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HomeMy WebLinkAboutCopper Valley Chugach Electric Assoc Correspondence 1996 ASSOCIATION, INC. CHUGACH ELECTRIC > » Ja? Ghigo kectric April 4, 1996 AECEIVE Commissioner Mike Irwin ISSIONER’S OFFICE Department of Community & Regional Affai COMM P.O. Box 112100 =” ° _" COMMUNITY & REGIONAL AFFAIRS Juneau, Alaska 99811-2100 Dear Commissioner Irwin: We are in receipt of the letter from Copper Valley Electric Association, Inc., to you of March 29th and wish to pass on our thoughts. We continue to believe that Copper Valley Electric is an important infrastructure essential to the growth of the Copper Valley/Valdez region. We have always known that in the short run benefits to our existing customers would be small; however, we remain committed to doing whatever we can to promote its completion subject only to the constraint that our existing customers not be unduly burdened with added costs. Chugach has strived in good faith to do what is necessary to comply with the state’s requirements and to meet Copper Valley’s needs. Ultimately the choice of whether to go forward with this project rests with the citizens of the areas affected and their representatives. For Chugach’s part, we believe this project holds the potential for substantial value to the Copper Valley service area and can be accomplished with negligable impact on the environment and could benefit Railbelt ratepayers as well. Chugach is poised to continue its cooperation with Copper Valley and to take other necessary steps to extend this essential electric power infrastructure to Copper Valley and Valdez. Our only requirement is and has been, that other Chugach customers must not be harmed. Chugach hopes this clarifies our position and helps move the effort along. Sincerely, Ss WA (i a) Sig Atal Eugene N- jornstad ~~ General Manager Griffith/96044.wpd 5601 Minnesota Drive © P.O. Box 196300 * Anchorage, Alaska 99519-6300 Phone 907-563-7494 ¢ FAX 907-562-0027 CHUGACK “LECTRIC | ay ASSOCIATION, INC. rage ASSOCIATION, INC. April 4, 1996 NECEIVE)) — 22 2149906 Commissioner Mike Irwin ssiSONERE OFFICE t of C i Regi i co = oe & Regional Affairs CO NAST REGIONAL AFFAIRS Juneau, Alaska 99811-2100 Dear Commissioner Irwin: We are in receipt of the letter from Copper Valley Electric Association, Inc., to you of March 29th and wish to pass on our thoughts. We continue to believe that Copper Valley Electric is an important infrastructure essential to the growth of the Copper Valley/Valdez region. We have always known that in the short run benefits to our existing customers would be small; however, we remain committed to doing whatever we can to promote its completion subject only to the constraint that our existing customers not be unduly burdened with added costs. Chugach has strived in good faith to do what is necessary to comply with the state’s requirements and to meet Copper Valley’s needs. Ultimately the choice of whether to go forward with this project rests with the citizens of the areas affected and their representatives. For Chugach’s part, we believe this project holds the potential for substantial value to the Copper Valley service area and can be accomplished with negligable impact on the environment and could benefit Railbelt ratepayers as well. Chugach is poised to continue its cooperation with Copper Valley and to take other necessary steps to extend this essential electric power infrastructure to Copper Valley and Valdez. Our only requirement is and has been, that other Chugach customers must not be harmed. Chugach hopes this clarifies our position and helps move the effort along. en Cn Lose WU. (eee Eugene N- jornstad Q General Manager Griffith/96044.wpd 5601 Minnesota Drive ¢ P.O. Box 196300 * Anchorage, Alaska 99519-6300 Phone 907-563-7494 * FAX 907-562-0027 October 16, 1995 David Ramseur Director of Communications Office of the Governor P.O. Box 110001 Juneau, Alaska 99811-0001 Kurt Parkan Special Staff Assistant CHUGACH F'ECTRIC ** ASSOCIATION, nC. svelopment Alaska Industrie! De :; and Export Authority Patrick Pourchot Legislative Director Office of the Governor P.O. Box 110001 Juneau, Alaska 99811-0001 Mike Irwin, Commissioner Department of Community ; ENE N. BJORNSTAD, P.E. General Manager Office of the Governor P.O. Box 110001 Juneau, Alaska & Regional Affairs P.O. Box 112100 Juneau, Alaska 99811-0001 99811-2100 Dear David: We appreciate you taking the time to meet with us on the Copper Valley Intertie. We want to ensure that the decision on approval of the loan is made with an understanding of the full potential of this line to enhance the prudent development of the Copper Valley and Valdez areas, the gateway to the Wrangel St. Elias Park. In particular, we are concerned that the decision be made with a broad understanding of the real world enhancements which the project will deliver. This decision is critical to providing the basis for sound and sustained economic health in the area. The potential economic stimulative effect of this project ranks it second only to installation of the Transalaska Pipeline and Valdez Oil Terminal in its historical impact. It is undoubtedly the most important and high profile decision this administration will make affecting the residents of this area and is very important to the residents of this area. It would be a mistake to make the decision turn on narrow study assumptions such as whether to impute interest to a zero interest loan, assume that fuel prices will decline at 1% per year forever, or assume that electric power consumption will not increase even if the price drops substantially. For these reasons, it is essential that Copper Valley Electric Association, Inc. (CVEA) and Chugach Electric Association, Inc. (Chugach), the stakeholders willing to substantially invest in the line, have an opportunity