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Signed Grant Application Stetson Round V
'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: htta://www.akener_qvauthority.org 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 16 7/1/2011 r ALASM Renewable Energy Fund Grant Application Round 5 SECTION 1 —APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Chugach Electric Association, Inc. Type of Entity: Fiscal Year End 12/31/11 Electric Utility (Cooperative) Tax ID # 92-0014224 Tax Status: —For-profit or tenon -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 ron_vecera@chugachelectric.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Title Ronald K. Vecera Director of Project Development Mailing Address P.O. Box 196300 Anchorage, Ak 99519-6300 Telephone Fax ail (097) 762-4769 (907) 7624191 [Ton_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 16 7/1//2011 rALASKA Renewable Energy Fund rD 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) Stetson Creek Diversion/Cooper Lake Dam Facilities 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 project is located at the Northern extent of the existing Cooper Lake Project, approximately 4.5 miles south of Cooper Landing, Alaska. The many communities in the service areas of Chugach and its wholesale consumers (Matanuska Electric, Homer Electric and the City of Seward) benefit from the hydroelectric energy output of the Cooper Lake facility. Kenai peninsula communities will benefit from improved fish habitat. 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) Reconnaissance X Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. As a condition of the Federal Energy Regulatory Commission (FERC) relicensing of the Cooper Lake plant in 2007, Chugach agreed to construct a project to divert water from Stetson Creek into the Cooper Lake reservoir and a related structure to release water into Cooper Creek. The project will enhance fish habitat and add water to Cooper Lake which will result in additional hydroelectric energy generation. Most importantly, constructing this project allows the license for the Cooper Lake hydro facility to be renewed for 50 years. AEA12-001 Grant Application Page 3 of 16 7/1//2011 rALASKA Renewable Energy Fund r) ENERGY AUTHORITY Grant Application Round 5 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.) This project needs to be completed to ensure that the Cooper Lake facility can continue to operate. This project is a condition of the Cooper Lake relicensing in 2007 and is required to know with certainty that Cooper Lake is licensed to operate for the additional 50 years granted by the new license. Certainty of ongoing Cooper Lake hydroelectric production is essential as the plant produces about 42,000 MWh per year, which offsets approximately 600,000 mcf of natural gas fired generation. The incremental hydro generation from additional water is estimated at 5,500 MWh per year. This offsets approximately 78,600 Mcfs of gas fired generation. Another benefit of the project is the enhancement of the fish habitat in Cooper Creek. See Section 5 of this grant application for elaboration on these benefits. The Kenai Peninsula economy will also benefit from the construction of the project as it will take approximately 2 years and will require several highly skilled craftsmen and construction workers. 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. The project is estimated to cost up to $23,900,000 in 2010 dollars. This is far in excess of the $12.74 million (also in 2010 dollars) that Chugach is required to spend to construct the project. Despite the significant increase in cost, Chugach has notified FERC that it intends to move forward with completion of the project. A letter to FERC (without attachments) provides this notification and is included with this grant application. To -date Chugach has spent approximately $1.5 million. An AEA Round IV renewable energy grant in the amount of $576,080 was received, which included $30,000 for feasibility and $546,080 for design and permitting. Chugach understands the AEA will grant up to $4 million combined for the design, permitting and construction phases. Thus, Chugach proposes funding the remainder of the project as follows: Total Project Amount $23,900,000 Less: Amount already spent by Chugach 1,500,000 Round IV AEA grant + Chugach match 1,152,160 Balance of funding required (total grant amount in Section 2.7) $21,247,840 Less: Design and Permitting grant in this application of $49,781 matched in the same amount by Chugach 99,562 Construction grant requested which, along with previous $546,080 grant and proposed $49,781 grant above, reaches maximum grant amount of $4 million 3,404,139 AEA12-001 Grant Application Page 4 of 16 7/1//2011 /ORITY � ALASAUTENERGYMKA Renewable Energy Fund Grant Application Round 5 Remaining balance to be funded by Chugach $17,744,139 In summary, the requested grant amount is $3,404,139 + $49,781 = $3,453,920. This amount, added to the $546,080 received for design and permitting in Round IV, equals the maximum amount of $4 million that can be requested. 