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HomeMy WebLinkAboutBPMC Meeting - September 21 1990 1FILE COPY Pea 37 / MIN a Page 1 of 8 v BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE SEPTEMBER 21, 1990 1. CALLED TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee to order at 9:45 a.m. in the Training Room at Chugach Electric Association to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Alaska Energy Authority Robert E. LeResche - Representative Brent Petrie - Alternate Chugach Electric Association David L. Highers - Representative Tom Lovas - Alternate City of Seward E. Paul Diener - Representative Golden Valley Electric Association Michael Kelly - Representative Matanuska Electric Association Ken Ritchey - Representative Homer Electric Association N.L. Story - Representative Municipal Light and Power Tom Stahr - Representative John Cooley - Alternate Others Present: Don Shira - Alaska Energy Authority Ron Saxton - Purchasing Utilities DeAnna Scott - Alaska Energy Authority Dave Calvert - City of Seward Mike Hubbard - R.W. Beck Dave Burlingame - Chugach Electric Association 3. PUBLIC COMMENT There being no public comment, Chairman Kelly proceeded to agenda item 4. 4. MODIFICATION OF AGENDA Added under Project Status Report, HEA transmission line was added. New Business Item B, Chugach Electric's cost associated with the installation of transfer tripping relays to support Bradley Lake and Homer Electric Dual Ported RTU to be included as project costs. skb9943(1) Page 2 of 8 5. APPROVAL OF MINUTES JULY 17, 1990 Chairman Kelly asked if there were any objections to approving the July 17, 1990 meeting minutes as distributed. Mr. Saxton stated that two corrections needed to be made, under Section 31 cost on page two paragraph one, it should read "Chairman Kelly stated that there were two transmittals from Mr. Saxton" and on the top of page 4, it should read: "Chairman Kelly recommended that if the committee had not included these type of costs in their initial determination of allowable costs then they should not be included." The minutes were approved as corrected. 6. BOND FINANCE TEAM Mr. LeResche reported that the Bonds were sold and the money is now on deposit with the Trustees. Each utility should be receiving their reimbursement in the near future. Mr. LeResche stated that the Alaska Energy Authority may be asking for complete forms of invoices to support the Section 31 costs that have been reported. 7. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the Technical Coordinating Subcommittee (TCS) met twice since the last Project Management Committee (PMC) meeting and that an agreement on the scope of work for the interim operating period has been reached. The interim period is the period between the time Bradley Lake becomes operational and nl when stability aids are in place. The SCADA point lists have been approved. Mr. Burlingame stated that Stone and Webster (SWEC) recommended against the use of series capacitors on the Kenai and that recommendation was adopted. Mr. Burlingame reported that SWEC also did not endorse the braking resistor scheme proposed by Power Technologies, Inc. (PTI). Homer Electric Association (HEA) and Chugach Electric Association (CEA) agreed to allow the transient overfrequency to rise above 61.5 Hz, if no detrimental effects to the turbines or consumers were encountered. He further stated that SWEC recommended the purchase of a less expensive stabilizer than what PTI has recommended. SWEC stated that it will do everything that the analog stabilizer could do but it does not have any of the characteristics in the model and stability study. The TCS has accepted the recommendation only if there is no capacity reduction from Bradley Lake in result from this stabilizer. At the August meeting, the TCS was pleased with the way the Railbelt Generator Test reports were performed by PTI. The TCS has instructed SWEC to put the Kenai generation test report in the same format. On the Bradley Lake Procurement and Testing Schedules, Mr. Burlingame stated that unit two is scheduled to be turned over to the utilities for operation on July 1, 1991 and unit one, August 1, 1991, with commercial operation on September 1, 1991. The Static Var System (SVS) installation is optimistic for June 1992, with utilities accepting it in January 1993. Mr. Burlingame further stated that SWEC recommended against the braking resistor. The recommendation was based on allowing the frequency rise to 63 Hz. With the frequency rise to 63 Hz, they would only need unit tripping