HomeMy WebLinkAboutIntertie Managment Commitee Meetings 09-13-2012 2Alaska Intertie Management Committee
DRAFT MEETING MINUTES
Thursday,August 16,2012
Anchorage,Alaska
1.CALL TO ORDER/INTRODUCTIONS
Vice Chairman Brad Evans called the meeting of the Alaska Intertie Management Committee to
order on August 16,2012 at 9:07.A quorum was established.
MOTION:Mr.Strandberg made a motion to approve the agenda.Motion seconded by
Vice-Chair Posey.The motion was approved unanimously.
Members present:Brad Evans (Chugach Electric);Jim Posey (AML&P);Jim Strandberg
(AEA);Cory Borgeson (GVEA-phone);and Gary Kuhn (MEA).
Public present in Anchorage:Sara Fisher-Goad,Gene Therriault,Kirk Warren,Kelli Veech;and
May Clark (AEA);Louis Agi and Jeff Warner (AML&P);Brian Bjorkquist (AGO);Ashish
Agrawal (Army);Burke Wick (Chugach Electric);Kirk Gibson (MR&G);Henri Dale (GVEA);
and Ray Baker (Accu-Type Depositions).
2.PRIOR MINUTES --November 18,2011
MOTION:Mr.Strandberg made a motion to approve the prior minutes from November
18,2011.Motion seconded by Mr.Kuhn.The motion was approved unanimously.
3.ELECTION OF OFFICERS (Action Item)
MOTION:Mr.Posey nominated Mr.Evans as Chairman.Nomination seconded by Mr.
Kuhn.The nomination was approved by acclamation.
MOTION:Mr.Kuhn nominated Mr.Posey as Vice-Chairman.Nomination seconded by
Mr.Evans.The nomination was approved by acclamation.
MOTION:Mr.Evans nominated AEA as the Secretary/Treasurer.Nomination seconded
by Mr.Posey.The nomination was approved by acclamation.
4.2013 BUDGET RATIFICATION (Action Item)
MOTION:Mr.Dale made a motion to adopt the attached budget.Motion seconded by
Mr.Posey.The motion was approved unanimously.
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5.RESOLUTION No.2012-01,Spinning Reserve (Action Item)
MOTION:Mr.Dale made a motion to go over Resolution No.2012-01.Motion seconded
by Mr.Posey.
Mr.Strandberg stated AEA has reviewed the resolution,but respectfully requests additional
time,perhaps 30 days,for further discussions and maybe a teleconference meeting.He stated at
the present time,AEA doesn't know enough to support the resolution.
MOTION:A motion was made to table Resolution No.2012-01 until the next regularly
scheduled AIMC meeting,not to be less than 30 calendar days from today.Motion
seconded.The motion was approved unanimously.
6.OTHER MATTERS
6A.Open Access Language
Chair Evans said there is no action to be taken here.A small taskforce needs to be assigned to
start drafting what will be contract language or amendments to the agreement of adopting rules
on open access.
Mr.Strandberg stated AEA is vitally interested in collaborating on the development of these
rules.He wanted to talk about the makeup of the group.He suggested the group be made up of
a combination of technical or market people with lawyers.
Mr.Borgeson liked Mr.Strandberg's idea of having the technical people write the first draft
before it gets to the attorneys.Chair Evans stated he would correspond with each of the
Committee members for input on which members to include in the technical core group.After
the technical core group assembles draft language,then they can get together with the legal
group and finalize the draft.
Vice-Chair Posey asked if there is some theme that AEA has that needs to be understood at the
table before the technical team goes forward.Mr.Strandberg said AEA is a public corporation
and they would like to start out with forming a set of rules allowing viable entities a reasonable
access within the existing reliability and reserve capabilities of the system.
Chair Evans cautioned that you could probably write the best open access language that is the
most fair to everybody in the universe and it will still be subject to a lot of criticism that it was
done to protect the utility interest.Chair Evans suggested having a taskforce of three people,so
it will get done in short order.
Mr.Strandberg stated AEA appreciated the attention the members are taking on this agreement
matter.He said the due date is July 1,2013.Mr.Gibson said there is a request for public
AIMC Draft Meeting Minutes-Aug 16 2012 Page 2 of 8
comment,no later than 18 months after the effective date of the agreement,which was
November of 2011.That date is May of 2013.
Chair Evans commented that whatever AIMC decides will more than likely be the precedent for
all open access issues across the system,whether it involves the intertie or not.He stated
everyone needs to be careful and review that internal to their organization and not let something
be propagated that you disagree with.
