HomeMy WebLinkAboutGrantApplication7Renewable Energy Fund Round VII
Grant Application - Standard Form
AEA 2014-006 Application Page 1 of 23 7/2/2013
Application Forms and Instructions
This instruction page and the following grant application constitutes the Grant Application Form
for Round VII 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/REFund7.html.
If you need technical assistance filling out this application, please contact Shawn Calfa,
the Alaska Energy Authority Grant 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 3 AAC 107.630 (b) Applicants may request trade secrets or
proprietary company data be kept confidential subject to review and approval by the
Authority. If you want information 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)
City of King Cove
Type of Entity: Fiscal Year End
Tax ID # 92-6001247 Tax Status: For-profit Non-profit X Government ( check one)
Date of last financial statement audit:
Mailing Address
3380 C Street, Suite 205
Anchorage, AK 99503
Physical Address
Same as Mailing
Telephone
907-274-7563
Fax
907-276-7569
Email
ghennighmgr@gci.net
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Gary L. Hennigh
Title
City Administrator
Mailing Address
3380 C Street, Suite 205
Anchorage, AK 99503
Telephone
907-274-7563
Fax
907-276-7569
Email
ghennighmgr@gci.net
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
X A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2 Attached to this application is formal approval and endorsement for the project by
the applicant’s board of directors, executive management, or other governing
authority. If the applicant is a collaborative grouping, a formal approval from each
participant’s governing authority is necessary. (Indicate Yes or No in the box )
Yes
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).
Yes
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/veep/Grant-Template.pdf. (Any exceptions
should be clearly noted and submitted with the application.)
Yes
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
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project and who will be the primary beneficiaries.
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.
Waterfall Creek Hydroelectric Project
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.
Delta Creek Valley – King Cove, Alaska
The project will be located on a small creek located approximately 5 miles north of the City of King Cove.
This creek is adjacent to and west of an existing hydroelectric project on Delta Creek that was
constructed in 1995. The creek has a noticeable waterfall that is visible from the Delta Creek
hydroelectric powerhouse.
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.
55.069129,-162.313385
2.2.2 Community benefiting – Name(s) of the community or communities that will be the
beneficiaries of the project.
The City of King Cove
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels (excluding heat-only)
X 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 X Construction and Commissioning
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2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of the proposed project.
This project will be a modest, run-of-the-river hydroelectric facility using Waterfall Creek and
consisting of a concrete diversion/intake structure, 4,500’ HDPE penstock pipeline, 16’X40’
metal powerhouse on a concrete slab, Pelton Impulse Turbine and induction generator, remote-
automatic control system, and 5,000’ access road. This facility will be a working partner to the
City’s existing and highly successful Delta Creek hydroelectric project, which has been
operating for the last eighteen years.
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 public benefits and financial savings which will accrue upon completion of this project are
both immediately significant and profound in their ramifications over the life of the Waterfall
Creek project. See the attached report, “Overview of the City’s Power Generation System
(September, 2013), hereafter referred to as the REPORT (2013),which provides the basis for all
of the technical and financial information, assumptions, and projections used in this grant
application.
Waterfall Creek is projected to displace approximately 60,000 gallons of diesel fuel in King Cove
that would otherwise have to be purchased and consumed annually. This represents
approximately 1 MW of electrical power, year after year, from a clean renewable resource.
The estimated annual savings of 60,000 gallons of diesel fuel is $250,000 at our current price of
$4.15/gallon. Of this amount, 35,000 gallons of diesel will be displaced by Waterfall Creek in
the City’s system. The other 25,000 gallons of diesel will be displaced in Peter Pan Seafood’s
power generation system and replaced with the purchase of “surplus” renewable energy from
the City.
Peter Pan Seafoods has been continually interested in purchasing any amount of “surplus
power” that the City has available from our Delta Creek hydro facility and this new Waterfall
Creek hydro facility. From both hydro sources, the City anticipates being able to sell Peter Pan
Seafoods at least 500,000 kWh of power at a cost of $0.15/kWh. Of this amount, 400,000 kWh
are anticipated from W aterfall Creek and 100,000 kWh from Delta Creek. This additional annual
revenue is estimated to be $75,000.
Together, the City is projecting the annual savings in diesel fuel and new revenue to be
approximately $225,000.
In summary, with Waterfall Creek, the City anticipates an initial annual fuel savings of $150,000
(i.e. 35,000 gallons of displaced diesel fuel at current price of $4.25) and annual surplus power
sales to Peter Pan Seafoods of $75,000. Together, these savings represent $225,000.
