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Home My WebLink AboutSchubee Lake GrantApplication4 September 14, 2010 Alaska Energy Authority Attn: Butch White, Grants Administrator AEA-11-005-RE Fund Grant Application Round 4 813 West Northern Lights Blvd Anchorage, AK 99503 RE: Schubee Lake Hydroelectric Project Grant Application AEA-11-005-RE Fund Grant Application Round 4 Dear AEA: Enclosed in response to RFA AEA-11-005-RE Fund Grant Application Round 4 program, is an application requesting funding for the Schubee Lake Hydroelectric Project. Enclosed with this letter are two hard copies and one CD with the document in PDF format. Enclosed as per the RFA, o Grant Application Form o Cost Worksheet (included in Section 10 – Appendices) o Grant Budget (included in Section 10 – Appendices) o Grant Budget Form Instructions o Other pertinent information If you have any questions, please call either Glen Martin (Resource Assessment & Permits) 360-385-1733 x122, or Bob Grimm (President) 360-385-1733 x120. Sincerely, Glen D. Martin Resource Assessment & Permits Enc. (as stated) Renewable Energy Fund Round IV Grant Application AEA 11-005 Application Page 1 of 18 7/21/2010 Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.org/RE_Fund-IV.html Grant Application Form GrantApp4.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet4.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget4.doc A detailed grant budget that includes a breakdown of costs by milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInstructions4.pdf Instructions for completing the above grant budget form.  If you are applying for grants for more than one project, provide separate application forms for each project.  Multiple phases for the same project may be submitted as one application.  If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for completion of each phase.  If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted.  If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER:  Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply.  All applications received will be posted on the Authority web site after final recommendations are made to the legislature.  In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 2 of 18 7/21/2010 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) ALASKA POWER COMPANY (APC)(a subsidiary of ALASKA POWER & TELEPHONE COMPANY) Type of Entity: Utility Mailing Address P.O. Box 3222, Port Townsend, WA 98368 Physical Address 193 Otto Street, Port Townsend, WA 98368 Telephone 360-385-1733 Fax 360-385-7538 Email glen.m@aptalaska.com 1.1 APPLICANT POINT OF CONTACT Name Glen Martin Title Permitting & Licensing Manager Mailing Address Alaska Power & Telephone Company P.O. Box 3222 Port Townsend, WA 98368 Telephone 360-385-1733 x122 Fax 360-385-7538 Email glen.m@aptalaska.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) X An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 3 of 18 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) Schubee Lake 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. The Schubee Lake Hydroelectric Project would be located across Chilkoot Inlet from Haines, Alaska, approximately 90 miles north of Juneau. The communities of Skagway, Haines, Lutak, and Klukwan would benefit from this potential project. 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 X Feasibility Construction and Commissioning X Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. APC is actively looking to add another hydroelectric storage facility to its Upper Lynn Canal (ULC) system serving Haines, Skagway, and nearby communities. To date, APC has considered Connelly Lake near Haines and Walker Lake near Klukwan, with Connelly Lake being preferred because of its much greater energy potential. However, some Haines citizens are opposed to development of Connelly Lake, and have expressed their interest in APC evaluating the Schubee Lake site as an alternative. APC has made a very preliminary evaluation of the Schubee Lake site and believe there is some potential; therefore the proposed grant is to study the Schubee Lake site to approximately the same depth as Connelly Lake so that a fair comparison can be made between the two. In our view, this means bypassing the reconnaissance phase (Phase I) and proceeding directly with conceptual design and feasibility work (Phase II). Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 4 of 18 7/21/2010 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.) APC’s ULC system is short of hydro energy for peaking between December 1 and April 15 of each year, requiring another storage hydropower project to reduce reliance on diesel generation during these periods and to allow for growth into the future for this region. The Schubee Lake Project has the potential to keep customers rates low compared to diesel generation. This project will reduce or eliminate price fluctuations due seasonally from the use of fossil fuels. At the times diesel has to be run there are pollutants added to the air including greenhouse gases and particulate matter and noise to those nearby the generation plant. This Project would also reduce the import of diesel fuel to the area, which would reduce the opportunity for spills. This Project would also reduce O&M costs for the diesel generators. Diesel generation during the last 8 years has averaged about 0.7 GWh in ULC, but was double that average amount during two of the years. Continuing load growth will make diesel generation more frequent. The potential generation of Schubee Lake is estimated to be about 30 GWh per year (although this value is based on very limited information). It is expected that generation during the early years of the Project’s life would likely be fairly limited. Another benefit of the Project would be an increase in reliability. Currently, the primary hydroelectric generators in the ULC system are near Skagway, with only diesel generation and two small run-of-river hydros located near Haines. If the submarine cable between Haines and Skagway were to be damaged, nearly all generation for Haines would need to be from diesel units. If constructed, this Project would need to transmit power directly to Haines through a second submarine cable to provide an increase in reliability. The Project could supply power to new industrial loads if they occurred. Currently, there is discussion about using the Port of Haines for offloading and possible assembly of the gas pipeline components before trucking them north, which could add a significant load to the area. Mineral exploration is occurring further up the Chilkat River toward Klukwan as well, which may require 2 MW or more of generation. 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 the proposed Phase II work is estimated to be $200,000. If the Phase II studies indicate a feasible project that can be developed more readily than Connelly Lake, APC will apply for additional funding in later AEA Renewable Energy Fund rounds for conducting Phase III and IV work. APC requests with this application grant funding of $160,000 which is 80% of the estimated costs of Phase II. APC will provide $40,000 in matching funds (20% match) from its normal operating funds. The total estimated costs for each phase, are shown below:  Phase I: Reconnaissance...........................................................................................$0  Phase II: Feasibility Analysis/Conceptual Design ........................................$200,000  Phase III: Permitting and Final Design (gross estimate)............................