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HomeMy WebLinkAboutSUS236CONTACT: George &leason Pat Serie (272- SUSITNA HYDROELECTRIC PROJECT Background Information Economic Update and Design Modifications A 1 icense appl ication for the Susi tna Hydroelectric Project was submitted in February 1983, based on a feasibiliaty study completed in 1982 and a recommendation by the Alaska Power* Author- ity Board of Directors. That application, now being evaluated by the Federal Energy Regulatory Commi ssi on FERC), must be approved and a license issued before construction can begfn. "$be Harra-$baseas Sus-B" tna Lpolent Venture Harza-Ebasco) is the design contractor for the Susitna project. Their first task was a detailed review of the design concept and cost estimates. This review considered new results of ons~ing project studies and revised economic and population projections. Results of the wint%r geotechnical program and more intens2 hydrologic stud'ies were especial 1 y important. Resui ts of that project review fall into two areas: 0 Economic and financial update based on declining oil prices worldwide, " Design refinements and resulting cost savings'based on more cornb)l ele information. As pressnted in the FERC 1 icense app?icatiow, the Susitna Hydr~electric Project consists of two phases. The first, the Watana dam, is pianned as ao 885-foot earth and rockfill structure cweating a reservoir 48 miles long, w-ith an installed capacity of 1020 megawatts. The second phase is the Devil Crnyon dam, a 646 foot high concrete thin arch dam. The Devil Canyon installation would have a capacity of 600 megawatts and a 26 mile long reser- voivj", The Eaatana portion of the project, scheduled to be aroducing power in 1993, will be a rock esnbanlcment with a central il:ipervious core. Two diversion tunnels (38 feet in diameter, 4100 feet long) are planned to divert the river during construction. Water will pass through six power conduits to an underground powerhouse conta'ning six generating units. Transformers will connect to a surface swi tchyard where the power will enter the transmission system. The project has been designed with two spil~lways. The main spillway can discharge water up to the probable maximum flow. The probable maximum flow can be discharged through z! separate emergency fuse plug spil lwav. The Devil Canyon facility is planned to begin operating in 2002. Its design also includes a diversion tunnel, power intake structure, four penstock tunnels, an underground powe!rhouse with four geceratiog units, and two spillways. The Susitna feasibility study conc'uded that this dam concept was economical ly feasible and preferabt e to ather a1 te~rnativer for providing needed electrical energy to the Railbelt. Current work is aimed at refining the design concept, reassessing the project's economic feasibil ity in 1 ight of changing factors, and determining the most cost effect~ve, optimal project under today's conditions. ECONOMIC AND FINANCIAL UPDATE The economic and financial update has been prepared to reflect changes in world oil prices arid resulting changes in forecasts of Alaskan economic conditions. Higher oil prices provide greater resources to build the Susitna Project. They also affect estimates of population growth and energy demand. Lower oil prices produce the opposite effzct. When oil prices dropped, it was necessary to reexamine the assumptions used in tbe Susitna license application and take an updated look at the economic and financial feasibility. Changes in some of the major assumptions include: " The mid-range estimate of oil prices used in the license application estimated price per barrel of oil in 1993 to be $46, rising by 2010 to $65. More conservative current planning estimates with changes in world oil price range from $22 to 950 per barrel in 2010. Reduced oil revenues based on the lower prices will re2irce State revenues according1 y. " Population growth will a1 so slow with reduced oil ?rites, The range of Railbelt population estimates used ir! the feasibility study was 539,000 to 595,000 in 2010. Updated popalation forecasts are in the range of 500,000 to using the ISER "Man-in-the-Arctic" program and the "Rail be1 t Electricity Demandn model f , " Less population growth means a lower growth rate for energy demand. The