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Home My WebLink AboutBPMC Meeting Dec 12 Continued Dec. 23, 2013 3Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY Regular Meeting Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting on Thursda December 12, 2013 at 1:00 p.m. For additional information contact Teri Webster at 907-771-3074. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Board Conference Room, 813 West Northern Lights Boulevard, Anchorage, Alaska; a teleconference line has been set up for those unable to attend in person. Dial 1-800-315-6338, Enter Code 3074#. The public is invited to attend. The State of Alaska (AEA) complies with Title Il of the Americans with Disabilities Act « 1990. Disabled persons requiring special modifications to participate should contact AEA staff at (907) 771-3074 to mak arrangements. Attachments, History, Details Attachments Details Agenda.pdf Department: Revision History Category: Created 12/4/2013 2:01:54 PM by tawebster Sub-Category: Modified 12/4/2013 2:01:54 PM by tawebster Location(s): Project/Regulation #: Publish Date: Archive Date: Events/Deadlines: Commerce, Community and Economic Development Public Notices Statewide 12/4/2013 12/13/2013 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority, Anchorage, Alaska December 12, 2013 December 23, 2013 1K CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 1:07 p.m. 2. COMMITTEE MEMBERS ROLL CALL Brad Janorschke Homer Electric Association (HEA) Cory Borgeson Golden Valley Electric Association (phone) (GVEA) Sara Fisher-Goad Alaska Energy Authority (AEA) Bradley Evans Chugach Electric Association (CEA) Joe Griffith Matanuska Electric Association (MEA) James Posey Anchorage Municipal Light & Power (AML&P) John Foutz City of Seward (SEW) 3s STAFF/PUBLIC ROLL CALL Bryan Carey, Gene Therriault, Kelli Veech, Kirk Warren, Teri Webster, and Yolanda Inga (AEA); Kirk Gibson (McDowell Rackner & Gibson); Brian Hickey, Paul Johnson, and Burke Wick (CEA); Brian Bjorkquist (Department of Law); Lynn Thompson, Alan Gray (GVEA); Rick Baldwin, Robert Day, Alan Owens, Mark Perry, Carrie Buckley and J.D, Graves (HEA); Marvin Yoder, Kit Jones (MEA); Dan Kendall, Rick Miller, and Jeff Warner (AML&P); Gary Dixon (Swalling & Associates); Bernie Smith (Regulatory Commission of Alaska (RCA); Sunny Morrison, and Miranda Stucktill (Accu-Type Depositions); 4. PUBLIC COMMENT There were no public comments. 5) AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was approved as amended. 6. APPROVAL OF PRIOR MEETING MINUTES - July 9, 2013 The July 9, 2013 meeting minutes were approved as presented. da NEW BUSINESS Ls Fish Water screen debris removal Mr. Day gave a detailed PowerPoint presentation regarding the fish water screen debris removal issue. He stated controlling the fish water has proven to be rather difficult. Mr. Day noted there are agency requirements to maintain certain minimum flows in the lower Bradley river. This is BPMC Minutes 12/12/2013 and 12/23/2013 Page | of 21 accomplished by releasing water through the dam through two manifolds with a number of different sized valves. In May of last year, all the valves were open and the flow could not be maintained, which could have resulted in a violation. An investigation was conducted and the determination was made that the two bird cages, that were installed over the fish water inlets in 1993, were clogged. One cage was in a foot of mud with debris piled around it and the other was buried under 13 feet of rock and debris. The debris field is approximately 500 cubic yards and extends into the mouth of the diversion tunnel, so that the stop logs cannot be dropped in their slots to block off the tunnel. There are four basic options to unclog the bird cages. The first option is an airlift hydraulic dredging with divers and a floating platform. An issue with this solution is the fish water release valves cannot be opened while divers are in the water. The question for the agencies is if fish water flow has to be maintained at all times. Option two is to drain the lake level down to the top of the diversion tunnel intake and remove the material out through a water dredging action (sluicing). The same question about the fish water flow has to be addressed. Option three is to pull the lake level down all the way to 1,068 ft. to the level of the horizontal apron in front of the diversion tunnel and place an excavator and backhoe on the apron to conduct a thorough cleaning. This option requires either a huge expense in pumping or a pass from the agencies on the fish water release. Option four is to delay any solution for a year to allow for further study. A standby pump would be recommended to be in place. Mr. Posey asked where the debris will be moved so it does not go down the tunnel. Mr. Day stated if the debris are pushed off the front end of the apron, it will go out into the old lake area. Mr. Posey asked could the agencies take three to four months to make a decision and delay any work until next year, and who, other than Federal Energy Regulatory Commission (FERC), has to give an answer on moving forward with timing and options. Mr. Day responded he does not know how long it will take the agencies to make their decisions but FERC is expected to get their advice from the environmental agencies. Mr. Griffith asked what would make us think the environmental agencies would not demand the current continued operations. Mr. Day stated he has personal experience with the issues regarding Battle Creek releases where the fish water was going to be warmer, so the fish were going to be fatter and more easily caught by predators. Chair Evans asked for an explanation of what happened when debris was removed from the power tunnel. Mr. Day stated the stop logs were put in, but cleaning the debris in the Power tunnel has nothing to do with the lake level. Mr. Griffith believes the agencies are not going to roll over on their fish water release flow. Chair Evans asked if we are in jeopardy if we take the time to ask. Mr. Day stated if Mr. Griffith is correct, then option one is really the only option to proceed and complete this year. Chair Evans suggested knowing whether or not dragging up pumps to do a fish water release is necessary before communicating with the agencies. Mr. Day stated he will find out. Mr. Griffith commented option one and two run the risk of not being able to do it correctly and tearing up something. Mr. Griffith agrees with the Operations & Dispatch (O&D) Committee that BPMC Minutes 12/12/2013 and 12/23/2013 Page 2 of 21 option three should be chosen. The question remains regarding a waiver or a reduction in the fish water flow. Chair Evans asked if we are in jeopardy if a waiver is requested. Mr. Carey commented he does not believe we are in jeopardy, because the lake level can continue to be drawn down during the winter. He recommended meeting with the agencies in January to get their response. Chair Evans stated it takes time to logistically organize each of these options and if it takes the agencies 120 days or longer to provide an answer, the jeopardy is not being able to mobilize the operations this year. Chair Evans asked how long it will take the agencies to answer. Mr. Carey stated Fish and Game should provide an answer fairly quickly and Fish and Wildlife should provide an answer by a date certain. Chair Evans asked Mr. Day if we can run some of this to ground and have a meeting at the beginning of January. Mr. Day agreed. Mr. Day asked Mr. Gray if Global has indicated their timeframe. Mr. Gray stated he does not have a specific time of when they would need a contract in place and will ask them. He commented if there is no answer by the middle of February, then it would be difficult to get the logistics organized. Ms. Fisher-Goad noted she is concerned about the dam safety and the working conditions that are needed for the valves and believes there needs to be a plan to correct the problem in 2014, regardless of the response from FERC. Ms. Fisher-Goad commented it would be nice to have more information on what type of leeway there is with respect to dam safety also being a concern. Mr. Posey commented the only reason a delay to 2015 would occur is if the agencies cannot come together timely enough for the work to be completed in 2014. Mr. Day stated one of the options would be to put the contract in place with a cancellation clause, pursuing option one and option three at the same time and cancelling whichever option is not possible. Chair Evans recommended this issue needs to be taken out of the boardroom and back to the O&D Committee and refine the options with the emphasis on getting it completed in 2014. Chair Evans suggested returning at the beginning of January and have some of the information worked down to a level where the Board can make the final call. Mr. Day commented his point was to ensure the BPMC understood this is significant money that has not been budgeted and has not been planned. Mr. Janorschke asked if there is a chance there would be a fish water bypass violation due to lack of flow in 2014 and if so, what are the penalties. Mr. Day stated we were right at the cusp of having a violation last year and it is weather-dependent. Mr. Carey said if spring comes late and there is no supplemental pumping of water, there is a good chance of having some type of violation. He noted FERC has not been attaching penalty fees. The position of AEA is not to have any violations. Mr. Griffith asked if the single pump provides enough flow to meet the known reductions. Mr. Day stated it is based on the idea that 75 percent of the required flows can be reached and the pump is big enough to provide the extra 25 percent flow, if needed. Chair Evans asked Mr. Day if the task is clear for the next meeting. Mr. Day stated he will pursue with the agencies and will come back with an answer. Chair Evans requested he provide information on what happened the last time a draw down occurred for debris removal. Mr. Posey requested contacting the proposed contractor regarding the specifics of a cancellation clause. Mr. Day expressed his appreciation to Mr. Owens for the amount of work he has done regarding this issue. Mr. Carey stated his goal is to receive some answers from FERC within the next seven days. BPMC Minutes 12/12/2013 and 12/23/2013 Page 3 of 21 7J. Fish water flows Mr. Carey gave a detailed PowerPoint presentation on maintaining minimum fish water flows at tidewater. It takes anywhere from three to five hours from when water is released at the dam to when it makes it down to the tidewater. Starting in 2010, there is a five-year trial amendment with FERC allowing short-term deviations of up to 7.5 percent, as long as the moving 24-hour average is above the required amount of CFS. Mr. Carey recommends this trial amendment become permanent, with a possible change of deviations of up to 10 percent. Chair Evans asked if the detection measuring infrastructure is working correctly. Mr. Carey stated during the winter when it is ice affected, they realistically cannot tell how much water is coming down. During the summer, a FERC standard USGS gauge is used, which is accurate up to plus/minus 10 percent. Mr. Griffith asked if the instrument is ever checked. Mr. Carey noted U.S Geological Survey (USGS) downloads data and check the instruments approximately every six weeks and after a storm they recheck the channel, recalibrate their rating curve and change their historical numbers. Mr. Carey recommends discussing with FERC and agencies any alternatives that would start running closer to the minimum flow, which would produce more energy, but still protect the habitat. Mr. Griffith commented relying entirely on USGS metering may be part of the issue. He asked if there was any possibility of placing different, more trustworthy equipment to model the flow. Mr. Carey stated gauge equipment can be placed, but FERC will still take the USGS numbers. Mr. Carey noted a read out is received from the USGS on 15-minute intervals. Mr. Carey commented below the North Fork, closer to tidewater, a small 10-foot tall re-regulation dam (re-reg) can be put in to smooth out the different pulses of water. Mr. Griffith asked if it would be like a surge tank on the river. Mr. Carey agreed and gave the example of if we could reduce the excess water by 10,000 acre-feet that would be more than 10,000 megawatt hours at $100 a megawatt hour, which is a gain of a million dollars of energy per year. Mr. Griffith asked where the re-reg dam would be placed. Mr. Carey stated it would need to be placed between tidewater and where the middle fork comes in. Mr. Griffith asked if that is where the flow, irrespective of what the fish do. Mr. Carey agreed and noted the salmon do not go far past the tidewater gauge because they are faced with falls. Mr. Griffith requested that option be reviewed. Mr. Carey stated under the Chair's direction, he could request the engineer to provide a concept of costs. Mr. Owens explained when the dam was originally constructed; the control system did not have the capability to be modulated. It was either fully open or fully closed. He noted HEA has installed a control system that can now handle modulation of the valves; the hardware will be in place by the end of this year. Mr. Owens explained they do not have a decent analog signal from the USGS. Chair Evans requested this issue be reviewed by the O&D Committee and refine what is the best way forward before a budget item or project is approved. Mr. Griffith asked if BPMC is currently a member of the National Hydropower Association involved in the Operational Excellence Program. Mr. Carey stated AEA has not been using the program because it is more of a recent initiative. Mr. Carey commented HEA or Chugach may be interested in the program. Mr. Griffith stated BPMC probably ought to become a member. Ms. Fisher-Goad noted AEA is a member of NHA and any of the operations of taking advantage of the Operational BPMC Minutes 12/12/2013 and 12/23/2013 Page 4 of 21 Excellence Program can be covered under AEA's membership and would be useful to BPMC. Mr. Posey said Eklutna would like to think about utilizing the program for the same reasons. Mr. Janorschke believes HEA is also a member of NHA. 7M. Status of governor Programmable Logic Controller (PLC) replacement project Mr. Day commented the Bradley Governor PLC Replacement Project is part of this year's budget and is moving forward. Mr. Owens provided an update on the replacement project. Mr. Griffith asked who is going to the factory acceptance test. Mr. Owens stated he is and he would like to get at least one of the operators with extensive knowledge of the control system. Mr. Griffith asked if the new control system will do anything for modulating the valves. Mr. Owens explained they are separate systems, but the new control system (the DCS) does have the ability to add any kind of logic the controls may need. Mr. Posey asked what is the age of the VA Tech and is it no longer supported or is this an update. Mr. Day stated is it seven years old and the software and hardware are not supported. They are still operating, but it has been nearly impossible to find anybody to assist with correcting issues. VA Tech flew in a software technician from Austria to work on the system and that could have caused more harm than good because some of the algorithms and control parameters changed when the software was installed. Chair Evans asked if anything they have done has had an effect on the failures of the governor. Mr. Day noted that would be hard for an engineer to say. Something has changed and they cannot find anybody who can assist in correcting the present issues with the current equipment because it is no longer made or supported. Chair Evans asked if replacing the governor will solve the problem or is this overspending to solve the problem. Mr. Day explained the governor is a computer control system that is broken and is no longer supported. Chair Evans asked if any internal upgrades have been made to the governor. Mr. Day stated no internal upgrades have been made to the governor. Chair Evans asked for a description of what has been done to date. The older SCADA system and annunciator systems were updated put in one box (the DCS). Chair Evans asked if the controls in the governor were updated to a newer version. Mr. Day stated the controls of the Governor were not updated. Chair Evans noted his concern the money could be spent and still have a stability problem. Mr. Day believes with good people, good hardware and good programming, we will have a better product than we have today. Chair Evans asked if Emerson is the right answer or if they are six months away from being obsolete. Mr. Day stated Emerson is the right answer. Mr. Owens noted Emerson is a world class control system. Chair Evans noted VA Tech is as well. Mr. Owens stated Emerson has a track record of maintaining 20-year-old systems. Mr. Owens pointed out that if Emerson becomes obsolete then CEA’s SPP plant will be in the same boat as they have an Emerson control system at SPP. Chair Evans commented the last time an upgrade was done there was a technical group involved to do vetting and AEA was a lot more involved. He asked if this upgrade is being handled in the same way. Mr. Day stated no, and does not believe it needs to be handled the way it was previously. Mr. Griffith asked if Mr. Day feels fully confident that in five years the story will be a success. Mr. Day believes the story will be a success in a year. BPMC Minutes 12/12/2013 and 12/23/2013 Page 5 of 21 Chair Evans commented it has been his experience that there is all kinds of help when something is being bought and then after the item is bought, the same relationship problems will occur with Emerson that are occurring with VA Tech. He noted his concern is that all of the work completed to identify and correct the stability problems is not connected to what is occurring now. Chair Evans expressed he is uncomfortable because there was a tremendous effort not that long ago. Mr. Posey agreed with Chair Evans and noted they had to wait for one specific person from Europe to help and ended up with a product that became obsolete. Mr. Posey stated he is sympathetic to how the problem is being approached because the last upgrade was not easy and this time will not be easy either. He believes working with the folks in Petersburg is probably the right thing to do. Chair Evans stated that same risk is run on any project. He noted his concern is what BPMC has control over, which is the work that was done to solve the stability problems. Chair Evans believes there needs to be a great deal of care to ensure all of that prior work does not get missed in the implementation. Mr. Posey agreed with Chair Evans and remembered a big part of the previous problem was the hardware not working correctly with the software. Chair Evans advised there needs to be some assurance in paying attention to the implementation of this system so that it achieves the same result as the first system. Chair Evans recommended some of the people who worked on the last system review this system and given their opinion. Mr. Day commented he welcomes the Chair and Committee's assignment of people who would like to conduct technical review of the documentation. Chair Evans said he would feel more comfortable if a technical coordinating committee was convened to discuss these issues and come back to the Board with the recommendation. Mr. Owens requested names and email addresses of the people Chair Evans would recommend be part of the technical coordinating committee so Mr. Owens can provide the information to them before the engineering review. Chair Evans noted he was on the previous committee, but will not attend this committee. Mr. Griffith stated he might attend. 