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HomeMy WebLinkAboutBPMC Meeting - June 17, 1993 2Railbelt Reserve Issues | issue | crucacn GENERAL CONCERNS Lack of contractual links between the Bradley PSA and AIA has made incorporation of Bradley into the Railbelt system more difficult. Concerned about practices which reduce railbelt reserves below contractually required levels; deteriorated reliability; inequities in burden of supplying spinning reserves. 2 second delay should be accepted. Supports ASCC efforts. How should load shed in lieu of spin be treated? No load shed in lieu of spin should be permitted until studies show it will perform as well as actual spin. Load shed in lieu of spin program must satisfy basic contractual requirements, based on results. Loads should be restored using spinning reserve of other utilities following a disturbance, as long as firm loads haven’t been interrupted. IOC contractual responsibilities may dictate development of reliability criteria by IOC--HEA doesn’t support duplicative efforts. Extra spinning reserve at times will prevent SILOS. : a m QO 9° D Cc c © v ¢ a £5) 1/9 (i-s Cal nw 2 LN3WHOVLLY Sp Sree iene ie cm ISSUE cuucach | ves |_omer | MATANUSKA QUALITY OF | SPIN All spin shouldn’t be treated equally. Generators should be connected to AGC in order to count spin from that unit as part of a utility’s operating reserve. Indirect AGC shouldn't be allowed for the spin to be fully counted as operating reserve. Supports a performance factor system for spinning reserves such that slow responding reserves do not count the full amount towards operating reserve or, in the alterative, a limit on the amount of slow responding reserves such as hydro. Quality will determine the amount of system frequency decline during the loss of system generation or facilities and amount of customer loads shed during disturbances. Cannot support relaxed spin standards unless supported by reasonable analysis. Is the unit under AGC control? How fast can the unit respond? SYSTEM Should be compared RESPONSE with PSS/E runs using DIFFERENCES the actual loadflow and generator loading from just prior to the system disturbance. Reviews should be after every major system disturbance or when requested by IOC member. ak Gael i nl oe SELLING OF Should not be allowed SPIN unless the reserve is backed up by a load shed scheme or the sale can be interrupted in a time frame to prevent first stage load shed. Spinning reserves loaded with "economy energy sales" results in reduced system spinning reserves and may reduce system reliability. Practice may not be equitable to all involved utilities. Should be curtailed or limited to improve overall system reliability. Selling spin isn’t permitted in the AIA. Economy energy sales should be covered by real spin at one end or the other or by both. Spin sold in nonexistent. ISSUE CHUGACH LOCATION OF SPINNING RESERVES Location and distribution of spinning reserve by geography, interconnections, and unit should not be specified by the IOC, unless reserves are pooled. Only reserves physically connected with the interconnected system should count toward spinning reserves. Affects the ability of the system to respond to disturbances. Must considered: (1) is the total required system reserves and criteria for "pooling" reserves equitable between utilities; and (2) weak transmission interties erode reliability and limit the ability to economically schedule generation. The resulting unbalanced generation during disturbances opens interties to island sections. Doesn't directly relate to reserves, but to load/resource scheduling in the "island" areas. The IOC should establish a reliability standard by region, if appropriate. The IOC must consider the ability of the system to respond and develop operational criteria to provide such reliability. MATANUSKA Transmission limitations should be considered. CHUGACH ewes HOMER MATANUSKA If SILOS is disabled Supports normal due to controller treatment of reserve unreliability, the owner | obligations-- exceptions of the controller should | to be justified, be obligated to supply approved. the amount of reserves disabled while the controller is fixed. Controller reliability criteria standards should be determined by the Relaying/Reliability subcommittee of the loc. OPERATING | RESERVE CRITERIA Must restore contractually required spin to the system. The AIA is the only contract between the intertie participants and is the only area for the resolution of spin/loadshed concerns. Can’t support relaxing current spinning reserve limitations. BPMC doesn’t have proper authority to limit reserve scheduling--it’s an IOC issue. How should spin requirements be handled when shares are allocated? Which criteria--size of generation units, amount of load, kWh sales, historical reliability, number of units on-line should be used to allocated required spin, and in what combination? Criteria necessary regarding modification or avoidance of reserve requirements. May be appropriate in certain circumstances. Spinning Reserve can’t be changed by the IOC. Operation can lower the amount, but in no case can it increase it. SILO must be enabled for the utility to count SILOS for operating reserves. Should develop a pooling mechanism to ensure that the amount of on- line operating reserves always exceed the minimum required. Bradley is slow. How should slower units be counted when calculating required spin? Bradley units are slow to respond. How should spin that responds more slowly than normal be counted when calculating required spin? The ASCC is the proper forum to develop the operating reserve criteria. ISSUE CHUGACH HOMER MATANUSKA FORMULA Current allocation formula is fair and equitable. The “penalty” for utilities with large generators is justified due to (1) loss of larger machine creates larger disturbances; and (2) utilities put on larger machines due to efficiency, with little consideration for reliability penalties. Could support modifications to formula to accommodate two concerns. STUDIES Additional studies Should study optimum needed to determine the distribution of spin maximum amount of between units or best hydro spin that will mixes of inertia prevent first stage load response, fast governor shed. response, slow machine response and AGC Tesponse. AEA RESERVE Doesn't believe AEA OBLIGATION? has a reserve obligation. | issuz_ | ctucacn ENTITLEMENT TO SPIN Water usage should be necessary in order to tap spinning reserve capability. Is the owner entitled whenever a unit is on line, or should a minimum amount of energy be scheduled? Who should pay for energy required and who can claim spin if Bradley is operated as a synchronous condenser? State of Alaska DS Walter J. Hickel, Governor Alaska Energy Authority A Public Corporation RECORD COPY June 16, 1993 FILE NO Bradley Lake Project Management Committee Members SUBJECT: Bradley Lake Hydroelectric Project Operation and Maintenance Dear PMC Members: The legislature adopted HCS CSSB106 that legislates the transfer of the Alaska Energy Authority projects and programs to the Department of Community and Regional Affairs and the Alaska Industrial Development and Export Authority (AIDEA). The apparent intent is to downsize the existing Alaska Energy Authority and contract services to the maximum extent possible. In pursuit of previous discussions with the Bradley Lake Project Management Committee (PMC) participants, it is the intent of the AEA to solicit proposals for the on-site operation and maintenance of the Bradley Lake Hydroelectric project. The options are to advertise for proposals and do an evaluation and award or to negotiate an Operation and Maintenance contract with a qualified contractor specified by the PMC. AEA hereby requests the Bradley Lake PMC to provide direction for soliciting proposals for the on-site aap and maintenance or to provide us with the Committee's recommendation for an on-site operator in accordance with the existing Bradley Lake project agreements. A formal scope of work for the Operations and Maintenance contract can be developed by AEA. After negotiation of the contract with the AEA and approval of the contractor by the PMC, the contract will be sent to the AEA Board for consideration and action. Sincerely, Gan Ronald A. Garzin Executive Director RAG:SES:ds ce: Riley Snell, AIDEA PO. Box 190869 701 EastTudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 93Q2/MA4798(1) Page 1 DATE: TO: FROM: SUBJECT: ® ||| eane Free Alaska Energy Authority MEMORANDUM June 11, 1993 Bradley Lake Project Management Committee David L. Highers, Chugach Electric Association Norm Story, Homer Electric Association Ken Ritchey, Matanuska Electric Association Dave Calvert, City of Seward Tom Stahr, Anchorage Municipal Light & Power Mike Kelly, Golden Valley Electric Association _ Ron Saxton, Ater Wynne Hewitt Dodson & Skerritt Brent N. Petrie £5,A. eho Secretary Project Management Committee Meeting Budget Subcommittee Meeting Confirmation of Upcoming Schedule The next meeting of the Bradley Lake Project Management Committee will be held Thursday, June 17, 1993. The meeting will begin at 10:00 a.m. in the Training Room at Chugach Electric Association, Anchorage. The Budget Subcommittee will meet prior to the Bradley PMC on June 17, 1993, at 8:00 a.m., in the Training Room at Chugach Electric Association. DB:BNP:db cc: Ronald A. Garzini, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Larry Wolf, Alaska Energy Authority David R. Eberle, Alaska Energy Authority DATE: TO: FROM: SUBJECT: Alaska Energy Authority MEMORANDUM eerenrsice FILE NO June 4, 1993 Re ~ oO Se attcteatizianaes Bradley Lake Project Management Committee David L. Highers, Chugach Electric Association Norm Story, Homer Electric Association v Ken Ritchey, Matanuska Electric Association Paul Diener, City of Seward Tom Stahr, Anchorage Municipal Light & Power Mike Kelly, Golden Valley Electric Association Ron Saxton, Ater Wynne Hewitt Dodson & Skerritt Brent N. Petrie Bet Secretary Project Management Committee Meeting Notice of Meeting - June 17, 1993 The next meeting of the Bradley Lake Project Management Committee is scheduled Thursday, June 17, 1993. The meeting will begin at 10:00 a.m. in the Training Room at Chugach Electric Association, Anchorage. The following items are enclosed for your information, review, and or files: ° Agenda- June 17, 1993 BPMC Meeting ° Draft Minutes - May 13, 1993 BPMC Meeting ° Approved Minutes - March 3, 1993 BPMC Meeting March 30, 1993 BPMC Teleconference April 16, 1993 BPMC Teleconference Please provide any comments regarding the upcoming June 17, 1993 BPMC meeting agenda items to Chairman Highers. DB:BNP:db CC: Ronald A. Garzini, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Larry Wolf, Alaska Energy Authority David R. Eberle, Alaska Energy Authority 10. II. 12, 13. 14. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA June17, 1993 Chugach Electric Association, Inc. Training Room 10:00 a.m. CALL TO ORDER 10:00 a.m. ROLL CALL PUBLIC COMMENT AGENDA COMMENTS APPROVAL OF MEETING MINUTES May 13, 1993 TECHNICAL COORDINATING SUBCOMMITTEE REPORT BUDGET SUBCOMMITTEE REPORT A. Bradley Lake Construction Cost Audit Update B. Bradley Lake O&M Cost Audit Update AGREEMENTS SUBCOMMITTEE REPORT OPERATION AND DISPATCH SUBCOMMITTEE REPORT REVIEW OF PROJECT STATUS OLD BUSINESS A. Spinning Reserves/Under Frequency Load Shedding Update B. Bradley Scheduling vs. Spin Requirement Update iC BPMC Control Over O&M Decisions and Agreements Master Agreement NEW BUSINESS A. Operations Budget Contingency Fund Resolution COMMUNICATIONS A. Schedule Next Meeting ADJOURNMENT Highers Burlingame Ritchey Sieczkowski Sieczkowski Eberle Lovas Saxton Saxton Saxton MEETING MINUTES May 13, 1993 i 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\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 2 of 9 Jolin ‘Cooley, Chugach Electric Association Dvas, Chugach Electric Association Ban 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 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS No changes were made to the agenda at this time. 5. 