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. $ 3,453,920 2.7.2 Other Funds to be provided (Project match) $17,793,920 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $21,247,840 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 $ 23,900,000 including estimates through construction) 2.7.5 Estimated Direct Financial Benefit (Savings) $136,423,100 2.7.6 Other Public Benefit (If you can calculate the benefit in $ Enhance fish habitat; terms of dollars please provide that number here and job benefit of two year explain how you calculated that number in your application construction project. (Section 5.) SECTION 3 — PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include contact information, a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. Chugach's project manager is Trey Acteson, Plant Manager for Peaking and Hydro Units. Key project management support will be provided by Peter Poray, Manager of Energy Services. The executive manager for this effort is Paul Risse, Sr. Vice President of Power Supply. Their professional bios are attached. Contact information for the primary contacts is as follows: Trey Acteson P.O. Box 196300 Anchorage, Ak 99519-6300 (907)762-4839 trey acteson@chugachelectric.com AEA12-001 Grant Application Page 5 of 16 7/1112011 /� ALASMKA Renewable Energy Fund Grant Application Round 5 Peter Poray P.O. Box 196300 Anchorage, Ak 99519-6300 (907)762-4788 peter porav(,chugachelectric.com 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. The proposed schedule is attached and the related grant amounts are summarized as follows: Item $ from AEA Match from CEA Schedule Final design & opinion of $ 49,781 $ 49,781 Complete 12/12 probable construction cost Construction bid documen- 49,781 58,801 Complete 3/13 tation package Construction vendor solici- 25,000 25,000 Complete 5/13 tation and award Construction to 6/30/13 805,000 805,000 5/13 — 6/30/13 Construction to completion 2,524,358 16,735,338 Complete 9/14 Commissioning/close-out 0 120,000 Complete 12/14 Totals $3,453,920 $17,793,920 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.) Schedule Milestone Completion Date Final design & opinion of 12/12 Probable construction cost Construction bid documentation package 3/13 Construction vendor solicitation & award 5/13 Construction of pipeline and diversion structures 9/14 Commissioning and close-out 12/14 AEA12-001 Grant Application Page 6 of 16 7/1//2011 /4OLALASKA Renewable Energy Fund MED 4MrD ENERGY AUTHORITY Grant Application Round 5 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. In addition to the key project management personnel identified earlier, an organizational chart of Chugach's extensive Power Supply Division is attached. Chugach has a great deal of experience in the construction, operation and maintenance of both thermal and hydroelectric generation projects. Key contractors supporting the effort include the engineering firms MWH Americas, Inc. (hereafter "MWH") and HDR Alaska, Inc. Both of these firms have extensive experience in Alaska. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Chugach will keep the AEA apprised of the project's status by preparing reports that conform to AEA's reporting requirements. 3.6 Project Risk Discuss potential problems and how you would address them. The three broad areas of risk are permitting, constructability and cost. Permitting: While there is a risk of not being able or being delayed in acquiring the necessary permits, this risk is mitigated by the ongoing positive relationship Chugach has with the permitting agencies as part of the relicensing process. Further, FERC relicensed the Cooper Lake project for 50 years and the numerous stakeholders involved in that process pledged support for the permits required for the diversion project. Constructability: This was addressed by the feasibility study, and consultation with FERC's dam safety representatives, which looked at construction options and found no reason to conclude the project could not be constructed. Additional detailed geotechnical and design investigations were completed during the summer of 2010 and this analysis will be the basis for a final design. Cost: There is the risk of the project cost exceeding the budget due to escalating costs for materials, equipment and man power as well as unexpected construction difficulties in a remote location due to weather, access or other conditions. This risk is being addressed by further analysis of design options and by budgeting for contingencies. AEA12-001 Grant Application Page 7 of 16 7/1//2011 /©ALASHKA Renewable Energy Fund Grant Application Round 5 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 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. The addition of water to Cooper Lake is expected to result in incremental hydro generation of 5,500 MWh per year. Additional water flow into Cooper Lake will allow this incremental energy to be generated by the two existing 9.6 MW hydro units at the Cooper Lake power plant. More fundamentally, this project is a condition of the FERC relicensing of the Cooper Lake plant, which will allow this plant to continue to produce an average of 47,500 MWh/year of renewable hydroelectric energy for another 50 years. 