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HomeMy WebLinkAboutFire Island T-line Grant Application - Signed/EALASKA Renewable Energy Fund Round 5 ENERGYAUTHORITY Grant Application Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.orq Grant Application GrantApp5.doc Application form in MS Word that includes an outline of Form information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Costworksheet Summary of Cost information that should be addressed by Worksheet 5.doc applicants in preparing their application. Grant Budget GrantBudget5. A detailed grant budget that includes a breakdown of costs by Form doc milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget GrantBudgetln Instructions for completing the above grant budget form. Form Instructions structions5.doc Authorized Authorized Form indicating who is authorized to sign the grant, finance Signers Form signers reports and progress reports and provides grantee information. form5.doc • 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 completion of each phase. • 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 12-001 Application Page 1 of 17 7/1/2011 /® ALASHKA Renewable Energy Fund Grant Application Round 5 SECTION 1 —APPLICANT INFORMATION Name (Name of utility, /PP, or government entity submitting proposal) Chugach Electric Assn., Inc. Type of Entity: Electric Cooperative Fiscal Year End 12131 Tax ID # 92-0014224 Tax Status: —For-profit or—X—non-profit check one Mailing Address Physical Address P.O. Box 196300 5601 Electron Drive Anchorage, Ak 99519-6300 Anchorage, Ak 99519 Telephone Fax Email 907 762-4759 907 762-4191 Ton vecera@chugachelectric.com 1.1 APPLICANT POINT OF CONTACT I GRANTS MANAGER Name Title Ronald K. Vecera Director of Project Development Mailing Address P.O. Box 196300 Anchorage, Ak 99519-6300 Telephone Fax Email (907) 762-4759 (907) 762-4191 ron_vecera@chugachelectric.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. AEA12-001 Grant Application Page 2 of 17 7/1//2011 ALASKA Renewable Energy Fund ,E) ENERGY AUTHORITY Grant Application Round 5 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) Type in your answer here and follow same format for rest of the application. Transmission Line From Fire Island Wind Project 2.2 Project Location — Include the physical location of your project and name(s) of the community or communities that will benefit from your project. The transmission line will traverse the distance from Fire Island, Alaska to Chugach Electric's (Chugach's) International substation, a distance of approximately 12.2 miles. The communities that will benefit include those, such as Anchorage, that receive retail electric service from Chugach, and in which over 67,000 retail members of Chugach receive service at nearly 78,500 separately metered billing locations. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels Hydro, including run of river X 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) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Cook Inlet Region, Inc. (CIRI), created a special purpose entity called Fire Island Wind, LLC (FIW) to develop a wind farm on Fire Island. The Fire Island Wind Farm ("the Wind Farm") is a utility -scale wind generation facility under development, ultimately planned to have a nameplate capacity of 52.8 MW and to be comprised of 33 wind turbine generators. Pursuant to a recently completed Power Purchase Agreement (PPA), Chugach, as Buyer, has agreed to purchase the electrical output from Phase I of the Wind Farm, which will be comprised of 11 General Electric ("GE") 1.6MW type XLE turbines for a total Phase I of 17.6 MW. AEA12-001 Grant Application Page 3 of 17 7/1//2011 /®ALASKA Renewable Energy Fund ENERGY AUTHORnY Grant Application Round 5 The Project that is the subject of this grant application includes the construction of the transmission line, which will interconnect the Fire Island Wind Farm (as well as a few retail electric customers on Fire Island), with Chugach's 34.5kV system at the International Substation. The Wind Farm will initially consist of 11-1.6MW GE wind turbines that will be consolidated into a single 34.5kV feeder. The feeder will be routed to a collector yard. The collector yard will connect to a double -circuit 34.5kV overhead transmission line running approximately 2.8 miles to the northeast coast of Fire Island. At that point, it will be connected to two 34.5kV 3 phase submarine cables. The submarine cables will run approximately 3.2 miles under the Cook Inlet to the mainland coast near Point Campbell and Anchorage International Airport. At Point Campbell, the conductors will be separated into single conductors and buried in a trench. The transmission lines will then continue approximately 6.2 miles to the International Substation and connect to the 34.5kV bus at the International Substation. Portions of under -ground mainland section will be installed in conduit. Splice cabinets will be required at various points on the underground section of the project. A map and drawing outlining the wind farm site and transmission Project is attached as Appendix 1. 