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Home My WebLink AboutMakushin Project Correspondance 1997>_MAY-15-97 THU 17:54 EXERGY FAX NO.5105378621 P.OLWoodamityTrustTF916-268-0110 (or 3351)£m 97 2:52 PM ows TO:Hank Lefbowltz &Larry Goldfarb PLEASE.CCS ; :|PROVIDE AQ@RXOF THISLETTERTO };}LARRY ana :|THANK YOU, FAX:1081 1-1-510-537-8621 FROM:Wood Family Trust i }JACK WOOD PAGES:3 [5715797 4:53p| MAY-15-97THU17:55 EXERGY FAX NO.6105378621omwwWwItn Kiiguust Suuluta Land Company Alaska Limited Liability Company 235 Montgomery St.,Suite 615 San Francisco.CA 94104 USA ISwW 916-269-0828 Fat 916-268-0110 May 12,1997 Mr.Hank Leibowitz Vice President Exergy,Inc 22320 Foothill Bivd.,Suite 540 Hayward,California 94541 Re:Makushin geothermal project Via:Fax 510-537-8621 Dear Hank: So ANEX and Exergy,Inc.do not misunderstand KSLC's positions regarding the agreement and statements made to me/KSLC on March 12,1997 In Unalaska,|will put forth those Items which you agreed.You presented KSLC with a offer to KSLC written in your own hand.Upon review of this agreement,between the first meeting and second meeting,|found it acceptable to me.About four hours after you presented the offer,you came back to our second meeting and stated you wanted to rescind the agreement.We then agreed,as follows: A.Exergy/ANEX had no Intentions of going forward with the Makushin Project,and; B.Exergy/ANEX would support continued efforts for the conditional transfer of the "$7.2+United States Department of Energy geothermal grant from Steamboat,Nevada',to be moved to the Makushin Project,and; C.ANEX would provide KSLC copies of all work product, engineering,design and reports developed by Exergy/ANEX resulting from its efforts associated with the -Makushin/Unalaska Project,and; D.ANEX would sign a quit claim type "release of interest”form. In a telephone conversation we had last Tuesday morning (May 5,1997),you stated (5/15/97 _4:53p | . MAY-15-97THU17:55 =EXERGY _-FAX NO,5105378871 P03reencee)woe -+". that you had now changed your mind and had no Intentions of "allowing”item °B.", above,to happen,as previously agreed.You explained that you/Exergy have "found another opportunity”ta use the funds elsewhere. As to item "C."above,you stated that Exergy/ANEX may provide KSLC with a copy of one additional report,beyond the "Unalaska Interconnect Study”(which KSLC has). You further stated that you will not provide copies of any other studies,engineering reports,design studies or projections --saying ,"I'm not giving you anything more than the two reports”. While It might be useful for KSLO to have Exergy/ANEX provide its "release of interest” to KSLC,the terms of the November 9,1895 Option to Lease expire of its own terms. ANEX has no rights thereunder and KSLC does not now require a release from ANEX or ite partners, |do regret the direction It appears you are taking your companies,as it relates to KSLC,the Project and the City of Unalaska.KSLC Intends to assure that ANEX and/or its partners are accountable for their agreements,statements,representations and actions (written,oral or demonstrated),as they may effect KSLC's ability to develop the Makushin Project. As always,|am willing to speak constructively about any matter. Sincerely, rahe Jack Wood Principal Manager cc.=Pletro Calatroni =(Fax 908-771-5972)Edward C,Fisch (Fax 4159249-0887 Larry Goldfarb (5715797 _4353p_| MAY-16-97 FRI 10:05 AM EXERGY °C,FAX NO,5105376”P01 oo WL Sefa7 (922)Lei -Joyy Exergy,Inc. To! bave GEamen./ May 16,1997 hay Sian oneS Jack Wood Face:HANK Lemons72KiiguusiSuulutaLandCompanyAlaskaLimitedLiabilityCompany235MontgomeryStreet,Sulte 615SanFrancisco,California 94104 Re:Makushin Geothermal Project Dear Jack: This is in response to your letter to me dated 12 May.Because the letter is rife withallegationsfortheseemingpurposeofcreatingsomelegaiclaimbyKSLC,!feelcompelledtosettherecordstraight. The use of the term "agreement”,mentioned no less than three times in the openingparagraph,is both inaccurate and misleading.There was not one agreement thatresultedfromourmeetingsInDutchHarboron12March.Our offer to continue pursuing the project under completely new financial terms was rejected by you afterconsultationwithyourpartners.Thus,there was nothing to rescind. As you well know,during our trip in March |had a lengthy conversation with DaveGermerwhileseatednexttohimontheflighttoDutchHarbor.His comments forced me to conclude that AIDEA was not nearly as committed to the project as you hadrepresentedtous.As a result,when |met with you in your hotel on 12 March |informed you of same and offered KSLC the opportunity to participate with Exergy onanentirelydifferentbasis,i.e.,we would continue on the project but without makinganyadditionalleasepaymentsuntilsuccesswasachieved,i.e.,after financial closing,and/or funds from the DOE were secured for well-drilling,a portion of which would beusedas'resource acquisition cost'.Several hours later we met again in your hotel room.You informed me that you had discussed this matter with your partners andtherewasconsensusthatthisofferwasnotacceptable.Prior to our second meeting | had a conversation with Larry Goldfarb;Larry and |agreed that the project was not.going anywhere and,therefore,Exergy should withdraw.Your statement in your 12 May letter "....|found it acceptable to me”suggests that our offer was accepted.it was explicitly rejected and when you told me so,|stated that Exergy was withdrawing.Moreover,you have since reminded me on several occasions that no agreement has been in place since our option expired at the end of February.There is nothing between us that obligates Exergy to continue in the project if we choose not to. 22320 Foothill Boulevard ¢Suite S40 Hayward,California *94541 Telephone 510/537-5881 «Fax 510/537-8621 MAY-16-97 FRI 10:05 AM -EXERG™"Te, Pad FAX NO,510537 |P,02 During the second meeting we discussed Exergy's withdrawal from the project,including the DOE grant.Recognizing that the money could only be used for anExergy/Kalina project,|stated that we would not get in the way of an attempt to use itwithanotherdeveloper,Evidently you believe this gesture is the same as anobligationbyExergytohelpyousecure$7.2M from the DOE for a non-Kalina project.Since then I have been advised by Far West Capital that there now appears to be a possibility to apply the $7.2 M at Steamboat.The contract with the DOE still specifies Steamboat.Your assertion that we agreed to help you obtain the DOE money for yourown,non-Kalina project,defies logic and is not true. With respect to the work product asked for,we have already given you the copy of theinterconnectgridstudyconductedbyPowerEngineers,paid for by Exergy and forwhichwewereundernoobligationtosharewithKSLC.In addition,you also havebeentherecipientoftheproposalsandprojectsummariessenttoAIDEAwhich contain technical information,and,of course you have all the work product pertaining to the lease agreement,including the resource documentation provided byGeothermEx., On the matter of your recent accusation in our telephone conversation last week,that Exergy was somehow responsible for AIDEA's decision not to fund the project and, therefore,the cause of harm to KSLC,this is absolutely false and potentially defamatory.When we sensed that AIDEA was moving away from the project last March |told you that.On my way back from Dutch Harbor |met With Randy SimmonsandstaffinAnchoragetotellthemofourplantowithdraw.Randy told me he understood our concern.|informed him that the only way Exergy would considerremainingintheprojectwouldbeforAIDEAtoexplicitlystatewhatExergyneededto do in order for AIDEA to commit to funding the project.Randy agreed to this request.On 5 May we met with Randy,AIDEA staff,Markley and LeResche to leam of AIDEA's findings.|asked Randy what AIDEA's position was.He said that there was not much interest coming from the city (Unalaska)and that his board was not very supportive oftheprolect.But the main reason for not going forward was that AIDEA would not let its AAA bond rating suffer by entering into a requirements contract and the risk that goesalongwithit;that the only possible way to get Makushin funded by AIDEA would bethroughatake-or-pay contract.You know,as well as we do,that the city and theprocessors,particularly the latter,will not agree to this.Randy then asked me if |wanted his remarks in writing and |said yes.This was exactly how the conversationtookplace.There was not a single instance where anything said by Exergy could possibly be construed as coercion or bias. In an attempt to part company with you amicably,at your request,|called AIDEA lastweek,and asked that they not send the letter.They agreed.|called to tell you thiswiththeexpectationthatitwouldhavethedesiredeffectandwouldstoptherhetoriccomingfromKSLC.Unfortunately,this did not happen as evidenced by the legalposturinginyour12Mayletter.Under these circumstances Exergy is obliged torequestthatAIDEAprovideExergywiththeletterdocumentingthemeetingon5May. Finally,much of our disappointment is due to the representations made by KSLC toExergyinNovember,1995.Specifically,in 2.b of the 11/9/95 option agreement KSLC *-MAY-16-87 FRI 10:06 AM EXERGY '%,FAX NO.510537€°°°P,03 -,° vo represented that "AIDEA has adopted conditional approvals authorizing funding of$82,000,000 to $85,000,000 for construction and development of the project.”We nowknowthatno"conditional approval”ever existed.{informed you of AIDEA's movement away from the project in March as soon as |became aware of that movement.It wasnotuntilourmeetingwithAIDEAon5Maythatitbecameclearthatnoconditional approval was ever granted.Accordingly,under the terms outlined in the last part of 2ofiheoptionagreement,Exergy is entitled to be reimbursed for the $300,000 spent to date on the project,including the $150,000 paid directly to KSLC as rent. |have instructed our corporate attorney,Mr.Allen Grossman,to review this matter with the objective of recovering the $300,000.He will no doubt be in touch with you. Very truly yours, H.M.peane Vice President AN cA Can uteort fe Ca-({ae HA ty onk be ph so nidldfe dant 2a Ow al pos 29C May 6,1997 Draft Mr.H.M.Leibowitz LVicePresident,Special Projects Mere'GenExergy,Inc. 22320 Foothill Boulevard,Suite 540 Hayward,California 94541 Dear Hank: Per our May 5,1997,|would like to reiterate the Authority's position concerning the development of the Makushin Geothermal Project.Before doing so however,|would like to express my sincere appreciation to you for your firm's efforts to date and for taking the time to meet with me to discuss the Authority's position with respect to the financing of the Makushin Geothermal Project.|felt our meeting was very productive and |now more fully recognize and appreciate your concerns and desires relative to project development and financing. From your very first meeting with Authority,it was agreed that prior to defining financing roles,pursuing development issues and expending substantial funds that the party's would focus on attaining a "requirements”power sales agreement with the City of Unalaska.Although we may,at times,have slightly deviated from this task,your efforts to stay on course and complete this task are commendable.Through principally your firm's efforts and expense a preliminary term sheet was presented to the City ofUnalaskaonMarch11"with the City acknowledging that it would shortly respond. Following a four week hiatus,the City finally responded with a short letter from its Assistant City Manager.This untimely response is fairly consistent with the City's recent lack of project support and enthusiasm.As you probably would agree,the City must be a strong project proponent for the project to have any chance of success. Additionally,as you are aware,the majority of the processors have also not demonstrated any substantive project support. As|indicated during our meeting,even with the City's strong support,the development and financing of this project would have been an "uphill battle”for the Authority with no guarantees of success.Recognizing the potential benefits to the City,the Authority was,however,prepared to pursue this development in the face of some substantial financing related hurdles if the City would have aggressively supported the project. The planned financing role of the Authority in this project is highly non-traditional,one in which the Authority has no prior record or experience and most importantly,one in which there were no intended "take or pay”contracts or credit enhancements.Possibly as important as the financing role itself,is the effect of this particular financing on the Authority's credit.Our primary bond underwriter has cautioned us that proceeding with this particular financing may have deleterious effects on the Authority's future rating.A down grade of the Authority's rating is an area in which the Authority has historically guarded against due to financing implications on future projects. Recognizing the apparent lack of City and processors support combined with extremely difficult project financing conditions which may effect the Authority's rating,we do not presently feel the project is consistent with the Authority's development goals and mission. Sincerely, D.Randy Simmons Executive Director h/all/dgermer/makushin/eib-8 March 25,1997 Draft Mr.H.M.Leibowitz - Vice President,Special Projects V eve &benExergy,Inc. 22320 Foothill Boulevard,Suite 540 Hayward,California 94541 Dear Hank: |appreciated that you took the time during your return from Dutch Harbor to meet with me and express your concerns about the Authority's role in the development of the Makushin Geothermal Project.|!now more fully recognize and appreciate your concerns relative to project development and financing.It is therefore,with this enhanced recognition,that |feel incumbent upon expressing the Authority's position relative to the development of the Makushin Project. As you probably recollect better than myself,during our first meeting,we agreed that prior to defining financing roles,pursuing development issues and expending substantial funds that the party's would focus on attaining a "requirements”power sales agreement with the City of Unalaska.Although we may,at times,have slightly deviated from this task,your efforts to stay on course and complete this task are commendable. Through principally your firm's efforts and expense a preliminary term sheet waspresentedtotheCityofUnalaskaonMarch11"with the City acknowledging that it would shortly respond.To date,we are still awaiting this response and can only assume that the City is simply not interested in having this project developed. Recognizing this apparent current lack of interest coupled with prior lack of visible project support for previous developer's proposals from the City,|do not feel it would be prudent for either of us to further pursue this development.From the Authority's perceptive,the City must be a strong project proponent for it to have any chance of success.As you are aware,the majority of the processors have also not demonstrated any substantive project support. As |indicated during our meeting,even with the City's strong support,the development and financing of this project would have been an "uphill battle”for the Authority. Recognizing the potential benefits to the City,the Authority was,however,prepared to pursue this development in the face of some substantial financing related hurdles if the City would have aggressively supported the project.The perceived financing role of the Authority in this project is highly non-traditional and one in which the Authority has no prior record or experience.As a means of mitigating non-traditional financial risks and the effects on the Authority's credit,we suggested including private sector participation and federal grants in the financing mix.With respect to the Authority's credit,our primary bond underwriter has cautioned us that proceeding with this particular financing may have deleterious effects on the Authority's future rating.A down grade of the Authority's rating is an area in which the Authority has historically guarded against due to financing implications on future projects.It was,therefore, imperative that private sector participation be included in the financing mix to reduce the potential impact on the Authority's credit. lf local support for this project were to change the Authority would be pleased to re- examine the project and determine if there is an appropriate role for the Authority consistent with its development goals and mission. Sincerely, D.Randy Simmons Executive Director h:/all/dgermer/makushin/leib-7 3 Qs de ww 4 \\ set "f mechan 'one CO Dvm \2en ke"e fugue Kiiguusi Suuluta Land Company DeAAlaskaLimitedLiabilityCompanyyn)47 235 Montgomery St.,Suite 615 San Francisca,CA 94104 USA ISW 916-269-0828 Fax 916-268-0110 May 9,1997 Honorable Randy Simmons Executive Director Alaska Industrial Development and Export Authority 480 W.Tudor Anchorage,AK 99503 Re:Status of Makushin Geothermal Electrical Generation Project Via:Fax 907-269-3044 Dear Mr.Simmons: As some in your staff know,I have been personally involved in the Makushin Projectsince1990andwithownershipinconditionalunderlyingleaseholdrightssince1991.In 1995 several associates joined with my family trust to formed Kiiguusi Suuluta Land Company,LLC (KSLC).The express purpose of KSLC's purchase of the entire "Makushin lands”was to assure the long term continuity of geothermal energy development activity for Unalaska and the Aleutian Islands.Since 1995,KSLC owns, in fee,all right,title and interest to 11.8 square miles (600 acres are within the City of Unalaska)and all sub-surface rights and activities. As you may be aware,in November 1995 KSLC granted ANEX Geothermal L.L.C. (Exergy,Inc.&Ansaldo Energia S.P.A.)a limited"Exciusive Option to Negotiate for the Development of the Makushin Geothermal Project',and no more.This limited and specific option allowed Anex only the rights to negotiate a lease with KSLC,and nothing more,beyond due diligence.ANEX has failed to execute the required lease. This limited and specific option to "negotiate a lease”expired by its own language on February 28,1997.As a result,neither ANEX or its associated partners have any rights whatsoever with regard to the Makushin Project or its lands. While the above information is important to KSLC,it does not and will not have any bearing on the continued and aggressive development of this Project.This Project is not "a developer's project”--whose only purpose may be to "showcase”a certain technology.This is a needed regional power Project which is viable,substantial and economicaliy sound.The Project has a willing and needed market for its clean and renewable electrical energy.Further,the Project's substantial geothermal resource is [5/09/97 -3:18p| TEV GY WUot Mm VIC COOVIIV IO 2091)MUaANIS V4 lori Ldcte adaptable to a number of proprietary energy conversion technologies.The Project continues to enjoy the active support of the Ounalashka Corporation,The Aleut Corporation,several of the major Unalaska fish processors and the City of Unalaska, together with general public support. This Project can not and will not fail because any one "technology company”can not go forward.All the merits and benefits of this viable and needed Project remain. The Wood Family Trust is the majority owner of KSLC and,as Wood's trustee in trust,| will continue to maintain an active,aggressive and knowledgeable development program which will result in Makushin geothermal electrical energy being sold into Unalaska and Dutch Harbor,as presented. For reasons not altogether clear at this time,I'm told that AIDEA may now be considering a substantial reduction in its level of financial support.This must be quickly address.Notwithstanding,over the past seven years the Project has been faced with many enormous obstacles,each of which have been worked through and AvarTrama Wer wore Ne. |request that AIDEA continue to refrain from issuing any report,study or letter which may reflect or comment on AIDEA's potential change in financial support.It is our opinion that ANEX/Exeragy has acted well outside its contractual rights. |also request that a meeting be set within the next several weeks in which the facts of this matter may be set forth and an understanding of respective positions be better known to all. Please contact me as soon as possible So we may arrange our schedules.If you have questions or comments concerning this letter,please contact myself or Mr.Edward Fisch. Sincerely, f a |whe ALphe/_ Jack Wood Principal Manager 5/09/97 -3:18p:| 04/07/97 10:45 vey Mooi - City of Unalaska Department of Administration P.O.Box 610 Unalaska,Alaska 99685 Phone (907)581-1251 Fax (907)581-3664 To:Dave Germer Fax #:(907)269-3044 AIDEA From:Nica Caoile Date:April 7,1997 for Gone Green Subj:Makushin Geothermal Pages:4 (including cover) Hard copy in the mail. 04/07/97 10:46 vey (002 CITY OF UNALASKA % P.O.BOX 610 _UNALASKA,ALASKA 99685-0610 ; an (907)581-1251 FAX (907)581-1417 * vr a UNALASKA,ALASKA alee April 7,1997 Randy Simmons,Executive Director Alaska Industrial Development &Export Authority AQN \Alant TrsAne Onna Tey v¥ooL FuUUT NuaU Anchorage,AK 99503 Re:Makushin Geothermal Project Dear Mr.Simmons: The City of Unalaska appreciates Mr.Germer and representatives of Exergy and KSLC visiting Unalaska last month to bring us up to date on the Makushin geothermal project. As stated in previous City Council resolutions,Unalaska remains committed to seeing the Makushin Project constructed,and ta achieving a solution to our increasing problems with power supply at Unalaska.We have conveyed this commitment to Alaska's Congressional delegation and to our State legislators on several occasions,and continue to want the project to stay on track. We have reviewed the "Term Sheet”presented during the visit,and understand that the next step in AIDEA's due diligence process on Makushin is the negotiation of a requirements Power Purchase Agreement with the City and then with our large industrial energy consumers.We believe the key aspect of the proposed contract,of course,is its "requirements”nature,as |am sure you appreciate.Given that underlying fact,and that the project will include gridding i i H thi wee aneiaAe eee tree Ele ateandcentral!discatch to unify generation within cur service area,we find the commercial terms on the term sheet reasonable,and believe that all energy users in Unalaska will benefit when the project is operational. Lg04/07/97 10:46 S _..oo03 :& Mr.Randy Simmons April 7,1997 Page 2 Please let us know your schedule for initiating detailed negotiations of the Power Purchase Agreement. Sincerely, CITY OF UNALASKA Aw.dtm Gene Green Assistant City Manager _04/07/97 10:47 S - (004 4/3/97 10:50 AM L eco 907 586-8339 MAKUSHIN G EOTHERMAL PROJECT TERM SIIEET 3/11/97 *Contract Type Requirements *Term --25 years ©Opening Rate -10.5¢,1997§ ¢Rate Inflator -2.00% °Rate step-up upon proven reliabjlity --$.01 *Proof Period --One year at 95%availability -14niw iict capacily at City buss -Gridding and central dispatch for entire service area *Miscella litions: -Processors agree to similar contracts. -City or AIDEA may cancel the agreement if well-drilling does not begin on or before July 1,1999. -City agrees to a moratorium on other generation investments until July 1,1999,except with concurrence of ATDEA. -City assists AIDEA in seeking additional Federal Funding in Washington.If additional funding is received,parties agree to re-open discussion of opening rate. -AIDEA may cancel the agreement at any time if AIDEA finds the project not feasible due to cost,schedule,financial guidelines and limitations of the Authority,or other statutory limitations of the Authority. P.003 DRAFT March 3,1997 Hon.Randy Simmons,Executive Director Alaska Industrial Development &Export Authority 480 West Tudor Road Anchorage,AK 99503 Re:Makushin Project Dear Mr.Simmons: The Cityof Unalaska appreciates Mr:Germer and representatives of Exergy and - -- ----KSLC visiting Unalaska last month to bring us up to date on the Makushin Geothermal Project. As stated in previous City Council resolutions,Unalaska remains committed to seeing the Makushin Project constructed,and to achieving a solution to our increasing problems with power supply at Unalaska.We have conveyed this commitment to Alaska's Congressional delegation and to our State legislators onseveraloccasions,and continue to want the project to stay on track. We have reviewed the "Term Sheet”presented during the visit,and understand that the next step in AIDEA's due diligence process onMakushinisthenegotiationofarequirementsPowerPurchaseAgreementwith the City and then with our large industrial energy consumers. We stand ready and eager to negotiate a Power Purchase Agreement within the framework of the term sheet.The key aspect of the proposed contract,of course, is its "requirements”nature,as I am sure you appreciate.Given that underlying fact,and that the project will include gridding and central dispatch to unify generation within our service area,we find the commercial terms on the termsheetquitereasonable,and believe that all energy users at Unalaska will benefit significantly when the project is operational._ Please let us know your schedule for initiating detailed negotiations of the Power Purchase Agreement. Sincerely, CITY OF UNALASKA March 25,1997 Draft Mr.H.M.Leibowitz Vice President,Special Projects Exergy,Inc. 22320 Foothill Boulevard,Suite 540 Hayward,California 94541 Dear Hank: |appreciated that you took the time during your return from Dutch Harbor to meet with me and express your concerns about the Authority's role in the development of the Makushin Geothermal Project.