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HomeMy WebLinkAboutBPMC Meetring - July 17, 1990 1FILE COPY fi — BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE i JULY 17, 1990 CALLED TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee to order at 9:45 a.m in the Conference Room at the office of the Alaska Energy Authority to conduct the business of the Committee per the agenda and the public notice. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Alaska Energy Authority Robert E. LeResche - Representative Brent Petrie - Alternate Chugach Electric Association David L. Highers - Representative Tom Lovas - Alternate City of Seward Absent Golden Valley Electric Association Michael Kelly - Representative Homer Electric Association N. L. Story - Representative Sam Mathews - Alternate Matanuska Electric Association Ken Ritchey - Representative Municipal vee and Power Tom Stahr - Representative Myles Yerkes - Aiternate Others Present: Don Shira - Alaska Energy Authority Ron Saxton - Purchasing Utilities John Cooley - Municipal Light & Power Marcey Rawitscher - Alaska Energy Authority DeAnna Scott - Alaska Energy Authority Tom Klinkner - Wohlforth, Argetsigner, Johnson & Brecht PUBLIC COMMENT There being no public comment, Chairman Kelly proceeded to agenda item 4. Page 2 of 10 MODIFICATION OF AGENDA Under New Business, Item E, Approval of Supplemental Bond Resolution for Second Series Bradley Lake Bonds and Item F, Increase Operating Reserve Requirement were included with Item C, Schedule Maintenance Fund. Mr. Petrie requested the Bond Finance Team Report be delayed until Mr. LeResche was available in the meeting. APPROVAL OF MINUTES MAY 17, 1990 Chairman Kelly asked if there were any objections to approving the May 17, 1990 meeting minutes as distributed. Hearing no objections the minutes were approved. BOND FINANCE TEAM Mr. LeResche reported that the Preliminary Official Statement was completed in Chicago on July 13, 1990. The pricing call will be on July 24, 1990 and the sale of the bonds on July 25, 1990. Mr. LeResche stated that he would be in New York for the sale of the bonds on July 25, 1990 and the AEA Board of Directors will be meeting via teleconference on July 25, 1990 to approve the sale of the Bonds. Mr. LeResche stated that what is needed from the PMC is an approved supplemental resolution and approval of the official estimate of the Section 31 Cost. Mr. LeResche stated the changes to the official statement were the matrix quarters, the expenditures to date were included and the cost estimate was officially changed to state the total construction cost of $312.5 million including $9.31 million for the stability aids. Mr. LeResche stated that each utility could pick up a copy of the Official Statement after the meeting. Mr. LeResche further stated that the insurance quote from MBIA came in at 34 basis points and at that rate, it would probably be worth $2 to $3 million to the PMC to insure the bonds now and have them triple A rated. This is on the assumption that the bond ratings stay the same as _ the first issuance. He further stated that at least the CAB’s and term bonds would be insured. AEA is currently in the process of talking with the underwriters to see if it would be beneficial to not insure the serial bonds. Currently, it looks as if everything would be insured by MBIA and will retain the triple A rating. Mr. LeResche stated that the pricing call will be on July 24, 1990 and that the utilities were welcomed to be in on the call. A. APPROVAL OF SECTION 31 COSTS Chairman Kelly stated that there were two transmittals from Mr. Saxton to the PMC. The first is a response to Mr. Wick’s questions as to when the Section 31 Costs would actually be reimbursed. The second was a complete breakdown of the utility cost for the 1989 and 1990 bond issuances. Mr. Saxton was asked to further explain the issues. Mr. Saxton stated that these issues had been addressed in a memorandum that had been sent to the PMC. He referred to that memorandum. Mr. Saxton explained that the Section 31 Costs are costs incurred by the utilities for organizing and participating in the PMC, including costs of negotiating the Power Sales Agreement. These costs are not eligible for matching funds from the State and must be approved by the PMC for payment. All Section 31 Costs will be capitalized as part of the second series bond issue. Mr. Saxton stated that the PMC had approved Section 31 costs through October 1989 at the November 30, 1989 meeting. Costs incurred by the utilities that are allowable Project Costs (such as legal opinions required by the financing) through that date were also approved on November 30, 1989. The PMC needs to approve similar Page 3 of 10 costs for the period from November 1989 through June 1990 so that they can be reimbursed from bond proceeds at closing. Mr. Saxton pointed out that the utilities had been reimbursed for expenses listed in sections A1 -- Finance Team Participation, A2 -- Legal Expenses for Financing, and A3 -- Legal Opinions. Managers were asked to check with their accounting staff to ensure that this had taken place and to report any problems to Ms. Rawitscher at AEA. No reimbursements have been made to date for any Section 31 Costs (those labeled B1 and B2 in the chart), TCC costs (A5) or for Project Costs after November 1, 1989. These will be reimbursed shortly after closing. Mr. Saxton then discussed the second attachment to the memo, which summarized utility costs from November 1989 through June 1990. He noted a mistake in the chart -- the chart shows $9,677 from Golden Valley under A1, the correct amount is $570. He also noted that there was a great deal of information lacking in the chart because it had not been received from the utilities. Information needed from each utility is listed in the footnotes in the chart. Managers were asked to forward the information to Ms. Rawitscher as soon as possible, to facilitate the payment to the utilities at closing. Mr. Saxton explained that the Section 31 Costs section of the chart needed to be approved prior to the bond issuance. The costs that are allowable project costs (those labeled A in the chart) do not have to be officially adopted by the PMC today. Mr. Saxton next brought up an issue that needed to be addressed by the PMC prior to the approval of the costs. ML&P had submitted two categories of expenses that had not been included by the other utilities. The first is reimbursement for costs prior to November 1, 1989 which had been overlooked in the computation of the original amounts which were approved at the November 30, 1989 meeting. Mr. Saxton asked whether the October 31, 1989 date was an absolute cut off date for expenses to be claimed for that period or if the PMC wanted to consider expenses prior to that. The second category of expenses were ML&P’s legal expenses for services not related to the financing effort. Mr. Saxton asked whether the utilities wanted to allow these as Section 31 Costs for all the utilities or whether they wished to exclude them. Ms. Rawitscher added that it was important to know which costs the utilities wanted to include in allowable expenses in order to ensure that money was available for reimbursement from bond proceeds. She added that the decision should be made prior to sale of the bonds to ensure proper sizing of the bond issue. Chairman Kelly asked whether Mr. Stahr was prepared to address this issue. Mr. Stahr stated that he was not prepared to address this issue due to the fact he has not reviewed the submittals. Mr. Saxton suggested that Mr. Stahr and Ms. Rawitscher work with ML&P on their expense submittals. Ms. Rawitscher reiterated that guidance is needed to be given by the PMC so that it would be clear which costs were allowable and which were not. Chairman Kelly suggested that since the amount in question for ML&P’s past expenses was small he felt that it would be appropriate to include those expenses. Chairman Kelly asked if the other members of the PMC had any objection to this. None were made. Mr. Lovas asked whether other utilities could submit costs that were overlooked. Ms. Rawitscher stated that as long as the information was forwarded to her within a couple of days it could be included. Mr. LeResche stated that the $2,000 to $3,000 costs should be included, but asked that Mr. Stahr and Ms. Rawitscher review the costs submissions to ensure that they are allowable. This is especially important because we are right up against the two percent limit on costs of issuance for the bonds. Chairman Kelly then asked if other utilities had been submitting charges for legal costs not related to