The City anticipates annual debt of $125,000 for Waterfall Creek based on the assumption of
maximum debt of $1.5 million.
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Therefore, the City’s expected annual net revenue increase to its electrical utility fund is
$100,000. This amount will increase by about $10,000 for every 5% increase in the cost of
diesel fuel. It is reasonable to assume the annual fuel cost savings with Waterfall Creek will
reach $200,000 within the next 5-7 years.
This additional revenue should ensure the City is able to maintain our current $0.30/kWh rate,
and position the community to offset any future, reasonable PCE program reductions.
Public health benefits – the estimated annual 60,000 gallons of diesel fuel which could be
replaced by renewable energy from the Waterfall Creek translates into 600 metric tons of
avoided carbon dioxide emissions.
Cleaner air will benefit all the residents of King Cove!
With the addition of Waterfall Creek, the City expects to derive between 70 to 75% of its total,
annual demand for electrical power from renewable sources in its own “backyard.”
Consequently, King Cove will be able to mitigate the increasing cost of diesel fuel and work
towards securing a sustainable energy future.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project.
The Waterfall Creek project is estimated to cost $5.5 million, as of September 2013. This
new/revised estimate was provided to the City on September 3, 2013 (a copy of this revised
cost estimate is included with this application). ACMI/RR, an independent construction cost
estimating firm in Anchorage was requested by the City, via our professional services contract
with HDR, to provide a current cost estimate to help insure that the City’s current cost and
funding plans for the project are on target. ACMI/RR was requested to use the following
information to validate/update the September 21, 2012 project cost estimate:
1.) Waterfall Creek’s 65% plans/specs;
2.) Review of recent Chignik Lagoon (Packer’s Creek) hydro project construction bids
compared to the project’s engineer estimates (summer of 2013); and
3.) Review/discuss mobilization costs and other contractor costs and experiences who have
or are currently doing major construction projects in King Cove.
Consequently, the City must now find an expeditious and affordable means to keep this project
on schedule and financially viable for the City.
The City’s revised/anticipated funding scenario for this $5.5 million estimate is as follows:
$800,000 AEA Renewable Energy Fund #7 – this request
2,600,000 AEA Renewable Energy Fund #6 – (confirmed)
200,000 AEA Energy Fund #5 (confirmed)
300,000 City Local Cash Match (confirmed)
1,500,000 City Debt (approved by the AK Municipal Bond Bank,
August 28, 2013
$5,500,000 TOTAL PROJECT COST
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Per this $5.5 million project cost estimate, $2,800,000 has been previously funded by the
Renewable Energy Fund. This additional request of $800,000 from the Renewable Energy
Fund, combined with the prior approval of $2,600,000 will total $3,400,000 and represent a 65%
(State Funding) to 35% (Local Funding) match.
The City brings to this project invaluable in-kind contributions, including experience, a proven
track record, and existing infrastructure which has a significant cost savings to this project. Our
successful Delta Creek project, with 18 years of successful plant construction and operation, is
a blueprint for how small rural communities can succeed with a small hydro project. King Cove
has demonstrated that it supervises complex construction well, exercises budget discipline, and
brings projects on-line and on time. Lessons have been learned about what constitutes
adequate operations and management resources. The idea with this project, as it was with
Delta Creek, is to have a viable financial plan, properly build the project, and operate and
maintain it for optimum long-term use.
As City leaders planned for Waterfall Creek (initial feasibility study was commissioned in 2006),
it was with these values in mind: keep costs as low as possible, respect the water resource,
and utilize as much Delta Creek infrastructure as possible. The geographic proximity of the
Waterfall Creek tributary feeding into Delta Creek is fortuitous. The result is that with the
addition of a new turbine and generator, and a small expansion of the existing powerhouse, the
construction of this new facility will be very cost effective. Similarly, the already-installed
transmission line provides an immediately viable delivery system. Estimated value of this in-
place infrastructure is $1 million.
2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total costs and benefits below.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application $800,000
2.7.2 Cash match to be provided (City and Cash Debt) $1.9 million
2.7.3 In-kind match to be provided (SEE ABOVE SUMMARY) $0.0
2.7.4 Other grant funds to be provided $2.8 million
2.7.5 Other grant applications not yet approved $0.0
2.7.6 Total Grant Costs (sum of 2.7.1 through 2.7.4) $5.5 million
A $200,000 FY13 grant and $2,600,000 FY14 grant have been awarded to the project from the
AEA Renewable Energy Fund. This grant request, combined with the above funding sources,
totals to $5.5 million.