|now more fully recognize and appreciate your concerns relative to project development and financing.It is therefore,with this enhanced recognition,that |feel incumbent upon expressing the Authority's position relative to the development of the Makushin Project. As you probably recollect better than myself,during our first meeting,we agreed that prior to defining financing roles,pursuing development issues and expending substantial funds that the party's would focus on attaining a "requirements”power sales agreement with the City of Unalaska.Although we may,at times,have slightly deviated from this task,your efforts to stay on course and complete this task are commendable. Through principally your firm's efforts and expense a preliminary term sheet waspresentedtotheCityofUnalaskaonMarch11™with the City acknowledging that it would shortly respond.To date,we are still awaiting this response and can only assume that the City is simply not interested in having this project developed. Recognizing this apparent current lack of interest coupled with prior lack of visible project support for previous developer's proposals from the City,|do not feel it would be prudent for either of us to further pursue this development.From the Authority's perceptive,the City must be a strong project proponent for it to have any chance of success.As you are aware,the majority of the processors have also not demonstrated any substantive project support. As |indicated during our meeting,even with the City's strong support,the development and financing of this project would have been an "uphill battle”for the Authority. Recognizing the potential benefits to the City,the Authority was,however,prepared to pursue this development in the face of some substantial financing related hurdles if the City would have aggressively supported the project.The perceived financing role of the Authority in this project is highly non-traditional and one in which the Authority has no prior record or experience.As a means of mitigating non-traditional financial risks and the effects on the Authority's credit,we suggested including private sector participation and federal grants in the financing mix.With respect to the Authority's credit,our primary bond underwriter has cautioned us that proceeding with this particular financing may have deleterious effects on the Authority's future rating.A down grade of the Authority's rating is an area in which the Authority has historically guarded against due to financing implications on future projects.It was,therefore, imperative that private sector participation be included in the financing mix to reduce the potential impact on the Authority's credit. If local support for this project were to change the Authority would be pleased to re- examine the project and determine if there is an appropriate role for the Authority consistent with its development goals and mission. Sincerely, D.Randy Simmons Executive Director h:/all/dgermer/makushin/leib-7 ALASKA INDUSTRIAL DEVELOPMENT = AND EXPORT AUTHORITY x_A@@E™ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:D.Randy Simmons Executive Director Dennis V.McCrohan,P.E. Deputy Director -Energy FROM:David Germer yyiy /Project Manager DATE:March 20,1997 SUBJECT:Makushin Project -March 11-12,1997 Trip Report On March 11",|traveled to Unalaska to meet with Unalaska City officials and City Council members,ANEX Joint Venture participants,and the CEO of the Ounalashka Native Village Corporation.Those attending on behalf of the ANEX joint venture corporation included:Hank Leibowitz,Vice President of Exergy,Inc.,and ANEX's Project Manager,William Nadauld,Project Development Manager for Exergy,and Bob LeResche,Exergy's consultant.Also present was Mr.Jack Wood,managing Partner of KSLC,Llc,the owner and lessor of a portion of the Makushin geothermal reservoir. The primary purposes of the meetings were to advise the City of recent project developments and to initiate power sales discussions.My role at these meetings was primarily as an observer;however,|did answer some general financing related questions.My objective in attending these meetings was to better understand project related community views and determine the level of local project support. Mr.Leibowitz was the primary spokesman for the ANEX venture and provided the formal project presentations.Our first meeting was held with Mark Earnest,Unalaska's City Manager.Mr.Leibowitz's presentation to both Mark Earnest and the City Council closely followed the attached hand-out prepared by Exergy.In addition to this handout, Memorandum March 20,1997 Page 2 Mr.Leibowitz also provided (to Mr.Earnest only)a draft summary of the contemplated general terms associated with a Makushin Project "requirements”power sales agreement.Based on his limited comments and questions it was difficult to ascertain Mr.Earnest's interest in the project and Mr.Leibowitz's presentation.Although none of his comments could be interpreted negatively,he did not provide any words of encouragement.After he briefly scanned the draft term sheet he inquired about the provision that would place a moratorium on the City making generation investments until July 1,1999.Both Messrs.Leibowitz and Wood emphasized that the proposed initial rate is very close to the City's and processor's avoided cost.He did indicate that there were no terms that he thought would be "red flags”for the City.Interestingly,he verified that the parties did not envision a "take or pay”agreement with the City.The parties agreed the best means of proceeding would be to prepare an MOU which would elaborate on the conditions presented on Exergy's draft term sheet.He stated that the City's utility person and possibly the City's attorney would be contacting me during theweekofMarch16"to further discuss the draft term sheet and MOU. On the evening of March 11,Mr.Leibowitz made a formal presentation to the Unalaska City Council.Council members seemed somewhat reserved and their comments and questions were minimal.There were questions concerning project scheduling particular with the timing of the drilling of the production well and plant construction.One Council member asked for an explanation on why electricity costs could be low with the large anticipated capital expenditure.Unalaska's Mayor,Frank Kelty,provided a few supportive comments and elaborated on the environmental and potential future cost benefits associated with the project. On the morning of March 12",parties met with Dick Davis,CEO of the Ounalashka Native Village Corporation.Portions of the project's access road are planned to cross Ounalashka Corp.surface and Aleut subsurface.Mr.Leibowitz provided a project update and requested Ounalashka's consideration in providing access permission at minimal cost to the project.Leibowitz's bases for the minimal fee request stemmed from the regional benefits associated with low cost,environmentally sound electricity and that the project's access road and port would provide access to Ounalashka land that is now inaccessible.Mr.Davis indicated that his company is a land holding company that primarily makes its money through leasing or selling land.The parties agreed that Exergy would provide a map that displays the access road route on Ounalashka land and that Mr.Davis would take into account the project benefits to his firm when he develops lease terms. On a separate but related matter,Mr.Davis spoke of Governor Knowles'recent trip to Dutch Harbor.Although community leaders spoke of many local issues such as onshore vs.offshore processing,there was no mention of the Makushin Project. Memorandum March 20,1997 Page 3 Mark Earnest was on my return flight to Anchorage and requested that we speak in the Anchorage Airport.He indicated that a cursory analysis of the term sheet by the appropriate City employees has not indicated any fatal flaws.He expressed concern about the un-budgeted legal time required to develop an MOU and inquired about requesting this funding from the developer.1!told him that |felt such a request was inappropriate recognizing the funds already expended by the developer,the risks now being undertaken by the developer,and most importantly,the true beneficiary of the development of the Makushin Project is the City.|continued,by informing him that from my perspective,if Makushin stands a prayer of being developed,the City has to be enthusiastically behind the project.Recognizing the Authority's requirement for legislative authorization for this project,he expressed concern about the potential conflict/impact with other City needs,particularly those that are federally mandated.He seemed to agree with my concern relative to limited City support and said he or another City offical would be calling me next week. Attachments H:/all/dgermer/makushin/trip-Report-March-97.doc _Makushin Geothermal Project,Revisited ANEX,L.L.C. Presented to the City of Unalaska March 11,1997 We've Made Significant Progress Since our Last -Meeting (June 4,1996) e Grid Interconnect Study e AIDEA Completes Project Review e¢Project Financing Model «"Over the Fence"Funds e Resume Permit Process ¢Initiate Power Sale Negotiations Makushin/3/97 Grid Interconnect Study ¢Makushin Power Sold to City -Resold to Processors ¢City and Processor Generators Connected in Unified Grid ¢Power Can be Transmitted,to and from Each Generator/User ¢Loss of any Generator,Including Makushin, is Picked up by Grid and Spin Reserve ¢Cost of Interconnect Paid for by Makushin Project Makushin/3/97 "Over the Fence''Funds ¢$7.2 M DOE Grant,Awarded to Exergy in 1994, Transferred to Makushin -DOE has Given Consent,Providing: *Power Sale Agreement in Place *Production Well Successful ¢Dollar for Dollar Offset to Project -Generation Cost is Reduced Makushin/3/97 AIDEA Completes Project Review (10/29/96) ¢"Fatal Flaw"Analysis by R.W.Beck -No Show Stoppers -Technology not an Issue e Add $315K/Year O&M Expense ¢Add Contingency to Capital Costs Makushin/3/97 Project Financing Model ¢Capital and O&M Costs Updated -R.W.Beck Input -Unified Grid Interconnect Cost ¢City and Processor Loads Updated Through '96 ¢Range of Selling Price of Makushin Power Established Makushin/3/97 Initiate Power Sale Negotiations ¢Regular Correspondence With City and Processors ¢Preliminary Meetings with UniSea and Alyeska °Negotiations Commence Today,3/11/97,with the City Makushin/3/97 Resume Permit Process ¢Direct contact with -Division of Government Coordination -Department of Fish &Game -Department of Environmental Conservation -Department of Natural Resources ¢Permit in Two Phases I.Drill and Test First Production Well Il.Full Project Development ¢Responding to Comments Made During Last Permitting Cycle by Previous Developer Makushin/3/97 MAKUSHIN G EOTHERMAL PROJECT TERM SHEET 3/11/97 ¢Contract Type ---Requirements °Term --25 years *Opening Rate --10.5¢,1997$ °Rate step-up upon proven relia bility -$.01 ¢Proof Period --One year at 95%availability *ProjecttoInclude: -14mw net capacity at City buss -Gridding and central dispatch for entire service area °Miscellaneous conditions: -Processors agree to similar contracts. -City or AIDEA may cancel the agreement if well-drilling does not begin on or before July 1,1999. -City agrees toa moratorium on other generation investments until July 1,1999,except with concurrence of AIDEA. -City assists AIDEA in secking additional Federal Funding in Washington.If additional funding is received,parties agree to re- open discussion of opening rate. -AIDEA may cancel the agreement at any time if AIDEA finds the project not feasible due to cost,schedule,financial guidelines and limitations of the Authority,or other statutory limitations of the Authority. Exergy,Inc.EGEIVE = OCT 31 9¢6 Alaska Industrial Development and Export Authority October 30,1996 Mr.Dave Germer Alaska Industrial Development &Export Authority480W.Tudor Road Anchorage,Alaska 99503 RE:Makushin Dear Dave: Thank you for faxing a copy of the R.W.Beck study.Its arrival was very timely.It coincided with the completion of Power Engineer's draft of the Makushin Interconnect Study.A copy is enclosed.With these two reports in hand,I believe there are several things we need to do together in the next few weeks.A go forward schedule is suggested: Oct.28 Makushin Interconnect Study draft received Oct.30 R.W.Beck Study received Oct.31 -Nov.6 Comments to Interconnect Study draft Nov.8 Final Interconnect Study Oct.31 -Nov.13 Makushin pro forma financial model updated to reflect R.W.Beck comments,two tier pricing for Makushin power and incorporation of latestoilprice;$1.13/gallon.Establish PPA pricing to City and fish processors. Nov.11 Send Makushin Interconnect Study to city and fish processors.Request meeting during week of 18th to discuss PPA. Nov.13,14,15 Confirm meeting dates. Nov.19-2]Meet w/City and processors re:PPA.Exergy, AIDA,Power,Walsh,LeResche Please let me have your comments at your earliest convenience. Very ye yours, H.M.Leibowitz 22320 Foothill Boulevard ¢Suite 540 ¢Hayward,California ¢94541 Telephone 510/537-5881 ¢Fax 510/537-8621 ttt October 29,1996 ..\Dove via Federal Express an Mr.David Germer Project Manager Alaska Industrial Development &Export Authority 48 West Tudor Anchorage,AK 99503 Dear Mr.Germer: R.W.Beck has reviewed the information provided by Exergy,Inc.describing the proposed Makushin Geothermal project.The information includes a letter dated March 15,1996 from H.M.Liebowitz of Exergy,Inc.to AIDEA and a report entitled "Makushin Geothermal Project Revisited”dated March 1996.The purpose of this review was to conduct a fatal flaw analysis of the project's design,proposed costs,and economic evaluations.The review was not a detailed evaluation,but rather a cursory review to provide the following: 1.An opinion as to the validity of the approach and whether or not it is reasonable for AIDEA and Exergy to approach the City of Unalaska with respect to the general terms and conditions of a power sales agreement. 2.A preliminary opinion as to the reasonableness of the operation,maintenance,and capital costs presented in the financial projections. 3.Feasibility of the technology. CONCLUSIONS Based on the information reviewed and the assumptions developed herein,we have concluded the following: 1.The approach presented by Exergy appears to be reasonable.AIDEA and Exergy should approach the City and processors'with respect to the target rates to determine whether the City and processors'may be willing to pay (with consideration to the processors'perceived avoided costs). 2.The capital costs appear to be understated,as discussed below,in the areas of contingency and potentially owners costs.Sensitivity calculations should be conducted to determine the impacts on the target rates.O&M costs may be understated in the areas identified below.Financial calculations will need to be reviewed to see if 10.5 cents/kilowatt hours is an adequate target. 3.The Kalina cycle technology is feasible as presented herein. 11-00223-10101-0101 [|£:002156\11-00223\jaf003tf.doe 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 ® Mr.David Germer October 29,1996 Page 2 FINANCIAL ANALYSIS/FEASIBILITY The primary purpose of the review was to determine if there were any fatal flaws in the financial analysis performed by Exergy. Exergy's actual computer model was not provided and,therefore,could not be reviewed for completeness or accuracy.However,a model was developed by AIDEA that incorporates Exergy's various inputs,and this model was provided to us for review.The model appears to capture most of the financial operations of the Makushin Project; however,there are several areas where both input and structural modifications should be made to the model.These included the following: 1.Interest costs on the bonds during construction (Interest During Construction,or IDC) are estimated using a factor applied to the construction costs instead of developing a cash flow model which provides a more reliable estimate.This does not produce a significant difference. It is unclear whether or not there is a debt service reserve fund included in the bond size.The fund should be equal to the lesser of one year's debt service or 10 percent of the bonds. Financing costs of the bonds appear to be sized at 2 percent of the sum of the construction costs,interest during construction,and reserve fund.Although not significant to the results,it should be based on the final bond size. It appears the provisions for reimbursing AIDEA or others for the costs of previous studies are not included in the bond issuance cost. Debt is amortized over 30 years which may bea little long.If the construction period is two years and interest capitalized just to the end of construction,this would make the total bond life to be 32 years.It may be more prudent to assume a two-year construction period,interest capitalized for at least an additional three months to account for possible construction delays,and amortize the debt over 25-27 years. No administrative and general,project insurance,or wellfield insurance costs appear to be included in the analysis as they are not included in Exergy's O&M estimates.A suggested amount of $315,000 per year for the total of these three cost elements. The royalty payment in years 10-20 of the model is based on 3.0%of gross revenues instead of the 3.5%stated by Exergy. A revised computer run was made using the spreadsheet model developed in concert with the previous Project developer but incorporating the revised assumptions provided by Exergy.Specific assumptions used are described as follows: 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 29,1996 Page 3 PROJECT OUTPUT Project Sales -83 million kilowatt-hours.This amount is consistent with previous studies and is mentioned in the March 15,1996 Exergy letter.No load growth is assumed for this particular case. DEVELOPMENT Costs Project cost -$74,836,000 as provided in the Exergy documents. Wellfield development costs -$15,270,000,which represents the high estimate provided by Exergy's consultants. OPERATING Costs Labor -$921,086 per year as provided by Exergy and its consultants.It is presumed that these costs escalate at general inflation. Subcontractors -$952,000 as provided by Exergy and its consultants.Again,these are assumed to escalate with inflation. Spares -$250,000 as provided by Exergy and escalated with inflation. Below-ground wellfield maintenance -$250,000 as provided by Exergy and escalated with inflation. Well makeovers -$450,000 as provided by Exergy and escalated with inflation. Other operating costs -Other annual operating costs were included pursuant to previous studies,and these include:administrative and general -$135,000;insurance -$150,000;and wellfield insurance -$30,000.None of these were specifically mentioned by Exergy. Royalty payments -2.5 percent of gross sales for years 1-10;3.5 percent of gross sales for years 11-20;and 5.0 percent of gross sales thereafter.These rates are provided by Exergy. BOND DATA Interest rate -8.0 percent. Amortization period -25 years. Cost of issuance -2.0 percent of bond proceeds. Prior studies -It was assumed that $500,000 of studies and other development costs not included in Project costs would be reimbursed to various Project participants by bond proceeds. 11-00223-10101-0101 |£:002156\11-00223\jaf003tf.doc Mr.David Germer October 29,1996 Page 4 Working capital -Bonds are assumed to fund $1 million for a Working Capital Fund and $1 million for a Reserve and Contingency Fund. Debt service reserve fund -Funded from bond proceeds and equal to the lesser of 10 percent of the bond size or one year's debt service. Capitalization period -Interest on bonds capitalized through March 1999,three months after the assumed on-line date. OTHER Inflation -3.5 percent per year which appears to be the estimate used by Exergy. On-line date -January 1999,which coincides with the year of Exergy's stated entry rate.No details have been provided by Exergy as to the latest date Project development can begin and still maintain this on-line date. Target rate -10.5 cents/kilowatt-hour in 1996 dollars.Exergy's summary of results includes entry rates in 1996 ranging from 10.0 -11.0 cents/kilowatt-hour. Target rate escalation -Two cases were run:Case 1A with an escalation equal to general inflation and Case 1B with a 2.5 percent real escalation.Exergy provides varying rates of escalation of the Target Rate,but it is unknown whether these escalation rates are real or nominal. Rate stabilization -A rate stabilization fund is assumed to be established in 1997 at the start of Project development.The fund is drawn from when actual Project costs would cause power rates to be greater than the Target Rate.Repayment to the Rate Stabilization Fund would be made in later years when Project costs are less than the Target Rate. FINANCIAL ANALYSIS Based on the assumptions described above,the following results were obtained: 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 29,1996 Page 5 Case 1A 1B Target Rate (cents/kWh -1996 $)10.5 10.5 Target Rate Escalation (Real)0.0%2.9% Bond Size $120.5 $120.5 Rate Stabilization Initial Deposit $28.9 $10.3 30-yr Return to RSF 4.6%17.1% 30-yr Gross Profit of RSF $59.7 $381.5 Exergy's Case IVr has a Target Rate of 10.5 cents/kilowatt-hour escalated at 2.5 percent,a Rate Stabilization Fund Minimum Balance of $10.5 million and a 30-year gross profit of $8.2 million.The amounts of rate stabilization calculated in Case 1B and Exergy's IVr are fairly close;however,the long-term profits are significantly different.Thus,it appears that Exergy may have incorporated a different pricing structure for the Target Rate in the later years than assumed in our analysis. The results shown in Table 1 are not meant to describe a particular set of Base Case assumptions but rather they are an attempt to duplicate as close as possible one of the Exergy cases.A more complete analysis would provide insights into the benefits and risks involved when input assumptions such as load growth,interest rates,operating costs,and others varied. AVOIDED Costs In the March 15,1996 letter,Exergy states they believe the Project energy can be sold for no more than the City's and processors'avoided cost.Since all their analyses are based on Target Rates ranging from 10.0 -11.0 cents/kilowatt-hour in 1996 dollars,it appears that the analysis is based on the assumption that the avoided costs are equal to 10.5 cents/kilowatt hour.Based on previous experience,the City's avoided costs are below this amount. AIDEA and Exergy should approach the processors with respect to the target rates that AIDEA and Exergy would propose processors may be willing to pay (with consideration to perceived avoided costs). 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 29,1996 Page 6 OPERATIONS AND MAINTENANCE ESTIMATE The operation and maintenance costs appear reasonable based on the information available.Certain assumptions are made,however,which could also impact these costs such as availability of qualified personnel,actual number of wells required to supply the required brine,and other unknowns primarily associated with the wellfield.As noted in the GeothermEx report,successful completion of the confirmation well is necessary before their estimate can be refined. FEASIBILITY OF KALINA CYCLE Based on the data reviewed and described above,it is R.W.Beck's opinion that the project is technically feasible.Geothermal generating facilities are currently being successfully operated and developed in the United States,as well as many international locations.The Kalina cycle is a developmental thermodynamic cycle which has been demonstrated on a prototype basis.More analysis would be required to assess the long-term operation and maintenance issues associated with the system,but since the Kalina cycle is not a significant departure from binary or flash cycle technologies,it is R.W.Beck's opinion that these risks are minimal. The information provided indicates that the operation and maintenance costs as well as the project capital costs are very preliminary and intended for planning only.The most significant risks are the unknown geotechnical conditions and the wellfield development risks.The assumptions on which the estimates were prepared are stated by Walsh Construction and GeothermEx and are reasonable based on the developmental stage of the Project.However,R.W.Beck would typically expect a project cost to include contingency of up to 20 percent for a project in this phase of development.We also noted that no owner's indirect costs are included with the estimate.This would include costs such as owner's permitting,development,engineering,etc.These costs need to be accounted for and included.If permitting,development,engineering,etc.are not included,these costs could increase the overall costs by 20 -30 percent of the engineering procurement and construction cost. ADDITIONAL DATA REQUEST Prior to completing a detailed evaluation and independent engineering review of the plant, R.W.Beck would require the following information: =Acopy of Exergy's computer output which supports their results (soft and hard copies, if available). 11-00223-10101-0101 |£::002156\11-00223\jaf003tf.doc Mr.David Germer October 29,1996 Page 7 All assumptions utilized in the financial analysis,pricing structures,and the cash flows during construction as well as during Project operations. Completed geotechnical report with recommendations for foundation designs. A conceptual design of the generating facility and infrastructure (roads,transmission line,etc.)with an accompanying detailed cost estimate. Completion and testing of the confirmation well and a summary of the wellfield requirements from GeothermEx based on the test results. Status report on the Exergy demonstration plant at the Department of Energy's Energy Technology Engineering Center showing the performance of the Kalina cycle. A detailed cost estimate of the project. Other data may be required as the review progresses. If you have any questions or comments,please call me at 303-299-5248. Sincerely, R.W.BECK,INC. CinkddW.Filsinger Senior Director TWE:jf c:Mike Hubbard 11-00223-10101-0101 |£:002156\11-00223\jaf003tf.doc October 24,1996 via Federal Express E Cc E |V e Mr.David Germer : Project Manager Cap 2905 Alaska Industrial Devel t &Export Authori48WestTudor--"port Ausnony Alaska Industrial Development Anchorage,AK 99503 and Export Authority Dear Mr.Germer: R.W.Beck has reviewed the information provided by Exergy,Inc.describing the proposed Makushin Geothermal project.The information includes a letter dated March 15,1996 from H.M.Liebowitz of Exergy,Inc.to AIDEA and a report entitled "Makushin Geothermal Project Revisited”dated March 1996.The purpose of this review was to conduct a fatal flaw analysis of the project's design,proposed costs,and economic evaluations.The review was not a detailed evaluation,but rather a cursory review to provide the following: 1.An opinion as to the validity of the approach and whether or not it is reasonable for AIDEA and Exergy to approach the City of Unalaska with respect to the general terms and conditions of a power sales agreement. A preliminary opinion as to the reasonableness of the operation,maintenance,and capital costs presented in the financial projections. Feasibility of the technology. CONCLUSIONS Based on the information reviewed and the assumptions developed herein,we have concluded the following: 1.The approach presented by Exergy appears to be reasonable.AIDEA and Exergy should approach the processors'with respect to the target rates that AIDEA and Exergy would propose that the processors may be willing to pay (with consideration to the processors'perceived avoided costs). The capital costs appear to be understated,as discussed below,in the areas of contingency and potentially owners costs.O&M costs may be understated in the areas identified below.Financial calculations will need to be reviewed to see if 10.5 cents/kilowatt hours is an adequate target. The Kalina cycle technology is feasible as presented herein. 