HomeMy WebLinkAbout091914_AEA - Neck Lake Hydro - REF Round VIII
September 19, 2014
Alaska Energy Authority
AEA 15003 Renewable Energy Grant Application
813 West Northern Lights Blvd.
Anchorage, AK 99503
RE: Neck Lake Hydroelectric Project Phase II & III Grant Application
AEA 15003 Renewable Energy Grant Application
Dear AEA:
Enclosed in response to RFA AEA 15003 Renewable Energy Grant Application
program, is an application requesting funding for the Neck Lake Hydroelectric Project for
Phase II & III activities.
If you have any questions, please call either Glen Martin (Resource Assessment &
Permits) 360-385-1733 x122, Karl Wood (Grant Funds Administrator) 360-385-1733
x128, or Bob Grimm (President) 360-385-1733 x120.
Sincerely,
Glen D. Martin
Resource Assessment & Permits
Enc. (as stated)
Renewable Energy Fund Round VIII
Grant Application - Standard Form
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.
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SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Alaska Power Company (APC) – A Subsidiary of Alaska Power & Telephone Co. (AP&T)
Type of Entity: Fiscal Year End:
Utility December, 2014
Tax ID #92-0153693
Tax Status: ☒ For-profit ☐ Non-profit ☐ Government (check one)
Date of last financial statement audit: April, 2014 (Available in AP&T Annual Report)
Mailing Address: Physical Address:
Glen Martin [Same]
PO Box 3222
Port Townsend, WA 98368
Telephone: Fax: Email:
360-385-1733 x 122 360-385-7538 Glen.m@aptalaska.com
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name: Title:
Glen Martin Permitting & Licensing Manager
Mailing Address:
Alaska Power Company
PO Box 3222
Port Townsend, WA 98368
Telephone: Fax: Email:
360-385-1733 x 122 360-385-7538 glen.m@aptalaska.com
1.1.1 APPLICANT ALTERNATE POINTS OF CONTACT
Name Telephone: Fax: Email:
Robert Grimm 360-385-1733 x 120 Bob.g@aptalaska.com
Jason Custer 907-225-1950 x 29 Jason.c@aptalaska.com
Karl Wood 360-385-1733 x 128 Karl.w@aptalaska.com
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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)
☒ 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)
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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.
Neck Lake Hydropower Project: Phases II-III
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.
Google Maps calculation: 56.097806.-133.138525
2.2.2 Community benefiting – Name(s) of the community or communities that will be the
beneficiaries of the project.
The project will benefit the community Whale Pass, Alaska. The most recently available AEA PCE
report identifies $0.59 kWh pricing for this service region, with an average PCE payment of $0.37
per eligible kilowatt hour.1 Approximately 57% of kilowatt hours sold are subject to PCE
subsidization.
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
1 Source: http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
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2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of the proposed project.
Alaska Power Company (APC), a subsidiary of Alaska Power & Telephone (AP&T), requests
$391,200 in AEA REF Round VIII funding for Phase II and Phase III activities for the Neck Lake
hydropower project. APC will provide $97,800 cash match to AEA funding. The 124 kW Neck Lake
Hydroelectric Project will be located below the outlet of Neck Lake, approximately 1.5 miles
southwest of the community of Whale Pass on Prince of Wales Island, Alaska. The Project will
supply as much as 450,000 kilowatt hours of energy per year to the community of Whale Pass,
offsetting diesel generation, which is currently the sole source of electricity for residents. The
relatively high and modulated flows from the lake combined with the steep drop at the lower end of
the outlet stream provide an attractive opportunity for a small run-of-river hydroelectric project.
Project features would include an access road, intake structure, 400 feet of penstock, a containerized
power plant, a tailrace channel, and 4 miles of distribution line upgrades. The hydroelectric facilities
will be designed to avoid interference with the existing salmon rearing and collection facilities
operated at Neck Lake by the Southern Southeast Regional Aquaculture Association (SSRAA). A
letter of support from the SSRAA is enclosed. APC conducted a reconnaissance study of the site in
2009 and determined that there is sufficient potential to almost always provide enough generation
meeting 100% of current and future Whale Pass loads. This Project will provide clean, renewable
electricity, as well as rate stabilization and lower rates for APC’s Whale Pass customers.
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 Neck Lake Hydroelectric Project will reduce the cost of electricity to the residents of Whale Pass,
who presently pay $0.59/kWh (excluding PCE subsidy). APC estimates that diesel generation would
decrease by about 99.5% at current load levels, with some diesel required occasionally when flow in the
stream is low. This would decrease fuel costs for APC, creating significant savings which would be
passed on to APC’s customers. APC estimates an approximate 50% savings for the rate payers, dropping
rates to approximately $0.29/kwh, based on recon-level financial and economic analysis. Phase II
analysis will improve the accuracy of this number. The State of Alaska currently subsidizes 57% of
energy consumed in Whale Pass through the Power Cost Equalization Program, and would receive a
significant proportion of energy cost-savings, with the remainder of cost savings being realized by Whale
Pass customers. The Neck Lake hatchery is central to many commercial and recreational opportunities;
the long term sustainability of this facility is vital to the region’s economic well-being. The Neck Lake
hydropower project will help assure long-term sustainability of the Neck Lake hatchery’s operations
by providing affordable hydropower at approximately half the cost of current diesel-fired generation,
with pricing remaining stabile long term. Lower energy costs would help support development of a
sustainable, stable economy in Whale Pass. At present, families and businesses within the community
experience significant hardship due to high energy costs. Some customers remain off-grid, or have
discontinued APC service because of the high cost of power – these customers would likely connect into
the Whale pass micro-grid if the Neck Lake hydropower project is built. Other benefits to the Alaskan
public would be a decrease in the environmental impacts of diesel generation by APC or self-
generation by Whale Pass residents (e.g. air pollution, noise pollution, fuel spills, etc.).
Replaces approximately 99.5% of diesel-fired generation of electricity in the Whale
Pass region.
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Provides more affordable renewable energy, reducing energy costs from $0.59 to
$0.29 / kWh in year one, increasing over time as the cost of diesel fuel rises.
(Estimates based on recon-level financial and economic modelling.)
State PCE statistics indicate that 57% of total kWh sold in FY13 are PCE-eligible
kWh; if this ratio holds true, the State of Alaska would realize significant PCE
subsidization savings, with approximately 43% of cost-savings being realized by
current ratepayers.2
Helps to support the State of Alaska’s goal of 50% renewable energy by 2025.
Will stabilize energy prices long term by reducing dependency upon diesel fuel – a
volatile commodity with pricing which escalates significantly faster than inflation.
By replacing diesel-fired generation, the project will reduce emissions, avoid “social
cost of carbon” costs, and will reduce ambient noise associated with operation of
diesel-fired generators in Whale Pass. This includes liability, risk, and noise
associated with many “off-grid” residents’ dispersed small generators.
Leverages private investment in renewables, allowing the private sector to share
project development costs and risks.
Reduces operating costs for resident businesses, supporting business retention,
growth and expansion.
Supports new economic development in the northern Prince of Wales region.
Helps assure long-term sustainability of the Neck Lake hatchery’s operations by
providing affordable hydropower at approximately half the cost of current diesel-fired
generation, with pricing remaining stabile long term. The Neck Lake hatchery is
central to many commercial and recreational opportunities; the long term sustainability
of this facility is vital to the region’s economic well-being. The hydroelectric facilities
will be designed to avoid interference with the existing salmon rearing and collection
facilities operated at Neck Lake by the Southern Southeast Regional Aquaculture
Association (SSRAA). APC and SSRAA have agreed to work cooperatively to
develop a hydropower project that will be junior to all needs of the Neck Lake
hatchery, and will assure no adverse impacts to the hatchery or salmon runs. The
SSRAA has provided a letter of support, which is enclosed.
Reduces operating expenses for essential community facilities, helping to support
long-term sustainability.
Allows Whale Pass to “home source” its energy supply from local, renewable
sources, reducing fuel purchases made outside of the community.
Reduces dependence on foreign oil.
Project avoids 16,313 tons (32,626,000 lbs) of carbon dioxide placed in the air over
a 50 year operating period; also avoids approximately 408 tons of NOx emissions
over 50 years. Remember that hydropower projects last for 100+ years, at minimum
2 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
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doubling these avoidances. The State of Alaska’s econometric model provides the
following fuel displacement and carbon dioxide avoidance values:
Reduces the need to transport fuel to Whale Pass, lowering the potential for leaks
and spills. Transferring fuel to APC’s storage tank would be less frequent, reducing
the potential for spills during fueling, and keeping groundwater safer for the area.
