HomeMy WebLinkAboutKootznoowoo Thayer Lake HD Transmission App
Renewable Energy Fund Round 3
Grant Application
AEA 10-015 Application Page 1 of 30 10/7/2009
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-III.html
Grant Application
Form
GrantApp3.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
Costworksheet3
.doc
Summary of Cost information that should be addressed by
applicants in preparing their application.
Grant Budget
Form
GrantBudget3.d
oc
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
GrantBudgetInst
ructions3.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.
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SECTION 1 – APPLICANT INFORMATION
Name Kootznoowoo Incorporated
Type of Entity: Independent Power Producer
Mailing Address: 8585 Old Dairy Road, Suite 104
Juneau, Alaska 99801
Physical Address: 8585 Old Dairy Road, Suite 104
Juneau, Alaska 99801
Telephone
907 790-2992
Fax
907-790-2995
Email
peter@kootznoowoo.com
1.1 APPLICANT POINT OF CONTACT
Name
Peter Naoroz
Title
General Manager and President
Mailing Address
8585 Old Dairy Road, Suite 104 Juneau, Alaska
Telephone
907 790-2992
Fax
907 790 2995
Email
Peter@kootznoowoo.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)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X 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 at tached
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.
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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)
Thayer Lake Hydropower Development (TLHD) Transmission
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.
West shoreline of Admiralty Island National Monument approximately 6 miles north of Angoon,
Alaska in the middle of the Kootznoowoo Wilderness. The City of Angoon, the Southeast Region and
the State of Alaska will benefit from this project.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels
X Hydro, including run of river 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 – update X Construction and Commissioning
Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
Thayer Lake Hydropower Development consists of a 1MW + run of the river hydropower project
located in the Tongass Forest within the Admiralty Island National Monument based on a
proposal that Kootznoowoo submitted in March 2000 which is described more full in the
Angoon Hydrologic Project Feasibility Evaluation Report (Project). The development would be
located on Thayer Creek approximately 6 miles north of Angoon. Thayer Creek flows out of
Thayer Lake (64 square mile reservoir) at a gentle grade through a broad forested valley then
steepens for 6,800 feet through a narrow forested canyon and finally flattens again for 2000 feet
before flowing into Chatham Strait. The development will tap the energy potential in the steep
section of the stream and will avoid any impact on anadromous fish that use the lower portion of
the creek. The average flow of Thayer Creek is approximately 370 cfs and can vary from 25 cfs
during the coldest periods of the winter to over 2000 cfs during storms in the fall and winter.
The generating facility has a head of 250 feet which is approximate because of the wording of
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the Forest Service Record of Decision (ROD) requiring maintenance of fish habitat. An
additional restriction set forth in the ROD which is not considered in the HDR proposal requires
the overland transmission line be buried where feasible along the access road to the community
of Angoon. The transmission line funding is the subject of this funding and is a companion to
the separate companion application for Round III funds.
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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.)
Kootznoowoo’s goal in applying for these funds , which will augment other sources, is
to design, permit and construct the generating portion of an energy generating and and
transmitting project that meets the congressional requirements of the Secretary of
Agriculture for the cultural and economic benefits for the community of Angoon and as
such is mindful of the increased health risks and costs associated with the current
diesel based generating capacity of Angoon, Alaska. While not quantified in terms of
health care costs savings over time and impacts on the global economy Kootznoowoo
goal is to decrease and ultimately eliminating the hydrocarbon emissions attributable to
current diesel generating facilities in the community and replacing it with clean
generating capacity and backup.
An additional public benefit is eliminating relatively risky shipments of diesel fuel in a
very important state fisheries area surrounding the community of Angoon and the
concomitant costs associated with stand by and actual clean up efforts which must be
borne by the utility rate payers and both the State of Alaska and the federal
government.
Reduced fuel costs and lower energy costs, particularly to businesses and government
sector users, provide significant public benefit and an opportunity for economic growth
in an otherwise stagnant and declining economy.
Finally, the replacement of volatile priced fuels that must be transported at significant
additional expense will be replace by clean and stable priced renewable fuel which is
locally produced.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the n ature and source
of other contributions to the project.
Kootznoowoo has expended significant funds, time and effort to date on this project.
The State of Alaska and the federal government have also contributed funds in
identifying this project and preparing a Record of Decision and a Final Environmental
Impact Statement. Based on the HDR feasibility and evaluation report (attached)
updated for inflation and additional known charges, the following is the current budget
for completion of the overall project:
Reconnaissance, Feasibility, Environmental $ 2,200,000
Preconstruction Engineering, Permitting, Design & Construction $ 2,221,000
Construction Costs Generating Facility Only $ 4,372,402
Construction Costs Transmission Facility $ 4,784,000
Contingency $ 1,623,706
Total Project Cost with Contingency $15,201,108
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Kootznoowoo is not seeking recovery of previously expended funds through this
application. Kootznoowoo’s request for funds under another application is for
$4,000,000, which includes $1,200,000 for the final design and permitting and other
pre-construction activities associated with the construction of the generating facility,
road, diversion structure, and penstock and power house shown in the HDR, Alaska
Project documents, and $2,800,000 for construction of same.
Through this application Kootznoowoo is requesting funds in the amount of $4,000,000
for the transmission line final design, permitting and construction (including
construction of maintenance road and burying t ransmission lines where feasible as
well as tunneling under Kootznoowoo Inlet to complete the transmission connection to
the community). The intent of these separate applications is to seek maximum State
funds and begin the transmission components in the Summer of 2010.
Kootznoowoo will contribute and endeavor to secure the additional funds necessary to
complete the final project. It will seek additional funds from sources including but not
limited to direct federal funds, tribal authorized funds and funds available from the
community or the State of Alaska.
2.7 COST AND BENEFIT SUMMARY
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. $ 4,000,000
2.7.2 Other Funds to be provided (Project match) $ 701,500
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 4,701,500
Project Costs & Benefits
(Summary of total project costs including work to date and future cost estimates to get to a fully
operational project)
2.7.4 Total Project Cost (Summary from Cost Worksheet
including estimates through construction) $15,201,108
2.7.5 Estimated Direct Financial Benefit (Savings) $20.7 million
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.)
