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Gartina Falls REF VI Grant Application
N.O. Grx 210149 Auke Bay, AK 99821 I PEC Phcne: (90i)/89-3196 ex130 Cell: (90/)321-0461 /-ax:(90/)/90-851/ L-nipd: pbibb@ak.net il INSIDE PASSAGE ELECTRIC COOPERATIVE GRANT APPLICATION FORM Renewable Energy Fund Round VI GARTINA FALLS HYDRO PROJECT September 20, 2012 Renewable Energy Fund Round 6 WMD Grant Application GEMID ENERGY AUTHORrrY 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(a 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. AEA 13-006 Application Page 1 of 26 7/3/2011 Renewable Energy Fund Round 6 Grant Application �4101--)ENERGY AUTHORITY SECTION 1 —APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Inside Passage Electric Cooperative Type of Entity: Electric Utility Fiscal Year End 12/31/12 Tax ID # 43.1964262 Tax Status: =For -profit or _x_non-profit ( check one Mailing Address Physical Address PO Box 210149 12480 Mendenhall Loop Road Auke Say, AK 99821 Juneau, AK 99801 Telephone IFax Email 907-789-3196 1 907-790.8517 jmitcheli@alaska.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Title Jodi Mitchell CEO/General Manager Mailing Address PO Box 210149, Auke Bay, AK 99821 Telephone Fax Email 907.789-3196 ext. 24 907-790.8517 jmitchell@alaska.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 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. AEA13-006 Grant Application Page 2 of 26 7/3//2012 Renewable Energy Fund Round 6 Grant Application ® ENERGY AUTHORITY 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) Gartina Falls Hydroelectric Project (Project) rI Project Location — ude the physical location of yourproject and name(s) of the community or communities that will efit from your project in the subsections below. See 2.2.1 & 2.2.2 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. U.YIT.Tl Longitude--135.381367 Hoonah. Alaska 2.2.2 Community benefiting — Name(s) of the community or communities that will be the beneficiaries of the project. The community of Honnah is tha nrimary hpnpficinry frnm this nrniprt Hoonah is a Tlingit community located on the northeast shore of Chichagof Island, 40 air miles west of Juneau. The City of Hoonah was incorporated in 1946 and has a population of 823 (2008). The proposed hydroelectric project is located approximately 2.5-miles southeast of the Hoonah airport, and accessible via existing logging roads. 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 AEA13-006 Grant Application Page 3 of 26 7/3//2012 Renewable Energy Fund Round 6 ® o L A.112QA Grant Application ® ENERGY AUTHORnY 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Gartina Falls Hydroelectric Project (Project) will include construction of a small diversion dam and intake structure just above Gartina Falls, installation of a steel penstock, a powerhouse at the base of the falls, a new access road, 0.1 miles of transmission line buried in conduit, and installation of power poles for 3.8 miles of overhead transmission line within the access road right-of-way. The purpose of the Project is to divert water from above the waterfall into the power plant and then discharge water back to the base of the waterfall. The new hydroelectric system will have an installed capacity of 455 kilowatts (kW) and will therefore be used to avoid an estimated 30 percent of Hoonah's current diesel -powered electricity through hydro generation. AEA13-006 Grant Application Page 4 of 26 7/3H2012 Renewable Energy Fund Round 6 ©Q� Grant Application ®ENERGYAUTHORrY 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.) In the Alaska Energy Authority, December 2011, Southeast Alaska Integrated Resource Plan produced by Black & Veatch, the Gartina Falls Hydro Project was identified as one of the seven resource projects that should be developed sooner rather than later. IPEC recognizes that the cost of living is high in the communities it serves, and that the opportunity for business development in the rural village communities served by IPEC is limited by the high cost of energy. IPEC's 2009 Energy Plan set a goal to be diesel independent in the near future. Development of the Project is a critical step in meeting this goal — as it could supply up to 30% of Hoonah's existing energy needs. While the energy generated by the Project will directly serve Hoonah, IPEC's current electric rates are balanced across all the communities, which means that a lower cost of energy in Hoonah will directly benefit rates for all five native communities served by IPEC. 