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BPMC Meeting Thursday 09-27-2007 10.am 1
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (Held @ CEA’s Board Room) Anchorage, Alaska Thursday, September 27, 2007 — 10:00 a.m. 4; CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, September 27, 2007, from Chugach Electric’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 745 ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association Steve Haagenson Golden Valley Electric Association Bradley Janorschke Homer Electric Association Tuckerman Babcock Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Don Zoerb, MEA Kirk Gibson, AterWynne LLP Brian Bjorkquist, Department of Law Doug Hall, AML&P Henri Dale, GVEA Charlie O'Hare, HEA Rick Baldwin, HEA Rick Eckert, HEA Lee Thibert, CEA Tom Johnston, ARECA Insurance Exchange Carole Harbeson, ARECA Insurance Exchange Kathy Collins, ARECA Insurance Exchange Bob Price, AML&P Linda MacMillan, AEA Mike Cunningham, CEA Rick Miller, AML&P Page 1 of 5 PUBLIC ROLL CALL (Continued) Lou Agi, AML&P Phil Steyer, CEA Christa Caldwell, AEA Shauna Howell, AEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS Move the O&M Contract item up and move Legal Bills/Service down and make it Item D. Mr. Day added a request for Seward and MEA to be added at the end of the meeting. 6. APPROVAL OF MEETING MINUTES - February 23, 2007 and June 26, 2007 MOTION: Mr. Posey moved to approve the minutes of the February 23, 2007 and the June 26, 2007 meetings, seconded by Mr. Haagenson. The meeting minutes were unanimously approved as presented. ts NEW BUSINESS 7A. Fixed Wing Aircraft Services HEA had some internal concerns about the flight services they were using - both for the protection of their employees and for the financial exposure to the BPMC. HEA used Maritime Helicopters for a two-week period while trying to come up with a solution. HEA found a 206 that they are leasing from a lodge across the bay for the winter months through April. HEA will look at their policies and expectations and guidelines and sometime this winter will gather the financial information they have. In the interim, HEA will gather more information to obtain a clear understanding of what the expectations are of both the aircraft and the pilots. Mr. Janorschke noted that both policies are being reviewed by attorneys. Mr. Haagenson recommended council for the BPMC does their own review as well. Chair Stewart asked AterWynne to take a look at the policies. HEA will have their attorney forward their findings. 7B. Insurance Mr. Carey noted that earthquake insurance, the way it was procured, was underwritten for Bradley for $50M. The probable maximum loss for Bradley is $40M, so for the last couple of years it’s been $20M of insurance for single occurrence for ARECA and $20M through the state broker, Willis. We recently found out that ARECA’s ability to insure went to $50M. We now have $50M through ARECA and $20M through Willis. Currently, Bradley has earthquake insurance of $70M. Because of the changes of the insurance market, it may be good for the Budget Finance Subcommittee to look at how we procure insurance in the future. Mr. Posey asked if the cost was increasing? Page 2 of 5 Mr. Carey responded that the cost went down from last year, so this year we have more insurance at a lower cost. ARECA added that the reason why the policy coverage went up from $20M to $50M is because ARECA Insurance Exchange renegotiated their insurance contract for the ’07-'08 year and they were able to negotiate better terms for this year. ARECA does regularly practice re-marketing insurance every year for cost purposes and to insure that ARECA’s interests are protected, they will be going to market again for the 08 year. Mr. Carey suggests that the Budget Finance Subcommittee look at this and property insurance in general. There have been recommendations made by insurance consultants to the BPMC before and there are Bradley recommendations in there. Mr. Haagenson posed the questing - if we are getting twice as much for half the price, why would we investigate? Are we looking at different vendors? Mr. Carey responded that we are looking more at would we like the process to stay the same or have a different process. Mr. Carey is not recommending that we change vendors or not, but he doesn't believe that this has been looked at for a while. Mr. Carey noted that the BPMC consultant looked at some specific insurance policies and made recommendations. Some of them have been resolved or acted on or have input from the other utilities. The other standpoint, the reason why we requested the O&M contract be put right underneath the insurance agenda item is because some of the insurance flows into the O&M contract. 7C. O&M Contract Mr. Baldwin noted they have been waiting for the insurance issue to be resolved before we got into the O&M discussions. About a year ago, the issue was placed before the BPMC as to whether or not the O&M Agreement should be amended. HEA offered up a 5-year term. AterWynne has issued up another draft, which adds some additional changes. HEA offered up what they thought the changes should be. The Agreement really does need to be looked at — the only question is what is the process for doing that? As Mr. Carey and Mr. Bjorkquist indicated, the insurance issues also flow into that. It was agreed that the Budget Subcommittee look at the O&M Agreement and the issues that are raised, come to some agreement on the business decisions that need to be made, and then have the lawyers review. Chair Stewart asked that if a meeting were called in January or February, would they be prepared to vote it? He noted that they have to be fair to HEA’s needs. Everybody is very supporting to voting a 5-year deal, it is the details that need to be cleared up. Chair Stewart stated that they will either agree or come to the BPMC with the two positions and we'll either agree or disagree and we'll vote on it and we'll move on. 7D. Legal Bills/Services It was noted by Mr. Gibson of AterWynne, that the BPMC was paying bills which more rightly go to the Railbelt Utility Group (RUG). Mr. Gibson met with Mr. Bjorkquist and discussed the bills and made sure that there wasn’t any crossover and noted that the bills be re-issued to the BPMC. Those bills have been re-issued and what is now needed is a ratification of the bills and request for payment. Mr. Bjorkquist’s understanding is that because the bills were billed Page 3 of 5 through the RUG, there is ambiguity through the contracts, and this clears up the ambiguity so that makes it ready to go forward. MOTION: Mr. Haageson moved to reinforce the authority of the BPMC to approve the proper bills submitted for the BPMC agreement. Seconded by Mr. Posey. Chair Stewart opened the floor for discussion. Mr. Babcock noted that there have been various motions made directing the Chairman to come back to the BPMC with a recommendation for a neutral counsel to represent the BPMC. MEA noted their concern with a conflict of interest in using AterWynne as the BPMC counsel. MEA objects to the motion on the grounds that there is a conflict of interest in using AterWynne as BPMC counsel as well as the BPMC not having been able to find a neutral attorney to represent the BPMC. MOTION: Mr. Haagenson restated the motion to reinforce the authority of the Chairman to authorize and approve for payment valid bills submitted to the Chairman for the BPMC purposes. This motion isn’t really about giving them more power, it says when the Chairman gives a bill to AEA to pay, that they should pay it. Their responsibility should be — is ita BPMC purpose. Mr. Gibson stated that there is no conflict of interest so long as the interests of the party align. When he works for the BPMC, he does it for all the utilities jointly as BPMC. As long as the utilities, under the BPMC are aligned, there is no conflict. Mr. Babcock stated that MEA maintains their objection. A voice vote was taken and the motion passed: City of Seward, CEA, HEA, GVEA, AML&P, and AEA for the motion, and MEA opposed. 