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. The existing Cooper Lake Project was commissioned in 1960 and consists of: • A 920 foot -long rock and fill dam that raises the elevation of Cooper Lake to a licensed maximum operating level of 1,210 feet mean sea level. • Cooper Lake, with a surface area of 2,910 acres. • An intake structure on the southeast shore of Cooper Lake; a 10,686 foot -long tunnel and penstock. • A powerhouse located on the southwest shore of Kenai Lake containing two turbine generators, each rated at 9.6 MW, which were repowered in 2000. • A 6.3 mile -long, 69 kV transmission line extending from the powerhouse to the Quartz Creek substation. • A step-up transformer at the Quartz Creek substation. • A 90.4 mile -long, 115 kV transmission line from the Quartz Creek substation to the Anchorage substation. AEA12-001 Grant Application Page 8 of 16 7/1//2011 /� ALASKA Renewable Energy Fund GONE) ENERGY AUTHORITY Grant Application Round 5 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 project would add diversion and bypass structures to the existing energy resources described above. The incremental energy production would be generated and delivered with the existing system. 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 includes Chugach's retail electric consumers and wholesale customers Matanuska Electric, Homer Electric and the Seward Electric System. The Cooper Lake units are part of the existing generation portfolio that Chugach uses to provide firm electric service to its retail and wholesale consumers. 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The proposed system includes diversion and bypass structures that will increase the energy output of the current renewable energy system (Cooper Lake hydro plant), described in detail at 4.2.1, by 5,500 MWh per year. 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 diversion project is located within the Chugach National Forest. The following federal agencies have all agreed to the project as part of the settlement agreement to relicense the Cooper Lake hydroelectric facility: • U. S. Department of Agriculture, Forest Service • U.S. Department of the Interior, Fish and Wildlife Service • U.S. Department of the Interior, National Park Service AEA12-001 Grant Application Page 9 of 16 7/1//2011 /� ALASAUTENERGYHKA Renewable Energy Fund Grant Application Round 5 • U.S. Department of Commerce, National Oceanic and Atmospheric Administration, National Marine Fisheries Service 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 expected to be required include: • U.S. Army Corps of Engineers 404 Permit • Alaska Department of Environmental Conservation 401 Water Quality Certification • U.S. Environmental Protection Agency Storm Water Pollution Discharge Elimination System Permit • Alaska Department of Fish and Game Fish Habitat Permit • Alaska Department of Natural Resources Water Rights • Alaska Department of Natural Resources Coastal Project Questionnaire • U.S. Forest Service Permits All permits can be pursued on a parallel path. The Corps 404 permitting process is likely the longest and most comprehensive effort, but the permitting periods are expected to take no more than 6 months from the time of application filing. Chugach has worked with all of the above agencies and does not anticipate any overwhelming barriers to securing the needed 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 There are a number of environmental, habitat, land use and cultural issues that have been addressed by the project and agreed to by interested parties as part of the relicensing of the Cooper Lake hydro project. In addition to the federal agencies listed in 4.3.2 above, other parties to the relicensing settlement agreement include: • Kenaitze Indian Tribe • Alaska Department of Fish and Game • Alaska Department of Natural Resources AEA12-001 Grant Application Page 10 of 16 7/1//2011 ORITY AH ENERGY Renewable Energy Fund Grant Application Round 5 • The Fish for Cooper Creek Coalition • Alaska Flyfishers Association • Alaska Center for the Environment 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 The most recent project cost estimate is up to $23.9 million. This is the high range of the Opinion of Probable Construction Cost developed by MWH in it Stetson Creek Diversion and Cooper Lake Dam Facilities Feasibility