Loading...
HomeMy WebLinkAboutBradley Lake PMC Meeting - Teleconf Friday, 03-24-2000 3y ALASKA INDUSTRIAL DEVELOPMENT =_ AND EXPORT AUTHORITY /= ALASKA @@—™ ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 February 29, 2000 Mr. Eugene Bjornstad Chugach Electric Association P.O. Box 196300 Anchorage, AK 99519-6300 Re: Bradley Lake FY2001 Budget of Annual Project Costs Dear Mr. Bjornstad: Enclosed is the proposed Bradley Lake Budget of Annual Project Costs for FY2001. The budget subcommittee reviewed the budget proposal on February 23, 2000 and voted to recommend Project Management Committee approval of this budget. The FY2001 budget results in a $674,311 increase in the annual utilities’ contribution. The components of the increase are as follows: Decrease in budgeted interest earnings 31,000 Decrease in budgeted O&M costs (266,331) Decrease in debt service (120,475) Decrease in budgeted transfer to arbitrage (10,000) Decrease in budgeted use of prior year accumulated surplus 999,078 Amount required for projected FY2000 deficit 41,039 Increase in annual contribution $ 674,311 The deadline for submission of the budget to the trustee is April 1, 2000. Sincerely, Dauinn SAN Labi dQ Elaine S. McCambridge Accountant Ce: Brad Evans Dennis McCrohan Stan Sieczkowski BRADLEY LAKE MONTHLY UTILITY CONTRIBUTION PERCENT = FY96 FY97 Fy98 Fy99 FY2000 FY2001 POWER PURCHASER SHARE TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL INCREASE CHUGACH ELECTRIC 30.4% 3,968,670 3,947,190 4,016,052 4,208,532 3,591,372 3,796,356 204,984 MUNICIPALITY OF ANCHORAGE 25.9% 3,381,203 3,362,902 3,421,560 3,585,552 3,059,748 3,234,396 174,648 AEG&T 25.8% 3,368,148 3,349,918 3,408,360 3,571,704 3,047,940 3,221,916 173,976 GOLDEN VALLEY ELECTRIC 16.9% 2,206,267 2,194,326 2,232,600 2,339,604 1,996,512 2,110,476 113,964 CITY OF SEWARD 1.0% 130,548 129,842 132,108 138,444 118,140 124,884 6,744 100.0% 13,054,836 12,984,178 13,210,680 13,843,836 11,813,712] 12,488,028 674,316 PERCENT FY98 «FY. FY97 Fy99 FY2000 FY2001 POWER PURCHASER SHARE MONTHLY MONTHLY MONTHLY MONTHLY MONTHLY | MONTHLY | INCREASE CHUGACH ELECTRIC. 30.4% 330,723 328,933 334,671 350,711 299,281 316,363 17,082 MUNICIPALITY OF ANCHORAGE 25.9% 281,767 280,242 285,130 298,796 254,979 269,533 14,554 AEG&T 25.8% 280,679 279,160 284,030 297,642 253,995 268,493 14,498 GOLDEN VALLEY ELECTRIC 16.9% 183,856 182,861 186,050 194,967 166,376 175,873 9,497 CITY OF SEWARD 1.0% 10,879 10,820 11,009 11,537 9,845 10,407 562 100.0% 1,087,904 1,082,016 1,100,890 1,153,653 984,476 1,040,669 COMPONENTS OF CHANGE IN CONTRIBUTION FY2000 ANNUAL CONTRIBUTION 11,813,712 DECREASE IN BUDGETED INTEREST EARNINGS 31,000 DECREASE IN BUDGETED O&M COSTS (266,331) DECREASE IN DEBT SERVICE (120,475) DECREASE IN TRANSFER TO ARBITRAGE (10,000) DECREASE IN BUDGETED USE OF PRIOR YEAR SURPLUS. 1,040,117 FY2001 ANNUAL CONTRIBUTION 12,488,023 2/29/00/3:19 PM,h;all\elaine\bradley\ 2001 Bradley Budget BRADLEY LAKE HYDROELECTRIC PROJECT REVENUES, EXPENSES & CHANGES IN SURPLUS REVENUES UTILITY CONTRIBUTIONS INTEREST INCOME SALE OF VEHICLE AEA SETTLEMENT PRIOR YEAR CORRECTIONS EXPENSES OPERATIONS RENEWALS/REPLACEMENTS TRANSFER TO OPERATING RESERVE BOND REFUNDING COSTS DEBT SERVICE (net of Capital Reserve Reductions) ARBITRAGE TRANSFER CURRENT YEAR SURPLUS (DEFICIT) BEGINNING SURPLUS ENDING SURPLUS BALANCE SHEET ASSETS REVENUE FUND OPERATING FUND LIABILITIES & SURPLUS LIABILITIES SURPLUS OTHER INFORMATION OPERATING RESERVE * MONTHLY CONTRIBUTIONS Required to be 20% of budgeted operating expense 2/16/00 FY98 FY99 FY2000 FYOO FY2001 ACTUALS ACTUALS BUDGET FORECAST BUDGET 13,210,675 13,843,841 11,813,712 11,813,712 12,488,023 1,845,862 1,837,883 1,775,000 