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 (Action 93-172). 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met. 7. 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 B. Brad! ey Lake O&M Cost Audit Update KOR OT )) > Parisena Stromberg & Company has completed the 1992 O&M cost audit. aa 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 wigptnancing Summarizing the effect of the legislation, Mr. Garzini a Atal at "AEA had been wounded badly, but was not dead." AEA can } Ks 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 pursued. Mir Eberle stated cost recovery was being investigated, however, was i Dot expected. “Mr. Eberle explained that the POL facility was constructed by the *\\conttactor for his own use under Phase I of the Bradley Project in 1986. At AEA's “tequest, 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. 11. 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 B y Scheduling vs. Spin Requirement Update PL ~ 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 casts 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 93-173). 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 M <Rberle noted the remaining underwater work could wait until next su Y ier, in anticipation of a reservoir level low enough to utilize a > Crane. AEA will be soliciting bid prices for the remaining underwater a 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. BEG, Contra Over O&M Decisions and Agreements - Master _~ Agreement {yyy se 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. nded by Mr. Kelly, the motion pas: unanimous roll call vote (Action 93-174). Cc: 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 le: xpenses be approved. The motion, seconded b Mr. Story, was approved by unanimous roll call vote (Action 93-175). 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. S le Next Meeting <Aneer” 7 \ \)))> “Thursday, June 17, 1993 ail 10:00 a.m. Chugach Electric Association 14. ADJOURNMENT The meeting adjourned at 11:30 a.m. David L. Highers, Chairman Attest: Panne Ronald A. Garzini, Alternate Representative dburger\word\minutes\pmc\05-93 ATTACHHENT 1 WOHLFORTH, ARGETSINGER, JOHNSON & BRECHT a PETER ARGETSINGER RiERCFEASIONAL CORPORATION TELEPHONE JULIUS 4 BRECHT ATTORNEYS AT LAW (907) 276-6401 CYNTHIA L. CARTLEOGE Ree Oreo 900 WEST STH AVENUE, SUITE 600 TELECOPY THOMAS F. KLINKN of BRADLEY E. MEYEN ANCHORAGE, ALASKA 99501-2048 I2OZ RE SCeS JAMES A. SARAFIN KENNETH E VASSAR ERIC E. WOHLFORTH RECEIVED MEMORANDUM APR 15 1993 ALASKA ENERGY AUTHORITY. TO; Brent Petrie Director of Operations Alaska Energy Authority FROM: Thomas F. Klinkner DATE: April 13, 1993 SUBJECT: Payment of Cost of Accelerating Construction of Fritz Creek Transmission Line Segment from Proceeds of Power Revenue Bonds, First and Second Series (Bradley Lake Hydroelectric Project); Our File No. 3610.2024 You have asked that we advise the Alaska Energy Authority (the “Authority") concerning a proposal by the purchasers of power (the “Purchasers") from the Bradley Lake Hydroelectric Project (the “Project") to capitalize the costs of accelerating construction of the Fritz Creek transmission line segment (the "Fritz Creek Line") under Section 31 of the Agreement for the Purchase and Sale of Electric Power (the "Power Sales Agreement") among the Authority and the Purchasers. We conclude that the Authority may do so, with the requisite approval of the Purchasers under Section 31 of the Power Sales Agreement. Our answer involves the following analysis of the agreements between the parties and federal tax law. |. Background. We understand that an Amendment to Agreement for Sale of Transmission Capability dated March 7, 1989 obligates the Purchasers other than Homer Electric Association, Inc. ("HEA") to pay HEA $600,000 (the “Fritz Creek Payment") in exchange for HEA accelerating the construction of the Fritz Creek Line to transmit power from the Project. To capitalize the Fritz Creek Payment, the Purchasers propose that the Authority pay HEA $600,000 from amounts held under the Power Revenue Bond Resolution, adopted September 7, 1989 (the "Bond Resolution"), securing the Authority’s Power Revenue Bonds, First and Second Series (Bradley Lake Hydroelectric Project) (the "Bonds"), and that the Purchasers other than HEA Memo to Brent Petrie Alaska Energy Authority April 13, 1993 Page 2 pay, as a portion of Annual Project Costs under the Power Sales Agreement, debt service on the Bonds allocable to this reimbursement. ll. Section 31 of the Power Sales Agreement. Section 31 (a)(ii) of the Power Sales Agreement provides for the capitalization of certain costs of the Purchasers as follows: (a) Promptly after the Committee is formed, and before the Authority first issues Bonds, the Purchaser members of the Committee shall determine by the affirmative vote of members whose Percentage Shares equal or exceed eighty percent (80%) of Project Capacity and of Annual Project Costs: * * * (ii) whether and to what extent the costs incurred by the individual Purchasers in conjunc- tion with this Agreement prior to the Date of Commercial Operation should be capitalized and reimbursed through issuance of additional Bonds, and whether and to what extent the costs of debt service on those additional Bonds should be added to Annual Project Costs and allocated among Purchasers either in accor- dance with their respective Percentage Shares or in some other manner. Section 31(b) of the Power Sales Agreement states that if the Purchasers provide the Authority with a determination under Section 31(a)(ii), the Authority shall issue additional bonds in the requisite principal amount and include debt service on the additional bonds in Annual Project Costs, allocating that debt service among the Purchasers in the manner specified in such determination. The literal terms of Section 31 of the Power Sales Agreement do not apply to the present proposal of the Purchasers. The Purchasers’ proposal fails the condition in Section 31(a)(ii) that the Purchasers determine whether to capitalize costs before the Authority issued the Bonds. Similarly, the proposal provides for capitalization with amounts presently held under the Bond Resolution, rather than Memo to-Brent Petrie Alaska Energy Authority April 13, 1993 Page 3 with the proceeds of additional bonds. Therefore, a Section 31 (a)(ii) determination based upon the Purchasers’ proposal would not invoke the Section 31(b) obligation of the Authority to capitalize the Purchasers’ costs by issuing additional bonds. However, we see no reason why the Authority could not elect to waive the conditions in Section 31(a)(ii) and accept the Purchasers’ proposal, provided, (i) the capitalization of the Fritz Creek Payment would have no adverse effect on the security for the Bonds and is authorized under the Bond Resolution; (ii) the capitalization of the Fritz Creek Payment would have no adverse effect on the tax exemption of interest on the Bonds; and (iii) the Purchasers’ proposal is duly adopted by the Purchasers under Section 31(a) of the Power Sales Agreement. We next address each of these issues. lll. Security of the Bonds. The funds held under the Bond Resolution that have been suggested as sources for the Fritz Creek Payment are the Renewal and Contingency Reserve Fund and the Construction Fund. Under Section 509 of the Bond Resolution, amounts in the Renewal and Contingency Reserve Fund are committed to payment of the costs of capital improvements to the Project, extraordinary operation and maintenance costs, and contingencies. Owners of the Bonds are entitled to the security provided by the restrictions on the used of amounts in this fund, and such amounts cannot be applied to the Fritz Creek Payment. Section 503 of the Bond Resolution provides that amounts in the Construc- tion Fund shall be applied to the Cost of Acquisition and Construction of the Project. The Bond Resolution defines "Cost of Acquisition and Construction" to include -"all costs and expenses...of placing the Project...in operation." This definition further provides that "such costs shall include amounts required to be paid to any other party which are applied or to to be applied under agreement to the payment of Costs of Acquisition and Construction." The definition of "Project" in the Bond Resolution incorporates by reference the description of the Project in Exhibit C to the Power Sales Agreement. That description specifically excludes the Fritz Creek Line. However, the costs that are to be reimbursed with the Fritz Creek Payment were incurred to accelerate the construction of the FritZ Creek Line, which was necessary to place the Project in operation. Thus the definition of Cost of Acquisition and Construction appears to be broad enough to include the Fritz Creek Payment. Memo to Brent Petrie Alaska Energy Authority April 13, 1993 Page 4 The principal reason for a narrower interpretation of the definition of Cost of Acquisition and Construction would have been that a narrower interpretation was necessary to assure there were sufficient funds in the Construction Fund to bring the Project to commercial operation, at which time the Purchasers’ take-or- pay obligations under the Power Sales Agreement would commence under Section 2(b) of the Power Sales Agreement and became the principal security for the payment of debt service on the Bonds. Now that the Date of Commercial Operation has passed, making the Fritz Creek Payment from the Construction Fund would have a de minimis effect on Bondowner security. In our opinion it is a properly authorized payment from the Construction Fund. IV. Tax Exemption. No original proceeds of the Bonds were deposited in the Construction Fund under the Bond Resolution. The amounts in the Construction Fund consist of (i) moneys transferred from funds and accounts held under the Indenture securing the Authority’s Variable Rate Demand Bonds (Bradley Lake Hydroelectric Project) (the "1985 Bonds"), upon the retirement of all outstanding 1985 Bonds in 1990; and (ii) proceeds from the investment of such moneys. A portion of these moneys have become transferred proceeds of the Bonds under former Treas. Reg. § 1.148- 4T(e). The Bonds were issued as tax-exempt private activity bonds for a facility for the local furnishing of electricity, under Section 142(f) of the Internal Revenue Code of 1986 (the "Code") as modified by the transition rule in section 645 of the Deficit Reduction Act of 1984 (See 1986 Tax Reform Act Blue Book, p. 1170). Section 142(a) of the Code provides that the Bonds qualify as tax-exempt private activity bonds if 95 percent or more of their net proceeds are used to provide a facility for the local furnishing of electricity. Section 150(a)(3) of the Code defines “net proceeds" of an issue as the proceeds of the issue reduced by amounts in a reasonably required reserve or replacement fund. The Code and Treasury Regulations no not specifically address whether "net proceeds" as defined in Section 150(a)(3) of the Code include transferred proceeds. The definitions of "proceeds" in former Treas Reg §1.148-8T(d)(2) and current Treas. Reg. §1.148-8(d)(2), which include transferred proceeds, apply be their terms only for purposes of arbitrage rebate, or arbitrage rebate and other arbitrage requirements relating to refundings, respectively. However, for purposes of this analysis, we will assume that expenditures of transferred proceeds of the Memo to Brent Petrie Alaska Energy Authority April 13, 1993 Page 5 Bonds must be taken into account in determining whether 95 percent or more of the net proceeds of the Bonds are used to provide an exempt facility in accor- dance with Section 142 of the Code. We will assume further that all of the moneys remaining in the Construction Fund under the Bond Resolution must be allocated to transferred proceeds of the Bonds. Section 645 of the Deficit Reduction Act of 1984 provides for the tax exemption of the Bonds notwithstanding the "two-county rule" in Section 142(f)(1) of the Code, if they were issued to finance the facility described in Section 645. This description is intended to identify the Project.’ Section 645 of the Deficit Reduction Act of 1984 does not define in detail the precise scope of the facility to which its terms apply. The only basis for determining the scope of the facility appears in Section 645(i), which states, "the facility was initially authorized by the Federal Government in 1962." The reference to federal approval in this statute has caused us to consider the scope of the facility that is made eligible for tax exempt financing under this provision to be determined by the FERC license for the Project. The description of the Project in the FERC license does not include the Fritz Creek Line. Thus the expenditure for the Fritz Creek Line may come only from the five percent of net proceeds of the Bonds that may be expended other than for exempt facility purposes. The Authority has determined that an additional $4,312,192 of proceeds could be expended for non-exempt facility purposes within the five percent of net proceeds limit of Section 142(a) of the Code. This amount is sufficient to provide for the $600,000 expenditure for the Fritz Creek Line. Section 57(a)(5)(A) of the Code identifies interest on a "specified private activity bond" as an item of tax preference subject to alternative minimum tax under Section 55 of the Code. However, Section 57(a)(5)(C)(iii) of the Code excludes ‘Section 645 provides in relevant part: ...facilities for the local furnishing of electric energy also shall include a facility that is part of a system providing service to the general populace-- (i) if the facility was initially authorized by the Federal Government in 1962; (ii) if the facility receives financing of at least 25 percent by an exempt person; (iii) if the electric energy generated by the facility is purchased by an electric cooperative qualified as a rural electric borrower under 7 U.S.C. §901 et. seq. and; (iv) if the facility is located in a noncontiguous State. Memo to Brent Petrie Alaska Energy Authority April 13, 1993 Page 6 from the term "private activity bond" for purposes of the alternative minimum tax any refunding bond if the refunded bond was issued before August 8, 1986. The 1986 Tax Reform Act Blue Book, at p. 443, states that "refunding bond" as used in Section 57(a)(5)(iii) of the Code refers to bonds issued exclusively to refund an issue of bonds. At the time the Bonds were issued, we determined that the Bonds were refunding bonds for this purpose because we understood that all original proceeds of the Bonds would be used either to refund the bonds issued for construction of the Project or for the ancillary purposes enumerated in Treas. Reg. § 1.103-15(b)(1) that would not cause those proceeds to be “excess proceeds" for purposes of Treas. Reg. §1.103-15(a). The proposed expenditure for the Fritz Creek Line would not come within the purposes listed in Treas. Reg. §1.103- 15(b)(1). However, this expenditure would be an expenditure of transferred proceeds, rather than original proceeds, of the Bonds. We do not believe that the requirement under Section 57(a)(5)(iii) that the proceeds of the Bonds be issued exclusively to refund an issue of bonds imposes any restriction on the expenditure of transferred proceeds of the Bonds. Therefore, an expenditure of $600,000 from transferred proceeds of the Bonds for the Fritz Creek Line would not cause interest on the Bonds to be subject to alternative minimum tax. V. Procedure. While Section 31 of the Power Sales Agreement does not obligate the Authority to accept the Purchasers’ proposal, Section 31 provides the basis for the Purchasers’ payment of debt service on the Bonds allocable to the Fritz Creek Payment. To establish the basis for this payment, the Purchasers’ proposal to make the Fritz Creek Payment from amounts held under the Bond Resolution and to apportion among the Purchasers responsibility for debt service on the Bonds allocable to that payment, should be adopted by the procedure established in Section 31(a). This procedure requires (i) action of Purchaser members of the Committee whose Percentage Shares equal or exceed 80% of project capacity and of annual project costs, (ii) determining that the Fritz Creek Payment should be capitalized and reimbursed from amounts held under the Bond Resolution, and (iii) determining that debt service on the Bonds allocable to the Fritz Creek Payment should be included in Annual Project Costs, and (iv) prescribing the manner in which that debt service should be allocated among the Purchasers. BRADLEY LAKE HYDROELECTRIC PROJECT SUMMARY OF OF FINANCING COSTS THROUGH JUNE 30, 1993 Interest Expense Interest Revenue Issuance Costs At Bond Closing: Program Fee/Insurance Cost of issuance at Closing Underwriter's Discount Cost of issuance paid through Trustee Sub-total Reserve Funds Capital Reserve Fund Operating Reserve Fund Renewal & Contingency Reserve Fund Sub-total Bond Discount Bond Discount Bond Premium Sub-total Total Financing Costs Projected Financing Costs (January 1991) Favorable Variance Variable Rate Demand Bond 65,251,362 (96,571,980) 7,714,588 1,523,041 2,006,250 11,243,879 3535797 11,597,676 0 (19,722,942) Power Revenue Bonds 18,973,652 (12,529,503) 1,302,839 8,500 2,155,662 3,467,001 879,744 4,346,745 13,393,000 0 1,607,908 15,000,908 3,842,140 (179,533) 3,662,607 29,454,408 FINCOST7.XLS, 4/1/93: 2:41 PM, Page | of 1 State Fund 0 625,000 3,392,092 4,017,092 4,017,092 15,249,000 Total Costs 84,225,014 (109,101,483) 9,017,427 1,531,541 4,161,912 14,710,880 1,233,541 15,944,421 13,393,000 625,000 5,000,000 19,018,000 3,842,140 (179,533) 3,662,607 13,748,559 1,500,441 2 LN3WHOWLLY ATTACHMENT 3 BRADLEY LAKE HYDROELECTRIC PROJECT RECONCILIATION OF PROJECT COSTS (Estimate as of May 12, 1993) Construction Cost $314,500,000 Financing Cost $13,750,000 Total Project Cost $328,250,000 Less Section 31 Cost $2,255,000 (Includes Fritz Creek Costs) Net Dividable Project Cost $325,995,000 (50% State/50% Utility) Utility Share State Share Net Project Cost (50/50) $162,997,500 $162,997,500 Section 31 Costs $2,255,000 $0 Total Share $165,252,500 $162,997,500 Appropriations $0 $175,080,000 Bond Proceeds $165,260,000 $0 Surplus (Shortage) $7,500 $12,082,500 dburgeriexcel\miscellCONCOST.XLS Page 1 5/12/93 4:45 PM BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES March 3, 1993 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. ROLL CALL Alaska Energy Authority Brent N. Petrie, Designated 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 Dave Fair, Alternate 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 John Cooley, Chugach Electric Association BPMC Meeting Minutes March 3, 1993 Page 2 of 13 Tom Lovas, Chugach Electric Association Jim Hall, Matanuska Electric Association Bob Hufman, AEG&T Moe Aslam, Municipal Light & Power Bob Price, Municipal Light & Power Dave Calvert, City of Seward David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority Eric Wohlforth, Wohlforth, Argetsinger, Johnson & Brecht Tom Klinkner, Wohlforth, Argetsinger, Johnson & Brecht Jim Seagraves, Nuveen 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS The following items were added to the agenda: 11 E. Section 31 Costs 11 F. Agreements Discussion 12 C. Refinancing of Bradley Lake Bonds 5. APPROVAL OF MINUTES - January 14, 1993 The minutes of the January 14, 1993 Bradley PMC meeting were approved with minor corrections (Action 93-164). 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met and noted that an update of the SVC testing would be included with the O&D Subcommittee report. 7 BUDGET SUBCOMMITTEE REPORT Bradl e Con: ion Audi FY92 O. Audi Mr. Ritchey reported that both audits were nearly completed. A draft report on the construction cost audit is expected from Metzler and Associates by mid- March. Copies of the audit will be distributed to AEA and members of the dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 3 of 13 Budget Subcommittee. Final reports of both audits are expected by the end of March. FY94 Budget Noting that BPMC approval of the budget was required by April 1, 1993, Mr. Ritchey informed the Committee that the FY94 budget was very similar to the FY93 budget. It was anticipated that the FY94 budget would be ready for distribution to the BPMC members by mid-March. Mr. Ritchey recommended that the BPMC schedule a meeting or teleconference at the end of March to consider approval of the budget. Fish Studies Mr. Ritchey relayed the Subcommittee had discussed continuing funding of the Bradley River fisheries studies. AEA recommended a three year fisheries studies program. The studies, also supported by other State and Federal resource agencies, would determine how much water was actually needed for salmon spawning. It is anticipated the results may indicate that the current flow requirements (40 cfs winter and 100 cfs summer) are higher than necessary to ensure salmon egg incubation. The total cost of the three year studies program is expected to be $117,000. It was pointed out that a reduction of the minimum flow requirement could ultimately save the utilities as much as $2,500/day. Lower minimum flow requirements could reduce potential violations due to current monitoring difficulties (i.e., icing at the gage stations). Additionally, information gained by the studies could be used to support alternate monitoring methods. Mr. Ritchey noted that the Budget Subcommittee revised the FY93 budget to include an additional $4,600 for this year's studies and that additional funds would be added to the FY94 budget to continue the studies. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported the Agreements Subcommittee held two teleconference meetings. Final revisions were made to the Soldotna Substation Agreement and Transmission Facilities Maintenance Agreement. Comments have not been received on the draft Daves Creek or Soldotna SVC Facilities Maintenance Agreements that were distributed in December. Agreements Discussion Mr. Saxton, referring to his memorandum dated March 2, 1993, recommended that the BPMC establish a master agreement designed to clearly define the role dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 4 of 13 and rights of the Committee to which all other agreements would be subject (Attachment 1). Mr. Saxton explained that the master agreement would define and preserve the rights of the BPMC without requiring the already completed agreements to be rewritten. Noting that AEA had only received Mr. Saxton's memorandum the day before, Mr. Petrie requested additional time to review the proposal before any action was taken by the Committee. In response to inquiry by Mr. Kelly, Mr. Saxton stated that the master agreement would recognize the BPMC as the central authority (rather than AEA). Mr. Lovas noted that there was no intent to change or create legal entities or relationships, but to reshape the agreements in order to be consistent. Chairman Highers deferred further discussion to Agenda Item 11 F., Agreements Discussion. 