HomeMy WebLinkAboutTerror Lake Unit 3 Hydroelectric Project Pre-Feasibility Analysis - Oct 2009 - REF Grants 2195460, 7040013Terror Lake Hydroelectric Project — FERC Project No. 2743
Third Unit Addition
Pre -Feasibility Analysis
ENGINEERING AND REGULATORY ASSESSMENT
Project Licensee:
KODIAK ELECTRIC ASSOCIATION
Kodiak, Alaska
OCTOBER 2009
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
Table of Contents
Listof Tables................................................................................................................................... iii
Table 2.3.1
License Articles Affected by Amendment Applications .......................................... iii
Table 2.5.1
Required License Exhibits.......................................................................................
iii
Table 2.7.6
Comparison of Options
"'
ExecutiveSummary............................................:............................................................................iv
1. Introduction............................................................................................................................. 1
1.1
Kodiak Electric System.....................................................................................................
1
1.2
Terror Lake Project Description........................................................................................
2
1.3
Provision for Third Unit in Existing Powerhouse..............................................................
2
1.4
Need for and Purpose of Installing Third Unit..................................................................
3
1.5
Scope of Studies...............................................................................................................
3
1.5.1
Regulatory Review...................................................................................................................
3
1.5.2
Engineering Review: ................................................................................................................. 4
1.5.3
Pre -Feasibility Report...............................................................................................................
4
2. Regulatory Review...................................................................................................................
4
2.1
Purpose of Regulatory Review..........................................................................................
4
2.2
Strategic Planning.............................................................................................................
5
2.3
Review of License Requirements....................................................................................
11
2.4
Risk Assessment.............................................................................................................
12
2.5
FERC Process for Application for Capacity Amendment to License ................................
13
2.5.1
Required Exhibits for Capacity Related Amendment...............................................................
13
2.6
Potential Study Requirements.........................................................................................
16
2.7
FERC Application for Amendment — Process Options ...................................................
16
2.7.1
Contents of a Capacity -related Amendment............................................................................
16
2.7.2
Process Options.....................................................................................................................
17
2.7.3
Integrated Licensing Process(ILP)...........................................................................................
17
2.7.4
Traditional Licensing Process(TLP).........................................................................................
18
2.7.5
Alternative Licensing Procedure (ALP)....................................................................................
19
2.7.6
Comparison of Options..........................................................................................................
20
2.8
Recommended Approach — FERC Alternative Licensing Procedure (ALP) .....................
21
2.8.1
Process Selection — Schedule Comparison............................................................................
21
2.8.2
Recommendation to Use FERC ALP.......................................................................................
21
2.8.3
Notice of Intent to File a Capacity Amendment Application...................................................
22
2.8.4
Request to Use the ALP..........................................................................................................
22
2.8.5
Communications Protocol......................................................................................................
24
2.8.6
Preliminary Application Document (PAD)/Draft Annotated Application for License ................
25
2.9
Schedule to Prepare Capacity Amendment Application .................................................
25
3. Engineering Review................................................................................................................
25
3.1
Purpose of Engineering Review......................................................................................
25
3.2
Review of Existing Third Bay Provisions.........................................................................
25
3.2.1
Civil / Mechanical..................................................................................................................
25
3.2.2
Electrical................................................................................................................................26
3.3
Tailrace Adequacy.........................................................................................................
27
3.4
Existing Drawings...........................................................................................................
27
3.4.1
As -Built Drawings..................................................................................................................
27
3.4.2
Exhibit F Drawings.................................................................................................................
28
3.4.3
Exhibit G Maps......................................................................................................................
28
October 2009 Hatch Acres Corporation ;i
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
3.5 Constructability Review.................................................................................................28
3.5.1 Adequacy of Third Bay Space................................................................................................. 28
3.5.2 Water Conveyance Connections............................................................................................ 28
3.6 Construction Schedule................................................................................................... 30
4. Conclusions and Recommendations....................................................................................... 30
4.1 Conclusions — Regulatory............................................................................................. 30
4.2 Conclusions — Engineering............................................................................................ 30
4.3 Recommendations — Regulatory................................................................................... 30
4.4 Recommendations — Engineering.................................................................................. 31
List of Tables
Table 2.3.1 License Articles Affected by Amendment Applications
Table 2.5.1 Required License Exhibits
Table 2.7.6 Comparison of Options
October 2009 Hatch Acres Corporation iii
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
Executive Summary
Kodiak Electric Association (KEA), licensee for the 20 MW Terror Lake Hydroelectric Project —
FERC No. 2743 (Terror Lake Project or project) has engaged the services of Hatch Acres
Corporation (Hatch Acres or HAC) to investigate the feasibility of installing a third turbine/generator
unit (third unit) in the existing open bay in the powerhouse, and by doing so expand the project
installed capacity from 20 to 30 MW. The Terror Lake Project was planned to be developed in
stages with the possibility of increasing the capability of the Project as the demand for electricity
may increase in the future:
KEA's Vision Statement is to Endeavor to produce 95% of energy sales with cost effective
renewable power solutions by the year 2020. KEA constructed a 4.5 MW wind facility at Pillar
Mountain as part of KEA's goal of reducing dependence on diesel generation by adding new
renewable energy generation to its system. Wind energy is variable and does not provide the
capacity to meet KEA's growing load demand. KEA identified installation of the third unit as the first
step towards achieving the goal set in KEA's Vision Statement.
This Pre -Feasibility Analysis presents our engineering and regulatory assessment of the feasibility to
install a third turbine/generator unit (third unit) in the existing empty bay in the powerhouse at the
Terror Lake Hydroelectric Project. The primary purpose of Task 1.a was to conduct a "fatal flaw
analysis" to evaluate the viability of installing the third unit. This report presents the results of our
regulatory and environmental review and analyses.
The purpose of the Regulatory Review is to (1) perform a detailed review of requirements in the
existing license, including the environmental terms and conditions; (2) identify and discuss any
risks that might be anticipated with filing an Application for Capacity Amendment, including
whether the filing might expose KEA to agency requests to modify terms and conditions of the
license not associated with installation of the third unit; and (3) advise KEA regarding the
recommended approach for the FERC license amendment process..
The purpose of the engineering review is to determine whether major modifications to the existing
powerhouse and other project facilities will be required to install the third unit including (1)
adequacy of the tailrace to accommodate water discharged from the powerhouse during the time
that the three units would be operating with a capacity of 30 MW compared to the existing
situation where installed capacity is 20 MW; and, (2) constructability review including adequacy of
space within the powerhouse to accommodate the third unit and water conveyance connections;
and electrical system considerations;
We did not identify any "fatal flaws" associated with installation of the third unit. KEA requested
that we rank, on a scale of 1 to 10 — with 10 being the most difficult, the potential difficulty of
pursuing the FERC License Amendment to install the third unit. The application will fall under the
category of "Capacity Amendment". We rank the third unit installation at "1" on the above
identified scale. We trust that this report will assist KEA in making its "Go / No" decision.
The next step, Task 1.1b, would build on work performed during Task 1.a. Regulatory Review
activities would include (1) Discuss the FERC Amendment process with federal and state agencies;
(2) receive further guidance from FERC Staff regarding use of the Alternative Licensing Procedure
for the Application for Capacity Amendment; and (3) Prepare scope, schedule, and related cost
estimate to prepare and file the Application for License Amendment. Engineering Review activities
would include (1) Review constructability — e.g. third bay space and water conveyance
connections; (2) Review potential construction schedule and any potential effect on current
October 2009 Hatch Acres Corporation iv
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
operations; (3) Verify that the As -Built Drawings and modified Exhibit F Drawings are adequate to
proceed with planning; and (4) Based on KEA decision to proceed, prepare a detailed scope and
budget.
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
1. Introduction
1.1 Kodiak Electric System
Pre -Feasibility Analysis
Kodiak Electric Association, Inc. (KEA) serves approximately 5,800 meters on Kodiak Island. KEA's
service area includes the area in and around the City of Kodiak, the US Coast Guard Base, Bells
Flats, Chiniak, Pasagshak, and Port Lions.
KEA operates an isolated electrical grid system. The 20 MW Terror Lake Project produces the
majority of Kodiak Electric Association's (KEA) electricity and is the cornerstone to KEA's Vision
Statement: "Endeavor to produce 95% of energy sales with cost effective renewable power
solutions by the year 2020, by providing base load capacity to backup other forms of renewable
energy."
KEA's recently completed Pillar Mountain Wind Farm includes three 1.5-MW wind turbines,
enhancing its renewable energy portfolio by 4.5 MW. The Terror Lake Project reservoir acts like a
battery to store energy generated by the variable winds; when winds are plentiful water is
conserved within the reservoir. When winds diminish, KEA can dispatch hydropower to serve load
and maintain system stability.
The current capacity at Terror Lake has been surpassed by the growing load demand. KEA needs to
run diesel units to meet this demand. KEA proposes to install the third unit to add 10 MW of
capacity at the Terror Lake Project. Installation of the third unit would increase KEA's total installed
renewable energy capacity from the existing 24.5 MW (20 MW hydro + 4.5 MW wind) to 34.5
MW (30 MW hydro + 4.5 MW wind).
KEA operates and maintains 33.95 MW of diesel generation in case the Terror Lake Project is not
available: Kodiak Generating Station, Nyman Power Plant, Swampy Acres Plant, and Port Lions.
There is a mixture of diesel reciprocating engines and a diesel -fired combined cycle generation
unit.
The table below lists KEA's electric generation facilities:
CAPACITY
PROJECT FUEL SOURCE (MW)
Terror Lake Hydroelectric Project Water 20.00
Pillar Mountain Wind Farm Wind 4.50
Kodiak Generating Station Diesel 17.60
Nyman Power Plant Diesel 9.00
Swampy Acres Plant Diesel 6.60
Port Lions Diesel 0.75
KEA Generating Capacity Total
58.45
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
1.2 Terror Lake Project Description
The 20 MW Terror Lake Hydroelectric Project, FERC No. 2743 (Terror Lake Project), is located in
the north central part of Kodiak Island approximately 25 miles southwest of the City of Kodiak
within the Kodiak National Wildlife Refuge. The Terror Lake Project is a remote site, accessible by
floatplane helicopter or boat only. The project was licensed in 1981 and commenced commercial
operation in 1985.