7P. Budget Amendment Ms. Fisher-Goad invited Ms. Veech to speak on one aspect of the budget issue. Ms. Veech requested a specific dollar amount to the budget amendment noted in the July 9th, 2013 minutes regarding the approval of an increase in contract for relay and meter replacement. Ms. Veech noted the interest earnings for the FY 2014 budget were estimated to be $2.2 million. Ms. Veech advised there will be a shortfall of those earnings of $717,000. Ms. Veech stated the other item of interest was the fish water screen debris removal action. She commented this item looks like it has been delayed. Ms. Veech requested specific dollar amounts to revise the budget and can bring the revised budget to the Committee at the next meeting in January. Chair Evans stated it sounds like Ms. Veech has enough input so she can take care of what we know now and then when the fish water screen debris numbers come in, she can revise the budget again. Chair Evans asked if there was a sense of urgency in making the fish water screen debris adjustment now. Ms. Veech stated ideally if a budget amendment was approved in January, collection would start February through June. Chair Evans believes the amount will be large enough to appear in their BPMC Minutes 12/12/2013 and 12/23/2013 Page 6 of 21 billing but not affect the power sales agreement. Chair Evans stated the Committee could probably pass the budget amendment and then work on contract numbers for the fish water screen debris removal item and get that processed as quickly as possible. Ms. Fisher-Goad stated the three issues are the relay and meter replacement project, the interest shortfall, and the fish water screen debris removal. Chair Evans suggested budgeting the top range for the fish water screen debris removal. Mr. Griffith stated he would prefer to budget the top range numbers for the fish water screen debris removal. Chair Evans requested Ms. Veech look up the numbers for the top of the range as she understands it today and use that for the revised budget. Mr. Griffith thought there was a number attached to the relay and meter replacement project. Ms. Veech stated she has $410,000 for the relay and meter replacement project. Mr. Owens stated $410,000 is the correct number. Chair Evans asked if that money is going to be spent before the end of this fiscal year. Mr. Owens agreed and advised the relay project is 99 percent complete. Mr. Owens reported the project is currently $140,000 under budget with a few remaining items to complete. Chair Evans asked if this is an additional $310,000 over what has already been spent. Mr. Owens explained initially there was $900,000 budgeted for this project. The project came in on bid at $1.4 million. Mr. Owens stated BPMC was asked for the shortfall of $410,000 to meet the bid estimates. He explained with the bid estimate of 1.4 million, the project is currently at 1.3 million. Chair Evans stated it does not sound like more funding is needed. Mr. Owens agreed no more funding is needed and is expected to come in under budget. 7A. 2013 Financial audit - Action item MOTION: Mr. Griffith made a motion to approve the Resolution 7A. that the Bradley Lake Project Management Committee accept the Fiscal Year 2013 audit report and approve the refund to the utilities. Motion seconded. Chair Evans asked if the money has to be moved because the Committee is going to turn around, do a budget adjustment and spend the money. Mr. Posey stated the money has to be moved at the end of the year. Mr. Griffith stated previously the money did not have to be moved, but Anchorage Municipal Light and Power had a problem with that procedure. Mr. Posey said an audit occurred and it was determined the procedure has to take place under the agreement. Ms. Veech explained FY13 is closed and the funds have to be refunded. Mr. Dixon noted each utility makes an entry in their books for this refund amount before they close the books for their year-end audits. Chair Evans requested Mr. Dixon explain the audit in more detail and specifically identify where the refunded funds came from. Mr. Dixon reported this audit covers the revenue and operating funds. Page four of the financial statements show the monies contributed by the participating utilities. The most significant budget variance is in the operations and maintenance line. Page 13 has the detail of the variances between the budgeted monies collected and how they were spent on operations. Mr. Dixon explained the monies being refunded come from two buckets. The first bucket is from the Renewal & Contingency (R&C) fund, which has a cap on it. The expenditures have been low enough that the R&C fund has reached its cap. Any amount above the cap that would be in the fund, minus any unpaid bills, will be refunded at the end of the year. Mr. Dixon explained the second bucket represents the residual amounts budgeted and collected that were greater than expended. BPMC Minutes 12/12/2013 and 12/23/2013 Page 7 of 21 Chair Evans stated the FERC land use fees were more than double what was budgeted. He thought that was resolved and asked how that issue was missed. Mr. Carey explained historically the budget was at about $61,000 a year for the FERC land use fees. He believed the fees were going to jump to about $178,000, but they did not for the first year. There was a first year special, which was about 75 percent or $130,000. Chair Evans asked if that is a loss of 300 percent. Mr. Bjorkquist stated Chair Evans could characterize it that way. Chair Evans asked if the FERC land use fees were going to get worse. Mr. Carey stated there was a per acre fee increase and believes next year the fee will be in the $180,000 range. Chair Evans would like to have it clear on the record that our people fought the good fight and they took some casualties, but we came out ahead Chair Evans asked AEA for an explanation on how the insurance came out substantially less than what was budgeted. Ms. Fisher-Goad believes a refund was received through the insurance. Mr. Carey stated there was a recent refund of $20,000 to $30,000 and the insurance policy was a little less than expected by about $20,000. Chair Evans asked if the FERC administration fee was at 10 percent and did they actually do some work for BPMC. Mr. Carey explained FERC funds their operations from the administration fees on the different licensees. The fee can change year-to-year and it is based on capacity. Mr. Gibson noted it is like the RCA regulatory fee. Mr. Griffith asked if anyone knows what happens to the $200,000 fee to AEA. Chair Evans stated in the beginning, that number was a seven-figure number originally and then it was negotiated down. The appropriate fee was decided because AEA was providing enough of an owner's effort to warrant the current fee. Ms. Fisher-Goad said a part of the fee pays for Mr. Carey's time and staffs time in the finance department. Mr. Griffith stated $670,000 was spent to help Battle Creek. Mr. Gibson noted there are monies running through the R&C fund that were spent that are not part of this statement. Ms. Veech stated there are two Battle Creek grants which are not part of this statement. Mr. Dixon stated the actual books of Bradley are wider than the columns we look at here. Chair Evans asked if the R&C fund was originally established through the indenture and has the R&C fund lived through all of the iterations of the new indentures for the new debt financing put in place. Mr. Griffith agreed. Chair Evans asked if the R&C fund amount is a minimum amount. Mr. Griffith agreed. Chair Evans requested the Committee members review the appropriateness of that level, given the plant is being depreciated, but it doesn't really get collected. Chair Evans stated $5 million does not go very far, given the nature of the plant and how expensive things are. He said the consumers that are benefiting today are consuming the asset and not doing anything to replace it. There is the argument that the new members have to get a loan and start all over again. Mr. Griffith thinks it would be good to review the R&C level. Chair Evans requested the Budget Committee start a discussion on that. The motion was approved unanimously. 7B. Bradley Static Var Compensator (SVC) maintenance agreement - Action Item MOTION: Ms. Fisher-Goad made a motion to table this item to the next meeting date. Motion seconded by Mr. Posey. The motion was approved unanimously. Mr. Janorschke requested a red line copy from the current SVC maintenance agreement before the next meeting. BPMC Minutes 12/12/2013 and 12/23/2013 Page 8 of 21 7C. Homer Electric Association (HEA) transmission tariff filing - Action item MOTION: Mr. Griffith made a motion to adopt Resolution 2013.02. Motion was seconded by Mr. Posey. Mr. Janorschke stated he has concern with some of the whereas clauses. He does not believe the tariff is in dispute with the BPMC with the transmission system. Mr. Janorschke believes it falls within the regulatory arena with the RCA. Mr. Griffith stated he does not accept and does not agree with Mr. Janorschke's comments. He does not know who will adjudicate this disagreement. Mr. Griffith noted right now they are operating under the wheeling agreement which requires arbitration if there is a disagreement. Mr. Griffith believes the disagreement does not belong in the RCA filing in place. Mr. Griffith believes the BPMC members think Mr. Janorschke's assessment in the tariff filing is inaccurate. Mr. Janorschke stated he appreciated the discussions he has had with Mr. Griffith in the past regarding this issue and stated he knows they have different views of the agreement. HEA's position is to take it to the Regulatory Commission to resolve the dispute and if the Regulatory Commission believes they are not the appropriate party to resolve the dispute then the dispute gets taken back to the BPMC or to the resolution process. Mr. Griffith commented in the interest of pursuing dual paths on this issue, the rest of us have an intent to file with the Superior Court at the same time to enforce the existing agreement. Mr. Griffith noted he made Mr. Janorschke aware of this the other day. Chair Evans asked Mr. Janorschke if debate is going to help this issue. Mr. Janorschke stated debate will not help because he disagrees with some of the whereas clauses in the resolution. Mr. Griffith stated it is not clear in the wheeling agreement who declares that the disagreement should go to arbitration. Mr. Gibson explained there is a dispute resolution process under the BPMC bylaws. By the way the positions have been set out, HEA does not believe it falls under the BPMC. The services agreement has a different dispute resolution process. Mr. Griffith noted the lease agreement expires at the end of this month, but the services agreement does not expire at the end of this month. Mr. Gibson commented if the BPMC was putting the actions under the services agreement, then the dispute resolution would naturally follow the services agreement. Mr. Griffith asked if that is logical. Mr. Gibson stated there is a choice because it is a BPMC issue and it could also fall under the BPMC bylaws concerning dispute resolution. Mr. Gibson advised if the BPMC believes this disagreement is a violation of the services agreement, then it has to be resolved using the dispute resolution from the services agreement. Mr. Griffith asked Mr. Gibson if the bylaws say any dispute is adjudicated in court. Mr. Gibson explained the process as the Committee decides if it can act. If the Committee can act, the Committee decides its actions. Any action will be subject to judicial review. If the Committee does not know if it can act, the court makes the determination. Mr. Griffith asked if judicial review means the Superior Court. Chair Evans asked for an explanation of how the resolution process works in the services agreement. Mr. Gibson explained the services resolution dispute resolution process is a little odd because 10B talks about having a meeting between the parties, but it gives Chugach a strength in the agreement BPMC Minutes 12/12/2013 and 12/23/2013 Page 9 of 21 because the affirmative vote from Chugach is required for adoption of any procedures. Mr. Griffith noted 12C states everything continues as-is until the dispute is resolved. Mr. Gibson agreed. Mr. Janorschke commented part of his disagreement with the resolution is HEA has tried to resolve these issues for quite a while and have made it very clear for a lengthy period of time HEA's intent to file a tariff across their system. He strongly disagrees that HEA's filing has improperly put at risk the reliability of the transmission system, improperly subverted the priority of the project, and improperly increased the cost of delivering power. Mr. Janorschke stated the intent is to start collecting the fair fees associated with delivering power across HEA's system that historically have not been adequately collected. He does not believe anyone is asking to go across the GVEA system or the Chugach system without proper compensation. Mr. Griffith stated it is done all the time to MEA's system, but that is another story. Mr. Posey commented MEA has a contract with the state. Mr. Griffith stated MEA does not have a contract, but they do have an order from the Commission. Mr. Janorschke stated the filing of the tariff was modeled after what GVEA and Chugach have done, but the fees charged are lower than both GVEA and Chugach. Mr. Janorschke stated this has a huge impact on operations and he will vote against Resolution 2013-02. Mr. Baldwin expressed his concerns about whether the BPMC action has standing to get involved in this situation and recommended careful review before any filing to avoid procedural wrangling. Mr. Baldwin noted the parties will have an interest in the tariff and requested examination of that question. Mr. Borgeson commented that Golden Valley Electric Association is interested in finding a negotiated resolution to this matter. Mr. Borgeson stated GVEA is in support of the Resolution 2013-02. Mr. Foutz apologized for needing explanation of the issues and requested a summary of the tariff at issue with the RCA. Mr. Janorschke explained the current lease agreement HEA has with Chugach expires at the end of 2013. HEA is setting up their own dispatching area and have filed a wheeling tariff for any energy going across HEA's system. He stated this is very similar to what Golden Valley Electric Association and Chugach has done with their systems. Mr. Janorschke stated part of the reason for the tariff is other users want to use HEA's system and it does not matter whether they are Bradley participants or independent power producers (IPP). He stated HEA has also filed a tariff on the losses issue, which does have a significant impact on their system. He noted the biggest challenge right now is trying to go back and recover the costs HEA is incurring having the Bradley power go across their system. Mr. Janorschke stated it is much more extensive than Bradley power just flowing up the east side of HEA's system, between Bradley Junction and Soldotna. He stated if there are doubts whether the Bradley project impacts HEA's system, he recommended talking to Mr. Burlingame. He explained this is an integral part of their system, including the other generation assets which do support the peninsula. Mr. Borgeson asked what the annual dollar amount is that HEA wishes to collect under this tariff and the Bradley participants. Mr. Janorschke believes it is $2.9 million. He noted HEA utilized consultants the members have previously used to help draft the tariff and the basis for the numbers. He stated they are requesting approval on an interim refundable rate from the Regulatory Commission. BPMC Minutes 12/12/2013 and 12/23/2013 Page 10 of 21 Mr. Foutz asked Mr. Janorschke if the tariff is for losses and wheeling. Mr. Janorschke stated there are two different tariffs. Mr. Foutz asked if this resolution geared toward one tariff or both tariffs. Mr. Janorschke stated this resolution is geared just toward the wheeling tariff. The motion was approved with one opposed (HEA). RECESS FOR THE DAY The meeting will be recessed until December 23, 2013, at 9:30 a.m. Chair Evans recessed the meeting at 3:35 p.m. Monday, December 23, 2013 CALL BACK TO ORDER Chair Evans reconvened the meeting at 9:38 a.m. Committee members Borgeson, Fisher-Goad, Griffith, Posey, Janorschke, and Foutz were present. 7D. Adoption of Reliability Standards - Action item MOTION: Mr. Griffith made a motion to adopt Item 7D. Motion seconded by Mr. Borgeson. Mr. Griffith stated the document was approved by Intertie Management Committee (IMC) within the last 60 days. Mr. Griffith commented it is entirely appropriate for the BPMC adopt these reliability standards because it is a most accurate representation of how the system operates. He will be voting in favor of adoption and recommends all other do the same. Mr. Janorschke commented by voting affirmatively on this resolution the members are acknowledging that we have been briefed by staff or have read the reliability standards. Mr. Janorschke stated he has some questions regarding the documents. He did not get to read all of the documents because Exhibits F and G were excluded from what he received. Mr. Janorschke asked if the Bradley O&D Committee has reviewed the implementation of these standards and has their recommendation been given to the BPMC Committee. Mr. Griffith stated he does not know if the O&D Committee formally acted on it. The same people created the Railbelt Reliability Committee (RRC). Mr. Janorschke stated these standards are not the same as the RRC. Mr. Griffith stated these standards have been changed and updated in the last 60 days to correct syntax, English errors, reference errors and things like that, but does not believe any substantive changes were made. Chair Evans commented the big change was that AEA took the standards through a very lengthy public process and advised comment. There were changes in adoption of the open access language which RRC did not include. Mr. Griffith advised there was a precise listing of the suggested changes. BPMC Minutes 12/12/2013 and 12/23/2013 Page 11 of 21 Mr. Janorschke asked if he was correct in understanding the BPMC O&D Committee has not reviewed the implementation of these standards. Chair Evans stated that is not a fair characterization, because it was the same people and it went through a public process. He said these standards will be given to the O&D Committee to review and they will determine what is appropriate for a power plant to operate in the system. Mr. Janorschke stated that as an IPP, Bradley has a spin requirement. Chair Evans stated he does not know about that. Mr. Janorschke stated everyone has agreed Bradley is an IPP. Chair Evans does not know that anybody at the table has agreed Bradley is an IPP. Mr. Griffith said he has stated that, but is not sure everybody agrees with him. Mr. Griffith does not believe the state views Bradley as an IPP. Mr. Griffith commented Bradley acts and looks to him like an IPP, but does not know if it has a spin requirement. Chair Evans explained there is a spin requirement if MEA's schedule constitutes his largest unit. Mr. Griffith agreed with that characterization. Mr. Janorschke asked if the IPP has the spin requirement associated with it, does HEA reserve on the transmission system capacity for that spin requirement. This will reduce the available deliverability of power from the Kenai Peninsula to Anchorage. Chair Evans stated that is already a common practice and is not changing. Mr. Janorschke noted they have not put a spin requirement on Bradley. Chair Evans stated Mr. Janorschke could have had spin, but if it is transmission constrained, it cannot be booked. Mr. Janorschke stated that is one of his questions for the O&D Committee. Mr. Janorschke stated he understands in Exhibit F there is a requirement to have 100 percent backup for 45 consecutive days of operation. He asked if this is required for the governor project this summer and if so, that will have a huge impact. Mr. Griffith advised the language says "45 days of operation fully backed up." Mr. Griffith believes the 100 percent backup is already occurring. Chair Evans agreed. Mr. Janorschke stated the standards also require interconnection agreements, relays, metering, switches and communication equipment, essentially putting a substation at Bradley Junction. Mr. Janorschke said he is not opposed to that, but wants to ensure these standards have been reviewed before the O&D Committee suggests numerous exceptions. Chair Evans does not read the standards that