Loading...
HomeMy WebLinkAboutHumpback Creek Hydroelectric Project Rehabilitation Cordova App Renewable Energy Fund Round 3 Grant Application AEA 10-015 Application Page 1 of 20 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. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 2 of 20 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Cordova Electric Cooperative Type of Entity: Rural Electric Cooperative Mailing Address PO Box 20 Cordova, AK 99574 Physical Address 705 Second Street Telephone 907-424-5555 Fax 907-424-5527 Email ckoplin@cordovaelectric.com 1.1 APPLICANT POINT OF CONTACT Name Clay Koplin Title CEO Mailing Address PO Box 20 Cordova, Alaska 99574 Telephone 907-424-5026 Fax 907-424-5527 Email ckoplin@cordovaelectric.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) X An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 3 of 20 10/7/2009 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) Humpback Creek Hydroelectric Project Rehabilitation 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. Humpback Creek, 5 miles north of Cordova, Alaska City Center and providing electricity to th e community of Cordova. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels X Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Cordova Electric Cooperative (CEC) is requesting $4 million to implement a construction-ready, state-of-the-art hydroelectric facility on Humpback Creek that would generate up to 4 million kWh per year, meeting 16% of Cordova’s annual energy needs with a renewable energy source. CEC operates an isolated electric system and therefore is solely responsible for serving its 1,560 customers. Cordova’s high electricity costs have been cited in several formal and informal community planning documents as a primary inhibitor of economic development, and this project would assist in making electricity rates more affordable for residents and businesses as well as displacing diesel fuel, and reducing our particulate emissions. Competitive bids for project construction exceeded expected cost by $5,500,000, so CEC is requesting additional funding to that provided in AEA round 1 RE grant. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 4 of 20 10/7/2009 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.) According to the Energy Information Administration (EIA), Cordovans pay 78% more than the EIA’s “extremely high energy cost benchmark” for electricity. Homeowners in the Cordova, Alaska area were paying roughly $ .4272 per kW for electricity in 2008. Based on 2008 costs, the average household energy expenditure for electricity in Cordova was $4,552.24, while the federal “extremely high energy cost benchmark” price for 10,656 kWh was only $2,546.78. While the price of oil has fallen from $150/barrel to $80/barrel, the cost of oil is expected to increase in the not too distant future due to inflation and an improved economy. The 2008 gas station price for diesel fuel was $5.13/gallon and is currently $3.95, propane was $4.40/gallon and is currently $4.40, and gasoline was $4.94/gallon and is now $3.97. (Shoreside Petroleum pricing as of 11/4/09, 907-424-3221). These prices still exceed the benchmarks for average per unit cost for each of these fuels. These prices also emphasize that there are no low-cost alternatives to meet energy needs in Cordova. Natural gas is not available, and wood is hard to collect for some residents and costly to dry in Cordova’s coastal rainforest climate. With increased hydropower capacity, CEC can continue its migration from diesel fuel dependency toward supplying 100% of its power from renewable energy sources. Shifting CEC’s power production from diesel to hydropower will result in lowering our costs of shipping diesel fuel to Cordova, hazardous substance precautions, and the ever -climbing cost of diesel fuel itself. Construction of the Humpback Creek Hydropower facility in Cordova will displace an additional 293,040 gallons of diesel per year. At a current price of $2.54/gallon, cost savings from fuel alone will amount to $744,322 per year. We anticipate a project pay-back period based on $17,031,000 to be 21 years if funded without long term debt. Project benefit: The project is designed to perform for 50 years, displacing a total of 14,652,000 gallons of fuel at the future cost of diesel. The lower operational and maintenance costs, and reduced air quality and fuel storage and handling costs are all tangible benefits of this project. 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. Total project expenses are estimated to be approximately $17 million. While FEMA will contribute funds to re-construct the facility because of the 2006 flood damage, it will not cover the expenses necessary to design the facility to a standard that would withstand future, similar flooding and erosive wear and tear. To date the CEC has spent over $2 million of its own funds for drilling assays, geo-technical analysis, engineering design work, required permits, bid preparation, evaluation, and award. FEMA is schedul ed to contribute $5.1 million, AEA Grant funding Round 1 for $4 million and we are requesting $4 million from the Alaska Energy Authority round 3 RE grant. Note that a large portion of the FEMA funding was for project repairs already completed to the lower reaches of the project. 