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HomeMy WebLinkAboutBPMC- July 20, 2018BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska \July 20,2018 1.CALL TO ORDER Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric ProjectManagementCommitteetoorderat10:01 a.m.A quorum was established. 2.ROLL CALL FOR COMMITTEE MEMBERS Cory Borgeson (Golden Valley Electric Association [GVEA]);Bryan Carey (Alaska Energy Authority [AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony Izzo (Matanuska Electric Association [MEA]);Mark Johnston (Anchorage Municipal Light &Power [ML&P]);John Foutz (City of Seward);and Bradley Janorschke (Homer Electric Association [HEA)). 3.PUBLIC ROLL CALL Tom Erickson,Michele Hope,Valerie Leavitt,Janet Reiser,Kirk Warren,Brandi White (AEA); Eric Meyers (American Transmission Company);Matt Clarkson,Burke Wick (CEA);Brian Bjorkquist,Stefan Saldanha (Department of Law);Ron Woolf (GVEA)(phone);Bob Day,Larry Jorgensen (HEA);Kirk Gibson (McDowell Rackner Gibson,PC);Tony Zellers (MEA);Mollie Morrison,Jeff Warner (ML&P);T.W.Patch (Public),Bernie Smith (Public);Ladonna Lindley (Accu-Type Depositions). 4,PUBLIC COMMENTS None. 5.AGENDA APPROVAL MOTION:Mr.Johnston made a motion to approve the agenda.Motion seconded by Mr. Thibert. The agenda was unanimously approved. 6.PRIOR MINUTES -June 15,2018 MOTION:Mr.Borgeson made a motion to approve the Minutes of June 15,2018.Mr. Foutz seconded the motion. The motion passed unanimously. 7.NEW BUSINESS A.Election of Officers Chair Janorschke recommended the Vice-Chair be nominated for Chair,and a new Vice-Chair be nominated. Mr.Gibson informed the three officer positions for BPMC are Chair,Vice-Chair and Secretary/Treasurer.The AEA representative is the permanent Secretary/Treasurer,unless the BPMC chooses to separate those positions.Mr.Gibson informed the nominations are open. BPMC Minutes 7/20/18 Page |of 6 Mr.Johnston nominated Mr.Borgeson for Chair.Mr.Thibert seconded the nomination. MOTION:Mr.Johnston made a motion to close nominations for Chair.Mr.tzzo seconded the motion. Motion passed with no objection. MOTION:Mr.Johnston made a motion to approve Mr.Borgeson as Chair.Mr.Thibert seconded the motion. Motion passed unanimously. Chair Borgeson requested Mr.Gibson continue to conduct the elections for Vice-Chair. Mr.Johnston nominated Mr.Izzo for Vice-Chair.Mr.Janorschke seconded the nomination. MOTION:Mr.Thibert made a motion to close nominations for Vice-Chair.Mr.Johnston seconded the motion. Motion passed with no objection. MOTION:Mr.Janorschke made a motion to unanimously accept Mr.Izzo as Vice-Chair. Mr.Johnston seconded the motion. Motion passed unanimously. Mr.Gibson confirmed the Secretary/Treasurer will continue to be the AEA representative.There was no discussion and no objection.He expressed congratulations to the new officers. B.Battle Creek Construction Update Mr.Carey informed the contractor Orion is on schedule and on budget.Road construction has been progressing well.The lower access road is mostly completed.The upper access road underwent realignment to move away from the cliff.There is no longer a need for a wall at this location.This change does not decrease the cost of construction,but does reduce the chance of large rocks falling during construction and operation at this location.The challenging construction of the first wall will begin in late August.The wall will be about 40 feet tall with a 15%grade.The contractor's hope is to reach the diversion site by the end of this season,with the intent to stage the concrete mix material in preparation for the spring work. Mr.Carey gave a full description of the pictures he took last week of the project construction.He advised of the plan to resolve an issue at the East Fork Diversion that has been unaddressed for many years.The water goes underneath the diversion through the sand and rock,eventually reaching the tide water.Helicopter costs were prohibitive to resolving the problem previously. Mr.Carey estimates 500 megawatt hours are being lost each summer from this leak. Mr.Thibert requested an update on the consultant issues surrounding the discrepancies in material quantities.Mr.Carey informed those issues are still being addressed.The survey data is currently being reviewed and validated.Interim payments have been made until a resolution is reached regarding the excavation quantities. BPMC Minutes 7/20/18 Page 2 of 6 Chair Borgeson asked if there are provisions to ensure the contractor maintains the BradleyLakeRoadtoensurenodegradationoccursasaresultofthecontractor's use.Mr.CareyadvisedthecontractoriscurrentlymaintainingtheBradleyLakeRoadandthecontractincludes specific road maintenance provisions. C.Bradley Operator Update Mr.Carey reported AEA met with a utility working group on June 29"and received commentsregardingtheformandformatoftheO&M contract agreement.Changes were made and the revised draft of the agreement was provided to BPMC members.AEA requested the utilities submit comments on the revised draft by July 31%.Mr.Carey informed the working group could meet again after the comments are received to settle any issues that arise. Mr.Thibert requested Mr.Gibson provide his comments regarding the new version of the agreement.Mr.Gibson felt the first version of the agreement prior to the working group was untenable,did not follow the BPMC's authority under the Power Sales Agreement,and needed revisions.The revised draft uses the current O&M agreement,including small upfront changes and the addition of two appendices.Mr.Gibson believes one appendix is fairly detailed and voluminous carrying many of the state required provisions.He noted three concerns: e Some requirements that are included may be unnecessary e The BPMC's authority under the Power Sales Agreement may not be protected e Some issues regarding subcontractors may be burdensome to HEA Mr.Gibson stated the second appendix addresses the compensation.Mr.Gibson understands HEA has conducted financial analysis and has provided the analysis to the Budget Committee for review.Mr.Gibson noted the issues will be narrowed once all the comments are received by the end of July.He feels the revised version is much better than the initial version. D.Resolution 2018-01 -Battle Creek Project Share Allocation Mr.Gibson recommends the BPMC approve Resolution 2018-01,which is designed to amend and clarify the earlier resolutions adopted by the BPMC concerning the Battle Creek Diversion Project (BCD Project).He discussed the proposed BPMC Resolution 2018-01 is limited to amending the voting requirements from the BPMC to accept the results of the study that will address the O&M impacts of the BCD Project on the Bradley Lake Project and clarifying the methodology to be used by the BPMC to allocate BCD Project shares of any non-participating purchaser that has not been otherwise sold or transferred. Mr.Gibson believes the opt-out issue discussed at the previous meeting requires additional review by counsel and can be brought before the BPMC in the future. MOTION:Mr.Janorschke made a motion to approve the Resolution 2018-01.Mr.Thibert seconded the motion. Aroll call vote was taken,and the motion passed unanimously. E.Dave's Creek O&M Mr.Gibson believes the Dave's Creek Static Var Compensator (SVC)System O&M Agreement between CEA and AEA is ready for BPMC approval.There are no issues.This is the result of the intent to create an O&M agreement template so all the agreements are essentially the same. BPMC Minutes 7/20/18 Page 3 of 6 Mr.Carey explained the process that began about a year ago with the Soldotna SVC O&M Agreement and requested Mr.Bjorkquist provide additional comments.Mr.Bjorkquist gave anoverviewoftheagreement.He believes the next step under the Power Sales Agreement is fortheBPMCtoentertainamotiontoapprovethisO&M Agreement so AEA can execute it. MOTION:Mr.Izzo made a motion to approve the Dave's Creek O&M Agreement betweenCEAandAEAaspresented.Mr.Johnston seconded the motion. A question was asked if CEA is satisfied with the agreement.Mr.Thibert responded he has not reviewed the agreement,but Brian Hickey of CEA has reviewed the agreement.Mr.Gibson advised the BPMC can move forward with contract approval for execution and any concerns that may surface can be brought before the BPMC. Motion passed unanimously. F.FY19 Budget Amendments MOTION:Mr.Janorschke made a motion to approve the 2019 Proposed Budget - Amendment 1.Mr.Johnston seconded the motion. Chair Borgeson requested Mr.Woolf provide an explanation of the proposed budget amendments.Mr.Woolf gave a detailed description of the proposed amendments which result in a net increase in utility contributions of $220,490.Mr.Woolf informed the Budget Committee reviewed the budget amendment and recommended it for approval. Chair Borgeson expressed support for the upgrades to the crew quarters.He asked Mr.Day if it is realistic to expect the upgrades to occur in FY19.Mr.Day expressed his hope is the Battle Creek contracting crews will vacate during wintertime and the upgrades can occur during that time. A roll call vote was taken,and the motion passed unanimously. 8.REPORTS A.Budget to Actual Report Mr.Woolf reviewed the Budget to Actual Report ending April 30,2018 provided to the Committee.There are no concerns.The year-to-date revenues are down approximately $717,000 and the expense guide is also down. Mr.{zzo inquired if this kind of lag is routine at this point in the fiscal year.Mr.Day noted there are a number of line items that have been spent as of today that are not reflected in this report. He informed a lag of a couple of months is normal in order to get good information. B.O8&D Report Mr.Warner stated the issues addressed at yesterday's O&D Committee will be reviewed during the Operator's Report.No action items occurred yesterday.The O&D Report provided in member packets is reflective of the June 20"O&D Committee meeting held at Bradley Lake.Mr.Day graciously led members on a tour of the facility.The issue of scheduling projectcapacitywasdiscussedandMr.Warner anticipates the O&D Committee will meet with CEA as BPMC Minutes 7/20/18 Page 4 of 6 the dispatcher to work through the operational details.Discussion continued regarding how totrackthecostssubmittedbyRonRebenitschthattheutilitiesarepayingforthroughAEA. Chair Borgeson asked who is directing the work of Mr.Rebenitsch and to whom is he reporting.Mr.Janorschke noted when Mr.Rebenitsch was under contract with HEA,he was reporting toHEA.Now that the contract is being rewritten,the direction and reporting is unclear.Chair Borgeson stated he will work with Mr.Day,Mr.Woolf,Mr.Carey,and Larry Jorgenson todevelopasolutiontobepresentedatthenextmeeting. Cc.Operators Report Mr.Day directed members to the Operator's Report provided in the packet.He noted the average lake levels were 1,107 feet,but by the end of the month,the level was up to 1,137 feet. Mr.Day expressed continued appreciation to Orion for their great working relationship and for shipping the 40-ton crane on their barge trip last week.The fish water control efforts are ongoing and remain complicated.Emerson has been onsite all week installing the fish water automation. Mr.Day reported the Orion subcontractor GMC has been doing a really good job maintaining and grading the road.He believes the road is in better condition than it has been for a couple of years.The fiber and power cables were buried along the road.Extra efforts are underway to ensure those are not disturbed. Mr.Day informed a contractor struck a bear two days ago.All procedures were followed.The skin went to Fish and Game,and the meat was salvaged.Mr.Day gave a reminder the public dock is closed.He noted a couple of recent earthquakes were within the criteria for an inspection,but no damage was sustained. Mr.Day described a system load rejection of about 70 to 80 megawatts occurred on Monday because the tie was lost to Fairbanks.Bradley went from 50 megawatts down to around 4 to 8 megawatts output.It was a good test of the governor work that was completed on the two units. Mr.Day noted the insurance inspection was positive and only revealed three minor issues that were fixed immediately.The equipment storage building project has begun and is going well. Mr.Day showed and described recent pictures of Bradley Lake site and road. Mr.Thibert requested an update on the dam safety plan and an update on any audits that have occurred.The last Dam Safety Surveillance Monitoring Plan update was completed five years ago.The Dam Safety Surveillance Monitoring Report is provided to Federal Energy Regulatory Commission (FERC)annually.Two recommendations for monitoring that could change were proposed during the 2016 Part 12 inspection.The minor revisions and updates to the DSSMP should be completed by the end of this year and will be submitted to FERC. 9.COMMITTEE ASIGNMENTS Chair Borgeson assigned the O&D Committee review all of the dam safety plans and provide a brief presentation to the BPMC at either the August or September meeting. Chair Borgeson reminded the utilities to review the draft O&M Agreement and return comments by July 31%, 10.MEMBERS COMMENTS BPMC Minutes 7/20/18 Page 5 of 6 Mr.Carey announced this is Mr.Bjorkquist's final meeting before retirement.Mr.CareyexpressedappreciationtoMr.Bjorkquist for his years of diligent work. Chair Borgeson echoed the appreciation and expressed congratulations to Mr.Bjorkquist. Mr.Foutz thanked Mr.Janorschke for his tenure as Chair.He echoed the appreciation to Mr.Bjorkquist for his service. Mr.Janorschke expressed congratulations to Mr.Bjorkquist. Mr.Johnston echoed previous comments. Mr.Thibert echoed previous comments,and congratulated the new officers. Mr.lzzo echoed previous comments. Chair Borgeson recognized the importance of the ongoing work by Mr.Day and his staff,Mr.Warner,Mr.Woolf,Mr.Carey,and all of the people behind the scenes. 41.NEXT MEETING DATE -August 17,2018 12.ADJOURNMENT . There er business for the committee,the meeting adjourned at 11:02 a.m. Cory Borgeson, Attest Gv _<C_ Bryan G4rey Alaska Energy Authority,Se¢retary BPMC Minutes 7/20/18 Page 6 of 6 11. 12. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING Friday,July 20,2018 10:00 A.M. Alaska Energy Authority,Board Room 813 W.Northern Lights Boulevard,Anchorage,Alaska To participate VIA TELECONFERENCE-1-888-585-9008 -Conference room code 134-503-899 AGENDA CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL PUBLIC COMMENTS AGENDA APPROVAL PRIOR MINUTES --June 15,2018 NEW BUSINESS A.Election of officers Kirk Gibson B.Battle Creek Construction Update AEA C.Bradley Operator update AEA D.Resolution 2018-01 Battle Creek Project Share Allocation Kirk Gibson E.Dave's Creek O&M Kirk Gibson F,FY19 Budget Amendments Budget Subcommittee REPORTS A.Budget to Actual Report Budget Subcommittee B.O&D Report J Warner C.Operators Report HEA COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -August 17,2018 ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska June 15,2018 1.CALL TO ORDER Chair Janorschke called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:01 a.m.A quorum was established. 2.ROLL CALL FOR COMMITTEE MEMBERS "-Cory Borgeson (Golden Valley Electric Association ISyEAN Bryan Carey (Alaska EnergyAuthority[AEA]);Lee Thibert (Chugach Electric Association [CEA});Tony 1zzo (MatanuskaElectricAssociation[MEA]);Mark Johnston (Anchorage Municipal Light &Power [ML&P]);JohnFoutz(City of Seward)(arrived 10:23 a.m.);and,Bradley Janorschké {Homer Electric Association [HEA]).".'te we a *os .3.PUBLIC ROLL CALL ve-wt msAmyAdler,Tom Erickson,Jocelyn Gather Teri Websiely Brandi White (AEA);Matt Clarkson,Brian Hickey,Josh Resnick,Burke Witk (CEA):Brian Bjorkquist,Stefan Saldanha (DepartmentofLaw);Ron Rebenitsch (Energy Enginéering):"Leo Quiachn'(phone)(GVEA);Bob Day,EmilyHutchison,Larry Jorgensen,Alan Owens,(HEA);Kirk.Gibson (MéDowell Rackner Gibson,PC);Matt Reisterer (MEA);Jeff.Warner (ML&P)T,W.Patcti,(Public),Bérnie Smith (Public);andso»_s a a owLadonnaLindley(Accu;Type Depositions).asa,oyr Toteowoe" 4.PUBLIC COMMENTS re oon fo *None.Froe re ."4Aooeor "anaofoar5.AGENDA'APPROVALa tyMOTION!,Mr.Johnston made a motion to approve the agenda.Motion seconded by Mr.Izzo."-ee.”"4a.2 The agenda was.'approved without objection.6.PRIOR MINUTES -Aprit'20,2018 MOTION:Mr.Thibert made 'a motion to approve the Minutes of April 20,2018.Mr. Johnston seconded the motion. Chair Janorschke requested the April 20,2018 minutes be corrected as follows;1)on page 1 under Roll Call,Brad be changed to Bradley;2)on page 3 under D.Soldotna SVC Switch Replacement,the two sentences beginning with Mr.Cannon,Substation Department head of HEA,reported recent control of the SVC at Soldotna,be changed to read,"Mr.Cannon,HEA Meter/Apparatus Superintendent,reported a switch is in need of replacement due to a history of maintenance problems;”and 3)on page 3,correct the spelling of Davis Creek to Dave's Creek. There was no objections to the corrections. DRAFT BPMC Minutes 6/15/18 Page 1 of 6 The motion to approve the Minutes of April 20,2018 with the corrections passed without objection. 7,NEW BUSINESS A.Battle Creek Construction Update Mr.Carey noted the test blast was conducted on May 10.The work on the Lower Access Road is ongoing.The contractors are slightly behind their original work schedule.This does not pose an issue now.The schedule will be monitored.Mr.Carey stated the width of the road will remain as planned.Drones have been utilized for gathering the survey grade LIDAR information on both the Lower Access Road and the Upper Acéess Road.Using the newaccuratedronetechnologyreducestheoverallcostofsurvefirig:”Mr.Carey showed anddescribedtherecentphotostakenoftheconstructionprocess'a"",*,Chair Janorschke introduced Mr.Rebenitsch of Energy”Engineefing,who oversees the projectasanadvisorandreportsdirectlytotheBPMC.Mi Rebenitsch noted he likes the structure andcostcontrolofthecontract.He believes the contractor has adequate.£&quipment and adequatecrew.Mr.Rebenitsch recommends an additidral track rock drill unit bé 'bfought on-site tofacilitatethenecessaryexcavationandtoremainWithinthetwo--year schédule.He believes thedronetechnologywillbeveryhelpfulttosurveying:".:.oe a 'to we o oe ,Mr.Rebenitsch described his recent fetohnaissance hike and noted the challenging rock wallformations.He expects there will be 'changés'tin the estimated quantities of excavations andtherecouldbeapossiblecosttobypass:a.spécificrock wall as”the pioneering continues.Mr.Rebenitsch stated heis uncertain the project can be.'Completed iin'two years.He believes theprojectmaytakethree.yearsiccomplete.eon ”rooPe osr)=4 ao s ma f .Mr.Borgeson suggested a discussion occur regarding cost iissties and whether or not a three-year completion schedule jis acceptable.Mr.Caréy informed the substantial and finalcompletionof,the project is "scheduled for August 2020.Mr.Carey requested the BPMC providespecificdirectionéastothethresholdofWheratheCoipmitteeandutilitiesaretobenotifiedofchange'orders.Mr."Borgeson 'advised representatives from the utilities can attend the weeklyprogressmeetingsandobtaininforgiation.id as ==-aea”rs eaMr.Rebenitsch,discussed hisgoal iis to'ptovide a one-page executive summary level report oftheweeklymeetingsandphotos,«The engineer's daily reportis available on SharePoint.Mr.Rebenitsch conveyed there will''bé>change order decisions to address regarding the rock walls.He will keep the Cominittee informed.Mr.Rebenitsch expressed appreciation to Mr.Day for thesupportprovided."Te att Mr.Thibert thanked Mr.Rebenitsch.Mr.Thibert noted the BPMC will continue to rely on Mr. Rebenitsch's expertise,guidance and recommendations. B.Approve Battle Creek Owners'Rep Budget and Contract Chair Janorschke noted the motion is included in the packet. MOTION:Mr.Borgeson made a motion the BPMC approve the Consulting Services Agreement (Agreement)between Homer Electric Association,Inc.and Energy Engineering,Inc.,for monitoring and oversight of the Battle Creek Diversion Project (BCD Project)and authorize and approve the cost of the utilities'representative DRAFT BPMC Minutes 6/15/18 Page 2 of 6 (estimated to be $90,000)for oversight of the BCD Project during FY 2018 pursuant to the Agreement to be paid out of the BPMC FY 2018 BCD Project budget.The costs associated with the BCD Project shall be allocated to those Purchasers choosing to participate in the BCD Project in accordance with the BPMC Resolution 2017-02 as may be amended.Mr.Thibert seconded the motion. Mr.Carey requested to change the word "utilities”to "BPMC'”in the first sentence.This is consistent with the draft agreement.There was no objection to the word change. Mr.Gibson explained the resolution and was available for questions.Mr.Thibert requested the total contract amount be disclosed for the record.Chair Janorschke received confirmation from Mr.Rebenitsch the estimated cost for the first year is $267,367."Jhe motion for the $90,000isforthe2018budget.The 2019 budget begins July 1.A 2019 "budget amendment will comebeforetheBoardattheJulymeetingandwillincludealine'item for Energy Engineeringconsultingservices._Po . The motion was amended to include the word clange and reads."The BPMC approve theConsultingServicesAgreement(Agreement)between Homer Eleétric Association,Inc.and Energy Engineering,Inc.,for monitoring and oversight of the Battle Creek DiversionProject(BCD Project)and authorize and approve the cost of the BPMC,representative(estimated to be $90,000)for oversight of the BCD Projeét during FY 2018 pursuant to theAgreementtobepaidoutoftheBPMCFY2018BGD,Project budget.The'costsassociatedwiththeBCDProjectShallbeallocatedtothosePurchaserschoosing toparticipateintheBCDProjectinaccordance|with the 'BPMC Resolution 2017-02 as maybeamended”.A roll call vote was takenand passed unanifndusly."