$4,000,000 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 5 of 18 7/21/2010  Phase IV: Construction (gross estimate)...................................................$36,000,000 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. $ 160,000 2.7.2 Other Funds to be provided (Project match) $ 40,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 200,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.4 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $ 40,200,000 2.7.5 Estimated Direct Financial Benefit (Savings) $ 642,000,000 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.) Not calculated Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 6 of 18 7/21/2010 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. Vern Neitzer, APC’s Chief Engineer, will be the Project Manager. Mr. Neitzer is located in Skagway near the Project location, and has extensive experience in managing hydroelectric development. A resume for Mr. Neitzer is included in Section 10. 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.) A bar schedule of the expected reconnaissance, feasibility analysis and conceptual design sequence is provided in Section 10. The following summarizes key activities and dates of the schedule. A FERC license will be required for this project since it will be located on Federal land. Phase II: Feasibility Analysis/Conceptual Design: FERC Preliminary Permit Application..............................fall 2011 USFS Special-Use Permit Application ...................... January 2011 Stream gage installation .............................................summer 2011 Hydrology studies ..............................................................fall 2012 Conceptual design/optimization..................................summer 2012 Geotechnical reconnaissance .....................................summer 2012 Draft feasibility report.......................................................fall 2013 Scoping – Agency/Public Meeting .....................................fall 2013 Final feasibility report ............................................winter 2013-14 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The Milestones must also be included on your budget worksheet to demonstrate how you propose to manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) The key tasks and decision points for Phase II are as follows:  Applied for FERC preliminary permit – receive by September 2011 (AP&T elected to take this step earlier)  Apply for FS Special Use Permit for investigations - January 2011  Install stream gage - summer 2011  Hydrology studies – fall 2012 after sufficient gage data has been collected to allow reasonable correlation of flows (to be updated as more data is collected)  Optimization of the conceptual design, including alternatives to discharge to either Lynn Canal or Kasidaya Creek – summer 2012  Geotechnical reconnaissance of likely alternative arrangements – summer 2012  Preparation of a draft feasibility report documenting the studies to date and the selection of a preferred alternative – fall 2013 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 7 of 18 7/21/2010  Scoping of environmental issues and proposed studies based on optimized conceptual design – fall 2013  Preparation of the final feasibility report that incorporates the results of the environmental scoping – winter 2013-2014 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. Key APC personnel involved in the project development and their roles will be:  Vern Neitzer, Project Manager  Bob Berreth, Electrical Design  Ben Beste, Mechanical Design  Larry Coupe, Civil Design  Glen Martin, Resource Assessment and Permits Phase II: Feasibility Analysis/Conceptual Design In this phase APC will conduct the permitting and feasibility evaluation work indicated in 3.2 and 3.3 above. All of that work will be by the APC personnel noted above, except for the geotechnical reconnaissance, which will be by a contractor (probably GeoEngineers, Inc.). 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. During Phase II, APC proposes to provide quarterly reports to AEA regarding the status of the work and use of the grant funds. APC has provided similar reports to AEA and other grant funding agencies in the past several years on other projects, and has established the necessary procedures for producing the reports expeditiously. 3.6 Project Risk Discuss potential problems and how you would address them. Site Control – APC will apply to the Forest Service for an Investigative Permit to conduct the necessary studies. APC received its first Investigative in 2010, which will expire in December 2010. Seismic – Geotechnical investigations will be conducted to provide an adequate level of knowledge about seismic and other geotechnical risks. Project components will be designed appropriately for seismic activity, since the Project will be located in a moderate-risk seismic zone. Structures will be buried as much as possible to minimize seismic impacts. Inclement Weather – Working conditions in the lake area are very harsh during the winter. The proposed schedule assumes no work during the winter at the lake. Environmental Opposition – APC is aware that some Haines area residents support development of the Schubee Lake Project as an alternative to the Connelly Lake Hydro Project, which they oppose. Nevertheless, other parties may oppose Schubee Lake for other reasons (it is located in an inventoried roadless area and the Forest Service Land Use Designation for the area is Semi- Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 8 of 18 7/21/2010 Remote Recreation, which may be restrictive). Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 9 of 18 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. Potential Energy Resource: At this time only a rough estimate can be made of the energy potential of this site based on drainage area and average precipitation. The energy potential is estimated to be about 30 GWh per year. The installed capacity would be approximately 6.0 MW. The Upper Lynn Canal (ULC) region is short of hydro energy for peaking between December 1 and April 15 of each year, requiring another storage hydropower project to reduce reliance on diesel generation during these periods and to allow for growth into the future for this region. The Schubee Lake site is one possibility. Other potential storage sites include Connelly Lake near Haines and Walker Lake near Klukwan. The primary advantages and disadvantages of these three sites, as estimated by APC at this time, are as follows: Schubee Lake Connelly Lake Walker Lake Energy potential 30 GWh/yr 45 GWh/yr 5 GWh/yr Land ownership Federal State State Restrictive land use classification High Moderate Moderate Anadromous fish issues None Minor Minor Local support or opposition Unknown Known opposition Unknown Relative cost High Moderate Moderate Based on this simple assessment, APC does not consider Walker Lake to be a preferred alternative because of its relatively small energy potential. However, the assessment does not make a clear case for either Schubee Lake or Connelly Lake. APC is not aware of any feasible wind, tidal, wave, geothermal or other renewable energy sites in the area. Compared to diesel generation, the Project will have the following advantages:  less expensive to operate than diesel (lower O&M);  no need to purchase fuel;  no air emissions;  fewer hazardous substances;  no particulate matter emissions;  can come on-line after a power outage almost immediately, but diesel can’t;  lower and more stable electric rates for customers Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 10 of 18 7/21/2010 As with all hydroelectric projects, the initial cost of development is much higher than for diesel generation. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The existing ULC energy system configuration is as follows: Unit Type Capacity, kW Efficiency, kWh/gal Age, years Goat Lake Hydro (storage) 4,000 N.A. 12 Dewey Lakes Hydro (storage) 943 N.A. 107 Lutak Hydro (run of river) 285 N.A. 10 10-Mile(1) Hydro (run of river) 600 N.A. 9 Kasidaya Hydro (run of river) 3,000 N.A. 2 Skagway #6 Diesel 855 14.69 23 Skagway #7 Diesel 1,100 14.80 13 Skagway #8 Diesel 500 14.89 18 Skagway #9 Diesel (refurbished) 930 ? 1 Haines #1 Diesel 800 12.64 40 Haines #2 Diesel 1265 12.93 26 Haines #3 Diesel 1600 14.92 20 Haines #4 Diesel 2865 12.83 14 (1) AP&T purchased power from Southern Energy’s 10-Mile hydro project until 2002. Purchases resumed in 2008. Haines and Skagway are interconnected by a 15-mile-long, 34.5-kV submarine cable with a capacity of approximately 20 MW. Skagway and Dyea are connected by a 7.3-mile long 7.2-kV distribution line, and Haines and the IPEC system are connected by a 10-mile long 12.47-kV distribution line. 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. Although the installed capacity of APC’s existing hydroelectric resources in the ULC system are greater than the peak demand of the interconnected grid, diesel generation is sometimes required due to water not being available for generation. Icing conditions also curtail hydro generation. The generation in the ULC system since the beginning of 1998 is summarized in the following table. Kasidaya Creek hydro became operational in late 2008, and has an annual energy potential of 12 GWh. APC began supplying power to the IPEC system in 2007. Annual Generation, MWh Year Goat Lake Dewey Lakes Lutak 10-Mile Diesel Total 1998 10,046 3,021 0 692 9,486 23,246 1999 17,159 3,511 0 861 2,237 23,768 2000 17,999 3,737 0 1,088 888 23,712 2001 18,457 3,267 0 837 669 23,230 2002 18,016 3,449 609 174 1,366 23,613 2003 18,711 3,439 583 0 284 23,017 2004 18,563 3,391 827 0 761 23,541 2005 19,533 3,646 810 0 255 24,244 2006 22,151 3,438 479 0 89 26,159 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 11 of 18 7/21/2010 2007 22,090 3,242 695 0 1,414 27,441 The Project will be fully incorporated with the other hydro resources so that the renewable resources will be dispatched as an integrated system. It is expected that the Project will eliminate essentially all diesel generation in the interconnected grid. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. It is expected that the Project will be able to supply loads in any of the interconnected communities in the ULC system, as well as IPEC loads in the Chilkat valley. Currently, it is sometimes necessary for APC to use diesel generation to supplement the hydro generation, either due to low streamflows, low lake levels, long-lasting cold springs, or outages. Load increases and expansion of the system have exacerbated this situation. When diesel generation is required, electric rates increase and cause fluctuations in customer energy bills that can be difficult to anticipate or adjust for. Adding more hydro capacity to the ULC grid will alleviate fluctuating electric rates for customers. The Project could provide in the near-term an incentive for additional economic development in the Haines and Skagway areas because there would be a surplus of economical power available. 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system:  A description of renewable energy technology specific to project location  Optimum installed capacity  Anticipated capacity factor  Anticipated annual generation  Anticipated barriers  Basic integration concept  Delivery methods Renewable energy technology specific to location – The Project will be a conventional hydroelectric project. Hydroelectric technology is well developed, and provides most of the renewable energy generated in the world in general, and Southeast Alaska in particular. The Project will utilize the abundant rainfall, glacial melt, and steep topography afforded by the Schubee Lake basin to generate renewable energy. Optimum installed capacity – The optimum installed capacity will be determined during Phase II. APC current estimates the installed capacity at 6.0 MW. Anticipated capacity factor – The anticipated capacity factor is estimated to be 57% (at 6.0 MW). Anticipated annual generation – The potential annual generation is estimated to be 30 GWh (at 6.0 MW). Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 12 of 18 7/21/2010 Anticipated barriers – There are no known technological barriers to development of the Project at this time. Basic integration concept – The ULC system is already a hydro-based system with diesel backup. Integrating another hydro project to the system will not present any difficulties. The run-of-river hydros in the system (Lutak, Kasidaya) will be dispatched first, followed by storage hydros (Goat Lake and Schubee Lake). Generally, the storage hydros will be dispatched based on their then- current storage levels and operating characteristics. In addition, one or both of the storage hydros would always be on-line to provide system stability. Delivery methods – The Project would be interconnected to the ULC grid either near Haines via a new submarine cable or at Kasidaya Creek via the existing 14-mile long, 34.5 kV submarine cable that connects Skagway and Haines. 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The project is on Tongass National Forest land that is in an inventoried roadless area and has a Semi-Remote Recreation land use designation. Under current rules, the roadless area status is potentially very problematic but not necessarily fatal. Because of the Federal lands, a FERC license would be required, as well as a USFS Special Use Permit. A FERC preliminary permit has already been applied for. Some State of Alaska lands would also be utilized, which would require a land lease from ADNR. The full extent of the land ownership issues and the steps necessary to address those issues will be explored and documented in the proposed Phase II studies. 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 Applicable Permits:  FERC License  USFS Special Use Permit  404 permit (Corps of Engineers)  Water right (ADNR),  State land lease (ADNR)  Coastal zone consistency review (ADNR-DCOM)  Fish habitat permit (ADF&G)(possibly)  SHPO review Permitting Timeline: Permit applications will be filed with the various agencies in Phase III after completion of the necessary feasibility assessments in Phase II. An application for a preliminary permit from FERC will occur before or during Phase II. Potential Permitting Barriers: APC is not currently aware of any permitting issues that would preclude development of the Project. Permitting barriers may become known as the Phase II Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 13 of 18 7/21/2010 work progresses. The USFS Land Use Designation (LUD) for this area is Semi-Remote Recreation, and transportation and utility development is allowed. However, the site is in an inventoried roadless area, which means that authorization of Project development by the Forest Service would need to be made by the Secretary of Agriculture rather than by the Tongass National Forest. 