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Home My WebLink AboutGrantApplication6_Tenakee_NO RESUMES GRANT APPLICATION – FOR – INDIAN RIVER HYDROELECTRIC PROJECT CONSTRUCTION SEPTEMBER 2012 – SUBMITTED TO – ALASKA ENERGY AUTHORITY RENEWABLE ENERGY GRANT PROGRAM – ROUND VI RFA #AEA-13-006 – SUBMITTED BY – CITY OF TENAKEE SPRINGS, ALASKA P.O. BOX 52 TENAKEE SPRINGS, AK 99841 Renewable Energy Fund Round 6 Grant Application AEA 13-006 Application Page 1 of 21 7/3/2011 Application Forms and Instructions This instruction page and the following grant application constitutes the Grant Application Form for Round 6 of the Renewable Energy Fund. An electronic version of the Request for Applications (RFA) and this form are available online at: http://www.akenergyauthority.org/RE_Fund-6.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 satisfied 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. 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. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 2 of 21 7/3//2012 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) CITY OF TENAKEE SPRINGS DBA TENAKEE SPRINGS ELECTRIC DEPARTMENT Type of Entity: LOCAL GOVERNMENT / PUBLIC ELECTRIC UTILITY Fiscal Year End SEPTEMBER 30 Tax ID # 92-0048310 Tax Status: For-profit or X non-profit ( check one) Mailing Address PO BOX 52 TENAKEE SPRINGS, AK 99841 Physical Address TENAKEE SPRINGS COMMUNITY BULDING TENAKEE AVENUE Telephone 907-736-2207 Fax 907-736-2207 Email citytke@gmail.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Arthur Bloom Title Vice Mayor, City Councilman, Hydropower Project Manager Mailing Address PO BOX 52 TENAKEE SPRINGS, AK 99841 Telephone 907-736-2222 Fax 907-736-2207 Email artmbloom@gmail.com 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) X 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 its project by its 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. Yes 1.2.4 If awarded the grant, we can comply with all terms and conditions of the attached grant form. (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 project and who will be the primary beneficiaries. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 3 of 21 7/3//2012 SECTION 2 – PROJECT SUMMARY This is intended to be no more than a 1-2 page overview of your project. 2.1 Project Title – (Provide a 4 to 5 word title for your project) INDIAN RIVER HYDROELECTRIC PROJECT CONSTRUCTION 2.2 Project Location – Include the physical location of your project and name(s) of the community or communities that will benefit from your project in the subsections below. 2.2.1 Location of Project – Latitude and longitude, street address, or community name. Latitude and longitude coordinates may be obtained from Google Maps by finding you project’s location on the map and then right clicking with the mouse and selecting “What is here? The coordinates will be displayed in the Google search window above the map in a format as follows: 61.195676.-149.898663. If you would like assistance obtaining this information please contact AEA at 907-771-3031. The project is located on Indian River, approximately one mile east of Tenakee Springs in Township 47 South, Range 63 East of the Copper River Meridian. This project is located at approximately 57.788d N, 135.193d W. 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. Tenakee Springs, its residents and businesses will benefit from this project. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels X Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Pre-Construction Construction Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 4 of 21 7/3//2012 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Replace diesel generation of electricity for the community of Tenakee Springs with renewable hydroelectric power. The City of Tenakee Springs proposes to construct a hydroelectric project on Indian River. This will be a 180 kW low head, run-of-river plant displacing the use of 31,400 gallons of diesel fuel annually, or 90% of annual electric utility diesel consumption. At least 6,500 additional gallons of fuel oil can be displaced by heating public buildings with excess energy from the hydro project. 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, etc.) The Tenakee Springs Electric Utility generators use approximately 34,900 gallons of diesel fuel per year. This project will eliminate about 90% of this annual fuel usage with hydroelectric generation. Additional diesel offsets can be gained by replacing heating oil with electric heat. The proposed project would help retain money within the community by stemming the outflow of money for petroleum products and providing employment during construction and operation. Additional Public Benefits would be less noise in the community (diesel generators would not be running most of the time), less pollutants discharged into the air, less risk for environmental liability, lower cost electricity - especially for commercial entities which currently pay very high rates, and potential expansion of economic base (fish processing and washeteria). 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. Construction of the project is estimated to cost $3,320,000. Tenakee Springs requests $2,988,000 in grant funds with $332,000 in local matching funds to construct this project. 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. $2,988,000 2.7.2 Cash match to be provided $312,000 2.7.3 In-kind match to be provided $20,000 2.7.4 Other grant applications not yet approved $0 2.7.5 Total Grant Costs (sum of 2.7.1 through 2.7.3) $3,320,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.6 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $3,674,000 Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 5 of 21 7/3//2012 2.7.7 Estimated Direct Financial Benefit (Savings) $5,086,000 2.7.8 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 your application (Section 5.) No quantifiable financial benefits, see narrative. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 6 of 21 7/3//2012 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). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. Currently, the project manager is Arthur Bloom, an elected member of the city council, vice mayor, and employee of the city (Hydroelectric Project Manager). Tenakee Springs hired Polarconsult Alaska, Inc. to complete a feasibility study, conceptual design, permitting, and final design for the project. Under this contract, Polarconsult is also providing project management support and guidance. No management assistance from AEA is needed. 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. Please fill out form provided below. You may add additional rows as needed. Milestones Tasks Start Date End Date 1. Grant Agreement Sign Grant Agreement July 2013 Jul 2013 1. Confirmation that all Design / Feasibility Requirements are Complete July 2013 Jul. 2013 2. Completion of Construction Documents July 2013 Jul 2013 (task 4), Feb. 2014 (task 5) 3. Contractor(s) / Vendor(s) Selection and Award July 2013 Jul 2013 (task 4) April 2014 (task 5) 4. Construction – Year 1 (access roads **) August 2013 Oct. 2013 5. Construction – Year 2 (balance of project) 5a. Transmission Line May 2014 Oct. 2014 5b. Diversion/Intake Structure May 2014 Oct. 2014 5c. Penstock May 2014 Oct. 2014 5d. Powerhouse May 2014 Oct. 2014 5e. Generation Equipment May 2014 Oct. 2014 6. Integration and Testing Oct. 2014 Nov. 2014 7. Final Acceptance, Commissioning, and Startup Nov. 2014 Dec. 2014 8. Operations Reporting Dec. 2014 Dec 2015 Schedule is based on timely signing of grant agreement. Tasks are based on months from grant agreement signing. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 7 of 21 7/3//2012 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 with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. The city’s existing project team, including Mr. Bloom and Tenakee’s consultant Polarconsult, has successfully advanced the project through the feasibility and conceptual design phases, and nearly completed the permitting and design phase as well. All permits for the project are expected to be issued by the end of 2012, and final designs and construction plans will be completed by the 1 st quarter of 2013. The City has been very successful at working collaboratively with state and federal agencies to obtain permits for the hydro project. The City of Tenakee Springs will follow the methods set forth in its ordinances for procurement and selection processes during project construction. 3.4 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Please provide an alternative contact person and their contact information. Tenakee's Hydro Project Manager will provide regular reports to AEA on current project activities. Reports will be issued on a more frequent basis as appropriate. 3.5 Project Risk Discuss potential problems and how you would address them. This project utilizes proven technology and construction methods. Nearly all permits have been issued, with the final permit (Corps of Engineers Wetlands Permit) expected by the end of 2012. Final design is in progress, with 100% construction drawings expected by the end of the 1st quarter 2013. The primary remaining risk on this project is construction risk, which would most likely be manifested as increased construction cost. The construction budget includes a 15% contingency, which should be sufficient to cover any unforeseen expenses. The City and utility have a variety of options to handle cost overruns on this project. The two major options are to seek additional grants or secure a loan that would be repaid through the utility rates. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 8 of 21 7/3//2012 SECTION 4 – PROJECT DESCRIPTION AND TASKS  The level of information will vary according to phase(s) of the project you propose to undertake with grant funds.  If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. For pre-construction applications, describe the resource to the extent known. For design and permitting or construction projects, please provide feasibility documents, design documents, and permitting documents (if applicable) as attachments to this application. The hydro project will be a run-of-river project located between falls 4 and falls 2 on Indian River. The project will have a design flow of 50 cfs, gross head of 63 feet, and installed capacity of 180 kW. The project will have a capacity factor of 76.2%, average total annual generation of 1,169,000 kWh, and would supply 90% of Tenakee’s existing electric load of 433,000 kWh. The project provides significant margin for load growth and/or space heating applications in the community. The project conceptual design drawings and feasibility study have been previously submitted to AEA, and are available upon request. Permits issued for the project and other pertinent documents are included with this application in Attachment E. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. Basic configuration of the existing system is 3 diesel electric generators; 2- 88kW peak and 1-66kW peak capacity installed in 2007 by AEA Rural Power System Upgrade with new switchgear. The existing system has an efficiency of about 13 kWh per gallon of fuel. Electricity is distributed throughout the community via an overhead three phase distribution system. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. Tenakee currently relies 100% on diesel fuel for electric generation. Other energy resources include gas/diesel for transportation (primarily for local boats / skiffs / ATVs), and a combination of wood and fuel oil for space and water heating. Many residents use the geothermal hot springs / bath house for bathing - the bath house is a focal point of the community. This project will displace approximately 90% of the diesel fuel used for electricity generation. Significant additional fuel oil or wood used for space heating can also be displaced by this project. No transportation fuels are expected to be displaced, although electric ATVs / mopeds could be an appropriate technology for Tenakee. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 9 of 21 7/3//2012 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Electrical power is used in residential homes, commercial businesses, city buildings, streetlights, and docks, and the school building. This project will have a profound beneficial impact by lowering energy costs and making the use of electrical energy for heating of public buildings feasible. Lower and more stable energy prices will tend to increase electrical demand on the system. Commercial enterprises in Tenakee Springs particularly suffer under the current energy costs, because they are not eligible for PCE subsidized rates. Lower energy costs will help to encourage commercial activity in the community, which will tend to increase electrical demand. 4.3 Proposed System 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 The project will include the following components: 1. A concrete diversion structure located at the head of falls 4 at an elevation of 126 feet. The structure will be co-located with an existing vertical slot fish pass built by the US Forest Service. The diversion will not impound a significant amount of water. 2. An intake structure utilizing an inclined plate overflow screen (coanda-type screen) intake to screen water from the creek and admit it to the project penstock. 3. An above-ground 36-inch diameter 1,534 foot long penstock supported on trestles and on grade. 4. A powerhouse fitted with a variable flow cross-flow turbine coupled to a three-phase synchronous generator via a gear box speed increaser. 5. 4,000 feet of transmission line to interconnect the hydro power house with the existing Tenakee electrical distribution system near the harbor. The project’s installed capacity will be 180 kW. The capacity factor is 76.2%. Annual energy generation capability is approximately 1,169,000 kWh. Controls will enable the hydro powerhouse to run the entire electric system, or run in parallel with the diesel plant. When the diesels need to run, the controls will run them at optimal loadings to the extent practical to maintain high fuel economy and avoid wet stacking or other adverse operating conditions. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 10 of 21 7/3//2012 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The project will be located on a combination of city and state land, and access from tidewater will be via a US Forest Service logging road. Alaska DNR issued a Final Decision to grant the city easements needed for the hydro project in September 2012 (see Attachment E). This Final Decision provides Early Entry Authorization (EEA) starting in 2013. The city can build the project under the EEA, and will receive the non-revocable easement upon completion of post-construction as-built survey. The terms of a road use agreement were agreed by the City and USFS Sitka Ranger District in May 2012. The US Forest Service is currently finalizing the form and language of the agreement. This agreement is expected to be finalized by December 2012 (see discussion in USFS support letter, Attachment B). 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 Permits required for this project are listed below, along with permit issuance date or the current status of the permit application. - FERC Finding of Non-Jurisdiction (issued May 26, 2010) - ADFG Fish Habitat Permit (issued December 15, 2011) - ADNR Water Rights (Water Use Permit issued August 7, 2012) - ADNR Easements (Final Decision issued September 11, 2012) - US COE (applied August 2010. Permit issuance is pending resolution of SHPO and USFWS comments. A new cultural resources survey is scheduled for October 2012 to address SHPO comments. Final design drawings addressing USFWS comments regarding intake operations and in- stream flows will be issued in October 2012. If no significant cultural resources or operational concerns are identified, permit issuance is expected by December 2012). Available information and site reviews to date have not identified any cultural resources in the project footprint that are likely to be a barrier to the project or permit issuance. - US Forest Service Road Use Permit (Drafted May 2012, final expected December 2012). The USFS supports this project, as indicated in the attached support letter (Attachment B) and comments issued during the public notice periods for the water rights and state land easement. Additionally, the USFS completed significant upgrades to Indian River Road during the summer of 2012, providing a reliable, long-term access route from tidewater to the hydro project site. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 11 of 21 7/3//2012 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 The following assessment is based on currently available information. Threatened or endangered species: None. Habitat issues: Fish habitat issues have been reviewed by ADFG. In-stream flow reservations in the ADFG Fish Habitat Permit (FH-11-I-0125) may be modified in the future to better serve habitat needs. Modified in-stream flows under discussion would improve project performance relative to existing permit terms. All capacity factors, fuel displacements, and project performance metrics in this application are based on the terms of the existing permit. Wetlands and other protected areas: The project will fill some wetlands (in-stream diversion footprint, access roads, etc.). These are being addressed in the permit process. Archeological resources: A cultural resources survey will be conducted in October 2012 to meet SHPO requirements for the project. Land development constraints: None. Telecommunications Interference: None. Aviation considerations: None. Visual, aesthetics impacts: None. The project will not be visible from available vantage points around Tenakee Springs. Other potential barriers: None known. 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. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 12 of 21 7/3//2012 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 The total anticipated project cost is $3,674,000, including all phases of development through construction. The total anticipated cost for this phase (construction) is $3,320,000. Grant funds of $2,988,000 are requested, and will be matched with $332,000 in the form of in-kind services, equipment usage, loans and/or matching grants (Tenakee does not have any matching grant funds for this project at this time). Of the $332,000 in matching funds, the City of Tenakee Springs will contribute a cash match of at least $1,000 and in-kind services of at least $20,000. The total anticipated capital cost of the project is $3,320,000, and the total development cost is $3,674,000. 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.) Total annual O&M costs for the project are projected at $0.02 per kWh of energy sold, or $7,465 per year. 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 city electric utility will own the project. Power will be sold to utility customers. With the requested grant, electric rates in the community would decrease from the existing rates of $0.55 to 0.65 per kWh to about $0.20 to 30 per kWh. This reduced rate would cover all utility expenses, such as operation, maintenance, repair, general, and administrative costs. These projected rates do not consider PCE subsidies to residential / community accounts. The city and electric utility are non-profit operations, so a rate of return is not applicable. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 13 of 21 7/3//2012 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 Indian River Hydroelectric Project The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. capacity factor of 76.2% (based on hydrology records for Indian River and adjacent comparable basins) 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 Three diesel gen sets ii. Rated capacity of generators/boilers/other 1- 88 kW John Deere / Marathon 1- 88 kW John Deere / Marathon 1- 64 kW John Deere / Marathon iii. Generator/boilers/other type -- iv. Age of generators/boilers/other All were commissioned in 2006. ~7 years old. v. Efficiency of generators/boilers/other 12.7 to 13.2 kWh/gallon, based on 2007 – 2009 data. b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $20,000 (estimated) ii. Annual O&M cost for non-labor $5,000 (estimated) c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] 433,000 kWh ii. Fuel usage Diesel [gal] 34,900 gallons Other NA iii. Peak Load Approximately 120 kW iv. Average Load Approximately 50 kW v. Minimum Load Approximately 19 kW vi. Efficiency 12.7 to 13.2 kWh per gallon (2007 - 2009 data) vii. Future trends Future load trend without hydro is flat or slightly declining. Future load trend with hydro is expected to increase. d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] 60,000 gallons (estimate) ii. Electricity [kWh] Unknown 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 14 of 21 7/3//2012 (any usage is included in power plant data at c.i) iii. Propane [gal or MMBtu] -0- iv. Coal [tons or MMBtu] -0- v. Wood [cords, green tons, dry tons] 24 cords per year (estimate) vi. Other Unknown. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] 180 kW installed capacity – run of river hydro 76.2% capacity factor. b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] Approximately 1,169,000 kWh annually ii. Heat [MMBtu] -- c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] -- ii. Coal [tons or MMBtu] -- iii. Wood [cords, green tons, dry tons] -- iv. Other -- Project Cost a) Total capital cost of new system $3,320,000 b) Development cost $3,674,000 (total of preconstruction and construction) c) Annual O&M cost of new system $7,465 d) Annual fuel cost $0 Project Benefits a) Amount of fuel displaced for i. Electricity ~31,400 gallons (at current load levels) ii. Heat ~6,500+ gallons iii. Transportation -- b) Current price of displaced fuel $4.50 per gallon c) Other economic benefits -- d) Alaska public benefits $170,550 annually in avoided utility fuel cost (actual 2012 Tenakee prices), 37,900 fewer gallons of fuel products being shipped by barge through the waters of Southeast Alaska. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 15 of 21 7/3//2012 Power Purchase/Sales Price a) Price for power purchase/sale $0.20 to 0.30 depending on final project costs and financing methods. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $5.09 million / 3.18 million = 1.60 Payback (years) $3.18 million / $195,950 = simple payback 16.2 years at projected 2015 fuel prices (AEA/ISER model) 4.4.5 Proposed Biomass System Information Please address the following items, if know. (For Biomass Projects Only) 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 Annual fuel displacement / Lifetime (50-year) fuel displacement: - 31,400 gallons for electrical generation (1,570,000 gallons over life) - 6,500+ gallons for space/water heating (325,000+ gallons over life) Annual Revenue/Savings (using $4.99 per gallon power plant fuel cost and $6.04 per gallon heating fuel cost in 2015, per mid range EIA fuel projections developed by AEA/ISER. - $156,686 avoided fuel (electricity, 2015) - $39,260 avoided fuel (heating, 2015) Non-economic benefits of the project to Alaskans include: - reduced air pollution and noise pollution within Tenakee Springs – improves quality of life and health of residents, and makes Tenakee a more desirable place to live. - reduced haulage and handling of petroleum products through the waters of Southeast Alaska by 37,900 gallons annually. Reduced potential for spills and environmental contamination. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 16 of 21 7/3//2012 - Stable and reasonable energy costs will also make Tenakee a more desirable place to live, and will help to attract local economic activity such as tourism, fishing, etc. The hydro combined with the hot springs will bolster the sustainability of the community for the long term. Commercial enterprises in Tenakee in particular will benefit from lower energy costs. Lower energy costs will make local businesses such as stores, restaurants, and lodges more viable and competitive and will increase Tenakee's sustainability and long term viability as a community. Tenakee has struggled in recent years to attract and retain working families with children to keep the local school open. Affordable energy, and the local economic activity it will encourage and support, will help considerably in our long term efforts to help the community thrive. Green Tags on the voluntary market have stabilized at a price of approximately $0.001 per kWh, which would result in incremental revenue of $1,100 to 1,200 per year assuming that all Green Tags from the project full output were sold. SECTION 6– SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum:  Proposed business structure(s) and concepts that may be considered.  