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HomeMy WebLinkAboutTerror Lake Unit 3 - AEA RE Fund - Round IV Grant Applicatio   Alaska Energy Authority  Renewable Energy Fund Round IV            Terror Lake Unit 3 Hydroelectric Project  Grant Application                Kodiak Electric Association, Inc.  PO Box 787 Kodiak, AK  99615  www.kodiakelectric.com  Renewable Energy Fund Round IV Grant Application AEA 11-005 Application Page 1 of 24 7/21/2010 SECTION 1 – APPLICANT INFORMATION Name: Kodiak Electric Association, Inc.   (KEA) Type of Entity: Member owned not‐for‐profit rural electric cooperative providing generation, transmission and  distribution services to the residents of Kodiak Island. Mailing Address PO Box 787  Kodiak, AK  99615 Physical Address 515 East Marine Way  Kodiak AK  99615 Telephone (907) 486‐7700 Fax (907) 486‐7720 Email dscott@kodiak.coop 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Darron Scott Title President/CEO Mailing Address PO Box 787  Kodiak, AK  99615 Telephone (907) 486‐7707 Fax (907) 486‐7720 Email dscott@kodiak.coop 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. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 2 of 24 7/21/2010 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)   Terror Lake Unit 3 Hydroelectric 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.   Kodiak Electric Association’s (KEA’s) Terror Lake Hydroelectric Facility is located on Kodiak Island,  approximately 25 miles southwest of the City of Kodiak.  Portions of the facility are located within the  Kodiak National Wildlife Refuge; project features affected by this proposed construction project are  located outside the boundary of the Refuge.    Terror Lake is the primary generation source for the community of Kodiak.  KEA’s service territory  includes approximately 5,800 meters in and surrounding the City of Kodiak, the U.S. Coast Guard  Support Center, Chiniak, Pasagshak and Port Lions.    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 Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Terror Lake Unit 3 Hydroelectric Project proposes to install a third hydro turbine capable of  producing an additional 10 megawatts (MW) in the existing Terror Lake plant.  The original engineers  of the Terror Lake facility had the foresight to design the facility for the expansion to three turbines.   The original design assumed the day would arrive when additional capacity would be required.  That  day has arrived.  Kodiak’s growing electrical demand has surpassed the current capacity of Terror  Lake.  Expanding the capacity at Terror Lake by 10 MW with a third turbine generator will enhance the  stability of KEA’s isolated grid system allowing additional forms of renewable energy to be integrated  and Kodiak’s dependence on diesel fuel to be minimized. The third turbine at Terror Lake is the  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 3 of 24 7/21/2010   cornerstone necessary for KEA to achieve its’ Vision Statement:  Endeavor to produce 95% of energy  sales with cost effective renewable power solutions by the year 2020.  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.)  As KEA strives to implement more renewable resources, the future must include a generation source  that increases our capacity and system stability.  Hydropower is a unique form of renewable energy in  that it is dispatchable base load that can respond quickly to system demand.  It is this key attribute of  hydropower that would allow KEA to integrate more variable sources of renewable energy onto its  isolated grid.      The Terror Lake reservoir acts like a battery for KEA’s Pillar Mountain Wind Project, as well as future  renewable energy projects.  An energy storage system is necessary for the variability of wind energy.   The reliability of wind energy on a minute‐to‐minute basis is uncertain because winds could be gusting  one minute and then suddenly calm.  This unpredictability requires KEA to have sufficient capacity  available to meet load requirements.  Currently, diesel generation is utilized to meet increased load  demand, which is neither economical nor environmentally friendly.     To demonstrate the need for additional hydroelectric capacity and its impact on the integration of  future renewable energy sources, the table below compares the dispatching sequence for KEA’s  generating sources to meet a 21 MW load with two versus three hydro turbines at Terror Lake.  The  example assumes the Pillar Mountain Wind Farm is supplying 3.0 MW of wind energy to the grid.  A  two‐turbine configuration at Terror Lake is only able to provide 20 MW of capacity, while a three‐ turbine configuration at Terror Lake would be able to provide 30 MW of capacity.    Generating Source Two Turbines   at Terror Lake  Three Turbines   at Terror Lake  Wind Power 3.0 MW 3.0 MW  Diesel Power 3.5 MW (Offline)  Hydro Power 14.5 MW 18.0 MW  Total Power 21 MW 21 MW    With only 20 MW of hydropower capacity, a 21 MW load on the KEA system would require 3.5 MW  diesel generation, despite the contribution of Pillar Mountain’s wind energy.  Even though the load  could be supplied with 100% renewable power, a diesel generator would be required for backup  capacity to the variable wind energy.  If the winds were to diminish and no wind energy was supplied  to the grid, Terror Lake would not be able to supply the full 21 MW of load.  This requires a diesel  engine to be running and ready to supply that load at any given moment.  Given the operational  efficiencies of a diesel engine, it would not be practical to run the diesel generator at a limited 1 MW  load to maximize hydropower’s potential capacity.  Running a diesel generator at 3.5 MW is the most  efficient dispatching sequence for these conditions; yet it is far from being the most efficient for  utilizing Kodiak’s renewable resources.  The limited generating capacity of a two‐turbine configuration  at Terror Lake led to KEA’s summer 2010 situation where the Terror Lake reservoir was spilling water  while diesel engines were running.      Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 4 of 24 7/21/2010   Due to grid stability under KEA’s current configuration, the contribution of renewable energy  resources has reached its maximum.  An additional 10 MW of hydro power provided by a third turbine  would supply the necessary capacity and enhanced frequency stability to support additional sources  of variable renewable power.  Thus, Terror Lake is the cornerstone for additional renewable energy.   Without the expanded hydro capacity, the addition of future renewable energy on KEA’s system will  not be feasible.    The expanded capacity from the third turbine would also cover peak loads.  Over the past decade,  peak loads on the system have averaged 24 MW.  Diesel generation is currently required for these  periods of high demand and the need for diesel powered supplemental capacity will continue to grow  into the future as peak loads increase.  Increasing Terror Lake’s capacity to 30 MW would mitigate the  use of diesel fuel by maximizing the use of wind power and covering the remaining peak loads with  hydropower.  (Refer to Exhibit K Excerpt from Power Generation Study for additional information.)        A third turbine would also provide backup capacity at Terror Lake when the two existing generating  units are offline for maintenance or repairs.  The two existing turbines at Terror Lake are 1984 model  generators.  The amount of outage time required for annual and quarterly maintenance on these  turbine generator units can be up to four weeks.  Losing 10 MW of power from offline turbine  generators during maintenance requires KEA to run diesel generators continuously to meet system  demand, requiring approximately 430,410 gallons of diesel fuel annually.  In addition to normal  maintenance, it should be noted that in 2015 an extensive outage will be necessary for Terror Lake’s  two generators’ re‐wind process.  This process can last up to three months per unit.  Based on these  same operating assumptions, a three month outage for one Terror Lake turbine generator would  require approximately 1,300,000 gallons of diesel fuel to cover the systems loads.      If the Terror Lake hydroelectric powerhouse contained a third turbine generator, the facility would be  able to continuously produce 20 MW of hydropower while one unit was offline.  This redundancy in  generating capacity would reduce the need to run diesel generation during the necessary hydro plant  maintenance events.     As the two existing turbines continue to age, they will likely require more extensive maintenance.  A  modern third turbine will be more reliable and will not require as much outage time as the 26‐year  old units.  By providing significant cost savings during the maintenance outages through the offset of  diesel backup, a new unit changes the cost‐benefit risk associated with taking the current turbines  offline for repair.      The enhanced stability to KEA’s grid resulting from additional hydro capacity also delays additional  distribution infrastructure costs. The two turbines at Terror Lake cannot tolerate more than  approximately 3 MW of instability on the grid without tripping.  This imposes a 3 MW limit on the  system’s distribution feeders.  Taking future projections of load growth into account, there will be five  feeders on the KEA system that will likely exceed this 3 MW limit.   Without a third turbine at Terror  Lake, the overloading problem on these five feeders will need to be resolved, potentially by building a  new 10 megavolt‐ampere (MVA) substation and reconfiguring the distribution system through a series  of switches that move loads to different feeders.  Expanding Terror Lake’s capacity by 10 MW would  potentially raise the limit on the system distribution feeders to 4.5 MW, and therefore postpone the  impact of load growth on the distribution system by allowing more capacity on the existing  distribution lines.  (Refer to Exhibit L Excerpt from Long Range Plan for additional information).          Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 5 of 24 7/21/2010   KEA’s integrated wind‐hydro generation system is a unique renewable energy solution for the many  communities of Alaska powered by hydroelectricity.  The lessons learned on this project will provide  valuable information for other Alaskan utilities to use as a model for similar projects so that they too  can maximize their renewable resources and work toward the State Energy Pathway Toward Energy  Independence.   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 total cost of installing the third turbine generator in Terror Lake’s powerhouse is estimated at  $15,907,950.  Fortunately, the original engineers of Terror Lake had the foresight to design the facility  for the expansion to three units.  The powerhouse contains an empty bay for the third turbine  generator unit and the power tunnel, penstock, and tailrace are large enough to accommodate a flow  corresponding to 30 MW of capacity without modification.  The original design assumed that the day  would arrive when additional capacity would be required.  The drawings and photographs of the  facility (attached as Exhibit C) show the available space and infrastructure for the third turbine  generator.      KEA applied for and was allocated $500,000 in matching grant funds from the Alaska Energy Authority  Renewable Energy Fund Round II to complete the initial feasibility analysis, engineering and  regulatory assessment, and Federal Energy Regulatory Commission (FERC) Licensing Amendment  phases of the project (AEA Grant Agreement #2195460).  KEA also applied for and was allocated  $248,160 in matching grant funds from the Alaska Energy Authority Renewable Energy Fund Round III  to complete the final engineering design and contractor bidding documents (AEA Grant Agreement  #7030011).  Based on the studies conducted to date the feasibility and constructability of the third  unit is a recommended action.   The feasibility report completed by Hatch Acres Corporation (Hatch)  indicates no fatal flaws are associated with the installation of the third turbine.  (Refer to Exhibit E  Third Unit Addition Feasibility Analysis, Engineering and Regulatory Assessment.)        This grant application is for the construction phase of this project.  Devine Tarbell Associates provided  KEA a preliminary design and construction cost estimate for installing the third turbine, attached as  Exhibit F.  Section 4.4.1 Project Development Cost includes a table that itemizes all the costs  associated to complete the Terror Lake Unit 3 Hydroelectric Project.      The KEA Board of Directors is aware of the total cost estimate for the third turbine installation project,  and has expressed their formal endorsement of the project through Resolution 662‐10 Authorization  for President/CEO to Represent KEA and Apply for a Renewable Energy Fund Round IV Grant though  the Alaska Energy Authority, dated August 26, 2010, attached as  Exhibit B.    Grant support for the construction phases of this project will help offset the cost borne by the KEA  membership.  KEA has also been allocated a New Clean Renewable Energy Bond (NCREB) by the  Internal Revenue Service (IRS) for this project.            Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 6 of 24 7/21/2010 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. $ 7,000,000 2.7.2 Other Funds to be provided (Project match) $ 7,459,790 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 14,459,790 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 including estimates through construction) $ 15,907,950 2.7.5 Estimated Direct Financial Benefit (Savings) $ 76,716,446 2.7.6 Other Public Benefit (If you can calculate the benefit in terms of dollars please provide that number here and explain how you calculated that number in your application (Section 5.) $ 2,067,690 (annually) $103,384,500 (50 year life of project) 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.   Darron Scott, President/CEO  Darron Scott is the President and Chief Executive Officer (CEO) of KEA.  Darron earned his bachelor’s  degree in Mechanical Engineering from Texas A&M in 1990, and began his career in 1987 as an  electrical cooperative engineer at Ingersoll‐Rand Pump Group of Texas.  He worked his way up  through the ranks and was promoted to production superintendent at Texas Utilities/TU Electric, a  steam production plant in Monahans, Texas.  After nine years with Texas Utilities, Darron and his wife  Carol looked north to Alaska, and Darron was chosen by the KEA Board of Directors to oversee KEA’s  employees and stand‐alone generation, transmission and distribution electrical grid.  Darron was on  board for a year before the State of Alaska divested the Four Dam Pool projects to the communities  they serve.  He served as a Director on the Joint Action Agency governing body for these four  hydroelectric projects, and was a driving force in accomplishing KEA’s long‐term goal of purchasing  the Terror Lake Hydroelectric Project that generates the majority of our cooperative’s power, with  ownership finalized in February of 2009.  In 2007, Darron was instrumental in creating KEA’s vision  statement:  KEA shall endeavor to produce 95% of energy sales with cost effective renewable power  solutions by the year 2020, and in bringing this vision statement to fruition by planning, developing,  and building a state of the art wind farm in Kodiak, which began operating in July of 2009.  Darron has  been KEA’s President/CEO for the past ten years and has been recognized as a leader by the Alaskan  utility industry with the Alaska’s Top 40 under 40 Award by the Anchorage Chamber of Commerce,  the Director’s Corporate Stewardship Award by the U.S. Fish and Wildlife Service, and the 2010  Mason Lazelle Achievement Award by the Alaska Power Association.      Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 7 of 24 7/21/2010   Alice Job, Manager of Finance and Administration  Alice Job is the Manager of Finance and Administration for KEA, a position she has held for over seven  years.  Alice and her husband Mark relocated to Kodiak in 2003 from Black Hills Electric Cooperative in  Custer, South Dakota, where she was the Manager of Office Services.  Her background includes 26  years of experience with rural electric cooperatives, numerous NRECA and USDA financial courses,  and a bachelor’s degree in Business Administration from the University of Alaska Southeast.  Her  comprehensive knowledge of accounting, financial planning, risk management, internal auditing,  procurement, and resource allocation, as well as extensive governmental and financial institution  compliance, has firmly established her proven track record in maximizing the effective and efficient  utilization of financial resources.  Alice is firmly committed to the cooperative philosophy, and she has  developed and maintains outstanding relationships with CFC, RUS, NISC, and other electric industry  affiliations.    Bob Coates, Manager of Operations and Engineering  Bob Coates is the Manager of Operations and Engineering for KEA, a position he has held for three  years.  He and his wife Teresa relocated to Kodiak from Prineville, Oregon, where he was the  Operations Manager for Pacific Power.  Bob “grew up” in substations, and brought 36 years of  experience managing electric utility systems to KEA, including his previous positions as the Account  Executive/Principle Consultant for Computer Sciences Corporation, Senior Director for Enron Energy  Services, Vice President of Technical Services for Si3, and Project Manager of Special Projects for  Portland General Electric.  Bob’s exemplary focus on safety embraces all facets of utility work and is  an outstanding complement to his expertise in technical areas, including the line department,  substation construction and maintenance, switching operations, revenue metering systems,  automatic meter reading systems, fixed network communication systems, and customer service  projects.      Jennifer Richcreek, Environmental Coordinator  Jennifer Richcreek is the Environmental Coordinator for KEA, a position she has held for two years.   She earned a bachelor’s degree in Earth Sciences from Johns Hopkins University in 2000 and a  master’s degree in Environmental Soil Science from Oregon State University in 2005.  Her background  also includes fisheries resource management as the Assistant Field Operations Officer aboard the  NOAA research trawl ship Miller Freeman, and as a Fisheries Analyst with Alaska Groundfish Data  Bank, Inc.  As KEA’s Environmental Coordinator, Jennifer is responsible for administering utility‐wide  compliance with all federal, state, and local environmental and safety regulatory requirements  including air emissions, hazardous material handling, waste management, land and water use  permitting, and hydropower dam safety.  Jennifer is a contributing member of local environmental  associations including Sustainable Kodiak, Envirothon, and the Kodiak Island Environmental  Workgroup.  She serves as the Vice Chairman of Alaska Power Association’s Environmental  Regulations Committee, and sits on the Alaska Chapter Board of the Air and Waste Management  Association.  Jennifer is dedicated to the advancement of KEA’s culture of safety and environmental  stewardship.      All KEA employees can be reached at (907) 486‐7700.  Section 1 Applicant Information contains  additional contact information.      KEA does not expect project management assistance from AEA or another government entity.    Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 8 of 24 7/21/2010 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.) Terror Lake Unit 3 Hydroelectric Project Construction Phase (Round IV Grant Application) Completion Date  Equipment Procurement June 2012  Construction Specification Bid Award December 2012  Acceptance of Equipment Delivery On‐Site May 2013  Equipment Installation July 2013  Commissioning and Testing August 2013  A detailed project schedule for the entire Terror Lake Unit 3 Hydroelectric Project is attached as  Exhibit H.  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.)   Milestone #1:  Equipment Procurement  This phase of the construction project includes the review of the vendor responses to KEA’s  equipment Requests for Proposal (RFP).   The selection and purchase of the most appropriate  equipment will be based on an engineering and economic analysis.  It is anticipated that this  milestone will be completed in June 2012.    Milestone #2:  Construction Specification Bid Award  This phase of the construction project includes the review of the contractor responses to  KEA’s installation and construction RFP.  The most appropriate contractors will be selected to  install the Unit 3 turbine generator, transformer and all associated electrical equipment.  This  portion of the project is scheduled for completion in December 2012.    Milestone #3:  Acceptance of Equipment Delivery On‐Site   In preparation for construction, mobilization of the various equipment components and  construction materials to the project site will occur in multiple barge shipments to the  Kizhuyak Bay jetty beginning in early 2013.  The equipment and materials will be staged at the  Terror Lake staging area or within the powerhouse as appropriate.  This portion of the project  is scheduled for completion in May 2013.    Milestone #4:  Equipment Installation   The construction and installation of the Unit 3 turbine generator, transformer, and associated  electrical equipment is excepted to take approximately six months and will occur as  equipment and materials arrive at the project site.   The completion date is anticipated to be  July 2013.      Milestone #5:  Commissioning and Testing  In August 2013 the final test and commissioning of all equipment will be completed.  Once all  equipment passes the testing process the third turbine will be released for operation.  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 9 of 24 7/21/2010 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. Hatch Acres Corporation (Hatch) is providing KEA with consulting services for the feasibility analysis  and regulatory aspects of the project.  KEA does not have any partnerships or commitment with any  entities to complete the construction phase of this project.  When selecting consulting services,  contractors and equipment vendors, KEA will emphasize the use of local contractors whenever  possible.     3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. To monitor the project’s budget, a project accounting system will assign tracking numbers to the costs  associated with each component of the project.  As the project manager, Darron Scott will provide  milestone reports to the Engineering and Technology Committee of the KEA Board of Directors.  KEA  will provide updates to their membership through the KEA website (www.kodiakelectric.com) and the  monthly KEA NewsLine newsletter.     KEA will follow all provisions outlined by AEA in the Renewable Energy Fund Grant Agreement and  provide quarterly updates on the project’s status.  3.6 Project Risk Discuss potential problems and how you would address them.   Many of the project risks have been investigated by Hatch in both an initial Feasibility Analysis  (attached as Exhibit E), and an in a more in‐depth Engineering and Regulatory Assessment report  currently under development.  