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HomeMy WebLinkAbout2.0 REFRoundIXApplication KHL Grant Lake HydroGRANT LAKE HYDROELECTRIC PROJECT REF Round IX Grant Application Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 1 of 34 7/8/14 Application Forms and Instructions This instruction page and the following grant application constitutes the Grant Application Form for Round VIII of the Renewable Energy Fund. A separate application form is available for projects with a primary purpose of producing heat (see 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 Request for Applications (RFA) and both application forms is available online at: http://www.akenergyauthority.org/Programs/Renewable-Energy-Fund/Rounds#round9. •If you need technical assistance filling out this application, please contact Shawn Calfa, the Alaska Energy Authority Grants Administrator at (907) 771-3031 or at scalfa@aidea.org. •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. •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 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, and proof of site control, utility agreements, 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 IX 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. REMINDER: •Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority 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. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 2 of 34 7/8/14 •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 the Authority. 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 IX Grant Application - Standard Form AEA 15003 Page 3 of 34 7/8/14 SECTION 1 – APPLICANT INFORMATION Please specify the legal grantee that will own, operate, and maintain the project upon completion. Name (Name of utility, IPP, local government, or other government entity) Kenai Hydro LLC Type of Entity: Fiscal Year End: Independent Power Producer December 31 Tax ID # Tax Status: ☒ For-profit ☐ Non-profit ☐ Government (check one) Date of last financial statement audit: Mailing Address: Physical Address: 3977 Lake Street, Homer, AK 99603 Same Telephone: Fax: Email: 907-283-2375 907-335-6164 msalzetti@homerelectric.com 1.1 Applicant Point of Contact / Grants Manager Name: Mikel Salzetti Title: Manager Renewable Energy Development Mailing Address: 3977 Lake Street, Homer, AK 99603 Telephone: Fax: Email: 907-283-2375 907-335-6164 msalzetti@homerelectric.com 1.1.1 APPLICANT SIGNATORY AUTHORITY CONTACT INFORMATION Name: Bradley P. Janorschke Title: General Manager Mailing Address: 3977 Lake Street, Homer, AK 99603 Telephone: 907-283-2312 Fax: 907-283-7122 Email:bjanorschke@homerelectric.com 1.1.2 Applicant Alternate Points of Contact Name Telephone: Fax: Email: Bradley P. Janorschke 907-283-2312 907-283-7122 bjanorschke@homerelectric.com Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 4 of 34 7/8/14 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, or ☒An independent power producer in accordance with 3 AAC 107.695 (a) (1), or ☐A local government, or ☐A governmental entity (which includes tribal councils and housing authorities) 1.2 APPLICANT MINIMUM REQUIREMENTS (continued) Please check as appropriate. ☒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 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 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 http://www.akenergyauthority.org/Programs/Renewable-Energy-Fund/Rounds#round9. (Any exceptions should be clearly noted and submitted with the application.) (Indicate by checking the box) ☒1.2.5 W e 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 IX Grant Application - Standard Form AEA 15003 Page 5 of 34 7/8/14 SECTION 2 – PROJECT SUMMARY 2.1 Project Title Provide a 4 to 7 word title for your project. Type in the space below. Grant Lake Hydroelectric 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 at 907-771-3031. The project would be harnessing the hydro energy of the Grant Lake watershed located near Moose Pass, Alaska. Latitude: 60°27'40.74"N Longitude: 149°20'14.18"W 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. Persons benefitted would be the utility customers on the Kenai Peninsula. 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 IX Grant Application - Standard Form AEA 15003 Page 6 of 34 7/8/14 2.4 Project Description Provide a brief one paragraph description of the proposed project. The Grant Lake Hydroelectric Facility would consist of 5 MW of installed capacity with an average annual output of 19,500 MWh of energy, installed on the Grant lake watershed near Moose Pass, Alaska. The proposed Project is comprised of an intake structure in Grant Lake, a tunnel, a surge tank, a penstock, a powerhouse, a tailrace detention pond, a switchyard with disconnect switch & step-up transformer, and an overhead or underground transmission line. The intake would be in Grant Lake near its outlet. Water would be conveyed from the intake through a 3200’ tunnel and a150 foot penstock to a powerhouse containing two Francis-type turbines. The powerhouse would be located near the bank of Grant Creek and would discharge through a tailrace into Grant Creek. A transmission line would connect the facility to the Railbelt grid near Moose Pass. The layout has been recently revised to minimize the Project footprint. The current design omits the construction of a diversion structure (dam) at the outlet of Grant Lake. All 13-feet of storage that will be utilized for power generation will be drawn from below the natural lake outlet. The tailrace channel, which returns flow from the powerhouse to Grant Creek, will be located at the upstream side of Reach 4. Supplemental water will be routed from the intake tunnel to provide instream flows for fish in the bypass reach (Reach 5).This tailrace location ensures that the reaches with the best natural habitat for fish will not be dewatered. Please see Exhibits A & B of the attached FERC Draft License Application for a complete project description and details on the proposed operation of the Project. 2.5 Scope of Work Provide a 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. The proposed Project consists of constructing a new 5-Megawatt hydroelectric facility on Grant Lake and Grant Creek near Moose Pass, Alaska. The new Project would divert water from Grant Lake and deliver the flow to a powerhouse located near the outlet of the existing Grant Creek natural, incised rock canyon downstream from Reach 5. The Project would include the following major components: •An intake structure in Grant Lake. •A tunnel extending from the lake intake to just east of the powerhouse. •A penstock and surge tank located at the west end of the tunnel. •A powerhouse with two Francis turbines providing a combined 5-Megawatt output. The maximum design flow will be approximately 385 cfs. •Tailrace detention pond. •Switchyard with disconnect switch and step-up transformer. •An overhead or underground transmission line. •Access road from the Seward Highway to the powerhouse and extending up to the intake structure at Grant Lake. •A pole mounted disconnect switch where the transmission line intersects the main power transmission line. Under this funding request the following tasks will be performed: LICENSING, LAND ACQUSITION & PERMITTING It is anticipated that a Final License Application (FLA) for this project will be submitted to the Federal Energy Regulatory Commission (FERC) in December of 2015. Funds from this grant along with matching funds and in-kind labor match will be utilized to obtain the required permits, leases, easements and / or rights to construct and operate this project. This will include: Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 7 of 