7E. Anonymous Complaint Mr. O’Hare briefed the group on a letter siting difficulties in the operation and maintenance at Bradley Lake. A response was written and given to the BPMC members explaining the investigation into each allegation explaining how these allegations were baseless. Kaufman Engineers provided a review of the fire system. They have an appropriate valve, which will be completed by the end of the year and installed. We don't feel it was a serious problem and did not cause the fire system to be non-functional, it was simply a leaky valve. During an outage, an inspection was done by Mr. Day on the other areas of concern. The coating on the piping — the piping was carbon steel rather than stainless steel, which was the original. The carbon steel piping was coated with epoxy, much like most of the equipment. Mr. Day found no problems. He also did a brief look of the wells that were cited in the anonymous letter, and found no problem with those wells that he could visually see. In the response it explains that they are in the process of putting together a new governor and the wells were looked at and were addressed with the contractor and they were deemed to be just fine. The quality is well within standards of industry practice. Some of the reps of the utilities and the O&D Committee have all visited the site, most of which have gone down into the runner pit where the things of concern are located and we have heard Page 4 of 5 nothing of any concern in terms of feedback. Each visitor had praised HEA’s making of the facility itself. We continue to feel there is no concern in any of these allegations and no basis for these allegations. HEA is diligent in the operation and maintenance. 7F. Election of Officers MOTION: Mr. Janorschke motioned to keep the board as is. Seconded by Mr. Haagenson. A voice vote was taken and the motion passed unanimously. 8A. Operator’s Reports Mr. Day reported that both runners have been replaced on unit 1 and 2 and they are running well. They have replaced the microwave system and moved it down on the road and installed a new cable in the fiber optic system that runs along the road, which in turn powers the gate diversion tunnel at the dam. They have successfully tested the gate house control as well as the diversion tunnel and are happy to report they did not drain the lake while doing the testing. Normal maintenance has gone on and they have completed the annual maintenance for the year during the shutdown on the runners. The relays have been replaced on the Soldotna- Bradley Lake line. There were some issues with those getting those fully operational. The new microwave system has solved those communication problems. Mr. Day had a request for Seward and MEA that they please inform him who their representatives are so that they will be able to receive all communication from the O&D Committee. Chair Stewart noted that all organizations need to submit a letter to the Chair of their primary and alternate members. The next meeting date will be left at the call of the Chair. 9. ADJOURNMENT The meeting adjourned at 11:10 a.m. BY: roby E red ATTEST: - Alaska Energy Authofity, Secretary Page 5 of 5 BPC Alechiun ef Af ABP 000 AM Big wn hiv 7 — ia Christe-Coldiel| ; Tie baer . Sfert Tine: fo: vad Tr bakle End Teles Ke : “Rick eel Heri ale “Rick Eelot Hick Cubson Ate CA not Dow Loevb AREA heb ice: TA) Averett I] Dred Tonacelle Fligtch sues. needed pin | Vytecion + explyces. t+Finneial ce Helice rls rset ns 206 Chavte, Leasing Apres a: [edly the. Apart é : sleiog ska és. future oyptions — bid oat... ‘WW Stee: AReCA = negstioke Lett Teas. 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Catan 15 > Ongsuty = | st hay Me S aap | {ivi va GVEA is — “elie ee A Lele EB — na castlich of pcterast? | K — pe co lich ole us tall ikea t= AS org es UT! under bP He Ain - Here is ya carsh(ieh See Vote: | | il I I i Arango = lee « Ce Cheat Of She. er — : eo 4 eutaze — eos SET i “a — sacanbged iva ox Be aes Carb en steel | asad tapes / S: Soinaid SSP Sis AP pe problem wf wells Cold see disevssebe wy aii ee laa mes to i — Cortivere . fe2r ue basis dw alleachins. HEA J lise ® neem = aaa 64 D hes dise sek -- oe ie so at Shey thee sas bois: Wut Ape. he L VE ethe Vonne yoru 1 Saas . 7 pew cable fiber o optic. ca ui tert jee hows + iversise Sousa Worwel weintenemer = Vepbecd ve len, Be Saklehew bes (145.6 wet). 35 feet below, Lubee i4 us im :; spi vil @ e : [att . hi Moines osck TN. Rat lel comtets smetaction ® 2 inches of ghcier mud: op i») : |'eq xt oe Seerd + MEA : por wh I 4 | | | | | Med Agen : “Prada hiseias qnaine p Bo oe Tovowseble. disor - CLO D oY we. Bae QU ane tal ~ pete eS atv. a a rrr es Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING Styt 27, 207 (Date) @CEAS Pond. Reon (Location) PLEASE SIGN IN No. NAME REPRESENTING 2 | Chr a Caidwett AEA 3 Bey ne. EA 4 | Kyad ap uv Arter Queoe LP 5 Priam Booekoursp a | ANY Genta & OA 6 ewer Doe 6VEA Cy of Supacd. — CHUCfctH Eteenic Capat Herteion — fa 22 STR) MAAC BAS Od wae CveA 20 | Jr COse Ma tf a} fo» fe DPILRP 92Q2\IT9884 K ok Ww “IDEX® @= ALASKA Sr Ay Alasta industrial Development GE ENERGY AUTHORITY 2 a id Export Authority BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Thursday, September 27, 2007 — 10:00 a.m. (via electronic media at CEA’s Board Room - 5601 Minnesota Drive) 1. CALLTO ORDER Stewart 2. ROLL CALL (for Committee members) .~ 2: PUBLIC ROLL CALL (for all others present) 4 4. PUBLIC COMMENT -~ 5. AGENDA COMMENTS ~~ 6. | APPROVAL OF MEETING MINUTES February 23, 2007“ Votre 'wasly approved , June 26, 2007.~ bo SK eb % NEW BUSINESS A. Fixed Wing Aircraft Services |“ B. vey: Insurance »-~ é Legal Bilis/Service . O&M Contract —~ E. Anonymous Complaint F. Election of ead Lor Sead mMeA - ta Ly 7 Mad - 8. COMMITTEE REPORTS / COMMENTS A. Operators Report a B. Next Meeting Date Stewart 9. ADJOURNMENT . (S Gre te sec) 813 West Northern Lights Boulevard * Anchorage, Alaska 99503-2495 www.aidea.org * 907/269-3000 * FAX 907/269-3044 ® Toll Free (Alaska Only) 888/300-8534 * www.akenergyauthority.org 1. @e BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (Held @ CEA’s Board Room) Anchorage, Alaska Friday, February 23, 2007 — 10:00 a.m. CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Friday, February 23, 2007, from Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association Steve Haagenson Golden Valley Electric Association (teleconference) Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light & Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority PUBLIC ROLL CALL John Cooley, Chugach Electric Association Burke Wick, Chugach Electric Association Bradley Evans, Chugach Electric Association Bob Price, Anchorage Municipal Light & Power Phil Steyer, Chugach Electric Association Suzanne Gibson, Chugach Electric Association Henri Dale, Golden Valley Electric Association Brian Hickey, Chugach Electric Association Charlie O’Hare, Homer Electric Association Rick Baldwin, Homer Electric Association Rick Miller, Anchorage Municipal Light & Power Linda MacMillan, Alaska Energy Authority Jenny Trieu, AterWynne Don Zoerb, Matanuska Electric Association Page 1 of 3 ba ® 4, PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — December 15, 2006 Mr. Janorschke moved to approve the minutes of the December 15, 2006 meeting, seconded by Mr. Posey. The meeting minutes were unanimously approved as presented. 7. NEW BUSINESS 7A. FY 08 Operating and Capital Budget Linda MacMillan MOTION #07-01: Mr. Posey moved that the Bradley Lake Project Management Committee approve the fiscal year 2008 Operating and Capital budget as presented. Seconded by Mr. Janorschke. MOTION #07-02: Mr. Carmony motioned to amend budget to remove $40,000 legal item labeled as Bradley Lake PMC Legal. Seconded by Mr. Janorschke for discussion. After discussion, a voice vote was taken and the motion to amend the budget to remove $40,000 for legal items failed. The Chair called the question for approval of the Bradley Lake Project Management Committee to approve the fiscal year 2008 Operating and Capital budget as presented. A voice vote was taken and the motion passed with one opposed vote from MEA. 7B. FY 07 Interim Budget Report Linda MacMillan Linda MacMillan presented the report stating that this was the first time in a couple of years that they weren't asking to amend the budget. This report is given quarterly to the Budget Subcommittee members and will now be added to the BPMC members as well. 7C. Homer O&M Agreement Brad Janorschke Mr. Janorschke handed out a new version of the Agreement and reviewed with the group the new language and other changes that were inserted. It was agreed that a smaller group (consisting of relevant attorneys and other participants) would get together to get issues resolved within 30 days, with an outside limit of 60 days. The group will use the version of this document that was emailed out by the Chair on February 20, 2007. 