=”__wreC.Bradley,Opérator RFP Update we OYoeaomreetMr.Carey informed two proposals'ywere received "arid one was deemed to be non--responsive.Mr.Erickson noted the ngnresponsive proposal ig,currently a public document.The evaluationcommitteeincludestwonon:'railbellt "Utility,represéntatives from Kodiak Electric and AEL&P.Theevaluationcommitteereviewed'the responsive proposal by HEA and found no issues.On May15,AEA''sént :a letter.of,Noticé.of Intent to"Awatd.This started the 10-day protest period.Noprotest§were received.”"The.draft.contract and HEA's proposal were provided for review to theutilitiesandtotheBPMC.”"Mrs»Carey#equested a work session be conducted with the utilitiesregardingthe'draft contract."The intent Is tp approve the contract during the July BPMCmeeting.a rs Mr.Borgeson asked if additional costs to the project will be incurred.Mr.Carey commented theprojectbudget,includirig spendifig levels,is set by the BPMC. oat atD.Resolution'2018-01 -Battle Creek Project Share Allocation Mr.Gibson noted Resolution 2018-01 has been provided in member packets for discussion and direction.Mr.Gibson advised he removed unnecessary and historical language from the 2017 resolution in this draft 2018-01 resolution.Mr.Gibson summarized the issues raised by three of the utilities.The issues raised by MEA are outlined in the minutes of the previous meeting regarding the O&M of 4%,the study,and the voting standard for the study.The issues raised by CEA regard the dispute resolution language and the specific provisions in the attachment on the ability to get in and out of the project.The issues raised by GVEA request the chronology of the building of the resolutions and express concerns over reimbursement language.Mr.Gibson DRAFT BPMC Minutes 6/15/18 Page 3 of 6 requested the BPMC discuss these issues now and provide him direction for the final resolution. Chair Janorschke agreed. Mr.Gibson reviewed page 4 of 4 of Attachment 1 to Resolution No.2018-01 addressing MEA's concerns;"The BCD Project will be charged 4%of the Bradley Lake annual O&M costs,or an amount to be determined by a study of the impacts of the BCD Project to the Bradley Lake Project,as an Annual Project Cost.The results of the study undertaken pursuant to this Paragraph C.3.of Attachment 1 will be approved in accordance with the voting requirements for Optional Project Work.”He asked Mr.Izzo for feedback.Mr.Izzo commented the current language addresses the previous concerns. Mr.Gibson reviewed CEA's issues regarding dispute resolution 'and requested direction.Mr.Thibert suggested it is appropriate for participants and non-participants to engage in the disputeresolutionprocessbecauseoftheinterrelationbetweenthisagreementandtheBradleyagreements.Mr.Gibson agreed to the recommendation: *There,was no opposition to thedirection..'ma-2 _Mr.Gibson reviewedissues regarding paragraphé.40 and 11 of page.2,0f 4 of Attachment 1 andrequestedBPMCprovidedirectiononhowtoproceedfromthelastapprovedresolutiontothisdraft.After Committee discussion,Mr.Thibert 'suggested theattorneys review the previousresolutionlanguagetoensuretheopt-outissue is being addfessed.Mr.Gibgon,agreed andbelievestheonlythingthatneedstobe.amended frorg the.2017 resolution languageis a clearallocationmethodology.He will britig thé,amendments*hefore the Committee at the nextmeeting.""oe .wewers».wyE.Bradley Lands Update ","a we,rsra*=."-.ouoe'.'v,PMr.Carey reported AEA Workedwith Departinent of"Law 'anid Department of Natural Resources(DNR)to finalize the remaining Bradley Lake Project land convéyances from BLM,effective May22,2018.The Battle Creek Project iis not on fedéral lands andis able to utilize the CleanRenewableEnergyBonds(CREBS)finanging.TheBradley Lake annual budget expendsapproximately,$200,000 for FERC,arid 'Use Fees.This line item will be removedin the newbudget.becatiseYall Bradley lands”have beéntohveyéd to the State of Alaska.A refund requestforapproximately$86,00g hhas béerifiled with FERC for the amount paid after land title hadbeenconveyed.oan vo”ny an anChairJanorschkeexpressedappreciationnto AEA and CEA staff for effortsin finalizing the landconveyances.",". -a 8.REPORTS *.a A. Budgetto Actual Report Ms.Garner reviewed the Budget to Actual Report ending March 31,2018 provided to the Committee.The IRS sent notice informing the utilities will receive a subsidy payment. Mr.Day discussed Schedule A-1 Capital Purchases Not Funded by the R&C Fund.He provided an update on each line item that shows zero and gave the current amount to be reflected in the next report.The bridge repair will not be conducted this year.Mr.Day had hoped Orion could complete the work while they were mobilized at the site.However,the Orion bid came in higher than the previous estimated cost.Mr.Day noted an official bidding process DRAFT BPMC Minutes 6/15/18 Page 4 of 6 will likely occur.The upgrade to the residence kitchens and crews quarters has been postponed because the remodel cannot occur while the Battle Creek contractor is onsite. Ms.Garner continued the review of the Budget to Actual Report for O&M Schedule B.Mr.Day informed the over budget amount for supplies and materials is necessary for the operation and maintenance of the facility.The labor and benefits line item came in under budget because the open employee position was not filled due to the uncertainty of the labor contract.Ms.Garner noted legal fees have increased and includes the Battle Creek legal work. Ms.Garner discussed the R&C Fund disbursements and repayments and noted a portion of the fire alarm system replacement has been moved to the FY18 budget.The spillway raise will not occur at this time.An Mr.Johnston inquired about the debt service.Ms.Gamer;'explained the remaining half of thedebtservicewastransferredinthebeginningofJuneafdgets'Paid on July 15,"?-Mr.Borgeson requested additional information regarding the incredsed interest income andinquiredaboutthesaleofthe1988Suburban.Ms:Garner discussed'the initial interest incomecalculationwasbasedonhigheranticipatedcapitalprojectcostsandoperatingcoststhanwhatactuallyoccurred.The additional monies in the'investment accounts earried,the guaranteedinterestrate.Ms.Garner noted the sale of the1988 Suburbart 'and loader will be teflected underRevenues,Other Miscellaneous.,*"+ae is *,=ae .onB.O&D Report oe ",Y _we"Dad "aMr.Warner presented the O&D Report pigvided in "member packets.He informed participantsthathavetheabilitytodyriarhicallyschedulé,their capacity ;share tan now do so independent ofCEA.A written description of the'process is forthcoming."MiWarner advised system eventtestingandgovernor'cesponse testing is ongding.«"The O&D Committee recommended AEAperformacurrentreplacementcoststudyforthé,Bradley project.AEAis working with ARECAonthedetails.Mr._Carey”informed {Wo proposals"have been received and will be forwarded totheBudget,Comimittee for feedback.wae feaoS,of,Chair Janorschke inquired 'as to O&D,discussiong.regarding the O&M impact of Battle Creek onBradley.”'The 0&D recommended to"BPMC to defer any studies of additional O&M costs untiltheprojectis'online and functioning..os""-.w.ov Cc.Operators Report'"esMr.Day directed merfibérs to the Operator's Report providedin the packet.He noted theSuburbanandothervehiclesafecurrentlybeingutilizedandprobablywillnotbesoldwithin theyear.Mr.Day described thefacility collocation with Orion has continued to be beneficial forbothparties.Orion has used the shop area for repairs and has provided barge hauling at no cost,including the transfer of the loader from Anchorage. Mr.Day informed he and Larry Jorgenson participated in a right-of-way inspection.Work may have to be completed on the power lines in the winter.Emerson came on-site and tuned up the governors.The lake level has been around 1,100,which is 20 feet above the minimum.Recent rains may have increased the levels.Fuel is expected to be delivered at a cost of approximately $40,000.The equipment storage building bids have been received and a recommendation to award at approximately $480,000 has been submitted.The contractor will receive 10%upon signing of the contract and will be reflected in this year's budget expenses.The equipment DRAFT BPMC Minutes 6/15/18 Page 5 of 6 storage building is expected to be completed this summer.Mr.Day expressed appreciation to the BPMC for his busy and exciting job environment. 9.COMMITTEE ASIGNMENTS None. 10.MEMBERS COMMENTS Mr.Izzo expressed appreciation for the comprehensive nature of the reports. Mr.Johnston echoed the appreciation. Mr.Borgeson acknowledged the success of Mr.Carey,AEA and"CEA staffin resolving the landconveyances.a Mr.Thibert concurred with the previous comments.He:Yeported,concerns have been raisedregardingBPMCvotingeffectsfromthepotentialacquisitionwithCEAandML&P.Mr.Thibertrequestedlegalrepresentativesreviewthebylawsandcontinuethe'diScussion.ChairJanorschkenotedtheitemwillbeplacedontheagendaforthenextmeeting._a ”a Mr.Foutz apologized for his tardiness.vet Se ne A)cs re 7 .caMr.Carey expressed appreciation td,sity'GEA,DNR,"snd De'Department of Law for their work.He requested the utilities provide a representative for the Oferator Agreement Work Group thatwillmeetpriortothenextBPMCmeeting»*"ee .'*.vm ea 'y vw.Chair Janorschke echoedppfegiation for 'he diligent Wotk.,"aeewyranae11.NEXT MEETING DATE -"Sly 20,2018)ve"oP ,om12.ADJOURNMENT ee fe oery:oyra aye a”a oe eaTherebeing'no further,bysiness.for the committee,the meeting adjourned at 11:40 a.m.ey =*oe”osPal="BY:_"i,"eeBradleyJanorgchke,Chair 's".oe..a am " Attest:":EaBryanCareyotnsAlaskaEnergyAuthority:Pecretary°_al a DRAFT BPMC Minutes 6/15/18 Page 6 of6 a 7B West Fork Upper Battle Creek Update July 20,2018 Events: Orion has mostly finished construction of the Lower Access Road.This section is about a mile long and goes from the existing dam road to the waterline outlet at East Fork Upper Battle Creek. Contractor submitted payment application for rock material at Staging Area 1.At this time,AEA believes it was contractor's choice. Contractor's As-built surveys to determine quantity of material have had problems that have slowed final payment. AEA through coordination with agencies was able to allow contractor to proceed forward with brushing &pioneering road construction of the Upper Access Road (UAR). Contractor encountered boulders at the start of the UAR and stopped. They requested how to proceed and allege delay of project critical path. AEA restated that means and methods are determined by contractor, encountering large boulders was expected,and we disagree on the issue of a delay.Alignment was shifted to decrease risk during construction and future.UAR pioneering proceeding. DOWL usage of a drone for aerial photos and survey has decreased costs and time. Schedule: Lower Access Road substantially completed to outlet in July. Upper Access Road pioneering started in July. Contractor may make it with pioneer road to diversion site this year. Construction now becomes more difficult and weather may impact schedule. Saget ATT See FER I We CTF 7.ae SSS OES ET MY :NE),ay "atPoetnesy t Mh: Caer gw OES. Pals 3 =5Sd 4 oe Lower Access Road from above East Fork.Bradley Dam upper right. eee Poe on a || Lower Access Road and Stage Area 2.32.j.hb.7eT|re4Awemall,3”aeaEab Drilling and blasting near East Fork.Route goes straight through center of picture. qo 7C Bradley Operator Update July 20,2018 Events: e AEA met with utilities to discuss the draft agreement. e That group preferred to use as much of the existing O&M Agreement rather than the terms of the State Department of Transportation &Public Facilities Standard Forms. e O&M labor costs will likely increase under the new agreement.After the O&M meeting Homer Electric provided by email the possible financial impact of the new agreement over the next five years. e Based on comments from the meeting,the draft O&M Agreement is being revised by AEA.In short,the existing agreement has been used as a base document.The main additions to the new agreement are a revised version of AEA's General Conditions and the Compensation terms from HEA's response to the RFP. e Draft agreement is being provided for utilities to review and comment. Approval by BPMC will be requested in an August meeting. 'SMRG McDOWELL RACKNER GIBSON PC MEMORANDUM TO:BPMC Members FROM:Kirk Gibson,BPMC Counsel DATE:July 16,2018 RE:BPMC Resolution 2018-01 This memorandum introduces BPMC Resolution 2018-01;item 7d of the Agenda for the July 20"BPMC Meeting. BPMC Resolution 2018-01 is designed to amend and clarify the earlier resolutions adopted by the BPMC concerning the Battle Creek Diversion Project (BCD Project).The following summary of the resolutions concerning the BCD Project that have been adopted by the BPMC to date is presented for convenience. Resolution No.2017-01 [June 28,2017] This Resolution was prepared and passed to evidence the interest and desire of the BPMC to move forward with the BCD Project.This was made principally for the AEA Board so AEA would move forward with the work associated with financing and bidding the BCD Project. Resolution No.2017-2 [October 13,2017] This Resolution (and Attachment 1)was the initial effort to set forth the terms and conditions under which Participation in the costs and benefits of the BCD Project would be managed by the BPMC. The Resolution was used to officially designate the BCD Project related work as "Optional Project Work”for the Bradley Lake Hydroelectric Project under the Power Sales Agreement. First Amendment to Resolution No.2017-02 [December 1,2017] This Resolution was developed to clarify the time when a Purchaser is required to provide notice to the BPMC regarding participation in the BCD Project and the type of expenditures that a Purchaser who is not participating in the BCD Project at the beginning would need to reimburse other Purchasers that are participating in the BCD Project when the Non-Participating Purchaser decided to elect back into the BCD Project.This Resolution was made at a time when the BPMC was finalizing the finer details of the obligations for participation in the BCD Project. {00039069.1}1 419 SW 11"Ave,Suite 400 |Portland,OR 97205-2605 'SMRG2IRACKNERGIBSON Second Amendment to Resolution No.2017-02 [December 6,2017] This Resolution further refines Resolution No.2017-02 by addressing the issue regarding the sale and transfer of BCD Project Shares.This Resolution allows for the sale and transfer of BCD Shares from a Non-Participating Purchaser to a Participating Purchaser. Resolution No.2017-03 [December 16,2017] This Resolution was made to address the financing of the BCD Project.There are resolutions adopted by AEA regarding the financing attached to the Resolution. Proposed Resolution No.2018-01 [July 20,2018] Proposed BPMC Resolution 2018-01 is limited to amending the voting requirements for the BPMC to accept the results of the study that will address the O&M impacts of the BCD Project on the Bradley Lake Project and clarifying the methodology to be used by the BPMC to allocate BCD Project shares of any Non-Participating Purchaser that has not been otherwise sold or transferred. {00039069.1}2 419 SW 11"Ave,Suite 400 |Portland,OR 97205-2605 RESOLUTION No.2018-01 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Battle Creek Diversion Project Share Allocation Process introduction:The Bradley Lake Project Management Committee ("BPMC')is involved a project which will divert the water flows of Battle Creek into Bradley Lake to increase the water for use by the Bradley Lake Hydroelectric Project ("Bradley Lake Project”).All Purchasers are supportive of the expansion of the capabilities of the Bradley Lake Project through the development of the Battle Creek Diversion Project ("BCD Project').The activities of the BPMC regarding the BCD Project are authorized as Optional Project Work under the Power Sales Agreement. Purpose of Resolution No.2018-01:Resolution 2018-01 amends the voting requirements for the BPMC to accept the results of the study that will address the O&M impacts of the BCD Project on the Bradley Lake Project and clarifies the methodology to be used by the BPMC to allocate BCD Project shares of any Non-Participating Purchaser that has not been otherwise sold or transferred. Resolution No.2018-01 WHEREAS,the BPMC has authorized the development and financing of the BCD Project through the adoption of Resolution No.2017-01 (June 28,2017),Resolution No.2017-02 (October 13,2017),First Amendment to Resolution No.2017-02 (December 1,2017),Second Amendment to Resolution No.2017-02 (December 6,2017),and Resolution No.2017-03 (December 16,2017)(jointly hereinafter referred to as the "Earlier BCD Project Resolutions”); WHEREAS,the BPMC voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project in Earlier BCD Project Resolutions was that the results of the study were to be approved by the affirmative vote of members whose percentage shares of the output from the Bradley Lake Project are equal or exceed eighty percent (80%)of the Bradiey Lake Project capacity and Annual Project costs; WHEREAS,the BPMC wishes to change the voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project from the voting requirements set forth in the Earlier BCD Project Resolutions to a voting requirement in accordance with the BPMC voting requirements for Optional Project Work (i.e.,the affirmative vote of at least four representatives of the Purchasers,whose percentages shares of Project capacity are greater than 51%plus the affirmative vote of the representative of the Authority); and, WHEREAS,the BPMC wishes to clarify the calculation and methodology for reallocation of the BCD Project Shares of any Non-Participating Purchaser that has not otherwise sold or transferred in accordance with the manner which such shares have been reallocated. Page 1 of 2-BPMC Resolution No.2018-01 NOW,THEREFORE,IT IS HEREBY RESOLVED BY THE BPWMC,that the voting requirements for adopting the results of the study of the impacts of the BCD project to the Bradley Lake Project shall be the same as the BPMC voting requirements for Optional Project Work (i.e., the affirmative vote of at least four representatives of the Purchasers,whose percentages shares of Project capacity are greater than 51%plus the affirmative vote of the representative of the Authority);and, BE IT FURTHER RESOLVED BY THE BPMC,that the methodology to be used by the BPMC to allocate BCD Project shares of any Non-Participating Purchaser that has not been otherwise sold or transferred shall be as attached in Exhibit A to this Resolution No.2018-01; and, BE IT FURTHER RESOLVED BY THE BPWMC,that,except as expressly set forth herein, the BPMC does not intend or desire any other changes to the Earlier BCD Project Resolutions by the adoption of this Resolution No.2018-01. Dated at Anchorage Alaska,this 20"day of July 2018. Chair Attest: Secretary Page 2 of 2-BPMC Resolution No.2018-01 Exhibit A To RESOLUTION NO.2018-01 OF BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE Reallocation of BCD Shares Exhibit A Page 1 of 2 The Reallocation Process: The methodology for allocating BCD Shares of any Non-Participating Purchaser that has not been otherwise sold or transferred is,as follows:the respective percentage of original shares of Bradley Lake Project capacity held by each Participating Purchaser shall be divided by the total percentage of Participating Purchasers ("Allocation Percentage').The Allocation Percentage shall be multiplied by the percentage of original shares of Bradiey Lake Project capacity held the total of all Non-Participating Purchasers that have not otherwise sold or transferred their BCD Shares to calculate the percentage of the reallocated amount of the Non-Participating BCD Shares ("Reallocated BCD Share”).The Reallocated BCD Share for each Participating Purchaser shall be added to the BCD Share for that Participating Purchaser to achieve the total amount of percentage participating in the BCD Project.Please see Exhibit 1 for an example of the specific calculation under this reallocation methodology.The Participating Purchasers may allocate their BCD Share and/or the redistributed BCD Shares from the BCD Pool by agreement. Example of Reallocation Process (Note:This example,using the data associated with Chugach Electric Association,Inc., illustrates the reallocation process with the data from the BPMC's 2018 BCD Share allocation process.Please see "Battle Creek Allocation Worksheet”prepared by Alaska Energy Authority at Page 2 of 2 of this Exhibit.] Step 1 -The respective percentage of original shares of Bradley Lake Project capacity held by each Participating Purchaser shall be divided by the total percentage of Participating Purchasers ("Allocation Percentage'). Allocation Percentage =30.40 /57.20 =.53147 Step 2 -The Allocation Percentage shall be multiplied by the percentage of original shares of Bradley Lake Project capacity held by the total of all Non-Participating Purchasers that have not otherwise sold or transferred their BCD Shares to calculate the percentage of the reallocated amount of the Non-Participating BCD Shares ("Reallocated BCD Share'). Reallocated BCD Share =(.53147)X GVEA's BCD Share (16.9)=8.98 Step 3 -The Reallocated BCD Share for each Participating Purchaser shail be added to the BCD Share for that Participating Purchaser to achieve the total amount of percentage participating in the BCD Project ("Final BCD Share Allocation'). Final BCD Share Allocation (%)=8.98 +30.4 =39.38% ExhibitAPage2of2 ALASKA ENERGY AUTHORITY Battle Creek Allocation December 13,2017 Battle Creek Share re-Battle Creek distribution to Allocation of Bradiey Percent HEA from GVEA Share Power Purchaser Shared ML&P12/13/17 Gross Chugach Electric 30.40%30.40%8.98%39.38% Municipality of Anchorage 25.90%0.00%0.00% Homer Electric 12.00%37.90%3.55%41.45% Matanuska Electric 13.80%13.80%4.08%17.88% Golden Valley Electric 16.90%0.00%0.00% City of Seward 1.00%1.00%0.30%1.30% 100.00%83.10%16.90%100.00% Battle Creek participation prior to Dec 13th: Non-participating percent total 42.80% Participating percent total 57.20% 100.00% Battle Creek participation Dec 13th: Non-participating percent total 42.80% Participating percent total 57.20% 100.00% BRADLEY LAKE HYDROELECTRIC PROJECT DAVES CREEK STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT Between CHUGACH ELECTRIC ASSOCIATION,INC., AND ALASKA ENERGY AUTHORITY January 1,2018 SECTION 14 SECTION 2 SECTION 3 SECTION 4 SECTION 5 SECTION 6 SECTION 7 SECTION 8 SECTION 9 SECTION 10 SECTION 11 SECTION 12 SECTION 13 SECTION 14 SECTION 15 SECTION 16 EXHIBIT 1 Table of Contents -DEFINITIONS uo...eee eceeeseceesesesseeeseesseassnenscesessssseeessessesenstenseeeseteneees 2 -EFFECTIVE DATE,TERM AND TEMINATION..........cccsssssestessrenseeene 4 -GENERAL PROVISIONS AND INCORPORATION OF EXHIBIT A OF THE MASTER OPERATING AGREEMENT ........::sscssssssesssesssesseeesereneees 5 -OPERATIONAL REQUIREMENTS..........cccsccecsesescesssssseseseeresreneneneeees 5 -OPERATION AND MAINTENANCE PLAN,SCHEDULE AND BUDGETS1.0.00...eeeessssesessencesseseeseseceseessseevsseveesssnsesensesesseressssssnseneeesesenenes 6 =PAYMENT .........ceccscsseessssecesseesseseessesesecceevensucessaesseneuesseuseceeuensseneeseaeseegs 7 -EMERGENCY EXPENDITURES1.0.0...ceccecesssessnssseeeseesennseeeasenseaes 8 -EXTRAORDINARY MAINTENANCE AND EQUIPMENT REPLACEMENT........ccccescscssesssssessessesscssessesscsesessesesesseeseseesesnsssnssssenenesnes 8 -MODIFICATIONS AND ADDITIONS........ec ceesessssssseeeessessnsseressesseees 9 -AUTHORIZED REPRESENTATIVE ........cccscsscsssscsseeseescteesserseeseeaaeees 9 -ACCESS TO FACILITIES ......cccecseceesssesseessescseesseeessesesseresasseeeseseeeseees 9 -FORCE MAJEUR1.0...ccccsseescssenseeesssscseesssesenseneceeesseesseeesanernenseeessees 9 -DISPUTE RESOLUTION uo.eee esseseeeseeeseneeeseesssseseeeseeeseeseneeesesens 10 NOTICES2...ceccceecesesesesestecssesessasceeeseseessaseceesssenseeseseeseasenenesatenseeess 11 -THIRD PARTY BENEFICIARIES............:csseessssstersseeeseseeerseeeneseneeseneens 11 -INDEMNITY AND LOSS..00.oe eeesecseeeseeeeeseesseeeseeesseneneeetetensenens 11 ssceceseeeseseeeeccuseuscceeensaeeenscasesssasasseeesesaeaessaeessueasconeeseneesesseeeesnsetenssenenseteesees 14 BPMC -Daves Creek SVS O&M Agreement Page|i BRADLEY LAKE HYDROELECTRIC PROJECT DAVES CREEK STATIC VAR COMPENSATION SYSTEM OPERATION AND MAINTENANCE AGREEMENT This Static Var Compensation System Operation and Maintenance Agreement for the Bradley Lake Hydroelectric Project ("Agreement"),is dated effective as of the first day of January 2018,by and between ALASKA ENERGY AUTHORITY,a public corporation of the State of Alaska ("Authority"),and CHUGACH ELECTRIC ASSOCIATION INC. ("Chugach”),a non-profit electric cooperative membership corporation of the State of Alaska. RECITALS 1.The Power Sales Agreement governing the sales of energy from the Bradley Lake Hydroelectric Project provides that the Bradley Lake Project Management Committee ("BPMC”)shall arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project and Project-related facilities ("Project”); 2.The BPMC is authorized,under its Bylaws adopted pursuant to the terms of the Power Sales Agreement,to approve agreements for the operation and maintenance of the Project; 3.The BPMC has arranged for and authorized Chugach Electric Association,Inc. ("CEA”)to perform dispatch services for the Project; 4.Chugach is the owner of the Daves Creek Substation which directly connects to the Static VAR Compensation System ("Daves Creek SVS”); 5.The Daves Creek SVS is a Project-related facility dispatched by the Project Dispatcher; 6.The BPMC and the Authority entered into the Bradley Lake Hydroelectric Project Master Maintenance and Operation Agreement on May 24,1994 ("Master Maintenance and Operation Agreement'),to,among other things,establish a contract administration and budgeting procedure for contracting for the maintenance and operation of the Project and related services,facilities,and equipment; 7.The Authority,before executing a contract or contract amendment for operation or maintenance of the Project,must submit the contract or amendment to the BPMC for its review and approval pursuant to the Master Maintenance and Operation Agreement; BPMC -Daves Creek SVS O&M Agreement Page |1 8.Chugach owns and operates electric transmission facilities and is engaged in the transmission,purchase,and sale of electric power and energy; 9.Chugach agrees to be the Field SVS Operator and perform Field SVS Operations and Maintenance for the benefit of the Project; 10.The Authority,the BPMC,and Chugach desire a contract be entered for Chugach to perform Field SVS Operations and maintain the Daves Creek SVS; 11.Pursuant to the Power Sales Agreement,the BPMC has approved the terms of this Agreement. AGREEMENT NOW THEREFORE,IN CONSIDERATION of the mutual covenants herein contained the Parties hereto agree as follows: SECTION 1 -DEFINITIONS The terms used in this Agreement shall be as defined in the Power Sales Agreement, except as specified below.For the purposes of this Agreement,the following definitions and abbreviations apply: A."Agreement”means this Agreement. B."Annual Daves Creek SVS Facilities Budget”shall have the meaning set forth in Section 5.B.of this Agreement. C."Authority”means the Alaska Energy Authority or any successor agency. D."BPMC”means the Bradley Lake Project Management Committee. E."Chugach”means the Chugach Electric Association,Inc. F."Construction”has the meaning given in AS 36.90.300(c) G."Daves Creek SVS”means the Project's Static VAR Compensation System located adjacent to the Daves Creek Substation and related Project-owned equipment located at the Daves Creek Substation. H."Daves Creek Substation”means Chugach's substation at Daves Creek,Alaska. BPMC -Daves Creek SVS O&M Agreement Page 2 of 13 I."Effective Date”means at 12:00a.m.on January 1,2018. J."Emergency”means an unforeseen circumstance that requires immediate action to protect or preserve the Daves Creek SVS,personnel,public health and safety, or the operation of the interconnected electric utility system. K."Field SVS Operations and Maintenance”means operating and maintaining the Daves Creek Substation including,operations performed at the Daves Creek SVS site such as high voltage switching,establishment of working clearances, and Daves Creek SVS local equipment troubleshooting performed by the SVS Field Operator. L."Fiscal Year”means July first (15)to June thirtieth (30"4)of each year. M."Master Maintenance and Operating Agreement”means the Bradley Lake Hydroelectric Project Master Maintenance and Operation Agreement dated May 24,1994. N."Party”or "Parties”means a signatory or the signatories to this Agreement. O."Power Sales Agreement”means the Bradley Lake Power Sales Agreement, dated December 8,1987,among the Authority;the Municipality of Anchorage (d.b.a.)Municipal Light and Power (ML&P);the City of Seward (d.b.a.Seward Electric System (SES);the Chugach Electric Association,Inc.(Chugach);the Golden Valley Electric Association,Inc.(GVEA);the Alaska Electric Generation and Transmission Cooperative,Inc.(AEG&T),the Matanuska_Electric Association,Inc.(MEA);and the Homer Electric Association,Inc.(HEA).M&LP, SES,Chugach,GVEA,AEG&T,MEA and HEA are collectively known as the "Purchasers”. P."Professional Services”has the meaning given in AS 36.30.990. Q."Project”means the Bradley Lake Hydroelectric Project and Project-related facilities. R."Project Dispatcher'or "Dispatcher”means the entity the BPMC has arranged for and authorized to perform dispatch services for the Project. S."SVS”means a Static VAR Compensation System. BPNC -Daves Creek SVS O&M Agreement Page 3of 13 "Field SVS Operator”means Chugach. "Remote SVS Operations”means power system operations performed by the Project Dispatcher to facilitate the transfer of Bradley lake energy and capacity (this includes but is not limited to,establishing and changing voltage setpoints, slope settings,and data acquisition for power system level analysis and troubleshooting,etc.)at the Daves Creek SVS. "SVS Facilities”means the SVS equipment owned by the Authority at Daves Creek Substation.In addition,the SVS Facilities shall mean the equipment owned by the Authority at the Daves Creek SVS that is required to maintain the Dispatchers SCADA,communications,firewalls,and engineering access. "SVS Field Operations”means operation and maintenance of the Daves Creek SVS and includes but is not limited to performing necessary maintenance at the Dave Creek SVS,high voltage switching,establishment of working clearances, and troubleshooting of equipment. "Substation Operator'means the Party the BPMC has arranged for and authorized to perform SVS Field Operations and Remote SVS Operations; currently Chugach. SECTION 2_-EFFECTIVE DATE,TERM AND TEMINATION A.Effective Date and Term of Agreement. This Agreement shall become effective on the Effective Date and shall continue in effect until terminated as provided in Section 2B. Termination of Agreement 1.This Agreement may be terminated under the following conditions: a.In the event of a material breach of this Agreement by a Party,the other Party shall give the breaching Party written notice of the breach and an opportunity to cure the breach within a reasonable time considering the circumstances of the breach.In the event the breach is not cured within a reasonable time,the non-breaching Party,except as provided in Section 2.B.2 of this Agreement,may terminate its obligations,duties and all rights it has under this Agreement.Any dispute as to a reasonable time to cure the breach shall be adjudicated by the BPMC. BPMC -Daves Creek SVS O&M Agreement Page 4 of 13 b.By the SVS Field Operator delivering written notice to the Authority and BPMC as provided in Section 5.B.3,all liabilities accruing under this Agreement prior to its termination shall be and are hereby preserved until satisfied and the rights of the Authority under 2.B.2.shall continue. 2.In the event this Agreement is terminated,the Authority,or its contractors, shall have the right to enter upon the substation facilities to operate and maintain the SVS facilities.Upon termination of this Agreement,the Substation Operator shall release all relevant records to the Authority. SECTION 3 -GENERAL PROVISIONS AND_INCORPORATION OF EXHIBIT A OF THE MASTER OPERATING AGREEMENT This Agreement is subject to the terms of the Master Maintenance and Operating Agreement.Except for paragraphs (h)Indemnity,(0)Notice and Communications and (t)Third Party Beneficiaries,the provisions of Exhibit A,Master Contract Provisions,of the Master Operating Agreement are expressly incorporated by reference in this Agreement.Paragraphs (h),(0)and (t)of the Master Maintenance and Operating Agreement are modified and included below as Sections 14,15,and 16 of this Agreement. Nothing in this Agreement is intended to alter the rights and obligations of the Authority and the Purchaser(s)under the Power Sales Agreement.In the event the terms of this Agreement and the Power Sales Agreement or Master Maintenance and Operating Agreement are found to be in conflict,the terms of the Power Sales Agreement shall have first priority with the Master Maintenance and Operating Agreement having second priority.The provisions of this Agreement are not intended,nor shall they be construed, to alter or modify any previous contracts or agreements of any Party or preclude any Party from performing existing obligations. In their performance of this Agreement,the Parties will comply with the terms and provisions of the Power Sales Agreement. SECTION 4 -OPERATIONAL REQUIREMENTS A.Systems Operation. Chugach agrees to operate its electric utility system in accordance with the provisions of Section 10(c)of the Power Sales Agreement. BPMC -Daves Creek SVS O&M Agreement Page 5 of 13 Daves Creek SVS Operation and Maintenance. In accordance with the provisions of this Agreement,the SVS Field Operator shall be responsible for the Field SVS Operations and Maintenance of the Dave Creek SVS on behalf of the BPMC and the Authority and for the coordination with the Project Dispatcher to provide increased transfer capacity resulting from operation of the Daves Creek SVS for the Purchasers in proportion to their Project shares. SECTION 5 -OPERATION AND MAINTENANCE PLAN,SCHEDULE AND BUDGETS A.Maintenance Plan and Schedule Requirements. 1. 2. The SVS Field Operator shall develop annually and submit to the BPMC a plan for operation and maintenance of the Daves Creek SVS facilities.This plan and schedule shall be used for planning and tracking maintenance activities and as the basis and support for budget submittals to the Authority and the BPMC. The plan and schedule shall function on a Fiscal Year basis. Annual SVS Facilities Budget. 1.After the Effective Date,and in accordance with schedules provided by the Authority,the SVS Field Operator shall prepare and submit each year to the Authority and to the BPMC a draft Annual Daves Creek SVS Facilities Budget for the following Fiscal Year as provided in Section 5 D.of this Agreement. The draft budget shall be prepared in a format and schedule provided to the Authority by the BPMC. The draft Annual Daves Creek SVS Facilities Budget shall be based upon anticipated operation and maintenance expenditure needs and reflect appropriate accounting and budgetary principles for utilities. The SVS Field Operator shall perform its duties in a manner consistent with the Annual Daves Creek SVS Facilities Budget except as provided in Sections 7 and 8 below.If the SVS Field Operator makes a determination during any Fiscal Year that it cannot perform its obligations under this Agreement without an increase in the expenditures authorized under Annual Project Budget,the SVS Field Operator shall timely report such finding to the Authority and the BPMC and shall submit a revised budget with explanations and analyses where appropriate for the Authority's and the BPMC's review BPMC -Daves Creek SVS O&M Agreement Page 6 of 13 and approval.In the event the revised budget is not adopted by the BPMC and the Authority,or in the event the Authority,pursuant to Section 13 (e)of the Power Sales Agreement does not authorize and agree to fund such expenditures,and the SVS Field Operator determines that it cannot perform its obligations under this Agreement,the SVS Field Operator may terminate this Agreement upon 90 days written notice to the Authority and the BPMC. Three Year Major Maintenance and Improvements Plan and Budget. Annually the SVS Field Operator shall prepare and submit a three-year plan and budget for proposed major maintenance and improvements,(e.g.,major equipment replacement)and other projects deemed by the SVS Field Operator to be required to insure continued safe and economical operation of the Daves Creek SVS Facilities that are not included in the proposed annual maintenance plan or that Fiscal Year or require more than one year to complete.The three- year plan shall be revised annually and submitted together with the proposed annual maintenance plan that is part of the Annual Daves Creek SVS Facilities Budget. Budget and Plan Submittal. The SVS Field Operator shall submit the annual maintenance plan,schedule, and budget,and the three-year plan and budget to the Authority and the BPMC no later than February 1 for the next Fiscal Year.The plans,schedules,and budgets may be modified through negotiations between the SVS Field Operator and the Authority,subject to approval by BPMC. SECTION 6 -PAYMENT A.The SVS Field Operator shall advance the ordinary costs of performing under this Agreement,including station services costs,and submit such costs for reimbursement by the Authority per Section 6.B.of this Agreement. The SVS Field Operator shall prepare an invoice each month identifying the actual and reasonable costs incurred in a format mutually agreeable to the Authority and the SVS Field Operator.The invoice shall be furnished to the Authority by the twenty-first (21st)of the month following the month in which the costs are incurred.All such invoices shall be subject to audit and approval by the Authority;such approval shall not be unreasonably withheld. BPMC -Daves Creek SVS O&M Agreement Page 7 of 13 C.Subject to the availability of funds,the Authority shall reimburse the SVS Field Operator for all costs reasonably incurred,properly invoiced,and approved under this Agreement. D.An appropriate invoice properly submitted to the Authority under Section 6.B.of this Agreement shall be due within thirty (30)days of receipt.Any amounts not paid when due shall accrue simple interest at the legal rate of interest beginning at the time payment was due. E.The Authority shall authorize payment for the full amount of the SVS Field Operator charges pending the resolution of any cost dispute,except for those costs expressly disapproved in writing.Within thirty (30)days after the SVS Field Operator submits a charge,the Authority shall notify the SVS Field Operator in writing of the amount of the charge in dispute and the basis for the dispute.If the Parties cannot settle the dispute informally,the dispute shall be submitted to the BPMC for resolution.In the event a resolution of the dispute through the BPMC fails,either Party may file an action in the Alaska Superior Court for the Third Judicial District to obtain a decision resolving such dispute and to obtain any other remedy permitted by law.Pending final resolution of any such dispute the Parties shall continue to perform under this Agreement. SECTION 7 -EMERGENCY EXPENDITURES The SVS Field Operator shall take such actions as it reasonably believes are necessary in an Emergency.If,in the reasonable judgement of the SVS Field Operator,the Emergency requires the SVS Field Operator to incur costs prior to obtaining written approval from the Authority,the SVS Field Operator shall declare an Emergency and notify the Authority and the BPMC within seventy-two (72)hours after discovery and declaration of the Emergency. SECTION 8 -EXTRAORDINARY MAINTENANCE AND EQUIPMENT REPLACEMENT When the SVS Field Operator learns of an equipment failure or other contingency that, in the SVS Field Operator 's judgment,necessitates incurring extraordinary maintenance and equipment replacement costs,the SVS Field Operator shall promptly notify the Authority and the BPMC of the circumstances.Except in an Emergency as provided in Section 7 of this Agreement,the SVS Field Operator shall obtain the Authority's written approval prior to incurring an extraordinary maintenance and equipment replacement cost.Except in an Emergency as provided in Section 7 of this Agreement,the SVS Field Operator shall incur no extraordinary maintenance and BPMC -Daves Creek SVS O&M Agreement Page 8 of 13 equipment replacement cost for which the approval of the Authority has been requested and expressly denied in writing. SECTION 9_-MODIFICATIONS AND ADDITIONS No modifications or additions shall be made to the Daves Creek SVS without the prior written approval of the BPMC. SECTION 10 -AUTHORIZED REPRESENTATIVE The Parties shall each designate one representative to carry out the provisions of this Agreement.Within thirty (30)days after execution of this Agreement,each Party shall notify the other Party in writing of its designated representative.Any Party may change its representative at any time and shall promptly provide written notice of such change to the other Party. SECTION 11 -ACCESS TO FACILITIES A.Authority and BPMC personnel or agents shall be granted reasonable access to Daves Creek Substation,SVS equipment and related-facilities upon reasonable notice and subject to any safety and security measures,for the purpose of inspection and testing. B.Project Dispatcher personnel or agents shall be granted reasonable access to the Daves Creek SVS to enable Project Dispatcher to maintain SCADA term servers,firewall equipment,engineering access to the Daves Creek SVS,related Daves Creek SVS system recorders,communications circuits and associated