Loading...
HomeMy WebLinkAboutBPMC Meeting February 27, 1990 2Alaska Energy Authority CORD COPY —PRO Bab fmiv 2/2 MEMORANDUM TO: Bradley Lake Project Management Committee FROM: Brent N. Petrie peer lternate Secretary, PMC DATE: February 2, 1990 SUBJECT: February 27, 1990 Meeting Enclosed for your review is a copy of the draft agenda for the February 27, 1990 meeting of the PMC. Please provide any corrections or additions to Chairman Kelly. Also enclosed for your review is a copy of the draft meeting minutes of the January 18, 1990 meeting, which will be considered at the next meeting. The attached list of PMC motions has been updated to include actions through the January 18, 1990 meeting. The executed November 30, 1989 meeting minutes are enclosed for your record. Enclosures: as stated Revised: February 1, 1990 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE February 27,1990 AGENDA Chugach Electric Association Anchorage, Alaska 1. CALLTO ORDER = 9:30 a.m. Kelly 2. ROLL CALL 3. PUBLIC COMMENT 4. MODIFICATION OF AGENDA 5. APPROVAL OF MINUTES January 18, 1990 6. BOND FINANCE TEAM REPORT Petrie 7. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Yerkes 8. INSURANCE SUBCOMMITTEE REPORT Saxton 9. BUDGET SUBCOMMITTEE REPORT Saxton Review of Draft FY O&M "Dry-Run" Budget Petrie 10. OPERATING AND DISPATCH AGREEMENT SUBCOMMITTEE REPORT Shira 11. REVIEW OF PROJECT STATUS Eberle 12. OLD BUSINESS Discussion of Test Period Power Sales Agreement Petrie 13. NEW BUSINESS a. Fritz Creek Agreement b. Schedule Next Meeting Date, Location, Time 14. COMMUNICATIONS 15. ADJOURNMENT Bradley PMC (BRADAPRS6) \ Page 1 of 9 January 18, 1990 (revised 2-1-90) BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE January 18, 1990 1. CALL TO ORDER Due to the flight delay of Chairman Kelly, Vice-Chairman Highers served as Chairman and called the Bradley Lake Project Management Committee to order at 9:10 a.m. in the Training Room of Chugach Electric Association to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Designated Representative Designated Alternate Representing Robert E. LeResche Brent Petrie Alaska Energy Authority Ken Ritchey Myles Yerkes Matanuska Electric Association, Inc. David L. Highers Tom Lovas Chugach Electric Association, Inc. Michael P. Kelly* Golden Valley Electric Association, Inc. Thomas R. Stahr John Cooley Municipal Light and Power Kent Wick Homer Electric Association Everett Paul Diener City of Seward *Joined meeting at 9:40 a.m. Representatives Absent Alternates Absent = Representing Fred Arvidson City of Seward Bob Hansen Golden Valley Electric Association, Inc. Sam Mathews Homer Electric Association Others Present : _Representing Ron Saxton Golden Valley Electric Association, Inc Dave Eberle Alaska Energy Authority Julie Becker Alaska Energy Authority Donald L. Shira Alaska Energy Authority Dan Bloom Chugach Electric Association Lance Duncan EBA Engineering (public) Dave Burlingame* Chugach Electric Association Norm Bishop* Stone and Webster Engineering Corp. John Yale* Stone and Webster Engineering Corp. *Joined meeting for agenda item 12., Report on Surge Tank Analysis. Bradley PMC (BRADAPR6) Page 2 of 9 January 18, 1990 (revised 2-1-90) 3. PUBLIC COMMENT There being no public comment, Chairman Highers proceeded to agenda item 4. 4. MODIFICATION OF AGENDA State Legislation regarding the Power Development Revolving Loan Fund (PDRLF) was added under New Business as item 13.c. Consideration of CEA Microwave Link as a Bradley Lake Project Cost was added as item 13.d. 5. APPROVAL OF MINUTES November 30, 1989 6. BOND FINANCE TEAM REPORT Mr. Petrie reported that Bond Finance Team activity will increase during the next month as the Team prepares for the final bond issuance. The intent is to have preliminary work on the bond finance completed by the end of June, 1990, with issuance dependent on market conditions prior to November 1, 1990. 7. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Yerkes reported that the TCS recommends acceptance of the Load Acceptance Analysis report prepared by Stone and Webster Engineering Corporation (SWEC). (reference Committee action under agenda item 12., Report on Surge Tank Analysis). Power Technologies, Inc. (PTI) is in the process of summarizing the results of the Kenai generator performance testing in a final report. AEA is negotiating with the SCADA supplier for Decknet software. This software will allow direct communication with the various utilities at an estimated cost of $116,000 with Landis and Gyr. The TCS intends to recommend action on this item at their next meeting. The TCS recommended that the cost of the microwave communications link direct to CEA headquarters be a Bradley Lake Project cost, since this item is necessary for dispatch. Mr. Yerkes said that the cost of this item would not exceed $50,000. (reference Committee action under agenda item 13.d. Consideration on CEA Microwave Link as a Bradley Lake Project Cost). Mr. Yerkes reported that the TCS recommended that the AEA negotiate contractual modifications with Fuji to provide for a third mode of operation for the Woodward governor control system. This system would be a “water wasting" mode which would be activated to provide quicker, more stable and secure operation in the event that the system senses a disturbance.. (reference Committee action under agenda item 12., Report on Surge Tank Analysis). The TCS received a schedule for stability additions (i.e., Static Var System, Series Capacitors), which provides an optimistic completion date of mid-1992, subject to completion of the stability analysis by PTI, which has now been delayed until all generator testing has been completed. Bradley PMC (BRADAPRS) } Page 3 of 9 January 18, 1990 (revised 2-1-90) Mr. Yerkes reported that comments by the utilities are due to the AEA by January 25, 1990 regarding technical specifications for the breaking resistors. The AEA Board, at their January 17, 1990 meeting, approved issuance of a Request for Proposals (RFP) for testing of the major generators