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HomeMy WebLinkAboutCEA Transimission Line Signed Grant ApplicationA L A S K A Renewable Energy Fund Round IV / GED ENERGY AUTHORITY Grant Application Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.org/RE Fund-IV.html Grant Application GrantApp4.doc Application form in MS Word that includes an outline Form 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 Costworksheet4.doc Summary of Cost information that should be Worksheet 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 GrantBudgetlnstructions4.pdf Instructions for completing the above grant budget Instructions 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. AEA 11-005 Application Page 1 of 14 7/21/2010 /� ALASRGY HKA Renewable Energy Fund Grant Application Round IV SECTION 1 — APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Chugach Electric Association, Inc. Type of Entity: Electric Utility Cooperative Mailing Address Physical Address P.O. Box 196300 5601 Electron Drive Anchorage, Ak 99519.6300 Anchorage, Ak 99519 Telephone Fax Email 907 762-4759 907 762-4191 ron_vecera@chugachelectric.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Title Ronald K. Vecera Director of Project Development Mailing Address P.O. Box 196300 Anchorage, Ak 99519.6300 Telephone Fax Email (907) 762-4759 (907) 762-4191 ron_vecera@chugachelectric.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) X An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); 1.2.2. Attached to this application is formal approval and endorsement for its project by Yes 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 ) 1.2.3. As an applicant, we have administrative and financial management systems and Yes follow procurement standards that comply with the standards set forth in the grant agreement. 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached Yes 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. AEA11-005 Grant Application Page 2 of 14 7/21/2010 /� ALASKA Renewable Energy Fund © ENERGY AUTHORITY Grant Application Round IV 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 Sword title for your project) Transmission Line to Renewable Energy Resources 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 will determine the routing and design for a transmission line to connect a potential geothermal energy resource (Mt. Spurr) and a potential hydro resource (Lake Chakachamna) to the existing Railbelt electric system. Both of these potential resources are on the west side of Cook Inlet and the closest interconnection point is at Chugach's Beluga power plant. The nearest community to the project is the Native Village of Tyonek. The communities that could benefit from the project include all of the communities served by the Railbelt electric utilities. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels Hydro, including run of river X Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance X Design and Permitting X Feasibility Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Chugach is proposing to begin the process of route selection and permitting for a new transmission line linking potential renewable energy projects on the west side of Cook Inlet to the existing Chugach system. Ormat Nevada, Inc. (Ormat), a wholly owned subsidiary of Ormat Technologies, Inc. (NYSE "ORA"), secured 15 geothermal leases on Mt. Spurr from the State of Alaska in 2008 and has since embarked on a multi -phased exploration and development plan, with a goal to explore and build a utility scale 50-100 MW geothermal power plant to be connected to the Railbelt power grid around 2016. Ormat has built over_1,000 MW of geothermal plants during the last 3 AEA11-005 Grant Application Page 3 of 14 7/21/2010 /ALASM Renewable Energy Fund ® ENERGY AUTHORITY Grant Application Round IV decades all over the western United States and several locations internationally. Phase 1 of Ormat's exploration, focusing on both aerial and ground based geological and geophysical surveys was completed in August 2010. Phase 2a, focusing on drilling four 500' to 1000' core holes, to measure temperature gradients and other geological features, started early September 2010 and is expected to be complete by the end of the month. Phase 2a will move on to drilling additional, deeper, slim holes in 2011. Both phases (1 and 2a) will be partially cost shared by Ormat and AEA as part of Round III of the Renewable Energy Grant Program. Future Ormat exploration and development phases, planned for 2012-2013, will focus on additional drilling in an attempt to confirm and delineate the geothermal resource. Subsequent geothermal field development and power plant construction and commissioning are expected to take place in 2014-2016. Hydroelectric resource assessment at Lake Chakachamna is not as far along, but a project in the future is possible. Chugach's proposed project would include one or more high voltage transmission lines which would connect to the existing substation and transmission lines at Beluga. The line would be built for a maximum operating voltage of 230 kV but could initially be operated at a lower voltage to match first stage development of 50 MW of the geothermal project. The line would cover a distance of at least 40 miles, depending on the routing. The initial phase would investigate feasible routes and select a preferred route, including permitting and right of way acquisition. While Chugach would own and operate the line, all purchasers (presumably all Railbelt utilities) would be able to access the renewable energy. The line would be designed to accommodate future development of a hydro resource at Lake Chakachamna. 