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Bradley Lake PMC Meeting Tuesday, May 20, 1997 2
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CALL TO ORDER Chairman Tom Stahr called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. in the Commission Room of Anchorage Municipal Light & Power, 1200 East 1st Avenue, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Dean. The following members were present, and a quorum was established: Tom Stahr, Chairman Municipal Light & Power Eugene Bjornstad, Vice Chairman Chugach Electric Association Dave Calvert City of Seward Norm Story Homer Electric Association Dennis McCrohan Alaska Energy Authority Jim Hall Matanuska Electric Association Mike Kelly (In at 11:50 a.m.) Golden Valley Electric Association 2, PUBLIC ROLL CALL Others Present: Stan Sieczkowski, Alaska Energy Authority Elaine McCambridge, Alaska Energy Authority Shauna Dean, Alaska Energy Authority Mary Ann Pease, Anchorage Municipal Light & Power Bob Price, Anchorage Municipal Light & Power Tim McConnell, Anchorage Municipal Light & Power John S. Cooley, Chugach Electric Association Bradley Lake Project Manag-..1ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 2 of 8 Brian Hickey, Chugach Electric Association Mike Massin, Chugach Electric Association Dora Gropp, Chugach Electric Association Don Stead, Homer Electric Association Brad Evans, Golden Valley Electric Association Steve Haagenson, Golden Valley Electric Association Bob Hufman, AEG&T Mike Yerkes, AEG&T Ron Saxton, Purchasing Utilities Peter Raiskums, Municipality of Anchorage, Internal Audit Amy McCullom, Municipality of Anchorage, Internal Audit 4. PUBLIC COMMENT There was no public comment. 5. AGENDA COMMENTS Mr. McCrohan requested that Item A., Draft Resolution Regarding Bradley Lake Completion, be added under Agenda Item 10., New Business. Mr. McCrohan added that Item 9.C., Construction Fund Residual Balance, could be deleted. There being no further additions or corrections, the agenda was adopted by unanimous consent. 6. APPROVAL OF MEETING MINUTES - MARCH 25, 1997 MOTION: Mr. Bjornstad moved, seconded by Mr. Story, to approve the meeting minutes of March 25, 1997. In the fourth line of the next-to-the-last paragraph on page 3, the word “potential” was replaced with the word "impact." Mr. Story noted that his name appeared under Agenda Item 9, New Business, Item A., Bond Refunding, on page 5, and twice in the first paragraph on page 6. He said he was not in attendance at that meeting. Mr. Bjornstad said he thought the two on page 6 were attributable to himself. In the first line under Agenda Item 8., Old Business, Item A., Spinning Reserves Update, on page 5, "ASE" was corrected to "ASCC/RCC." Mr. Bjornstad said on page 6, in the paragraph beginning "Chair Stahr appointed...," the line, "Mr. Kelly said he would check with Mike Cunningham...." should be changed to himself as the speaker. In the second line of Agenda Item D., Construction Fund Residual Balance, on page 5, it was noted that, "PMC's bond counsel, Mr. Vassar" should be corrected to "AEA's bond counsel, Mr. Vassar." Bradley Lake Project Mana, -..1ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 3 of 8 There being no other additions or corrections, a voice vote was taken, and the minutes were unanimously approved as amended. 7. BUDGET SUBCOMMITTEE REPORT A. Bradley Lake Construction Audit Briefing - Pete Raiskums Mr. Raiskums reported that the audit of the AEA costs to the Bradley project had been completed. The costs, covering a period between 1982 through June 30, 1996, totaled approximately $18 million. Mr. Raiskums said AEA had used the State accounting system to track the costs and then charged them to the appropriate project. Mr. Raiskums briefly recapped how the costs were broken down in the draft audit report and said the costs were detailed out by the year in which they were charged. He said no costs were found to be inappropriate, they were well documented, and AEA had been very cooperative throughout the audit process. 8. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported that the O&D Subcommittee had met the previous day at the Bradley Lake Power Plant. He said AEA had been working with state and federal agencies to reduce the potential fire hazard around the project facilities caused by the spruce-beetle-killed timber. He said a proposal to clear away the hazardous timber was expected within the next month. The general recommendation was that an area 300 feet back from the facilities be cleared, and that an additional 300 feet be selectively cleared to eliminate all potential fire hazards, and that this be done as soon as possible. Mr. Sieczkowski reported that the North Fork flow monitoring project would be completed this summer. He said the project would provide better real-time flow monitoring from the side flows, which would enable the project operators to reduce the fish water releases from the reservoir. Mr. Sieczkowski stated that the construction list had been reviewed, and the estimates for project completion had been revised. Homer and Chugach had developed a schedule and projected completion date for each item listed. He said the revised list would be provided to the Committee within the next 30 days, and the O&D Subcommittee would formally present it to the PMC for approval. Mr. Stead reported that the current maintenance was up to date, and the annual maintenance was being performed and was on schedule. He said a problem had been discovered in some bolting on the first day of the outage. Mr. Stead said the failure report received from FPI in Hayward, California, reflected that the bolts had failed due to a combination of three factors: (1) bolt brittleness, (2) overload, and (3) the manufacturing process used on the bolts. He said 40 new bolts had been ordered to replace the bolts in both units, and both units will remain out of service until the bolts have been replaced. With respect to the fish water debris, Mr. Stead reported that the contract had been let and was completed ahead of schedule and under budget. He said the NTE $500,000 contract would be completed for approximately $305,000. He noted that the divers had found little debris in the intake and trash racks and very few rocks in the rock trap, and they had completed their inspection within two days. Bradley Lake Project Manay-v...ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 4 of 8 Mr. Stead responded to questions regarding the fish water debris project and the bolt failure on the units. Mr. Hickey reported on operations. He stated that lake elevation was back up above the 1080 to 1082.1. He said they would allow the lake to refill until the 27th when there would be an unscheduled Eklutna outage. He said the units would probably be utilized at that time for about a week, and then they would let the lake refill for another 15 days following that. Mr. Hickey said a FERC inspection was scheduled for the 18th or the 20th of June, and they would return to normal operations after that time. Mr. Hickey reported that the governors had been reset back to the 2/4/16 operating mode, and they had been using the units as synchronous condensers from time to time. Mr. Hickey said Scope 1 of the instability study, which consisted of the evaluation of historical events, had been completed for $22,000. He said the report had been completed and would be distributed on Friday. Scope 2 of the instability study had been awarded to EPS. He said they were the only responsive bidder, with a fixed price proposal of $107,717. Mr. Hickey said the contract schedule and a list of fixed milestone payments had been negotiated with EPS; the first milestone payment was due today, along with the report on the analysis of the governor control system and the tunnel model. Mr. Hickey reported that a task order contract had also been established with Woodward Governor Company, and they had been issued a notice to assist EPS, in an amount not to exceed $10,000, in the analysis of the control system. A task order contract was also established with Power Technologies for assistance, but they have not yet been utilized on the project. A task order contract established with Stone & Webster had authorized them to obtain from their records correspondence relating to the project to be provided to the O&D Subcommittee. Mr. Hickey noted that $139,717 of the $145,000 had been committed to date. The project completion date is August 30th. Mr. Hickey responded to questions regarding the governor project. Mr. Sieczkowski explained that the construction list he had distributed had been revised by the 0&D Subcommittee at its meeting the previous day. Mr. Sieczkowski gave an overview of the revised construction list as compared to the original list approved by the PMC on February 9, 1996. He said it was the O&D Subcommittee's recommendation that the items and estimates under the new column, "Recommended Estimate Revised" be approved by the PMC so they could proceed with completion of the construction list. Specifically, he said the amount being requested for approval was $1,938,959, with a contingency of $290,844, for a total of $2,229,803. Mr. Sieczkowski responded to questions, and discussion was heard. The requested Committee action on this item was deferred until after discussion of Agenda Item 8.B., Budget Subcommittee Bond Refunding. Bradley Lake Project Manayv...ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 5 of 8 9. OLD BUSINESS A. Spinning Reserves Update Mr. Cooley reported that the ASCC/RCC had completed its preliminary economic analysis of changing the spinning reserve requirements. The analysis was currently under Committee review, and a recommendation was expected in about a month. Preliminary results indicate that on a pooled basis, if responsive reserves were required to be carried in either Fairbanks or Kenai, there would be an estimated cost of a million dollars per year to change the spinning reserve criteria. If spinning reserve responsive spin was not required on either end of the system, there would only be a negligible additional cost, on a pooled basis, to change the spinning reserve requirement. Mr. Cooley noted that one assumption that was being taken into consideration included whether any geographic distribution would be required on the spinning reserve, which would be a major factor in whether there would be an additional cost, on a pooled basis, to change the spinning reserve requirement. Mr. Cooley reported that the Committee would meet Thursday of next week to final the NERC recommendations. Mr. Cooley responded to questions. B. Budget Subcommittee Bond Refunding Ms. Pease said she would also provide the Budget Subcommittee report at this time since she had not provided it earlier in the meeting. Ms. Pease reported that two invoices had been received from Ron Saxton at Ater, Wynne, et al., for legal services rendered, the February 1997 invoice in the amount of $2,614.61 and the March 1997 invoice in the amount of $2,085.50. She requested Committee approval for payment of those invoices. MOTION: Mr. Story moved, seconded by Mr. Bjornstad, to approve payment of the February and March 1997 invoices from Ater, Wynne, et al. There being no discussion, a voice vote was taken, and the motion passed unanimously. Referring to the audit completed by Parisena, Stromberg & Company for the period ending 6/30/96 that had been distributed, Ms. Pease noted that the only open issue addressed in the report was contained in Footnote E, labeled "Contingency." She said the issue involves the concurrent audit done by the Municipality's internal auditor, Mr. Raiskums. She said the bonds issued exceeded the recoverable construction costs by $350,524, resulting in an over-payment of debt service and interest by the PMC. Ms. Pease said the Budget Subcommittee had received updated information from AEA, and it was the Subcommittee's recommendation that the PMC authorize Mr. Raiskums to finalize the examination of the Bradley Lake bond fund and identify the final amount to be refunded to the participants under the issue. MOTION: Mr. Story moved to approve the Budget Subcommittee's recommendation, and that the PMC authorize Mr. Raiskums to finalize the examination of the Bradley Lake Bradley Lake Project Manag -...ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 6 of 8 bond fund and identify the final amount to be refunded to the participants under the issue. Seconded by Mr. Bjornstad. Upon request, Ms. Pease stated that the audit assignment to Mr. Raiskums would be that he update and finalize the figures contained in his preliminary audit, which Parisena, Stromberg had used in the preparation of its report. Mr. Raiskums' final report would be as of May 1997. Ms. Pease responded to Committee questions, and Mr. McCrohan and Ms. McCambridge provided additional explanation. Ms. Pease reported that the Bond Refunding Subcommittee established by the Chair at the previous PMC meeting had met on numerous occasions to discuss the advance refunding of the Bradley Lake First Series bonds. She noted that the last report provided by Goldman Sachs on May 14th reflected that the market had rallied, and a bond refunding at that time would have provided an approximate 5% savings, which translated into about $550,000 per year savings to the PMC, continuing out to the year 2017. Ms. Pease stated that no additional work had been done on the bond refunding, and Mr. Stahr would address the outstanding issues that needed to be addressed before proceeding with any additional work on the bond refunding. There being no further discussion, a voice vote was taken, and the motion passed unanimously. Mr. Saxton addressed the variety of issues associated with the bonds that were still outstanding as they affected the status of physical projects and the construction work that remained to be done. He said those issues would need to be resolved expeditiously if further work was to be done in contemplation of a bond refunding. He noted that in doing any refunding, they should use caution to proceed in a way that would preserve their APUC exemption. Mr. Saxton addressed other issues and problems that would have to be addressed prior to proceeding with a bond refunding. 10. NEW BUSINESS A. Draft Resolution Regarding Bradley Lake Completion Mr. McCrohan reviewed the draft resolution pertaining to project completion. He requested Ms. McCambridge to address the two attached tables which correlated to the construction list reported on by Mr. Sieczkowski earlier in the meeting. Ms. McCambridge gave an overview of the original and updated construction lists and explained the reasons for the additional and revised costs on the updated list. Ms. McCambridge said that assuming the revised estimates were accurate, the revised figure needed from now forward to final project completion would be $2,001,453. Ms. McCambridge stated that the second schedule incorporated the $2,001,453 to complete the project into the total construction costs incurred to date, for a total of $315,408,790.00. Ms. McCambridge briefly summarized the breakdown of the categories of costs, interest earnings, and contributions. Ms. McCambridge responded to questions. Bradley Lake Project Manav -...ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 7 of 8 The Chair called a break at 11:05 a.m. due to construction noise interfering with the meeting. The meeting was reconvened at 11:10 a.m. Mr. McCrohan said the actions called for in the resolution which would be required and/or recommended in order for the bond refunding to go forward were as follows: (1) the requirement that issuance of the bonds in the aggregate initial amount of $165,260,157 must be within the maximum principal amount authorized by the Power Sales Agreement; (2) the requirement that the construction punchlist must be approved by the PMC; and (3) the recommendation that the balance to date of $500,591 be made available to the Bradley Project in the form of reduction in interest payments and that the remaining balance be returned to the State. Mr. McCrohan briefly elaborated on other requirements of the resolution. He noted that this was a draft resolution, and it could be revised, but it addressed the substantive issues. He requested the PMC's approval of the resolution before the bond refunding activities were resumed. Lengthy discussion was heard regarding AIDEA's position on the bond refunding issue and the feasibility of proceeding with it in view of the current spinning reserves and other issues. Mr. Saxton drew an outline on the board and elaborated on the various issues under the main headings of: (1) Future Work, (2) Obligation for Bonds, and (3) Refunding. Further discussion was heard regarding the APUC exemption issue and the current state of the bond market. The PMC concurred that Mr. Saxton should research the statutes and any legal restraints and report back to the PMC regarding how the bond refunding would impact the APUC exemption, and also that he meet with AEA's attorneys regarding AEA's position on the refunding. Further discussion was heard regarding other issues, including how projects such as the governor study and the spinning reserves responsiveness, would impact the refunding. Ms. Pease was directed to have the Budget Subcommittee review the bond refunding issue and develop a plan of the steps and costs involved in the process for presentation to the PMC. It was agreed that a teleconference could be scheduled to discuss any results. 8. OPERATION AND DISPATCH SUBCOMMITTEE REPORT (Deferred) With respect to the requested action on the construction punchlist, which was deferred until after the above agenda item was taken up, Mr. Sieczkowski reiterated his earlier recommendation that the PMC act on the revised estimate. MOTION: Mr. Story moved, seconded by Mr. Evans, to approve the revised construction punchlist. There being no discussion, a voice vote was taken, and the motion passed unanimously. Ade COMMITTEE MEMBER COMMENTS There were no Committee member comments. A. Next Meeting Date Bradley Lake Project Manay-...ent Committee Meeting Minutes Tuesday, May 20, 1997 Page 8 of 8 The next regular meeting of the Bradley Lake Hydroelectric Project Management Committee was tentatively scheduled for the third week in July at the call of the Chair. 