The Terror Lake Dam is a fill structure approximately 193 feet in height and some 2,450 feet long.
The dam crest is at El. 1.425 ft. The dam raised the level of the original lake by some 170 feet,
forming a reservoir with a surface area of about 1,000 acres and providing 108,000 acre feet of
storage at its normal maximum elevation of 1,420 ft (msl). The un-gated side channel spillway crest
has a crest El. at 1,420 ft and a length of 650 feet.
The Terror Lake Project is a trans -basin diversion project. A 23,300 foot -long, 11 foot diameter
tunnel carries water from Terror Lake reservoir to an outlet portal located on the west slope of the
Kizhuyak River Basin where flows pass through a 3,400 foot -long penstock to a powerhouse
containing two 10 MW generating units. Outflow from the powerhouse is conveyed through a
2,275 foot -long tailrace to the lower Kizhuyak River.
Additional water is diverted to the project tunnel from the 20 foot -high Falls Creek diversion dam
and the 40 foot -high Shotgun Creek diversion dam. The 20 foot -high Rolling Rock Creek diversion
dam is presently inoperable. These are all fill structures with minimum storage capabilities
The powerhouse is located on the west bank of the Kizhuyak River, housing two 10-MW vertical
axis impulse turbine generators with centerline elevation 103.5 feet, and containing an empty bay
for a future third unit. A 2,200-foot-long tailrace channel conveys flows from the powerhouse to the
main stem of the Kizhuyak River. The tailrace was recently upgraded and no additional
modifications are anticipated.
A 13.8/138-kV switchyard located adjacent to the powerhouse. Project electrical output is
transmitted across a 17.4-mile-long, 138-kV transmission line from the switchyard to a substation
within the USCG Reservation north of the Kodiak Airport. No modifications to the transmission line
are anticipated.
1.3 Provision for Third Unit in Existing Powerhouse
The 20 MW Terror Lake Project was planned to be developed in stages with the possibility of
increasing the capacity by installing a 10 MW third unit in the empty bay as the demand for
electricity increased in the future:
• Powerhouse — The Terror Lake powerhouse was constructed in 1984 with two vertical axis
impulse Pelton turbine/generator units and an empty bay for a future 10 MW unit. The
power tunnel, penstock, and tailrace are large enough to accommodate a flow
corresponding to 30 MW of capacity without modification.
Switchyard — Space has been allocated for addition of a future (Unit 3) 15MVA Generation
Step Up transformer and disconnect switches to be located in the south corner of the
switchyard, next to the service road and adjacent to the access gate. No additional bus has
been provided. (Terror Lake Switchyard General Arrangement Plan, Dwg No. TL-57-021
(Rev 4: 12-6-85 As Built Revisions). (Source: FDP — Unit 3 Addition Estimate
Assumptions.doc, page 1. 1/11/2007
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
Transmission — Two options exist: (1) feed the "Future 138 kV" line or (2) increase the
output too the 138 kV Airport Substation line. ).(Source: FDP — Unit 3 Addition Estimate
Assumptions.doc, page 1. 1/1112007)
1.4 Need for and Purpose of Installing Third Unit
KEA's loads continue to grow and there are significant periods of time when KEA's load now
surpasses the 20 MW capacity of the Terror Lake Project's existing hydro turbine/generator units.
The existing powerhouse contains an empty bay designed to accommodate a third 10 MW
turbine/generator unit. Expanding the existing 20 MW installed capacity to 30 MW by installing the
third 10 MW unit would: (1) cover peak loads, (2) provide outage backup for the existing two units;
(3) improve KEA's system stability; and (4) provide backup capacity to support the existing 4.5 MW
Pillar Mountain Wind Farm and enable KEA to pursue additional renewable energy projects.
The two existing turbine/generator units are 1984 vintage. The amount of outage time required for
annual and quarterly maintenance on these units can be up to four weeks. Losing 10 MW of power
from offline hydro units during maintenance requires KEA to run diesel generators to meet system
demand resulting in approximately 430,410 gallons of diesel fuel annually.
Installing the third unit will enable KEA to cover peak loads and times when a hydro unit is down
for maintenance with renewable power. Over the past decade, peak loads on the system have
averaged 24 MW. Diesel generation is currently required for these periods of high demand and the
need for diesel powered supplemental capacity will continue to grow into the future as peak loads
increase. The current approach of burning diesel fuel to supplement KEA's capacity is not
economical.
Installation of the third unit would also provide the benefit of reducing emissions from KEA's diesel
capacity during periods of high demand.
1.5 Scope of Studies
The scope of work for Task Order 01, Terror Lake Project Engineering & Regulatory Assessment,
includes the following activities:
1.5.1 Regulatory Review
Phase 1aactivities include:
• Review License Exhibits and Articles, and overall project record (FERC Docket and reports
prepared by the FERC Regional Office) - identify and discuss potential modifications related
to addition of the third unit
• Identify and discuss any risks regarding opening the License as a result of filing an
Application for Amendment — i.e. exposure to agencies requiring modifications to recently
agreed to modifications to monitoring and reporting procedures for the license -mandated
minimum flow release (License Article 43)
• Identify potential environmental issues and discuss potential study requirements and related
approvals and permits with resource agencies
• Review FERC license amendment process options; discuss with FERC staff; and recommend
proposed approach
Phase 1.b activities following KEA decision to proceed with the FERC Amendment will include:
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
• Discuss the FERC Amendment process with federal and state agencies;
• Receive further guidance from FERC staff regarding use of the Alternative Licensing
Procedure for the Application for Capacity Amendment; and
• Prepare scope, schedule, and related cost estimate to prepare and file the Application for
License Amendment
1.5.2 Engineering Review.
Phase 1a activities include:
• Review existing third bay provisions in existing design — determine whether there any
additional considerations/modifications
• Review adequacy of tailrace to accommodate modification in project operations with the
third unit
Phase 1.b activities following KEA decision to proceed with the FERC Amendment will include:
• Review constructability — e.g. third bay space and water conveyance connections; Review
potential construction schedule and any potential effect on current operations;
• Verify that the As -Built Drawings and modified Exhibit F Drawings and Exhibit G Maps are
adequate to proceed with planning
1.5.3 Pre -Feasibility Report
Phase 1.a Pre -Feasibility Report:
• Prepare a Report presenting the results of the above identified tasks
• Provide support for KEA's "Go/No-Go Decision"
Phase 1.b Pre -Feasibility Report
• See above regarding Environmental and Engineering Sections
• Based on decision, prepare a detailed scope and budget for following Phase lb and Phase II
2. Regulatory Review
2.1 Purpose of Regulatory Review
The purpose of the Regulatory Review is to (1) perform a detailed review of requirements in the
existing license, including the environmental terms and conditions; (2) identify and discuss any
risks that might be anticipated with filing an Application for Capacity Amendment, including
whether the filing might expose KEA to agency requests to modify terms and conditions of the
license not associated with installation of the third unit; and (3) advise KEA regarding our
recommended approach for the FERC license amendment process.
October 2009 Hatch Acres Corporation 4
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
2.2 Strategic Planning
Discussion with KEA Staff — luly 27 & 28, 2009
A site visit and office meetings with KEA Staff were accomplished in July. During the office
meetings Hatch Acres Corporation personnel met with Darron Scott, CEO, and Jennifer Richcreek,
Environmental Coordinator to discuss the Terror Lake Project and the potential enhancements:
• We discussed KEA's Vision Statement and goal to reach 95% renewable energy generation
by the year 2020
• We discussed KEA's interest in reducing use of diesel -fuel -fired generation for multiple
purposes:
o Fuel contracts — volatile cost of fuel
o Sulfur content of fuel and reducing environmental effects associated with use of
diesel fuel and increased requirements associated with State permitting
o Future uncertainties — e.g. "cap & trade"
• Third Unit
o Need for the third unit to operate "in sync" with the two existing units
o KEA interest in relieving the current problem where one unit is down during
maintenance and only one unit is available
o KEA interest in providing capacity credits for purposes of considering additional
renewable energy generation units
o We noted that, based on our site visit and preliminary office studies we conducted
prior to the site visit, we did not identify any impediments to a successful FERC
Amendment proceeding.
Follow-up Discussion with ADF&G Staff — July 29, 2009
KEA's consultants, Nan Nalder and Dick Griffith (Hatch Acres Consultants) met with Jim Ferguson,
outgoing Statewide Hydropower Coordinator, and Scott Maclean, incoming Statewide Hydropower
Coordinator, in Anchorage on July 29, 2009.
The purpose of the meeting was to discuss the proposed Third Unit addition at the Terror Lake
Project as Nan & Dick had been in consultation with Jim Ferguson regarding this potential
upcoming license amendment and wanted to share current information with Jim and Scott to
ensure a smooth transition. Jim has a long history working on the Terror Lake Project and stated
that he would remain available to participate in consultation.
We briefly discussed the proposal and, based on our site visit during the previous 2 days, and
conversations with John Magee regarding the design and capability of the tailrace to accommodate
flow from the three units, whether ADF&G would need additional studies. We were advised that
ADF&G would be interested in: (1) a hydrologic simulation of the additional flow with three units
releasing flow to the tailrace and whether the tailrace, as reconfigured, would be adequate to
accommodate the additional flow; and (2) whether there would be a modification to the current
rule curve for operation of the Terror River reservoir with the three units operating.
We also discussed the next steps for consultation with the agencies and the FERC process. ADF&G
offered their assistance as appropriate in assisting KEA with the next steps in the consultation
process. We note that ADF&G has offered use of their conference room for meetings with agencies
on other projects and would provide space for agency meetings in the future.
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
We discussed use of the ALP as it would establish a protocol going forward with modifications to
the project. Jim and Scott agreed that they could support the ALP as the appropriate pre -filing FERC
process.
Recommended Approach for the FERC Proceeding and Associated Permitting
The recommended approach to the FERC Amendment is to request FERC approval to use the
Alternative Licensing Procedure (ALP) to enable KEA to prepare the environmental assessment
required by the FERC regulations and the National Environmental Policy Act (NEPA) concurrently.