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 benefit of the transmission line is that it allows the renewable energy produced by the Wind Farm to be transmitted to electric customers. Renewable wind energy helps displace electricity that would otherwise be generated using dwindling Cook Inlet natural gas fuel supplies. Initially, the line will serve the first phase of the Fire Island Wind Farm, with energy to be delivered to Chugach Electric and its customers. The transmission line will also facilitate subsequent phases of the wind farm, which may deliver renewable energy and its benefits to other Railbelt Utilities in the future. The Railbelt utilities that could benefit from the intertie serve approximately 75% of the population of Alaska. Finally, the transmission line will also enable additional energy deliveries from other renewable energy developers, such as for a tidal power project which is currently proposed off the west coast of Fire Island. Based on the Final Wind Resource Assessment completed on August 22, 2011, the expected energy output of the initial phase of the wind project is 51,000 MWh per year. There are numerous benefits for Chugach from the purchase of 51,000 MWh per year of renewable wind energy These include reduced fuel consumption, reduced carbon emissions, diversification of the generation portfolio and conservation of Cook Inlet gas supplies. There is also rate stability from a fixed price 25 year PPA and the learning gained from contracting for and integrating a renewable energy resource into the existing power supply. Many of these benefits are quantified and explained in detail in the tariff advice letter Chugach filed with the Regulatory Commission of Alaska (RCA) to request approval of the PPA. The tariff advice letter (without attachments) is attached as Appendix 2. Projected fuel savings can be found on p. 11 (Chart 5) and avoided carbon emissions can be found on p. 12 (Chart 7). The PPA is also attached as Appendix 3. While these benefits are the result of the energy produced by the wind farm, they cannot be realized unless a transmission line is constructed to allow delivery of the energy. AEA12-001 Grant Application Page 4 of 17 7/1//2011 ALASKA Renewable Energy Fund � ENERGY AUTHORITY Grant Application Round 5 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. A state appropriation in the amount of $25 million was made for a transmission line from Fire Island to Anchorage. However, this is not enough to complete the project. The transmission line cost worksheet based on feedback from a recently completed competitive RFP is attached as Appendix 4. The current estimate of final cost for the transmission line is $36.795 million. Thus, this grant application in the amount of $4.0 million is being submitted to supplement the amount of construction funding available. Together, the two grants plus other additional funding sources are expected to cover the cost of the line and associated facilities. Chugach will own, operate and maintain the new transmission line. 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. $ 4,000,000 2.7.2 Other Funds to be provided (Project match) $25,000,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $29,000,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.4 Total Project Cost (Summary from Cost Worksheet $36,795,000 including estimates through construction) 2.7.5 Estimated Direct Financial Benefit (Savings) $60,600,000 (NPV of avoided fuel cost for 17.6 MW Phase I of the Fire Island Wind Farm. When fully built out to 52.8 MW capacity the avoided fuel cost NPV will increase to well over $100,000,000) 2.7.6 Other Public Benefit (If you can calculate the benefit in $ 8,800,000 (NPV of terms of dollars please provide that number here and avoided carbon emissions explain how you calculated that number in your application and for Renewable Energy (Section 5.) Certificates for 17.6 MW Phase I of the Fire Island Wind Farm. When fully built out to 52.8 MW capacity carbon and REC NPV will increase to well over $22,000,000) 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. AEA12-001 Grant Application Page 5 of 17 7/1 //2011 /© ALASKA Renewable Energy Fund GEE) ENERGY AUTHORrrY Grant Application Round 5 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. Cook Inlet Transmission, LLC ("CIT") will manage the Project. CIT is owned by CIRL CIRI is an Alaska Native Corporation, based in Anchorage, AK. CIRI also owns Fire Island Wind, LLC ("FIW") who in turn, owns the Fire Island Wind Farm which is the generation resource that will interconnect to Chugach via the transmission line described herein. CIRI has contracted with the Summit Power Group, Seattle, WA for project management and engineering support. Summit Power has broad experience in managing utility scale energy projects. Please see: www.summitpower.com for more detail. 