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HomeMy WebLinkAboutBPMC Meeting - February 13, 1996 1BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING MINUTES Commission Room Anchorage Municipal Light & Power 1200 East 1st Avenue Anchorage, Alaska Tuesday, February 13, 1996 10:30 a.m. 1. CALL TO ORDER Chairman Tom Stahr called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:30 a.m. in the Commission Room of Anchorage Municipal Light & Power, 1200 East 1st Avenue, Anchorage, Alaska, to conduct the business of the Committee per the agenda and public notice. 2. ROLL CALL Roll was called by Shauna Dean. The following members were present, and a quorum was established: Tom Stahr, Chairman Anchorage Municipal Light & Power Eugene Bjornstad, Vice Chairman Chugach Electric Association Dan Beardsley Alaska Energy Authority, Secretary Wayne Carmony, Treasurer Matanuska Electric Association Don Stead Homer Electric Association Bradley Evans Golden Valley Electric Association Others Present: Tim McConnell, Municipal Light & Power Bob Price, Municipal Light & Power Moe Aslam, Municipal Light & Power Mary Ann Pease, Municipal Light & Power Stan Sieczkowski, Alaska Energy Authority Shauna Dean, Alaska Energy Authority Brian Hickey, Chugach Electric Association Lee Thibert, Chugach Electric Association John S. Cooley, Chugach Electric Association Dora Gropp, Chugach Electric Association Dennis Lapp, Chugach Electric Association Mike Kelly, Golden Valley Electric Association Steven Haagenson, Golden Valley Electric Association Jim Hall, Matanuska Electric Association Bob Hufman, AEG&T Ron Saxton, Ater, Wynne, Hewitt, Dodson & Skerritt Del LaRue, Dryden & LaRue Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 2 of 8 3. PUBLIC COMMENT None. 4. AGENDA COMMENTS Chair Stahr asked that Item 6., Budget Subcommittee Report, and Item 10.A., Scheduled Maintenance Fund, be moved to follow Item 10., New Business. He said Mary Ann Pease, who was scheduled to give those reports, would be arriving late to the meeting. Mr. Bjornstad asked that he be allowed to report on two old outstanding bills from Ater, Wynne following Mr. Carmony's comments on recent expenses under Item 10.B., Approval of Legal Expenses and Other Expenses. Item C. was added under No. 10., New Business, for a report on the Bradley Lake Dispatch Audit Report by Mr. Bjornstad. The above additions were approved by unanimous consent. 5. APPROVAL OF MEETING MINUTES - DECEMBER 6, 1995 MOTION: Mr. Bjornstad moved for approval of the minutes. Seconded by Mr. Evans. Mr. McConnell noted the "was" before "surplus" in the first sentence on page 3 should be deleted. There being no further corrections, a voice vote was taken, and the minutes were approved as amended. 6. BUDGET SUBCOMMITTEE REPORT AND MAINTENANCE REPORT This item was heard following Agenda Item No. 10., New Business, in conjunction with Agenda Item No. 10.A., Scheduled Maintenance Fund. t OPERATION AND DISPATCH SUBCOMMITTEE REPORT Mr. Sieczkowski distributed the Construction List and said Committee action would be required. He reported that the O&D Committee had met on January 18 and February 5, 1996. Mr. Sieczkowski reported that Homer Electric had contracted with Shannon & Wilson to evaluate the Fish Water Bypass Release program. The Phase 1 report had been submitted in December 1995, at which time the O&D Committee had discussed the alternatives with HEA. At this time, HEA is proceeding with completion of the study. Mr. Sieczkowski reported that there had been a plant outage on December 17th. The Bradley operator had been recognized by the O&D Committee for the appropriate action he had taken, and the O&D Committee had requested HEA to notify the employee of its support. The O&D Committee was continuing its review of the plant multiple shutdown list, and HEA would provide recommendations in the near future. Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 3 of 8 Mr. Sieczkowski said the recommended Construction List of tasks to be accomplished had been finalized, and the O&D Committee would be recommending approval of the List. The remaining balance in the fund would be $774,222.92 as of December 31, 1995, if the List was approved. Mr. Sieczkowski reported that the communications network was under review to determine if the current Bradley system was adequate and the most economical system. HEA had requested an alternative quote from the local communications company for providing communications at the Bradley site. The use and number of circuits had been reviewed by the O&D Committee and determined to be appropriate at the current time. The Bradley governors performance would be reevaluated upon Committee approval. ML&P had requested a modification in the governor response to coordinate better with the proposed SMES system. The O&D Committee had recommended that a scope of work be developed for the study for the purpose of evaluating the existing governor performance and providing analysis and recommendations. ML&P, CEA, and HEA were currently developing the scope of work for the O&D review and recommendations, and it was anticipated it would take four months to complete the study. Mr. Sieczkowski reported that the O&D and Budget Subcommittees had met to discuss the auditor's report for HEA and CEA. CEA had also provided detailed information for the dispatcher duties. No conclusions or recommendations were reached regarding the auditor's report. Mr. Hickey reported that Bradley operations were normal, although there had been an intermittent problem with the static var compensator at Soldotna. He said it was believed the problem with the synchronizing circuit had been resolved when the board was replaced. Modified boards had been ordered for both the Soldotna and the Daves Creek SVCs. With respect to maintenance, Mr. Stead reported that a dual-unit outage had occurred on December 17th. He said the outage was the result of operator error when fuses that went to a Schweitzer relay were pulled and opened both line breakers. A second event occurred when a capacitor blew up inside the governor on Unit 1 and took that unit off line. Both items had been repaired, and the 12/17/95 outage was still under investigation. Discussion was heard regarding the Construction List and the O&D Committee's recommendation for approval of the expenditure of $2,336,000. In response to Mr. Saxton's request, Mr. Sieczkowski said a breakdown of the funding sources would be provided at the next meeting by Mr. McCrohan. MOTION: Mr. Carmony moved that the expenditure for the governor speed control modification study be approved, and that approval of the remainder of the Construction List expenditures be deferred until the next meeting, after the Committee members had had an opportunity to review the List. Seconded by Mr. Bjornstad. In response to Mr. Kelly's question, Mr. Stahr explained what portion of the study would be SMES related. Mr. Aslam elaborated on the purpose of the study. The question was called. A roll call vote was taken, and the motion passed unanimously. 8. INSURANCE SUBCOMMITTEE Mr. Beardsley reported that the officers and directors insurance had been renewed, with a slight increase in premium over last year of approximately $200. Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 4 of 8 With respect to the aircraft insurance, Mr. Beardsley reported that he had been contacted by Mr. Stead about three weeks ago. Mr. Stead had informed him at that time the local carrier was having difficulty in meeting the million-dollar-per-seat requirement, and Mr. Stead was taking the appropriate steps to ensure that the required insurance would either be provided by the carrier or through its own insurance policies. Mr. Beardsley explained that it was HEA's obligation to provide coverage of a million dollars per seat, and the contractor was unable to obtain that type of coverage at this time. He commented that this requirement was largely due to the Bradley accident and its current status. As a consequence, the contractor would have to find supplemental coverage to make up the difference. He anticipated Mr. Stead would have that problem resolved by the next meeting. In response to Mr. Kelly's question, Mr. Beardsley said he understood Mr. Stead would obtain quotes, and if the amount was significantly greater than what was budgeted, it would need to come back to the Committee for approval. If it stayed within the budget, he said it would be appropriate to proceed with obtaining the coverage. Mr. Beardsley provided an update on the Bradley aircraft accident with respect to the insurance issue. The Zidalis claim had been settled with the insurance company for approximately $2.2 million. Larry Wolfe's claim had gone to trial, and a judgment had been entered against the insurance