A hatchery operated by the Southern Southeast Regional Aquaculture Association (SSRAA) is
located on the Neck Lake outlet stream, as shown below in Exhibit 1. The hydroelectric facilities
will be designed to be junior to all of SSRAA’s needs, and avoid any and all interference with the
existing salmon rearing and collection facilities. APC and SSRAA have agreed to work cooperatively
to develop a hydropower project design which will assure zero adverse impacts to the hatchery or
salmon runs, and fully protect SSRAA’s interests and operational requirements.
The Neck Lake hatchery is central to many commercial and recreational opportunities; the long term
sustainability of this facility is vital to the region’s economic well-being. The Neck Lake hydropower
project will assure long-term sustainability of the Neck Lake hatchery’s operations by providing
affordable hydropower at approximately half the cost of current diesel-fired generation, with pricing
remaining stabile long term. This will help sustain the viability of commercial and recreational
fishery resources long term.
Performance Unit Value
Displaced Electricity kWh per year 450,000
Displaced Electricity total lifetime kWh 22,500,000
Displaced Petroleum Fuel gallons per year 32,143
Displaced Petroleum Fuel total lifetime gallons 1,607,143
Displaced Natural Gas mmBtu per year -
Displaced Natural Gas total lifetime mmBtu -
Avoided CO2 tonnes per year 326
Avoided CO2 total lifetime tonnes 16,313
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EXHIBIT 1: SSRAA HATCHERY AND NECK LAKE HYDROPOWER PROJECT LAYOUT
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.
Neck Lake Hydro: Phase II-III Budget Overview
Phase II of this project requires a total of $169,000 to: complete environmental studies; complete
consultations with SSRAA, FERC, and resource agencies; conduct a feasibility analysis; and finalize
the conceptual design. APC requests $135,200 AEA REF funding for Phase II, and will provide
$33,800 cash match.
Phase III of this project requires a total of $320,000 to: develop project final design; write the
environmental assessment; continue agency consultation; complete a FERC license application filing;
AEA RE- Fund
Grant Funds
Grantee Matching
Funds
Source of
Matching Funds:
Cash/In-
Kind/Federal
Grants/Other State
Grants/Other
TOTALS
Total Cost - Phase II $135,200.00 $33,800.00 APC $169,000.00
Total Cost - Phase III $256,000.00 $64,000.00 APC $320,000.00
Grand Totals - Phase II & Phase III
Activities $391,200.00 $97,800.00 APC $489,000.00
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respond to FERC’s additional information requests (AIR); finalize agency permitting; and address
any additional field studies needed to satisfy agency requirements. APC requests $256,000 AEA
REF funding for Phase III, and will provide $64,000 cash match.
APC’s cumulative Phase II-III request is for a total of $391,200 AEA REF funding, which will
be matched by $97,800 in cash provided by APC out of its normal operating funds. This
represents an 80% grant / 20% cash match ratio.
Please see Section 4.4 Proposed New System Costs and Projected Revenues for a break-down of
costs and funding sources by phase.
The construction costs indicated in Section 4.4 and 9 of this application were developed in September
of 2014, based on site reconnaissance conducted in 2009. Construction costs may change by the time
final design is completed, and will be updated subsequent to Phase II and Phase III activities proposed
for AEA REF funding.
In Round II of the REF program, APC was awarded $108,000 for completion of a conceptual design,
environmental surveys, and a feasibility report. Part of these funds were used to develop and submit
a filing for a FERC jurisdictional determination. FERC determined that a license would be required
for this project. Of the total amount of the grant funding, only $22,474.73 was expended. These
funds were used to support activities including surveying and mapping, preparation of the FERC
jurisdictional determination filling, and conceptual design.
FERC’s finding that a license would be required resulted in APC terminating project activities due to
concerns about increased project development costs. However, FERC has recently developed a small
hydropower licensing track that should significantly expedite the licensing process and reduce the
licensing costs associated with a small project such as Neck Lake. The availability of this licensing
track – in conjunction with diesel cost escalation estimates and key findings of the SEIRP – have lead
APC to conclude that it is in the best interest of the ratepayers of Whale Pass to resume efforts to
pursue the Neck Lake hydropower project. This finding is supported by updated reconnaissance-
level financial and economic analysis completed by APC in September of 2014.
Phase II and III project activities and budgets have been updated to reflect current conditions.
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 Phase II = $135,200
Phase III = $256,000
_________________
Total = $391,200
2.7.2 Cash match to be provided Phase II = $33,800
Phase III = $64,000
_________________
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Total = $97,800
(State grant funds to be matched on a 1:1 basis)
1. New Match to New State Investment: N/A
2. Match to Date: $22,474 spent before closing the grant
3. Funds currently available: APC will direct matching funds from its existing O&M budget.
2.7.3 In-kind match to be provided $NA
2.7.4 Other grant funds to be provided $NA
2.7.5 Total Costs for Requested Phase of Project (sum of 2.7.1 through 2.7.4) = $489,000
Other items for consideration
2.7.6 Other grant applications not yet approved None
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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.
$3,011,474.73
2.7.8 Additional Performance Monitoring Equipment not
covered by the project but required for the Grant
Only applicable to construction phase projects
Does not apply
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.
The AEA’s financial model
provides a BCR of 0.65, but
does not include PCE savings
for the State of Alaska.
APC anticipates that
construction-phase grant
funding will be required for
the project to generate a
positive BCR.
The project will help support
long-term sustainability of
Neck Lake hatchery
operations by providing
affordable hydropower at
approximately half the cost of
current diesel-fired
generation, with pricing
remaining stabile long term.
This will support and sustain
the vitality of commercial and
recreational fishing resources
in the region.
See below for output of AEA
model.
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.
State PCE statistics indicate that
57% of total kWh sold in FY13
are PCE-eligible kWh; if this
ratio holds true, the State of
Alaska would realize significant
PCE subsidization savings, with
approximately 43% of cost-
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savings being realized by
current ratepayers.3
The project will help support
long-term sustainability of
Neck Lake hatchery
operations by providing
affordable hydropower at
approximately half the cost of
current diesel-fired
generation, with pricing
remaining stabile long term.
This will support and sustain
the vitality of commercial and
recreational fishing resources
in the region.
3 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
Results
NPV Benefits ($6,209,073.56)
NPV Capital Costs $9,588,161
B/C Ratio (0.65)
NPV Net Benefit ($15,797,235)
Performance Unit Value
Displaced Electricity kWh per year 450,000
Displaced Electricity total lifetime kWh 22,500,000
Displaced Petroleum Fuel gallons per year 32,143
Displaced Petroleum Fuel total lifetime gallons 1,607,143
Displaced Natural Gas mmBtu per year -
Displaced Natural Gas total lifetime mmBtu -
Avoided CO2 tonnes per year 326
Avoided CO2 total lifetime tonnes 16,313
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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.
Project Management Team:
Resumes and references are enclosed.
Greg Mickelson – Alaska Power & Telephone Company
Project Manager
907-755-4822
greg.m@aptalaska.com
Vern Neitzer – Alaska Power & Telephone Company
Senior Engineer
Vern.n@aptalaska.com
907-983-2202
Larry Coupe – Alaska Power & Telephone Company
Senior Civil Engineer
Larry.c@aptalaska.com
360-385-1733 x155
Ben Beste – Alaska Power & Telephone Company
Senior Mechanical Engineer
Ben.b@aptalaska.com
360-302-1379
Bob Berreth – Alaska Power & Telephone Company
Senior Electrical Engineer
Bob.b@aptalaska.com
360-385-1733 x 123
Glen Martin – Alaska Power & Telephone Company
Grant Writer, Project Manager
360-385-1733 x 122
Glen.M@aptalaska.com
Jason Custer – Alaska Power & Telephone Company
Business Development Director
907-225-1950 x 33
Jason.c@aptalaska.com
Karl Wood – Alaska Power & Telephone Company
Grant Administrator
360-385-1733 x128
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Additional AP&T senior engineers and project managers can be utilized as needed to assist
with management and execution of the project.
