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HomeMy WebLinkAboutCooper Valley R.W. Beck-Feasibility Study 1993State of Alaska a o Alaska Energy Authority A Public Corporation Date: September 1, 1993 Subject: Amendment No. 4 to Contract No. 2800631 - R. W. Beck Copper Valley Intertie Feasibility Study From: nein An ttca ety Procurement Manager R Ges Rook — VIg dnt. Telephone: 7214 vars To: William R. Snell Contra ft. 2%O6G3 | Executive Director The attached amendment is being forwarded to you for signature. Normally we would have had the Contractor sign the amendment first, but due to the nature of this amendment we thought it best to send it for your review and signature first. The Copper Valley Intertie Feasibility Study contract award was the result of an RFP for which R. W. Beck was the successful proposer. The work under this RFP was two-phase in nature, with performance of the second phase of the study contingent upon availability of funds for the balance of the study, prior to completion of the work under phase 1 (see Contract Appendix B, Statement of Work, Attachment 1). The first phase of the study as amended, had a total cost of $ 234,947.00. It has now been determined that funds are available to cover the $ 137,176 cost of phase 2 of the study, as provided for in the contract. Attached also for your information, as Attachment 2, is a copy of the Memorandum of Agreement (MOA) between the Alaska Energy Authority and Copper Valley Electric Association, Inc. (CVEA). Under the terms of the MOA, CVEA agrees to reimburse the Energy Authority for the total cost of the R. W. Beck study, up to a total of $ 372,123, the entire cost of the study, including the cost of this amendment. If you approve this amendment, please sign both originals. CONCUR SIGNATURE DATE Dick Emerman Sf dara, Yl Li ZS Senior Economist PO. Box 190869 701 East Tudor Road Anchorage, Alaska 99519-0869 (907) 561-7877 Fax: (907) 561-8584 AIDEA 24 J. Hickei, Governor APPENDIX B ‘ STATEMENT OF SERVICES The Contractor will conduct Phase 1 of a Copper Valley Intertie Feasibility Study as outlined in the Request for Proposals issued by the Alaska Energy Authority (AEA- 93-R-005). Specific services to be performed for Phase 1 are identified in the Contractor’s proposal submitted on January 6, 1993, as reproduced below. The Contractor and the Contracting Agency intend to amend this agreement to include Phase 2 of the feasibility study if the Contracting Agency determines that funds are available for this purpose prior to the conclusion of Phase 1. TASK A - ELECTRICAL SYSTEM STUDIES Electric system studies are to be provided by Power Technologies, Inc. (PTI) as a subcontractor to R. W. Beck and Associates. Overview The RFP proposes to interconnect two isolated systems in south-central Alaska through a 138 kV transmission line between Glennallen and Sutton areas. The systems involved in this interconnection are: e the Copper Valley Electric Association (CVEA), which operates the Glennallen-Valdez 138 kV line and lower voltage electric facilities in the Glennallen to Valdez areas, and e the Railbelt system which is a large, multi-utility interconnected network extending from Fairbanks to the Kenai Peninsula and having transmission facilities operating at 115 kV, 138 kV and 230 kV. At one end, the proposed line would connect with existing 138 kV facilities owned by the Authority at the Pump Station No. 11 Substation near Glennallen. At the other end, the line will connect with 115 kV facilities owned by Matanuska Electric Association (MEA) at the O'Neill Substation near Sutton. The ONeill Substation is on a 16-mile long radial feed from a 115 kV loop between the Authority's Teeland Substation and Plant 2 belonging to Anchorage Municipal Light and Power. The Eklutna hydro plant is connected to the Teeland-Plant 2 115 kV loop. The primary generation resources for the CVEA system are the 2-unit, 12 MW Solomon Gulch hydroelectric plant near Valdez, 7.3 MW of diesel generation at Valdez, 7.6 MW of diesel generation at Glennallen, and a 2.8 MW mobile combustion turbine. For the Railbelt system, there are numerous combustion turbine units, two combined cycle plants (mostly natural gas fired), two coal-fired steam units, and three hydro-electric plants; one being the Authority's 120 MW Bradley Lake facility. Future major generating resources are planned. The proposed interconnection will significantly enhance the reliability of the CVEA system by providing a transmission source from the much stronger railbelt system. This interconnection will minimize loss of load in the CVEA system for generation AIDEA 25 Aracnmeny 7. R. W. Beck and Associates, Inc. MEMORANDUN oO FROM + Mamamndum of Aareamant Fyhihit A 1 rt ®.:. of Alaska Department of Law t Ronald A. Garzini care November 9, 1992 Executive Director Alaska Energy Authority =LE NO FEL 269-5166 suauecT Sutton-Glennallen Intertie eg ae ST James F. Klas Assistant Attorrmey General Transportation Section, Anchorage This memorandum is in response to the request of your office of November 2, 1992 regarding the plan for Copper Valley Electric Association (CVEA) to advance the Energy Authority costs for phase 1 of the Sutton-Glennallen Intertie Feasibility Study. I have researched the proposal and find no law to prohibit such an arrangement. This appears to be a conditional gift which the AEA has the power to accept under AS 44.83.080(5). The AEA furthermore has the power to perform the feasibility studies under AS 44.83.080(13) and to enter into a Memorandum of Agreement (MOA) for this study under AS 44.83.080(14). State funds may not be spent without an appropriation pursuant to Article IX, section 13 of the state constitution, but this requirement is being met in this instance through your Legislative Revised Program Request (RPL) dated October 26, 1992 which if approved will result in an appropriation for the stated purposes. However, the AEA and CVEA should understand that absent specific legislative direction or clear intent, costs are not ordinarily reimbursable from an appropriation where the costs are incurred prior to an appropriation being passed. Past attorney general opinions have noted that only in exceptional circumstances may grant money be used to reimburse for costs incurred prior to the date of the legislative appropriation. See, for example, the attached attorney eabaeal opinions dated August 7, 1985, file No. 