8. COMMITTEE REPORTS 8A. Operators Report / Update on Governor’s Modification Project- Charlie O’Hare Mr. O’Hare stated that the governor project is 95% complete. The revisions to the algorithms are going to take place next month. The running total is $5.2M, which excludes some costs from CEA prior to 2002, which were reported by Brian Hickey to be $776,000. Page 2 of 3 ee Ge Mr. Cooley added that the governor functions much better than the old one, saying it’s in the high 90%. The change in algorithms will take place starting March 19". Overall, the operators are happy with the new governor. 8B. NEXT MEETING DATE The next meeting date will be. May 18, 2007 at HEA or the Bradley Lake Project site. 9. ADJOURNMENT The meeting was adjourned at 10:30 a.m. BY: Bill Stewart, Chairman ATTEST: Alaska Energy Authority, Secretary Page 3 of 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES Special Meeting — Held Via Teleconference at AIDEA/AEA Board Room - Anchorage, Alaska Tuesday, June 26, 2007 — 10:00 a.m. 4, CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Tuesday, June 26, 2007, via teleconference to conduct the business of the Committee per the public notice. z ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association (teleconference) Steve Haagenson Golden Valley Electric Association (teleconference) Bradley Janorschke Homer Electric Association (teleconference) Rick Miller Anchorage Municipal Light & Power (teleconference) Karl Reiche Alaska Energy Authority 3. PUBLIC ROLL CALL Linda MacMillan, Alaska Energy Authority Jenny Trieu, AterWynne (teleconference) Mike Cunningham, Chugach Electric Association (teleconference) Bob Day, Homer Electric Association (teleconference) Henri Dale, Golden Valley Electric Association (teleconference) 4. NEW BUSINESS 4A. FY07 Budget Amendment Linda MacMillan MOTION #07-03: Mr. Janorschke motioned the Bradley Lake Project Management Committee approve to reduce the FY07 budget by $548,000 and request the bond trustee to refund the surplus to the utilities by June 30, 2007. Seconded by Mr. Haagenson. A voice vote was taken and the motion passed unanimously. Page 1 of 2 5. ADJOURNMENT The meeting was adjourned at 10:10 a.m. BY: Bill Stewart, Chairman ATTEST: Alaska Energy Authority, Secretary Page 2 of 2 BUDGET INFORMATION Final FYO7 Bradley Budget Report * x ‘IDEN JS As Alaska Industrial Development and Export Authorily FAX / ELECTRONIC TRANSFER TO: BRADLEY BUDGET SUBCOMMITTEE : From: Shellie Helton, Accountant Kate Lamal (GVEA) Power Supply kklamal@gvea.com — Phone: (907)269-3023 Be Michael Cunningham (CEA) = Mike_Cunningham@chugachelectric.com FAX: (907)269-3044 Rick Miller (ML&P) MillerRE@ci.anchorage.ak.us Charlie O'Hare (HEA) COHare@HomerElectric.com Date: August 21, 2007 Rick Eckert (HEA) reckert@HomerElectric.com Henri Dale (GVEA) hfdale@gvea.com Pages: (6) six re: FY07 Bradley Lake O&M Status Report cc: Bryan Carey, AEA Linda MacMillan, AEA Attached is the Final FY07 Bradley O&M Expenditure Status Report for the period of 07/01/06 thru 06/30/07. FY07 Revenues currently exceed FY07 Expenditures by $295,943. This amount is due to . the following items: $161,827 underestimated interest income 5,656 unbudgeted surplus sales 367,181 overestimated O&M costs 34,862 overestimated R&C repayment (327,185) R&C interest retained in R&C Fund 27,700 overestimated culvert repairs 34,457 overestimated Helicopter Pad repairs (8,555) underestimated arbitrage costs $295,943 Notice: _ This facsimile may contain confidential information that is being transmitted to and is intended only for the use of the recipient named above, Reading, disclosure, discussion, dissemination, distribution, or copying of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited. If you have received this facsimile in error, please immediately destroy it and notify us by telephone, (907) 269-3000. H.Aall\shelton\PJ22020 1-Bradley\O&M\F Y 07\FAXbradleyOM.doc 813 West Northern Lights Boulevard * Anchorage, Alaska 99503-2495 www.aidea.org * 907/269-3000 * FAX 907/269-3044 * Toll Free (Alaska Only) 888/300-8534 * www.akenergyauthority.org ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT FY 2006 FY2007 FY 2007 ACTUALS AMENDED ACTUALS ——FINAL__—__BUDGET__AS OF 06-30-07, REVENUES, EXPENSES & CHANGES IN SURPLUS REVENUES UTILITY CONTRIBUTIONS 14,448,825 15,847,818 15,847,816 INTEREST INCOME 1,896,353 4,713,710 1,875,537 SALE OF SURPLUS - - 5,656 16,345,178 17,561,528 17,729,009 EXPENSES OPERATIONS 3,212,202 3,280,343 2,913,160 R&C REPAYMENTS 412,419 1,482,234 1,447,372 (a) R&C INTEREST APPLIED AS REPMT 202,517 327,185 PURCHASE OF VEHICLE - CULVERT REPAIRS 50,000 22,300 HELICOPTER PAD REPAIRS 200,000 165,543 TRANSFER TO OPERATING RESERVE 25,000 25,002 DEBT SERVICE (net of Capital Reserve Reduction) 12,276,325 12,273,950 12,273,950 TRANSFER TO ARBITRAGE 241,714 250,000 258,555 PRIOR YEAR SURPLUS (SHORTFALL) 704,804 17,049,979 17,561,527 17,433,067 CURRENT YEAR SURPLUS(DEFICIT) (704,801) 1 295,943 PRIOR YEAR SURPLUS (DEFICIT) 704,801 - BEGINNING SURPLUS (DEFICIT) 0 COMMITTED CY EXP & DEBT SVC ENDING SURPLUS (DEFICIT) (0) 1 295,943 BALANCE SHEET ASSETS REVENUE FUND 457 898 - 1,531,244 OPERATING FUND 534,188 821,997 DUE TO REV FUND (Ops Rsv interest in transit) - - PREPAID SCADA MAINT & D&O Insurance 20,525 17,929 RECEIVABLES - FY06 SHORTFALL 70,648 - 1,083,260 - 2,371,170 LIABILITIES & SURPLUS CURRENT LIABILITIES 670,840 - 627,856 DUE TO OP RESERVE - PREPAID REVENUE - - COMMITTED CY EXP & DEBT SVC - - - PAYABLE - FY07 R&C REPAYMENT 412,419 - 1,447,372 PAYABLE - FY07 SURPLUS : 295,943 1,083,260 - 2,371,170 (0) 7 (0) OTHER INFORMATION OPERATING RESERVE 661,402 686,400 MONTHLY CONTRIBUTIONS 1,204,069 1,320,652 Note (a) The annual R&C repayment Is processed at year end after all current year R&C expenditures have been processed. Total R&C Fund receivable at 06/30/07: $4,241,500 2007 Sum and Cash Bal 06-30-07final.xls - B-SUM Page 1 of 4 BRADLEY LAKE OPERATIONS & MAINTENANCE SCHEDULE B APPROVED AMENDED BUDGET ACTUALS OVER FY2007 YTD YTD (UNDER) BUDGET 06/30/07 06/30/07 BUDGET (b} SUMMARY (A) HEA Annual Operations & Maintenance 1,494,965.00 | 1,494,969.00| 1,223,457.52 (271,511.48) (B) CEA Dispatch and Substation/SVC Maintenance 130,000.00 130,000.00 85,117.55 (44,882.45) (C) Other O&M and Maintenance Projects 444,521.00 444,522.00 425,763.45 (18,758.55); (D) insurance Costs 605,356.60 605,356.60 622,669.85 17,313.25 (E) Regulatory Costs 331,000.00 331,000.00 326,454.19 (4,545.81) (H) Contingencies = = - - 3,005,842.60 | 3,005,847.60 | 2,683,462.56 (322,385.04) {F) Administrative Costs 274,500.00 274,500.00 229,697.50 (44,802.50) 3,280,342.60 | 3,280,347.60 | 2,913,160.06 (367,187.54) (G) Bond Refunding Costs - - - - 3,280,342.60 | 3,280,347.60 | 2,913,160.06 (367,187.54) FYO7BdgtStatusRptxis E1201 E1201 E1201 £1201 E1201 E1201 £1201 €1201 E1201 E1201 E1201 £1201 £1201 E1201 E1201 E1201 E1201 E1201 E1201 E1201 53700 $3900 54000 54100 54200 54200 54300 $4300 04270007 04270008 04270001 04270002 04270004 04270005 Page 2 of 4 24301 24301 24301 24301 24301 24303 24301 24301 24302 24312 24301 24301 24301 24301 24301 24301 24301 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 883 888 88s8s 8 3sss8s FERC 535 - Operation Supervision & Engineering (A) HEA O&M Contract (C) HEA On-Site Civil Project Manager (C) HEA Digitize & Control Project Drawings FERC 537 - Hydraulic Expenses (A) HEA O&M Contract FERC 538 - Electric Expenses (A) HEA O&M Contract (C) SOA BOILIER INSPECTION FERC 539 - Misc. Hydraulic Power Generation Exp (A) HEA O&M Contract (C) Replace Two Way Radios (C) HEA Circuits and Radio - To Bernice Lake (C) CEA Circuits -Bernice Lake to Anchorage FERC 540 - Rents {C) Bradley Lake FERC land use fees (5% increase bud: FERC 541 - Maint Supervision & Engineering (A) HEA O&M Contract FERC 542 - Maintenance of Structures {A) HEA O&M Contract (C) Other FERC 543 - Maint of Reservoirs, Dams & Waterways (A) HEA O&M Contract “ (C) Bradley Lake Dam Repair (C) Nuka Diversion (C) Middle Fork Diversion {C) Kachemak Creek Gauging Station ({C) Other O&M APPROVED AMENDED BUDGET ACTUALS OVER FY2007 YTD YTD (UNDER) BUDGET 06/30/07 06/30/07 BUDGET (b) 125,569.00 125,569.00 154,484.98 28,915.98 125,569.00 ERT 154,484.98 28,915.98 49,200.00 49,201.00 71,710.78 22,509.78 49,200.00 49,201.00 71,710.78 22,509.78 222,000.00 222,000.00 178,085.09 (43,914.91) 222,000.00 222,000.00 178,085.09 (43,914.91) 331,625.00 331,625.00 274,885.36 (56,739.64) 3,000.00 3,000.00 (3,000.00) 90,000.00 90,000.00 90,000.00 - 28,740.00 28,740.00 28,746.00 6.00 453,365.00 453,365.00 393,631.36 (59,733.64) 74,000.00 74,001.00 62,623.40 (11,377.60) 74,000.00 74,001.00 62,623.40 (11,377.60) 82,451.00 82,452.00 43,476.75 (38,975.25) 82,451.00 82,452.00 43,476.75 (38,975.25) 90,400.00 90,400.00 96,272.67 5,872.67 90,400.00 90,400.00 96,272.67 5,872.67 10,440.00 10,441.00 4,906.62 (5,534.38) 10,440.00 10,441.00 4,906.62 (5,534.38) ——— FYO7BdgtStatusRptxis £1201 E1201 E1201 E1201 £1201 £1201 £1201 £1201 E1201 E1204 E1201 £1201 E1201 E1201 E1201 1201 E1201 E1201 55601 $5604 57100 04270012 Page 3 of 4 24301 24301 24301 24312 24312 24301 oco00 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 220201 888888 88s 88 88 88 FERC 544 - Maintenance of Electric Plant (A) HEA O&M Contract (A) HEA O&M Contract-Runner Repairs FERC 545 - Maintenance of Misc. Hydraulic Plant (A) HEA O&M Contract ({C) Penstock Drain Clean-out FERC 556 - System Control & Load Dispatching (A) HEA O&M Contract (C) NOAA Weather Service (C) SCS Snow Measurement (C) UAA Seismic monitoring and reporting (C) USGS Streamguaging (C) State of Alaska Permits FERC 562 - Station Expenses (B) CEA SVC/Substation Maintenance Contract {C) SVC Condition AssessmentStaff Training FERC 571 - Maintenance of Overhead Lines APPROVED AMENDED BUDGET ACTUALS OVER FY2007 YTD YTD (UNDER) BUDGET 06/30/07 06/30/07 BUDGET (b) 280,200.00 280,200.00 214,054.56 (66,145.44) 280,200.00 280,200.00 214,054.56 (66,145.44) — = = 213,000.00 213,000.00 96,557.91 (116,442.09), 213,000.00 213,000.00 96,557.91 | (116,442.09) 20,080.00 20,080.00 23,442.04 3,362.04 9,000.00 9,000.00 6,221.96 (2,778.04) 56,500.00 56,500.00 54,691.09 (1,808.91) 183,281.00 183,281.00 183,281.00 - : - 200,00 200.00 268,861.00 268,861.00 267,836.09 1,024.91 130,000.00 130,000.00 85,117.55 (44,882.45) 130,000.00 130,000.00 85,117.55 (44,882.45)| (A) HEA Overhead Line Maintenance 70,000.00 70,001.00 65,580.76 (4,420.24) 70,000.00 70,001.00 65,580.76 (4,420.24)| {H) Contingencies - | - - : FERC 920 - Administrative Expense (F) AEA Admin Fee 200,000.00 200,000.00 200,000.00 - AEA Administrative Costs 200,000.00 200,000.00 200,000.00 - PMC Costs (F) Bradley Lake Audit fees 8,500.00 8,500.00 8,298.00 (202.00) (F) Bradley Lake PMC Legal 40,000.00 40,000.00 (870.00) (40,670.00)|PY exp redux, FY07 billings disputed (F) Bradley Lake Arbitrage Report 6,000.00 6,000.00 4,475.00 (1,525.00) (F) Bradley Lake Trustee fees 20,000.00 20,000.00 17,594.50 (2,405.50) PMC Costs 74,500.00 74,500.00 29,697.50 (44,802.50) Bond Refunding Costs Reimburseable costs Refunding Costs - - FYO7BdgtStatusRptxis E1201 E1201 E1201 E1201 E1201 E1201 E1201 58401 58401 58801 58801 04270020 03270010 Page 4 of 4 24301 24312 220201 220201 220201 220201 220201 388 838388 TOTAL FERC 920 FERC 924 - Property Insurance {D) Insurance Premiums (D) Homer Electric Insurance (D) Risk Assessment FERC 928 - Regulatory Commission Expenses (E) FERC administrative fees (E) FERC 5 Year Inspection (E) Seismic Survey Spillway (E) Contractual Engineer - FERC license issues TOTAL BRADLEY LAKE BUDGET APPROVED AMENDED BUDGET ACTUALS OVER FY2007 YTD YTD (UNDER) BUDGET 06/30/07 06/30/07 BUDGET (b) 274,500.00 274,500.00 229,697.50 (44,802.50) 533,356.60 533,356.60 532,759.11 (597.49) 57,000.00 57,000.00 $5,010.74 (1,989.26) 15,000.00 15,000.00 34,900.00 19,900.00 605,356.60 605,356.60 622,669.85 17,313.25 126,000.00 126,000.00 196,746.92 70,746.92 | 90,000.00 90,000.00 88,858.51 (1,141.49) 115,000.00 115,000.00 40,848.76 (74,151.24) 331,000.00 331,000.00 326,454.19 (4,545.81) | | 3,280,342.60 [_3,280,347.60 | _2,913,160.06 (367,187.54) FYO7BdgtStatusRptxs : BLPMC 2007 - ATERWYNNEur September a ATTORNEY - CLIENT PRIVILEGED AND CONFIDENTIAL MEMORANDUM TO: Bill Stewart, Chairman — Bradley Lake Project Management Committée FROM: Jenny Trieu aa DATE: December 15, 2006 RE: Homer O&M We have reviewed contracts for the operation and maintenance of the Bradley Lake Hydroelectric Project (“Project”). This memorandum presents our analysis and provides recommendations as to possible changes to the Project operations and maintenance contractual arrangements. Background A. Effective December 8, 1987, the Alaska Power Authority (“APA”) entered into the Agreement for the Sale and Purchase of Electric Power (“PSA”) to sell power generated from the Project to the following utility purchasers: Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., the City of Seward d/b/a Seward Electric System, and Alaska Electric Generation & Transmission Cooperative, Inc. (with Homer Electric Association, Inc. and Matanuska Electric Association, Inc. as additional parties) (collectively, the “Purchasers”). B. Effective February 11, 1994, the successor to the APA, the Alaska Energy Authority (“AEA”), and Homer Electric Association, Inc. (“HEA”) entered in the Operation & Maintenance Agreement (O&M Agreement”). The O&M Agreement provides the terms under which HEA serves as the operator of the Project. Cc. Effective May 24, 1994, AEA entered into the Master Maintenance and Operating Agreement (“Master Agreement”) with the Bradley Project Management Committee (“PMC”). The PMC is made of a representative of each of the Purchasers and the AEA. The Master Agreement provides the terms under which the PMC works with AEA to establish a contract administration and budgeting procedure for contracting for Project maintenance and operation, other services, leases, etc. Recommendations In reviewing both the AEA-Homer O&M Agreement and the AEA-PMC Master Agreement, certain ambiguities exist in the allocation of risks and responsibilities between AEA, HEA, and PMC. It is important to resolve these ambiguities because the parties need to be clear as to their obligations with respect to the Project. They also need to be able to accurately insure or otherwise protect themselves from the risks they incur in their respective roles relating to the 305676/1/ILT/054459-0001 Project and because, if there were to be an issue with the Project relating to O&M, the parties should be clear as to who is responsible. This better ensures the efficient operation of the Project. The following are our recommendations as to how these ambiguities may be resolved in an updated O&M contract for the Project. He Clarify that PMC is responsible for contracting. Under the current contractual arrangement, it can be construed that both HEA and the PMC have contract management duties. This should be clarified such that primary contracting duties are allocated to the PMC. The key issue in considering who should review and approve Project contracts (e.g., contracts for services, procurement, etc.) is whether the party bearing most of the risk is taking prudent actions to protect itself, including legal review of arrangements that might affect such risks. Pursuant to the PSA, it is the Purchasers (operating collectively as the PMC) that bear the costs of repairs and improvements and, absent contract provisions shifting such responsibility, the Purchasers bear the risk of contract failures, cost overruns, costs of delays, etc. The O&M Agreement is between AEA and Homer; that agreement does not change the relationship between the Purchasers and the AEA, nor does it change the PMC’s financial responsibilities for Project costs. To the extent the PMC is comfortable that certain contracts pose insignificant risks to the Purchasers, it is appropriate to defer to Homer’s contract management role under the O&M Agreement. To the extent the PMC believes any contract creates potential significant impact on the Project or costs associated with the Project, then the PMC’s involvement in the contract review process is important given the PMC’s financial responsibility for costs that may result from contract performance or non-performance. They key is, however, that it should be the PMC’s right to decide whether a proposed contract should be approved by it directly or whether it should be deferred to HEA for approval. The current Master Agreement between AEA and the PMC supports this allocation of responsibility inasmuch as it provides that the AEA must obtain PMC approval of any work to be performed by a contactor (with some limited exceptions). In theory, review of such third party contracts could be performed by a number of attorneys, including attorneys for AEA, Homer, or the PMC; however, such review should be “on behalf” of the PMC. The issue that arises is that attorneys for Homer and the AEA do not normally perform work on behalf of the PMC. Only PMC utility counsel has the pre-existing attorney-client relationship with the PMC. In any event, the choice of who should review such contracts belongs to the PMC because it bears the risk associated with the Project. The PMC should expressly designate who is responsible for such contract review. If an issue arises involving Homer’s failure to perform under the O&M Agreement, that agreement between Homer and AEA recognizes the financial risks undertaken by the PMC. The O&M Agreement expressly names the PMC as a third party beneficiary. As a third party beneficiary, the PMC has the right to step into the shoes of the AEA and enforce the terms of the O&M Agreement. Such a right would not have been conferred upon the PMC by the parties to that agreement if the PMC’s role were merely incidental. 