HomeMy WebLinkAboutREF Grant Walker Lake Hydro Appendix BKleinschmidt
September 13, 2012
VIA EMAIL
Ms. Jodi Mitchell, CEO/General Manager
Inside Passage Electric Cooperative
P.O. Box 210149
Auke Bay, AK 99801
Walker Lake Hydroelectric Project — Development Overview
Dear Ms. Mitchell:
The Tlingit & Haida Regional Electrical Authority's (THREA) efforts to develop sustainable,
cost effective hydroelectric energy for the Haines region is an exciting example of Alaskans
taking the incentive to address energy independence for their communities. Hydropower is an
ideal way to reduce diesel generation dependence and provide a long-term sustainable energy
alternative, while maintaining the environmental resources that provide these generation
opportunities. Unlike many proposed hydroelectric developments, the Walker Lake Project has
the added benefits of being located in an accessible area outside U.S. federal lands.
We understand the THREA filed its Preliminary Permit Application for the site in competition
with another hydroelectric developer on June 11, 2012 and that FERC has not selected a
preferred applicant at this point. We also understand that moving your project forward is
contingent on receiving grant funding from the State of Alaska. Pursuant to our conversations,
Klemschmidt Associates (Kleinschmidt) is providing this Development Overview as a statement
of our interest in supporting THREA's efforts should the project move forward.
As we have discussed, new hydroelectric development based on community goals and energy
independence is the type of work that resonates with our staff. We have drawn from our
extensive experience with projects similar to Walker Lake to provide you a general overview and
potential cost ranges associated with the site feasibility assessment, potential supporting studies
and licensing efforts, and initial engineering design considerations that THREA will face in the
next three years. We have also included a synopsis of Kleinschmidt and the services we provide
for clients across the country for your information as part of this submittal. We hope that the
information assists you in developing your grant applications and, more generally in your project
planning efforts. We are excited with the prospect of potentially being part of your efforts.
1217 NE Burnside Road, Suite 401 • Gresham, OR 97030 • Phone: 503.345.7956 • Fax: 503.345.7959 • www.KleinschmidtUSA.com
- Offices Nationwide -
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Ms. Jodi Mitchell
Sentember 13.2012
KLEINSCHMIDT OVERVIEW
Kleinschmidt approaches our work with the understanding that every job and every client
matters; that our continued success requires not only expertise in our disciplines but trust and
true partnerships with our clients that grow over time.
R. Stevens Kleinschmidt, Ph.D., a hydraulic engineer, founded Kleinschmidt in 1966. Dr.
Kleinschmidt was respected for his knowledge of hydropower engineering issues and his
practical approach to solving hydro plant problems. This focus and expertise in hydropower
issues and practical, solution -oriented approaches remain key components of the Kleinschmidt
organization today. From modest beginnings in Maine, Kleinschmidt's services have expanded
over the years in response to the changing needs of the hydroelectric industry. We now have
offices throughout the country.
Kleinschmidt's 137 professional, technical, and administrative staff is focused primarily on
hydroelectric energy project engineering, regulatory and supporting services. Kleinschmidt is
one of the few consulting firms in the country that specializes in servicing the hydro industry.
This long-term focus allows us to offer a depth of experience sometimes found in larger, multi -
disciplined firms, while retaining the project control, communication, response time, flexibility
and personal attention that characterize smaller firms. This flexibility allows Kleinschmidt to
structure our hydropower engineering services to meet the needs of new and existing power
project owners and operators. Our firm is known nationally for being a leader in environmental
and licensing expertise in addition to the engineering skills that have always been a hallmark of
the company. Through the experience of leading more than 70 hydropower licensings,
Kleinschmidt has a solid understanding of the issues and environmental effects associated with
hydropower development. Please visit our website at www.kleinschmidtusa.com for more
detailed information regarding Kleinschmidt services, project experience, and staff. Attachment
A includes a brief synopsis of our services.