9. OPERATION & DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski distributed a summary of the January 28, 1993 O&D Subcommittee meeting without additional comment (Attachment 2). Fish Water Bypass Update Mr. Eberle reported AEA anticipated removal of the estimated 40 - 60 cubic yards of material blocking the intake using hydraulic dredges through the ice. Proposals will be requested from three diving firms and the contract awarded by mid-March. Work is expected to begin March 22, 1993 and take about two weeks to complete. The total cost of the work is currently approximated at $125, 000. SVC Testing Mr. Burringame distributed a summary of SVC Testing (Attachment 3). Reporting that the SVC systems performed well during testing, Mr. Burlingame noted the only problem was with the capacitors. The SVC's have not been energized below zero degrees without experiencing capacitor problems. ABB is trying to determine if the problem is the capacitors or system harmonics. Testing of the SVC is expected to be completed by March 5, 1993. Mr. Burlingame reported two outages had occurred which fully tested the SVC system. While Bradley was operating at 115 megawatts, a 73 megawatt load trip islanded the Kenai, splitting the Kenai into two islands. The SVC operated at 64 hertz and the voltage remained solid until the Kenai blacked out. Mr. Burlingame noted that the present SVC configuration did not allow the Kenai to be picked up while black, however, the configuration was being changed. During the second outage, both Bradley Lake units were synchronized dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 5 of 13 10. 11. on line at 61.2 hertz. A synch-check relay closed the units in, causing a 90 megawatt power swing on the Kenai. The SVC dampened the severe voltage swings, but hit its ceiling of 70 megavars for five seconds. Air Crash Accident Reporting on the February 20, 1993 South Central Air plane crash at the Bradley Lake Project, Mr. Sieczkowski informed the Committee that the air craft experienced difficulty upon takeoff from the Project airstrip. Larry Wolf, John Zidalis and his wife Gail, and their grandson were in the plane. The plane clipped the fence at the end of the runway and crashed, nose down, into the tidal flats. The pilot, Larry, John and Gail received multiple injuries, however all are recovering. The grandson was uninjured. Anticipated recovery time for both Larry and John is expected to be about two months. Mr. Sieczkowski noted that Richard Turner has assumed John Zidalis's responsibilities at the Project site and Dave Eberle is filling in for Larry Wolf. The cause of the accident is currently being investigated by the FAA and NTSB. REVIEW OF PROJECT STATUS Mr. Eberle reported that problems with the Bradley Lake governors (AGC) are being worked on. ABB is investigating the problem with the SVC capacitors. ABB suspects the problem may be caused by a manufacturing defect and expects that, when identified, the faulty capacitors will be replaced. Eight proposals have been accepted by AEA for the contaminated soil cleanup work. Bids are expected from the proposers by mid-March. Mr. Eberle noted that the capacitance rating of the existing CEA breaker at the Soldotna Substation was not high enough and that AEA was purchasing a new breaker to replace it. Installation of the new breaker is expected to be completed by the end of July 1993. IBEW r Negotiation Mr. Sieczkowski reported the IBEW made an initial proposal to AEA to which AEA provided a counter proposal. The negotiations broke down and the IBEW issued a complaint of unfair labor practice. AEA is preparing another counter proposal and will be meeting with the IBEW on March 22, 1993. OLD BUSINESS dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 6 of 13 Spinning Reserve/Under Frequency Load Shedding Update Mr. Lovas reported that the Intertie Operating Committee had received a load shedding schedule recommendation. The proposal included recommendations for additional work and investigation by the ASCC Reliability Criteria Committee (or some other group). The current proposed load shedding schedule is subject to action on or before March 19, 1993. If approved, the new schedule will go into effect within 60 days. The ASCC is focusing on defining various aspects of spin and spinning resources (i.e., quality, character, distribution and location of spinning resources). The Reliability Criteria Committee is currently compiling utility input regarding the spinning reserve and operating reserve issues. Bradley Scheduling vs. Spin Requirement Mr. Saxton stated that, with the exception of AML&P, neither the utilities or AEA had submitted any comments regarding spin requirements. Mr. Lovas noted that CEA had agreed to carry additional spin on behalf of SES and MEA (and HEA) to cover the portion attributable to each utility until February 1, 1993. It was clarified that CEA was no longer covering that portion of spin. Mr. Stahr stated that the utilities still had a spin obligation and recommended that the BPMC consider whether AEA had a spin obligation. Mr. Saxton pointed out that both issues needed to be addressed, stating that the only binding spin requirement was in the Intertie Operating Agreement. Mr. Lovas stated that the RCC was investigating system technical requirements and representative shares of the utilities, but it had not discussed the issue of AEA spin obligation. In response to Mr. Kelly, Mr. Lovas confirmed that the issue of utility spin obligations and share proportions ( allocation of spin responsibilities) could be addressed by the RCC. However, Mr. Lovas felt that determining any AEA spin obligation was beyond the authority of the RCC. Mr. Kelly cautioned against allowing the issue to be dropped. Mr. Saxton stated it was his understanding from a previous BPMC meeting that the utilities were to submit written comments on the spin requirements to him. Mr. Stahr observed that, at some point, the utilities were going to have to find a consensus solution, rather than a solution favorable to an individual utility. Mr. Kelly suggested that the dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 7 of 13 utilities review the AML&P comments and either agree with them or provide their own comments. Mr. Petrie stated AEA will provide comments on the spin requirement issue to Mr. Saxton. Mr. Stahr will distribute AML&P's previous comments to the utilities for reference and recommended that all utility responses be forwarded to Mr. Saxton. Mr. Petrie, acting as Chairman, directed the utilities to submit responses to Mr. Saxton no later than March 30, 1993.1 Additionally, Mr. Kelly recommended that the utilities send each other a copy of their response. Fritz Creek Segment Funding Mr. Petrie reported the Energy Authority bond counsel and accountant were researching methods to restructure money within the bond issue to cover HEA's acceleration cost for the Fritz Creek transmission line segment. Mr. Petrie stated that AEA expected to be able to make a recommendation to the Committee at its next meeting. Mr. Saxton requested that AEA forward its findings to him. Mr. Petrie confirmed that the information and resulting recommendations would be forwarded. Mr. Saxton asked if HEA had developed any alternative proposals in case ABA's efforts were unsuccessful. Reiterating HEA's position presented by Mr. Story at the January 14, 1993 BPMC meeting, Mr. Fair stated it (funding of the Fritz Creek line costs) was not HEA's problem. Mr. Fair noted that it was an obligation of the Project and that three financing options had been provided in the Transmission Agreement. Mr. Fair stated that HEA was not responsible to independently resolve the problem. Fish Water Bypass Update This item was previously discussed under Item 10, Review of Project Status. Section 31 Costs This item refers to funding of the Fritz Creek Segment previously discussed under Item 11 C. Agreements Discussion | In the temporary absence of the Committee Chairman and in the absence of the Vice Chairman, the Committee Secretary, Mr. Brent Petrie, served as Acting Chairman. dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 8 of 13 Review of List of Agreements Mr. Saxton stated that no comments had been received on the list of railbelt agreements distributed at the last Committee meeting. Mr. Petrie directed the utilities to submit revisions of the list to Tom Lovas. Master Agreement The Committee continued discussion of the master agreement concept started under Item 8., Agreements Subcommittee Report, Agreements Discussion. Mr. Saxton stated that his memorandum outlined the least intrusive way to accomplish transfer of the BPMC to the central role without throwing away the work already done on the agreements. Mr. Petrie reiterated his earlier request for more time to review the proposal, stating that AEA was not prepared to vote on the recommendation. AEA wanted, however, to pursue closure of the current agreements. Mr. Petrie stated that if the agreements could not be signed, AEA would need to develop an interim memorandum of understanding with HEA. Mr. Saxton stated, according to the Power Sales Agreement, the BPMC was given the authority to operate and maintain the Project. Mr. Saxton further stated, at question was the right of AEA to independently contract with the utilities. Mr. Saxton explained that his recommendation ensured that both the BPMC and AEA agreed, adding that neither had the right to act independently. Mr. Saxton clarified that the proposed master agreement would relate to both past and future agreements (excluding power sales, services and transmission agreements). Mr. Fair expressed concern over the potential delay of completing the Substation Maintenance Agreement. Mr. Fair noted that HEA had a temporary Transmission Maintenance Agreement but no Substation Maintenance Agreement. Mr. Sieczkowski and Mr. Fair agreed that, a temporary substation agreement was needed in the absence of a final agreement. Mr. Saxton contended that the creation of a master agreement would not produce any more substantial delays, citing the process had already taken about one year.2 Mr. Fair requested direction from the Committee on whether HEA should delay signing the current agreements. Mr. Stahr recommended that the established process continue and all agreements be done the same way and all modified the 2 Chairman Highers returned to the meeting. dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 9 of 13 same way. It was the understanding of Mssrs. Petrie and Fair that the members of Agreements Subcommittee were ready to approve the agreements for signature. Mr. Saxton disagreed, stating his understanding was that the members of the Subcommittee had not reached a consensus favorable to signing the present agreements. Mr. Sieczkowski stated that prior to Mr. Saxton's memorandum, all final comments had been incorporated and the agreements were recommended for signature and, in fact, were ready to sign. In response to Mr. Kelly, Mr. Saxton stated that the BPMC had the ability to contract directly, however, that it would result in disadvantages as well as advantages. Mr. Fair commented that he did not disagree with the proposed master agreement and even supported the concept. Noting that HEA now had SVC equipment installed at its substations, Mr. Fair added that any further delay finalizing the agreements created a practical problem for HEA. Mr. Saxton pointed out that, even though the agreements were ready to sign, the agreements and resulting budgets needed to be approved by the BPMC. Mr. Saxton stated that the development of a master agreement could be accomplished within two or three days and would not cause a significant delay. Mr. Kelly asked what would happen if the Energy Authority ceased to exist and how that would affect the Project under the proposed master agreement. Mr. Saxton explained that the agreements would be composed of three parties: the BPMC, the Energy Authority, and the individual utility, and to accommodate for loss of the Energy Authority would be more complex than the current proposed master agreement. Mr. Eberle suggested that the Committee execute the current pending agreements with a provision that the agreements be subject to the proposed master agreement. Mr. Kelly concurred, recommending that a clause be included in the pending agreements recognizing the authority of the master agreement and that the master agreement address the possible disappearance of the Energy Authority or a change in BPMC policy. Mr. Saxton proposed CEA, HEA and AEA sign a letter of agreement subjecting all utility operating agreements to a master agreement which would allow the current process to continue and pending agreements to be signed. Mssrs. Petrie, Fair and Highers preferred that a clause be included in the pending agreements rather than a separate letter agreement. In accordance with the consensus of the dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 10 of 13 Committee, Mr. Saxton will draft and distribute the clause to the utilities within a few days. 12. | NEW BUSINESS A. Revised Scheduling & Allocation Procedures Mr. Sieczkowski reported that the Operation & Dispatch Subcommittee recommended adoption of the revised Scheduling & Allocation Procedures. Mr. Kelly moved to approve the revised procedures. Secon Mr. Petrie, the revised Scheduli Allocation Procedures wel ved by unanimo! 