We also recommend that KEA prepare, concurrent with preparation of the application for
amendment: (1) plans that will be required to install the third unit; (2) applications for permits; and
(3) requests for other required approvals. We discuss the options available to KEA for the FERC
process and our recommendation to use the ALP in more detail in Section 2.7 — FERC Application
for Amendment — Process Options and 2.8 — Recommended Approach — FERC Alternative
Licensing Procedure (ALP) of this report.
One of the most comprehensive applications for approval required concurrent with preparation of
the amendment application is the Coastal Project Questionnaire (CPQ). The primary purpose of the
CPQ is to demonstrate consistency of KEA's proposed addition of the third unit with the Alaska
Coastal Management Plan (ACMP). The Final CPQ will be submitted to the Alaska Department of
Natural Resources, Division of Coastal and Oceanic Management (ADNR/DCOM). The CPQ and
related Determination of Consistency are required prior to FERC issuance of the Order Approving
Amendment to License.
Pre -Filing Consultations with Aizencies and other Partici
We do not anticipate any major requests for studies from the resource agencies. In discussions with
ADF&G, we are aware that the ADF&G will be interested in the proposed operation with the three
units and any affect on the recently reconstructed tailrace.
Following a "Go" decision by KEA of the proposed installation of the Third Unit as discussed within
this report, we recommend that KEA and Hatch Acres staff identify primary contacts and enter into
consultations with federal and state agencies and other entities (Participants) that will be interested
in the Amendment. Hatch Acres, in coordination with KEA, will need to prepare documents to
facilitate these consultations: (1) Preliminary Application Document (PAD); (2) Notice of Intent to
File an Application for Capacity Amendment (NOI); (3) Request to Use the ALP & Communications
Protocol; and (4) a detailed proposed plan of action.
We recommend that this initial consultation with the agencies be held in Anchorage. We note that
ADF&G has agreed to provide meeting space and assist with contacting the appropriate individuals
in the federal and state agencies.
The goal of these initial consultations is to reach agreement on: (1) any proposed studies; (2)
required permits and other approvals; (3) use of the ALP and agreement regarding the
Communications Protocol; and (4) the pre -filing schedule.
Topics for discussion and objectives of these consultations include:
• Present information regarding KEA's proposed action (installation of the Third Unit) —
format for deliverable is the Preliminary Application Document (PAD);
• Discuss how the Third Unit is an essential element in meeting KEA's overall goal to
produce 95% of energy with renewable power by the year 2020;
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
• Discuss benefits of installing the Third Unit: e.g. KEA system benefits and reduced diesel
emissions;
• Discuss KEA's proposed use of the ALP and provide copies of draft Notice of Intent to File
Capacity Amendment Application and Request to Use ALP;
• Provide a draft Communications Protocol for review and approval, including signature by
decision maker for each agency and other entity that wish to be participants in the ALP;
• Receive information from agencies and other entities regarding any required studies;
• Confirm requirements for permits and other approvals;
• Discuss draft Scoping Document No. 1 and request comments regarding "target" resources;
and,
• Discuss KEA's proposed schedule for the FERC process, including permits and other
approvals; agree to pre -filing schedule.
Preliminary Schedule and Major Milestones
For planning purposes, we developed a very preliminary schedule presenting the major steps and
milestones in the pre -filing process. We also provide information regarding the steps that FERC Staff
typically go through in processing an application for amendment. We cannot provide a schedule
for the FERC Staff actions, nor for the issuance of an order. We do, however, provide some notes
in this section regarding actions KEA could elect to take in advance of FERC's issuance of the order
to reduce delay in installing the third unit.
During Phase 1.b, we will: (1) conduct a site visit to confirm requirements regarding installation of
the turbine/generator unit and related mechanical & electrical equipment; (2) continue to work on
the regulatory aspects of the project; and (3) prepare a detailed scope, schedule, and budget to
prepare and file an Application for Non -Capacity Amendment with the FERC. These consultations
will involve KEA Staff during the initial contacts and at major milestones where consultations are
required to support the Capacity Amendment Application. A preliminary list of activities,
participants & activity duration is provided in the following table:
ACTIVITY DESCRIPTION / LEAD & DURATION
# DELIVERABLES PARTICIPANTS
1 Convene a teleconference with FERC
Lead: Nan Nalder, HAC;
Preparation time — 2
Staff to discuss proposed amendment &
Jennifer Richcreek, KEA;
days
pre -filing process. Receive guidance
& Mo Fayyadd, FERC
Teleconference — hold
from FERC Staff as provided in FERC
DHAC
when KEA determines.
regulation for amendments.
Participants: Dick Griffith,
HAC; and FERC Staff as
determined by Mo.
2 Prepare draft documents to initiate the
Lead: Nan Nalder, HAC
From NTP from KEA —
FERC proceeding:
& Jennifer Richcreek, KEA
60 days
• Preliminary Application
Participants: Dick Griffith,
Document
Peter Rodrigue, Gene
• Notice of Intent to File an
Hawkridge, Dave
Application
Johnston, Langley Sears,
• Request to Use the ALP
HAC; John Magee & Jim
• Communications Protocol
Thrall (R&M)
Continue with office studies
3. Initiate Consultation with agencies &
Lead: Nan Nalder, HAC
60 days
Participants (See notes above at
& Jennifer Richcreek, KEA
October 2009 Hatch Acres
Corporation
7
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
ACTIVITY DESCRIPTION /
# DELIVERABLES
Consultations with Agencies and other
Participants
Develop PowerPoint to describe KEA's
proposal.
Convene meeting in Anchorage
Provide documents listed above at item
2 to facilitate consultation. (Note —
should allow 30 days for agencies to
review prior to initial consultation)
Pre -Feasibility Analysis
LEAD & DURATION
PARTICIPANTS
Participants: Dick Griffith,
& other HAC, as
appropriate; Jim Thrall;
and Agencies including:
ADF&G, ADNR (DCOM
& SHPO), FWS, USACE &
others TBD.
4. Respond to any agency requests:
Lead: Nan Nalder, HAC
30 days
& Jennifer Richcreek, KEA
• Develop proposed study plans
Participants: Dick Griffith,
• Provide response to questions
&, as appropriate, Peter
Rodrigue, GeneHawkridge,
raised during initial
Dave
consultation
Johnston, Langley Sears,
HAC; John Magee & Jim
Thrall.
5. Commence any requested field studies.
Lead: Nan Nalder, HAC
60 days — 180 days
(continuous activity)
& Jennifer Richcreek, KEA
NOTE: Will depend on
Continue with office studies.
Participants: Dick Griffith
extent of any requests
Identify space in Anchorage & Kodiak
& other HAC, as
to hold Scoping Meetings
appropriate; John Magee
Prepare Final Package for formal NEPA
& Jim Thrall.
Scoping:
Subconsultants if field
• Notice of Scoping Meeting
studies are requested.
• Correspondence, as required
• PAD
• NOI
• Request to Use ALP
• Communications Protocol
• Scoping Document No. 1
• PowerPoint
6 Issue Notice of Scoping Meetings in
Lead: Nan Nalder, HAC
30 days notice period
local newspapers.
& Jennifer Richcreek, KEA
for meetings
Provide Final Package (as noted in
Participants: Dick Griffith
Activity 5) to agencies and Participants
& other HAC, as
for review and comment.
appropriate
Begin to prepare Draft Application for
Capacity Amendment & Preliminary
Draft Environmental Assessment
(PDEA). (continuous activity)
7 Convene Scoping Meetings in Lead: Nan Nalder, HAC 5 days (includes travel
Anchorage and Kodiak. & Jennifer Richcreek, KEA to Kodiak from
Provide opportunity for site visit Participants: Dick Griffith, Anchorage)
(powerhouse & tailrace and fly over of & other HAC, as
Terror Lake reservoir) appropriate; John Magee
Documents to be available include: & Jim Thrall; and
• Notice of Scoping Meeting Agencies including:
• Correspondence, as required ADF&G, ADNR (DCOM
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
ACTIVITY DESCRIPTION /
# DELIVERABLES
• PAD
• NOI
• Request to Use ALP
• Communications Protocol
• Scoping Document No. 1
8. Notice Period for Comments in
Pre -Feasibility Analysis
LEAD & DURATION
PARTICIPANTS
& SHPO), FWS, USACE &
others TB D. Other
Participants, including
members of the public.
30 days post Scoping
response to Scoping Meetings Meetings
9. Review & respond to comments Lead: Nan Nalder, HAC 30 — 60 days
received from agencies and others. & Jennifer Richcreek, KEA
Participants: Dick Griffith,
Continue work on Draft Application & Peter Rodrigue, Gene
PDEA for Amendment & PDEA. Hawkridge, Dave
Johnston, Langley Sears,
HAC; John Magee & Jim
Thrall (R&M)
10 Complete Draft Application & PDEA.
Lead: Nan Nalder, HAC
60 days
Conduct internal review for
& Jennifer Richcreek, KEA
consistency
Participants: Dick Griffith,
Peter Rodrigue, Gene
Hawkridge, Dave
Johnston, Langley Sears,
HAC; John Magee & Jim
Thrall (R&M)
11 Provide Draft Application for
Lead: Nan Nalder, HAC
45 days
Amendment & PDEA to KEA for pre-
& Darron Scott & Jennifer
issuance review and comment.
Richcreek, KEA
Respond to questions and comments
Participants: Dick Griffith,
and provide to KEA for approval
Peter Rodrigue, Gene
Hawkridge, Dave
Johnston, Langley Sears,
HAC; John Magee & Jim
Thrall (R&M)
12 Provide Draft Application for
Lead: Nan Nalder, HAC
60 day review period.
Amendment & PDEA to agencies &
& Jennifer Richcreek, KEA
Note that agencies may
Participants for review & comment.
Participants: Langley Sears
request extension of
(Electronic service of the Draft
time to comment.
Application)
Provide paper copies to library in
Kodiak & KEA office for public review.
Issue Notice in newspapers in
Anchorage & Kodiak
Note that Exhibit F is only provided to
FERC per CEII requirements
13 Review comments received on Draft
Lead: Nan Nalder, HAC
30 — 60 days
Application & PDEA.
& Jennifer Richcreek, KEA
depending on extent of
Contact commenting parties to receive
Participants: Dick Griffith,
comments receive.
clarification, if necessary.
