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HomeMy WebLinkAboutCarlson Creek 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: Carlson Creek 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 Carlson Creek 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 19 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 19 7/21/2010 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) ALASKA POWER COMPANY (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 / GRANTS MANAGER 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 19 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) Carlson Creek 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. This project is approximately 8 miles north of Slana, Alaska on the Glenn Highway (Tok Cutoff). This project would provide hydroelectric power to Slana, Chistochina, and Mentasta. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels X Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance X Design and Permitting X Feasibility Construction and Commissioning X Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. APC proposes to construct the 300 kW Carlson Creek Hydroelectric Project (Project), which will be located approximately 8 miles north of Slana on the Glenn Highway (Tok Cutoff). The Project would off-set diesel generation which presently supplies power to the communities of Slana, Chistochina, and Mentasta. The Project will consist of two small diversion structures, approximately 13,200 feet of penstock, a powerhouse with a single generating unit, tailrace, small substation, and a very short length of transmission line. For about half the year, the Project operation will be run-of-river, but during the colder months the Project will draw water from Carlson Lake. The potential annual generation is estimated to be approximately 1,200 MWh/yr, which is about equal to the current annual requirements of the three communities. Therefore, the Project has the potential to almost offset 100% of the current diesel generation. The Project will provide clean, renewable electricity, as well as rate stabilization. The cost to maintain a hydro project is also significantly lower than diesel generation. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 4 of 19 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.)  The Project will reduce the cost of generation by APC, and the savings would be passed on to APC’s customers in Slana, Chistochina, and Mentasta who presently pay $0.5974/kWh, $0.5974/kWh, and $0.6085/kWh respectively (excluding PCE subsidy). The Project has the potential to generate 100% of the current loads, which are about 450 MWh/yr, 300 MWh/yr, and 350 MWh/yr for Slana, Chistochina, and Mentasta, respectively. The existing diesel plants in Slana, Chistochina, and Mentasta would be placed on standby status, reducing maintenance costs and the frequency of generator overhaul and replacement. This would decrease both fuel costs and O&M costs for APC, and those savings would be passed on to APC’s customers. APC estimates the annual savings at current rates would be approximately $49,000 in the first year of operation (equivalent to about 6.8¢/kWh of sales), and the savings would increase as the cost of diesel fuel increases. Residential customers using less than 500 kWh/month would see only a small decrease in their bill, assuming that APC’s savings result in a comparable decrease in the PCE COPA rate. Commercial customers and residential customers using over 500 kWh/month would see greater savings. Over the expected 50 year life of the Project, the expected economic benefits could amount to as much as $18,300,000, and the fuel savings could be as much as 3.5 million gallons. The State of Alaska would benefit from reduced draw on the PCE program. Currently, about 53% of APC’s retail sales in Slana, Chistochina, and Mentasta are subject to COPA. Over the expected 50 year life of the Project, the total savings to the State could be as much as $8,600,000. Lower energy costs would help stimulate both residential and commercial development in both communities and along the highway. The environmental impacts of APC’s diesel generation, (e.g. air pollution, noise pollution, and potential for spills, etc.) will be significantly reduced by this Project. 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 estimated cost of the Carlson Creek Hydroelectric Project is $6,300,000. The total estimated cost of the Project is allocated as follows:  Phase I: Reconnaissance....................................................................................$50,000  Phase II: Resource Assessment, Feasibility Analysis, Conceptual Design......$300,000  Phase III: Final Design and Permitting...........................................................$300,000  Phase IV: Construction .................................................................................$5,650,000  Total...............................................................................................................