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ED ENERGY AUTHORITY
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
SPECIAL MEETING
(Teleconference)
AGENDA
Tuesday, December 18, 2012 — 2:30 p.m.
Alaska Energy Authority’s Aspen Room
813 West Northern Lights Boulevard, Anchorage, AK
1. CALL TO ORDER
2: ROLL CALL (for Committee members)
3; PUBLIC ROLL CALL (for all others present)
4. PUBLIC COMMENT
5. AGENDA COMMENTS / MOTION FOR APPROVAL
6. APPROVAL OF PRIOR MEETING MINUTES — September 26, 2012
ts NEW BUSINESS
A. Approve the FY 2012 audit / refund (Action Item)
8. ADJOURNMENT
To participate by teleconference, dial 1-800-315-6338 and use code 3074#.
813 West Northern Lights Boulevard e Anchorage, Alaska 99503
www.aidea.org ¢ 907/771-3000 ¢ FAX 907/771-3044 e Toll Free (Alaska Only) 888/300-8534 e www.akenergyauthority.org
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:
Second:
By:
Bradley Evans, Chair
Attest:
Bryan Carey
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
September 26, 2012
DRAFT 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
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 USDGS 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.
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
BPMC 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
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.
BY:
Bradley Evans, Chair
Attest:
Bryan Carey
Alaska Energy Authority, Secretary
Audited Financial Statements
and
Other Financial Information
BRADLEY LAKE
PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
Years ended June 30, 2012 and 2011
SWALLING & ASSOCIATFS
Certified Pablic Accountants & Bus
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
Financial Statements and Other Financial Information
Years ended June 30, 2012 and 2011
Contents
Page
Independent Auditor’s Report 1
Balance Sheets 2
Statements of Revenues and Expenses 3
Statements of Cash Flows 4
Notes to Financial Statements 5-10
Independent Auditor’s Report on Other Financial Information 11
Statements of Expenses 12
SWALLING & ASSOCIATES PC Certified Public Accountants & Business Advisers
INDEPENDENT AUDITOR’S REPORT
Bradley Lake Project Management Committee
Anchorage, Alaska
We have audited the accompanying special-purpose balance sheets of the Bradley Lake Project
Management Committee (a project management committee) Operating and Revenue Funds as of
June 30, 2012 and 2011, and the related special-purpose statements of revenues and expenses,
and special-purpose statements of cash flows for the years then ended. These financial statements
are the responsibility of the Bradley Lake Project Management Committee. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
The accompanying special-purpose financial statements were prepared for the purpose of
complying with, and in conformity with the accounting requirements specified in Note A, and are
not intended to be a presentation in conformity with generally accepted accounting principles.
In our opinion, the special-purpose financial statements referred to above present fairly, in all
material respects, the assets, liabilities and surplus of the Bradley Lake Project Management
Committee Operating and Revenue Funds as of June 30, 2012 and 2011, and its revenue and
expenses and its cash flows for the years then ended, on the basis of accounting described in
Note A.
This report is intended solely for the information and use of the Bradley Lake Project
Management Committee and is not intended to be and should not be used by anyone other than
this specified party.
aunlling F Aeaeceatly | PC.
December 10, 2012
3201 C Street. Suite 405 : Anchorage. Alaska 99503 @ Independent member of DFK International - a worldwide association e 5 of independent accounting firms and. business advisers Ph 907.563.7977 + Fax 907.561.7683 - www.swallingcpas.com
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
BALANCE SHEETS
June 30, 2012 and 2011
ASSETS
Current assets:
Investments (Note B)
Due from R & C Fund (Note A)
Other receivable (Note A)
Prepaid expense
Total assets
LIABILITIES AND SURPLUS
Current liabilities:
Due to AEA (Note D)
Accounts payable
Payable to utilities -O & M (Note E)
Payable to utilities — R & C refund (Note A)
R & C repayment (Note A)
Total liabilities
See accompanying notes to the financial statements.