366-527-85, and March 24, 1986, file No. 663-86-0412. The reasoning employed in these AG opinions applies to capital budget appropriations as well. Whether CVEA can be reimbursed out of a future state appropriation would be determined from the language of the appropriation. Without specific language in the appropriation making clear the legislative intent to reimburse CVEA out of the appropriation it hy very probable that the reimbursement to CVEA would not be allowed. Furthermore, the MOA with CVEA should AIDEA 26 Page 7 of 17 fim ad @ Ronald A. Garzini Sutton-Glennallen Intertie reflect that the $260,000 conditional gift can only be refunded to CVEA if the appropriation from the legislature clearly reflects that legislative intent. JFK: bb Att AIDEA 27 Memorandum of Agreement Exhibit A Page 8 of 17 COPPER VALLEY INTERTIE FEASIBILITY STUDY In November 1992, the Alaska Energy Authority issued a Request for Proposals ("RFP") to perform a Copper Valley Intertie Feasibility Study. The proposed "Copper Valley Intertie" would consist of a 138 kV electrical transmission line between Sutton and Glennallen. The sections entitled "Background" and "Scope of Work" from the RFP are attached. R.W. Beck & Associates ("Beck") was selected to conduct the study. Beck will be assisted by Dames & Moore and Power Technologies, Inc. A Notice to Proceed (i.e. a formal notice to the contractor to begin work) was issued to Beck by the Energy Authority on February 22, 1993. AIDEA 28 Memarandum of Agreement Exhibit A Page 9 of 17 AIDEA 29 ASPS AEA-93-R-005 PROPOSED SCOPE OF WORK BACKGROUND Copper Valley Electric Association (CVEA) is a member-owned electric cooperative serving primarily the Alaska communities of Valdez and Glennallen. In 1991, CVEA energy requirements were approximately 60 million kWh. Roughly 40 million kWh were provided from the Solomon Gulch hydroelectric project, and the remaining 20 million kWh were supplied by diesel generation. Petro Star Valdez Inc. is scheduled to begin operation of a 30,000 barrel-per- day refinery near Valdez by the end of this year, and has signed an agreement to purchase all of its power requirements from CVEA for at least five years. Petro Star’s annual requirement is estimated at 20.8 million kWh. CVEA estimates that approximately 5 million kWh of this additional requirement can be supplied by Solomon Gulch while the remainder would be supplied by additional diesel generation. Diesel generation requirements contribute significantly to the relatively high retail rates in the CVEA system. A number of alternatives to diesel generation have been suggested in the past, including development of additional hydroelectric resources, end-use conservation, and interconnection with the Railbelt system. Regarding interconnection possibilities, a reconnaissance study of a "Northeast Intertie" was conducted for the Energy Authority by Power Engineers, Inc. in 1989. The "Northeast Intertie" was envisioned as a 230 kV line extending from Sutton (near Palmer) to Delta Junction via Glennallen. The capital cost estimate was $155 million in 1988 dollars. In 1991, the Energy Authority briefly reviewed a proposal to construct only the Glennallen to Delta Junction portion at 138 kV. Neither of these alternatives were judged cost-effective at the time. The "Northeast Intertie" reconnaissance study indicates that a Sutton- Glennallen line would be considerably less expensive than a Glennallen-Delta Junction line. This is supported by a brief engineering review and cost estimate of a 138 kV Sutton-Glennallen line conducted this year by Power Engineers at the request of CVEA. Based in part on this review, CVEA believes that a Sutton-Glennallen intertie, allowing purchase of gas-fired energy from the Anchorage area, offers promise as a long-term, cost-effective substitute for diesel generation in the CVEA system. The Energy Authority has included funds for a feasibility study of a 138 kV Sutton-Glennallen intertie in its FY 94 capital budget request. The FY 94 capital budget will be considered by the Legislature during the 1993 session Mamamndum of Acreement Fyhihit A Page 10 of 17 AIDEA 30 @ @ =e that convenes in January, and appropriations within the FY 94 capital budget will be effective on July 1, 1993. However, CVEA has expressed its desire that the study begin as soon as possible, and has expressed its willingness to advance funds to the Energy Authority sufficient to cover expected study costs through June 30, 1993. Consequently, this feasibility study will be conducted in two phases, with Phase 1 including all work through June 30, 1993, and Phase 2 including all work after June 30, 1993. This Request for Proposal (RFP) covers the entire feasibility study, both Phase 1 and Phase 2. Proposers should note the following: A. Issuance of a contract pursuant to this RFP is contingent on final execution of a written agreement with CVEA to pay Phase 1 study costs to the Energy Authority. The CVEA Board of Directors has voted its approval of this concept and its acceptance of the maximum allowable amount but, as this RFP is being prepared, a formal agreement has not yet been executed. B. The contract will include standard contract termination provisions. The contractor should be aware that Phase 2 will be initiated only if additional funds are made available to the Energy Authority either by the Legislature or by CVEA. SG If the Legislature appropriates funds for this purpose, CVEA will be reimbursed for funding it advances to cover Phase 1 costs. If the Legislature does not appropriate such funds, CVEA will not be reimbursed. D. The maximum allowable budget for Phase 1 tasks is $225,000. The maximum allowable budget for Phase 1 and Phase 2 tasks combined (i.e., the entire feasibility study) is $325,000. E. All information pertinent to the scope of work that is in the possession of CVEA or AEA will be made available to the contractor at the beginning of the feasibility study. SCOPE OF WORK Tasks are presented below for each Phase. Proposals must address the entire scope of work, including both Phases. A. Electrical system studies Phase 1. All work under this task is to be accomplished during Phase 1. Perform load flow, dynamic stability, and transient stability analysis sufficient to determine transmission design at a feasibility level, including compensation and other requirements, using Power Technologies, Inc. PSS/E program. Task definition is as follows: Wlamnenadum af A aeaamant Dvhihit A Pace 11 of 17 AIDEA 31 I. The load flow, dynamic stability, and transient stability analysis shall be sufficient to allow recommendation as to any compensation in the interconnected system. The following shall be addressed: first swing stability, voltage collapse and regulation. 