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HomeMy WebLinkAboutAEA Board Minutes June 21 2023 813 W Northern Lights Blvd, Anchorage, AK 99503  Phone: (907) 771-3000  Fax: (907) 771-3044  Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG Alaska Energy Authority BOARD MEETING MINUTES Wednesday, June 21, 2023 Anchorage, Alaska 1.CALL TO ORDER Chair Pruhs called the meeting of the Alaska Energy Authority to order on June 21, 2023, at 8:31 am. A quorum was established. 2.ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Vice-Chair Bill Kendig (Public Member); Albert Fogle (Public Member); Julie Sande (Commissioner DCCED) (arrived 9:20 am); Bill Vivlamore (Public Member); and Randy Eledge (Public Member). 3.AGENDA APPROVAL MOTION: A motion was made by Vice-Chair Kendig to approve the agenda, as presented. Motion seconded by Mr. Fogle. The motion to approve the agenda passed without objection. 4.PRIOR MINUTES – May 19, 2023 MOTION: A motion was made by Vice-Chair Kendig to approve the prior minutes of May 19, 2023. Motion seconded by Mr. Fogle. The motion to approve the minutes of May 19, 2023, passed without objection. 5.PUBLIC COMMENTS (2 minutes per person) There were no members of the public online or in-person who requested to comment. 6. NEW BUSINESS – None 7. OLD BUSINESS - None 8.DIRECTOR COMMENTS A.Responses to Board Questions from May Board Meeting - Included in thepacket B. Governor’s State Energy Security Task Force Alaska Energy Authority Page 2 of 8 Curtis Thayer, Executive Director and Secretary-Treasurer, discussed that the Alaska Energy Security Task Force has held two meetings. The next meeting is scheduled for June 27, 2023. Subcommittees will be determined at that meeting. Presentations on infrastructure funding, GRIP applications, and PCE will also be given. The Security Task Force will hold a series of 30-minute informational symposium presentations focusing on different aspects of rural and urban energy in Alaska. The series will provide a foundational level of understanding and will be available in a recorded webinar format for members and the public. Mr. Thayer informed that the report due in October will provide the beginnings of a roadmap of ideas and concepts for reaching the Governor’s moonshot goal of 10-cent power. The process will be ongoing for the next several years. Mr. Thayer discussed that the report would include suggested legislative changes to regulations and statutes. The focus on the Railbelt highlights resilience and reliability. The focus in rural Alaska highlights cost and renewables. Both short-term and long-term solutions will be considered. Mr. Thayer noted that nuclear possibilities are within the category of long-term solutions. Chair Pruhs asked if the deliverable report will contain more questions or more answers. Mr. Thayer believes the report will contain more questions describing how to achieve the 10-cent power goal, rather than solutions. Mr. Thayer discussed the constraints of financing. One of the subcommittees is focusing on the federal tax incentive opportunities, including the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and other federal funding programs. The report will include AEA’s updated information regarding the energy needs, costs, and options in rural Alaska communities, coastal communities, and urban communities. Mr. Thayer indicated that all options are on the table, including consolidation. He noted that the hope is to have Black & Veatch and Michael Baker International provide modeling support for the Task Force’s information. Chair Pruhs asked if the deliverable report will recommend specific permitting processes and regulations to be streamlined. Mr. Thayer hopes that the report will identify certain regulations and statutory changes. He gave the example that on State land leased for wind farms, Department of Natural Resources (DNR) charged a wind tax that was ultimately paid for by the ratepayer. Through work with the Governor’s Office and DNR, the wind tax was eliminated. It is important that the State regulatory and statutory processes are not an impediment to establishing lower cost energy solutions. C. FY24 Operating Budget and Capital Budget Update Mr. Thayer informed that the Legislature adjourned, and the FY24 Operating Budget remained as presented. The total authorized budget is about $58 million, of which approximately $48 million is Power Cost Equalization (PCE) funds. The Legislature made changes to the Capital Budget. The Legislature added $6 million for Bulk Fuel Upgrades. The Legislature increased the Renewable Energy Grant Round XV by $9.6 million, for a total of about $17 million. The Legislature added $5 million for the Whittier Port Electrification project. The $5 million is paid for from the cruise ship passenger head tax. Mr. Thayer noted that Princess and Holland America are providing $6 million Alaska Energy Authority Page 3 of 8 for the electrification project. Mr. Eledge requested additional information regarding the line item titled Inflation Reduction Act (IRA) Home Energy Performance-Based Whole-House Rebate Allocations, High Efficiency Electric