE ! 2269 MEALS M422 AEA OIL 53 2000 VWVE 0 M424 OcR MCGE 2242 MEALS M424 AEA OIL 53 2000 VWVE 0 M511 ocB WEST 2-38Y5300 MEALS = M511 AEA OIL 1220 2000 13816C46 138 0 1421 OCR MCGE 2254 PUMP 11 1421 AEA OIL 53 2000 o 1511 ocB WEST 1-38Y5300 PUMP 11 1511 AEA OIL 1220 1980 145GMS20 138 0 2207 LTC WEST UCS2788-1L PUMP 11 AEA OIL 360 1980 138 13 0 2208 TRN WEST UCS2788-1 PUMP 11 AEA OIL 0 1980 138 13 0 2209 REACTOR WEST ZMS8052-1 PUMP 11 AEA OIL 4115 1984 138 5 OA GAS-BLANKET 1 2204 REACTOR WEST . 5336 PUMP 12 AEA OIL 1460 1985 138 300A GAS-BLANKET 0 2205 LTC WEST . UCS2788-2L PUMP 12 AEA OIL 0 2000 13 0 2206 TRN WEST. UCS2788-2 PUMP 12 AEA OIL 0 1981 138 13 OA/FAIFA GAS-BLANKET 0 2421 OCR MCGE: 2241 PUMP 12 2721 AEA OIL 53 2000 0 12422 OCR MCGE 2240 PUMP 12 2422 AEA OIL 53 2000 0 2511 OcB WEST 3-38Y5300 PUMP 12 2511 AEA OIL 1220 1980 145GMS20 138 0 2512 ocB WEST 4-38Y5300 PUMP 12 2512 AEA OIL 1220 1980 145GMS20 138 ) 2600 TRN UST ~~ L2s2t04 > DS CVEA OIL 1140 2000 7.5 0 2601 LTC WEST + A356772L DS CVEA OIL 0 1985 0 2602 TRN WEST ~~ A3S6772 Ds CVEA OIL 2342 1985 OA 10 0 2608 TRN AC 4072525 Ds CVEA OIL 0 0 0.5 0 eee eee perme ere ee meee * rs 8a 3 CVEA Substation Equipment Listing 3/27/96 Number | Type MFR _ Serial # Loc. CVEA# Owner Fluid Vol Yr. MODEL KV___ MVA Cool Vent Tanks 2609 TRN AC 4072526 DS CVEA OIL 0 0 05 0 2610 TRN AC - 4072527 DS CVEA OIL 0 0 0.5 0 2611 TRN AC ~ 4072528 Ds CVEA OIL 0 0 0.5 0 320 OCR MCGE ~ 2253 DS v320 CVEA OIL 53 2000 VWWVE 0 321 OcR MCGE ~ 4222 Ds v321 CVEA OIL 53 2000 VWVE 1 V322 OCR MCGE ~ 414 DS 322 CVEA OIL 41 2000 RXE 0 V323 OCR MCGE ~ 416 DS 323 CVEA OIL 41 2000 RXE 1 |V324 OCR MCGE_~_ 417 Ds 324 CVEA___OIL 41 2000 RXE 0 Single Phase Distribuition OCR's. These OCR's will be serviced at CVEA's warehouse in Glennallen and Valdez. OCR-1 MCGE Gin-Distrib F422/21 CVEA OIL 25 OCR-1 MCGE Gin-Distrib F422/22 CVEA OIL OCR-1 MCGE Gln-Distrib F422/23 CVEA OIL 25 OCR-1 MCGE Gin-Distrib F422/24 CVEA OIL 25 OCR-3 MCGE Gin-Distrib F421/21 CVEA OIL 25 OCR-3 MCGE Gin-Distrib F421/22 CVEA OIL 25 OCR-3 MCGE Gin-Distrib F421/24 CVEA OIL 25 OCR-3 MCGE Gin-Distrib F421/25 CVEA OIL 25 OCR-1 MCGE Gin-Distrib F421/27_ CVEA OIL 25 OCR-1 MCGE Gin-Distrib F421/28 CVEA OIL 25 OCR-1 MCGE Gin-Distrib F2421/21 CVEA OIL 25 OCR-3 MCGE Gln-Distrib F2421/23 CVEA OIL 25 OCR-1 MCGE Gin-Distrib F2421/91 CVEA OIL OCR-3 MCGE Vdz-Distrib F424/21_ CVEA OL 25 file=server\excel\Substation Equipment: Substation Equipment page 2 of 2 i Seer bere Channa wih ee wereen al CVEA Substation Control/Meter/Relay Listing — _-Bestprer | Gy |__iype—|__nufaeurs __Senal#_[__ae 3/28/96 OCR Controller 5 Form 3 and3A__|MCGE Electronic relay 1 27/59 Basler GDP Electronic relay A 81 Basler GDP OCR Controller 3 Form 3A MCGE GDP Electronic relay 2 221C SEL Hydro Mechanical Relay 12 87 Fuji Hydro Mechanical Relay 12 50/51 Fuji Hydro Mechanical Relay 2 40 Fuji Hydro Mechanical Relay 2 64 Fuji Hydro. Mechanical Relay 2 59d Fuji Hydro Mechanical Relay 2 59f Fuji Hydro Mechanical Relay 2 46 Fuji Hydro Mechanical Relay 2 67 Fuji Hydro Mechanical Relay 4 53 Fuji Hydro Mechanical Relay 2 59G Fuji Hydro Mechanical Relay Aux Relays Fuji Hydro Mechanical Relay 2 66F1 Fuji_ Hydro Mechanical Relay 8 50/51 Fuji Hydro Mechanical Relay 2 27B Fuji Hydro Mechanical Relay 6 Aux Relays Fuji [Hydro Meter 1 Scientific Columbus Hydro Electronic relay 1 121F SEL Meals Electronic relay C4 221C SEL Meals Jem Meter A Scientific Columbus Meals OCR Controller 3 Form 3A MCGE Meals Electronic relay a 121F SEL P11 Meter 1 Scientific Columbus P11 OCR Controller if Form 3A MCGE P11 Electronic relay r 121F SEL P12 Meter 1 Scientific Columbus P12 Meter 1 Scientific Columbus Petro Relay 2 O/U Voltage Basler Petro Relay 2 O/U Freq Basler Petro Relay 2 Reverse Power _| Basler Petro OCR Controller 2 Form 3A MCGE PUMP 12 Meter 1 Scientific Columbus VDP Relay it 27/59 Basler VDP Relay 1 81 Basler VDP | Transducers and meee meters not listed. es RTU with analog inputs is located at each location (seven total) file=server\excel\Substation Equipment:Electronic Equipment Page 1 of 1 beds we PAPER SUBSTATION MAINTENANCE SERVICES CONTRACT Agreement was made as of , between Copper Valley Electric Association, Inc. (herein after called the "CVEA"), and ., (herein after called the "Contractor"). WHEREAS the Contractor is authorized to engage in the practice of Electrical Testing and Maintenance and has personnel with sufficient experience and equipment to perform the Electrical Testing and Maintenance services set forth herein and desires to perform said services for CVEA; and, NOW, therefore, in consideration of the mutual undertakings herein contained, the parties hereto agree as follows: ARTICLE | GENERAL The Contractor shall render diligently and competently the Electrical Testing and Maintenance services