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HomeMy WebLinkAboutBPMC Meeting - September 27, 1988 1@ 8 FILE COPY BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE // September 27, 1988 1. CALL TO ORDER Robert E, LeResche called the Bradley Lake Project Management Committee meeting to order at 1:05 p.m. in the Train- ing Room of Chugach Electric Association, to conduct the business of the Committee per the agenda. 2. ROLL CALL In attendance were the following: Designated Representative __‘Designated Alternate __Representing 00 Robert E. LeResche Alaska Power Authority E, Paul Diener City of Seward James F. Palin Myles C. Yerkes Matanuska Electric Assoc., Inc. David L. Highers Chugach Electric Assoc., Inc. Kent Wick Sam Mathews Homer Electric Assoc., Inc. Michael Kelly Robert Hansen Golden Valley Electric Assoc., Inc. John Cooley Municipal Light and Power Representatives Absent ___ Alternates Absent _ Representing _ Bob Peirson City of Seward Thomas R. Stahr Municipal Light and Power Brent N. Petrie Alaska Power Authority Tom Lovas Chugach Electric Association, Inc Others Present 00011 _CRepresenting David Eberle Alaska Power Authority Ron Saxton Golden Valley Electric Assoc., Inc. Julie Becker Alaska Power Authority Tom Martin Chugach Electric Association, Inc. 3. PUBLIC COMMENT It was noted that there were no members of the public in attendance. 4. MODIFICATION OF AGENDA Mr. Kelly asked that Discussion of Bradley Lake Project Maintenance Contractor be added. This item was added as agenda item 10. ZIWAM 49% BRADLEY LAKE PMC Page 2 of S September 27, 1988 Mr. Saxton asked that a report on the September 23, 1988 meeting with Rural Electric Association be added to the agen- da. This was added as agenda item 11. Due to the addition of these two items to the agenda, Other Business became item 12., Communications became item 13., and Adjournment became agenda item 14. 5. APPROVAL OF MINUTES August 29, 1988 Mr. Highers motioned, seconded by Mr. Cooley, that the minutes of the August 29, 1988 meeting be approved. The mo- tion passed with no objection approving adoption of the August 29, 1988 meeting minutes with no changes. 6. FINANCE COMMITTEE REPORT Review of Meetings with Rating Agencies and Bond Insurance Companies Mr. LeResche said that Marcey Rawitscher, Manager, Financial Analyses for the Alaska Power Authority, is currently developing a written report on the week of September 19, 1988 meetings with rating agencies and bond insurance com- panies to include the next step in the bond financing process. Mr. LeResche said that this report would be distributed to the Committee members and discussed at the next PMC meeting. Mr. LeResche also commented that copies of the slide presentation utilized at the meetings with the rating agencies and bond insurance companies would be distributed to each of the PMC participants. 7. REVIEW OF PROJECT STATUS Discussion on Independent Review of Stability Studies Mr. Eberle said that the draft report by Southern Company Services, Inc. (SEI) regarding Bradley Lake stability studies is scheduled to be available during the week of October 3, 1988. It was noted that during the August 29, 1988 PMC meet- ing, Mr. Eberle had been requested to proceed with preliminary discussions with entities who could perform an inde- pendent review of this report. Mr. Eberle said that a one month delay is anticipated since the draft report is not yet available for an independent contractor review. 8. TECHNICAL COORDINATING COMMITTEE REPORT Report on Configuration Control Committee Mr. Yerkes said that at the August 29, 1988 PMC meeting, the Technical Coordinating Committee (TCC) was directed to appoint a member to serve on the Power Authority Configuration Control Board (CCB) and the TCC directed to serve as the construction oversight and cost control mechanism. Mr. Yerkes said that the TCC had not met since the August 29, 1988 PMC meeting; however, at the next meeting of the TCC, a delegate would be appointed. BRADLEY LAKE PMC Page 3 of S September 27, 1988 Discussion of Draft Definitions of "Operations" and "Maintenance" Mr. LeResche asked Mr. Wick to provide a verbal report on this item. Mr. Wick noted that the PMC, at their August 29, 1988 meeting, had tabled consideration of the draft definitions of operations and maintenance time certain to this PMC meeting. Mr. Wick said that after the August 29, 1988 PMC meeting, he met with Messrs. Petrie and Shira of the Power Authority and that progress toward resolving this issue was made. Mr. Wick said that during the meeting with Messrs. Petrie and Shira, it was determined that the Power Authority would provide copies of the operations and main- tenance agreements with the Four Dam Pool and information on insurance requirements. Mr. Wick said that he is con- fident that an operations and maintenance agreement can be worked out between the parties; however, he would not vote to adopt the definitions until such time as the operations and maintenance agreement is in place. Mr. Wick said that he is reviewing