in the Railbelt (i.e., Fairbanks and Anchorage utilities, since Kenai machines have been tested). The Intertie Operating Committee has agreed to provide 1/2 of the funding (Not to Exceed 1/2 of $175,000) for this scope of work, with the other half as a Bradley Lake Project cost. Mr. Yerkes said that the TCS recommends that the PTI studies, which will utilize this testing information, be delayed until this study is completed. (reference Committee action under agenda item 13.b., Funds for Generator Performance Testing). Mr. Yerkes said that the utility TCS members believe that project testing prior to commercial operation should actually be comprised of the following two test periods: 1) _ specific equipment component testing, and 2) performance testing of the project as a whole after it is brought on-line ("operational testing"). Mr. Yerkes stated that the utilities prefer a 90 day operational testing period. Copies of the January 17, 1990 letter from N.A. Bishop, SWEC, to D.R. Eberle, AEA, were distributed. This letter stated that SWEC believes that the results of the recent studies analyzing the existing Kenai to Anchorage transmission lines suggest that a second transmission line from the Soldotna substation to the University substation may be justified in terms of improved reliability and increased power export capabilities from Kenai to Anchorage. 8. INSURANCE SUBCOMMITTEE REPORT Mr. Petrie reported that SWEC had been authorized two weeks ago to proceed with a risk assessment evaluation for the Bradley Lake Project. Completion of this scope of work is anticipated to take an additional ten weeks. Copies of the scope of work were made available to the Committee (reference Risk Assessment Evaluation Bradley Lake Hydroelectric Project, revised: January 11, 1990). The risk assessment evaluation will estimate the value of the losses that could be reasonably expected over the 30 year life of the bonds issued for the project. Mr. Kelly joined the meeting at this time and proceeded as Chairman. 9. BUDGET AND FINANCE SUBCOMMITTEE REPORT Unreimbursed Bradley Lake Costs Mr. Saxton referenced the one page item which had previously been telecopied to the members; Unreimbursed Bradley Lake Costs. Mr. Saxton explained that the list was not an exclusive list of items to ultimately be reimbursed. The intent of this list was to provide for monthly submittals with back-up by the utilities to the AEA (with a copy provided to Mr. Saxton) of on-going costs. At this time, the costs would primarily be 1990 TCS expenses (A5) and costs for conducting Committee meetings and general business (B2). It was noted that the members would receive a formal transmittal of this document with a letter of instruction and that the costs may not necessarily be reimbursed after submittal. Bradley Budget Proposal Timeline for Annual Budget Process Mr. Saxton said that there were two key dates set by the Bond Resolution in this timeline: Bradley PMC (BRADAPR6) Page 4 of 9 January 18, 1990 (revised 2-1-90) 1) April 2, the date by which the annual budget must be adopted by either the BPMC or the AEA (Mr. Saxton noted that the Committee loses the right to control the budget for that year if the budget is not adopted by April 1), and 2) July 1, the first day of a fiscal year and the date the budget takes effect. Mr. Saxton said that ten months after the fiscal year budget takes effect (May 1), the Committee will compare the budget to actual costs to determine if additional payment (or refund) is due. The Budget and Finance Subcommittee suggested that all budget input be submitted to the AEA by December 1 of a given year and that the AEA subsequently submit a complete proposed budget to either the BPMC or applicable subcommittee by January 15 (it was noted that these dates are for development of a typical fiscal year budget and distinct from the current "dry- run" budget exercise). Appointment of Budget Subcommittee It was noted that the focus of the Budget and Finance Subcommittee had changed. As such, the subcommittee was renamed Budget Subcommittee and the following individuals were appointed: 5 aca . ffiliati Ron Saxton, PMC Utilities Tom Lovas, CEA Ken Ritchey, MEA Brent Petrie, AEA Laurie Prentice, ML&P Draft Bradley Lake Annual FY O&M Budget Inputs and Sources Mr. Saxton reviewed the Draft Bradley Lake Annual FY O&M Budget Inputs and Sources. It was noted that dry-run budget amounts for items 6 (Operations and Dispatch) and 7 (Homer Transmission Line) need to be provided by CEA and HEA, respectively. There was some discussion to show a combined payment obligation (i.e., insurance) as item 10, Alaska Intertie Budget Component. The consensus was to defer this and consider it again after the first dry-run budget had been developed. Mr. Shira reviewed the Draft (January 10, 1990) Bradley Lake Annual FY O&M Budget, which listed FERC accounts, inputs, amounts (for AEA items), and sources/comments. Mr. Shira explained that the primary inputs for this document were developed for the 1989 R.W. Beck Consulting Engineer’s Report and that the major differences were in the provision of more exact numbers for the FERC expenses and on-going studies. Mr. Shira was asked to provide manpower assumptions for this budget and he responded that this budget provides for 4 maintenance/emergency operators at the site (reference FERC Acct. 541), AEA supervision/administrative support (FERC Accts. 