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Home My WebLink AboutRay Kreig-Intertie Contracting Alternatives Cost Review 1995To: Wilson HUGHES From: Ray Kreig | fax: 258-9614 12/15/95 14:24:23 Page 2 of 3 RAY KREIG 201 Barrow #1 Anchorage, Alaska 99501-2429 (907) 276-2025 @ fax 258-9614 e-mail: ray@kreig.com December 14, 1995 Fred Braun, President Alaska Electric Generation & Transmission Cooperative, Inc. 3380 C Street, Suite 205 Anchorage, Alaska 99503 SUBJECT: _ Intertie Contracting Alternatives Cost Review Dear Mr. Braun: The following statements are presented in my individual capacity rather than as President of the Chugach Electric Association board. Had there been enough time, | would have brought this letter to the CEA board for official approval and a formal CEA transmittal. | am confident, however, that the CEA Board would have approved the contents of this letter, had but time allowed. As you know, CEA consumers will pay the largest share of the costs of the Northern and Southern Interties (30.2%). They may also pay as much as 80% of the costs of the Sutton to Glennallen intertie. Before our board takes up final approval of the Construction Management Agreement (CMA) we feel that we have a duty to our ratepayers to determine what extra costs (if any) are likely to result from project construction under the limitations contained in the Memo of Understanding with the IBEW Union (MOU). To that end the CEA board has authorized an Intertie Contracting Alternatives Cost Review which will be undertaken by consultants. We expect that it will be completed in mid-January. The scope of work for the review is attached. | understand that AEG&T plans to take action concerning the CMA for the Northern Intertie at this meeting. Some initial estimates indicate that the MOU restrictions could cost railbelt consumers between $1 and $10 million extra for the Northern Intertie alone. These costs would be allocated as follows: Chugach Electric consumers would pay: $300,000 to $3 million more Homer Electric consumers would pay: $100,000 to $1 million more Matanuska Electric consumers would pay: $150,000 to $1.5 million more -INTCOST. AGT To: Wilson HUGHES From: Ray Kreig | fax: 258-9614 12/15/95 14:25:24 Page 3 of 3 Ray Kreig to Fred Braun, December 14, 1995 Intertie Contracting Alternatives Cost Review Page 2 Since CEA has taken the initiative to determine the costs relative to the MOU, | am asking (as an individual) that AEG&T delay action on approval of the CMA until CEA has completed its cost review. Again, for the reasons previously stated, this is not an official request on behalf of the CEA Board. It is rather my personal request that, as members of our respective boards, we thoroughly exercise our fiduciary responsibility to obtain adequate information upon which to base our decisions on the contract provisions to be used for the construction of these important projects. | believe that a short delay in CMA approval is clearly in the best interest of railbelt electric consumers. Sincerely yours, Yong Wasip Ray Kreig attachment: Scope of Work for Intertie Contracting Alternatives Cost Review -INTCOST.AGT To: Wilson HUGHES From: Ray Kreig | fax: 258-9614 12/15/95 14:26:56 Page 1 of3 Intertle Contracting Alternatives Cost Review - Scope of Work for Chugach Electric Association Contract No.: 95233 RFP No.: 95-057 I. GENERAL A. Purpose This RFP will provide interested firms the opportunity to submit proposals for services required for the review of contracting alternatives for the construction of two major transmission ties in Alaska. The successful firm will be expected to execute the enclosed Professional Services Contract for this work. The scope of work includes, but is not limited to: - review of bid award data, - interviews, - availability of local labor force, and - determination of possible cost savings for various contracting methods. Background The electric transmission systems in South Central Alaska are interconnected with a 138 and a 115 kV transmission line respectively. To strengthen these ties additional transmission lines have been proposed to be constructed between Healy and Fairbanks (Northern Intertie) and Anchorage and Kenai (Southern Intertie). These ties will be jointly owned by the participating utilities: Chugach Electric Association, Inc., Homer Electric Association, Inc., Matanuska Electric Association, Inc., Anchorage Municipal Light and Power, Alaska Electric Generation & Transmission Cooperative, Inc., Golden Valley Electric Association, Inc., Fairbanks Municipal Utilities System, and City of Seward Light & Power Division. Ail design and construction activities are governed by various agreements executed by this Intertie Participants Groups (IPG). The review will estimate the cost to the public (if any) of the IBEW Union- only contracting restrictions now envisioned for the construction of two 230/138 kV transmission interties each that may take place in the next 5-10 years. Such restrictions result from the 1990 Memo of Understanding between the IBEW Union and certain “Railbelt Utilities": Chugach, Homer, and Golden Valley Electric associations. A copy of the memorandum will be made available to the successful proposer. To: Wilson HUGHES From: Ray Kreig | fax: 258-9614 12/45/95 14:28:13 Page 2 of 3 Contract No.: 95233 RFP No.: 95-057 Cc. Requirements To be considered for selection, Proposers arc expected to demonstrate their qualifications and approach to successfully carry out the review. ie SCOPE OF SERVICES AND SCHEDULES A. Services its Review construction bid award data on other large transmission jobs in the US and Alaska. Interview contractors, estimators, and others deemed by Proposer to be knowledgeable in this field. Comment on whether the IBEW Local 1547 (Alaska) workforce will be large enough to provide sufficient workers for the intertie projects without drawing from out of state locals. Comment on the local hire record of past large transmission project contractors. Estimate the cost savings that are likely if the participating utilities were to take one of the following steps: STAY WITH IBEW MEMO OF UNDERSTANDING - Ask for more concessions from the IBEW Union under the Memo of Understanding which refers to “such further concessions as the parties may negotiate’. Identify just what concessions should be asked for. What are the likely cost savings for each concession? REPUDIATE THE MEMO OF UNDERSTANDING. What additional] money over step a. above could be. saved if the projects were constructed free of the 1990 Memo of Understanding restrictions but still under “Little Davis Bacon” wage scale and restrictions (assuming it will be required by the 50% state grants involved). CONSTRUCT UNDER OPEN BIDDING. What additional money over steps a. and b. above could be saved if the 2 To: Wilson HUGHES From: Ray Kreig | fax: 258-9614 12/15/95 14:29:12 Page 3 of 3 Contract No.: 95233 RFP No.: 95-057 projects were constructed under completely free, open, and competitive bidding? The engineering plans and specifications are most developed for the Northern Intertie which shall be the project primarily used in the above comparative analysis. They will be made available to the successful proposer. §. Prepare written report of findings with a brief executive summary. 6. Be available for continuing consultation as needed and travel to present findings if necessary. 7. Other Services - Services which may be required and shall be performed in accordance with the Engineering Services Contract included in Appendix A. Schedules The following schedule is anticipated for the described services: ltem Date Submittal of Proposal and Work Plan 42/04/95 Selection of Successful Engineers 12/06/95 Preparation and Approval of Engineer- 12/08/95 ing Services Contract Final Report and Recommendations 01/15/96