requested by CVEA upon the terms and conditions contained herein. ARTICLE II SCOPE OF WORK The scope of work for the services to be performed by the Contractor are set forth in Attachment A which is incorporated by reference hereto. ARTICLE Ill COMPENSATION CVEA shall pay the Contractor for the services performed pursuant to this Agreement in the amounts provided in Attachment B (hereinafter referred to as "Schedule") which is incorporated by reference hereto. On the day specified in the Schedule, the Contractor shall submit to CVEA a monthly statement of compensation due hereunder. The monthly statements shall be submitted to CVEA's address or fax number as set forth in Article IV, Section 12. Unless otherwise specified, CVEA shall pay the full statement amount due to the Contractor within thirty (30) days after receipt of such statement and, if CVEA fails to pay the full statement amount due to the Contractor for services and expenses within thirty (30) days after approval by CVEA of the Contractor's statement, the amounts due to the Contractor shall include a monthly service charge at ten and one-half percent (10.5%) per annum from said thirtieth (30th) day and, in addition, the Contractor may, after nove ere) years weeny pose f f ey ree A eee Ey Copper Valley Electric Association, Inc. Contractoring Services Agmt 03/28/96 giving fifteen days' written notice to CVEA, suspend services under this Agreement until all amounts due for services and expenses have been paid in full. ARTICLE IV gs 7 oF 6 MISCELLANEOUS SECTION 1. INSURANCE. The Contractor shall maintain the following policies of insurance : Workmen's Compensation Insurance covering all non-exempt employees of the Contractor who shall perform any of the obligations of the Contractor hereunder, Comprehensive General Liability Insurance covering all operations by, or on behalf of, the Contractor providing insurance for bodily injury and property damage liability in the amount of $500,000 per occurrence, $500,000 aggregate for bodily injury, property damage and personal injury, Comprehensive Automobile Insurance covering all owned, hired and non-owned vehicles with coverage limits not less than $500,000 per person/$500,000 per occurrence bodily injury and $500,000 property damage, Worker’s Compensation insurance as required by Alaska laws which meets the requirements of AS 23.30.270 will be provided by the Contractor. The policies of the insurance shall be in such form as issued by such insurer and CVEA shall be a “named insured’ on the each policy. SECTION 2. INDEMNITY. a) The Contractor shall indemnify and hold harmless CVEA from and against any claim of, or liability for, negligent error or omission of the Contractor under this agreement. The Contractor shall not be required to indemnify CVEA for a claim of, or liability for, the independent negligence of CVEA. If this is a claim of, or liability for, the joint negligent error or omission of the Contractor and the independent negligence of CVEA the indemnification and hold harmless obligation shall be apportioned on a comparative fault basis. “Contractor” and “CVEA”, as used within this article, include the employees, agents and other utilities who are directly responsible, respectively, to each. The term “Independent Negligence” is negligence other than in CVEA’s selection, administration, monitoring, or controlling of the Contractor and in approving or accepting the Contractor’s work. b) The Contractor shall exercise that degree of skill, cure and judgment commensurate with the professional standards for the services of a similar nature in Alaska. c) The Contractor shall correct, through re-performance at its expense, any services which are deficient or defective because of the Contractor's failure to perform Page 2 of 6 eens Copper Valley Electric Association, Inc. Contractoring Services Agmt 03/27/96 said services in accordance with professional standards, provided CVEA has notified the Contractor in writing within a reasonable time, not to exceed 60 days, of the discovery of any such deficiency during the performance of the services and within 12 months of the date of final payment under this agreement. d) The provisions of Section 3.A as they pertain to contract claims by construction contractors against CVEA arising out of the Contractors plans and specifications during the construction, are limited to the amount of professional liability insurance identified in Section 1 of Article IV. SECTION 3. TERMINATION: (a). DEFAULT TERMINATION: This Agreement may be terminated by either party upon 10 days written notice if the other party fails substantially to perform in accordance with its terms through no fault of the party initiating the termination (default termination). If CVEA terminates this agreement, CVEA will