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HomeMy WebLinkAboutBPMC Meeting June 10, 1994 2ALASKA INDUSTRIAL DEVELOPMENT * AND EXPORT AUTHORITY = ALASKA mm =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 PY NY en Fm 10. 11 12. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA Friday, June 10, 1994 Anchorage Municipal Light & Power Commission Room - 1200 East 1st Avenue 10:00 a.m. CALL TO ORDER Story ROLL CALL PUBLIC COMMENT AGENDA COMMENTS A. Confirmation of Elected Officers in accordance with Section II of the Alaska Energy Authority By-Laws APPROVAL OF MEETING MINUTES - April 29, 1994 BUDGET SUBCOMMITTEE REPORT Lovas OPERATION AND DISPATCH SUBCOMMITTEE REPORT Sieczkowski INSURANCE SUBCOMMITTEE REPORT McCrohan A. Insurance Review Proposal OLD BUSINESS A. Spinning Reserves Update Lovas B. PMC Meeting Minutes - Recording and Transcribing McCrohan NEW BUSINESS A. AEA Agreement Revision Schedule McCrohan B. Approval of Legal Expenses and Other Payments Woodcock COMMITTEE COMMENTS A. Next Meeting Date Story ADJOURNMENT ALASKA INDUSTRIAL DEVELOPMENT > ¢ AND EXPORT AUTHORITY {= ALASKA @@E™ ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 ALASKA ENERGY AUTHORITY/ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY Public Notice Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting to conduct the affairs of the Committee at Anchorage Municipal Light ee Power (Commission Room), 1200 East 1st Avenue, Anchorage, Maxks, This meeting will commence at 10:00 a.m., on Friday, June 10, i994. For additional information, contact Norman L. Story, Chairman, Homer Electric Association, 3877 Lake Street, Homer, Alaska 99603. The State of Alaska, (AIDEA) complies with Title Ir of the Americans with Disabilities Act of 1990. Disabled persons requiring special modifications to participate should contact AIDEA staff at (907) 561-8050 to make special arrangements. /s/_ Alaska Energy Authority Project Management Committee Publish: June 6, 1994 BRADLEY LAKE PROJECT MANAGEMENT CU: DRAFT 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 1st 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 Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Matanuska Electric Association Jim Woodcock, Alternate Municipal Light & Power Tom Stahr, Designated Representative Homer Electric Association Norm Story, Designated Representative Others Present: Stan Sieczkowski, AEA/AIDEA Sharron Sigafoos, AIDEA Gene Bjornstad, Chugach Electric Association Dan Bloumer, 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 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 over the expenses associated with the accident itself. Since they were included and charged to the Bradley Lake project but are subject to potential reimburse- ment from the insurance proceeds, the Budget Subcommittee’s recommendation is to accept the charges pending the outcome of the insurance process. (2) $4,500 was charged to the Bradley Lake project that was associated with the remodeling of an AEA person’s office who was performing 80 percent of his time with direct charges to the Bradley Lake project. Parisena Stromberg identified these as administrative and general charges and recommended that they be removed or reimbursed to the project. It is the Budget Subcommittee’s recommendation, given that a lawsuit is under way and a motion for summary judgment has been filed on the matter of administrative and general expenses, that the Committee accept those charges, note that those types of Bradley Lake Projecc Management Committee Meeting Minutes - April 29, 1994 Page 3 of 7 charges would be involved in any potential settlement under the lawsuit, and forego any action at this time. (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 fronting 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 noted with respect to the range of account numbers used to derive the calculation. 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, which 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 Projec. 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 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, on an ongoing basis, the maintenance activities and expenses 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 monitoring and reviews. Mr. Lovas said Mr. Sieczkow- ski would address this issue during the O&D Subcommittee 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 Operation and Dispatch Subcommittee. Upon Mr. Story’s request, Mr. Kelly gave the Committee an overview of the Budget Subcommittee’s position on the issues of (1) line item discrepancies, and (2) whether like kind work should be contract or force account. Discussion was heard. Bradley Lake Project 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. 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. 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) HEA’s liability in the event the loss exceeds the deductible and whether the Authority’s insurer could take action against HEA in that event. 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. 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 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 clarifica- tion from the ASCC representatives so that the RCC could undertake the modified assignment at its next meeting sched- Bradley Lake Project Management Committee Meeting Minutes - April 29, 1994 Page 6 of 7 10. uled for May 5, but in the absence of 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 Bradley Lake Projece Management Committee Meeting Minutes - April 29, 1994 Page 7 of 7 11. 