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 ce) Mr.David Germer October 24,1996 Page 2 FINANCIAL ANALYSIS/FEASIBILITY The primary purpose of the review was to determine if there were any fatal flaws in the financial analysis performed by Exergy. Exergy's actual computer model was not provided and,therefore,could not be reviewed for completeness or accuracy.However,a model was developed by AIDEA that incorporates Exergy's various inputs,and this model was provided to us for review.The model appears to capture most of the financial operations of the Makushin Project; however,there are several areas where both input and structural modifications should be made to the model.These included the following: 1.Interest costs on the bonds during construction (Interest During Construction,or IDC) are estimated using a factor applied to the construction costs instead of developing acashflowmodelwhichprovidesamorereliableestimate.[As will be shown later,theamountincludedinthemodelissignificantlylow./nobtrve It is unclear whether or not there is a debt service reserve fund included in the bond size.The fund should be equal to the lesser of one year's debt service or 10 percent of the bonds.wes jacluded Financing costs of the bonds appear to be sized at 2 percent of the sum of the construction costs,interest during construction,and reserve fund.Although not significant to the results,it should be based on the final bond size.<"-s< It appears the provisions for reimbursing AIDEA or others for the costs of previous studies are not included in the bond issuance cost. Debt is amortized over 30 years which may be a little long.If the construction period is two years and interest capitalized just to the end of construction,this would make the total bond life to be 32 years.It may be more prudent to assume a two-year construction period,interest capitalized for at least an additional three months to account for possible construction delays,and amortize the debt over 25-27 years. No administrative and general,project insurance,or wellfield insurance costs appear to be included in the analysis as they are not included in Exergy's O&M estimates.Past studies have included $315,000 per year for the total of these three cost elements. The royalty payment in years 10-20 of the model is based on 3.0%of gross revenues instead of the 3.5%stated by Exergy. A revised computer run was made using the spreadsheet model developed in concert with the previous Project developer but incorporating the revised assumptions provided by Exergy.Specific assumptions used are described as follows: 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 24,1996 Page 3 PROJECT OUTPUT . Project Sales -83 million kilowatt-hours.This amount is consistent with previous studies and ismentioned in the March 15,1996 Exergy letter.No load growth is assumed for this particular case. DEVELOPMENT COsTs Project cost -$74,836,000 as provided in the Exergy documents. Wellfield development costs -$15,270,000,which represents the high estimate provided by Exergy's consultants. OPERATING CosTS Labor -$921,086 per year as provided by Exergy and its consultants.It is presumed that these costs escalate at general inflation. Subcontractors -$952,000 as provided by Exergy and its consultants.Again,these are assumed to escalate with inflation. "Spares -$250,000 as provided by Exergy and escalated with inflation. Below-ground wellfield maintenance -$250,000 as provided by Exergy and escalated with inflation. Well makeovers -$450,000 as provided by Exergy and escalated with inflation. Other operating costs -Other annual operating costs were included pursuant to previous studies,and these include:administrative and general -$135,000;insurance -$150,000;and wellfield insurance -$30,000.None of these were specifically mentioned by Exergy. Royalty payments -2.5 percent of gross sales for years 1-10;3.5 percent of gross sales for years 11-20;and 5.0 percent of gross sales thereafter.These rates are provided by Exergy. BOND DATA Interest rate -8.0 percent. Amortization period -25 years. Cost of issuance -2.0 percent of bond proceeds. Prior studies -It was assumed that $500,000 of studies and other development costs not included in Project costs would be reimbursed to various Project participants by bond proceeds. 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 24,1996 Page 4 Working capital -Pursuant to previous studies,bonds are assumed to fund $1 million for a Working Capital Fund and $1 million for a Reserve and Contingency Fund. Debt service reserve fund -Funded from bond proceeds and equal to the lesser of 10 percent of the bond size or one year's debt service. Capitalization period -Interest on bonds capitalized through March 1999,three months after the assumed on-line date. OTHER Inflation -3.5 percent per year which appears to be the estimate used by Exergy. On-line date -January 1999,which coincides with the year of Exergy's stated entry rate.No details have been provided by Exergy as to the latest date Project development can begin and still maintain this on-line date. Target rate -10.5 cents/kilowatt-hour in 1996 dollars.Exergy's summary of results includes entry rates in 1996 ranging from 10.0 -11.0 cents/kilowatt-hour. Target rate escalation -Two cases were run:Case 1A with an escalation equal to general inflation and Case 1B with a 2.5 percent real escalation.Exergy provides varying rates of escalation of the Target Rate,but it is unknown whether these escalation rates are real or nominal. Rate stabilization -A rate stabilization fund is assumed to be established in 1997 at the start of Project development.The fund is drawn from when actual Project costs would cause power rates to be greater than the Target Rate.Repayment to the Rate Stabilization Fund would be made in later years when Project costs are less than the Target Rate. FINANCIAL ANALYSIS Based on the assumptions described above,the following results were obtained: 11-00223-10101-0101 |£::002156\11-00223\jaf003tf.doc Mr.David Germer October 24,1996 Page 5 Case 1A 1B Target Rate (cents/kWh -1996 $)10.5 10.5 Target Rate Escalation (Real)0.0%2.5% Bond Size $120.5 $120.5 Rate Stabilization Initial Deposit $28.9 $10.3 30-yr Return to RSF 4.6%17.1% 30-yr Gross Profit of RSF $59.7 $381.5 Exergy's Case IVr has a Target Rate of 10.5 cents/kilowatt-hour escalated at 2.5 percent,a Rate Stabilization Fund Minimum Balance of $10.5 million and a 30-year gross profit of $8.2 million.The amounts of rate stabilization calculated in Case 1B and Exergy's IVr are fairly close;however,the long-term profits are significantly different.Thus,it appears that Exergy may have incorporated a different pricing structure for the Target Rate in the later years than assumed in our analysis. The results shown in Table 1 are not meant to describe a particular set of Base Case assumptions but rather they are an attempt to duplicate as close as possible one of the Exergy cases.A more complete analysis would provide insights into the benefits and risks involved when input assumptions such as load growth,interest rates,operating costs,and others varied. AVOIDED Costs In the March 15,1996 letter,Exergy states they believe the Project energy can be sold for no more than the City's and processors'avoided cost.Since all their analyses are based on Target Rates ranging from 10.0 -11.0 cents/kilowatt-hour in 1996 dollars,it appears that the analysis is based on the assumption that the avoided costs are equal to 10.5 cents/kilowatt hour.However,based on previous analyses,the City's avoided costs are below this amount. AIDEA and Exergy should approach the processors with respect to the target rates that AIDEA and Exergy would propose processors may be willing to pay (with consideration to perceived avoided costs). 11-00223-10101-0101 |£\002156\11-00223\af003tf.doc Mr.David Germer October 24,1996 Page 6 OPERATIONS AND MAINTENANCE ESTIMATE The operation and maintenance costs appear reasonable based on the information available.Certain assumptions are made,however,which could also impact these costs such as availability of qualified personnel,actual number of wells required to supply the required brine,and other unknowns primarily associated with the wellfield.As noted in the GeothermEx report,successful completion of the confirmation well is necessary before their estimate can be refined. FEASIBILITY OF KALINA CYCLE Based on the data reviewed and described above,it is R.W.Beck's opinion that the project is technically feasible.Geothermal generating facilities are currently being successfully operated and developed in the United States,as well as many international locations.The Kalina cycle is a developmental thermodynamic cycle which has been demonstrated on a prototype basis.More analysis would be required to assess the long-term operation and maintenance issues associated with the system,but since the Kalina cycle is not a significant departure from binary or flash cycle technologies,it is R.W.Beck's opinion that these risks are minimal. The information provided indicates that the operation and maintenance costs as well as the project capital costs are very preliminary and intended for planning only.The most significant risks are the unknown geotechnical conditions and the wellfield development risks.The assumptions on which the estimates were prepared are stated by Walsh Construction and GeothermEx and are reasonable based on the developmental stage of the Project.However,R.W.Beck would typically expect a project cost to include contingency of up to 20 percent for a project in this phase of development.We also noted that no owner's indirect costs are included with the estimate.This would include costs such as owner's permitting,development,engineering,etc.These costs need to be accounted for and included.If permitting,development,engineering,etc.are not included,these costs could increase the overall costs by 20 -30 percent of the engineering procurement and construction cost. ADDITIONAL DATA REQUEST Prior to completing a detailed evaluation and independent engineering review of the plant, R.W.Beck would require the following information: =Acopy of Exergy's computer output which supports their results (soft and hard copies, if available). 11-00223-10101-0101 |£:\002156\11-00223\jaf003tf.doc Mr.David Germer October 24,1996 Page 7 All assumptions utilized in the financial analysis,pricing structures,and the cash flows during construction as well as during Project operations. Completed geotechnical report with recommendations for foundation designs. A conceptual design of the generating facility and infrastructure (roads,transmission line,etc.)with an accompanying detailed cost estimate. Completion and testing of the confirmation well and a summary of the wellfield requirements from GeothermEx based on the test results. Status report on the Exergy demonstration plant at the Department of Energy's Energy Technology Engineering Center showing the performance of the Kalina cycle. A detailed cost estimate of the project. Other data may be required as the review progresses. If you have any questions or comments,please call me at 303-299-5248. Sincerely, R.W.BECK,INC. CY HZ Todd W.Filsin Senior Director Cc Mike Hubbard 11-00223-10101-0101 |£.\002156\11-00223jaf003tf.doc September 24,1996 via Federal Express Mr.David Germer E Cc E |V FEProjectManageraAlaskaIndustrialDevelopment&Export Authority .an : 48 West Tudor SEP 25 155 Anchorage,AK 99503 Alaska Industrial Development Dear Mr.Germer:and Export Authority PURPOSE R.W.Beck has reviewed the information provided by Exergy,Inc.describing the proposed Makushin Geothermal project.The information includes a letter dated March 15,1996 from H.M.Liebowitz of Exergy,Inc.to AIDEA and a report entitled "Makushin Geothermal Project Revisited”dated March 1996.The purpose of this review is to conduct a fatal flaw analysis of the project's design,proposed costs,and economic evaluations.The review was not a detailed evaluation,but rather a cursory review to provide the following: 1.An opinion as to the validity of the approach and whether or not it is reasonable for AIDEA and Exergy to approach the City of Unalaska with respect to the general terms and conditions of a power sales agreement. 2.A preliminary opinion as to the reasonableness of the operation,maintenance,and capital costs presented in the financial projections. 3.Feasibility of the technology. FINANCIAL ANALYSIS/FEASIBILITY The primary purpose of the review was to determine if there were any fatal flaws in the financial analysis performed by Exergy. The documents reviewed provide little detail on the financial assumptions utilized,and the results lack much explanation.Consequently,a thorough review of Exergy's financial analysis could not be performed,and Exergy's results could not be duplicated by R.W. Beck.However,enough data was provided that when supplemented with data and pricing structure from previous studies,an analysis could be performed.These results were compared to those of Exergy,but they should not be expected to track Exergy's completely. 11-00223-10101-0101 |£:\002156\11-00223\jaf001tf.doc 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 Mr.David Germer September 24,1996 Page 4 Case 1A 1B Target Rate (cents/kWh -1996 $)10.5 10.5 Target Rate Escalation (Real)0.0%2.5% Bond Size $120.5 $120.5 Rate Stabilization Initial Deposit $28.9 $10.3 30-yr Return to RSF 4.6%17.1% 30-yr Gross Profit of RSF $59.7 $381.5 As stated earlier,Exergy's results do not contain details regarding the assumptions used nor are there explanations on the results themselves.However for Exergy's Case IVr which has a Target Rate of 10.5 cents/kilowatt-hour escalated at 2.5 percent,the Rate Stabilization Fund Minimum Balance is shown to be $10.5 million and the 30-year Gross Profit is $8.2 million.Since the amounts of rate stabilization calculated in Case 1B and Exergy's IVr are fairly close but the long-term profits are significantly different,it appears that Exergy may have incorporated a different pricing structure for the Target Rate in the later years than assumed in our analysis. The results shown in Table 1 are not meant to describe a particular set of Base Case assumptions but rather they are an attempt to duplicate as close as possible one of the Exergy cases.A more complete analysis would provide insights into the benefits and risks involved when input assumptions such as load growth,interest rates,operating costs,and others varied. AVOIDED Costs In the March 15,1996 letter,Exergy states they believe the Project energy can be sold for no more than the City's and Processors'avoided cost.Since all their analyses are based on Target Rates ranging from 10.0 -11.0 cents/kilowatt-hour in 1996 dollars it appears that the analysis is based on the assumption that the avoided costs are equal to 10.5 cents. However,the City's avoided cost is below this amount even if a very generous portion of production costs in addition to fuel and purchased power are included.The City and Processors will ultimately have to decide what they are willing to pay,but the Target Rate may have to be less than that assumed in the analysis. 11-00223-10101-0101 |£\002156\11-00223\af001tf.doc Mr.David Germer September 24,1996 Page 5 OPERATIONS AND MAINTENANCE ESTIMATE The operation and maintenance costs appear reasonable based on the information available.Certain assumptions are made,however,which could also impact these costs such as availability of qualified personnel,actual number of wells required to supply the required brine,and other unknowns primarily associated with the wellfield.As noted in the GeothermEx report,successful completion of the confirmation well is necessary before their estimate can be refined. FEASIBILITY OF KALINA CYCLE Based on the data reviewed and described above,it is R.W.Beck's opinion that the project is technically feasible.Geothermal generating facilities are currently being successfully operated and developed in the United States,as well as many international locations.The Kalina cycle is a developmental thermodynamic cycle which has been demonstrated on a prototype basis.More analysis would be required to assess the long-term operation and maintenance issues associated with the system,but since the Kalina cycle is not a significant departure from binary or flash cycle technologies,it is R.W.Beck's opinion that these risks are minimal. The information provided indicates that the operation and maintenance costs as well as the project capital costs are very preliminary and intended for planning only.The most significant risks are the unknown geotechnical conditions and the wellfield development risks.The assumptions on which the estimates were prepared are stated by Walsh Construction and GeothermEx and are reasonable based on the developmental stage of the Project.However,R.W.Beck would typically expect a project cost to include contingency of up to 20 percent for a project in this phase of development.We also noted that no owner's indirect costs are included with the estimate.This would include costs such as owner's permitting development,engineering,etc.R.W.Beck would expect these costs to be in the range of 20 -30 percent of the Engineering Procurement and Construction cost. Prior to completing a detailed evaluation and independent engineering review of the plant, R.W.Beck would require the following information: ADDITIONAL DATA REQUEST In order for a thorough review to be completed,it would be necessary to obtain the following: =Acopy of Exergy's computer output which supports their results. =All assumptions utilized,pricing structures,and the cash flows during construction as well as during Project operations. 11-00223-10101-0101 |£:\:002156\11-00223\jaf001tf.doc Mr.David Germer September 24,1996 Page 2 ASSUMPTIONS In order to conduct the review,the spreadsheet model developed in concert with the previous Project developer was updated and revised to include new assumptions and payment structures.Specific assumptions used are described as follows. PROJECT OUTPUT Project Sales -83 million kilowatt-hours.This amount is consistent with previous studies and is mentioned in the March 15,1996 Exergy letter.No load growth is assumed for this particular case. DEVELOPMENT Costs Project cost -$74,836,000 as provided in the Exergy documents. Wellfield development costs -$15,270,000,which represents the high estimate provided by Exergy's consultants. OPERATING Costs Labor -$921,086 per year as provided by Exergy and its consultants.It is presumed that these costs escalate at general inflation. Subcontractors -$952,000 as provided by Exergy and its consultants.Again,these are assumed to escalate with inflation. Spares -$250,000 as provided by Exergy and escalated with inflation. Below-ground wellfield maintenance -$250,000 as provided by Exergy and escalated with inflation. Well makeovers -$450,000 as provided by Exergy and escalated with inflation. Other operating costs -Other annual operating costs were included pursuant to previous studies,and these include:administrative and general -$135,000;insurance -$150,000;and wellfield insurance -$30,000.None of these were specifically mentioned by Exergy. Royalty payments -2.5 percent of gross sales for years 1-10;3.5 percent of gross sales for years 11-20;and 5.0 percent of gross sales thereafter.These rates are provided by Exergy. BOND DATA Interest rate -8.0 percent Amortization period -25 years Cost of issuance -2 percent of bond proceeds 11-00223-10101-0101 |£:\002156\11-00223\jaf001t£.doc Mr.David Germer September 24,1996 Page 3 Prior studies -It was assumed that $500,000 of studies and other development costs not included in Project costs would be reimbursed to various Project participants by bond proceeds.' Working capital -Pursuant to previous studies,bonds are assumed to fund $1 million for a Working Capital Fund and $1 million for a Reserve and Contingency Fund. Debt service reserve fund -Funded from bond proceeds and equal to the lesser of 10 percent of the bond size or one year's debt service. Capitalization period -Interest on bonds capitalized through March 1999,three months after the assumed on-line date. OTHER Inflation -3.5 percent per year which appears to be the estimate used by Exergy. On-line date -January 1999,which coincides with the year of Exergy's stated entry rate.No details have been provided by Exergy as to the latest date Project development can begin 'and still maintain this on-line date. Target rate -10.5 cents/kilowatt-hour in 1996 dollars.Exergy's summary of results includes entry rates in 1996 ranging from 10.0 -11.0 cents/kilowatt-hour. Target rate escalation -Two cases were run:Case 1A with an escalation equal to general inflation and Case 1B with a 2.5 percent real escalation.Exergy provides varying rates of escalation of the Target Rate,but it is unknown whether these escalation rates are real or nominal. Rate stabilization -A rate stabilization fund is assumed to be established in 1997 at the start of Project development.The fund is drawn from when actual Project costs would cause power rates to be greater than the Target Rate.Repayment to the Rate Stabilization Fund would be made in later years when Project costs are less than the Target Rate. FINANCIAL ANALYSIS Based on the assumptions described above,the following results were obtained. 11-00223-10101-0101 |£:\002156\11-00223\jaf001tf.doc Mr.David Germer September 24,1996 Page 6 =Completed geotechnical report with recommendations for foundation designs. =A conceptual design of the generating facility and infrastructure (roads,transmission line,etc.)with an accompanying detailed cost estimate. =Completion and testing of the confirmation well and a summary of the wellfield requirements from GeothermEx based on the test results. m=Status report on the Exergy demonstration plant at the Department of Energy's Energy Technology Engineering Center showing the performance of the Kalina cycle. =Other data may be required as the review progresses. CONCLUSIONS 1. 2. 