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HomeMy WebLinkAboutAlaska Energy Authority Annual Capital Project Status Report 01-29-2019-A 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA January 29, 2019 The Honorable Cathy Giessel Senate President State Capitol Room 427 Juneau, Alaska 99801 Chief Clerk Crys Jones Alaska House of Representatives Thomas Stewart Building Room 202 Juneau, Alaska 99801 Re: Alaska Energy Authority annual capital project status report Dear President Giessel and Chief Clerk Jones: As required by AS 44.83.950(b), the project status reports for the following Alaska Energy Authority capital projects are attached. • Bradley Lake Hydroelectric Project • Alaska Intertie Project As required by AS 44.83.085, a Susitna-Watana Hydro project status report is available on the Alaska Energy Authority website and an electronic copy was submitted to the legislature January 15, 2019, the 1st day of legislative session. If you have any questions, please call me at (907) 771-3000. Sincerely, Kirk Warren Interim Executive Director cc: Senate Secretary, Liz Clark 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA ALASKA ENERGY AUTHORITY ANNUAL CAPITAL PROJECT STATUS REPORT January 29, 2019 PROJECT: Bradley Lake Hydroelectric Project PROJECT LOCATION: Homer, Alaska ORIGINAL ESTIMATED PROJECT COSTS1: $ 355,900,000 ESTIMATED COSTS OF BATTLE CREEK DIVERSION IMPROVEMENT2: 47,200,000 $ 403,100,000 CURRENT ESTIMATED PROJECT COSTS: Construction Expenditures-Original Construction $ 316,902,894 Construction Expenditures-Battle Creek Diversion through 12/31/18 14,089,478 Projected to Complete-Battle Creek Diversion Improvement 32,941,914 Total Construction Costs 363,934,286 Financing Costs-Original Construction 11,316,424 Financing Costs-Battle Creek Diversion Improvement 168,608 Total Financing Costs 11,485,032 Total Estimated Project Costs $ 375,419,318 SOURCE OF FUNDS: Appropriated Funds: SLA1979 CH 80 $ 80,000 SLA1981 CH 92 $ 5,000,000 SLA1981 CH 92 $ 10,000,000 SLA1982 CH 141 $ 3,000,000 SLA1984 CH 171 $ 50,000,000 SLA1985 CH 96 $ 50,000,000 SLA1986 CH 41 $(50,000,000) SLA1986 CH 41 $ 50,000,000 SLA1986 CH 128 $ 50,000,000 SLA1987 CH 96 $(50,000,000) SLA1987 CH 96 $ 50,000,000 SLA1988 CH 172 $ 7,000,000 SLA1993 CH 19 $(12,082,500) $162,997,500 Other: Power Revenue Bonds, includes interest earnings $165,221,818 Battle Creek Diversion Power Revenue Bonds, includes interest earnings $ 47,249,964 Total Source of Funds: $375,469,282 1 Excludes project financing costs. Also excludes major maintenance and repair costs and preconstruction costs associated with Battle Creek diversion. Battle Creek diversion construction costs are included in ‘estimated costs of Battle Creek Diversion Improvement’. 2 Excludes project financing costs. Also excludes major maintenance and repair costs and preconstruction costs associated with Battle Creek diversion. Battle Creek diversion construction costs are included in this estimate. Bradley Lake Hydro Project Status Report Page 2 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG PROJECT DESCRIPTION: Bradley Lake is a hydroelectric project located near Homer, Alaska with an installed capacity of 120 megawatts. Construction of the Bradley Lake Project was substantially completed in 1991, with the date of commercial operation declared to be September 1, 1991. The project continues to provide electric power to the Railbelt utilities from the Kenai Peninsula to Fairbanks. The project is operated and maintained by Homer Electric Association. PROJECT STATUS AT 12/31/18: The Bradley Lake Project Management Committee (BPMC) has responsibility to operate and maintain the Bradley Lake hydroelectric project. The BPMC was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement) dated December 8, 1987. The members of the BPMC include the Alaska Energy Authority (AEA) and the six purchasers under the Power Sales Agreement - Chugach Electric Association, Inc.; Golden Valley Electric Association, Inc.; the Municipality of Anchorage (Municipal Light & Power); the City of Seward (Seward Electric System); Alaska Electric and Energy Cooperative, Inc. (AE&EC); and Matanuska Electric Association, Inc. (MEA). Originally, the Alaska Electric Generation & Transmission Cooperative, Inc. (AEG&T) was a purchaser under the Power Sales Agreement for the benefit of HEA and MEA. AEG&T assigned its rights under the Power Sales Agreement pertaining to MEA to MEA in 2015, and its rights pertaining to HEA to AE&EC in 2003. HEA is an additional party to the Power Sales Agreement, and is the entity represented on the BPMC while AE&EC has no direct vote as a consequence of the individual representation of HEA. The projects ongoing maintenance and repairs are funded by the six purchasers and not by state appropriation. The major project for 2018 was the start of West Fork Upper Battle Creek Diversion. Generation for the year was 405,751 megawatt hours (MWh). The 2018 generation was higher than the long term annual mean generation of 380,000 MWh. Originally, the Project encompassed 5,498 acres of federal lands. All of these lands were conveyed to the State of Alaska, pursuant to the Alaska Statehood Act, through five separate Tentative Approvals (TAs) and a Patent from the United States that became effective on April 20 or May 22, 2018. AEA is no longer required to pay annual charges for the use and occupancy of lands that were owned by the United States. The diversion of West Fork Upper Battle Creek (WFUBC) into Bradley Lake will increase the Bradley Lake Hydropower Project’s annual energy by approximately 37,000 MWh. A license amendment was received from the Federal Energy Regulatory Commission (FERC) in September 2016. The WFUBC Project Invitation to Bid, site visits, and bid opening were performed in the Fall of 2017. Four of the six Railbelt utilities are participating in the WFUBC project. Bradley Lake Hydro Project Status Report Page 2 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG Preconstruction activities for the Battle Creek diversion project were partially funded by a $3 million allocation of an ARCTEC Energy Project appropriation (FSSLA11 CH 5). Additional funding sources include a $500,000 Renewable Energy Grant, a $500,000 contribution by the participating utilities to match the Renewable Energy Grant, and an additional $1.2 million contribution by the participating utilities. In December 2017, the Authority issued, as a private placement, $47 million of Power Revenue Bonds for the long-term financing of the construction costs of the Battle Creek Diversion Project. The Power Revenue Bonds consist of $40 million New Clean Renewable Energy Bonds (NCREB); $1.2 million Qualified Energy Conservation Bonds (QECB); and $5.8 million Taxable Draw- Down Bonds. The tax subsidies associated with the NCREB and QECBs significantly reduce the net interest costs of financing the WFUBC construction project. The contractor mobilized to the Bradley Lake Project in April 2018 and is expected to complete the WFUBC project in 2020. 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG REDUCING THE COST OF ENERGY IN ALASKA ALASKA ENERGY AUTHORITY ANNUAL CAPITAL PROJECT STATUS REPORT January 29, 2019 PROJECT: Alaska Intertie Project PROJECT LOCATION: Willow to Healy, Alaska CURRENT ESTIMATED PROJECT COSTS: Construction Expenditures-Original Construction $124,245,687 Construction Expenditures-Upgrades/Improvements through 12/31/18 14,298,030 Projection to Complete Upgrades/Improvements: 10,001,970 Total Estimated Project Costs $148,545,687 SOURCE OF FUNDS: Appropriated Funds: Original Construction SLA1980 CH 50 $ 3,000,000 SLA1981 CH 92 $ 36,000,000 SLA1981 CH 92 $ 40,000,000 SLA1983 CH107 $ 25,000,000 SLA1984 CH171 $ 18,600,000 SLA1987 CH127 $ 5,896,400 FY87 Administrative Lapse $ (33,281) Source of Funds-Original Construction $128,463,119 Improvements/Upgrades SLA2002 CH 1 $ 20,300,000 SLA2008 CH 29 $ (10,000,000) SLA2008 CH 29 $ 10,000,000 SLA2011 CH 5 $ 5,000,000 SLA2012 CH 5 $ (9,160,564) SLA2012 CH 5 $ 8,160,564 Source of Funds-Upgrades/Improvements $ 24,300,000 Total Source of Funds: $152,763,119 Alaska Intertie Project Status Report Page 2 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG PROJECT DESCRIPTION: The Alaska Intertie (AKI) transmission line is a 170-mile long, 345 kilovolt (kV) transmission line between Willow and Healy that is owned by the Alaska Energy Authority (AEA) and operates at 138 kV. The AKI was built in the mid 1980’s with State of Alaska appropriations of approximately $124 million. The AKI is part of a number of backbone transmission segments that, when connected together, can move power throughout the network from Delta through Fairbanks to Anchorage down to the southernmost limit at Nanwalek. The project includes transmission towers, conductors, transformers at Healy and Teeland substations (Knik Road), and Railbelt system stability devices (Static VAR Compensators) at three locations that are necessary to allow the utilities to remain interconnected and for power to flow between utilities. The project is owned outright by AEA, and carries no debt. PROJECT STATUS AT 12/31/18 The AKI continues normal operations carrying Bradley Lake and economy power north into the Golden Valley Electric Association (GVEA) system. The economy power is generated by Chugach Electric Association (CEA), Municipal Light and Power (ML&P), Homer Electric Association (HEA) and Matanuska Electric Association (MEA). Although power generally flows north, the line is available for GVEA to transfer energy south if an emergency situation finds the Cook Inlet region short of electric power. AEA has a 5 year renewable service agreement with Alstom Grid (now GE Power) for maintenance, training, parts, and telephonic support for the Static VAR Compensators, which were installed under contract in 2016. This service agreement ensures this critical infrastructure can be economically maintained. The Second Amended and Restated Alaska Intertie Agreement (ARAIA) was signed by AEA and the Railbelt utility participants (participants) in March 2014. The participants include GVEA, CEA, ML&P, and Matanuska Electric Association (MEA). These four utilities and AEA each have a seat on the Intertie Management Committee (IMC). The IMC has responsibility to operate and maintain the AKI. The IMC adopted bylaws to govern their operation, and retained contracts and operating procedures to maintain an easy transition to the amended agreement. The longstanding Intertie Operating Committee (IOC) continues to recommend operating policies, procedures, and standard practices to the IMC for consideration. Additional Background: Agreements were developed over a span of 30 years to govern the cooperative management and operation of the connected network at large. AEA has agreements with participating utilities to ensure the AKI operates with prudent maintenance and operation by utilities. ML&P is the southern region operator and GVEA is the northern region operator. MEA, CEA and GVEA provide maintenance of the AKI in the southern and northern region respectively. Alaska Intertie Project Status Report Page 3 of 3 813 West Northern Lights Boulevard, Anchorage, Alaska 99503 | P 907.771.3000 | Toll Free 888.300.8534 | F 907.771.3044 | WWW.AKENERGYAUTHORITY.ORG Potential extension of the AKI to the Point MacKenzie area – Due to budget limitations during the original construction, the AEA owned portion of the AKI ends near the Willow-Fishhook Road. In cooperation with the participants, AEA explored extending the AKI to connect with the southcentral transmission system, using a 2002 appropriation. In analyzing this potential project, it was determined that the Point MacKenzie area was the optimal location for the terminus and would strengthen the transmission inter-connection, ultimately assisting in the movement of Bradley Lake hydro energy north to Fairbanks, ensuring increased capacity and reliability of power transmission in southcentral Alaska and would provide greater flexibility for dispatching generation resources for region-wide ratepayer benefit.