way and believes Mr. Janorschke's interpretation is very liberal. Chair Evans stated the O&D Committee can debate that issue. Chair Evans said he is not going to debate the standards line-by- line at the table. Chair Evans commented for every one exception that can be found in the standards, there are 1,000 items in the standards which are the way BPMC wants to operate. Mr. Janorschke was not aware the IMC has been the railbelt reliability coordinator for the grid for over 25 years and requested clarification on what they have done in that period of time. Mr. Janorschke requested an explanation of the use of best interest in the sentence, "the Committee has determined it is in the best interest of the purchasing utilities to implement these standards." Mr. Janorschke stated he was not aware Bradley had a problem and asked what is the issue with the standards. Mr. Borgeson commented the IMC has adopted these reliability standards, so they are already in place. Mr. Borgeson stated the group of utilities have adopted the reliability standards and have indicated the intent to file them as part of the tariffs. Mr. Borgeson noted he supports the passage of the resolution with a clear understanding that these are organic agreements and standards that will change. He said there are going to be problems with the standards and exceptions will need to be made, but there needs to be some basic reliability standards for the transmission lines that are interconnected to protect the system. Mr. Borgeson stated he asked the IMC last week the question about Bradley having a spinning reserve. He reported the answer was Bradley does not need a BPMC Minutes 12/12/2013 and 12/23/2013 Page 12 of 21 spinning reserve because of the protocols that are in place. Mr. Borgeson recommended the O&D Committee work on whatever issues need to be amended. Mr. Borgeson said it is a good start, but not the end. Mr. Foutz agreed with Mr. Borgeson's comments. Mr. Foutz said his concern is ensuring the state is finished reviewing and amending the reliability standards before BPMC adopts the resolution. Ms. Fisher-Goad advised the state is comfortable with the resolution and believes it is a good working guide. The state has supported the reliability standards at the IMC. She noted there is an understanding there may be some amendments to them along the way and the state is committed to working with the utilities to formalize the way the system has been operating. She noted enforcement mechanisms and sanctions are on a separate track. She reported 354 pages, which included Exhibits F and G, have been on the AEA web page since October for public comment and advised for the record that no public comments were received. An unidentified speaker noted CIRI requested a meeting with AEA to discuss the documents. Ms. Fisher-Goad said the state intends to support the adoption of these reliability standards. Chair Evans commented one of the reasons for adopting the reliability standards is there has been more pressure regarding open access and how the system is being operated. He noted more IPP's want to be on the system, so there has to be standards for the IPP's to adhere to and let them know how the system operates. Chair Evans noted everyone realizes these standards are organic and any issues that do not make sense or that are disruptive to the day-to-day operations will be addressed. These standards provide established practices and framework that new producers will have to follow, including incorporating their generation, using the transmission, serving their customers, and how they conduct business on the system. Chair Evans stated the benefits of the interconnection through all of the generation and substations needs to be protected by these rules and regulations. He said there is a docket downtown currently that is making disparaging remarks about the BPMC. He noted all of the rules and regulations have been in place in the Lower 48 and the multitude of IPP projects in the Lower 48 have managed to come online with these rules and regulations. Chair Evans advised this system is being modeled as much as possible on industry standards that are supported through other important regulations. He stated if there is going to be open access on the system, there has to be rules and regulations and it is a work in progress. Mr. Janorschke stated he agreed with most of Chair Evan's comments. The intent of his questions were focused on how these standards apply to Bradley and the amount of exceptions and waivers going forward. Chair Evans stated he is not saying there are going to be any waivers for Bradley. Chair Evans commented if Mr. Janorschke wants the same people who have been reviewing these standards for the last five years to sit down and see what they have missed, that is fine, but it is not a reason to stall this resolution. Mr. Borgeson commented another reason he is in favor of this resolution is it properly places this issue into the Bradley group. He noted he likes the idea of the inclusion of all of the utilities sharing the expense and effort in reviewing these standards. Mr. Borgeson stated he shares some of the same concerns as Mr. Janorschke regarding waivers and how issue could arise from that. Mr. Posey stated AML&P supports the resolution. He noted there are exceptions for the consideration for those who are less than 10 megawatts. He believes this is the right thing to do. Mr. Day stated he is troubled as the agent of this Committee in terms of managing and operating Bradley. He is glad to do whatever BPMC instructs, but has concerns about what the standards say about interconnection standards, spin requirement standards and testing standards. He commented he BPMC Minutes 12/12/2013 and 12/23/2013 Page 13 of 21 either obeys those standards or he does not obey those standards and he is unsure as to which standards he is supposed to follow as the operator of the facility Chair Evans commented he is sure the issues can be sorted out because they have been doing it for years. Mr. Griffith expressed appreciation to Mr. Day for making his argument for a TRANSCO or a single operator. Mr. Griffith stated it seems Homer is requesting to send these reliability standards to the O&D Committee and Mr. Griffith has no objection to that. He recommends passing the resolution and then sending it to the O&D Committee. Chair Evans stated the reliability standards will go to the O&D Committee after the resolution is passed. The motion was approved with one opposed (HEA). 70. Bradley dispatching, losses and scheduling Mr. Janorschke requested Mr. Day give his presentation on losses and scheduling. Chair Evans invited other technical members to the table, as well. Mr. Day gave a PowerPoint presentation entitled Bradley Dispatch. He noted the information is given not as the operator of the plant, but as a participant. Mr. Day explained this issue came to his attention through the months of September, October and November. He stated the Bradley Lake Hydro Project governing contract has a requirement that the utilities have a weekly schedule so losses can be known. Mr. Day explained that when Bradley is in the mode of impending spill, where the water levels are above 1,175 ft., and if any of the participants cannot take their share of that excess energy, then it is required the excess energy be offered to the other utilities. Mr. Day showed a timeline illustrating when Bradley was in imminent spill. Mr. Day showed graphs illustrating there is no output schedule and energy was wasted during the middle of the day. He stated this wasted energy was not offered to the other utilities, but should have been. Mr. Day commented Chugach is dispatching this joint facility for its own benefit. Every time the units are ramped up and down, a certain amount of loss of life is used to the detriment of the rest of the participants. Mr. Day does not believe this is appropriate. Mr. Janorschke stated this presentation has to do with the agenda item on dynamic scheduling that will come later in the meeting. Mr. Janorschke showed what the outlook will look like with dynamic scheduling, as opposed to the existing contract stating block scheduling. Mr. Griffith said it is his view they are showing dynamic scheduling. Mr. Day stated it is being done by Chugach for their benefit. Mr. Griffith commented he has a different view of that. Mr. Griffith does not believe the document that required scheduling considers the language in the transmission services agreement that says Chugach may dispatch the system under certain conditions to their own benefit and the benefit of their customers. He noted the transmission services agreement clearly gives Chugach the authority to do what Mr. Day is objecting to. Mr. Day commented there is language that allows Chugach to skip schedule or to use Bradley and replace the energy to the other utilities, but not to this degree. Mr. Griffith does not believe there is any degree. Mr. Day stated there is a requirement for a week ahead schedule, which is not being done or followed. Mr. Day said no one is objecting to Chugach doing a true-up at the end of the period. Mr. Day stated he supports dynamic scheduling and he stated that basically all of the energy that is produced during imminent spill is free to the participants. Mr. Day reported HEA got a bill BPMC Minutes 12/12/2013 and 12/23/2013 Page 14 of 21 from Chugach Electric for wholesale power that is out of line, because the energy for that month was free. Mr. Griffith noted he will have to check his bill. Chair Evans requested Mr. Day give his presentation on losses. Mr. Day gave a PowerPoint presentation entitled "Why Losses Matter to HEA." He explained Bradley losses have the potential to cost HEA a lot of money and this problem can be solved by pre-scheduling per the contracts. Chair Evans noted those presentations covered the CEA dispatch dispute and the Homer Bradley Lake system losses. TE. Implementation of dynamic scheduling - Action item MOTION: Mr. Griffith made a motion to adopt the dynamic scheduling resolution as amended. Motion seconded by Mr. Posey. Mr. Griffith requested a brief description of dynamic scheduling with an explanation of how it would function in the railbelt. Mr. Johnson explained the owners of a jointly owned unit will model their piece of the plant based on their ownership shares. If dynamic scheduling is selected then Bradley has to work with that party to telemeter their control signal over a data link. The control signal allows outside entities to treat Bradley like it was one of their own units. The actual Bradley control signal would be a composite of the schedules or the dynamic schedules. As each party receives their dynamic schedule, they will need to use that value in their real-time Area Control Error (ACE) calculation, or their load balancing control. Mr. Johnson was asked to explain how Homer losses might be handled under dynamic scheduling. Mr. Johnson explained within the energy management system there are dynamic schedules and interchange schedules. If a schedule is known at a given hour, a prediction can be made regarding what the losses will be. Chair Evans asked if a participant changes their schedule and went from zero to 10, the dynamic schedule reads the losses and recommends dispatching 11 to get the 10. This is transparent across the intervening system. Mr. Johnson stated if the energy management system can manage a dynamic schedule, the Bradley piece should be treated as one schedule and then the delta on Bradley would be allocated and be an offset to their real-time interchange. Chair Evans asked how Mr. Johnson is handling losses today across the system to participants and if it is still inadvertent. Mr. Johnson commented the Bradley losses are handled with Bradley and all of Homer being part of the load balance area. He explained FERC has a methodology where at the end of the month, the energy is rebalanced with Bradley. Mr. Johnson reported there is a proposal to address Mr. Day's concern and if the wheeling of Bradley power is causing six megawatts of losses, then Chugach would generate that. The wheeling piece would be broken up and be generated in real- time and continue to true those up with some adjustments. Chair Evans asked if there was some reason why Bradley cannot generate the losses. Mr. Johnson stated Bradley can generate the losses, but any generator is treated as part of the generating resources. Mr. Johnson said the losses could be trued-up after the fact or moved into the normal daily scheduling. Mr. Griffith noted it does not matter who generates the losses, as long as the credit for them fits in their nominations. Chair Evans commented there is a real-time way for the intervening transmission BPMC Minutes 12/12/2013 and 12/23/2013 Page 15 of 21 systems, which would be Homer and Chugach, to have those losses made up, so the balance of the generation is transparent. Mr. Johnson agreed. Mr. Wick stated up to the end of this year, MEA, Homer, City of Seward, and Chugach have all been the same system essentially. He believes Mr. Day showed a dynamic schedule for Bradley Lake. Mr. Wick stated the unit is run with a reg assist with the system and it is all inclusive. As it breaks out, each utility will be able to have a dynamic schedule and schedule the losses and allocated it to each utility based on their Bradley load so they are made up in real-time. The losses in the schedule are rounded to the nearest megawatt and will be trued-up at the end of the day. Mr. Johnson stated Chugach is in the middle of updating with their vendors the current release and proposes to defer the dynamic schedule implementation until after the update. Mr. Griffith asked if Chugach is operating the Open System International (OSI) system. Mr. Johnson agreed. Mr. Griffith noted that is the same system MEA has. Chair Evans stated it does not matter what interchange schedule and package system the participant has and it does not have to be the same as Chugach's. Mr. Borgeson requested AEA's opinion on whether or not the state supports the dynamic scheduling resolution. Ms. Fisher-Goad said the way she reads the resolution, it is directing the O&D Committee to work with Chugach to develop this process to be able to perform the dynamic scheduling. She has no issues with that. Ms. Fisher-Goad requested to hear HEA's input because it sounds like this resolution would help the concerns Mr. Day outlined during his presentation. Mr. Borgeson asked if GVEA will be able to use Bradley power to follow their wind if there is dynamic scheduling at Bradley. Mr. Griffith stated GVEA can buy it cheaper from MEA and they will not have to address Chugach's rate over their transmission lines. Mr. Johnson stated once Bradley goes to dynamic scheduling, the participants send a control signal to Bradley and can treat it like another generator. Mr. Johnson commented if GVEA can follow wind with another generator, then it can be followed with the dynamic schedule. Mr. Borgeson asked if Mr. Johnson's answer was affirmative that he believes GVEA will be able to use Bradley power to follow their wind if Bradley goes to dynamic scheduling. Mr. Wick noted GVEA might be right now by trying to keep the tie loaded as much as possible and if GVEA is going to dynamically move Bradley up and down on their share, part of the line has to be kept unloaded to handle the ups and downs. Mr. Borgeson stated as unit two is brought on, the tie is not going to be loaded nearly as much as it is at this point, which would allow for the flexibility. Chair Evans commented all of the intervening restrictions in the request will have to be incorporated. Mr. Wick noted there will be a significant change when Healy comes online. Mr. Borgeson asked how does Chugach's requirement to schedule ahead its gas impact dynamic scheduling. He asked if Chugach is really able to do dynamic scheduling if they have to allocate all of their gas a day ahead. Mr. Borgeson asked if the reason Chugach is using Bradley at this point and ramping it up and down is because they already have a commitment for gas. Mr. Wick stated when Chugach is regulating with Bradley, it does cut down on the amount that is moved around on the fuel nominations. Chugach does have some leeway to move on those nominations and they do smooth it with hydro, which includes Eklutna power plant and Cooper Lake power plant as well. Mr. Borgeson asked if the day ahead scheduling of the gas will impact Chugach's ability to do dynamic scheduling based on factors that intervene in the day. Mr. Wick disagreed and stated the day ahead scheduling of the gas should not impact Chugach's ability to do dynamic scheduling. Mr. BPMC Minutes 12/12/2013 and 12/23/2013 Page 16 of 21 Wick noted they still have unit commitments and it should not impact that. Mr. Griffith stated Chugach will be affected if they end up with an outage on the transmission line or some anomaly occurs and then the gas assumption will probably be off. Mr. Wick commented under normal conditions, there will be no impact, but if there are unit trips or line trips, Chugach currently has to reschedule those and would still have to reschedule those depending on what the anticipated length of the outage. Chair Evans noted that scenario is true even if it is not a Chugach unit trip. Mr. Johnson stated the load forecast could possibly be inaccurate. If the load is higher or lower, then hydro becomes a resource that can be used to help balance it out. Mr. Borgeson asked what the budgeted cost increase to the Bradley participants if this resolution is passed. Mr. Johnson does not believe there has been a budget item allocated. The software licensing is already within the standard. A contractor would be used to implement it and would be onsite for a couple of weeks. Mr. Johnson estimates the number is in the tens of thousands of dollars and under $50,000. Mr. Johnson advised each party would be responsible for implementing their connection piece, including any software needed to send the signal. Mr. Borgeson asked what the estimated cost increase is for the participants on an annualized and ongoing basis and what kinds of charges will the project see. Mr. Johnson stated there is no licensing fee. He commented the initial cost is for moving to the dynamic schedule, including professional services for implementation and testing. After that, there are the normal maintenance costs. Mr. Wick stated utilities will still submit schedules on Bradley Lake, even with dynamic scheduling. Mr. Borgeson advised Golden Valley strongly supports this resolution and expressed his appreciation to Chugach and knows it takes time and effort. He noted that moving forward and discussing a TRANSCO independent system operator, the load balancing becomes something everyone really wants to have. Mr. Janorschke stated he likes this resolution. Mr. Janorschke offered a written friendly amendment to the resolution directing the O&D Committee to address the issues regarding dynamic scheduling, losses and conflicts with the existing agreements. The friendly amendment was amended and accepted. Mr. Gibson read the amendment as a guide to help the Committee understand. "The Committee has determined that it is in the best interest of the purchasing utilities and their respective customers or members that the dynamic scheduling be implemented for the project. To that end, the Committee directs the Operation and Dispatch Subcommittee to work closely with Chugach to develop a scope, schedule and budget for the implementation of master station dynamic scheduling as quickly as is reasonably practical. This review shall include recommended changes to existing contracts (i.e. Bradley Lake Hydro Electric Project allocation and scheduling procedures and agreement for Bradley Lake resource scheduling) and any applicable standards necessary to allow dynamic scheduling without violation of the documents. It must include methods to apportion losses caused on all the utility participants when a participant changes their dispatched amount and further, to develop a budget amendment for this project and submit this amendment to the BPMC at their next quarterly BPMC meeting." The motion was approved unanimously. 