Greg Mickelson, APC’s V.P. of Power Operations will be the Project Manager for all phases of
work. Mr. Mickelson is an engineer with extensive experience in project management and
electrical generation, transmission and distribution. Mr. Mickelson has been a part of APC’s
team for over 30 years and has been an essential part of the company’s success. He has overseen
numerous grant-funded projects and is familiar with following associated guidelines and
requirements. Mr. Mickelson’s resume is enclosed.
APC’s personnel will conduct all Phase II engineering work and will utilize contractors for the
environmental studies in Phase II. Resumes of key personnel are enclosed.
3.2 Project Schedule and Milestones
Please fill out the schedule below. 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.
A bar schedule detailing Phase II, Phase III, and Phase IV development activities is provided in
Exhibit 2 below.
The following narrative summarizes key activities and dates of the schedule. Note that this schedule
describes the entire development sequence; requested grant funds will support Phases II and III
activities only.
Phase I: Reconnaissance: Completed 2008 – 2009. Recon-level cost estimate and
financial/economic update performed in July-September of 2014.
Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design: July 2015 –
December 2016
In late 2009 APC had a surveyor develop topographic mapping of the Project. During the summer
of 2015, the conceptual design from the Phase I reconnaissance work by APC will be reviewed and
augmented to develop firm information for presenting to permitting agencies. As part of this work,
APC will coordinate extensively with SSRAA regarding the proposed development. As discussed
above, APC and SSRAA have agreed to work cooperatively to develop a hydropower project that
will be junior to all needs of the Neck Lake hatchery, and will assure no adverse impacts to the
hatchery or salmon runs; SSRAA has provided us a letter of support, which is enclosed.
In addition, a cost estimate will be prepared for the selected arrangement, and an updated economic
and financial analysis will be conducted. The results will be presented in a feasibility report. At
the same time, APC will initiate the FERC licensing process by submitting the Notice of Intent
(NOI) and the Preliminary Application Document (PAD) to FERC, the Resource Agencies, and will
be available to the public after a public notice is placed in the areas newspapers. Within 60 days of
the notice and NOI and PAD submittal, APC will hold a public/agency consultation meeting to
receive comments, questions, and concerns to develop the study plan for environmental surveys.
This can be accomplished in the first two months, i.e. July through August 2015. These surveys
may include fish surveys, wildlife assessments, botanical surveys, wetlands surveys, archaeological
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survey (initial SHPO review), and water quality testing. Due to the small size of the project and the
expected knowledge base that should already exist for this site (because of the hatchery) APC believes
that environmental field surveys may be more limited than for your typical hydroelectric project. The
total area of impact, including within the SSRAA facility, is expected to be approximately 0.25 acres.
However, to ensure we are adequately funded, we are assuming the regular collection of field studies
will be required, as shown in the milestones chart below.
PHASE II MILESTONES
PHASE II - Milestones Tasks Start Date End Date
NOI & PAD Issued to FERC Completion & Filing of NOI & PAD; issue
Public/Agency Meeting Notice 07/01/15 08/01/15
Agency Consultation
Meeting
Consultation with FERC and Resource
Agencies; consultation meeting; start to
develop study plan
08/01/15 09/01/15
Draft Study Plan Issued Draft Study Plan issued for comment 12/01/15 12/31/15
Final Study Plan Issued Final Study Plan issued so field studies
can begin 01/05/16 02/05/16
Fish Survey Final Report Conduct fish survey - contractor 04/01/16 12/01/16
Wildlife Survey Final Report Conduct wildlife survey - contractor 05/01/16 12/01/16
TES Botanical Survey Final
Report
Conduct TES botanical survey -
contractor 05/01/16 12/01/16
Wetland Delineation Final
Report Conduct wetland delineation - contractor 05/01/16 12/01/16
Cultural Resouce Survey
Final Report
Conduct cultural resouce survey -
contractor 06/01/15 12/01/16
Water Quality Sampling
Final Report
Conduct water quality sampling -
contractor/APC 07/01/15 12/01/16
Feasibility & Conceptual
Design
Analysis of data collected; issuance of
draft and final feasibility and conceptual
design reports
10/01/16 12/31/16
Phase III: Permitting and Final Design: January 2017 – July 2018
In this phase, the environmental assessment and the FERC license application will be finalized and
submitted to FERC by March 2017. We anticipate having the license by May 1, 2018. Other permits
and land easements will be acquired, and final design documents prepared. Permits will include:
COE Section 404 permit, ADFG fish habitat permit, ADNR land lease or easement, ADNR water rights
(applied for but they won’t issue until after operations have gone on for 5 years), and SHPO review.
Final design will begin in approximately April 2018 and will be completed, including agency
approval, by December 2018. The development of license article plans with agency consultation after
the license is issued will also occur along with final design review by FERC and agencies. If additional
field studies are requested by the agencies or FERC takes longer than expected to issue a license, this
timeline may be pushed back.
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PHASE III MILESTONES
PHASE III -
Milestones Tasks Start Date End Date
Land Easements /
Authorizations / Early
Entry Permit
Applications
Apply to DNR and SSRAA for land use
authorizations, including an Early Entry Permit 01/06/17 01/30/17
Environmental
Assessment Issued Develop and finalize the EA 01/06/17 02/28/17
File License
Application with FERC Develop and finalize the license application 02/01/17 03/15/17
File for Agency
Permits
Apply for COE, ADF&G, ADNR, ADEC, etc.
permits 12/31/16 01/01/18
FERC License
Issuance
After submitting license application, respond to
additional info requests, etc. up to FERC
license issuance
03/15/17 04/30/18
Final Design Approval Finalize project design and get FERC / Agency
approvals 04/30/18 12/31/18
License Article Plan
Approvals
Submit draft license articles to FERC and
agencies for approvals/permits to begin
construction
04/30/18 12/31/18
Phase IV: Construction: May 2018 – August 2020
Construction would begin after a FERC license is received and the license article plans and final
design are approved by FERC and other agencies. Once funding for this phase is secured, APC will
order generating equipment and begin off-site fabrication of the intake and powerhouse modules. On-
site construction is anticipated to begin in early 2019 and continue through the third quarter of 2020.
The construction work should not be significantly compromised by weather at this temperate location.
• Award contract for supply of the generating equipment by August 2018
• Completion of access road to intake site by April 2019
• Completion of Diversion Structure by September 2019
• Completion of Powerhouse by May 2020
• Completion of Generation Equipment Installation by July 2020
• Completion of Penstock Installation by April 2020
• Completion of Distribution Line into Whale Pass by July 2020
• Test and Startup by August 2020
• End of Phase IV Construction September 2020
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EXHIBIT 2: PROJECT TIMELINE
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.
APC: APC will manage the grant. APC has been providing power to Alaskan communities since
1957. Since then, from only a handful of employees, APC has grown to 134 employee-owners (all
of AP&T) who provide power services to 25 communities. APC has experience with renewable
resources after constructing 4 hydroelectric projects in S.E. Alaska, currently operating 7
hydroelectric projects in S.E. Alaska, experimented with a hydrokinetic turbine in the Yukon River,
and is currently constructing their 8th hydroelectric project (Reynolds Creek). APC also has extensive
experience with diesel/hydropower system integration and operations.
APC has personnel certified as electrical, civil, and mechanical engineers who maintain existing
facilities to the highest professional standards. APC has a consistent history of excellent performance
in reliability, customer service, and a long-standing reputation for being a low cost provider of electric
service. Additionally, APC is committed to transitioning from fossil fuel power generation to
renewable energy.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
PHASE I: Reconnassaince
Reconnaissance (completed)
PHASE II: Resource Assement/Feasibility Analysis/Conceptual Design
Agency Consultation/Permitting
Resource Assessment (studies)
Feasibility & Conceptual Design
PHASE III: Final Design and Permitting
Permitting & FERC License App
FERC Application Processing
Final Design
Agency Permits Issued
PHASE IV: Construction
Grant processing
Access Road
Diversion & Intake
Penstock
Generating Equipment Procurement
Powerhouse
Install Distribution Line
Test and Start-Up
LEGEND:<-- Procurement and off-site fabrication <-- On-site construction
2020
NECK LAKE HYDROELECTRIC PROJECT
DEVELOPMENT SCHEDULE
2015 2016 2017 2018 2019
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APC’s budgets have included several 50% grant funded projects for installation of transmission lines
on Prince of Wales Island, and three RUS (Rural Utilities Service) 100% grants for the installation of
transmission lines from Tok to Tetlin and Haines to Lutak, and communities along the Haines
Highway.