Peter Rodrigue, Gene
Modify Draft Application to address
Hawkridge, Dave
comments received.
Johnston, Langley Sears,
Prepare Final Application & PDEA
HAC; John Magee & Jim
Thrall (R&M)
October 2009 Hatch Acres Corporation
TERROR LAKE HYDROELECTRIC PROJECT:
Pre -Feasibility Analysis
Third Unit Addition
ACTIVITY DESCRIPTION /
LEAD &
DURATION
# DELIVERABLES
PARTICIPANTS
14 File Final Application & PDEA with the
Lead: Nan Nalder, HAC
7 days
FERC Office of the Secretary & Portland
& Jennifer Richcreek, KEA
Regional Office (PRO) (electronic
Participants: Langley Sears
filing)
File Exhibit F separately under CEII
with FERC Office of Secretary & copy
to PRO (electronic filing)
Provide Final Application & PDEA for
Amendment to agencies & Participants
for review & comment. (Electronic
service of the Draft Application)
Provide paper copies to library in
Kodiak & KEA office for public review.
TOTAL — PRE -FILING
539 — 719 DAYS
End of Pre -filing & Commencement of
NOTE: FERC has no
Post -Filing FERC Application
established deadlines
Processing
post -filing. Duration
noted below is based
on experience with
applications of similar
15
FERC Staff review for Adequacy
FERC Staff
Within 45 — 60 days of
filing
16
FERC issues Notice of Application
Lead: Nan Nalder, HAC
30 — 45 days
& Jennifer Richcreek, KEA
depending on content
Respond to any FERC requests for
Participants: Dick Griffith,
of AIR
additional information (AIR). Note that
Peter Rodrigue, Gene
FERC may request information they
Hawkridge, Dave
will need to take KEA's PDEA and turn
Johnston, Langley Sears,
it into the FERC NEPA EA.
HAC; John Magee & Jim
Thrall (R&M)
17
FERC Staff review for environmental
FERC Staff
No deadline set —
purposes.
given the extent of
potential environmental
issues associated with
Third Unit could take
60 — 90 days
18
Federal & State Agencies provide
Federal & State Agencies
60-day Notice
recommendations, terms & conditions
19
FERC Staff prepare and issue EA
NOTE: FERC Staff may elect to issue EA
at same time of issuance of Order on
Amendment.
19
Order Approving Amendment issued
No deadline set —
NOTE: If there are no interventions or
given the extent of
contested comments filed, this Order
potential environmental
may be issued by the Division Director,
issues associated with
Division of Hydro Administration &
Third Unit could take
Compliance (DHAC)
90 - 180 days
Order is final post 30
October 2009 Hatch Acres Corporation 10
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
ACTIVITY DESCRIPTION / LEAD & DURATION
# DELIVERABLES PARTICIPANTS
days of issuance
TOTAL — FERC PROCESSING 285 — 435 DAYS
GRAND TOTAL 824 — 1.154 DAYS
2.3 Review of License Requirements
We reviewed the December 1978 Application for License; FERC License and amendments to date
to the Terror Lake Project; other documents posted to the FERC Docket for Project No. 2743 (Terror
Lake Project); the FERC Part 12 Report prepared by Hatch Acres Corporation for the Four Dam Pool
Power Agency (FDPPA) who held the license at the time the Part 12 report; and the Dam Safety
Inspection Reports prepared by the FERC Division of Dam Safety and Inspections (D2S1), Portland
Regional Office (PRO).
We note that nothing in the proposed installation of the Third Unit is expected to affect the Offer of
Settlement made part of the Order Issuing Major License and Approving Joint Offer of Settlement
dated October 5, 1981 and effective on November 1, 1981.
Note that the recommended process to prepare the Capacity Amendment Application, the
Alternative Licensing Procedure (ALP) allows the Applicant to prepare and file with the Application
for License Amendment a Preliminary Draft Environmental Assessment (PDEA). The PDEA
addresses the FERC regulation for the Environmental Exhibit E and the requirements of the National
Environmental Policy Act.
FERC changed the regulations for Applications for License, including Amendments to the License,
in the late 1970's. The 1978 Application for License for the Terror Lake Project was based on the
regulations prior to the major modifications. Because of the major changes in the FERC regulations,
we determined that the entire format of the Capacity Amendment Application will need to conform
to the regulations at 18 CFR 4.51 and 4.41.
Based on our review we identified the License Exhibits and Articles that will require investigations
and preparation of modifications to the documents on file with the FERC. These investigations and
modifications to documents on file with the FERC will be presented in the Capacity Amendment
Application.
Regarding license exhibits, the regulation in effect does not follow the format of the 1978
Application. KEA will not be required to note which exhibits from the 1978 Application are
modified by the Capacity Amendment Application.
KEA will be required to address License Articles. Table 2.3.1 identifies these Articles that will be
affected by the addition of the third unit. Any modifications will be discussed in the Capacity
Amendment Application. Note that FERC will probably issue new License Articles using their
current numbering system.
October 2009 Hatch Acres Corporation I 1
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
TABLE 2.3.1
LICENSE ARTICLES AFFECTED BY AMENDMENT APPLICATION
LICENSE
ARTICLE DESCRIPTION MODIFICATION
Annual Charges Original installed capacity is noted as 26,700 horsepower.
Article 33 KEA will need to file the modified installed capacity in
o administrative charge based horsepower and FERC will compute the additional
on installed capacity administrative charge paid by KEA annually.
Article 34 As -built drawings To be filed at completion of construction of the third unit.
Contract drawings and
Article 37 specifications to be filed with
To be filed following issuance of the Amendment Order and
FERC 60 days prior to
prior to commencement of construction.
construction.
Effects of project operations on
Article 41 the fishery resource in the
Consultation with resource agencies to discuss any required
Kizhuyak River below the
modifications to Article 41.
powerhouse.
Archaeologically Sensitive Areas in vicinity of powerhouse
Article 45 Monitor & protect
— protect during construction. Discuss with SHPO whether
archaeological site 49-KOD-190
any of the identified areas could be affected during
construction.
Plans to minimize erosion, dust,
Article 47 sedimentation, water pollution
Consultation with resource agencies to discuss any required
during construction
plans.
2.4 Risk Assessment
At the direction of KEA, we did not consult with the resource agencies in performing the review
presented in this report. In order to address KEA's interest in identifying any "fatal flaws" or major
difficulties with the proposed FERC amendment, we did briefly discuss the potential for installation
of the third unit with staff in the Alaska Department of Fish & Game (ADF&G) as ADF&G has
recently been involved in the upgrade of the tailrace and we were interested in identifying any
concerns ADF&G would have with addition of the third unit. ADF&G staff did not identify any
major issues from their perspective. They will want to be involved in discussions with KEA should
KEA elect to proceed with the FERC amendment. The Application for Capacity Amendment is not
anticipated to result in requests by resource agencies for any new environmental field studies.
We reviewed the existing License Articles and the 1981 Settlement Agreement and did not identify
any potential for "opening up the license" to address other project facilities and/or project
operations regarding facilities other than at the Terror Lake Powerhouse.
We note that consultation with all agencies and interested participants in the FERC licensing
process has not occurred and recommend that KEA consider engaging these entities in consultation
at the outset of Phase 1.b of the feasibility study. We recommend that the Hatch Acres team
participate in such consultations with KEA.
We also reviewed the current tailrace operations and found it adequate to accommodate additional
flow released from the third unit.
Installation of the third turbine will not require additional lands or modifications to the project
boundary.
October 2009 Hatch Acres Corporation 12
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
On the scale of 1 to 10 with 10 being the most difficult, we assign a "1" to installation of the third
unit.
2.5 FERC Process for Application for Capacity Amendment to License
2.5.1 Required Exhibits for Capacity Related Amendment
The FERC regulations require that
"Any application to amend a license for a hydropower project that involves
additional capacity not previously authorized, and that would increase the actual or
proposed total installed capacity of the project, would result in an increase in the
maximum hydraulic capacity of the project of 15 percent or more, and would result
in an increase in the installed name -plate capacity of 2 megawatts or more, must
contain the following exhibits, or revisions or additions to any exhibits on file,
commensurate with the scope of the licensed project:"
The Terror Lake Project is classified as a Major Project. The contents of the Amendment
Application will include modifications to the license exhibits listed above in Table 2.3.1.
Exhibits A, B, C, D, E, under 18 CFR 4.51 and Exhibits F, and G under 18 CFR 4.41 would be
included in the Amendment Application. As KEA proposes to use the Alternative Licensing
Procedure (ALP), a Preliminary Draft Environmental Assessment will replace the Exhibit E.
Because no additional lands will be required and the Project Boundary will not be changed, KEA
will advise FERC that a modified Exhibit G is not applicable.
Citations to the FERC regulation are noted at each License Exhibit; all regulations are found in Title
18 of the Code of Federal Regulations.
Table 2.5.1 presents the license exhibits that will be included in the Application for Capacity
Amendment. Text in italic face is excerpted from the FERC regulations.
October 2009 Hatch Acres Corporation 13
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
TABLE 2.5.1
REQUIRED LICENSE EXHIBITS
LICENSE
EXHIBIT
Pre -Feasibility Analysis
This section of the Application identifies the licensee and provides supporting information
regarding the state requirements. Of interest to the Amendment, the Initial Statement requires
Initial a statement supporting why the proposed changes are necessary.
Statement (4) The amendments of license proposed and the reason(s) why the proposed changes are
necessary, are: [Give a statement or description! (Emphasis added) Note that the statement to
4.51(a) include here will be excerpted from the Preliminary Draft Environmental Assessment at the
section discussing the purpose and need for the Amendment: e.g. The Terror Lake Project is
the cornerstone to KEA's renewable energy vision.