$6,300,000 APC has been awarded a grant of $40,000 for the Phase I work in Round 2 ($10,000 match by APC); to date the grant documents have been received, and therefore APC has not spent much on the Project. APC made a site reconnaissance in September 2009, and plans to install stream gages in the fall of 2011. With this application, APC is requesting grant funding for Phases II and III. The total estimated cost of those two phases is $600,000, and AP&T requests grant funding of 90% of that cost, or $540,000. APC will provide matching funds totaling $60,000 (10% of the total cost). Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 5 of 19 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. $540,000 2.7.2 Other Funds to be provided (Project match) $60,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $600,000 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) $6,300,000 2.7.5 Estimated Direct Financial Benefit (Savings) $18,300,000 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.) $8,600,000 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 6 of 19 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. Eric Hannan, APC’s Interior Regional Manager, will be the Project Manager for all phases of the work. Mr. Hannan is located in Tok, and is an electrical engineer with extensive experience in project management and electrical generation, transmission and distribution. A resume for Mr. Hannan 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 timeline for all four development phases is provided in Section 10. The following summarizes key activities and dates of the schedule. Phase I: Reconnaissance: Fall 2011 – Spring 2013  Installation of two stream gages  Site inspection by APC engineers (completed September, 2009)  Re-evaluation of project capacity and construction cost based on information from the site inspection and stream gages  Reconnaissance report to document Phase I activities  Request jurisdictional determination from the Federal Energy Regulatory Commission (FERC) Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design: Fall 2013 – Fall 2015  Obtain topographic mapping  Geotechnical investigations at structure locations  Hydrologic investigations to determine long-term flow availability and design flood  Revise conceptual design and construction cost estimate  Detailed economic analysis  Fish surveys and analysis  Wildlife surveys  Botanical surveys  Wetland surveys  Archaeological survey  Water quality testing  Feasibility report documenting Phase II activities Phase III: Permitting and Final Design: Fall 2013 – Fall 2015  Prepare permit application based on Phase II analyses  Provide additional information to permitting agencies as required Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 7 of 19 7/21/2010  Prepare final design plans, specifications, design reports, and environmental monitoring plans Phase IV: Construction: Summer 2015 – Fall 2017 Once final design is complete, APC will place the order for generating equipment. APC could begin mobilization of equipment to Slana in the early spring of 2015 in anticipation of a late spring 2015 start of construction. Pioneering a road to the diversion areas and starting the powerhouse foundation will be the first goals of construction. Construction of the diversion structures and installation of the penstock would begin as soon as the road is complete; that work is expected to require two construction seasons. APC intends to fabricate much of the intake and powerhouse off-site in modified shipping containers so that on-site outdoor work is limited to the short April-November construction season; the off-site fabrication work will begin in early 2015 and continue through much of 2016. 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.) Key (i.e. critical path) milestones for the Project are:  End of Phase I (decision point after completion of reconnaissance study)  End of Phase II (decision point after completion of feasibility analysis)  Receipt of all necessary permits and additional funding for the construction phase by fall 2014  End of Phase III (decision point after completion of design and final cost estimate)  Award contract for supply of the generating equipment by fall 2014  Completion of access road to powerhouse site by June 2015 and to diversion site by August 2015  Completion of penstock installation by October 2016 The schedule described in 3.2 above is consistent with these milestones. It should be noted that the schedule assumes only limited on-site outside work during the December-March time period due to the extreme cold temperatures that are common for that time of year. If unusually harsh weather conditions extend that period, the entire schedule could slip, however, if mild conditions persist then more work will be accomplished. 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 involved in the project development and their roles will be:  Eric Hannan, Project Manager and Transmission Design  Bob Berreth, Electrical Design  Ben Beste, Mechanical Design  Larry Coupe, Civil Design  Glen Martin, Resource Assessment and Permits Phase I: Reconnaissance Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 8 of 19 7/21/2010 For this phase, APC will utilize their own personnel to acquire and analyze data and to install two stream gages. Phase II: Resource Assessment/Feasibility Analysis/Conceptual Design In this phase APC will continue with acquiring property access and complete environmental and engineering/conceptual design studies. APC may use the following contractors for the various studies:  Wetlands delineation - - HDR Alaska Inc.  