company in the amount of $1.6 million. However, both sides had indicated they would appeal. Mr. Beardsley had been advised that Risk Management would provide an accounting and current status of all claim issues within the next 30 days. In response to Chair Stahr’s question, Mr. Beardsley said the Committee's concern would be one of recouping funds rather than any potential liability the Committee may have. 9. OLD BUSINESS A. Spinning Reserves Update In Mr. Lovas' absence, Mr. Bjomstad reported there had been no further action on this item. Mr. Lovas had said the ASCC anticipated discussing this issue at their next meeting, which was scheduled for March. B. Agreement Briefing Mr. Saxton distributed an outline and a bound document containing the key agreements. Using the overhead projector, he gave his presentation on the substantive content of the contracts. Mr. Saxton said the initial Bradley Lake Agreements consisted of three documents which had been executed at the same time: (1) Power Sales Agreement (the principal document), (2) Agreement with Chugach (the Services Agreement), and (3) the Homer Transmission Agreement. The latter two agreements were executed to create a transmission path, both in the physical sense and in the legal sense, for the power from Bradley Lake. He said the Homer Agreement would continue in perpetuity, but the Chugach Services Agreement would only continue until such time as there was an alternative transmission path. The other two documents contained in Mr. Saxton's packet were the Committee Bylaws and the Master Maintenance and Operating Agreement (MMOA). Mr. Saxton provided an overview of the contents, provisions, requirements, and responsibilities set out in those two documents. Mr. Saxton summarized the different project funds and the purposes they served. Mr. Saxton stated that the Services Agreement created the path utilizing the Chugach system to get power from the Kenai Peninsula north. Mr. Saxton described that agreement with respect to the items Chugach Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 5 of 8 would provide. The Transmission Capability Agreement with HEA provided for the financing of the new transmission line to be constructed by Homer. He said the agreement provided for use of the old Homer Beluga line as well as the new line. Mr. Saxton said the three agreements were currently exempt from APUC review and oversight until such time as the bonds were retired. Mr. Saxton also reviewed the succeeding agreements in chronological order. They were: (1) Allocation and Scheduling Procedures, (2) the Master Maintenance and Operating Agreement, (3) the Project Operating and Maintenance Agreement, and (4) the Transmission Facilities and O&M Agreement. Two agreements currently pending active review are: (1) the Static Var Compensator Facilities Maintenance Agreement, and (2) the Substation Agreements. Mr. Beardsley provided a brief update on the status of the latter two agreements. He said the remaining agreements that had not been executed had been submitted last month for review by the PMC, and some Committee members had provided comments. Mr. Saxton added that the Dispatch Agreement had been signed in 1992, prior to execution of the Master Maintenance and Operating Agreement (MMOA), with the understanding it would be revised following execution and implementation of the MMOA. He said the Dispatch Agreement was in the process of being revised at this time, and several comments had been received from Anchorage and Chugach. Once those comments had been incorporated, the Dispatch Agreement would be submitted for Committee approval. Mr. Saxton discussed voting requirements, the open meetings laws as they relate to the PMC, and percentages for voting purposes. Mr. Beardsley recommended that individuals who had issues to be resolved meet with the Subcommittee so the agreements could be finalized. He said the Subcommittee consisted of himself, Don Edwards from Chugach, Rick Baldwin from HEA, and Larry Hittle from Ater, Wynne. He said the Subcommittee would schedule a meeting when someone was ready to work with them. Mr. Kelly asked what was the target date for execution of all the agreements. Mr. Saxton responded that he concurred with Mr. Beardsley's recommendation that individual agency representatives have a final opportunity to meet with the Subcommittee to resolve any issues of concem