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your project’s total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $ 4,000,000 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 of 20 10/7/2009 2.7.2 Other Funds to be provided (Project match) $ 13,031,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 17,031,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.4 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $17,031,000 2.7.5 Estimated Direct Financial Benefit (Savings) $744,322 Annually 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.) $ Approximately 3 cents per kWh savings in fuel surcharges Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 of 20 10/7/2009 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. CEC has assembled a project management team with a comprehensive set of skills. The attached organization chart illustrates how CEC will manage this project with local experience, contracted engineers, and an owner’s representative, a check-and-balance system designed to ensure that the team’s strongest skills are reinforced and no single entity makes decisions without the benefit of careful review and oversight. Cordova Electric Cooperative is a 17-employee cooperative. Key management staff is technically skilled and experienced in the electric utility industry and at CEC. In-house, CEC has an extremely strong, balanced management staff, each with deep experience in their role: Clay Koplin, CEC Chief Executive Officer, holds a bachelor’s degree in electrical engineering and is registered as a professional engineer in the State of Alaska and has 11 years of experience at CEC, 18 years total in the industry. Valerie Covel is CEC’s Manager of Administration and Finance, and has managed CEC’s accounting and finance for 17 years including the Power Creek Project and other large capital projects, 28 years total in the industry; Danny Ackmann is CEC’s Manager of Power Production and has over 30 years in the industry including Hydroelectric Plant Design and Construction with Hydro West Company, and Diesel Plant operations and maintenance with AP&T (Alaska Power and Telephone). Andy Gentry is CEC’s Manager of Engineering and Operations and has 33 years of experience in the industry as a journeyman lineman, substation manager, and operations manager with Pacific Power, and has worked at Cordova Electric Cooperative for two years. CEC has contracted with the reputable engineering firm R&M Consultants, Inc. for project management. R&M Consultants, Inc. is tasked with over-seeing the work of Hatch Acres, who has complete final design and prepared FERC exhibits for the license amendment application approved in March, 2009. CEC awarded project construction bid to Mowat construction of Woodinville, Washington for $9,985,005 in July 2009 from a field of 5 bidders. 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.) See attached summary of Mowat Construction Schedule. This schedule was provided to CEC in August of 2009 during the bid review process, and is in the process of being updated. 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 Formatted Table Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 of 20 10/7/2009 manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) CEC performed an analysis of project cost and benefit with the CEC board of directors, and opted to build the project at the higher-than-expected bid amount as it still remained the best long-term option for lowering rates. A “go” decision was enacted by the board, and CEC awarded the construction contract to Mowat Construction, obtained a construction loan, and raised rates 6%. Cash flow will be managed by drawing down on the CoBank construction loan, and requesting reimbursements from FEMA and AEA as appropriate. To date CEC has completed several key tasks that have brought the Humpback Creek hydro- electric facility to construction. The project construction was awarded to Mowat construction on 8/3/09. CEC obtained a construction loan from CoBank for $8,700,000 to complete the project. The remaining key steps necessary to complete construction include:  Mobilization of contractor, October 2009 (completed).  Issuance of FERC approval to proceed with construction (November 2009; pending)  Construction: contractors will begin working on tunnel construction in January, 2010 and the entire project will be completed by August, 2010. The schedule commissions the new plant in September, 2010. Delays in the bid schedule (no bids in first bid offering due to competing stimulus projects required CEC to rebid the project to attract available bidders) moved the project schedule. 