pay the Contractor a sum equal to the percentage of work completed that can be substantiated in whole or in part either by the Contractor to the satisfaction of CVEA, or by CVEA. If CVEA becomes aware of any non-conformance with this agreement by the Contractor, CVEA will give prompt written notice thereof to the Contractor. Should the Contractors services remain in non-conformance, the percentage of total compensation attributable to the non-conforming work may be withheld. (b) CONVENIENCE TERMINATION: CVEA may at any time terminate (convenience termination) this agreement for its needs or convenience. In the event of a convenience termination, the Contractor will be compensated for authorized services and authorized expenditures performed to the date of receipt of written notice of termination plus reasonable expenses. No fee or other compensation of the uncompleted portion of the services will be paid except for already incurred indirect costs which the Contractor can establish and which would have been compensated for over the life of this agreement, but because of the termination would have to be absorbed by the Contractor without further compensation. c) In the event of termination, the Contractor shall deliver copies of all work products, reports, estimates, schedules and other documents and data prepared pursuant to the agreement to CVEA. However, the Contractor shall not be liable for any unauthorized use of any drawings, reports, estimates, schedules, or any other documents or data prepared, and, should CVEA engage in the unauthorized use of any said work product, the provisions of Article (4), Section (3) Indemnity, shall not apply to hold the Contractor responsible to indemnify CVEA. Unauthorized work is defined as the re-use of any work product for another project other than the one for which the work product was generated, or the use of any incomplete work product delivered pursuant to Article (4) ,Section (4), subparagraph (a) or (b). Page 3 of 6 ons Copper Valley Electric Association, Inc. Contractoring Services Agmt 03/27/96 d) Disputes. Disputes regarding interpretation and application of these termination provisions shall be resolved under Section 5, Disputes, below. SECTION 4. DISPUTES. Any and all disputes that arise from the interpretation or application of the terms and conditions of this Agreement or that relate to the allegations of non-performance of the mutual obligations of this Agreement shall be resolved by binding arbitration. There shall be one arbitrator mutually agreed to by the parties. If, however, the parties cannot agree on an arbitrator, then each party shall select its own arbitrator and the two arbitrators chosen by the parties shall select a third arbitrator and the panel of three arbitrators shall hear the dispute(s). The panel members of the arbitrators shall be from a nationally recognized arbitrating organization such as the American Arbitration Association and governed by the rules thereof. Unless the arbitrator or arbitration panel awards otherwise, each party is responsible for their own the costs and attorney's fees and they shall split equally the costs and fees associated with the arbitration, including the fees of the single arbitrator. However, if the panel has three arbitrators, then each party shall be responsible for the fees of the arbitrator selected by said party and the parties shall split equally the fees of the third arbitrator. SECTION 5. BINDING EFFECT. This Agreement and all of its terms, covenants, conditions and appendices represent the entire Agreement and shall extend to and be binding upon the respective heirs, executors, administrators, successors and assigns of the parties to this Agreement. SECTION 6. SEVERABILITY. If any section, paragraph, clause or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction or determined by the arbitrator or panel of arbitrators to be invalid or unenforceable, the remainder of this Agreement shall be unaffected by such adjudication or determination and all the remaining provisions of this Agreement shall remain in full force and effect as if such section, paragraph, clause or provision or any part thereof so adjudicated or determined to be invalid had not been included herein. SECTION 7. ASSIGNMENT. The obligations of the Contractor under this Agreement shall not be assigned without the approval in writing of CVEA. SECTION 8. NO ORAL MODIFICATIONS. This Agreement may not be modified orally and may only be modified in writing executed by both parties. SECTION 9. INTEGRATION. This Agreement constitutes the entire Agreement between the parties and understandings reached therein and that there are no oral or Page 4 of 6 fr te aa porn wore Copper Valley Electric Association, Inc. Contractoring Services Agmt 03/27/96 parole