6B.Non-IMC participant interconnected utility operations
Chair Evans stated this will be an issue for everyone here,no later than the first quarter of 2013.
There is a great sense of urgency for everyone in the room to diligently work this through to its
logical conclusion.Chair Evans said utilities that aren't participants still operate under
guidelines and operating practices we've been working under for the last 30 years,until we all
agree that those can be changed on a non-discriminatory basis.Chair Evans said he doesn't see
the logic in allowing large-scale utility operations to run counter to that.
Vice-Chair Posey commented there are three former Commissioners in the room.He stated
Alaska has always dealt with regulated assets and utilities by having a cost causer and a cost
payer.Vice-Chair doesn't think that has to change.
Chair Evans asked what the AIMC will do about the unit running in the system tomorrow that is
not going to carry spinning reserve and is large enough to note on the system frequency
monitoring.
Mr.Dale responded to the extent that frequency changes,he will contribute to restore it.Chair
Evans asked what Mr.Dale will do about having to tell his membership that they're spending
money to spin units for the benefit of non-payers.Mr.Dale said he understood the concept and
everybody has to participate.He agreed there are no free rides.
Chair Evans asked the Committee if the formation of a formal reliability group should be
included in this agreement to have recognized authority in the system.Chair Evans asked for
everyone to decide if there is something that needs to be done outside of the Alaska Intertie
Agreement regarding rules and obligations for operating within the system.
Mr.Strandberg asked Mr.Dale if he was speaking previously about the AEEC certification
proceeding.Mr.Dale answered the concern at the time was that AEEC is not signatory to
Addendum A and that this mechanism could be moving generators out of Homer/AEG&T into
this other group.Mr.Dale believed they would follow the rules of Addendum A.
Mr.Bjorkquist commented part of the history was MEA's position that they weren't subject to
the reliability standards or Addendum A because it was AEG&T.That was part of the context as
to why that clarification was required when AEEC was included.
Mr.Strandberg asked Chair Evans what the best approach would be on system-wide reliability.
Chair Evans responded the ideal approach would be to have a body that was recognized as the
AIMC Draft Meeting Minutes-Aug 16 2012 Page 3 of 8
authority in the reliability standards of a system by governing bodies,regulatory bodies,the state
of Alaska and the law.Chair Evans suggested adopting what has been done in the Lower 48 and
molding it to Alaska's needs.He said the actual rules and operating guidelines we presently
have are all from NERC,but the spinning reserve,the standby reserve and the planning reserves
are completely different from the Lower 48 and have been adjusted to appropriately reflect
Alaska's needs.
Chair Evans stated his intent is to form another taskforce.He stated this will be more of a legal
task because he is asking for the review of the contracts the way they were and the way they
changed.Questions for the taskforce would include;what are the trickle-down obligations?Are
you a signatory to the intertie agreement?Do we need a railbelt systems coordinating council?
Does it have to be a corporation?Can it be a corporation?He said the taskforce would also
provide a recommendation on the reliability group structure.
Mr.Strandberg asked Chair Evans what relationship he had with Mr.Dale's current committee
and the work product from that committee and this new taskforce.Chair Evans said Mr.Dale's
committee wasn't working on the legal aspects,and they were looking at the mechanics of the
rules and what would be a rational change to those rules.Chair Evans stated the taskforce is
being challenged in at least two other ways.He agreed that eventually it all has to come together
and the Council would more than likely just adopt what we've done.
Mr.Dale commented it is not so much the reliability rules,but rather the reliability organization
structure.Chair Evans agreed and said if there was a council,not unlike the Intertie
Management Committee,then they would make these assignments to subcommittees just like
NERC does.
Vice-Chair Posey suggested filing with the RCA what we know in our history,some explanation
of our history,letting the RCA know where we're at today and where we are going.Chair Evans
agreed and said it would be nice to be able to tell the RCA we're forming a reliability council.
Vice-Chair Posey stated any other way of trying to do it legislatively would take one to two
years to complete and we don't have that kind of time,given the risk faced by not having this
resolved or a path for how to resolve it.
Mr.Strandberg asked Mr.Dale if he had all of the railbelt utilities,including Doyon,on his
RRC.Mr.Dale stated Doyon hasn't attended in quite some time.He said the Army does attend
regularly and the City of Seward hasn't attended in quite a while.Mr.Strandberg asked Mr.