license application esibimated a Railbelt: need for 6.3 billion to 11.4 billiorr kilowatt hours in 2010. With changes in assu:lptions, $:he update projects a range of 5.8 to 6.5 billion kilowatt hours. All of these modifications have been considered in reexamining the economic and financial feasibility of the project. TIqe results of the update show that the project remafns economically feasible under the revised projections. Using the lowest oil price projec- tions produces the most marginal advantage over thermal a1 lerna- tives. If oil prices increase at all beyond the lowes'i; alterna- tives, the economic feasibility of the project will also increase. State decisions on financing the project will affect the cost of electricity from Susitna in comparison with a1 temative thermal projects. DESIGN REFINEME;jTS a, Detailed review of layouts and costs, the winter geotechnical program, and detai 1 ed f 1 ood hydro1 ogy studies have 1 ed 'to several recommended design changes. The total savings due to these changes would be 8421 million. The following design modifica1:ions have been recommended for the Watana project. 0 Reduction in the amount of foundation rock to be excavat- ed by 3.5 million cubic yards. i r"/ " Change in composition and configuration of the dam to use more materials available from excavation. " Combined approach channel to power intake and main spillway. O Change in orientation of underground caverns and reduc- tion in number of power conduits for the generating units. " Modification of main spillway to discharge Probable Maximum Flood, thus eliminating the fuse plug emergency spillway. 0 Reduced transmission voltage from Gold Creek to Ester substation to meet Fat rbanks ' load requirements. These changes, if adopted, would have these effects: " Met savings by reducing the construction cost for Watana by aboi:t $421 million about 10 percent ' A potential reduction in construction time for Watana. " Some reduction in adverse envi ronmental impacts. Several additional design modifications are also being evalu- ated. A specific recommendation on these modifications will be j made in the future. These changes could result in additional cost d-~ F\ ,tc savings of up to $250 mil lion. Modifications to the Watana project ( o,,&- could include constructing the powerhouse above ground rather than underground and modifying the power intake structures and conduits; potential savings in the Devil Canyon structure might include modifications to the tunnel downstream from the dam, In addition to these design refinements, reduced economic projections have resulted in other potential modifications that are now being studied. The primary one would be downsizing the Elatana project to a lower dam height, with accompanying reductions in generation and transmission system requirements. This would bring project energy production more closely in 1 ine with cuirrent esti- mates of need for power. These refinements could reduce the capital cost of the project by an estimated $700 million and could further reduce env i ronmenta 1 impiicts because of reduced reservoi r size. BOARD ACTIONS The actions before the Power Authority Board of Directors are to : 0 Consider and accept results of the economic and financial update. " Approve recommended design refinements and r*el ated cost savings. ' Consider potential design refinements for future action. 0 Consider Watana a1 ternatives to better match revised energy demand forecasts. BOARD PEET 11% 8:00 A.M. - 10:00 A.M. Legislative Information Office Tel econference Center 1024 W. 6th Ave. 10:30 A.M. - 6:00 P.M. Anchorage Westward Hilton Mena i -A% eu t i an ROOK October 14, 1983 I. Opportunity for Pub1 ic Comment through teleconferencing network from the Legislative Off ice Teleconference Center ( 1024 We 6th Fve. ') , t~ teleconference centers i n Juneau, Fairbanks and Soidctna, 8:00 A.bi. - 10:00 A.M. Meeting reconvenes at 10:30 A.M. at the Anchorage Westward Hilton, Kenai-Rleutian Room. ,/ I " II. Approval of the Minutes of the September 27, 1983, Board Meeting in Anchorage. 111. Ccnsideration ef Actions with respect to the Susitna Hydroelectric Project: &"' A. Project Refinements .-- ,{L*t4:(cGt. r-2! ?~t,-t'~,*-,-d<' - P Y B. Project Update i- L& , . 