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HomeMy WebLinkAboutBPMC Meeting - March 5, 1991 1FILE COPY me —_—_ a Ot 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MARCH 5, 1991 CALLED TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee to order at 10:05 a.m. in the Training Room at Chugach Electric Association to conduct the business of the Committee per the agenda and the public notice. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Alaska Energy Authority Robert E. LeResche - Representative Brent Petrie - Alternate Chugach Electric Association David L. Highers - Representative Tom Lovas - Alternate (joined 10:20 a.m.) City of Seward E. Paul Diener - Representative Golden Valley Electric Association Michael Kelly - Representative and Chairman Homer Electric Association Norman L. Story, Representative Matanuska Electric Association Ken Ritchey - Representative Municipal Light and Power John Cooley - Alternate Others Present: Stanley Sieczkowski - Alaska Energy Authority Dave Eberle - Alaska Energy Authority Ron Saxton - Purchasing Utilities DeAnna Scott - Alaska Energy Authority Joe Griffith - Chugach Electric Association Bob Hufman - Alaska Electric Generation & Transmission Pete Fraser - Municipal Light and Power Dave Burlingame - Chugach Electric Association (joined at 10:45 a.m.) PUBLIC COMMENT There were no public comments offered. Page 2 of 8 MODIFICATION OF AGENDA Under Item No. 12, New Business A, 1) CEA Dispatching Cost and 2) FY92 O&M Budget were addressed in Item 8, Budget Subcommittee Report. APPROVAL OF MINUTES November 28, 1990 Chairman Kelly asked if there was any objection approving the November 28, 1990 meeting minutes as distributed. Hearing none, Mr. Cooley motioned, Mr. Ritchey seconded that the November 28, 1990 meeting minutes be approved as distributed. The roll was called and the motion passed unanimously. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported the Technical Coordinating Subcommittee (TCS) met on February 21, 1991. He stated that Stone and Webster Corporation (SWEC) distributed the SVS specifications and they are currently out to bid. March 15, 1991 is the deadline date for the SVS specification comments and the technical proposals are due April 4, 1991. The price proposal will be due May 9, 1991. Chugach and GVEA are on the evaluation committee to review the technical proposals. Mr. Burlingame reported the TCS approved the use of overfrequency tripping for Cooper Lake to try and control the frequency during times of high Kenai energy export. The TCS approved unanimously that CEA would install an overfrequency tripping unit for a cost not to exceed $13,500 pending approval by the PMC. Mr. Highers moved, seconded by Mr. Ritchey that authorization be given to Chugach to install overfrequency tripping at Quartz Creek not to exceed $13,500 to mitigate overfrequency excursions. The roll was called and the motion passed unanimously. Mr. Burlingame reported Power Technologies, Inc. (PTI) was proposing to use the existing 115 KV capacitor on the Kenai, however, after reconsideration, it would be more economical to remove the SVS capacitor bank in its entirety and delete it from the contract. Mr. Burlingame reported that AEA distributed a revised start-up and testing schedule. Unit #2 will be synchronized onto the system June 10-14 and Unit #1 will follow June 12-17. Tests are schedule to be completed July 4-15 for Unit #2 and July 6-18 for Unit #1. There would be a 30-day testing period for each unit. After acceptance, the units will be turned over to AEA for CEA to dispatch and control until commercial operation. He further reported that AEA intends to bring the plant to 120 MW output or as much as water availability would allow. The TCS stated that if the units were to be run above their stability limits, it would be at the utilities discretion and only after sufficient studies have been performed to verify the results of planned tests. Mr. Burlingame reported that Chugach has provided AEA a system maintenance schedule and AEA is going to coordinate the start-up and testing. AEA requested a similar schedule from HEA. Mr. Burlingame reported that the TCS will continue to move to include ML&P and Chugach as the Bradley Lake DECNET interface points as approved by the Intertie Operating Committee, even though GVEA has since changed its position and wants to be an interface point. Relative to dispatching of SVSs from Soldotna, Chugach needs to decide how they want this to be handled. Page 3 of 8 Mr. Burlingame reported that Power Technologies, Inc. (PTI) gave a two fold verbal presentation of the proposed operating limits for Bradley Lake during the first year of operation. The maximum levels were as previously adopted by the TCS with the following exception. PTI proposed alternative outputs which would allow higher unit capacity outputs by subjecting the Kenai systems to higher voltages than those previously established by the TCS. PTI will issue a final report in March, 1991. The second issue discussed was the minimal operation limits of Bradley. Without the operation of a gas turbine on the Kenai, if there was a loss of the line to Anchorage, the result could be cascading blackout along the Kenai. PTI has been requested to issue a second report addressing the minimal operation level Mr. Burlingame stated the TCS appeared to bog down when discussing contractual commitments or obligations of various