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. Personnel resources for oversight, management and construction of the Humpback Creek hydro-electric facility will come from a combination of in-house knowledge of the site and local conditions, contracted engineering and project management services, and a construction contractor. Due to the administrative complexity of DHS&EM and FEMA funding, FERC regulation, and the challenging construction site, CEC has elected to contract R&M Consultants, an Anchorage engineering firm, to provide project management services. The Project Manager will be John Magee, PE, a specialist with hydroelectric construction background. This relieves CEC staff to direct the daily business of the Cooperative and maintain high level oversi ght of the project. In addition, an owner’s representative and resident engineer during construction, Omar Fulton, PE, with specialized skills in geotechnical work, which comprises much of this project, has also been retained for field representation at the remote site. R&M has subcontracted Hatch Acres as the design engineer. Jim Rutherford, PE, is the project engineer and will be onsite for inspection during key construction points (pouring concrete, installing flood gates, etc.). CEC conducted a bid process in September, 2008 for construction of an access road and awarded the bid to a local contractor. The access road is complete. CEC awarded the project construction bids in August 2009 to Mowat Construction for the 2010 construction season. The contractor has mobilized to the site, and is making preparations for project construction this winter on the tunnel, and early spring on the intake structure, when stream flows are low. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 of 20 10/7/2009 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. CEC, R&M, Hatch Acres, Mowat Construction and subcontractors have established regular communication procedures among all project team members. We have established an e -mail listserv for the project so that all team members receive regular updates, both narrative progress reports and photo documentation of construction progress. We will continue to use these procedures, modifying them as appropriate during construction, commissioning and post- construction phases of the project.  CEC’s owner representative will be present at the construction site throughout the construction period, and will have “stop work” authority should he observe any work that does not follow design specifications. We expect the Project Manager to make periodic site visits, and key task site visits.  The Project Manager will be tracking construction progress according to the Schedule of Tasks.  CEC will make site visits weekly to bi-weekly as appropriate to the work in progress  CEC owner’s representative will serve as Resident Engineer through construction, and prepare or supervise preparation of daily progress reports and construction photographs documenting progress.  CEC has been preparing and submitting monthly progress reports to the AEA for RE round 1 grant award and will continue to do so through project commissioning. 3.6 Project Risk Discuss potential problems and how you would address them. The Humpback Creek site is geologically and hydraulically complex, and construction is logistically complex and weather dependent due to the remote site. Cost overruns have been the norm, from original construction to present. To mitigate the risks and improve the constructability of the project, an access road was added to the project scope. Access by heavy equipment to deliver materials, concrete, and personnel significantly reduces cost of helicopter and foot work, and allows more rigorous construction methods. Heavy equipment allows stream flows and other site challenges to be managed during construction. The Eyak Corporation has agreed to allow CEC to utilize their road as a maintenance road after construction is complete, reducing the operating and maintenance costs of the project over the life cycle. A talented and capable construction management team with adequate engineering oversight during construction will assure a quality, cost constrained construction phase. The prior project performed poorly during various flow regimes, requiring intensive operations and maintenance and frequent loss of production. The design of the structure to perform in the challenging environment was managed by selecting an expert engineering team to thoroughly characterize the geology and hydrology of the site and design accordingly. Flexibili ty was incorporated into the design to allow adjustments to project features after construction is complete. A robust SCADA and automation system will allow reliable remote monitoring and operation of the site during all weather conditions to maximize the performance and protect the integrity of the project. The SCADA system will duplicate the system at Power Creek (CEC’s 6MW hydroelectric facility) and provide seamless, standard operation with the other generation assets. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 of 20 10/7/2009 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 suffi cient 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. Humpback Creek has an average flow rate of 48 CFS (cubic feet per second), which declines slightly in the winter months. When completed, the Humpback Creek hydro-electric facility will have an installed capacity of 1,250 kW, generating 4 million kWh/year. The completed facility will increase Cordova Electric Cooperative’s power generating capacity by 16% to 20%. Our analysis of energy source alternatives leads us to the conclusion that while in the longer term other renewable energy sources are as attractive if not more attractive, their development horizon is much too long for meeting our immediate energy needs. Other potential sources available to the Cordova energy market and their advantages and disadvantages include: Increasing diesel generator efficiency, and adding heat recovery units Wind: CEC and the Native Village of Eyak have entered into a Memorandum of Agreement to collaborate on mapping wind resources. Solar: not readily available in the Cordova area Natural gas: prohibitively expensive to develop transportation infrastructure. Propane: Requires costly retooling diesel generation plant and fuel storage for a different fossil fuel option. Dam storage pool: CEC is pursuing licensing of a dam storage pool and has two strong site candidates, but the licensing, permitting and construction steps will take about seven years. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. Cordova Electric Cooperative’s current energy supply portfolio includes:  Power Creek hydro-electric facility, with two each 3MW Turgo Turbines, capable of generating 5.5 MW, commissioned in 2001, and the  Orca Diesel Power Plant with five diesel generators (when the Power Creek hydro-electric facility became operable, CEC retired its other, older diesel power plant) including 2 each 1100kW rated 1984 Cats in a container van, 1 each 2400kW rated 1984 Fairbanks-Morse 38TD8-1/8, 1 each 2600kW rated installed 1985 EMD 20-645-E4, and new, high efficiency EMD 710 series 3500kW generator installed summer of 2009. System-wide efficiency averaged 13.65 kWh/gallon in 2007, and is expected to top 14 kWh/gallon in 2009/2010 with the new EMD in the CEC portfolio.  Conservation: CEC has replaced 20 % of Cordova’s street lights with LED lights and will Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 of 20 10/7/2009 replace 20% more in winter 2009/2010, has automated plant lighting at the Power Creek and Eyak plants to reduce internal use of diesel; distributed 3,500 compact fluorescent bulbs to its Cooperative membership at no charge; joined Touchstone Energy and distributed their energy brochures to CEC members; formed a partnership with the Native Village of Eyak and Cordova School District to purchase five wind anemometers to map Cordova’s wind resources, and constantly communicated and supported energy efficiency and energy conservation education and directives in Cordova. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. Due to our unique circumstance of remote location, the community of Cordova has very few options for meeting its energy needs. Hydroelectricity, diesel fuel, gasoline, propane and a modest amount of wood heat meet the electrical, heating and transportation needs of the community (see attached graph of CEC power sources since incorporation). The Cordova Electric Cooperative was incorporated in 1978 and until 1991 Cordova relied solely on diesel fuel for power. Low diesel fuel prices, low costs of shipping and storing diesel fuel, and the relatively low installed cost of diesel generation were tolerable. Concern for rising fuel cost and increasingly higher environmental standards for air quality, fuel transport and storage prompted construction of the Humpback Creek Hydroelectric project. The negative environmental impacts of the Exxon Valdez Oil spill on the community, and of diesel generation on the air and water quality, increased the urgency. The project provided 15- 20% of Cordova’s annual Power needs. Coal fired generation and natural gas resources from the Carbon Mountain fields 40 miles south of Cordova were evaluated and determined infeasible. A tidal feasibility study was completed in 2001 and determined infeasible. Wind resources are available, and are currently under assessment at CEC cost in partnership with the Native Village of Eyak, but would compete with existing run-of-river hydro assets, greatly reducing their feasibility until a storage option is developed. At least 13 hydro-electric sites were evaluated until the Power Creek site was selected and successfully developed as the second run-of-river hydroelectric project for the community in 2001. Conservation has been identified as the other existing energy “resource” and is being aggressively implemented internally and externally in the community by CEC in the transportation and heating sectors in addition to electrical consumption. Conservation and efficiency will free existing energy supply resources and offset the need to develop additional generation assets. A dam storage project is currently under preliminary analysis by Cordova Electric Cooperative at CEC expense. Fuel prices have tripled in the last 18 months, diesel as a primary fuel source is less affordable than ever, particularly given the age, inappropriate unit sizing and dispatch, and relatively poor efficiency of the existing diesel generation. The loss of the Humpback Creek project from service has had the disastrous effect of removing 2,500,000 kWh of energy, the equivalent of 185,200 gallons of diesel annually. The current credit market makes it unlikely that CEC will be able to borrow the necessary capital to complete construction due to the more immediate need of improving the capacity and efficiency of the diesel generation plant. This project will increase the service life of the Humpback Creek project from 20 years to 50 years and increase average kilowatt-hour production 60% to 4,000,000 kWh utilizing the existing water resource and existing power plant, penstock, and transmission line infrastructure. It is complementary and essential to Cordova’s existing mix of energy infrastructure and growing demand and for the sustainability of the community. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 of 20 10/7/2009 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Cordova is located on the eastern edge of Prince William Sound in south-central Alaska approximately 160 air miles east of Anchorage. Although once connected to interior Alaska points with a railroad, there have been no overland (road or rail) connections to interior roads and population centers for several decades. Transportation to Cordova generally consists of scheduled air service to Anchorage or Southeast Alaska, bi-weekly ferry service within Prince William Sound and barge service from Washington state. Cordova’s principal industry is fishing and fish processing. It has been the home port and home to fishermen and processors for Prince William Sound and the Gulf of Alaska. However, Cordova lost about half of its canneries and fish processors in the late 80s and early 90s due to higher energy and transportation costs than other PWS communities. The burden of high energy costs threatens the sustainability of Cordova’s fishing industry. Annual energy demands include residential use, small business, and the public service and government sectors including the USFS Ranger District, USCG Cutter, Air Station, and Housing, municipal buildings, schools, swimming pool and recreation center. Cordova’s total population as certified by the US Census 2000 is 2,564. More recent State population counts show our population decreasing, however, and the Alaska Community Database counts 2,194 current residents. The steady annual population decline of 14.4% since 2000 can be attributed to the hardship created by the high cost of reliable energy. Electrical demand has exceeded CEC’s supply capacity via its two run -of-the-river hydroelectric projects, Power Creek and Humpback Creek (while Humpback Creek remains out of service). Diesel fuel generation has to be provided during the summer fish processing season, and fish processing is Cordova’s primary industry. When Power Creek is routinely taken out of service for an hour at a time, or for several hours a day during annual flood events, all four diesel generators must be operated to meet system loads. Loss of any one diesel generator reduces CEC generation assets below the demand, and power outages result. Summer demand for energy comes primarily from the commercial seafood processing industry, the economic lifeblood of the community. In the seafood sector, the first and third largest processors upgraded and added demand to their facilities i n 2006 and the largest will upgrade and add additional substantial demand and fish waste processing plant (approximately 1400 kW or 25% of system peak) in 2009 – these upgrades and fish meal plant are now completed and installed. The second largest upgraded and added demand in 2009. This drives the economy of the community and generates essential jobs, raw fish tax revenue, and sustainability to the community and the State of Alaska. This project directly offsets the use of diesel fuel and increases the productivity and longevity of an existing asset. Humpback Creek hydro-electric plant capacity will help CEC meet the growing seafood processor loads with hydroelectric power so that diesel fuel expenses will not be passed through to the seafood processors, increasing their land-based utility costs and making offshore processing more attractive. Winter production of the Humpback Creek plant, while less than summer production, directly offsets diesel pass-through costs to business, residential, and community infrastructure power rates. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 of 20 10/7/2009 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 CEC is requesting $4 million in this RE round 3 grant cycle to implement a construction-ready hydro-electric intake and diversion dam structure on a year-round flowing creek that can generate 1,250 kW. We anticipate the facility will generate 4 million kW annually. Since a fire at the Humpback Creek hydro-electric facility in 2005 and the catastrophic flood of October, 2006, Cordova Electric Cooperative has invested over $1million of its own dollars to re- build the facility and bring it back on-line for power generation. We considered several options for constructing an operable in-take and diversion structure, but an evaluation of the existing site indicates that the site is too geologically unstable for the Federal Energy Regulatory Commission (FERC) to issue a license for the facility’s original location. Engineering review pushed CEC to examine a new location, one that ultimately will result in more than doubling the life of this hydro- electric facility (from 20 to 50 years, per engineers’ estimates) and will generate an additional 1.5 million kWh in energy. The goals of the project are to place the renewable energy project back into service. It will be located upstream approximately 30’ where it is not threatened by future flood events. It will be built of concrete and tied to bedrock, which will seal water in-flows and increase the kilowatt hour production approximately 60%. The construction of an access road will reduce construction costs and a tunnel incorporated into the design may provide a means to divert water during the construction of the intake structure, but both will remain as permanent features that will reduce the operations and maintenance costs of the project. The ultimate goal is to replace diesel fuel generation with clean, local, renewable energy resources and reduce the cost of energy in the process. Toward this goal of bringing Humpback Creek hydroelectric facility on-line in 2009, we have completed several significant steps:  Completed repairs to lower project features (repaired access bridge, transmission line, power house foundation, tailrace, transformers and electrical equipment, and stream banks) by July, 2007.  