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HomeMy WebLinkAboutBPMC April 17, 2014Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY Special Meeting Public Notice Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee (BPMC) will hold a special meeting on Thursday, April 17 at 2:00 p.m. regarding dispute resolution committee followed by a special BPMC meeting to review and discuss the findings, conclusions, and recommendations of the BPMC’s Dispute Resolution Committee and consider; 1) accepting the report of the Dispute Resolution Committee; and 2) addressing the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and Chugach Electric Association, Inc. (Chugach) that may remain unresolved by the work of the Dispute Resolution Committee. We will also cover a Battle Creek update; governor project update; Operator report and committee reports. For additional information contact Teri Webster. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Aspen Room, 813 West Northern Lights Boulevard, Anchorage, Alaska; a teleconference line has been set up for those unable to attend in person. Dial 1-800-315-6338, Enter Code 3074#. The public is invited to attend. The State of Alaska (AEA) complies with Title Il of the Americans with Disabilities Act « 1990. Disabled persons requiring special modifications to participate should contact AEA staff at (907) 771-3074 to mak arrangements. Attachments, History, Details Attachments Details BPMC Special Agenda.pdf Department: Commerce, Community and Dispute Resolution Agenda.pdf Economic Development Category: Public Notices Revision History Sub-Category: Advisory Committee Meetinc Created 4/14/2014 3:12:42 PM by tawebster Location(s). Statewide Modified 4/14/2014 3:12:42 PM by tawebster Project/Regulation #: Modified 4/16/2014 4:50:09 PM by tawebster ; Publish Date: 4/14/2014 Archive Date: 4/18/2014 Events/Deadlines: ony ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHOR ny’ BOARD MEETING BPMC 04/17/14 Roll call from top to bottom ending with Chair Golden Valley Electric Association Homer Electric Association Matanuska Electric Association City of Seward Municipal Light & Power Chugach Electric Association 8 3 3 a Roll call from top to bottom ending with Chair < Golden Valley Electric Association Homer Electric Association Matanuska Electric Association City of Seward Alaska Energy Authority Municipal Light & Power Chugach Electric Association Next Meeting: xxxx xXxx XX, XXXX Hon Workk -GVZA orn a Carne. Buckle, HEA Bradley Lake Project Management Committee Thursday, April 17, 2014 @ 2:00 P.M. **PLEASE WRITE LEGIBLY** Matt Clore Rabm Brewer ORGANIZATION Bvina Bartle (lav ks Buns Be 7% Clarke BemMec —— MRAG ATD CHUCGA CY Mee KER Atc# teh MEA CHUGACL | CHU AT (AvA Lili f Ai vf MhAuk Jolapey, Qs 30 L Lit [a Ley hit a Ih Vo ach brow 639 lesa} ra AGO Bradley O&D Committee’s Responses to Homer Electric’s Statement of Disputes On or about January 15, 2014 Homer Electric Association, Inc. (HEA) submitted a Statement of Disputes to the Bradley Lake Project Management Committee (BPMC). Homer listed areas with both the Services Agreement and the Transmission Agreement where they feel Chugach Electric Association, Inc. as the project Dispatcher, violated the scheduling protocols of the project leading to operational and maintenance issues for the project participants. HEA also asserted that under the terms of the Transmission Agreement the BPMC failed to act on issues surrounding the losses incurred over the Soldotna segment of the transmission line. Following are the disputed points and O & D Committee Response. Services Agreement. Section 10(b) of the service Agreement limits dispute resolution to matters involving “performance under (the) Agreement.” HEA has identified certain disputes that arise under the specific terms of the Services Agreement and they are as follows: Services Agreement, Section 8 Performance Failures. Section 8(a)(i) requires the Dispatcher to “(dispatch) power generation at the Bradley Lake Project in accordance with the requests of the Parties, ... and the applicable operating criteria or guidelines adopted by the Project Management Committee.” The BPMC has adopted Allocation and Scheduling Procedures (Procedures) for the Project as the applicable operating criteria or guidelines. With respect to its obligations under Section 8(a)(i) and the Procedures the Dispatcher has failed to perform as follows: av In violation of Sections 5 (Section 5 of the allocation and scheduling procedures)(b), (c), (d), (e), (f), and (g) of the Procedures the Dispatcher routinely utilizes energy from the Project to regulate Fire Island Wind (FIW) output. O & D Response to Point 1. Section 7(c) Chugach’s Priority allows CEA to operate Bradley Lake to meet the requirements of Chugach’s system. Bradley Lake is and has been routinely operated in support of the entire system, to include HEA in the past. The plant is not operated exclusively to regulate FIW but regulate all the assets under CEA control. Section 8(a) of the Services Agreement allows for modification(s) to the scheduling procedures by agreement between the Dispatcher and authorized representatives of the Wheeling Utilities. 2s The Project has spilled water in each of the past two years as a direct result of both action and inaction of the part of the Dispatcher as follows: a. Acting in violation of Section 5 (Section 5 of the allocation and scheduling procedures) (h) of the Procedures, the Dispatcher used the Project to load-follow its own system rather than dispatching the Project to prevent spill and imminent spill conditions. b. Acting in violation of Section 5 (Section 5 of the allocation and scheduling procedures)(j) of the Procedures, the Dispatcher scheduled its share of Project capacity to load-follow its own system rather Page 1 of 4 than scheduling its share to prevent spill and imminent spill conditions. Further, the Dispatcher failed to mitigate the adverse effects on the Project in scheduling extensive outages in performing maintenance and repairs on its transmission system. Gs In violation of Sections 5 (Section 5 of the allocation and scheduling procedures) (j) of the Procedures the Dispatcher failed to notify Participants of Capacity and Energy to be made available to them at no cost under section 5(h) of the Procedures, as a result of its and other Participants’ inability or refusal to take their fully allocated shares of energy during imminent and actual Spill conditions, thus extending and exacerbating the amount of and the duration of spill and imminent spill. O & Dresponse to point 2. Between September 24th and October 1st of 2012 the Bradley Lake Projected spilled water. The plant was in service during this event. The elevation at which Bradley Lake spills is 1,180 MSL. On September 1, 2012 the reservoir elevation was 1,153.7 MSL, 26.3 feet below the spill elevation. In flows in September were calculated at 64,625 acre-feet more than predicted by the National Weather Service for the year. Between September 20th (reservoir level of 1,165.5 MSL) and September 24th (reservoir level of 1,180.0 MSL) that lake level increased by 14.5 feet. The very high volumes of precipitation made it impossible to prevent spill through plant operations. The inflows into the lake were extraordinary in September of 2012. The only way spill could have been prevented in this event would be to adopt a much lower lake level target in the summer months. In vast majority of years this would restrict the amount of water that could be carried into the winter months when Bradley energy is of highest value. Between September 13th and September 26th of 2013 the project again spilled due to high lake levels. On September 1st the reservoir elevation was 1,166.4 MSL. During the period of September 3rd to September 21st both Bradley Lake generating units were out of service for maintenance work scheduled by the plant operator, Homer Electric. One unit was returned to service on September 21st and that unit was fully loaded at that time. On September 25th the second Bradley unit was returned to service. This spill event ended on September 26th. Spill during this time period could have been avoided if Bradley Lake Units had been in service during the month of September. The way to avoid this type of spill is not to allow scheduled maintenance during the late summer or fall months during the expected high inflow periods. During the time period once spill ended where the lake level was above 1,175 (imminent spill), September 26" to November 9" CEA, ML&P, and GVEA undertook their best efforts within the prudent operational constraints of each of their systems to take as much Bradley Lake output as they could. By HEA statement they allege that there was spill during this period of time, no spill occurred during the period of “imminent spill”. 3: The Dispatcher is violating Section 5 (Section 5 of the allocation and scheduling procedures) (g) of the Procedures by routinely loading Project generation units to levels well in excess of its own share, and failing to provide an accounting proving whether or not in has thereby effectively taken Project Capability belonging to other Participants. 4. The Dispatcher is violating Section 5 (Section 5 of the allocation and scheduling procedures) (g) of the Procedures by routinely loading Projects units to levels well in excess of its own share, to the extent that spin carried on Bradley at the time is being used by the Dispatcher to provide real energy, and failing to provide and accounting proving whether or not such loading has effectively taken Project Spin Capability belonging to other Participants, thereby potentially leaving the system deficient in spin. O & D Response to Point 3 and 4. The dispatcher (CEA), disputes these claims. There has been no evidence of these types of activities and no claim or assertion by any other Bradley participant of such activity. 5. The Dispatcher is violating Section 5 (Section 5 of the allocation and scheduling procedures) (b) of the Procedures by failing to publish the week-ahead, hour by hour schedule of Bradley output. O & D Response to 5. In the collective memory of all the Bradley participants this type of schedule has never been produced for the Bradley Project. The participants over time have developed a method using day ahead scheduling that fully meets the requirements of all the participants. Section 8(a) of the Services Agreement allows for modification(s) to the scheduling procedures by agreement between the Dispatcher and authorized representatives of the Wheeling Utilities. Section 8(a)(iv) of the Services Agreement requires the Dispatcher to “(coordinate) with HEA in order that the Dispatcher and HEA alike will minimize, to the extent reasonably practicable, any potential conflicts between and among (A) HEA’s system operations, (B) Chugach’s system operation, and (C) the dispatch of Project generation and the provision of services to the Wheeling Utilities ...” With respect to its obligations under Section 8(a)(iv) the Dispatcher, in violation of Sections 5 (Section 5 of the allocation and scheduling procedures) (b), (c), (d), (e), (f), and (g) of the Procedures the Dispatcher continuously fails to adhere to the wheeling schedule it provides to HEA. O & D Response to Section 8 This issue is clouded by the unilateral changes that HEA has attempted to make to the Services Agreement that is the topic of other regulatory and legal proceedings. The O & D committee believes that if HEA were to observe and abide by the Services Agreement that this would not be an issue. Transmission Agreement. Section 14 of the Transmission Agreement provides for dispute resolution of mattes “under (the) Agreement.” HEA has identified certain disputes that arise under the specific terms of the Transmission Agreement and they are as follows: Transmission Agreement, Section 3(b) Performance Failures Section 3(b) of the Transmission Agreement provides that HEA Shall be compensated for line losses resulting from the flow of Bradley Lake power over the Soldotna Segment and requires the BPMC to determine the amount of line losses and the appropriate amounts and manner of compensation. With respect to their obligations under Section 3(b) of the Transmission Agreement the Purchasers, through the BPMC, have filed to perform as follows: 1. The Purchaser through the BPMC have violated Section 3(b) of the Transmission Agreement by failing to act upon HEA’s request of January, 2012 to review and correct Loss Tables for the Soldotna Segment. Ze The Purchasers through the BPMC, despite repeated requests from HEA to the Project Dispatcher, have refused to provide the technical calculations underlying the Loss tables for the Soldotna Segment currently in use. 3. The Purchasers through the BPMC have failed to review and update Loss calculations for the Soldotna Agreement as required under Section 8(c) of the Procedures. O & Dresponse to 1,2 and 3. The loss allocations used by the dispatcher had been in place for many years prior to HEA’s suggestion that they may not have been accurate. The tables used in the loss calculations were provided to HEA when requested. The issue of the loss allocation was the topic of many discussions at various Bradley O & D meetings in 2012 and 2013. HEA put forth a white paper regarding losses but did not provide a concise request for a change in methodology for calculating those losses nor did they propose a resolution for forwarding to the BPMC for approval of a new methodology for calculation/allocating losses. The BPMC asked the O & D Committee to review the disputes as listed by HEA and report back to the BPMC. Upon review of the disputes the O & D committee finds the allegations to be without merit and that the project dispatcher and BPMC have not violated the various agreements as alleged by Homer. BRADLEY LAKE HYDROELECTRIC PROJECT PROJECT MANAGEMENT COMMITTEE In the Matter of the Dispute Between the BRADLEY LAKE PROJECT PARTICIPANTS, and HOMER ELECTRIC ASSOCIATION, INC., and Its Affiliate, ALASKA ELECTRIC AND ENERGY COOPERATIVE, INC., Regarding Use of the Soldotna-Quartz Creek Lines, Their Related Infrastructure, and Cost for Use of Those Facilities Order No. __ Ne eee [PROPOSED] ORDER RESOLVING THE DISPUTED ISSUES BETWEEN THE DESIGNATED UTILITIES AND HOMER ELECTRIC ASSOCIATION, INC. BY THE BPMC: SUMMARY On February 7, 2014, we found that this Bradley Lake Project Management Committee (“BPMC”) has authority to consider and decide on their merits the disputed issues between the Designated Utilities’ and Homer Electric Association, Inc. (“HEA”), regarding the continuing effect of the Bradley Lake Agreements’ after the expiration of the Lease’ and whether HEA is entitled to any additional compensation for Chugach’s continued use of ' Chugach Electric Association, Inc. (“Chugach”), Golden Valley Electric Association, Inc. (“GVEA”), Matanuska Electric Association, Inc. (“MEA”), and the Municipality of Anchorage d/b/a Municipal Light & Power (““ML&P”). The Bradley Lake Agreements include (1) the Agreement for the Sale and Purchase of Electric Power (“Power Sales Agreement”), (2) the Agreement for the Wheeling of Electric Power and for Related Services (“Services Agreement’), and (3) the Agreement for the Sale of Transmission Capability, dated December 8, 1987, and the Amendment to Agreement for Sale of Transmission Capability, dated March 7, 1989 (“Capability Amendment”) (hereinafter “Bradley Lake Agreements” or “Agreements”). Agreement for the Lease of Facilities, executed by and between Chugach and HEA in September 1985. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 1 of 15 certain electrical facilities north of the Soldotna Substation for the purpose of wheeling energy from the Bradley Lake Hydroelectric Project (“Project”) under the terms of the Bradley Lake Agreements.’ Our analysis in support of our finding on authority is contained herein. Now, after having provided all parties with the opportunity to fully advance evidence, and brief and argue their positions with regard to the disputed issues, we find that (1) the Bradley Lake Agreements were not modified, amended, or terminated by the expiration of the Lease; (2) the Bradley Lake Agreements continue to provide Chugach with the right and obligation to operate, maintain, repair, and wheel Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation; and (3) HEA will continue to receive equitable compensation for Chugach’s continuing operation, maintenance, repair, and wheeling of Project energy over the electrical facilities owned by HEA from the Soldotna Substation north to the Quartz Creek Substation. BACKGROUND The Project was made possible through a series of highly integrated contracts referred to as the Bradley Lake Agreements. Under the Bradley Lake Agreements, power is transmitted from the Project across Project facilities to the Bradley Junction, where it then * See Transcript of February 7, 2014, BPMC Meeting at 104:15-106:6 (Exhibit 1). HEA raised other technical disputes regarding Chugach’s performance under the Bradley Lake Agreements in its Statement Regarding Dispute Resolution Procedures filed with the BPMC on January 23, 2014. Those disputes are not addressed in this Order and will be considered and resolved by the BPMC through a separate resolution. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 2 of 15 enters the transmission system of Alaska Electric & Energy Cooperative, Inc. (“AEEC”).® From Bradley Junction, Project energy flows north along AEEC’s transmission line running from Bradley Junction to the Soldotna Substation (“Soldotna Segment”). The transmission of Project energy across the Soldotna Segment is governed by the Capability Amendment. Under the Capability Amendment, Chugach, GVEA, ML&P, and MEA contributed to the cost of constructing the Soldotna Segment in exchange for secure transmission capacity on the Soldotna Segment. From the Soldotna Substation, Project energy then flows north through certain electrical facilities, including AEEC’s transmission line running from the Soldotna Substation north to the Quartz Creek Substation (“‘S/Q Line”). For the past 25 years, Chugach has operated, maintained, repaired, provided storage services for, and wheeled Project energy north of the Soldotna Substation through certain electrical facilities, including the S/Q Line, pursuant to the Services Agreement,’ which continues in effect for another 25 years.’ There is no provision in the Services Agreement that refers to the Lease or that suggests the expiration of the Lease will impact the rights and obligations of any party to the Services Agreement or the Bradley Lake Agreements. The Lease was associated with Chugach’s wholesale power sales to HEA, and the Lease expired on January 1, 2014.” HEA believes that, when the Lease expired on January 1, Successor to Alaska Electric Generation and Transmission Cooperative, Inc., and a single- member cooperative of HEA. See Services Agreement at 7-8. See Services Agreement at 3, 28-29. See Lease at 2. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 3 of 15 2014, Chugach lost the right and the obligation to operate and maintain the electrical facilities north of the Soldotna Substation owned by HEA (including the S/Q Line). The Designated Utilities disagree. The Designated Utilities believe that, despite the expiration of the Lease, the Services Agreement provides Chugach with the right and the obligation to operate and maintain all electrical facilities north of the Soldotna Substation used to wheel Project energy (including the S/Q Line). On November 15, 2013, HEA submitted tariff filings designated as TA355-32 and TA356-32 (“HEA’s Tariff Filings”) with the Regulatory Commission of Alaska (“RCA”), seeking approval of new tariff rates and rules regarding transmission services and line losses for the S/Q Line. On December 23, 2013, the Protesting Utilities filed their Comments on HEA’s Tariff Filings.'® In their Comments, the Protesting Utilities argued that HEA’s Tariff Filings were improper because the Bradley Lake Agreements are exempt from the RCA’s jurisdiction under AS 42.05.431(c). The RCA held a two-day hearing on the jurisdictional issue and then promised to issue further written questions regarding the matter before making a decision. On February 19, 2014, the RCA issued Order U-13-23(3)/U-13-204(3) Issuing Questions and Requiring Filings. The parties filed testimony in response to Order U-13- 203(3)/U-13-204(3) on March 24, 2014, and April 4, 2014. Thereafter, the RCA issued Order U-13-203(6)/U-13-204(6) and Order U-13-203(7)/U-13-204(7) requiring witnesses to ‘0 Comments, Formal Protest, and Objections of Chugach Electric Association, Inc., Golden Valley Electric Association, Inc., Matanuska Electric Association, Inc., and the Municipality of Anchorage d/b/a Municipal Light & Power to the Tariff Filings of Homer Electric Association, Inc. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 4 of 15 appear at a hearing on April 10, 2014 to answer further questions. The hearing was held and the RCA is now awaiting further testimonial filings from the parties. On December 12, 2013, the BPMC passed Resolution 2013-02, preliminarily finding that the disputed issues are within the BPMC’s authority to resolve and beginning the dispute resolution process by appointing a Dispute Resolution Committee to address the disputed issues raised by HEA and the Designated Utilities. The Dispute Resolution Committee scheduled and held five meetings at the offices of the AEA to address the issues identified in BPMC Resolution 2013-02.'' On January 24, 2014, the Dispute Resolution Committee asked all interested parties to file briefs addressing three issues: (1) whether the BPMC has the authority to address the underlying disputed issues; (2) whether Chugach has the right and obligation to continue operating, maintaining, and repairing the electrical facilities used to wheel Project energy from the Soldotna Substation north under the terms of the Services Agreement; and (3) whether HEA is entitled to any additional compensation for Chugach’s continuing use of certain of HEA’s electrical facilities north of the Soldotna Substation used for wheeling Project energy. On January 27, 2014, the BPMC passed Resolution 2014-02 requiring that “[aJll Project participants . . . act in good faith to maintain the status quo and permit Chugach to operate, maintain, repair, and dispatch Project energy over the S/Q Line under the terms of the Services Agreement and the other Bradley Lake Agreements during the pendency of the '! Those meetings were held on the following dates: January 24, 2014; January 27, 2014; February 7, 2014; April 11, 2014; and April 17, 2014. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 5 of 15 dispute.” On February 4, 2014, the Designated Utilities’? and HEA’ both filed briefs addressing the issues identified in Resolution 2013-02. On February 7, 2014, based upon consideration of the arguments presented by both the Designated Utilities and HEA, the BPMC found that it has authority to consider and decide the disputed issues on their merits.'* The supporting analysis for the BPMC’s decision on authority is detailed below. On April 11, 2014, the Dispute Resolution Committee made specific findings regarding the disputed issues in Resolution 14-09. Those findings have been considered by the BPMC and are incorporated into the findings in this Order. On April 17, 2014, the Dispute Resolution Committee passed Resolution 14-10 declaring that the parties had reached an impasse and recommended that the BPMC move forward with formal dispute resolution procedures. Now, in accordance with our dispute-resolution obligations under the Services Agreement and the BPMC’s Bylaws the BPMC has determined to decide the disputed issues on their merits.!° '2 Designated Utilities’ Brief on Disputes with Homer Electric Association, Inc. (“Designated Utilities’ Br.”). Position Statement of Homer Electric Association, Inc. (“HEA’s Br.”). '* See Exhibit 1 at 104:15-106:6. IS 13 Certain matters were referred to the O&D Committee. The technical and operational information provided by the O&D Committee in response has been duly considered by the BPMC and is incorporated into this Order. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 6 of 15 THE PARTIES’ POSITIONS L HEA’s Position HEA asserts that the BPMC does not have the authority to consider or decide the disputed issues on their merits.'° HEA further asserts that the BPMC’s authority derives from the Power Sales Agreement and that the Power Sales Agreement does not give the BPMC authority to resolve the underlying disputed issues.'’ Specifically, HEA argues that the BPMC does not have the authority to consider or resolve the issue of compensation to HEA for wheeling Bradley power.'® HEA argues that “[n]Jo provision in any of the [Bradley Lake Agreements] speaks to” the compensation issue.'? Instead, HEA states that the ultimate decision regarding compensation “will be made by the RCA or by a court.””” Moreover, HEA’s position is that Chugach’s right to access and transmit Project energy over HEA’s facilities arose entirely from the Lease, not the Bradley Lake Agreements.”! HEA asserts that the “expiration of both the [Lease] and the HEA-[Chugach] power sales agreement” terminated Chugach’s right to receive power at HEA’s Soldotna Substation and to operate any of HEA’s transmission facilities.77 HEA explains that upon the expiration of the Lease, HEA began operating as an independent load-balancing authority and '6 See HEA’s Br. at 2. 7 See HEA’s Br. at 2. '8 See HEA’s Br. at 2. 19 HEA’s Br. at 2. 20 HEA’s Br. at 2. 21 See HEA’s Br. at 3. 22 HEA’s Br. at 3. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 7 of 15 assumed the responsibility of providing transmission services between Bradley Junction and Quartz Creek.” Finally, HEA argues that the Services Agreement does not require HEA to maintain the December 31, 2013, status quo.” II. The Designated Utilities’ Position The Designated Utilities assert that the disputed issues arise out of the Bradley Lake Agreements and that the BPMC has the authority to consider and decide the disputed issues on their merits.”> Specifically, the Designated Utilities argue that the Power Sales Agreement creates and defines the BPMC’s broad rights and obligations with respect to the management, operation, and improvement of the Project and that the Power Sales Agreement requires the BPMC to adopt procedures for resolving disputes that arise under the Bradley Lake Agreements.”° The Designated Utilities assert that, pursuant to the Power Sales Agreement, the BPMC adopted the Bradley Project Management Committee Bylaws (“Bylaws”), which 27 contain specific procedures for dispute resolution.“’ The Designated Utilities further argue that the Bylaws’ dispute-resolution procedures give the BPMC the authority to decide, on their merits by majority vote, those issues the BPMC determines are within its authority to consider.”* The Designated Utilities point out that the Services Agreement similarly provides that all disputes arising thereunder are within the BPMC’s authority to adopt procedures to 33 See HEA’s Br. at 4. 4 See HEA’s Br. at 4. 25 See Designated Utilities’ Br. at 1-7. 6 See Designated Utilities’ Br. at 6. 27 See Designated Utilities’ Br. at 6. 8 See Designated Utilities’ Br. at 6. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 8 of 15 resolve.” The Designated Utilities, therefore, conclude that pursuant to the Power Sales Agreement, the Bylaws, and the Services Agreement, the BPMC has the authority to (1) determine whether it has authority to consider the disputed issues, and (2) to resolve, on the merits by a majority vote, those issues the BPMC determines are within its authority to resolve.*” Moreover, the Designated Utilities argue that the Services Agreement and the Lease are unrelated agreements and that the termination of the Lease did not terminate Chugach’s rights and obligations under the Services Agreement to operate, maintain, and repair the electrical facilities north of the Soldotna Substation, including the S/Q Line, for wheeling 31 Project energy.” The Designated Utilities assert that Chugach’s rights and obligations with regard to the S/Q Line are governed by the Services Agreement, not the Lease.” Further, the Designated Utilities assert that HEA has been and is still being fairly compensated for the use of its facilities to wheel Project energy north as a part of the “net economic benefits” all Project Participants recognized and receive under the Bradley Lake Agreements.*? THE BPMC’S DECISION AND ORDER L The Disputed Issues Arise Under the Bradley Lake Agreements The BPMC finds that the disputed issues between the Designated Utilities and HEA are essentially a disagreement over Chugach’s and HEA’s relative rights and obligations with 29 See Designated Utilities’ Br. at 6. 