3. Based on the information provided,the approach presented appears to be reasonable. AIDEA and Exergy should approach the processors with respect to the rates the processors would be willing to pay to identify what the "actual”avoided costs are. The capital costs appear to be understated as discussed above. The Kalina cycle technology is feasible as presented herein. If you have any questions or comments,please call me at 303-299-5248. Sincerely, R.W.BECK,INC. Todd W.Filsinger Senior Director 11-00223-10101-0101 |£:\002156\11-00223\jaf001tf.doc Case 1A 11-Sep-96 8:06:53 CAPITAL COST DATA/PARAMETERS AEA/AIDEA UNALASKA GEOTHERMAL PROJECT Bond Sizing Analysis (Dollars in Thousands) Base Year FINANCING DATA Construction Cost $74,836 Jun-96 Bond Issue Dates (EOM)Dec-96 Drilling,Field Development,etc.15,270 =Jun-96 Cost of Capital 8.00% Escalation 0 Reinvestment Rate 5.00% Other Costs 0 Cost of Issuance 2.00%of bonds Total Development Costs >90,106 Other Costs 0 Less:Initial Studies 500 Grant 0 Bond Insurance 0.00%of debt svc Equity Participation R&C Fund Requirement 1,000 AIDEA 0 Working Capital 1,000 Processors 0 Debt Amortization Period 25 years Bond Financed Amount $90,106 OPERATING COSTS Reinvestment Rates during Operations: RSF Fund 5.00% Salaries 1996 §WC Fund 4.00% Plant Superintendent 80.000 J $80.000 R&C Fund 5.00% Administrative Ass't 31.200 i 31.200 Well Rehab Fund 5.00% Ops/Maintenance 56.784 7 397.488 DSR Fund 7.00% Mechanical Maint.66.600 1 66.600 J&E Tech 27.040 1 27.040 Target Rate: Utility Person 31.200 |31.200 Base Rate 10.5 cents/kWh $633.528 Base Year 1996 year Overtime 75,000 Inflator (Real)0.00% Payroll Burden 30%212.558 Total Payroll $921,086 Average Annual Escalation Factor: Subcontracts/Spares/Wellfield Maintenance 1,902.000 General 3.50% Tota]Operating and Maintenance $2,823.086 Project Cost (Constiuction Period)0% Drilling Cost (Constniction Period)0% Admin &General $135 1996 Insurance $150 1996 Wellfield Insurance $30 1996 Well Reserve Fund Deposit $° Steamfield Royalty Year 1 2.5%of busbar cost NM 3.5%of busbar cost 2)5.0%of busbar cost Annual Energy Sold 83,000 MWh Energy Losse Busbar to Load 0.00% City Costs 0.0 cents/kWh Base Year 1996 Inflation of City Costs 2.00%' Federal Renewable Energy Incentive 0 cents/kWh the Financial Engineering Company Finance;Assumptions Page 1}of2 9/11/96 -8:07 AM Case [A Cash Flow End-of-Period Balances Interest Earniogs Project Grant/Equity Bond Bond Granv/Equity Bond Const Cap intDateCostsFundFundInterestFundFundFund DSR WC/RC Grant Bonds Dec-96 $0 82,612 21,690 11,288 2,000 Jan-97 1,512 0 1,512 0 81,587 21,690 11,288 2,000 0 487 Feb-97 1,512 0 1,512 0 80,557 21,690 11,288 2,000 0 483 Mar-97 2,260 0 2,260 0 78,774 21,690 11,288 2,000 0 471 Apr-97 3,009 0 3,009 0 76,233 21,690 11,288 2,000 0 468 May-97 3,009 0 3,009 0 73,681 21,690 11,288 2,000 0 457 Jun-97 48h 0 48it 4,820 0 69,313 16,870 11,288 2,000 0 443 Jul-97 4,811 0 4,8tl 0 64,907 16,870 11,288 2,000 0 404 Aug-97 4,811 0 481 0 60,483 16,870 11,288 2,000 0 386 Sep-97 3,895 0 3,895 0 56,958 16,870 11,288 2,000 0 370 Oct-97 3,146 0 3,146 0 54,168 16,870 11,288 2,000 0 356 Nov-97 2,398 0 2,398 0 $2,117 16,870 11,288 2,000 0 346 Dec-97 2,398 0 2,398 4,820 0 50,057 12,050 11,288 2,000 0 338 Jan-98 2,245 0 2,245 0 48,121 12,050 11,288 2,000 0 309 Feb-98 2,245 0 2245 0 46,177 12,050 11,288 2,000 0 30! Mar-98 3,895 0 3,895 0 42,573 12,050 11,288 2,000 0 290 Apr-98 4,047 0 4,047 0 38,800 12,050 11,288 2,000 0 275 May-98 5,254 0 5,254 ; 0 33,803 12,050 11,288 2,000 0 256 Jun-98 5,406 0 $,406 4,820 0 28,631 7,230 11,288 2,000 0 235 Jul-98 5,712 0 5,712 0 23,113 7,230 11,288 2,000 0 193 Aug-98 5,712 0 5,712 0 17,571 7,230 11,288 2,000 0 170 Sep-98 4,963 0 4,963 0 12,756 7,230 11,288 2,000 0 148 Oct-98 4,505 0 4,505 0 8,380 7,230 11,288 2,000 0 129 Nov-98 4,505 0 4,505 0 3,985 7,230 11,288 2,000 0 til Dec-98 4,047 0 4,047 4,820 0 32 2,410 11,288 2,000 0 94 Jan-99 0 0 0 0 97 2,410 11,288 2,000 0 66 Feb-99 0 0 0 0 163 2,410 11,288 2,000 0 66 Mar-99 0 0 0 2,410 0 229 0 11,288 2,000 0 66 $90,106 0 21,690 0 7,724 the Financial Engineering Company Page |of | Finance;BASECASE 9/11/96 -8:14 AM the Financial Engineering Company Finance;BASECASE Case 1A SOURCES: USES: SOURCES AND USES OF FUNDS Bonds: Bond I Grant. Equity Interest Earnings Grant Bond Funds Total Sources Construction: Project Construction Drilling Escalation Cost of Issuance Bond Insurance Initial Studies Capitalized Interest DSR R&C/WC Funds Rounding Total Uses 120,500 0 0 128,224 500 21,690 11,288 2,000 229 128,224 Page 1 of| 9/11/96 -8:14 AM Case 1A EXPENSES nsusance WVelifield Insurance Jeneral &Administrative (owner) Loyalty "otal Cast of Operations Wher Costs: Deposit to DSR Fund Deposit to Well Reserve Deposit to R &C Fund 'ebt Service o Working Capital Fund ity Costes OTAL EXPENSES (TEREST &OTHER INCOME som Working Capital Fund OE Lncentives SR Interest Earnings ansfer from (to)RSF ITAL OTHER INCOME JTAL DELIVERED COST OF POWER: Dollars Cents/kWh (Nominal) 1996 Dollars ergy Sales (million kWh) te Stabifi Fund S:y Withdrawals to Project Deposits to Fund o sund Deposit Required (6/95) leturn on RSF 4.6% the Financial Engineering Company Finance;BASECASE ALASKA ENERGY AUTHORITY UNALASKA GEOTHERMAL PROJECT Aanual Cests of Power (Dears ie Thousands) \2 3 4 Calendar Year 1999 2000 2001 2002 1,021 1,057 1,094 1,132 2,109 2,183 2,259 2,338 166 72 178 184 33 34 36 37 150 15S 160 166 242 250 259 268 3,721 3,851 3,986 4,125 Q 0 0 0 0 0 0 0 0 0 0 0 8,466 11,288 11,288 11,288 1,005 1,030 1,066 1,103 9 Q Q Q 13,192 16,169 16,340 16,597 1,000 1,035 1,071 1,109 ()0 0 Q $93 79 790 7190 1937 4.343 4,128 3,905 3,530 6,168 $,989 5,804 9,662 10,001 10,351 10,713 11.6 12.0 12.5 12.9 10.5 105 10.5 10.5 83,000 83,000 83,000 83,000 0 1,937 4343 4,128 3,905 ty 0 0 0 0 0 (1) 11,288 1,t42 Q 16,700 i) 0 (1,288 1,182 Qo 16,889 11,476 13.8 10.5 93,000 3,435 a 0 11,288 1,223 0 17,085 0 Q 41,288 1,266 ° (7,288 9 9 £1,288 1,356 9 U7,715 2009 2010 1441 Lot 2,975 3,079 235 23 47 49 au 219 477 Bika 5,385 $,573 0 [) 0 ) 0 ° 11,288 11,288 1,404 1,453 9 Q 18,077 18,314 Lau 1,460 0 ) 790 790 2,246 19ST 4447 4,207 13,630 14,107 164 17.0 10.5 10.5 53,000 83,000 2,246 1,957 0 0 Page |of 3 9/11/96-8:15 AM Case 1A EXPENSES Labor Subcontracts Insurance Wellfield Insurance General &Administrative (owner) Royalty Total Cost ofOperations Other Costs: Deposit to DSR Fund Deposit to Weil Reserve Deposit to R &C Fund Debt Service To Working Capita)Fund City Costs COTAL EXPENSES NTEREST &OTHER INCOME rom Working Capital Pund OE Incentives ISR Interest Earnings 'transfer from (to)RSF 'OTAL OTHER INCOME OTAL DELIVERED COST OF POWER: Dollars Cents/Wh (Nominal) 1996 Dollars nergy Sales (mitlion kWh) ate Stabilization Fund Summary Withdrawals to Project 9 Deposits to Fund Fund Deposit Required (6/95)$28,930 Return on RSP 4.6% the Financial Engineering Company Finance;BASECASE Calendar Year 1,349 16,188 19.5 10.5 83,000 0 0 14,288 1,725 a 19,633 368 18,576 22.4 10.5 83,000 749 9 Qo 11,288 1,980 Qo 21,152 854 8,160 Q t] 41,288 2,049 i] 21,498 1251 23 24 2021 2022 2,177 2,253 4,495 4,652 354 367 7 73 319 330 1,030 1,066 8,446 8,741 0 0 0 0 0 0 11,288 (1,288 2,121 2,195 Q Q 21,855 22,225 2,132 2,206 0 0 790 790 1,662 088: 1259 908 20,596 2317 248 25.7 105 10.5 83,000 83,000 Q 0 1,662 2,088 Page 2 of 3 9/1196 -8:15 AM the Financial Engineering Company Finance;BASECASE Case 1A EXPENSES Labor Subcontracts Insurance Wellfield Insurance General &Administrative (ovmer) Royalty Total Cost of Operations Others Costs: Deposit to DSR Fund Deposit to Well Reserve Deposit to R &C Fund Debt Service To Working Capital Fund City Costs TOTAL EXPENSES INTEREST &OTHER INCOME From Working Capital Fund DOE Incentives DSR Interest Earnings Transfer from (to)RSF TOTAL OTHER INCOME TOTAL DELIVERED COST OF POWER: Dollars Cents/'kWh (Nominal) 1996 Dollars Energy Sales (mitlion kWh) Rate Stabilization Fund Summary Withdrawals to Project Deposits to Fund Fund Deposit Required (6/95) Retum on RSF Calendar Year $28,930 40% 2s keictory0 0 2,822 2,272 0 14,141 2,283 0 12,078 (22,283) (7,921) 22,063 26.6 105 22,283 19,715 2,363 (13,483) CUi,bt9) 13,483 (13,954) (11,508) 23,634 285 10.5 $3,000 13,954 (14,443) (UL,9tt) 14,443 1,266 10,382 12,989 2,620 (24,948) (12,328) 25,317 30.5 10.5 83,000 14,948 (15,472) (12,760) 26,203 316 10.5 83,000 15,472 Page 3 of3 9/41/96 -8:13 AM Case X EXPENSES Labor Subcontracts Insurance Wellfield Insurance General &Administrative (owner) Royalty Total Cost of Operations Other Costs: Deposit to DSR Fund Deposit to Well Reserve Deposit to R &C Fund Debt Service To Working Capital Fund City Costs TOTAL EXPENSES INTEREST &OTHER INCOME From Working Capital Fund DOE Incentives DSR Interest Earnings Transfer from (to)RSF TOTAL OTHER INCOME TOTAL DELIVERED COST OF POWER: Dollars Cents/kWh (Nominal) 1996 Dollars Energy Sales (million kWh) Rate Stabilization Fund Summary Withdrawals to Project Deposits to Fund Fund Deposit Required (6/95) Retum on RSF ig.)2.5%kerk Bec i Calendar Year 1999 $10,271 {71% the Financial Engineering Company Finance;BASECASE ALASKA ENERGY AUTHORITY UNALASKA GEOTHERMAL PROJECT Asoeal Costs of Pewer (Dollars in Thousands) 2 3 4 5 6 2000 2001 2002 2003 2004 1,057 1,094 1,132 1,172 1243 2,183 2,259 2,338 2,420 2,505 472 178 184 191 198 34 36 37 38 40 155 160 166 (72 178 250 259 268 277 287 3,851 3,986 4,125 4,270 4 AID ti)Q 0 0 q 0 9 0 0 0 ti)t)0 0 0 11,288 11,288 1,288 11,288 41,288 1,030 1,066 1,103 942 482 9 9 9 Q Q 16,169 16,340 16,517 16,700 16,889 1,035 1,071 1,109 1,148 188 9 0 0 9 (*) 790 7H 790 790 790 3,341 2,816 2,256 1,658 L021 5,167 4,677 4.154 3,596 2,999 11,002 11,663 (2,362 13,104 13,890 13.3 14.1 149 15.8 16.7 116 118 12.1 $24 12.7 83,000 83,000 83,000 83,000 83,000 3,341 2,816 2,256 1,658 1,021 0 0 9 0 0 14,724 7 30 83,000 342 9 0 11,288 1,266 9 07,288 382 9 10 VY 12 2007 2008 2009 2010 1,345 (,392 1,441 1,491 2,777 2,874 2,975 3,079 219 227 235 243 44 45 47 49 97 204 2u1 219 318 329 477 494 4,900 $,071 5,385 5,573 9 0 0 0 0 0 0 0 0 0 0 0 U1,288 11,288 11,288 11,288 1,310 1,356 1,404 1,453 Q Q 9 Q 17,498 WANS 18,077 18,314 3,317 1,363 1,41l 1,460 0 0 0 0 790 7190 790 7% (1,153)(1974),(2,713)(3,640) 954 179 (512)(1,389) 16,544 17,536 18,588 19,704 19.9 2u1 224 23.7 13.7 140 143 147 83,000 83,000 83,000 33,000 90 0 0 0 1,153 1,974 2,713 3,640 Page |of 3 S/LLA96 -11:18 AM Caspian”18 EXPENSES Labor Subcontracts fasurance Wellfield Insucance General &Administrative (owner) Royalty Total Cost of Operations Other Costs: Deposit to DSR Fund DeposittoWell Reserve Deposit to R &C Fund Debt Service To Working Capital Fund City Costs TOTAL EXPENSES INTEREST &OTHER INCOME From Working Capital Fund DOE Incentives DSR Interest Earnings Transfer from (to)RSF TOTAL OTHER INCOME TOTAL DELIVERED COST OF POWER: Dollars Cents/kWh (Nominal) 1996 Doliars Energy Sales (million kWh) Rate Stabilization Fund Summary Withdrawals to Project Deposits to Fund Fund Deposit Required (6/95) Return on RSF the Financial E Calendar Year $10,271 171% Finance;BASECASE _Cc pay 790 (4,627) (2,326) 20,886 25.2 15.0 4,627 79 (5,679) (3,324) 22,139 26.7 15.4 5,679 7190 (6,798) (4,389) 23,468 28.3 15.8 0 0 11,288 1,667 7 18 19 2015 2016 2017 4771 1,833 -9,897 3,687 3,785 3,917 288 298 309 58 60 62 260 269 278 586 601 628 6,619 6.851 7,091 0 0 0 0 ry 0 0 0 0 11,288 11,288 U,288 1,725 1,786 1,848 9 9 9 19,633 19,925 20,227 1,734 1,795 1,857 0 0 0 790 790 790 (9,259)(10,610)(12,048) (6,735)(8,025)(9,400) 26,368 27,950 29,627 38 33.7 357 16.5 169 173 83,000 83,000 83,000 0 0 0 9,259 10,610 12,048 1,339 790 (13,577) (10,865) 31,405 378 17.8 83,000 13,577 0 Q 11,288 1,980 9 21,152 1,990 (14917) (12,137) 33,289 40.1 18.2 83,000 Q 14,917 (16,638) (13,789) 16,638 23 24 2021 2022 2,177 2,253 4,495 4,682 354 367 n 73 Hg 330 1,030 1,066 8,446 8,741 0 0 0 0 0 0 11,288 14,288 2,121 2,195 Q Q 2,855 22,225 2,132 2,206 0 90 790 790 (8,470)(20,419) (15,549)(17,423 37,404 39,648 45.1 478 (9k 19.5 83,000 83,000 Q 0 38,470 20,419 Page 2 of 3 9/11/96-1:15 AM the Financial Engineering Company Finance;BASECASE Case iG EXPENSES Labor Subcontracts fosurance Wellfield Insurance General &Administrative (owner) Royalty Total Cost of Operations Other Coats: Deposit to DSR Fund Deposit to Well Reserve Deposit to R &C Fund Debt Service To Working Capital Fund City Costs TOTAL EXPENSES INTEREST &OTHER INCOME Prom Working Capital Fund DOE Incentives DSR Interest Earnings Transfer from (to)RSF TOTAL OTHER INCOME TOTAL DELIVERED COST OF POWER: Dollars Centsv/kWh (Nominal) 1996 Dollars Energy Sales (million kWh) Rate Stabilization Fund S y Withdrawals to Project Depositsto Fund Fund Deposit Required (6/95) Retum on RSF 25 Calendar Year 2023 2,283 0 12,078 (42,247) (27,885) 42,027 506 20.0 83,000 0 42,247 $10,271 17.1% 2,363 (5,196) (32,833) 35,196 2,446 (7,542) (35,096) 47,221 569 21.0 37,542 28 2026 2,585 $,339 2,532 (40,036) (37,505) 50,055 3 215 83,000 40,036 2,620 (42,689) (40,069) 53,058 63.9 22.0 83,000 42,689 406 U3to 10,745 2,712 £45,509) (42,797) 56,241 678 22.5 83,000 45,509 Page3of39/11/96=11:15 AM STATE OF ALASKA ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY NOTICE TO PROCEED AND INVOICE SUMMARY NTP NO:Sixteen (16) AGREEMENT NO:NO:93-017 PROJECT NO:64 PROJECT TITLE:Professional Architectual and Multi-Disciplined Engineering Services CONTRACTOR:R.W.Beck and Associates INSTRUCTIONS AND PAYMENTS EXPLANATION ON REVERSE NOTICE TO PROCEED (NTP) IN ACCORDANCE WITH OUR AGREEMENT FOR THE ABOVE PROJECT,PROVIDE THE FOLLOWING SERVICES (OR SERVICES ASDESCRIBEDONTHEFOLLOWINGREFERENCEDATTACHMENT): This NTP allows R.W.Beck to complete Phase 1 -Fatal Flaw Analysis as outlined in R.W.Beck's May 2,1996 letter to David E.Germer. COMPENSATION FOR THE ABOVE SERVICES,BY THE METHOD(S)OF PAYMENT SPECIFIED IN OUR AGREEMENT SHALL NOT EXCEED: $5,000.00 ;WHICH INCREASES THE TOTAL AUTHORIZED AMOUNT TO:$396,780.00 Aaa [e)™(PRQJECT MANAGER)NTP ACCEPTED (CONTRACTOR'S MANAGER) Wank ©.From,Auaerke2 1996 SIGNATURE DATE SIGNATURE DATE NAME:David E.Germer PHONE:(907)269-3000 NAME:Todd Filsinger PHONE:(303)297-2811 ADDRESS:480 West Tudor Road ADDRESS:Bank One Building,Suite 1900 Anchorage,Alaska 99503-6690 1125 Seventeenth Street Denver,Colorado 80202-2615 INVOICE SUMMARY FOR AGREEMENT SEQUENTIAL INVOICE NUMBER FOR THE AGREEMENT:CONTRACTOR'S INVOICE NUMBER: METHOD OF PAYMENT AUTHORIZED AMOUNT PREVIOUS INVOICES THIS INVOICE TOTALS TO DATE BALANCE AUTHORIZED FIXED PRICE(S)$$$$$ UNIT PRICE(S)$$$$$ PERSONNEL RATES $5,000.00 $$$$ DIRECT NON-SALARY $$$$$ COSTS NEGOTIATED MARKUP $$$$$ COST PLUS FIXED FEE $$$$$ (SALARY)($)($s )($»(S$»($s ) (NON-SALARY)-($»($($s (Ss )($) (INDIRECT)($)($($s ($s »($) (FEE)($»($s ae))($s »¢$) TOTALS $$$$$ PAYMENT REQUEST (CONTRACTOR)PAYMENT APPROVED (AUTHORIZED OFFICER) SIGNATURE DATE SIGNATURE DATE NAME:Todd Filsinger NAME: PAYMENT RECOMMENDED (PROJECT MANAGER)COST ACCOUNTING INFORMATION ACTIVITY AMOUNT SIGNATURE DATE $ NAME:Davd E.Germer PHONE: NTPANVOICE AIDEA/AEA PAGE 10F 2 JULY 1994 CONTRACTOR'S INSTRUCTIONS 1.KEEP THE SIGNED,UNMARKED COPY OF THIS FORM FOR REPRODUCTION AND BILLING. 2.COMPLETE ITEMS WITHIN THE NTP ACCEPTED BLOCK,INVOICE SUMMARY FOR AGREEMENT BLOCK,AND THE PAYMENT REQUEST BLOCK IN ACCORDANCE WITH THESE INSTRUCTIONS. 3.IF THE NOTICE TO PROCEED IS UNACCEPTABLE,CONTACT THE ISSUING OFFICER IMMEDIATELY.IF ACCEPTABLE, ACKNOWLEDGE BY SIGNATURE UNDER THE NTP ACCEPTED BLOCK OF THIS FORM AND RETURN A COPY OF IT TO THE ISSUING OFFICER WITHIN TEN DAYS FOLLOWING RECEIPT. 4.SUBMIT EACH INVOICE (MUST BE AN ORIGINAL)TO THE CONTRACTING AGENCY WHEN ALL SERVICES ARE COMPLETED OR MONTHLY FOR THAT PORTION OF THE SERVICES THAT ARE COMPLETED,AS APPROPRIATE,.YOU SHOULD USE YOUR FIRM'S INVOICE FORMS;HOWEVER,YOU MUST ALSO PROVIDE A COPY OF THE ACCEPTED NTP (LAST CONSECUTIVELY NUMBERED NTP AND INVOICE SUMMARY FORM WHICH WAS ISSUED FOR THE AGREEMENT)WITH EACH INVOICE AND WITH ALL INVOICE SUMMARY INFORMATION ENTERED,AS INDICATED,FROM THE INFORMATION CONTAINED IN THE ACCOMPANYING INVOICE. 5.ITEMIZE CHARGES UNDER THE INVOICE SUMMARY BLOCK BY THE METHOD(S)OF PAYMENT WHEN REQUIRED BY OUR AGREEMENT,AND IF SPECIFIED UNDER THE AGREEMENT,FURTHER SEGREGATE BY PHASE,TASK,OR WORK PRODUCT IN AN ATTACHMENT TO THIS FORM. 6.SUBSTANTIATE ALL CHARGES (OTHER THAN FOR FIXED PRICE OR FIXED FEE COMPENSATION)BY ATTACHING RECEIPTS,EXCEPT FOR AN AMOUNT LESS THAN $25.00 FOR MISCELLANEOUS (AUTHORIZED)TRAVEL EXPENSES WHICH MAY BE ITEMIZED AS ALLOWED BY IRS REPORTING POLICIES;TIME SHEETS;SUMMARY OF UNITS COMPLETED;OR OTHER PROOF OF EXPENDITURES.FOR FIXED PRICE OR FIXED FEE COMPENSATION,PROVIDE THE CONTRACTING AGENCY WITH DETAILED DOCUMENTATION OF PROGRESS THAT WILL SUPPORT THE AMOUNT OF PAYMENT BEING REQUESTED BY THE CONTRACTOR. 7.SIGN AND DATE UNDER THE CONTRACTOR PAYMENT REQUEST BLOCK IN ACCORDANCE WITH THE FOLLOWING ACKNOWLEDGMENT:BY SIGNATURE ON THIS FORM,THE CONTRACTOR CERTIFIES ENTRIES TO BE TRUE AND CORRECT FOR SERVICES PERFORMED TO DATE UNDER OR BY VIRTUE OF SAID AGREEMENT.THE CONTRACTOR FURTHER CERTIFIES THAT ALL APPLICABLE FEDERAL,STATE AND LOCAL TAXES INCURRED BY THE CONTRACTOR IN THE PERFORMANCE OF SERVICES HAVE BEEN PAID AND THAT ALL SUBCONTRACTORS ENGAGED BY THE CONTRACTOR FOR SERVICES INCLUDED IN ANY INVOICE SHALL BE FULLY COMPENSATED BY THE CONTRACTOR FOR SUCH SERVICES. PAYMENTS 1.PAYMENTS WILL BE MADE BASED ON APPROVED CONTRACTOR'S INVOICES BY THE METHOD(S)OF PAYMENT SPECIFIED WITHIN OUR AGREEMENT,SUMMARIZED AS FOLLOWS: A.FIXED PRICE(S)-A SINGLE LUMP SUM PAYMENT EQUAL TO THE FIXED PRICE OR PROGRESS PAYMENTS NOT TO EXCEED THE FIXED PRICE(S)AS STATE IN OUR AGREEMENT. B.UNIT PRICE(S)-PAYMENTS EQUAL TO THE NUMBER OF COMPLETED UNITS MULTIPLIED BY THE APPLICABLE UNIT PRICE STATED IN OUR AGREEMENT. C.PERSONNEL RATE -PROGRESS PAYMENTS EQUAL TO THE NUMBER OF HOURS EXPENDED BY EACH NAMED INDIVIDUAL OR BY JOB CLASSIFICATION MULTIPLIED BY THE APPLICABLE HOURLY BILLING RATE STATED IN OUR AGREEMENT (NO MARKUP). D.DIRECT NON-SALARY COSTS -REIMBURSEMENT FOR INCURRED DIRECT COSTS (NO MARKUP)OF SUBCONTRACTS, EQUIPMENT USE AND OTHER EXPENSES WHICH ARE SPECIFICALLY AUTHORIZED BY OUR AGREEMENT,NOT TO EXCEED ANY LIMITS SPECIFIED THEREIN. E.NEGOTIATED MARKUPS -PAYMENTS EQUAL TO A PERCENTAGE,AS STATED IN OUR AGREEMENT,OF INCURRED COSTS AS COMPENSATION FOR SPECIFIC EXPENSES OR PROFIT EXPRESSLY NOT INCLUDED WITHIN ANY OTHER METHOD OF PAYMENT.(COSTS INCURRED FOR ADMINISTRATION AND MANAGEMENT OR HANDING OF SUBCONTRACTS AND OTHER ITEMS OF DIRECT NON-SALARY COSTS ARE GENERALLY ELEMENTS OF DIRECT SALARY COSTS AND/OR INDIRECT (OVERHEAD)COSTS WHICH MAY BE INCLUDED,WITH PROFIT,IN ALL METHODS OF PAYMENT;THEREFORE COMPENSATION BASED ON A NEGOTIATED MARKUP IS NOT ALOQLOWED UNLESS THE SPECIFIC EXPENSES OR PROFIT REPRESENTED BY SUCH MARKUP ARE FULLY IDENTIFIED AND SUCH COMPENSATION IS NOT INCLUDED WITHIN ANOTHER METHOD OF PAYMENT. F.COSTS PLUS FIXED FEE -REIMBURSEMENT FOR INCURRED DIRECT SALARY AND DIRECT NON-SALARY COSTS PLUS A MARKUP,AS STATED IN OUR AGREEMENT,FOR INDIRECT COSTS PLUS A PROGRESS PAYMENT EQUAL TO A PERCENTAGE OF FIXED FEE AS STATE IN OUR AGREEMENT. NTPANVOICE AIDEA/AEA PAGE 2 OF 2 JULY 1994 MAY-@3-1S96 14:42 ° RW caovk P.d2/ga May 2,1996 via Federa}Express Mr.David E.Cermer Project Manager Alaska Industrial Development and Export Authority 480 West Tudor Anchorage,AK 99503 Dear David: Thank you for the opportunity to propose on the review of the Exergy preposal.Our proposal is as follows: SCOPE OF SERVICES Phase |-Fatal Flaw Review As a first step in analyzing the new project plans,we will conduct a fatal flaw analysis of the project's design,proposed costs and economic evaluations.This review will consist of an opinion of the application of the technology being proposed as well as a determination of the general reasonableness of the new capital and O&M figures.As part of the initialanalysis,we will prepare a list of additional information that would be required for a moredetailedappraisal.As a result of this task,we will prepare a short letter report containing the results of this initial fatal flaw analysis. With respect to Phase |,we will review the summary material provided ta us to determine if the approach and magnitude of O&M and capital costs are reasonable and the technology is feasible.The work product from this phase will be: 1.An opinion from Beck as to the validity of the approach and whether or not it isreasonableforAIDEAandthedevelopertoapproachtheCitywithrespecttothe general terms and conditions of a PSA. A preliminary opinion as to the reasonableness of the financial projections (O&M and capital items)presented in the proposal. A preliminary opinion in a letter report,with respect to the feasibility of the technologypresentedincludingadiscussionofthetechnologies"track record”. A list of additional items (if necessary)needed from Exergy to provide a detailed evaluation and independent engineering review of the plan. It should be noted that Phase I will not include any detailed evaluation,but rather a cursory review. 09-00CUO-G0168.51C01620 |jscons'pro\atwatt.dac 733 Suventeerth Street,Suite 1900 Denwor,CO 80202-2615 Phone 13031299-52G0 Fax (393)297 2871 we MAY-O3-13S6 14:42 ¢ RW sek P.@zo4 lf the results of this first analysis are sufficiently encouraging,we will undertake a more detailed analysis of ANEX's project design and cost estimates to determine their accuracy. The review will be limited to only those project components that have been modified or changed by ANEX.The work product from Phase II will be a detailed Jetter report outlining our findings.Mike Hubbard will be available to meet with ALDEA to discuss a draft report before it is finalized to minimize travel costs. Mr.David E.Germer May 2,1996 Page 2 Phase II -Independent Assessment EXPERIENCE AND PERSONNEL R.W.Beck is recognized across the world as a independent engineering firm with respect to geothermal,hydropower,solar,wind,and fossil fueled technologies.Currently,we are Teviewing two geothermal facilities in Java,Indonesia.R.W.Beck has been involved in the financing,construction,operation,and/or testing of over 25 geothermal power plants worldwide,including 13 flash plants and 8 binary projects using pentane or isobutane as the working fluid.While we have not worked on an aqueous ammonia cycle specifically, we are familiar with the thermodynamic principals upon which the Kalina Cycle is based, and have reviewed various applications of recuperation technolegy.1 have attached a statement of qualifications for your review. The personnel we would utilize on this project are as follows: Todd Filsinger $122.08 Mike Henderson $116.74 Jon Neff $103.83 Paul Harmon $100.71 Mike Hubbard $&8.00 Dean Sevy $74.78 The resumes of these individuals are attached hereto. SCHEDULE AND Cost ESTIMATE We would commence work imunediately upon notification to proceed.Phase [would be completed in two weeks.We would anticipate that ANEX would respond to our requestforinformationwithintwoweeksandPhaseIlwouldbecompletedinthreeweeks.This is equivalent to a seven week project schedule.We have added Mike Hubbard to the projectteamtohelpholddownthecostsrelatedtogettingAIDEA's comments through-out the 00-00000-40708-3100/1620 |jAconsipreya(l0éth.des MAY-@3-1996 14:42 RW LK ¢ P.@4/04 HATER process.Assuming we receive adequate data from ANEX,we should be able to complete Phase I and Ul for a price not te exceed $5,000 and 25,000,respectively.We will work with AIDEA as necessary to meet schedule and budget constraints. Mr.David E.Germer May 2,1996 Page 3 1 hope this is fully responsive to your needs.As a point of interest,]have included a "white paper”developed ona Kalina Cycle technology (authored by Kalina &Leibowitz)for your review.Please call me at 303-299-5248 when you have had a chance to review this. Sincerely, R.W.BECK,INC. Todd W.Filsinger Associate and Executive Engineer TWE:jf 00-43000U-40108-$100/1620 |jcons\proljaf0Cotf.doc TOTAL P.O- JUL-@B8-1996 11:84 MINISEA EXECUTIVE 861 5398 P.@1 \S)UniSea oc."Borel (Morler a)Ovm July 8,1996 2)bool v Mr.Riley Snell,Executive Director Fe Alaska Industrial Development &Export Authority 480 West Tudor Road Anchorage,AK 99503-6690 Dear Mr.Snell: Last month I had some productive discussions with Dave Germer of AIDEA,ANEX representatives,and others in Unalaska regarding the Makushin Geothermal Project.1 also attended the group's presentation to the City Council and was gratified to hear the Council's Supportive comments. UniSea is interested in pursuing serious discussions with AIDEA and the developer regarding purchase of project power on 4 requirement basis.As I expressed in previous discussions with ANEX,and to Mr.Germer as well,UniSea is more than willing to leave the power generation business under the proper circumstances.These circumstances,of course,involve a rate structure conipetitive with our existing costs of power and sufficient assurances of a reliability.I hope we can begin discussions toward this end at the earliest possible date. As a large employer and large exporter of product from Alaska,UniSea appreciates AIDEA's interest in a project with such promise for our industry.I hope AIDEA will continue to support development of the Makushin project. Sincerely, UNISEA,INC, Terry Shaff President and CEO ipo UniSaa,Inc.15400 Northeast 90th Street,P.O.Box 9701 9,Redmond,Washington 98073-8719 (206)68t-8181 FAX (206)882-1669 [7708796 10:15a | CC'Dave Alaska State Legislature Representative Carl E.Moses SESSION: STATE CAPITAL BUILDING JUNEAU,ALASKA 99801-1182 CHAIRMAN HOUSE RULES COMMITTEE CHAIRMAN HOUSE SPECIAL COMMITTEE ON FISHERIES INTERIM 716 W.4TH AVE.#630 ANCHORAGE,AK 99501-2133 PHONE:(907)258-8167 FAX:(907)258-3468 MEMBER FINANCE SUBCOMMITTEES ON: DEPT.OF FISH AND GAME DEPT.OF PUBLIC SAFETY and Export Authority Date 6/13/96 Mr.Riley Snell,Executive Director Alaska Industrial Development &Export Authoriitty 480 West Tudor Road Anchorage,AK 99503-6690 Dear Mr.Snell: |appreciate your sending Mr.Germer to Unalaska to participate in meetings with myself,the City staff and City Council,Unisea,the ANEX Joint Venture and others regarding the Makushin Geothermal Project. |believe this project is critical to the future of Unalaska,our country's largest fishing port,and |strongly support its timely development. |hope that AIDEA will continue to work closely with the City,our fish processors and other industries and ANEX,and do all in your power to assist with project development and finance. Sincerely, 4,LEH rveeRep.Carl E.Moses ADAK ¢AKUTAN @ AMCHITKA ®ATKA @ ATTU *BELKOFSKI *CHERNOFSK]¢CHIGNIK *CHIGNIK LAGOON ¢CHIGNIK LAKE *COLD BAY *DUTCH HARBOR EGEGIK *FALSE PASS ®®IGIUGIG «ILIAMNA ®IVANOF BAY *KING COVE «KING SALMON *KOKHANOK #¢KOKHANOK BAY ®LEVELOCK *NAKNEKNELSONLAGOON*NEWHALEN ®NIKOLSKI *«NONDALTON ¢PEORO BAY ®PERRYVILLE *PILOT POINT ¢PORT ALSWORTH ¢PORT HEIDEN ¢PORT MOLLEA SAND POINT ¢SHEMYA #SQUAW HARBOR *SOUTH NAKNEK ®ST.GEORGE ISLAND e ST.PAUL ISLAND ¢UGASHIK ¢UNALASKA ¢UNGA ALASKA INDUSTRIAL DEVELOPMENT exANDEXPORTAUTHORITY{=ALASKAi)SENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 June 5,1996 Mr.Jack S.Wood Principal Manager Kiiguusi Suulutna Land Company 21859 Angeli Place Grass Valley,California 95949 Dear Jack: |very much enjoyed meeting you and Terry in Dutch Harbor.Your knowledge of the area and its history made the side trips that much more fascinating and interesting.