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HomeMy WebLinkAboutCopper Valley Intertie Memorandums 1992-1993WALTER J. HICKEL, GOVERNOR DEPT. OF COMMUNITY & REGIONAL AFFAIRS DIVISION OF ENERGY MEMORANDUM November 23, 1993 To: Robert E. Harris Director From: Richard Emerman ( ja Senior Economist 7 | Subject: | Copper Valley Intertie Feasibility Study -- Issuance of Draft Report According to our contractor for the Copper Valley Intertie Feasibility Study, R.W. Beck & Associates (Beck), the draft report is 99% complete -- with about one more day’s work it would be ready to go to the printer. Preliminary copies of all significant segments of the draft report have been provided to Copper Valley Electric Association (CVEA) over the past several weeks. Some segments, such as the load forecast and environmental analysis, were first provided to CVEA two months ago, which in turn submitted detailed comments back to Beck and to the Division of Energy. A brief chronology explaining how we got into the position of providing advance drafts to CVEA is attached. According to the attached letter from Beck to Clayton Hurless of CVEA, a meeting on December 1, 1993 is planned between Beck and CVEA to discuss additional CVEA comments and questions about the preliminary drafts. Although Beck is ready to issue the formal draft report right now, they are continuing to operate under instructions that CVEA is to be given full opportunity to present their views and arguments prior to general release of the draft report. After discussing this with Ike Waits and Dennis Meiners, I believe we should instruct Beck to issue the formal draft report to the public as soon as possible, and cancel their meeting of December 1 with CVEA. The reason, as suggested at the end of the attached chronology, is that we have gone beyond the normal pre-draft consultation practice whereby informed parties are asked to review and comment on the accuracy of segments with which they may be uniquely familiar. Instead, we have reached a point where it could reasonably be argued that CVEA, as a committed intertie advocate, has been given an unfair opportunity to influence the content and conclusions of the draft report before any other party has an opportunity for review and comment. This would not be consistent with the even-handed public process envisioned by the statutes under which this study is being conducted, nor would it be consistent with the general policy of the Department. Robert E. Harris November 23, 1993 Page 2 To minimize any further perception that one side of the intertie debate has been accorded an advantage in the study process, I recommend immediate release of the draft report. At that time, CVEA and all other interested parties will have equal opportunity for review and comment prior to preparation of the final report. Attachments cc: Dennis Meiners Ike Waits -81 39 mh BECK/SEATTLE CONSULT FAX NO. 208 44. 4864 EF RW, BECK AND ASSOCIATES 2101 Fourch Avcnuc Suite 600 @ Seatrle, Washington 95121-2375 e USA Telephone (206) 441-7500 @ Fax (206) $41 4962 WS-1559-HA1-AJ November 19, 1993 Mr. Clayton Hurless General Manager Copper Valley Electric Association, Inc. P.O, Box 45 Glennallen, Alaska 99588-0045 Upcoming Meeting to Discuss Report Dear Clayton: We look forward to meeting with you and other Copper Valley Electric Association representatives in our office at 1.00 p.m. on December 1st to discuss the preliminary draft of the Intertie feasibility report. In recent telephone discussions with Mike Easley, several important comments and questions have been raised regarding the basic assumptions used in our analysis. We would like to discuss these issues more thoroughly with you so that appropriate adjustments can be made. I would expect that after our discussions we would be in position to make final adjustments in the cost estimate, load forecast, economic analysis and other elements of the study and proceed with completion of the draft report. Since it may be useful to spend more than just Wednesday afternoon reviewing and discussing the analysis and report, we are prepared to carry the meeting over to Thursday, December 2nd, if necessary. Paul Dorvel will be on vacation November 29th and 30th but the rest of us will be available throughout the weck of November 29 through December 3 if your schedule changes. If you should have any questions or require additional information please call either me at (206) 727-4418 or Paul Dorvel at (206) 727-4632. Very tnily yours, R. W. BECK AND ASSOCIATES ohn L. Heberling Executive Engineer JLH: G Paul Dorvel Mike Easley Dave Helsby Dick Emerman Boston, MA @ Columbus, NE @ Denver, CO w Indimapolis, INw Mingcapolix, MN Noshville, TN @ Orlando, Fl. @ Phocuia, AZ @ Sacramento, CA @ Seattle, WA November 22, 1993 To: From: Robert E. Harris oa Director ; Richard Emerman / . / \ Senior Economist { Subject: Copper Valley Intertie Feasibility Study -- Brief Chronology As the feasibility study manager, I have afforded Copper Valley Electric Association (CVEA) the opportunity to review and comment on segments of the feasibility study draft prior to its general distribution. This has created at least the perception that CVEA, as an intertie advocate, has been given an unfair advantage relative to other interested parties in influencing the content and outcome of the draft report. Ike Waits suggested this morning that it would be useful to set down a chronology that indicates how we got into this situation, so a chronology with regard to the issue is set down below. 