POTENTIAL PROJECT APPROACH & COST ESTIMATES
Based on our recent conversations, review of the competing Preliminary Permit Applications, a
general review of potential environmental issues, and our experience with new hydroelectric
development projects, we provide the following for your information and consideration. The
strategies we suggest have been effective on many of our projects. We believe they will allow
THREA to evaluate development potential and, as appropriate, move towards cost- effective
licensing and design. Our suggested approach also provides checkpoints throughout the process
for reevaluating, adding, deleting, or modifying analyses, identifying and proactively addressing
potential environmental resource issues, and supporting engineering design.
The associated cost estimates provided herein are extremely high level and based on our
experiences at projects similar to Walker Lake. Understanding that THREA is preparing to
submit grant -funding requests to AEA, we have provided cost ranges. It may be prudent to
assume the higher ranges for funding purposes; however, we expect that as THREA moves
forward, these costs can be refined and, in some instances, potentially lowered.
2.
Ms. Jodi Mitchell
September 13, 2012 3.
ENGINEERING FEASIBILITY ANALYSIS & PRELIMINARY DESIGN
PHASE I —INITIAL FEASIBILITY ASSESSMENT
This analysis would provide a base level assessment of the hydrology for the Walker Lake
Project and use that information to develop conceptual infrastructure suited to the site. It would
consider existing information and initial design proposals already set forth. From this
information, the study would derive a preliminary opinion of probable cost for developing the
site as well as transmission construction cost opinions. THREA can use this analysis to evaluate
the base economics for the proposed project as well as identify potential issues or fatal flaws that
need to be factored into the economic analysis. Further, the report would identify potential
critical issues for each development based upon existing information and the recommended next
steps. Depending on data availability, this study could be accomplished relatively quickly (within
two to three months of project initiation). This assessment would confirm the project's overall
economic feasibility prior to THREA expending additional resources on regulatory,
environmental or engineering efforts.
Ideally, a small project such as Walker Lake would qualify for a small hydro license exemption;
however, the need to construct a dam(s) to support generation precludes this option. During
Phase I analysis THREA may consider including an engineering alternative analysis to determine
if a lake tap or other methods that do not require water retention structures is feasible. We
provide additional discussion on licensing options in Section 2.3.
To provide you with a budgetary estimate, we have assumed that this type of study would
consider up to three designs for the site, provide a basic hydrologic analysis from existing,
available data, and a summary of potential power production based upon the site hydrology. It
would also include a general overview of potential environmental and regulatory considerations,
and a preliminary opinion of probable costs for the conceptual design including potential
transmission routes.
Cost Estimate: $10,000 - $20,000
PHASE Il — DESIGN SELECTION AND REFINEMENT
Assuming Phase I evaluation demonstrates economic and technical viability, Klemschrnidt
recommends refining the selected development option(s) including developing basic design
drawings to the point that THREA can use them during licensing consultation. From the
information developed in Phase I additional consideration can be given to developing the best
system to support the needs of the community, this would include considerations such as having
two smaller generating units vs. one to provide power during low flow periods, to continue
production during repairs, etc and to consider ease of long-term maintenance and operations.
This refined design would include adequate detail to identify/clarify potential construction and
operation effects on resources and would provide the basis for determining appropriate
environmental studies for licensing and construction. This design refinement could also include
preliminary transmission layout, which Kleinschmidt typically develops using best available data
and, where necessary, additional information from our geotechnical experts.
Ms. Jodi Mitchell
September 13. 2012
If, early agency discussions provide relevant information regarding environmental concerns, this
refined design may also include design options for resolving potential issues identified during
initial data reconnaissance (see below) or initial agency discussions.