$14.4 million from
converting household
heat from diesel
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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 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 will be Peter Naoroz the General Manager and President of
Grantee. Mr. Naoroz’s resume is attached. Mr. Naoroz has begun a search for an
assistant project manager who will be retained by a firm with significant qualifications in
completing run of river hydroelectric projects. Because of the unique nature of this
project’s location and permitting requirements, Mr. Naoroz will maintain full
responsibilities for permitting, project funding including power sales agreement, and
project implementation including but not limited to procuring project construction
management services and retaining qualified general contractors who meet
requirements of the USDA Forest Service. Firms which have expressed an interest in
providing project management services include Cascade Creek, LLC, AP&T, and
Chatham Electric. We will be continuing our search for qualified firms and select one
based on a proven capability to perform work on time and on budget, experience in
designing and building hydropower in Southeast Alaska; proven experience in building
Low Impact Hydropower Institute approved hydropower generation facilities.
Kootznoowoo expects to coordinate with a solicit input from AEA, the City of Angoon,
the Angoon Community Association and the certificated public utility, IPEC during each
phase of the Project.
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.)
Many phases of the development project have successfully been completed. The
reconnaissance and preliminary feasibility and environmental work necessary for
proceeding to preconstruction activities have been completed and fully funded b y either
Kootznoowoo or the federal government. The schedule of proposed work that will be
funded by the first phase of this grant includes the following major tasks:
Selection of Project Consultants including legal team to prepare Power Purchase
Agreement
Pre-Construction Engineering , Design and Construction Documentation
Permitting including Special Use Permit and License Articles
Additional fundraising
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.)
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Preconstruction Phase
Construction Phase
Confirmation that all design and feasibility requirements are complete. January 2011
Completion of bid documents January 2011
Bidding, Feedback and Bid Awards March 2011
Road Construction – Generation Facility September 2011
Road Construction – Power Line and Transmission September 2011
Power House Construction March 2012
Transmission Line Construction April 2012
Integration and testing June 2012
Decommissioning old systems or System Integration August 2012
Final Acceptance, Commissioning and Start-up August 2012
Operations Reporting September 2012
Project scoping and contractor solicitation for planning and design February 2011
Permit applications (as needed) December 2011
Final environmental assessment and mitigation plans (as needed) August 2011
Resolution of land use, right of way issues September 2011
Permit approvals September 2011
Final system design January 2011
Engineers cost estimate update and verification January 2011
Updated economic and financial analysis January 2011
Negotiated power sales agreements with approved rates March 2011
Final business and operational plan March 2011
Secure additional funding or raise funds necessary to complete January 2011
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.
No formal partnerships or commitments with other entities other the U.S. Department of
Energy have been entered into. We have the support and cooperation of the City of
Angoon and the Angoon Community Association as can be evidenced by the attached
Energy Resolution which remains in effect, as well as the Resolutions of Support from
each organization. This critical group of entities will work collaboratively on supporting
the development of the Project and utilize their influence to move the project to
completion. In exchange for this support Kootznoowoo will endeavor to make the
project a success by completing on time and on budget, and by keeping these entities
informed on progress; utilizing open and competitive bidding on project components ;
and providing for and requiring a local hiring preference for labor and contracting.
Kootznoowoo selection processes include a preference for shareholders and their
spouses during competitive bidding. Kootznoowoo also commits to the procurement
requirements of the federal government, its agencies and including those requirements
of the Recovery Act (Stimulus). The AEA will have access to all final bid documents
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and criteria prior to bid awards. Kootznoowoo Project Manager retains all contract
decision authority.
IPEC, the community of Angoon’s electric utility, has prepared a strategic plan which
has been adopted by its Board of Directors identifying the Project as its renewable
solution for the Community. The plan states that TLHD will displace 90% of the diesel
requirement it uses to generate electricity. On June 1st 2009 representatives of IPEC
and the AEA described Thayer Lake as Angoon’s perfect solution to diesel generation.
The purpose of the meeting was to seek common ground to building the project.
Subsequent to this meeting Kootznoowoo has received a bid from a highly regarded law
firm to assist Kootznoowoo in entering into a power sales agreement once we are in a
position to determine the final economics and fund construction of the project.
Kootznoowoo expects significant public benefits to ensue from the project which will be
memorialized in the final power sales agreement.
IPEC has reported to the Southeast Conference in its Status Report on Quest for Diesel
Independence dated September 14, 2009 that “it is conceived that IPEC will buy power
from Kootznoowoo when the project is built as long as it is cheaper than diesel-
generated power.” Kootznoowoo will not proceed with this project unless this is the
case and it will not proceed unless TLHD can significantly reduce the overall cost of
power to Angoon ratepayers. IPEC’s letter dated November 7, 2009 is enclosed with
this application.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
During finalization of Project Design and Permitting, the Project Manager will initiate a
bidding process with the advice and guidance of the Kootznoowoo Advisory Committee
which is being constituted at this time and members will include the following
organizations and interests which has been authorized by the Kootznoowoo Board of
Directors:
Kootznoowoo, Inc. – Peter Naoroz, General Manager and Chair of Committee
Local Utility – Peter Bibb, COO, IPEC has been invited
State of Alaska – Lawrence Blood, Rural Utilities Business Staff, DCRA, State of Alaska
Representative of the USDA Forest Service -- Marty Marshall Admiralty District Ranger
Representative of the City of Angoon – Mayor Albert Howard or designee
Representative of the Angoon Community Association -- President Wally Frank or
designee
Natural Currents LLC – Mr. Roger Bason, President and CEO
Kootznoowoo will plan to monitor phases of the project and keep AEA informed on the
status by communicating internally and externally as follows:
Weekly conference calls among the Project Manager and potential contractors
and consultants with a report of findings to the Advisory Committee via email.
Scheduling of initial meeting with agenda setting and action items within 1 month
of notice of grant authorization from AEA.
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Monthly Scheduled meeting of Kootznoowoo Advisory Committee with written
progress reports to AEA and U.S. DOE Golden.
Selection of Final Design Firm, Permitting consultants and legal firm to prepare
Power Purchase Agreement and recommendation from Advisory Committee and
Project Manager to Kootznoowoo Board of Directors with copy to AEA and U .S.
DOE Golden for informational purposes.
Submittal of updated Schedule and Cost Estimates to all interested parties
including AEA, and United States Department of Energy Golden Field Office (US
DOE- Golden).
During Project construction, communications within the team will consist of:
Weekly conference calls among the Project Manager, Construction Manager,
Construction Superintendents, Design Engineer, and representatives of the
Forest Service with written report to Kootznoowoo Advisory Committee.
Weekly regarding compliance with environmental requirements
Bi-weekly written reports from the Construction Manager and Design Engineer
detailing work completed, work to be completed in the next two weeks, and
potential problems identified.