535 and 920), and considers contracting line maintenance to a utility. Mr. Saxton said that a meeting of the Budget Subcommittee would be convened in the near future to review the dry-run budget. This item was placed on the agenda for the next BPMC meeting and it was noted that the members should plan for a lengthy discussion of the draft budget at that time. Bradley PMC (BRADAPR6) Page 5 of 9 January 18, 1990 (revised 2-1-90) 10. OPERATING AND DISPATCH AGREEMENT SUBCOMMITTEE REPORT Mr. Shira reported that the Operating and Dispatch Agreement Subcommittee had received a presentation on January 16, 1990 by SWEC on three items: 1) project hydrology, 2) turbine efficiencies/governor modes, and 3) reservoir model for forecasting reservoir inflow and matching projected utility demand. The Subcommittee will meet again on February 15, 1990. SWEC is to proceed with the reservoir inflow forecasting model; the utilities have developed their anticipated usage to feed into this model. It was noted that coordinating the DFI hydro thermal coordination model with the Bradley scheduling model is an eventual objective. Mr. Shira reported that the contract with Frank Moolin and Associates had been increased by $15,000, as directed by the BPMC at their November 30, 1989 meeting (reference page 4 of 11-30-89 meeting minutes). 12. OLD BUSINESS REPORT ON SURGE TANK ANALYSIS The following individuals made an overview presentation regarding the Load Acceptance Analysis (i.e., surge tank study) prepared by SWEC and PTI; Norm Bishop, Lead Bradley Engineer for SWEC, and John Yale, Assistant Control Engineer for SWEC. Mr. Bishop said that the purpose of the study was to investigate potential project modifications to maximize the ability of Bradley units to provide spinning reserve to the Railbelt system. Mr. Bishop pointed out that the spinning reserves provided by Bradley can be classified in two general categories: 1) rapid load acceptance to respond to the initial generation need and thus avoid frequency drop and, 2) slower load acceptance to reduce the load on combustion turbines that have provided the initial generation need. It was noted that the relative amount of spinning reserve provided by Bradley Lake is related to the rate of load acceptance by the hydroelectric units and that the rate of load acceptance is dictated by the turbine needle opening times. The following three different turbine needle opening times were simulated in order to evaluate the potential Bradley Lake spinning reserve capabilities: Alternative Capital Cost, I Modification 1) Existing hydraulic/turbine/governor design $ 0, No modifications required (72 second effective needle opening time) 2) Existing hydraulic design with governor $1.2 M estimate for hydraulic control and governor software control system modification (30 second effective modification, exclusive of any construction delay cost turbine needle opening time) 3) Addition of surge tanks (10 second effective $15.2 M direct cost for extensive modifications and 2 surge tanks; needle opening time) delay costs not included Bradley PMC (BRADAPR6) Page 6 of 9 January 18, 1990 (revised 2-1-90) The spinning reserve capabilities of Bradley Lake were summarized as follows: Interconnected System Kenai Isolated Bradl ns 1 n- inni 1 fe i 72 seconds 27MW 3 MW 30 seconds 27 MW 0 MW 10 seconds 45 MW 10 MW Bradley Needle Opening Ti Time Full Load (f i-no-load) Spinning R P ial* 72 seconds 80 seconds 119 MW 30 seconds 40 seconds 119 MW 10 seconds 13 seconds 119 MW *CT Peak Rating Operation allowed from 108 MW for minimum head to 119 MW for 30 foot range at top of reservoir; however, these MW may be limited by the transmission condition (i.e., power transfer capability of the Anchorage-Kenai Intertie) to 40 MW. Mr. Bishop also displayed ramping curves for various needle opening times and noted that the most erratic ramping curve was for the 30 second needle opening time. Mr. Bishop said that the alternative associated with this erratic curve was not recommended due to control system instabilities, flow instability and vibrations causing equipment wear. Surge Tank Conclusions and Recommendations by SWEC Mr. Bishop summarized that in all cases the combustion turbines, if allowed to be used in a peaking mode, would return to normal capacity in less than 90 seconds. It was concluded that the use of decreased needle opening times below the existing 72 second needle time, facilitated by surge tanks or other measures, does little to avoid load shedding or to increase the spinning reserve capability of Bradley Lake. Mr. Bishop said that for the small increase in spinning reserve value, the cost for the associated sophisticated requirements do not appear to justify the added expense for the required modifications. It was noted that during Kenai import, to control frequency in the event of intertie loss, combustion turbines must be operated on the Kenai regardless of the needle opening times for Bradley Lake. Mr. Bishop provided the following recommendations based upon the results of this study (reference Report on Load Acceptance Analysis, Bradley Lake Hydroelectric Project prepared by SWEC, January, 1990): 1) Maintain the current load acceptance rate (72 second needle opening time), and current hydraulic and equipment design. Bradley PMC (BRADAPRS) Page 7 of 9 January 18, 1990 (revised 2-1-90) 2) Implement an additional needle operating mode providing for simultaneous operation of all six needles and allowing for deflectors to cut into the water stream. 3) Discontinue any further investigation of revised needle opening times or modified hydraulic system design including surge tanks. It was noted that the additional governor operating mode (i.e., recommendation 2 or mode 3) was presently being included in the existing project. Mr. Highers motioned, seconded by Mr. Ritchey, that the BPMC accept the above three recommendations presented by Mr. Bishop. Discussion followed regarding the above motion. Mr. Stahr said that the BPMC should look at the surge tank in terms of what the cost would have been initially, at the beginning of design rather than in terms of today’s costs. Mr. Stahr also said that not all trips result in instantaneous loss of load and that this case should be reviewed. Mr. Stahr expressed concern with the prudence of operating in the peak mode without a reliable transmission line to the Kenai Peninsula. Mr. Stahr concluded that the BPMC should not reject the surge tank until a wider range of load sheds is explored. 