to carefully review the CH2MHill study and make a presentation to the decision maker before the decision is taken. CVEA and Chugach are member-owned cooperatives and as representatives of our members, we have an obligation to work for their best interests over the long tern. When the decision was first made to approve the loan to support this intertie, a power sales agreement was not in place. The situation is vastly 5601 Minnesota Drive * P.O. Box 196300 * Anchorage, Alaska 99519-6300 Phone 907-563-7494 * FAX 907-562-0027 David Ramseur October 16, 1995 Page 2 different now. Chugach and CVEA have agreed in principle to the structure of a power sales agreement and the parties are in the process of developing the actual text of the document. It is now very realistic to expect rate decreases for CVEA members on the order of 15% with the prospect of additional savings from closer coordination of the two utilities’ operations. Now that the word is out, the residents of the area are very excited in anticipation of the possibilities. Chugach and CVEA are also working hard to help Petro Star Valdez Refinery to obtain the benefits of the lower rates the intertie will bring. Without the intertie, Petro Star has clearly indicated it will cogenerate and leave the CVEA system. Of course, CVEA will do its best to protect its customers from cost burdens associated with this change, but the resulting loss to CVEA of approximately 20% of its load will inevitably cause rate increases for those remaining customers (who already suffer the highest unsubsidized electric rates in the State) as the high fixed costs of replacing the 20 year old diesel plant with new diesels are spread over fewer sales of electric energy. We can only move forward or take a giant step back. There is no business as usual option available. Once again, we appreciate your attention to this matter of fundamental importance. If you have additional information about the process toward decision or if you have any questions, please do not hesitate to contact either one of us. Sincerely, CHUGACH ELECTRIC ASSOCIATION, COPPER VALLEY ELECTRIC INC. ASSOCIATION, INC. - a Eugene\N.) Bjornstad\ Clayfon Hurless General Manager General Manager cc: The Honorable Tony Knowles Jim Ayers, Chief of Staff Governor, State of Alaska Office of the Governor P.O. Box 110001 P.O. Box 110001 Juneau, Alaska 99811-0001 Juneau, Alaska 99811-0001 John T. Shively, Commissioner Riley Snell, Executive Director Dept. of Natural Resources AIDEA 400 Willoughby Avenue 480 West Tudor Road Juneau, Alaska 99801-1796 Anchorage, Alaska 99503 October 16, 1995 David Ramseur Director of Communications Office of the Governor P.O. Box 110001 Juneau, Alaska 99811-0001 Kurt Parkan Special Staff Assistant CHUGACH FSECTRIC ASSOCIATION, INC. EGELY oct 19188 Alaska Industrie! Development and Export Authority Patrick Pourchot Legislative Director Office of the Governor P.O. Box 110001 Juneau, Alaska 99811-0001 Mike Irwin, Commissioner Department of Community Rh; ENE N. BJORNSTAD, P.E. ; General Manager Office of the Governor P.O. Box 110001 Juneau, Alaska & Regional Affairs P.O. Box 112100 Juneau, Alaska 99811-0001 99811-2100 Dear David: We appreciate you taking the time to meet with us on the Copper Valley Intertie. We want to ensure that the decision on approval of the loan is made with an understanding of the full potential of this line to enhance the prudent development of the Copper Valley and Valdez areas, the gateway to the Wrangel St. Elias Park. In particular, we are concerned that the decision be made with a broad understanding of the real world enhancements which the project will deliver. This decision is critical to providing the basis for sound and sustained economic health in the area. The potential economic stimulative effect of this project ranks it second only to installation of the Transalaska Pipeline and Valdez Oil Terminal in its historical impact. It is undoubtedly the most important and high profile decision this administration will make affecting the residents of this area and is very important to the residents of this area. It would be a mistake to make the decision turn on narrow study assumptions such as whether to impute interest to a zero interest loan, assume that fuel prices will decline at 1% per year forever, or assume that electric power consumption will not increase even if the price drops substantially. For these reasons, it is essential that Copper Valley Electric Association, Inc. (CVEA) and Chugach Electric Association, Inc. (Chugach), the stakeholders willing to substantially invest in the line, have an Opportunity to carefully review the CH2MHill study and make a presentation to the decision maker before the decision is taken. CVEA and Chugach are member-owned cooperatives and as representatives of our members, we have an obligation to work for their best interests over the long tern. When the decision was first made to approve the loan to support this intertie, a power sales agreement was not in place. The situation is vastly 5601 Minnesota Drive ¢ P.O. Box 196300 * Anchorage, Alaska 99519-6300 Phone 907-563-7494 © FAX 907-562-0027 David Ramseur October 16, 1995 Page 2 different now. Chugach and CVEA have agreed in principle to the structure of a power sales agreement and the parties are in the process of developing the actual text of the document. It is now very realistic to expect rate decreases for CVEA members on the order of 15% with the prospect of additional savings from closer coordination of the two utilities’ operations. Now that the word is out, the residents of the area are very excited in anticipation of the possibilities. Chugach and CVEA are also working hard to help Petro Star Valdez Refinery to obtain the benefits of the lower rates the intertie will bring. Without the intertie, Petro Star