Periodic site visits by the Project Manager, Construction Manager, Design
Engineer, with a detailed report on findings provided to the members of the
Kootznoowoo Advisory Committee
.
These internal discussions and reports will form the basis of monthly reports and
quarterly reports to the AEA and the Department of Energy Golden Field Office
(U.S. DOE- Golden).
The reports will show in a clear and concise manner progress made on the
various tasks and milestones, the work to be accomplished in the ensuing month,
and potential problems and corrective actions to be considered or implemented.
Cost data as described above will also be provided on a monthly basis. Microsoft
Project or similar software will be used to develop and maintain schedule and
budget information; updating of the management files will be on a bi-weekly
basis.
3.6 Project Risk
Discuss potential problems and how you would address them.
Resource construction always carry certain amounts of uncertainty be it technical or
financial. Construction of a run of river project such as TLHD carries significantly less
risks than say a lake tap project with significant underground work. Additionally the
technology is proven and risks are further mitigated by complete and thorough Forest
Service oversight; particularly, when the standards are established and applied by the
USDA Forest Service under their standard field manual and a ROD which has been
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thoroughly vetted by stakeholders through a full blown Environmental Impact Statement
and a to be established Special Use Permit. This high level of scrutiny was established
by the U.S. Congress under ANILCA. However risks do exist and some of the potential
risks and mitigating actions being taken by Kootznoowoo Incorporated for TLHD
includes the following.
Permitting – Kootznoowoo has taken a hands on and close working relationship with the
USDA Forest Service who is the primary permitting authority for TLHD. Additionally
they have engaged HDR, Alaska, a well-respected and international engineering firm, to
lead the effort to design an environmentally acceptable Project design which is
highlighted on the video produced by Kootznoowoo which can be seen at
http://www.vimeo.com/5659693. Additionally, Kootznoowoo has met through the Forest
Service permitting team with Corp of Engineer and State of Alaska agencies that have
permitting authority over hydroelectric projects and are establishing a basis to clear all
permits through the auspices of the Forest Service as required by the Forest Service
Handbook. In order to mitigate the affects of changes in personnel within the Forest
Service they have agreed to assign personnel to a stakeholder advisory committee to
advise Kootznoowoo in all aspect of final design, procurement, contract, power
purchase agreement, construction and operation.
Design – HDR’s design has led to a Record of Decision by the Forest Service and is
now at the point to finalize with the new requirement of the Forest Service record of
Decision and the economic reality of $4.00 per gallon diesel as well as inflation over the
past 9 years. Kootznoowoo has applied for and received a grant award from the
Department of Energy to complete project design and permitting primarily because of
the Forest Service work leading up to the Final EIS in which a buried line alternative
was heavily favored in discussion as was consideration for moving the power house
location and penstock closer to the fish barrier located on Thayer Creek. Advances in
monitoring options available as well as a newly installed fiber optic service to Angoon
has provided a significant opportunity to finalize a more efficient and productive Project
with advances in technology and data. Kootznoowoo will search for opportunities to
segment design elements and project components to minimize overall project costs.
Those activities such as road construction will not be taken further but rather
constructed on a design/build basis in an effort to lower Project costs. Assuming funding
of this application design of the remaining elements by the State of Alaska at the end of
FY11 the final design and permitting can conceivable be completed by the end of the
second quarter FY12. The ROD requires design documents to be submitted to Forest
Service for review – by including District Ranger and Monument manager in the
decision making process we expect this review to be completed timely.
Seismic – Project components will be designed appropriately for seismic activity, and it
is noted that the Eastern Denali- Chatham fault line runs through Chatham Straits where
Thayer Creek outfalls. The ROD requires that the diversion dam be constructed to
meet the guidelines for low hazard dams established by the Alaska Department of
Natural Resources. (ROD page 11)
Underground Construction – The current design for the project does not include
significant underground construction. Appropriate Geotechnical work will be done at the
diversion structure and power house foundation and Penstock placemen to assure
sound construction.
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Cost Overruns – The Project budget includes an appropriate level of contingency .
Operations – All major elements of the Project will carry standard warranties as
appropriate.
Operations and maintenance of the Project will be performed by qualified contractors in
accordance with Forest Service and Kootznoowoo hiring and employment policies
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SECTION 4 – PROJECT DESCRIPTION AND TASKS
Tell us what the project is and how you will meet the requirements outlined in Section 2 of
the RFA.
The level of information will vary according to phase(s) of the project you propose to
undertake with grant funds.
If you are applying for grant funding for more than one phase of a project provide a
plan and grant budget form for completion of each phase.
If some work has already been completed on your project and you are requesting funding for
an advanced phase, submit information sufficient to demonstrate that the preceding phases
are satisfied and funding for an advanced phase is warranted.
4.1 Proposed Energy Resource
Describe the potential extent/amount of the energy resource that is available.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be
available for the market to be served by your project.
The TLHD as envisioned will be a 1+ megawatt hydroelectric resource located
approximately 6 miles north of Angoon Alaska. Annual energy production during an
average water year is estimated to be 8 million kilowatt-hours. The community load
factor needs to be confirmed based on the passage of time, new telecommunication,
entertainment and broadband services and the conversion of diesel heat to electric heat
as well as projected load factors..
During final design the Project will be evaluated to accommodate increased storage in
the future and new technology to deal with freeze that will allow for better matching
generation with load requirements. These features are not felt to be warranted at this
time but as loads increase will be reconsidered.
Advantages: As will be discussed in the next subsection, diesel generation must be used
to provide electric generation in Angoon. The TLHD project will eliminate the need for
approximately 95% of the diesel generation until alternative reliable backup can be
provided that is capable of generations during low water according to estimates provided
by Inside Passage Electrical Cooperative, the certificated community utility.
While other small hydroelectric resources are available in the area, none are as
accessible and proximate to Angoon, nor are they ready for immediate construction.
The project is located in a hydro reserve envisioned by Congress to provide power to
Angoon. Tidal energy has promising potential in and near Angoon but the technology
will need to be proven and deployment can not be deemed feasible nor reliable at this
time.
Geothermal, biofuel, wind and other alternative energy production is all of limited
application to Angoon at this time because of the lack of development of the regional
intertie. Until this is accomplished the best source of power necessary to displace diesel
in Angoon is this Project.
4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
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Briefly discuss the basic configuration of the existing energy system. Include information about
the number, size, age, efficiency, and type of generation.
