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HomeMy WebLinkAboutR8 RE Fund Grant App_IndianRiver_TenakeeMain GRANT APPLICATION – FOR – INDIAN RIVER HYDROELECTRIC PROJECT SUPPLEMENTAL CONSTRUCTION FUNDING SEPTEMBER 22, 2014 – SUBMITTED TO – ALASKA ENERGY AUTHORITY RENEWABLE ENERGY GRANT PROGRAM – ROUND IV RFA #AEA-15003 – SUBMITTED BY – CITY OF TENAKEE SPRINGS, ALASKA P.O. BOX 52 TENAKEE SPRINGS, AK 99841 Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 1 of 24 7/2/14 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/REFund8.html. • 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 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. • 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. • In the sections below, please enter responses in the spaces provided, often under the section heading. 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. • In accordance with 333 (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 is 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 VIII Grant Application - Standard Form AEA 15003 Page 2 of 24 7/2/14 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) CITY OF TENAKEE SPRINGS dba TENAKEE SPRINGS ELECTRIC DEPARTMENT Type of Entity: Fiscal Year End: LOCAL GOVERNMENT July 31 Tax ID # Tax Status: ☐ For-profit ☐ Non-profit ☐ Government (check one) Date of last financial statement audit: Mailing Address: Physical Address: PO BOX 52 TENAKEE SPRINGS COMMUNITY BLDG. TENAKEE SPRINGS, AK 99841 TENAKEE AVENUE Telephone: Fax: Email: 907-736-2207 907-736-2207 citytke@gmail.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name: Title: ARTHUR BLOOM HYDRO PROJECT MANAGER Mailing Address: PO BOX 52 TENAKEE SPRINGS, AK 99841 Telephone: Fax: Email: 907-736-2222 907-736-2207 artmbloom@gmail.com 1.1.1 APPLICANT ALTERNATE POINTS OF CONTACT Name Telephone: Fax: Email: X Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 3 of 24 7/2/14 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) ☐ 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) * RESOLUTION ON AGENDA FOR SEPTEMBER COUNCIL MEETING, WILL BE PROVIDED WHEN AVAILABLE ☐ 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/REFund8.html. (Any exceptions should be clearly noted and submitted with the application.) (Indicate 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) X X X * X X X Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 4 of 24 7/2/14 SECTION 2 – PROJECT SUMMARY This section is intended to be no more than a 2-3 page overview of your project. 2.1 Project Title – (Provide a 4 to 7 word title for your project). Type in space below. INDIAN RIVER HYDROELECTRIC PROJECT – CONSTRUCTION 2.2 Project Location – Include the physical location of your project and name(s) of the community or communities that will benefit from your project in the subsections below. 2.2.1 Location of Project – Latitude and longitude, 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 is located on Indian River, approximately one mile east of Tenakee Springs in Township 47 South, Range 63 East of the Copper River meridian. This project is located at approximately 57.788d N, 135.193d W. 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. Tenakee Springs, its residents and businesses will benefit from this project. 2.3 PROJECT TYPE Put X in boxes 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 X X X Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 5 of 24 7/2/14 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of the proposed project. Displace diesel generation of electricity for the City of Tenakee Springs with renewable hydroelectric power. The City of Tenakee Springs is constructing a hydroelectric project on Indian River. This will be a 180 kW low head, run-of-river plant displacing the use of 30,000 gallons of diesel fuel annually, or 90% of annual electric utility diesel consumption. At least 6,500 additional gallons of fuel oil can be displaced by heating public buildings with excess energy from the hydro project. The city successfully completed construction of Phase 1 of this project in June 2014, which consisted of extending access roads and trails to the powerhouse and intake sites. Phase 2 will commence this fall, which will construct the balance of the project. The final engineer’s cost estimate exceeds the funds the city has available for this project, so the city is requesting additional grant funds to ensure Phase 2 can be completed without disruption. 