APC’s engineering staff has been involved in the design, construction and operation of hydroelectric
projects since the 1980’s. APC currently maintains over 250 miles of transmission line and has
seasoned staff to maintain diesel generators and hydro power plants. APC has administrators
responsible for multi-million dollar budgets, including the management of 60+ employees,
equipment, and all generation and distribution resources.
Resumes of key AP&T staff are attached.
Key APC/AP&T personnel and their roles in this project are as follows:
• Greg Mickelson, Project Manager & Construction Superintendent, Engineer
• Vern Neitzer, Senior Engineer
• Bob Berreth, Electrical Design
• Ben Beste, Mechanical Design
• Larry Coupe, Civil Design
• Glen Martin, Resource Assessment and Permits
• Jason Custer, Financial and Business Case Analysis, Project Management Tasks, Technical
Writing
• Karl Wood, Grant Administrator
Phase I: Reconnaissance
Already completed by APC.
Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design
In this phase APC will acquire property access and complete environmental and
engineering/conceptual design studies. APC may use the following contractors for the various
surveys:
• Wetlands delineation - - HDR Alaska Inc.
• Threatened and endangered plant species survey - - HDR Alaska Inc.
• Fish surveys - - Fisheye Consulting (or possibly staff from SSRAA Hatchery)
• Water quality sampling - - Analytica Group Environmental Laboratories
• Cultural resource surveys - - Northern Land Use Research Alaska, LLC
APC permitting specialists will compile the environment information into resource assessment
documents as required by the various permitting agencies and FERC. APC engineers will conduct
engineering/conceptual design studies in-house.
Phase III: Final Design & Permitting
APC will complete agency consultation for permitting and filing a FERC license application. An
environmental assessment will be prepared for the license application as well. Final design will be
completed after the FERC license is issued. It is estimated that FERC’s small hydro licensing process
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may take only one year before issuance of a license. Along with a FERC license, the following
permits will be acquired:
• 404 Certification / permit (Corps of Engineers)
• 401 Certification (ADEC); ADEC could waive this because of FERC and COE involvement
• Fish habitat permit (ADF&G)
• Land lease or easement (SSRAA)
• Land lease or easement (ADNR)
• Water right (ADNR); will be applied for, but will take minimum of 5 years to obtain
because the water right is only certified after the water is being used for a while (certified
based on how much water is actually used, or maximum daily use).
• SHPO review
APC will prepare the final design documents in-house using its staff civil, mechanical, and electrical
engineers, who all have extensive experience in hydroelectric development. These engineers
designed APC’s South Fork Hydroelectric Project which entered service in 2005, as well as APC’s
Kasidaya Creek Hydroelectric Project which began service in October 2008.
Below, Phase IV activities are described, but funds are not being requested for this phase.
Phase IV: Construction
Construction activities will be completed by local contractors and APC staff:
• Access road - - local contractor(s) or force account
• Intake fabrications - - Reynold Grey Machining and Services
• Intake on-site construction - - local contractor(s) or force account
• Penstock materials procurement - - APC
• Penstock installation - - local contractor(s) or force account
• Generating equipment procurement - - APC
• Powerhouse fabrications - - Reynold Grey Machining and Services
• Powerhouse construction - local contractor(s) and force account
• Distribution line construction - - local contractor(s) and force account
• Testing and start-up - - APC
Reynold Grey Machining and Services is a welding and fabrication company in Port Townsend,
Washington that APC has used frequently for similar work, including fabrication of container modules
for diesel powerplants recently installed in Slana and Allakaket. Reynold Grey is located near APC’s
engineering staff, who thereby can conveniently oversee the proposed fabrication work.
APC will negotiate purchase orders for materials and equipment from vendors who have performed
work on other, similar APC hydropower projects.
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.
During Phases II and III, APC proposes to provide quarterly reports to AEA regarding the status
of the work. APC has provided similar reports to AEA and other grant funding agencies in the
past several years on other projects, and has established the necessary procedures timely
preparation and delivery of reports, and responding in a timely manner to questions and requests
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for information by the AEA. In addition to providing quarterly reports, at the completion of Phase
II, APC will provide AEA with a summary report including conceptual design drawings and an
updated cost estimate. At the completion of Phase III, APC will provide AEA with a summary
reporting including final design drawings, specifications, updated cost estimates, and copies of the
FERC license and permits.
APC is open to consider any additional/alternative reporting measures which may be desired by
the AEA.
3.5 Project Risk
Discuss potential problems and how you would address them.
APC believes that its experience designing, constructing, and operating similar small hydropower
projects in Alaska; its longstanding vendor, technical service, supply chain relationships and industry
knowledge; and its incumbent project development resources will help minimize risks and control
costs. APC has a strong understanding of risks through development/construction experience, as well
as an understanding of the processes involved in creating a durable hydropower asset capable of 50+
years of reliable, safe operation.
Activities currently proposed for AEA REF Round VIII funding support will include pre-
development activities which assist in identifying and mitigating risks.
Site Control – APC will apply to ADNR for development rights on state lands. APC is confident
that the Neck Lake hydropower facility will not conflict with the SSRAA operation already on the
site. APC and SSRAA have agreed to work cooperatively to develop a hydropower project that will
be junior to all needs of the Neck Lake hatchery, and will assure no adverse impacts to the hatchery
or salmon runs. The SSRAA has also provided us with a letter of support, which is enclosed. The
project will help support long-term sustainability of hatchery operations by providing affordable
hydropower at approximately half the cost of current diesel-fired generation, with pricing remaining
stabile long term.
Seismic – Project components will be designed appropriately for seismic activity, since the Project
will be located in a moderate-risk seismic zone. Structures will be buried as much as possible to
minimize seismic impacts.
Underground Construction – The Project does not include underground construction, which can be
fraught with cost overrun potential. Geotechnical investigations will be made at the diversion and
powerhouse areas to provide an adequate level of knowledge about ground conditions at those sites.
Inclement Weather – Working conditions in the Project area during the winter could cause brief
interruptions of the construction schedule. If prolonged interruptions occur that could jeopardize the
completion schedule, APC will add contractors or more personnel as necessary to get back on
schedule.
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
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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.
Enclosed is a resume for Karl Wood, Grant Administrator for APC. Mr. Wood has administered
federal and state grant funds for many years.
If needed, supplemental accounting assistance can be supplied by APC.
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.
APC is a regulated utility, and is required to track and substantiate expenses in a manner which is
acceptable to the Regulatory Commission of Alaska. APC is also accustomed to maintaining project
records in a manner which is acceptable to the AEA, and the State of Alaska, for grant-funded
projects. Thus, APC is accustomed to maintaining data on utility costs and expenditures which meets
with a very high standard in terms of assuring that expenses are reasonable, ordinary, and necessary.
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.
APC is a regulated utility, and is required to track and substantiate expenses in a manner which is
acceptable to the Regulatory Commission of Alaska. Thus, APC is accustomed to maintaining data
on utility costs and expenditures which meets with a very high standard in terms of assuring that
expenses are reasonable, ordinary, and necessary.
APC is a private sector business which is accustomed to managing and controlling costs in order to
maximize value and return on investment while ensuring sustainable benefits.
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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.
Amount of Energy Available, and Pros and Cons of Project:
Proposed Energy Resource: The Neck Lake site has the potential to generate 3.2 GWh per year
with an installed capacity of 750 kW, however, that would be much greater than the required
generation. APC will evaluate the optimum installed capacity during Phase II; at this time an installed
capacity of 124 kW is estimated as being appropriate.
Lowers Energy Costs. It is currently estimated that the project will be able to produce clean energy
for approximately $0.30 less (50% less) than the cost of diesel-fired generation of electricity. Over
time, annual savings will increase as the cost of diesel fuel continues to escalate over stabile
hydropower pricing.
Stabilizes Energy Costs Long Term. The project will stabilize local energy costs by reducing
dependency on diesel fuel – a volatile commodity with costs which escalate faster than the rate of
inflation. Hydropower maintenance and operating costs are extremely low compared to that those
associated with diesel-fired generation.
Long Project Lifespan with Additional Cost-Savings Available Beyond Capital Cost
Repayment – The project has an estimated useful life of over 50 years. Properly constructed
hydropower sites can provide over 100+ years of reliable service. (For example, AP&T’s Dewey
Lakes hydropower project has been operating for 109 years.) After the financing period is complete
and capital costs are paid off, the cost of maintaining and operating a hydropower project drops to
very low levels.