Inside Passage Electrical Cooperative (IPEC) until recently operated (3) 500 kva diesel
fired generators at a diesel cost of over $4.00 a gallon (fluctuates) resulting in a power
cost to consumers and businesses that were recently $0.62 per kWh. Significant
upgrades have occurred under the supervision and by the AEA. The Grantee is aware
of the upgrade to the system and the addition of a new control system which currently is
presently having “bugs worked out”. It is assumed that the efficiency of the system will
be slightly better. Until the system reliability is confirmed by IPEC and AEA we assume
that the historic numbers mentioned elsewhere are accurate for this grant proposal.
Feedback from AEA and IPEC would be helpful in other grant request the Grantee will
be making.
Historically and until the past couple of months the community of Angoon has been
serviced by IPEC with four diesel generators.
Generators (#2 diesel fuel engines)
Caterpillar 3456ATAAC 475 kW
Caterpillar 3508DI 550 kW (existing)
Caterpillar 3508DITA 560 kW (existing)
Angoon’s electric generation facility consists of three diesel generator sets (genset) with
a total capacity of approximately 1,500 kw. The community’s load is typically between
250kw and 400kw. Their voltage output is 480v 3-phase which feeds three -250kw
overhead transformers. These transformers boost to a 7,200v distribution voltage and a
majority of the community receives power by an overhead distribution system.
Kootznoowoo understands that these systems have been removed and replaced with
one 1 CAT 3456 genset with planned heat exchanger. We understand that this planned
unit is in testing mode and no reliable data on efficiency has been established. While
optimistic about savings, this application assumes similar efficiency going forward on the
basis of a stable load. AEA will have the best information available through its oversight
of the project.
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
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any impact the project may have on existing energy infrastructure and resources.
Existing Energy Resources are entirely diesel generation by the local electric utility and a
combination of wood, diesel and propane for heating and cooking. Several other
residences and a large lodge utilize diesel generation for their electric production. As
detailed in the next section significant need and demand exists under a lower cost price
structure for electricity. The Project is designed to displace fossil fuel and replace with
local clean renewable energy.
In 2007, IPEC burned 147,157 gallons of diesel to produce 1,949,156 of sold kWh. The
average cost of diesel was $2.55 in 2007, but exceeded $4.00 in 2008. Our hydropower
development will stabilize electrical costs to a low rate, reduce operating costs, reduce
fuel spill issues and reduce carbon emissions in our community. These ancillary benefits
are in addition to significantly increasing the standard of living of one of the lowest
income per capita communities $11,357 with 82% of the residents being Alaska Natives
with an overall community poverty rate of 27.9% (2000 US Census and Alaska Dept of
Labor Workforce and Development 2007) with 87% unemployment (TANF, Central
Council of Tlingit and Haida Indians of Alaska).
The average annual flow of Thayer Creek is estimated to be 369 cfs with peak flows
exceeding 2000 cfs (HDR 2000 and with 2003 update data included). Hydrodynamic
head at proposed power house site is 250 feet. The development has the capacity to
generate 8,500,000 kWh annually or four times the current consumption load of the
community. It is anticipated that economic forces of elast icity of demand in the
consumer, tribal and business markets will increase demand from the current usage.
Further, most homes, businesses and schools are heated with diesel fuel. It is
anticipated that with the advent of low cost hydropower that space heat ing energy usage
will begin substitution from oil heat to electrical heat once the project is completed.
Kootznoowoo expects the demand to expand as future local demand as sales
opportunities are created.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
The following table provides a historic summary of energy sales over the past six years
according to IPEC and as publish by AEA for the community of Angoon
FY 2003 1,755,719 kWh
FY 2004 1,765,541 kWh
FY 2005 1,746,764 kWh
FY 2006 1,658,402 kWh
FY 2007 1,677,750 kWh
FY 2008 1,934,201 kWh
The Thayer Lake Hydropower Development is the highest economic and energy priority for the
City of Angoon, the Angoon Community Association (traditional IRA tribe) and Kootznoowoo
Incorporated as evidenced by our jointly developed Angoon Community Energy Plan.
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The economic benefits of this project are profound and will decrease the diesel generated
electrical expenses to the State of Alaska (through PCE program) community residences,
businesses and tribal members by over $900,000 a year (2008 cost of $0.62 per kWh versus an
expected hydropower development cost $0.15 per kWh at a community usage of 2,000,000 kWh
per year). This is a profound economic impact since the community has a population of
approximately 470. In addition, the advent of low cost electricity will provide strong incentive for
businesses, schools, municipal buildings and homes of tribal members to convert from expensive
diesel space heating to cheaper and more economically reliable hydropower electricity. It is
estimated that this will provide an additional $1.5 million dollars in collective energy savings in
displacing another 500,000 gallons of diesel a year. Kootznoowoo through TLHD has the goal to
completely displace the use of fossil fuel use in Angoon with a goal of 100% renewable energy
driven Native community as a hallmark of the only community in the Admiralty Island National
Monument Wilderness. TLHD will allow Angoon to become energy self sufficient in energy
generation for current and future load growth. Converting police, municipal, school, and fire
vehicles (as well as personal vehicles) to plug in electric and or electric hybrid vehicles will over
time further decrease the use of fossil fuels in Angoon.
In addition to the substantial increase in the standard of living and promotion of economic
benefits, TLHD will provide cultural and social benefits. Currently the Angoon public schools
have cut back on sports and extracurricular activities in order to pay energy expenses. These
lack of activities have spawned unwanted social behaviors that would be eliminated if these
programs could resume with lower energy costs. The gym and other sports activities are
unheated or not heated after hours which have further reduced the recreational and social
activities or our youth. In some cases, this has led some of our tribal member families to move out
of their traditional community so they can provide resources to their children. TLHD will reverse
this downward social spiral impacting our youth and young adults.
Many of our elders are on fixed income and many residents live on a subsistence lifestyle where
fishing and hunting provide the majority of the protein consumed in many households. Allowing
fish and game to be readily and more cheaply frozen will allow more sharing of resources with
our elderly and at our social gatherings where subsistence foods is a staple. Additionally, many
of our citizens have curtailed their transportation expenses to regional cultural events so that
they can pay their energy bills. This has led to a decrease in some of our most respected elders
and leaders from attending and contributing to important Native issues and forums. In some
cases, our elders have had to move out of their traditional community leaving a vacuum of tribal
knowledge and protocol with some clans.