Project Description
(3) The number, type, and rated capacity of any turbines or generators, whether existing or
Exhibit A proposed, to be included as part of the project,
4.51(b) 5) The specifications of any additional mechanical, electrical, and transmission equipment
appurtenant to the project; and
6) Statement that no additional lands will be required
Project Operation
(1) A statement whether operation of the powerplant will be manual or automatic, an
estimate of the annual plant factor, and a statement of how the project will be operated
during adverse, mean, and high water years;
(2) An estimate of the dependable capacity and average annual energy production in
kilowatt-hours (or a mechanical equivalent), supported by the following data:
(i) The minimum, mean, and maximum recorded flows in cubic feet per second of the stream
or other body of water at the powerplant intake or point of diversion, with a specification of
any adjustments made for evaporation, leakage, minimum flow releases (including duration
of releases), or other reductions in available flow; monthly flow duration curves indicating
the period of record and the gauging stations used in deriving the curves; and a specification
Exhibit B of the period of critical streamflow used to determine the dependable capacity;
4.51(c) (ii) An area -capacity curve showing the gross storage capacity and usable storage capacity of
the impoundment, with a rule curve showing the proposed operation of the impoundment
and how the usable storage capacity is to be utilized;
(iii) The estimated hydraulic capacity of the powerplant (minimum and maximum flow
through the powerplant) in cubic feet per second;
(iv) A tailwater rating curve; and
(v) A curve showing powerplant capability versus head and specifying maximum, normal,
and minimum heads;
(3) A statement, with load curves and tabular data, if necessary, of the manner in which the
power generated at the project is to be utilized, including the amount of power to be used
on -site, if any, the amount of power to be sold, and the identity of any proposed purchasers;
Proposed Construction Schedule
Exhibit C (2) Proposed schedule describing the necessary work and specifying the intervals following
4.51(d) issuance of a license amendment order when the work would be commenced and
completed.
October 2009 Hatch Acres Corporation 14
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
LICENSE
EXHIBIT
Statement of Costs and Financing
(ii) The cost of the new development work, with a specification of:
(A) Total cost of each major item;
(8) Indirect construction costs such as costs of construction equipment, camps, and
commissaries;
(C) Interest during construction; and
(D) Overhead, construction, legal expenses, taxes, administrative and general expenses, and
contingencies.
(4) A statement of the estimated average annual cost of the total project as proposed
specifying any projected changes in the costs (life -cycle costs) over the estimated financing or
licensing period if the applicant takes such changes into account, including:
(i) Cost of capital (equity and debt);
(ii) Local, state, and Federal taxes;
(iii) Depreciation and amortization;
Exhibit D (iv) Operation and maintenance expenses, including interim replacements, insurance,
4.51(e) administrative and general expenses, and contingencies; and
(v) The estimated capital cost and estimated annual operation and maintenance expense of
each proposed environmental measure.
(5) A statement of the estimated annual value of project power, based on a showing of the
contract price for sale of power or the estimated average annual cost of obtaining an
equivalent amount of power (capacity and energy) from the lowest cost alternative source,
specifying any projected changes in the cost of power from that source over the estimated
financing or licensing period if the applicant takes such changes into account.
(6) A statement specifying the sources and extent of financing and annual revenues available
to the applicant to meet the costs identified in paragraphs (e) (3) and (4) of this section.
(7) An estimate of the cost to develop the license application;
(8) The on -peak and off-peak values of project power, and the basis for estimating the values,
for projects which are proposed to operate in a mode other than run -of -river; and
(9) The estimated average annual increase or decrease in project generation, and the
estimated average annual increase or decrease of the value of project power, due to a change
in project operations (i.e., minimum bypass flows; limits on reservoir fluctuations).
The format for the PDEA follows the NEPA Environmental Assessment (EA) requirements. For
those sections of the EA that are not applicable, we will state in an introductory section the
PDEA extent of the potential project -related effects on natural resources and why information is not
4.34(i) appropriate. The content of the PDEA will depend on any environmental issues raised by the
resource agencies during the Scoping Meeting and issues identified by FERC Staff. At this
point, we do not anticipate a major effort associated with the PDEA.
October 2009 Hatch Acres Corporation 15
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
LICENSE
EXHIBIT
General Design Drawings of the Principal Project Works & Supporting Information Used as
the Basis of Design. NOTE: The Exhibit F drawings are protected under the FERC regulations
governing Critical Energy Infrastructure Information (CEII) and are not to be provided in
publicly available documents. Exhibit F drawings are only provided to the FERC and must be
filed pursuant to CEII procedures contained in 18 CFR 388.112 and 388.113.
Exhibit F The drawings must conform to the specifications of §4.39.
4.41(g) (1) The drawings must show all major project structures in sufficient detail to provide a full
understanding of the project, including:
(i) Plans (overhead view);
(ii) Elevations (front view);
(iii) Profiles (side view); and
(iv) Sections.
Exhibit L-11 / FERC Drawing No. 2743-19 — Powerhouse (PH) Site Plan
Exhibit Exhibit L-12 / FERC Drawing No. 2743-20 — PH General Arrangement - Plans
Drawings
Exhibit L-13 / FERC Drawing No. 2743-21 — PH General Arrangement — Sections
Map of the project that must conform to the specifications of §4.39.
Exhibit G NOTE: Because there are no new major project features proposed and no modification to the
4.41(h) Project Boundary, we will include a statement that no modifications to the Exhibit G Maps on
file with the FERC are required.
2.6 Potential Study Requirements
Most of the studies to support the Capacity Amendment Application are related to engineering and
economic aspects of the proposed installation of the Third Unit.
The Application for Capacity Amendment is not anticipated to result in requests by resource
agencies for any new environmental field studies. We do anticipate that the agencies will be
interested in reviewing our analysis regarding the additional flow from the powerhouse during
periods when all three units would be in operation; and analysis of the effect on the Terror Lake
reservoir during such periods.
2.7 FERC Application for Amendment — Process Options
2.7.1 Contents of a Capacity -related Amendment
For capacity -related amendments, a licensee is required to provide information required by Subpart
L — Application for Amendment; 18 CFR 4.201(b):
(b) Required exhibits for capacity related amendments. Any application to amend a license for a
hydropower project that involves additional capacity not previously authorized, and that would
increase the actual or proposed total installed capacity of the project, would result in an increase in
the maximum hydraulic capacity of the project of 15 percent or more, and would result in an
increase in the installed name -plate capacity of 2 megawatts or more, must contain the following
exhibits, or revisions or additions to any exhibits on file, commensurate with the scope of the
licensed project:
October 2009 Hatch Acres Corporation 16
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
(5) For amendment of a license for a water power project that, at the time the application is filed, has
been constructed and is proposed to have a total installed generating capacity of more than 5 MW—
Exhibits A, B, C, D, E, F, and G under §4.51 of this chapter.
2.7.2 Process Options
The FERC regulations governing Applications for Amendment are silent as regards process design
for Applications for Amendment.
Effective July 23, 2005, the Integrated Licensing Process (ILP) is the default process for filing an
application for an original, new, or subsequent license.
We discussed this with FERC staff in the Division of Hydro Administration and Compliance
(DHAC) and were advised that the most amendments follow the traditional licensing process (TLP)
and the three -stage consultation process. We noted that KEA would be interested in consolidating,
to the extent practicable, the environmental review and related requirement for a NEPA document
to support a Commission action. The consolidated review provided by the ALP avoids the "second
bite at the apple" that often occurs in a TLP: Applicant files Application for License with the Exhibit
E; Agencies provide recommendations; FERC Staff then conducts NEPA Scoping and prepares an
Environmental Assessment (EA). Often agencies that recommended terms and conditions in
response to the Exhibit E increase their recommendations in response to the FERC NEPA Scoping
and related EA.
We were advised that while the regulation is silent as regards applications for amendment, an
Applicant may elect to use the Alternative Licensing Procedure. Commission approval is needed to
use either the Traditional or the Alternative Licensing Process.
There are three options for the FERC prefiling process:
• Integrated Licensing Process (ILP)
• Traditional Licensing Process (TLP)
• Alternative Licensing Procedure (ALP)
The following sections 2.7.1 through 2.7.3 provide a brief discussion of the three options with
notes regarding the appropriateness of each option to KEA's proposed action. In reviewing the
three options, we also considered the applicability of each option to the proposed addition of the
third unit and the other potential project enhancements being investigated in Task Order 2. We see
the benefit of establishing a protocol for the FERC amendment proceeding for the Third Unit
Addition that would serve KEA's interests in enhancing the Terror Lake Project with other potential
applications for amendment. Section 2.7.6 provides a discussion of the schedules for each option.
2.7.3 Integrated Licensing Process (ILP)
FERC states that:
"The Integrated Licensing Process is intended to streamline the Commission's
licensing process by providing a predictable, efficient, and timely licensing process
that continues to ensure adequate resource protections. The efficiencies expected to
be achieved through the ILP are founded in three fundamental principles:
• Early issue identification and resolution of studies needed to fill
information gaps, avoiding studies post -filing;
• Integration of other stakeholder permitting process needs; and
October 2009 Hatch Acres Corporation 17
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
• Established time frames to complete process steps for all stakeholders,
including the Commission." (Source: FERC Website at Industries —
Hydropower)
The ILP is established as the "default" process and Applicants desiring to use either the TLP or ALP
are required to file a request with the FERC. The request must include a discussion regarding why
the ILP is not appropriate for the proposed FERC proceeding and include documentation of the
Applicants consultation with agencies and other entities regarding their support for the request.
The ILP imposes a detailed, sequential process schedule, including time frames for each step,
including deadlines that must be met. ILP was primarily designed to address the problem FERC
identified where delays in issuing licenses were caused by the state agencies failing to issue water
quality certificates in a timely fashion; and issues experienced in proceedings involving large
existing hydropower projects seeking a new license (relicensing) During the rulemaking, many
commenting entities stated that strict adherence to the mandatory deadlines imposed by the FERC
in setting the schedule emphasized speed at the expense of sound science and quality decision -
making
Based on our experience, the ILP would be "overkill" for the proceeding to apply for the Capacity
Amendment. The ILP is highly regulated and the Applicant cedes a great degree of control over the
process to the FERC Staff: FERC holds the Scoping Meetings; FERC Staff review and approve all
study plans; the schedule is established by regulation and does not provide flexibility; the
timeframe for the ILP is not designed for specific proceedings, rather the regulation imposes a "one
size fits all" and does not take into consideration the scope of the proposed action, nor does the
schedule take into consideration difficulty in accessing a project site or the seasonal constraints on
conduct of field investigations.