the financing. Mr. Saxton stated that they had not and that this type of Page 4 of 10 cost was not included in any of the categories listed on the expense reimbursement forms. Mr. Saxton stated that if the PMC wanted to include these as Section 31 Costs, it would be a policy decision. Chairman Kelly recommended that if the committee had not included these type of costs in their initial determination of allowable costs then they should not be included. He asked if there were objection to this policy and there were none from the PMC. Chairman Kelly reiterated that Ms. Rawitscher should work with ML&P to help them classify the costs. Mr. Saxton then explained that the second half of the chart outlined those expenses submitted by the PMC for Section 31 Costs to date. He asked that a motion be made to approve those costs. Mr. Ritchey moved and Mr. Story seconded that the PMC approve the $86,532.09 in Section 31 Costs incurred from the period of November 1, 1989 through June 30, 1990 and to approve any Section 31 Costs not previously reimbursed. The motion passed with Messrs. Ritchey, Highers, Story, Kelly, Stahr, LeResche voting yes. City of Seward absent. Mr. Saxton also stated that a motion was needed for the PMC to instruct the Energy Authority to set up an additional fund for reimbursement of Section 31 Costs between July 1990 and the date of commercial operation. Mr. Saxton recommended that $300,000 in additional funds be approved. Mr. Stahr moved, Mr. LeResche seconded the motion that the PMC instruct the Alaska Energy Authority reserve the amount of $300,000 for future PMC expenses. The motion passed with Messrs. Highers, Story, Kelly, Stahr, LeResche and Ritchey voting yes. City of Seward, absent. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Yerkes reported that there had not been a TCS meeting since April 24, 1990, but the subcommittee will be meeting on July 19, 1990 at AEA. Mr. Yerkes reported that the stability solutions studies are not going very well and there are problems with the reports. There are additional problems to solve regarding the stability problem with the intertie. There are quite a few significant problems with the governor control system and the static var system. PTI is trying to develop a scheme to resolve the stability problem on the intertie. There has been an increase in the budget amount to $9.2 million to reflect and to cover the problems that are going on now. The stability aids are another potential problem area. Mr. Yerkes stated that due to his leaving ML&P, he suggested that Mr. Dave Burlingame from Chugach Electric Association be appointed to the TCS. Mr. Burlingame is very knowledgeable of the stability problems and is aware of what is currently going on with the system. Chairman Kelly asked for Mr. Highers’ concurrence to appointing Mr. Burlingame of CEA to the Technical Coordinating Subcommittee. Mr. Highers concurred. It was stated that with out objection by Chairman Kelly that Mr. Burlingame will be reporting to the PMC from the Technical Coordinating Subcommittee and attending the Control Configuration Board meetings and making those reports. Chairman Kelly asked if there were any question of the TCS. Mr. Lovas stated that he had additional information in regards to the TCS. Mr. Lovas reported that at the last meeting it was suggested that there be a joint manager’s meeting with GE requesting shaft data information. From further discussion with John Cornell with AEG&T and GE, and from conversations that CEA staff has had, it became clear that GE would be willing to provide the data to the utilities but that they would not provide the data directly to PTI. Consequently, CEA’s production group is preparing a letter specifically asking GE for information with regards to CEA generators outline. Page 5of 10 INSURANCE SUBCOMMITTEE REPORT Mr. Saxton reported that the insurance committee has been waiting for the final assessment report from Stone and Webster Engineering Corporation (SWEC) and it has now been issued. The subcommittee met on July 16, 1990 to review it and talk about options. The aviation and liability insurance will be purchased from the State of Alaska. | There was quite a bit of explanation of the property and Boiler and Machinery options. The subcommittee has the report and now has to follow-up on a number of tasks and then gather the information on the various cost alternatives. The committee is just beginning to work on this. Mr. Saxton further stated that from the report, the conclusion is that the risk to this project from natural disasters, earthquakes, fire, flood, etc., the maximum probable losses are limited. The maximum probabie loss from an earthquake is $12 million. The real risk results in substantial damage from human error and machinery malfunctions. Mr. Petrie stated that the subcommittee is going to look at getting quotes on property premiums at $60, $80 and $100 million. The report listed what might be expected as a loss, from "Probable Maximum Loss" and "Maximum Possible Loss". "All other perils" was in the area of $140 million excluding the transmission line. To deal with a situation were we have major damage and have to expedite repairs, we would be looking at something in the area of $60, $80 or $100 million. The subcommittee will also have to look at some way of self-insuring the transmission line, possibly rolling it into the program that we have on the Anchorage-Fairbanks Intertie. The other issue is looking at either self-insuring or paying premiums for the first $10 million layer. The subcommittee has received an initial quote for $125,000 to buy down to a $1 million deductible. Mr. Petrie reported that this is very good compared to the Four Dam Pool. A $10 million layer would cost about $400,000, so it could be a very different situation and the subcommittee my not have gotten the right quote. The subcommittee will be exploring these issues and will get back to committee in about 60 days. Chairman Kelly asked if there were any questions, being none Chairman Kelly proceeded to the next item on the agenda. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported that the Budget Subcommittee met on July 16, 1990 and addressed the issues that pertain to the budget. be AEA Cost Mr. Ritchey stated that from the discussion of the last meeting, the Mangers were to meet as a group to take a position on the Administrative and General cost. This is still the only outstanding issue related to AEA’s costs. The subcommittee will need direction from the PMC. The split of personnel cost between O&M and construction. AEA stated that the present split was appropriate particularly considering that there was no overtime put into the budget and there would be some in the first year. AEA has agreed to check about capitalizing all of the seismic monitoring costs. That cost is up to $35,000 each year. The subcommittee has had discussions regarding some of the other cost to see if they could be completely capitalized or not. This has been left for AEA to check on for the next meeting. 10. Page 6 of 10 fe HEA Transmission Line Maintenance There was a meeting among representatives of the operating staff of each utility and they were able to reduce the cost for the inspection of the Bradley J.ake/Bradley Junction transmission line from $72,000 to $41,000. ue CEA Software and Dispatching Labor Cost The $150,000 cost proposed by CEA for dispatching is still an unresolved issue. It is CEA’s position that the $150,000 set up for the dispatch program and administrative labor cost (i.e., Brad Evan and Henry Dale) as well as the $36,000 for dispatch training is appropriate and should be in the budget. The subcommittee has asked CEA to justify their position and convince the subcommittee members that these costs are specific to Bradley. a! Insurance Mr. Ritchey stated that the subcommittee had hoped to finalize the insurance numbers but after the Insurance Subcommittee meeting there were a lot of questions that were raised. The insurance costs are open. The initial numbers that the committee had to begin with were not accurate. It may take possibly two months to get the current information. A CEA and HEA Wheeling Agreement Costs Unless the PMC objects, the Budget Subcommittee has taken it upon themselves to visit the issues related to costs under the CEA and HEA Wheeling Agreements. Mr. Ritchey stated that under CEA’s wheeling agreement, there was a formula established in the services agreement and various accounts established. Mr. Ritchey stated that the committee should revisit the issue and see what sort of billings are to be seen and how they are to be computed. Related to the HEA Wheeling Agreement, there was general language in the agreement however, no accounts were set up. We should look at this from a budget standpoint of what the utilities are going to be expected to pay.. Unless there is objection The Budget Subcommittee would like to visit these issues further. Chairman Kelly asked if there was any objection to the Budget Subcommittee to look at the CEA and HEA Wheeling Agreement costs. Hearing none, the subcommittee will take this task on. z Fiscal Year Budgets The subcommittee has decided tentatively, unless instructed otherwise by the direction of the PMC, to have the Bradley O&M Budgets presented to the PMC for action in August of each year for the following fiscal year. This would exclude FY 1991. OPERATING AND DISPATCH SUBCOMMITTEE REPORT Mr. Shira reported that Mr. Saxton prepared a draft of the allocation and scheduling procedures and they were circulated to the subcommittee members. Mr. Shira noted that CEA has a number of comments on the recent draft and a meeting has been scheduled on July 18, 1990 with Mr. Saxton to discuss the comments. Chairman Kelly asked when would the presentation be made to the committee. Mr. Shira responded at the next scheduled PMC meeting. 