34 7/8/14 •Working with the Alaska Department of Natural Resources (ADNR) to obtain the appropriate easements and / or leases from the ADNR. This will require working with ADNR to determine if there are any conflicts within the current management and permitting guidelines within the Kenai River Comprehensive Management Plan (KRCMP) and the Kenai Area Plan (KAP) and if there are conflicts working with the appropriate entities to get amendments or MOUs that address the conflicts and allow ADNR permits, leases, easements and / or rights to be obtained. •Obtaining a railroad crossing easement if discussions with the Alaska Railroad indicate that a new crossing would be better that the existing road crossing •Obtaining a U.S. Forest Service (USFS) Special Use Permit. •Obtaining a Section 404 Permit from the U.S. Army Corps of Engineers. •Obtaining an EPA NPDES permit •Continuing work with the USFS and other Agencies on a re-routed easement for the Commemorative Iditarod National Historic Trail. •Obtaining any other permits, licenses, leases, easements, or rights to construct and operate the project. FINAL DESIGN Funds from this grant along with matching funds and in-kind labor match will be utilized to complete the final design tasks: •Geotechnical Field Explorations •Additional Topographic Mapping •Prepare Engineering Design Bid Package •Prepare 50% Plans and Specifications •Prepare 90% Plans and Specifications •Prepare 100% Plans and Specifications •Issue Stamped/Signed Construction Documents •Prepare QCIP •Prepare Environmental Plans •Prepare Construction Plans •FERC Review and Approval to Construct •Prepare Water-to-Wire Bid Package •Review and Select Vendor •Limited Award for Shop Drawings Although the final design work would be competitively bid, attached is a proposed detailed project work scope from McMillen Jacobs Associates whom KHL has retained to do all preliminary engineering design required for the FERC FLA. SECTION 3 – Project Management, Development, and Operation 3.1 Schedule and Milestones Criteria: Stage 2-1.A: The proposed schedule is clear, realistic, and described in adequate detail. 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 in 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 of your proposed project. Add additional rows as needed. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 8 of 34 7/8/14 Milestones Tasks Start Date End Date Deliverables LICENSING, LAND ACQUSITION & PERMITTING 115 Submit FERC Final License Application 12/31/2015 12/31/2015 FLA 200 Acquire Land and Easements 8/1/2016 6/1/2017 Leases, Easements & Rights 205 404 Permit 7/1/2016 4/1/2017 404 Permit 210 USFS Special Use 7/1/2016 4/1/2017 USFS Special Use Permit 220 NPDES or APDES Permit 3/1/2017 4/1/2017 NPDES Permit 230 INHT Re-route 7/1/2016 6/1/2017 MOU 240 Other permits, licenses, leases, easements, and / or rights as required 8/1/2016 1/1/2018 Permits, licenses, leases, easements, and / or rights as required FINAL ENGINEERING AND FERC PLANS 300 Geotechnical Field Explorations 7/1/2016 10/1/2016 Detailed construction cost estimate for the proposed tunnel 305 Additional Topographic Mapping 7/1/2016 10/1/2016 Topographic & Bathymetric Maps 310 Prepare Engineering Design Bid Package 7/1/2016 8/1/2016 Bid Package 315 Bid Period 8/1/2016 9/1/2016 N/A 320 Review and Select Engineering Contractor 9/1/2016 10/1/2016 Bid Award 325 Prepare 50% Plans and Specifications 10/1/2016 1/30/2017 50% Draw & Spec Package 330 Prepare 90% Plans and Specifications 1/30/2017 6/1/2017 90% Draw & Spec Package 335 Prepare 100% Plans and Specifications 6/2/2017 9/1/2017 100% Draw & Spec Package 340 Issue Stamped/Signed Construction Documents 11/1/2017 11/1/2017 Stamped/Signed Construction Documents 345 Prepare QCIP 9/1/2017 11/1/2017 Written Quality Control and Inspection Program 350 Prepare Environmental Plans 1/30/2017 9/1/2017 Written Environmental Plans 355 Prepare Construction Plans 6/2/2017 11/1/2017 Written Construction Plans 360 FERC Review and Approval to Construct 11/1/2017 1/30/2018 Final Design Documentation Report 365 Prepare Water-to-Wire Bid Package 10/1/2016 1/1/2017 Water-to-Wire Bid Package 375 Bid Period 1/1/2017 3/1/2017 N/A 380 Review and Select Vendor 3/1/2017 4/1/2017 N/A 385 Limited Award for Shop Drawings 4/1/2017 5/1/2017 Bid Award 3.2 Budget Criteria: Stage 2-1.B: The cost estimates for project development, operation, maintenance, fuel, and other project items meet industry standards or are otherwise justified. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 9 of 34 7/8/14 3.2.1 Budget Overview Describe your financial commitment to the project. List the amount of funds needed for project completion and the anticipated nature and sources of funds. Consider all project phases, including future phases not covered in this funding request. Phase Description Value 1 Reconnaissance Study $131,442 2 Resource Monitoring, Feasibility & Conceptual Design $5,712,558 3 Final Design & Permitting $4,875,528 4 Construction & Commissioning $48,348,280 TOTAL PROJECT COST $59,067,808 Kenai Hydro has received $2,100,000 in grant funds. Homer Electric has spent or committed to spend $3,744,000. It is anticipated that the balance of funds will come from a combination of financing, Federal grants, State grants, private grants and possible Legislative appropriation. 3.2.2 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. 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 at 907-771-3031 or by emailing the Grants Administrator, Shawn Calfa, at scalfa@aidea.org. Milestone or Task 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 ) Phase III LICENSING, LAND ACQUSITION & PERMITTING $995,680 $181,247 Cash $1,176,927 FINAL ENGINEERING $3,004,320 $544,278 Cash $3,548,598 KENAI HYDRO PM & ADMIN $ $150,000 In-Kind $150,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTALS $4,000,000 $875,528 $4,875,525 Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 10 of 34 7/8/14 Budget Categories: Direct Labor & Benefits $ $150,000 $150,000 Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $4,000,000 $725,525 $4,725,525 Construction Services $ $ $ Other $ $ $ TOTALS $4,000,000 $875,525 $4,875,525 Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 11 of 34 7/8/14 Milestone or Task 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 ) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTALS $ $ $ Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ $ $ Construction Services $ $ $ Other $ $ $ TOTALS $ $ $ Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 12 of 34 7/8/14 Milestone or Task 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 ) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTALS $ $ $ Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ $ $ Construction Services $ $ $ Other $ $ $ TOTALS $ $ $ Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 13 of 34 7/8/14 Milestone or Task 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 ) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTALS $ $ $ Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ $ $ Construction Services $ $ $ Other $ $ $ TOTALS $ $ $ 3.2.3 Cost Justification Indicate the source(s) of the cost estimates used for the project budget. In developing the budget estimates for final engineering and construction, the recent hands on experience at the Allison Creek and Blue Lake Hydroelectric projects was used as the basis for developing the Grant Lake Project cost estimates. The understanding gained from these projects of the environmental, regulatory, and FERC requirements for the design and construction of a hydroelectric project in the State of Alaska were applied to ensure a comprehensive and representative project cost. The site specific challenges for construction at the Grant Lake project were also incorporated into the estimate including establishing access, short construction windows, challenging weather conditions, and manpower/equipment acquisition. Specific assumptions and sources used in developing the estimate included the following: Equipment costs for the turbine/generator equipment were obtained from manufacturers for the proposed two unit powerhouse configuration. Quotes assumed a water-to-wire package which included all required mechanical and electrical equipment for the powerhouse. These budget estimates were then compared to other similar constructed projects to ensure consistency. Tunnel costs were based on the actual completed production rates for the Allison Creek and Blue Lake tunnels. Estimated both the linear foot cost as well as cubic yard cost to determine average cost per linear foot. Rock projected at Grant Lake is similar to that found at Allison. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 14 of 34 7/8/14 Transmission line costs were based on actual bids received for Allison Creek, which were then adjusted to account for easier access for the line construction, as compared to the Allison where access had to be constructed. Substation costs were developed based on actual costs for the Allison and Blue Lake equipment and field construction at Allison which has a similar powerhouse size. Powerhouse costs were developed based on a developed footprint of the powerhouse and unit costs developed for similar projects for concrete placement, powerhouse building, etc. The Allison Creek project provided a solid basis for production rates such as concrete placement, excavation, and building costs including electrical and balance of plant. General conditions and mobilization/demobilization costs were based on actual costs from the Allison and Blue Lake projects for equipment and materials shipment from Seattle via barge. Housing and administrative costs were developed reflecting the short summer construction season and limited housing availability near the project site. Engineering costs were developed based on a detailed scope and labor breakdown to reflect the Grant Lake Project. Specifically, the engineering level of detail and documentation to meet FERC expectations was incorporated into the estimate. Construction administration and supervision costs were developed based on the FERC requirements for the Allison Creek and Blue Lake project. Staffing levels were developed to provide a FERC mandated level of oversight in the field. Office engineering support was reflective of the actual level of effort required for the Allison and Blue Lake projects. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 15 of 34 7/8/14 3.2.4 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 $4,000,000 Cash match to be provided $725,528 In-kind match to be provided $150,000 Total costs for project phase(s) covered in application (sum of above) $4,875,528 3.2.5 Total Project Costs Indicate the anticipated total cost by phase of the project (including all funding sources). Use actual costs for completed phases. Reconnaissance $131,442 Feasibility and Conceptual Design $5,712,558 Final Design and Permitting $4,875,528 Construction $48,348,280 Total Project Costs (sum of above) $59,067,808 3.2.6 Operating and Maintenance Costs O&M costs can be estimated in two ways for the standard application. Most proposed RE 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. Options O&M Impact of proposed RE project 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. $ 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. $ 3.3 Project Communications Criteria: Stage 2-1.C: The applicant’s communications plan, including monitoring and reporting, is described in adequate detail. Describe how you plan to monitor the project and keep the Authority informed of the status. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 16 of 34 7/8/14 Project management and financial control will issue reports to AEA on a mutually agreeable schedule throughout the life of the grant. These reports can be customized to meet AEA needs. Additionally, AEA can access the Kenai Hydro website (www.kenaihydro.com) that serves as a conduit for information, including a library of existing information, a calendar of events, and a repository for contact information for interested parties. Alternative Contact: Bradley P. Janorschke, General Manager (907) 283-2312 bjanorschke@homerelectric.com 3.4 Operational Logistics Criteria: Stage 2-1.D: Logistical, business, and financial arrangements for operating and maintaining the project throughout its lifetime and selling energy from the completed project are reasonable and described in adequate detail. Describe the anticipated logistical, business, and financial arrangements for operating and maintaining the project throughout its lifetime and selling energy from the completed project. The facility will be remotely operated and monitored from the existing HEA Dispatch Center which is manned 24 hours a day, 7 days a week, 365 days a year. Scheduled monthly site inspection, planned and unplanned maintenance will be conducted by HEA’s exiting roving Operations & Maintenance crew that currently maintains and operates HEA’s unmanned thermal generation plants in Nikiski, Soldotna and Seldovia, Alaska. Existing personnel will provide the labor needed to operate and maintain the facility. Existing company vehicles, tooling and equipment currently utilized by the roving operations and maintenance crew will be utilized to conduct onsite work. Electricity generated at the Project would be transmitted via Chugach Electric’s 115-kV transmission line that extends from the Lawing Substation near the Project to the Quartz Creek Substation where it enters HEA’s transmission and distribution system. The Project would become an integral component of HEA’s overall generation portfolio. Except for the small amount of electricity used to power the auxiliary Project equipment and facilities, the power generated by the Project would be dispatched as a part of the entire HEA generation system. The Project generation would be pooled with other HEA generation resources and shared among retail and wholesale purchasers. As with all generation resources available to HEA, the Project would be dispatched economically to minimize total generation costs while meeting, licensing requirements, reliability requirements and contractual service obligations. KHL’s objective in operating the Project is to optimize HEA’s ability to meet load throughout the integrated system, balancing its hydro and thermal energy sources. Within the constraints of the licensed operating levels, KHL would operate the Project in the temporal mode most advantageous to the system. The energy from the Project would primarily be used for base load as well as taking advantage of any available spinning reserve. It would occasionally be used for peaking where appropriate. This added source of generation that is quite distant from other generation sources on the Railbelt grid will improve power quality, reduce voltage drop and provide a generation source to an area of the system that would otherwise be susceptible to an outage with a single transmission line interruption. Additionally, the location of the Project that is near the boundaries of two other electric utilities that currently wheel power across HEA’s systems, sets up the possibility that future, mutually beneficial wheeling arrangements may be possible. SECTION 4 – QUALIFICATIONS AND EXPERIENCE Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 17 of 34 7/8/14 4.1 Project Team Criteria: Stage 2-2.A: The Applicant, partners, and/or contractors have sufficient knowledge and experience to successfully complete and operate the project. If the applicant has not yet chosen a contractor to complete the work, qualifications and experience points will be based on the applicant’s capacity to successfully select contractors and manage complex contracts. Criteria: Stage 2-2.B: The project team has staffing, time, and other resources to successfully complete and operate the project. Criteria: Stage 2-2.C: The project team is able to understand and address technical, economic, and environmental barriers to successful project completion and operation. Criteria: Stage 2-2.D: The project team has positive past grant experience. 