1,800,000 1,744,000 1,477 0 0 0 0 0 0 0 0 oO 15,058,014 15,681,724 13,588,712 13,613,712 14,232,023 1,748,691 1,905,324 2,154,115 2,309,873 1,887,784 23,832 25,764 0 0 0 0 0 0 294,124 (283,289) 0 (47,844) 13,017,785 13,746,181 12,393,675 12,146,374 12,273,200 27,976 34,110 40,000 20,600 30,000 15,112,408 15,428,090 14,587,790 14,429,003 14,190,984 (54,394) 253,634 (999,078) (815,291)| 41,039 575,012 520,618 999,078 774,252 (41,039) 520,618 774,252 0 (41,039) 0 481,136 135,622 : - - 296,292 1,099,686 : 158,961 200,000 777,428 1,235,308 - 158,961 200,000 256,810 461,056 200,000 200,000 520,618 774,252 - (41,039) : 777,428 1,235,308 - 158,961 200,000 535,000 535,000 535,000 535,000 535,000 1,100,890 1,153,653 984,476 984,476 1,040,669 2/29/00/3:19 PM, h:all\elaine\bradley2001 Bradley Budget BRADLEY LAKE OPERATIONS & MAINTENANC 2/16/00 CHANGE CHANGE FY0O FY2000 FROM FY00 FROM ‘00 E BUDGET PROJECTED BUDGET PROJECTED BUDGET SUMMARY HEA O&M Contract Total 835,000 1,033,200 (118,500) (316,700) Ei 716,500 3 CEA Substation/SVC Maintenance 47,000 47,000 0 % 47,000 Other O&M 585,915 621,173 (169,331) (104,589) = 416,584 Change in phone circuits Insurance Costs 303,900 301,400 0 2,500 ie 303,900 fs Regulatory Costs 122,000 143,500 21,500 2 143,500 E 1,893,815 2,046,273 (266,331) (418,789) | 1,627,484 i Administrative Costs 260,300 263,600 0 (3,300) } 260,300 2,154,115 2,309,873 (266,331) (422,089) 5 1,887,784 Bond Refunding Costs 0 (47,844) 0 47,844 __ 2,154,115 2,262,029 (266,331) Page 1 of 3 2/29/00/3:25 PM, 2001 Bradley Budget BRADLEY LAKE OPERATIONS & MAINTENANC 2/16/00 CHANGE CHANGE B FY00 FY2000 FROM FY00 FROM ‘00 FY2001 FERC 535 - Operation Supervision & Engineering HEA O&M Contract 93,000 72,900 (14,500) Other 0 93,000 72,900 __(14,500) _ FERC 537 - Hydraulic Expenses HEA O&M Contract 15,000 3,500 (5,000) Other 0 15,000 _ 3,500_ (5,000) FERC 538 - Electric Expenses HEA O&M Contract 144,500 129,400 (9,500) 144,500 129,400 (8,500) _ FERC 539 - Misc. Hydraulic Power Generation Expe E HEA O&M Contract 128,500 97,000 (18,000) 13,500 : DIS Voice/Data Circuits (inc. space & power) 195,028 217,000 (195,028) (217,000)]% DIS 2-way Radio Circuits & radio maint. 41,775 12,600 (41,775) (12,600) : HEA Circuits and Radio - To Bernice Lake 90,000 90,000 |i CEA Circuits -Bernice Lake to Anchorage 0 27,684 27,684 |& 365,303 326,600 (137,119) (98,416)] FERC 540 - Rents Bradley Lake FERC land use fees (5% increase bu 75,000 69,933 75,000___(69,933 FERC 542 - Maintenance of Structures HEA O&M Contract 88,000 15,300 (62,500) Boat Dock Repairs 38,000 0 (38,000) 126,000 15,300 (100,500) Sn === FERC 543 - Maintenance of Reservoirs, Dams & Wa HEA O&M Contract 8,000 0 (3,000) NUKA Diversion 0 8,000 (3,000) FERC 544 - Maintenance of Electric Plant HEA O&M Contract 257,000 218,000 (3,000) 36,000 HEA - Transformer Fire 185,000 0 (185,000) 257,000 ‘403,000 (3,000) (149,000 FERC 545 - Maintenance of Misc. Hydraulic Plant i HEA O&M Contract 92,000 74,700 0 17,300 Misc. oO 0 0 92,000 74,700 0 FERC 556 - System Control & Load Dispatching HEA O&M Contract 9,000 1,400 (3,000) CEA Dispatch & Software 0 0 0 NOAA Weather Service 6,400 6,400 0 SCS Snow Measurement 10,500 10,500 0 UAA Seismic monitoring 57,000 57,000 0 USGS Streamguaging 142,212 127,740 (12,212) USGS Minimum Flow Study oO oO 225,112 203,040 15,212) FERC 562 - Station Expenses CEA SVC/Substation Maintenance Contract 47,000 47,000 O 47,000 47,000 Oo FERC §71 - Maintenance of Overhead Lines HEA Overhead Line Maintenance 20,000 20,000 0 20,000 20,000 oO Page 2 of 3 2/29/00/3:25 PM, 2001 Bradley Budget BRADLEY LAKE OPERATIONS & MAINTENAN FERC 920 - Administrative Expense AEA Admin Fee Workers comp refund AEA Administrative