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HomeMy WebLinkAboutBPMC Meeting - September 21 1993 2ALASKA INDUSTRIAL DEVELOPMENT y AND EXPORT AUTHORITY 480 WEST TUDOR » ANCHORAGE, ALASKA 99503-6690 + (907) 561-8050 * FAX (907) 561-8998 MEMORANDUM TO: Bradley Lake Project Management Committee David L. Highers, Chugach Electric Association Norman L. Story, Homer Electric Association Ken Ritchey, Matanuska Electric Association Dave Calvert, City of Seward Tom Stahr, Anchorage Municipal Light & Power Mike Kelly, Golden Valley Electric Association Ron Saxton, Ater Wynne Hewitt Dodson & Skerritt FROM: Denise Burger A Operations Assistant DATE: December 14, 1993 SUBJECT: Project Management Committee Minutes A copy of the signed, approved Bradley Lake Project Management Committee meeting minutes dated September 21, 1993 is enclosed for your records. /db Alaska Energy Authority RECORD VUOP* FILE NO MEMORANDUM _ _TRo 3b min AEA/UTIL/0026 9/a1/%3 DATE: September 21, 1993 a TO: Bradley Lake Project Management Committee David L. Highers, Chugach Electric Association Norm Story, Homer Electric Association Ken Ritchey, Matanuska Electric Association Dave Calvert, City of Seward Tom Stahr, Anchorage Municipal Light & Power Mike Kelly, Golden Valley Electrig, Association THRU: Stanley E. Sieczkowski Director Facilities Operation and Engineering FROM: Larry Wolf = Lf Senior Operations Engineet SUBJECT: Bradley Lake Hydroelectric Project August 18, 1993 Unit Trips - Update It has been determined by the AEA operators, and confirmed by SWEC on-site inspections, that a 2" make-up valve to the closed loop cooling water system was leaking and caused that system to become saturated. This caused the pressure on the suction side of the cooling water circulating pump to increase beyond normal operating pressure. The increase in the pump suction pressure caused the pressure regulating valve to close completely. Being in the automatic operating mode, all cooling water flow to the turbine/generator bearing sumps and the generator stator air coolers stopped. Both units therefore tripped on bearing over temp before any unit damage occurred. The valve has been repaired and the cooling water system is operating properly. In order to prevent this occurrence in the future, a pressure sensor, or flow meter with monitored operating limits, will be placed in the closed loop cooling system. This sensor will then alarm when pressure begins to climb beyond normal operation limits, allowing our operators to respond and prevent a trip condition. SWEC is completing a report on their system study and the on-site investigation. The report will recommend the most appropriate modification to the cooling system. AEA will then initiate the proper modifications to the cooling system. Other factors related to the raw water side and closed loop side of the cooling water system that SWEC is investigating are: the increase in cooling water sump temperature beyond design limits by approximately 10 °F due to the unusually warm summer weather; the raw water side flow rates due to more head losses than anticipated; the removal of a vacuum break valve in the raw water cooling loop system which should reduce system head losses; and higher temperatures experienced in the cooling water sump. FINAL REPORT OF THE RECORD VOPY FILE NO fro 3-li Min g)arlo PEER-REVIEW AUDIT OF THE CONTRACT BIDDING, AWARD AND AUDITING PROCESS OF THE BRADLEY LAKE HYDROELECTRIC PROJECT PRESENTATION TO BRADLEY LAKE PROJECT MANAGEMENT COMMITEE METZLER & ASSOCIATES SEPTEMBER 21, 1993 PRESENTATION TO BRADLEY LAKE PROJECT MANAGEMENT COMMITEE PRESENTATION OUTLINE I PROJECT OBJECTIVES AND SCOPE I PROJECT METHODOLOGY Il PROJECT SCHEDULE AND STATUS IV FINDINGS Vv RECOMMENDATIONS VI NEXT STEPS PROJECT OBJECTIVES AND SCOPE OBJECTIVES e To provide a peer-review audit of the contract bidding, award and auditing process used by the Alaska Energy Authority during the construction of the Bradley Lake Hydroelectric Project. - Check on past procedures - Confirm the accuracy and completeness of project construction costs. DETAILED TASK DESCRIPTIONS Task 1.0 Review the Alaska Energy Authority construction contract audit process Task 2.0 Review a sample of the construction contract audits and/or audit summaries Task 3.0 Review the bid and award process Task 4.0 Review randomly-picked construction contracts, contract amounts and change orders Task 5.0 Review a sampling of construction invoices for accuracy Task 6.0 Examine the allocation of AEA man-hour charges to the project PROJECT METHODOLOGY e Approved Detailed Workplan e Interviews e Document Review e Draft Report Preparation e Comment Resolution and Final Report Presentation PROJECT SCHEDULE AND STATUS Interviews, documentation review and fact finding occurred the week of February 1, 1993 on AEA's site offices Initial draft report issued to Budget Subcommittee on March 5, 1993 Final draft issued to Budget Subcommittee and AEA on April 5, 1993 Comments received from AEA and incorporated with final report issued on April 13, 1993 Final Presentation of report on September 21, 1993 FINDINGS The Project Approach And Organization Of Responsibilities Among The Contracts Was Reasonable. The AEA acted with commendable insight to attempt to apply to the Bradley Lake Project the lessons it learned from managing the Four-Dam Pool project. A decision to develop an internal audit capability to be applied as a management tool to the Bradley Lake project was made early in the project. The AEA also made a reasonable and appropriate decision to rely heavily on Bechtel and Stone & Webster for oversight of the construction and design management aspects of the project. FINDINGS The AEA Construction Contract Audit Process Implemented At Bradley Lake Was Generally Appropriate. M&A judges the frequency of internal audits performed to be adequate. The audit reviews performed or supervised by the AEA audit staff were sufficient in design and execution. The work papers have been retained and indicate sufficient definition of objectives and a proposed work plan. Further, evidence that the audit work was properly supervised and coordinated is also evident. The staff performing the audits themselves were sufficiently competent and experienced for the work performed. FINDINGS The Audits Conducted Or Supervised By The AEA Of The Bradley Lake Project Were Of Generally Sufficient Scope And Depth To Achieve The Audit Program Objectives. e The audit process employed at Bradley Lake was appropriately laid out and even improved as time went on. The focus shifted from somewhat financial to contract compliance. ¢ Later audits also began to focus on identifying ways to improve future practices, which is always a major objective of any audit program. FINDINGS The Contract Bid And Award Process Implemented At Bradley Lake Was Reasonable And Consistent With AEA Requirements And General Industry Practices. The AEA procurement activities are governed by State regulations. Reasonable procurement procedures existed and clearly defined the requirements for awarding contracts. These procedures describe responsibilities, approval levels, and decision-making requirements for different- sized contracts. Evidence shows that these procedures were adequately complied with during the Bradley Lake Project. FINDINGS Overall, The Contract Change Order Process Was Found To Be Well Organized and Consistently Applied. This process was adequately substantiated by supporting documentation, and duly signed and executed by all necessary parties. The adequacy of the change order process employed on the Bradley Lake Project reflected, to a large degree, the level of detail and comprehensiveness of the cost control mechanisms employed by both Stone & Webster Engineering and Bechtel. On the Bradley Lake Project, M&A found both a close link between the cost control mechanisms and the scope change control process. 10 FINDINGS The Processing And Payment Of Construction Invoices Was Generally Acceptable And Reasonable. All the invoices sampled were in order and were well archived in a manner which demonstrated adequate control over the invoice processing cycle. All questions were easily answered and supporting documentation easily retrievable. 11 FINDINGS The Original Rationale And Assumptions Relied Upon By The AEA In Determining The Staff Size And Complement Of Personnel Appears To Be Reasonable And Appropriate. e The original conclusions reached by the AEA in its lessons learned from the Four-Dam Pool project were sound. e In light of the lessons learned from the Four-Dam Pool project, the AEA would have had difficulty justifying why it had understaffed the Bradley Lake Project teams, if that had been the case. e Given the complexity of the task before it, the AEA acted wisely in its approach to direct oversight. 12 FINDINGS The Project Cost Control Mechanism Employed By The Authority To Manage Its Own Internal Cost Was Deficient As A Management Tool The methodologies employed by the Authority to budget and control its own costs were found to be deficient in several aspects. It is clear even from the Authority's own Project Management Plan that the mechanisms employed by the Authority to manage its own costs did not achieve the standards implied by the Plan, The same practices would not have been acceptable to the Authority if they were employed by either its Design Engineer or its Construction Manager. 13 FINDINGS The Process Of Allocating Payroll Overhead And Office Indirect Costs To The Bradley Lake Project Was Disproportionate By Design. The allocation of overhead and indirect costs to the Bradley Lake Project appear somewhat arbitrary and lacking in consistent practice. Although the AEA maintained that the allocation of payroll overheads and office indirects to the Bradley Lake Project reflected an equitable distribution of these costs, M&A found that these costs were not allocated on a pro rata basis across all budgeted projects. M&A found that the Bradley Lake Project did bear a disproportionate share of the Authority's overhead and indirect costs. - The exact amount of this share could not be determined with the information that was provided by the AEA. - The AEA did indicate in discussions that they felt additional supporting documentation could be developed to demonstrate the legitimacy of these charges, but would be time consuming to retrieve and so was not provided. 14 RECOMMENDATIONS Evaluate And Document The Allocation Methodology For Indirect And Other Overhead Amounts. M&A is unable to verify the allocation methodology described by the AEA to charge indirect and other overhead charges to projects. From the information provided in response to data requests, there are a number of outstanding concerns. The Authority should provide documentation of this methodology in a format that could be substantiated by independent review. - The Authority has indicated that additional information could be made available and subject to review, but this process might be time-consuming. - It is the recommendation of M&A that this effort would merit the time to perform it. 15 RECOMMENDATIONS Develop An Internal Project Management And Cost Control Capability. The Authority will have to develop an internal project management and cost control capability regardless of what role it feels is appropriate for itself on future projects. Even if its role will be to contract out direct engineering and construction management as it did on Bradley Lake, improved controls are still required. If its role will be one of even more active oversight and management, then it will naturally need improved systems and controls. 16 RECOMMENDATIONS Develop Project Management Procedures Or Guidelines To Be Used On Major Capital Projects. While the project management approach, systems, and procedures used to manage the Bradley Lake engineering and construction were sound, for the most part they all were based on proprietary systems or procedures of either Stone & Webster or Bechtel. The Authority should develop guidelines to be used on projects that define project requirements. If it is to become as active in the role of project management then these organization and mission questions must be addressed. 17 RECOMMENDATIONS Develop A Project Critique And Lessons Learned Document For The Bradley Lake Hydroelectric Project. The Authority should supplement existing project documentation with a Project Critique for the Bradley Lake project. This critique would not be a straightforward chronology of project events, such as the Project Construction Historical Report, but would instead review the management processes and approach employed to identify lessons to be applied to future Energy Authority projects. This critique would offer the same benefits that the Bradley Lake Management Plan provided in 1984: it gathered together the lessons learned from the Four- Dam Pool project in order to apply them to Bradley Lake. The use of such project critiques is a common practice among advanced utilities. 18 RECOMMENDATIONS Develop A Bradley Lake Operating Committee Review Manual And Program. e As part of the transition of the Bradley Lake project to operations mode, some form of Bradley Lake Operating Committee Review Program should be developed to govern future activities. e This program or manual should address operational concerns and decision making as well as the specific concerns identified in this review. 19 NEXT STEPS e Review recommendations e Identify any appropriate changes resulting from new status of AEA e Implementation of approved recommendations 20 September 15, 1993 DUM RECORD UOPY QUALIFICATION TO OPERATE FILE NO HOMER ELECTRIC ASSOCIATION, INC. FRO 3-1.) min BRADLEY LAKE HYDROELECTRIC PROJECT ST ae ALASKA ENERGY AUTHORITY VY 9 Jarl43 SUMMARY As required by AS 44.83.080, AS 44.83.396 and 3 AAC 94.160, the Alaska Energy Authority (AEA) finds that Homer Electric Association, Inc., (HEA) is a qualified utility for the purpose of operating and maintaining the Bradley Lake Hydroelectric Project. APPLICATION REQUIREMENTS On July 22, 1993, HEA submitted the "Bradley Lake O&M Services Application" to AEA and the Bradley Lake Project Management Committee (PMC). On August 19, 1993, HEA submitted to AEA a copy of HEA Resolution #93-44 authorizing the application. The application and resolution in compliance with the corresponding numbered subsections of 3 AAC 94.160(c), contained the following items: (1) Appendix A, Certificate of Public Convenience and Necessity No. 32 _ granted to Homer Electric Association, Inc. (2) Articles of Incorporation of Homer Electric Association, Inc. and Certificates of Amendment of Articles of Incorporation of Homer Electric Association, Inc., dated March 24, 1954 and July 8, 1975. AEA has confirmed that HEA is an active Alaska corporation. (3) HEA Resolution #93-44. (4) HEA Representative for the Application: David L. Fair Executive Manager, Engineering and Operations Homer Electric Association, Inc. 3977 Lake Street Homer, Alaska 99603 (5) HEA Board of Directors & Offices: Hugh R. Chumley, President J. Michael Pate, Vice President David R. Carey, Secretary-Treasurer Fred L. Braun, Deputy Secretary Ken Lancaster, Jr., Director Sue C. Carter, Director George Jackinsky, Director Robert B. Turkington, Director Ruth D. Fitzpatrick, Director General Manager: Norman L. Story After (6) HEA Organization Chart dated 2/16/93, a proposed Bradley Lake O&M Organization Chart dated June 16, 1993, O&M Project Manager Position Description, HEA Contract Engineer Qualifications Statement, HEA and MEA Personnel Qualification Statements and a listing of Technical Consultants and Legal Advisors, and letters from Matanuska Electric Association, Inc. (MEA) and Alaska Electric Generation and Transmission, Inc. (AEG&T) committing support services to facilitate, enhance and support HEA's operations staff. (7) REA Form 7 Financial and Statistical Report for the month ending December 31, 1992, dated March 16, 1993. (8) "Modified Bradley Lake FY 94 Budget." review of these documents by AEA, the following supplementary information from HEA was provided: III. 1. General description of operations for Item 7 was provided by HEA. 2. Item 8, the "Modified Bradley Lake FY 94 Budget"' was provided to meet the requirement of an estimate of the annual costs to operate, maintain, and replace equipment on the power project. AEA finds for the purpose of the proposal the submission is adequate. However, a more precise budget proposal based upon . terms and conditions will be required as agreed by AEA for negotiating an O&M contract. AEA EVALUATION There is more than one electric utility served by the power project besides HEA that may be available to operate the project. Pursuant to 3 AAC 94.160(e) and (f), AEA has the discretion to request proposals or accept applications from each electric utility, and to require additional information, conduct an investigation, receive written comment, and consider information from public meetings. As specified in the Service Agreement for the Bradley Lake Project, HEA is an appropriate utility to operate the project. The utilities served by the project have agreed in their July 22, 1993 meeting, in accordance with the Power Sales Agreement, to receive the application of HEA as an operator for the project. As a result of that agreement by the potential qualified operators, AEA has reviewed the application of HEA on its merits. AEA has requested additional information from HEA in order to examine current operating practices, safety and capital improvement records, ability to adequately attract and retain qualified staff to operate the project, current technical staff to support the project, licensing and permitting qualifications, financial capability, organizational stability, and capability to operate the project economically. AEA has reviewed the following additional documents provided by HEA: HEA Bylaws Information Guide - Safety Accreditation Program Status of Environmental Program Management Directives 411 - 415 relating to Outages Construction Work Plan for 1993 - 1994 Audited Form 7 Year Ending December 31, 1990 Audited Form 7 Year Ending December 31, 1991 Audited Form 7 Year Ending December 31, 1992 HEA Financial Statements December 31, 1991 and 1990 HEA Financial Statements December 31, 1992 and 1991 Annual Report to APUC for year ended December 31, 1991 Annual Report to APUC for year ended December 31, 1992 Soldotna #1 Operator Training Program HEA 1992 Budget HEA 1993 Budget Draft Revised Purchasing Procedures Listing of All Insurance Claims Previous 5 Years Listing of All Litigation Previous 5 Years Letter dated July 13, 1993 from IBEW to HEA HEA Letter dated September 2, 1993 on O&M of instrumentation and Control Equipment at the Plant and Filing Proposal APUC No. 32 HEA Service Area effective May 12, 1989 Bradley Lake O&M Services Application Resolution #93-44 dated August 10, 1993 Sample Time and Equipment Sheets Sample Accounting Reports In addition to the above documents, AEA staff inspected the HEA Facilities in Homer and interviewed HEA personnel. HEA staff have visited the project numerous times and the AEA offices in Anchorage. HEA staff appear to be fully aware of the required operation and maintenance duties. IV. FINDINGS: AEA finds that HEA is qualified to provide operation and maintenance and related administrative services for the Bradley Lake Hydroelectric Project. These findings are premised on the information from HEA listed in sections II and III which has been evaluated by AEA, the proximity of HEA administrative and operational facilities to the project, and the concurrence of the other purchasing utilities evidenced by the Service Agreement and PMC action. The findings require the following contingent actions to be undertaken by AEA and HEA: 1. From the review of financial documents, HEA appears to be a financially sound organization. It does not, however, have significant cash or financial reserves to independently withstand the liability of a catastrophic loss resulting from operator negligence. Agreements for the project must have adequate Risk Management and insurance safeguards to assure restoration of the project in the event of catastrophic loss occurring as a result of the operator's actions. This issue will be addressed separately by AEA and the utilities in discussions regarding transfer of AEA duties. 