13. a new Treasurer, this item be tabled until the next PMC meeting. There was no opposition. 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 sheduled 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. BY: Norm Story, Chairman ATTEST: Dennis V. McCrohan, Secretary REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT A. PURPOSE OF REQUEST FOR PROPOSAL There are three objectives of this Request for Proposal (RFP) and the resulting consulting agreement. The first two objectives will be required under any con- tract, the third is an additive alternate. The primary objective of the agreement is to provide the Bradley Lake Project Management Committee (PMC) and the Alaska Energy Authority (AEA), a public corporation of the State of Alaska, with an independent insurance review, for bond covenant and prudent ownership purposes, of the insurance policies and risk management practices being applied to the Bradley Lake Hydroelectric Project. Upon completion of the review, the Consultant shall prepare a report making recommendations identifying the types, amounts and provisions of insur- ance that should be carried by the PMC and AEA and their contractors with re- spect to the operation, maintenance and administration of the Project. The final recommendations will be adopted by the PMC and AEA as required by bond covenants (see excerpt attached) for the Project. The second objective is for the Consultant to expand the analysis on the alloca- tion of risk management costs and funding addressed under the first scope of work to provide the PMC and AEA recommendations on possible alternatives available to the PMC and AEA to fund self insured losses. The analysis shall include a brief discussion of the advantages and disadvantages of each alternative. The third scope of work is to expand the analysis of loss exposures to include the range of potential losses resulting from the operation, maintenance and power dispatch activities of the project performed by contractors. In particular that analysis should address s risks associated with those activities performed by the contractors. The purpose of this scope is to inform the PMC and AEA of the potential risks and provide information such that the PMC and AEA can make informed decisions concerning possible insurance coverage available, re- tention of risk or contractual transfer risk to contractors. Where applicable the availability of commercial insurance coverage should be identified. B. BACKGROUND AEA is the owner of the Bradley Lake Hydroelectric Project, which is capable of producing 90 megawatts of electricity. The project was financed through capital REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT appropriations by the Alaska Legislature and bonded indebtedness. Under a Power Sales Agreement, six utilities are obligated to purchase the entire electric capacity of the project, (a seventh utility actually purchases the electricity on be- half of two utilities). Those six utilities are either a private corporation, rural electric cooperatives or municipally owned utilities. The utilities along with the AEA manage the operation of the project through the PMC. The physical facilities of the project are maintained and operated by Homer Electric Association, one of the six purchasing utilities. The actual transfer of power produced by the project to the purchasers is managed, or dis- patched, by Chugach Electric Association, another one of the six purchasing utilities. To comply with bond covenants, the insurance coverage must have an inde- pendent review. As a part of that review, the amount of self insured risk needs to be analyzed to determine if the limits are appropriate, and if a change in the self insured risks would be beneficial to the PMC and AEA. Presently AEA, through the Division of Risk Management, provides property and boiler and machinery coverage for the project. Any property and boiler and ma- chinery losses up to the amounts of the self insured risks, other than operator negligence or intentional tortuous conduct, are to be reimbursed by the project operating budget. The second scope of work anticipates a review of the options available to the AEA and PMC to finance self insured risks Homer Electric Association, Inc., as the operator, provides coverage for its ac- tivities which include policies for: general, automobile liability, watercraft, avia- tion, and workers compensation. The third scope of work anticipates a review of the operation and maintenance of the project and the dispatch of power. The intent is to identify the potential risks and provide information which can be used by management to determine how to address potential losses, either through insurance, self insurance or by contract. Cc. SCOPE OF WORK The Scope of Work for the primary objective shall result in a report that includes the review, analysis and recommendations by the Consultant related to: Ae Appropriateness of insurance coverage. Changes that may reduce cost or improve coverage shall be identified. REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT a. A schedule of insurance policies is enclosed for reference in pre- paring the proposal. b. Risk Assessment Evaluation of Bradley Lake Hydroelectric Project which identifies maximum probable loss is also enclosed. De Activities which impose the greatest risks of catastrophic loss. Major ex- posures should be identified and potential impacts measured to the extent practical. This review shall include: a. Property loss exposures, including both direct damage loss poten- tials and consequential risks (e.g., loss of revenues and extra ex- penses). b. Third party liability risks and directors and officers, professional li- ability, and errors and omissions exposures. Consider the amount of operation and maintenance or construction service activities that are contracted out to independent contractors. 