How you propose to finance the maintenance and operations for the life of the project  Identification of operational issues that could arise.  A description of operational costs including on-going support for any back-up or existing systems that may be require to continue operation  Commitment to reporting the savings and benefits The city electric utility will be responsible for operation and maintenance of the hydro project once it is completed. O&M costs would be covered by the utility’s electric rates and revenues. O&M costs are estimated at $0.02 per kWh. Operational costs will include periodic cleaning of the diversion and intake structure (clearing logs and debris), scheduled maintenance and overhauls of the turbines, generators, and ancillary equipment and related hydro project operations such as seasonal adjustment of settings at the intake to allow for winter vs. summer operations. The City of Tenakee Springs commits to reporting the savings and benefits associated with the Indian River hydroelectric project. SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 17 of 21 7/3//2012 The City of Tenakee Springs has been actively advancing this project through the study, permitting and design process since 2009. This has included the successful completion of one prior hydro study grant and the successful management to date of a second grant for final design and permitting, The project is on track to be ready for limited construction in the summer of 2013 (access roads), potentially using construction crews that will already be in the area for other projects. The city would procure long lead items later in 2013 in time for full construction of the project in the summer of 2014. SECTION 8– LOCAL SUPORT Discuss what local support or possible opposition there may be regarding your project. Include letters of support from the community that would benefit from this project. Attached to this application are letters of support from the US Forest Service, Chatham School District, and several private individuals who support the project. The city is not aware of any opposition to this project. None of the permits issued to date have received opposing comments during public comment periods. SECTION 9 – GRANT BUDGET Tell us how much you want 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 City of Tenakee Springs is requesting a grant of $2,988,000 to construct the Indian River Hydroelectric Project. Since 2009, the Denali Commission, State of Alaska, and City of Tenakee Springs have committed $354,000 to ready this project for construction. This amount includes $51,000 in matching funds and in-kind contributions from the City of Tenakee Springs, plus significant additional in-kind contributions from numerous residents of Tenakee Springs. The City Council has passed several unanimous resolutions supporting this project over the past several years. The city proposes to invest an additional $332,000 in the form of cash match, loans, and/or in- kind services to complete this project. Some (but not all) of this matching amount may come from other grants, however the city does not have any other grants in place as matching funds for this project at this time. The city will make the use of its equipment available for the project, which is valued at $20,000. The city will provide a cash match of at least $1,000. The city plans to pursue a State of Alaska grant for the balance of matching funds for the project ($319,000). If unsuccessful, it will provide the matching funds from city assets or by a loan, bond, or other debt vehicle carried by the city or utility. Applications should include a separate worksheet for each project phase that was identified in section 2.3.2 of this application, (Reconnaissance, Feasibility, Conceptual Design, Design and Permitting, and Construction). 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. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 18 of 21 7/3//2012 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 Grant Agreement with AEA Signed: July 2013 1. Confirmation that all Design / Feasibility Requirements are Complete Jul. 2013 $5,000 $0 $5,000 2. Completion of Construction Documents Jul 2013 (task 4), Feb. 2014 (task 5) $9,500 $500 Cash $10,000 3. Contractor(s) / Vendor(s) Selection and Award Jul 2013 (task 4) April 2014 (task 5) $24,500 $500 Cash $25,000 4. Construction – Year 1 (access roads **) Oct. 2013 $580,000 $10,000 In-kind $590,000 5. Construction – Year 2 (balance of project) 5a. Transmission Line Oct. 2014 $299,000 $10,000 In-kind $309,000 5b. Diversion/Intake Structure Oct. 2014 $209,000 $77,000 Cash or other grant $286,000 5c. Penstock Oct. 2014 $838,000 $78,000 Cash or other grant $916,000 5d. Powerhouse Oct. 2014 $613,000 $78,000 Cash or other grant $691,000 5e. Generation Equipment Oct. 2014 $315,000 $78,000 Cash or other grant $393,000 6. Integration and Testing Nov. 2014 $50,000 $0 $50,000 7. Final Acceptance, Commissioning, and Startup Dec. 2014 $45,000 $0 $45,000 8. Operations Reporting 2015 $0 $0 In-kind $0 TOTALS $2,988,000 $332,000 $3,320,000 Budget Categories: Direct Labor & Benefits $80,000 $20,000 $100,000 Travel & Per Diem $5,000 $5,000 $10,000 Equipment $250,000 $19,000 $269,000 Materials & Supplies $1,052,000 $19,000 $1,071,000 Contractual Services $240,000 $19,000 $259,000 Construction Services $1,361,000 $250,000 $1,611,000 Other TOTALS $2,988,000 $332,000 $3,320,000 * Construction schedule is seasonally sensitive - delays in grant authorization may adversely impact schedule. ** Assumes qualified contractors will be in area during 2013 and work schedules will allow for construction of project access roads / trails. Renewable Energy Fund Round 6 Grant Application AEA13-006 Grant Application Page 19 of 21 7/3//2012 Project Milestones that should be addressed in Budget Proposal Reconnaissance Feasibility Design and Permitting Construction 1. Project scoping and contractor solicitation. 