2 tN — nN $ 2,086,967
773,898
5.640
$2,866,505
$ 389,806
908,063
794,738
773,898
$_2,866,505 Ny — —_ $ 3,169,225
190,270
5.640
3,365.1
$ 710,685
743,177
1,373,372
—— 537,901
$3,365,135
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
STATEMENTS OF REVENUES AND EXPENSES
Years ended June 30, 2012 and 2011
2012
Variance
Favorable 2011
Budget Actual (Unfavorable) Actual
Revenues:
Utility contributions,
net of surplus refund $ 16,203,578 $15,408,840 $ (794,738) $15,814,310
Interest receipts 1,742,935 1,959,302 216,367 1,905,127
State renewable energy 500.000 22,637 (477.363) -
Total revenue 18,446,513 17,390,779 (1,055,734) 17,719,437
Expenses, fixed asset
replacements, transfers
and debt service:
Operations and maintenance 5,318,263 4,733,201 585,062 4,976,939
Debt service 12,100,750 12,100,750 - 12,105,450
Arbitrage transfer 230,000 196,112 33,888 229,976
Fixed asset replacements 361,000 401,579 (40,579) 309,822
Battle Creek — state 500,000 22,637 477,363 -
Interfund transfer (63.500) (63.500) - 97.250
Total expenses, fixed
asset replacements,
transfers and debt
service 18,446,513 17,390,779 1,055,734 17.719.437
Excess of revenues over
expenses, fixed asset
replacements, transfers
and debt service $ - § - § - § :
See accompanying notes to the financial statements.
3
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
STATEMENTS OF CASH FLOWS
Years ended June 30, 2012 and 2011
2012 2011
Cash flows from operating activities:
Excess of revenues over expenses,
fixed asset replacements, transfers
and debt service $ . $ -
Adjustments to reconcile excess of revenues
over expenses, fixed asset replacements,
transfers and debt service to net cash provided
by (used in) operating activities:
Increase in accounts receivable (583,628) (190,270)
Increase (decrease) in accounts payable 164,886 (671,743)
(Decrease) increase in amounts due to other funds (320,879) 710,685
Increase in payable to utilities 195,264 1,092,378
Decrease in R & C repayment (537.901) (894.645)
Net cash (used in) provided by
operating activities (1,082,258) 46,405
Available cash and cash equivalents, beginning of year 3,169,225 3,122,820
Available cash and cash equivalents, end of year $2,086,967 $3,169,225
Supplemental disclosure of cash flows information:
Interest paid $5,415,600 $ 5,944,722
See accompanying notes to the financial statements.
4
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2012 and 2011
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Description of Business: The Bradley Lake Project Management Committee (the Committee)
was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric
Power (Power Sales Agreement) dated December 8, 1987. The purpose of the Committee is to
arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the
Project), which became operational in September 1991, and the scheduling, production and
dispatch of power. The members of the Committee include the Alaska Energy Authority (AEA)
and the five purchasers under the Power Sales Agreement - Chugach Electric Association, Inc.;
Golden Valley Electric Association, Inc.; the Municipality of Anchorage (Municipal Light &
Power); the City of Seward (Seward Electric System); and the Alaska Electric Generation &
Transmission Cooperative, Inc. (AEG&T). AEG&T assigned its rights pertaining to Homer
Electric Association, Inc. (HEA) under the Power Sales Agreement to Alaska Electric and
Energy Cooperative, Inc. (AE&EC) in 2003. HEA and the Matanuska Electric Association, Inc.
(MEA) are additional parties to the Power Sales Agreement but are included as power
purchasers for purposes of representation while AEG&T and AE&EC have no direct vote as a
consequence of the individual representation of HEA and MEA.
Section 13 of the Power Sales Agreement delineates other Committee responsibilities, including:
establishing procedures for each party's water allocation, budgeting for annual Project costs and
calculating each party's required contribution to fund annual Project costs. Committee approval
of operations and maintenance arrangements for the Project, sufficiency of the annual budgets
and wholesale power rates and the undertaking of optional Project work requires a majority
affirmative vote and the affirmative vote of AEA.
The Power Sales Agreement extends until the later of: 1) 50 years after commencement of
commercial operation or 2) the complete retirement of bonds outstanding under the AEA Power
Revenue Bond Resolution along with the satisfaction of all other payment obligations under the
Power Sales Agreement. Renewal options for additional terms exist.
As of June 30, 2012, AEA had incurred slightly more than $1.0 million in expenses relating to
the Battle Creek diversion project. Funding for this project comes from state appropriations and
the Bradley Lake Project Renewal and Contingency Reserve Fund (R & C Fund). The project
would divert water from the upper part of Battle Creek into Bradley Lake. Completion of the
diversion project is expected to increase the amount of energy the Bradley Lake Hydroelectric
Project produces annually by an average of 36,000 MW-hours, or nearly a ten percent increase in
energy production. The diversion project’s engineering is in final design, and various
environmental studies are ongoing. Construction of the diversion project will require that the
Federal Energy Regulatory Commission (FERC) first approve and amend the Bradley Lake
Hydroelectric Project’s FERC license. Amendment of the FERC license is expected in 2013.
