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Home My WebLink AboutBPMC Meeting September 23, 1994 1BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES Commission Room Anchorage Municipal Light & Power 1200 East 1st Avenue Anchorage, Alaska Friday, September 23, 1994 10:00 a.m. 1. CALL TO ORDER Chairman Norm Story called the meeting of the Bradley Lake Hydro- electric Project Management Committee to order at 10:10 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. All members were present. 2. ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Jim Woodcock, Designated Representative Anchorage Municipal Light & Power Tom Stahr, Designated Representative Chugach Electric Association Eugene Bjornstad, Designated Representative Others Present: Dan Beardsley, AIDEA/AEA Sharron Sigafoos, AIDEA Stan Sieczkowski, AEA Jim Hall, Matanuska Electric Association Myles Yerkes, Homer Electric Association Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Bradley Evans, Golden Valley Electric Association Steven Haagenson, Golden Valley Electric Association Tom Lovas, Chugach Electric Association Lee D. Thibert, Chugach Electric Association John S. Cooley, Chugach Electric Association Tim McConnell, Anchorage Municipal Light & Power Mary Ann Pease, Anchorage Municipal Light & Power Tonya Lamothe, ARECA Insurance Dave Hutchens, ARECA Insurance 3. PUBLIC COMMENT None. Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 2 of 8 4. AGENDA COMMENTS Mr. Story stated that "Golden Valley/Chugach Bradley Share Agreement Review" should be added as Item C. under No. 10, New Business. There were no other changes or additions to the agenda. 5. APPROVAL OF MEETING MINUTES - AUGUST 4, 1994 MOTION: Mr. Bjornstad moved to approve the August 4, 1994 minutes. Seconded by Mr. Woodcock. The following revisions were noted: Page 3 of 9, first paragraph, second line: "Davis Creek" should be revised to "Daves Creek." Page 3 of 9, first paragraph, sixth line: "...December 1993 through July 1994...." should be revised to "...December 1993 through March 1994...." Page 7 of 9, second line in the second motion: "Davis Creek" should be revised to "Daves Creek." Page 7 of 9, third paragraph, fourth sentence (eighth line): ",..this was the total 1994 billing for these expenses...." should be revised to read, "...this was the billing through March 1994 for these expenses...." Page 7 of 9, ItemB., first paragraph after the motion, second line: "Mr. Kelly" should be changed to "Mr. Yerkes." Page 8 of 9, the second paragraph was revised to read: "Mr. Story explained that a minimum provision of 350,000 megawatt- hour take per year was outlined in the existing Chugach/Homer Power Supply Agreement. If certain large-load suppliers ever dropped off-line, the Agreements’ required minimum "take" could be reduced. Presently, the Agreement contains language that Homer Electric would not be penalized if a drop in megawatt-hour take per year occurs." The question was called; the minutes were approved as corrected. 6. BUDGET SUBCOMMITTEE REPORT Mr. Lovas reported that the newly constituted Budget Subcommittee, consisting of Mr. Evans, Ms. Pease, Mr. Sieczkowski, Mr. Yerkes, Mr. Saxton (legal counsel), and Mr. Lovas, Chair, had met September 21st via teleconference. The following items were discussed: A. Proposed Settlement Negotiations - Administrative and General Expenses of AEA The Budget Subcommittee discussed the ongoing settlement negoti- ations between BPMC and AEA as well as the ramifications of the Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 3 of 8 settlement with respect to the ‘96 budget. A fixed number is expected for the ‘96 budget, but this is subject to further discussion. B. O&M Activities Audit BPMC had received a proposal from Parisena Stromburg for a complete audit of the O&M activities for the fiscal year audit recently completed. After reviewing the audit engagement letter proposed by Parisena, the Subcommittee discussed the implications for the upcoming year. The significant aspect is that Parisena proposes to do a "complete" audit for the upcoming year as opposed to the abbreviated audits performed in the past. The primary reason is that the State has implemented a new record-keeping system which will facilitate conducting a full, complete audit. The projected cost of the full audit will be $15,400, which is the same fee as in previous years for the abbreviated audit; however, the Committee will receive a much more detailed audit due to the State’s new system. Mr. Lovas asked that the Committee approve the audit engagement on the basis of the Budget Subcommittee’s recom- mendation and that the Budget Subcommittee Chairman be authorized to execute the engagement letter and coordinate with Parisena Stromburg. MOTION: Mr. Woodcock moved to approve the audit engagement of Parisena Stromburg in the amount of $15,400 for FY '96. Seconded by Mr. Bjornstad. A voice vote was taken, and the motion passed unanimously. C. Research Bids and Alternatives for Secretarial Services Mr. Lovas reported that, at the Committee’s request, the