the Draft Operation and Maintenance Definitions (as revised July 12, 1988) with the Power Authority staff and that Exhibit 2, which addresses emergency operator responsibilities, needs to be tied into Exhibit 4, owner responsibilities. Mr. LeResche said that his understanding was that progress was not made during the meeting between Messrs. Wick, Petrie and Shira and Mr. LeResche’s position is that he had heard nothing to indicate to date that HEA/AEG&T should operate the Bradley Lake Project during the initial two year warranty period. Mr. LeResche went on to say that he does not anticipate that there is any additional information on this matter which he has not heard which would change his decision; further, it is the Power Authority’s decision to make who will perform on-site operation and maintenance during the warranty period. Mr. Wick said that he feels that HEA/AEG&T can perform the initial on-site operation and main- tenance of the project, but only if all parties want them to do so. Mr. Wick also commented that it had always been his understanding that HEA/AEG&T would have a part in the operation and maintenance of the project from day one. Mr. Kelly asked Mr. Eberle the last date that an operator can be determined. Mr. Eberle responded that the critical element is at what point employees are hired to perform operation and maintenance functions. Mr. Eberle recom- mended that employees be hired during the later part of the summer of 1990, one year prior to commencement of com- mercial operation. Mr. Kelly paraphrased that the decision regarding what entity will perform initial on-site operation and maintenance functions during the warranty period can thus be made one year from today. Mr. Kelly suggested that the issues might be clearer at that time, such as whether AEG&T is more than an entity on paper. Mr. Kelly said that the AEG&T has become something other than what was originally anticipated. Mr. Yerkes explained that the intent of the TCC, which recommended the definitions of operations and maintenance, was to formulate generic definitions and that determination of which party will provide which function is not required to adopt the definitions. Mr. Eberle suggested that the PMC consider adopting the definitions as recommended by the TCC; however, that the PMC tie approval of the definitions to the assumption that HEA/AEG&T will be the ultimate on-site operator of the Bradley Lake Project. Mr. Eberle went on to say that if that assumption changes (i.e., during the next year when a decision would need to be made), the PMC can change the assumption and/or amend the definitions. Mr. Eberle asked if HEA would support approval of the definitions if there were the understanding that HEA/AEG&T would eventually be the on-site maintenance and emergency operator. Mr. Wick responded that he would approve the definitions only with the understanding that HEA/AEG&T would provide this function from the beginning of project operation. Mr. Cooley said that, technically, the Power Authority or HEA/AEG&T can perform the maintenance and emergency operator responsibilities; however, when the services agreement was signed, the utilities said that they would support HEA/AEG&T. Mr. Palin said that he understood, from what Mr. Wick had said, that if HEA/AEG&T does not perform initial on-site maintenance and emergency operation of the project, HEA will eliminate the transmission scope of control from the operation and maintenance contract currently being drafted. Mr. Mathews responded that this would be required in order for HEA to maintain primary control of their substations with permissive control granted on a case by case basis. Mr. Eberle asked if that was not the case currently. Mr. Mathews responded that this issue is not clear as presently writ- ten. Mr. Eberle added that there is no reason to install any equipment in the substations prior to one year prior to the date of commercial operation. BRADLEY LAKE PMC Page 4 of 5 September 27, 1988 Mr. LeResche said that the decision has been made that the Power Authority will perform maintenance and emergen- cy operator responsibilities during the warranty period, as Mr. LeResche believes that that is in the best interest of the project and in getting the full value of the warranty contracts. Mr. LeResche went on to say that a member present would be the ultimate maintenance and emergency operator. Mr. LeResche said that he would consult with HEA/AEG&T personnel in the hiring of these personnel, who would ultimately be employees of HEA/AEG&T. Mr. Kelly said that if he were in Mr. Wick’s position, he would not want the Power Authority to perform operator functions during the war- ranty period and then transfer the employees to the ultimate on-site operator. Mr. Kelly said that he would not neces- sarily endorse the Power Authority performing initial operation; however, it appeared to be a State decision. Mr. Wick said that HEA will work with the Power Authority to develop the operation and maintenance contract for the period