agreements entered into between the parties and should there be any said oral or parole agreements, they are hereby superseded by this written Agreement. SECTION 10. WAIVER. Any extension of time for payment or performance of any obligations under this agreement and any forbearance by either party in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. SECTION 11. NOTICES. Any notice required of either party shall be in writing and, unless receipt of such notice is expressly required by the terms of this Agreement, shall be deemed served when deposited in the mail in a sealed envelope, with sufficient first class postage affixed, and addressed to the appropriate party at their place of business. The address of each party for purposes of notice under this provision is as follows: CONTRACTOR'S ADDRESS CVEA'S ADDRESS Mr. Michael E. Easley Manager Engineering P.O. Box 45 Glennallen, Alaska 99588-0045 PHONE: (907) 835-4301 FAX: (907) 835-4328 Page 5S of 6 po ome Copper Valley Electric Association, Inc. Contractoring Services Agmt 03/27/96 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed. ATTEST Copper Valley Electric Association, Inc. By Witness Its: ATTEST mE By, Witness Its: President Page 6 of 6 yd GREAT NORTHERN ENGINEERING Alaska Industrial Development & Export Authority 480 W. Tudor Road Anchorage, Alaska 99503 and Export Authority Attention: Mr. Stan Sieczkowski Subject: Introduction of Services Dear Mr. Sieczkowski Great Northern Engineering is pleased to announce the addition of Mr. John Schwochert to our staff. Mr. Schwochert has been hired to assume the position of Senior Rotating Equipment Project Engineer. John brings a wealth of knowledge and experience from 30 years in the professional services industry. His primary duties will focus on trouble shooting and preventive maintenance programs for the rotating equipment industry. Included in the services that will be available under the supervision of Mr. Schwochert will be vibration surveys, vibration analysis, equipment installation, predictive preventive maintenance management, and control systems analysis, design, and installation. Mr. Schwochert joins a Great Northern Engineering staff of project and discipline engineers, designers, and technicians that have provided services throughout the Alaska industrial market since 1982. These services include mechanical, structural, electrical, instrumentation, and corrosion engineering; construction management, inspections, and estimates; maintenance engineering including vibration analysis, PM programs, process safety management programs; and as-built P & ID verification services for hazard analysis. Thank you for the opportunity to introduce John Schwochert and his expertise along with Great Northern Engineering. We look forward to an opportunity to propose our services for your specific requirements. If you have any questions regarding the services available or need any additional information please call us anytime at one of the following numbers; Anchorage 561-0200, Palmer 745-6988, or Kenai 283-5199. Sincerely, LH Rad ohn H. Riggs, PE. President 137 E. Arctic Ave., Suite 101 + Palmer, Alaska 99645 Anchorage (907) 561-0200 + Palmer (907) 745-6988 + Kenai (907) 283-5199 + FAX (907) 745-0591 ( Quulty Servives : (907) 274-1056 pane AUB 2 8 1996 Valdez Star Client No. 4A Power Users Endorse’ Sale of Cooperative by Pat Lynn Editor, The Star 2/0E€ 302 3// Y20A BISA VALDEZ—Electric power consumers in Valdez and the Copper Basin have sent a powerful message to the people who run the Copper Valley Electric Cooperative. They support the sale of Copper Valley Electric and the building of a transmis- sion line from Sutton to Glennallen— but only if those actions result in imme- diate lower rates for electrical users. Those are the results of a survey, anon-legal straw poll, conducted by the power co- op earlier this month. The voters said they also support equalization of power rates for Valdez and Glennallen—but only if there is no increase in the Valdez rates. Question 1: Merger or sale of Copper Valley? Asked how they would feel if there was no immediate See Survey... Page 8 Survey Sends Message To Power Co-Op Continued from Page 1 RIE 302 31/ 440A 3¥s# 10 percent rate decrease, the rate reduction as a result of a sale or merger, the consum- ers voted 80 to 20 percent against a sale/merger. However, when asked if they would approve a sale/ merger witha 10 percent rate reduction, the consumers swung in the opposite direc- tionand voted their approval by 57 to 42 percent. The margin got even larger if a sale/merger resulted in a 20 percent rate reduction. Then the vote was 80 to 20 percent in favor. And if there was a guaran- tee of equal rates with the new co-op owners, the Cop- per Valley Electric consum- ers agreed to the