11. REVIEW OF PROJECT STATUS Mr. Eberle reported that the Bradley Lake Project was 62% complete as of the end of December, 1989, compared to scheduled completion of 61%. In terms of the general civil construction contract, the lower power tunnel elbow is being concreted, with lining scheduled to begin by January 30, 1990. The penstock manifold testing was successful. Powerhouse unit 2 has been enclosed in concrete and encasing of unit 1 is in progress. Mr. Eberle reported that the cofferdam is no longer needed and is being removed. The completion schedule for the powerhouse can potentially be decreased by 4-5 months and a revised completion schedule has been requested from the contractors. Bradley PMC (BRADAPR6) Page 8 of 9 January 18, 1990 (revised 2-1-90) 13. NEW BUSINESS a. Discussion of Test Period Power Sales Agreement Mr. Saxton said that the Test Period PSA needs to define the test period leading to commercial operation to minimize impact on the bond resolution issue, define the rights to use the test power (i.e., in the same proportions as after commercial operation), and set the price of the test power. Chairman Kelly referenced the utilities cost of power adjustment with the Commission and suggested that this issue be considered in developing a non-disruptive cost of power (i.e., a "weighted weighted cost of power"). The consensus was that a discussion draft of this document would be distributed to the Committee prior to the next meeting. b. Funding for Generator Performance Testing Chairman Kelly said that Chairman Orr, Intertie Operating Committee (IOC), had suggested that the cost of the generator performance testing could be minimized if the IOC performed the testing through PTI (i.e., in order to avoid overhead costs associated with SWEC providing the work through PTI). It was noted that the AEA Board of Directors at their January 17, 1990 meeting had approved issuance of a separate RFP for this testing in order to maintain competitive pricing. It was also noted that this item could not be added to the current contract with PTI due to the estimated cost. Mr. Yerkes requested that the subsequent draft contract for generator performance testing be reviewed by the TCS prior to execution. Mr. Eberle suggested that the TCS and IOC representatives serve in an advisory capacity relative to this work. c. State Legislation regarding Power Development Revolving Loan Fund (PDRLF) Mr. Petrie reported that the amendment to the bill currently in the Senate Rules Committee of the Legislature regarding the PDRLEF virtually wipes out the PDRLF by depositing all funds back in the General Fund with the requirement for subsequent appropriation by the Legislature. Mr. Petrie said that the Four Dam Pool Project Management Committee at their last meeting passed a resolution asking that the two sections amending this legislation be removed in order to allow flexibility by the AEA in providing quicker response times to emergencies. Mr. LeResche provided the example whereby the AEA was available to provide timely funds to repair the Solomon Gulch transmission line after the avalanche in the Thompson Pass area. The FDP PMC intends to submit a letter accompanying their resolution to the Legislature which they request the BPMC co-sign in support. d. Consideration of CEA Microwave Link as a Bradley Lake Project Cost Mr. Yerkes explained that the direct microwave link betwen the Division of Communications (Divcom) and the CEA main headquarters had been discussed at a previous TCS meeting and this discussion centered on the funding of the link partially by CEA or entirely as a project cost. It was noted that CEA staff had previously said that CEA would fund 1/2 of this cost; however, concern was expressed that this cost should be distributed to all customers receiving benefit, rather than just CEA customers. The TCS at the meeting of January 17, 1990, recommended that the PMC approve the microwave link as a project cost. Bradley PMC (BRADAPR6) Page 9 of 9 January 18, 1990 (revised 2-1-90) e. Schedule Next Meeting The next meeting of the BPMC was scheduled as follows: Date February 27, 1990 Location CEA Training Room Time 9:30 a.m. 14. COMMUNICATIONS It was noted that Senator Kelly had called a hearing regarding the power outage for January 26, 1990 at 2:00 p.m. from the Legislative Information Office (LIO). Senator Kelly’s office had requested that an AEA representative (Mr. Eberle) initiate the hearing discussions by providing a summary description of the event. The utilities were requested to provide input to Mr. Eberle relative to what happened and how the (proposed) interties would have affected the outage. Mr. Dave Hutchens said that he had prepared an allocation of benefits of the interties. 15. ADJOURNMENT There being no further business before the Committee, the Committee adjourned by acclamation at 12:25 p.m. Chairman Kelly ATTEST: Secretary Approved by PMC at meeting held , 1990. Page No. 01/23/90 BRADLEY PROJECT MANAGEMENT COMMITTEE MOTIONS (H: BRADRES, REPORT BRADACT) MEETING PAGE MOTION MINUTES REF DATE ** 06/30/88 06/30/88 3 06/30/88 4 06/30/88 5 *k 08/29/88 08/29/88 2 08/29/88 08/29/88 08/29/88 08/29/88 08/29/88 08/29/88 08/29/88 08/29/88 ANP wWWWWN ** 09/27/88 09/27/88 2 09/27/88 4 ** 10/21/88 10/21/88 2 10/21/88 2 10/21/88 3 10/21/88 4 ** 11/30/88 11/30/88 11/30/88 11/30/88 11/30/88 11/30/88 11/30/88 PWNNNN ** 01/20/89 01/20/89 2 01/20/89 2 *k 03/03/89 03/03/89 2 03/03/89 3 ** 04/06/89 04/06/89 2 04/06/89 2 04/06/89 2 04/06/89 3 SETTING UP LONG-TERM FINANCING, FINANCE SUBCOM EST SAXTON TO DRAFT BY-LAWS, SHARE COST ALLOCATION TCC SUBCOMMITTEE EST., IDENTIFY RESPONSIBILITIES AUTHORIZE ATTENDANCE/COST AT 9-88 BOND RATING MTG SAXTON TO ACCOMPANY FINANCE TEAM TO NY 9-88 ACTING CHAIRMAN PRO TEM APPROVAL OF 6-30-88 MEETING MINUTES TCC AS CONSTRUCTION OVERSIGHT/COST CONTROL MECH TccC TO APPOINT MEMBER TO APA CONFIGURATION CONTROL ACCEPT DEFINITIONS/RESPONSIBILITIES O&M, TABLED FAILED, TABLE O&M DEFINITIONS TO NEXT MTG. ADOPT O&M DEFINITONS, DELETE EXHIBIT 4 APROVAL OF 8-29-88 MEETING MINUTES ADOPT O&M DEFINITIONS AS MODIFIED APPROVE 9-27-88 MEETING MINUTES AUTHORIZE RELEASE OF DRAFT PRESS