Home Rebate Allocation. Mr. Thayer discussed that the total amount is $74 million and will be split between the two areas. AEA will partner with Alaska Housing Finance Corporation (AHFC) and enter into a Memorandum of Understanding (MOU) and reimbursable services contract for AHFC to administer the funds. AEA will maintain responsibility for the accounting and federal reporting of the funds. Mr. Thayer explained the program targets home energy rebates and energy efficiencies. The federal award is expected to be released any time after the budget goes into effect July 1, 2023. Mr. Thayer reviewed the information in the packet showing AEA’s funding sources comparison for the capital budget for the last four years. He noted that the Legislature provided AEA with five new positions to focus on the IIJA funding. Three of those positions have been filled. Mr. Thayer discussed AEA’s funding sources comparison for the operation budget for the last four years is basically flat. The five new positions are reflected in the increase in AEA receipts. Also reflected in the graph is the true-up of cost of living increases and insurance adjustments. D. AEA Infrastructure Awards Tracker: Mr. Thayer discussed that the weekly tracking spreadsheet now includes the color-coded key. The spreadsheet will be updated for the next meeting. i.Grid Resilience and Innovation Partnerships (GRIP) III – Railbelt Innovation Resiliency Project (application) ii.Grid Resilience and Innovation Partnerships (GRIP) III – rural Alaska Microgrid Transformation (application) iii.Energy Efficiency Revolving Fund Capitalization Grant Program (Sec 40502) Mr. Thayer informed that the GRIP III application for the Railbelt, the GRIP III application for rural Alaska, and the Energy Efficiency Revolving Fund Capitalization Grant Program information are linked to the agenda. He provided a general overview of each of the programs, including the funding amounts and the required match that could be provided by the State and other entities. The GRIP III application acceptance announcements are expected in the fall of 2023 or the winter of 2024. Out of the total 135 concept papers submitted, it is anticipated that Department of Energy (DOE) will award up to 40 submissions. Vice-Chair Kendig asked for information regarding GRIP I and GRIP II. Mr. Thayer discussed that the GRIP I application is for its maximum of $100 million for grid resilience and the Railbelt backbone reconstruction project. The GRIP II application for $16 million links the battery system with a coordinated control system for the four utilities and AEA. It requires a 50% match. Alaska Energy Authority Page 4 of 8 Vice-Chair Kendig asked if the GRIP I application is funded, if any of those funds will be used to reimburse AEA. Mr. Thayer disagreed. He noted that the funding will assist in the completion of the upgrades. The FY2023 estimated amount for the completion of the upgrades from Bradley Lake to Anchorage is over $400 million, and the upgrades from Anchorage to Fairbanks is over $600 million. Mr. Thayer discussed that the estimated amounts would change due to supply logistics. He noted that transformers now have a two-year lead time. A member commented that the long lead time is a result of the high demand for the steel used in the transformers. Chair Pruhs commented that long lead time items are now factored in the project viability assessment. Mr. Thayer noted that if the GRIP III applications are awarded, then up to 40 projects will be competing for transformers and other equipment. Mr. Thayer discussed that permitting is another challenge in the process. Regulatory changes have been included at the federal level, but the guidance on implementation has not been released. E. Owned Assets Update Mr. Thayer gave an overview of the Owned Assets Update included in the Board packet. The Alaska Intertie Management Committee approved the Intertie’s FY24 budget and includes upgrading and replacing the Snow Load Management System on the northern Intertie. At Bradley Lake Hydroelectric Project, the utilities have hired a contractor and crew to construct a kit house to fulfill housing needs. The kit house will be constructed at about a third of the cost of new construction. In 2022, the Battle Creek diversion was successful in diverting approximately 20% greater volume of water than was used for the application and the economics. Chugach Electric Association (CEA) was designated by the Bradley Lake Project Management Committee (BPMC) to perform design and procurement for the AEA owned Sterling-Quartz (SSQ) section upgrade. The proceeds of the required project work bonding are $166 million and will be allocated as 65% transmission and 35% battery energy storage system. Mr. Thayer discussed the three rural transmission lines recently discovered as AEA owned assets. AEA is working with the communities to upgrade the right-of-ways and to dispose and transfer ownership of those lines. Chair Pruhs requested information regarding insurance of AEA’s owned assets. Mr. Thayer explained that the Intertie and Bradley Lake obtain insurance through the market and the