2. AEA did not find any significant financial anomalies indicating the HEA is not qualified to operate the project. Based on annual reports and AEA staff interviews, HEA has had minor accounting and invoicing problems. HEA has made significant progress’ in resolving those problems. The procedures to assure prompt accounting are in place at HEA. HEA must emphasize implementation to assure that invoicing and financial records are timely and . accurate. AEA will monitor HEA's performance in this area. 3. Operational and training procedures relating to the existing HEA plant are acceptable but -limited to current HEA activities. Appropriate operating and training procedures relating to the hydroelectric plant must be provided. AEA will audit the development of these procedures assuring completion by March 31, 1993. 4. HEA's proposed procurement policy contains provisions relating to procuring goods and services from local vendors for current facilities. The policy needs to be revised to encompass goods and services for the hydroelectric project and attendant facilities. AEA will audit the development of these procedures and assure completion by March 31, 1993. Additional technical, management, administrative, and accounting services related to the Bradley Lake Project, may also be incorporated into the O&M contract. However, assignment of these services to HEA requires discussion with the PMC team directed to negotiate the AEA transition. Im addition, a further demonstration of qualifications will be required by HEA. V. AEA PROPOSED ACTION: AEA proposes to enter into negotiations with HEA for operation of the Bradley Lake Hydroelectric Project. Those negotiations will entail: 1. An Interim Agreement with HEA to provide economical direct labor services to AEA for operation of the facility. This agreement will require appropriate auditing of invoicing and financial record preparation, and establishment of HEA operating and training procedures for the hydroelectric plant. All terms and conditions of the Master Operating Agreement will be incorporated. 2. Costs and terms for a five year operating agreement, effective start date of the agreement, and provisions for extension. 3. Additional duties and obligations delegated to the operator will be discussed with HEA after the PMC reviews the proposed duties. DATED THIS 4 day of September, 1993. CoM Char DENNIS V.. McCROHAN, P.E. Deputy Director (Energy) Alaska Energy Authority 10. Li 12. 13. 14. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA September 21, 1993 Chugach Electric Association, Inc. Training Room 1:00 p.m. CALL TO ORDER _ 1:00 p.m. ROLL CALL PUBLIC COMMENT AGENDA COMMENTS APPROVAL OF MEETING MINUTES - August 17, 1993 TECHNICAL COORDINATING SUBCOMMITTEE REPORT BUDGET SUBCOMMITTEE REPORT A. B. Bradley Lake Construction Cost Audit Presentation Bradley Lake O&M Cost Audit Update AGREEMENTS SUBCOMMITTEE REPORT OPERATION AND DISPATCH SUBCOMMITTEE REPORT REVIEW OF PROJECT STATUS OLD BUSINESS A. Spinning Reserves Update B. Bradley Scheduling vs. Spin Requirement Update Cc BPMC Control Over O&M Decisions and Agreements Master Agreement D. O&M Contract Update E. BPMC Bylaws - Subcommittee Authority/Voting Procedures NEW BUSINESS A. Approval of Legal Expenses and Other Payments COMMUNICATIONS A. Schedule Next Meeting ADJOURNMENT Highers Burlingame Ritchey Brian Walshe Metzler & Associates Sieczkowski Wolf Eberle Lovas Saxton Saxton Story Saxton Ritchey Mr. Dave Calvert City of Seward Sth & Adams P.O. Box 167 Seward, Alaska 99664 Mr. David L. Highers Chugach Electric Association 560I Minnesota Drive P.O. Box 196300 Anchorage, Alaska 99519-6300 Mr. Michael P. Kelly Golden Valley Electric Association 758 Illinois P.O. Box 1249 Fairbanks, Alaska 99707 Mr. James Hall Matanuska Electric Association 163 Industrial Way P.O. Box 2929 Palmer, Alaska 99645-2929 Mr. S.C. Mathews Homer Electric Association 3977 Lake Street Homer, Alaska 99603 Mr. Ron Saxton Ater Wynne Hewitt Dodson & Skerritt 225 S.W. Columbia, Suite 1800 Portland, OR 97201-6618 90Q1DO068L{1) Mr. Ken Ritchey Matanuska Electric Association 163 Industrial Way P.O. Box 2929 Palmer, Alaska 99645-2929 Mr. N. L. Story Homer Electric Association 3977 Lake Street Homer, Alaska 99603 Mr. Thomas R. Stahr Municipal Light and Power 1200 E. 1st Avenue Anchorage, Alaska 99501-1685 Mr. Eugene N. Bjornstad Chugach Electric Association 5601 Minnesota Drive P.O. Box 196300 Anchorage, Alaska 99519-6300 Mr. John Cooley Chugach Electric Association 5601 Minnesota Drive P.O. Box 196300 Anchorage, Alaska 99519-6300 Mr. Bob Hansen Golden Valley Electric Association 758 Illinois P.O. Box 71249 Fairbanks, Alaska 99707 Mr. Kurt Dzinich 4511 N. Riverside Drive Juneau, Alaska 99801 Mr. Robert Hufman Utilities Consulting Services 1018 Galena Street Fairbanks, Alaska 99709 Mr. David Burlingame Chugach Electric Association, Inc. P.O. Box 196300 Anchorage, Alaska 99519-6300 Mr. Tom Lovas Chugach Electric Association, Inc. P.O. Box 196300 Anchorage, Alaska 99519-6300 Mr. Vince Mottola Fairbanks Municipal Utilities System P.O. Box 72215 Fairbanks, Alaska 99707 Mr. Dave Fair Homer Electric Association 3977 Lake Street Homer, Alaska 99603 90Q1UD0068L{1) SS ae Research Agency P.O. Box Y Juneau, Alaska 99811-3100 Mr. Hank Nikkels Anchorage Municipal Light & Power 1200 East Ist Street Anchorage, Alaska 99501 Mr. poe Evans Golden Valley Electric Association 758 Illinois P.O. Box 71249 Fairbanks, Alaska 99707 Mr. Mike Yerkes P.O. Box 36 Skwentna, Alaska 99667 DATE: TO: FROM: SUBJECT: Alaska Energy Authority MEMORANDUM AEA/UTIL/0022 September 7, 1993 Bradley Lake Project Management Committee David L. Highers, Chugach Electric Association Norm Story, Homer Electric Association Ken Ritchey, Matanuska Electric Association Dave Calvert, City of Seward Tom Stahr, Anchorage Municipal Light & Power Mike Kelly, Golden Valley Electric Association Ron Saxton, Ater Wynne Hewitt Dodson & Skerritt Dennis V. McCrohan Secretary PPM Cole Project Management Committee Notice of Meeting - September 21, 1993 The next meeting of the Bradley Lake Project Management Committee will be held Tuesday, September 21, 1993. The meeting will begin at 1:00 p.m. in the Training Room at Chugach Electric Association, Anchorage. The following items are enclosed for your information, review, and files: ° Agenda - September 21, 1993 ° Updated List of BPMC Representatives ° Draft Meeting Minutes - August 17, 1993 ° Approved Meeting Minutes - July 22, 1993 ° BPMC Action Summary Log - Revised Meeting Minutes The BPMC Action Summary Log is a historical list of actions (i.e., motions, directives, determinations) approved by the Committee. Beginning in January 1993, all actions taken by the Committee were recorded by number in the meeting minutes. The action numbers in the January 14 - June 17, 1993 Committee meeting minutes have been revised to coincide with the historical list. A copy of the revised minutes are enclosed for your files. DB:DVM:db ce: Vince Mottola, Fairbanks Municipal Utilities System Stanley E. Sieczkowski, Alaska Energy Authority Larry Wolf, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Brent N. Petrie, Alaska Energy Authority 10. IL, 12; 13; 14. CALL TO ORDER BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING AGENDA September 21, 1993 Chugach Electric Association, Inc. Training Room 1:00 p.m. 1:00 p.m. ROLL CALL PUBLIC COMMENT AGENDA COMMENTS APPROVAL OF MEETING MINUTES - August 17, 1993 TECHNICAL COORDINATING SUBCOMMITTEE REPORT BUDGET SUBCOMMITTEE REPORT A. B. Bradley Lake Construction Cost Audit Presentation Bradley Lake O&M Cost Audit Update AGREEMENTS SUBCOMMITTEE REPORT OPERATION AND DISPATCH SUBCOMMITTEE REPORT REVIEW OF PROJECT STATUS OLD BUSINESS aAwm> Spinning Reserves Update Bradley Scheduling vs. Spin Requirement Update BPMC Control Over O&M Decisions and Agreements Master Agreement D. O&M Contract Update E BPMC Bylaws - Subcommittee Authority/Voting Procedures NEW BUSINESS A. Approval of Legal Expenses and Other Payments COMMUNICATIONS A. Schedule Next Meeting ADJOURNMENT Highers Burlingame Ritchey Brian Walshe Metzler & Associates Sieczkowski Wolf Eberle Lovas Saxton Saxton Story Saxton Ritchey BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE List of Representatives Representative Dennis V. McCrohan Secretary Ron Saxton Legal Counsel Alternate Brent N. Petrie Effective Date: August 9, 1993 Page 2 Utility Alaska Industrial Development and Export Authority 480 W. Tudor Road Anchorage, Alaska 99503-6690 Phone: 561-8050 Fax: 561-8998 Alaska Energy Authority 701 E. Tudor Road P.O. Box 190869 Anchorage, Alaska 99519-0869 Phone: 561-7877 Fax: 561-8584 Ater Wynne Hewitt Dodson & Skerritt 225 S.W. Columbia, Suite 1800 Portland, Oregon 97201-6618 Phone: (503) 226-1191 Fax: (503) 226-0079 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE List of Representatives Effective Date: August 9, 1993 Representative Alternate Utility Dave Calvert City of Seward 5th and Adams P.O. Box 167 Seward, Alaska 99664 Phone: 224-3331 Fax: 224-3248 David L. Highers Eugene N. Bjornstad Chugach Electric Association Chairman 5601 Minnesota Drive P.O. Box 196300 Anchorage, Alaska 99519-6300 Phone: 563-7494 Fax: 562-0027 Michael Kelly Bradley Evans Golden Valley Electric Association 758 Illinois P.O. Box 71249 Fairbanks, Alaska 99707 Phone: 452-1151 Fax: 451-0556 Kenneth Ritchey James Hall Matanuska Electric Association Treasurer 163 Industrial Way P.O. Box 2929 Palmer, Alaska 99645-2929 Phone: 745-9211 Fax: 745-9368 Norman L. Story David L. Fair Homer Electric Association Vice Chairman 3977 Lake Street Homer, Alaska 99603 Phone: 235-8167 Fax: 235-3313 Tom Stahr Hank Nikkels Anchorage Municipal Light & Power 1200 E. First Avenue Anchorage, Alaska 99501 Phone: 279-7671 Fax: 263-5204 A wv NY rr \a & Ib\ J : _<SOBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE DRAFT MEETING MINUTES August 17, 1993 i CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:05 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Bob Hufman, Alaska Electric Generation & Transmission Cooperative dburger/word/minutes/pme/08-93 Bradley Lake Project Management Committee Meeting Minutes - August 17, 1993 Page 2 of 6 David Burlingame, Chugach Electric Association D mer, Chugach Electric Association —" mmstad, Chugach Electric Association <())\\S Fom Lovas, Chugach Electric Association Je Bradley Evans, Golden Valley Electric Association Jim Hall, Matanuska Electric Association Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Myles Yerkes, Homer Electric Association Brent Petrie, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Larry Wolf, Alaska Energy Authority Denise Burger, Alaska Energy Authority 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next item. 4. AGENDA COMMENTS No changes were made to the agenda at this time. 5. APPROVAL OF MEETING MINUTES Minutes of the July 22, 1993 meeting were approved as submitted. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame stated the TCS had not met. However, Mr. Burlingame reported that ABB has begun studies to determine system stability limits with the addition of the Southern intertie. The scope of work and defined cases are the same as the previous study done for the existing line. 7. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported the Budget Subcommittee had met and discussed the financial impacts of transferring the operation and maintenance of Bradley Lake to Homer Electric Association. The Subcommittee concluded that a determination could not be made until responsibility for all of the various duties was negotiated between HEA and AEA. dburger/word/minutes/pmc/08-93 Bradley Lake Project ® vcsen Committee Meeting Minutes - August 17, 1993 Page 3 of 6 Mr. pe: ted a retroactive drop in the CEA wheeling rate, from $.023 to $.022 dar year 1993. wre A ~—s Construction Cost Audit The final construction cost audit report by Metzler & Associates has been distributed to the Budget Subcommittee members and will be discussed at the next Subcommittee meeting. As an outcome of the audit, Mr. Ritchey noted the utilities may want to consider a pre- construction audit before beginning work on the new interties. Mr. Ritchey stated that, if scheduling permitted, Brian Walshe of Metzler & Associates would give a presentation on the audit at the September BPMC meeting. B. O&M Cost Audit No new information was reported on the O&M cost audit. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Saxton reported the Agreements Subcommittee was awaiting a determination regarding the Master Operating Agreement and had not met. It was noted that the following agreements are not yet completed: Master Operating Agreement, Homer Transmission Line Maintenance Agreement, Soldotna Substation Agreement, Daves Creek and Soldotna SVC Maintenance Agreements. Mr. Eberle added an interim letter agreement had been signed for continued CEA maintenance of the SVC substations. Mr. Hufman reported that the site operators IBEW labor negotiations were on hold pending the outcome of the O&M contract with Homer Electric Association. 9. OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Eberle reported the O&D Subcommittee had not met since the last BPMC meeting, however a meeting is scheduled tomorrow. dburger/word/minutes/pmc/08-93 Bradley Lake Project Management Committee Meeting Minutes - August 17, 1993 Page 4 of 6 10. REVIEW OF PROJECT STATUS Mr. Eberle reported the contaminated soil clean-up contract work has been <toniipleted. The Project airstrip has been resurfaced with clean, crushed gravel. 11. OLD BUSINESS A. Spinning Reserve/Under Frequency Load Shed Update Mr. Lovas reported the IOC has implemented the new load shedding schedule. This item is now completed and will be deleted from future Committee meeting agendas. The ASCC is continuing to work on the allocation of spinning reserves. B. Bradley Scheduling vs. Spin Requirement Update Mr. Saxton reported that he and Mr. Lovas had met and formulated an initial draft of the issues. It was expected that the document would be ready for distribution in the near future. Cc. BPMC Control Over O&M Decisions and Agreements - Master Operating Agreement Mr. Saxton noted that completion of the Master Operating Agreement was placed on hold while issues related to the transition of AEA were resolved. Final comments on the Master Operating Agreement are expected from AIDEA the first week September. Mr. Saxton anticipated the Master Operating Agreement could be ready for signature by the September BPMC meeting. Once the Master Operating Agreement is in place, Mr. Saxton expected quick completion of the remaining agreements. In response to inquiry from Mr. McConnell, Mr. Saxton explained the Homer O&M Agreement would ultimately be subject to the Master Operating Agreement, but that its development was separate from the other agreements. D. O&M Contract Update Mr. Story reported HEA had met with the utilities to discuss questions and concerns regarding HEA's proposed operation and maintenance of the Project. HEA has submitted a draft contract to AEA and will be meeting with AEA and AIDEA later today to discuss the remaining process and schedule. dburger/word/minutes/pmc/08-93 Bradley Lake Project management Committee Meeting Minutes - August 17, 1993 Page 5 of 6 Mr, MeCrohan relayed the following timetable for the transfer of _ __Bradley-Lake operations and maintenance from the Energy Authority to EWEN - the utilities: cs Review HEA's application and determine HEA's qualification by the first week of September 1993 oi Identify list of duties to be retained by AEA and duties to be transferred (and to whom they will be transferred) by the second week of September 1993 c Detailed budget discussions to begin the first week of October BPMC Bylaws - Subcommittee Authority/Voting Procedures Mr. Saxton distributed a list of duties assigned to the various subcommittees, noting the information was requested at the last Committee meeting (Attachment 1). Mr. Saxton distributed a draft resolution to amend the Bradley Lake Project Management Committee Bylaws (Attachment 2). Mr. Saxton explained that, under the current Committee Bylaws, special purpose committees (i.e., subcommittees) were limited to an advisory role and had no authority to take final actions. The proposed resolution would amend the Bylaws to allow the Committee to delegate decision making duties to the subcommittees on authorized matters. The proposed amendment establishes subcommittee voting procedures by majority vote of the subcommittee members. Additionally, under the amendment, the power to modify or reject any decisions made by the subcommittees is retained by the Committee. Mr. Saxton explained the purpose for amending the Bylaws was to establish a means to delegate decision making authority to the subcommittees. Mr. Saxton added that Committee delegations to the subcommittees needed to be clearly recorded, but how the Committee and subcommittees communicate and the voting procedures used by the subcommittees were policy issues that should be determined by the BPMC. Methods of voting at the subcommittee level, reporting of subcommittee actions, and review of subcommittee actions by the Committee were generally discussed. Chairman Highers requested that the utilities submit written comments to Mr. Saxton on the proposed dburger/word/minutes/pmce/08-93 Bradley Lake Project management Committee Meeting Minutes - August 17, 1993 Page 6 of 6 resolution to amend the Bylaws (Action 93-177). Mr. Saxton will mes a final resolution for consideration at the next Committee YY © Oo . CS 12. NEW BUSINESS A. Approval of Committee Expenses Mr. Ritchey moved t Vv. ment of $24,104.06 for Committee legal expenses for the month of July 1993. Seconded by Mr. Calvert the motion was approved by unanimo Il call vote (Action 93-178). 