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Bradley Lake PMC Meeting June 19, 2008 2
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the AIDEA/AEA’s Board Room) Anchorage, Alaska Thursday, June 19, 2008 — 10:00 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, June 19, 2008, from the AIDEA/AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association (teleconference) Brad Evans Chugach Electric Association Wayne Carmony Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Christa Caldwell, AEA Henri Dale, GVEA Linda MacMillan, AEA Page 1of 5 Rick Baldwin, HEA Brian Bjorkquist, Dept. of Law Rick Miller, AML&P Burke Wick, CEA Doug Hall, AML&P Bob Price, AML&P Mike Cunningham, CEA (teleconference) Charlie O’Hare, HEA (teleconference) Don Zoerb, MEA (teleconference) Kirk Gibson (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES - May 14, 2008 MOTION: Mr. Posey moved to approve the minutes of the May 14, 2008 meeting. Seconded by Mr. Barnum. The meeting minutes were unanimously approved. 7. NEW BUSINESS TA. O&M Agreement MOTION: Mr. Carmony moved that the Bradley Lake Project Management Committee approve the Operations & Management Agreement for the Bradley Lake Hydroelectric Project between Homer Electric Association, Inc. and Alaska Energy Authority, effective July 1, 2008 through June 30, 2013 with an automatic renewal for a successive five-year term unless proper notice of termination is given by either party. Seconded by Mr. Carey. Mr. Janorschke stated that HEA went back and addressed the concerns from the previous PMC meeting. Mr. Baldwin added that the first issue of significance is the issue of termination provision that the BPMC was concerned about. The question was raised — what happens if the UPP or some REGA organization comes about and AEA wants to transfer the contract over to the new organization. Section 2D of the Agreement states that the Agreement may be terminated upon no less than six (6) months notice if the termination is approved by the Authority and the majority of the members of the BPMC constituting not less than 75% of project capacity and the Authority contracts to transfer operation and maintenance responsibility over the project to an entity organized to operate generation assets in the railbelt. He went on to Page 2 of 5 state that would allow the rest of the utilities to out-vote HEA if HEA didn’t want to surrender the reigns. The O&D Committee has been working on a new set of work rules that are updated. Those rules are referred to under operator's specific duties in section 5B of the Agreement, which obligates HEA to operate, maintain and repair the project in accordance with the operation and maintenance standards and work rules. The work rules are integrated into this Agreement with the O&D Committee being responsible for developing the work rules. Another issue of concern was the issue of oversight of subcontracts. Section 5Q provides for the operator to agree to comply with any written procedures adopted by the BPMC and approved by the Authority concerning the administration of any subcontracts. The work will be done at the committee level and more detailed procedures can be more easily developed and more easily changed. Mr. Bjorkquist added that in the Agreement under section 12, were procedures for modification of the work rules and that procedure stays in place — modification of work rules require approval of the Authority and the BPMC and that provision was not changed, so you still have the ability to change the work rules in the future. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association; = ----- Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7B. Transformer Replacement Mr. O'Hare stated that the facilities transformer at Bradley Lake catastrophically failed. This is the same transformer that failed in 1999. They are rapidly getting a replacement for this transformer and have come up with an estimate of costs totaling $110,000. They are looking into a reduced priced transformer that may reduce that cost. In the meantime, a back-up generator (125 kV) to power the shop, warehouse, crews quarters, duplexes and the dam. The dam itself has a back-up generator, but they opted to get a generator the size that would power the dam and leave the back-up generator and the dam off as a back-up to that. There is a timeframe of four weeks for the transformer to arrive and get replaced. They will be removing the old transformer and sending it out for recause analysis to find out why it failed and significantly right after an earlier transformer failure less than ten years ago. Once they determine what the root cause of the failures are, an active plan to eliminate the cause of this and determine what is needed to be done on an ongoing basis will take place. An authorization of $110,000 is being requested for the replacement of the transformer and the analysis. Page 3 of 5 Mr. Posey asked if there was a spare or if a spare was part of the $110,000 or a part of the replacement plus to get a spare? Mr. O'Hare replied that they do not have a spare and what they would like to do first is get the root cause analysis completed to determine what the cause was before getting a spare or a back-up generator. The manufacturer of the one that failed was not the manufacturer of the previous one that failed. Mr. Posey also inquired as to the $110,000 being the quote for the replacement — do you think there is a cheaper alternative or a different manufacturer that will make one that will meet our needs? Mr. O'Hare gave a breakdown of the costs: Transformer: $70,000 Shipping: $10,000 Misc. Connectors: $ 5,000 Back-up Generator Rental: $ 5,000 Root Cause Analysis: $10,000 Additional Labor: $10,000 MOTION: This is what is known as an extraordinary expenditure and per the O&M Agreement, section 8E, BPMC authorization is needed for these expenditures. Move by Mr. Posey, seconded by Mr. Newton. This will authorize them to replace with the $70,000 plus spending all the connectors and the root cause analysis, afterwards determining if we should look at buying a spare. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7c. Budget Report Ms. MacMillan gave an overview of the budget report, including a projected surplus in the budget of approximately $480,000. The Budget Finance Sub-committee decided to hold off amending the budget and wait until the final audit and will refund monies to the utilities at that time. Mr. Carey added that insurance quotes for next year have been received from ARECA and Willis and we are seeing a reduction by about $50,000 in the cost of insurance for next year. Page 4 of 5 8A. Operators Report Mr. O’Hare reiterated the transformer failure and added that they are preparing for the annual outage, which starts on July 18, 2008 and ends on August 7, 2008, with a combined unit outage on July 29, 30, and August 1! 2008. Lake level is at 1,091. The lake level is coming up, but not as fast as anticipated. The snowpack is estimated to be 25-30 percent above average. It is anticipated to have more inflow at the project this year than last year. 8B. Next Meeting Date The next meeting will be Thursday, September 25, 2008, at 10:00 a.m. at AEA. BY: Exons Lo rad Evans, Chair ATTEST: aarreine Alaska Energy Authority/Secretary 9. ADJOURNMENT Meeting adjourned at 10:35 a.m. Page 5 of 5 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 pate: (/ (2/000 ty apoacepho BRADLEY PMC VOTING 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. 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 4) Determination of annual project costs after 12) Evaluation and approval of optional project 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) each FY. work and compensation for such work. 5)—Evaluation-of necessity-for and-scheduling-of ——_13}—Application-of insurance-claims-proceeds-not———— required project work. governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 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. 15) Approval of consultants. VOTING METHOD C: 8) Selection among alternate methods that involve AEA for funding required project work. Unanimous vote by all (including AEA) VOTING METHOD D: 9) Adoption or amendment of procedural committee rules (except dispute resolution). Majority vote (including AEA) 10) Adoption of project maintenance schedules. Election of Officers Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING bh 19. wee (Date) ATIEA Board. Poon (Location) PLEASE SIGN IN No. N REPRESENTING AME L 1 tse Howe/ 2 AW. NMusron’ 3 He Aes Ds = ge Ss] bmada Mae Millen 6 7 voile AL = MLifp Z|! ens Ds or keuist ai fae 13 8 is . AEA 9 it@k mi hw L¢ [— w| Bob Price at AR A u Unci sta Caldwet! AEA sta OU rei 14 15 16 17 18 + mt 19 20 21 22 92Q2\IT9884 JUN-19-cUs Uri>f From?HeH Gl"! KENHL 190 535bec4 lo: su44 reese MOTION: Move that the Bradley Lake Project Management Committee approve the Opcrations & Management Agreement for the Bradley Lake Hydroelectric Project between Homer Electric Association, Inc. and Alaska Energy Authority, effective July 1, 2008 through June 30, 2013 with an automatic renewal for a successive five-year term unless proper notice of termination is given by either party. Move: Loewe e (' aia Second: TELECONFERENCE INSTRUCTIONS Thursday, June 19, 2008 — 10:00 a.m. To join the meeting, please do the following: Dial 1-800-315-6338 Enter 3028# oe A ALASKA ZI EX /= ENERGY AUTHORITY Alaska Industrial Development Wr a Export Authority BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Thursday, June 19, 2008 — 10:00 a.m. (via electronic media at the AIDEA/AEA Board Room - 813 W. Northern Lights Blvd.) 1. CALLTO ORDER ~ Ane Evans 3. PUBLIC ROLL CALL (for all others present) “~ “op eg ey Loy Le Ow a 4. PUBLIC COMMENT .~ 5. AGENDA COMMENTS (changes/additions/deletions) a ae belie pbk Fheek 6. APPROVAL OF MEETING MINUTES May 14, 2008 ly AX Gu | sé br 2. ROLL CALL (for Committee members) 7, NEW BUSINESS A. O&M Agreement (Action Item) Janorschke B. Transformer Replacement O'Hare C. Budget Report Cunningham 8. COMMITTEE REPORTS / COMMENTS A. Operators Report B. Next Meeting Date Evans 9. ADJOURNMENT 813 West Northern Lights Boulevard * Anchorage, Alaska 99503-2495 www.aidea.org © 907/771-3000 * FAX 907/771-3044 ® Toll Free (Alaska Only) 888/300-8534 * www.akenergyauthority.org BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the Chugach Electric Association’s Board Room) Anchorage, Alaska Wednesday, May 14, 2008 — 10:00 a.m. 4; CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Wednesday, May 14, 2008, from the Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward (teleconference) Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Page 1of 5 Christa Caldwell, AEA Henri Dale, GVEA Doug Hall, AML&P Peter Raiskums, MOA Mike Chadwick, MOA Brian Bjorkquist, Department of Law Tuckerman Babcock, MEA Rick Miller, AML&P Charlie O’Hare, HEA Rick Baldwin, HEA Don Zoerb, MEA Linda MacMillan, AEA (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES - March 11, 2008 MOTION: Mr. Janorschke moved to approve the minutes of the March 11, 2008 meeting. Seconded by Mr. Newton. The meeting minutes were unanimously approved. 7. NEW BUSINESS 7A. O&M Agreement Mr. Baldwin stated that HEA originally proposed a 5-year term with automatically renewable 5- year terms. HEA was looking for change in the contract which would eliminate what they viewed is an unacceptable risk of the operator for uninsured losses. The clear provision for who would be responsible for deductible/coverage gaps/claim in excess of the limits — since HEA is operating at cost it didn’t want to assume any risk. HEA has by this agreement received that — there is a provision that uninsured losses will then be a project expense. HEA still remains liable for willfulness conduct or gross negligence. A second item that came up was the interplay between the legitimate interest of the BPMC in controlling the asset that member utilities are paying for and are responsible for and AEA’s duties as the owner and its obligation under the bond. The intent of this draft was to expand the BPMC’s role of beyond its role in the original contract. The original contract provided for the attachment of a master O&M agreement, which had not been negotiated at the time the original contract was entered into. That O&M agreement later became an attachment to the HEA O&M Page 2of5 contract (an agreement between the BPMC and HEA). The terms of that agreement were also integrated into the new agreement. The final significant change is language inserted as a result of an insurance study commissioned by the BPMC (Bud Griffin). There was concern at the BPMC that they were having inadequate input into HEA’s subcontracting practices and needed more oversight. Discussion ensued that each subcontract should be put before the individual BPMC utilities or perhaps the BPMC lawyer for review prior to execution by HEA. That discussion never really came to a conclusion because there were discussions of should a minimum limit be put on the contracts so HEA wouldn't have to come back to the BPMC with the subcontracts for janitorial, etc. They provided HEA will follow the subcontracting procedures as established by the BPMC and AEA. Mr. Bjorkquist added input as to history (in his perspective). Over time there has been a balance of interests addressed. On one hand the PMC has wanted to have oversight and the ability to influence what goes on, but on the other hand there needs to be some flexibility/freedom on HEA’s part so there aren’t cumbersome processes that add to expense. The question at hand is — is there a way for the BPMC to get re-involved midway rather than just at the beginning during contract review? Mr. Carmony asked if there was anything in place where HEA has the ability to allow for adjustments — if they need a change order to a contract if the amount of the change order is less than 2% of the contract, do they have the ability to go forward or do they have to wait until the BPMC approves? Mr. O'Hare stated that there is no percentage buffer specifically. If HEA sees something will be over budget, they are required to go back to the O&D subcommittee to discuss and determine whether to-go forward with taking it to the BPMC for approval or increasing the budget, and that would be a budget amendment. Mr. Bjorkquist added that the indemnification provision comes from legislation that was passed this year (Chapter 4, Session Laws of Alaska 2008), in which all state agencies, including AEA, have language similar to this indemnification language for any construction related contract. The O&M work that HEA does, some of it could be characterized as construction related and therefore the legislature in this law requires that this indemnification language be included in the agreement. Mr. Newton made reference to Section 12 — work rules — and requirements of the Authority and the BPMC approving changes. Mr. O'Hare responded that the work rules were put out by AEA in the early 90s and they were incorporated into the union contract — it states how things will be done at the site. If changes were necessary to the work rules, HEA would have to go to AEA to get approval to change the work rules before it could be negotiated into a new contract. Mr. Bjorkquist added that the concept is that those are issues that would be brought to the BPMC or a subcommittee and dealt with in conjunction with AEA, not just AEA dictating what happens. Page 3 of 5 **Action Item for O&M — bargaining and work rules. Finance and O&D committee to get together on subcontracting and when do we step in and when do we complement HEA and when do we let HEA do their thing. 