1 vote after minor corrections w no Action 93-165). B. Operations Fund Contingency Resolution Mr. Saxton deferred discussion of this item to the next regular Committee meeting. Cc. Refinancing Bradley Lake Bonds Chairman Highers noted a memorandum regarding possible refinancing had been sent to the Committee by Mr. Petrie (Attachment 4). Mr. Petrie informed the Committee that AEA had received three bond refunding proposals, noting that two were later withdrawn. The remaining proposal, submitted by Nuveen, specifically addressed the portion of the bond funds allocable to AML&P and the City of Seward. Mr. Petrie noted that, due to anticipated changes in the tax laws, there was only a limited amount of time to complete the bond refunding transaction. Addressing the Committee, Mr. Seagraves explained that private activity bonds cannot be typically advance refunded, however under the current tax law, the portion of the bond funds attributable to municipal entities (i.e., AML&P and Seward) could be refunded. Referring to the Nuveen proposal, Mr. Seagraves noted a calculated savings of $3,000,000 (under present market conditions). Mr. Wohlforth relayed that treasury regulations amended last year allowed portions of bond fundings to be allocated for different purposes. The regulations also state that governmental purpose (not private) bonds may be advance refunded. Therefore, those portions of the Bradley dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 11 of 13 bond which qualified as government purpose were eligible for refunding. However, the regulation that allows advance refunding of the bond will end with new treasury regulations effective July 1, 1993. Mr. Wohlforth stated his firm was confident that the municipal portions of the Bradley bonds could be refunded under the current regulations and would survive any Treasury scrutiny. Mr. Kelly asked if the bond refunding could be insured against a later (retroactive) determination of tax liability. Mr. Wohlforth explained the bond insurer does not insure for legal risk (only economic). Mr. Wohlforth stated that any potential problem would become evident prior to the bond closing and expressed confidence in the tax analysis. Mr. Seagraves, citing the Daily Bond Buyer, stated that the only post closing, retroactive tax liability decisions occurred in obvious fraudulent ~ cases. Mr. Klinkner stated that the tax analysis was innovative and within the law, however, the law was expected to change to disallow this type of transaction. Mr. Lovas questioned whether the analysis addressed the receipt of the savings produced by the refunding by private participants. It was Mr. Wohlforth's belief that the effect of the refunding would not influence any tax liability determination. Chairman Highers stated that investigations by CEA indicated a lack of consensus regarding the interpretation of current Treasury regulations. Mr. Seagraves noted that, as a general rule, a three percent savings guideline is applied when evaluating the cost effectiveness of refunding. It was clarified that all expenses related to the bond sale could be capitalized. In response to inquiry by Mr. Lovas, Mr. Seagraves indicated that a simultaneous series of bonds could be issued to provide for additional project costs (i.e., HEA acceleration costs for the Fritz Creek transmission line). Mr. Seagraves estimated that the preliminary bond sale efforts would cost approximately $15,000 and that the majority of the associated costs would not be incurred until the final decision is made just before the sale. It was noted that the utilities must first unanimously agree to the bond sale. Mr. Petrie informed the Committee that a letter of intent to issue bonds was required by the State sixty days in advance of the sale. Mr. Petrie anticipated minimal legal costs associated with the preliminary effort. Chairman Highers expressed reservations committing to the bond sale. Mr. Stahr noted that what he estimated to be an annual saving of dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 12 of 13 $25,000 might not provide sufficient incentive to take even a small risk. Mr. Petrie recommended that the Committee approve only the preliminary work and defer the final decision. Mr. Wohlforth noted that the next opportunity to refinance (after July 1, 1993) was not until 1999, when the bonds were callable. Mr. Seagraves cautioned that, as in any bond sale, market conditions were subject to change. Addressing tax liability, Mr. Wohlforth stated that if the proposed refunding received an unfavorable tax determination, it would not effect the previous bonds. Mr. Seagraves added that application of a retroactive tax was highly unlikely, however, if, in a hypothetical extreme case, it did occur, the bond holders would sue. Mr. Seagraves explained that the burden became the bond holders and that the utilities were only obligated to pay the debt service originally agreed to. Mr. Seagraves informed the Committee that the bonds had close by July 1, 1993 and that preparation for the bond sale should by complete by June 1, 1993. If the notice of intent to issue bonds was given within the next few days, Mr. Seagraves stated the bond sale could take place as early as the first week of May, or any time favorable between then and July 1, 1993. Mr. Stahr stated that AML&P counsel was conservative and hesitant to proceed without an IRS opinion, however, AML&P would agree to proceed with limited preliminary steps. Mr. Kelly motioned that AEA ive n ture of i issue bond. The motion was seconded and passed by the following role call vote: IO iQ SB * => S * Ip" S ie. I< I< P< Iden _V: a Ligh T SS i. re > p< Action 93-1 Mr. ion BPM im . investigate the Bradley Lake bond refunding not to exceed $25,000. 3 Costs include AEA bond counsel and AML&P legal counsel. dburger\word\minutes\pmc\03-93 BPMC Meeting Minutes March 3, 1993 Page 13 of 13 The motion, seconded by Mr. Ritchey, passed by unanimous role call vote (Action 93-167). Chairman Highers requested that the utility managers be kept informed on the issue. 13. . COMMUNICATIONS A. Schedule Next Meeting March 30, 1993 9:00 a.m. via Teleconference The teleconference will address approval of the budget and the Bradley bond refunding. Mr. Burlingame noted that the Committee would need to meet in April to discuss release of the 90 megawatt interim operating restriction. Mr. Stahr motioned that th ion & Di: h mmi thorized to in e the proj utput to 120 megawatts (or another rmined a) riate level onl nsen f the Subcommittee. The motion nded by Mr. Kell was approved by unanimous role call vote (Action 93-168). Mr. Ritch val of attorney | expenses for the month of January 1993. Mr. Kelly moved the Committee approve the expenses. on Mr. Ritch he expenses were approved by unanimous role call vote (Action 93-169). 14. ADJOURNMENT 0 further business before the Committee, the meeting adjourned at 1:05 p.m. David L. Highers, Chairman wie rel MCE ——$ Brent N. Petrie, Secretary dburger\word\minutes\pmc\03-93 WYNN ° a-Ue edvvy 249 YVI9 ALER WINE Ju va ov as: ATTACHMENT 1 ATER WYNNE mee HEWITT Portland, Ovegon 97201-6618 . (503) 226-1198 DODSON Fax So Zapcors & SKERRITT ATTORNEYS AT LAW DUPLICA FACSIMILE TRANSMITTAL NOTICE: This facsimile contains confidential information that is being transmitted to and is intended only for the use of the recipient named below. Reading, disclosure, discussion, ssemination, distribution, or copying of this information by anyone other than the named recipient or his:or her employees or agents is strictly prohibited. If you have received this facsimile in error, please immediately destroy it and notify us by telephone, (503) 226~1191. DATE: March 2.1993 0 TO: SEE BELOW CITY/STATE: ne ee FAX NUMBER: OFFICE NUMBER: FROM: Re 068 on —— eee DOCUMENT : Memo re: Master Operating Agreement Outline _ PAGES (INCL. COVER)__.6 _.-—=s—-«-«; USAGE TIME CLIENT NUMBER: _53944-0000 Fax No, Office No. Dave Highers, Tom Lovas, CBA, Ancho 7 AK 907/562-0027 907/563-7494 Ken Ritchey, « Palmer, AK 907/745-9368 907/745-3231 Paul Diener, City of Seward, Seward, AK 907/224-3248 907/224-3331 Norm Story, HBA, Homer, AK 907/235-3313 907/235-8167 Mike Kelly, GVEA, Fairbanks, AK 907/451-5633 907/452-1151 Tom Stahr, ML&P, Anchorage, AK 907/263-5204 907/263-5201 Ro. D Brent Petrie, tan Sieczkowski; ABA, Anchorage ——907/561-8584 907/561~7877 WL8\ BPMC. fax 03/02/93 11:01 50° “76 0079 ATER WYNNE @007/007 ATER WYNNE BPMC March 2, 1993 Page 5 6. Payment, Accounts, Records and Audits, Extraordinary Maintenance, Insurance, Indemnity, Uncontrollable Forces and other "boiler plate" provisions would be part of the Master Operating Agreement. 7. Listing of ABA Major Equipment (Exhibit B). The exhibit to the Master Operating Agreement would contain a similar list of equipment. £ ake P O&M _A ts. The following is a list of agreements between AEA and | individual Bradley Lake participants which could be included in a “Master Operating Agreement". le Dispatch Agreement between AEA and CEA. Ze Maintenance Agreement between AEA and Maintenance Contractor. 3. Transmission Facilities Maintenance Agreement between AEA and AEG&T. 4. Facilities Interconnected Dispatch Agreement between AEA and HEA, a5 Communications Equipment Agreement between AEA and DIVCOM. 6. Static VAR Compensator Systems at Daves Creek and Soldotna Maintenance Agreement between AEA and CEA, 7. Operating Agreement with Bradley Lake contract operator. Distribution: Paul Diener, Seward Ken Ritchey, MEA Dave Highers, CEA Norm Story, HEA Mike Kelly, GVEA Tom Stahr, ML&P Ron Garzini, AEA Brent Petrie, AEA Stan Sieczkowski, AEA LGIN Sdigh.doo 03/02/93 11:00 50% 926 0079 ATER WYNNE 008/007 ATER WYNNE BPMC March 2, 1993 Page 4 b. Budget Preparation. Unless otherwise agreed, all contractors will be subject to the same requirements regarding budget submission and subsequent approval process by the BPMC (and AEA). ce. invoice and Payment. Standard procedures for invoices and payments of contractor costs will be included in the Master Operating Agreement. ai Dispyte Resolution. Consistent with BPMC description above. e. Insurance. The base agreement would contain guidelines but leave details to each contractor's exhibit. des In and F eure. Same for all contractors. 6. Contractor Exhibit. Each Contractor for the Project would execute a detailed exhibit with AEA and be obligated to the terms and conditions affecting Contractors included in the Master Operating Agreement. The specific duties relating to the work performed by the Contractor would be contained in the exhibit. All exhibits would be subject to BPMC approval prior to execution or amendment. An Example (Outline) of the contents of an exhibit based upon the current AEA-Chugach O&M Agreement for Daves Creek follows: 1. Parties to Exhibit. AEA and Chugach. yi Definitions. The exhibit would contain definitions specifically related to the exhibit (Party, SVC, SVC Facilities). 3. Term of Exhibit. Separate Term and Termination provision. 4. Maintenance of Facilities. Similar to existing O&M Agreement. 5. Maintenence Plan, Schedule and Budget. Section would only include provisions that are unique to the exhibit. 