13. COMMUNICATIONS A. Schedule Next Meeting Tuesday, September 21, 1993 1:00 p.m. Chugach Electric Association 14. ADJOURNMENT The meeting adjourned at 10:40 a.m. David L. Highers, Chairman Attest: is inceminicaipemecsaipaieaaas Dennis V. McCrohan, Secretary dburger/word/minutes/pmc/08-93 TO: FROM: DATE: RE: ATTACHHENT 1 MEMORANDUM Ron Saxton Liz Westby August 16, 1993 Duties Assigned to the Bradley Lake Project Management Committee Subcommittees The following tasks were assigned to BPMC Subcommittees (as referenced in the BPMC meeting minutes): AGREEMENTS SUBCOMMITTEE Action items: Update Allocation and Scheduling Agreement Exhibits C and D. (Minutes 1/13/92, p. 3) Work on Maintenance and Right of Way Agreements with Homer. (Minutes 1/13/92, p. 3) Advisory Items: Review Dispatch Agreement. (Minutes 11/19/91, p. 3) Review and follow-up on: - Allocation and Scheduling Agreement Exhibit A - Dispatch Agreement - Transmission Facility Maintenance - Facilities Interconnected Dispatch - Communications MOU - SVCS Draft Agreement - Daves Creek Substation - Soldotna Substation (Minutes 3/26/92, p. 4) All utility agreements should be presented to the PMC concurrently (even though some are ready). (Minutes 7/23/92) BuDGET (AND FINANCE) SUBCOMMITTEE Action Items: Develop draft definitions of Project (construction) costs versus utility costs. (Minutes 7/28/89, p. 4) Establish uniform accounting procedures for utility cost reimbursement. (Minutes 7/28/89, p. 4) Prepare FY93 budget. (Minutes 11/19/91, p. 2) Hire an auditor to perform an O&M cost audit, subject to budgetary constraints. (Minutes 11/20/92, p. 10) Hire a consultant to perform the Bradley Lake construction cost audit. (Minutes 11/20/92, p. 10) Advisory items: Review issues: - cash flow timing; budget revisions subsequent to budget adoption; reserve accounting; AEA staffing and overhead costs; - transmission costs; - environmental studies costs; - Intertie budget component. (Minutes 2/27/90, p. 3-4) : HEA Transmission Line Maintenance; - AEA Costs; - CEA Software; Dispatching labor costs. (Minutes 5/17/90, p. 4-5) Review of CEA and HEA Wheeling Agreement costs, and insurance. (Minutes 5/17/90, p. 6) Address the sinking fund payment that SWEC came up with for the scheduled maintenance and replacement of equipment. (Minutes 7/17/90, p. 8) Look at Homer Electric O&M expenses for the transmission line. (Minutes 7/2/91, p. 3) -2- nO: FROM: DATE: RE: ATTACHMENT 1 MEMORANDUM Ron Saxton Liz Westby August 16, 1993 Duties Assigned to the Bradley Lake Project Management Committee Subcommittees The following tasks were assigned to BPMC Subcommittees (as referenced in the BPMC meeting minutes): FAGREESMENTS’SUmecrmnery rem a ae Action Items: Update Allocation and Scheduling Agreement Exhibits C and D. (Minutes 1/13/92, p. 3) Work on Maintenance and Right of Way Agreements with Homer. (Minutes 1/13/92, p. 3) Advisory Items: Review Dispatch Agreement. (Minutes 11/19/91, p. 3) Review and follow-up on: - Allocation and Scheduling Agreement Exhibit A : Dispatch Agreement - Transmission Facility Maintenance . Facilities Interconnected Dispatch Communications MOU SVCS Draft Agreement Daves Creek Substation Soldotna Substation (Minutes 3/26/92, p. 4) All utility agreements should be presented to the PMC concurrently (even though some are ready). (Minutes 7/23/92) BupceT (AND FINANCE) SUBCOMMITTEE___ Action Items: Develop draft definitions of Project (construction) costs versus utility costs. (Minutes 7/28/89, p. 4) Establish uniform accounting procedures for utility cost reimbursement. (Minutes 7/28/89, p. 4) Prepare FY93 budget. (Minutes 11/19/91, p. 2) Hire an auditor to perform an O&M cost audit, subject to budgetary constraints. (Minutes 11/20/92, p. 10) Hire a consultant to perform the Bradley Lake construction cost audit. (Minutes 11/20/92, p. 10) Advisory items: Review issues: - cash flow timing; budget revisions subsequent to budget adoption; reserve accounting; AEA staffing and overhead costs; transmission costs; environmental studies costs; Intertie budget component. (Minutes 2/27/90, p. 3-4) HEA Transmission Line Maintenance; AEA Costs; CEA Software; Dispatching labor costs. (Minutes 5/17/90, p. 4-5) Review of CEA and HEA Wheeling Agreement costs, and insurance. (Minutes 5/17/90, p. 6) Address the sinking fund payment that SWEC came up with for the scheduled maintenance and replacement of equipment. (Minutes 7/17/90, p. 8) Look at Homer Electric O&M expenses for the transmission line. (Minutes 7/2/91, p. 3) 2- Analysis and discussion of (1) payments to the trustee to eliminate the cashflow problem, and (2) timing of payments. (Minutes 7/2/91, p.4) Review final project construction budget and provide comments to AEA prior to 5/20/93. (Minutes 5/13/93, p. 7) Manage budget line items. A 10% increase in the overall budget will need BPMC approval. (Minutes 1/14/93, p. 13) OPERATING AND DISPATCH AGREEMENT SUBCOMMITTEE Action Items: Engage services of a consultant to assist with drafting language for the Allocation and Scheduling Agreement. (Minutes 5/4/89, p. 6) Draft Bradley Lake Allocation and Scheduling Agreement. (Minutes 10/19/89, p. 5). Revise Scheduling & Allocation Procedures. (Minutes 3/3/93, p. 10) Develop agreements: - Dispatch Agreement between AEA and CEA : Maintenance Agreement between AEA and Maintenance Contractor Transmission Facilities Maintenance Agreement between AEA and HEA - Participants Allocation & Scheduling Agreement - Substation Maintenance Agreement between AEA and HEA - Joint Operations Agreement between CEA and HEA - Communications Equipment Agreement between AEA and Division of Telecommunications - Soldotna #1 Dispatch Agreement between CEA and AEG&T (Minutes 7/28/89, p. 4) Develop a method for tracking and accounting for costs associated with dispatching during generation tests from Bradley Lake. (Minutes 6/6/91, p. 2) Develop procedures to allow the Bradley participants to readily note or record Chugach's service needs for Kenai area combustion turbine versus those conditions of providing combustion turbine to support the operation of Bradley Lake. (Minutes 7/2/91, p. 3) Work on the problem of cleaning intakes. (Minutes 1/14/93, p. 6) Advisory items: Review of draft Dispatch Agreement. Work on 2 issues: (1) spinning reserve, and (2) losses on the Homer transmission system. (Minutes 2/27/90, p. 4) Review results of SWEC model on spill allocation. (Minutes 4/6/90, p. 5) Review comments on Dispatch Agreement and reservoir model. (Minutes 11/19/91, p. 3) Review of SCADA communications problem. (Minutes 3/26/92, p. 5) Discuss load restoration procedures, loss and billing procedures. (Minutes 6/6/91, p. 4) Subcommittee informed PMC of new procedures regarding single unit operation. (Minutes 7/23/92, p. 4-5) With help from the TCS, investigate frequency oscillations associated with islanding of the Bradley system. (Minutes 7/23/92, p. 13) TECHNICAL COORDINATING SUBCOMMITTEE Action items: Develop draft operation and maintenance definitions and responsibilities. (Minutes 8/29/88, p. 4) Provide an opinion on test period power agreement, interim operational period. (Minutes 7/17/90, p. 7) <A- Approve SCADA point list. (Minutes 9/21/90, p. 2) Develop operating scenarios with 80 MW and 90 MW caps. (Minutes 6/6/91, p. 7) Set the operating criteria for Bradley based on Homer Electric and Seward being subject to no more than stage two load shedding for any single contingency event, using interim operating criteria until such time as the final operating conditions are adopted by the PMC. (Minutes 7/2/91, p. 3) Expansion of Bradley Lake Operating Conditions, interim operating levels. (Minutes 4/28/92, Attachment A, p. 2) Identify proposed long-term solutions to islanding problem. (Minutes 7/23/92, p. 13) Advisory items: Meet with SEI regarding their assessment of reliability of the Bradley Junction to Fritz Creek transmission line. (Minutes 1/20/89, p. 2) Review bids for SCADA system. (Minutes 3/3/89, p. 2) Make presentation to PMC regarding proposed PTI 115 kV additions. (Minutes 4/6/89, p. 2) Review scope of work for system stability studies prepared by SWEC and proposal from PTI to complete additional stability work. (Minutes 6/8/89, p. 3) Review of software program DECNET. (Minutes 6/8/89, p. 3) Review and presentation of Load Acceptance Analysis report prepared by SWEC. (Minutes 1/18/90, p. 2) Study of microwave link between Divcom and CEA main headquarters. (Minutes 1/18/90, p. 8) Review, approve SWEC’s recommendation on the installation of the braking resistor, installation of digital stabilizers on the units, installation of one SVS at the Daves Creek side and in Soldotna. (Minutes, 11/28/90, p. 2) -5- ATTACHMENT 2 DRAFT 08/16/93 11:29am BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 93- A RESOLUTION AMENDING ARTICLE 6.2 OF THE BRADLEY PROJECT MANAGEMENT COMMITTEE BYLAWS WHEREAS, the Agreement for the Sale and Purchase of Electric Power of the Bradley Lake Hydroelectric Project § 13(b) allows the Bradley Lake Project Management Committee (Committee) to adopt procedural rules governing the conduct of the Committee’s affairs; WHEREAS, the Committee adopted Bylaws which specify the manner in which the Committee will act and section 6.2 states that the Committee may not delegate its decision-making duties to any special purpose committee; WHEREAS, the Committee finds it necessary to amend its Bylaws to allow the special purpose committees to make decisions when properly instructed and authorized by the Committee. NOW, THEREFORE BE IT RESOLVED that the Committee hereby amends section 6.2 of the Bylaws as follows: 6.2 Powers. The Committee may delegate its decision-making duties to a special purpose committee. 6.2.1 Authorization. Special purpose committees may only act upon Committee matters when authorized to do so by the Committee. 6.2.1 Voting Requirements. Decisions made by a special purpose committee shall be by affirmative vote of a majority of the members of a special purpose committee. 6.2.2 Decisions Reviewable. The Committee may affirm, modify or reject any decision of a special purpose committee. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE By: Chairman BY: Secretary DATE: BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES July 22, 1993 1. CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Dennis McCrohan, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Bob Hufman, Alaska Electric Generation & Transmission Cooperative Dave Hutchens, Alaska Rural Electric Cooperative Association David Burlingame, Chugach Electric Association John Cooley, Chugach Electric Association dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 2 of 10 Gene Bjornstad, Chugach Electric Association Bradley Evans, Golden Valley Electric Association Jim Hall, Matanuska Electric Association Moe Aslam, Municipal Light & Power Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Dave Fair, Homer Electric Association Myles Yerkes, Homer Electric Association Brent Petrie, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority Chairman Highers welcomed Dennis McCrohan, Deputy Director of Energy, Alaska Industrial Development and Export Authority (AIDEA). Mr. McCrohan will represent Alaska Energy Authority on the Bradley Lake and Four Dam Pool Project Management Committees. 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS The following items were added to the agenda: 12.C. Acceptance of HEA's Application for the Operation and Maintenance of Bradley Lake 12.D. Approval of SVC Testing Power Costs 12.E. Interim SVC Maintenance Agreement 12.F. Legal Opinion on O&D Subcommittee Authority 5. APPROVAL OF MEETING MINUTES Minutes of the June 17, 1993 meetings were approved as submitted. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame stated the Technical Coordinating Subcommittee had not met. It is anticipated that PTI will complete the final Bradley Lake operating study by the end of July 1993. Mr. Burlingame expects the TCS to hold its final meeting in August to review and accept the study recommendations. dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 3 of 10 7. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey reported the Budget Subcommittee held a teleconference on July 1, 1993. The Subcommittee is reviewing the costs for maintenance of Homer Electric's Bradley Junction and Soldotna line with HEA. Mr. Ritchey reported the FY94 wheeling rate, under the Transmission Services Agreement was expected to be slightly lower than the FY93 rate of $.023. The Budget Subcommittee is awaiting the final wheeling information from Chugach Electric Association. The Subcommittee approved modifications to the FY94 budget to accommodate the cost of the FY94 Stream Gage Program ($110,000). The cost of the FY94 Stream Gage Program was included in the budget narrative, but was overlooked in the line items. Mr. Ritchey noted several budget line items were reduced by a total of $110,000, however the adopted FY94 budget total remained unchanged. A. Construction Cost Audit Update The Subcommittee has received the final draft of the Construction Cost Audit. Mr. Ritchey noted that efforts were being made to arrange a presentation of the audit to the BPMC by Mr. Brian Walshe of Metzler and Associates. B. O&M Audit Update Parisena Stromberg & Associates has completed the 1992 O&M cost audit. Mr. Ritchey stated clarification of a few items was still needed. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported the Agreement Subcommittee had not met. Mr. Sieczkowski stated that he and Mr. Saxton had met, however, and discussed the master operating agreement. Further comments were deferred to Mr. Saxton under agenda item 11. C. 9. O&D SUBCOMMITTEE REPORT Mr. Eberle stated the O&D Subcommittee met on July 8, 1993. Merits of changing the water year were discussed by the Subcommittee, but were judged insufficient to justify a change at the present time. dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 4 of 10 10. Mr. Eberle reported the Subcommittee discussed concerns over the lack of a maintenance agreement for the Daves Creek and Soldotna substations. It was believed that completion of the maintenance agreement had been interrupted by consideration of the master operating agreement. Mr. Eberle stated that Chugach Electric Association had been performing minor maintenance of the facilities. To ensure that necessary maintenance continued, the Subcommittee recommended the BPMC approve an interim letter agreement (between AEA and CEA). Additionally, the Subcommittee proposed to review the substation maintenance expenses, prior to payment, until the full agreement was in place. The Subcommittee also approved forwarding the following SVC testing costs to the BPMC for payment: Chugach Electric Association $352,798.77 Municipal Light & Power 16,323.33 Mr. Eberle noted that CEA submitted only the cost of additional power generation and no labor, and that AML&P included $1,603 labor costs in its billing. HEA initially submitted costs which included labor, but subsequently withdrew them. The City of Seward had not yet requested reimbursement for SVC testing costs, however, apparently was planning to submit a request. Mr. Eberle stated that the O&D Subcommittee approved a motion to formally advise the BPMC of the differences in the submitted testing costs. Mr. Eberle informed the Committee that the O&D Subcommittee was discussing both station service and equipment SVC losses. The BPMC was advised that provisions for these losses would need to be addressed in the O&M budget. The Subcommittee will be revising and updating the Allocation & Scheduling Procedures. Current interim procedures will be revised to final operating procedures and then brought to the BPMC for approval. Mr. Eberle stated the Project's yearly maintenance is scheduled the first two weeks of October, pending approval by the utilities. During the maintenance outage, ABB will be installing the replacement capacitors and the new Soldotna breaker. REVIEW OF PROJECT STATUS Mr. Eberle recommended that $100,000 of Project construction funds be reserved for future clean-up of the remaining underwater debris in the fish water bypass intake channel. Explaining there was no urgency to complete the clean- up, Mr. Eberle stated that it could be done for approximately $50,000 at a reservoir level low enough to permit use of heavy equipment. Utilizing divers dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 5 of 10 11. to do the work now would cost an estimated $160,000 - $180,000 and was not necessary. In response to inquiry by Mr. Saxton, Mr. Eberle explained the funds would be held by the trustee bank. It was noted that, to date, approximately $200,000 had been spent on the previous diving operation to clear the fish water bypass intake area. OLD BUSINESS A. B. Spinning Reserve / Under Frequency Load Shedding Update Bradley Scheduling vs. Spin Requirement Update Mr. Cooley reported on behalf of Mr. Lovas that Mr. Lovas and Mr. Saxton had been working on categorizing spinning reserve policy and technical issues. It was expected that the various issues would be defined by the next Committee meeting. The Alaska Systems Coordinating Council (ASCC) is also waiting on the review being done by Mr. Lovas and Mr. Saxton. Mr. Burlingame added that approval of the new load shedding schedule was expected at a meeting later in the day. BPMC Control Over O&M Decisions and Agreements - Master Operating Agreement Mr. Saxton reported that he, Stan Sieczkowski, and Jim Klasen, assistant Attorney General, agreed that the concept of the master operating agreement was workable. A meeting was scheduled later in the day to discuss specific details of the agreement. Mr. Saxton expected some delay on the agreement progress until AIDEA became more familiar with the operation and maintenance of the Bradley Lake Project. Budget Subcommittee Authority - Resolution 93-11 Mr. Petrie explained that the purpose of the resolution was to give the Budget Subcommittee authority to adjust line items within the budget and authority to adjust the budget up to ten percent of the total. Mr. Petrie revised the phrase approved budget, where it appeared, to read adopted budget. It was noted that the phrase adopted budget did not necessarily mean the budget was approved by the Committee. Mr. Petrie moved to Resolution 93-11 0 Mr. Kelly, th motion was approved by unanimous roll call vote (Action 93-169). Prior to the vote, Mr. Petrie explained that AEA was currently dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 6 of 10 represented on the Budget Subcommittee and the assumption was made that the Energy Authority will continue to be represented on the Subcommittee. Mr. Saxton addressed the issue of subcommittee authority, stating that, though somewhat confusing, the bylaws clearly intended that specific authority could be delegated to subcommittees. Mr. Saxton recommended that the Committee clarify the bylaws, replacing the section which states "The BPMC may not delegate its decision making duties to any special purpose committees" with "Special purpose committees shall exercise only such powers as are expressly delegated by the Committee." Mr. Saxton added the proposed revision would help clear up pending questions on O&D Subcommittee authority. Mr. Ritchey moved that the Committee W. n recommended by Mr. on. Mr. Kell nded the motion. commenting that, in order to avoid potential confusion, authority should be delegated to the subcommittees by resolution. Mr. Stahr moved that the motion be tabled to allow study of the bylaws and any potential impacts created by the proposed change. Mr. Kelly seconded the motion to table Mr. Ritchey's motion. Hearing no objection, Chairman Highers tabled the motion until the next scheduled Committee meeting (Action 93-170). With the approval of Chairman Highers, Mr. Eberle introduced discussion of New Business, Item 12. F., Legal Opinion on O&D Subcommittee Authority. Mr. Eberle reported that the O&D Subcommittee approved a motion stating that the following questions be brought to the Bradley Lake Project Management Committee for clarification: 1. What, if any, items has the BPMC delegated to the O&D Subcommittee to take independent action on. 2. | What voting procedures should the Subcommittee use. 3. | Under the BPMC bylaws, does the BPMC have the authority to delegate powers to subcommittees. It was suggested by Mr. Eberle that these issues be considered during Mr. Saxton's review of the BPMC bylaws. Mr. Saxton will distribute a copy of the current BPMC bylaws to the Committee members along with a list of actions taken by the Committee. dburger\word\minutes\pmc\07-93 BPMC Meeting Minu.. July 22, 1993 Page 7 of 10 Mr. Kelly recommended that any past delegations to the subcommittees, which are not out of date, be drafted into resolutions for consideration at the next scheduled BPMC meeting. Mr. Yerkes raised the question of subcommittee voting procedures. Mr. Saxton responded that the issue was not specifically addressed in the Power Sales Agreement (PSA) or Committee bylaws, adding that decisions in the Budget Subcommittee were generally made by consensus of the majority. Mr. Saxton suggested that the same weighted voting procedures developed for the BPMC be observed by the subcommittees. Mr. Kelly recommended that past actions taken by the subcommittees be affirmed and that it be made clear that the proposed change does not alter past subcommittee actions. Additionally, Mr. Kelly proposed subcommittee voting procedures by majority consensus and that voting be limited to the designated, authorized subcommittee representative. The issue will be discussed further at the next Committee meeting. 12. NEW BUSINESS A. Nomination and Election of Officers Mr. Kelly, Mr. Calvert and Mr. Story were previously asked to serve as the nominating committee by Chairman Highers. Mr. Kelly reported that the nominating committee had met and recommends that the current officers continue to serve the Committee, noting that Mr. McCrohan, as the designated representative for the Energy Authority, would serve as Secretary. Mr. Kelly invited nominations from the floor, however, no further nominations were heard. Mr. Kelly moved the Committee unanimously accept the proposed nominations. Seconded by Mr. Story, the motion was a Vv. nani LI v Action 93-171). Approval of Legal Expenses and Other Payments Mr. Ritchey moved the Committee a: ve payments of $17,602.62 and $23,345.03 to Ater Wynne Hewitt Dodson & Skerritt for Mr. Saxton's k nsel mimi ring the mont if Mi id June 199 nded by Mr. Story, the motion was approved by unanimous roll call vote Action 93-172). Acceptance of HEA's Application for the Operation and Maintenance of Bradley Lake Mr. Story moved that the BPMC a he Homer Electric Association application, dated July 22, 1993, for the operation and maintenance of dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 8 of 10 the Bradley Lake Hydroelectric Project for submission to Alaska Energy Authority to be used as a basis to negotiate with the Energy Authority and the Project Management Committee to develop a final budget and contract. The motion, seconded by Mr. Ritchey was approved by unanimous roll call vote (Action 93-173). ! Mr. Story requested that the Chairman appoint a team to assist with contract and budget negotiations. Mr. Kelly recommended that each utility general manager, or appointed designee, be represented on the team. Mr. Story already anticipated involving the utilities in the interim development process of the operation and maintenance proposal prior to negotiation with the Energy Authority and presentation to the BPMC. Mr. Story expected planned work sessions among the utilities to take place in Anchorage. Mr. Ritchey recommended that the budget issues be separated from the other issues and dealt with by the Budget Subcommittee, adding that non-subcommittee members could participate in the discussions as well. Mr. McCrohan stated that the Energy Authority preferred to negotiate directly with Homer Electric Association before bringing the contract to the Committee, or a designated group of the Committee, for approval. Mr. Saxton pointed out that the negotiations would include three, separate parties: Homer Electric Association, Alaska Energy Authority and the Bradley Lake Project Management Committee. It was the consensus of the BPMC that the utilities should be involved in the informal development phase of the contract in order to allow opportunity for input and discussion of utility concerns. The initial development process will not include AEA. Mr. Stahr noted HEA's efforts to include the utilities in the process to date and expected that HEA will continue to include the utilities. Mr. Saxton clarified that HEA would be negotiating with ABA as its own representative and not as a representative of the BPMC. Mr. Story confirmed that it was HEA's intent to, first, work with the utilities during the development of the contract; second, negotiate the contract with AEA; and third, present the contract to the BPMC for approval. Mr. Story reiterated that all utility concerns would be resolved before the contract was brought to AEA for negotiation. 1 No other applications were submitted to the Committee. dburger\word\minutes\pmc\07-93 BPMC Meeting Minu... July 22, 1993 Page 9 of 10 Although the Budget Subcommittee will be reviewing HEA's proposed budget, Mr. Saxton advised the Committee that the budget would need to be approved separately and could not be agreed to in the contract. Approval of SVC Testing Power Costs Mr. Eberle reviewed the utility test power costs reported under agenda Item 9, O&D Subcommittee Report. Mr. Eberle informed the Committee that, initially, funds had not been budgeted for SVC test power costs. The Subcommittee agreed that the SVC testing costs should be capitalized, however did not specifically define which costs would be included. Mr. Eberle explained that AEA assumed the utility labor costs would be absorbed by the utilities, as had been the previous, established practice. Mr. Eberle recommended that the direct expenses and any personnel overtime costs directly attributable to the testing be capitalized. Mr. Stahr stated that was the procedure that AML&P used for billing its testing costs and proposed that all utility billings be reviewed for demonstration of actual cost. Mr. Eberle pointed out that CEA calculated the cost of test power and that it may be cumbersome to reconstruct actual costs. Mr. Eberle acknowledged that future utility cost reimbursements should be documented actual costs, but added that this had not been determined in advance of the SVC testing. Mr. Burlingame stated that CEA had documentation of its actual power generation costs for SVC testing and offered to share that information. Mr. Story moved that the SVC testin imbu ubmitted. Second Mr. Kelly, the motion was approved by unanimous roll call vote (Action 93-174). It was clarified that any proposed labor costs submitted for reimbursement should be incremental overtime costs, and that billings expected from Homer Electric Association and the City of Seward were included in the motion. Interim SVC Maintenance Agreement Mr. Eberle reiterated the importance of maintaining the SVC system and recommended that, until the formal SVC maintenance agreements were executed, of a letter agreement with Chugach Electric Association be used to ensure continued maintenance. Additionally, Mr. Eberle proposed, during the interim, under the letter agreement, the maintenance costs be reviewed by the O&D Subcommittee for payment. Mr. Kelly moved that the Committee approve Mr. Eberle's recommendation: ni Mr. Sto: he motion was a) Vi unanimous roll call vote (Action 93-175). Mr. Sieczkowski commented that the SVC and Transmission Line Maintenance Contracts were dburger\word\minutes\pmc\07-93 BPMC Meeting Minutes July 22, 1993 Page 10 of 10 13. 14. Attest: presently ready for signature, except for inclusion of the reference to the master operating agreement, and that a budget amendment would be brought to the Budget Subcommittee to cover the maintenance costs. Other Items Mr. Eberle recalled the Committee had previously requested investigation of the cost of SVC system studies covering the effects of the new Kenai transmission line. ASEA Brown Boveri (ABB) estimated a cost of $88,000 to perform the studies. Mr. Eberle recommended the studies be done through AEA's existing contract. Mr. Kelly moved that an amount not to exceed $100,000 be authorized for ABB to perform studies of the effect of the Southern Intertie on the SVC system. The motion, seconded by Mr. Stahr, was approved by unanimous roll call vote (Action 93-176). The cost of the studies will be capitalized as a Bradley Lake Project cost. COMMUNICATIONS A. Schedule Next Meeting Tuesday, August 17, 1993 10.00 a.m. Chugach Electric Association Training Room ADJOURNMENT The meeting adjourned at 11:50 a.m. David L. Highers,.Zhairman Deus Vo elael~ Dennis McCrohan, Secretary dburger\word\minutes\pmc\07-93 Revised Action Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES January 14, 1993 1. CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Ronald A. Garzini, Alternate Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Paul Diener, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt David Burlingame, Chugach Electric Association John Cooley, Chugach Electric Association e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 2 of 13 Gene Bjornstad, Chugach Electric Association Tom Lovas, Chugach Electric Association Bob Hufman, AEG&T Dave Fair, Homer Electric Association Mike Yerkes, Homer Electric Association Doug Hall, Municipal Light & Power Moe Aslam, Municipal Light & Power Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Dave Calvert, City of Seward David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Larry Wolf, Alaska Energy Authority Denise Burger, Alaska Energy Authority 3: PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS Item 12. E, Authority Over Budget Revisions, was added to the agenda. Ss APPROVAL OF MINUTES - October 9, 1992 The minutes of the November 20, 1992 Bradley PMC were approved as submitted. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met since the November Bradley PMC meeting. Mr. Burlingame noted that modifications had been made to the Woodward governor as a result of testing performed in November, and that efforts to resolve the unstable Kenai oscillation problem were in progress. 7. BUDGET SUBCOMMITTEE REPORT Mr. Ritchey informed the BPMC that the Budget Subcommittee would be requesting authorization to make changes to the Bradley O&M budget that were within ten percent of the budget (agenda item 12. E). Changes over ten percent of the budget would be brought before the Bradley PMC. e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 3 of 13 The Budget Subcommittee is currently reviewing the proposed FY94 Bradley O&M Budget. The Subcommittee will be meeting again at the end of February and expects to have a budget ready to present to the Bradley PMC by the March meeting. The BPMC was reminded that the budget needed to be completed and adopted by the first of April. Mr. Ritchey noted that the Bradley PMC had been informed of an O&M budget surplus of $910,411 at the November 20, 1992 meeting. Mr. Ritchey explained that this amount included approximately $450,000 carried forward from FY92 to FY93. To avoid large swings in the utility payments from year to year, the Subcommittee plans to carry the remaining estimated $450,000 into FY94. Mr. Ritchey noted a letter sent by Ron Saxton to Ron Garzini requesting information regarding use of Bradley bond funds. In question is whether a portion of the remaining construction funds could be transferred to Section 31 to cover the HEA Fritz Creek transmission line construction cost. HEA's Fritz Creek transmission line construction costs are considered to be a utility expense and meet the criteria for use of Section 31 funds, however Section 31 funds have been depleted. Mr. Saxton noted that redirecting construction funds to Section 31 funds would not impact the financial obligation of the utilities or the Energy Authority. Mr. Garzini has forwarded the request to Eric Wohlforth, AEA bond counsel, for review and advisement. A. Bradley Lake Construction Cost Review To clarify any previous misunderstanding, Mr. Ritchey noted that the construction cost audit had been approved as a construction cost item and was not an O&M cost. Pending successful completion of reference checks, Metzler & Associates has been tentatively selected by the Subcommittee to perform the construction cost audit. Mr. Ritchey anticipated Metzler & Associates would begin the audit shortly after confirmation. B. FY93 Budget, AEA Administrative Costs Update No comments were made regarding this issue. Cc. Bradley Lake O&M Cost Audit Update Mr. Ritchey reported that the O&M audit being performed by Parisena & Stromberg was more than half way complete. The Budget Subcommittee expects an audit report by February 2, 1993. e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 4 of 13 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported that changes to the Soldotna Substation Agreement (with HEA) were made at the December 11, 1992 Agreements Subcommittee teleconference meeting. Offering the assistance of the Bradley PMC, Chairman Highers asked if anything could be done to expedite the agreement negotiation process. Mr. Sieczkowski stated that the Subcommittee's comments had been incorporated and that no other issues remained to be resolved. Changes to the Transmission Line Maintenance Agreement made by the Subcommittee at a December 21, 1992 teleconference meeting have been incorporated. Additionally, new drafts of the Daves Creek and Soldotna SVC Facilities Maintenance Agreements were distributed for review on December 18, 1992. Comments are expected from the utilities by January 29, 1993. 9. OPERATION & DISPATCH SUBCOMMITTEE REPORT A summary of the Operation & Dispatch Subcommittee meeting of January 7, 1993 was distributed to the PMC (Attachment 1). Mr. Wolf reported that the Subcommittee reviewed an operations report presented by AEA. Beginning with January 1993 information, the report (a summary of project generation statistics, reservoir hydrology data, and operations and maintenance events) will be distributed as an attachment to the Subcommittee meeting minutes. DECnet programming was discussed at the meeting. AEA requested AML&P and GVEA develop and implement their own DECnet programming. Updating his report given at the November 20, 1992 BPMC meeting on the progress of the annual maintenance, Mr. Wolf stated that no additional problems were discovered during completion of the maintenance work. However, due to insufficient time during the annual maintenance to repair a transformer nitrogen leak, a one day outage would be needed to perform the repair. Reservoir Draw-down Mr. Wolf reported on the blockage of the Bradley Lake fish water bypass intakes. Early in November, reduced flow was noted through one of the fish water bypass valves. Suspecting a blockage, the operators unsuccessfully tried to clear the intake with a back flow of compressed air. During a visual inspection of the area on November 17, 1992, Mr. Wolf noted erosion of overburden and loose fill from the bank above the intakes and suspected that the e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 5 of 13 material was migrating into the intake area. AEA contracted a diver to inspect the intakes on November 19, 1992, however, due to uncooperative weather conditions, the dive was not made until December 8, 1992. The diver reported finding large, smooth rocks, debris and silt. Discrepancies in the diver's report with known information raised some question as to the accuracy of this assessment. Mr. Wolf explained that there were no large, smooth rocks in the area, and stated that the diver's inspection was hindered by inability to see due to the high level of glacial silt in the water. Because of the discrepancies in the initial dive inspection report, AEA is arranging for a second dive inspection by another dive company utilizing hard hat (rather than scuba) gear. If the material causing the blockage can be easily removed, the divers will attempt to clear the intake area. Assessing the currently available information, Mr. Wolf stated that any remaining loose material above the intake area should be removed and the intakes cleaned and modified to avoid a repeat of the problem. In order to minimize the risk of damaging the intakes, Mr. Wolf anticipated that the reservoir would need to be lowered to 1068' to clean and modify the intakes. A request for an engineering proposal to provide a design for modification of the intakes and contract specifications for the removal of the overburden and cleaning and modification work was made to Stone & Webster Engineering the first week of January. The O&D Subcommittee was informed of the situation and discussed associated problems of operating the project at a reservoir level under 1080' at its January 7, 1993 meeting. Mr. Wolf stated that unknown tunnel transient effects could cause a problem when operating the project below 1080' and recommended a transient analysis study be performed. Mr. Wolf explained that, according to the design engineer, a sudden needle closure below this level could cause a vacuum and subsequent tunnel failure. Mr. Wolf noted that, barring a needle closure, the project is capable of generating 105 to 109 megawatts between the 1068' and 1080' reservoir level. Additional reservoir storage capacity between 1068' and 1080' is 18,734 acre-feet. In lieu of successful clearing of the intakes by the divers, Mr. Wolf outlined three options to clear and modify the intakes: Option I: At the current reservoir level, either on the ice or on floats, utilize a clam to clear the debris. The work would be done in 70' of water and includes a high risk of damaging the intakes. Modification of the intakes would have to be done by divers. High repair costs are anticipated for this method. e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 6 of 13 Option II: At a reservoir elevation of 1090', access the intake area from the adjacent bank using a hoe or clam. The work would be done in approximately 20' of water. Risk of damaging the intakes would be less, however, modification of the intakes would still have to be done by divers. Anticipated repair costs would be less than Option I. Option Il: Lower the reservoir to 1068' to facilitate use of on-site equipment and perform work under dry conditions. Repair costs would be lower, however impact to the utilities schedule would be the highest. Mr. Wolf explained that the fish water bypass was a FERC license requirement. A water release of 40 cfs is required November through April and 100 cfs June through September. Under present conditions (at a reservoir elevation of 1136') the maximum obtainable release is 86 cfs. Release from the blocked intake is limited to a flow of 7 cfs. Mr. Wolf noted that favorable weather conditions could provide the necessary flow to meet the FERC requirement, however, if the requirement was not met, FERC could fine the project up to $10,000/day. Ultimately, the license could be revoked. The Committee elected to discuss agenda item 12. C., Reservoir Draw-down. Chairman Highers initiated the discussion stating that the draw-down would greatly impact CEA's maintenance schedule. Mr. Stahr questioned use of underwater camera equipment to evaluate the situation. Mr. Wolf explained that a camera would not be useful because the glacial silt prevented visibility. It was noted that sonar equipment could be effective under these conditions. Mr. Garzini recommended that the Operation & Dispatch Subcommittee continue to work on the problem until the technical options are defined. If differences develop which cannot be resolved at the Subcommittee level, Mr. Garzini suggested that a special Bradley PMC meeting be called at that time. Mr. Bjornstad reiterated that the problem particularly impacted CEA's maintenance schedule. Mr. Bjornstad requested an immediate second dive inspection and notification of the results to the utilities, stating that this information was critical to CEA's planning. Mr. Stahr asked if enough water could be pumped over the spillway to meet the FERC requirements. Mr. Wolf explained because the 100 cfs was measured down stream of the dam, some greater amount had to be released at the dam in order to meet the requirement. Mr. Stahr expressed the need for an expedient assessment of the problem and requested that AEA keep the utilities informed of changes to the availability of Bradley generation. e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 7 of 13 10. Warranty coverage of the problem and the possibility of design error were questioned. Mr. Eberle stated that assessment of those issues at this time would be premature because the cause of the problem was unknown. No determination had been made as to how the cost was to be handled (i.e. operation, or construction, or warranty). Chairman Highers concurred with Mr. Garzini's recommendation that the O&D Subcommittee continue to handle the problem. Mr. Wolf noted that the Energy Authority needed to be informed of the utilities' maintenance schedules in order to facilitate planning the maintenance needs of Bradley Lake. Chairman Highers added that maintenance at Bradley Lake should be a coordinated effort between the utilities and AEA to meet the utilities’ needs as well. Referring to the January 7, 1993 O&D Subcommittee meeting, Mr. Wolf stated that revisions to the Allocation & Scheduling Procedures had been approved for recommendation to the BPMC. The revised procedures will be forwarded to the general managers in advance of the next Bradley PMC meeting. An additional item of discussion at the Subcommittee has been HEA line losses. Mr. Wolf stated that HEA was in the process of developing their loss numbers for further discussion at the next Subcommittee meeting. Mr. Lovas noted that, in the past, CEA had provided those numbers to HEA. Mr. Burlingame clarified that the "line loss" being discussed was the difference between the total sum of retail kilowatt hours sold by HEA and the total wholesale megawatt hours purchased. REVIEW OF PROJECT STATUS Mr. Eberle reported that AEA had received ten contaminated soil clean-up technical proposals which are currently being reviewed. Price proposals are expected in February. AEA is continuing efforts to obtain a clean-up waiver from the Alaska Department of Environmental Conservation. Mr. Eberle reported that the capacitor bank of the second harmonic filter failed during on-line testing of the Daves Creek Substation Static Var Compensator System (SVC) in December. Initially, the problem was suspected to be a possible harmonics condition that the system was not designed for. However, after studying the problem, ABB concluded the system could handle the harmonics. Subsequent study and inspection of the capacitor bank by ABB identified a combination of several problems which resulted in the failure: use of wrong size fuses, improper attachment of the spring ejectors on the fuse links, and mis-manufactured (under sized) capacitors. ABB will be replacing the majority of the capacitor bank at the Daves Creek Substation. All fuses will e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 8 of 13 be checked and modifications made to the spring ejectors. ABB also plans to modify the alarm and protection system. In spite of the additional work, ABB expects to be able to maintain its schedule and have the system on line by mid- March. Mr. Eberle noted that a contract was being issued to Woodward Governor to resolve the unstable frequency oscillation problem. Design, testing and implementation of the system modifications is expected to be completed by the end of June. 11. OLD BUSINESS A. Spinning Reserves/Under Frequency Load Shedding Update Tom Lovas reported that the Alaska Systems Coordinating Council (ASCC) Reliability Criteria Committee met with its consultant, Bill Masters, in December. The Intertie Operating Committee (IOC) has received a proposed load shedding schedule (based on current conditions, including Bradley Lake) from its Reliability Criteria Subcommittee. The recommendation includes implementation of a specific load shedding schedule which includes requirements for load shed in lieu of spin. Mr. Lovas stated that the schedule will accommodate the current operating conditions and improve the reliability of the interconnected system. Questions regarding character of the spin, resources of the spin, and the location of the spin remain to be resolved by the IOC. Bradley Scheduling vs. Spin Requirement Update Referring to the November 20, 1992 BPMC meeting, Chairman Highers noted his request that the utilities provide written comments on the spin requirement issue to Mr. Saxton. Chairman Highers urged the utilities to submit written comments as soon as possible, noting that AML&P had already submitted comments. 12. NEW BUSINESS A. Approval of Committee Expenses 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). e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 9 of 13 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 93-148):! City of Seward Yes Matanuska Electric Association Y 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 Chairman Highers noted the January 8, 1993 memorandum prepared by Tom Lovas which was previously distributed to the utilities (Attachment ! To facilitate record keeping, commencing with calendar year 1993, the secretary will assign sequential numbers to all actions taken by the Bradley PMC in accordance with the Committee Bylaws (Article 14.1). e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 10 of 13 2). Mr. Story stated that repayment of HEA's Fritz Creek transmission line construction costs had been left unresolved. HEA recently invoiced the utilities for the line costs, however, HEA was receptive to other options of payment (i.e. capitalization of costs). Mr. Saxton, referring to his earlier comments on the possible restructuring of the remaining unused bond funds, stated that the Fritz Creek costs met Section 31 qualifications. Mr. Lovas commented that it was unfortunate that the costs had not been submitted under Section 31 prior to bond issue. Mr. Lovas noted that Item 12 of the Transmission Agreement clearly expressed the intent to include the Fritz Creek costs under Section 31. Additionally, in lieu of qualification as a Section 31 cost, Item 12 outlines a mechanism to treat the transmission line cost as a project operation expense during the first 3 years of operation. Mr. Lovas suggested the transmission line could be paid for as a Section 13 (project construction) cost, or, paid for by HEA through a bond issue (to be paid back by the utilities). Mr. Lovas recommended that HEA submit a reimbursement plan to the Bradley PMC. Mr. Story objected to the burden being placed on HEA and requested additional discussion or suggestions. Mr. Kelly suggested that HEA self-finance the cost and the utilities repay HEA by the same terms as if it had been submitted under Section 31. Repayment of the cost as a project operation expense in this manner would have minimal impact on the utilities. Mr. Lovas reiterated that the first step was to determine if bond funds could be used to cover HEA's Fritz Creek transmission line costs. If bond funds cannot be used, Mr. Lovas stated that HEA would then need to provide the BPMC with a mechanism for repayment which would least impact the utilities' cash flow. Mr. Garzini informed the Committee that AEA was already investigating a variety of options and was willing to assist in resolving the problem. Chairman Highers requested that HEA and AEA work together to find an acceptable method of repayment of HEA's cost. Bradley Draw-down This item was discussed earlier under Item 9, Operation & Dispatch Subcommittee Report. BPMC Control Over O&M Decisions and Agreements Mr. Saxton introduced three issues for discussion: (1) control over O&M, (2) identification of appropriate parties to various agreements; and (3) the relationship of the multiple agreements and contracts that have been issued. e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 11 of 13 Control Over O&M Referring to the Power Sales Agreement, Mr. Saxton stated that Section 13 created the Project Management Committee, Section 13 (b) established Committee rules, and Section 13 (c) outlined Committee responsibilities. Paraphrasing Section 13 (c) (i), Mr. Saxton stated, "Subject to certain non-delegable rights, the PMC shall be responsible for the management, operation, maintenance and improvement of the project, in recognition that as take-or-pay purchasers of project capacity the purchasers have substantial long term interest..." Additionally, Mr. Saxton stated the Agreement established the Committee's responsibilities as follows: "The Committee is responsible to arrange for the operation and maintenance of the project, and the scheduling, production, and dispatch of project power." In order to accomplish this, the utilities agreed that AEA would become the initial project operator. Mr. Saxton pointed out that the contract clearly stated the Committee was ultimately responsible for operation of the project. Identification of Appropriate Parties to Various Agreements Mr. Saxton stated that agreements had been prepared under the authority of AEA with an approval signature of the BPMC, however, the BPMC could retain authority as the principal signer with an approval signature of AEA. Mr. Saxton stated that either case worked, but the ultimate responsibility belonged to the BPMC. It was noted that differences on which way the authority was viewed was causing difficulties in the agreements process. ionship of Multiple Agreement: ni A list of agreements prepared by Tom Lovas (Attachment 3) was distributed to the Committee. Mr. Saxton recommended that the agreements be catalogued and, preferably, reviewed to determine their effect on each other (i.e. potential conflicts). Chairman Highers requested that the utilities review the list to ensure the inclusion of all agreements and submit any changes to Tom Lovas (Action 93-149). Mr. Yerkes asked if the BPMC could contract legally. Mr. Saxton could not provide an answer without further investigation, however stated that the BPMC could contract in joint venture or partnership. Mr. Saxton noted that the same result could be obtained if AEA e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minuics January 14, 1993 Page 12 of 13 contracted with the recognition that it was the BPMC who made the decision. Mr. Saxton expressed concern about the introduction by AEA of a potential additional step to the Committee's decision making process wherein AEA assumes that its approval of a decision is required before the decision is carried out. (Mr. Saxton referred to AEA's objection to administering payment of approved Committee legal fees.) Mr. Garzini reiterated his desire for the utilities to control more of the operation and maintenance of the Bradley Lake (and Four Dam Pool) Project(s). However, in addition to ownership of the project, AEA has an obligation to FERC and a bond obligation which must be fulfilled. Mr. Garzini stated that beyond these requirements, all other issues were open to the management of the Committee. Mr. Kelly noted that AEA's responsibilities had been protected by the inclusion of veto rights. Referring to the Power Sales Agreement, Item 13 (b), Mr. Saxton confirmed that AEA had certain non-delegable rights and that in these matters the utilities and AEA had to agree. Mr. Saxton stated, in order to avoid potential problems, it was necessary to clarify who was responsible for contract commitments made by AEA prior to execution of a contract. Mr. Garzini suggested that the BPMC wait until after the Alaska Energy Authority's strategic plan was presented to its Board of Directors on January 22, 1993 before taking any action on the issue. Pending the response of the Board of Directors to the plan, Mr. Garzini hoped to call a meeting of all the utilities (Four Dam Pool and Bradley Lake) to begin discussing the transfer of responsibility. Mr. Saxton stated that the Agreements Subcommittee could not finalize some of the agreements now being worked on without guidance on the authoritative roles of the BPMC and AEA. Mr. Kelly recommended that the Agreements Subcommittee be informed that the BPMC wished to retain the power that was intended by the Power Sales Agreement, noting that, in some respects, AEA's participation was absolute within the BPMC. Chairman Highers expressed the concurrence of the Committee, requesting that it be noted in the minutes. Responding to inquiry by Mr. Lovas, Mr. Kelly confirmed that the existing agreements should be re-opened to "reformulate the participants." It was clarified that the substance of the agreements would not change. Mr. Lovas introduced the concept of one master Bradley Lake operational procedure agreement designed to incorporate all operational issues (rather than the e:\dburger\word\minutes\pmc\01-93a BPMC Meeting Minutes January 14, 1993 Page 13 of 13 introduced the concept of one master Bradley Lake operational procedure agreement designed to incorporate all operational issues (rather than the present series of agreements). Mr. Story expressed concern over the potential for further delays to the completion of present draft agreements. E. Authority Over Budget Revisions Mr. Ritchey moved that the Bradley PMC grant authority to the Budget Subcommittee to manage budget line items. However, if the Subcommittee anticipates an increase to the approved overall operating budget of more than ten percent, the Subcommittee would seek BPMC approval. The FY93 operating budget is $2,699,928. Therefore any budget changes greater than $269,993 would require approval of the Bradley PMC. Mr. Ritchey noted that the request was, in part, inspired by the need to pay the BPMC legal bills which had exceeded the budgeted line item amount. Mr. Ritchey explained that the Subcommittee wanted to establish a means by which it could make adjustments to the budget (within limitations). It was clarified that the ten percent limit referred to cumulative budget changes. The motion, ‘ond Mr. Kelly, was a ved by a unanimous role call vote (Action 93-150). 13. . COMMUNICATIONS A. Schedule Next Meeting March 11, 1993 10:00 a.m. CEA Training Room 14. ADJOURNMENT With no further business or communications before the Committee, the meeting e:\dburger\word\minutes\pmc\01-93 Revised Actwn Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES March 3, 1993 1. CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Brent N. Petrie, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Paul Diener, Designated Representative Homer Electric Association Dave Fair, Alternate Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt David Burlingame, Chugach Electric Association John Cooley, Chugach Electric Association dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 2 of 13 Tom Lovas, Chugach Electric Association Jim Hall, Matanuska Electric Association Bob Hufman, AEG&T Moe Aslam, Municipal Light & Power Bob Price, Municipal Light & Power Dave Calvert, City of Seward David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority Eric Wohlforth, Wohlforth, Argetsinger, Johnson & Brecht Tom Klinkner, Wohlforth, Argetsinger, Johnson & Brecht Jim Seagraves, Nuveen 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS The following items were added to the agenda: 11 E. Section 31 Costs 11 F. Agreements Discussion 12 C. Refinancing of Bradley Lake Bonds 5. APPROVAL OF MINUTES - January 14, 1993 The minutes of the January 14, 1993 Bradley PMC meeting were approved with minor corrections. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met and noted that an update of the SVC testing would be included with the O&D Subcommittee report. 7. BUDGET SUBCOMMITTEE REPORT Bradley Lake Construction Cost Audit and FY92 O&M Audit Mr. Ritchey reported that both audits were nearly completed. A draft report on the construction cost audit is expected from Metzler and Associates by mid- March. Copies of the audit will be distributed to AEA and members of the dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 3 of 13 Budget Subcommittee. Final reports of both audits are expected by the end of March. FY94 Budget Noting that BPMC approval of the budget was required by April 1, 1993, Mr. Ritchey informed the Committee that the FY94 budget was very similar to the FY93 budget. It was anticipated that the FY94 budget would be ready for distribution to the BPMC members by mid-March. Mr. Ritchey recommended that the BPMC schedule a meeting or teleconference at the end of March to consider approval of the budget. Fish Studies Mr. Ritchey relayed the Subcommittee had discussed continuing funding of the Bradley River fisheries studies. AEA recommended a three year fisheries studies program. The studies, also supported by other State and Federal resource agencies, would determine how much water was actually needed for salmon spawning. It is anticipated the results may indicate that the current flow requirements (40 cfs winter and 100 cfs summer) are higher than necessary to ensure salmon egg incubation. The total cost of the three year studies program is expected to be $117,000. It was pointed out that a reduction of the minimum flow requirement could ultimately save the utilities as much as $2,500/day. Lower minimum flow requirements could reduce potential violations due to current monitoring difficulties (i.e., icing at the gage stations). Additionally, information gained by the studies could be used to support alternate monitoring methods. Mr. Ritchey noted that the Budget Subcommittee revised the FY93 budget to include an additional $4,600 for this year's studies and that additional funds would be added to the FY94 budget to continue the studies. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported the Agreements Subcommittee held two teleconference meetings. Final revisions were made to the Soldotna Substation Agreement and Transmission Facilities Maintenance Agreement. Comments have not been received on the draft Daves Creek or Soldotna SVC Facilities Maintenance Agreements that were distributed in December. Agreements Discussion Mr. Saxton, referring to his memorandum dated March 2, 1993, recommended that the BPMC establish a master agreement designed to clearly define the role dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 4 of 13 and rights of the Committee to which all other agreements would be subject (Attachment 1). Mr. Saxton explained that the master agreement would define and preserve the rights of the BPMC without requiring the already completed agreements to be rewritten. Noting that AEA had only received Mr. Saxton's memorandum the day before, Mr. Petrie requested additional time to review the proposal before any action was taken by the Committee. In response to inquiry by Mr. Kelly, Mr. Saxton stated that the master agreement would recognize the BPMC as the central authority (rather than AEA). Mr. Lovas noted that there was no intent to change or create legal entities or relationships, but to reshape the agreements in order to be consistent. Chairman Highers deferred further discussion to Agenda Item 11 F., Agreements Discussion. 9. OPERATION & DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski distributed a summary of the January 28, 1993 O&D Subcommittee meeting without additional comment (Attachment 2). Fish Water Bypass Update Mr. Eberle reported AEA anticipated removal of the estimated 40 - 60 cubic yards of material blocking the intake using hydraulic dredges through the ice. Proposals will be requested from three diving firms and the contract awarded by mid-March. Work is expected to begin March 22, 1993 and take about two weeks to complete. The total cost of the work is currently approximated at $125, 000. SVC Testing Mr. Burringame distributed a summary of SVC Testing (Attachment 3). Reporting that the SVC systems performed well during testing, Mr. Burlingame noted the only problem was with the capacitors. The SVC's have not been energized below zero degrees without experiencing capacitor problems. ABB is trying to determine if the problem is the capacitors or system harmonics. Testing of the SVC is expected to be completed by March 5, 1993. Mr. Burlingame reported two outages had occurred which fully tested the SVC system. While Bradley was operating at 115 megawatts, a 73 megawatt load trip islanded the Kenai, splitting the Kenai into two islands. The SVC operated at 64 hertz and the voltage remained solid until the Kenai blacked out. Mr. Burlingame noted that the present SVC configuration did not allow the Kenai to be picked up while black, however, the configuration was being changed. During the second outage, both Bradley Lake units were synchronized dburger\word\minutes\pmc\03-93a 4 1 BPMC Meeting Minutes March 3, 1993 Page 5 of 13 10. 