Report dated March 14, 2011. The key assumptions made in the development of the cost estimates included: • Costs are December 2010 dollars. • Escalation to the construction period has not been added. • All work will be performed by qualified and experienced construction contractors or major equipment suppliers. • All auxiliary equipment and systems are assumed to be supplied by general construction contractors. Project costs are summarized as follows: Design Engineering and Construction Management $ 3,200,000 Construction 17,700,000 Owner's Costs 3,000,000 Total $23,900,000 4.4.2 Project Operating and Maintenance Costs Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant. (Note: Operational costs are not eligible for grant funds however grantees are required to meet ongoing reporting requirements for the purpose of reporting impacts of projects on the communities they serve.) AEA12-001 Grant Application Page 11 of 16 7/1//2011 /ORITY � ALASAUTENERGYHKA Renewable Energy Fund Grant Application Round 5 O&M expenses are estimated at $130,000 to $190,000 per year. Labor will be required to operate the facilities, perform routine maintenance to ensure that the structures perform in accordance with design requirements and respond to malfunctions and system failures. There will also be an annual start-up and shutdown of the facility. In addition, a budget would be established for annual replacement of worn or broken equipment, surveying and dam inspections and stream gauging. O&M expenses will be included in Chugach's revenue requirement for generation and transmission service and recovered through rates approved by the Regulatory Commission of Alaska (RCA). 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: • Identification of potential power buyer(s)/customer(s) • Potential power purchase/sales price - at a minimum indicate a price range • Proposed rate of return from grant -funded project The incremental hydro power will be added to Chugach's available power supply and sold to existing consumers (including wholesale customers) at tariff rates. As of August 2011, Chugach's rates include about 6.4 cents/kWh for generation costs. Chugach's rates are regulated by the RCA. Chugach's rates are designed to earn an annual margin from generation and transmission sales that is equal to 10% of the annual long-term interest expense for generation and transmission debt. Any margin (return) Chugach earns from this grant -funded project will be due to additional long-term interest expense associated with debt financing of the project. Chugach will not earn a return on any portion of the project cost paid for with a grant. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. The project cost worksheet is attached. The estimated cost of the project is $23.9 million. To measure financial benefits, Chugach's production costing model calculated how much additional hydro energy of 5,500 MWh/year reduces gas use. The reduction in gas use is approximately 78,500 mcf/year. Using a gas cost of $7.53/mcf, with an escalation rate of 2.5%/year, the net present value (NPV) of the reduced gas usage is approximately $16 million through 2057, the year through which the license has been extended. While the incremental hydro energy is small, the Stetson Creek project is required for the new 50 year license for the Cooper Lake Plant. The NPV of reduced gas use from the continued production of 42,000 MWh from Cooper Lake is in excess of $120 million, based on avoided gas use of 600,000 mcf/year, and measuring through the expiration of the new license in 2057. A summary of the value of the hydroelectric production from the Stetson Creek diversion project and the existing Cooper Lake plant is attached to the Project Cost Worksheet. AEA12-001 Grant Application Page 12 of 16 711H2011 /© ALASKA Renewable Energy Fund ® ENERGY AUTHORITY Grant Application Round 5 SECTION 5— PROJECT BENEFIT Explain the economic and public benefr'ts 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 total NPV of the fuel related benefit of the Cooper Lake project and the incremental hydro production from Stetson Creek is estimated at $136.4 million through 2057. This is based on Chugach's production costing model which calculated the reduced fuel use that is possible because of the hydro energy. Further, while a value has not been calculated, there is also the benefit of reduced carbon emissions. Revenue recovery of project costs will be through cost -based rates reviewed and approved by the RCA. The primary non -energy related benefit is the enhancement of fish habitat by increasing water temperatures in Cooper Creek, which extends from the Project Dam at Cooper Lake to the Kenai River. The portion of the creek upstream of the confluence with Stetson Creek (the main tributary to Cooper Creek) currently has minimal flow, due to the diversion of all lake outflows through the powerhouse. Studies