sale/merger idea by a margin of 77 to 23 percent. Question 2: Transmission Line Asked if they would sup- port the construction of a Sutton to Glennallen power transmission line with a 10 percent increase in rates, the consumers voted no by a margin of 67 to 32 percent. When asked about con- struction of the transmission line with no change in rates, the vote was close: 52 per- cent in favor, 48 percent against. However, when asked how they felt about the transmis- sion line with an immediate vote became overwhelming: 82 percent in favor, 18 per- cent against. Question 3: Equalizing Rates Currently, Valdez and Glennallen residential con- sumers pay different rates for power: In Valdez, the rate is 17 cents per kilowatt hour; in Glennallen it’s 21 cents. ‘These rates are among the highest in the entire nation. As one might expect, there is strong sentiment in Glennallen and the Copper Basin for equalization of rates. In Valdez, it depends on how you ask the question. On the ballot was a two- part question: 1. Would you support equal rates if there was a 10- percent or less increase in the Valdez rates? Residents of the Glennallen area voted overwhelmingly in favor by a margin of 76 to 24 percent. In Valdez, how- ever, it was just the opposite: 81 to 18 percent against. 2. But when the question was framed differently— would you supportequal rates if there was no change in the Valdez rates—the resulting vote was near unanimous in both communities. Glennallen area consum- ers voted 79 percent in favor, 21 percent against; Valdez consumers voted 80 percent in favor, 20 percent against. The voting on all three questions reflect consumer sensitivity to current and potential future rate in- creases. The voting also appears to reflect consumer loyalty to lower rates rather then loy- alty to the utility itself. In Valdez, the extremely high electric rates are thought to be the single largest detri- ment to economic develop- ment. Indeed, Copper Valley’s single largest consumer, the Petro Star refinery, is with- drawing from the Copper Valley system for that very reason. The company says it can cut its annual $1.2 mil- lion power bill in half by generating its own power on site. QUALITY SERVICES| AUG 19 1996 Fairbanks Daily News Miner Date CLs No._Y204 JO GENE KUBINA Age: 48 . How long in Alaska: 19 years “| honestly think the people of Alaska would accept some form of contributing.” Occupation: Teacher, Valdez City Schools Marital status; spouse's name: Married; Donna Kubina Children: one oie seeks to make gas p Yyoo0A By BRIAN O'DONOGHUE. j Staff Writer The natural gas pipeline is within reach, according to Rep. Gene Kubina. “T think the next two years are critical,” said Kubina, a Valdez Democrat seeking re-elec- tion ‘as House District 35’s voice in the Legislature. ‘The oil com- panies need to be able to go to their investors and say, ‘we’ve got a guarantee for a stable tax rate.’ If they can get a long-term commitment, say 25 years, I think they can sell any gas project.” Kubina, 48, was first ap- ipeline a reality pointed “to the Legislature in M989. He is familiar with the con- _stitutional barrier against binding future legislatures to any fiscal policy. But that problem can be overcome, he argues, with a carefully crafted constitutional amendment. “There are ways we can bind each other,” Kubina said of the contractual arrangements needed to launch the $15 billion mega- project. “I think it would be very ‘ easy for the people of Alaska to vote and say the taxes will re- main the same.’ 1 Kubina comes from Valdez, a See KUBINA, Page B-2 a ° ° KUBILNA: Pipeline 345A 2I0E Y2OA Continued from Page B-1 shipping and fishing community at the southern end of the trans-Alaska pipeline. As he sees it, a gas pipeline could be built along the existing pipeline route in time to catch the market window for nat- ural gas identified by oil producers and Yukon Pa- cific Corporation. “If people don’t get greedy, I tallave we can do it,” he said. The economic boost from construction of the $15 billion project would extend to royalties on gas sales well into the next century, not to mention property taxes collected on the new pipeline itself. Kubina said nothing before the Legislature holds greater promise for reversing Alaska’s current fiscal woes. Kubina, a teacher by profession, was one of ‘the few members of the Legislature to vote against cre- ating the Long Range Fiscal Planning Commission to consider aise for bridging the deficit, cur- rently estimated at $410 million next year. “We were just passing the buck again,’ “We all know what the alternatives are.” Kubina was amused this year as he watched the leadership ignore the commission’s controversial recommendations for budget cuts, new taxes and possible caps on the Permanent Fund dividend. Not