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. IPEC has expended $1.3 million in developing the Project so far. This work included reconnaissance and feasibility studies, permitting and licensing, and final design. IPEC now proposes to implement Phase IV — Construction, of the Hoonah-IPEC Hydro Project. The total estimated costs for Phase IV of Project using 2012 cost estimates is: Phase IV: Construction....................................................... $6,694,000 IPEC received $450,000 from DOE as a "cash match" funding for the Project development work. Additionally, IPEC expects to spend an estimated $15,000 of company funds to help administer the 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. $ 6,694,000 2.7.2 Cash match to be provided *see comment below $ 0 2.7.3 In -kind match to be provided $ 15,000 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) $6,709,000 AEA13-006 Grant Application Page 5 of 26 7/3//2012 Renewable Energy Fund Round Grant Application * IPEC received $450, 000 from DOE as a an active match. ANETATATW ® , MI "cash match" funding and considers this 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 $8,009,000 including estimates through construction) 2.7.7 Estimated Direct Financial Benefit (Savings) $ 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.) AEA13-006 Grant Application Page 6 of 26 7/3//2012 Renewable Energy Fund Round 6 Grant Application SECTION 3 — PROJECT MANAGEMENT PLAN Describe who wilt 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. IPEC is the single point of contact and will execute all grant, contractual and administrative responsibilities. HDR will provide all interface design, permitting, system integration, and construction management. Peter Bibb, IPEC Operations Manager, is the Grant Manager. He is the single point of contact with AEA and will execute all grant contractual and administrative responsibilities. Mr. Bibb has 21 years of experience in the electric power generation field. He is skilled in tracking grants, communications, and in his ability to deal smoothly and professionally with executive officers, upper management, employees, vendors, and customers in day-to-day and occasionally adverse situations. Paul Berkshire,P.E., HDR, will serve as the Project Manager. He will work with the Grant Manager to commit essential engineering disciplines to ensure a successful project. 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 Final Project Design Complete Construction Drawings January 2012 2013 Acquire land and land rights 2012 January 2013 Receive FERC License FERC completes review period 2012 November 2012 FERC may/may not request 2012 November assessments 2012 FERC writes License 2012 December 2012 FERC issues License to build Project 2012 December 2012 Prepare Project Material List January 2012 2013 AEA13-006 Grant Application Page 7 of 26 7/3//2012 Renewable Energy Fund Round 6 400--) ni Grant Application �40MEDENERGY AUTHORITY Procure equipment and materials August December 2013 2013 Construct access roads August October 2013 2013 Construct diversion structure August 2013 July 2014 Construct powerhouse October May 2014 2014 Install turbine and controls October 2014 May 2014 Install penstock October 2014 May 2014 Construct substation Aril 2014 July 2014 Construct transmission line August October 2012 2012 Start-up and testing August October 2014 2014 System integration September December 2014 2014 Project closeout December 2014 Operations reporting AEA13-006 Grant Application Page 8 of 26 7/3//2012 Renewable Energy Fund Round 6 ©� Grant Application ©®ENERGYAUTHORrrY 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. IPEC has teamed with the engineering firm of HDR Alaska for design, permitting, construction management, and system integration. The Project will be constructed using qualified prime contractor, utility, and local labor. An experienced superintendent will perform and oversee local labor and specialty trades. Locally available contractors will be used for the earthwork and electric line extension. All major purchases and construction contracts will be in accordance with IPEC procurement policies. 