305676/1/JLT/054459-0001 For the reasons provided above, we conclude that the PMC has practical and contractual bases supporting its need to be involved in the review of Project repair and procurement contracts before the contracts are signed. 2. Clarify that HEA is responsible for making O&M-related recommendations to the PMC. The O&M Agreement provides that HEA is to make annual recommendations to the PMC for the operations and maintenance related work. This allocation of responsibility is consistent with the risks allocated to the respective parties. That is, HEA as the operator has the responsibility to make practical recommendations and reports to the PMC. The PMC, as the party responsible for the financial consequences of the Project, should have the right and duty to consider and decide whether to act upon the recommendations of the operator. 3 Clarify budgeting duties. As owner of the Project, the AEA has delegated primary responsibility to develop an annual budget for the Project to the PMC. The PMC is obligated to provide a draft budget to the AEA for approval. The current versions of the AEA-Homer O&M Agreement and the AEA- PMC Master Agreement are consistent with this, but the AEA~-Homer O&M Agreement should be changed such that the PMC’s budgeting responsibilities are provided in the correct contract. Currently, the PMC’s budgeting responsibilities are specifically provided in the O&M Agreement, which is only between AEA and Homer; this would be better placed in addendum to the Master Agreement. This proposed change better enables the parties to enforce their rights if the need were ever to arise. Moreover, the AEA-Homer O&M Agreement should be modified such that HEA’s requests for approval for emergency expenditures should be submitted directly to the PMC. 4. Clarify insurance-related obligations. The current versions of the AEA-HEA O&M Agreement and the AEA-PMC Master Agreement are unclear as to the parties’ obligations to carry Project-related insurance. The AEA-HEA O&M Agreement requires HEA and AEA to carry insurance to cover their respective “negligent, willful and grossly negligent acts....” Additionally, HEA is to carry “insurance satisfactory to [AEA] and the [PMC] covering injury to persons or property...as a result of errors, omissions, or operations” of HEA, and that this insurance for injury to persons or property is to be the “primary coverage” for AEA’s liability exposure for such claims. In terms of insuring against liability, AEA and the PMC are protected as additional insureds on HEA’s policies relating to the Project. This coverage may not be sufficient to satisfy AEA’s responsibilities with respect to insurance coverage under the Power Revenue Bond Resolution AEA executed effective September 7, 1989 (“Bond Resolution”) authorizing a bond issuance to finance the Project. Specifically, the Bond Resolution requires that AEA the Project at all times insured against such risks and in such amounts...as is customary in connection with the operations of the facilities of a type and size comparable to the Project...” (See Bond Resolution, Section 714.) Reliance on coverage as an additional insured party under HEA’s insurance appears to be inconsistent with AEA’s insurance requirement and does not satisfactorily delineate or protect against the PMC’s liability exposure. 305676/1/JLT/054459-0001 Moreover, where a claim is not covered under insurance that HEA is required to carry, both AEA and the PMC are exposed to liability that is not addressed by their positions as additional insured parties to HEA’s policies. For instance, as the party directly contracting with service providers, the PMC is not covered as an additional insured party. Status as an additional insured party to HEA’s insurance only protects AEA and the PMC for claims arising from acts or omissions of HEA. Liability stemming from acts or omissions of the PMC are not covered. We recommend that the Project contract documents be amended as follows: AEA carries property insurance (this includes determining the appropriate types of property insurance). Such policies should name the Purchasers and HEA as “additional insured parties” or “parties in interest.” Such policies should also include a waiver of subrogation clause that limits the ability of the property insurance carrier from seeking damages from HEA (as operator) and/or the Purchasers after the insurance company has been ordered to pay on a claim. This limitation is important because, without it, the Purchasers (being the ultimately responsible for Project costs) would have no benefit from the insurance (i.e., the Purchasers would pay for the insurance coverage and then pay the insurance company back for any claims it had to cover). HEA, as operator, should carry liability insurance (primary and excess coverages up to an amount to be determined in an updated insurance plan). If needed, HEA should carry marine and aviation insurance. The Purchasers should have the status of “named insureds” on these policies, which means that the Purchasers would have all the rights of the HEA. This “named insured” status is important because of the PMC’s exposure to claims based on its role in entering into Project-related contracts with third parties exposes the PMC to liability. Asa “named insured,” the PMC would be covered under HEA’s policies as though the contracts were executed by HEA. This allocation is reasonable because the costs attributed to such insurance are paid by the PMC indirectly. All parties’ policies relating to the Project should be maintained separate and apart from such parties’ other insurance policies. This prevents the application of aggregate coverage limitations from claims unrelated to the Project and does not unduly jeopardize the Project’s risk management program. Action Items 1. We recommend that the other parties give comments to the operations and maintenance related contracts. 2. We will review the comments and prepare draft changes to the relevant agreement(s). 305676/1/JLT/054459-0001 _ATERWYNNEur ATTORNEYS AT LAW Bradley Lake Utilities c/o Steve Haagenson Chugach Electric Association, Inc. BLPMC ‘ Suite 1800 September 27, 2007 222 S.W. Columbia TG Portland, OR 97201-6618 503-226-1191 July 31,'20683-226-0079 Invoice 1069183 053844-0000 5601 Electron Drive RLS Anchorage AK 99518 AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $4,855.50 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $4,855.50 Previous Outstanding Bill(s): Date Invoice # Amount 04/21/06 1066892 3323.50 05/24/06 1067841 1532.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 .00 1,532.00 3,323.50 .00 Current Bill Regarding Bradley-Related Activities 670.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $5,525.50 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account (including unapplied trust retainer) .00 BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities July 31, 2006 Page 2 Invoice 1069183 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 06/14/06 Meeting with Henri Dale regarding Operations & Maintenance contract JLT 80 and related issues. 06/15/06 Confer with BPMC Chair Haagenson on meeting agenda and RLS 40 preparation. 