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HomeMy WebLinkAboutBrad Project Tran Transfer of Operation & Maintenance 1993 3. SENT BY: 9-16-93 > 9:19AM ; CHUGACH ELECTRIC= AK ENERGY ALTHORITY:# 2/10 ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR » ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 - FAX (907) 561-8998 - FILE COPY September 13, 1993 me Z- 1,0 R Mr. David L. Highers Chairman Chugach Electric Association P.0. Box 196300 Anchorage, AK 99519-6300 Mr. Ron Saxton, Esq. Ater Wynne Hewitt Dodson & Skerritt 225 §.W. Columbia, Suite 1800 Portland, OR 97201-6618 Subject: Bradley Lake AEA Duties Dear Dave and Ron: Attached is a matrix of duties performed and/or required by the Bradley Lake agreements. We have assumed that you will distribute the ligt to the utilities as you deem appropriate. On the matrix, we have indicated duties that: * are nondelegable by AEA - (yellow). * are proposed for evaluation, if the PMC and ABA agree, for delegation to the PMC or Operator - (blue). * are currently fractured where AEA should reestablish responsibility - (pink). ® where AEA concurrence is recommended. In summary, these duties are: Power Sales and Payment AEA's preliminary legal review indicates that it is acceptable to delegate the billing of Annual Project Costs. However, payment, reconciliation activities, and receipt of payments may not be delegated. Remedies for nonperformance may also not be delegated. SENT BY: 9-16-93 ; 9:20AM ; CHUGACH ELECTRIC> AK ENERGY AUTHORITY:# 3/10 Mr. David L. Highers Mr. Ron Saxton September 13, 1993 Page Two Budgeting AEA currently prepares, coordinates, and finalizes the budget. The PSA indicates budget preparation is, and will be, the responsibility of the PMC. With the exception of minimum debt service and reserve fund requirements, investment interest available to offset costs, and AEA's administrative costs, all of which will be provided by AEA, the PMC may obtain the budget detail from the operators or provide the details within its control. The PMC may coordinate all budget inputs and finalize the budget. The budget and ite line items will be aubject to AEA concurrence. Qperations AKA will procure the services of the operations and maintenance contractor, the dispatch contractor and other contractors as required. Except for preparation of the annual report, the project status report for the legislature, necessary safety and operational inspections to meet its fiduciary and ownership obligations, AEA will delegate the operational and dispatch duties to contractors, subject to appropriate concurrence, oversight. and audit controls. Funding AEA will remain responsible for fumding those items that are not covered by operating revenues, insurance and self-inaured risk management or optional work. The PMC will remain responsible for determining any additional payments over and above the minimum required by the bond agreements. Optional work will remain the responsibility of the benefitted purchaser(s). Insurance/Uninsured Losses The obligations will remain the same except that AEA may delegate the actual procurement and administration of the necessary insurance policies to the project operator. This delegation will depend upon the operator's specific capabilities. Compliance with Permits and Laws While AEA will retain responeibility for compliance with the various permits, licenses, laws and regulations governing the project, the project operator may be primarily responsible for preparing permits, amendments and revisions, and compliance. The operator will be required to indemnify AEA for coste incurred as a result of its failure to operate the project in compliance with those permits, licenses, laws and regulations. If the obligation is delegated, any necessary applications, renewals and reports may be delegated to the operator. For those items that are delegated, AEA will retain appropriate concurrence, overaite and audit controls. SENT BY: 9-16-93 : 9:20AM ; CHUGACH ELECTRIC+ AK ENERGY AUTHORITY:# 4/10 Mr. David L. Highers Mr. Ron Saxton September 13, 1993 Page Three General and Administrative Requirements These obligations will remain essentially the same except that the party responsible for a particular obligation will also be responsible for keeping and maintaining the records. Additionally, the clerical and other support provided the PMC by the AEA for PMC activities, may be assigned to the PMC. Maintenance of ali project construction records may be delegated to the operator. The proposed duties for delegation are substantial. We have had a preliminary legal review to determine the viability of this delegation. A final legal review, by the Department of Law, will be required when the specific conditions of delegation are defined. We would next like to meet with the PMC negotiating team at your earliest convenience to discuss: ® your suggestions or comments as to which duties are to be delegated and to which party. * which duties are to be evaluated in detail. * procedure for evaluating duties to be delegated, conditions of delegation, and timetable for evaluation. @ target date for transfer of duty to the PMC