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HomeMy WebLinkAboutREFAC Meeting minutes 8-21-2009Renewable Energy Fund Advisory Committee Meeting August 21, 2009, AEA Board Room 9:00am to 12:00pm Minutes 1.) Call to Order The Renewable Energy Fund Advisory Committee convened at 9:00 a.m. Chris Rose, Vice Chair presided over the meeting in the absence of Chairman Vince Beltrami. 2.) Roll Call: Committee Members AEA Staff Other Participants Chris Rose, Acting Chair Steve Haagenson Wynn Menefee, DNR Brad Reeve Mike Harper Bob Swenson, DNR Jim Posey Sara Fisher-Goad Mike Mitchell, Dept. of Law Sen. Lyman Hoffman (phone) Butch White James Strandberg David Lockard Shauna Howell 3.) Public Comments There were no public comments. 4.) Agenda Comments There were no changes to the meeting agenda. 5.) Approval of Meeting Minutes — May 15, 2009 MOTION: Senator Lyman Hoffman moved to approve the meeting minutes from the May 15, 2009 Renewable Energy Fund Advisory Committee. The motion was seconded by Jim Posey. The minutes were unanimously passed as presented. 6.) Renewable Energy Fund Regulations Mr. White stated that since the last meeting a public hearing was held with no public comment received; however, individual comments were received. A definition of “economic benefits and public benefits” was requested. Mr. Mitchell advised that those were such broad terms that they could really not be defined in the regulations. A definition of “biomass projects,” was requested, our standard answer is that it would depend on the project. Another individual requested that we follow the federal definition of an IPP. Staff determined the definition would stand on the definition in our regulations. Mr. Mitchell clarified the difference between the federal regulations and ours that the state definition defines the public basically within the definition by Page 1 of 4 saying it’s entirely for use by the residents of one or more municipalities or unincorporated communities recognized by DCCED. The purpose was to have a threshold of public use such as it would have to at least be a community recognized by DCCED, rather than “2 or 4 cabins in the woods” for example. Ms. Fisher-Goad pointed out that the feds definition states “to be used primarily by the public” and our definition states “entirely by the residents.” She stated it’s a new program amending the power project fund definition to include IPP and the new program renewable energy fund. Mr. Haagenson stated it was one definition being used for two different programs. Mr. White said another comment came from the Legislative Affairs Agency attorneys and the Department of Law regulations review section that have been assisting to develop the regulations. It clarified AEA’s role in making recommendations to the Legislature that we are not a grant program, but it’s the Legislature that actually approves the grants, in summary, clarifying our statutorily required scoring in the evaluation criteria and in changing the evaluation criteria to “will consider” from “may consider.” Mr. Mitchell said those are viewed as technical comments to conform to the statute and in the case of the recommendations aspect to clarify that this is in the first instance recommendations to the Legislature and then only once they approve the grants is it a grant program. Mr. White summarized the approval process: the entire package is sent to the Dept. of Law regulations section, they review it one last time, as does Mr. Mitchell, if approved, it’s forwarded to the Lieutenant. Governor's office for filing and 30 days after it’s filed, we will have effective regulations with one last step to post online a summary of what the regulations are then we truly have regulations. The public comment period is completely closed. Mr. Mitchell did not anticipate further changes. A clarification was requested on the definition of “energy,” i.e., under section 107.615 does the definition under eligible projects include a waste heat recovery plant. Mr. Mitchell stated the Legislature specified by statute waste heat recovery was included within the program, and, by definition, waste heat is energy within the program. Mr. Rose asked about the timeline and how long would it take the Lieutenant Governor's office to sign off on the regulations. Mr. White said it would be about 30 days. Mr. Mitchell said it would depend on how long it remained under review with the Dept. of Law. It then goes to the Lieutenant Governor's office and when he files it, the regulations will become effective 30 days later. Mr. Rose stated he asked about the timeline as how it would fit into the Round 3 timeline and whether or not we wait till the regulations are effective before issuance of Round 3 RFP. Mr. Haagenson stated September 1 is the target date to issue Round 3. Mr. White said he felt the application period would close after the effective date of the regulations and that the draft regulations would be placed on the website. Mr. Reeve said he was contacted by the RCA as they are trying to understand the technical benefits of the project as opposed to what the financial benefit to the state or the consumer should be. This would be discussed under agenda Item 9. Mr. Rose spoke to Bob Pickett and understands the conversations between AEA and RCA are still ongoing. 