Diesel Fuel Displacement Benefit. The project will displace approximately 99.5% of Whale Pass’s
diesel-fired generation of electricity with clean, renewable hydropower from a local, low-impact
source.
Supports State Renewable Energy Policy Goals. By supplanting diesel-fired generation with clean,
renewable hydropower, the project will help to support the State of Alaska’s goal of 50% renewable
energy by 2025.
No Difficulties with Power Sales Agreements – The project is being proposed by APC, the
incumbent utility, as a self-build project.
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Benefits Community Which is Still 100% Diesel Dependent. Unlike other communities of Prince
of Wales Island, Whale Pass has not yet had the opportunity to transition from 100% diesel-fired
generation to an energy mix including renewables. The most recently available AEA PCE report
identifies $0.59 kWh pricing for this service region, with an average PCE payment of $0.37 per
eligible kilowatt hour.
Generates Significant Power Cost Equalization Savings for the State of Alaska. Due to current
100% dependency on diesel-fired generation, the State of Alaska would experience significant Power
Cost Equalization subsidization savings. State PCE statistics indicate the 57% of total kWh sold in
Whale Pass in FY13 are PCE-eligible kWh; if this ratio holds true, the State of Alaska would realize
significant PCE subsidization savings, with approximately 43% of cost-savings being realized by
current ratepayers.4
A Reasonable Increment of Hydropower. Economic viability of many hydropower projects in
Alaska is challenged by the difficulty of matching the utility’s incremental load growth to the size of
locally available hydropower resources; this produces the frequently occurring situation in which a
portion of a project’s power and energy from a new hydropower project cannot be sold during initial
years of operation. Neck Lake is a small increment of power and energy, which APC anticipates can
be integrated within the regional utility system without these types of challenges to economic and
financial feasibility.
Experienced Hydropower Developer. APC has significant experience developing, owning, and
operating low impact hydropower projects. APC has developed 4 new hydropower projects in Alaska
in the last 20 years, with a 5th hydropower project (Reynolds Creek) currently entering final
construction; APC currently owns and operates 7 hydropower projects. APC’s parent company,
AP&T, has over 50 years of experience as a private sector Alaskan business engaged in ownership,
development, and reliable operation of hydropower projects.
Existing Investment to Date. Reconnaissance phase activities have been completed due to private
investment by both the AEA and APC.
Disadvantage – Large Capital Expenditure Requirement. The major drawback of hydropower
projects is that they are extremely capital intensive. While hydropower projects have very long useful
lifespans (50+ or even 100+ years), commercial financing is typically available for a 30 year period
at most. Whale Pass is a relatively small increment of new hydropower (0.124 MW), which helps
reduce the total capital expenditure required.
Ease of Integration – Hydropower can be readily incorporated alongside diesel-fired generation
within a small utility system, with minimum integration concerns.
Discussion of Energy Technology Alternatives in Whale Pass
4 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
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No viable alternative energy sources have been identified in the Whale Pass region.
Transmission Interconnection to POW Grid. A 25 mile transmission connection
would connect Whale Pass to the existing the Prince of Wales grid, providing access
to APC hydropower assets, however, the transmission connection project would be
more costly than the Neck Lake micro hydropower project, would be less reliable,
and would have a shorter useful lifespan.
Diesel: A Costly and Unsustainable Energy Source – Whale Pass is currently
100% dependent on diesel-fired generation. This energy source is very costly, with
pricing escalating faster than inflation due to the rising price of petroleum – a volatile
commodity sensitive to a wide variety of supply risks and geopolitical factors. The
high cost of diesel-fired generation places financial pressure on families and
businesses in Whale Pass. Continued 100% dependency on diesel-fired
generation is not a sustainable way of life for residents of Whale Pass.
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.
There are 3 gensets in APC’s Whale Pass diesel power plant:
Unit #1 = JD4045, 70 kW, Installed 1995, 11.24 kWh/gal (averaged from 2013)
Unit #2 = JD4045, 70 kW, Installed 1995, 11.95 kWh/gal (averaged from 2013)
Unit #3 = JD6068, 110 kW, Installed 2008, 13.33 kWh/gal (averaged from 2013)
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.
Existing power plant resources are described in section 4.2.1. above.
Existing potential renewable / alternative energy resources are discussed in section 4.1 above.
This hydropower project will significantly reduce use of existing diesel gensets. Occasionally, one
or more diesel gensets will be needed in addition to the hydro power. This will reduce the use of
diesel gensets and the frequency of their maintenance, including overhauls and replacement. The
diesel generators that would be impacted are all owned and operated by APC in Whale Pass. The
Project will almost entirely eliminate this area’s reliance on fossil fuels. APC also owns the
transmission and distribution infrastructure, so no impacts will occur to existing energy infrastructure
and resources.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
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The existing energy market for the project is Whale Pass. Whale Pass is an isolated community on the
northern end of POW, approximately 25 road miles above Naukati Bay,5 which lacks a transmission
connection to the Prince of Wales grid. APC currently owns and operates all of the electrical
infrastructure on the island. The existing diesel plant will be placed on standby status, reducing APC’s
diesel operations and maintenance costs.
Currently, Whale Pass customers pay $0.59 per kWh (excluding PCE subsidy).
i. Electricity [kWh] 300,000 kWh (2013)
This figure does not include “off-grid” residents running numerous dispersed
diesel gensets, who would connect in the event more affordable hydropower
becomes available. AP&T anticipates these connections could increase the
total demand to approximately 450,000 kwh.
ii. Fuel usage
Diesel [gal] 25,000 (2013) This figure does not include “off-grid” residents running
numerous dispersed diesel gensets, who would reconnect in the event more
affordable hydropower becomes available.
Other NA
iii. Peak Load 34.40 kW -- This figure does not include “off-grid” residents running
numerous dispersed diesel gensets, who would reconnect in the event more
affordable hydropower becomes available.
iv. Average Load 34.15 kW -- This figure does not include “off-grid” residents running
numerous dispersed diesel gensets, who would reconnect in the event more
affordable hydropower becomes available.
v. Minimum Load 26 kW -- This figure does not include “off-grid” residents running numerous
dispersed diesel gensets, who would reconnect in the event more affordable
hydropower becomes available.
vi. Efficiency 11.3 kWh/gal
vii. Future trends Use of electricity likely to increase with more affordable rates, and with
reconnection of current “off-grid” residents.
Lowers Energy Costs. It is currently estimated that the project will be able to produce clean
energy for approximately $0.30 less than diesel-fired generation of electricity. Over time,
annual savings will increase as the cost of diesel fuel continues to escalate over stabile
hydropower pricing.
Stabilizes Energy Costs Long Term. The project will stabilize local energy costs by
reducing dependency on diesel fuel – a volatile commodity with costs which escalated faster
than the rate of inflation. Hydropower maintenance and operating costs are extremely low
compared to that those associated with diesel-fired generation.
Long Project Lifespan with Additional Cost-Savings Available Beyond Capital Cost
Repayment – The project has an estimated useful life of over 50 years. Properly constructed
hydropower sites can provide over 100+ years of reliable service. (For example, AP&T’s
5 The northern most community to be connected to the islands renewable energy grid.
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Dewey Lakes hydropower project has been operating for 109 years.) After the financing
period is complete and capital costs are paid off, the cost of maintaining and operating a
hydropower project drops to very low levels.
Generates Significant Power Cost Equalization Savings for the State of Alaska. Due to
current 100% dependency on diesel-fired generation, the State of Alaska would experience
significant Power Cost Equalization subsidization savings. State PCE statistics indicate the
57% of total kWh sold in Whale Pass in FY13 are PCE-eligible kWh; if this ratio holds true,
the State of Alaska would realize significant PCE subsidization savings, with approximately
43% of cost-savings being realized by current ratepayers.6 At present, AP&T estimates PCE
savings to be $3,620,000 over the 50-year life of the Project.
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:
Renewable energy technology specific to location – The Project will be a conventional run-of-river
hydroelectric project. Project features shall include:
• 400 feet of single lane access road
• Intake with fish screen, 34 cfs diversion capacity
• 350 feet of 30- inch diameter pipeline
• Powerhouse with four 31-kW generating units, each consisting of a pump-as-turbine and
synchronous generator
• Upgrade of about 4 miles of distribution line from single-phase to three-phase
Hydroelectric technology is well established, with over 100+ years of successful commercial
application in southeast Alaska, British Columbia, and the Pacific Northwest. The Project will utilize
the abundant rainfall and steep topography afforded by the falls on the Neck Lake outlet stream to
generate renewable energy.