64 +*; . C. FY 1984 Budget D. FY 2985 Budget E, Review of Susitna Access Road IV. Consideraticn of Action with respect to the Balance of the Alaska Power Authority Budget for FY 1985. V. Any other Business or Action which might properly come before the Board of Directors. VI, Opportunity for Pub1 ic Comment. PIIFIUPES OF THE !*IEEPSF"IG of the Alaska Dower Authority Board sf 3irectsrs Anchorage, A! aska September 26, 1983 P b @ Approval of Kinutes of the July 7, 1%3, Board !!eating in Ketch-ii kan, 14E0 Consideration of adoptlon of criteria for project economic and financial eval uatf an, IIL Review of Bradley Lake Project and consideration of developing a Federal Eneroy Re~ulatorv Commission (FERGj License Appl icatioc. IV, Review of the Susitna Hydropowe~. Project, consideration of budget a1 1 ocations , and other actions as appropriate. V, Gonsfderation Q$" Loan f~om the Rural Electrif fcatfsw Revolving Loan Fund to Egegik Electric Cooperative. I/ 1 , Considerat'on of actions for the Anchcraye/Fairbanks lniertie Pr~ject. \dII, @on%s'deration sf actl'esns related to Sslomcsn Gulch COP- st~uction Claims, VITI, CsnsideraLion of actions far the Delta tine extension, IX. Consideration of aeticn with respect to the FY'85 budget. X, Consddfration of funding reqcas ts f ram State agencies. %I, C~nsideration of acticcs wi th respect to the assumption of the Ahaska Po~er AcPministrati~n~ Xll, Consideration of action with respect to Swan Lake interim financing. XTII, Review of progress on power sales negotiations. XIV* Selection of management consul tant for audit oq the 21 3545 ~~~,*!~~ A1-1:krjr; PJ 1% , ;p:/ 3int3' ~US~~SS~ ~lr KC'CC .VR~C~ ~iqht 3r~~~~r'i ~3me before the 3oard of Si rectors. Mr. David Allison, Esq. Mr. Robert Huiman, Vice Chaiman Commissioner Dick iyon, Chai man Department of Commerce & Economi c D2vel opmeni Mr. Peter McOowel 1 , Di rector Office of Management & Budget Comi ssi sner Estke~ Wunnicke Department of Natural Resources MEMBERS ABSENT: Comissioner Dan Casey Department of Transportation h Public Facilities Page 2 ITEF"! I[ sl Approval of the Pinutes of the July 7, 1985, Board Meeting in Ketchi kan. CHAIRMAN LYON called the meeting to order at !3:15 AM and announced that there would be sope changes to the agenda due to the need for Executive Sessfov on three natters. MR. ALLISIDFI moved and COk!MISSIONER WUIqN ICKE seconded that the Board adopt the Minutes of the July 7, 1983, meeting as presented. Hearing not objection, COMKiSSIONER LYOW ordered the Minutes adcpted as presented. ITEM I! Cansiderat-ion of adoption of criteria for project economic and financial evaluation. MR. ERIC P. YOULD, Executive Director, explainr?d that the Alaska Power Authority is required by regulation to annually develop new criterf;! by which projects are evaluated for economic feasibility. The method of evaluation used by the Powllr Authority is a net present worth life cycle analysis of various alternatives. Critical criteria are; 1) inflation rate; discount rate; 3) fue escalation rate; 4) debt/equity ratio; cost of diebt; and 6 economic life of a project. MR. YOULD suggested that the Board consider eliminatincl the debtjeauity ratio because it is not relevant to the anaiysis being used. MR. YOULD reconmended that the Board adopt the same criteria used last year, except that the inf:ation rate be changed to 5.5 percent and cost of debt be reduced to 10 percent. MR. HUFMloN, Chai rman of the Fi nance Subcornmi ttee, reported that the Subcornmi ttee recommended acceptance of infl ation rate, discount rate, cost of debt, and economic 1 ife and term of loan, and deletion of the debt to equity ratia. He stated that the issue of "fel escalat?o~t rate was not resolved, KR, HUFMAN stated the Finance 5ubtommi ttee agreed to formal ize procedures by picking six nationally recognized experts and use the median fuel escalation Pate of the six, MR. ALLISON move6 and M2, PtDOWEHL sreesnded that the Finance Subcommittee make a ~ecsmendatisn to the Board an the sir experts and the question of 1 ong-term versus short-tern escala- tion rate. The motion was passed by a unanimous voice vote af 211 six voting members present. COKFIISSIONER WUNNICKE then moved that the Board approve the economic parameters as presented by staff, with the exception of a future report from the Finance Subct2Tmfttee on the fuel escalation