2 Projected load information shall be used for the studies. The contractor shall perform the load flow studies for the system under normal and abnormal conditions. 3. The contractor shall propose alternatives to correct any system instability. 4. All computer runs shall be accompanied with graphical results and written interpretations. BE The Energy Authority has the transmission and generation data base for the Railbelt system and for the Glennallen-Valdez system in PSS/E format. This will be provided to the contractor at the beginning of the feasibility study. Phase 2. No additional work. Route selection Phase ]. The contractor will be required to examine and compare at least one route that generally follows the Glenn Highway corridor, using the “Northeast Intertie" reconnaissance study "suggested route" as a starting point, and one route that stays well away from the road corridor. One such route away from the road follows Boulder Creek, and also appears as an option in the reconnaissance study (i.e. the proposed "NEICR route"). As noted below in the task labeled "Public Comment Process," public meetings in Palmer, Glennallen, and points in between will be held at the beginning of Phase 1 in cooperation with the affected utilities (Copper Valley Electric Association and Matanuska Electric Association). Both route alternatives, near the road and away from the road, will be reviewed and refined during the winter, including flyover of both routes and limited ground review of accessible portions. Initial environmental impact comparisons will also be conducted at this time. Another set of public meetings will follow the winter review to share information and discuss results. The result of Phase 1 will be an orderly compilation of information developed on the identified route alternatives. Such information will include, but not necessarily be limited to, mapping, preliminary cost Mamarndium of Acreement Fyhihit A Page 12 of 17 eo @ -4- ~ comparisons for construction and maintenance, reliability, environmental impact, and public comment. Phase _2. After June 30, two primary route alternatives will be identified in consultation with the Energy Authority, and will be further reviewed and refined including flyover and ground review as appropriate. Thus both summer and winter conditions will be accounted for in the route selection, feasibility design, and environmental analysis. Public meetings will again follow the Phase 2 summer review. The result of Phase 2 will be the selection of a preferred route for purposes of feasibility analysis. This selection will be made in consultation with the Energy Authority, and will be based on estimates of construction cost, operations and maintenance cost, reliability, environmental impact, public acceptability, and any other relevant considerations. Cc. Feasibility design and cost estimate Phase 1. Prepare preliminary design and cost estimates (construction and O&M) for route alternatives consistent with route selection information requirements. This will include typical structures proposed for identified route segments. Include consideration of meteorological conditions. Complete feasibility design for project components common to all route alternatives, such as substation modifications. Provide estimated project development and construction schedule. Phase 2. Prepare final feasibility level design and cost estimates (construction and O&M) for the selected route. Provide supporting documentation for feasibility design, including terrain unit maps and typical foundations and structures for route segments. Provide supporting documentation for construction cost estimate, including unit costs and quantities. Develop O&M cost estimate by cost category, such as inspection, routine maintenance, and repair and replacement. Provide estimated cash flow schedule for project development and construction. D. Environmental studies Phase 1. Review environmental information regarding the alternative route corridors already available in published reports. Schedule and AIDEA 32 Memorandum of Agreement Exhibit A Page 13 of 17 AIDEA 33 @ @ ace conduct a meeting with resource agencies at an early date to solicit information and concerns. Initiate intertie assessment in the following areas: land ownership status land use impact air quality impact water quality impact fish and wildlife impact terrestrial impact recreation resource value visual impact safety PHN AARYNS The "safety" assessment (item 9 above) must include consideration of EMF issues. Because EMF has proven in the past to be an important issue for public acceptability of this intertie, care should be taken to prepare and present clear and convincing analysis on the magnitude of such fields at varying distances from the transmission line, how these field strengths compare with transmission lines of higher and lower voltage, and with other electrical facilities and equipment. A summary of present research status on EMF, and regulations regarding EMF around the country and the world, must also be included. The contractor must be prepared to interact with the public on all of the environmental issues listed above at the public meetings scheduled throughout the study. Phase 2. Complete the tasks described in Phase 1. Load forecast Phase 1. Prepare a 20-year load forecast for the CVEA service territory, including Low, Medium, and High scenarios. The foundation of the load forecast will be an economic forecast with particular attention to the future prospects for major employers or power consumers. At a minimum, the economic forecast must consider the following: 1. Alyeska pipeline terminal a. scenarios for future pipeline shutdown due to diminishing oil flow. b. probability of purchasing power from CVEA for selected loads (e.g. "house" loads or other loads). Memarandum of Agreement Exhibit A Page 14 of 17 2. Oil refining a. Petro Star refinery — prospects for future expansion or risk of future closure. b. prospects for a second refinery in Valdez. Cc. prospects for future cogeneration/self-generation. 