06/27/06 Review of O&M contract issues. RLS 1.00 Total Fees $ 670.00 TOTAL CURRENT CHARGES $ 670.00 ATERWYNNE LLP Federal ID 93-0394748 ATERWYNNEup ATTORNEYS AT LAW Bradley Lake Utilities c/o Bill Stewart Chugach Electric Association, Inc. 5601 Electron Drive Anchorage AK 99518 Suite 1800 222 S.W. Columbia Portland, OR 97201-6618 503-226-1191 Fax 503-226-0079 December 21, 2006 Invoice 1072775 053844-0000 RLS AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $ 670.00 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $ 670.00 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 .00 .00 .00 670.00 Current Bill Regarding Bradley-Related Activities 4,632.50 TOTAL AMOUNT NOW DUE (including current and previous charges) $5,302.50 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account 00 (including unapplied trust retainer) BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month. ATERWYNNE LLP Federal ID 93-0394748 Bradley Lake Utilities December 21, 2006 Page 2 Invoice 1072775 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 10/16/06 Meeting with Bill Stewart and Lee Thibert regarding representation JLT 2:10 matters. 10/27/06 Review bylaws provisions on meetings; discussion with Bill Stewart in JLT 30 response to his questions regarding meeting requirements. 11/08/06 Communicate with Bill Stewart regarding upcoming Bradley Lake board JLT 40 meeting. 11/12/06 Analyze modifications needed to the Bradley Lake O&M contracts. JLT 1.20 11/13/06 Continue to review Homer O&M agreement matters; discussion with JLT 3.10 Henri Dale regarding same; review materials sent by Henri Dale related to same. 11/15/06 Conference with Chairman regarding meeting preparation. JLT 40 11/26/06 Continue to draft updated Operations & Maintenance Agreement with JLT 2.20 Homer Electric. 11/27/06 Perform due diligence in preparation of firm response to request from SLL 2.50 client for opinion with respect to accountants’ audit of year-end financial statements; preparation of memorandum to all billing attorneys requesting response to client's request for opinion; preparation of firm response to client's request for opinion. 11/27/06 Review Bradley insurance materials for purposes of updating O&M JLT 5.50 contracts; continue to draft First Amended and Restated O&M Agreement with Homer. 11/28/06 Continue to review issues related to updated Homer O&M agreement; JLT 2.90 review insurance recommendations related to same. 11/29/06 Communicate with Bill Stewart and Henri Dale regarding changes to JLT 1.10 Homer O&M agreement and changes needed to Master Maintenance Agreement to resolve insurance-related issues. Total Fees $4,632.50 TOTAL CURRENT CHARGES ___ $4,632.50_ ATERWYNNE Lip Federal ID 93-0394748 ATERWYNNE wp ATTORNEYS AT LAW Bradley Lake Utilities c/o Bill Stewart Chugach Electric Association, Inc. 5601 Electron Drive Anchorage AK 99518 Suite 1800 222 S.W. Columbia Portland, OR 97201-6618 503-226-1191 Fax 503-226-0079 January 26, 2007 Invoice 1073458 053844-0000 RLS AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $5,302.50 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $5,302.50 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 4,632.50 .00 .00 670.00 Current Bill Regarding Bradley-Related Activities 3,585.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $8,887.50 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account .00 (including unapplied trust retainer) BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER. This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities January 26, 2007 Page 2 Invoice 1073458 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 12/04/06 Communicate with Henri Dale regarding proposed First Amended and JLT 1.70 Restated O&M Agreement with Homer. 12/04/06 Review response to audit letter; edit same. JLT .60 12/05/06 Review BPMC audit letter issues. RLS 50 12/05/06 Prepare first draft of First Amended and Restated O&M Agreement with JLT 80 Homer for Bill Stewart's review. 12/06/06 Communicate with Bill Stewart regarding Bradley O&M issues. JLT -30 12/13/06 Prepare PowerPoint presentation providing introduction to Bradley Lake JLT 3.20 PMC issues as requested by Bill Stewart; review insurance issues related to Homer O&M agreement in preparation for board meeting; discussion with Bill Stewart regarding representation of utilities. 12/15/06 Prepare briefing on PSA for board members. RLS 1.00 12/15/06 Prepare for PowerPoint presentation describing Bradley Lake PMC per = JLT 6.50 request of Bill Stewart; prepare for discussion on Homer O&M agreement issues; meeting with Bill Stewart prior to board meeting; participate in Bradley Lake PMC board meeting; participate in PMC meeting. 12/27/06 Revise representation letter per request of members at December 15 JLT 50 meeting; communicate with Bill Stewart regarding same. Total Fees $3,585.00 TOTAL CURRENT CHARGES $3,585.00 ATERWYNNE LLP Federal ID 93-0394748 Suite 1800 222 S.W. Columbia ATE RWYNNE LLP Portland, OR 97201-6618 ATTORNEYS AT LAW 503-226-1191 Fax 503-226-0079 Bradley Lake Utilities February 22, 2007 c/o Bill Stewart Invoice 1074315 Chugach Electric Association, Inc. 053844-0000 5601 Electron Drive RLS Anchorage AK 99518 AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $8,887.50 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $8,887.50 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days 3,585.00 .00 4,632.50 .00 670.00 Current Bill Regarding Bradley-Related Activities 192.68 TOTAL AMOUNT NOW DUE (including current and previous charges) $9,080.18 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account 00 (including unapplied trust retainer) BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities February 22, 2007 Page 2 Invoice 1074315 053844-0000 Legal Services Regarding Bradley-Related Activities Travel 174.51 Meals 18.17 Total Costs $ 192.68 TOTAL CURRENT CHARGES $ 192.68 ATERWYNNE LLP Federal ID 93-0394748 ATERWYNNEup ATTORNEYS AT LAW Bradley Lake Utilities c/o Bill Stewart Chugach Electric Association, Inc. 5601 Electron Drive Anchorage AK 99518 Suite 1800 222 S.W. Columbia Portland, OR 97201-6618 503-226-1191 Fax 503-226-0079 March 26, 2007 Invoice 1075017 053844-0000 RLS AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $9,080.18 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $9,080.18 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 02/22/07 1074315 192.68 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 3,777.68 .00 4,632.50 670.00 Current Bill Regarding Bradley-Related Activities 3,867.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $12,947.18 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account (including unapplied trust retainer) .00 BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month. ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities March 26, 2007 Page 2 Invoice 1075017 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 02/08/07 Review proposed Homer O&M agreement amendment; discussion with JLT 1.10 Henri Dale regarding same. 02/12/07 Meeting with Bill Stewart to discuss Homer O&M Agreement and other JLT 1.80 matters. 02/14/07 Review and revise Homer O&M Agreement per discussion with Bill JLT 4.30 Stewart; review insurance issues related to same. 02/15/07 Review budget per Bill Stewart; discussion with Henri Dale regarding JLT 1.10 Homer O&M Agreement. 02/20/07 Discussions with Henri Dale and Bill Stewart regarding Homer O&M JLT 1.60 Agreement and other matters to prepare for upcoming Bradley Lake PMC board meeting. 02/22/07 Research Bradley O&M agreements, amendments and proposed MMD 1.30 amendment; provide briefing on same. 02/23/07 Prepare for and participate in board meeting; discussion with Bill JLT 3.50 Stewart, Rick Baldwin, and Bryan Carey regarding Homer O&M Agreement. Total Fees $3,867.00 TOTAL CURRENT CHARGES $3,867.00 ATERWYNNE Lip Federal ID 93-0394748 ATERWYNNE ue ATTORNEYS AT LAW Bradley Lake Utilities c/o Bill Stewart Chugach Electric Association, Inc. 5601 Electron Drive Anchorage AK 99518 Suite 1800 222 S.W. Columbia Portland, OR 97201-6618 503-226-1191 Fax 503-226-0079 May 23, 2007 Invoice 1076483 053844-0000 RLS AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $12,947.18 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $12,947.18 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 02/22/07 1074315 192.68 03/26/07 1075017 3867.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 3,867.00 192.68 3,585.00 5,302.50 Current Bill Regarding Bradley-Related Activities 1,865.68 TOTAL AMOUNT NOW DUE (including current and previous charges) $14,812.86 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account (including unapplied trust retainer) .00 BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE LIP Federal ID 93-0394748 Bradley Lake Utilities May 23, 2007 Page 2 Invoice 1076483 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 03/02/07 Review contractual issues relating to performance of required project RLS 2.20 work. 04/04/07 Communicate with AEA regarding status of Homer O&M contract JLT .20 preparation. 