Costs PMC Costs Bradley Lake Audit fees Bradley Lake PMC Legal Bradley Lake Arbitrage Report Budget, recording, courier Bradley Lake Trustee fees PMC Costs Bond Refunding Costs Costs to be reimbursed at closing Refunding Costs TOTAL FERC 920 FERC 924 - Property Insurance Insurance Premiums Homer Electric Insurance RSA with Risk Management FERC 928 - Regulatory Commission Expenses FERC administrative fees Contractual Engineer - Bradley FERC Licensing Reimb from Construction Fund (prior year) 5 Year Inspection & Follow-up TOTAL BRADLEY LAKE BUDGET 2/16/00 CHANGE FY00 FY2000 FROM FY00 BUDGET PROJECTED BUDGET PROJECTED CHANGE FROM ‘00 FY2001 93,500 115,000 28,500 28,500 0 0 200,000 200,000 0 0 0 0 200,000 200,000 0 0 8,500 8,500 0 0 30,000 30,000 0 off 1,800 5,100 0 (3,300) 0 0 0 of; 20,000 20,000 0 0 60,300 63,600 0 (3,300) 0 (47,844) 0 47,844 0 (47,844) 0 47,844 | 260,300 215,756 0 — a 270,000 270,000 0 0 30,000 27,500 0 2,500 3,900 3,900 0 0 303,900 301,400 0 143,500 2,154,115 2,262,029 Page 3 of 3 2/29/00/3:25 PM, 2001 Bradley Budget BRADLEY LAKE BUDGET ACTIVITY BY ACCOUNT “Total 6/30/99 Balance FY2000 Projected Debt Payment 7/1/99 Revenues Interest Transfers to O&M Transfers to Debt Servic 99 O&M Requisitions 2000 O&M Requisitions Reimbursement for refun Renewals/Replacements To Excess Earnings fund Reduction in Capital Res Debt Payments 6/30/2000 Projected Balan FY2001 Budget Revenues Interest Transfers to O&M Transfers to Debt Servic 2000 O&M Requisitions 2001 O&M Requisitions Reimbursement for refunding Renewals/Replacements To Excess Earnings fund Reduction in Capital Res Debt Payments 6/30/2001 Projected Balan Rev Fund O&M Fund Debt Fund Op Reserve R&C Cap Reserve 135,623 1,099,686 6,853,293 535,000 5,000,009 13,145,600 26,769,211 (6,605,993) (6,605,993) 11,813,712 11,813,712 1,800,000 1,800,000 (1,829,194) 1,829,194 - (12,146,374) 12,146,374 - (461,056) (461,056) (2,109,873) (2,109,873) 37,008 10,836 47,844 (20,600) (20,600) 311,600 (311,600) (12,705,275) (12,705,275) (209,825) 368,787 (2) 535,000 5,000,009 12,834,000 18,527,970 12,488,023 12,488,023 1,744,000 1,744,000 (1,718,997) 1,718,997 - (12,273,200) 12,273,200 - (200,000) (200,000) (1,887,784) (1,887,784) (30,000) (30,000) (12,273,200) (12,273,200) 1 - (2) 535,000 5,000,009 12,834,000 18,369,009 A 28% of Annual O&M Budget Page 1 of 1 2/29/00/3:26 PM, 2001 Bradley Budget 5 ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY /= ALASKA mE =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 269-3000 FAX 907 / 269-3044 March 9, 2000 Mr. Eugene Bjornstad General Manager Chugach Electric Association 5601 Minnesota Drive P.O. Box 196300 Anchorage, Alaska 99518-6300 SUBJECT: Audited Financial Statements Bradley Lake Project Dear Mr. Bjornstad: Attached is the audited Bradley Lake Project Financial Statement. The statement has been reviewed by the Budget Subcommittee and found to be acceptable. Please add this item to the agenda. Copies have been provided to each PMC member, Brad Evans - Budget Subcommittee Chairman, and AterWynne. Please let me know if you have any questions. Sincerely, GM Col—— Dennis V. McCrohan, P.E. Deputy Director - Project Development and Operations Attachment cc: BPMC Members w/attachment Ron Saxton, AterWynne wiattachment Brad Evans, Golden Valley Electric Association w/attachment AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS JUNE 30, 1999 AND 1998 Audited Financial Statements BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Anchorage, Alaska Independent Auditor's Report Balance Sheets Statements of Revenue, Expenses and Changes in Surplus Statements of Cash Flows Notes to Financial Statements Independent Auditor's Report on Additional