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.) A successful geothermal development at Mt. Spurr would provide significant benefits. Geothermal is base -load generation with a very high capacity factor. It is a renewable resource that would offset fossil fuel generated electricity for the entire Railbelt. This would lower fuel costs, lower carbon emissions and enhance rate stability. It would also help diversify the mix of generation resources for the Railbelt and help conserve the declining Cook Inlet natural gas supply. In its 2009 AEA renewable energy grant application, Ormat quantified the benefit of geothermal energy production. Ormat estimated savings, assuming a 50 MW plant, of 2,925,183 Mbtu of natural gas per year for 25 years or more. The value of this gas was estimated at $22.1 million in 2016 to $41 million in 2041. Ormat also estimated carbon offset savings (compared to natural gas) of $13.7 million per year. The project is believed to have a resource potential of 50 to 100 MW. If a 100 MW plant is developed, these benefits will be doubled. Geothermal energy from Mt. Spurr (and any future hydro from Lake Chakachamna) will only be accessible to Railbelt utilities if there is a transmission link from the new generation to Chugach's existing system. The proposed link will provide for the reliable transport of the new AEA11-005 Grant Application Page 4 of 14 7/21/2010 GW:) ENERGY AUTHORITY Renewable Energy Fund Grant Application Round IV renewable energy resources to the interconnected systems of Alaska's Railbelt and allow all participating utilities to realize the benefits listed above. 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. Phase 1 of the project would consist of: Route selection and preliminary design estimated to cost approximately $550,000, and Assessment of permit requirements estimated to cost approximately $50,000. Chugach will provide an estimated $20,000 of project supervision and other labor to manage these tasks and secure agreement from participants on the route. Phase 2 of the project would consist of: Acquisition of permits and rights -of -way estimated to cost approximately $300,000, and Geotechnical/survey work and final design, estimated to cost approximately $800,000. Chugach will provide an estimated $60,000 of project supervision and other labor to manage these tasks and secure agreement from participants on an initial and final configuration. Funding for Phase 1 and Phase 2 in the amount of $1.7 million is the subject of this grant request. If one or both of the renewable energy projects prove viable, and construction proceeds, the funding for this major infrastructure addition would be pursued and is expected to be a combination of financing by participants and available grant opportunities. The construction cost of a 45 mile transmission line is expected to be about $60 million. 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. $1,700,000 2.7.2 Other Funds to be provided (Project match) $ 80,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $1,780,000 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 $61,780,000 including estimates through construction) 2.7.5 Estimated Direct Financial Benefit (Savings) $See narrative below 2.7.6 Other Public Benefit (If you can calculate the benefit in $See narrative below terms of dollars please provide that number here and explain how you calculated that number in your application (Section 5.) AEA11-005 Grant Application Page 5 of 14 7/21/2010 �©ALAUTHORITY SM Renewable Energy Fund Grant Application Round IV As mentioned above, if either of these renewable energy resources proves to be viable, the public benefit of this project is that it allows access by all Railbelt utilities to the renewable energy. All utilities will realize the benefits of reduced fuel costs, lower carbon emissions, conservation of fossil fuel resources, diversifying the generation mix and the economies of scale of larger projects. While it is difficult to quantify this as a benefit of the transmission line, because it is the geothermal energy from the Ormat project that creates these financial benefits, the transmission line is essential for the delivery of newly developed renewable energy. SECTION 3 — PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completina the proiect within the scope. schedule and budoet 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. The Project Manager is Shawn Wendling. He is a long-term Chugach employee with significant experience with Transmission and Distribution construction, operation and maintenance. His supervisor is Jon Sinclair, P.E. and the executive responsible for transmission, as well as a variety of other activities, is Ed Jenkin, P.E. Professional bios for each are attached. In addition to these individuals, the project will be supported by the resources of