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) This grant will be for work that is completed from July 1, 2012 through June 30, 2013. The project will be in progress by the time of award of the requested grant, but a 2012 Round V grant will be timely, as the line is expected to be constructed during the summer and fall of 2012. Schedule details are below: Permitting and Design: Route Preparation Preliminary Route and Design: Complete Execute Power Purchase Agreement: Complete RCA Approval of Power Purchase Agreement: Pending — October 14, 2011 expected. Agreement of Route: Complete Agreement of Design Specification: Complete Issuance of Construction bid packages: Complete Award Construction contract complete negotiations: September 2011 Permitting: Target completion by October 2011 Brush and Tree Clearing of Mainland ROW: October — November 2011 Brush and Tree Clearing of Fire Island ROW: Completed Procurement of Long -Lead Materials: October — December 2011 Construction: Mainland ACWR Trenching- October/November 2011 Overhead Section: January -February 2012 (Connor's Bog: requires ground to be frozen) Buried Sections: February -July 2012 Construction: Submarine Cable Jet Plough Project: July -mid -August 2012 Construction: Fire Island (3 Miles of Overhead and 1,400 ft. Direct Buried): May -July 2012 Communications: Terminations, procedures and testing: August 2012 AEA12-001 Grant Application Page 6 of 17 7/11/2011 /� ALASKA Renewable Energy Fund E) ENERGY AUTHORITY Grant Application Round 5 Transmission Acceptance and Final Completion: Inspection, testing, CEA Acceptance: August 2012 Back Feed Power (Energization): August 3 1 " 2012 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The Milestones must also be included on your budget worksheet to demonstrate how you propose to manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) The major milestones for the transmission project are outlined above in Section 3.2. Chugach and CIT are currently proceeding with the project in order to preserve the schedule and in reliance of the aforementioned $25 million State of Alaska appropriation, but minimizing expenditure of capital until the RCA approval of the PPA relating to the Wind Farm, which is expected by October 14, 2011. Full-scale construction of the Project will commence in January 2012, and CIT will expend the capital as construction progresses through September 2012. 3.4 Project Resources Describe the personnel, contractors, 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 key project participants include: Cook Inlet Transmission Company, LLC — Project Manager Summit Power Group, LLC — Engineering and Project Management Support. Statement of qualifications is available at http://www.summitpower.com/ A statement of qualifications for Summit Power is attached as Appendix 5. Stanley Consultants, Inc. — Design Engineering, Bid Specification Development and Bid Evaluation. Stanley Engineering Statement of Experience can be found at: hM2://www.stanleyconsultants.com/marketss power deliveryphp Restoration Science Engineering, Inc. ("RSE") — Permitting and Environmental Consultant. RSE Statement of Experience can be found at http://restorsci.com/ Chugach Electric — Standards, Conformance & Inspection General Contactor — Contract 1 (Mainland Transmission) — TBD General Contactor — Contract 2 (Submarine Transmission) — TBD CIT is finishing a bidding process for the general contractor and expects to award a contract to the winning bidder in September 2011. Service agreements already exist for Summit Power Group, RSE, Golder & Associates, and Stanley Consultants. AEA12-001 Grant Application Page 7 of 17 7/1//2011 � �' ALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application Round 5 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. CIT will provide monthly project status reports. Chugach will coordinate project status reports from CIT that provide the required information in conformance with AEA reporting requirements. 3.6 Project Risk Discuss potential problems and how you would address them. Cost overruns can occur due to delays, late design changes and unanticipated field conditions. Extensive field work will be directed to capture field conditions. Close coordination with participants will avoid late design changes as well as delays. In the event of cost overruns, the owner of the wind farm is responsible to cover unanticipated cost overruns that are above the amount of the original $25 million appropriation from the State, plus this supplemental grant. Natural events such as floods, volcanic activity or earthquakes can lead to delays. Worker safety during such events will be addressed at every stage of the project. CIT or its subcontractors will provide insurance coverage standard to the industry to cover such events. SECTION 4 — PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. • The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget form for completion of each phase. • 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 fundina 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. The grant request is for a transmission line. The line will interconnect the Fire Island Wind Project ("FIWP") to the Chugach electric system. The FIWP is a utility -scale wind generation facility which is planned to have a nameplate capacity of 52.8 MW and to be comprised of 33 1.6 MW wind turbine generators. Pursuant to a PPA, Chugach has agreed to purchase the electrical output of Phase 1 of this project, which consists of 11 General Electric 1.6 MW type XLE wind turbines, for a total capacity of 17.6 MW. The expected annual energy production for