communication network equipment.Exhibit 1 contains a drawing showing the Network Topology to Daves Creek SVC . SECTION 12 -FORCE MAJEURE A.No Party to the Agreement shall be liable to the other Party for,or be in breach of or default under this Agreement because of,any delay in performance or any delay or failure to deliver,receive,or accept delivery of energy due to any of the following events: 1.Any cause or condition beyond such Party's reasonable control which such Party is unable to overcome by the exercise of reasonable diligence,including BPMC -Daves Creek SVS 0&M Agreement Page 9 of 13 but not limited to:fire,flood,earthquake,volcanic activity,wind,drought and other acts of the elements;court order and act of civil,military,or governmental authority;riot,insurrection,sabotage and war;breakdown of or damage to facilities or equipment;electrical disturbance originating in or transmitted through such Party's electric system or any electric system with which such Party's system is interconnected;and,any act or omission of any person or entity other than such Party,or Party's contractors or suppliers of any type or anyone acting on behalf of such Party.Strikes,lockouts,and other labor disturbances shall be considered Force Majeure events and nothing in this Agreement shall require either Party to settle a labor dispute against its best judgment;provided,that during any labor dispute each Party shall make all reasonable efforts under the circumstances,including,to the extent permitted by law and collective bargaining agreements,the use of replacement personnel and or management personnel and/or other personnel under the provisions of a mutual aid agreement to ensure,if possible,the continued ability of the Parties to carry out their obligations under this Agreement,or 2.Any action taken by such Party which is reasonably necessary or prudent to protect the operation,performance,integrity,reliability,or stability of the Project or of such Party's electric system or any electric system with which such Party's electric system is interconnected,whether such actions occur automatically or manually. B.In the event of any delay excused under this Section,the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay.No cost adjustment shall be allowed,only time extensions as appropriate.Nothing contained in this Section 12 shall require any Party to settle any strike,lockout or other labor dispute.Each Party shall give the other Party prompt written notice of any delay which the Party giving notice considers to be an excusable delay of its performance. SECTION 13 -DISPUTE RESOLUTION Pending resolution of a disputed matter,the Parties shall continue performance of their respective obligations pursuant to this Agreement.If the Parties cannot reach timely, mutual agreement on any matter in the administration of this Agreement,the SVS Field Operator shall,to the extent necessary for its continued performance,make a determination of such matter without prejudice to the rights of the other Party.Such determination shall not constitute a waiver of any other remedy belonging to any Party. BPMC -Daves Creek SVS O&M Agreement Page 10 of 13 SECTION 14 -NOTICES Notices shall be addressed as follows:Executive Director,Alaska Energy Authority, 813 West Northern Lights Blvd.,Anchorage,Alaska 99503.Notices to Chugach will be addressed to:General Manager,Chugach Electric Association,Inc.,P.O.Box 196300, Anchorage,Alaska 99519-6300.A Party may change the foregoing designation of its name or address to which notices or demands are to be directed at any time by written notice given to the other Party. Any notice or request not otherwise provided for in this Agreement shall be given in such manner as the Parties agree. SECTION 15 -THIRD PARTY BENEFICIARIES This Agreement gives no rights or benefits to anyone other than the Parties,Chugach and the Authority,and the BPMC as a third-party beneficiary.The BPMC is the only third-party beneficiary.In any action by the BPMC for damages,Chugach shall have the right to assert against the BPMC any defense which it could have asserted against the Authority.The raising of any such defense by Chugach shall not affect any right of a Purchaser or the BPMC under the Master Maintenance and Operating Agreement or Power Sales Agreement. SECTION 16 -INDEMNITY AND LOSS A.Indemnity. The SVS Field Operator shall indemnify,defend,and hold the Authority harmless from and against any claim of,or liability for,negligent acts,errors,and omissions of the SVS Field Operator with respect to any Construction-related Professional Services provided by the SVS Field Operator under this Agreement. The SVS Field Operator is not required to indemnify,defend,or hold harmless the Authority for a claim of,or liability for,the independent negligent acts,errors, and omissions of the Authority or third-parties.If there is a claim of,or liability for, a joint negligent act,error,or omission of the SVS Field Operator and Authority, the indemnification,defense,and hold harmless obligation of this provision shall be apportioned on a comparative fault basis.In this provision,"independent negligent acts,errors,and omissions”means negligence other than the Authority's selection,administration,monitoring,or controlling of the SVS Field Operator,or in approving or accepting the SVS Field Operator's work. BPMC -Daves Creek SVS O&M Agreement Page 11 of 13 B.Uninsured Loss. The costs of any loss or damage to or arising out of the SVS Field Operator's performance hereunder not covered by insurance,including uninsured deductibles and indemnity (including the SVS Field Operator's indemnity under Section 16 A.,above),shall be included in the Annual Daves Creek SVS Facilities Budget as an operating cost unless and to the extent caused by the willful act or gross negligence of the SVS Field Operator.The SVS Field Operator shall be responsible for paying any such costs if and to extent the loss or damage is determined to be caused by or arises out of the SVS Field Operator's willful act or gross negligence.For the avoidance of doubt,the SVS Field Operator acknowledges its responsibility,as a Participant,to pay its Percentage Share of Annual Project Costs,including its Percentage Share of all amounts included in the Annual Daves Creek SVS Facilities Budget. IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to be executed by their authorized officers or representatives as of the day and year first above written. ALASKA ENERGY AUTHORITY By: Its:Executive Director CHUGACH ELECTRIC ASSOCIATION,INC. By: Its:Chief Executive Officer BPMC -Daves Creek SVS O&M Agreement Page 12 of 13 STATE OF ALASKA )ss. THIRD JUDICIAL DISTRICT ) The foregoing Agreement was acknowledged before me this day of , 2018,by Janet Reiser,the Executive Director of the Alaska Energy Authority,an Alaska corporation,on behalf of the corporation. Notary Public in and for Alaska My commission expires: STATE OF ALASKA )ss. THIRD JUDICIAL DISTRICT )- The foregoing Agreement was acknowledged before me this day of , 2018,by Lee Thibert,CEO of Chugach Electric Association,inc.,an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My commission expires: BPMC -Daves Creek SVS O&M Agreement Page 13 of 13 Exhibit 1 Comments: 4 The VPN Router Is normally trnet off,E wil GrugechElectriccanenabletherouteroncetheSVC isinservice, STATION LAN SVAITCH At ry Ld STATION LAN SWITCH BL =?p2 Store Wie on VO Lapend sreal NETWORK TOPOLOGY i!Ii]iiCHUGASH Glearic Aguxialton,in.ego5401Mirnasete Drive -?.O ter 196300Araerege,Abedin FV5194300 NETWORK TOPOLOGY fanny} SE ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT 2019 PROPOSED BUDGET -AMEND 1 DATE:07/20/18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT 2019 Budget Contents Schedule Description Page # Overview of Budget Changes between FY19 Original Budget and FY19 Amendment 1 Budget 3-4 Schedule A Budget Summary 5 Schedule A-1 Capital Purchases not funded by R&C 6 Schedule B Operations &Maintenance Budget 7-13 Schedule C Monthly Utility Contributions 14 Schedule D R&C Fund Disbursements and Repayments 18 Schedule E Battle Creek Capital Purchases 16 Schedule F Battle Creek Administrative Costs 17 Schedule G Battle Creek Monthly Utility Contributions 18 7/2/20189:50 AMH:\Accounting\AEA FY19 FS Shared Files\Bradley Lake\Budget\2019-BradleyBudget-ProposedAmend1-072018.xIsx 2 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Overview of Budget Changes between FY19 Original Budget and FY19 Amendment 1 Budget FY19 Original Budgeted Utility Contributions 18,496,810 From Schedule A REVENUES 1)Increase in interest income (40,000) (40,000) EXPENSES 2)Increase in Operations &Maintenance 39,992 3)Increase in Non R&C Capital Purchases 212,500 4)Increase in Transfer To(From)Operating Reserve 7,998 260,490 Net change in utility contributions 220,490 FY19 Proposed Amendment 1 Budgeted Utility Contributions 18,717,301 Notes: 1)Increase in interest income Utility contributions increase and more current cash flow projections are available to use to estimate interest income 2)Increase in Operations &Maintenance FERC 540 -Lands at Bradley Lake were transferred from federal land to state land.The federal land fee was reduced from $200,842 to $0. FERC 542 -FY18 approved project "Upgrade Crews Quarters/Residence Kitchen"was moved from FY18 Captial budget (sch A-1)to FY19 O&M budget (sch B)$165,000. FERC 924 -ARECA insurance proposal premiums are $600,834,the orginal estimate was $525,000.Premiums have increased across nation by about 12%. 3)Increase in Non R&C Capital Purchases FY18 approved project "Battle Creek Bridge Repair Refurbishment"was moved from FY18 budget into FY19 budget $200,000 Added addition capital project "Tire Machine"$12,500 4)Decrease in Transfer to(from)Operating Reserve - operating reserve is required to be 20%of budgeted operating expense 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxOverview Page 3 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Overview of Budget Changes between FY19 Original Budget and FY19 Amendment 1 Budget Battle Creek-FY19 Original Budgeted Utility Contributions 2,541,824 From Schedule A EXPENSES 5)Increase in Battle Creek Administrative costs 254,245 6)Increase in Transfer To(From)Operating Reserve 50,689 7)Decrease in Debt Service (132,360) 8)Decrease in Capital Reserve Contribution (429,838) (257,264) Net change in utility contributions (257,264) Battle Creek-FY19 Proposed Amendment 1 Budgeted Utility Contributions 2,284,560 Notes: 5)Increase in Battle Creek Administrative costs FERC 923 -Battle Creek Participating Utilities Owner's representative estimated 1 year fee is $254,245 6)Increase in Transfer to(from)Operating Reserve - operating reserve is required to be 20%of budgeted operating expense 7)Decrease in Debt Service Lands at Bradley Lake were transferred from federal land to state land.There should no longer be a need to draw on the Series 9 loan Estimated debt service on Series 9 was $132,360 8)Decrease in Capital Reserve Contribution $429,838 was estimated capital reserve requirement on Series 9 loan,there is no capital reserve requirement if we do not draw on Series 9 7/12/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxOverview Page4 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Budget Summary Schedule A proposed changes made by Amend 1 highlighted FY2018 FY2019 FY2019 FY2019 Inc(Dec)From FY2016 FY2017 03/05/18 Amended Approved Amend 1 Proposed PY Amended Bradley Lake (excluding Battle Creek shown below)Actuals Actuals Budget Budget Change Budget Budget Re .Exp &Changes in surplus Revenues Utility Contributions (sch C)17,828,513 17,172,295 19,819,362 18,496,810 220,490 18,717,301 (4,102,062) Interest Income 1,930,547 1,991,555 1,845,000 1,855,000 40,000 1,895,000 50,000 19,759,060 19,163,850 21,664,362 20,351,810 260,490 20,612,301 (1,052,062) Expenses Operations &Maintenance (sch B)4,273,634 4,011,783 4,593,387 4,491,916 39,992 4,531,908 (61,479) Renewals/Replacements (R&C Fund Repayments)(sch D)2,692,710 2,476,905 2,793,307 2,746,068 0 2,746,068 (47,239) Non R&C Capital Purchases (sch A-1)26,444 89 1,307,000 60,000 212,500 272,500 (1,034,500) Transfer To(From)Operating Reserve (8,747)(85,531)(112,145)(20,294)7,998 {12,296)99,849 Debt Service (net of Capital Reserve Reductions)12,494,600 12,426,200 12,778,100 12,778,588 0 12,778,588 488 Arbitrage Transfer 281,419 334,404 304,713 295,533 0 295,533 (9,180) 19,759,060 19,163,850 21,664,362 20,351,810 260,490 20,612,301 |(1,052,062) Surplus (Deficit)0 0 0 0 (0)0 Other Project Costs -Battle Creek Revenues,Expenses &Changes in surplus Revenues-Battle CreekUtilityContributions(sch G)0 800,000 400,000 0 0 0 (400,000) Utility Contributions (sch G)0 0 633,356 2,541,824 (257,264)2,284,560 1,651,204 Capital Reserve Contributions 0 0 2,796,378 0 0 0 (2,796,378) Other Available Funds i!)0 499,985 0 0 ie)(499.985) 0 800,000 4,329,719 2,541,824 (257,264)2,284,560 (2,045,159) Expenses-Battle CreekBattleCreekAdministrative costs (sch F)0 43,800 199,743 254,245 453,988 410,188 Capital Purchases (sch E)0 800,000 400,000 0 (*]('](400,000) Capital Purchases -Revenue Fund (sch E)0 0 16,500 0 0 0 (16,500) Transfer To(From)Operating Reserve 0 0 8,760 31,349 50,689 82,038 73,278 Debt Service 0 0 903,064 1,880,894 (132,360)1,748,534 845,470 IRS Subsidy 0 0 0 (*)0 o 0 Cost of Issuance 9th Series 0 0 21,217 0 0 0 (21,217) Capital Reserve Contribution 0 0 2,936,378 429,838 (429,838)()(2,936,378) Arbitrage Transfer 0 i°)0 0 0 0 0 0 800,000 4,329,719 2,541,824 (257,264)2,284,560 [(2.045.159) Surplus (Deficit)0 (0)0 0 (') L a la i Other Information Operating Reserve *1,116,353 802,357 918,677 898,383 906,382 Operating Reserve -Battle Creek*0 0 8,760 39,949 90,798 Monthly Contributions 1,654,119 1,431,025 3,303,227 1,541,401 1,559,775 Monthly Contributions Battle Creek 0 0 211,119 211,819 190,380 *Required to be 20%of budgeted operating expense 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxSch A Page 5 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Capital Purchases Not Funded by R&C Fund Schedule A-1 roposed changes made by Amend 1 highlightec FY17 FY18 FY18 FY19 @03/31/18 Approved Capital Project Description Actuals Actuats Projected Budget [Comments Replace/Automate Fish Water Valves &Actuators 89 231,490 385,000 _[Phase one is the new radio upgrades completed 2018.Will likely extend into 2019,mostfundscomefrom2018excessmoniesonloaderandcrane. JEquipment storage shed (unheated bus barn)-11,646 100,000 |Design Estimate is 470,000.This project was moved to the FY19 R&C fund $500,000. 1 ton Flatbed with Plow :-62,000 -[purchased 2018 for approx.$62k Battle Creek Bridge Repair Refurbishment (2)bd --200,000 [Moved to FY2019 [Mobil Crane 40 to 50 tons (used)-69,920 69,920 +[purchased 2018 for 31,200 +10,000 in repair.Excess FY18 budget moved to fish water Replace Michigan Loader -bd 250,000 -[purchased 2018 for approx.$250,000.Excess FY18 budget moved to fish water. Upgrade Crews Quarters\Residence Kitchen -1,850 --}Moved to O&M budget FERC 542.Schedule B Replace 1988 Suburban Ambulance -51,977 58,000 +|Jpurchased 2018 for approx.$58k 1/2 ton Pick up truck -33,028 33,028 -purchased 2018 for approx.$32k Replace High Bay Lighting in Power Plant 14,220 20,000 -JFY19 replace high bay lighting is in the FY19 O&M budget Turbine Nozzle Repair ...60,000 Purchase long lead parts Note we are monitoring Unit 2 for any degradation.We may needtomakeamidyearbudgetadjustmentifworkisrequired. Tire machine 12,500 The current tire machine that is on site is from 1990.Used to change tires on trucks andautomobilesfromsummertirestosnowtires. Total Non R&C Capital Purchases 89 414,131 977,948 272,500 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxSch A-1 Page 6 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Operations &Maintenance Budget Schedule B HEA 3,365,387 HEA 3,209,154 HEA 2,704,303 HEA 2,959,282 CEA 408,098 CEA 190,187 CEA 183,499 CEA 114,448 AEA 1,808,280 AEA 1,754,770 AEA 1,705,585 AEA 1,458,178 proposed changes made by Amend1 highlighted FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 |Budget to date Budget from PY y by cost type Labor &Benefits 2,143,223 1,738,336 404,887 2,005,079 1,533,371 471,708 1,889,814 658,383 1,231,434 1,900,742 10,928 Travel 98,600 13,796 84,804 132,950 27,009 105,941 76,950 4,978 71,972 33,950 (43,000) Training 38,731 10,819 27,912 49,300 35,736 13,564 49,300 8,130 41,170 49,300 - Contractual 1,205,659 813,606 392,053 1,217,418 850,184 367,234 841,062 176,194 664,868 1,033,216 192,154 Supplies &Materials 275,760 95,952 179,808 229,358 113,151 116,207 183,345 77,130 106,215 204,345 21,000 Other Costs 451,846 375,357 76,489 381,744 298,031 83,713 387,818 33,410 354,408 69,818 (318,000) Equipment,Furniture and Machinery 33,130 6,051 27,079 11,500 9,553 1,947 7,000 3,091 3,909 7,000 - [Maintenance Projects 13,000 3,457 9,543 ----795 (795)}-- Administrative Costs 1,321,817 1,216,260 105,557 1,126,761 1,144,749 (17,988)1,158,098 418,402 739,696 1,233,537 75,439 5,581,766 4,273,634 1,308,131 5,154,110 4,011,785 1,142,326 4,593,387 1,380,513 3,212,874 4,531,908 (61,479) FERC 535 -Operation Supervision &Engineering Operations Sup/Eng Bradley Lake Operating Labor &Benefits 304,235 321,664 (17,429)299,649 266,820 32,829 265,587 114,153 151,434 270,953 5,366 Travel 9,500 9,281 219 10,450 9,452 998 10,450 347 10,103 10,450 - Training 7,904 2,080 5,824 9,300 114,171 (1,871)9,300 1,911 7,389 9,300 - Contractual 1,445 -1,445 1,400 300 1,100 1,000 -1,000 1,000 - Supplies &Materials 6,203 346 5,857 4,100 5,781 (1,681)4,000 367 3,633 4,000 - Bradley Lake Operating Total 329,287 333,371 (4,084)324,899 293,523 31,376 290,337 116,778 173,559 295,703 5,366 FERC 535 -Operation Supervision &Engineering Total 329,287 333,371 (4,084)324,899 293,523 31,376 290,337 116,778 173,559 295,703 JHEA 5,366 FERC 537 -Hydraulic Expenses Hydraulic Expenses Bradley Lake Operating Labor &Benefits 95,273 81,677 13,596 92,746 65,670 27,076 94,453 28,821 65,632 98,853 4,400 Contractual 17,180 -17,180 4,000 5,647 (1,647)2,000 -2,000 2,000 - Supplies &Materials 2,608 1,277 1,331 2,900 886 2,014 2,000 352 1,648 2,000 - Bradley Lake Operating Total 115,061 82,954 32,107 99,646 72,202 27,444 98,453 29,173 69,280 102,853 4,400 FERC 537 -Hydraulic Expenses Total 115,061 82,954 32,107 99,646 72,202 27,444 98,453 29,173 69,280 102,853 JHEA 4,400 712/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xIsxSch B Page 7 of 18 FY16 FY17 FY18 Fy19 FY16 FY17 FY18 FY19 increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 _|Budget to date Budget from PY FERC 538 -Electric Expenses Electric Expenses Bradley Lake Operating Labor &Benefits 257,107 215,440 41,667 242,940 193,058 49,882 232,294 85,570 146,724 240,998 8,704 Travel ---7,000 8,638 (1,638)7,000 2,930 4,070 7,000 - Training 30,827 8,739 22,088 25,000 23,737 1,263 25,000 -25,000 25,000 - Contractual 3,342 1,400 1,942 2,000 1,400 600 2,000 1,400 600 2,000 - Supplies &Materials 12,232 6,241 5,991 8,500 4,672 3,828 9,732 -9,732 9,732 - Bradley Lake Operating Total 303,508 231,820 71,688 285,440 231,505 53,934 276,026 89,900 186,126 284,730 8,704 [FERC 538 -Electric Expenses Total 303,508 231,820 71,688 285,440 231,505 53,934 276,026 89,900 186,126 284,730 JHEA 8,704 [rere 539 -Misc.Hydraulic Power Generation ExpensesMiscHydroPowerExp Bradley Lake Operating Labor &Benefits 189,473 158,532 30,941 178,991 137,740 41,251 179,530 66,934 112,596 216,960 37,430 Training --.15,000 829 14,171 15,000 6,219 8,781 15,000 . Contractual 315,249 285,812 29,437 297,048 214,899 82,149 287,525 68,505 219,020 287,525 - Supplies &Materials 22,000 19,041 2,959 17,900 19,695 (1,795)17,900 5,466 12,434 17,900 - Bradley Lake Operating Total §26,722 463,385 63,337 508,939 373,163 135,777 499,955 147,124 352,831 537,385 {HEA 37,430 BRADLEY CIRCUITS/RADIO TO BERNICE LK Other Costs 30,000 31,059 (1,059)35,695 35,696 (1)35,695 14,873 20,822 35,695 - BRADLEY CIRCUITS/RADIO TO BERNICE LK Total 30,000 31,059 (1,059)35,695 35,696 (1)35,695 14,873 20,822 35,695 JHEA - BRADLEY CIRCUITS BERNICE LK TO ANCH Other Costs 28,746 29,864 (1,118)29,773 29,540 233 29,773 12,334 17,439 29,773 - BRADLEY CIRCUITS BERNICE LK TO ANCH Total 28,746 29,864 (1,118)29,773 29,540 233 29,773 12,334 17,439 29,773 [CEA - FERC 539 -Misc.Hydraulic Power Generation Expenses Total 585,468 524,308 61,160 $74,407 438,398 136,009 565,423 174,332 391,091 602,853 37,430 |FERC 540 -Rents FERC Land Use Fee Bradley Lake Operating Other Costs 183,000 279,876 (96,876)312,176 230,614 81,562 318,000 -318,000 -(318,000) Bradley Lake Operating Total 183,000 279,876 (96,876)312,176 230,614 81,562 318,000 -318,000 >(318,000) FERC 540 -Rents Total 183,000 279,876 (96,876)312,176 230,614 81,562 318,000 -318,000 -JAEA (318,000) 712/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xisxSch B Page8of18 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 |Budget to date Budget from PY FERC 541 -Maintenance Supervision &Engineering Maint Supervision/Eng Bradley Lake Operating Labor &Benefits 222,118 239,299 (17,181)224,284 229,602 (5,318)272,586 114,811 157,775 277,696 5,110 Bradley Lake Operating Total 222,118 239,299 (17,181)224,284 229,602 (5,318)272,586 114,811 157,775 277,696 5,110 FERC 541 -Maintenance Supervision &Engineering Total 222,118 239,299 (17,181)224,284 229,602 (5,318)272,586 114,811 157,775 277,696 JHEA 5,110 FERC 542 -Maintenance of Structures Maintenance of Structures Bradley Lake Operating Labor &Benefits 95,273 89,890 5,383 92,746 65,629 27,117 94,453 28,848 65,605 98,853 4,400 Contractual :--10,000 -10,000 10,000 -10,000 10,000 - Supplies &Materials 61,273 23,398 37,875 §3,713 42,233 11,480 53,713 26,696 27,017 53,713 - Equipment,Furniture and Machinery 11,500 6,051 5,449 11,500 8,318 3,182 7,000 3,091 3,909 7,000 - Maintenance Projects 4,000 1,827 2,173 -------- Bradley Lake Operating Total 172,046 121,166 50,880 167,959 116,180 51,779 165,166 58,635 106,531 169,566 4,400 BRADLEY UPGRADE CREWS QUARTERS/RESIDENCE KITCHEN Contractual -.