7F. HEA proposed load balancing area - Action item MOTION: Mr. Griffith made a motion to adopt Resolution 2013-05. Motion seconded by Mr. Posey. No vote was taken. BPMC Minutes 12/12/2013 and 12/23/2013 Page 17 of 21 MOTION: Mr. Janorschke made a motion to table Resolution 2013-05. Motion seconded by Mr. Foutz. The motion to table was approved with four in favor and two opposed (MEA & CEA). MOTION: Mr. Griffith made a motion to bring Resolution 2013-05 Telemetry of Bradley Lake of the Chugach load balancing area to the next Bradley Lake Project Management Committee meeting to be called by the Chair. Motion not seconded. No vote was taken. 7G. HEA O&M operator status - Action item MOTION: Mr. Griffith made a motion to adopt Resolution 2013-06 as amended, Change of project operator. Motion seconded by Mr. Borgeson. Ms. Fisher-Goad stated she is going to vote no on this resolution and requests discussion at some point with respect to the concerns. She noted BPMC is six months into a five-year contract. Mr. Griffith asked if AEA has veto authority on this resolution. Mr. Gibson stated his review of this resolution is that it is an advisory resolution, which would need a majority of the quorum to pass. Mr. Janorschke requested explanation of the basis for the statement regarding that this is no longer in the best interest of the project. He asked if a cost analysis has been prepared. Mr. Borgeson does not believe a cost analysis has been done. Mr. Borgeson explained his support for this resolution comes from the fact that the last time the contract was renewed there was not a cost analysis done on whether Homer should continue. He stated there is no intent to break the existing contract and believes it is time to put everyone on notice, especially Homer, there will be a different process the next time this comes up for review. Ms. Fisher-Goad stated her issue is that the first, “be it further resolved” is not consistent with the discussion. Chair Evans believes the nature of the wording is a housekeeping issue and AEA would be obligated to inform HEA of the vote and does not preclude any other activities. Ms. Fisher-Goad believes the message has been delivered, given the fact there is a motion to adopt the resolution. Chair Evans respectfully disagreed because it was eclipsed the last time the contract was renewed. Mr. Borgeson requested Mr. Gibson expound on his reason for believing this resolution is advisory. Mr. Gibson explained the direction is to immediately provide notice that the contract will not be renewed. It is not a termination notice. Mr. Bjorkquist believes the concern with the language in this resolution is in giving notice, the contract is not going to be renewed. This changes the dynamic of the contract between AEA and Homer Electric. Currently the way the contract works is the agreement continues unless two years' prior notice is given. This resolution is saying the contract will not be renewed. If this passes, AEA has to affirmatively do something different to get a new operator in 2018 or to continue the contractual relationship with Homer, rather than just allowing the automatic renewal to take place. Mr. Gibson stated nothing can be done for four years and six months. The BPMC is instructing AEA, the contractor of the O&M agreement, to not automatically renew the contract for another five years. Mr. Bjorkquist stated this resolution would take away the possibility of an automatic renewal in 2016. He noted in order for AEA to contract with Homer, AEA will have to proactively do BPMC Minutes 12/12/2013 and 12/23/2013 Page 18 of 21 something, rather than allowing the automatic renewal under the current agreement. Mr. Gibson stated the BPMC could pull this resolution back. Mr. Bjorkquist is not certain the notice can be withdrawn, which is the concern. He advised this is implementing a contract between AEA and Homer Electric and AEA cannot unilaterally force Homer back into what was the provision with the automatic renewal. That is under the contract as it now exists. Homer would have to at least accept the withdrawal and agree to it. Mr. Borgeson asked how many automatic renewals are there in the contract with Homer as the operator. Mr. Bjorkquist stated it is on a five-year rotating basis. Mr. Borgeson asked if the term ever ends. Mr. Gibson stated there are ways to terminate it, but there are going to be three evergreens and stop. There are issues that if Homer cannot perform under the budget they are given, they can provide notice. Mr. Bjorkquist stated there are mechanisms for termination if there is cause. Mr. Borgeson asked for an explanation as to why there is automatic renewal in the contract. Mr. Gibson stated that was bargained for in the agreement between HEA, AEA and the BPMC. Mr. Bjorkquist stated it also provides some administrative efficiencies for AEA. Ms. Fisher-Goad stated her issue with this language is what happens between now and four-and-a- half years, because right now this resolution is saying AEA needs to provide notice that the O&M agreement will not be renewed. The resolution gives AEA no directional perspective what the BPMC wants done with respect to how the consistency of the operation of the project should be maintained. Ms. Fisher-Goad said it was mentioned no analysis was done in 2008 when this was originally negotiated, perhaps BPMC would like to give AEA some direction with respect to that issue. She noted there are costs associated with terminating, wind-down and demobilization. Ms. Fisher-Goad commented there are clearly some issues the BPMC wants AEA to explore with respect to Homer, but she does not believe this resolution addresses those issues and is incomplete. She recommends the BPMC to give direction to AEA. Ms. Fisher-Goad gave a commitment to work to make sure that AEA does the appropriate analysis with respect to the operation of the project. Two amendments were given and accepted. "Now, therefore, it is hereby resolved by the Committee as follows: That AEA is directed to immediately provide notice to HEA that the project O&M agreement will not be automatically renewed without a cost benefit analysis and management review being performed." The second amendment reads; "AEA notify the Committee when the notice has been provided to HEA that its services as operator under the project O&M agreement will not be automatically renewed without a cost benefit analysis and management review being performed and therefore could conclude July 1, 2018." Ms. Fisher-Goad recommended AEA will come back at the next quarterly meeting with any budget impacts with respect to the work that needs to be completed for the cost benefit analysis. Mr. Borgeson stated AEA can bring any budget impacts to the next annual meeting. Mr. Janorschke requests the sentence be stricken which reads; "the Committee has determined that it is in the best interest of the purchasing utilities.". Mr. Janorschke does not believe anything has been determined yet, other than the desire to have a management and budget review. Mr. Janorschke stated he was surprised to hear counsel reference some concerms regarding HEA and AEA referenced issues regarding HEA. Mr. Janorschke noted he is not aware of any concerns or issue at Bradley and HEA's performance to date. Mr. Janorschke requested if any participants have issues or concerns on how Bradley is operated and maintained, please let HEA know because corrections cannot be made if the issues are not brought forward. BPMC Minutes 12/12/2013 and 12/23/2013 Page 19 of 21 Mr. Janorschke asked if the next agenda would include a resolution on the dispatch agreement. He believes it is appropriate to review all of the agreements. Chair Evans stated he would place Mr. Janorschke's request on the next agenda. The motion was approved with one opposed (HEA). 7H. Battle Creek update Chair Evans invited Mr. Carey to provide an update on Battle Creek and asked if he was substantially increasing the budget for the project. Mr. Carey advised an independent cost estimate has been conducted and came in verbally at $60 million but he has not seen the document yet. Chair Evans asked if the numbers have been rerun on the economics at the $60 million target. Mr. Carey stated he has not rerun the numbers. Chair Evans asked if we are still standing by the 36,000 megawatt hours. Mr. Carey believes the FERC amendment is using 37,000 megawatt hours. Mr. Borgeson stated he does not believe the additional cost will dramatically impact the cost of power out of the project. He asked over how many years the cost will be spread. Mr. Carey believes they are using 35 years. Chair Evans noted that is a 20 percent increase. Mr. Carey thinks the interest rate will be one of the biggest drivers. Mr. Griffith asked what happens if there is no additional state money added to this project. Mr. Carey advised AEA would proceed with the amendment and the go/no-go decision with regard to construction can be made after returning from FERC. There will be a much greater financial analysis completed on the different rates and different financing assumptions. Mr. Griffith asked if the idea has been abandoned of the 50/50 Bradley Lake participation arrangement. Mr. Griffith asked if Mr. Carey is suggesting the utilities carry all of the debt. Ms. Fisher-Goad requested to answer instead of Mr. Carey. Ms. Fisher-Goad stated there will be a point when the BPMC will need to make a decision if state support cannot be found for a portion of the cost and whether it is worth the continuation, potential construction and financing. Ms. Fisher- Goad noted Ms. Walker has been brought back to look at this issue and help work through the existing power sales agreement and bring potential financing options back to the Committee after session. Ms. Fisher-Goad advised there is no additional cost to BPMC for this because it is part of the current financial arrangement. Mr. Griffith commented a lot more will be known after session. Mr. Borgeson asked if the utilities need to contribute any additional funds to do the studies to get to a go or no-go decision. Ms. Fisher-Goad believes no additional funds are needed. Mr. Borgeson asked if the utilities would have a chance to opt out or not pay for any additional expenses on this issue before they were incurred. Ms. Fisher-Goad advised that the process would be similar to other motions the BPMC has made to support this project with additional funds, because there are a combination of Renewable Energy Fund dollars associated with this, the state's direct appropriation through the existing project, and also the $500,000 from BPMC. Mr. Griffith believes the contribution was $670,000. Mr. Borgeson asked if BPMC would be able to stop all further work on this project by a vote. Ms. Fisher-Goad agreed. Mr. Borgeson asked if AEA would have a veto power over this vote. Chair Evans stated BPMC came up with the original seed money to do the concept and high level engineering. He noted Chugach procured a grant and turned that over on behalf of the BPMC to the BPMC Minutes 12/12/2013 and 12/23/2013 Page 20 of 21 state of Alaska for further evaluation, plus the BPMC contributed budget money. Chair Evans believes the total contribution has been between one million and $1.5 million. Ms. Fisher-Goad reported there are federal lands associated with the project boundaries and AEA has asked Department of Natural Resources (DNR) to evaluate seeking the conveyance of those lands. Since FERC has changed their rules, there is an economic benefit for those BLM lands to potentially be conveyed to the state. AEA is working with DNR and expect to have another update. Mr. Posey asked approximately how many acres would be transferred. Mr. Carey stated a bit over 5,000 acres. Mr. Posey asked if these acres come out of the state's entitlements. Mr. Carey and Ms. Fisher-Goad agreed. Ms. Fisher-Goad advised it has been selected, but has not been conveyed and those are some of the issues AEA is working with DNR. Mr. Posey asked if there are competing selections or other groups. Ms. Fisher-Goad stated DNR needs to provide their evaluation. There is a financial benefit to the utilities and the rate payers that was not there previously. Chair Evans asked if there are any plans by the state to assess a fee to the project for the land. Ms. Fisher-Goad does not believe so. Chair Evans advised the next agenda will not include an update on Battle Creek. Item 7F was tabled and will be on the next agenda. The transmission services agreement will be on the next agenda. Unfinished Items L., K. and N. will be on the next agenda. The work assignments include O&D to address the dynamic scheduling resolution, reliability rules as they apply to the plant, and the previous assignment was a management review of the governor project. Chair Evans believes there was a recommendation that the technical coordinating committee would be reformed under that assignment. Chair Evans advised he will send out a memo to reform the TCC and work with the state of Alaska. Chair Evans stated the O&D Committee should provide a recommendation for the appropriate treatment of losses across utility systems. Mr. Griffith asked what was the assignment concerning the fish water debris removal issue. Mr. Owens stated AEA was to address the FERC and the other state agencies to see about the variance of fish water flows. Mr. Janorschke invited the BPMC to meet at Bradley for the next meeting and the Committee can tour the facility. 8. ADJOURNMENT There being no further business for the committee, the meeting adjourned. BY: - Bradley Evans, Chair Attest: eae Siar Ky 1K \ Sara Fisher-Goad Alaska Energy Authority, Secretary BPMC Minutes 12/12/2013 and 12/23/2013 Page 21 of 21 = ALASKA —= ENERGY AUTHORITY BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Thursday, December 12, 2013-— 1 p.m. Alaska Energy Authority’s Board Room 813 West Northern Lights Boulevard, Anchorage, AK 1. CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA COMMENTS / MOTION FOR APPROVAL APPROVAL OF PRIOR MEETING MINUTES - July 9, 2013 NEW BUSINESS 2013 financial audit — Action item Bradley SVC maintenance agreement — Action item Homer Electric Association (HEA) transmission tariff filing — Action item Adoption of Reliability Standards — Action item Implementation of dynamic scheduling — Action item HEA proposed load balancing area — Action item HEA O & M operator status — Action item Battle Creek update Fish water screen debris removal Fish water flows Purchase or lease of Soldotna-Quartz Creek line Kenai outage in November 2013 . Status of governor replacement project Dispute resolution process 8. ADJOURNMENT oy |S | ae) | | | | ZZr AS moOmMMoOO DD To participate by teleconference, dial 1-800-315-6338 and use code 3074#. 813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free (Alaska Only) 888.300.8534 F 907.771.3044 = ALASKA _ ENERGY AUTHORITY BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Thursday, December 12, 2013-— 1 p.m. Alaska Energy Authority’s Board Room 813 West Northern Lights Boulevard, Anchorage, AK CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA COMMENTS / MOTION FOR APPROVAL APPROVAL OF PRIOR MEETING MINUTES -— July 9, 2013 NEW BUSINESS 2013 financial audit — Action item Bradley SVC maintenance agreement — Action item Homer Electric Association (HEA) transmission tariff filing — Action item Adoption of Reliability Standards — Action item Implementation of dynamic scheduling — Action item HEA proposed load balancing area — Action item HEA O & M operator status — Action item Battle Creek update Fish water screen debris removal Fish water flows Purchase or lease of Soldotna-Quartz Creek line Kenai outage in November 2013 . Status of governor replacement project Dispute resolution process 8. ADJOURNMENT Ba SS | ee ee ie ee ZEP ASM BOM OO Dp To participate by teleconference, dial 1-800-315-6338 and use code 3074#. 813 West Northern Lights Boulevard Anchorage, Alaska 99503 1 907.771.3000 Toll Free (Alaska Only) 888.300.8534 F 907.771.3044 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority, Anchorage, Alaska July 9, 2013 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 8:34 a.m. 2. COMMITTEE MEMBERS ROLL CALL Cory Borgeson Golden Valley Electric Association (GVE sme Bryan Carey Alaska Energy Authority (AEA) “ - Brad Evans Chugach Electric Association, (Cc A) Joe Griffith Matanuska Electric Associ , James Posey Anchorage Municipal Li: Harvey Ambrose Homer Electric Associatiot John Foutz City of Seward mn ) 3 é - Power (AML&P) wea 3. y Se Gene Therriault, Wayne Dyok (AEA); Knlekcers nen (AIDEA); Don Zoerb (MEA); Burke Wick, Brian Hickey (CEA); Brad Janorschke, Alan Owns, Bob] ay (HEA);Brian Bjorkquist (Department of Law); Bernie Smith (Regulatory Ggpmission P i Daniels (MEA); Sunny Morrison (Accu- Type Depositions); 4. PUBLIC COMMENT There were.no SBiBlic.< comments. 5. fernpa CCOMENTS MOTION FOR ova The agenda was approved as amended. ““ 6. APPROVAL OF PRIOR MEETING MINUTES - May 17, 2013 The May 17, 2013 meeting minutés were approved as presented. Te NEW BUSINESS TA. Annual Election of Officers, Chairman and Vice-Chairman MOTION: Mr. Griffith made a motion to reelect the current officers. Motion seconded by Mr. Posey. The motion was approved unanimously. 7B. Budget Amendment Chair Evans requested Item 7, Budget Amendment be addressed before Item 7, Executive Session. Chair Evans inquired about the proposed budget amendment and requested Mr. Janorschke review the issues. BPMC Minutes 7/9/2013 Page 1 of 2 Mr. Janorschke explained the budget amendment is in excess of 5% of the budget. He stated the budget amendment is for the relay and meter replacement project. There are three phases. The first phase is the design work completed by Electric Power Systems (EPS). It is 95% complete and could come in about $33,000 under budget. Phases Two and Three consist of the project outage/project management testing commissioning and the wiring contract. Before EPS had completed the Phase One design work, they submitted an estimate for Phases Two and Three for $417,000, which HEA included in the Bradley budget. Within the last 30 to 45 days, after the completion of the Phase One design work, EPS updated their estimate for the construction of Phases Two and Three to $827,000. HEA responded by getting additional details from EPS and went or bid with two other vendors. The determination was EPS' bid was accurate. HEA will discuss thi further with the Operations & Dispatch (O&D) Committee on Thursday and if O&D approves the budg ndment, then a contract can be Mr. Griffith asked if, in effect, the project cost doubl ; 2d. the cost of Phases Two i furthe i Amt Fose noted the total Tail ‘to be 12-hour workdays, seven days a ‘ons for the shortfall of about ited to communicate to the budget adjustment of $410,000 to the ed by HEA for replacing the Electro Committee. Motion seconded by Mr. minimize outage time at Bradley Lake, week, which incurs overtime and expenses e $410,000. No work has started for Phases Two aR. HEA Committee before they aa ith the project its devices The other two viable bidders ee project Oi MOTION: Mr. Borges¢ Mechanical Relays, suijee to appr val of the O Ambrose. The motion was approve ay MOTION: Mr. Careyl ‘made a | motion to Ph eee, ive Session to discuss the Battle Creek Diversion project. Motion seconded, Pa! - motion Was approved unanimously. 