Phase I is 51,000 MWh. To the extent that the FIWP is fully built out to its 52.8 MW capacity, then the energy generated each year would be approximately 153,000 MW-hours. At its full capacity, the FIWP would generate approximately 3.5% of the Alaska Railbelt total electricity. There are two primary advantages to the proposed wind farm. First, the energy output is renewable so it provides benefits related to reduced fuel use, carbon emissions, etc. as presented AEA12-001 Grant Application Page 8 of 17 7/1//2011 /© 14��1 sRenewable Energy Fund 401D ENERGY AUTHORFFY Grant Application Round 5 in the response to Question 2.5. The other significant advantage is economic. The State of Alaska appropriated $25 million for a transmission line for Fire Island. Further, the project is eligible for an estimated $18.7 million federal grant from the U.S. Treasury under the American Recovery and Reinvestment Act of 2009. These two grants significantly reduce the cost of the project and make it economic for Chugach's ratepayers. The project also enjoys significant public support from electric customers. Additionally, the wind farm is fully developed and ready to construct. This will ensure that the environmental and economic benefits described herein are certain to be achieved, compared to more speculative, long-term energy resource development projects that are in the pre- feasibility/study phase of development. Some things which affect the feasibility and likelihood of the transmission line project being completed: 1. Regulatory Approval: The PPA which underpins the construction of the FIW project must receive final, un-appealable approval by mid -October. The contract has been submitted, a procedural schedule that meets this time requirement has been set and the process is moving forward consistent with expectations. 2. Cost of Energy: The Project and the Fire Island Wind Farm which is enabled by the Project, will deliver energy to Railbelt Consumers at a cost which is comparable to or better than other energy resource future alternatives: 3. Fund Matching: for the Project, and the Fire Island Wind Farm, there is a substantial amount of private investment, which is far greater than the requested grant amounts. Further, the wind farm will qualify for US Federal grants as well. Thus, this project is not solely dependent on state of AK grant funding. 4. Technical Feasibility: The project employs utility industry standard technology for transmission lines which is deployed widely across the USA. The Fire Island wind farm is utilizing wind turbines of the same type which General Electric has sold and installed over 15,000 times in projects around the world. 5. Readiness for construction: The design of the Project is complete, the permits are in late stages of completion and the construction contractor should be selected within 30 days of the date of this grant. The Fire Island wind farm has already begun construction and site development activity. Pre -construction fieldwork necessary to maintain schedule for the transmission line will begin in late October 2011. Full scale construction will begin in February 2012 with long lead procurement beginning in December 2011. 6. Local Benefits: The cost benefit worksheet attached hereto describes in detail the significant local benefits related to avoided carbon emissions, Renewable Energy Certificates and avoided natural gas fuel purchases. 7. Local Support: The Project and the Fire Island wind farm are widely supported by the local public. Appendix 7 contains letters of support for the Fire Island wind farm. 8. Sustainability: The Project will be constructed in a way that utilizes environmentally sustainable practices in sensitive areas and in the undersea portion. The Fire Island wind farm has completed extensive environmental studies to ensure minimal impact to sensitive biological areas and threatened or endangered species. Long term revenue necessary for ongoing operation of the Project is secured via the 25 year power purchase agreement between the Fire Island wind farm and Chugach Electric. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System AEA12-001 Grant Application Page 9 of 17 7/1//2011 / an" ALASKA 4007) ENERGY AUTHORITY Renewable Energy Fund Grant Application Round 5 Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. Chugach's existing energy system includes gas fired plants at Beluga (7 units), Bernice Lake (3 units) and International (3 units) with a combined capacity of 500 MW. All of these thermal generation units are expected to be retired within the next ten years. Chugach is currently in the process of constructing the 183 MW Southcentral Power Project. Chugach owns 70% of this power plant, which is expected to be in service in 2013. Chugach also owns a hydro plant at Cooper Lake with a capacity of 19.2 MW and is a 30% owner of the 47 MW Eklutna hydro plant. Chugach purchases hydro energy from the state- owned Bradley Lake power plant with a 30% share of that 126 MW plant. The FIWP will be a new resource that helps diversify the existing system and will be the first non -hydro renewable energy to be incorporated into the existing power supply portfolio. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The bulk of Chugach's generation will continue to come from these thermal and hydro resources. The 51,000 MWh from the FIWP will not affect capacity needs but will provide about 4% of Chugach's annual retail electric requirements. This will allow the offset of approximately 315,000 Mcf of gas used for thermal generation. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The existing energy market for the Phase I FIWP output is Chugach's retail consumers. Chugach's retail load is approximately 1,170,000 MWh per year with a retail system peak of approximately 210 MW. FIWP will provide about 4% of Chugach's retail energy requirements. Electricity produced by future phases of the FIWP will be available for additional purchase by Chugach or for acquisition by other Railbelt utilities. The energy sold pursuant to the Chugach PPA is at a fixed price for the entire 25 year term. The long-term value of this renewable energy compared to other options available to Chugach is documented in the RCA Tariff Advice Letter 335-8 attached as Appendix 2. It is important for the transmission line Project described herein to be funded through grant proceeds, so that the ultimate cost of the electricity from the FIWP can remain affordable. 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 AEA12-001 Grant Application Page 10 of 17 7/1//2011 /iceALASKA Renewable Energy Fund ENERGYAUTHORITY Grant Application Round 5 • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The proposed project is a newly constructed 34.5 kV, 12.2 mile system that will allow the electric energy produced by the FIWP to be conveyed to the Chugach Electric system. It will consist of submarine, underground and overhead cable segments. A map the proposed transmission system is attached as Appendix 1. Each wind turbine will have its own generation step-up transformer that supplies 34.5 kV output to a cable collector system for routing to a common point (collector switchyard). The point of delivery and change of ownership of the electrical output will occur at the collector switchyard, located on Fire Island. The collector switchyard, through a series of isolation switches, is tied to the transmission system. The new transmission system will carry the FIWP energy to the mainland for delivery to Chugach's International substation. The expected capacity factor for the FIWP, which is interconnected via the transmission line Project described herein, is 32.8%. As mentioned elsewhere in this application, the transmission line (for Phase I of FIWP) will initially deliver about 51,000 MWh/year to Railbelt loads. When the FIWP is fully built out, the transmission line will deliver approximately 153,000 MWh/year. Chugach will regulate the generation from the FIWP via generation reserves inherent to the Cooper Lake Hydro project, the Southcentral Power Project, and other generators in the Chugach system. Chugach also retains the right to dispatch the wind farm as necessary to preserve system stability and reliability. 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 wind farm will be on lands owned by CIRI. The transmission line on Fire Island will be constructed pursuant to an agreement with the Federal Aviation Administration (FAA) on FAA property as well as on CIRI-owned lands. On the mainland, the transmission line will traverse both Municipality of Anchorage and Department of Transportation lands from Pt. Campbell through the airport and over to Chugach's International Substation. A portion of the project will be submarine cable laid on the floor of Cook Inlet. The Project has obtained the necessary permits for the submarine portion of the cable installation. The Project is in the final stages of securing the permits necessary to occupy the other lands described above. 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 The transmission line project will require and has obtained a Section 404 permit from the US Army Corps of Engineers (USACE), as well as various land use permits, rights of way along public roads and utility crossing agreements. The list of permits necessary for the Project is AEA12-001 Grant Application Page 11 of 17 7/1//2011 /ORITY � ALASAUTENERGYHKA Renewable Energy Fund Grant Application Round 5 Appendix 6 to this application. Permitting activity is ongoing at present and is in the final stages of completion. It is expected that all necessary permits, easements and rights of way will be obtained by November 2011. At this time, there are no known barriers that will prevent the securing of the Project permits. 