1. Opener clause 2. Bargaining issue — coming back to the PMC 3. Contracting issue — at what level does the PMC take a more active role. 7B. Auditor Selection Mr. Cunningham briefed the group that with the retirement of Gary Stromberg, there was a process of recommending an independent auditor for the project to the BPMC. The finance committee developed an RFP, posted that on the Alaska CPA website and sent out several invitations to select firms that were recommended by members of the finance committee. There were three responses and the finance committee met after reviewing the responses, making a unanimous recommendation of the retention of Swalling & Associates for a three-year term with the option to renew for two years. Criteria to evaluate the responses _ included cost/understanding the engagement/audit strategy/experience. MOTION: Mr. Newton moved that the Bradley Lake Project Management Committee retain Swalling and Associates P.C. as the project independent auditor for the year(s) ended June 30, 2008 through June 30, 2010, with an option to extend the engagement for two additional years. Seconded by Mr. Carmony. A roll call vote was taken and the motion passed unanimously. 7C. Internal Audit Report 2008-5 Bradley Lake Hydro Project Mr. Raiskums with the Municipality of Anchorage lead off the discussion regarding the report. They were asked by AML&P to audit the O&M costs at Bradley Lake. Overall, costs were reasonable. A few minor exceptions: work rules and HEA having family members at the plant (liability). Discussion ensued in regards to family members at plant sites, family housing, food/meals, transportation, emergency transportation, tours through powerhouse, security cameras, etc. Chair Evans suggested that this matter be taken back to the O&D committee, in relation to security at the plant and non-qualified personnel with access issues. MOTION: Mr. Newton moved to accept the report. Seconded by Mr. Posey. Discussion ensued. Mr. Carmony moved to express appreciation to the Municipality for providing the BPMC with the information for the purposes of assisting with the management of the project. Seconded by Mr. Posey. A voice vote was taken and the motion passed unanimously. Page 40f5 8. COMMITTEE REPORTS / COMMENTS 8A. Operators Report Mr. O’Hare stated that the annual outage starts July 18" and ends on August 7". R&M is redesigning the replacement for the culvert repair based on closing the runway for a period of time. Construction is anticipated to start in the fall. New flight service (starting June 1, 2008) - Grant has obtained the contract and flight services will be switched to this new airline soon. 8B. Next Meeting Date The next meeting will be Thursday, June 19, 2009, at 10:00 a.m. at Bradley Lake. 9. ADJOURNMENT Meeting adjourned at 11:20 a.m. BY: Brad Evans, Chair ATTEST: Alaska Energy Authority, Secretary Page 5 of 5 SECOND AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT BETWEEN HOMER ELECTRIC ASSOCIATION, INC. AND ALASKA ENERGY AUTHORITY EFFECTIVE AS OF JULY 1, 2008 TABLE OF CONTENTS Page Section 1 - Construction and Definitions........c.cccccccssssesesseseesesscseeseeseesesecseeseeseesensenecseeseneeaeneeaes 2R Section 2 - Term of Agreement 0.0... cccceeesesesessesesessseneescseseserscsesesesseseescseseceesesscsesessescaeseneeevees S45 Section 3 ='(Qualified: Utility Status sxc x ssccecsscstavevssevassvesscavasrassecvevevssosnduevssversusexsstasstessbvevsestves ones 545 Section 4 - Operator’s General Duties and Right to Subcontract. v.00... ccceeseseseseeseseseeseseseeeees 545 Section 5 - Operator’s Specific Duties... Section 6 - Accounts, Records and Audits... 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Section 17 = Availability of Information «. scccqecsscsevsasssseceesaaovavessovesassessversevssresssseseansveowenioens 1444 Section: 18 = Effect:of I ermination sccse..c.scczehecatacsssossconnesssasessatesenssacsnesssovesssoesaserssvousveeepvessvesse I4H4 ECU Onl 9 =i POree Via) Ut es eer seca ar esesece cm ewer earaeaases vase oemenastssexs unaavacayunssameemrses urea 15544 Section.20 = Third Party Bene ficiaties rss sce rarscrecsesrsenssersrstasesssnsrererrerstrasas nereomer remem ISHS Section 21 - Assignment of Contract .....ccccccececsesesesseseseenecsesesesseseesscseessesesecsesenssseeseeeeees ISHS Section 22 - Exhibits ........cccccecsccsscsscesecseessessceseeseesecsecseceeceseesecseeeaeesecesecseceseeeecaeeeeeaseaeeeeeee 16H6 Section 23 = Multiple Copies sisscascsesesecsecssnveysovessussesnessssarvevnscsssosaven conntssevssavesssssestosesressnsvsvasses 16H6 Section 24 - AMENAME Nt .........cccceesceseeseessesseeseeseeseesecseeeeceseesecseceseeeeeseeseceaecseseaeceseaeeaeeaeeetens 1OH6 Section 25 - Waiver Not Continuing ...:..:.0:0b.csssssosesesoncecoseresseseseocnseeceseresseseroesororsorsseesecerereses 16H6 Section 26 - Severability Section 27 - Conduct in Accord with Applicable Law... ccccseeseeeeseneeseeneeseseneeseseeeeeees 1OH6 Section 28 - Section Headings .........ccsceseseseseeeeseseeeeeeeescseseeescseaeseeseeeescseescsesesessesesseseeeeees I7HH6 SECOND AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT THIS SECOND AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT (“Agreement”) dated as of , 2008, is entered into by the HOMER ELECTRIC ASSOCIATION, INC. (“Operator”) and the ALASKA ENERGY AUTHORITY (“Authority”). WITNESSETH WHEREAS, the Authority is a public corporation of the State of Alaska duly created, organized, and existing pursuant to AS 44.83, and authorized by law to sell electric power generated by the Bradley Lake Project (“Project”); WHEREAS, the Bradley Lake Project Power Sales Agreement (the “Power Sales Agreement”) provides that the Bradley Lake Project Management Committee (“BPMC”) shall arrange for the operation and maintenance of the Project and Project Related Facilities and adopt an annual budget of Project Costs; WHEREAS, to provide for the operation and maintenance of the Project and Project Related Facilities, the BPMC entered into a Master Maintenance and Operating Agreement with the Authority under which the Authority shall enter into contracts necessary to perform services for, or operation and maintenance of, the Project and Project Facilities; WHEREAS, the Authority is authorized under AS 44.83.396 to enter into agreements for the operation and maintenance of power projects owned by the Authority with a “qualified utility”; WHEREAS, the BPMC is authorized under the Master Maintenance and Operating Agreement and its Bylaws adopted pursuant to the terms of the Power Sales Agreement, to approve contracts for the operation and maintenance of Project facilities; WHEREAS, the Operator has been identified in the “Bradley Lake Hydroelectric Project Agreement for the Wheeling of Electric Power and Related Services” (“Services Agreement”) dated June 29, 1989, by the participating utilities as an appropriate entity to operate and maintain the Project; WHEREAS, the Operator is both a qualified utility within the meaning of AS 44.83.425(3) and is authorized to operate and maintain a power project acquired or constructed by the Authority; WHEREAS, the Operator has agreed to operate and maintain the Project in accordance with the terms and conditions of this Agreement; 1 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT WHEREAS, the Operator has provided O&M services pursuant to the Operation & Maintenance Agreement for the Bradley Lake Project dated as of February 11, 1994 (“1994 O&M Agreement”), which was for an initial period of five years and automatically renewable annually thereafter; WHEREAS, the parties extended the 1994 O&M Agreement through an Amendment dated June 22, 1999, which extended the 1994 O&M Agreement through June 30, 2004, and provided that the term shall continue from year to year thereafter; and WHEREAS, the parties have determined that instead of the annual renewal, this Agreement shall be for a term of five (5) years, which may be renewed for successive five-year terms thereafter. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: Section | - Construction and Definitions (a) Construction. This agreement is executed in accordance with the terms of the following underlying agreements (the “Underlying Agreements”): (1) Bond Resolution; (2) Power Sales Agreement; (3) Master Maintenance and Operating Agreement. This Agreement in its entirety including the exhibits and the Underlying Agreements represent the entire Agreement of the Operator and the Authority. Nothing in this Agreement is intended to alter the rights and obligations of the Authority and any Purchaser under the Underlying Agreements. In the event of a conflict between a term or provision in this Agreement and any Underlying Agreement, the term or provision in any Underlying Agreement shall control, and the Underlying Agreements shall be construed in the order of precedence in which they are listed above. In the event of a conflict between any provision in the body of this Agreement and any provision contained in an exhibit hereto, the former shall control. (b) For purposes of this Agreement, the following definitions apply. (1) “Agreement” means this Second Amended and Restated Operation & Maintenance Agreement for the Bradley Lake Project. (2) “Annual Project Costs” shall have the meaning given to that term by the Power Sales Agreement. (3) “Authority” means the Alaska Energy Authority as established by AS 44.83, and any successor agency thereto and, unless the context otherwise requires, the employees, agents, and contractors who are directly responsible, respectively, to the Authority. 2 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (4) (5) (6) (7) (8) (9) (10) (1) (12) (13) (14) (15) (16) (17) “Bond Resolution” shall have the meaning given to that term by the Power Sales Agreement. “BPMC” means the Bradley Lake Project Management Committee as established under the December 8, 1987, Power Sales Agreement and operating under its Bylaws. “Construction” has the meaning given in AS 36.90.300(c). “Contract Year” means the twelve month period starting July 1 of a calendar year through and including June 30 of the next succeeding calendar year. “Emergency” means an event as declared by the Operator resulting from an unforeseen combination of circumstances or the resulting state that requires immediate action to protect or preserve the Project (or its operations), Project personnel, or public health and safety. “Extraordinary Costs” means costs for operations, maintenance, repair or equipment replacement which were not anticipated to materialize in the Contract Year, and not provided for in the Project O&M Budget. “Effective Date” means July 1, 2008. “Division of Risk Management” means an office which is part of the State Department of Administration and which is established pursuant to AS 44.21.020. “FERC” means the Federal Energy Regulatory Commission, an agency of the United States Department of Energy, or its successor agency. “Master Maintenance and Operating Agreement” means the Master Maintenance and Operating Agreement dated as of May 24, 1994, between the Authority and the BPMC. “O&M” means operation and maintenance of the Project and includes the duties set forth in this Agreement. “Operation and Maintenance Standards” means the Plant Operation and Maintenance Manual, and equipment installation, operation, and maintenance manuals. “Operator” means Homer Electric Association, Inc. (HEA) or its authorized assignee (pursuant to Section 21) and the employees, agents, and contractors who are directly responsible, respectively, to either. “Optional Project Work” shall have the meaning given to that term by the Power Sales Agreement. 3 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (18) “Participant” shall have the meaning given to that term by the Power Sales Agreement. (19) “Party” or “Parties” means each or all the signatories to this Agreement or a party’s authorized assignee. (20) “Percentage Share” shall have the meaning given to that term by the Power Sales Agreement. (21) “Power” or “Electric Power” means electric energy or electric capacity, or both, except where the context requires a distinction, in which case electric energy is expressed in kilowatt hours, and electric capacity is expressed in kilowatts. (22) “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), as it may be amended from time to time. (23) “Professional Services” has the meaning given in AS 36.90.300(c). (24) “Project” means the Bradley Lake power generation facility and the associated transmission and substation facilities described in Exhibit A. (25) “Project Budget” means the budget for Annual Project Costs as adopted and amended pursuant to Section 13 of the Power Sales Agreement. 25)(26) _ “Project Capacity” shall have the meaning given to that term by the Power Sales Agreement. @6)27) “Project O&M Budget” means the budget for the operation and maintenance of the Project as adopted and amended pursuant to Section 13 of the Power Sales Agreement. RAS) “Project Related Facilities” shall have the meaning given to that term by the Master Maintenance and Operating Agreement. 2829) _ ‘Prudent Utility Practices” shall have the meaning given to that term by the Power Sales Agreement. (294(30) _ “Purchaser” or “Purchasers” shall have the meaning given to that term by the Power Sales Agreement. 31) “Required Project Work” shall have the meaning given to that term by the Power Sales Agreement. 