and to provide comments, and then the agreements be finalized and submitted to the PMC for approval. Mr. Beardsley reiterated that the three agreements to be submitted to the PMC for approval were the Transmission Facilities Agreement, the Static Var Compensator Maintenance Agreements, and the Bradley Lake Dispatch Agreement. He reminded that the PMC had received the Subcommittee's final draft of those Agreements in December. Mr. Kelly suggested that final approval of those agreements be scheduled for July, which should give everyone ample opportunity to discuss their issues of concern with the Subcommittee. Mr. Carmony asked that the meeting be noticed so that interested parties would be present. Mr. Beardsley said he would schedule and notice the meeting. The Committee concurred. C. Moose Mitigation Mr. Beardsley said the plan established under the license through the resource agencies to address mitigation consisted of three components: (1) waterfowl, (2) fish, and (3) moose. The waterfowl component had been resolved with the ponds and the runway effort. He said that effort appeared to have been successful, and closure from Fish and Game was imminent. The fish studies had been completed Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 6 of 8 this year. The only issue remaining was reducing flows, and that was being addressed, but the fish component had been resolved with respect to the license. The moose mitigation consisted of a plan adopted in November of 1989 which provided that certain lands would be set aside to allow for increased or enhanced moose habitat, and that the Authority would fund habitat enhancement as well as research. Mr. Beardsley said the Authority had been working toward a final agreement with the Homer Fish and Game Advisory Board, as well as Alaska Department of Fish and Game and the U.S. Fish and Wildlife Service, and the result had been the establishment of a nonprofit corporation, which had been reviewed and approved by staff at Mr. Saxton's office. He said ownership of the lands would be tumed over to the nonprofit corporation for the purpose of overseeing the lands, which would relieve the PMC from liability. In addition, Mr. Beardsley reported that funds from the Construction Fund had been set aside to establish an endowment, in the approximate amount of $183,000, and to pay as a lump sum the obligation for the nonprofit organization to continue to provide annual reports, studies, and research related to moose habitat in the Homer area. Mr. Beardsley said the three Fish and Game entities mentioned earlier had given their approval of the plan, and it would be filed with the State once approved by the AEA Board. He said this, then, would satisfy PMC's obligations under the license. He concluded by saying this issue should be resolved within the next 30 to 60 days. 10. NEW BUSINESS A. Scheduled Maintenance Fund Ms. Pease said the scheduled maintenance fund discussion was part of the budget, and she suggested postponing this item to be heard along with the budget discussion. The Committee concurred. This item was moved to Agenda Item No. 6, Budget Subcommittee Report, following Item No. 10. B. Approval of Legal Expenses and Other enses Mr. Bjornstad reported a bill had been received from Ater, Wynne, Hewitt, Dodson & Skerritt in the amount of $5,052.09 for the month of September 1995. MOTION: Mr. Bjornstad moved to approve payment of the above-mentioned legal expenses in the amount of $5,052.09 for September 1995. Seconded by Mr. Beardsley. There being no discussion, a voice vote was taken, and the motion passed unanimously. Mr. Bjomstad said he also had a bill from Ater, Wynne for November 1995. He said payment had been approved at the December 6th meeting, but he was unsure whether it had been paid. He said he would forward it to the appropriate personnel for payment. Mr. Carmony reported a bill had been received from Ater, Wynne in the amount of $2,789.77 for the month December 1995. MOTION: Mr. Carmony moved to approve payment of the above-mentioned legal expenses in the amount of $2,789.77 for December 1995. Seconded by Mr. Bjornstad. There being no discussion, a voice vote was taken, and the motion passed unanimously. C. Bradley Lake Dispatch Audit Report Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 7 of 8 This item was discussed following the next item being tabled. 