-:----:165,000 165,000 BRADLEY UPGRADE CREWS QUARTERS/RESIDENCE KITCHEN Total -:------:165,000 165,000 FERC 542 -Maintenance of Structures Total 172,046 121,166 50,880 167,959 116,180 51,779 165,166 58,635 106,531 334,566 [HEA 169,400 FERC 543 -Maintenance of Reservoirs,Dams &Waterways Maint Res,Dams,WWays Bradley Lake Operating Labor &Benefits 51,276 42,848 8,428 50,409 50,035 374 50,610 1,471 49,139 §3,091 2,481 Contractual 5,200 9,080 (3,880)§,200 63,704 (58,504)6,500 -6,500 6,500 - Bradley Lake Operating Total 56,476 51,928 4,548 55,609 113,739 (58,130)57,110 1,471 55,639 59,591 2,481 BRADLEY NUKA REPAIR Contractual ---15,000 980 14,020 15,000 :15,000 15,000 - Equipment,Furniture and Machinery 21,630 -21,630 -------- BRADLEY NUKA REPAIR Total 21,630 :21,630 15,000 980 14,020 15,000 -15,000 15,000 - BRADLEY POWER TUNNEL MAINT (Dam) Contractual 20,000 3,673 16,327 15,000 9,431 5,569 15,000 -15,000 15,000 - BRADLEY POWER TUNNEL MAINT (Dam)Total 20,000 3,673 16,327 15,000 9,431 5,569 15,000 -15,000 15,000 - BRAOLEY POWER TUNNEL DRAIN CLN/INSP (P/House) Maintenance Projects 9,000 1,557 --------- BRADLEY POWER TUNNEL DRAIN CLN/INSP (P/House)Total 9,000 1,557 -::------ [FERC 543 -Maintenance of Reservoirs,Dams &Waterways Total 107,106 57,158 49,948 85,609 124,151 (38,542)87,110 1,471 85,639 89,591 {HEA 2,481 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xdsxSch B Page9of18 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 |Budget to date Budget from PY [FERC 544 -Maintenance of Electric Plant Maintenance of Elec Plant Bradley Lake Operating Labor &Benefits 381,093 336,417 44,676 370,983 266,161 104,822 379,102 116,720 262,382 397,141 18,039 Travel 3,500 3,270 230 4,500 740 3,760 4,500 -4,500 4,500 - Contractual 91,443 69,651 21,792 79,000 36,844 42,156 70,000 19,363 50,637 70,000 - Supplies &Materials 27,245 10,142 17,103 27,245 13,081 14,164 20,000 1,476 18,524 20,000 - Maintenance Projects ----:::---- Bradley Lake Operating Total 503,281 419,480 83,801 481,728 316,826 164,902 473,602 137,559 336,043 491,641 18,039 BRADLEY HIGH BAY LIGHTS Supplies &Materials -:---:---30,000 30,000 BRADLEY HIGH BAY LIGHTS Total -::-:>::-30,000 30,000 FERC 544 -Maintenance of Electric Plant Total 503,281 419,480 83,801 481,728 316,826 164,902 473,602 137,559 336,043 521,641 [HEA 48,039 FERC 545 -Maintenance of Misc.Hydraulic Plant Maint of Mise Hydr Plant Bradley Lake Operating Labor &Benefits 95,273 94,653 620 92,746 66,129 26,617 94,453 29,149 65,304 98,853 4,400 Contractual 3,900 -3,900 3,900 §,274 (1,374)3,900 -3,900 3,900 - Supplies &Materials 43,000 28,044 14,956 43,000 20,631 22,369 35,000 41,000 (6,000)35,000 - Bradley Lake Operating Total 142,173 122,697 19,476 139,646 92,034 47,612 133,353 70,149 63,204 137,753 4,400 BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Contractual 24,900 -24,900 20,000 -20,000 -1,345 (1,345)-- BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Total 24,900 -24,900 20,000 -20,000 -1,345 (1,345)-- FERC 545 -Maintenance of Misc.Hydraulic Plant Total 167,073 122,697 44,376 159,646 92,034 67,612 133,353 71,494 61,859 137,753 JHEA 4,400 FERC 556 -System Control &Load Dispatching System Cnt!&Load Disp Bradley Lake Operating Labor &Benefits 49,000 10,478 38,522 49,502 27,294 22,207 20,618 7,176 13,442 21,506 888 Contractual 8,500 31 8,469 60,500 66,135 (5,635)53,000 §,437 47,563 §3,000 - Supplies &Materials 6,199 4,090 2,109 6,000 2,229 3,771 6,000 -6,000 6,000 - Bradley Lake Operating Total 63,699 14,599 49,100 116,002 95,657 20,344 79,618 12,613 67,005 80,506 THEA 888 BRADLEY EMERSON ANTIVIRUS UPGRADE Contractual -.:::-::-40,000 40,000 BRADLEY EMERSON ANTIVIRUS UPGRADE Total -::-:-:--40,000 [HEA 40,000 BRADLEY POWERHOUSE PC'S Contractual 50,000 37,261 12,739 :------- BRADLEY POWERHOUSE PC'S Total 50,000 37,261 12,739 -------HEA - 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xisxSch B Page 10 of 18 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 __|Budget to date Budget from PY Snow Measurement Bradley Lake Operating Contractual 10,000 10,000 -10,000 10,000 -10,000 10,000 -12,000 AEA 2,000 Bradley Lake Operating Total 10,000 10,000 -10,000 10,000 :10,000 10,000 -12,000 2,000 Seismic Service Bradley Lake Operating Contractual 62,000 60,370 1,630 60,370 61,358 (988)62,000 16,778 45,222 62,000 [AEA - Bradley Lake Operating Total 62,000 60,370 1,630 60,370 61,358 (988)62,000 16,778 45,222 62,000 - Streamguaging Serv Bradley Lake Operating Contractual 296,000 301,338 (5,338)310,000 157,164 152,836 213,137 53,284 159,853 206,291 JAEA (6,846) Bradley Lake Operating Total 296,000 301,338 (5,338)310,000 157,164 152,836 213,137 53,284 159,853 206,291 (6,846) Permits Bradley Lake Operating Other Costs 100 350 (250)100 450 (350)350 -350 350 JAEA - Bradley Lake Operating Total 100 350 (250)100 450 (350)350 -350 350 - [FERC 556 -System Control &Load Dispatching Total 481,799 423,918 57,881 496,472 324,629 171,842 365,105 92,675 272,430 401,147 36,042 FERC 562 -Station Expenses Station Expenses SVC/Substation Mai Contract Labor &Benefits 251,852 147,344 104,508 130,414 151,868 (21,455)423,726 64,731 58,995 65,675 [CEA (58,051) Labor &Benefits -:-----29,043 [HEA 29,043 Travel 26,000 (31)26,034 6,000 -6,000 6,000 1,701 4,299 2,000 ICEA (4,000) Contractual 6,500 1,244 §,256 4,000 3,447 554 4,000 -4,000 2,000 [CEA (2,000) Contractual :--------30,000 [HEA 30,000 Supplies &Materials 95,000 2,118 92,882 16,000 3,848 12,152 16,000 1,773 14,227 11,000 {CEA (5,000) Supplies &Materials ---------10,000 JHEA 10,000 Other Costs -9,208 (9,208)4,000 1,148 2,852 4,000 6,202 (2,202)4,000 [CEA - Maintenance Projects -73 (73)----795 (795)-CEA - SVC/Substation Maintenance Contract Total 379,352 159,956 219,396 160,414 160,311 103 153,726 75,202 78,524 153,718 (8) [FERC 562 -Station Expenses Total 379,352 159,956 219,396 160,414 160,311 103 183,726 75,202 78,524 153,718 (8) 7/2/20189:50 AM201 9-BradleyBudget-ProposedAmend1-072018.xisxSch B Page11 of 18 FY16 FY17 Fy18 FY19 FY16 FY17 FY18 FY19 Increase Amended (Over)Under Amended (Over)Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 _|Budget to date Budget from PY FERC 571 -Maintenance of Overhead Lines Maint of OH Lines Bradley Lake Operating Labor &Benefits 146,320 94 146,226 179,671 7,014 172,657 82,402 -82,402 31,120 (51,282) Travel 54,600 1,276 §3,324 95,000 8,179 86,821 49,000 -49,000 10,000 (39,000) Contractual 90,000 33,746 56,254 50,000 -50,000 86,000 -86,000 50,000 (36,000) Supplies &Materials -1,255 (1,255)50,000 95 49,905 19,000 -19,000 5,000 (14,000) Other Costs ::::584 (584):-:-- Bradley Lake Operating Total 290.920 36,371 254,549 374,671 15,872 358,799 236,402 -236,402 96,120 (140,282) BRADLEY JUNCTION SWITCH REMOVAL Travel ---5,000 -5,000 ----- Contractual ---70,000 73,076 (3,076)----- Other Costs 210,000 25,000 185,000 -.-----. BRADLEY JUNCTION SWITCH REMOVAL Total 210,000 25,000 185,000 75,000 73,076 1,924 ----. MARKER BALL REPLACEMENT Labor &Benefits 4,929 :4,929 -6,352 (6,352)----- Travel 5,000 -5,000 5,000 -§,000 ----- Contractual 200,000 :200,000 200,000 140,526 59,474 -83 {83)-- Equipment,Furniture and Machinery ----1,235 (1,235)----- MARKER BALL REPLACEMENT Total 209,929 -209,929 205,000 148,113 56,887 -83 (83)-- [FERC 571 -Maintenance of Overhead Lines Total 710,849 61,371 649,478 654,671 237,061 417,610 236,402 83 236,319 96,120 JHEA (140,282) [FERC 920 &930 -Administrative Expense AEA Bradley Fixed Admin Fees Bradley Lake Operating Administrative Costs 200,000 200,000 -200,000 200,000 :200,000 83,333 116,667 200,000 JAEA - Bradley Lake Operating Total 200,000 200,000 -200,000 200,000 -200,000 83,333 116,667 200,000 - Operating Committee Exp-Audit Bradley Lake Operating Administrative Costs 116,250 101,530 14,720 16,494 16,500 (6)16,800 -16,800 16,500 JAEA (300) Bradley Lake Operating Total 116,250 101,530 14,720 16,494 16,500 (6)16,800 -16,800 16,500 (300) Operating Committee Exp-Legal Bradley Lake Operating Administrative Costs 25,000 77,719 (52,719)25,000 57,444 (32,444)25,000 40,499 (15,499)25,000 JAEA - Bradley Lake Operating Total 25,000 77,719 (52,719)25,000 57,444 (32,444)25,000 40,499 (15,499)25,000 - 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xdsxSch B Page 12 of 18 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Increase Amended (Over)Under Amended (Over}Under Approved Actual @ (Over)Under Approved (Decrease) Budget Actual Budget to date Budget Actual Budget to date Budget 11/30/17 _|Budget to date Budget from PY Operat Committee Exp-Arbitrage Bradley Lake Operating Administrative Costs 3,630 7,010 (3,380)3,630 3,630 -3,380 -3,380 2,935 JAEA (445) Bradley Lake Operating Tota!3,630 7,010 (3,380)3,630 3,630 -3,380 -3,380 2,935 (445) Trust &Account Fees Bradley Lake Operating Administrative Costs 12,300 11,918 382 12,000 11,918 82 11,918 5,959 §,959 11,918 JAEA - Bradley Lake Operating Total 12,300 11,918 382 12,000 11,918 82 11,918 5,959 5,959 11,918 - Misc Admin Bradley Lake Operating Administrative Costs -8,375 (8,375)-10,000 (10,000)10,000 -10,000 10,350 JAEA 350 Bradley Lake Operating Total -8,375 (8,375)-10,000 (10,000)10,000 -10,000 10,350 350 FERC 920 &930 -Administrative Expense Total 357,180 406,552 (49,372)257,124 299,492 (42,368)267,098 129,791 137,307 266,703 (395) FERC 924 &925 -Insurance Premiums Insurance Premiums Bradley Lake Operating Administrative Costs §10,000 477,981 32,019 500,000 §02,391 (2,391)525,000 236,957 288,043 600,834 [AEA 75,834 Administrative Costs 64,637 52,541 12,096 64,637 52,279 12,358 56,000 20,718 35,282 56,000 [HEA - Bradley Lake Operating Total 574,637 530,522 44,115 564,637 554,670 9,967 581,000 257,675 323,325 656,834 75,834 Risk Management Bradley Lake Operating Administrative Costs ----------FCEA - Bradiey Lake Operating Total ----------- FERC 924 &925 -Insurance Premiums Total 574,637 530,522 44,115 564,637 554,670 9,967 581,000 257,675 323,325 656,834 75,834 FERC 928 -Regulatory Commission Expenses FERC Admin Fees Administrative Costs 210,000 182,885 27,115 180,000 122,210 57,791 185,000 -185,000 185,000 [AEA - Bradley Lake Operating Total 210,000 182,885 27,115 180,000 122,210 57,791 185,000 -185,000 185,000 - FERC Related Prof Services FERC Part 12 Inspection Administrative Costs 55,000 35,663 19,337 25,000 24,113 887 ----JAEA - Contractual Engineer-FERC license issues Administrative Costs 125,000 60,638 64,362 100,000 144,264 (44,264)125,000 30,936 94,064 125,000 [AEA - Bradley Lake Operating Total 180,000 96,301 83,699 125,000 168,377 (43,377)125,000 30,936 94,064 125,000 - FERC 928 -Regulatory Commission Exp Total 390,000 279,186 110,814 305,000 290,586 14,414 310,000 30,936 279,064 310,000 : Total Bradley Lake Budget 5,581,766 4,273,634 1,308,131 5,154,110 4,011,785 1,142,326 4,593,387 1,380,513 3,212,874 4,531,908 (61,479) 7/2120189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xisxSch B Page 13 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Monthly Utility Contributions Schedule C Power Purchaser Chugach Electric Municipality of Anchorage Homer Electric Matanuska Electric Golden Valley Electric City of Seward Rounding Power Purchaser Chugach Electric Municipality of Anchorage Homer Electric Matanuska Electric Golden Valley Electric City of Seward proposed changes made by Amend 1 highlighted FY2016 FY2017 FY2018 FY2019 FY2019 FY2019 Change between Percent Amended Amended Amended Original Proposed Proposed FY2018 to Share Budget Budget Budget Budget Change Amendment 1 proposed FY2019 30.4%6,034,236 5,941,176 6,025,086 5,623,032 67,020 5,690,052 (335,034) 25.9%5,141,004 5,061,732 5,133,216 4,790,676 57,108 4,847,784 (285,432) 12.0%2,381,928 2,345,208 2,378,322 2,219,616 26,460 2,246,076 (132,246) 13.8%2,739,216 2,696,988 2,735,076 2,552,556 30,432 2,582,988 (152,088) 16.9%3,354,552 3,302,832 3,349,470 3,125,964 37,260 3,163,224 (186,246) 1.0%198,492 195,432 198,192 184,968 2,208 187,176 (11,016) (5)3 (2)3 1 100.0%19,849,423 19,543,371 19,819,362 18,496,810 220,491 18,717,301 (1,102,062) FY2018 FY2019 FY2019 Percent FY2016 FY2017 Monthly FY2019 Proposed Proposed Share Monthly Monthly Accelerated Monthly Change Amendment 1 30.4%502,853 495,098 1,004,181 468,586 5,585 474,171 (530,010) 25.9%428,417 421,811 855,536 399,223 4,759 403,982 (451,554) 12.0%198,494 195,434 396,387 184,968 2,205 187,173 (209,214) 13.8%228,268 224,749 455,846 212,713 2,536 215,249 (240,597) 16.9%279,546 275,236 558,245 260,497 3,105 263,602 (294,643) 1.0%16,541 16,286 33,032 15,414 184 15,598 (17,434) 100.0%1,654,119 1,628,614 3,303,227 1,541,401 18,374 1,559,775 (1,743,452) 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxSch C Page 14 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT R&C Fund C and Schedule D kcal 'Actual Actual PROJECTED|PROJECTED PROJECTED |PROJECTED PROJECTED |TO REPAY TO REPAY TO REPAY TO REPAY Description Oisburse at 08/308 Disburse at O6/90117 Disburse at 06/30/18 Disburse at 08/30/18 R&C FUND PROJECTS |Governor 0.00 4,052,070.14 0.00 4,052.070.14 0.00 4,052,070.14 0.00 4,052,070.14 {Replace RFLS 0.00 251,092.68 0.00 251,092.69 0.00 251,092.69 0.00 251,092.69 Replace Runners 0.00 1,946,732.79 0.00 1,946,732.79 0.00 1,946,732.79 0.00 1,946,732.79 Replace cable from dam to power house 0.00 2,321,922.94 0.00 2.321,922.94 0.00 2,321,922.94 0.00 2,321,922.94 Replace power system stabilizer 0.00 619,205.10 0.00 619,205.10 0.00 619,205.10 0.00 619,205.10 Replace two RTUs 8.00 86,905.27 0.00 86,905.27 6.00 86.905.27 0.00 86,905.27 Culvert Repairs 0.00 675,966.79 9.00 675,966.79 0.00 675,966.79 9.00 675,966.79 [Trans Towers Frost Jacking Repairs 0.00 887,596.62 0.00 887,596.62 0.00 887,596.62 0.00 887,596.62 Replace Plant and SCADA Controls.0.00 1,344,683,05 0.00 1,344,683.05 0.00 1,344,683.05 0.00 1,344,683.05 Vibration Monitoring System 0.00 490.00 0.00 490.00 0.00 490.00 0.00 490.00 Battle Creek Feasibility 9.00 0.00 9,00 0.00 0.00 0.00 0.00 0,00 Fire Alarm System Replacement 0.00 0.00 0.00 0.00 100,000.00 100,000.00 250,000.00 350,000.00 Battle Creek Diversion 149,683.91 1,144,017.74 25,982.26 1,170,000.00 0.00 1.170,000.00 0.00 1,170,000.00 Replace Electro-Mechanical Retays 0.00 4,277,197.06 0.00 1,277,197.06 0.00 4,277,197.06 0.00 4,277,197.06 Fishwater Screen Debris Removal 290,306.98 312,236.43 0.00 312,236.43 0.00 312,236.43 0.00 312,236.43 Turbine Nozzie Repair 1,320,234.57 1,416,658,06 12,203.01 1,428,861.07 0.00 1,428,861.07 0.00 1,428,861.07 Spitway Raise 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SVC Daves Creek{1,570,577.34 1,570,577.34 |5,606,007.81 7,176,585.15 |1,391,899.49 8,568,484.64 0,00 8,568,484.64 Equipment Storage Shed 0.00 0.00 9.00 0.00 0.00 0.00 500,000.00 500,000.00 Emerson Operating System Upgrade.0.00 0.00 0.00 9.00 0.00 0.00 700,000.00 700,000.00 3.330,802.80 17.907,352.02 5.644 193.08 23,551.545.10]1,491,899.49 25,043,444.59]1,450,000.00 26,493,444 59CurrentYearR&C Repayment (3,461,591.16 (3,262,788.00.(2,793,306.63} Adjust bal to $5 mill (won't be corrected until year end)0.00 0.00 0.00 Less Interest in Fund Applied to Repayment ore ay (361,780.54)0.00 Net Transfer from Revenue Fund (3,748,672.09 __(3.624,568.54 '2,793,306.63, cl Prior Yeare R&C Repayments (12,716,539.31 (15,409,249.92 (17,806 155.064 {20,527,878.92 Due back to Utilities 1,055,961.48 1,147,663.37 151,582.79 0.00 R&C Cumulative interest (Retained)Applied As Part of 9.00 9.00 9.00}9.00 Net R&C Repayments (11.660.577.83 14,261,586.54 {17,734.572.29 (20,527,878.92 INET DUE TO R&C FUND 2,498,102.10 §,665,390,02 4,515,565,67 3,219,498.02 IR&C FUND CASH FLOW PROJECTION 9 ]Balance 3,212,607.32 5.623,509.49 3,219,624.39 786,511.13 Di nt year (1,265,152.32 (2,906,842.05 (1,341,405,49)(1,350,000.004 De prior year accrued (22,899.86 (2,065,650.48'(2,737,351.03)(100,000.00) IR&C Repayment to utilities (20,211.52)(1,055,961.41 (1,147,663.37)(202,076.79) Net other cash inflow(cutfiow)(29,506.22)0.00 9.00 0.00 Current year interest earnings 287,060.93 361,780.54 0.00 0.00 Current year Participants Contributions to R&C 3,461,591.16 3,262,788.00 2,793,306.63 2.746,067.65 Ending investment Balance §,623,509.49 4.39 786,511,139 -1,880,501.98 R&C Payable at year end-Due to Utilities (1,055,961.41 (1,147,663.37;(202,076.79;0.00 R&C vendor Payable at year end __(2,065,650.48'(2,737,351.03)(100,000.00.{100,000.00} PROJECTED NET DUE +ENDING INVESTMENT BALANCE 5.000.000.00 5.000.000.00 5,000,000.00 §,000,000.00 total repaid Temaining to IREPAYMENT AMOUNT at 6/90/19 pay at 7/1/19 Fy19 FY20 FY21 i$1,401,948.53 X 25%all 4 years th yr 350,487.13 1,401,948.53 -= I$1,834,499.92 X 25%yr 4 |25%yr 2 |50%yr 3 final yr 917,249.96 1,834 499,92 2 . IS789,697.09 X 25%yr 1}75%yr 2 final yr $92,272 82 789,697.09 5 . $3,330,802.80 X 25%yr 1 |32%yr 2 [25%yr 3]Fist yr 832,700.70 [2nd yr 1,065,856.90 [3rd yr 832,700.70 [4th yr 599,644.50 3,330,802.80 -° $5,644,193.06 x 25%all 4 years 'et yr 1,411,048.27 F2nd yr 1,411,048.27 [3rd yr 1,411,048.27 4,233,144.61 (1,411,048.27}-1,411,048.27 5 151,491 899.49 x 25%all 4 years ety 372,974.87 Fend yr 372,974.87 745,949.75 (745,949.75)372,974.87 372,974.87 . I$1,350,000 x 25%all 4 years Met yr 362,500.00 362,500.00 (4,087,500.00)362,500.00 362,500.00 362,500.00 5 2,692,710.61 2,476.905.17 _2.616.723.84 |2,746 067.65 (G.244 498.02)2.146.523.14 736.474.87 362,500.00 0.00 'FY 18 projects reflect and actual for diffe projects on which is higher (budgeted or actual),so the R&C repayment amount reflects a conservative amount 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xsx Sch D Page 15 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Battle Creek Capital Construction Purchases Schedule E FY17 FY18 FY18 FY19 Original Amended Approved Capital Construction Project Description Actuals Budget Budget 03/05/18 Budget Comments Battle Creek Diversion 798,072 -400,000 - Total Construction 798,072 -400,000 - Used 2007 Chevrolet Silverado --8,800 - Used 2006 Chevrolet Silverado --7,700 - 16,500 -Total capital revenue fund purchases -- 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xisxSch E Page 16 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Battle Creek Administrative Costs Budget Schedule F HEA -HEA 8,193 CEA -CEA - proposed changes made by Amend 1 highlighted AEA 43,000 AEA 445,795 FYi8 Fy19 Fy18 (Over)Increase Amended Under FY19 Amend (Decrease) Budget Actual Budget 1 Budget from PY Summary by cost type - Administrative Costs 43,000 -43,000 453,988 410,988 43,000 -43,000 453,988 410,988 FERC 920,923,&930 -Administrative Expense Battle Creek Admin Fees Administrative Costs ---8,193 [HEA 8,193 Administrative Costs 22,000 -22,000 168,000 JAEA 146,000 Battle Creek Admin Fees Tota!22,000 -22,000 176,193 164,193 Operating Committee Exp-Owners Representative Administrative Costs ---254,245 [AEA 254,245 Operating Committee Exp-Owners Representative Total ---254,245 254,245 Operating Committee Exp-Other Administrative Costs 500 -§00 - JAEA (500) Operating Committee Exp-Other Total 500 -500 -(500) Operating Committee Exp-Legal Administrative Costs 15,000 -15,000 15,000 [AEA - Operating Committee Exp-Legal Total 15,000 -15,000 15,000 - Operat Committee Exp-Arbitrage Administrative Costs 2,000 -2,000 2,000 JAEA - Operat Committee Exp-Arbitrage Total 2,000 -2,000 2,000 - Trust &Account Fees Administrative Costs 3,500 -3,500 6,550 JAEA 3,050 Trust &Account Fees Total 3,500 :3,500 6,550 3,050 FERC 920,923,&930 -Administrative Expense Total 43,000 .43,000 453,988 410,988 Total Bradley Lake Budget 43,000 -43,000 453,988 825,026 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xdsxSch F Page 17 of 18 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Battle Creek Monthly Participating Purchaser Contributions proposed changes made by Amend 1 highlightedScheduleG POWER PURCHASER Chugach Electric Association Municipal Light &Power Homer Electric Association Matanuska Electric Association Golden Valley Electric Association City of Seward Rounding POWER PURCHASER Chugach Electric Association Municipal Light &Power Homer Electric Association Matanuska Electric Association Golden Valley Electric Association City of Seward *(1)The calculation the FY2018 2/2/2018 Amended Budget is shown below. 7/2/20189:50 AM2019-BradleyBudget-ProposedAmend1-072018.xlsxSch G FY2018 FY2018 FY2018 FY2019 FY2017 7/28/2017 2/2/2018 3/5/2018 FY2019 FY2019 Proposed Percent Amended Amended Amended Amend 3 Approved Proposed Amendment 1 Share Budget Budget Budget *(1)Budget Budget Change Budget 39.38%315,040 157,520 236,521 301,379 1,000,970 (101,310)899,660 0.00%------- 41.44%331,520 165,760 116,938 185,189 1,053,332 (106,611)946,721 17.88%143,040 71,520 107,389 136,837 454,478 (45,999)408,479 0.00%-----.