Dale if his intention was to reach out to all potential known entities that might interconnect with
those reliability rules.Mr.Dale said they haven't reached out to people who might interconnect.
Mr.Strandberg asked Mr.Dale if there has been unanimous agreement in the standards from all
of the participating attendees.Mr.g responded they have come to a unanimous
agreement on the language,but MLP has not signed,nor has Chugach.Mr.Strandberg believes
that both Seward and Golden Valley have signe D Gr
Mr.Strandberg commented that there has been some good work done and that material could be
developed into the taskforce initiative the Chair was suggesting.Chair Evans said clearly their
work is foundational to the organization and structure that is being contemplated.Chair Evans
AIMC Draft Meeting Minutes-Aug 16 2012 Page 4 of 8
stated he would like to see the reliability group operate without a budget at first and not start out
administratively heavy.Chair Evans stated a group of legal people need to evaluate what the
appropriate structure is for an organization such as this.It doesn't have to operate differently
than the IMC.He suggested getting the structure first and worry about the budget when the need
arises.
Chair Evans asked the group to comment about the process an entity would follow to become a
participating member of the group.Mr.Dale commented they would start out as an ad-hoc
group and anybody is welcome to participate and now that we are under the ARCTEC,there
would be some question as to who can participate.Chair Evans said he was interested in making
the membership appropriate for what its mission is.
Mr.Agi suggested using the same membership qualifications that the IMC uses.Mr.Dale stated
it is important to have buy-in from all of the major players and the agreement has to be binding
on everybody that is interconnected.
Mr.Kuhn suggested utilizing the technical resources available so that it doesn't become overly
complicated and difficult to understand when an enforcement action is needed.Chair Evans
responded he would like to see the rules the same as they have been for the last 30 years.
Mr.Agi suggested petitioning the RCA for an initiation of rule making and establishing a council
for electrical utilities that the RRC,and maybe some other participants among the railbelt who
are certificated interconnected utilities,have as a condition of their certification that they will
now participate in this council under set guidelines.
Chair Evans said it is critical that whatever is filed with the RCA says we are firmly behind the
way we have operated the system,until it is clear to uss that there needs to be.a specific change.Mr.Strandberg commented in previous discussions 'between AEA and the utilities,they havealwayssoughttocreatea.voluntary unanimous package that would be submitted to the RCA asaninformationalfiling."He stated the group should consider very carefully the suggestion to
petition for a regulatory proceeding.Mr.Strandberg requested that open access terms are
included as the network evolves,but with the caveat that anyone who participates agrees to have
adequate reserves and to follow reasonable reliability rules in the network.7 z -a5.
:4.Mr.Kuhn said it is always good to have a proxy pat on the table from''the utilities,rather thanhavingthegoverningentitycomeupwithsomethingfirst.
Chair Evans asked the Committee to send him an email regarding who should be on this
taskforce.Chair Evans suggested the group consists of attorneys,prior commissioners and the
technical group.
Mr.Strandberg stated AEA is gratified about having these conversations at this forum for the
Alaska Intertie.He stated his concern that as the discussions are carried on,the other key known
utilities wouldn't be a part of those discussions.Mr.Strandberg asked Chair Evans what his
thought is on the effectiveness of this without the other utilities here.
AIMC Draft Meeting Minutes-Aug 16 2012 Page 5 of 8
Chair Evans said it is a public meeting.He said they should have some sort of notification,
perhaps a letter that frames this situation and the obligations of utility operations in an
interconnected system.Chair Evans said they could be invited by letter to participate in the IMC
and participate in the discussion.
Mr.Strandberg requested Mr.Bjorkquist's legal opinion.Mr.Bjorkquist stated the IMC is
focused on the Alaska Intertie and so in expanding these procedures to the entire railbelt,it
becomes broader.Mr.Bjorkquist stated the dilemma is figuring out how to get something that is
enforceable because there are two different issues;the railbelt and the intertie.He stated there
have been some conversations over the last two years about that and no good answer was ever
developed.
RECESS:10:31 am.
The IMC reconvened its regular meeting at 10:47 am.
6C.Next meeting
Chair Evans suggested continuing the discussion on the Railbelt Interconnecting Transmission
Corridor,RITC,system and the transfer of benefits from state assets to all of the participating
members.He said the discussion should include the eventual deliverability points for other state
assets that may be developed in the near future and that would define a common corridor for
open access.Chair Evans said he endorses the AIMC looking at the configuration in the railbelt
that ties common assets together,which allows people to conduct business utilizing a unified
rate.He stated it is a very complex situation,especially when the budget is reviewed.Chair
Evans stated this evolves the system,shows maturity of the group and is necessary to go to the
next 50 years of operation in this system.