has clearly indicated it will cogenerate and leave the CVEA system. Of course, CVEA will do its best to protect its customers from cost burdens associated with this change, but the resulting loss to CVEA of approximately 20% of its load will inevitably cause rate increases for those remaining customers (who already suffer the highest unsubsidized electric rates in the State) as the high fixed costs of replacing the 20 year old diesel plant with new diesels are spread over fewer sales of electric energy. We can only move forward or take a giant step back. There is no business as usual option available. Once again, we appreciate your attention to this matter of fundamental importance. If you have additional information about the process toward decision or if you have any questions, please do not hesitate to contact either one of us. Sincerely, CHUGACH ELECTRIC ASSOCIATION, COPPER VALLEY ELECTRIC INC. ASSOCIATION, INC. Eugene\N,) Bjornstad\ Clayfon Hurless General Manager General Manager cc: The Honorable Tony Knowles Jim Ayers, Chief of Staff Governor, State of Alaska Office of the Governor P.O. Box 110001 P.O. Box 110001 Juneau, Alaska 99811-0001 Juneau, Alaska 99811-0001 John T. Shively, Commissioner Riley Snell, Executive Director Dept. of Natural Resources AIDEA 400 Willoughby Avenue 480 West Tudor Road Juneau, Alaska 99801-1796 Anchorage, Alaska 99503 CHUGACh ELECTRIC ASSOCIATION, INC. ASSOCIATION, INC. EUGENE N. BJORNSTAD, P.E. General Manager Pin Ser August 30, 1995 Mr. Dennis McCrohan AIDEA 480 West Tudor Anchorage, Alaska 99503 Dear Mr. McCrohan: Chugach and Copper Valley Electric Association (CVEA), have been discussing and negotiating a possible powers sales agreement. Critical to this power sales agreement is the proposed Sutton to Glennallen Intertie. It is our understanding that a report will be completed in the very near future and transmitted to the committee composed of officials from Department of Community and Regional Affairs (DCRA), Department of Natural Resources (DNR) and Alaska Industrial Development and Export Authority (AIDEA). The report will contain a recommendation and new review of the feasibility of the intertie. Chugach and CVEA have also been discussing the future power supply options for Petro Star’s refinery in Valdez. We believe there can be significant progress in the discussions between our utilities and Petro Star, which will strengthen the rationale and need for the intertie. To demonstrate the seriousness of our respective utilities’ interest in entering into a contractual agreement, the outline of principles of a contract and a memorandum of understanding between Chugach and CVEA regarding service to Petro Star and the utilities, are attached for your review and consideration. It is our intent to incorporate more details into a draft agreement which would be submitted to our respective Boards of Directors for approval and then to the Alaska Public Utilities Commission. We respectfully urge consideration of the progress we have made and recommend that the report being finalized support the intertie connection between the consumers of Copper Valley Electric Association and the Anchorage utility grid. Sincerely, Eugene S Bjornstad { Clayton Hurless General Manager General Manager Chugach Electric Association, Inc. Copper Valley Electric Association, Inc. 5601 Minnesota Drive ¢ P.O. Box 196300 « Anchorage, Alaska 99519-6300 Phone 907-563-7494 ¢ FAX 907-562-0027 CONTRACT PROPOSAL between CHUGACH ELECTRIC ASSOCIATION, INC. and the COPPER VALLEY ELECTRIC ASSOCIATION, INC. Parties: Copper Valley Electric Association, Inc. and Chugach Electric Association, Inc. Recitals: © History and Contract Form. Intertie Agreements. Sale and Purchase of Electric Power. System Sale (non-designated sources). Net Requirements (net of Solomon Gulch, not demand limited). Net Billing of up to 80% of costs of Sutton-Glennallen Intertie. Agreement: Term: Twenty years, effective upon completion of Sutton-Glennallen Intertie. Rates: @ CVEA subject to demand and energy allocation of costs determined on a “pooled” G&T resource basis. Wholesale power rates as authorized by APUC or successor. POWER SUPPLY PROVISIONS Net Requirements: @ Chugach supplies requirements of CVEA service area (at Glennallen terminus of Sutton-Glennallen line) net of Solomon Gulch generation up to capacity of transmission system east from Sutton. (All Requirements Option): @ CVEA has the option to transition to all requirements and pool Solomon Gulch with all other Chugach G&T resources after the average costs of Chugach resources is within a negotiated range of the cost of Solomon Gulch power. CVEA Generation: e CVEA provides power to Chugach, under terms of cooperative agreement exhibit, for emergencies, maintenance or other requirements, from generating resources of CVEA at costs to be determined and delineated by schedule provided to dispatch center. Non-Exclusivity: @ CVEA may schedule Solomon Gulch as necessary to meet CVEA loads. All Solomon Gulch output is anticipated to go to CVEA. @ CVEA may generate from own resources during transmission line outages, or if Chugach generation otherwise unavailable. Resale: @ CVEA shall use Chugach-supplied power to serve retail load as ultimate consumers and end-users, and may not resell capacity or energy to others. RATEMAKING PROVISIONS G&T Cost Basis: @ Rates to be based on cost of all G&T resources available to deliver capacity and energy from Chugach G&T system. Up to 80% of the costs of the Sutton-Glennallen Intertie will be pooled and considered a part of the Chugach G&T system. Revenue requirement as determined by APUC or other regulatory authority. Cost of Service: @ Capacity and Energy rates as determined by traditional or non-traditional methods, including fixed/variable, embedded or marginal cost, subject to approval