No fatal flaws were identified associated with the installation of the  third unit.  On a scale of 1 to 10, with 10 being the most difficult, the potential difficulty of pursuing  the FERC license amendment for the third turbine is rated by Hatch as a 1.      The location of the Terror Lake reservoir within the Kodiak National Wildlife Refuge generates  interest from the public regarding multiple uses of the land and the project’s impact on wildlife.  An  in‐depth regulatory analysis conducted in the preparation of the FERC Licensing Amendment and  agency consultation process has confirmed there are no major issues regarding the FERC Licensing  Amendment process or related permitting approvals associated with installation and operation of the  third turbine.  The proposed construction activity does not involve modification to the licensed  project boundary or any changes to the lake level or storage capacity, conveyances, tailrace, or the  existing 138 kV transmission line.  This proposed construction will not involve any new ground‐ disturbing activity.  There will be no construction “in the wet” and the operation of the third turbine  generator will not affect the water quality in the tailrace or Kizhuyak River.  The proposed  construction activities are not anticipated to disturb normal activities of wildlife or thier use of  habitat.  Any additional flow to the tailrace with all three hydro turbines running is not anticipated to  affect salmon spawning and rearing.  Based upon these findings, no major requests for field studies  from the resource agencies are expected.        Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 10 of 24 7/21/2010   KEA continues to work diligently with all interested parties to ensure that the public’s interest in this  unique environment is protected.  In accordance with the FERC License Amendment process, KEA will  consult with the appropriate resource agencies, native tribes, and members of the public to  communicate the significant environmental benefits of the Terror Lake Unit 3 Hydroelectric Project in  terms of its contribution to KEA’s renewable energy vision and the goals of the Alaska Energy  Pathway Toward Energy Independence.      From an engineering perspective, it has been determined that the powerhouse can accommodate a  third unit with slight variations in turbine dimension.  The new model Pelton turbines have slight  variations in dimension, but offer increased efficiencies as compared to the 1980’s design of the  existing two turbines.  Minor changes within the control room will be necessary, and the Supervisory  Control and Data Acquisition (SCADA) equipment and protective relays will need to be upgraded.  As  anticipated, it is recommended that KEA install additional circuit switches to the 138 kV generators’  step‐up transformers to allow for rapid isolation.      Extreme caution will be required during construction activities to avoid disrupting the operation of  the other two turbines.  Minimal disruption to Terror Lake operations is essential.  Terror Lake is  KEA’s primary generation source and an excessive outage during construction would require  extensive usage of costly diesel‐powered generation.  Outage management will be an important  factor for KEA to consider when scheduling the turbine installation.      From a power distribution perspective, KEA is exposed to a risk in system reliability due to having a  single transformer for the power supplied by Terror Lake to town.  This choke point is a 25‐year old 20  MVA, 138/67 kV transformer located at Swampy Acres Substation.  This transformer operates well,  but it provides the only point where power can be moved from Terror Lake to town.  KEA is already  moving forward with a solution by installing a redundant transformer at the Airport Substation that  will operate in parallel with the existing transformer.  This new transformer will be large enough to  handle the 30 MW of power from a three‐turbine Terror Lake system.     Expanding Terror Lake’s capacity by 10 MW would significantly improve KEA’s system‐wide  distribution infrastructure by increasing transient stability, regulating system frequency, and  preventing load shed and trip events.  The enhancement to KEA’s isolated grid, as provided by the  third turbine, supports the variable wind energy supplied by the Pillar Mountain Wind Project and  allows for future integration of additional renewable sources of energy, such as Phase II of Pillar  Mountain Wind Project or potential tidal or wave energy.  (Refer to Exhibit M Excerpt from EPS Grid  Stability Analysis for additional information.)                                Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 11 of 24 7/21/2010 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. Terror Lake is the cornerstone to KEA’s renewable wind‐hydro energy generation system.  The lake  acts like a battery to store energy generated by the Pillar Mountain Wind Farm.  When winds are  plentiful, water can be conserved within the lake reservoir.  When winds diminish, the hydropower’s  capacity can be dispatched to generate the power necessary without the use of diesel generation.   Hydropower is a unique form of renewable energy in that it is dispatchable base load that can respond  quickly to changes in system demand.  The current capacity at Terror Lake has been surpassed by the  growing load demand.  Without increased hydropower capacity, the synergistic relationship of more  wind and water as described cannot be fully realized.      A solution to this limit on renewable energy integration would be to expand the capacity of Terror  Lake by 10 MW.  An expanded hydroelectric facility would provide ample backup capacity to develop  additional renewable energy resources.  The Terror Lake powerhouse currently contains two turbine  generator units with space and provisions available for the installation of a third unit.      Diesel generation is also able to provide additional capacity for renewable energy resources; however,  use of diesel generation is counterproductive to KEA’s efforts to expand its use of renewable sources  of energy.  Diesel generation is still relied upon because, like hydropower, it provides dispatchable  base load that can respond quickly to system demand.  KEA is striving to reduce the use of diesel  generation because of its high cost, both financially and environmentally.      Another capacity alternative is a battery bank.  Conceptually, a battery bank should also be able to  store excess wind energy and respond quickly to changes in wind energy output according to system  demand.  The disadvantage to a battery bank is that it can only provide supplemental load for a  relatively short period of time.  While hydropower can be dispatched over many months, a battery  bank can only be dispatched for hours.  KEA is researching how a battery bank can compliment a third  turbine at Terror Lake to determine the most optimum renewable energy/grid stability mix.  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. KEA operates an isolated electrical grid system. The main power source comes from the two  hydroelectric turbine generators at Terror Lake.  KEA also operates and maintains four independent   Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 12 of 24 7/21/2010   diesel generation facilities (Kodiak Generating Station, Nyman Power Plant, Swampy Acres Plant and  Port Lions) which are a mixture of diesel reciprocating engines and a diesel‐fired combined cycle  generation unit. KEA brought 4.5 MW of wind on line in July of 2009 with the completion of the Pillar  Mountain Wind Project.     The table below details KEA’s generation resources.   The capacity numbers listed are high‐end  nominal values for the machines.  This is a point where the machines can be operated on a high end  for a period of time, but does not reflect total potential due to the detrimental effects of full load  operations on diesel engines.  Note that the efficiencies are for the load points mentioned at ideal  conditions.                                                                          KEA carries a large amount of generation capacity as an emergency precaution to operate the isolated  system in case the two turbines at Terror Lake are unavailable.  The additional capacity provided by  the Pillar Mountain Wind and the third turbine at Terror Lake are both generation projects designed to   mitigate the use of diesel generation.  KEA Energy  Generation Efficiency Unit Installation  Date Capacity   12.2 kWh/gal DeLaval DSRS‐12‐3 1976 1.80 MW   15.6 kWh/gal Caterpillar 3616 2005 5.00 MW   15.6 kWh/gal Caterpillar 3616 2005 5.00 MW   14.4 kWh/gal DeLaval DSRS‐16‐4 1980 5.80 MW  Kodiak  Generating Station Total  17.60 MW  13.8  kWh/gal DeLaval DSR ‐48 1978 2.50 MW  14.2 kWh/gal Solar Taurus 60‐T7301S, SoLoNOx 1999 6.50 MW  Nyman Power Plant  Total  9.00 MW  10.5 kWh/gal Fairbanks  Morse  38TD‐8 1/8 1968 1.50 MW  10.5 kWh/gal Fairbanks  Morse  38TD‐8 1/8 1968 1.50 MW  13.2 kWh/gal Caterpillar 3516B 2002 1.80 MW   13.2 kWh/gal Caterpillar 3516B 2002 1.80 MW Swampy  Acres Plant Total 6.60 MW  Fuji VT1R6N  Turbine  with Mitsubishi Generator 1984 10.0 MW  Fuji VT1R6N  Turbine  with Mitsubishi Generator 1984 10.0 MW  Terror Lake  Hydroelectric  Facility Total 20.00 MW  GE 1.5sle Wind Turbine  2009 1.5 MW   GE 1.5sle Wind Turbine   2009 1.5 MW   GE 1.5sle Wind Turbine 2009 1.5 MW  Pillar Mountain Wind  Total  4.5 MW  11.3 kWh/gal Waukesha 28950 1968 0.24 MW  11.5 kWh/gal Waukesha 28950 1979 0.24 MW  11.5 kWh/gal Caterpillar 3406 1970 0.14 MW  11.5 kWh/gal Caterpillar 343 1970 0.14 MW   Port Lions Total  .75 MW   KEA Generating Capacity Total  58.45 MW  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 13 of 24 7/21/2010   KEA has over 32 miles of transmission lines and 341 miles of distribution lines.  KEA has six substation  facilities as itemized in the table below.    KEA Substation Configuration Substation Size Voltage Terror Lake Substation 11.25 MVA 13.8 kV/138 kV 11.25 MVA 13.8 kV/138 kV 750 KVA 13.8 kV/12.47 kV Airport Substation 10 MVA 138 kV/12.47 kV Swampy Acres 20 MVA 138 kV/67 kV/12.47 kV 7.5 MVA 67 kV/12.47 winding 7.5 MVA 4.16 kV/67 kV Hartman Substation 10 MVA 4.16 kV/12.47 kV/67 kV 10 MVA 4.16 kV/12.47 kV/67 kV High Substation 10 MVA 67 kV/2.4 kV/12.47 kV Nyman Substation 10 MVA 67 kV/12.47 kV/13.8 kV 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 existing energy resources for KEA are itemized in Section 4.2.1 Basic configuration of Existing  Energy System.      The Terror Lake Hydroelectric Facility is limited by the amount of water available.  Historically, the  facility provides our community with a high average of 117 million kilowatt‐hours (kWh) annually.   Extreme rain and/or high snow runoff can increase the total hydro generation capabilities.  The third  turbine at Terror Lake will increase capacity, but will not generate additional hydro kWh except  through gained efficiencies.  This project serves as a cornerstone for additional renewable energy  solutions, and to meet full potential it must work in tangent with other variable renewable energy  resources.     The enhanced stability to KEA’s grid resulting from this additional hydro capacity also forestalls  distribution infrastructure costs, and allows for future integration of additional renewable sources of  energy, such as Phase II of Pillar Mountain Wind Project or potential tidal or wave energy.  The two  turbines at Terror Lake alone cannot tolerate more than approximately 3 MW of instability on the grid  without tripping.  This imposes a 3 MW limit on the system’s distribution feeders.  Taking future  projections of load growth into account, there will be five feeders on the KEA system that will likely  become loaded over this 3 MW limit.   Without a third turbine at Terror Lake, the overloading problem  on these  feeders will need to be resolved by building a new 10 MVA substation and reconfiguring the  distribution system through a series of switches that move the loads to different feeders.  Expanding  Terror Lake’s capacity by 50% with the third turbine generator will raise the limit on the system  distribution feeders to 4.5 MW.  A third turbine would therefore postpone the impact of load growth  on the distribution system by allowing more capacity on the distribution lines.  This would save KEA  $7.55 million in substation construction costs.  (Refer to Exhibit L Excerpt from Long Range Plan for  additional information.) Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 14 of 24 7/21/2010 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The community of Kodiak utilizes approximately 135 million kWh of electric energy annually.  The  membership base consists of 4,665 residential services that consume approximately 7,156 kWh each  per year.  The residential services continue to show a slight increase in usage each year.   The total  annual energy usage of the large power consumers, and subsequently the energy usage of the entire  system as a whole, is largely dependent on the fishing industry, which can be volatile.  Seafood‐ processing accounts for approximately 20% of KEA’s electric consumption annually.        KEA completed a 10‐year load forecast in January of 2009 (attached as Exhibit J).  This forecast predicts  a continual increase in peak loads (i.e., capacity) and total sales (i.e., energy).  The continual growth of  the Kodiak community will put pressure on KEA’s existing capacity to cover peak loads.  This growth  will result in increased price and environmental pressure if diesel fuel continues to be utilized to keep  up with total sales.     Mitigating the use of highly unpredictable diesel fuel cost in our energy generating portfolio stabilizes  KEA’s cost of power, thereby allowing customers to plan and budget their power costs.  Diesel cost  volatility from month to month makes it difficult for the Kodiak business community to plan future  development or predict cost of future operations.  Expanding Terror Lake’s hydroelectric capacity  would bring KEA much closer to its renewable energy vision and stabilize the cost of power for the  Kodiak community. 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 Terror Lake powerhouse currently contains two turbine generator units with space and provisions  available for the installation of a third unit.  The power will be delivered via an existing 138 kV  transmission line that runs from the hydro facility to the Airport Substation and is then distributed to  the KEA membership.      The third turbine will provide increased capacity, which can be visualized as water flowing though the  facility through a wider drinking straw; the same amount of water will be utilized, but the release  method is now modified and much quicker.  Year‐round wind generation from the Pillar Mountain  Wind Project helps maintain high water levels in the lake to increase the hydro facility’s efficiency and  make KEA’s overall operations more stable and efficient.       Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 15 of 24 7/21/2010 An expanded hydroelectric facility would be able to provide ample backup capacity to the Pillar  Mountain Wind Project without the use of diesel generation.  KEA is currently in the process of  conducting a third unit optimization analysis to examine the hydraulic dynamic issues of the facility to  identify the best equipment arrangement.  KEA expects that the third turbine generator would provide  an optimum installed capacity of 10 MW, with an anticipated capacity factor of 42%.    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. KEA is the sole owner of the Terror Lake Hydroelectric Facility and no potential land ownership issues  are anticipated.  The proposed construction activity does not involve modification to the lake level,  tailrace, or the existing 138 kV transmission line.  This proposed construction will not involve any new  ground‐disturbing activity or require any additional land.  The established project boundaries for the  Terror Lake facility will not be changed.  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 licenses and permits that were transferred to KEA upon the purchase of the Terror Lake facility  from the Four Dam Pool Power Agency include FERC Permit Number 2743, Army Corps of Engineers  Nationwide Permits, Alaska Department of Fish and Game Habitat Permits, and Federal  Communications Commission Licenses.  Refer to Exhibit I for the FERC License and an inventory of all of  the licenses and permits associated with the Terror Lake facility that were transferred to KEA in  February 2009.    Installing a third turbine generator to the facility requires a capacity amendment to the FERC license.   The FERC license articles affected by the proposed Terror Lake Unit 3 Hydroelectric Project include the  annual charges based on installed capacity, the as‐built drawings, and agency consultation  documentation.  KEA is currently preparing the Application for Capacity Amendment to License along  with the supporting documentation for the agency consultation process.  There are no major barriers  anticipated during the FERC Licensing Amendment process or related permitting approvals associated  with installation and operation of the third turbine.    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 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 16 of 24 7/21/2010 Installing the third turbine will not involve any new ground‐disturbing activity because the Terror Lake  Hydroelectric Facility was designed for this capacity expansion.  The proposed construction activity  does not involve modification to the licensed project boundary or any changes to the lake level or  storage capacity, conveyances, tailrace, or the existing 138 kV transmission line.  The areas involved in  the proposed construction are existing operational features at the facility.      There will be no construction in the tailrace or Kizhuyak River, nor will the operation of the third  turbine generator affect the water quality in the tailrace or Kizhuyak River.  The proposed construction  is not anticipated to disturb normal activities of wildlife or their use of habitat.  Any additional flow to  the tailrace with all three turbines running is not anticipated to affect salmon spawning and rearing.  It  is not anticipated that any threatened or endangered species would be affected.  There will be no  change in the facility’s aesthetic appearance, and there is no recreational use at the site.      In accordance with the FERC License Amendment process, KEA will consult with the appropriate  resource agencies, native tribes, and members of the public to confirm that the proposed installation  of the third unit will not affect threatened or endangered species, disturb normal activities of wildlife  or their use of habitat, disturb archeological or historical sites, or affect any other pertinent  environmental land use concern.      When construction activities commence in the spring and summer of 2013, the selected Contractor and  their personnel, subcontractors and suppliers will be required to comply with all environmental  protection requirements while on Project Land.  These environmental terms and conditions will be  included in the bid package.      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 system   KEA was allocated $500,000 in matching grant funds from the Alaska Energy Authority Renewable  Energy Fund Round II to complete the initial feasibility analysis, engineering and regulatory  assessment, and FERC Licensing Amendment phases of the project (AEA Grant Agreement #2195460).   KEA was also allocated $248,160 in matching grant funds from the Alaska Energy Authority Renewable  Energy Fund Round III to complete the final engineering design and contractor bidding documents (AEA  Grant Agreement #7030011).            Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 17 of 24 7/21/2010   The following table provides detailed information and cost estimates for the complete Terror Lake Unit  3 Hydroelectric Project.  This cost estimate was provided by Devine Tarbell and Associates, included in  this loan application as Exhibit F.  This grant application is requesting matching funding for the  Construction Phase of this project.                                                                                              Terror Lake Unit 3 Hydroelectric Project Amount  FERC LICENSING AMENDMENT   Engineering and Regulatory Assessment  $                70,000   Third Unit Optimization  $                60,000   Agency Consultations and Public Scoping Meetings  $              250,000   Finalize Project Plan  $                80,000   Conduct Project Studies  $              420,000   FERC License Amendment Application  $              120,000   FERC Licensing Amendment Sub‐Total  $          1,000,000   DESIGN PHASE  Engineering Design $               298,160  Development and Release of Bid Documents $               150,000  Design Phase Sub‐Total $               448,160  CONSTUCTION PHASE    Power Plant Structures and Improvements    $          1,488,901  Reservoirs, Dams and Waterways  $                22,617   Reservoirs, Dams & Waterways Sub‐Total    $          1,511,518        Turbines, Governors & Auxiliary    $          2,992,500   Generators, Auxiliary and Excitation  $          2,247,000   Turbine and Generator Testing  $              105,000   Water Wheels, Turbines & Generators Sub‐Total  $          5,344,500         Connections, Supports and Structures  $              282,000   Switchgear and Control Equipment  $              514,500   Accessory Electrical Equipment Sub‐Total  $              796,500         Miscellaneous Power Plant Equipment    $              262,500   Substation and Switching Station Structures and Improvements  $          1,720,000   KEA Personnel Labor and Overhead    $          2,750,000    Misc Power Plant Equipment ‐ Substation/Switching Sub‐Total  $          4,732,500     Contingency  $          2,074,772   Construction Phase Sub‐Total  $        14,459,790  TOTAL PROJECT  FERC Licensing Amendment $          1,000,000  Design Phase $              448,160  Construction Phase $         14,459,790  Total Terror Lake Unit 3Hydroelectric Project $         15,907,950   Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 18 of 24 7/21/2010   The major cost of this project is the purchase of the turbine and generator equipment.  In addition to  powerhouse equipment and construction costs, substation construction will also be required to  transform the third turbine’s generated power at 138 kV to the existing 69 kV transmission line.  There  is sufficient room in the existing Terror Lake substation for this transformer and associated equipment.    The Construction Phase of the project is estimated at $14,459,790.  KEA is requesting grant funds in the  amount of $7,000,000 for this phase of the project.  KEA’s matching funds for the construction phase  are estimated at $7,459,790; this capital contribution may be funded through a NCREB.    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.) KEA has been responsible for all the operation and maintenance at the Terror Lake facility since the  inception of the project in 1984.  