12: ADJOURNMENT MOTION: Mr. Kelly moved to adjourn, second by Mr. Story. There being no objection and no further business of the Committee, the meeting was adjourned at 11:55 a.m. ” Eugere Bjomstad, Vige ‘Chairman ATTEST: wae Uy VN Cole Alaska Energy Authority, Secretary ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= ALASKA im ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 May 28, 1997 Ms. Cindy S. Carl, Owner Executary 626 Cordova, Suite 104 Anchorage, Alaska 99501 Dear Cindy: Please provide a summary from the enclosed four (4) tapes for the Bradley Lake Project Management Committee (BPMC) meeting minutes (send a disc of the minutes too). The next meeting date has been tentatively set for the third week in July. If you have any questions, please call me. Sincerely, Shauna M. Dean Enclosures _ + SEN BY: WOHLFORTH + H-20-37 + 8:41AM ; WOHLFORTH? RESOLUTION NO. RESOLUTION OF THE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RELATING TO COMPLETION OF THE ORIGINAL BRADLEY LAKE PROJECT; FINAL USE OF MONEY RE- MAINING IN THE CONSTRUCTION FUND; AND MATTER WHEREAS, the Alaska Power Authority (now known as the Alaska Energy Authority and hereinafter referred to as the "Authority") has entered into a Power Sales Agreement dated as of December 8, 1987, (the "Power Sales Agreement") with Chugach Electric Association, Inc., the 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 the Alaska Electric Generation & Transmission Cooperative, Inc. (the "Purchasers"); and WHEREAS, under the terms of the Power Sales Agreement, the Purchasers are obligated to purchase from the Authority, and the Authority is obligated to sell to the Purchasers, electricity generated by the Bradley Lake Hydroelectric Project, as defined in the Power Sales Agreement (the "Project"); and WHEREAS, the Power Sales Agreement establishes the amount of the Purchasers’ payment obligations for the purchase of electricity in part by the amount of debt service on bonds, such as the Bonds described below, issued to financed the Project; and WHEREAS, the Power Sales Agreement contains a limitation on the maximum principal amount of bonds which may be used to establish the Purchasers’ payment obligations; and WHEREAS, the Authority has issued its Alaska Energy Authority Power Revenue Bonds in two separate series and in an aggregate principal amount of $165,260, 157 (the "Bonds"); and WHEREAS, there is a question as to whether the principal amount of Bonds originally issued was in excess of the maximum amount which may be used to establish the Purchasers’ payment obligations; and WHEREAS, it is one of the purposes of this Resolution to resolve this question and WHEREAS, the Authority issued the Bonds pursuant to its Power Revenue Bond Resolution adopted September 7, 1989, {the "Power Revenue Bond Resolution"); and * Sbit1' BY: WOHLFORTH 5-20-97 + 8:41AM ; WOHLI i WHEREAS, proceeds of the Bonds were deposited in the Construction Fund established by the Power Revenue Bond Resolution (the "Construction Fund") to be used for the purposes of the Construction Fund; and WHEREAS, amounts in the Construction Fund were to be used to pay for “Costs of Acquisition and Construction" (as defined in the Power Revenue Bond Resolution); and WHEREAS, the Power Revenue Bond Resolution contains certain provisions relating to the disbursal of amounts remaining in the Construction Fund after final completion of the Project; and WHEREAS, the Purchasers and the Authority have reached an agreement with respect to both the type and amount of work remaining to be done for the Project to be finally completed and the appropriate disbursal of money remaining in the Construction Fund after such final completion; and WHEREAS, it is also one of the purposes of this Resolution to confirm those agreements; and WHEREAS, the Power Sales Agreement establishes the Project Management Committee, which includes the Purchasers and the Authority; and WHEREAS, pursuant to the terms of the Power Sales Agreement, the Project Management Committee has the authority to adopt this Resolution and, by so adopting this Resolution, to finally resolve the matters referred to above without the necessity of any further action by the Purchasers or any of them; NOW, THEREFORE, BE IT RESOLVED by the Project Management Committee as follows: Section 1. The issuance of the Bonds in the aggregate initial principal amount of $165,260,157 (the "Bond Principal Amount”) Is within the maximum principal amount authorized by Section 8(a)(i) of the Power Sales Agreement. Accordingly, the annual payment obligations of the Purchasers will be determined taking into account the debt service obligations with respect to the entire principal amount of Bonds. The Project Management Committee agrees that the Bond Principal Amount is, and has always been, within “Recoverable Construction Costs” as defined in the Power Sales Agreement. Section 2. Attached hereto, and hereby incorporated by reference, as Exhibit A is @ "punch list" of matters relating to work still to be completed with respect to the Project. The punch list includes a statement of the amount of money currently estimated Resolution No. Bradley Lake/P¥C AFFOS8OC/SS79.0801 Page 2 # 3/ 5 * SENT. BY: WOHLFORTH * 5-20-87 + 6:42AM ; WOHL"“°7"HS # 4/5 for the completion of each of these matters. The Project Management Committee agrees that (a) the total amount (the "Punch List Amount’) indicated in the punch list for the matters listed therein is the entire amount necessary for the full and final completion ot he Project for all purposes of the Power Sales Agreement, (b) there are no other matters beyond the matters listed in the punch list that are necessary for the full and final completion of the Project for all purposes of the Power Sales Agreement, (c) each of the matters listed on the punch list is a Cost of Acquisition or Construction, and the Authority may, in its discretion, determine to leave the amounts indicated in the punch list In the Construction Fund to be used ta pay said Costs of Acquisition or Construction in accordance with the Power Revenue Bond Resolution or establish a separate ee fund for such amounts and for such purpose, (d) the Authority shall have no obi to expend more for any matter lis inch list than th such matter on the punch kst, regardless of any change in circumstances, (e) should the matters listed on the punch list be