RELEASE SO. ACTING CHAIRMAN FOR MEETING ADOPT RESOLUTION 88-1, ESTABLISHING BY-LAWS INTER APPROVE 10-21-88 MEETING MINUTES ELECTION OF KELLY AS FY89 CHAIRMAN LERESCHE AS FY89 SECRETARY, PETRIE AS ALTERNATE ELECTION OF HIGHERS AS FY89 VICE-CHAIRMAN APPOINTMENTS TO FINANCE TEAM ADOPT RESOLUTION 88-2, CAPITALIZING SEI STAB COST APPROVAL OF 11-30-88 MEETING MINUTES ADOPTION OF RESOLUTION 89-3, REA APPROVAL OF DOC’S APPROVAL OF 1-20-89 MEETING MINUTES ADOPT RESOLUTION 89-4, SUPPORT FOR EXEC ORDER 75 APPROVAL OF 3-3-89 MEETING MINUTES ADOPT TCS 4-6-89 REPORT, NOT PTI 115 KV ADDITIONS ADOPT 4-3-89 REPORT OF INSURANCE SUBCOMMITTEE ADOPT 4-3-89 REPORT OF BUDGET SUBCOMMITTEE Page No. 01/23/90 BRADLEY PROJECT MANAGEMENT COMMITTEE MOTIONS (H: BRADRES, REPORT BRADACT) MEETING PAGE MOTION MINUTES REF DATE 04/06/89 3 04/06/89 3 04/06/89 4 ** 05/04/89 05/04/89 05/04/89 05/04/89 05/04/89 05/04/89 05/04/89 OUPWNNN ** 06/08/89 06/08/89 4 06/08/89 6 06/08/89 6 06/08/89 7 06/08/89 7 ** 07/28/89 07/28/89 2 07/28/89 2 07/28/89 5 07/28/89 6 ** 08/21/89 08/21/89 2 08/21/89 3 08/21/89 5 08/21/89 5 ** 10/19/89 10/19/89 10/19/89 10/19/89 10/19/89 10/19/89 OnNNINN ** 10/30/89 10/30/89 10/30/89 10/30/89 10/30/89 10/30/89 10/30/89 10/30/89 NNDAHAHW ADOPT 4-3-89 REPORT OF TAX SUBCOMMITTEE ADOPT 4-3-89 REPORT REGARDING FERC LICENSURE ADOPT 4-5-89 OP/DISPATCH AGREE SUBCOMMITTEE REPORT APPROVAL OF 4-6-89 MEETING MINUTES ACCEPT 4-11-89 FINANCE TEAM REPORT ACCEPT 5-4-89 REPORT OF TECH COORDINATING SUBCOM TABLE MOTION TO ACCEPT 4-11-89 BUD SUBCOM MINUTES ACCEPT 4-5-89 REPORT OF OPERATING/DISPATCH SUBCOM APA ENGAGE RISK ASSESSMENT ENGINEER PROJECT COST AUTHORIZE $20 K PARTICIPANTS ALLOCATION/SCHED AGR DESIRE FOR UTIL PART TO OP/MAINTAIN AFTER WARRANTY REQUEST SWEC TCS BRIEFING, APA NOT TO RELAX CONTR WICK APPOINTED TO BOND FINANCE TEAM RITCHEY APPOINTED TO INSURANCE SUBCOMMITTEE APPROVE 5-4-89 MEETING MINUTES APPROVE 6-8-89 MEETING MINUTES ADOPT RES. 89-5, LINDSAY OPINION RE REFUND BONDS TCS TO SELECT REP TO REVIEW FDP TCC TECH STANDARDS APPROVAL OF 7-28-89 MINUTES ADOPT RES. 89-6, RATIFYING PRIOR ACTIONS PROJECT/SECTION 31 COSTS ADOPT RES. 89-7, BOND RESOLUTION CHANGES APPROVAL OF 8-21-89 MINUTES BOND SALE ACCLAMATION LETTER SECTION 31 COST, SMITH-BARNEY REPORT PROJECT COST, DFI SURGE TANK ANALYSIS (RECONSIDER) PROJECT COST, DFI INTERTIE STUDY (RECONSIDER) E&O INSURANCE PURCHASE-DEFEATED EXTENSION OF FMAA CONTRACT, $25,000 DISTRIBUTION OF LIST OF UTILITY COSTS TO MEMBERS APPROVAL OF COSTS OF BOND ISSUANCE TCS COSTS AS COSTS OF ISSUANCE APPROVAL OF SECTION 31 COSTS DFI SURGE TANK STUDY AS PROJECT COST Page No. 3 01/23/90 BRADLEY PROJECT MANAGEMENT COMMITTEE MOTIONS (H: BRADRES, REPORT BRADACT) MEETING PAGE MOTION MINUTES REF DATE ** 01/18/90 01/18/90 2 APPROVE 11-30-89 MEETING MINUTES 01/18/90 7 SEPARATE 3 SURGE TANK RECOMMENDATIONS 01/18/90 7 FAILED-TABLE SURGE TANK RECOMMENDATION ONE 01/18/90 7 ACCEPT CURRENT LOAD ACCEPTANCE RATE 01/18/90 7 ACCEPT ADDITIONAL NEEDLE OPERATING MODE 01/18/90 7 DISCONTINUE ADD’L SURGE TANK INVESTIGATION 01/18/90 8 SHARE GENERATOR PERFORMANCE TESTING WITH IOC 01/18/90 8 CHAIR TO CO-SIGN FDP PMC LTR RE PDRLF LEGISLATION 01/18/90 8 FAILED-CEA MICROWAVE LINK (RECONSIDERED BELOW) 01/18/90 8 APPROVE CEA MICROWAVE LINK AS BRADLEY COST BPMC Minutes, November 30, 1989 page 1 of 8 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE NOVEMBER 30, 1989 MINUTES OF MEETING 1. CALL TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee Meeting to order at 9:15 a.m. in the Training Room of Chugach Electric Association, Anchorage. 2. ROLL CALL The roll was called and a quorum established. In attendance were the following representatives: Alaska Energy Authority Brent Petrie - Alternate Chugach Electric Association Tom Lovas - Alternate City of Seward None present. Golden Valley Electric Association Michael Kelly - Representative Homer Electric Association Kent Wick - Representative Sam Matthews - Alternate Matanuska Electric Association Ken Ritchey - Representative Myles Yerkes - Alternate Municipal Light and Power Thomas Stahr - Representative John Cooley - Alternate Others present: Don Shira - Alaska Energy Authority Dave Eberle - Alaska Energy Authority Ron Saxton - PMC Utilities Marcey Rawitscher - Alaska Energy Authority Joe Griffith - Chugach Electric Association Dan Bloomer - Chugach Electric Association Denise Burger - Alaska Energy Authority 3. PUBLIC COMMENT There being no public comment, Chairman Kelly continued on to agenda item 4. BPMC Minutes, November 30, 1989 page 2 of 8 4. MODIFICATION OF AGENDA Mr. Petrie requested an item, 8.d., Stone and Webster Errors and Omission Insurance be added to the agenda. There being no objection, item 8.d. was added to the agenda. 5. APPROVAL OF MINUTES The minutes of the October 19, 1989 meeting were approved as written. 6. BOND FINANCE TEAM REPORT Mr. Petrie reported that closure of the first bond issue was completed. Mr. Petrie explained there is some question of possible tax liability (loss of tax exemption) should the Bradley Lake Project become commercially operational significantly earlier than originally anticipated (September 1991). Mr. Saxton and Ms. Rawitscher further defined the tax issue stating that interest is capitalized up to October 1991 but cannot be capitalized more than a short period of time after commercial operation begins without exceeding the 5 percent limit for non-project costs and threatening the entire transaction. An additional potential problem could also surface if commercial operation began before July 1, 1991, in that the bond resolution would require the final O&M budget to be in place a year earlier (April 1, 1990 rather than April 1, 1991.) Mssrs. Wick and Yerkes explained that the SCADA process and Stability Problem may result in an extended test period, which could delay commercial operation. Mr. Saxton suggested that the test period be defined, which may require an arrangement between the utilities and the Energy Authority. Mr. Griffith suggested discussions with the IRS may be