at Bradley Lake for faults along the Soldotna to Bradley Lake Line. Mr. Burlingame noted that the TCS recommends that the $30,974 cost for the dual porting HEA Diamond Ridge RTU be approved as a project cost. Dual porting will allow CEA to utilize HEA's RTU directly instead of having a cpu/cpu link to dispatch Bradley Lake. It would be more reliable than having two SCADA systems. The other recommendation by the TCS is reimbursement to Chugach Electric Association (CEA) of $95,441.09 for relay additions required at HEA's Soldotna Substation to be approved skb9943(2) Page 3 of 8 by the PMC as a project cost. Chairman Kelly stated that these two items will be addressed under New Business. Mr. Burlingame stated that a letter was received from HEA the week of September 21, 1990, stating that HEA does not agree with the 63 Hz overfrequency and there may need to be some changes in other areas. Mr. Burlingame stated that the TCS has not had a chance to address this concern. Mr. Lovas questioned, if the frequency excursion was lowered, would SWEC change their position on the braking resistor. Mr. Burlingame stated he was unsure of what position SWEC would take but did state if the frequency was to be held at 61.5 Hz, a braking resistor would be required. Mr. Stahr expressed his concerns with the controls on the braking resistor to the TCS. Chairman Kelly stated that it would be beneficial for the PMC to know what the output of that would be and directed the TCS to look at the impact and the solutions to this and to bring their recommendation to the PMC. Chairman Kelly further stated that the braking resistor is not to be deleted by the TCS until further discussion by the PMC. 8. INSURANCE SUBCOMMITTEE REPORT Mr. Saxton reported that the Insurance Subcommittee is still waiting to receive the information from the Division of Risk Management on the insurance quotes. Mr. Petrie stated that this information should be available in the next two to three weeks. Mr. Saxton stated that the list put together by the Insurance Subcommittee should be the basis of the source for the information. Mr. Petrie assured Mr. Saxton that it was. 9. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported that the Budget Subcommittee met on July 20, 1990. The items that were addressed at the meeting were as follows: Insurance The Budget Subcommittee is still waiting to receive information from the Insurance Subcommittee. Mr. Petrie stated that the Energy Authority should have information on the insurance cost by October 1, 1990. This is a large budget item. The subcommittee has decided that transmission line repairs would be funded out of the Renewal and Contingency Funds. CEA Dispatching Cost Chugach distributed information on dispatch software and dispatcher training to support the part of the O&M budget they feel should be used to pay for these costs. Due to the lack of time, the subcommittee was unable to address this but will be discussing it at their next meeting. CEA supports the dispatcher costs that have already been submitted. CEA has also suggested that the subcommittee consider increasing the dollar amount. Budget Information The July budget was based upon wages and benefits from FY90 and the budget was updated with the wages and benefits for FY92. Overtime was included for the operation personnel. Omitted from the budget was operating cost for various vehicles at the project, a cost of $37,000. Mr. Saxton stated that part of the decrease is recognizing that we are working with a 10 month budget versus a 12 month budget. skb9943(3) Page 4 of 8 AEA Cost At the Budget Subcommittee meeting, the members were advised that according to the contract, the Managers felt that AEA overhead cost should not be paid. It was discussed briefly, but the final decision would be discussed with the PMC with or without the overhead included, or what ever way the PMC would want this presented. CEA and HEA Wheeling Costs Mr. Ritchey reported that CEA distributed its wheeling calculations over the Soldotna to Teeland line. The subcommittee will be reviewing and discussing CEA's cost at the next meeting. Mr. Ritchey stated that the subcommittee also needs HEA's cost calculations. Test Period Power Mr. Ritchey stated that at the previous PMC meeting this subject was dismissed as unnecessary because it would not occur before July 1, 1991. However, it appears there will be a test period of some type and power will be generated for a couple of months. It was the subcommittee's understanding, the price of 0 cents per KWH is not what the