rate, and that the debt ta equity ratio be deleted rrom future eanside~ation. blR. HUFMAN seconded the mot""in, The metlsn was ?z:;eri iinani.cl;rl:/ hy 311 ~i x ~IC:~FF ~erber~ grezan:* 371/057 Page 3 r" MR. VCLLC preser.:eo back~round on tne Sr.cl~y Lake dFe~--l'-b c,bj the COTE: pC Engineers irvol vemect, and the Pov~er Authorf::jf s assumpxion ~f the project. MR. JOE PERK-INS, Director of Cbn- struction, then reviewed the design and engineering aspects of the bradley Lake Project and charoes in the project from the Corps project concept. MR. YOULD then reviewed the project's economics. MR. YOULD stated that the local utilities have indicated that they are interes"Ld din the project and are willing to enter into agreements of intent to purchase power prior to the Po\der Authority beginning design. We indfcated that the staff's recommnendation was to authorize Stone and Webster to prepare a FERC Lict!nse Applica- tion by February 1984, at which time the Board could decide whether or not to submit the applicatio~ and proceed with design. In zddition, he also recomnended that the Board retain an engineer of record to review Stone and Webste~k swork, MR. WUFMAN moved that the Board adopt the staff recommendation. MR. ,4LLISON seconded the mot-ion, MR, NUNN sta"$gQ that the Board shou%d not lianit itself 4x1 one option. MR. ALLISON suggested that the Board dirbett staff to consider both the 90 and 135 megawatt projects. MR. HUFMAN agreed to incorporate MR. ALLISON'S suggestion into his motion and that staff make a firm recommenda"cion on the project capacity in December. The motion was passed unanimously by al'l six voting members present. CHAIRMAN LYON asked the Board to consider !TEM V, Considera- tion of a loan to Egegik Light & Power Company EL&PC) ahead of ITEM %V, Considera"%ion of ban from the Rural Efectr-idiicatioln Rtvolving Loan fund to Egegik Light & Power Company MR. BENISH briefed the Board on a loan application from EL&PC for the construction of a line extension to serve new HUD housing, 13 comercia1 enterprises, a health clinic, and two community facilities in the amount of $130,000.00. MR. BENlSW discussed the issuer; involved in the Board's approval of this loan. Thzy were; because HUD housing was not planned to hook-up to the utility, emergency situation has developed in which the line extens necessapy for these houses to obtain power for the winter; 2 is n;f simply a line extension because it invslves rebuildi relocation of existing line; 3) depr ciatian of existing plant was not taker, into consideration; and 4 updated net worth statement was presented in lieu of a financial statement. The staff's recornendation was epproval OF the loan despite deficfencies in documentation, because af the apparcnt financial abil i ty to .r-EDay the loan and 1 ikel ihood :f growth. REPRESENTATIVE ADELHEID WERRMANN stated her support for this project which is ;n her district. MR, HOMER LEONARD, OwnerfManager 311/Q5i Page 4 of EL&PC, commented on the purchase of the system from Naknek Electric and the need for the loan to meet the needs of the corn- munity. rsfR. ILL ISOFI moved that the Board approve Resol ut ?on o 1<;83-9? a lsan in the a~clunt of Si3C,000.00 tc EL&PC at two percent interaest for twenty years. COMMISSIONER IfIUFll4ICKE seconded the motion. The motion was passed unanimously by all six voti ng members present. CHAIRI4AN LYON suggested the Board go into Executive Session. MR. WUFMAN moved that the Board go into Executive Session for two reasons: I? to discuss issues related to Swan take financing and the current status of power sales agreements; and 2 claim settle- ment related to the Solomon Gulch Hydroelectric Projecl:. MR. NUMN seconded the vction. MR. ALLISCPI stated that he was opposed to an Executive Sessicn for discussing fina~rial matters. NS. LAI!RA DAVIS said that the motion should be specific that the E~xecutive Session was necessary to discuss matters that could have a clear adverse fi~ancial effect on the Power Authority or the State. MR. BENISH offe~ed a motion that the Power Authorit:y Board of Directors hold an Executive Session far discussion of the Swan Lake financing and the possibility for litigation and other matters related to litigation on the Solomon Gulch claims settlement. MR. FUFMAP and PR. F:U?IN agreed