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HomeMy WebLinkAboutBradley Lake PMC Regular Meeting Minutes 12.30.2009BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska December 30, 2009 - 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 10:03 a.m. on Wednesday, December 30, 2009, from the AEA boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Brad Evans Chugach Electric Association Bob Day Homer Electric Association Henri Dale Golden Valley Electric Association Rick Miller Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority Joe Griffith Matanuska Electric Association (teleconference) John Foutz City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA May Clark, AEA Mike Cunningham, CEA Burke Wick, CEA Kirk Gibson, AterWynne (teleconference) Brian Newton, Golden Valley Electric Association (teleconference) Bonnie Godfreid, Swalling & Associates Gary Dixon, Swalling & Associates Shelby Weems, AEA Linda MacMillan, AEA Jim Kingrey, HEA Don Zoerb, MEA (teleconference) Brian Bjorkquist (teleconference) 4. PUBLIC COMMENT There were no public comments. Page 1 of 7 BPMC Minutes 12/30/09 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. Brad Janorschke on teleconference could not attend; therefore assigned Bob Day as voting delegate to HEA. 6. APPROVAL OF MEETING MINUTES — October 7, 2009 MOTION: Mr. Griffith moved to approve the minutes of the October 7, 2009 meeting. Seconded by Mr. Carey. A voice vote was taken and the meeting minutes were unanimously approved as presented. Tt. NEW BUSINESS 7A. RFP for Insurance Broker Mr. Cunningham stated this motion is a follow-up to a recommendation received through Warren, McVeigh & Griffin, Inc., Risk Management Consultants, to test the market for a new broker and possible new insurance coverage for the project. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee direct AEA, with aide of an insurance advisor designated by the BPMC, to proceed with a request for proposal for an insurance broker for the project. Seconded by Mr. Dale. Mr. Carey stated a large lead time is required for an RFP to have insurance in place by July 1. If the BPMC wishes to proceed with a broker, then it needs to be decided now. The BPMC has coverage through ARECA for property and boiler machinery coverage. Last year it was about $520,000 and the previous year it was $580,000. The difference last year compared to previous years is in previous years the coverage was split with the primary policy through ARECA, then a secondary policy for seismic coverage through the state broker. State risk management changed brokers so last year the entire amount was through ARECA. Under our current policy, it is not split between insurers. If the utilities want policies to be split they can come up with the wording in the RFP. He said he would be the project manager working with the Division of Risk Management and AEA procurement. Writing of selection criteria would be done by the state following their regulations and procurement guidelines since it will be a state procurement. Much of the criteria would be written by the BPMC, working with the finance committee, making the boiler plate and receiving input from state procurement during the evaluation period. Cost must be a minimum of 40% of the criteria. The evaluation board would consist of both state procurement and representatives from the utilities. Linda MacMillan stated there’s a line item in the budget under committee costs to pay for work done by Warren McVeigh. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Page 2 of 7 BPMC Minutes 12/30/09 Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Abstain The motion passed. 7B. FY09 Audit Report & Refund FY09 Surplus Mr. Cunningham stated the FY 09 audit has been completed and representatives from Swalling & Associates were present to review the results. There’s a refund due the utilities in the amount of $284,745. There’s a motion to accept the audit and to approve the refund to be made the utilities. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee accept the FY09 audit report and request AEA to refund the FY09 surplus to the utilities by December 31, 2009. Seconded by Mr. Foutz. Mr. Dixon stated that the audit was for the year ended June 30, 2009, performed over the past two months and subject to the engagement letter. The financial statements are called special purpose since they’re not following what would be generally accepted accounting principles, as they are being done to conform with the requirements for BMPC special purposes. They are audited under generally accepted auditing standards and the financial statements were audited, but are the representation of management and Swalling interface with AEA on the actual auditing work subject to the review and approval of the BPMC finance committee. Ms. Godfreid reviewed audit highlights: e Financial Statement is for the two years ended June 30, ‘09 and ‘08. First page is report of independent auditors that simply states BPMC has a special purpose financial statement and that the audit was conducted in accordance with generally accepted auditing standards. e Balance Sheets. The investments are the most significant asset and the liabilities are primary operating expense and accounts payable. The payable to the utilities for any overpayment during the year is $284,000. Assets are $2.5 million, and liabilities