|hope to see you again in the very near future. Thanks again for loaning me the enclosed thesis and associated maps/cross sections. Sincerely,»a i) David E.Germer Project Manager Enclosure h:\all\dgermer\makushin\wood.doc +-----$--------------,DATE:-WedneGQ,June 12,1996 vi :Vi O TO:AIDEA)Machovane”I've sent these to Rep.Moses,Sen. FAX:: &::Zharoff,Terry Shaft &Dick Davis :907 269-3020 :and asked them to consider ::sending something similar to :?Riley.FROM: LeResche &Co.bi RL DRAFT LeResche *June 12,1996 Mr.Riley Snell,Executive Director Alaska Industrial Development &Export Authority 480 West Tudor Road Anchorage,AK 99503-6690 Dear Mr.Snell; I enjoyed my very productive discussions with Dave Germer of AIDEA,ANEX representatives,and others in Unalaska earlier this month,regarding the Makushin Geothermal Project.I also attended the group's presentation to the City Council,and was gratified to hear the Council's supportive comments. Unisea is interested in pursuing serious discussions with AIDEA and the developer regarding purchase of project power ona requirements basis.As I expressed in previous discussions with ANEX,and to Mr.Germer as well, Unisea is more than willing to leave the power generation business under the proper circumstances.These circumstances,of course,involve a rate structure competitive with our existing costs of power and sufficient assurances of a reliability.I hope we can begin discussions toward this end at the earliest possible date. As alarge employer and large exporter of product from Alaska,Unisea appreciates AIDEA's interest in a project with such promise for our industry.I hope AIDEA will continue to support development of the Makushin project. Sincerely, Terry Shaff President and CEO DRAFT LeResche ¢June 12,1996 Mr.Riley Snell,Executive Director Alaska Industrial Development &Export Authority 480 West Tudor Road Anchorage,AK 99503-6690 Dear Mr.Snell: T appreciate your sending Mr.Germer to Unalaska to participate in meetingswithmyself,the City staff and City Council,Unisea,the ANEX Joint Venture and others regarding the Makushin Geothermal Project. I believe this project is critical to the future of Unalaska,our country's largest fishing port,andI strongly support its timely development. I hope that AIDEA will continue to work closely with the City,our fish processors and other industries and ANEX,and do all in your power to assist with project development and finance. Sincerely, Rep.Carl Moses DRAFT LeResche *June 12,1996 Mr.Riley Snell,Executive Director Alaska Industrial Development &Export Authority 480 West Tudor Road Anchorage,AK 99503-6690 Dear Mr.Snell: I appreciate your sending Mr.Germer to Unalaska to participate in meetings with city officials,fish processors and the ANEX Joint Venture regarding the Makushin Geothermal Project. Although I was unable to attend the briefings because of the Special Legislative Session,I believe this project is an important one.As you know,the Unalaska economy is one of the fastest growing in the State,and is critical to Alaska's fishing industry. I hope that AIDEA will continue to work closely with the City,industry and the developer,to help this project become reality. Sincerely, Senator Fred Zharoff DRAFT LeResche *June 12,1996 Mr.Riley Snell,Executive Director Alaska Industrial Development &Export Authority480WestTudorRoad Anchorage,AK 99503-6690 Dear Mr.Snell: I enjoyed meeting in Unalaska with Dave Germer and officials of the ANEX Joint Venture regarding the Makushin Geothermal Project. Ounalashka Corporation strongly supports development of the Makushin project,and look forward to continuing to work with AIDEA and the developer to make this project succeed. [hope AIDEA will continue to support the Makushin and to assist in its development. Sincerely, Richard L.Davis,Jr. ALASKA INDUSTRIAL DEVELOPMENT = ,AND EXPORT AUTHORITY {=ALASKA@@E™=ENERGY AUTHORITY an 4 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:William R.Snell Executive Director Dennis V.McCrohan,P.E. Deputy Director -Energy FROM:David Germer y)PS tLProjectManager DATE:June 12,1996 SUBJECT:|Makushin Project -June 3-5,1996 Trip Report On June 3,1996,|traveled to Unalaska to meet with Unalaska City officials and City Council members,ANEX Joint Venture participants,and the CEO of the Ounalashka Native Village Corporation.Those attending on behalf of the ANEX joint venture corporation included:Mr. Hank Leibowitz,Vice President of Exergy,Inc.,and ANEX Project Manager;Mr.Ron Simms, Vice President of Walsh Construction Company,a member of the ANEX joint venture,and Bob LeResche,a consultant to Exergy,Inc.Also present was Mr.Jack Wood,managing Partner of KSLC,Llc,the owner of the 7,500 acres containing the Makushin geothermal reservoir. The purposes of the meetings were to advise the City of improvements in the economics of the proposed Makushin geothermal generation project and of ANEX's willingness to assist the City with electric capacity during Makushin project construction;and,to seek the City's commitment to discuss purchase of project power on a requirements basis.My role at these meetings was to answer financing related questions and to better understand the issues as well as the level of support of the community,City officials,and fish processors. Mr.Leibowitz was the primary spokesman for the ANEX venture and provided the formal project presentations.He emphasized that the project and ANEX proposal bears little economic resemblance to previous proposals.As presently structured,the project is to be developed by a highly capable organization with a long history of developments of this kind. As presently designed,the project a)requires no grants or other government subsidies,and b) provides power to the City and the fish processors at or below avoided cost,as represented in the R.W.Beck "integrated diesel”case prepared for the City last year. Memorandum June 12,1996 Page 2 Following review of past studies and further analysis,ANEX has redesigned and re-costed the Makushin project.The redesign and re-costing has been possible through use of the new Kalina technology,through re-thinking and elimination of various fees and costs proposed by previous leaseholders,and through contact with Alaska engineers and constructors,which have allowed them to sharpen their cost estimates.The project as now proposed differs from previous proposals in several significant ways,which together reduce project cost by nearly 20%,and reduce operating costs by roughly 30%: °ANEX will construct the project on an "EPC”basis;that is,on a turnkey basis for a fixed price.The preliminary turnkey price estimate has been submitted to AIDEA for review. °The corporations making up the ANEX Joint Venture are all substantial corporations and capable of executing the project on an EPC basis. °The present detailed cost estimate totals $90,681,000.This compares to the previous estimate of about $109,000,000. °ANEX presently holds a valid lease option for the geothermal resource at Makushin.The new landowner has offered lease rates significantly below those previously available. .The ANEX proposal does not include a "fluid fee”component to the developer, as was the case with the previous proposal.Thus,the only direct cost for fluids to the project will be the reduced royalty. °ANEX's review and updating of project operating costs concludes that the project can be operated for $2.5 million per year (escalated for inflation),which is nearly $1.4 million lower than proposed by the previous developer.These savings (about 1.5 cents per kWh)flow directly to the City and processors as lower rates.This figure includes all necessary allowances for wellfield maintenance and new wells. °The present project will require less than 1,000,000 pounds/minute of 325 degree m/l brine for a net electrical output of 14mW,compared to the approximately 1,400,000 pounds/minute required for net 14mW operation of the previous design.This improvement is significant for two reasons.First,it significantly lowers the risk that the field might require extra wells to allow production of 14mW.Leibowitz noted that results of the small-bore exploration well test by the Alaska Power Authority suggested that a single full sized well would produce 1,400,000 pounds/minute.Second,the reduced throughput for the same net energy production decreases future maintenance costs and well replacement costs. Memorandum June 12,1996 Page 3 ANEX believes the project as now designed can provide energy to Unalaska at a unit cost Significantly below the present and projected avoided costs of the City of Unalaska and the processors,and allows the City and the industrial users to prudently consider committing to requirements contracts at rates that will minimize future load risk to AIDEA. The Unalaska Mayor,Frank Kelty,and City Manager,Mark Earnest appeared to support the development plans presented by H.Leibowitz.M.Earnest noted that the one key to project development was securing contracts with the processors.Recognizing that two thirds of the power demand rests with the processors,his statement is valid.Although H.Leibowitz indicated that "over-the-fence”money was not required,Mayor Kelty still indicated a desire/willingness to pursue federal grants.The City collects power charges at three rates: $0.21 for residential,$0.17 for small business and $0.11 for large customers. City Council members were somewhat more reserved than the Mayor in their project supportandrequestedadditionaltimefordiscussion.They asked for further clarification of H.Leibowitz's request for a 6 month moratorium on the City efforts to seek alternative energy projects. Unalaska is presently looking for a permanent full-time public works director.The present acting director appears to have limited electrical power experience and background. Reportedly,the City's power plant is not well maintained and experiences frequent outages. Not surprising,the processors,who require very reliable power,are reluctant to place their soleelectricalpowerneedsinthehandsoftheCity.The task of negotiating a "requirements”PSA with the processors is clouded by the fact that the City has no person properly situated to take the lead in this effort.The Mayor and City Manager are cognizant of this problem and indicated that they would discuss this issue with the City Council and appoint a City official to conduct this task.Undoubtedly,to secure a suitable "requirements”PSA,ANEX and AIDEA will have to be intimately involved and probably will need to take an active/lead role. After learning of the processor's apprehension with a City operated integrated system and thelikelihoodofthemaccepting,at least initially,only their variable cost,H.Leibowitz suggested the following concept: a)variable rate -processors rate of $.09 kWh and City rate of $.15 kWhb)processor's rate would be interruptable and would escalate at a higher rate than the City's rate |will run the economics of this concept to determine if there is a suitable rate and inflator that could result in a reasonable rate of return. The parties also met with Terry Shaft,Unisea's President.Mr.Shaft explained that Unisea does not want to be in the power business and supports the Makushin alternative if it is reliable and cost effective.He noted that his firm is facing sizable capital expenditures ($500,000)to gain their PSD permit.Additionally,his company as well as other processors and the City are facing the mandatory use of low sulfur diesel ($0.10 to $0.20 higher than regular diesel)by the end of the year.When questioned,he appeared to be receptive to the idea of using his Memorandum June 12,1996 Page 4 Strategically located power plant as a system wide power distribution point.He suggested that the City name a strong point person to forward the Makushin and integrated system plans. Recognizing the processors reliability concerns,H.Leibowitz is proposing retaining Power Engineers to conduct a gridding,dispatch and costing study which would combine the processors systems with the City's grid.He feels that such an analysis would elevate the processor's reliability concerns and significantly facilitate the development of "requirements” PSA's with the processors.As of this writing,he has contacted Power Engineers and is preparing to initiate this effort. There were very few questions concerning project financing.Questions concerning financing usually dealt with due diligence requirements.B.LeResche explained to the City Council the concept of AIDEA accepting the load risk.The venture partners are proceeding under the pretense that the project will be fully bonded.There has been no discussion concerning the City,processors,or ANEX providing project equity.Although uncertain,|suspect their financing perception relates to our past efforts with OESI,although OESI's plan required significant "over the fence”money.If the Authority contemplates the developer and City taking an equity position,it would probably be beneficial to advise them of this position in the near term,before additional funds are spent. H:/all/dgermer/makushin/trp-rpt.doc MAY-07-96 TUE 09:57 EXERGY FAX NO.510527892] o P,C1 tt"Exergy,Inc.titPACSIMILE 7 May 1996 TO:David E.Germer FAX:907/269-3044 FROM:Hank Leibowitz Re:Makushin Dear Mr.Germer: !am in receipt of your letter dated May 6 and have reviewed the propos- als from Pritchard and R.W.Beck attached to it.Notwithstanding Pritchard's familiarity with the Kalina Cycle technology,we accept your recommendation to select R.W.Beck to conduct the analyses described.We are hopeful that Beck will be able to "get up to speed”quickly on the features and characteristics of the Kalina Cycle technology. Thank you. Very truly yours, H.M.Leibowitz Vice President HML:feb Cc R.LeResche 22320 Foothill Boulevard *Suite 540 «Hayward,California «94541 Telephone 510/537-5881 ¢Fax 510/537-8621 May 6,1996 Mr.H.M.Leibowitz Vice President,Special Projects Exergy,Inc. 22320 Foothill Boulevard,Suite 540 Hayward,California 94541 Dear Hank: Per your suggestion,|contacted Mr.Kulberg of The Pritchard Corporation,Mr.Larson of Sargent and Lundy,and Mr.Filsinger of R.W.Beck to determine their interest in assisting us with our engineering review of the Makushin development plan.Messrs. Kulberg and Filsinger expressed an interest in receiving a request for proposal and bidding on this work.Due to their present workload and other factors,Mr.Larson of Sargent and Lundy was not interested in bidding on this work.The attached request for proposal was sent to Messrs.Filsinger and Kulberg.Proposals (see attached)were received from both parties by the May 3,1996 deadline. The Authority recommends that the bid be awarded to R.W.Beck.This decision is based primarily on Beck's more extensive geothermal project experience and familiarity with this specific Alaskan project.Based on the Beck proposal,the engineering review costs are estimated to be $30,000 or $20,000 less than those reflected in the draft reimbursement agreement. Your proposed changes to the cost reimbursement agreement have been forwarded to an Assistant Attorney General.With only two days remaining in the Alaska legislative session,|doubt whether |will receive his comments until the session is over.|will attempt to have a response to you concerning this matter as soon as possible. Concerning the geothermal lease,the Authority,recognizing the importance of the lease terms to project financing,would like to be kept informed and provide its input Mr.H.M.Leibowitz May 6,1996 Page 2 into the development of this lease.As suggested by Bob LeResche,the best means for the Authority to review lease terms and provide input would be to provide a bond attorney to critique lease terms as negotiations proceed.At this stage |don't view this as a very timely or costly effort.Such costs could be covered in the reimbursement agreement. Please let me know if you have any additional thoughts or questions on the above matters. Sincerely, David Germer Project Manager Attachments CC:Dennis V.McCrohan Robert LeResche h:\aliidgermer\mckushinVeib-3.doc May 2,1996y Alaska Industris}Develop} via Federal Express nd Export Authority eintad Mr.David E.Germer Project Manager Alaska Industrial Development and Export Authority 480 West Tudor Anchorage,AK 99503 Dear David: Thank you for the opportunity to propose on the review of the Exergy proposal.Our proposal is as follows: SCOPE OF SERVICES Phase |-Fatal Flaw Review As a first step in analyzing the new project plans,we will conduct a fatal flaw analysis of the project's design,proposed costs and economic evaluations.This review will consist of an opinion of the application of the technology being proposed as well as a determination of the general reasonableness of the new capital and O&M figures.As part of the initial analysis,we will prepare a list of additional information that would be required for a more detailed appraisal.As a result of this task,we will prepare a short letter report containing the results of this initial fatal flaw analysis. With respect to Phase I,we will review the summary material provided to us to determine if the approach and magnitude of O&M and capital costs are reasonable and the technology is feasible.The work product from this phase will be: 1.An opinion from Beck as to the validity of the approach and whether or not it is reasonable for AIDEA and the developer to approach the City with respect to the general terms and conditions of a PSA. 2.A preliminary opinion as to the reasonableness of the financial projections (O&M and capital items)presented in the proposal. 3.A preliminary opinion ina letter report,with respect to the feasibility of the technology presented including a discussion of the technologies "track record”. 4.A list of additional items (if necessary)needed from Exergy to provide a detailed evaluation and independent engineering review of the plan. It should be noted that Phase I will not include any detailed evaluation,but rather a cursory review. 00-00000-60108-5100/1620 |j:\cons\pro\jaf006tf.doc 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 & Sy thats Mr.David E.Germer May 2,1996 Page 2 Phase II -Independent Assessment If the results of this first analysis are sufficiently encouraging,we will undertake a more detailed analysis of ANEX's project design and cost estimates to determine their accuracy. The review will be limited to only those project components that have been modified or changed by ANEX.The work product from Phase II will be a detailed letter report outlining our findings.Mike Hubbard will be available to meet with AIDEA to discuss a draft report before it is finalized to minimize travel costs. EXPERIENCE AND PERSONNEL R.W.Beck is recognized across the world as a independent engineering firm with respect to geothermal,hydropower,solar,wind,and fossil fueled technologies.Currently,we are reviewing two geothermal facilities in Java,Indonesia.R.W.Beck has been involved in the financing,construction,operation,and/or testing of over 25 geothermal power plants worldwide,including 13 flash plants and 8 binary projects using pentane or isobutane as the working fluid.While we have not worked on an aqueous ammonia cycle specifically, we are familiar with the thermodynamic principals upon which the Kalina Cycle is based, and have reviewed various applications of recuperation technology.I have attached a statement of qualifications for your review. The personnel we would utilize on this project are as follows: Todd Filsinger $122.08 Mike Henderson $116.74 Jon Neff $103.83 Paul Harmon $100.71 Mike Hubbard $88.00 Dean Sevy $74.78 The resumes of these individuals are attached hereto. SCHEDULE AND Cost ESTIMATE We would commence work immediately upon notification to proceed.Phase I would be completed in two weeks.We would anticipate that ANEX would respond to our request for information within two weeks and Phase II would be completed in three weeks.This is equivalent to a seven week project schedule.We have added Mike Hubbard to the project team to help hold down the costs related to getting AIDEA's comments through-out the 00-00000-60108-5100/1620 |j:\cons\pro\jaf006tf.doc Mr.David E.Germer May 2,1996 Page 3 process.Assuming we receive adequate data from ANEX,we should be able to complete Phase I and II for a price not to exceed $5,000 and 25,000,respectively.We will work with AIDEA as necessary to meet schedule and budget constraints. I hope this is fully responsive to your needs.As a point of interest,I have included a "white paper”developed ona Kalina Cycle technology (authored by Kalina &Leibowitz) for your review.Please call me at 303-299-5248 when you have had a chance to review this. Sincerely, R.W.BECK,INC. Todd W.Filsinger Associate and Executive Engineer TWE:jf 00-00000-60108-5100/1620 |j:\cons\pro\jaf006tf.doc the Financial Engineering u.apany Phone:(907)522-3351 800 East Dimond Blvd.,Suite 3-310 Fax:(907)344-1843 Anchorage,Alaska 99515 To:David Germer \Leoelp-oe by we paw From:Michael D.Hubbard Pages:4 (including cover) Date:5/1/96 10:44:12 AM Subject:|Unalaska Rate Work Note: Attached is the proposal that I sent to Unalaska which was used as the scope of work on the purchase order. The Financial Engineering Company 800 East Dimond Blvd.,Suite 3-310 Anchorage,Alaska 99515 Phone (907)522-3351 Fax (907)344-1843 February 14,1996 Mr.David Denig-Chakroff Director of Public Utilities City of Unalaska PO Box 89 Unalaska,Alaska 99685 Dear Dave: Pursuant to your letter of February 12,outlined below is a proposed scope of work to perform the review outlined in your letter.A budget showing hours and expenses for each task is provided in Attachment A. Task 1 -Adequacy ofRates The purpose of Task 1 is to determine whether or not the existing electric rates are set at levels such that revenue requirements are collected.Accordingly,the rates model used in July 1994 will be updated with revised customer data (7.¢.,billing demands,energy requirements,and number of meters per customer class)and revenue requirements.The adequacy of the rates will be tested for one-,two-and three-year periods using growth projections provided by the City. Billing demands will be based in part on the findings of Task 2.However should these demands be based on a billing methodology different from that currently used by the City,two separate cases will be run.The first case will be based on current billing demand methods,and the second will be based on the recommended method. Should the rates prove to be adequate or nearly so,allocated cost of service for each customer class will not be discussed in detail at this time.The rates established in 1994 moved the City more towards allocated-cost based rates,and large deviations from this only a year and a half later would lead away from rate stability. A report summarizing the findings will be provided as described in Task 6. Task 2 -Classification of Service Two main issues are included in this task.First,the City must have some sort of policy relating to the determination of whether or not a customer should be demand metered.This policy should not only lay out the mechanism for such determination but also how often should these reviews be made.Conversely,the City should probably also have a policy relating to demand-metered customers changing to energy-only rates. The second issue deals with those customers that are demand metered.What billing demands should be applied -actual monthly demands or ratcheted demands based on annual peaks? These two issues are somewhat interrelated,and the answer to the second issue could influence the first.The theory of rate making lends itself to establishing billing demands based on annual peaks accumina that these neablo are fairly anincidant with the owotemowide neal Uawrever thearns dance Mr.David Denig-Chakroff February 14,1996 Page 2 Therefore,various utilities throughout the State will be contacted to determine their practices and policies.These findings will be summarized in the report and will discuss any particular reasons why a utility may implement one policy over another. Based the review of other utility policies and the City's circumstances,a policy on billing demands will be developed. Once this policy is developed,a policy will be recommended for checking whether or not a customer should be demand metered.The policy will probably be based on a load factor (either monthly or annual).Accordingly,the analysis will include determining an appropriate load factor to use. Task 3 -Power Factors Since the combined power factors of the City's electric customers affect the amount of power generation required at any one time,it is desirable to have power factors as close to unity as possible.The City has an existing ordinance which addresses power factor,but this has not been included with the rate ordinance for demand-metered customers. The survey performed in Task 2 will also include information relating to power factor policies which will be summarized in the report.A short discussion on how power factor affects the City utility will also be provided.Based on the review of other utilities as well as an analysis of how it affects City operations,a recommendation will be made on what minimum power factors must be maintained as well as penalties for deviating below those minimums.The affect on rates will be quantified by showing penalty payments for varying power factors for various levels of usage by demand-metered customers. Task 4 -Street Lights Based on the analysis performed in Task 1 and the resulting rates,language for a metered streetlight rate ordinance will be developed. Task 5-PCE Program Currently,the State of Alaska subsidizes many of the electric utilities throughout the state by paying for part of the consumers'electric bills.Without this subsidy,the residents and business of Alaska would see significant increases in their monthly power bill.As the state revenues continue to decline,legislators are looking for various ways to reduce the budget,and the Power Cost Equalization Program is always a visible target. The PCE program will be discussed and summarized in the report.The affects of a reduced PCE program will be discussed and quantified by showing the cost to the consumer before and after various assumed funding level cuts.The analysis will include several different usage levels in each customer class.Since it is difficult at times to have an idea how much a certain utility customer uses during a particular month,the non-residential analysis will be identified to a specific type of business or even the customer,itself,if appropriate. Mr.David Denig-Chakroff February 14,1996 Page 3 Task 6 -Report A written report will be prepared which summarizes the analysis and findings.Five copies of a draft report will be prepared and forwarded to the City for review and comment.Twenty five (25)copies of the final report will be provided to the City. Task 7 -Presentation An oral presentation of the analysis and findings will be made to the City Council. Dave,thanks for the opportunity to propose on this work for the City.Since I was the one that performed the major part of the analysis in the 1994 rate study,I believe I can perform the work in a very efficient manner.If you should have any questions or comments on the above material or the attached budget,please do not hesitate to call me.I can start work on this as soon as you would like. Very truly yours, THE FINANCIAL ENGINEERING COMPANY Rh,hobhaf Michael D.Hubbard Attachment -Budget ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY =,/qm =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 Facsimile Transmittal TO:Harold Kulberg Comp any Pritchard Corporation Fax #:913-338-6425 From:David Germer Date:4/26/96 Time:2:50 Number of pages including cover page:> Transmittal Contents: Comments: Notice:This facsimile may contain confidential information that is being transmitted to and is intended only for the use of the recipient named above.Reading,disclosure,discussion,dissemination, distribution,or coping of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited.If you have received this facsimile in error,please immediately destroy it and notify us by telephone,(907)269-3000. H/all/cheryl/fax/one.doc 08-4181 (Rev.9/95) Fime to renew yourAlaskaBusinessLicense .If your business name appears on the blue card,your business license will expire on December 31,1995.This letter explains how to get a new or renewed license,which will be valid until December 31,1997 To renew your existing license: In order to renew your existing license,mail only the blue card back in the enclosed envelope with a check or money order payable to the State of Alaska.Pay $50 if you do not sell tobacco products,or $75 if you do sell tobacco.The renewal envelope is addressed to Key Bank because we are automating deposits. You may correct your mailing address by writing on the blue card,but please do not make any other changes. To change your business name, owner,or type of activity: If you wish to change the business name,owners or type of business activity (Standard Industrial Classification Code)on your license,you must apply for a new license on the attached form.Mail the application form and payment in the enclosed envelope.The cost of a new license is the same as the cost of renewing your current license. Thanks for your cooperation! We appreciate your compliance with Alaska's business licensing law and your contribution to the Alaska economy.We will process over 30,000 business licenses in the coming two months.We thank you in advance for your patience if there are delays.We will do our best to serve you promptly. Sincerely, The Director and the Employees of the Division of Occupational Licensing NEED HELP? Please check the back of this application for offices where you can get assistance or information about the Alaska Business License Program TR IEA2 RI CR ee 9,PSY A hati tet tea Pe GRE PNR hte SOE AL ERNE BIg g St Busines ;License Ir.structions This application is for a new business license.If you are renewing your current license without any changes,please mail only the blue renewal card with payment in the enclosed envelope. Who Needs a Business License? Any _individual,company or partnership which regularlyengagesinbusinessactivityinAlaskamusthavea business license for that activity.Business activity includes nonprofit as well as profit operations.