Some of our traditional clan houses have become in disrepair because there are no funds to heat
the houses which has led to further degradation. Lower energy costs will allow clans and their
members to fix and maintain structures that are over 100 years old. It is important to the
community of Angoon to protect and allow these cultural structures to be preserved.
Furthermore, it is difficult for our community to host regional events that Angoon has
traditionally hosted due to the high cost of energy. Therefore, low cost hydropower will revitalize
our ability to host cultural and traditional events that we have been forced to eliminate.
An ancillary benefit is that Thayer Creek has the opportunity to provide future clean water source
for the community of Angoon. The location of existing small dam and water line along the
planned transmission line provides the opportunity for additional infrastructure along an existing
grandfathered right of way for future water sourcing. Although the current Angoon water source
is acceptable, it has limitations and the Thayer Creek could provide a better quality water source
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in the future. An underground crossing alternative across Kootznoowoo Inlet provides
significant opportunity to enhance water supply and fire protection as part of the Project at no
additional costs.
Angoon’s largest employer, a destination lodge of national reputation, provides its own diesel
generated power currently and would be a likely candidate to conversion once less expensive
power is available in the community. This Lodge burns about 15 gallons per hour of diesel for 90
days a year or about 32,400 gallons.
The City of Angoon has expended funds on renovation of a cold storage facility and is expected to
be operational as soon as economic and less expensive power is available. This facility was
constructed in conjunction with the Angoon Community Association with contributions from
Kootznoowoo but can not operate at the existing cost of power and therefore it cannot support the
fishing industry. When operating much of the operation will be seasonal in nature. However, the
facility will be open the entire year with some basic maintenance load during the off-season
months.
Kootznoowoo in collaboration with Tlingit and Haida and Sealaska had created the Angoon
Business Center which was recently terminated for lack of funds to pay heating and electric bills..
This business incubator while run as energy efficiently as possible supported 15 computer
terminals and a fledgling business which manufactured coats with a number of sewing machines.
The Angoon business center will hopefully find new sponsors and continue to provide a reliable
load to help support the local load.
Kootznoowoo is also considering establishing a tourist destination facility that will include a
large commercial all electric commercial kitchen that was contributed to the community as a gift
from a local benefactor. This kitchen served a camp of 125 workers daily and with significant
power requirements that will likely be served by a stand alone generator.
Kootznoowoo has been contacted by more that one small cruise operator and has looked at the
potential benefits of attracting small boutique boats to Angoon. The lack of modern amenities
and the cost of services with embedded costs of utilities make such a proposition marginal in
terms of economics. Being able to attract and charge berth fees which include reliable shore
power would change to economics to marginally attractive.
Perhaps the single most significant factor which must be considered as a potential impact on the
energy market is the possibility of bringing on significant new housing to the market.
Remarkably at a time when most of Alaska is experience significant migration to regional centers
Angoon continues to maintain a core population despite the high cost of transportation and
energy. The reasons are beyond the scope of this application but importantly each and every
original shareholder of Kootznoowoo was deeded a residential lot of a minimum size of ½ acre
and up to 1.5 acre depending on location. In addition to this conveyance nearly 900 acres of
prime real estate was conveyed to the City of Angoon for future development. There is no other
community in Southeast Alaska with this inventory of platted residential lots and opportunities for
immediate growth. If the average usage is extrapolated over 4 times the number of homes and
business in Angoon it is reasonable to predict the load growth will quadruple and the load
growth would be faster than average due to pent up demand. Reasonable scenarios exist that
completely reverse the stable to declining economy of Angoon with reduction of energy costs.
GCI has recently installed a cable landing station in Angoon that is a customer of IPEC. This
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cable landing station also provides television, broadband and telephone service to Angoon at the
lowest rate in the State. Accordingly, it is reasonable to expect use of these services to increase
the average household demand for electricity in the future. The historic TV cable provider (the
City of Angoon) will be displaced with higher value lower cost content provided by GCI.
Without TLHD any one of these loads would create significant need for diesel generation. The
Project will provide the long-term/low-cost power required for the development of these and
other potential loads. The Project will increase the value of the public’s private property and
business in Angoon and increase the likelihood that new businesses will begin and be able to
maintain themselves and not fail due to the high cost of electricity.
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
Attached is the HDR feasibility and evaluation along with the Forest Service FEIS which fully
describes in detail the system we propose. Land ownership, permits and environment issues are
described at length and the proposed system is suitable and well thought out and designed to
meet the requirements of the U. S. Congress in granting certain rights to Kootznoowoo to develop
hydroelectric resources for Angoon. .
The specific technology is well established and proven and consists of a small diversion dam, a
pipeline and penstock which powers two Francis turbines which in turn generate the renewable
energy. From the powerhouse the power will be transmitted to Angoon via an overland
transmission line which will be buried where feasible consistent with the ROD.
The proposed plan is to install two generators capable of producing 1MW however the next
phase will review all assumptions related to potential load and stream flow with the goal of
optimizing capacity. Given Angoon’s current average load and peak load this configuration is
optimum as it will allow Angoon’s current load to be serviced reliably with some room to grow.
As designed the anticipated annual generation is approximately 8,500,000 mWh per year which is
approximately 4 times the annual requirements. Please see the details in Selected Arrangements
in the HDR report.
Given the completion of the Environmental work the only anticipated barrier to this “shovel
ready project” is funding. Low water flows will require the current diesel genset to serve in a
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back up capacity particularly during the coldest days of the year. The energy produced will be
transmitted over a 6 mile transmission line which will be buried where feasible and which will
ideally be run through a drilled conduit under Kootznoowoo Inlet to the existing power grid
operated by IPEC, the Angoon’s utility. IPEC will purchase power from Kootznoowoo as
provided in a power sales agreement and operation and maintenance responsibilities will be
detailed in that agreement.
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.
All the land and waters upon which the Project will be situated is either National Forest in a
highly restricted category of land status – “Wilderness Monument” or on land surface estate
owned by Kootznoowoo, Inc. The Alaska National Interest Lands Conservation Act (ANILCA), Section
506(a)3(B) gives Kootznoowoo, Inc., the right to develop hydroelectric resources on Admiralty Island at
the Project locations, subject to such conditions as the Secretary shall prescribe for the protection of
water, fishery, wildlife, recreational and scenic values of Admiralty Island. The Secretary through the
USDA Forest Service has prescribed these conditions in the ROD completed in July 2009. The intertie
connection across Kootznoowoo Inlet between Kootznoowoo’s surface estate and the City of
Angoon will involve future negotiation for easements with private landowners and these details
are anticipated as part of finalizing the permitting and several options are available and funds
necessary are anticipated to be well within the contingencies provided.