to adoot thic as their motion. VR. ALLISOP! said he would go into Executive Session and, if he felt the subject mstter inappropriate, request the meeting he made public. The motion was passed unanimously by all six voting members present. The Board went into Executive Session st !0:55 AM, The Board reconvened at %:SO PM, CHAIRVAN LYON discussed the Execuuti~~e Sessicr: and the rules for such sessions adopted by the Board. ht. explained that the Eoard discussed the Solomon Gulch claims settl enle~t, but chose not to discuss the f1nant:ing package for the Energy Program for Alaska and the status of power sales agreements. MR. ALLISON moved that the Board approve the settlement authority for claims arising f~om Solomon Gulch as was reauested in the Executive Session and was more speeifical ly stateti in Exhibit F, which is part of the confidential record of the Executive Session, all of which will be entered as a matter of public record upon resolution and completion 3f the setti ement negot'iation. MR. MUNN seconded the motion. The aotion was passed unanimous1;i by all : 5, ~0: " pa ~e~"f7be"xvesent e $;" 1 ;:!A3pf ' re~uestee $ha: 371./057 Page 5 FOR. YGrlllD iwferaed the Board that there were .two actions involved with this item: 1) the allocation of the FYI84 budget and consideration of the FY'85 budget and 2) the review of project ecenomics due to changed economic conditions and a review of the scope of the project. MR. McDOWELL suggested that the Board defer action on the S~lsitna economic issues for a s~eciai meeting thpt would consider only Susitna. MR. YOULD presented background on the Susitna project and the current project update. A review of the project has resulted in the recommendation of design modifications that wi 11 reduce the project cost upon which the Board could act and the consideration of other scope changes that will not require Board action until later in the project. MR. ALLISON asked if the project kipdate would include a reccfisideration of the access route. MR. YOULD stated that access would be considered in the future. COMMISSIONER GIUKNYCKE asked that the access question be included on the next meeting agenda and reports on access made available to the Board. MR. NUNN suggested that Harza-Ebasco provide information on access for Board cons ideralion. COMMISSIONER WUNNICKE suggested that the staff present information on the access selection to the Project Management Subcornmi ttee rather than the full Board. MR. ALL ISON recuested that the staff co~sider real locating the FYI84 budget to incorporate more socioeconomic and environmental tasks ard reduce mansgement and engineering tasks. CHAIRMAN LYON askea that budget considerations for the Suritna FY '85 budget. be deferred to the next meeting. MR. HUFMAN stated that he would like to hcld a Finance Subcommittee meeting before the next Board meeting. COfdlMTSS IOMER NUNN ICKE suggested that the Board consider Susitna and the full Power Authority budget at the ne.xt meeting. CHhIRMAN LYON sugges"ced that the Finance Subcommittee meet on October 13, 1983, and the Board meet on October 14, 1983. MR. ALLISON requested that a portion of the meeting be tele- conqerenced: CHAIRMAN LYON suggested that the meeting begin with t@leconferencing from 8 - 10 AM on October 14, to a1 law people to voice their cpinians on the Susitna project, and that the Bozrd meeting becjin at 10:30 AM. COMMISSIONER WUNNICKE asked that the project Management Subcommittee also meet before the next Board meeting to discuss access. ."Te (l"jLL3 br-;e"ec :ne 3p~i-Q cn "",~e tr2r~r75~;~r ''r~ ext~qsj~r 7" +o !he :anara Loop agr!cl:lturaq area thax Idas tPe result of a '~a;si 3tiye i~~~~c~j i-jcn, chapter 106, 5!;1 1Gg: '"~~~~~~), Cacfior ,-- ""np f'ya T ' 232 "521- ;,--. ui3d.4. re 3~7jni: ++dp~ld jrqj~~ve c2ns:rgct2pr gi d.5 ,:: if2 % 3711057 Page 7 of sinple pnsse services h: ~~ouid be ccrx-aczec cc flb'EA. KR. HU-YAeP1 moved that the 3oard aforove the cosign and cc~structicn of the Tanana Loop line extension, thar the staff enzer ineo an operations and mainte- 3nce agreement with GVEA, and suggested the operation and maintenance cost would be born by GVEA. F'IR. McDDWELL seconded the motion. The motior: passed with HUFMAI4, bIUNNICKE, McDOWELL, NUNN, and LYON voting yes, ALLISON voting no. ITEFi XVII Any