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HomeMy WebLinkAboutDixon Diversion Feasibility REF ApplicationRenewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 1 of 33 11/16/2021 Application Forms and Instructions This instruction page and the following grant application constitutes the Grant Application Form for Round 14 of the Renewable Energy Fund (REF). A separate application form is available for projects with a primary purpose of producing heat (see Request for Applications (RFA) Section 1.5). This is the standard form for all other projects, including projects that will produce heat and electricity. An electronic version of the RFA and both application forms is available online at: https://www.akenergyauthority.org/What-We-Do/Grants-Loans/Renewable-Energy-Fund/2021- REF-Application. What follows are some basic information and instructions for this application: • The Alaska Energy Authority (AEA) expects this application to be used as part of a two-year solicitation cycle with an opt-out provision in the second year of the cycle. • If you are applying for grants for more than one project, provide separate application forms for each project. • Multiple phases (e.g. final design, construction) for the same project may be submitted as one application. • If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for each phase of the project (see Sections 3.1 and 3.2.2). • In order to ensure that grants provide sufficient benefit to the public, AEA may limit recommendations for grants to preliminary development phases in accordance with 3 Alaska Administrative Code (ACC) 107.605(1). • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are completed and funding for an advanced phase is warranted. Supporting documentation may include, but is not limited to, reports, conceptual or final designs, models, photos, maps, proof of site control, utility agreements, business and operation plans, power sale agreements, relevant data sets, and other materials. Please provide a list of supporting documents in Section 11 of this application and attach the documents to your application. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. Please provide a list of additional information; including any web links, in Section 12 of this application and attach the documents to your application. For guidance on application best practices please refer to the resource-specific Best Practices Checklists; links to the checklists can be found in the appendices list at the end of the accompanying REF Round 14 RFA. • In the Sections below, please enter responses in the spaces provided. You may add additional rows or space to the form to provide sufficient space for the information, or attach additional sheets if needed. • If you need assistance with your application, please contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771-3081. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 2 of 33 11/16/2021 REMINDER: • AEA is subject to the Public Records Act AS 40.25, and materials submitted to AEA may be subject to disclosure requirements under the act if no statutory exemptions apply. • All applications received will be posted on the Authority web site after final recommendations are made to the legislature. Please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. • In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by AEA. If you want information to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential, it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 3 of 33 11/16/2021 SECTION 1 – APPLICANT INFORMATION Please specify the legal grantee that will own, operate, and maintain the project upon completion. Name Chugach Electric Association, Inc. On behalf of the Bradley Lake Management Committee (BPMC) Tax ID # 92-0014224 Date of last financial statement audit: April 9, 2021 for year end 12/31/2020 Mailing Address: Physical Address: PO Box 196300 5601 Electron Drive Anchorage, AK 99519-6300 Anchorage, AK 99518 Telephone: Fax: Email: (907) 762-4192 (907) 562-6994 sean_skaling@chugachelectric.com 1.1 Applicant Point of Contact / Grants Coordinator Name: Title: Sean Skaling Business & Sustainable Program Development Manager Mailing Address: Chugach Electric Association, Inc. PO Box 196300 Anchorage, AK 99519-6300 Telephone: Fax: Email: (907) 762-4192 (907) 562-6994 sean_skaling@chugachelectric.com 1.1.1 Applicant Signatory Authority Contact Information Name: Title: Lee Thibert Chief Executive Officer Mailing Address: Chugach Electric Association, Inc. PO Box 196300 Anchorage, AK 99519-6300 Telephone: Fax: Email: (907) 762-4747 (907) 562-6994 lee_thibert@chugachelectric.com 1.1.2 Applicant Alternate Points of Contact Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 4 of 33 11/16/2021 Name Telephone: Fax: Email: Arthur Miller (907) 762-4758 (907) 762-4816 arthur_miller@chugachelectric.com 1.2 Applicant Minimum Requirements Please check as appropriate. If applicants do not meet the minimum requirements, the application will be rejected. 1.2.1 Applicant Type ☒ An electric utility holding a certificate of public convenience and necessity under AS 42.05 CPCN # 8 and CPCN # 121, or ☐ An independent power producer in accordance with 3 AAC 107.695 (a) (1) CPCN #______, or ☐ A local government, or ☐ A governmental entity (which includes tribal councils and housing authorities) Additional minimum requirements ☒ 1.2.2 Attached to this application is formal approval and endorsement for the project by the applicant’s board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate yes by checking the box) ☒ 1.2.3 As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement (Section 3 of the RFA). (Indicate yes by checking the box) ☒ 1.2.4 If awarded the grant, we can comply with all terms and conditions of the award as identified in the Standard Grant Agreement template at https://www.akenergyauthority.org/What-We-Do/Grants-Loans/Renewable-Energy- Fund/2021-REF-Application (Any exceptions should be clearly noted and submitted with the application.) (Indicate yes by checking the box) ☒ 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. If no please describe the nature of the project and who will be the primary beneficiaries. (Indicate yes by checking the box) Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 5 of 33 11/16/2021 SECTION 2 – PROJECT SUMMARY 2.1 Project Title Provide a 4 to 7 word title for your project. Type in the space below. Dixon Diversion Feasibility Project 2.2 Project Location 2.2.1 Location of Project – Latitude and longitude (preferred), street address, or community name. Latitude and longitude coordinates may be obtained from Google Maps by finding you project’s location on the map and then right clicking with the mouse and selecting “What is here? The coordinates will be displayed in the Google search window above the map in a format as follows: 61.195676.-149.898663. If you would like assistance obtaining this information, please contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771- 3081. Latitude 59.69163 Longitude -150.91268 The location identified by the latitude and longitude coordinates above is the end of Dixon Glacier where water will be either diverted to Bradley Lake or captured in a run-of-river hydro facility and returned to the Martin River drainage. 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. Railbelt electric utility service areas of Chugach Electric Association, Inc. (Chugach), Homer Electric Association, Inc. (HEA), Golden Valley Electric Association, Inc. (GVEA), Matanuska Electric Association, Inc. (MEA) and the City of Seward. 2.3 Project Type Please check as appropriate. 2.3.1 Renewable Resource Type ☐ Wind ☐ Biomass or Biofuels (excluding heat-only) ☒ Hydro, Including Run of River ☐ Hydrokinetic ☐ Geothermal, Excluding Heat Pumps ☐ Transmission of Renewable Energy ☐ Solar Photovoltaic ☐ Storage of Renewable ☐ Other (Describe) ☐ Small Natural Gas 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Pre-Construction Construction ☐ Reconnaissance ☐ Final Design and Permitting ☒ Feasibility and Conceptual Design ☐ Construction Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 6 of 33 11/16/2021 2.4 Project Description Provide a brief, one-paragraph description of the proposed project. Dixon Diversion would be an expansion to the Bradley Lake Hydroelectric Project. Two project alternatives are currently being studied. The primary option would build a tunnel to divert water from the Dixon Glacier watershed to Bradley Lake to increase the energy output of the existing Bradley Lake power plant. The other alternative would transport water by tunnel to a new power plant located on the Lower Martin River. Either alternative would generate enough energy annually to be among the largest hydroelectric projects in Alaska. The diversion project would generate an estimated 168,000 MWh annually, which would increase Bradley Lake’s energy output by about 44 percent. This application uses the first option of diverting water to Bradley Lake for the estimated project costs and energy generation. The Martin River alternative is likely to have similar but higher costs and energy generation. 