2.5 PROJECT BENEFIT Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel costs, lower energy costs, local jobs created, etc.) The Tenakee Springs Electric Utility diesel generators use approximately 32,000 gallons of diesel fuel per year. This project will eliminate 90+% of this annual fuel usage with hydroelectric power. Additional fuel offsets can be achieved by replacing heating oil with electric heat. The proposed project would help retain money within the community by stemming the outflow of money for petroleum products and providing employment during construction and operation. Additional public benefits would be less noise in the community (diesel generators would not be running most of the time), less air pollution, less risk for environmental liability, lower cost electricity – especially for commercial entities which currently pay very high rates, and potential expansion of economic base (fish processing and washeteria). 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. The final engineer’s cost estimate for the project is $4,297,280. The city has existing funds of $3,320,000, of which $578,349 was spent to complete Phase 1 construction, leaving $2,741,651 in funds currently remaining for the project. Additional grant funds of $977,000 are requested to fully fund Phase 2 construction of the project. The City will provide $280 cash match and the city/residents may provide in-kind services as available and appropriate to facilitate project completion. 2.7 COST AND BENEFIT SUMMARY Include a summary of grant request and your project’s total costs and benefits below. Costs for the Current Phase Covered by this Grant (Summary of funds requested) 2.7.1 Grant Funds Requested in this application $ 977,000 2.7.2 Cash match to be provided $ 280 2.7.3 In-kind match to be provided $ as-needed Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 6 of 24 7/2/14 2.7.4 Other grant funds to be provided $ 3,320,000 2.7.5 Total Costs for Requested Phase of Project (sum of 2.7.1 through 2.7.4 $ 4,297,280 Other items for consideration 2.7.6 Other grant applications not yet approved none. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 7 of 24 7/2/14 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.7 Total Project Cost Summary from Cost Worksheet, Section 4.4.4, including estimates through construction. $ 4,526,280 2.7.8 Additional Performance Monitoring Equipment not covered by the project but required for the Grant Only applicable to construction phase projects $ 0 2.7.9 Estimated Direct Financial Benefit (Savings) The economic model used by AEA is available at www.akenergyauthority.org/REFund8.html. This economic model may be used by applicants but is not required. Other economic models developed by the applicant may be used, however the final benefit/cost ratio used will be derived from the AEA model to ensure a level playing field for all applicants. $ 5,726,787 2.7.10 Other Public Benefit If you can calculate the benefit in terms of dollars please provide that number here and explain how you calculated that number in Section 5 below. No quantified benefit, see section 5 SECTION 3 – PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include contact information, a resume and references for the manager(s). 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. Currently, the project manager is Arthur Bloom, an elected member of the city council (term ends September 2014) and employee of the city (Hydroelectric Project Manager). Tenakee Springs hired Polarconsult Alaska, Inc. to complete a feasibility study, conceptual design, permitting, final design, and construction engineering for the project. Under this contract, Polarconsult is also providing project manager support and guidance. No management assistance from AEA is needed. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 8 of 24 7/2/14 3.2 Project Schedule and Milestones Please fill out the schedule below. Be sure to identify key tasks and decision points 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. Milestones Tasks Start Date End Date Issue Final Construction Drawings for Agency Review Final Construction Drawings, Engineer’s Cost Estimate -- 9/22/14 Receive Agency Review Comments Agency Review Comments 9/22/14 10/6/14 Issue Final Construction Drawings for Construction Final Construction Documents 10/6/14 10/13/14 Select Vendors / Contractors and Award Contracts Contractor for Penstock Bench Construction Turbine/Generator Vendor Switchgear/Controls Vendor Contractor for Balance of Construction 10/13/14 11/17/14 Construction Management Oversee contractor/vendor selection, manage construction process for City 10/6/14 12/31/15 Construction Engineering / Inspection Site inspections, review contractor submittals, change orders, pay requests, and duties as set forth in construction / procurement contracts. 