Project Costs & Benefits
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(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.
$5.5 million
2.7.8 Additional Performance Monitoring Equipment not covered
by the project but required for the Grant Only applicable to
construction phase projects.
$0.0
2.7.9 Estimated Direct Financial Benefit (Savings) - annually $225,000 (year 1)
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.
Cleaner air/environment &
long-term rates
SECTION 3 – PROJECT MANAGEMENT PLAN
Describe who will be responsible for managing the project and provide a plan for s uccessfully
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 Manager will be Gary Hennigh. Mr. Hennigh has been King Cove’s City Administrator
for the last 23 years. He is responsible for the overall delivery and management of public
services including: all general government programs; port & harbors; police and fire services;
water, sewer, solid waste, and electrical utilities; and recreational programs. He directly
supervises the City’s annual operating budget of $5 million and its five department heads. Gary
also directs the City’s lobbying efforts in Juneau and Washington, D.C.
Gary also oversees and administers the City’s major capital construction projects, grant/loan
agreements and professional services contracts. Throughout his tenure and with his guidance
and advocacy, the City has successfully acquired over $60 million in federal and state grants for
hydroelectric, water and transportation projects. This includes the Delta Creek Hydroelectric
project, which in 1995 was awarded an “Excellence in Engineering Design” from the American
Consulting Engineering Council.
Gary has a B.A. degree in geography form Mansfield University of Pennsylvania and a Master’s
degree in regional planning from Pennsylvania State University.
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 revised schedule of project milestones is shown below and based on a revised, critical path
schedule prepared by HDR and submitted to the City on September 6, 2013.
In retrospect the project schedule presented in the Round #6 grant application has been
problematic. The primary reason was due to the extensive time required to obtain the Title
AS16 (Fish Habitat) permit from the Alaska Department of Fish and Game. More than 3 years
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of permit discussion, negotiations, and compromises were required to obtain this final permit on
July 31, 2013. As noted in the REPORT (September 2013), the City ultimately agreed to a 24%
reduction in expected energy from Waterfall Creek from 1.4 MW to 1.07 MW.
Prior to resolving this permit issue, the City was reluctant to aggressively move forward with the
project’s final plans/specs. The overall impact of schedule delays means the project will not be
completed until October 2014, instead of December 2013. However, the project is now moving
forward with the revised schedule as summarized below. Subsequent to this application for
additional funding, the City will be submitting a request to AEA for amending and/or finalizing
AEA grant agreements 7050887 and 7060929 to facilitate these schedule modifications.
The focus of these amendments will be to allow the city to proceed in an expeditious manner to
achieve the schedule shown below. In order to do this, the City will be proposing, with
appropriate justification, some administrative and financial recommendations to achieve this
schedule.
Please fill out form provided below. You may add additional rows as needed.
Milestones Tasks
Start
Date
End
Date
Final Design Permitting #3 Final Environmental Assessment Jan
2012
Nov
2013
#5 Permit Approvals Jan
2011
Oct
2013
#6 Final Design Jul
2012
Dec
2013
#7-10 cost, plans, & sales agreement Jul
2013
Feb
2014
Construction #1-2 Confirmation/completion bid docs Nov
2013
Jan
2014
#3 Contract Award Dec
2013
Mar
2014
#4 Construction completed Apr
2014
Oct
2014
#5,6,7 & 8 testing, acceptance & reporting Oct
2014
Nov
2014
Note: these project milestones numbers are taken from the Grant Budget Form in the
application package. Where a number, like tasks #1 and #2, for Final Design and Permitting is
not shown above indicates this task has already been completed prior to this application.
3.3 Project Resources
Describe the personnel, contractors, accounting or bookkeeping personnel or firms, equipment,
and services you will use to accomplish the project. Include any partnerships or commitments
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with other entities you have or anticipate will be needed to complete your project. Describe any
existing contracts and the selection process you may use for major equipment purchases or
contracts. Include brief resumes and references for known, key personnel, contractors, and
suppliers as an attachment to your application.
The City of King Cove has an existing term contract with HDR Alaska which has been amended
to include provision for the final design and permitting for this project, as well as assistance with
the construction bid and award process. Bob Butera and Paul Berkshire are the primary HDR
staff who will be involved with Waterfall Creek.
