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Home My WebLink AboutBPMC Meeting, March 31 1994 1ALASKA INDUSTRIAL DEVELOPMENT > 4 AND EXPORT AUTHORITY = ALASKA @@™_ _=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE, ALASKA 99503 907 / 561-8050 FAX 907 /561-8998 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES MARCH 31, 1994 No signed copy of the minutes have been located at this time. Please note that the March 31, 1994 minutes were approved as presented at the PMC meeting on April 29, 1994. Motion made by Mr. Bjornstad, seconded by Mr. Evans. There were no objections. 4 7 NA pv) Beye Sharron Sigaféos \Mdmihistrative Assistant 3. BRADLEY ‘E PROJECT MANAGEMENT COM JRAFT MEETING MINUTES Commission Room Anchorage Municipal Light & Power E 6 E { V fF 1200 East lst Avenue, Anchorage, Alaska | Thursday, March 31, 1994 , 10:00 a.m. APR 14 1994 Alaska Industrial Development and Expert Authority Chairman Highers called the meeting of the Bradley Lake Hydro- electric Project Management Committee to order at 10:03 a.m. in the Commission Room of Anchorage Municipal Light & Power, 1200 East 1st Avenue, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. All Committee members were present; a quorum was established. CALL TO ORDER ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Matanuska Electric Association Jim Hall, Alternate Municipal Light & Power Tom Stahr, Designated Representative Homer Electric Association Norm Story, Designated Representative Others Present: Dan Beardsley, AIDEA/AEA Sharron Sigafoos, AIDEA ' Stan Sieczkowski, AEA/AIDEA Larry Wolf, AEA/AIDEA Gene Bjornstad, Chugach Electric Association John S. Cooley, Chugach Electric Association Tom Lovas, Chugach Electric Association David Burlingame, Chugach Electric Association Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Tim McConnell, Anchorage Municipal Light & Power Bob Price, Anchorage Municipal Light & Power Moe Aslam, Anchorage Municipal Light & Power Myles Yerkes, Homer Electric Association Bob Hufman, Utilities Consulting Services Vince Mottola, Fairbanks Municipal Utilities System Allan Yost, REA PUBLIC COMMENT There were no public comments. “Bradley Lake Project anagement Committee Meeting Minutes - March-31, 1994 Page 2 of 8 AGENDA COMMENTS Item A., Approval of Legal Expenses and Other Payments, under No. 10, New Business, was changed to Item B. FY ’95 Budget was added as Item A. FERC Comments was added as Item C. The agenda was approved as modified. APPROVAL OF MEETING MINUTES - FEBRUARY 24, 1994 MOTION: Mr. Kelly moved to approve the February 24, 1994 minutes. Seconded by Mr. Story. Hearing no objection, the minutes were approved as presented. BUDGET SUBCOMMITTEE REPORT. Mr. Lovas reported that the Budget Subcommittee had reviewed the FY ‘95 expectations of AIDEA/AEA’s administrative and general, as well as oversight, activities under the HEA O&M contract. He said that in order to be in legal compliance, the PMC should review the revenue considerations and operating budget 90 days prior to the start of the fiscal year. Mr. Lovas said he would present the Subcommittee’s expectation of an adequate budget to meet the total commitments, with the expectation that the PMC will direct the Budget Subcommittee to work on the cash flow implications and the actual monthly rates charged to the utility, to be final- ized in May, based upon a total operating budget for FY ‘95. He said this expectation would result in satisfying PMC’s obligations under the bond resolution and the Power Sales Agreement. Mr. Lovas said this budget will have some transition activi- ties during the course of the O&M transfer to HEA through the balance of this fiscal year as well as another extended or complete fiscal year. That activity is recognized in the budget; therefore, the budget may be subject to future modification. ‘ Mr. Lovas stated that one of the Subcommittee’s concerns is the application of surplus revenues over operating expenses, including debt service, that have developed during the past couple of operating years. The Subcommittee expects to be provided a more current projection of what the budget surplus will be for use in deriving the FY ‘95 revenues and payment obligations of the