10/6/14 12/31/15 Phase 1 Construction Access roads and Trails (Completed) 9/1/13 7/15/14 Phase 2 Construction Balance of Project Surveys Construction surveys, final as-built survey 11/1/14 12/31/15 Power Line Construct power line 11/1/14 7/31/15 Diversion/Intake/Fishpass Construct diversion/intake/fishpass 11/1/14 8/31/15 Penstock Construct penstock bench and penstock 11/1/14 6/30/15 Powerhouse Construct powerhouse 11/1/14 9/30/15 Turbine/Generator Furnish and install turbine/generator 11/1/14 10/31/15 Switchgear/Controls Furnish and install switchgear/controls 11/1/14 10/31/15 Startup / Commissioning Startup and commission plant 11/1/14 11/30/15 O&M Manual Provide final O&M manual to owner 11/1/14 12/31/15 Operations Reporting to AEA Provide annual operation reports to AEA 12/31/16 12/31/26 3.3 Project Resources Describe the personnel, contractors, personnel or firms, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. The city’s existing project team, including Mr. Bloom and Tenakee’s consultant Polarconsult, has successfully advanced the project through the completion of Phase 1 construction. For the remainder of construction, the city and Polarconsult intend to work with Wilson Engineering based in Juneau for assistance with site inspections and other services to help reduce mobilization costs for engineers out of Anchorage, where Polarconsult is headquartered. The City of Tenakee Springs will follow the methods set forth in its ordinances for procurement and contractor / vendor selection processes during phase 2 construction. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 9 of 24 7/2/14 3.4 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Please provide an alternative contact person and their contact information. Tenakee’s Hydro Project Manager will provide regular reports to AEA on current project activities. Construction reports will be issued on a monthly basis or more frequently as appropriate. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 10 of 24 7/2/14 3.5 Project Risk Discuss potential problems and how you would address them. This project utilizes proven technology and construction methods. All permits are in place, and design is complete. The primary remaining risk on this project is construction risk, which would most likely be manifested as increased construction cost. The city has phased construction to first address the highest-risk construction activities and provide time to adapt design for site conditions ascertained during construction. This strategy has been successfully implemented over the past year with the completion of Phase 1 construction (project access roads and trails) in summer 2014. Phase 1 encountered challenging geotechnical conditions that resulted in final Phase 1 cost 12% above the engineer’s cost estimate. Close coordination between the city, engineer, and contractor enabled the city to adapt the plans and construct superior site access to the powerhouse than provided in the original design. Geotechnical data obtained during Phase 1 construction has been used to complete the Phase 2 project designs and prepare the final engineer’s cost estimate. These design deliverables reflect current known geotechnical site conditions, and contain appropriate contingencies for site geotechnical conditions. The City and utility have a variety of options to handle future cost overruns on this project should they occur. The two principal options are to seek additional grants or secure a loan that would be repaid through future utility revenues. 3.6 Project Accountant(s) Tell us who will be performing the accounting of this Project for the Grantee and include contact information, a resume and references for the project accountant(s). 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 project management support. The City employs a bookkeeper to manage city finances. The City’s engineering consultant and hydro project manager also directly review all pay requests from construction contractors / suppliers. 3.7 Financial Accounting System Discuss the accounting system that will be used to account for project costs and whom will be the primary user of the accounting system. All construction pay requests are first routed to the Engineer, who reviews the request for consistency with the construction contract and technical status and adequacy of work completed. The engineer makes a recommendation for payment or revision of the pay request as appropriate. The pay request then goes to the hydro project manager for review and approval, and is then forwarded to the City’s bookkeeper for final processing. The city uses QuickBooks accounting software. 3.8 Financial Management Controls Discuss 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. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 11 of 24 7/2/14 The cost review process for project construction is summarized in section 3.7 above. The city’s engineer and hydro project manager are both familiar with the RE grant rules and will review submittals for consistency with grant program rules before they are submitted to AEA. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 12 of 24 7/2/14 SECTION 4 – PROJECT DESCRIPTION AND TASKS The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. 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 satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss 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. The hydro project will be a run-of-river project located between falls 4 and falls 2 on Indian River. The project will have a design flow of 50 cfs, gross head of 64.5 feet, and installed capacity of 180 kW. The project will have a capacity factor of 76.2%, average total annual generation of 1,169,000 kWh, and would supply 90+% of Tenakee’s existing electric load of 427,000 kWh. The project provides significant margin for load growth and/or space heating applications in the community. The project design drawings, permits, and feasibility study have been submitted to AEA, and are also available upon request. Permits issued for the project, final design drawings, and other pertinent documents are included with this application in Attachment G. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. Basic configuration of the existing system is 3 diesel electric generators; 2- 88kW peak and 1- 66kW peak capacity installed in 2007 by AEA Rural Power System Upgrade with new switchgear. The existing system has an efficiency of about 13 kWh per gallon of fuel. Electricity is distributed throughout the community via an overhead three phase distribution system. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. Tenakee currently relies 100% on diesel fuel for electric generation. Other energy resources include gas/diesel for transportation (primarily for local boats / skiffs / ATVs), and a combination of wood and fuel oil for space and water heating. Many residents use the geothermal hot springs / bath house for bathing - the bath house is a focal point of the community. This project will displace approximately 90% of the diesel fuel used for electricity generation. Significant additional fuel oil or wood used for space heating can also be displaced by this project. No transportation fuels are expected to be displaced, although electric ATVs / mopeds could be an appropriate technology for Tenakee. 4.2.3 Existing Energy Market Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 13 of 24 7/2/14 Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Electricity is used in residential homes, commercial businesses, city buildings, streetlights, and docks, and the school building. This project will have a profound beneficial impact by lowering energy costs and making the use of electrical energy for heating of public buildings feasible. Lower and more stable energy prices will tend to increase electrical demand on the system. Commercial enterprises in Tenakee Springs particularly suffer under the current energy costs, because they are not eligible for PCE subsidized rates. Lower energy costs will help to encourage commercial activity in the community, which will tend to increase electrical demand. 4.3 Proposed System Describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 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 • Basic integration concept • Delivery methods The project is a run-of-river hydroelectric project with major elements listed below. Please also reference the final design drawings included in Attachment G. 1. A concrete diversion / intake structure with a design headwater elevation of 124.0 feet and design flow of 50 feet per second. The structure is co-located with an existing U.S. Forest Service fish pass at the top of falls 4. The structure includes modifications to the fishpass to maintain and enhance its functionality. 2. A 1,700 foot long, 36” diameter HDPE penstock installed on a bench down the east bank of Indian River. 3. A powerhouse with a variable flow cross-flow turbine coupled to a three-phase synchronous generator via a gear box speed increaser. Switchgear and controls will automatically dispatch the hydro or diesel power plant based on water availability. The rated tailwater elevation is 59.5 feet, for total gross head of 64.5 feet and net operating head at full design flow of 55.7 feet. 4. 4,300 feet of new distribution voltage power line from the hydro power house to the city’s existing distribution system near the small boat harbor. The project’s installed capacity is 180 kW, with a capacity factor of 76.2%. Annual energy generation capability is approximately 1,169,000 kWh. When the diesels need to run, the controls will run them at optimal loadings to the extent practical to maintain high fuel economy and avoid wet stacking or other adverse operating conditions. 