Gilkes or Canyon Industries (anticipated turbine & generator packages), Arctic Insulation & Mfg.
(HDPE Pipe) and Control Power Inc. (control systems) are well-known vendors to the City and
HDR and are anticipated to be involved/selected for this project. Each has provided services
and products to King Cove for more than two decades. This city may also consider using a
“construction manager at risk” approach for selecting the general contractor for the project.
As always, the City will follow its local government procurement policies for all services,
materials and construction contracts for this project.
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.
The City will require monthly written progress reports from the HDR project manager. These
reports will be submitted to AEA for information and review. As identified milestones are
achieved, these will be communicated to AEA. Written and verbal inquiries from AEA regarding
the project will be responded to in a timely fashion. Any presentations or updates provided to
King Cove’s City Council will also be shared with AEA, including invitations for AEA to attend
meetings and/or observe the project firsthand.
3.5 Project Risk
Discuss potential problems and how you would address them.
There is always risk involved in any construction project, and particularly so in rural, remote
Alaska. King Cove’s previous experience with Delta Creek and our other major construction
projects have taught us a lot. By having HDR as our partner in this project, as they were with
the Delta Creek project, we are extremely confident in our mutual abilities to minimize project
risks. We have a combined hands-on experience and ability to work as a team that will serve us
well on Waterfall Creek.
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
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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.
There are two documents which describe the extent/amount of energy available from Waterfall
Creek including:
1.) “King Cove – Waterfall Creek Hydroelectric Project Concept Design Report (CDR)”
prepared by HDR in September 2007 for the Alaska Energy Authority (AEA); and
2.) “Overview of the City’s Power Generation System (September 2013)”, referred to as the
REPORT, and prepared by the City of King Cove.
3.) A copy of these reports are included with this grant application – Waterfall Creek
Hydroelectric Project -65% plans and specs.
Subsequent to the 2007 CDR, both AEA and the City have funded other preliminary work in order
to further develop and produce this information.
PROS – We know about hydroelectric power in King Cove. We have a track record that is
demonstrated in both word and deed. See Section 2.5 Project Benefit and Section 3.1 Project
Manager and Section 3.4 Project Resources. The City’s prior investment in our existing Delta
Creek system and our willingness to provide similar matching funds for this project, are indicators
of ability and follow through. As previously mentioned, the shared electrical transmission line
(original cost = $500,000) from the site five miles to “downtown” King Cove is a plus. The
expansion of the existing Delta Creek power house to accommodate the Waterfall Creek turbine
and generator is a much less expensive proposition than needing a new powerhouse. This will
provide an excellent location for integrating both hydroelectric control systems for better operator
monitoring, troubleshooting, security and total system efficiency.
CONS – NONE. Given our 18 years of successful hydro experience this project is one we
approach with confidence.
Wind energy may be another viable energy source for King Cove, however, this has not yet been
fully validated.
The City does plan to start this fall with another year of wind data collection from the Ram Creek
Valley, which is immediately adjacent to our new diesel plant. The City has the existing MET
tower that AEA left in King Cove after collecting a year of data in the Delta Creek Valley in
2005/2006. Per this data from the Delta Creek Valley, the City understands we have class 6
winds, but with a very high turbidity factor. However, the Ram Creek Valley is more protected
than the Delta Creek Valley with the added advantage of being immediately adjacent to our new
diesel power house and SCADA system. The City continues to be very interested in learning
more about this possibility. We are observing how the Kodiak Electric Association does with its
combo hydro-diesel-wind system.
Like much of rural Alaska, our “energy market” is a single-site, off-the-grid market. However, the
potential for sale of surplus power from the Waterfall Creek project (and Delta Creek) to Peter
Pan Seafoods (PPSF) is excellent. See the signed Memorandum of Understanding with PPSF, in
which they have indicated their support for the project and their willingness to consider a power
purchase contract.
As documented in the 2005 “King Cove Energy Projects – Concept Design Report”, PPSF is
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interested in purchasing between 500,000 kWh to 1.0 MW on an annual basis. Further validation
of Peter Pan’s interest/desire to purchase power from the City was their recent referrals of two
wind energy manufacturers to the City in “hope” that we are pursuing all renewable energy
possibilities.
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.