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 Threatened and endangered species: APC is not aware of any threatened and endangered species in the Project area. APC expects to conduct field studies during Phase III regarding threatened and endangered species, but impacts are not anticipated. Habitat Issues: Habitat surveys will be conducted by to determine if fish utilize any part of this drainage. A mountain goat survey will be necessary for this project. No other issues are expected at this time. Wetlands: The Project will affect some wetlands, including Schubee Lake and possibly small muskeg areas along the penstock route. However, no significant impacts are expected and final configuration of the project has not been made. Archaeological Resources: Archeological surveys will need to be conducted during Phase III. No significant impacts to archeological or cultural resources are expected. Land Development Constraints: No land development constraints are known at this time other than the potential for the USFS LUD to place some restrictions on this site. Permits acquired from the resource agencies will specify any necessary constraints for the Project features. Telecommunications Interference: A 34.5 kV submarine cable will not create interference with telecommunications. Aviation Considerations: The project does not pass by an airport and transmission of electricity would be over a submarine cable, which would be out of the way of any aviation. Visual, Aesthetic Impacts: Impacts to visual aesthetics are unknown at this time until a conceptual design is developed during Phase II. The LUD for this site could make this something to address, however. Other Potential Barriers: No other potential barriers are known at this time. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 14 of 18 7/21/2010 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 Anticipated Project costs (based on APC’s knowledge and experience at building hydroelectric projects): Phase I (no reconnaissance phase proposed)...............................$0 Phase II (see breakdown below)........................................$200,000 Phase III (gross estimate)...............................................$4,000,000 Phase IV (gross estimate) .............................................$36,000,000 Total..............................................................................$40,200,000 Estimated Costs for Phase II: Feasibility Analysis/Conceptual Design FERC Preliminary Permit Application..................................$5,000 USFS Special-Use Permit Application...................................$5,000 Stream gage installation ......................................................$25,000 Hydrology studies ..................................................................$5,000 Conceptual design/optimization...........................................$80,000 Geotechnical reconnaissance ..............................................$25,000 Draft feasibility report.........................................................$15,000 Environmental scoping ........................................................$30,000 Final feasibility report ........................................................$10,000 Total For Phase II: .......................................................... $200,000 Requested Grant Funding: $160,000 (80% of total cost for Phase II) Applicant Matching Funds: $40,000 (20% of total cost for Phase II) Other Funding Sources: Other funding sources have not been identified at this time. AP&T will provide the $40,000 in matching funds for Phase II from its normal operating funds. Projected Capital Cost of Renewable Energy System: $36,000,000 (assumed to be the cost of Phase IV Construction) Projected Development Cost of Proposed Renewable Energy System: $4,200,000 (assumed to be the sum of Phase I, II, and III costs). Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 15 of 18 7/21/2010 4.4.2 Project Operating and Maintenance Costs Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant. (Note: Operational costs are not eligible for grant funds however grantees are required to meet ongoing reporting requirements for the purpose of reporting impacts of projects on the communities they serve.) The O&M cost for the Project is estimated to be approximately $250,000 per year. AP&T is not requesting grant funding for O&M costs. 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 APC is developing this project to supply power to APC’s ULC system customers. APC expects that the regulated rates to its commercial and residential customers would be adjusted to reflect the capital costs added to the rate base; it is too early to identify how much adjustment would be necessary. Currently, APC’s customers in Haines pay $0.2185/kWh and in Skagway pay $0.0830/kWh (excluding PCE subsidy). During the Phase II work, APC will evaluate whether the Project has the potential to supply power to cruise ships visiting either Haines or Skagway during the summer tourist season. Such sales could provide substantial revenue during the early years of the Project’s life. APC projects that a sales price of $0.20/kWh would be attractive to the cruise lines and the revenue from those sales would provide a positive net income to APC and the State. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Please see the attached Cost Worksheet. SECTION 5– PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following:  Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project  Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate)  Potential additional annual incentives (i.e. tax credits)  Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available)  Discuss the non-economic public benefits to Alaskans over the lifetime of the project The people of Alaska will benefit from the Project development as follows: Potential annual fuel displacement: The potential Project generation (30 GWh/year) is Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 16 of 18 7/21/2010 equivalent to about 2.14 million gallons of diesel fuel annually, or about 107 million gallons over a 50 year Project life. At a fuel cost of $3.00/gallon, the savings would be $6,400,000 annually. Fuel prices are expected to escalate; at an average fuel cost of $6.00/gallon, the savings over 50 years could be as much as $642,000,000. Anticipated annual revenue: If sold at $0.20/kWh, the anticipated annual revenue for the potential Project generation would be $6,000,000. Potential additional annual incentives: Not estimated. Potential additional revenue streams : Not estimated. Non-economic public benefits to Alaskans: The primary non-economic benefits of the Project are the environmental benefits from reducing diesel generation. The potential Project generation (30 GWh/year) is equivalent to about 25,000 tons of diesel emissions per year. Other benefits: In the short term the local economy would benefit due to local hire for construction labor, materials for construction, and lease or rental of equipment. In the long term, there would be employment for O&M of the Project. 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 APC operates and maintains all of the existing ULC generation, transmission, and distribution system to provide a high degree of reliability. The Project will be integrated into the ULC system, and will be operated and maintained in a similar manner. With regular maintenance, a conventional hydroelectric project should have a minimum life of 50 years; there are many operating projects over 100 years old. Some components may need replacement or refurbishment during that time, but replacement of major items resulting in significant costs are not expected, since conventional hydroelectric equipment and materials are robust and commercialized. O&M costs are expected to be about $250,000 per year (2009 cost level). Operation and maintenance costs will be funded by revenues from the sale of power from the project. APC will provide whatever reporting of savings and benefits that AEA considers appropriate. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 17 of 18 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. APC conducted a site visit in August 2009 to measure flow in the outlet stream and to take lake depth readings to help determine the energy potential of this site. APC expects to begin the Phase II work in July 2011. APC elected to apply for a FERC Preliminary Permit in 2010, prior to the July 2011 AEA grant award deadline in order to expedite the schedule. No other grants have been applied for to pay for this project at this time. 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. Enclosed are letters of support for this project, including a resolution from the Haines Borough (Resolution No. 09-01-149). 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 – GrantBudget4.doc Total Project Costs: $40,200,000 Investments to date and funding sources: APC has invested approximately $5,000 in labor and helicopter services in making preliminary investigations of the Schubee Lake site. Amount requested in grant funds: $160,000 (for Phase II work) Additional investment by APC: APC will provide matching funds in the amount of $40,000 for Phase II work (20% match). [AUTHORIZED SIGNATURES] Grant Documents Authorized Signers Please clearly print or type all sections of this form. Community/Grantee Name: ALASKA POWER COMPANY Regular Election is held: Annually / Board of Dir. IDate: September 14, 2010 Authorized Grant Si Printed Name Title Term Glen Martin Permitting I Lic.ensing / PermanenEnvlfonnfental KeVleW Robert S. Grimm CEO I President Permanen I authorize the above person(s) to sign Grant Documents: (Highest ranking organization/community/municipal official) Printed Name Title Term Robert S. Grimm CEO I President Permanent Grantee Contact Information' . Mailing Address: P.o. Box 3222, Port Townsend, WA 98368 Phone Number: (360) 385-1733 x122 Fax Number: (360) 385-7538 E-mail Address: glen.m@aptalaska.com Federal Tax 10 #: 92-0153693 Please submit an updated form whenever there is a change to the above information. Please return the original completed form to: Alaska Energy Authority ALASKA813 W. Northern Lights Blvd. ENERGY AUTHORITYAnchorage, AK 99503 Attn: Butch White, Grants Adminjstrator H:\GRANTSIAEA Round IV Renewable Energy Grants LOIO\Grant_Authorized_Signers4.doc APPENDICES TABLE OF CONTENTS 1. Certificate of Public Convenience & Necessity 2. Corporate Resolution 3. Project Maps 4. Reconnaissance Report & Photos 5. Schedule 6. Resume’s 7. Letters of Support 8. Cost Worksheet 9. Grant Budget Form CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY CORPORATE RESOLUTION PROJECT MAPS RECONNAISSANCE REPORT & PHOTOS Schubee Lake Visit July 28, 2009 Vernon Neitzer and Danny Gonce helicopter via Temsco A‐Star (pilot Jessie) to Schubee Lake (aka Long Lake) at 8 am with inflatable boat and motor. The weather is clear, warm and sunny with light breeze off from the glacier on the East side. The best landing sites are opposite the glacier on the north beach of the arm that extends to the east. Helicopter altimeter read 3280 ft. GPS recorded 3333 ft elevation. Schubee Glacier has receded uncovering the east arm of the lake in the last 50 years. There is maybe 800 feet of glacier that still borders the lake but has no depth. The largest inlet stream appears from a small cave under this ice. Above the lake more glacier lies on a rock bench that extends to the west and several more streams of water descend from this area. The entire drainage basin is well defined and cut off from the ice field to the east. The boat was equipped with a depth sounder. A GPS was used to track the lake perimeter at a depth of 10 to 15 feet. The GPS calculated the enclosed area at 259 acres. There is perhaps another 10 acres of lake that is shallower than 10 feet. The depth sounder was then used to search for the deepest part of the lake. This was found to be several hundred feet out from the near vertical wall on the south end of the lake. Deepest recorded depth was 340 feet. Numerous waypoints and corresponding lake depths were recorded. Boat landing was made at the lake outlet. The outlet area has a plowed up narrow berm of rocks that rises 8 to 15 feet above the lake and extends 400 feet to the north of the outlet and 500 feet to the south of the outlet. A profile of the top of the terminal moraine at the outlet was taken using a sight level and rod. Measurements are attached. Water is leaking through the terminal moraine in numerous places. The area north of the outlet has the most leakage (<2 cfs). The lake water was very turbid near the inlet area along the base of the glacier with visibility increasing to about 10 feet in the outlet area. Surface water temperature varied from 39 F to 45 F. A temperature profile was taken in front of the outlet where lake depth was about 140 feet. The lake has “turned over” with the warmest water on the surface. See below. The outlet stream discharge was gauged at 85 cfs using a Global velocity meter and tape measure. Results are attached. Vegetation on the lake shore indicates that the lake level was higher than normal and was likely at peak runoff. Downstream of the outlet there are a couple of large benches, the first about 50 feet below the lake and the second 100 feet or more below the lake. The outlet stream splits and is braided in these bench areas but recombines again further downstream. The west side of the Lynn Canal is visible from the outlet area. Below the benches the terrain drops off rapidly and the stream forms what is locally known as Long Falls. Cell phone service was limited with the best signal at the outlet area. Skagway VHF base station came in clear but hand held radios lacked transmit power to get out. Temsco 500 (pilot John) returns Vern to Skagway Danny to Haines 6:30pm . Photos are R/Engineering/Schubee Lake Schubee Lake Outlet 28‐Jul‐09 Weather: Clear sky light breeze from Glacier (south) Vern Neitzer Danny Gonce Gage Outlet discharge Sta Depth V (ft/sec) Q (cfs) 6.4 to 9 .3 avg 1.1 avg 0.33 South Side of rock 10.7 0.85 1.4 0.95 N edge of rock 12 0.55 2.1 1.155 13 1.4 1.6 2.24 14 1.2 3.6 4.32 15 1.5 3.7 5.55 16 1.5 3.8 5.7 17 1.35 4.1 5.535 18 1.5 4.2 6.3 19 2.2 3.4 7.48 20 2.3 3.2 7.36 21 1.8 4 7.2 22 1.5 4.3 6.45 23 1.4 4 5.6 24 1.1 4 4.4 25 1 3.7 3.7 26 0.9 3 2.7 27 0.9 3 2.7 28 1 2.8 2.8 29 0.6 2.8 1.68 30 0.6 2.1 0.63 Edge of rock on N shore 84.78 Outlet area profile following crest of outlet area glacial berm to the NORTH Sta Rod Sighting Elevation Ref to Lake 0+0 5.5 Lake outlet N side 0+20 12.2 BS 6.7 0+45 9.2 BS 10.4 0+70 4.4 BS 9.3 0+95 4.2 BS 8 1+20 5.8 BS 8.3 1+45 9.4 BS 12.2 1+70 6.4 BS 13.1 1+95 6.9 BS 14.5 2+20 6 BS 15 2+45 3.7 BS 13.2 2+70 6.5 BS 14.2 2+95 2.4 BS 11.1 3+20 2.2 BS 7.8 3+45 6.1 BS 8.4 3+70 6.4 BS 9.3 3+95 10.6 BS 14.4 4+15 13.3 BS 22.2 Outlet area profile following crest of outlet area glacial berm to the SOUTH Sta Rod Sighting Elevation Ref to Lake 0+0 5.5 Lake outlet S side 0+15 12 BS 6.5 0+35 11.2 BS 12.2 0+60 9.9 BS 16.6 0+85 6.5 BS 17.6 1+10 3.6 BS 15.7 1+35 7.6 BS 17.8 1+60 3.9 BS 16.2 1+85 4 BS 14.7 2+10 4.7 BS 13.9 2+35 5.3 BS 13.7 2+60 7 BS 15.2 2+85 4.8 BS 14.5 3+10 2.9 BS 11.9 3+35 6.8 BS 13.2 3+60 8.3 BS 16 3+85 6 BS 16.5 4+10 6 BS 17 4+35 3.6 BS 15.1 4+60 2.6 BS 12.2 4+85 5.5 BS 12.2 5+10 7 BS 13.7 5+30 12.7 BS 20.9 Water temperature profile in front of outlet where depth was ~240' Depth Temp F 5 42.3 15 41.5 25 40.6 35 40.6 45 40.4 55 40.4 65 40.5 75 40.5 85 40.6 95 40.7 SCHEDULE PHASE II: Feasibility AnalysisFERC