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ATTORNEYS AT LAW LY Nov 2 4 1995 )
November 20, 1995
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VIA_ FACSIMILE AND U.S. MAIL
Dennis McCrohan
Alaska Industrial Development & Export Authority
480 West Tudor
Anchorage, Alaska 99503-6690
Re: Solomon Gulch Project
Dear Dennis:
Following our discussion, I want to clarify my interpretation of issues surrounding
the development of Allison Lake. Specifically, I want to clarify that the water that is diverted
from the Lake into the impoundment behind the Solomon Gulch Hydroelectric Project should
be considered part of the Initial Project. Our response is that water diverted into Solomon Lake
and used to generate power is Initial Project power, regardless of the origin of that water.
Allison Lake is located some 600 feet above the impoundment which is used to
generate power at the Solomon Gulch Hydroelectric Project. Plans to develop Allison Lake
include Copper Valley Electric Association’s installation of a hydro-generation unit at the Lake,
and modifications to divert water from Allison Lake to Solomon Lake. Water entering Solomon
Lake would be used to generate power at the Solomon Gulch facility.
The Initial Project, as defined in the Long-Term Power Sales Agreement Four
Dam Pool - Initial Project ("PSA"), includes the Solomon Gulch Hydroelectric Project licensed
by the Federal Energy Regulatory Commission’. The facility is defined primarily in terms of
tangible assets -- the dam, rockfill dikes, the area comprising Solomon Lake, penstock,
powerhouse, transmission lines, substations, and appurtenant facilities. Anticipated generation
and storage capability are also included as a referent for operations and the calculation of annual
charges associated with the facilities.
| FERC issued the license for Solomon Gulch Project No. 2742 on June 21, 1978 (3 FERC
61,250). The license was transferred from Copper Valley Electric Association to the
Alaska Power Authority on May 28, 1982 (19 FERC 62,365).
Seattle, Washington (206) 623-4711 Fax (206) 467-8406 * San Francisco, California (415) 421-4143 Fax (415) 989-1263
ATER WYNNE
Dennis McCrohan
November 20, 1995
Page 2
The FERC license describes the Project as the only potential hydroelectric site in
a 19 square mile river basin, that would "utilize 90% of the total basin runoff for power
generation." After completion of studies, the FERC license estimated the average annual
generation of Solomon Gulch at 54,565 MWh. As reported by the PMC in the Fiscal Year 1995
Budget, 1994 estimated purchases by Copper Valley for Solomon Gulch power is projected to
be 48,000 MWh. The additional water will not significantly impact the terms under which the
initial FERC license was granted.
Irrespective of where the water originates, e.g., rain, melting snow, or an Allison
Lake diversion, once it enters Solomon Lake, it becomes part of the Initial project. As noted
in the FERC license, "[t]he project will be operated to maximize firm power generation." This
operational approach is mirrored in the PSA, whereby "each party has a direct financial interest
in ensuring the maximum practicable sale of power from the Initial Project." Section 3(c) even
prohibits Purchasers from supplanting Initial Project power with other generation. CVEA’s
desire to increase the ability to generate more power at the facility is clearly supported by both
the PSA and FERC license.
Please let me know if you have additional questions.
Ve ly yours,
on Saxton
of Attorneys for Purchasing Utilities
ce? Dennis Lewis, City of Petersburg (via U.S. Mail)
Clayton Hurless, Copper Valley Electric Association, Inc. (via U.S. Mail)
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