or Operator, if viable, as determined by the PMC. Regarding on site Bradley Lake operations, we will present to the PMC on September 21, 1993, our findings on HEA's qualifications. Please let me know if you have any questions. Very truly yours, BEM Cok Dennis V. McCrohan, P.E. Deputy Director (Energy) DVM: ec Attachment ec: R. Snell, AIDEA 1/1 D. Beardsley, AIDEBA 1/0 S. Sieczkowski, AEA 1/0 E. Wohlforth, WAJ&B V/L J. Baldwin, Dept. of Law 1/1 MHIVUAUIL LLCUINILT AR CYCRUI AUINUNRII1+# 3/ iu orcuam + vivo, weve a Page 1 3 g x x XR Bradley Lake 9/10/93 BUTY POWER SALES Sell Capacity Purchase Capacity Collect Payments Determine Amount Invoice Enforce Payment Reimburse Costs Determine Amounts Invoice Dispatch Req. Power Reserves Replace Purchaser Increase Project Share Terminate Sales Y ae Vetsag)AEA obligations stay same 6 - Sédde~ APA obligations reduced + as Sonn AEA obligations increase PERFORM (FSA) CURRENT FUTURE EBERERS GREBSE PMC PUR AEA PMC PMC AEA CURRENT "ETB OBB! AONIN2 BUSY WY OV:6V 91 dS £6, FUTURE eee "BB ALdGHinY AG O3AIS2 4a - FUTGRE OVERSIGHT FUTURE AUDIT E PUR "BEBE ' BB UNUUALN CLEUIRIC> ARK ENERUY AUINORITY;# 6/10 ’ 0-Z1IAM ; o-107-30 suv wie NS tye GO OY A KORG — DUTY BUDGETING Annual Proj. Costs Debt Service Reserve Funds Power Prod. Costs O&M Personnel Costs Materials Supplies £ngineering Other Required Work Dispatch Insurance AEA Admin.& Gen. PMC Committee Cost FERC Costs/Fees Other Utility Cost Claims Reserve Optional Work Extraord. Main.& Equip. Prepare Budget Annual Proj. Costs Wholesale Pwr Rate kwh Estimates Invest. Interest Additional Payments Reserves Intertie Financial Audit Procure Administer Budget Modifications PERFORM( PSA) CURRENT FUTURE AEA AEA AEA AEA AEA OPER AEA OPER AEA OPER AEA OPER AEA OPER AEA OPER AEA Cm@ES/DISP AEA OPER AEA AEA PMC PMC AEA OPER PMC PMC PMC PMC AEA PMC AEA OPER AEA{PMC) PMC AEA(PMC) PMC PUR PUR AEA AEA PMC PMC PMC PMC AEA(1) AEA AEA AEA PMC PMC CURRENT CONCUR. rue AEA FUTURE CONCUR. '' "BEE BBEBBE BRBRESEE FUTURE OVERSIGHT ee oe | FUTURE AUDIT B' BE BRE BRBBEG BREBEBEE DUTY CPERATIONS Assure Oper. & Impr. Contract O&M Procure Perform Sch. Purch./Dispatch Dispatch Procure Administer Perform Manage Water Supply Maintenance Schedule Maint. Mngt. System Required Work Identify Procure Administer Perform-No Altern. Perform-Alternates Optional Work Identify Procure Administer Perform License/Permit Studies Training/Tech. Support Annual” Report Project Status Report Safety Inspections Restore Project Required Reserves Terminate Project PERFORM( PSA) CURRENT FUTURE AEA AEA AEA(PMC) ABA OPER OPER PMC DISP AEA(PMC) AEA AEA -_PMC DISP DISP AEA(PMC) OPER AEA(PMC) OPER AEA -OPER AEA/ PMC ALL AEA OPER AEA OPER AEA OPER AEA OPER PUR ALL AEA OPER AEA OPER AEA OPER AEA OPER AEA OPER AEA AEA AEA AEA ABA OPER/AEA ABA OPER/AEA PUR PUR AEA AEA CURRENT CONCUR. AEA PEER ‘> 5 FUTURE CONCUR. FUTURE OVERSIGHT '" BEB’ '' BBE’ BB: AEA AEA AEA/PMC AEA AEA FUTURE AUDIT BE UNUUALT CLOUINIL™ AR CNERUT AUINUNIIT+# G/1U 0-Z1AmM > o-107-390 + uw vie DUTY FUNDING Bonding Issue Original Additional Payments Pay Bonding Agent Amend Resolution Maintain Funds Tax Covenants Additional Payments R&C Fund Debt Service Other Trust Agreements Required Work Optional Work Uninsured Risks Dispatch Equipment PERFORM( PSA) CURRENT FUTURE AEA AEA AEA AEA AEA AEA AEA AEA AEA AEA AEA AEA AEA AEA PMC PMC PMC PMC PMC PMC AEA AEA AEA(2) AEA(2) PUR PUR AEA AEA AEA AEA CURRENT CONCUR. PUR/PMC80% trere FUTURE CONCUR. PUR/PMC80% FUTURE OVERSIGHT erretud ‘ FUTURE AUDIT ‘R'RRe Cs CHUGACH ELECTRIC+ AK ENERGY AUTHORITY:# 9/10 > 9:214M 3-16-33 SENI BY: DUTY INSURANCE/LOSS Project Insurance Determine Amounts Procure Administer Disburse Proceeds Operating Losses Determination Liability Self Insurance PMC Indemnification Liability Insurance Payment COMPLI ANCE-LAW/PERMITS FERC License pplications ports Renewals Other Permits APUC Requirements Retail Rate Approval Records CTHER Purchaser Operations System O&M Financing Limitation PERFORM( PSA) CURRENT FUTURE AEA/PMC AEA/ PMC AEA OPER “AEA OPER AEA AEA PMC PMC AEA AEA AEA AEA AEA AEA PMC PMC AEA OPER ALL OPER/ALL AEA -OPER ALL JOPER/ALL PUR PUR PUR PUR PUR PUR PUR PUR CURRENT CONCUR. FUTURE CONCUR. FUTURE OVERSIGHT FUTURE AUDIT w''§ AEA AEA AEA AEA AEA AN WWAUI AUINURIIT + #LU/ LU Wwunu Len y ex & by DUTY GENERAL & ADMINISTRATIVE Capital Assets Ownership Purchase Control Surplus Determin. Procedures PMC Procedures Dispute Scheduling Optional Work Technical Stds. Maintenance Stds Water Allocation Reserves Records Bond Cost Accounting Engineering PMC Power Usage Inspection Records Facilities Enforce Agreement Against Purchaser Against AEA PMC Consultant Procure. PMC Support Miscellaneous Mergers Assignment Renewal of PSA PERFORM{ PSA) CURRENT FUTURE AEA AEA AEA AEA PMC PMC BEA/PMC OPER/PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC PMC AEA AEA AEA All AEA OPER PMC PMC REA/PUR OPER/PUR ALL ALL ALL ALL ALL ALL PUR PUR PMC PMC AEA OPER/ PMC PUR PUR PUR PUR PUR PUR CURRENT CONCUR. AEA(3) ts AEA AEA/PMC AEA/PMC AEA FUTURE CONCUR. AEA AEA/ PMC AEA/PMC AEA FUTURE OVERSIGHT { tate FUTURE AUDIT . ALASKA INDUSTRIAL DEVELOPMENT Z£ py AND EXPORT AUTHORITY 480 WEST TUDOR * ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 + FAX (907) 561-8998 August 12, 1993 RECORD VOPY FILE NO PRO_3-)0 TRAN Mr. David Highers, Chairman ; Bradley Lake Project Management Committee Y CHUGACH ELECTRIC ASSOCIATION P.O. Box 196300 Anchorage, Alaska 99519-6300 Subject: Short Term Schedules and Milestones Bradley Lake Project Dear Mr. Highers: As a result of our August 10, 1993 meeting and my subsequent discussions with Ron Saxton, I thought it would be helpful to outline the short term AIDEA/AEA activities relative to Bradley Lake. These are: 1. Provide final comments by AIDEA/AEA on the Bradley Master Operating Agreement - September 4, 1993. 