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HomeMy WebLinkAboutBPMC Meeting June 30, 1988 1HECORD VLOPY FILE NO BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE &) Bo) ee INITIAL MEETING MINUTES THURSDAY, JUNE 30, 1988 The meeting was held in the training room at Chugach Electric. The meeting began at approximately 10:00 a.m. people were in attendance: Kent Wick - HEA Sam Matthews - HEA/AEG&T Myles Yerkes - MEA John Cooley - ML&P Paul Diener - City of Seward Jim Palin - MEA Don Grimes - First Southwest Dave Eberle - APA Bob LeResche - APA Brent Petrie - APA Don Shira - APA Dave Highers - CEA Tom Lovas - CEA Ron Saxton - GVEA Mike Kelly - GVEA Kurt Dzinich - Senate Advisory Council Marnie Isaacs - APA Carol Johnson - CEA The attendees began by stating their names and affiliation (a sign-in sheet is attached). I. Il. Approval/Modification of Agenda Mr. LeResche stated that Dave Highers had distributed an agenda for the meeting (copy attached). Mr. LeResche added an item II. Finance. The agenda was approved as amended. Finance Mr. LeResche prepared an analysis that was sent to everyone, and which he said he tried to keep as neutral as possible. The underwriters feel it is highly important to understand the finance issues as early as possible. A discussion ensued regarding the percentage points that will be charged on the Bradley Lake project. Mr. LeResche stated he needs an affirmative commitment from all participants to get the financing in progress and talk to rating agencies and insurance companies, then this committee or a subcommittee thereof should formally review rates, tax PRO 3-hi min The following v PMc Minutes -2- June 30, 1988 laws, etc. every quarter and be ready to make a decision by December, 1990. Mr. LeResche introduced Mr. Don Grimes from First Southwest as APA's Financial Advisor. Mr. Grimes reported that he reviewed the memo and thinks it was well written. It also gives an indication of what the risks are on waiting on the financing. The risks involved are: pls Rates will generally be increasing; Ze Uncertainties of the tax laws, and or Technical amendments to the 1986 Budget Act. Mr. Grimes feels that the PMC should poise themselves to get ready to go in the market, talk to rating agencies and insurance companies and get documents in as final form as they can be. "No decision needs to be made today, however, if you don't get yourselves to that point you'll always be a few months or several months away from making a decision." It will take several months to get all of the work done. Mr. Grimes' recommendation is to get ready to go and then the decision can be made as to whether or not it is the best idea to move forward. A question was raised regarding the cost of getting ready. Mr. LeResche stated each participant would pay out-of-pocket expenses. There would not be any payments to anyone. Mr. Wick stated that he feels it is prudent to move ahead. Mr. Wick made a motion for the PMC to move ahead and begin the process of talking to the rating agencies and insurance companies to prepare the financial paperwork. Mr. Highers asked if the subject could be discussed prior to approval of the motion. Mr. Highers suggested that each utility choose a representative and then finance the representative for the necessary expenses. Mr. Grimes feels it is important for as many utilities as possible be represented, especially the three largest utilities. Mr. Palin asked if all of the APA financing team was embedded, or if the utilities have any participation in the decision (i.e. Financial Advisor, Underwriters, etc.). Mr. LeResche reported that First Southwest will remain the Financial Advisor to the Power Authority, their fee is $1.95 per $1,000 plus actual out-of-pocket expenses. The Underwriters are at a fixed fee to be negotiated at the time of the sale, but an amount will have to be approved by all of the participants. Mr. Grimes expects it will be PMC Minutes -3- June 30, 1988 caok « somewhere between 1.5 to 2%, but will be subject to the current market conditions. Mr. LeResche stated he also expects there ‘to be approximately three additional co-managers hired. There is an RFP being put together for that hiring. A discussion ensued regarding the fees for the Financial Advisor and the Underwriters. Mr. Palin stated that he foresees a potential political problem. Mr. LeResche agreed, but feels there is no way to lock in their fee due to the changing market. Mr. Palin went on to request the current rating. Mr. Grimes feels that the issue will be rated A or A-. Mr. Wick moved to proceed in setting up long-term financing up to the point of being ready to sell the bonds, also to set up a subcommittee with a representative from each participant and from the Power Authority. The motion was approved unanimously. Four Dam Pool PMC Experience Mr. Saxton reported that he sent out a memo to all participants on June 14. Mr. Saxton gave a report on the Four Dam Pool. Mr. Saxton's recommendations were: a6 Take advantage of the opportunity to organize before plant operation and before things become a crisis situation. Ze There are rules of the organization and conditions of the agreements, and it is very important that everyone know and