Budget Subcommittee discussed this issue briefly. Mr. Lovas stated that part of the settlement discussions with AEA regarding the A&G expenses may have an impact on secretarial services. AEA had indicated they would continue to provide secretarial services through FY ‘95. It was the Budget Subcommittee’s expectation that it would review alternatives and determine the costs for contract- ing secretarial services for FY ‘96 during the next budget review cycle. D. Schedule for FY ‘96 Budget Preparation Mr. Lovas stated that the schedule for the FY ‘96 budget prepara- tion would be presented to the PMC for approval no later than April 1, 1995. The Subcommittee and the PMC had suggested that HEA and AEA submit a work plan and preliminary budget by no later than mid-November so the Budget Subcommittee could develop the O&M budget for the following year. Mr. Yerkes had indicated he would work with Mr. Sieczkowski to accomplish this. Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 4 of 8 Mr. Lovas reminded the Committee that once the finalized data through June 1994 had been received, the carry-over would be reviewed and a determination would be made as to whether a new power rate should be set effective January 1, 1995. The Budget Subcommittee anticipated doing this during the November time frame. E. Additional SVS Maintenance Costs for April, May, and June Mr. Lovas reported additional SVS maintenance costs were submitted to AEA for April, May, and June. He said this was a follow-on of the approval granted by the PMC for work through March 1994. Additional maintenance was performed on the Daves Creek and the Soldotna SVS systems in the April/May/June time frame in the amount of $15,805.81. Mr. Lovas stated that these expenses have been reviewed by the Budget Subcommittee, and it is recommended that the PMC authorize AEA to pay those maintenance expenses. MOTION: Mr. Bjornstad moved to approve payment in the amount of $15,805.81 for maintenance performed in April, May, and June 1994 on the Daves Creek and Soldotna SVS systems. Seconded by Mr. Calvert. A voice vote was taken, and the motion passed unani- mously. 7. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported that the O&D Subcommittee had not met since the last PMC meeting; therefore, he had no report at this time. He said a meeting of the O&D Subcommittee is scheduled for 10/18. He requested that Mr. Yerkes provide an update for Project maintenance. Mr. Yerkes advised that the project was shut down on 8/23 for scheduled major maintenance. On 8/27, Unit 1 was brought back on line; on 8/28, Unit 1 began experiencing difficulties in control- ling frequency. During this time, Unit 1 was conflicting with the Berniece Power Project in the Kenai, and although no outage resulted, there were large frequency fluctuations. Unit 1 was taken off line, and testing was performed on 8/29. A problem was discovered with one of the needles opening wide open as it went through the second transition point. Chugach dispatch was consulted at that time. Chugach advised that it did not require the power from the final two needles; they could operate approxi- mately 40 megawatts with four needles. The needles causing the problem were locked out, and Unit 1 went back on line 8/30 with no further problems. The work on Unit 2 was completed during the same time period. The Woodward Governor representative was present during the maintenance on 8/23 to disassemble, clean, and inspect the piled actuator Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 5 of 8 hydraulic systems. Although Unit 2 had also had a governor problem in the past, no significant problems were discovered during the inspection process. However, significant contamination and manu- facturing debris were found in the actuators at that time which could have caused the previous problems. Unit 2 was brought back on line and has operated satisfactorily since that time. Unit 1 has been tested by Woodward, and the needle continues to malfunction, but the cause has not been determined. Mr. Yerkes added that the Woodward rep had anticipated a two-week stay for the project, but was still, as of this date, on the project and working on Unit 1. It is anticipated that Unit 1 will be back on line by 10/17. Mr. Yerkes provided a brief overview of other minor problems. Discus- sion was heard. 