of APUC or other regulatory authority as may exist. Allocated Demand: e An allocated demand shall be used in the cost of service to determine CVEA's share of capacity costs and will equal to the greater of 1) CVEA's non-coincident peak demand reduced by 70% of the then-current capacity of Solomon Gulch or 2) CVEA's coincident peak demand placed on the Chugach system. Fuel, Purchase Surcharges:e Applies per regulatory actions. Wheeling: ¢@ CVEA provides power to Chugach at Glennallen (e.g. net of losses). For Chugach resources or generation provided by third party to CVEA for the Chugach system (e.g., cogenerated power sold to Chugach or sold to CVEA for assignment to Chugach) requiring wheeling services for ultimate disposition, wheeling terms, conditions and rates to be based on principles, practices and agreements as approved by APUC or other regulatory authority, if any. Capital Credits: @ CVEA eligible for capital credits resulting from purchases on patronage and cost-of-service basis, on an equal basis with other wholesale customers. Regulation: @ By the APUC or other regulatory authority, if any. In the absence of regulatory authority, per the negotiated contract provisions subject to dispute resolution by binding arbitration. BILLING AND PAYMENT Monthly Bills: @ Rendered on or before 10th of month for preceding month usage; delay acceptable when notice given. Payment: @ Payment by no later than 25th of the month the bill was rendered, unless delayed, but no later than 15 days following receipt of bill. Late payments subject to interest charges. Billing Disputes: @ Disputed amounts paid, with notice of dispute. Dispute resolution to be specified. POWER PLANNING Joint Planning: @ Annually, CVEA and Chugach shall meet to discuss power supply issues, contract modifications, operation and maintenance issues, and other issues at request of either party. Agree to exchange information on matters of power sale and purchase agreement at all times. Points of Delivery: @ Delivery at Glennallen e Add or remove delivery points upon mutual agreement of parties. PROVISIONS RELATING TO ELECTRICAL SERVICE Continuity: @ Chugach agrees to make capacity and energy continuously available, subject to Uncontrollable Forces, in the amount required at all current or future delivery points net of generation from Solomon Gulch. Restoration of Service: e Chugach agrees to restore service with reasonable best efforts, and provide notice of determination of continuing problems and estimated time to repair. Third Parties: e@ Standard "no third-party beneficiary” clause. Facilities and Equipment: e Both parties agree to maintain facilities in accordance with Prudent Utility Practices to prevent or minimize failures and provide for prompt repair and return to service. Load Characteristics: e@ Standard utility and interconnected system terms, including power quality, phase balance limitations, power factor correction, load shedding relay equipment and participation in interconnected system loadshedding schedules. Metering: © Each party responsible for tests, calibration, restoration of commercial accuracy of metering equipment necessary to meet the contract terms. Normal accuracy 1%, adjustments to billing amounts for errors determined in metering since prior test. Legal Matters: (to be delineated) Good Faith Performance Force Majeure (Uncontrollable Forces) Responsibilities of Parties - Emergency and Otherwise Indemnification Arbitration and Legal Proceedings Insurance Provisions Approval Requirements Non-severability Successors and Assigns Assignments to Secured Lenders Rights of Access and Removal Notifications Access to Records and Information Mutual Covenants and Warranties Other Legal Provisions, as required Exhibits: 1) Definitions 2) Points of Delivery 3) Incorporation of Solomon Gulch and transition to All Requirements (CVEA option after certain trigger) 4) Cooperative Agreement - Power Resources 5) Coordination of Operations 7) Opinions of Counsel we es CHUGACH,: ELECTRIC °°“ * ASSOCIATION, INC. coi ASSOCIATION, INC. moan EUGENE N. BJORNSTAD, P.E AM IP 11 , PE. D E \y Ir i V F General Manager ee: Sim August 1, 1995 U\ AUG ~ 3 1995 Ye: ohhe Mr. William R. Snell, Executive Director!25k2 !nclustria! Development FAX: 561-8998 AIDEA and Export Authority Hard Copy to Follow 480 W. Tudor Road Anchorage, AK 99503 Subject: Copper Valley Intertie Dear Mr. Snell: Chugach Electric Association (Chugach) and the Cooper Valley Electric Association (CVEA) are steadfast in our support of the Copper Valley Intertie. We believe that the Intertie is a viable and appropriate project that will assist in reducing electric power costs for the residents and businesses of the Copper Valley and Valdez and contribute to the economic development of Alaska. We have affirmed our joint interests in seeing this project move forward. The Board of Directors of both Chugach and CVEA have recently adopted the attached resolutions that direct each utility to commence negotiation of a firm power agreement. A firm power agreement will assure that a supply of low-cost energy will be continuously available to the electric customers of CVEA when the Intertie is complete. The negotiations will explicitly consider possible ways Chugach could participate in Intertie construction, operation and maintenance. We are committed to working together on a long-term power supply arrangement for CVEA, and urge you and the other members of the Review Committee to assist us in this beneficial undertaking. The Intertie will provide significant benefits to all Alaskans by enhancing the economic potential of a vital region of the state. A favorable review by the committee will help us obtain those benefits and lower costs to users of electricity. Thank you for your consideration. Sincerely, Lue Bjornstad General Manager