3: Possibility of federal project such as the "HF Active Auroral Research Program" (HAARP) being developed and purchasing power from CVEA. 4. Trans-Alaska gas pipeline terminal —- update on prospects and probable impact on CVEA load. The load forecast for each year must be disaggregated into two categories, summer and winter. The summer period will be defined as the time during which spill energy is presently available from the Solomon Gulch hydro project. At the outset of this task, the contractor shall review the most recent Power Requirements Study produced by CVEA and discuss it with its authors. Any significant discrepancies between the load forecast produced by the contractor under this task and the most recent Power Requirements Study produced by CVEA shall be explained in the text of the contractor’s study. Phase 2. No additional work. F. Economic evaluation of alternatives Phase 1. Conduct an economic feasibility assessment of the intertie, comparing the present value of system costs under the intertie scenario with the present value of system costs under the primary alternatives. The intertie scenario will include, but not necessarily be limited to, consideration of the following: 1. capital and O&M cost of the intertie; 2. cost to provide gas-fired energy in the Cook Inlet area for sale to CVEA; < capital cost of providing diesel generation back-up, based on a plan for acquiring and/or deploying diesel generators in the event the intertie is constructed; AIDEA 34 Memorandum of Agreement Exhibit A Page 15 of 17 ig @ ato , 4. O&M cost associated with back-up diese] generation, with specific attention to the extent of labor savings anticipated from the intertie. The diesel scenario will include, but not necessarily be limited to, consideration of the following: 1. capital and O&M cost of diesel generation, based on a plan for acquiring and deploying diesel generators in the event the intertie is not constructed; ies fuel cost of diesel generation. At least one scenario will be constructed for comparative assessment that includes the proposed Allison Lake hydroelectric project and end- use conservation programs. Background on these alternatives is available in the Allison Lake Reconnaissance Study, issued by the Energy Authority in September 1992. Parameters of the economic analysis such as fuel price forecasts, discount rate, and time frame will be developed by the contractor in consultation with the Energy Authority. Price forecasts for natural gas and diesel fuel will require consultation with area utilities as well. Phase 2. A final cost estimate for the intertie will not be available until Phase 2. Most of the economic analysis should be completed during Phase 1, with Phase 2 reserved for final revisions to cost estimates or additional sensitivity analysis. G. Public comment process Phase 1. As described under the category of "route selection," public meetings will be held in Palmer, Glennallen, and points in between at two different times during Phase 1: at the beginning of the study process to inform people that the feasibility study is underway and to solicit their concerns, and near the end of Phase 1 to report on study findings and continue the public dialogue. CVEA and AEA will be represented at these meetings, as will Matanuska Electric Association as appropriate. The contractor will be required to prepare presentation materials and will have a prominent role in the meetings. Phase 2. A third set of public meetings will be held in Palmer, Glennallen, and points in between near the end of Phase 2, again to report on study findings and to accept public input. If the process is successful, a public consensus will begin to emerge on acceptable routing and environmental mitigation. H. Report preparation and study schedule AIDEA 35 Mamarandum of Aareement Rxhihit A Page 16 of 17 eo @ -8- Phase_1. A Phase 1 report will be required that presents all information acquired and analysis conducted during the Phase 1 effort. Twenty-five copies and one camera-ready copy of the Phase 1 report will be delivered to the Energy Authority. Phase 2. If the study proceeds to Phase 2, fifty copies and one camera- ready copy of a draft report presenting all aspects of the study will be delivered to the Energy Authority. After a 30-day comment period, the contractor will consult with the Energy Authority on necessary revisions to the draft, and produce a final report (seventy-five copies and one camera-ready copy). While the schedule for Phase 2 will depend on how much additional work is needed after Phase 1, assume for planning purposes that the draft report must be complete by October 1, 1993, and the final report must be complete by December 1, 1993. AIDEA 36 Memorandum of Agreement Exhibit A Page 17 of 17 @ R.W. BECK @ AND ASSOCTATES, INC Fourth and Blanchard Building, Suire 600 # 2101 Fourth Avenue Searle, Washington 96121-2375 » USA Telephone (206) 441-7500 m Fax (206) 441-4962 ‘Tslew 4000402 BECKSEA WS-1559-HA1-AJ July 21, 1993 Mr. Clayton Hurless General Manager Copper Valley Electric Association, Inc. P.O, Box 45 Clennallen, Alaska 99588-0045 Copper Valley Tutertic Peusility Study Estimated Costs to Completion of Study Dear Clayton: Tt was a pleasure to mcet with you, Mike, Robert and Dick yesterday to discuss the economic analysis component in particular and the overall status in general of the Intertie Study. As the Intertie Study has progressed, it has become apparent that certain tasks relaled to routing and design issues have expanded in scope primarily to accommodate the questions and concerns brought to our attention during the public comment meetings and through discussions with CVEA and other local utility personnel. The original apportionment of tasks into Phase 1 and Phase 2 has also been changed somewhat due to the higher degree of attention paid to certain details of the preliminary design earlier in the process than originally anticipated. CVEA and the Alaska Energy Authority have also requested that we not provide a draft report at the end of Phase 1: Further, CVEA has indicated that it would like to proceed with completion of the full study as originally defined for Phase 1 and Phase 2 in the scope of services provided with our technical proposal to the Authority dated January 5, 1993. The full study is also to be expanded to address the additional services described later in: this letter. Based on the foregoing, we have prepared an adjusted cost estimate