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 Wind Farm Project has completed a Phase I and environmental assessment (EA) with a finding of no significant impacts. The USACE has completed, as the lead Agency, and issued a 404 Project Wide Permit which includes the entire transmission route. The Permit addresses species, habitat, wetlands, and archaeological issues associated with the overall project. The following Agencies contributed to the 404 Permit and/or required their own related permit. • US Army Corp of Engineers- 404 • US Fish & Wildlife Service- Avian and Eagle • FAA- Structure locations • AK Dept of Environment Conservation-401 • AK Dept of F&G-Wetland and ACWR • AK Dept of Natural resources- AK Coastal Management Review and Land Use Permit • AK Dept of Transportation No significant issues that will delay the Project have been identified as a result of the environmental investigations and permitting process. A copy of the EA report and the permits can be provided as requested. The transmission line will be constructed either underground (over 80% of the "Main Land" portion) or on 60 foot tall poles which are commonly deployed elsewhere in the community. CIT and Chugach will collaborate with local community leaders to minimize the impact of construction of the transmission line as reasonably possible. No aviation or telecommunications interference considerations will apply. The Project has agreed to comply with all FAA requirements relating to avoiding aviation interference. 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. AEA12-001 Grant Application Page 12 of 17 7/1//2011 ,GEL)ALASKA Renewable Energy Fund GW:) ENERGY AUTHORITY Grant Application Round 5 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 estimated cost of this project is $36.795 million, as reflected on the attached cost estimate, Appendix 4. The project is currently supported by a $25 million State of Alaska appropriation. Expenses to date have been borne by CIT and as of July 31, 2011 were approximately $900,000. This grant funding request is for $4.00 million to supplement the state appropriation and provide for the total estimated cost of the project. Additional funding for the Project will be provided by matching funds as necessary from other sources including private equity funding from Cook Inlet Transmission and its Affiliates. 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.) The projected O&M cost for the project is estimated at $22,000/year. Chugach will be responsible for O&M and cost recovery will be via electric rates. 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 For the wind farm that will interconnect via the transmission line Project, a "Phase P' PPA has been negotiated between FIW and Chugach and filed with the RCA for approval. A copy of the PPA is attached as Appendix 3. Future phases (build outs) of the wind faun are not expected to require expansion of the transmission line constructed pursuant to the original ($25 million) and this supplemental grant application. The transmission line is being constructed to accommodate possible future phases of wind. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. The Project Cost Benefit Worksheet is not applicable. Costs and benefits are in the context of a transmission line to deliver renewable wind energy from the FIWP. The FIWP will provide stable -priced renewable energy that will displace fossil fueled energy. Benefits include reduced AEA12-001 Grant Application Page 13 of 17 7/1//2011 OWL) KA Renewable Energy Fund Grant Application Round 5 fuel use, reduced carbon emissions, diversification of the generation mix, etc. These benefits are substantial. The transmission line is essential for these benefits to be realized and may facilitate subsequent phases of the wind project as well as a tidal energy project. More detail on the cost benefit analysis relating to the power from the FIWP is provided in the attached Tariff Advice Letter which is attached as Appendix 2. 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 (gal and $) 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 The primary benefit will be the delivery of renewable energy. The value of the wind energy was previously cited in response to Section 2.5 of this application. The transmission line facilitates the delivery of energy from a renewable project to the existing Railbelt grid. The Wind Farm will, during its first Phase of development, reduce natural gas demand by approximately 315,000 Mcf per year which would otherwise cost approximately $2.5 - $3 million annually. The transmission system is essential to get the energy to the market. When fully built out to its 52.8 MW capacity, the Wind Farm will reduce gas demand by approximately 900,000 to 1,000,000 MCF per year which would otherwise cost approximately $7.5 - $9.0 million annually. Chugach will own, operate and maintain the new transmission line. Electric rates to collect the revenue to recover the cost of the transmission line will be cost -based and subject to review and approval of the RCA. A rate of return (margin) will only be earned on utility provided capital, so if the line were 100% grant financed, no revenue other that necessary to recover operations and maintenance expenses would be collected. Chugach will also receive the green tags associated with all energy produced from the Wind Farm. The green tags could be monetized and result in additional revenue (net cost savings) for Railbelt electric customers. The construction of the transmission line facilitates the construction of the Wind Farm. The Wind Farm will qualify for a federal cash grant of almost $19 million which is being used to reduce the cost of the project. The construction of both the Wind Farm and the transmission line will generate economic benefits to the Anchorage area, provide local construction