AEA is familiar with King Cove’s diesel energy system, since they have recently assisted us in
completing a $3 million upgrade/replacement of our old diesel system. Three new CAT diesels
(1-model 3512; with a maximum kWh output of 1050 and 2-model 3456; each with a maximum
kWh output of 475 and manufactured in 2006/2007) and City supplied CAT 3512 (14 years old,
low hours and a top/bottom rebuild in 2004; maximum output of 650 kWh).
Efficiency of these generators ranges between 13.5 to 14.5 gallons/kWh. These provide our
current diesel production with a generating capacity of 2.4 MW (megawatts). They are in addition
to the 850 kWh that our current Delta Creek hydro can produce under optimum summer
conditions, usually from May through October. In winter months Delta Creek hydro produces
around 0-200 kWh daily, rising in the spring/fall months to between 400-600 kWh.
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.
The City’s existing diesel plant and Delta Creek hydroelectric facility have adequate capacity to
meet the City’s power generation demands for many years. However, the costs and
environmental impacts to the community and local industry can be significantly reduced with the
addition of Waterfall Creek to our power generation system These include the replacement of
60,000 gallons of annual diesel fuel that would otherwise be required by the City’s and Peter Pan
Seafood’s diesel systems.
We have demonstrated a desire and an ability to look long term to the financial and environmental
consequences for our City of having renewable energy. We have seen the benefits in Delta
Creek and we are anxious to keep going, to keep succeeding, to use the power of water (and
possibly wind) to achieve a new level of energy independence; in so doing we hope that other
communities will watch King Cove and know they can dream big too.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
Existing energy market consists of approximately 130 residential households, two major boat
harbors, a new 40,000 s.f. school, and old school of comparable size that has been transformed
into the community’s multi-purpose center. There are also numerous public facilities and a major
municipal water system requiring constant well field pumping. King Cove also has three large and
four smaller commercial establishments.
Peter Pan Seafood, one of the largest year-round seafood processors in Alaska, has their own
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diesel system. Their peak demand is at least 3 times the City’s peak demand. Their growth is
now being constrained by their inability to expand their power generation capacity and this is why
they are very receptive to purchasing any amount of energy the City may be able to sell them.
Again, the only “impact” that Waterfall Creek is going to have on either the existing City system or
PPSF system is cheaper cost per kWh, energy efficiencies, and the gift of cleaner air for
everyone.
Also, for every $100,000 to $150,000 in energy savings (i.e. replacing diesel costs in the current
system and paying debt service on Waterfall Creek), and combined with revenue from power
sales to PPSF from Waterfall Creek, the City’s goal is to lower current kWh rates by at least
$0.02/kWh for all City utility customer classes. This goal assumes the State’s PCE program
remains constant.
4.3 Proposed System
Include information necessary to describe the system you are intending to develop and address
potential system design, land ownership, permits, and environmental issues.
4.3.1 System Design
Provide the following information for the proposed renewable energy system:
A description of renewable energy technology specific to project location
Optimum installed capacity
Anticipated capacity factor
Anticipated annual generation
Anticipated barriers
Basic integration concept
Delivery methods
See attached 2007 Concept Design Report and 2013 REPORT.
4.3.2 Land Ownership
Identify potential land ownership issues, including whether site owners have agreed to the project
or how you intend to approach land ownership and access issues.
The entire project is located on land owned by the King Cove Corporation. See attached letter of
support from King Cove Corporation for this project. The City expects to purchase 20 acres of
land from the corporation for this project. The purchase price is expected to be $100,000.
.
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 discussion of potential barriers
As previously noted in the application, acquiring the Title 16 (Fish Habitat) required three years of
significant negotiations and compromises before it was finally received on July 31, 2013.
Other permits required and expected in the next two months are: 1) Alaska Water Use Act (DNR)
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permit; and 2) Clean Water Act permit (DOE Section 404). Both of these permits were delayed in
the process of acquiring the Title 16 permit.
The COE has agreed to our approach to use the project’s pre-construction notice (PCN) for the
project to be covered under nationwide permit #12 for utility corridors. The OE f urther stated we
were wise to wait for the final Title 16 permit prior to filing the PCN. No other permit requirements
and/or potential barriers are expected.
4.3.4 Environmental
Address whether the following environmental and land use issues apply, and if so how they will
be addressed:
Threatened or endangered species
Habitat issues
Wetlands and other protected areas
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
At this point, the City or HDR do not expect any of the above “issues” to present any further
problems in the final permitting for this facility.