- 1.30%10,400 5,200 7,808 9,949 33,044 (3,345)29,699 1 1 1 1 100.00%800,000 400,000 468,657 633,356 2,541,824 (257,264)2,284,560 FY2019 FY2018 FY2018 FY2019 Proposed Percent March April -June FY2019 Proposed Amendment 1 Share Monthly Monthly Monthly Change Monthly 39.38%.-59,130 80,749 83,414 (8,443)74,972 0.00%------- 41.44%--29,235 51,985 87,778 (8,884)78,893 17.88%.-26,847 36,663 37,873 (3,833)34,040 0.00%------- 1.30%-.1,952 2,666 2,754 (279)2,475 100.0%--117,164 172,064 211,819 (21,439)190,380 ve Original """Corrected ]Contributions FY2018 Capital Capital Other Prior to 2/2/2018 Reserve Reserve Available Other Amended ,Contributions |,Contributions J Funds Available Funds Budget 1,246,143 1,101,213 144,930 381,451 236,521 1,443,286 1,158,819 284,467 401,405 116,938 565,796 499,992 65,804 173,193 107,389 41,137 36,353 4,784 12,592 7,808 (1)1 3,296,363 2,796,378 499,985 968,640 468,657 Page 18 of 18 Bradley Lake Budget to Actual Expense Report 07/01/2017 to 04/30/2018 Page 1 of 8 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Schedule A-1 Expenses for the period 07/01/17 through 04/30/18 FY17 FY17 FY18 FY18CAPITALPURCHASESNOTFUNDEDBYR&C FUND BupGeT |actuALs |BUDGET |ACTUALS Replace/Automate Fish Water Valve Actuators 250,000 89 225,000 280,729 Equipment storage shed (unheated bus barn)--100,000 11,912 1 ton Flatbed with Plow --65,000 - Battle Creek Bridge Repair Refurbishment (2)--182,000 - {Mobil Crane 40 to 50 tons (used)--100,000 76,568 Replace Michigan Loader --350,000 - Upgrade Crews Quarters and Residents Kitchen --165,000 1,850 Replace 1988 Suburban Ambulance --65,000 §3,203 1/2 ton Pick up truck --35,000 33,028 Replace High Bay Lighting in Power Plant --20,000 14,220 Total Non R&C Capital Purchases 250,000 89 1,307,000 471,510 Page 2 of 8 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEOULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2017 THROUGH 04/30/2018 FY 18 FY 17 BUDGET % FY18 Approved 07/01/2017 -(Over)Under FY17 Approved Budget 04/30/2018 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY17 Actual Summary by expense type Labor &Benefits 1,889,814 1,574,845 1,201,945 104,121 -1,306,066 268,779 2,005,079 1,533,371 Travel 76,950 64,124 6,426 1,701 -8,127 55,997 132,950 27,009 Training 49,300 41,083 8,571 ::8,571 32,512 49,300 35,736 Contractual 841,062 700,885 272,144 :224,857 497,001 203,884 1,217,418 850,184|suppiies &Materials 183,345 152,788 103,778 2,005 :105,783 47,005 229,358 113,150 Other Costs 387,818 323,182 29,747 32,978 202,329 265,054 $8,128 381,744 297,447 Furniture and Machinery 7,000 5,833 5,524 795 -6,319 (486)11,500 10,137 Maintenance Projects -2 -800 :800 (800):: Administrative Costs 1,158,098 965,083 40,911 :872,358 913,269 51,814 1,126,761 1,144,749 4,593,387 3,827,823 1,669,046 142,400 1,299,544 3,110,990 716,833 5,154,110 4,011,783 FERC 535 -Operation Supervision &Engineering Operations Sup/Eng Bradley Lake Operating Labor &Benefits 265,587 221,323 220,811 ::220,811 512 299,649 266,820 Travel 10,450 8,708 766 --766 7,942 10,450 9,452 Training 9,300 7,750 2,121 --2,121 5,629 9,300 11,171 Contractual 1,000 833 121 --121 712 1,400 300 Supplies &Materials 4,000 3,333 1,618 =-1,618 1,715 4,100 $,781 Bradley Lake Operating Total 290,337 241,947 225,436 :+225,436 16,511 324,899 293,523 FERC 535 -Operation Supervision &Engineering Total 290,337 241,947 225,436 °-225,436 16,511 324,899 293,523 FERC 537 -Hydraulic Expenses Hydraulic Expenses Bradley Lake Operating Labor &Benefits 94,453 78,711 $7,047 ::57,047 21,664 92,745 65,670Contractual2,000 1,667 *:-:1,667 4,000 $,647Supplies&Materials 2,000 1,667 540 --540 1,127 2,900 886 Bradley Lake Operating Total 98,453 82,045 57,587 -:$7,587 24,458 99,645 72,202 FERC 537 -Hydraulic Expenses Total 98,453 82,045 57,587 °-57,587 24,458 99,645 72,202 FERC 538 -Electric Expenses Electric Expenses Bradley Lake Operating Labor &Benefits 232,294 193,578 168,681 :-168,681 24,897 242,940 193,058 Travel 7,000 5,833 5,660 ::$,660 173 7,000 8,638 Training 25,000 20,833 231 -:231 20,602 25,000 23,737 Contractual 2,000 1,667 1,400 -:1,400 267 2,000 1,400 Supplies &Materials 9,732 8,110 111 ::111 7,999 8,500 4,672 Bradley Lake Operating Total 276,026 230,021 176,084 --176,084 $3,937 285,440 231,505 FERC 538 -Electric Expenses Total 276,026 230,021 176,084 :.176,084 53,937 285,440 231,505 FERC 539 -Misc.Hydraulic Power Misc Hydro Power Exp Bradley Lake Operating Labor &Benefits 179,530 149,608 136,153 ::136,153 13,455 178,991 137,740 Training 15,000 12,500 6,219 *.6,219 6,281 15,000 829 Contractual 287,525 239,604 154,136 ::154,136 85,468 297,048 214,899 Supplies &Materials 17,900 14,917 12,990 ::12,990 1,927 17,900 19,695 Bradley Lake Operating Total 499,955 416,629 309,498 ”-309,498 107,131 508,939 373,163 BRADLEY CIRCUITS/RADIO TO BERNICE LK Other Costs 35,695 29,746 29,747 >:29,747 (1)35,695 35,696 BRADLEY CIRCUITS/RADIO TO BERNICE LK Total 35,695 29,746 29,747 >:29,747 (1)35,695 35,696 BRADLEY CIRCUITS BERNICE LK TO ANCH Other Costs 29,773 24,811 :24,758 -24,758 53 29,773 29,540 BRADLEY CIRCUITS BERNICE LK TO ANCH Total 29,773 24,811 -24,758 -24,758 $3 29,773 29,540 FERC $39 -Misc.Hy Power Total 565,423 471,186 339,244 24,758 :364,002 107,184 574,407 438,398 FERC 540 -Rents FERC Land Use Fee Bradley Lake Operating Other Costs 318,000 265,000 -:202,079 202,079 62,922 312,176 230,614 Bradley Lake Operating Total 318,000 265,000 -:202,079 202,079 62,921 312,176 230,614 FERC 540 -Rents Total 318,000 265,000 :°202,079 202,079 62,921 312,176 230,614 FERC 541-Supervision &Engineering Maint Supervision/Eng Bradley Lake Operating Labor &Benefits 272,586 227,155 221,662 -:221,662 5,493 224,283 229,602 Bradley Lake Operating Total 272,586 227,155 221,662 -*221,662 5,493 224,283 229,602 FERC S41 -Maintenance Supervision &Engineering Total 272,586 227,155 221,662 ::221,662 5,493 224,283 229,602 FERC S42 -Maintenance of Structures Maintenance of Structures Bradiey Lake Operating Labor &Benefits 94,453 78,711 57,854 -:$7,854 20,857 92,746 65,629 Contractual 10,000 8,333 a :=:8,333 10,000 : Supplies &Materials 53,713 44,761 31,843 -.31,843 12,918 $3,713 42,233 Equipment,Furniture and Machinery 7,000 5,833 5,524 ::§,524 309 11,500 8,318 Bradley Lake Operating Total 165,166 137,638 95,220 ::95,220 42,418 167,959 116,180 FERC 542 -Maintenance of Structures Total 165,166 137,638 95,220 :-95,220 42,418 167,959 116,180 Page 3 of 8 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2017 THROUGH 04/30/2018 Fy 18 FY 17 BUDGET % FY18 Approved 07/01/2017 -(Over)Under FY17 Approved Budget 04/30/2018 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY17 Actual FERC S43 -Maintenance of Reservoirs,Dams &Waterways Maint Res,Dams,WWays Bradley Lake Operating labor &Benefits 50,610 42,175 9,185 -:9,185 32,990 50,409 $0,035 Contractual 6,500 5,417 :::-5,417 5,200 63,704 Bradley Lake Operating Total $7,110 47,592 9,185 :-9,185 38,407 55,609 113,739 BRADLEY NUKA REPAIR Contractual 15,000 12,500 ::::12,500 15,000 980 BRADLEY NUKA REPAIR Total 15,000 12,500 ::->12,500 15,000 980 BRADLEY POWER TUNNEL MAINT (Dam) Contractual 15,000 12,500 :::-12,500 15,000 9,431 BRADLEY POWER TUNNEL MAINT (Dam)Total 15,000 12,500 a ---12,500 15,000 9,431 FERC 543 -Maintenance of Reservoirs,Dams &Waterways Tota 87,110 72,592 9,185 --9,185 63,407 85,609 124,151 FERC 544 -Maintenance of Electric Plant Maintenance of Elec Plant Bradley Lake Operating Labor &Benefits 379,102 315,918 229,089 .id 229,089 86,829 370,983 266,161 Travel 4,500 3,750 -:::3,750 4,500 740 Contractual 70,000 58,333 $2,657 --52,657 5,676 79,000 36,844 Supplies &Materials 20,000 16,667 9,482 *-9,482 7,185 27,245 13,081 Bradley Lake Operating Total 473,602 394,668 291,227 :-291,227 103,441 481,728 316,825 FERC 544 -Maintenance of Electric Plant Total 473,602 394,668 291,227 *-291,227 103,441 481,728 316,825 FERC 545 -Mai of Misc.Hydraulic Plant Maint of Misc Hydr Plant Bradley Lake Operating Labor &Benefits 94,453 78,711 68,682 ::68,682 10,029 92,746 66,129 Contractual 3,900 3,250 2,009 --2,009 1,241 3,900 5,274 Supplies &Materials 35,000 29,167 45,006 ::45,006 (15,839)43,000 20,631 Bradley Lake Operating Total 133,353 111,128 115,697 -.115,697 (4,569)139,646 92,033 BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Contractual :::::::20,000 : Supplies &Materials ::1,345 -.1,345 1,345)-: BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Tot ::1,345 ::4,345 1,345)20,000 + FERC 545 -of Misc.Hy Plant Total 133,353 111,128 117,042 -.117,042 5,914)159,646 92,033 FERC 556 -System Control &Load Dispatching System Cntl &Load Disp Bradley Lake Operating Labor &Benefits 20,618 17,182 31,209 --31,209 (14,027)49,502 27,294 Contractual $3,000 44,167 15,282 --15,282 28,885 60,500 66,135 Supplies &Materials 6,000 5,000 843 --843 4,157 6,000 2,229 Bradley Lake Operating Total 79,618 66,349 47,334 :47,334 19,015 116,002 95,657 Snow Measurement Bradley Lake Operating Contractual 10,000 8,333 :-10,000 10,000 {1,667}10,000 10,000 Bradiey Lake Operating Total 10,000 8,333 :-10,000 10,000 {1,667)10,000 10,000 Seismic Service Bradley Lake Operating Contractual 62,000 $1,667 ::$5,004 55,004 (3,337)60,370 61,358 Bradley Lake Operating Total 62,000 51,667 --$5,004 55,004 (3,337)60,370 61,358 Streamguaging Serv Bradley Lake Operating Contractual 213,137 177,614 -:159,853 159,853 17,761 310,000 157,164 Bradley Lake Operating Total 213,137 177,614 id -159,853 159,853 17,761 310,000 157,164 Permits Bradley Lake Operating Other Costs 350 292 :*250 250 42 100 450 Bradley Lake Operating Totat 350 292 -:250 250 42 100 450 FERC 556 -System Control &Load Dispatching Total 365,105 304,255 47,334 :225,107 272,441 31,814 496,472 324,629 FERC S62 -Station Expenses Station Expenses Bradley Lake Operating Labor &Benefits 123,726 103,105 1,573 104,121 :105,695 (2,590)130,414 151,868 Travel 6,000 5,000 .1,701 -1,701 3,299 6,000 : Contractual 4,000 3,333 2,488 ::2,458 875 4,000 3,447 Supplies &Materials 16,000 13,333 -2,005 =2,005 11,328 16,000 3,848 Other Costs 4,000 3,333 -8,220 :8,220 (4,887)4,000 1,148 Equipment,Furniture and Machinery .:a 795 :795 (795)-: Maintenance Projects :::800 -800 (800)-: Bradley Lake Operating Total 153,726 128,104 4,032 117,642 -121,674 6,430 160,414 160,311 FERC 562 -Station Expenses Total 153,726 128,104 4,032 117,642 :121,674 6,430 160,414 160,311 Page 4 of 8 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2017 THROUGH 04/30/2018 Fy 18 FY 17 BUDGET % FY18 Approved 07/01/2017 -{Over}Under FY17 Approved Budget 04/30/2018 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY17 Actual FERC S71 -Maintenance of Overhead Lines Maint of OH Lines Bradley Lake Operating Labor &Benefits 82,402 68,668 -:::68,668 179,671 7,014 Travel 49,000 40,833 -:.:40,833 95,000 8,179 Contractual 86,000 71,667 43,998 ::43,998 27,669 50,000 - Supplies &Materials 19,000 15,833 -:+:15,833 $0,000 95 Equipment,Furniture and Machinery -----:-.584 Bradley Lake Operating Total 236,402 197,001 43,998 --43,998 153,003 374,671 15,872 BRADLEY JUNCTION SWITCH REMOVAL Travel ---:..-5,000 - Contractual ::---:-70,000 73,076 BRADLEY JUNCTION SWITCH REMOVAL Total -:-*:::75,000 73,076 BRADLEY MARKER BALL REPLACEMENT Labor &Benefits ::::-::-6,382 Travel -::-.:-5,000 : Contractual --83 :.83 {83}200,000 140,526 Equipment,Furniture and Machinery :----:-.1,235 BRADLEY MARKER BALL REPLACEMENT Total :+83 ::83 (83)205,000 148,113 FERC S71 -Maintenance of Overhead Lines Total 236,402 197,001 44,081 ::44,081 152,920 654,671 237,061 FERC 920 &930 -Administrative Expense AEA Bradley Fixed Admin Fees Bradley Lake Operating Administrative Costs 200,000 166,667 -:166,667 166,667 0 200,000 200,000 Bradley Lake Operating Total 200,000 166,667 ::166,667 166,667 i}200,000 200,000 Operating Committee Exp-Audit Bradley Lake Operating Administrative Costs 16,800 14,000 :.16,860 16,800 (2,800)16,494 16,500 Bradley Lake Operating Totat 16,800 14,000 -:16,800 16,800 {2,800}16,494 16,500 Operating Committee Exp-Legal Bradley Lake Operating Administrative Costs 25,000 20,833 --96,830 96,830 (75,997)25,000 57,444 Bradley Lake Operating Total 25,000 20,833 -:96,830 96,830 (75,997)25,000 $7,444 Operat Committee Exp-Arbitrage Bradley Lake Operating Administrative Costs 3,380 2,817 --**2,817 3,630 3,630 Bradley Lake Operating Total 3,380 2,817 ':--2,817 3,630 3,630 Trust &Account Fees Bradley Lake Operating Administrative Costs 11,918 9,932 :.11,918 11,918 (1,986)12,000 11,918 Bradley Lake Operating Total 11,918 9,932 -:11,918 11,918 (1,986)12,000 11,918 Misc Admin Bradley Lake Operating Administrative Costs 10,000 8,333 2 2 10,350 10,350 (2,017):10,000 Bradley Lake Operating Total 10,000 8,333 ::10,350 10,350 (2,017):10,000 FERC 920 &930 -Administrative Expense Total 267,098 222,582 :.302,565 302,565 (79,983)257,124 299,492 FERC 924 &925 -Insurance Premiums insurance Premiums Bradley Lake Operating Administrative Costs 581,000 484,167 40,911 :486,132 527,044 42,877)564,637 554,670 Bradley Lake Operating Total $81,000 484,167 40,911 :486,132 527,044 (42,877))564,637 554,670 FERC 924 &925 -Insurance Premiums Total 581,000 484,167 40,911 -486,132 527,044 42,877)!564,637 $54,670 FERC 928 -yc FERC Admin Fees Bradley Lake Operating Administrative Costs 185,000 154,167 ::--154,167 180,000 122,210 Bradley Lake Operating Total 185,000 154,167 :::-184,167 180,000 122,210 FERC Related Prof Services BRADLEY FERC PART 12 INSPECTION Administrative Costs a ===:::25,000 24,113 BRADLEY FERC PART 12 INSPECTION Total :::--*-25,000 24,113 BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES Administrative Costs 125,000 104,167 :.83,661 83,661 20,506 100,000 144,264 BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES To}125,000 104,167 --83,661 83,661 20,506 100,000 144,264 FERC 928 -Regul ¥Ce (Total 310,000 258,334 bd *83,661 83,661 174,673 305,000 290,586 Total Bradiey Lake Budget 4,593,387 3,827,823 1,669,046 142,400 1,299,544 3,110,990 716,833 $,184,110 4,011,783 Page S of 8 BRADLEY LAKE R&C FUND DISBURSEMENTS AND REPAYMENTS SCHEDULE D Expenses for the period 7/1/17 through 4/30/18 Actual Actual Actual Actual Budget .@ 6/30/17 TO REPAY @ 4/30/18 TO REPAY FY18 Description Expense 6/30/2017 Expense 6/30/2018 R&C FUND PROJECTS Governor 0.00 4,052,070.14 0.00 4,052,070.14 0.00 Replace RFLS 0.00 251,092.69 0.00 251,092.69 0.00 Replace Runners 0.00 1,946,732.79 0.00 1,946,732.79 0.00 Replace cable from dam to power house 0.00 2,321,922.94 0.00 2,321 ,922.94 0.00 Replace power system stabilizer 0.00 619,205.10 0.00 619,205.10 0.00 Replace two RTUs 0.00 86,905.27 0.00 86,905.27 0.00 Culvert Repairs 0.00 675,966.79 0.00 675,966.79 0.00 Tower Repair for Jack Frost Heaves 0.00 887,596.62 0.00 887,596.62 0.00 Replace Plant and SCADA Controls 0.00 1,344,683.05 0.00 1,344,683.05 0.00 Vibration Monitoring System 0.00 490,00 0.00 490.00 0.00 Fire Alarm System Replacement 0.00 0.00 0.00 0.00 350,000.00 Battle Creek Diversion 25,982.26 1,170,000.00 0.00 1,170,000.00 0.00) Bradley Replace Electro-Mechanical Relays 0.00 1,277,197.06 0.00 1,277,197.06 0.00 Fishwater Screen Debris Removal 0.00 312,236.43 0.00 312,236.43 0.00 Turbine Nozzel Repair 12,203.01 1,428,861.07 0.00 1,428,861.07 0.00 SVC replacement Daves Creek |Soldotna 5,606,007.81 7,176,585.15 1,341,405.96 8,517,991.11 1,360,400.00) Spillway Raise 0.00 0.00 0.00 0.00 350,000.00 5.644,193.08|_23,551,545.10 1,341,405.96 |24 892,951.06 2,060,400.00 Current Year R&C Repayment (3,262,788.00)(2,793,306.00) Adjust to balance to $5million 0.00 0.00linterestinFundAppliedtoRepayment(361,780.54)(226,780.98) Net Transfer from Revenue Fund (3,624,568.54)(3,020,086.98) Cumulative Prior Years R&C Repayments {15,409,249.92)(17,886,155.09) Due Back to Utilities 1,147 ,663.37 440,986.52 Adjust Due to R&C Actual 0.00 0.00 (14,261,586.55)(17,445,168.57) NET DUE TO R&C FUND 5,665,390.01 4,427,695.51 R&C FUND CASH FLOW PROJECTION Beginning Investment Balance §,623,509.49 3,219,624.39 Disbursements-current year -Accrual (2,906,842.05)(1,291 ,540.73) Disbursements-prior year accrued (2,065,650.48)(2,737,351.03) Utilities'R&C Refund (1,055,961.11)(1,147,663.37) Net other cash inflow(outflow)0.00 0.00 Current year interest earnings 361,780.54 226,780.98 Participants Contributions to R&C Fund 3,.262,788.00 2,793,306.00 Ending Investment Balance 3,219,624.39 1,063,156.24 Accrued Due to Utilities (1,147,663.37)(440,986.52) Accrued R&C vendor Payable at Year End (2,737,351 .03)(49,865.23) PROJECTED NET DUE +ENDING INVESTMENT BALANCE 5,000,000.00 5,000,000.00 REPAYMENT AMOUNT $1,834,499.92 x 25%yr 1 |25%yr 2 |50%yr 3 $789,697.09 x 25%yr 1 |75%yr 2 $3,330,802.80 x 25%yr 1 |32%yr 2}25%yr 3 |18%yr 4 2nd yr 1,065,856.90 |3rd yr 832,700.70 832,700.70) $5,644,193.08 x 25%all 4 years 1st yr 1,411,048.27 [2nd yr 1,411,048.27 1,445,505.93 $1,341,405.96 x 25%all 4 years 1st yr 335,351.49 §15,100.00) 2,476,905.17 2,579,100.46 2,793,306.63 Page 6 of 8 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Battle Creek Capital Purchases Schedule E Expenses for the period 07/01/17 through 04/30/18 FY18 Battle Creek Capital Purchases FY17 Amended FY18 __Actuals Budget Actuals Battle Creek Diversion 799,063 400,000 358,647 Total Construction 799,063 400,000 358,647 Used 2007 Chevrolet Silverado -8,800 8,800 Used 2006 Chevrolet Silverado -7,700 7,700 Total capital revenue fund purchases -16,500 16,500 7 of8 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Battle Creek Administrative Costs Budget Schedule F Expenses for the period 07/01/17 through 04/30/18 BUDGET % FY18 Amended 01/01/2018 -(Over)Under Budget 04/30/2018 Total Actual |Budget to Date Summary by cost type Administrative Costs 43,800 29,200 34,393 (5,193) 43,800 29,200 34,393 (5,193) FERC 920 &930 -Administrative Expense AEA Battle Creek Fixed Admin Fee Administrative Costs 22,000 14,667 14,667 (0) Total AEA Battle Creek Fixed Admin Fee 22,000 14,667 14,667 (0) Operating Committee Exp-Other Administrative Costs 500 333 21 313 Total Operating Committee Exp-Other 500 333 21 313 Operating Committee Exp-Legal Administrative Costs 15,000 10,000 12,520 (2,520) Total Operating Committee Exp-Legal 15,000 10,000 12,520 (2,520) Operat Committee Exp-Arbitrage Administrative Costs 2,000 1,333 -1,333 Total Operat Committee Exp-Arbitrage 2,000 1,333 -1,333 Trust &Account Fees Administrative Costs 4,300 2,867 7,185 (4,319) Total Trust &Account Fees 4,300 2,867 7,185 (4,319) FERC 920 &930 -Administrative Expense Total 43,800 29,200 34,393 5,193) Total 43,800 29,200 34,393 5,193) 8 of8 ¥B. Bradley O&D Report to the BPMC July 20,2018 1.June 20 O&D meeting a.The meeting took place at the Bradley Lake Project.Members toured the Battle Creek Project. 2.Scheduling Project capacity a.Reviewing scheduling for Bradley Lake capacity.The goal of the discussion is to maximize the available Project capacity rights for all Participants. i.When is a participant required to purchase available Project capacity from another Participant? ii.Maintain system constraints. iii.Project Dispatcher scheduling process. 3.Budget a.Unanimously approved a motion to FY19 draft budget to include: i.Tire machine ii.Move Battle Creek bridge repair into the FY19 budget 4.BPMC's Battle Creek Project representative a.Discussed requirements for HEA to keep track of Ron Rebenitsch's use of Bradley Lake assets while performing his duties. Bradley Lake Operator Report BPMC July 16,2018 Unit Statistics:as of 07/16/2018 Generation Unit 1 (MWhrs)Unit 2 (MWhrs)Total (MWhrs) June 2018 18,271 11,973 30,245 Hydraulics Avg.Lake Level (ft.)Usage (ac ft.)Fish water (CFS) ft.) June 2018 1107.27 30,094 168 AVG Lake Level -1137.1'as of July 16,2018 Inflows estimated at 83,160 ac.Ft. Capital Projects: 1)Battle Creek is well underway -Work continues and the road is all the way to the base of the left fork of Battle Creek (the outfall). 2)Thanks to Orion -Orion has been excellent at allowing Bradley to piggyback on available barge space.Our 40-ton Crane is now at Bradley. 3)Fish Water Control Automation -The FAT occurred July 2"?and 3 with no issues.EMERSON is on site to implement the control.We had the flow meter at the dam fail last week,repair parts are on the way. 4)Road to the Dam -GMC (Orion subcontractor)has continued to keep the existing road in good shape.We continue to exercise caution with the fiber and power cable buried in the road because it is not full depth burial in certain locations. 5)Public Dock -The floating dock is closed during construction of Battle Creek. 6)Earthquakes -There have been a couple of earthquakes that have triggered an inspection of the Dam,no damage has been found.(4.0 within 50 miles). Operations,Maintenance,and Inspections: 1)Operations-While preparing this report stating that operations at the Plant were normal with nothing extraordinary to report.Bradley saw a large load rejection and went to nearly zero output by engaging the dividers.At the time or writing the units are back in speed/power mode.Reportedly the cause was the loss of the tie to Fairbanks (this has not been confirmed).This Bradley Lake Operator Report Page 1 event showed that the work on Nikiski and Bradley governors was to good effect. 2)Unit availability-Unit 1 100%,Unit 2 100%. 3)Safety Meeting -We held our monthly safety meeting June 12. 4)Training -A two-day chain saw cutting and safety class was held at Bradley and was well received. 