7C. Executive Session: Battle Creek Pheersion project update - 8:49 to 9:35 a.m. 8. ADJOURNMENT & There being no further business for the committee, the meeting adjourned. BY: Bradley Evans, Chair Attest: Sara Fisher-Goad Alaska Energy Authority, Secretary BPMC Minutes 7/9/2013 Page 2 of 2 RED-LINED CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-01 Resolution Approving SVC Operation and Maintenance ContraetAgreement WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc. ("Chugach"), Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority"—), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the eCommittee is required to make aa ” for the ane and a eee of the Project, and duling lispatch ement of the Project power...” WHEREAS, Chugach owns and operates electric transmission facilities and is engaged in the transmission, purchase, and sale of electric power and energy; WHEREAS, Chugach as owner of the Daves Creek facilities and historical lessee of the 115 kV portion of the Soldotna Substation, has faithfully, prudently and successfully operated and maintained the SVS facilities a these two locations for over 20 years, and further agrees to continue to operate and maintain the SVS facilities for the benefit of the Bradley Lake Project; WHEREAS, the Authority and Chugach desire to define the terms and conditions governing the operation and maintenance of the SVS facilities at the above described substations; and WHEREAS, pursuant to the Power Sales Agreement, the BPMC has approved the terms of the attached SVS Maintenance Agreement;_and, WHEREAS, the Committee has duly considered whether it is in the best interests of the Purchasing Utilities and their respective customers or members for Chugach Eleetrie-Asseciation to continue in its role as operator and maintainer of the Project Static VAR compensators at Soldotna Substation and Daves Creek. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee, has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the Alaske-EnergyAuthority enter into the attached SVS operations and maintenance agreement entitled, “BRADLEY LAKE HYDROELECTRIC PROJECT STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT Between CHUGACH ELECTRIC ASSOCIATION, INC., AND ALASKA ENERGY AUTHORITY DECEMBER 12, 2013 Wewith-_Chugach Eleetrie—Asseeiationne—for the operation and Mmaintenance of the Project Bradley Lake-Static VAR Compensator Systems _at Soldotna Substation and Daves Creek.- DATED at Anchorage, Alaska, this 12" day of December, 2013. Chair (SEAL) ATTEST Secretary RESOLUTION 2013-01 SVC Maintenance Contract CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-01 Resolution Approving SVC Operation and Maintenance Agreement WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc. ("Chugach"), Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority"), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the Committee is required to make arrangements...” for the operation and maintenance of the Project, and the scheduling, production, and dispatch of the Project power... WHEREAS, Chugach owns and operates electric transmission facilities and is engaged in the transmission, purchase, and sale of electric power and energy; WHEREAS, Chugach as owner of the Daves Creek facilities and historical lessee of the 115 kV portion of the Soldotna Substation, has faithfully, prudently and successfully operated and maintained the SVS facilities a these two locations for over 20 years, and further agrees to continue to operate and maintain the SVS facilities for the benefit of the Bradley Lake Project; WHEREAS, the Authority and Chugach desire to define the terms and conditions governing the operation and maintenance of the SVS facilities at the above described substations; WHEREAS, pursuant to the Power Sales Agreement, the BPMC has approved the terms of the attached SVS Maintenance Agreement; and, WHEREAS, the Committee has duly considered whether it is in the best interests of the Purchasing Utilities and their respective customers or members for Chugach to continue in its role as operator and maintainer of the Project Static VAR compensators at Soldotna Substation and Daves Creek. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee, has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the Authority enter into the attached SVS operations and maintenance agreement titled, “BRADLEY LAKE HYDROELECTRIC PROJECT STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT Between CHUGACH ELECTRIC ASSOCIATION, INC., AND ALASKA ENERGY AUTHORITY DECEMBER 12, 2013 with Chugach for the operation and maintenance of the Project Static VAR Compensator Systems at Soldotna Substation and Daves Creek. DATED at Anchorage, Alaska, this 12" day of December, 2013. Chair (SEAL) ATTEST Secretary RESOLUTION 2013-01 SVC Maintenance Contract RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-02 HEA Tariff Filing . WHEREAS, on December 8, 1987, Chugach Electric Association, Inc. (“Chugach”), Golden Valley Electric Association, Inc. (“GVEA”), the Municipality of Anchorage d/b/a Municipal Light and Power (“ML&P”), the City of Seward d/b/a Seward Electric System (“Seward”), and Alaska Electric Generation & Transmission Cooperative, Inc. (“AEG&T”), and Additional Parties Homer Electric Association, Inc. (“HEA”) and Matanuska Electric Association, Inc. (“MEA”), entered into the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (“Power Sales Agreement”) with the Alaska Power Authority (“Authority”) (collectively “Project participants”); and WHEREAS, HEA, GVEA, MEA, ML&P, Seward, and AEG&T also entered into the Agreement for the Wheeling of Electric Power and for Related Services (“Services Agreement”) with Chugach; and WHEREAS, Chugach, GVEA, ML&P and AEG&T also entered into the Agreement for the Sale of Transmission Capability (“Transmission Agreement”) with HEA; and WHEREAS, the Authority issued Power Revenue Bonds under the Power Revenue Bond Resolution (“Bond Resolution”); and WHEREAS, the Power Sales Agreement, the Services Agreement, the Transmission Agreement, and the Bond Resolution (“Bradley Lake Agreements”), among others, collectively set forth the arrangements, responsibilities, and obligations necessary to secure the benefits of the Bradley Lake Hydroelectric Project (“Project”) for all the Project participants; and WHEREAS, pursuant to Section 13 of the Power Sales Agreement, the Project Management Committee (“PMC”) has been formed for the purposes and with the responsibilities specified by the Bradley Lake Agreements including, without limitation, the responsibility to address disputes arising under the Bradley Lake Agreements; and WHEREAS, the State of Alaska has enacted into law provisions (AS 42.05.431(c)(1)) that exempt the Bradley Lake Agreements, and amendments to those agreements, from review or approval of the Regulatory Commission of Alaska (“RCA”) until all long-term debt for the Project is retired; and WHEREAS, HEA entered into the Agreement for the Lease of Facilities (“Lease”) with Chugach wherein Chugach agreed to lease and operate HEA’s transmission line running between the Soldotna Substation and the Quartz Creek Substation (“S/Q Line”); and WHEREAS, the Lease expires on January 1, 2014, and HEA will take over Chugach’s responsibilities and obligations for O&M on the S/Q Line under the Bradley Lake Agreements; and WHEREAS, HEA has refused to operate the S/Q Line consistent with the terms and obligations of the Bradley Lake Agreements or Chugach’s responsibilities and obligations under the Services Agreement that HEA will undertake; and WHEREAS, on November 15, 2013, HEA submitted to the RCA tariff filings TA355-32 (relating to transmission and ancillary services on the S/Q Line) and TA356-32 (relating to line losses from the transmission of energy from the Project (“Project energy”) across the S/Q Line) (collectively “HEA’s tariff filings”), which ignore and are inconsistent with HEA’s obligations under the Bradley Lake Agreements; and WHEREAS, HEA’s tariff filings attempt to unilaterally and detrimentally restructure the Bradley Lake Agreements and disregard the relevant statutes and jurisdictional structure for the resolution of disputes under the Bradley Lake Agreements; and WHEREAS, if approved, HEA’s tariff filings would improperly put at risk the security and reliability of the transmission system over which Project energy is wheeled to the Project participants; and WHEREAS, if approved, HEA’s tariff filings would improperly subvert the priority status that Project energy is entitled to be given over the S/Q Line for transmission purposes under the Bradley Lake Agreements; and WHEREAS, if approved, HEA’s tariff filings would improperly and significantly increase the cost of delivering Project energy to all other Project participants; and WHEREAS, if approved, HEA’s tariff filings would undermine the assurances and commitments made to the Project bond holders by the Authority through the Bond Resolution. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE PMC AS FOLLOWS: BE IT RESOLVED: HEA’s tariff filings raise a dispute concerning the wheeling of Project energy under the terms of the Bradley Lake Agreements that is within the primary jurisdiction and authority of the PMC to resolve. BE IT FURTHER RESOLVED: HEA’s tariff filings ignore the PMC’s role in resolving disputes relating to the wheeling of Project energy, violate the relevant statutes and terms of the Bradley Lake Agreements, put at risk the security and reliability of the transmission system over which Project energy is wheeled to the Project participants throughout the Railbelt, improperly subvert the priority status of Project energy over the S/Q Line, improperly increase the costs of delivering Project energy, and violate the assurances made to Project bond holders. BE IT FURTHER RESOLVED: The PMC will take all necessary and appropriate action to require Chugach to continue to operate the S/Q Line and to request that the RCA reject HEA’s Res 2013-02 HEA Tariff Filing Page 2 of 3 tariff filings until the dispute over the terms and conditions for the operation of the S/Q Line for the transmission of Project energy may be properly and fully addressed by the PMC. BE IT FURTHER RESOLVED: The PMC will take all necessary or appropriate action to ensure that the relevant statutes and the terms of the Bradley Lake Agreements are upheld including, without limitation, those terms that require the operator of the S/Q Line to operate it in a manner consistent with the terms of the Bradley Lake Agreements. BE IT FURTHER RESOLVED: The PMC will take all necessary or appropriate action to ensure that Project energy will continue to be delivered on an uninterrupted, priority basis along the S/Q Line to the Project participants who rely on that energy. BE IT FURTHER RESOLVED: Chugach shall continue to operate and maintain the S/Q Line in accordance with Chugach’s responsibilities and obligations under’ the Services Agreement pending the resolution of the dispute between HEA and the other Project participants. BE IT FURTHER RESOLVED: All Project participants will participate in good-faith negotiations in an effort to resolve the dispute regarding the S/Q Line to protect the priority of Project energy, and to ensure reliable, low-cost transmission service across the S/Q Line consistent with the Bradley Lake Agreements. BE IT FURTHER RESOLVED: If the dispute concerning the wheeling of Project energy over the S/Q Line has not been resolved within 90 days from the date of this Resolution, the Committee will adopt formal dispute resolution procedures, pursuant to Section 10(b) of the Services Agreement, to effectuate a final resolution of the dispute. BE IT FURTHER RESOLVED: That all Project participants will immediately designate representatives with the necessary authority to resolve the dispute and will enter into good-faith negotiations to resolve the dispute in a manner that is consistent with the Bradley Lake Agreements. BE IT FINALLY RESOLVED: During the good-faith negotiation period, all Project Participants will share relevant information in response to reasonable requests and will negotiate with each other in a manner that effectuates the intent and purpose of the Bradley Lake Agreements. DATED at Anchorage, Alaska, this 12" day of December, 2013. Chair (SEAL) ATTEST Secretary Res 2013-02 HEA Tariff Filing Page 3 of 3 CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-03 Adoption of Railbelt Reliability Standards WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power ( "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority" ), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the committee is required to arrange...” for the operation and maintenance of the Project, and the scheduling, production, and dispatch of Project power...”;and, WHEREAS, Article 3 and Article 9 of the Alaska Intertie Agreement, dated December 23, 1985 (“1985 Agreement”), provided that the Intertie Operating Committee (“IOC”) would be responsible for operating the interconnected Railbelt system and for developing operating procedures and standards practices with respect to such operations. The Intertie Management Committee (“IMC”) has assumed these responsibilities under the Amended and Restated Alaska Intertie Agreement, dated November 18, 2011 (“2011 Amended Agreement”). Further, that through Addendum No. 1 to the 1985 Agreement entitled “Reserve Capacity and Operating Reserve Responsibility” (incorporated as Exhibit H of the 2011 Amended Agreement) the Utility Participants of that agreement would be responsible for reserve requirements for the interconnected system; and, WHEREAS, the IMC (and previously the IOC) has essentially been the Railbelt reliability coordinator for the interconnected Railbelt grid for over 25 years; and, WHEREAS, there has always been close coordination between the IOC/IMC and the Committee; and, WHEREAS, Section 3.1 of the 2011 Amended Agreement provides that the IMC shall determine the operating policies and procedures for handling the obligations and responsibilities for providing Reserve Capacity and Operating Reserves for the Intertie; and, WHEREAS, the IMC has the authority to adopt operating policies and procedures, reliability standards, and enforcement mechanisms, for the Intertie; and, WHEREAS, the IMC has adopted the “Intertie Management Committee’s Railbelt Operating and Reliability Standards, updated October 1, 2013,” as the Reserve Capacity and Operating Reserves for the Intertie and as the operating policies and procedures, reliability standards, and enforcement mechanisms, with one modification made at the request of the Alaska Energy Authority (“AEA”) respecting the Alaska Intertie assets and 2011 Amended Agreement: The “sanctions” portions of the enforcement mechanisms in the “Intertie Management Committee’s Railbelt Operating and Reliability Standards, updated October 1, 2013,” shall not become effective for purposes respecting the Alaska Intertie assets and 2011 Amended Agreement until separately approved by the IMC. WHEREAS, the IMC intends to submit these reliability standards as an informational filing to the Regulatory Commission of Alaska (“RCA”). WHEREAS, the IMC has requested that the RCA exercise the authority granted to it under AS 42.05.321 and other applicable authority and to enter an order 1. Finding that the approval of these standards will serve the public convenience and necessity; 2. Formally approving the standards and finding that they are just and reasonable; and 3. Providing for mechanisms and processes for periodic review of the standards. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the Intertie Management Committee’s “Railbelt Operating and Reliability Standards, updated October 1, 2013” be adopted and applied as required to all applicable Project assets, facilities and activities; and, BE IT FURTHER RESOLVED BY THE COMMITTEE , that the Committee desires that the Operator of the Project to abide by and follow the “Railbelt Operating and Reliability Standards, updated October 1, 2013” in all aspects of the operation of the Project and deliver of energy from the Project; and, BE IT FURTHER RESOLVED BY THE COMMITTEE, that AEA and the Operator make the necessary amendments to the Project Operation and Maintenance Standards and/or Work Rules REs 2013-03 — RELIABILITY STANDARDS PAGE 2 OF3 to accommodate and effectuate this purpose and objective of this Resolution as soon as practicable and report to the Committee when the Operator is complying with the purpose and objective of this Resolution. DATED at Anchorage, Alaska, this 12" day of December, 2013. Chair (SEAL) ATTEST Secretary REs 2013-03 — RELIABILITY STANDARDS PAGE 3 OF3 RED-LINED CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-04 Adoption of Dynamic scheduling WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc.(“Chugach"), Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority" ), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the eCommittee is required to arrange...” for the operation and management,eperationmaintenance of the Project, and the scheduling, production, and dispatchimprevement of the Project power;...”==- WHEREAS, Bradley lake is within the Chugach Load Balancing Area (LBA); and, WHEREAS, dynamic scheduling provides the capability for parties outside of the Chugach LBA to dispatch thereir Project Bradley-shares in Rreal time through the Chugach SCADA/EMS System; and, WHEREAS, dynamic scheduling of the Project will provide each of the pPurchasersing Utilities maximum flexibility in efficiently using their respective shares of the Prejeets-energy and capacity produced by the Project; and, WHEREAS, Chugach, as the Project dispatcher, has the technical capabilities within its existing SCADA/EMS master station to implement dynamic scheduling; NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the dynamic scheduling be implemented for the Project. To that end, The Committee directs the Operations and Dispatch Subcommittee to work closely with Chugach to develop a scope, schedule, and budget for the implementation of master station dynamic scheduling as quickly as is reasonably practical. And further, to develop a budget amendment for this project and submit this amendment to the BPMC and the next quarterly BPMC-meeting of the BPMC. DATED at Anchorage, Alaska, this 12" day of December, 2013. (Seal) Attest Chair Secretary CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-04 Adoption of Dynamic scheduling WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc.("Chugach"), Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority" ), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the Committee is required to arrange...” for the operation and maintenance of the Project, and the scheduling, production, and dispatch of the Project power;...” WHEREAS, Bradley lake is within the Chugach Load Balancing Area (LBA); and, WHEREAS, dynamic scheduling provides the capability for parties outside of the Chugach LBA to dispatch their Project shares in real time through the Chugach SCADA/EMS System; and, WHEREAS, dynamic scheduling of the Project will provide each of the Purchasing Utilities maximum flexibility in efficiently using their respective shares of the energy and capacity produced by the Project; and, WHEREAS, Chugach, as the Project dispatcher, has the technical capabilities within its existing SCADA/EMS master station to implement dynamic scheduling; NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the dynamic scheduling be implemented for the Project. To that end, The Committee directs the Operations and Dispatch Subcommittee to work closely with Chugach to develop a scope, schedule, and budget for the implementation of master station dynamic scheduling as quickly as is reasonably practical. And further, to develop a budget amendment for this project and submit this amendment to the BPMC and the next quarterly meeting of the BPMC. DATED at Anchorage, Alaska, this 12" day of December, 2013. (Seal) Attest Chair CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-05 Telemetry of Bradley Lake into Chugach Load Balancing Area WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc.(Chugach), Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. (“HEA”), and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (the "Authority" ), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the committee is required to arrange...” for the operation and maintenance of the Project, and the scheduling, production, and dispatch of the Project power...”; and WHEREAS, as of December 31. 2013, HEA will transition from a net requirements customer of Chugach (via the tri-partite agreement) operating within Chugach’s Load Balancing Area; and, WHEREAS, on January 1, 2014, HEA will begin operating its own Load Balancing Area (LBA) and take on the duties of a Load Balancing Authority; and, WHEREAS Chugach Electric will remain the Project Dispatcher; and, WHEREAS, HEA is the Operator of the Project Power Plant and through various agreements the Project transmission lines south of Quartz Creek; and, WHEREAS, the Project facilities must telemetered out of the HEA LBA and into the Chugach LBA; and, WHEREAS, it is in the best interest of the Project and the interconnected Railbelt grid to accurately account for and allocate electrical losses; and, WHEREAS, the following LBA interchange configuration will minimize the magnitude of required Project loss adjustments, and simplify real and reactive power energy accounting. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination: The Committee has determined that it is in the best interests of the interconnected Railbelt grid, the Purchasing Utilities and their respective customers or members that Project facilities south of Quartz Creek be telemetered out of the HEA LBA and into the CEALBA with the LBA boundary defined by following interchange points: Bradley Lake MOD 2425 (real and reactive interchange with Diamond Ridge line) Soldotna 115 -69 kV transformer (real and reactive interchange ) Soldotna 115 kV line to Diamond Ridge (real and reactive interchange ) Soldotna 115 kV line to Bernice Lake (real and reactive interchange ) Soldotna LM 6000 generator (real and reactive interchange) Sterling Substation T-1 (Sterling real and reactive ) Quartz Creek Breaker 442 (Quartz to Soldotna 69 kV line) CEA, the Project dispatcher, will continue to schedule energy and capacity, for the participants delivered to CEA, at HEA’s Soldotna Substation, as currently defined in the Bradley Lake “Agreement for the Wheeling of Electric Power and for Related Services. DATED at Anchorage, Alaska, this 12" day of December, 2013. (SEAL) ATTEST Secretary RES 2013-05 LOAD BALANCING CONSENTING AND APPROVING RESOLUTION OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 2013-06 Change of Project Operator WHEREAS, pursuant to Section 13 of the Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power (the "Power Sales Agreement") dated as of December 8, 1987, by and among the Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., the Municipality of Anchorage d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc., and as Additional Parties Homer Electric Association, Inc. and Matanuska Electric Association, Inc. (as used herein collectively, the "Purchasing Utilities"), and the Alaska Energy Authority (“AEA" ), the Project Management Committee (the "Committee") has been formed for the purposes and with the responsibilities specified by the Power Sales Agreement; and WHEREAS, pursuant to section 13 (c) (ii) (A) the committee is required to arrange...” for the operation and maintenance of the Project, and the scheduling, production, and dispatch of the Project power...”; and WHEREAS, to provide for the operation and maintenance of the Project and Project Related Facilities, the Committee entered into a Master Maintenance and Operating Agreement (“Master M&O Agreement”) with the AEA to establish a contract administration and budgeting procedure for contracting for the operation and maintenance of the Project and Project Related Facilities, and the related services, facilities, and equipment; and, WHEREAS, the Committee is authorized under Master M&O Agreement and the Committee Bylaws (adopted pursuant to the terms of the Power Sales Agreement), to approve contracts for the operation and maintenance of Project facilities; and, WHEREAS, the Committee approved the contract between AEA and Homer Electric Association, Inc. (“HEA”), for HEA to provide O&M services pursuant to the “Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association, Inc. and Alaska Energy Authority” dated effective July 1, 2008 (“Project O&M Agreement”); and, WHEREAS, the Committee no longer believes it is in the best interests of the Project that HEA be utilized to provide the services of Operator under the Project O&M Agreement; and, WHEREAS, the terms of the services of require that the Operator be provided with timely notice that the Project O&M Agreement will be terminated; and, WHEREAS the Committee desires to provide HEA with sufficient notice of its intention to not utilize the services of HEA; WHEREAS, the Committee has adopted this Resolution to acknowledge its intent to not renew HEA as Operator under the Project O&M Agreement pursuant to its authority under the Master M&O Agreement. NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE COMMITTEE as follows: Committee Determination. The Committee has determined that it is in the best interests of the Purchasing Utilities and their respective customers or members that the services of HEA as Operator of the Project not be extended beyond the current term which under the terms of the Project O&M Agreement ends on July 1, 2018. BE IT FURTHER RESOLVED BY THE COMMITTEE, that AEA is directed to immediately provide notice to HEA that the Project O&M Agreement will not be renewed. BE IT FURTHER RESOLVED BY THE COMMITTEE that AEA notify the Committee when the notice has been provided to HEA that its services as Operator under the Project O&M Agreement will not be renewed and therefore conclude July 1, 2018. BE IT FURTHER RESOLVED BY THE COMMITTEE that AEA notify the Committee when AEA and HEA are to meet to discuss the arrangements necessary for the orderly takeover of duties of the Operator in accordance with Section 18 (a) of the Project O&M Agreement. DATED at Anchorage, Alaska, this 12" day of December, 2013. Chair (SEAL) ATTEST RES 2013-06 CHANGE OF PROJECT OPERATOR Audited Financial Statements and Other Financial Information BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Years ended June 30, 2013 and 2012 SWALLING & ASSOCIATES Certified Public Accountants & Business Advisers BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Financial Statements and Other Financial Information Years ended June 30, 2013 and 2012 Contents Independent Auditor’s Report Balance Sheets Statements of Revenues and Expenses Statements of Cash Flows Notes to Financial Statements Independent Auditor’s Report on Other Financial Information Statements of Expenses La! ro I ty wn > w N io 6-11 12 13 SWALLING & ASSOCIATES Certified Public Accountants & Business Advisers INDEPENDENT AUDITOR’S REPORT Bradley Lake Project Management Committee Anchorage, Alaska We have audited the accompanying special-purpose financial statements of the Bradley Lake Project Management Committee (a project management committee) Operating and Revenue Funds, which comprise the special-purpose balance sheets as of June 30, 2013 and 2012, and the related special-purpose statements of revenues and expenses, and special-purpose statements of - cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements The Bradley Lake Project Management Committee is responsible for the preparation and fair presentation of these special-purpose financial statements in accordance with the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond Resolution as described in Note A. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility . Our responsibility is to express an opinion on these special-purpose financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 5 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. F vasa ‘ati 3201 C Street, Suite 4065 : Anchorage. Alaska 99503 endent member of DFKIn tional -a worldwide ossociation Sts eens aaectalecenentingla (lemependibuslnrceacdvivery Ph 907.563.7977 - Fax 907.561.7683 - www.swallingepas.com Bradley Lake Project Management Committee Opinion In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the assets, liabilities and surplus of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30, 2013 and 2012, and its revenue and expenses and its cash flows for the years then ended, on the basis of accounting described in Note A. Basis of Accounting We draw attention to Note A of the special-purpose financial statemients, which describes the basis of accounting. The financial. statements are prepared on the basis of the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond resolution, as discussed in Note A, which is a basis of accounting other than accounting principles generally accepted in the United States of America to comply with accounting requirements of the bond resolution referred to above. Our opinion is not modified with respect to that matter. They are not intended to be a complete presentation of the Bradley Lake Project Management Committee’s financial statements. Restriction on Use This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Suonllieg 6 Boareulls PC. Anchorage, Alaska December 4, 2013 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS BALANCE SHEETS June 30, 2013 and 2012 ASSETS Current assets: Investments (Note B) Due from R & C Fund (Note A) Other receivable Prepaid expense Total assets LIABILITIES AND SURPLUS Current liabilities: Due to AEA (Note D) Accounts payable Payable to utilities -O & M (Note E) Payable to utilities — R & C refund (Note A) Total liabilities See accompanying notes to the financial statements. 5 It — oo $ 1,466,992 767,078 2,150 5.640 $2,241,860 $ 305,117 905,331 264,334 767.078 $2,241,860 2012 $ 2,086,967 773,898 5.640 $2,866,505 $ 389,806 908,063 794,738 773.898 $2,866,505 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUES AND EXPENSES Years ended June 30, 2013 and 2012 2013 Variance Favorable 2012 Budget Actual (Unfavorable) Actual Revenues: Utility contributions, net of surplus refund $ 17,207,567 $16,176,157 $ (1,031,410) $ 15,408,840 Interest receipts 1,868,406 1,936,516 68,110 1,959,302 State Renewable Energy - 477,363 477,363 22,637 Total revenue 19,075,973 18,590,036 (485,937) 17,390,779 Expenses, fixed asset replacements, transfers and debt service: Operations and maintenance 6,144,846 5,070,732 1,074,114 4,733,201 Debt service 12,107,950 12,107,950 - 12,100,750 Arbitrage transfer 220,000 296,812 (76,812) 196,112 Fixed asset replacements 520,625 554,627 (34,002) 401,579 Battle Creek — State - 477,363 (477,363) 22,637 Interfund transfer 82,552 82,552 - (63,500) Total expenses, fixed asset replacements, transfers and debt service 19,075,973 18,590,036 485.937 17,390,779 Excess of revenues over expenses, fixed asset replacements, transfers and debt service $ See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS Years ended June 30, 2013 and 2012 Cash flows from operating activities: Excess of revenues over expenses, fixed asset replacements, transfers and debt service Adjustments to reconcile excess of revenues over expenses, fixed asset replacements, transfers and debt service to net cash provided by (used in) operating activities: Decrease (increase) in accounts receivable (Decrease) increase in accounts payable Decrease in amounts due to other funds (Decrease) increase in payable to utilities Decrease in R & C refund Net cash used in operating activities Available cash and cash equivalents, beginning of year Available cash and cash equivalents, end of year Supplemental disclosure of cash flows information: Interest paid See accompanying notes to the financial statements. =) it iS — es) 4,670 (87,233) (188) (530,404) (6.820) (619,975) 2.086.967 $1,466,992 it at — rN (583,628) 164,886 (320,879) 195,264 (537,901) (1,082,258) 3,169,225 $2,086,967 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2013 and 2012 NOTE A: SIGNIFICANT ACCOUNTING POLICIES Description of Business: The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement) dated December 8, 1987. The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the Project), which became operational in September 1991, and the scheduling, production and dispatch of power. The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement - Chugach Electric Association, Inc.; Golden Valley Electric Association, Inc.; the Municipality of Anchorage (Municipal Light & Power); the City of Seward (Seward Electric System); and the Alaska Electric Generation & Transmission Cooperative, Inc. (AEG&T). AEG&T assigned its rights pertaining to Homer Electric Association, Inc. (HEA) under the Power Sales Agreement to Alaska Electric and Energy Cooperative, Inc. (AE&EC) in 2003. HEA and the Matanuska Electric Association, Inc. (MEA) are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T and AE&EC have no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities, including: establishing procedures for each party's water allocation, budgeting for annual Project costs and calculating each party's required contribution to fund annual Project costs. Committee approval of operations and maintenance arrangements for the Project, sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of: 1) 50 years after commencement of commercial operation or 2) the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction of all other payment obligations under the Power Sales Agreement. Renewal options for additional terms exist. At June 30, 2013, slightly more than $2.5 million of capital additions occurred relating to the Battle Creek Diversion project to enhance the Bradley Lake Hydroelectric Project. The funding for this project comes from State appropriations and the Bradley Lake R & C Fund. This project would divert the upper part of Battle Creek into Bradley Lake. The increase in water will enable the Project to produce an additional annual average of 36,000 MW-hrs. (nearly a 10% increase in Bradley Lake’s annual energy). Diversion engineering is in final design and various environmental studies are ongoing. An amendment to the Bradley Lake Hydroelectric Project Federal Energy Regulatory Commission license is expected in 2014 with construction completed in 2016. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2013 and 2012 NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued) Establishment of Trust Funds: Article V, Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund, including an Operating Reserve account, to be held by AEA. In actuality these funds, along with the Debt Service, Excess Investment Earnings (arbitrage), and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle, Washington. All deposits, including utility contributions and interest transferred from other funds, are made into the Revenue Fund, which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund; Operating Reserve Fund; Operating Fund; Revenue Fund; Capital Reserve Fund; and the Renewal & Contingency Fund when the fund balance is $5,000,000 or greater. Revenue and Expense Recognition: Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement. Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received. Operating and maintenance expenses are recognized when incurred, while transfers to Debt Service Fund and Excess Earnings Funds are recognized when the transfer is made. Purchases of fixed asset replacements are expensed when purchased. The Operating Fund reimburses the Renewal and Contingency Reserve Fund (R & C Fund) for capital costs over a four year period. Transfers to the R & C Fund for repayment of funds withdrawn for capital costs occur monthly based on the budgeted R & C expenditures. At year end the actual Operating Fund and R & C Fund expenses are compared to the actual revenue and a refund is given to the utilities when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed revenues. At June 30, 2013, the surplus to be refunded was $767,078, resulting in a net balance due to the R & C Fund of $372,249. The balance due to the R & C Fund at June 30, 2012 was $328,496. Estimates: The preparation of the special-purpose financial statements of the Operating and Revenue Funds requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2013 and 2012 NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued) In fiscal year 2009, the Federal Energy Regulatory Commission (FERC) land use fee increased significantly due to a new methodology for estimating the fee. The increased 2009 fee of $378,141 was paid to FERC and the Committee participated in litigation to dispute this new methodology. In fiscal year 2010, $380,000 was accrued for the fee, but was not paid pending an outcome of the litigation. During fiscal year 2011, the dispute was settled and the new land use fee methodology was discontinued. The fees for fiscal years 2009, 2010 and 2011 were estimated to be the same amount billed prior to the new methodology resulting in a refund receivable of $190,270 at June 30, 2011 that was received in September, 2011. Additional information regarding the refund of FERC fees is contained in footnote E, Surplus Refund. Income Taxes: The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a) of the Internal Revenue Code. Therefore, the Committee had no deferred tax liabilities or assets or tax carryforwards as of June 30, 2013 and 2012 and no current or deferred tax expense for the years then ended. NOTE B: INVESTMENTS Substantially all of the balances in the following funds are invested in collateralized investment agreements with JP Morgan Chase Bank through the trust department of US Bank. The specified interest rate for monies from the Operating and Revenue Funds invested in the agreements is 7.38% per annum. Balances at June 30, 2013 and 2012 are as follows: 2013 2012 Operating Fund $ 1,310,642 $ 1,176,629 Revenue Fund 156,350 910,338 Total investments $1,466,992 $_2,086,967 Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale. Investments are presented at aggregate cost. For purposes of the cash flow statements, management considers the full amount of the investment balance to be cash available for operations. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2013 and 2012 NOTE C: MAJOR CONTRACTS AND AGREEMENTS During May 1994, the Alaska Energy Authority entered into the Master Maintenance and Operating agreement with the Committee. The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement. The term of the Master Agreement is indefinite, remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists. This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project, subject to the approval of the Committee. On behalf of the Committee, the AEA entered into an agreement with Chugach Electric Association, Inc. (CEA) in August 1996, for the provision of all services necessary to dispatch the Project's electric power output. The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996, the Alaska Energy Authority entered into an agreement with CEA on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. An operation and maintenance agreement dated February 11, 1994, was executed between Homer Electric Association, Inc. and the Alaska Energy Authority. This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association, Inc. The agreement, as amended effective July 1, 2008, is through June 30, 2013 and automatically continues in successive five year terms thereafter unless terminated by either party as set forth in the amended agreement. Generally, to avoid an automatic, successive five year term extension, notice of termination by either party must be given two years in advance of the termination date. HEA is to be reimbursed for costs associated with the operation, maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August 1996, the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project. The transmission agreement continues from year to year, except upon written notice to terminate by either party. Notice of termination must be given six months in advance of termination dates. In June 1999, the transmission agreement was again amended to require HEA to provide communication services in addition to the other services. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2013 and 2012 NOTE D: RELATED PARTY TRANSACTIONS During the years ended June 30, 2013 and 2012, costs incurred under the various contracts with related parties described in Note C were as follows: 2013 201 Homer Electric Association, Inc. — operation, maintenance, communications and fixed asset replacements $ 2,627,680 $ 2,480,366 Chugach Electric Association, Inc. — substation service maintenance $ 316,905 $ 126,578 Alaska Energy Authority — administrative fees $ 200,000 $ 200,000 For the years ended June 30, 2013 and 2012, Chugach Electric Association, Inc. provided dispatch services to the Committee at the agreed upon amount which is zero. Amounts payable to related parties at June 30, 2013 and 2012 were as follows: 2013 201 Included in accounts payable: Homer Electric Association, Inc. $ 499,683 $ 589,952 Chugach Electric Association, Inc. $ 16,281 $ 1,586 Due to others: Alaska Energy Authority — short-term borrowings for vendor payments $ 305,117 $ 389,806 NOTE E: SURPLUS REFUND AND UTILITY CONTRIBUTIONS RECEIVABLE The $794,738 surplus at June 30, 2012 was refunded to member utilities in fiscal year 2013 pursuant to the Power Sales Agreement and direction of the Committee. At June 30, 2013, a surplus of $264,334 will be refunded to member utilities in fiscal year 2014 pursuant to the Power Sales Agreement and direction of the Committee. 