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HomeMy WebLinkAboutBPMC Meeting July 9, 2013 2BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority, Anchorage, Alaska May 17, 2013 ds CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee (BPMC) to order at 9:00 a.m. 2. COMMITTEE MEMBERS ROLL CALL Brad Evans (Chair) Chugach Electric Association (CEA) Cory Borgeson Golden Valley Electric Association (GVEA) Bryan Carey Alaska Energy Authority (AEA) Joe Griffith Matanuska Electric Association (MEA) James Posey Anchorage Municipal Light & Power (ML&P) Harvey Ambrose Homer Electric Association (HEA) John Foutz City of Seward(SEW) 3. STAFF/PUBLIC ROLL CALL Sara Fisher-Goad, Kelli Veech, Nick Szymoniak, Gene Therriault; Jake Plancich, Teri Webster, and Sandie Hayes (AEA); Rick,Baldwin, Alan Owens, Carrie Buckley, and Robert Day (HEA); Tom Hartnell and Ron Woolf (GVEA); Jeff Warner (ML&P); Burke Wick, Lee Thibert, and Brian Hickey (CEA); Denali Daniels, Don Zoerb, and Kaye Laughlin (MEA); TW Patch and Bernie Smith (Regulatory Commission of Alaska); David Burlingame (Electric Power Systems); Kirk Gibson (McDowell Rackner & GibSon);Brian Bjorkquist (Alaska Department of Law). 4. PUBLIC COMMENT There were»no public comments. 5. AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was amended. 7A = Annual Election of Committee Officers was postponed. 6. APPROVAL OF PRIOR MEETING MINUTES - March 21, 2013 The March 21, 2013 meeting minutes were approved as presented. ihe NEW BUSINESS 7A. Update on Battle Creek Diversion Project Mr. Carey gave a PowerPoint presentation entitled Battle Creek Diversion. This diversion dam is approximately 25 feet tall and 100 feet long at 1,700 feet elevation. Mr. Carey stated the diversion amount of water above the gauge is conservatively at .76 of the below glacier gage. Mr. Carey gave an update of the work that has been done. He has received comments from BPMC Minutes 5/17/2013 Page | of 4 U.S. Fish & Wildlife Services (USF&WS) and Alaska Department of Fish and Game (ADF&G) on the Battle Creek Diversion Project. He stated USF&WS and ADF&G have differing opinions as to the effects of turbidity, temperature and velocity. Mr. Posey asked who the predators are in the river. Mr. Carey stated Dolly Varden, eagles and bears. Mr. Carey stated National Marine Fisheries (NMFS) did not submit official comments, but were on the phone with USF&WS at the last meeting and agree with USF&WS' comments. Their main concern was habitat connectivity. They also mentioned target flows down at tidewater. Mr. Carey stated we do not want to have hard set compliance points that could result in violations, but rather have target flows that can vary a little bit. Mr. Posey asked if the target could be 60 and then adjusted up to 120 after five to 10 years. Mr. Carey stated he doesn't believe 60 would be approved. Chairman Evans asked Mr. Carey to explain the target flows. Mr. Griffith asked Mr. Carey how the agency comments of there not being enough information are going to be addressed. Mr. Carey stated there will be a comment response to USF&WS providing references and more information about their concerns. He stated some of USF&WS comments are impossible to address because there is no information or studies to address them. FERC staff is the adjudicator and will make the ultimate decision. Mr. Carey requested Ms. Laughlin give her impressions..of the meeting with USF&WS and NMFS. Ms. Laughlin stated they needed more information to justify their decision. She believes they want the project. Mr. Ambrose askedhif these three agencies are looking for some minimum continuous fish water flow release. Mr. Carey stated all the agencies will want some type of flow, but it is not clear how much the release would.be. Mr. Carey stated the amendment application has not been submitted and will take about one year after the submittal date to get the amendment. He said)the amendment application could be submitted in either July and allow FERC to request more studies or be submitted in October with some possible studies completed. Either case, Mr. Carey does not believe construction would occur next summer. Chair Evans asked if the amendment application will be submitted without fullstesolution, of all the issues withthe stakeholders. Mr. Carey stated full concurrence will not be reached because some.of the issuesjsuch as turbidity, cannot be proven. Mr. Posey suggested gathering as much data as possible this summer and submitting the amended application in October because there is no way construction could happen next summer. Chair Evans asked Mr. Carey if there are fatal flaws in terms of the feedback for this project. Mr. Carey doesn't believe so. He stated the agencies are advisory to FERC and are not mandatory because there are no federal lands involved. Mr. Posey asked how the flushing is allowed for every year. Mr. Carey stated there will be bed load gravel built up behind the dam and the sluice gate will be opened up once or twice a year to flush all the gravel out from behind the dam. He stated it would probably be done during a rain storm to have very high flows occurring at that point. Mr. Carey stated the estimated construction cost as of December 2012 was $52.3M which is 80 percent design cost estimate. The conservative estimate of produced energy is 35,200 MWhrs. 