1? The Alaska Energy Authority (AEA) included an FY 94 capital budget request for $500,000 (later reduced to $425,000) to conduct the feasibility study. If approved, the study could not have begun until July 1, 1993 (i.e. the beginning of FY 94). I met with Clayton Hurless, General Manager of CVEA, during the fall of 1992 to discuss options for proceeding with a feasibility study. He did not want to wait until July 1, 1993, but wanted instead for the study to begin as soon as possible. The reason he wanted a feasibility study conducted was to demonstrate to the legislature that the Copper Valley intertie had gone through (or was going through) the same process that the Railbelt and Tyee-Swan interties had gone through. He expressed the belief that this would increase the chances that the legislature would include funds for a Copper Valley intertie within an overall intertie package. At my meeting with Clayton Hurless in fall 1992, I presented him with two options: A. He could conduct the study himself (or hire a consultant himself), and present the study to the legislature in support of his request for State funds. I told him this would not be recommended if he anticipated getting the funds through AFA because I felt that the legislature -- particularly the House as it had been organized for a number of years - - would be unlikely to accept his study in fulfillment of AEA’s statutory review process. However, he could seek to have funds appropriated to CVEA as a grant, perhaps through the Dept. of Administration or through AIDEA or some other way. The legislature had appropriated millions to AIDEA for the Healy Coal Plant, and other major requests (such as Seward transmission line) had been appropriated as named recipient grants through, I believe, the Dept. of Admin. These had not required an AEA feasibility study. B. If he felt that AEA would be the most likely conduit for Copper Valley intertie funds, then the feasibility study should be conducted by AEA to satisfy AEA’s statutory project review process. However, I told him that an AEA study would be managed and controlled by AEA independent of CVEA. He felt that appropriation through AEA was the most likely path at that point and he therefore initiated the process to develop an MOA under which CVEA would pay AEA to do the study. On October 13, 1992, I submitted the attached memo to Ron Garzini and Brent Petrie stating my views on the proposed arrangement that CVEA would pay AEA to conduct the feasibility study. My position was that we should not share management responsibility with CVEA, and that generally we should proceed as if the study were funded by State appropriation. On November 6, 1992, CVEA submitted the attached draft agreement to AEA. It contained numerous statements that implied a favorable posture regarding the outcome of the proposed feasibility study, e.g. "G. AEA and CVEA agree that preliminary studies conducted by Power Engineers, Inc. relative to contructing a 138K V transmission line from O'Neill Substation to Pump Station 11 Substation are indicative that it is the option that would provide the most benefits to CVEA’s long- term power requirments (sic) and rate reduction program." "K. | AEA and CVEA agree that time is of the essence and, in order to expedite the project construction to the extent possible, it would be beneficial to both parties for CVEA to advance funds to AEA to conduct the necessary additional studies to meet AEA’s statutory requirments (sic) for establishing the project’s feasibility." I redrafted the proposed agreement in a manner that deleted language suggesting favorable judgment of the study outcome in advance of the study process. See attached the final MOA dated January 6, 1993. The study proceeded along for a few months. Numerous contacts with CVEA occurred -- for example, I met with Clayton Hurless, his staff, and Beck staff in Seattle in April to go over route alternatives in detail. Beck was in frequent contact with CVEA staff on study issues. In early summer 1993, I met with Ron Garzini and Clayton Hurless in Garzini’s office -- Brent Petrie came in mid-way through the meeting. The re 10. 1. feasibility study had been underway since March 1993 and Clayton Hurless had expressed objections to the way the study was going. Ron Garzini stated to me that he wanted to establish a new management relationship among CVEA, AEA, and our study contractor R.W. Beck; that he wanted to ensure that CVEA had full opportunity to make their views known on all assumptions and significant elements of the study before any general release. He wanted us to go forward in a cooperative manner. On June 14, 1993, Garzini, Petrie, Hurless, and myself met with Beck in Beck’s Seattle office. Beck stated that they had been in frequent contact with CVEA staff up to that point on significant aspects of the study. Garzini restated, however, that he wanted a new management relationship in which CVEA was accorded full opportunity to express their views on all significant aspects of the study, and that they should be more closely consulted and included in the study development. I don’t remember exactly when the verbal commitment was made to provide CVEA with advance copies of the draft segments in order to get their comments and consider revisions prior to general release. But it was around this time and it was in the context of the "new relationship" that Garzini wanted. Up to a point, there is nothing unusual in providing certain segments of a draft to the appropriate party in advance of general release to check its accuracy. For example, Beck provided a copy of its write-up on Petro Star future loads to the Petro Star site manager along with a request to check its accuracy. Sending segments of drafts to the affected utility -- for example, to check the accuracy of data used to establish labor or fuel costs, or generator efficiencies -- is not controversial. The issue of fairness arose when subjects such as the intertie environmental analysis, cost estimate, and regional load forecast were sent as well. This went beyond input material that can simply be checked for accuracy. And it could be argued that other parties have comparable interest in, and understanding of, such issues as the intertie environmental impact, intertie construction costs, or the modeling of future