Mr.Strandberg said AEA is vitally interested in establishing a strong backbone between Brad
Lake and the Alaska Intertie.He said AEA strongly endorses these business structure
discussions that would simplify the commercial environment to move power on a backbone.
Mr.Gibson asked Chair Evans if Ship Creek uses ML&P to get to the corridor,and there is a
gold mine on the east side of MEA,or the military on the other side of Golden Valley,how do
you expect either Golden Valley or MEA in that situation to charge?Would it be part of the
corridor rate when it goes through their system or do they stop and then there is a distribution
rate?
Chair Evans stated his opinion is there are two answers.One is if the gold mine is connected to
the corridor and it happens to be a corridor that is in their service territory,there wouldn't be a
distribution charge.That is the idea of the common asset.On the first end of it,if they chose not
to connect to the corridor,but use the assets of ML&P to get to the corridor,then there should be
a fee associated with that.
AIMC Draft Meeting Minutes-Aug 16 2012 Page 6 of 8
Mr.Kuhn commented the corridor has to be identified and the assets have to be brought up to
where the existing Brad can be gotten to the systems appropriately.He said this is going to
change significantly and dramatically this fall,where some are not going to be able to get their
shares of Brad if the state doesn't recognize that this is a game-changer.
Mr.Strandberg said AEA sees the business structure as defining access,control and cost
responsibility for the backbone.He stated AEA wants to look at the business structure,along
with the technical aspects of the wires and towers,to have a simplified commercial structure so
that open access contracts can be written efficiently and economically.
Chair Evans commented the way the system works now really is an impediment to economic
development.He stated there needs to be some exclusivity with the utility to make it work.
Chair Evans stated the corridor needs to become more of a common asset for public good
because the rate is lowered as more people use it.
Mr.Dale commented our corridors are constrained and there is a limit to how much we want
people to participate because they are constrained lines.Chair Evans agreed and said there has
to be a preservation of utility interests the way they were and how that gets shepherded going
forward.He stated that is a huge challenge,but said open access allows it to be used until the
time it is constrained and then the utility companies have to pay for the upgrade.
Mr.Strandberg stated one of the fundamentals of transmission planning is to provide adequate
capacity so that we can have open access with people who are willing to bring their money and
to agree to reserve limits.
Vice-Chair Posey stated if you come to the table and you want to use an asset that is already
fully subscribed,something has to give and is that money to the people who currently use it to
buy a percentage or do you unconstrain it through other investment or does the state look at it as
being economic development and they pay for the expansion?He said that one way or the other,
money has to changed hands and it needs to be done and it needs to have a process.
Mr.Dale stated the single rate works well for him because he is far away and buys from anybody
he can.He asked if anyone in the middle is seeing this as distance sensitive or segment sensitive.
Chair Evans said he needs to look at the model because we're all transmitting benefit up the line
and it is coming apart and if individual tariffs are set,there is going to be litigation for a long
time.He stated what is being set up is more robust to stand the test of time.
Mr.Kuhn said the state hasn't given an opinion on whether a unified system with a managing
entity could even be developed.Mr.Strandberg indicated those discussions are definitely on the
table and he thinks it is too early to reach any conclusion,other than these issues are compelling
and important and we have to start addressing them right away.
Chair Evans asked Mr.Strandberg if this should be left on the IMC's agenda.Mr.Strandberg
said he is pleased to participate in these discussions.Chair Evans asked the Committee if they
feel the evaluation of how to unconstrain the system and developing the boundaries of a
AIMC Draft Meeting Minutes-Aug 16 2012 Page 7 of 8
backbone should be the focus of this Committee or should the individual utilities be the ones
who move it along or should it be the responsibility of ASCC.
Mr.Strandberg said there is a process underway where he is meeting with the utilities and the
transmission planning is under an extreme fast-track.He suggested continuing that process and
he can report back and bring any issues to this group for discussion.Mr.Strandberg stated he
will participate in whatever forum is convenient for the utilities.He stated his desire of having
everybody at the table.
The next meeting is scheduled for Thursday,September 13,2012 at 2:00 pm in the conference
room on the third floor of the Frontier Building,3601 "C”Street in Anchorage.
7.ADJOURNMENT
There being no further business of the AIMC,the meeting adjourned at 11:36 am.
Brad Evans,Chairman
Gene Therriault,Secretary
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