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. Project monitoring and managing: With the advice and aid of HDR, IPEC will hire a Construction Manager to facilitate the building of the proposed Project. The Construction Manager will receive direction and guidance from the Project Manager. The Project Manager will communicate with FERC, the Grant Manager and AEA to fulfill required monitoring and informational requirements set forth in the Grant Agreement and FERC License. Alternative Contact Person: Jodi Mitchell, CEO/Manager, IPEC 3.5 Project Risk Discuss potential problems and how you would address them. Risk mitigation will be accomplished by implementing a risk identification and mitigation program for the duration of the project. The primary risks and our proposed mitigation plan are as follows: Risk of increased project cost— the cost estimate to construct and operate the hydroelectric facility was assembled in July of 2012. There is a risk that Project cost may increase during the FERC licensing phase and the period before construction funds are secured. This risk will be mitigated by carefully monitoring the scope and scale of the project, ensuring that cost effective measures are implemented to hold costs down, and by developing a detailed and thorough final design that accurately reflects the scope of the project There are additional elements of risk that arise in any rural Alaska construction project; however, the risk associated with this small project is expected to be minimal. A highly AEA13-006 Grant Application Page 9 of 26 7/31/2012 Renewable Energy Fund Round 6 401D ee Grant Application d=MMKIDDENERGYAUTHORITY competent team of professionals has been assembled with the skills and motivation necessary to see this project through to successful completion. The project has been devised to move forward in distinct phases, with carefully planned go/no go decision intervals. IPEC understands the potential risks associated with this project, but seeks to realize the benefit of reduced diesel fuel consumption by utilizing a readily available renewable resource. AEA13-006 Grant Application Page 10 of 26 7/3//2012 Renewable Energy Fund Round 6 4EMD Grant Application ®© ENERGY AUTHORrrY 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 On May 25, 2012, IPEC filed for a FERC License for the Project, FERC No. 14066-000. In Exhibit A, Section 3, Page A-9, "Mode of Operation". The Gartina Falls Hydroelectric Project will operate entirely in a run -of -the -river mode. This mode of operation is expected to result in 1,810 MWh of average annual generation. Pros: With the completed construction and `on-line" operation of the proposed Project, it is anticipated the hydro operation will displace 30% of the current diesel fuel used to generate electricity for the community of Hoonah. • Help fulfill IPECs long-term renewable energy initiatives. • Project simple payback — 8 years • Introduce a viable and proven means to produce energy locally ■ Demonstrate to the State and IPEC members the commitment to renewable energy resource development • O&M costs estimated to remain level or reduced slightly ■ Reduced dependence on diesel fuel and potential for fuel spills • Reduced noise when operating 100% on hydroelectric power • Reduced emissions and air pollution ■ Produce jobs and help provide a sustainable economy for local people and businesses • Help stabilize electric rates Cons: ■ Hydro development capital cost is expensive compared to diesel generation • Project research, development, construction, and management requires substantial time and effort from many organizations and IPEC staff The FERC License Application filed with FERC on May 25, 2012 is attached to this Application. Appedix F AEA13-006 Grant Application Page 11 of 26 7/3//2012 Renewable Energy Fund Round 6 400D A _ Grant Application ©4111111111111K)ENERGY AUTHORMY 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. In March, 2012 the new AEA Hoonah Power System Upgrade Project came on-line. The grant funded project replaced the old Hoonah Powerplant that was constructed in 1977. The new powerplant generation equipment consists of four diesel generator sets (gensets) with a total generation capacity of 3,060 kW. The generation system is a 4160- volt wye three-phase system. In addition to the electrical generation capacity, the powerplant is outfitted with a diesel water jacket heat recovery system (HR). The purpose of the heat recovery is to minimize the annual consumption of diesel fuel in Hoonah by connecting public use facilities to the system. The HR system provides supplemental heat to five facilities. • Genset #1 1,100 Kw 1997 CAT 3512 14 KWh/gal diesel • Genset #2 1,050 Kw 2010 CAT 3512 14 KWh/gal diesel • Genset #3 455 Kw 2005 CAT 3456 14 KWh/gal diesel • Genset #4 455 Kw 2005 CAT 3456 14 KWh/gal diesel Power is distributed throughout the community via 7.2/12.47kV overhead three-phase distribution system. The power plant produces 14.25 kWh per gallon of diesel on average. The average weighted cost per gallon of diesel fuel for IPEC during 2012 is $4.12 per gallon. 