utilities as opposed to outlining the parameters of operation. Direction was asked from the PMC. PTI has been requested to issue a second report addressing the minimal operation levels. Mr. Highers moved that the PMC direct the TCS to determine the maximum Kenai import, i.e., minimum Bradley Lake operating limit without a gas turbine on-line, assuming that any single contingency event will not result in more than a reasonable loss of load as determined by the TCS. The roll was called and the motion passed unanimously. Mr. Highers stated that he has been talking with Mr. Burlingame about this issue and spinning reserves and if there are concerns in the TCS regarding responsibilities, he would like them to be moved out of the TCS. He stated that any cost allocations or utility responsibilities associated with providing any required reserves will need to be decided by the PMC at the conclusion of the TCS report. Chairman Kelly stated that without objection the record would reflect that any situation with the reserves or load shed would be decided by the PMC. There were no objections. INSURANCE SUBCOMMITTEE REPORT Mr. Saxton reported that all of the insurance quotes explored by the Subcommittee came in less than expected which will be discussed as part of the Budget. Mr. Saxton stated that there is one insurance issue that is not part of the Budget, which is, business interruption insurance. Mr. Saxton asked Mr. Petrie to further explain. Mr. Petrie stated that for the first time in years there is an option to purchase business interruptible insurance. The Subcommittee asked the Division of Risk Management to find a carrier that would cover one year of debt service, O&M and fuel replacement costs for a value of $21 million. The property insurance underwriters would be interested in writing such coverage but only for the perils covered by the property insurance which is fire, earthquake, flood, etc. The premium for the business interruption insurance would be $116,000 per year. Mr. Petrie stated that some direction is needed from the PMC if there is still an interest in exploring this insurance. The Subcommittee has requested the Division of Risk Management to check and see if this could be extended to the Boiler and Machinery perils i.e., substation equipment, rotating equipment, etc. because exposures to Boiler and Machinery risks may represent a greater likelihood for a business interruption. The Insurance Subcommittee’s recommendation is to explore the insurance and see exactly what is covered and make an additional recommendation to the Budget Subcommittee. Mr. Saxton stated the business interruption insurance is budgeted at zero in the FY92 Budget Proposal. If the PMC would like for the Insurance Subcommittee to further explore the business interruption insurance, direction would be needed. Chairman Kelly directed the Subcommittee to look further into the business interruption insurance but not include it into the budget. Page 4 of 8 BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported that the deadline to adopt a budget is April 1, 1991 for FY92. Mr. Ritchey stated each member should have received a narrative from AEA that included a 10-month fiscal year budget, a cash flow analysis and Mr. Saxton’s analysis of issues related to Chugach’s dispatching cost. A yellow budget sheet was distributed to reflect the new budget number of $2,206,998 as opposed to the budget total that was attached with the narrative of $2,231,998. The difference of this is the elimination of the business interruption insurance in the budget. Mr. Ritchey noted that the dispatching cost of $150,000 proposed by CEA have been included as part of the Bradley Lake O&M budget. Mr. Saxton’s analysis stated that the Transmission Services Agreement defines dispatcher as an individual or individuals employed by Chugach, but is silent on compensation. There are a couple of issues regarding this. ML&P feels that it was the intent of the parties at the time the Power Sales Agreement and Transmission Services Agreement were executed that the cost of dispatch by CEA was included as part of transmission services. Also, if the PMC determines that payment of the dispatching cost incurred by CEA is appropriate, the Budget Subcommittee requested that the PMC direct the Operations and Dispatch Subcommittee to review the activities and level of funding proposed by CEA, including labor, training and software costs, and provide a recommendation to the Budget Subcommittee. Mr. Cooley proposed that if the CEA Economic Dispatch Program is required to operate Bradley, it should be funded as a project cost which would reduce the O&M Budget and proposed $100,000 for CEA dispatching. Mr. LeResche inquired about the budgeted $20,000 Economic Dispatch Program. Mr. Lovas stated it is a CEA software package with a portion allocated to Bradley. He also stated that the total package cost is $200,000 and is amortized over a ten year period. This software is necessary and is directly tied to the operation, scheduling and dispatching Bradley power. Mr. Lovas further stated if CEA was not dispatching Bradley Lake Power the additional software would not be needed. Chairman Kelly asked the PMC if there was objection to the software being a project cost. Chairman Kelly also presented two additional related points: 1) He understood that CEA was going to take a look at the incremental cost for dispatching Bradley