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2012 and 2011
NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued)
Establishment of Trust Funds: Article V, Section 502 of the Alaska Energy Authority's Power
Revenue Bond Resolution established a Revenue Fund and an Operating Fund, including an
Operating Reserve account, to be held by AEA. In actuality these funds, along with the Debt
Service, Excess Investment Earnings (arbitrage), and various construction funds related to the
Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank
in Seattle, Washington.
All deposits, including utility contributions and interest transferred from other funds, are made
into the Revenue Fund, which transfers amounts approximately equal to one-twelfth of the
annual operating and maintenance budget into the Operating Fund on a monthly basis.
Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to
satisfy semiannual interest payments and annual principal payments on the Project's outstanding
bonds payable.
Interest earnings available for operations and maintenance are derived from the following funds:
Debt Service Fund; Operating Reserve Fund; Operating Fund; Revenue Fund; Capital Reserve
Fund; and the Renewal & Contingency Fund when the fund balance is $5,000,000 or greater.
Revenue and Expense Recognition: Utility contributions are recognized as revenue when due to
be received under the terms of the Power Sales Agreement. Transfers from other funds are
recognized when the transfer is made and interest earnings are recognized when received.
Operating and maintenance expenses are recognized when incurred, while transfers to Debt
Service Fund and Excess Earnings Funds are recognized when the transfer is made. At the end
of June 2010 an additional transfer of $131,922 was made to the Debt Service Fund for July
2010 interest on Series 5 Bonds defeased in early August 2010 with proceeds of Series 6 Bonds
issued in early July 2010. The transfer was made per a Committee approved budget amendment.
Purchases of fixed asset replacements are expensed when purchased. The Operating Fund
reimburses the Renewal and Contingency Reserve Fund (R & C Fund) for capital costs over a
four year period. In years prior to the year ended June 30, 2012, transfers to the R & C Fund
were made annually based on funds withdrawn for capital costs equal to the cumulative total of
one-fourth of the amount of expenditure incurred each year. Beginning in the year ended June
30, 2012, transfers to the R & C Fund for repayment of funds withdrawn for capital costs occur
monthly based on the budgeted R & C expenditures. At year end the actual Operating Fund and
R & C Fund expenses are compared to the actual revenue and a refund is given to the utilities
when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed
revenues. At June 30, 2012, the surplus to be refunded was $773,898 resulting in a net balance
due to the R & C Fund of $328,496. At June 30, 2011, the balance due to the R & C Fund was
$1,127,757.
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2012 and 2011
NOTE A: SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates: The preparation of the special-purpose financial statements of the Operating and
Revenue Funds requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
In fiscal year 2009, the Federal Energy Regulatory Commission (FERC) land use fee increased
significantly due to a new methodology for estimating the fee. The increased 2009 fee of
$378,141 was paid to FERC and the Committee participated in litigation to dispute this new
methodology. In fiscal year 2010, $380,000 was accrued for the fee, but was not paid pending
an outcome of the litigation. During fiscal year 2011, the dispute was settled and the new land
use fee methodology was discontinued. The fees for fiscal years 2009, 2010 and 2011 were
estimated to be the same amount billed prior to the new methodology resulting in a refund
receivable of $190,270 at June 30, 2011 that was received in September, 2011. Additional
information regarding the refund of FERC fees is contained in footnote E, Surplus Refund.
Income Taxes: The Bradley Lake Project Management Committee is exempt from income
taxation under Section 501 (a) of the Internal Revenue Code. Therefore, the Committee had no
deferred tax liabilities or assets or tax carryforwards as of June 30, 2012 and 2011 and no current
or deferred tax expense for the years then ended.
NOTE B: INVESTMENTS
Substantially all of the balances in the following funds are invested in collateralized investment
agreements with JP Morgan Chase Bank through the trust department of US Bank. The
specified interest rate for monies from the Operating and Revenue Funds invested in the
agreements is 7.38% per annum. Balances at June 30, 2012 and 2011 are as follows:
012 2011
Operating Fund $ 1,176,629 $ 944,100
Revenue Fund 910.338 dud loo
Total investments $ 2,086,967 $3,169,225
Investments are sold as needed to cover operating requisitions submitted to the trustee and are
therefore considered to be short-term and available for sale. Investments are presented at
aggregate cost.
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2012 and 2011
NOTE B: INVESTMENTS (Continued)
For purposes of the cash flow statements, management considers the full amount of the
investment balance to be cash available for operations.