that the Valdez Democrat is ready to join in imposing such measures himself. He sees the Legislature serving as a sounding board, outlining alternatives for the public’s consid- eration. “Once we get a consensus people feel comfort- able with, I believe the people of Alaska should fully decide it.” In practical terms, Kubina said he would support placing a range of possibilities on the ballot, in- ° cluding concepts such as capping or cutting out the dividend, establishing an educational endowment and restoring an income tax. “I honestly think the people of Alaska would ac- cept some form of contributing,” he said. Kubina is running unopposed in the House Dis- trict 35 Democratic primary. Former Rep. Harley Olberg, the man Kubina de- feated in 1994, is hoping for a rematch in Novem- ber’s general election. First Olberg must get past GOP rival Bruce Grossmann, a Delta city coun- cilman. As Delta’s representative, Kubina fought to se- cure funding for consultants and community plan- ning after President Clinton committed to closing Fort Greely, a major employer in the Alaska Highway gateway town. ” he said. “We got the money to identify the alternatives. That process is going forward now.” For the present, Kubina said he’s trying to spread the word that Delta’s agricultural promise has just begun to take root. : “People like me have a responsibility to express and show the Legislature how agriculture is in- creasing in the area.” The teacher views that as an education issue, countering the disappointment seeded by the state’s original Delta barley project, a costly devel- opment that left many participants raising little be- sides debt. “The barley project, that’s all people re- member,” Kubina said. ‘““They don’t realize a new generation of people in the area are making it.” Kubina is ambivalent about the $35 million in- tertie proposed to link Glennallen and Valdez area with other Railbelt electricity users. Petro Star, one of the major potential customers, has announced plans to build its‘ own power- generating facility. The intertie, meanwhile, re- mains “in limbo,” he noted, pending further study of the alternatives. “I want to see lower electrical rates for the people of the Glennallen area—that’s my goal,” Ku- bina said. “If the intertie is the way to do that, I’ll support it. But if the intertie is not, we should use the grant (for alternatives) to provide it. “T’m hoping there is a very clear plan by Jan- uary, which way to go,”’ Kubina said. Kubina was appointed to the Legislature in 1989, filling the vacancy created by the late Rep. Betty Nato’s illness. Elected a year later in his own right, Kubina was given the chairmanship of House State Affairs under Speaker Sam Cotten. AD The teacher from Valdez entered the 1992 race for state Senate confident that his high profile in Prince William Sound gave him an edge. Then-Rep. Georgianna Lincoln of Rampart proved otherwise, beating Kubina handily in Pthe Democratic primary. Two years ago, Kubina ousted Olberg and re- gained his seat. It was a rare triumph for a Demo- crat in a year that saw Republicans strengthen _ their control over both the Hotes and Senate. For the first time, however, Kubina was a member of the Legislature’s minority. “I was a little disheartened at first,” said Ku- bina, who held the position of House minority whip. “But it’s an important role, making sure members of the majority do what’s best. I ended up enjoying being in the minority. But I’ve always been the kind of guy who gets along with both sides of the aisle.” “QUALITY SERVICES pate AUG 19 1996 Fairbanks Daily News Miner Client No. Y2e4 Olberg bases decisions SG beaks on values, ‘not politics 2/0EF 420A By BRIAN en Steff Writer iteian, HI" For. a pol ia Rep ub lican Hatley Oly habit. He’s prone to speak his mind. Take the Longevity Bonus. In 1994, the year he lost his bid for re-election, Olberg in- censed seniors with his blunt comments about doing away with the program. : He got the blame for initiating the program’s phase out, though that decision was the entire Leg- islature’s to make. “ T don’t think in terms of what’s political suicide,” said Ol- berg, a'seed-farmer and Repub- lican who represented House District 35 from 1992-1994. “I think in terms of right and wrong for Alaska.” Take income tax. Olberg won’t kid anyone. The day will come, he said, when Alaska needs to reinstate the dreaded annual assessment. hE ONE ERC - HARLEY OLBERG "| think in terms of right and wrong for Alaska.” -but someday, “He doesn’t mean tomorrow, He doesn’t think it will even be con- sidered for ‘at. least four years— , Sure as rain falling on his fields in Delta, an income _. tax will be needed, Olberg said. “It isn’t possible in a political sense now. But you can’t cut the budget enough,” he said. “‘We’ll