PMC had in mind. Mr. Ritchey stated that there are various possibilities: It could be done as zero cost; there is also an option of constructing a payment obligation to pay 12 months cost in 10 months and front load it; or the other possibility is to sell the output to a third entity with resale to the participating utilities. The subcommittee felt that this needed to be addressed. Mr. Saxton elaborated on the test power and said that if there is a significant rate of free power it would cause a rate impact. You would have a period where you would collect lower power cost, (i.e. zero power cost) and then when Bradley starts up, you would have a greater jump than if you had not had free power, that was one motivation. The second motivation would be simply spreading a cost over a period of time. Mr. LeResche asked if the utilities had any discussion as to where the money would be placed? Mr. Saxton stated it is clear that the Energy Authority is not allowed to receive the money. Mr. LeResche stated that the Energy Authority could arrange to receive the money and net it out over the project cost to simply lower the debt. Mr. Saxton stated that this was one area that has not been taken into consideration. However, Mr. Saxton stated that the utilities were thinking about accumulating the money and using it to reduce operating cost when the project became operational, but has not decided how to do this. Chairman Kelly asked Mr. Lovas if he has looked at this. Mr. Lovas stated that this was discussed initially, but to his knowledge, a meeting was never called to address this. Chairman Kelly stated that without objection the goal would be to handle this very simply and receive the power at no cost. CEA would arrange a teleconference with Mr. Saxton, HEA - Mr. Klein; GVEA - Mr. Hansen; ML&P - Mr. Cooley; MEA - Mr. Parker; City of Seward - Mr. Gilbreath. A. AEA Administrative and General Expenses Chairman Kelly asked Mr. Ritchey to discuss the proposed Administrative Cost of the Energy Authority. Mr. Ritchey began by stating the Energy Authority staff went through all of what is called administrative cost and have basically allocated it as a percentage of direct personnel cost. As a percentage, it works out to 48.4 percent and what was $299,000 at the July meeting is now $265,000. The reason for the decrease is that the Energy Authority has increased their staff from 70 to 75. These increases occurred in the Rural Programs Component which carries a higher overhead rate along with Bradley picking up a small increase. Out of the budget of $2.5 million, $265,000 is for AEA overhead cost. Mr. Saxton stated that these AEA costs are in addition to those positions which charge directly to skb9943/(4) skb9943(5) Page 5 of 8 Bradley. Mr. Ritchey reported that the administrative costs are positions, such as: Mr. LeResche, Mr. Petrie, Personnel Officer's time, etc. He further stated a scenario was completed by the Energy Authority where each person who was considered administrative and general expenses had a percentage of their time allocated to Bradley. Chairman Kelly questioned what was the direct cost to Bradley at this point. Mr. Ritchey responded that there are about 12 positions that have been identified as having direct charges to Bradley. The direct charges include fringe benefits for each position. Chairman Kelly asked if Mr. Saxton would explain what the utilities' options were. Mr. Saxton began by stating that all of the people specific to Bradley, which includes the Accountant and the Administrative Assistant, are direct costs. When you get to the column that is called overhead, that is really in the budget as AEA Administrative and General Expense, the cost for abla ig tee project. This is separate from the hands on work. The options that the PMC has, and bear in mind standards need to be set, AEA is entitled to what is called "project specific administrative and general costs." The Energy Authority is entitled to receive something in this category and that is what the PMC has to determine. Or, the PMC can take a more conservative approach and lean towards the contract which defines it as a very narrow category. Mr. Saxton further stated that a budget has to be approved by four utilities with a percentage that adds up to 51% of the vote and AEA. The PMC needs to come up with a budget. The PMC has the choice of coming to a political compromise and set up some limits or if all fails, an arbitrator can be obtained and have a third party declare the meaning of the language. Mr. LeResche questioned what