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HomeMy WebLinkAboutRes 2022-01 Ratifying Governors Submission of FY23 Operating and Capital Budget 2022ALASKA ENERGY AUTHORITY RESOLUTION 2022-01 RESOLUTION OF THE ALASKA ENERGY AUTHORITY RATIFYING GOVERNORS SUBMISSION OF FY23 OPERATING BUDGET AND CAPITAL BUDGET WHEREAS, the operating and capital budget of the Alaska Energy Authority ("the Authority") are subject to the Executive Budget Act; WHEREAS, the FY23 operating and capital budget submissions for the Authority are included in the Governor's State operating and capital budget submissions to the Alaska State Legislature ("the Legislature") and are set out in Attachment A; WHEREAS, the Governor's State operating and capital budget submissions, including the Authority's operating and capital budget submissions, are subject to appropriation by the Legislature; and WHEREAS, the Board provides oversight for the Authority and its finances. NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA ENERGY AUTHOIRTY AS FOLLOWS: Section 1. The Authority's FY23 operating and capital budget submissions are ratified by the Board. The final FY23 operating and capital budget are subject to the approval and appropriation by the Legislature. Dated at Anchorage, Alaska, this 27th day of January 2022. J. Dana Pruhs, Chair ttittttlfllFi1joi [SEAL] Curtis W. Thayer, Secretary = 4 SEAL AEA Resolution No. 2022-01 �'�,, * �.` FY23 Operating Budget & Capital Budget Page 1 Attachment A C � o d E n U F- m a 7 ¢ N � y E o Ole o o c pe � e a �� at c c o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Z « 66000000 0 0000 000 � m CM E O 0 N O O O O O C C7 Q O O O O O O O O R O O O O O C C O O Coco Ss N 4 N oor�0000 ti n eer;o CG^O 000 O OD�OO ^ co a0 M� 0. � ,r- O N 41 G OO rl:0000 1l: f� 0oNO 000 E as 00 MOoIn0C 4 0OO co ticD O UJ a r .a N C a h0000 1� h; OOf�O OOO Q Ci co N C O C O Go C o� V cO� � h co n n d C O N v o Ci. a`� oo�0000 oo�•o 0000 000 E oor-a0Lo0o M^ 0 00 Go O L cc A A o ry E t! 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Thayer Estimated Project Dates: 07/01/2022 - 06/30/2027 Contact Phone: (907)771-3000 Brief Summary and Statement of Need: The Alaska Energy Authority's (AEA) Electrical Emergencies program is critical to rural communities. Electrical emergencies can result in the loss of communications, lights, refrigeration systems, washeterias, water and sewer systems, and the use of other basic infrastructure and equipment. The program contributes to the Department's mission of promoting a healthy economy and strong communities, as electricity is considered essential for both community development and economic growth. Funding: FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 _ Total 1004 Gen $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $1,200,000 Fund -- Total: $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $1,200,000 i— State Match Required r One -Time Project r Phased - new r Phased - underway r Ongoing 0% = Minimum State Match % Required r Amendment r Mental Health Bill Operating & Maintenance Costs: Amount Staff Project Development: 0 0 Ongoing Operating: 0 0 One -Time Startu : 0 Totals: 0 0 Prior Funding History / Additional Information: Sec11 Ch1 SLA2021 P103 L18 HB69 $200,000 Sect Ch19 SLA2018 P2 L20 SB142 $330,000 Sec12 Chl SLA2017 P16 L30 SB23 $330,000 Sec27 Ch38 SLA2015 P27 L16 SB26 $330,000 Sect Ch18 SLA2014 P3 L6 SB119 $330,000 Sect Ch17 SLA2012 P6 L11 SB160 $330,000 Sec4 Ch5 SLA2011 P127 1-19 SB46 $330,000 AEA received $200,000 in the FY2022 and anticipates funds will be depleted or nearly depleted by FY2023. Project Description/Justification: The Electrical Emergencies Program is often a life or safety issue and the last resort for communities with an electrical emergency. This program provides support when an electric utility has lost or will lose the ability to generate or transmit power to its customers and the condition is a threat to life, health, and/or property (including freezers full of invaluable subsistence foods). Funding provides the current level of technical support through the Electrical Emergencies Program. State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 32950 Page 1 Released December 15, 2021 Alaska Energy Authority - Electrical Emergencies Program FY2023 Request: $200,000 Reference No: 32950 Power outages are expensive and compromise public safety: Water and sewer systems are subject to freezing and bursting • Fire hazards increase • Medical clinics and other public facilities may close Electrical emergencies may involve power plant failures and/or distribution system failures. If the Alaska Energy Authority (AEA) is unable to respond, the response to loss of power emergencies will be redirected to the Department of Military and Veterans Affairs, Division of Homeland Security and Emergency Management, State Emergency Operations Center (SEOC). State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 32950 Page 2 Released December 15, 2021 Alaska Energy Authority - Round XIV Renewable Energy Pro�ctGrants .;AS 42.45.045. FY2023 Request: $15,000,000 Reference No: 57255 AP/AL: Appropriation Project Type: Energy Category: Development Location: Statewide House District: Statewide (HD 1-40) Impact House District: Statewide (HD 1-40) Contact: Curtis W. Thayer Estimated Project Dates: 07/01/2022 - 06/30/2027 Contact Phone: (907)771-3000 Brief Summary and Statement of Need: From 2008 to 2020 appropriations totaling $282.8 million were issued for Renewable Energy Fund (REF) projects. The State funding has been matched with hundreds of millions of dollars from local sources to develop projects designed to reduce and stabilize the cost of energy in Alaska. The REF will be capitalized using excess earnings from the PCE Endowment Fund per AS 42.45. Funding_ FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 - Total 1210 Renew $15,000,000 $15,000,000 Ener Total: $15,000,000 $0 $0 $0 $0 $0 $15,000,000 r State Match Required r One -Time Project r Phased - new r Phased - underway Pr Ongoing 0% = Minimum State Match % Required r Amendment r Mental Health Bill Operating & Maintenance Costs: Amount Staff Project Development: 0 0 Ongoing Operating: 0 0 One -Time Startup: 0 Totals: 0 0 Prior Funding History / Additional Information: Sec? Chl SLA2021 P9 L12 HB3003 $4,750,973 Sect Ch1 SLA2018 P2 L23 SB142 $11,000,000 Sect Ch38 SLA2015 P2 L17 SB26 $11,512,659 Sect Ch18 SLA2014 P4 L8 SB119 $22,843,900 Sect Ch16 SLA2013 P4 L20 SB18 $25,000,000 Sect Ch17 SLA2012 P6 L15 SB160 $25,870,659 Sec4 Ch5 SLA2011 P127 L23 SB46 $26,620,231 Sec? Ch43 SLA2010 P19 L20 SB230 $25,000,000 Sect Chl5 SLA2009 P2 L23 SB75 $25,013,014 Sec13 Ch29 SLA2008 P87 L20 SB221 $100,000,000 AS 42.45.085(d)(2)(b) use of the Power Cost Equalization Endowment Fund allows for up to $25,000,000, of PCE Endowment Fund earnings to be appropriated to the REF, to the bulk fuel revolving loan fund, for rural power system upgrades, or to a combination of the funds or purposes listed. The bulk fuel revolving loan fund does not require capitalization at this time. A capitalization request of $15 million to the Renewable Energy Fund is included in the operating budget. Project Description/Justification: This appropriation would allow for a Request for Application (RFA) for Round XIV Renewable Energy Fund grants. The demand for REF grants is estimated based on applications received for State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 57255 Page 1 Released December 15, 2021 Alaska Energy Authority - Round XIV Renewable Energy FY2023 Request: $15,000,000 Project Grants AS 42.45.045 Reference No: 57255 the previous Round XI11 grants, which were appropriated which was conducted in FY2021 and appropriated in FY2022. State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 57255 Page 2 Released December 15, 2021 Alaska Energy Authority - Rural Power Systems Upgrades FY2023 Request: $20,000,000 Reference No: 52498 AP/AL: Appropriation Project Type: Energy Category: Development Location: Statewide House District: Statewide (HD 1-40) Impact House District: Statewide (HD 1-40) Contact: Curtis W. Thayer Estimated Project Dates: 07/01 /2022 - 06/30/2027 Contact Phone: (907)771-3000 Brief Summary and Statement of Need: Electric utility systems are essential infrastructure in rural communities. New power systems are designed to meet accepted utility standards for safety, reliability, and environmental protections. Upgrading rural power generation and distribution systems includes more than the replacement of entire facilities. As funding availability diminishes emphasis on maintenance and improvement projects and training for operations and planned maintenance have become critical. Deferred maintenance for Rural Power System Upgrades (RPSU) is estimated at approximately $327,000,000. Fund_ing:, FY2023 FY2024 FY2025 FY2026 i FY2027 FY2028 __ Total 1002 Fed $10,000,000 $10,000,000 Rcpts 1169 PCE $10,000,000 $10,000,000 Endow - Total: $20,000,000 $0 $0 $0 $0 $0 $20,000,000 r State Match Required r One -Time Project 0% = Minimum State Match % Required Operating & Maintenance Costs: r r Phased - new Amendment r Phased -underway W Ongoing r Mental Health Bill Amount Project Development: 0 Ongoing Operating: 0 One -Time Startup: _ 0 Totals: 0 Prior Funding History / Additional Information: Sec8 Chi SLA2021 P70 L21 HB69 $17,500,000 Sec5 Ch8 SLA2020 P64 L17 HB205 $17,500,000 Sect Chi9 SLA2018 P2 L22 SB142 $21,900,000 Sec18 Ch2 SLA2016 P36 L28 SB138 $1,053,858 Sect Ch2 SLA2016 P2 L20 SB138 $1,446,142 Sect Ch18 SLA2014 P6 L9 S13119 $5,120,000 Sect Ch16 SLA2013 P4 L18 SB18 $10,800,000 Sect Ch17 SLA2012 P6 L13 SB160 $13,000,000 Staff 0 0 IC Per AS 42.45.085 (B) up to $25 million of Power Cost Equalization funds may be appropriated to the Renewable