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. Fuel is delivered via barge to Hoonah year round and stored in bulk at the City of Hoonah/Hoonah Trading Company tank farm. Fuel is delivered by truck to IPEC daily and to local businesses and residents. The displacement of diesel fuel with hydroelectric power will reduce the total fuel throughput of the Hoonah Trading Company (HTC) fuel terminal. Although this project will result in reduced fuel sales for HTC, the net benefit realized by this project will benefit the entire community. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Annual diesel fuel consumption for Hoonah's electric powerplant is approximately 350,000 gallons which provides approximately 5-million kWh of electricity to customers. AEA13-006 Grant Application Page 12 of 26 7/3//2012 Renewable Energy Fund Round 6 4MED e n,n Grant Application ©4111111111C)ENERGY AUTHORMY The hydroelectric system will reduce the amount of diesel consumed at the powerplant by an estimated 30% which in turn will reduce the fuel -cost portion of electricity. The current diesel fuel cost component of electric rates in Hoonah is nearly 50% of the overall electric rate. 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 Renewable Energy Technology Specific to Location The Project is a conventional run -of -river hydroelectric operation that uses the natural flow of Gartina Creek. The technology is proven and exists throughout Alaska and the world. The technology uses little to no impoundment and the natural creek flow is used with seasonal variations with the watershed run off. Creek flow is diverted into a penstock just above Gartina Falls, through a turbine/generator installed in a powerhouse, and returned to base of the falls and stream. Optimum Installed Capacity: 455 kW Anticipated Capacity Factor: 45% Anticipated Annual Generation: 1,810,000 kWh Anticipated Barriers Winter operation hampered by freezing creek flow and powerhouse discharge Winter maintenance for road access to powerhouse Basic Integration Concept The Project will use proven and reliable technology to integrate remote generation sources. Hydroelectric and diesel systems are in operation throughout Alaska and the world IPEC will work with HDR to maximize the hydro -diesel system efficiency Delivery Methods Project generation will intertie with the existing Hoonah distribution via an overhead transmission line, approximately 3.7 miles long with an additional .1 miles of buried line in conduit. AEA13-006 Grant Application Page 13 of 26 7/3//2012 Renewable Energy Fund Round 6 GONED Grant Application �MMUDENERGY AUTHORnY 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 hydroelectric site is located on land owned by Sealaska Corporation, the southeast Alaska regional native corporation. Sealaska has authorized IPEC to enter onto its lands to collect field data and perform reconnaissance level studies. Additionally, the Project will cross land administered by the Huna Totem Corporation, a Hoonah village corporation. A portion of the transmission line will be located on City land within the community of Hoonah. IPEC has a long term relationship with the City of Hoonah, including rights -of -ways and long term lease agreement for operating the existing IPEC power generation and distribution facilities. IPEC will secure long term land interests from both Sealaska, Huna Totem Corporation and the City of Hoonah. Letters of Project support are included in the FERC License Application. 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: The Project is under FERC jurisdiction and will require a FERC License prior to construction. The FERC License is anticipated prior to January, 2013. 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 As a run -of -river small hydro project, this Project has a very small adverse impact to the environment and will produce significant renewable energy benefits. IPEC/HDR have gone to considerable efforts in their outreach efforts to the community and their consultation efforts with resource agencies. The Project has broad support and is not controversial in any way. Comments on the Project and support letters from the community are on record for the Project. AEA13-006 Grant Application Page 14 of 26 7/3//2012 Renewable Energy Fund Round 6 ®GOOD ei nQ Grant Application ®�ENERGY AUTHORITY Attached to this Application is the FERC Application for a License, Exhibit E- Environmental Report. 