economic and population growth in the region, and that these other parties should have equal opporunity to review and comment. October 13, 1992 To: Ron Garzini Brent Petrie in From: Dick pena j, Wy Subject: | Copper Valley Role in Intertie Feasibility Study If Copper Valley pays for the study, I believe that the study outcome will ca influenced and that we should try to minimize that influence. As you know, whenever a supplicant for State funds conducts or commissions a study on the project for which funding is sought, there is a strong tendency for cost estimates to be low, problems underestimated, and benefits exaggerated. If we buy into it, we increase the chance that AEA will have to come back to the Legislature sometime in the future for more money, and with less credibility. The situation with Kennecott is different because Kennecott is not asking for any State money. Because Kennecott would bear the entire cost of the Greens Creek intertie, their concern is much different than Copper Valley’s. The choices for the preliminary cost estimate work for Greens Creek were Beck and HDR. When I told Kennecott that Beck tended to be more "conservative" than HDR (i.e. their estimates tended to be somewhat higher in my experience), Kennecott replied that they would be much more comfortable with the more conservative firm. What they didn’t want was extra cost surprises down the road. Because Copper Valley’s interest is much different, I am uncomfortable with having them play any significant role in the study. Assuming they pay for the study, I would limit their participation to: ie Review the RFP and give us their comments on it. 2; Review the proposals and give us their comments -- specifically which firms would be acceptable and which would not. 35 Provide system data to the study team as they would whether or not they were paying for the study. 4. Review the draft report and provide written comments, again as they would whether or not they were paying for the study. 5: Participate in the public meeting process -- i.e. Clayton Hurless should be at the front table for all public meetings on this subject. Beyond that, I would not share management responsibilty with Copper Valley, or give the consultant any impression that their job is to satisfy Copper Valley in this assignment. I would not create a joint management or supervisory committee as we did with Kennecott. COPPER VALLEY ELECTRIC ASSOCIATION, INC. = P.O.BOX45 GLENNALLEN, ALASKA ggsa8-008b& CEIVED Glennallen (907) 822-3211 NOV 2 1992 Valdez (907) 835-4301 Telefax # (907) 822-5586 ALASKA ENERGY AUTHORITY November 6, 1992 Mr. Ron Garzini, Executive Director Alaska Energy Authority P. O. Box 190869 Anchorage, Alaska 99519-0869 Subject: Memorandum of Understanding of OPS-11 Line Enclosed is a draft of the Memorandum of Understanding (MOU) for the OPS-11 Line. It should be self-explanatory. Please review the MOU and forward your comments. Your truly, Clayton Hurless General Manager Enclosure cc: Dick Emmerman c:\wp\cdh\92-174.jw SERVING MEMBER-OWNERS IN THE COPPER RIVER BASIN AND VALDEZ DRAFT GZ0amn ") MEMORANDUM OF UNDERSTANDING = “°F 4200" REGARDING THE STUDY AND PRELIMINARY COST OF RIGHT-OF-WAY SELECTION AND ACQUISTION TO FACILITATE THE CONSTRUCTION OF A 138KV TRANSMISSION LINE FROM O’NEILL SUBSTATION NEAR SUTTON, ALASKA, TO PUMP STATION ELEVEN SUBSTATION NEAR GLENNALLEN, ALASKA (OPS-11 LINE). THIS MEMORANDUM OF UNDERSTANDING dated the of November, 1992, by and between the ALASKA ENERGY AUTHORITY (AEA) and COPPER VALLEY ELECTRIC ASSOCIATION INC. (CVEA). WITNESSETH: A. AEA desires to fulfill its statutory duty of providing residents of the State of Alaska with a long-term economical and reliable supply of power; B. CVEA owns and operates an electric utility system serving the Copper Basin and Valdez areas of the State of Alaska and is engaged in the business of providing electric service to approximately 8,000 Alaskan residents; c AEA has constructed a significant number of generation and transmission facilities in the State of Alaska; D. AEA has the desire to further expand and improve the transmission and generation infrastructure within the State of Alaska; E. AEA and CVEA have been working together to find an economically feasible method to reduce CVEA’s dependency on expensive diesel generated power and to provide CVEA the opportunity to begin the process of reducing its extremely high retail rates; F. AEA and CVEA have studied a number of different projects, such as raising the Solomon Gulch dam and spillway to facilitate increased water storage in Solomon Reservoir, tapping Allison Lake to provide supplemental generation and water supply for the Solomon Gulch project, and developing Silver Lake as a new project. Each of these projects would provide an increment of additonal energy, but none would eliminate the necessity to continue running the diesel genertors during low inflow periods; G: AEA and CVEA agree that preliminary studies conducted by Power Engineers Inc. relative to constructing a 138KV transmission line from O’Neill Substation to Pump Station 11 Substation are indictative that it is the option that would provide the most benefits to CVEA’s long-term power requirments and rate reduction program. DR md Se Memorandum of Understanding AEA and CVEA Page 2 H. AEA and CVEA also agree that further studies are required to verify and expand the NOW, 1.1 1.2 L3 scope of the preliminary findings to meet AEA’s statutory requirements for establishing feasibilty for the proposed project; AEA has included $500,000 in its FY 94 budget request to the 1993 Alaska Legislature to conduct the necessary studies for the OPS-11 line, and such funds will not be available until July 1, 1993; CVEA has paid for the preliminary studies and, through December 31, 1992, will have expended approximatley $100,000; AEA and CVEA agree that time is of the essence and, in order to expedite the project construction to