Optimum installed capacity – 124 kW (to be confirmed by Phase II studies).
Anticipated capacity factor – TBD. Estimated at 40%.
Anticipated annual generation – Potentially 450 MWh/yr, providing “off-grid” residents connect
to receive more affordable electricity. As Whale Pass loads grow, consistent with estimates within
the southeast Alaska integrated resource plan, the project would be able to generate as much as 1,000
MWh/yr with the proposed installed capacity of 124 kW.
Anticipated barriers – No technological barriers.
6 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
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Basic integration concept – Integration of hydropower within the existing diesel-fired system is not
overly complicated. APC already operates two independent integrated hydro-diesel systems. For
much of the year the hydro generation will be much more than the load, and therefore the diesel
generation will be on standby; one or more hydro units will be on-line, with any excess generation
shunted to dummy resistance loads. During low flow periods, possibly during late summer and during
parts of the winter when flow is low, the hydro generation may be placed in lag position with diesel
taking the lead. During the transition periods, diesel unit(s) will be block-loaded in lag position, with
the hydro in lead position. Preliminary studies indicate that the Project would be able to replace about
99.5% of diesel-fired generation, excluding planned or forced outages.
Delivery methods – Project generation will be delivered to Whale Pass via an upgraded existing 4-
mile-long distribution line from the powerhouse to the existing distribution system in the community.
EXHIBIT 3: PROJECT DESIGN
The hydroelectric facilities will be designed to avoid interference with the existing salmon rearing
and collection facilities operated at Neck Lake by the Southern Southeast Regional Aquaculture
Association (SSRAA).
Delivery methods: Project will deliver energy to Alaska Power Company via conventional
distribution lines and substations.
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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.
This project is located on lands owned by the State of Alaska, and SSRAA. As Phase II and Phase
III activities progress, APC will be applying for a lease or easement from the State of Alaska, and
will negotiate an arrangement with SSRAA. SSRAA has provided the applicant with a letter of
support for this project (enclosed).
The hydroelectric facilities will be designed to avoid interference with the existing salmon rearing
and collection facilities operated at Neck Lake by the SSRAA. APC and SSRAA have agreed to
work cooperatively to develop a hydropower project that will be junior to all needs of the Neck Lake
hatchery, and will assure no adverse impacts to the hatchery or salmon runs. The project will help
support long-term sustainability of hatchery operations by providing affordable hydropower at
approximately half the cost of current diesel-fired generation, with pricing remaining stabile long
term.
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
Applicable Permits:
• 404 permit (Corps of Engineers)
• FERC License
• Water right (ADNR),
• State land easement (ADNR)
• Fish habitat permit (ADF&G)
• SHPO review
Permitting Timeline: APC expects to complete environmental and design studies in 2016 for
Phase II. Phase III permitting, licensing, and final design are anticipated to be completed by July
2018 due to the FERC licensing process.
Potential Permitting Barriers: There are no known permitting barriers at this time.
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
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• Identify and discuss other potential barriers
Threatened and Endangered Species: No impacts are anticipated to threatened and endangered
species, due to the project’s location and small size (<0.5 acres). An environmental assessment will
be made in Phase III as part of the FERC licensing process, which includes agency consultation.
Habitat Issues: The Southern Southeast Regional Aquaculture Association (SSRAA) has
established a rearing and trapping facility at the lake and outlet stream. Coho salmon smolts are
reared in pens in the lake, then released into the lake for migration out to tidewater during the spring.
When the adults return, they ascend a ladder into a single raceway, where they are quickly processed
for shipment to markets in the lower 48. Water for the raceway and ladder is diverted from the head
of the second (middle falls). SSRAA’s existing knowledge of fish usage of the stream may allow the
project to go without additional fish surveys. However, until consultation begins, we are assuming
fish surveys will be required.
The hydroelectric facility will be designed to avoid interference with the existing salmon rearing and
collection facilities. APC and SSRAA have agreed to work cooperatively to develop a hydropower
project that will be junior to all needs of the Neck Lake hatchery, and will assure no adverse impacts
to the hatchery or salmon runs. The project will help support long-term sustainability of hatchery
operations by providing affordable hydropower at approximately half the cost of current diesel-fired
generation, with pricing remaining stabile long term.
Wetlands: There is potential for a small amount of wetlands to be impacted. It is expected that a
wetlands delineation may be necessary to determine what if any impacts may occur.
Archaeological & Historical Resources: A site review by the SHPO is required to determine
necessity of an archaeological survey.
Land Development Constraints: APC will coordinate with SSRAA to make sure their needs and
goals are not affected by construction and operation of the Project.
Telecommunications Interference: The 12 kV distribution line will not create interference with
telecommunications.
Aviation Considerations: There is no significant aviation in the Project area.
Visual, Aesthetic Impacts: The Project will not be in a visually or aesthetically special view shed
that needs protection.
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
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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
Anticipated project costs:
Phase Cost Status
I $22,474.73 Completed
II $169,000 Proposed for AEA REF 8 Funding
III $320,000 Proposed for AEA REF 8 Funding
IV $2,500,000 To be completed circa 2019
Total $3,011,474.73
Cost estimation is based upon APC’s experience completing similar small hydropower projects, and
in-house vendor, supply, and construction cost data.
Proposed allocation of grant funds and cash match for Phase II and III activities are detailed in the
table below.
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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.)
O&M cost is estimated to be $25,000 in the first year of operation. APC will operate and maintain
the Project with proceeds from sale of power to its customers. No grant funding shall be requested
for operation and maintenance.
NECK LAKE HYDRO PHASE II BUDGET
Fish Survey $16,000.00 $4,000.00 $0.00 $20,000.00
Wildlife Survey $8,000.00 $2,000.00 $0.00 $10,000.00
TES Botanical Survey $8,000.00 $2,000.00 $0.00 $10,000.00
Wetland Delineation $16,000.00 $4,000.00 $0.00 $20,000.00
Cultural Resource
Survey $8,000.00 $2,000.00 $0.00 $10,000.00
Consultation /
Coordination with
SSRAA
$8,000.00 $2,000.00 $0.00 $10,000.00
Water Quality
Sampling $7,200.00 $1,800.00 $0.00 $9,000.00
Initial FERC
Permitting
Process/Agency
Consultation
$40,000.00 $10,000.00 $0.00 $50,000.00
Feasibility Analysis $16,000.00 $4,000.00 $20,000.00
Conceptual Design $8,000.00 $2,000.00 $10,000.00
Total $135,200.00 $33,800.00 $169,000.00
NECK LAKE HYDRO PHASE III BUDGET
ACTIVITY AEA FUNDS MATCHING FUNDS IN-KIND FUNDS TOTALS
FERC Licensing /
Agency Permitting /
EA
$48,000.00 $12,000.00 $60,000.00
Final Design $48,000.00 $12,000.00 $60,000.00
Additional Field
Studies $160,000.00 $40,000.00 $200,000.00
$0.00 $0.00
Total $256,000.00 $64,000.00 $320,000.00
Grand Total, Phase II and Phase
III Activities $391,200.00 $97,800.00 APC $489,000.00
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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
The customer for power is Alaska Power Company – the applicant requesting grant funds.
Potential sales price is currently estimated to be $0.30 (or 50%) less than the current cost of diesel-
fired generation, or $0.29 / kwh – however, this estimate will need to be refined and examined in
detail as part of project development activities proposed for AEA REF Round VIII funding.
Proposed Rate of Return from Grant-Funded Project:
The rate of return for the Neck Lake hydropower project would be regulated by the Regulatory
Commission of Alaska, and would generate a regulated return on private investment consistent with
the rate of return for similar projects. As a regulated utility, APC / AP&T is not permitted to earn a
rate of return on grant funds, or otherwise include grant funds in the rate base. APC would sell power
at a cost-based rate, consistent with AEA requirements.
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
The Applicant should demonstrate that the renewable energy resource is available on a sustainable
basis.
Annual average resource availability.