NOTE C: MAJOR CONTRACTS AND AGREEMENTS
During May 1994, the Alaska Energy Authority entered into the Master Maintenance and
Operating agreement with the Committee. The purpose of the agreement is to establish contract
administration and budgeting procedures for maintenance and operation contracts of the Bradley
Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment
in a manner consistent with the requirements of the Power Sales Agreement. The term of the
Master Agreement is indefinite, remaining in effect until termination of the Power Sales
Agreement or until AEA no longer legally exists. This agreement authorizes AEA to enter into
any contracts necessary to perform operating or maintenance-type services to the Project, subject
to the approval of the Committee.
On behalf of the Committee, the AEA entered into an agreement with Chugach Electric
Association, Inc. (CEA) in August 1996, for the provision of all services necessary to dispatch
the Project's electric power output. The dispatch agreement runs concurrently with the wheeling
and related services contract entered into by and among the parties to the Power Sales
Agreement in December 1987 and remains in effect for the term of the wheeling agreement
unless CEA ceases to be the output dispatcher.
In August 1996, the Alaska Energy Authority entered into an agreement with CEA on behalf of
the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC
Substations.
An operation and maintenance agreement dated February 11, 1994, was executed between
Homer Electric Association, Inc. and the Alaska Energy Authority. This agreement provides for
the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric
Association, Inc. The agreement, as amended effective July 1, 2008, is through June 30, 2013
and automatically continues in successive five year terms thereafter unless terminated by either
party as set forth in the amended agreement. Generally, to avoid an automatic, successive five
year term extension, notice of termination by either party must be given two years in advance of
the termination date. HEA is to be reimbursed for costs associated with the operation,
maintenance and repair of the Project as determined in advance through the submission of an
annual budget based upon prudent estimates and anticipated operation and maintenance costs.
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2012 and 2011
NOTE C: MAJOR CONTRACTS AND AGREEMENTS (Continued)
In August 1996, the agreement was amended to separate the maintenance of the transmission
facilities from the hydroelectric project. The transmission agreement continues from year to
year, except upon written notice to terminate by either party. Notice of termination must be
given six months in advance of termination dates. In June 1999, the transmission agreement was
again amended to require HEA to provide communication services in addition to the other
services.
NOTE D: RELATED PARTY TRANSACTIONS
During the years ended June 30, 2012 and 2011, costs incurred under the various contracts with
related parties described in Note C were as follows:
2012 O11
Homer Electric Association, Inc. — operation,
maintenance, communications and fixed
asset replacements $ 2,480,366 $ 2,406,762
Chugach Electric Association, Inc. — substation
service maintenance $ 126,578 $ 361,591
Alaska Energy Authority — administrative fees $ 200,000 $ 200,000
For the years ended June 30, 2012 and 2011, Chugach Electric Association, Inc. provided
dispatch services to the Committee at the agreed upon amount which is zero.
Amounts payable to related parties at June 30, 2012 and 2011 were as follows:
012 2011
Included in accounts payable:
Homer Electric Association, Inc. $ 589,952 $ 375,194
Chugach Electric Association, Inc. $ 1,586 $ 5,514
Due to others:
Alaska Energy Authority — short-term
borrowings for vendor payments $ 389,806 $ 710,685
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2012 and 2011
NOTE E: SURPLUS REFUND AND UTILITY CONTRIBUTIONS RECEIVABLE
The $1,183,102 surplus at June 30, 2011 was refunded to member utilities in fiscal year 2012
pursuant to the Power Sales Agreement and direction of the Committee.
During fiscal year 2011, the Committee approved a fiscal year 2011 budget amendment and
refund to the utilities of $360,000 as a result of increased interest earnings, reduction of the
FERC land use fee, and net of an increase of expenses to the Daves Creek SVC Cooling System
repair. An additional refund of $442,623 was paid during fiscal year 2011 and a refund of
$190,270 was payable at June 30, 2011 for overcharges of FERC land use fees in prior years.
The $794,738 surplus at June 30, 2012 will be refunded to member utilities in fiscal year 2013
pursuant to the Power Sales Agreement and direction of the Committee.
NOTE F: SUBSEQUENT EVENTS
The Committee has evaluated subsequent events through December 10, 2012, the date the
financial statements were available to be issued, and did not identify anything requiring
additional disclosure.
10
SWALLING & ASSOCIATES
PC Certified Public Accountants & Business Advisers
INDEPENDENT AUDITOR’S REPORT ON OTHER FINANCIAL INFORMATION
Bradley Lake Project Management Committee
Anchorage, Alaska
We have audited the special-purpose financial statements of the Bradley Lake Project
Management Committee Operating and Revenue Funds as of and for the years ended June 30,
2012 and 2011 and our report thereon dated December 10, 2012, which expressed an unqualified
opinion on those special-purpose financial statements, appears on the page preceding the balance
sheets. Those audits were conducted for the purpose of forming an opinion on the special-
purpose financial statements taken as a whole. The supplemental special-purpose Statements of
Expenses are presented for purposes of additional analysis and are not a required part of the
special-purpose financial statements. Such information is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to
prepare the special-purpose financial statements. The information has been subjected to the
auditing procedures applied in the audits of the special-purpose financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the special-purpose financial statements
or to the special-purpose financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the information is fairly stated in all material respects in relation to the special-purpose
financial statements taken as a whole.