ENB:TL:cah:95026gb.tI Attachment ce: J. Shively, Department of Natural Resources M. Irvwin, Department of Community and Regional Affairs T. Knowles, Governor, State of Alaska C. Hurless, Copper Valley Electric Association, Inc. 5601 Minnesota Drive * P.O. Box 196300 ¢ Anchorage, Alaska 99519-6300 Phone 907-563-7494 ¢ FAX 907-562-0027 7 ELECTRIC ASSOCIATION. INC. Anchorage. Alaska RESOLUTION WHEREAS, providing electric power by Chugach Electric Association, Inc. (Chugach) to Copper Valley Electric Association, Inc. (CVEA) has the potential to reduce the costs of service to Chugach members by spreading fixed costs over a larger customer base; WHEREAS, CVEA can substantially reduce its power supply costs through purchases from Chugach; WHEREAS, The Copper Valley Intertie (Intertie) may provide mutual savings to both Chugach and CVEA members; WHEREAS, Chugach supports environmentally sound construction of basic infrastructure which facilitates economic development; WHEREAS, electrical interconnection of the Railbelt with Valdez and Copper Valley offers the potential for long term system growth; and WHEREAS, Chugach’s participation in construction, ownership or maintenance of the Intertie may facilitate interconnection of the Valdez and Copper Valley regions with the Railbelt; WHEREAS, Chugach’s wholesale customers will have the option to include or exclude the costs and benefits of the transaction in their rates; NOW, THEREFORE BE IT RESOLVED that Chugach supports the construction of the Intertie and urges the State of Alaska to facilitate and expedite development of the Intertie; IT IS FURTHER RESOLVED that the General Manager is directed to commence negotiation of a power sale arrangement with CVEA for a sale of firm power net of Solomon Gulch output which ensures that benefits accrue to all Chugach members and which may include: ° Pooling the costs of the Copper Valley Intertie with other Generation and Transmission expenses on the Chugach system; ° Participation in construction, ownership or maintenance of the Intertie: ° Other services or assistance to CVEA in aid of either interconnection or provision of power to CVEA. CERTIFICATION L Patricia B. Jasper . do hereby certify that | am_.._ Secretary of Chugach Electric Association, Inc., an electric non-profit cooperative membership corporation organized and existing under the laws of the State of Alaska; that the foregoing is a complete and correct copy of a resolution adopted at a meeting of the Board of 19th July 95, Directors of this corporation, duly and properly cailed and held on the...-2=._......— day of 2. IST that a quorum wos present at the meeting; that the resolution is set forth in the minules of the meeting and bes not been rescinded ili 19th IN WITNESS WHEREOF, I have hereunto subscribed my name and atfixed the seal of this corporation this 22-77... day of UE Su EY 1995 ) V ee ee EL (Seal) tary COPPER VALLEY ELECTRIC ASSOCIATION, INC. GLENNALLEN, ALASKA RESOLUTION 95-15 POWER SUPPLY NEGOTIATIONS WITH CHUGACH ELECTRIC ASSOCIATION WHEREAS, Copper Valley Electric Association, Inc. is a rural electric cooperative serving the residents of the Copper River basin and the City of Valdez, and WHEREAS, CVEA’s members pay among the highest unsubsidized electric rates in the state of Alaska, and WHEREAS, CVEA’s Board of Directors have been striving to find the most cost effective power supply alternative for its members, and WHEREAS, it appears CVEA can substantially reduce its power supply costs through purchases from Chagach; and WHEREAS, the Sutton to Gilennailen intertie may provide mutual savings to both CVEA and Chugach members; and WHEREAS, an electrical interconnection of the Railbelt with Valdez and Copper Valley offers the potential for long-term system growth; and WHEREAS, Chnugach’s participation im construction, ownership or maintenance of the intextie may facilitate interconnection of the Valdez and Copper Valley ‘regions with the Railbeit; now therefore BE IT RESOLVED, the Copper Valley Electric Board of Directors supports the construction of the Sutton to Giennallen intertic and urges the State of Alasika to facilitate and expedite deveiopment of the intertie; and 07/21/95 08:09 TX/RX NO.1472 P.002 Resolution 95-15 Page 2 BE [IT FURTHER RESOLVED, that the Copper Valley Electric Association Board of Directors directs the General Manager to commence negotiations of a power sale arrangement with Chugach Electric Association for the purchase of firm power net of Solomon Gulch output which ensures that benefits accrue to all Copper Valley Electric members and which may include: e Pooling of costs of the Copper Valley Intertie with other Generation and Transmission expenses on the Chugach system; e Participation in construction, ownership or maintenance of the Intertie; ¢ Other services or assistance to CVEA in aid of either interconnection or provisions of power to CVEA. Approved and signed this 20th day of July, 1995, in Valdez, Alaska. S Paul S. Holland, President (seal) 07/21/95 08:09 TX/RX NO. 1472 P.003 This report summarizes the major actions at Chugach board meetings. The board normally meets at 6 p.m. on the first and third Wednesdays of each month (call 762-4708 for the schedule). Meetings are held in the board room on the second floor of the headquarters building at 5601 Minnesota Drive. A time is set aside in each board meeting for public comments. Once approved, board minutes are available to the public. Board leaves retail rates unchanged The board voted to leave retail rates unchanged at a special meeting Sept. 25. The meeting was held to reconsider a vote taken at a Sept. 20 meeting. At that time the board approved submitting a simplified rate filing to the Alaska Public Utilities Commission which called for a 1.2 percent increase in retail demand and energy rates, and decreases