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HomeMy WebLinkAboutBPMC Meeting October 21, 1988 2Pl FILE COPY ELT HT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE October 21, 1988 1. CALL TO ORDER Robert E. LeResche called the Bradley Lake Project Management Committee meeting to order at 1:55 p.m. in the Train- ing Room of Chugach Electric Association, to conduct the business of the Committee per the agenda. 2. ROLL CALL In attendance were the following: Designated Representative ____ Designated Alternate _ Representing Robert E. LeResche Brent N. Petrie Alaska Power Authority E. Paul Diener City of Seward James F. Palin Myles C. Yerkes Matanuska Electric Assoc., Inc. Dave Highers Tom Lovas Chugach Electric Assoc., Inc. Kent Wick Sam Mathews Homer Electric Assoc., Inc. Michael Kelly Robert Hansen Golden Valley Electric Assoc., Inc. Thomas R. Stahr John Cooley Municipal Light and Power Representatives Absent = Alternates Absent __ Representing Bob Peirson City of Seward Others Present nnmmmmennnmmnnnd © Presenting salle Ron Rainey Homer Electric Assoc., Inc. Ron Saxton Golden Valley Electric Assoc., Inc. Dave Hutchens Alaska Rural Electric Cooperative Assoc. Kurt S. Dzinich Senate Advisory Council Donald L. Shira Alaska Power Authority Julie Becker Alaska Power Authority 3. PUBLIC COMMENT There being no public comment, Mr. LeResche proceeded to agenda item 4. 4. MODIFICATION OF AGENDA Discussion of Rural Electric Association Approvals was added as agenda item 6.a. Discussion of Federal Energy Regulatory Commission Hydroelectric Fees was added as agenda item 8.a. BRADLEY LAKE PMC Page 2 of S October 21, 1988 5. APPROVAL OF MINUTES Mr. Palin motioned, seconded by Mr. Highers, that the minutes of the September 27, 1988 Bradley Lake Project Manage- ment Committee meeting be approved as distributed. The motion passed without objection. 6.a. DISCUSSION OF RURAL ELECTRIC ASSOCIATION APPROVALS Mr. Saxton explained that there are two issues related to REA approvals: 1) REA approval that the PSA is acceptable for any party to enter into; and 2) REA approval that it is acceptable for the individual utilities to participate in or sign the PSA. Mr. Saxton said that a letter agreement has been developed and distributed to the signatories to the PSA stating that the parties agree to an interpretation to the PSA and Chugach Electric Association agreements. Mr. Saxton noted that the at- torneys for each party have reviewed and have no objection to the letter agreement. Mr. Saxton said that the letter agree- ment has been set up for the utility managers to sign and that REA stated that they will accept this letter when it is signed by the managers. This letter agreement was executed at the meeting. Mr. Saxton said that REA asked for asummary of documents two weeks ago (i.e., near October 7, 1988) and this summary has been submitted to REA. Mr. Saxton said that the HEA transmission agreement, which has been revised and the revisions verbally approved by ML&P, will require reapproval by each participant prior to REA approval. Mr. Saxton recounted that on October 11, 1988, REA sent letters to CEA, GVEA and HEA asking for additional informa- tion; however, no information has been submitted in response to this request to date. It was noted that REA is raising ad- ditional issues at this time and that REA will not approve utility participation in the PSA until their information requests are satisfied. The individual utilities (i.e. CEA, GVEA and HeA)anticipated no problem in responding to the informa- tion requests and said that responses will be forthcoming within 10 days. Mr. Saxton will determine if the documentation is satisfactory to REA during his trip to Washington, D.C. on Four Dam Pool business in two weeks (i.e., near October 4, 1988). 6.b. DISCUSSION OF INDEPENDENT REVIEW OF STABILITY STUDIES Mr. Yerkes said that a final stability studies report is to be issued within a few weeks. In regard to the independent review of the stability studies which had previously been suggested by Mr. Dzinich, Mr. Yerkes noted that he and Afzal Khan, Alas- ka Power Authority, agree that current contractors to the Alaska Power Authority are not appropriate to do the inde- pendent review. Mr. LeResche said that due to the State of Alaska procurement process, retainage of a contractor to do the independent review will take a few months. Mr. LeResche commented that the intent is to utilize Railbelt Alternatives Study funds for this scope of work. Mr. Palin motioned, seconded by Mr. Kelly, that the BPMC authorize release of the Draft Press Release-Southern Inter- tie as redrafted (reference Draft No. 4). The motion passed without objection. 