30 See Designated Utilities’ Br. at 6-7. See Designated Utilities’ Br. at 2-5. See Designated Utilities’ Br. at 2-5. See Designated Utilities’ Br. at 7. 31 32 33 ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 9 of 15 regard to electrical facilities owned by HEA and used by Chugach to dispatch and wheel Project energy under the Services Agreement. The BPMC finds that this dispute is governed by the terms of the Services Agreement and the Bradley Lake Agreements. Further, the BPMC finds that there exists a dispute as to whether HEA is entitled to any additional compensation for the use of HEA’s electrical facilities north of the Soldotna Substation for wheeling Project energy. The BPMC finds that this dispute is also governed by the terms of the Services Agreement and the Bradley Lake Agreements. Il. The BPMC Has Authority to Consider and Resolve Issues Arising Under the Bradley Lake Agreements Upon consideration of the Bradley Lake Agreements, the Bylaws, and the arguments put forth by both the Designated Utilities and HEA, the BPMC finds that it has the authority to consider and resolve the disputed issues on their merits by a majority vote.* The BPMC finds that the disputed issues between the Designated Utilities and HEA concern Chugach’s continuing rights and obligations to operate, maintain, repair, and dispatch and wheel Project energy over the electrical facilities north of the Soldotna Substation and are within the authority of the BPMC to address and resolve under both the Power Sales Agreement and the Services Agreement. The Power Sales Agreement and the Services Agreement place a broad range of rights and obligations upon the BPMC.*® Section 13(c) of the Power Sales Agreement requires the 4 Tf the resolution of such a dispute also involves an amendment to any of the Bradley Lake Agreements, then such an amendment would also have to be made consistent with the language for amendment of the Bradley Lake Agreements. 3° See Power Sales Agreement at 19-23. ORDER NO. __ , March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 10 of 15 BPMC to oversee the “management, operation, maintenance, and improvement” of the Project and requires the BPMC to “[a]rrange for the operation and maintenance of the Project and the scheduling, production, and dispatch of Project power.” This language requires the BPMC to address operation and management issues as well as issues associated with the scheduling and dispatch of power. The current disputes between the Designated Utilities and HEA concern each of these areas of authority for the BPMC. Further, Section 13(b) requires the BPMC to “adopt procedural rules” for “dispute resolution.” Similarly, Section 10(b) of the Services Agreement expressly incorporates and designates the BPMC as the entity responsible for resolving disputes under the Services Agreement. Specifically, the Services Agreement provides: At the meetings referred to in Section 10(a), the Parties shall also review performance under this Agreement, including difficulties encountered under the Agreement by any of the Parties and allegations (if any) of failure of any Party to perform the Agreement in good faith in accordance with its terms or intent. The Parties agree that any further procedures for dispute resolution under this Agreement shall be entrusted (if the Authority concurs) to good faith negotiation and adoption by the [BPMC], with Chugach’s affirmative vote required for adoption of such procedures. This language requires the BPMC to address difficulties encountered and the failure of any Party to perform the terms of the Services Agreement. The current disputes between the Designated Utilities and HEA concern each of these areas of authority for the BPMC. The BPMC’s authority over the issues in dispute between the Designated Utilities and HEA is also consistent with the exemption of the Bradley Lake Agreements from any regulatory oversight under AS 42.05.431(c). Absent such an exemption, the rights and responsibilities of utilities over electrical facilities and rates would be resolved by the RCA. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 11 of 15 In the case of the Bradley Lake Agreements, the Legislature exempted such disputes from the RCA and permitted them to be addressed and resolved by the industry through the specialized experience and expertise of the BPMC through applying the dispute resolution mechanisms set forth in the Bradley Lake Agreements. Finally, this ruling on the authority of the BPMC is required under Article 12 of the Bylaws entitled “Procedures for Dispute Resolution.” Article 12.2 of the Bylaws states that “in the event the authority of the [BPMC] to act is at issue, the [BPMC] shall first make a finding as to its authority.” Once such a finding is made, the BPMC has the authority to decide, on the merits, those issues the BPMC determines are within its authority to consider. Finally, Article 5.10.2 of the Bylaws provides that “the act of a majority of votes taken during a meeting at any time when a quorum is present, shall be an act of the [BPMC], and binding on the members.” The BPMC, therefore, concludes that (1) the disputed issues between the Designated Utilities and HEA arise under the Bradley Lake Agreements; and (2) the Power Sales Agreements, the Services Agreement, and the Bylaws provide the BPMC with the authority and the responsibility to resolve the disputed issues between the Designated Utilities and HEA. III. The Bradley Lake Agreements Were Not Modified, Amended, or Terminated By the Expiration of the Lease and Chugach Is Still Entitled to Operate, Maintain, Repair, Dispatch, and Wheel Project Energy over the S/Q Line Upon consideration of the Bradley Lake Agreements and the evidence and arguments put forth by both the Designated Utilities and HEA, the BPMC finds that Project energy enjoys priority status for transmission services from the Project north to the Project ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 12 of 15 Participants over the Soldotna Segment and the S/Q Line. Moreover, the expiration of the Lease did not modify, amend, or terminate the Services Agreement or the priority status that Project energy enjoys thereunder. Instead, transmission services across the S/Q Line continue to be governed by the Services Agreement. The Services Agreement requires Chugach to operate, maintain, repair, and dispatch and wheel Project energy over the electrical facilities from the Soldotna Substation north.*° And, the Services Agreement requires Chugach to perform those services for 50 years.°” The shorter term of the Lease is never mentioned in the Services Agreement.*® Significantly, the Lease was executed two 39 years before the Services Agreement.’ Nonetheless, the Parties did not to incorporate the Lease into the Services Agreement. Thus, the parties intended that the expiration of the Lease would not affect Chugach’s continuing obligations under the Services Agreement. Further, the Services Agreement can only be amended, renegotiated, or terminated at 40 an earlier date by unanimous agreement.” As such, the Chugach delivery point for Project energy may be changed from the Soldotna Substation to the Quartz Creek Substation as a 36 See Services Agreement at 2 (“At the request of any Wheeling Utility, Chugach will provide wheeling, storage, and energy purchase services to such Utility for that Utility’s Bradley Lake Energy in accordance with the provisions of this Agreement.”); see also Services Agreement at 7-8 (“Chugach will in good faith and at all times: . . . operate, maintain, and repair the electrical facilities used to perform the services provided hereunder... .”). 37 See Services Agreement at 3, 28-29. 38 The Lease expired on January 1, 2014. See Lease at 2. The Lease was approved by the Commission in Order U-85-013(3), June 4, 1985. The Services Agreement was executed on Dec. 8, 1987. Services Agreement at 1. 39 “See Services Agreement at 3-4. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 13 of 15 “successor facility” only through the “written consent of all the Parties.”*! HEA’s attempts to unilaterally terminate, amend, or renegotiate the Services Agreement through its Tariff Filings and actions impeding Chugach’s ability to operate, maintain, repair, and dispatch and wheel Project energy over the S/Q Line are improper. The BPMC, therefore, concludes that the expiration of the Lease, which was neither referenced in nor related to the Bradley Lake Agreements, does not affect Chugach’s continuing obligations under the Services Agreement or the priority status Project energy enjoys thereunder. Instead, HEA must honor its commitment under the Services Agreement and allow Chugach to continue operating, maintaining, repairing, and dispatching and wheeling Project energy over the S/Q Line. IV. Although HEA Is Compensated Under the Bradley Lake Agreements, HEA Will Continue to Receive Reasonable Compensation for the Use of Its System Associated With the Transmission of Project Energy The BPMC finds that the parties to the Services Agreement anticipated that the Project would produce “net economic benefits” for all the parties.” Further, the BPMC finds that, in exchange for those net economic benefits, HEA committed its system to be used for the transmission of Project energy to the Project Participants in accordance with the Bradley Lake Agreements. Thus, HEA is compensated under the Bradley Lake Agreements for the use of HEA’s system and is entitled to no additional compensation. Nonetheless, in the interest of reaching an equitable balance among the Project Participants, the BPMC orders that HEA is 41 See Services Agreement at 3. As the Designated Utilities point out, at least 10 sections of the Services Agreement would have to be amended in order to effectuate such a change in delivery point. See Designated Utilities’ Br. at 2 n.5. ” Services Agreement at 1. ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 14 of 15 to receive payments from the other Project Participants for the continuing use of HEA’s S/Q Line through the term of the Services Agreement. The amount of those payments is to consist of both a fixed and a variable component. The fixed component is to be an amount of Three Hundred Thousand Dollars ($300,000) per year which equitably compensates HEA for the Project Participants’ continuing use of HEA’s transmission facilities from the Soldotna Substation north under the Bradley Lake Agreements. The variable component is to consist of reasonable costs incurred by Chugach in fulfilling its responsibility under the Services Agreement to maintain HEA’s transmission system from the Soldotna Substation north when such maintenance is performed by or through HEA efforts. Chugach has the obligation to authorize and approve all such variable maintenance costs. Such fixed and variable amounts are consistent with the maximum compensation HEA has recovered historically from Chugach through the formula elements set forth in the Bradley Lake Agreements and represent a reasonable remedy under the circumstances of these disputes. These fixed and variable payments are effective and required from January 1, 2014 until the expiration of the Services Agreement. DATED AND EFFECTIVE this day of , 2014. PROJECT MANAGEMENT COMMITTEE Bradley Evans BPMC Chair ORDER NO. __ March 20, 2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Page 15 of 15 Se NUE A a oe 10. ue BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE SPECIAL MEETING AGENDA Thursday, April 17, 2014 2:30 p.m. — 4:00 p.m Alaska Energy Authority’s Aspen Room 813 West Northern Lights Boulevard, Anchorage, AK CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA APPROVAL OLD BUSINESS A. Dispute Resolution Committee report and findings B. Battle Creek update C. Governor Project update OPERATORS REPORT COMMITTEE REPORTS A. Budget committee - 2015 budget approval process and more efficient process B. AEA — Suggestions for reporting requirements for Bradley incidents C. O&D — Budget items questions and which committee can answer them — Evaluation of Mr. Day's operator report of compliance to reliability standards — Loss factor issue and driving need for change MEMBERS COMMENTS ADJOURNMENT To participate by teleconference, dial 1-800-315-6338 and use code 3074#. OS} SESS) BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE SPECIAL MEETING AGENDA Thursday, April 17, 2014 2:00 p.m. — 2:30 p.m Alaska Energy Authority’s Aspen Room 813 West Northern Lights Boulevard, Anchorage, AK CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA APPROVAL OLD BUSINESS A. Dispute Resolution Committee final report e Committee recommendations to the BPMC — Resolution 14-10 MEMBERS COMMENTS ADJOURNMENT To participate by teleconference, dial 1-800-315-6338 and use code 3074#. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE INTRODUCTION: The Bradley Lake Project Management Committee (BPMC) appointed a Dispute Resolution Committee at its January 15, 2014, meeting to address matters raised by Resolution No. 2013-02 and the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and the Designated Utilities! The BPMC determined that the disputes arise under the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement) and/or the Amendment to Agreement for Sale of Transmission Capability (Transmission Sharing Agreement). Counsel for the BPMC advised that the BPMC did have authority to use the BPMC procedures for dispute resolution to resolve the matters arising under both the Services Agreement and the Transmission Sharing Agreement. The BPMC determined that both the Services Agreement and the Transmission Sharing Agreement provide the BPMC with the authority to use its procedures for dispute resolution.” This Resolution 14-10 of the Dispute Resolution Committee sets forth the findings, conclusions, and recommendations of the Dispute Resolution Committee. DISPUTE RESOLUTION COMMITTEE PROCESS AND ACTIVITIES: At the meeting held on January 15, 2014, the BPMC agreed unanimously to adopt an initial process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes through a negotiated effort up to and including mediation.> The BPMC appointed a Dispute Resolution Committee to conduct that settlement process. The Dispute Resolution Committee scheduled and held five additional meetings at the offices of the Alaska Energy Authority (AEA) in Anchorage to address the issues identified in BPMC Resolution No. 2103-02.4 In addition to discussions concerning the issues, position papers were requested by the Dispute Resolution Committee and subsequently presented by HEA and by the Designated Utilities. AEA participated in all of the scheduled meetings. All of these parties also had counsel present in the scheduled meetings. Seward Electric participated in the Dispute Resolution Committee without counsel. A BPMC “Members-only” meeting was also hosted by ML&P on February 20, 2014. Two members of the Dispute Resolution Committee also met numerous times with representatives of HEA prior to and during the time period which the Dispute Resolution Committee was active. Counsel for the BPMC interviewed two of the individuals that participated in the drafting of the various underlying documents that concern the contractual arrangements and accommodations reached regarding the power generated and wheeled from the Bradley Lake Project (the “Bradley Lake Agreements”). Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch Committee (O&D Committee). The O&D Committee made two separate presentations to the Dispute Resolution Committee. The information provided by the O&D Committee in response was discussed and duly considered by the Dispute Resolution Committee and is incorporated into the findings in this Resolution 14-10. 1 Chugach Electric Association, Inc. (Chugach) , Golden Valley Electric Association, Inc. (GVEA), Matanuska Electric Association, Inc. (MEA), and City of Anchorage, Municipal Light & Power (ML&P). 2 See Section 10(b) of the Services Agreement and Section 14 of the Transmission sharing agreement. 3 The Members were clear that the process would not waive any rights that a party may have under any agreements or the law. 4 The meetings of the Dispute Resolution Committee were held on the following dates: January 24, 2014; January 27, 2014; February 7, 2014; April 11, 2014; and April 17, 2014. FINDINGS AND CONCLUSIONS: After consideration of the information that has come before it, the discussions and presentation held by and between the various parties, and a review of the Bradley Lake Agreements, the BPMC Dispute Resolution Committee makes the following findings and conclusions: 1. The Bradley Lake Agreements were negotiated and written to achieve a series of mutual beneficial arrangements which would provide benefits to the Railbelt Utilities and assure the success of the Bradley Lake Project and repayment of the bonds issued by the State to develop the Bradley Lake Project. 2. The Parties that entered into the Services Agreement and the Transmission Sharing Agreement, along with the Alaska Energy Authority (AEA), constitute the membership of the BPMC. 3. The Bradley Lake Agreements formalize the arrangements by and between the Railbelt Utilities and AEA regarding all aspects of the power generated and transmitted from the Bradley Lake Project. 4. The Services Agreement provides Chugach, as Dispatcher of power generated by the Bradley Lake Project, considerable flexibility to operate and maintain its generation and transmission system and to schedule and use its resources in the manner that Chugach deems necessary or prudent.° 5. The legislative history concerning the Bradley Lake Project and the exemption from regulatory oversight granted by the State evidences that all signatories to the Bradley Lake Agreements considered and agreed that there would be benefits flowing to all parties from the contractual arrangements and that all matters associated with the power generated by and transmitted from Bradley Lake Hydroelectric Project would be under the purview of the BPMC and its members. 6. The Services Agreement entered into on December 8, 1987, and the Transmission Sharing Agreement entered into on March 7, 1989, each provide the BPMC with the contractual authority to use the procedures for dispute resolution that were negotiated and adopted by the BPMC to address disputes under the respective agreements. 7. The BPMC unanimously adopted procedures for dispute resolution as part of the BPMC’s Bylaws on December 1, 1993. 8. All procedures for dispute resolution to be used by the BPMC must adhere to the negotiated and adopted procedures for dispute resolution set forth in Article 12 of the BPMC Bylaws. 9. The BPMC unanimously agreed to adopt an initial settlement process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes up to and including mediation. 10. The BPMC appointed the Dispute Resolution Committee to conduct that settlement process. 11. HEA provided the Dispute Resolution Committee with a Statement Regarding Dispute Resolution Procedures which outlined its concerns with the extent of the BPMC’s authority and presented HEA’s Statement of Disputes. HEA was willing to participate in the dispute resolution process but reserved > AEA was formerly known as the Alaska Power Authority. © See, e.g., Section 7(c) of the Services Agreement. Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 2 of 5 all of its rights “...to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority.” 12. The Designated Utilities stated that both the BPMC and its Dispute Resolution Committee clearly have the requisite authority to address issues at dispute between the parties. 13. Both HEA and the Designated Utilities presented a Position Statement to the Dispute Resolution Committee.’ 14. HEA identified specific disputes regarding the activities of the Dispatcher of power generated by the Bradley Lake Project and the insufficiency of its compensation for line losses resulting from the flow of the power generated from Bradley Lake Project flowing over HEA’s transmission system. 15. The Designated Utilities consider HEA in violation of the Bradley Lake Project Agreements because HEA has taken unilateral actions to inappropriately gain operational control of the electric facilities used to wheel power generated by the Bradley Lake Project northward which is contrary to the Services Agreement. 16. The Dispute Resolution Committee met both formally and informally in an effort to reach resolution of the disputed issues. 17. The Dispute Resolution Committee has made every reasonable attempt to meet and discuss all relevant issues with HEA, the Designated Utilities, and the other BPMC members. 18. All Members of the BPMC have representatives that actively participate on the O&D Committee. 19. The O&D Committee provided the Dispute Resolution Committee with the technical and operational expertise pertaining to the analyses of the various issues raised by HEA and the Designated Utilities. 20. The O&D Committee issued two written reports responding to specific questions from the Dispute Resolution Committee.® 21. The O&D committee has reported to the Dispute Resolution Committee that the O&D Committee has a general consensus on the following issues: a. Dual control with coordination of a transmission segment is technically possible, but not practical because dual load balancing authorities (LBA) would not be balanced. b. Line Losses can be calculated for any transmission line segment without regard to the LBA that controls the line; c. While it is technically possible the O&D Committee considers it operationally impractical to have a LBA established just for Soldotna to Quartz Creek line segment (SQ line); d. While it is technically possible the O&D Committee considers it operationally impractical to establish an LBA for just the SQ line operation and assign it to HEA or Chugach for dispatch purposes; e. HEA has one distribution load connected to the SQ line made up of 3 MW of peak load requirements for the Sterling Substation; 7 See Minutes of BPMC Special Meeting dated February 7, 2014. 8’ The O&D Committee issued a report titled “Bradley Lake O&D Committee Response to BPMC Chairman’s Questions” dated February 27, 2014, and a report titled “Bradley O&D Committee Responses To The BPMC Investigation and Discussion Questions” dated March 21, 2014. See Minutes of the BPMC Special Meeting dated April 11, 2014. Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 3 of 5 f. The O&D Committee does not believe the line losses attributable to the line that serves the Sterling Substation load are significant; g. All parties support dynamic scheduling of Bradley Lake Project power; h. Since the beginning of 2014, Chugach is dispatching Bradley Lake Project power in a manner that provides load following and frequency matching of HEA’s customer loads; i. There remains a dispute between the parties regarding LBA boundaries; j. All parties developed and agreed upon a PSS/E model which defines the losses for each transmission line segment; k. All parties agreed that the PSS/E model accurately represents the losses for each line segment; 1. All Parties agreed that HEA is adequately compensated for line losses by over generation of the Bradley Lake Project; and m. Current operating procedures need to be updated to properly address spill mitigation procedures and ponding needed to accommodate dynamic scheduling. 22. The Services Agreement and the Transmission Sharing Agreement provide for parties to continue to perform their obligations pending resolution of any dispute.’ 23. The lease between HEA and Chugach of certain transmission facilities has expired since the execution of the Service Agreement and the Transmission Sharing Agreement. 24. HEA has unilaterally changed some of the long standing arrangements for accommodating the flow of power from the Bradley Lake Project. 25. The Dispute Resolution Committee has discussed and considered the issues related to transmission of power generated by the Bradley Lake Project from Bradley Junction to Quartz Creek as raised by both HEA and the Designated Utilities under the Bradley Lake Agreements generally, and more specifically the Services Agreement and the Transmission Sharing Agreement.'° 26. Not all issues in dispute are capable of resolution through the Dispute Resolution Committee’s settlement process. 27. A poll of the BPMC members regarding their respective views on whether the mediation efforts on these issues are at an impasse was taken by the Chair of the Dispute Resolution Committee the results of which has caused the Chair of said committee to acknowledge there is an impasse in the mediation efforts. 28. The examination process which the BPMC authorized the Dispute Resolution Committee to execute has run its course and the ability to achieve further resolution through the Dispute Resolution Committee’s settlement process is not viable. WHEREFORE, THE BPMC DISPUTE RESOLUTION COMMITTEE RESOLVES THAT: BEIT RESOLVED: The BPMC should require all parties to conform and conduct their actions to ensure that power generated by the Bradley Lake Project retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power to all purchasers. BE IT FURTHER RESOLVED: All parties to the Services Agreement and the Transmission sharing agreement should act to keep the status quo and continue to perform their obligations under the respective ° See Section 12(c) of the Services Agreement and Section 16(c) of the Transmission sharing agreement. 10 The Dispute Resolution Committee’s specific findings regarding the disputed issues are described in Resolution 14-09. Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 4 of 5 agreements in a manner which they have performed such obligations over the past twenty plus years until all disputes are resolved. BE IT FURTHER RESOLVED: The BPMC should adopt a resolution effectuating the agreement reached by and between the parties that HEA and Chugach are to be compensated for line losses resulting from Bradley Lake Project power transmission by over generation of the Bradley Lake Project. BE IT FURTHER RESOLVED: The BPMC should effect a resolution requiring the Bradley participants to resolve the remaining LBA technical issues between HEA and Chugach, the transmission service provider, in accordance with the Operating and Reliability Standards previously adopted by the BPMC. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, allow HEA to receive compensation for the costs associated with the transmission of Project power beyond Soldotna Substation. Any such amount should be equitably distributed by and between the Project Participants in accordance with their respective share of participation. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, act in a timely manner on any compensation request by HEA and find that any adjustment to compensation paid to HEA is effective with service beginning January 1, 2014. BE IT FURTHER RESOLVED: Given that the mediation efforts are at an impasse, the Dispute Resolution Committee recommends that the BPMC, as a whole, move forward and: A. Declare further settlement efforts of the BPMC authorized Dispute Resolution Committee to resolve the remaining issues of Soldotna to Quartz Creek transmission compensation and the Bradley Lake power delivery point are at impasse and that the dispute Resolution Committee’s continued effort to reach a negotiated resolution of these issues is no longer viable; and B. Determine whether the BPMC desires to move the dispute resolution process from the Dispute Resolution Committee’s settlement process to one of the more formal dispute resolution procedures provided for under Article 12 of the BPMC’s Bylaws including either arbitration under Section 12.4 of the BPMC Bylaws, or BPMC consideration and resolution of the disputed issues in accordance with the procedural rules for decision-making responsibilities under the BPMC procedures for dispute resolution referenced in Section 12.2 and accordingly, Section 5.10.2 of the BPMC Bylaws. Dated at Anchorage, Alaska, this 17th day of April, 2014. Evan J. Griffith Dispute Resolution Committee Chairman Sara Fisher-Goad, Secretary Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 5 of 5 aS ne} BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE SPECIAL MEETING AGENDA Thursday, April 17, 2014 2:00 p.m. — 2:30 p.m Alaska Energy Authority’s Aspen Room 813 West Northern Lights Boulevard, Anchorage, AK CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA APPROVAL OLD BUSINESS A. Dispute Resolution Committee final report e Committee recommendations to the BPMC — Resolution 14-10 MEMBERS COMMENTS ADJOURNMENT To participate by teleconference, dial 1-800-315-6338 and use code 3074#. Sy aie 10. WTF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE SPECIAL MEETING AGENDA Thursday, April 17, 2014 2:30 p.m. — 4:00 p.m Alaska Energy Authority’s Aspen Room 813 West Northern Lights Boulevard, Anchorage, AK CALL TO ORDER ROLL CALL (for Committee members) PUBLIC ROLL CALL (for all others present) PUBLIC COMMENT AGENDA APPROVAL OLD BUSINESS A. Dispute Resolution Committee report and findings B. Battle Creek update C. Governor Project update OPERATORS REPORT COMMITTEE REPORTS A. Budget committee - 2015 budget approval process and more efficient process B. AEA — Suggestions for reporting requirements for Bradley incidents C. O&D — Budget items questions and which committee can answer them — Evaluation of Mr. Day's operator report of compliance to reliability standards — Loss factor issue and driving need for change MEMBERS COMMENTS ADJOURNMENT To participate by teleconference, dial 1-800-315-6338 and use code 3074#. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE INTRODUCTION: The Bradley Lake Project Management Committee (BPMC) appointed a Dispute Resolution Committee at its January 15, 2014, meeting to address matters raised by Resolution No. 2013-02 and the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and the Designated Utilities.! The BPMC determined that the disputes arise under the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement) and/or the Amendment to Agreement for Sale of Transmission Capability (Transmission Sharing Agreement). Counsel for the BPMC advised that the BPMC did have authority to use the BPMC procedures for dispute resolution to resolve the matters arising under both the Services Agreement and the Transmission Sharing Agreement. The BPMC determined that both the Services Agreement and the Transmission Sharing Agreement provide the BPMC with the authority to use its procedures for dispute resolution.” This Resolution 14-10 of the Dispute Resolution Committee sets forth the findings, conclusions, and recommendations of the Dispute Resolution Committee. DISPUTE RESOLUTION COMMITTEE PROCESS AND ACTIVITIES: At the meeting held on January 15, 2014, the BPMC agreed unanimously to adopt an initial process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes through a negotiated effort up to and including mediation.* The BPMC appointed a Dispute Resolution Committee to conduct that settlement process. The Dispute Resolution Committee scheduled and held five additional meetings at the offices of the Alaska Energy Authority (AEA) in Anchorage to address the issues identified in BPMC Resolution No. 2103-02. In addition to discussions concerning the issues, position papers were requested by the Dispute Resolution Committee and subsequently presented by HEA and by the Designated Utilities. AEA participated in all of the scheduled meetings. All of these parties also had counsel present in the scheduled meetings. Seward Electric participated in the Dispute Resolution Committee without counsel. A BPMC “Members-only” meeting was also hosted by ML&P on February 20, 2014. Two members of the Dispute Resolution Committee also met numerous times with representatives of HEA prior to and during the time period which the Dispute Resolution Committee was active. Counsel for the BPMC interviewed two of the individuals that participated in the drafting of the various underlying documents that concern the contractual arrangements and accommodations reached regarding the power generated and wheeled from the Bradley Lake Project (the “Bradley Lake Agreements”). Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch Committee (O&D Committee). The O&D Committee made two separate presentations to the Dispute Resolution Committee. The information provided by the O&D Committee in response was discussed and duly considered by the Dispute Resolution Committee and is incorporated into the findings in this Resolution 14-10. 1 Chugach Electric Association, Inc. (Chugach) , Golden Valley Electric Association, Inc. (GVEA), Matanuska Electric Association, Inc. (MEA), and City of Anchorage, Municipal Light & Power (ML&P). 2 See Section 10(b) of the Services Agreement and Section 14 of the Transmission sharing agreement. 3 The Members were clear that the process would not waive any rights that a party may have under any agreements or the law. 4 The meetings of the Dispute Resolution Committee were held on the following dates: January 24, 2014; January 27, 2014; February 7, 2014; April 11, 2014; and April 17, 2014. FINDINGS AND CONCLUSIONS: After consideration of the information that has come before it, the discussions and presentation held by and between the various parties, and a review of the Bradley Lake Agreements, the BPMC Dispute Resolution Committee makes the following findings and conclusions: 10. re The Bradley Lake Agreements were negotiated and written to achieve a series of mutual beneficial arrangements which would provide benefits to the Railbelt Utilities and assure the success of the Bradley Lake Project and repayment of the bonds issued by the State to develop the Bradley Lake Project. The Parties that entered into the Services Agreement and the Transmission Sharing Agreement, along with the Alaska Energy Authority (AEA),° constitute the membership of the BPMC. The Bradley Lake Agreements formalize the arrangements by and between the Railbelt Utilities and AEA regarding all aspects of the power generated and transmitted from the Bradley Lake Project. The Services Agreement provides Chugach, as Dispatcher of power generated by the Bradley Lake Project, considerable flexibility to operate and maintain its generation and transmission system and to schedule and use its resources in the manner that Chugach deems necessary or prudent.® The legislative history concerning the Bradley Lake Project and the exemption from regulatory oversight granted by the State evidences that all signatories to the Bradley Lake Agreements considered and agreed that there would be benefits flowing to all parties from the contractual arrangements and that all matters associated with the power generated by and transmitted from Bradley Lake Hydroelectric Project would be under the purview of the BPMC and its members. The Services Agreement entered into on December 8, 1987, and the Transmission Sharing Agreement entered into on March 7, 1989, each provide the BPMC with the contractual authority to use the procedures for dispute resolution that were negotiated and adopted by the BPMC to address disputes under the respective agreements. The BPMC unanimously adopted procedures for dispute resolution as part of the BPMC’s Bylaws on December 1, 1993. All procedures for dispute resolution to be used by the BPMC must adhere to the negotiated and adopted procedures for dispute resolution set forth in Article 12 of the BPMC Bylaws. The BPMC unanimously agreed to adopt an initial settlement process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes up to and including mediation. The BPMC appointed the Dispute Resolution Committee to conduct that settlement process. HEA provided the Dispute Resolution Committee with a Statement Regarding Dispute Resolution Procedures which outlined its concerns with the extent of the BPMC’s authority and presented HEA’s Statement of Disputes. HEA was willing to participate in the dispute resolution process but reserved > AEA was formerly known as the Alaska Power Authority. ® See, e.g., Res. 14-10 Section 7(c) of the Services Agreement. FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 2 of 5 all of its rights “...to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority.” 12. The Designated Utilities stated that both the BPMC and its Dispute Resolution Committee clearly have the requisite authority to address issues at dispute between the parties. 13. Both HEA and the Designated Utilities presented a Position Statement to the Dispute Resolution Committee.’ 14. HEA identified specific disputes regarding the activities of the Dispatcher of power generated by the Bradley Lake Project and the insufficiency of its compensation for line losses resulting from the flow of the power generated from Bradley Lake Project flowing over HEA’s transmission system. 15. The Designated Utilities consider HEA in violation of the Bradley Lake Project Agreements because HEA has taken unilateral actions to inappropriately gain operational control of the electric facilities used to wheel power generated by the Bradley Lake Project northward which is contrary to the Services Agreement. 16. The Dispute Resolution Committee met both formally and informally in an effort to reach resolution of the disputed issues. 17. The Dispute Resolution Committee has made every reasonable attempt to meet and discuss all relevant issues with HEA, the Designated Utilities, and the other BPMC members. 18. All Members of the BPMC have representatives that actively participate on the O&D Committee. 19. The O&D Committee provided the Dispute Resolution Committee with the technical and operational expertise pertaining to the analyses of the various issues raised by HEA and the Designated Utilities. 20. The O&D Committee issued two written reports responding to specific questions from the Dispute Resolution Committee.* 21. The O&D committee has reported to the Dispute Resolution Committee that the O&D Committee has a general consensus on the following issues: a. Dual control with coordination of a transmission segment is technically possible, but not practical because dual load balancing authorities (LBA) would not be balanced. b. Line Losses can be calculated for any transmission line segment without regard to the LBA that controls the line; c. While it is technically possible the O&D Committee considers it operationally impractical to have a LBA established just for Soldotna to Quartz Creek line segment (SQ line); d. While it is technically possible the O&D Committee considers it operationally impractical to establish an LBA for just the SQ line operation and assign it to HEA or Chugach for dispatch purposes; e. HEA has one distribution load connected to the SQ line made up of 3 MW of peak load requirements for the Sterling Substation; 7 See Minutes of BPMC Special Meeting dated February 7, 2014. 8 The O&D Committee issued a report titled “Bradley Lake O&D Committee Response to BPMC Chairman’s Questions” dated February 27, 2014, and a report titled “Bradley O&D Committee Responses To The BPMC Investigation and Discussion Questions” dated March 21, 2014. See Minutes of the BPMC Special Meeting dated April 11, 2014. Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 3 of 5 f. The O&D Committee does not believe the line losses attributable to the line that serves the Sterling Substation load are significant; g. All parties support dynamic scheduling of Bradley Lake Project power; h. Since the beginning of 2014, Chugach is dispatching Bradley Lake Project power in a manner that provides load following and frequency matching of HEA’s customer loads; There remains a dispute between the parties regarding LBA boundaries; j. All parties developed and agreed upon a PSS/E model which defines the losses for each transmission line segment; k. All parties agreed that the PSS/E model accurately represents the losses for each line segment; 1. All Parties agreed that HEA is adequately compensated for line losses by over generation of the Bradley Lake Project; and m. Current operating procedures need to be updated to properly address spill mitigation procedures and ponding needed to accommodate dynamic scheduling. 22. The Services Agreement and the Transmission Sharing Agreement provide for parties to continue to perform their obligations pending resolution of any dispute.’ 23. The lease between HEA and Chugach of certain transmission facilities has expired since the execution of the Service Agreement and the Transmission Sharing Agreement. 24. HEA has unilaterally changed some of the long standing arrangements for accommodating the flow of power from the Bradley Lake Project. 25. The Dispute Resolution Committee has discussed and considered the issues related to transmission of power generated by the Bradley Lake Project from Bradley Junction to Quartz Creek as raised by both HEA and the Designated Utilities under the Bradley Lake Agreements generally, and more specifically the Services Agreement and the Transmission Sharing Agreement.'° 26. Not all issues in dispute are capable of resolution through the Dispute Resolution Committee’s settlement process. 27. A poll of the BPMC members regarding their respective views on whether the mediation efforts on these issues are at an impasse was taken by the Chair of the Dispute Resolution Committee the results of which has caused the Chair of said committee to acknowledge there is an impasse in the mediation efforts. 28. The examination process which the BPMC authorized the Dispute Resolution Committee to execute has run its course and the ability to achieve further resolution through the Dispute Resolution Committee’s settlement process is not viable. WHEREFORE, THE BPMC DISPUTE RESOLUTION COMMITTEE RESOLVES THAT: BEIT RESOLVED: The BPMC should require all parties to conform and conduct their actions to ensure that power generated by the Bradley Lake Project retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power to all purchasers. BE IT FURTHER RESOLVED: All parties to the Services Agreement and the Transmission sharing agreement should act to keep the status quo and continue to perform their obligations under the respective ° See Section 12(c) of the Services Agreement and Section 16(c) of the Transmission sharing agreement. 10 The Dispute Resolution Committee’s specific findings regarding the disputed issues are described in Resolution 14-09. Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 4 of 5 agreements in a manner which they have performed such obligations over the past twenty plus years until all disputes are resolved. BE IT FURTHER RESOLVED: The BPMC should adopt a resolution effectuating the agreement reached by and between the parties that HEA is to be compensated for line losses resulting from Bradley Lake Project power transmission by over generation of the Bradley Lake Project. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, allow HEA to receive compensation for the costs associated with the transmission of Project power beyond Soldotna Substation. Any such amount should be equitably distributed by and between the Project Participants in accordance with their respective share of participation. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, act in a timely manner on any compensation request by HEA and find that any adjustment to compensation paid to HEA is effective with service beginning January 1, 2014. BE IT FURTHER RESOLVED: Given that the mediation efforts are at an impasse, the Dispute Resolution Committee recommends that the BPMC, as a whole, move forward and: A. Declare further settlement efforts of the BPMC authorized Dispute Resolution Committee to resolve the remaining issues of Soldotna to Quartz Creek transmission compensation and the Bradley Lake power delivery point are at impasse and that the dispute Resolution Committee’s continued effort to reach a negotiated resolution of these issues is no longer viable; and B. Determine whether the BPMC desires to move the dispute resolution process from the Dispute Resolution Committee’s settlement process to one of the more formal dispute resolution procedures provided for under Article 12 of the BPMC’s Bylaws including either arbitration under Section 12.4 of the BPMC Bylaws, or BPMC consideration and resolution of the disputed issues in accordance with the procedural rules for decision-making responsibilities under the BPMC procedures for dispute resolution referenced in Section 12.2 and accordingly, Section 5.10.2 of the BPMC Bylaws. Dated at Anchorage, Alaska, this 17th day of April, 2014. Evan J. Griffith Dispute Resolution Committee Chairman Sara Fisher-Goad, Secretary Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 5 of 5 Bradley Lake BPMC Meeting April 17%, 2014 Operators Report Unit Statistics: Generation Unit 1 (MWhrs) Unit 2 (MWhrs) Total (MWhrs) March 2014 13,104 6,856 19,960 Hydraulics Avg. Lake Level (ft) Usage (ac ft) Fishwater (ac ft) March 2014 1,141 20,373 2,937 Lake Level — April 16 - 1,131.5’ Incidents and CEA callout: None Inspections: Dam Inspections: March 23 - A flyover inspection was conducted, no abnormal conditions noted. April 3 — A limited dam inspection was conducted. Power Tunnel Penstock drain flow measurement was conducted on March 21". The data collected indicates the flow is about the same as last quarter. Maintenance Activities: Accusonic is still working on a permanent software solution for the flow totalizer portion of the Bradley penstock flow meters. The meters are providing accurate flow indication. Road clearing was started this month due to warm weather and light snow. The grader was able to clear the road to mile marker 5 out of 8. Weather permitting, the operators will begin minor tree and brush removal along the airport and barge dock. The main brush removal will take place at the dam utilizing the temporary maintenance worker this summer. Bradley Lake Operator Report Page 1 Projects: Governor PLC Replacement - This project is still on schedule. An Invitation for Bid on the cabinet wiring contract was released to local contractors on April gy Following the O&D meeting last week, a meeting was held with the ‘Bradley Governor Consultants’, members of the O&D and AEA. EPS developed a list of questions that were forwarded to Emerson for comment. Factory Acceptance Testing is scheduled for April 21-25 at the Emerson facility in Pittsburgh. To date the attendees will be as follows; James Cote (EPS), Bob Day (HEA), Alan Owens (BLPP), Paul Parsons (BLPP). Penstock Dresser Coupling Inspection and Painting - Surface rust has accumulated on the Power Tunnel and Diversion Tunnel vent coupling outer edges and bolts. The work scope is to inspect, clean, and paint the original dresser couplings and bolts. The couplings are used to connect approximately 120 feet of vertical vent pipe with an 8’ circumference. (Refer to the attached photo) Turbine Nozzle/Needle Valve Repair — Repair planning is ongoing with FUJI/Voith Hydro and NAES who performed the Nozzle rebuild in 2002/2003. Nozzle specification and parts documentation was sent to Voith Hydro this week. Testing equipment is being setup to test the spare nozzle at Bradley. Installation and/or repair (depending on preliminary seal testing) of the spare nozzle is in progress. (Refer to the attached photos of nozzle) Partial Discharge Monitor - Iris Power has scheduled a technician for the 2"4 week in May to complete the installation and commissioning of the generator partial discharge monitor. Bradley Lake operators are finalizing the power supplies and fiber optic converters that will connect the monitor to the plant Emerson DCS system. Computer Room Fire System and Alarm Panel Replacement— Work scope preparation and vendor contact for the fire system installation and panel replacement is ongoing. The project will be conducted in two phases. Phase 1- Design and install a clean gas suppression system for the computer and communication room. Phase 2 — Design and install new alarm and monitoring cabinets in the residences, crew quarters, shop, and main control room. Bradley Lake Operator Report Page 2 One of nine dresser couplings to be cleaned and inspected. Photos of Turbine Water Nozzle Side View of Nozzle Water Inlet View of Nozzle Needle Outlet View of Nozzle Bradley Lake Operator Report Page 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE INTRODUCTION: The Bradley Lake Project Management Committee (BPMC) appointed a Dispute Resolution Committee at its January 15, 2014, meeting to address matters raised by Resolution No. 2013-02 and the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and the Designated Utilities.'! The BPMC determined that the disputes arise under the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement) and/or the Amendment to Agreement for Sale of Transmission Capability (Transmission Sharing Agreement). Counsel for the BPMC advised that the BPMC did have authority to use the BPMC procedures for dispute resolution to resolve the matters arising under both the Services Agreement and the Transmission Sharing Agreement. The BPMC determined that both the Services Agreement and the Transmission Sharing Agreement provide the BPMC with the authority to use its procedures for dispute resolution.? This Resolution 14-10 of the Dispute Resolution Committee sets forth the findings, conclusions, and recommendations of the Dispute Resolution Committee. DISPUTE RESOLUTION COMMITTEE PROCESS AND ACTIVITIES: At the meeting held on January 15, 2014, the BPMC agreed unanimously to adopt an initial process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes through a negotiated effort up to and including mediation.* The BPMC appointed a Dispute Resolution Committee to conduct that settlement process. The Dispute Resolution Committee scheduled and held five additional meetings at the offices of the Alaska Energy Authority (AEA) in Anchorage to address the issues identified in BPMC Resolution No. 2103-02.‘ In addition to discussions concerning the issues, position papers were requested by the Dispute Resolution Committee and subsequently presented by HEA and by the ee eae AEA participated in all of the scheduled meetings. All of these parties also had counsel present ie Scheduled meetings. Seward Electric participated in the Dispute Resolution Committee without counsel. A BPMC “Members-only” meeting was also hosted by ML&P on February 20, 2014. Two members of the Dispute Resolution Committee also met numerous times with representatives of HEA prior to and during the time period which the Dispute Resolution Committee was active. Counsel for the BPMC interviewed two of the individuals that participated in the drafting of the various underlying documents that concern the contractual arrangements and accommodations reached regarding the power generated and wheeled from the Bradley Lake Project (the “Bradley Lake Agreements”). Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch Committee (O&D Committee). The O&D Committee made two separate presentations to the Dispute Resolution Committee. The information provided by the O&D Committee in response was discussed and duly considered by the Dispute Resolution Committee and is incorporated into the findings in this Resolution 14-10. 1 Chugach Electric Association, Inc. (Chugach) , Golden Valley Electric Association, Inc. (GVEA), Matanuska Electric Association, Inc. (MEA), and City of Anchorage, Municipal Light & Power (ML&P). 2 See Section 10(b) of the Services Agreement and Section 14 of the Transmission sharing agreement. 3 The Members were clear that the process would not waive any rights that a party may have under any agreements or the law. + The meetings of the Dispute Resolution Committee were held on the following dates: January 24, 2014; January 27, 2014; February 7, 2014; April 11, 2014; and April 17, 2014. FINDINGS AND CONCLUSIONS: After consideration of the information that has come before it, the discussions and presentation held by and between the various parties, and a review of the Bradley Lake Agreements, the BPMC Dispute Resolution Committee makes the following findings and conclusions: 10. 11. The Bradley Lake Agreements were negotiated and written to achieve a series of mutual beneficial arrangements which would provide benefits to the Railbelt Utilities and assure the success of the Bradley Lake Project and repayment of the bonds issued by the State to develop the Bradley Lake Project. The Parties that entered into the Services Agreement and the Transmission Sharing Agreement, along with the Alaska Energy Authority (AEA),° constitute the membership of the BPMC. The Bradley Lake Agreements formalize the arrangements by and between the Railbelt Utilities and AEA regarding all aspects of the power generated and transmitted from the Bradley Lake Project. The Services Agreement provides Chugach, as Dispatcher of power generated by the Bradley Lake Project, considerable flexibility to operate and maintain its generation and transmission system and to schedule and use its resources in the manner that Chugach deems necessary or prudent.® The legislative history concerning the Bradley Lake Project and the exemption from regulatory oversight granted by the State evidences that all signatories to the Bradley Lake Agreements considered and agreed that there would be benefits flowing to all parties from the contractual arrangements and that all matters associated with the power generated by and transmitted from Bradley Lake Hydroelectric Project would be under the purview of the BPMC and its members. The Services Agreement entered into on December 8, 1987, and the Transmission Sharing Agreement entered into on March 7, 1989, each provide the BPMC with the contractual authority to use the procedures for dispute resolution that were negotiated and adopted by the BPMC to address disputes under the respective agreements. The BPMC unanimously adopted procedures for dispute resolution as part of the BPMC’s Bylaws on December 1, 1993. All procedures for dispute resolution to be used by the BPMC must adhere to the negotiated and adopted procedures for dispute resolution set forth in Article 12 of the BPMC Bylaws. The BPMC unanimously agreed to adopt an initial settlement process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes up to and including mediation. The BPMC appointed the Dispute Resolution Committee to conduct that settlement process. HEA provided the Dispute Resolution Committee with a Statement Regarding Dispute Resolution Procedures which outlined its concerns with the extent of the BPMC’s authority and presented HEA’s Statement of Disputes. HEA was willing to participate in the dispute resolution process but reserved > AEA was formerly known as the Alaska Power Authority. ® See, e.g., Section 7(c) of the Services Agreement. Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 2 of 5 12: 13; 14. IS: 16. Vp 18. 19: 20. 2A. all of its rights “...to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority.” The Designated Utilities stated that both the BPMC and its Dispute Resolution Committee clearly have the requisite authority to address issues at dispute between the parties. Both HEA and the Designated Utilities presented a Position Statement to the Dispute Resolution Committee.’ HEA identified specific disputes regarding the activities of the Dispatcher of power generated by the Bradley Lake Project and the insufficiency of its compensation for line losses resulting from the flow of the power generated from Bradley Lake Project flowing over HEA’s transmission system. The Designated Utilities consider HEA in violation of the Bradley Lake Project Agreements because HEA has taken unilateral actions to inappropriately gain operational control of the electric facilities used to wheel power generated by the Bradley Lake Project northward which is contrary to the Services Agreement. The Dispute Resolution Committee met both formally and informally in an effort to reach resolution of the disputed issues. The Dispute Resolution Committee has made every reasonable attempt to meet and discuss all relevant issues with HEA, the Designated Utilities, and the other BPMC members. All Members of the BPMC have representatives that actively participate on the O&D Committee. The O&D Committee provided the Dispute Resolution Committee with the technical and operational expertise pertaining to the analyses of the various issues raised by HEA and the Designated Utilities. ve sc MN . . . . The O&D Committee issued pwo written reports responding to specific questions from the Dispute Resolution Committee.* The O&D committee has reported to the Dispute Resolution Committee that the O&D Committee has a general consensus on the following issues: a. Dual control with coordination of a transmission segment is technically possible, but not practical because dual load balancing authorities (LBA) would not be balanced. b. Line Losses can be calculated for any transmission line segment without regard to the LBA that controls the line; c. While it is technically possible the O&D Committee considers it operationally impractical to have a LBA established just for Soldotna to Quartz Creek line segment (SQ line); d. While it is technically possible the O&D Committee considers it operationally impractical to establish an LBA for just the SQ line operation and assign it to HEA or Chugach for dispatch purposes; e. HEA has one distribution load connected to the SQ line made up of 3 MW of peak load requirements for the Sterling Substation; 7 See Minutes of BPMC Special Meeting dated February 7, 2014. 