2.5 Scope of Work Provide a short narrative for the scope of work detailing the tasks to be performed under this funding request. This should include work paid for by grant funds and matching funds or performed as in-kind match. Matching and grant funds will be used to perform some of the many engineering and environmental studies required by agencies to obtain a license amendment to the Bradley Lake Hydroelectric Project license. It is expected that feasibility, conceptual design, and environmental studies will cost more than $5 million. The results of these studies will significantly advance the knowledge of geology, vegetation, fish, and wildlife populations of the area. 2.6 Previous REF Applications for the Project See Section 1.15 of the RFA for the maximum per project cumulative grant award amount Round Submitted Title of application Application #, if known Did you receive a grant? Y/N Amount of REF grant awarded ($) No previous applications have been submitted for this project Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 7 of 33 11/16/2021 SECTION 3 – Project Management, Development, and Operation 3.1 Schedule and Milestones Please fill out the schedule below (or attach a similar sheet) for the work covered by this funding request. Be sure to identify key tasks and decision points, including go/no go decisions, in your project along with estimated start and end dates for each of the milestones and tasks. Please clearly identify the beginning and ending of all phases (I. Reconnaissance, II. Feasibility and Conceptual Design, III. Final Design and Permitting, and IV. Construction) of your proposed project. See the RFA, Sections 2.3-2.6 for the recommended milestones for each phase. Add additional rows as needed. Tas k # Milestones Tasks Start Date End Date Deliverables 1 Conceptual Analysis & Recommendation Determine conceptual configurations of elements, cost estimates, and energy 11/2021 6/2023 Conceptual Alternatives Analysis & Recommendations 2 Detailed Hydrology Assessment Install stream gauges on Dixon fork stream and Martin River, precipitation, and glacier volume change 11/2021 6/2023 Hydrology Report 3 Environmental Studies Consultation with Agencies on required studies and perform studies 7/2022 6/2025 Environmental Study Reports 4 Geotechnical Investigation Drilling of rock 6/2023 6/2024 Geotechnical Report 5 Draft Amendment & Exhibits Draft Amendment and Exhibits for review prior to submitting to FERC 1/2024 6/2024 Draft Amendment with Exhibits 6 Final Amendment and Exhibits Final amendment with engineering layout, costs, environmental studies 1/2025 6/2025 Final Amendment 7 Preliminary Design Report Write a conceptual business and operations plan 1/2024 6/2025 Preliminary Design Report Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 8 of 33 11/16/2021 3.2 Budget 3.2.1 Funding Sources Indicate the funding sources for the phase(s) of the project applied for in this funding request. Grant funds requested in this application $1,000,000 Cash match to be provideda $1,000,000 In-kind match to be provideda $0 Energy efficiency match providedb $0 Total costs for project phase(s) covered in application (sum of above) $2,000,000 Describe your financial commitment to the project and the source(s) of match. Indicate whether these matching funds are secured or pending future approvals. Describe the impact, if any, that the timing of additional funds would have on the ability to proceed with the grant. The BPMC is committed to providing the stated matching funds of $1,000,000 to complete this work. The matching funds are secured and approved. See the attached BPMC Resolution No. 21-03 for the matching funds commitment. BPMC’s match and other funding sources will not impact the ability of this grant to proceed rapidly once issued. All funds received from the REF will reduce project costs that are ultimately paid for by the customers of the Railbelt utilities. Therefore, the grant will decrease the cost of energy for about three quarters of the state’s population. a Attach documentation for proof (see Section 1.18 of the Request for Applications) b See Section 8.2 of this application and Section 1.18 of the RFA for requirements for Energy Efficiency Match. 3.2.2 Cost Overruns Describe the plan to cover potential cost increases or shortfalls in funding. BPMC will be responsible to manage or cover any cost overruns. 3.2.3 Total Project Costs Indicate the anticipated total cost by phase of the project (including all funding sources). Use actual costs for completed phases. Indicate if the costs were actual or estimated. Reconnaissance Actual $500,000 Feasibility and Conceptual Design Estimated $7,000,000 Final Design and Permitting Estimated $2,000,000 Construction Estimated $175,000,000 Total Project Costs (sum of above) Estimated $184,500,000 Metering/Tracking Equipment [not included in project cost] Estimated $0 3.2.4 Funding Subsequent Phases If subsequent phases are required beyond the phases being applied for in this application, describe the anticipated sources of funding and the likelihood of receipt of those funds. • State and/or federal grants • Loans, bonds, or other financing options • Additional incentives (i.e. tax credits) • Additional revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 9 of 33 11/16/2021 Final design and construction costs will be paid by the five Railbelt utilities participating in the BPMC. If state or federal grants are available and awarded, those funds would help offset the project cost and will lower the cost of energy for all residences and businesses served by those utilities, approximately three quarters of the population of the state from Homer to Fairbanks. Renewable Energy Certificates (green tags) from Bradley Lake are not anticipated at this time. 3.2.3 Budget Forms Applications MUST include a separate worksheet for each project phase that was identified in Section 2.3.2 of this application — I. Reconnaissance, II. Feasibility and Conceptual Design, III. Final Design and Permitting, and IV. Construction. Please use the tables provided below to detail your proposed project’s total budget. Be sure to use one table for each phase of your project, and delete any unnecessary tables. The milestones and tasks should match those listed in 3.1 above. If you have any question regarding how to prepare these tables or if you need assistance preparing the application please feel free to contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771-3081. Phase 2 — Feasibility and Conceptual Design Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In- kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Sections 2.3 thru 2.6 of the RFA ) Conceptual Analysis & Recommendation 6/2023 $187,500 $187,500 BPMC Cash $375,000 Detailed Hydrology Assessment 6/2023 $187,500 $187,500 BPMC Cash $375,000 Various Environmental Studies 6/2025 Geotechnical Investigation 6/2024 $625,000 $625,000 BPMC Cash $1,250,000 Draft Amendment 6/2024 Final Amendment 6/2025 Preliminary Design Report 6/2025 TOTALS $1,000,000 $1,000,000 BPMC Cash $2,000,000 Budget Categories: Direct Labor & Benefits Travel & Per Diem Equipment Materials & Supplies Contractual Services $1,000,000 $1,000,000 BPMC Cash $2,000,000 Construction Services Other TOTALS $1,000,000 $1,000,000 BPMC Cash $2,000,000 Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 10 of 33 11/16/2021 3.2.4 Cost Justification Indicate the source(s) of the cost estimates used for the project budget, including costs for future phases not included in this application. The cost estimates in this application are based on prior Alaska hydroelectric projects under the jurisdiction of the Federal Energy Regulatory Commission (FERC), specifically Bradley Lake, Susitna-Watana, Grant Lake, and Cooper Lake hydroelectric projects. Project team members have worked on all these projects. 