(See the list of exemptions from business licensing at the bottom of this instruction sheet). A separate license is required for each separate business activity.One license will cover branch offices of the same business,as long as all the branches engage in the same activity under the same name. On the other hand,a business which engages in several different activities in a single location will need more than one business license. A business license is not transferable.If a business is sold,the new owner must purchase a new license. Also,a new license must be purchased if a business changes its activity.A change of name fee will be assessed and a new license issued if a business changes only its name. Business Name List the name under which business will be conducted. The name may only use 40 characters,including letters and spaces.Getting a business license for a specific business name does not prevent other busi- nesses from using the same name.If you want to reserve your business name,register the name with the Division of Banking,Securities and Corporations. Call 465-2530 for information. Type of Business If a business is not a legally recognized corporation or partnership,it is a sole proprietorship. A corporation does not legally exist until a Certificate of Incorporation or Certificate of Authority is issued by the Alaska Division of Banking Securities and Corpora- tions (907-465-2530).The corporation file number is found on the certificate of incorporation or authority and on the corporations biennial report. Owner Name If the business is a sole proprietorship,print the owner's legal name.If the business is a partnership, list all partners names.Use extra paper if necessary, however,only the first forty characters_will be printed on the license.If the business is a corporation,print the corporation's legal name. Social Security Number or EIN The division uses these numbers for identification purposes.They are optional.If you provide a SSN,it will be deleted from public documents,but may be given to other government agencies. 08-4181 (Rev.9/95) Standard Industrial Classifications The division uses Standard Industrial Classifications (S.I.C.codes)to describe different business activities.The federal government publishes a manual of S.I.C. codes,which the division uses for guidance.However, the final decision about classification is up to the division.Each business license permits the owner to engage in the activities described by a single S.I.C. code and other very closely related activities. Fees Fees are nonrefundable and must be sent with the application or it will not be processed.Send a check or money order for $50 for a basic business license,or $75 for a license which includes a tobacco endorse- ment permitting the sale of tobacco products.Once the application is complete,the license will be issued for the remaining period of the year in which you have applied and all of the following year. Professional Licenses Occupational licenses are required in addition to business licenses for many activities.Health care professionals,construction contractors,hairdressers, and numerous other professionals must get occupa- tional licenses before a business license will be issued for their work.If an occupational license is required, the owner's license type,number,type of license, name of one license holder,his or her license number and position in the business must be written on the business license application. Exemptions If you hold or should hold one of the following li-censes,you do not need a business license for the covered activity: 1.Alaska Fisheries business license for seafood processors issued by Alaska Dept.of Revenue, (907)465-4683. 2.Commercial Fishing permits issued by Alaska Dept.of Fish and Game,(907)789-6150. 3.Liquor licenses issued by Alaska Dept.of Revenue for alcohol sales only,(907)277-8638 4.Insurance licenses issued by Alaska Dept.of Commerce and Economic Development, (907)465-2515.5.Mining licenses issued by Alaska Dept.of Revenue,(907)465-4683. 6.Coin-operated amusement and gaming ma- chines issued by Dept.of Revenue, (907)465-2229. BUS'Alaska Busniess License Application State of Alaska DEPARTMENT USE ONLY Department of Commerce and BL:O New BUS §$Economic Development GQ)Renewal TOB S$Business Licensing Section $ 9th Floor,333 Willoughby Ave OL:O New P.O.Box 110806 CG}Renewal Type:2 cKJuneau,AK 99811-0806 MOTelephone:(907)465-2550 or -2 Other (907)465-2552 Rec.#lnitials: Sign your application and return it to the address above with a check or DEPARTMENT USE ONLY money order.Make checks payable to:State of Alaska. These fees are nonrefundable.License No. Standard Business License Fee (Without Tobacco Endorsement)QO $50 Business License Fee Including Tobacco Sales Endorsement QO $75 Once your application is complete,the license will be issued for the remaining period of the year in which you applied, and all of the following calendar year. Business Name (limited to 40 characters) Physical Address Mailing Address City State ZIP Code Business is:(check one)QO Sole Proprietorship (one individual owner) Q)Partnership (All partners'names must be listed below or attached) OQ)Corporation File Number QO)Other (explain) Owner Name(s),(only the first 40 characters will be printed on the buisness license): Social Security Number of one owner or business EIN (optional) Standard Industrial Classification (choose one 4-digit number from the S.1.C.code list on the back) Describe your business activities in order of importance.If a permit and/or professional license is required,list the type of license,name of one license holder,his or her license number and position in the business.THIS SECTION MUST BE COMPLETED., DO YOU SELL TOBACCO PRODUCTS?O YES O NO If YES,your business license must have a tobaccoendorsement.The tobacco endorsement fee is $25.00 in ADDITION to the $50.00 business license fee. This application must be signed and dated by one owner,managing partner or other person authorized to sign on behalfoftheowner,OR IF A CORPORATION by a registered agent. |declare,under penalty of perjury,that this application is true and complete. Signature Printed Name Title Date YOUR LICENSE WILL BE ISSUED 3 -4 WEEKS AFTER YOUR COMPLETE APPLICATION AND FEE ARE RECEIVED. 08-4181 (Rev.9/95) VIANVARY INVUSIRIAL GLADSSIFICAIION (3S.1.0.)CODE LIS! 1. 2. 3. 0100 0200 0700 0800 0300 Please select the title which best de es your business ac-4.If your busir. tivity from the list below. Write the four-digit number on your license application where 5. you are asked for a "Standard Industrial Classification Code." If you do not see a title on the list which describes your busi-ness,call the Division of Occupational Licensing for help. a AGRICULTURE,FORESTRY,&FISHING Agricultural Production -Crops Agriculture Production -Livestock Agricultural Services (inc.Animal, Livestock &Landscape Services) Forestry Fishing,Hunting &Trapping MINING 1000 1200 1300 1400 Metal Mining Coal Mining Oil &Gas Extraction Mining and quarrying of nonmetallic minerals,except fuels CONSTRUCTION 1500 1600 1700 General Building Contractors Heavy Construction other than Building Construction Contractor Special Trade Construction Contractors MANUFACTURING 2000 2100 2200 2300 2400 2500 2600 2700 2800 2900 3000 3100 3200 Food &Kindred Products Tobacco Manufacturers Textile Mill Products Apparel &Other Textile Products Lumber &Wood Products,except Furniture Furniture &Fixtures Paper &Allied Products Printing &Publishing and Allied Industries Chemicals &Allied Products Petroleum Refining and Related Industries Rubber &Misc.Plastics Products Leather &Leather Products Stone,Clay,Glass &Concrete Products 3300 3400 3500 3600 3700 3800 3900 Primary Metal Industries Fabricated Metal Products except Machinery and Transportation Equipment Industrial/Commercial Machinery & Computer Equipment Electronic &Other Electrical Equipment &Components,exc. Computer Equipment Transportation Equipment Measuring,Analyzing &Controlling Instruments,Photographic,Medical & Optical Goods;Watches &Clocks Misc.Manufacturing Industries TRANSPORTATION &PUBLIC UTILITIES 4000 4100 4200 4300 4400 4500 4600 4700 4800 4900 Railroad Transportation Local &Suburban Transit & Interurban Highway Passenger Transportation Motor Freight Transportation & Warehousing U.S.Postal Service Water Transportation Air Transportation Pipelines,Except Natural Gas Transportation Services Communication Electric,Gas &Sanitary Services WHOLESALE TRADE 5000 5100 Wholesale Trade -Durable Goods Wholesale Trade -Nondurable Goods RETAIL TRADE 5200 5300 5400 5500 NEED HELP? JUNEAU HEADQUARTERS Division of Occupational Licensing P.O.Box 110806,Juneau,AK 99811-0806 Physical Location Location:9th Floor,State Office Building,333 Willoughby AvenueTelephone:(907)465-2550 or (907)465-2552 08-4181 (Rev.9/95) Building Materials,Hardware,Garden Supply &Mobile Home Dealers Genera!Merchandise Stores Food Stores Automotive Dealers &Gasoline Service Stations works in more than one S.I.C.code area, you will need more than one business license. 5600 5700 5800 5900 Many professions require permits or occupational licenses as well as business licenses (for example,nursing,hair- dressing,banking,mining,and construction contracting). Apparel &Accessory Stores Home Furniture,Furnishing & Equipment Stores Eating &Drinking Places Miscellaneous Retail FINANCE,INSURANCE &REAL ESTATE 6000 6100 6200 6300 6400 6500 6700 Depository Institutions Nondepository Credit Institutions Security &Commodity Brokers, Dealers Exchanges &Services Insurance Carriers Insurance Agents,Brokers.and Service Real Estate Holding &Others Investment Offices SERVICES 7000 7200 7300 7500 7600 7800 7900 8000 8100 8200 8300 8400 8600 8700 8800 8999 Hotels,Rooming Houses,Camps & Other Lodging Places Personal Services Business Services Auto Repair Services &Parking Misc.Repair Services Motion Pictures Amusement &Recreation Services Health Services Legal Services Educationai Services Social Services Museums,Art Galleries &Botanical &Zoological Gardens Membership Organizations Engineering,Accounting,Research, Management &Related Services Private Households (Domestic Services) Misc.Services,not elsewhere Classified (Artists,Writers) For assistance in completing this application,or for information about the Business License program,contact the business license office nearest you in person or by telephone.If you prefer to write,send your letter to the headquarters office in Juneau. ANCHORAGE Frontier Building,3601 C Street,Suite 722 Telephone (907)561-2969 FAIRBANKS 675 Seventh Ave.,Station A Telephone (907)451-2852 ALASKA INDUSTRIAL DEVELOPMENT . AND EXPORT AUTHORITY /=>ALASKA@aE- =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 April 23,1996 Mr.Todd W.Filsinger,P.E. Associate and Executive Engineer Consulting Services R.W.Beck Bank One Building,Suite 1900 1125 Seventeenth Street Denver,Colorado 80202-2615 Dear Mr.Filsinger: As |indicated during our recent phone conversation,AIDEA is seeking proposals from firms to perform an engineering review of an existing conceptual development plan for the Makushin Geothermal Project.Prior to discussing the desired scope of services for this review,|felt it may be beneficial if |provided you with some background information on the Makushin project and a brief description of AIDEA. The Alaska Industrial Development and Export Authority,AIDEA,was established in 1967 to advance Alaska's economic prosperity and to create jobs for Alaskans.AIDEA accomplishes its mission by providing various means of financing and by facilitating the financing of industrial,manufacturing,export,and business enterprises and facilities within the state. AIDEA also has the authority to own and operate facilities which advances this goal.AIDEA is a public corporation of the State of Alaska and a political subdivision within the Department of Commerce and Economic Development. The Makushin project is a geothermal power project located near the towns of Unalaska and Dutch Harbor,Alaska on the Aleutian chain.Attempts to develop the project have been ongoing since the early 1980's.Recently,ANEX,an Ansaldo/Exergy joint venture,acquired the exclusive rights to develop the project.ANEX has reviewed the project's specifications, objectives and information provided by the previous developer/contractor.A new plan has been developed,including the implementation of the Kalina Cycle technology,that summarizes the installation of a 14 MW,net,plant and transmission to the load center in Dutch Harbor and Unalaska.A brief summary of the results of the ANEX's evaluation was presented to AIDEA in a report entitled Makushin Geothermal Project Revisited.In addition to the report,ANEX has provided AIDEA with a series of scenarios projecting the project's financial operating results under various assumptions. Mr.Todd W.Filsinger,P.rc. April 23,1996 Page 2 ANEX has approached AIDEA in regards to financing,ownership,and operation of the project. Like any prudent financial institution,AIDEA plans to undertake a review of the project to confirm its feasibility and its eligibility for financing.Contemporaneous with this review,AIDEA, along with the developer,will explore the development of a "requirements”power sales contract with the City of Unalaska.AIDEA desires to retain an engineering consultant to review project information and to inform AIDEA as to,among other things,the adequacy of such information for making investment decisions and the nature of the financial risks involved in financing the project. Although the ANEX Project Report provides an excellent summary,it lacks the necessary detail to accurately confirm the new design/technology and verify the new capital and O&M estimates.Therefore,the consultant,through AIDEA,will have to obtain the necessary information from the developer to complete the required scope of work.It is important to note that the new ANEX development plan is in fact a modification of the past developers plan.As such,the scope of the engineering review is limited to only those project components that have been modified by ANEX.Based on the ANEX Project Report,it would appear that the large majority of project changes are a result of the employment of the Kalina thermal cycle technology. The proposed scope of services for this review is described below.Upon receipt of the proposals by AIDEA,the scope of services may be revised,modified or completely rewritten to incorporate approaches identified in the proposals. .As a first step in analyzing the new project plans conduct a fatal flaw analysis of the project's design,proposed costs and economic evaluations.This review would consist on an opinion of the application of the technology being proposed as well as a determination of the general reasonableness of the new capital and O&M figures.As part of the initial analysis prepare a list of additional information that would be required for a more detailed appraisal.Prepare a short letter report,containing the results of this initial fatal flaw analysis. .If the results of this first analysis are sufficiently encouraging,undertake a more detailed analysis of ANEX's project design and cost estimates to determine their accuracy.The review should be limited ton only those project components that have been modified or changed by ANEX. °The consultant shall perform the work as outlined above and present an initial draft report to AIDEA for review.Revisions at this stage are standard. Comments shall be addressed and all work completed and a final report presented for final acceptance. The above two phased approach to initial project due diligence is thought to be more cost effective and would allow the parties to more quickly begin exploring the potential development of a "requirements”PSA with the City of Unalaska. Mr.Todd W.Filsinger,P.c. April 23,1996 Page 3 Your firm is invited to submit a proposal to the Authority to provide professional services on a time and material basis for the above scope of work.Proposals must contain a general scope of services,your rates,a schedule for completion,and relevant personnel qualifications.In addition,please comment on any relevant experience or familiarity your firm may have with Kalina cycle technology.To be considered for the above work,your firm must have a valid Alaska Business License or provide evidence of application.Proposals will be evaluated solely on the following four criteria: 1.Demonstrated comprehension of required services and proposed strategy for performance. 2.Relevant experience and credentials of proposed personnel. 3.Reasonableness of proposed schedule for performance. 4 Prior familiarity and experience associated with the Kalina cycle technology. Since time is of the essence,please provide your proposal to me as soon as possible,or by no later than May 3,1996,at 4:00 p.m. Af Lo David E.Germer Project Manager CC:Dennis V.McCrohan William R.Snell h:\all\dgermer\makushin\proposal.doc JOGO O OOOO OOOO OOO OOO OOOO OOOO GCC OOO OOOO OOOO OOOO OOOOOOOOOOO OOOO OOOO OOOO OOO GOGGOO OGG OLOK XXx ;P,01 x k TRANSACTION REPORT k k APR-23-96 TUE 13:37 =x XK X x SEND (M)xXxx x DATE START RECEIVER TX TIME PAGES TYPE NOTE Mt DP x x xX x APR-23 13:35 913032972811 1/23"4 SEND (M)OK 118 xXKX x X x TOTAL IM 235 PAGES:4 x x xkOOOOOOOOCOOCOOOOOOOOOOOOOOOOOOOOOOOOOOOOCOCOOOOOOCOOOOOOOOOOOOOOOOOOOCLKLOKUK ALASKA INDUSTRIAL DEVELOPMENT :i)AND EXPORT AUTHORITY {=Ga =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99502 907 /269-3000 FAX 907 /269-3044 Facsimile Transmittal TO:Aba.Fppblh.£/.eitecrbhe,KE. Company HC).teh Fax#:as]297-Kd ff From:Stare (rtprer Date:£n 02 3-FE Time:43S Bim: Number of pages including cover page:x Transmittal Contents: ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY «<ALASKA@@E™ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 Facsimile Transmittal TO:hy,Teblbl LS,cast RE. Company PL Aa2ek Fax#:C323 ]297-2hY/ From:Lhaved (ALrer Date:_S -23-76 Time:ABS p+ye: -Number of pages including cover page:x ' Transmittal Contents: Comments: Notice:This facsimile may contain confidential information that is being transmitted to and is intended only for the use of the recipient named above.Reading,disclosure,discussion,dissemination,distribution,or coping of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited.If you have received this facsimile in error,please immediately destroy it and notify us by telephone,(907)269-3000. H/all/chery1/fax/one.doc ALASKA INDUSTRIAL DEVELOPMENT [=AND EXPORT AUTHORITY f=ALASKA . @@E =ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 April 23,1996 Mr.Harold Kulberg Deputy Manager The Pritchard Corporation 10950 Grandview Drive Overland Park,Kansas 66210-1414 Dear Mr.Kulberg: As |indicated during our two recent phone conversations,AIDEA is seeking proposals from firms to perform an engineering review of an existing conceptual development plan for the Makushin Geothermal Project.Prior to discussing the desired scope of services for this review,|felt it may be beneficial if |provided you with some background information on the Makushin project and a brief description of AIDEA. The Alaska Industrial Development and Export Authority,AIDEA,was established in 1967 to advance Alaska's economic prosperity and to create jobs for Alaskans.AIDEA accomplishes its mission by providing various means of financing and by facilitating the financing of industrial,manufacturing,export,and business enterprises and facilities within the state. AIDEA also has the authority to own and operate facilities which advances this goal.AIDEA isapubliccorporationoftheStateofAlaskaandapoliticalsubdivisionwithintheDepartmentof Commerce and Economic Development. The Makushin project is a geothermal power project located near the towns of Unalaska and Dutch Harbor,Alaska on the Aleutian chain.Attempts to develop the project have been ongoing since the early 1980's.Recently,ANEX,an Ansaldo/Exergy joint venture,acquired the exclusive rights to develop the project.ANEX has reviewed the project's specifications, objectives and information provided by the previous developer/contractor.A new plan has been developed,including the implementation of the Kalina Cycle technology,that summarizes the installation of a 14 MW,net,plant and transmission to the load center in Dutch Harbor and Unalaska.A brief summary of the results of the ANEX's evaluation was presented to AIDEA in a report entitled Makushin Geothermal Project Revisited.In addition to the report,ANEX has provided AIDEA with a series of scenarios projecting the project's financial operating results under various assumptions. ANEX has approached AIDEA in regards to financing,ownership,and operation of the project. Like any prudent financial institution,AIDEA plans to undertake a review of the project toconfirmitsfeasibilityanditseligibilityforfinancing.Contemporaneous with this review,AIDEA, Mr.Harold Kulberg April 23,1996 Page 2 along with the developer,will explore the development of a "requirements”power sales contract with the City of Unalaska.AIDEA desires to retain an engineering consultant to review project information and to inform AIDEA as to,among other things,the adequacy of such information for making investment decisions and the nature of the financial risks involved in financing the project. Although the ANEX Project Report provides an excellent summary,it lacks the necessary catail to accurately confirm the new design/technology and verify the new capital and O&M estimates.Therefore,the consultant,through AIDEA,will have to obtain the necessary information from the developer to complete the required scope of work.It is important to note that the new ANEX development plan is in fact a modification of the past developers plan.As such,the scope of the engineering review is limited to only those project components that have been modified by ANEX.Based on the ANEX Project Report,it would appear that the large majority of project changes are a result of the employment of the Kalina thermal cycle technology. The proposed scope of services for this review is described below.Upon receipt of the proposals by AIDEA,the scope of services may be revised,modified or completely rewritten to incorporate approaches identified in the proposals. .As a first step in analyzing the new project plans conduct a fatal flaw analysis of the project's design,proposed costs and economic evaluations.This review would consist on an opinion of the application of the technology being proposed as well as a determination of the general reasonableness of the new capital and O&M figures.As part of the initial analysis prepare a list of additional information that would be required for a more detailed appraisal.Prepare a short letter report,containing the results of this initial fatal flaw analysis. .If the results of this first analysis are sufficiently encouraging,undertake a more detailed analysis of ANEX's project design and cost estimates to determine their accuracy.The review should be limited ton only those project components that have been modified or changed by ANEX. °The consultant shall perform the work as outlined above and present an initial draft report to AIDEA for review.Revisions at this stage are standard. Comments shall be addressed and all work completed and a final report presented for final acceptance. The above two phased approach to initial project due diligence is thought to be more cost effective and would allow the parties to more quickly begin exploring the potential development of a "requirements”PSA with the City of Unalaska. Your firm is invited to submit a proposal to the Authority to provide professional services on a time and material basis for the above scope of work.Proposals must contain a general scope of services,your rates,a schedule for completion,and relevant personnel qualifications.In Mr.Harold Kulberg April 23,1996 Page 3 addition,please comment on any relevant experience or familiarity your firm may have with Kalina cycle technology.To be considered for the above work,your firm must have a valid Alaska Business License or provide evidence of application.Proposals will be evaluated solely on the following four criteria: 1.Demonstrated comprehension of required services and proposed strategy for performance. 