Threatened and endangered plant species survey - - HDR Alaska Inc.  Fish surveys - - Graystar Pacific Seafood, Ltd.  Water quality sampling - - Travis/Peterson Environmental Consulting, Inc.  Cultural resource surveys - - Browne Research; Northern Land Use Research, Inc.  Topographic mapping - - Aero-Metric, Incorporated  Seismic refraction surveys - - GeoEngineers, Inc. APC permitting specialists will compile the environment information into resource assessment documents as required by the various permitting agencies. APC engineers will conduct the engineering/conceptual design studies in-house. Phase III: Final Design & Permitting Assuming that a FERC license would not be required, in this phase the following permits will be acquired:  404 permit (Corps of Engineers)  Fish habitat permit (ADF&G)(this may not be required as the creek is not listed by ADF&G)  Land leases or easements (ADNR & Ahtna)  Water right (ADNR)  SHPO review  BIA Permit APC will prepare the final design documents in-house using its own civil, mechanical, and electrical engineers, who all have extensive experience in hydroelectric development. These engineers designed APC’s South Fork Hydroelectric Project which entered service in 2005, as well as APC’s Kasidaya Creek Hydroelectric Project which entered service in 2008. Phase IV: Construction Construction will be by local contractors and APC staff. Additional information will be provided in subsequent applications for construction funding. Resumes for the above-mentioned firms and individuals are included in Section 10. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. During Phases II and III, APC proposes to provide quarterly reports to AEA regarding the status of the work. 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 report expeditiously. Besides the quarterly reports, at the completion of Phase II, APC will provide AEA with a copy of the feasibility report, including conceptual design drawings and cost estimate. At the completion of Phase III, APC will provide AEA with a copy of the final design drawings, specifications, and cost estimate, and the permits. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 9 of 19 7/21/2010 3.6 Project Risk Discuss potential problems and how you would address them. Site Control – APC does not yet have development rights on land to be occupied by the powerhouse and part of the penstock and access road. We are working with the land owners to negotiate a lease, easement, or sale. Seismic – Project components will be designed appropriately for seismic activity, since the Project will be located in a high-risk seismic zone. Structures will be buried as much as possible to minimize seismic impacts. Underground Construction – The Project does not include a significant amount of underground construction, which can be fraught with cost overrun potential. Geotechnical investigations will have to be made at the diversion and powerhouse area to provide an adequate level of knowledge about ground conditions at those sites. Inclement Weather – Working conditions in the Project area are very harsh during the winter. The proposed schedule assumes only some on-site outside work during the December-March period (frozen ground could aid in getting over wetlands with minimal impact). If unusually harsh winter weather extends that period, the entire schedule could slip. Should that appear likely, APC and its contractor(s) will review various options, including double-shift work during the long summer days or limited outside work during the winter, such as processing aggregate in the powerhouse area. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 10 of 19 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. Proposed Energy Resource: APC will develop the Carlson Creek site to the largest capacity that is economically feasible, which at this time is estimated to be 300 kW, with an estimated annual generation of 1.2 GWh. During Phase I: Reconnaissance, APC will calculate the potential energy of the Project for various installed capacities, based on a hydrologic record estimated by transposition of data from similar drainages in the Tok – Slana area. During Phase II the Project capacity will be thoroughly evaluated based on stream gage data that will begin being collected in Phase I. The evaluation will consider estimates of instream flow releases that may be required, current electrical loads, and the potential for load growth. At this time the only viable alternative to the Project is considered to be continued diesel generation that occurs at Slana, Chistochina, and Mentasta. APC intertied Slana and Chistochina in 2008 and Mentasta to Slana in 2010 to more efficiently use the existing diesel resources, get more households and businesses on the grid, and reduce their electric rates. All three communities rely 100% on diesel generation provided by APC, but with the new interties we can use one diesel plant for all three with the individual plants as backup in case an outage occurs between communities. The Project has the potential to displace almost 100% of this diesel generation, providing hydroelectric power to all three communities. Pros: Compared to diesel generation, the Project will have the following advantages:  less expensive to operate than diesel (lower O&M);  significant reduction in the purchase of 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 Cons: As with all hydroelectric projects, the initial cost of development is much higher than for diesel generation. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 11 of 19 7/21/2010 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. Existing Power Generation There are 3 gensets in the Slana diesel power plant and 2 gensets in the Chistochina diesel power plant as follows: Slana Power Plant: Unit #1 = John Deere Model 6068TF250, 115 kW, Purchased 2004 or 05?, Installed 2005 Unit #2 = John Deere Model 6068TF250, 115 kW, Purchased 2004 or 05?, Installed 2005 Unit #3 = John Deere Model 6068TF250, 115 kW, Purchased 2004 or 05?, Installed 2005 Chistochina Power Plant: Unit #1 = John Deere Model 6068TF250, 110 kW Unit #2 = John Deere Model 6068RD250, 110 kW Mentasta Lake Plant: Unit #1 = John Deere Model 6068TF250, 115 kW, Installed 2009 Unit #2A = John Deere Model 6068TF250, 110 kW, Unit #3A = John Deere Model 6068TF250, 110 kW, Installed 2008 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. Diesel generation being the existing energy resource, this hydroelectric project has the potential to nearly eliminate the use of diesel generators, except during forced outages. This will reduce the use of diesel and the frequency of their maintenance, including overhauls and replacement. The diesel generators that would be affected are all owned and operated by APC in the Slana, Chistochina, and Mentasta power plants. The Project will reduce this area’s reliance on fossil fuels. At this time it is expected that the diesel generators would be placed on standby except for a small amount of peaking diesel. Feasibility analysis will determine if there is more energy to get out of this project in order to be completely off of diesel. In addition, the transmission and distribution grids between and in all three communities are also owned and operated by APC. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The existing energy market is the communities of Slana, Chistochina, and Mentasta. APC intertied the communities of Slana and Chistochina in 2008 and with Mentasta Lake in 2010; all three of, which are reliant upon diesel generation. These communities were just placed on the same grid by APC to reduce their rates by consolidating the power generation. Combined peak demand is about 130 kW. Annual generation is about 450 MWh, 300 MWh, and 350 MWh by the Slana, Chistochina, and Mentasta powerplants, respectively. Load growth in Chistochina has been about 2% per year for the last 10 years. Slana, Chistochina, and Mentasta residential customers who use less than 500 kWh/month will see only a small decrease in their electric bills, since the PCE COPA would decrease proportionally. Commercial customers and residential customers who use more than 500 kWh/month will see a Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 12 of 19 7/21/2010 larger decrease in their electric bills (up to 14.0 ¢/kWh in the first year of operation). Electric rates would be much more stable once the Project is in operation. Both Slana and Chistochina customers pay $0.5974/kWh because they are intertied. Mentasta, has been paying $0.6085/kWh (excluding PCE), but now that it was recently intertied, will have its rate match the rest of the grid. Many customers supplement their electrical use with wood, kerosene, and oil or gas generators, as well as for heating. Several customers also use propane for cooking, clothes dryers, hot water heaters, etc. If electric rates come down these other sources use may decline, which would help clean the air and reduce toxic spills. 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. Facilities to be constructed include:  2.5 miles of single lane access road  One diversion structure on the north fork of Carlson Creek and another at the outlet of Carlson Lake. The total diversion capacity will be approximately 12 cfs.  13,200 feet of 20-inch pipeline  Powerhouse with a single 300-kW generating unit  A short section of buried or overhead transmission line to connect to the existing APC transmission line along the Glenn Highway (Tok Cutoff) Hydroelectric technology is well developed, and provides most of the renewable energy generated in the world in general, and in Alaska in particular. The Project will utilize the rainfall and steep topography afforded by the Carlson Creek basin to generate renewable energy. Optimum installed capacity – 300 kW (to be confirmed by Phase II studies). Anticipated capacity factor – 46% (to be confirmed by Phase II studies). Anticipated annual generation – The Project has the potential to generate 100% of the interconnected load, up to a maximum of approximately 1200 MWh/year (equivalent to about 94,000 gallons of diesel fuel). Currently all three communities diesel generation is about 1,226 MWh/year, equivalent to about 98,078 gallons of diesel fuel. Anticipated barriers – Winter operation may be hampered by freezing of the powerhouse discharge. APC will evaluate methods of discharging subsurface to allow winter operation. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 13 of 19 7/21/2010 Basic integration concept – Integration of hydropower is not particularly difficult; APC already operates two independent integrated hydro-diesel systems. Because the Project can potentially supply 100% of the generation requirements, the diesel units will usually be in standby service. Delivery methods – Project generation will be delivered to the interconnected Slana-Chistochina- Mentasta system by a short section of buried cable or overhead transmission line from the powerhouse to the existing transmission line along the Glenn Highway (Tok Cutoff). 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. Part of the project is on state land, Ahtna land, and private property. We are working on an agreement with Ahtna and the private property owners, and will obtain an easement from the state. 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:  404 permit (Corps of Engineers)  Fish habitat permit (ADF&G)(this may not be required as the creek is not listed by ADF&G)  Land leases or easements (ADNR & Ahtna)  Water right (ADNR)  SHPO review  BIA Permit Permitting Timeline: we anticipate being able to complete environmental and design studies in order to have permits by fall 2015. Potential Permitting Barriers: No permitting barriers are known at this time. 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 T&E Species: Are not expected to be found there. APC will do a resource evaluation during Phase II. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 14 of 19 7/21/2010 Habitat Issues: Carlson Creek is not listed as an anadromous stream by ADF&G’s website. The Slana River is listed above and below Carlson Creek as: Rec Pt Type FDD Code FDD Stream Name Species String Longitude Latitude 1 MIDSP 212-20-10080-2605 Slana River Kp,Sp -143.77123 62.76446 The creek will likely require a fish survey, but it is possible that fish do not use this waterbody. A wetland delineation will be conducted under Phase II to determine if habitat will be impacted. Wetlands: Wetlands will be avoided when possible. A wetlands delineation survey will be conducted in Phase II. This survey will include looking for threatened and endangered plant species. Archaeological Issues: An archaeological survey may be required by SHPO. APC will request a review of the available information by SHPO to make this determination. Land Development Constraints: No land development constraints at this time (assumption is that an agreement will be reached with Ahtna and private property owners and that site analysis will not come up with any problems). Telecommunications Interference: The 34.5 kV transmission line does not create interference with telecommunications. This size of conductor is frequently found on the same pole with telephone lines, as they are also found to coexist on APC’s poles. Higher voltages can cause interference however. Aviation Considerations: This project is not near an airport or typical flight pattern, nor will the infrastructure be more than 45 feet above ground for a short distance to the existing transmission infrastructure along the highway, which is well below safe flying elevation. Visual & Aesthetic Impacts: Visual and aesthetics are not an issue here, but there would be minor impacts related to visible human activity. The powerhouse and appurtenances will be away from the highway and presumably out of view at this time, except for the access road and transmission line (which may be buried) to the highway. The existing infrastructure along the highway will not have to be upgraded because it is new 3-phase infrastructure. 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 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 15 of 19 7/21/2010  Identification of other funding sources  Projected capital cost of proposed renewable energy system  Projected development cost of proposed renewable energy system Anticipated project costs:  Phase I: $50,000 (APC estimate based on experience with other projects)  Phase II: $300,000 (APC estimate based on experience with other projects)  Phase III: $300,000 (APC estimate based on experience with other projects)  Phase IV: $5,650,000 (APC estimate based on experience with other projects)  Total: $6,300,000 Requested grant funding: $540,000 (Phases II and III only) Applicant matching funds: $60,000 (Phases II and III only) Other sources of funding: $40,000 Round 2 grant with $10,000 matching funds (Phase I) Projected capital cost: $5,650,000 (capital cost is assumed to be the cost of Phase IV – Construction) Projected development cost: $650,000 (development cost is assumed to be the total cost of Phases I, II, and III) 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.) APC will operate and maintain the Project with proceeds from sale of power to its customers. No grant funding is requested for operation and maintenance. 