2 Provide list of current AEA duties and proposed future non-delegable duties. The list will segregate AEA duties into non-delegable and delegables to the PMC or Operator(s), and current and proposed future concurrence votes. — September 11, 1993. 3. Complete AIDEA/AEA's assessment of HEA's Application and general qualifications - September PMC Board Meeting. 4. Complete review of HEA draft agreement - September 24, 1993. 5. Start detail budget and agreement discussions with HEA - no later than October 8, 1993. Please let me know if you have any comments or suggestions. Very truly yours, 0M c CA — henwe =F —YDennis V. McCrohan, P.E. Deputy Director (Energy) i oe f& DVM/sh cc: Ron Saxton, AWHDS SA William R. Snell, AIDEA Eric Wohlforth, WAJB Jim Baldwin, Department of Law @ ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR + ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 * FAX (907) 561-8998 August 16, 1993 RECORD VOPY FILE NO David L. Fair, P.E. VY Executive Manager Engineering and Operations Homer Electric Association, Inc. 3977 Lake Street Homer, Alaska 99603 Subject: HEA Bradley Lake Operation and Maintenance Application Meeting August 19, 1993 Dear Mr. Fair: Dan Beardsley and I would like to meet with you concerning the application for operation and maintenance of the Bradley Lake Project. Per our conversation we will meet with you in Homer on August 19, 1993. Our proposed agenda is as follows: 1. Overview of the Application by HEA 2. Specific discussions: — O&M staffing -— Hiring and training plans - Employee safety and equipment safeguard procedures and inspections — Emergency procedures — Engineering, operational, maintenance, administrative and legal support services for: -— Maintenance and repairs, particularly I&C support — Small projects and improvements - R&C and insurance repairs and replacements - Water management, monitoring and planning — Management and administrative services including accounting services, cost management, scheduling, procurement and contract administration — Document and drawing maintenance and storage Mr. David L. Fair, P.E. August 16, 1993 Page Two 3. Tour of maintenance and operation, engineering and administrative facilities 4. Preliminary discussions: - Criteria for determining Qualifications — Draft Agreement — Form and duration of Agreement — Budget Task Breakdown We would like the discussions to be informal. Regarding Item 2 above, we understand you may not have specific procedures, staff, etc. in place. We also understand that these services may not necessarily be delegated to HEA. However, we are interested in your approach, general qualifications for each item, and interest in providing these services. Should you have any. other topics you wish to discuss at that time, please give me a call. Very truly yours, SHUM: Gal~ Dennis V. McCrohan, P.E. Deputy Director (Energy) DVM/sh cc: William R. Snell, AIDEA David Highers, Chugach Electric Association Ron Saxton, Esq. AWHDS Ho.iner Electric Assvcviation, Inc. ate CORPORATE OFFICE Central Peninsula Service Center 3977 Lake Street 280 Airport Way Homer, Alaska 99603-7680 Pouch 5280 Phone (907) 235-8167 Kenai, Alaska 99611-5280 FAX (907) 235-3313 Phone (907) 283-5831 FAX (907) 283-712R ECE] VED July 21, 1993 JUL 2 6 1993 Mr. Dave Highers Chugach Electric Association, Inc. P. O. Box 196300 Anchorage, Alaska 99519-6300 Dear Dave: ay ad vi In response to your July 20, 1993, letter regarding raat? eke ‘date v are providing the attached copy of HEA’s draft proposal for your review prior to the July 22 BPMC vote on this issue. Your concern about HEA qualifications and O&M costs are addressed in our_ proposal. Specifically: e To insure the most qualified and experienced staffing, we propose to retain the existing crafts people at the site under HEA’s existing bargaining unit agreement. ° The Project Manager selection process will be conducted by a participant screening committee. e The budget is preliminary, only for proposal discussion, and will be subject to adjustment based upon future AEA/BPMC budget negotiations. We request Chugach’s approval of this proposal for submission to the AEA as a basis to finalize an agreement with AEA providing for project O&M by HEA. Chugach will, as a BPMC member, reserve its final approval pending action on the AEA/HEA agreement and budget by the full BPMC. In the spirit of joint utility cooperation, we further request that any Chugach concern regarding the HEA proposal be addressed with our staff. Dave, I appreciate your positive response and look forward to a cooperative relationship. Sincerely, HOMER ELECTRIC ASSOCIATION, INC. “LAs N. L. Story General Manager NLS\DHO72193.Itr/twb Enclosure yl cc: Railbelt Utility Managers XO. WOlr 6 i EBERLE SIELZKOWSE| O09: Waar Reuuny eur FILE NO gro 32ho TRAN oe Alaska Energy Authority A Public Corporatior Twp June 16, 1993 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 operations 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, Can Ronald A. Garzinf Executive Director RAG:SES:ds cc: Riley Snell, AIDEA PO. Bex 190869 701 East Tudor Road =Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 93Q2/MA4798(1) Page | /_ + wT aa.