Preliminary Permit ApplicationUSFS Special Use Permit ApplicationStream Gage InstallationHydrology StudiesConceptual Design/OptimizationGeotechnical ReconnaissanceDraft Feasibility ReportEnvironmental ScopingFinal Feasibility ReportPHASE III: Final Design and PermittingField StudiesPermits Application PreparationPermits Application ProcessingFinal DesignPHASE IV: Construction2018-19Q1 Q2 Q3 Q4Q1 Q2Q1 Q2SCHUBEE LAKE HYDROELECTRIC PROJECTDESIGN AND CONSTRUCTION SCHEDULE2012Q3 Q4Q42016-17Q1 Q2Q3 Q420142015Q1 Q2Q1 Q2 Q3Q4Q32013Q3 Q4Q1 Q2Q3 Q4 Q120102011Q2 Q3 Q4 RESUME’S LETTERS OF SUPPORT HAINES BOROUGH RESOLUTION NO. 09-01-149 Adopted A resolution of the Haines Borough Assembly recognizing the need for a new, cost-effective, environmentally appropriate, reliable, and renewable source of electric power for citizens of the Haines Borough, and supporting the efforts of Alaska Power & Telephone, Inc. (AP&T) to develop a project to address this need. WHEREAS, the Haines Borough is committed to replacing fossil fuel-based energy production wherever and whenever possible with energy produced reliably, efficiently and at a reasonable cost from renewable sources, and WHEREAS, at a January 20, 2009 meeting, the Haines Borough Energy Sustainability Commission recommended that the Assembly support efforts by AP&T to secure funding to do additional design and data gathering for hydro electric sources including but not limited to Connelly Lake and Schubee Lake to help inform the public process prior to permitting, and WHEREAS, electricity has products as the energy transportation, and the potential resource used to for replace petroleum home heating and WHEREAS, current hydro-electric power production infrastructure is inadequate to provide for present demand for power, and therefore cannot meet potential increased demand for low cost electric power to support new or expanded uses such as heat, transportation, and industrial/commercial growth, and WHEREAS, the demand for electric power in the Upper Lynn Canal has periodically exhausted the installed capacity of the existing hydroelectric generating system during the fall, winter, and spring months, forcing the utility to generate power with diesel generation equipment, resulting in higher rates for customers, and WHEREAS, AP&T proposes to investigate, permit, design, and construct a hydroelectric facility in the most viable and appropriate site in Upper Lynn Canal area, to address the energy needs of the area, and WHEREAS, the Haines Borough Assembly acknowledges there are risks to any ecosystem in the vicinity of planned projects for developing new energy resourceSj and WHEREAS, AP&T has a long history of constructing hydroelectric plants in Southeast Alaska while simultaneously providing for the protection of the ecosystem within which the hydroelectric plant is located; Resolution 09-01-149 Page .Two THEREFORE BE IT RESOLVED, that the Haines Borough Assembly recognizes the need for increased electric power generation from a renewable resource in the Upper Lynn Canal, and it endorses the concept of creating new hydro-electric capacity in the region; AND BE IT FURTHER RESOLVED, that the Haines Borough Assembly supports the investigation, study, conceptual design, and initial permitting of any potential projects by AP&T or others which can be shown to provide reliable, cost effective, renewable energy in a manner which does not adversely impact local rate payers, the local economy, the watershed ecosystems, or the traditional uses of the area; AND BE IT FURTHER RESOLVED, the Haines Borough Assembly has an interest in participating as a partner in any power generation project that would promote and ensure the lowest possible rates for its citizens, provide for the greatest reliability and future growth, and create potential for the Borough to realize revenue from the sale of excess power to commercial users. ATTEST: BLANK PAGE Memo To: Tom Bolen, Haines Borough Manager From: Stephanie Scott, Energy & Sustainability Coordinator Cc: Commissioners, Energy & Sustainability Commission Date: January 21, 2009 Re : Recommendation to the Borough Assembly regarding the Connelly Lake Hydro Electric Project proposal from Alaska Power & Telephone (APT) before the Committee of the Whole, January 21, 2009 The Energy & Sustainability Commission crafted the following recommendation to the Assembly during its January 20, 2009 Commission meeting. The Energy & Sustainability Commission recommends that the Assembly support efforts by APT to secure funding to do additional design and data gathering for hydro electric sources including but not limited to Connelly Lake and Schubee Lake to help inform the public process prior to permitting. During debate following the making and seconding of the motion, “support” was defined as “support for the grant and the uses of the grant.” The motion carried 7 to 1. Commissioner Wackerman was absent, Commissioner Holmes voted in the negative, and Commissioner Gonce accepted the Chairʼs ruling that he had a conflict of interest and did not vote. [COST WORKSHEET] Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet RFA AEA11-005 Application Cost Worksheet Page 1 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. Annual average resource availability. 30 GWh maximum annual hydroelectric output Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 2. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank) i. Number of generators/boilers/other 7 hydro units, 8 diesel ii. Rated capacity of generators/boilers/other 8,828 kW hydro, 9,915 kW diesel iii. Generator/boilers/other type Hydro and diesel iv. Age of generators/boilers/other Varies v. Efficiency of generators/boilers/other Varies b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $125,000 approx. ii. Annual O&M cost for non-labor $40,000 approx., excluding fuel 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] 27,440,000 kWh (2007) ii. Fuel usage Diesel [gal] 100,000 gal/yr (avg.) Other iii. Peak Load 4,900 kW iv. Average Load 2,800 kW v. Minimum Load 1,500 kW vi. Efficiency Varies vii. Future trends Moderate growth d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power. Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet RFA AEA11-005 Application Cost Worksheet Page 2 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] 6,000 kW b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 30,000,000 kWh max ii. Heat [MMBtu] c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] ii. Coal [tons or MMBtu] iii. Wood [cords, green tons, dry tons] iv. Other 4. Project Cost a) Total capital cost of new system $36,000,000 (est. cost of Phase IV) b) Development cost $4,200,000 (est. cost of Phase I, II, and III) c) Annual O&M cost of new system $250,000 (2009 est.) d) Annual fuel cost No fuel cost 5. Project Benefits a) Amount of fuel displaced for i. Electricity 650,000 gal/yr (by cruise ships, increasing as ULC loads grow) ii. Heat iii. Transportation b) Current price of displaced fuel $3.00/gal (2009), 3.75% escalation for 20 years c) Other economic benefits Potential revenue source to State from sales to cruise ships d) Alaska public benefits Reduced diesel emissions; reduced PCE (not calculated) 6. Power Purchase/Sales Price a) Price for power purchase/sale $0.20/kWh (sales to cruise ships) 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 2.9 with sale of 9,000 MWh/yr to cruise ships Payback (years) Not calculated [GRANT BUDGET FORM] Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Milestone or Task Phase II – Feasibility Analysis and Conceptual Design Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In-kind/Federal