4.3.2 Land Ownership 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 project will be located on a combination of city and state land, and access to the project is via the city-owned log transfer facility and an existing US Forest Service logging road. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 14 of 24 7/2/14 1. The city has a long-term road use permit from the U.S. Forest Service authorizing use of the logging road for project construction, operations and maintenance. 2. The city has an easement for the portions of the project located on state land (ADL 108047). 3. The city owns portions of the power-line route between the hydro powerhouse and harbor. A utility easement will be dedicated and recorded for the power line once the line is installed and an as-built survey has been completed. 4.3.3 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 discuss potential barriers All permits for the project are in place. Major permits are: 1. FERC Finding of Non-Jurisdiction (DI10-8-000) 2. Fish habitat permit (FH11-I-0125) 3. Water use permit (LAS 27836) 4. U.S. Corps of Engineers Environmental Permit (2010-0758 NWP-39) 5. State Land Easement for project lands (ADL 108047) 6. Road Use Permit from U.S. Forest Service 7. A SWPPP will be prepared and filed with ADEC prior to commencing Phase 2 construction activities. 4.3.4 Environmental Address 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 • Archaeological and historical resources • Land development constraints • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and discuss other potential barriers This project is in the construction phase and all environmental issues have been addressed. Threatened or endangered species. Consulted with applicable agencies, no affected species in area. Habitat issues. Fisheries issues addressed by Fish Habitat permit with in-stream flow reservations and post construction monitoring requirements. Project includes enhancements to fish pass to improve fish passage for coho salmon planted into Indian River by US Forest Service in late 1990s. Wetlands. Project authorized by Corps of Engineers under Nationwide Permit 39. Archeological. Cultural resources survey completed in 2012, project follows archeologist’s recommendations for a finding of “no historic properties affected”. Land development constraints. None applicable. Telecomm Interference. None applicable. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 15 of 24 7/2/14 Aviation considerations. None applicable. Visual, aesthetic impacts. Project site is not frequented by the public and is not visible from commonly used vantage points – none applicable. Other potential barriers. None. 4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants records or analysis, industry standards, consultant or manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: • Total anticipated project cost, and cost for this phase • Requested grant funding • Applicant matching funds – loans, capital contributions, in-kind • Identification of other funding sources • Projected capital cost of proposed renewable energy system • Projected development cost of proposed renewable energy system Total estimated construction cost is $4,297,280. Requested grant funding is $977,000. Existing project funding in place is $3,320,000, of which $578,349 was spent to complete Phase 1 construction, leaving $2,741,651 in funds currently available for the project. 4.4.2 Project Operating and Maintenance Costs Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant. (Note: Operational costs are not eligible for grant funds however grantees are required to meet ongoing reporting requirements for the purpose of reporting impacts of projects on the communities they serve.) 4.4.3 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 • Proposed rate of return from grant-funded project Not applicable. All power will be sold to existing customers of Tenakee Springs Electric Department. Utility rates will be based on utility operating costs with the hydro plant in service. Existing rates are approximately $0.74/kWh. Projected fuel savings from the hydro project would support reducing rates to approximately $0.43/kWh. Rates are set by the city council. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 16 of 24 7/2/14 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Please fill out the form provided below. Renewable Energy Source Indian River The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. Run of River hydropower. plant capacity factor of 76.2% Unit depends on project type (e.g. windspeed, hydropower output, biomass fuel) Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank) i. Number of generators/boilers/other Three diesel generators ii. Rated capacity of generators/boilers/other 2 – 88 kW, 1 – 64 kW. iii. Generator/boilers/other type -- iv. Age of generators/boilers/other All were commissioned in 2006. ~8 years old. v. Efficiency of generators/boilers/other 13.3 kWh/gal, based on 2012-13 data. b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $42,000 (estimated, total 2012-13 non-fuel expense of $83k) ii. Annual O&M cost for non-labor $41,000 (estimated) 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] 427,102 kWh (2012-13, PCE report) ii. Fuel usage Diesel [gal] 31,987 (2012-13, PCE report) Other -- iii. Peak Load Approx 100 – 120 kW (estimated) iv. Average Load 48 kW (2012-13, PCE report) v. Minimum Load Approx 20 kW (estimated) vi. Efficiency 13.3 kWh/gal (2012-13, PCE report) vii. Future trends Recent trend is for flat load growth, future is projected to be flat to increasing due to lower rates. d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] 6,500 gallons displaced by excess hydro electricity 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 VIII Grant Application - Standard Form AEA 15003 Page 17 of 24 7/2/14 ii. Electricity [kWh] Unknown any usage is included in utility totals at c.i iii. Propane [gal or MMBtu] Unknown. iv. Coal [tons or MMBtu] None. v. Wood [cords, green tons, dry tons] 24 cords per year (estimate) vi. Other Unknown. 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] 180 kW installed capacity – run of river hydro with 76.2% capacity factor. b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] Approximately 1,169,000 kWh annually. ii. Heat [MMBtu] -- c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] -- ii. Coal [tons or MMBtu] -- iii. Wood or pellets [cords, green tons, dry tons] -- iv. Other -- Project Cost a) Total capital cost of new system $4,297,280 b) Development cost $229,000 (design and permitting) c) Annual O&M cost of new system $10,000 (incremental cost of hydro plant operations and diesel plant operations). Other utility costs assumed unchanged. $30,000 annual payment into sinking fund for long-term hydro repair and replacement costs. d) Annual fuel cost $0 for water. $9,900 for fuel for diesel generators. Project Benefits a) Amount of fuel displaced for i. Electricity 30,000 gallons ii. Heat 6,500 gallons iii. Transportation None. b) Current price of displaced fuel $4.78 gallon (2012-13 average) Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 18 of 24 7/2/14 c) Other economic benefits Improved function of fish passage at Indian River. d) Alaska public benefits $150,000 annually in avoided utility fuel cost (at projected 2015 price), estimated 36,500 fewer gallons of fuel products being shipped by barge through the waters of Southeast Alaska to Tenakee Springs. Also projected reduced annual PCE program expense of $52,500 ($0.22/kWh x 238,739 eligible kWh). Power Purchase/Sales Price a) Price for power purchase/sale Estimated at $0.43/kWh, will depend on final project cost, operations cost, and city council approval of rates. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $5.73M / $4.06M = 1.41 (R8 AEA/ISER Model) Payback (years) $4.297M / $182,500 = simple payback 23.5 years at projected 2015 fuel prices (AEA/ISER model) 4.4.5 Impact on Rates Briefly explain what if any effect your project will have on electrical rates in the proposed benefit area. If the is for a PCE eligible utility please discuss what the expected impact would be for both pre and post PCE. The project will decrease the utility’s fuel expense by an estimated $150,000 annually (at projected 30,000 gallons x $5/gal cost). Impact to non-fuel costs are estimated at an increase of $10,000, consisting of hydro plant operating costs and reduced diesel plant operating costs. Also setting aside $30,000 annually for a sinking fund for the hydro plant, the net result is a projected savings of $110,000 annually. This savings divided by total kWh sales of 360,337 (2012-13) results in $0.31/kWh of potential rate reduction before PCE is considered, for a projected rate of $0.74 – 0.31 = $0.43/kWh. With the above assumptions, the PCE subsidy level is projected to decrease from $0.47/kWh to $0.22/kWh. This is based on the following utility expenses: sinking fund expense of $30,000; other non-fuel expenses increasing $10,000 to $93,069; and continuing fuel purchase of $9,900; for total expenses of $132,969. With flat demand of 360,337 kWh sales, these utility expenses are $0.37/kWh sold. Subtracting the PCE base rate ($0.1482/kWh) and multiplying by 0.95 yields the projected PCE subsidy level of approximately $0.21/kWh with the hydro project in service. The eligible PCE rate is thus projected to decrease from $0.27/kWh (2013) to $0.43 – 0.21 = $0.22/kWh. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 19 of 24 7/2/14 SECTION 5– PROJECT BENEFIT Explain the economic and public 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: • Potential annual fuel displacement (gallons and dollars) over the lifetime of the evaluated renewable energy project • Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) • Discuss the non-economic public benefits to Alaskans over the lifetime of the project 1. Projected annual fuel displacement is 30,000 gallons for the diesel power plant and 6,500+ gallons by displacing heating oil. Annual value is $182,500 at projected 2015 prices. 2. Annual utility revenues are projected to be $155,000, based on projected flat sales of 360,337 kWh, and a base rate of $0.43/kWh. 3. The utility is not aware of any applicable tax credits related to this project. 4. The utility does not intend to pursue other revenue streams beyond electricity sales. 5. Non economic public benefits include: (a) Less noise and air pollution in the community (diesel generators would not be running most of the time) enhancing the health and quality of life for residents and making Tenakee a more desirable place to live. (b) reduced haulage and handling of 36,500+ gallons of petroleum products through the waters of Southeast Alaska annually. Reduced potential for spills and environmental contamination. (c) stable and more affordable electricity costs will also make Tenakee a more desirable place to live, and will help to attract local economic activity such as tourism, fishing, etc. The hydro combined with the hot springs will bolster the sustainability of the community for the long term. (d) Commercial enterprises in Tenakee in particular will benefit from lower energy costs. Lower energy costs will make local businesses such as stores, restaurants, and lodges more viable and competitive and will increase Tenakee's sustainability and long term viability as a community. Tenakee has struggled in recent years to attract and retain working families with children to keep the local school open. Affordable energy, and the local economic activity it will encourage and support, will help considerably in our long term efforts to help the community thrive. 5.1 Public Benefit for Projects with Private Sector Sales 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. Renewable energy resource availability (kWh per month) N/A Estimated sales (kWh) N/A Revenue for displacing diesel generation for use at private sector businesses ($) N/A Estimated sales (kWh) N/A Revenue for displacing diesel generation for use by the Alaskan public ($) N/A Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 20 of 24 7/2/14 SECTION 6– SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum: • Proposed business structure(s) and concepts that may be considered. • How you propose to finance the maintenance and operations for the life of the project • Identification of operational issues that could arise. • A description of operational costs including on-going support for any back-up or existing systems that may be require to continue operation • Commitment to reporting the savings and benefits The city electric utility will be responsible for operation and maintenance of the hydro project once it is completed. O&M costs would be covered by the utility’s electric rates and revenues. O&M costs are estimated at $0.02 per kWh. The city also anticipates establishing a sinking fund for the project funded from utility revenues to pay for long-term operating, maintenance, repair and replacement expenses for the project. Operational costs will include periodic cleaning of the diversion and intake structure (clearing logs and debris), scheduled maintenance and overhauls of the turbines, generators, and ancillary equipment and related hydro project operations such as seasonal adjustment of settings at the intake to allow for winter vs. summer operations. The City of Tenakee Springs commits to reporting the savings and benefits associated with the Indian River Hydroelectric Project. SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. The City of Tenakee Springs has been actively advancing this project through the study, permitting and design process since 2009. This has included the successful completion of one prior hydro study grant, completing permitting and design, and successfully completing Phase 1 of project construction, which has provided easy access to the project site for prospective contractors and improved understanding of geotechnical conditions, which was used to complete project designs The city is looking forward to commencing Phase 2 construction and completing the project in 2015. The city anticipates starting procurement for long-lead items this fall. SECTION 8 – LOCAL SUPPORT AND OPPOSITION Discuss local support and opposition, known or anticipated, for the project. Include letters of support 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 2, 2014 The project is included in the Southeast Regional Integrated Resource Plan (IRP) prepared for AEA in 2012. Several local entities have previously provided letters of support for the project, which are included in Attachment B. Renewed support letters have been requested and will be provided to AEA when available. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 21 of 24 7/2/14 SECTION 9 – GRANT BUDGET Tell us how much you are seeking in grant funds. Include any investments to date and funding sources, how much is being requested in grant funds, and additional investments you will make as an applicant. 9.1 Funding Sources and Financial Commitment Provide a narrative summary regarding funding source and your financial commitment to the project The City of Tenakee Springs is requesting a grant of $977,280 to complete construction of the Indian River Hydroelectric Project. Since 2009, the Denali Commission, State of Alaska, and City of Tenakee Springs have committed $354,000 in pre-construction funds and $3.32 million in construction funds to complete this project. This includes $51,000 in matching funds and in-kind contributions from the City of Tenakee Springs, plus significant additional in-kind contributions from numerous residents of Tenakee Springs. The City Council has passed several unanimous resolutions supporting this project over the past several years. The city and its residents will continue to provide matching funds and in-kind services to see this important project successfully completed. 9.2 Cost Estimate for Metering Equipment Please provide a short narrative, and cost estimate, identifying the metering equipment, and its related use to comply with the operations reporting requirement identified in Section 3.15 of the Request for Applications. Hydro plant switchgear specifications include the ability to export electronic reports that will meet the requirements of section 3.15 of the RFA. Since this capability is to be integrated into the new switchgear, no additional hardware cost is expected to meet this requirement. Automated export of data from the switchgear to AEA may not be practical, but routine email of data files is readily achievable. Preparation of annual operating reports meeting the requirements of RFA Section 3.15 is estimated to cost the utility $3,000 per year in staff time. Renewable Energy Fund Round VIII Grant Application - Standard Form AEA 15003 Page 22 of 24 7/2/14 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 and Commissioning). Please use the tables provided below to detail your proposed project’s budget. Be sure to use one table for each phase of your project. 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 Issue Final Construction Drawings for Agency Review Sept 22, 2014 $0 $0 $0 Receive Agency Review Comments Oct. 6, 2014 $0 $0 $0 Finalize, Phase 2 construction issue bid documents Oct. 13, 2014 $3,000 $7,000 Exist. Funds/Cash / In-kind $10,000 Select vendors/contractors and award contracts Nov. 17, 2014 $3,000 $7,000 Exist. Funds/Cash / In-kind $10,000 Construction Management Dec. 31, 2015 $32,000 $88,000 Exist. Funds/Cash / In-kind $120,000 Construction Engineering / Inspection Dec. 31, 2015 $22,600 $103,400 Exist. Funds/Cash / In-kind $126,000 Phase 1 Construction Access Roads and Trails July 15, 2014 $0 $564,880 (completed) $564,880 Phase 2 Construction Nov. 2014 – Dec. 2015 Surveys Dec. 31, 2015 $8,000 $22,000 Exist. Funds/Cash / In-kind $30,000 Power Line Jul. 31, 2015 $108,400 $303,000 Exist. Funds/Cash / In-kind $411,400 Diversion, Intake, Fishpass Aug. 31, 2015 $168,000 $468,000 Exist. Funds/Cash / In-kind $636,000 Penstock Jun. 30, 2015 $285,000 $795,000 Exist. Funds/Cash / In-kind $1,080,000 Powerhouse Sep. 30, 2015 $98,000 $272,000 Exist. Funds/Cash / In-kind $370,000 Turbine / Generator Oct. 31, 2015 $73,000 $203,000 Exist. Funds/Cash / In-kind $276,000 Switchgear / Controls Oct. 31, 2015 $42,000 $118,000 Exist. Funds/Cash / In-kind $160,000 Construction Contingency Dec. 31, 2015 $118,000 $327,000 Exist. Funds/Cash / In-kind $445,000 Project Startup and Commissioning Nov. 30, 2015 $14,000 $38,000 Exist. Funds/Cash / In-kind $52,000 O&M Manual Dec. 31, 2015 $2,000 $4,000 Exist. Funds/Cash / In-kind $6,000 Operations Reporting to AEA Dec. 31, 2026 Future utility rates TOTALS $977,000 $3,320,280 $4,297,280 Budget Categories: Direct Labor & Benefits $0 $0 $0 Travel & Per Diem $0 $0 $0 Equipment $99,126 $336,874 $436,000 Materials & Supplies $0 $0 $0 Contractual Services $61,840 $210,160 $272,000 Construction Services $714,862 $2,429,418 $3,144,280 Other $101,172 $343,828 $445,000 TOTALS $977,000 $3,320,280 $4,297,280