3.3 Project Communications 3.3.1 Project Progress Reporting Describe how you plan to monitor the progress of the project and keep AEA informed of the status. Who will be responsible for tracking the progress? What tools and methods will be used to track progress? The progress of this project will be a regular agenda item for the BPMC. AEA and the Railbelt utilities are members of BPMC. In addition, monthly or more frequent updates will be presented to utility engineers and AEA management. The engineering team comprised of utility and AEA staff engineers will be responsible for tracking progress using various means of communication and planning tools including Microsoft Word, Excel, SharePoint, and Project. Due to AEA’s ownership of Bradley Lake Hydroelectric Project and its role in the BPMC, AEA will be well informed of this project’s progress. 3.3.2 Financial Reporting Describe the controls that will be utilized to ensure that only costs that are reasonable, ordinary and necessary will be allocated to this project. Also discuss the controls in place that will ensure that no expenses for overhead, or any other unallowable costs will be requested for reimbursement from the REF Grant Program. Budget for studies will be approved by the BPMC utilities and AEA through existing established processes with strong controls. Utilities submit expenses to BPMC. These are verified by AEA accounting staff and approved by other utilities through BPMC. All utilities and the BPMC are audited annually. Expenses for overhead or other unallowable costs will not be requested for reimbursement and will be reviewed through the BPMC accounting process. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 11 of 33 11/16/2021 SECTION 4 – QUALIFICATIONS AND EXPERIENCE 4.1 Project Team Include resumes for known key personnel and contractors, including all functions below, as an attachment to your application. In the electronic submittal, please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. 4.1.1 Project Manager Indicate who will be managing the project for the Grantee and include contact information. If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. The BPMC will designate staff or hire a project manager for this project. The project manager will be supported by utility engineers experienced with hydroelectric permitting and hydro project management including Mike Brodie (Chugach Electric Association, Inc.), Mike Salzetti (Homer Electric Association, Inc.), and Bryan Carey (Alaska Energy Authority). Additionally, Betsy McGregor (Alaska Energy Authority) will participate in the permitting process. She has extensive hydro permitting experience in Alaska, having managed the Susitna Watana permitting process. Chugach on behalf of the BPMC requests project management assistance from AEA. Submitted with this application are the resumes of Mike Salzetti and Mike Brodie. Resume statements for Bryan Carey and Betsy McGregor are below. Bryan Carey, P.E., Owned Asset/Hydro Manager. Bryan Carey is the project manager for the Alaska Energy Authority’s Bradley Lake Hydroelectric Project (Alaska’s largest Hydro project), Alaska Industrial Export Development Authority owned Snettisham Hydroelectric Project, and was the Project Engineer for the Susitna-Watana Hydroelectric Project. As the project manager/engineer he has directed numerous studies for licensing or amendments with Federal Energy Regulatory Commission (FERC). Recently he managed the West Fork Upper Battle Creek Diversion Project to divert water to Bradley Lake from project initiation, FERC license amendment, and construction. In addition to the hydroelectric work he has been the project manager for various rural Alaska energy projects that include bulk fuel facilities, power plants, and small hydroelectric & wind projects. Mr. Carey received a Bachelor of Science degree in engineering from the University of Alaska Fairbanks and a Master of Business Administration from University of Alaska Anchorage. Betsy McGregor, Preliminary Design and Environmental Manager. Betsy McGregor is the environmental manager for the Alaska Energy Authority and works on a wide breadth of development projects. Ms. McGregor is a fisheries and wildlife biologist by training and has 29 years of experience in natural resources in Alaska and the Pacific Northwest. In addition to her field experience, Betsy has extensive experience in agency consultation and preparing technical and regulatory documents associated with Federal Energy Regulatory Commission (FERC) licensing and compliance; National Environmental Policy Act; Clean Water Act Section 404 Wetlands permitting and Section 401 Water Quality Certification; National Historic Preservation Act Section 106; Endangered Species Act; Bald and Golden Eagle Protection Act; ADF&G Fish Habitat Permits; Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 12 of 33 11/16/2021 and right-of-way easements. She was the Environmental Manager for the Susitna-Watana Hydroelectric Project FERC integrated licensing process, directing a team of consultants through consultation, study planning, study implementation and FERC filings. She provided technical support for the Bradley Lake FERC license amendment for the West Fork Upper Battle Creek Diversion Project and compliance with the Lower Battle Creek fish habitat implementation plan. She currently serves as the agency’s project manager for the construction of the Fivemile Creek Hydroelectric Project and licensing study activities associated with the Nuyakuk Hydroelectric Project. In addition to the hydroelectric work, she is the Volkswagen Program Manager for the State of Alaska, the Electric Vehicle Program Manager for the agency, and has assisted AIDEA with the Ambler Access Project permitting. Ms. McGregor received a Bachelor of Science degree in Wildlife Science from Purdue University. 4.1.2 Project Accountant Indicate who will be performing the accounting of this project for the grantee. If the applicant does not have a project accountant indicate how you intend to solicit financial accounting support. BPMC will account for this project as part of routine business. BPMC accounting is managed by AEA. 4.1.3 Expertise and Resources Describe the project team including the applicant, partners, and contractors. For each member of the project team, indicate: • the milestones/tasks in 3.1 they will be responsible for; • the knowledge, skills, and experience that will be used to successfully deliver the tasks; • how time and other resource conflicts will be managed to successfully complete the task. If contractors have not been selected to complete the work, provide reviewers with sufficient detail to understand the applicant’s capacity to successfully select contractors and manage complex contracts. Chugach Electric Association, Inc. is the applicant and has extensive experience in permitting, licensing, building, operating, maintaining, and re-licensing hydroelectric projects in Alaska including Cooper Lake, Eklutna Lake, and is a member of the BPMC. Chugach is applying on behalf of the BPMC to support the project. The other partners are the other four Railbelt electric utilities on the Railbelt who receive power from Bradley Lake and form the BPMC: Homer Electric Association, Inc., Seward Electric, Matanuska Electric Association, Inc., and Golden Valley Electric Association, Inc. Alaska Energy Authority, owner of Bradley Lake hydro is also a partner in the project. The BPMC will oversee all milestones and tasks described in Section 3.1 above. The tasks will be conducted mostly by contractors selected for their experience and expertise in each of the task areas. Time and resource conflicts will be managed through the contracts issued. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 13 of 33 11/16/2021 The contractors have not been selected. BPMC, AEA and the participating utilities have extensive experience issuing and managing contracts for complex projects. New Requests for Proposals are expected to be issued in spring 2022 for the project environmental, engineering, and licensing expertise. Existing team members have managed the FERC licensing process for license amendments at Bradley Lake, Cooper Lake, and a new license at Grant Lake. The BPMC regularly manages complex projects, such as the maintenance and refurbishment of Bradley Lake Hydro plant and the addition of Battle Creek Diversion Project, also funded by the Renewable Energy Fund. 4.2 Local Workforce Describe how the project will use local labor or train a local labor workforce. Local contractors will be solicited to the maximum extent because of their local knowledge and cost. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 14 of 33 11/16/2021 SECTION 5 – TECHNICAL FEASIBILITY 5.1 Resource Availability 5.1.1 Assessment of Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available, including average resource availability on an annual basis. For pre-construction applications, describe the resource to the extent known. For design and permitting or construction projects, please provide feasibility documents, design documents, and permitting documents (if applicable) as attachments to this application (See Section 11). Likelihood of the resource being available over the life of the project. See the “Resource Assessment” section of the appropriate Best Practice Checklist for additional guidance. The Dixon basin is a coastal, 20-square-mile, high-elevation area. Based on previous work, the average annual precipitation is estimated around 120 inches of water. Glacial melt of Dixon Glacier increases the outflow greater than the precipitation alone. Two potential projects are currently being studied. An engineering alternatives report is due in the first half of 2022 which will guide the decision of which project to pursue. The primary alternative is the diversion of this water into the Bradley Lake reservoir (see orange line in Figure 1). Assuming diversion of 75% of the water, the project would generate an estimated 168,000 MWh from the existing Bradley Lake Hydroelectric facility. The other alternatives would harness the energy from the water dropping 1,000 feet over a relatively short distance in a run-of-river configuration which would return the water to the Martin River basin (see green line in Figure 1 below). Assuming diversion of 95 percent of the water, the project would generate an estimated 174,000 MWh per year from a new hydro power plant. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 15 of 33 11/16/2021 Figure 1: Development Alternatives 5.1.2 Alternatives to Proposed Energy Resource Describe the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. Alternatives to this project are to continue using fossil fuels (natural gas from Cook Inlet, liquid petroleum, and coal) to meet the majority of electric demand in the Railbelt, or develop wind, solar, new hydro, or other forms of renewable energy. The strong advantage this project has over the other alternatives is this project is expected to be less expensive than the other generating sources and would displace the incumbent fossil fuels. Additionally, if the decision is made to divert water into the existing Bradley Lake it will have relatively low environmental impact (especially as compared to fossil fuels or a new storage hydro project), the license amendment process is likely simpler, and Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 16 of 33 11/16/2021 it is less likely to spur opposition. The run-of-river option also has the benefit over the alternatives that the environmental impacts are likely relatively minimal compared to storage hydro or other alternatives. However, due to its location next to Bradley Lake hydro project and sharing its transmission infrastructure, the run-of-river project would allow more of Bradley Lake’s water to remain stored when the water is flowing through the run-of-river project. Both project alternatives result in a fully or virtually dispatchable new renewable energy source, which is of value in the Railbelt grid and which solar and wind can not provide without large energy storage devices. 5.1.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. See the “Environmental and Permitting Risks” section of the appropriate Best Practice Checklist for additional guidance. • List of applicable permits • Anticipated permitting timeline • Identify and describe potential barriers including potential permit timing issues, public opposition that may result in difficulty obtaining permits, and other permitting barriers The project will be licensed and regulated by the FERC. Permits will be applied for and acquired within the FERC timeline and during final design. All land is owned by the State of Alaska Department of Natural Resources and is non parkland. Project is planned to be low visibility, with minimal impact to fish and game populations around the project. The FERC process requires public input and permits be completed prior to construction. Public education and communication will be an important part of the development process. Public opposition is expected to be low due to the characteristics of the project alternatives and its location. 5.2 Project Site Describe the availability of the site and its suitability for the proposed energy system. Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. See the “Site control” section of the appropriate Best Practice Checklist for additional guidance. All project lands are owned by the State of Alaska. Easements and permits are expected to be straight forward as they would be an expansion of existing Bradley Lake easements. The project would be consistent with Bradley Lake land use which makes the easement and permit expansions simple and non-controversial. 5.3 Project Technical & Environmental Risk 5.3.1 Technical Risk Describe potential technical risks and how you would address them. • Which tasks are expected to be most challenging? • How will the project team reduce the risk of these tasks? • What internal controls will be put in place to limit and deal with technical risks? See the “Common Planning Risks” section of the appropriate Best Practice Checklist for additional guidance. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 17 of 33 11/16/2021 During the feasibility phase, the greatest risks are managing cost and the safety of field crews. BPMC’s management process and contracting language will mitigate cost risks. All utilities and AEA have strong safety cultures and procedures to ensure the safety of field crews. During the construction phase, the long underground tunnels will be the most challenging. The project team will perform a robust study of the terrain and geology to better understand risk of tunneling. The construction budget will have contingencies for various unexpected rock conditions. All of these risks will be minimized through the procurement processes to hire contractors for various steps of the project. BPMC recently built a very similar project, the Battle Creek Diversion, and successfully navigated the technical and environmental risks. This project will run parallel to the Battle Creek project using the same tools and procedures, but this time with the benefit of the recent experience on the same type of project in the same geographic area. For example, the team will work closely with stakeholders and consulting agencies to ensure a smooth process. The plan and path forward will be carefully planned and communicated. This proposal takes into account flow reservations and currently assumes a 25% flow reservation. If flow reservation is increased to 50%, the preliminary project economics remain positive. The team is confident it can successfully navigate the technical and environmental risks this project presents, especially given its recent success with the same type of project at Bradley Lake. 5.3.2 Environmental Risk Explain whether the following environmental and land use issues apply, and if so which project team members will be involved and how the issues will be addressed. See the “Environmental and Permitting Risks” section of the appropriate Best Practice Checklist for additional guidance. • Threatened or endangered species • Habitat issues • Wetlands and other protected areas • Archaeological and historical resources • Land development constraints • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and describe other potential barriers Previous Bradley Lake amendments have not identified threatened or endangered species, habitat issues, archaeological resources, land development constraints, telecommunications, or aviation issues in the vicinity of the project. There may be minor wetland impacts while constructing the access road, though most ground is well drained. The project location is not visible to the public unless they are in a plane. 