Loading...
HomeMy WebLinkAboutBPMC Meeting, April 29, 1994 1BRADLE: wAKE PROJECT MANAGEMENT COruiITTEE MEETING MINUTES Commission Room Anchorage Municipal Light & Power 1200 East lst Avenue Anchorage, Alaska Friday, April 29, 1994 10:00 a.m. CALL TO ORDER Vice Chairman Norm Story called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:03 a.m. in the Commission Room of Anchorage Municipal Light & Power, 1200 East lst Avenue, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. A quorum was established. ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Golden Valley Electric Association Brad Evans, Alternate City of Seward Dave Calvert, Designated Representative Matanuska Electric Association Jim Woodcock, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Homer Electric Association Norm Story, Designated Representative Chugach Electric Association Eugene Bjornstad, Designated Representative Others Present: Stan Sieczkowski, AEA/AIDEA Sharron Sigafoos, AIDEA Dan Bloomer, Chugach Electric Association John S. Cooley, Chugach Electric Association Tom Lovas, Chugach Electric Association David Burlingame, Chugach Electric Association Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Tim McConnell, Anchorage Municipal Light & Power Bob Price, Anchorage Municipal Light & Power Myles Yerkes, Homer Electric Association Bob Hufman, Utilities Consulting Services Vince Mottola, Fairbanks Municipal Utilities System Allan Yost, REA Dave Hutchen, ARECA Robert Mau, Matanuska Electric Association Jim Hall, Matanuska Electric Association Mike Kelly, Golden Valley Electric Association Roger Kemppel, Public Bradley Lake Projecc Management Committee Meeting Minutes - April 29, 1994 Page 2 of 7 PUBLIC COMMENT. There were no public comments. AGENDA COMMENTS Mr. Story stated that budget line item adjustments for Bradley O&M would be addressed during the Budget Subcommittee Report, but no modification to the agenda was required. Capital Project Work at Bradley was added as Item No. 10.C. APPROVAL OF MEETING MINUTES - MARCH 31, 1994 MOTION: Mr. Bjornstad moved to approve the March 31, 1994 minutes. Seconded by Mr. Evans. Hearing no objection, the minutes were approved as presented. BUDGET SUBCOMMITTEE REPORT Mr. Lovas reported that the Budget Subcommittee had met April 27th to undertake the tasks assigned to it at the last PMC meeting. Mr. Lovas reported that the Parisena Stromberg audit report for FY ‘93 operating and maintenance expenses had been finalized and distributed at the last meeting. Parisena Stromberg had not given a formal presentation to the Committee or the Budget Subcommittee at that time, but three outstanding items need to be resolved: (1) An allocation of administrative and general overhead expenses with respect to personnel involved in an aircraft accident. The overhead charges associated with the personnel expenses are intended to be part of the settlement with the insurance company in regard to the expenses associated with the accident itself. The expenses were included and charged to the Bradley Lake project and are subject to potential reim- bursement from the insurance proceeds, the Budget Subcom- mittee’s recommendation is to accept the charges pending the outcome of the insurance process. (2) Four thousand five hundred dollars ($4,500) was charged to the Bradley Lake project that was associated with the remodel- ing of an AEA person’s office who directly charged the Bradley Lake Project for 80% of his time. Parisena Stromberg identi- fied these as administrative and general charges and recom- mended that they be removed or reimbursed to the project. Given that a lawsuit is under way and a motion for summary judgment has been filed on the matter of administrative and general expenses, it was the Budget Committee’s recommendation that they accept those charges and forego any action at this Bradley Lake Projecc Management Committee Meeting Minutes - April 29, 1994 Page 3 of 7 time. It was noted that those types of charges would be involved in any potential settlement under the lawsuit. (3) Project funds were fronted from the Bradley Lake project to pay expenses for which the project has been reimbursed and the dollars properly accounted for; however, the project has not been compensated for interest on the funds. The Budget Subcommittee recommended that the PMC accept reimbursement of the actual charges and not require interest to be paid because the advance was in part due to clerical error for which internal controls are now in place to minimize the likelihood of this type of error reoccurring. The Budget Subcommittee recommended that the audit report be accepted in completion of the contract for the O&M audit with the proposed resolutions to the outstanding items included in the report. Mr. Lovas said the proposed resolutions had been adopted by the Budget Subcommittee and were generally agreed to by AIDEA and Parisena Stromberg. MOTION: Mr. Bjornstad moved that the Parisena Stromberg audit report be accepted with the recommended resolutions to the three outstanding issues as stated by Mr. Lovas. Seconded by Brad Evans. Motion passed unanimously. Mr. Lovas reported that the Subcommittee had also reviewed the charges for wheeling services by Chugach provided under the Transmission Services Agreement. Per the contract, the wheeling rate is updated once per year effective for billings on or after July 1. Chugach submitted a new calculation of the wheeling rate that increased the transmission services rate from 2.2 mills to 2.6 mills per kwh. The increase is due solely to the change in the phase-in factor applied to each calendar year per the Transmission Services