Information Statements of Expenses Barisena, Sheombeg & Company A Professional Corporation Certified Public Accountants 3201 C Street, Suite 405 Anchorage, Alaska 99503 Tel. (907) 563-4547 FAX (907) 561-7683 Independent Auditor's Report Bradley Lake Project Management Committee Anchorage, Alaska We have audited the accompanying balance sheets as of June 30, 1999 and 1998, and the related statements of revenues, expenses and changes in surplus and of cash flows for the years then ended, of the Bradley Lake Project Management Committee Operating and Revenue Funds (a project management committee). These special purpose financial statements are the responsibility of the Bradley Lake Project Management Committee. Our responsibility is to express an opinion on these special purpose financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying special purpose financial statements were prepared to present revenue and expenses on an accrual basis with the exception of interest income and fixed asset replacements, which have been presented on a cash basis in order to conform to the fiscal year operations and maintenance budget. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and surplus of the Bradley Lake Project Management Committee as of Junie 30, 1999 and 1998 and its revenue, expenses and changes in surplus and cash flows for the years then ended, in conformity with generally accepted accounting principles. This report is intended for the information and use of the Bradley Lake Project Management Committee and should not be used for any other purpose. Tfrnene Atrore Leg Bagees AP Parisena, Stromberg & Company, APC Anchorage, Alaska December 28, 1999 ’ BRADLEY LAKE PR_, (CT MANAGEMENT COMMITT OPERATING AND REVENUE FUNDS BALANCE SHEETS June 30, 1999 and 1998 ASSETS Current assets: Investments (Note B) Total Assets LIABILITIES AND SURPLUS Current liabilities: Due to AIDEA Accounts payable Total Liabilities Surplus Total liabilities and surplus See accompanying notes to the financial statements. 1999 $ 1,235,307 $_ 1,235,307 $ 126,111 334,944 461,055 774,252 $_ 1,235,307 $777,428 $777,428 $ 16,176 240,634 256,810 520,618 $__777.428 * BRADLEY LAKE PRU,~CT MANAGEMENT COMMITTI OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUE, EXPENSES AND CHANGES IN SURPLUS YEARS ENDED June 30, 1999 and 1998 1999 1998 Budget Actual Variance Actual Revenue: Utility contributions $ 13,843,836 $13,843,841 $ 5 $13,210,675 Interest receipts 1,699,979 1,837,883 137,904 1,845,862 Transfer from (to) operating reserve (117,560) - 117,560 - Additional utility contribution - - - - Miscellaneous income 5,000 - (5,000) 1,477 Total revenue 15,431,255 15,681,724 250,469 15,058,014 Expenses, fixed asset replacements and debt service: Operations and maintenance 2,246,947 1,939,433 (307,514) 1;776,667 Debt service 13,494,308 13,746,181 251,873 13,017,785 Bond refunding costs (reimbursement) (Note E) (350,000) (283,288) 66,712 294,124 Fixed asset replacements 40.000 25,764 (14,236) 23,832 Total expenses, fixed asset replacements and debt service 15,431,255 15,428,090 (3,165) 15,112,408 Excess (deficiency) of revenue over expenses, fixed asset replacements and debt service : 253,634 253,634 (54,394) Surplus, beginning of year 520,618 575,012 Surplus, end of year 774.252 520.618 See accompanying notes to the financial statements. 