are $2.5 million. e Revenue & expenses compares ‘09’s actual to ‘09’s budget with a variance. Utility contributions were almost $1 million more this year than last year. Interest income is at $1.7. Operating expenses went up $800,000. AEA has adjusted revenue to break even with expense, resulting in the $284,000 refund. $16,881,000, was paid in, but the only requirement for revenue was $16,596,000. e Cash Flows. Utility contributions are recognized as revenue when owed, and then they're adjusted for the break even. Transfers from other funds are recognized when received. There’s no excess of revenue over expenses. The only changes in cash are in the receivables and payables. The cash flow statement also discloses the interest paid of $6,344,000, which is a disclosure requirement. Page 3 of 7 BPMC Minutes 12/30/09 e Revenue & expense recognition shows how the operating fund reimburses the R&C fund, done over a four-year period. The future commitment to the R&C at the end of ‘09 is $2.7 million. e Investments are in collateralized investment agreements at JC Morgan Chase. Major contracts and agreements show how the BPMC has contracted with various utilities and AEA for operation of Bradley Lake. e Related party transactions are a required disclosure on almost everything BPMC does as a related party transaction, that’s where it shows payment to HEA for operations, CEA and AEA. In the refund of surplus there’s a typo in the last paragraph that will be fixed. The refund is $284,000. A brief discussion followed regarding the R&C investment procedures and results. Mr. Cunningham stated the finance committee reviewed the report and had no changes or comments. Mr. Dixon stated there were no difficulties in performing the audit, no corrections were made and the finance committee was not asked to pass on any adjustments. There were no disagreements with management or AEA. There were no other findings or issues to report. 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. 8. OLD BUSINESS 8A. FAA Cameras Mr. Gibson reported that no action was required on either item under Old Business at this time. The FAA has requested a camera be placed at the Bradley facility. FAA and BPMC attorneys discussed various responsibilities outlined in the contract governing the relationship between the FAA and BPMC and could not agree on contractual language imposing certain obligations on BPMC. The FAA wants to use its traditional lease for the camera placement. It’s our position that a license would be more in line with the activities being proposed. There are three areas where the FAA's regional counsel had outstanding issues: 1. Quiet Enjoyment — A clause that ensures BPMC is entering into an agreement with a party that has the right to do so by requiring AEA/BPMC to warrant that fact. We would be agreeable to the clause being modified to remove the language, “and warrants...” FAA is not paying rent for the ability to use the site, so it’s not reasonable to require AEA/BPMC to covenant that it will protect the FAA’s possession from all persons Page 4 of 7 BPMC Minutes 12/30/09 claiming possession. The following would be acceptable: “AEA warrants that it has good and valid title to the premises, and rights of ingress and egress.” 2. Attorneys Fees and Venue - FAA objected to adding provision regarding attorney's fees being awarded to winners of any dispute and establishing venue in Alaska for any disputes arising thereto. Our proposed language provides for attorney’s fees to the prevailing party and that the dispute be heard in Anchorage where AEA and licensed land are located. 3. Remediation Clause — FAA revised the agreement to remove the hold harmless wording recommended by us and make it AEA’s responsibility to remediate contamination not caused by FAA’s use of the property. We revised the language to remove the limitation that the contamination had to be directly related to “Government’s use of AEA’s property pursuant to this License regarding installation, operation and maintenance of the camera,” and, instead, required the FAA to remediate if related to FAA’s use of premises. Mr. Day stated that by having FAA install the camera puts a certain amount of operation and maintenance on them and would like to work with them to see it happen. A pros and cons discussion followed. It was determined the BPMC will approach the FAA again to propose resolutions to the issues. 8B. Update on FERC Fees A number of entities that have hydroelectric protested the significant increase in land use fees charged by FERC. The participants in this group have been working the issue at FERC and the DC Circuit Court (Group). The Group initially filed a request for a rehearing at FERC regarding FERC’s process for picking the methodology it used for assessing the land use fees. The Group also filed for and received a stay with the DC Circuit Court (while the request for rehearing was being heard by FERC). As part of the order granting the stay, the DC court ordered FERC to provide progress reports on its progress concerning the participants’ rehearing request. BPMC (and some others) joined the Group later, so the Group also filed an appeal on behalf of BPMC (and the others) of the charges invoiced by FERC, and requested a hearing regarding its fees. BPMC paid the fees invoiced by FERC under protest. On October 30, 2009, FERC issued its order denying the hearing request of the participants. FERC later submitted a report to the DC Circuit providing a copy of its rehearing order with a statement that FERC does not intend to file a motion to dissolve the stay at the present time. FERC appears content to allow the stay to continue, at least until it knows whether the partici- pants’ group will seek judicial review. On December 18, 2009, the Group filed a Petition for Review of FERC’s denial of a request for rehearing with the DC Circuit Court. The Group’s next move will be influenced by the briefing schedule issued by the DC Circuit Court, as well as any action taken by FERC. If FERC seeks to lift the stay, we would need to provide a response. If FERC issues a new fee schedule for 2010 based on the new BLM/USFS methodology, we would need to decide whether to seek another stay from the court or pay under protest. At this point we expect the court to issue a preliminary order requiring us to prepare a docketing statement and preliminary statement of the issues. Once the court sets our case for briefing, our chances of FERC or the court staying the 2010 fee schedule and bills could increase. This may take five to seven years if everything goes as usual. Page 5 of 7 BPMC Minutes 12/30/09 Of the $30,000 budgeted for BPMC’s participation in these efforts, expenditures total $11,600 to date. 9. COMMITTEE REPORTS / COMMENTS 9A. Operators Report Mr. Day presented a written report to the Committee and reported that the power supply at the gatehouse has been reconfigured for more reliable operation adding SCADA and some enunciation utilities to it. He also reported that there’s $1.2 million in the present budget to do some mitigation on power jacking issues on the dual transmission line that crosses the Fox River Flats; wherein three structures are affected to where they have jacked out of the ground to as much as five feet. One of the structures, as it was researched, sunk — the attachments, cross-members and power foundation bolts are now below grade. Everything is stable and tight, but all seems to be sinking into the mud. The mitigation is to return this winter (winter access only) and take a pile driver and while there add pile to the piles that are jacking, weld another 25’ to each one and drive until resistance, then move onto the next one. They are just preparing to put the contract out, which the estimate is coming in close to the $1.2 million. It’s likely they will be able to keep one line in service while performing the work, and at the end of day return it to service. A discussion followed on different pile methods, similar work performed on the Intertie and perhaps consulting other utilities that have done similar work. Nuka Diversion repairs could not be continued and are postponed due to weather until spring. A discussion ensued on the Nuka water flow and cfs required. Chair Evans suggested future reports might be written differently, possibly ranked by project for easier navigation. Mr. Griffith inquired as to the condition of the SVC at Soldotna. Chair Evans stated he would obtain a report for the next meeting. 9B. Fish Water Release Issue Mr. Carey reported that currently Bradley releases about 12-14,000 acre feet of water above what the required minimums are at the gauging station. Bradley is in the same situation as Kodiak Electric in requesting modifications to their permit to modify the main flow monitor reporting procedures. In early November, U.S. Fish & Wildlife Service (USF&WS) and Alaska Department of Fish & Game (ADF&G) looked at the Lower Bradley River and wrote what their requirements would be if we were to get minimum flow. ADF&G wants us to monitor certain parameters for one year before the FERC modification would start plus the year after. The USF&WS wants two years before and two years after. We believe the monitoring requirements they want is redundant because the parameters they want have already been studied. We are requesting a meeting with them as we believe they have not read many of the research already done. The State’s hydrologist left as of January 1, so there won't be a replacement there for another month. They also want expensive fish traps and someone would have to fly out there by helicopter once a month for the five months they’d be in place. We need to meet with them to discuss this to see if we can change their mind. Hopefully during February they will come to Page 6 of 7 BPMC Minutes 12/30/09 an agreement, but right now what they want is unacceptable. If they do away with the pre- monitoring, we’d still have to approach FERC this spring to get it into position. We're trying to get agreement amongst the locals before we approach FERC as to what the work plan will be and have already provided ADF&G with the proposed work plan. FERC will most likely come right back to the resource agencies and say if the resource agencies agree, they will agree. Prior to moving forward to FERC, the BPMC will have to agree on the various costs. Prior to adjournment, Chair Evans requested the finance committee review the BPMC current debt and associated information to see if there’s a reasonable opportunity to refinance. 9C. Next Meeting Date The next meeting will be at the call of the Chair. 10. ADJOURNMENT The meeting adjourned at 11:12 a.m. BY: Evans, Chair ATTEST: Mal Alaska Energy Authority, Secretary 7 Page 7 of 7 BPMC Minutes 12/30/09