Agreement. Mr. Lovas reported that the computation had been reviewed by the Subcommittee, and concern had been expressed with respect to the range of account numbers used to derive the calcula- tion. However, it is the Budget Subcommittee’s view that the computation is acceptable as presented subject to further review and discussion with Chugach about the account numbers. The rate would apply for service on or after July 1, 1994. There was also a question regarding how reimbursable expenses were accounted for and tracked in the account totals used in the computation of the rate. Chugach will verify and report back to the Budget Subcommittee. At the last PMC meeting, the Budget Subcommittee had been directed to review the cash flows and the anticipated carry- over from the prior period operating error and make a recom- mendation on the appropriate utility payments for FY '95. At Bradley Lake Project Management Committee Meeting Minutes - April 29, 1994 Page 4 of 7 this time, the estimated deficit on the total FY '94 budget (through June 30) is about $308,000, with a beginning surplus forecast of $1,000,000, for a projected ending surplus of approximately $706,000. Assuming a carry-over of the $706,000 and the expected deficit built into the budget computations, the surplus at the end of FY ‘95 is projected at approximately $355,000. The operating reserve level is roughly 20 percent of the operating budget. Because the surplus is declining over time and it appears there is an adequate operating reserve, the Budget Subcom- mittee recommends that the utilities continue the existing monthly payments of $1,159,991 at this time and that the Budget Subcommittee will review and consider a mid-year change after the completion of the year-end accounting of actual expenses accrued through June 1994 if the actual ending surplus is significantly different than the forecast surplus at this time. MOTION: Mr. Woodcock moved to approve the allocation process for the FY ‘95 monthly utility contributions. Seconded by Mr. Bjornstad. Motion passed unanimously. Mr. Lovas stated that the Budget Subcommittee had considered how to routinely audit and report the maintenance activities and expenses, on an ongoing basis, of the Bradley Lake project as they occur. He advised that AIDEA anticipates providing quarterly status information on the flow of funds and expenses as they occur; however, this does not ameliorate the Budget Subcommittee’s concern with regard to having ongoing monitor- ing and reviews. Mr. Lovas said Mr. Sieczkowski would address this issue during the Operations and Dispatch (O&D) Subcommit- tee report. Mr. Lovas said another issue of concern is how the budget is established with regard to line items and activities within certain FERC accounting categories. He explained that the FERC accounting structure has traditionally been the basis for the O&M activities, but changes have routinely been made to line items, including how activities are identified and accounted for. The Budget Subcommittee’s position is that it should review the basis for modifications within the func- tional categories and approve major categories, allowing movement of funds within the categories as long as the tasks are retained. If there is a change in tasks, the Budget Subcommittee should have an opportunity to review that upon analysis provided by the O&D Subcommittee. Upon Mr. Story’s request, Mr. Yerkes gave the Committee an overview of the Budget Subcommittee’s position on the issues of (1) line item discrepancies, and (2) whether like kinds of work should be contract or force account. Discussion was heard. Bradley Lake Projecc Management Committee Meeting Minutes - April 29, 1994 Page 5 of 7 MOTION: Mr. Bjornstad moved that the Committee allow Homer Electric Association to shift funds as proposed between the personnel budget categories for FY '94, with the understanding that HEA will prepare a more detailed work plan for FY ‘95 and a process will be established to notify the Budget and O&D Subcommittees of proposed transfers. Seconded by Mr. Wood- cock. The motion passed unanimously. 7. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported that the O&D Subcommittee had met prior to the PMC meeting on March 31, and the next O&D meeting is scheduled for May 11. The project FY ‘94 maintenance schedule for the remainder of the year, the established budget, and the FY '95 operation and maintenance schedule will be discussed at the May 11th meeting. The allocations agreed to by the utilities will also be discussed and finalized. The maintenance standards have been provided to all the utilities, and the O&D Subcommittee will discuss a schedule of review as directed by the PMC at the last meeting. 8. INSURANCE SUBCOMMITTEE REPORT Mr. McCrohan reported that the Insurance Subcommittee has met with HEA several times, and two issues are still outstanding: (1) HEA’s liability for errors in performance (negligence of operator), and (2) Whether the Authority’s insurer could take action against HEA in the event that HEA’s liability associ- ated with a loss exceeds the deductible. Mr. McCrohan said the Insurance Subcommittee’s position on the latter issue is that HEA should be added to AIDEA’s coverage and indemnified if a loss exceeds the deductible because HEA is acting on AIDEA’s behalf. Mr. Story advised that HEA had recently been added as an additional insured on the State’s policy, and HEA is awaiting confirmation from the insurance company. In addition, HEA has obtained additional coverage for the deductible. Discussion was heard. 