to complete the full Intertie Study. This revised cost estimate will be sufficient to complete all of the original scope of services, with the exception of a report at the conclusion of Phase 1, plus all of the additional services identified herein. In total, the cost to complete the Intertie Study is $372,100. A breakdown of this estimate into major components is shown in Attachment 1. We will not undertake any additional tasks, beyond those described in this letter, that would increase the total cost of the Intertie Study without prior written authorization of CVEA and the Authority. The schedule to complete the Intertie Study will be the same as agreed to for Phase 2 of the original study. Key milestones in the original schedule are submittal of a draft report at the end of September 1993, another set of public information meetings in mid-October 1993 and submittal of the final report on November 30, 1993. We understand the desire of CVEA to accelerate the completion of the Intertie Study but feel that it will be difficult to do so particularly because of the need to assure an accurate cost estimate for the Interlie. The necessary time to complete the Intertie Study is also dependent on the public comment process. AIDEA 37 Page 1 of 4 Mamarandum of Acreement Fxhibit B We will submit portions of the draft report to CVEA and the Authority in rough draft form prior to formal submittal in the Intertie Study Draft Report for comment and review. We will also conduct periodic telephone discussions as needed to apprise CVEA and Authority personnel of progress. , Additional Services Certain additional services have been requested or are expected to be needed to complete the Intertie Study at this time. We recently established a separate account to track these costs, although for the most part, they could all be considered as expansions of the originally defined tasks. Some of these tasks have been completed to date and others have not been started yet pending authorization from the Authority and CVEA. The costs to complete all of these additional services is included in the total cost estimate mentioned above. Additional Services Completed to Date : Attendance at the Technical Review Meeting (TRM) July 6, 1993, by two design engineers and the project manager from R.W. Beck. Includes preparation effort, coordination, and the development of a meeting transcription which is in progress. . Revised display boards and base maps for second set of public micctings to incorporate route and title modifications afler June 14 mecting with CVEA and the Authority. Provided additional copies for public meeting handouts. s Provided an EMF write-up for handout and additional computation for local distribution lines, prior to the second set of public meetings. Provided additional support for preparation of public meetings and held additional meetings. . Researched the availability of a meteorologist, schedule and cost, and explored the options for a meteorological study and ways to accelerate schedule. Drafted a letter with recommendation to CVEA. . Obtained large scale aerial photography and tax maps from Mat-Su Borough to verify land status in Sutton. . Obtained full set small scale aerial, color infrared stereo photography for the corridor. Additional Services To Be Provided Afler Authorization . Complete transcription of the proceedings of the TRM, distribule for comments, and summarize comments. a Recompute design values, edit the Basis of Design, formulate design criteria for additional structure options following the TRM. 5 Resize the transmission line components for new criteria and additional structure types following the TRM. 2 Develop cost estimating bases, requests for material quotes for alternative AIDEA 38 Afamamn dum af A craamant Fvhihit R Page Z O14 Mr. Clayton Hurless -3- July 21, 1993 structure types, and redo the same for the Xframe alternative which had already been developed. = Develop unit costs for each loading zoneand applicable alternative structure type, comparing costs and selecting the least cost alternative for each line section. Provide extra effort to fine tune clearing and construction costs with clearing contractor, helicopter contractor, and line construction contractor, with 1-2 day working session in Anchorage that CVEA and the Authority could participate in. We feel this would substantially aid in determining the least cost options for the Intertie. Select preliminary least cost conductor alternative, solicit early quotations for conductor material. Conduct discussions with PEI on this matter. At this time we have carefully estimaled the costs to complete the study and can provide more detailed information if needed. Unfortunately, I was unable to discuss scope and budgeting issues with Dames & Moore today to determine what impacts if any the slight change in direction of the Intertie Study will have on their scope and budget requirements. I believe that we should be able to complete the environmental review as anticipated with the original budget amount, however. : If you should have any questions or require additional information please call either me at (206) 727-4418 or Paul Dorvel at (206) 727-4632. We appreciate the opportunity to be of service to CVEA and look forward to successful completion of the Intertie Study. JLH: attachment Very truly yours, R. W. BECK AND ASSOCIATES John L. He¥erling Executive Engineer CS Paul Dorvel Dick Emerman Memarandum of Acreement Exhibit B AIDEA 39 Page 3 of 4 21-Jul-93 Attachment 1 Copper Valley Intertie Feasibility Study Estimated Cost to Complete Study Task Support of System Studies Route Selection Design, Cost Estimate and Schedule Support of Environmental Review Load Forecast Economic Analysis Public Comment Report Project Management Dames & Moore - Environmental Review PTI - System Studies Total (1) - Includes Phase 1 and Phase 2. (2) - Costs through June 30, 1993. Mamarandum Af Aareement Original Castto Cost to Amount Over (Under) Original Estimated Total Budgct(1_ Date(2)_ Complet__ Cost Budget $2,742 34,761 31,926 10,646 19,166 35,563 17,857 35,177 15349 101897 9776 $1,027 28,604 22,162 5,084 14,774 15,902 16,225 1,080 10,339 51,872 30,856 $1,715 $2,742 so 8623 37,227 2,466 35540 57,702 25,776 6102 11,186 540 4392 19,166 0 19,661 35,563 0 5500 21,725 3868 32,500 33,580 (1,597) 8,940 19,279 3,930 50,025 101,897 0 1,200 32,056__2,280 $334,860 $197,925 $174,198 $372,123 $37,263 Rvhihit R AIDEA 40 Pave 4 of 4 MEMORANDUM OF AGREEMENT... REGARDING THE COMPLETION OF THE FEASIBILITY STUDY OF A 138 KV LINE FROM O’NEILL SUBSTATION NEAR SUTTON, ALASKA, TO PUMP STATION ELEVEN SUBSTATION NEAR GLENNALLEN, ALASKA (SGL, FORMERLY KNOWN AS OPS-11 LINE) THIS MEMORANDUM OF AGREEMENT dated the bo” of August, 1993, by and between the ALASKA ENERGY AUTHORITY (AEA) and corse VALLEY ELECTRIC ASSOCIATION, INC. (CVEA). WITNESSETH: A. AEA and CVEA have been working together to develop an economically feasible plan which would reduce CVEA’s dependency on expensive diesel generated power and which would provide CVEA the opportunity to begin the process of reducing its high retail rates for electric service to its member/owners. B. AEA and CVEA have studied a number of different projects, such as raising the Solomon Gulch dam and spillway to provide increased water storage in Solomon Gulch Reservoir, tapping Allison Lake to provide supplemental generation and water storage for the Solomon Gulch Project, developing Silver Lake, and others. Each of these projects could provide an increment of additional energy, but none promises to eliminate the necessity of diesel generation in the future. GC; AEA and CVEA entered into a Memorandum of Agreement (MOA) (Exhibit A) on January 6, 1993, which provided for conducting a feasibility study of the 138 kv SGL (formerly known as the OPS-11 line). In accordance with its terms, AEA contracted with R.W. Beck & Associates of Seattle, Washington, to prepare Phase 1 of the study. R.W. Beck also provided AEA with a proposal to complete the study if directed to do so by AEA and CVEA. The MOA dated January 6, 1993, is hereby rescinded, is void as to its terms and conditions, and is superseded by this agreement. D. The proposed 138 kv line between Sutton and Glennallen, being evaluated by the feasibility study covered by the initial MOA and that is subject of this Memorandum of Agreement, is a scaled down version of the Sutton-Glennallen portion of the Northeast Intertie Project that was studied by AEA in the late 1980’s. Consequently, the reconnaissance study requirement for the proposed 138 kv SGL has been satisfied by the completion of the 1989 Northeast Intertie Study. E. Section 10 of Chapter 18, SLA 1993 eliminates the power of AEA to conduct feasibility studies. However, Section 34 of Chapter 18 includes transitional language that allows AEA to complete a feasibility study in progress on the effective date of the Act. F. Section 4 of Chapter 19, SLA 1993 appropriates $35,000,000 to the Department of Community and Regional Affairs (DCRA) for payment as a loan for the design and construction of the 138 kv SGL. The appropriation is contingent upon the completion of a feasibility study and finance plan satisfactory to DCRA as set out in former AS 44.83.181. AIDEA 41 ATACHKMEUT 2 Memorandum of Agreement AEA and CVEA Page 2 Gs NOW, 1.1 Lez, 1:3 Phase 1 of the original feasibility study is essentially complete, and AEA and CVEA have discussed the completion of the study with R.W. Beck & Associates. As a result of those discussions, R.W. Beck has provided AEA and CVEA with a current status report of the study, an accounting of funds expended to date, a proposal outlining an expanded scope of work to be performed by Beck, and additional funds required for the completion of the study. The above reports and proposal are set out in a letter from R.W. Beck dated July 21, 1993, signed by John Heberling and identified as R.W. Beck document WS-1559-HA1-AJ, attached as Exhibit B. CVEA prefers the feasibility study to be completed as soon as possible and asked AEA for an estimate of the cost of completion including any cost that has been incurred to date. In response, AEA, in consultation with R.W. Beck and CVEA, has estimated a total of $472,123 will be required to fund the completed study. $372,123 of the above amount is for those tasks assigned to R.W. Beck in accordance with Exhibit B. The remaining $100,000 is available for costs incurred by AEA, preparation of a plan of finance, and obtainment of an independent cost estimate. It is agreed by the parties to this agreement that there is some question as to whether or not AEA will prepare the plan of finance and whether or not an independent cost estimate will be required. It is agreed that the two items referenced in the preceding sentence will be negotiated in good faith by the parties to this agreement at the appropriate time. The Board of Directors of CVEA has reviewed the project status and the R.W. Beck proposal for completion of the study and has approved the same in accordance with the modified scope of work as set out in Exhibit B. CVEA requests that AEA or its successor within DCRA continue to administer the feasibility project in accordance with the terms of this agreement. THEREFORE, the parties agree as follows: ARTICLE I OBLIGATIONS OF THE ALASKA ENERGY AUTHORITY (AEA) AEA will conduct the work covered by this agreement in a timely manner and will keep CVEA fully informed on the status of contracts required to complete the work. AEA will submit invoices to CVEA on a monthly basis for reimbursement of costs covered by this agreement. At the conclusion of work covered by this agreement, AEA will refund to CVEA any funds remaining from CVEA’s initial advance payment. Upon issuance of a finding by DCRA that the feasibility study and finance plan are satisfactory in accordance with Section 4(d), Chapter 19, SLA 1993, AEA or its successor within DCRA will use its best efforts to assist CVEA in the preparation of the necessary loan applications to secure, in the most expeditious manner possible, the $35,000,000, 50-year, zero-interest loan and other supplemental financing required for the SGL Line in accordance with the relevant provisions of Chapters 18 and 19, SLA 1993. AIDEA 42 @ @ Memorandum of Agreement AEA and CVEA Page 3 1.4 251 2:2 2:3 Sok 3:2 Any change in the scope of work covered under this agreement that entails a change in cost shall be approved in writing between the parties to this agreement prior to any approval being forwarded to a contractor, who is performing work covered under this agreement, to proceed with work. ARTICLE I OBLIGATIONS OF COPPER VALLEY ELECTRIC ASSOCIATION, INC.