2.7.4 Traditional Licensing Process (TLP)
FERC states:
"In developing a license application, applicants must complete and document a
three -stage pre -filing consultation process. The steps include:
First Stage
• Applicant issues notice of intent, preliminary application document, request to use TLP,
and newspaper notice;
• Commission approves use of TLP;
• Applicant conducts joint agency/public meeting and site visit,
• Resource agencies and tribes provide written comments, and
• Agencies, tribes, or applicant request dispute resolution on studies with the
Commission.
Second Stage
• Applicant completes reasonable and necessary studies.
• Applicant provides draft application and study results to resource agencies and tribes;
• Resource agencies and tribes comment on draft application; and
• Applicant conducts meeting if substantive disagreements exist.
October 2009 Hatch Acres Corporation 18
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
Third Stage
• Applicant files final application with Commission and sends copies to agencies and
tribes." (Source: FERC Website at Industries — Hydropower)
The primary drawback to the TLP is that the environmental report is in the format of the Exhibit E.
The Exhibit E format does not address requirements under NEPA for an Environmental Assessment
(EA). What this means is that the Applicant prepares and files the Exhibit E as part of the
Application. Following FERC acceptance of the Application, FERC Staff or a Third Party Contractor
conducts NEPA Scoping and prepares the EA or EIS depending on the extent of environmental
impacts. The post -filing process would add 1 — 2 years to the FERC post -filing process. In addition,
agencies have a second opportunity to impose terms and conditions: the first opportunity is when
the Applicant files the Application including the Exhibit E and the agencies file recommendations
and preliminary terms and conditions; and the second opportunity is in response to FERC Scoping
and issuance of the NEPA EA where the agencies may file additional recommendations and final
terms and conditions. In our experience, agencies often take advantage of this "second bite of the
apple" to impose significantly modified recommendations and, in some cases, mandatory terms and
conditions.
2.7.5 Alternative Licensing Procedure (ALP)
FERC States:
"In contrast to the traditional licensing process described above, Applicants can utilize the
Commission's alternative licensing process designed to improve communication among affected
entities.
As part of the alternative licensing process, an applicant can:
• Tailor the pre -filing consultation process to the circumstances of each case;
• Combine into a single process the pre -filing consultation process and environmental review
processes under the National Environmental Policy Act and other statutes; and
• Allow for preparation of a preliminary draft environmental assessment by an applicant or an
environmental impact statement by a contractor chosen by the Commission and funded by
the applicant.
The requirements of the alternative licensing process are found in 18 CFR 4.34(i) and discussed in detail in
Order 596." (Source: FERC Website at Industries — Hydropower)
The significant advantages of the ALP are:
• The pre -filing consultation process is collaborative and allows flexibility in developing the
schedule and deadlines are established by the participants;
• Study plans are developed by the applicant in consultant with participants and can be
modified as need arises
• The Applicant, in coordination with participants, tailor the pre -filing process to be
commensurate with the scope of the proposed action; and
• The Applicant conducts the Scoping process and prepares the Draft NEPA EA in the form of
the Preliminary Draft Environmental Assessment (PDEA).
October 2009 Hatch Acres Corporation 19
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
2.7.6 Comparison of Options
The following matrix presents a comparison of the three processes:
TABLE 2.7.6
COMPARISON OF OPTIONS
Item Integrated Licensing Traditional Licensing Alternative Licensing
Process Process Procedure
(ILP) (TLP) (ALP)
Consultation with Integrated under regulation "Paper— driven" — primarily Collaborative
Resource Agencies & document provision for
Indian Tribes review & comment
FERC Staff
Begins at Pre -filing Notice of
Post Application Filing
Early involvement on requested
Involvement
Intent; Staff direction of
basis.
process & involvement is
Post Application Filing
sustained throughout
Deadlines
Strict, defined deadlines for
Pre -filing— some deadlines
Pre -filing— deadlines are
all participants throughout
for participants.
defined by the collaborative
process.
group.
Requests for extension must
Post -filing— defined
be detailed and demonstrate
deadlines for participants.
Post -filing— defined deadlines
good cause. Granting
for participants.
extensions is rare.
Study Plan
Developed through study
Developed by Applicant
Developed by collaborative
Development
plan meetings.
based on early agency and
group.
tribal recommendations.
All plans must be approved
Applicant may request FERC
by FERC.
No FERC involvement.
staff assistance; available as
FERC staffing resources allow.
Study Dispute
Informal dispute resolution
FERC study dispute resolution
FERC study dispute resolution
Resolution
available to all participants.
available upon request.
available upon request.
Formal dispute resolution FERC OEP Director issues FERC OEP Director issues
available to agencies with advisory opinion. advisory opinion.
mandatory conditioning
authority. 3-member panel
technical recommendation on
study dispute.
FERC OEP Director opinion
binding on Applicant.
Application Preliminary licensing
Draft and final application
Draft and final application with
proposal or draft application
include Exhibit E.
applicant prepared EA or third -
and final application include
party EIS meeting requirements
Exhibit E that has form and
Post filing FERC staff conduct
of NEPA
contents of an EA meeting
scoping and prepare NEPA
requirements of NEPA.
document
NEPA Process NEPA Scoping and
Begins when FERC staff
NEPA Scoping and preparation
preparation of EA are
accepts the application. FERC
of EA are conducted during
integrated with pre -filing
staff conducts Scoping and
collaborative pre -filing process.
process.
prepares the EA or EIS.
October 2009 Hatch Acres Corporation 20
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
2.8 Recommended Approach — FERC Alternative Licensing Procedure (ALP)
2.8.1 Process Selection — Schedule Comparison
The ILP, as noted above, is a highly regulated pre -filing process. The schedule follows the process
diagram included in the Final Rule. The NEPA process is integrated with the pre -filing activities.
Modifications to the schedule are very difficult to achieve. Strict deadlines are imposed.
The TLP follows the three -stage consultation process and review and comment periods are specified
in the FERC regulation. Modifications to these periods require approval by all participants and the
FERC. The NEPA process begins post -filing and FERC acceptance of the Application.
The ALP pre -filing schedule and deadlines are defined by the collaborative group. The NEPA
process is integrated with the pre -filing activities.
2.8.2 Recommendation to Use FERC ALP
We reviewed the three available options that govern the pre -filing consultation and preparation of
the Capacity Amendment Application discussed above in Section 2.7. We recommend that KEA
request FERC approval to use the Alternative Licensing Procedure (ALP), as opposed to opting in for
the ILP as the default process for the following reasons:
• ALP allows KEA, in consultation with the agencies, to tailor the pre -filing consultation
process to fit the scope of the potential project -related effects on the environment
• ALP provides KEA flexibility in design of field studies in consultation with
affected/interested agencies; unlike the ILP where FERC must approve all study plans
• ALP provides KEA and the pre -filing participants with flexibility in establishing the schedule
for the pre -filing process; unlike the ILP where FERC establishes rigid deadlines. This
flexibility is particularly important for a project located in a remote site where access is
solely by helicopter, float plane, or boat.
• ALP provides a process where consultations, environmental review, and NEPA scoping are
combined; this greatly streamlines the pre -filing process.
• ALP allows preparation of the NEPA document — the PDEA. FERC uses KEA's PDEA as the
basis for its own NEPA document — another aspect of the streamlining benefits of the ALP.
The regulation for the ALP at 18 CFR 4.34 (i)(2) describes the goals of the ALP
(2) The goal of such alternative procedures shall be to:
(i) Combine into a single process the pre -filing consultation process, the
environmental review process under the National Environmental Policy Act
and administrative processes associated with the Clean Water Act and other
statutes,
(ii) Facilitate greater participation by and improve communication among
potential applicant, resource agencies, Indian tribes, the public and
Commission staff in a flexible pre -filing consultation process tailored to the
circumstances of each case;(Emphasis Added)
(iii) Allow for the preparation of a preliminary draft environmental assessment
by an applicant or its contractor or consultant, or of a preliminary draft
environmental impact statement by a contractor or consultant chosen by the
Commission and funded by the applicant;
October 2009 Hatch Acres Corporation 21
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
(iv) Promote cooperative efforts by the potential applicant and interested
entities and encourage them to share information about resource impacts and
mitigation and enhancement proposals and to narrow any areas of
disagreement and reach agreement or settlement of the issues raised by the
hydropower proposal, and (Emphasis Added)
(v) Facilitate an orderly and expeditious review of an agreement or offer of
settlement of an application for a hydropower license, exemption or
amendment to a license.
Following KEA selection of the pre -filing process, KEA will prepare and file with the FERC:
• Notice of Intent to File an Application for License — discussed below at 2.8.2
• Request to Use the Alternative Licensing Process — discussed below at 2.8.3
2.8.3 Notice of Intent to File a Capacity Amendment Application
When FERC modified its regulations in 2005, it added a requirement for applicants to file a Notice
of Intent (NPI) to file. While the regulation does not address amendments, this requirement may
apply. Noticing requirements are found at 18 CFR 5.5(b):
(1) The potential applicant or existing licensee's name and address.
(2) The project number, if any.
(3) The license expiration date, if any.
(4) An unequivocal statement of the potential applicant's intention to file an
application for an original license, or, in the case of an existing licensee, to file or
not to file an application for a new or subsequent license.
(5) The type of principal project works licensed, if any, such as dam and reservoir,
powerhouse, or transmission lines.
(6) The location of the project by state, county, and stream, and, when appropriate,
by city or nearby city.
(7) The installed plant capacity, if any.
(8) The names and mailing addresses of: agencies, Tribes, and other participants
The Notice is filed with the FERC along with the Request to Use the ALP and the Pre -Application
Document.
2.8.4 Request to Use the ALP
FERC modified its regulations in 2005. The primary purpose of the modified regulations was to
include the Integrated Licensing Process (ILP) discussed above in section 2.8.1. FERC established
the ILP as the "default process." FERC added a requirement in Section 5.3(a)(2) of the regulations
that requires applicants to file a request with the FERC if the applicant desires to use and alternative
to the ILP:
"(2) Any potential license applicant that files its notification of intent pursuant to
§5.5 and pre -application document pursuant to §5.6 after July 23, 2005 must
request authorization to use the licensing procedures of parts 4 and 16, as provided
for in paragraphs (b)— (0 of this section."