9. OLD BUSINESS A. Spinning Reserves Update - Mr. Lovas said he had received the meeting minutes from the last ASCC meeting, and it was still not clear to him what the ASCC’s directive was to the Reliability Criteria Committee (RCC). He said there had been a suggestion at the meeting to hold an executive committee meeting to refine the directive to the RCC. However, the motion that was passed tabled the operating reserve criteria until a report on the issue could be provided. Mr. Lovas said he would like to get clarification from the ASCC representa- tives so that the RCC could undertake the modified assignment at its next meeting scheduled for May 5. In the absence of Bradley Lake Project Management Committee Meeting Minutes - April 29, 1994 Page 6 of 7 10. that, the RCC would try to bring something forward for more detailed consideration. Mr. Story stated that he had chaired the meeting at which there had been discussion on this issue, and it was felt the executive committee should address it; however, Mr. Stahr had made a motion to redirect the RCC to its original task. Mr. Story asked Mr. Stahr to elaborate. Mr. Stahr said the ASCC wanted to know what the recommended operating reserve require- ments for the Railbelt were to meet some range of reliability. He explained that when the original intertie operating agreement was entered into, tentative decisions were made with regard to how much spin and reserve were required to operate the system, but the intent was to refine these issues in the future. Mr. Stahr said this is what he felt the directive from the ASCC to the RCC entailed. Mr. Lovas responded that one of the difficulties the RCC has had in completing that assignment was that Committee members routinely assess the modification to the determination of the numbers based upon the financial impact to the utility as a result of the allocation agreement. Mr. Stahr concurred that this has been a problem. Discussion was heard. Mr. Story stated that the RCC should suspend its activities with regard to this issue, and it will be an agenda item for the next PMC meeting. In the interim, the managers and technical people could refine it with regard to the degree of reliability management expects. Mr. Bjornstad suggested that the utilities provide a position statement on reliability parameters at the next meeting. NEW BUSINESS A. Nominations Subcommittee Report/Recommendations - The Nominations Subcommittee’s nominations were as follows: Mr. Norm Story Chairman Mr. Tom Stahr Vice Chairman Mr. Gene Bjornstad Treasurer MOTION: Mr. Kelly moved that nominations be closed; seconded by Mr. Calvert. Motion passed unanimously. MOTION: Mr. Calvert moved to approve the recommendations of the Nominations Subcommittee as listed above. Seconded by Mr. Kelly. Motion passed unanimously. B. Approval of Legal Expenses and Other Payments - Mr. Hall requested that, in light of the fact the Committee now has a new Treasurer, this item be tabled until the next PMC meeting. There was no opposition. Bradley Lake Project Management Committee Meeting Minutes - April 29, 1994 Page 7 of 7 iis 13. Capital Project Work at Bradley - Mr. Sieczkowski reported that he had met with Dave Eberle and Larry Wolf and drafted a list of 28 items, some construction and some O&M, and would be prepared to make a recommendation to the Committee at the next meeting. In the meantime, they would work with Homer Electric to identify the construc- tion versus O&M items and, based upon the budgetary decision made previously, would be prepared to proceed on the O&M items that were within the budget. Those O&D items which are outside the budget would be presented to the O&D and Budget Subcommittees for review on an expe- dited basis. Discussion was heard. COMMITTEE COMMENTS A. Next Meeting Date - The next PMC meeting was scheduled for Friday, June 10, 1994, at 10:00 a.m., in the Commission Room of ML&P. Treasurer’s Duties - Mr. Lovas advised that the Treasurer has traditionally acted as the Budget Subcommittee Chairman. Mr. Saxton stated that this is not required by the bylaws. Mr. Bjornstad suggested that since Mr. Lovas had been very active in the Budget Subcommittee, he act as Chairman. The Committee concurred. Supreme Court Decision RE: Healy - Mr. Kelly advised that the Supreme Court had affirmed AIDEA’s, Golden Valley's, and the APUC’s position, and the stay on Healy was vacated. They had also settled with the Trustees for Alaska ten days ago, and the Healy project will proceed. ADJOURNMENT. There being no further business of the Committee, the meeting was adjourned at 11:30 a.m. Ze Norm Story, Chairma eens AL MMA V Ve Cahe— Dennis V. McCrohan, Secretary Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING 4p 23.1224 (Location PLEASE SIGN IN NAME | REPRESENTING Wonwa Ne Cohen | DEA Stan SS eceKXows kK 1 | AEA | 3_| Brcadlens suns GQveA MV SAXTY Parchesing vA hey LEE Gé LST; en | 7 | Gere Byrn s7aet céE/A 8 ol Bhrec- re = 9 Dim Weod cock MEA Prot Qian Aba i MER 11 DAVE CAAKUE RT SES 2 | Fon De Crrebf Nhe 3 | Fa Seb Lop 14 | BoR HUFMAN A EGET 1s | 70a COUVAS 16 Anep Mote (il SEE. 7| Bos fri 4 ¢ P 3 | Ahlan Unt KEA 19 A Lo cur Con ar Chigr = S 20 oe ee SN WEA 21 John eo kn, Chugach 2 | en Ci taped A EA —fnd- 92Q2\IT9884 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 BRADLEY PMC VOTING Koll Lall DATE: [24/44 01% ZAE Zz 14% 7] 30% [Z ES] 16 (ZT mE | 26% [7] Meo Toca ZT fe 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. 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) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 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. 8) Sclection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 11) 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers