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Home My WebLink AboutBPMC Meeting Minutes 2005 - 2012Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes January 19, 2012 March 16, 2012 July 17, 2012 (Elect Officers) August 31, 2012 September 26, 2012 December 18, 2012 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING SPECIAL MEETING Alaska Energy Authority, Anchorage, Alaska December 18, 2012 a. CALL TO ORDER Chair Evans called the special meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 2:30 p.m. 2. COMMITTEE MEMBERS ROLL CALL Cory Borgeson Golden Valley Electric Association (GVEA) Bryan Carey Alaska Energy Authority (AEA) Harvey Ambrose Homer Electric Association (HEA) Brad Evans Chugach Electric Association (CEA) Joe Griffith Matanuska Electric Association (phone) (MEA) Richard Miller Anchorage Municipal Light & Power (phone) (AML&P) 3. STAFF/PUBLIC ROLL CALL Henri Dale (GVEA); Brian Hickey (CEA); Gary Dixon, Swalling & Associates; Kelli Veech, Teri Webster, and Sandie Hayes (AEA); Participating by phone: Burke Wick and Mike Cunningham, (CEA); Brian Bjorkquist,(Department of Law); Kirk Gibson (McDowell Rackner & Gibson PC) 4. PUBLIC COMMENT There were no public comments. 55 AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was unanimously approved. 6. APPROVAL OF PRIOR MEETING MINUTES — September 26, 2012 The September 26, 2012 meeting minutes were unanimously approved as amended. Ts NEW BUSINESS 7A. Approve FY12 Audit Report and Refund FY12 Budget Surplus to Utilities Mr. Dixon gave an overview of the Swalling & Associates 2012 Audit report. He said KPMG audits AEA funds for the Bradley Lake Project and Swalling & Associates uses their financial statements and looks at a more detailed level. They look to make sure that the policies and procedures are BPMC Minutes 12/18/2012 Page 1 of 2 being applied consistently since that’s the premise for having comparative information. They did not propose any adjustments. Mr. Dixon explained how the refund to the utilities is broken down. The Renewal & Contingency Fund (R&C) is capped at $5M. Funds over that becomes the benchmark for refunds and in 2012 the fund it was over by $773,897.73. Chair Evans asked if the amount of $773,897.73 that is going to be allocated to the R&C fund includes the recovery of the $670,000 to the Battle Creek Project. Ms. Veech responded that the $670,000 is not included in this figure. Chair Evans asked if the reserve fund can be increased from $5M. Ms. Veech responded that it has been raised in the past for a particular project but must be approved by the trustee. Chair Evans inquired what the drivers were behind the surplus amount. Mr. Dixon stated that besides the surplus of $794,000 from the utility contributions and the surplus of $585,000 from operating and maintenance expenses, the rest was a composite. One example was the State renewable energy grant spent $22,000 vs. the $500,000 budgeted. Mr. Griffith moved that the Bradley Lake Project Management Committee (BPMC), accept the fiscal year 2012 Audit Report and approve a total refund of $1,568,635.67 to the utilities. This is broken down as $794,737.94 to Operating & Maintenance, and $773,897.73 to Renewal & Contingency Fund. Motion was seconded by Mr. Ambrose. ROLL CALL VOTE: The motion passed unanimously. 8. Adjournment The meeting adjourned at 3:35 p.m. BPMC Minutes 12/18/2012 Page 2 of 2 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Aspen Room) Anchorage, Alaska September 26, 2012 MINUTES CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 1:00 p.m., Tuesday, September 26, 2012, from the AEA Aspen Conference Room, Anchorage, Alaska to conduct the business of the Committee per agenda and public notice. ROLL CALL Cory Borgeson Golden Valley Electric Association (phone) Bryan Carey Alaska Energy Authority Harvey Ambrose Homer Electric Association Brad Evans Chugach Electric Association Don Zoerb Matanuska Electric Association (phone) Rick Miller Anchorage Municipal Light & Power (phone) PUBLIC ROLL CALL Burke Wick (CEA); Harvey Ambrose and Larry Jorgensen (HEA); Henri Dale (GVEA); Brian Bjorkquist (AGO); May Clark, Kim Lomen, Teri Webster, and Kelli Veech (AEA); Participating by phone: Mike Cunningham (CEA); Brad Janorschke (HEA); Don Zoerb (MEA); Ron Woolf, (GVEA); Kirk Gibson, McDowell Rackner & Gibson PC. Mr. Borgeson stated Henri Dale would vote on behalf of GVEA for this meeting. PUBLIC COMMENT There were no public comments. AGENDA COMMENTS/MOTION FOR APPROVAL Chair Evans requested Agenda Item 7B be added, “HEA proposal to discuss access and other energy matters on the Kenai Peninsula relative to Bradley Lake.” The agenda was unanimously approved as amended. APPROVAL OF MEETING MINUTES - August 31, 2012 BPMC Minutes 9/26/2012 Page 1 of 4 The August 31, 2012 meeting minutes were unanimously approved as presented. Mr. Jim Posey (AML&P) joined the meeting by teleconference. 7. NEW BUSINESS 7A. Approve FY13 Budget Revision for R&C Funds for Battle Creek Mr. Dale moved that the Bradley Lake Project Management Committee (BPMC), as recommended by the Finance Committee, approve the Alaska Energy Authority to proceed with final design, construction costs, exhibits for final amendment application, project bid documents and continuation of USGS water gauging for the Battle Creek Diversion project up to $670,000 to be paid from the FY2013 R&C budget. Seconded by Mr. Posey. The motion was amended as follows: Move that the Bradley Lake Project Management Committee approve the Alaska Energy Authority to proceed with final design, construction costs, exhibits for final amendment, application, project bid documents and continuation of USGS water gauging for the Battle Creek Diversion project as Optional Project Work, in accordance with the opinion of Bond Counsel, in any amount of up to $670,000 to be paid from the Renewal and Contingency Reserve Fund, as recommended by the Finance Committee. Move further that any payments made from the Renewal and Contingency Reserve Fund under this motion be repaid by the Project Participants based on each Participant’s percentage in equal installments over a four-year period, as recommended by the Finance Committee. Move further that it is the BPMC’s intention to work with the Alaska Energy Authority to secure designation for the Optional Project Work amounts as “utility matching funds.” The amended motion was accepted by Mr. Dale. Mr. Ambrose wanted to confirm that the $670K was enough right now. Mr. Carey said yes, the field work is complete and on budget. A roll call was taken: City of Seward Absent Matanuska Electric Association Yes Chugach Electric Association Yes Homer Electric Association Yes Golden Valley Electric Association Yes Municipal Light & Power Yes Alaska Energy Authority Yes The motion passed unanimously. ROL NR SAS ARS RT FEB RS MONS AE REE SE OR RT ERT A NR EN BPMC Minutes 9/26/2012 Page 2 of 4 7B. Homer Electric Association proposal to co-mingle unused capacity energy that could be generated at Nikiski, not needed by HEA, into the Bradley Pooled Energy and exported for certain conditions on guarantees of Bradley access over the Quartz Creek to the Soldotna line. Mr. Janorschke said he emailed the proposal document to the Railbelt managers for their review. He said HEA is still trying to iron out the details. He then turned the discussion over to Mr. Ambrose who explained the HEA draft proposal is meant to help solve the issue relative to the Soldotna-Quartz Creek line segment by the end of 2013. He said there are no provisions as to how the line will be utilized by the parties. It could be treated like a Bradley asset and be leased to BPMC for a possible five-year term, with the cost prorated based upon each participant's share in Bradley, including HEA, for the operation and maintenance of the line. A key factor is AEA’s veto power with respect to the annual budget for its asset; HEA seeks the same veto power for its asset. The proposal would have the Bradley Participants (excluding HEA) purchase Surplus Energy from the Nikiski Power Plant. Surplus Energy from the Nikiski plant would be defined as the difference between a base loaded Nikiski Power Plant, non-duct fired, and the HEA system load. If HEA system load exceeds Nikiski base load there would be no surplus energy; but if lower than that amount it will be surplus energy. In any case, Surplus energy would be limited to 18 MWs. How the surplus energy would be used should be decided by the remaining five participants, excluding HEA, and could be based on existing participation in Bradley or reconfigured based upon the respective system sizes. Payment for the Surplus Energy would be an equivalent amount of water inventory transferred from the participants’ Bradley account to HEA’s Bradley account. Addenda and conditions would be attached which are not yet developed. A final condition would be similar to Chugach’s Bradley services agreement which is tied to Chugach’s Bradley dispatch agreement, HEA would want this lease tied to the O&M agreement they have for Bradley. HEA does not expect an answer today, only BPWMC review. He said this has the potential to avoid tariffs and RCA actions, and requested BPMC review in a timely manner. Chair Evans said there’s an assignment out for a combination of legal and technical review on contractual issues related to Bradley access, so this matter will also be assigned to that group. It is hoped the review can be expedited and a solid position established. Mr. Zoerb requested the proposal emailed to him, as well as Mr. Griffith. Chair Evans said the counter parties should meet to review the proposal and come to a go/no go conclusion by Thanksgiving. Mr. Ambrose agreed. 8A. Operator’s Report Mr. Jorgensen said the lake level as of September 16 was 1181.4 feet and from Sept 16 through Sept. 23 rose 23 feet and continues to rise. The lake is spilling over the dam due to a large amount of rain fall. 1800 cfs went over the spillway last night. At the last meeting we reported trying to operate the governor in six needle control, which has been restored without the unit oscillating. When the tie to Anchorage was opened up, there were problems in Divider 1 Mode of operation in both units. When the units were in this mode they were not responding to control signals. We worked with VA Tech and Emerson to resolve the issue. When VA Tech supplied the Modbus interface they provided a set of parameters which included a Divider Bias. Emerson set up a control for this with the assumption it was similar to a valve limiter. Further investigation found that VA Tech should never have put the Bias into the Modbus interface and that the Divider Bias was to be set at a constant value of 10% whereas the DCS was driving it to 100% after the unit came on-line. VA Tech has sent a new controls load with the bias removed BPMC Minutes 9/26/2012 Page 3 of 4 from the Modus link and Emerson has provided instructions to remove their logic affecting the bias. These modifications will be made as soon as it is scheduled with Dispatch. Chair Evans said it sounded reasonable and the operator’s will work the fix as soon as possible, due to more expected storms. 8B. Update on Battle Creek Diversion Project Bryan Carey said that the field work on Battle Creek was completed on time September 15. Archeological survey was done; nine borings were completed. The draft license amendment will be submitted in October upon completion of two exhibits, with a 90-day agency comment period before submission to FERC. We will request draft license conditions from the agencies at that time and we will meet with them to discuss these. The objective is to submit the Final License application with agency concurrence on the conditions. The Final License application will be submitted in the spring. Pre-site visits are planned for contractors in the summer or fall. Bids can be taken through the winter of 2013, with a contractor selected by spring 2014 and construction started by the summer. The draft license will be routed to the BPMC for their review prior to submission to FERC. 9. Next Meeting Date Depending on the progress of the tasks assigned, the next meeting will be at the call of the Chair, but prior to December, 2012. 10. Adjournment The meeting adjourned at 1:43 p.m. B ¥: PK Bradle Attest: Bryan Carey Alaska Energy Authority, Sécretary BPMC Minutes 9/26/2012 Page 4 of 4 Bradley Lake Project Management Committee Meeting Tuesday, December 18, 2012 Agenda Item: 7A MOTION: Move that the Bradley Lake Project Management Committee accept the fiscal year 2012 Audit Report and approve a total refund of $1,568,635.67 to the utilities. This is broken down as: $794,737.94 Operating & Maintenance $773,897.73 Renewable & Contingency fund Move: Joe Gr fy Second: Hac Voy Arlbrose. aye KK Bradley Evans, Attest: 2 Bryan atey Alaska Energy Authority, Secretary BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Aspen Room) Anchorage, Alaska August 31, 2012 MINUTES 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:00 a.m., Friday, August 31, 2012, from the AEA Aspen Conference Room, Anchorage, Alaska to conduct the business of the Committee per agenda and public notice. 2. ROLL CALL Roll was called by Kim Lomen. The following members were present: John Foutz City of Seward (late arrival) Joe Griffith Matanuska Electric Association Brad Evans Chugach Electric Association Brad Janorschke Homer Electric Association (teleconference) Cory Borgesen Golden Valley Electric Association Jim Posey Anchorage Municipal Light & Power (late arrival) Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL May Clark, Kim Lomen and Kelli Veech (AEA); Brian Bjorkquist (AGO); Burke Wick, Brian Hickey and (Mike Cunningham phone)(CEA); Harvey Ambrose, Bob Day and Larry Jorgensen (HEA); Henri Dale (GVEA); Jeff Warner (ML&P); Don Zoerb, MEA (phone). 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was unanimously approved. 6. Approval of Meeting Minutes — July 17, 2012 The July 17, 2012 meeting minutes were approved as amended. na a RL ER NE A A A RR Page 1 of 4 BPMC Final Meeting Minutes 8/31/2012 7. New Business 7A. Selection of Auditor Mr. Cunningham said at the direction of the PMC, the finance Committee issued an RFP for auditor services which was advertised in local newspapers. Two responses were received and the scores were close. The finance committee worked hard on the process. MOTION: Mr. Janorschke moved that the Bradley Lake Project Management Committee (BPMC) award the three-year audit services on the Bradley Lake Hydroelectric Project (the project) operating and revenue funds for a three-year term engagement with an option to renew for two additional years beginning with the fiscal year ending June 30, 2013 to Swalling and Associates. Seconded by Mr. Griffith. A roll call vote was taken: City of Seward: Abstain Matanuska Electric Association: Yes Anchorage Municipal Light and Power: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Alaska Energy Authority: Yes The motion passed unanimously. 8. COMMITTEE REPORTS/COMMENTS A. Operator’s Report Mr. Jorgensen reported the lake level as of August 29, 2012 was 1153.8 feet. Annual gate testing was completed in July. The diversion tunnel piping was inspected and will be recoated. There have been several issues with the interfacing of the new control system with existing equipment both at the plant and with remote dispatch. Currently both units can run from dispatch, but only up to 38 MW’s each. They can be run manually from the site to full load. In remote control, as soon the transition is made to six needle control there are stability issues, and we are working to resolve them. The SVC at Soldotna was down causing Bradley to be limited to only one unit at a time due to voltage limitations. More work will be done on the thyristors later this summer. The SVC was returned to service on August 28 allowing both units to be run. R&M Consultants have been on site performing work for the Diversion Project. Chair Evans inquired as to where the governing documents are stating a plant can’t be run when one SVC is down; after the SVC’s were put in, more problems occurred that Page 2 of 4 BPMC Final Meeting Minutes 8/31/2012 never did before and we need to investigate why that is. High voltage does not mean unstable. Mr. Hickey said the limitations are listed in a table in the original Bradley risk contingency documents. PTI did the study at that time. Mr. Day pointed out that operations were easier in the 1990s. Chair Evans agreed. CEA performed the repair work on the Soldotna SVC. Mr. Griffith asked what the problem was now with the thyristors and would it be a persistent issue. Chair Evans said he didn’t know if there was one, but thought it might be the control card. Mr. Griffith said that task should be in the ARCTEC proposal. Chair Evans said we should task the O&D to see what we want to do and let the engineers and operators come back with a recommendation. HEA accepted the assignment. Mr. Day added that an inspection of Nuka Glacier area was performed and there are no significant changes in the terrain. Not much water has flowed toward Bradley Lake as historically, due to a colder summer. B. Update on the Battle Creek Diversion Project Mr. Carey said R&M began drilling August 20 and seismic work is complete. They will drill for 10 more days, with a slight route change in part of the canal which will reduce the amount of rock to be blasted. Engineering design is complete to the 65% level. A cost estimate incorporating the geotechnical information should be done this fall. The draft license amendment will be submitted in the fall of 2012. There will be a 90-day agency comment period open until late December. PM&E negotiations with agencies will occur January-March with final amendment approval expected in March 2013. FERC scoping document will be received by April 2013 for a 60-day comment period. The Environmental Assessment will be done by FERC and will have a 60-day response period, EA comments and scoping document terms and conditions are due in the Summer of 2013. Construction could occur in 2014 upon completion of the amendment, permitting, and bidding. Funding was discussed. Short-term funding is needed to finish design. Construction funds must be received prior to bidding. $670K funding will be needed which includes the current balance of $430K, adding in final design and bid documents, gaging, environmental and licensing work and a 25% contingency. Mr. Griffith stressed the urgency to determine where the funding source as soon as possible, perhaps from the Renewable & Contingency Fund (R&C). Mr. Bjorkquist said this could possibly be an R&C funded project as a capital improvement option if the BPMC approves. A bond resolution allows the R&C Fund to apply for capital improvements defined as “to include optional project work that is for the repair, renewal, replacement, improvement betterment, additions or expansions which are capital improvements”. This project fits some of those characterizations. There are also provisions in the Power Sales Agreement for the BPMC to determine whether to do optional project work and to determine how funding for that work should be. Mr. Bjorkquist recommended bond counsel sign off on it. Page 3 of 4 BPMC Final Meeting Minutes 8/31/2012 Mr. Griffith moved that the BPMC move forward and request funding from the Renewable & Contingency Fund. Seconded by Mr. Posey. The motion was amended by Chair Evans that the BPMC move forward and request the funds from the R&C Fund following bond counsel approval. The amendment was accepted by Mr. Griffith. Mr. Bergeson said review of the R&C Fund could be an agenda item at the next meeting to allow us to see what funding is actually available in the R&C Fund, there is no rush to make a decision at this time. Mr. Bjorkquist said we also need to investigate impacts and requirements to replenish the fund. Chair Evans agreed. He said this should be an assignment for the finance committee to investigate. Mr. Griffith withdrew the motion and Chair Evans assigned the task to the budget committee and the counsel for the state. Another option suggested was possibly getting allocation from ARCTEC. Chair Evans agreed. Mr. Griffith said the ARCTEC projects are not done yet, so we don’t know what funding is available. Chair Evans said the BPMC needs to discuss long-term funding, i.e., grant funding through a similar model as Bradley Lake where the state will finance it and we pay back 50% of the debt service. Mr. Posey agreed and said it had been discussed previously. Mr. Dale asked if all the fish studies were done as it was a bad salmon year. Mr. Carey said no fish studies were done this year. Since Chinook have not been previously found and very little stray sockeye are present, Coho are the main ADFG concern. The diversion will occur at 1700’ and flow will still be present in lower Battle Creek. Six square miles of channel still flow in the winter and ADFG so far has agreed with the work. Mr. Day said the Bradley model doesn't fit the economics of this project, liking it to a second payback mortgage for Bradley Lake where the money goes into the Railbelt energy fund. It’s not a gift and the state does not contribute 50%, utilities continue to payback. Mr. Bjorkquist said the payments continue until the utilities terminate the PSA. B. Next Meeting Date Depending on the progress of the tasks assigned, the next meeting will be at the call of the Chair, but prior to October 1, 2012. 9. Adjournment The meeting adjourned at 10:00 a.m. Kode Foe Brad Evans, Chai ATTEST: Alaska Energy Authority, Secretary Page 4 of 4 BPMC Final Meeting Minutes 8/31/2012 = ALASKA... = ENERGY AUTHORITY 813 West Northern Lights Boulevard Anchorage, Alaska 99503 T 907.771.3000 Toll Free (Alaska Only) 888.300.8534 F 907.771.3044 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING (via electronic media at the Alaska Energy Authority's Aspen Room) Anchorage, Alaska July 17, 2012 MINUTES 1. CALL TO ORDER Chair Brad Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:00 on Tuesday, July 17, 2012, from the AEA Aspen Conference Room, Anchorage, Alaska to conduct the business of the Committee per agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: John Foutz City of Seward Joe Griffith Matanuska Electric Association Brad Evans Chugach Electric Association Harvey Ambrose Homer Electric Association Henri Dale Golden Valley Electric Richard Miller Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL May Clark AEA Kim Lomen AEA Brian Hickey CEA Burke Wick CEA Bob Day HEA Rick Miller ML&P Jeff Warner ML&P Jim Strandberg AEA Lee Thibert CEA Sara Fisher-Goad AEA Larry Jorgensen HEA (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was approved as amended. 6. Approval of Meeting Minutes — March 16, 2012 The March 16, 2012 meeting minutes were approved as amended. Page 1 of 4 BPMC Minutes 7/17/2012 7. New Business 7A. Review of the Agreements Mr. Griffith said that there are a series of new issues in the Railbelt, such as determining how to support the Susitna-Watana project and the Unconstrained Bradley Lake project. One factor is the O&M services agreement and who runs Bradley Lake. Mr. Griffith suggested that Mr. Gibson review the agreements. The Agreements, which were signed in 1980, may need changes so the committee can fully understand the conditions the project is currently operating under when changes occur at end of 2014. There have been many changes in 20 years so the language of the agreement must be reviewed. A task force must consider the contractual good faith and fair dealing concept; the prudent utility practice; and the obligations and duties of all the agencies involved. Chair Evans said that if there were no more comments he moved to close the discussion and that he would create a task force by Chair edict. He would also consult the BMPC attorney regarding the creation of an ad hoc committee or write a resolution to review the original agreements. 7B. Update on the Battle Creek Diversion Project Mr. Carey said there had been a workshop held with agencies on the environment flows. In early May, Alaska Department of Fish and Game and U.S. Fish and Wildlife reviewed cross sectional transacts of Battle Creek at a low flow rate. Fish and Game has performed two in-stream flow reviews and came to a similar conclusion. Chairman Evans asked if the different agencies reviewing the resources in terms of water flow and salmon spawning would have to consolidate their finds. Mr. Carey said that once the draft conditions are completed by Fish and Game and federal agencies, there will be an opportunity to negotiate conditions for the final license application. After the negotiations are complete, the final license application will be submitted. Mr. Carey said that once the license amendment is received in summer of 2013, the project can go to bid and a site visit will be conducted for the bidders. The successful contractor will have the winter months to gather their equipment and have it mobilized for construction in the 2014 calendar year. However, there will be additional funding needed to cover the increased cost of helicopter drilling. AEA is waiting on additional information from the environmental licensing consultant, but the amount needed will be between $250,000 and $500,000. Originally the project started out with $6 M and $3 M was used to fund the Battle Creek design and licensing. Both the RE fund and BPMC contributed $500,000 bringing the total budget to $4 M, of which roughly $3.4 M has been obligated. There is currently $600,000 of unobligated funding. The cost of additional engineering and licensing to bid is greater than the unobligated amount. Of the $3.4 M between $1.5 M and $2 M has been used for helicopter drilling. The costs for geotechnical work and engineering design amount to about 80% of the original budget. Ms. Fisher-Goad said relocation of existing funds may be the quickest way to obtain the funds needed for 2012. But Mr. Gibson must be consulted to find out the current status of the grants and determine the most logical solution. 7C. Election of Officers MOTION: Mr. Griffith moved for election of Committee Officers with current slate. Mr. Posey seconded the motion. Page 2 of 4 BPMC Minutes 7/17/2012 A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 8. Committee Reports/Comments 8A. Operator’s Report —Larry Jorgensen Mr. Jorgenson said the Lake level as of July 13 was 1,126.3 feet. Mr. Posey asked if annual gate testing was being done to determine if there was any erosion of pipe in the project. Mr. Jorgenson said the lower region is reinforced steel to guard against erosion. Trash collection is done in the penstock at the end of the year to determine if any erosion has occurred and there has not been any substantial trash in the past. There is a large rock trap by the turbines that any eroding concrete would have to jump and that is not likely to happen. There were no other meeting comments. Meeting summary/assignments: e Creation of a task force to review the Agreements. Update language in the agreements and determine the duties and obligations of all participating agencies. e Creation of a special purpose committee to work with AEA to cover upcoming funding shortfall. 8B. Next Meeting Date Based on issues raised in the July 17, 2012 meeting, the next meeting should be held by mid-September. 9. Adjournment The meeting adjourned at 10:00 a.m. py o Econ, Brad Evans, Chair eres Lo g Alaska Efergy Authority, Secrefdry Page 3 of 4 BPMC Minutes 7/17/2012 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Aspen Room) Anchorage, Alaska March 16, 2012 — 10:00 a.m. MINUTES 1. CALLTO ORDER Chair Brad Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Friday, March 16, 2012, from the AEA Aspen Conference Room, Anchorage, Alaska to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: John Foutz City of Seward (joined by teleconference while meeting in progress) Joe Griffith Matanuska Electric Association Brad Evans Chugach Electric Association Brad Janorschke Homer Electric Association Henri Dale Golden Valley Electric Association Richard Miller Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Burke Wick, CEA Bob Day, HEA Larry Jorgensen, HEA Kirk Gibson, McDowell, Rackner & Gibson PC (teleconference) Kelli Veech, AEA Yolanda Inga, AEA May Clark, AEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS / MOTION FOR APPROVAL The agenda was approved as presented. Ft Page lof 5 BPMC Minutes 3/16/2012 6. APPROVAL OF MEETING MINUTES — January 19, 2012 The January 19, 2012 meeting minutes were unanimously approved as amended. 7. NEW BUSINESS 7A. Amend FY 12 Capital Budget MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee amend the FY12 capital budget (Schedule A-1) to replace 160 ton Bridge Crane controls as recommended by the O&D and Budget Subcommittees for $271,000. Postpone other FY12 capital projects (Accusonic Flow Meter Monitoring $10,000, Fish Water Valve Actuators $20,000, and Utility Vehicles $11,000) and the R&C project for the Fire Alarm System of $250,000 to the FY13 capital budget. The total FY12 capital budget and R&C project deferrals to FY13 is $291,000. Seconded by Mr. Janorschke. Mr. Miller said the budget committee met and approved this item. The crane issues need to be corrected. In response to a question from Mr. Griffith, Mr. Day said the crane is old and the hooks don’t work correctly, and besides the safety issue, the crane will be needed for upcoming outages. A roll call vote was taken: City of Seward: Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 7B. Approve FY 13 Operating & Capital Budget MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee approve the fiscal year 2013 Operating and Capital budget as presented. Seconded by Mr. Janorschke. Mr. Miller said the budget committee met and approved the proposed budget and asked HEA to prioritize Schedule A-1 capital projects not included in the R&C fund. Two large increases made this year are R&C Fund retainment and operations and maintenance. The large items being deferred are the fire alarm system and mechanical relays. Mr. Day confirmed a couple of trips occurred recently due to aging of the mechanical relays. Discussion followed regarding personnel wages and contracts. (Mr. Foutz, City of Seward and Mr. Gibson, McDowell, Rackner & Gibson PC joined the meeting at 10:16 a.m. by teleconference) ea et I A A NN NENA AEA A AR Page 2 of 5 BPMC Minutes 3/16/2012 In response to a question by Chair, Mr. Day said there are six housing units available now in staging for Battle Creek work. Mr. Carey said helicopter work will begin this summer with geotechnical work beginning in July or August. He said this will be discussed with R&M and Homer Electric and he will discuss project scheduling and report back to the BPMC. Housing needs were discussed. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 7C. Renew Swalling & Associates Contract MOTION: Mr. Janorschke moved that the Bradley Lake Project Management Committee approve a one year renewal of the contract with Swalling and Associates for audit services for the year ending June 30, 2012 and also approve a 2.8% audit fee increase based on the 2011 CPI index for Anchorage per the 2008 contract. Seconded by Mr. Griffith. Mr. Miller said Swalling charges $14,000/year for the audit and next year a new RFP will go out for audit services. Swalling has done a good job doing extra work as needed and auditors are getting hard to find. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 7D. Update on Battle Creek Diversion Mr. Carey said a consultation meeting slide show presentation was held with the Agencies on February 14, 2012. They were requested to provide us with Draft Licensing Conditions by March 20, 2012, including required environmental flows. The AEA consultants presentation demonstrated that when glacial water is removed from Upper Battle Creek the water temperature in Lower Battle ———————————————————————————— Page 3 of 5 BPMC Minutes 3/16/2012 Creek increased to the optimum temperature zone for Coho salmon as determined by the Cooper Lake studies. We should receive R&M’s proposal next week for geotechnical work next summer, which will include a substantial amount of drilling work showing locations of the canal and road. We should receive a complete cost & design estimate by December; and per the FERC schedule, receive the License Amendment next year. This summer mountain goat, bear and eagles nest surveys will be performed. Regarding annual project costs, he said Western Financial Group, as instructed by Valorie Walker, estimated annual project costs using 20 and 25 year term bonds and $20 M and $25 M financing estimates. (The printed estimates were distributed to the meeting attendees). The current debt service averages 3.77% with bonds issued in July 2013. Using energy at approximately 39,000 MWh, (assuming the diversion from May through November at 36,000 to 42,000 ac-ft and with the assumption that one MWh is equal to one acre feet of water), the debt service annual cost would be $33/MWh to $48/MWh, depending on the term and amount of funds used. It’s assumed AIDEA or AEA will perform the bonding. Financing may entail amending the Power Sales Agreement (PSA) and waiting on amending the PSA for better financing information and cost estimates. The assumption for the financing was using bonds issued July 1, 2013, there’s time until we get the Amendment next spring, also considering whether construction will occur next year. We are looking at going out to bid in 2013 with two years of construction occurring during summer months. We will blast the tracks the first year then blast deeper the second year and perform more site work. Mr. Griffith stressed the importance of beginning work on strategy and on the agreements as soon as possible. Bonding, financing, timing and possible amendment to the existing PSA was discussed. Mr. Carey said there’s a section in the PSA that refers to required or optional work, and it was decided this work would be under the required section, which would be a prudent project for the utilities. 8. Committee Reports / Comments A. Operator’s Report — Larry Jorgensen Mr. Jorgensen said included in the written report provided are generation statistics for both units. The lake level as of March 8 was 1131.1 feet, six feet higher than last year. Annual switchman training for all operators was given by Kevin Dunham of CEA. PO was issued for DCS/Vibration system to Emerson. Cascade Maintenance Management System in service with all PMs and equipment information transferred from old Mapcon system. Completed draft budget for review. Made repairs to loader, snow plow and incinerator. SCADA RTU 15 has had frequent failures. Unit #2 tripped on February 29 with no lockouts and conflicting indications. Replaced 86X relay and a Genius block, both of which had failed. There were no other meeting comments. Page 4 of 5 BPMC Minutes 3/16/2012 Meeting summary/assignments: e The Budget Finance Committee to work on RFP for audit services, form their working group, coordinate with appropriate AEA personnel to work out a finance plan for Battle Creek and report back to the BPMC. e Mr. Gibson will begin to think about modifying the existing PSA. B. Next Meeting Date The next meeting will be at the call of the Chair. 9. Adjournment The meeting adjourned at 10:50 a.m. BY: oo Bra ns, Chair ATTEST: £ laska Energy ority, Secretary Page 5 of 5 BPMC Minutes 3/16/2012 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Aspen Room) Anchorage, Alaska January 19, 2012 — 10:00 a.m. MINUTES 1. CALLTO ORDER Chair Brad Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, January 19, 2012, from the AEA Aspen Conference Room, Anchorage, Alaska to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: John Foutz City of Seward (teleconference) Joe Griffith Matanuska Electric Association Brad Evans Chugach Electric Association Harvey Ambrose Homer Electric Association Henri Dale Golden Valley Electric Association Jim Posey Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Burke Wick, CEA Arthur Miller, CEA Bob Day, HEA Larry Jorgensen, HEA Rick Miller, AML&P Jeff Warner, AML&P Don Zoerb, MEA (teleconference) Kirk Gibson, McDowell, Rackner & Gibson PC (teleconference) Landis Erwin, UA Local 367 Gary Dixon, Swalling & Associates Brian Bjorkquist, Department of Law Kelli Veech, AEA May Clark, AEA 4. PUBLIC COMMENT There were no public comments. ——E—{&=_{=££2—={[]_———_{[{EK“_—iE—————— Page 1 of 4 BPMC Minutes 1/19/2012 5. AGENDA COMMENTS / MOTION FOR APPROVAL The agenda was approved as amended. Mr. Ambrose added Item 7E “Bradley Lake loss compensation.” 6. APPROVAL OF MEETING MINUTES — JUNE 8, 2011 and JULY 25, 2011 The June 8, 2011 and July 25, 2011 meeting minutes were unanimously approved. 7. NEW BUSINESS 7A. Approval of FY11 Audit Report and Refund Fy11 Budget Surplus to Utilities MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee approve the FY 11 Audit Report and Refund FY11 budget surplus of $1, 183,102.03 to the utilities. Seconded by Mr. Griffith. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 7B. Adopt Proposed Wheeling Rate Change MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee adopt the proposed wheeling rate change as described in the memorandum and work papers for bills effective January, 2012. Seconded by Mr. Ambrose. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. age of4 BPMC Minutes 1/19/2012 7C. Update on FERC Land Use Fees Mr. Gibson said the Group (that represents 35-43 percent of all hydroelectric land for dams in the US) filed Reply Comment to FERC on its federal land use fees proposed rule. He provided copies of the Group comment as well as a copy of comments to FERC from the Alaska delegation, Senators Murkowski and Begich — and from Governor Parnell. He said the BPMC has saved well over $100,000 in land use fees not paid to FERC while the matter was pending. The FERC final ruling should be issued by August 2012. Chairman Evans said if the ruling is successful, a thank you letter would be in order to the Alaska delegation on behalf of AEA. 7D. Update on Battle Creek Diversion Mr. Carey said we recently received R&M Consultants’ Preliminary Design Report and 65% level drawings. The diversion dam is 20’ tall and water could be diverted from about May 15 to the end of October to capture 92% of the water. ADF&G’s main concern is the winter flows, which will not be affected. Estimated total cost of project is about $43.5 M. Chair Evans asked Mr. Carey to work up an annual estimated cost for the project. Mr. Carey said the estimated interest rate is 4% and based on gaging data from USGS, HDR estimates 36,000 acre-feet or 36,000-42,000 MWh. The fisheries report will be out and sent to the agencies tomorrow, they have already attended one presentation on it; we have received no negative comments. Following issuance of the fisheries report and as part of the FERC licensing process, an agency meeting will be held February 14, 2012 at HDR’s offices and utility personnel are invited to attend. A helicopter recon will be conducted this summer to identify bear den, goat and eagles nest surveys. A geotechnical investigation (rock drilling) will also be conducted this summer, as well as gathering final terrestrial information. State and federal agencies are working well together on the project. No dwellings will be affected by the project. We should be able to file for the License Amendment in January 2013 and hopefully receive it by mid-2013. 7E. Bradley Lake Loss Compensation - HEA Mr. Day said the contract between Bradley Lake and HEA provides for compensation to HEA for losses of Bradley transmission in the HEA system beginning at project onset. They have issues with the existing methodology; therefore, Electric Power Systems has begun a study which should be available in two weeks. He requested O&D Committee review the study and make recommendations to the BPMC. 8. Committee Reports / Comments A. Operator’s Report — Bob Day Mr. Day introduced Larry Jorgensen, Bradley’s new Power Plant Superintendent, who took questions from the written report provided to the BPMC. Chair Evans asked how the unit responded to the numerous recent intertie trips. Mr. Jorgensen said the new exciters in the power system stabilizers were installed last fall and were also tuned. The unit responded well with no issues and was able to pick up and drop load as needed. Tuning also showed improved unit response. Mr. Day said Bradley’s response to a Beluga trip in November was excellent. The November disaster declaration did not affect the project, plenty of snow will be good for the water pack next year. Mr. Day said Page 3 of BPMC Minutes 1/19/2012 rebuilding the transmission line between Anchorage and Quartz Creek will cause numerous extended outages, but all parties are working to coordinate that. Mr. Day referred to the Operator’s Report and the problems with the powerhouse overhead bridge crane. Bringing the crane controls into compliance may cost about $400,000, bids are currently being received and they are working with the budget subcommittee on this. Chair Evans suggested budget subcommittee work with the O&D Committee also. The Operator’s Report is part of these minutes. B. Next Meeting Date The FY 2013 Budget must be adopted before the end of March, 2012; therefore, a tentative meeting date of March 16, 2012 will be scheduled. 9. Adjournment The meeting adjourned at 10:43 a.m. ATTEST: BPMC Minutes 1/19/2012 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes June 8, 2011 July 25, 2011 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES SPECIAL MEETING (via teleconference @ Alaska Energy Authority Board Room) Anchorage, Alaska July 25, 2011 @ 10:00 a.m. fi; CALL TO ORDER Chair Evans called the special meeting of the Bradley Lake Hydroelectric Project Management Committee (BPMC) to order at 10:05 a.m. on Monday, July 25, 2011, from the Alaska Energy Authority (AEA) Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Brad Evans Chugach Electric Association (teleconference) Harvey Ambrose Homer Electric Association (teleconference) Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power (teleconference) Joe Griffith Matanuska Electric Association (teleconference) Linda MacMillan Alaska Energy Authority 3. PUBLIC ROLL CALL May Clark, AEA Karin St. Clair, AEA Brenda Applegate, AEA Henri Dale, GVEA (teleconference) Doug Hall, ML&P (teleconference Rick Miller, ML&P (teleconference) Kirk Gibson, McDowell Rackner & Gibson (teleconference) Landis Erwin (United Association Local 367) 4, PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. The agenda was approved as presented. Page 1 of 2 BPMC Special Meeting July 25, 2011 6. A. Approval of AEA Issuance of Battle Creek Renewable Energy grant to BPMC Chair Evans stated last year Chugach Electric Association (CEA) applied for the grant on behalf of the BPMC. This motion formalizes that since CEA did that on behalf of the BPMC, the grantee should be the BPMC. When asked if Ms. Fisher-Goad was aware of this, Ms. MacMillan affirmed yes. She added this action was necessary to support AEA’s revised program submission to State of Alaska Office of Management and Budget to request the change in grantee from CEA to the BPMC. Motion: Mr. Posey moved that the BPMC approve AEA’s issuance of the Battle Creek Renewable Energy grant to the BPMC rather than CEA, applicant for the grant on behalf of the BPMC; and direct AEA to obtain a revised program from the State of Alaska Office of Management and Budget to approve this change in grantee in the legislation authorizing funding for the grant. Seconded by Mr. Ambrose. A roll call vote was taken: City of Seward Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7. ADJOURNMENT Meeting adjourned at 10:11 a.m. oy: obese, SS Evans, Chair ATTEST: laska Energy Authofity, Secretary Page 2 of 2 BPMC Special Meeting July 25, 2011 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska June 8, 2011 - 10:00 a.m. A; CALL TO ORDER Chair Brad Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Wednesday, June 8, 2011, from the AEA Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2; ROLL CALL Roll was called by May Clark. The following members were present: John Foutz City of Seward Joe Griffith Matanuska Electric Association (teleconference) Brad Evans Chugach Electric Association Bob Day Homer Electric Association Henri Dale Golden Valley Electric Association Jim Posey Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, CEA (teleconference) Burke Wick, CEA Rick Miller, AML&P Doug Hall, AML&P Brian Bjorkquist, Department of Law Kirk Gibson, McDowell Rackner & Gibson PC (teleconference) Linda MacMillan, AEA Karin St. Clair, AEA May Clark, AEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS / MOTION FOR APPROVAL The agenda was approved with no objections. 6. APPROVAL OF MEETING MINUTES - March 14, 2011 The March 14, 2011 meeting minutes were unanimously approved. Page 1 of 4 BPMC Minutes 6/8/2011 7. NEW BUSINESS 7A. Authorize refund of $360,000 representing estimated FY11 Operating Budget Surplus The operating surplus is composed of higher interest income and lower FERC land use fees than budgeted, offset by anticipated cost of Dave’s Creek cooling system repair. MOTION: Mr. Day moved that the Bradley Lake Project Management Committee approve the attached amended FY11 Budget and refund the $360,000 reduction in budget to the utilities by June 30, 2011. Seconded by Mr. Carey. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion passed unanimously. 7B. Update on Bradley Property Insurance Renewal AEA received the proposal for the FY12 Bradley property and equipment insurance from ARECA. The expiring premium for this year is $511,000, renewing premium for next year is $473,000 under the same policy as before. Earthquake coverage is $50M with Zurich being the secondary insurer. The BPMC had no questions. 7C. Update on Battle Creek Diversion Project AEA met with resource agencies on April 21, 2011, and they appear positive to the Battle Creek diversion and have few fish or terrestrial issues. We are moving forward. The BPMC has a $500K Renewable Energy Fund (REF) matching grant request in and we await the Governor's actions on the bill. This year we will be performing our second year of fish surveys. A fish survey was done at low water in May and there were no fish found in the beaver pond following the winter. A terrestrial survey will be requested by FERC which will consist of a helicopter search for eagle nests. Bear and moose are the main animals in the area. We are tentatively planning a public meeting in Homer at the end of July. In regards to fisheries, if all water is diverted at the 2,000 foot level, the difference in the water level at tidewater will be .1 or .2 feet; so the resource agencies do not believe this to be controversial. Environmental flow will be minimal if we have to install a valve. R&M will perform geological survey work this summer; rock types are already known from original permitting, to be followed up this winter with conceptual design which would be brought to 65% completion. We will begin the formal preliminary permit process with FERC, which we should receive in 2013 or early 2014. Mr. Dale asked what the $15M legislative request for the diversion was based on. Mr. Carey said that number was requested by ARCTEC. Chair Evans added that amount was based on 50% match funding of the latest construction estimate. Mr. Carey said when the conceptual 65% design is Page 2 of 4 BPMC Minutes 6/8/2011 completed later this year, another cost estimate will be written. For the FY ending in June we have spent $300,000 on this project. We are also expecting $500,000 from the REF grant which will be matched by the BPMC. We will verify this summer the ditch approach versus tunnel, An update on terrestrial and aquatic surveys will be provided at the end of summer, but no cost estimate updates will be done. R&M prepared a document in March that describes the ditch work alignment and percentages of slope and drainages, which will be provided to the BPMC. 7D. Updated on FERC Land Use Fees Mr. Gibson provided an update on FERC Notice of Inquiry (“NOI”) regarding land use fees. The members of the Group that the BPMC joined to submit comments in the FERC proceeding regarding FERC’s development of a new methodology for determining hydro project land use fees now represents about one-third of the total federal acreage that will be subject to those fees. The Group’s counsel has produced a comprehensive land use fee calculation methodology proposal which was submitted to FERC this month. It’s unknown how long the process will take. The primary thrust of the Group’s proposal points out that hydro project land is almost always not suitable for agriculture or urban type uses, which makes FERC’s use of unadjusted agriculture land values or urban land values inappropriate. A winter photo of the project taken at a recent FERC inspection make a strong case for Bradley Lake's limited potential land uses. The proposal also points out that lands surrounding a hydro project generally can be, and usually are, used for exactly the same purposes that existed before the project was built, and that the public is only excluded from a small portion of the project lands for safety or security reasons. Finding a suitable land-value index for FERC to use as a base for its fee calculations has proved to be difficult. The proposal recommends taking the National Agriculture Statistical Service (NASS) estimates of land values for each project's lands and reducing them by 40 percent would be a fair valuation of methodology and can be periodically updated. Previously, FERC methodology used Anchorage land values for Bradley Lake lands. The final piece of the proposal is to adopt a single “encumbrance factor” of 30 percent for transmission and non-transmission land uses. The encumbrance factor is designed to reflect the reduced potential usage of transmission rights of way. The Bradley Lake Project's share of the Group's fees will total about $4,200, of which $1,460 has already been invoiced. Counsel will provide the BPMC with an accurate estimate of what the costs are likely to be under the new calculation, which will probably be the same or better as before. Counsel's analysis of the Group’s proposal and the results it yields shows that it provides reasonable and fair results for the Bradley Lake Project. 8. COMMITTEE REPORTS/COMMENTS 8A. Operator’s Report —- Bob Day Water inflow projection is poor, down about 15-20% from normal water year. Exciter equipment and design was finalized with Basler and delivery is expected late July. Unit maintenance outages have been rescheduled to October due to delays in new excitation equipment delivery. The final draft “Dam Safety & Surveillance Monitoring Plan” was completed by R&M and Hatch and was sent to AEA for review, then on to FERC for review. ROW clearing work from Bradley Lake to Bradley Junction was completed. CEA replaced metering recorders. Gate hydraulic system nitrogen accumulators in the power tunnel gate house were charged. New gas monitoring systems was installed in the PT gate house. Installed public boat dock and repaired hinge on the dock. HDR continues work at Battle Creek. Penstock testing was done on June 6. Page 3 of 4 BPMC Minutes 6/8/2011 Diversion inspections are scheduled for June 13. USGS gage testing will be done in early June. FERC Part 12 inspection will be conducted in mid-July. HEA personnel are moving around and one has gone to work on the slope. We offer our condolences to the family of Ashley Udelhoven, a former HEA employee and colleague. Senator Murkowski may be visiting Bradley Lake in the near future. O&D annual site visit will be held on June 9 and the utilities have an open invitation to visit the project. 8B. Comments Chair Evans suggested discussion on a formal R&R (Repairs & Replacement) Fund, perhaps 10 percent of the original project construction cost, which would contain more funds than our current R&C fund. This subject should be revisited every decade or so in terms of how the underlying conditions change around the necessity for an R&R fund. The BPMC needs to have a discussion to decide or not to do this and should think about this before the next meeting. Mr. Posey suggested that perhaps the yearly overage refunds could be put into this fund. Ms. MacMillan said she thought the original bond covenant had a provision for an R&R fund that the utilities in the past had decided not to fund. She will look into the bond paperwork and report back to the Committee. 9. NEXT MEETING DATE The next meeting will be at the call of the Chair. 10. ADJOURNMENT The meeting adjourned at 10:39 a.m. BY: XC Botenh, rad Evans, Chair ATTEST: { Alaska Energy ority, Secretary Page 4 of 4 BPMC Minutes 6/8/2011 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes Feb 4, 2010 March 30, 2010 June 3, 2010 Sept 14, 2010 December 29, 2010 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska December 29, 2010 - 10:00 a.m. A, CALL TO ORDER Secretary Bryan Carey called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:35 a.m. on Wednesday, December 29, 2010, from the AEA Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Joe Griffith Matanuska Electric Association (teleconference) Burke Wick Chugach Electric Association Harvey Ambrose Homer Electric Association (teleconference) Henri Dale Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, CEA (teleconference) Don Zoerb, MEA (teleconference) Bob Day, HEA (teleconference) Brian Newton, GVEA (teleconference) Rick Miller, AML&P Bob Price, AML&P Doug Hall, AML&P Mark Johnson, CEA (teleconference) Gary Dixon, Swalling & Associates Brian Bjorkquist, Department of Law Kirk Gibson, McDowell Rackner & Gibson pc (teleconference) Linda MacMillan, AEA May Clark, AEA Mr. Carey stated that in the absence of both the BPMC Chairman and Vice Chairman, the membership would now elect a Chairman Pro-Tem to conduct the meeting and the vote shall be in the majority. MOTION: Mr. Griffith moved to elect Bryan Carey as Chairman Pro-Tem for this meeting. Seconded by Mr. Wick. Page 1 of 4 BPMC Minutes 12/29/2010 A roll call vote was taken: City of Seward: (absent) Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS / MOTION FOR APPROVAL The memorandum dated November 12, 2010 Kirk Gibson regarding FERC Land Use Fees update was added to the agenda as item 6C. There were no objections. Mr. Cunningham requested that agenda item 6A “Request for Consent of BPMC & the Authority,” be removed from the agenda. There were no objections. 6. NEW BUSINESS 6A. Request for consent of BPMC and the Authority (Removed at the request of Mr. Cunningham). 6B. Approval of FY10 Audit Report & Refund of Surplus to Utilities Mr. Dixon stated Swalling and Associates audited the operating and revenue funds as in previous years. The financial statements are special purpose and are not intended to be a presentation in conformity with generally accepted accounting principles. The audit is performed under generally accepted auditing standards. The financial statements were prepared by AEA, who provide the accounting services. There were no significant changes in accounting policies, methods or disclosures. There were no problems or disagreements with AEA management. No adjustments to the numbers as presented were proposed. Representations on financial statements were received from Mike Cunningham of the BPMC and Linda MacMillan, AEA accountant. AEA financial statements are audited by KPMG. $280,994 will be refunded to the utilities this year. In June of 2010 $375,000 was refunded to the utilities. $380,000 has been budgeted for FERC land use fees. No other issues were encountered. The BPMC had no questions. MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee approve the FY10 audit report of the Bradley Lake Project Management Committee Operating and Revenue Funds and refund the surplus of $280,994 to the utilities. Seconded by Mr. Wick. Page 2 of 4 BPMC Minutes 12/29/2010 A roll call vote was taken: City of Seward: (absent) Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 6C. Update on FERC Land Use Fees Mr. Gibson provided an update. The land use fee issue is winding its way through DC circuit courts, oral arguments have occurred and a ruling should occur within the next 60 days. In July FERC issued another order concerning the fees, a formula based on the same methodology and criteria the dam owners of the Western US (the “Group”) objected to in 2009. The BPMC pays about 10% of the Group's legal fees, based upon the acreage of federal land under and around the project. There’s a new FERC attorney who may be in favor of settlement. $30,000 was budgeted in 2009 to fight the fee increase. The BPMC to date has been invoiced $25,700 for its share of the expenses and there is an outstanding invoice of $4,650 currently being processed. He suggested the BPMC consider increasing the approved $30,000 by $20,000 to cover potential expenses at least through the first two quarters of 2011. Mr. Griffith asked Mr. Gibson if he was monitoring this matter for the BPMC, or were we relying on the DC firm and when might the matter be decided. Mr. Gibson stated he monitors their work and an answer should be received in about 90 days to be remanded back to FERC. The lands include all of the federal lands under the permit to Bradley junction, including Bradley Lake and transmission. The diversion project land is state land that was transferred to the state in the early 1980s. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee increase the budget for the land use fee issue to $50,000. Seconded by Mr. Wick. A roll call vote was taken: City of Seward: (absent) Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. Page 3 of 4 BPMC Minutes 12/29/2010 Ts Next Meeting Date The next meeting will be at the call of the Chair. 8. ADJOURNMENT The meeting adjourned at 10:54 a.m. ATTEST: Page 4 of 4 BPMC Minutes 12/29/2010 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES SPECIAL MEETING (via teleconference @ Alaska Energy Authority Board Room) Anchorage, Alaska September 14, 2010 at 9:00 a.m. 1. CALL TO ORDER Chair Evans called the special meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:00 a.m. on Tuesday, September 14, 2010, from the Alaska Energy Authority Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Brad Evans Chugach Electric Association (teleconference) Harvey Ambrose Homer Electric Association (teleconference) Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power Bryan Carey Alaska Energy Authority Joe Griffith Matanuska Electric Association (teleconference) John Foutz City of Seward (teleconference) 3. PUBLIC ROLL CALL May Clark, AEA Linda MacMillan, AEA Henri Dale, GVEA (teleconference) Kirk Gibson, McDowell Rackner & Gibson (teleconference) 4. PUBLIC COMMENT There were no public comments. 6. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. The agenda was approved as presented. 6. A. APPROVE BATTLE CREEK GRANT RESOLUTION Chair Evans stated the opportunity arose to apply for a grant from the State Renewable Energy Fund for the Battle Creek Diversion Project. At that time, he asked Mr. Carey to investigate the best way to do this, which resulted in the decision to have CEA apply for the grant on behalf of the BPMC, which required a resolution of support from the BPMC. We could receive a higher score if matching funds were made available. Page 1 of 2 BPMC Special Meeting September 14, 2010 Mr. Carey said the second fish sampling event occurred at Battle Creek and the results were good. The cost estimate will be done this fall and the satellite photograph has been taken. During the next month or two, we should have a detailed contour map at about 3 or 4 foot intervals. With that we will be able to determine what the route would be to get the water — tunneling or overland. We should know what the conceptual cost will be at budget time next year. We are still looking at about 40,000 acre feet flow or 40,000 mwh. Mr. Posey asked Mr. Carey how this grant might rank in the Renewable Energy Fund Round 4 ranking. Mr. Carey stated it would probably rank high due to matching funds and the benefit-cost ratio. Funding would be available next July 1. The grant will be administered by AEA. Motion: Mr. Griffith moved to authorize CEA, on behalf of the BPMC, to apply for an AEA Round IV Renewable Energy grant for the Battle Creek Diversion project in the amount of $500,000 with a match of $500,000 paid by the utilities in proportion to their participatory shares in the Bradley Lake Project. Seconded by Mr. Newton. A roll call vote was taken: City of Seward Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Municipal Light & Power: Yes Alaska Energy Authority: ’ Yes The motion unanimously passed. ts ADJOURNMENT Meeting adjourned at 9:10 a.m. BY: ATTEST: Alaska Energy Authority, Secretary Page 2 of 2 BPMC Special Meeting September 14, 2010 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority's Board Room) Anchorage, Alaska June 3, 2010 - 10:00 a.m. as CALL R Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday June 3, 2010, from the’ AEA Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: City of Seward John Foutz (teleconference) Joe Griffith Matanuska Electric Association (teleconference) Brad Evans Chugach Electric Association Harvey Ambrose Homer Electric Association Henri Dale Golden Valley Electric Association Jim Posey Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, CEA Burke Wick, CEA Ed Jenkin, CEA Jim Kingrey, HEA Rick Miller, AML&P Don Zoerb, MEA (teleconference) Brian Bjorkquist, Dept. of Law Kirk Gibson, McDowell Rackner & Gibson pc (teleconference) Bill Prentice, McDowell Rackner & Gibson pc (teleconference) Chris Rutz, AEA Linda MacMillan, AEA Shauna Howell, AEA May Clark, AEA 4. PUBLIC COMMENT There were no public comments. Page 1 of 7 BPMC Minutes 6/3/2010 6. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. MOTION: Mr. Griffith moved to approve the agenda as presented. Seconded by Mr. Carey. The agenda was unanimously approved as presented. 6. APPROVAL OF MEETING MINUTES — March 30, 2010 Mr. Griffith stated he was present by teleconference, however, it was not indicated in the minutes. MOTION: Mr. Ambrose moved to approve the minutes of the March 30, 2010 meeting. Seconded by Mr. Dale. The meeting minutes were unanimously approved with the correction showing Mr. Griffith as being in attendance by teleconference. 7, NEW BUSINESS 7A. Series § Bond Refunding: Mr. Cunningham referenced McDowell Rackner & Gibson PC documents in the meeting packet, dated June 3, 2010. The PMC and AEA have been working closely to complete the refunding. A preliminary offering statement was developed and distributed to the participants. Two update calls were conducted with ratings agencies Moody's and Standard & Poor's. In response to due diligence questions, a due diligence call was also made. Future activities include the offering statement and bond pricing. The BPMC finance committee recommends approval of Resolution 2010-01. At or near bond closing each utility will be required to complete the Certificate of Power Purchaser form and the Continuing Disclosure Agreement on their letterhead, which is a normal requirement. A checklist will be provided to assist in completing the form. BPMC counsel will work with each individual utility's counsel to accomplish this task. Mr. Griffith questioned why we are carrying an extra month’s interest on the bonds and was informed that Valorie Walker (AEA’s Deputy Director, Finance) would contact him with clarification to his question. Mr. Posey joined the meeting by teleconference at 10:16 a.m. The motion was read into the record as follows to include the Resolution language as underlined below. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee on behalf of the Power Purchasers, hereby determine that it is in the best interests of the Power Purchasers and their customers or members that the proposed refinancing of the Fifth Series bonds be completed by the issuance of the Sixth Series bonds and that the timely furnishing by the Power Purchasers of the certificates and opinions and information relating to the Official Statement required under the Bond Purchase Agreement (BPA), and the annual financial information required under the Disclosure Page 2 of 7 BPMC Minutes 6/3/2010 Agreement, and approval of Consenting and Approving Resolution No. 2010-01 is a reasonable obligation of each Purchasing Utility. Seconded by Mr. Posey. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. Mr. Griffith asked if the BPMC still needed a motion on the Resolution. Chair Evans stated that he felt that was covered by inserting the Resolution language in the previous motion. Mr. Bjorkquist stated if there was any question, AEA would want it to be very clear that the Resolution has been adopted, and it was suggested that if there was any ambiguity, that the Committee vote for adopting the Resolution separately. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee adopt Resolution 2010-01. Seconded by Mr. Ambrose. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. Chair Evans urged the participants to remain in diligent contact with Mr. Cunningham to keep the process moving. Mr. Cunningham stated all was going well and expected no problems. BPMC counsel will put together an opinion for the underwriters on this matter. Mr. Posey arrived at the meeting at 10:24 a.m. 7B. FY10 Budget Report/Approve Amended FY10 Budget The BPMC budget policy, adopted in the October 2009 meeting, requires BPMC approval to amend the operating budget if a surplus or deficit greater than $250,000 is projected. A FY10 budget reduction of $375,000, due to projected increase in interest income, and decrease in R&C fund and arbitrage payments, offset by increase in debt service for July 2010 interest Page 3 of 7 BPMC Minutes 6/3/2010 related to Series 5 bond refunding, was presented along with a motion to approve the amended budget and refund the resulting surplus to the utilities by June 30, 2010. MOTION: Mr. Dale moved that the Bradley Lake Project Management Committee approve the attached amended FY10 Budget and refund the $375,000 reduction in budget to the utilities by June 30, 2010. Seconded by Mr. Posey. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: - Yes The motion unanimously passed. 7C. Retain ARECA as property insurance provider Following state procurement guidelines, there were four respondents to the RFP with ARECA being the successful respondent. MOTION: Mr. Carey moved that the Bradley Lake Project Management Committee authorize the retention of the ARECA insurance Exchange to procure property and related insurance coverages, as necessary, for the Bradley Lake Hydroelectric Project effective 7/1/2010. Seconded by Mr. Posey. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8. OLD BUSINESS 8A. Middle Fork Flows We have been talking with the resource agencies to request flow deviations of up to 7.5% of the required minimum flows at lower Bradley and to get their consent, have agreed that we would perform an intra-gravel temperature study at a cost of $25,000 at the location of the existing USGS gage. Page 4 of 7 BPMC Minutes 6/3/2010 AEA will request FERC approval for a five year trial program to evaluate the feasibility of allowing operation 7.5% below the required seasonal flow values, provided that the 24 hour average flow is maintained at or above the required value in Lower Bradley River. They also want to do four netting events during the fall salmon run to be performed by the USFWS only this year. We would provide the transportation to Bradley. After five years we can apply for an amendment to the Bradley permit. Comments to the amendment would be limited to flow data only. The dam operators will need to discuss this, perhaps using software through CEA to monitor flows. If automated, it should work better and be part of the daily routine. The resource agencies are writing letters to AEA regarding concurrence with the plan. Once we receive those letters, we will correspond with FERC. Upon receipt of FERC approval, we will install the intra- gravel gages and instruct USFWS to proceed. No further specifics were required by the BPMC. 8B. Battle Creek At the previous meeting, the BPMC authorized spending $75,000 through the end of this fiscal year ending June 30 and $20,000 has been expended to date. We would continue the $75,000 into the next fiscal year for a pre-feasibility study. For preliminary engineering $75,000 extended to the next fiscal year would be sufficient to get the satellite photographs and detailed topographical maps and conceptual costs late this year to better determine the route selection. A PowerPoint photograph was shown of the area. A stakeholder’s (ADF&G, USFWS, NMFS, DNR) meeting was held May 18, 2010 at AEA. The diversion would likely be placed at 1,200 feet or 1,500 feet and the land area is at 10 square miles including the glacier. At 80% diversion for those months, based on two year's data we have, it would come out to be about 35-36,000 acre feet equaling 35-36,000 Mwh. Based on the data for Solomon Gulch, tunnel amounts could be more like $3,500/foot. At the agencies request, to get more flow rates and to move after permitting, we will install two gauges on Battle Creek and also perform stream characterization of the Creek which includes counting the fish. These tasks are not covered in the current budget. If we were to begin this year, it would cost approximately $225,000 for both, and for engineering and environmental data it would cost about $300,000. Salmon start to return in mid-July and water flow is already increasing. If we wait until after July, we will miss several of salmon species which could delay any type of permitting or decisions in regards to the environmental flows by year. For the steam characterization and fish counting, we have engineering firms already under contract to AEA and we will be able to request a proposal from them fairly quickly. Gages are installed through USGS and they would want to be informed within the next two weeks due to helicopter availability. Photography and engineering work is in the FY10 budget which we can continue over to the already adopted FY11 budget. Environmental type work and gauging would cost more and will need to be added to the budget so that we may proceed with the work. Salmon have not yet returned as of this date; the reds usually show up in July, pinks maybe late August, and Coho in August or September. We have not lost anything yet this year. In July all fish reruns of concern to the resource agencies will occur and we will not miss much if we proceed now. We'll be looking at many hydro projects during the next few years, so obtaining good data now is important. The fish site characterization can be done in another week or two and we can move forward to request a proposal from the engineering contractors to alert them. The gauges are more important due to helicopter availability time. It's estimated to cost $2 to $2.5 million for permitting and it appears the amendment can be performed as an Environmental Assessment (EA), and not an Environmental Impact Statement Page 6 of 7 BPMC Minutes 6/3/2010 (EIS). The EA would be restrictive only to changes in Battle Creek and the agencies are unlikely to approve it until they have at least two years of data in hand. It was suggested that perhaps we could apply for state grant money for this work. There are no other regulatory matters pending. MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee approve increasing the previously authorized cost of $75,000 for Upper Battle Creek feasibility study and permitting to $300,000; and authorize payment for the project as part of the FY2011 project budget. Seconded by Mr. Griffith. Chair Evans stated he would like the motion to recognize the potential for state grant monies and if the grant were to occur for our large scale hydro project, then grant funds would be used instead. Also, if this year looks good, and the state sees that this is a worthy project that we've put some work into, then we can possibly obtain grant money next year to finish the work. There were no objections to proceed with the expansion to the budget. The motion was amended to include the grant wording: MOTION: Move that the Bradley Lake Project Management Committee approve increasing previously authorized cost of $75,000 for Upper Battle Creek feasibility study and permitting to $300,000, recognizing the potential for a grant and there may not be a need to utilize BPMC budget monies; and Authorize payment for the project as part of the FY2011 project budget. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8C. Soldotna SVC Status Report Soldotna SVC tripped on 6/2/2010 resulting in replacement of two fuses and three capacitors. Daves Creek failed on 5/12/2010 due to a failure of the 124V DC converter, which provides the control voltage to the Swede Water cooling system, affecting the thyristor banks and compounded by the fact that the main SVC control PLC board failed. The input boards have failed before and this is the fourth failure in as many years. There are 20 between Daves Creek and Soldotna. ABB spares are in stock and lead time for replacement boards is about six months at a cost of $16,000. On 5/28/2010, we sent ABB a list of other Daves Creek SVC replacement parts and are waiting for a quote. We do not have spares for some items on this replacement list, which have a lead Page 6 of 7 BPMC Minutes 6/3/2010 time of six weeks. As soon as we hear from ABB we will put out a schedule. We are planning to provide high temperature trip at two locations that doesn’t require the Sweetwater system to be on line for it to trip. The main controller will be wired. It was suggested the O&D Committee review inventory noting the 5/12/2010 event. This matter will be placed on their next agenda. 9. COMMITTEE REPORTS / COMMENTS 9A. Operators Report Daves Creek SVC has been out of service since early May due to leaks in the cooling system for the thyristor banks. Soldotna SVC tripped on 6/2/10 while loading the Kenai-Anchorage Intertie for testing. Outages were completed for annual and biennial scheduled maintenance. The runners are in good condition. Contract was awarded on the Duplex remodel project and the electrical contractor has been on site. A barge shipment arrived 5/26/2010. A pre-bid meeting was held on the runway culvert replacement project, and six or seven bids are expected. Transmission line frost jacking repairs were completed under budget at a cost of about $1 million. The Cascade system was selected for the new work management software replacement and will hopefully be completed at the end of June. The communications hut was removed and transported to Homer where it will be sold. Four FAA cameras are installed and can be seen on FAA's website. The vendor for the oil storage room halon system replacement continues to work with the State Fire Marshal and this should be complete by the end of June. Gate testing is scheduled for 6/21/2010, followed by inspections of the Nuka, Middle Fork & Battle Creek diversions. Photos should be taken of the work to be shared with the BPMC members. 9B. Next Meeting Date The next meeting will be at the call of the Chair. 10. ADJOURNMENT The meeting adjourned at 11:40 a.m. BY: zoe Evans, Chair ATTEST: baie z Alaska Energy Adthority, Secretary Page 7 of 7 BPMC Minutes 6/3/2010 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska [Due to technical difficulties audio not available for this meeting] March 30, 2010 - 10:00 a.m. A. CALL TO ORDER Vice Chair Alternate Harvey Ambrose called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:05 a.m. on Tuesday March 30, 2010, from the AEA boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Joe Griffith Matanuska Electric Association (teleconference) Burke Wick Chugach Electric Association Harvey Ambrose Homer Electric Association (teleconference) Henri Dale Golden Valley Electric Association Jim Posey Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, CEA (teleconference) Don Zoerb, Matanuska Electric (teleconference) Bob Day, HEA Jim Kingrey, HEA Rick Miller, AML&P Doug Hall, AML&P Bob Price, AML&P Kirk Gibson, McDowell Rackner & Gibson PC (teleconference) Rich Wilson, Alaska Ratepayers Valorie Walker, AEA Linda MacMillan, AEA Shauna Howell, AEA May Clark, AEA 4. PUBLIC COMMENT Rich Wilson, Alaska Ratepayers, stated they would like to heighten awareness of what a major hydroelectric facility like Susitna or Chakachamna looks like. They have met with the legislature, FERC, utilities, and AEA RIRP Advisory group and propose VIP (administration, legislative, mayoral and other Railbelt leaders) educational site visits to Bradley Lake or Cooper Page 1 of 5 BPMC Minutes 3/30/2010 Lake hydro projects this coming summer hosted by the BPMC and Alaska Ratepayers. There is an apparent lack of knowledge among current leaders about large hydro projects and they need to be educated. Alaska Ratepayers has a website that can be visited for more information. 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. Following a roll call vote, the agenda was approved as presented. 6. APPROVAL OF MEETING MINUTES — December 30, 2009 and February 4, 2010 MOTION: Mr. Dale moved to approve the minutes of the December 30, 2009 and February 4, 2010 meetings. Seconded by Mr. Wick. A roll call vote was taken and the meeting minutes were unanimously approved as presented. ils NEW BUSINESS 7A. Bank of America Underwriter Mr. Cunningham stated the Finance Committee met and reviewed responses to an RFP for refunding of the power revenue refunding bonds. The top three responses were evaluated and Bank of America was selected. The Finance Committee recommends the BPMC approve this motion. MOTION: Mr. Zoerb moved that the Bradley Lake Project Management Committee retain Bank of America Merrill Lynch as underwriter for refunding the Power Revenue Refunding Bonds, Fifth Series - $30,640,000. Seconded by Mr. Wick. A roll call vote was taken: City of Seward: Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7B. BPMC Proposed FY 11 Budget Mr. Cunningham stated the Finance Committee met and evaluated the proposed budget. Of major note is a decrease in R&C Fund repayments because FY10 was the last year to pay for governor and runner projects. There is a slight increase in debt service and the FERC Land Use Fees increased. The Finance Committee recommends the BPMC approve this motion. MOTION: Mr. Wick moved that the Bradley Lake Project Management Committee approve the fiscal year 2011 Operating and Capital budget as presented. Seconded by Mr. Dale. Page 2 of 5 BPMC Minutes 3/30/2010 A roll call vote was taken: City of Seward: Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7C. Bradley Improvement Project The Upper Battle Creek potential water source was discussed. It is located two miles west of the project and is on State DNR land. Pre-feasibility engineering would cost about $75,000 and would take two to three years. It could provide more information on environmental flows and fish habitat. The diversion means Bradley would have an increase of approximately 50,000 MWhrs. One acre foot of water at Bradley is nearly equal to 1 MWhr. The diversion would most likely require an amendment to the existing Bradley license. A short road could be built from the existing Bradley road to the tunnel exit. A tunnel would be constructed and would be used for initial access to the 2,000’ level to build the small diversion dam. The $75,000 investment is a good start if it increases hydro. Future funding for overall costs is yet to be determined. MOTION: Mr. Day moved that the Bradley Lake Project Management Committee approve the Alaska Energy Authority to proceed with feasibility study and permitting for a diversion structure on Upper Battle Creek to improve project energy production; and approve relatec costs up to $75,000 incurred between March 30, 2010 and June 30, 2010 be paid for by the FY2010 project budget. Seconded by Mr. Carey. A roll call vote was taken: City of Seward: Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8. OLD BUSINESS 8A. FAA License for Cameras Mr. Gibson reported that the parties have ironed out all issues and the license granting the FAA the ability to place a camera on the Bradley Lake Hydro facility premises is ready for execution Page 3 of 5 BPMC Minutes 3/30/2010 by AEA. The FAA conceded on all outstanding issues. The license term shall end on March 15, 2027 and either party may cancel the License with 60 days written notice. Counsel recommends the BPMC approve the motion. MOTION: Mr. Posey moved the Bradley Lake Project Management Committee direct the Alaska Energy Authority to proceed with the execution of the License [DTFAAL-09-00014] with the U.S. Department of Transportation Federal Aviation Administration for placement of an aviation weather camera on the Bradley Lake Hydroelectric property. Seconded by Mr. Wick. A roll call vote was taken: City of Seward: Absent Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8B. Update on FERC Land Use Fees The US Court of Appeals granted BPMC’s intervention where other dam owners are protesting FERC’s imposition of land use fee increases. FERC has not issued its fee schedule yet for 2010 and may possibly be awaiting the court ruling. To date, the BPMC has been billed approximately $12,000 in legal fees. 8C. Status Report on Soldotna SVC - tabled until next meeting. 8D. Possible Debt Refinancing Mr. Cunningham stated this item was covered under 7A, New Business; therefore no further discussion was necessary. The BPMC agreed. 9. COMMITTEE REPORTS / COMMENTS 9A. Operators Report Transmission line frost jacking repairs were completed over the weekend and will be inspected again on April 2, 2010. There are 14 remaining piles to be stored at Bradley. A PowerPoint presentation was given on this subject and on the lake levels. The document control project first stage is complete, converting drawings to electrical format, entering the final phase of the project and has implemented new EDMS system. Duplex modifications RFP’s are out and a site visit has occurred, bids are due in a week and a half and the BPMC will be notified of the results. Eagle Lake hut removal and transport to Homer over DNR/Borough land is estimated at $3,000, awaiting permit as the land has been transferred to the Borough. Received quotes from vendors on the oil storage room halon system. Cathodic protection system for the gate shafts has been commissioned. Page 4 of 5 BPMC Minutes 3/30/2010 9B. Next Meeting Date The next meeting will be at the call of the Chair. 10. ADJOURNMENT The meeting adjourned at 11:08 a.m. BY: ATTEST: Alaska Energy Authefity, Secretary Page 5 of 5 BPMC Minutes 3/30/2010 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES SPECIAL MEETING (via teleconference @ Alaska Energy Authority Board Room) Anchorage, Alaska [Due to technical difficulties audio not available for this meeting] February 4, 2010 at 10:00 a.m. 46 CALL TO ORDER Chair Evans called the special meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:04 a.m. on Thursday, February 4, 2010, from the Alaska Energy Authority Boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by May Clark. The following members were present: Brad Evans Chugach Electric Association (teleconference) Harvey Ambrose Homer Electric Association (teleconference) Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power James Hemsath Alaska Energy Authority (teleconference) Joe Griffith Matanuska Electric Association (teleconference) John Foutz City of Seward (teleconference) 3. PUBLIC ROLL CALL May Clark, AEA Shauna Howell, AEA Linda MacMillan, AEA Shelby Weems, AEA Jim Strandberg, AEA Henri Dale, GVEA Don Zoerb, MEA (teleconference) Jim Walker, MEA (teleconference) Rick Miller, AML&P Bob Day, HEA (teleconference) Jim Kingrey, HEA (teleconference) John Foutz, City of Seward (teleconference) Kirk Gibson, McDowell Rackner & Gibson (teleconference) 4. PUBLIC COMMENT There were no public comments. Page 1 of 3 BPMC Special Meeting February 4, 2010 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. The agenda was approved as presented. 6. LEGAL SERVICES Chair Evans asked if everyone had a copy of the February 2, 2010 letter from Kirk Gibson regarding Mr. Gibson's transition to the new law firm of McDowell Rackner & Gibson and opened up the meeting for discussion, stating the issue is whether the group wishes to retain Mr. Gibson and the new firm as counsel to the BPMC. He stated that Mr. Gibson would join the meeting after the Committee’s initial discussion. Mr. Newton stated Mr. Gibson will continue to represent GVEA at his new firm. Chair Evans would prefer to retain Mr. Gibson as he’s familiar with the issues and has been with the BPMC for a long time. Mr. Posey agreed and stated that it’s critical that consistency is important, had nothing against AterWynne and that perhaps in a couple of years they could revisit this issue or if something occurred in the meantime where they had to seek new counsel. Mr. Foutz inquired as to what AterWynne’s history was with the BPMC and how long they had been counsel. Chair Evans stated he couldn’t remember and that it had been a long time. Mr. Posey stated that AterWynne had put it all together and Mr. Gibson has been the BPMC primary counsel since day one, which Mr. Griffith agreed. Mr. Griffith also remarked that he was concerned about AterWynne’s conflict of interest with the Saxton issue and that they never excused themselves from that matter. He also wanted to know to what extent Mr. Gibson’s FERC experience was, as that is important to the BPMC. Chair Evans asked if anyone had a conflict with retaining Mr. Gibson. Mr. Newton said GVEA did not. Chair Evans stated there had never been an issue and could not remember a specific negative example and recommended retaining Mr. Gibson and letting him finish out his term and perhaps consider new counsel at a later time. Mr. Posey stated ML&P had no real conflicts, but was concerned that AterWynne showed up as a conflict between GVEA and MEA, but noted that AterWynne always offered to stand down if there was a conflict. He said there are not enough firms practicing that would know the Bradley Lake project well enough. Mr. Griffith asked about GRETC and BPMC management possible conflict and Mr. Newton stated GVEA would stand down and use other counsel if necessary. Chair Evans stated if the Committee couldn't resolve this issue, they would have to change counsel and agreed with Mr. Posey. Mr. Newton stated he would gladly stay with Mr. Gibson though he was not opposed to change. Chair Evans stated the Committee does not know who the new counsel would be from AterWynne and that we should evaluate it if neutral representation came up, but noted Mr. Gibson has the history with the Committee. Mr. Griffith stated we should stay with Mr. Gibson as he has the knowledge of the current FERC issues. Mr. Day supported retaining Mr. Gibson. Chair Evans stated an action item to the agenda would need to be added. Motion: Mr. Griffith moved that the BPMC accept an amended agenda that would include the motion to retain Mr. Gibson as counsel. Seconded by Mr. Posey. Mr. Newton wanted to know the Committee’s knowledge of the new firm and would there be the same amount of support personnel available to the BPMC. Chair Evans stated Mr. Gibson took some energy support people with him to the new firm, but that he would have to address those questions himself, and that Mr. Gibson would join the teleconference shortly. Page 2 of 3 BPMC Special Meeting February 4, 2010 Motion: Mr. Griffith moved that the BPMC retain Mr. Gibson as counsel. Seconded by Mr. Posey. A roll call vote was taken: City of Seward Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. (Mr. Gibson joined the meeting by teleconference at 10:25 a.m. and answered questions. ] He stated the FERC capability would be better than before, that they would handle all the local hydro issues in-house, but would continue to handle hearings, etc. through DC attorneys. Mr. Dale asked that he clarify when using the term “we” that he was referring to AterWynne. Mr. Gibson also stated there are seven on staff at the new firm, and suggested everyone visit their website. He stated they brought Bill Prentice over from AterWynne who has 25 plus years’ experience and that they could be another large West Coast firm specializing in energy and public utility issues. Currently, they are working on two matters for the BPMC, the FAA camera issue and the FERC land use fee issue. There were no further questions of Mr. Gibson. Chair Evans stated that if anyone wanted to suggest agenda items for the next meeting, they could do so now. There were none. Chair Evans stated he would correspond with Mr. Gibson and with AterWynne and inform them of the actions taken at the meeting. ifs ADJOURNMENT Meeting adjourned at 10:30 a.m. BY: rad Evans, Chair , - F ATTEST: K. E, rae <A Alaska Energy Authority, Secretary o / Page 3 of 3 BPMC Special Meeting February 4, 2010 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes Feb 26, 2009 April 23, 2009 June 10, 2009 October 7, 2009 December 30, 2009 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska December 30, 2009 - 10:00 a.m. A; CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:03 a.m. on Wednesday, December 30, 2009, from the AEA boardroom, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. is ROLL CALL Roll was called by May Clark. The following members were present: Brad Evans Chugach Electric Association Bob Day Homer Electric Association Henri Dale Golden Valley Electric Association Rick Miller Anchorage Municipal Light & Power Bryan Carey Alaska Energy Authority Joe Griffith Matanuska Electric Association (teleconference) John Foutz City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA May Clark, AEA Mike Cunningham, CEA Burke Wick, CEA Kirk Gibson, AterWynne (teleconference) Brian Newton, Golden Valley Electric Association (teleconference) Bonnie Godfreid, Swalling & Associates Gary Dixon, Swalling & Associates Shelby Weems, AEA Linda MacMillan, AEA Jim Kingrey, HEA Don Zoerb, MEA (teleconference) Brian Bjorkquist (teleconference) 4. PUBLIC COMMENT There were no public comments. Page 1 of 7 BPMC Minutes 12/30/09 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. Brad Janorschke on teleconference could not attend; therefore assigned Bob Day as voting delegate to HEA. 6. APPROVAL OF MEETING MINUTES — October 7, 2009 MOTION: Mr. Griffith moved to approve the minutes of the October 7, 2009 meeting. Seconded by Mr. Carey. A voice vote was taken and the meeting minutes were unanimously approved as presented. Te NEW BUSINESS TA. RFP for Insurance Broker Mr. Cunningham stated this motion is a follow-up to a recommendation received through Warren, McVeigh & Griffin, Inc., Risk Management Consultants, to test the market for a new broker and possible new insurance coverage for the project. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee direct AEA, with aide of an insurance advisor designated by the BPMC, to proceed with a request for proposal for an insurance broker for the project. Seconded by Mr. Dale. Mr. Carey stated a large lead time is required for an RFP to have insurance in place by July 1. If the BPMC wishes to proceed with a broker, then it needs to be decided now. The BPMC has coverage through ARECA for property and boiler machinery coverage. Last year it was about $520,000 and the previous year it was $580,000. The difference last year compared to previous years is in previous years the coverage was split with the primary policy through ARECA, then a secondary policy for seismic coverage through the state broker. State risk management changed brokers so last year the entire amount was through ARECA. Under our current policy, it is not split between insurers. If the utilities want policies to be split they can come up with the wording in the RFP. He said he would be the project manager working with the Division of Risk Management and AEA procurement. Writing of selection criteria would be done by the state following their regulations and procurement guidelines since it will be a state procurement. Much of the criteria would be written by the BPMC, working with the finance committee, making the boiler plate and receiving input from state procurement during the evaluation period. Cost must be a minimum of 40% of the criteria. The evaluation board would consist of both state procurement and representatives from the utilities. Linda MacMillan stated there’s a line item in the budget under committee costs to pay for work done by Warren McVeigh. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Page 2 of 7 BPMC Minutes 12/30/09 Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Abstain The motion passed. 