8 The O&D Committee issued a report titled “Bradley Lake O&D Committee Response to BPMC Chairman’s Questions” dated February 27, 2014, and a report titled “Bradley O&D Committee Responses To The BPMC Investigation and Discussion Questions” dated March 21, 2014. See Minutes of the BPMC Special Meeting dated April 11, 2014. &Apr.| 17 Res. 14-10 Mondies FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 3 of 5 f. The O&D Committee does not believe the line losses attributable to the line that serves the Sterling Substation load are significant; g. All parties support dynamic scheduling of Bradley Lake Project power; h. Since the beginning of 2014, Chugach is dispatching Bradley Lake Project power in a manner that provides load following and frequency matching of HEA’s customer loads; i. There remains a dispute between the parties regarding LBA boundaries; j. All parties developed and agreed upon a PSS/E model which defines the losses for each transmission line segment; k. All parties agreed that the PSS/E model accurately represents the losses for each line segment; 1. All Parties agreed that HEA is adequately compensated for line losses by over generation of the Bradley Lake Project; and m. Current operating procedures need to be updated to properly address spill mitigation procedures and ponding needed to accommodate dynamic scheduling. 22. The Services Agreement and the Transmission Sharing Agreement provide for parties to continue to perform their obligations pending resolution of any dispute.” 23. The lease between HEA and Chugach of certain transmission facilities has expired since the execution of the Service Agreement and the Transmission Sharing Agreement. 24. HEA has unilaterally changed some of the long standing arrangements for accommodating the flow of power from the Bradley Lake Project. 25. The Dispute Resolution Committee has discussed and considered the issues related to transmission of power generated by the Bradley Lake Project from Bradley Junction to Quartz Creek as raised by both HEA and the Designated Utilities under the Bradley Lake Agreements generally, and more specifically the Services Agreement and the Transmission Sharing Agreement.'° 26. Not all issues in dispute are capable of resolution through the Dispute Resolution Committee’s settlement process. 27. A poll of the BPMC members regarding their respective views on whether the mediation efforts on these issues are at an impasse was taken by the Chair of the Dispute Resolution Committee the results of which has caused the Chair of said committee to acknowledge there is an impasse in the mediation efforts. 28. The examination process which the BPMC authorized the Dispute Resolution Committee to execute has run its course and the ability to achieve further resolution through the Dispute Resolution Committee’s settlement process is not viable. WHEREFORE, THE BPMC DISPUTE RESOLUTION COMMITTEE RESOLVES THAT: BEIT RESOLVED: The BPMC should require all parties to conform and conduct their actions to ensure that power generated by the Bradley Lake Project retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power to all purchasers. BE IT FURTHER RESOLVED: All parties to the Services Agreement and the Transmission sharing agreement should act to keep the status quo and continue to perform their obligations under the respective s A ° See Section 12(c) of the Services Agreement and Section 16(c) of the Transmission sharing agreement. 10 The Dispute Resolution Committee’s specific findings regarding the disputed issues are described in Resolution 14-09. Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 4 of 5 agreements in a manner which they have performed such obligations over the past twenty plus years until all disputes are resolved. BE IT FURTHER RESOLVED: The BPMC should adopt a resolution effectuating the agreement reached by and between the parties that HEA and Chugach are to be compensated for line losses resulting from Bradley Lake Project power transmission by over generation of the Bradley Lake Project. BE IT FURTHER RESOLVED: The BPMC should effect a resolution requiring the Bradley participants to resolve the remaining LBA technical issues between HEA and Chugach, the transmission service provider, in accordance with the Operating and Reliability Standards previously adopted by the BPMC. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, allow HEA to receive compensation for the costs associated with the transmission of Project power beyond Soldotna Substation. Any such amount should be equitably distributed by and between the Project Participants in accordance with their respective share of participation. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, act in a timely manner on any compensation request by HEA and find that any adjustment to compensation paid to HEA is effective with service beginning January 1, 2014. BE IT FURTHER RESOLVED: Given that the mediation efforts are at an impasse, the Dispute Resolution Committee recommends that the BPMC, as a whole, move forward and: A. Declare further settlement efforts of the BPMC authorized Dispute Resolution Committee to resolve the remaining issues of Soldotna to Quartz Creek transmission compensation and the Bradley Lake power delivery point are at impasse and that the dispute Resolution Committee’s continued effort to reach a negotiated resolution of these issues is no longer viable; and B. Determine whether the BPMC desires to move the dispute resolution process from the Dispute Resolution Committee’s settlement process to one of the more formal dispute resolution procedures provided for under Article 12 of the BPMC’s Bylaws including either arbitration under Section 12.4 of the BPMC Bylaws, or BPMC consideration and resolution of the disputed issues in accordance with the procedural rules for decision-making responsibilities under the BPMC procedures for dispute resolution referenced in Section 12.2 and accordingly, Section 5.10.2 of the BPMC Bylaws. Dated at Anchorage, Alaska, this 17th day of April, 2014. Evan J. Griffith Dispute Resolution Committee Chairman Sara Fisher-Goad, Secretary Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 5 of 5 Bradley Lake Project Management Committee - Alaska Online Public Notices Page 1 of 1 STATUS: Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY Special Meeting Public Notice Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee (BPMC) will hold a special meeting on Thursday, April 17 at 2:00 p.m. regarding dispute resolution committee followed by a special BPMC meeting to review and discuss the findings, conclusions, and recommendations of the BPMC’s Dispute Resolution Committee and consider; 1) accepting the report of the Dispute Resolution Committee; and 2) addressing the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and Chugach Electric Association, Inc. (Chugach) that may remain unresolved by the work of the Dispute Resolution Committee. For additional information contact Teri Webster. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Aspen Room, 813 West Northern Lights Boulevard, Anchorage, Alaska; a teleconference line has been set up for those unable to attend in person. Dial 1-800-315-6338, Enter Code 3074#. The public is invited to attend. The State of Alaska (AEA) complies with Title Il 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. Attachments, History, Details Attachments Details BPMC Special Agenda.pdf De : Commerce Community and partment: 5 Dispute Resolution Agenda.pdf Category: ia Revision History Sub-Category: Advisory Committee Meeting Created 4/14/2014 3:12:42 PM by Location(s): Statewide tawebster Project/Regulation #: Modified 4/14/2014 3:12:42 PM by . tawebster [Details] Publish Date: 4/14/2014 Archive Date: 4/18/2014 Events/Deadlines: http://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=172193 4/16/2014 CHECKLIST FOR BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETINGS Meeting Date/Time: Meeting Location: Task CONFIRMED/DATE Secure Meeting Date with Bryan Carey *3065 MAKE SURE IT’S NOT A STATE HOLIDAY Secure Meeting Date with Chairman, Brad Evans (call his Exec Assistant, Connie Owens @ 762-4747) Secure meeting room for use (block out 30 minutes prior to meeting to allow for set-up time Send email “SAVE THE DATE” to all Committee members, in Outllook Contacts “BPMC” with meeting date/time/location (ask for documents to be emailed for packet inclusion — including action items with their motions. Need five for quorum. Schedule a teleconference line with GCI (1-800-770-2121) provide them with a reference project (BPMC) and code (your | phone extension number) Draft Agenda for Bryan Carey’s review. After Bryan approves, Send Draft Agenda by email to Chairman for review and approval, Brad_evans@chugachelectric.com always cc: Connie Owens connie_owens@chugachelectric.com Post to the State of Alaska’s Online Notice System 5 business days prior to the meeting. Attach agenda. Gather documents from members. They rarely have any. One week prior to meeting, email packet to members (big group BPMC) including all attachments (teleconference information /agenda /draft of previous meeting minutes/motions/general handouts) (SEND IN PDF FORMAT!) Print 5 extra copies of the full packet of information and bring to the meeting for those who did not bring their copy ALSO BRING TO THE MEETING: State Calendar, List of Reps, Sign in Sheet, Bylaws, and Minutes in final form from the last meeting for Chair's signature if they are approved! TEST RECORDING EQUIPMENT BEFORE the meeting. Following the meeting: Make sure you disconnect the phone! Stop recording. Have Chair and Bryan C. sign approved minutes. Send a pdf of the signed minutes to the committee members. Type up a draft of the meeting minutes.& send it to B Carey for review and any other speaker for review. After their edits, prepare a final draft for the next meeting. Bradley Lake Project Management Committee - Alaska Online Public Notices Page 1 of 1 STATUS: Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY Special Meeting Public Notice Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee (BPMC) will hold a special meeting on Thursday, April 17 at 2:00 p.m. regarding dispute resolution committee followed by a regular BPMC meeting. For additional information contact Teri Webster. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Aspen Room, 813 West Northern Lights Boulevard, Anchorage, Alaska; a teleconference line has been set up for those unable to attend in person. Dial 1-800-315-6338, Enter Code 3074#. The public is invited to attend. The State of Alaska (AEA) complies with Title Il 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. Attachments, History, Details Attachments Details None Department: Commerce Community and . Economic Development Revision History Category: Public Notices Created 4/14/2014 3:12:42 PM by tawebster Sub-Category: advisory Committee|Mecting Location(s): Statewide Project/Regulation #: Publish Date: 4/14/2014 Archive Date: 4/18/2014 Events/Deadlines: http://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=172193 4/14/2014 Bradley Lake Project Management Committee - Alaska Online Public Notices Page 1 of 1 STATUS: Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY Special Meeting Public Notice Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee (BPMC) will hold a special meeting on Thursday, April 17 at 2:00 p.m. regarding dispute resolution committee followed by a special BPMC meeting to review and discuss the findings, conclusions, and recommendations of the BPMC’s Dispute Resolution Committee and consider; 1) accepting the report of the Dispute Resolution Committee; and 2) addressing the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and Chugach Electric Association, Inc. (Chugach) that may remain unresolved by the work of the Dispute Resolution Committee. We will also cover a Battle Creek update; governor project update; Operator report and committee reports. For additional information contact Teri Webster. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Aspen Room, 813 West Northern Lights Boulevard, Anchorage, Alaska; a teleconference line has been set up for those unable to attend in person. Dial 1-800-315-6338, Enter Code 3074#. The public is invited to attend. The State of Alaska (AEA) complies with Title Il 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. Attachments, History, Details Attachments Details a epee Agence Department: Sanne regan Dispute Resolution Agenda. pdf Category: Public Notices Pp Revision History Sub-Category: Advisory Committee Meeting Created 4/14/2014 3:12:42 PM by Location(s): = = Statewide tawebster Project/Regulation #: Modified 4/14/2014 3:12:42 PM by : tawebster [Details] Publish Date: 4/14/2014 Modified 4/16/2014 4:50:09 PM by [Details] Archive Date: 4/18/2014 tawebster Events/Deadlines: http://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=1 72193 4/16/2014 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE RESOLUTION NO. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE INTRODUCTION: The Bradley Lake Project Management Committee (BPMC) appointed a Dispute Resolution Committee at its January 15, 2014, meeting to address matters raised by Resolution No. 2013-02 and the various concerns regarding the transmission of energy generated by the Bradley Lake Project that have been raised by Homer Electric Association, Inc. (HEA) and the Designated Utilities.! The BPMC determined that the disputes arise under the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement) and/or the Amendment to Agreement for Sale of Transmission Capability (Transmission Sharing Agreement). Counsel for the BPMC advised that the BPMC did have authority to use the BPMC procedures for dispute resolution to resolve the matters arising under both the Services Agreement and the Transmission Sharing Agreement. The BPMC determined that both the Services Agreement and the Transmission Sharing Agreement provide the BPMC with the authority to use its procedures for dispute resolution.” This Resolution 14-10 of the Dispute Resolution Committee sets forth the findings, conclusions, and recommendations of the Dispute Resolution Committee. DISPUTE RESOLUTION COMMITTEE PROCESS AND ACTIVITIES: At the meeting held on January 15, 2014, the BPMC agreed unanimously to adopt an initial process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes through a negotiated effort up to and including mediation.’ The BPMC appointed a Dispute Resolution Committee to conduct that settlement process. The Dispute Resolution Committee scheduled and held five additional meetings at the offices of the Alaska Energy Authority (AEA) in Anchorage to address the issues identified in BPMC Resolution No. 2103-02.‘ In addition to discussions concerning the issues, position papers were requested by the Dispute Resolution Committee and subsequently presented by HEA and by the Designated Utilities. AEA participated in all of the scheduled meetings. All of these parties also had counsel present in the scheduled meetings. Seward Electric participated in the Dispute Resolution Committee without counsel. A BPMC “Members-only” meeting was also hosted by ML&P on February 20, 2014. Two members of the Dispute Resolution Committee also met numerous times with representatives of HEA prior to and during the time period which the Dispute Resolution Committee was active. Counsel for the BPMC interviewed two of the individuals that participated in the drafting of the various underlying documents that concern the contractual arrangements and accommodations reached regarding the power generated and wheeled from the Bradley Lake Project (the “Bradley Lake Agreements”). Certain matters were referred by the Dispute Resolution Committee to the BPMC Operations and Dispatch Committee (O&D Committee). The O&D Committee made two separate presentations to the Dispute Resolution Committee. The information provided by the O&D Committee in response was discussed and duly considered by the Dispute Resolution Committee and is incorporated into the findings in this Resolution 14-10. 1 Chugach Electric Association, Inc. (Chugach) , Golden Valley Electric Association, Inc. (GVEA), Matanuska Electric Association, Inc. (MEA), and City of Anchorage, Municipal Light & Power (ML&P). 2 See Section 10(b) of the Services Agreement and Section 14 of the Transmission sharing agreement. 3 The Members were clear that the process would not waive any rights that a party may have under any agreements or the law. + The meetings of the Dispute Resolution Committee were held on the following dates: January 24, 2014; January 27, 2014; February 7, 2014; April 11, 2014; and April 17, 2014. FINDINGS AND CONCLUSIONS: After consideration of the information that has come before it, the discussions and presentation held by and between the various parties, and a review of the Bradley Lake Agreements, the BPMC Dispute Resolution Committee makes the following findings and conclusions: 10. 11. The Bradley Lake Agreements were negotiated and written to achieve a series of mutual beneficial arrangements which would provide benefits to the Railbelt Utilities and assure the success of the Bradley Lake Project and repayment of the bonds issued by the State to develop the Bradley Lake Project. The Parties that entered into the Services Agreement and the Transmission Sharing Agreement, along with the Alaska Energy Authority (AEA),° constitute the membership of the BPMC. The Bradley Lake Agreements formalize the arrangements by and between the Railbelt Utilities and AEA regarding all aspects of the power generated and transmitted from the Bradley Lake Project. The Services Agreement provides Chugach, as Dispatcher of power generated by the Bradley Lake Project, considerable flexibility to operate and maintain its generation and transmission system and to schedule and use its resources in the manner that Chugach deems necessary or prudent.® The legislative history concerning the Bradley Lake Project and the exemption from regulatory oversight granted by the State evidences that all signatories to the Bradley Lake Agreements considered and agreed that there would be benefits flowing to all parties from the contractual arrangements and that all matters associated with the power generated by and transmitted from Bradley Lake Hydroelectric Project would be under the purview of the BPMC and its members. The Services Agreement entered into on December 8, 1987, and the Transmission Sharing Agreement entered into on March 7, 1989, each provide the BPMC with the contractual authority to use the procedures for dispute resolution that were negotiated and adopted by the BPMC to address disputes under the respective agreements. The BPMC unanimously adopted procedures for dispute resolution as part of the BPMC’s Bylaws on December 1, 1993. All procedures for dispute resolution to be used by the BPMC must adhere to the negotiated and adopted procedures for dispute resolution set forth in Article 12 of the BPMC Bylaws. The BPMC unanimously agreed to adopt an initial settlement process for examining claims and reaching resolution under which all parties would meet and attempt to resolve the disputes up to and including mediation. The BPMC appointed the Dispute Resolution Committee to conduct that settlement process. HEA provided the Dispute Resolution Committee with a Statement Regarding Dispute Resolution Procedures which outlined its concerns with the extent of the BPMC’s authority and presented HEA’s Statement of Disputes. HEA was willing to participate in the dispute resolution process but reserved > AEA was formerly known as the Alaska Power Authority. © See, e.g., Res. 14-10 Section 7(c) of the Services Agreement. FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 2 of 5 all of its rights “...to have any dispute that may arise in the context of the BPMC dispute process resolved by the appropriate judicial or regulatory authority.” 12. The Designated Utilities stated that both the BPMC and its Dispute Resolution Committee clearly have the requisite authority to address issues at dispute between the parties. 13. Both HEA and the Designated Utilities presented a Position Statement to the Dispute Resolution Committee.’ 14. HEA identified specific disputes regarding the activities of the Dispatcher of power generated by the Bradley Lake Project and the insufficiency of its compensation for line losses resulting from the flow of the power generated from Bradley Lake Project flowing over HEA’s transmission system. 15. The Designated Utilities consider HEA in violation of the Bradley Lake Project Agreements because HEA has taken unilateral actions to inappropriately gain operational control of the electric facilities used to wheel power generated by the Bradley Lake Project northward which is contrary to the Services Agreement. 16. The Dispute Resolution Committee met both formally and informally in an effort to reach resolution of the disputed issues. 17. The Dispute Resolution Committee has made every reasonable attempt to meet and discuss all relevant issues with HEA, the Designated Utilities, and the other BPMC members. 18. All Members of the BPMC have representatives that actively participate on the O&D Committee. 19. The O&D Committee provided the Dispute Resolution Committee with the technical and operational expertise pertaining to the analyses of the various issues raised by HEA and the Designated Utilities. 20. The O&D Committee issued two written reports responding to specific questions from the Dispute Resolution Committee. 21. The O&D committee has reported to the Dispute Resolution Committee that the O&D Committee has a general consensus on the following issues: a. Dual control with coordination of a transmission segment is technically possible, but not practical because dual load balancing authorities (LBA) would not be balanced. b. Line Losses can be calculated for any transmission line segment without regard to the LBA that controls the line; c. While it is technically possible the O&D Committee considers it operationally impractical to have a LBA established just for Soldotna to Quartz Creek line segment (SQ line); d. While it is technically possible the O&D Committee considers it operationally impractical to establish an LBA for just the SQ line operation and assign it to HEA or Chugach for dispatch purposes; e. HEA has one distribution load connected to the SQ line made up of 3 MW of peak load requirements for the Sterling Substation; 7 See Minutes of BPMC Special Meeting dated February 7, 2014. 8 The O&D Committee issued a report titled “Bradley Lake O&D Committee Response to BPMC Chairman’s Questions” dated February 27, 2014, and a report titled “Bradley O&D Committee Responses To The BPMC Investigation and Discussion Questions” dated March 21, 2014. See Minutes of the BPMC Special Meeting dated April 11, 2014. Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 3 of 5 f. The O&D Committee does not believe the line losses attributable to the line that serves the Sterling Substation load are significant; g. All parties support dynamic scheduling of Bradley Lake Project power; h. Since the beginning of 2014, Chugach is dispatching Bradley Lake Project power in a manner that provides load following and frequency matching of HEA’s customer loads; i. There remains a dispute between the parties regarding LBA boundaries; j. All parties developed and agreed upon a PSS/E model which defines the losses for each transmission line segment; k. All parties agreed that the PSS/E model accurately represents the losses for each line segment; 1. All Parties agreed that HEA is adequately compensated for line losses by over generation of the Bradley Lake Project; and m. Current operating procedures need to be updated to properly address spill mitigation procedures and ponding needed to accommodate dynamic scheduling. 22. The Services Agreement and the Transmission Sharing Agreement provide for parties to continue to perform their obligations pending resolution of any dispute.’ 23. The lease between HEA and Chugach of certain transmission facilities has expired since the execution of the Service Agreement and the Transmission Sharing Agreement. 24. HEA has unilaterally changed some of the long standing arrangements for accommodating the flow of power from the Bradley Lake Project. 25. The Dispute Resolution Committee has discussed and considered the issues related to transmission of power generated by the Bradley Lake Project from Bradley Junction to Quartz Creek as raised by both HEA and the Designated Utilities under the Bradley Lake Agreements generally, and more specifically the Services Agreement and the Transmission Sharing Agreement.!° 26. Not all issues in dispute are capable of resolution through the Dispute Resolution Committee’s settlement process. 27. A poll of the BPMC members regarding their respective views on whether the mediation efforts on these issues are at an impasse was taken by the Chair of the Dispute Resolution Committee the results of which has caused the Chair of said committee to acknowledge there is an impasse in the mediation efforts. 28. The examination process which the BPMC authorized the Dispute Resolution Committee to execute has run its course and the ability to achieve further resolution through the Dispute Resolution Committee’s settlement process is not viable. WHEREFORE, THE BPMC DISPUTE RESOLUTION COMMITTEE RESOLVES THAT: BEIT RESOLVED: The BPMC should require all parties to conform and conduct their actions to ensure that power generated by the Bradley Lake Project retains its contractually-agreed-to priority along the designated transmission line segments necessary to deliver that power to all purchasers. BE IT FURTHER RESOLVED: All parties to the Services Agreement and the Transmission sharing agreement should act to keep the status quo and continue to perform their obligations under the respective ° See Section 12(c) of the Services Agreement and Section 16(c) of the Transmission sharing agreement. 1° The Dispute Resolution Committee’s specific findings regarding the disputed issues are described in Resolution 14-09. Res. 14-10 | FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 4 of 5 agreements in a manner which they have performed such obligations over the past twenty plus years until all disputes are resolved. BE IT FURTHER RESOLVED: The BPMC should adopt a resolution effectuating the agreement reached by and between the parties that HEA is to be compensated for line losses resulting from Bradley Lake Project power transmission by over generation of the Bradley Lake Project. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, allow HEA to receive compensation for the costs associated with the transmission of Project power beyond Soldotna Substation. Any such amount should be equitably distributed by and between the Project Participants in accordance with their respective share of participation. BE IT FURTHER RESOLVED: The BPMC should, as part of its resolving the outstanding disputes, act in a timely manner on any compensation request by HEA and find that any adjustment to compensation paid to HEA is effective with service beginning January 1, 2014. BE IT FURTHER RESOLVED: Given that the mediation efforts are at an impasse, the Dispute Resolution Committee recommends that the BPMC, as a whole, move forward and: A. Declare further settlement efforts of the BPMC authorized Dispute Resolution Committee to resolve the remaining issues of Soldotna to Quartz Creek transmission compensation and the Bradley Lake power delivery point are at impasse and that the dispute Resolution Committee’s continued effort to reach a negotiated resolution of these issues is no longer viable; and B. Determine whether the BPMC desires to move the dispute resolution process from the Dispute Resolution Committee’s settlement process to one of the more formal dispute resolution procedures provided for under Article 12 of the BPMC’s Bylaws including either arbitration under Section 12.4 of the BPMC Bylaws, or BPMC consideration and resolution of the disputed issues in accordance with the procedural rules for decision-making responsibilities under the BPMC procedures for dispute resolution referenced in Section 12.2 and accordingly, Section 5.10.2 of the BPMC Bylaws. Dated at Anchorage, Alaska, this 17th day of April, 2014. Evan J. Griffith Dispute Resolution Committee Chairman Sara Fisher-Goad, Secretary Res. 14-10 FINAL DISPOSITION OF THE DISPUTE RESOLUTION COMMITTEE Page 5 of 5 faPendafler 752 Essentials Series File Folders & www.pendaflex.com 10% P4 MADE IN USA