-uvarmm WU LLU INNIUT AN LIWAUL AUILIVALII SY 27 0 ASSOCIATION, INC, IC = AS80GATION Mit, oO 4 CER DAVID L. HIGHERS Generali Manager CHUGACH, LECTRIG 3 RECEIVED July 12, 1993 JUL 1 2 1993 Norman L. Sto: General Manager ALASKA ENERGY AUTHORITY Homer Electric Association, Inc. 3977 Lake Street Homer, Alaska 99603 Dear Norm: From the tone of your July 1, letter there is obviously some misunderstanding of the letter that I sent to you on June 7, regarding Bradley Lake O&M. I will attempt to clarify our position. You concluded that "Chugach has openly reneged on a written contractual commitment" when it responded negatively to your letter asking that we agree to not submit a competing contract proposal for the Bradley Lake O&M. This is simply not an accurate assessment of the situation. The Services Agreement For Bradley Lake Energy (Agreement) that you referenced says that "The Parties agree to support and assist any reasonable efforts by AEG&T and/or HEA to obtain from the Authority the right to operate and maintain the Project... ."._ To date Chugach has not seen or discussed with HEA or AEG&T any proposal for Bradley O&M and therefore we cannot support what we have not seen. Further, even if we had been shown AEG&T\HEA's proposal, it is not clear that we would have béen able to evaluate its reasonableness since there were no other proposals to compare it with Chugach has never said that it will not support a reasonable offer by AEG&T\HEA for Bradley Lake O&M, only that we want to protect our interests by first having the courtesy of reviewing your proposal and second having a realistic criteria to judge it against to assure it is truly a "reasonable" effort. You are correct when you reiterated that Chugach has concerns about AEG&T\HEA's having demonstrated the lack of ability to take on a project of the scope of Bradley Lake O&M. The concerns expressed were not meant to belittle AEG&T\HEA, but rather were intended to show that AEG&T and or HEA have been responsible for several generation and transmission projects, since the Agreement was signed, and AEG&T\HEA's handling of those projects has raised questions by Chugach and other utilities with respect to AEG&T\HEA's ability to handle Bradley Lake O&M. These concerns could not have been raised prior to the signing of the Agreement, because they developed subsequently. 5601 Minnesota Drive * P.O. Box 196300 ¢ Anchorage, Alaska 99519-6300 Phone 907-563-7494 ¢ FAX 907-562-0027 out ar: ("12-99 + L12U9AM CHUGACH ELECTRIC> AK ENERGY AUTHORITY;# 3/ 3 Page-2 Norm Story Bradley Lake O&M You indicated that I dismissed out of hand your comments that performing the O&M of Bradley Lake by HEA would result in beneficial economic effects on the Kenai Peninsula. I agree that those benefits will flow to the communities on the Peninsula, but that will happen, and has already happened, regardless of who operates Bradley Lake, The fact is, the project is located on the Peninsula as are the jobs that are required to perform the O&M. My comment was that this should have no bearing on selecting a contractor. Iam puzzled by your comment about AEG&T rejecting Chugach's offer to perform O&M on Soldotna #1 for the same reason that Chugach would reject the offer of AEG&T to perform the O&M at Bernice Lake. | don't have a clue as to what “reason" you reference. When Chugach puts out a solicitation of proposals for services we make our selection based upon qualifications and cost. If all bidders are equally qualified, we select the candidate who can perform the work at the lowest cost insuring that our rate-payers receive the highest quality product at the lowest cost. If Chugach were to solicit O&M proposals for Bernice Lake in the future, and if AEG&T\HEA met our qualifications and offered to do so al the lowest cost, they would be selected to provide the service, period. I am pleased to find out that HEA will be offering to perform the O&M services for Bradley Lake at cost. This is the first indication that we have had of any part of your proposal. Although it may be difficult for you “to understand how an alternative proposal could beat HEA's price without losing money", I suggest that reasons such as economies of scale, experience and other factors allow some bidders to perform tasks at a lesser cost than others. Since you have raised the issue, let me assure you that Chugach has no intention of offering to perform