11. 12. 13. Page 7 of 10 REVIEW OF PROJECT STATUS Mr. LeResche stated that Mr. Eberle was down at the project site and reported that the project is 76% complete and the schedule has not been changed from the September 1991 commercial operation date. The contractor is two-thirds complete with the tunnel lining, which has been the slow part of the job. Jay Carlson, who was the original manager is back at the site. Price will complete ahead of schedule. Mr. LeResche stated that the AEA Board of Directors will officially reduce the budget to $312.5 million which will include over $20 million for unallocated and allocated contingencies. Mr. Lovas asked that if there would be a delay with filling the reservoir and if so, would a full test period be able to be conducted. Mr. LeResche stated that he thought it could be fully tested with a partial or full reservoir and as far as he is aware, the filling of reservoir will start October 1990 and will be filled next spring. OLD BUSINESS A. DISCUSSION OF TEST PERIOD POWER SALES AGREEMENT Chairman Kelly stated that the Test Period Power Sales Agreement and a couple of related issues were still out there. The need for a Test Period Power Sales Agreement was discussed when we thought we were going to have an early completion. Maybe a more important side issue was a testing protocol that AEA was to develop and submit to the utilities. Chairman Kelly asked if Mr. Saxton would address both issues. Mr. Saxton stated that it was not necessary for the PMC to have a test period power sales agreement and that the PMC could revisit the issue later if the PMC feels there is a need for one. As far as the testing protocol is concerned, this is more of a level of comfort for the utilities to see how the tests are to be performed and what will be done before the engineer declares the project commercially operable. Mr. Eberle was to have that list prepared by SWEC. Mr. LeResche stated that SWEC would have this information within the week, but AEA has not seen it yet. Chairman Kelly asked that when the information is available that a copy be mailed to the Chairman of the TCS. The PMC would like to have an opinion from the TCS before acting on this. Chairman Kelly stated that the need for a test period power sales agreement at this time is a dead issue. B. FINANCIAL ADVISOR Chairman Kelly asked the PMC if there was a desire to obtain a Financial Advisor for the second issuance of bonds. Hearing no motion for a Financial Advisor the PMC would proceed. Chairman Kelly stated that AEA has a financial advisor, Bill Newman of First Southwest, and the PMC need not retain a second financial advisor for the second issuance. Mr. LeResche stated that if the PMC feels as if they are not being assisted to their expectations, they should let him know. NEW BUSINESS A. ELECTION OF OFFICERS Chairman Kelly stated that this is the annual meeting of the Bradley PMC. The Bylaws state that the PMC will have the annual meeting the first opportunity after the first of July, which is the beginning of the new fiscal year. The order of business of the annual meeting simply states the election of officers and any other business that should come before the committee. The election of officers has been scheduled and Chairman Kelly has asked Mr. Ritchey, Mr. Wick and Mr. Diener to serve on the Nominations Committee. The Bylaws also provides for a permanent Secretary and Treasurer which is Mr. LeResche of the Energy Authority. The Bylaws provide that those duties can be Page 8 of 10 split and that the PMC can change this into two separate offices. Chairman Kelly stated that currently there is no need for the PMC to do this. He then asked the PMC if they had any desires of seeing this role changed. Hearing no comment, Mr. LeResche will continue as Secretary and Treasurer. Chairman Kelly asked Mr. Ritchey to proceed with the Nomination Committee’s Report. Mr. Ritchey stated that the Nominating Committee met via the telephone and the committee suggest that the PMC retain the same Chairman, Mr. Kelly and Vice- Chairman, Mr. Highers. Mr. Ritchey then asked for any other nominations for Chairman of the PMC. No additional nominations were made. Mr. Ritchey asked if there were any objections to Mr. Kelly being Chairman of the PMC. No objections were stated and Mr. Kelly is Chairman of the PMC. Mr. Ritchey asked for other nominations for Vice- Chairman, hearing none, Mr. Ritchey called it closed and asked if there were any objections of Mr. Highers being Vice-Chairman of the PMC. Hearing none, Mr. Highers is the Vice-Chairman of the PMC. COMMITTEE EXPENSES REIMBURSEMENT Mr. Saxton stated that a process will be required to bring future committee expenses before the PMC for some kind of approval. This can be done at every meeting or less frequently but there will be a need for the committee to approve expenses over the next year which will be paid out of the money held in the reserve. After the project is operational, expenses will be paid out of the budget. Chairman Kelly stated that the forms are developed and each committee member has a copy. Everything on the form is streamlined so, with no objection, the PMC will continue to use it. Ms. Rawitscher stated that each committee member should get their June 1990 expenses in as soon as possible. Chairman Kelly asked if there were any questions or comments, being none, Chairman Kelly proceeded to the next item. SCHEDULED MAINTENANCE FUND; APPROVAL OF SUPPLEMENTAL BOND RESOLUTION FOR SECOND SERIES - BRADLEY LAKE BONDS; INCREASE OPERATING RESERVE REQUIREMENT Ms. Rawitscher reported that the Budget Subcommittee had addressed some time ago the sinking fund payment that SWEC came up with for the scheduled maintenance and replacement of equipment. The subcommittee had originally thought that the Renewal and Contingency Fund could be used to hold those payments until needed, but this is not possible. Ms. Rawitscher asked Mr. Klinkner to add a fund in the Supplemental Resolution into which the sinking fund payments could be made and call it the Scheduled Maintenance Fund. When the PMC decides to start making the sinking fund payments, (which the budget committee has put off for five years) money would be put into the Schedule Maintenance Fund. The money in the Scheduled Maintenance Fund could be spent at the direction of the PMC to replace equipment. The Fund will be pledged to the bonds. The structure of this fund is set up for the interest on the fund not to be subject to income tax. Mr. Saxton stated that this method gives the Committee another option about handling some of these items and gives the PMC more flexibility. Ms. Rawitscher stated that there are some items that SWEC estimates could cost up to $20,000,000 to repair in future years. The choices that are available to the PMC in order to obtain such money would be to either finance it, or to do it through some type of a sinking fund. Chairman Kelly asked Mr. LeResche how the Energy Authority wanted to address this. Mr. LeResche suggested that the Committee consider the approval of the Supplemental Resolution which establishes the Scheduled Maintenance Fund. 14. Page 9 of 10 Mr. LeResche stated that this Supplemental Resolution would bring the previous bond resolution up to date with this issue. It adds the Scheduled Maintenance Fund and establishes the Operating Reserve Account of $625,000. Ms. Rawitscher stated that this is a little more