have shown that currently lower water temperatures in Cooper Creek are a likely limiting factor to the establishment and/or maintenance of salmon or trout populations in the creek. Fish habitat will be significantly improved by diverting colder water from Stetson Creek into Cooper Lake and releasing warmer flows from near the surface of Cooper Lake into upper Cooper Creek. The proposed releases from Cooper Lake will accomplish two main objectives: 1) restoring flows in Cooper Creek upstream of Stetson Creek and 2) increasing stream temperatures into a range more beneficial for salmon and trout spawning and incubation, by exchanging input of Stetson Creek's cold water for input of Cooper Lake's warmer water to Cooper Creek. The fish species most likely to benefit from Cooper Creek flow and temperature changes include Chinook, Cohn, Sockeye and Pink Salmon, and rainbow trout. The enhance habitat could restore significant spawning use of the creek up to the barrier falls by salmon. Increased temperatures will result in significantly earlier fry emergence, thereby increasing fry survival and potentially increasing the number of returning adults. Wildlife will benefit from increased numbers of salmon in Cooper Creek. In addition to the above, the project will provide the economic benefit of construction jobs for a period of approximately two years. AEA12-001 Grant Application Page 13 of 16 7/1//2011 ,C ALASKA Renewable Energy Fund ME= ENERGY AUTHORITY Grant Application Round 5 SECTION 8— 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 This is a very sustainable project as the structures constructed as a result of this project are expected to be used as long as the Cooper Lake power plant remains in operation. The plant is currently licensed through 2057 and the life of the generation units, with maintenance and occasional repowering, is expected to last through the duration of the license. This project will be part of the overall Cooper Lake facility, which is an integral part of Chugach's power supply portfolio. It will be operated and maintained as any system generating asset would be and costs associated with the project will be recovered through existing ratemaking methods. Chugach does not anticipate any ongoing operational or financial issues associated with this project. Chugach will commit to reporting savings and benefits, as required by the AEA. 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. Chugach has already expended approximately $1.5 million on a variety of feasibility related studies and tasks including identifying land and regulatory issues, permitting and environmental analysis, assessment of alternatives, conceptual design analysis and cost estimates, detailed economic and financial analysis, a final feasibility report and a final site investigation plan and all final design field work. A Round IV AEA renewable energy grant in the amount of $576,080 was recently received. It will supplement funds Chugach is providing for engineering services to complete design and permitting. 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. AEA12-001 Grant Application Page 14 of 16 7/1//2011 ALASKA Renewable Energy Fund /4MU ENERGY AUTHORITY Grant Application Round 5 This project was part of the FERC relicensing settlement agreement signed by the following governmental and non -governmental agencies: U.S. Department of Agriculture, Forest Service, Alaska Region U.S. Department of Interior, Fish and Wildlife Service U.S. Department of Commerce, National Marine Fisheries Service U.S. Department of Interior, National Park Service State of Alaska, Department of Natural Resources State of Alaska, Department of Fish and Game Kenaitze Indian Tribe Alaska Center for the Environment Fish for Cooper Creek Coalition, and Alaska Fly Fishers Letters of support have also been received from: Fish for Cooper Creek Coalition; and Alaska Fly Fishers 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 — GrantBudget5.doc Provide a narrative summary regarding funding sources and your financial commitment to the project. Chugach is requesting $3,453,920 in grant funds. Chugach recently received a Round IV grant of $576,080. To date, Chugach has spent $1.5 million of its funds on this project. AEA grant funds, along with matching Chugach contributions, will allow the project to proceed while additional financing and grant funding sources are pursued to finish the project, which has a total cost estimated at $23.9 million. Grant budget forms are attached which present the expected costs by milestone for each phase of the project for which work will be performed during the period from 7/1/12 through project completion in 2014. AEA12-001 Grant Application Page 15 of 16 7/1//2011 �&' ALASHKA 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 (3k ` ALE 1 IA/ , EVA N.' Signature Title C Date AEA12-001 Grant Application Page 16 of 16 7/1//2011