04/12/07 Discussion with Bill Stewart regarding PMC cooperation matters. JLT .30 04/18/07 Discussions with Bill Stewart regarding PMC representation; JLT 90 discussions and emails with Bill Stewart regarding anonymous letter complaining about HEA O&M services. 04/24/07 Discussion with Bill Stewart regarding Homer O&M contract insurance JLT .80 issues; discussion with Homer attorney Rick Baldwin regarding same. 04/25/07 Communication with Bill Stewart regarding Homer O&M insurance JLT .20 issues. Total Fees $1,600.00 Travel 265.68 Total Costs $ 265.68 TOTAL CURRENT CHARGES $1,865.68 ATERWYNNE Lip Federal ID 93-0394748 ATERWYNNE ue, ATTORNEYS AT LAW Bradley Lake Utilities c/o Bill Stewart Chugach Electric Association, Inc. 5601 Electron Drive Anchorage AK 99518 Suite 1800 222 S.W. Columbia Portland, OR 97201-6618 503-226-1191 Fax 503-226-0079 June 19, 2007 Invoice 1076933 053844-0000 ILE AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $14,812.86 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $14,812.86 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 02/22/07 1074315 192.68 03/26/07 1075017 3867.00 05/23/07 1076483 1865.68 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days 1,865.68 .00 3,867.00 192.68 8,887.50 Current Bill Regarding Bradley-Related Activities 630.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $15,442.86 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account (including unapplied trust retainer) .00 BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER. This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities June 19, 2007 Page 2 Invoice 1076933 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 04/20/07 Research Bradley bond covenants related to safe operation of project in © MMD 4.50 response to anonymous letter expressing concerns regarding O&M of project; provide briefing on same. Total Fees $ 630.00 TOTAL CURRENT CHARGES $ 630.00 ATERWYNNE Lip Federal ID 93-0394748 Suite 1800 222 S.W. Columbia ATERWYNNEur Portland, OR 97201-6618 ATTORNEYS AT LAW 503-226-1191 Fax 503-226-0079 Bradley Lake Utilities July 19, 2007 c/o Bill Stewart Invoice 1077757 Chugach Electric Association, Inc. 053844-0000 5601 Electron Drive JEL Anchorage AK 99518 AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $15,442.86 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $15,442.86 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 02/22/07 1074315 192.68 03/26/07 1075017 3867.00 05/23/07 1076483 1865.68 06/19/07 1076933 630.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days 630.00 1,865.68 .00 3,867.00 9,080.18 Current Bill Regarding Bradley-Related Activities 210.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $15,652.86 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account .00 (including unapplied trust retainer) BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities July 19, 2007 Page 2 Invoice 1077757 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr = Hours 06/21/07 Communications with Bill Stewart and Mike Cunningham to prepare for JLT .30 upcoming board meeting regarding budget reduction; review materials. 06/26/07 Teleconference to approve budget reduction and refund to utilities. JLT 40 Total Fees $210.00 TOTAL CURRENT CHARGES $ 210.00 ATERWYNNE LLP Federal ID 93-0394748 Suite 1800 222 S.W. Columbia ATERWYNNE LLP Portland, OR 97201-6618 ATTORNEYS AT LAW 503-226-1191 Fax 503-226-0079 Bradley Lake Utilities September 17, 2007 c/o Bill Stewart Invoice 1078963 Chugach Electric Association, Inc. 053844-0000 5601 Electron Drive KHG Anchorage AK 99518 AMOUNT ENCLOSED $ Please detach this stub and return with your remittance Amount Due From Previous Statement(s) $15,652.86 Payments and Credits Since Last Statement $ .00 Amount Outstanding From Previous Statement(s) $15,652.86 Previous Outstanding Bill(s): Date Invoice # Amount 07/31/06 1069183 670.00 12/21/06 1072775 4632.50 01/26/07 1073458 3585.00 02/22/07 1074315 192.68 03/26/07 1075017 3867.00 05/23/07 1076483 1865.68 06/19/07 1076933 630.00 07/19/07 1077757 210.00 0-30 days 31-60 days 61-90 days 91-120 days Over 121 days .00 210.00 630.00 1,865.68 12,947.18 Current Bill Regarding Bradley-Related Activities 63.00 TOTAL AMOUNT NOW DUE (including current and previous charges) $15,715.86 ACCOUNT DETAIL - INFORMATION ONLY Balance in Trust Account 00 (including unapplied trust retainer) BALANCE DUE UPON RECEIPT ACCOUNTS NOT PAID WHEN DUE WILL ACCRUE A SERVICE CHARGE AT THE RATE AGREED BY THE CLIENT OR NINE PERCENT PER ANNUM, WHICHEVER IS GREATER This statement may not include expense items such as telephone, photocopies, filing fees, etc., which occur later in the month ATERWYNNE Lip Federal ID 93-0394748 Bradley Lake Utilities September 17, 2007 Page 2 Invoice 1078963 053844-0000 Legal Services Regarding Bradley-Related Activities Date Description Tkpr Hours 08/28/07 Confer regarding HEA’s memorandum regarding use of employee- KHG .20 owned fixed-wing aircraft for transferring Homer employees and outside consultants to Bradley Lake Dam; telephone conference with Henri Dale regarding Bradley Lake issues. Total Fees $ 63.00 TOTAL CURRENT CHARGES $ 63.00 ATERWYNNE Lip Federal ID 93-0394748 Page 1 of 1 BLPMC are September 27, 2007 From: Bill Stewart 7.E. Sent: Wednesday, April 18, 2007 9:53 AM To: ‘Ron Miller’; Brian Bjorkquist; ‘Bryan Carey’ Ce: Janorschke, Brad Subject: Bradley Lake Letter Attachments: BL Maintenance.pdf | received that attached letter this morning. Please keep me let me know what AEA and HEA think should be done in response. Bill Stewart Chief Executive Officer Chugach Electric Association (907) 762-4701 bill_stewart@chugachelectric.com 4/18/2007 Bill Stewart Chugach Electric 3601 Electron Dr. Anchorage AK. 99518 Dear Sir, I am writing this letter in regards to the continued operation and maintenance of the Bradley Lake Project by Homer Electric Association. It is with great concern, yet apprehension for fear of reprisal, but feel compelled to bring these safety and reliability issues to your attention. There are deficiencies that have been reported to HEA management on numerous occasions that are not being addressed in a timely manner or not at all. It is believed that these issues could possibly be detrimental to the safety of the plant and equipment or even have catastrophic consequences. I will summarize in the next few paragraphs these unsafe conditions. The main fire suppression water comes off the penstock at approximately 500 psi, and is then reduced at a Pressure Reducing Valve to 160 psi. This main reducing valve has been bad and in need of repair for over 1 4% years. Because the PRV doesn’t work it over pressurizes the system on the downstream side until the main Fire Safety Relief Valve has lifted thereby leaking water by to the Clearwater Sump. The main Fire Safety Relief Valve is set to open at 180 psi, thus fire system pressure is now 180 psi instead of 160 psi. The consequences of having the main Fire Safety Relief Valve lifted are that it is unknown that during a real fire emergency if system pressure would be maintained in order to suppress a fire. It is most likely that the seats on the Fire Safety Relief Valve have eroded to the point the valve will not seal and now also needs to be replaced. These problems have been brought to HEA managements attention on numerous occasions by numerous people, along with price quotes to repair or replace said valve, and engineering has been asked for to resolve this continuing condition. No action has been taken yet nor direction given to repair or replace. Another safety issue has to do with some of the recent work done during the Bradley governor replacement. Prior to any work being done it was brought to the attention of HEA management on numerous occasions, that the new piping for the Jet Brake was carbon steel and not stainless steel as the original design specs called for. The welds on this new piping were also found to be sub-standard, and not full penetration welds as spelled out in the original design criteria per ANSI B 31.1 for Pressure Vessel Piping. This is of great concern in that