3 ' BRADLEY LAKE PRL,2CT MANAGEMENT COMMITT.WU. OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS YEARS ENDED June 30, 1999 and 1998 Cash flows from operating activities: Excess (deficiency) of revenues over expenses, fixed asset replacements and debt service Adjustments to reconcile excess of revenues over expenses, fixed asset replacements and debt service to net cash provided by operating activities: Increase (decrease) in accounts payable Increase (decrease) in amounts due to AIDEA Net cash provided by operating activities Available cash and cash equivalents at beginning of year Available cash and cash equivalents at end of year Supplemental disclosure of cash flows information: Interest paid See accompanying notes to the financial statements. 4 1999 $ 253,634 94,310 109.935 457,879 777,428 12 ‘7 $ 10,136,181 1998 $ (54,394) (11,708) (109,080) (175,182) 952,610 $777,428 $9,637,785 * BRADLEY LAKE PRC,~CT MANAGEMENT COMMITTE_ OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 1999 and 1998 NOTE A: SIGNIFICANT ACCOUNTING POLICIES Description of Business: The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement) dated December 8, 1987. The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project, which became operational in September 1991, and the scheduling, production and dispatch of power. The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement - Chugach Electric Association, Inc.; Golden Valley Electric Association, Inc.; the Municipality of Anchorage (Municipal Light & Power); the City of Seward (Seward Electric System); and the Alaska Electric Generation & Transmission Cooperative, Inc. (AEG&T). The Homer Electric Association, Inc. (HEA) and the Matanuska Electric Association, Inc. (MEA) are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T has no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities, including: establishing procedures for each party's water allocation, budgeting for annual Project costs and calculating each party's required contribution to fund annual project costs. Committee approval of operations and maintenance arrangements for the Project, sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of: 1) 50 years after commencement of commercial operation or 2) the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction of all other payment obligations under the Power Sales Agreement. Renewal options for additional terms exist. Establishment of Trust Funds: Article V, Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund, including an Operating Reserve account, to be held by AEA. In actuality these funds, along with the Debt Service, Excess Investment Earnings (arbitrage), and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle, Washington. BRADLEY LAKE PR ___ ECT MANAGEMENT COMMIT1 OPERATING AND REVENUE FUNDS i NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1999 and 1998 NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued) All deposits, including utility contributions and interest earnings, are made into the Revenue Fund, which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund; Operating Reserve Fund; Operating Fund; Revenue Fund; Capital Reserve Fund; and the Renewal & Contingency Fund. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates. Revenue and Expense Recognition: Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement. Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received. Operating and maintenance expenses are recognized when incurred, while interest and principal payments on bonds are recognized when paid. Purchases of fixed asset replacements are expensed when purchased. Income Taxes: The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a) of the Internal Revenue Code. NOTE B: INVESTMENTS Substantially all of the balances in the following funds are invested in collateralized investment agreements through the trust department of US Bank. The specified interest rate for monies from the Operating and Revenue Funds invested in the agreements is 7.38%. Balances at June 30, 1999 and 