5)Insurance Inspection -the annual insurance inspection was conducted July 13",|expect to see a report with little if any comments.An outlet cover was noticed to be missing (fixed immediately}Oily rags were not disposed of properly (fixed immediately),a ground wire on a conduit was disconnected (fixed that afternoon). 6)Equipment Storage Building -The contract for the Equipment storage building has been awarded to Yenney and Associates in Homer,work has commenced with the building service being installed. 7)Flight Coordination -Flights have kept Bradley very busy with over 70 flights in the month of June. Lisee umsgamsg112631127.3 14798 _rare ;we opeune,|Kf.HL EE Ls. We seodiey 6Man's 6,563 1118.8 wey',<(2m™Pyso08\"oe "-_SN "adeer™ eeduneee Le a 2 Oe oe Se Pe:esee2 ee eeee 2 |2 cee a Melee.yy "Ey mae ms Ww wa B)Wie was wa Bradley Lake Operator Report Page 2 New Mile 8 Marker,new road to Battle Creek Diversion Bradley Lake Operator Report Page 3 Right Front View of Dam Ae* *wee7oc=ARS paneiesaeed 2T¥a "Wigg oy,+,oe Page 4BradleyLakeOperatorReport Bradley Lake Operator Report Page 5 Bradley Lake Project Management Committee -Alaska Online Public Notices STATUS:Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY (AEA) Bradley Lake Project Management Committee Page 1 of 1 Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting on Friday,July 20,2018 at 10:00 a.m.For additional information contact Valerie Leavitt at 907-771-3903. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location:Alaska Energy Authority Board Conference Room,813 West Northern Lights Boulevard,Anchorage,Alaska; A teleconference line has been set up for those unable to attend in person.Dial 1-888-585-9008,Enter Code 134-503-899#. The public is invited to attend.The State of Alaska (AEA)complies with Title Il of the Americans with Disabilities Act of 1990.Disabled persons requiring special modifications to participate should contact AEA staff at 907- 771-3074 to make arrangements. 7 Attachments,History,Details Attachments BPMC Agenda.pdf Revision History Created 7/11/2018 12:24:55 PM by tawebster https://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=190683 Details Department: Category: Sub-Category: Location(s): Project/Regulation #: Publish Date: Archive Date: Events/Deadlines: Commerce,Community and Economic Development Public Notices Statewide 7/41/2018 7/21/2018 7/11/2018 an7FfBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING id Friday,July 20,2018 10:00 A.M. Alaska Energy Authority,Board Room 813 W.Northern Lights Boulevard,Anchorage,Alaska To participate VIA TELECONFERENCE-1-888-585-9008 -Conference room code 134-503-899 AGENDA CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL PUBLIC COMMENTS AGENDA APPROVAL PRIOR MINUTES -June 15,2018 11. 12. NEW BUSINESS A.Election of officers Kirk Gibson B.Battle Creek Construction Update AEA C.Bradley Operator update AEA D.Resolution 2018-01 Battle Creek Project Share Allocation Kirk Gibson E.Dave's Creek O&M Kirk Gibson F.FY19 Budget Amendments Budget Subcommittee REPORTS A.Budget to Actual Report Budget Subcommittee B.O&D Report J Warner C.Operators Report HEA COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -August 17,2018 ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE \d {0 First Second First Second First Second First Second BPMC 7/20/18 =A v 5 LvMyulNmbs®( Roll Call Agenda -Minutes 2018-01 BCD Share FY19 Budget amendments QoRollcallfromtoptobottomendingwithChairvaAllocation W\Yes No (7tes No (Yes\No Yes No vey No©ww)QO WA V Matanuska Electric Association Cal S WA Chugach Electric Association \Xx WA J City of Seward \w%/,J, Golden Valley Electric Association c 7 SA /V/ Municipal Light &Power i 4WA v 7 Homer Electric Association 6S S v Alaska Energy Authority Be S V S First "Second First Second First Second First Second First Second x ws LA ILA [ox eh [06 '"VV er (Ww)fRollcallfromtoptobottomendingwithChairaAwx;WN}i Yes No Yes No Yes No No \Yes No Matanuska Electric Association Chugach Electric Association City of Seward Golden Valley Electric Association Municipal Light &Power Homer Electric Association Alaska Energy Authority Sy Sibi tsiNextMeeting:8/17/18 . S ol By OQaile9spraid (€)Craps y Ofd -C)>eR ervussd oqo q % Fe bigs paired Bradley Lake Project Management Committee Friday,July 20,2018 **PLEASE WRITE LEGIBLY** NAME ORGANIZATION LadQynr LynAley Accu Tee. KC VSS)BOM e [026TWParcPose Bred TYnorsonue LEA Larry Jorgens tw HEA Bina |move NENCeseune"Su¢Zz 4 SUBLIE.rian Riaov|Can ABDSkenSaldanl&A-G-O BURKL Wick CE4ZelsDamnthea (BeaconANAlixeMercismMLLER Bon A 'Uhuste be eh HAE te Dinrq ACA Wichehe tyne AZA Wet Cfacks™Chygecl Valerie &Leavitt ean Oc Warner KE. Cavid ease Cory Borgeson,Chair ATTENDANCE -BPMC MEETING,July 20_COMMITTEE.MEMBERS Lee)Thibert,Vice Chair OoBradJanorschke SsSSS|Bryan Carey,Secretary/Treasurer -_op 7 ALTERNATE OO GVEA Leo QuiachonCEAABurkeWickAMbootBobDay Janet Reiser Tony Izzo MEA Tony Zellers -Mark Johnston 7 MLP aS Jeff Warner7JohnFoutzOnSEWOO | Public Members _COUNSEL CEA "Brian Hickey (CEA)oO Kirk Gibson,McDowell Rackner &Gibson Mark Johnson (CEA)SSS SSC Bran Biorkquist,Dept.of Law Sherri Higher (CEA)Stefan Saldanha Dept of Law |Paul Risse (CEA)AEA Brenda Applegate Josh Resnick (CEA)Amy AdlerHEAto.:Rich Baldwin1 (HEA)pocelyn Gardner _ Alan Owens (HEA)JS Brandi White i -Emily Hutchinson (HEA)|Carmen Noble BS 7 |Larry Jorgensen (HEA)Oo ;'Teri Webster _Sn;|Steve Canon (HEA)OO _Tom Erickson a MLP Anna Henderson (MLP)7 David Lockard-OO neseMolly Morrison (MLP):-e JS Kirk Warren GVEA}-_|Ron Woolf (GVEA)|Jessica HoustonOe|Pete Sarauer (GVEA)_-i |Katie Conway / MEA |_|Jim Brooks (MEA);/ -|__|David Pease (MEA)i ::- Matt Reisterer (MEA) :Oo - Ed Jenkins (MEA)fp "Public :Bernie Smith OO --- |"Crystal Enkvist (APA)a "Mel Hutchinson (APA)/-- aval TW Patch :7 ;/oe wal Eric Myers (American TransmissionCo):-/-/ Ron Rebenitsch (Energy Engineering); CHECKLIST FOR BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETINGS Meeting Date/Time:"7 le Lo AM Task CONFIRMED |DATE 1.|Identify possible dates -Call HEA first to get available dates of the Chairman,Brad Janorschke (call his Exec Assistant,Heather 907-283-2334).Meeting is usually 2 hours long. 2.|Check dates for Bryan Carey and the board room before calling other utilities for dates.KirkGibsonisnotavailablethe4"Thursday of each month.Ideally the last two weeks of the month.Make sure it's not a state holiday.Need five for quorum. 3.|Once date/time is set send calendar meeting request to all members,in Outlook Contacts "BPMC MEMBERS ”with meeting date/time/location (ask for documents to be emailed forpacketinclusion-including action items. 4.|Secure meeting room for use (block out 60 minutes prior to meeting to allow for set-up time) 5.|One week prior to the meeting draft the agenda.Ask Homer Electric and Bryan for items. Draft Agenda and send to Bryan first then the final to Brad J to approve. 6.|After agenda is approved post it on the AEA website under Events. 7.|Post to the State of Alaska's Online Notice System 5 business days prior to the meeting.Attach agenda.te .8.|Gather documents from members.Due dateis two days/prior to the meeting.((afie.Weel |Ae ©">9.|Email packet to members including all attachments Teibosn ones "inférmation/agenda/araltofpreviingOtteforegeneralhandouts)(Send docs in PDF oma)LSwatCocs:td SIL Rrehee ale ©10.|Print 12 full sakes of ionthatice and bring to the meeting onthe ease ee Gattorneys(3),Janet,and your copy.Set out tent cards./\(=ahe-€ex :11.|For handouts print out 20 agendas and 20 copies of otheritems.Easiestis to make 20apacketsboundbyaclip.No need to copy the prior minutes for the public. 12.|MEETING DAY -Put sign in sheet on end of the board room table and lay out the handouts next to it.-|f |20-441 meeting for Chair's signature if they are approved.Make toffee A have water for Meetiny ape"Er r14.|Signin on the phone 5 minutes prior.Ge -Gi \ 13.|ALSO BRING TO THE MEETING:List of Reps and Minutes in final form from the last WD 15.|Accutype will be present but also record from ourat rriost Aw have youdisplaysomedocumentsuponthescreen.w[q eee16.|Following the meeting:Make sure you disconnect the phon Stop Fh)Chair and Bryan sign approved minutes. 17.|Take the disc from the recording out of the system and download recording and place in O:drive and also in BPMC meeting folder 18.|Send a pdf of the signed minutes to the committee members.|will do this upon my return.Teri will do wha,She returns| Bradley Lake Project Management Committee Meeting Friday,July 20,2018 Agenda Item:7F MOTION:Move that the Bradley Lake Project Management Committee approve the first amendment to the fiscal year 2019 Bradley Lake Hydroelectric Project budget as presented. Move: Second: Federal Grant Procurement Practicalities Thursday,July 19,2018 2:00-3:30 p.m.Eastern Time 1:00-2:30 p.m.Central Time Noon-1:30 p.m.Mountain Time 11:00 a.m.-12:30 p.m.Pacific Time Robert M.Lloyd Principal Federal Fund Management Advisor™ IM |/7 -Sraludelsix phe bul FeperAt Funo oct ehectovee,eenMANAGEMENTApvisorouageuha/ Toregister additional peoplefor the webinar,to obtain thephone number, password/PIN numberor other logisticsfor the meeting;or to purchase a recording of the webinar,call Federal Fund Management Advisor's Client Services Team at 888-265-0600. Federal Fund Management Advisor™ www.federalfundmanagement.com 4340 East-West Highway,Ste.300,Bethesda,Maryland 20814 «800-677-3789 About the Speaker BOB LLOYDis principal of Federal Fund Management Advisor™and a recognized authority onpoliciesandpracticesaffectingtheaward,administration and oversight of federal grants and contracts.He has more than 40 years of experience in federal award implementation.Prior to starting his management consulting practice in Washington,D.C.,in 1982,he served as the executive director of the Grants Management Advisory Service and held staff positions in two large federally funded organizations.Since then,he has been a consultant,trainer or advisor to award and audit units in sixteen federal award-making departments and agencies,and to recipient and subrecipient organizations and their professional advisors located in all 50 states, the District of Columbia,several U.S.territories and 18 foreign countries.He is the principal author of several reference works on federal grants management and audits. Moderator:Darla Fera,contributing editor,Federal.Grants News (grants.complianceexpert.com) About Columbia Books &Information Services Columbia Books &Information Services (CBIS)is assisting Bob Lloyd in his presentation of federal funding webinars. CBIS is a leading provider of compliance information,training and in-depth data across a range of areas including associations,nonprofits,grants,government relations,FDA,federal contracting,energy,paint contracting and meeting planning. For more than 40 years,CBIS has provided users with compliance resources and training,print directories,online databases and customized data delivery.Our dedicated staff has extensive experience capturing and delivering relevant,accurate and highly useful information to our clients.For more information on our complete line of information services,visit www.columbiabooks.com. About the Sponsor -Federal Fund Management Advisor™ Federal Fund Management Advisor™(federalfundmanagement.com)was established to provide recipients and subrecipients of federal funds with accurate,responsible and practical advice concerning the acquisition,administration and oversight of federal grants,cooperative agreements and contracts. Save $50!A Practical Guide to Federal Grants Management -From Solicitation Through Audit (www.federalfundmanagement.com/A-Practical-Guide-to-Federal-Grants-Management-From- Solicitation-Through-Audit).This book was prepared by the FFMA team,Bob Lloyd and Darla Fera.It makes for an excellent companion to the type of information provided in FFMA webinars.It discusses each stage of the grants life cycle and includes summary lists and tips that will help to reinforce an understanding of the OMB uniform guidance. For further information and to order,please go to federalfundmanagement.com.Use coupon code FFMASO in the shopping cart to take advantage of our special discount for webinar attendees. This publication is designed to provide accurate,comprehensive and authoritative information on the subject matter covered.However,the opinions contained in this publication are those solely of the speakers and not the publisher.The publisher does not warrant that information contained herein is complete or accurate.The conference materials are published with the understanding that the publisher is not engaged in rendering legal!or other professional services.If legal advice or other expert assistance is required,the services of a competent professional person should be sought. Copyright ©2018 Robert M.Lloyd.All rights reserved. Organizations participating in the July 19,2018,Webinar are hereby permitted to make one photocopy of these materials for each of their employees or contractors who listen to the live broadcast of the Webinar. Webinar Program e Introductions/Administrative Reminders e Approximately 75 Minutes of Presentation e Approximately 15-Minute Q&A Session Note:The question and answer session will normally last until half past the hour or until questions are exhausted, whichever comes first.If there are a considerable number of questions left in the queue at half past the hour,we'll try to make arrangements to accommodate more but may have to suggest that you contact Bob directly at (864)235-8680 (preferred)or consultlloyd@ aol.com. Webinar Materials Federal Grant Procurement Practicalities Presentation by Robert LIOYd oo...esscsssesssseesecssesssssssessesscssesssseseeseecssseeeesssstsssestesceneseseenss page 1 Supplementary Information.................ccssssssssssessesseccessscesessecaecsssonassusssnseuassesasssansececeaeceses page 29 e Excerpts from 2 CFR 200 e OMB N-18-18 e Excerpts from 2017 Compliance Supplement Note:Everyone wishing to receive CPE credit for today's program... Federal Fund Management Advisor™is a sponsor of continuing professional education certified by the National Association of State Boards of Accountancy.In order to receive CPE credit for today's program, every participant must complete a survey form and enter today's program code.This will be the name of a U.S.state and presented at the conclusion of today's presentation and Q&A session. Several times during today's program,CPE codes will appear in a box on your screen.As the CPE codes appear,please press submit to confirm your participation in today's program.Additionally,please jot down these codes in the order in which they appear on the screen,as you will need them later for the survey.The codes may repeat. Immediately after the conclusion of the webinar,a link to the survey form will appear on your screen.Please verify or fill in the information requested.It is important that you enter all information on the form exactly as instructed to do so. The survey link will also be emailed to you.The email should be forwarded to any colleague who attended this webinar,so they too can complete the CPE process.Only one person from your group can complete the process through the webinar platform. After you complete and submit the survey,you will be emailed your certificate of completion. Federal Grant Procurement Practicalities Webinar ¢July 19,2018 ¢2:00-3:30 p.m.Eastern Time Presenter: Robert M.Lloyd,Principal,Federal Fund Management Advisor™ Moderator: Darla Fera,Contributing Editor,Federal Grants News Webinar Outline Part 1:Presentation Part 2:Q&A Questions may be submitted in two ways: (1)To send a question from the webinar page,go to the Chat Pod located in the lower left corner of your screen at any time during the webinar.Type your question into the dialog box at the bottom and then click on the blue send button or (2)Dial *1 on your phone keypad and an operator will connect you to the moderator so that you can ask your question(s)"live”with the webinar participants listening during the Q&A portion of the program. Procurement Angst #For colleges,universities and nonprofit organizations,in particular o Example:"Public bid openings”-dropped for nongovernments,12/19/14 =Implementation delays o One year,12/19/14 o Two years,9/10/15 o Three years,5/17/17 "Now effective for FYs beginning on or after 12/26/17 o Required recording of deferral decision in procurement policies izZILS1I8)__TAR TES AN NASTGln MET TROT Congressional Action and Follow-up National Defense Authorization Act (FY 2017)(S.2943,PL 114-328) o Section 217:Increased micro-purchase threshold for research programs and entities American Innovation and Competitiveness Act (S.3084,PL 114-329) o Section 207:Micro-purchase threshold for procurement solicitations by research institutions Comments urging across-the-board applicability of an increased threshold No issuance of revised regulations PYTEMe OLS PP RODeTEAIY Oy Cae Ler esvesety eC aa a Congressional Action and Follow-up =National Defense Authorization Act (FY 2018)(115-91) ©Section 806 increases micro purchase threshold ($10,000)and simplified acquisition threshold ($250,000)for all recipients o Technically not effective until the Federal Acquisition Regulation is revised o OMB Memorandum 18-18%(Class deviation to 2 CFR 200.102) o Federal agencies still must implement via changes to agreements *Included in the webinar material. OP EOI OLED YaR ORS al Oy RCCOLESkeCa | |a Nature of a Contract Jnder a Grant =Purchase of Goods and/or Services o Buy,Acquire,Purchase,Procure =Case-by-Case Determination of the Nature of Lower Tier Relationship (2 CFR 200.330*) =Factors Influencing the Decision Reminder:The Federal Acquisition Regulation Does Not Apply to Contracts under Grants #2 CFR 200.317-326*Instructs Recipients and Subrecipients How to Enter into the Transaction *Included in the webinar material.a7119]8 RE oP ent OL ey obere pia vag ntcneeteceriecs Federal Award Relationships -Pass-Through - .Entity "Assist,Stimulate,"Buy,Acquire,Purchase, or Support”or Procure” are COP EOCNZOL ERODE MeL Ov GRA LEeHreeseived mplementation of OMB''s Recipient Procurement Policies Policy Components =2 CFR 200.317-326 and 2 CFR 200,Appendix II* *Issued 12/26/13 °Revisions issued 12/19/14 ¢Collectively effective 12/26/14 =FAQ (issued in installments during 2014) *Grace period for non-state entities (.110-6) ¢Other issues for non-state entities (.320-1 thru .320-5) "Applicability ¢To procurement under new awards issued by federal agencies after 12/26/14 *To procurement under old awards if modified by federal agencies after 12/26/14 *Included in the webinar material. OPTC ae O LEP RODSCEN OL OY CAAT TOES ¢5 217,A Requirements for State Governments =Rely on State Law and Procedure =»Why?...ABA Model Procurement Code for State and Local Governments ="Carry-over from OMB Circular A-102,Common Rule,Section _.36 "However,include Contract Provisions (2 CFR 200.326 and Appendix II) Pe_aye NE Romo Mgmt ae a All Other Recipients Reliance on Own Written Procurement Policies Provided They Meet These Standards (2 CFR 200.318;200.319(c)) Recipient and Subrecipient Responsibility o Privity of Agreement Contracting with Responsible Parties with the Ability to Perform Possible Federal Agency Review of Recipient Procurement Procedures or Transactions (2 CFR 200.324) OP Yes Oh OL SPYRODErVGLOyGEAILT nts ese L/ecaaam Standards of Conduct =2 CFR 200.318(c)(1) o Prohibit individual conflicts of interest ©Prohibit solicitation or acceptance of gratuities (except minor items) o Define "participation” =New Disclosure Requirement (2 CFR 200.113) ®Impose Disciplinary Procedures ="Role of Whistleblowing =Address Organizational Conflict of Interest =Federal Agencies May Issue Supplemental Conflict of Interest Rules (2 CFR 200.112) ange BECP (ich 01 by Rober Malloy danlLpehts reserved,Te Practical "Acquisition Planning” Manage the "Supply Chain” Conduct Market Research Avoid Unnecessary Purchasing Consider "Bundling”or "Breaking Out” o Importance of thresholds Consider Lease and Purchase Alternatives Conduct Joint Purchasing o Permitted and encouraged o But establish who the purchaser is Use Federal Excess and Surplus Property Conduct "Value Engineering” _.Reb ORleD puree i. Selection of Responsible Contractors =2 CFR 200.318(h) =Factors to Consider o Contractor integrity o Past performance o Compliance with public policy o Financial and technical resources ="Contrast to Subawards (Subgrants)of Federal Financial Assistance o Awards often include factors such as "need for the funds” o Awards to "high risk”subrecipients are possible (2 CFR 200.207) 1120)Se ETDSADENARTICNT Arenceresei Veg |.iv Competition Free and Open Alert to Actions that Restrict Competition o 2 CFR 200.319(a)(1-7) Contractor Involvement in Preparing Solicitation (IFB,RFP)Prohibited General Prohibition Against Geographic Preference Solicitation of SBE,MBE,WBE and Labor Surplus Area Firms (2 CFR 200.321)["Affirmative Steps”]cae Solicitation =IFB and RFP =Contents o Clear description of technical features ¢Specifications or statement of work (SOW) o Limited use of "brand name or equal” o Identification of essential requirements o Evaluation criteria , o Instructions for submitting offers ="Prequalified Bidders Lists