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 its own interconnected Slana – Chistochina – Mentasta system. This power ultimately will be sold to APC’s customers in all three communities and in between at a lesser cost than the current cost of diesel generation. Rate of Return: Not calculated. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. The Cost Worksheet is attached in Section 10. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 16 of 19 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 The people of Alaska will benefit from the Project development as follows: Potential annual fuel displacement: The potential Project generation (1.2 GWh/year) is equivalent to about 95,000 gallons of diesel fuel annually, or about 4.8 million gallons over a 50 year Project life. At a fuel cost of $3.00/gallon, the annual savings would be $285,000 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 $29,000,000. Anticipated annual revenue: APC would expect to have a new rate tariff for the Slana – Chistochina – Mentasta system based on the various funding contributions. If funded as proposed herein, the Project is estimated to result in a decrease in revenue of about $49,000 in the first year of operation (equivalent to about $0.068/kWh of sales). Potential additional annual incentives: Not estimated. Potential additional revenue streams : Not estimated. Non-economic public benefits to Alaskans: Reduced air emissions and noise, reduced chance for diesel fuel spills. Other benefits: The State of Alaska would spend less on the PCE program, since the Project generation would decrease the amount of diesel generation subject to PCE reimbursement. In the short term the local economy would benefit due to local hire for construction. In the long term, lower and more stable electric rates could lead to more residential and commercial development, which in turn would add more income to these communities. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 17 of 19 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 APC will operate the Project to supply power to APC’s interconnected Slana – Chistochina – Mentasta system, for eventual sale to its retail customers. APC will maintain the Project as it does with its other hydroelectric resources, which can be expected to have a life of at least 50 years. The Project will be remotely operated, with continuous monitoring by a SCADA system. O&M personnel will visit the plant at least once per week for routine checks on the equipment. A routine maintenance schedule will be established, a brief annual shutdown is likely for maintenance. 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. In Round 2, AEA awarded APC a $40,000 grant to conduct the Phase I studies for this project; however, the grant documentation was not received until recently (2010). The Phase I work was started with a site visit by two APC employees in September 2009; a copy of the site visit memorandum is included in Section 7. Additional Phase I work will be conducted during the winter and spring of 2011; stream gages will be installed in the fall of 2011. Based on the site visit, we believe seismic refraction surveys in the area of the lake outlet will be necessary to determine the extent and cost of a grout curtain to enable effective use of the lake storage. That work will be planned for late summer/fall of 2011, pending allocation of additional grant funds. 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. This project has not been advertised nor have public meetings been held at this time because we have been looking at the feasibility of the site first. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 18 of 19 7/21/2010 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 Total Project Costs: $6,300,000 (total for Phases I, II, II, and IV) Investments to date and funding sources: APC has spent on a minor amount to date for a brief helicopter reconnaissance of the site in 2008. Amount requested in grant funds: $540,000 (90% of estimated costs for Phases II and III) Additional investment by APC: APC will provide matching funding equaling 10% of the total cost of Phases II and III ($60,000). This matching amount will be paid from APC’s general operations funds. Funding for construction will be obtained at a later date. [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. Project Schedule 5. One-Line Diagrams 6. Resume’s 7. Cost Worksheet 8. Grant Budget Form CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY CORPORATE RESOLUTION PROJECT MAPS PROJECT SCHEDULE PHASE I: ReconnaissanceInstall stream gagesSite inspectionRe-evaluate conceptual designReconnaissance reportFERC Jurisdictional DeterminationPHASE II: Resource Assessment, Feasibility Analysis, Conceptual DesignTopographic mappingGeotechnical investigationsRevise conceptual designEnvironmental surveysFeasibility reportPHASE III: Final Design and PermittingPermit application preparationPermit application processingFinal designPHASE IV: ConstructionMobilizationAccess roadIntakePenstockGenerating equipment