8. INSURANCE SUBCOMMITTEE REPORT A. Independent Insurance Review Mr. Beardsley reported that after discussions with the trustee, it was decided Risk Management would perform the insurance review. Mr. Beardsley directed the Committee to the review prepared by Brad Thompson in the meeting packets. He said the review had been presented to the auditors as well as to the trustee. Mr. Beardsley added that, as previously discussed, an analysis of PMC’s risks would be performed and incorporated into the review to ensure that appropriate and adequate coverage was in place. However, this had been omitted from the review, and Mr. Beardsley recommended that the PMC further discuss the need for this analysis and the level of effort that should be put into it. B. Professional Liability Mr. Beardsley reported that HEA had agreed to hire a third party with E&O coverage to perform required design work. However, he felt that the utilities should continue discussions with respect to how the professional liability coverage should be approached and if it should be reviewed next year. Mr. Yerkes commented that the structural engineer retained to doa minor amount of work does not have the requisite liability insurance coverage, and Homer does not have coverage for him. Mr. Beardsley stated that Remy Williams had been retained to perform the same type of work for AEA, and he had his own E&O coverage. He said the PMC may want to consider retaining Mr. Williams for those types of services. Discussion was heard. Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 6 of 8 C. General Liability Mr. Beardsley gave an overview of the policies carried by AEA and the reason the PMC decided to explore general liability coverage. He said ARECA recently provided a quote of $66,000 to provide coverage of up to $1,000,000 on property loss/damage and boiler and machinery loss. Mr. Beardsley summarized HEA’s obligations as the operator to provide general liability coverage for the project. Mr. Beardsley reported on the status of Four Dam Pool’s progress with respect to obtaining general liability coverage and provided a comparison of the Four Dam Pool project and HEA’s situation. Mr. Beardsley stated that the general liability portion should be included when the PMC looks at placement of the entire package of coverage next year. Mr. Beardsley said the Insurance Subcommittee will review two possibilities in the interim: whether the exclusion waiver can be obtained or if it must be dealt with as a property matter. He said the PMC should address the issue of interim liability until coverage is obtained. Discussion was heard regarding the PMC’s options vis-a-vis project expenses. Tonya Lamothe, ARECA Insurance, addressed the Committee on the $66,000 quote for property/boiler and machinery coverage. Further discussion was heard regarding the boiler and machinery coverage. Chairman Story stated that since the solution had not been deter- mined, it would be premature for the PMC to make a decision at this time. He directed the Insurance Subcommittee to be reactivated and provide the PMC with recommendations for procurement of coverage prior to 12/31/94. Discussion was heard which clarified that the existing coverage would expire 12/31/94, and the costs associated with continuing coverage would be at a prorated premium of $66,000. 9. OLD BUSINESS A. Spinning Reserves Update Mr. Lovas said he had reported at the last meeting that the RCC was reviewing response of spin levels necessary to reduce or avoid first-stage load-shedding. The Committee has performed benchmark runs of actual observed cases and is correlating the models with the history. The benchmark runs are double-checked and then compared with past recorded events in an attempt to develop an historical summary relative to the findings of the Committee on its response to spin requirement. Mr. Lovas reported that the working hypothesis at this point is that the amount of combustion turbine spin on the system should be equivalent to that portion of combustion turbine spin included in the primary contingency or the contingency being investigated. Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 7 of 8 Basically, the system contingency is a 100-megawatt combined cycle unit, so there needs to be at least 78 to 80 megawatts of combus- tion turbine spin on the system to avoid first-stage load-shedding in most instances. The RCC contemplates finalizing the analysis and developing its recommendations at its next meeting on 10/6/94. B. Agreement Progress Report Mr. Beardsley referred the PMC to the letter to Mr. Saxton and Chugach regarding the dispatch agreement. He said no response has been received yet, but AEA is prepared to begin discussions. Mr. Beardsley said it was anticipated that the transmission agreements will be sent to HEA within the next two weeks. Mr. Lovas commented that Chugach has preliminarily reviewed the dispatch agreement. He said that although Chugach has not formally responded, they do not anticipate any major problems and are in the process of finalizing their review. Mr. Yerkes asked if the current insurance difficulties would reflect in the Chugach maintenance agreement. Mr. McCrohan responded that he thought that would be a correct assumption. Discussion was heard regarding the outstanding list of agreements yet to be executed. Chairman Story stated his understanding that the schedule was established and the time line for these agreements to be completed was year-end 1994. C. Directors’ and Officers’ Liability Insurance Mr. Beardsley reported that quotes had been received from Willis Corroon for directors’ and officers’ liability coverage, and that information was provided in the meeting packets. He said it was his understanding that the Committee members were to provide their input