the extent possible, it would be beneficial to both parties for CVEA to advance funds to AEA to conduct the necessary additional studies to meet AEA’s statutory requirments for establishing the project’s feasibility; THEREFORE, the parties agree as follows: ARTICE I OBLIGATIONS OF THE ALASKA ENERGY AUTHORITY (AEA) AEA will submit a request to the 1993 Alaska Legislature in the amount of $500,000 to fund the necessary studies, right-of-way selection, public involvement meetings, and other preliminary engineering work required to construct a 126-mile, 138K V transmission line beginning at the O’Neill Substation near Sutton, Alaska (owned by Matanuska Electric Association) and terminating at Pump Station 11 Substation near Glennallen, Alaska (owned by AEA and operated under contract by CVEA). Upon receiving authorization by the Alaska Legislature to fund the work described in the above paragraph 1.1, AEA will refund to CVEA all funds advanced from the date of this agreement through June 30, 1993; and to the extent adequate funds are remaining in the authorization after payment to CVEA of all funds advanced under this agreement and the payment of all other costs associated with completing the tasks as outlined in the attached AEA estimate of costs (Exhibit A), AEA will refund to CVEA the costs of the preliminary studies that were conducted prior to this agreement in an amount not to exceed $110,000. AEA will conduct the work covered by this agreement in a timely manner and will keep CVEA informed on the status of the various contracts that will be required to complete the work. DRE: ons sy “hy Memorandum of Understanding AEA and CVEA Page 3 1.4 If the work provided for in this agreement concludes that the OPS-11 is feasible and is the best long-term economic solution to providing an adequate and reasonably priced source of wholesale power to CVEA, AEA shall use its best efforts to obtain adequate funding for the construction of the project in a manner that will produce the maximum benefit possible to the member-owners of CVEA. 1.5 On completion of the work provided for in this agreement and the decision to proceed with the construction of the OPS-lI line, AEA will enter in good faith negotiations with CVEA and other interested parties to determine the most cost- and time-efficient method for construction. Possible methods could include but are not be limited to contracting with CVEA, another utility, or a consortium of utilities to provide the design, right-of-way acquistion, construction, and construction management for the project. ARTICLE I OBLIGATION OF COPPER VALLEY ELECTRIC ASSOCIATION (CVEA) 2.1. CVEA will advance funds not to exceed $260,000 to AEA to conduct the work described in paragraph 1.1 of Article I of this agreement and further described in Exhibit A attached to this agreement beginning on the effective date of this agreement and ending on June 30, 1993. 2.2. CVEA will provide the coordination with Matanuska Electric Association and other interested organizations for the conducting of public involvement meetings and other activities relative to securing land holder and agency permission for rights-of-way in the most cost- and time-efficient manner possible. 2.3. CVEA will cooperate with AEA in all ways possible to assure that the work is completed at the earliest date possible consistent with performing the work to the standards required to meet AEA’s statutory requirements. ARTICLE I GENERAL PROVISIONS 3.1 This Memorandum of Understanding will be effective when approved by each organization’s Board of Directors, and the Resolution effecting such approval has been transmitted to the other party. Such resolutions will become a part of this agreement and shall be attached hereto. Memorandum of Understanding AEA and CVEA Page 4 3.2 Subsequent to the effective date of this MOU, should any provision contained herein be determined to be unlawful or unenforcible, all other provisions shall remain in effect as if the unlawful or unenforcible provision were not in the agreement. IN WITNESS WHEREOF, the Alaska Energy Authority and Copper Valley Electric Association have caused this Memorandum of Understanding to be executed the day and year first above written. ALASKA ENERGY AUTHORITY COPPER VALLEY ELECTRIC ASSOCIATION, INC. BY: BY: Ay MEMORANDUM OF AGREEMENT REGARDING THE FEASIBILITY STUDY OF A 138 KV TRANSMISSION LINE FROM O’NEILL SUBSTATION NEAR SUTTON, ALASKA, TO PUMP STATION ELEVEN SUBSTATION NEAR GLENNALLEN, ALASKA (OPS-11 LINE). Khy ‘ 73 OY THIS MEMORANDUM OF AGREEMENT dated the (-' of _ VMAuUaru ___, 1997, & by and between the ALASKA ENERGY AUTHORITY (AEA) and COPPER VALLEY ELECTRIC ASSOCIATION, INC. (CVEA). WITNESSETH: A. The primary mission of AEA is to facilitate the development of energy systems that will satisfy the requirements of Alaska consumers at the lowest cost over the long run; B. CVEA owns and operates an electric utility system serving the Copper Basin and Valdez areas of Alaska and is engaged in the business of providing electric service to approximately 8,000 Alaskan residents; Cc AEA has constructed a significant number of generation and transmission facilities in Alaska; D: AEA and CVEA have been working together to find an economically feasible method to reduce CVEA’s dependency on expensive diesel generated power and to provide CVEA the opportunity to begin the process of reducing its high retail rates; E: AEA and CVEA have studied a number of different projects, such as raising the Solomon Gulch dam and spillway to provide increased water storage in Solomon Reservoir, tapping Allison Lake to provide supplemental generation and water supply for the Solomon Gulch project, and developing Silver Lake. Each of these projects would provide an increment of additional energy, but none promises to eliminate the necessity of diesel generation in the future. F. In 1989, AEA issued a reconnaissance study for the “Northeast