11. on line at 61.2 hertz. A synch-check relay closed the units in, causing a 90 megawatt power swing on the Kenai. The SVC dampened the severe voltage swings, but hit its ceiling of 70 megavars for five seconds. Air Crash Accident Reporting on the February 20, 1993 South Central Air plane crash at the Bradley Lake Project, Mr. Sieczkowski informed the Committee that the air craft experienced difficulty upon takeoff from the Project airstrip. Larry Wolf, John Zidalis and his wife Gail, and their grandson were in the plane. The plane clipped the fence at the end of the runway and crashed, nose down, into the tidal flats. The pilot, Larry, John and Gail received multiple injuries, however all are recovering. The grandson was uninjured. Anticipated recovery time for both Larry and John is expected to be about two months. Mr. Sieczkowski noted that Richard Turner has assumed John Zidalis's responsibilities at the Project site and Dave Eberle is filling in for Larry Wolf. The cause of the accident is currently being investigated by the FAA and NTSB. REVIEW OF PROJECT STATUS Mr. Eberle reported that problems with the Bradley Lake governors (AGC) are being worked on. ABB is investigating the problem with the SVC capacitors. ABB suspects the problem may be caused by a manufacturing defect and expects that, when identified, the faulty capacitors will be replaced. Eight proposals have been accepted by ABA for the contaminated soil cleanup work. Bids are expected from the proposers by mid-March. Mr. Eberle noted that the capacitance rating of the existing CEA breaker at the Soldotna Substation was not high enough and that AEA was purchasing a new breaker to replace it. Installation of the new breaker is expected to be completed by the end of July 1993. IBEW Labor Negotiations Mr. Sieczkowski reported the IBEW made an initial proposal to AEA to which AEA provided a counter proposal. The negotiations broke down and the IBEW issued a complaint of unfair labor practice. AEA is preparing another counter proposal and will be meeting with the IBEW on March 22, 1993. OLD BUSINESS dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 6 of 13 A. Spinning Reserve/Under Frequency Load Shedding Update Mr. Lovas reported that the Intertie Operating Committee had received a load shedding schedule recommendation. The proposal included recommendations for additional work and investigation by the ASCC Reliability Criteria Committee (or some other group). The current proposed load shedding schedule is subject to action on or before March 19, 1993. If approved, the new schedule will go into effect within 60 days. The ASCC is focusing on defining various aspects of spin and spinning resources (i.e., quality, character, distribution and location of spinning resources). The Reliability Criteria Committee is currently compiling utility input regarding the spinning reserve and operating reserve issues. B. Bradley Scheduling vs. Spin Requirement Mr. Saxton stated that, with the exception of AML&P, neither the utilities or AEA had submitted any comments regarding spin requirements. Mr. Lovas noted that CEA had agreed to carry additional spin on behalf of SES and MEA (and HEA) to cover the portion attributable to each utility until February 1, 1993. It was clarified that CEA was no longer covering that portion of spin. Mr. Stahr stated that the utilities still had a spin obligation and recommended that the BPMC consider whether AEA had a spin obligation. Mr. Saxton pointed out that both issues needed to be addressed, stating that the only binding spin requirement was in the Intertie Operating Agreement. Mr. Lovas stated that the RCC was investigating system technical requirements and representative shares of the utilities, but it had not discussed the issue of AEA spin obligation. In response to Mr. Kelly, Mr. Lovas confirmed that the issue of utility spin obligations and share proportions ( allocation of spin responsibilities) could be addressed by the RCC. However, Mr. Lovas felt that determining any AEA spin obligation was beyond the authority of the RCC. Mr. Kelly cautioned against allowing the issue to be dropped. Mr. Saxton stated it was his understanding from a previous BPMC meeting that the utilities were to submit written comments on the spin requirements to him. Mr. Stahr observed that, at some point, the utilities were going to have to find a consensus solution, rather than a solution favorable to an individual utility. Mr. Kelly suggested that the dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 7 of 13 utilities review the AML&P comments and either agree with them or provide their own comments. Mr. Petrie stated AEA will provide comments on the spin requirement issue to Mr. Saxton. Mr. Stahr will distribute AML&P's previous comments to the utilities for reference and recommended that all utility responses be forwarded to Mr. Saxton. Mr. Petrie, acting as Chairman, directed the utilities to submit responses to Mr. Saxton no later than March 30, 1993.1 Additionally, Mr. Kelly recommended that the utilities send each other a copy of their response (Action 93-151). Cc. Fritz Creek Segment Funding Mr. Petrie reported the Energy Authority bond counsel and accountant were researching methods to restructure money within the bond issue to cover HEA's acceleration cost for the Fritz Creek transmission line segment. Mr. Petrie stated that AEA expected to be able to make a recommendation to the Committee at its next meeting. Mr. Saxton requested that AEA forward its findings to him. Mr. Petrie confirmed that the information and resulting recommendations would be forwarded. Mr. Saxton asked if HEA had developed any alternative proposals in case AEA's efforts were unsuccessful. Reiterating HEA's position presented by Mr. Story at the January 14, 1993 BPMC meeting, Mr. Fair stated it (funding of the Fritz Creek line costs) was not HEA's problem. Mr. Fair noted that it was an obligation of the Project and that three financing options had been provided in the Transmission Agreement. Mr. Fair stated that HEA was not responsible to independently resolve the problem. D. Fish Water Bypass Update This item was previously discussed under Item 10, Review of Project Status. E. Section 31 Costs This item refers to funding of the Fritz Creek Segment previously discussed under Item 11 C. | In the temporary absence of the Committee Chairman and in the absence of the Vice Chairman, the Committee Secretary, Mr. Brent Petrie, served as Acting Chairman. dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 8 of 13 F. Agreements Discussion Review of List of Agreements Mr. Saxton stated that no comments had been received on the list of railbelt agreements distributed at the last Committee meeting. Mr. Petrie directed the utilities to submit revisions of the list to Tom Lovas. Master Agreement The Committee continued discussion of the master agreement concept started under Item 8., Agreements Subcommittee Report, Agreements Discussion. Mr. Saxton stated that his memorandum outlined the least intrusive way to accomplish transfer of the BPMC to the central role without throwing away the work already done on the agreements. Mr. Petrie reiterated his earlier request for more time to review the proposal, stating that AEA was not prepared to vote on the recommendation. AEA wanted, however, to pursue closure of the current agreements. Mr. Petrie stated that if the agreements could not be signed, AEA would need to develop an interim memorandum of understanding with HEA. Mr. Saxton stated, according to the Power Sales Agreement, the BPMC was given the authority to operate and maintain the Project. Mr. Saxton further stated, at question was the right of AEA to independently contract with the utilities. Mr. Saxton explained that his recommendation ensured that both the BPMC and AEA agreed, adding that neither had the right to act independently. Mr. Saxton clarified that the proposed master agreement would relate to both past and future agreements (excluding power sales, services and transmission agreements). Mr. Fair expressed concern over the potential delay of completing the Substation Maintenance Agreement. Mr. Fair noted that HEA had a temporary Transmission Maintenance Agreement but no Substation Maintenance Agreement. Mr. Sieczkowski and Mr. Fair agreed that, a temporary substation agreement was needed in the absence of a final agreement. Mr. Saxton contended that the creation of a master agreement would not produce any more substantial delays, citing the process had already taken about one year.2 Mr. Fair requested direction from the Committee on whether HEA should delay signing the current 2 Chairman Highers returned to the meeting. dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 9 of 13 agreements. Mr. Stahr recommended that the established process continue and all agreements be done the same way and all modified the same way. It was the understanding of Mssrs. Petrie and Fair that the members of Agreements Subcommittee were ready to approve the agreements for signature. Mr. Saxton disagreed, stating his understanding was that the members of the Subcommittee had not reached a consensus favorable to signing the present agreements. Mr. Sieczkowski stated that prior to Mr. Saxton's memorandum, all final comments had been incorporated and the agreements were recommended for signature and, in fact, were ready to sign. In response to Mr. Kelly, Mr. Saxton stated that the BPMC had the ability to contract directly, however, that it would result in disadvantages as well as advantages. Mr. Fair commented that he did not disagree with the proposed master agreement and even supported the concept. Noting that HEA now had SVC equipment installed at its substations, Mr. Fair added that any further delay finalizing the agreements created a practical problem for HEA. Mr. Saxton pointed out that, even though the agreements were ready to sign, the agreements and resulting budgets needed to be approved by the BPMC. Mr. Saxton stated that the development of a master agreement could be accomplished within two or three days and would not cause a significant delay. Mr. Kelly asked what would happen if the Energy Authority ceased to exist and how that would affect the Project under the proposed master agreement. Mr. Saxton explained that the agreements would be composed of three parties: the BPMC, the Energy Authority, and the individual utility, and to accommodate for loss of the Energy Authority would be more complex than the current proposed master agreement. Mr. Eberle suggested that the Committee execute the current pending agreements with a provision that the agreements be subject to the proposed master agreement. Mr. Kelly concurred, recommending that a clause be included in the pending agreements recognizing the authority of the master agreement and that the master agreement address the possible disappearance of the Energy Authority or a change in BPMC policy. Mr. Saxton proposed CEA, HEA and AEA sign a letter of agreement subjecting all utility operating agreements to a master agreement which would allow the current process to continue and pending agreements to be signed. Mssrs. Petrie, Fair and Highers dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 10 of 13 preferred that a clause be included in the pending agreements rather than a separate letter agreement. In accordance with the consensus of the Committee, Mr. Saxton will draft and distribute the clause to the utilities within a few days (Action 93-152). 12; NEW BUSINESS A. Revised Scheduling & Allocation Procedures Mr. Sieczkowski reported that the Operation & Dispatch Subcommittee recommended adoption of the revised Allocation & Scheduling Procedures. Mr. Kelly moved to approve the revised procedures. Seconded by Mr. Petrie, the revised Allocation & Scheduling Procedures were approved by unanimous role call vote after minor corrections were noted (Action 93-153). B. Operations Fund Contingency Resolution Mr. Saxton deferred discussion of this item to the next regular Committee meeting. Cc. Refinancing Bradley Lake Bonds Chairman Highers noted a memorandum regarding possible refinancing had been sent to the Committee by Mr. Petrie (Attachment 4). Mr. Petrie informed the Committee that AEA had received three bond refunding proposals, noting that two were later withdrawn. The remaining proposal, submitted by Nuveen, specifically addressed the portion of the bond funds allocable to AML&P and the City of Seward. Mr. Petrie noted that, due to anticipated changes in the tax laws, there was only a limited amount of time to complete the bond refunding transaction. Addressing the Committee, Mr. Seagraves explained that private activity bonds cannot be typically advance refunded, however under the current tax law, the portion of the bond funds attributable to municipal entities (i.e., AML&P and Seward) could be refunded. Referring to the Nuveen proposal, Mr. Seagraves noted a calculated savings of $3,000,000 (under present market conditions). Mr. Wohlforth relayed that treasury regulations amended last year allowed portions of bond fundings to be allocated for different purposes. dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 11 of 13 The regulations also state that governmental purpose (not private) bonds may be advance refunded. Therefore, those portions of the Bradley bond which qualified as government purpose were eligible for refunding. However, the regulation that allows advance refunding of the bond will end with new treasury regulations effective July 1, 1993. Mr. Wohlforth stated his firm was confident that the municipal portions of the Bradley bonds could be refunded under the current regulations and would survive any Treasury scrutiny. Mr. Kelly asked if the bond refunding could be insured against a later (retroactive) determination of tax liability. Mr. Wohlforth explained the bond insurer does not insure for legal risk (only economic). Mr. Wohlforth stated that any potential problem would become evident prior to the bond closing and expressed confidence in the tax analysis. Mr. Seagraves, citing the Daily Bond Buyer, stated that the only post closing, retroactive tax liability decisions occurred in obvious fraudulent cases. Mr. Klinkner stated that the tax analysis was innovative and within the law, however, the law was expected to change to disallow this type of transaction. Mr. Lovas questioned whether the analysis addressed the receipt of the savings produced by the refunding by private participants. It was Mr. Wohlforth's belief that the effect of the refunding would not influence any tax liability determination. Chairman Highers stated that investigations by CEA indicated a lack of consensus regarding the interpretation of current Treasury regulations. Mr. Seagraves noted that, as a general rule, a three percent savings guideline is applied when evaluating the cost effectiveness of refunding. It was clarified that all expenses related to the bond sale could be capitalized. In response to inquiry by Mr. Lovas, Mr. Seagraves indicated that a simultaneous series of bonds could be issued to provide for additional project costs (i.e., HEA acceleration costs for the Fritz Creek transmission line). Mr. Seagraves estimated that the preliminary bond sale efforts would cost approximately $15,000 and that the majority of the associated costs would not be incurred until the final decision is made just before the sale. It was noted that the utilities must first unanimously agree to the bond sale. Mr. Petrie informed the Committee that a letter of intent to issue bonds was required by the State sixty days in advance of the sale. Mr. Petrie anticipated minimal legal costs associated with the preliminary effort. dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 12 of 13 Chairman Highers expressed reservations committing to the bond sale. Mr. Stahr noted that what he estimated to be an annual saving of $25,000 might not provide sufficient incentive to take even a small risk. Mr. Petrie recommended that the Committee approve only the preliminary work and defer the final decision. Mr. Wohlforth noted that the next opportunity to refinance (after July 1, 1993) was not until 1999, when the bonds were callable. Mr. Seagraves cautioned that, as in any bond sale, market conditions were subject to change. Addressing tax liability, Mr. Wohlforth stated that if the proposed refunding received an unfavorable tax determination, it would not effect the previous bonds. Mr. Seagraves added that application of a retroactive tax was highly unlikely, however, if, in a hypothetical extreme case, it did occur, the bond holders would sue. Mr. Seagraves explained that the burden became the bond holders and that the utilities were only obligated to pay the debt service originally agreed to. Mr. Seagraves informed the Committee that the bonds had to close by July 1, 1993 and that preparation for the bond sale should by complete by June 1, 1993. If the notice of intent to issue bonds was given within the next few days, Mr. Seagraves stated the bond sale could take place as early as the first week of May, or any time favorable between then and July 1, 1993. Mr. Stahr stated that AML&P counsel was conservative and hesitant to proceed without an IRS opinion, however, AML&P would agree to proceed with limited preliminary steps. Mr. Kelly motioned that AEA ive n h f intent to i nd. The Ww: following rol vote: City of Seward Yes Matanuska Electric Association ___Yes Electri ies Y. Se eee eee 1: Blectric / ae Y. Iden V; Electric Association Y Munici igh Wi Abstai En Ai Yes (Action 93-154 Kelly m BPM: investigate the Bradley Lake bond a nding not to exceed $25,000. 3 3 Costs include AEA bond counsel and AML&P legal counsel. dburger\word\minutes\pmc\03-93a BPMC Meeting Minutes March 3, 1993 Page 13 of 13 The motion, seconded by Mr. Ritchey, passed by unanimous role call vote (Action 93-155). Chairman Highers requested that the utility managers be kept informed on the issue. 13. . COMMUNICATIONS A. Schedule Next Meeting March 30, 1993 9:00 a.m. via Teleconference The teleconference will address approval of the budget and the Bradley bond refunding. Mr. Burlingame noted that the Committee would need to meet in April to discuss release of the 90 megawatt interim operating restriction. Mr. Stahr motioned that th ion & Di h mmit rized to inc th ject output to 120 megaw r another determin: riate level onl nsensus of the Subcommittee. The motion nded by Mr. Kell was a Vi nanimous role vote (Action 93-1 Mr. Ritchey requested approval of attorney legal expenses for the month of January 1993. Mr. Kelly moved the Committee approve the expenses. Seconded by Mr. Ritchey, the expenses were approved by unanimous role call vote (Action 93-157). 14. ADJOURNMENT o further business before the Committee, the meeting adjourned at 1:05 p.m. ighers, an Brent N. Petrie, Secretary dburger\word\minutes\pmc\03-93 Revised Action Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES March 30, 1993 1. CALL TO ORDER Vice Chairman Story called the Bradley Lake Hydroelectric Project Management Committee to order at 9:05 a.m. via teleconference, to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Brent N. Petrie, Designated Representative Chugach Electric Association Eugene Bjornstad, Alternate Representative Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Paul Diener, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Tom Lovas, Chugach Electric Association Joe Griffith, Chugach Electric Association dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 2 of 5 Ronald a. Garzini, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Bruce Holmes, Alaska Energy Authority Denise Burger, Alaska Energy Authority PUBLIC COMMENT There were no public comments. 4. AGENDA COMMENTS No changes were made to the agenda. 