utilities. Mr. Lovas reported that the AIDEA/AEA staff has been very helpful in providing details and staff progress reports with regard to their A&G activities for the next fiscal year. He said the Subcommittee has developed a proposal which identi- fies the difference of opinion with regard to how the A&G costs should be included in the utilities’ budgets. ’ Bradley Lake Projec anagement Committee [ Meeting Minutes - Ma:ch 31, 1994 is Page 3 of 8 ay AP Be Mr. Lovas distributed a handout entitled "Proposed Bradley Lake FY 95 Budget Summary" at this time and summarized it for the Committee. Mr. Lovas stated that the utilities propose and recommend that the PMC adopt the budget of $15,816,593 for FY ‘95. It was further recommended that the Budget Subcommittee be directed to meet April 27, 1994, to review actual revenues and expenses to date and develop the surplus anticipated to be available for inclusion in FY '95 revenues, and to develop the utility rates for FY ‘95 to be approved by the PMC at the May meeting. Chairman Highers stated that the PMC was required to act on the FY ‘95 budget issue today. Discussion was heard. Mr. Lovas reported that Parisena Stromberg had completed a Management audit of the operations for the period July 1, 1992 through June 30, 1993, and submitted a report, which was brought before the Budget Subcommittee for consideration. The report, dated November 30, 1993, also contained the operating expenses for that period. Mr. Lovas said the PMC could accept the report as presented; however, the Budget Subcommittee has noted a the following items of dispute between the audit and AEA’s actual recorded operating expenses: allocations of overhead with respect to the aircraft accident that occurred during that period, the remodeling of some of the facilities with respect to the office that were charged to the project, “and a back-charge of interest. Mr. Lovas reported that AEA had reviewed the draft report and submitted a letter in response to the disputed items; however, there have been no discussions between the Subcommittee, Parisena Stromberg, and AEA in this regard. The Subcommittee recommended that the material be submitted as a report, subject to further discussion of the Budget Subcommittee, with finalization proposals to be presented to the PMC at the May meeting. The Committee concurred. With regard to an earlier suggestion that the O&D Subcommittee review the maintenance procedures included in HEA’s FY ‘94 budget, Mr. Lovas requested that the PMC revisit this issue. 7. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski reported that the Operation and Dispatch Subcommittee met on March 29, 1994, at the AIDEA office to review the operation and maintenance standards. Mr. Sieczkowski explained that there are three levels of maintenance standards utilized for the Bradley O&M program: vendors’ manuals, plant operation and maintenance manuals, and the Four Dam Pool technical standards, which are included by ‘ Bradley Lake Projeci anagement Committee Meeting Minutes - March 31, 1994 Page 4 of 8 reference. The Automatic Maintenance Management System is the maintenance schedule which was derived from the manuals. Mr. Sieczkowski reported that the Subcommittee agreed to begin review of the tech standards and the plant O&M manuals. A schedule will be developed for review of the documents, and the objective will be to complete the review and present a recommendation of the standards Bradley will follow to the PMC for consideration. He stated the schedule would be distri- Y buted to the Committee next-weekefor approval. Mr. Sieczkowski requested Mr. Burlingame to discuss the operations and Mr. Yerkes to discuss the maintenance. Mr. Burlingame reported that there had been no operational problems since the last PMC meeting. Mr. Yerkes commented that the O&D Committee meeting went well. He had nothing to report at this time. Mr. Sieczkowski expressed his appreciation to Mr. Wolf for his efforts in the project. 