Cost Estimate: $25,000 - $40,000
PHASE III — PRELIMINARY DESIGN
Preliminary design drawings would clearly show the layout of project structures and equipment
using concepts and approaches. This design package would incorporate the design criteria and
load conditions into the site access, overall dimensions and elevations, proposed construction
baselines and control points, general arrangement of structures and components, layout and
dimensions of flow passages and flow control devices, electrical one -line diagram and control
block diagram, water surface elevations, and river flow ranges. At this design stage,
Kleinschmidt has typically established penstock size, and the preliminary route, flow control
devices, materials, method of support, and anchorages.
Cost Estimate: $50,000 - $150,000
Transmission Routing and Construction
We have not provided THREA with a complete discussion of transmission construction costs for
this project stage. Typically, transmission design and routing is developed during the feasibility
studies. For planning purposes in Alaska, we generally assume a construction cost of
approximately $500,000 per mile for three-phase transmission lines in established corridors and
up to $1,000,000 for new corridors depending on terrain and geology. Once we establish the
preliminary design with our clients, we would typically bring in a transmission specialty firm to
assist in finalizing the details.
SITE RECONNAISSANCE AND INITIAL DATA GATHERING
Stream Gaging - We understand several stream flow studies were undertaken for the project
area in the 1980s and 1990s; however, as THREA notes in its PPA, it is important to begin to
develop a long-term hydrologic data set. Stream gaging data will aid in confirming project
feasibility and meeting the expectations of the regulatory agencies for site -specific data. The
more stream gaging data available, the better for developing an operational regime as well as
specific design criteria. Stream gaging will also provide critical baseline information for other
environmental studies.
There are several alternatives available to THREA to gather the stream data. You could hire an
outside consulting firm who could provide and install stream gaging equipment, monitor the
gages, and provide a report for use during design and licensing. Alternatively, you could invest
in or rent stream gaging equipment and, with some training and follow up from Kleinschmidt or
other firms, employ local residents to collect data and maintain the monitoring equipment. There
are also stream gaging systems that operate remotely — providing data directly to a computer in
real time; however, they would still require periodic, on -site stream velocity measurements.
9
Ms. Jodi Mitchell
September 13, 2012
5.
This type of equipment could incur significant upfront costs. If THREA has an opportunity to
use this equipment in the future, or could rent it to other interested parties, it may be worth
considering. Kleinsclunidt sees distinct advantages to training and employment of local residents
for work supporting the development and eventual operations of a hydroelectric facility;
however, for a budgetary estimate for the grant application, we have assumed THREA would
hire a consulting firm. This represents an upper end to the costs; if there are advantages in the
grant funding to training programs, those dollars should cover a training program as well. We
would be happy to discuss other options with you.
Cost Estimate: $25,000 - $30,000L
Topographic Mapping — We note that THREA includes this potential study in its Preliminary
Permit Application. While project development will eventually require site -specific survey and
mapping for design purposes, we suggest that existing topographical information may be
sufficient for the initial project development and analysis stages. Some project developers use
LiDAR mapping, which can provide high -resolution topographic and geologic data, but can cost
upwards of $75,000 to accomplish. This level of detail may not be necessary for the Walker Lake
project; however, depending on engineering design considerations and agency responses to
raising the lake level, it could provide value. THREA should consider the costs involved to
accomplish such in comparison to the project size, especially during the project's initial stages.
Accordingly, the cost estimate we provide for this task includes only desktop analysis and
Geographic Information System (GIS) mapping.
Cost Estimate: $10,000 - $15,000
Geotechnical Investigation — As with mapping, readily available geotechnical information may
be sufficient for initial development efforts. THREA may want to budget for an initial, desktop
evaluation and possible site visit by a geotechnical expert but we would not recommend
committing to extensive studies involving borings or test excavations at this stage. We have
incorporated a modest cost estimate for this task with these assumptions.