4 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (39)(32) “Work Rules” means the Bradley Lake Hydroelectric Site Work Rules as initially published by the Authority and as amended from time to time by the Authority and the BPMC. Section 2 - Term of Agreement (a) (b) This Agreement shall take effect as of the Effective Date, subject to execution by the authorized representatives of both Parties. The term of this Agreement shall be five (5) years from the Effective Date, and shall automatically be renewed for successive five-year terms until terminated as provided herein and subject to the termination rights set forth in Section 2(c) and Section 7(d). Notice of termination by either party shall be given two years in advance of the end of any term. (c) In the event the Authority reasonably determines that the Operator’s performance of its fed) obligations under this Agreement, without immediate remedial actions, could cause substantial damage to the Project or endanger public health or safety, the Authority shall promptly notify the Operator and shall identify the areas where performance must be remedied. The Operator shall submit to the Authority a plan for remedial action to correct its performance within twenty-four (24) hours of such notice. The Authority or its designee shall have the right to temporarily take over the duties of the Operator until a remedial action plan reasonably satisfactory to the Authority is agreed to by the Operator. If the Parties fail to agree to a remedial action plan within thirty (30) days of the date of notice provided by the Authority, the Authority may immediately terminate this Agreement. This Agreement may be terminated upon no less than six (6) months’ notice if (i) the termination is approved by the Authority and a majority of the members of the BPMC constituting not less than 75% of Project Capacity, and (ii) the Authority contracts to transfer operation and maintenance responsibility over the Project to an entity organized to operate generation assets in the Railbelt. Section 3 - Qualified Utility Status The Authority has determined that the Operator is a qualified utility within the meaning of AS 44.83.425(3) and has met all the requirements thereof. Section 4 - Operator’s General Duties and Right to Subcontract. To the extent authorized by the Project O&M Budget, or as otherwise funded in accordance with this Agreement, the Operator shall: (a) (b) Operate and maintain the Project so as to make power available to the Purchasers in an amount equal to the amount the Purchasers may schedule from the Project, within the limitations imposed by available Project capability, available water, and the scheduling procedures adopted by the BPMC; Bring to the attention of the Authority and the BPMC Required Project Work, and perform or cause to be performed such Required Project Work to the extent funds are made available 5 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT for such purpose; provided, however, that any procurement or other contracts related to Required Project Work must be in writing and must be approved in advance pursuant to Section 13 of the Power Sales Agreement. The Operator shall not perform or cause to be performed Optional Project Work unless such Optional Project Work is approved and funded by the BPMC and assigned to the Operator by the Authority. Notwithstanding the foregoing, the Operator may subcontract work in accordance with Section 5(q) on the operation or maintenance of the Project or Project Related Facilities to the extent authorized in the Project O&M Budget or with the written approval of the Authority and the BPMC, which shall not be unreasonably withheld. Each subcontract will contain a specific clause providing that it is subject to the provisions of the Master Maintenance and Operating Agreement. In performing its duties hereunder, Operator, or any subcontractor, is performing solely as an independent contractor. Section 5 - Operator’s Specific Duties To the extent authorized by the Project O&M Budget or as otherwise funded in accordance with this Agreement, the Operator shall: (a) Coordinate operation, maintenance, repair and other work schedules with the Purchasers in accordance with the Bradley Lake Allocation and Scheduling Procedures; (b) Operate, maintain, and repair the Project in accordance with the Operation and Maintenance Standards and Work Rules. In addition, the Operator shall use and update the Automated Maintenance Management System or such equivalent system as the Authority may direct. The Operation and Maintenance Standards and Work Rules shall be maintained at the Project site. Any revisions to the Operation and Maintenance Standards or Work Rules shall be effective within a period of time after notice having due regard to the nature of the revisions requested and necessary project budget revisions; (c) Provide all material, labor, engineering and other technical support, subcontract management, and training to operate, maintain, and repair the Project, and all tools, equipment, spare parts, materials, and supplies needed to perform work under this Agreement in accordance with the Operation and Maintenance Standards and written directives by the Authority; (d) Comply with all applicable federal, state, and local government laws, regulations and permits. If the Operator elects to contest an order issued by a local government, state or federal agency (other than the Authority), the Operator shall promptly notify the Authority and the BPMC; (e) Provide security and access in accordance with a mutually agreed plan; 6 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (f) (g) (h) (i) 0) (k) 0) (m) Read, maintain, and operate all Project metering devices, record such readings, and maintain or forward data, forms, relevant graphs, and/or magnetic tapes as required by the Authority; Make annual recommendations to the Authority and BPMC for: (1) operation, maintenance, repair, replacement, and modification of Project facilities; (2) installation of additional protective relaying, instrumentation, control systems, or other apparatus as necessary to maintain or improve the Project and interconnected system reliability, integrity, efficiency, and safety; (3) a five (5) year schedule of estimated equipment modifications, replacements, additions, and disposals; Prepare monthly and year-end operating and financial statements, in a form acceptable to the Authority relating to the performance of this Agreement; Provide qualified personnel with the ability to perform the duties assigned to the Operator under this Agreement; Prepare and conduct an annual training program that meets the minimum training standards established by the BPMC. The Authority may require the Operator to undertake additional training which the Authority deems necessary, however, funding for such additional training is the responsibility of the Authority; Following a protective relay or alarm action, and upon observation or notification, interpret the cause, identify corrective measures, and take corrective action as the situation warrants. The Operator shall document any such actions within three (3) days of their accomplishment; Take prudent measures to protect equipment, personnel, and the general public from hazards arising from equipment failure such as electrical faults, vandalism, and mechanical failure and repair and report damaged facilities to the Authority, to the BPMC on behalf of the Authority and any appropriate law enforcement authority, as soon as possible following each occurrence; Record the operating characteristics of the power plant equipment and machinery as required; Maintain the Project living quarters, including expenses for utility services, as a cost of operation and maintenance; Update, keep and make available to the Authority, BPMC, or any Purchaser the required Project documents, as-built drawings, and other records, including records to meet FERC license requirements and records required by any project related insurance agreements; 7 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (p) Perform water and power operation studies as required to integrate power from the Project into the Purchasers’ systems with due regard for the capability limits of the Project planned water reserves, and Purchasers’ power needs; (q) Arrange for and administer subcontracts or agency agreements related to the O&M of the Project; provided, however, that Operator agrees to comply with any written procedures adopted by the BPMC and approved by the Authority concerning the review.-and approval and administration of any such contracts, subcontracts, or agreements; (r) Conduct all technical, operation, and maintenance inspections of the Project in accordance with FERC and other permits or agency requirements, and submit inspection and other reports to the appropriate entities as directed by the Authority; (s) Support the Project by coordinating related technical and operating activities with the Purchasers; and (t) Perform such other additional duties related to the operation, maintenance and repair of the Project as may be included in the Project O&M Budget. Section 6 - Accounts, Records and Audits In keeping records for work performed under the Agreement, the Operator shall utilize the accounting system required of public utilities and licensees by the FERC for electric plants. The Operator shall make its records available at reasonable times. The Operator shall retain copies of all invoices, payroll records, and other supporting documents sufficient for an audit of all expenditures, for three (3) years following the close of each Fiscal Year. The Operator will furnish the Authority with operating and financial statements related to work performed under the Agreement as may be reasonably requested by the Authority. If delivery of those statements is unreasonably delayed, the Authority may, with its own staff or agents, perform all work necessary to collect the data reasonably necessary, but only at such times and in such a manner as will not unreasonably interfere with Operator’s operations under the Agreement. Section 7 - Budget (a) In accordance with schedules provided by the Authority, the Operator shall prepare and submit each year to the Authority and the BPMC a draft O&M budget for the Project for the following Contract Year. (b) The draft O&M budget shall be based upon prudent estimates and anticipated O&M requirements and expenditures, and reflect appropriate accounting and budgetary principles for utilities. The draft budget shall be prepared in a format and schedule provided to the Authority by the BPMC. (c) Not less than 30 days prior to the beginning of a Contract Year the Project O&M Budget shall be adopted for the Contract Year pursuant to Section 13 of the Power Sales Agreement. 8 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (d) The Operator shall perform its duties in a manner consistent with the Project O&M Budget except as provided in Sections 8 and 9 below. If the Operator makes a determination during any Contract Year that it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under the Project O&M Budget, the 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 pursuant to Section 13 of the Power Sales Agreement, and the Operator determines that it cannot perform its obligations under this Agreement, the Operator may terminate this Agreement upon 150 days notice to the BPMC and the Authority. Section 8 - Extraordinary Costs (a) If the Operator learns of an event or other contingency which involves an Extraordinary Cost, the Operator shall promptly notify the Authority and the BPMC of the circumstances and request authorization to make such expenditures pursuant to Section 13 of the Power Sales Agreement. (b) After notice is given as provided for in Section 8(a) and if required by the Authority or BPMC, the Operator shall develop a scope, schedule, budget and proposed plan of work and deliver the same with a request to proceed as soon as practicable. The Authority and BPMC shall respond in writing to the Operator’s request as soon as practicable after the receipt of the plan. Upon approval obtained pursuant to Section 13 of the Power Sales Agreement, the Operator shall perform such work consistent with the plan. The Operator shall not incur any Extraordinary Costs without the written approval obtained pursuant to Section 13 of the Power Sales Agreement except as provided in Section 9 below. Section 9 - Emergency Expenditures The Operator shall take such actions as it reasonably believes are necessary in an Emergency, including incurring unbudgeted costs. If, in the reasonable judgment of the Operator, the Emergency requires the Operator to incur costs prior to obtaining written approval from the Authority and the BPMC pursuant to Section 13 of the Power Sales Agreement, the Operator shall notify the Authority and the BPMC of the Emergency as promptly as practicable with due regard to the Emergency. Section 10 - Disbursement of Funds (a) The normal and routine costs of performing under this Agreement shall be initially paid by the Operator. (b) The Operator shall submit complete written invoices to the Authority for payment with cost summaries and support documents as reasonably requested by the Authority and BPMC. (c) The Authority shall expeditiously arrange for payment of all invoices, including invoices for Emergency expenditures, and shall work with the Operator to promptly resolve any disputed billings. All such invoices shall be subject to audit and approval by the Authority, such approval shall not be unreasonably withheld. In the event the Authority disputes any 9 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (d) (e) amount set forth in such an invoice, the Authority shall arrange for payment of the undisputed amounts of the invoice. Subject to the availability of funds, the Authority shall reimburse the Operator for all costs under this Agreement. Any undisputed amount on an invoice submitted to the Authority by the Operator shall be paid by the Authority within thirty (30) days of receipt of the invoice. Any amount not paid within thirty (30) days shall accrue simple interest at the legal rate of interest at the time payment was due, until paid by the Authority. Section 11 - Access to Operator’s Facilities Authority and BPMC personnel or agents shall be granted reasonable access to the Project and the Project-owned equipment and facilities on the Operator’s premises upon reasonable notice and subject to security measures, for the purpose of inspection and testing. Section 12 - Use of Project Living Quarters (a) (b) (c) Use of living quarters is established by the Bradtey-Work Rules. Modification of the Work Rules requires the approval of the Authority and the BPMC. The Operator shall schedule occupation of the Project living quarters in an efficient manner. The Operator shall include in such scheduling, quarters for visiting employees of the Operator, subcontractors, the Authority, and the BPMC as needed and available. On-site operations and maintenance personnel shall have priority in the use of permanent residences at the Project. Section 13 - Insurance and Indemnity (a) General. (1) During the term of this Agreement, the Operator shall use its best efforts to maintain insurance satisfactory to the Authority and the BPMC covering injury to persons or property suffered by any Party or a third party, as a result of errors, omissions, or operations which arise both out of and during the course of this contract by the Operator or by any of its contractors (the ““Operator’s Insurance’’). (2) The Operator’s Insurance shall be the primary coverage for the exposures delineated in subsection (1) above with respect to the State of Alaska, its officers, agents, and employees, the BPMC, its officers, agents, and employees, and the Operator, its officers, agents, and employees, as named insureds. Any additional insurance or self-insurance separately maintained by the State, except insurance purchased on behalf of the BPMC, shall be in excess of the Operator’s Insurance and shall not contribute to it. 10 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (3) (4) (5) (6) (7) (8) (9) The cost of the required insurance shall be paid by the Operator and included in the Project O&M Budget as an operating cost. Policies maintained under this Agreement must provide that any cancellation, non- renewal or material change be upon thirty (30) days written notice to all named insureds. Insurance Companies shown on the certificate of insurance must be acceptable to the Authority. The Authority shall not unreasonably withhold approval of such Insurance Company. The Operator shall, at least thirty (30) days prior to cancellation, non-renewal, or material change, provide the Authority with written evidence of insurance which replaces or reinstates the required insurance coverage. A copy of the insurance policies required of the Operator will be furnished to the Authority prior to beginning work under this Agreement. Prior to February 1 of each year thereafter, evidence of insurance shall be provided by the Operator. The Operator’s obligation to obtain and maintain insurance coverage pursuant to this section shall be subject to the general availability of such coverage under reasonable terms and conditions. If one or more of the required insurance coverages is not available under reasonable terms and conditions, the Operator shall, under the guidance and direction of the BPMC and Division of Risk Management, use its best efforts to obtain substantively equivalent insurance coverage acceptable to the BPMC, the Authority, and the Division of Risk Management. If, after utilizing its best efforts, the Operator is unable to obtain the required insurance coverage under reasonable terms and conditions, as reasonably determined by the Operator, the Operator shall request a waiver of the relevant insurance requirement. The request shall outline steps taken by the Operator to obtain such insurance and shall disclose quotations received for coverage. To the extent the waiver will not materially affect the safe and prudent operation of the Project, the Authority, after consulting with the Division of Risk Management, will not unreasonably withhold approval of the requested waiver. Failure to furnish satisfactory evidence of insurance or failure to maintain the policy without complying with this subsection shall result in a material breach of this Agreement. The Authority shall maintain a policy or policies of property damage insurance insuring the Project against loss resulting from fire, explosion, accident, or equipment breakdown for the probable maximum loss of the Project, with deductible amounts as established after consultation with the BPMC. The policy or policies shall contain a waiver of subrogation with respect to the Operator and the BPMC and list the Operator as an additional named insured to the extent of its interests. The Authority shall annually, prior to February Ist each year, furnish evidence of insurance to the Operator and the BPMC. 11 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (b) (c) (d) Workers’ Compensation Insurance. (1) (2) The Operator shall provide and maintain, for all employees engaged in work under this Agreement, coverage as required by AS 23.30.045, and, where applicable, any other statutory obligations including but not limited to Federal U.S.L. & H. and Jones Act requirements. The policy must waive subrogation against the State and provide for an All States Endorsement. The Operator is responsible for workers’ compensation insurance for any of its subcontractors who directly or indirectly provide services under this Agreement. Commercial General Liability Insurance. (1) (2) The Operator shall maintain commercial general liability insurance. The Operator shall secure insurance as required to meet its obligations under this subsection. The BPMC and the Authority shall be included as additional insureds as respects insurance required in this subsection and shall not, by their inclusion, be responsible to the insurance carrier for payment of the premium These insurance policies must also contain a provision providing for cross liability or severability of interest. The commercial general liability insurance shall be subject to the following limits of liability: (i) Bodily Injury and Property Damage Liability of a minimum $5,000,000 Combined Single Limits each occurrence and affording insurance for Premises Operations, Owners and Contractors’ Protective, Independent Contractors, Products/Completed Operations, Blanket Contractual Liability, Broad Form Property Damage, and personal Injury Liability; (ii) | Commercial Auto Liability Insurance covering all vehicles used by the Operator in the performance of services under this agreement with minimum coverages of not less than $5,000,000 combined single limit each occurrence for bodily injury and property damage liability. Additional Liability Insurance. The Operator shall maintain the following additional insurance, where applicable, for aircraft and watercraft owned or contracted for by the Operator. (1) Owned Aircraft and Non-Owned Aircraft with seating capacity of five seats or less, except commercial, scheduled flights, with limits of liability not less than: $5,000,000 for Bodily Injury per occurrence; $1,000,000 for Passenger Liability per seat; and $5,000,000 for Property Damage Liability per occurrence. Coverage must include Slung Cargo exposures. Except in an Emergency, if an aircraft with more than five seat capacity is used, then special coverage and limits must be obtained and must be approved by the Authority and BPMC. 12 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (f) (g) (2) Owned Watercraft and Non-Owned Watercraft with limits of liability not less than $5,000,000 per combined single limit each occurrence. Subcontractor’s insurance. Any contract entered into with a subcontractor, other than a Purchaser, by the Operator to perform part of its obligations hereunder shall require the same insurance provisions stated in paragraphs (b) through (d) of this Section 13. The Operator may request a waiver of part or all of such provisions where such waiver will not materially affect the Project and the Operator determines the waiver is necessary to its performance of this Agreement. The Authority will not unreasonably withhold approval of such waiver. Indemnity. The Operator shall indemnify, defend, and hold the Authority harmless from and against any claim of, or liability for, negligent acts, errors, and omissions of the Operator with respect to any Construction-related Professional Services provided under this Agreement. The Operator is not required to indemnify, defend, or hold harmless the Authority for a claim of, or liability for, the independent negligent acts, errors, and omissions of the Authority. If there is a claim of, or liability for, a joint negligent act, error, or omission of the Operator and Authority, the indemnification, defense, and hold harmless obligation of this provision shall be apportioned on a comparative fault basis. In this provision, “independent negligent acts, errors, and omissions” means negligence other than in the Authority’s selection, administration, monitoring, or controlling of the Operator, or in approving or accepting the Operator’s work. Uninsured Loss. The costs of any loss or damage to or arising out of the Project not covered by insurance, including uninsured deductibles and indemnity (including the Operator’s indemnity under Section 13(f), above), shall be included in the Project Budget as an operating cost unless and to the extent caused by the willful act or gross negligence of the Operator. The Operator shall be responsible for paying any such costs if and to the extent the loss or damage is determined to be caused by or arises out of the Operator’s willful act or gross negligence. For the avoidance of doubt, the Operator acknowledges its responsibility, as a Participant, to pay its Percentage share of Annual Project Costs, including its Percentage Share of all amounts included in the Project Budget. Section 14 - Dispute Resolution Pending resolution of a disputed matter, the Parties will 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 Operator shall, to the extent necessary for its continued performance, make a determination of such matter without prejudice to the rights of the other Parties. Such determination shall not constitute a waiver of any other remedy belonging to either Party. 13 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT Section 15 - Notices. Time and Holidays Computation. Designated Representatives (a) (b) (c) (d) Any notice or demand involving a claim of default, breach of the Agreement, or notice of a dispute shall be sent to the appropriate Party by registered or certified mail. Any notice required to be given to any Party by this Agreement shall be effective when it is received by such Party. In computing any period of time from such notice, the period shall commence at 12:01 p.m. on the date of receipt of such notice. Notice to Operator required by this Agreement shall be in writing directed to the General Manager of Homer Electric Association, Inc., 3977 Lake Street, Homer, Alaska 99603. Notice to the Authority required by this Agreement shall be in writing addressed to the Executive Director of the Alaska Energy Authority, 813 West Northern Lights, Anchorage, Alaska 99503. If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday, payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed. Each Party shall designate a representative to act for it in matters not requiring formal action by its governing bodies. Either Party may at any time change its designated representative by giving written notice to the other Party. Section 16 - Remedies Cumulative No remedy conferred upon or reserved to the Parties under this Agreement is intended to be exclusive of any other remedy or remedies existing at law or equity. Section 17 - Availability of Information The Parties shall make available to each other, for inspection and copying during business hours, all books, records, plans and other information relating to any calculation or determination to be made under this Agreement. Section 18 - Effect of Termination (a) Not less than 75 days prior to the date of any scheduled termination of this Agreement the parties shall meet for the purpose of discussing arrangements necessary for the orderly takeover of the duties of the Operator by the Authority. At or before the meeting the Operator shall submit to the Authority a takeover plan which sets forth the actions which in the opinion of the Operator are reasonably required to accomplish the takeover, and any budget amendments necessary to accomplish the plan. The Authority shall review and either approve or modify the plan and budget. The Operator shall perform in accordance with the approved plan, subject to any budgetary constraints. The Authority shall secure funding for and pay any Extraordinary Costs reasonably incurred by the Operator in performing its duties hereunder, including close-out and demobilization costs. 14 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT (b) Following termination of this Agreement for any cause, the Authority shall have the right and a reasonable amount of time, not to exceed six (6) months, to arrange disposition of Project-owned equipment on the Operator’s premises. Section 19 - Force Majeure (a) No Party to the Agreement shall be liable to other Parties 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: (1) 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; strike, lockout and other labor dispute excluding those disputes wrongfully caused by the Operator; 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 tier or anyone acting on behalf of such Party); or (2) 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. (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 will 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 Parties prompt written notice of any delay which the Party giving notice considers to be an excusable delay of its performance. Section 20 - Third Party Beneficiaries The BPMC, as representative of the Purchasers, is a third party beneficiary of this Contract, with the legal right to enforce the provisions hereof. In any action by the BPMC for damages, the Operator shall have the right to assert against the BPMC any defense which it could have asserted against the Authority. The raising of any such defense by the Operator shall not affect any right of a purchaser or the BPMC under the Master Maintenance and Operating Agreement or Power Sales Agreement. Section 21 - Assignment of Contract This Agreement shall be binding upon and inure to the benefit of the successors, legal representatives or assigns of the Operator and the Authority. However, the Operator may not 1S 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT assign the Agreement or any part thereof without the prior written consent of the Authority and the BPMC. No such assignment shall operate to relieve the Operator of its obligations under this Agreement. If the Authority discontinues its current legal existence, unless the rights, powers and duties of the Authority are transferred to a successor entity with substantially the same expertise within the meaning of Prudent Utility Practices, powers and duties as the Authority, its obligations under the Agreement will automatically be assigned to the BPMC, without the need for consent by the Operator. Section 22 - Exhibits The provisions of the following exhibits attached hereto are incorporated by reference herein: Exhibit A - Project Facility Description; Exhibit B - Project Specific Federal and State Agency Requirements; Section 23 - Multiple Copies This Agreement may be executed in several counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument. Section 24 - Amendment Any amendment or modification to this Agreement must be in writing and signed by the Operator and the Authority and approved by the BPMC. Section 25 - Waiver Not Continuing Any waiver at any time by any Party of its rights with respect to any default of the other Party hereto, or with respect to any other matter arising in connection with the Agreement, shall not be considered a waiver with respect to any subsequent default, right or matter. Any delay short of the statutory period of limitations in asserting or enforcing any right shall not be deemed a waiver of such right. Section 26 - Severability In the event that any provision of the Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the Agreement shall be unaffected by such adjudication and all the remaining provisions of the Agreement shall remain in full force and effect as if such provision so adjudicated to be invalid had not been included herein. Section 27 - Conduct in Accord with Applicable Law The Operator and the Authority agree that at all times during the term of the Agreement, they shall conduct themselves in accord with all applicable laws and permits, and they will undertake no action contrary to such laws or permits. Moreover, the Parties specifically acknowledge that the Agreement is subject to all applicable provisions of state and federal law concerning Equal Employment Opportunity as well as all applicable provisions of state and federal law concerning 16 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT work hours and safety standards. The interpretation and application of the Agreement and the actions of the parties hereunder shall be governed by the laws of the State of Alaska. Section 28 - Section Headings The section headings of the Agreement are for convenience only, and do not purport to, and shall not be deemed to, define, limit or extend the scope or intent of the section to which they pertain. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the day and year first above written. HOMER ELECTRIC ASSOCIATION, INC. By. Bradley P. Janorschke General Manager Date ALASKA ENERGY AUTHORITY By Steve Haagenson Executive Director Date 17 2nd AMENDED AND RESTATED OPERATION & MAINTENANCE AGREEMENT I EXHIBIT A PROJECT DESCRIPTION PROJECT DESCRIPTION re 12 General The Bradley Lake Hydroelectric Project is located on the Kenai Peninsula at the northeast end of Kachemak Bay about 27 miles from Homer. The project contributes to the electrical generating capacity of Alaska’s Railbelt serving customers from the Kenai Peninsula to Fairbanks. Major elements of the project include a concrete faced, rockfill dam, to raise the level of Bradley Lake about 100 feet, an ungated spillway having discharge capacity of 23,800 cfs at pool elevation 1190.6, a diversion tunnel which also serves as a low level outlet, a submerged intake leading to the power tunnel which, including the vertical shaft, is 19,152 ft. long, a surface powerhouse located on the shore of Kachemak Bay and a tailrace channel into the bay. All elevations given in this report are referred to Bradley Lake Project Datum, at which zero is equal to 13.63 ft. above MLLW at Bear Cove. The two unit plant has a nominal generating capacity of 126 MW at 917 ft. net head. Each generating unit consists of a six jet, vertical shaft Pelton turbine driving a 63 MVA generator at 0.95 power factor. The penstock for a future third unit was also constructed as part of the initial project development. Usable storage in Bradley Lake at full pool (El 1180) is about 280,000 acre ft. The project is connected to the existing Kenai Peninsula transmission line, consisting of two parallel 115 KV lines. The lines run through the Fox River Delta to connect with Homer Electric Association’s Fritz Creek to Soldotna Transmission line. A summary of pertinent project data is given on Table 1. History of Development The power generation potential of Bradley Lake was first studied by the U.S. Corps of Engineers and presented in a report dated March 1955. The project was authorized by Congress in 1962, but despite its feasibility federal funds were not available for its construction. The Alaska Energy Authority (then Alaska Power Authority) assumed responsibility for the project in 1982. Preliminary plans were developed and field investigations started in 1982. In April 1984, the Authority submitted an application for license to the Federal Energy Regulatory Commission (FERC). The license to construct the project was issued on December 31, 1985. The first major contract, “Site Preparation” was let in 1986 and was completed in 1987. This contract included on-site access roads, barge dock, airstrip, permanent facilities, construction camp and diversion tunnel. Following a one year hold on project construction, the General Civil Construction and Transmission Line Clearing A-1 Contracts were awarded in June 1988. The Powerhouse Construction Contract was awarded in December 1988 and the Transmission Line Construction Contract was awarded in June 1989. The General Civil Construction and the Powerhouse contracts were completed in August 1991. The Alaska Energy Authority issued a contract for supply of the turbines and generators in 1987, and issued a contract for supply of the SCADA control systems in July 1989. Smaller contracts were also issued for transmission line surveying, geotechnical surveys, and construction of the Middle Fork and Nuka Diversion structures. The diversion tunnel was closed in October 1990, however all inflow to the reservoir was released through the fish water bypass lines. Actual storage in the lake started in Spring 1991 when enough water was available to meet downstream minimum flow requirements. A contract for Site Rehabilitation was issued in June 1991. Both units were released to dispatch in August 1991, and the Project was declared in commercial operation September 1, 1991. Construction of the project was completed on November 21, 1991, with the completion of the Site Rehabilitation work. 2. DESIGN 2.1 Geology Except for the transmission line, all major elements of the project are founded on or in the bedrock. The geology of the site is composed of Upper Mesozoic Age metamorphic rocks of the McHugh Complex. Most probably this melange is composed of turbidites which have been slightly to moderately metamorphosed. Rock types encountered are graywacke, argillite, chert, dacite, metatuff, and greenstone. The graywacke, argillite and mixtures of these rocks are dominant. Chert occurs as nodules and lenses in the argillite and metatuff with some massive beds up to 15 ft thick. The diabase occurs as intrusive dikes generally 10 to 20 ft. in width with some dikes about 40 ft. thick. The metatuff is metamorphosed, volcanic pyroclastic debris. Frequently it is intermixed with the argilite but some layers up to 15 ft. thick were encountered. Over all it constitutes less than 5% of the rock mass. The greenstone is metamorphosed volcanics. It constitutes less than 3% of the rock mass. Except where severely weathered, the argillite is moderately hard to hard. The graywacke, chert, dacite and greenstone are hard to very hard. Foliation (cleavage) is poorly developed in the argillite and bedding, when identifiable, is poorly preserved. The graywacke is massive and displays neither bedding nor foliation. The chert, dacite and metatuffs are generally massive and show no foliation. Jointing is well developed. It is widely spaced in the graywacke and moderately to widely spaced in the argillite. Generally three or more sets are observed resulting in blocky structures. There are some open joints in the abutment of the dam and spillway, especially in the rock know between these structures. Hydrosplitting tests A-2 2.2 made along the tunnel alignment showed low in situ horizontal stresses ranging from 0.9 to 0.5 of overburden pressure at the depth tested. Open vertical joints striking about parallel to the tunnel (N60 W) were observed during tunnel construction at depths of rock cover of as much as 1200 ft. Geologic Hazards The Pacific Plat is subducting under the North American Plate south of the coast of Alaska. The Aleutian Arc trench marks the surface juncture of the two plates. This trench trends northeast-southwest and is located about 185 miles southeast of the site at its nearest approach. The Pacific Plate is moving north relative to the North American plate. The subduction zone dips northwest and the upper contact of the subduction plate, the Benioff zone, lies at a depth of about 30 miles beneath the surface at the site. The Benioff zone is the locus of great earthquakes. Major faults in the general site area are the Border Ranges fault which lies under Kachemak Bay and the Eagle River Fault which crosses Bradley Lake near its head. Both faults trend NE-SW (about N45 E) parallel to regional structure. Three smaller faults lie within the site area crossing the power tunnel between the intake and the powerhouse. These are the Bull Moose Fault, the Bradley River Fault, and the Bear Cub Fault. These trend approximately north-south. The Bull Moose and Bradley River are the larger of these faults. Where crossed by the power tunnel they consisted of a series of gouge-filled anastamosing shears, a few feet to possibly 20 ft. wide, separated by sound rock and extending over a width of 300 to-400 ft. Lineations and minor shears parallel these faults. Seismicity of the site was investigated by Woodward-Clyde Consultants, “Report on Bradley Lake Hydroelectric Project Design Earthquake Study,” 1981. They recommended an MCE earthquake spectrum normalized to zero period horizontal acceleration of 0.75g with a duration of 25 seconds for design of critical, water retaining structures. Vertical acceleration was taken at 2/3 horizontal. This spectrum has been the basis of investigation and design of the dam, spillway and powerhouse. Dynamic analyses of the dam and spillway were made using Finite Element analyses. The time-history used an accelerogram whose spectrum envelopes the Woodward~ Clyde spectrum, This was constructed by combining two appropriate shorter earthquake records. This hybrid earthquake has a duration of 28 seconds. The nearest active volcanoes are Mt. St. Augustine and Mt. Redoubt which are more: than 100 miles from the site across Cook Inlet. Renewed activity poses no direct threat to the project other than possible development of a tsunami due to large mudflows or slides from Mt. St. Augustine and ash falls from both. The cost of Alaska has been subjected to tsunami generated by uplift due to offshore earthquakes. This hazard was investigated by Stone & Webster Engineering Corporation in a report presented to this Board (September 1987). This report indicated an annual probability (combined earthquake and volcanic activity) of about 0.007 for a wave height at the powerhouse reaching El 25 BLP Datum (El A-3 2.3 38.63 MLLW datum). The powerhouse is designed to withstand water to this level without damage. The hazards of seiche in Bradley Lake due to earthquake and the possibility of a wave generated in the lake by a liquefaction generated slide in the Bradley Glacier delta were investigated. It was concluded waves from these sources would not damage the dam or spillway. The mountain sides surrounding Bradley Lake are bare rock which has been scoured by late Pleistocene and recent glaciation. Minor rockfalls may result from earthquake but slides which could cause overtopping are not a hazard. The Kachemak and Nuka glaciers are sufficiently far from the lake that ice falls or slides which might result from earthquake would not reach the lake. Main Dam The dam is a concrete faced, rockfill structure. Top of the embankment is El 1190. A parapet wall at the upstream face extends to El 1194. Normal full pool (crest of the spillway) is El 1180 and pool level under PMF is El 1190.6. The parapet wall is designed to provide wave protection during floods. The face slab is 12 inches thick, constant top to bottom. The toe plinth varies in width along its contact with the rock from 10.5 ft. to 13.3 ft. Minimum thickness varies from 3 ft. to 2.25 ft. depending on location and head. The face slab is underlain by a 12 ft. wide zone of crushed rock grading from fines (passing No. 200 mesh) to 3 inch size. The toe plinth is founded on rock for its full length. General rock level in the river bottom is about El 1065 giving a nominal dam height to the top of the embankment of 125 ft. However, a narrow channel was found along the right side of the river bottom. This was excavated to bedrock, at its lowest point at El 1032, over a length of 28 ft. centered on the toe plinth and backfilled with concrete. Thus the dam is actually 158 ft. high above the lowest point in the bedrock. The rock surface drops slightly south of the left abutment under the gate shaft bench. In this area the rock is covered by overburden and some rock fill. A concrete wall was constructed across this bench. This extends down to rock for its full length of about 175 ft. A single line grout curtain is located along it. The single line ground curtain extends the full length of the toe plinth and into the abutments. Maximum hole depth is 110 ft. In general the rock was tight and takes were small. However several open joints were found in the abutments. These were grouted to refusal and check holes drilled and grouted. Alternative types of dams considered in selecting a concrete face rock fill included a thick arch structure, a concrete gravity dam or a central core embankment dam. The concrete face rockfill was selected because of its excellent resistance to earthquake, relative cost, lack of suitable earth core material, and topographic constraints, especially space for the upstream cofferdam. Slopes upstream and downstream were established at 1.6H to 1V to restrict deformation under the MCE 0.75 g horizontal) to acceptable limits. A-4 2.4 2.5 Spillway The spillway is an ungated concrete gravity section with side slopes of 3H to 10V upstream and 8H to 10V downstream. Crest length is 175 ft. at elevation 1180.00. Overall length of the spillway is 275 ft. Spillway discharge at PMF would be 23,800 cfs at a lake level of El 1190.6. A drainage and grouting gallery extends the full length of the spillway at or just above rock level. Access to this gallery is from the left abutment. A single line grout curtain having a depth of 30 to 50 ft. below rock surface inclined 20 upstream and fanning into both abutments was constructed. Drain holes are 3 inches diameter, five feet on centers, and 30 ft. deep except at the right abutment where a fan of holes 50 ft. to 60 ft. long were drilled. All seepage from the spillway drainage system is collected and discharged over a vee notch weir to permit monitoring. Ice loading causes some tension in the upstream face at about El 1170. Accordingly reinforcing was placed in the upstream face. Dynamic analyses using the hybrid accelogram confirmed that stresses are within allowable and no lateral displacement of the spillway would occur under the MCE. The spillway was model tested at Colorado State University. The model extended from well upstream of the power tunnel intake to well) downstream of the main dam. Water velocities along the toe of the main dam were measured and riprap along the downstream tow sized to prevent erosion in the event of spillway operations. Power Tunnel & Intake The power tunnel system consists of an upper tunnel 738 