services for others at less than its cost. \ In closing, I want you to be dssured that Chugach has no intention of reneging on the agreement we signed in 1989 or any other agreement. We look forward to working with AEG&T\HEA and the other Bradley participants in selection of an O&M contractor. vid L. Highers General Manager CC: Railbelt Managers Ron Garzini-AEA Croat Quer bnew, WC State of Alaska DN Walter J. Hickel, Governor Alaska Energy Authority / A Public Corporation MEMORANDUM RECORD UOPY FILE NO June 22, 1993 “PRO 3+1o TRAN! LAW o ~1,% To: Charles E. Cole : Attorney General e Department of Law Attn: Carolyn Jones Assistant Attorney General From: om . Garzini Executive Director Alaska Energy Authority Subject: Request for an Opinion on Procedure for Bradley Lake Hydroelectric Project Operation and Maintenance The Alaska Energy Authority (AEA) requests your opinion on the applicability of the State of Alaska procurement code, AS 36.30, and AS 44.83.396 and 3 AAC 94.160 to contract(s) for the operation and maintenance of the Bradley Lake Hydroelectric project. This project was constructed under the Energy Program for Alaska, AS 44.83.380-.425. SB106, which takes effect August 11, 1993, provides that AEA shall, to the maximum extent feasible, enter into contracts with public utilities and other entities to carry out its duties with respect to the maintenance and operation of power projects owned by AEA. Please note that there is a bond resolution accepted by AEA in September 1989 applicable to the Bradley project and also a power sale agreement with the utilities which purchase power from Bradley which may affect the applicability of the procurement code to the contracts in question. You should also note that the money to pay the operation and maintenance at Bradley are paid out of a fund established by the bond resolution. Please advise us of the appropriate lawful procedure for entering into a contract for the operation and maintenance of the Bradley Hydroelectric Project by June 30, 1993. SES:RAG:it PO. Box 190869 704 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 93Q2\IT5031(1) State of Alaska RECORD LOPY FILE NO Aah oe Aneto —PRe 22h FRAY A Public Corporation actrees ; TELECOPY PRO o-h 4 HER Anchorage Telecopy Phone No. (907) 561-8584 a Telecopy Sent To: —Dave Fair Name of Company: —Homer Electric Association . Company Address: —Homes. Alaska. Telecopy Phone Number: —235-3313 Sender: —Denise Burger Telephone Number: —~2OP SSh1-7877 = Number of Pages Sent: i Gncluding this cover page.) Date Sent: tune 11. 1993 If you do not receive all of this telecopy, please cali: (907) 261-7240 Anchorage Attached are specific references by Ron Garzini supporting utility involvement in the operation and maintenance of the Bradley Lake Hydroelectric Project, as recorded in the BPMC meeting minutes. Please feel free to call me if you need additional information. Message: P.O. Box 190869 701 East Tudor Read Anchorage, Alaska 99519-0869 (907) 561-7877 TRANSMISSION REPORT THIS DOCUMENT (REDUCED SAMPLE ABOVE) WAS SENT *k COUNT ** # 4 C0’. GARZNY week SEND ik [no| REMOTE STATION I. D. START TIME | DURATION RPAGES j COMMENT [ | 907 235 3313 6-11-93 9:29 | 2°27" 4 TOTAL 0:02'27" 4 XEROX TELECOPIER 7020 State of Alaska ’) Alaska Energy Authority A Public Corporation TELECOPY Anchorage Telecopy Phone No. (907) 561-8584 Telecopy Sent To: Dave Fair Name of Company: Homer Electric Association Company Address: Homer, Alaska Telecopy Phone Number: 235-3313 Sender: Denise Burger Telephone Number: (907) 561-7877 Number of Pages Sent: 4 (Including this cover page.) Date Sent: June 11, 1993 If you do not receive all of this telecopy, please call: (907) 261-7240 Anchorage Message: Attached are specific references by Ron Garzini supporting utility involvement in the operation and maintenance of the Bradley Lake Hydroelectric Project, as recorded in the BPMC meeting minutes. Please feel free to call me if you need additional information. P.O. Box 190869 701 East TudorRoad Anchorage, Alaska 99519-0869 (907) 561-7877 BPMC Meeting Minut January 14, 1993 Page 9 of 13 Mr. Ritchey distributed a chart of Ater Wynne legal fees and expenses encompassing August 1992 to January 1993. Mr. Ritchey explained that the August and September expenses were included on the chart because they had not been paid (although they had previously been approved). Mr. Ritchey noted that the expenses were well above the budget line item approved for FY93. Mr. Kelly motioned to approve the submitted expenses for payment. The motion, seconded by Mr. Ritchey passed by the following roll call vote (Action 93-162): City of Seward Yes Matanuska Electric Association Yes Chugach Electric Association Yes Homer Electric Association Yes Golden Valley Electric Association Yes Municipal Light & Power Yes Alaska Energy Authority No Mr. Garzini stated his objection to administering payment of legal bills to cover the AEA administrative cost law suit. Mr. Saxton stated that the money paying for the legal expenses was not AEA's money, explaining that the money was only handled by AEA as a result of the technical provisions of the Power