(CVEA) CVEA will advance funds not to exceed $472,123 to AEA to conduct the work described and scheduled in Exhibit A to occur before November 30, 1993. CVEA shall pay such funds within two weeks of receipt of monthly invoices from AEA. The above $472,123 is inclusive of any payments made by CVEA as of the date of this agreement. CVEA will participate with AEA and others in the public involvement meetings and will assist in other activities such as land holder and agency right-of-way discussions. CVEA will cooperate with AEA in all ways to assure that the work is completed in a timely fashion and consistent with AEA statutory requirements. ARTICLE II GENERAL PROVISIONS This Memorandum of Agreement will be effective when approved by an authorized person of each organization. Subsequent to the effective date of this Memorandum of Agreement, should any provision contained herein be determined to be unlawful or unenforceable, all other provisions shall remain in effect as if the unlawful or unenforceable provision were not in the agreement. IN WITNESS WHEREOF, the Alaska Energy Authority and Copper Valley Electric Association have caused this Memorandum of Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY COPPER VALLEY ELECTRIC ASSOCIATION, INC. (nat Lith Bt Palio AIDEA 43 Memorandum of Agreement AEA and CVEA Page 4 STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) A The foregoing Memorandum of Agreement was acknowledged before me this & ill day of , 1993, by Ronald Garzini, Executive Director of the ALASKA ENERGY AUTHORITY, on behalf of the Authority. lista lige ae Notary Public/in and for the State of Alaska My commission expires: NL FL9 7 STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) The foregoing Memorandum of Agreement was acknowledged before me this 2 7 day of : ple , 1993, by CLAYTON HURLESS, General Manager of COPPER V. TRIC ASSOCIATION, on behalf of said corporation. Notary Public in and for the State of Alaska My commission expires: |e etre | AIDEA 44 MEMORANDUM OF AGREEMENT REGARDING THE FEASIBILITY STUDY OF A 138 KV TRANSMISSION LINE FROM O'NEILL SUBSTATION NEAR SUTTON, ALASKA, TO PUMP STATION - ELEVEN SUBSTATION NEAR GLENNALLEN, ALASKA (OPS-11 LINE). wu pee ta. THIS MEMORANDUM OF AGREEMENT dated the 7 of __Jauue , 1994, by and between the ALASKA ENERGY AUTHORITY (AEA) and COPPER VALLEY ELECTRIC ASSOCIATION, INC. (CVEA). WITNESSETH: A. The primary mission of AEA is to facilitate the development of energy systems that will satisfy the requirements of Alaska consumers at the lowest cost over the long run; B. CVEA owns and operates an electric utility system serving the Copper Basin and Valdez areas of Alaska and is engaged in the business of providing electric service to approximately 8,000 Alaskan residents; Cc; AEA has constructed a significant number of generation and transmission facilities in Alaska; D. AEA and CVEA have been working together to find an economically feasible method to reduce CVEA’s dependency on expensive diesel generated power and to provide CVEA the opportunity to begin the process of reducing its high retail rates; E. AEA and CVEA have studied a number of different projects, such as raising the Solomon Gulch dam and spillway to provide increased water storage in Solomon Reservoir, tapping Allison Lake to provide supplemental generation and water supply for the Solomon Gulch project, and developing Silver Lake. Each of these projects would provide an increment of additional energy, but none promises to eliminate the necessity of diesel generation in the future. F. In 1989, AEA issued a reconnaissance study for the “Northeast Intertie," a proposed 230 kv transmission line from Sutton to Glennallen, then north to the Fairbanks area; G. The proposed 138 kv line between Sutton and Glennallen, to be evaluated in the feasibility study that is the subject of this Memorandum of Agreement, is a scaled down version of the Sutton-Glennallen portion of the Northeast Intertie. Consequently, AEA’s reconnaissance study requirements for the proposed 138 kv line between Sutton and Glennallen (the "OPS-11" line) have been satisfied by completion of the 1989 Northeast Intertie study; AIDEA 45 an ee Beene nemo nen Evhihit A Page 1 of 17 Memorandum of Agreement AEA and CVEA Page 2 of 4 H. NOW, ri 12 1.3 For the OPS-11 line, the next step in AEA’s project review process is a feasibility study conforming to AEA’s statutory requirements; AEA has included $500,000 in its FY 94 capital budget request to conduct a feasibility study, plan of finance, and independent cost estimate for the OPS-11 line. If this request is ultimately approved by the Governor and the Legislature, the funds will not be available for expenditure until July 1, 1993; CVEA prefers that the project evaluation process begin as soon as possible and asked AEA to estimate the amount that would be spent on the required feasibility study prior to July 1, 1993, if funding were available now. In response, AEA estimated that $260,000 would be spent prior to July 1, 1993, and an additional $165,000 would be spent after July 1, 1993, to complete the feasibility study and also the plan of finance and independent cost estimate (see Exhibit A). The parties anticipate that all tasks in Exhibit A will be complete by December 31, 1993, provided timely provision of adequate funds. THEREFORE, the parties agree as follows: ARTICLE I - OBLIGATIONS OF THE ALASKA ENERGY AUTHORITY (AEA) AEA will continue to support a request in the FY 94 capital budget of not less than $425,000 to fund the feasibility study, plan of finance, and independent cost estimate for the OPS-11 line. Further, AEA will support the use of a portion of this request to reimburse CVEA for all funds advanced to AEA for the OPS-11 feasibility study under the terms of this Memorandum of Agreement. If the Legislature specifically appropriates funds to reimburse CVEA for funds CVEA advances to AEA for the OPS-11 feasibility study from the date of this agreement through June 30, 1993, CVEA will be reimbursed in accordance with the appropriation. If the Legislature does not specifically appropriate funds to reimburse CVEA for such feasibility study costs, CVEA will not be reimbursed. The parties are cognizant of and have read the Alaska Department of Law memorandum (Exhibit B) indicating that legislative intent to refund these costs to CVEA must be clearly expressed in the appropriation in order for reimbursement to occur. AEA will conduct the work covered by this agreement in a timely manner and will keep CVEA informed on the status of contracts