ft. long extending from the intake through the upper elbow, a vertical shaft 647 ft. deep and a lower elbow and lower tunnel with a total length of 17,767 ft. The lower tunnel is on a 1.67%) grade. The intake channel is about 350 ft. long, and the bottom at the intake is at El 1030. Dual high-pressure gates are installed in the upper tunnel about 520 ft. downstream of the tunnel portal in a vertical drywell. The gates are hydraulically actuated. An accumulator bank rides on the hydraulic system. This is sized to permit closing each gate without recharging even in the event of complete loss of power. Provision is made for stoplogs at the intake portal. The same stoplogs can also be used at the intake portal of the diversion tunnel. A rock trap is provided just upstream of the intake portal. The downstream 435 ft. of the lower tunnel is designated the manifold section. This section contains three wye-branch penstocks which extend to the powerhouse. Two are in service and one is closed by a hemispherical head to be used for a future third unit. The downstream end of the manifold is closed with a hemispherical head which can be removed as necessary for access to the tunnel. The manifold-penstock section and downstream portion of the tunnel for 2725 ft. upstream of the manifold are steel liner encased in concrete. Inside diameter of this section is 11 ft. Four drain pipes A-S 2.6 2.7 are located outside of the steel liner in the concrete encasement. Drain holes extend from these drains into rock at intervals of 10 and 20 fi. Seepage from these drains is collected and passed through the powerhouse where it can be measured. The remainder of the lower tunnel is 13 ft. ID with a 12 inch thick concrete lining. The vertical shaft and upper tunnel are 11 ft. ID lined with concrete. The manifold-penstock section was pressure tested at 960 psi (1.9 times static head) for 1 hour before encasing it in concrete. There were no indications of distress, and distortions were very small and acceptable. In situ horizontal stresses in the rock are low. To protect against possible hydro- splitting of the rock by leakage from the tunnel, the steel lining was carried to Sta. 31 +58 where rock cover was equal to 0.8 of the static head. The concrete lining was reinforced to Sta. 38+60. From Sta. 31 +60 to Sta. 35+60 the rock was high pressure grouted (500 psi) using squeeze grouting procedures. Selected areas of the remainder of the lower tunnel were also reinforced. High pressure grouting (250 psi) was done from Sta. 35+60 to Sta. 38+60 and at selected areas to Sta. 64+00 to ensure that open joints intersecting or close to the tunnel were filled with high strength grout. The tunnel was first filled to the then reservoir level, El 1076, in May 1991. A falling head test for a 12 hour duration was made in late May which showed an average leakage of only 58 gpm. Powerhouse The powerhouse has a concrete substructure with steel framed superstructure. It is founded entirely in rock, and the tailrace excavation is in rock for a modest distance away from the powerhouse. The powerhouse has been designed for safety against excessive structural stresses, sliding, overturning or flotation. Loading conditions include MCE, (0.75g) DBE (0.35g), high tides, storm high tide, tsunami, and various plant conditions such as in operation, servicing, and construction including appropriate factors of safety. Diversion Tunnel The diversion tunnel is approximately 407.5 ft. long and is located in the high rock spur between the spillway and the main dam. It has been converted to a low level outlet which is normally closed by a dual system of high pressure slide gates located in a deep dry well shaft. The tunnel is lined with concrete from the upstream portal to downstream of the gate shaft. Gate operation is by hydraulic actuators. There is a bank of accumulators which can open each gate completely in the event of loss of all power. The gates discharge through a steel penstock 10.5 ft. in diameter which extends past the downstream portal of the tunnel. Two 28 inch- diameter steel pipes encased in concrete extend through the entire length of the tunnel. these discharge through a system of 7 motor operated valves of different sizes so arranged that fish water releases can be made from the reservoir as necessary to maintain required flows in the Lower Bradley River of 40 to 100 cfs at Riffle Reach. A-6 2.8 Diversions into Bradley Lake As a part of the development of the Project, the Middle Fork of the Bradley River, a portion of the outflow from the Nuka Glacier, and a small tributary of Battle Creek were diverted into the reservoir. 2.8.1 2.8.2 Middle Fork Diversion The Middle Fork Diversion is located approximately one mile north of Bradley Lake in an adjacent drainage at elevation 2160 on the Middle Fork Tributary of the Bradley River. The Diversion consists of a small intake basis and two reaches of open channel approximately 760 feet and 483 feet long, separated by a stilling basin which is located in a natural bog area, all of which were established by excavation. The Diversion conveys water from the Middle Fork of the Bradley River to Marmot Creek, a tributary to Bradley Lake, and operates in all seasons. Nuka Diversion Glacial melt forms a pond called Nuka Pool at the terminus of the: Nuka Glacier. Nuka Pool lies on the divide between two drainages, discharging water both into the Upper Bradley River and into the Nuka River. Water discharged into the Upper Bradley River flows to Bradley Lake and that which is discharged to the Nuka River flows to the Kenai Fjords National Park. The purpose of the Nuka Diversion is to cause the glacial melt water flowing through the Nuka Pool to flow in the upper Bradley River, except of an initial increment of flow which must be provided to the Nuka River in accordance with the June 1986 Contract between the Alaska Energy Authority and the U.S. Department of Interior. In compliance with this Contract, the design must assure that when flows are available in the Nuka Pool, 5 cfs will be diverted to the Nuka River prior to any diversion of water to the Upper Bradley River. To accomplish this, flow from the Nuka Pool to the Upper Bradley River passes over a long, uniform weir constructed by modifying the naturally occurring rock weir at the pool outlet. At the Nuka River outlet of the pool, water is constrained to flow through a 12-inch: steel pipe in a gabion dike. This pipe has been sized such that it will discharge 5 cfs when the Nuka Pool level is at the elevation of the Bradley-side weir crest and flow is about to commence to the Upper Bradley River. No flow is allowed to enter the Upper Bradley River from the Nuka Pool until 5 cfs enters the Nuka River. A second, identical pipe is also provided. This second pipe ensures flows if the first pipe becomes inoperative and needs to be repaired. It may also be used to augment flows. A-7 239 2.10 2.11 2.12 2.8.3. Upper Battle Creek Diversion The Upper Battle Creek Diversion is located at elevation 1342 approximately 0.7 miles south-southeast of Bradley Lake Dam and diverts a small tributary of Battle Creek into the reservoir adding 0.9 square miles of drainage area to the Project. Diversion is accomplished by emplacement of a small, talus dike across the tributary at the base of a waterfall. An intake basin 25’x25’ by 3 feet deep was constructed near the bottom of the falls and flow is directed through three interconnected ponds. Approximately 300 feet of ditch was excavated between the ponds to reverse the direction of the flow into the reservoir. Permanent Facilities To accommodate for the needs of on-site personnel, the project is provided with two 32’x82’ duplex living quarters, a 43’x50’ office/transient worker residence building, a 50’x160’ shop-warehouse and a fenced storage yard which also contains an unheated storage/incinerator building. Project Airstrip The project airstrip is incorporated into the permanent project road system between the barge dock and permanent facilities. The strip is 2400 ft. long and 75 ft. wide and is equipped with plane lights, a taxi and parking apron, weather building and warning lights. The airstrip is designed for VFR use only and is not open to the public. Barge Dock Water access to the project is from a dock facility consisting of five (5) 53 ft. diameter sheet pile cells placed out into the tidal flats of Kachemak Bay. A rockfill, gravel-surfaced causeway extending some 700 ft. from the shoreline connects the barge dock cells to the project access road at the bay shore. Use of this facility is available only during half tides and greater. A small, aluminum floating dock is attached to the sheet pile cells to provide mooring for skiffs belonging to the public. This small dock is removed each winter to prevent it from being damaged by ice. Transmission Line Two parallel and separate single circuit 115 kV transmission lines, each about 20 miles long, connect to the substation at the powerhouse and carry the power generated to the Fritz Creek-Soldotna 115 kV Transmission Line owned by Homer A-8 2.13 2.14 Electric Association, Inc. The point of connection for these two lines is designated as the Bradley Junction. The Bradley Lake transmission line towers are guyed, X-configuration towers manufactured of Corten type steel. The conductor is 556 kemil, 42/19 Aluminum/Steel “Special Dove.” Roads About 1 0.8 miles of gravel surface access roads have been constructed and connect the powerhouse, permanent facilities, airstrip, dam site and other project areas. Instrumentation Settlement and deflection of the main dam are monitored by two rows of monuments set on the upstream face at approximately mid-height of the face and just below the parapet; and three monuments set in the rock fill along the upstream side of the El 1077 berm. Three monuments are set in the crest of the spillway. Instrument pedestals were established along these several lines of monuments. The instrument pedestals are referenced to four primary survey monuments set in rock. Seepage into the spillway drainage gallery is collected and discharged over a vee notch weir. Main dam leakage is estimated by deducting fish water releases and spillway seepage from the flow recorded at the USGS gaging station just downstream of the dam. Four exploratory borings along the line of the tunnel have been converted to open standpipe piezometers to measure groundwater levels above the tunnel. Seepage flow from the drain system around the steel lining in the tunnel is monitored in the powerhouse. INITIAL FILLING OF RESERVOIR . Filling of the reservoir started October 3D, 1990, but was suspended shortly thereafter to meet the fisheries minimum flow requirements. As the hydrograph began to rise the following spring, filling was resumed. The initial rate of filling was slow but accelerated during the summer of 1991. Water level reached full pool during a severe storm in late September 1991. Spilling started on September 27 and continued for 8 days with about 0.5 ft. depth passing over the spillway. The winds during this storm were heavy. Waves splashed over the spillway and to some extend over the parapet wall of the dam. These caused no damage. Measured deflections and settlements of the main dam during filling were very small, maximum displacements being: crest settlement 0.02 ft. displacement 0.03 downstream A-9 upstream face settlement 0.04 displacement 0.02 downstream downstream bench settlement 0.07 displacement 0.01 The settlement and deflection of the crest are only about 0.03% of the dam height. There was no detectable seepage through the dam. 4. POWER HOUSE STARTUP The units were turned over for pre-operational testing in March 1991. Unit 2 was first rotated on May 15, 1991, and Unit 1 on May 18, 1991. The units were released to Chugach Electric Association in Anchorage, Alaska for dispatch on August 1, 1991, and the plant declared in Commercial Operation on September 1, 1991. 5. PROJECT LANDS On the basis of the project boundary shown in Exhibit G, the acreage of the lands belonging to the United States of Alaska are tabulated below: Asterisks (*) denote transmission line ROW acreage only. BLM Area State Area Other Water Subtotal Description Acres Acres Acres Acres Acres T.3S., R.1OW Tract A* 263.62 Total Per TP 263.62 263.62 T.3S., R.11W Section 23 26.15 Section 25 42.48 Section 26 20.78 Tract B* 129.34 Total Per TP 218.75 218.75 T.4S., R.9W Section 30* 45.74 2.79 Section 31* 0.33 182.13 Tract A* 12.73 U.S. Surv. 2937 182.13 12.73 2.79 Total Per TP 46.07 182.13 12.73 2.79 240.93 T.4S., R.10W Section 35 149.14 Section 36 75.94 182.13 4.00 Section 36* 40.17 Tract A* 14.36 A-10 Description Total Per TP T.5S., R.8W Section 19 Section 20 Section 29 Section 30 Section 31 Total Per TP T.5S., R.9W Section 3 Section 6 Section 7 Section 8 Section 9 Section 10 Section 11 Section 14 Section 15 Section 16 Section 17 Section 18 Section 22 Section 23 Section 24 Section 25 Section 26 Section 36 Total Per TP T.5S., R.10W Section 1 Section 2 Section 3 Section 9 Section 10 Section 11 Section 12 Section 13 Section 14 ATS 1418 Total Per TP BLM Area Acres 265.25 388.74 93.63 6.04 139.40 316.24 944.05 40.00 5.64 121.12 267.30 29.21 210.59 5.67 168.73 32.28 69.46 31.37 397 66.32 513.20 558.08 372.53 15.07 15.46 2,425.17 26.81 128.83 384.89 127.87 398.57 222.79 64.41 41.59 1.56 1,397.32 State Area Other Acres Acres 14.36 23.21 84.35 208.39 139.39 139,39 A-11 Water Subtotal Acres Acres 4.00 279.61 944.05 100.71 166.95 170.10 0.94 232.80 548.73 145.42 16.63 67.64 35.77 1,485.70 2,633.56 1,536.71 Description T.6S., R.8W Section 6 Total Per TP Total Proj. Area Including Transmission Line Transmission Line Area Only BLM Area Acres 320.00 320.00 5,498.69 86.24 State Area Acres 925.81 407.32 A-12 Other Acres 12:73 Water Acres 1,492.49 Subtotal Acres 320.00 Dam: Spillway: Power Tunnel: Diversion Tunnel: Penstock: Middle Fork Diversion: Nuka Diversion: Battle Creek Diversion: Airstrip: Table A-1 Bradley Lake Hydroelectric Project Data Concrete-faced rockfill, 600 feet long, 125 feet high, 360,000 cubic yards rockfill, and 10,800 cubic yards concrete Ungated concrete ogee section, 175 feet long (11,000 cubic yards concrete) 13-foot nominal diameter, fully concrete lined, approximately 19,152 feet in length 21-foot horseshoe concrete lines/penstock tunnel, 407.5 feet long Steel, 9-foot diameter with 6 1/2 foot diameter branches 1517 foot diversion includes upper and lower channels with intake basin and stilling basin 2 diversion and control dikes, pilot channel and outlet weir 300 foot diversion channel with intake basin, talus diversion weir Gravel surface airstrip 2,400 ft. long by 75 feet wide incorporated into access road A-13 Annual Firm Energy: Average Annual Energy: Transmission Line: Barge Dock: Access Roads: Powerhouse: Turbines: Generators: Governors: 329 gigawatt hrs 376 gigawatt hrs 115 kilovolt, two