4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants records or analysis, industry standards,
consultant or manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
As previously noted in Section 2.6 and 2.7, and summarized in the REPORT (2013), the total
project cost is now estimated at $5.5 million. The cost for this (final) phase of the project is $1.2
million. This phase covers additional construction costs of $1.2 million.
This grant request for the AEA Energy Fund Round #7 is for $800,000. The additional $400,000
for this phase will come from the City ($1.9 million in combination cash and long-term debt). The
enclosed Resolution 14-02 authorizes the submittal of this grant for up to $900,000.
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Refer to the following summary of total project cost by phase and funding sources:
Phase 1
Final Design & Permitting 400,000
Subtotal 400,000
Phase 2
Land Acquisition 100,000
Construction 3,600,000
Construction Management 200,000
Subtotal 3,900,000
Phase 3
Construction 1,200,000
Subtotal 1,200,000
Total Project Cost $5,500,000
Funding AEA City/Other Total
Phase 1 200,000 200,000 400,000
Phase 2 2,600,000 1,300,000 3,900,000
Phase 3 800,000 400,000 1,200,000
3,600,000 1,900,000 5,500,000
The total anticipated AEA Renewable Energy Fund grants of $3.6 million (FY13 for $200,000,
FY14 for $2.6 million, and FY15 for $800,000) represents 65% of the total project costs. This
level of financial participation by AEA/State is consistent with similar renewable energy projects
for communities of comparable size to King Cove.
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.)
Annual operating costs, including anticipated debt for the Waterfall Creek portion of the City’s
power generation system, are estimated to be between $175,000 and $200,000.
These annual O&M costs, like all other costs to operate and maintain our diesel power plant and
Delta Creek hydro facility, are paid for through the cost of customer user fees (i.e. kWh/cost).
The City operates its electrical utility as an enterprise fund in a manner to achieve and maintain
financial solvency, including a repair and replacement item within the fund.
4.4.3 Power Purchase/Sale
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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 enclosed Memorandum of Understanding (MOU) between the City and Peter Pan Seafoods
documents the well-known interest and viability to sell power to the company. Due to the late
timing of the City’s decision to submit this FY15 Renewable Energy grant we did not request
Peter Pan sign a new MOU. As noted above, as well as in the City’s three prior grant
applications, this is a known fact.
The potential power purchase/sales price is estimated to be $0.15/kWh.
The proposed rate of return from Waterfall Creek is estimated to be a 2.1 B/C ratio.
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered in
evaluating the project.
Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 1,070,000 kWh
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank)
i. Number of generators/boilers/other 4 generators and 1 hydro turbine/generator
ii. Rated capacity of generators/boilers/other All gens – 2,450 kWh/& Delta Creek hydro = 850kw
iii. Generator/boilers/other type (2) CAT 3512 & (2) CAT 3456 & Gilkes generator
iv. Age of generators/boilers/other 3 Gen 5 yrs; 1 Gen 12 yrs; hydro Gen 18 yrs.
v. Efficiency of generators/boilers/other 13.5 – 14.5 kWh
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor $230,000
ii. Annual O&M cost for non-labor $1,050,000
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] 4,840,000
ii. Fuel usage
Diesel [gal] 184,000
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
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Other
iii. Peak Load 1020 kWh
iv. Average Load 500-600kWh
v. Minimum Load 200
vi. Efficiency .05%
vii. Future trends annual growth
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu]
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
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]
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 5,000,000 kWh
ii. Heat [MMBtu]
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu]
ii. Coal [tons or MMBtu]
iii. Wood or pellets [cords, green tons,
dry tons]
iv. Other
Project Cost
a) Total capital cost of new system $5,100,000
b) Development cost $400,000 (final design & permitting)
c) Annual O&M cost of new system $200,000 (includes annual debt maximum of $1.5
million)
d) Annual fuel cost $540,000 with Waterfall Creek, and without Waterfall
Creek are approximately $800,000
Project Benefits
a) Amount of fuel displaced for
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i. Electricity 60,000 gallons (City system 36,000 gallons; PPSF system 24,000 gallons)
ii. Heat
iii. Transportation
b) Current price of displaced fuel $4.14
c) Other economic benefits
d) Alaska public benefits Reduced carbon emissions and less dependency on
PCE program for rate stabilization
Power Purchase/Sales Price
a) Price for power purchase/sale $0.15/kWh X 500,000 kWh = $75,000 annually
Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 2.1
Payback (years) 18.3 years
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 discus what the expected impact would be for both
pre and post PCE.