required to complete the work. AIDEA 46 Mamarandum of Aareement Ryhihit A Page 2 of 17 Memorandum of Agreement AEA and CVEA Page 3 of 4 1.4 15 1.6 AEA will submit invoices to CVEA on a monthly basis for reimbursement of costs covered by this agreement. At the conclusion of work covered by this agreement, AEA will refund to CVEA any funds remaining from CVEA’s initial advance payment. If the work provided for in this Memorandum of Agreement concludes that the OPS-11 line is feasible and is the best long-term economic solution to providing an adequate and reasonably priced source of power to CVEA, AEA shall use its best efforts to obtain adequate funding for construction of the project. On completion of the feasibility study, plan of finance, and independent cost estimate, AEA will enter into good faith negotiations with CVEA to determine the most cost- and time-efficient method for project construction consistent with State procurement law. ARTICLE I OBLIGATIONS OF COPPER VALLEY ELECTRIC ASSOCIATION, INC. (CVEA) zal ee Ze) Sok Sez CVEA will advance funds not to exceed $260,000 to AEA to conduct the work described and scheduled in Exhibit A to occur before July 1, 1993. CVEA shall pay such funds within two weeks of receipt of monthly invoices from AEA and will make an advance payment of $20,000 to AEA upon execution of this agreement. CVEA will participate with AEA and others in the public involvement meetings and will assist in other activities such as land holder and agency right-of-way discussions. CVEA will cooperate with AEA in all ways to assure that the work is completed in a timely fashion and consistent with AEA statutory requirements. ARTICLE GENERAL PROVISIONS This Memorandum of Agreement will be effective when approved by each organization's Board of Directors and the Resolution effecting such approval has been transmitted to the other party. Such resolutions will become a part of this agreement and shall be attached hereto. Subsequent to the effective date of this Memorandum of Agreement, should any provision contained herein be determined to be unlawful or unenforceable, all other provisions shall remain in effect as if the unlawful or unenforceable provision were not in the agreement. AIDEA 47 Memorandum of Acreement Exhibit A Page 3 of 17 Memorandum of Agreement AEA and CVEA Page 4 of 4 IN WITNESS WHEREOF, the Alaska Energy Authority and Copper Valley Electric Association have caused this Memorandum of Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY COPPER VALLEY ELECTRIC ASSOCIATION, INC. STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) e foregoing Memorandum of Agreement was acknowledged before me this May of , 19923 '¢ RONALD GARZINI, Executive Director of the ALASKA ENERGY A’ ‘ORITY, on behalf of the Authority. Notary Public in afd for the State of Alaska My commission expires: Def Dher(2, 19%3 STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) cA The foregoing Memorandum of Agreement was acknowledged before me this /7 - day of Aletember _, 1992, by CLAYTON HURLESS, General Manager of COPPER VALLEY ELECTRIC ASSOCIATION, INC., on behalf of said corporation. Nowny Public in and for the ae of. eam i] My commission expires: arg 5 AIDEA 48 Memarandum of Agreement Exhibit A Page 4 of 17 COPPER VALLEY ELECTRIC ASSOCIATION, INC. RESOLUTION 92-28 AEA/CVEA MEMORANDUM OF AGREEMENT OPS-11 INTERTIE LINE WHEREAS, the Copper Valley Electric Association Board of Directors has identified the need for rate relief for its membership, and alternatives have been studied to fulfill this need; and WHEREAS, the Board of Directors has identified the most reasonable solution is to become interconnected to the Railbelt System; and WHEREAS, Copper Valley Electric Association has begun preliminary studies of an intertie line from O'Neill Substation to Pump Station 11 Substation, the purpose of which is to connect CVEA's system to the Railbelt system; and WHEREAS, the Alaska Energy Authority has indicated studies cannot continue until the next fiscal year when funds are appropriated; and WHEREAS, the Board of Directors has identified the need to continue the studies in a timely manner; now, therefore BE IT RESOLVED, that Copper Valley Electric Association and the Alaska Energy Authority enter into a Memorandum of Agreement which allows for Copper Valley Electric Association to forward funds in the amount of $260,000 to the Alaska Energy Authority to continue preliminary studies of the OPS-11 line; and BE IT FURTHER RESOLVED, the Board of Directors approves the Memorandum of Agreement and authorizes the General Manager to execute the document on behalf of Copper Valley Electric Association. Approved and signed this 16th day of December, 1992, in Glennallen, Alaska. ill | ee Secretary (attest) Robert E. Sunder, President (seal) AIDEA 49 Memorandum of Acreement Exhibit A Page 5 of 17 EXHIBIT A October 20, 1992 Cost estimate for Copper Valley Intertie Feasibility Study Note: It is assumed that both the "Northern Suggested Route" (near the road) and the "NEICR" route up Boulder Creek (or a comparable route away from the road) will be reviewed, refined, and compared in the feasibility study. Also assumed that the study begins in mid-January. Public meetings would be held at the start. Both route alternatives would be reviewed and refined in the winter, including flyovers of both routes and limited ground review of accessible portions. Preliminary environmental impact comparisons would be conducted. Another set of public meetings would follow to share information and discuss results. After June 30, any remaining route alternatives would again be reviewed and refined, including flyover and ground review as appropriate. Thus both summer and winter conditions will be accounted for in the route selection, feasibility design, and environmental analysis. Public meetings would again follow the summer review. Before 6/30 After6/30 Total Electrical system studies _ $30,000 $30,000 Route selection 25,000 15,000 40,000 Feasibility design 25,000 5,000 30,000 Cost estimate 20,000 20,000 Environmental studies 60,000 40,000 100,000 Load forecast 25,000 25,000 Economic evaluation of alternatives 40,000 10,000 50,000 Plan of finance 25,000 25,000 Independent cost estimate 25,000 25,000 Public comment process 20,000 10,000 30,000 AEA costs 35,000 15,000 = 50,000 TOTAL $260,000 $165,000 $425,000 AIDEA 50 Mamarandum af Aareement Fvhihit A Page 6 of 17