03/02/93 11:00 302 996 0079 ATER WYNNE @005/007 ATER WYNNE BPMC March 2, 1993 Page 3 be included in separate exhibits to the agreement and executed by the AEA and the individual contractor. 3. Term. The term of the Master Operating Agreement would extend until the Bradley Lake Power Sales Agreement terminates. Each of the exhibits signed by AEA and a Contractor would state the term of the exhibit based upon the particular circumstances. 4. BeMc Rights and Obligations. a. Exhibit Approval. BPMC approval would be required before any exhibit (or amendment thereto) detailing the duties of a contractor is executed by the AEA. : b. Budget Approval. All plans and budgets would be submitted to the AEA and the BPMC for approval. The AEA and the individual contractor would be responsible for the preparation of the initial submission of plans and budgets. Cc. AEA Rights. The relationships of the BPMC and the AEA would continue as provided in the Power Sales Agreement. (The limitations on BPMC actions consistent with AEA's legal responsibilities and obligations as a State agency and FERC licensee would be preserved.) Specific procedural requirements (time for approval, payment of obligations, contractor performance) would be included in the Master Operating Agreement with the right of the AEA to proceed in the event of disagreement. d. Dispute Resolution. All disputes would be subject to mediation for a limited period prior to invoking arbitration or litigation. The BPMC would be responsible for setting up mediation and would be a stated party to any mediation or arbitration. e. BPMC Status. The BPMC would sign the Agreement acting on behalf of all the Parties to the Power Sales Agreement. It would continue to act as a non-incorporated body without any separate lagal status. Si. ntr ions. a. id a zr. Unless otherwise agreed, each of the contractors signing an exhibit will act as an independent contractor. RLS idermemn @003 008 U3/02/93 11:32 503 226 0079 ATER WYNNE LY 003/006 ATER WYNNE BPMC March 2, 1993 Page 2 purchasers of Bradley Lake power a direct participatory role in the management of the Project. The BPMC is “responsible for the management, Operation, maintenance, and improvement of the Project" to the extent such responsibilities are consistent with AEA's ownership of the Project. That responsibility can be handled through direct BPMC participation in contract administration, or by making the BPMC the contracting entity for Bradley Lake activities. In either case, the AEA, as a State agency, owner and holder of the FERC license, must retain control of matters affecting its obligations under State law and the FERC license. The existing contracts between AEA and its O&M contractors place the BPMC only in a budget review mode, after AEA and the contractor have reviewed and agreed to the essentials for the following year. The issues that count most to BPMC members are schedule and cost. If the BPMC is involved after the fact, the matters most important to them have already been decided. PROPOSAL The easiest wey to remedy the lack of BPMC involvement is to revise the format of the contracts to make the BPMC's role central in the planning and budgeting process. The AEA would continue its role as contractor, but would use the BPMC (or a subcommittee) to review the schedules, plans and budgets submitted by the contractor. For all matters excepting those where AEA's legal responsibilities are paramount, the BPMC's decision would control. The advantage of this type of revision is that it would require the least change in BPMC/AEA relationships. The following is an outline of the key terms of such an Operating Master Agreement: td of a Li P A ement. lie Parties. AEA, BPMC (acting on behalf of the Bradley Lake Power Sales Agreement Parties) and Contractors for O&M of the Bradley Lake Project and related transmission and communication facilities. ie Nature of Agreement. All Bradley Lake subcontracting would be subject to the same planning and budgetary provisions as provided in the basic agreement. Specific responsibilities would RLS\MSider nem 03/02/93 LES32 @ 002/008 @50" °76 0079 ATER WYNNE = a a eee Sa ATER WYNNE Sune 1800 222 SW. Cobambia HEWITT - ae eH) 26 19 (303) 226-1191 DODSON Fax (503) 226-0079 & SKERRITT ATTORNEYS AT LAW VIA _ FACSIMILE MEMORANDUM TO: BPMC FROM: Ron Saxton and Tom Lovas DATE: March 2, 1993 RE: Bradley Lake Project Management Committee Master Operating Agreement Outline - Alternatives For Bradley Lake BPMC Involvement In Project Management Consistent with the Project Power Sales Agreement For Discussion at Wednesday BPMC Meeting. At the last BPMC meeting, Ron was given the assignment to develop a proposal for clarifying the role of the BPMC in the various Bradley operating agreements. The assignment was to draft these agreements in a way that recognized the BPMC's role in decisions about operating matters. Tom Lovas assisted Ron in the development of the following proposal. In gummary, our proposal is to keep the individual agreements between the AEA and each contractor, but to make all such agreements subject to terms in a Master Operating Agreement to which the BPMC is a party. This approach provides protection of the BPMC concerns, while still allowing individual arrangements between AEA and individual contractors. BACKGROUND The Bradley Project Management Committee was established in the Bradley Lake Project Power Sales Agreement to provide the RLS deme Seattle, Washington Washington, D C. San Francisca, California Affiliated offices tn (206) 623-4711 (202) 785-0303 (415) 421-4143 Anchorage. Fairbanks Fax (206) 467-8406 Pax (202) 783-8676 Fax (415) 989-1263 and Juneau, Alaska dela 001/008 vor uge@s Ab:3L = GPSYB_-226 0079 ce, Pees mort | ert eu tI aif ATER WYNNE Sue 1800 222 S.W. Columbia Portland, Oregon 97201-6618 HEWITT : (503) 226-1191 DODSON mena ATTORNEYS AT LAW FACSIMILE TRANSMITTAL NOTICE: This facsimile contains confidential information that is being transmitted to and is intended only for the use of the recipient named below. Reading, disclosure, discussion, dissemination, distribution, or copying of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited. If you have received this facsimile in error, please immediately destroy it and notify us by telephone, (503) 226-1191. DATE: SNe ee TO: ee eee ee ee CITY/STATE: SEE BELOW 00 FAX NUMBER: OFFICE NUMBER: FROM: —Ron_ Saxton DOCUMENT _Memo_re: Master Operating Agreement Outline PAGES (INCL. COVER)___6 ss USAGE TIME CLIENT NUMBER: _53844-0000 . Fax No, Office No. Dave Highers, Tom Lovas, CEA, Anchorage, AK 907/562-0027 907/563-7494 Ken Ritchey, MEA, Palmer, AK 907/745-9368 907/745-3231 Paul Diener, City of Seward, Seward, AK 907/224-3248 907/224-3331 Norm Story, HEA, Homer, AK 907/235-3313 907/235-8167 Mike Kelly, GVEA, Fairbanks, AK 907/451-5633 907/452-1151 Tom Stahr, ML&P, Anchorage, AK 907/263-5204 907/263-5201 Ro ent Petrie, tan Sieczkowskiv EA, Anchorage ——>907/561-8584 907/561-7877 RLs\ BPMC. fax ATTACHMENT 2 BRADLEY LAKE OPERATION AND DISPATCH SUBCOMMITTEE SUMMARY OF MEETING JANUARY 28, 1993 CORRESPONDENCE Bradley Draw-down, January 8, 1993 Update on Fish Water Bypass Intake Obstruction, January 19, 1993 OPERATIONS Participant subcommittee voting rights were discussed by the Subcommittee. It was noted that questions regarding voting rights had been previously raised at the BPMC level and that Mr. Saxton was investigating the issue. The Chairman will request Mr. Saxton provide written procedural guidelines for the subcommittees. It was reported that a second dive inspection of the fish water bypass intake area disclosed approximately 40 yards of material covering the intake. Because the size of the material is small (generally under 6 inches), the debris could potentially be vacuumed from the intake area. The work will be done in April at a proposed reservoir elevation of 1108' with minimal impact to the scheduling utilities. A reservoir draw-down to the 1068' level would not be required. The utilities will be requested to use an additional 9,000 acre feet of water over current schedule in order to reach the 1108' reservoir level by April 1, 1993. Responsibility for the remaining DECnet installation work was discussed by the Subcommittee. AEA recommended that the DECnet be installed and maintained by the utilities using it. GVEA and AML&P will discuss AEA's recommendation. It was noted that, ultimately, the issue may need to be re-addressed by the TCS and that any additional expenses to complete the task would need to be approved by the BPMC. ACTION ITEMS Transient Stability Analysis Study: The Subcommittee approved recommendation of a transient stability analysis study to be done by Stone & Webster Engineering Corporation for an amount not to exceed $10,000. The study is needed in order to determine potential transient effects in the tunnel in the event of a sudden needle closure at a reservoir elevation below 1080’. ATTACHMENT 3 CHUGACH ELECTRIC ASSOCIATION. INC. Anchorage, Alaska March 3, 1993 TO: Bradley Lake Project Management Committee FROM: David W. Burlingame, Manager, Power Control SUBJECT: Bradley Lake SVC Testing On February 22, 1993 while setting up the system to perform testing for the SVCs, the Kenai peninsula suffered an outage to approximately 60% of the HEA consumers for approximately 1-1/2 minutes and 12,000 Chugach and Golden Valley consumers for 3 minutes. The following is a synopsis of the outage and the follow-up performed since the event: . Bradley Lake was operating at 115 MW Bernice Lake unit 3 was on-line at 23 MW Exports as measured at Daves Creek were 68 MW and 73 MW at Quartz Creek. Quartz Creek breaker to Anchorage tripped on a power swing above 80 MW, islanding the Kenai. This relay was originally set to protect the Kenai for an overexport condition. Immediately following the Kenai separation, the Bernice Lake 115/69 KV transformer was tripped by the transformer differentials, islanding the Bernice Lake Power Plant and Golden Valley and Chugach shed consumer load at 59.3 Hz. Bradley Lake islanded by itself, one unit was placed in deflector by Chugach SCADA upon detection of islanding. Chugach and GVEA restored their consumers but CEA but did not realize the system was separated in three places. The Dispatcher was in contact with the Bradley power plant and the operator did not mention his frequency of 64 Hz. Approximately 4 minutes later, both Bradley Lake units tripped on overfrequency, blacking out the Kenai. Bernice Lake stayed on-line since it was separated from the rest of the Kenai and no service interruptions were experienced by Tesoro or other industrials. Following blackout of the Kenai, HEA load was picked up by closing in from Anchorage. It was 5 minutes before a Bradley Lake unit was synchronized to the system. The overcurrent relay at Quartz Creek has been reset and will no longer trip for power swings. A Chugach SCADA change was made to place a unit in deflector after checking for a gas turbine status and also to block the Bradley units from raise pulses after the needles are fully open. There is still a problem of not having a reliable, fast response frequency source on the Kenai for Bradley Lake, should Bradley become islanded from Bernice. We are working with the AEA to install a frequency source into our SCADA computer via microwave to eliminate this problem. Bradley Lake has been tested up to its full power output of 115 MW. The SVC systems have performed very well, although some problems have been experienced with Bradley Lake. On March 2, 1993 the Bradley units were allowed to synchronize onto the system by a synch-check relay while on an overspeed condition @nits were at 61.25 Hz). The closing caused a large power swing and voltage oscillations on the Kenai. AEA is investigating the problem. The only remaining tests are the Kenai islanding and possible staged fault tests. Testing should be completed by March 6, 1993. ATTACHMENT 4 State