5.4 Technical Feasibility of Proposed Energy System Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 18 of 33 11/16/2021 In this section you will describe and give details of the existing and proposed systems. The information for existing system will be used as the baseline the proposal is compared to and also used to make sure that proposed system can be integrated. Only complete sections applicable to your proposal. If your proposal only generates electricity, you can remove the sections for thermal (heat) generation. 5.4.1 Basic Operation of Existing Energy System Describe the basic operation of the existing energy system including: description of control system; spinning reserve needs and variability in generation (any high loads brought on quickly); and current voltage, frequency, and outage issues across system. See the “Understanding the Existing System” section of the appropriate Best Practice Checklist for additional guidance. The existing energy system is the Alaska Railbelt grid serving communities from Homer to Fairbanks. The Dixon Diversion project would significantly augment the existing Bradley Lake project, which is arguably the most valuable generation asset on the Railbelt. Bradley Lake provides a large amount of dispatchable energy for all Railbelt utilities, which directly offsets natural gas and other fossil fuels, allows for the integration of more variable renewable generation resources, and provides dispatching flexibility of the most efficient natural gas generators. By either adding more water to Bradley Lake or creating a new run-of-river hydro project that would allow Bradley Lake to store more water, the Dixon Diversion project allows all Railbelt utilities to increase the generation potential of Bradley Lake. The project will increase Bradley Lake’s generation load factor, and dispatchers will have greater flexibility to use Bradley Lake at higher capacities throughout much of the year. Chugach welcomes specific questions or requests for other information about the Railbelt system that can help AEA evaluate this project. 5.4.2.1 Existing Power Generation Units Include for each unit include: resource/fuel, make/model, design capacity (kW), minimum operational load (kW), RPM, electronic/mechanical fuel injection, make/model of genset controllers, hours on genset Unit 1: This project will displace energy from fossil fuel units in the Railbelt. Unit 2: AEA’s Evaluation Model contains the information needed for the Railbelt system. Unit 3: Unit 4: Unit 5: Unit 6: 5.4.2 Existing Energy Generation Infrastructure and Production In the following tables, only fill in areas below applicable to your project. You can remove extra tables. If you have the data below in other formats, you can attach them to the application (see Section 11). Is there operational heat recovery? (Y/N) If yes estimated annual displaced heating fuel (gallons) Yes, the primary natural gas generators on the Railbelt operate in combined cycle with a steam generator. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 19 of 33 11/16/2021 5.4.2.2 Existing Distribution System Describe the basic elements of the distribution system. Include the capacity of the step-up transformer at the powerhouse, the distribution voltage(s) across the community, any transmission voltages, and other elements that will be affected by the proposed project. This project serves the Railbelt grid from Homer to Fairbanks and power from the project is delivered at transmission voltages. If specific details are needed for application review, please contact Chugach Electric. 5.4.2.3 Existing Thermal Generation Units (if applicable to your project) Generation unit Resource/ Fuel type Design capacity (MMBtu/hr) Make Model Average annual efficiency Year Installed Hours Not applicable 5.4.2.5 Annual Electricity Production and Fuel Consumption (Existing System) Use most recent year. Replace the section (Type 1), (Type 2), and (Type 3) with generation sources Month Generati on (Type 1) (kWh) Generatio n (Type 2) (kWh) Generatio n (Type 3) (kWh) Fuel Consumptio n (Diesel- Gallons) Fuel Consumptio n [Other] Pea k Loa d Minimu m Load January February March April May June July August Septembe r October November December Total 5.4.2.4 O&M and replacement costs for existing units Power Generation Thermal Generation i. Annual O&M cost for labor ii. Annual O&M cost for non-labor iii. Replacement schedule and cost for existing units Covered by AEA’s REF Evaluation Model for the Railbelt. Contact Chugach if additional information would be helpful. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 20 of 33 11/16/2021 5.4.3 Future Trends Describe the anticipated energy demand in the community, or whatever will be affected by the project, over the life of the project. Explain how the forecast was developed and provide year by year forecasts. As appropriate, include expected changes to energy demand, peak load, seasonal variations, etc. that will affect the project. The electric demand in the Railbelt is expected to remain fairly steady over the 50-year life of the hydro project, barring any significant changes to economic conditions or population. Most of the Railbelt utilities have been experiencing overall reductions of load over the past decade resulting mostly from end-use energy efficiency improvements and slow or declining economic conditions. It is expected that these efficiency changes will continue, but at a slower rate in the coming decades and will be matched with increased loads and beneficial electrification such as the electrification of transportation. The US Energy Information Administration in their Annual Energy Outlook, which projects energy use to 2050, projects less than 1 percent growth per year through 2050. This projection is a combination of energy efficiency measures that reduce load and economic development that increases load at a greater pace. Due to current economic conditions in Alaska, it is likely that demand will continue to decrease slightly each year before economic growth and the addition of electric vehicles to the load surpass the efficiency decline. On the relatively large (by Alaska standards) Railbelt grid, these changes are expected to be slow, incremental changes to an otherwise stable load. 5.4.4 Proposed System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • The total proposed capacity and a description of how the capacity was determined • Integration plan, including upgrades needed to existing system(s) to integrate renewable energy system: Include a description of the controls, storage, secondary loads, distribution upgrades that will be included in the project • Civil infrastructure that will be completed as part of the project—buildings, roads, etc. • Include what backup and/or supplemental system will be in place See the “Proposed System Design” section of the appropriate Best Practice Checklist for additional guidance. The most likely of the two project options is the diversion of water to Bradley Lake, which requires a tunnel to be constructed from Bradley Lake to the proposed intake location. The intake structure would be small and similar to the recently constructed Battle Creek intake. An access road to the intake site may need to be constructed from an existing stream bridge. Under a separate project, the Bradley Lake spillway and/or dam may be raised to store more water. Under this project option no new power plant would be needed as the diverted water would ultimately flow to Bradley Lake. The existing power plant is already integrated into the transmission system. Under the run-of-river project alternative, a new power plant would be added that would interconnect with existing transmission infrastructure. The size of the plant would be determined after additional feasibility work is completed. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 21 of 33 11/16/2021 5.4.4.1 Proposed Power Generation Units Unit # Resource/ Fuel type Design capacity (kW) Make Model Expected capacity factor Expected life (years) Expected Availability 5.4.4.2 Proposed Thermal Generation Units (if applicable) Generation unit Resource/ Fuel type Design capacity (MMBtu/hr) Make Model Expected Average annual efficiency Expected life 5.4.5 Basic Operation of Proposed Energy System • To the best extent possible, describe how the proposed energy system will operate: When will the system operate, how will the system integrate with the existing system, how will the control systems be used, etc. • When and how will the backup system(s) be expected to be used See the “Proposed System Design” section of the appropriate Best Practice Checklist for additional guidance. The diverted water from Dixon Diversion will increase the water flow through the existing Bradley Lake power plant. The Bradley Lake power plant is already integrated into the Railbelt grid and the power is provided to all Railbelt electric utilities according to existing agreements. The addition of diverted water from Dixon Diversion will provide more water and therefore more energy through the existing dam. Utilities currently use Bradley Lake power to supplement and refine their dispatch of other fossil fuel based generation and variable renewable energy generation to maximize the efficiency of their systems. The additional energy through the Bradley Lake Power Project will allow for greater efficiency by all participating utilities and will 1) directly displace natural gas and other fossil fuel generation; 2) allow operators to more efficiently use their existing generation; 3) provide more energy to back up variable renewable generation, such as Fire Island Wind, which is backed up primarily by Bradley Lake and other storage hydro facilities. The water flows from Dixon Diversion will be greatest in warmer months and will be less in colder months. The additional volume of water added to Bradley Lake will allow each utility to take more energy from Bradley Lake throughout the year with less concern about winter lake levels. No new generators, uses existing Bradley Lake Hydroelectric generators Not Applicable Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 22 of 33 11/16/2021 Future separate projects to increase the height of the spillway or the height of the dam and spillway would result in more water storage and allow for additional seasonal flexibility of dispatch. The Bradley Lake Power Project was built with the ability to additional another generation in the future. 5.4.3.1 Expected Capacity Factor 52% Bradley Lake’s current capacity factor is approximately 36%. With the addition of water diverted from Dixon Diversion, the capacity factor would increase to about 52% 5.4.5.2 Annual Electricity Production and Fuel Consumption (Proposed System) Month Generation (Proposed System) (kWh) Generation (Type 2) (kWh) Generation (Type 3) (kWh) Fuel Consumption (Diesel- Gallons) Fuel Consumption [Other] Secondary load (kWh) Storage (kWh) January 12,600,000 February 12,600,000 March 14,000,000 April 14,000,000 May 14,000,000 June 15,400,000 July 15,400,000 August 15,400,000 September 15,400,000 October 14,000,000 November 12,600,000 December 12,600,000 Total 168,000,000 Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 23 of 33 11/16/2021 5.4.6 Proposed System Operating and Maintenance (O&M) Costs O&M costs can be estimated in two ways for the standard application. Most proposed renewable energy projects will fall under Option 1 because the new resource will not allow for diesel generation to be turned off. Some projects may allow for diesel generation to be turned off for periods of time; these projects should choose Option 2 for estimating O&M. Option 1: Diesel generation ON For projects that do not result in shutting down diesel generation there is assumed to be no impact on the base case O&M. Please indicate the estimated annual O&M cost associated with the proposed renewable project. $ 250,000 Option 2: Diesel generation OFF For projects that will result in shutting down diesel generation please estimate: 1. Annual non-fuel savings of shutting off diesel generation 2. Estimated hours that diesel generation will be off per year. 3. Annual O&M costs associated with the proposed renewable project. 1. $ 2. Hours diesel OFF/year: 3. $ 5.4.7 Fuel Costs Estimate annual cost for all applicable fuel(s) needed to run the proposed system (Year 1 of operation) Diesel (Gallons) Electricity Propane (Gallons) Coal (Tons) Wood Other 5.4.5.3 Annual Heating Fuel Consumption (Proposed System) Month Diesel (Gallons) Electricity Propane (Gallons) Coal (Tons) Wood (Cords, green tons, dry tons) Other January February March April May June July August September October November December Total Not Applicable Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 24 of 33 11/16/2021 Unit cost ($) Annual Units Total Annual cost ($) 5.5 Performance and O&M Reporting For construction projects only 5.5.1 Metering Equipment Please provide a short narrative, and cost estimate, identifying the metering equipment that will be used to comply with the operations reporting requirement identified in Section 3.15 of the Request for Applications. Water flow meters would be installed to measure the amount of water diverted to Bradley Lake. The cost would be small, have not been estimated and are included in the construction cost. 5.5.2 O&M reporting Please provide a short narrative about the methods that will be used to gather and store reliable operations and maintenance data, including costs, to comply with the operations reporting requirement identified in Section 3.15 of the Request for Applications The BPMC is an established, well-functioning organization that tracks all Bradley Lake Project expenses, including operations and maintenance expense. BPMC financial records are audited on an annual basis. Performance in terms of energy generation, water measurement and other similar performance metrics are already in place and any additional measures will be incorporated into BPMC’s procedures. The metrics will be reported according to the grant agreement requirements. Electric costs to run communications and valves would be de minimis. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 25 of 33 11/16/2021 SECTION 6 – ECONOMIC FEASIBILITY AND BENEFITS 6.1 Economic Feasibility 6.1.1 Economic Benefit Annual Lifetime (50 years) Anticipated Diesel Fuel Displaced for Power Generation (gallons) 10,400,000 gallons of diesel equivalent 520,000,000 gallons Anticipated Fuel Displaced for Heat (gallons) 0 0 Total Fuel displaced (gallons) 10,400,000 520,000,000 Anticipated Diesel Fuel Displaced for Power Generation ($) $9,240,000 (year 1 natural gas savings) 168,000 MWh generated times avoided cost of fuel displaced and O&M of $55/MWh $235,000,000 (NPV over 50 years; assumes 2% annual increase to avoided cost, 5% discount rate). Anticipated Fuel Displaced for Heat ($) 0 Anticipated Power Generation O&M Cost Savings Embedded in fuel estimate. Anticipated Thermal Generation O&M Cost Savings Total Other costs savings (taxes, insurance, etc.) 0 0 Total Fuel, O&M, and Other Cost Savings $9,240,000 $235,000,000 Calculated as the NPV cost savings (utility fuel costs avoided minus cost to purchase the energy from this project) using 5% discount rate. AEA may calculate this differently from a grant project perspective. 6.1.2 Economic Benefit Explain the economic benefits of your project. Include direct cost savings and other economic benefits, and how the people of Alaska will benefit from the project. Note that additional revenue sources (such as tax credits or green tags) to pay for operations and/or financing, will not be included as economic benefits of the project. Where appropriate, describe the anticipated energy cost in the community, or whatever will be affected by the project, over the life of the project. Explain how the forecast was developed and provide year-by-year forecasts Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 26 of 33 11/16/2021 The economic model used by AEA is available at https://www.akenergyauthority.org/What-We- Do/Grants-Loans/Renewable-Energy-Fund/2021-REF-Application. This economic model may be used by applicants but is not required. The final benefit/cost ratio used will be derived from the AEA model to ensure a level playing field for all applicants. If used, please submit the model with the application. The project will reduce direct energy cost to approximately three quarters of Alaskans who live in communities served by the Railbelt utilities. The lower cost of energy in the Railbelt reduces costs to rural communities who purchase goods and services from the Railbelt region. The lower cost also helps rural residents and government/tribal organizations due to the Power Cost Equalization (PCE) formula. The PCE formula is based on equalizing certain rural electric costs to match the average electric cost in Anchorage, Fairbanks and Juneau, cities that are past beneficiaries of State grants to develop low-cost hydro projects. The Dixon Diversion project will help lower the cost of electricity in both Anchorage and Fairbanks and therefore it will lower electric costs in PCE communities. Based on 75% flow of estimated Dixon, the estimated annual generation from the project is 168,000 MWh per year. Based on preliminary cost estimates, the benefit of the project to the participating utilities could exceed $170 million (NPV) over the 50-year life of the project, when accounting for the cost-based purchase price of the additional energy generated as a result of this diversion project. 