2.Relevant experience and credentials of proposed personnel. 3.Reasonableness of proposed schedule for performance. 4.Prior familiarity and experience associated with the Kalina cycle technology. Since time is of the essence,please provide your proposal to me as soon as possible,or by no later than May 3,1996,at 4:00 p.m. Sincerely, Dvd£ David E.Germer Project Manager a CC:Dennis V.McCrohan William R.Snell h:\all\dgermer\makushin\proposal.doc SOOO OOOO OCC CO COCO OOOO OOOO COO OCC OOO OOOO OOAC OOOO OOOO COO O OOOO OOK OOK*° ..P,01 x k TRANSACTION REPORT x 'APR-23-96 TUE 13:42 x X X SEND (IM)x xk X k DATE START RECEIVER TX TIME PAGES TYPE NOTE Mt DP x x xX x APR-23 13:39 919136616030 2'30"4 SEND (M)OK 119 k x xX X X 'TOTAL eM 305 PAGES:4 x k OOOO OOOO OOOO OCC OCC OOOO OOOO OOOO OOO OOO GOOG CCC GOO OO COQ OOOO OOOO IOK ALASKA INDUSTRIAL DEVELOPMENT _:-AND EXPORT AUTHORITY /-@ ENERCY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 f 269-3044 Facsimile Transmittal TO:hi feaeddl.LillaY .Company HE Rt padk,CctdutalioyZ Fax #:C13)Bb/=E050 From:Deuce tl (Pazmet Date:SX -229 -F7ETime:L220 2? Number of pages including cover page:x Transmittal Contents: ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY l===>ALASKA @@E-=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 Facsimile Transmittal TO:Zn,Hard hla FAX 907 /269-3044 CCompany=x Be LL aew Li Fax #:C73)BES--B30 From:Merced (Pzrmes Date:K-29 -FE Time:"LD 77. Number of pages including cover page:x Transmittal Contents: Comments:a /uybo,66/7 6030 Notice:This facsimile may contain confidential information that is being transmitted to and is intended only for the use of the recipient named above.Reading,disclosure,discussion,dissemination, distribution,or coping of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited.If you have received this facsimile in error,please immediately destroy it and notify us by telephone,(907)269-3000, H/all/cheryl/fax/one.doc Pritchard THE PRITCHARD CORPORATION 10950 Grandview Drive,Overland Park,Kansas 66210-1414,US.A (913)661-6000 FAX:(913)661-6030 April 18,1996 [E (fi I f AFR 22 195 Mr.David Germer Alaska Industriz!Development480WestTudorRoadandExportAuthorityAnchorage,Alaska 99503 Dear Mr.Germer: Thank you for your interest in The Pritchard Corporation.I have enclosed a brochure that briefly describes our company activities. From our conversation,I understand your organization has received a proposal from Exergy for a geothermal project at Dutch Harbor.Exergy has proposed the Kalina cycle and said Pritchard is familiar with this technology. We have done preliminary design work using the Kalina cycle concept as applied to the bottoming cycle for a cogeneration project.We are interested in your request to evaluate the Exergy proposal for your geothermal project and look forward to hearing from you. Very truly yours, A@,k Harold A.Kulberg Deputy Manager HAK:cg Enclosure A Black &Veatch Company .Tr Ste Reteg Oe ee eT metal da Re Le Pie St RE TEE ES BAM eben a ee Be AB a RO aS A SIEiinns,ee eT hae! ;. see -ee " ."pei ret oR - - ° Todd W.Filsinger,P.E.Associate and Executive Engineer Consulting Services (303)299-5248 Internet:tfilsing@nvbeck.com aeOo| Bank One Building,Suite 1900. 1125 Seventeenth Street Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 ce) "EREDARNc Ra Soltek en Prey Sa apes NONE a -ep ONES GIST Gee ERISTotEE 5 28Sneeee TE APR 12 '96 15:37 TSI/SR 996 Pat Rees al 725 Farmers Lane »P.O.Box 1236 =Santa Resa,California 95402ThermaSourceInc.(707)$23-2960 +FAX (707)523-1029 TELECOPIER COVER LETTER FAX NUMBER (707)523-1029RKREETEAEERRARERTEREERERERRREREAE EERE EEERERKRAE RAKES TOs Dewus Me Ces baw) Location:Aides. Frou:Gégey Mitu|DATE:4/i-f4e TIME: NUMBEROF PAGES INCLUDING THIS COVER:/ Sei ee RE EEK ERE EER ERR EARLE AER EE EEEREEERE RE RR MEE MESSAGE: ***PLEASE CALL (707)523-2960 IF YOU FAIL TO RECEIVE ALL *** THE PAGES OR IF THERE ARE OTHER PROBLEMS {4/12/96 4:20p | APR 12 °96 15:37 TSI/SR ;; 996 Pa2 ThermaSource.. GEOTHERMAL CONSULTING SERVICES April 12,1996 Mr.Dennis MccCrohanAlaskaIndustrialDevelopment Export.authority'480 West Tudor anchorage,AK 99503RetMakushinVolcano Geothermal Resource Dear Mr.McCrohan, Enclosed is a recommended Scope-of-Wark to evaluate thegeothermalresourceassociatedwiththeMakushinVolcanoonUnalaskaIsland.I believe that this work can be completed inaboutfiveweekswithlessthan150manhoursofprofessionaltime.Engineering,geological,and geochemical experts willbeusedtostudythevariousaspectsoftheresourceinorderto'finalize an opinion., We:have performed many assessments din volcanic environments in Hawaii,Indonesia,Japan,and Canada.Also enclosed is a list of projects that we have worked on. Tf you have any "questions about the Scope-of-Work,'pleasecallme. Yours truly, Gerald N Vice-Pr 725 Farmers Lane #PO,Box 1236 @ Santa Hosa,California 95402 ©(707)523-2960 '®FAX (707)523-1029 ,[4712/96 4:20p| APR 15 °96 12:43 Te T/SR ;.998 PG2 ThermaSource. GEOTHERMAL CONSULTING SERVICES SCOPE OF WORK . GEOTHERMAL RESOURCE ASSESSMENT SERVICES MAKUSHIN VOLCANO,UNALAKSA The recommended scope-of-work to evaluate the feasibility ofdevelopinga14MWgeothermalpowerprojectonUnalaskaisasfollows: Review all available documents related to the geothermal resource on Unalaska Island including prior technical reports, geological maps,Grilling logs,and well tests.ThisinformationisavailablefromAIDEAandwillbereturneduponcompletionoftheassessment. Based on the available data,'provide a conceptual model of theresource.This model will entail definition of the areal extent,depth,and producing characteristics of the geothermalresource.Conclusions as to the adequacy of the potential resource to produce 14 MW over the long term will result from the model.Any existing geologic descriptions will be reviewed and reinterperted if necessary.Although there may be strong indications of a commercial resource,certainactivitiestoprovetheresourcetoalevelsatisfactorytoobtainprojectfinancingwlll'he reconmended.Theserecommendedactivitieswouldbethosereasonablyexpectedofaprudentowner. Confer with Exergy's geothermal resource consultant to clarify any questions on factual information and methodologies usedintheirresourceassessment. Certain risks accompany geothermal,projects,even those thatareprovenandoperating.We will identify risks and provide an assessment as to whether the data suggests such risks arelikelyorunlikelytooccur.For most projects,comton risks.entail resource longevity,well production decline rates, scaling tendencies,and thermal breakthrough,among many others that are site specific.Steps to mitigate such risks will be identified. Provide a Final Report that discusses the above issues alongwithmethodologiesused,any assumptions made,and the datareliedontoformulatetheresourceassessmentopinion,To complete the Scope-of-Work,it is 'estimated that 150 hoursofprofessionaltimewillberequired.our billing rate forthisserviceis$80/hour plus expenses.Total cost will not 'axceed $15,000 without prior approval. 725 Farmers Lane @ P.O.Box 1236 ®Santa Rosa,California 95402 ©(707)523-2960 ®FAX (707)523-1029 st APR 12 '96 15:38 TSI/SR oe 996 Pad 'ThermaSourcen.GEOTHERMAL CONSULTING SERVICES COMPANY PROFILE ThermaSource,Inc.is in the forefront of the geothermalindustryasaleadingproviderofconsultingservicesincludingdrillingandreservoirengineering,fieldsupervision,well testing,and geology.Since its inceptionin1980,ThermaSource has been actively engaged in manydomesticandinternationalgeothermaldevelopmentprojectsthatcoverallresourcetypes.©Our clients include electricutilities,integrated oi]companies,private investors, public agencies,and major financial institutions.Our professional personnel have over 25 years of combinedgeothermalexperience,and we provide clients with close persona]attention to ensure a competitive and successsful project.The enclosed Project List shows some of our past engagements. wag Farmers Lane @ PO,Box 1236 *Santa Rosa,California 95402 «(707)523-2960 @ FAX (707)523-1029 :;[4712/96 4220p | APR 12 °96 15:39 TSI/SR oo.936 PS GEOTHERMAL CONSULTING SERVICES PROJECT LIST DRILLING ENGINEERING TCPL Geothermal Ltd.,Calgary,Alberta,"Canada=-Drilling Engineering and weli site supervision-Well testing,resource assessment,and economics,The Geysers Field-Property appraisal and formulation of purchase offerforproducingpropertyinTheGeysers Oxbow Geothermal Corporation,Reno,Nevada Well design and drilling program management-General Reservoir Engineering services and well.testing Ben Holt Company,Pasadena,CaliforniaDrillingengineering:and well site supervision,CasaDiabloHotSpringsGeothermalProject,California Los Alamos National Laboratory,Los Alamos,New Mexico-Well site supervision of Hot Dry Rock Project Mother Earth Industries,Carefree,Arizona -Drilling Engineering and well site supervision -Wall testing,resource assessment,Sulphurdale,Utah Geothermal Field Development of economic evaluationto determinedamageclaimincivillawsuit Pacific GeoPower Company,Burnaby,B.C.Canada-Drilling Engineering for prospect in Meager CreekareaofBritishColumbia Department of Water and Power,Los Angeles,California-Drilling program review and:resource assessment International Communications &Energy,Inc.,Hyannis,Massachusetts ©.-Design of exploration.well programCoordinaterigmobilizationandshipmentof drillingsuppliestoaforeigncountry Pacific Energy Corporation,Loa Angeles,CA-Drilling Engineering services,Casa Diablo HotSprings 725 Farmers Lane #P.O.Box 1236 ®Santa Rosa,California 95402 @ (707)523-2960 @ FAX (707)523-1029[4/12/96 4:20p-) APR 12°96 15:39 TSI/SR |.-996 PBS RESERVOIR ENGINEERING © Bank of America,San Francisco,California-Raservoir assessment and property appraisalforprojectfinancingoftwoproducingproperties.inTheGeysers , -Market value appraisal of undeveloped geothermalleasesinTheGeysers Anadarko Preduction Company,Santa Rosa,CaliforniaReservoirengineeringservices,Alvord Desert,Oregon,Salt Wells,Nevada,and The Geysers,California.Well testing services,Salt Wells, Nevada CCPA No.1,Kelseyville,California-Reservoir assessment of producing property in The Geysers Geothermal Field United Siscoe Mines,Toronto,Canada -Appraisal of Fair Market Value of geothermalpropertiesforassatrestructuring Sacramento Municipal Utility District -Appraisal of Fair Market Value of SMUD-GEO #1SteamField Department of Water Resources,State of California-Appraisal of Fair Market Value of Francisco Lease, The Geysers Field-Well testing and lease maintenance True Geothernal,Casper,Wyoming-Reservoir Engineering and Drilling Engineering Consultants,Kilauea East Rift Geothermal Project,Hawaii-Resource assessment of properties in northern Nevada Well Production Testing,Carlsbad,California-On-site monitoring and data collection,Fee #6 Well Test,Niland Geothermal Project Well Test Analysis and Well Interference Analysis city of Provo,Utah-Resource assessment opinion for Municipal BondProspectus Sierra Pacific Power company,Reno,Nevada-Assessment of geothermal resources dedicate@g to power sales contracts 4/12/96 4:20p | APR 12 °96 15:48 TSI/"SR 995 PB? DIRECT USE George Nolte and Associates,Sacramento,CaliforniaResourceAssessmentofLakeCountyDirectUse'Geothermal Resources County of Lake,California Ag Park Greenhouse Geophysical survey --Drilling and testing of directusegeothermal wells Blaydes and Associates,Santa Rosa,California-Preliminary Geothermal Resource Assessment for the City of Clear Lake,California FOREIGN United Nations,New York,New York . -Technical assistance and classroom instructor in - Drilling Engineering to Peoples Republic of China=Technical advisor in Reservoir Engineeringfor lowtemperatureresourcestoSocialistRepublicof Romania Exlog,Sacramento,California and P.T.Exlog Sarana, Jakarta,Indonesia ; Well testing and resource assessment for geothermalfields.in Indonesia -VandConstructionCompany,Tokyo,Japan 4 alk..)*agsroom instruction on geothermal resources and drilling techniques OTHER Dravo Recovery Systems,Pittsburg,Pennsylvania-Management of waste dewatering operation in The GeysersEconomic feasibility study Humboldt Associates,Santa Rosa,California-Drilling Engineeringandwell site supervision ofoilandgasprojectinCentralNevada County of Sonoma,California ; Resource assessnent for EIR covering Aidlin PowerPlantDevelopmentatTheGeysersField Department of Water Resources,State of Idaho-Artesian well inventory and database creation [4/12/96 4:20p| SMALL rROCUREMENTS ($25,000 OR LESS) Chapter 2 Note:Prior to using this procurement process,users should familiarize themselves with the Introduction tothishandbook. :N D Develop a written scope and price estimate for the proposed contract (Chapter 7).This is the most significant task to be accomplished in the procurement process. The pre-solicitation estimate must be prepared without input from any Contractorwhichmaybelaterconsideredforthecontractandpriortosolicitingproposals. Note:If your price estimate is more than $20,000,consider using the process in Chapter 3.A low estimate canresultinlossoftime,money and effort if a contract can't be awarded because the negotiated price exceeds $25,000orifthepricecannotbelaterincreasedabove$25,000 for a necessary and warranted change in scope or effort. A RITY_AND IN Orally confirm authority to solicit proposals.Identify the funding source.Is funding provided through State appropriations to your Agency,Reimbursable Services Agreement (RSA)from another agency,or by Federal participation (FHWA,FAA,other Federal Agency)?Become familiar with funding sources, amount(s)and applicable constraints.Identify AKSAS Collocation and Ledger Codes and if a CIP Project,AKSAS Project Number. Ascertain if there are any requirements for coordination with the fundingagency(s).That is,if an RSA,does the granting agency need to be involved in the procurement process?If an FHWA project,the Project Manager must apprise Project Control of any intended Consultant use.Later changes or refinements to the ATP Project Estimate Sheet (or R/W estimate sheet for fee appraisers)must indicate the service(s)required and their cost.If FHWA Planning or Research (HPR,PL or PR)funding,you must have FHWA's prior,written approval of scope.If an FAA project,orally check with FAA before proceeding,as FAA concurrence will be required after contract negotiations and prior to award. RFP AND SOLICITATION If oral solicitation is used,oral responses must be followed up by written responses.Exhibit #1 is asample RFP letter for Small Procurements. Solicit at least three Offerors and obtain at least three responses -even if "not interested."If FHWA funding,include at least one Disadvantaged Business Enterprise (DBE)if a DBE is reasonably available and certified by DOT&PF for the required work.The DOT&PF Civil Right Office (telephone 266-1488)publishes a monthly directory of Certified Disadvantaged Business Enterprises which can be used to identify DBE's. The choice of which Contractors to "solicit"is unrestricted.You may select from the telephone directory or whatever source2you have available.The Division of General Services and Supply,Department of Administration,maintains a master register of potential Contractors sorted by Commodity Code(s).Upon request theycanfurnishyoualistingand/or mailing labels.For additional information aboutthisservicecontacttheAnchorageofficeat276-3320 or Juneau at 465-2253. ee ee ee ee ee le beeeeeeeee88eoee86oe6eoeeob8OeOOOeeeOOSDOOOSeeOeOeoOemOOeeee8ee8emeeeeee PSA Handbook Small Procurements ($25,000 or Less)Revised Date Chapter 2,Page 1 of 3 August 27,1993 Most small procurements require price (adjusted by applicable "Alaska bidder or product”preferences)be a selection factor.But,the statute covering Competitive Sealed Proposals (AS 36.30.270)exempts Offerors from submitting competitive price proposals when Architecture,Engineering and Land Surveying (A/E andLS)services are required to be provided by a registered professional.Thus,thosesolicitations,requiring "licensed"A/E or LS services,need not include price as a selection factor.Use your best judgement when requiring "licensed"services. Remember detailed scopes of work are needed for A/E or LS price proposals (not "pids").Price proposal content may best be evaluated by a registered professional. Note:FAA will not participate in contracts wherever costs (total costs,hourly rates,man-hour estimates,etc)were a selection factor -reference 49 CFR 18.36(t). Before communicating with any Contractor,begin a Record of Negotiation and Selection (see Sample RONS -Small Procurement,Exhibit #30)to outline the proposed scope of work,schedule and any other small procurement requirements. Complete the RONS,Form #14,as you discuss the procurement with each Contractor (handwritten entries are acceptable).This will aid to ensure that each Contractor receives the same information,that you obtain required information from each Contractor;and it will provide the final RONS in a "one-step”process. EVALUATIONOFPROPOSALS Evaluate proposals.Select proposal "most advantageous to the State",not necessarily the lowest offer.If a point scoring method is used and there is no federal funding,a 10%Alaska Offeror Preference (2 AAC 12.260 (e))must be applied.Record the reasons for your selection in the Record of Negotiation. NOTICE OF INTENT TO NEGOTIATE Orally notify each Offeror of the Contractor selected for negotiations. TECHNICALANDPRICEANALYSIS Individuals and firms without current Alaska licenses for the services they intend to provide (business,occupational or corporate)shall not be used in the contract. Obtain a price proposal from the selected Contractor if price was not a selection factor.Perform a technical and price analysis (see Chapter 8,Section 8.5.1)of the proposal and then develop negotiation objectives. )NEGOTIATION(See Chapter 9) PROTESTSANDAPPEALS (See Chapter 10). RECORD OFNEGOTIATIONANDSELECTION-"RONS"(See Chapter 11). In addition to the discussion and directions contained in Chapter 11 and the RONS format document within appendix D the following practices shall also beobserved.Prior to issuing any contract award,all Contracting Officers will obtain the review and written approval of the pending award from their immediatesupervisors.The transmittal memo depicted as Exhibit 45A within Appendix C of this Handbook shall be utilized for this purpose. PROFESSIONAL SERVICES AGREEMENT -"PSA”(See Chapter 12) oe ee ae®ae?ae®aw ae?ae aw”ae as em ae See Mew an am *ose ew?ane?ow?ee P ee ae ae?ant ae?an ae Pee ee?an?on?as aw am an ae?ae?am ant ae oan?an?aw”ae a e®oe ee ee ee ee ee 8 ee ee ee 8 ee ee 8 8 ee ee ee ee ee ee eee ee ee ee ee ee ee te eee eee ee ee ee te PSA Handbook Small Procurements ($25,000 or Less); .Revised Date Chapter 2,Page 2 of 3 August 27,1993 eto! OE CONTRACT RECORDSAfterRONSandPSAare prepared,assemble and transmit a complete set of 'ie!procurement documents as instructed by the Documents Checklist-Small Procurements ($5-25,000),Form #27.Keep a copy of all materials for your project files (See Chapter 13). NOTE:Your Professional Services Coordinator will at this time review the RONS,PSA,and other Documentstoidentifyanynecessaryrevisionsthatmustbemade.The Coordinator will also assign a contract number forthePSA.In general,the Contractor must sign two copies of the PSA first.The Coordinator will then obtain aContractingOfficer's signature on both copies of the PSA and a copy of the RONS.One of the originally signedcopiesofthePSAwillbereturnedtotheAgency's Contract Manager to reproduce for project files and totransmittotheContractorwithaNoticetoProceedinaccordancewithChapter15. ENCUMBERFUNDSFORPSA (See Chapter 14). CONTRACT MANAGEMENT Provide one originally signed copy of the PSA to the Contractor and manage the contract (Chapter 15). PSA Handbook Ce a ee,eee ene 0 oe 6 ©8 6 8 8 8 ee 8 8 ee ee ee eee eee eee ee ee Small Procurements ($25,000 or Less)Revised Date Chapter 2,Page 3 of 3 August 27,1993 2nd DRAFT 1 PROFESSIONAL SERVICES PROCEDURES The following initial criteria must be met prior to the establishment of a professional service contract: e Obtain delegation to purchase when necessary. e Develop a comprehensive statement of work/services to be performed. e Develop a cost estimate and project schedule based upon the statement of work/services. e Ensure funding is available for the project. e Prepare a draft timeline/procurement schedule for the project. e Provide the statement of work/services,cost estimate,and timeline to the Procurement Manager for review,and a determination of wnat mode the item will be procured.i.e.DOT/PF,DOA,or exempt procurement procedures. PROFESSIONAL SERVICES UNDER $5,000. e Obtain delegation to purchase when necessary. e Complete the initial criteria as listed above. ¢Solicit a minimum of three verbal quotes for the service based upon the statement of work/services to be performed. e Ensure that all individuals contacted for quotes are provided identical information for an "apples to apples”comparison of quotes. e Once verbal quotes are received,determine which quote is the most advantageous to the Authority and prepare a written statement for the Procurement Manager's review,to justify the selection. e Prepare a AIDEA Small Procurement Form (Obtained from the Procurement Manager.) e Ensure that a copy of the Contractors Alaska Business License and proof of insurance are in the procurement file (Must be on file with AIDEA/AEA prior to award of contract.) 2nd DRAFT 1 2nd DRAFT 2 Provide the complete procurement file to the Procurement Manager for review prior to having the contract executed by the individual with the delegated authority to sign the contract for AIDEA/AEA. Provide Finance with a copy of the executed contract and the executed original is placed on file in the fireproof cabinets in the Procurement Manager's office along with other documents within the procurement file which then becomes the contract file. Ensure that all invoices for the project are approved based upon the Delegation of Authority and sent to Finance for payment Upon completion of the project ensure that a completion memo is accomplished (with a copy sent to Finance)so that the contract file can be removed from the active contracts file and placed in the retired contracts file. PROFESSIONAL SERVICES BETWEEN $5,000.AND $25,000 Complete the initial criteria.Note that a written Scope of Work/Statement of Services must be prepared by the Project Director/Manager. Solicit a minimum of three written quotes for the services to be accomplished. Ensure that all Contractors are provided the identical information to base their quote on for an "apples to apples”comparison of the quotes received. If anything other than price is going to used to determine award of the contract,then all potential Contractors must be made aware of this at the time of the solicitation for quotes. Allow Contractors adequate time to complete their response to the solicitation. Formally advertised proposals requires a minimum of 21 days after release of the Request for Proposals. Once a proposal is received,select the most acceptable proposal based upon the established criteria in the statement of work Upon determination of the successful Contractor,get a contract number from the Procurement Manager Inform all unsuccessful Contractors that they were not selected for award 2nd DRAFT.2 2nd DRAFT 3 Prepare a Professional Service Agreement (PSA)form to be utilized for all such Contracts under $25,000,and include all required appendixes.(Two originals,one for the Contractor and one for AIDEA/AEA.) Provide the Procurement Manager with a copy of the draft PSA for review prior to submitting it to the Contractor for signature,but after negotiations have been completed with the Contractor.The Procurement Manager will normally assist the Project Manager/Director during these negotiations. After the review of the PSA has been completed and the PSA has been executed by the Contractor,forward the agreement to the appropriate individual with authorization to make the procurement based upon Delegation of Authority. Upon execution of the agreement,forward one signed original to the Contractor for their files and one to the Procurement Manager for placement in the contract files within the fireproof file cabinets. Provide Finance with a copy of the contract (and Notice(s)to Proceed if one is being utilized). Administration of the contract is by the Project Director/Manager. Accomplish amendments to the contract,as necessary,by the Project Director/Manager. Prior to issuance of any amendments,have the Procurement Manager review the documents in draft. Have all amendments signed in duplicate by the Contractor and the individual delegated authority to make the procurement for AIDEA/AEA. Upon execution of the amendment by both parties,ensure that the Contractor is given one original and a duplicate original is placed in the contract file. Provide Finance of all copies of amendments (and Notices to Proceed,if utilized). Ensure that finance receives all invoices for the project after review of the Project Director/Manager,and ensure approval by the individual delegated authority to make the procurement for AIDEA/AEA is received. Provide a contract completion memo for the contract file upon final payment (with a copy sent to Finance)so the contract file is retired from the active file in the Procurement Manager's office. PROFESSIONAL SERVICES ABOVE $25,000 2nd DRAFT 3 2nd DRAFT 4 Complete the initial criteria.Note that a written Scope of Work/Statement of Services along with a project schedule and budget must be prepared by the Project Director/Manager.Seek assistance from the Procurement Manager when necessary. Once the Procurement Manager determines which mode will be utilized,an Authority to Seek Professional Services (ASPS)will be prepared by the Project Director/Manager and routed to the Procurement Manager who will obtain the appropriate approvals based upon the Delegation of Authority. Procurements in this category require a public solicitation period of a minimum of 21 days. Prepare the advertisement for the Procurement Manager's review prior to making the solicitation.