completed or accomplished for an amount less than the total amount set forth in the punch list for those matters, the excess money set aside for those matters will remain in, or be returned to, the Construction Fund for disbursal in accordance with the Power Revenue Bond Resolution, the Power Sales Agreement, and the remainder of this Resolution, and (f) expenditure of the amounts set aside for the matters listed on the punch list, or such lesser amount as may be necessary for the completion of any such matter, is complete satisfaction of the Authority's covenant contained in Section 6(d) of the Power Sales Agreement. Section 3. As of April 30, 1997, the total cost of completing the Project Is $327 264,132. This cost includes all expenditures for the Project through said date (including financing costs and interest earnings accrued through said date and including costs of the Project described in Section 31 of the Power Sales Agreement) and also includes the Punch List Amounts. The Project Management Committee agrees that the portion of the Project funded with proceeds of the Bonds is $164,759,566 (which consists of 1/2 of the construction costs of the Project, 1/2 of the financing costs, and all of the costs of the Project described in Section 31 of the Power Sales Agreement) (the "Bond Financed Amounts"). The Authority has indicated its willingness to use the amount by which the Bond Principal Amount exceeds the Bond Financed Amounts (that amount being $500,591 and herein referred to as the "Available Bond Amounts") to make interest payments with respect to the Bonds. The Project Management Committee agrees that at any time after the Authority directs the Trustee in writing to apply the Available Bond Amounts to interest payments with respect to the Bonds, the Authority may transfer to the State of Alaska all amounts remaining in the Construction Fund, other than the Punch List Amounts and said Available Bond Amounts, including any amounts that may cbs eponted Wy the Coneinietin bit atte a cate. of this ASSAM. Thee Froiet Management Committee further agrees that any such transfer, together with any transfer of money from the Construction Fund to the State of Alaska that may have occurred prior to the date of this Resolution, is a proper transfer in accordance with the terms of the Power Sales Agreement and the Power Revenue Bond Resolution. Resoluton No. ___ Sradtey Lake/PMC AFFOBOACIESTO 0801 Page 3 + SENT, BY: WOHLFORTH * 8-20-97 + 8:43AM ; WOHLI“**"" He # 5/5 Section 4. Upon the adoption of this Resolution and its acceptance by the Authority, this Resolution shall be a valid and binding agreement and understanding by and among the Project Management Committee, the Purchasers, and the Authority. Section 5. This Resolution shall take effect immediately upon its adoption. ADOPTED this day of . 1997. PROJECT MANAGEMENT COMMITTEE By: Title: ACCEPTED this day of 1997, by the Alaska Energy Authority. ALASKA ENERGY AUTHORITY By: D. RANDY SIMMONS Executive Director Resolution No. ___ Bradley Lake/PMC ALASKA ENERGY AUTHORITY BRADLEY LAKE FINAL CONSTRUCTION LIST REPORT OF ACTIVITY ITEM Fish Study Fish Water SCADA - Construction Moose Mitigation Fund Diversion Tunnel Powerhouse Floor/Paint SVC Spares Equipment Misc Engineering Fishwater Bypass Cleanup ADIT Access Modification Building Roof Modification Airfield Road Access Cold Weather Modification Rip Rap Upstream Face of Left Dam Approved Workorders unfinished at 3/96 Penstock Condensation Governor Speed Instability Study System Analysis Equip at SVCs Contingency Transfer trip schemes - Old Invoices Subtotal AEA Operating Costs Brown & Root Retainage Interest on Retainage (A) (B) (A) + (B) a (c) (A) - (C) Feb-96 PRELIMINARY Si PRELIMINARY Estimate Adjustment/ Revised | Payments Estimate to Complete | Reallocation Estimate 3/20/96-4/24/97| to Complete 290,000.00 (70,000) 220,000 78,762.96 141,237.04 200,000.00 (100,000) 100,000 = - 100,000.00 200,000.00 (14,785) 185,215 : 185,790.16 (575.16) 50,000.00 (45,000) 5,000 © 1,850.86 3,149.14 125,000.00 (120,000) 5,000 : - 5,000.00 175,000.00 (30,000) 145,000 x - 145,000.00 30,000.00 (15,000) 15,000 , - 15,000.00 50,000.00 (10,000) 40,000 _ - 40,000.00 100,000.00 225,000 325,000 7.04 324,992.96 25,000.00 (7,000) 18,000 a 5,565.08 12,434.92 100,000.00 (55,000) 45,000 a - 45,000.00 95,000.00 (60,000) 35,000 29,584.46 5,415.54 30,000.00 (25,000) 5,000 294.53 4,705.47 175,000.00 - 175,000 - 175,000.00 154,000.00 1,244 155,244 48,179.31 107,064.69 25,000.00 (25,000) - = a 50,000.00 95,000 145,000 - 145,000.00 250,000.00 (100,000) 150,000 - 150,000.00 212,000.00 78,844 290,844 - 290,844.00 - 170,500 170,500 | - 170,500.00 2,336,000.00 (106,197)| 2,229,803 | 350,034.40 1,879,768.60 60,000.00 10,000 70,000 : 52,273.38 17,726.62 102,958.00 - 102,958 - 102,958.00 100,000.00 - 100,000 : - 100,000.00 2,598,958.00 (96,197.00)| _2,502,761.00__ 402,307.78 2,100,453.22 §/20/97,9:12 AM BRADLEY LAKE HYDROELEC C PROJECT ANALYSIS OF COSTS AND CONTRIBUTIONS Total Construction Costs Section 31 Costs Costs incurred to date Preliminary Estimate to Complete Estimated Total Construction Costs Financing Costs Per 9/30/93 Calculation Interest received 10/1/93 -6/30/94 (less 9/30/93 Accru Interest received 7/1/94 - 6/30/95 Interest received 7/1/95 -6/30/96 Interest Received 7/1/96-4/30/97 Interest Accrued 3/31/97 Total Financing Costs Total Project Costs Contributions Excess Contributions 4/24/97 Total Bonds State 311,053,337 155,526,669 155,526,669 2,255,000 2,255,000 313,308,337 157,781,669 155,526,669 2,100,453 1,050,227 1,050,227 315,408,790 158,831,895 156,576,895 12,921,538 6,460,769 6,460,769 (454,058) (227,029) (227,029) (238,100) (119,050) (119,050) (185,210) (92,605) (92,605) (161,355) (80,677) (80,677) (27,474) (13,737) (13,737) 11,855,342 5,927,671 5,927,671 327,264,132 164,759,566 162,504,566 328,235,202 165,260,157 162,975,045 971,070 500,591 470,479 h\&ageifie\aea\reports\BLCONST.xls, RESIDUAL BAL Current ALASKA INDUSTRIAL DEVELOPMENT » ¢ AND EXPORT AUTHORITY /= ALASKA @@E™ =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA Tuesday, May 20, 1997 - 10:00 a.m. Anchorage Municipal Light & Power Commission Room - 1200 East 1st Avenue 4. CALLTOORDER ~~ Stahr 2. ROLL CALL (for Committee members) ow 3. PUBLIC ROLL CALL (for all others present) , near 4. PUBLIC COMMENT “ Aa > 5. | AGENDA COMMENTS hos Keke 6. APPROVAL OF MEETING MINUTES - March 25, 1997” = _ les BUDGET SUBCOMMITTEE REPORT ‘~~ A. Bradley Lake Construction Audit Briefing Raiskums~ 8. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Sieczkowski 9; OLD BUSINESS A. Spinning Reserves Update.“ Lovas 4 B. Budget Subcommittee Bond Refunding Pease ~ \C_ —Comistuction Find REGidaLBaance Mop fohan 10. NEW BUSINESS — ——_¥ Ale DreoklB kase or Bh Coy dite COMMITTEE COMMENTS A. Next Meeting Date Stahr 12. ADJOURNMENT Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING Hie yy XO, 199 7 (Date) MA ¥ 2 (Location) PLEASE SIGN IN No. NAME REPRESENTING 1 a Deo AE 2 Belper AEG #7 s| ZF Lok ve LEE. A = vi we yu Merk S| Gere Borns tad CA feel : 6 | DADE CC aceat 5 oS 8 4 | vec. E 9 Pa Me mes AER 14 10 | Ko JAXTOw Rechetiny Cpl triy ul Macy #0 Rase. MYtfr 2 |THAame 2 SL, S 4k FF = VV Ke Kells GUEA 15 16 17 18 19 20 21 De, 92Q2\IT9884 7) ' } Derian Hickey Project Schedule RFP Proposal Description Milestone Date Milestone Amount Task Task# # 3d 3a Review existing hydro model, May 20, 1997 $13,705 transfer functions 3a 3c/3d Existing Bradley Woodward Model & May 26, 1997 $12,475 block diagrams 3d 3a Document existing PTI transfer June 15, 1997 $20,020 functions, block diagrams 3d 3a Incorporate tunnel model into PTI July 1, 1997 $24,080 software 3f 3f Insert new model into July 15, 1997 $950 Railbelt data base 3e 3e Insert (or remove) deflector time July 15, 1997 $5,475 delay in data base, complete two test cases 3g 3g Benchmark 10 cases August 7, 1997 $17,350 3h 3h Final Report & presentation August 30, 1997 $13,662 Total $107,717 BRADLEY L¢é. HYDRO PROJECT CONSTRUCTION LIST EEE ETEEEE EEE Eese essere cree Seer eee EEEEEE Pree Imre EES ESTIMATE INVOICED ESTIMATE REVISED TO DESCRIPTION FEB. 9, 1996 05/19/97 CHANGE DATE 1 34 |THE BRADLEY RIVER SALMON STUDY CONTRACT $290,000 $220,000 (70,000)| $78,762.00 | 2 35 _|FISH WATER RELEASE SCADA MODIFICATIONS $200,000 $100,000 (100,000) $0.00 3 |DONE | 36 |MOOSE MITIGATION FUND $200,000 $185,215 (14,785) $185,215 4 37 _|DIVERSION PORTAL TUNNEL LEAKAGE $50,000 $5,000 (45,000) $1,851.00 5 38 |POWERHOUSE FLOOR $125,000 $5,000 (120,000) $0.00 6 39 |STATIC VAR COMPENSATOR SPARES $175,000 $145,000 (30,000) $0.00 i 40 |EQUIPMENT $30,000 $15,000 (15,000) $0.00 8 MISC PROJECT ENGINEERING $50,000 $40,000 (10,000) 20 |Emergency Generator Controls 0 $10,660.00 25 |Safety Cable on West side Powerhouse 0 $22,587.84 25 _|Guard Rail around hatches 0 6 _|Service Water Modifications $2,800 2,800 $0.00 DONE | 25 {Platform Additions $39,000 10,660 $10,660.00 29 _|Fuel Station Sump Modifications $8,000 1,100 $1,100.00 9 |DONE | 41 _ |FISHWATER BYPASS DEBRIS REMOVAL $100,000 $325,000 225,000 $0.00 10 32__|ADIT ACCESS MODIFICATION $25,000 $18,000 (7,000) $5,565.08 11 42 |BUILDINGS ROOF MODIFICATION $100,000 $45,000 (65,000) $0.00 12 33 __|AIRFIELD ROAD ACCESS $95,000 $35,000 (60,000 $29,584.46 13 43__|COLD WEATHER MODIFICATIONS $30,000 $5,000 (25,000) $295.00 | 14 44 _|RIP RAP UPSTREAM FACE OF LEFT DAM ABUTMENT $175,000 $175,000 0 $0.00 15 APPROVED WORK ORDERS 1__ {Air and Oil Seperators $1,000 $12,000 11,000 $438.93 8 _|Control Circuits $50,000 $0 (60,000) DONE 15 _|Powerhouse Lockers $11,400 $3,560 (7,840) $3,560.00 18 _|Repair Storage Roofs $3,000 $3,000 0 $0.00 19 |Repair Parrapet Wall and Gatehouse Roof $2,000 $4,200 2,200 $290.00 DONE 20 |Diesel Generator Control Circuits $2,000 $2,825 825 $2,825.00 DONE | 21 __/|Fishwater Bypass Control Engineering $50,000 $40,000 (10,000)| $27,526.00 DONE 22 |Crickets and Dormer Engineering $12,700 $17,400 4,700 $17,342.00 23 _|13.8KV Relay Modification $12,000 $6,400 (5,600) $6,400.00 DONE 26 _|Governor Improvements Study $9,900 $16,059 6,159 $16,059.00 | 16 45 __|PENSTOCK CONDENSATION $25,000 $0 (25,000) $0.00 17 46 |GOVERNOR INSTABILITY STUDY $50,000 $145,000 95,000 $0.00 18 47 __|SYSTEM ANALYSIS EQUIPMENT $250,000 $150,000 (100,000) $0.00 19 |DONE TRANSFER TRIP SCHEMES (ADDED 4/97) $170,500 170,500 | $155,000.00 SUBTOTAL $2,124,000 $1,938,959 (185,041) $575,721 20 CONTINGENCY $212,000 $290,844 78,844 $2,336,000 Construction List 32597 Page 1 5/20/97 awd ” C hock o4 Agenda Item No. CITY OF SEWARD MATANUSKA ELEC ASSOC CHUGACH ELEC ASSOC HOMER ELEC ASSOC GOLDEN VAL ELEC ASSOC MUNI LIGHT & POWER ALASKA ENERGY AUTHORITY A=4+ OVER 51% We B = AEA CONCUR With A a BRADLEY PMC VOTING Tem 2 Rol Coll DecfkRess YES NO ABS o CDT] CoD) Oot DATE: ~y 7 14% | I 3% (| [| |] [J] ] 12% [=] im [Te] bel] L { 26 ESE) EEE) EET C = UNANIMOUS D= MAJORITY VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of Project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers Agenda Item No. CITY OF SEWARD MATANUSKA ELEC ASSOC CHUGACH ELEC ASSOC HOMER ELEC ASSOC GOLDEN VAL ELEC ASSOC MUNI LIGHT & POWER ALASKA ENERGY AUTHORITY A=4+ OVER 51% BRADLEY PMC VOTING YES NO ABS YES 01% [| NO ABS YES NO ABS 14% ‘| 30% 12% 17% | VAP | 26% [_] a ETE) febee] [ET B= AEA CONCUR With A C = UNANIMOUS D= MAJORITY VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of Project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers Agenda Item No. CITY OF SEWARD MATANUSKA ELEC ASSOC CHUGACH ELEC ASSOC HOMER ELEC ASSOC GOLDEN VAL ELEC ASSOC MUNI LIGHT & POWER ALASKA ENERGY AUTHORITY A=4+ OVER 51% B = AEA CONCUR With A 5/00 DATE: BRADLEY PMC VOTING vis NO ABS YES NO ABs YES NO ABS 01% [_[| JT] LeT 14% [_[T_] Les 3% [TT }) CII] CLT) 12% [2 .. [| eye E [- 17% [kek = Ee eek: | 26 ETE] EE) Eee eB] [AEee] FE 4 C = UNANIMOUS D= MAJORITY VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of Project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers Agenda Item No. CITY OF SEWARD MATANUSKA ELEC ASSOC CHUGACH ELEC ASSOC HOMER ELEC ASSOC GOLDEN VAL ELEC ASSOC MUNI LIGHT & POWER ALASKA ENERGY AUTHORITY A=4+ OVER 51% BRADLEY PMC VOTING DATE: B=AEACONCUR With A = ow me ws wo as ves =a 4% {| | | } LCL} Ely | 3% [TT] CLI) CLI 122% [_[_] im Ele) COL ee) EST 264 PRE] Eee] ET AE ea ed C = UNANIMOUS D= MAJORITY VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of