jobs as well as long term operations and maintenance jobs. The construction of the transmission line may also facilitate subsequent phases of development of the Wind Farm as well as other renewable energy projects such as the tidal project that is proposed off the west coast of Fire Island. SECTION 6— SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. AEA12-001 Grant Application Page 14 of 17 7/1//2011 ," ALASKA Renewable Energy Fund ® ENERGY AUTHORITY Grant Application Round 5 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 proposed transmission line is a very sustainable project. The PPA between Chugach and FIW? is for 25 years. Chugach will own and operate the transmission line and the cost of purchasing the FIWP energy output and operating and maintaining the transmission line will be included in Chugach's rates. The line will allow for expansion of the Wind Farm and provide a delivery means for other renewable energy developers that are able to access it. The Project will be financed by an already approved $25 million appropriation, as well as the funding requested herein. The owner of the FIWP will provide a financial "backstop" in the event actual costs of the Project exceed the grant proceeds available under the appropriation and this supplemental grant. 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. FIW is moving expeditiously with this project once it receives RCA approval. Construction at the FIW site has begun, and must resume immediately for CIRI to be eligible to receive an $18.7 million federal grant pursuant to the American Recovery and Reinvestment Act. Chugach has access to a $25 million appropriation from the State of Alaska for the transmission line. Applying these grants to the cost of the wind farm and the transmission line, respectively, greatly improves the economics of the project and makes it economic for Chugach to purchase the energy. Chugach requests that any funding sanctioned as a result of this grant application be administered pursuant to the existing terms of Grant No. 7910002. Permitting, environmental studies, cost analysis, competitive bids for construction and engineering, clearing and other pre -construction activities have been underway for many years. The project is shovel -ready and major construction efforts will be underway beginning in January 2012. 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. Local support for the FIWP is very strong. When the RCA publically noticed the proposed PPA between Chugach and FIW, 133 letters of support were received from the public vs. only 15 letters of opposition. Appendix 7 contains the letter of support received in this regard. AEA12-001 Grant Application Page 15 of 17 7/1//2011 ,GEEDALASKA Renewable Energy Fund Li ENERGY AUTHORIT Grant Application Round 5 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. Include an estimate of budget costs by milestones using the form — GrantBudgef5. doc Provide a narrative summary regarding funding sources and your financial commitment to the project. Chugach has prepared this grant application to help secure the supplemental funding to ensure completion of the FIWP, including the transmission system needed to get the project's output to Chugach's system for delivery to its retail customers. FIW has estimated the total cost for transmission at $36.795 million. A State grant of $25 million is available to offset this cost. The difference of $4.00 million is the amount of this grant application that Chugach is applying for in support of the FIWP. As of July 31, 2011, CIRI, through its wholly owned subsidiary CIT has expended $891,011 on permitting, engineering, geotechnical investigations, project management and other pre -construction activities necessary to complete the Project by September 2012. AEA12-001 Grant Application Page 16 of 17 7/1//2011 /� ALASAUTENERGYHKA Renewable Energy Fund Grant Application Round 5 SECTION 10 — ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Contact information, resumes of Applicant's Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4. Applicants are asked to separate resumes submitted with applications, if the individuals do not want their resumes posted. B. Cost Worksheet per application form Section 4.4.4. C. Grant Budget Form per application form Section 9. D. Letters demonstrating local support per application form Section 8. E. An electronic version of the entire application on CD per RFA Section 1.7. F. Authorized Signers Form. G. Governing Body Resolution or other formal action taken by the applicant's governing body or management per RFA Section 1.4 that: - Commits the organization to provide the matching resources for project at the match amounts indicated in the application. - Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. - Provides as point of contact to represent the applicant for purposes of this application. - Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. H. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations and that they can indeed commit the entity to these obligations. Print Name pj��U��' ` W, (;Vrryrys Signature Title r,' G I' CX L�l.. T I vli OFF (Ct::V Date l 6 1 AEA12-001 Grant Application Page 17 of 17 7/1//2011