7B. FY09 Audit Report & Refund FY09 Surplus Mr. Cunningham stated the FY 09 audit has been completed and representatives from Swalling & Associates were present to review the results. There’s a refund due the utilities in the amount of $284,745. There’s a motion to accept the audit and to approve the refund to be made the utilities. MOTION: Mr. Griffith moved that the Bradley Lake Project Management Committee accept the FY09 audit report and request AEA to refund the FY09 surplus to the utilities by December 31, 2009. Seconded by Mr. Foutz. Mr. Dixon stated that the audit was for the year ended June 30, 2009, performed over the past two months and subject to the engagement letter. The financial statements are called special purpose since they’re not following what would be generally accepted accounting principles, as they are being done to conform with the requirements for BMPC special purposes. They are audited under generally accepted auditing standards and the financial statements were audited, but are the representation of management and Swalling interface with AEA on the actual auditing work subject to the review and approval of the BPMC finance committee. Ms. Godfreid reviewed audit highlights: e Financial Statement is for the two years ended June 30, ‘09 and ‘08. First page is report of independent auditors that simply states BPMC has a special purpose financial statement and that the audit was conducted in accordance with generally accepted auditing standards. e Balance Sheets. The investments are the most significant asset and the liabilities are primary operating expense and accounts payable. The payable to the utilities for any overpayment during the year is $284,000. Assets are $2.5 million, and liabilities are $2.5 million. e Revenue & expenses compares ‘09’s actual to ‘09's budget with a variance. Utility contributions were almost $1 million more this year than last year. Interest income is at $1.7. Operating expenses went up $800,000. AEA has adjusted revenue to break even with expense, resulting in the $284,000 refund. $16,881,000, was paid in, but the only requirement for revenue was $16,596,000. e Cash Flows. Utility contributions are recognized as revenue when owed, and then they're adjusted for the break even. Transfers from other funds are recognized when received. There’s no excess of revenue over expenses. The only changes in cash are in the receivables and payables. The cash flow statement also discloses the interest paid of $6,344,000, which is a disclosure requirement. Page 3 of 7 BPMC Minutes 12/30/09 e Revenue & expense recognition shows how the operating fund reimburses the R&C fund, done over a four-year period. The future commitment to the R&C at the end of ‘09 is $2.7 million. e Investments are in collateralized investment agreements at JC Morgan Chase. Major contracts and agreements show how the BPMC has contracted with various utilities and AEA for operation of Bradley Lake. e Related party transactions are a required disclosure on almost everything BPMC does as a related party transaction, that’s where it shows payment to HEA for operations, CEA and AEA. In the refund of surplus there’s a typo in the last paragraph that will be fixed. The refund is $284,000. A brief discussion followed regarding the R&C investment procedures and results. Mr. Cunningham stated the finance committee reviewed the report and had no changes or comments. Mr. Dixon stated there were no difficulties in performing the audit, no corrections were made and the finance committee was not asked to pass on any adjustments. There were no disagreements with management or AEA. There were no other findings or issues to report. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8. OLD BUSINESS 8A. FAA Cameras Mr. Gibson reported that no action was required on either item under Old Business at this time. The FAA has requested a camera be placed at the Bradley facility. FAA and BPMC attorneys discussed various responsibilities outlined in the contract governing the relationship between the FAA and BPMC and could not agree on contractual language imposing certain obligations on BPMC. The FAA wants to use its traditional lease for the camera placement. It’s our position that a license would be more in line with the activities being proposed. There are three areas where the FAA’s regional counsel had outstanding issues: 1. Quiet Enjoyment — A clause that ensures BPMC is entering into an agreement with a party that has the right to do so by requiring AEA/BPMC to warrant that fact. We would be agreeable to the clause being modified to remove the language, “and warrants...” FAA is not paying rent for the ability to use the site, so it’s not reasonable to require AEA/BPMC to covenant that it will protect the FAA’s possession from all persons Page 4 of 7 BPMC Minutes 12/30/09 claiming possession. The following would be acceptable: “AEA warrants that it has good and valid title to the premises, and rights of ingress and egress.” 2. Attorneys Fees and Venue - FAA objected to adding provision regarding attorney’s fees being awarded to winners of any dispute and establishing venue in Alaska for any disputes arising thereto. Our proposed language provides for attorney's fees to the prevailing party and that the dispute be heard in Anchorage where AEA and licensed land are located. 3. Remediation Clause — FAA revised the agreement to remove the hold harmless wording recommended by us and make it AEA’s responsibility to remediate contamination not caused by FAA’s use of the property. We revised the language to remove the limitation that the contamination had to be directly related to “Government's use of AEA’s property pursuant to this License regarding installation, operation and maintenance of the camera,” and, instead, required the FAA to remediate if related to FAA’s use of premises. Mr. Day stated that by having FAA install the camera puts a certain amount of operation and maintenance on them and would like to work with them to see it happen. A pros and cons discussion followed. It was determined the BPMC will approach the FAA again to propose resolutions to the issues. 8B. Update on FERC Fees A number of entities that have hydroelectric protested the significant increase in land use fees charged by FERC. The participants in this group have been working the issue at FERC and the DC Circuit Court (Group). The Group initially filed a request for a rehearing at FERC regarding FERC’s process for picking the methodology it used for assessing the land use fees. The Group also filed for and received a stay with the DC Circuit Court (while the request for rehearing was being heard by FERC). As part of the order granting the stay, the DC court ordered FERC to provide progress reports on its progress concerning the participants’ rehearing request. BPMC (and some others) joined the Group later, so the Group also filed an appeal on behalf of BPMC (and the others) of the charges invoiced by FERC, and requested a hearing regarding its fees. BPMC paid the fees invoiced by FERC under protest. On October 30, 2009, FERC issued its order denying the hearing request of the participants. FERC later submitted a report to the DC Circuit providing a copy of its rehearing order with a statement that FERC does not intend to file a motion to dissolve the stay at the present time. FERC appears content to allow the stay to continue, at least until it knows whether the partici- pants’ group will seek judicial review. On December 18, 2009, the Group filed a Petition for Review of FERC’s denial of a request for rehearing with the DC Circuit Court. The Group’s next move will be influenced by the briefing schedule issued by the DC Circuit Court, as well as any action taken by FERC. If FERC seeks to lift the stay, we would need to provide a response. If FERC issues a new fee schedule for 2010 based on the new BLM/USFS methodology, we would need to decide whether to seek another stay from the court or pay under protest. At this point we expect the court to issue a preliminary order requiring us to prepare a docketing statement and preliminary statement of the issues. Once the court sets our case for briefing, our chances of FERC or the court staying the 2010 fee schedule and bills could increase. This may take five to seven years if everything goes as usual. Page 5 of 7 BPMC Minutes 12/30/09 Of the $30,000 budgeted for BPMC’s participation in these efforts, expenditures total $11,600 to date. 9. COMMITTEE REPORTS / COMMENTS 9A. Operators Report Mr. Day presented a written report to the Committee and reported that the power supply at the gatehouse has been reconfigured for more reliable operation adding SCADA and some enunciation utilities to it. He also reported that there’s $1.2 million in the present budget to do some mitigation on power jacking issues on the dual transmission line that crosses the Fox River Flats; wherein three structures are affected to where they have jacked out of the ground to as much as five feet. One of the structures, as it was researched, sunk — the attachments, cross-members and power foundation bolts are now below grade. Everything is stable and tight, but all seems to be sinking into the mud. The mitigation is to return this winter (winter access only) and take a pile driver and while there add pile to the piles that are jacking, weld another 25’ to each one and drive until resistance, then move onto the next one. They are just preparing to put the contract out, which the estimate is coming in close to the $1.2 million. It’s likely they will be able to keep one line in service while performing the work, and at the end of day return it to service. A discussion followed on different pile methods, similar work performed on the Intertie and perhaps consulting other utilities that have done similar work. Nuka Diversion repairs could not be continued and are postponed due to weather until spring. A discussion ensued on the Nuka water flow and cfs required. Chair Evans suggested future reports might be written differently, possibly ranked by project for easier navigation. Mr. Griffith inquired as to the condition of the SVC at Soldotna. Chair Evans stated he would obtain a report for the next meeting. 9B. Fish Water Release Issue Mr. Carey reported that currently Bradley releases about 12-14,000 acre feet of water above what the required minimums are at the gauging station. Bradley is in the same situation as Kodiak Electric in requesting modifications to their permit to modify the main flow monitor reporting procedures. In early November, U.S. Fish & Wildlife Service (USF&WS) and Alaska Department of Fish & Game (ADF&G) looked at the Lower Bradley River and wrote what their requirements would be if we were to get minimum flow. ADF&G wants us to monitor certain parameters for one year before the FERC modification would start plus the year after. The USF&WS wants two years before and two years after. We believe the monitoring requirements they want is redundant because the parameters they want have already been studied. We are requesting a meeting with them as we believe they have not read many of the research already done. The State’s hydrologist left as of January 1, so there won't be a replacement there for another month. They also want expensive fish traps and someone would have to fly out there by helicopter once a month for the five months they'd be in place. We need to meet with them to discuss this to see if we can change their mind. Hopefully during February they will come to Page 6 of 7 BPMC Minutes 12/30/09 an agreement, but right now what they want is unacceptable. If they do away with the pre- monitoring, we'd still have to approach FERC this spring to get it into position. We're trying to get agreement amongst the locals before we approach FERC as to what the work plan will be and have already provided ADF&G with the proposed work plan. FERC will most likely come right back to the resource agencies and say if the resource agencies agree, they will agree. Prior to moving forward to FERC, the BPMC will have to agree on the various costs. Prior to adjournment, Chair Evans requested the finance committee review the BPMC current debt and associated information to see if there's a reasonable opportunity to refinance. 9C. Next Meeting Date The next meeting will be at the call of the Chair. 10. ADJOURNMENT The meeting adjourned at 11:12 a.m. BY: ATTEST: G KA f Alaska Energy Authority, Secretary J Page 7 of 7 BPMC Minutes 12/30/09 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES REGULAR MEETING (via electronic media at the Alaska Energy Authority’s Board Room) Anchorage, Alaska October 7, 2009 - 10:00 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:01 a.m. on Wednesday, October 7, 2009, from the AEA office, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bob Day Homer Electric Association Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power (teleconference) Bryan Carey Alaska Energy Authority Joe Griffith Matanuska Electric Association (teleconference) Jeff Estes City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA Mike Cunningham, CEA (teleconference) Don Zoerb, MEA (teleconference) Gary Kuhn, MEA (teleconference) Kirk Gibson, AterWynne (teleconference) Shelby Weems, AEA Linda MacMillan, AEA Bob Price, AML&P Jim Kingrey, HEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS / MOTION FOR APPROVAL There were no agenda comments. Page 1 of 3 BPMC Minutes 10/07/09 6. APPROVAL OF MEETING MINUTES — June 10, 2009 MOTION: Mr. Day moved to approve the minutes of the June 10, 2009 meeting. Seconded by Mr. Carey. On page 4 of 4, frequency in the divider mode should read 24 hertz. In the 2" paragraph on page 4 of 4, its not ‘throw up volts,” it should read ‘throw out bolts’. On page 5 of 5, ...they wrote it down $25,000 to $100,000. Insert ‘work involved’. Delete the next sentence. The meeting minutes were unanimously approved as amended. Ue NEW BUSINESS 7A. BPMC BUDGET POLICY Operations and Maintenance: Bradley Project Management Committee (BPMC) approval for budget changes will be required if the projected budget surplus or deficit is greater than $250,000. Variation among the individual line items of the budget will not require BPMC approval. Renewal and Contingency Fund Projects: Capital projects approved by the BPMC and exceeding $500,000 will be funded out of the Renewal and Contingency Fund (R&C Fund) which provides for repayment to the fund over a four year period. Other capital projects will be considered part of the Operations and Maintenance budget unless otherwise directed by the Operations and Development (O&D) and Budget Subcommittees and approved by the BPMC. BPMC approval, based on O&D Subcommittee recommendations, will be required for a R&C Fund project increase the lesser of 15% of project cost or $250,000 and above. MOTION: Mr. Day moved to adopt the above stated BPMC Budget Policy. Seconded by Mr. Carey. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8. COMMITTEE REPORTS / COMMENTS 8A. Operators Report Mr. Day reported that during the generator inspection, two bolts and their respective locking tabs were missing from the upper generator stator fan shroud cover in the west quadrant. Mr. Day gave a presentation to the group. Page 2 of 3 BPMC Minutes 10/07/09 Comments Chair Evans: . Asked the status of the breaker failure scheme; Mr. Day stated that because both Diamond Ridge and Soldotna relaying were rewired, causing the scheme changes, which may have corrected the problem. . What is the status of the gatehouse closing as based on failure of the power supply. Mr. Day stated it’s at the top of the list as they have performed testing and now are aware of the mechanism of the failure mode, which should be corrected this month. . What is the schedule for the fish water release issue: Mr. Carey stated that ADF&G and FWS have developed a draft proposal; mitigation cost may be $20,000; time for engineering support work and flow regimes with FERC may be another $15,000, totaling probably less than $50,000. We should be able to present a business plan by end of year. 8B. Next Meeting Date The next meeting will be at the call of the Chair. 9. ADJOURNMENT Meeting adjourned at 10:25 a.m. BY: £, Wach M.Zoriwe ATTEST: B-x« z Zot) r0s0 Alaska Energy Authosity, Secretary Page 3 of 3 BPMC Minutes 10/07/09 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via electronic media in the AEA Board Room) Anchorage, Alaska Wednesday, June 10, 2009 — 10:00 a.m. 4; CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroélectric Project Management Committee to order at 10:00 a.m. on Wednesday, June 10, 2009, at the AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2 ROLL CALL Roll was called by Shauna Howell. The following members were present: Harvey Ambrose Homer Electric Association Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power Bryan Carey Alaska Energy Authority Gary Kuhn Matanuska Electric Association (teleconference) — City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA Shelby Weems, AEA Carol Harviston, ARECA Insurance Marilyn Leland, ARECA insurance Marge Cabanski, AEA Rick Eckert, HEA Bob Price, AML&P Rick Miller, AML&P Linda MacMillan, AEA Bob Day, HEA BPMC June 10, 2009 Meeting _ Page 1 of 6 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES - February 26, 2009 and April 23, 2009 MOTION: Mr. Newton moved to approve the minutes of the February 26, 2009 meeting. Seconded by Mr. Posey. The meeting minutes were unanimously approved. MOTION: Mr. Posey moved to approve the minutes of the April 23, 2009 meeting. Seconded by Mr. Carey. The meeting minutes were unanimously approved. 7. NEW BUSINESS TA. Presentation of Fish Water Release Mr. Carey stated that Terror Lake has a trial permit modification from FERC on their fish water releases so that they can go 7.5% below what the required minimums are for short periods of time as long as they are up to the minimums for the day. The problem we have at Bradley is that we are gauged 8 miles away from the dam - if it even pops up for a 15 minute interval on to the USGS gauge, at that point we are under violation with our FERC permit. That happens about two or three times per year. The fish water releases can be raised to prevent going into violation so frequently. We are trying to get a better handle on controlling how much water is being released and run it closer to what the minimums are and do a trial FERC modification permit just like the one at Terror Lake. It seems like the resource agencies are not against it and cost-wise we are looking at $25 — $50,000 total of which $10 — $20,000 may be mitigation of fish and game such as a fish survey of the lower Bradley river. In the case of 1 cfs over a year’s time we are consuming 100 megawatts - that comes out to about $72,000. It could be that by running the releases much closer to the minimums with this permit modification we could be saving $200,000 or $300,000 in terms of water each year. There will be some additional work that has to go on in regards to how dispatch at CEA talks to the operators down there so that the operators will know if we go more than the 7.5% below but they can’t be watching their gauges all day long, so there will have to be some work on the coordination of that. Chair Evans asked if the icing and seasonal conditions care for the equipment was well enough so that it would reliably tell us where we were at. Mr. Carey noted that a suggestion for the icing at the gauge would be to put a camera there and operators could see what icing is occurring. For icing that occurs in the canyon, that typically occurs BPMC June 10, 2009 Meeting Page 2 of 6 during the spring months when we have a lot of snow melt. Currently the operators set the releases high just knowing that overnight when no one is watching the gauge levels that it is going to start freezing up — this way having a 24 hour rolling average we will be able to set the release amount during the night time as being a lot closer to what is being required. If it does freeze up we can still catch up with it the next day in terms of opening up the gauges farther. Chair Evans asked if there are fry in the lower river year-round? Mr. Carey replied that during the winter it is the eggs and it is actually thought, without having any type of proof, that we actually have more salmon there now than we did when Bradley was built just because the regulation of the river has allowed greater habitat usage. It is from that standpoint that with the money to be spent, that it may be that Fish & Game request $10,000 to do a fish survey and from that stand point we can prove that having a hydro here is actually beneficial to the salmon. He also added that he was talking about a survey to see what was in there — through discussions with fish and game and what is incurred in regards to Terror Lake. Chair Evans asked if we would get all of the life cycle information — how long they are in there, when they are flushed out? Mr. Carey stated that it wouldn’t be the life cycle information because they have all of that information. It would be information such as has the habitat changed and are there more ‘spawning areas and greater numbers of salmon. There has been a teleconference with resource agencies and they will let us know what information they want from us. A month after that we will do a formal proposal to them to do the modification trial. The formal letter will be disbursed and get concurrence from them and then go to FERC letting them know we have gone to the resource agencies and they are all in agreement with us about proceeding on this path. Chair Evans asked when they needed the funds. Mr. Carey stated this was discussed with the O&D and Jim Thrall. Jim’s time is worth $5,000 - $10,000 for the entire amount and we are using it under the engineering support. If Fish & Game wants to have some type of study, that would be $5,000 - $10,000 mitigation that we could come back and request that. Mr. Day added that the item was put in the budget for Middle Fork equipment check improvements and fish water for $55,000. Some of that will be spent for equipment. Most of what Mr. Carey spoke on is already in the budget. Chair Evans asked Mr. Carey to provide a schedule of what hope to accomplish in the remainder of this budget year. 7B. O&D Report on Bradley Unit Trips Mr. Day stated that there had been a number of trips at Bradley Lake and he is now reporting back to the group on those. On March 23, 2009, Bradley Unit 2 tripped and went off line. There was ‘misbehavior’ out of the system and Bradley contributed to that. The root cause was a vibration sensor on the Nikiski machine which tripped off 40 megawatts. Bradley was in condense mode and it tried to come out of that and there is a mode that is designed into the new governor that is the divider BPMC June 10, 2009 Meeting Page 3 of 6 mode 2, which makes Bradley very aggressive in controlling frequency. It swung the system around extensively. In order to mitigate that, they are working with VA Tech and have a procedure to remove divider mode 2. We will move the set mode at 24 hertz so it won’t go into divider mode 2. Waiting on technical guidance from VA Tech to implement that. Chair Evans asked if there was any use as a last ditch effort to set that one-tenth of a hertz higher than the mechanical throw out bolts on turbines? Mr. Day responded that Mr. Burlingame looked at it from that standpoint and it pushes things around too much. This is an easy way to disable it. The 115 kv ring bus opened up and we couldn't determine why. We believe there used to be an old breaker back-up that used to be implemented there — there are some notes in the original documents. We didn’t want to get in there and test that because it opens up the ring bus. That is on our agenda for the planned outage coming up in July. We will investigate the back-up scheme. It’s breaker failure and information about if one of the two lines is out of service and you are above 50 megawatts you'll trip one of the machines — there are some limitations and strange wiring hidden in the back that we are unable to get good documentation and investigation on. Also, while that had us in single mode operation, we took the opportunity to do our annual relay testing. Normally the relay technician plugs a test block into the relay, does his test and unplugs it. On this particular relay, when it was plugged in, it tripped the unit. We investigated it, found nothing wrong except that maybe when he put in the test block he put it in a little crooked. To prevent any further problems, we lifted all of the trip leads before we inserted the test block. On March 25, 2009, the gate configuration is such that if you lose power at the gate house the inlet to the penstock will close automatically. There is a 3-fold system at the gate house — a main power, backup power and emergency generator plus an inverter that is all supposed to carry you through any kind of outages or problems. During the 23” there were oscillations through the system, the transfer switch at the gate house ‘went crazy’ trying to follow all of this and got itself in a mode where it hung up in between states. The inverter powered the gate house for the next two and a half days. Once the inverter ran out of battery power, the power failed and the gate shut. We lost the unit on low penstock pressure. It is a matter of human to machine interface. The SCADA points we monitor are not as clear as they should be on loss of power, loss of AC. The loss of AC relay is loss of AC and it means the gates are going closed, but that means your communication is down and your RTU is down and you don’t get that alarm. We have a number of improvements to make at the gate house_in terms of putting in a new RTU, putting in new points, putting in new alarms and enunciation and making sure we are monitoring the incoming AC, the inverter AC, whether the generator is running or not, so that the operator and dispatcher at CEA will have full knowledge of what is going on and that will prevent any further problem like this. Had we noticed we were on inverter power at the gate house on the 24" this wouldn’t have been a problem, but we were not aware. 7C. BPMC Budget Policy The budget policy was tabled until the next meeting. BPMC June 10, 2009 Meeting Page 4 of 6 7D. Update on FERC Land Use Fees Protest Mr. Gibson gave a briefing on the protest. He stated that the protest is made up of 11 utilities. The legal expenses of the group will be allocated per each share pro-rata share of federal land within the project. This puts the BPMC at 10.5% of the total bills. Background information was gathered on the land use classification, how Alaska classifies the area around the geographical decision and how isolated Bradley is and the non-project uses on the federal land, which is subsistence hunting and fishing and some camping, as well as the non-allocable project land (farming). This information went to attacking the agricultural index that they now use. FERC’s underlying contention is the projects fully encumber, meaning doesn’t allow any other use of the land, and the problems with Bradley Lake is that the Kenai peninsula has all of the same classifications so downtown Homer has the same classification as Bradley Lake. In our permit request it talks about the transmission line being in wetlands and can only be repaired by helicopter and then access to the project itself is by air or water. We are waiting to hear FERCs ruling on the request for re-hearing. We think that FERC is waiting to see who has paid and who hasn't. Because we were not in the original nine utilities protected by the court, the group went ahead and filed an appeal of the bills on our behalf and Seattle’s behalf. They used the same analysis and work as they did on the other one. The BPMC group approved $30,000. We received a memo from the attorneys and they spent more time than they thought on the original work and they had to add extra work because of the two late-comers (Bradley Lake and Seattle) but they used some of the information. They had $125,000 in bills so far but they wrote it down $25,000 to $100,000 and they think there is probably $50,000 more work involved. We have forks in the road that we can decide if we want to go forward and how much and maybe we benefit from the group as a whole from this point forward. Chair Evans asked how do you protect the individuality of a project in this group? Mr. Gibson responded that they are protecting us very well on the individuality on the nature of it. They went into a fairly extensive description of what is in our permit. Chair Evans asked since we are in a pool, do you think there is a risk of a compromise that splits it down the middle and some got a fair resolution and some got less than fair resolution out of it? Mr. Gibson responded that they pick a system to value land and then they apply it on all of the different dams. If they pick a general index of any type, you are always at risk of individual projects being abused by that index. Then the question being - is there a process in there that you can show that yes, you are using the index but it doesn’t apply to me. The question came up of when we have to pay. Mr. Gibson noted that the bill has already been paid in protest. Also to be noted, the last time they gave a refund, it took seven years for the dams to receive it. 8A. Operators Report Mr. Day presented the group with two handouts. We are at 43% of our average. There is very little snow pack. It is the first time I’ve ever been to the dam on the first of May and very little action with BPMC June 10, 2009 Meeting Page 5 of 6 the bulldozer to get there. The peninsula received significant ash fall and that accelerated the snow melt. There wasn’t much snow to accelerate, but what was there is almost gone. We are at or near the average for this time of year. Also noted is that Aaron Reemer has resigned. They are interviewing for a replacement. They are investigating the backup breaker scheme. Had a fail to start on May 31°. Had an outage on the tie line with no blackout. Unit 2 failed to start. An air pressure sensor had hung up on it — once that was restored the machine started and ran correctly. All of the corrective actions at the gate house, as well as some SF6 inspection and exciter stability study to do. Need to go back to Nuka glacier to see if there is any work to be done soon, as well as power tunnel cleaning, air monitoring, installations, clean and paint the diversion pipe. Transmission tower jacking was also in the budget. The O&D met and decided on a Chair/Vice Chair rotation. HEA will be the Chair and a Vice Chair will alternate through the committee, because HEA is on top of the project and can make the reports and call the meetings easier than someone else. Lastly, there is equipment on order that will be placed on Middle-Fork to give an indication on what is coming into the Middle-Fork for fish flows and that is a piece of the equation for the lower Bradley river so we can get tighter control and keep the water in the dam. Mr. Carey noted a change — the Vice Chair is AEA and is not rotating. Mr. Carey also asked that the utilities update their representative and alternate letters. 8B. Next Meeting Date The next meeting will be at the call of the Chair. 