6. BUDGET SUBCOMMITTEE REPORT 10. NEW BUSINESS A. Scheduled Maintenance Fund Ms. Pease reported that the Budget Subcommittee met February 6, 1996, to discuss the proposed FY 97 budget. Ms. Pease read a document entitled, "Bradley Lake Subcommittee Report’ into the record at this time. The Subcommittee's recommendation was that the BPMC support a motion to exclude payments for a scheduled maintenance fund in the FY 97 budget. Ms. Pease summarized the budget attachments to the Subcommittee report. She said the major increases in the FY 97 budget would be for the five-year inspection and the FERC administrative fees. Ms. Pease reported that the Budget Subcommittee had voted unanimously to support the FY 97 budget that was being submitted to the BPMC today. The total operating budget would be $2,499,154, with debt service payments of $13,390,560, for a total FY 97 budget of $15,889,714. The proposed FY 97 budget would be a 22% decrease from the approved FY 96 budget of $15,921,375. Utility contributions for FY 97 would be $13,089,178, as compared to $13,054,836 in FY 96. Ms. Pease said a $1,059,000 surplus had been used in FY 96; a surplus of $959,037 would be used in FY 97. Through utilization of the surpluses, the Revenue Fund balance had been reduced to $100,000. The budget still contained an operating reserve of $535,000. Ms. Pease said the Budget Subcommittee recommended that the BPMC support a motion to adopt the FY 97 budget as presented. Mr. Saxton added that the FY 97 budget reflected an administrative cost reduction from the AEA. Because of the reduction, the amount AEA was entitled to through the settlement agreement had been reduced. Ms. Pease responded to questions, and discussion was heard. MOTION: Mr. Kelly moved to approve the FY 97 budget as submitted. Seconded by Mr. Stead. MOTION: Mr. Kelly moved to table the motion until later in the meeting. There being no objection, this item was tabled. 10. NEW BUSINESS C. Bradley Lake Dispatch Audit Report Mr. Bjornstad said the State and all the general managers had received a proposal from Chugach regarding the dispatch agreement and the price it would charge to perform the dispatching functions. Mr. Bjornstad said Chugach would provide the services at no charge if the southern and northern intertie controllers would agree to do likewise. MOTION: Mr. Bjornstad moved that Chugach's proposal to provide dispatching services at no charge be approved contingent upon the southern and northern intertie controllers agreeing to do the same. Seconded by Mr. Carmony. Chair Stahr explained ML&P's position on the proposal. Discussion was heard regarding potential problems. Mr. Kelly said he would be willing to discuss the proposal from GVEA's perspective. Bradley Lake Project Management Committee Meeting Minutes Tuesday, February 13, 1996 Page 8 of 8 The question was called, and a roll call vote was taken. The motion passed with one nay from ML&P. MOTION: Mr. Kelly moved that the Committee return to Agenda Items 6. and 10.A., the Budget Subcommittee Report and the Scheduled Maintenance Fund Report. Seconded by Mr. Beardsley. The motion passed by unanimous consent. 6. BUDGET SUBCOMMITTEE REPORT (CONTINUED) 10. NEW BUSINESS (CONTINUED) A. Scheduled Maintenance Fund (Continued) Chair Stahr asked if there was further discussion on the pending motion. Mr. Beardsley said AEA's position was that the maintenance fund should be established as a prudent initiative of the utilities. He recommended that the BPMC approve the maintenance fund and added that AEA would not be in a position to provide interim financing for replacement of any items. Mr. Kelly suggested that the Committee plan on revisiting this issue in the future when the Bradley cost of power had been reduced as compared to the alternative power. The question was called on the motion to approve the FY 97 budget as submitted. A roll call vote was taken, and the motion passed unanimously. 11. COMMITTEE MEMBER COMMENTS None. 12. NEXT MEETING DATE The next regular meeting of the Bradley Lake Hydroelectric Project Management Committee was scheduled for Tuesday, April 2, 1996, at 10:00 a.m., in the Commission Room of ML&P. 13. ADJOURNMENT MOTION: Mr. Kelly moved to adjourn. Seconded by Mr. Bjornstad. There being no further business of the Committee, the fheeting was adjourned at 11:55 a.m. BY: Tom Stahr, Chairman ATTEST: KOM: Co [— Alaska Energy Authority, Secretary