Grants/Other State Grants/Other TOTALS FERC Preliminary Permit application April 2011 $ 4,000 $ 1,000 Cash, labor & benefits $ 5,000 USFS Special Use Permit application January 2011 $ 4,000 $ 1,000 Cash, labor & benefits $ 5,000 Stream gage installation Summer 2011 $ 20,000 $ 5,000 Cash, labor & benefits $ 25,000 Hydrology studies Fall 2012 $ 4,000 $ 1,000 Cash $ 5,000 Conceptual design/optimization Summer 2012 $ 64,000 $ 16,000 Cash $ 80,000 Geotechnical reconnaissance Summer 2012 $ 20,000 $ 5,000 Cash $ 25,000 Draft feasibility report Fall 2013 $ 12,000 $ 3,000 Cash $ 15,000 Environmental scoping Fall 2013 $ 24,000 $ 6,000 Cash $ 30,000 Final feasibility report Winter 2013-2014 $ 8,000 $ 2,000 Cash $ 10,000 TOTALS $ 160,000 $ 40,000 $ 200,000 Budget Categories: Direct Labor & Benefits $ 128,000 $ 32,000 Direct labor & benefits $ 160,000 Travel & Per Diem $ 16,000 $ 4,000 $ 20,000 Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ 16,000 $ 4,000 Cash $ 20,000 Construction Services $ $ $ Other $ $ $ TOTALS $ 160,000 $ 40,000 $ 200,000 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Project Milestones that should be addressed in Budget Proposal Reconnaissance Feasibility Design and Permitting Construction 1. Project scoping and contractor solicitation. 2. Resource identification and analysis 3. Land use, permitting, and environmental analysis 5. Preliminary design analysis and cost 4. Cost of energy and market analysis 5. Simple economic analysis 6. Final report and recommendations 1. Project scoping and contractor solicitation. 2. Detailed energy resource analysis 3. Identification of land and regulatory issues, 4. Permitting and environmental analysis 5. Detailed analysis of existing and future energy costs and markets 6. Assessment of alternatives 7. Conceptual design analysis and cost estimate 8. Detailed economic and financial analysis 9, Conceptual business and operations plans 10. Final report and recommendations 1. Project scoping and contractor solicitation for planning and design 2. Permit applications (as needed) 3. Final environmental assessment and mitigation plans (as needed) 4. Resolution of land use, right of way issues 5. Permit approvals 6. Final system design 7. Engineers cost estimate 8. Updated economic and financial analysis 9. Negotiated power sales agreements with approved rates 10. Final business and operational plan 1. Confirmation that all design and feasibility requirements are complete. 2. Completion of bid documents 3. Contractor/vendor selection and award 4. Construction Phases – Each project will have unique construction phases, limitations, and schedule constraints which should be identified by the grantee 5. Integration and testing 6. Decommissioning old systems 7. Final Acceptance, Commissioning and Start-up 8. Operations Reporting Renewable Energy Fund Round IV RFA AEA11-005 Grant Budget Instructions Page 1 of 5 7-21-10 Grant Budget Instructions NOTICE TO GRANTEES Reimbursement to a Grantee under this program is on a cost reimbursable basis. In accordance with the terms of the grant a Grantee is required to submit certified requests for reimbursements that document commitments and expenditures and demonstrate meeting milestones identified in the grant. A proposed reimbursement schedule tied to completion of milestones must be identified in the applicant’s proposal. The Alaska Energy Authority (“AEA” or “Authority”) will n ot approve a reimbursement schedule that does not reflect costs or commitments tied to the accomplishment of milestones identified in the grant. The final reimbursement schedule is subject to negotiation and will be incorporated into the grant agreement. The Authority may authorize a percentage of grant funds, up to 20% depending on the type of grant, as an advance reimbursement at the start up of the grant. The Authority may also withhold up to 20% of the total grant subject to completion of the project and submission of final reports and other documentation that may be required by the grant. A Grantee is required to account for and document all expenditures of grant and matching funds including documentation of expenditures on any advanced reimbursement. All requests for reimbursement are subject to audit by the Authority. The Grantee is also required to comply with 2.AAC.45.010, the State Single Audit regulations. 1. Budget Form Information concerning the proposed grant budget needs to be provided on the Grant Budget Form. The Grantee must tie their budget request to the proposed milestones they propose in their application. Examples of milestones for each project phase are included with the budget form and in Section 2 of the RFA. For the purposes of determining potential cash-flow and a reimbursement schedule Grantees should use the form to identify the proposed date that the milestone would be met, the anticipated amount of grant funds to be expended to meet that milestone, and the amount and type of matching resources they intend to apply to that milestone. The bottom part of the form includes the allowable Budget Categories and is intended to be a summary of types of cost for each phase of the grant. 2. Allowable Costs Allowable costs for a grant include all reasonable and ordinary costs for direct labor and benefits, travel, equipment, supplies, contractual services, construction services, and other direct costs identified that are necessary for and incurred as a direct result of the project. Grant Budget Instructions Renewable Energy Fund Round IV RFA AEA11-005 Grant Budget Instructions Page 2 of 5 7-21-10 A cost is reasonable and ordinary if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs under this grant include all reasonable and ordinary costs for direct labor & benefits, travel, equipment, supplies, contractual services, construction services, and other direct costs identified and approved in the Project budget that are necessary for and incurred as a direct result of the Project and are consistent with the requirements of the grant agreement. A cost is reasonable and ordinary if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs are only those costs that are directly related to activities authorized by the Grant Agreement and necessary for the Project. The categories of costs and additional limits or restrictions are listed below: a. Direct Labor & Benefits Include salaries, wages, and employee benefits of the Grantee’s employees for that portion of those costs attributable to the time actually devoted by each employee to, and necessary for the Project. Direct labor costs do not include bonuses, stock options, other payments above base compensation and employee benefits, severance payments or other termination allowances paid to the Grantee’s employees. b. Travel, Meals, or Per Diem Include reasonable travel expenses necessary for the Project. These include necessary transportation and meal expenses or per diem of Grantee employees for which expenses the employees are reimbursed under the Grantee’s standard written operating practice for travel and per diem or the current State of Alaska Administrative Manual for employee travel. c. Equipment Include costs of acquiring, transporting, leasing, installing, operating, and maintaining equipment necessary for the Project, including sales and use taxes. Equipment owned by the Grantee is to be charged to the project at the monthly rates contained in the Data Quest Blue Book. The rates for equipment owned by the Grantee for less than a month’s duration are to be computed on an hourly charge determined by dividing the monthly rate by 176. Equipment rented by the