9. ADJOURNMENT Meeting adjourned at 11:07 a.m. BY: “Festa hs ous Saceand ( ad Evans, Chair ATTEST: ; £ £42, Alaska Energy Authority, Secretary BPMC June 10, 2009 Meeting Page 6 of 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES SPECIAL MEETING (via teleconference @ AIDEA/AEA) Anchorage, Alaska April 23, 2009 at 10:00 a.m. 4; CALL TO ORDER Chair Evans called the special meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, April 23, 2009, from the AIDEA/AEA Office, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. _ ROLL CALL Roll was called by Shauna Howell. The following members were present: Brad Janorschke Homer Electric Association (teleconference) Brad Evans Chugach Electric Association (teleconference) Henri Dale Golden Valley Electric Association (teleconference) --- Anchorage Municipal Light and Power (teleconference) Bryan Carey Alaska Energy Authority _ Matanuska Electric Association --- City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA Linda MacMillan, AEA Shellie Helton, AEA Brian Bjorkquist, AEA Mark Johnson, CEA (teleconference) Mike Cunningham, CEA (teleconference) Burke Wick, CEA (teleconference) Don Zoerb, MEA (teleconference) Bob Day, HEA (teleconference) Aaron Remer, HEA (teleconference) Ken Langford, AML&P (teleconference) John Foutz, City of Seward (teleconference) 4. PUBLIC COMMENT There were no public comments. Page 1 of 3 BPMC Meeting April 23, 2009 5! NEW BUSINESS 5A. FERC Land Use Fees Discussion ensued as to the increase of the land use fees (see attached letter). Motion: Mr. Janorschke moved that the Bradley Lake PMC approve the hiring of the Van Ness Feldman, P.C. firm for joining in the protest on the land use fees. Seconded by Mr. Dale. Mr. Johnson briefed the group on the appeal noting that the appeal was filed on behalf of a group of utilities in the Lower 48. He has reviewed the brief and believes in the eyes of a former administrative law practitioner and decision maker that it is a well crafted brief and the arguments that are raised are primarily related to the due process is employed by a FERC in adopting rules from the forest service. His opinion is that the arguments that are raised are very solid and the record does not reflect that FERC independently considered and assessed the appropriateness of the piece. He considers this a very interesting litigation at this point and thinks this has a decent chance of success. He would urge people to support the legal work. Chair Evans said it needed to be discussed how they would manage this going forward. He asked if anyone had an issue with Kirk Gibson being the person who would look into this matter. Chair Evans asked that roll be called due to additional members joining in the teleconference (after the initial start of the meeting) and he also asked that a new motion be entertained as there was now a quorum. ROLL CALL Roll was called by Shauna Howell. The following members were present: Brad Janorschke Homer Electric Association (teleconference) Brad Evans Chugach Electric Association (teleconference) Henri Dale Golden Valley Electric Association (teleconference) -- Anchorage Municipal Light and Power (teleconference) Bryan Carey Alaska Energy Authority —_ Matanuska Electric Association John (?) City of Seward (teleconference) Motion: Mr. Day moved that the BPMC join the class action suit, not to exceed $30,000 estimated in the letter (see attached), for the hiring of the Van Ness Feldman, P.C. firm for joining in the protest on the FERC land use fees. Seconded by City of Seward. Discussion ensued. Chair Evans restated that he would assign Kirk Gibson to keep the BPMC posted and let the group know if this moves through as well as provide updates. Page 2 of 3 BPMC Meeting April 23, 2009 A roll call vote was taken: City of Seward Matanuska Electric Association: Chugach Electric Association: Homer Electric Association: Golden Valley Electric Association: Municipal Light & Power: Alaska Energy Authority: The motion unanimously passed. 6. ADJOURNMENT Meeting adjourned at 10:23 a.m. ATTEST: ke laska Energy Authorit Yes Yes Yes Yes Yes BY: ‘fase: Page 3 of 3 BPMC Meeting April 23, 2009 ecretary BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via electronic media in the Chugach Electric Association’s Board Room) Anchorage, Alaska Thursday, February 26, 2009 — 10:00 a.m. JUN 7 & 7009 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, February 26, 2009, from Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2: ROLL CALL Roll was called by Shauna Howell. The following members were present: Brad Janorschke Homer Electric Association (teleconference) Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power Bryan Carey Alaska Energy Authority -_ Matanuska Electric Association --- City of Seward 3. PUBLIC ROLL CALL Shauna Howell, AEA Kirk Gibson (teleconference) Rick Miller, AML&P Henri Dale, GVEA Doug Hall, AML&P Aaron Remer, HEA Linda MacMillan, AEA Mike Cunningham, CEA Burke Wick, CEA Page 1 of 4 BPMC Minutes 2/26/2009 4. PUBLIC COMMENT There were no public comments. 5: AGENDA COMMENTS New business — Brian Newton asked if there could be a discussion about AEA if there is a move to transfer Bradley Lake to the new REGA entity. Chair Evans asked in fairness to AEA, is there anyone here from AEA able to speak to that? Bryan Carey replied he was not able to speak to that. It will just be a utility discussion. Brian — | just want it put in the minutes the ramifications — Chair | would like it recognized that this is a last minute addition that AEA in no way is prepared to do that. Mr. Newton made mention that there could be authorization of a legal review to find out if it is permissible or exactly can a transfer be accomplished and what ramifications it would have. This item will be added under New Business as Item C. 6. APPROVAL OF MEETING MINUTES — December 17, 2008 MOTION: Mr. Posey moved to approve the minutes of the December 17, 2008 meeting. Seconded by Mr. Day. The meeting minutes were unanimously approved. ite NEW BUSINESS 7A. Update of FY’09 Budget Mr. Cunningham noted that there had been some decreases from the original budget as well as some increases on expenses. He then gave an overview of the budget changes between FY09 and FY10 projected costs noting the net utility contribution increase as $106,598 (see attached). 7B. Approval of FY’10 Budget (Action Item) MOTION: Mr. Day moved that the Bradley Lake Project Management Committee approve the fiscal year 2010 Operating and Capital budget as presented. Seconded by Mr. Newton. Mr. Cunningham presented the group with budget paperwork including the overview of budget changes between FY09 and FY10 noting that the $30,000 for the replacement of the Haylon w/FM- 200 in oil separator room would be taken out. Chair Evans asked that they look and see what every utility is using so they can standardize for power plant work management systems. He would like to see plant managers and IT employees getting together to try and choose a platform they can all work towards. Mr. Day noted that this has been done, but for what they want for Bradley a very compact work management system, it is just too much. They don’t have the staff support at Bradley and don't want to put that effort into that. Mr. Remer was able to find the replacement to the Haylon so they would like to take out the $30,000 from the budget as it was not needed this year. Page 2 of 4 BPMC Minutes 2/26/2009 We over-release about a million to a million and a half dollars worth of electricity of water every year just to be sure we make sure to stay out of trouble of violations -- with better data we get closer. Chair Evans asked the operations committee to prepare a presentation for the BPMC on the fish water release. A roll call vote was taken: City of Seward -— Matanuska Electric Association: --- Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7C: Movement of Asset to Another Corporation Mr. Gibson discussed that the bond documents and the Power Sales Agreement. They think this new organization will work like the BPMC, but something would have to be different. Mr. Posey added that due to the bond documentation, when we as utilities thought about taking this over, we talked about what we would have to do in refinancing it order for us to take over. The bigger question is, if AEA through legislation, transfers this to another entity, would it have to be refinanced and if it is refinanced, what happens to current contracts as to their length; and second, | thought that our current contract said that we paid for this at the rate we’re paying and would continue would pay so that the state could recover some of its grant money as part of this. Mr. Gibson stated that the documents are too detailed to answer those questions. Chair Evans stated that we don’t know what was in the legislation as far as this goes. Mr. Newton stated that if approval was gained that we actually start that process. Chair will cali a special meeting, subject to Kurt Gibson giving a cursory review and getting us some level of detail, enough so that he feels comfortable discussing it if everyone is agreeable to that. 8. COMMITTEE COMMENTS / REPORTS 8A. Operators Report Mr. Day introduced Aaron Remer as a new HEA employee for Bradley Lake. Mr. Remer noted that in general the plant is running well. Mr. Remer added that there was a medical personnel issue but that was taken care of. Mr. Day said they are trying to establish an operator-in-training qualification program with the idea of ‘growing our own operator’ for Bradley Lake. Page 3 of 4 BPMC Minutes 2/26/2009 Mr. Remer explained that there would be an outage on repairs for power lines. They are going to take advantage of that three to four week period of time to get outage work done and reduce the length of the normal scheduled outage. They are continuing work on PNID drawings. Chair Evans stated that he was very concerned about the last two events at Bradley Lake and the response of the plant. Chair Evans was always a proponent that we were trying to make Bradley too responsive and if we in fact created another problem —- very concerned we may have eliminated a response problem and created an even worse response problem. At least from. the governing board, there is a high concern for this because they don’t want to have the tie tripped out because Bradley is over-responding. It may solve Bradley, but it may create a much worse system problem. Would like to see this group come forward to the full committee and talk about the response to the plant and the system. It needs to be elevated to this level because it is such a serious issue. Mr. Day stated that it is a very complex system. Mr. Posey said they put good controls on Bradley, but did not make the changes post agrum at Nikiski. Every time we make a change on the system we need to look at how we tie it back into all of the other pieces. Chair Evans added that we approach this problem as solving the world’s problems with Bradley Lake, and yet this system can respond adversely to those solutions. Chair wanted to give the sense of urgency and wanted it on record that he doesn’t want this problem sitting out there and doesn’t want to get called this time next year and have not done anything. Chair Evans stated that as a first step he wants to get the documentation and bring it to the Board so they are informed. 8B. Next Meeting Date The next meeting will be at the call of the Chair. 9. ADJOURNMENT Meeting adjourned at 11:05 a.m. a de Sess : ae ad Evan ATTEST: 7/ Bide oe 7 Alaska Sia? Autho! a Page 4 of 4 BPMC Minutes 2/26/2009 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes January 23, 2008 Feb 4, 2008 (Elect officers) March 11, 2008 May 14, 2008 June 19, 2008 December 17, 2008 (Wheeling rate motion) BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES TELECONFERENCE (via teleconference in the AIDEA/AEA Board Room) Anchorage, Alaska Wednesday, December 17, 2008 — 10:30 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:30 a.m. on Wednesday, December 17, 2008, via teleconference to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Brad Evans Chugach Electric Association (teleconference) Bradley Janorschke Homer Electric Association (teleconference) Brian Newton Golden Valley Electric Association (teleconference) Wayne Carmony . Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power (teleconference) Bryan Carey Alaska Energy Authority Jeff Estes City of Seward (teleconference) 3. PUBLIC ROLL CALL Shauna Howell, AEA Christa Caldwell, AEA Linda MacMillan, AEA Shellie Helton, AEA Rick Baldwin, HEA (teleconference) Page 1 of 4 Gary Dixon, Swalling and Associates (teleconference) Bonnie Godfried; Swalling and Associates (teleconference) Bob Day, HEA (teleconference) Aaron Remer, HEA (teleconference) Henri Dale, GVEA (teleconference) Rick Miller, AML&P (teleconference) Burke Wick, CEA (teleconference) Mike Cunningham, CEA (teleconference) Don Zoerb, MEA (teleconference) Kirk Gibson, AterWynne (teleconference) 4. PUBLIC COMMENT There were no public comments. 5: AGENDA COMMENTS Chair Evans asked that Insurance Claims to be added as Item 8B, and move Next Meeting Date to Item 8C. The group unanimously approved this change. 6. APPROVAL OF MEETING MINUTES — June 19, 2008 MOTION: Mr. Posey moved to approve the minutes of the June 19, 2008 meeting. Seconded by Mr. Newton. The meeting minutes were unanimously approved. te NEW BUSINESS 7A. Wheeling Rate Approval MOTION: Mr. Posey moved to accept the recommendation of the Budget Committee to implement the Bradley Lake wheeling rate change effective, retroactively, to July 1, 2008. Seconded by Mr. Newton. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. Page 2 of 4 7B. FY08 Audit for Approval — Present Financials for Approval to Issue Refund MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee accept the FY08 audit report and request AEA to refund the FY08 surplus to the utilities by December 31, 2008. Seconded by Mr. Newton. Ms. Godfried gave a brief overview of the audit, noting that this was a clean opinion and had no exceptions and had no unadjusted differences as a result of the audit. Because they made no adjustments to the management financial statement, the refund stands as had been reported previously at $740,267. A roll call vote was taken: CityofSeward: ween Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 8A. Operator Report Mr. Day stated that the annual outage had been taken care of as well as the gate testing. FERC had been to the site and expressed concerns to the continuing corrosion. Part of the corrosion resulted in a trip of the unit during that time. When the facilities transformer failed, power was lost to the dam and the inverter failed to pick up — resulting in a power failure that caused the gate to close. They tripped the unit out on low penstock pressure for a day. Ultimately, they were unaware of the gate closing due to the corrosion of one of the staff switches on the gate in the gate shaft. He also noted that Nuka Glacier work and Middle Fork reports had been sent out. The transformer serving the camp facilities failed unexpectedly (photos were included in the report). It is the second time the transformer has failed in 10 years. It looks like a late manufacturing defect. Aaron Reemer joined as the Bradley Lake Superintendent. 8B. Insurance Update Mr. Gibson spoke on the processing of the claim with the respect to the helicopter accident. HEA has prepared an invoice with support and presented that to AEA for processing to the insurance company for the work that was done as a result of the accident. They are working together to prepare an additional report to be filed by AEA to the insurance company. The amount is approximately $75,000. Page 3 of 4 The utilities will be invoiced, and the insurance proceeds will be refunded to the utilities when they arrive. He also noted the plan to handle future claims. Rick Baldwin, Brian Bjorkquist, Bryan Carey and Mr. Gibson met to talk about aligning the incentives with respect to these claims and having the claims processed more efficiently through HEA as opposed to AEA filling the information out and sending them in. They discussed a process in which HEA would prepare and prosecute all claims on behalf of AEA and the BPMC. Any litigational claims would have to go through AEA and BPMC oversight. BPMC and AEA will be responsible for pursuit of any litigation, should any occur. An issue came up that there needs to be a policy in place that goes hand-in-hand with the recent O&M Agreement. The policy would need some input from the members on one area — and if you necessarily agree that HEA should prepare and prosecute all claims — up to what amount do you want them to process them and go forward vs. that being a claim big enough that the BPMC wants to have oversight? Historically, this helicopter accident is roughly $75,000. Over the last five years, there was a runner (something to do with runner insurance) that was approximately $100,000. Mr. Carmony asked if Mr. Gibson had a suggestion of the amount that would be reasonable. Mr. Gibson stated that it comes down to the comfort level of the BPMC and what they would want to see at these meetings. Chair Evans wanted to be sure that all claim work will be processed without delay. Mr. Gibson, along with Rick Baldwin, Brian Bjorkquist and Bryan Carey will meet and prepare a draft policy which will be presented to the BPMC at the next meeting. 8C. Next Meeting Date The next meeting will be in February at the call of the Chair. 9. ADJOURNMENT Meeting adjourned at 11:00 a.m. BY: Brad Evans, Chair ATTEST: Alaska Energy Authority, Secretary Page 40f 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the AIDEA/AEA’s Board Room) Anchorage, Alaska Thursday, June 19, 2008 — 10:00 a.m. as CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, June 19, 2008, from the AIDEA/AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. as ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association (teleconference) Brad Evans Chugach Electric Association Wayne Carmony Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Christa Caldwell, AEA Henri Dale, GVEA Linda MacMillan, AEA Page 1of 5 Rick Baldwin, HEA Brian Bjorkquist, Dept. of Law Rick Miller, AML&P Burke Wick, CEA Doug Hall, AML&P Bob Price, AML&P Mike Cunningham, CEA (teleconference) Charlie O’Hare, HEA (teleconference) Don Zoerb, MEA (teleconference) Kirk Gibson (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — May 14, 2008 MOTION: Mr. Posey moved to approve the minutes of the May 14, 2008 meeting. Seconded by Mr. Barnum. The meeting minutes were unanimously approved. le NEW BUSINESS 7A. O&M Agreement MOTION: Mr. Carmony moved that the Bradley Lake Project Management Committee approve the Operations & Management Agreement for the Bradley Lake Hydroelectric Project between Homer Electric Association, Inc. and Alaska Energy Authority, effective July 1, 2008 through June 30, 2013 with an automatic renewal for a successive five-year term unless proper notice of termination is given by either party. Seconded by Mr. Carey. Mr. Janorschke stated that HEA went back and addressed the concerns from the previous PMC meeting. Mr. Baldwin added that the first issue of significance is the issue of termination provision that the BPMC was concerned about. The question was raised — what happens if the UPP or some REGA organization comes about and AEA wants to transfer the contract over to the new organization. Section 2D of the Agreement states that the Agreement may be terminated upon no less than six (6) months notice if the termination is approved by the Authority and the majority of the members of the BPMC constituting not less than 75% of project capacity and the Authority contracts to transfer operation and maintenance responsibility over the project to an entity organized to operate generation assets in the railbelt. He went on to Page 2 of 5 state that would allow the rest of the utilities to out-vote HEA if HEA didn’t want to surrender the reigns. The O&D Committee has been working on a new set of work rules that are updated. Those rules are referred to under operator's specific duties in section 5B of the Agreement, which obligates HEA to operate, maintain and repair the project in accordance with the operation and maintenance standards and work rules. The work rules are integrated into this Agreement with the O&D Committee being responsible for developing the work rules. Another issue of concern was the issue of oversight of subcontracts. Section 5Q provides for the operator to agree to comply with any written procedures adopted by the BPMC and approved by the Authority concerning the administration of any subcontracts. The work will be done at the committee level and more detailed procedures can be more easily developed and more easily changed. Mr. Bjorkquist added that in the Agreement under section 12, were procedures for modification of the work rules and that procedure stays in place — modification of work rules require approval of the Authority and the BPMC and that provision was not changed, so you still have the ability to change the work rules in the future. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: = ----- Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7B. Transformer Replacement Mr. O'Hare stated that the facilities transformer at Bradley Lake catastrophically failed. This is the same transformer that failed in 1999. They are rapidly getting a replacement for this transformer and have come up with an estimate of costs totaling $110,000. They are looking into a reduced priced transformer that may reduce that cost. In the meantime, a back-up generator (125 kV) to power the shop, warehouse, crews quarters, duplexes and the dam. The dam itself has a back-up generator, but they opted to get a generator the size that would power the dam and leave the back-up generator and the dam off as a back-up to that. There is a timeframe of four weeks for the transformer to arrive and get replaced. They will be removing the old transformer and sending it out for recause analysis to find out why it failed and significantly right after an earlier transformer failure less than ten years ago. Once they determine what the root cause of the failures are, an active plan to eliminate the cause of this and determine what is needed to be done on an ongoing basis will take place. An authorization of $110,000 is being requested for the replacement of the transformer and the analysis. Page 3 of 5 Mr. Posey asked if there was a spare or if a spare was part of the $110,000 or a part of the replacement plus to get a spare? Mr. O’Hare replied that they do not have a spare and what they would like to do first is get the root cause analysis completed to determine what the cause was before getting a spare or a back-up generator. The manufacturer of the one that failed was not the manufacturer of the previous one that failed. Mr. Posey also inquired as to the $110,000 being the quote for the replacement — do you think there is a cheaper alternative or a different manufacturer that will make one that will meet our needs? Mr. O’Hare gave a breakdown of the costs: Transformer: $70,000 Shipping: $10,000 Misc. Connectors: $ 5,000 Back-up Generator Rental: $ 5,000 Root Cause Analysis: $10,000 Additional Labor: $10,000 MOTION: This is what is known as an extraordinary expenditure and per the O&M Agreement, section 8E, BPMC authorization is needed for these expenditures. Move by Mr. Posey, seconded by Mr. Newton. This will authorize them to replace with the $70,000 plus spending all the connectors and the root cause analysis, afterwards determining if we should look at buying a spare. A roll call vote was taken: City of Seward: Yes Matanuska Electric Association: Yes Chugach Electric Association: Yes Homer Electric Association: Yes Golden Valley Electric Association: Yes Anchorage Municipal Light & Power: Yes Alaska Energy Authority: Yes The motion unanimously passed. 7c. Budget Report Ms. MacMillan gave an overview of the budget report, including a projected surplus in the budget of approximately $480,000. The Budget Finance Sub-committee decided to hold off amending the budget and wait until the final audit and will refund monies to the utilities at that time. Mr. Carey added that insurance quotes for next year have been received from ARECA and Willis and we are seeing a reduction by about $50,000 in the cost of insurance for next year. Page 4 of 5 8A. Operators Report Mr. O'Hare reiterated the transformer failure and added that they are preparing for the annual outage, which starts on July 18, 2008 and ends on August 7, 2008, with a combined unit outage on July 29, 30, and August 1°, 2008. Lake level is at 1,091. The lake level is coming up, but not as fast as anticipated. The snowpack is estimated to be 25-30 percent above average. It is anticipated to have more inflow at the project this year than last year. 8B. Next Meeting Date The next meeting will be Thursday, September 25, 2008, at 10:00 a.m. at AEA. 9. ADJOURNMENT Meeting adjourned at 10:35 a.m. BY: rad Evans, Chair ATTEST: Pi z Alaska Energy Authori ecretary Page 5 of 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the Chugach Electric Association’s Board Room) Anchorage, Alaska Wednesday, May 14, 2008 — 10:00 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Wednesday, May 14, 2008, from the Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2 ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association Brad Evans Chugach Electric Association Brian Newton Golden Valley Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward (teleconference) Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Page 1of5 Christa Caldwell, AEA Henri Dale, GVEA Doug Hall, AML&P Peter Raiskums, MOA Mike Chadwick, MOA Brian Bjorkquist, Department of Law Tuckerman Babcock, MEA Rick Miller, AML&P Charlie O’Hare, HEA Rick Baldwin, HEA Don Zoerb, MEA Linda MacMillan, AEA (teleconference) 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES - March 11, 2008 MOTION: Mr. Janorschke moved to approve the minutes of the March 11, 2008 meeting. Seconded by Mr. Newton. The meeting minutes were unanimously approved. 7. NEW BUSINESS 7A. O&M Agreement Mr. Baldwin stated that HEA originally proposed a 5-year term with automatically renewable 5- year terms. HEA was looking for change in the contract which would eliminate what they viewed is an unacceptable risk of the operator for uninsured losses. The clear provision for who would be responsible for deductible/coverage gaps/claim in excess of the limits — since HEA is operating at cost it didn’t want to assume any risk. HEA has by this agreement received that — there is a provision that uninsured losses will then be a project expense. HEA still remains liable for willfulness conduct or gross negligence. A second item that came up was the interplay between the legitimate interest of the BPMC in controlling the asset that member utilities are paying for and are responsible for and AEA’s duties as the owner and its obligation under the bond. The intent of this draft was to expand the BPMC’s role of beyond its role in the original contract. The original contract provided for the attachment of a master O&M agreement, which had not been negotiated at the time the original contract was entered into. That O&M agreement later became an attachment to the HEA O&M Page 2 of 5 contract (an agreement between the BPMC and HEA). The terms of that agreement were also integrated into the new agreement. The final significant change is language inserted as a result of an insurance study commissioned by the BPMC (Bud Griffin). There was concern at the BPMC that they were having inadequate input into HEA’s subcontracting practices and needed more oversight. Discussion ensued that each subcontract should be put before the individual BPMC utilities or perhaps the BPMC lawyer for review prior to execution by HEA. That discussion never really came to a conclusion because there were discussions of should a minimum limit be put on the contracts so HEA wouldn't have to come back to the BPMC with the subcontracts for janitorial, etc. They provided HEA will follow the subcontracting procedures as established by the BPMC and AEA. Mr. Bjorkquist added input as to history (in his perspective). Over time there has been a balance of interests addressed. On one hand the PMC has wanted to have oversight and the ability to influence what goes on, but on the other hand there needs to be some flexibility/freedom on HEA’s part so there aren't cumbersome processes that add to expense. The question at hand is — is there a way for the BPMC to get re-involved midway rather than just at the beginning during contract review? Mr. Carmony asked if there was anything in place where HEA has the ability to allow for adjustments — if they need a change order to a contract if the amount of the change order is less than 2% of the contract, do they have the ability to go forward or do they have to wait until the BPMC approves? Mr. O'Hare stated that there is no percentage buffer specifically. If HEA sees something will be over budget, they are required to go back to the O&D subcommittee to discuss and determine whether to go forward with taking it to the BPMC for approval or increasing the budget, and that would be a budget amendment. Mr. Bjorkquist added that the indemnification provision comes from legislation that was passed this year (Chapter 4, Session Laws of Alaska 2008), in which all state agencies, including AEA, have language similar to this indemnification language for any construction related contract. The O&M work that HEA does, some of it could be characterized as construction related and therefore the legislature in this law requires that this indemnification language be included in the agreement. Mr. Newton made reference to Section 12 — work rules — and requirements of the Authority and the BPMC approving changes. Mr. O’Hare responded that the work rules were put out by AEA in the early 90s and they were incorporated into the union contract — it states how things will be done at the site. If changes were necessary to the work rules, HEA would have to go to AEA to get approval to change the work rules before it could be negotiated into a new contract. Mr. Bjorkquist added that the concept is that those are issues that would be brought to the BPMC or a subcommittee and dealt with in conjunction with AEA, not just AEA dictating what happens. Page 3 of 5 “Action Item for O&M — bargaining and work rules. Finance and O&D committee to get together on subcontracting and when do we step in and when do we complement HEA and when do we let HEA do their thing. 1. Opener clause 2. Bargaining issue — coming back to the PMC 3. Contracting issue — at what level does the PMC take a more active role. 7B. Auditor Selection Mr. Cunningham briefed the group that with the retirement of Gary Stromberg, there was a process of recommending an independent auditor for the project to the BPMC. The finance committee developed an RFP, posted that on the Alaska CPA website and sent out several invitations to select firms that were recommended by members of the finance committee. There were three responses and the finance committee met after reviewing the responses, making a unanimous recommendation of the retention of Swalling & Associates for a three-year term with the option to renew for two years. Criteria to evaluate the responses included cost/understanding the engagement/audit strategy/experience. MOTION: Mr. Newton moved that the Bradley Lake Project Management Committee retain Swalling and Associates P.C. as the project independent auditor for the year(s) ended June 30, 2008 through June 30, 2010, with an option to extend the engagement for two additional years. Seconded by Mr. Carmony. A roll call vote was taken and the motion passed unanimously. 7C. Internal Audit Report 2008-5 Bradley Lake Hydro Project Mr. Raiskums with the Municipality of Anchorage lead off the discussion regarding the report. They were asked by AML&P to audit the O&M costs at Bradley Lake. Overall, costs were reasonable. A few minor exceptions: work rules and HEA having family members at the plant (liability). Discussion ensued in regards to family members at plant sites, family housing, food/meals, transportation, emergency transportation, tours through powerhouse, security cameras, etc. Chair Evans suggested that this matter be taken back to the O&D committee, in relation to security at the plant and non-qualified personnel with access issues. MOTION: Mr. Newton moved to accept the report. Seconded by Mr. Posey. Discussion ensued. Mr. Carmony moved to express appreciation to the Municipality for providing the BPMC with the information for the purposes of assisting with the management of the project. Seconded by Mr. Posey. A voice vote was taken and the motion passed unanimously. Page 40f5 8. COMMITTEE REPORTS / COMMENTS 8A. Operators Report Mr. O'Hare stated that the annual outage starts July 18” and ends on August 7". R&M is redesigning the replacement for the culvert repair based on closing the runway for a period of time. Construction is anticipated to start in the fall. New flight service (starting June 1, 2008) - Grant has obtained the contract and flight services will be switched to this new airline soon. 8B. Next Meeting Date The next meeting will be Thursday, June 19, 2008, at 10:00 a.m. at Bradley Lake. 9. ADJOURNMENT Meeting adjourned at 11:20 a.m. Senn Brat\Evans, Chair BY: ATTEST: £ Alaska Energy Aut! ity, Secretary Page 5 of5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the AIDEA/AEA Board Room) Anchorage, Alaska Tuesday, March 11, 2008 — 10:00 a.m. 