7.) Round 1 Status — PowerPoint Presentation — Peter Crimp Round 1 status was presented by Mr. Haagenson. Peter Crimp presented the report to the LB&A Committee on August 14. Many have submitted initial grant drafts awaiting grantee action. Three grants Page 2 of 4 out of 78 projects are awaiting AEA action. Twenty-two are waiting for final signature of the grantee. Twenty-four are active amended. He is hopeful the six capped projects will be resolved in Round 3. Mr. Rose asked what kinds of issues are requiring AEA action. Mr. Haagenson stated it is nailing down milestones to create a complete package before they are signed. Those awaiting grantee action are the grants that have been put together in a form we like and we are working with them and waiting for them to actually develop their milestones and update any cost estimates, etc. Mr. Rose stated that some grantees were confused regarding the process of milestones and getting reimbursed by AEA and hoped that in Round 3 the process would be more clearly defined. A discussion regarding the reimbursement process ensued, including monetary advances, proper use of funding by the grantees, rules, milestones, providing important advanced information to the applicants, AEA’s ability to manage projects and the emphasis to the grantees that this is a cost reimbursable grant process. About 2/3 of the grant applications are in place. 8.) Round 2 Status — Butch White The Round 2 status report was given by Mr. White: Have not put any grants out, they are all drafted and on the system, however, the focus has been on the Round 1 grants. Out of 30 projects, worth about $25 million, about one third of the grantees have provided the information needed. Ms. Fisher-Goad stated that $9.6 million for 14 projects in Round 1 have been expended to date. 9.) Round 3 Request for Applications — Discussion of Issues — Steve Haagenson Round 3 status report was given by Mr. Haagenson: Benchmark/ payments was discussed as to the relationship between accounting and project engineering and ways to simplify the accounting certification process and to define benchmarks, i.e, design, permitting, construction, ordering materials, and closeout; as milestones are reached a fixed percentage of the payment will be made. It was suggested that perhaps using contractors to help do some oversight in some cases. Audit procedural concerns were also discussed. Mr. White stated an audit can be called up to $500,000 received in a single year. There's a federal and a state single audit requirement pretty much along the same thresholds. Ms. Goad stated that in all of our grant agreements there are standard provisions that require documentation and record keeping. It was suggested that a good way to tell if the books were in order was to perhaps perform a preliminary audit when the first milestone is reached or perhaps hiring another accountant in house or contracted out may be considered. AEA receives no funds to administer the grants; a discussion ensued as to how much funding to administer would be needed in the future and that funding would be pursued through the Governor's office and the OMB. Bob Swenson asked if we had a feel for the next two years of the level of new project costs. Mr. Posey? stated he felt we could get another $25 million this year, and Sen. Hoffman stated it’s critical that the committee impress upon the Governor that we need to get back on track with the renewable energy commitments. Mr. Rose stated we should definitely ask for $50 million, which was the intent a year and a half ago. He felt there was at least that amount of good projects out there. Page 3 of 4 Mr. Menefee stated that the permitting that comes up afterwards, water, land, etc. should be considered. DNR is having trouble pushing permitting through OMB. CAPS — assume caps at application: After the fact does not work. Assume caps are in place when we give them the application. Ms. Goad asked if the program could be designed with the flexibility to go higher than the proposed cap. A cap that could be lifted if necessary. Mr. Menafee said the cap is not in the regulation or legislation, and as long as everyone is getting notice and treated similarly it should be ok. Cost Based Rates: Mr. Haagenson explained the concept then opened the floor for discussion. An extensive discussion followed regarding PERPA / RCA authority responsibilities and certifications; definitions of IPPs, responsibilities for rate making, and a new subject of collateralizing of the grants which should be discussed further at another meeting. Schedule: Issue RFA by September 1, 2009 with recommendations to the Legislature by January 29, 2010. REFAC Terms: Appointed to three year terms, may be staggered terms. We will contact the Governor's office for clarification. Next Meeting date: Tentatively late September. The meeting was adjourned at 11:55 a.m. Page 4 of 4 JE ALASKA @@me > ENERGY AUTHORITY Renewable Energy Fund Advisory Committee Meeting Friday, August 21, 2009, AEA Board Room 9:00am to 12:00pm AGENDA de) Cail to Order Beltrami 2.) — Roll Call 3) Public Comment (limit of 2 minutes) 4.) | Agenda Comments (changes/additions/deletions) 5.) | Approval of Meeting Minutes (May 15, 2009) 6.) | REF Regulations White Uo) Round 1 Status — PowerPoint Haagenson 8.) Round 2 Status White 9.) | Round 3 Request for Applications — Discussion of Issues Benchmark/Payments Caps — assume caps at application Cost-based rates Schedule Issue RFA — September 1, 2009 Application period 30 days Recommendation to Legislature January 29, 2010 10.) REFAC terms 11.) Next Meeting Date 12.) Adjournment OMONMDARWN— 10.) 