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HomeMy WebLinkAboutBPMC Meeting May 13, 1993 1Revised Action Nos. - September 7, 1993 FRECORD VOPY FILE NO BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (oO A APPROVED MEETING MINUTES May 13, 1993 1. CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Ronald A. Garzini, Alternate Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Paul Diener, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt David Burlingame, Chugach Electric Association Gene Bjornstad, Chugach Electric Association dburger\word\minutes\pme\05-93 BPMC Meeting Minutes May 13, 1993 Page 2 of 9 he John Cooley, Chugach Electric Association Tom Lovas, Chugach Electric Association Dan Bloomer, Chugach Electric Association Jim Hall, Matanuska Electric Association Moe Aslam, Municipal Light & Power Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Dave Calvert, City of Seward Dave Fair, Homer Electric Association David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. AGENDA COMMENTS No changes were made to the agenda at this time. APPROVAL OF MINUTES - March 3, 1993 March 30, 1993 April 16, 1993 The minutes of the March 3, 1993 Bradley Project Management Committee meeting, March 30, 1993 Teleconference and April 16, 1993 Teleconference were approved as submitted. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met. BUDGET SUBCOMMITTEE REPORT A. Bradley Lake Construction Cost Audit Update Mr. Ritchey reported final comments were being forwarded to Metzler & Associates. The final audit report is anticipated in the near future. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 3 of 9 Bradley Lake O&M Cost Audit Update Parisena Stromberg & Company has completed the 1992 O&M cost audit. Following initial review by the Budget Subcommittee, the report will be distributed to the Bradley PMC. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported that AEA had received and was reviewing the proposed paragraph subjecting the agreements to a master operating agreement for inclusion in the remaining agreements. Additionally, AEA has received and is reviewing the proposed master operating agreement. Mr. Sieczkowski expected the Agreements Subcommittee to meet to discuss these issues in the near future. Noting the discussion at the March 3, 1993 BPMC meeting regarding the role of AEA and the BPMC (i.e., the ability of the BPMC to contract), Mr. Kelly asked if the current proposed agreements reflected the BPMC as the contracting authority. Mr. Saxton explained that he and Mr. Lovas had drafted a master operating agreement. The concept was discussed with AEA and its attorney, but AEA had not responded further. Mr. Saxton explained the emphasis had been directed toward completing the agreements in progress for a limited term, with the inclusion of a means to incorporate them under the anticipated master operating agreement. In view of the recent legislation affecting the Alaska Energy Authority, Mr. Garzini recommended the BPMC delay further action on the issue for at least two weeks. Mr. Garzini reiterated AEA's ultimate intention to transfer the operation and maintenance of Bradley Lake to the utilities, however added, some time was needed to fully study the legislation and to form a plan. Citing intentions to include the utilities in the planning, Mr. Garzini noted numerous options were possible (i.e., joint action agency, etc.). Mr. Garzini informed the Committee that the Energy Authority Board of Directors will dissolve 90 days after the legislation is signed. AEA and the responsibility for the operation and maintenance of the State's hydroelectric facilities will be transferred to the Alaska Industrial Development and Export Authority (AIDEA) Board. The rural programs and services provided by AEA will be transferred to the Department of Community and Regional Affairs (DCRA). Grants to build the approved interties will be issued by the Department of Administration (DOA). Noting DOA's inexperience, Mr. Garzini suggested AEA may be able to assist the utilities dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 4 of 9 with financing. Summarizing the effect of the legislation, Mr. Garzini stated that "AEA had been wounded badly, but was not dead." AEA can no longer acquire projects, however Mr. Garzini believed AEA could still finance projects. The change will have no effect on AEA's agreements. Expressing concern over the uncertain effects of the legislation, Mr. Kelly suggested that the utilities may have an opportunity for a role in shaping the outcome. Mr. Garzini added his concern over the integration of an exempt agency (AEA) with a classified agency (DCRA) and the potential loss of qualified personnel. It was noted that AEA's programs had been fully budgeted for the next fiscal year. Mr. Garzini expressed preference for the establishment of a utility joint action agency and recommended that the utilities pursue the possibility. In response to questions by Mr. Ritchey, Mr. Saxton explained the Energy Authority would continue to exist, however, some of its programs and loans will be transferred, and it no longer has the ability to construct and acquire projects. Mr. Kelly recommended that the Bradley PMC strongly assert its position to operate Bradley Lake. 9) OPERATION & DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported the Operation & Dispatch Subcommittee held a teleconference meeting on March 12, 1993. Based on the current lake level, a 115 megawatt interim operating guideline was approved by the Subcommittee for scheduling purposes. The Subcommittee recommended a transient stability analysis by Stone & Webster Engineering to determine operating conditions below the 1080! reservoir elevation level. Mr. Sieczkowski noted the SVC systems were in operation and that installation of the Woodward governor modifications was expected the week of May 24, 1993. 