Intertie," a proposed 230 kv transmission line from Sutton to Glennallen, then north to the Fairbanks area; iG. The proposed 138 kv line between Sutton and Glennallen, to be evaluated in the feasibility study that is the subject of this Memorandum of Agreement, is a scaled down version of the Sutton-Glennallen portion of the Northeast Intertie. Consequently, AEA’s reconnaissance study requirements for the proposed 138 kv line between Sutton and Glennallen (the "OPS-11" line) have been satisfied by completion of the 1989 Northeast Intertie study; Memorandum of Agreement AEA and CVEA Page 2 of 4 NOW, Tl 1.2 L.3 For the OPS-11 line, the next step in AEA’s project review process is a feasibility study conforming to AEA’s statutory requirements; AEA has included $500,000 in its FY 94 capital budget request to conduct a feasibility study, plan of finance, and independent cost estimate for the OPS-11 line. If this request is ultimately approved by the Governor and the Legislature, the funds will not be available for expenditure until July 1, 1993; CVEA prefers that the project evaluation process begin as soon as possible and asked AEA to estimate the amount that would be spent on the required feasibility study prior to July 1, 1993, if funding were available now. In response, AEA estimated that $260,000 would be spent prior to July 1, 1993, and an additional $165,000 would be spent after July 1, 1993, to complete the feasibility study and also the plan of finance and independent cost estimate (see Exhibit A). The parties anticipate that all tasks in Exhibit A will be complete by December 31, 1993, provided timely provision of adequate funds. THEREFORE, the parties agree as follows: ARTICLE I OBLIGATIONS OF THE ALASKA ENERGY AUTHORITY (AEA) AEA will continue to support a request in the FY 94 capital budget of not less than $425,000 to fund the feasibility study, plan of finance, and independent cost estimate for the OPS-11 line. Further, AEA will support the use of a portion of this request to reimburse CVEA for all funds advanced to AEA for the OPS-11 feasibility study under the terms of this Memorandum of Agreement. If the Legislature specifically appropriates funds to reimburse CVEA for funds CVEA advances to AEA for the OPS-11 feasibility study from the date of this agreement through June 30, 1993, CVEA will be reimbursed in accordance with the appropriation. If the Legislature does not specifically appropriate funds to reimburse CVEA for such feasibility study costs, CVEA will not be reimbursed. The parties are cognizant of and have read the Alaska Department of Law memorandum (Exhibit B) indicating that legislative intent to refund these costs to CVEA must be clearly expressed in the appropriation in order for reimbursement to occur. AEA will conduct the work covered by this agreement in a timely manner and will keep CVEA informed on the status of contracts required to complete the work. Memoranduin of Agreement AEA and CVEA Page 3 of 4 1.4 i) 1.6 AEA will submit invoices to CVEA on a monthly basis for reimbursement of costs covered by this agreement. At the conclusion of work covered by this agreement, AEA will refund to CVEA any funds remaining from CVEA’s initial advance payment. If the work provided for in this Memorandum of Agreement concludes that the OPS-11 line is feasible and is the best long-term economic solution to providing an adequate and reasonably priced source of power to CVEA, AEA shall use its best efforts to obtain adequate funding for construction of the project. On completion of the feasibility study, plan of finance, and independent cost estimate, AEA will enter into good faith negotiations with CVEA to determine the most cost- and time-efficient method for project construction consistent with State procurement law. ARTICLE II OBLIGATIONS OF COPPER VALLEY ELECTRIC ASSOCIATION, INC. (CVEA) 2.1 2:2 2.3 3.1 3.2 CVEA will advance funds not to exceed $260,000 to AEA to conduct the work described and scheduled in Exhibit A to occur before July 1, 1993. CVEA shall pay such funds within two weeks of receipt of monthly invoices from AEA and will make an advance payment of $20,000 to AEA upon execution of this agreement. CVEA will participate with AEA and others in the public involvement meetings and will assist in other activities such as land holder and agency right-of-way discussions. CVEA will cooperate with AEA in all ways to assure that the work is completed in a timely fashion and consistent with AEA statutory requirements. ARTICLE I GENERAL PROVISIONS This Memorandum of Agreement will be effective when approved by each organization’s Board of Directors and the Resolution effecting such approval has been transmitted to the other party. Such resolutions will become a part of this agreement and shall be attached hereto. Subsequent to the effective date of this Memorandum of Agreement, should any provision contained herein be determined to be unlawful or unenforceable, all other provisions shall remain in effect as if the unlawful or unenforceable provision were not in the agreement. Memorandum of Agreement AEA and CVEA Page 4 of 4 IN WITNESS WHEREOF, the Alaska Energy Authority and Copper Valley Electric Association have caused this Memorandum of Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY COPPER VALLEY ELECTRIC ASSOCIATION, INC. STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) _The foregoing Mem ate of Agreement was acknowledged before me this (a bay of _< ae , 199236¥ RONALD GARZINI, Executive Director of the ALASKA ENERGY A ORITY, on behalf of the Authority. Notary Public f He for the State of Alaska My commission expires: (ZAI/IID STATE OF ALASKA ) ) ESS; THIRD JUDICIAL DISTRICT ) The foregoing Memorandum,of Agreement was acknowledged before me this (ot say of eee 5 19923 CLAYTON HURLESS, General Manager of COPPER VALLEY ELE C ASSOCIATION, INC., on behalf of said corporation. Notary Public hd for the State of