understand those rules. an There is a broad range of tasks involved in the project. Take advantage of people who specialize in different areas of the operation such that individual tasks go beyond the focal point person. The legislature imposed open meeting requirement rules on the PMC. Mr. Saxton feels this is a high priority to avoid getting into any trouble. The public can and probably will attend meetings. Mr. Petrie stated he agrees with Mr. Saxton's assessment, however, he also feels that the participants have a greater depth of staff to deal with the complicated and wide range of issues in house. With the Intertie Operating Committee there is a history of working together where you use the specialty people from each utility and use consultants where you have to. Mr. / PMC Minutes ~~ June 30, 1988 IV. Vv. Saxton said he would use the Four Dam Pool as a lesson on things not to do and the Intertie Operating Committee as a lesson on a way things can be done and work well together. Mr. Lovas asked if there were provisions in the Four Dam Pool Agreement laying out requirements for bylaws and procedures. Mr. Saxton reported there was a policy agreement rather than rules. Three years after the Four Dam Pool project began the policy/procedure manual came out. Discussion of Responsibilities of the Committee Mr. Saxton feels the Bylaws for the Bradley Lake project should be devised as soon as possible. Mr. Wick asked Mr. Saxton to come up with objectives for the Bylaws, Policy and Procedures requirements. Mr. LeResche volunteered Mr. Petrie and Mr. Grimes to assist Mr. Saxton in the preparation of the documents. Mr. Highers moved to retain Mr. Saxton to draft the Bylaws for the Bradley Lake project and to share the cost according to the allocation of participation. The motion passed unanimously. Mr. LeResche would like to have a draft of the Bylaws by the next PMC meeting. Project Status Report Mr. LeResche asked Mr. Eberle to give a status report. Mr. Eberle reported that the formal groundbreaking ceremonies were held on Wednesday, June 29. There are four contracts that are active right now, they are: Camp Catering - Brown & Root General Civil Construction - Ensearch Transmission Line Clearing - Zubeck Turbine Generators - Fuji Electric Three additional contracts will be issued this summer, they are: is Powerhouse bid will be put out for bid on Friday, July 1, 1988, Mr. Eberle expects to open bids by mid September. a. Transmission Line Construction RFP will be out by mid September and awarded by the end of the year. de SCADA RFP will go out by the first of August and awarded by the end of the year also. ¢ - PMC Minutes -5- June 30, 1988 vI. VII. Mr. Eberle gave a commercial operation date of September 1, 1991. Some of the major milestones are that the transmission line construction needs to be completed by the fall of 1990, including Homer Electric's line so the capability to backfeed power to the project is there. The dam itself will be completed in October of 1990 with water up to the tunnel in the Spring of 1991. The first unit will be available for testing in the Spring of 1991 and ultimately be ready for commercial operation September 1, 1991. The original construction estimate was figured at $355.9 million. The power sales estimate was $350 million including the cost of financing. The current construction cost projection is less than $300 million; however, until they get into the tunnel, they don't know what the total cost will be. Mr. Kelly asked what Bechtel's relationship is to Enserch. Mr. Eberle reported that Bechtel is the construction manager for Ensearch. The designers for the project are Stone and Webster. Mr. Kelly moved to have the TCC become a subcommittee of the PMC to research and identify the overall responsibilities of the owner, operator and dispatcher including the responsibilities or duties associated with operations and maintenance. The TCC is to report back to the PMC at the next meeting. The TCC will meet on July 14, 1988. A discussion ensued regarding Operations, Maintenance and Dispatch. Mr. LeResche asked Mr. Wick if he had heard from REA regarding their approval. Mr. Wick feels that an agreement from REA will be made by late summer or early fall. Mr. LeResche will submit a letter from APA on September 1 supporting a review completion date. Establishment of Meeting Schedule Mr. LeResche suggested that the next PMC meeting be held around the first of September. All participants agreed to meet on August 24, 1988. Mr. Palin requested monthly status reports or a general status report on the project. Election of Interim Officers Mr. LeResche suggested that during the interim period and until the Bylaws are established and agreed on, he act as Chairman of the PMC for the Power Authority. The Power Authority would call the meetings and take, transcribe and distribute the minutes for all participants. PMC Minutes o> June 30, 1988 VIII.Assignments for Preparation of Draft Rules of Procedure IX. /sb This item was previously discussed under item Iv. Discussion of Responsibilities of the Committee. No further action was taken. Other Agenda Items as Proposed None Adjournment Mr. Kelly moved to adjourn. The motion passed unanimously.