As noted in section 4.2.3, the City’s goal is for Waterfall Creek to lower current City kWh rates by
at least $0.02/kWh for all City utility classes.
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 annual fuel displacement over the life of the project (assume 40 years) is estimated to
be 2.4 million gallons of fuel costing a minimum $1.30 million.
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Potential anticipated revenue from power sales over the life of the project is estimated to be
$2.5 million.
Potential annual incentives (tax credits) or revenue streams (like green tag sales, etc.) are
unknown to us at this tie.
Non-economic public benefits to Alaska have been previously summarized in Section 2.4. The
health benefits of 600 metric tons of LESS annual, carbon emission in King Cove and the
western end of the Alaska Peninsula and the eastern Aleutian Islands means better air quality
for the residents and less respiratory illnesses and a cleaner environment for everyone.
5.1.1 Public Benefit for Projects with Private Sector Sales
Projects that include sales of power to private sector businesses (sawmills, cruise ships, mines,
etc.), please provide a brief description of the direct and indirect public benefits derived from the
project as well as the private sector benefits and complete the table below. See section 1.6 in
the Request for Applications for more information.
Renewable energy resource availability (kWh per month) 33,000 kWh – monthly/average
Estimated sales (kWh) 400,000 kWh
Revenue for displacing diesel generation for use at privet
sector businesses ($)
$60,000
Estimated sales (kWh) 400,000 kWh
Revenue for displacing diesel generation for use by the
Alaskan public ($)
$60,000
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
Include at a minimum:
Proposed business structure(s) and concepts that may be considered.
How you propose to finance the maintenance and operations for the life of the project
Identification of operational issues that could arise.
A description of operational costs including on-going support for any back-up or existing
systems that may be require to continue operation
Commitment to reporting the savings and benefits
The sustainability and operability of this project is no different than our existing Delta Creek hydro
facility. The City has the experience and proven track record to construct, operate, maintain and
hydroelectric facilities.
Our successful Delta Creek project with 18-years of successful operations, is a blueprint for how
small, rural communities can succeed with a small hydro project. King Cove has demonstrated
that it supervises complex construction well, exercises budget discipline and brings projects on-
line on time. Lessons have been learned about what constitutes adequate operations and
management resources. The idea with this project, as it was with Delta Creek, is to build
infrastructure that lasts and then is taken good care of.
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Operations & Maintenance: One of the contractor requirements for the Waterfall Creek hydro
facility will be to develop a comprehensive O&M manual for all aspects of this new facility. The
same requirement for the Delta Creek facility was successfully accomplished by HDR Alaska and
their subcontractors. The existing O&M document is a constant source of information for plant
employees and routinely serves as a technical guide.
The operational costs and overall financial viability of this project will be integrated into the City’s
overall power distribution system. The financial operations of this system are part of the City’s
electrical enterprise fund, which by definition, is to achieve and maintain financial solvency by
regulating and maintaining electric user rates to generate the necessary annual revenue to meet
annual operating expenses, as well as adequate funding for a repair and replacement fund for
any major unanticipated needs.
The commitment to reporting “savings” will always be ongoing as part of the City reviewing and
amending, as circumstances allow, the electric user rates in King Cove. Any such savings will
also be reported in the monthly and annual PCE utility costs reports.
The City will always continue to tout the benefits of renewable energy. We do this in periodic
reports to our users, as well as to the government agencies who have helped us achieve these
benefits. We have never been shy about publishing news releases to share with others around
the state and elsewhere!
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.
As noted in Section 3.2, the City’s desired schedule for this project has been problematic until
just recently. However, now with the Title 16 permit finalized there are no further expected
delays. The schedule presented in Section 3.2 is realistic and obtainable.
The City acknowledges that our previous schedules, and administrative reporting have not been
as timely or responsive as desired. However, these situations have now significantly changed
and the City is driven to complete this project as expeditiously as possible. The City is well
aware that every year’s delay in having this project online is costing the City over $250,000.
We now fully expect to have Waterfall Creek in operation by November of 2014.
The City has been awarded a $200,000 FY13 grant from Round 5 of the AEA Renewable Energy
Grand Fund and a $2,600,000 FY15 grant from Round 6 of the AEA renewable Energy Grant
Fund.
The City has an exemplary record of achievements with over $30 million in various state and
federal grants for a variety of community projects over the last 10-15 years. A review of the
City’s annual audits can further substantiate these statements.
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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,
2013.