of Alaska DS Walter J. Hickel, Governor Alaska Energy Authority A Public Corporation MEMORANDUM VIA FAX AND REGULAR MAIL TO: Bradley Lake Project Management Committee Mr. Ron Saxton, Ater Wynne Hewitt Dodson and Skerritt Mr. Jim Seagraves, John Nuveen & Company Mr. Eric Wohlforth, Wohlforth Argetsinger Johnson & Brecht FROM: BrentN. Petrie ©). AJ, 7 tex Alaska Energy Authority SUBJECT: Partial Refunding of Bradley Lake Bonds DATE: February 24, 1993 Attached is an information item on the possibility of refinancing a limited portion of the outstanding Bradley Lake bonds. Bradley Lake Project Management Committee Chairman Dave Highers has agreed to place this item on the agenda for March 3. We can discuss it further at that time but will need an agreement from the BPMC on whether or not to proceed soon since these bonds can be refunded only until June 30, 1993. There is also a risk that any investment of time would be lost if interest rates move up half a point from where they are today (February 24, 1993). See you on March 3. BP:tg Attachment as stated Distribution: Mr. David Highers, Chairman, BPMC, Chugach Electric Association Mr. Norm Story, Vice Chair BPMC, Homer Electric Association Mr. Ken Ritchey, Matanuska Electric Association Mr. Paul Diener, City of Seward Mr. Michael Kelly, Golden Valley Electric Association Mr. Thomas Stahr, Municipal Light and Power PO. Box 190869 701 EastTudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 Refunding of Bradley Lake Bonds Information Item Over the last several months, the Energy Authority has received three proposals from underwriting firms for refunding a portion of the Bradley Lake bonds. The first two proposals were submitted to us by Merrill Lynch and by Dean Witter in Fall 1992. Both proposals were quickly withdrawn, however, once the firms discovered that the Bradley Lake bonds are "private activity" bonds which are not normally eligible for advance refunding. The most recent proposal is from Nuveen and is based on certain "multi-purpose allocation rules" that expire July 1, 1993. Nuveen believes, and Eric Wohlforth agrees, that these rules allow the Authority to refund Bradley Lake bonds that are properly allocable to Anchorage ML&P and Seward, that roughly $28 million in callable bonds can be so allocated, and that all savings realized from the refunding would be melded under terms of the power purchase contracts to reduce costs to all purchasers. The most recent estimates provided by Nuveen (2/24/93) are as follows: Net savings in debt service would be about $120,000 per year. Total net savings over the life of the bonds would be 3.6 million. The present value of savings over the life of the bonds would be $1.8 million. : The present value of savings as a percent of the bonds being refunded would be 6.5%. This assumes of course that interest rates at the time of refunding are the same as they were on 2/24/93. All of these savings are projected as net of financing costs including underwriter’s discount and issuance expenses. If interest rates increased by about 50 basis points from the levels reached on 2/24/93, no savings would be realized. The Authority has also heard that a refunding proposal has been prepared by Smith Barney and presented to Chugach. However, we have not yet seen it. In order for the Authority to proceed with one of these refunding plans, authorization from the Bradley PMC will be necessary. Expenses would be incurred by Authority staff, bond counsel, and financial advisor that would have to be paid directly by the utilities if the refunding is prepared but not implemented due to future increases in interest rates. If the refunding occurs, the expenses would still have to be paid by the utilities but can presumably be capitalized. In addition, according to Nuveen’s lawyer, a certificate of agreement by the Bradley PMC (to the effect that the refunding will not create an increased burden or obligation) will be necessary in accordance with Section 11 of the Power Sales Agreement. Prepared 2/24/93 DRE BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES March 30, 1993 1. CALL TO ORDER Vice Chairman Story called the Bradley Lake Hydroelectric Project Management Committee to order at 9:05 a.m. via teleconference, to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Brent N. Petrie, Designated Representative Chugach Electric Association Eugene Bjornstad, Alternate Representative 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 Tom Lovas, Chugach Electric Association Joe Griffith, Chugach Electric Association dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 2 of 5 Ronald a. Garzini, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Bruce Holmes, Alaska Energy Authority Denise Burger, Alaska Energy Authority 3. PUBLIC COMMENT There were no public comments. 4. AGENDA COMMENTS No changes were made to the agenda. 5. OLD BUSINESS A. Bradley Bond Refunding Update A memorandum summarizing Bradley bond refunding costs was faxed to the Committee members (Attachment 1). Mr. Petrie reported AEA met with its financial advisor and bond counsel, the bond underwriters, Mr. Saxton and a utility representative, Mary Ann Pease of AML&P, via teleconference the preceding week. It was the consensus of the attorneys that the proposed Bradley bond refunding was "defendable before the IRS" and that it would be prudent to proceed with the refunding. Mr. Petrie stated some opinions still remain to be written and will be distributed upon completion. Mr. Petrie noted that, in today's market, the present value savings of the bond refunding proposal would be about 4%, or $1.3 million. Citing the minimal savings, Mr. Petrie stated AEA would not recommend the refunding proposal under the current market conditions. It was, however, the consensus of those participating in the bond refunding discussion that AEA and the purchasing utilities should continue preparations for the refunding with the intent of being ready to take advantage of optimal market conditions when they occur. Mr. Petrie informed the Committee that, of the $25,000 authorized by the Committee on March 3, 1993 to proceed with the initial refunding steps, $13,600 had been spent. Additional costs through May 1, 1993 are estimated to be $41,500. Trading, travel, underwriting, rating costs, etc. will be incurred after May 1. Mr. Saxton dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 3 of 5 clarified that the refunding costs could be capitalized. Mr. Petrie added that, if the bond sale was not completed, the costs would have to be absorbed by the Committee. Mr. Bjornstad inquired if AML&P had made any determination regarding the refunding. Mr. Stahr reported that the Municipality's bond counsel was reviewing the proposal made by Mr. Eric Wohlforth, AEA bond counsel. Mr. Stahr could not predict when the Municipality would make its decision and reminded the Committee that the Municipality's bond counsel was not likely to support the refunding without substantial savings (well over $100,000). Mr. Bjornstad asked what the minimal savings requirement was in order to make the refunding effort worth while. Mr. Petrie stated that, generally, a 3% savings was considered worth while, however, because of additional administrative costs associated with the refunding, a higher return of savings was needed. AEA would recommend proceeding with the bond refunding at a 5% savings. Mr. Petrie estimated a cost to AEA of $30,000/year to administer the refunding. Mr. Stahr requested a minimal savings of $130,000 as qualification to proceed with the refunding. Mr. Story recommended postponing a decision until AML&P finished evaluating the proposal. Mr. Petrie stated that, in order to proceed with the refunding, a decision was needed by the middle of April, otherwise closure could not be made by June 30. Mr. Petrie suggested that the utilities update their financial information (form to be provided by AEA) while waiting for AML&P's decision. The information would be needed for a document review meeting scheduled April 13, 1993. It was the consensus of the Committee that continuing with the refunding would require a minimum savings of $130,000 and the approval of AML&P, and that, in the meantime, the Committee members would update the necessary financial information. In response to Mr. Stahr's question regarding the need for an engineer's report, Mr. Saxton stated that, according to Jim Seagraves, an engineer's report was not necessary. dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 4 of 5 6. NEW BUSINESS A. Approval of Bradley Lake FY94 O&M Budget Referring to the budget materials previously distributed by AEA (Attachment 2), Mr. Ritchey noted that the budget summary on page one included debt service for the year. Mr. Ritchey explained that the total included both the debt service and operations costs (subtotaled). Previously, only operations costs were presented to the BPMC. It was noted that the operations budget (pages two and three) was broken down by categories of the power sales agreement. Mr. Ritchey stated that, although the budget was presented in a different format, the contents of the budget remained very similar to previous budgets. Pages four, five and six provide a comparison of the budget proposed by AEA and the Budget Subcommittee's recommended budget. Mr. Ritchey pointed out that $417,244 for AEA administrative overhead costs were not included in the budget recommended by the Subcommittee. Mr. Ritchey explained that the Subcommittee's budget recommendation was made without the participation of AEA. Mr. Ritchey moved that the BPMC adopt the Subcommittee recommended total budget of $15,678,212! (which excludes AEA administrative overhead costs). The motion, seconded by Mr. Diener, fail the following roll vote:? City of Seward Yes Matanuska Electric Association Ye hugach Electric Association Yi Homer Electric Association Yes Golden Valley Electric Association Yes Municipal Light & Power Yes Alaska Energy Authority No_ (Action 93-170) Mr. Garzini objected to the proposed budget, stating it would adversely affect the operation of the Project. Mr. Garzini informed the Committee that AEA would file the alternate ' Corrected from $15,678,213. 2 As established by the Committee Bylaws, adoption of a budget requires approval of AEA and four utilities with a combined project share of 51%. dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 5 of 5 budget, which includes AEA administrative overhead costs, with the trustee. Copies of the budget will be forwarded to the utilities. Ts COMMUNICATIONS A. Schedule Next Meeting Thursday, May 13, 1993 10:00 a.m. Chugach Electric Association 8. ADJOURNMENT The meeting adjourned at 9:45 a.m. David L. Highers, Chairman Brent N. Petrie, Secretary dburger\word\minutes\pmc\03-93-2 ATTACHMENT 1 Alaska Energy Authority MEMORANDUM DATE: March 30, 1993 TO: Bradley Lake Hydroelectric Project Project Management Committee FROM: Brent N. Petrie Manager/Planning and Project Development Alaska Energy Authority SUBJECT: Bradley Refunding Costs At its meeting, the Bradley Lake Project Management Committee authorized the expenditure of up to $25,000 to conduct research necessary to position ourselves for a partial refunding of Bradley Debt. As of March 29, 1993, the approximate billings against this authorization were: AEA Bond Counsel - Wohlforth et al $4,100 Bradley Utility Counsel - Ater Wynne, Hewitt Dodson & Skerritt $4,500 AML&P Counsel est. $5,000 Preston et al —— $13,600 Estimated additional costs to prepare the refunding through May 1 follow: AEA Bond Counsel - Wohlforth $10,000 Bradley Utility Counsel - Ater Wynne, Hewitt Dodson & Skerritt $10,000 AEA Financial Advisor - J.C. Bradford $9,500 AEA Staff $12,000 Total estimated additional costs through May 1 $41,500 Today (March 30) the estimated present value of savings on a refunding is $1.3 million or a little more than 4% of the refunded amount. If the committee desires to proceed an additional budget authorization of $40,000 is recommended. BNP:jd 93Q1\JD4566(1) ATTACHMENT 2 Proposed Bradley Lake FY '94 Budget SUMMARY Debt Service $13,388,241 * * * * Operations & Maintenance 1,567,158 Insurance 259,162 Project-Specific A & G 149,556 PMC Costs 166,000 Other 148,095 : Subtotal 2,289,972 TOTAL $15,678,213 BRADLEY LAKE BUDGET \AEA_PMC1.WK3.DT FY 1994 — PMC 03/24/93 PMC ACCT ; O&M | INSUR. | P.8.A&G|COSTPMCG OTHER | TOTAL NO. DESCRIPTION (A) ©) (2) © ra) 1 2 | HYDRAULIC POWER GENERATION 3/535 OPERATION SUPER. & ENGIN. see Schedule 5 for PSA cost category distribution. 