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 2013 and 2012 NOTE F: SUBSEQUENT EVENTS The Committee has evaluated subsequent events through December 4, 2013, the date the financial statements were available to be issued, and did not identify anything requiring additional disclosure. 11 SWALLING & ASSOCIATES Certified Public Accountants & Business Advisers INDEPENDENT AUDITOR’S REPORT ON OTHER FINANCIAL INFORMATION Bradley Lake Project Management Committee Anchorage, Alaska : We have audited the special-purpose financial statements of the Bradley Lake Project Management Comimittee Operating and Revenue Funds as of and for the years ended June 30, 2013 and 2012, and our report thereon dated December 4, 2013, which expressed an unmodified opinion on those special-purpose financial statements, appears on the page preceding the balance sheets. Our audits were conducted for the purpose of forming an opinion on the special-purpose financial. statements taken as a whole. The supplemental special-purpose Statements of Expenses are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements. The information has been subjected to the auditing procedures applied in the audits of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the . underlying accounting and other records used to prepare the special-purpose financial statements or to the special-purpose financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the special-purpose financial statements taken as a whole. This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Fuallng FE Gesell, PC . Anchorage, Alaska December 4, 2013 3201 C Street. Suite 405. : Anchorage. Alaska 99503 independent member of DFK International -o worldwide association Se independent accounting firms and business advisers Ph 907.563.7977 - Fax 907.561.7683 - www.swallingcpas.com BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES Years ended June 30, 2013 and 2012 2013 Variance Favorable 2012 Budget Actual (Unfavorable) Actual Expenses: seca Generation expense: Operation supervision and engineering $ 275,481 $ 247,827 $ 27,654 $ 260,557 Hydraulic operation 113,111 82,269 30,842 76,032 Electric plant operation 222,043 283,620 (61,577) 199,474 Hydraulic power generation operation 593,896 347,507 246,389 328,990 FERC land use fees 62,623 132,158 (69,535) 62,623 Structure maintenance 355,125 345,860 9,265 345,862 Reservoir, dam, and waterway maintenance 118,579 139,872 (21,293) 38,193 Electric plant maintenance 425,378 330,064 95,314 309,307 Hydraulic plant maintenance 167,344 196,120 (28,776) 154,124 System control and load dispatching 400,397 355,710 44,687 341,247 Substation operation and maintenance 133,500 316,905 (183,405) 126,578 Overhead line maintenance 562,239 26,562 535,677 233.130 Total generation expense 3.429.716 2,804,474 625,242 2,476,117 Administrative, general and regulatory expense: . Insurance 614,490 535,894 78,596 535,825 AEA administrative fee 200,000 200,000 - 200,000 PMC costs 60,600 50,931 9,669 49,262 Regulatory commission: FERC administrative fees 232,714 257,840 (25,126) 208,552 FERC licensing and study 71,000 79.438 (8,438) 70,540 Total administrative, general and regulatory expense 1,178,804 1,124,103 54,701 1,064,179 Total operations and maintenance expenses, before capital project reimbursement 4,608,520 3,928,577 679,943 3,540,296 R & C Fund repayment 1,536,326 1,142,155 394.180 1,192,905 Total operations and maintenance expenses $6,144,846 $5,070,732 $1,074,123 $4,733,201 13 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE P.O. Box 196300 Anchorage, Alaska 99519-6300 December 4, 2013 Swalling & Associates, P.C. 3201 C Street, Suite 405 Anchorage, Alaska 99503 This representation letter is provided in connection with your audit of the special-purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds (PMC), which comprise the balance sheets as of June 30, 2013 and 2012, and the related special- purpose statements of revenues and expenses, and of cash flows for the years then ended and the related notes to the financial statements for the purpose of expressing an opinion as to whether the special-purpose financial statements are presented fairly, in all material respects, on the basis of accounting described in Note A. Certain representations in this letter are described as being limited to matters that are material. Items are considered to be material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors. We confirm, to the best of our knowledge and belief, as of December 4, 2013, the following representations made to you during your audit. Financial Statements e Wehave fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated October 29, 2013, including our responsibility for the preparation and fair presentation of the special-purpose financial statements. e The special-purpose financial statements referred to above are fairly presented in conformity with special-purpose accounting requirements described in Note A. e We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. e We acknowledge our responsibility for the design implementation, and maintenance of internal control to prevent and detect fraud. Page 2 Swalling & Associates, P.C. December 4, 2013 Significant assumptions we used in making accounting estimates, including any measured at fair value, are reasonable. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the special-purpose accounting requirements described in Note A. All events subsequent to the date of the special-purpose financial statements and for which the special-purpose accounting requirements described in Note A, requires adjustment or disclosure have been adjusted or disclosed. The effects of all known actual or possible litigation, claims, and assessments have been accounted for and disclosed in accordance with the special-purpose accounting requirements described in Note A. Material concentrations have been properly disclosed in accordance with the special-purpose accounting requirements described in Note A. Guarantees, whether written or oral, under which the company is contingently liable, have been properly recorded or disclosed in accordance with the special-purpose accounting requirements described in Note A. Information Provided We have provided you with: o Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the special-purpose financial statements, such as records, documentation, and other matters. o Additional information that you have requested from us for the purpose of the audit. o Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. All material transactions have been recorded in the accounting records and are reflected in the special-purpose financial statements. We have disclosed to you the results of our assessment of the risk that the special-purpose financial statements may be materially misstated as a result of fraud. Page 3 Swalling & Associates, P.C. December 4, 2013 We have no knowledge of any fraud or suspected fraud that affects the entity and involves: o Management, o Employees who have significant roles in internal control, or o Others where the fraud could have a material effect on the special-purpose financial statements. We have no knowledge of any allegations of fraud or suspected fraud affecting the PMC received in communications from employees, former employees, regulators, or others. We have no knowledge of any instance of noncompliance or suspected noncompliance with laws and regulation whose effects should be considered when preparing the special-purpose financial statements. We have disclosed to you all know actual or possible litigation, claims, and assessments whose effects should be considered when preparing the special-purpose financial statements. We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware. We have complied with all aspects of contractual agreements that would have a material effect on the special-purpose financial statements in the event of noncompliance. The Alaska Energy Authority has satisfactory title to all owned assets, and there are not liens or encumbrances on such assets nor has any asset be pledged as collateral, except as disclosed in the notes to the financial statements. We acknowledge our responsibility for presenting the statements of expenses in accordance with the special-purpose reporting accounting requirements described in Note A, and we believe the statements of expenses are fairly presented in accordance with the special- purpose accounting requirements described in Note A. The methods of measurement and presentation of the statements of expenses have not changed from those used in the prior period, and we have disclosed to you any significant assumptions or interpretations underlying the measurement and presentation of the supplementary information. Page 4 Swalling & Associates, P.C. December 4, 2013 an ted y— Ron Woolf, Chait Bradley Lake Budget Subcommittee The undersigned signs this letter as an accountant for the Alaska Energy Authority (AEA) which has contracted to provide accounting and other administrative services for the PMC. I have undertaken no special inquiry of the PMC regarding any matter referenced in this letter, but rather sign based upon information I obtained while performing accounting and other administrative duties on behalf of AEA. KW ek Kelli Veech, Accounting Systems Analyst Alaska Energy Authority Bradley Lake Project Management Committee Meeting Tuesday, December 12, 2013 Agenda Item: 7A MOTION: Move that the Bradley Lake Project Management Committee accept the fiscal year 2013 Audit Report and approve a refund of $1,031,411.11 ($264,333.51 O&M and $767,077.60 R&C) to the utilities. Move: Second: BRADLEY LAKE HYDROELECTRIC PROJECT STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT Between CHUGACH ELECTRIC ASSOCIATION, INC., AND ALASKA ENERGY AUTHORITY DECEMBER 12, 2013 Section WN— OONA NA 10 11 13 14 15 TABLE OF CONTENTS Title Page D CFI ONDS iecccccecccsexeccecececsscsescessseccsuavatcaveasecsussasstouconsescussctucssuceeneusenseuseaseteecsattas 1 Effective Date, Term ON Termination .........seeessesceeseseeceseessestsssseeeeseeeees 2 General Provisions and Incorporation of Exhibit A of the Master Operating AGreeMent..........sssscrsrerssecsssssssessesesesesssesessesees 3 Operational REQUIFEMENTS ........seeseeeeeees 4 Maintenance Plan, Schedule GNd BUCGEF .......eeeeeeeseseteteeee 4 IROAVIVD@M Ncccserecceseccececcsttvcctonsconcacccceccecacrcsssccecrcccrersescrecesessstescsecerate 6 Emergency Expenciitul es .............-csesrssesssseccescessececerecnesesseseseen tL Extraordinary Maintenance and Equipment Replacement .............00 7 MO cific ations CMG ACICIIONS Sacsccetcncececscceesensnsenecstasseccaccesscssssucsasenesisssveteeteaes 7 Authorized Representative ... al. ACCESS 1O: FOCIINNGS mevrcccecsssosnostacekeassutscascsecsovcosvascavensansonses cas dotsavenassnaiviswesresecd 8 ROL ETMGI GUNG werttcrcraceeretererertrcccecerectasessatactecnersensnsnststtrerarsecncerreecenerceretrsettr? 8 Dispute Resolution . INO NCGS exreceresercsesceccensesees Mbp RENT YWABEME TCI CICS cessececcecacccecces-ce-ccccsscccercaceccsecsocececssccseaseccesnesasesaesczseees 2 BRADLEY LAKE HYDROELECTRIC PROJECT STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT This Agreement (hereinafter referred to as “Agreement”), is made and entered into this 12!" day of December, 2013, by and between ALASKA ENERGY AUTHORITY, a public corporation of the State of Alaska (hereinafter referred to as “Authority"), and CHUGACH ELECTRIC ASSOCIATION, INC., (hereinafter referred to as “Chugach"), a non-profit electric cooperative membership corporation of the State of Alaska. WITNESSETH: WHEREAS, the Authority is the owner of the Bradley Lake Hydroelectric Project, including the Project Power Transmission Lines between the substation at the Bradley Lake Power House and Bradley Junction and the Static VAR Compensator Systems (SVS) Located at Chugah's Daves Creek substation and Homer Electric Association's Soldotna substation; WHEREAS, Chugach owns and operates electric transmission facilities and is engaged in the transmission, purchase, and sale of electric power and energy; WHEREAS, Chugach as owner of the Daves Creek facilities and historical lessee of the 115 kV portion of the Soldotna Substation, has faithfully, prudently and successfully operated and maintained the SVS facilities for over 20 years and further agrees to continue to operate and maintain the SVS facilities for the benefit of the Bradley Lake Project; WHEREAS, the Authority and Chugach desire to define the terms and conditions governing the operation and maintenance of the SVS facilities at the above described substations; and WHEREAS, pursuant to the Power Sales Agreement, the BPMC has approved the terms of this Agreement; NOW THEREFORE, IN CONSIDERATION of the mutual covenants herein contained the Parties hereto agree as follows: SECTION 1_ DEFINITIONS The terms used in this Agreement shall be as defined in the Power Sales Agreement, except as specified below. For the purposes of this Agreement, the following definitions and abbreviations apply: SVS O&M AGREEMENT Page 1 “Agreement” means this Agreement. “BPMC" means the Bradley Lake Project Management Committee. “Emergency” shall mean an unforeseen circumstance or the resulting state that requires immediate action to protect or preserve the SVS Facilities, personnel, public health and safety, or the operation of the interconnected system in accordance with Prudent utility Practice. “Party” or “Parties” means the signatories to this Agreement. “Power Sales Agreement” means the Bradley Lake Power Sales Agreement, dated December 8, 1987, among the Authority; the Municipality of Anchorage (d.b.a. Municipal Light and Power (ML&P)); the City of Seward (d.b.a. Seward Electric System (SES)); the Chugach Electric Association, Inc. (Chugach); the Golden Valley Electric Association, Inc. (GVEA); the Alaska Electric Generation and Transmission Cooperative, Inc. (AEG&T), the Matanuska Electric Association, Inc. (MEA); and the Homer Electric Association, Inc. (HEA). “Soldotna Substation” shall mean the 115 kV portion of HEA's substation at Soldotna, Alaska. “Substation Operator” means the Party operating and maintaining the SVS equipment at Daves Creek and Soldotna substations. “SVS" means a Static VAR Compensation System. SECTION 2_ EFFECTIVE DATE, TERM AND TERMINATION A. Effective Date and Term of Agreement. This Agreement shall become effective on the date set forth above and shall continue in effect until terminated as provided in Section 2B. B. Termination of Agreement. 1 This Agreement may be terminated under the following conditions: a. In the event of a material breach of this Agreement by a Party, the other Party shall give the breaching Party written notice of the breach and an opportunity to cure the breach within a reasonable time considering the circumstances of the breach. In the event the breach is not cured within a reasonable time, the non-breaching Party, except as provided in Section 2.B.3., may terminate its SVS O&M AGREEMENT Page 2 obligations, duties and all rights it has under this Agreement. Any dispute as to a reasonable time to cure the breach shall be adjudicated by the BPMC. bs By the Substation Operator providing 90 days written notice to the Authority and BPMC. 2: In the event this Agreement is terminated, the Authority, or its contractors, shall have the right to enter upon the substation facilities to operate and maintain the SVS facilities. Upon termination of this Agreement, the Substation Operator shall release all relevant records to the Authority. All liabilities accruing under this Agreement prior to its termination shall be and are hereby preserved until satisfied SECTION 3_ GENERAL PROVISIONS AND INCORPORATION OF EXHIBIT A OF THE MASTER OPERATING AGREEMENT This Agreement is subject to the terms of the Master Operating Agreement between the Authority and the BPMC. Except for paragraphs (0) Notice and Communications and (t) Third Party Beneficiaries, the provisions of Exhibit A, Master Contract Provisions, of the Master Operating Agreement are expressly incorporated by reference in this Agreement. Paragraphs (0) and (t) are modified and included below as Sections 14 and 15. Nothing in this Agreement is intended to alter the rights and obligations of the Authority and the Purchaser(s) under the Power Sales Agreement. In the event the terms of this Agreement and the Power Sales Agreement or Master SVS O&M AGREEMENT Page 3 Operating Agreement are found to be in conflict, the terms of the Power Sales Agreement shall have first priority with the Master Operating Agreement having second priority. The provisions of this Agreement are not intended, nor shall they be construed, to alter or modify any previous contracts or agreements of any Party or preclude any Party from performing existing obligations. In their performance of this Agreement, the Parties will comply with the terms and provisions of the Power Sales Agreement. SECTION 4_ OPERATIONAL REQUIREMENTS A. Systems Operation. The Parties agree to operate their respective systems in accordance with the provisions of Section 10 (c) of the Power Sales Agreement. Substation and SVS Operation and Maintenance. In accordance with the provisions of this Agreement, the Substation Operator shall be responsible for the operation and maintenance of the SVS equipment on behalf of the Authority and for provision of increased transfer capacity resulting from operation of the SVS for the Purchasers in proportion to their Project shares. Chugach, as owner of the Daves Creek Substation and as historical operator of the Soldotna SVS, shall be the Substation Operator for both the Daves Creek Substation and Soldotna SVS equipment. SECTION 5 OPERATION AND MAINTENANCE PLAN, SCHEDULE AND BUDGETS A. Maintenance Plan and Schedule Requirements. 