Contracted for engineering and design of replacement intake structu re in October, 2007  Site visits to Washington and Oregon hydro-electric facilities in December of 2007  Held a design option workshop among key design team members December of 2007  Completed a life-cycle cost study  Secured site control for right-of-way construction and maintenance access, and executed lease for new in-take and diversion dam location  Completed project design  Distributed, evaluated, and awarded bid Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 13 of 20 10/7/2009  Mobilized the contractor What remains to be done: see attached Schedule of Tasks for a breakdown of construction activities starting in October, 2009. Anticipated barriers to completion include:  Severe weather events Basic integration concept  The project will be operated on the same successful SCADA and operational platform as the Power Creek Hydroelectric project to standardize to the system  The project has operated as an integral part of Cordova’s power production portfolio, and its absence has been the significant disruption. This project could be characterized as re-integration. Delivery methods  Energy will be delivered with the existing infrastructure associated with the project: transmission lines, transformers, bus, etc. 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. Land is owned by the Eyak Corporation and (subsurface) Chugach Alaska Corporation, and CEC has access easements and a lease for all project lands. Copies are available upon request, but have, I believe, already been provided to AEA. 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 CEC has received approvals from FERC, FEMA, Department of Homeland Security and Emergency Management, the Alaska Department of Natural Resources, the Alaska Department of Fish and Game, the US Army Corps of Engineers, and associated agencies consulted by these named agencies. Copies of permits are available upon request. 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 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 14 of 20 10/7/2009  Telecommunications interference  Aviation considerations  Visual, aesthetics impacts  Identify and discuss other potential barriers The issues that apply are Habitat Issues, wetlands and other protected areas, and Land development constraints. All necessary permits for habitat and wetlands issues have been secured. Sea-Run fisheries has been contracted as the environmental compliance inspector during construction activities, and the resident engineer Omar Fulton has daily sight inspection responsibilities for environmental compliance. The land constraints are identified in the bodies of the special use permits and lease from The Eyak Corporation and are also administered by the resident engineer and CEC for compliance. There is a backup inspector from R&M available to cover as resident engineer during Omar Fulton’s absence, so contingencies have been covered. The Humpback Creek hydro-electric facility site is a very suitable location in several respects. Located five miles north of Cordova municipal boundaries, it is not adjacent to any community development. Neighbors will not be disturbed by construction or operation, nor are trespassers likely to cause any damage because of the remote location (readily accessible by boat or air only). The creek carves a steep gorge that runs roughly at a 45 to the coast and is thus hidden from view on the coast. No archeological or historical remains have been documented at this site, a finding verified by the State Historic Preservation Office. As part of CEC’s license amendment request being submitted to FERC, the project team completed an environmental assessment of potentially affected resources. Assembled by Hatch Acres, the assessment includes work conducted by Alaska Biological Research (aquatic, wetlands, terrestrial resources), Sea-Run Fisheries (cultural resources), R&M Consultants (engineering, construction impacts), and Hatch Acres (regulatory elements). Resources evaluated but for which no impacts are anticipated include cultural sites, aesthetics, recreation, or threatened or endangered species. Resources evaluated and found to warrant procedures for minimizing adverse affects include:  Water quality: Construction of the spur access road segments and staging areas would involve the crossing of some wet meadow wetland but does not involve any major stream crossings. It does, however, include a proposed segment of road within the Humpback Creek streambed. The stream in this reach during June sampling was confined to a narrow channel through wide beds of gravel deposits. There are virtually no fines to be disturbed. Engineers propose to excavate some of the cobble/gravel to create an elevated road bed so travel through the wetted channel of the stream would be minimized. There are many standard best management practices (BMPs) to reduce the potential effects of construction on water quality. These include the use of silt curtains and straw bales, the creation of run- off collection systems around the staging areas with settling basins to capture and prevent unwanted materials from reaching the stream. CEC will measure existing water quality conditions prior to construction and will monitor those conditions throughout construction according to a water quality Monitoring Plan approved by consulting resource agencies. This plan will specify monitoring methods and reporting requirements (Hatch Acres, July 2008, Draft License Amendment Application).  