(See the Procurement Manager for determination of the appropriate publications to be used). Prepare a Request For Proposal (RFP)package utilizing the appropriate forms for the mode established initially.Note that in certain limited instances the Procurement Manager may prepare the remainder of the RFP package after the Project Director/Manager prepares the Scope of Work/Statement of Services. Have the RFP package reviewed by the Procurement Manager and members of the Evaluation Committee selected as noted below,prior to distribution for solicitation. Establish a distribution list to be maintained by the receptionist for mailing the RFP package to those responding to the solicitation. Establish an Evaluation Committee with members selected by the Executive Director (minimum of 3 members to evaluate the proposals)upon the closing of the solicitation period.The Procurement Manager may,at times,serve on the Evaluation Committee as a scoring member,but otherwise will always serve as an ex-officio member of all Evaluation Committees.Note:If soliciting proposals for engineering services,the majority of the committee must be composed of Alaska registered professional engineers . Conduct Preproposal conference,if applicable. If a Preproposal conference is held,ensure you take good notes so that any significant questions raised during the conference are answered and an addendum outlining the questions and responses are forwarded to all holder's of the RFP. 2nd DRAFT 4 2nd DRAFT 5 Maintain a written record of all clarifying and interpretive questions asked by potential proposers and issue addendum as necessary,after consulting with the Procurement Manager. Do not open any proposals prior to the time and date established in the RFP.The Procurement Manager will open all proposals received with the assistance of the Project Director/Manager. The Procurement Manager shall review,all proposals upon opening to ensure that they are responsive to the RFP with the assistance of the Project Director/Manager. Provide the Evaluation Committee members with the responsive proposals received along with their checklists,scoresheets,and a copy of the RFP. Upon completion of individual evaluations,all members are to provide a copy of their specific scoresheets to the Procurement Manager at least 24 hours prior to the scheduled Evaluation Committee meeting. The Procurement Manager will compile scores and compute the appropriate scores for the Alaska Bidders Preference and Cost.These will be checked by the Project Director/Manager. The Evaluation Committee will meet to discuss all proposals,select the best proposal,and make a recommendation for award to the Executive Director. The Project Director/Manager will prepare a Notice of Intent to Award (NOITA)with the approval of the Executive Director,based upon the selection of the Evaluation Committee. Allow a 10 Day protest period from the time the NOITA is issued Contract negotiations may begin during the protest period.The Procurement Manager will normally assist the Project Director/Manager during the negotiations. The successful Contractor should provide proof of insurance during this period Provide the Procurement Manager with a draft of the contract (PSA)for review after negotiations have been completed with the Contractor. Prepare the contract based upon negotiations,along with all required appendixes,in duplicate (two originals).) Upon completion of the protest period,issue the finalized contract to the Contractor for signature and upon return to the appropriate individual delegated authority to sign the contract. 2nd DRAFT ) 5 2nd DRAFT 6 Upon execution of the contract,provide the contractor with one original executed contract and forward the other original along with other documents within the procurement file to the Procurement Manager for placement in the contract file maintained in that office in the fireproof cabinets. Ensure that Finance is provided a copy of the contract and Notice(s)to Proceed,if utilized. Administer the contract,as required. Prepare any amendments as required in the same fashion as mentioned for PSA's under $25,000 Complete a Release from Agreement form (obtained from the Procurement Manager),upon completion,but prior to making final payment,and place in the Contract file when executed by the Contractor. Provide a copy of the executed Release from Agreement form to Finance with the invoice covering the final payment. 2nd DRAFT 6 April 10,1996 ...-.ays adviafacsimile pie vadustrial Develaprae:4 are)and Export Authority David E.Germer Project Manager Alaska Industrial Development and Export Authority 480 West Tudor Anchorage,AK 99503 Dear David: Based on our discussions,I would recommend a two-fold approach to the review of the Exergy proposal. PHASE I -FATAL FLAW REVIEW R.W.Beck will review the summary material provided to us to determine if the approach and magnitude of O&M and capital costs are reasonable and the technology is feasible. The work product from this phase will be: 1.An opinion from Beck as to the validity of the approach and whether or not it is reasonable for AIDEA and the developer to approach the City with respect to the general terms and conditions of a PSA. 2.A preliminary opinion as to the reasonableness of the financial projections (O&M and capital items)presented in the proposal. 3.A preliminary opinion with respect to the feasibility of the technology presented including a discussion of the technologies "track record”. 4.A list of additional items (if necessary)needed from Exergy to provide a detailed evaluation and independent engineering review of the plan. This approach would allow AIDEA to minimize its expenditures in the initial evaluation as Phase I of the project should not exceed $10,000.It should be noted that Phase I will not include any detailed evaluation,but rather a cursory review. PHASE II -INDEPENDENT ASSESSMENT If the project plan is deemed reasonable we could then conduct a detailed evaluation of the data provided (as requested in Phase I)by Exergy.Once we complete Phase I and receive follow-up information,we could provide AIDEA with a detailed scope for Phase II. 00-00000-60108-5100/1620 |j:\cons\pro\jaf004tf.doc 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 David E.Germer April 10,1996 Page 2 I would anticipate that we could conduct Phase II for a budget in the range of $25,000 to $55,000. T hope this is fully responsive to your needs.Please call me at 303-299-5248 when you have had a chance to review this.I look forward to working with you on this project. Sincerely, R.W.BECK,INC. Lode Todd W.Filsinger Associate and Executive Engineer TWFjf c:Paul Harmon 00-00000-60108-5100/1620 |j:\cons\pro\jaf004tf.doc ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY {=ASENERGYAUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 Facsimile Transmittal TO:Jen Fatta Company Fax #:303-297-2911 From:Dave Germer Date:4/9/96 Time:11:30 Number of pages including cover page:2 Transmittal Contents: Comments: Notice:This facsimile may contain confidential information that is being transmitted to and is intended only for the use of the recipient named above.Reading,disclosure,discussion,dissemination, distribution,or coping of this information by anyone other than the named recipient or his or her employees or agents is strictly prohibited.If you have received this facsimile in error,please immediately destroy it and notify us by telephone,(907)269-3000. H/all/cheryl/fax/one.doc To:Jen Fatta From:David Germer Subject:Beck's Makushin Project Proposal Per my discussion with Todd |am forwarding the following segment of a draft letter from AIDEA to Exergy.Hopefully,this will be of some use in making a few revisions to your proposal. Although the ANEX Project Report provides an excellent summary it lacks the necessary detail to accurately confirm the reasonableness of the new design/technology and verify the new capital and O&M estimates.|suggest that as a first step,in analyzing the new project plans,that R.W.Beck,AIDEA's past consultant for this project,conduct a fatal flaw analysis of the project's design,proposed costs and economic evaluations.This review would consist of an opinion on the technology being proposed as well as a determination of the general reasonableness of the new capital and O&M figures.As part of the fatal flaw analysis Beck would also prepare a list of additional information that would be required for a detailed independent appraisal.If the results of this first analysis are sufficiently encouraging,the detailed independent evaluation could be conducted.This two phased approach to project due diligence is thought to be more cost effective and would allow the parties to more quickly begin exploring the potential development of a "requirements”PSA with the City of Unalaska. |contacted T.Felsinger of Beck on March 20,1996 and requested that he prepare a proposal for the above engineering services.Attached is his letter proposal. bd APR-@3-1996 16:58 Ru BECK P.61/02 RWABECKFACSIMILECOVERSHEET Hardcopy to follow via U.S.Mail To:David Germer =AIDEA Fax:907-269-3044 From:Todd Filsinger Phone:303-299-5248 Date/Time:April 3,1996 /4:39 PM Pages (including cover):2 Cast Account: Transmission Questions:Receptionist/303-299-5200 document12 1125 Seventeenth Street,Suite 1900 Denver,CO 80202-2615 Phone (303)299-5200 Fax (303)297-2811 APR-@3-1996 16:59 2W BECK P.@2/82 April 3,1996 via facsimile David E.Germer Project ManagerAlaskaIndustrial Development and Export Authority480WestTudor Anchorage,AK 99503 Dear David: Based on our discussions,I would recommend a two-fold approach to the review of the Exergy proposal. PHASE I -FATAL FLAW REVIEW We will review the material provided to us to determine if the approach and magnitude of O&M and capital costs are reasonable and the technology is feasible.The work product from this phase will be:cesen able 1.An opinion from Beck as to the yaidity of foffhe€approach and whether or not if is feasible ol VffortheGiAIDEAtomoverd;fy Cone tear}ferent Rene ope nhewera<<Jovleprts ef x»PS$fl-pe of Ae 2 A list of additional tiemss Cf necessary)needed from Exergy to provide a detailed.Ca opr ats s ok fhe evaluation and independent engineering review of the plan.fer",/.howme (ey 2 PHASE II -INDEPENDENT ASSESSMENT 1125 Seventeenth Street,Suile 1900 Denver,CO 60202-2615 Phone (303)299-5200 Fax (303)297-2811 "Ifthe project plan is deemed reasonable we could then conduct a detailed evaluation of the data provided (as requested in Phase 1)by Exergy.Co sr" This approach would allow AJDEA to minimize its expenditures in the initial evaluation.| would anticipate that we could conduct Phase !for $5,000 to $10,000. T hope this is fully responsive to your needs.Please call me at 303-299-5248 when you have had a chance to review this.I look forward to working with you. Sincerely, R.W.BECK,INC. Seite” Todd W.Filsinger Associate and Executive Engineer TWF:jf 00-00000-60108-5100/1620 |jAcons\pro\jaf003t£doc Now TOTAL P.@2JcedFette ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY f=ALASKA@@KENERGYAUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 March 20,1996 sos -2749 -5 2O0 Mr.Todd W.Filsinger,P.E. R.W.Beck Bank One Building,Suite 1900 1125 Seventeenth Street Denver,Colorado 80202-2615 Dear Todd: |enjoyed talking to you about the Makushin Geothermal Project.As |indicated,the Mukushin Project has recently been redesigned and re-costed by EXERGY.AIDEA would like to confirm the reasonableness of the revised technical parameters/processes being proposed by EXERGY and verify the various economic scenarios they have presented.To assist us in better understanding the revised project,EXERGY has supplied us with a report entitledMakushinGeothermalProjectRevisiteddatedMarch1996andwithaseriesofscenarios projecting the project's financial operating results under various assumptions.|have enclosed this material for your review as well as an EXCEL file that generates the presented financial results.We would appreciate you keeping this material confidential. After perusing this material,we would like you to prepare a short proposal of the time and cost required for your firm to comment on the reasonableness of the material. Please feel free to give me a call at 907-269-3027 if you have any questions. Sincerely,Lod one David E.Germer a Project Manager Enclosures cc:Dennis McCrohan h:\all\dgermer\mckushin\filsing.doc ALASKA INDUSTRIAL DEVELOPMENT =AND EXPORT AUTHORITY = aE :sSEENERGY AUTHORITYDe 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:William R.Snell Executive Director Dennis V.McCrohan,P.E. Deputy Director -Energy SoFROM:David Germer Vy JProjectManager" DATE:March 12,1996 SUBJECT:|Makushin Project -Meeting Report On March 7,1996,Dennis McCrohan and |meet with Hank Leibowitz,Vice President of Special Projects for Exergy,Inc.,Lawrence Goldfarb,Executive Vice President of Exergy, Ronald Simms,Vice President of Walsh Construction Company,and Bob LeResche, consultant for Exergy,to discuss the status of the Makushin Geothermal Project.Ansaldo,theprocesstechnologylicenserandExergyhaveformedajointventurereferredtoasANEXtoevaluateanddeveloptheproject.Walsh Construction,a subsidiary of Atkinson Construction of San Francisco,is the contemplated construction contractor for the project. Exergy and Walsh Construction have recently completed a re-evaluation of the Makushin project using new geothermal lease terms and a generating system based on Ansaldo's proprietary technology.Mr.Leibowitz presented an updated project design and cost estimate. The updated capital estimate is approximately $90.7 million or roughly $22 million less than OESI's prior estimate.Soil stability associated with the site access road appears to be the largest cost uncertainty associated with this estimate.Annual operating and maintenance costs were estimated to be $2.5 million (1999 dollars)compared to OESI's prior estimate of $3.9 million (1999 dollars).Exergy will be providing us with a description of their proposedplansandalistingofthecostbreakdownoftheirO&M figure.After receiving this information,we should be able to define the various factors that have contributed to the cost reductions. Mr.Simms provided a short description of the proposed schedule.The schedule outlines a four year construction time frame where no on-site work begins until 1997.Costs have been Memorandum March 12,1996 Page 2 included in the Exergy estimate for a production confirmation well (proof of resource)in 1997 utilizing helicopters for mobilization.Mr.Simms'schedule shows plant start-up in 2000. Bob LeResche then presented 14 scenarios of an economic model that he had created for the project.Not surprisingly,given the significant capital and O&M reductions,the new project economics are significantly better than prior economic analysis.Review/confirmation of these cost reductions,the Ansaldo technology,and LeResche's economic modeling assumptions/techniques will be necessary to verify the project's new economics.Based on LeResche's model,a rate stabilization fund is still necessary to lower costs in the early years of operation.The source of this fund is something other than bonds (i.e.equityJoan or grant). Once the project costs are less than the stabilized 1999 rate of $0.1220 kWh,then the source of the rate stabilization fund is paid back from the difference between the actual cost and $0.1220 kWh.Depending upon the scenario,this fund could be drawn upon from 1 to 16 years and under the worst scenarios,may not be fully paid back during the project's 30 year bond repayment period.The infusion of grants/equity in the range of $5 to $10 million were examined in a few scenarios.Although this type of infusion clearly betters the project's economics and diminishes financial risks,it may,under certain economic scenarios,not be required.|!have started recreating LeResche's financial model in order to better understand Exergy's economic assumptions and to allow us to independently examine our own scenarios. Prior to defining project/financing roles and pursuing development issues it was agreed that the party's primary focus should be on attaining a "requirements”power sales agreement with the City of Unalaska.Although the parties plan to meet with the processors it was agreed that City should ultimately develop a requirements contract with them.It was explained that AIDEA will require a Cost Reimbursement Agreement with Exergy to cover consultant costs and outside expenses associated with the review of the ANEX plan and with the development of the power sales agreement.During the discussion Dennis clearly stated that no Federal or State legislative action should be sought this year. h:\all\dgermer\makushin\meet-mem.doc a \en WAW e®&COST REIMBURSEMENT AGREEMENT Deoun S THIS COST REIMBURSEMENT AGREEMENT ("Reimbursement Agreement')is made this day of ,1996,between the EXERGY INCORPORATED ;("EXERGY”) and the ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY ("Authority”). RECITALS: WHEREAS,the Makushin Project ("the Project”)is a proposed geothermal power project that is being developed by EXERGY; WHEREAS,the development of the Project would provide environmentally sound electric power to the City of Unalaska and local onshore fish processors: WHEREAS,under prior Project ownership the Authority has undertaken feasibility studies and evaluations of the Project; WHEREAS,the Authority has under consideration a preliminary proposal for the financing and ownership of the Project under the Authority's Development Project statutory authority; WHEREAS,the Authority must develop a Finance Plan before approval of a Development Project: WHEREAS,development of a Finance Plan for the Project requires the Authority,the City and processors to reach an agreement on the key parameters of a power sales agreement including rate structure; WHEREAS;the Authority in its development of a financing plan must undertake a review of the Project to confirm its feasibility and its eligibility for financing; WHEREAS,in connection with development of a power sales agreement and the feasibility review the Authority plans to retain counsel and engineering consultants to assist it in evaluating information related to the Project and to provide professional advice to the Authority in that regard;and WHEREAS,the consultants are expected to assist in the development of the power sales agreement,review all available information concerning the Project and to inform the Authority as to,among other things,the adequacy of such information for making investment decisions,the nature of the financial risks involved in the financing of the Project;and WHEREAS,the Authority requires that EXERGY agrees to reimburse the Authority for all direct costs incurred in support of such evaluations and development of a power sales agreement;and WHEREAS,the Authority and EXERGY are each legally authorized to enter into this agreement and each is legally authorized to perform its respective duties as set forth herein; NOW,THEREFORE,in consideration of the mutual covenants and promises herein contained,and for other valuable consideration,the receipt and sufficiency of which is acknowledged,the Authority and EXERGY do hereby agree as follows: >;WY 1.Subject to the reimbursement requirements set out herein,the Authority agreesYtoprovidefundsnottoexceed$200,000 in partial support of the proposed"oy evaluation."ye x4 2.Prior to the disbursement of any funds by the Authority in accordance with|>_-Section T96 this Agreement with respect to a specific task,the Authority andecEXshalleachapproveabudgetsettingforththeamountoffundsthatwill :be expended for the task.The parties agree that no funds shall be disbursed under this agreement except in accordance with a budget approved pursuant toNvythisSection. If the Project is approved and the Authority and Exergy enter into a final agreement with respect to the Project,Exergy and the Authority agree that all costs incurred under this agreement will be included as a qualified cost for purposes of determining any payment to be negotiated between the parties.wo4.Exergy agrees to reimburse the Authority for all direct costs incurred in support of the evaluations if:(a)Exergy withdraws or otherwise declines to proceed with an application for financial assistance from the Authority,(b)the Authority,for whatever reason,declines to approve financing of the Project with tax-exempt bonds,or (c)the Authority and Exergy are unable to execute a final financing agreement with respect to the Project.Repayment is due within ninety (90) days following the date which the Authority notifies Exergy in writing the amount of repayment which is due.onThe obligation of the Authority pursuant to the Agreement is strictly limited to participation in the Project evaluations.The Authority may impose further terms and conditions with respect to the evaluations,as the Authority,in its sole and absolute discretion,determines to be reasonable and prudent.oExergy shall defend,indemnify,and hold harmless the Authority from and against any and all suits,claims,actions,losses,costs,penalties and damages (of whatever kind or nature,including reasonable attorney's fees and litigation cost)arising in favor of government agencies or third parties (including employees of the parties)on account of any damages arising out of,or in connection with this Agreement. 7.This Agreement shall be governed by and construed under the laws of the State of Alaska. 8.Any action orjudicial proceeding arising out of this Agreement shall be filed and prosecuted in the Superior Court for the State of Alaska,Third Judicial District, at Anchorage. 9.This Agreement may not be modified or amended except by writing signed by the parties. 10.The signatories to this Agreement assert that they have the power and requisite authority to bind each party to perform the obligations set out in this Agreement. IN WITNESS WHEREOF,the parties hereto,in consideration of the mutual covenants set forth herein and intending to be legally bound,have caused this Agreement to be executed and delivered this day of ,1996. ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY William R.Snell Executive Director H.M.Leibowitz Exergy,Inv. ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY =>ALASKA @@E-=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:David E.Germer / Project Manager FROM:Dennis V.McCrohan,P Deputy Director-Energy DATE:March 8,1996 SUBJECT:Status of Diesel Permits at Unalaska Makushin Geothermal |discussed the status of permits with Bill Steigers who is consulting for Unisea,City,and Alyeska on environmental matters.The status as reported is: 1.City of Unalaska a.City has a PSD Avoidance Permit.Limited to less than 250 ton NOX per year. City is raising stacks on existing units.PSD public hearing scheduled for April 1996 with permit completion scheduled for May 1996. b.Currently City capacity is capped at 6.5 MW.PSD will allow City to increase KWH but not capacity. c.Capacity cap cannot be lifted at existing facilities due to location. d.City is looking at new 16 MW unit at a different location.Mike Hubbard is doing some consulting on the new facility. 2.Westward a.Westward has a PSD Avoidance permit.Limited to less than 250 ton NOX per year. b.Westward has new 1990 engines integrated with heating and cooling cycle. C.Interconnected to City and can buy energy from City but not sell. d.Westward has not submitted a PSD application. 'Memorandum March 8,1996 Page 2 3.Unisea a.Unisea has PSD Compliance Order.Operation by consent. b.Major problems due to bluff which may require land purchase,raising stacks, etc.Also thought to be the major contributor to City ambient emission violations. Cc.Currently exceeding emissions allowed under Compliance Order. d.Consultant working on PSD. 4.Alyeska a.Also has a PSD Compliance Order.Operation by consent. b.isolated electrically from City. Cc.Consultant working on PSD.Probably will receive PSD. 5.American President Lines a.Already buying power from City on occasion. b.PSD Avoidance permit.Less than 250 ton NOX per year. Steigers'discussions with the processors have been that processors want out of the energy business.However,processors will never sign any commitment beyond one year.Steigers thinks the processors are thinking the geothermal project will require a take or pay agreement. He doubts if processors recognize the difference between take or pay and requirements power sales agreements. cc:William R.Snell,Executive Director ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY f=AmEENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /269-3000 FAX 907 /269-3044 MEMORANDUM TO:David Denig-Chakroff City of Unalaska . FROM:Dennis V.McCrohan,recoilDeputyDirector-Energy DATE:March 5,1996 SUBJECT:Makushin\Status |apologize for my previous inaccurate advice concerning the status of the project. Attached is a facsimile received today regarding a Makushin meeting on March 7.My discussions today with Mr.LeResche indicate that Exergy is extremely interested in continuing the project.The meeting at AIDEA will to be discuss details of an Exergy/AIDEA participation arrangement. Please let me know if you have any questions. Attachment CC:William R.Snell,Executive DirectorJohnB.Olson,P.E.,Deputy Director-Development LEMcoUc a wu. a I. Il. VII. a 9Us DOO"O5NGY mio @¥'20 AM MAKUSHIN GEOTHERMAL PROJECT Alaska Industrial Development &Export Authority *ANEX Joint Venture March 7,1996 10.00 AM AGENDA Updated Project Design and Cost Estimate ¢Exergy (Mr.Leibowitz) ¢Walsh Construction (Mr.Ron Simms) Updated Proposed Project Schedule ¢Exergy (Mr.Leibowitz) ¢Walsh Construction (Mr.Ron Simms) Discussions with Power End-Users ¢Exergy (Mr.Leibowitz) Implications for Plan of Finance -DISCUSSION -Implications of New Cost Estimates and Processor Discussions -Rate Stabilization Fund -Potential for Equity Investment Proof-of-Resource Risk -DISCUSSION ¢Exergy (Mr.Leibowitz) Admunuistrative Critical Path -DISCUSSION -AIDEA-ANEX Reimbursable Services Agreement -City Power Purchase Agreement -Processor Power Purchase Agreements -AIDEA -ANEX agreement(s) -AIDEA "due diligence" -Conditional AIDEA decision -Conditional Legislative approval -Permitting -Proof-of-Resource well -Financing -Construction Establish Benchmark Deadlines &Assign Tasks REL:03/06/96 U2l2