6. c. STATUS OF FRITZ CREEK TRANSMISSION LINE Mr. Mathews said that Homer Electric Association has been building the first ten mile section of the transmission line. En- gineering is complete and material is on order for the next twelve mile section, with a start date anticipated for late Novem- ber of 1988. Mr. Mathews noted that a November 18, 1988 prequalification date and January 21, 1989 bid date have been set for the segment to be contracted out, Tustumena Road to Bradley Junction. It was noted that the Invitation for Bids BRADLEY LAKE PMC Page 3 of October 21, 1988 requires that this work be bid two ways; Kasilof to Bradley Junction and Kasilof to Fritz Creek. Mr. Wick noted that the intent of this was to enable HEA to delay their decision to construct one or both segments until the February, 1989 HEA Board of Director’s meeting when this contract is scheduled to be awarded. It was noted that neither bid will allow com- pletion of an intertie to Fritz Creek concurrent with the Bradley Lake Project coming on-line. Mr. Wick said that the com- pletion date can be changed to correspond with completion of the Bradley Lake Project (i.e., 1991) during the prebid conferences. Mr. Wick said that load growth for the southern Kenai Peninsula has been less than originally anticipated and that the voltage problem is not as severe as originally thought; therefore, HEA anticipates delaying construction of the Fritz Creek to Bradley Junction segment for two to five years. It was noted that construction of the other segments is well ahead of schedule and that construction of the Fritz Creek to Bradley Junction segment is estimated at $3,000,000 for an annual carrying cost of $400,000 - $500,000. Mr. Wick said that HEA will not build this segment until it is absolutely needed. Mr. Kelly noted that the absence of this segment will reduce stability and cause outages on the Kenai Peninsula. Mr. Palin suggested that HEA and the Technical Coordinating Committee discuss the impact of the lack of this segment and that the BPMC consider that HEA should not have to bear the total cost of this segment. Mr. Palin suggested that the Committee might want to include this segment as part of the Bradley Lake Project. Mr. LeResche said that this segment is not required for the operation of the Bradley Lake Project; however, utility line problems will be minimized by its inclusion. Mr. Cooley said that without this segment, transmission line problems will black- out the Kenai Peninsula. Mr. Yerkes added that while the major risk is to the southern system, the northern system could also be affected. Mr. Yerkes said that with a fault in the new line, the Bradley Project will go off-line and with the 60 MW decrease, the Kenai Peninsula will go black. Mr. Yerkes also noted that in addition to the stability problem, the Brad- ley Lake Project output will be restricted for the Project can not be operated at full capacity without great risk without the second line. Mr. Saxton noted that the transmission agreement only defines the Bradley Junction to Soldotna Substation segment of the line. Mr. Kelly noted that there had been a change in the original understanding that this segment would be completed coinci- dent with the Bradley Lake Project and that this issue needs to be addressed as a policy issue before the PMC. Mr. Wick said that the original intent was that this segment would be completed at the same time as the Bradley Lake Project. Mr. Wick said that revisions need to be made to the HEA contract if this line segment is in fact delayed. Mr. Wick said that he will work with Mr. Baldwin to add language to the contract in the event this line segment is delayed. Mr. Kelly said that HEA needs to inform the parties of their determination as to whether or not HEA is willing to absorb the impact of not having this segment constructed, then each of the other parties can assess the relative risk or problem to each of their systems. Mr. Wick responded that HEA members are not willing to absorb the cost of $3,000,000 ($400,000 - $500,000 per year) at this time and that they are unwilling to assume any risk. Mr. Wick said that the stability problem at this time is unquantifiable and he expects that the line will be very reliable, since there areno mountain crossings or avalanche areas. Mr. Kelly said that it is then up to the other parties to determine if they are willing to accept the risk to their lines. Mr. Saxton interpreted this to mean that the attorneys should not do any further work with regard to the transmission agree- ment until this issue is resolved, since the agreement does not address that segment and some of the Boards of Directors might vote not to approve the agreement in absence of this issue being addressed in the agreement. Mr. LeResche noted that the Power Authority Selection Committee for the Consulting Engineer for Bradley Lake clearly recommended R.W. Beck; therefore, interviews were not scheduled with R.W. Beck and CH2M Hill. Mr. LeResche left the meeting at this time to meet his airline reservation. Mr. Petrie nominated Mr. Kelly to serve as Ac- ting Chairman for the remainder of this meeting. The motion passed without objection. - BRADLEY LAKE PMC Page 4 of 5 October 21, 1988 7. UNFINISHED BUSINESS Consideration of Draft By-laws Mr. Saxton distributed copies of Bradley Project Management Committee Bylaws, as dated October 19, 1988, which incor- porated comments discussed at the September 27, 1988 meeting on the previous draft and comments received after that meeting from CEA, MEA, and HEA. Mr. Saxton noted that it is a simple process to amend the Bylaws subsequent to their adoption. Mr. Saxton reviewed each of the Bylaw Articles presented and noted that as presented the quorum is constituted of five members. Mr. Saxton also noted that Committee actions may be taken by any reasonable voting method; however, all ac- tions taken via teleconferencing shall be by roll call vote (reference Article 5.10.1). Mr. Saxton discussed the provisions of Article 5.10.4, which require