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
Please see the ROD which is attached for a complete list of applicable permits. Permit timeline
will ensue once sufficient funds are available to engage permitting professional and pay
necessary fees including mitigations impacts necessary after negotiations.
Anticipated Permitting Timeline: Assuming available funds as early as September 2011
Identify and discussion of potential barriers to permitting: Kootznoowoo does not anticipate
barriers based on discussions to date with Forest Service officials who are responsible for
coordinating activities of permitting authorities. The only significant barrier to permits is
funding. In all likelihood the mitigation requirement of the U.S. Army Corps of Engineer’s 404
permit for mitigating affects to wetlands.
Importantly Thayer Lake Hydropower Development is the number one priority of the combined
Angoon Energy plan in which Kootznoowoo, Incorporated, the City of Angoon and the Angoon
Community Association (traditional IRA) have signed off on. Please see attached resolutions and
letter to President Obama. In addition, IPEC submitted a strong letter of support in
Environmental Impact Study process and has demonstrated their political and local support for
the development. Additionally other communities and important economic entities continue to
support the Project and TLHD is blessed with wide community support from within the
community and tribal members that live outside the community but would like to return once
energy costs have been stabilized and an economy can return. The development has a Final
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Environmental Impact study that is culmination of years of environmental wrangling with the US
Forest Service and Environmental groups. We now enjoy the support of the US Forest Service
along with local and national Environmental groups. Our only barrier to development that we
are working on is securing funds for preconstruction and construction funds to build the
development. With help from the State of Alaska, the Department of Energy, Agriculture and
Interior the cash flow from the project will more than pay for the anticipated operating costs and
under our scenarios make a return to Kootznoowoo to provide resources for our tribal members.
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
Discussion
Any threatened and endangered species have been fully disclosed in the Final Environmental
Impact study and do not pose a barrier to Project completion
Habitat Issues are also disclosed in the same document and requirements for mitigating the
impacts on habitat are fully articulated.
Wetlands and other protected areas are fully disclosed in the Final Environmental Impact
Statement (FEIS) and do not pose a significant barrier to Project completion. The Army Corp of
Engineers has physically been present on the site with the Forest Service and Grantee and no
barriers to construction are anticipated with the current design.
Archaeological and historical resources have been disclosed by the FEIS and certain mitigation
measures will be required which Kootznoowoo feels are attainable and will require continued
community participation and monitoring.
Land development constraints have been fully analyzed by both HDR, Alaska and the Forest
Service based on their experts and significant experience. The original road to the diversion dam
was relocated based on recent experience in Gustavus with roads that are proximate to streams
and creeks. The relocation will add slightly to the length but will protect critical habitat and
reduce the chance of unstable soils and fill
Telecommunications interference – there is no anticipated telecommunication interference.
Aviation considerations – the crossing off Kootznoowoo Inlet is designed to be under water to
avoid impacting the seaplane approach that is currently utilized by the community.
Visual, aesthetics impacts have been addressed fully to the standards established by ANILCA in
the Forest Service Record of Decision (ROD) based on the alternatives established in the Final
Environmental Statement.
Identify and discuss other potential barriers
Kootznoowoo does not anticipate barriers based on discussions to date with Forest Service
officials who are responsible for coordinating activities of permitting authorities.
Importantly Thayer Lake Hydropower Development is the number one priority of the combined
Angoon Energy plan in which Kootznoowoo, Incorporated, the City of Angoon and the Angoon
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Community Association (traditional IRA) have signed off on. Please see attached resolutions and
letter to President Obama. In addition, IPEC submitted a strong letter of support in
Environmental Impact Study process and has demonstrated their political and local support for
the development. Additionally other communities and important economic entities continue to
support the Project and TLHD is blessed with wide community support from within the
community and tribal members that live outside the community but would like to return once
energy costs have been stabilized and an economy can return. The development has a Final
Environmental Impact study that is culmination of years of environmental wrangling with the US
Forest Service and Environmental groups. We now enjoy the support of the US Forest Service
along with local and national Environmental groups. Our only barrier to development that we
are working on is securing funds for preconstruction and construction funds to build the
development. With help from the State of Alaska, the Department of Energy, Agriculture and
Interior the cash flow from the project will more than pay for the anticipated operating costs and
under our scenarios make a return to Kootznoowoo to provide resources for our tribal members
4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants Records or Analysis, Industry Standards,
Consultant or Manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
Attached is the detailed budget submitted to the US DOE GOLDEN 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.
Also attached is a Schedule of HDR cost estimates which have been adjusted to 2010 dollars
using a 3% inflation rate.
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.)
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TABLE 4.4.2 Project Operating and Maintenance Costs
O&M Cost Basis Amount
Labor 1 half-time position $25,000
Transportation 200 trips/year@$25/trip $5,000
Misc. Expenses $15,000
Administrative 35% of O&M $15,000
Insurance 0.1% of Total Construction Cost $8,000
Replacements 0.2% of Total Construction Cost $17,000
Total $85,000
Source: HDR Angoon Hydroelectric Project Feasibility Evaluation Report March 2000
Operating cost estimates from HDR’s study assume coordination with the O&M of the existing diesel plant so that a
single new half time position is required. Kootznoowoo believes that in order to retain qualified personnel to
maintain both systems the position will need to pay more than the estimated costs even if inflated for wage inflation
over the past 10 years. Additionally the transportation estimate of $25 per trip will need to inflate at the rate of
inflation of gasoline over the same period of time. These estimates will be updated with the updated feas ibility
analysis completed with this phase of the project and negotiated in the Power Sales Agreement.
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
Potential power buyers and customers include existing utility – IPEC is anticipated to be the
major customer. Depending on the utility rate structure – particularly for large interruptible
users at least one lodge has expressed an interest in purchasing power directly from
Kootznoowoo. Kootznoowoo also may start a business venture with a large user of energy on
lands on the North side of Kootznoowoo Inlet that would be serving after the communities power
needs were met in order to avoid spilling surplus power.