Sheet pile cells granular fill 10.8 miles, gravel Surface, steel superstructure, 160 feet long, 80 feet wide, 92 feet high 2 each Pelton, vertical shaft, 90,170 horsepower max. 2 each Rated output at max. operating pool is 63 MVA. 2 each VA Tech digital EXHIBIT B BRADLEY LAKE PROJECT SPECIFIC FEDERAL AND STATE AGENCY REQUIREMENTS Dept. of Environmental Conservation (DEC) Dept. of Environmental Conservation (DEC) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Corps of Engineers (COE) Dept. of Fish & Game (DFG) Dept. of Fish & Game (DFG) Dept. of Fish & Game (DFG) Dept. of Fish & Game (DFG) Approval to Operate Class “C” Water System Permit date 11/4/88 Permit date 04/3/89 Waiver Approval 5/23/91 Certificate to Construct Class “C” Water System Land Use License DACWS85-3-91-88 Land Use License DACWS85-2-90-24 Dredge and Fill Permit #071-QYD-2-850502 Plus seven modifications Land Use License DACW85-3-86-55 Land Use License DACW85-3-86-73 Land Use License DACW85-3-86-101 Critical Habitat Area FG 88-11-0077 Special Area Permit FG 86-11-0824 Anadromous Fish Stream, Critical Habitat Area FG 86-11-0416 Plus Amendment IV Critical Habitat Area FG 86-11-0115 Approval to operate permanent facilities -Public water system and wastewater disposal system. Approval to operate permanent facilities - Powerhouse Creek Source. Waiver Approval, Class “C” Water Well. Certificate to construct potable water system at Bradley Lake Powerhouse. Approval to Operate was requested 2/4/92 -No response as of yet. COE land use license to construct and operate the upper Battle Creek Diversion Dam. Land use license for gauging station electrical distribution line. Section 10 - Perform work in or affecting U.S. navigable waters. Section 404 Discharge dredged or fill material into U.S. waters. Extension of land use license to allow for material extraction. Extension of land use license for area used as access road and construction landfill. Land use license to conduct studies and design project. Road Construction Kachemak Bay Critical Habitat Area Airstrip Construction and Operation Transmission Line Construction Powerhouse to Lower Camp Access Road ) Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. Dept. of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Fish & Game (DFG) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) of Natural Resources(DNR) Critical Habitat Area FG 86-11-0114 Plus Amendment I Anadromous Fish Stream Critical Habitat Area FG 86-II-0113 Plus two amendments Critical Habitat Area FG 86-11-0112 Plus Amendment II Anadromous Fish Stream FG 86-II-0110 Plus Amendment II Critical Habitat Area FG 86-11-0108 Critical Habitat Area FG 86-11-0107 Plus Amendment I Anadromous Fish Stream FG 86-II-0106 Plus Amendment II Critical Habitat Area FG 85-II-0824 Plus one amendment Water Rights LAS 13370 Permanent Water Rights LAS 6998 Water Rights Application LAS 14316 Permanent Water Rights LAS 2837 Public and Charitable Lease ADL 225142 Permanent Water Rights LAS 2836 Right -of- Way ADL 223192 Uplands Lease ADL Airstrip to Powerhouse Access Road Martin River material site access road, Battle Creek. Spoil Disposal/Waterfowl Nesting Area Martin River material site, Martin Barge dock and staging area. Powerhouse and switchyard construction and operation. Bradley River Dam, Bradley. Airstrip construction and operation. Water rights for Upper Battle Creek Diversion Project. Permit to use permanent facilities Well No. 4 for 5 additional years. Bradley Lake Waterfowl Nesting Area Appropriate water for waterfowl nesting area. Lease of State Lands near Fritz Creek for Moose Mitigation. Appropriate water from Middle Fork and Nuka Glacier Pool Final documents issued Final documents issued. Dept. of Natural Resources(DNR) Dept. of Interior (DOI) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) Federal Energy Regulatory Commission (FERC) 222656 Tidelands Lease Contract FERC License Amendment FERC License Amendment FERC License Amendment FERC License Amendment FERC License FERC License Amendment B-3 Final documents issued. Provisions for water from Nuka Glacier Pool. To construct and operate Upper Battle Creek Diversion Project. To adopt modified flow regime during reservoir filling. For relocation of permanent landing strip To adopt modified operational flow regime to be consistent with ADF&G flow regime. FERC order issuing license Order granting extension until January 1, 1992 to complete project construction BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Hydroelectric Project (the “Project’), you will be provided furnished living quarters. The following guidelines are provided to explain the various duties and responsibilities for living at the project site in a fair, equitable and nondiscriminatory manner. While the information offered here is intended to be comprehensive, it is not all-inclusive, is subject to change and may be updated or revised from time-to-time at the direction of the_Bradley Project Management Committee (BPMC) Executive—Director—and/orthe Director/Facilities-Operations-and Engineering. For these reasons, please check with the Plant SuperintendentSenior-Operations-Engineer for verification prior to taking any questionable action. The following guidelines are separated into two main sections: 1) Project Residency Guidelines and 2) Project Employment Guidelines. PROJECT RESIDENCY GUIDELINES 1. Moving Expenses/Logistics To and From Site. Upon assignment to the Project, the-Energy—Authority-willmove up to 3,000 pounds of personal household belongings will be moved to rennet ato no expense to the —Employes. pe energy through the Plant Superintendent. General-Foreman/Bradley-and-the Personnel Officer. In addition, the-Energy—Authority—wil transport_up—to 3,000 pounds of personal belongings will be transported between the project-Project_site and Homer at the commencement and the termination of employment at the Project. Such costs shall be reimbursed to the pProject participants if employment is terminated prior to one year of service. 2. Housing Provided. At no cost to the employee, the-Energy—Authority—will provide a two bedroom furnished housing unit at the Project site will be provided for use by each employee, their family, and visitors. On-call employees will be required to be on-site continuously throughout their normally scheduled workshifts. Major appliances, maintenance equipment and normal kitchen, living room, and bedroom furniture are provided bythe-Energy—Authority in the housing units. Small appliances, cooking utensils, bedding, entertainment devices, personal belongings and other furnishings are the responsibility of the employee and are not supplied by the employer. The Plant Superintendent General foereman/Bradley will provide employees with a list of the provided furnishings and household goods and their condition both at the commencement of employment and at the end of employment at the Project. ATTACHMENT 1 3. Utilities. FheEnergyAuthortywit-previde eElectricity, heat, sewer, and water will be provided at no cost to the employee. Employees will be responsible for and pay for their personal telephone calls and any service charges for telephone and television. 4. Food/Supplies/Mail. Employees will be responsible for the purchase and preparation of their own food. Food and mail will be transported from Homer to the Project on a space-available basis on scheduled flights by the contracted flight operator. Delivery of food and mail to the contracted flight operator will be the responsibility of the employees. All transportation of employee food, supplies and mail must be coordinated for transportation through the_Plant Superintendent GerneralFereman/Bradley or his designee designated-representative. 5. Condition and Maintenance of Housing. Employees are responsible for maintaining the original condition of housing with the exception of normal wear and tear. Employees are responsible for damage to their housing unit and/or common areas or any equipment thereon which may be sustained by reason of carelessness, negligence or intentional acts of employee or his/her relatives and visitors to the project site. Routine maintenance, housekeeping and repair of the provided housing is the responsibility of the employees. Employees are expected to keep their housing units repaired and maintained in good sanitary order and condition. 6. Damages. Employees are not required to pay an up-front damage deposit for their housing unit. Damages to the housing unit determined to be caused by the employee or family/friends of the employee, other than normal wear and tear, may be deducted from the employee’s pay. 7. Personal Property. Fhe—Neither the employer, the Project_Owner andnor Participants are _net-Energy—Authorityis-not responsible for damages by wind, fire, water, theft, earthquakes or natural disaster, etc., to personal effects located within the housing units or stored at the Project. Employees will be responsible for maintaining their own personal property insurance for their personal belongings. 8. Rental. Employees are not allowed to rent out_any portion of the Energy Authority-provided housing, or permit its use by individuals not approved_by the Plant Superintendent as visitors. 9: Alterations. Structural alterations are not allowed to the housing units nor are additions or alterations to the common areas. Outside installations such as antennas, basketball hoops, etc. are prohibited unless approved in writing in advance of installation by the Plant Superintendent. GerneratForeman/Bradiey—orthe—Senior Operations Engineer. 10. Owner/Access. The Plant Superintendent or other Project Management personnel $ man H BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Page 2 Energy-Authority managementofficial, may authorize entry to an employee-occupied housing unit in an emergencies-emergency if there is reason to believe there may be imminent danger_to life or property. Such entry may be authorized whether or not the employee is present at the time. The_Plant_Superintendent_or other Project_Management personnel Energy Authority also maintains the right, in times of non-emergency, to conduct unit inspections, usually after a 24 hour notice, to ensure the health and safety of all residents, to protect the_pProject Energy—Autheritys property and for general maintenance of the facility. 11. Drugs/Alcohol. 4n—keeping—with—Energy—Authority_policy, tIhe Project shall remain drug-free and alcohol-free. 12. Noise/Offenses. Employees and their guests may not cause a nuisance to other resident employees. This includes, but is not limited to, noise, noise producing activities and noxious or other offensive activities. No improper, offensive or unlawful use shall be made of any part of the Project. 13. Trash. Employees will deliver trash from the housing units to the site incinerator. No storage of trash will be permitted in or outside of any residence in such a manner as to permit the spread of fire or encouragement of vermin. 14. Pets. One dog or cat or other non-exotic pet per family is allowed. The_Plant Superintendent General Foreman/Bradley may authorize exceptions to this guideline for birds, fish, gerbils, etc. No kennels, dog teams, livestock, horses and/or other exotic pets are allowed. Owners of pets are responsible and liable for injury, damage or loss caused by their pets; it is their responsibility to ensure that pets are not nuisances and that they do not create unsanitary conditions in/around living quarters. Pets must be leashed or under the owner's control while on_pProject Energy—Authority-owned—or controlled premises. 15. Storage. Common areas in and around housing units and project—Project facilities shall not be obstructed or littered. Explosives or illegal products shall not be kept in the housing units. Paint, stain or other inflammable products should be stored in approved containers. Personal property storage, with the exception of firewood piles, is not permitted outside of the employee’s housing unit or assigned yard space. Outside property storage will be in a designated area as approved in writing by the_Plant Superintendent. General Foreman/Bradley. 16. Firewood. If employees so desire, they may store firewood for use in their fireplaces. Wood piles shall be allowed in common areas around the housing units at a location, or locations, specified by the Plant Superintendent. General Foreman/Bradley. Wood shall be neatly stacked, and shall not touch the common area walls. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Page 3 17. Gardens. Upon approval of the Plant Superintendent General Foreman/Bradley, garden plots may be permitted. 18. Education. Education for school age dependent children of employees is the sole responsibility of the employees. 19. Voting. Voting privileges will be by means of absentee ballot and will be the responsibility of the employee. 20. Firearms. Storage of firearms will be permitted in the housing units only. Use of firearms will be in accordance with local and state law. Discharge of firearms will not be permitted within one-half (1/2) mile of the Project facilities. 21. Medical Emergencies. The Plant Superintendent GeneratForeman/Bradley or designated authority will arrange for and coordinate assistance or evacuation to treatment facilities for medical emergencies pursuant to the facility emergency action plan or evacuation plan. The _Plant Superintendent General-Foreman/Bradley or designated authority should be contacted immediately concerning any Worker's Compensation-related illnesses or accidents. The _Plant Superintendent General Foreman/Bradley will provide and complete the necessary forms regarding the Worker's Compensation incident(s) to the Human Resources Department Energy—Authority Personnel Officer within 72 hours of the accident/illness report. 22. Personal Vehicles. Employees may not store or operate motorized personal wheeled vehicles on the Project roads. Petroleum products for personal use may be purchased from the Project at the current price paid by the Project to the vendor. Purchases may be made through the Plant Superintendent General Foreman/Bradiey or designated authority. 23. Recreational Vehicles. Snowmobiles, four wheelers, and other motorized off- road vehicles including trail bikes, jeeps and other four wheel drive vehicles not used in project-Project_ maintenance are prohibited on Project roads per stipulations of the FERC license. 24. Private Boats. Private boats are allowed to the extent that they do not interfere with Project operations. Private boats on the site must be approved by the_Plant Superintendent. GeneralForeman/Bradiey-or Senior Operations-Engineer. 