Cost Estimate: $10,000 - $15,000
REGULATORY ASSISTANCE
Ideally, THREA should consider contracting for regulatory assistance at the same time as for
engineering feasibility, so environmental and permitting issues are considered in the
development of any plans and so that there is the opportunity to keep agencies and local
stakeholders apprised of project development. At the least, any regulatory assistance for which
THREA contracts would begin upon a preliminary feasibility determination and prior to initial
agency consultation. Kleinschmidt has supported a number of new hydro developers from pre -
conceptual feasibility through project construction. As discussed below, our experience indicates
that THREA may wish to consider informal stakeholder discussions as part of its initial project
' (for one year of gaging and data analysis/study report)
Ms. Jodi Mitchell
September 13, 2012 6.
feasibility stages to lay the groundwork for a formal regulatory process should you decide to
pursue project development.
Kleinschmidt takes advantage of our team's depth of FERC licensing experience to help our
clients focus their initial, reconnaissance level field studies on resources we anticipate will be of
interest to agencies and stakeholders. This allows us to work with these clients proactively to
begin initial stakeholder outreach backed by on -the -ground information, rather than starting that
discussion with stakeholders by identifying their general laundry list of information requests for
hydroelectric projects. We undertake this consultation on a resource basis or conduct a general
meeting with all agencies typically involved in new hydroelectric review and permitting.
THREA may consider this approach, particularly because of the project's small size and, unless
otherwise identified during pre -consultation, its limited potential enviromnental effect.
Additionally, early consultation typically provides the licensee opportunities to determine agency
interests and the extent of potential study or mitigation requests. Understanding stakeholder and
agency issues will help determine which licensing process provides the most value/protection to
the licensee. This understanding would also assist THREA in determining the funding level
necessary for regulatory/environmental work during the project's licensing and construction
phases.
Assuming the project, as THREA presents in its PPA, requires construction of a dam(s), the
proposed Project will likely fall under the regulations for Minor Water Power Projects under
Section 4.60 of FERC's regulations. This allows for a slightly abbreviated license application,
but still requires details of project structures and construction methods, and an environmental
assessment. We have observed that many Alaskan licensees default to the Alternative Licensing
Process (ALP). While this may be appropriate for larger projects with many potential
environmental issues, we recommend THREA consider the Traditional or Integrated Licensing
Processes (TLP or ILP). The TLP is well suited for small projects without controversial
environmental issues. While agency consultation can mirror that of the ALP or ILP, the process
does not require a licensee gain consensus on all study requirements or environmental effects;
FERC steps in as the arbiter for unresolved issues after the license files its license application.
The ILP is also appropriate for a project such as Walker Lake, but has a stringent schedule
requirement. The benefit of the ILP is that FERC staff are actively involved throughout the
process and provide feedback on study requests, methodologies, and mitigation prior to license
application submittal.
As THREA is aware, all licensing processes start with preparing a Notice of Intent to File an
Application (NOI) and an accompanying Pre -Application Document (PAD) that provides basic,
readily available environmental information about a proposed project. We recommend filing an
NOI and PAD as early in the process as possible once a feasibility determination is made so that
planning may begin for any data gathering or field studies necessary for the license application
as well as for the additional detailed engineering support studies. Kleinschmidt's preliminary
(and simplified) assessment of the regulatory process plan for the Walker Creek Project is as
follows:
Ms. Jodi Mitchell
Seutember 13, 2012
I . Meet with FERC licensing staff
2. Meet with regulatory agencies and other potential participants
3. Develop draft NOI and PAD
4. Hold additional agency/stakeholder meeting(s)
5. File NOI and PAD and Request use of ILP or TLP
6. Conduct Studies as necessary
7. Prepare License Application
8. File Application; FERC issues EA, etc.
9. FERC issues License
10. Construct Project
By their nature, regulatory costs are somewhat unpredictable. Discrete components can be
estimated more easily; however, internal strategizing, agency communications and coordination,
and similar activities are manageable but not predictable. Depending on the strategies THREA
employs, Kleinschmidt could provide more discreet estimates for better known and understood
aspects of the projects, while reserving a more undefined time and materials component for the
planning and coordination activities.