would happen if the budget is not agreed upon. Mr. Saxton stated that if the budget was not agreed upon by the utilities and the Energy Authority, 90 days before the project is to be declared commercial operable the Energy Authority has the right to impose a budget. Mr. Saxton further stated that if this were to be litigated, the Authority would only have a right to costs they were entitled to collect. Mr. LeResche stated that the Energy Authority calculated this amount by looking at their project specific administrative and general expense costs. Chairman Kelly stated that if the PMC had a number, say $200,000 and let's say for argument purposes, this is 10% of the budget for this year and it was agreed by the PMC that they would pay this number and in the future, would pay those costs never to exceed 10% of the operating budget. This would allow the Authority some flexibility to put some of their cost but it has a cap to keep things from getting out of control. Through much discussion and comments from the participants on this subject, it was motioned by Mr. Ritchey that the Budget Subcommittee come back to the PMC at their next meeting with a budget that includes AEA Bradley related administrative cost of roughly $200,000 but not to exceed 10 percent of the total operating budget for Bradley Lake. Chairman Kelly asked Mr. LeResche if he supported this. Mr. LeResche stated that he felt that the Budget Subcommittee should be the one to negotiate the percentage cap. Chairman Kelly stated that the Budget Subcommittee work with AEA to come up with a number and agree on a percentage. The subcommittee is to bring to the PMC this agreement in the form of a resolution. 10. 11. Page 6 of 8 B. CEA Dispatching Cost This will be discussed at the next Budget Subcommittee meeting and we will be able to address this at the next PMC meeting. OPERATING AND DISPATCH SUBCOMMITTEE REPORT Mr. Shira reported that the Operating and Dispatch Subcommittee has been working on the allocation and scheduling of the Bradley energy for some time and feel that the committee has progressed and is getting close to a workable set of procedures. The procedures are pretty important because they set up the mechanism for the operation of the project and the best utilization of the available water supply. This, of course, is intended to minimize the risk of spilling water at the project and meeting each participant's needs of their share of the Bradley Lake energy. Mr. Shira stated Mr. Hubbard has been working with the Subcommittee and will outline where the Subcommittee is, what the Subcommittee has accomplished to date and where the Subcommittee needs to go from here. Mr. Hubbard proceeded with the presentation. The items that were discussed are enclosed on Attachment 1. At the conclusion of Mr. Hubbard's presentation, direction was asked from the PMC on to how to handle the overscheduling of the project. Mr. Hubbard asked that in a situation where there is additional capacity available to the project which has not been scheduled, can a purchaser that has already scheduled up to it's percentage share of the project, schedule more in a particular hour. The Operation and Dispatch Agreement presently allows this provided the purchaser has permission from the other utility(ies). The issue is, however, should there be compensation? After a lengthy discussion, it was decided by the PMC members that a rate of $5.00 per MWH will be charged for each hour that another purchaser's share is used. Each purchaser would have an account established in which the dollar amounts would be held until the end of the contract year and at that time, a true-up on the account would be completed. Mr. Lovas expressed some concern with the reservoir operation model. Chairman Kelly asked if a presentation was given to the PMC on the mainframe versus the personal computer version. Mr. Lovas stated that in some cases a high powered mainframe model is taken and simplified to a PC version but results in a loss of information. Mr. Lovas stated that he is concerned if the PC version of a mainframe program would be adequate for all of the utilities needs. Mr. Shira stated that AEA could have SWEC give a presentation on what has been developed. REVIEW OF PROJECT STATUS Mr. LeResche stated that the tunnel lining is now complete. One generator is fully installed and the contractor is currently working on the second. The filling of the reservoir will begin in October after the upper gate structures are completed. Mr. LeResche stated that he was informed that the transmission lines have been completed to the extent of being able to hook up to Homer. Mr. LeResche stated that the only change order dispute he anticipates that will be outstanding at the end of the project will be with Enserch. Enserch is involved with the welding problem on the penstock, the tunnel liner and the tunnel water question. The project is about 82 to 83 percent complete. Mr. Story stated that Homer Electric is ready to hook up at Bradley Junction which is near Caribou Lake. The 12-13 mile construction was completed in the Winter of 1989. skb9943(6) 12. 