Kootznoowoo is targeting a pro forma $0.15 kWh for power sales which cuts power cost based on
recent prices in half. In 2008 fuel costs averaged as much as $.30 per kWh, however until the next
phase of the Project involving the preconstruction activities can reveal the likely economics of the
projects including available federal grant funds this figure is only a target. A price range would
be $0.13 to $0.18 depending on other terms of the power sales agreement such as sharing of
employees and creation of operating efficiencies. By including the COO of IPEC in this critical
final design phase we are optimistic about reducing our operating costs by working
collaboratively on reducing maintenance and operation costs. For example a buried transmission
line with an underground cable through Kootznoowoo inlet should reduce O&M for the life of the
project. Because of the lack of economies of scale it is essential for the utility and Kootznoowoo
to look for every possible savings in order to keep the rate as low as possible.
Kootznoowoo is endeavoring to make the community cost of power as low as possible., Given the
significant current investment in the project it is unrealistic for Kootznoowoo to expect to
accomplish this without significant grant funds. A full recovery on the basis of a risk adjusted fair
market basis requires considerations aside from the power sale revenues.. As Kootznoowoo and
its original shareholders and their heirs and assigns own significant land in the service area it
only makes sense to pursue public funds to best of our ability while available and therefore avoid
unnecessary expenses. Simply put, Kootznoowoo is not looking for a direct market rate return
from the State of Alaska’s grant funded portion of the project. By keeping energy prices as low as
possible the return from grant funds can be seen elsewhere in ways that are not traditionally
measure – such as the health and sustainability of the City of Angoon as well a business ventures
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Kootznoowoo can sponsor. On new funds, Kootznoowoo would expect a normal market rate of
return from its financial contributions. Kootznoowoo believes it will be able to achieve significant
public benefit as is described further in Section 5 and elsewhere.
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
Cost worksheets are attached and a narrative is included as an additional attachment which
includes documentation.
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
Diesel generation pollutes Angoon’s otherwise pristine environment and community. Per a July
9, 2007 letter submitted the US Forest by the Inside Passage Electric Cooperative (IPEC), the
utility discharged 3,437,981 pounds of CO2 emissions in 2006. One key benefit of our
development would be to mitigate this discharge of CO2 emissions in our community that impacts
the health and safety of our shareholder, tribal and community members – all of whom are
residents of Alaska in Angoon. Kootznoowoo expects to receive on behalf of its shareholders
significant benefit from low cost power.
The least of these benefits is the annual revenue contemplated under the Power Purchase
Agreement. Targeting a sales price of $0.15 per kWh and adjusting for the cost incurred (HDR,
Alaska, 2000) net operating income in the range of $200,000 is reasonable to expect initially.
Significant growth will cause this revenue to increase and the average cost to drop so it is
reasonable for revenues to grow faster than inflation. However, the real benefits to
Kootznoowoo’s land holdings and the value of shareholder lots is immediate as the community
moves toward positive economic growth and expectations change to a more positive economic
future.
Tax credits, green tags and renewable energy subsidies may or may not be available depending
on the action of state and federal policy makers. This project is not dependent on such incentives
but if they are available they should inure to the benefit of Kootznoowoo Shareholders and the
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community of Angoon.
Other benefits including the possibility of eliminating all diesel for household heat.
Angoon’s annual electric diesel generation produces approximately 2,000,000 kWh (source AEA). There
are other independent producers of diesel generated electricity and these figures are unknown at this time.
No known renewable energy produces electricity in Angoon at this time. However, more disturbing, no use
of electricity is used for space heating in Angoon due to the high cost of electricity. Therefore over 95% of
the energy usage for space heating for homes and businesses is produced through diesel generated heat.
Approximately 5% of the homes use firewood or are supplemented with firewood.
The CBJ Greenhouse Gas Emission study released in March 2009 reveals that Juneau is 81% dependent
on diesel in its total non-transportation use of energy. Naturally, Angoon does not have hydropower so it
is 100% diesel dependent. Converting the MMBTU requirements for Angoon using the CBJ 81% figure,
we find that Angoon would convert to its diesel usage to electrical usage if the price of electricity provided
the economic incentive to convert to lower cost electrical heat. Theoretically, (based on 2,000,000 kWh
figure) the community of Angoon would need 10,500,000 kWh (2,000,000/19%) if it completely converted
its home heating and diesel fuel usage to electrical generation from low cost methods. Theoretically, the
community of Angoon currently needs the equivalent of 10,500,000 kWh for its current needs if their needs
can be compared “one to one” with Juneau’s usage. Because of the high cost of fuel in Angoon and
current conservation efforts this estimate is very conservative but is a straightforward extrapolation. We
know that the PCE supplement creates a significant barrier to realistically making this conversion.
However a significant reduction in the price of electricity would allow for conversion to occur. In other
words low cost power would drive conversion from diesel and other CO2 producing fuel sources in the
community of Angoon much as has recently occurred in Juneau, Petersburg, Sitka and other communities.
IPEC will be able to completely idle their diesel generation capacity to a stand by status and would be
able to salvage unnecessary equipment further reducing cost of operating existing infrastructure. IPEC
would however need to build and expand its distribution system in Angoon as demand will increase the
number of homes, business and public buildings which are operated as the economy moves forward. In a
community planning on building an airport in the next year or so and building a new ferry terminal and
other necessary infrastructure it is entirely reasonable to expect significant economic growth particularly
compared to recent years of decline. There exists the potential for many new housing starts do to one of
the highest level of vacant but “shovel ready” housing lots in the Community directly the result of
Kootznoowoo shareholders receiving lands from Kootznoowoo. We expect Angoon to likely experience an
unprecedented power demand in converting home heat fuel from diesel to relatively inexpensive
hydroelectric power which, in turn would justify line upgrades and line expansion to new areas within the
community.
Currently, the community of Angoon has one of the highest unemployment rates at 87% (source TANF
program, Central Council of Tlingit and Haida Indians of Alaska) and lowest per capita income in
Southeast Alaska. The per capita income for Angoon was $11, 357. Nearly a third of families and
Angoon’s overall population are below the poverty line (source US Census Bureau Fact finder for
Angoon, Alaska). Alaska ranks number one in energy use per capita. According to the Cold Climate
Housing Research Center 2009 Alaska Housing Assessment, the average Sealaska household (of which
Angoon belongs) consumes $6,072 of energy per year.
Over half of the average household per capita income of Angoon residents is spent on energy. The impact
of this project to bring low cost hydropower to the community of Angoon and energy customers is
potentially profound. Energy customers are making decisions to either heat their homes or feed their
household. TLHD is ready to finalize its design based on these facts and the enormous price increase in
the cost of diesel since the HDR feasibility analysis. An updated design and procurement of necessary
permits and funding is all that remains between continuing the decline associated with diesel generation
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and the growth anticipated with economical and non volatile hydroelectric power generation. The boost
to the economy with the construction should be the catalyst for this growth as families begin to return to
Angoon once the see progress on the horizon. An investment by the State of Alaska alongside the current
award by the US DOE in this project is needed now in order to save this community.