in wholesale rates. At the special meeting Sept. 25, the board voted to leave in place the wholesale rate decreases requested by the simplified rate filing. The filing includes a 1.8 percent decrease in wholesale demand and energy rates for Matanuska Electric Association and the City of Seward, and a 4.8 percent decrease in wholesale demand and energy rates for Homer Electric Association. If approved by the APUC, the rate changes are scheduled to be effective with November billings. Chugach sold 163.1 million kilowatt-hours of electricity in July, about 713,800 kwh more than projected by the budget. Wholesale power sales accounted for 69.7 million kwh, retail sales for 69.5 million kwh and economy energy sales for 23.9 million kwh. Year-to- date sales stood at 1.2 billion kwh, about 17 million more than projected by the budget. Chugach finished July with operating revenues of $9.3 million, about $504,000 less than anticipated by the budget. Year-to-date operating revenues stood at $75.9 million, about $834,000 less than projected by the budget. July expenses were $9.8 million, about $555,400 less than projected by the budget. Year-to-date expenses stood at $69.4 million, about $2.9 million less than projected by the budget. Chugach’s equity-to-total-capitalization ratio at the end of July stood at 25.30 percent. By comparison, Chugach’s year-to-date July 1994 power sales totaled 1.2 billion kwh, while operating revenues were $74.4 million and expenses were $64.3 million. Chugach’s equity-to-total-capitalization ratio at the end of July 1994 stood at 23.65 percent. In other action at September meetings, the board: Approved capital credits payments totaling $13,451.99 for 29 estates, bringing the 1995 estate payments total to $80,901.35. Appointed Ray Drummond, Dan Eck and Sherry Hoover to the Member Advisory Council. Approved Chugach’s Fifth Supplemental Indenture of Trust, which allows Chugach to secure short-term debt or obtain long-term loans (greater than one year) by issuing bonds. Appointed Pat Jasper and Ed Granger as the voting delegate and alternate, respectively, to the National Rural Electric Cooperative Association Region IX meeting Oct. 3 - 5 in Spokane, Wash. Mary Minder and Kathleen Weeks were appointed the voting delegate and alternate, respectively, to the Cooperative Finance Corp. district meeting Oct. 4 in Spokane. Voted to amend Board Policy #208 to make copies of the board agenda and board information packets available for the public to review at the same time as the information is distributed to the board. Voted to advertise for and appoint the members of the 1996 Bylaws Committee early. In addition, the board voted to provide the 1996 Bylaws Committee with staff legal and clerical support, and outside specialized counsel. Asked the general manager to make recommendations regarding (1) a proposed bylaw change creating a seat on the board for a wholesale all-requirements customer, and (2) an interim non-voting seat for same pending voting on the proposed bylaw change. Distributed a list of proposed board policy and bylaw change topics for ranking. Approved directors’ expenses. PAGE 2 A win-win deal Safety Bear Buddy Indian transformer PAGE 3 Board viewpoint PAGE 4 Board report How to reach us Our service center at 5601 Minnesota Drive is open from 8 a.m.- 6 p.m., Monday-Friday. Switchboard hours are 8 a.m.- 5 p.m. Frequently called numbers WMA TRATEIIED 5A FS oS ck a diners wet os BS 563-7494 MUO Ara, eR MS rete ek ees Adee a (800) 478-7494 Customer service . . Spe haen oe SE 563-7366 Cinvoniet Seryine! Tax, j25483 exes Si ver oss 762-4678 SE Se Linea cas ekg wees acest te 563-5060 762-4731 762-7227 Power theft hotline Danger tree hotline Payment options You may pay your bill by mail, in-person at our service center or by using our curbside drop box. You may be able to pay by phone if your bank or credit union offers this service. Current payments may also be made at any Anchorage branch of the First National Bank of Anchorage. To report a power outage Mon-ri, Bam: = 5 piece. oe. St ae 563-7366 PRE OUTS 25 tb SiGe hoi OR . . 563-7494 Outside Anchorage ...........64+4 (800) 478-7494 The Chugach Outlet A Publication of Chugach Electric Association, Inc. 5601 Minnesota Drive. P.O. Box 196300, Anchorage, Alaska 99519-6300. Chugach Electric Association, Inc. is a not-for-profit member- owned electric cooperative and Alaska’s largest electricity supplier. Chugach’s mission is to meet the energy needs of members and customers by providing competitively-priced, reliable, safe energy and services today and into the future through prudent and responsible planning, maintenance and management of the assets of the cooperative. Ray Kreig, President Kathleen Weeks, Vice President Patricia Jasper, Secretary. -Turnagain Midtown Jewel Lake Mary Minder, Treasurer .Sand Lake Martin Bushue, Directo: Northwood Ed Granger, Director . Oceanview Pat Kennedy, Director Satellite Park Gene Bjornstad, General News notes *Do we have your number? Chugach is increasingly taking advantage of new technologies to provide better outage reporting and other customer services. However, in order for these systems to work for you, Chugach needs to have your current phone number. Check the number we have printed on your bill. If it’s not right (or blank) please provide an updated number on the portion of the bill you return with your payment. *The regulatory cost charge reappears effective with October bills. This is the fee collected from customers of all regulated Alaska utilities (not just electric utilities) to fund the operations of the Alaska Public Utilities Commission. The RCC adds 24 cents to the average bill for 750 kwh of residential service. *The retail and wholesale fuel surcharges decreased with October bills. The quarterly adjustment recovers the costs (both