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 s Total Anticipated Project Cost & Cost for the Construction phase: Total Project Cost: $8,009,000 Cost for this Phase -Construction (2012): $6,694,000 Requested Grant Funding: $6,694,000 This funding will complete the Project. Applicant Matching Funds: $450,000 $450,000 was made available from the Department of Energy Juneau to Hoonah Intertie Project (Grant DE-FG07-061D14791) and used as Match for this Project. Other Funding Sources: $0 None at this time. Project Capital Costs: $6,694,000 Phase I thru IV, Project Development Cost: $1,300,000 Design and Permitting AEA13-006 Grant Application Page 15 of 26 7/31/2012 Renewable Energy Fund Round 6 �_ ei Grant Application®ENERGY AUTHORrrY 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 A Business Operating Plan will be developed during the final design phase to accurately quantify operating and maintenance, and renewal and replacement costs for the hydroelectric facility. The estimated annual operating and maintenance cost for this Project is $500,000 which includes O&M, costs for borrowed money, insurance, and other unplanned expenses. Funding for the estimated O&M costs will be funded by IPEC's electric rate structure. IPEC has successfully demonstrated its sustainability as a regional electric utility serving five remote communities in southeast Alaska. The addition of hydroelectric power to the current mix of IPEC generating facilities will further enhance IPECs sustainability. 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 IPEC is the certificated electric utility for Hoonah and will also be the project grantee and operator; therefore, a power purchase agreement is not required. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Refer to Appendix B for the Cost Worksheet. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. A hydraulic analysis is included as part of the FERC License Applicant. This analysis demonstrates that Gartina Creek will provide water on a sustainable basis. Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) Anticipated Annual Average Generation: 1,810,000 kWh Since 2010, in stream flow measurements are available from existing stream gage equipment AEA13-006 Grant Application Page 16 of 26 7/3//2012 Renewable Energy Fund Round 6 Grant Application ®�ENERGYAUTHORrrY located upstream of the falls. Exhibit A of the FERC License Application, page A-2 provides data 1 on Gartina Falls average monthly flow. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt' grid, leave this section blank) i. Number of generators/boilers/other Four (4) ii. Rated capacity of generators/boilers/other Combined 3,060 KW ill. Generator/boilers/other type n/a iv. Age of generators/boilers/other 2005 to 2010 v. Efficiency of generators/boilers/other 14 KWh per gallon diesel b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $100,000 ii. Annual O&M cost for non -labor $400,000 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] 4,860,308 ii. Fuel usage Diesel [gal] 331,184 Other iii. Peak Load 800 Kw iv. Average Load 600 Kw v. Minimum Load 475 Kw vi. Efficiency 14 KWh per gallon diesel vii. Future trends Maintain current load d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] n/a ii. Electricity [kWh] n/a iii. Propane [gal or MMBtu] n/a iv. Coal [tons or MMBtu] n/a v. Wood [cords, green tons, dry tons] n/a vi. Other n/a Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity Hydro-455 Kw (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] 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. AEA13-006 Grant Application Page 17 of 26 7/3//2012 Renewable Energy Fund Round 6 4000 A Grant Application �400RDENERGY AUTHORMY b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 1,810,000 ii. Heat [MMBtu] n/a c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] n/a ii. Coal [tons or MMBtu] n/a iii. Wood [cords, green tons, dry tons] n/a iv. Other n/a Project Cost a) Total capital cost of new system $6,694,000 b) Development cost $1,300,000 c) Annual O&M cost of new system $500,000 d) Annual fuel cost n/a Project Benefits a) Amount of fuel displaced for i. Electricity 100,000 gallons ii. Heat n/a iii. Transportation n/a b) Current price of displaced fuel $4.12 per gallon c) Other economic benefits d) Alaska public benefits Reduction of carbon dioxide emissions by approximately 1,500 tons annually Power Purchase/Sales Price a) Price for power purchase/sale n/a Project Analysis a) Basic Economic Analysis i Project benefit/cost ratio Payback (years) AEA13-006 Grant Application 1.8 Q Page 18 of 26 7/3//2012 Renewable Energy Fund Round 6 