Grantee can be charged to the grant at actual invoiced charge rates, subject to a maximum amount equal to the hourly rates contained in the Data Quest Blue Book. The Authority’s Project Manager must approve all equipment charge rates to be used by the Grantee. The Data Quest Blue Book is available to the AEA Project Managers and grantees may contact them for current allowable rates. Grant Budget Instructions Renewable Energy Fund Round IV RFA AEA11-005 Grant Budget Instructions Page 3 of 5 7-21-10 Subject to prior approval of the Authority’s Project Manager, costs or expenses necessary to repair or replace equipment damage or losses incurred in performance of work under the grant may be allowed. However, damage or losses that result from the Grantee’s employees, officer’s, or contractor’s gross negligence, willful misconduct, or criminal conduct will not be allowed. d. Materials and Supplies Include costs of material, office expenses, communications, computers, and supplies purchased or leased by the Grantee necessary for the Project. e. Contractual services Include the Grantee’s cost of contract services necessary for the Project. Services may include costs of contract feasibility studies, project management services, engineering and design, environmental studies, field studies, and surveys for the project as well as costs incurred to comply with ecological, environmental, and health and safety laws. f. Construction Services For construction projects this includes the Grantee’s cost for construction contracts, labor, equipment, materials, insurance, bonding, and transportation necessary for the Project. Work performed by the Grantee’s employees during construction may be budgeted under direct labor and benefits. Contracted project management or engineering may be budgeted under contractual services and major equipment purchases made by the Grantee may be budgeted under equipment. g. Other Direct Costs In addition to the above the following expenses necessary for the Project may be allowed. • Net insurance premiums paid for insurance required for the grant Project; • Costs of permits and licenses for the grant Project; • Non-l itigation legal costs for the Project directly relating to the activities; in this paragraph, “non-litigation legal costs” includes expenses for the Grantee’s legal staff and outside legal counsel performing non-litigation legal services; • Office lease/rental payments; • Other direct costs for the Project directly relating to the activities and identified in the grant documents; and/or • Land or other real property or reasonable and ordinary costs related to interests in land including easements, right-of-ways, or other defined interests. 3. Specific Expenditures not allowed Ineligible expenditures include costs for overhead, lobbying, entertainment , alcohol, litigation, payments for civil or criminal restitution, judgments, interest on judgments, penalties, fines, costs not necessary for and directly related to the grant Project, or any costs incurred before the beginning date of the grant as indicated on the signature page. Grant Budget Instructions Renewable Energy Fund Round IV RFA AEA11-005 Grant Budget Instructions Page 4 of 5 7-21-10 Overhead costs described in this section include: • salaries, wages, applicable employee benefits, and business-related expenses of the Grantee’s employees performing functions not directly related to the grant Project; • office and other expenses not directly related to the grant Project; and • costs and expenses of administration, accounting, human resources, training, property and income taxes, entertainment, self-insurance, and warehousing. 4. Match and Cost Sharing If the Applicant is providing a match, it is should be detailed either as a specific dollar amount or as a percentage of the total project budget. The type and amount of matching contributions should be discussed in the application under section two. Cost sharing or matching is that portion of the Project costs not borne by the Authority. The Authority will accept all contributions, including cash and in-kind, as part of the Applicants’ cost sharing or matching when such contributions meet the following criteria: • Are provided for in the Project budget; • Are verifiable from the Applicant’s records; • Third party costing sharing contributions are verifiable (with a letter of intent or similar document); • Are not included as contributions for another state or federally assisted project or program (i.e., the same funds cannot be counted as match for more than one program); • Are necessary and reasonable for proper and efficient accomplishment of the Project or program objectives; • Are allowable costs; • Are not paid by the State or federal government under another award, except for authorized by the State or federal statute to be used for cost sharing or matching; • Must be incurred within the grant eligible time period. Any match proposed with the application will be required in the Grant award and the Grantee will be required to document the use of the proposed matching funds or in-kind contributions with their request for reimbursement. Previous Renewable Energy Fund grants will not be counted as match. 5. Valuing In-Kind Support as Match If the Applicant chooses to use in-kind support as some; or, its entire match, the values of those contributions will be reviewed by the Authority at the time the budget is approved. The values will be determined as follows: • The value of real property will be the current fair market value as determined by an independent third party or a valuation that is mutually agreed to by the Authority and the Applicant and approved in the grant budget. • The value assessed to Applicant equipment or supplies will not exceed the approved equipment rates or fair market value of the supplies at the time the grant is approved or amended. Grant Budget Instructions Renewable Energy Fund Round IV RFA AEA11-005 Grant Budget Instructions Page 5 of 5 7-21-10 Equipment usage will be valued based on approved usage rates that are determined in accordance with the item c. above. Rates paid will not exceed the fair market value of the equipment if purchased. Rates for donated personal services will be based on rates paid for similar work and skill level in the recipient’s organization. If the required skills are not found in the recipient organization, rates will be based on rates paid for similar work in the labor market. Fringe benefits that are reasonable, allowable, and allocable may be included in the valuation. Transportation and lodging provided by the Applicant for non-local labor will not exceed the commercial rates that may be available within the community or region. 6. Grant Disbursements Applicants are reminded that they must request disbursement of grant funds in the form and format required by the Authority with appropriate back-up documentation and certifications. This format will be provided by the Authority. The back-up documentation must demonstrate the total costs incurred are allowable, and reflect the amount being billed. Documentation must include: • A summary of direct labor costs supported by timesheets or other valid time record to document proof of payment; • Travel and per diem reimbursement documentation; • Contractor or vendor payment requests; and • Invoices. Payment of grant funds will be subject to the Applicant complying with its matching contribution requirements of the proposed grant. Payment of grant funds will be made by AEA to the Grantee within 30 days of receipt of a properly completed, supported, and certified Reimbursement Request.