6.1.3 Economic Risks Discuss potential issues that could make the project uneconomic to operate and how the project team will address the issues. Factors may include: • Low prices for diesel and/or heating oil • Other projects developed in community • Reductions in expected energy demand: Is there a risk of an insufficient market for energy produced over the life of the project. • Deferred and/or inadequate facility maintenance • Other factors Hydroelectric projects have a high initial cost. This diversion project also has a high cost, but it uses existing generation and transmission sources, thereby significantly reducing the cost as compared to a new hydroelectric project. Once constructed, hydroelectric projects commonly operate for more than 100 years, though this project was calculated using the economic life of 50 years. Since the precipitation will continue at the Dixon basin, this project’s energy generation appears to be economic over its 50-year life. As natural gas prices rise the hydroelectric energy becomes relatively lower cost. As long as there is a Railbelt needing energy there will be a market for Dixon energy. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 27 of 33 11/16/2021 6.1.4 Public Benefit for Projects with Direct Private Sector Sales For projects that include direct sales of power to private sector businesses (sawmills, cruise ships, mines, etc.), please provide a brief description of the direct and indirect public benefits derived from the project as well as the private sector benefits and complete the table below. See Section 1.6 in the Request for Applications for more information. Not Applicable Renewable energy resource availability (kWh per month) Estimated direct sales to private sector businesses (kWh) Revenue for displacing diesel generation for use at private sector businesses ($) Estimated sales for use by the Alaskan public (kWh) Revenue for displacing diesel generation for use by the Alaskan public ($) 6.2 Other Public Benefit Describe the non-economic public benefits to Alaskans over the lifetime of the project. For the purpose of evaluating this criterion, public benefits are those benefits that would be considered unique to a given project and not generic to any renewable resource. For example, decreased greenhouse gas emission, stable pricing of fuel source, won’t be considered under this category. Some examples of other public benefits include: • The project will result in developing infrastructure (roads, trails, pipes, power lines, etc.) that can be used for other purposes • The project will result in a direct long-term increase in jobs (operating, supplying fuel, etc.) • The project will solve other problems for the community (waste disposal, food security, etc.) • The project will generate useful information that could be used by the public in other parts of the state • The project will promote or sustain long-term commercial economic development for the community 1. The project will develop additional infrastructure including roads. 2. Roads will increase access for other projects such as wind energy development and public access for hiking and hunting. 3. The project will reduce Alaska’s estimated greenhouse gas emissions by up to 195,000 tons/year. 4. The project will help Railbelt utilities move toward their renewable energy and carbon reduction goals without raising costs to ratepayers. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 28 of 33 11/16/2021 SECTION 7 – SUSTAINABILITY Describe your plan for operating the completed project so that it will be sustainable throughout its economic life. At a minimum for construction projects, a business and operations plan should be attached and the applicant should describe how it will be implemented. See Section 11. 7.1.1 Operation and Maintenance Demonstrate the capacity to provide for the long-term operation and maintenance of the proposed project for its expected life • Provide examples of success with similar or related long-term operations • Describe the key personnel that will be available for operating and maintaining the infrastructure. • Describe the training plan for existing and future employees to become proficient at operating and maintaining the proposed system. • Describe the systems that will be used to track necessary supplies • Describe the system will be used to ensure that scheduled maintenance is performed The project will be managed by the BPMC. The BPMC has managed the Bradley Lake Hydroelectric project, including operations and maintenance, for 30 years. Insurance and special inspections by FERC finds Bradley Lake has been maintained in good condition. Employees start out as trainees with a training plan. Many operating workers at Bradley Lake stay long term which ensures knowledge about maintaining project is not lost. A computerized maintenance management system ensures O&M is performed at the scheduled times and that necessary supplies are ready. 7.1.2 Financial Sustainability • Describe the process used (or propose to use) to account for operational and capital costs. • Describe how rates are determined (or will be determined). What process is required to set rates? • Describe how you ensure that revenue is collected. • If you will not be selling energy, explain how you will ensure that the completed project will be financially sustainable for its useful life. This project is well-positioned to be financially sustainable and secure because it is an addition to an existing successful hydro project with established governance and financial structures that are managed by AEA and the participating five electric utilities. Governing documents, power sales agreements, O&M agreements and other materials are publicly available at: https://www.akenergyauthority.org/What-We-Do/Railbelt-Energy/Bradley-Lake-Hydroelectric- Project/Bradley-Lake-Governing-Documents AEA provides the accounting support for BPMC’s capital and operating expenses. Bradley Lake expenses are submitted by the utilities to AEA for review, approval, coding, and processing. The financials for Bradley Lake are reviewed by the BPMC and audited annually. Project costs would be paid by each of the participating utility members of the BPMC. In general, utility costs are recovered on a dollar-for-dollar basis through existing and well-established cost of Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 29 of 33 11/16/2021 power adjustment processes. In general, cost of power adjustment factors are included in all retail (residential and commercial) classes of service. Power purchase contracts already exist for Bradley Lake power so revenue for the project through the sale of the additional energy is assured. Additionally, the increased energy output from this project will likely be below the utilities’ avoided costs, so it will reduce the cost of energy to ratepayers, thereby strengthening the assurance that the energy will be purchased. 7.1.2.1 Revenue Sources Briefly explain what if any effect your project will have on electrical rates in the proposed benefit area over the life of the project. If there is expected to be multiple rates for electricity, such as a separate rate for intermittent heat, explain what the rates will be and how they will be determined Collect sufficient revenue to cover operational and capital costs • What is the expected cost-based rate (as consistent with RFA requirements) • If you expect to have multiple rate classes, such as excess electricity for heat, explain what those rates are expected to be and how those rates account for the costs of delivering the energy (see AEA’s white paper on excess electricity for heat).. • Annual customer revenue sufficient to cover costs • Additional incentives (i.e. tax credits) • Additional revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) It is expected that this project would lower the electric rates of all five Railbelt utilities. The project cost is expected to result in a cost of energy that is below the utilities’ current avoided costs. At this preliminary stage, the cost-based rate for energy from the proposed project is expected to be approximately $0.022 per kWh. A more reliable project cost, calculated benefit of the project, and the attendant impact on electric rates will be determined after the necessary studies have been made, including the economic viability of the project. Revenue sources will be the five Railbelt electric utilities who will ultimately recover the costs through electric rates charged to their customers. 