5. OLD BUSINESS A. Bradley Bond Refunding Update A memorandum summarizing Bradley bond refunding costs was faxed to the Committee members (Attachment 1). Mr. Petrie reported AEA met with its financial advisor and bond counsel, the bond underwriters, Mr. Saxton and a utility representative, Mary Ann Pease of AML&P, via teleconference the preceding week. It was the consensus of the attorneys that the proposed Bradley bond refunding was "defendable before the IRS" and that it would be prudent to proceed with the refunding. Mr. Petrie stated some opinions still remain to be written and will be distributed upon completion. Mr. Petrie noted that, in today's market, the present value savings of the bond refunding proposal would be about 4%, or $1.3 million. Citing the minimal savings, Mr. Petrie stated AEA would not recommend the refunding proposal under the current market conditions. It was, however, the consensus of those participating in the bond refunding discussion that AEA and the purchasing utilities should continue preparations for the refunding with the intent of being ready to take advantage of optimal market conditions when they occur. Mr. Petrie informed the Committee that, of the $25,000 authorized by the Committee on March 3, 1993 to proceed with the initial refunding steps, $13,600 had been spent. Additional costs through May 1, 1993 are estimated to be $41,500. Trading, travel, underwriting, rating costs, etc. will be incurred after May 1. Mr. Saxton dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 3 of 5 clarified that the refunding costs could be capitalized. Mr. Petrie added that, if the bond sale was not completed, the costs would have to be absorbed by the Committee. Mr. Bjornstad inquired if AML&P had made any determination regarding the refunding. Mr. Stahr reported that the Municipality's bond counsel was reviewing the proposal made by Mr. Eric Wohlforth, AEA bond counsel. Mr. Stahr could not predict when the Municipality would make its decision and reminded the Committee that the Municipality's bond counsel was not likely to support the refunding without substantial savings (well over $100,000). Mr. Bjornstad asked what the minimal savings requirement was in order to make the refunding effort worth while. Mr. Petrie stated that, generally, a 3% savings was considered worth while, however, because of additional administrative costs associated with the refunding, a higher return of savings was needed. AEA would recommend proceeding with the bond refunding at a 5% savings. Mr. Petrie estimated a cost to AEA of $30,000/year to administer the refunding. Mr. Stahr requested a minimal savings of $130,000 as qualification to proceed with the refunding. Mr. Story recommended postponing a decision until AML&P finished evaluating the proposal. Mr. Petrie stated that, in order to proceed with the refunding, a decision was needed by the middle of April, otherwise closure could not be made by June 30. Mr. Petrie suggested that the utilities update their financial information (form to be provided by AEA) while waiting for AML&P's decision. The information would be needed for a document review meeting scheduled April 13, 1993. It was the consensus of the Committee that continuing with the refunding would require a minimum savings of $130,000 and the approval of AML&P, and that, in the meantime, the Committee members would update the necessary financial information (Action 93-158). In response to Mr. Stahr's question regarding the need for an engineer's report, Mr. Saxton stated that, according to Jim Seagraves, an engineer's report was not necessary. dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 4 of 5 6. NEW BUSINESS A. Approval of Bradley Lake FY94 O&M Budget Referring to the budget materials previously distributed by AEA (Attachment 2), Mr. Ritchey noted that the budget summary on page one included debt service for the year. Mr. Ritchey explained that the total included both the debt service and operations costs (subtotaled). Previously, only operations costs were presented to the BPMC. It was noted that the operations budget (pages two and three) was broken down by categories of the power sales agreement. Mr. Ritchey stated that, although the budget was presented in a different format, the contents of the budget remained very similar to previous budgets. Pages four, five and six provide a comparison of the budget proposed by AEA and the Budget Subcommittee's recommended budget. Mr. Ritchey pointed out that $417,244 for AEA administrative overhead costs were not included in the budget recommended by the Subcommittee. Mr. Ritchey explained that the Subcommittee's budget recommendation was made without the participation of AEA. Mr. Ritchey moved that the BPMC adopt the Subcommittee recommended total budget of $15,678,212! (which excludes AEA administrative overhead costs). The motion, seconded by Mr. Diener, fai following roll call vote:? ity of Sew: Ye: M Electric Association ¥ Chugach Electric Association _Yes Homer Electric Association Yes Iden V; Electric Association Ye. Municipal Light & Power__Yes En Authori No _ (Action 93-159 Mr. Garzini objected to the proposed budget, stating it would adversely affect the operation of the Project. Mr. Garzini informed the Committee that AEA would file the alternate | Corrected from $15,678,213. 2 As established by the Committee Bylaws, adoption of a budget requires approval of AEA and four utilities with a combined project share of 51%. dburger\word\minutes\pmc\03-93-2 BPMC Teleconference Meeting Minutes March 30, 1993 Page 5 of 5 budget, which includes AEA administrative overhead costs, with the trustee. Copies of the budget will be forwarded to the utilities. 7. COMMUNICATIONS A. Schedule Next Meeting Thursday, May 13, 1993 10:00 a.m. Chugach Electric Association 8. ADJOURNMENT The meeting adjourned at 9:45 a.m. David L. Highers, Chairman Ue ee er cI) Brent N. Petrie, Secretary dburger\word\minutes\pmc\03-93-2 Revised Action Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES April 16, 1993 1. CALL TO ORDER Vice Chairman Story called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. via teleconference, to conduct the business of the Committee per the agenda and the public notice. Chairman Highers directed the remainder of the meeting after telecommunications were reestablished. 2. ROLL CALL Alaska Energy Authority Ronald A. Garzini, Alternate Representative Chugach Electric Association David L. Highers, Designated Representative Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Absent Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Stanley E. Sieczkowski, Alaska Energy Authority dburger\word\minutes\pmc\04-93a BPMC Teleconference Meeting Minutes April 16, 1993 Page 2 of 3 Dick Emerman, Alaska Energy Authority Gloria Manni, Alaska Energy Authority Denise Burger, Alaska Energy Authority Eric Wohlforth, Wohlforth, Argetsinger, Johnson & Brecht Jim Seagraves, Nuveen Charles E. McKee 3. PUBLIC COMMENT harles E. McK Mr. McKee, public member, spoke to the Committee regarding currency and financing of Railbelt Intertie and Bradley Lake Bonds. Mr. McKee referred the Committee to his case on file at the Ombudsman's office and requested the Committee acknowledge his copyright to the original treasury seal. 4. AGENDA COMMENTS No change was made to the agenda. 5. OLD BUSINESS A. Bradley Bond Refunding Update Mr. Emerman noted there were two issues to consider regarding the proposed refunding: (1) the legality of the refunding, and (2) the ultimate savings to the utilities. Mr. Stahr advised the Committee that, because of unresolved legal issues, bond counsel of the Municipality of Anchorage recommended against Municipal Light & Power's participation in the bond refunding. Chairman Highers stated that Chugach Electric Association supported Municipal Light & Power's decision and polled the remaining utilities. Homer Electric Association, Golden Valley Electric Association and Matanuska Electric Association also supported the decision not to proceed with the refunding. The City of Seward was not present at the meeting. Chairman Highers invited additional comment. Hearing no comments, the Chairman declared the issue closed (Action 93-160). dburger\word\minutes\pmc\04-93a BPMC Teleconference Meeting Minutes April 16, 1993 Page 3 of 3 6. COMMUNICATIONS A. Schedule Next Meeting Thursday, May 13, 1993 10:00 a.m. Chugach Electric Association 7. ADJOURNMENT With no further business before the Committee, the meeting adjourned at 10:30 a.m. Attest: Ronald A. Garzini, Afternate Representative dburger\word\minutes\pmc\04-93 Revised Action Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES May 13, 1993 1, CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:15 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Ronald A. Garzini, Alternate Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Paul Diener, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Tom Stahr, Designated Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt David Burlingame, Chugach Electric Association Gene Bjornstad, Chugach Electric Association dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 2 of 9 John Cooley, Chugach Electric Association Tom Lovas, Chugach Electric Association Dan Bloomer, Chugach Electric Association Jim Hall, Matanuska Electric Association Moe Aslam, Municipal Light & Power Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Dave Calvert, City of Seward Dave Fair, Homer Electric Association David R. Eberle, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority 31 PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS No changes were made to the agenda at this time. 5. APPROVAL OF MINUTES - March 3, 1993 March 30, 1993 April 16, 1993 The minutes of the March 3, 1993 Bradley Project Management Committee meeting, March 30, 1993 Teleconference and April 16, 1993 Teleconference were approved as submitted. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met. 7 BUDGET SUBCOMMITTEE REPORT A. Bradley Lake Construction Cost Audit Update Mr. Ritchey reported final comments were being forwarded to Metzler & Associates. The final audit report is anticipated in the near future. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 3 of 9 Bradley Lake O&M Cost Audit Update Parisena Stromberg & Company has completed the 1992 O&M cost audit. Following initial review by the Budget Subcommittee, the report will be distributed to the Bradley PMC. 8. AGREEMENTS SUBCOMMITTEE REPORT Mr. Sieczkowski reported that AEA had received and was reviewing the proposed paragraph subjecting the agreements to a master operating agreement for inclusion in the remaining agreements. Additionally, AEA has received and is reviewing the proposed master operating agreement. Mr. Sieczkowski expected the Agreements Subcommittee to meet to discuss these issues in the near future. Noting the discussion at the March 3, 1993 BPMC meeting regarding the role of AEA and the BPMC (i.e., the ability of the BPMC to contract), Mr. Kelly asked if the current proposed agreements reflected the BPMC as the contracting authority. Mr. Saxton explained that he and Mr. Lovas had drafted a master operating agreement. The concept was discussed with AEA and its attorney, but AEA had not responded further. Mr. Saxton explained the emphasis had been directed toward completing the agreements in progress for a limited term, with the inclusion of a means to incorporate them under the anticipated master operating agreement. In view of the recent legislation affecting the Alaska Energy Authority, Mr. Garzini recommended the BPMC delay further action on the issue for at least two weeks. Mr. Garzini reiterated AEA's ultimate intention to transfer the operation and maintenance of Bradley Lake to the utilities, however added, some time was needed to fully study the legislation and to form a plan. Citing intentions to include the utilities in the planning, Mr. Garzini noted numerous options were possible (i.e., joint action agency, etc.). Mr. Garzini informed the Committee that the Energy Authority Board of Directors will dissolve 90 days after the legislation is signed. AEA and the responsibility for the operation and maintenance of the State's hydroelectric facilities will be transferred to the Alaska Industrial Development and Export Authority (AIDEA) Board. The rural programs and services provided by AEA will be transferred to the Department of Community and Regional Affairs (DCRA). Grants to build the approved interties will be issued by the Department of Administration (DOA). Noting DOA's inexperience, Mr. Garzini suggested AEA may be able to assist the utilities dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 4 of 9 10. with financing. Summarizing the effect of the legislation, Mr. Garzini stated that "AEA had been wounded badly, but was not dead." AEA can no longer acquire projects, however Mr. Garzini believed AEA could still finance projects. The change will have no effect on AEA's agreements. Expressing concern over the uncertain effects of the legislation, Mr. Kelly suggested that the utilities may have an opportunity for a role in shaping the outcome. Mr. Garzini added his concern over the integration of an exempt agency (AEA) with a classified agency (DCRA) and the potential loss of qualified personnel. It was noted that AEA's programs had been fully budgeted for the next fiscal year. Mr. Garzini expressed preference for the establishment of a utility joint action agency and recommended that the utilities pursue the possibility. In response to questions by Mr. Ritchey, Mr. Saxton explained the Energy Authority would continue to exist, however, some of its programs and loans will be transferred, and it no longer has the ability to construct and acquire projects. Mr. Kelly recommended that the Bradley PMC strongly assert its position to operate Bradley Lake. 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. REVIEW OF PROJECT STATUS Mr. Eberle reported work on the Static Var Compensator Systems was complete with the exception of a few punch list items. Replacement of the capacitors by ABB is anticipated by August or September. Mr. Eberle confirmed installation of the governor modifications was scheduled May 24, 1993 with testing to immediately follow. The soil remediation contract was awarded in early April for $660,000. The soil burner is on site and nearly finished processing the soil. Part two of the contract, crushing and spreading the aggregate on the runway, is expected to be completed by mid-June. Mr. Stahr asked if recovery of the spill cleanup cost was being dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 5 of 9 Li pursued. Mr. Eberle stated cost recovery was being investigated, however, was not expected. Mr. Eberle explained that the POL facility was constructed by the contractor for his own use under Phase I of the Bradley Project in 1986. At AEA's request, the contractor left the POL facility in an as is/where is condition for continued use, making it AEA's responsibility. The deterioration of the POL facility liner was not discovered until later during removal of the facility. Mr. Eberle informed the BPMC that a revised final project construction budget would be presented to the Energy Authority Board of Directors on May 20, 1993 for approval. The budget was increased by approximately $2,000,000 to cover unanticipated costs, including the fish water bypass work, utility power costs to support testing, the contaminated soil cleanup, and the proposed capitalization of the Fritz Creek Transmission Line. Mr. Burlingame advised the BPMC that ABB was in the process of reorganizing and was reassigning staff who had worked on the SVC Systems. Mr. Burlingame recommended that any studies required to add a second transmission line be requested before the engineers familiar with the project were no longer available. Mr. Eberle concurred, stating, however, that it was not a construction expense, but that the construction contract could be used to facilitate the studies. Mr. Eberle will discuss the scope of work with Dave Burlingame and obtain an estimate from ABB. Mr. Kelly recommended that a determination be made on whether the studies could be considered a project cost, otherwise, the studies could be funded as one of the first costs against the interties. OLD BUSINESS A. Spinning Reserve / Under Frequency Load Shedding Update Mr. Lovas reported the utilities expected to implement the new load shedding schedule adopted by the Intertie Operating Committee (IOC) by June 1, 1993. The Alaska Systems Coordinating Council Reliability Criteria Committee (ASCC-RCC) has developed a position statement. The RCC is also discussing proposed spin allocation methodologies, including generation and load relationships, performance factors on generating units, sales levels, and load weighting of units. The RCC has agreed upon four characteristics required for a workable allocation methodology: 1) incentives to improve unit reliability; 2) recognition of liability imposed by size of generating units; 3) recognition of a utility's need to use the reserve; and 4) application to present and future operating considerations. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 6 of 9 Bradley Scheduling vs. Spin Requirement Update Mr. Saxton noted he had received comments from Homer Electric Association and Chugach Electric Association in addition to earlier comments received from Municipal Light & Power. Golden Valley Electric Association, Matanuska Electric Association and Alaska Energy Authority will be forwarding comments to Mr. Saxton. Fritz Creek Segment Funding Mr. Eberle reported that AEA had been advised by Eric Wohlforth, AEA bond counsel, that the Fritz Creek costs could be funded as a Section 31 cost, upon approval of the purchasers (Attachment 1). Approval of the increased project budget by the AEA Board of Directors was also needed. Referring to Mr. Wohlforth's April 13, 1993 letter, Mr. Story clarified that HEA intended to share the cost with the other purchasers and did not expect to be exempted. Mr. Kelly moved that the $600,000 Fritz Creek transmission line segment acceleration cost be treated as a Section 31 cost, subject to AEA Board approval of the increased project construction budget, to be paid by all purchasing utilities according to percentage shares, including Homer Electric Association. The motion, seconded by Mr. Stahr, was approved by unanimous role call vote (Action 93-161). Fish Water Bypass Update Mr. Eberle reported the diving contractor began work on March 25, 1993. Due to adverse ice and weather conditions, the work took longer than expected. The contractor was able to clear sufficient material out of the way to install a vertical trash rack over each intake, preventing subsequent obstructions. However, because of the difficult working conditions, the contractor was not able to remove the material from the intake area without incurring significant additional expense. Mr. Eberle explained the remaining submerged material could be removed this summer using a crane, if the reservoir level drops low enough (which is not expected), or the material could be removed by divers from a barge. A cost of $50,000 is anticipated to remove the material by crane or $150,000 if divers and barge are required. Hither case, however, was estimated to be more economical than continuing the operation under the conditions encountered in March. Mr. Eberle reported the intakes are presently clear and operating at required output. With the right combination of adverse events, the intakes could, again, become obstructed, however, it is not expected to be an immediate problem. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 7 of 9 Mr. Eberle noted the remaining underwater work could wait until next summer, in anticipation of a reservoir level low enough to utilize a crane. AEA will be soliciting bid prices for the remaining underwater work. Mr. Eberle explained the source of the debris was rock excavated from the gate shaft and used as fill for access to the upstream face of the spillway. Considerable loose rock remained above the water line in the vicinity of the intake channel which also needed to be cleared. It was estimated that this would cost approximately $50,000. The total cost to resolve the problem and prevent future problems could reach $400,000. Mr. Eberle stated that it was AEA's position that, considering the nature and source of the rock debris, the cost of the fish water bypass repair work should be considered a construction cost, rather than an O&M cost. Mr. Kelly expressed concern regarding the availability of funds to cover the additional construction expenses (i.e., POL facility and fish water bypass repairs). Mr. Eberle stated the proposed revised project budget included these additional costs. The necessary funds and an additional construction contingency would be committed from the excess project construction funds by the AEA Board of Directors before the funds were reclaimed by the State. Mr. Saxton cautioned that some of the "extra" money may actually be bond money which would need to be returned to the investors, explaining that too many bonds may have been issued relative to the construction cost. Mr. Eberle distributed a summary of the financing costs and a reconciliation of project costs to the Committee (Attachments 2 and 3). The construction cost of $314,500,000 noted on the top line of Reconciliation of Project Costs (Estimate as of May 12, 1993) represents the revised project construction budget (assuming approval by the AEA Board of Directors) and includes the POL facility and fish water bypass repair costs, additional utility SVC testing costs, Fritz Creek transmission line segment costs (as Section 31) and approximately $650,000 - $700,000 in unallocated contingency. Based upon the final construction budget of $314,5000,000, $12,082,500 would be returned to the State general fund, with virtually all bond proceeds having been expended. The Budget Subcommittee will review the final project construction budget and provide any comments to AEA prior to consideration by the AEA Board of Directors on May 20, 1993. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 8 of 9 E. BPMC Control Over O&M Decisions and Agreements - Master Agreement Mr. Saxton noted Mr. Garzini's recommendation to postpone action related to the master agreement until plans for the operation and maintenance of Bradley Lake could be developed. Mr. Saxton requested to be kept informed of the direction AEA was taking regarding the master agreement. 12. NEW BUSINESS A. Operations Budget Contingency Fund Resolution Discussion of this item was deferred to the next Committee meeting. B. Diamond Ridge Relaying Costs Mr. Eberle noted that a memorandum had been distributed in the BPMC meeting packet outlining the Diamond Ridge relaying cost. Mr. Eberle explained that the cost had been approved by the Technical Coordinating Subcommittee (TCS) but, due to an oversight, had not been formally presented to the BPMC for approval. Funds for the cost were included in the original project construction budget. Mr. Story motioned that $107,115.45 be approved as a construction cost for Diamond Ridge relaying. Seconded by Mr. Kelly, the motion passed by unanimous roll call vote (Action 93-162). C. Approval of Legal Expenses (added to the agenda) Mr. Ritchey noted the BPMC had incurred $45,803.76 legal expenses for February, March and April 1993. Mr. Ritchey moved that the $45,803.76 legal expenses be approved. The motion, seconded by Mr. Story, was approved by unanimous roll call vote (Action 93-163). 13. COMMUNICATIONS Mr. Sieczkowski noted that since Bob Hufman's accident, John Sorrel of Homer Electric Association was assisting with the Bradley Lake labor negotiations. Mr. Sieczkowski advised the Committee that progress was slow. dburger\word\minutes\pmc\05-93 BPMC Meeting Minutes May 13, 1993 Page 9 of 9 A. Schedule Next Meeting Thursday, June 17, 1993 10:00 a.m. Chugach Electric Association 14. ADJOURNMENT The meeting gdjourned at 11:30 a.m. Attest: dburger\word\minutes\pmc\05-93 Revised Action Nos. - September 7, 1993 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE APPROVED MEETING MINUTES June 17, 1993 1. CALL TO ORDER Chairman Highers called the Bradley Lake Hydroelectric Project Management Committee to order at 10:10 a.m. in the Training Room at Chugach Electric Association in Anchorage, Alaska to conduct the business of the Committee per the agenda and the public notice. 2. ROLL CALL Alaska Energy Authority Brent N. Petrie, Designated Representative Chugach Electric Association David L. Highers, Designated Representative and Chairman Golden Valley Electric Association Mike Kelly, Designated Representative City of Seward Dave Calvert, Designated Representative Homer Electric Association Norm Story, Designated Representative Matanuska Electric Association Ken Ritchey, Designated Representative Municipal Light & Power Hank Nikkels, Alternate Representative Others Present: Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Bob Hufman, Alaska Electric Generation & Transmission Cooperative David Burlingame, Chugach Electric Association John Cooley, Chugach Electric Association dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 2 of 9 Jim Borden, Chugach Electric Association Tom Lovas, Chugach Electric Association Dan Bloomer, Chugach Electric Association Jim Hall, Matanuska Electric Association Mary Ann Pease, Municipal Light & Power Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Dave Fair, Homer Electric Association Ron Garzini, Alaska Energy Authority David R. Eberle, Alaska Energy Authority Eric Marchegiani, Alaska Energy Authority Stanley E. Sieczkowski, Alaska Energy Authority Denise Burger, Alaska Energy Authority 3. PUBLIC COMMENT There being no public comment, the meeting continued to the next agenda item. 4. AGENDA COMMENTS The following items were added to the agenda: 12.B. Approval of FY94 Payment Obligation 12.C. Approval of Other Payments 5. APPROVAL OF MINUTES - May 13, 1993 The minutes of the May 13, 1993 Bradley Project Management Committee meeting were approved as submitted. 6. TECHNICAL COORDINATING SUBCOMMITTEE REPORT Mr. Burlingame reported that the TCS had not met. The TCS expects to meet in July to review the results of the SVC system tests and to define the long term operating guidelines of the Project. “EL BUDGET SUBCOMMITTEE REPORT A. Bradley Lake Construction Cost Audit Update Mr. Ritchey expected the final report to be distributed in one week. The Budget Subcommittee will meet in two weeks to discuss the report. Plans dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 3 of 9 are being made for a representative of Metzler & Associates to present the report to the BPMC. Bradley Lake O&M Cost Audit Update The FY92 O&M cost audit is being reviewed and the Subcommittee is awaiting clarification of some questions. Other Budget Subcommittee Issues: Mr. Ritchey noted that an error had been discovered in the approved FY94 O&M budget. Cost for the USGS stream gage program was included in the narrative, however, did not appear as a line item. Other budget line items will be adjusted to provide for the cost of the program ($110,000). The changes will not effect the budget total. Mr. Ritchey informed the Committee that the Budget Subcommittee was preparing a resolution formalizing the authority of the Subcommittee to make certain changes to the O&M budget. The resolution will be ready for consideration at the next BPMC meeting. Other items being discussed by the Subcommittee are the HEA Fritz Creek line costs and the CEA wheeling issue. Chairman Highers asked what impact the recent legislation affecting AEA would have on the Bradley O&M budget. Mr. Petrie recommended that the Committee wait until December or January, when new operation arrangements were expected to be in place, before altering the budget or utility payment schedule. Mr. Petrie added AEA was incurring unexpected costs related to preparation for the transfer of operation responsibilities and the on-site labor negotiations. Referring to a memorandum issued by AEA, Mr. Petrie stated AEA was requesting guidance from the Committee on the selection of an operation and maintenance contractor for Bradley Lake (Attachment 1). Mr. Petrie informed the Committee that a meeting of Four-Dam Pool, Bradley Lake and other utilities was scheduled for July 7, 1993 at AEA to discuss the transfer of tasks handled by AEA to the utilities. Mr. Kelly expressed concern over the continuing availability of Energy Authority staff to oversee the transition and recommended that the BPMC assert its authority as the contracting power. Acknowledging there had been several previous discussions on the BPMC authority to contract, Mr. Petrie stated AEA was responsible for contracting Project operation and maintenance, however, dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 4 of 9 the Power Sales Agreement gave the BPMC the authority to approve the contract. 8. AGREEMENTS SUBCOMMITTEE REPORT 10. Mr. Sieczkowski reported the Agreements Subcommittee had not met since the last BPMC meeting. OPERATION & DISPATCH SUBCOMMITTEE REPORT Mr. Marchegiani reported the O&D Subcommittee met June 3, 1993. Under the direction of the Subcommittee, AEA has contracted SWEC to perform a two phase hydraulic transient stability analysis at a reservoir elevation below 1080". April and May reservoir inflows were reported to be higher than anticipated. It is speculated that the increased inflow is early snow melt due to the unusually warm Spring weather. If the increased flow continues, a water reallocation is expected about July 1. Removal of loose rock above the water line at the fish water bypass intake channel is complete. Mr. Marchegiani informed the Committee that material still remained below the water line. AEA is investigating methods and costs to remove the remaining material. Mr. Eberle stated that a recent sonar scan indicated debris around one of the trash racks installed during the winter, however unless a low reservoir level and high winds occur, the remaining debris is not expected to shift or cause additional problems. At a reservoir level low enough to potentially cause a problem, equipment can be brought in to remove the debris and remedy the problem. Maintenance will probably be delayed until next year or when a low enough reservoir occurs to facilitate the use of heavy equipment. Mr. Marchegiani reported that the Woodward governor modification and testing had been completed. Mr. Burlingame added the governor modification performed well, doubling the governor response rate. REVIEW OF PROJECT STATUS Mr. Eberle informed the Committee that the new breaker for Soldotna was expected to be delivered by mid-August. ABB has delayed the capacitor replacement to September or October and has proposed a reduced number of capacitors for replacement. AEA will either require an extended warranty or insist upon full replacement of the capacitors. In response to concerns raised by CEA, AEA is reviewing SVC protection controls with ABB, which may result in some modifications. AEA has requested information from ABB on the cost of additional dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 5 of 9 11. system studies. Mr. Eberle noted the AEA Board of Directors approved the final Project budget of $314,500,000 at its May meeting. Documents are being prepared to release the surplus appropriation ($12.1 million) back to the State. OLD BUSINESS A. Spinning Reserve / Under Frequency Load Shedding Update Mr. Lovas reported institution of the under frequency load shedding schedule was delayed until the end of June. Revisions proposed by GVEA are currently under review. The relays are in place and ready to set. The Alaska Systems Coordinating Council Reliability Criteria Committee (ASCC - RCC) is reviewing final comments on the spinning reserve proposals. The Committee expects to finalize a recommendation in the near future. Bradley Scheduling vs. Spin Requirement Update Mr. Saxton distributed a summary chart of the spinning reserve issue comments submitted from the utilities (Attachment 2). Noting the summary included several issues other than Bradley spin, Mr. Kelly recommended that the focus be narrowed to Bradley spin. Mr. Kelly pointed out that several of the issues were presently being addressed by the ASCC. Mr. Lovas stated the ASCC-RCC could handle the system response and technical questions, however, not the related legal issues (i.e., responsibility for spinning reserve). Mr. Saxton will work with the RCC (specifically, Chairman Tom Lovas) to delineate the technical and legal issues. Mr. Lovas and Mr. Saxton will report back to the BPMC (Action 93-164). BPMC Control Over O&M Decisions and Agreements - Master Agreement Mr. Saxton reported that no further activity had occurred on the master operating agreement due to questions created by the legislated changes at AEA, however, the State Attorney General's office is currently reviewing the draft master operating agreement. Mr. Saxton stated that he and Mr. Sieczkowski were in accord on the basic substance of the agreement and the BPMC contractual relationship in the agreement. Mr. Sieczkowski informed the Committee that he would be meeting with the Assistant Attorney General this afternoon to discuss final comments on the draft agreement. Mr. Kelly expressed concern over the handling dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 6 of 9 of contracting an operator for Bradley Lake - specifically, if the master operating agreement provided contracting authority to the BPMC. Mr. Saxton responded that the issue was taken care of by the proposed master operating agreement. Mr. Saxton requested direction from the BPMC on proceeding with the development of the master operating agreement, recognizing that the Committee may prefer to wait until other issues related to the transition of AEA are resolved. Referring to AEA's letter requesting direction from the BPMC on the selection of an operator for Bradley Lake, Mr. Garzini stated AEA would, most likely, be responsive to the BPMC's choice. Expressing the need to provide Alaska Industrial Development and Export Authority (AIDEA) information and a schedule on the transfer of project O&M responsibilities to the utilities, Mr. Garzini asked the utilities to submit suggestions. Mr. Garzini added that, more than ever, it was necessary for the utilities to work together in order to accomplish all that needed to be done. Mr. Garzini reiterated that AEA would be responsive to the BPMC. Mr. Saxton advocated completion of the master operating agreement, stating that completion of the remaining agreements had been put on hold while the master operating agreement concept was developed. Mr. Saxton explained that completing the master operating agreement would enable completion of the remaining agreements. Additionally, only minor changes to the already completed agreements were needed in order to fit into the framework of the master operating agreement. Mr. Garzini recommended that the BPMC select an operator. Mr. Garzini stated that approval was expected by the Attorney General's office for a sole source contract, adding that prompt action was needed by the utilities. Mr. Saxton stated that remaining agreement issues, including the master operating agreement could be resolved in a one or two day meeting of the Agreements Subcommittee. Mr. Story stated HEA would have an O&M proposal ready to submit to AEA and the Bradley PMC within two weeks. Noting that the introduction of the proposed master operating agreement had delayed the completion of the three remaining HEA agreements, and recognizing the need to expedite the agreements process, Mr. Story moved that the PMC authorize Ron 0 ieczkowski mplete the master operating a: ment. The motion nded by Mr. Ritchey, wa: approved by unanimous roll call vote (Action 93-165). dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 7 of 9 Mr. Story moved that the BPMC direct AEA to work solely with Homer Electric Association to complete its proposal for the onsite operation and maintenance of the Bradley Lake Hydroelectric Project, in accordance with existing project agreements.'! Mr. Kelly asked if the issue of sole source procurement of the Bradley Lake operation and maintenance contract had been resolved. Mr. Garzini stated, because it was not a typical procurement situation (i.e. the BPMC would actually be paying for the contract), AEA could likely participate in a contract selected by the BPMC. Mr. Garzini added that a formal legal opinion on the procurement issue was requested by AEA. Related to the contracting issue, Mr. Saxton stated that, according to the Power Sales Agreement, the BPMC has the authority to chose the project operator and AEA has the authority to veto the choice. Continuing, Mr. Saxton stated it was his opinion that both AEA and the BPMC had authority to contract and to veto the other's selection. Mr. Saxton added that the language of the proposed master operating agreement allows the State to contract with the operator and requires the approval of the BPMC. Mr. Kelly recommended that the BPMC consider HEA's forthcoming proposal while AEA obtained a legal opinion on State procurement requirements. Mr. Garzini stated that, because of the State's responsibility to the FERC license and bond requirements, AEA should be the contracting authority and that the contract be subject to the approval of the BPMC. Mr. Garzini requested that, if the BPMC develops a contract with an operator, the FERC license, the bond holders and State's interests be protected. Mr. Kelly strongly preferred the BPMC as the contractor, acknowledging the need to maintain AEA's interest. Mr. Garzini later offered an additional alternative, stating that AEA could contract with the BPMC, which in turn, would contract with the project operator. Mr. Story recognized AEA's obligations and its right to veto a contract as well as its technical ability to assist with the development of an operation and maintenance contract proposal. It is HEA's intent to work with AEA to bring a two part proposal to the BPMC which would identify the required services (Part 1) and the technical contract and budget (Part 2). Mr. Story explained that HEA was in the process of working with AEA and had not set up a structure to negotiate a contract with the BPMC. The issue of which entity, the BPMC or ABA, would ultimately be the contractor did not affect the development of the operation and maintenance proposal. Mr. Story clarified the intent of ' Mr. Story's original motion did not contain the word solely. Mr. Story later added the word to clarify the intent of the motion. dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 8 of 9 his motion was for the BPMC to direct AEA to work solely with HEA to complete HEA's contract proposal for the operation and maintenance of Bradley Lake. The propriety of HEA's request for exclusive assistance from AEA was questioned. In an effort to expedite the process of completing HEA's operation and maintenance proposal, Mr. Kelly recommended the motion nded as follows: The BPMC requests AEA assist HEA with the preparation of an operation and maintenance proposal for presentation at the next Bradley PMC meeting. Both Mr. Story and Mr. Ritchey accepted the amended motion. Prior to the vote, Chairman Highers clarified that the motion was not intended to be interpreted as exclusive. Mr. Garzini stated that AEA was available to any BPMC member who requested help. The amended motion was approved by unanimous roll call vote (Action 93-166). 12. NEW BUSINESS A. Operations Budget Contingency Fund Resolution Mr. Petrie reported that the Budget Subcommittee was working on a resolution delegating authority to the Budget Subcommittee and expected to have it ready by the next BPMC meeting. B. Approval of FY94 Payment Obligation The FY94 utility payment schedule and cash flow was distributed to the Committee. Mr. Ritchey noted that the BPMC had previously acted upon the FY94 budget, however had not approved the FY94 utility payment schedule (Attachment 3). Mr. Ritchey advised the Committee that the fund balance (Cash Flow, line 8) may actually be higher than shown, in which case the utility payment amount could be reduced in the future. AEA is reviewing the figures. Mr. Ritchey moved to approve FY94 utili ment schedule. Seconded by Mr. Kelly, the motion was approved by unanimous roll call vote ( Action 93-167). Cc. Approval of Other Payments Mr. Kelly mov rove payment ximatel Bill Bennett for legal assistance associated with the Bradley Lake labor negotiations and $6,215.90 to Ron Saxton for legal counsel. Seconded Mr. Ritch he motion w Vi nani 1 Vv (Action 93-168). dburger\word\minutes\pmc\06-93a BPMC Meeting Minutes June 17, 1993 Page 9 of 9 13. © COMMUNICATIONS A. Schedule Next Meeting Thursday, July 22, 1993 10:00 a.m. Chugach Electric Association 14. ADJOURNMENT The meeting gdjourned at 12:30 p.m. is Bit IE (Sis— Brent N. Petrie, Secretary dburger\word\minutes\pmc\06-93