3. The current system of allocating risk management costs to the Project, and methods of funding being utilized for insured and non insured risks. 4. Comment on loss prevention (inspection) services provided by the Boiler and Machinery Insurer. D; Employee benefits shall not be included in the Consultant's response to this RFP, nor will employee benefits be reviewed as a part of the pro- posed consulting agreement. 6. The Consultant will be required to deliver a draft of the report to AEA not later than seventy-five (75) calendar days from issuance of the notice to proceed under the proposed contract. The PMC and AEA will provide comments on the draft to the Consultant within 21 days of receipt of the draft by the consultant. The Consultant shall incorporate the comments received from AEA and its risk managers into the final report. A camera ready original of the final report plus fifty (50) copies must be delivered to AEA not later than one-hundred twenty (120) days from issuance of the notice to proceed. The Scope of Work for the second objective expands on Number 3 of the first scope of work, the self insurance funding analysis. The purpose of this scope is to recommend methods to finance the self insured risks retained by the PMC REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT and AEA. This is especially important if the first scope of work recommends an increase in the self insured retentions. The recommendations shall contain a discussion of the advantages and disadvantages of each alternative. In addition the recommendation should identify the professional expertise necessary to im- plement each alternative. The review of each alternative should include man- agement and ownership of the funding source by the following: ue AEA under the existing corporate structure. 2 The Bradley Project Management Committee. 3. The Purchasing Utilities. 4. A nonprofit corporation or joint action agency established under state law. 5: Recommended Alternatives by the Consultant. The third scope of work is an expansion of Number 2 of the first scope of work. The intent is to inform the PMC and AEA of the potential liabilities associated with the ownership, operation, maintenance and dispatch of power of the project. The work shall result in a review identifying the possible areas of loss and pos- sible commercial insurance coverages available and provide information which can be used by management to determine how to address the potential losses, either through insurance, self insurance or by contract. D. DATA AVAILABLE The following will be made available in the initial stages of the Consultant's study: ls Up-to-date list of the project facilities showing current values. 2 History of the Project, prior independent audits, insurance premiums, and losses, by line of coverage, for the last five years. 3. Complete copies of all property and liability insurance policies now in force. 4. Current financial and budget statements for the Project. REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT Bradley Lake Hydroelectric Plant Operation and Maintenance Manual. Automated Maintenance Management System (AMMS) programs and records. Operations and Maintenance Contract with Homer Electric Association. Dispatch Agreement with Chugach Electric Association. Other data reasonably required by the Consultant will be made available. E. CONTENT TO BE INCLUDED IN THE RESPONSE TO THIS REQUEST FOR PROPOSAL Please include the following items as a minimum. Additional information perti- nent to the decision making process may also be included by the Consultant. 1. A brief history and description of firm, including a statement of the firm's qualifications to perform the services being requested. Statement regarding the firm's capabilities and experience with govern- mental risk management and insurance in Alaska. Statement regarding the firm's capabilities and experience with hydroelec- tric and power project insurance coverages and risk management procedures. Specific responsibilities, resumes and list of five (5) references for each individual that will be assigned to this study. Designate the individual leading the study team. Statement explaining how the firm will respond to questions, comments, and concerns raised by AEA and its risk managers during the study. For example, how would the firm respond to a situation where a recommen- dation was not acceptable to AEA due to funding limitations or other prac- tical reasons. A cost breakdown showing the maximum guaranteed cost of the study as well as specific charges, hourly rates and any other basis of billing pro- posed by the Consultant. REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT lee Statement of each Scope of Work to be provided with a proposed work plan and schedule for completion of each. F. SELECTION CRITERIA Selection of Consultants for oral presentations (if held) and the Consultant to ultimately work on this study will be based on the following standards: 1. Responsiveness of the written proposal to the purpose and Scope of the study. A response to each of the items listed under Part D of this RFP is required. 