1. The Substation Operator uses a well-developed and robust Reliability Centered Maintenance (RCM) Program. This programs is T&D system wide and covers all equipment in the Chugach substation T&D asset register including the AEA SVSs. This program utilizes a predictive maintenance strategy to optimize equipment life-cycle costs. This program is available for inspection, or relevant portions will be provided to the Authority at any time given reasonable notice. Annual SVS Facilities Budget. i After the effective date of this Agreement, and in accordance with schedules provided by the Authority, the Substation Operator shall prepare and submit each year to the Authority and to the BPMC a draft Annual SVS SVS O&M AGREEMENT Page 4 Facilities Budget for the following Fiscal Year as provided in Section 5 D. The draft budget shall be prepared in a format and schedule provided to the Authority by the BPMC. The draft Annual SVS Facilities Budget shall be based upon prudent estimates and anticipated operation and maintenance expenditures, and reflect appropriate accounting and budgetary principles for utilities. The Substation Operator shall perform its duties in a manner consistent with the Annual SVS Facilities Budget except as provided in Sections 7 and 8 below. If the Substation Operator makes a determination during any Fiscal Year that it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under Annual Project Budget, the Substation Operator shall report such finding to the Authority and the BPMC and shall submit a revised budget for the Authority's and the BPMC's review and approval. In the event the revised budget is not adopted by the BPMC and the Authority, or in the event the Authority, pursuant to Section 13(e) of the Power Sales Agreement does not authorize and agree to fund such expenditures, and the Substation Operator determines that it cannot perform its obligations under this Agreement, the Substation Operator may terminate this Agreement as provided for in Section 2 A.1.b. Cc Three Year Major Maintenance and Improvements Plan and Budget. Annually the Substation Operator shall prepare and submit a forward looking plan and budget for proposed major maintenance and improvements, (e.g., major equipment replacement) and other projects deemed by the Substation Operator to be required to insure continued safe and economical operation of the respective SVS facilities that are not included in that Fiscal Year's proposed annual maintenance plan or require more than one year to complete. The plan shall be revised annually. SVS O&M AGREEMENT Page 5 D. Budget and Plan Submittal. The Substation Operator shall submit the schedule and budget, and the forward looking plan and budget to the Authority and the BPMC no later than November 1 for the next Fiscal Year. The plans, schedules and budgets may be modified through negotiations between the Substation Operator and the Authority, subject to approval by BPMC. SECTION 6 PAYMENT A. The ordinary costs of performing under this Agreement, including station service costs, shall be initially paid by the Substation Operator. The Substation Operator shall prepare an invoice each month identifying the actual and reasonable costs incurred in a format mutually agreeable to the Authority and the Substation Operator. The invoice shall be furnished to the Authority by the end of the month following the month in which the costs are incurred. All such invoices shall be subject to audit and approval by the Authority, such approval shall not be unreasonably be withheld. The Authority shall reimburse the Substation Operator for all costs reasonably incurred and properly invoiced and approved under this Agreement. Any amounts owed by the Authority to the Substation Operator and not in dispute shall be paid by the Authority within thirty (30) days of receipt of an appropriate invoice from the Substation Operator. Any amounts not paid within thirty (30) days shall accrue simple interest at the legal rate of interest beginning at the time payment was due. Within thirty (30) days after the Substation Operator submits an invoice, the Authority shall notify the Substation Operator in writing of any amount in dispute and the basis for the dispute. If the Parties cannot settle the dispute informally within 60 days following the written notice of dispute, the dispute shall be submitted to the BPMC for resolution. In the event a resolution of the dispute through the BPMC fails, either party may file an action in the Alaska Superior Court for the SVS O&M AGREEMENT Page 6 Third Judicial District to obtain a decision resolving such dispute and to obtain any other remedy permitted by law. Pending final resolution of any such dispute the Parties shall continue to perform under this Agreement. SECTION 7_ EMERGENCY EXPENDITURES The Substation Operator shall take such actions as it reasonably believes are necessary in an emergency. If, in the reasonable judgment of the Substation Operator, the emergency requires the Substation Operator to incur costs prior to obtaining written approval from the Authority, the Substation Operator shall notify the Authority and the BPMC within 72 hours after discovery of the emergency. ECTION 8 EXTRAORDINARY MAINTENANCE AND EQUIPMENT REPLACEMENT When the Substation Operator learns of an equipment failure or other contingency which, in the Substation Operator's judgment, necessitates incurring an extraordinary maintenance and equipment replacement cost, the Substation Operator shall promptly notify the Authority and the BPMC of the circumstances. Except as provided in Section 7, the Substation Operator shall obtain the Authority's written approval prior to incurring an extraordinary maintenance and equipment replacement cost. Except in emergency circumstances the Substation Operator shall incur no extraordinary maintenance and equipment replacement cost for which the approval of the Authority has been requested and expressly denied in writing. SECTION 9_ MODIFICATIONS AND ADDITIONS Except in emergencies, no modifications or additions shall be made to the SVS equipment without the prior written approval of the BPMC. SECTION 10 AUTHORIZED REPRESENTATIVE The Parties shall each designate one representative to carry out the provisions of this Agreement. Within 30 days after execution of this Agreement, each Party shall notify the other Party in writing of its designated representative. Any Party may change its representative at any time and shall promptly provide written notice of such change to the other Party. SVS O&M AGREEMENT Page 7 SECTION 11_ ACCESS TO FACILITIES Authority and BPMC personnel or agents shall be granted reasonable access to the substations, SVS equipment and facilities upon reasonable notice and subject to security measures, for the purpose of inspection and testing. SECTION 12_ FORCE MAJEURE A. No Party to this Agreement shall be liable to the other Party for, or be considered to be in breach of or default under this Agreement on account of, any delay in performance or any delay or failure to deliver, receive or accept delivery of energy due to any of the following events: 1s Any cause or condition beyond such Party's reasonable control which such Party is unable to overcome by the exercise of reasonable diligence, including but not limited to: fire, flood, earthquake, volcanic activity, wind, drought and other acts of the elements; court order and act of civil, military or governmental authority; riot, insurrection, sabotage and war; breakdown of or damage to facilities or equipment; electrical disturbance originating in or transmitted through such Party's electric system or any electric system with which such Party's system is interconnected; and, any act or omission of any person or entity other than such Party, or Party's contractors or suppliers of any type or anyone acting on behalf of such - Party. Strikes, lockouts, and other labor disturbances shall be considered Force Majeure events and nothing in this Agreement shall require either Party to settle a labor dispute against its best judgment; provided, that during any labor dispute each Party shall make all reasonable efforts under the circumstances, including, to the extent permitted by law and collective bargaining agreements, the use of replacement personnel and or management personnel and/or other personnel under the provisions of a mutual aid agreement to ensure, if possible, the continued ability of the Parties to carry out their obligations under this Agreement, or Any action taken by such Party which is reasonably necessary or prudent to protect the operation, performance, integrity, reliability or stability of the Project or of such Party's electric system or any electric system with which such Party’s electric system is interconnected, whether such actions occur automatically or manually. SVS O&M AGREEMENT Page 8 B. In the event of any delay excused under this section, the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay. No cost adjustment shall be allowed, only time extensions as appropriate. Nothing contained in this paragraph shall require any Party to settle any strike, lockout or other labor dispute. Each Party shall give the other Party prompt written notice of any delay which the Party giving notice considers to be an excusable delay of its performance. SECTION 13__ DISPUTE RESOLUTION Pending resolution of a disputed matter, the Parties shall continue performance of their respective obligations pursuant to this Agreement. If the Parties cannot reach timely mutual agreement on any matter in the administration of this Agreement, the Substation Operator shall, to the extent necessary for its continued performance, make a determination of such matter without prejudice to the rights of the other Party. Such determination shall not constitute a waiver of any other remedy belonging to any Party. SECTION 14__NOTICES Notices shall be addressed as follows: Executive Director, Alaska Energy Authority, 813 West Northern Lights Boulevard, Anchorage, Alaska 99503. Notices to Chugach will be addressed to: Chief Executive Officer, Chugach Electric Association, Inc., P.O. Box 196300, Anchorage, Alaska 99519-6300. A Party may change the foregoing designations of its name or address to which notices or demands are to be directed at any time by written notice given to the other Party. Any notice or request not otherwise provided for in this Agreement shall be given in such manner as the Parties agree. SECTION 15_ THIRD PARTY BENEFICIARY This Agreement gives no rights or benefits to anyone other than the Parties, Chugach and the Authority, and the BPMC as a third party beneficiary. The BPMC is the only third party beneficiary. In any action by the BPMC for damages Chugach shall have the right to assert against the BPMC any defense which it could have asserted against the Authority. The raising of any such SVS O&M AGREEMENT Page 9 defense by Chugach shall not affect any right of a Purchaser or the BPMC under the Master Operating Agreement or Power Sales Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their authorized officers or representatives and their corporate seals to be hereunto affixed as the day and year first above written. ALASKA ENERGY AUTHORITY —— By: Sara Fisher-Goad | Its: Executive Director EE CHUGACH ELECTRIC ASSOCIATION, INC. xX By: Bradley Evans Its: Chief Executive Officer SVS O&M AGREEMENT Page 10 STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged before me this 12" day of December, 2013, by Sara Fisher-Goad, the Executive Director of the Alaska Energy Authority, an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My commission expires: STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged before me this 12'» day of December, 2013, by Bradly W. Evans, the Chief Executive Officer of the Chugach Electric Association, Inc., an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My commission expires: SVS O&M AGREEMENT Page 11 STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged before me this 12!" day of December, 2013, by Sara Fisher-Goad, the Executive Director of the Alaska Energy Authority, an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My commission expires: STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged before me this 12m day of December, 2013, by Bradly W. Evans, the Chief Executive Officer of the Chugach Electric Association, Inc., an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My commission expires: SVS O&M AGREEMENT Page 11 BRADLEY LAKE HyDRO FISH-WATER SCREEN, DEBRIS REMOVAL PROJECT May-JUNE 2014 Bradley Lake Water Supply System | Water flow from Bradley Lake consists of three main parts. 1.Power Tunnel — main supply of water from Bradley Lake to the Power House turbine-generators. 2. Diversion Tunnel — bypasses the dam, used during construction or emergency condition to divert Bradley Lake water flow around the dam. 3. Fish-water bypass (2- 28” pipes) — used to bypass the dam to supply a regulated water flow to the Bradley River fish and eco-system as part of the project permit. 12/12/2013 Diversion tunnel inlet, bypasses water flow to the Bradley River. Fishwater inlet pipes les sone 12/12/2013 12/12/2013 Diversion Tunnel and Fishwater Bypass Pipe Screens y Two 28” pipes located at the bottom of the diversion tunnel supply water to various controls valves ranging from 6” to 24”. The control valves are positioned to maintain minimum fishwater flow requirements to the Bradley River. : [The flat inlet | screens shown far left were replaced with these birdcage type screens Bradley Lake level trend from 2001-2013 Graph illustrates the low lake level period is normally during the month of May. The project will need to be scheduled when ice is melting off the lake before high spring runoff begins. Lake level can fluctuate several feet in a few days. 12/12/2013 Minimum fishwater flow to the Bradley River is supplied by two methods: . Snow melt and natural runoff into the Bradley River. . Bypass flow from Bradley Lake through the fishwater bypass pipes. In May of 2013 annual spring runoff was late due to cooler temperatures. It was noted by the Bradley Plant Operators that fishwater flow manifold #1 was not able to meet traditional expected flow rates. The Bradley Operating permit requires that minimum flow rates be met or it is considered a violation of the FERC permit. Global Diving Inc. was contracted to inspect and clean the intake screens. * In June of 2013 diving operations were conducted at Bradley Lake to determine screen condition and evaluate any accumulated debris. Pipe #2 inlet screen was cleared of debris and proved to be functional Pipe #1 inlet screen could not be located due to the amount of debris that was covering the screen. Global Diving conducted two separate diving expeditions using bubble elevation techniques to quantify the debris covering fishwater pipe #1 inlet screen. Evaluation = Fishwater Bypass Screen #1 Debris (1 of 2) ‘Hortzonta! cross section of Diversion Tunnel looking down: showing height of debris in depth from the bottom “L gl Vertical Gross Section of Diversion Tunnel Looking into Tunnel ai 7 tae ieee ] 12/12/2013 Source of Debris Covering Fishwater Screen #1 (photo 1 of 2) This construction photo from June 14*, 1990 indicates a large amount of loose material above and to the right of the diversion tunnel inlet. This loose material is not present today as illustrated by the next slide. It indicates the field has been eroded by wave action over several years. Source of Debris Covering Fishwater Screen #1 (photo 2 of 2) Rock fall ledge above tunnel inlet. Exposed boulder field below loose debris. 12/12/2013, 12/12/2013 Debris Removal Options #1- ing — Reduce lake level initially to 1080’, range 1080’-1098’ Floating platform to support a venturi suction system Air lift is provided by diesel driven compressors Divers used to stage the suction piping Debris is discharged off the end of the platform into deeper water 75% fishwater flow through piping, 25% through pumping if required (FERC) Red level to approx Use a crane to place medium sized excavators near the side of the tunnel and remove the material from around the screen Use a small dozer or skid steer to transport the debris away from the tunnel 75% fishwater flow through piping, 25% through pumping if required (FERC) Option #3 — Excavator Equipment Working from inside the Tunnel- Reduce lake level to 1068’ Use excavators to work down inside the diversion tunnel area Use external pumps to provide fishwater flow Possibly get a fishwater waiver from FERC July 2013 — Project specifications were sent to various crane, and diving companies in Alaska. Global Diving and Salvage was the only company that responded with a proposal. The estimate was received on November 27". Proposal Overview - (Remove 75-100% of the debris, some factors unknown) * Lake level between 1080’- 1098’ * Global will provide barge mobilization and transportation of equipment to the Bradley barge dock. They will transport flexi floats, crane, and compressors by flatbed trailer to the dam site. Provide two 1000 cfm air compressors to hydraulically air lift (dredge) the debris covering the #1 fishwater inlet screen. One compressor can operate the lift. However, they propose two for maximum production and mechanical failure. Supply enough equipment and fuel for a 12 hour/day operation. (5000 gallons of fuel). Should be able to remove the majority of the debis. Some pockets of debris may still remain, however fishwater flow capability will be restored 12/12/2013, Proposal Overview - (Remove 75-100% of the debris, some factors unknown) Reduce Lake level to approx. 1080’ (below 1100’ fishwater flow reduced) * Itis important to note that required fishwater flow through the normal piping system cannot be maintained below 1100’, thus the need to pump if 100% fishwater flow is required. Crane and tractor trailer of counter weights would self drive to the dam. The crane would be used to lower small to medium sized, dozers, skid steer loaders and excavators near the tunnel entrance to mechanically remove the debris. (tunnel entrance is beyond the reach of crane) Fishwater flow would be maintained through normal piping and additional pumping if required by FERC. Excavators would access the debris reaching from the side of the tunnel Should be able to remove the majority of the debis. Some pockets of debris may still remain, depending on the ability of the equipment to maneuver around or within the water flow. Fishwater flow capability will be restored. 12/12/2013 Proposal Overview - (Remove 100% of the debris) This includes the cost of equipment in proposal #2 + the cost of pumping to maintain fish water flow while reducing level through generation to enter the diversion tunnel. Solution Overview Option #1 — Airlift Hydraulic Dredging — (Remove 75-100%) 1. A- Can maintain 75 CFS fishwater flow without additional pumping Lake Level 1080’ - Base bid by Global $971,109 1. B- Additional Pumpi: *depent in! 171,000* Total $1,142,109 Option #2 — Excavator Working from side of the Tunnel — (Remove 75-100%) 2. A.- Can maintain 75 CFS fishwater flow without additional pumping Lake Level 1080’ - Crane and equipment $474,832 = Additional P. i < n FE! nse) 171,000* Total $645,832 Option #3 — Excavator Working from inside the Tunnel Area ~ (Remove 100%) 3. A- Crane, equipment, and operators (proposal #2) Lake level 1068’—Crane and equipment $474,832 . B. — Additional ing (1m 78 x 2) 1,367,556 Estimated equipment and pump cost $1,842,388 FERC and other known agencies. Dredging operations — Least impact on tunnel and downstream ego-system. Lake level will be reduced to 1080’. This limits fishwater flow capacity to 75% without pumping. Will FERC allow a reduced flow of 75CFS, during repair time? If not then pumping will be required. ($171,000/month of pumping) Considerations of working from the side of tunnel — FERC and other agency response required to determine if maintaining 75% fishwater flow. Long excavator with 30’ reach would remove most of the debris. If 100% fishwater flow is required, the screen would be cleared first and may also require additional pumping. Delay until 2015 if these questions cannot be answered soon - If lake level is maintained above 1100’ the project could be delayed until 2015. Worst case is rental of one pump during low runoff period. Would FERC allow for reduced runoff of 75% until project can be implemented. ($171,000/month of pumping) 12/13/2013 10 Level and Distance Overview i Tunn ation The bottom of the diversion tunnel is 1068’ Power tunnel inlet channel was initially excavated to 1055’ Power tunnel bottom is 1030’ Power tunnel top is 1061’ Distance from Crane to diversion entrance — 230’ Crane boom length — 200’ Crane capacity at 105 ft - 33,100 Ibs — 30,000 + rigging Crane capacity at 150 ft - 18,000 Ibs - 16,000 + rigging Crane capacity at 200 ft- 8,500 Ibs- 6,000 + rigging The transport weight of the crane itself is 140,000 Ibs Total counter weights are 158,500 Ibs Total machine weight will be around 300,000 Ibs Weight of medium sized dozer and excavator — 18,000 Ibs Weight of small excavator and skid-steer — 6000 - 8000 Ibs 12/12/2013 11 Bradley River Fish Water Operation = License requires minimum flows in Bradley River = HEA operates to avoid violations = Operations result in “over release” of flows with loss of >10,000 MWh = Five year trial allows short term deviation = ALASKA @@mm> ENERGY AUTHORITY Bradley River Fish Water Path = AEA to discuss with FERC and agencies potential license amendment to minimize “over release” while maintaining fish habitat = Convert allowable trial flow deviation to implementable plan that meets minimum flow requirements over a 24-hour period l= gm ENERGY aia ye iver P Bradley R iver i i ] 4 qm ENERGY AUTHORITY ise] National Hydropower Association Operational Excellence Program «= As NHA member Bradley Lake Project entitled to participate = Program benefits licensees in following areas = Safety « Operations and maintenance « Environmental performance « Web based program with mobile accessible module « Training available in 2014 to operations personnel ga ALASKA. mmm ENERGY AUTHORITY