4.1.1 Project Manager Indicate who will be managing the project for the Grantee and include contact information, and a resume. In the electronic submittal, please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. 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. Mr. Mike Salzetti will continue in his role as project manager. Mike has been with the Grant Lake Hydroelectric project since June of 2010. He has over 14 years of project management experience and played an integral role in the design of Homer Electric’s new generation facilities. Mr. Salzetti’s contact information in shown in Section 1.1 of this application and his professional qualifications are included. Mr. Salzetti has the guidance, support, staffing, and resources of Homer Electric Association, the sole owner of Kenai Hydro LLC, to support him in all phases of this project. 4.1.2 Expertise and Resources Describe the project team including the applicant, partners, and contractors. Provide sufficient detail for reviewers to evaluate: • the extent to which the team has sufficient knowledge and experience to successfully complete and operate the project; • whether the project team has staffing, time, and other resources to successfully complete and operate the project; • how well the project team is able to understand and address technical, economic, and environmental barriers to successful project completion and operation. 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. Include brief resumes for known key personnel and contractors 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 Mr. Mike Salzetti will be responsible for project management and direct oversight of the project development. He has the guidance, support and staffing of his parent organization for managing this project from its current state through final project design and permitting. Kenai Hydro LLC, whose sole member is the Homer Electric Association (HEA), was created to evaluate and develop the site as a low impact hydroelectric facility. Kenai Hydro, LLC has contracted well-qualified consultants to conduct the natural resources studies, engineering feasibility assessments and licensing consultation services. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 18 of 34 7/8/14 Kenai Hydro will continue its successful partnership with McMillen (formerly Long View Associates) as a licensing and permitting consultant. Mr. Cory Warnock with McMillen who has been involved with the project since 2011 will continue in his role as Licensing & Permitting Consultant, his resume and qualifications are attached. In addition to their role as Licensing Consultant, McMillen was the lead contractor in the natural resources study effort to bring this phase of the project in on time and under budget. The final design contract will be awarded on a competitive bid process per established HEA policies. 4.1.3 Project Accountant(s) Indicate who will be performing the accounting of this project for the grantee and include a resume. In the electronic submittal, please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. If the applicant does not have a project accountant indicate how you intend to solicit financial accounting support. Diana Imlay, Accounting Supervisor 907-235-3397 dimlay@homerelectric.com Resume attached. 4.1.4 Financial Accounting System 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 Renewable Energy Fund Grant Program. South Eastern Data Corporation (SEDC). Julia Clymer, Controller 4.2 Local Workforce Criteria: Stage 2-2.E: The project uses local labor and trains a local labor workforce. Describe how the project will use local labor or train a local labor workforce. In the construction of the project, HEA Management Directives governing contracting and procurement will be followed. These directives include consideration for such things as material procurement from pre-qualified businesses operating on the Kenai Peninsula, possession of an Alaska Business license, maintenance of an office and staff within Alaska and advertisements in general circulation publications as defined by Alaska State Statutes that promote local contracting and procurement. For operations and maintenance of the facility once it is constructed, existing local HEA employees will remotely operate and monitor the facility from the existing HEA Dispatch Center which is manned 24 hours a day, 7 days a week, 365 days a year. Scheduled monthly site inspection, planned and unplanned maintenance will be conducted by HEA’s exiting roving Operations & Maintenance crew that currently maintains and operates HEA’s unmanned thermal generation plants in Nikiski, Soldotna and Seldovia, Alaska. Existing local personnel will provide the labor needed to operate and maintain the facility. Existing company vehicles, tooling and equipment currently utilized by the roving operations and maintenance crew will be utilized to conduct onsite work. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 19 of 34 7/8/14 SECTION 5 – TECHNICAL FEASIBILITY 5.1 Resource Availability Criteria: Stage 2-3.A: The renewable energy resource is available on a sustainable basis, and project permits and other authorizations can reasonably be obtained. 5.1.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available, including average resource availability on an annual basis. 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. 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. Using the hydrology data and the habitat parameters identified in the natural resources studies, KHL’s consultant (McMillen), developed an operational study. An energy generation model was then developed to simulate the Project under these proposed operations. Utilizing the average daily inflows from the composite hydrology record, the anticipated annual energy production would be 19,500,000 kilowatt-hours. A copy of the Project Operations and Fisheries Habitat Technical Memo documenting this work is attached to the grant application. Pros Hydropower is renewable, long-lived, efficient, dispatchable and environmentally responsible energy that emits no greenhouse gases, waste or air pollution. It uses readily available technologies, it is low maintenance, displaces consumption of fossil fuels, and it provides long-term price stability to energy consumers. This particular facility could greatly enhance HEA’s spinning reserve capacity which provides an additional fuel savings. Hydropower opportunities on the Kenai Peninsula are extremely limited; potential resources have been catalogued by the US Geological Survey – Water Resources of Alaska. Proximity to the Railbelt grid, low impact and available energy recommend a Grant Lake hydro facility to be atop the short list of viable Kenai Peninsula renewable resources. The most expedient solution to local energy needs is construction of natural gas-fired generation. These units are less expensive to procure and install, require a much shorter time to permit, and have