actual and anticipated) of fuel and purchased power expenses over and above the amounts recovered in the basic kilowatt-hour rate. The fuel adjustment can (and usually does) vary each quarter. The October decrease means that for the next three months the average monthly residential bill for 750 kwh of service will see News notes, page 2 Printed in Alaska with vegetable inks on recycled paper (100% recycled, 20% post-consumer waste) THE GHUGAGH UU TS fo=. Chugach and Gopper Valley developing power sales agreement Chugach and Copper Valley Electric Association have been working out the details of a power sales agreement which would provide a firm, reliable source of economical electricity for CVEA customers well into the next century. Economical electric service is important to Copper Valley customers, who pay approximately twice as much for power as Railbelt Alaskans. The proposal would also benefit current retail and wholesale Chugach customers by spreading costs over a larger customer base. Still, before any power can flow from the Railbelt to the Copper River Basin, a transmission line must first be completed between Sutton and Glennallen. At the end of September, CVEA‘ss plans to build a 138,000-volt transmission line to link its customers to the state’s major power grid were on hold while a panel appointed by Gov. Tony Knowles reviewed the project. In 1993, the Legislature authorized and appropriated $35 million to be used as a zero-interest, 50-year loan to CVEA to help construct the line. The Legislature also authorized the Alaska Industrial Development and Export Authority to issue up to $25 million in bonds to provide additional funding for the project. The legislation made the loan subject to an independent feasibility study of the project, which was completed in April 1994 for the Department of Community and Regional Affairs, Division of Energy. In July 1994, the DCRA Commissioner Chugach and Copper Valley Electric Association have {121} been working on an arrangement to link the CVEA‘s system to the Railbelt power grid found the project could be financed and was economically feasible. However, to date the loan has not been made. In May 1995, Gov. Tony Knowles appointed an Interagency Review Panel to take another look at the feasibility study. The three-agency panel is comprised of the commissioners of DCRA and the Department of Natural Resources and the executive director of AIDEA. The see Power sales, page 3 Working on a win-win deal For the past year, Chugach’s management team has been discussing how to provide electrical power to Copper Valley Electric Association in Glennallen. Today, Copper Valley has the highest unsubsidized retail electric rates in the state and does not receive any power cost equalization funds from the State. During the 1993 legislative session, Copper Valley was authorized to receive an interest-free $35 million loan to construct an intertie between the Railbelt electrical system and the Glennallen-Valdez network. Clearly, connecting Copper Valley to the Railbelt grid will be a great benefit to their area. However, you may wonder what it does for Chugach customers. The easy answer is that we sell more power and spread costs over a greater number of kilowatt-hours; hence, the cost-burden per unit of output is less. A broader perspective would see greater economic activity as a result of cheaper energy prices. More economic activity contributes to the overall good of Alaska’s citizens. This is why this intertie project makes good sense. While Chugach and Copper Valley are in the final stages of consummating a News notes, continued from page 1 be $1.84 lower than it has been during the past quarter. * October is national cooperative month. Chugach is organized as an electric cooperative, owned by its more than 50,000 members. There are approximately 1,000 electric cooperatives nationwide. As co-op members, Chugach customers elect a board of directors to set policy for the utility and share in any margins earned by the organization through the “capital credits” program. *Remember, Outlet readers can earn $50 if they find their member number in the newsletter. Each month three member numbers are inserted into the copy. If you find a member number in brackets {} which matches the member number on your bill, call our service center at 563-7366. Safety Bear Buddy Chugach is one of several utilities participating in a statewide Safety Bear Buddy program. The program lets kids in trouble know they can approach specially-marked, radio-equipped utility vehicles and ask for help. Utility employees will radio for assistance and stand by until the proper authorities arrive. The Safety Bear Buddy program started in 1989 and now has 33 companies statewide participating using special {76137} vehicles which are on the streets every day to help out kids, and sometimes adults. This past January an Anchorage People Mover bus driver helped two young children who had been locked out of their home. Children in trouble should think of safety first when looking for help. Stress these safety tips to your child: ,Safet aeigieeve, “< Buddy Never dash across the street without looking for oncoming traffic. Obey traffic safety rules. Stop. Look left, right, left and make sure it’s clear before crossing the street. Utility workers in the field or on the roadside may be in a potentially dangerous area. Be aware of your surroundings before approaching them. Be careful when you're in construction sites or around utility operations. Do not touch the utility truck. It may be attached to a high voltage line. Call the driver and wave your arms over your head to get their attention before approaching. Always use common sense. It pays to be careful, especially during times of emergency. power sales agreement that would involve the construction of the