Chugach's extensive in- house engineering staff and the use of qualified consulting engineers and contractors. Contact information is as follows: Name: Shawn Wendling Address: P.O. Box 196300 Anchorage, Ak 99519-6300 Phone: (907) 762-4510 Fax: (907)762-4693 Jon Sinclair P.O. Box 196300 Anchorage, Ak 99519-6300 (907)762-4603 (907)762-4693 Email: shawn_wendling@chugachelectric.com ion sinclair@chueachelectric.com 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) Phase 1 (Feasibility): 7/1/11 to 6/30/12 Phase 2 (Design & Permitting) 7/1/12 to 6/30/13 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.) AEA11-005 Grant Application Page 6 of 14 7/21/2010 ALASKA Renewable Energy Fund /4MED ENERGY AUTHORITY Grant Application Round IV Comprising the project phases identified previously, the following decision points have been identified and are included on the project worksheets: - Route selection report/Agreement on preferred route by all participants - Assessment of permit requirements - Agreement on initial and final configuration of the line by all participants - All permits and rights -of -way acquired - Geotechnical, Survey and Final Design 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. Chugach has in-house expertise in its Transmission Services department and its project manager and other responsible staff are knowledgeable in transmission line projects and very capable of managing the processes described in this application. Engineering Services for route selection, permitting and design will be performed by consultants, who will be selected through a qualification/RFP process. All materials and construction contracts will be procured through competitive bidding. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Chugach will file project status reports that provide information on project activities, schedule and budget in a manner and frequency that conforms to AEA reporting specifications. 3.6 Project Risk Discuss potential problems and how you would address them. The project features and schedule will be driven by the renewable energy projects it will serve. Basic feasibility and route selection can be determined independently from these projects. Line configuration and installation schedule will depend heavily on the timing of renewable energy projects. Final design, material procurement and construction will be closely coordinated with the other parties. We will adopt a design which will allow scaling of the project to the size of the generation project it serves. Cost overruns can occur due to delays, late design changes and unanticipated field conditions. Extensive field work will be directed to capture field conditions. Close coordination with participants will avoid late design changes as well as delays. Natural events such as floods, volcanic activity or earthquakes can also lead to delays. Worker safety during such events will be addressed at every stage of the project. Participant change is a risk that can be an opportunity or a threat. Loss of a participant shifts funding burdens to the remaining ones. The vicinity of coal resources may also allow other AEA11-005 Grant Application Page 7 of 14 7/21/2010 mp ALASKA Renewable Energy Fund � ENERGY AUTHORRY Grant Application Round IV participants to join and supplement funding. SECTION 4— PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. • The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget form for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and fundina for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extentlamount 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 vour Droiect. A Round III AEA grant was awarded to Ormat to begin assessing the geothermal potential at Mt. Spurr. Ormat has advised Chugach that a viable geothermal resource could justify development of a 50 to 100 MW project. A future hydroelectric development at Lake Chakachamna is also a possibility. Chugach's proposed project is the transmission line necessary to connect these new energy resources to the existing Chugach system which would allow delivery of the energy from these renewable energy projects to the other Railbelt utilities. 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 energy system is the combined generation resources of the Railbelt utilities. According to the AEA Regional Integrated Resource Plan, published in February 2010, the Railbelt utilities have a total of 1,276 MW of installed capacity. This includes 1,099 MW of thermal generation and 177 MW of hydro. The age, condition and efficiency of these generation units varies, but many are old and will be retired in the next few years. 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. New renewable energy generation resources developed at Mt. Spurr or Chakachamna will allow diversification of the Railbelt generation mix. It would allow for the retirement of older, less efficient generation units and a material reduction in fossil fueled generation. Chugach's proposed project will extend the transmission system so that the energy from renewable energy resources that are developed can be delivered to Railbelt utilities. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. AEA11-005 Grant Application Page 8 of 14 7/21/2010 rALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application Round IV The existing energy market consists of the Railbelt utilities and the communities that they serve. The existing load is primarily residential and commercial. Electrical energy needs are met with generation that is primarily natural gas, supplemented by hydro, and also by coal and diesel in the Fairbanks area. Successful development of renewable energy resources will allow diversification of the generation mix for existing customers and provide a source of renewable and stable priced energy for years to come. It would also reduce the need for scarcer natural gas supplies to be used for power generation. 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 The system design is for the transmission link to newly developed renewable energy sources. The number of circuits, voltage level and conductor size will be dictated by development of the renewable energy projects. The geothermal project can be served by a single 138 W transmission line in its initial configuration of 50 MW. Larger development of this resource and/or the Chakachamna hydro plant would require a double circuit of 230 W to provide adequate capacity and reliability. 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. To be determined during Phase 1 of the project. 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 To be determined during Phase 1 of the project. 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 AEA11-005 Grant Application Page 9 of 14 7/21/2010 /® ALASKA Renewable Energy Fund 4NND ENERGY AUTHORITY Grant Application Round IV • 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 To be determined during Phase 1 of the project. 4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer's estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: • Total anticipated project cost, and cost for this phase • Requested grant funding • Applicant matching funds — loans, capital contributions, in -kind • Identification of other funding sources Projected capital cost of proposed renewable energy system Projected development cost of proposed renewable energy s See section 2 and grantibudget forms. Chugach has constructed several transmission lines and has the experience and knowledge to rough estimate transmission line costs based on the terrain and their length. The total estimated project cost is $61,780,000. The phases that are part of this grant application include feasibility and design and permitting. The requested grant amount for these two phases is $1,700,000. Chugach is only proposing a match of in-house project management resources estimated at $80,000. Chugach is not proposing additional funding because this project is not solely for Chugach's benefit. It would benefit any participating electric utility in the Railbelt. Thus, while Chugach is willing to take the lead to advance the project, it would not be fair to our ratepayers for them to fund a project that others who benefit will not have paid for in a similar fashion. 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 Maintenance of the transmission line is estimated at $250,000 per year. This expense would be funded through the rate structure applicable to project participants. AEA11-005 Grant Application Page 10 of 14 7/21/2010 /� ALAJKA Renewable Energy Fund 4MED ENERGY AUTHORITY Grant Application Round IV 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 Not applicable. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. The Project Cost/Benefit worksheet is not applicable. Costs and benefits are in the context of a transmission line to deliver the renewable energy from projects on the west side of Cook Inlet. The renewable energy projects allow stable priced renewable energy to be used to displace fossil fueled energy. This conserves the fuel resources, reduces carbon emissions, diversifies the generation mix, etc. These benefits are substantial. While they result from the development of the geothermal or hydro renewable energy systems, the proposed transmission line is essential to realize these benefits. SECTION 5— PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project The benefits information should include the following: • Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project • Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) • Discuss the non -economic public benefits to Alaskans over the lifetime of the project The primary benefit will be the delivery of renewable energy. The value of geothermal energy, as estimated by Ormat, was previously cited in the response to Section 2.5 of this application. For this project (and Chakachamna) to be developed there must be a path to get the energy to the market. The proposed transmission line is the essential link to do so. In addition to allowing the delivery of clean, stably priced renewable energy, this project will also benefit Alaskans by helping to conserve available supplies of natural gas. Revenue collected to recover the cost of a transmission line would be cost -based and subject to review and approval by the Regulatory Commission of Alaska. A rate of return (margin) would only be earned on utility provided capital. No return would be earned on any investment financed AEA11-005 Grant Application Page 11 of 