8. INSURANCE SUBCOMMITTEE REPORT Mr. McCrohan requested Mr. Beardsley to address the Committee on the Insurance Subcommittee report. Mr. Beardsley stated that since many of the issues discussed by the Insurance Subcommittee also relate to the Four Dam Pool, draft minutes of the Subcommittee meeting were prepared. Mr. Beardsley reported that directors’ and officers’ liability insurance was discussed. Homer Electric’s insurance represen- tatives assured the Subcommittee no increase in this coverage would be required due the transfer of project responsibility to HEA. Mr. Beardsley stated that a directors’ and officers’ liability insurance application/request for quote had been prepared for execution by the PMC. Regarding aircraft coverage, a waiver request for slung cargo had been received from Homer. The basis for the request was that if HEA has slung cargo, they will obtain coverage at that time. Mr. Beardsley explained that slung cargo coverage is difficult to obtain, and blanket coverage is cost-prohibitive. He said the Insurance Subcommittee had suggested HEA submit a waiver request and recommended that the PMC approve it. With regard to aircraft carrying more than five passengers, policies that are currently on the market do not provide Bradley Lake Projeci anagement Committee Meeting Minutes - March 31, 1994 VPs Page 5 of 8 “AR split-limit coverage. They only provide single-limit cover- age, which essentially is a blanket coverage of the entire set of liabilities. With more than five passengers, the annual premium would increase by approximately $6,000 for $19 million in coverage instead of $15 million in coverage. Mr. Beardsley reported that Risk Management had been requested to do an assessment in terms of State policy and report back to him their recommendation. Mr. Beardsley reported that an issue has arisen regarding the marine coverage for transportation of fuels to the site, and Homer will be working with Delta Western, the current carrier, to analyze what their insurance currently covers. Mr. Beardsley reported that the Subcommittee had also dis- cussed liability for removal and marine transport of waste oil from the site. He advised the Committee that an incinerator can be purchased for approximately $7,500 that would be able to burn the waste oil without the need for additional permits from EPA. He said this is probably a viable alternative, and a proposal would be submitted to the O&D and Budget Subcom- mittees for review. Mr. Saxton added that he believed some of the environmental issues still need to be resolved with respect to where the risks lie between the State as the owner, HEA as the operator, and the PMC in its role. Mr. Yerkes stated that he felt the issue of errors and omissions coverage versus professional liability should be reviewed in more detail. Brief discussion was heard. OLD BUSINESS A. Spinning Reserves Update - Mr. Lovas reported that the RCC had submitted a status report of the investigation and activity to the ASCC for consideration at its last meeting. The ASCC had rejected the status report and requested the RCC to complete the initial assignment. Mr. Lovas said it was his understanding that there was to be ASCC executive committee action in that regard. He added that he has not scheduled an RCC meeting to take up the charge pending clarification from the ASCC or from the representatives of the PMC. Mr. Lovas stated that when the RCC receives the final approved minutes of the ASCC meeting or clarification from the PMC regarding the charge, this issue will be revisited by the RCC. Master Maintenance and Operating Agreement - Mr. Saxton reported that he had sent a redraft of the Agreement to the Committee members on March 9 which reflected all of the final changes suggested by Rick Baldwin. He said both Bradley Lake Projec lanagement Committee on Meeting Minutes - March 31, 1994 bad Page 6 of 8 tds he and AIDEA are satisfied with the draft, and it is being presented to the PMC for action at this time. Mr. McCrohan clarified that AIDEA had approved a resolution allowing the Executive Director to execute the Agreement in its present form. Mr. Saxton stated that all Bradley related contracts are expected to be governed by the Master Agreement once it is adopted. MOTION: Mr.