utilities reimburse the cost. Chair Pruhs asked for additional information regarding the insured amount and requirements related to a bonded project. Mr. Thayer noted he can provide that specific information to Chair Pruhs. Mr. Thayer discussed the recent field visit to Bradley Lake by Lieutenant Governor Dahlstrom, her Chief of Staff, Representative Schrage, and the Chair of the RCA. Mr. Thayer indicated that additional interest from legislators has prompted another field visit to Bradley Lake next week. Attendees include Representative Edgmon, Representative Rauscher, Senator Bishop, Senator Bjorkman, Senator Merrick, Commissioner Crum, and Randy Ruaro, AIDEA. Another field visit to Bradley Lake is scheduled in July to accommodate additional interest from legislators. The Legislature designated $5 million for the Dixon Diversion project and the field visits provide a Alaska Energy Authority Page 5 of 8 good opportunity to highlight the Bradley Lake project. Mr. Thayer discussed that the Dixon Diversion project studies are ongoing. The project is expected to increase Bradley Lake’s power by 50%. The utilities will maintain their water percentage amounts. Increased line transmission capability is necessary for the additional power. The total line upgrades will take approximately six to eight years to build out and will dramatically decrease the current line loss. Mr. Thayer noted that the same transmission line upgrades are also necessary if an additional generator is utilized to increase power. However, utilizing an additional generator will not provide the same level of power increase as the Dixon Diversion project. Mr. Thayer reiterated that the SSQ line upgrade processes are ongoing and are ahead of schedule. The old 69 kV poles have been removed. Chair Pruhs requested that members be provided information, separate from the Dixon Diversion, on the benefits of upgrading the transmission line from 115 kV to 230 kV. He asked for the cost and the timeline of a standalone transmission line upgrade. Chair Pruhs believes that a transmission line upgrade could begin even before the Dixon Diversion begins. Mr. Thayer agreed and explained that discussions are ongoing regarding the line upgrades. Mr. Eledge asked Mr. Thayer for the timeline for CEA’s upgrade. Mr. Thayer noted that the upgrades are phased over several years and staff can provide CEA’s schedule. F. AEA Library Demonstration Mr. Thayer invited Nathan Howes, AEA Project Manager for Documentation and Retention, to review the demonstration. Mr. Howes discussed the digital library for AEA. The software allows for keyword searches to find documents in the public library. The information will be accessible on the website through either the browse function or the search function. The naming convention has been simplified to assist the public in finding information. Mr. Howes highlighted that a contractor has begun the digitation of all the documents. Over 3,000 documents have been loaded into the digital library and over 10,000 documents remain to be loaded. Additionally, the in-house documents will also be loaded into the digital library. A soft launch of the digital library will occur in July. Mr. Thayer noted that AEA receives many requests for documents and fulfilling the requests takes staff time. He discussed that one of the goals of the digital library is making many documents easily accessible and forward-facing, thus reducing staff time used for document requests. Mr. Thayer explained that documents concerning cyber security, such as schematics and blueprints of powerhouses, will not be forward-facing. Commissioner Sande acknowledged and thanked Mr. Thayer and staff for fulfilling the Board’s request. She believes AEA and AIDEA do a remarkable job of being as transparent as possible in the processes. This library initiative will allow easy access to valuable public resources. She looks forward to the press release. G. State Energy Program (SEP) Update Alaska Energy Authority Page 6 of 8 Mr. Thayer discussed that the SEP is a federal program and funding is split between AEA and AHFC. Through the IIJA, AEA received $795,000 in additional funding last year and is expected to receive a lump sum amount of $3.6 million. The funds will be used for grid planning, the State Energy Plan, workforce development and training, outreach and education program development, and AHFC funding. The budget has been approved by DOE. H. Renewable Energy Grant Fund (REF) Update Mr. Thayer discussed that REF completed its Round 15. The recommendation to the Legislature was $25.25 million. The Legislature funding $17 million. The list of 18 funded projects is shown on page 107. The technologies include hydro, wind, geothermal, storage, biomass, solar, and heat recovery. Mr. Thayer indicated that Round 16 will begin next week. He noted that the applications that were not given funding in Round 15 have the option to move forward in Round 16 with their Round 15 score or to submit a different application. The recommendations for Round 16 will be provided to the Legislature by the January statutory deadline. Mr. Thayer explained that the