7.1.2.2 Power Purchase/Sale The power purchase/sale information should include the following: • Identification of potential power buyer(s)/customer(s) • Potential power purchase/sales price - at a minimum indicate a price range (consistent with the Section 3.16 of the RFA) Identify the potential power buyer(s)/customer(s) and anticipated power purchase/sales price range. Indicate the proposed rate of return from the grant-funded project. Include letters of support or power purchase agreement from identified customers. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 30 of 33 11/16/2021 The additional energy from this project is expected to be purchased by the existing purchasers of Bradley Lake power: Chugach Electric, GVEA, HEA, MEA, and the City of Seward. The cost of the energy is not yet known at this pre-feasibility stage but is estimated to cost approximately 2.2 cents per kWh using current estimates. The price range is conservatively estimated to be 2 to 4 cents per kWh. The utilities’ current avoided cost for fuel and avoided O&M is about 5.5 cents per kWh or higher, resulting in cost savings to utility rate payers. SECTION 8 – PROJECT READINESS 8.1 Project Preparation Describe what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Specifically address your progress towards or readiness to begin, at a minimum, the following: • The phase(s) that must be completed prior to beginning the phase(s) proposed in this application • The phase(s) proposed in this application • Obtaining all necessary permits • Securing land access and use for the project • Procuring all necessary equipment and materials Refer to the RFA and/or the pre-requisite checklists for the required activities and deliverables for each project phase. Please describe below and attach any required documentation. The BPMC is performing reconnaissance and pre-feasibility studies on the Dixon Project with its own funding. An engineering alternatives report will be completed in 2022 identifying the best option for the project (diversion to Bradley Lake or run-of-river hydroelectric facility). If grant funds are acquired, then such funds will be committed to feasibility engineering and environmental studies within months. Contractors will acquire permits and land access as needed prior to study field work. 8.2 Demand- or Supply-Side Efficiency Upgrades If you have invested in energy efficiency projects that will have a positive impact on the proposed project, and have chosen to not include them in the economic analysis, applicants should provide as much documentation as possible including: 1. Explain how it will improve the success of the RE project 2. Energy efficiency pre and post audit reports, or other appropriate analysis, 3. Invoices for work completed, 4. Photos of the work performed, and/or 5. Any other available verification such as scopes of work, technical drawings, and payroll for work completed internally. Not applicable Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 31 of 33 11/16/2021 SECTION 9 – LOCAL SUPPORT AND OPPOSITION Describe local support and opposition, known or anticipated, for the project. Include letters, resolutions, or other documentation of local support from the community that would benefit from this project. Provide letters of support, memorandum of understandings, cooperative agreements between the applicant, the utility, local government and project partners. The documentation of support must be dated within one year of the RFA date of November 16, 2021. Please note that letters of support from legislators will not count toward this criterion. Please see attached Resolution from the BPMC, which represents support from all Railbelt electric utilities. SECTION 10 – COMPLIANCE WITH OTHER AWARDS Identify other grants that may have been previously awarded to the Applicant by AEA for this or any other project. Describe the degree you have been able to meet the requirements of previous grants including project deadlines, reporting, and information requests. Chugach received an EETF grant from AEA for the battery and flywheel demonstration project which has helped inform Chugach’s decisions regarding the addition of a larger grid battery. Chugach has been responsive to requests by AEA and shares performance information with Alaska Center for Energy and Power as needed per agreement between AEA and Chugach. Chugach works closely with AEA on many projects, including supporting electric vehicle charging developments. SECTION 11 – LIST OF SUPPORTING DOCUMENTATION FOR PRIOR PHASES In the space below, please provide a list of additional documents attached to support completion of prior phases. No prior phases have been completed. SECTION 12 – LIST OF ADDITIONAL DOCUMENTATION SUBMITTED FOR CONSIDERATION In the space below, please provide a list of additional information submitted for consideration. Attached is the current draft schedule for the project from the feasibility phase through licensing, conceptual design and final design. Renewable Energy Fund Round 14 Grant Application – Standard Form AEA 23001 Page 32 of 33 11/16/2021 SECTION 13 – AUTHORIZED SIGNERS FORM Community/Grantee Name: Chugach Electric Association, Inc. Regular Election is held: Annually in May Date: January 18, 2022 Authorized Grant Signer(s): Printed Name Title Term Signature Arthur Miller Exec. VP, Regulatory and External Affairs N/A Lee Thibert CEO N/A I authorize the above person(s) to sign Grant Documents: (Must be authorized by the highest ranking organization/community/municipal official) Printed Name Title Term Signature Lee Thibert CEO N/A Grantee Contact Information: Mailing Address: PO Box 196300, Anchorage, AK 99519-6300 Phone Number: (907) 762-4747 Fax Number: (907) 562-0027 Email Address: Lee.thibert@chugachelectric.com Federal Tax ID #: 92-0014224 Please submit an updated form whenever there is a change to the above information. Renewable Energy Fund Round 14 Grant Application -Standard Form S�» f� ... �NffllllfM-1£f0�1A�It\ill1Mft&MoqAfmNl ALASKA ENERGY AUTHORITY swairll TM. ,li>ueaJNfi PCUMENrf'tS t,,yffrl!fl Vil>llfR A:PP�lrJGff-,: A.Contact information and resumes of Applicant's Project Manager, Project Accountant(s), key staff, partners, consultants, and suppliers per application form Section 3.1, 3.4 and 3.6. Applicants are asked to provide resumes submitted with applications in separate electronic documents if the individuals do not want their resumes posted to the project web site. B.Letters or resolutions demonstrating local support per application form Section 9. C.For projects involving heat: Most recent invoice demonstrating the cost of heating fuel for the building(s) impacted by the project. D.Governing Body Resolution or other formal action taken by the applicant's governing body or management per RFA Section 1.4 that: •Commits the organization to provide the matching resources for project at the match amounts indicated in the application. •Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. •Provides as point of contact to represent the applicant for purposes of this application. •Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. E.An electronic version of the entire application on CD or other electronic media, per RFA Section 1.7. F.CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations and that they can indeed commit the entity to these obligations. Print Name Signature Title Date AEA 23001 Page 33 of33 11/16/2021 Lee D. Thibert Chief Executive Officer 1/18/2022 Attachments 1. BPMC Resolution No. 21-03 2. Project Schedule The following attachments are submitted as separate PDFs per RFA instructions. 3. Resume: Mike Salzetti 4. Resume: Mike Brodie Dixon-Bradley Lake AlternativePage 1 of 1