2. Resource identification and analysis 3. Land use, permitting, and environmental analysis 4. Preliminary design analysis and cost 5. Cost of energy and market analysis 6. Simple economic analysis 7. Final report and recommendations 1. Project scoping and contractor solicitation. 2. Detailed energy resource analysis 3. Identification of land and regulatory issues, 4. Permitting and environmental analysis 5. Detailed analysis of existing and future energy costs and markets 6. Assessment of alternatives 7. Conceptual design analysis and cost estimate 8. Detailed economic and financial analysis 9, Conceptual business and operations plans 10. Final report and recommendations 1. Project scoping and contractor solicitation for planning and design 2. Permit applications (as needed) 3. Final environmental assessment and mitigation plans (as needed) 4. Resolution of land use, right of way issues 5. Permit approvals 6. Final system design 7. Engineers cost estimate 8. Updated economic and financial analysis 9. Negotiated power sales agreements with approved rates 10. Final business and operational plan 1. Confirmation that all design and feasibility requirements are complete. 2. Completion of bid documents 3. Contractor/vendor selection and award 4. Construction Phases – Each project will have unique construction phases, limitations, and schedule constraints which should be identified by the grantee 5. Integration and testing 6. Decommissioning old systems 7. Final Acceptance, Commissioning and Start-up 8. Operations Reporting ATTACHMENT A PROJECT TEAM QUALIFICATIONS ATTACHMENT B LETTERS OF SUPPORT United StatesUSDADepartmentof:z-:z=;_..Agriculture Forest Service Alaska Region Tongass National Forest Sitka Ranger District 204 Siginaka Way Sitka,AK 99835 Phone:(907)747-6671 Fax:(907)747-4253 File Code:2170 Date:September I],2012 Shawn Calfa Grant Manager Alaska Energy Authority 8]3 West Northern Lights Blvd. Anchorage,AK 99503 I am writing this letter in support of the City of Tenakee Springs'Indian River Hydroelectric Project grant proposal for Round 6 of the Renewable Energy Grant Program.This project is an excellent example of responsible,sustainable use of our local resources.Once complete,this project will supply about 90%of Tenakee Springs'current electrical demands and displace about 44,400 gallons of diesel fuel per year. Diesel fuel generated electricity contributes significant amounts of carbon dioxide into the atmosphere as well as creating significant noise.Recent increases in the price of diesel fuel have resulted in 3]7% increased cost of fuel from 2002 to 2009. This project will help to stabilize and lower electric rates in Tenakee Springs.Those changes would lower the cost of living in the community and make local businesses more viable.Other potential benefits are diversifying the local economy,stabilizing or increasing the population of school-age children,and providing a stepping stone toward potential jobs in construction,maintenance,and operation of hydroelectric generation.This will in turn increase the long-term viability of the community. The Tongass National Forest is a committed partner to Tenakee Springs'development of sustainable, affordable,and renewable power generation.We are working closely with the City to ensure long-term access to the project site through changes in our motor vehicle use planning and reciprocal rights-of-way. The City concurrently is working with the Tongass National Forest to develop project design and operations compatible with the Forest Services'significant investments in enhancing the salmon productivity of Indian River. If you have any questions please fee free to contact me at (907)747-4218 or by email at cgoularte@fsJed.us. Sincerely, CAROL A.GOULARTE District Ranger ~ Printed on Recycled Paper ••, 1 ‐‐ SCHOOLS ‐‐ ANGOON GUSTAVUS KLUKWAN TENAKEE Chatham School District Scott Butterfield, Ph.D. DISTRICT SUPERINTENDENT P.O. BOX 109 ANGOON, ALASKA 99820 PHONE: 788-3302 or 788-3682 FAX: 788-3252 Chatham School District Mission Statement In partnership with families and communities, the Chatham School District will provide safe and stable educational experiences built upon the uniqueness of each community, to educate students to become self‐sufficient adults who will be contributing members of our diverse and changing world. Revised: 8‐7‐2008 September 20, 2012 Mr. Art Bloom Vice Mayor, Hydro Project Manager PO Box 52 City of Tenakee Springs Tenakee Springs, Alaska 99841 Subject: Statement of Support for Indian River Hydroelectric Project Dear Mr. Bloom: I am writing in support of Tenakee Springs’ efforts to secure funding for the Indian River hydro project. This project is a excellent example of responsible, sustainable use of our local resources. Once complete, this project will supply 80 to 90% of Tenakee’s annual electricity needs, displacing approximately 31,400 gallons of fuel used annually for electricity generation. In addition to reducing the amount of fuel burned in Tenakee and reducing the amount of noise from the diesel power plant, this project will help stabilize and lower electric rates in Tenakee Springs, lowering the cost of living in the community and making local businesses more viable. This in turn will help make Tenakee a more stable, sustainable community. Sincerely, Scott Butterfield, Superintendent Chatham School District Board of Education MR. LARRY SWEET, SR.