use reserves and eventually, when they run out, it’s inevi- table.” Given the chance, Olberg vows to ¢lose down the Department of Environmental Conservation. . “They’ve been a monster,” he said, citing the agency’s regula- tory burdens on business. "Olberg said he’s ready for sim- ilar program reductions wherever possible, but he won’t pretend that’s the whole answer to Alaska’s budget deficit. “You can’t cut government $500 million.” As a quick rev- enue raiser, Olberg would revive the state’s school tax. ‘‘Let’s call See OLBERG, Page B-2 Age: 54 How long in Alaska: 20 years Occupation: Farmer Marital status; spouse's name: Married; Lynn Olberg Children: four thet OLBERG; Intertie 21dE ¥26A Continued from Page B-1 it $50 per head, out of the first paycheck of the year.” Olberg said he would also sup- port a gradual raising of the to- bacco tax. He opposes any statewide sales tax. Rep. Gene Kubina, House Dis- trict 35’s current incumbent, is running unopposed in the Demo- cratic primary. The district’s GOP contest matches Olberg against Bruce Grossmann, a Delta city coun- cilman. Delta’s rival Republicans differ most dramatically on the issue of abortion. “As near as I can tell the sole reason he’s running in because I’m pro-choice,” said Olberg, who considers abortion a private deci- sion for a woman “and her God” to make. “Not my God,” he added, ‘‘not your God. But her God.” Olberg realizes that stand places him at odds with the GOP’s current platform. “Supposedly you can’t be a pro-choice Republican anymore,” he said. “But that’s what makes a free country. If you’ve got the $30 (filing fee), you can run for office.” In Olberg’s view, the district’s biggest issue is the scheduled clo- sure of Fort Greely. Grossmann is inclined to rely on the private sector in mar- keting Delta’s attractions to new businesses. The farmer argues for direct legislative action, promoting gov- ernment use of the buildings the military plans to vacate. “There’s a whole building complex the military is going to surplus,” Olberg said. ‘“There’s a commissary, a grocery store, housing units. It’s a nice tidy army post. I can’t help but lieve some agency could make something of that.” Converting the facility into a state prison, for example, would provide Delta with a new in- dustry overnight, he said. Olberg served as chairman of the House Community and Re- gional Affairs Committee under Speaker Ramona Barnes. His single term in Juneau co- incided with the legislature’s last division of so-called discretionary money, which allowed lawmakers to freely designate how certain funds would be spent within their districts. Olberg said he’s proud of the way he spread money across the entire district, showing none of the regional bias he detectg in Kubina’s actions toward the Inte- rior. “For a rural legislator,” ol- berg said, “that discretionary capital budget allowed you to do a lot of good little things.” Olberg also won approval of a $35 million appropriation to build an intertie linking Glen- nallen and Valdez with the state’s power link. But the project has never been started. With the help of the Knowles administration, Sutton-area resi- dents and others critical of an in- tertie along the scenic Glenn Highway have kept the proposal under study. “It’s kind of died on the vine,” said Olberg, who contends the in- cumbent, Kubina, hasn’t fought like he should to get the project going. “‘I still haven’t given up on it, but sooner or later, someone else is going to glom on to that money.” Had Olberg been re-elected, he said Knowles would have been made aware of the intertie’s im- portance to his district. . “I’d have sure hung it around their necks.” Communities in Prince Wil- liam Sound encompass 58 per- cent of the voters in House District 35. That demographic profile came into play two years ago as Kubina, a teacher from Valdez, defeated the Delta farmer. Olberg now describes that loss as an unexpected gift. “I know in hindsight that I was getting caught up in the system. If I had stayed, I would have become a politician,” Olberg said, spitting out the last word. “You start looking at things in the context—how does this work for me? Instead of—does this work for the state of Alaska?” - Olberg said he’s determined to keep those priorities straight. But he would make one change if voters send him back to Juneau. Next time he vows to do a better job keeping his constituents in- formed. “If you’re not used to blowing your own horn, it’s hard to turn that switch on,” the farmer said. “But you can’t do anything for anybody, if you’re not there.” ) (907) 274-1056 AUG 23 196 Date Frontiersman Client No. YIOn, Knowles | must make intertie call PVO Favq 3 PICK Gov. Tony Knowles has kept Alaska on pins and nee- dles waiting for his decision on the Sutton-to-Glen- nallen