beginning after the warranty period and will take whatever steps are necessary to protect their system. Mr. Palin said that the State of Alaska’s decision to operate the project during the warranty period is not a vote of the PMC and that whoever will ultimately operate the project should be flanged into the hiring and warranty operation process. Mr. Cooley motioned, seconded by Mr. Palin, that the Committee adopt the definitions as modified by Mr. Kelly (i.e., revise Exhibit 4, Additional Interim/Short-Term Responsibilities of Owner, Section 4.1 to read; In conjunction with Project Maintenance and Emergency Operator, provide for the hiring and training of all on-site plant personnel; and Section 4.3 to read; Provide for initial on-site O&M functions). The motion passed with Messrs. Diener, LeResche, Palin, Highers, Kelly, and Cooley voting yes, and Mr. Wick voting no. Mr. Wick provided the following justification for his vote in opposition to this motion; the definitions clearly indicate that the Power Authority will provide O&M during the initial phase and it is not in the best interest of the parties to make that decision at this time. Mr. Wick said that HEA will work with the Power Authority and other parties to see that O&M is done to everyone’s satisfaction. Mr. Le- Resche said that the change to Section 4.1 of Exhibit 4 leaves the door open on this issue. Mr. Wick responded that the door is not in fact open when there is a stone wall behind it. Mr. Kelly restated that Mr. LeResche had said that the Power Authority will not hire anyone to fill the role of on-site O&M without bringing this issue back before the PMC. Mr. LeResche concurred with this statement. Mr. Kelly said that the PMC, in their passage of the definitions, did not vote on who will perform initial operation. 9. CONSIDERATION OF DRAFT BY-LAWS Mr. Saxton said that the draft By-laws had been discussed during the morning workshop and that he will read and in- corporate Mr. Wohlforth’s comments and the consensus of the members present during the workshop. Mr. Saxton said that he will distribute, via Express Mail, a redraft of the By-laws by Monday, October 3, 1988 and requested that any ad- ditional comments by the members and their attorneys be provided to him by October 14, 1988. Mr. Saxton suggested that the members come to the next meeting prepared to act on the By-laws. It was noted that the consensus of the par- ties during the morning workshop was to provide for a quorum as five members (i.e., Article 3.9), and that Article 3, Section 3.10.4(1), would provide that the matters included in this section would require a majority of Purchaser Com- mittee member votes, so long as those utilities constitute 51% or more of the kwh sold. 10. DISCUSSION OF BRADLEY LAKE PROJECT MAINTENANCE CONTRAC- TOR Previously discussed under 8.b., Discussion of Draft Definitions of "Operations" and "Maintenance." 11. REPORT ON REA MEETING Mr. Saxton reported that the draft language in the Services Agreement, which says, in part, that all parties who are sig- natories to the Power Sales Agreement agree if they come into possession of the line they will (?) the rights of Municipal BRADLEY LAKE PMC Page S of S September 27, 1988 Light and Power and the City of Seward. Mr. Saxton said that the language in the draft appears to be acceptable to the Rural Electric Association and that if this agreement is not approved by the REA within one month (i.e., by October 31, 1988), Mr. Saxton recommends that a meeting be scheduled with representatives of the REA. 12. OTHER BUSINESS Mr. LeResche suggested that the PMC officially designate a Finance Team at the next PMC meeting to include the fol- lowing representation: Alaska Power Authority, Financial Advisor, Lead Underwriter, Bond Counsel, and two mem- bers of the PMC, Mr. LeResche suggested that the two PMC members be Mr. Kelly and Mr. Palin. No action was taken on this issue. Mr. LeResche noted that a meeting to discuss Railbelt alternative matters had been tentatively scheduled. After some discussion, this meeting was scheduled to begin at 10:00 a.m. on October 21, 1988 in the Training Room of Chugach Electric Association. It was determined that if there was sufficient business for the PMC to conduct at that time, a PMC meeting would be held, commencing at 1:00 p.m., October 21, 1988 in the CEA Training Room. 13. COMMUNICATIONS Mr. Eberle reported that meetings would be held with R.W. Beck and Associates and CH2M Hill regarding their proposals to conduct consulting engineer services for the Bradley Lake bond issuance. Mr. Eberle reported that the selection scores for these two firms were close, partially due to the Alaska Bidder’s Preference which affected the CH2M Hill score. Mr. Eberle welcomed any of the PMC members interested to attend the meetings with these two firms. 14. ADJOURNMENT Mr. LeResche noted that he had to leave the meeting at this time to meet his airline reservation. The meeting adjourned at 2:15 p.m. ACTING CHAIRMAN APPROVED AT PMC MEETING HELD _Qctoher 21 , 1988.