11.) 12.) /=ALASKA ) ENERGY AUTHORITY Renewable Energy Fund Advisory Committee Meeting Friday, August 21, 2009, AEA Board Room 9:00am to 12:00pm Shite 4.0 AGENDA End @ 1:55 Call to Order“ Bettrami @ Reve Roll Call ~~ ; Public Comment (limit of 2 minutes) ~~ Agenda Comments (changes/additions/deletions)~ Approval of Meeting Minutes (May 15, 2009) ,——~ REF Regulations ~~ White Round 1 Status — PowerPoint “ Haagenson Round 2 Status” White Round 3 Request for Applications — Discussion of Issues ————> ct ye Benchmark/Payments _~ Caps — assume caps at application,“ Cost-based rates “ Schedule Issue RFA — September 1, 2009 Application period 30 days Recommendation to Legislature January 29, 2010 REFAC terms Next Meeting Date — Adjournment Pape Theo : OCallattrlité ¢ ban o Fern | eth. 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(0.)\ RE FAC Térms : Moe [> Poe Renewable Energy Fund Advisory Committee Meeting 2 td oP May 15, 2009, AEA B R ( y ard Room A pre oe re 9:00am to 12:00pm Draft Minutes ROLL CALL: Committee Members AEA Staff Other Participants Vince Beltrami (Chair) Steve Haagenson Wynn Menefee DNR Jodi Mitchell Mike Harper Mike Mitchell Dept of Law Chris Rose Peter Crimp Denali Daniels Denali Commission Rep. Bill Thomas (phone) Butch White Brad Reeve Chris Rutz Sandy Burd (phone, Senator Hoffmann) Sarah Fisher-Goad Jim Posy James Strandberg Christa Caldwell Marge Cabanski The Renewable Energy Fund Advisory Committee convened at 9:06 a.m. Vince Beltrami asked if there was any public Comment and there was none. Steve Haagenson asked that updates to Round 1, Round 2 and staffing be added to the agenda. MOTION: Chris Rose moved to approve the meeting minutes from the March 20, 2009 Renewable Energy Advisory Committee and it was seconded by Brad Reeve. The motion passed unanimously. ISSUES DISCUSSED: Butch White began the discussion on the regulations and asked for input from the committee regarding: eligible applicants and projects, ranking of applications, request for reconsideration, failure to proceed and definitions especially in the area of IPPs. Draft Renewable Energy Grant Fund Regulations: Page 2, Eligible Applicants: Discussion was held on limiting funding to bio-fuels to only the areas of reconnaissance and feasibility and holding off on design and construction. The current proposed definition of bio-fuels is “solid, liquid, or gaseous fuel derived from biomass (page 9 #6 of proposed regulations) A question was posed and lengthy discussion followed on whether or not to award grant money to IPPs who cannot fund their project. It was recognized that IPPs have other means to obtain funding for construction such as bank loans, federal government programs, USDA Rural Development and etc. It was agreed that IPPs need to fund their own project and not use grant money as a benefit. The IPPs need to be owners of their projects. Mike Mitchell noted that in order to deal with the IPPs in the correct manner, that they are included in statutes and would require statuary change. The bar can be set conservatively to address issues regarding IPPs. All members agreed that a definition for IPPs was needed for the regulations. A suggested definition would be: 1. Amount of public benefit from the power produced, 100% 2. Come with 50% money in hand 3. Experience 4. Operational commitment 5. Bio-fuels , actually producing fuel (may be a sub definition) 6. Regulated and Certified 7. Cost based rates 8. Limit planning and development only 9. Sinking fund, hold as a bond, state to hold as escrow to replenish the fund 10. Have a different definition for heat, electricity and other fuels 11. Minimum power generation requirement The question was raised whether there should be requirement for a business plan in the RFA. Butch White noted that there is a place in the grant application that can be requested be completed. The committee summarized their discussion by saying that IPPs will be awarded grant money for construction as long as they meet the criterion listed above, or grant money for feasibility and reconnaissance. Steve Haagenson suggested inserting caps in the beginning of the grant application, rather than end of the application. Butch White commented that there is an intention to revisit the entire grant application. The other recommendations for the draft of the Renewable Energy Grant Regulations were: Page 2, Authority and Purpose: In the first sentence insert evaluation after application to read “to establish regulations for the application, evaluation, award, and administration”........ Page3, Grant Applications, The grant application is part of the grant agreement and the agreement is part of the regulations. The question was asked if you have an item in the application and it is challenged and it’s not in regulations is that at risk? Yes. Mike Mitchell suggested adding “additional information requested by the Authority” in the application, that there will be a required general description of the subject areas and then sufficient authority to ask for other information if needed. Brad Reeve asked if it is possible for someone to plagiarize another grant application being that they are on the net, and not know anything about the project. Mr. Mitchell said it was not a requirement to post these applications on the net. It was felt that any plagiarized applications would be weeded out by the project team in the evaluation process. What about applicants from other states, who are looking for free money, can we just eliminate their applications? If they meet the requirements they should be considered. Page 4, Evaluation of Applications: \n the second paragraph, change the word will to shall so that it reads “At a minimum the criteria shall include” Move 1 and 2 on the bottom of the page so there will be 4 points. Change the word may to shall so it will read “The authority shall also consider,” top of page 5 renumber 3-9 to 1-6 and insert the number 7 to be a catch all for other criteria assigned. The number 9 should be inserted into the next paragraph. Peter Crimp had asked if the door should be left opened for the residential program in the future. It was felt that this could be addressed at a later date. Page 5, Phased Approach to Assistance: In the last sentence delete “be required to re-apply” and change to read “and may apply for additional funds for subsequent phases of the project.” Page 6, Request or Reconsideration: The first sentence should be changed to read, “Applicants whose applications are rejected at the initial eligibility and feasibility review stage may request the Executive Director.........” Page 6, Recommendations to the Legislature: The last sentence should be changed to read “Award of any grant under this program is subject to appropriation approval of the appropriations by the governor.” Page 6, Notice of Intent to Award a Grant: The last sentence should be changed to read “.....the grant is consistent with the funding available and updated milestones are identified.” Page 6, Grant Agreement: The first sentence should be changed to read “As a condition to provide grant assistance, applicants...... Page 7, On the top of page, change the word will to may so the sentence should read “A grant agreement may, in the authority's discretion include” Add #10, language addressing the requirement of permits for site control and appropriate authorization which is needed before the project is started. Page 7, Failure to Proceed: The last sentence to read ‘funds and consistent with legislative approval". Page 8, Reporting of Operations: Delete the word an from the first paragraph so the sentence reads “...Grantee must provide O&M reports...” Butch White commented that he and Peter Crimp are still working on this regulation. Page 9, Grant Funded Assets: Not included with PCE, discussion was held on the last sentence “or any other energy tariffs are based.” Work will be done on this area to make it read correct. Page 9, Definitions # 4: 50% was changed to 100% #12 (will be numbered correctly) sentence now reads “waste heat recovery” as used in AS42.45.045 (/) (5) (A) means recovered heat. Delete #7 entirely. The status of Round 1 is that there are only a few grants out. The vast majority of the grants have been created internally and need to be reviewed by Project Managers. One grantee has informed us they are not going forward with the project so that particular grant will go back to LB&A to get re-appropriated to next project on list Staffing: Steve Haagenson reported that there are fourteen positions for summer and fall work. These positions are needed to do the level of work needed. There will also be a need to add five new positions in AEA; a part time Biomass Project Manager; a Wind Assistant Manager; a Hydro Assistant Manager; two (one for Geothermal and Energy Efficiency) temporary Assistant Program Managers. These positions will manage contractors and conduct proper review of projects. There is a concern that 2 million dollars will be spent this year, although it is in the budget for a five year window. This situation will be closely monitored to ensure that projects are only reviewed if this Agency in charge of it. Steve Haagenson summarized the past nine months and thanked the committee members for all the input in achieving ting the grant process going, regulations drafted, money approved and a LB&A audit. Mike Mitchell was asked the status of the regulations. He commented the need to have adequate input from the Agency regarding the regulations. He has built in more than a month to look at the regulations and have a final internal review. The regulations can then be turned into “regulation language,” and are out for a mandatory thirty day public notice and comment. Once that is closed, the regulations get signed off and go to the Lieutenant Governor and become final. There may be a need to provide one or two public hearings in which the public can comment by teleconference. A public hearing is not required but due to the public interest in the regulations it may be needed. Butch White mentioned that the regulations need to also go through Board of Directors for approval. The goal is to have a valid set of regulations in place before prior to round 3. Meeting was adjourned at 12:30 p.m.