KEA utilizes specific accounts to monitor the operation and  maintenance expenses per turbine.  Historically, the average cost for the operation and maintenance  per unit has been $43,013 annually.  (No capital improvements are included in this number.)  KEA does  not anticipate any additional operational costs will be experienced at the hydro plant when unit #3 is  installed.  It is further anticipated that no additional personnel will be necessary to operate a third unit  at the existing facility.   KEA is not requesting any grant funds for the operation and maintenance costs  associated to the Terror Lake Unit 3 Hydroelectric Project. 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 KEA is the only electric utility in Kodiak and there will be no power purchase agreements.  KEA is a  generation, transmission and distribution not‐for‐profit rural electric cooperative. The power  generated from the third hydroelectric turbine will go straight into the KEA grid.  The project savings  will also go straight to the members of the cooperative.  The community will experience a lower cost of  power from decreased diesel fuel consumption.  The rate of return on this project is not an appropriate  gauge for the overall benefit to the membership.    4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project.   The completed Project Cost Worksheet form is found at the end of this grant application on pages 25 ‐ 31.  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 19 of 24 7/21/2010 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 This project will help move Alaska to greater energy independence.  When all of the benefits from this  project are realized, the total amount of diesel fuel displaced equals 827,076 gallons annually. Of this  amount, 396,666 gallons of diesel is utilized annually for increased capacity situations, and an  additional 430,410 gallons of diesel are utilized when the Terror Lake units go offline for quarterly  maintenance requirements.  At a price of $2.50 per gallon times 827,076 gallons, the total cost of fuel  savings provided by the project equals $2,067,690 annually.  The life of this project is estimated to be  50 years; therefore the total economic benefit is $2,067,690 times 50 years, which equals  $103,384,500.  This estimate does not inflate the cost of fuel.  The volatility of fuel costs makes this  project even more beneficial.      A detailed economic analysis of the total project saving (included as Exhibit G) uses the complete cost  of the project ($15,907,950), assumes a total of $7,700,000 in grants and the remaining $8,207,950 at a  1% interest rate for 16 years (NCREB repayment schedule), calculates the cost of debt and depreciation  at 50 years and then provides a total annual cost for installing a third unit at the Terror Lake facility for  comparison to generating with diesel fuel.   The 1% interest rate and the $7,700,000 in grant funds are  “assumptions” used in modeling the direct cost benefit of this project.    Additional operation and maintenance (O&M) costs of $43,013 have been added to these fixed costs  and 5% inflation was applied to the O&M costs annually.    On an annual basis, diesel generation is dispatched 1,700 hours per year to cover system capacity  needs.  The Kodiak Generating Station diesel equipment is generally dispatched for quick response to  capacity issues.  The most efficient method to operate the diesel fired units is at 3.5 MW.  3,500 kW of  generation for 1,700 hours equals 5,950,000 kWh per year.  At efficiency rate of 15 kWh per gallon,  that equals 396,666 gallons of diesel consumed annually for capacity issues only.       There are quarterly and annual maintenance schedules required on the two existing Terror Lake  turbines.  A total of 430,410 gallons of diesel fuel are consumed annually to compensate for these  hydro generating units going offline for their necessary maintenance.  At an efficiency rate of 15 kWh  per gallon, the amount of diesel generation utilized for maintenance issues equates to 6,456,150 kWh  annually.       Considering both capacity and maintenance issues, the total annual kWh equals 12,406,150.  The  economic analysis utilizes this annual kWh wherein the cost of debt and O&M on the third unit is  compared to fuel costs.   The cost of fuel consumed utilized in this analysis is $2.50 per gallon which at  an efficiency rate of 15 kWh per gallon equates to 0.16 cents per kWh.  Fuel costs have been inflated at  5%, as have O&M costs.  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 20 of 24 7/21/2010   NPV Summary ‐ Terror Lake Unit #3    Terror Lake Unit #3  $         15,907,950   Capacity Factor 10  Availability Factor 0.96  Annual Generation ‐ kWh 12,406,150  O&M Base Costs $/kWh  $              0.00347   Interest Rate on Debt  1%  Life of Project 50  Grants Received  $           7,700,000   Inflation Rate 5.0%  Additional O&M Costs (Third Unit)  $                 43,013   Base Fuel Cost $/gal  $                     2.50   Base Year Differential Cost $/kWh  $                 (0.122)  Base Year Savings  $           1,345,847   Net Present Value  $         73,801,391   Today's Value ‐ Distribution Plant $7.55 M  Construction Delayed 10 years    $           2,915,055   Total Project Savings  $76,716,446     The long term benefit to our community resulting from this Terror Lake enhancement is enormous.  It  is estimated that over the 50 year life of this project the net present value (NPV) as compared to diesel  power alone will be $73,801,391.   An additional benefit of $2,915,055 has been added to this project  benefit based on the advantage realized by postponing the need for an additional substation and  distribution system upgrades necessary to provide for KEA’s continued system growth.    The full cost  of the substation and distribution system upgrades are $7,550,000.  This value has been discounted  (5%) based on the present value to KEA for not having to expend these funds for another 10 years.  It is  anticipated in the future, this additional substation will still be needed to compensate for the  continued growth within our community.    KEA is not a taxable entity and therefore will not benefit from any tax credit incentives for this project.   There are no additional revenue streams generated from this project.   The KEA membership is the sole  beneficiary.  The benefit is in the electric energy rate schedules.  The rate structure allocates the full  cost of any diesel generation to the membership in the form of a cost of power adjustment (COPA).      There are many non‐economic benefits provided through this project.  The Terror Lake Unit 3  Hydroelectric Project allows for further integration of wind and water, and possibly other types of  renewable energy on KEA’s isolated grid system.  Integration challenges are a major issue faced by  many other utilities within our State.  Lessons learned on this project will benefit other electric utilities  as additional renewable resources are designed and integrated into existing hydro facilities.  As an  energy storage application, this project is a major asset to KEA’s research and development into energy  storage issues.  Based on lessons learned throughout this project, KEA will be able to provide valuable  assistance to other utilities exploring similar energy storage applications.       Economic development in our community is also a key consideration.  This project will provide the  infrastructure necessary to lower our cost of power through renewable energy resources, which could  help entice additional fish processing and/or help retain the current processors operating in Kodiak.   The project also helps to reduce air pollution from diesel generation, which is a major benefit to  Kodiak, Alaska and our nation.     Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 21 of 24 7/21/2010 SECTION 6– SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum: • Proposed business structure(s) and concepts that may be considered. • How you propose to finance the maintenance and operations for the life of the project • Identification of operational issues that could arise. • A description of operational costs including on-going support for any back-up or existing systems that may be require to continue operation • Commitment to reporting the savings and benefits   This project will not change KEA’s current business structure.  It is anticipated that operational and  maintenance costs at the Terror Lake project will not substantially increase when an additional turbine  is installed.   No additional support is required to continue operating this facility.  This project is an  expansion to an already successful operating facility.      The project will be sustainable on a continual basis for the following reasons:  • The Terror Lake Hydroelectric Facility is the cornerstone in developing future sustainable  renewable energy for the long term benefit of the Kodiak community.     • KEA has been responsible for the operations and maintenance at the Terror Lake Hydroelectric  Facility for the past 26 years.  The third turbine will not substantially change the operations or  maintenance of this facility.   • The Terror Lake Facility was initially designed and engineered for three 10 MW turbines and the  foundation is built for the installation of the third turbine.  The photographs of the facility in  Exhibit C show the available space and infrastructure for the third turbine generator.    • The evaluation of installing a third unit was initially performed in 1983 for the Alaska Power  Authority (APA) now Alaska Energy Authority (AEA) and the study indicated that the Terror Lake  facility should have a third turbine when KEA’s system load warranted the installation.  (This  study is included in Exhibit D.)  • The third turbine at Terror Lake will allow for a 50% increase in capacity and will cover KEA’s  peak loads for many years to come.  • A third unit at Terror Lake will provide continuous production.  The redundancy in generating  capacity would reduce the need to run diesel generation for scheduled maintenance on the  turbines.      KEA will provide reports to the AEA on the savings and benefits realized from this project as required in  the grant agreement.                  Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 22 of 24 7/21/2010 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. KEA is aggressively moving forward on this project and the grant funds associated with this application  will move us into the construction phase.      Previous grant allocations on this project include the following:    • Round II ‐ $500,000 Grant # 2195460.   This matching award from AEA was for the feasibility  analysis and FERC licensing process.  This portion of the project is on schedule and it is  anticipated that we may complete this process quicker than originally anticipated in the grant  application.    The initial evaluation on the viability of installing the third turbine generator by reviewing the  regulatory and engineering requirements of the project has been completed.  The purpose of the  regulatory review was to identify any risks associated with opening up the FERC license, including the  environmental terms and conditions of the license; no risks have been identified.  A teleconference  with FERC staff took place in August 2010 wherein the amendment process, timelines and schedules  were discussed.  The teleconference with FERC staff provided positive reassurance that the license  amendment process can proceed in a streamlined manner.  KEA is now preparing an Application for  Capacity Amendment to License.     The purpose of the engineering review was to determine whether there are any major modifications to  the existing facility that may be required to install the third unit, such as the tailrace’s adequacy for  accommodating a flow of water associated with 30 MW of hydroelectric capacity.  It has been  determined that the additional unit will work well in the available space.  The analysis of the tailrace  hydraulics indicates adequate flow rates for the salmon spawning cycle.      As indicated in our most recent quarterly report, KEA has expended approximately $97,000 working  with Hatch Acres to complete this Regulatory and Engineering Assessment.  A proposed construction  schedule included in Exhibit H provides an updated estimated timeline for completion of the FERC  License Amendment.  The installation of the third unit will be accomplished within the exiting licensed facility boundary and  there were no activities identified that would result in negative environmental impact.  The regulatory  review found no major issues regarding the FERC amendment process and related permitting  approvals associated with installation of the third unit.  Further, the engineering review found no  substantive reason that the Unit 3 addition would not be feasible with respect to electrical, protection,  control, communications, and instrumentation.  Based upon this favorable assessment, KEA intends to  proceed with the project in accordance with the Round II milestone schedule.        • Round III ‐ $248,160 Grant # 7030011.   This award from AEA includes the Engineering Design  and Development and Release of Bid Documents.  These grant funds are allocated for final  engineering design plans and specifications as wells as preparation of the construction budget  and schedule.   Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 23 of 24 7/21/2010   It is anticipated that KEA will continue to be on schedule for this proportion of the project as indicated  on the proposed construction schedule included in Exhibit H  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. KEA is viewed by many as a shining star in implementing sustainable, renewable energy solutions.  The  continued support provided by the local community of Kodiak and the statewide community of Alaska  has been a major component to KEA’s success. The strong community support on the Terror Lake  purchase as well as the Pillar Mountain Wind Project indicates both Kodiak’s and Alaska’s commitment  to move toward self‐reliance obtained by reducing dependence on fossil fuels.      In 2010 KEA was featured in a Discovery Channel documentary and in the June 2010 Alaska Airlines  Magazine.  Both of these publications focused on the Pillar Mountain Wind Project, developed with  the assistance of AEA grant funding.  KEA’s efforts with expanding its renewable wind‐hydro energy  generation system continue to draw the attention of media outlets that travel to Kodiak to learn how  even a small rural electric cooperative like KEA could make a huge difference in our nation’s efforts to  develop its renewable energy resources.      Pacific Seafood, a local fish processor, has partnered with KEA to market salmon production with 100%  renewable wind generated energy.  With the ability to provide renewable energy credits to our local  processors KEA hopes to be able to assist in promoting  wild Alaska seafood in an effort to sustain our  local fish processing facilities.    Kodiak is assisting Alaska in moving toward greater energy independence and our community strongly  supports our efforts.  As support of renewable energy within the community continues to grow, a  renewed sense of pride has emerged for Kodiak’s progress in sustainable living.      Letters and Resolutions from the Kodiak Island Borough, City of Kodiak, US Coast Guard Base, and  Kodiak Chamber of Commerce expressing support for this project are included in Exhibit A.    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 – GrantBudget3.doc   As itemized in section 4.4.1 Project Development Costs, the full cost of this project is anticipated to be  $15,907,950.  Previous grant applications from Round II and Round III account for $1,448,160, with  AEA providing $748,160 and KEA matching with $700,000.    This grant application is requesting $7,000,000 for the Construction Phase with KEA matching funds of  $7,459,790.     A cost breakdown in the Grant Budget form is included on page 32 of the application, and a detailed  explanation of the five remaining project milestones is found in Section 3.3 Project Milestones.      Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 25 7-21-10 Please note that some fields might not be applicable for all technologies or all project phases. The level of information detail varies according to phase requirements. 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. The Terror Lake Unit 3 Hydroelectric Project proposes to install a 10 megawatt (MW) turbine at the  current Terror Lake Facility.  This project will increase the capacity at Terror Lake from 20 MW to 30  MW.  The third turbine was not installed during the initial project construction because system loads  at that time did not indicate a need for 30 MW of capacity.  The project will be sustainable on a  continual basis for the following reasons:  • The Terror Lake Hydroelectric Facility is the cornerstone in developing future sustainable  renewable energy for the long term benefit of the Kodiak community.     • Kodiak Electric Association, Inc. (KEA) has been responsible for the operations and  maintenance at the Terror Lake Hydroelectric Facility for the past 26 years.    • The third turbine will not substantially change the operations or maintenance of this facility.   • The Terror Lake Facility was initially designed and engineered for three 10 MW turbines and  the foundation is built for the installation of the third turbine.  Drawings and photographs of  the facility included in Exhibit C show the available space and infrastructure for the third  turbine generator.    • The evaluation of installing a third unit was initially performed in 1983 for the Alaska Power  Authority (APA) now Alaska Energy Authority (AEA) and the study indicated that the Terror  Lake facility should have a third turbine when KEA’s system load warranted the installation.  KEA’s system now warrants the installation of the third turbine. (This study is included in  Exhibit D.)  • The enhanced stability to KEA’s grid resulting from this additional hydro capacity also  forestalls substation and distribution infrastructure costs, and allows for additional renewable  sources of energy (i.e., Phase II of Pillar Mountain Wind Project, potential tidal or wave) to be  integrated onto the KEA system in the future.  Exhibit M Excerpt of EPS Grid Stability Analysis  contains information on how the third hydro turbine increases transient stability, regulates  system frequency, and prevents load shed and trip events.    The integration of wind and hydro power is a great economical solution for the Kodiak community.   The Terror Lake Unit 3 Hydroelectric Project will allow KEA to maximize renewable energy solutions.   This project will increase the system stability so that KEA can continue to move forward in its vision to  produce 95% of its energy sales with cost effective renewable power solutions by the year 2020.     Annual average resource availability. 96% Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)   Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 26 7-21-10 2. Existing Energy Generation and Usage  a) Basic configuration   KEA operates an isolated electrical grid system and is not connected to any other gird or utility.  The Terror Lake  Hydroelectric Facility is KEA’s primary generation source, and it controls KEA’s system frequency.      KEA also operates and maintains four independent diesel generation facilities (Kodiak Generating Station, Nyman  Power Plant, Swampy Acres Plant and Port Lions) which are a mixture of diesel reciprocating engines and diesel‐ fired combined cycle generation units.  The system is centered on supporting Terror Lake as the primary  generation source.  There is a large amount of backup generation in case the hydro facility is unavailable.  Diesel  reciprocating engines cover peak loads and provide storm system protection.  A combined cycle plant is used for  longer periods of generation for lake level augmentation.      KEA’s Pillar Mountain Wind project consists of three GE 1.5 MW SLE wind turbines. This project was completed in  July 2009.  The wind turbines work in concert with the Terror Lake Hydro facility.  Wind power is intermittent  power, and the Terror Lake reservoir acts as a large battery for the wind power. Unlike wind, hydro power is  predictable, dispatchable and can be stored.    The table below details KEA’s generation resources.   The capacity numbers used are high end nominal for the  machines.  This is a point where the machines can be operated on a high end for a period of time, but does not  reflect total potential due to the detrimental effects of full load operations on diesel engines.  Note that the  efficiencies are for the load points mentioned at ideal conditions.                                                      Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 27 7-21-10 KEA Energy Generation Efficiency Unit Installation Date Capacity   12.2 kWh/gal DeLaval DSRS‐12‐3 1976 1.80 MW   15.6 kWh/gal Caterpillar 3616 2005 5.00 MW   15.6 kWh/gal Caterpillar 3616 2005 5.00 MW   14.4 kWh/gal DeLaval DSRS‐16‐4 1980 5.80 MW  Kodiak Generating Station Total  17.60 MW  13.8  kWh/gal DeLaval DSR‐48 1978 2.50 MW  14.2 kWh/gal Solar Taurus 60‐T7301S, SoLoNOx 1999 6.50 MW  Nyman Power Plant Total  9.00 MW  10.5 kWh/gal Fairbanks Morse 38TD‐8 1/8 1968 1.50 MW  10.5 kWh/gal Fairbanks Morse 38TD‐8 1/8 1968 1.50 MW   13.2 kWh/gal Caterpillar 3516B 2002 1.80 MW   13.2 kWh/gal Caterpillar 3516B 2002 1.80 MW  Swampy Acres Plant Total  6.60 MW   Fuji VT1R6N Turbine with Mitsubishi Generator 1984 10.0 MW   Fuji VT1R6N Turbine with Mitsubishi Generator 1984 10.0 MW   Terror Lake Hydroelectric Facility Total  20.00 MW   GE 1.5sle Wind Turbine 2009 1.5 MW   GE 1.5sle Wind Turbine  2009 1.5 MW   GE 1.5sle Wind Turbine 2009 1.5 MW   Pillar Mountain Wind  Total  4.5 MW  11.3 kWh/gal Waukesha 28950 1968 0.24 MW  11.5 kWh/gal Waukesha 28950 1979 0.24 MW  11.5 kWh/gal Caterpillar 3406 1970 0.14 MW  11.5 kWh/gal Caterpillar 343 1970 0.14 MW   Port Lions Total  .75 MW   KEA Generating Capacity Total  58.45 MW  i. Number of generators/boilers/other 19  ii. Rated capacity of generators/boilers/other 58.45 MW (Detail itemized in the above table).  iii. Generator/boilers/other type See KEA Energy Generation Table (above).  iv. Age of generators/boilers/other See KEA Energy Generation Table (above).  v. Efficiency of generators/boilers/other See KEA Energy Generation Table (above).  b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $2,077,653,81 (2009 Actual)  ii. Annual O&M cost for non-labor $1,848,947.78 (2009 Actual ‐ no fuel costs included).    Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 28 7-21-10 c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] 141,056,056 kWh (2009 actual)    ii. Fuel usage  Diesel [gal] 1,596,799 gallons consumed (2009 actual)  Other N/A  iii. Peak Load 23.9 MW  iv. Average Load 17 MW  v. Minimum Load 11 MW  vi. Efficiency 14.4 kWh/gal for Kodiak Generating Station’s Unit #4  vii. Future trends     The chart above reflects KEA’s historical peak system demand and the predicted  peak system demand through Year 2019.  This forecast indicates a continual  increase in peak load and total sales.  This growth will put pressure on KEA’s  existing capacity to cover peak loads.  