Sales Agreement. Mr. Garzini objected to the payment of legal expenses for what he considered an unnecessary law suit. In response to questioning by Chairman Highers, Mr. Garzini stated that the Energy Authority would administer the payment of legal expenses approved by the Committee. Directing his comments to Mr. Garzini, Mr. Kelly recalled the history behind the AEA administrative cost issue. After negotiating with Mr. Bussell, the Committee felt that there was too large a difference to resolve through continued negotiation. The Committee was also concerned that the issue would return every year. It was the consensus of the utilities that the best course was to seek a legal determination in order to put the issue to rest. Mr. Kelly acknowledged Mr. Garzini's desire to work directly with the utilities to resolve the issue, however, stated that changing the present course of action would be difficult. Mr. Garzini expressed hope that future problems could be resolved either technically or through the managerial process. Mr. Garzini added that his ultimate goal was for the utilities to play a greater role in the management of the project. B. Fritz Creek Segment Funding e:\dburger\word\minutes\pmc\01-93 BPMC Meeting Minutes May 13, 1993 Page 3 of 9 ey Lake O&M Cost Audit Update pet arisena Stromberg & Company has completed the 1992 O&M cost audit. Following initial review by the Budget Subcommittee, the report will be distributed to the Bradley PMC. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported that AEA had received and was reviewing the proposed paragraph subjecting the agreements to a master operating agreement for inclusion in the remaining agreements. Additionally, AEA has received and is reviewing the proposed master operating agreement. Mr. Sieczkowski expected the Agreements Subcommittee to meet to discuss these issues in the near future. Noting the discussion at the March 3, 1993 BPMC meeting regarding the role of AEA and the BPMC (i.e., the ability of the BPMC to contract), Mr. Kelly asked if the current proposed agreements reflected the BPMC as the contracting authority. Mr. Saxton explained that he and Mr. Lovas had drafted a master operating agreement. The concept was discussed with AEA and its attorney, but AEA had not responded further. Mr. Saxton explained the emphasis had been directed toward completing the agreements in progress for a limited term, with the inclusion of a means to incorporate them under the anticipated master operating agreement. In view of the recent legislation affecting the Alaska Energy Authority, Mr. Garzini recommended the BPMC delay further action on the issue for at least two weeks. Mr. Garzini reiterated AEA's ultimate intention to | transfer the operation and maintenance of Bradley Lake to the utilities, however added, some time was needed to fully study the legislation and to form a plan. Citing intentions to include the utilities in the planning, Mr. Garzini noted numerous options were possible (i.e., joint action agency, etc.). Mr. Garzini informed the Committee that the Energy Authority Board of Directors will dissolve 90 days after the legislation is signed. AEA and the responsibility for the operation and maintenance of the State's hydroelectric facilities will be transferred to the Alaska Industrial Development and Export Authority (AIDEA) Board. The rural programs and services provided by AEA will be transferred to the Department of Community and Regional Affairs (DCRA). Grants to build the approved interties will be issued by the Department of Administration (DOA). Noting DOA's inexperience, Mr. Garzini suggested AEA may be able to assist the utilities dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 4 of 9 w ancing. Summarizing the effect of the legislation, Mr. Garzini oe at "AEA had been wounded badly, but was not dead." AEA can wwe 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 State of Alaska DS Walter J. Hickel, Governor Alaska Energy Authority A Public Corporation RECORD COPY June 16, 1993 FILE NO FRD 3-1. min PRO 3-1.0 TRA 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 Aniepeity projects and programs to the Department of were! 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 operations 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 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 93Q2/MA4798(1) Page | RECON Vem LIEK gtire ES: AND EXPORT AUTHORITY ALASKA INDUSTRIAL DEVELOPMENT RECORD VOPY FILE NO PRO o- WY cert June ll, 1993 = Mr. Dave L. Highers Chairman Bradley Lake Project Management Committee Chugach Electric Association P.O. Box 196300 Anchorage, Alaska 99519-6300 Subject: AEA Legislation -- Clarification of State Position Dear Mr. Chairman: To be sure everyone understands the course of activities associated with the implementation of AEA_ Legislation, following are the groundrules AIDEA and AEA will follow in negotiation with the attached utilities. I. Negotiations relating to Bradley Lake, existing Railbelt intertie and Four Dam Pool issues. A. There will be no changes in Project ownership or FERC licenses. B. Contract changes (Bradley and Four Dam Pool Power Sales Agreements and Alaska Intertie Agreement) will be limited to changes required to implement the legislation. This may mean no contract changes. Cc. AEA/AIDEA will negotiate with a single utility Manager and utility attorney from each group (e.g., one manager/attorney team for Bradley and existing intertie issues, one team for Four Dam_ Pool). Utilities should work out any differences between themselves on their own without state participation, and negotiate with the state only when ready to proceed with a sinyle utility position. 