procurementPowerhouseTransmission lineTesting and start-up2017Q1 Q2 Q3 Q42016Q1 Q2 Q3 Q42015Q1 Q2 Q3 Q4CARLSON CREEK HYDROELECTRIC PROJECTDESIGN AND CONSTRUCTION SCHEDULE2014Q1 Q2 Q3 Q4Q4 Q1 Q2Q1 Q2 Q3Q4 Q1 Q2 Q3 Q42009201120122013Q1 Q2 Q3Q3Q4 ONE-LINE DIAGRAMS RESUME’S REYNOLD GREY MACHINING & SERVICES, INC. 321 No. Otto St. Pt. Townsend, WA. 98368 (360)385-1167 phone (360)385-3212 Fax RGMACHINESHOP@YAHOO.COM Established in June of 2003 by Greg and Marcy Mika, Reynold Grey has progressed into a diverse shop catering to all types and sizes of machining and fabrication work. Flexible describes us best! As a small town shop we provide a multitude of services in one location to keep costs down. We are capable of all conventional machining, production CNC machining, all types of welding and fabrication designed to suit the project, sandblasting and painting. We are known for our unique approach to problem solving and for the variety of jobs we are capable of tackling. Providing quality work at affordable pricing is our constant goal. Following is a few examples of some of the jobs we have completed. STRUCTURAL STEEL WORK AT PT. HUDSON MARINA IN PT. TOWNSEND, FRIDAY HARBOR FERRY TERMINAL, GUARD SHACKS AT MC CORD AFB AND MANY MORE. COMPLETE OVERHAUL OF TURBINES AND TURBINE SHAFTS FOR THE ROCKY BROOK GENERATION STATION IN BRINNON, WA. CONVERSION OF SEMI TRAILER INTO A PORTABLE GENERATION STATION TO POWER THE TOWN OF SLANA, ALASKA. MULTIPLE HYDRO PROJECTS WITH SQUARES TO ROUND AND ANGLED FLANGES TO PIPE AND OTHER ASSORTED PROJECT WORK FOR BOTH KASIDAYA AND FALLS CREEK PROJECTS IN ALASKA. FOR MORE INFORMATION PLEASE CALL ANYTIME. SLANA GENERATION STATION 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. 1,200 MWh 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 8 diesel generators (3-Slana; 2-Chistochina; 3- Mentasta) ii. Rated capacity of generators/boilers/other 1025 kW combined iii. Generator/boilers/other type Diesel iv. Age of generators/boilers/other 5 years v. Efficiency of generators/boilers/other 12.7 kWh/gal average, all 3 plants b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $69,000 (2008) ii. Annual O&M cost for non-labor $4,000 (2008, 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] 1,226,086 kWh ii. Fuel usage Diesel [gal] 96,542 Other iii. Peak Load 279 kW iv. Average Load 139 kW v. Minimum Load 69 kW vi. Efficiency 12.7 kWh/gal average, both plants vii. Future trends Modest growth (2%) 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] 300 kW b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 1,200,000 kWh 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 $5,650,000 (est. cost of Phase IV) b) Development cost $650,000 (est. cost of Phases I, II, and III) c) Annual O&M cost of new system $50,000 (2008 est.) d) Annual fuel cost No fuel cost 5. Project Benefits a) Amount of fuel displaced for i. Electricity 94,488 gal/yr ii. Heat iii. Transportation b) Current price of displaced fuel $3.00/gal (2009), 3.75% escalation for 20 years c) Other economic benefits $10,000/yr O&M savings d) Alaska public benefits Reduced PCE ($9,900,000), reduced diesel emissions 6. Power Purchase/Sales Price a) Price for power purchase/sale N/A; AP&T is the public utility for these communities 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 2.9 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 Topographic mapping $ 40,500 $ 4,500 Cash $ 45,000 Geotechnical investigations $ 31,500 $ 3,500 Cash, labor & benefits $ 35,000 Hydrology studies $ 9,000 $ 1,000 Cash, labor & benefits $ 10,000 Power output studies $ 9,000 $ 1,000 Cash, labor & benefits $ 10,000 Conceptual design and cost estimate $ 31,500 $ 3,500 Cash, labor & benefits $ 35,000 Economic analysis $ 9,000 $ 1,000 Cash, labor & benefits $ 10,000 Fish surveys and analysis $ 27,000 $ 3,000 Cash $ 30,000 Wildlife surveys $ 13,500 $ 1,500 Cash $ 15,000 Botanical surveys $ 22,500 $ 2,500 Cash $ 25,000 Wetlands surveys $ 31,500 $ 3,500 Cash $ 35,000 Archaeological survey $ 27,000 $ 3,000 Cash $ 30,000 Water quality testing $ 9,000 $ 1,000 Cash $ 10,000 Feasibility report $ 9,000 $ 1,000 Cash $ 10,000 TOTALS $ 270,000 $ 30,000 $ 300,000 Budget Categories: Direct Labor & Benefits $ 63,000 $ 7,000 Direct labor & benefits $ 70,000 Travel & Per Diem $ 4,500 $ 500 Cash $ 5,000 Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ 202,500 $ 22,500 Cash $ 225,000 Construction Services $ $ $ Other $ $ $ TOTALS $ 270,000 $ 30,000 $ 300,000 Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Milestone or Task Phase III – Permitting and Final 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 Prepare Permit Applications (including additional info, as needed) $ 18,000 $ 2,000 Cash $ 20,000 Prepare Final Design $ 252,000 $ 28,000 Cash, labor & benefits $ 280,000 TOTALS $ 270,000 $ 30,000 $ 300,000 Budget Categories: Direct Labor & Benefits $ 42,300 $ 4,700 Direct labor & benefits $ 47,000 Travel & Per Diem $ 2,700 $ 300 Cash $ 3,000 Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ 225,000 $ 25,000 Cash $ 250,000 Construction Services $ $ $ Other $ $ $ TOTALS $ 270,000 $ 30,000 $ 300,000 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.