Anadromous fish: CEC believes that adherence to the BMPs for sediment and erosion control and other water quality assurance measures would adequately protect what fishery does exist. The increased stability of the new in-take/diversion structure under extreme flood conditions would also enhance fish habitat protection by reducing risks of major flood-related washouts of project features with attendant downstream impacts on aquatic habitat.  Terrestrial resources: the overall footprint of project features occupies an extremely small Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 15 of 20 10/7/2009 area and habitat losses are minimal. Following construction, the areas along the road spurs and staging areas would be properly graded using stockpiled topsoil, and vegetated to promote drainage and to prevent soil erosion. Species used for re-vegetation would be determined in consultant with the Alaska Department of Natural Resources. To minimize disturbance of local wildlife such as bears, raptors, deer and small mammals, road construction in this area would be of limited duration with only a matter of a few days necessary near crossing in the anadromous reach visited by feeding bears. 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 The total anticipated project cost is $17,031,000. Of this project total, approximately $3,000,000 was for lower project features (completed), and $14,031,000 is for intake structure design, permitting, bid, construction, and commissioning of the intake structure. Projected capital cost for project completion is $4,000,000 from AEA Round 1, $4,331,000 from FEMA, $4,000,000 this AEA request, and $4,700,000 contribution from CEC for a total cost to completion of $17,031,000. 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 gran tees are required to meet ongoing reporting requirements for the purpose of reporting impacts of projects on the communities they serve.) The operating and maintenance costs for the rebuilt facilities are estimated to be significantly less than those of the original structure due to the design and accessibility of the rebuilt project. Estimated annual O&M for labor is $47,155.93, and for non-labor is $32,237.69 including the new lease payment. These costs will be funded out of the annual operating budget of CEC. 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 Cordova Electric Cooperative is the sole provider of electric energy to the community of Cordova, and the purchasers are existing members of the Cooperative. As a non-profit Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 16 of 20 10/7/2009 Cooperative, rates are adjusted incrementally to minimize margins while providing adequate operating capital. Please find Cordova Electric Cooperative’s current rate sheet attached. Proposed rate of return from grant-funded project: Total project costs of $17,031,000 divided by total annual savings of $744,322 in fuel plus $65,406 in O&M savings results in a proposed rate of return of 21 years. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. See attached cost worksheet. SECTION 5– PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following:  Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project  Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate)  Potential additional annual incentives (i.e. tax credits)  Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available)  Discuss the non-economic public benefits to Alaskans over the lifetime of the project The project produced 3,700,000 kWh when originally constructed, and steadily declined to an annual production of 2,500,000. The project will displace 293,040 gallons of diesel per year. At a current price of $2.54/gallon, cost savings from fuel alone will amount to $744,322 per year. Rates were increased 6% in 2009. A decrease in the base rate structure is anticipated if the project is funded by the renewable energy fund round 3 grant. The offset cost of diesel fuel will be realized directly by the members of the Cooperative since fuel costs are passed through as a surcharge. The additional annual incentives include the sale of Renewable Energy Credits. CEC was successful in certifying the Power Creek Hydroelectric project with Green-E as a renewable energy project, and have already realized additional revenue. It is anticipated that Humpback Creek would also qualify as a renewable energy project and generate as much as $0.01 per kWh of revenue through REC sales. The non-economic benefits include improved water and air quality through reduced fuel discharges and air emissions, reduced reliance on external energy sources, and price stability in the rate structure. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 17 of 20 10/7/2009 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 CEC has operated this hydroelectric project for almost 15 years before it was destroyed. The sustainability of the project was threatened by the original design and construction impacted by an extreme weather event. The primary focus of the reconstruction project is the design and construction of a high performance, low maintenance facility capable of surviving extreme events well in excess of the October, 2006 flood that destroyed the intake structure. CEC currently has financing in place to construct the project, but had to raise rates 6% to amortize the financing. This increase will be partially offset by fuel savings passed on to CEC members. Potential operational issues include bedload management and leafy debris management. The design incorporated three separate gates to manage both bedload and debris (two very distinct problems). Stop logs in each gate bay allows flexibility in the configuration of the intake structure that can be tuned to minimize maintenance and maximize production. A temporary operator will be hired to manually operate the plant for three months during a fall storm season. If necessary, CEC will add an automated (Polar Atlas) trash rack to manage leafy debris. The project was designed to retrofit the cleaner if necessary. The current CEC operating revenues supported maintenance of the project when it was substantially more difficult to maintain. It is anticipated that maintenance costs will reduce dramatically, but CEC operating budget currently supports a more intensive maintenance program to manage unanticipated maintenance issues. Emergency backup contingencies were designed into the project including a UPS backup system, and the ability to manually operate the plant in an emergency. CEC very closely monitors the cost and performance of hydroelectric production because it directly offsets diesel fuel costs. CEC follows a simplified rate filing process that allows rates to be adjusted every six months. When CEC realizes savings from the project, they can be passed directly and immediately to the ratepayers. This process is well documented and summarized in CEC monthly reports to the board of directors. The information is public and accessible to AEA upon request. CEC reports the success of the projects to the membership at annual meetings and newsletters. 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. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 18 of 20 10/7/2009 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. Work has already commenced on this project. The project is financed by Cordova Electric Cooperative, and the loan has already been included in a rate increase. An award in this grant phase will directly lower the cost of power to Cordova residents. The contractor has been mobilized and ground breaking construction will commence in November or December of 2009. CEC has received FEMA grants and an AEA RE round 1 grant. We didn’t apply for round 2 because of the cost structure and commitment to paying a portion of the project. CEC is applying for a round 3 grant due to the cost escalation at bid opening. CEC has complied with all grant provisions with FEMA and AEA to date. The Native Village of Eyak also applied for a federal department of energy stimulus grant in cooperation with CEC that included a $4,850,000 grant for Humpback Creek. CEC will not know the status of this application until February or March of 2010. 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. The Humpback Creek Hydroelectric project is widely supported by the community, including non- profit environmental groups generally opposed to development projects. The economic and environmental benefits are clear, direct, and understood by the community. The City of Cordova, the Native Village of Eyak, and The Eyak Corporation have either supported the project through board/council action, or are direct participants in land leases and access permits. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 19 of 20 10/7/2009 SECTION 9 – GRANT BUDGET Tell us how much you want in grant funds Include any investments to date and funding sources, how much is being requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by milestones using the form – GrantBudget3.doc Total remaining costs of the new Humpback Creek hydro-electric reconstruction project are anticipated to be 11.6 million, Funding for this project is projected to come from three sources:  FEMA: the Federal Emergency Management Agency is scheduled to reimburse CEC for $4,332,000 in total repairs. FEMA will only reimburse CEC for October 2006 flood damage to restore the original facility, although FERC would not issue a license for CEC’s old, destroyed in-take and diversion structures because they are structurally flawed by virtue of their location.  CEC: we are spending $4.7 million of our funds as a contribution to project.  AEA: CEC is requesting $4.0 million from the AEA to construct the only sensible opti on for a hydro-electric facility on Humpback Creek; new in-take and diversion structures as designed and permitted by FERC. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 20 of 20 10/7/2009 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 Clay R. Koplin Signature Title Chief Executive Officer Date November 5, 2009