-PRES. MR. KEVIN FRANK, SR., CLERK MR. ALBERT KOOKESH III MRS. SALLY McLAUGHLIN MRS. LYNETTE HART October 10, 2012 Mr. Art Bloom Vice Mayor, Hydro Project Manager PO Box 52 City of Tenakee Springs Tenakee Springs, Alaska 99841 RE: Tenakee Springs Indian River Hydroelectric Project Dear Mr. Bloom: We are writing to support Tenakee Springs’ efforts to secure funding for the Indian River hydro project. This project is an excellent example of responsible, sustainable use of our local resources. Once complete, this project will supply 80 to 90% of Tenakee Spring’s annual electricity needs, displacing approximately 31,400 gallons of fuel used annually for electricity generation. In addition to reducing the amount of fuel burned in Tenakee and reducing the amount of noise from the diesel power plant, this project will help stabilize and lower electric rates in Tenakee Springs, lowering the cost of living in the community and making local businesses more viable. This in turn will help make Tenakee a more stable, sustainable community. Please let us know how we can help to further support this important Tenakee Springs and Southeast Alaska project? Sincerely, Jeffrey Wilson P.O. Box 51 Tenakee Springs, AK 99841 Joel Groves From:"Peter Bernstein" <boatsnpete@gmail.com> Date:Thursday, September 13, 2012 8:49 AM To:"City of Tenakee Springs Alaska" <citytke@gmail.com> Cc:<joel@polarconsult.net> Subject:Indian River Hydro Project Page 1 of 1 9/21/2012 I am writing in support of this project and in support of Art Bloom who has worked many hours in persistent pursuit of it. Implementing this project will substantially reduce Tenakee's carbon footprint, lower and stabilize power costs and will go a long way to making Tenakee a more economically viable place to live and do business.This will also extend the useful life of our existing power plant far into the future. in short, there are no foreseeable downsides to this project and many benefits to be gained. Pete Bernstein 204 W. Tenakee ave (box 501) Tenakee Springs, Ak. 99841 Joel Groves From:"Larry Hura" <huracarp@hotmail.com> Date:Tuesday, September 11, 2012 4:40 PM To:"City of Tenakee Springs Alaska" <citytke@gmail.com>; <joel@polarconsult.net> Subject:Tenakee hydro project Page 1 of 1 9/21/2012 To: Art Bloom, Tenakee project manager Thank you for your time and effort in securing hydro power for the City of Tenakee Springs. This project has been in the making for many years, and now, it looks as though it may become a reality. It is time for Tenakee, and other small communities, to stop using fossil fuels when there are much cleaner means to gener ate electricity. Stabilizing the price of electricty is very important to any small community and its residents, especially small business. This hydro project will be a giant step in achieving that goal. Again, thank you Mr. Bloom for your hard work, and you can count on me for my continuing support in making the hydro project a reality in Tenakee Springs. Larry Hura Councilman, Tenakee Springs ATTACHMENT C ELECTRONIC VERSION OF ENTIRE APPLICATION ATTACHMENT D GOVERNING BODY RESOLUTION City of Tenakee Springs RESOLUTION 2013-03 In the Council Introduced by August 30, 2012 Art Bloom A RESOLUTION FOR THE CITY OF TENAKEE SPRINGS, ALASKA, AUTHORIZING AN AEA GRANT APPLICATION WHEREAS, the City of Tenakee Springs desires assistance in funding the study, design, development, and construction of a hydroelectric project on Indian River; and WHEREAS, the Alaska Energy Authority (AEA) is accepting grant applications for the fiscal year 2014 funding round of the Renewable Energy Grant Program, due on September 24, 2012; and WHEREAS, the City qualifies to receive funding from the Grant Program; THEREFORE BE IT RESOLVED that the Common Council of the City of Tenakee Springs, Alaska, to agree and affirm the following: 1. The Council commits to providing the matching resources for the project as specified in the grant application, and 2. The Council hereby authorized Arthur Bloom to sign the grant application, and to commit the City to the obligations under the grant, 3. The Council designated Arthur Bloom as the point of contact to represent the City for purposes of the grant application, 4. The Council certifies that the City is in compliance with federal, state, and local laws including existing credit and federal tax obligations. ADOPTED 7 ayes, 0 nays THIS 30th DAY OF August 2012 _________________ Don Pegues City Council President Ex officio MAYOR ATTEST: ___________________________ Lisa Speno City Clerk ATTACHMENT E ADDITIONAL PROJECT INFORMATION PROJECT PERMITS - FERC FINDING OF NON-JURISDICTION (MAY 26, 2010) - ADFG FISH HABITAT PERMIT (DECEMBER 15, 2011) - ADNR WATER RIGHTS (AUGUST 7, 2012) - ADNR EASEMENT FINAL DECISION (SEPTEMBER 11, 2012) - DEPT. OF ARMY WETLANDS/ WATER PERMIT (PENDING) - U.S. FOREST SERVICE ACCESS AGREEMENT (PENDING) FERC FINDING OF NON-JURISDICTION (MAY 26, 2010) UNITED STATES OF AMERICA 131 FERC ¶62,179 FEDERAL ENERGY REGULATORY COMMISSION City of Tenakee Springs Docket No.DI10-8-000 ORDER RULING ON DECLARATION OF INTENTION AND FINDING LICENSING NOT REQUIRED (Issued May 26,2010) 1.On March 1,2010,the City of Tenakee Springs filed a Declaration of Intention (DI)concerning the proposed Indian River Hydroelectric Project,which will be located near the city of Tenakee Springs,on Chichagof Island,Sitka Borough,Alaska,affecting T.47 S,R.63 E,secs.15,21,and 22,Copper River Meridian. PROJECT DESCRIPTION 2.The proposed run-of-river Indian River Hydroelectric Project will consist of:(1) a 6-foot-high,30-foot-wide diversion structure,to be located at river mile (RM)0.85; (2)a 40-inch-diameter,1,550-foot-long penstock;(3)a 30-foot-wide,40-foot-long, wood frame powerhouse,located at RM 0.55,housing a 250 kW turbine-synchronous generator;(4)a 50-foot-long tailrace returning flows back into Indian River;(5)a 5,900-foot-long transmission line;and (6)appurtenant facilities. PUBLIC NOTICE 3.Notice of the DI was issued on March 9,2010.Protests,comments,and motions to intervene were to be filed by April 9,2010.The U.S.Department of Agriculture, U.S.Forest Service,Tongass National Forest,filed a motion to intervene and comments on April 19,2010.The comments stated that the proposed project had the potential to affect Forest Service interests,but the comments did not relate to the issue of jurisdiction.No other protests,comments,or motions to intervene have been received. JURISDICTION 4.Pursuant to Section 23(b)(1)of the Federal Power Act (FPA),16 U.S.C.