Neck Lake outlet stream, 120 cfs average flow, 57 feet of head
Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt 7 grid, leave this section blank)
i. Number of generators/boilers/other 3
ii. Rated capacity of generators/boilers/other Unit #1 = JD4045, 70 kW, Installed 1995,
11.24 kWh/gal (averaged from 2013)
Unit #2 = JD4045, 70 kW, Installed 1995,
11.95 kWh/gal (averaged from 2013)
Unit #3 = JD6065, 110 kW, Installed 2008,
13.33 kWh/gal (avg. July/August 2013)
iii. Generator/boilers/other type As noted above
iv. Age of generators/boilers/other As noted above
7 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.
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v. Efficiency of generators/boilers/other 11.3 kW h per gallon of diesel (aggregate for all
generators)
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor $15,000
ii. Annual O&M cost for non-labor $10,000
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] 300,000 kWh (2013)
This figure does not include “off-grid” residents running numerous dispersed
diesel gensets, who would reconnect in the event more affordable
hydropower becomes available. AP&T anticipates these connections could
increase the total demand to approximately 450,000 kwh.
ii. Fuel usage
Diesel [gal]
Other
iii. Peak Load 34.40 kW -- This figure does not include “off-grid” residents running
numerous dispersed diesel gensets, who would reconnect in the event more
affordable hydropower becomes available.
iv. Average Load 34.15 kW -- This figure does not include “off-grid” residents running
numerous dispersed diesel gensets, who would reconnect in the event more
affordable hydropower becomes available.
v. Minimum Load 26 kW -- This figure does not include “off-grid” residents running numerous
dispersed diesel gensets, who would reconnect in the event more affordable
hydropower becomes available.
vi. Efficiency 11.3 kWh/gal
vii. Future trends Use of electricity likely to increase with more affordable rates, and with
reconnection of current “off-grid” residents.
i. Electricity [kWh]
i. Diesel [gal or MMBtu] NA
ii. Electricity [kWh] NA
iii. Propane [gal or MMBtu] NA
iv. Coal [tons or MMBtu] NA
v. Wood [cords, green tons, dry tons] NA
vi. Other NA
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]
124 KWH run-of-river hydropower
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 1,000,000 kWh max. (300,000 kWh at current load levels)
ii. Heat [MMBtu] NA
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c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu] NA
ii. Coal [tons or MMBtu] NA
iii. Wood or pellets [cords, green tons,
dry tons]
NA
iv. Other NA
Project Cost
a) Total capital cost of new system $2,500,000
b) Development cost $511,474.73
c) Annual O&M cost of new system $25,000
d) Annual fuel cost None
Project Benefits
a) Amount of fuel displaced for
i. Electricity Estimated 25,000 gallons of diesel per year
ii. Heat NA
iii. Transportation NA
b) Current price of displaced fuel $4 / gallon – equivalent to $0.2857 / kwh
c) Other economic benefits The project will help support long-term
sustainability of Neck Lake hatchery operations by
providing affordable hydropower at
approximately half the cost of current diesel-fired
generation, with pricing remaining stabile long
term. This will support and sustain the vitality of
commercial and recreational fishing resources in
the region.
d) Alaska public benefits Other benefits:
The project will help support long-term
sustainability of Neck Lake hatchery operations by
providing affordable hydropower at
approximately half the cost of current diesel-fired
generation, with pricing remaining stabile long
term. This will support and sustain the vitality of
commercial and recreational fishing resources in
the region.
Produces significant PCE benefits for the State of
Alaska.
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Power Purchase/Sales Price
a) Price for power purchase/sale Currently estimated at $0.30 less than the cost of
diesel-fire generation, however, this is an early
estimate which will be substantiated and revisited
following application of AEA Round VIII funds for
Phase II and III tasks.
Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio The AEA’s financial model provides a BCR of 0.65, but does
not include PCE savings for the State of Alaska. At present,
APC estimates PCE savings to be $3,620,000 ($2014) over
the 50-year life of the Project; a value in excess of the
project’s capital cost.
APC anticipates that construction-phase grant funding will
be required for the project to generate a positive BCR.
The project will help support long-term sustainability of
Neck Lake hatchery operations by providing affordable
hydropower at approximately half the cost of current diesel-
fired generation, with pricing remaining stabile long term.
Results
NPV Benefits ($6,209,073.56)
NPV Capital Costs $9,588,161
B/C Ratio (0.65)
NPV Net Benefit ($15,797,235)
Performance Unit Value
Displaced Electricity kWh per year 450,000
Displaced Electricity total lifetime kWh 22,500,000
Displaced Petroleum Fuel gallons per year 32,143
Displaced Petroleum Fuel total lifetime gallons 1,607,143
Displaced Natural Gas mmBtu per year -
Displaced Natural Gas total lifetime mmBtu -
Avoided CO2 tonnes per year 326
Avoided CO2 total lifetime tonnes 16,313
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This will support and sustain the vitality of commercial and
recreational fishing resources in the region.
See below for output of AEA model.
Payback (years) Does not generate a positive BCR without State of Alaska
grant funding support, unless ancillary benefits such as PCE
displacement and hatchery benefits are included. See notes
above.
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.
State PCE Savings:
PCE is a complex calculation with outputs which are a function of a variety of variables, including:
1) level of legislatively authorized appropriation; 2) the performance of the PCE endowment, and
level of investment income produced during a given period; 3) current power and energy prices in
“benchmark” communities used as a point of comparison, which in turn are determined by their own
unique set of variables; 4) the cost of diesel fuel.8 The extent to which PCE subsidization is deployed
in recipient communities is a function of the level of energy consumed by eligible recipients, and in
the case of “community facilities,” a function of local population. This makes it difficult to forecast
PCE savings. However, State PCE statistics indicate the 57% of total kWh sold in the Tok region
in FY13 are PCE-eligible kWh; if this ratio holds true, the State of Alaska would realize significant
PCE subsidization savings, with approximately 43% of cost-savings being realized by current
8 Source: http://www.akenergyauthority.org/PDF%20files/PCEProgramGuideJuly292014EDITS.pdf
Results
NPV Benefits ($6,209,073.56)
NPV Capital Costs $9,588,161
B/C Ratio (0.65)
NPV Net Benefit ($15,797,235)
Performance Unit Value
Displaced Electricity kWh per year 450,000
Displaced Electricity total lifetime kWh 22,500,000
Displaced Petroleum Fuel gallons per year 32,143
Displaced Petroleum Fuel total lifetime gallons 1,607,143
Displaced Natural Gas mmBtu per year -
Displaced Natural Gas total lifetime mmBtu -
Avoided CO2 tonnes per year 326
Avoided CO2 total lifetime tonnes 16,313
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ratepayers.9 Due to the fact that PCE subsidizes the first 500 kWh per month of residential energy
purchases, and the first 70 kWh per month x the community population of community facility
expenses, the State of Alaska is “at the front of the line” to experience cost savings for PCE-eligible
ratepayer classes. These PCE savings can be used to assist other, less fortunate communities in other
parts of Alaska.
Lowers Energy Costs. It is currently estimated that the project will be able to produce clean
energy for approximately $0.30 less than the current cost of diesel-fired generation of
electricity. Over time, annual savings will increase as the cost of diesel fuel continues to
escalate over stabile hydropower pricing.
Stabilizes Energy Costs Long Term. The project will stabilize local energy costs by
reducing dependency on diesel fuel – a volatile commodity with costs which escalate faster
than the rate of inflation. Hydropower maintenance and operating costs are extremely low
compared to that those associated with diesel-fired generation.
Long Project Lifespan with Additional Cost-Savings Available Beyond Capital Cost
Repayment – The project has an estimated useful life of over 50 years. Properly constructed
hydropower sites can provide over 100+ years of reliable service. (For example, APC’s
Dewey Lakes hydropower project has been operating for 109 years.) After the financing
period is complete and capital costs are paid off, energy costs drop dramatically, reflecting the
relatively low level of costs associated with operating and maintaining a hydropower project.
Generates Significant Power Cost Equalization Savings for the State of Alaska. Due to
current 100% dependency on diesel-fired generation, the State of Alaska would experience
significant Power Cost Equalization subsidization savings. State PCE statistics indicate that
57% of total kWh sold in Whale Pass in FY13 are PCE-eligible kWh; if this ratio holds true,
the State of Alaska would realize significant PCE subsidization savings, with approximately
43% of cost-savings being realized by current ratepayers.10 At present, APC estimates PCE
savings to be $3,620,000 over the 50-year life of the Project.