Lake power, and 2) CEA was also going to review a possible lower figure as a settlement amount. Chairman Kelly asked Mr. Higher if CEA had a chance to look at this and if a settlement on the order of $100,000 would cover the cost. Mr. Highers stated that CEA has looked at this issue and their incremental cost was substantial higher than $150,000. CEA views this as compensation not reimbursement. Mr. LeResche stated, referring to Mr. Cooley’s amendment, the dispatching cost would not be allowed as a capital expense because it is a cost related to the Service Agreement and dispatching should be an O&M expense. Chairman Kelly suggested either putting a dollar amount in the budget; or putting the number to zero; but strongly recommended against holding up the budget. Mr. Story moved that the FY92 Bradley Lake O&M Budget be approved as submitted. Mr. Cooley moved to amend the motion to change the FERC Account number 561 from $150,000 to $100,000. This amendment died from_a lack of a second. The main motion being on the floor, Chairman Kelly asked if there was any discussion. Mr. Ritchey went through the budget a page at a time. He explained that the FERC account numbers 132 and 174 are initially completely funded by bond proceeds and in future years may need replenishing. He also stated that some items are based on specific values, AEA’s experience with the Four Dam Pool and other projects. Chairman Kelly asked about the CEA’s training cost of $36,000 in FERC account number 561. Mr. Lovas responded that the $150,000 in FERC account Page 5 of 8 561 that includes the $36,000 for training costs was based on one years worth of expenses. FERC account 561 was reduced from $150,000 to $131,000. Mr. Ritchey noted the FERC account number 923 are estimates from AEA. FERC account number 924 Insurance, is for all of the insurance plus approximately a 10% contingency due to the possibility of the insurance inflating before the policies are actually placed. The property insurance was quoted $215,000 with a $25,000 contingency. The Boiler and Machinery was quoted at $60,000 with $5,000 contingency. The General Liability and Watercraft and Aviation Insurance is one-sixth of the State policy distributed over the Energy Authority’s six projects at $10,000 per project. Director’s and Officers Liability Insurance was estimated at $15,000. Mr. Ritchey stated that Fuel Spill coverage is not in the Budget. Mr. Ritchey stated that the regulatory expenses in FERC account 928, land use fees of $45,000 and administrative fees of $95,000 are well established. Mr. Saxton further stated these are the fees the Four Dam Pool PMC has filed a lawsuit to be exempt from paying. Mr. LeResche suggested that because the dispatch item was reduced by $19,000 and there are some concerns regarding the inspection and transportation charges, he would like to see a line item having the $19,000 dedicated for contingency for allocation per the PMC’s approval. Chairman Kelly asked if there were any objections to this amendment. Being none, it was included as part of the main motion. Mr. Ritchey then referred to the cash flow analysis. Mr. Ritchey stated the debt service payments are equal each month except for February which is less. Each utility would pay their percentage and the first 10 months of payment will total $12,764,098. Mr. Ritchey directed the PMC to refer to the bottom under Balance in operating reserve. He stated if the budget worked as projected, at the end of June there would be $164,525 left in the operating fund for the next fiscal year. Mr. Ritchey stated the total budget number for approval, after rounding up the total, is $2,207,000 and asked if there were any additional questions. Being none, the roll was called and the motion passed unanimously. OPERATING AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported that there are several issues to come before the Operating and Dispatch Subcommittee which will be meeting at AEA on March 27, 1991. The Subcommittee will discuss the Allocation and Scheduling Draft Agreement, the operation of the transmission line after Homer Electric has completed their construction, and formulation of an agenda for any other items that need to be resolved in the near future. Chairman Kelly asked if there were any questions, being none, Chairman Kelly asked if Mr. Story would give an update on the transmission line construction. Mr. Story reported that the 6 mile section being constructed in-house by HEA was complete. IRBY was behind the curve and has increased the number of people and are now ahead. HEA was predicting three weeks before the two ends could be tied in and ready for energization. Chairman Kelly asked Mr. Hufman to brief the PMC on his discussions with Mr. Lovas since the last meeting relative to the issue of how to handle the spinning reserves and the overspeed peaking operation of gas turbines to develop Bradley’s spinning reserve capabilities. Mr. Hufman stated that he and Mr. Lovas had just started talking about this issue and wondered what the PMC’s position was, and whether the utilities allow such peaking. Chairman Kelly asked Mr. Burlingame to discuss this matter in the TCS. Mr. Burlingame suggested that this issue should more appropriately be referred to the Operating and Dispatch Subcommittee to work out the details. Chairman Kelly stated without objection he would ask the Operating and Dispatch Subcommittee to look at 10. 