It will also cause increased price and  environmental pressure from the increased utilization of diesel fuel.  d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] N/A  ii. Electricity [kWh] N/A iii. Propane [gal or MMBtu] N/A iv. Coal [tons or MMBtu] N/A v. Wood [cords, green tons, dry tons] N/A vi. Other N/A   Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 29 7-21-10 3. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] 10 MW  b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 40,000,000 kWh annually  ii. Heat [MMBtu] N/A c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] N/A ii. Coal [tons or MMBtu] N/A iii. Wood [cords, green tons, dry tons] N/A iv. Other N/A 4. Project Cost a) Total capital cost of new system $15,907,950  b) Development cost (Included in the total capital costs above)  c) Annual O&M cost of new system $ 43,013  d) Annual fuel cost N/A 5. Project Benefits a) Amount of fuel displaced for i. Electricity 827,076 gallons annually (Plant life = 50 years).  Total diesel fuel displaced  during life of the project is equal to 41,353,800 gallons.  ii. Heat N/A iii. Transportation N/A b) Current price of displaced fuel 827,076 gallons x $2.50 per gallon = $2,067,690 (annually).  c) Other economic benefits   Other economic benefits of this project include the stepping  stone that this project provides to KEA’s and the entire network  of future renewable power solutions that will become available  to the Kodiak community.  These future renewable solutions will  continue to displace diesel fuel consumption.  The more fuel  displaced with renewable energy, the greater savings made for  the community.  Fuel cost volatility is a continual challenge.   All of the economic benefits provided by the Terror Lake Unit 3  Hydroelectric Project will not be fully realized until future  renewable solutions are implemented.  On average, Terror Lake  is limited to 117 million kWh annually.  Extreme rain conditions    Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 30 7-21-10 and snowmelt can impact the reservoir; as KEA experienced in  2004 and again in 2010. In 2004 the facility generated over 130  million kWh.  Based on 2010 calculations to date, we may exceed  this 130 million kWh.  Our goal is to continue to deploy  sustainable renewable solutions for our community to:  • reduce diesel emission;   • provide a diversified generation portfolio;   • progress toward more renewable energy;  • research and develop stability solutions for variable  renewable power and its integration with hydro power  for the benefit of many communities within the State of  Alaska.    While there is not a specific dollar amount associated with these  benefits, they significantly enhance the value of this project. d) Alaska public benefits Alaska Public Benefit includes 827,076 gallons of diesel fuel not  utilized for power generation annually.  To quantify this benefit  to Alaska:   827,076 gallons * $2.50 = $2,067,690 annually.  Total project savings are 827,076 gallons * 50 years * $2.50 per  gallon = $103,384,500.    Alaska needs to continue to invest in long term energy solutions.   This project is key to developing sustainable renewable  infrastructure that will benefit the Kodiak community for many  generations.   KEA is continuing to solve stability issues with variable renewable  power solutions, which is an enormous benefit to the entire State  of Alaska in “developing energy resources in a responsible  manner to sustain Alaska’s economy and provide for the growth  of Alaska’s communities and industries.”[State Energy Policy Goal  #2] and “Reduce the dependence of Alaskan communities on  fossil fuels for electricity and heat by developing our renewable  alternative energy resources…” [State Energy Policy Goal #4] and  “Maintain a commitment to environmental stewardship and  responsible resource development, anticipating the  environmental effects of and regulatory response to climate  change.”[State Energy Policy Goal #6] 6. Power Purchase/Sales Price a) Price for power purchase/sale N/A    Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet   RFA AEA11-005 Application Cost Worksheet Page 31 7-21-10 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 35.88  (See the Economic Analysis in Exhibit #G – Project Benefit where the  total cost savings is divided by the total capital cost).  Payback (years) Simple payable on this project is under 9 years.  (Detailed explanations on all the assumptions used in the model can be  found in the Renewal Energy Fund Application in the Economic  Analysis, (Exhibit G) and Section 5 – Project Benefit). The summary  below assumes $7,700,000 in grant funds have been applied to this  project.   NPV Summary ‐ Terror Lake Unit #3    Terror Lake Unit #3  $         15,907,950  Capacity Factor 10  Availability Factor 0.96  Annual Generation ‐ kWh 12,406,150  O&M Base Costs $/kWh  $              0.00347  Interest Rate on Debt  1%  Life of Project 50  Grants Received  $           7,700,000  Inflation Rate 5.0%  Additional O&M Costs (Third Unit)  $                 43,013  Base Fuel Cost $/gal  $                     2.50  Base Year Differential Cost $/kWh  $                 (0.122)  Base Year Savings  $           1,345,847  Net Present Value  $         73,801,391  Today's Value ‐ Distribution Plant $7.55 M  Construction Delayed 10 years   $           2,915,055  Total Project Savings  $76,716,446  Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Page 32 Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In-kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Attached Milestone list. ) $ $ $ #1 Equipment Procurement June 2012 $ 2,500,000 $ 481,590 Cash – NCREB $ 2,981,590 #2 Contractor Specification Bid Award December 2012 $ 790,795 $ 700,000 Cash – NCREB $ 1,490,795 #3 Acceptance of Equipment Delivery On-Site May 2013 $ 1,869,037 $ 1,857,950 Cash – NCREB $ 3,726,987 #4 Equipment Installation July 2013 $ 1,247,530 $ 3,970,250 Cash – NCREB $ 5,217,780 #5 Commissioning & Testing August 2013 $ 592,638 $ 450,000 Cash – NCREB $ 1,042,638 $ $ $ $ $ $ $ $ $ $ $ TOTALS $ 7,000,000 $ 7,459,790 $ 14,459,790 Budget Categories: Direct Labor & Benefits $ $ 1,491,590 $ 1,491,590 Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ 4,692,930 $ 4,251,840 $ 8,944,770 Contractual Services $ 496,840 $ 545,000 $ 1,041,840 Construction Services $ 1,810,230 $ 1,171,360 $ 2,981,590 Other $ $ $ TOTALS $ 7,000,000 $ 7,459,790 $ 14,459,790 Kodiak Electric Association, Inc.   Renewable Energy Fund Grant – Round IV  List of Exhibits    Exhibit  Document Title    A    Letters and Resolutions Demonstrating Local Support     B Resolution 662‐10 Authorization for President/CEO to  Represent KEA and Apply for a Renewable Energy Fund  Round IV Grant through the Alaska Energy Authority    C Drawings and Photographs of the Existing  Accommodations for a Third Turbine at the Terror Lake  Hydroelectric Facility    D    An Evaluation of Installation of Third Unit    E    Third Unit Addition Feasibility Analysis      Engineering and Regulatory Assessment    F Terror Lake Unit 3 Hydroelectric Project’s Preliminary  Design Level Construction Cost Estimate     G Economic Analysis of Total Project Savings    H Terror Lake Unit 3 Hydroelectric Project Schedule    I    FERC Project 2743  Order Issuing Major License   List of Licenses and Permits    J    2009 Ten‐Year Load Forecast    K    Excerpt from Power Generation Study    L    Excerpt from Long Range Plan     M    Excerpt from EPS Grid Stability Analysis    Exhibit A      Letters and Resolutions   Demonstrating Local Support                                                  Exhibit B      Resolution 662‐10  Authorization for President/CEO to Represent KEA  and Apply for a Renewable Energy Fund Round IV Grant  through the Alaska Energy Authority                                              Exhibit C      Drawings and Photographs   of the Existing Accommodations for a Third Turbine   at the Terror Lake Hydroelectric Facility                                    1 Terror Lake Hydroelectric Project Site Visit Photographs – May 11 & 12, 2010 1. Powerhouse from Downstream Side 2. Powerhouse Interior – Third Bay in Foreground 2 3. Powerhouse Interior – Third Bay in Background 4. Powerhouse Interior – Cover/Floor over Third Bay on Turbine Floor 3 5. Reinforcing Rod and Waterstop at Third Bay in TSV Area 6. Turbine Discharge Flume at Third Bay 4 7. Turbine Discharge Flume at Third Bay 8. Tailrace Stoplog in place in Third (Left) Bay 5 9. Unit 2 Turbine from Third (Empty) Bay 10. Turbine Pit Area 6 11. Unit 2 TSV Area 12. Control Valves for TSV on Unit 2 7 13. Unit 2 TSV Control Panel Interior 14. Unit 3 TSV 8 15. Unit 3 TSV Area 16. New Governor Hydraulic Control 9 17. Governor Hydraulic Pressure System 18. Governor Control Panel 10 19. Unit 1 and 2 Generators 20. Generator Nameplate 11 21. Generator Breaker, Surge and Neutral Cubicles 22. Underside of Powerhouse Crane 12 23. Cooling Water Strainer and Piping 24. Tailwater Depression Blower 13 25. Service Air Compressor (left) and Governor Air Compressor (right) 26. Control Room showing Location for Unit 3 Control Panel 14 28. Control Room and Living Quarters (above) 28. Powerhouse Service Bay 15 29. Downstream Gallery on Turbine Floor 30. Penstock at Tunnel Portal Area 16 31. New Needle Tips for Unit 1 and 2 Turbine Injectors 32. New Seat Rings for Unit 1 and 2 Turbine Injectors 17 33. Spare Injector Housing 34. Original Runner 18 35. Switchyard – 138 kV Main Bus showing space provided for third unit connections 36. Switchyard – conduit stub-ups for third unit equipment 19 37. Nameplate – Generator Stepup Transformer 20 38. Nameplate – 145-kV, 1200-A Circuit Switcher 39. Switchyard – Transformer & Circuit Switcher connected to main 138 kV Bus (Background, 138 kV Line Oil Circuit Breaker below and bypass switch on top of A-frame) 21 40. Conduits provided for future 13.8 kV power cables to stepup transformer 41. Provision for cable tray extension for Unit 3 low voltage power and control cables 22 42. Similar openings were provided in the floor under area where new control panel would be located for cable drops into cable tray under the control room.               Exhibit D      An Evaluation of   Installation of Third Unit                                                  Exhibit E      Third Unit Addition Feasibility Analysis  Engineering and Regulatory Assessment                                    Terror Lake Hydroelectric Project – FERC Project No. 2743 Third Unit Addition Pre-Feasibility Analysis ENGINEERING AND REGULATORY ASSESSMENT Project Licensee: KODIAK ELECTRIC ASSOCIATION Kodiak, Alaska OCTOBER 2009 TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation ii Table of Contents List of Tables .............................................................................................................................. iii Table 2.3.1 License Articles Affected by Amendment Applications ................................ iii Table 2.5.1 Required License Exhibits ................................................................................ iii Table 2.7.6 Comparison of Options ..................................................................................... iii Executive Summary ................................................................................................................... iv 1. Introduction .......................................................................................................................... 1 1.1 Kodiak Electric System .................................................................................................. 1 1.2 Terror Lake Project Description ..................................................................................... 1 1.3 Provision for Third Unit in Existing Powerhouse ........................................................... 2 1.4 Need for and Purpose of Installing Third Unit ............................................................... 3 1.5 Scope of Studies ........................................................................................................... 3 1.5.1 Regulatory Review .................................................................................................................. 3 1.5.2 Engineering Review: ............................................................................................................... 4 1.5.3 Pre-Feasibility Report .............................................................................................................. 4 2. Regulatory Review ............................................................................................................... 4 2.1 Purpose of Regulatory Review ...................................................................................... 4 2.2 Strategic Planning ......................................................................................................... 5 2.3 Review of License Requirements ................................................................................ 11 2.4 Risk Assessment ......................................................................................................... 12 2.5 FERC Process for Application for Capacity Amendment to License ........................... 13 2.5.1 Required Exhibits for Capacity Related Amendment ............................................................ 13 2.6 Potential Study Requirements ..................................................................................... 16 2.7 FERC Application for Amendment – Process Options ................................................ 16 2.7.1 Contents of a Capacity-related Amendment ......................................................................... 16 2.7.2 Process Options .................................................................................................................... 17 2.7.3 Integrated Licensing Process (ILP) ....................................................................................... 17 2.7.4 Traditional Licensing Process (TLP) ..................................................................................... 18 2.7.5 Alternative Licensing Procedure (ALP) ................................................................................. 19 2.7.6 Comparison of Options .......................................................................................................... 20 2.8 Recommended Approach – FERC Alternative Licensing Procedure (ALP) ................ 21 2.8.1 Process Selection – Schedule Comparison .......................................................................... 21 2.8.2 Recommendation to Use FERC ALP .................................................................................... 21 2.8.3 Notice of Intent to File a Capacity Amendment Application .................................................. 22 2.8.4 Request to Use the ALP ........................................................................................................ 22 2.8.5 Communications Protocol ..................................................................................................... 24 2.8.6 Preliminary Application Document (PAD)/Draft Annotated Application for License .............. 25 2.9 Schedule to Prepare Capacity Amendment Application .............................................. 25 3. Engineering Review ........................................................................................................... 25 3.1 Purpose of Engineering Review .................................................................................. 25 3.2 Review of Existing Third Bay Provisions ..................................................................... 25 3.2.1 Civil / Mechanical .................................................................................................................. 25 3.2.2 Electrical ................................................................................................................................ 26 3.3 Tailrace Adequacy ....................................................................................................... 27 3.4 Existing Drawings ........................................................................................................ 27 3.4.1 As-Built Drawings .................................................................................................................. 27 3.4.2 Exhibit F Drawings ................................................................................................................ 28 3.4.3 Exhibit G Maps ...................................................................................................................... 28 3.5 Constructability Review ............................................................................................... 28 3.5.1 Adequacy of Third Bay Space ............................................................................................... 28 3.5.2 Water Conveyance Connections ........................................................................................... 28 3.6 Construction Schedule ................................................................................................ 30 TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation iii 4. Conclusions and Recommendations ............................................................................... 30 4.1 Conclusions – Regulatory ........................................................................................... 30 4.2 Conclusions – Engineering .......................................................................................... 30 4.3 Recommendations – Regulatory ................................................................................. 30 4.4 Recommendations – Engineering ............................................................................... 31 List of Tables Table 2.3.1 License Articles Affected by Amendment Applications Table 2.5.1 Required License Exhibits Table 2.7.6 Comparison of Options TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation iv Executive Summary Kodiak Electric Association (KEA), licensee for the 20 MW Terror Lake Hydroelectric Project – FERC No. 2743 (Terror Lake Project or project) has engaged the services of Hatch Acres Corporation (Hatch Acres or HAC) to investigate the feasibility of installing a third turbine/generator unit (third unit) in the existing open bay in the powerhouse, and by doing so expand the project installed capacity from 20 to 30 MW. The Terror Lake Project was planned to be developed in stages with the possibility of increasing the capability of the Project as the demand for electricity may increase in the future: KEA’s Vision Statement is to Endeavor to produce 95% of energy sales with cost effective renewable power solutions by the year 2020. KEA constructed a 4.5 MW wind facility at Pillar Mountain as part of KEA’s goal of reducing dependence on diesel generation by adding new renewable energy generation to its system. Wind energy is variable and does not provide the capacity to meet KEA’s growing load demand. KEA identified installation of the third unit as the first step towards achieving the goal set in KEA’s Vision Statement. This Pre-Feasibility Analysis presents our engineering and regulatory assessment of the feasibility to install a third turbine/generator unit (third unit) in the existing empty bay in the powerhouse at the Terror Lake Hydroelectric Project. The primary purpose of Task 1.a was to conduct a “fatal flaw analysis” to evaluate the viability of installing the third unit. This report presents the results of our regulatory and environmental review and analyses. The purpose of the Regulatory Review is to (1) perform a detailed review of requirements in the existing license, including the environmental terms and conditions; (2) identify and discuss any risks that might be anticipated with filing an Application for Capacity Amendment, including whether the filing might expose KEA to agency requests to modify terms and conditions of the license not associated with installation of the third unit; and (3) advise KEA regarding the recommended approach for the FERC license amendment process.. The purpose of the engineering review is to determine whether major modifications to the existing powerhouse and other project facilities will be required to install the third unit including (1) adequacy of the tailrace to accommodate water discharged from the powerhouse during the time that the three units would be operating with a capacity of 30 MW compared to the existing situation where installed capacity is 20 MW; and, (2) constructability review including adequacy of space within the powerhouse to accommodate the third unit and water conveyance connections; and electrical system considerations; We did not identify any “fatal flaws” associated with installation of the third unit. KEA requested that we rank, on a scale of 1 to 10 – with 10 being the most difficult, the potential difficulty of pursuing the FERC License Amendment to install the third unit. The application will fall under the category of “Capacity Amendment”. We rank the third unit installation at “1” on the above identified scale. We trust that this report will assist KEA in making its “Go / No” decision. The next step, Task 1.b, would build on work performed during Task 1.a. Regulatory Review activities would include (1) Discuss the FERC Amendment process with federal and state agencies; (2) receive further guidance from FERC Staff regarding use of the Alternative Licensing Procedure for the Application for Capacity Amendment; and (3) Prepare scope, schedule, and related cost estimate to prepare and file the Application for License Amendment. Engineering Review activities would include (1) Review constructability – e.g. third bay space and water conveyance connections; (2) Review potential construction schedule and any potential effect on current operations; (3) Verify that the As-Built Drawings and modified Exhibit TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation v F Drawings are adequate to proceed with planning; and (4) Based on KEA decision to proceed, prepare a detailed scope and budget. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 1 1. Introduction 1.1 Kodiak Electric System Kodiak Electric Association, Inc. (KEA) serves approximately 5,800 meters on Kodiak Island. KEA’s service area includes the area in and around the City of Kodiak, the US Coast Guard Base, Bells Flats, Chiniak, Pasagshak, and Port Lions. KEA operates an isolated electrical grid system. The 20 MW Terror Lake Project produces the majority of Kodiak Electric Association’s (KEA) electricity and is the cornerstone to KEA’s Vision Statement: “Endeavor to produce 95% of energy sales with cost effective renewable power solutions by the year 2020, by providing base load capacity to backup other forms of renewable energy.” KEA’s recently completed Pillar Mountain Wind Farm includes three 1.5-MW wind turbines, enhancing its renewable energy portfolio by 4.5 MW. The Terror Lake Project reservoir acts like a battery to store energy generated by the variable winds; when winds are plentiful water is conserved within the reservoir. When winds diminish, KEA can dispatch hydropower to serve load and maintain system stability. The current capacity at Terror Lake has been surpassed by the growing load demand. KEA needs to run diesel units to meet this demand. KEA proposes to install the third unit to add 10 MW of capacity at the Terror Lake Project. Installation of the third unit would increase KEA’s total installed renewable energy capacity from the existing 24.5 MW (20 MW hydro + 4.5 MW wind) to 34.5 MW (30 MW hydro + 4.5 MW wind). KEA operates and maintains 33.95 MW of diesel generation in case the Terror Lake Project is not available: Kodiak Generating Station, Nyman Power Plant, Swampy Acres Plant, and Port Lions. There is a mixture of diesel reciprocating engines and a diesel-fired combined cycle generation unit. The table below lists KEA’s electric generation facilities: PROJECT FUEL SOURCE CAPACIT Y (MW) Terror Lake Hydroelectric Project Water 20.00 Pillar Mountain Wind Farm Wind 4.50 Kodiak Generating Station Diesel 17.60 Nyman Power Plant Diesel 9.00 Swampy Acres Plant Diesel 6.60 Port Lions Diesel 0.75 KEA Generating Capacity Total 58.45 1.2 Terror Lake Project Description The 20 MW Terror Lake Hydroelectric Project, FERC No. 2743 (Terror Lake Project), is located in the north central part of Kodiak Island approximately 25 miles southwest of the City of Kodiak TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 2 within the Kodiak National Wildlife Refuge. The Terror Lake Project is a remote site, accessible by floatplane helicopter or boat only. The project was licensed in 1981 and commenced commercial operation in 1985. The Terror Lake Dam is a fill structure approximately 193 feet in height and some 2,450 feet long. The dam crest is at El. 1.425 ft. The dam raised the level of the original lake by some 170 feet, forming a reservoir with a surface area of about 1,000 acres and providing 108,000 acre feet of storage at its normal maximum elevation of 1,420 ft (msl). The un-gated side channel spillway crest has a crest El. at 1,420 ft and a length of 650 feet. The Terror Lake Project is a trans-basin diversion project. A 23,300 foot-long, 11 foot diameter tunnel carries water from Terror Lake reservoir to an outlet portal located on the west slope of the Kizhuyak River Basin where flows pass through a 3,400 foot-long penstock to a powerhouse containing two 10 MW generating units. Outflow from the powerhouse is conveyed through a 2,275 foot-long tailrace to the lower Kizhuyak River. Additional water is diverted to the project tunnel from the 20 foot-high Falls Creek diversion dam and the 40 foot-high Shotgun Creek diversion dam. The 20 foot-high Rolling Rock Creek diversion dam is presently inoperable. These are all fill structures with minimum storage capabilities The powerhouse is located on the west bank of the Kizhuyak River, housing two 10-MW vertical axis impulse turbine generators with centerline elevation 103.5 feet, and containing an empty bay for a future third unit. A 2,200-foot-long tailrace channel conveys flows from the powerhouse to the main stem of the Kizhuyak River. The tailrace was recently upgraded and no additional modifications are anticipated. A 13.8/138-kV switchyard located adjacent to the powerhouse. Project electrical output is transmitted across a 17.4-mile-long, 138-kV transmission line from the switchyard to a substation within the USCG Reservation north of the Kodiak Airport. No modifications to the transmission line are anticipated. 1.3 Provision for Third Unit in Existing Powerhouse The 20 MW Terror Lake Project was planned to be developed in stages with the possibility of increasing the capacity by installing a 10 MW third unit in the empty bay as the demand for electricity increased in the future: • Powerhouse – The Terror Lake powerhouse was constructed in 1984 with two vertical axis impulse Pelton turbine/generator units and an empty bay for a future 10 MW unit. The power tunnel, penstock, and tailrace are large enough to accommodate a flow corresponding to 30 MW of capacity without modification. • Switchyard – Space has been allocated for addition of a future (Unit 3) 15MVA Generation Step Up transformer and disconnect switches to be located in the south corner of the switchyard, next to the service road and adjacent to the access gate. No additional bus has been provided. (Terror Lake Switchyard General Arrangement Plan, Dwg No. TL-57-021 (Rev 4: 12-6-85 As Built Revisions).(Source: FDP – Unit 3 Addition Estimate Assumptions.doc, page 1. 1/11/2007 • Transmission – Two options exist: (1) feed the “Future 138 kV” line or (2) increase the output too the 138 kV Airport Substation line. ).(Source: FDP – Unit 3 Addition Estimate Assumptions.doc, page 1. 1/11/2007) TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 3 1.4 Need for and Purpose of Installing Third Unit KEA’s loads continue to grow and there are significant periods of time when KEA’s load now surpasses the 20 MW capacity of the Terror Lake Project’s existing hydro turbine/generator units. The existing powerhouse contains an empty bay designed to accommodate a third 10 MW turbine/generator unit. Expanding the existing 20 MW installed capacity to 30 MW by installing the third 10 MW unit would: (1) cover peak loads, (2) provide outage backup for the existing two units; (3) improve KEA’s system stability; and (4) provide backup capacity to support the existing 4.5 MW Pillar Mountain Wind Farm and enable KEA to pursue additional renewable energy projects. The two existing turbine/generator units are 1984 vintage. The amount of outage time required for annual and quarterly maintenance on these units can be up to four weeks. Losing 10 MW of power from offline hydro units during maintenance requires KEA to run diesel generators to meet system demand resulting in approximately 430,410 gallons of diesel fuel annually. Installing the third unit will enable KEA to cover peak loads and times when a hydro unit is down for maintenance with renewable power. Over the past decade, peak loads on the system have averaged 24 MW. Diesel generation is currently required for these periods of high demand and the need for diesel powered supplemental capacity will continue to grow into the future as peak loads increase. The current approach of burning diesel fuel to supplement KEA’s capacity is not economical. Installation of the third unit would also provide the benefit of reducing emissions from KEA’s diesel capacity during periods of high demand. 1.5 Scope of Studies The scope of work for Task Order 01, Terror Lake Project Engineering & Regulatory Assessment, includes the following activities: 1.5.1 Regulatory Review Phase 1a activities include: • Review License Exhibits and Articles, and overall project record (FERC Docket and reports prepared by the FERC Regional Office) - identify and discuss potential modifications related to addition of the third unit • Identify and discuss any risks regarding opening the License as a result of filing an Application for Amendment – i.e. exposure to agencies requiring modifications to recently agreed to modifications to monitoring and reporting procedures for the license- mandated minimum flow release (License Article 43) • Identify potential environmental issues and discuss potential study requirements and related approvals and permits with resource agencies • Review FERC license amendment process options; discuss with FERC staff; and recommend proposed approach Phase 1.b activities following KEA decision to proceed with the FERC Amendment will include: • Discuss the FERC Amendment process with federal and state agencies; • Receive further guidance from FERC staff regarding use of the Alternative Licensing Procedure for the Application for Capacity Amendment; and TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 4 • Prepare scope, schedule, and related cost estimate to prepare and file the Application for License Amendment 1.5.2 Engineering Review: Phase 1a activities include: • Review existing third bay provisions in existing design – determine whether there any additional considerations/modifications • Review adequacy of tailrace to accommodate modification in project operations with the third unit Phase 1.b activities following KEA decision to proceed with the FERC Amendment will include: • Review constructability – e.g. third bay space and water conveyance connections; Review potential construction schedule and any potential effect on current operations; • Verify that the As-Built Drawings and modified Exhibit F Drawings and Exhibit G Maps are adequate to proceed with planning 1.5.3 Pre-Feasibility Report Phase 1.a Pre-Feasibility Report: • Prepare a Report presenting the results of the above identified tasks • Provide support for KEA’s “Go/No-Go Decision” Phase 1.b Pre-Feasibility Report • See above regarding Environmental and Engineering Sections • Based on decision, prepare a detailed scope and budget for following Phase Ib and Phase II 2. Regulatory Review 2.1 Purpose of Regulatory Review The purpose of the Regulatory Review is to (1) perform a detailed review of requirements in the existing license, including the environmental terms and conditions; (2) identify and discuss any risks that might be anticipated with filing an Application for Capacity Amendment, including whether the filing might expose KEA to agency requests to modify terms and conditions of the license not associated with installation of the third unit; and (3) advise KEA regarding our recommended approach for the FERC license amendment process. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 5 2.2 Strategic Planning Discussion with KEA Staff – July 27 & 28, 2009 A site visit and office meetings with KEA Staff were accomplished in July. During the office meetings Hatch Acres Corporation personnel met with Darron Scott, CEO, and Jennifer Richcreek, Environmental Coordinator to discuss the Terror Lake Project and the potential enhancements: • We discussed KEA’s Vision Statement and goal to reach 95% renewable energy generation by the year 2020 • We discussed KEA’s interest in reducing use of diesel-fuel-fired generation for multiple purposes: o Fuel contracts – volatile cost of fuel o Sulfur content of fuel and reducing environmental effects associated with use of diesel fuel and increased requirements associated with State permitting o Future uncertainties – e.g. “cap & trade” • Third Unit o Need for the third unit to operate “in sync” with the two existing units o KEA interest in relieving the current problem where one unit is down during maintenance and only one unit is available o KEA interest in providing capacity credits for purposes of considering additional renewable energy generation units o We noted that, based on our site visit and preliminary office studies we conducted prior to the site visit, we did not identify any impediments to a successful FERC Amendment proceeding. Follow-up Discussion with ADF&G Staff – July 29, 2009 KEA’s consultants, Nan Nalder and Dick Griffith (Hatch Acres Consultants) met with Jim Ferguson, outgoing Statewide Hydropower Coordinator, and Scott Maclean, incoming Statewide Hydropower Coordinator, in Anchorage on July 29, 2009. The purpose of the meeting was to discuss the proposed Third Unit addition at the Terror Lake Project as Nan & Dick had been in consultation with Jim Ferguson regarding this potential upcoming license amendment and wanted to share current information with Jim and Scott to ensure a smooth transition. Jim has a long history working on the Terror Lake Project and stated that he would remain available to participate in consultation. We briefly discussed the proposal and, based on our site visit during the previous 2 days, and conversations with John Magee regarding the design and capability of the tailrace to accommodate flow from the three units, whether ADF&G would need additional studies. We were advised that ADF&G would be interested in: (1) a hydrologic simulation of the additional flow with three units releasing flow to the tailrace and whether the tailrace, as reconfigured, would be adequate to accommodate the additional flow; and (2) whether there would be a modification to the current rule curve for operation of the Terror River reservoir with the three units operating. We also discussed the next steps for consultation with the agencies and the FERC process. ADF&G offered their assistance as appropriate in assisting KEA with the next steps in the consultation process. We note that ADF&G has offered use of their conference room for meetings with agencies on other projects and would provide space for agency meetings in the future. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 6 We discussed use of the ALP as it would establish a protocol going forward with modifications to the project. Jim and Scott agreed that they could support the ALP as the appropriate pre-filing FERC process. Recommended Approach for the FERC Proceeding and Associated Permitting The recommended approach to the FERC Amendment is to request FERC approval to use the Alternative Licensing Procedure (ALP) to enable KEA to prepare the environmental assessment required by the FERC regulations and the National Environmental Policy Act (NEPA) concurrently. We also recommend that KEA prepare, concurrent with preparation of the application for amendment: (1) plans that will be required to install the third unit; (2) applications for permits; and (3) requests for other required approvals. We discuss the options available to KEA for the FERC process and our recommendation to use the ALP in more detail in Section 2.7 – FERC Application for Amendment – Process Options and 2.8 – Recommended Approach – FERC Alternative Licensing Procedure (ALP) of this report. One of the most comprehensive applications for approval required concurrent with preparation of the amendment application is the Coastal Project Questionnaire (CPQ). The primary purpose of the CPQ is to demonstrate consistency of KEA’s proposed addition of the third unit with the Alaska Coastal Management Plan (ACMP). The Final CPQ will be submitted to the Alaska Department of Natural Resources, Division of Coastal and Oceanic Management (ADNR/DCOM). The CPQ and related Determination of Consistency are required prior to FERC issuance of the Order Approving Amendment to License. Pre-Filing Consultations with Agencies and other Participants We do not anticipate any major requests for studies from the resource agencies. In discussions with ADF&G, we are aware that the ADF&G will be interested in the proposed operation with the three units and any affect on the recently reconstructed tailrace. Following a “Go” decision by KEA of the proposed installation of the Third Unit as discussed within this report, we recommend that KEA and Hatch Acres staff identify primary contacts and enter into consultations with federal and state agencies and other entities (Participants) that will be interested in the Amendment. Hatch Acres, in coordination with KEA, will need to prepare documents to facilitate these consultations: (1) Preliminary Application Document (PAD); (2) Notice of Intent to File an Application for Capacity Amendment (NOI); (3) Request to Use the ALP & Communications Protocol; and (4) a detailed proposed plan of action. We recommend that this initial consultation with the agencies be held in Anchorage. We note that ADF&G has agreed to provide meeting space and assist with contacting the appropriate individuals in the federal and state agencies. The goal of these initial consultations is to reach agreement on: (1) any proposed studies; (2) required permits and other approvals; (3) use of the ALP and agreement regarding the Communications Protocol; and (4) the pre-filing schedule. Topics for discussion and objectives of these consultations include: • Present information regarding KEA’s proposed action (installation of the Third Unit) – format for deliverable is the Preliminary Application Document (PAD); • Discuss how the Third Unit is an essential element in meeting KEA’s overall goal to produce 95% of energy with renewable power by the year 2020; • Discuss benefits of installing the Third Unit: e.g. KEA system benefits and reduced diesel emissions; TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 7 • Discuss KEA’s proposed use of the ALP and provide copies of draft Notice of Intent to File Capacity Amendment Application and Request to Use ALP; • Provide a draft Communications Protocol for review and approval, including signature by decision maker for each agency and other entity that wish to be participants in the ALP; • Receive information from agencies and other entities regarding any required studies; • Confirm requirements for permits and other approvals; • Discuss draft Scoping Document No. 1 and request comments regarding “target” resources; and, • Discuss KEA’s proposed schedule for the FERC process, including permits and other approvals; agree to pre-filing schedule. Preliminary Schedule and Major Milestones For planning purposes, we developed a very preliminary schedule presenting the major steps and milestones in the pre-filing process. We also provide information regarding the steps that FERC Staff typically go through in processing an application for amendment. We cannot provide a schedule for the FERC Staff actions, nor for the issuance of an order. We do, however, provide some notes in this section regarding actions KEA could elect to take in advance of FERC’s issuance of the order to reduce delay in installing the third unit. During Phase 1.b, we will: (1) conduct a site visit to confirm requirements regarding installation of the turbine/generator unit and related mechanical & electrical equipment; (2) continue to work on the regulatory aspects of the project; and (3) prepare a detailed scope, schedule, and budget to prepare and file an Application for Non-Capacity Amendment with the FERC. These consultations will involve KEA Staff during the initial contacts and at major milestones where consultations are required to support the Capacity Amendment Application. A preliminary list of activities, participants & activity duration is provided in the following table: ACTIVIT Y # DESCRIPTION / DELIVERABLES LEAD & PARTICIPANTS DURATION 1 Convene a teleconference with FERC Staff to discuss proposed amendment & pre-filing process. Receive guidance from FERC Staff as provided in FERC regulation for amendments. Lead: Nan Nalder, HAC; Jennifer Richcreek, KEA; & Mo Fayyadd, FERC DHAC Participants: Dick Griffith, HAC; and FERC Staff as determined by Mo. Preparation time – 2 days Teleconference – hold when KEA determines. 2 Prepare draft documents to initiate the FERC proceeding: • Preliminary Application Document • Notice of Intent to File an Application • Request to Use the ALP • Communications Protocol Continue with office studies Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) From NTP from KEA – 60 days 3. Initiate Consultation with agencies & Participants (See notes above at Consultations with Agencies and other Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick 60 days TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 8 ACTIVIT Y # DESCRIPTION / DELIVERABLES LEAD & PARTICIPANTS DURATION Participants Develop PowerPoint to describe KEA’s proposal. Convene meeting in Anchorage. Provide documents listed above at item 2 to facilitate consultation. (Note – should allow 30 days for agencies to review prior to initial consultation) Griffith, & other HAC, as appropriate; Jim Thrall; and Agencies including: ADF&G, ADNR (DCOM & SHPO), FWS, USACE & others TBD. 4. Respond to any agency requests: • Develop proposed study plans • Provide response to questions raised during initial consultation Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, &, as appropriate, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall. 30 days 5. Commence any requested field studies. (continuous activity) Continue with office studies. Identify space in Anchorage & Kodiak to hold Scoping Meetings Prepare Final Package for formal NEPA Scoping: • Notice of Scoping Meeting • Correspondence, as required • PAD • NOI • Request to Use ALP • Communications Protocol • Scoping Document No. 1 • PowerPoint Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith & other HAC, as appropriate; John Magee & Jim Thrall. Subconsultants if field studies are requested. 60 days – 180 days NOTE: Will depend on extent of any requests 6 Issue Notice of Scoping Meetings in local newspapers. Provide Final Package (as noted in Activity 5) to agencies and Participants for review and comment. Begin to prepare Draft Application for Capacity Amendment & Preliminary Draft Environmental Assessment (PDEA). (continuous activity) Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith & other HAC, as appropriate 30 days notice period for meetings 7 Convene Scoping Meetings in Anchorage and Kodiak. Provide opportunity for site visit (powerhouse & tailrace and fly over of Terror Lake reservoir) Documents to be available include: • Notice of Scoping Meeting • Correspondence, as required Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, & other HAC, as appropriate; John Magee & Jim Thrall; and Agencies including: 5 days (includes travel to Kodiak from Anchorage) TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 9 ACTIVIT Y # DESCRIPTION / DELIVERABLES LEAD & PARTICIPANTS DURATION • PAD • NOI • Request to Use ALP • Communications Protocol • Scoping Document No. 1 ADF&G, ADNR (DCOM & SHPO), FWS, USACE & others TBD. Other Participants, including members of the public. 8. Notice Period for Comments in response to Scoping Meetings 30 days post Scoping Meetings 9. Review & respond to comments received from agencies and others. Continue work on Draft Application & PDEA for Amendment & PDEA. Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) 30 – 60 days 10 Complete Draft Application & PDEA. Conduct internal review for consistency Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) 60 days 11 Provide Draft Application for Amendment & PDEA to KEA for pre- issuance review and comment. Respond to questions and comments and provide to KEA for approval Lead: Nan Nalder, HAC & Darron Scott & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) 45 days 12 Provide Draft Application for Amendment & PDEA to agencies & Participants for review & comment. (Electronic service of the Draft Application) Provide paper copies to library in Kodiak & KEA office for public review. Issue Notice in newspapers in Anchorage & Kodiak Note that Exhibit F is only provided to FERC per CEII requirements Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Langley Sears 60 day review period. Note that agencies may request extension of time to comment. 13 Review comments received on Draft Application & PDEA. Contact commenting parties to receive clarification, if necessary. Modify Draft Application to address Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, 30 – 60 days depending on extent of comments receive. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 10 ACTIVIT Y # DESCRIPTION / DELIVERABLES LEAD & PARTICIPANTS DURATION comments received. Prepare Final Application & PDEA Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) 14 File Final Application & PDEA with the FERC Office of the Secretary & Portland Regional Office (PRO) (electronic filing) File Exhibit F separately under CEII with FERC Office of Secretary & copy to PRO (electronic filing) Provide Final Application & PDEA for Amendment to agencies & Participants for review & comment. (Electronic service of the Draft Application) Provide paper copies to library in Kodiak & KEA office for public review. Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Langley Sears 7 days TOTAL – PRE-FILING 539 – 719 DAYS End of Pre-filing & Commencement of Post-Filing FERC Application Processing NOTE: FERC has no established deadlines post-filing. Duration noted below is based on experience with applications of similar complexity. 15 FERC Staff review for Adequacy FERC Staff Within 45 – 60 days of filing 16 FERC issues Notice of Application Respond to any FERC requests for additional information (AIR). Note that FERC may request information they will need to take KEA’s PDEA and turn it into the FERC NEPA EA. Lead: Nan Nalder, HAC & Jennifer Richcreek, KEA Participants: Dick Griffith, Peter Rodrigue, Gene Hawkridge, Dave Johnston, Langley Sears, HAC; John Magee & Jim Thrall (R&M) 30 – 45 days depending on content of AIR 17 FERC Staff review for environmental purposes. FERC Staff No deadline set – given the extent of potential environmental issues associated with Third Unit could take 60 – 90 days 18 Federal & State Agencies provide recommendations, terms & conditions Federal & State Agencies 60-day Notice 19 FERC Staff prepare and issue EA NOTE: FERC Staff may elect to issue EA at same time of issuance of Order on Amendment. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 11 ACTIVIT Y # DESCRIPTION / DELIVERABLES LEAD & PARTICIPANTS DURATION 19 Order Approving Amendment issued NOTE: If there are no interventions or contested comments filed, this Order may be issued by the Division Director, Division of Hydro Administration & Compliance (DHAC) No deadline set – given the extent of potential environmental issues associated with Third Unit could take 90 - 180 days Order is final post 30 days of issuance TOTAL – FERC PROCESSING 285 – 435 DAYS GRAND TOTAL 824 – 1.154 DAYS 2.3 Review of License Requirements We reviewed the December 1978 Application for License; FERC License and amendments to date to the Terror Lake Project; other documents posted to the FERC Docket for Project No. 2743 (Terror Lake Project); the FERC Part 12 Report prepared by Hatch Acres Corporation for the Four Dam Pool Power Agency (FDPPA) who held the license at the time the Part 12 report; and the Dam Safety Inspection Reports prepared by the FERC Division of Dam Safety and Inspections (D2SI), Portland Regional Office (PRO). We note that nothing in the proposed installation of the Third Unit is expected to affect the Offer of Settlement made part of the Order Issuing Major License and Approving Joint Offer of Settlement dated October 5, 1981 and effective on November 1, 1981. Note that the recommended process to prepare the Capacity Amendment Application, the Alternative Licensing Procedure (ALP) allows the Applicant to prepare and file with the Application for License Amendment a Preliminary Draft Environmental Assessment (PDEA). The PDEA addresses the FERC regulation for the Environmental Exhibit E and the requirements of the National Environmental Policy Act. FERC changed the regulations for Applications for License, including Amendments to the License, in the late 1970’s. The 1978 Application for License for the Terror Lake Project was based on the regulations prior to the major modifications. Because of the major changes in the FERC regulations, we determined that the entire format of the Capacity Amendment Application will need to conform to the regulations at 18 CFR 4.51 and 4.41. Based on our review we identified the License Exhibits and Articles that will require investigations and preparation of modifications to the documents on file with the FERC. These investigations and modifications to documents on file with the FERC will be presented in the Capacity Amendment Application. Regarding license exhibits, the regulation in effect does not follow the format of the 1978 Application. KEA will not be required to note which exhibits from the 1978 Application are modified by the Capacity Amendment Application. KEA will be required to address License Articles. Table 2.3.1 identifies these Articles that will be affected by the addition of the third unit. Any modifications will be discussed in the Capacity Amendment Application. Note that FERC will probably issue new License Articles using their current numbering system. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 12 TABLE 2.3.1 LICENSE ARTICLES AFFECTED BY AMENDMENT APPLICATION LICENSE ARTICLE DESCRIPTION MODIFICATION Article 33 Annual Charges (a) administrative charge based on installed capacity Original installed capacity is noted as 26,700 horsepower. KEA will need to file the modified installed capacity in horsepower and FERC will compute the additional administrative charge paid by KEA annually. Article 34 As-built drawings To be filed at completion of construction of the third unit. Article 37 Contract drawings and specifications to be filed with FERC 60 days prior to construction. To be filed following issuance of the Amendment Order and prior to commencement of construction. Article 41 Effects of project operations on the fishery resource in the Kizhuyak River below the powerhouse. Consultation with resource agencies to discuss any required modifications to Article 41. Article 45 Monitor & protect archaeological site 49-KOD- 190 Archaeologically Sensitive Areas in vicinity of powerhouse – protect during construction. Discuss with SHPO whether any of the identified areas could be affected during construction. Article 47 Plans to minimize erosion, dust, sedimentation, water pollution during construction Consultation with resource agencies to discuss any required plans. 2.4 Risk Assessment At the direction of KEA, we did not consult with the resource agencies in performing the review presented in this report. In order to address KEA’s interest in identifying any “fatal flaws” or major difficulties with the proposed FERC amendment, we did briefly discuss the potential for installation of the third unit with staff in the Alaska Department of Fish & Game (ADF&G) as ADF&G has recently been involved in the upgrade of the tailrace and we were interested in identifying any concerns ADF&G would have with addition of the third unit. ADF&G staff did not identify any major issues from their perspective. They will want to be involved in discussions with KEA should KEA elect to proceed with the FERC amendment. The Application for Capacity Amendment is not anticipated to result in requests by resource agencies for any new environmental field studies. We reviewed the existing License Articles and the 1981 Settlement Agreement and did not identify any potential for “opening up the license” to address other project facilities and/or project operations regarding facilities other than at the Terror Lake Powerhouse. We note that consultation with all agencies and interested participants in the FERC licensing process has not occurred and recommend that KEA consider engaging these entities in consultation at the outset of Phase 1.b of the feasibility study. We recommend that the Hatch Acres team participate in such consultations with KEA. We also reviewed the current tailrace operations and found it adequate to accommodate additional flow released from the third unit. Installation of the third turbine will not require additional lands or modifications to the project boundary. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 13 On the scale of 1 to 10 with 10 being the most difficult, we assign a “1” to installation of the third unit. 2.5 FERC Process for Application for Capacity Amendment to License 2.5.1 Required Exhibits for Capacity Related Amendment The FERC regulations require that “Any application to amend a license for a hydropower project that involves additional capacity not previously authorized, and that would increase the actual or proposed total installed capacity of the project, would result in an increase in the maximum hydraulic capacity of the project of 15 percent or more, and would result in an increase in the installed name-plate capacity of 2 megawatts or more, must contain the following exhibits, or revisions or additions to any exhibits on file, commensurate with the scope of the licensed project:” The Terror Lake Project is classified as a Major Project. The contents of the Amendment Application will include modifications to the license exhibits listed above in Table 2.3.1. Exhibits A, B, C, D, E, under 18 CFR 4.51 and Exhibits F, and G under 18 CFR 4.41 would be included in the Amendment Application. As KEA proposes to use the Alternative Licensing Procedure (ALP), a Preliminary Draft Environmental Assessment will replace the Exhibit E. Because no additional lands will be required and the Project Boundary will not be changed, KEA will advise FERC that a modified Exhibit G is not applicable. Citations to the FERC regulation are noted at each License Exhibit; all regulations are found in Title 18 of the Code of Federal Regulations. Table 2.5.1 presents the license exhibits that will be included in the Application for Capacity Amendment. Text in italic face is excerpted from the FERC regulations. TABLE 2.5.1 REQUIRED LICENSE EXHIBITS LICENSE EXHIBIT Initial Statement 4.51(a) This section of the Application identifies the licensee and provides supporting information regarding the state requirements. Of interest to the Amendment, the Initial Statement requires a statement supporting why the proposed changes are necessary. (4) The amendments of license proposed and the reason(s) why the proposed changes are necessary, are: [Give a statement or description] (Emphasis added) Note that the statement to include here will be excerpted from the Preliminary Draft Environmental Assessment at the section discussing the purpose and need for the Amendment: e.g. The Terror Lake Project is the cornerstone to KEA’s renewable energy vision. Exhibit A 4.51(b) Project Description (3) The number, type, and rated capacity of any turbines or generators, whether existing or proposed, to be included as part of the project; 5) The specifications of any additional mechanical, electrical, and transmission equipment appurtenant to the project; and 6) Statement that no additional lands will be required TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 14 LICENSE EXHIBIT Exhibit B 4.51(c) Project Operation (1) A statement whether operation of the powerplant will be manual or automatic, an estimate of the annual plant factor, and a statement of how the project will be operated during adverse, mean, and high water years; (2) An estimate of the dependable capacity and average annual energy production in kilowatt-hours (or a mechanical equivalent), supported by the following data: (i) The minimum, mean, and maximum recorded flows in cubic feet per second of the stream or other body of water at the powerplant intake or point of diversion, with a specification of any adjustments made for evaporation, leakage, minimum flow releases (including duration of releases), or other reductions in available flow; monthly flow duration curves indicating the period of record and the gauging stations used in deriving the curves; and a specification of the period of critical streamflow used to determine the dependable capacity; (ii) An area-capacity curve showing the gross storage capacity and usable storage capacity of the impoundment, with a rule curve showing the proposed operation of the impoundment and how the usable storage capacity is to be utilized; (iii) The estimated hydraulic capacity of the powerplant (minimum and maximum flow through the powerplant) in cubic feet per second; (iv) A tailwater rating curve; and (v) A curve showing powerplant capability versus head and specifying maximum, normal, and minimum heads; (3) A statement, with load curves and tabular data, if necessary, of the manner in which the power generated at the project is to be utilized, including the amount of power to be used on-site, if any, the amount of power to be sold, and the identity of any proposed purchasers; Exhibit C 4.51(d) Proposed Construction Schedule (2) Proposed schedule describing the necessary work and specifying the intervals following issuance of a license amendment order when the work would be commenced and completed. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 15 LICENSE EXHIBIT Exhibit D 4.51(e) Statement of Costs and Financing (ii) The cost of the new development work, with a specification of: (A) Total cost of each major item; (B) Indirect construction costs such as costs of construction equipment, camps, and commissaries; (C) Interest during construction; and (D) Overhead, construction, legal expenses, taxes, administrative and general expenses, and contingencies. (4) A statement of the estimated average annual cost of the total project as proposed specifying any projected changes in the costs (life-cycle costs) over the estimated financing or licensing period if the applicant takes such changes into account, including: (i) Cost of capital (equity and debt); (ii) Local, state, and Federal taxes; (iii) Depreciation and amortization; (iv) Operation and maintenance expenses, including interim replacements, insurance, administrative and general expenses, and contingencies; and (v) The estimated capital cost and estimated annual operation and maintenance expense of each proposed environmental measure. (5) A statement of the estimated annual value of project power, based on a showing of the contract price for sale of power or the estimated average annual cost of obtaining an equivalent amount of power (capacity and energy) from the lowest cost alternative source, specifying any projected changes in the cost of power from that source over the estimated financing or licensing period if the applicant takes such changes into account. (6) A statement specifying the sources and extent of financing and annual revenues available to the applicant to meet the costs identified in paragraphs (e) (3) and (4) of this section. (7) An estimate of the cost to develop the license application; (8) The on-peak and off-peak values of project power, and the basis for estimating the values, for projects which are proposed to operate in a mode other than run-of-river; and (9) The estimated average annual increase or decrease in project generation, and the estimated average annual increase or decrease of the value of project power, due to a change in project operations ( i.e., minimum bypass flows; limits on reservoir fluctuations). PDEA 4.34(i) The format for the PDEA follows the NEPA Environmental Assessment (EA) requirements. For those sections of the EA that are not applicable, we will state in an introductory section the extent of the potential project-related effects on natural resources and why information is not appropriate. The content of the PDEA will depend on any environmental issues raised by the resource agencies during the Scoping Meeting and issues identified by FERC Staff. At this point, we do not anticipate a major effort associated with the PDEA. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 16 LICENSE EXHIBIT Exhibit F 4.41(g) General Design Drawings of the Principal Project Works & Supporting Information Used as the Basis of Design. NOTE: The Exhibit F drawings are protected under the FERC regulations governing Critical Energy Infrastructure Information (CEII) and are not to be provided in publicly available documents. Exhibit F drawings are only provided to the FERC and must be filed pursuant to CEII procedures contained in 18 CFR 388.112 and 388.113. The drawings must conform to the specifications of §4.39. (1) The drawings must show all major project structures in sufficient detail to provide a full understanding of the project, including: (i) Plans (overhead view); (ii) Elevations (front view); (iii) Profiles (side view); and (iv) Sections. Exhibit Drawings Exhibit L-11 / FERC Drawing No. 2743-19 – Powerhouse (PH) Site Plan Exhibit L-12 / FERC Drawing No. 2743-20 – PH General Arrangement - Plans Exhibit L-13 / FERC Drawing No. 2743-21 – PH General Arrangement – Sections Exhibit G 4.41(h) Map of the project that must conform to the specifications of §4.39. NOTE: Because there are no new major project features proposed and no modification to the Project Boundary, we will include a statement that no modifications to the Exhibit G Maps on file with the FERC are required. 2.6 Potential Study Requirements Most of the studies to support the Capacity Amendment Application are related to engineering and economic aspects of the proposed installation of the Third Unit. The Application for Capacity Amendment is not anticipated to result in requests by resource agencies for any new environmental field studies. We do anticipate that the agencies will be interested in reviewing our analysis regarding the additional flow from the powerhouse during periods when all three units would be in operation; and analysis of the effect on the Terror Lake reservoir during such periods. 2.7 FERC Application for Amendment – Process Options 2.7.1 Contents of a Capacity-related Amendment For capacity-related amendments, a licensee is required to provide information required by Subpart L – Application for Amendment; 18 CFR 4.201(b): (b) Required exhibits for capacity related amendments. Any application to amend a license for a hydropower project that involves additional capacity not previously authorized, and that would increase the actual or proposed total installed capacity of the project, would result in an increase in the maximum hydraulic capacity of the project of 15 percent or more, and would result in an increase in the installed name-plate capacity of 2 megawatts or more, must contain the following exhibits, or revisions or additions to any exhibits on file, commensurate with the scope of the licensed project: TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 17 (5) For amendment of a license for a water power project that, at the time the application is filed, has been constructed and is proposed to have a total installed generating capacity of more than 5 MW—Exhibits A, B, C, D, E, F, and G under §4.51 of this chapter. 2.7.2 Process Options The FERC regulations governing Applications for Amendment are silent as regards process design for Applications for Amendment. Effective July 23, 2005, the Integrated Licensing Process (ILP) is the default process for filing an application for an original, new, or subsequent license. We discussed this with FERC staff in the Division of Hydro Administration and Compliance (DHAC) and were advised that the most amendments follow the traditional licensing process (TLP) and the three-stage consultation process. We noted that KEA would be interested in consolidating, to the extent practicable, the environmental review and related requirement for a NEPA document to support a Commission action. The consolidated review provided by the ALP avoids the “second bite at the apple” that often occurs in a TLP: Applicant files Application for License with the Exhibit E; Agencies provide recommendations; FERC Staff then conducts NEPA Scoping and prepares an Environmental Assessment (EA). Often agencies that recommended terms and conditions in response to the Exhibit E increase their recommendations in response to the FERC NEPA Scoping and related EA. We were advised that while the regulation is silent as regards applications for amendment, an Applicant may elect to use the Alternative Licensing Procedure. Commission approval is needed to use either the Traditional or the Alternative Licensing Process. There are three options for the FERC prefiling process: • Integrated Licensing Process (ILP) • Traditional Licensing Process (TLP) • Alternative Licensing Procedure (ALP) The following sections 2.7.1 through 2.7.3 provide a brief discussion of the three options with notes regarding the appropriateness of each option to KEA’s proposed action. In reviewing the three options, we also considered the applicability of each option to the proposed addition of the third unit and the other potential project enhancements being investigated in Task Order 2. We see the benefit of establishing a protocol for the FERC amendment proceeding for the Third Unit Addition that would serve KEA’s interests in enhancing the Terror Lake Project with other potential applications for amendment. Section 2.7.6 provides a discussion of the schedules for each option. 2.7.3 Integrated Licensing Process (ILP) FERC states that: “The Integrated Licensing Process is intended to streamline the Commission's licensing process by providing a predictable, efficient, and timely licensing process that continues to ensure adequate resource protections. The efficiencies expected to be achieved through the ILP are founded in three fundamental principles: • Early issue identification and resolution of studies needed to fill information gaps, avoiding studies post-filing; • Integration of other stakeholder permitting process needs; and TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 18 • Established time frames to complete process steps for all stakeholders, including the Commission.” (Source: FERC Website at Industries – Hydropower) The ILP is established as the “default” process and Applicants desiring to use either the TLP or ALP are required to file a request with the FERC. The request must include a discussion regarding why the ILP is not appropriate for the proposed FERC proceeding and include documentation of the Applicants consultation with agencies and other entities regarding their support for the request. The ILP imposes a detailed, sequential process schedule, including time frames for each step, including deadlines that must be met. ILP was primarily designed to address the problem FERC identified where delays in issuing licenses were caused by the state agencies failing to issue water quality certificates in a timely fashion; and issues experienced in proceedings involving large existing hydropower projects seeking a new license (relicensing) During the rulemaking, many commenting entities stated that strict adherence to the mandatory deadlines imposed by the FERC in setting the schedule emphasized speed at the expense of sound science and quality decision-making Based on our experience, the ILP would be “overkill” for the proceeding to apply for the Capacity Amendment. The ILP is highly regulated and the Applicant cedes a great degree of control over the process to the FERC Staff: FERC holds the Scoping Meetings; FERC Staff review and approve all study plans; the schedule is established by regulation and does not provide flexibility; the timeframe for the ILP is not designed for specific proceedings, rather the regulation imposes a “one size fits all” and does not take into consideration the scope of the proposed action, nor does the schedule take into consideration difficulty in accessing a project site or the seasonal constraints on conduct of field investigations. 2.7.4 Traditional Licensing Process (TLP) FERC states: “In developing a license application, applicants must complete and document a three-stage pre-filing consultation process. The steps include: First Stage • Applicant issues notice of intent, preliminary application document, request to use TLP, and newspaper notice; • Commission approves use of TLP; • Applicant conducts joint agency/public meeting and site visit; • Resource agencies and tribes provide written comments; and • Agencies, tribes, or applicant request dispute resolution on studies with the Commission. Second Stage • Applicant completes reasonable and necessary studies. • Applicant provides draft application and study results to resource agencies and tribes; • Resource agencies and tribes comment on draft application; and • Applicant conducts meeting if substantive disagreements exist. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 19 Third Stage • Applicant files final application with Commission and sends copies to agencies and tribes.” (Source: FERC Website at Industries – Hydropower) The primary drawback to the TLP is that the environmental report is in the format of the Exhibit E. The Exhibit E format does not address requirements under NEPA for an Environmental Assessment (EA). What this means is that the Applicant prepares and files the Exhibit E as part of the Application. Following FERC acceptance of the Application, FERC Staff or a Third Party Contractor conducts NEPA Scoping and prepares the EA or EIS depending on the extent of environmental impacts. The post-filing process would add 1 – 2 years to the FERC post-filing process. In addition, agencies have a second opportunity to impose terms and conditions: the first opportunity is when the Applicant files the Application including the Exhibit E and the agencies file recommendations and preliminary terms and conditions; and the second opportunity is in response to FERC Scoping and issuance of the NEPA EA where the agencies may file additional recommendations and final terms and conditions. In our experience, agencies often take advantage of this “second bite of the apple” to impose significantly modified recommendations and, in some cases, mandatory terms and conditions. 2.7.5 Alternative Licensing Procedure (ALP) FERC States: “In contrast to the traditional licensing process described above, Applicants can utilize the Commission's alternative licensing process designed to improve communication among affected entities. As part of the alternative licensing process, an applicant can: • Tailor the pre-filing consultation process to the circumstances of each case; • Combine into a single process the pre-filing consultation process and environmental review processes under the National Environmental Policy Act and other statutes; and • Allow for preparation of a preliminary draft environmental assessment by an applicant or an environmental impact statement by a contractor chosen by the Commission and funded by the applicant. The requirements of the alternative licensing process are found in 18 CFR 4.34(i) and discussed in detail in Order 596.” (Source: FERC Website at Industries – Hydropower) The significant advantages of the ALP are: • The pre-filing consultation process is collaborative and allows flexibility in developing the schedule and deadlines are established by the participants; • Study plans are developed by the applicant in consultant with participants and can be modified as need arises • The Applicant, in coordination with participants, tailor the pre-filing process to be commensurate with the scope of the proposed action; and • The Applicant conducts the Scoping process and prepares the Draft NEPA EA in the form of the Preliminary Draft Environmental Assessment (PDEA). TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 20 2.7.6 Comparison of Options The following matrix presents a comparison of the three processes: TABLE 2.7.6 COMPARISON OF OPTIONS Item Integrated Licensing Process (ILP) Traditional Licensing Process (TLP) Alternative Licensing Procedure (ALP) Consultation with Resource Agencies & Indian Tribes Integrated under regulation “Paper – driven” – primarily document provision for review & comment Collaborative FERC Staff Involvement Begins at Pre-filing Notice of Intent; Staff direction of process & involvement is sustained throughout Post Application Filing Early involvement on requested basis. Post Application Filing Deadlines Strict, defined deadlines for all participants throughout process. Requests for extension must be detailed and demonstrate good cause. Granting extensions is rare. Pre-filing – some deadlines for participants. Post-filing – defined deadlines for participants. Pre-filing – deadlines are defined by the collaborative group. Post-filing – defined deadlines for participants. Study Plan Development Developed through study plan meetings. All plans must be approved by FERC. Developed by Applicant based on early agency and tribal recommendations. No FERC involvement. Developed by collaborative group. Applicant may request FERC staff assistance; available as FERC staffing resources allow. Study Dispute Resolution Informal dispute resolution available to all participants. Formal dispute resolution available to agencies with mandatory conditioning authority. 3-member panel technical recommendation on study dispute. FERC OEP Director opinion binding on Applicant. FERC study dispute resolution available upon request. FERC OEP Director issues advisory opinion. FERC study dispute resolution available upon request. FERC OEP Director issues advisory opinion. Application Preliminary licensing proposal or draft application and final application include Exhibit E that has form and contents of an EA meeting requirements of NEPA. Draft and final application include Exhibit E. Post filing FERC staff conduct scoping and prepare NEPA document Draft and final application with applicant prepared EA or third- party EIS meeting requirements of NEPA NEPA Process NEPA Scoping and preparation of EA are integrated with pre-filing process. Begins when FERC staff accepts the application. FERC staff conducts Scoping and prepares the EA or EIS. NEPA Scoping and preparation of EA are conducted during collaborative pre-filing process. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 21 2.8 Recommended Approach – FERC Alternative Licensing Procedure (ALP) 2.8.1 Process Selection – Schedule Comparison The ILP, as noted above, is a highly regulated pre-filing process. The schedule follows the process diagram included in the Final Rule. The NEPA process is integrated with the pre-filing activities. Modifications to the schedule are very difficult to achieve. Strict deadlines are imposed. The TLP follows the three-stage consultation process and review and comment periods are specified in the FERC regulation. Modifications to these periods require approval by all participants and the FERC. The NEPA process begins post-filing and FERC acceptance of the Application. The ALP pre-filing schedule and deadlines are defined by the collaborative group. The NEPA process is integrated with the pre-filing activities. 2.8.2 Recommendation to Use FERC ALP We reviewed the three available options that govern the pre-filing consultation and preparation of the Capacity Amendment Application discussed above in Section 2.7. We recommend that KEA request FERC approval to use the Alternative Licensing Procedure (ALP), as opposed to opting in for the ILP as the default process for the following reasons: • ALP allows KEA, in consultation with the agencies, to tailor the pre-filing consultation process to fit the scope of the potential project-related effects on the environment • ALP provides KEA flexibility in design of field studies in consultation with affected/interested agencies; unlike the ILP where FERC must approve all study plans • ALP provides KEA and the pre-filing participants with flexibility in establishing the schedule for the pre-filing process; unlike the ILP where FERC establishes rigid deadlines. This flexibility is particularly important for a project located in a remote site where access is solely by helicopter, float plane, or boat. • ALP provides a process where consultations, environmental review, and NEPA scoping are combined; this greatly streamlines the pre-filing process. • ALP allows preparation of the NEPA document – the PDEA. FERC uses KEA’s PDEA as the basis for its own NEPA document – another aspect of the streamlining benefits of the ALP. The regulation for the ALP at 18 CFR 4.34 (i)(2) describes the goals of the ALP (2) The goal of such alternative procedures shall be to: (i) Combine into a single process the pre-filing consultation process, the environmental review process under the National Environmental Policy Act and administrative processes associated with the Clean Water Act and other statutes; (ii) Facilitate greater participation by and improve communication among the potential applicant, resource agencies, Indian tribes, the public and Commission staff in a flexible pre-filing consultation process tailored to the circumstances of each case;(Emphasis Added) (iii) Allow for the preparation of a preliminary draft environmental assessment by an applicant or its contractor or consultant, or of a preliminary draft TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 22 environmental impact statement by a contractor or consultant chosen by the Commission and funded by the applicant; (iv) Promote cooperative efforts by the potential applicant and interested entities and encourage them to share information about resource impacts and mitigation and enhancement proposals and to narrow any areas of disagreement and reach agreement or settlement of the issues raised by the hydropower proposal; and (Emphasis Added) (v) Facilitate an orderly and expeditious review of an agreement or offer of settlement of an application for a hydropower license, exemption or amendment to a license. Following KEA selection of the pre-filing process, KEA will prepare and file with the FERC: • Notice of Intent to File an Application for License – discussed below at 2.8.2 • Request to Use the Alternative Licensing Process – discussed below at 2.8.3 2.8.3 Notice of Intent to File a Capacity Amendment Application When FERC modified its regulations in 2005, it added a requirement for applicants to file a Notice of Intent (NPI) to file. While the regulation does not address amendments, this requirement may apply. Noticing requirements are found at 18 CFR 5.5(b): (1) The potential applicant or existing licensee's name and address. (2) The project number, if any. (3) The license expiration date, if any. (4) An unequivocal statement of the potential applicant's intention to file an application for an original license, or, in the case of an existing licensee, to file or not to file an application for a new or subsequent license. (5) The type of principal project works licensed, if any, such as dam and reservoir, powerhouse, or transmission lines. (6) The location of the project by state, county, and stream, and, when appropriate, by city or nearby city. (7) The installed plant capacity, if any. (8) The names and mailing addresses of: agencies, Tribes, and other participants The Notice is filed with the FERC along with the Request to Use the ALP and the Pre- Application Document. 2.8.4 Request to Use the ALP FERC modified its regulations in 2005. The primary purpose of the modified regulations was to include the Integrated Licensing Process (ILP) discussed above in section 2.8.1. FERC established the ILP as the “default process.” FERC added a requirement in Section 5.3(a)(2) of the regulations that requires applicants to file a request with the FERC if the applicant desires to use and alternative to the ILP: “(2) Any potential license applicant that files its notification of intent pursuant to §5.5 and pre-application document pursuant to §5.6 after July 23, 2005 must request authorization to use the licensing procedures of parts 4 and 16, as provided for in paragraphs (b)–(f) of this section.” The following discussion identifies the steps in requesting FERC approval to use the ALP and includes the relevant regulation in italic face following the narrative. The regulation governing Alternative procedures is found in 18 CFR 4.34: TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 23 (i) Alternative procedures. (1) An applicant may submit to the Commission a request to approve the use of alternative procedures for pre-filing consultation and the filing and processing of an application for an original, new or subsequent hydropower license or exemption that is subject to §4.38 or §16.8 of this chapter, or for the amendment of a license that is subject to the provisions of §4.38. The first step is to contact all agencies and other potential participants to discuss KEA’s desire to use the ALP, including a statement why the ALP will result in an efficient and effective pre- filing process. (2) A potential applicant requesting the use of §4.34(i) alternative procedures of this chapter must: (i) Demonstrate that a reasonable effort has been made to contact all agencies, Indian tribes, and others affected by the applicant's request, and that a consensus exists that the use of alternative procedures is appropriate under the circumstances; Following this initial consultation, KEA will prepare a Communications Protocol, provide to agencies and participants for review and comment and file with FERC at the outset of the pre- filing process. (ii) Submit a communications protocol, supported by interested entities, governing how the applicant and other participants in the pre-filing consultation process, including the Commission staff, may communicate with each other regarding the merits of the potential applicant's proposal and proposals and recommendations of interested entities; and KEA is required to provide a copy of its request to use the ALP for review and comment before filing with the FERC (iii) Provide a copy of the request to all affected resource agencies and Indian tribes and to all entities contacted by the applicant that have expressed an interest in the alternative pre-filing consultation process. (d)(1) The potential applicant must provide a copy of the request to use the traditional process or alternative procedures to all affected resource agencies, Indian tribes, and members of the public likely to be interested in the proceeding. The request must state that comments on the request to use the traditional process or alternative procedures, as applicable, must be filed with the Commission within 30 days of the filing date of the request and, if there is no project number, that responses must reference the potential applicant's name and address. KEA then files the Request to Use the Alternative Procedure, accompanied by the Communications Protocol with FERC, provides copies to consulted entities, and publishes notice of its request in local newspapers (in this case, the notice is also to be published in the Anchorage Daily News. (2) The potential applicant must also publish notice of the filing of its notification of intent, of the pre-application document, and of any request to use the traditional process or alternative procedures no later than the filing date of the notification of intent in a daily or weekly newspaper of general circulation in each county in which the project is located. The notice must: (i) Disclose the filing date of the request to use the traditional process or alternative procedures, and the notification of intent and pre-application document; (ii) Briefly summarize these documents and the basis for the request to use the traditional process or alternative procedures; TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 24 (iii) Include the potential applicant's name and address, and telephone number, the type of facility proposed to be applied for, its proposed location, the places where the pre-application document is available for inspection and reproduction; (iv) Include a statement that comments on the request to use the traditional process or alternative procedures are due to the Commission and the potential applicant no later than 30 days following the filing date of that document and, if there is no project number, that responses must reference the potential applicant's name and address; (v) State that comments on any request to use the traditional process should address, as appropriate to the circumstances of the request, the: (A) Likelihood of timely license issuance; (B) Complexity of the resource issues; (C) Level of anticipated controversy; (D) Relative cost of the traditional process compared to the integrated process; and (E) The amount of available information and potential for significant disputes over studies; and (F) Other factors believed by the commenter to be pertinent; and (vi) State that respondents must submit an electronic filing pursuant to §385.2003(c) or an original and eight copies of their comments to the Office of the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. The FERC regulation provides that: “(e) Requests to use the traditional process or alternative procedures shall be granted for good cause shown.” [Order 2002, 68 FR 51121, Aug. 25, 2003; 68 FR 61742, Oct. 30, 2003]” 2.8.5 Communications Protocol The purpose of this Communication Protocol (Protocol) is to facilitate communication and cooperation among KEA; federal and state agencies; Native Alaska Tribes and Native Corporations; other interested organizations; and members of the public (collectively, Participants) during the preparation of KEA’s Capacity Amendment Application. The Communications Protocol is required by the FERC regulations at 18 CFR 4.34(i) (3) for the Alternative Licensing Procedure (ALP): (3) A potential hydropower applicant requesting the use of alternative procedures must: (i) Demonstrate that a reasonable effort has been made to contact all resource agencies, Indian tribes, citizens' groups, and others affected by the applicant's proposal, and that a consensus exists that the use of alternative procedures is appropriate under the circumstances; (ii) Submit a communications protocol, supported by interested entities, governing how the applicant and other participants in the pre-filing consultation process, including the Commission staff, may communicate with each other regarding the merits of the applicant's proposal and proposals and recommendations of interested entities; and (iii) Serve a copy of the request on all affected resource agencies and Indian tribes and on all entities contacted by the applicant that have expressed an interest in the alternative pre-filing consultation process. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 25 2.8.6 Preliminary Application Document (PAD)/Draft Annotated Application for License We consulted with FERC Staff regarding requirements for the PAD as required in the FERC regulations at 18 CFR 5.8. The purpose of a PAD is to provide FERC and Participants with existing information relevant to the project proposal. Potential Applicants for license are not required to conduct studies in order to generate information for inclusion in the PAD. Because this is an Application for Capacity Amendment to install a third unit in the existing Powerhouse and KEA’s proposal does not involve: ground-disturbing actions on lands not already disturbed and no additional lands are required, KEA will use existing information and information developed in the pre-feasibility studies presented in this report, KEA will present information required by the FERC regulation for the PAD in the format of a Draft Application for License. 2.9 Schedule to Prepare Capacity Amendment Application One of the major benefits of using the ALP is the ability to establish the pre-filing schedule in consultation with the agencies and other participants. This flexibility allows KEA to schedule meetings and any on-site visits by participants to avoid poor weather conditions. A schedule would be developed during Phase 1.b of the Pre-Feasibility Study. Please see a preliminary schedule included at Section 2.2 Strategic Planning of this report. This schedule was developed absent any consultation with agencies and other participants and is provided solely for planning purposes. 3. Engineering Review 3.1 Purpose of Engineering Review The purpose of the Engineering Review is to determine whether there are any major modifications that may be required to install the third unit and review tailrace adequacy to accommodate modifications in project operation. The project constructability, potential construction schedule, and adequacy of existing As-Built Drawings and License Exhibits to proceed with planning and support the license amendment, are also evaluated. 3.2 Review of Existing Third Bay Provisions 3.2.1 Civil / Mechanical The third bay in the powerhouse, which is currently unused, is equal in size to the Unit 1 and 2 turbine bays. Therefore the powerhouse can accommodate a third unit that is at least equal in capacity to the existing units. Only the primary (first stage) concrete has been placed in the third bay, allowing for the second stage concreting once the embedded parts for the new turbine and generator are in place. The open area for secondary concrete is believed to be sufficiently large to accommodate slight variations in turbine dimensions with modern state-of-the-art Pelton turbines when compared early 1980’s design of the Unit 1 and 2 turbines. Variations are generally quite small, and this will allow a turbine with the highest possible efficiency, considering head and flow conditions. It is uncertain as to what, if any anchors or other provisions have been made in the primary concrete for setting, adjusting, and holding the new turbine components during installation and concreting operations. However, even if nothing has been provided, drilled anchors and dowels can be installed for this purpose without major inconvenience. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 26 The spherical turbine inlet valve for the third unit is in place and bolted to the branch pipe from the penstock manifold. It is reported that the valve is not complete and only the valve body is in place (no rotor, seals, bearings or valve operator). The downstream end of the valve is closed with a bolted pressure flange. Use of this valve body for the third unit will require some review, as supply of the remaining valve components by suppliers other than Fuji, the original equipment manufacturer, may be difficult. It may be more expeditious to purchase a complete new valve. It appears that the cooling water system and other mechanical systems have been designed to allow future expansion for a third unit. The powerhouse cranes runway currently extends over the third bay and would be used for installation of the new unit. Suitable care will be required that crane operations and construction activities will not affect operation of the other units (i.e. don’t drop anything on the Unit 1 or 2 generators). Other mechanical considerations for installing a third unit at Terror Lake include: • Impact of added waterway head losses on performance of the new and existing units • Hydraulic transients with the added flow of the third unit • Tailrace water levels with the higher flow and its affect on turbine operation • Potential for increased sediment in the water, and its adverse affect on the turbines At present the head loss from the Terror Lake reservoir to the turbines with both units discharging rated flow (135 cfs) is 26 ft, based on site test data. With a third 135 cfs unit the loss will increase to approximately 57 ft. As a result, the overall gross head water-to-wire efficiency of the plant when operating three units at rated flow will be about 2.5% lower than with two units. However, when the third unit is installed the overall efficiency when only one or two units are operating should increase a small amount as the new turbine should be slightly more efficient than the existing units, even with the recently installed new runners. The project design criteria indicates that hydraulic transients with third unit installed was considered in the original design analysis of the plant. Apparently, with three units there may be some limit to the needle operating time on one of the units. This is not be a major obstacle but should be reviewed further in the context of unit parallel operation. With three units operating, tailwater levels will increase. Levels that are too high would interfere with the Pelton turbine operation. This has been reviewed in Section 3.3, and tailwater levels are not considered to be a problem. Increased flows and velocities in the tunnels and penstock, in theory, imply added sediment transport to the units and increased wear on the turbine runners and needles. Sediment erosion has been a problem in the past, but has been mitigated by the present rock trap design. For the Terror Lake project, the majority of the sediment comes from the Falls Creek and Rolling Rock Creek diversions, and the flow through these diversions will not change with the addition of the third unit. Therefore the addition of a third unit will not have any effect on sediment erosion. 3.2.2 Electrical We noted space constraints and are concerned that the space available in the control room may be inadequate for the Unit 3 control panel. We also have questions regarding the adequacy of space in the existing switchyard and control building for addition of a Unit 3 step-up transformer, protection, isolating disconnect switch, and bus extensions needs to be evaluated. Further investigation is needed. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 27 We have questions regarding the capability of the existing SCADA system to accommodate the new unit. It may not be possible to extend the existing DEC PDP-11/24 SCADA system for the new unit, although it may be possible to obtain components for expanding the equipment from Hewlett-Packard or an after market seller if there is adequate space. It may be necessary to complete a SCADA system upgrade to accommodate Unit 3 input/output. There are no provisions for auxiliary power for Unit 3 according to the information provided by KEA on 9/21/2009. Adequacy of existing equipment including ac and dc distribution panels and motor controls needs further evaluation to determine if sufficient space exists to add the necessary branch circuit breakers and motor controllers. We have questions regarding the adequacy of the existing 125 V dc system 168 Ah battery needs to be evaluated for the addition of Unit 3, including powering new controls, relays, and switchgear. This should be considered as the battery is being replaced this year. We have questions regarding the adequacy of raceways to accommodate control and power cabling between Unit 3 and other system elements; this needs to be evaluated. It appears that the existing 138 kV transmission line from Terror Lake to KEA’s Airport Substation is adequate for the additional power that will be added by Unit 3, but further study is needed to make certain that no system problems will arise from the added capacity, such as a need to upgrade the fault ratings of equipment at all 138-kV system terminals. With the addition of Unit 3, we need to make certain that the plant will meet current NESC and NEC code provisions for all newly added equipment, including an evaluation of arc flash protective margins and labeling requirements, and adequate space and egress provisions. 3.3 Tailrace Adequacy The tailrace capacity is adequate for three units operating. The tailrace confluence with Kizhuyak River was reconstructed recently and reduced the backwater effect into the tailrace channel during high river flows. The addition of a third unit should not have significant effect on the depth of flow, velocity of flow, or high tailwater elevation when all units are operating. We estimate that the depth of flow in the channel may increase 9 inches and the velocity of flow will increase about 0.5 fps, over current conditions with only two units. The increased flow velocity is not expected to affect the stability of the riprap along the banks. The boulders were sized for velocities higher than those expected with three units operating. 3.4 Existing Drawings 3.4.1 As-Built Drawings New drawings will be required as part of engineering for the construction and installation of the third unit. These drawings would be issued to the FERC as as-built drawings once the work is complete. • Figure 3.1-1, Powerhouse Main Single Line Diagram, is not up-to-date. • Exhibit 4.4.1A System Switching Diagram: voltage level shown for the Port Lions line (7.2/12.47 kV) is not consistent with the Supporting Technical Information Document STI-12-2008, FERC Project Number 2743, Amendment No.1 dated December 2008 prepared by HDR Alaska, Inc. • General Arrangement Drawings, e.g. Figures 1.13-1, -2, and -3 are not dimensioned as to equipment locations; location of motor control centers does not appear to be indicated. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 28 3.4.2 Exhibit F Drawings Revisions to existing Exhibit F drawings that would be required to support an application for capacity amendment include: Exhib it FERC No. 2743- Showing L-12 2743-48 Powerhouse General Arrangement – Plans L-13 2743-49 Powerhouse General Arrangement – Sections L-14 2743-50 Powerhouse General Arrangement - Plans 3.4.3 Exhibit G Maps All activities related to installation of the third unit would occur within the existing Project Boundary and no new structures are proposed. Therefore, no revisions to existing Exhibit G drawings would be required to support an application for capacity amendment 3.5 Constructability Review This section contains a very preliminary review of constructability. A more detailed evaluation will be conducted during Phase 1.b. 3.5.1 Adequacy of Third Bay Space While a more detailed review of the equipment requirements and space allocation in the third bay is required, significant problems or obstacles are not anticipated. The third bay is considered adequate for a unit that is the same size as Units 1 and 2. 3.5.2 Water Conveyance Connections Completion of the new turbine installation without significant disruption of Terror Lake operations will require careful study. Terror Lake is key to KEA’s operations and it is necessary to keep plant outages to a minimum. During certain periods of the year plant outages would not be allowed. We understand that May through June is the optimum time to have the Terror Lake Project offline to install the third unit. As a minimum, there needs to be one outage to add the turbine inlet valve internal parts or to install a new valve. Adding turbine inlet valve new parts would obviously require a longer outage. Another consideration is the possibility that the penstock branch line for Unit 3 has, over time, become filled with sediment (volcanic ash). This sediment will have to be removed prior to start of operation of the new turbine. It would appear that the best time to do this would be before the new turbine casing is installed. If the existing valve or downstream flange were removed the sediment could be moved into the third bay area for disposal. Various outage scenarios can be postulated, including the following: (a) Install new internal parts in existing valve TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 29 Activity Outage (days) Comment Unwater tunnel and penstock 2 Remove valve body 2 Install internal parts in valve 14 Risk of delay if valve body is not in good condition Remove sediment from penstock 0 Work done coincident with Item 3 Re-install and test valve 4 Re-water tunnel and penstock 2 Total outage 24 (b) Procure new valve Activity Outage (days) Comment Unwater tunnel and penstock 2 Remove valve body 2 Remove sediment from penstock 5 Install and test valve 5 Re-water tunnel and penstock 2 Total outage 16 Rather than dewatering the complete waterway and tunnel it may be possible to only dewater downstream of the guard valves, which are approximately 3100 ft upstream of the powerhouse. This would significantly reduce the dewatering and re-watering time, but safety issues must be considered. It may be necessary to overhaul the existing (Unit 1 and 2) turbine inlet valves. If this is required the overhaul work should be planned in conjunction with the work on the third unit. One possible scenario would be: • Purchase a new valve • Replace the Unit 1 valve with the new valve and then rebuild the Unit 1 valve. • Replace the Unit 2 valve with the rebuilt Unit 1 valve and than rebuild the Unit 2 valve. • Install the rebuilt Unit 2 valve in the new Unit 3. Because of equipment lead times, this work needs to be planned well in advance of the replacement activities. Other than the valve work, and perhaps a short outage or outages for electrical interconnections it should be possible to complete the third unit work without interruption of existing plant generation activities. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 30 3.6 Construction Schedule Fabrication of the new electrical and mechanical equipment will drive the construction schedule. Fabrication of the turbine/generator will occur off-site. Modifications to the powerhouse and switchyard required to accommodate the new turbine/generator are not expected to take over a 6-month period. Outage of the project to install the new electrical and mechanical equipment will probably be 1.5 weeks in duration. KEA advises the optimum time for a project outage is May through June. KEA has redundant diesel capability and would use diesel and wind during the outage at the Terror Lake Project. 4. Conclusions and Recommendations 4.1 Conclusions – Regulatory Installation of the third unit will primarily be accomplished within the existing powerhouse and switchyard. We did not identify any activities that would result in environmental impacts. No additional lands will be required as all activities will occur within the existing Project boundary. Addition of the third unit will increase the project installed capacity and average annual generation. We did not identify any major issues regarding the FERC amendment process and related permitting / approvals associated with installation of the third unit. 4.2 Conclusions – Engineering No serious engineering concerns or issues were identified in the engineering review. There is some concern about control room space and egress with additional controls, but that can likely be solved by adding an exit door to the outside through the back wall. Head losses will increase with three units running, reducing the gross head about 2.5 percent when running three units compared to two. However, the new unit should be slight more efficient that the two existing units, so the overall plant efficiency should increase when running only one or two units. We have found no substantive reason that the Unit 3 addition will not be feasible with respect to electrical, protection, control, communications, and instrumentation; with the caveat that with a number of unanswered questions, we may yet discover other challenges that will need to be addressed. 4.3 Recommendations – Regulatory We recommend that KEA and Hatch Acres engage the agencies and other entities who will; be interested in the Amendment in consultation at the beginning of Phase 1.b. We recommend that KEA and Hatch Acres arrange for a teleconference consultation with staff in the FERC Division of Hydro Administration and Compliance (DHAC) at the beginning of Phase 1.b. Mo Fayyad, FERC DHAC, has offered to set up this consultation. We recommend that KEA use the Alternative Licensing Process in order to streamline the process, establish protocol that can be used in other amendments under consideration (Hidden Basin and Terror River), and avoid the “second bite at the apple” inherent in the Traditional Licensing Process. TERROR LAKE HYDROELECTRIC PROJECT: Pre-Feasibility Analysis Third Unit Addition October 2009 Hatch Acres Corporation 31 4.4 Recommendations – Engineering Inside the Terror Lake Powerhouse Control Room, after a new switchboard panel is added for Unit 3, there will not be a safe, unobstructed path of egress from the backside of the Main Control Switchboard. At the left end, it appears that the path will be obstructed by the AC/DC switchgear, and at the right end, by the swing-out manual synchronizing panel, to which someone has duct-taped padding to protect heads. We therefore recommend that an emergency exit door be added to the backside of the control room (~west side of the Powerhouse). The work station currently at the left end of the Main Control Switchboard will need to be moved elsewhere. We recommend proceeding with replacing the obsolete SCADA equipment, and, in conjunction with this, upgrading protective relaying, to provide a fully up-dated protection and control system. (We are assuming that the protective relaying is original equipment). We recommend consideration of the addition of circuit switchers in the 138 kV switchyard on each generator step-up transformer in order to allow for rapid isolation of any transformer fault.               Exhibit F      Terror Lake Unit 3 Hydroelectric Project’s  Preliminary Design Level   Construction Cost Estimate                                                Exhibit G      Economic Analysis of   Total Project Savings                                    Economic Analysis - Terror Lake Unit 3 Hydroelectric ProjectPrinciple 8,207,950$         Grants DepreciationInterest 1.000% 7,700,000$    8,207,950Periods 16 50 Cost per Maintenance Total Diesel DifferentialPmt $557,685.85 KWH Cost Cost Fuel +O&M Cost SavingsTotalCash TotalPrinciple Interest Cash2013 $475,606.35 $82,079.50 $557,685.85 + $164,159.00 = $721,844.85 1 $0.058 $0.003 $0.048 $0.062 $0.170‐$0.108‐$1,345,846.8132014 $480,362.42 $77,323.44 $557,685.85 + $164,159.00 = $721,844.85 2 $0.058 $0.004 $0.049 $0.062 $0.179‐$0.117‐$1,449,231.3972015 $485,166.04 $72,519.81 $557,685.85 + $164,159.00 = $721,844.85 3 $0.058 $0.004 $0.049 $0.062 $0.188‐$0.126‐$1,557,785.2092016 $490,017.70 $67,668.15 $557,685.85 + $164,159.00 = $721,844.85 4 $0.058 $0.004 $0.049 $0.062 $0.197‐$0.135‐$1,671,766.7122017 $494,917.88 $62,767.97 $557,685.85 + $164,159.00 = $721,844.85 5 $0.058 $0.004 $0.049 $0.062 $0.207‐$0.144‐$1,791,447.2902018 $499,867.06 $57,818.80 $557,685.85 + $164,159.00 = $721,844.85 6 $0.058 $0.004 $0.049 $0.063 $0.217‐$0.155‐$1,917,111.8982019 $504,865.73 $52,820.13 $557,685.85 + $164,159.00 = $721,844.85 7 $0.058 $0.005 $0.050 $0.063 $0.228‐$0.165‐$2,049,059.7352020 $509,914.39 $47,771.47 $557,685.85 + $164,159.00 = $721,844.85 8 $0.058 $0.005 $0.050 $0.063 $0.239‐$0.176‐$2,187,604.9652021 $515,013.53 $42,672.32 $557,685.85 + $164,159.00 = $721,844.85 9 $0.058 $0.005 $0.050 $0.063 $0.251‐$0.188‐$2,333,077.4562022 $520,163.66 $37,522.19 $557,685.85 + $164,159.00 = $721,844.85 10 $0.058 $0.005 $0.050 $0.064 $0.264‐$0.200‐$2,485,823.5712023 $525,365.30 $32,320.55 $557,685.85 + $164,159.00 = $721,844.85 11 $0.058 $0.006 $0.051 $0.064 $0.277‐$0.213‐$2,646,206.9922024 $530,618.95 $27,066.90 $557,685.85 + $164,159.00 = $721,844.85 12 $0.058 $0.006 $0.051 $0.064 $0.291‐$0.227‐$2,814,609.5842025 $535,925.14 $21,760.71 $557,685.85 + $164,159.00 = $721,844.85 13 $0.058 $0.006 $0.051 $0.064 $0.306‐$0.241‐$2,991,432.3062026 $541,284.40 $16,401.46 $557,685.85 + $164,159.00 = $721,844.85 14 $0.058 $0.007 $0.051 $0.065 $0.321‐$0.256‐$3,177,096.1642027 $546,697.24 $10,988.61 $557,685.85 + $164,159.00 = $721,844.85 15 $0.058 $0.007 $0.052 $0.065 $0.337‐$0.272‐$3,372,043.2152028 $552,164.21 $5,521.64 $557,685.85 + $164,159.00 = $721,844.85 16 $0.058 $0.007 $0.052 $0.065 $0.354‐$0.288‐$3,576,737.6192029 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 17 $0.013 $0.008 $0.008 $0.021 $0.371‐$0.351‐$4,349,352.5962030 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 18 $0.013 $0.008 $0.008 $0.021 $0.390‐$0.369‐$4,575,028.1762031 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 19 $0.013 $0.008 $0.008 $0.022 $0.409‐$0.388‐$4,811,987.5342032 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 20 $0.013 $0.009 $0.009 $0.022 $0.430‐$0.408‐$5,060,794.8612033 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 21 $0.013 $0.009 $0.009 $0.022 $0.451‐$0.429‐$5,322,042.5542034 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 22 $0.013 $0.010 $0.010 $0.023 $0.474‐$0.451‐$5,596,352.632YearTotal Unit #3  CostTotal Diesel Cost 1% CREB Financing of $8.2MYearUnit #3 versus DieselTotal Cost Savings50 Year DepreciationTotal Margin ImpactUnit #3 Capital Cost Operational Cost,,,,2035 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 23 $0.013 $0.010 $0.010 $0.023 $0.498‐$0.474‐$5,884,378.2132035 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 24 $0.013 $0.010 $0.010 $0.023 $0.498‐$0.474‐$5,884,378.2132036 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 25 $0.013 $0.011 $0.011 $0.024 $0.523‐$0.499‐$6,186,805.0742037 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 26 $0.013 $0.011 $0.011 $0.024 $0.523‐$0.499‐$6,186,805.0742038 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 27 $0.013 $0.011 $0.011 $0.024 $0.549‐$0.524‐$6,504,353.2782039 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 28 $0.013 $0.011 $0.011 $0.024 $0.549‐$0.524‐$6,504,353.2782040 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 29 $0.013 $0.012 $0.012 $0.025 $0.576‐$0.551‐$6,837,778.8922041 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 30 $0.013 $0.012 $0.012 $0.025 $0.576‐$0.551‐$6,837,778.8922042 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 31 $0.013 $0.012 $0.012 $0.026 $0.605‐$0.579‐$7,187,875.7862043 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 32 $0.013 $0.012 $0.012 $0.026 $0.605‐$0.579‐$7,187,875.7862044 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 33 $0.013 $0.013 $0.013 $0.026 $0.635‐$0.609‐$7,555,477.5262045 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 34 $0.013 $0.013 $0.013 $0.026 $0.635‐$0.609‐$7,555,477.5262046 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 35 $0.013 $0.014 $0.014 $0.027 $0.667‐$0.640‐$7,941,459.3522047 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 36 $0.013 $0.014 $0.014 $0.027 $0.667‐$0.640‐$7,941,459.3522048 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 37 $0.013 $0.014 $0.014 $0.028 $0.700‐$0.673‐$8,346,740.2692049 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 38 $0.013 $0.014 $0.014 $0.028 $0.700‐$0.673‐$8,346,740.2692050 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 39 $0.013 $0.015 $0.015 $0.028 $0.735‐$0.707‐$8,772,285.2332051 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 40 $0.013 $0.015 $0.015 $0.028 $0.735‐$0.707‐$8,772,285.2332052 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 41 $0.013 $0.016 $0.016 $0.029 $0.772‐$0.743‐$9,219,107.4452053 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 42 $0.013 $0.016 $0.016 $0.029 $0.772‐$0.743‐$9,219,107.4452054 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 43 $0.013 $0.017 $0.017 $0.030 $0.811‐$0.781‐$9,688,270.7672055 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 44 $0.013 $0.017 $0.017 $0.030 $0.811‐$0.781‐$9,688,270.7672056 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 45 $0.013 $0.017 $0.017 $0.031 $0.851‐$0.821‐$10,180,892.2552057 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 46 $0.013 $0.017 $0.017 $0.031 $0.851‐$0.821‐$10,180,892.2552058 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 47 $0.013 $0.018 $0.018 $0.031 $0.894‐$0.862‐$10,698,144.8182059 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 48 $0.013 $0.018 $0.018 $0.031 $0.894‐$0.862‐$10,698,144.8182060 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 49 $0.013 $0.019 $0.019 $0.032 $0.938‐$0.906‐$11,241,260.0092061 $0.00 $0.00 $0.00 + $164,159.00 = $164,159.00 50 $0.013 $0.011 $0.011 $0.024 $0.523‐$0.499‐$6,186,805.074Average: $0.0381 Total‐$294,517,642.177NPV($73,801,390.60)               Exhibit H      Terror Lake Unit 3 Hydroelectric Project   Schedule                                    IDTask NameDurationStartFinish1FERC License Amendment785 days?Tue 12/1/09Mon 10/15/122Review licensing requirements25 daysTue 12/1/09Sat 1/2/103Application for Amendment333 daysFri 5/7/10Fri 7/22/114Pre-filing and Post-Isuance Consultation554 days?Wed 9/1/10Mon 10/15/125Submit Draft Application1 dayMon 10/25/10Mon 10/25/106Agency and Public Scoping Meeting1 dayTue 12/7/10Tue 12/7/107Draft Application Review by Agencies63 days?Wed 12/8/10Fri 3/4/118Internal Review of DA from Agencies100 days?Mon 3/7/11Fri 7/22/119Submit Final License Application0 daysFri 7/22/11Fri 7/22/1110Application Processing261 daysMon 7/25/11Mon 7/23/1211License amendment issued0 daysMon 7/23/12Mon 7/23/121213Engineering847 daysTue 12/1/09Wed 1/9/1314Pre-feasibility study25 daysTue 12/1/09Sat 1/2/1015Feasibility study140 daysThu 4/1/10Mon 9/13/1016Detailed engineering425 daysThu 5/26/11Wed 1/9/1317Turbine and generator equipment165 daysThu 5/26/11Wed 1/11/1223Main transformer138 daysThu 1/12/12Mon 7/23/1229Contractor submittal review240 daysThu 2/9/12Wed 1/9/1330Civil design80 daysThu 3/22/12Wed 7/11/1231Electrical design80 daysThu 4/5/12Wed 7/25/1232Mechanical design80 daysThu 4/5/12Wed 7/25/1233Construction specification143 daysThu 6/14/12Mon 12/31/1234Prepare bid documents30 daysThu 6/14/12Wed 7/25/1235KEA review15 daysThu 7/26/12Wed 8/15/1236Finalize and issue for bidding10 daysThu 8/16/12Wed 8/29/1237Receive bids44 daysThu 8/30/12Tue 10/30/1238Review and award44 daysWed 10/31/12Mon 12/31/123940Equipment Procurement355 daysThu 1/12/12Wed 5/22/1341Turbine and generator equipment327 daysThu 1/12/12Fri 4/12/1349Main transformer217 daysTue 7/24/12Wed 5/22/135354Site Work138 daysMon 2/4/13Wed 8/14/1355Mobilization15 daysMon 2/4/13Fri 2/22/1356Install turb & gen embedded parts22 daysMon 2/25/13Tue 3/26/1357Concrete and curing27 daysWed 3/27/13Thu 5/2/1358Install turbine and gen remaining parts48 daysFri 5/3/13Tue 7/9/1359Install controls switchgear and misc systems38 daysFri 5/17/13Tue 7/9/1360Unit 3 turbine inlet valve operator20 daysWed 3/27/13Tue 4/23/1361Switchyard work36 daysThu 5/23/13Thu 7/11/1362Dry test of generating unit15 daysFri 7/12/13Thu 8/1/1363Plant outage for electrical interconnection4 daysFri 7/12/13Wed 7/17/1364Wet test20 daysThu 7/18/13Wed 8/14/1365Commissioning complete0 daysWed 8/14/13Wed 8/14/13SepNovJanMarMayJulSepNovJanMarMayJulSepNovJanMarMayJulSepNovJanMarMayJulSepter1st Quarter3rd Quarter1st Quarter3rd Quarter1st Quarter3rd Quarter1st Quarter3rd Quarter2010201120122013TaskProgressMilestoneSummaryRolled Up TaskRolled Up MilestoneRolled Up ProgressSplitExternal TasksProject SummaryGroup By SummaryDeadline Proposed Terror Lake Unit 3, Licensing and Engineering Schedule (Based on a 5 day work week)Page 1Terror Lake Unit 3Date: Mon 8/30/10               Exhibit I      FERC Project 2743 Order Issuing Major License  List of Licenses and Permits                                                    Exhibit J      2009 Ten‐Year Load Forecast                                                    Exhibit K      Excerpt from Power Generation Study                                                    Exhibit L      Excerpt from Long Range Plan                                                  Exhibit M      Excerpt from EPS Grid Stability Analysis