-: Kelly moved for approval of the Master Maintenance and Operating Agreement. Seconded by Mr. Calvert. A roll call vote was taken, and the motion passed unanimously. C. Report on Bond Refinancing - Mr. Saxton reported that a subcommittee had been appointed at the last PMC meeting for the purpose of working with the Nuveen people in reviewing the Nuveen proposal. He reported that they had met once, but interest rates had increased by the time a second phone contact was made. Therefore, the subcommit- tee’s recommendation is that further consideration be tabled until such time as a drop in interest rates would again make it worthy of the PMC’s attention. He concluded by stating that it is not worth pursuing at this time. The Chair stated that this item would be removed from the agenda. Mr. Kelly asked that Mr. Saxton’s comments in this regard be specifically stated in the minutes as a reminder to the Committee in the future. D. Transition Duties - Mr. -McCrohan reported that the Committee had been provided a letter in mid-February which summarized some of the final AEA duties that were still subject to discussion at that time. He said the Commit- tee, in acting on the budget today, will implement those duties for FY ‘95. Mr. McCrohan briefly summarized those duties as follows: *% The administrative duties relative to permits and FERC will be continued by AEA in FY ‘95; however, it is likely some of these duties would be performed by contractor personnel. *% The hydrology work relative to water management and planning is currently in Homer’s FY ‘95 budget and scope. * The PMC will solicit and procure contractor services to record and prepare its meeting minutes in FY '95. “Bradley Lake Project anagement Committee Meeting Minutes - March 31, 1994 Page 7 of 8 *% AEA, in conjunction with the Budget Subcommittee, has established an amount for preparation of the annual budget each year, and this will be under the direction of the Budget Subcommittee. % The AEA 900 account for PMC travel has been deleted. Chairman Highers stated that Mr. Ritchey had been respon- sible for making arrangements with regard to the transfer of duties in the past. He asked Mr. Story to assume that responsibility at this time. 10. NEW BUSINESS A. FY '95 Budget MOTION: Mr. Story moved to adopt the FY ‘95 budget in the amount of $15,816,593. Seconded by Mr. Kelly. Discussion was heard. Mr. McCrohan stated that the AEA believes the budget as proposed is what is necessary to provide the services required by statute, by bond resolution, and by the Power Sales Agreement and the other project agreements. Mr. McCrohan said AEA has agreed to provide time sheet support for all Authority labor costs. It’s the Authority’s view that all of the labor costs AEA is proposing are directly related to the Bradley project. He said that AEA has experienced a 30-percent budget reduction that is directly related to the merger of AEA and AIDEA. The balance of the reductions are due of the transfer of duties to HEA. Mr. Lovas clarified that PMC travel has been deleted from both AIDEA’s and the utilities’ budgets because no one had charged any PMC travel to the Bradley Lake budget. He said that the Bradley project contains no travel budget for PMC meetings. A revision would need to be made if any of the affected parties were considering charging their travel to the budget. Further discussion was heard. The six Purchasing Utilities voted aye, AEA voted nay. Since Section 13 (b) of the Power Sales Agreement requires an affirmative vote of a majority of the Purchasers and the affirmative vote of the Authority, the motion failed. B. Approval of Legal Expenses and Other Payments - This item was tabled until the next PMC meeting. The Chair advised Mr. Hall to provide the Committee with a letter designat- ing him as Mr. Ritchey’s alternate. The Chair also requested Mr. Hall to work with Mr. Ritchey and the Budget Subcommittee to get the information for this item. C. FERC Comments - Mr. Saxton reported that FERC is proposing to change the way fees are charged for hydro projects. Bradley Lake Projeci anagement Committee Meeting Minutes - March 31, 1994 Page 8 of 8 Mr Four Dam Pool had asked Mr. Saxton to prepare comments in response to the proposed changes, and Chairman Highers had asked Mr. Saxton to prepare his comments on behalf of the PMC as well. Mr. Saxton said his comments will be sub- mitted within the next couple of days. Mr. Saxton informed the Committee that there is a general concern that people are not sure what the proposal is because it is difficult to comprehend how the fees would be changed. Therefore, his comments basically state that it is not clear how the fees would change and requested that nothing be changed until clarification is provided. He added that APPA is encouraging other people to submit the same type of comments. 