other business or action which right properly come before the Board of Directo~s, MR. YOULD asked for the Board's guidance on three other appropriations: Fa1 se Pass $600 ,OPR, 00 ) ; Pedro Bay 5500,000.00 and Nikslski S200,000.00). MR. McOOWELL stated that each of these appropriations was careful ly )!considered by the Administration a~d was intended to be implemented this fiscal year. MS. PATRICIA DEJONG, Director of Project Evaluation, discussed these three projects, the appropriations made for each, and the needs of each community. CHAIRMAN LYON recommended that this ;tern be deferred until a future Board meeting. [CHAIRMAN LWN asked that Items XI% and XITI be esnsa'dered together. ITEM XI1 Consideration of action with respect to Swan Lake interim financing. YTEF XIII Review of progress on Power Sales Negotiations. MR. BENISH reviewed the negotiations that have been held with the City of Ketchikatl on arranging refinancing of the 835 million Swan Lake Note and the status of the refinancing. MR. YOULP indicated that the City of Ketchikan was willing to adopt a resolu- tion seperate from the acquisition agreement with the intent language required by the Power Authority. MR, HANK PRENTISS of Ketchikan spoke on behalf of the City about the refinancing of the $35 million Note. h discussion of the Sv~an Lake refinancing and the ststus of negotiation for Power Sales Agreements un the four project pool ensued. COMMISSIONER WUNNICKE left the meeting at 4:30 PM. ITEV XV Consideration of act4 on wi th respect to Bond Counsel . Pi MR. HUFKAR presentea backgrou~d on the selection of %ord Counsel fo~ %he nowe\- Authority. !-!Pa FIIINF! ~+.zi,ed that the Firiance Subco~vri +tee + s recamme~<;?tion wss th5t the Scrarc! erter intc a contract with Wohlforth and Flint through calendar year 1984 with a Re~best "iol* Proposal For ~i-983-service prepared as soon as the staff can reasor;c?bly do so. FIR, A\-LISOIU rr;oved that tke Eoard approve the Page 8 Suhcorvmi ttee ' s recornrendation. MR. McDGWELi seconded the motion. The motion was passed by a1 1 five voting members present. ITEM XIV Selection of management consultant for audit of the Alaska Power Authority. MR. McDOWEll briefed the Board on "che evaluation prccess for selecting a management eonsu l tant. The Evaluation Committee, with concurrence of P1R. McDOWELL, Chai rman of the Audit Subcomi ttee, selected the Joint Venture of C.T. Main Inc., and Arthur Young and Company. MR. McDCWELL moved that the Board instruct the staff to enter into negotiations with the Main/Ycung team and if negotia- tions are not successful , that negotiations begin with the second place fim, Touche Ross and Company. KR. WUFMAN seconded the motion. The motion was passed lrnanimously by all five voting members present. CHAIRMAN LYON adjourned the meeting at 5:b5 PM, Comissioner Dick Lyon ATTEST Page 9 POWER AETTHORITY BOARD MEET PLEASE SIGN IN AS POWER ACTTHORIT'JB BOARD MEET PLEASE lN BOARD MEET PLEASE SIGN IN d COMPANY AS POWER AETHO BOARD MEET PLEASE lN BOARD PL EASE SIGN IN 11%. CONSIDERATIPN OF AGTIONS WITH RESPECT TO THE SUSITNA HYDRO- ELlLCTRIC PRQJECT, A, Action Item A Consideration of incorporation of certaain design refinements into the Susi tna Hydroelectric Project. The existing configuration of the Susitna Project was adopted in early 1982 thrcugh the Board's acceptance , sf the Acres American Feasibility Report. In keeping with the then existing level of site informa.tion, the project layout, design assumptions, and cost estim~te lvere developed based on worst case scenarios. Addition- al site explorations have be.en conducted since the completion of the feasibil ity study. Also, Harza- Ebasco, our design firm, has brought fresh insight to the development of the project. Harza-Ebasco has come forward with twc groups of refinements to the project configuration. The first group, recommended for immediate incorporation, has been scrutinized and favorably endorsed by the Power Author1 - ty's External Review Panel and by the Power Authority's cost estimator (augmented by independent cost estimating experti se) , The second group consists of several signif icani refinem~~ts that require additional eval- uation befcl-e adoption by the Board. The consultant recommends thei r incorporation i nto the prozect subject tc the outcome of addi$ional evduation. - C, Issues The Board has the opportunity to approve the engineer's recommendaticns in whole or in part, and thereby reduce the estimated project cost. If approved by the Board, the second group of refinements will have to pass the same evaluation process that the first group passed. The refinements are either neutral or henefi- cia1 with regard to environmental impact. An expanded discussion can be found in the appended infomatio -, * costs Cost i~pl jcztions are addressed in the Appendjces. 