10. REVIEW OF PROJECT STATUS Mr. Eberle reported work on the Static Var Compensator Systems was complete with the exception of a few punch list items. Replacement of the capacitors by ABB is anticipated by August or September. Mr. Eberle confirmed installation of the governor modifications was scheduled May 24, 1993 with testing to immediately follow. The soil remediation contract was awarded in early April for $660,000. The soil burner is on site and nearly finished processing the soil. Part two of the contract, crushing and spreading the aggregate on the runway, is expected to be completed by mid-June. Mr. Stahr asked if recovery of the spill cleanup cost was being dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 5 of 9 11. pursued. Mr. Eberle stated cost recovery was being investigated, however, was not expected. Mr. Eberle explained that the POL facility was constructed by the contractor for his own use under Phase I of the Bradley Project in 1986. At AEA's request, the contractor left the POL facility in an as is/where is condition for continued use, making it AEA's responsibility. The deterioration of the POL facility liner was not discovered until later during removal of the facility. Mr. Eberle informed the BPMC that a revised final project construction budget would be presented to the Energy Authority Board of Directors on May 20, 1993 for approval. The budget was increased by approximately $2,000,000 to cover unanticipated costs, including the fish water bypass work, utility power costs to support testing, the contaminated soil cleanup, and the proposed capitalization of the Fritz Creek Transmission Line. Mr. Burlingame advised the BPMC that ABB was in the process of reorganizing and was reassigning staff who had worked on the SVC Systems. Mr. Burlingame recommended that any studies required to add a second transmission line be requested before the engineers familiar with the project were no longer available. Mr. Eberle concurred, stating, however, that it was not a construction expense, but that the construction contract could be used to facilitate the studies. Mr. Eberle will discuss the scope of work with Dave Burlingame and obtain an estimate from ABB. Mr. Kelly recommended that a determination be made on whether the studies could be considered a project cost, otherwise, the studies could be funded as one of the first costs against the interties. OLD BUSINESS A. Spinning Reserve / Under Frequency Load Shedding Update Mr. Lovas reported the utilities expected to implement the new load shedding schedule adopted by the Intertie Operating Committee (IOC) by June 1, 1993. The Alaska Systems Coordinating Council Reliability Criteria Committee (ASCC-RCC) has developed a position statement. The RCC is also discussing proposed spin allocation methodologies, including generation and load relationships, performance factors on generating units, sales levels, and load weighting of units. The RCC has agreed upon four characteristics required for a workable allocation methodology: 1) incentives to improve unit reliability; 2) recognition of liability imposed by size of generating units; 3) recognition of a utility's need to use the reserve; and 4) application to present and future operating considerations. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 6 of 9 Bradley Scheduling vs. Spin Requirement Update Mr. Saxton noted he had received comments from Homer Electric Association and Chugach Electric Association in addition to earlier comments received from Municipal Light & Power. Golden Valley Electric Association, Matanuska Electric Association and Alaska Energy Authority will be forwarding comments to Mr. Saxton. Fritz Creek Segment Funding Mr. Eberle reported that AEA had been advised by Eric Wohlforth, AEA bond counsel, that the Fritz Creek costs could be funded as a Section 31 cost, upon approval of the purchasers (Attachment 1). Approval of the increased project budget by the AEA Board of Directors was also needed. Referring to Mr. Wohlforth's April 13, 1993 letter, Mr. Story clarified that HEA intended to share the cost with the other purchasers and did not expect to be exempted. Mr. Kelly moved that the $600,000 Fritz Creek transmission line segment acceleration cost be treated as a Section 31 cost, subject to AEA Board approval of the increased project construction budget, to be paid by all purchasing utilities according to percentage shares, including Homer Electric Association. The motion, seconded by Mr. Stahr, was approved by unanimous role call vote (Action 93-161). Fish Water Bypass Update Mr. Eberle reported the diving contractor began work on March 25, 1993. Due to adverse ice and weather conditions, the work took longer than expected. The contractor was able to clear sufficient material out of the way to install a vertical trash rack over each intake, preventing