appropriate, however Mr. Petrie commented that such action was premature. Mr. Petrie reiterated Mr. Saxton’s suggestion to establish a definition for "test period" and address arrangements for the use of power generated during the test period. Mr. Petrie further recommended that Bond Counsel, Ron Saxton, Dave Eberle and the Technical Coordinating Subcommittee (TCS) work together to formulate acceptable definitions and solutions to present at the January PMC meeting. Mr. Eberle added it may be necessary to redefine "commercial operation." After further discussion Chairman Kelly summarized by stating the consensus was a preference to stay with the current schedule, with commercial operation after July 1, 1991. Ms. Rawitscher will also be consulting with the tax lawyer on 12/1/89 to determine if it is possible to redefine interest dollars. Mr. Ritchey suggested that the budget process might begin now to avoid a possible bind later. Mr. Petrie commented that a dry run of the budget process has already begun and, if necessary, could be nearing completion by the April 1990 date. Chairman Kelly stated that no action was required at this time and further discussion on the issue should be included in the next PMC meeting after additional information was available. 7. TECHNICAL COORDINATING SUBCOMMITTEE REPORT (TCS) Mr. Yerkes stated that due to a delay by Power Technologies Inc. (PTI) on the Surge Tank Analysis there is no information to report on this item. The TCS is scheduled to meet December 14, 1989 and expects to review the draft report at that time. Mr. Yerkes noted that there was a proposal to reduce the amount of lining in the power tunnel, however upon review by the BPMC Minutes, November 30, 1989 page 3 of 8 contractor, the savings were determined to be insignificant. (Further discussion by Mr. Eberle under item 11.) 8. INSURANCE SUBCOMMITTEE REPORT Mr. Saxton stated the Insurance Subcommittee was directing its emphasis toward preparation of insurance alternatives for the dry run budget. a. Report on Collective Business Interruption Insurance Not addressed at this time. b. Report on Pooled Insurance Coverage Mr. Saxton commented steady progress was being made on the possibility of pooling with the Four Dam Pool. c. Risk Assessment Mr. Petrie stated the Energy Authority was proceeding to use Stone & Webster Engineering Corporation (SWEC) to update estimated damage costs. After discussing the option and added expense (increased amount of time as well as dollars) of hiring an independent consultant, Risk Management agreed that SWEC could best make the required estimates for the necessary "modified risk assessment." The contract does require the retention of an independent consultant for this purpose after project commercial operation begins. Other options for insurance were discussed, Mr. Petrie noting the possibility of self insurance. There being no objection, the PMC supported AEA’s approach to proceed with finalizing a work order for SWEC to perform the task. d. SWEC Errors and Omissions (E&0) Insurance Mr. Petrie stated that E&O insurance had become an issue the Energy Authority felt should be presented to the PMC for consideration as it would be classified a project cost. Mr. Eberle gave a brief history of the attempts to attain E&O insurance beginning in 1985, stating it was generally not obtainable at all until recently. Mr. Eberle described the proposed coverage as $850,000 for a $10 million policy with $500,000 deductible, pointing out that the deductible was per occurrence and that any problem areas discovered to date would be excluded from coverage. Mr. Eberle noted that given the advance stage of construction, the proposed policy may not be worth the expense. Mr. Eberle suggested self insurance might be an alternative option to consider at this point. Mr. Saxton stated that funds could possibly be made available for this purpose through the issue of additional bonds. After further comments, Mr. Ritchey motioned, seconded by Mr. Stahr, to approve the purchase of E&O insurance. Without further discussion, the motion was defeated in a roll call vote, the vote being as follows: Messrs. Ritchey, Kelly, Highers, Wick, Petrie, Lovas voting NO; Mr. Stahr voting YES; City of Seward representative ABSENT. BPMC Minutes, November 30, 1989 page 4 of 8 9. BUDGET AND FINANCE SUBCOMMITTEE REPORT Mr. Saxton reported the committee has identified a detailed list of the components and sources of the budget, however would like to continue working on it before presenting it to the PMC. Mr. Saxton identified one item for the PMC to consider; the benefit of handling the Chugach and Homer Electric wheeling agreements by the PMC. Chairman Kelly commented there seemed to be notable benefit to design these agreements under the umbrella of the PMC. Mr. Lovas stated that Chugach Electric has already performed a substantial amount of work in regard to the rates and scheduling and would not want to relinquish it to the PMC, rather would prefer to use the PMC to review that work. Mr. Saxton stated it was the committee's intention to finalize the budget items and to present it to the PMC at the January meeting, beginning the gathering of necessary information after that time. 10. OPERATING AND DISPATCH AGREEMENT SUBCOMMITTEE REPORT Mr. Shira distributed copies of minutes for the November 1, 1989 meeting held at the project site (attachment 1). An additional meeting was held November 28, 1989. Mr. Shira stated the committee, working with Frank Moolin & Associates (FMAA) is making good progress on discussions of resolutions for several issues (detailed in the November 1, 1989 meeting minutes.) Chairman Kelly requested continued reports on subcommittee progress at future PMC meetings. Mr. Petrie noted that the Operating and Dispatch Agreement Subcommittee has had need for the services of a consultant. Mr. Petrie suggested that the PMC consider allocating $100,000.00 under Section 31 Costs for continuing consulting needs, as he felt it was to the benefit of the purchasers. Mr. Lovas