Project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers Agenda Item No. CITY OF SEWARD MATANUSKA ELEC ASSOC CHUGACH ELEC ASSOC HOMER ELEC ASSOC GOLDEN VAL ELEC ASSOC MUNI LIGHT & POWER ALASKA ENERGY AUTHORITY A=4+ OVER 51% B= AEA CONCUR With A DATE: BRADLEY PMC VOTING YES NO ABS YES NO ABS YES NO ABs 01% | l=] [ [| | | 4% [_[ [| _] | 3% [JT TT] (CJ [| 2% [_| J J 17% 24 [ESE] EPEE|] Esto ese) | eee] L C = UNANIMOUS D= MAJORITY VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of Project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS JUNE 30, 1996 AND 1995 A Professional Corporation AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS JUNE 30, 1996 AND 1995 Audited Financial Statements BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Anchorage, Alaska Page Independent Auditor's Report 1 Balance Sheets 2 Statements of Revenue, Expenses and Changes in Surplus 3 Statements of Cash Flows 4 Notes to Financial Statements 5-8 Independent Auditor's Report on Additional Information 9 Statements of Expenses 10-11 Prusena, Stonbory & Company A Professional Corporation Certified Public Accountants 3301 C Street, Suite 520 7 Anchorage, Alaska 99503 Independent Auditor's Report Tel. (907) 563-4547 FAX (907) 561-7683 Bradley Lake Project Management Committee Anchorage, Alaska We have audited the accompanying balance sheets as of June 30, 1996 and 1995, and the related statements of revenues, expenses and changes in surplus and of cash flows for the years then ended, of the Bradley Lake Project Management Committee Operating and Revenue Funds (a project management committee). These special purpose financial statements are the responsibility of the Bradley Lake Project Management Committee. Our responsibility is to express an opinion on these special purpose financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying special purpose financial statements were prepared to present revenue and expenses on an accrual basis with the exception of interest income, which has been presented on a cash basis in order to conform to the fiscal year operations and maintenance budget. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and surplus of the Bradley Lake Project Management Committee as of June 30, 1996 and 1995 and its revenue, expenses and changes in surplus and cash flows for the years then ended, in conformity with generally accepted accounting principles. This report is intended for the information and use of the Bradley Lake Project Management Committee and should not be used for any other purpose. ee, Moore, N AU are Parisena, Stromberg & Company, APC Anchorage, Alaska January 28, 1997 BRADLEY LAKE PROJECT MANAGEMENT COM). TEE OPERATING AND REVENUE FUNDS BALANCE SHEETS June 30, 1996 and 1995 ASSETS Current assets: Investments (Note B) Due from AEA (Note E) Due from Construction Fund Total Assets LIABILITIES AND SURPLUS Current liabilities: Due to AIDEA Due to Construction Fund Accounts payable Total current liabilities Contingencies (Note E) Surplus: Reserved (Note C) Unreserved Total surplus Total liabilities and surplus See accompanying notes to the financial statements. 2, 1996 $ 1,560,757 1,560,757 $ 107,427 288,223 395.650 1,165,107 1,165,107 $1,560,757 $ 2,485,919 34,903 16,760 2 5317582 $ 323,071 378,006 701,077 55,000 1,781,505 1,836,505 $2,537,582 BRADLEY LAKE PK ECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUE, EXPENSES AND CHANGES IN SURPLUS YEARS ENDED June 30, 1996 and 1995 1996 1995 Budget Actual Variance Actual Revenue: 7 Setar Utility contributions $ 13,054,836 $13,054,836 $ - $13,919,892 Interest receipts 1,697,500 1,924,479 226,979 1,923,471 Arbitrage refund - 25,465 25,465 - Revenue from state - - - 250,000 Salary reimbursement from workers' compensation insurance : - - 24.600 Total revenue 14,752,336 15,004,780 252,444 16,117,963 Expenses and debt service: Operations and maintenance 2,530,650 2,285,453 245,197 2,116,973 Interest payments 10,415,725 10,415,725 - 10,596,285 Principal payments 2.975.000 2.975.000 - 2.795.000 Total expenses and debt service 15,921,375 15,676,178 245,197 15,508,258 Excess (Deficiency) of revenue over expenses and debt service (1,169,039) (671,398) 497.641 609.705 Surplus, beginning of year 1,836,505 1,226,800 Surplus, end of year 11 07 $1,836,505 See accompanying notes to the financial statements. 3 BRADLEY LAKE PROJECT MANAGEMENT COMMI1 1 EE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS YEARS ENDED June 30, 1996 and 1995 1996 1995 Cash flows from operating activities: Excess (deficiency)of revenues over expenses and debt service $ (671,398) $ 609,705 Adjustments to reconcile excess of revenues over expenses and debt service to net cash provided by operating activities: Decrease in accounts payable (89,783) (79,180) Decrease in amounts due to State - (239,946) Increase (decrease) in amounts due to AIDEA (215,644) 262,506 (Increase) decrease in amounts due from AEA 34,903 (34,903) (Decrease) increase in amounts due to Construction Fund 16,760 (35,545) Net cash provided by operating activities (925,162) 482,637 Available cash and cash equivalents at beginning of year 2.485.919 2.003.282 Available cash and cash equivalents at end of year $_1,560.757 $ 2.485.919 Supplemental disclosure of cash flows information: Interest paid $10,415,725 $10,596,285 See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 1996 and 1995 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, 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). The Homer Electric Association, Inc. (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 has 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. 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 Seattle- First National Bank in Seattle, Washington. BRADLEY LAKE PROJECT MANAGEMENT COMMI1 1 nE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1996 and 1995 NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued) All deposits, including utility contributions and interest earnings, 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. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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 expense during the reporting period. Actual results could differ from those estimates. 