regarding the D&O coverage quotes during this meeting, to be followed by Committee action. Chairman Story advised that he has received no comments from any of the participants. He asked if Mr. Hutchens wished to address the Committee on behalf of the participants. Mr. Hutchens responded that Willis Corroon would have to address that. He stated that the ARECA members have D&O coverage under a group policy underwritten by another carrier, and ARECA receives a discount on the premium because it is a sponsor of the D&O policy. MOTION: Mike Kelly moved that the Insurance Subcommittee be dir- ected to place the D&O liability insurance with Willis Corroon and provide the PMC with a report at the next meeting regarding recom- mended levels and exclusions. Seconded by Mr. Woodcock. Discus- Bradley Lake Project Management Committee Meeting Minutes - September 23, 1994 Page 8 of 8 sion was heard with respect to the exclusions. The question was called, and a voice vote was taken. The motion passed unanimously. 10. NEW BUSINESS A. Approval of Legal Expenses and Other Expenses Mr. Bjornstad reported that a bill had been received from Ater, Wynne, Hewitt, Dodson & Skerritt in the amount of $5,539.59 for August. He said another bill for $2,652.36 had been submitted for July, but he didn’t know if the Committee members had a copy of that bill. MOTION: Mr. Bjornstad moved to approve payment of $5,539.59 for August. Seconded by Mr. Calvert. A voice vote was taken, and the motion passed unanimously. B. Secretarial Services Mr. McCrohan reiterated that AEA will continue to provide secre- tarial services, per the FY ‘95 budget, until the settlement offer between AEA and the Bradley Lake Project Management Committee has been accepted by the parties. C. GVEA/Chugach Bradley Share Agreement Review Mr. Kelly reported that Chugach and Golden Valley had recently made a filing with the Alaska Public Utilities Commission with respect to the GVEA/Chugach Bradley Share Agreement Review. He referred the Committee members to their packets for a copy of the filing and offered to answer questions or provide an overview presentation followed by Q&A. At Chairman Story’s request, Mr. Evans provided a brief outline presentation. Brief discussion was heard. 11. COMMITTEE COMMENTS A. Next Meeting Date The next PMC meeting was scheduled for Thursday, November 10, 1994, at 10:00 a.m., in the Commission Room of ML&P. 12. ADJOURNMENT There being no further business of the Co adjourned at 11:15 a.m. 4 BY: : Norm Story, ATTEST: WM Chon Dennis V. McCrohan, Secretary ittee, the meeting was —_ Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING September 23, 1994 (Date) Municipal Light & Power - Commission Room (Location) PLEASE SIGN IN [ z ae aaa - FEA REPRESENTING 2 Tienes AEAL | 3 | eed) $F ls |= hoo Sreeekfoskd; WEA 4 peer eal QvEK 5 “4 AY 6 fou ae Rove her Ub les Ate leyan, 7 Ze. ls | Zee & jest es | LP 1 | Jim Weoodcouc Mern Ul ne LF wart Tal Say 12 IZ S / ire Ce. 113 | DAVE CAAVERT SES i eae ees 92Q2\IT9884 Agenda Item No. DATE: 9/23/94 BRADLEY PMC VOTING Poll Cat! YES NO ABS YES NO ABS YES NO ABS CITY OF SEWARD Wave Calvertois [7T 1 _] MATANUSKA ake eo b 14% [Vv | in Caooddoclke CHUGACH ELEC ASSOC B 30% y | LaGene £ HOMER ELEC ASSOC form __, 12% / Sfor 2 GOLDEN VAL ELEC ASSOC 17% Phe ely MUNI LIGHT & POWER ff 26% Tim ahr ALASKA ENERGY AUTHORITY Dennis A=4+ OVER 51% B = AEA CONCUR With A a =o Ene eo C = UNANIMOUS D= MAJORITY VOTING METHOD A: 3) Establishment of FY estimated annual 11) payment obligation and schedule of each Requiring four yeas with 51% of utilities, with no purchaser. AEA vote: 4) Determination of annual project costs after 12) 1) Procedures for scheduling, production and each FY. dispatch of project power. 5) Evaluation of necessity for and scheduling of 13) 2) Establishment of procedures for use of each required project work. purchaser's water allocation (AEA assent required for license requirements). 6) Determination of appropriate amount of 14) insurance. 3) Selection among alternative methods that do not involve AEA for funding required project 7) Adoption of additional minimum funding work. amounts for renewal and contingency reserve 15) fund above that required by bond resolution. VOTING METHOD B: Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. Evaluation and approval of optional project work and compensation for such work. Application of insurance claims proceeds not governed by bond resolution. Approval of procedures and any individual utility agreements relating to electric power reserves for project. Approval of consultants. VOTING METHOD C: 8) Selection among alternate methods that Requiring 4 yeas with 51% of utilities and AEA concurrence: involve AEA for funding required project work. Unanimous vote by all (including AEA) VOTING METHOD D: 1) Arranging operation and maintenance of 9) Adoption or amendment of procedural project. 2) Adoption of budget of annual project costs. VOTE(93Q3/BC5272) committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. Majority vote (including AEA) Election of Officers