this Jet Brake System is designed to stop the turbine in case of an emergency shutdown or over speed condition. Failure of this piping or welds could be catastrophic to the integrity of the turbine or generator, ultimately affecting the ability to produce power. Because this is considered pressure vessel piping these welds may also affect the insurability of the plant. There were also modifications done to the hydraulic piping for the new governor, none of the new piping was pressure tested or flushed which is also specified in the original design. There is also the question of whether the welders making the welds to the new piping were qualified to do so. HEA management was made aware of these concerns and chose to do nothing, even though the original specs were provided to them. In the past HEA has been a good steward of the project, when there was a safety concern that may affect the reliability of the plant no expense was spared to remedy the problem, with the current management in place we seem to be more interested in taking short-cuts. With the Bradley O & M contract coming due I guess you’ll have to ask yourself whether you think taking short-cuts with such an investment is in the best interest of your utility. Because of the sensitivity of this letter 1 wish to remain anonymous. Best Regards Homer Electric Association, Inc. 3977 Lake Street 280 Airport Way Homer, Alaska 99603-7680 Kenai, Alaska 99611-5280 Phone (907) 235-8551 Phone (907) 283-5831 FAX (907) 235-3313 FAX (907) 283-7122 VALLE. ; ad April 20, 2007 Kor Barr, Ron Miller Executive Director AIDEA 813 W. Northern Lights Blvd. Anchorage, AK 99503-6690 Dear Ron: We would like to take this opportunity to address the concerns raised by the anonymous letter received by you concerning the quality of the operation and maintenance of the Bradley Lake Hydroelectric Plant. We are unsure of the source of these concerns but are compelled to address them regardless as we take the responsibility of stewardship of this facility very seriously. The fire system problem mentioned was previously brought to management’s attention. Upon investigation, we determined that the system is still functional and that no immediate safety hazard exists. This system was modified from the original plant specification during construction. The modifications that were made have long term reliability problems, but the system is functional at this time. To simply replace the substituted components will not resolve the problem and would require additional expensive repairs in the near future. At a cost of $25,000 or more for a temporary fix, it is appropriate to seek a solution that resolves the issue long term, not just simply rebuild an inappropriate system. Issues at Bradley are prioritized and this problem is simply not at the level the anonymous letter makes it out to be. This problem has been on the Bradley action list and is prioritized to insure it will be corrected in a timely manner. The material changes in the governor piping system were addressed by HEA during the course of the project. The carbon steel piping that replaced the stainless steel piping is coated with a coal- tar epoxy coating to prevent corrosion and now matches the material specification of most other materials within the runner chamber. The piping welds mentioned in the letter were also addressed and found to be more than adequate and within all code requirements. It should be noted that these welds are outside any pressure boundary and are at the end of open pipes which are the outlets for the nozzles of the jet brakes. Attached is a picture of this piping and splash plate for your convenience. The hydraulic piping replaced during the governor project was, in fact, pressure tested by means of an in-service leak check which is standard practice for this type of work and well within code requirements. A Touchstone Energy® Cooperative Kh Letter to Ron Miller April 20, 2007 Page 2 The welders working on the project were hired by the contractor for the project and came from the local union hall. These personnel were screened by the contractor and replaced if/when found to be unqualified. A world renowned engineering company with expertise in governors and high pressure piping was hired to engineer and install the new materials and equipment for the retrofit governor system. Appropriate specifications were issued by HEA for this project. These specifications were followed by the manufacturer and HEA had appropriate inspection and engineering oversight to insure that the system was properly installed. Vague charges as to applicability and adequacy of design brought forward by an anonymous letter must be placed in their proper perspective. We do not have any reason to suspect substandard work or materials are involved in the retrofit in any way. After having addressed these issues, if the BPMC would wish to initiate an independent engineering review, HEA would willingly participate and invite such a review. However, we feel that such a review is not warranted by the unsubstantiated charges in this letter. The plant is always open for your independent inspection at any time. We invite you, and/or your technical staff, to visit at some future date so that you may make any inspections or inquiries that you might feel necessary. If, after reading this response, you have additional questions or concerns please feel free to call me at any time to discuss them at length. HOMER ELECTRIC ASSOCIATION, INC. LRG Bradley P. Janorschke General Manager Attachment c: Bradley Lake Project Management Committee Steve Haagenson, GVEA Bryan Carey, AEA Bill Stewart, CEA Tim Barnun, City of Seward Wayne Carmony, MEA Jim Posey, ML&P Agenda Item: ite MOTION: Move to approve the following nominated individuals as Officers to the BPMC. CHAIRMAN Move: Second: VICE CHAIRMAN Move: Second: SECRETARY/TREASURER This position of Secretary/Treasurer remains with AEA. Chairman: Vice Chairman: Secretary/Treasurer: Bryan Carey DATE: _ 2f, 4007 BRADLEY PMC VOTING Agenda Item No. Tema. Rll Gil YES NO ABS vEs ass YES NO ABS CITY OF SEWARD 01% MATANUSKA ELEC ASSOC 14% aaa (Er a CHUGACH ELEC ASSOC 30% HOMER ELEC ASSOC 12% [ Ce GOLDEN VAL ELEC ASSOC 17% Oo Py MUNI LIGHT & POWER 26% ao Er fo] ALASKA ENERGY AUTHORITY eon oye] A=4+ OVER 51% B= AEA CONCUR With A 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) Selection 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. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 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 DATE: BRADLEY PMC VOTING Agenda Item No. YES NO ABS YES NO ABS YES NO ABS CITY OF SEWARD 01% MATANUSKA ELEC ASSOC 14% [ CHUGACH ELEC ASSOC 30% | | HOMER ELEC ASSOC 12% : GOLDEN VAL ELEC ASSOC 17% | MUNI LIGHT & POWER 26% ALASKA ENERGY AUTHORITY | Cy A=4+ OVER 51% B= AEA CONCUR With A C = UNANIMOUS D = MAJORITY VOTING METHOD A: 3) Establishment of FY estimated annual 11) Determination of rules, procedures and payment obligation and schedule of each accounts necessary to manage project when Requiring four yeas with 51% of utilities, with no purchaser. no bonds outstanding. AEA vote: 4) Determination of annual project costs after 12) Evaluation and approval of optional project 1) Procedures for scheduling, production and each FY. work and compensation for such work. dispatch of project power. 5) Evaluation of necessity for and scheduling of 13) Application of insurance claims proceeds not 2) Establishment of procedures for use of each required project work. governed by bond resolution. purchaser's water allocation (AEA assent required for license requirements). 6) Determination of appropriate amount of 14) Approval of procedures and any individual insurance. utility agreements relating to electric power 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) reserves for project. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve 15) Approval of consultants. fund above that required by bond resolution. VOTING METHOD C: 8) Selection among alternate methods that involve AEA for funding required project Unanimous vote by all (including AEA) work. VOTING METHOD D: 9) Adoption or amendment of procedural committee rules (except dispute resolution). Majority vote (including AEA) 10) Adoption of project maintenance schedules. Election of Officers MMe Copy TELECONFERENCE INSTRUCTIONS Thursday, September 27, 2007 — 10:00 a.m. To join the meeting, please do the following: Ke Dial 1-800-315-6338 f a Enter 813#