25. Private Aircraft. The Project landing strip may be used by employees who own aircraft. Use is governed by Federal Aviation Administration rules and regulations and is to be used as Visual Flight Rules only. A State liability waiver will be required for its use. Only aircraft meeting requirements of the State Division of Risk Management to use a State facility will be allowed to use the air strip. All aircraft services procured-by the-Energy-Authorityand utilized by employees and their guests must be logged and BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Page 4 | coordinated through the Plant Superintendent. General Foreman/Bradley. No personal aircraft storage is provided. Employees are liable and responsible for their personal equipment on site. 26. Parking. Project vehicles may not be parked in such a manner as to block access to Project facilities, fire hydrants, designated fire lanes; they may not be parked on lawns or in such a manner as to damage yards or yardwork. 27. Project Vehicles. Project vehicles are not to be used by persons other than employees except in the case of emergency. In the case of emergency use by non- | employees, the Plant Superintendent General Foreman/Bradley, or his/her designee will be immediately notified. Project vehicles may be used only in the conduct and support of Project business. 28. Speed Limit. The speed limit on the Project site is as posted and as is reasonable for current conditions. 29. Transportation to and from Project. Transportation to and from Homer will be provided through the_Employer’s—EnergyAuthority’s contract carrier as scheduled by the_Plant_Superintendent_or his designee Senior—Operations—Engineer—and/orthe General Foreman/Bradley for the employee at the start and finish of each workweek schedule. On-site persons residing with the employee will be accommodated on a space-available basis on these flights. Those persons involved in a medical emergency will have first priority. Transportation for employee and dependants other than scheduled flights will be arranged and paid for by the employee. Only approved air carriers meeting the requirements of the State Division of Risk Management to use a State facility will be allowed to utilize the air strip. 30. Visitors. Project visitation by relatives or friends will be permitted. Transportation will be by private boat or on a space available basis on the scheduled contracted flight operator or other approved charter. It is the employee’s responsibility to have their guests/invitees sign in and out with the Plant Superintendent or his designee General Foreman/Bradiey upon arrival to and departure from the Project. Visitors will abide by these Work Rules while at the Project site. The_Employer Energy-Authority reserves the right to ask guests to leave the Project site for safety reasons or disobeyance of site rules. 31. Energy-Authority Project Management Personnel Project Visitations. When Project Management EnergyAuthority personnel visit the Project they shall be housed in the visitor's quarters and shall abide by all the guidelines and regulations for the Project. During their stay, they are responsible for their own meals and shall do their own house cleaning, including washing any dishes and bed linens used. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Page 5 32. Project Facilities. Spouses, other residents or Project guests are not allowed unaccompanied in Project facilities except in housing units. Project facilities includes the powerhouse, maintenance building, crews quarter's, and dam site. 33. Project Equipment/Workspaces. Project materials, supplies, equipment and workspace and other_pProject properties Energy-Authority_belongings are not available for employees’ personal use. If Project facilities are needed to be used, prior approval shall be received from the_Plant Superintendent. Senior-OperationsEngineeror the General Foreman/Bradley. 34. Policies Not Covered in these Guidelines. All existing practices for the benefit and welfare of Energy-Authority employees assigned to the Project presently in effect and not specifically covered by the terms of this Agreement shall be continued until superseded by a future revision to these work rules memerandum-or directive. 35. Project Description and Definition. As described in FERC exhibits A & G to project license. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT SITE WORK RULES Page 6 JUN-19-2088 @7:S7 From:HEA GM KENAT 19873356224 To: 3044 Peave Homer Electric Association, Inc. Homer, Alaska 99603-7680 Kenai, Alaska 99611-5280 Phone (907) 235-8551 Phone (907) 283-5831 Ai Corporate Office Central Peninsula Service Center 7 | 9 3977 Lake Street 280 Airport Way ng ay FAX (907) 235-3313 FAX (907) 283-2353 www.homerelectric.com FAX COVER SHEET Fax (907) 335-6224 DATE: oe 14 log 70: Shrouce Howe COMPANY: FAX Ht: $1 Bou FROM: El Brad Janorschke, General Manager (_] Sandra Ghormley, Manager of Member Services [x] Teresa Gamble, Assistant to the General Manager COMMENTS: Number of pages (including this disc If you do not recvive all pages, please contact the sender at (907) 283-2334. A Touchstone Energy’ Cooperarive atx MOTION: Move that the Bradley Lake Project Management Committee approve the Operations & Management Agreement for the Bradley Lake Hydroelectric Project between Homer Electric Association, Inc. and Alaska Energy Authority, effective July 1, 2008 through June 30, 2013 with an automatic renewal for a successive five-year term unless proper notice of termination is given by either party. Move: Second: Alaska Industrial Development and Export Authority AE ALASKA Al ae f= ALASKA BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Thursday, June 19, 2008 — 10:00 a.m. (via electronic media at the AIDEA/AEA Board Room - 813 W. Northern Lights Blvd.) ‘. CALL TO ORDER ,” Evans 2. ROLL CALL (for Committee members)” / 35 PUBLIC ROLL CALL (for all others present) 4. PUBLIC COMMENT ~~ 5. AGENDA COMMENTS (changes/additions/deletions) a ee L 6. APPROVAL OF MEETING MINUTES May 14, 2008 orm : ) fem ‘kL cn 7. NEW BUSINESS Wi ~ ' A. O&M Agreement (Action Item) x Janorschke B. Transformer Replacement O'Hare Cc. Budget Report , — Cunningham 8. COMMITTEE REPORTS / COMMENTS A. Operators Report a“ B. Next Meeting Date Evans 9. ADJOURNMENT 813 West Northern Lights Boulevard * Anchorage, Alaska 99503-2495 www.aidea.org * 907/771-3000 * FAX 907/771-3044 ® Toll Free (Alaska Only) 888/300-8534 * www.akenergyauthority.org BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the Chugach Electric Association’s Board Room) Anchorage, Alaska Wednesday, May 14, 2008 — 10:00 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m..on Wednesday, May 14, 2008, from the Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward (teleconference) Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Page 1of5 Christa Caldwell, AEA Henri Dale, GVEA Doug Hall, AML&P Peter Raiskums, MOA Mike Chadwick, MOA Brian Bjorkquist, Department of Law Tuckerman Babcock, MEA Rick Miller, AML&P Charlie O’Hare, HEA Rick Baldwin, HEA Don Zoerb, MEA Linda MacMillan, AEA (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES - March 11, 2008 MOTION: Mr. Janorschke moved to approve the minutes of the March 11, 2008 meeting. Seconded by Mr. Newton. The meeting minutes were unanimously approved. 7. NEW BUSINESS 7A. O&M Agreement Mr. Baldwin stated that HEA originally proposed a 5-year term with automatically renewable 5- year terms. HEA. was looking for change in the contract which would eliminate what they viewed is an unacceptable risk of the operator for uninsured losses. The clear provision for who would be responsible for deductible/coverage gaps/claim in excess of the limits — since HEA is operating at cost it didn’t want to assume any risk. HEA has by this agreement received that — there is a provision that uninsured losses will then be a project expense. HEA still remains liable for willfulness conduct or gross negligence. A second item that came up was the interplay between the legitimate interest of the BPMC in controlling the asset that member utilities are paying for and are responsible for and AEA’s duties as the owner and its obligation under the bond. The intent of this draft was to expand the BPMC’s role of beyond its role in the original contract. The original contract provided for the attachment of a master O&M agreement, which had not been negotiated at the time the original contract was entered into. That O&M agreement later became an attachment to the HEA O&M Page 2 of 5 contract (an agreement between the BPMC and HEA). The terms of that agreement were also integrated into the new agreement. The final significant change is language inserted as a result of an insurance study commissioned by the BPMC (Bud Griffin). There was concern at the BPMC that they were having inadequate input into HEA’s subcontracting practices and needed more oversight. Discussion ensued that each subcontract should be put before the individual BPMC utilities or perhaps the BPMC lawyer for review prior to execution by HEA. That discussion never really came to a conclusion because there were discussions of should a minimum limit be put on the contracts so HEA wouldn't have to come back to the BPMC with the subcontracts for janitorial, etc. They provided HEA will follow the subcontracting procedures as established by the BPMC and AEA. Mr. Bjorkquist added input as to history (in his perspective). Over time there has been a balance of interests addressed. On one hand the PMC has wanted to have oversight and the ability to influence what goes on, but on the other hand there needs to be some flexibility/freedom on HEA’s part so there aren’t cumbersome processes that add to expense. The question at hand is — is there a way for the BPMC to get re-involved midway rather than just at the beginning during contract review? Mr. Carmony asked if there was anything in place where HEA has the ability to allow for adjustments — if they need a change order to a contract if the amount of the change order is less than 2% of the contract, do they have the ability to go forward or do they have to wait until the BPMC approves? Mr. O'Hare stated that there is no percentage buffer specifically. If HEA sees something will be over budget, they are required to go back to the O&D subcommittee to discuss and determine whether to-go forward with taking it to the BPMC for approval or increasing the budget, and that would be a budget amendment. Mr. Bjorkquist added that the indemnification provision comes from legislation that was passed this year (Chapter 4, Session Laws of Alaska 2008), in which all state agencies, including AEA, have language similar to this indemnification language for any construction related contract. The O&M work that HEA does, some of it could be characterized as construction related and therefore the legislature in this law requires that this indemnification language be included in the agreement. Mr. Newton made reference to Section 12 — work rules — and requirements of the Authority and the BPMC approving changes. Mr. O’Hare responded that the work rules were put out by AEA in the early 90s and they were incorporated into the union contract — it states how things will be done at the site. If changes were necessary to the work rules, HEA would have to go to AEA to get approval to change the work rules before it could be negotiated into a new contract. Mr. Bjorkquist added that the concept is that those are issues that would be brought to the BPMC or a subcommittee and dealt with in conjunction with AEA, not just AEA dictating what happens. Page 3 of 5 **Action Item for O&M — bargaining and work rules. Finance and O&D committee to get together on subcontracting and when do we step in and when do we complement HEA and when do we let HEA do their thing. 1. Opener clause 2. Bargaining issue — coming back to the PMC 3. Contracting issue — at what level does the PMC take a more active role. 7B. Auditor Selection Mr. Cunningham briefed the group that with the retirement of Gary Stromberg, there was a process of recommending an independent auditor for the project to the BPMC. The finance committee developed an RFP, posted that on the Alaska CPA website and sent out several invitations to select firms that were recommended by members of the finance committee. There were three responses and the finance committee met after reviewing the responses, making a unanimous recommendation of the retention of Swalling & Associates for a three-year term with the option to renew for two years. Criteria to evaluate the responses _ included cost/understanding the engagement/audit strategy/experience. MOTION: Mr. Newton moved that the Bradley Lake Project Management Committee retain Swalling and Associates P.C. as the project independent auditor for the year(s) ended June 30, 2008 through June 30, 2010, with an option to extend the engagement for two additional years. Seconded by Mr. Carmony. A roll call vote was taken and the motion passed unanimously. 7C. Internal Audit Report 2008-5 Bradley Lake Hydro Project Mr. Raiskums with the Municipality of Anchorage lead off the discussion regarding the report. They were asked by AML&P to audit the O&M costs at Bradley Lake. Overall, costs were reasonable. A few minor exceptions: work rules and HEA having family members at the plant (liability). Discussion ensued in regards to family members at plant sites, family housing, food/meals, transportation, emergency transportation, tours through powerhouse, security cameras, etc. Chair Evans suggested that this matter be taken back to the O&D committee, in relation to security at the plant and non-qualified personnel with access issues. MOTION: Mr. Newton moved to accept the report. Seconded by Mr. Posey. Discussion ensued. Mr. Carmony moved to express appreciation to the Municipality for providing the BPMC with the information for the purposes of assisting with the management of the project. Seconded by Mr. Posey. A voice vote was taken and the motion passed unanimously. Page 4 of 5 8. COMMITTEE REPORTS / COMMENTS 8A. Operators Report Mr. O'Hare stated that the annual outage starts July 18" and ends on August 7". R&M is redesigning the replacement for the culvert repair based on closing the runway for a period of time. Construction is anticipated to start in the fall. New flight service (starting June 1, 2008) - Grant has obtained the contract and flight services will be switched to this new airline soon. 8B. Next Meeting Date The next meeting will be Thursday, June 19, 2009, at 10:00 a.m. at Bradley Lake. 9. ADJOURNMENT Meeting adjourned at 11:20 a.m. BY: Brad Evans, Chair ATTEST: Alaska Energy Authority, Secretary Page 5 of 5 PLEASE DELIVER TO THE FOLLOWING: Brad Evans Brian Newton Bradley Janorschke Wayne Carmony Jim Posey Tim Barnum Kirk Gibson Chugach Electric Association Golden Valley Electric Association Homer Electric Association Matanuska Electric Association Anchorage Municipal Light & Power City of Seward AterWynne Number of pages including cover sheet: (907) 762-4514 (907) 458-5951 (907) 335-6224 (907) 689-9368 (907) 263-5204 (907) 224-4085 (503) 226-0079 C7