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Tuesday, March 11, 2008, from the AIDEA/AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke (teleconference) Homer Electric Association Brad Evans Chugach Electric Association Brian Newton (teleconference) Golden Valley Electric Association Wayne Carmony (teleconference) Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Christa Caldwell, AEA Kirk Gibson, BPMC Charlie O’Hare, HEA Don Zoerb, MEA Page 1 of 6 Rick Baldwin, HEA Linda MacMillan, AEA Rick Miller, AML&P Henri Dale, GVEA Doug Hall, AML&P Bob Price, AML&P Bob Day, HEA Mike Cunningham, CEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES -— February 4, 2008 MOTION: Mr. Posey moved to approve the minutes of the February 4, 2008 meeting. Seconded by Mr. Newton. Mr. Carmony noted two comments: In item 7B, line 4, add ..and they verbally concurred..., and in line 6, replace the word form to request. The meeting minutes were unanimously approved as amended. Ws NEW BUSINESS 7A. Budget ’08-‘09 Mr. Cunningham spoke about the overview with budget detail involving increases and decreases in the budget. The bottom line being FY09 utility contributions would amount to $16,881,542. Ms. MacMillan noted that they took out $100,000 for contingencies. The bond agreement requires that there is a certain percentage of the estimated operating budget sitting in an operating reserve should there be a cash flow problem. Since the operating budget didn’t go up, the same level of increasing the operating reserve this year that we did last year isn’t necessary. The debt service — the principal has gone down by $900 for next year. The biggest increase has to do with the renewal and contingency fund. That is a fund within the bond agreement that is supposed to be funded up to at least $5M, but then is a borrowing account for the utilities for large repairs. It has been used in the past heavily for runners and governor projects. The amount to repay is increasing this year, and in addition, the other portion of that increase has to do with interest in the fund. Other increases in the budget include studies for long range maintenance of structures/buildings, and this year is for a one-time tunnel draining and cleaning inspection. There is an increase cost for Schedule-A capital for vehicles or equipment as needed at the plant. Arbitrage has also been going up — that is a projected increase in how much we will be paying arbitrage, which is a payment to the IRS when the rate Page 2 of 6 of the bonds is better than it should be than the amount of interest we’re paying on the bond funds. Mr. Carmony asked about an increase of 58%. Mr. O'Hare stated that in 2007 they didn’t have the manpower to take care of all the projects they had budgeted for and a lot of the O&M didn’t get done because the correct staffing wasn’t in place to take care of the things that were budgeted. The 2009 budget has risen a bit higher than expected partly because some of the studies proposed by the O&D committee have been placed back into the O&M portion, which is outside of our normal O&M. The O&D feels they need to do that at Bradley, as well. The other is the architectural study -- a study of the facilities at Bradley Lake. It’s becoming crowded with the manpower that is required there, as well as the large number of vehicles/equipment sitting out in the elements. They are looking to put up a shed and possibly splitting a couple of the duplexes to allow for additional manpower. The difference between 2007 and 2009 is that maintenance didn’t get done that should have because of the lack of personnel. Mr. O'Hare will prepare a write-up the difference in costs and will disburse to the committee. MOTION: Mr. Newton moved to accept the budget, seconded by Mr. Posey. Mr. Carmony noted his objection to the $25,000 in the legal budget. A roll call vote was taken with City of Seward, CEA, HEA, GVEA, AML&P and AEA voting yes, and MEA voting against, as based on the above noted objection. 7B. O&M Agreement Mr. Carey stated that the O&M agreement is in more of a final-draft form as of now. AEA has a new Executive Director and he has not been briefed on the draft O&M agreement. He expects to brief the new Executive Director on the proposed O&M agreement, and shortly after that will be going out to the utilities for comment. Mr. Gibson added that the current O&M agreement is one that has been renewed on an annual basis and we are now going forward and creating a longer term agreement. Mr. Carmony asked if this O&M agreement has been drafted and not released for review? Mr. Carey responded that it has not been released to all of the utilities due to AEA just receiving a new Executive Director who has not yet been briefed. Chair Evans asked that the reason it is being re-drafted is because there is a proposal on the table that we’re going to go to a multi-year O&M agreement instead of a single year and are trying to conform that agreement to a multi-year? Page 3 of 6 Mr. Carey responded that the original agreement was done back in the 90s and needs to be revised and modernized. He expects that a draft will go out shortly after the new Executive Director of AEA approves it and then it will be sent out in draft form for all the utilities to comment. The editing and proposed changes are being done by AEA and HEA. The other utilities are not involved in the discussions at this point. Mr. Carmony asked if Mr. Gibson or AterWynne has in any way shared any part of that proposed agreement with anyone at GVEA. Mr. Gibson replied that he has asked questions with GVEA for clarification or other issues. Mr. Janorschke asked Mr. Baldwin to add clarification. It is Mr. Janorschke’s understanding that the state wanted some changes that would have impacted HEA as the operator, and has a hang up - until HEA and the state resolve that issue as the contractor for the state’s assets, and after those issues were resolved then it was understanding at that point then the draft O&M agreement would go to all the participants. Until HEA and the state had their point of contention addressed and resolved, there was really no point in furthering it for input for the rest of the participants until those issues were off the table. Mr. Baldwin added that the O&M agreement is between AEA and HEA subject to BPMC approval. The efficient way to do it is to have the two parties who are members of the contract put together the contract and then submit it to the BPMC for review and ratification. Mr. Carmony asked for the position of the Chair as to whether or not this process has been abused. Chair Evans said he couldn’t comment, as he just stepped into the BPMC and it would be improper to comment on it. Mr. Carmony asked for a complete account of all the information that has been shared with GVEA -- when it was shared, and who it was shared with. Mr. Carmony would also like to know if GVEA has made any request for information to Mr. Gibson. Chair Evans stated that with the issuance of the draft - information would all be forthcoming with the draft as to what the discussions might have been. Mr. Posey asked what was the anticipated date for the final review and when will the other members be receiving that? Mr. Carey responded hopefully this month. Mr. Carmony asked the Chair that he request the Attorney General's office to give an opinion upon the conduct of Mr. Gibson in this affair based upon the remarks that were made by the attorney from HEA. He believes that accurately represented what was supposed to have occurred and he believes that AterWynne has acted improperly and would like an opinion on that. Chair Evans asked that Mr. Carmony’s request be moved to agenda item 8A -- under Old Business -- Legal Representation for discussion. Mr. Carmony stated he would not like it moved. The complaint you are going to take up is with regards to a long standing objection MEA has had through AterWynne’s representation, but the complaint he just lodged is very specific to a specific issue. Page 4 of 6 Chair Evans stated he does not see that it is not part of MEA’s legal representation matter that is on the agenda later. The Chair's response is that he will defer that to that discussion and MEA can add it to its list of grievances under legal representation under item 8A. 7C. Auditor Selection Mr. Cunningham stated that the finance committee sent out requests for proposal for audit services and three responses were received and have been distributed to the rest of the committee. Deliberations and evaluations of the responses will be taking place and in a month will come to the PMC with a recommendation to retain an auditor. 8. OLD BUSINESS 8A. Legal Representation Mr. Gibson stated that based on the discussion of the February 4" meeting, he spoke with the ethics council regarding MEA’s wish to use David Mayberry of Patton Boggs to do the discussions with AterWynne. Mr. Mayberry and Mr. Blackhurst of AterWynne spoke on February 12" and there was email correspondence between them with documents attached. That goes back to a letter from Ron Saxton to the group (August 14, 1989) as representing he would be the attorney for the group, that no representation that is adverse to the group would be undertaken by AterWynne, but that the representation of the group does not preclude Mr. Saxton or the firm from representing adverse to an individual member of the group and was signed by the BPMC. They went on to make the by-laws as to how consultants would be collected. Mr. Mayberry responded within three hours that he would let AterWynne know if he had any questions and AterWynne has heard nothing since from him. It is Mr. Gibson’s recommendation to move forward with the formal opinion of the Bar. Mr. Walker added that with regards to that, MEA believes that a formal opinion from the Bar could clarify this if it is properly presented. Mr. Mayberry has reviewed the rules related to Bar proceeding and it appears to not be a type of proceeding that will allow for comment or input from other affected parties. Therefore, MEA intends to seek a formal opinion also. MEA intends to seek whatever other remedies they can find to get out from under what they see as an improper representation due to the conflict of interest between AterWynne and MEA. Mr. Carmony made the comment that the specific circumstances that were previously discussed today — these are circumstances that did not come to light until today and he believes that they are relevant to this issue and MEA will be proceeding with the inclusion with these circumstances with whatever remedies we can find to attempt to relieve this situation. 9. COMMITTEE REPORTS / COMMENTS 9A. Operator’s Report Page 5 of 6 Mr. Day reported that the lake level stayed relatively flat throughout the year and has been well managed by CEA as they brought them back into their normal range in February/March. In February the project developed 28,260 megawatt hours and used 29,412 acre feet of water, equating into a 30% load factor, which is a good, normal operation out of Bradley Lake. There were 23 flights for crew change. The plant is running very well and we are getting a number of maintenance items completed. Mr. Day also reported that 2007 was not an indicative year, as HEA was going through difficulties with staffing. It’s part of getting Bradley Lake back to where it needs to be to be managed properly. Mr. O’Hare seconded that 2007 was not an indicative year, as that was the year of the governor project and normal time was spent on that project and they weren't allowed to do the normal maintenance. We had the staff working on that project rather than normal operations and maintenance at the plant. ‘SB. Next Meeting Date The next meeting will be May 7, 2008 at 10:00 a.m. 10. ADJOURNMENT Meeting adjourned at 10:55 a.m. ws) Zeno — 5 Brad vans, Chair Alaska Energy Aut! ffity, Secretary Page 6 of 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (via teleconference in the AIDEA/AEA Board Room) Anchorage, Alaska Monday, February 4, 2008 — 10:00 a.m. 1. CALL TO ORDER Vice Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Monday, February 4, 2008, from the AIDEA/AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bradley Janorschke Homer Electric Association Brad Evans Chugach Electric Association Henri Dale Golden Valley Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Bryan Carey : Alaska Energy Authority 3. PUBLIC ROLL CALL Rick Baldwin, HEA Don Zoerb, MEA Jim Walker, MEA Tuckerman Babcock, MEA Kirk Gibson, AterWynne Shauna Howell, AEA Christa Caldwell, AEA Rick Miller, AML&P Linda MacMillan, AEA Bob Day, HEA Charlie O’Hare, HEA Bob Price, AML&P Valorie Walker, AEA Page 1 of 3 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES -— September 27, 2007 and January 23, 2008 MOTION: Mr. Evans moved to approve the minutes of the September 27, 2007 meeting. Seconded by Mr. Posey. Mr. Carmony noted two corrections: in the roll call section Mr. Babcock should be listed, and in the public roll call section Mr. Zoerb should be listed. The meeting minutes were unanimously approved as amended. MOTION: Mr. Posey moved to approve the minutes of the January 23, 2008 meeting. Seconded by Mr. Evans. The meeting minutes were unanimously approved as presented. It was also noted that all organizations need to send AEA (Shauna Howell) a letter outlining their designate and alternate. Te NEW BUSINESS 7A. Governance MOTION: Mr. Posey moved to nominate Brad Evans as Chair and Brad Janorschke as Vice Chair. Seconded by Mr. Janorschke. There was no discussion and no other nominations. A voice vote was taken and the motion passed: CEA, HEA, GVEA, AML&P, and AEA for the motion, and MEA opposed. 7B. Legal Representation Mr. Gibson gave an update on the issues raised by MEA counsel regarding the ability of AterWynne to represent the PMC group. The ethics counsel at AterWynne reviewed the analysis that had been done previously and it had been concurred, and the Alaska Bar reviewed the same issue and they verbally concurred with AterWynne’s counsel, as well. AterWynne’s ethic counsel has not talked with Mr. Walker of MEA. Once they talk with Mr. Walker, they would request a formal opinion from the Bar and then present that to the PMC for review with complete data. In the meantime, it is asked that MEA rely on the representation until formal opinion is issued. Mr. Gibson reiterated that he does not represent MEA, he just represents the PMC. As soon as the formal opinion is received it will be distributed. Mr. Walker has asked the law firm of Patton Boggs to participate in the formal opinion process before the Bar Association. Mr. Gibson asked if MEA would like AterWynne to contact Patton Boggs. Mr. Walker noted that would be fine — David Mayberry will be representing MEA. Page 2 of 3 8A. Operator’s Report Mr. Day stated that Bradley has been operating very well. Around New Year's there were two incidences where Bradley was exhibiting some unstable behavior when two units are in condense. They are looking into that. The lake level has been below normal, but as time has gone on, it has gotten more toward the historical average. Mr. Day noted that they are going to try and get the EPS involved to help with the analysis. The two units are pushing back and forth, and the only thing they have seen is that when both units are in condense the system is slightly loaded. It could be something in the new governors or it could be possibly the SVS. There is a European safety valve on the SF6 tank that is not factory mutual approved and that needs to be changed out. That has not been accomplished as of today. 8B. Next Meeting Date The next meeting date will be Wednesday, March 12, 2008. ADJOURNMENT Meeting adjourned at 10:15 a.m. BY: Kees! Ciad ol, d Evans, Chair ATTEST: oe £ Alaska Energy Autarity, Secretary Page 3 of 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES SPECIAL MEETING (via teleconference in the AIDEA/AEA Board Room) Anchorage, Alaska Wednesday, January 23, 2008 — 10:00 a.m. a, CALL TO ORDER Vice Chair Janorschke called the special meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Wednesday, January 23, 2008, from the AIDEA/AEA Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Brad Evans Chugach Electric Association Henri Dale Golden Valley Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Shauna Howell, AEA Linda MacMillan, AEA Rick Eckert, HEA Gary Stromberg, Parisena, Stromberg & Company Charlie O'Hare, HEA Rick Miller, AML&P Mike Cunningham, CEA Wayne Carmony, MEA Don Zoerb, MEA Tuckerman Babcock, MEA Page 1 of 3 PUBLIC ROLL CALL (Continuation) Jim Walker, MEA Kirk Gibson, Ater Wynne LLP Agenda Item 1: MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee accept the results of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30, 2007, as presented by Parisena, Stromberg and Company, APC. Seconded by Mr. Evans. Vice Chair Janorschke opened the motion for discussion. MEA asked at what capacity was Mr. Gibson participating in the meeting. Mr. Gibson responded that he was there for the BPMC only. MEA objected to the representation. Mr. Gibson stated that he will not represent the BPMC at this meeting, but rather, will remain on the teleconference as a guest. Mr. Stromberg noted that this would be his last year providing an audit, as he will be retiring. Mr. Stromberg gave a review of the audit. A voice vote was taken and the motion was unanimously approved. Agenda Item 2: MOTION: Mr. Posey moved that the Bradley Lake Project Management Committee instruct AEA to pay the utilities their proportionate share of the FY07 surplus by the end of January, 2008. Seconded by Mr. Evans. Vice Chair Janorschke opened the motion for discussion. No discussion ensued. A voice vote was taken and the motion passed unanimously. Agenda Item 3: MOTION: Mr. Evans moved that the Budget and Finance Subcommittee begin RFP process to select a new auditor for audit of the Revenue and Operating bond funds under 9.3 of the BPMC By-Laws. Vice Chair Janorschke opened the motion for discussion. No discussion ensued. A voice vote was taken and the motion passed unanimously. Thanks was expressed to Mr. Stromberg for his work on the yearly audits. Page 2 of 3 The next meeting will be at the call of the Vice Chair. ADJOURNMENT Meeting adjourned at 10:25 a.m. a BY: Caren) ATTEST: Z a f Yi Alaska Eneray ploy, Secretary Page 3 of 3 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes February 23, 2007 June 26, 2007 September 27, 2007 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (Held @ CEA’s Board Room) Anchorage, Alaska Thursday, September 27, 2007 — 10:00 a.m. 1. CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, September 27, 2007, from Chugach Electric’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association Steve Haagenson Golden Valley Electric Association Bradley Janorschke Homer Electric Association Tuckerman Babcock Matanuska Electric Association Jim Posey Anchorage Municipal Light and Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Don Zoerb, MEA Kirk Gibson, AterWynne LLP Brian Bjorkquist, Department of Law Doug Hall, AML&P Henri Dale, GVEA Charlie O’Hare, HEA Rick Baldwin, HEA Rick Eckert, HEA Lee Thibert, CEA Tom Johnston, ARECA Insurance Exchange Carole Harbeson, ARECA Insurance Exchange Kathy Collins, ARECA Insurance Exchange Bob Price, AML&P Linda MacMillan, AEA Mike Cunningham, CEA Rick Miller, AML&P Page 1 of 5 PUBLIC ROLL CALL (Continued) Lou Agi, AML&P Phil Steyer, CEA Christa Caldwell, AEA Shauna Howell, AEA 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS Move the O&M Contract item up and move Legal Bills/Service down and make it Item D. Mr. Day added a request for Seward and MEA to be added at the end of the meeting. 6. APPROVAL OF MEETING MINUTES -— February 23, 2007 and June 26, 2007 MOTION: Mr. Posey moved to approve the minutes of the February 23, 2007 and the June 26, 2007 meetings, seconded by Mr. Haagenson. The meeting minutes were unanimously approved as presented. re NEW BUSINESS 7A. Fixed Wing Aircraft Services HEA had some internal concerns about the flight services they were using - both for the protection of their employees and for the financial exposure to the BPMC. HEA used Maritime Helicopters for a two-week period while trying to come up with a solution. HEA found a 206 that they are leasing from a lodge across the bay for the winter months through April. HEA will look at their policies and expectations and guidelines and sometime this winter will gather the financial information they have. In the interim, HEA will gather more information to obtain a clear understanding of what the expectations are of both the aircraft and the pilots. Mr. Janorschke noted that both policies are being reviewed by attorneys. Mr. Haagenson recommended council for the BPMC does their own review as well. Chair Stewart asked AterWynne to take a look at the policies. HEA will have their attorney forward their findings. 7B. Insurance Mr. Carey noted that earthquake insurance, the way it was procured, was underwritten for Bradley for $50M. The probable maximum loss for Bradley is $40M, so for the last couple of years it’s been $20M of insurance for single occurrence for ARECA and $20M through the state broker, Willis. We recently found out that ARECA’s ability to insure went to $50M. We now have $50M through ARECA and $20M through Willis. Currently, Bradley has earthquake insurance of $70M. Because of the changes of the insurance market, it may be good for the Budget Finance Subcommittee to look at how we procure insurance in the future. Mr. Posey asked if the cost was increasing? Page 2 of 5 Mr. Carey responded that the cost went down from last year, so this year we have more insurance at a lower cost. ARECA added that the reason why the policy coverage went up from $20M to $50M is because ARECA Insurance Exchange renegotiated their insurance contract for the ’07-’08 year and they were able to negotiate better terms for this year. ARECA does regularly practice re-marketing insurance every year for cost purposes and to insure that ARECA’s interests are protected, they will be going to market again for the '08 year. Mr. Carey suggests that the Budget Finance Subcommittee look at this and property insurance in general. There have been recommendations made by insurance consultants to the BPMC before and there are Bradley recommendations in there. Mr. Haagenson posed the questing - if we are getting twice as much for half the price, why would we investigate? Are we looking at different vendors? Mr. Carey responded that we are looking more at would we like the process to stay the same or have a different process. Mr. Carey is not recommending that we change vendors or not, but he doesn't believe that this has been looked at for a while. Mr. Carey noted that the BPMC consultant looked at some specific insurance policies and made recommendations. Some of them have been resolved or acted on or have input from the other utilities. The other standpoint, the reason why we requested the O&M contract be put right underneath the insurance agenda item is because some of the insurance flows into the O&M contract. 7C. O&M Contract Mr. Baldwin noted they have been waiting for the insurance issue to be resolved before we got into the O&M discussions. About a year ago, the issue was placed before the BPMC as to whether or not the O&M Agreement should be amended. HEA offered up a 5-year term. AterWynne has issued up another draft, which adds some additional changes. HEA offered up what they thought the changes should be. The Agreement really does need to be looked at — the only question is what is the process for doing that? As Mr. Carey and Mr. Bjorkquist indicated, the insurance issues also flow into that. It was agreed that the Budget Subcommittee look at the O&M Agreement and the issues that are raised, come to some agreement on the business decisions that need to be made, and then have the lawyers review. Chair Stewart asked that if a meeting were called in January or February, would they be prepared to vote it? He noted that they have to be fair to HEA’s needs. Everybody is very supporting to voting a 5-year deal, it is the details that need to be cleared up. Chair Stewart stated that they will either agree or come to the BPMC with the two positions and we'll either agree or disagree and we'll vote on it and we'll move on. 7D. Legal Bills/Services It was noted by Mr. Gibson of AterWynne, that the BPMC was paying bills which more rightly go to the Railbelt Utility Group (RUG). Mr. Gibson met with Mr. Bjorkquist and discussed the bills and made sure that there wasn’t any crossover and noted that the bills be re-issued to the BPMC. Those bills have been re-issued and what is now needed is a ratification of the bills and request for payment. Mr. Bjorkquist’s understanding is that because the bills were billed Page 3 of 5 through the RUG, there is ambiguity through the contracts, and this clears up the ambiguity so that makes it ready to go forward. MOTION: Mr. Haageson moved to reinforce the authority of the BPMC to approve the proper bills submitted for the BPMC agreement. Seconded by Mr. Posey. Chair Stewart opened the floor for discussion. Mr. Babcock noted that there have been various motions made directing the Chairman to come back to the BPMC with a recommendation for a neutral counsel to represent the BPMC. MEA noted their concern with a conflict of interest in using AterWynne as the BPMC counsel. MEA objects to the motion on the grounds that there is a conflict of interest in using AterWynne as BPMC counsel as well as the BPMC not having been able to find a neutral attorney to represent the BPMC. MOTION: Mr. Haagenson restated the motion to reinforce the authority of the Chairman to authorize and approve for payment valid bills submitted to the Chairman for the BPMC purposes. This motion isn’t really about giving them more power, it says when the Chairman gives a bill to AEA to pay, that they should pay it. Their responsibility should be —is ita BPMC purpose. Mr. Gibson stated that there is no conflict of interest so long as the interests of the party align. When he works for the BPMC, he does it for all the utilities jointly as BPMC. As long as the utilities, under the BPMC are aligned, there is no conflict. Mr. Babcock stated that MEA maintains their objection. A voice vote was taken and the motion passed: City of Seward, CEA, HEA, GVEA, AML&P, and AEA for the motion, and MEA opposed. 7E. Anonymous Complaint Mr. O'Hare briefed the group on a letter siting difficulties in the operation and maintenance at Bradley Lake. A response was written and given to the BPMC members explaining the investigation into each allegation explaining how these allegations were baseless. Kaufman Engineers provided a review of the fire system. They have an appropriate valve, which will be completed by the end of the year and installed. We don't feel it was a serious problem and did not cause the fire system to be non-functional, it was simply a leaky valve. During an outage, an inspection was done by Mr. Day on the other areas of concern. The coating on the piping — the piping was carbon steel rather than stainless steel, which was the original. The carbon steel piping was coated with epoxy, much like most of the equipment. Mr. Day found no problems. He also did a brief look of the wells that were cited in the anonymous letter, and found no problem with those wells that he could visually see. In the response it explains that they are in the process of putting together a new governor and the wells were looked at and were addressed with the contractor and they were deemed to be just fine. The quality is well within standards of industry practice. Some of the reps of the utilities and the O&D Committee have all visited the site, most of which have gone down into the runner pit where the things of concern are located and we have heard Page 4 of 5 nothing of any concern in terms of feedback. Each visitor had praised HEA’s making of the facility itself. We continue to feel there is no concern in any of these allegations and no basis for these allegations. HEA is diligent in the operation and maintenance. Tes Election of Officers MOTION: Mr. Janorschke motioned to keep the board as is. Seconded by Mr. Haagenson. A voice vote was taken and the motion passed unanimously. 8A. Operator’s Reports Mr. Day reported that both runners have been replaced on unit 1 and 2 and they are running well. They have replaced the microwave system and moved it down on the road and installed a new cable in the fiber optic system that runs along the road, which in turn powers the gate diversion tunnel at the dam. They have successfully tested the gate house control as well as the diversion tunnel and are happy to report they did not drain the lake while doing the testing. Normal maintenance has gone on and they have completed the annual maintenance for the year during the shutdown on the runners. The relays have been replaced on the Soldotna- Bradley Lake line. There were some issues with those getting those fully operational. The new microwave system has solved those communication problems. Mr. Day had a request for Seward and MEA that they please inform him who their representatives are so that they will be able to receive all communication from the O&D Committee. Chair Stewart noted that all organizations need to submit a letter to the Chair of their primary and alternate members. The next meeting date will be left at the call of the Chair. 9. ADJOURNMENT The meeting adjourned at 11:10 a.m. abs iA BY: Crem ATTEST: tah i Z Alaska Energy Authofity, Secretary LY 4 Page 5 of 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES Special Meeting — Held Via Teleconference at AIDEA/AEA Board Room - Anchorage, Alaska Tuesday, June 26, 2007 - 10:00 a.m. 1. CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Tuesday, June 26, 2007, via teleconference to conduct the business of the Committee per the public notice. 25 ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association (teleconference) Steve Haagenson Golden Valley Electric Association (teleconference) Bradley Janorschke Homer Electric Association (teleconference) Rick Miller Anchorage Municipal Light & Power (teleconference) Karl Reiche Alaska Energy Authority 3. PUBLIC ROLL CALL Linda MacMillan, Alaska Energy Authority Jenny Trieu, AterWynne (teleconference) Mike Cunningham, Chugach Electric Association (teleconference) Bob Day, Homer Electric Association (teleconference) Henri Dale, Golden Valley Electric Association (teleconference) 4. NEW BUSINESS 4A. FY07 Budget Amendment Linda MacMillan MOTION #07-03: Mr. Janorschke motioned the Bradley Lake Project Management Committee approve to reduce the FY07 budget by $548,000 and request the bond trustee to refund the surplus to the utilities by June 30, 2007. Seconded by Mr. Haagenson. A voice vote was taken and the motion passed unanimously. Page 1 of 2 5. ADJOURNMENT The meeting was adjourned at 10:10 a.m. BY: Bill Stewart, Chairman ATTEST: Zz Alaska Energy A rity, Secretary Page 2 of 2 1. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (Held @ CEA’s Board Room) Anchorage, Alaska Friday, February 23, 2007 — 10:00 a.m. CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Friday, February 23, 2007, from Chugach Electric - Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. Roll was called by Shauna Howell. The following members were present: ROLL CALL Bill Stewart Chugach Electric Association Steve Haagenson Golden Valley Electric Association (teleconference) Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light & Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority PUBLIC ROLL CALL John Cooley, Chugach Electric Association Burke Wick, Chugach Electric Association Bradley Evans, Chugach Electric Association Bob Price, Anchorage Municipal Light & Power Phil Steyer, Chugach Electric Association Suzanne Gibson, Chugach Electric Association Henri Dale, Golden Valley Electric Association Brian Hickey, Chugach Electric Association Charlie O’Hare, Homer Electric Association Rick Baldwin, Homer Electric Association Rick Miller, Anchorage Municipal Light & Power Linda MacMillan, Alaska Energy Authority Jenny Trieu, AterWynne Don Zoerb, Matanuska Electric Association Page 1 of 3 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — December 15, 2006 Mr. Janorschke moved to approve the minutes of the December 15, 2006 meeting, seconded by Mr. Posey. The meeting minutes were unanimously approved as presented. if NEW BUSINESS 7A. FY 08 Operating and Capital Budget Linda MacMillan MOTION #07-01: Mr. Posey moved that the Bradley Lake Project Management Committee approve the fiscal year 2008 Operating and Capital budget as presented. Seconded by Mr. Janorschke. MOTION #07-02: Mr. Carmony motioned to amend budget to remove $40,000 legal item labeled as Bradley Lake PMC Legal. Seconded by Mr. Janorschke for discussion. After discussion, a voice vote was taken and the motion to amend the budget to remove $40,000 for legal items failed. f The Chair called the question for approval of the Bradley Lake Project Management Committee to approve the fiscal year 2008 Operating and Capital budget as presented. A voice vote was taken and the motion passed with one opposed vote from MEA. 7B. FY 07 Interim Budget Report Linda MacMillan Linda MacMillan presented the report stating that this was the first time in a couple of years that they weren't asking to amend the budget. This report is given quarterly to the Budget Subcommittee members and will now be added to the BPMC members as well. 7C. Homer O&M Agreement Brad Janorschke Mr. Janorschke handed out a new version of the Agreement and reviewed with the group the new language and other changes that were inserted. It was agreed that a smaller group (consisting of relevant attorneys and other participants) would get together to get issues resolved within 30 days, with an outside limit of 60 days. The group will use the version of this document that was emailed out by the Chair on February 20, 2007. 8. COMMITTEE REPORTS 8A. Operators Report / Update on Governor’s Modification Project- Charlie O’Hare Mr. O'Hare stated that the governor project is 95% complete. The revisions to the algorithms are going to take place next month. The running total is $5.2M, which excludes some costs from CEA prior to 2002, which were reported by Brian Hickey to be $776,000. Page 2 of 3 Mr. Cooley added that the governor functions much better than the old one, saying it’s in the high 90%. The change in algorithms will take place starting March 19". Overall, the operators are happy with the new governor. 8B. NEXT MEETING DATE The next meeting date will be May 18, 2007 at HEA or the Bradley Lake Project site. 9. ADJOURNMENT The meeting was adjourned at 10:30 a.m. BY: tewart, Chairman ATTEST: x Alaska Energy Authority’ Secretary Page 3 of 3 Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes March 28, 2006 July 26, 2006 (Elect officers) December 15, 2006 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES (held @ CEA’s Board Room) Anchorage, Alaska Friday, December 15, 2006 — 10:00 a.m. a. CALL TO ORDER Chair Stewart called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Friday, December 15, 2006, from Chugach Electric Association’s Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2 ROLL CALL Roll was called by Shauna Howell. The following members were present: Bill Stewart Chugach Electric Association Steve Haagenson Golden Valley Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light & Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Tuckerman Babcock, Matanuska Electric Association Elvi Gray Jackson, Anchorage Municipal Light & Power John Cooley, Chugach Electric Association Bob Price, Anchorage Municipal Light & Power Rick Miller, Anchorage Municipal Light & Power Mike Cunningham, Chugach Electric Association Linda MacMillan, Alaska Energy Authority Brian Hickey, Chugach Electric Association ___Henri Dale, Golden Valley Electric Association Charles O’Hare, Homer Electric Association Jenny Trieu, AterWynne Suzanne Gibson, Chugach Electric Association Gary Stromberg, Parisena, Stromberg & Company (teleconference) Bradley Lake Project Management Committee Meeting December 15, 2006 Page 2 of 3 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — July 26, 2006 Mr. Haagenson moved to approve the minutes of the July 26, 2006 meeting, seconded by Mr. Janorschke. The meeting minutes were unanimously approved as presented. 7. NEW BUSINESS 7A. Bradley Lake Audit Status Report - Gary Stromberg Mr. Stromberg presented the final draft of the audited financial statements and other financial information for Bradley Lake Project Management Committee Operating and Revenue Funds for the period ending June 30, 2006 and 2005. The group would like to receive an interim or budget variance report throughout the year. MOTION #06-10: Mr. Haagenson moved the Bradley Lake Project Management Committee accept the results of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30 2006, as presented by Parasena, Stromberg & Company, APC. Seconded by Mr. Posey. A voice vote was taken and the motion passed by unanimous approval. MOTION #06-11: Mr. Posey moved the Bradley Lake Project Management Committee instruct the utilities to pay their proportionate share of the FY06 short fall ($70,648.40) to the bond trustee, U.S. Bank, on or before February 1, 2007. Seconded by Mr. Janorschke. A voice vote was taken and the motion passed by unanimous approval. 7B. Insurance Coverage — Mike Cunningham Mr. Cunningham gave an overview of a 2-page handout on commercial property and boiler and machinery. The group discussed comfort levels with amount of insurance coverage as well as premium prices. 7C. Homer O&M Agreement — Brad Janorschke Mr. Janorschke presented the group with HEA’s request to have a 5-year renewable instead of a year-to-year Agreement. The 5-year Agreement would be easier for HEA in regards to planning_and training. HEA is requesting-a 5-year Agreement.and. change the year to 2007. After discussion, the Chairman said that the group who would be tasked with looking this Agreement over would bring back something to the BPMC in 60 days. Each utility will have one person designated to perform the review and report back. Chair Stewart will have someone Bradley Lake Project Management Committee Meeting : December 15, 2006 Page 3 of 3 from his office schedule the meeting with an invitation for the utilities to send someone to participate. 8. COMMITTEE REPORTS 8A. Operators Report / Update on Governor’s Modification Project- Charlie O’Hare Mr. O’Hare gave an overview of an update handout, which included budget information, available spin limit, and power and fiber cable replacement — the report states that the Bradley governor project is 95% complete. There was some discussion as to the total expenditures and Mr. O’Hare said he will have the total expenditures to date at the next meeting. He also stated that the O&D recommends the BPMC rescind the present limits on Bradley Lake spinning reserve in favor of new limits and/or use requirements developed by the IOC Dispatch Subcommittee when they have been finalized. After some discussion, Mr. O’Hare said he would take this back to the O&D Committee and re-address it. The issue of the power and fiber cable replacement was discussed, with the emphasis being on the over projected project cost of $200,000. HEA will provide a budgetary update at the next BPMC meeting to include a budget amendment request, if required. HEA will have Rick Baldwin review and approve the construction contract bid selection. After approval, they will be forwarded to the BPMC Chair. 8B. NEXT MEETING DATE The next meeting date will be in February at the call of the Chair. 9. ADJOURNMENT The meeting was adjourned at 11:20 a.m. BY: ATTEST: BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES 813 W. Northern Lights Boulevard Anchorage, Alaska Wednesday, July 26, 2006 — 10:00 a.m. 1. CALL TO ORDER Chair Haagenson called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Wednesday, July 26, 2006, from the Alaska Industrial Development and Export Authority's Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Steve Haagenson Golden Valley Electric Association Bill Stewart Chugach Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association Jim Posey Anchorage Municipal Light & Power Tim Barnum City of Seward Bryan Carey Alaska Energy Authority 3. PUBLIC ROLL CALL Rick Miller, Anchorage Municipal Light & Power Mike Cunningham, Chugach Electric Association Tuckerman Babcock, Matanuska Electric Association Don Zoerb, Matanuska Electric Association Lee Thibert, Chugach Electric Association John Cooley, Chugach Electric Association Robert Day, Anchorage Municipal Light & Power Charles O’Hare, Homer Electric Association Rick Eckert, Homer Electric Association Henri Dale, Golden Valley Electric Association Bob Price, Anchorage Municipal Light & Power Linda MacMillan, Alaska Energy Authority Rick Baldwin, Homer Electric Association ‘Bradley Lake Project Mana,zment Committee Meeting July 26, 2006 Page 2 of 6 4, PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS Mr. Carmony added under New Business — Section F — Legal Matters (2 motions). Chair Haagenson added under New Business — Section G — Letters from AEA. 6. APPROVAL OF MEETING MINUTES — March 28, 2006 Mr. Janorschke moved to approve the minutes of the March 28, 2006 meeting, seconded by Mr. Posey. The meeting minutes of March 28, 2006, were unanimously approved as presented. Te NEW BUSINESS 7A. ELECTION OF OFFICERS Mr. Janorschke nominated Mr. Stewart for the position of Chairman, seconded by Mr. Carmony. Mr. Posey nominated Mr. Haagenson for the position of Chairman, seconded by Mr. Barnum. The group voted and Mr. Stewart was voted in as Chairman of the BPMC. Mr. Posey nominated Mr. Haagenson for the position of Vice Chairman, seconded by Mr. Barnum. Mr. Carmony nominated Mr. Janorschke for the position of Vice Chairman, seconded by Mr. Stewart. The group voted and Mr. Janorschke was voted in as Vice Chairman of the BPMC. The position of Secretary/Treasurer remains with AEA. 7B. FERC INSPECTION REPORT - CAREY Mr. Carey reported that during the week of July 10, 2006, the FERC inspection and Part 12 inspection, as well as the Potential Failure Modes Analysis (PFMA) discussions/meetings were held at HEA. Most of the discussions involved the PFMA and the history of Bradley and potential problems. Bradley came out as having more calcite than what the inspectors have seen in other dams. There is a small amount of corrosion down the diversion tunnel, which will be monitored. Seismic movement for Bradley, that was approved by FERC in a record decision, is a greater amount of movement than what FERC normally approves. The discussion came up ________ of why Bradley could have greater seismic movement than other dams. It has been proposed that the tunnel drains which are accessed from the outside be cleaned out next year. ‘Bradley Lake Project Mana, zment Committee Meeting July 26, 2006 Page 3 of 6 7C. INSURANCE RENEWAL - CUNNINGHAM Mr. Cunningham gave a summary of the insurance summary Renewal period July 1, 2006 — July 1, 2007 and Expiring period July 1, 2005 -— July 1, 2006. Mr. Haagenson’s recommendation was to find a way to fund $20M. Mr. Posey added that the group should look at the cost of borrowing or a letter of credit for $20M from either AIDEA or someone else vs. the cost of insuring it. The group agreed to revisit this item at the next meeting with more information becoming available from the underwriter and Mr. Cunningham, also adding to that AIDEA’s look at how they would help fund the $20M. Mr. Carey clarified that it is Alaska Energy Authority that owns it and not AIDEA. 7D. RENEWAL & CONTINGENCY FUND REDEPOSIT PROCEDURE - MACMILLAN Ms. MacMillan gave a brief overview of the procedure, stating that this was a proposed housekeeping tool so that the movement of cash matches the budget plan. Motion #06-5: Mr. Janorschke moved to approve the Renewal and Contingency Fund redeposit procedure beginning with project fiscal year ended June 30, 2006 as follows: Renewal and Contingency Fund redeposit will be made in early August each year. The amount will equal the approved budget percentage of actual accrued expenditures as of June 30 of the fiscal year just ended. Seconded by Mr. Posey. A voice vote was taken and the motion passed by unanimous approval. 7E. HOMER O&M AGMT — RECOMMENDATION FROM THE COMMITTEE - DALE Mr. Dale stated that the O&D Committee did meet and the recommendation was to not extend the contract, not change the terms of language at this time. Mr. Carmony added that the document that Homer presented be modified to say 5 years instead of 10 years and we vote in favor of extending this agreement for 5 years. Mr. Posey noted that if we are going to propose that, then to send it back to the O&D Committee and address at the next BPMC meeting. Motion #06-6: Recommend to not extend the contract, and not change the terms of language at this time. Seconded by Chair Stewart. Discussion ensued as to moving this item to the next BPMC meeting allowing more time for the 0&D Committee to make changes or a further review. Motion #06-7: Mr. Carey moved to table this item until the next meeting date. Seconded by Mr. Posey. A voice vote was taken and the motion to table passed by unanimous approval. ____ The 0&D Committee was tasked with reviewing this document.and_ making necessary changes——___ for presentation and review at the next BPMC meeting. 0 Bradley Lake Project Management Committee Meeting July 26, 2006 Page 4 of 6 7F. LEGAL MATTERS — (2 motions) CARMONY First Legal Matter Motion #06-8: Mr. Carmony moves that the legal services provided to the BPMC by AterWynne be terminated and that an offer be extended to the firm of Davis Wright Tremaine to be retained as interim counsel to the BPMC. Seconded by Mr. Janorschke for discussion. Mr. Carmony’s concern is that there is commingling legal advice across the boundaries of various organizations. Mr. Haagenson stated that on the IOC everyone has their own attorneys, and the IPG is the same. Mr. Carmony added it may be time to terminate their services and obtain a firm that the group is all convinced can provide advice to the group. His research directed him to the firm of Davis Wright Tremaine as a recommendation for an interim counsel, hence the termination of the firm of AterWynne and extend an offer to Davis Wright Tremaine. Mr. Carey stated that the firm of Davis Wright Tremane could have a problem with in the sense that there would be conflict of interest, and asked if there were any other firms that could be used. Mr. Haagenson added that this group has a right to pick their own attorney. AterWynne is the present attorney by letter agreement. If the move is made to Davis Wright Tremaine, he recommended finding another attorney, adding that it may involve extending the search out of state. Mr. Carmony amended the motion to read: Move we terminate the services of AterWynne and have the Chairman begin immediately to identify and employ or retain an interim counsel until such time as something can be brought to the board for a more permanent arrangement. Seconded by Mr. Janorschke for further discussion. Mr. Haagenson stated that terminating before employing could be a big mistake and to use caution if the group proceeds this direction. It might be worth further amending Mr. Carmony’s motion to say we are looking at replacing AterWynne with someone else, and let this group do an evaluation to find a replacement and do the action at the correct time. Mr. Carmony stated that if that was a suggested amendment, he would second it. Mr. Carmony stated that we have made the decision to pursue new counsel and are going to authorize the Chair to do that investigation and bring a recommendation back to the group. Mr. Haagenson restated that he is not authorizing getting new counsel — rather, going out and find someone to replace them and once we have them and pick them, then we will replace them. Mr. Janorschke further amended the motion to include a timeline of the end of the year 2006. Chair Stewart agreed to making the assignment and a timeline. The Chair will bring back recommendations to the next BPMC meeting with a decision at the following meeting by the end of the year. A voice vote was taken and the motion was passed by unanimous approval. “Bradley Lake Project Management Committee Meeting July 26, 2006 Page 5 of 6 Second Legal Matter Motion #06-9: Mr. Carmony moves that the Chairman promptly inform the utility members of the BPMC of all work assigned to the BPMC attorney. Further, that all work products, including drafts of the attorney be distributed to each utility at the same time it is turned over for review to the Chairman. Seconded by Mr. Janorschke for discussion. It was agreed that the wording “including drafts” will be removed from the above-stated motion. A roll call vote was taken and the results were as follows: City of Seward No Matanuska Electric Association: Yes Chugach Electric Association: No Homer Electric Association: Yes Golden Valley Electric Association: No Anchorage Municipal Light & Power: No Alaska Energy Authority: Yes 7G. LETTERS FROM AEA - HAAGENSON Mr. Haagenson presented three letters: Letter from Bryan Carey to Steve Haagenson dated June 13, 2006 Letter from Steve Haagenson to Bryan Carey dated July 17, 2006 Letter from Ron Miller to Steve Haagenson dated July 25, 2006 He stated the two points the letters reference — request for bond counsel for work that they did and request for backup for the other part of the invoice. Mr. Bjorkquist noted that the concern that AEA has with the invoice that was given is the description didn’t describe what was done sufficiently to know that it was related to the operations of Bradley as opposed to something else. Reviewing bond documents — what was the purpose, what was intended, why was that being done. Multiple things are going on amongst the utilities with respect to Bradley and other issues — including possible divestiture. That is not related to operating Bradley, and if that is what this legal review is for, it’s inappropriate to be passed through the Bradley budget. That is fundamentally the question that AEA asks — what was being done with this, what’s the work, so that AEA knows. The second part about requesting the work product that came from that, in the past, you have shared work product with AEA, and that is a very efficient way to operate. If there is a common understanding of how things work, things work much better. What was intended was if this is something that you believe is appropriate to share with us, share it so that we don’t have to duplicate the work effort to come to our own conclusion on the very same issues. AEA asks for clarification that it's appropriate within Bradley operations as opposed to outside Bradley operations into something that would be inappropriate to pass through the Bradley budget. The role that we suggest AEA plays is a minimal role and the only question that we ask related to that is to obtain assurance that what you are invoicing through the Bradley budget, passed through to every ratepayer in the railbelt, is related to Bradley operations and not something else. You are exempt from regulation for Bradley, not from anything else. When the last fiscal Ny ov “Bradley Lake Project Management Committee Meeting July 26, 2006 Page 6 of 6 years budget was approved, there was a request to put in $150,000 for formation of a joint action agency, which is unrelated to operating Bradley — it has to do with the potential divestiture of Bradley. The Bradley budget is inappropriate for that and for AEA just to ask for Clarification that the invoices relate to Bradley and Bradley operations is a minimal intrusion into the prerogatives of the BPMC. Chair Stewart asked that there be more use of phones and less use of letters to resolve these issues. 8. COMMITTEE REPORTS 8A. OPERATORS REPORT — UPDATE ON GOVERNOR MODIF. PROJECT — O’HARE Mr. O’Hare gave a brief overview on the project update handout dated July 26, 2006. The overview included items accomplished, major problems encountered and expenditures to date. He stated that construction was completed on Unit 1 as of May 13, 2006 and have started testing, which was put on hold on May 18, 2006 due to a divider issue. The modifications for that divider issue were completed on July 6, 2006, and testing for Unit 1 was completed on July 10, 2006. The testing proved the new design has improved the operation of the Unit. Unit #2 construction started on July 12, 2006. Expect construction to be complete on August 8, 2006, followed by testing of both units on August 16, 2006. Some of the major problems encountered include a deficiency in the design of the hydraulic system that precluded the dividers to operate at the required speed of 1.1 seconds. That mandated that VA TECH go back and do some redesign and hydraulic upgrades, which caused a delay and a change order to the initial contract. During construction of Unit #1 some problems with the linkage were found, including pitting and galling. VA TECH has corrected these problems with Unit #1 and just found that Unit #2 has the same problems. It has resulted in change orders to the contract and a bit of a delay. During testing of Unit #1, it was discovered that the new hydraulic system was not strong enough to pull the dividers out of the stream during four and six needle operations, resulting in VA TECH going back and redesigning the profiles of the dividers so that the force factor angle was changed to allow the present hydraulics to be able to pull the dividers out of the stream. 8B. NEXT MEETING DATE The next meeting date will be at the call of the Chair. 9. ADJOURNMENT The meeting was adjourned at 11:45 a.m. ATTEST: Alaska Energy Authori Secretary BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES 813 W. Northern Lights Boulevard Anchorage, Alaska Tuesday, March 28, 2006 — 10:30 a.m. 1. CALL TO ORDER Chair Haagenson called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:30 a.m. on Tuesday, March 28, 2006, from the Alaska Industrial Development and Export Authority's Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Howell. The following members were present: Steve Haagenson Golden Valley Electric Association Mike Cunningham Chugach Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light & Power (teleconference) Tim Barnum City of Seward Karl Reiche Alaska Energy Authority 3. PUBLIC ROLL CALL Brian Bjorkquist, Department of Law Mike Cunningham, Chugach Electric Association Bob Price, Anchorage Municipal Light & Power Doug Hall, Anchorage Municipal Light & Power Henri Dale, Golden Valley Electric Association Charles O’Hare, Homer Electric Association Rick Eckert, Homer Electric Association Brian Hickey, Chugach Electric Association Mark Foster, Consultant Linda MacMillan, Alaska Energy Authority Gary Stromberg,Parisena,Stromberg & Go. Jenny True, AterWynne (teleconference) Don Zoerb, Matanuska Electric Association (teleconference) Bradley Lake PMC Meeting March 28, 2006 Page 2 of 5 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — June 21, 2005 The meeting minutes of June 21, 2005, were unanimously approved as presented, with the comment from Chair Haagenson to delete the memorandum attachment. ts NEW BUSINESS 7A. _FY’06 Budget Revision Mike Cunningham and Linda MacMillan gave an overview of the 2006 Operating and Capital budget revision. MOTION #06-1: Mr. Janorschke moved that the Bradley Lake Project Management Committee approve the fiscal year 2006 Operating and Capital budget revision as presented. Seconded by Mr. Miller. A voice vote was taken and the motion was unanimously approved. 7B. FY’07 Budget MOTION #06-2: Mr. Janorschke moved that the Bradley Lake Project Management Committee approve the fiscal year 2007 Operating and Capital budget as presented. Seconded by Mr. Miller. Mike Cunningham and Linda MacMillan gave an overview of the FY’07 Operating and Capital budget. Wayne Carmony commented on the topic of $40,000 budgeted for Bradley Lake PMC Legal. MEA’s position is that the firm of AterWynne has an inherent conflict of interest in representing the BPMC. They believe that the inclusion of $40,000 in the budget is inappropriate and requested that the membership would consider deleting it — either to delete it or to take steps to locate and identify a new legal firm to represent this organization. Chair Haagenson noted that they were talking about the budget items and wasn’t sure if they could dive into the philosophy of the budget. MOTION #06-3: Mr. Carmony moved to make an Amendment to delete the $40,000 from the 2007 budget that is identified as Bradley Lake PMC Legal and to take that up after taking a look at the potential for identifying and employing a new attorney. Chair Haagenson restated the motion to read: Motion to amend the Bradley Lake PMC Meeting March 28, 2006 Page 3 of 5 budget to remove the $40,000 on page 5 of 9 called Bradley Lake PMC Legal. Seconded by Brad Janorschke. Mr. Carmony stated that there are three months before the fiscal year 2007 budget begins. He believes that in that timeframe we can take up the question of a conflict and add funds back into the budget prior to the commencement of the fiscal year 2007 once this issue of a potential conflict of interest is resolved. Mr. Cunningham added that the FY’07 budget needs to be approved and in place by April 1° according to bond covenants, and that doesn’t preclude a future amendment to it. Mr. Posey stated that this issue was brought up last year and nothing was brought up by anybody in that interim period of time to look for new counsel and with the pending date ‘of April right upon us, he didn’t think they should change the budget now, but if someone wanted to do the research and look for other counsel that would meet all of their requirements during this interim period — either for one year or three months — that’s fine but we have to approve the budget and he intended to vote against this motion. Mr. Carmony also stated that over the course of the last year there had been changes that he wanted to point out to the group. The AREA has been formalized and that organization has named AterWynne as their attorney and as everyone was aware, the intense lobbying efforts are taking place to have various State-owned assets placed with that organization (JAA). Chair Haagenson added that the question now was do we take the money out of the budget now or not, and it doesn’t specify who our legal counsel is. As the Amendment stands now — do we remove the $40,000 from the budget or not? Mr. Janorschke commented that regardless of what is done with the current legal, the funds are needed and we can certainly add the Amendment back in, but just to keep from intermingling the two issues, he would support leaving it as-is, but not ruling out if someone wanted to do the research bringing it up at the next BPMC meeting to discuss. Chair Haagenson called the question — All in favor of removing Bradley Lake PMC legal counsel fees of $40,000 from the FY’07 budget say aye (MEA — Wayne Carmony responded and asked for a roll call vote). City of Seward No Matanuska Electric Association Yes Chugach Electric Association - Homer Electric Association No Golden Valley Electric Association No _____ Anchorage Municipal Light & Power No Alaska Energy Authority Abstain Chair Haagenson stated that the motion failed. Bradley Lake PMC Meeting March 28, 2006 Page 4 of 5 Motion of Approving the FY’07 budget as presented. A voice vote for the Approval of the FY’07 budget was taken and the only nay vote was from MEA. The motion passed with one nay vote from MEA. 7C. _FY’05 Audit Report from Parisena, Stromberg & Company MOTION 06-4: Mr. Janorschke moved that the Bradley Lake Project Management Committee accept the results of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30, 2005, as presented by Parisena, Stromberg & Co., APC. Seconded by Mr. Posey. Gary Stromberg presented the audit report. A voice vote was taken and the motion passed by unanimous approval. 7D. Direction from Chair Haagenson . Direct the O&D Committee to review the Homer Operation and Maintenance Agreement. . Consider the Homer Electric request to sign a 10-year term Agreement. . Identify necessary modifications to the contract, such as BPMC attorney review of construction contracts, as approved by the BPMC - timeframe to be by the next meeting in July. 8. COMMITTEE REPORTS / COMMENTS 8A. Operators Report Charlie O’Hare stated that the governor project started a couple of weeks ago. There are no major issues as of this time. Brian Hickey added that from a technical perspective they have worked with VA Tech to develop a governor control algorithm to eliminate the instability problem in conjunction with the new deflectors. By August they will know the results. Completion date is set for the end of August. 8B. Next Meeting Date The next meeting date is at the call of the Chair, and will be held at the Bradley Lake Project site Bradley Lake PMC Meeting March 28, 2006 Page 5 of 5 9. ADJOURNMENT The meeting was adjourned at 11:20 a.m. BY: LEZ 5 _— Steve faagenson, Chairman ATTEST: i”, Secretary Bradley Lake Project Management Committee (BPMC) Signed Meeting Minutes June 21, 2005 March 31, 2005 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES 813 W. Northern Lights Boulevard Anchorage, Alaska Tuesday, June 21, 2005 — 10:00 a.m. te CALL TO ORDER Chair Haagenson called the meeting of the Bradley Lake Hydroelectric Project Management Committée to order at 10:00 a.m. on Tuesday, June 21, 2005, from the Alaska Industrial Development and Export Authority's Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Brenda Fuglestad. The following members were present: Steve Haagenson Golden Valley Electric Association Joe Griffith Chugach Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light & Power Dave Calvert - City of Seward Art Copoulos Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, Chugach Electric Association Linda MacMillan, AEA and AIDEA Ron Saxton, AterWynne John Cooley, Chugach Electric Association Bob Price, Anchorage Municipal Light & Power Ed Ruebling, Anchorage Municipal. Light & Power Brian Hickey, Chugach Electric Association Lee Thibert, Chugach Electric Association Henri Dale, Golden Valley Electric Association Bob Day, Anchorage Municipal Light & Power Gerald Winkler, Homer Electric Association David Burlingame, Electric Power Systems Jim Walker, Matanuska Electric Association (teleconference) Don Zoerb, Matanuska Electric Association (teleconference) Maynard Smith, Homer Electric Association (teleconference) Bradley Lake PMC Meeting June 21, 2005 Page 2 of 4 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS There were no agenda comments. 