Cost Estimate
Preparation of a PAD for the project could typically cost approximately $20,000 - $30,000,
depending on the available information and input from agencies and other stakeholders. This
estimate includes costs associated with an initial meeting with the agencies and stakeholders and
follow-ups via conference calls, email, and other electronic communications.
A license application for the project could range between $40,000 and $100,000, again
depending on issues, agency involvement, number of consultation meetings, etc. If there are
fewer study requirements to incorporate into the application and operations are straight forward
and pre -agreed with the agencies, the costs should tend towards the lower amount. We anticipate
that the process, to the point of filing an application with FERC, would take 24 to 36 months,
depending on issue complexity and the need for field studies.
ENVIRONMENTAL STUDY SCOPING AND AGENCY CONSULTATION
Early and consistent consultation with jurisdictional agencies and local stakeholders is key to
identifying relevant site -specific environmental issues and associated studies. It also allows for
early negotiations regarding the appropriate scope of these studies, which will help THREA
expend funding efficiently and effectively. It generally also provides for a smoother transition
7.
Ms. Jodi Mitchell
13, 2012 g.
from feasibility to licensing as a project moves forward. Face-to-face meetings are sometimes the
best means to highlight potential issues as well as to resolve them. Typically, the investment in
more consultation, if it appears that the agencies and stakeholders are working with the applicant,
is worth much more than the additional consulting costs. As the result of increased consultation
services, the licensee usually encounters fewer and reduced scope of studies and fewer comments
and misunderstandings related to documents — actions and activities that often slow process
schedule and result in additional large expenditures. If the issues are limited and the agencies do
not have a requirement for additional meetings, costs can be limited and consulting staff may not
be required. In our experience, making extra efforts early in the process will save time and
dollars in the long run.
Cost Estimate
If THREA requires consulting staff support, meetings with agencies and other stakeholders could
range from approximately $3,000 to $5,000 each depending on the number of staff attending and
the nature of the meeting in terms of preparation and follow-up. Agency meetings can often be
held in conjunction with other planning or process meetings for increased efficiencies.
ENVIRONMENTAL SURVEYS
While we would not recommend initiating large-scale environmental studies until after the initial
feasibility determination and informal discussions with agencies regarding the licensing process,
several resource investigations are standard for most hydroelectric development projects.
THREA may want to initiate baseline surveys to inform its agency consultation and should
anticipate that it will likely need to undertake these (and potentially other) studies within the first
three years of project development. These initial surveys should draw heavily from existing data
if it is available, with a focus on field reconnaissance for those that require site -specific analysis.
As THREA is proposing an approximately 4-mile transmission corridor, land based studies
should incorporate the proposed transmission route as well as Walker Lake and the anticipated
penstock and powerhouse locations. Potential studies may include:
Baseline Water Quality Survey
Baseline Fisheries Survey
Habitat and Cover Mapping/Wetland Delineation
Baseline Wildlife & Amphibian Survey
Recreation Use Assessment
Note that, as presented, these studies are initial field efforts to establish baseline data for agency
negotiations and initial licensing document preparation. THREA should consider the possibility
that some environmental resource issues may require multi -year study efforts.