than 20% of the annual budget. It is the amount that is needed for the cash flow because of the insurance payment that is due in July. It may earn unlimited interest as well. Chairman Kelly stated that these issues are to be combined in the approval of the Supplemental Resolution. Mr. Petrie noted that on page 9 in Article 5, the statement that "The Trustee shall make payments from the Scheduled Maintenance Fund and apply amounts in the Scheduled Maintenance Fund to payment of items of maintenance, renewal, repair and rehabilitation of the Project, as specified in a requisition of the Committee delivered to the Trustee should be reworded. Mr. Klinkner and Mr. Vassar pointed out that the PMC does not normally make requisition of the trustee. It would be the Authority. Mr. Highers moved, Mr. LeResche seconded the PMC approve the Supplemental Resolution with the correction to read "...In a requisition of the Authority in accordance with a budget adopted by the Committee." Chairman Kelly asked if there was any further discussion on the supplemental resolution. Hearing no objections the roll was called with Messrs. Story, Kelly, Stahr, LeResche, Ritchey, Highers voting yes, City of Seward, absent. The Supplemental Resolution was adopted. D. FERC LICENSING FEE Chairman Kelly stated that he received a letter from Mr. Nease asking that the Bradley PMC join the a appeal of the FERC licensing fees for the Four Dam Pool project. The Four Dam Pool PMC requested FERC to reconsider their decision and it was denied. The Four Dam Pool is now appealing that decision. Chairman Kelly asked Mr. Saxton to give a brief explanation of both the pros and cons. Mr. Saxton stated that the issue is a waiver of fees for the Four Dam Pool. Mr. Saxton further stated that what the Four Dam Pool PMC hopes to accomplish is to have FERC establish standards and once known, it is possible that Bradley could benefit. The Four Dam Pool PMC is estimating that the cost will be $50,000 to fight this over the next year and they asked for your financial participation to help with the effort. Chairman Kelly asked if there was a motion to join the Four Dam Pool’s appeal. Hearing none, the issue died from a lack of a motion. Chairman Kelly stated that he would write a letter on behalf of the Bradley PMC declining to support the Four Dam Pool PMC in their Appeal to FERC. = SCHEDULE NEXT MEETING SEPTEMBER 21, 1990 Chugach Electric Association Training Room 9:30 a.m. COMMUNICATIONS Chairman Kelly stated that each utility is encouraged to monitor the upcoming "Pricing Call" as they wish. Chairman Kelly also welcomed Mr. Norm Story who is replacing Mr. Wick of Homer Electric. Chairman Kelly asked Mr. Stahr to join the finance team as the replacement for Mr. Wick due to his seniority and affiliation with the Finance Team in last issuance. Mr. Stahr accepted. Chairman Kelly asked Mr. Petrie to inform all of the appropriate persons of the change (i.e. Seagraves and First Southwest). Chairman Kelly stated he received draft communication from Mr. Highers concerning the handling of legal services of the PMC. Chairman Kelly opened the floor for discussion. Chairman Kelly pointed out that Mr. Saxton’s services have been used in PMC group actions 15. Page 10 of 10 to represent the participating utilities on the PMC. In order to make the billing a smooth transaction, Mr. Saxton bills GVEA and GVEA in turn bills the participants for such services. Mr. Stahr stated that he feels that Mr. Saxton has done an excellent job representing the utilities. With no reflection on his services however, Mr. Stahr feel that the PMC should look at obtaining a local attorney. Mr. Stahr noted that he was not sure of the travel cost associated in the billing and by Mr. Saxton being somewhat remote is obviously a factor. Chairman Kelly stated that he would send a breakdown of travel of Mr. Saxton’s time as it relates to the PMC. Mr. Highers stated that Mr. Stahr’s point is well taken and this should probably be discussed at the Managers Meeting. Chairman Kelly asked that if any participant knows of an Alaskan Attorney to bring it to the managers for consideration. ADJOURNMENT There being no further business before the Committee, the Committee adjourned by acclamation at 12:00 noon. ecretary Approved by PMC at meeting held September 21, 1990. Deacder Stave Gowser Governor RECORD UOPY Alaska Bnergy Authority A Puslic Gerperation FILE NO Tip eIC-o- ray PRO Behl mind (ANCHORAGE Telecopy Phone No. (907) 561-8584) Pearce (907) 465-3767) V/HTIA0e ; (QUNEAU Telecopy Phone No. He-hKe tte, fh /geteerser, etl neem eee TELECOPY SENT TO: NAME OF COMPANY: COMPANY ADDRESS: TELECOPY PHONE NUMBER: 2 "I@& —-So7> —_— SENDER: I yo than = 3 ett es CHARGE CODE: TELEPHONE NUMBER: ~c NUMBER OF PAGES SENT: Re 5 a. INCLUDING THIS COVER PAGE DATE SENT: eB =f 7-F 9 IF YOU DO NOT RECEIVE ALL OF THIS TELECOPY PLEASE CALL: (907) 261-7240-Anchorage (997) 465-3575-Juneau SPECIAL INSTRUCTIONS: * : él +ga< fect = RO. BOX AM Juneau. Alaska 99811 (907) 465-3575 We PO. Box 190869 701 EastTuder Road) §=Anchorage Alaska 99519-0869 (907) 561-7877 TRANSMISSION REPORT THIS DOCUMENT (REDUCED SAMPLE ABOVE) WAS SENT ** COUNT *% # 32 %#weK SEND ik NO REMOTE STATION I. D. START TIME DURATION #PAGES COMMENT 1 9072765093 8-17-90 8:05 22°04" 32 TOTAL 0:22°04" 32 XEROX TELECOPIER 7020 Stote of Alaska >< Steve Cowper Soverner Alaska Bnergy Authority A Public Corporation TELfFCaoOrPY (ANCHORAGE Telecopy Phone No. (907) 561-8584) (JUNEAU Telecopy Phone No. (907) 465-3767) TELECOPY SENT TO: RA ou ; ae NAME OF COMPANY: COMPANY ADDRESS: TELECOPY PHONE NUMBER: Ss O=>=— ed) C—O 2 SENDER: oes = eS TELEPHONE NUMBER: Fet-75 7-2 CHARGE CODE: NUMBER OF PAGES SENT: . i $= INCLUDING THIS COVER PAGE DATE SENT: fe>—-'( N~— Samo IF YOU DO NOT RECEIVE ALL OF THIS TELECOPY PLEASE CALL: (907) _ 261-7240~Anchorage (907) 465-3575-Juneau SPECIAL INSTRUCTIONS: PO. BOK AM Jun@au. Alaska 99811 (907) 465-3575 BW PO. Box 190869 701 East Tuder Roaa) Anchorage, Alaska 99519-0869 (907) 561-7877 TRANSMISSION REPORT THIS DOCUMENT (REDUCED SAMPLE ABOVE) WAS SENT **k COUNT *%* # 32 #3 SEND 2 NO REMOTE STATION I. D. START TIME DURATION #PAGES COMMENT 1 503 226 0079 8-17-90 8:34 28°39" 32 TOTAL 0:28'39" 32 XEROX TELECOPIER 7020 (1) (Working DAMPT len Rivet Ment. TASSS. Qre hat Ve Ee aC (tact, Te pont hrag/ CK @) fAdoerkoun Ogntes . Au Put 2 ane Ve loseny These Laide he deer Yeti. th, Crk) Cleese Ce} me Enno i L pce inet Trfeeratiyn Maw. Mill Dethue Sea Sbl-2917 WORKING DRAFT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE JULY 17, 1990 CALLED TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee to order at 9:45 a.m in the Conference Room at the office of the Alaska Energy Authority to conduct the business of the Committee per the agenda and the public notice. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Alaska Energy Authority Robert E. LeResche - Representative Brent Petrie - Alternate Chugach Electric Association David L. Highers - Representative Tom Lovas - Alternate City of Seward Absent Golden Valley Electric Association Michael Kelly - Representative Homer Electric Association N. L. Story - Representative Sam Mathews - Alternate Matanuska Electric Association Ken Ritchey - Representative Municipal Light and Power Tom Stahr - Representative Myles Yerkes - Alternate Others Present: Don Shira - Alaska Energy Authority Ron Saxton - Purchasing Utilities John Cooley - Municipal Light & Power Marcey Rawitscher - Alaska Energy Authority DeAnna Scott - Alaska Energy Authority Tom Klinkner - Wohlforth, Argetsigner, Johnson & Brecht PUBLIC COMMENT There being no public comment, Chairman Kelly proceeded to agenda item 4. Page 2 of 10 MODIFICATION OF AGENDA Under New Business, Item E, Approval of Supplemental Bond Resolution for Second Series Bradley Lake Bonds and item f, Increase Operating Reserve Requirement were included with Item C, Schedule Maintenance Fund. Mr. Petrie requested the Bond Finance Team Report be delayed until Mr. LeResche was available in the meeting. APPROVAL OF MINUTES MAY 17, 1990 Chairman Kelly asked if there were any objections to approving the May 17, 1990 meeting minutes as distributed. Hearing no objections the minutes were approved. BOND FINANCE TEAM Mr. LeResche reported that the Preliminary Official Statement was completed in Chicago on July 13, 1990. The pricing call will be on July 24, 1990 and the sale of the bonds on July 25, 1990. Mr. LeResche stated that he would be in New York for the sell of the bonds on July 25, 1990 and the AEA Board of Directors will be meeting via teleconference on July 25, 1990 to accept the sell of the Bonds. Mr. LeResche stated