a relatively small footprint compared to hydro power. However, gas-fired units are not sustainable, subject to market-driven fuel pricing and availability, shorter lived, cost more to operate and maintain, and emit greenhouse gases. Cons Disadvantages of hydropower include high initial investment, relatively long time required to permit/license, and potential impact on habitats and water quality. Included with this application is the Draft FERC License Application consisting of the following items: GrantLk (P-13212) DLA Vl1 Content Definitions 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Cover Letter 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 InitialStmt 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit A (Project Description) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit B (Project Operations & Resource Utilization) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit C (Construction Schedule) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit D (Project Costs & Financing) 03-27-15 FINAL Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 20 of 34 7/8/14 GrantLk (P-13212) DLA Vl1 Exhibit E (Environmental Analysis) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit F (General Design Drawings & Reports) 03-27-15 FINAL (Public) GrantLk (P-13212) DLA Vl1 Exhibit G (Project Boundary Maps) 03-27-15 FINAL Pursuant to 18 CFR §4.39(e), Exhibit F design drawings showing major structures, as well as the Preliminary Supporting Design Report, were filed separately with FERC as Critical Energy Infrastructure Information (CEII). Procedures for obtaining access to CEII may be found at 18 CFR §388.113. Requests for access to CEII should be made to the FERC’s CEII Coordinator. 5.1.2 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. • List of applicable permits • Anticipated permitting timeline • Identify and describe potential barriers Permits • A permit to invoke the Traditional License Program has been granted by FERC • A 1st & 2nd Preliminary Permit has been granted by FERC • A FERC Draft License Application 3/2015 • A FERC Final License Application 12/2015 • 404 Permit 4/2017 • USDA Forest Service, Special Use Permit 4/2017 • NPDES Permit 4/2017 • No known potential barriers 5.2 Project Site Criteria: Stage 2-3.B: A site is available and suitable for the proposed energy system. 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. The legal description and ownership of lands (ADNR 2006) within the proposed project boundary are provided in the table below. All land is referenced to the Seward Meridian. Un-shaded rows pertain to the Grant Lake outlet and Grant Creek. Shaded rows include Grant Lake in its entirety and potential transmission areas. KHL will need to work with the Alaska Department of Natural Resources (ADNR) to obtain the appropriate easements and / or leases from the ADNR. This will require working with ADNR to determine if there are any conflicts within the current management and permitting guidelines within the Kenai River Comprehensive Management Plan (KRCMP) and the Kenai Area Plan (KAP) and if there are conflicts working with the appropriate entities to get amendments or MOUs that address the conflicts and allow ADNR permits, leases, easements and / or rights to be obtained. KHL has made extensive progress with respect to developing a mutually acceptable re-route of the proposed Iditarod National Historic Trail (INHT) through the Grant Lake Hydroelectric Project Area. KHL will continuing work with the USFS and other Agencies on a re-routed easement for the INHT. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 21 of 34 7/8/14 An Alaska Railroad Corp., Access Road & Transmission Line ROW Crossing will be required. Additional Transmission Line Right-of-Way, lease or purchase agreements will be required ADNR, Water Rights will be required. It does not appear that any facilities of infrastructure will be located on the two private land parcels. Township Range Section Ownership 5N 1W 36 Private 5N 1E 27 USDA Forest Service 5N 1E 28 USDA Forest Service 5N 1E 29 USDA Forest Service 5N 1E 30 State patented land 5N 1E 31 State patented land 5N 1E 32 State patented land 5N 1E 33 USDA Forest Service 5N 1E 34 USDA Forest Service 5N 1E 35 USDA Forest Service 5N 1E 36 USDA Forest Service 4N 1E 1 USDA Forest Service 4N 1E 2 USDA Forest Service 4N 1E 3 USDA Forest Service 4N 1E 5 USDA Forest Service 4N 1E 6 State patented land 4N 1E 7 State patented land 4N 1W 1 Private 4N 1W 12 Private 5.3 Project Risk Criteria: Stage 2-3.C: Project technical and environmental risks are reasonable. 5.3.1 Technical Risk Describe potential technical risks and how you would address them. Kenai Hydro is very encouraged by the natural resources study results for this project and the proposed operating scenario resulting from this information. Kenai Hydro has engaged in significant and positive consultation and collaboration with Stakeholders and believes that all issues that have been identified can be addressed with a suite of protection, mitigation and enhancement (PM&E) measures and engineered solutions that are identified in the Draft License Application and Draft Management Plans and will be further refined in the Final FERC License Application. The Project has no know technical risks at this time. 5.3.2 Environmental Risk Explain whether the following environmental and land use issues apply, and if so how they will be addressed: • Threatened or endangered species • Habitat issues • Wetlands and other protected areas Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 22 of 34 7/8/14 • Archaeological and historical resources • Land development constraints • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and describe other potential barriers An extensive suite of natural resources studies have been completed on this project. The results of these studies are included with this grant application in the following reports: • Grant Lk Fisheries Assessment Final Report • Grant Lk Geomorphology Final Report • Grant Lk IFIM Final Report • Grant Lk Macroinvertebrate Final Report • Grant Lk RecVis Final Report • Grant Lk Terr Final Report June • Grant Lk WQ-Hydrology Final Report * A Cultural Resources report was completed but due to the sensitive nature of its content it was not included with the grant application. Kenai Hydro is very encouraged by the natural resources study results for this project and the proposed operating scenario resulting from this information. Kenai Hydro has engaged in significant and positive consultation and collaboration with Stakeholders and believes that all issues that have been identified can be addressed with a suite of protection, mitigation and enhancement (PM&E) measures and engineered solutions that will be identified in the Draft and Final License Applications. 5.4 Existing and Proposed Energy System Criteria: Stage 2-3.D: The proposed energy system can reliably produce and deliver energy as planned. 