11. COMMITTEE COMMENTS A. Next Meeting Date - There was a consensus of the Committee that the next PMC meeting will be held on Friday, April 29, 1994, at 10:00 a.m., in the Commission Room of ML&P. B. Nominations Subcommittee - Chairman Highers appointed Matanuska Electric (Mr. Hall), Golden Valley Electric (Mr. aioe Kelly), and City of Seward (Mr. Calvert) to a nominations subcommittee, with Mr. Calvert to serve as Chairman. The subcommittee was directed to meet prior to, or at, the next meeting of the PMC to make nominations for an interim Chair and Treasurer. Mr. Highers said he would be present at the next meeting, and the new Chair and Treasurer would be in place for approximately one to two months before the next election. Discussion was heard on the requirements of the bylaws in this regard. 13. ADJOURNMENT ‘There being no further business of the Committee, the meeting was adjourned at 10:50 a.m. BY: David L. Highers, Chairman NOTE: March 31, 1994 minutes were approved by the PMC Committee at their April 29 1994 meeting as presented. Motion by: Mr. Bjornstad, seconded by: Mr. Evans. ATTEST: There were no objections. Dennis V. McCrohan, Secretary Bradley Lake PROJECT MANAGEMENT COMMITTEE MEETING March SIS 7ZS (Date) Arcburoge Mustemal #2 a (Locatioh) 2rd Mewer~ PLEASE SIGN IN Z| ° NAME | REPRESENTING | Daw Lewd Le AEA | Sty uy Vic pln : _ Shaw Srecz ows AeA g LEA Roy CAXNWA/ Pereberny hl fee Oo JO INQ ID JH [HR JW [dy — Oo 3] Alin Yos7_ LEA i LAL dP 1s Kn aol... hirgact, 16 7 i J Lhe a 17 | [ecg Whe , it. 18 NoE AsuAm mMCrP 19 [ho (2 U pb NEGET. 20 | Gare Shake 1 21 om pn lh scall fe. 22) 92Q2\IT9884 BRADLEY PMC VOTING Agenda Item No. “CITY OF SEWARD Dave (.lvert01% i AtatanusKa ELE ASE" 1496 GL CA 5 MMNyrg Dp Lge Libis baker Feb2¢ mrt hes / PAE EI, Se favke CKelg ia = Rarer ste A, VET [7h de) [7 ie, h cS -CHUGACH ELEC ASSOC > ~ 30% ATOMER ELEC ASBE"I 12% Mike K elly “GOLDEN VAL ELEC ASSOC Y 17% Sja yah c AGUNI LIGHT & POWER 26% 1S MoM, ALASKA ENERGY AUTHORITY A=4+ OVER 51% B = AEA CONCUR With A a ae ea C = UNANIMOUS VOTING METHOD A: Requiring four yeas with 51% of utilities, with no AEA vote: 1) Procedures for scheduling, production and dispatch of project power. 2) Establishment of procedures for use of each purchaser's water allocation (AEA assent required for license requirements). 3) Selection among alternative methods that do not involve AEA for funding required project work. VOTING METHOD B: Requiring 4 yeas with 51% of utilities and AEA concurrence: 1) Arranging operation and maintenance of project. 2) Adoption of budget of annual project costs. VOTE(9303/BCS5272) 3) Establishment of FY estimated annual payment obligation and schedule of each purchaser. 4) Determination of annual project costs after each FY. 5) Evaluation of necessity for and scheduling of required project work. 6) Determination of appropriate amount of insurance. 7) Adoption of additional minimum funding amounts for renewal and contingency reserve fund above that required by bond resolution. 8) Selection among alternate methods that involve AEA for funding required project work. 9) Adoption or amendment of procedural committee rules (except dispute resolution). 10) Adoption of project maintenance schedules. 11) Determination of rules, procedures and accounts necessary to manage project when no bonds outstanding. 12) Evaluation and approval of optional project work and compensation for such work. 13) Application of insurance claims proceeds not governed by bond resolution. 14) Approval of procedures and any individual utility agreements relating to electric power reserves for project. 15) Approval of consultants. VOTING METHOD C: Unanimous vote by all (including AEA) VOTING METHOD D: Majority vote (including AEA) Election of Officers