2: Reputation and professional qualifications of the specific individuals assigned to complete the study. 3. Experience with hydroelectric and power project insurance coverages and risk management procedures will be a primary criteria. Experience with other governmental, large corporate or industrial insurance coverages and self insurance programs will also be considered. 4. Cost of the work to be done. 5S: Review of the proposed schedule and overall ability to complete the study within ninety (90) days from issuance of notice to proceed. 6. Consultant must act solely as an expert advisor to AEA and shall not be compensated in any way under the proposed contract from the sale or placement of insurance coverage(s) that may result from the Consultant's recommendations. G. GENERAL INFORMATION Interested parties should be aware that: This Request for Proposal does not commit the State to award a contract, to pay any costs incurred in preparation of a proposal, or to procure or contract for any professional services. All costs directly or indirectly incurred in response to the request shall be the sole responsibility of and shall be borne by respondents. The State may require follow-up oral interviews at a later date, may require the proposers selected to participate in negotiations, and to submit any technical or compensation changes, or other revisions of their proposals as may result from REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT such negotiations. The State reserves the right to waive technicalities and minor irregularities, or to reject any or all proposals in whole or in part, with or without cause; and to accept that proposal, if any, which in its sole judgment will be in its best interest. Six (6) copies of the sealed proposals shall be delivered, either in person or by mail or courier, to AEA by 4:00 p.m. on Friday, July 22, 1994 at the following address: Daniel W. Beardsley Contracts Manager Alaska Energy Authority 480 West Tudor Road Anchorage, Alaska 99503 All proposals should be marked on the outside: "PROPOSAL FOR INDEPENDENT INSURANCE REVIEW, BRADLEY LAKE HYDROELECTRIC PROJECT DUE: 4:00 p.m. on July 22, 1994". It is the responsibility of the proposer to ensure that the proposal is received at the address indicated above before the deadline for delivery stated. Proposals received after the deadline will be rejected and will be returned UNOPENED. REQUEST FOR PROPOSAL INDEPENDENT INSURANCE REVIEW BRADLEY LAKE HYDROELECTRIC PROJECT Bond Covenant Excerpt The Bradley Lake Power Revenue Bond Resolution, Section 714.3 provides the following: [E]very two (2) years, from and after July 1, 1990, the Authority shall em- ploy an independent insurance consultant for the purpose of reviewing the insurance coverage of, and the insurance required for, the Authority and the Project and making recommendations respecting the types, amounts and provisions of insurance that should be carried with respect to the Authority and the Project and their operation, maintenance and administration. A signed copy of the report of the independent insurance consultant shall be filed with the Trustee and copies thereof shall be sent to the Authority, and the insurance requirements specified hereunder, in- cluding any and all of the dollar amounts set forth in this Section, shall be deemed modified or superseded as necessary to conform with recom- mendations contained in said report. ALASKA INDUSTRIAL DEVELOPMENT * pemae tenn elena = ALASKA @@E =SENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 MEMORANDUM TO: Project Management Committee Bradley Lake Hydroelectric Project FROM: Dennis V. McCrohan, Secretary Yh : ( , U— DATE: June 10, 1994 SUBJECT: PMC Meeting Minutes - Recording and Transcribing I would like to remind the Committee that the recording and transcribing of Project Management Committee meeting minutes by the Alaska Energy Authority will be discontinued as of June 1994. This service has not been included under the Authority’s costs for fiscal year 1995. This item was brought to the Committee’s attention in my letter dated February 17, 1994 (copy attached) regarding transition duties. Discussions relating to the FY 95 Rudgeb were subsequently heard at the February and March 1994, PMC meetings with no action taken at those times. A decision regarding how future meeting minutes will be recorded and transcribed must be addressed at our June meeting. Your consideration of this issue is appreciated. DVM/sh attachment ‘ ALASKA INDUSTRIAL DEVELOPMENT Abd AND EXPORT AUTHORITY 480 WEST TUDOR + ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 » FAX (907) 561-8998 February 17, 1994 Mr. David L. Highers Chugach Electric Association P.O. Box 196300 Anchorage, AK 99519-6300 Subject: Transition Duties Dear Mr. Highers: As you are aware, we have executed the O&M Agreement which transfers a substantial portion of the Authority's duties and responsibilities to HEA. However, there are several remaining duties which require clarification. These are: FERC licensing administration Water management and hydrology studies PMC meeting recording PMC budget coordination PMC travel APRONS To assure that these items are budgeted, we have included these items under Authority costs in our FY95 budget submission to the PMC Budget Subcommittee. We would be pleased to continue to provide the services required for Items 1 and 2. These services would be provided by outside contract services in lieu of in-house staff used in FY94.