1. Delegate the decision to the Executive Director. 2. Adopt the engineer's recommendation 3 Disapprcve the propcsed refii~eme~ts in part cr in total , F. Recornended Acti on Proceed with option No. 2; adclpt the engineer's recommendation 1. Please refer to the sep~rate binder provided with the September 27, 1983, Bcard Packet, wihich pro- vides the followi~g information: a. Report on Recommended Project Ref i nements . Previously provided. b. Report or! Potential Project Refi~ements. (Previously provided. j c. Report of the External Review Panel. ously provided. ) d. Memorandum on the Project Cost Estin2te. [Previously provided.) 2. Su~mary of Eeccrrrended Project Ref i ne~erts. 3. Sumary cf Potential Project Refinem~nts. 111. CONSIDERATION OF ACTIORS WISH RESPECT TO THE SUSITMA FIYDRO- ELECTRIC PROJECT. The Board has requested an update on the proje!ct,, to include information on the present outlook for the project's economic and financial viability. This item presents the economic assessment and cost of power approximations. A subsequent presentation wi 1 I address the financial aspects. Executive Su~rnary of Economic am3 Financial Update, provided as a sepzrate attachrent. 111, CONSIDERATION OF ACTIONS WITH RESPECP "$ THE S;USIFNA HYDROELECTRIC PROJECT, A, Action Item C To allocate the FY 1984 Budget appropriation. The FY 1984 Budget a1 location to the Power Authority was presented as two elements, * $22 million to be used to pursue n Federal Energy Regulatory Comi ssion FERC) License Application. * An Additional $6 mil 1 ion for the same purpose, but with the requirement that the Board of Directors affinatively act on its full or ~artiai use if needed (See Appendix). Due to the unforeseen requests for information by the Federal Energy Regu'i atory Conmi ssion during FY 1983 and administrative constraints sn biiity of Funds, a significant disruption to the FY 1983 work plan occu~red, Tka t i sruptian had domino effect on the FY 1984 work plan ee Appendix 2 Presently, the FY 84 $22 million allocation will not Fdnd all program objec- tives. Application of a portion of the $6 million element is appropriate if all objectives are to be preserved, C, Issues Shoilld the project be rsconfigured; and, if so, should it be funded Prsm the uwwstricted accouct sr the restricted accsunt, D Costs If FY 84 Project objectives and Project reconfig- urations are to be Funded From the unrestricted account, $3,334,000 would be moved From the restricteld to the unrestricted account, leaving 2,665,000 for future unforeseen requi regents see Appendix 3 if the Project reconiigur3tion is to be funded from the restricted account, funds would be released in the unrestricted account for appl icaeion against the project cbjectives. However, this would commit the restricted accaufit by 53,245,000. Under thais scennrio, an additional $89,000 would be moved fro^ the restricted account to the unrestricted account to restore the Power Authority contingencies. This would leave a balance of $2,666,CC0 in the restricted account (see Al~pendix 4, Tables 1 and 21. If reconfiguration is not pursued, no reallocations between accounts would be necessary. 1. Approve reailocaticn of 83.334million from the restricted to the urrestricted budget.. 2. Ppprove re?iiocation of QPSl,000 frcm the i-est~7~"rei to ~iw unr~stric?ld SLC!~! 31:d commit the restricted budget by $3,245,000 for project reconfiguration. 3. Withhold approval of reallocations. F, Recommended Action Approve option No. 1 or option Ro. 2. 1. Letter from Governor Shefqieid to Chairman iyon of duly 28, 1983. -2 Cur~.enr and ~rcpcsed F'i 84 L~cget aiiocctions, reconf igurat~on fro^ unrestricted budget. 