5.4.1 Basic Configuration of Existing Energy System Describe the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. Nikiski Combined Cycle Plant (Steam/Gas) 80 MW CT 1984, ST 2014 Soldotna Combustion Turbine Plant (Gas) 48 MW 2014 Bernice Lake Combustion Turbine Plant (Gas) 80 MW 3 Units 1971, 1978, 1981 Bradley Lake Hydroelectric Project (hydro) 14 MW 1991 Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 23 of 34 7/8/14 Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank) i. Number of generators/boilers/other ii. Rated capacity of generators/boilers/other iii. Generator/boilers/other type iv. Age of generators/boilers/other v. Efficiency of generators/boilers/other vi. Is there operational heat recovery? (Y/N) If yes estimated annual displaced heating fuel (gallons) b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor ii. Annual O&M cost for non-labor c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] ii. Fuel usage Diesel [gal] Other iii. Peak Load iv. Average Load v. Minimum Load vi. Efficiency vii. Future trends d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other N/A 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 24 of 34 7/8/14 5.4.2 Future Trends Describe the anticipated energy demand in the community over the life of the project. HEA has over 22,400 member-owners and provides power to over 33,300 meters located throughout the Kenai Peninsula. HEA sold 465 million kilowatt-hours of electricity in 2014 and its latest published Equity Management Plan indicates a 1% per year growth rate over the next 15 years. Predictions beyond this time frame are very difficult but HEA has no indication that this gradual increase in load would not continue for the 100 year plus life expectancy of this project. Additionally, HEA is interconnected to a regional Alaskan grid known as the “Railbelt” via a three phase, 115 kV transmission line. The Railbelt is generally defined as the service areas of six regulated public utilities: Anchorage Municipal Light & Power (ML&P), Chugach Electric Association (Chugach), Golden Valley Electric Association (GVEA), HEA, Matanuska Electric Association (MEA), and the City of Seward Electric System (SES). This region covers a significant area of the state and contains the majority of the state’s population and economic activity; it extends from Homer to Fairbanks and includes areas such as Anchorage, Fairbanks, and the Matanuska-Susitna Valley. HEA can provide power to Alaskan residents from Anchorage to Fairbanks via wholesale and economy energy sales to the other five interconnected electric utilities. Also, HEA could experience a significant load growth if the proposed Alaska LNG project comes to fruition. 5.4.3 Impact on Rates Briefly explain what if any effect your project will have on electrical rates in the proposed benefit area over the life of the project. For PCE eligible communities, please describe the expected impact would be for both pre and post PCE. Depending on available grant funds, Legislative appropriations, long term financing rates and term, it is estimated that the project will not negatively impact rates and could potentially help to stabilize rates. Over the long term, 50 to 100 years out the project will reduce electric rates. 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 • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Integration plan • Delivery methods The proposed Project consists of constructing a new 5-Megawatt hydroelectric facility on Grant Lake and Grant Creek near Moose Pass, Alaska. The new Project would divert water from Grant Lake and deliver the flow to a powerhouse located near the outlet of the existing Grant Creek natural, incised rock canyon downstream from Reach 5. The Project would include the following major components: • An intake structure in Grant Lake. • A tunnel extending from the lake intake to just east of the powerhouse. • A penstock and surge tank located at the west end of the tunnel. • A powerhouse with two Francis turbines providing a combined 5-Megawatt output. The maximum design flow will be approximately 385 cfs. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 25 of 34 7/8/14 • Tailrace detention pond. • Switchyard with disconnect switch and step-up transformer. • An overhead or underground transmission line. • Access road from the Seward Highway to the powerhouse and extending up to the intake structure at Grant Lake. • A pole mounted disconnect switch where the transmission line intersects the main power transmission line. The layout has been revised to minimize the Project footprint. The current design does not include the construction of a diversion structure (dam) at the outlet of Grant Lake. All 13-feet of storage that will be utilized for power generation will be drawn from below the natural lake outlet. The tailrace channel, which returns flow from the powerhouse to Grant Creek, will be located at the upstream of Reach 4. This tailrace location ensures that the reaches with the best natural habitat for fish will not be dewatered. The detention pond will be utilized to allow the powerhouse to meet the spin requirements without resulting in drastic changes to in-channel flows. Anticipated Capacity Factor of 45% Anticipated Annual Generation of 19,500,000 Kwh Anticipated Barriers – None The power would be integrated via economic dispatch through HEA’s dispatch system Power would be delivered to the Railbelt grid via a one mile long transmission line from the powerhouse to existing transmission infrastructure located along the Seward Highway. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] 5 MW b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 19,500,000 kWh ii. Heat [MMBtu] c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] N/A ii. Coal [tons or MMBtu] iii. Wood or pellets [cords, green tons, dry tons] iv. Other d) i. Estimate number of hours renewable will allow powerhouse to turn diesel engines off (fill in as applicable) 5.4.5 Metering Equipment Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 26 of 34 7/8/14 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. HEA has standardized on a Schneider Electric ION 7330 meter part number M7330A0B0C0E0A0A (20-65 VDC power supply). The cost of which is included in the construction cost estimate. SECTION 6 – ECONOMIC FEASIBILITY AND BENEFITS 6.1 Economic Feasibility Criteria: Stage 2-4.A: The project is shown to be economically feasible (net positive savings in fuel, operation and maintenance, and capital costs over the life of the proposed project). 6.1.1 Economic Benefit Explain the economic benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following: • Anticipated annual and lifetime fuel displacement (gallons and dollars) • Anticipated annual and lifetime revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) • 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) The economic model used by AEA is available at http://www.akenergyauthority.org/Programs/Renewable-Energy-Fund/Rounds#round9. 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. Potential Fuel Displacement According to the AEA Economic Model, it is estimated that $171,628,469 can be saved in avoided fuel cost over the first 50-year of the project. Anticipated Annual Revenue 4th quarter 2014 HEA rates were $0.22029 / Kwh. At 19,500,000 Kwh per year the annual revenue would be $4,295,655. With no escalation in rates this would result in a 50 year lifetime revenue value of $214,782,750 and a 100 year lifetime revenue value of $429,565,500. Potential Additional Annual Incentives The potential tax credits are purely speculative, and will depend on the form of the business entity that carries the project into licensing, construction and operation. Potential Additional Annual Revenue Streams It may be possible to sell Renewable Energy Credits engendered by this project. The renewable energy will incrementally stabilize the long term price of power providing an attractive incentive to potential local businesses. It may also be possible to sell spinning reserve capacity from this asset when HEA is not utilizing the spin from this facility. 6.1.2 Power Purchase/Sale Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 27 of 34 7/8/14 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 • Proposed rate of return from grant-funded project 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. Energy from the project will be sold to Homer Electric Association (HEA) for the benefit of its customers at prevailing rates. It should be noted that the project would incrementally stabilize long term electricity rates. It is likely that the acceptable rate-of-return will be kept to single-digit margins. A secondary market is other Railbelt utilities. 