7B. Economic Analysis of Battle Creek Diversion Project Mr. Carey requested Mr. Szymoniak review the economic analysis of Battle Creek diversion project slides. BPMC Minutes 5/17/2013 Page 2 of 4 Mr. Szymoniak presented rate analysis comparing different interest rates and flow rates. He stated the fixed cost constitute most of the project's power cost and would remain the same during the life of the project. He also did a rate comparison on natural gas generation which shows the cost of natural gas power increasing each year with inflation while Battle Creek power remains stable. Mr. Posey asked what would be the implications of a one year slip in the project on the total cost estimate. Mr. Carey responded stating in another two months the independent cost estimate of the project will be at the 95 percent level. It was agreed to wait until this data is collected and submit the FERC licensing amendment in the fall. Once the license is obtained then they can review the costs again to determine if the project moves forward. 7C. Next Steps for Transmission Planning Ms. Fisher-Goad and Mr. Szymoniak gave a presentation on the next steps for transmission planning. She stated they have been working,n Railbelt-wide transmission planning. The first year of funding for the unconstrained Bradley Lake plan was requested in the Governor's budget during last legislative session, but wasn't included in the final version of the capital budget. Mr. Szymoniak explained the slides regarding potential rate impacts with transmission upgrades and the benefit/cost analysis based on founassumptions: the full cost is recovered through rates; the full cost is funded withycommercial loans; the cost is shared proportionally by all utilities; annual operating costs are two percent of capital’costs. Mr. Szymoniak stated that all project costs and benefits were reported in a May:9, 2013 EPS report by Mr. Burlingame. Ms. Fisher-Goad stated*AEA gives the Legislature and the administration an analysis detailing the impacts of rates to constituents and rate payers for particular amounts of funding provided for transmission upgrades. Chair Evans requested a discussion regarding the concerns about the reliability standards that were used.for planning purposés. Ms. Fisher-Goad stated this was an initial presentation and will be refined to be presented this summeémto the Regulatory Commission. Chair Evans requested an update on the transmission upgrade and rate impacts. He also requested a discussion on concerns regarding the. potential significant operational changes on the Kenai Peninsula between Homer, Chugach, and,the Bradley Lake Project. The assumptions ascribe the benefits and cost of the project to the kilowatt hours sold within the Railbelt system. The slide shows the cost spread over the total Railbelt load. Chair Evans asked to explain why there is a 300% spread between the estimated low savings and the estimated high savings. Mr. Burlingame said they are working on production cost savings analysis which comes in at about $80 million a year. He believed the estimated savings will be between $120 million and $150 million a year, but the analysis has not been completed. Mr. Griffith asked what criteria was used in the planning study. Mr. Burlingame stated they tried to mimic the reliability criteria that each of the utilities use to plan their own transmission systems. Chair Evans asked if this same reliability criteria was used to identify the projects to start with. Mr. Burlingame stated the criteria they used was to have no loss of an interconnective resource resulting in a loss of firm customer from the bulk transmission system. Chair Evans inquired about what structure would be used to finance the proposed transmission upgrade. Ms. Fisher-Goad stated the financing question has been a long-term Railbelt issue. BPMC Minutes 5/17/2013 Page 3 of 4 She believes it is important for the utility companies to agree these are the project upgrades that need to go forward before the financing question is taken to the Legislature. Chair Evans stated the capital costs are too large to bear even if all the utilities created a unified Railbelt system. Ms. Fisher-Goad stated AEA has bonding authority for conduits and projects they own. She stated the Legislature and administration has looked favorably upon low interest financing for energy projects. She believes AEA and the state of Alaska have been very creative in support projects that are good for the region. Mr. Ambrose commented it would not be accurate to say the benefits of the Railbelt upgrades are unilateral across the utility companies. He believes the upgrades need to be done, but would be difficult to sell the cost to his members because they, are necessary for the Railbelt, but not necessary for Homer. Chair Evans appreciated the presentation and the members input, but there is clearly no unified response to being a unified system. He does not believe the utilities have to merge, but need to find a way for the utilities to give the reliability group a greater role. Chair Evans believes it is incumbent upon this committee to endorse the planning criteria that\has been used for these studies. He recommends drafting a resolution for the next meeting. Chair Evans requested the Chair of the Bradley O&D, through Mr. Griffith, provide an update on the technical operations concerning issues on the Static Var Compensator, the power plant, and the energy accounting. 8. OPERATORS REPORT Mr. Owens gave his preséntation on the operators report,,Prudent maintenance on the dam will be occurring in the next three months. The fish screens will need to be cleaned and requires no net change to the budget. Mr. Day gave an update onthe phone, internet, and intranet installation. Mr. Griffith requested an update.on thescyber security of the Bradley system. Mr. Day stated the DCS system is isolatedfrom any external network. No external access is allowed. The waterfall isolation system has been approved, in the budget and will be installed. 9. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 11:44 a.m. BY: Bradley Evans, Chair Attest: Bryan Carey Alaska Energy Authority, Secretary BPMC Minutes 5/17/2013 Page 4 of 4