Cost Estimates
This is one of the more difficult items to predict, as Kleinschmidt does not yet have an
understanding of what information may be available or what information the agencies may
request/require. Depending on initial survey findings, THREA may find that additional, more
Ms. Jodi Mitchell
September 13, 2012
intensive studies are necessary. Additionally, any agency cooperation, use of THREA staff, or
employing a consultant that can accomplish several of the anticipated studies during one or two
field visits could reduce costs. If using consultant support, THREA could expect:
• Water Quality` - $25,000 - $30,000 (per year)
• Baseline Fisheries survey - $25,000 to $50,000
• Habitat and Cover Mapping/Wetland Delineation - $30,000-$35,000
• Baseline Wildlife and Amphibian Survey - $25,000 - $30,000
• Recreation Use Assessment - $40,000 - $60,000
• Subsistence Use Assessment - $25,000 - $30,000
BUDGET AND SCHEDULE SUMMARIES
Table 1 depicts a potential timeline contemplating the activities that THREA may accomplish
within the Preliminary Permit's three-year timeframe. The figure's intent is to depict how each
of the tasks discussed above interrelate. It represents a "fast track' process, which can be
modified to more closely to track with THREA's anticipated schedule based on initial
information. This timeline assumes FERC selects THREA as the preferred license applicant and
AEA funding begins in spring 2013. Table 2 summarizes estimated costs for all tasks identified,
but does not contemplate additional, more in-depth or follow up studies that THREA may
identify during agency consultation.
Anticipate 2 years of dissolved oxygen, temperature and other baseline data
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Ms. Jodi Mitchell
September 13. 2012 I 1
TABLE 2 ESTIMATED COST SUMMARY
TASK
Ji
ESTIMATED
COST/OPINION OF COST
RANGE
Engineering
Phase I Feasibility Study
$10,000- $20,000
Phase II - Design Selection &
Refinement
$25,000 - $40,000
Phase III - Preliminary Design
$50,000 - $150,000
Subtotal
585,000 - $210 000
Site Reconnaissance
& Initial Data
Gathering
Stream Gaging
$25,000 - $30,000
To o ra hic Mapping
$10,000 - $15,000
Geotechnical Investigation
$10,000 - $15,000
Subtotal
$45,000 - $60,000
Regulatory
Assistance
Preliminaty Application Document
(PAD)
$20,000 - $30,000
License Application Development
$40,000 - $100,000
Environmental Study Scoping &
Agency Consultation
$15,000 - $25'000
Subtotal
$75,000 - $155,000
Environmental
Surveys
Water Quality
$50,000 - $60,000
Baseline Fisheries Survey
$25,000 - $50,000
Habitat and Cover Mapping/Wetland
Delineation
$30,000 - $35,000
Baseline Wildlife and Amphibian
Survey
$25,000 - $30,000
Recreation Use Assessment
$40,000 - $60,000
Subsistence Use Assessment
$25,000 - $30,000
Subtotal
$195 000 - $265,000
Total
$400 000 - $690,000
' For one year of gaging and data analysis/study report
a Assumes 5 meetings
S Assumes 2 years of data gathering
Ms. Jodi Mitchell
September 13. 2012 _ 12
CONCLUSIONS & ADDITIONAL INFORMATION
We have provided this information to you to assist you in planning and for your grant
application. We hope that it provides value as you pursue the Walker Lake Project. While the
cost estimates are generalized, they are based on our experience with a variety of similar
projects. The strategies presented are those that we have used successfully at those projects.
Should THREA decide to solicit consulting assistance for the project, we would appreciate you
considering us for all aspects of the work scopes. At your request, we would be pleased to
provide you with a formal proposal for services related to the potential development of the
Walker Lake Project. In the interim, we wish you the best in the FERC preferred applicant
selection and the AEA funding processes.
Please feel free to contact me at any time.
Sincerely,
Allison Murray
Senior Regulatory
ASM:TMJ
Attachment A — General Qualifications Package
\\Eag1eVobs\Proposa1s\1 HREA PPA\002-TH REA 9-13-12.doc
ME'i.;ti
In today's environment, hydro owners are often confronted with unique
challenges that require a collaborative approach by people who truly
understand HYDRO.
Hydro engineering with regulatory, environmental and fish passage
experience under one roof --that's Kleinschmidt. And after nearly half a
century, HYDRO remains our primary focus.
The knowledge and experience we have gained by working with our
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you with technically sound and practical solutions. That's our passion.
Hydropower
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Holtwood Hydroelectric, PA
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