6. APPROVAL OF MEETING MINUTES — March 31, 2005 The meeting minutes of March 31, 2005, were approved as presented with the addition of Art Copoulos making a change to include the addition of the statement “Costs associated with JAA formation (of Four Dam Pool) did not run through the AEA accounting records.” 6A. OLD BUSINESS Motion: To bring back table Item 7E from the March 31, 2005 Committee Meeting; HEA O&M Contract extension pending legal review of the Contracts of VA Tech and FUJI. A discussion ensued and the Motion was moved to table and seconded by Mr. Griffith allowing for an evergreen roll-over of the existing contract. Motion: Mr. Copoulos moved to have the PMC do a review of the five year O&M Contract and convene to discuss recommendations contingent to its approval and renewal. There being no further discussion, the question was called. Seconded by Mr. Brad Janorschke. A raised hands vote was taken and the Motion was unanimously approved. Uf NEW BUSINESS 7A. Replacement for Don Stead’s Position Mr. Brad Janorschke explained the Transition Plan in effect is for HEA to continue managing the Project involved hiring EPS as the Project Manager for the duration of the transition or until HEA is in a position to relieve them of that responsibility. Mr. David Burlingame is EPS’ designated Project Manager and will remain in charge of the project for the interim. The governor project is currently being run as follows: Maynard Smith is Contract Administrator monitoring any contract appliance issues with VA Tech and with EPS; Gerry Winkler is Power Production Manager and is currently working closely with Don Stead via email. Gerry will be filling this position until the new Generation Manager is positioned in mid-July. Mr. Copoulos informed this committee that the transition process is running smoothly. The weekly meeting of the O&D Committee and the Bradley Lake Governor Subcommittee is keeping communication open and the governor project progressing Bradley Lake PMC Meeting June 21, 2005 Page 3 of 4 well. The Bradley Lake Governor Subcommittee was set up strictly as advisory to the BPMC to help guide Homer's efforts. 7B. Detuning the Rotor Chair Haagenson asked to attach this memo to the minutes to discuss the VA Tech serviceman not grinding the bucket on the runners as commissioned. Mr. Winkler explained that the first serviceman sent by VA Tech was not experienced in the grinding process but a second person sent over was in fact a grinding supervisor with prior grinding experience. He provided the correct grinding depth profiles and templates were made to allow for quality grinding. Mr. Winkler gave an update on the detuning process. Currently runner AO is detuned and signed off of decoupling. It is currently on Unit 1 and back in service. Currently runner SO is in LA for crack repair and stress relief. Runner BO, which is currently on Unit #2, is being removed during this two week outage and due to be detuned towards the end of this week. Mr. Winkler described the detuning process to the committee and added that welding is now being done on-site with stress relief being done in LA. Both runners will have been detuned after this week and a third runner weld and stress repaired but not detuned. This third runner is a back-up spare in case of another event. Chair Haagenson asked about the micro-goose runners and Mr. Day informed that they are about eighteen months away. He went on to say that they have started the 45-day review for the governor project. Governor replacement is scheduled to start November 18‘ depending on water level and other factors involved. There will be a 55-day outage for the first unit and a 45-day outage for the second unit. It will take from six to eight months to have the governors in place with the detuned runners operating until that time. 7C. Bradley Lake Project Transition Plan This topic was covered under section 7A above so Mr. Janorschke reiterated that the Transition Plan currently in place is going well. The O&D Committee and the Bradley Lake Governor Subcommittee are working well together to ensure the project continues to run smoothly during this time. 7D. Revised R&C Transfer Motion: Approve June 2005 transfer from the Revenue Fund to the R&C Fund in the amount equal to the amount budgeted in the FY2005 Project Budget of $1,581,725.00 and for the R&C Fund balance to be greater than $5,000,000 after the transfer estimated to be $5,994,000.00. This is allowed for in sections 506.1 (4) and 509.3 of the “Bond Resolution.” This Motion supersedes the Motion made at Bradley Lake PMC Meeting June 21, 2005 Page 4 of 4 the March 31, 2005 meeting under Item C. Seconded by Mr. Jim Posey. A raised hands vote was taken and the Motion was unanimously approved. Mr. Cunningham reiterated how the BPMC authorized the transfer of the necessary amount to bring the R&C Fund back up to five million dollars, but built into the Budget were some governor project payments that have not occurred and rather than return them in the form of a Fiscal Year Surplus, transfer those excess funds to the R&C Fund and hold them pending payment for the milestone payments on the governor project. He went on to say that the Budget Subcommittee had discussed this issue and recommended approval of the Motion. 8. COMMITTEE REPORTS 8A. Operators Report Mr. Day reiterated that Homer's crew is doing a great job and expects that dates concerning the governor project will be met. 8B. Next Meeting Date The next meeting date is at the call of the Chair. The next meeting will be to discuss the Operation Agreement. All comments pertaining to the Operation Agreement and Performance Measures are to be emailed to the Chairman. 9. ADJOURNMENT The meeting was adjourned at 11:12 a.m. BY: LEZ ea Steve igenson, Chairman ATTEST: au Sx Alaska Energy ority, Secretary BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES 813 W. Northern Lights Boulevard Anchorage, Alaska Thursday, March 31, 2005 — 10:00 a.m. 1. CALL TO ORDER Chair Haagenson called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. on Thursday, March 31, 2005, from the Alaska Industrial Development and Export Authority's Board Room, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. es ROLL CALL Roll was called by Shauna Howell. The following members were present: Steve Haagenson Golden Valley Electric Association Joe Griffith Chugach Electric Association Bradley Janorschke Homer Electric Association Wayne Carmony Matanuska Electric Association (teleconference) Jim Posey Anchorage Municipal Light & Power Dave Calvert City of Seward Art Copoulos Alaska Energy Authority 3. PUBLIC ROLL CALL Mike Cunningham, Chugach Electric Association (teleconference) Don Stead, Homer Electric Association Linda MacMillan, AEA and AIDEA Karl Reiche, AEA and AIDEA Ron Saxton, AterWynne Rick Miller, Anchorage Municipal Light & Power John Cooley, Chugach Electric Association Doug Hall, Anchorage Municipal Light & Power Bob Price, Anchorage Municipal Light & Power Ed Ruebling, Anchorage Municipal Light & Power Brian Hickey, Chugach Electric Association Lee Thibert, Chugach Electric Association Don Zoerb, Matanuska Electric Association (teleconference) Bradley Lake PMC Meeting March 31, 2005 Page 2 of 10 Henri Dale, Golden Valley Electric Association Rick Eckert, Homer Electric Association Brad Janorschke, Homer Electric Association Kate Lamal, Golden Valley Electric Association Gary Stomberg, Parisena, Stromberg & Company Brian Bjorkquist, Department of Law Tim Barman, City of Seward Bob Day, Anchorage Municipal Light & Power Brad Evens, Chugach Electric Association Louis Agi, Anchorage Municipal Light & Power 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS Hearing no objection, an additional item was added to Item 7B of the agenda to include a discussion of the monies needed for the formation of the Joint Action Agency. 6. APPROVAL OF MEETING MINUTES — November 18, 2004 The meeting minutes of November 18, 2004 were approved as presented with the addition of Don Stead to the attendance record. 7. NEW BUSINESS 7A. Approve Utilities FY04 Deficit Repayment to the Project. Mr. Stromberg gave a brief overview of the audit. He stated this is a standard opinion special purpose financial statement audit. A clean opinion was issued and the statements presented to the BPMC are signed and bound. He noted that in the balance sheet the total assets are reduced from approximately $2.4 million to approximately $368,000. The Revenues are off budget by $364,000 and that variance is in interest, $73,492 of which is the deficit due back from the participants. He referred the committee to their packets for detail information. In response to committee member questions, Mr. Stromberg stated that the revenues are set by budget and the difference in the revenues was interest expenses and excess. The $73,492 is a receivable from participants this year. Ms. MacMillan stated that this amount has not yet been billed as the Committee needs to approve the billing amount. If the Committee approves staff would like to bill in April. Mr. Jim Posey (ML&P) joined the meeting at this time. MOTION: Mr. Griffith moved to approve the utilities’ FY04 deficit repayment to the project in the amount of $73,492.00. Seconded by Mr. Posey. There being no further discussion, the question was called. A voice vote was taken and the motion passed unanimously. Bradley Lake PMC Meeting March 31, 2005 Page 3 of 10 7B Approve FY05 Budget Changes to Increase Expenses for the Property Valuation and R&C Fund Repayment and to add $150,000 for the purpose of the formation of the Joint Action Agency MOTION: Mr. Griffith moved to approve the FY05 budget changes to increase expenses for the property valuation and increase for Renewal and Contingency Fund and to add $150,000 for the purpose of the formation of the Joint Action Agency. Seconded by Mr. Posey. Mr. Carmony read into the record the motion that was approved at the previous meeting. Motion: The Bradley Lake Budget Committee be instructed to identify the costs and the scope of the effort on the activity to undertake the transfer of the Bradley Lake Project ownership to the utilities. He said that the motion does not in any way solidify the form of the transfer to an organization such as the JAA. This is not something that we have all agreed to in spite of what we have done. We have not even approved the concept of taking ownership, and now we are talking about a study just to look at what is involved in taking ownership. Until the concept is approved and a decision has been made to take ownership then there should be no discussion about in what form it would be transferred and in what form the new organization would be deemed appropriate. The BPMC is jumping over several stages in assuming that the action already taken is an action that in fact was not. Mr. Cunningham stated that the Budget Subcommittee has discussed this issue but nothing has been resolved at this point, therefore no recommendation is forthcoming. In response to Committee member questions, Mr. Bjorkquist stated the concern is that if adding this into the budget in effect adds it to the rates that will be chargeable to Bradley Lake, then it is an inappropriate expenditure because it is an expenditure that is not related to the operation of Bradley Lake, it is related to a possible divestiture in forming an. organization that could obtain the Bradley facility and other facilities. It is the Alaska Energy Authority’s view that this would be an inappropriate expenditure if added to the Bradley budget that would get passed through to rate payers. Mr. Bjorkquist stated the committee could amend the motion by going back to the original budget document and deleting the proposed addition of the $150,000 until such time as there has been additional discussion about how that might be funded and to also have a better definition and scope. He said that while AEA is concerned about the appropriateness of funding it through the project, we are also concerned about the scope of the project being one that has never been agreed to by the participants. MOTION: Mr. Carmony moved to table the motion on the floor and moved the original FY05 budget proposal that did not include the additional $150,000. Seconded by Mr. Janorschke. There being no further discussion, the question was called. A voice vote was taken with three yeas, three opposed, and Mr. Tim Barnum abstained. Bradley Lake PMC Meeting March 31, 2005 Page 4 of 10 Mr. Barnum stated that he is not up to speed on the subject matter and does not feel comfortable voting. Mr. Bjorkquist stated that the BPMC By-laws provision states that a party is deemed a yes vote unless they make it clear that they have voted no. Section 5.10.3 of the By-laws state “A representative who is present at a meeting of the committee at which action on a committee matter is taken shall be presumed to have assented (voted yes) to such action unless the representative’s dissent is both indicated and recorded at the time of the action.” There is no provision for abstaining, you vote yes unless you vote no. Mr. Bjorkquist informed the committee that unless Mr. Barnum casts a definitive vote then his vote is deemed a yes vote. Mr. Barnum stated that he would change his vote to yes on the motion. Chairman Haagenson reiterated that the motion on the table is an amended motion that moves to approve the FY05 budget changes to increase expenditures for the property valuation and increases to the renewable and contingency fund. For further clarification Chairman Haagenson reviewed the budget changes stating $75,000 will be added for the project appraisal contract; $540,000 will be added to replenish the R&C Fund to the $5 million dollar level, which is in anticipation of the Runner Replacement in subsequent fiscal years. There will also be an increase to the operating reserve to $15,000 in accordance with the covenant by adjusting debt service and the arbiter’s transfer to actuals. Other points, which have already been discussed, are the FYO4 deficit repayments of $73,492. There is a schedule that shows the additional collection over the remaining two months of the fiscal year. Participant payments will total 1,647,000 over May and June of FYOS, and then in FYO6 they drop back down. In response to committee member questions, Ms. MacMillan stated that in April AEA will bill $73,000 for the deficit. If this budget is approved, the monthly contribution will need to change to reflect the new rate for May and June of FY05 to ensure the replenishment of the R&C fund. For clarification, Chair Haagenson stated the motion on the table to approve the FY05 budget changes to increase expenditures for the property valuation and increase the R&C Fund does not include the $150,000. Hearing no further discussion the question was called a second time to confirm the vote. Upon voice vote the motion passed. 7C. Approve the June 2005 Transfer From the Revenue Fund to the R&C Fund Mr. Cunningham stated this motion is an administrative request to grant Linda MacMillan authorization to transfer funds in June in the event that he is not available. MOTION: Mr. Cunningham moved to approve the June 2005 transfer from the Revenue Fund to the R&C Fund in the amount equal to the lesser of amount budgeted or amount required to bring the balance to $5 million dollars. Seconded by Mr. Janorschke. Bradley Lake PMC Meeting March 31, 2005 Page 5 of 10 Chair Haagenson stated that the amount actually transferred to the BPMC will be reported back to the committee. There being no further discussion, the question was called. A voice vote was taken and the motion passed. 7D. Approval of the FY06 Budget MOTION: Mr. Janorschke moved to approve the FY06 Budget. Seconded by Mr. Posey. Mr. Cunningham briefed the committee on the FY06 budget stating there is a $274,000 increase in operating expenses which is primarily due to non recurring costs for SEC Training Project Valuations. Also, there is an increase of $549,000 in the R&C Fund for anticipated expenditures in FYO6. There was a decrease of $200,000 in transmission relay replacements, and a $15,000 decrease for operating fund transfers as we have no operating budget increase. The budget is being decreased from $1,627,000 per month to $1,344,000: which results in a drop in monthly contributions beginning in FYO06. He thanked the members of the Budget Subcommittee; Henry Dale, Don Stead, Rick Miller, and Linda MacMillan, for their efforts in pulling the numbers together to produce the budget. AMENDED MOTION: Mr. Griffith moved to amend the FY06 budget to reflect, under Item 920 Administrative Expenses, an additional $150,000 for activities related to the Joint Action Agency Assumption Project. Discussions ensued with regard to the legality of bringing the same amendment to a motion back a second time in the same meeting. Mr. Cunningham stated this motion is not the same as this is for the FY06 budget and the previous motion was for the FY05 budget. Mr. Saxton stated a defeated motion could not be brought back to the table at the same meeting; however, this motion was removed, not defeated. Mr. Carmony stated there was no vote at the last BPMC meeting that a Joint Action Agency would be the vehicle to assume the Bradley Project. There was no specific Motion made at the last meeting of a Joint Action Agency being the vehicle for taking ownership. He advised the committee members to reread the minutes of the previous meeting and the motion that passed as there is an assumption being made today that is inaccurate. There has never been an action by the Management Committee to assert that the JAA was a vehicle for taking ownership of Bradley Lake. AMENDED MOTION: Seconded by Mr. Posey. Chair Haagenson reiterated that the amended motion is to amend the FY06 budget to add a line under Administrative Expenses of $150,000 for activities related to the transfer of the Projects to the JAA. Bradley Lake PMC Meeting March 31, 2005 Page 6 of 10 In response to committee member questions, Mr. Bjorkquist stated that AEA would have the same concerns if this was part of a budget that would be included within rates. AEA believes this would be an inappropriate addition to the budget. Mr. Copoulos added that costs associated with JAA formation (of Four Dam Pool) did not run through the AEA accounting records Discussions ensued as to how The Four Dam Pool was formed. Mr. Bjorkquist stated that whether something was done improperly in the past does not provide justification for continuing something that might be improper. The concern that AEA has is that the Bradley Lake contract and the rates that are set under Bradley Lake Hydropower Project are not regulated by the RCA. They are exempt from regulation, and therefore it is AEA’s role and responsibility to oversee what is included in the budget to make sure it is properly included in a budget that is not regulated. He said that it was his- understanding that this was being discussed at the Budget Subcommittee meetings. Mr. Bjorkquist reiterated that AEA believes that it is inappropriate to add to a budget that is included within the rates that would then be chargeable from Bradley. Mr. Carmony stated he is becoming increasingly. concerned that issues of such importance and of such magnitude are being brought to this body on the day of the meeting on the morning of the meeting with no advance notice. This late notice does not allow the participants to conduct an analysis or seek advice from council. He requested that the members vote against this change and that the committee bring important issues before the body in advance of the meeting to allow the members to absorb the information and provide time for due diligence. There being no further discussion, the question was called. Upon voice vote the motion failed with four yeas and three against (State of Alaska voted against the motion). Discussions ensued with regard to the affect the State’s vote has on the outcome of motions. It was noted that, for budget matters, it requires the affirmative vote of the State of Alaska. Chairman Haagenson stated that the amended motion failed as the State voted against it. Mr. Bjorkquist stated AEA has the responsibility, because this is not regulated by the RCA, to make sure that items in the Budget are appropriate. If the committee submits a Budget that has an item that we believe is inappropriate it is our duty to vote no. MOTION: Mr. Griffith moved to rescind the prior amendment to the FY06 Budget. Seconded by Mr. Janorschke. Discussions ensued with regard to AEA’s ability to exercise their veto power. Hearing no further discussion, the question was called. Upon voice vote the motion to rescind the amendment to the FY06 Budget passed unanimously. Bradley Lake PMC Meeting March 31, 2005 Page 7 of 10 Chairman Haagenson, hearing no objection, supplanted the original Schedule C with the new Schedule C that is dated 3/31/2005 8:44a.m. In response to committee member questions, Ms. MacMillan reviewed the schedule stating there is a technical correction on the top of the form; the numbers carrying FY05 to FY06 were the wrong numbers for FY05. The rest of the budget remains unchanged. MOTION: The FY06 Budget with the amended Schedule C, which was previously moved and seconded by Mr. Janorschke and Mr. Posey respectively, is back on the table. Hearing no further discussion, the question was called. Upon voice vote the motion passed unanimously. 7E. HEA O&M Contract Extension Term MOTION: Mr. Carmony moved to approve Item 7E HEA O&M Contract Extension Term. Seconded by Mr. Copoulos. Mr. Stead stated that the VA Tech has completed the construction of the new governor with the exception of the alga rhythm and its model in PSSE. They have one contractor that is holding them up, and they have not been able to get the model completed in PSSE. It works but it does not perform in the way that it performed in another simulation. Three different software systems have been built in. The first software is their software and it works fine. The second is a software system called Naplab Simulink and it functioned similarly to their logic cad model. The third is being built in the PSSE and is not currently working. This is the last hold-up. All of the manufacturing has been completed and all of the parts are in shipment or stored at Homer Electric for VA Tech. Once we start receiving material that is in transit we become liable for a million dollar payment, which is why Homer Electric has not accepted receipt of this material and is being held for VA Tech. Once the running model is delivered to Homer Electric it is then given to another contractor who runs the 10 base cases against it. We verify that the 10 base cases are improved by the governor alga rhythm that is proposed to be used. We recommend that the outage be moved back to the first of May, this will ensure the model is complete and can be evaluated. In response to committee member questions, Mr. Stead stated we believe the PSSE simulation because the PSSE model that is currently being worked on is the one that we all use in the railbelt to model the generation and transmission sets. He said they have been working on the PSSE model for over four months. He said that in his report with regard to discussions while in Ravensburg was that this may have to be pushed to October. Mr. Stead stated that there are no additional costs in connection with these delays. Discussions ensued with regard to who hired the PSSE modeler and whose data they are using. Mr. Stead stated that they are using the current railbelt model and they are constructing the Bradley governor inside of it. Mr. Stead also noted for the committee that the spare runner has been repaired and heat treated and has been returned to the Bradley Lake Project. On the 18" of April a detuning process will be performed to alleviate the ringing concerns and excess stresses that might be in the runner. It will then be rebalance and ready in case a swap is necessary. Bradley Lake PMC Meeting March 31, 2005 Page 8 of 10 Mr. Cooley said maintenance was planned for April; therefore people have planned out how they want to use their water for the year. If we change the April date people will need to adjust how they want to use their water throughout the year, which may have an impact on the various users. Mr. Stead commented about the risks involved and stated the committee should have a legal review of the agreements to ensure the BPMC's interests are protected. In response to committee member questions, Mr. Saxton stated he has not seen the contract. Mr. Stead said they are trying to locate the original FUJI contract but will send the VA Teck contract to Mr. Saxton. Mr. Copoulos stated he is not aware of any details related to the FUJI contract, and he is under the understanding that the contract is approximately fifteen plus years old. Chairman Haagenson stated the contract that is in place continues year to year absent either Homer quitting or AEA terminating it. The reason it is in front of the committee today is that you are requesting the contract be amended to enable a commitment of a five year term instead of a year to year. Mr. Copoulos stated that AEA’s view is that there is benefit in having the stability you receive with a five year contract: benefit of retaining a skilled knowledgeable workforce and planning for future repairs, etc. AEA supports the idea of a five year extension. MOTION: Mr. Griffith moved to table Item 7E pending results of a legal review of the contracts for VA Tech and FUJI. Seconded by Mr. Copoulos. Hearing no further discussion, the question was called. Upon voice vote the motion passed with four yeas and three opposed. 7F. Turbine Runner Replacement — Risk Analysis, FUJI Contracts, & Replacement Recommendations Mr. Stead said that at the request of the BPMC, the O&D Committee has evaluated runner replacement at Bradley Lake and the O&D Committee recommends the replacement of the three runners that are currently at the facility. He further stated that the risk analysis adjusted the estimate of avoided cost for the Bradley Lake runner replacement. The risk analysis was performed by Mr. Hickey in coordination with me and under the review of the O&D Committee. We looked at what would happen if a runner cracked, failed, and threw parts around and what the maximum damage to the facility would be (e.g. a bucket falls off, it might hit a needle and do a little bit of damage but everything would shut down; the bucket would fall off and it would do a lot of damage inside the discharge chamber; or in the worst case scenario, actual tunnel failures). Copies of the detailed analysis were handed out to the committee for further review. Mr. Stead said that the O&D Committee also recommends that VA Tech be held responsible for the replacement of the runners. Bradley Lake PMC Meeting March 31, 2005 Page 9 of 10 In response to committee member questions, Ms. MacMillan stated the replacement of the three Runners is in the FY06 and FY07 because it is an eighteen month replacement to manufacture. It does run through the R&C Fund. The committee suggested that this should be funded, to the degree possible, out of the R&C Fund, and to then make a motion to replenish that with long term debt at the earliest opportunity. MOTION: Mr. Griffith moved to have the Finance Committee define long term debt and a funding profile for runner replacement and other activities at Bradley as well as consider the needs of the Alaska Intertie when they are defined. Mr. Carmony stated that any motion would be out of order if it included anything beyond the current scope of the Bradley Lake Project Management Committee. Certainly anything to do with the Alaska Intertie is not within the scope of our activities and should not be funded by us; therefore, it is not appropriate for us to undertake it in this fashion. Mr. Griffith said the reason it would make sense to have the Alaska Intertie included in the motion is that we know that there are fixes that are going to be required for the Alaska Intertie. They should be considered at the same time simply in the interest of saving money. It is not being suggested that the Bradley Project Management Committee pay the bill, the Alaska Intertie portion should be billed under the |OC Agreement for whatever the 1OC bonds end up being. It makes sense to bring them up together as in essence the IOC and: Bradley PMC are the same people. Mr. Carmony said it is his understanding that AIDEA has already put into motion a plan to address issues around the Intertie and it seems completely inappropriate for this committee to undertake or to usurp the actions that they intend to proceed with. Mr. Griffith withdrew his language in the motion with regard to the Alaska Intertie. AMENDED MOTION: Mr. Griffith moved to have the Finance Committee make a long term plan for the use of the R&C funds to replace the three runners for Bradley Lake and then with a longer term plan using some other vehicle. Seconded by Mr. Posey. There being no further discussion, the question was called. Upon voice vote the motion passed unanimously. Upon reviewing the Analysis System Report it was noted that the worst possible failure case would result in an approximate cost of $289 million. It was also noted that the insurance would not cover this loss. 7G. Audit Approval MOTION: Mr. Griffith moved to approve the FY04 Parisena Stromberg audit as presented. Seconded by Mr. Janorschke. There being no discussion, the question was called. Upon voice vote the motion passed. Bradley Lake PMC Meeting March 31, 2005 Page 10 of 10 8. Committee Report / Comments Mr. Cunningham gave a brief update on the Budget Committee Report/Appraisal Audit Update stating he has been advised by the consultant performing the appraisal that it should be completed by May 1“; no later than June 1°. The power plant tunnel will be appraised at full replacement cost plus debris removal. We have a July 1 property insurance renewal so we will be able to fold the results of the appraisal into the renewal. He said there is some disagreement in terms of additional insured and waiver of subrogation issues and listing of additional insured on the policies. In response to committee member questions, Mr. Cunningham said the Stone & Webster report should be available by May 1, no later than June 1. There will be another report issued around June/July that will incorporate the Stone & Webster recommendation with the Warren McVey report, which will be issued in final forum after the appraisal is complete. There is a July 1* insurance renewal on the property. 8B. Next Meeting Date The next meeting date will be at the call of the chair. 9. ADJOURNMENT The meeting was adjourned at 11:45 a.m. BY: Mi Steve Haagenson, Chairman ATTEST: Zn & ' aska Energy Authority, Sécretary