14 7/21/2010 ALASKA Renewable Energy Fund D ENERGY AUTHORITY Grant Application Round IV r SECTION 6— SUSTAINABILITY Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum: • Proposed business structure(s) and concepts that may be considered. • How you propose to finance the maintenance and operations for the life of the project • Identification of operational issues that could arise. • A description of operational costs including on -going support for any back-up or existing systems that may be require to continue operation • Commitment to reporting the savings and benefits This project is very sustainable. All Railbelt utilities who want to share in the project can receive shares similar to how it is done for Bradley Lake. Participant shares allocate energy output, costs and responsibilities. Governance is provided by all parties, similar to how the Bradley Lake Project Management Committee manages that project's operations and maintenance. This form of business organization and partnership is well understood by the Railbelt utilities. With respect to the new facilities, transmission lines have a design life of 40 to 50 years. The proposed line would become part of Chugach's transmission system and be operated and maintained while renewable energy projects require the service. Operating and maintenance costs consist primarily of line losses, inspections and replacement of damaged or worn parts. Cost recovery will occur via the rates participants pay to recover the net capital investment (after any grants received) and O&M expenses associated with the transmission line. Since this project would be integrated into the Railbelt electric system and costs recovered from Railbelt utilities through the life of the project, it is another good reason to conclude that it is a very sustainable project. SECTION 7 — READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. Chugach and Ormat have been in contact with each other to share information about the geothermal potential and project development at Mt. Spurr for the past year. Ormat has already begun on -site assessment and initiated drilling activities. Chugach's work on Phase 1 of this project will begin as soon as grant funds are available and the results of Ormat's assessment activities indicate a continued likelihood of project development. A Request for Proposals for Engineering Services for the route selection study can be released within 6 weeks of funding availability. SECTION 8— LOCAL SUPORT Discuss what local support or possible opposition there may be regarding your project. Include AEA11-005 Grant Application Page 12 of 14 7/21/2010 /w ALASKA Renewable Energy Fund ® ENERGY AUTHORITY Grant Application Round IV letters of support from the community that would benefit from this project. Letters of support have been received from: • Homer Electric Association • Golden Valley Electric Association • Anchorage Chamber of Commerce 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 Provide a narrative summary regarding funding sources and your financial commitment to the project. Chugach is requesting grant funding in the amount of $1.7 million. Chugach will provide in- house labor in the estimated amount of $80,000 to manage the project and provide other support as needed. Chugach is not proposing a financial match other than internal resources because this project is not just for Chugach's benefit. While Chugach is taking the lead, and the project would connect to Chugach's existing system, this project is being undertaken on behalf of the Railbelt electric utilities, all of whom would presumably be off -takers and beneficiaries of the geothermal project. If the geothermal resource proves viable and the transmission project proceeds to construction, a financing plan including funding sources and financing on behalf of all participants will be developed. Adjustments will be made based on developments at Lake Chakachamna. Estimates of the costs of the initial phases of this project (feasibility, design and permitting) are shown in the attached Grant/Budget documents. AEA11-005 Grant Application Page 13 of 14 7/21/2010 ALASM Renewable Energy Fund Grant Application Round IV SECTION 9 — ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Contact information, resumes of Applicant's Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4. B. Cost Worksheet per application form Section 4.4.4. C. Grant Budget Form per application form Section 9. D. Letters demonstrating local support per application form Section 8. E. An electronic version of the entire application on CD per RFA Section 1.6. F. Authorized Signers Form. G. Governing Body Resolution or other formal action taken by the applicant's governing body or management per RFA Section 1.4 that: - Commits the organization to provide the matching resources for project at the match amounts indicated in the application. - Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. - Provides as point of contact to represent the applicant for purposes of this application. - Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. H. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name Bradley W. Evans Signature Title Chief Execu v Officer Date 9 l/ql!G AEA11-005 Grant Application Page 14 of 14 7/21/2010