intertie to Glennallen, the project still needs a final review. The governor has convened a group of knowledgeable people to take another look at the viability of the project before the loan is made. I am optimistic that the governor will make the right decision and allow the project to proceed. Certainly, it cannot fail to contribute favorably to Alaska’s economy. Sree MN. qo Making a move Chugach crews, along with Reynolds Rigging and Lynden Transport, moved a new 58,000-pound transformer into the Indian Substation in August. Tests had shown the old transformer in the substation was failing and it was necessary to replace it. Crews installed a mobile substation to provide electrical service while the transformer exchange took place. Power sales, continued from page 1 panel is reportedly nearing the end of its review. In the meantime, Chugach and Copper Valley have been working out the details of a contract to ensure a long-term, reliable source of reasonably-priced power for CVEA. Chugach was selected as the preferred provider for CVEA after a review of power supply proposals submitted last year. Here are some of the points contained in the preliminary power sales agreement: *Chugach would supply all the power required by CVEA over and above the output of the Solomon Gulch hydroelectric project at Valdez. While CVEA is obligated by contract to take the output of the State-owned hydro facility, Solomon Gulch only provides about 60 percent of the power required by CVEA in an average year. Wholesale power from Chugach would be much cheaper than the supplemental power CVEA now produces with its diesel generators. *CVEA could buy as much power as it wants from Chugach, subject to the carrying capacity of the planned transmission line. *A portion of the cost of the transmission line would be shared by Chugach and its other wholesale customers. Individual wholesale customers would have the option to opt out of the shared costs of the line, but in so doing would also forfeit the savings {167106} realized by adding CVEA as another Chugach customer. *CVEA would have the option of becoming an “all-requirements” customer of Chugach’s at some point in the future. Under that arrangement, Solomon Gulch would be pooled with other Chugach generation resources and Chugach would plan for and install generation (if necessary) to meet all of Copper Valley’s needs. *CVEA would be eligible to earn capital credits on its power purchases from Chugach. In the past two years Chugach has returned nearly $5 million in capital credits to its wholesale customers. Chugach is Alaska’s largest Board viewpoint RCNA eee ete COMPETITION! Everyone knows that competition is what gets consumers the best deal in their purchases whether it be groceries or airline tickets. What would happen to food prices if there was only one grocery store? What about electric service? Presently, you have no choice but to buy your power from Chugach Electric Association if you live in the service area. There is little competition for your consumer dollar. Lacking that competition, your board of directors is the group of men and women who represent you, the ratepayer, in a “watchdog” capacity in the effort to keep rates down while providing safe, reliable power. Because our fuel is some of the least expensive in the country, Chugach rates are essentially the lowest in Alaska. However, they are only at about the national average. If there were retail competition, would these rates be lower? Are you receiving the best VALUE from YOUR cooperative when you pay your electric bill? To answer these questions, Chugach has joined a group of 24 of the largest electric co-ops in one of the most extensive “benchmarking” efforts ever done. Benchmarking is a reliable way of measuring our performance against the best practices of other electric utilities. This study is being performed by a leading utilities management consultant for NRECA, the National Rural Electric Cooperative electric supplier, providing wholesale and economy energy power to utilities from Homer to Fairbanks and retail electric service to 65,000 metered locations from Anchorage to the northern Kenai Peninsula. Chugach owns and operates three natural gas- fired power plants and one hydroelectric facility, and also takes power under contract from two additional hydro projects. Association. It will give us detailed information on where we are and where we need to improve in order to achieve the new joint staff-board goal of being at the top of all electric co-ops and investor-owned utilities in economic efficiency. Results and progress will be shared with you in future Outlets. COST SAVING MEASURE - Your board is working with management in many areas to lower costs and your rates. Recently Chugach was faced with two alternatives in the disposal of obsolete turbines at Beluga and at Bernice Lake. If we removed the units and disposed of them through surplus means, we would likely have expended numerous resources and expense in the disposal process. On the other hand, Chugach chose to advertise the retired units for sale, and ended up receiving $60,000 for the units. The buyer also agreed to remove the units and be responsible for asbestos abatement. These innovative methods benefit the cooperative and help keep your rates low. As a result of this action, the IBEW Union has filed a grievance alleging violation of their Chugach labor contract. An arbitrator has been selected who may ultimately decide the issue. We’ll keep you posted. CVEA is also a member-owned electric cooperative. It provides service to 3,000 metered locations serving approximately 8,000 people from Valdez north past Glennallen and west along the Glenn Highway. CVEA currently uses the Solomon Gulch project and aging diesel generators at Valdez and Glennallen to meet the demands of its customers.