Intertie project. Public hearings are long since past. Debate has raged on. And now decisions about a merger or takeover with Copper eg Electric Associa- tion are being held up by the intertie decision. Environmentalists and those concerned with the pro- ject marring the beauty of the Valley have tirelessly protested the intertie. Copper Valley residents are hop- ing the project will be approved and their high electric rates will drop. But while Capper Valley residents see the intertie as saving them money, the board of the Matanuska Electric Association has voiced concerns that before an intertie project is completed, MEA customers will be sharing more of the burden than the rest of Alaska taxpayers. The sands beneath the project keep shifting. PetroStar, a key player in the need for electricity in the area, has decided to generate its own power. Opponents to the project thought this decision — a condition to the pro- ject’s feasibility — would sound the death knell for the intertie, but the project continues to hold on to life as long as it remains on Knowles’ desk. For what is the governor waiting? If something indi- cates this project still warrants giving out a $35 million, interest-free loan to build the intertie, maybe Knowles should share it with the rest of us. Otherwise, oppo- nents to the electric line and general cynics will contin- ue to assume that politics is playing its hand in an issue that seems to be out of the public’s control. Cases for both sides have already been made. The die has been cast by PetroStar. Now is the time for Knowles to make his decision. And that decision should be to kill the project. . — Frontiersman (907) 274-1056 Date __ SEP 0 6 1995 Frontiersman Client No._ 204 Knowles won't rush intertie decision SIE 4acqg 302 II 200 By LAURA MITCHELL HARRIS Frontiersman reporter There may not be a quick de-. cision on the intertie project, but opponents should be glad, the governor says. Gov. Tony Knowles said Tues- day he has no intention of rush- ing the state’s decision on whether to build an electric in- tertie from Sutton to Glen- nallen. “Y’ll say I think the concept of the intertie is positive,” the gov- ernor said. It could reduce costs while supplying energy, he said, but added there’s no rea- son to hurry the intertie deci- sion with the situation continu- all chang ‘or more than three years, the decision whether to hook the Copper River Electric Associa- tion to the state’s Railbelt ener- grid has been in limbo. After two feasibility studies and a string of public hearings, the $35 million loan sits in the state’s coffers, drawing inter- est. The loan would help fund the construction costs of the pro- posed intertie. But several things seem to be holding it up, including the governor's stated reluctance to make a hasty deci- sion. Knowles directed his Depart- ment of Community and Re- ional Affairs Commissioner ike Irwin to hold a series of public hearings last fall. After a pericalarly rowdy session in utton, Irwin postponed mak- ing the final decision slated to be released in December 1995. In April, Valdez oil refinery Petro Star — which would be the line’s biggest customer — announced it would generate its own power rather than buy it from Copper Valley Electric Association. Petro Star’s in- volvement is one of the main criteria cited in the most recent intertie feasibility study. Chugach Electric Associa- tion’s role in the intertie project will also have to be explored, Knowles said. He said he expects more of a financial commitment from Chugach before dispersing the $35 million “grant,” as he put it. Chugach has said it will be a partner with Copper Valley in the intertie to help absorb the costs if the loan is granted. “We're ‘the bank here,” Knowles said. “I want to know how it could fit into its (Chugach’s) business plan.” eopper Valley customers from Glennallen to Valdez pay some of the highest electric rates. CVEA’s general manager, Clayton Hurless, says lower rates could do wonders for the resource-rich area in terms of development and tourism. Knowles said it is not really fair that a large portion of the state receives cheaper power due to intertie energy while not allowing the Copper Valley the same opportunity. He did not give a time frame or deadline for making the in- tertie decision. The state has to probe the business issues rather than looking at this only from the values of the people, he said. And he doesn’t know how long that will take. “It’s an issue of the heart for many people,” he said. “But this is a public policy issue. I have to go by the law. [ still have some serious questions about this, which is why is hasn’t gone for- ward.” This approach should give opponents to the project confi- dence that a hasty decision will not be made, Knowles said.