1998 are as follows: 1999 1998 Operating Fund $ 1,099,685 $ 296,292 Revenue Fund 135,622 481,136 Total investments Su 1E235:307. $ 777,428 6 “BRADLEY LAKE PRC,_ CT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1999 and 1998 NOTE B: INVESTMENTS (Continued) Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale. Investments are presented at aggregate cost, which approximates market value. For purposes of the cash flow statements, management considers the full amount of the investment balance to be cash available for operations. NOTE C: MAJOR CONTRACTS AND AGREEMENTS During May 1994, the Alaska Energy Authority entered into the Master Maintenance and Operating agreement with the Committee. The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement. The term of the Master Agreement is indefinite, remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists. This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project, subject to the approval of the Committee. On behalf of the Committee, the Alaska Energy Authority entered into an agreement with Chugach Electric Association, Inc. (CEA) in August, 1996, for the provision of all services necessary to dispatch the Bradley Project's electric power output. The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996, the Alaska Energy Authority entered into an agreement with Chugach Electric Association, Inc. on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. BRADLEY LAKE PRL, ECT MANAGEMENT COMMIT1__ OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1999 and 1998 NOTE C: MAJOR CONTRACTS AND AGREEMENTS (Continued) An operation and maintenance agreement dated February 11, 1994, was executed between Homer Electric Association and the Alaska Energy Authority. This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association. The agreement is through June 30, 2004 and continues from year to year thereafter, except upon written notice to terminate by either party. Notice of termination must be given one year in advance of the termination date. HEA is to be reimbursed for costs associated with the operation, maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August, 1996, the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project. The transmission agreement continues from year to year, except upon written notice to terminate by either party. Notice of termination must be given six months in advance of termination dates. NOTE D: RELATED PARTY TRANSACTIONS During the years ended June 30, 1999 and 1998 the Committee paid the following amounts to related parties for costs incurred under the various contracts described in Note D: 1999 1998 Homer Electric Association - operation and maintenance $ 753,962 $ 697,735 Chugach Electric Association - substation service maintenance $ 23,624 $ 29,727 For the years ended June 30, 1999 and 1998, Chugach =e Association provided dispatch services to the Committee for no charge. NOTE E: COMMITMENTS AND CONTINGENCIES Forward Delivery Bond Purchase Agreement: In December, 1997, Bradley Lake Project Management Committee entered into a forward delivery bond purchase agreement providing for the issuance of two series of Power Revenue Refunding Bonds in April of 1999 and 2000. The costs associated with the refunding were expensed in the year ended June 30, 1998 and repaid by funds provided by the bonds during the year ended June 30, 1999. A Professional Corporation Certified Public Accountants 3201 C Street, Suite 405 Anchorage, Alaska 99503 Tel. (907) 563-4547 FAX (907) 561-7683 INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION Bradley Lake Project Management Committee Operating and Revenue Funds Anchorage, Alaska Our report on our