4. Curre~t and ?ropcsed FY 8t bucget a1 loi~tions, reconf igurati cn "rom restr*i cted acco~ict. I 11. CONSIDERATIOri OF ACTIONS WITH RESPECT TO THE SUSITFIA HYDRO- ELECTRIC PROJECT. Consideration of the FY 1985 budgzt to be endorsed by the Boar+ for the Susi tna H~droelectric Project. Three budget levels are advanced. They are: $75M, which advances the project at a rate consistent with an earliest possible construction start of 1986; 558.4M, which accommo- dates a probab;e 1987 constrcction star:; and 543M, w!~ich supports the Federzl Energy Regulatory Com~i ssion process and environmental programs, but does not fund project desian or significant geetechnical investigations. Issues Implicit in the ~oard; approval of one of these three budget levels is the ass~mption that the project will proceed as previously endorsed. Explicit is the rate at which it will proceed. Approval of some ~tiier budget level, which could ranse fro^ nothing to something less than $43M, would bring under examination the assumption that the project would proceed as preidiousl;~ endorsed. The family of aotions this act would call intc play habe not been assessed. A breakdown of the budget is shown in the Appendix. 1. Approve the 975M budget level 2. Approve the S58.4M budget level 3. Approve the 943.0bI budget level September 23, 1983, letter from Eric Yould to Robert Hufman with attachments. 111. COMSfOERATION OF ACTIONS WITH RESPECT 10 THE SUSITNA HYDRO- ELECTRIC PROJECT. The Board had previously asked that the Susitna access route be reassessed. The Power Authority initi3ted that reassessment, but suspended it when it beczme evident that a construction management consul tant would not be engaged in FY 84.This input was considered essential to the conclusians of the update. At its meeting of September 27, 1983, the eoard requested that a review of the original selection be made, and a scatus report of the update be prorfded, PI ease refer to Appendix for addi tionai information. iV. COElSIDERATIOFI OF ACTION MITH RESPECT TO THE BALAlNCE OF THE ALASKA POWER AUTHORITY BUDGET FOR FY 85 BUDGET. A. -4ma Action Item Adoption of Alasks Power Authority FY 85 budget request for submittal to Office ci Management & Budaet The FY 8% budget request is due to OMB on Ocbober 17, 8983, Power Authoriey staff has traditionally prepared the budget request far Board review, modification, and adoption. Thle Project Management Subcommittee is cansidering a1 ternati ve schemes for. project approval which caul ci possibly eliminate the need for a sepsrate budget approval in fr' ire budget cycles. Power Author4 ty staff is presently preparing a Power Project Development Plan that wil I 52 ready in December, 1983. This budget rheqtlest is consistent with bas'c concepts which will be presented in thzt plar,. Since the Power Authorit] is not yet operating under an approved Pawer Project Development Plan, 1". .is neces- sary to bring this requer"tts the Boar-d for direction and approval . "l"he Finance Subcomm-i'ttee has revje~ed the FV 1985 budget request and has made r~cammendations for consid- eration tiy the full Board. Three different levels of pfi3r.t and funding presented for each project request and the f-i nance Subronm~ ttee' s recein~endzticm are suma~ized in the Appendix. e, Issues 1) The Boapd may wish to speed up or slow down the project dei~elopalent process fur any of the individual projects in the capital budget request. 7) The draaFi- Pudir. Subcarrapnittee Report recornended an increase in staff to better meet the Power Authority mandate. Pi; I s biidgetl request , therefore, req;: ects necessary jnrreases in operating biidqet ar a tine ~h~fi ECY~T~OT ? s reque~ei ng ~c~-oss- ihe-bo;,i*d decreases in agency operating budgets. Costs are as indicated in the FY 55 rzquiest arrd as estimated in the cash flow For future yearc. 1. Approve budget as submitted by staff, 2. Approve budget as modiff ed by Finan,ce Sbbccm- miltee. 3, Approve hvdt,:et as modified by Finance Silbcont- mittee w. :h additional modificathons, 4. Dir~ct staff ic mske mzjor moclific8ti.ins subject ta review at another Board neetifig and submit bu dget then. F. Recommended Action As appropriate. I. Stamnary of funding for. 'levels of sffort* 2 L4-2 Finance Subconmittee's recomenao~~ons to be provided at October 14, 1983, Board Iqeeting). Draft FY 35 budget request has previausiy been provided in a separate bincer to the Peard.