§817(1), a non-federal hydroelectric project must (unless it has a still-valid pre-1920 federal permit)be licensed if it: 20100526-3076 FERC PDF (Unofficial) 05/26/2010 Docket No.DI10-8-000 2 •is located on a navigable water of the United States; •occupies lands or reservations of the United States; •utilizes surplus water or waterpower from a government dam;or •is located on a stream over which Congress has Commerce Clause jurisdiction,is constructed or modified on or after August 26,1935,and affects the interests of interstate or foreign commerce. DISCUSSION 5.The proposed project will not occupy an y public lands or reservations of the United States and will not use surplus water or waterpower from a Federal government dam.The proposed project would be constructed after August 26,1935,and would be located on a Commerce Clause stream.1 However,the proposed project would not affect the interests of interstate commerce,because the City of Tenakee Springs plans to sell the generated power to the Tenakee Springs Electric Utility,which is not connected to an interstate transmission grid.Therefore,the project does not require licensing under Section 23(b)(1)of the FPA. CONCLUSION 6.Consequently,Section 23(b)(1)of the FPA does not require licensing of the proposed project.If evidence to support the Commission’s licensing jurisdiction is found in the future,Section 23(b)(1)would require licensing.Under Section 4(g)of the FPA,the project owner could then be required to apply for a license. The Director orders: (A)Section 23(b)(1)of the Federal Power Act does not require licensing of the proposed Indian River Hydroelectric Project.This order is issued without prejudice to any future determination upon new or additional evidence that licensing is required. 1 The Indian River flows into Tenakee Inlet and Chatham Straits,tributary to the Pacific Ocean. 20100526-3076 FERC PDF (Unofficial) 05/26/2010 Docket No.DI10-8-000 3 (B)This order constitutes final agency action.Requests for rehearing by the Commission ma y be filed within 30 da ys of the date of issuance of this order,pursuant to 18 C.F.R.§385.713. William Guey-Lee,Chief Engineering and Jurisdiction Branch Division of Hydropower Administration and Compliance 20100526-3076 FERC PDF (Unofficial) 05/26/2010 ADFG FISH HABITAT PERMIT (DECEMBER 15, 2011) ADNR WATER USE PERMIT (WATER RIGHTS) (AUGUST 7, 2012) Page 1 of 3 Department of Natural Resources Division of Mining, Land, and Water PERMIT TO APPROPRIATE WATER LAS 27836 The State of Alaska, acting by and through the Department of Natural Resources, Division of Mining, Land and Water, PO Box 111020, 400 Willoughby Avenue, Suite 400, Juneau, Alaska 99811-1020, hereinafter referred to as the grantor, under AS 46.15, the Alaska Water Use Act, and the regulations adopted under it, grants to: City of Tenakee Springs P.O. Box 52 Tenakee Springs, Alaska 99841 The right to develop the following use of water: SOURCE: Indian River QUANTITY: 50 Cubic Feet per Second USE: Hydroelectric Power Generation PERIOD: January 1 through December 31 With a PRIORITY DATE of September 7, 2010 The location of this water source: A diversion weir on Indian River, which flows into Tenakee Inlet, approximately 1 mile northeast of Tenakee Springs on Chichagof lsland, in the SE1/4 SW1/4 of Section 15, Township 47 South, Range 63 East, Copper River Meridian, The location to which this appropriation is appurtenant: A hydroelectric powerhouse located approximately 1,800 feet downstream of the diversion weir and adjacent to the Indian River within State of Alaska easement ADL 108047, in the NE1/4 NW1/4 of Section 22, Township 47 South, Range 63 East, Copper River Meridian, located within the Sitka Recording District, First Judicial District, State of Alaska. Changes in the natural state of water are to be made in the manner and only for the purposes stated in this permit. This permit is subject to the pertinent statutory PERMIT TO APPROPRIATE WATER LAS 27836 Page 2 of 3 provisions in AS 46.15, Administrative Regulations in 11 AAC 93, and the following conditions: The holder of this permit shall comply with the following: 1. Follow acceptable engineering standards in exercising the right granted by this permit. 2. Except for claims or losses arising from negligence of the State, defend and indemnify the State against and hold it harmless from any and all claims, demands, legal actions, loss, liability and expense for injury to or death of persons and damages to or loss of property arising out of or connected with the exercise of the right granted by this permit. 3. Comply with all applicable laws, regulations and conditions. 4. Notify the grantor of any change of address, transfer of any real property identified in this permit, or any proposed change in the water appropriation. 5. Respond to any request for additional information during the duration of this permit per AS 46.15.100 and AS 46.15.175. Failure to respond may result in the termination of this permit. 6. Obtain and maintain permanent right of access to the property where water is to be withdrawn, impounded, or diverted, and over which water is to be transported both to the point of use and to the point of discharge, per 11 AAC 93.040 (c) (4). 7. This permit is subject to ADFG Fish Habitat Permit FH11-I-0125 (Issued December 15, 2011) as it has been issued and may be amended from time to time, regarding, but not limited to, minimum in-stream flow releases, diversion structures, step-heights between fish pass structure pools, fish screen, rates of decrease in water levels, monitoring, recording, and reporting, etc. ADFG Fish Habitat Permit FH11-I-0125 is hereby attached as Appendix A, and compliance therewith, or any amendment thereof, is a condition of this State water permit (LAS 27836). Per the above referenced ADFG Fish Habitat Permit, or as it may be amended from time to time, the fish pass structure will be provided with a ADNR EASEMENT FINAL DECISION (SEPTEMBER 11, 2012) ADNR EASEMENT PRELIMINARY DECISION (JULY 19, 2012)