13. Page 7 of 8 Discussions with Bradley personnel are currently underway for actually hooking up the two lines. Mr. Story reported that 28 miles are left to be completed from Bradley Junction to Soldotna. This is the bid portion of the line awarded to IRBY Construction (IRBY). IRBY will begin construction in mid-November, 1990. Homer Electric has been obtaining compliance with certain permitting. IRBY is presently on site in Ninilchik and are in the process of staging equipment and material. Mr. Story stated that all of the material for that job and the 6.2 miles that HEA is completing are either in place, ordered, or in the hands of the contractor. Commonwealth Associates is the Project Manager and is currently on site with an office in the Ninilchik area. The 6.2 mile portion that HEA will be completing will be starting up at the same time as the contractors. HEA anticipates completion in February 1991 and the contractor anticipates his portion completion in March/April 1991. OLD BUSINESS Being none, Chairman Kelly proceeded to the next agenda item NEW BUSINESS A. FUTURE COSTS REIMBURSEMENT Mr. Saxton stated that PMC should be receiving reimbursement for the Section 31 Costs that have previously been approved. Mr. Saxton reported that on July 17, 1990, the PMC voted to set aside $300,000 to be used for reimbursement of committee expenses incurred by the PMC members for the remainder of the project until commercial operation. There are still outstanding Section 31 Costs that were associated with the bond closing. Those costs would be the Opinion Letters and the New York travel associated with the closing. Mr. Saxton urged the utilities to submit to Ms. Rawitscher or himself as soon as possible those costs that have not previously been reported. Mr. Saxton further stated that any reimbursable cost incurred by the members would have to be approved by the PMC at each meeting. The invoices are to be given to either Ms. Rawitscher or Mr. Saxton. The invoices are to include information identifying the cost and any other invoice(s) supporting the cost. The invoices, will in turn, be approved for payment at each PMC meeting. After approval has been received, the Energy Authority will requisition payment from the trustee for reimbursement to the utility(ies). Mr. Saxton stated again that the utilities will be reimbursed for the Opinion Letter cost and the travel cost to New York. All other costs incurred by the committee members would be actual committee expenses (i.e., travel to the PMC meetings, lunches, etc.). Chairman Kelly stated that this would be an on-going agenda item and encouraged the utilities to keep current with their invoices for payment by the PMC. Mr. Saxton urged timely submittals for the preparation of these invoices prior to the next scheduled meetings. B. HEA DIAMOND RIDGE RTU PORTING COST Chairman Kelly stated that he would entertain a motion to approve the HEA Diamond Ridge RTU dual porting costs as a project cost. Mr. Highers motioned to approve $30,974.00 for the HEA Diamond Ridge RTU dual-porting as a project cost. Mr. Stahr provided the second. The roll was called and the motion passed unanimously. skb9943(7) Page 8 of 8 Chairman Kelly stated that he would entertain a motion to approve, as a project cost, reimbursement to Chugach for the relay additions. Mr. Story motioned to approve as a project cost reimbursement to Chugach of $95,441.09 for the relay additions that were required at the Homer _and Soldotna substation for the operation and dispatch of Bradley by Chugach. Mr. Ritchey provided the second. The motion passed unanimously. SCHEDULED NEXT MEETING November 28, 1990 Chugach Electric Association Training Room 10:00 a.m. 14. COMMUNICATIONS Being none, Chairman Kelly proceeded to the next agenda item. 15. ADJOURNMENT There being no further business before the Committee, the Committee adjourned by acclamation at 12:15 p.m. ae Chairman ATT Secre' Approved by PMC at meeting held November 28, 1990. skb9943(8)