Grant Application ®®ENERGYAUTHORIIY 4.4.5 Proposed Biomass System Information Please address the following items, if know. (For Biomass Projects Only) • What woody biomass technology will be installed (cord wood, pellets, chips, briquettes, pucks). • Efficiency of the biomass technology. • Thermal or electric application. • Boiler efficiency. • Displaced fuel type and amount. • Estimated tons of wood pellets or chips (specify) to be used per year, and average moisture percentage. • Estimated cords of wood to be used per year, specify whether dry or green and the moisture percentage. • Ownership/Accessibility. Who owns the land and are their limitations and restrictions to accessing the biomass resource? • Inventory data. How much biomass is available on an annual basis and what types (species) are there, if known? SECTION 5— PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following: • Potential annual fuel displacement (gallons and dollars) over the lifetime of the evaluated renewable energy project • Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) • Discuss the non -economic public benefits to Alaskans over the lifetime of the project Potential Fuel Displacement The avoided fuel costs over a 30 year period is estimated at $40.2 million. AEA13-006 Grant Application Page 19 of 26 7/3//2012 Renewable Energy Fund Round 6 GOOD _ Grant Application i�)ENERGY ALTHORrrY Anticipated Annual revenue IPEC is economically regulated by the Regulatory Commission of Alaska. As such, electric rates and revenue changes are subject to the RCA review and approval. Potential additional annual incentives and revenue streams: Unknown at this time Non -economic Public Benefits to Alaskans • Help fulfill IPECs long-term renewable energy initiatives. • Develop a viable and renewable means to produce energy locally • Demonstrate State and IPEC commitment to renewable energy resource development • Reduced dependence on diesel fuel and potential for fuel spills • Reduced noise when operating 100% on hydroelectric power • Reduced emissions and air pollution 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 IPEC will own and operate the hydroelectric facility. IPEC owns, operates, and maintains electric utilities in five small rural communities and provides reliable cost effective electric power year-round. As a member owned cooperative, IPEC is a non-profit entity focused on delivering reliable, efficient, low cost electric energy. The Project will operate at the same level of detail and consistency as all IPEC power plant operations. An Operating Plan will be prepared for the project that identifies long term operations and maintenance, as well as renewable and replacement costs for the useful life of the project. IPEC has a proven record of operating and maintaining sound power plant operations and electric distribution systems. IPEC will commit to monitoring and reporting the Project savings and benefits as required by the REF grant funding and the FERC License Agreement to demonstrate the viability of this renewable project. AEA13-006 Grant Application Page 20 of 26 7/31/2012 Renewable Energy Fund Round 6 Grant Application ®® ENERGY AUTHORITY SECTION 7 — READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. The most recent work to move this development forward occurred in 2010 where IPEC teamed with KWAAN Electric to secure "match funding" from DOE ($450,000) and then in July, 2010 received Round III REF money to begin and complete Final Design and Permitting for the Project. On May 25, 2012 IPEC filed for a FERC License Application and anticipates a License to construct by the end of 2012. When IPEC receives Round 6 REF money in July, 2013 they will begin Project construction immediately. 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. IPEC and HDR have gone to considerable efforts in our outreach efforts to the community and our consultation efforts with the resource agencies. The Project has broad support and is not controversial in any way. Comments on the Project and support letters from the community are on record for the Project AEA13-006 Grant Application Page 21 of 26 7/3//2012 Renewable Energy Fund Round 6 © 1111� Grant Application ©GENE- AUTHOFnY 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. Provide a narrative sunnnay regarding funding sources and your financial commitment to the project. Total estimated cost for the hydro Project is estimate at $8,009,000. This includes money received from DOE ($450,000) and REF Round III ($850,000) and an estimated $15,000 that IPEC expects to spend internally. These funds are due to expire early in 2012. Early in 2013, after receiving a FERC License to construct, IPEC will be ready to begin procurement, mobilization, and construction. The grant request for $6,694,000 will allow Project construction and integration into the Hoonah power grid. 