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 interest and principal payments on bonds is recognized when paid. Income Taxes: The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a) of the Internal Revenue Code. NOTE B: INVESTMENTS Substantially all of the balances in the following funds are invested in collateralized investment agreements through the trust department of Seattle-First National Bank. The specified interest rate for monies from the Operating and Revenue Funds invested in the agreements is 7.38%. Balances at June 30, 1996 and 1995 are as follows: 1996 1995 Operating Fund $ 660,152 $ 2,004,613 Revenue Fund 900.605 481,306 Total investments $_1,560,757 $2,485,919 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1996 and 1995 NOTE B: INVESTMENTS (Continued) 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, which approximates market value. For purposes of the cash flow statements, management considers the full amount of the investment balance to be cash available for operations. NOTE C: RESERVED SURPLUS The Committee has funded the five-year inspection planned for 1996 by including a portion of the total estimated cost of $75,000 in the operating and maintenance budgets in the years prior to 1996. The inspection was performed and expensed during fiscal year 1996. The reserve was eliminated. NOTE D: 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 Alaska Energy Authority entered into an agreement with Chugach Electric Association, Inc. (CEA) in August, 1996, for the provision of all services necessary to dispatch the Bradley Project's electric power output. Terms of the contract specify that payment shall be made to CEA for direct personnel costs, training and the costs of computer software used for dispatching Project 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 Chugach Electric Association, Inc. on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. BRADLEY LAKE PROJECT MANAGEMENT COMMI1 11 E OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1996 and 1995 NOTE D: MAJOR CONTRACTS AND AGREEMENTS (Continued) An operation and maintenance agreement dated February 11, 1994, was executed between Homer Electric Association and the Alaska Energy Authority. This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association for an initial term of five years, commencing February 11, 1994. The agreement continues from year to year thereafter, except upon written notice to terminate by either party. Notice of termination must be given one year 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. NOTE E: CONTINGENCIES Subsequent to year end, the Municipality of Anchorage Office of Internal Audit completed a review of annual project costs and concluded that the bonds issued exceeded recoverable construction costs by $350,524, resulting in overpayment of debt service and interest by the PMC. The PMC is awaiting results of an audit of costs. No resolution has been made at this time. NOTE F: RELATED PARTY TRANSACTIONS During the years ended June 30, 1996 and 1995 the Committee paid the following amounts to related parties for costs incurred under the various contracts described in Note D: 1996 1995 Homer Electric Association - operation and maintenance $ 825,680 $ 853,713 Chugach Electric Association - dispatch services $ 99,814 $ 131,722 Chugach Electric Association - substation maintenance $ 112,246 $ 73,681 Dusena, Sromberg & Company A Professional Corporation Certified Public Accountants 3301 C Street, Suite 520 Anchorage, Alaska 99503 Tel. (907) 563-4547 FAX (907) 561-7683 INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION Bradley Lake Project Management Committee Operating and Revenue Funds Anchorage, Alaska Our report on our audits of the special purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds for June 30, 1996 and 1995, appears on the page preceding the balance sheets. Those audits were made for the purpose of forming an opinion on the special purpose financial statements taken as a whole. The supplemental Statements of Expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the special purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the special purpose financial statements taken (oe Muore Lag AFP C_ Parisena, Stromberg & Company, APC Anchorage, Alaska January 28, 1997 BRADLEY LAKE PRO >T MANAGEMENT COMMITTE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES June 30, 1996 and 1995 Expenses: Generation expense: 1996 Budget Actual Operation supervision and engineering: Contractual Hydraulic operation: Contractual Electric plant operation: Contractual Variance Favorable 1995 (Unfavorable) Actual Hydraulic power generation operation: Contractual Rents: Contractual Structure maintenance: Contractual Reservoir, dam, and waterway maintenance: Contractual Electric plant maintenance: Contractual Hydraulic plant maintenance: Contractual System control and load dispatching: Contractual Substation operation and maintenance: Contractual Overhead line maintenance: Contractual Continued $ 173,300 $ 107,658 $ 65.642 $ 95.418 33,000 12,239 20.761 27,093 173,100 147.140 25.960 133,278 276.400 240,127 36,273 210,703 65,000 62,024 2.976 200 20,500 17.606 _ 2.894 17,828 9,100 3,383 5.717 2.673 331.400 283.734 47,666 290,783 108,000 95,204 12.796 65,820 426,950 340,196 86.754 358.644 52,000 112,246 _ (60,246) 23.681 28.000 533 27,467 17.616 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES (Continued) June 30, 1996 and 1995 1996 Variance Favorable 1995 Budget Actual (Unfavorable) Actual Administrative, general and regulatory expense: Insurance $ 362,400 $ 323,605 $ 38,795 $ 328,320 Administration 275,000 275,000 - 330,602 Contractual 88,000 114,847 (26,847) - Regulatory commission: FERC land use fees - - - 59,023 Five-year inspection - 6,783 (6,783) - FERC administrative fees 75,000 116,029 (41,029) 79,900 FERC licensing 28,500 27,099 1,401 23,919 Rule curve development 5,000 - 5,000 - Americans with disabilities survey - : : 1,472 Total administrative, general and regulatory expense 833,900 863.363 (29,463) 823.236 Total operating and maintenance expenses $_2,530,650 $_2,285.453 $__245,197 $_2,116,973 11