audits of the special purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds for June 30, 1999 and 1998, appears on the page preceding the balance sheets. Those audits were made for the purpose of forming an opinion on the special purpose financial statements taken as a whole. The supplemental Statements of Expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the special purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the special purpose financial statements taken as a whole. Phiten, Moor GCa=es gee Parisena, Stromberg & Company, APC Anchorage, Alaska December 28, 1999 ‘BRADLEY LAKE PROJECT ...ANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES June 30, 1999 and 1998 1999 Variance Favorable 1998 Budget Actual (Unfavorable) Actual Expenses: Generation expense: Operation supervision and engineering $ 103,500 $ 66,746 $ 36,754 $ 76,936 Hydraulic operation 15,000 4,932 10,068 5,585 Electric plant operation 149,000 135,801 13,199 130,686 Hydraulic power generation operation 304,322 248,830 55,492 227,663 FERC land use fees 64,050 71,242 (7,192) 72,661 Structure maintenance 136,000 74,643 61,357 20,856 Reservoir, dam, and waterway maintenance 8,000 37,566 (29,566) 271 Electric plant maintenance 263,000 220,494 42,506 244,357 Hydraulic plant maintenance 102,000 74,536 27,464 77,603 System control and load dispatching 256,575 247,397 9,178 238,382 Substation operation and maintenance 47,000 23,624 23,376 29,727 Overhead line maintenance 20,000 20,139 (139) 19,157 Total generation expense 1,468,447 1,225,950 242.497 1,143,884 Administrative, general and regulatory expense: Insurance 322,200 293,559 28,641 299,593 AEA administrative fee 200,000 200,000 - 200,000 PMC costs 66,800 40,193 26,607 44,924 Arbitrage expense - 34,110 (34,110) 27,976 Regulatory commission: FERC administrative fees 161,000 104,451 56,549 43,938 FERC licensing 28.500 41,170 (12,670) 16,352 Total administrative, general and regulatory expense 778,500 713,483 65,017 632,783 Total operating and maintenance expenses $2,246,947 $ 1.939.433 $ 307,514 $ 1,776,667 10 MAR-15-00 14:42 FROM:ENC*“SERING/POWER PRODUCT ID: 1907°"53305 PAGE 2/2 BRADLEY LAKE PROJECT FACILITIES TRANSFORMER The Bradley Lake Project Facilities Transformer was placed in service January 14, 2000. The temporary generator was removed from the project January 26, 2000, The project was accomplished with project personnel supplemented by a cleaning crew and one general maintenance worker. The new transformer is electrically of the same size and configuration as the original. The new transformer had to have the housing modified to allow for mounting to the floor and installation of the fuses on the low side. This is not uncommon for larger installations. The cabling on the high side of the transformer was completely replaced. The cabling on the low side of the transformer was replaced at the first junction box just prior to exiting the powerhouse. This allowed for any heat or chemically damaged cabling to have been removed. The replacement cable was taken from warehouse stock. The subcommittee that was formed to investigate the cause of the fire and the protective actions that rernoved the transformer from service have not yet filed a report. Through my conversations with the team, they did not find any inappropriate relay actions nor any cause for the fire beyond an internal fault, Costs for the fire were accumulated in two separate accounts, one for labor and one for materials and outside services. Labor totals to $44, 261.24 and materials total to $134,001.96, This totals to $178,263.20. There may be a few charges that have not come in yet. I would not expect them to accumulate to a significant sum.