concurred that some further mechanism should be provided for the committee to retain consultant services to alleviate the necessity for the committee to request funds from the PMC for each task. Mr. Petrie offered the service of AEA as a vehicle for the contracting, as a matter of convenience to the utilities. Chairman Kelly expressed potential concerns he had heard regarding the performance of the current consultant (FMAA). Mr. Shira commented that, in general, FMAA was performing well and recommended FMAA be allowed to continue. Mr. Wick motioned to extend the contract with FMAA for an amount up to $25,000. An amendment offered by Mr. Lovas to increase the amount to $100,000 died for lack of a second. The original motion, having been seconded by Mr. Petrie, passed by a unanimous roll _ call vote of all those representatives present. Mr. Petrie requested clarification for the source of these dollars, stating preference for Section 31 as utility costs. After some discussion, it was concluded that until the initial O&M agreement has been finalized, such costs should be project costs. Mr. Shira expressed his appreciation for the contribution that Marvin Riddle of GVEA made toward developing the Technical Standards for the Four Dam Pool, noting after the first of the year, work would begin on the Technical Standards for Bradley Lake. 11. REVIEW OF PROJECT STATUS Mr. Eberle reported that the project is about 61 percent complete overall. BPMC Minutes, November 30, 1989 page 5 of 8 All tunneling is now complete with the exception of a 15 foot rock plug which will remain in place until the tunnel is ready to be watered-up. The hydrotest of the penstock and manifold is scheduled within the next few days. Mr. Eberle explained the test would be performed to the extreme of 150 percent of working pressure, about 950 psi. Lining has begun in the upper tunnel to be followed by the lower tunnel and vertical shaft this winter. Mr. Eberle added that the powerhouse is enclosed and Unit 2 spiral case for the turbine has been embedded in concrete. Two major shipments for the Turbine/Generator Components are arriving this month. After earlier shipping problems, Mr. Eberle stated Fuji is taking several measures to insure the safe arrival of these shipments. Mr. Eberle suggested the PMC schedule a meeting at the Project site later this winter or early next spring to review the project status. In response to a question on the progress of the transmission line, Mr. Eberle stated currently work is being done on the foundations. Most of the pilings in the Fox River Valley have been driven and the contractor is preparing to move onto the Caribou Lake plateau. Mr. Wick updated the PMC regarding HEA’s progress on their portion of the transmission line. At present, HEA is working south from Bradley Junction to Fritz Creek and has approximately one mile of poles in place on the thirteen mile segment. Mr. Wick noted that mechanical problems with the only helicopter of proper size available in the state may require that the poles be hauled in overland. However, Mr. Wick still anticipates this work will be done by Summer 1990. Mr. Eberle referenced Mr. Yerkes earlier comment on the tunnel lining, explaining the original design was for 100 percent tunnel lining. The better than anticipated geology (rock quality) provided an opportunity to consider deleting some of the liner in hopes of a significant ($2 to $3 million) financial savings. The contractor's estimated cost difference however showed little or no savings due mostly to the added cost of ending and restarting the sections of lining. Mr. Eberle stated the result of the review was to continue with the original plan for full tunnel lining. 12. OLD BUSINESS a. Report By Power Technologies, Inc. (PTI) In reference to the PTI Surge Tank Analysis report previously mentioned by Mr. Yerkes, Mr. Eberle added that he expects to receive the rough draft by December 7, 1989. The TCS will review the draft report at their December 14, 1989 meeting and completion of the final report is anticipated by the next PMC meeting. b. Report on the Four Dam Pool FERC Fee Appeal Mr. Saxton noted that FERC has denied the request by the Alaska Energy Authority and the Four Dam Pool utilities for exemption from annual fees and a motion for reconsideration has been filed. FERC initially denied the request stating that although the Energy Authority was not earning a profit on the sale of the power, it felt the utility companies were. Therefore, the utilities did not meet the required non-profit standard. Mr. Saxton does not expect a positive result on the motion and anticipates the Four Dam Pool to decide next year on BPMC Minutes, November 30, 1989 page 6 of 8 whether or not to continue this process in court. Mr. Saxton noted that if there is a judicial appeal, Bradley Lake may be requested to (or desire to) participate in some way. c. Review of Reimbursable Cost Items by Utilities from Grant Funds or Bond Proceeds Mr. Ritchey motioned that the list of utility costs prepared by Mr. Saxton be released to all PMC members at this time. Mr. Wick seconded the motion. Without discussion, all members present unanimously approved the motion. Prior to passing out the prepared list, Mr. Saxton noted that all costs reported were not entirely comparable. Mr. Saxton reminded the PMC that the purpose for gathering together these (Section 31) costs was to provide the utilities the opportunity for reimbursement from the tax exempt bond proceeds. Mr. Saxton warned the committee that there is current debate on whether there is sufficient money to reimburse all expenses and recommended that as a group the PMC decide which costs are appropriate. Mr. Saxton distributed copies of the list of utility cost items titled "Unreimbursed Bradley Lake Costs, Project Costs" and a second list titled "Section 31 Costs" (Attachment 2) explaining that there were substantial differences of dollar amounts among the utilities. Mr. Saxton noted discrepancies in legal fees were probably