Alaska My commission expires: _D( tober (> 199.) COPPER VALLEY ELECTRIC ASSOCIATION, INC. RESOLUTION 92-28 AEA/CVEA MEMORANDUM OF AGREEMENT OPS-11 INTERTIE LINE WHEREAS, the Copper Valley Electric Association Board of Directors has identified the need for rate relief for its membership, and alternatives have been studied to fulfill this need; and WHEREAS, the Board of Directors has identified the most reasonable solution is to become interconnected to the Railbelt System; and WHEREAS, Copper Valley Electric Association has begun preliminary studies of an intertie line from O'Neill Substation to Pump Station 11 Substation, the purpose of which is to connect CVEA's system to the Railbelt system; and WHEREAS, the Alaska Energy Authority has indicated studies cannot continue until the next fiscal year when funds are appropriated; and WHEREAS, the Board of Directors has identified the need to continue the studies in a timely manner; now, therefore BE IT RESOLVED, that Copper Valley Electric Association and the Alaska Energy Authority enter into a Memorandum of Agreement which allows for Copper Valley Electric Association to forward funds in the amount of $260,000 to the Alaska Energy Authority to continue preliminary studies of the OPS-11 line; and BE IT FURTHER RESOLVED, the Board of Directors approves the Memorandum of Agreement and authorizes the General Manager to execute the document on behalf of Copper Valley Electric Association. Approved and signed this 16th day of December, 1992, in Glennallen, Alaska. VY i. ppt Robert E. Sunder, President (seal) ALASKA ENERGY AUTHORITY BOARD OF DIRECTORS MEETING JANUARY 22, 1993 RESOLUTION 1993-03 RESOLUTION OF THE ALASKA ENERGY AUTHORITY APPROVING A MEMORANDUM OF AGREEMENT WITH COPPER VALLEY ELECTRIC ASSOCIATION FOR A FEASIBILITY STUDY OF A SUTTON-GLENNALLEN INTERTIE WHEREAS, the Alaska Energy Authority completed a reconnaissance study in 1989 of a transmission line between Sutton and Glennallen; and WHEREAS, the Alaska Energy Authority Board of Directors has approved the inclusion of $425,000 in the FY94 capital budget request to conduct a feasibility study of a transmission line between Sutton and Glennallen; and WHEREAS, Copper Valley Electric Association has requested that the Sutton-Glennallen intertie feasibility study begin as soon as possible; and WHEREAS, Copper Valley Electric Association has agreed to pay the expected costs of the feasibility study incurred through June 30, 1993; and WHEREAS, the Legislative Budget and Audit Committee approved the request of the Energy Authority to receive and expend the funds that Copper Valley Electric Association has agreed to pay; NOW THEREFORE BE IT RESOLVED BY THE ALASKA ENERGY AUTHORITY AS FOLLOWS: Section 1. That the Alaska Energy Authority Board of Directors approves the Memorandum of Agreement between the Alaska Energy Authority and Copper Valley Electric Association regarding the Sutton-Glennallen feasibility study and the provision of funds not to exceed $260,000 by Copper Valley Electric Association. : an vens_5/ Rey Attn ae Nays OO ABSENT 2) funs/ Mag) 93Q1\JD4148(1) Page 1 and the resolution was declared adopted on the aane day of , 1993. ALASKA ENERGY AUTHORITY By: hairma By: Secretary Approved at Sinu ary 4a, 1992 Board Meeting. Corporate Seal Goes Here 93Q1\JD4148(2) Page 2 m XHIZIT A October 20, 1992 Cost estimate for Copper Valley Intertie Feasibility Study Note: It is assumed that both the "Northern Suggested Route" (near the road) and the "NEICR" route up Boulder Creek (or a comparable route away from the road) will be reviewed, refined, and compared in the feasibility study. Also assumed that the study begins in mid-January. Public meetings would be held at the start. Both route alternatives would be reviewed and refined in the winter, including flyovers of both routes and limited ground review of accessible portions. Preliminary environmental impact comparisons would be conducted. Another set of public meetings would follow to share information and discuss results. After June 30, any remaining route alternatives would again be reviewed and refined, including flyover and ground review as appropriate. Thus both summer and winter conditions will be accounted for in the route selection, feasibility design, and environmental analysis. Public meetings would again follow the summer review. Before 6/30 After 6/30 Total Electrical system studies $30,000 $30,000 Route selection 25,000 15,000 40,000 Feasibility design 25,000 5,000 30,000 Cost estimate : 20,000 20,000 Environmental studies 60,000 40,000 100,000 Load forecast 25,000 25,000 Economic evaluation of alternatives 40,000 10,000 50,000 Plan of finance 25,000 25,000 Independent cost estimate 25,000 25,000 Public comment process 20,000 10,000 30,000 AEA costs 35,000 15,000 50,000 TOTAL $260,000 $165,000 $425,000 MEMORANDUN, costars c.ate of Alaska a FROM Ronald A. Gar2ini ree Novenber 9, i392 Executive Director Alaska Energy Authority 5 feu 269-5166 sugect Sutton-Glennallen y Intertie ST: James F. Klas Assistant Attorrey General Transportation Section, Anchorage This memorandum is in response to the request of your office of November 2, 1992 regarding the plan for Copper Valley Electric Association (CVEA) to advance the Energy Authority costs for phase 1 of the Sutton-Glennallen Intertie Feasibility Study. I have researched the proposal and find no law to prohibit such an arrangement. This appears to be a conditional gift which the AEA has the power to accept under AS 44.83.080(5). The AEA furthermore has the power to perform the feasibility studies under AS 44.83.080(13) and to enter into a Memorandum of Agreement (MOA) for this study under AS 44.83.080(14). State funds may not be spent without an appropriation pursuant to Article IX, section 13 of the state constitution, but this requirement is being met in this instance through your Legislative Revised Program Request (RPL) dated October 26, 