Energy Fund (REF), to the bulk fuel revolving loan fund, or for RPSU, or to a combination of the funds or purposes listed. This project includes federal receipts and state match for those funds, as well as $10,000,000 of excess earnings from the PCE Fund that will be directed towards deferred maintenance projects. Project Description/Justification: State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 52498 Page 1 Released December 15, 2021 Alaska Energy Authority - Rural Power Systems Upgrades FY2023 Request: $20,000,000 Reference No: 52498 The Alaska Energy Authority (AEA) is working in partnership with the Denali Commission for the FY2023 work plan to identify projects for funding. The projects preliminarily identified are in the following communities: Aniak, Bettles, Metlakatla, and False Pass. AEA and the Denali Commission will continue to refine project selection and cost estimates. State funds are used to leverage federal funds to expand the number of communities served by this program and which advances sustainable, efficient energy infrastructure projects that . decrease energy costs in rural Alaska over the long term. Additionally, deferred maintenance costs for RPSU structures are estimated at approximately $327 million. State matching funds are required for Denali Commission funded construction projects. A match of 20% for distressed communities and 50% for non -distressed communities. The distressed community list is maintained by the Denali Commission. This program concentrates on power production and delivery, including diesel powerhouse, heat recovery, and electrical distribution. Efficiency, reliability, safety, and sustainability are primary drivers throughout the conceptual design, final design, and construction process. After completion of the project, the rural utility is required to employ a qualified operator to ensure that the system is properly operated and maintained. AEA provides training and technical assistance to assist the community with proper operation of the new facility. This program began in 1997 and has expanded since FY1999 with federal funding from the Denali Commission. Federal funding for rural power systems upgrades have been in decline since FY2011 and any available federal funds for construction projects now require a 20% - 50% match, depending on whether the community is considered distressed. State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 52498 Page 2 Released December 15, 2021 Alaska Energy Authority - Bulk Fuel Upgrades AP/AL: Appropriation Category: Development Location: Statewide Impact House District: Statewide (HD 1-40) Estimated Project Dates: 07/01 /2022 - 06/30/2027 FY2023 Request: $13,000,000 Reference No: 49734 Project Type: Energy House District: Statewide (HD 1-40) Contact: Curtis W. Thayer Contact Phone: (907)771-3000 Brief Summary and Statement of Need: The Bulk Fuel Upgrades (BFU) program will invest $13 million in rural Alaska in FY2023. The BFU program upgrades non -compliant bulk fuel tank farms in rural communities. This project reduces the cost of energy by reducing or eliminating fuel loss from leaks, spills, or catastrophic failure. By providing enough capacity for current & planned needs, communities may purchase fuel in larger quantities at a lower cost per gallon. Meets code compliance standards improving life, health, & safety of the community. This project includes more than the replacement of entire facilities. As funding availability diminishes, emphasis on mx & improvement projects & training for ops & planned mx have become critical. Funding: FY2023 FY_2024 FY2025 FY2026 _ FY2027 FY2028 - Total 1002 Fed $7,500,000 $7,500,000 $7,500,000 $7,500,000 $7,500,000 $37,500,000 Rcpts 1003 G/F $5,500,000 $5,500,000 $5,500,000 $5,500,000 $5,500,000 $27,500,000 Match_ -- Total: $13,000,000 $13,000,000 $13,000,000 $13,000,000 $13,000,000 $0 $65,000,000 r State Match Required r One -Time Project r Phased - new r Phased -underway FF Ongoing 0% = Minimum State Match % Required r Amendment r Mental Health Bill Operating & Maintenance Costs: Amount Staff Project Development: 0 0 Ongoing Operating: 0 0 One -Time Startup: 0 Totals: 0 0 Prior Funding History / Additional Information: Sec8 Ch19 SLA2021 P70 L19 HB69 $13,000,000 Sect Ch19 SLA2018 P2 L19 SB142 $17,000,000 Sect Chl SLA2017 P2 L22 SB23 $2,420,000 Sect Ch2 SLA2016 P2 L18 SB138 $1,300,000 Sect Ch18 SLA2014 P3 L33 SB119 $7,300,000 Sect Ch16 SLA2013 P4 L14 SB18 $6,000,000 Sect Ch17 SLA2012 P6 L9 SB160 $7,000,000 Declining funds available for bulk fuel upgrades in rural Alaska means that bulk fuel tanks are not upgraded timely. As a result, communities are left with aging fuel tanks that may not meet the capacity needs of the community or are at risk of leaks, contamination, and/or failure. Recent emphasis has also been put on barge header projects to protect river and ocean side fuel