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HomeMy WebLinkAboutMemo of AgreementBetween AEA & Copper Valley Electric Assoc 1993~ 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 say eee 1993, by and between the ALASKA ENERGY AUTHORITY (AEA) and COPPER 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. iC 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 The MOA dated January 6, 1993, is hereby rescinded, is void as to its terms and conditions, and is superseded by this agreement.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 14 rr Memorandum of Agreement AEA and CVEA Page 2 G. NOW, Lak 1.2 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, ABA 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 15 A Memorandum of Agreement AEA and CVEA Page 3 1.4 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) 2.1 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. 2.2. 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. 2.3. 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 3.1 This Memorandum of Agreement will be effective when approved by an authorized person of each organization. 3.2 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. Cratith Cp lit AIDEA 16 Memorandum of Agreement AEA and CVEA Page 4 STATE OF ALASKA ) | THIRD JUDICIAL DISTRICT ) iby The foregoing Memorandum of Agreement was acknowledged before me this _(& 7 day of B cust , 1993, by Ronald Garzini, Executive Director of the ALASKA ENERGY AUTHORITY, on behalf of the Authority. x Notary Public/in and for the State of Alaska My commission expires: Nf FL4¢ 7 STATE OF ALASKA ) })) ‘ss: THIRD JUDICIAL DISTRICT ) rh The foregoing Memorandum of Agreement was acknowledged before me this 2 day of : alae , 1993, by CLAYTON HURLESS, General Manager of COPPER Vv TRIC ASSOCIATION, on behalf of said corporation. Notary Public in and for the State of Alaska My commission expires: 6-7-9 Z AIDEA 17 MEMORANDUM OF AGREEMENT REGARDING THE FEASIBILITY STUDY OF * 138 KV TRANSMISSION LINE FROM O’NEILL SUBSTATION NEAR SUTTON, ALASKA, TO PUMP STATION - ELEVEN SUBSTATION NEAR GLENNALLEN, ALASKA (OPS-11 LINE). neg f +> — td. THIS MEMORANDUM OF AGREEMENT dated the 2 of __Jauua , 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; iG: 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 18 Memorandum of Agreement AEA and CVEA Page 2 of 4 H. NOW, Pl 1.2 eS 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 7 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 19 om. * wate a mow. 9 26 17 Memorandum of Agreement AEA and CVEA Page 3 of 4 1.4 L5 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) 2.1 ae Pa) Sok SZ 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 I 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 20 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 ) ) ss. THIRD JUDICIAL DISTRICT ) e foregoing Memorandum of Agreement was acknowledged before me this oe of , 19923 5§ RONALD GARZINI, Executive Director of the ALASKA GY A ORITY, on behalf of the Authority. dui % Gas Yhasr—_—_ Notary Public in for the State of Alaska My commission expires: "Octbher (2 1993 STATE OF ALASKA ) )iss: THIRD JUDICIAL DISTRICT ) < The foregoing Memorandum of Agreement was acknowledged before me this _/7 - day of XCpternrber , 1992, by CLAYTON HURLESS, General Manager of COPPER VALLEY ELECTRIC ASSOCIATION, INC., on behalf of said corporation. ey Notary Public in and for the = of. aoe My commission expires: G ? E AIDEA 21 a se Ree Bokihis A Dace A af 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. Robert E. Sunder, President (seal) AIDEA 22 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 After 6/30 Total Electrical system studies ny $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 23 iMac! lM AS ttt esc Wet 8 Dane & nf 17