This report is intended solely for the information and use of the Bradley Lake Project
Management Committee and is not intended to be and should not be used by anyone other than
this specified party.
Runllrg ff Cocecuty PC.
December 10, 2012
3201 C Street, Suite 405 : Anchorage, Alaska 99503 BD lndependent member of DFK International -a worldwide association of independent accounting firms and. husiness’ advisers Ph 907.563.7977 + Fax 907.561.7683 - www.swallingepas.com
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
OPERATING AND REVENUE FUNDS
STATEMENTS OF EXPENSES
Years ended June 30, 2012 and 2011
2012
Variance
Favorable 2011
Budget Actual (Unfavorable) Actual
Expenses:
Generation expense:
Operation supervision
and engineering $ 262,888 $ 260,557 $ 2,331 $ 226,863
Hydraulic operation 111,118 76,032 35,086 88,703
Electric plant operation 208,194 199,474 8,720 180,216
Hydraulic power
generation operation 576,395 328,990 247,405 434,727
FERC land use fees 62,623 62,623 - 62,623
Structure maintenance 291,307 345,862 (54,555) 266,257
Reservoir, dam, and
waterway maintenance 114,688 38,193 76,495 198,343
Electric plant maintenance 398,205 309,307 88,898 242,543
Hydraulic plant maintenance 158,761 154,124 4,637 104,058
System control and load dispatching 387,112 341,247 45,865 501,615
Substation operation
and maintenance 120,000 126,578 (6,578) 361,591
Overhead line maintenance 317.708 233.130 84,578 289.202
Total generation expense 3.008.999 2.476.117 532,882 2.956.741
Administrative, general and
regulatory expense:
Insurance 617,090 535,825 81,265 563,516
AEA administrative fee 200,000 200,000 - 200,000
PMC costs 65,600 49,262 16,338 79,157
Regulatory commission:
FERC administrative fees 232,500 208,552 23,948 291,640
FERC licensing and study 71,000 70.540 460 82,960
Total administrative, general
and regulatory expense 1,186,190 1,064,179 122,011 1,217,273
Total operations and
maintenance expenses,
before capital project
reimbursement 4,195,189 3,540,296 654,893 4,174,014
R & C Fund repayment 1,123,074 1,192,905 (69,831) 802,925
Total operations and
maintenance expenses $5,318,263 $ 4,733,201 $ 585,062 $ 4,976,939
12
Bradley Lake Project Manager-et Committee Meeting Page 1 of 1
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li bl $ rs Public Notices Online Public Notice Bradley Lake Project Management
State of Alaska Committee Meeting
Submitted by: tawebster/08
Date Submitted: 12/07/2012 02:22 PM
Date Modified:
Submission Mode: direct
Approve Prior To Post: n/a
Approved By: n/a
Approval Date: n/a
Attachments: No files attached
Bradley Lake Project Management Committee Meeting
Category: Public Notices Department: Commerce Community & Economic
Development
Publish Date: 12/07/2012 Location: Statewide
Archive Date: 12/19/2012 Coastal District: N/A
Event/Deadline Date: 12/18/2012 02:30 PM
Body of Notice:
ALASKA ENERGY AUTHORITY
Special Meeting - Teleconference
Public Notice
Bradley Lake Project Management Committee
Notice is hereby given that the Bradley Lake Project Management Committee will hold a special meeting on
Tuesday, December 18, 2012 at 2:30 p.m. via teleconference regarding the approval of the FY 2012 audit/refund.
For additional information contact Brad Evans, Chairman.
This meeting will be conducted by electronic media pursuant to AS 44.88.050(a) and AS 44.62.310 at the
following location:
Alaska Energy Authority Aspen Room, 813 West Northern Lights Boulevard, Anchorage, Alaska;
Teleconference information: Dial 1-800-315-6338, enter code 3074#.
The public is invited to attend. The State of Alaska (AEA) complies with Title II of the Americans with Disabilities
Act of 1990. Disabled persons requiring special modifications to participate should contact AEA staff at (907) 771-
3074 to make arrangements.
Revision History:
12/07/2012 02:22:10 PM by tawebster/08/State/Alaska/US
$$WebClient [Submitter] [Anon] [CCED]
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