the affirmative vote of at least four representatives of the Purchasers whose percentage shares of Project capacity are greater than 51% and which do not require action by the Power Authority. Such actions include: adopting of procedures for scheduling, production and dispatch of Project power; selection among alternative methods that do not involve the Power Authority for funding required project work; and establishment of procedures for the use of each Purchaser’s water allocation, except that the Power Authority’s affirmative vote shall be required for any water alloca- tion decision which affects performance of the Power Authority’s obligation under its FERC license. Mr. Yerkes expressed concern that Article 5.10.4 may conflict with the PSA and the Power Authority’s entitlement to vote. Mr. Saxton responded that he does not see a problem if the Power Authority approves the Bylaws. Mr. Saxton reviewed Article 5.10.5 which sets out the mattters which shall require the affirmative vote of at least four rep- resentatives of the Purchasers, whose percentage share of Project capacity are greater than 51% plus the affirmative vote of the Power Authority representative. Such matters include: arranging for the operation and maintenance of the Project; adoption of budget of annual project costs; establishing for each Fiscal Year the estimated annual payment obligation and schedule of each Purchaser; determining the actual annual project costs; evaluation of the necessity for and scheduling of required project work, determining the appropriate amount of and obtaining Project insurance, adopting additional mini- mum funding amounts for the Renewal and Contingency Reserve Fund; selection among alternative methods that involve the Power Authority for funding required project work; adoption or amendment of procedural rules of the Committee ex- cept for dispute resolution procedures; adoption of maintenance schedules for the Project; determination of rules, proce- dures and accounts necessary to manage the Project when no bonds are outstanding; evaluation and approval of optional project work and associated compensation; application of insurance claims proceeds not governed by the bond resolution; approval of procedures and any individual utility agreements relating to electric power reserves for the Project; and the ap- proval of consultants. Dispute resolution procedures require unanimous concurrence of all Committee members and election of officers requires a majority of Committee votes, with each member receiving an equal vote including the Power Authority. Mr. Saxton noted that the Committee in adopting these rules of procedure is making a policy decision that they will operate in the open. Mr. Saxton said that the Attorney General’s Office has said that the BPMC is not formally subject to the State of Alaska’s open meetings law. The motion was made and seconded to adopt A Resolution of the Bradley Project Management Committee, established pursuant to Section 13 of the Bradley Agreement for the Sales and Purchase of Electric Power ("the Power Sales Agree- ment") establishing Bylaws for the operation of the Committee. This motion was passed without objection adopting this as Resolution 88-1. The motion was made and seconded to amend Article 13.1.1.(b), such that reimbursement will not exceed $35.00 per day, plus the actual expense for lodging and travel. This motion was withdrawn leaving the reimbursement not to exceed $150.000 per day for a maximum of two days travel and actual meeting days for each duly convened meeting of the Com- mittee. BRADLEY LAKE PMC Page S of 5 October 21, 1988 8. OTHER BUSINESS a. Discussion of Federal Energy Regulatory Commission Hydroelectric Fees Mr. Petrie advised the BPMC that the Power Authority had requested exemption from the payment of annual FERC fees for the Four Dam Pool projects. It was noted that the FERC has granted a conditional exemption for the Terror Lake and Solomon Gulch projects; however, FERC perceives that the municipalities (i.e., the Cities of Petersburg, Wrangell and Ketchikan) accrue a profit and as such are not eligible for exemption from administrative and land use fees. It was noted that the past fees in question have been paid in protest and that the Power Authority and Four Dam Pool Purchasing Utilities will be meeting with the FERC staff on November 9, 1988 to address the area of dispute. Update on Stability Studies It was noted that $60,000 has been spent to date on the Bradley Lake stability studies by Southern Company Services, Inc. (SEI). Discussion ensued regarding the allocation of this $60,000 plus future costs related to this work to be shared by the Committee members. There was no objection to allocating this cost to all of the members as part of the capital cost of the Project. It was determined that a draft resolution on this issue would be presented to the members by Mr. Saxton prior to the next meeting. 8.b. Schedule Next Meeting It was determined that the next meeting of the BPMC would convene November 30, 1988 at 10:00 a.m. in the Training Room of Chugach Electric Association. 9, COMMUNICATIONS There being no further business before the Committee, a motion was made to adjourn. 10. ADJOURNMENT Acting Chairman Kelly adjourned the meeting at 4:00 p.m. Zi ACTING CHAIRMAN APPROVED AT BPMC MEETING HELD November 30, 1988. ——————