subsequent obstructions. However, because of the difficult working conditions, the contractor was not able to remove the material from the intake area without incurring significant additional expense. Mr. Eberle explained the remaining submerged material could be removed this summer using a crane, if the reservoir level drops low enough (which is not expected), or the material could be removed by divers from a barge. A cost of $50,000 is anticipated to remove the material by crane or $150,000 if divers and barge are required. Either case, however, was estimated to be more economical than continuing the operation under the conditions encountered in March. Mr. Eberle reported the intakes are presently clear and operating at required output. With the right combination of adverse events, the intakes could, again, become obstructed, however, it is not expected to be an immediate problem. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 7 of 9 Mr. Eberle noted the remaining underwater work could wait until next summer, in anticipation of a reservoir level low enough to utilize a crane. AEA will be soliciting bid prices for the remaining underwater work. Mr. Eberle explained the source of the debris was rock excavated from the gate shaft and used as fill for access to the upstream face of the spillway. Considerable loose rock remained above the water line in the vicinity of the intake channel which also needed to be cleared. It was estimated that this would cost approximately $50,000. The total cost to resolve the problem and prevent future problems could reach $400,000. Mr. Eberle stated that it was AEA's position that, considering the nature and source of the rock debris, the cost of the fish water bypass repair work should be considered a construction cost, rather than an O&M cost. Mr. Kelly expressed concern regarding the availability of funds to cover the additional construction expenses (i.e., POL facility and fish water bypass repairs). Mr. Eberle stated the proposed revised project budget included these additional costs. The necessary funds and an additional construction contingency would be committed from the excess project construction funds by the AEA Board of Directors before the funds were reclaimed by the State. Mr. Saxton cautioned that some of the "extra" money may actually be bond money which would need to be returned to the investors, explaining that too many bonds may have been issued relative to the construction cost. Mr. Eberle distributed a summary of the financing costs and a reconciliation of project costs to the Committee (Attachments 2 and 3). The construction cost of $314,500,000 noted on the top line of Reconciliation of Project Costs (Estimate as of May 12, 1993) represents the revised project construction budget (assuming approval by the AEA Board of Directors) and includes the POL facility and fish water bypass repair costs, additional utility SVC testing costs, Fritz Creek transmission line segment costs (as Section 31) and approximately $650,000 - $700,000 in unallocated contingency. Based upon the final construction budget of $314,5000,000, $12,082,500 would be returned to the State general fund, with virtually all bond proceeds having been expended. The Budget Subcommittee will review the final project construction budget and provide any comments to AEA prior to consideration by the AEA Board of Directors on May 20, 1993. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 8 of 9 E. BPMC Control Over O&M Decisions and Agreements - Master Agreement Mr. Saxton noted Mr. Garzini's recommendation to postpone action related to the master agreement until plans for the operation and maintenance of Bradley Lake could be developed. Mr. Saxton requested to be kept informed of the direction AEA was taking regarding the master agreement. 12. NEW BUSINESS A. Operations Budget Contingency Fund Resolution Discussion of this item was deferred to the next Committee meeting. B. Diamond Ridge Relaying Costs Mr. Eberle noted that a memorandum had been distributed in the BPMC meeting packet outlining the Diamond Ridge relaying cost. Mr. Eberle explained that the cost had been approved by the Technical Coordinating Subcommittee (TCS) but, due to an oversight, had not been formally presented to the BPMC for approval. Funds for the cost were included in the original project construction budget. Mr. Story motioned that $107,115.45 be approved as a construction cost for Diamond Ridge relaying. Seconded by Mr. Kelly, the motion passed by unanimous roll call vote (Action 93-162). GC; Approval of Legal Expenses (added to the agenda) Mr. Ritchey noted the BPMC had incurred $45,803.76 legal expenses for February, March and April 1993. Mr. Ritchey moved that the $45,803.76 legal expenses be approved. The motion, seconded by Mr. Story, was approved by unanimous roll call vote (Action 93-163). 13. COMMUNICATIONS Mr. Sieczkowski noted that since Bob Hufman's accident, John Sorrel of Homer Electric Association was assisting with the Bradley Lake labor negotiations. Mr. Sieczkowski advised the Committee that progress was slow. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 9 of 9 A. Schedule Next Meeting Thursday, June 17, 1993 10:00 a.m. Chugach Electric Association 14. ADJOURNMENT The meeting adjourned at 11:30 a.m. Attest: Ronald A. Garzini, Alternate Representative dburger\word\minutes\pmc\05-93