11. Negotiations relating to New Interties. 480 WEST TUDOR » ANCHORAGE, ALASKA 99503-6690 - (907) 561-8050 - FAX (907) 561-8998 ™ 7» Mr. David L. Highers June ll, 1993 Page ‘Two A. Utilities should resolve all issues between themselves without state participation. B. Utilities should negotiate with the state with a single manager/attorney team. Similarly, the state will negotiate through a single two person team. We have arranged for a meeting at AEA offices at 9:30 a.m. July 7, 1993, to discuss transition options for certain functions presently conducted by AEA. A separate announcement on this meeting will also be sent to you. Sincerely, Sincerely, Ah tam R. Sne Ronald A.YGarzini Executive Director Executive Director AIDEA AEA WRS: RAG: bjf£ Distribution: Jim Klasen, Department of Law Carolyn Jones, Department of Law James Baldwin, Department of Law Edgar Blatchford, Commissioner, Department of Community & Regional Affairs Stan Sieczkowski, Alaska Energy Authority Brent Petrie, Alaska Energy Authority Dick Emerman, Alaska Energy Authority Dave Eberle, Alaska Energy Authority Gloria Manni, Alaska Energy Authority Herv ey Files’ Alaska Energy Authority DATE: TO: FROM: SUBJECT: Alaska Energy Authority = 2&co8b -oPy FILE NO TRE 3 she raed MEMORANDUM S June 17, 1993 Bradley Project Management Committee Members Four Dam Pool Members Vince Motolla, Fairbanks Municipal Utilities Systems Bob Hufman, Alaska Electric Generation & Transmission Cooperative Bob Martin, Tlingit-Haida Regional Electrical Authority Charlie Walls, Alaska Village Electric Cooperative, Inc. Diane Rabb, Rural Alaska Power Association Dave Hutchens, Alaska Rural Electric Cooperative Association, Inc. Brad Reeve, Alaska Systems Coordinating Council Ronald A. Garzini a fe Executive Director t ps Alaska Energy Authority Utility and AEA Operations At the request of several managers, we have rescheduled a meeting to discuss the implementation of recent legislative actions that affect the Energy Authority and the existing State-owned energy projects. We will not be discussing new intertie financing nor operations of individual projects such as Bradley Lake. We will present an outline of AEA functions, financing activities and projects underway. We will talk in detail about the provisions of the dismemberment act and plans and timetables to effect the requirements of the act. Once the details are well-known we will discuss some possible new roles for the utility industry. It is our hope that these discussions can assist in a more efficient transition, and make sure no worthwhile functions are lost. The meeting is scheduled for July 7, 1993, from 9:30 a.m. to 4:00 p.m. in the Alaska Energy Authority conference room at 701 East Tudor Road. 93Q2A49I16(1) Subject: Utility and AEA Operations June 17, 1993 The tentative schedule is: 9:30 a.m. - 12:00 p.m. AEA Functions and project requirements 12:00 p.m. - 1:00 p.m. Lunch 1:00 p.m. - 2:00 p.m. Work Session 2:00 p.m. - 2:15 p.m. Break 2:15 p.m. - 3:00 p.m. Work Session 3:00 p.m. - 4:00 p.m. Conclusions Please confirm the company representatives to Terri Ganthner at 261-7256 by June 30. As a related reminder the Four Dam Pool PMC has scheduled their next meeting for July 8 at the Alaska Energy Authority offices. SES:ja cc: Brent N. Petrie, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Gloria Manni, Alaska Energy Authority Dave Eberle, Alaska Energy Authority Herv Hensley, Alaska Energy Authority and icbess Alaska Energy Authority 93Q2\A4916(2) ¥ AA as lier ge © [_ = > ‘CHUGACH ELECT RIC Cie G i: ASSOCIATION, INC. rie A Atak hme one, DAVID L. HIGHERS Genera Manager RECEIVED June 7, 1993 JUN 0 7 1993 Norman L. Story ALASKA ENERGY AUTHORITY General Manager Homer Electric Association, Inc. RECORD UOPY 3977 Lake Street FILE NO Homer, Alaska 99603 Re: Bradley Lake O&M Contract Dear Norm: — PRO B-l° TRAW In your letter of May 27, you asked that Chugach declare that it will not submit a competing proposal for the Bradley Lake O&M contract. I am unable to make that commitment for several reasons. First, when Chugach entered into the Bradley Lake Services Agresment, it agreed along with the other parties to support and assist any reasonable efforts by AEG&T and/or HEA to obtain from the Authority the right to operate and maintain the project. While Chugach fully supports AEG&T\HEA's right to submit a proposal, it is difficult for us to support that proposal when neither AEG&T or HEA have demonstrated the ability to take on a project of this magnitude. The only major project HEA has managed (the Quartz Creek line) for the benefit of the