that what is needed from the PMC is an approved supplemental resolution and approval of the official estimate of the Section 31 Cost. Mr. LeResche stated the changes to the official statement were the matrix quarters, the expenditures to date were included and the cost estimate was officially changed to state the total construction cost of $312.5M including $9.31M for the stability aides. Mr. LeResche stated that each utility could pick up a copy of the Official Statement after the meeting. Mr. LeResche further stated that the insurance quote from MBIA came in at 34 basis points and at that rate, it would probably worth $2 to $3M to the PMC to insure the bonds now and have them triple A rated. This is on the assumption that the bond ratings stay the same as the first issuance. He further stated that at least the cab’s and term bonds would be insured. We are currently in the process of talking with the underwriters to see if it would be beneficial to us to not insure the serial bonds. Currently, it looks as if everything would be insured by NBIA and will retain the triple A rating. Mr. LeResche stated that the pricing call will be on July 24, 1990 and that the utilities were welcomed to be in on the call. A. APPROVAL OF SECTION 31 COSTS Chairman Kelly stated that there were two transmittals for Mr. Saxton to the PMC. The first is a response to Mr. Wick’s questions as to when the Section 31 Costs would actually be reimbursed. The second was a complete breakdown of the utility for the 1989 and 1990 bond issuances. Mr. Saxton was asked to further explain the issues. Mr. Saxton stated that these issues had been addressed in a memo that had been sent to the PMC. He referred to that memo. Mr. Saxton explained that the Section 31 Costs are costs incurred by the utilities for organizing and participating in the PMC, including costs of negotiating the Power Sales Agreement. These costs are not eligible for matching funds from the State and must be approved by the PMC for payment. All Section 31 Costs will be capitalized as part of the second series bond issue. Mr. Saxton stated that the PMC had approved Section 31 costs through October 1989 at the November 30, 1989 meeting. Costs incurred by the utilities that are allowable Project Costs (such as legal opinions required by the financing) through that date were also approved through approval of the charted date November 30, 1989. The PMC needs to Page 3 of 10 approve similar costs for the period from November 1989 through June 1990 so that they can be reimbursed from bond proceeds at closing. Mr. Saxton pointed out that the utilities had been reimbursed for expenses listed in sections A1 -- Finance Team Participation, A2 -- Legal Expenses for Financing, and A3 -- Legal Opinions. Managers were asked to check with their accounting staff to ensure that this had taken place and to report any problems to Ms. Rawitscher at AEA. No reimbursements have been made to date for any Section 31 Costs (those labeled B1 and B2 in the chart), TCC costs (A5) or for Project Costs after November 1, 1989. These will be reimbursed shortly after closing. Mr. Saxton then discussed the second attachment to the memo, which summarized utility costs from November 1989 through June 1990. He noted a mistake in the chart -- the chart shows $9,677 from Golden Valley under A1, the correct amount is $570. He also noted that there was a great deal of information lacking in the chart because it had not been received from the utilities. Information needed from each utility is listed in the footnotes in the chart. Managers where asked to forward the information to Ms. Rawitscher as soon as possible, to facilitate the payment to the utilities at closing. Mr. Saxton explained that the Section 31 Costs section of the chart needed to be approved prior to the bond issuance. The costs that are allowable project costs (those labeled A in the chart) do not have to be officially adopted by the PMC. Mr. Saxton next brought up an issue that needed to be addressed by the PMC prior to the approval of the costs. ML&P had submitted two categories of expenses that had not been included by the other utilities. The first is reimbursement for costs prior to November 1, 1989 which had been overlooked in the computation of the original amounts which were approved at the November 30, 1989 meeting. Mr. Saxton asked whether the October 31, 1989 date was an absolute cut off date for expenses to be claimed for that period or if the PMC wanted to consider expenses prior to that. The second category of expenses were ML&P’s legal expenses for services not related to the financing effort. Mr. Saxton asked whether the utilities wanted to allow these as Section 31 Costs for all the utilities or whether they wished to exclude them. Ms. Rawitscher added that it was important to know which costs the utilities wanted to include in allowable expenses in order to ensure that money was available for reimbursement from bond proceeds. She added that the decision should be made prior to sale of the bonds to ensure proper sizing of the bond issue. Chairman Kelly asked whether Mr. Stahr was prepared to address this issue. Mr. Stahr stated that he was not prepared to address this issue due to the fact he has not reviewed the submittals. Mr. Saxton suggested that Mr. Stahr and Ms. Rawitscher work with ML&P on their expense submittals. Ms. Rawitscher reiterated that guidance is needed to be given by the PMC so that it would be clear which costs were allowable and which were not. Chairman Kelly suggested that since the amount in question for ML&P’s past expenses was small he felt that it would be appropriate to include those expenses. Chairman Kelly asked if the other members of the PMC had any objection to this. None were made. Mr. Lovas asked whether other utilities could submit costs that were overlooked. Ms. Rawitscher stated that as long as the information was forwarded to her within a couple of days it could be included. Mr. LeResche stated that the $2,000 to $3,000 costs should be included, but asked that Mr. Stahr and Ms. Rawitscher review the costs submissions to ensure that they are allowable. This is especially important because we are right up against the two percent limit on costs of issuance for the bonds. Page 4 of 10 Chairman Kelly then asked if other utilities had been submitting charges for legal costs not relating to the financing. Mr. Saxton stated that they had not and that this type of cost was not included in any of the categories listed on the expense reimbursement forms. Mr. Saxton stated that if the PMC wanted to include these as Section 31 Costs, it would be a policy decision. Chairman Kelly recommended that if the committee had not included these type of costs in their intitial determination of allowable costs then they should be included. He asked if there were objection to this policy and there were none from the PMC. Chairman Kelly reiterated that Ms. Rawitscher should work with ML&P to help them classify the costs. Mr. Saxton then explained that the second half of the chart outlined those expenses submitted by the PMC for Section 31 Costs to this date. He asked that a motion be made to approve those costs. Mr. Ritchey moved and Mr. Mathews seconded that the PMC approve the $86,532.09 in Section 31 Costs incurred from the period of November 1, 1989 through June 30, 1990 and to approve any Section 31 Costs not previously reimbursed. The motion passed with Messrs. Ritchey, Highers, Story, Kelly, Stahr, LeResche voting yes. City of Seward absent. Mr. Saxton also stated that a motion was needed for the PMC to instruct the Energy Authority to set up an additional fund for reimbursement of Section 31 Costs between July 1990 and the date of commercial operation. Mr. Saxton recommended that $300,000 in additional funds be approved. Mr. Stahr moved, Mr. LeResche seconded the motion that the PMC instruct the Alaska Energy Authority reserve the amount of $300,000 for future PMC expenses. The motion passed with Messrs. Highers, Story, Kelly, Stahr, LeResche and Ritchey voting yes. City of Seward, absent. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Yerkes reported that there has not been a TCS meeting since April 24, 1990 and the subcommittee will be meeting on July 19, 1990 at AEA. Mr. Yerkes reported that the stability solutions studies are not going very well and there are problems with the reports. There are additional problems to solve regarding the stability problem with the intertie. There are quite a few significant problems with the governor control system and the static var. PTI is trying to come up with some informal number to develop a scheme to resolve the stability problem on the intertie. There has been a increase in the budget amount to $9.2M to reflect and to cover the problems that are going on now. The stability aides are another potential problem area. Mr. Yerkes stated that due to his leaving ML&P, he suggested that Mr. Burlingame from Chugach Electric Association be appointed to the TCS. Mr. Burlingame is very knowledgeable of the stability problems and is aware of what is currently going on with the system. Chairman Kelly asked for Mr. Highers’ concurrence to appointing Mr. Burlingame of CEA to the Technical Coordinating Subcommittee. Mr. Highers concurred. It was stated that with out objection by Chairman Kelly that Mr. Burlingame will be reporting to the PMC from the Technical Coordinating Subcommittee and attending the Control Configuration Board meetings and making those reports. Chairman Kelly asked if there were any question of the TCS. Mr. Lovas stated that he had additional information in regards to the TCS. Mr. Lovas reported that at the last meeting it was suggested that the there be a joint manager’s meeting with GE requesting shaft data information and from our further discussion with John Cornell with AEG&T and GE and from conversation that CEA staff has had, it came clear that GE would be willing to provide the data to the utilities but that they would not provide the data directly to PTI. Consequently, CEA’s production group is preparing a letter asking specifically to GE asking for information with regards to CEA outline the needs and consideration of the TCS and will provide that information to the utilities. Page 5 of 10 INSURANCE SUBCOMMITTEE REPORT Mr. Saxton reported that the insurance committee has been waiting for the final assessment report from Stone and Webster Engineering Corporation (SWEC) and it has now been issued. The subcommittee met on July 16, 1990 to review it and talk about options. The aviation and liability insurance purchased from the State of Alaska. Quite a bit explanation of the property and Boiler and Machinery option. The subcommittee has the report and now has to follow-up on a number of task and then gather the information on the various cost alternatives. The committee is just beginning to get into the meat of the work. Mr. Saxton further stated that from the report, the conclusion is that the risk of this project from natural disasters, earthquakes, fire, flood, etc. the maximum probable losses (MPL) are limited. The MPL from an earthquake is on $12M. The real risk results in substantial damage by human error and machinery malfunctions. Mr. Petrie stated that subcommittee is going to look at getting quotes on property premiums at 60, 80 or 100M and after looking at the report at what might be expected as a loss, they two terms Probable Maximum Loss and Maximum possible loss and MPL is something they had for all other perils was something like was about $140M excluding the transmission line so, to deal with a situation were we have major damage we have to expedite repairs, we would be looking at something 60, 80 or 100M we'll also have to look at someway of self-insuring the transmission line maybe rolling it into the program that we have with the Anchorage-Fairbanks Intertie as a possibility. The other issue is looking at either self-insuring or paying premiums for the first 10M layer. We have an initial quote for $125,000 to buy down to a 1M deductible that is very good compared to the Four Dam Pool, that 10M layer cost $400K, so it could be a very different situation; we may have not gotten the right quote. We will be exploring those and get back to everyone in about 60 days. Chairman Kelly asked if there were any questions, being none Chairman Kelly proceeded to the next item on the agenda. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported that the Budget Subcommittee met on July 16, 1990 and addressed the issues that pertains to the budget. * AEA Cost Mr. Ritchey stated that from the discussion from the last meeting, the Mangers were to meet as a group to take a position on the Administrative and General cost. This is still the only outstanding issues. We will need direction from the PMC. The split of personnel cost between O&M and construction. AEA stated that the present split was appropriate particularly considering that there was no overtime put into the budget and there would be some in the first year and this will be left the same as in the first presentation. AEA has agreed to check with SWEC to see about capitalizing all of the seismic monitoring cost. That cost is up to $35,000 each year. The subcommittee has had this discussion regarding some of the other cost if they could be completely capitalize or not. This has been left for the AEA to check on for the next meeting. x HEA Transmission Line Maintenance There was a meeting among the operating staff of each utility and they were able through their discussion bring the cost down from $72,000 to 41,000. 10. 11. Page 6 of 10 i CEA Software and Dispatching Labor Cost The $150,000 cost proposed by CEA for dispatching is still an unresolved issue. CEA position that the $150,000 that was set up for the dispatch program, administrative labor cost i.e., Brad Evan and Henry Dale, as well as the $36K for dispatch training is appropriate and should be in the budget. The subcommittee has asked CEA to justify their position and convince the subcommittee members that there is a reason why it is specific to Bradley and the subcommittee will address this at that time. bs Insurance Mr. Ritchey stated that the subcommittee had hoped the finalize the insurance numbers but after the insurance subcommittee meeting there where a lot of questions that were raised. The insurance cost are open. The numbers that we had to begin with were not accurate. We are looking at possibly two months to get the current information. bd CEA and HEA Wheeling Agreement Costs Unless the PMC objects, the budget subcommittee has taken it upon themselves to visit the issues on the cost under the CEA and HEA wheeling agreements. Mr. Ritchey stated that under CEA’s wheeling agreement, there were formula established in the services agreement and various accounts were established. Mr. Ritchey stated that he remembers seeing numbers some time ago and feels that the committee should revisit the issue and see what exactly sort of billings we are going to see and how it is going to be computed. One of the examples, how do you break out the Beluga, some of the cost on CEA’s system will be broken out. In the case of HEA wheeling agreement there was general language in the agreement, no accounts were set up. This is not specifically related to the Bradley O&M Budget but a budget from the standpoint of what the utilities are going to be expected to pay unless there is no objection we would like to visit that and | suspect that some issues will come out of this there we are not aware now. Chairman Kelly asked if there was any objection to the Budget Subcommittee to take a look at the CEA and HEA Wheeling Agreement costs. Hearing none, the subcommittee will take this task on. Ba Fiscal Year Budgets The subcommittee has decided tentatively, unless instructed otherwise by the direction of the PMC, to have the Bradley O&M Budgets presented to the PMC for action in August of each year for the following fiscal year. This would exclude FY 1991. OPERATING AND DISPATCH SUBCOMMITTEE REPORT Mr. Shira reported that Mr. Saxton prepared a draft of the allocation and scheduling procedures and they were circulated around to the subcommittee members. | understand from CEA that they have a number of comments on the recent draft and we have a meeting scheduled on July 18, 1990 with Mr. Saxton to discuss the comments. Chairman Kelly asked when would the presentation be made to the committee. Mr. Shira responded at the next scheduled PMC meeting. REVIEW OF PROJECT STATUS Mr. LeResche stated that Mr. Eberle was down at the project site and reported that the project is 76% complete and the schedule has not been changed from the September 1991 date. The Page 7 of 10 contractor is two-thirds complete with the tunnel lining, which has been the slow part of the job. Jay Carlson, who was the originally manager is back at the site. Price will complete ahead of schedule. Mr. LeResche stated that the AEA Board of Directors will officially reduce the budget to $312.5 million which will includes over $20 million for unallocated and allocated contingencies. Mr. Lovas asked that if there appear to be some delay with filling the reservoir and if so, would a full test period be able to be conducted. Mr. LeResche stated that he thought it could be fully tested with partial or full reservoir and as far as he is aware the filling of reservoir will start October 1990 and will be filled this Spring. 