1992 which if approved will result in an appropriation for the stated purposes. However, the AEA and CVEA should understand that absent specific legislative direction or clear intent, costs are not ordinarily reimbursable from an appropriation where the costs are incurred prior to an appropriation being passed. Past attorney general opinions have noted that only in exceptional circumstances may grant money be used to reimburse for costs incurred prior to the date of the legislative appropriation. See, for example, the attached attorney general opinions dated August 7, 1985, file No. 366-527-85, and March 24, 1986, file No. 663-86-0412. The reasoning employed in these AG opinions applies to capital budget appropriations as well. Whether CVEA can be reimbursed out of a future state appropriation would be determined from the language of the appropriation. Without specific language in the appropriation making clear the legislative intent to reimburse CVEA out of the appropriation it is very probable that the reimbursement to CVEA would not be allowed. Furthermore, the MOA with CVEA should reflect that the $260,000 conditional gift can only be refunced <5 CVEA if the appropriation from the legislature clearly reflects that legislative intent. JFK: bb att KEPOR!I: MEDIA CONTACE DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Please return completed form to: Annette Barril Secretary II : 7 Office of the Commissioner From: helen Efren Date (2) (ELF 3 7) i Fa ? Contacted by: Like O vd te Telephone Leh - LhLi News Newspaper/TV/Radio Station: “Contact Narrative: SCO CY CG (continue on back if necessary) Action Required or Taken: Follow-up Response Necessary? Yes No x If yes, when, what type, and person responsible: cc: Division Director Deputy Director Date In Received By 2/6/87 December 16, 1993 Contact narrative: I received a phone call today from Peter Goodman, reporter for the Anchorage Daily News working out of their Palmer office. Points in the discussion included: 1 He said he had been out in Glennallen during this last week and had talked with a number of people, including Mr. Randy Maag, Engineering Manager of the Petro Star refinery. Randy Maag sent our study contractor a letter in early November stating that the refinery planned a very significant expansion in its power requirements over the next 10 years -- an assumption which can make a significant difference in the economic analysis of the intertie. Apparently, Randy Maag eventually told the reporter that the expansion plans were fairly speculative -- more speculative than they seemed to be in his letter. So the reporter asked whether I felt we might be misled by speculative projections of major expansions at the refinery to make the intertie look better. He also asked whether I felt a good decision could be made on the intertie when so little was known about such a major assumption. I said it would be good to know more about it than we do, but that at this point we proposed only to lay out in the draft study what we had been told to this point. The reporter also said that he was presently planning to do a story on the subject of the Sutton-Glennallen intertie sometime next week, and that he plans to come in and look at our files in accordance with his previous request under public information laws. He asked about changes that Beck might now be making in the draft report relative to the content of the preliminary working drafts that are in our files. I said that the cost estimate was coming down, but I declined to give him a number until Beck puts it in writing. I also said that there will be changes in the load forecast, and discussed my direction to Beck to create essentially two "Mid" cases; one with limited expansion of the Petro Star refinery, and one with the full expansion described in Randy Maag’s letter. A Fax From The Department of Community & Regional Affairs a Division af Ene BOM BESTS Ts Anchorage, AK 99519-0869 7oL Eade PEGE RLS ot Floor Anchorage, AK 99503 Main Telephone Number (907) $61-7877 ore Deliver Fax ro: ee. Company Name: Company Address: Nyeermber: (907) $61-8F584 a, Zana Fax Phone #: 2ZVG-— S272 Sender: a eee Sender's Phone *# # of Pages Sent: Date Fax Sent: * SS you aon eo ecaive — SPECIAL INSTRUCTIONS TO FAX RECIPIENT: Unctuding this cover shaw@) SS Sadee signe att: TRANSMISSION REPORT THIS DOCUMENT WAS CONFIRMED (REDUCED SAMPLE ABOVE - SEE DETAILS BELOW) *k COUNT ** TOTAL PAGES SCANNED >: 2 TOTAL PAGES CONFIRMED : 2 yee SEND eek [No. | REMOTE STATION START TIME [DURATION|#PAGES | MODE | RESULTS 1 12-14-93. 14:41 1'22"| 27 2 | COMPLETED | | | 9600 TOTAL 0:01°22" 2 NOTE: \o. : OPERATION NUMBER 48 : 4800BPS SELECTED EC : ERROR CORRECT G2 : G2 COMMUNICATION PD : POLLED BY REMOTE SF : STORE & FORWARD RI: RELAY INITIATE RS : RELAY STATION MB : SEND TO MAILBOX PG : POLLING A REMOTE MP : MULTI-POLLING = RM : RECEIVE TO MEMORY A Fax From The Department of Community & Regional Affairs Division of Energy Mailing Address: Physical Address: P.O. Box 190869 701 East Tudor Road, 2nd Floor Anchorage, AK 99519-0869 Anchorage, AK 99503 Main Telephone Number (907) 561-7877 Deliver Fax to: Company Name: g : Company Address: fieboré Fax Phone #: ee Sf eZ Sender: A ! Exner Sender's Phone # S6/- 7572 # of Pages Sent: 2 . } (Including this cover sheet) Date Fax Sent: hh Fass If you don't receive all of this lease call: iy Anchorage: (967) SIRS SPECIAL INSTRUCTIONS TO FAX RECIPIENT: WALTER J. HICKEL, GOVERNOR DEPT. OF COMMUNITY & REGIONAL AFFAIRS DIVISION OF ENERGY December 14, 1993 Mr. Peter Goodman, Reporter Anchorage Daily News 800 West Evergreen, Suite 205 Palmer, AK 99645 VIA FAX: = 746-5171 Dear Mr. Goodman: Following receipt of your fax dated December 10, 1993, requesting access to our files on the Sutton-Glennallen intertie feasibility study, I called you and left a message on your phone recorder. Since I have not yet heard back from you, I am following up with this fax reply. The