- We may be able to achieve some savings for these items since we have been requested to propose these services on other AEA projects. Items 3 and 4 are completely optional. Item 5 is an allocation for PMC members’ travel which could be simply deleted if PMC members do not require travel reimbursement for meetings. Please let me know your direction on the above items. Very truly yours, RIM Cbb~ Dennis V. McCrohan Deputy Director (Energy) DVM:ec eva100.doc ce: R. Saxton, AWHD&S R. Snell, AIDEA ALASKA INDUSTRIAL DEVELOPMENT =_ > ¢ AND EXPORT AUTHORITY / => ALASKA @™ ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 June 2, 1994 Norman L. Story General Manager Homer Electric Association 3977 Lake Street Homer, AK 99603 Subject: Bradley Lake Agreements Dear Norm: Mr. Ron Saxton has requested a planning schedule for updating Bradley agreements as required by the AEA reorganization and to incorporate the Master Operating Agreement. The schedule is: Agreement Status Schedule Dispatch Agreement Partially complete Late June 1994 between AEA/CEA meetings with CEA O&M Agreement Complete between AEA/HEA Transmission Facilities July 1994 Maintenance Agreement between HEA/CEA SVC Maintenance Agreement August 1994 between CEA/AEA Bradley Junction Maintenance July 1994 Agreement between HEA/AEA Norman L. Story June 2, 1994 Page Two Master Operating Agreement Complete between AEA/Participating Utilities We believe these are the remaining agreements to be revised. Please let me know if you have any questions. Very truly yours, COM Gobo Dennis V. McCrohan, P.E. Deputy Director (Energy) DVM:ec ec100doc cc: R. Snell, AIDEA R. Saxton, AWHD&S Chugach Position Statement on Reliability Parameters June 10, 1994 The following table shows the historical power supply reliability achieved by Chugach: Power Supplier Service Interruption (average hours per consumer) 1993 1992 1991 | 1990 | 1989 0.1191 0.3499 0.5578 0.4583 3.5441 Five-Year 1.0058 0.9857 0.9177 1.9461 2.3200 Average As previously discussed in the Reliability Criteria Committee of the ASCC, Chugach's position is that an acceptable level of reliability for power supply interruptions is 1 hour per consumer with less than 15 occurrences per year. However, Chugach holds that an initial goal for development of underlying reliability criteria should be no more than 0.5 hour of power supply-caused outages for the average customer per year and a frequency of less than 5 per year on average. Subsequent to the last BPMC meeting, the RCC met to discuss this subject. The committee discussed the desire of the General Managers to arrive at a definitive answer on how much operating reserves the railbelt should carry. The committee, without objection, adopted the following recommendation: "The RCC recommends that the level of operating reserves on the system shall equal 100% of the largest generation contingency." The recommendation affirms the operating reserve level currently in effect. This level of operating reserve is required to permit load to be immediately (without having to wait for the start up of a unit) restored following under-frequency load shed caused by the loss of an operating generating unit. Utilities relying on SILOS for operating reserves may not be able to restore load until another unit is started. The committee recognized that the application of operating reserve for reliability could be identified for the interconnected system within two separate time periods: Summer (mid-April through mid- September) and Winter (mid-September through mid-April). 4635.JSC:BM June 8, 1994 Chugach Position Statement on Reliability Parameters Page 2 In summer, it is generally not economically prudent to carry enough operating reserves to prevent under frequency load shed upon the loss of any but the smallest gas turbine. The frequency decline is too fast (due to the small amount of inertia on the system) for the gas turbines to respond in time to prevent load shedding. The committee agreed that operating reserves were primarily providing restoration capability during summer. Therefore, all reserves may be counted as operating reserves to meet the 100% of the largest generation contingency requirement. In winter, the load and inertia are large enough that much of the time prudent levels of operating reserves are able to prevent initiation of under-frequency load shedding upon loss of an on-line unit. Operating reserve equal to 100% of the largest generation contingency is required for load restoration. To prevent under-frequency load shedding, however, some percentage of the operating reserves must be responsive. The members estimated the responsive percentage may need to be in the range of 20-50% of the total operating reserve to prevent UF load shedding. The committee decided to conduct system studies to determine the appropriate percentage of responsive spin during a normal winter loading for loss of: 1) a frame 5 loaded at 15 MW; 2) a frame 7 loaded at 60 MW; and, 3) a combined cycle loaded at 100 MW. The studies will be done both with and without a North Pole unit running. Chugach will prepare dispatch scenarios for the study cases to be distributed to the generating utility dispatch centers for review prior to running the cases. These studies should allow the RCC to recommend a responsive percentage of operating reserves that should be maintained during the winter. Methods of allocating the responsive percentage among generating utilities will need to be developed later, perhaps by others. It is Chugach's recommendation that the RCC should continue to work on developing the operating reserve criteria, as discussed. 4635.JSC:BM June 8, 1994