Legislature and Governor recently signed legislation that removed the 10-year sunset window for the REF funding. I. Power Project Fund (PPF) Update Mr. Thayer noted that the Loan Dashboard Report is included in the packet. There are no delinquencies. The 15 outstanding loans total approximately $27 million. The uncommitted cash balance is about $7.2 million. The loan commitments total about $5.5 million. The most recent loan approval was for a solar farm in Soldotna for $540,000. He noted that the report highlights the loans by State region and by project type. J. Legislative Update Mr. Thayer discussed that the legislative requests are included on page 113 in the packet. The workload has been lighter since the Legislature adjourned in May. K. Cook Inlet Gas Supply Mr. Thayer stated that this section of the packet includes articles of interest pertaining to the gas supply. The Railbelt utilities, including Interior Gas and Enstar, developed a gas study outlining the options available in Cook Inlet, including costs and timeframe projections. Mr. Thayer informed that AEA provided some of the information for the study, but was not involved in its compilation. The study will become public and go before the Regulatory Commission on June 28th. Mr. Thayer noted that AEA Board members will receive a copy of the report, and if desired, AEA could request Enstar to give a presentation of the findings. Chair Pruhs asked Mr. Thayer if any entities are searching for gas supplies in other areas of Southcentral Alaska toward the Valley and Talkeetna. Mr. Thayer discussed that AEA was contacted by an interested party who believes there is a potential of 137 trillion cubic feet of natural gas near Willow. This potential amount is greater than the amount of gas on the North Alaska Energy Authority Page 7 of 8 Slope. The potential reserve has not been proven or quantified. No additional background information has been provided to AEA regarding the basis of the belief. The entity does not have leases for the State lands and is seeking approximately $700 million funding from the State to prove-up the reserves. Mr. Fogle inquired as to the option of tankers driving from the North Slope to provide natural gas. Mr. Thayer explained that the option is being reviewed to supply Fairbanks. He does not believe that tankers are a viable solution for the volume needed to supply MEA, Enstar, CEA, and HEA. Mr. Fogle asked if a natural gas pipeline could be utilized. Mr. Thayer noted that efforts regarding a natural gas pipeline have occurred over the last 40 years. There is a permitted project with an established right-of-way that requires approximately $150 million to proceed. The decision whether to move forward is nearing a critical juncture. If the natural gas pipeline does not move forward, then other plans will have to be made. L.Community Outreach Mr. Thayer discussed that the community outreach schedule is included in the packet. He noted that the National Electric Vehicle Plan is due for its required annual update. The public comment period has begun. Staff members are traveling and fulfilling the requirements for the program. Mr. Thayer advised that the Governor signed the Carbon Credit bill during the very successful Alaska Sustainability Conference. The Legislature included the amendment that 20% of the funds earned from the carbon credit will be directed to AEA’s Renewable Energy program. Mr. Thayer complimented Brandy Dixon, AEA, staff, and the Planning Committee for their efforts. The Conference had over 1,000 attendees and 150 speakers. AEA staff also participated as moderators and subject matter experts. Mr. Thayer discussed that during the Conference, the Governor hosted a dinner and a breakfast for investors, who represented over $3 trillion worth of investment capital looking for opportunities. Mr. Thayer noted that AEA’s pitch papers presented at the Conference are included in the Board packet. Mr. Thayer stated that the Office of Management and Budget (OMB) has begun their budgeting process, but has not yet provided a schedule for the deliverables. Mr. Thayer indicated that members will be informed when the schedule becomes available. He expects that the operating budget will remain the same, unless there is a need for additional personnel related to the federal infrastructure funds. The capital budget amount depends on the need for federal receipt authority. The members will be kept apprised of the process. Mr. Thayer advised that through his requests of the federal delegation and DOE, Alaska will now be included in the federal government’s national transmission needs study. Previously, Alaska and Hawaii were excluded since they are not connected to the continental United States. The study helps to identify areas for additional transmission resources. Mr. Thayer noted that the last time Alaska received federal funding for the Railbelt transmission system was in 1954. Mr. Thayer introduced new members of the staff who were present, Ryan McLaughlin, Owned Assets Project Manager, and Karen Bell, HR Director. Mr. Thayer expressed appreciation to the staff for their diligent efforts.