IPEC currently sells electricity in a non-subsidized rate at over $0.525 per kWh. TLHD would
dramatically reduce and stabilize the electrical rate, would provide for a meaningful alternative to heating
fuels such as diesel, propane and wood and would allow the City of Angoon to prosper. It will result in
direct out of pocket annual savings to Angoon ratepayers of over $300,000 annually for electricity alone
and increase disposable income by nearly $600 per capita or $1800 for a household of three.
As can be seen from the attached chart conversion to electric heat is entirely likely to occur and the update
to the existing feasibility will recalculate loads based on rational economic behavior which can be shown
graphically by the following chart. New homes will also likely be constructed with electric heating as part
of design. It is expected that this conversion will be directly related to the price of electricity which in turn
is based on future demand predictions. Kootznoowoo would prefer to overestimate demand estimates and
encourages AEA to do the same for the factors mentioned above and for the reasons we have seen other
communities react to lower cost power.
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
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Kootznoowoo will operate the Project in a corporate entity. At present it has reserved the name
Natural Power for such a purpose. The likely entity will be an LLC that will operate as an IPP.
The LLC structure gives Kootznoowoo the benefits of corporate protection of assets and is
consistent with other entities owned by Kootznoowoo, Inc., and it can be managed for little
additional costs. This form of business structure gives us the greatest opportunity to attract and
retain partners such as the local utility once the project is fully constructed and in an operating
mode. Other concepts may need to be considered as facts and circumstances dictate.
Kootznoowoo expects the project to finance the maintenance and operations for the life of the
project as run of river hydro projects while expensive are very well understood and relatively
simple to maintain and operate.
Identification of operational issues that could arise.
According to HDR the operational cost of the Project was calculated to be $85,000 per year in
1999 dollars. Costs identified were Labor, Transportation by boat, Miscellaneous Expenses,
Administrative, Insurance and Replacement Reserves. Even after adjusting for inflation these
figures appear too low and unrealistic given reporting requirements for IPP’s in Alaska. We
believe that economies of scale and operation can be achieved by working very closely and
cooperatively with the local utility and we will explore this thoroughly during the negotiations for a
power sales agreement. Because on-going back-up to the Project must be provided by IPEC we
expect to be able to achieve our mutual goals of the lowest cost power to the community and at the
same time look forward to increased economy as demand and revenues grow.
Kootznoowoo is commitment to reporting the savings and benefits of this project as part of its on
going responsibilities under the Grant and under its role of steward of the lands and waters in and
around Angoon. It will of course have a long term interest in Angoon as its largest landowner and
as its business interests grow with economic and competitive energy becomes available.
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.
Kootznoowoo has been seeking funds from federal sources within the Department of Agriculture
(for the entire project primarily on the basis of displacing greenhouse gases and economic
development), the Department of Interior (particularly for roads components) and the
Department of Energy for the Preconstruction activities described in this phase of the Grant. To
date the Department of Energy has awarded $1,110,500 in matching funds to Kootznoowoo for
Preconstruction activities. We are optimistic that other funds will be made available from these
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agencies. The funds awarded will be used as Kootznoowoo’s contribution to this grant.
As stated elsewhere significant milestones have been accomplished. Kootznoowoo has received
other grants from the Department of Agriculture which completed the HDR study. Milestones that
have been achieved include the following:
HDR Feasibility and Evaluation Report March 2000
Additional Stream gauging and analysis by HDR 2003
Establish Community Energy Policy in December 2008 which was adopted by the City of
Angoon and later endorsed as to top priority of the Tribal Council in Angoon in March of
2009
Completed Environmental Impact Statement and Record of Decision which enjoyed
considerable community and regional support. March 2009 and July 2009 for end of
appeal period.
Awarded a $1,110,500 grant from DOE for completion of design, permitting and
preconstruction activities associated with TLHD. August 2009
We intend to proceed as quickly as possible to be in a position to enter the next phase of this
project just as soon as we raise necessary funds for matching the DOE grant or have other funds
available to proceed. As you can see Kootznoowoo will need to fund the project activities until
other funds are available such as the DOE funds discussed elsewhere.
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.
Local support is considerable. The City of Angoon, the Angoon Community Association
(federally recognized tribe) considers this project the community’s highest priority. We do not
expect any opposition to the project. Enclosed are letters of support. Please review the EIS for a
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complete list of support letters from the region and the community.
Attached are local letter of support
SECTION 9 – GRANT BUDGET
Tell us how much you want in grant funds Include any investments to date and funding sources,
how much is being requested in grant funds, and additional investments you will make as an
applicant.
Include an estimate of budget costs by milestones using the form – GrantBudget3.doc
As described throughout this grant application, the total cost of TLHD is estimated to
be $14 million, including all costs spent to date. Initial reconnaissance studies, preliminary
design, and the necessary environmental work were funded from internal equity and a small
federal grant as well as support from the USDA Forest Service who prepared the Record of
Decision, the project scoping and environmental work necessary to complete the FEIS.
Currently, internal equity totals approximately $2.2 million. For several years, internal equity
has been used to move the Project forward.
A federal award was recently added to the project sources of funds and the Kootznoowoo Board
has accepted these funds and directed staff to seek sources of the match. This application is one
such effort. Other efforts include possibility of liquidating assets of Kootznoowoo to invest in the
project. Given the economics both to Kootznoowoo and the future ratepayers it essential to
maximize efforts to find grant funds from all possible sources. Significant stimulus funds, tribal
funds for economic development and healthy communities and as well as funds designed for
simply creating sustainable communities are now available for the first time. The State of
Alaska’s contribution would certainly improve the chances of completing this project at the
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earliest date possible. Future costs will be funded by a combination of corporate equity, federal
grants, and proceeds from this grant. Total equity will be targeted at 20 percent of total Project
costs ($2.8 million). Kootznoowoo is committed to the completion of Thayer Creek and we will
continue to rely on the City of Angoon and the federally recognized tribe (the Angoon
Community Association) for project support so that benefits may flow to the ratepayers of
Angoon.
GrantBudget3 is enclosed
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SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. 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. 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.
F. 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 Peter M. Naoroz
Signature
Title President
Date November 6, 2009