12. OLD BUSINESS A. DISCUSSION OF TEST PERIOD POWER SALES AGREEMENT Chairman Kelly stated that the discussion of the Test period power sales agreement and a couple of issues that were out there is if we really need a test period power sales agreement, that was on the front burner when we thought we were going to have early completion and maybe a more important side issue, a testing protocol that AEA was to develop and submit to the utilities. Chairman Kelly asked if Mr. Saxton would address both issues. Mr. Saxton stated that it was not necessary that the PMC did not need to have one and that they could revisit this issue later if the PMC feels there is a need for one. And as far as the testing protocol is concerned, this would be to the level of comfort of the utilities to look over and see how the tests were to be performed and what was to be done before the engineer declares the project commercially operable and Mr. Eberle was to have that list ready. Mr. LeResche stated that Mr. Schnider from SWEC stated that he would have this information within the week but we have not seen it yet. Chairman Kelly asked that when the list is made available that it be mail out as soon as it is ready and that the Chairman of the TCS receives copy of it. The PMC would like to have an opinion from the TCS before acting on this. Chairman Kelly stated that this is a dead issue. FINANCIAL ADVISOR Chairman Kelly asked the PMC if there was a desire is obtain a Financial Advisor for the second issuance of bonds. Hearing no motion for a Financial Advisor the PMC would proceed. Chairman Kelly stated that AEA has a financial advisor, Bill Newman of First Southwest, and the PMC will not retain a second financial advisor for the second issuance. Dr. LeResche stated that if the PMC feels as if they are not being helped as they feel they should to let him know. 13. NEW BUSINESS A. ELECTION OF OFFICERS Chairman Kelly stated that this is the annual meeting of the Bradley PMC and the Bylaws state that the PMC will have the annual meeting the first opportunity after the first of July which is the beginning of the new fiscal year. The order of business of the annual meeting simply states the election of officers and any other business that should come before the committee. We have scheduled the election of officer and Chairman Kelly has asked Mr. Ritchey, Mr. Wick and Mr. Denier to help with the nominations committee. The By-laws also provides for a permanent Secretary/Treasure which is Dr. LeResche of the Energy Authority and the bylaws provides that those duties can be split and that the PMC can change this into two separate offices. Chairman Kelly stated that currently there is no need for the PMC to do this and then asked the PMC if they had Page 8 of 10 any desires of seeing this role changed. Hearing no comment or contrary to suggestion, we will go forward with Dr. LeResche as Secretary/Treasurer. Chairman Kelly asked Mr. Ritchey to proceed. Mr. Ritchey stated that the nominating committee met via the phone and the suggest that the PMC retain the same Chairman, Mr. Kelly and Vice-Chairman, Mr. Highers. Mr. Ritchey asked for any other nominations for Chairman of the PMC, no response was made. Mr. Ritchey asked if there were any objections of Mr. Kelly being Chairman of the PMC, no objections were stated. Mr. Kelly is Chairman of the PMC. Mr. Ritchey asked other nominations for Vice-Chairman, hearing none, Mr. Ritchey called it closed and he asked if there were any objections of Mr. Highers being Vice-Chairman of the PMC. Hearing none, Mr. Highers is the Vice- Chairman of the PMC. COMMITTEE EXPENSES REIMBURSEMENT Mr. Saxton stated that the future process will required to bring future committee expenses back to the PMC for some kind of approval, which can be done every meeting or less frequently but there will be a need for the committee to approve expenses over the next year which will be paid out of the money in the reserve and after it is operational out of Chairman Kelly stated that at this point of time the forms are developed and each committee member has a copy of it and feels that everything is pretty streamline on this and with no objection we will call this good and will continue to use the same forms. Ms. Rawitscher stated that each committee member is to get their June 1990 expenses in as soon as possible. Chairman Kelly asked if there were any questions or comments, being none, Chairman Kelly proceeded to the next item. SCHEDULED MAINTENANCE FUND; APPROVAL OF SUPPLEMENTAL BOND RESOLUTION FOR SECOND SERIES - BRADLEY LAKE BONDS; INCREASE OPERATING RESERVE REQUIREMENT Ms. Rawitscher reported that the Budget Subcommittee had addressed some time ago the sinking fund payment that SWEC came up with for the scheduled maintenance and replacement of equipment. The Subcommittee had thought originally the Renewal and Contingency Fund could be used to hold those payments until needed, but this is not possible. Ms. Rawitscher asked Mr. Klinkner to add a fund into the Supplemental Resolution into which those sinking funds payments could be made and it is called the Scheduled Maintenance Fund. When the PMC decides to start making the sinking fund payments, (which the budget committee has put off for five years) money would be put into the Scheduled Maintenance Fund. The money in the Scheduled Maintenance Fund could be spent at the direction of the PMC to replace equipment. The fund will be pledged to the bonds. The structure of this fund is set up for the interest on the fund will not be subject to an income tax. Mr. Saxton stated that this gives the committee another option about handling some of these things without forcing the PMC into anything; it gives the PMC more flexibility. Ms. Rawistcher stated that there are some items that SWEC feels that would cost the PMC through current year dollars of $20M to repair. The choices that are available to the PMC in order to obtain the money would be to either finance it or to do it through some sinking fund. Chairman Kelly asked Mr. LeResche how the Energy Authority wants to address this. Mr. LeResche suggested to consider the resolution which both approves the supplemental resolution. Mr. LeResche stated that basically this is a supplemental resolution that bring the previous bond resolution up to date with this issue. It does add the Scheduled Maintenance Fund and this resolution does establish the operating reserve account of $625,000. Ms. Rawistcher stated that this is a little more than 20% of the annual budget 14. Page 9 of 10 because it is the amount that is needed for the cash flow because of the insurance payment that is due in July and it earns unlimited interest as well.Chairman Kelly stated that because these issues are to be combined in the approval of the supplemental resolution. Mr. Petrie noted that on page Q in Article 5, "The Trustee shall make payments from the Scheduled Maintenance Fund and apply amounts in the Scheduled Maintenance Fund to payment of items of maintenance, renewal, repair and rehabilitation of the Project, as specified in a requisition of the Committee delivered to the Trustee.", should be reworded. Mr. Klinkner and Mr Vassar pointed out that the PMC does not normally make requisition of the trustee. It would be the Authority. Mr. Highers move, Mr. LeResche seconded the PMC approve the supplemental resolution with the correction to read _"...in_a requisition of the Authority in accordance with a budget adopted by the Committee. Chairman Kelly asked if there was any further discussion on the resolution approving the supplemental resolution? No further comments were made, Chairman Kelly stated that the question had been call and hearing no objection the roll was called with Messrs. Story, Kelly, Stahr, LeResche, Ritchey, Highers voting yes, City of Seward, absent. D. FERC LICENSING FEE Chairman Kelly stated that he received a letter from Mr. Nease asking that the Bradley PMC join with the appeal of the FERC licensing fees for the Four Dam Pool project. The Four Dam Pool PMC requested FERC to reconsider their decision and it was denied and the Four Dam Pool is appealing that decision and hoping a judge will reconsider the decision were the Four Dam Pool would not have to pay relicensing fees to operate their projects. Chairman Kelly asked Mr. Saxton to give a brief explanation of both pros and cons. Mr. Saxton stated that the issue is a waiver of fees for the four dam pool. Mr. Saxton further stated that what the