files are available for public review at our office during regular business hours. Should you request copies of file materials following your review, we will copy them for you and charge the agency’s standard duplication fees. I would prefer that you review the materials first and then select whatever you want us to copy. Unless I hear otherwise from you, I will assume that you will come to our offices first to review the files before we copy and mail anything to you pursuant to your December 10 request. I will be in the office during the week of December 13, but will then be on vacation for the last two weeks of December. Should you wish to come in to review the files during the week of December 20, please contact Irene Tomory, Administrative Assistant. Should you wish to review the files during the December 27-29 period, please contact Terri Ganthner, Administrative Assistant. Sincerely, Mk {prove Richard Emerman Senior Economist 701 East Tudor Road, P.O. Box 190869, Anchorage, AK 99519-0869 ws KEPORI: MEDIA CONTACT DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Divisrn ¢ 4 Erryy Please return completed form to: Annette Barril Secretary II Dy ~ Office of the Commissioner From: hihi Eneman Date PES A £ TS A: Fae CQ cac ry ty Telephone eer Lhivh, Nex Contact Narrative: Contacted by: (continue on back if necessary) Action Required or Taken: ACHE Follow-up Response Necessary? Yes No If yes, when, what type, and person responsible: cc: Division Director Deputy Director Date In Received By 2/6/87 (2/0/53 Contact Narrative: Reporter inquired about the status of the Copper Valley intertie feasibility study. He had in his possession at least one memo I had written on the subject, and possibly more. For example, a memo he specifically referred to was one I wrote to Garzini and Petrie in late 1992 before the study began, in which I suggested that there was a potential for bias in the feasibility study because the intertie applicant (CVEA) would be paying for it, and that we needed to be especially careful to maintain an arms length relationship. My assumption is that he obtained these memos from Mr. Chris Rose, a lawyer who obtained them from our files a couple of weeks ago pursuant to a formal request under the Public Records Act. The main thrust of his questioning was whether I felt the study turned out to be objective and fair. The main thrust of my reply was that I believed the State (i.e. AEA, DCRA, and myself) and our contractor had been successful in maintaining our neutrality and objectivity throughout the study process, making adjustments only in response to those criticisms from CVEA that we believed had merit and rejecting the others. However, I also confirmed that we had much more comment from and interaction with CVEA than with any of the other interested parties, and that I wondered whether the study would have been at least somewhat affected if we had been in contact primarily with an advocate of one of the intertie alternatives instead of with CVEA. I said that perhaps we would have been more forcefully confronted with different perspectives and arguments, and that this might have made a difference. Additional Note: I heard yesterday from Robert Harris that a question had been raised about whether I had spoken recently with a reporter from Palmer. It has been several months since anyone from Palmer has called me, and I have never initiated a contact with the media myself. However, I would not be surprised if the file memos I referred to above have been distributed to a number of people and/or organizations, including media people and potential intertie opponents. The gist of the memos copied by Mr. Chris Rose was that the study might be perceived to be biased because the study process has, to this point, allowed CVEA considerably more opportunity than any other party to comment on and argue for changes in the analysis and preliminary drafts. ff Arron REPURI: MEDIA CUNITAL! DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS Please return completed form to: Annette Barril Secretary II Office of the Commissioner From: Ki Mac Entoonte Date fz G3 Contacted by: ppec boxed mary Telephone 2YE-2Y320 (Seuspaps}/1V/Radio Station: Yuete Cope 4, S Ve As J J) fel ra we. Contact Narrative: _Ste_atbehod, (continue on back if necessary) Action Required or Taken: Follow-up Response Necessary? Yes No If yes, when, what type, and person responsible: cc: Division Director Deputy Director Date In Received By 2/6/87 12/13/93 Contact Narrative: I received the attached fax this morning requesting access to Sutton-Glennallen intertie feasibility study files in accordance with public information statutes. I called back and left a message on his recorder saying that he could come in and look through the files, and that we would then copy requested material. As of noon today, he has not indicated whether or when he will come in. Anchorage Daily News 12/10/93 — Page t 300 West Evergreen, Suite 205 i Palmer, Alaska 99645 Phone: 746-2430 Fax: 746-5171 Oecember 10, 1993 Mr. Richard Emmerman Project Manager for Feasibility Study for Sutton to Glennallen Intertie Department of Community and Regional Affairs Anchorage, Alaska i Desr Mr; Ermerrnan: i Under all applicable state and federal open record laws, | hereby request copies of any and all correspondence between R.W. Beck Inc. and Copper Valley Electric Association related to the feasibility study on the proposed Sutton to Glennallen Intertie as well as copies of apy existing drafts of that feasibility study. ! {f the mass of paper involved is large enough to make mailing or faxing impractical, | request that you allow me to visit your office and provide me with access to the relevant files. Thank you for your time. | ! \ . | Sincerely, | Puls rde Peter S. Goodman Reporter Street Address: 1001 Northway Drive, Anchorage, Alaska 99508 Mailing Address: P.O. Box 14-9001, Anchorage, AK 99514-9001 (907) 267-4200