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HomeMy WebLinkAboutBPMC May 21, 2013BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority, Anchorage, Alaska March 21, 2013 1. CALL TO ORDER Chair Evans called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 1:30 p.m. 2. COMMITTEE MEMBERS ROLL CALL Cory Borgeson Golden Valley Electric Association (phone) (GVEA) Bryan Carey Alaska Energy Authority (AEA) Brad Janorschke Homer Electric Association (phone) (HEA) Brad Evans Chugach Electric Association (CEA) Joe Griffith Matanuska Electric Association (MEA) James Posey Anchorage Municipal Light & Power (AML&P) John Foutz City of Seward (SEW) 3. STAFF/PUBLIC ROLL CALL Richard Miller (AML&P); Burke Wick (CEA); Robert Day (HEA); Kathy Harris (CEA); Jeff Warner (AML&P); Brian Bjorkquist (Department of Law); Larry Jorgensen (HEA); Kelli Veech, Teri Webster, and Sandie Hayes (AEA). Participating by phone: Len Thompson (GVEA); Kirk Gibson (McDowell Rackner & Gibson PC). 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS/MOTION FOR APPROVAL The agenda was approved as amended. 6. APPROVAL OF PRIOR MEETING MINUTES -— September 26, 2012 The September 26, 2012 meeting minutes were approved as presented. 7. OLD BUSINESS TA. Battle Creek Diversion Amendment Mr. Carey indicated the second stage consultation started November 5" when AEA filed with Federal Energy Regulatory Commission (FERC) the draft amendment application for Bradley Lake. There is a 90-day period for agencies to comment and during that time a few comments were received from the U.S. Army Corps of Engineer and FERC. The comments are minor and can be resolved in the final amendment application. Alaska Department of Fish and Game, National Marine Fisheries, and U.S. Fish & Wildlife are still working on their comments and are expected by the end of the week. Once these are received, a meeting will be set up a meeting to discuss them. This information will be part of the final draft amendment to FERC. After it reaches FERC, it takes about seven (7) months to get BPMC Minutes 03/21/2013 Page 1 of 3 the license order. If the amendment is sent in late May or the first part of June, it is estimated to receive the license order around January of next year. This still is enough time to look at the terms and conditions from FERC that would make it onerous. One potential term or condition is if FERC requests a significant amount of water going downstream during the summer and that obviously would affect the amount of energy it is estimated to see from the project and have substantial changes. Assuming there are no roadblocks, AEA could move forward and do the bidding on the project and the contractor would be able to start work next summer. A spreadsheet was given of estimated cost of energy based on principal and interest for a 30-year term. It does not include O&M. Two different interest rates, 3 percent and 5 percent, were used in the spreadsheet as an estimate of what the cost might be. This spreadsheet is for information purposes only and does not, in any way, show what is expected from funding. Chair Evans asked how the current budget looks. Mr. Carey stated the budget looks good and will carry us through the rest of the calendar year. The geotechnical investigation, the drilling, and the helicopter time all came in under budget saving a couple hundred thousand dollars. Some of this may be spent on the permitting process but it should be minimal. 7B. FERC Land Fee Update Kirk Gibson (McDowell Rackner & Gibson, PC) gave an update on the FERC land fee. He stated that in January the final order was sent out by FERC to revise the methodology for calculating the FERC land fees. Back in 2009, there was an enormous 800% increase in fees for BPMC for the Bradley Lake Project and it was because FERC used a BLM methodology and applied it to the way they calculate the FERC land use fees. BPMC joined a group of hydro facilities ownership utilities throughout the country that represented approximately 60% of all the dam owners. They were able to stop the rules being implemented and had a victory in the DC circuit court in 2011. Because the circuit court stayed the implementation of the new rates, BPMC saved about 2.1 million dollars during that period because they were not paying the higher charges. The fees paid were approximately $58,000 which were attorney fees. The present end rate is higher than the 2009 rate but not as high as it could have been. Chair Evans asked if the budgeting committee was clear on what the fees would be for the budget. It was confirmed there is $175,000 allocated in the budget for the FERC land use fees. 8. NEW BUSINESS 8A. Approve the fiscal year 2014 Operating and Capital Budget Robert Day (HEA) indicated the operating budget proposal has been reviewed and approved by the Operations & Dispatch Committee. It then went to the budget sub-committee which also reviewed and approved. There was a question on Schedule A1, DCS Security Interface for Data Access, $125,000 that needs more detail. Mr. Day explained this has been budgeted for an internet security system. This system not only provides a sophisticated firewall but also allows for a contractor to be able to access the system remotely. Members Posey and Griffith stated there is real concern on this issue. An in-depth look at the control system at Bradley and what degree of security is needed should be done as a group with AEA and the other utility. Chair Evans said he will need to take this issue up with the Intertie Management Committee because they are the ones with the operating tools for most of the utilities. He stated the need for a system-wide approach. He will make an assignment for this. Mr. Borgeson asked how the budget procedure works when a proposed item is not expended in the year it was budgeted. Mr. Jorgensen explained that capital budget items that are not spent or received by the end of the fiscal year (June 30) are moved to the next year’s budget. BPMC Minutes 03/21/2013 Page 2 of 3 More discussions about the budget procedures and where the items should be in the schedules ensued. Chair Evans made the assignment to the finance committee to make sure there is a system capable of budgeting across multiple years. Chair Evans asked for more detail on the telephone replacement. Mr. Day explained the existing telephone system was installed in 1991. Problems have occurred with frost heaves which have damaged the underground analog cables. Communication has been lost to the fire alarm system and the barge dock. A wireless system will eliminate these issues. Chair Evans asked Mr. Day to provide a project description and scope of work to be brought to the next meeting. Chair Evans inquired about the Generator Partial Discharge Monitor line item. He asked if there was a concern about partial discharge. Mr. Jorgensen said the original plant was installed with an ozone monitoring system which is outdated and failed a few years ago. They are looking at current technology to protect the generator and also anticipate any problems they may have with it. Member Griffith indicated the Operations & Maintenance, Schedule B has increased approximately $215,000 and inquired about the increase. Mr. Jorgensen explained there are several large items that make up this increase (1) ARC Flash Study to become compliant with regulations (2) oil was contaminated by water and therefore all the reserve oil was used and had to be resupplied (3) contract labor increases (4) Grant Aviation’s discontinued travel to Homer. Mr. Griffith moved that the Bradley Lake Project Management Committee (BPMC), approve the fiscal year 2014 Operating and Capital budget as presented. Motion was seconded by Mr. Janorschke. The motion passed unanimously. Mr. Janorschke suggested having a future meeting at the Bradley Lake facility since some committee members have not been there in several years. Mr. Borgeson expressed interest as well. No date was set. 9. Adjournment There being no further business for the committee, the meeting adjourned at 2:42 p.m. BPMC Minutes 03/21/2013 Page 3 of 3