systems. Project Description/Justification: State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 49734 Page 1 Released December 15, 2021 Alaska Energy Authority - Bulk Fuel Upgrades FY2023 Request: $13,000,000 Reference No: 49734 This request includes federal receipt authority and state funds for bulk fuel tank farm upgrades. AEA is working in partnership with the Denali Commission on the FY2023 work plan to prioritize project selection. The projects preliminarily identified for construction are in the following communities: Venetie, Scammon Bay, Shungnak, and Ewok. Over the next few months, AEA and the Denali Commission will continue to refine the project selection and cost estimates. State funds are used to leverage federal funds to expand the number of communities served by this program, which advances sustainable, efficient energy infrastructure projects that decrease energy costs in rural Alaska. State matching funds are required for Denali Commission funded construction projects. A match of 20% for distressed communities and 50% for non -distressed communities. The distressed community list is maintained by the Denali Commission. Most of the rural tank farms have serious deficiencies that typically include: • Inadequate dikes to contain fuel spills • Inadequate foundations, which could cause gradual tank movement and fuel leakage • Improper piping systems and joints, which are the most common source of fuel leaks • Improper siting near wells, beaches, and buildings, or within a flood plain • Tanks that are rusted or damaged beyond repair • Electrical code violations • Inadequate security The deferred maintenance for BFU is estimated at approximately $800 million. State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 49734 Page 2 Released December 15, 2021 Alaska Energy Authority - Volkswagen Settlement FY2023 Request: $400,000 Reference No: 61842 AP/AL: Appropriation Project Type: Life / Health / Safety Category: Transportation Location: Statewide House District: Statewide (HD 140) Impact House District: Statewide (HD 140) Contact: Curtis W. Thayer Estimated Project Dates: 07/01/2022 - 06/30/2027 Contact Phone: (907)771-3000 Brief Summary and Statement of Need: The Alaska Energy Authority (AEA) is seeking statutory designated program receipt authority for the administration and disbursement of $400,000 in interest earnings from the Volkswagen (VW) Settlement environmental mitigation trust. Funding: FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 Total 1108 Stat $400,000 $400,000 Desig _ Total: $400,000 $0 $0 $0 $0 $0 $400,000 i— State Match Required r One -Time Project I— Phased -new r Phased - underway r Ongoing 0% = Minimum State Match % Required r Amendment I— Mental Health Bill Operating & Maintenance Costs: Amount Staff Project Development: 0 0 Ongoing Operating: 0 0 One -Time Startup: 0 Totals: 0 0 Prior Funding History / Additional Information: Sec4 Ch2 SLA2018 P6 L8 HB321 $8,125,000 The amount of interest earned on funds from the 2016 Volkswagen Settlement environmental mitigation trust, estimated to be $400,000, is appropriated to the Department of Commerce, Community, and Economic Development, Alaska Energy Authority, for activities related to the Volkswagen Settlement. Project Description/Justification: On January 24, 2016, the United States and the State of California filed a lawsuit against VW alleging it had manufactured diesel cars sold and operated in the U.S. beginning in 2009 with systems intended to defeat emissions tests. These systems allowed vehicles to emit nitrogen oxide (NOx) pollution at levels that significantly exceeded the amounts allowed under the Clean Air Act. As part of the settlement, VW established an Environmental Mitigation Trust, and Alaska was allocated $8.125 million dollars. The Trust has earned about $400,000 in interest, for which AEA is now requesting receipt authority, to fund additional eligible mitigation actions. AEA was designated as the lead State agency to oversee how Alaska's allocation is distributed and spent. As required, AEA developed a Beneficiary Mitigation Plan through a public process that summarizes how the State allocation of mitigation funds will be distributed among the various eligible mitigation actions to reduce NOx emissions. The Plan was approved by the Trustee and AEA has disbursed or committed funds for the replacement of 33 old diesel school buses, one public transit bus, and several gensets used for prime power in rural villages, and for the development of EV charging stations. AEA will submit funding State of Alaska Capital Project Summary Department of Commerce, Community, and Economic Development FY2023 Governor Reference No: 61842 Page 1 Released December 15, 2021 Alaska Energy Authority - Volkswagen Settlement requests for selected projects to the Trustee for approval. 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