due to the amount of legal work each utility required. Mr. Saxton also addressed discrepancies in the TCS cost amounts stating he had received detailed billing from HEA and clarified their cost did not include any staff labor. Responding to a question from Chairman Kelly, Mr. Saxton stated the money for these reimbursements was coming out of the second bond issue and this current review of the costs would help determine how to size it. Again Mr. Saxton expressed doubt that all Section 31 costs could be reimbursed. Ms. Rawitscher requested the committee address the costs of issuance (items Al, A2, and A3 of "Unreimbursed Bradley Lake Costs, Project Costs".) Mr. Petrie motioned, seconded by Mr. Stahr, that the Committee approve the costs of bond issuance, items Al, A2, and A3. Mr. Stahr verified ML&P legal expenses (A2). Mr. Ritchey suggested that the actual cost of in-house legal service be included in this item. There being no objection, the motion passed unanimously by a roll call vote of all those representatives present. Mr. Saxton suggested further discussion of TCS cost items. Mr. Wick clarified HEA’s TCS expenses stating that approximately $18,000 was paid to Black & Veatch for studies on the impact of the Bradley Lake project and approximately $8,000 was paid to Gilbert Commonwealth for evaluation of stability problems. Mr. Wick stated those expenditures were necessary to HEA because of its proximity to the project. Chairman Kelly recommended item A5, TCS expenses, be included in the previous motion approving items Al, A2, A3. There were no objections, however discussion between Mr. Eberle and Mr. Matthews resulted in the determination that the ($18,000) Black & Veatch cost was not a TCS related expense, but rather an O&M cost. Mr. Petrie and Mr. Lovas recommended that the original motion for approval be amended to exclude the ($18,000) Black & Veatch cost. By consensus, the original motion was made to read: Mr. Petrie motioned, seconded by Mr. Stahr, that the committee approve the costs of bond issuance, items Al, A2, A3 and BPMC Minutes, November 30, 1989 page 7 of 8 Ms. the TCS costs, item A5 (having been determined to exclude the Black & Veatch cost.) Further discussion by committee members resulted in the reclassification of HEA’s Black & Veatch cost as a Section 31 cost. Chairman Kelly noted, as a general guideline, future studies to be considered for reimbursement should be approved by the PMC in advance. There was no objection. Section 31 Costs Mr. Stahr motioned, seconded by Mr. Lovas, that the Section 31 costs be approved (as adjusted to include the $18,864.29 HEA Black & Veatch cost previously removed from item A5 of Project Costs.) Concern was expressed by Mr. Ritchey about the negotiation costs. Mr. Saxton stated that 97 percent to 99 percent of the listed amounts were actual attorney fees. Mr. Lovas requested that CEA’s footnoted cost of $22,700 (in-house attorney fees) be included as part of item Bl, Negotiation Costs. There being no objection or further discussion, the motion was passed unanimously by a roll call vote of all those representatives present. Mr. Petrie requested the Chairman provide a letter to the Energy Authority clarifying the revised numbers for "Section 31 Costs" and "Unreimbursed Bradley Lake Costs, Project Costs." d. Reconsideration of DFI Surge Tank and Intertie Study Costs Mr. Petrie distributed a letter stating the Energy Authority’s position after further review of these two items (attachment 3). Mr. Petrie stated the Energy Authority was now agreeable to include the DFI Surge Tank Study (for $10,000) as a project cost. The motion to include the DFI Surge Tank Study was made by Mr. Petrie and having been seconded, passed by a unanimous roll call vote of all those representatives present. It was determined that ARECA should be reimbursed $10,000 for the DFI Surge Tank Study. Rawitscher requested clarification regarding the source of the compensation amount of $600,000 to HEA for the Fritz Creek - Soldotna Transmission Line. Chairman Kelly recommended a review of past meeting minutes to clarify how that cost was intended to be handled. as NEW BUSINESS a. Contingency Plan for early Bradley on-line b. Disposition of Bradley Test Power Chairman Kelly noted that these items had been discussed earlier (reference item 6, Bond Finance Team Report.) Mr. Saxton stated his understanding was that the project would not be going on line (as commercially operable) before July 1991. Mr. Eberle added that in the most optimistic scenario, the earliest the project could produce 90 mega watts would be April or May of 1991, however the test period could extend to July 1991. BPMC Minutes, November 30, 1989 page 8 of 8 14. c. Benefits of Coordinated Dispatch Chairman Kelly stated a meeting had taken place between Mr. Brooks, Dr. LeResche, and the railbelt managers at Chugach’s office. The goal being to obtain money through the legislature from the Railbelt Energy Fund, it was determined to send a memorandum of understanding between the Energy Authority and utilities to work toward coordinated dispatch to optimize savings. In addition, it was decided an effort should be made to assure the legislature that this was a one time request for funds. Chairman Kelly stated a third concept discussed was a 2 mil usage toll on the line to produce a repayment stream to the Energy Authority. Mr. Lovas noted that CEA had agreed to prepare the frame work of a wheeling agreement, extension intertie agreement at that meeting. Currently, this work is in the initial draft stage. d. Schedule Next Meeting The next meeting was scheduled for Wednesday, January 17, 1990, 9:00 a.m. in the training room at Chugach Electric. COMMUNICATIONS There being no communications or further comments at this time, Chairman Kelly continued to item 15. >. ADJOURNMENT All business before the committee being complete, the meeting adjourned at 11:51 a.m. “VY A. Chairman Kelly Attest: z Alaskg@ Energy Authority, Secretary Approved at BPMC meeting held Jay. /§__, 1990