The following discussion identifies the steps in requesting FERC approval to use the ALP and
includes the relevant regulation in italic face following the narrative.
The regulation governing Alternative procedures is found in 18 CFR 4.34:
October 2009 Hatch Acres Corporation 22
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
(i) Alternative procedures. (1) An applicant may submit to the Commission a
request to approve the use of alternative procedures for pre -filing consultation and
the filing and processing of an application for an original, new or subsequent
hydropower license or exemption that is subject to §4.38 or § 16.8 of this chapter,
or for the amendment of a license that is subject to the provisions of §4.38.
The first step is to contact all agencies and other potential participants to discuss KEA's desire to use
the ALP, including a statement why the ALP will result in an efficient and effective pre -filing
process.
(2) A potential applicant requesting the use of §4.34(i) alternative procedures of
this chapter must:
(i) Demonstrate that a reasonable effort has been made to contact all
agencies, Indian tribes, and others affected by the applicant's request, and
that a consensus exists that the use of alternative procedures is appropriate
under the circumstances;
Following this initial consultation, KEA will prepare a Communications Protocol, provide to
agencies and participants for review and comment and file with FERC at the outset of the pre -filing
process.
(ii) Submit a communications protocol, supported by interested entities,
governing how the applicant and other participants in the pre -filing
consultation process, including the Commission staff, may communicate
with each other regarding the merits of the potential applicant's proposal
and proposals and recommendations of interested entities; and
KEA is required to provide a copy of its request to use the ALP for review and comment before
filing with the FERC
(iii) Provide a copy of the request to all affected resource agencies and
Indian tribes and to all entities contacted by the applicant that have
expressed an interest in the alternative pre -filing consultation process.
(d)(1) The potential applicant must provide a copy of the request to use the
traditional process or alternative procedures to all affected resource agencies,
Indian tribes, and members of the public likely to be interested in the proceeding.
The request must state that comments on the request to use the traditional process
or alternative procedures, as applicable, must be filed with the Commission within
30 days of the filing date of the request and, if there is no project number, that
responses must reference the potential applicant's name and address.
KEA then files the Request to Use the Alternative Procedure, accompanied by the Communications
Protocol with FERC, provides copies to consulted entities, and publishes notice of its request in
local newspapers (in this case, the notice is also to be published in the Anchorage Daily News.
(2) The potential applicant must also publish notice of the filing of its notification of
intent, of the pre -application document, and of any request to use the traditional
process or alternative procedures no later than the filing date of the notification of
intent in a daily or weekly newspaper of general circulation in each county in
which the project is located. The notice must:
(i) Disclose the filing date of the request to use the traditional process or
alternative procedures, and the notification of intent and pre -application
document;
(ii) Briefly summarize these documents and the basis for the request to use the
traditional process or alternative procedures;
October 2009 Hatch Acres Corporation 23
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
(iii) Include the potential applicant's name and address, and telephone number,
the type of facility proposed to be applied for, its proposed location, the places
where the pre -application document is available for inspection and
reproduction;
(iv) Include a statement that comments on the request to use the traditional
process or alternative procedures are due to the Commission and the potential
applicant no later than 30 days following the filing date of that document and,
if there is no project number, that responses must reference the potential
applicant's name and address;
(v) State that comments on any request to use the traditional process should
address, as appropriate to the circumstances of the request, the:
(A) Likelihood of timely license issuance;
(6) Complexity of the resource issues;
(C) Level of anticipated controversy;
(D) Relative cost of the traditional process compared to the integrated
process; and
(E) The amount of available information and potential for significant
disputes over studies; and
(F) Other factors believed by the commenter to be pertinent; and
(vi) State that respondents must submit an electronic filing pursuant to
§385.2003(c) or an original and eight copies of their comments to the Office of
the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426.
The FERC regulation provides that:
"(e) Requests to use the traditional process or alternative procedures shall be
granted for good cause shown."
[Order 2002, 68 FR 51121, Aug. 25, 2003; 68 FR 61742, Oct. 30, 2003]"
2.8.5 Communications Protocol
The purpose of this Communication Protocol (Protocol) is to facilitate communication and
cooperation among KEA; federal and state agencies; Native Alaska Tribes and Native Corporations;
other interested organizations; and members of the public (collectively, Participants) during the
preparation of KEA's Capacity Amendment Application. The Communications Protocol is required
by the FERC regulations at 18 CFR 4.34(i) (3) for the Alternative Licensing Procedure (ALP):
(3) A potential hydropower applicant requesting the use of alternative procedures
must:
(i) Demonstrate that a reasonable effort has been made to contact all resource
agencies, Indian tribes, citizens' groups, and others affected by the applicant's
proposal, and that a consensus exists that the use of alternative procedures is
appropriate under the circumstances;
(ii) Submit a communications protocol, supported by interested entities,
governing how the applicant and other participants in the pre -filing
consultation process, including the Commission staff, may communicate with
each other regarding the merits of the applicant's proposal and proposals and
recommendations of interested entities; and
(iii) Serve a copy of the request on all affected resource agencies and Indian
tribes and on all entities contacted by the applicant that have expressed an
interest in the alternative pre -filing consultation process.
October 2009 Hatch Acres Corporation 24
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
2.8.6 Preliminary Application Document (PAD)/Draft Annotated Application for
License
We consulted with FERC Staff regarding requirements for the PAD as required in the FERC
regulations at 18 CFR 5.8. The purpose of a PAD is to provide FERC and Participants with existing
information relevant to the project proposal. Potential Applicants for license are not required to
conduct studies in order to generate information for inclusion in the PAD. Because this is an
Application for Capacity Amendment to install a third unit in the existing Powerhouse and KEA's
proposal does not involve: ground -disturbing actions on lands not already disturbed and no
additional lands are required, KEA will use existing information and information developed in the
pre -feasibility studies presented in this report, KEA will present information required by the FERC
regulation for the PAD in the format of a Draft Application for License.
2.9 Schedule to Prepare Capacity Amendment Application
One of the major benefits of using the ALP is the ability to establish the pre -filing schedule in
consultation with the agencies and other participants. This flexibility allows KEA to schedule
meetings and any on -site visits by participants to avoid poor weather conditions. A schedule would
be developed during Phase 1.b of the Pre -Feasibility Study. Please see a preliminary schedule
included at Section 2.2 Strategic Planning of this report. This schedule was developed absent any
consultation with agencies and other participants and is provided solely for planning purposes.
3. Engineering Review
3.1 Purpose of Engineering Review
The purpose of the Engineering Review is to determine whether there are any major modifications
that may be required to install the third unit and review tailrace adequacy to accommodate
modifications in project operation. The project constructability, potential construction schedule,
and adequacy of existing As -Built Drawings and License Exhibits to proceed with planning and
support the license amendment, are also evaluated.
3.2 Review of Existing Third Bay Provisions
3.2.1 Civil / Mechanical
The third bay in the powerhouse, which is currently unused, is equal in size to the Unit 1 and 2
turbine bays. Therefore the powerhouse can accommodate a third unit that is at least equal in
capacity to the existing units.
Only the primary (first stage) concrete has been placed in the third bay, allowing for the second
stage concreting once the embedded parts for the new turbine and generator are in place. The
open area for secondary concrete is believed to be sufficiently large to accommodate slight
variations in turbine dimensions with modern state-of-the-art Pelton turbines when compared early
1980's design of the Unit 1 and 2 turbines. Variations are generally quite small, and this will allow
a turbine with the highest possible efficiency, considering head and flow conditions.
It is uncertain as to what, if any anchors or other provisions have been made in the primary
concrete for setting, adjusting, and holding the new turbine components during installation and
concreting operations. However, even if nothing has been provided, drilled anchors and dowels
can be installed for this purpose without major inconvenience.
October 2009 Hatch Acres Corporation 25
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
The spherical turbine inlet valve for the third unit is in place and bolted to the branch pipe from the
penstock manifold. It is reported that the valve is not complete and only the valve body is in place
(no rotor, seals, bearings or valve operator). The downstream end of the valve is closed with a
bolted pressure flange. Use of this valve body for the third unit will require some review, as supply
of the remaining valve components by suppliers other than Fuji, the original equipment
manufacturer, may be difficult. It may be more expeditious to purchase a complete new valve.
It appears that the cooling water system and other mechanical systems have been designed to allow
future expansion for a third unit.
The powerhouse cranes runway currently extends over the third bay and would be used for
installation of the new unit. Suitable care will be required that crane operations and construction
activities will not affect operation of the other units (i.e. don't drop anything on the Unit 1 or 2
generators).
Other mechanical considerations for installing a third unit at Terror Lake include:
• Impact of added waterway head losses on performance of the new and existing units
• Hydraulic transients with the added flow of the third unit
• Tailrace water levels with the higher flow and its affect on turbine operation
• Potential for increased sediment in the water, and its adverse affect on the turbines
At present the head loss from the Terror Lake reservoir to the turbines with both units discharging
rated flow (135 cfs) is 26 ft, based on site test data. With a third 135 cfs unit the loss will increase
to approximately 57 ft. As a result, the overall gross head water -to -wire efficiency of the plant
when operating three units at rated flow will be about 2.5% lower than with two units. However,
when the third unit is installed the overall efficiency when only one or two units are operating
should increase a small amount as the new turbine should be slightly more efficient than the
existing units, even with the recently installed new runners.
The project design criteria indicates that hydraulic transients with third unit installed was
considered in the original design analysis of the plant. Apparently, with three units there may be
some limit to the needle operating time on one of the units. This is not be a major obstacle but
should be reviewed further in the context of unit parallel operation.
With three units operating, tailwater levels will increase. Levels that are too high would interfere
with the Pelton turbine operation. This has been reviewed in Section 3.3, and tailwater levels are
not considered to be a problem.
Increased flows and velocities in the tunnels and penstock, in theory, imply added sediment
transport to the units and increased wear on the turbine runners and needles. Sediment erosion has
been a problem in the past, but has been mitigated by the present rock trap design. For the Terror
Lake project, the majority of the sediment comes from the Falls Creek and Rolling Rock Creek
diversions, and the flow through these diversions will not change with the addition of the third unit.
Therefore the addition of a third unit will not have any effect on sediment erosion.