other railbelt utilities is now the subject of litigation due, in Chugach's opinion, {9_mismanagement_ AEG&T/HEA has never communicated to Chugach how it plans to operate and maintain Bradley Lake and therefore, it would be an incorrect assumption to read the Bradley Lake Services Agreement as a blind commitment of Chugach's support for HEA/AEG&T. In short, it is not at all clear to Chugach that AEG&T or HEA is capable of holding up its end of the bargain by presenting a reasonable (competent and economical) proposal for management of Bradley Lake. Second, you stated in your letter that "Not only does the project have significant impact on our service territory, but we also believe contract O&M services by HEA/AEG&T will have beneficial economic and jobs effects on the Kenai Peninsula. . .". While this may be true, when choosing a contractor to provide O&M services for a $325 million dollar hydroelectric facility, Chugach is more interested in assuring that the contractor is fully qualified to perform the services required and that the contractor can provide those services at the lowest cost. Providing economic development through jobs for the Kenai Peninsula is not a factor that Chugach would consider in selecting a contractor for this task. When AEG&T put O&M services out to bid for the Soldotna | unit, it selected the highest 5601 Minnesota Drive * °C Box 196300 « Anchorage, Alaska 99519-6300 Pnone 907-563-7494 * FAX 907-562-0027 sci BY m- 7-93 ° 1.55PM: CHLGACH ELEC '*'C- AK ENERGY ALTHORITY:= 3 Page 2-Norm Stary Bradley Lake O&M bidder rather than Chugach, who provided the lowest cost bid. Chugach offered to provide the O&M services at a cost which was a fraction of the cost that Intercore, the firm the bid was eventually awarded to, submitted. Chugach can only assume that this decision was also an effort by AEG&T\HEA to provide jobs on the Kenai Peninsula. That choice was certainly AEG&T's tight because HEA and its consumers will bear the financial impacts of that decision. However, Chugach cannot support a similar decision for Bradley Lake when it will impact every ratepayer in the railbelt. Finally, for Chugach to agree to ignore alternative proposals for obtaining the best\lowest-cost arrangement for the Bradley Lake O&M would, in my judgement, be a poor business decision. There is a good possibility that the agreement you have proposed would violate anti-trust laws and the State of Alaska may be unable to accept a proposal from AEG&T/HEA on a non- competitive basis for this reason. I believe that each utility that is interested in providing the O&M services for Bradley Lake should be given the opportunity to submit a proposal. A thorough review of all proposals submitted that takes into consideration the ability to competently perform the tasks at the most reasonable cost will provide the best result; an O&M contractor that will do the job at the lowest cost for all of our members. J DATE: TO: FROM: SUBJECT: RECORD ULOPY FILE NO PRo. Alaska Energy Authority - MEMORANDUM June 4, 1993 Bradley Project Management Committee Members Four Dam Pool Members Vince Motolla, Fairbanks Municipal Utilities Systems Bob Hufman, Alaska Electric Generation & Transmission Cooperative Bob Martin, Tlingit-Haida Regional Electrical Authority Charlie Wails, Alaska Village Electric Cooperative, Inc. Diane Rabb, Rural Alaska Power Association Dave Hutchens, Alaska Rural Electric Cooperative Association, Inc. onald A. Garzini BUS Executive Director Alaska Energy Authority Utility and AEA Operations The Alaska Energy Authority will host a meeting to discuss the implementation of recent legislative actions that affect the Energy Authority and the existing State-owned hydroelectric projects and interties. A specific topic we would like to discuss is if and how a utility or group of utilities might take on certain operational activities that are now done in common for all state-owned facilities. These activities include, but are not limited to, reporting and record keeping for Federal Energy Regulatory Commission (FERC) and regulatory agencies, engineering, basic record and drawing maintenance, technical standards for maintenance and operations, new technology ‘development, and PMC support. The conference is scheduled for June 16, 1993, from 10:00 a.m. to 4:00 p.m. at the Alaska Energy Authority building, 701 East Tudor Road, in the state personnel office training room. The tentative schedule is: 10:00 a.m. - 12:00 p.m. AEA Functions and project requirements 12:00 p.m. - 1:00 p.m. Lunch 1:00 p.m. - 2:00 p.m. Work Session 2:00 p.m. - 2:15 p.m. Break 2:15 p.m. - 3:00 p.m. Work Session 3:00 p.m. - 4:00 p.m. Conclusions 93Q2\JA4916(1) 3- l1© Tem Subject: Utility and AEA Operations June 4, 1993 The Bradley Lake Budget Subcommittee meeting previously scheduled for June 16 is moved to 8:00 a.m., June 17th. Please confirm the company representatives to Terri Ganthner at 561-7877 by June 14th. SES:ja ce: Brent N. Petrie, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Gloria Manni, Alaska Energy Authority Dave Eberle, Alaska Energy Authority Herv Hensley, Alaska Energy Authority 93Q2\JA4916(2)