9 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
10 Source: Most recently available AEA PCE report:
http://www.akenergyauthority.org/PDF%20files/pcereports/FY13StatisticalRptComt.pdf
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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
Potential Fuel Displacement
1 Year – 32,143 gallons -- $128,572 ($2014, assuming $4 / gal) (326 tons less CO2 emissions)
50 Years – 1,607,150 gallons -- $6,428,600 ($2014, assuming $4 / gal) (16,300 tons less CO2)
100 Years – 3,214,300 gallons -- $12,857,200 ($2014, assuming $4 / gal) (32,600 tons less CO2)
Anticipated Annual Revenue
To be determined based upon outcome of activities proposed for AEA REF Round VIII funding.
Potential Additional Annual Incentives
At present, AP&T’s estimates PCE savings to be $3,620,000 over the 50-year life of the Project.
Potential Additional Annual Revenue Streams
While Alaska does currently not have Renewable Portfolio Standards, these conditions could change,
and there may potentially be a market for Renewable Energy Certificates or other environmental
attributes from the project at a future date.
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.
Does not apply.
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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
Proposed business structure(s) and concepts that may be considered.
Project would be developed as an asset owned and operated by the incumbent utility, Alaska Power
Company (APC).
Proposed Operations & Maintenance
Project would be owned and operated by APC, an AP&T subsidiary. APC currently operates 6
hydropower projects in Alaska, with an 7th (Reynolds Creek) scheduled for near term construction.
Back-up requirements
There will be no back-up systems installed. APC’s existing diesel power plant will provide 100%
back-up power supply capacity.
Identification of operational issues that could arise.
Mechanical:
Well designed and constructed hydroelectric projects generally have few major mechanical
operational issues once the inevitable initial bugs have been worked out. Mechanical operational
issues are typically replacement of worn parts.
Other:
Climate change could potentially impact inflows to the project, and project operations. It is not certain
what changes will occur, but there is some support for the belief that hydropower operation in Alaska
may be beneficially affected by climate change in that there will be more precipitation in the winter
in the form of rain rather than snow, which may result in additional energy during winter months
when hydropower flows tend to be lowest.
Commitment to reporting the savings and benefits
In the event of State investment, project partners would be glad to commit to reporting of savings and
benefits in a manner consistent with AEA requirements.
As a regulated utility serving PCE-eligible communities, APC is required to keep highly detailed
records of costs. These records can also be used to help identify savings to the AEA.
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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.
Neck Lake Hydro was awarded $82,000 for recon and feasibility and $26,000 for final design for a
total of $108,000 in AEA REF Round II funds (#2195455). Part of these funds were used to develop
and submit a filing for a FERC jurisdictional determination. FERC determined that a license would
be required for this project. Only $22,474.73 of total grant funds were expended, supporting activities
including surveying and mapping, preparation of the FERC jurisdictional determination filling, and
conceptual design. The remaining balance of funds was returned to the AEA.
FERC’s finding that a license would be required resulted in APC terminating project activities due to
concerns about project development costs. However, FERC has recently developed a small
hydropower licensing track that should significantly expedite the licensing process and reduce the
licensing costs associated with a small project such as Neck Lake. The availability of this project
licensing track – in conjunction with diesel cost escalation estimates and key findings of the SEIRP
– have lead APC to conclude that it is in the best interest of the ratepayers of Whale Pass to resume
efforts to pursue the Neck Lake hydropower project. This finding is supported by updated
reconnaissance-level financial and economic analysis completed by APC in September of 2014.
APC would complete remaining Phase II activities starting in July 2015, upon awarding of AEA
funds. Contractors for field studies will be contacted prior to the summer of 2015 to ensure their
availability.
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
No local opposition is anticipated, as the proposed project would decrease electric rates, substitute
clean energy for diesel fuel, and use a waterway which is already developed (for aquaculture).
The hydroelectric facilities will be designed to avoid interference with the existing salmon rearing
and collection facilities operated at Neck Lake by the Southern Southeast Regional Aquaculture
Association (SSRAA). APC and SSRAA have agreed to work cooperatively to develop a hydropower
project that will be junior to all needs of the Neck Lake hatchery, and will assure no adverse impacts
to the hatchery or salmon runs. The SSRAA has provided a letter of support for this project, which
is enclosed. The project will provide significant benefits to the hatchery, helping to assure long-term
sustainability of the Neck Lake hatchery’s operations by providing affordable hydropower at
approximately half the cost of current diesel-fired generation, with pricing remaining stabile long
term. The Neck Lake hatchery is central to many commercial and recreational opportunities; the long
term sustainability of this facility is vital to the region’s economic well-being.
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There is significant community opposition to continued reliance upon diesel-fired generation, due to
high and escalating energy costs, and the hardships this produces for businesses and residents.
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
Anticipated project costs:
Phase Cost Status
I $22,474.73 Completed
II $169,000 Proposed for AEA REF 8 Funding
III $320,000 Proposed for AEA REF 8 Funding
IV $2,500,000 To be completed circa 2019
Total $3,011,474.73
Cost estimation is based upon APC’s experience completing similar small hydropower projects, and
in-house vendor, supply, and construction cost data.
Amount requested in grant funds: $135,200 Phase II
$256,000 Phase III
$391,200 Total
Additional investment by APC: APC will provide matching funding equaling 20% ($97,800) of the
total cost of Phase II & III Project development. This matching amount will be paid from APC’s
general operations funds.
The table which follows lists proposed costs and cost allocations, including matching fund
commitments:
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Neck Lake Hydropower: Phase II and III Activities:
Phase II
Milestones
Anticipated
Completion Date
RE- Fund Gran
Funds
Grantee Matching
Funds
Source of
Matching Funds:
Cash/In-
Kind/Federal
Grants/Other State
Grants/Other
TOTALS
Initial FERC
Permitting
Process/Agency
Consultation
07/31/16 $16,000.00 $4,000.00 APC $20,000.00
Wildlife Survey 07/31/16 $8,000.00 $2,000.00 APC $10,000.00
TES Botanical
Survey 07/31/16 $8,000.00 $2,000.00 APC $10,000.00
Wetland
Delineation 07/31/16 $16,000.00 $4,000.00 APC $20,000.00
Cultural
Resource
Survey
07/31/16 $8,000.00 $2,000.00 APC $10,000.00
Consultation /
Coordination
with SSRAA
07/31/16 $8,000.00 $2,000.00 APC $10,000.00
Water Quality
Sampling 07/31/16 $7,200.00 $1,800.00 APC $9,000.00
Fish Survey 07/31/16 $40,000.00 $10,000.00 APC $50,000.00
Feasibility
Analysis 07/31/16 $16,000.00 $4,000.00 APC $20,000.00
Conceptual
Design 07/31/16 $8,000.00 $2,000.00 APC $10,000.00
TOTALS $135,200.00 $33,800.00 APC $169,000.00
Direct Labor &
Benefits $43,200.00 $10,800.00 APC $54,000.00
Travel & Per
Diem $4,800.00 $1,200.00 APC $6,000.00
Equipment $$$
Materials &
Supplies $$$
Contractual
Services $87,200.00 $21,800.00 APC $109,000.00
Construction
Services $$$
Other $$$
TOTALS $135,200.00 $33,800.00 APC $169,000.00
Budget Categories:
AEA 15003 Page 42 of 45 7/2/14
Renewable Energy Fund Round VIII
Grant Application - Standard Form
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.
Does not apply.
Phase III
Milestones
Anticipated
Completion Date
AEA RE- Fund
Grant Funds
Grantee Matching
Funds
Source of
Matching Funds:
Cash/In-
Kind/Federal
Grants/Other State
Grants/Other
TOTALS
Additional Field
Studies 09/30/17 $48,000.00 $12,000.00 APC $60,000.00
FERC Licensing /
Agency
Permitting / EA
12/31/17 $48,000.00 $12,000.00 APC $60,000.00
Final Design 07/30/18 $160,000.00 $40,000.00 APC $200,000.00
TOTALS $256,000.00 $64,000.00 APC $320,000.00
Direct Labor &
Benefits $203,200.00 $50,800.00 APC $254,000.00
Travel & Per
Diem $4,800.00 $1,200.00 APC $6,000.00
Equipment $$$
Materials &
Supplies $$$
Contractual
Services $48,000.00 $12,000.00 APC $60,000.00
Construction
Services $$$
Other $$$
TOTALS $256,000.00 $64,000.00 APC $320,000.00
Budget Categories:
Grand Total, Phase II and Phase
III Activities $391,200.00 $97,800.00 APC $489,000.00
AEA 15003 Page 43 of 45 7/2/14