11. Page 6 of 8 this matter. He further stated that if there are technical or design elements that need to be addressed, he would request that Operating and Dispatch Subcommittee to put together an outline of such items and get it to the TCS. REVIEW OF PROJECT STATUS Mr. Eberle reported that as of February, 1991, the project was 91 percent complete. Mr. Eberle stated that the tunnel and all of the high pressure grouting is complete. The steel liner is complete with the exception of the 60 foot closure piece which will be put together in another week. They anticipate to be completed with all of the tunnel work and bolting on the spherical head at the end of the tunnel about the first of April. The contractor has completed the concrete work in the diversion tunnel at the dam and is in the process of installing the gate housing. The diversion tunnel work is scheduled to be completed by May, 1991. The contractor anticipates demobilization by June 1, 1991. With respect to the reservoir, since the bulkhead gates were installed virtually all flows that have entered the lake have been released to accommodate fish flows, with only ice build up in the reservoir. This is the driest year AEA has seen since the start of the project. Mr. Eberle stated that he has looked at historical records and what we are experiencing this winter is parallel to a record low year in terms of the winter precipitation. If we do not get snow this spring and a lot of rain this summer we will have less than a full reservoir. Back feed power to the power house was completed in January and we are now on HEA’s meter. The spherical valve and governor control systems for Unit #2 are completed. The contractor is in the process of filling Unit #1 to begin testing and will be done by the middle of March. The control panel for SCADA is complete. The contractor was at the project site testing the equipment. The spinning of the units (dry) will begin in April and they should be able to spin wet in May. Mr. Eberle stated that a Testing and Start-up Subcommittee of the TCS has been formed and will be meeting on March 14, 1991 at the project site with representatives from Chugach, Homer and ML&P. The SVS contract status was previously mentioned in the TCS report and the Site Restoration Contract will go out to bid on March 18, 1991 and the bids will be due April 25, 1991. OLD BUSINESS A. Test Period Power Mr. Lovas reported the group that was originally assembled as fashioned in the September 21, 1990 minutes never met. This issue was however, discussed with the Railbelt Rate Committee. The consensus of this group was to bring the test period power in at a zero rate. Mr. Lovas stated that it should reflect no energy from Bradley, which would result in keeping the cost down. Mr. Saxton noted that this is an issue which should be addressed by individual utilities and is not a PMC issue. Chairman Kelly stated if that is the recommendation, without objection, each utility will handle the test period power on their own. Mr. Highers stated that CEA is faced with export limits and this is a more complex issue than introducing free power. There is also a question of allocations and the cost of running turbines to support testing. The PMC directed the Dispatch Subcommittee to determine the allocation method to be used for Bradley Lake power prior to commercial operation. The Subcommittee was asked to specifically address two instances: 1) when Bradley Page 7 of 8 Lake is providing power into the system for AEA’s testing purposes and as such, some utilities may actually incur increased costs associated with the power by providing the generation required to perform any commissioning tests, and 2) for that period when Bradley Lake is supplying power to the system under utility controlled dispatching schedules prior to commercial operation. 12. NEW BUSINESS A. Approval of PMC Expenses Mr. Saxton distributed to the PMC a copy of the schedule of Unreimbursed Bradley Lake Costs - As Submitted to Ater Wynne March, 1990. The following costs were identified: PROJECT COSTS Chugach Finance Team Activities $ 2,044.60 Homer Electric Association TCC Expenses 2,186.68 Seward Electric TCC Expenses 201.67 TOTAL $ 4,432.93 SECTION 31 COSTS - Bradley Organization Chugach $ 33.45 GVEA 498.10 Seward 311.26 Ater Wynne 21,139.42 TOTAL $21,982.23 Mr. Saxton stated that AEA’s staff is concerned with the lack of back-up information that has been sent with the request for reimbursement. On the last page of this handout, Ms. Rawistcher prepared a list that reflects the dollar amounts requested for reimbursement and it also has a column stating if additional information is needed. If there is a yes in that column, additional peo documentation will need to be submitted before reimbursement can e made. Mr. LeResche moved, seconded by Mr. Highers to approve the Section 31 Cost as reported. The roll was called and the motion passed unanimously. Mr. LeResche also stated that AEA will provide a procedure to the utilities for the supporting documentation that will be needed for reimbursement of their costs. FY92 Budget This was discussed in detail under the Budget Subcommittee Report, Item 8. Page 8 of 8 E. SCHEDULE NEXT MEETING April 12, 1991 Chugach Electric Association Training Room 10:00 a.m. ADJOURNMENT There being no further business before the Committee, the Committee adjourned by acclamation at 11:56 a.m. Approved by PMC at meeting held June 6, 1991.