6.1.3 Public Benefit for Projects with Private Sector Sales For projects that include 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. N/A Renewable energy resource availability (kWh per month) N/A Estimated sales (kWh) Revenue for displacing diesel generation for use at private sector businesses ($) Estimated sales (kWh) Revenue for displacing diesel generation for use by the Alaskan public ($) 6.2 Financing Plan Criteria: Stage 2-4.B: The project has an adequate financing plan for completion of the grant-funded phase and has considered options for financing subsequent phases of the project. 6.2.1 Additional Funds Identify the source and amount of all additional funds needed to complete the work in the phase(s) for which REF funding is being applied in this application. Indicate whether these 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. Phase III grant request is for $4,000,000. Per the attached HEA Board Resolution 45201532, HEA will match the grant funds with $725,528 of cash and $150,000 of in-kind administrative and project management labor. 6.2.2 Financing opportunities/limitations If the proposed project includes final design or construction phases, what are your opportunities and/or limitations to fund this project with a loan, bonds, or other financing options? Total anticipated project cost $59,067,808, Phase III anticipated costs $4,875,528 Phase III grant request is for $4,000,000. Kenai Hydro will match the grant funds with $725,528 of cash and $150,000 of in-kind administrative and project management labor. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 28 of 34 7/8/14 Kenai Hydro has received $2,100,000 in previous renewable energy grant funds for Phase I & II work. Homer Electric has spent or committed to spend $3,744,000. It is anticipated that the balance of funds will come from a combination of financing, Federal grants, State grants, private grants and possible Legislative appropriation. 6.2.3 Cost Overruns Describe the plan to cover potential cost increases or shortfalls in funding. The cost estimates for this project were based upon the recent hands on experience at the Allison Creek and Blue Lake Hydroelectric projects. The understanding gained from these projects of the environmental, regulatory, and FERC requirements for the design and construction of a hydroelectric project in the State of Alaska were applied to ensure a comprehensive and representative project cost. The site specific challenges for construction at the Grant Lake project were also incorporated into the estimate including establishing access, short construction windows, challenging weather conditions, and manpower/equipment acquisition. Equipment costs for the turbine/generator equipment were obtained from manufacturers for the proposed two unit powerhouse configuration. Quotes assumed a water-to-wire package which included all required mechanical and electrical equipment for the powerhouse. These budget estimates were then compared to other similar constructed projects to ensure consistency. Tunnel costs were based on the actual completed production rates for the Allison Creek and Blue Lake tunnels. Estimated both the linear foot cost as well as cubic yard cost to determine average cost per linear foot. Rock projected at Grant Lake is similar to that found at Allison. Transmission line costs were based on actual bids received for Allison Creek, which were then adjusted to account for easier access for the line construction, as compared to the Allison where access had to be constructed. Substation costs were developed based on actual costs for the Allison and Blue Lake equipment and field construction at Allison which has a similar powerhouse size. Powerhouse costs were developed based on a developed footprint of the powerhouse and unit costs developed for similar projects for concrete placement, powerhouse building, etc. The Allison Creek project provided a solid basis for production rates such as concrete placement, excavation, and building costs including electrical and balance of plant. General conditions and mobilization/demobilization costs were based on actual costs from the Allison and Blue Lake projects for equipment and materials shipment from Seattle via barge. Housing and administrative costs were developed reflecting the short summer construction season and limited housing availability near the project site. Engineering costs were developed based on a detailed scope and labor breakdown to reflect the Grant Lake Project. Specifically, the engineering level of detail and documentation to meet FERC expectations was incorporated into the estimate. Construction administration and supervision costs were developed based on the FERC requirements for the Allison Creek and Blue Lake project. Staffing levels were developed to provide a FERC mandated level of oversight in the field. Office engineering support was reflective of the actual level of effort required for the Allison and Blue Lake projects. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 29 of 34 7/8/14 While this hard look at project costs resulted in a significant increase to original cost estimates, KHL is confident that the provided cost estimates are accurate, and that the project can be built for this amount with little chance of cost over-runs. 6.2.4 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. It is anticipated that the balance of funds will come from a combination of financing, Federal grants, State grants, private grants and possible Legislative appropriation. 6.3 Other Public Benefit Criteria: Stage 3-4.C: Other benefits to the Alaska public are demonstrated. Avoided costs alone will not be presumed to be in the best interest of the public. 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 Energy from the Grant Lake Project would reduce the consumption of carbon-based energy sources, thereby helping to improve air quality in Kenai Peninsula and conserve the Cook Inlet’s limited supply of natural gas. In the first 50 years of operation this project will reduce the amount of CO2 released on the Kenai Peninsula by over 500,000 tons. This renewable energy would also assist in stabilizing the long term price of power to consumers, and it would be a significant step in diversifying HEA’s generation portfolio and would assist in the State of Alaska’s state renewable energy goal. As with most hydroelectric facilities, this project has high upfront costs. However, in the first 50 years of existence the project shows an NPV Net Benefit of $14,497,040 with a B/C Ratio of 1.27. These values are conservative in nature because they do not account for current and future grant funds or potential Legislative appropriations possible for the project. Additionally the project economics are based upon a 50 year life expectancy, however current estimates for hydroelectric life expectancy stretch to 100 years. This project represents a long term invest in Alaska that will produce clean, renewable power for Alaskans throughout this century. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 30 of 34 7/8/14 SECTION 7 – SUSTAINABILITY Describe your plan for operating the completed project so that it will be sustainable throughout its economic life. Include at a minimum: • Capability of the Applicant to demonstrate the capacity, both administratively and financially, to provide for the long-term operation and maintenance of the proposed project • Is the Applicant current on all loans and required reporting to state and federal agencies? • Likelihood of the resource being available over the life of the project • Likelihood of a sufficient market for energy produced over the life of the project Operations and maintenance will be financed through typical utility accounting procedures using revenue generated by the hydro facility and other utility cash flows. The facility would be essentially unmanned requiring only periodic inspection and routine maintenance. Annual O &M costs are anticipated to be about $112,551 (in 2014 dollar) per year which is easily supported by the projects expected annual revenue. SECTION 8 – PROJECT READINESS 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 The reconnaissance associated with Phase I was completed in 2009, the results of which suggested pursuing feasibility work. To that end, Field Studies were initiated in 2009 and executed through July of 2010. An authorization to proceed to licensing using the Traditional License Program was granted by FERC on 9/15/2009. Numerous agency and interested shareholder forums have been held, and public comment processes have been undertaken. The FERC scoping process has been completed and FERC issued Scoping Document 2 for this project on 8/23/2010. Natural Resources Study Plans were finalized in 2012 and those Plans were executed in 2013. The results of the Natural Resources Studies were shared with Stakeholder and Agencies in early 2014. The summer and fall of 2014 were spent in a collaborative approach to develop an acceptable operations scheme. During the winter of 2014 - 2015 KHL developed a DLA and Draft Management Plan. The DLA was issued for public comment in March of 2015. KHL anticipates filing a FLA with FERC in December of 2015. Kenai Hydro maintains a website, www.kenaihydro.com that documents project progress. Phase 1 Reconnaissance studies, which were completed in January 2009, were partially funded by a $100,000 AEA grant. Kenai Hydro received partial funding for Phase II activities in the amount of $2,000,000 through two separate awards of $816,000 and of $1,184,400 through AEA Renewable Energy Grants. As shown in Section 3.1 Project Schedule and Milestones, Kenai hydro has a detailed schedule to start the Phase III work of Final Design and Permitting as soon as Grant funds are available if the project is selected as a grant recipient. SECTION 9 – LOCAL SUPPORT AND OPPOSITION Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 31 of 34 7/8/14 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. The Documentation of support must be dated within one year of the RFA date of July 8, 2015. As with all projects of this nature, the local public is somewhat polarized with respect to their viewpoint. Some Moose Pass residents have expressed their support for the Project while others are opposed. The HEA board of directors, which represents approximately 22,400 member-owners, has shown consistent support for renewable energy projects. Additionally, HEA has been encouraged by its members to explore alternative sources of sustainable power supply, lessen its reliance on natural gas fuel, and stabilize rates. Attached you will find letters of support for this project from Speaker of the Alaska State House, Representative Mike Chenault and Alaska State Representative Kurt Olson (jointly signed); Alaska State Representative Paul Seaton; Alaska State Senator Peter Micciche and the Kenai Peninsula Economic District that were submitted with last year’s Round VIII application. KHL checked with these individuals and entities to ensure that it was ok to resubmit there 2014 letters with the 2015 Round IX grant application. Since Alaska State Senator Cathy Giessel’s district was modified, Senator Giessel choose to reissue her letter of support. SECTION 10 – COMPLIANCE WITH OTHER AWARDS Identify other grants that may have been previously awarded to the Applicant by the Authority 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. Phase 1 Reconnaissance studies, which were completed in January 2009, were partially funded by a $100,000 AEA grant. Kenai Hydro received partial funding for Phase II activities in the amount of $2,000,000 through two separate awards of $816,000 and of $1,184,400 through AEA Renewable Energy Grants. KHL complied with all terms of the grant agreements from previously award grants, which included timely quarterly progress reports, delivery of agreed upon deliverables and closeout of the grants. SECTION 11 – LIST OF SUPPORTING DOCUMENTATION FOR PRIOR PHASES In the space below please provide a list additional documents attached to support completion of prior phases. Grant Lk Fisheries Assessment Final Report Grant Lk Geomorphology Final Report Grant Lk IFIM Final Report Grant Lk Macroinvertebrate Final Report Grant Lk RecVis Final Report Grant Lk Terr Final Report June Grant Lk WQ-Hydrology Final Report TM001-Grant Creek Hydrologic Analysis-Final TM002-Grant Creek Hydraulic Analysis-Final TM003-Grant Lake Hydroelectric Project Operations and Fisheries Habitat – Final A Cultural Resources report was completed but due to the sensitive nature of its content it was not included with the grant application. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 32 of 34 7/8/14 Kenai Hydro maintains a website, www.kenaihydro.com that contains additional supporting documents. As further support, KHL has attached the DLA as shown in Section 12 which is the culmination of the Phase I & II work. SECTION 12 – LIST OF ADDITIONAL DOCUMENTATION SUBMITTED FOR CONSIDERATION In the space below please provide a list of additional information submitted for consideration. Included with this application is the Draft FERC License Application consisting of the following items: GrantLk (P-13212) DLA Vl1 Content Definitions 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Cover Letter 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 InitialStmt 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit A (Project Description) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit B (Project Operations & Resource Utilization) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit C (Construction Schedule) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit D (Project Costs & Financing) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit E (Environmental Analysis) 03-27-15 FINAL GrantLk (P-13212) DLA Vl1 Exhibit F (General Design Drawings & Reports) 03-27-15 FINAL (Public) GrantLk (P-13212) DLA Vl1 Exhibit G (Project Boundary Maps) 03-27-15 FINAL Pursuant to 18 CFR §4.39(e), Exhibit F design drawings showing major structures, as well as the Preliminary Supporting Design Report, were filed separately with FERC as Critical Energy Infrastructure Information (CEII). Procedures for obtaining access to CEII may be found at 18 CFR §388.113. Requests for access to CEII should be made to the FERC’s CEII Coordinator. Renewable Energy Fund Round IX Grant Application - Standard Form AEA 15003 Page 33 of 34 7/8/14 SECTION 13 – AUTHORIZED SIGNERS FORM Community/Grantee Name: Homer Electric Association, Inc. Regular Election is held: Annually Date: May 4, 2016 Authorized Grant Signer(s): Printed Name Title Term Signature Bradley P. Janorschke General Manager 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 Bradley P. Janorschke General Manager N/A Grantee Contact Information: Mailing Address: 3977 Lake Street, Homer, Alaska 99603 Phone Number: 907-235-8551 Fax Number: 907-235-3323 E-mail Address: bjanorschke@homerelectric.com Federal Tax ID #: 92-0014079 Please submit an updated form whenever there is a change to the above information.