4 DIRECT 160,619 8,338 | 28,260 o| 34,226| 231,443 5 TRAVEL & TRAINING 16,000 16,000 6/537 HYDRAULIC OPERATION EXPENSES 7 CONTRACTS 56,296 56,296 8/538 ELECTRIC OPERATION EXPENSE 9 DIRECT 119,100 119,100 10 TRAINING 2,000 2,000 "1 CONTRACTS 30,000 30,000 12 SUPPLIES 7,000 7,000 13539 HYDRAULIC PWR GEN. OP EXP 14 DIRECT 17,100 88,869| 105,969 15 TRAVEL & TRAINING 4,000 el 4,000 16 CONTRACTS 290,000 290,000 17 SUPPLIES 20,000 20,000 18/540 RENTS 19 WAREHOUSE 6,500 L 6,500 20 FERC [85,000 | 85,000 21 [542 MAINTENANCE OF STRUCTURES I L 22 SUPPLIES 3,000 [ a [3,000 23 EQUIPMENT 6,000 } 6,000 24/544 MAINTENANCE OF ELECTRIC PLANT 2s DIRECT __|__ 193,800 | __193,800 28 TRAVEL 4,000 4,000 27 CONTRACTS 30,000 30,000 28 SUPPLIES 10,000 10,000 29 EQUIPMENT 30,000 30,000 30/545 MAIN. OF MISC. HYDRAULIC PLANT ) 31 DIRECT 135,119 135,119 32 TRAVEL & TRAINING [3,000 | 3,000 33 CONTRACTS _[ 25,000 25,000 34 SUPPLIES 25,000 [ | 25,000 35 EQUIPMENT 50,000 | 50,000 36| 556 SYS CONTROL & LOAD DISPATCHING 37 DIRECT 8,000 8,000 38 TRAVEL [4,000 | eI 4,000 39 CONTRACTS 205,720 | 205,720 40 EQUIPMENT 36,000 36,000 41 |_TOTAL HYDRAULIC PWR GEN EXP 1,525,958 8,338 | 84,556 O| 123,095 | 1,741,947 ys : 43 | TRANSMISSION EXPENSES 44| 562 BRADLEY JUNCTION SUBSTATION 45 CONTRACTS 2,200 2,200 46|571 MAINTENANCE OF OVERHEAD LINES 47 CONTRACTS 39,000 39,000 48 | TOTAL TRANSMISSION EXPENSES 41,200 | 0 0 0 0] 41,200 , BRADLEY LAKE BUDGET \AEA_PMC1.WK3.DT FY 1994 - PMC 03/24/93 PMC ACCT O&M | INSUR. | P.S.A&G|COST PMC OTHER TOTAL | NO. DESCRIPTION (A) (8) ©) _(0) ©. F) 1 | 2| ADMIN, GENERAL & REGULATORY EXPENSES | 3|920 ADMIN AND GENERAL EXPENSES 4 ADMINISTRATIVE (O.H. AND DIRECT) 18,000 18,000 | 5 BPMC (TRAVEL) 23,000 23,000 6 BPMC (SUBCOMMITTEE TRAVEL) | __ 15,000 | 15,000 7 UTILITIES’ LEGAL (NOT RELATED TO PMC v AEA LITIGATION) | __75,000 75,000 8 AEA BRADLEY LAKE LEGAL (NOT RELATED TO PMC v AEA LITIGATION) | 25,000 25,000 9 TRUSTEE FEES | 10 AUDIT " 5 YEAR INSPECTION | 12|924 INSURANCE 13|928 REGULATORY COMMISSION EXPENSE 14 TOTAL ADMIN, GEN & REG EXP 15 TOTAL FY 1994 BRAD LAKE BUDGET BRADLEY LAKE COMPARISON OF AEA AND PMC BUDGET PROPOSAL FY 1994 SUMMARY BUDGET COMPARISON AEA PsA cost cAlEcoRy PROPOSED. UTES OPERATION & MAINTENANCE INSURANCE PROJECT—SPEGIFIED A&G PMc CosTs OTHER TOTAL 1,740,254 1,567,158 259,162 259,162 516,799 149,556 191,000 168,000 o 148,005- ee BLOT 219. 2.289.971 SCHEDULE 3 P. 1 of 1 \AEA_PMC1.WK3.DT 03/24/93 VARIATION, (173,096) o (867,243) 5,000) __148,005 — M1724 BRADLEY LAKE COMPARISON OF AEA AND PMC BUDGET PROPOSAL SCHEDULE 4 P.1 of 2 \AEA_PMC1.WK3.DT FISCAL YEAR 1994 03/24/93 POWER SALES AGREEMENT COST CATAGORY: | AEA PMc acct insur. | P.8.Aaa|costPMc] OTHER | TOTAL oam | insur. | P.8.aaa|costpmc| OTHER | TOTAL : No. DESCRIPTION ® @ © ray wa | @ te © | © wareAnos} 2 | HYDRAULIC POWER GENERATION 2 3|538 OPERATION SUPER. & ENGIN. see Schedule 5 for PBA cost category distribution. 3 4 DIRECT e338 28,200 231,443 160,818 6336 26,280 ° 34220 | 231,443 | « 8 TRAVEL & TRAINING | 16,000 16,000 { | 10,900 ols «037 HYDRAULIC OPERATION EXPENSES e 7 CONTRACTS 56 206 56206 56206 | Se 206 o|7 s ELECTRIC OPERATION EXPENSE | 8 s 118,100 118,100 118,100 o;e 10 2,00 2,900 2,900 0 }10 " 30,000 30,900 30,900 ol} 12 SUPPLIES 7,900 7,900 7,p00 o|i2 13638 HYDRAULIC PWR GEN. OP EXP 13 “4 DIRECT 105 960 17,100 s8s60| 105,960 oli. 18 TRAVEL & TRAINING 4,000 4,000 4,000 o|1s 16 CONTRACTS: 280,000 290,000 ole 7 SUPPLIES 20,000 20900 20,900 o\7 18 | 540 RENTS 6 1° WAREHOUSE 6500 6,500 6,500 o lie 20 FERC 145,000 | 85,000 0 |20 21 [642 MAINTENANCE OF STRUCTURES a SUPPLIES 3,000 | 3,000 ° 23 EQUIPMENT 6,900 000 o|23 24|644 MAINTENANCE OF ELECTRIC PLANT 24 2 DIRECT 183 200 183 £00 o|}25 26 TRAVEL 4,000 4,000 0 |26 27 CONTRACTS 30 00 30,200 r o|27 2 SUPPLIES 1000 10,900 o|z 20 EQUIPMENT |___30,900 30,900 0 |ze 30/545 MAIN. OF MI8C. HYDRAULIC PLANT 30 a DIRECT q}31 32|___ TRAVEL & TRAINING i iE o|32 33 CONTRACTS o|3s 34 SUPPLIES o|a6 38 EQUIPMENT | o|35 36556 SYS CONTROL & LOAD DISPATCHING ae 37 DIRECT o|37 3s TRAVEL o|38 20 CONTRACTS o|30 “0 EQUIPMENT “0 41 | TOTAL HYDRAULIC PWR GEN EXP 4] 41 42 a2 43 | TRANSMISSION EXPENSES “a 44 | 562 BRADLEY JUNCTION SUBSTATION “4 “a CONTRACTS | 0|4 46571 MAINTENANCE OF OVERHEAD LINES “a a7 CONTRACTS 47 48 | TOTAL TRANSMISSION EXPENSES 41,200 o o o ° 41,200 o\s BRADLEY LAKE SCHEDULE 4 P.2 0f2 COMPARISON OF AEA AND PMC BUDGET PROPOSAL \AEA_PMC1.WK3.0T FISCAL YEAR 1994 03/24/93 POWER SALES AGREEMENT COST CATAGORY: AEA PMc accT oam INSUR. P.8. AAG | COSTPMC; OTHER TOTAL oam | INSUR. | P.8. A&G | COSTPMC) OTHER TOTAL No. DESCRIPTION “ © @ 2) © fa “ ) @ (2) © “ VARIANCE 1 1 2 | ADMIN, GENERAL & REGULATORY EXPENSES 2 3|20 ADMIN AND GENERAL EXPENSES 3 4 ADMINISTRATIVE (O.H. AND DIRECT) 417,243 18,900 (417 4 5 BPMC (TRAVEL) 23,000 ols . BPMC (SUBCOMMITTEE TRAVEL) me 15,900 ole 7 UTILITIES’ LEGAL (NOT RELATED TO PMC v AEA UTI@ATION) 75,900 o|7 e ‘AEA BRADLEY LAKE LEGAL (NOT RELATED TO PMG v AEA LITIGATION, 25,000 ole ° TRUSTEE FEES 20,000 | ole 10 AUDIT 15,900 o}10 WwW 5 YEAR INSPECTION 15,900 o;|lM 12 [924 INSURANCE 250,824 o iz 13 | 926 REGULATORY COMMISSION EXPENSE 50 o}13 4 TOTAL ADMIN, GEN & REG EXP 4 15 TOTAL FY 1984 BRAD LAKE BUOGET (417.244)] 15 AEA PROPOSED BUDGET @ 3/8/93 2,682,855 ADD: ADJUSTMENT TO AEA LEGAL 25,900 LESS: ADJ TO ACCT 545, PCN 431 (9.40) FY 1994 BUDGET SHOWN ABOVE 2.797.215 _ BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES April 16, 1993 1. CALL TO ORDER Vice Chairman Story called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. via teleconference, to conduct the business of the Committee per the agenda and the public notice. Chairman Highers directed the remainder of the meeting after telecommunications were reestablished. 2. ROLL CALL Alaska Energy Authority Ronald A. Garzini, Alternate Representative Chugach Electric Association David L. Highers, Designated Representative Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Absent 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 Stanley E. Sieczkowski, Alaska Energy Authority dburger\word\minutes\pmc\04-93 BPMC Teleconference Meeting Minutes April 16, 1993 Page 2 of 3 Dick Emerman, Alaska Energy Authority Gloria Manni, Alaska Energy Authority Denise Burger, Alaska Energy Authority Eric Wohlforth, Wohlforth, Argetsinger, Johnson & Brecht Jim Seagraves, Nuveen Charles E. McKee 3. PUBLIC COMMENT Charles E. McKee Mr. McKee, public member, spoke to the Committee regarding currency and financing of Railbelt Intertie and Bradley Lake Bonds. Mr. McKee referred the Committee to his case on file at the Ombudsman's office and requested the Committee acknowledge his copyright to the original treasury seal. 4. AGENDA COMMENTS No change was made to the agenda. 5. OLD BUSINESS A. Bradley Bond Refunding Update Mr. Emerman noted there were two issues to consider regarding the proposed refunding: (1) the legality of the refunding, and (2) the ultimate savings to the utilities. Mr. Stahr advised the Committee that, because of unresolved legal issues, bond counsel of the Municipality of Anchorage recommended against Municipal Light & Power's participation in the bond refunding. Chairman Highers stated that Chugach Electric Association supported Municipal Light & Power's decision and polled the remaining utilities. Homer Electric Association, Golden Valley Electric Association and Matanuska Electric Association also supported the decision not to proceed with the refunding. The City of Seward was not present at the meeting. Chairman Highers invited additional comment. Hearing no comments, the Chairman declared the issue closed (Action 93-171). dburger\word\minutes\pmc\04-93 BPMC Teleconference Meeting Minutes April 16, 1993 Page 3 of 3 6. COMMUNICATIONS A. Schedule Next Meeting Thursday, May 13, 1993 10:00 a.m. Chugach Electric Association 7. ADJOURNMENT With no further business before the Committee, the meeting adjourned at 10:30 a.m. Attest: dburger\word\minutes\pmc\04-93 BUTILPAY.XLS BRADLEY LAKE UTILITY PAYMENTS __|_ 7 FY-94 | |e ee ea | | | Lee ae ¢ Percent - a See Power purchasers _ ; | Share | July August | September | October | November | December | January | Feb March April May June | FY Total Chugach Electric Association 30.40% | $352,637 | $352,637 | $352,637 | $352,637 | $352,637 | $352,637 | $352,637 | $350,657 637 | $352,637 | $352,637 | $352,637 | $352,637 | $4,231,647 ALASKA ENERGY AUTHORITY {—— = | = | - | | Municipality of Anchorage | 25.90% $300,438 | $300,438 | $300,438 | $300,438 | $300,438 | $300,438 | $300,438 | $300,438 | $300,438 | $300,438 $300,438 | $300,438 | $3,605,252 Alaska Electric Generation & ‘| Transmission Cooperative, Inc. (acting on 7 5 behalf of Homer Electric Association, | | | ae - Inc.-12.0% and Matanuska Electric Association, Inc.-13.8%) if 25.80% | $299,278 | $299,278 | $299,278 | $299,278 | $299,278 | $299,278 | $299,278 | $299,278 $299,278 | $299,278 | $299,278 | $299,278 | $3,591,332. Golden Valley Electric association, Inc. | 16.90% | $196,038 Si $196,038 | $196,038 | $196,038 | $196,038 | $196,038 | $196,038 | $196,038 | $196,038 $196,038 | $196,038 | $196,038 | $2,352,462 City of Seward | 1.00% $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $11,600 $139,199 Total 100.00%} $1,159,991 |$1,159,991 |$1,159,991 |$1,159,991 |$1,159,991 |$1,159,991 1$1,159,991 $1,159,991 [$1,159,991 |$1,159,991 [$1,159,991 }$1,159,991 |$13,919,891 + oe . 2B lay AQ 28 Bas i w ¢ Yel 3 ~j. * ma... ~“ 1% > we Page 1 NOTE: FY-94 cash flow cell B-9 ($496,000) is the $910,000 excess of operating funds FY-92 less $494,000 utilized on the FY-93 cash flow plus $80,000 estimated excess from FY-93 operating funds. it soe AU meh mc UT CS E F Ct J Se 7 2 BRADLEY LAKE PROJECT CASH FLOW 4 | 2 |Cash Flow From Operations - _ 09:19 AM | 3 | - _ a | FY 1994 i . | Is | July August September October November December February March April May June FY Total 6 | 7 | Utila 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 1,159,991 13,919,891 | 2 | Fund Balance 496,000 Moved to Operating Fund 721,601 (64,00 219,335 171,002 225,601 154,002 215,437 154,002 216,835 225,601 159,835 2,624,846 Remains Revenue Fund 934,390 1,223,998 940,656 988,989 934,390 1,005,989 944,554 1,005,989 943,156 934,390 1,000,156 11,791,045 41] = aaeeeeneneeseses secese2seeneresen= 12 |PAYMENTS FROM REVENUE FUND 3 | 13 | Principal 1,312,500 1,312,500 2,625, 44 | interest 5,381,621 5,381,621 10,763, 15 [Replenish O Reserve 0 0 0 75,404 0 0 0 6,503 81,906 16 | 37 | 18 | Total paid-Revenue Fund 0 0 0 6,769,524 0 0 0 "6,700,623 13,470,147 OO —————— 6,769, | 20 [OPERATING FUND [21 |O&M 431,993 219,335 241,271 285,335 154,002 215,437 154,002 232,104 159,835 226,064 2,707,215 | 22 | a 2) Contingency 0% 0 0 0 0 0 o 0 0 0 0 16,095,456 | 28 | INCOME _ Interest 4 on Capital Reserve & RAC Fund 670,811 0 0 Oo} 0 0 0 0 1,341,621 Interest on _ ‘Operating Fund & Reserve 22,719 0 0 0 0 0 0 0 45,102 Interest on 105,726 0 0 0 0 0 0 0 40,526 0 0 0 0 0 0 0 289,608 (283,342 21,936 (114333 (61,435 61,435 (15,269 65,766 (66,229) 0 283,342 6,266 0 $4,599 61,435 0 8,766 0 65,766 0 0 15,670 0 59,734 0 0 6,503 0 463 535,000 335,000 319,330 319,330 459,597 535,000 535,000 535,000 528,497 528,497 335,000 _ = 289,608 6,266 0 $4,599 0 10,164 71,599 8,766 0 65,766 Oo; | 774171 2,998,169 3,938,826 4,873,215 5,862,204 | 1,766,780 2,818,710 | 3,824,699 4,767,855 5,702,244 1314 _ :