Four Dam Pool PMC hopes to accomplish is to have FERC establish standards and once the standard is know, it is possible that Bradley could meet the standard and then, benefit from this. _ The Four Dam Pool PMC is estimating that the cost will be $50,000 cost to fight this over the next year and they asked for your financial participation to help with the effort. This dies from a lack of a motion. Chairman Kelly stated that he would write a letter on behalf of the Bradley PMC declining to support the Four Dam Pool PMC in their Appeal to FERC. EE: SCHEDULE NEXT MEETING SEPTEMBER 21, 1990 Chugach Electric Association Training Room 9:30 a.m. COMMUNICATIONS Chairman Kelly stated that on the pricing call each utility is encouraged to monitor as they wish. Chairman Kelly also welcomed Mr. Norm Story who is replacing Mr. Wick of Homer Electric. Chairman Kelly asked Mr. Stahr to join the finance team in the replacement of Mr. Wick due to his seniority and affiliation with the Finance Team last issuance. Mr. Stahr accepted. Chairman Kelly asked Mr. Petrie to inform all of the appropriate persons of the change (i.e. Seagraves and First Southwest). Chairman Kelly stated he received draft communication from Mr. Highers concerning the handling of legal services of the PMC. Chairman Kelly at this time opened the floor for discussion. He further continued to state that they way Mr. Saxton’s services has been handled related to the group, it was decided to use Mr. Saxton to represent the participants on 15. Page 10 of 10 the PMC. In order to make the billing a smooth transaction, Mr. Saxton would bill GVEA and GVEA would in turn bill the participants. Mr. Stahr stated that he feels that Mr. Saxton has done an excellent job representing the utilities and that this is no reflection in his services however, Mr. Stahr feel that the PMC should look at obtaining a local attorney. Mr. Stahr noted that he was not sure of the travel cost associated in the billing and by Mr. Saxton being somewhat remote is obviously a factor. Chairman Kelly stated that the would send a breakdown of travel of Mr. Saxton’s time as it relates to the PMC. Mr. Highers pvstated that Mr. Stahr’s point is well taken and this should probably be discussed at the Managers Meeting. Chairman Kelly asked that if any participant knows of an Alaskan Attorney to bring it to the managers for direction. ADJOURNMENT There being no further business before the Committee, the Committee adjourned by acclamation at 12:00 noon. Chairman Kelly ATTEST: Secretary Approved by PMC at meeting held September 21, 1990. SENT BY WoHLFORTH: ARGETSINGER + 8-17-90 ; 4:36PM ; 90727650834 AK ENERGY AUTHORITY:# 1 COPY" RECORD # FIUE NO WOMLFORTH, ARGETSINGER, JOHNSON & BRECHT | PRO 3-h'l mn duuuey. eaten, ATTORNEYS AT Law 2 h1/ Fe ‘ORNEYS A HARRIS, ORR see: a aoanes 200 WEST BTH AVENUE, SUITE SOO ane "yagi otenatare comen /' 7140 oie a Meven ANCHORAGE, ALASKA @980! "2 Se eae. TELEPHONE (071-878-8401 Calc €, WOrroRTH TELECOPY (807) 276-8003 of COunse. mostee G. connor FILE NO. 3610.2010 DATE August 17,1990 PLEASE DELIVER THE FOLLOWING PAGES TO: | NAME __Mesoey Ravitechae FIRM __ Alaska Energy Me crTy _ Anchorage TELEPHONE NUMBER (___)__ 26-7262 TELECOPY NUMBER (____) ee ae FROM Eric F. Wohlforth ; | TOTAL NUMBER OF PAGES INCLUDING THIS PAGE ‘ | COMMENTS ——Attached 15a revised extract othe MC autem ——$§ RERAEREEERAEERKEEREE EAE CARE ERRE REHEARSE SEHAEAEHARAEEEEREEERAEERE | POSSIBLE. OPERATOR Janie AT (907) 276-6401 IF YOU DID NOT RECEIVE ALL PAGES, PLEASE CALL BACK AS soa as CREKEREEEEEREREARAREEERAAHEREERNERARA CRT TEE RARER ERR RAEE a. WE ARE TRANSMITTING FROM A XEROX 7020 TELECOPIER WE ARE TRANSMITTING FROM A XEROX 295 GROUP THREE AUTOMATIC TELECOPIER | TXTS PARKTELECOPY . FM SENT BY: wWoHLFORTH ARGETSINGER | 8-17-90 ; 4:36PM ; 90727650934 AK ENERGY AUTHORITY: # 2 | EXTRACT FROM THE MINUTES OF THE BRADLEY LAKE PROJECT MANAGEMENT CONMITTEE JULY 17, 1990 1. CALLED TO ORDER Chairman Kelly called the Bradley Lake Project Management Committee to order at 9:45 a.m. in the Conference Room at the office of the Alaska Energy Authority to conduct the business of the Committee per the agenda and the public notice, 2. ROLL CALL The roll call was taken and a quorum was established. In attendance were the following: Alaska Energy Authority Robert E. LeRasche - Representative Brent Petrie - Alternate Chugach Electric Association David L. Highers = Representative Tom Lovae - Alternate City of Seward Absent Golden Valley Electric Association Michael Kelly ~ Representative Homer Electric Association N.L. Story - Representative Sam Mathews - Alternate Matanuska Electric Association Ken Ritchey - Representative Municipal Light and Power Tom Stahr - Representative Myles Yerkes - Alternate Others Present: Don Shira - Alaska Energy Authority Ron Saxton - Purchasing Utilities John Cooley = Municipal Light & Power Marcey Rawitscher - Alaska Energy Authority DeAnna Scott = Alaska Energy Authority Tom Klinkner ~ Wohlforth, Argetsinger, Johnson & Brecht | | | | SENT BY: WOHLFORTH, ARGETSINGER + 8-17-90 + 4:37PM i 9072765093 AK ENERGY AUTHORITY: # 3 | ' | | | * * * * * (C) SCHEDULED MAINTENANCE FUND; APPROVAL OF SUPPLEMENTAL BOND RESOLUTION FOR SECOND SERIES - BRADLEY BONDS; INCREASE OPERATING RESERVE REQUIREMENT _ Ms. Rawitscher reported that the Budget Subcommittee had addressed some time ago the sinking fund payment that SWEC came up with for scheduled maintenance and replacement of equipment. The Subcommittee ha thought originally that the Renewal and contingency Fund could be used to hold those payments unti needed, but this is not possible. Ms. Rawitscher asked Mr. Klinkner to add a fund in the Supplemental Resolution into which tnose sinking fund payments could be made and it is called the Scheduled | Maintenance Fund. When the PMC decides to start making the sinking fund payments, (which the budget committee has put off for five years) money would be put into the Scheduled Maintenance Fund. The money in the Scheduled Maintenance Fund could be spent at the direction of the PMC to replace equipment. The Fund will be pledged to the bonds. The structure of this fund is set up for the interest on the fund not to be subject to income tax. Mr. Saxton stated that this gives the Committee another option about | handling some of these things without forcing the PMC into anything: it gives the PMC more flexibility. Ms. Rawitscher stated that there are some items that SWEC feels that would cost the PMC through current year dollars of $20M to repair. The choices that are available to the PMC in order to obtain the money would be to either finance it or to do it through some sinking fund, Chairman Kelly asked Mr. LeResche how the Energy Authority wants to addrese this. Mr. LeResche suggested that the Committee consider the approval of the Supplemental Resolution whoih establishes the Scheduled Maintenance Fund, | Mr. LeResche stated that this Supplemental Resolution brings the previous bond resolution up to date with this issue. It adds the Scheduled Maintenance Fund and establishes the Operating Reserve Account of $625,000, Ms. Rawitscher stated that this is a little more than 20% of the annual budget. It is the amount that ls needed for the cash flow because of the insurance payment that is due in guly. It may earn unlimited interest as well. chairman kelly stated that these issues are to be combined in the approval of the Supplemental Resolution. Mr. Betrie noted that on page 9 in Article 5, the statement tnt Page 2 A200714 SENT BY! WOHLFORTH ARGETSINGER + 8-17-90 + 4:38PM i Page 3 | | | | "The Trustee shall make payments from the Scheduled Maintenance Fund and apply amounts in the Scheduled Maintenance Fund to payment of items of maintenance, renewal, repair and rehabilitation of the Project, as specified in a requisition of the Committee delivered to the Trustee", should bea rewarded. Mr. — and Mr. Vasear pointed out that the PMC does not normally make requisition of the trustee. It would be the Authority. Mr. Highers moved, Mr. LeResche seconded that the PMC approve the Supplemental | Resolution with the correction to read "..,In a@ requisition of the Authority in accordance with a budget adopted by the Committee." Chairman Keliy asked if there was any further discussion on the resolution approving the supplemental resolution? No further comments were made, Chairman Kelly stated that the question had been called and hearing no objection the roll was called with Messrs. Story, Kelly, Stahr, LeResche, Ritchey, Highers voting yes, City of Seward, Absent. The Supplemental Resolution was adopted, | | * ek ek 8 90727850939 AK ENERGY AUTHORITYi# 4