3.2.2 Electrical
We noted space constraints and are concerned that the space available in the control room may be
inadequate for the Unit 3 control panel. We also have questions regarding the adequacy of space in
the existing switchyard and control building for addition of a Unit 3 step-up transformer, protection,
October 2009 Hatch Acres Corporation 26
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
isolating disconnect switch, and bus extensions needs to be evaluated. Further investigation is
needed.
We have questions regarding the capability of the existing SCADA system to accommodate the new
unit. It may not be possible to extend the existing DEC PDP-11/24 SCADA system for the new unit,
although it may be possible to obtain components for expanding the equipment from Hewlett-
Packard or an after market seller if there is adequate space. It may be necessary to complete a
SCADA system upgrade to accommodate Unit 3 input/output.
There are no provisions for auxiliary power for Unit 3 according to the information provided by
KEA on 9/21/2009. Adequacy of existing equipment including ac and do distribution panels and
motor controls needs further evaluation to determine if sufficient space exists to add the necessary
branch circuit breakers and motor controllers.
We have questions regarding the adequacy of the existing 125 V do system 168 Ah battery needs to
be evaluated for the addition of Unit 3, including powering new controls, relays, and switchgear.
This should be considered as the battery is being replaced this year.
We have questions regarding the adequacy of raceways to accommodate control and power
cabling between Unit 3 and other system elements; this needs to be evaluated.
It appears that the existing 138 kV transmission line from Terror Lake to KEA's Airport Substation is
adequate for the additional power that will be added by Unit 3, but further study is needed to make
certain that no system problems will arise from the added capacity, such as a need to upgrade the
fault ratings of equipment at all 138-kV system terminals.
With the addition of Unit 3, we need to make certain that the plant will meet current NESC and
NEC code provisions for all newly added equipment, including an evaluation of arc flash protective
margins and labeling requirements, and adequate space and egress provisions.
3.3 Tailrace Adequacy
The tailrace capacity is adequate for three units operating. The tailrace confluence with Kizhuyak
River was reconstructed recently and reduced the backwater effect into the tailrace channel during
high river flows. The addition of a third unit should not have significant effect on the depth of flow,
velocity of flow, or high tailwater elevation when all units are operating. We estimate that the
depth of flow in the channel may increase 9 inches and the velocity of flow will increase about 0.5
fps, over current conditions with only two units.
The increased flow velocity is not expected to affect the stability of the riprap along the banks. The
boulders were sized for velocities higher than those expected with three units operating.
3.4 Existing Drawings
3.4.1 As -Built Drawings
New drawings will be required as part of engineering for the construction and installation of the
third unit. These drawings would be issued to the FERC as as -built drawings once the work is
complete.
• Figure 3.1-1, Powerhouse Main Single Line Diagram, is not up-to-date.
• Exhibit 4.4.1A System Switching Diagram: voltage level shown for the Port Lions line
(7.2/12.47 kV) is not consistent with the Supporting Technical Information Document STI-
October 2009 Hatch Acres Corporation 27
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
12-2008, FERC Project Number 2743, Amendment No.1 dated December 2008 prepared
by HDR Alaska, Inc.
• General Arrangement Drawings, e.g. Figures 1.13-1, -2, and -3 are not dimensioned as to
equipment locations; location of motor control centers does not appear to be indicated.
3.4.2 Exhibit F Drawings
Revisions to existing Exhibit F drawings that would be required to support an application for
capacity amendment include:
Exhibit FERC No. 2743- Showing
L-12 2743-48 Powerhouse General Arrangement — Plans
L-13 2743-49 Powerhouse General Arrangement —
Sections
L-14 2743-50 Powerhouse General Arrangement- Plans
3.4.3 Exhibit G Maps
All activities related to installation of the third unit would occur within the existing Project
Boundary and no new structures are proposed. Therefore, no revisions to existing Exhibit G
drawings would be required to support an application for capacity amendment
3.5 Constructability Review
This section contains a very preliminary review of constructability. A more detailed evaluation will
be conducted during Phase 1.b.
3.5.1 Adequacy of Third Bay Space
While a more detailed review of the equipment requirements and space allocation in the third bay
is required, significant problems or obstacles are not anticipated. The third bay is considered
adequate for a unit that is the same size as Units 1 and 2.
3.5.2 Water Conveyance Connections
Completion of the new turbine installation without significant disruption of Terror Lake operations
will require careful study. Terror Lake is key to KEA's operations and it is necessary to keep plant
outages to a minimum. During certain periods of the year plant outages would not be allowed.
We understand that May through June is the optimum time to have the Terror Lake Project offline
to install the third unit.
As a minimum, there needs to be one outage to add the turbine inlet valve internal parts or to
install a new valve. Adding turbine inlet valve new parts would obviously require a longer outage.
Another consideration is the possibility that the penstock branch line for Unit 3 has, over time,
become filled with sediment (volcanic ash). This sediment will have to be removed prior to start of
operation of the new turbine. It would appear that the best time to do this would be before the
October 2009 Hatch Acres Corporation 28
TERROR LAKE HYDROELECTRIC PROJECT:
Third Unit Addition
Pre -Feasibility Analysis
new turbine casing is installed. If the existing valve or downstream flange were removed the
sediment could be moved into the third bay area for disposal.
Various outage scenarios can be postulated, including the following:
(a) Install new internal parts in existing valve
Activity
Outage (days) Comment
Unwater tunnel and penstock
2
Remove valve body
2
Install internal parts in valve
14 Risk of delay if valve body is not in good
condition
Remove sediment from penstock
0 Work done coincident with Item 3
Re -install and test valve
4
Re -water tunnel and penstock
2
Total outage
(b) Procure new valve
Activity
24
Outage (days) Comment
Unwater tunnel and penstock
2
Remove valve body
2
Remove sediment from penstock
5
Install and test valve
5
Re -water tunnel and penstock
2
Total outage
16
Rather than dewatering the complete waterway and tunnel it may be possible to only dewater
downstream of the guard valves, which are approximately 3100 ft upstream of the powerhouse.
This would significantly reduce the dewatering and re -watering time, but safety issues must be
considered.
It may be necessary to overhaul the existing (Unit 1 and 2) turbine inlet valves. If this is required
the overhaul work should be planned in conjunction with the work on the third unit. One possible
scenario would be:
• Purchase a new valve
• Replace the Unit 1 valve with the new valve and then rebuild the Unit 1 valve.
• Replace the Unit 2 valve with the rebuilt Unit 1 valve and than rebuild the Unit 2 valve.
October 2009 Hatch Acres Corporation 29
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
• Install the rebuilt Unit 2 valve in the new Unit 3.
Because of equipment lead times, this work needs to be planned well in advance of the
replacement activities.
Other than the valve work, and perhaps a short outage or outages for electrical interconnections it
should be possible to complete the third unit work without interruption of existing plant generation
activities.
3.6 Construction Schedule
Fabrication of the new electrical and mechanical equipment will drive the construction schedule.
Fabrication of the turbine/generator will occur off -site. Modifications to the powerhouse and
switchyard required to accommodate the new turbine/generator are not expected to take over a 6-
month period.
Outage of the project to install the new electrical and mechanical equipment will probably be 1.5
weeks in duration. KEA advises the optimum time for a project outage is May through June.
KEA has redundant diesel capability and would use diesel and wind during the outage at the Terror
Lake Project.
4. Conclusions and Recommendations
4.1 Conclusions — Regulatory
Installation of the third unit will primarily be accomplished within the existing powerhouse and
switchyard. We did not identify any activities that would result in environmental impacts.
No additional lands will be required as all activities will occur within the existing Project boundary.
Addition of the third unit will increase the project installed capacity and average annual generation.
We did not identify any major issues regarding the FERC amendment process and related
permitting / approvals associated with installation of the third unit.
4.2 Conclusions — Engineering
No serious engineering concerns or issues were identified in the engineering review. There is some
concern about control room space and egress with additional controls, but that can likely be solved
by adding an exit door to the outside through the back wall.
Head losses will increase with three units running, reducing the gross head about 2.5 percent when
running three units compared to two. However, the new unit should be slight more efficient that
the two existing units, so the overall plant efficiency should increase when running only one or two
units.
We have found no substantive reason that the Unit 3 addition will not be feasible with respect to
electrical, protection, control, communications, and instrumentation; with the caveat that with a
number of unanswered questions, we may yet discover other challenges that will need to be
addressed.
4.3 Recommendations — Regulatory
We recommend that KEA and Hatch Acres engage the agencies and other entities who will; be
interested in the Amendment in consultation at the beginning of Phase 1.b.
October 2009 Hatch Acres Corporation 30
TERROR LAKE HYDROELECTRIC PROJECT: Pre -Feasibility Analysis
Third Unit Addition
We recommend that KEA and Hatch Acres arrange for a teleconference consultation with staff in
the FERC Division of Hydro Administration and Compliance (DHAC) at the beginning of Phase 1.b.
Mo Fayyad, FERC DHAC, has offered to set up this consultation.
We recommend that KEA use the Alternative Licensing Process in order to streamline the process,
establish protocol that can be used in other amendments under consideration (Hidden Basin and
Terror River), and avoid the "second bite at the apple" inherent in the Traditional Licensing Process.
4.4 Recommendations — Engineering
Inside the Terror Lake Powerhouse Control Room, after a new switchboard panel is added for Unit
3, there will not be a safe, unobstructed path of egress from the backside of the Main Control
Switchboard. At the left end, it appears that the path will be obstructed by the AC/DC switchgear,
and at the right end, by the swing -out manual synchronizing panel, to which someone has duct -
taped padding to protect heads. We therefore recommend that an emergency exit door be added to
the backside of the control room (---wet side of the Powerhouse). The work station currently at the
left end of the Main Control Switchboard will need to be moved elsewhere.
We recommend proceeding with replacing the obsolete SCADA equipment, and, in conjunction
with this, upgrading protective relaying, to provide a fully up -dated protection and control system.
(We are assuming that the protective relaying is original equipment).
We recommend consideration of the addition of circuit switchers in the 138 kV switchyard on each
generator step-up transformer in order to allow for rapid isolation of any transformer fault.
October 2009 Hatch Acres Corporation 31