The entire community of King Cove is in favor of the City pursuing funding for a second hydro-
electric project. This support is reflected by the attached letters from the King Cove Corporation,
as well as the Agdaagux and Belkofski tribes. In addition, the Memorandum of Understanding
between the City and Peter Pan Seafoods, speaks to their favorable interest in the project as
well.
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.
The budget costs by milestones forms are enclosed with this application.
Sections 2.6 and 4.4.1, have described and documented the project’s overall budget and
anticipated sources of funding.
The City is requesting $800,000 in Round 7 of the AEA Renewable Energy Grant. The City will
be providing a $400,000 match to this $800,000 million request to AEA.
Applications MUST include a separate worksheet for each project phase that was identified in
section 2.3.2 of this application, (I. Reconnaissance, II. Feasibility and Conceptual Design, III.
Final Design and Permitting, and IV. Construction and Commissioning). Please use the tables
provided below to detail your proposed project’s budget. Be sure to use one table for each
phase of your project.
If you have any question regarding how to prepare these tables or if you need assistance preparing the
application please feel free to contact AEA at 907-771-3031 or by emailing the Grant Administrator,
Shawn Calfa, at scalfa@aidea.org.
Milestone or Task
Anticipated
Completion
Date
RE- Fund
Grant Funds
Grantee
Matching
Funds
Source of
Matching
Funds:
Cash/In-
kind/Federal
Grants/Other
State
Grants/Other
TOTALS
(List milestones based on
phase and type of project.
See Milestone list below. )
$ $ $
Construction/commission Nov 2014 $800,000 $400,000 City debt $1,200,000
$ $ $
$ $ $
$ $ $
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$ $ $
$ $ $
$ $ $
$ $ $
$ $ $
$ $ $
$ $ $
TOTALS $800,000 $400,000 $1,200,000
Budget Categories:
Direct Labor & Benefits $ $ $
Travel & Per Diem $ $ $
Equipment $ $ $
Materials & Supplies $ $ $
Contractual Services $ 50,000 $ 50,000 $ 100,000
Construction Services $750,000 $350,000 $1,100,000
Other $ $ $
TOTALS $800,000 $400,000 $1,200,000
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SECTION 10 – AUTHORIZED SIGNERS FORM
Community/Grantee Name:
City of King Cove
Regular Election is held:
October 8, 2013
Date:
September 23, 2013
Authorized Grant Signer(s):
Printed Name Title Term Signature
Gary Hennigh
City Administrator
N/A
Bonnie Folz
Administrative Manager
N/A
I authorize the above person(s) to sign Grant Documents:
(Highest ranking organization/community/municipal official)
Printed Name Title Term Signature
Henry Mack
Mayor
2015
Grantee Contact Information:
Mailing Address: 3380 C Street, Suite 205
Anchorage, AK 99503
Phone Number:
907-274-7563
Fax Number:
907-276-7569
E-mail Address:
ghennighmgr@gci.net
Federal Tax ID #:
92-6001247
Please submit an updated form whenever there is a change to the above information.
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SECTION 11 – ADDITIONAL DOCUMENTATION AND CERTIFIC ATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. Contact information, resumes of Applicant’s Project Manager, key staff, partners,
consultants, and suppliers per application form Section 3.1 and 3.4. Applicants
are asked to provide resumes submitted with applications in separate electronic
documents if the individuals do not want their resumes posted to the project web
site.
B. Letters or resolutions demonstrating local support per application form Section 8.
C. For heat projects only: Most recent invoice demonstrating the cost of heating fuel
for the building(s) impacted by the project.
D. Governing Body Resolution or other formal action taken by the applicant’s
governing body or management per RFA Section 1.4 that:
- Commits the organization to provide the matching resources for project at the
match amounts indicated in the application.
- Authorizes the individual who signs the application has the authority to
commit the organization to the obligations under the grant.
- Provides as point of contact to represent the applicant for purposes of this
application.
- Certifies the applicant is in compliance with applicable federal, state, and local,
laws including existing credit and federal tax obligations.
E. An electronic version of the entire application on CD or other electronic media, per
RFA Section 1.7.
F. CERTIFICATION
The undersigned certifies that this application for a renewable energy grant is truthful
and correct, and that the applicant is in compliance with, and will continue to comply
with, all federal and state laws including existing credit and federal tax obligations and
that they can indeed commit the entity to these obligations.
Print Name Gary Hennigh
Signature
Title City Administrator
Date September 23, 2013