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. 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 Calla, at scalfa@aidea.org. AEA13-006 Grant Application Page 22 of 26 7/3//2012 Renewable Energy Fund Round 6 n�t2�n Grant Application ©�ENERGYAUTHORrrY Project Construction and Commissioning Below Milestones and Task assume the receipt of a FERC License to Construct Project Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In- kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Milestone list below. $ $ $ IPEC Project Administration $15,000 $ 15,000 Project /Construction Management $1,070,000 $1,210,000 Contingency $1,050,000 $1,050,000 Interest $ 234,375 $ $ 234,375 Obtain Land Rights $ 40,000 $ $ 40,000 Site work $ 50,000 $ $ 50,000 Construct access roads $ 231,000 $ $ 231,000 Construct diversion structure, intake, & sluicewa $1,271,000 $ $1,271,000 Construct powerhouse $ 411,250 $ $ 411,250 Install turbine/generator and controls $ 766,000 $ $ 766,000 Install penstock & tailrace $ 452,875 $ $ 452,875 Construct substation $ 101,000 $ $ 101,000 Construct transmission line $ 801,600 $ $ 801,500 Communication & Control $ 75,000 $ 75,000 Start-up and testing $ 50,000 $ $ System integration $ 30,000 $ $ Project closeout $ 30,000 $ $ Operations reporting $ 30,000 $ $ $ $ $ Totals $6,694,000 $ 15,000 $6,709,000 AEA13-006 Grant Application Page 23 of 26 7/3//2012 Renewable Energy Fund Round 6 MMMD pL n_.QA Grant Application ®4MW)ENERGY AUTHORITY Pro'ect Milestones that should be addressed in Bud et Pro osal Reconnaissance FeasibilityDesign and Permitting Construction 1. Project scoping and 1. Project scoping 1. Project scoping 1. Confirmation that all contractor solicitation. and contractor and contractor design and feasibility 2. Resource solicitation. solicitation for requirements are identification and 2. Detailed energy planning and design complete. analysis resource analysis 2. Completion of bid 3. Land use, permitting, 3. Identification of 2. Permit applications (as documents and environmental land and regulatory needed) 3. Contractor/vendor analysis issues, selection and award 4. Preliminary design 4. Permitting and 3. Final environmental 4, Construction Phases analysis and cost environmental assessment and 5. Cost of energy and analysis mitigation plans Each project will have market analysis 5. Detailed analysis of (as needed) unique construction 6. Simple economic existing and future 4. Resolution of phases, limitations, analysis energy costs and land use, right of and schedule markets way issues constraints which 7. Final report and 6. Assessment of should be identified recommendations alternatives 5. Permit approvals by the grantee 7. Conceptual design 6. Final system 5. Integration and analysis and cost design testing estimate 7. Engineers cost 6. Decommissioning old 8. Detailed economic estimate systems and financial 8. Updated 7. Final Acceptance, analysis economic and Commissioning and 9, Conceptual financial analysis Start-up business and 9. Negotiated 8. Operations Reporting operations plans power sales 10. Final report and agreements with recommendations approved rates 10. Final business and operational plan AEA13-006 Grant Application Page 24 of 26 7/3//2012 Renewable Energy Fund Round 6 � Grant Application �4NOIDENERGY AUTHORMY SECTION 10 —AUTHORIZED SIGNERS FORM Community/Grantee Name: Inside Passage Electric Cooperative Inc. Regular Election is held: Every other month Date: 9-20-12 Authorized Grant Siuner(s): Printed Name Title Term Signature Jodi M. Mitchell General Manager & Chief Executive Officer Employee Peter A. Bibb Operations Manager Employee Jerry Medina Administrative Officer Employee I authorize the above person(s) to sign Grant Documents: (Highest ranking organization/community/municipal official) Printed Name Title Term Signature Jodi M. Mitchell General Manager & Chief Executive Officer Employee AI / V� u Grantee Contact Information: Mailing Address: P.O. Box 210149 P.O. Box 210149 Auke Bay, AK 99821 Phone Number: 907-789-3196 ext 24 907-789-3196 ext 33 Fax Number: 907-790-8517 E-mail Address: jitchell@alaska.com bibb ak.net Federal Tax ID #: 43-196-4262 Please submit an updated form whenever there is a change to the above information. AEA13-006 Grant Application Page 25 of 26 7/3//2012