Permitted TIE oPyCetielcheOLETakopeftdVaroyGRAY ensfesccr cama ai 4) Acceptable Procurement Methods =Micro Purchases "Small Purchases =Competitive Sealed Bids =Competitive Negotiation ="Noncompetitive Negotiation =Time and Materials Contracts __yaoi orsiomalane dma Micro Purchases =Purchases of $3,500 or Less o Congressional actions to raise threshold o Reminder:OMB Memorandum 18-18 ="Davis-Bacon Act Exception ="No Need to Solicit Competition =Determination of Reasonable Price by Recipient or Subrecipient 7119115 Reopen O18 Py Ropere Mer org Sinrgrevceseare oo od,if _| Small Purchase Procedures =Role of the Federal Simplified Acquisition Threshold (Currently $150,000 unless grant agreement is modified) =Role of the Small Purchase Threshold of the Recipient or Subrecipient "Solicitation of Quotations from an "Adequate Number of Sources” FeSPIT ETRE?OLS PY RODeTE Nad ey CRAY cetera ZA Competitive Sealed Bids =Formal Advertising #Results in Firm Fixed Price Contract (Lump Sum or Unit) ="Preferred”for Construction "Conditions Required for Use (2 CFR 200.320(c)(1)and (2)) THB GoPet cae OLEPVaRoPesealoYGRA LEN EST eScLLa Competitive Proposals =More than One Source Expected to Make Offer =Either Fixed Price or Cost-Type Contract Anticipated ="RFP Must Be Publicized "Solicitation Identifies Evaluation Factors and Relative Importance =Written Procedures Required for Conduct of Technical Evaluation ="Award to Most Advantageous Offer with Price and Other Factors Considered ="Procedure Must Be Used for Architectural/Engineering Services and Price Cannot Be Used as a Selection Criterion (aka "Brooks Bill”) 1711911 o SoperOyeneroyetT°an: Noncompetitive Negotiation =Sole Source "Justification o Only available from a single source o Public exigency or emergency o Federal awarding agency authorization o Inadequate competition a "JOFOC” UNS 8)BE or yrenuscee OePyeRoberelloraAlcnehreresered Time and Materials Contracts 2 CFR 200.318(j) =Use Limited -Permitted Only When No Other Contract Type Is Suitable =Ceiling Price Must Be Stated =Recipient or Subrecipient Must Exercise Oversight to Assure Contractor Efficiency and Cost Control __aS Oapions Maine Mn Cost or Price Analysis Required in All Procurements Above the Simplified Acquisition Threshold Required Independent Estimate Prior to Solicitation Separate Negotiation of Profit Cost Principles Apply (Based on Type of Contractor) o 48 CFR 31 for commercial entities o Appendix IX 2 CFR 200 for hospitals o Subpart E.2 CFR 200 for all others Cost Plus Percentage of Cost or Percentage of Construction Cost Contracts Prohibited amie agrigneS AN EuyRaTelliaknts MnigRETRCNTE!ee ie Contract Award ®What's It Called? =Issue a Sound,Complete and Enforceable Agreement o Clauses that make sense o Think "Business Law 101” =Required Clauses o Appendix Il of 2 CFR 200 Elraits _eqpagia Sed ergpkgmsis tants nagtencsters Contract Administration =2 CFR 200.318(b) =Criteria o Performance o Compliance =What Tools Are Available? o For fixed price contracts ¢Supplies and equipment o For cost-type contracts ¢Services and construction L9118)_appsMNCepRamong AongeCI Contract Administration =Possible actions o Conduct surveillance/monitoring during performance o Enforce delivery o Conduct inspection o Correct defects o Inspect records/verify charges o Disburse payment o Enforce warranties/remedies Pence?0)8 Py Roper het oy RAMTenetesecyed Procurement Records "History of the Procurement” o Rationale for procurement method o Selection of contract type o Basis for selection of successful offeror ©Basis for contract cost or price Audit Readiness o OMB 2018 Compliance Supplement (www.federalfundmanagement.com/resources) °*Part 3.2L* *Included in the webinar material. A eeopy MLC OLE PERobeen Love AlLlightsesccd aaa om Robert M.Lloyd Consulting Services for Effective Grants Management -On-site grants and subgrant management training -Grants policy and procedure "audits” -Audit findings resolution -questioned costs &control deficiencies -On-call compliance expertise -Indirect cost rate development -Grant and subgrant agreement review | -Compliance program development -Program performance and results assessment and evaluation -Application assistance -Advocacy consultlloyd@aol.com *864.235.8680 +864.235.1465 (FAX) FFMA's Upcoming Popular Webinars See website for upcoming programs. Recordings Available OMB's Recommended Internal Controls}, °+,+1Time and Effort on Your Federal Grants Briefing on OMB's 'Super Circular'for All Staff Charging Facility Costs to Your Federal GrantsO+"°+¢>" °Cash Management on Your Federal Grant o+*Managing Fixed Amount Awards and Subawards }, °Subrecipient or Contractor?Making the Determination o °Recovering Federal Grant Indirect Costs -A Tutorial for Nonprofit Organizations }, °¢.>e%>,)},°," °" ° °>,"ePre-award Review of Subrecipients and Contractors Single Audit Transition:A-133 to 'Subpart F' Engaging Professional Services on Your Grant Traveling on Your Federal Grant How to Respond Effectively to Grant Audit Findings How to Write Subaward Agreements Subrecipient Empowerment Many others... Sirona TeaGMAT)ec For ee |[Le gement:com areal MENGE /MFeperatFunp MANAGEMENT DS Excerpts from 2 CFR Part 200,Uniform Administrative Requirements,Cost Principles, and Audit Requirements for Federal Awards Procurement Standards §200.317 Procurements by states. When procuring property and services under a Federal award,a state must follow the same policies and procedures it uses for procurements from its non-Federal funds.The state will comply with §200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section §200.326 Contract provisions.All other non-Federal entities,including subrecipients of a state,will follow §§200.318 General procurement standards through 200.326 Contract provisions. §200.318 General procurement standards. (a)The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local,and tribal laws and regulations,provided that the procurements conform to applicable Federal law and the standards identified in this part. (b)Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions,and specifications of their contracts or purchase orders. (c)(1)The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection,award and administration of contracts.No employee,officer,or agent may participate in the selection,award,or administration of a contract supported by a Federal award if he or she has a real or apparentconflictofinterest.Such a conflict of interest would arise when the employee,officer,or agent,any member of his or her immediate family,his or her partner,or an organization which employs or is about to employ any of the parties indicated herein,has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.The officers,employees,and agents of the non-Federal entity may neither solicit nor accept gratuities,favors,or anything of monetary value from contractors or parties to subcontracts.However,non- Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value.The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers,employees,or agents of the non-Federal entity. (2)If the non-Federal entity has a parent,affiliate,or subsidiary organization that is not a state,local government,or Indian tribe,the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest.Organizational conflicts of interest means that because of relationships with a parent company,affiliate,or subsidiary organization,the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization. (d)The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate,an analysis will be made of lease versus purchase alternatives,and any other appropriate analysis to determine the most economical approach. (e)To foster greater economy and efficiency,and in accordance with efforts to promote cost-effective use of shared services across the Federal Government,the non- Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. (f)The non-Federal entity is encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs. (g)The non-Federal entity is encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions.Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost. (h)The non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement.Consideration will be given to such matters as contractor integrity,compliance with public policy, record of past performance,and financial and technical resources.See also §200.213 Suspension and debarment. (i)The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include,but are not necessarily limited to the following: rationale for the method of procurement,selection of contract type,contractor selection or rejection,and the basis for the contract price. (j)(1)The non-Federal entity may use a time and materials type contract only after a determination that no other contract is suitable and if the contract includes a ceiling price that the contractor exceeds at its own risk.Time and materials type contract means a contract whose cost to a non-Federal entity is the sum of: (i)The actual cost of materials;and (ii)Direct labor hours charged at fixed hourly rates that reflect wages,general and administrative expenses,and profit. (2)Since this formula generates an open-ended contract price,a time-and-materials contract provides no positive profit incentive to the contractor for cost control or labor efficiency.Therefore,each contract must set a ceiling price that the contractor exceeds at its own risk.Further, the non-Federal entity awarding such a contract must assert a high degree of oversight in order to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls. (k)The non-Federal entity alone must be responsible,in accordance with good administrative practice and sound business judgment,for the settlement of all contractual 29 and administrative issues arising out of procurements. These issues include,but are not limited to,source evaluation,protests,disputes,and claims.These standards do not relieve the non-Federal entity of any contractual responsibilities under its contracts.The Federal awarding agency will not substitute its judgment for that of the non-Federal entity unless the matter is primarily a Federal concer.Violations of law will be referred to the local,state,or Federal authority having proper jurisdiction. [78 FR 78608,Dec.26,2013,as amended at 79 FR 75885,Dec.19,2014;80 FR 43309,July 22,2015] §200.319 Competition. (a)All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section.In order to ensure objective contractor performance and eliminate unfair competitive advantage,contractors that develop or draft specifications, requirements,statements of work,or invitations for bids or requests for proposals must be excluded from competing for such procurements.Some of the situations considered to be restrictive of competition include but are not limited to: (1)Placing unreasonable requirements on firms in order for them to qualify to do business; (2)Requiring unnecessary experience and excessive bonding; (3)Noncompetitive pricing practices between firms or between affiliated companies; (4)Noncompetitive contracts to consultants that are on retainer contracts; (5)Organizational conflicts of interest; (6)Specifying only a "brand name”product instead of allowing "an equal”product to be offered and describing the performance or other relevant requirements of the procurement;and (7)Any arbitrary action in the procurement process. (b)The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state,local,or tribal geographical preferences in the evaluation of bids or proposals,except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E)services,geographic location may be a selection criterionprovideditsapplicationleavesanappropriatenumberof qualified firms,given the nature and size of the project,to compete for the contract. (c)The non-Federal entity must have written procedures for procurement transactions.These procedures must ensure that ail solicitations: (1)Incorporate a clear and accurate description of the technical requirements for the material,product,or service to be procured.Such description must not,in competitive procurements,contain features which unduly restrict competition.The description may include a statement of the qualitative nature of the material,product or service to be procured and,when necessary,must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use.Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements,a "brand name or equivalent”description may be used as a means to define the performance or other salient requirements of procurement.The specific features of the named brand which must be met by offers must be clearly stated;and (2)Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. (d)The non-Federal entity must ensure that all prequalified lists of persons,firms,or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition.Also,the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period. [78 FR 78608,Dec.26,2013,as amended at 79 FR 75885,Dec.19,2014] §200.320 Methods of procurement to be followed. The non-Federal entity must use one of the following methods of procurement. (a)Procurement by micro-purchases.Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (§200.67 Micro-purchase).To the extent practicable,the non-Federal entity must distribute micro-purchases equitably among qualified suppliers.Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable. (b)Procurement by small purchase procedures.Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies,or other property that do not cost more than the Simplified Acquisition Threshold.If small purchase procedures are used,price or rate quotations must be obtained from an adequate number of qualified sources. (c)Procurement by sealed bids (formal advertising).Bids are publicly solicited and a firm fixed price contract (lump sum or unit price)is awarded to the responsible bidder whose bid,conforming with all the material terms and conditions of the invitation for bids,is the lowest in price. The sealed bid method is the preferred method for procuring construction,if the conditions in paragraph (c)(1) of this section apply. (1)In order for sealed bidding to be feasible,the following conditions should be present: (i)A complete,adequate,and realistic specification or purchase description is available; (ii)Two or more responsible bidders are willing and able to compete effectively for the business;and (iii)The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principaily on the basis of price. 30 (2)If sealed bids are used,the following requirements apply: (i)Bids must be solicited from an adequate number of known suppliers,providing them sufficient response time prior to the date set for opening the bids,for local,and tribal governments,the invitation for bids must be publicaly advertised; (ii)The invitation for bids,which will include any specifications and pertinent attachments,must define the items or services in order for the bidder to properly respond; (iii)All bids will be opened at the time and place prescribed in the invitation for bids,and for local and tribal governments,the bids must be opened publicly; (iv)A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents,factors such as discounts,transportation cost,and life cycle costs must be considered in determining which bid is lowest.Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of;and (v)Any or all bids may be rejected if there is a sound documented reason. (d)Procurement by competitive proposals.The technique of competitive proposals is normally conducted with more than one source submitting an offer,and either a fixed price or cost-reimbursement type contract is awarded.It is generally used when conditions are not appropriate for the use of sealed bids.If this method is used,the following requirements apply: (1)Requests for proposals must be publicized and identify all evaluation factors and their relative importance.Any response to publicized requests for proposals must be considered to the maximum extent practical; (2)Proposals must be solicited from an adequate number of qualified sources; (3)The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients; (4)Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered;and (5)The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E)professional services whereby competitors'qualifications are evaluated and the most qualified competitor is selected,subject to negotiation of fair and reasonable compensation.The method,where price is not used as a selection factor,can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort. (e)[Reserved] (f)Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1)The item is available only from a single source; (2)The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3)The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or (4)After solicitation of a number of sources,competition is determined inadequate. [78 FR 78608,Dec.26,2013,as amended at 79 FR 75885,Dec.19,2014;80 FR 54409,Sept.10,2015] §200.321 Contracting with small and minority businesses,women's business enterprises,and labor surplus area firms. (a)The non-Federal entity must take all necessary affirmative steps to assure that minority businesses, women's business enterprises,and labor surplus area firms are used when possible. (b)Affirmative steps must include: (1)Placing qualified small and minority businesses and women's business enterprises on solicitation lists; (2)Assuring that small and minority businesses,and women's business enterprises are solicited whenever they are potential sources; (3)Dividing total requirements,when economically feasible,into smaller tasks or quantities to permit maximum participation by small and minority businesses, and women's business enterprises; (4)Establishing delivery schedules,where the requirement permits,which encourage participation by small and minority businesses,and women's business enterprises; (5)Using the services and assistance,as appropriate,of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce;and (6)Requiring the prime contractor,if subcontracts are to be let,to take the affirmative steps listed in paragraphs (1) through (5)of this section. §200.322 Procurement of recovered materials. Anon-Federal entity that is a state agency or agency of a political subdivision of a state and its contractors must comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA)at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition,where the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000;procuring solid waste management services in a manner that maximizes energy and resource recovery;and establishing an 31 affirmative procurement program for procurement of recovered materials identified in the EPA guidelines. [78 FR 78608,Dec.26,2013,as amended at 79 FR 75885,Dec.19,2014] §200.323 Contract cost and price. (a)The non-Federal entity must perform a cost or priceanalysisinconnectionwitheveryprocurementactionin excess of the Simplified Acquisition Threshold including contract modifications.The method and degree of analysis is dependent on the facts surrounding the particular procurement situation,but as a starting point,the non- Federal entity must make independent estimates before receiving bids or proposals. (b)The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed.To establish a fair and reasonable profit,consideration must be given to the complexity of the work to be performed,the risk borne by the contractor,the contractor's investment,the amount of subcontracting,the quality of its record of past performance,and industry profit rates in the surrounding geographical area for similar work. (c)Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the non-Federal entity under Subpart E-Cost Principles of this part.The non-Federal entity may reference its own cost principles that comply with the Federal cost principles. (d)The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used. §200.324 Federal awarding agency or pass-through entity review. (a)The non-Federal entity must make available,upon request of the Federal awarding agency or pass-through entity,technical specifications on proposed procurements where the Federal awarding agency or pass-through entity believes such review is needed to ensure that the item or service specified is the one being proposed for acquisition. This review generally will take place prior to the time the specification is incorporated into a solicitation document. However,if the non-Federal entity desires to have the review accomplished after a solicitation has been developed,the Federal awarding agency or pass-through entity may still review the specifications,with such review usually limited to the technical aspects of the proposed purchase. (b)The non-Federal entity must make available upon request,for the Federal awarding agency or pass-through entity pre-procurement review,procurement documents, such as requests for proposals or invitations for bids,or independent cost estimates,when: (1)The non-Federal entity's procurement procedures or operation fails to comply with the procurement standards in this part; (2)The procurement is expected to exceed the Simplified Acquisition Threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation; (3)The procurement,which is expected to exceed the Simplified Acquisition Threshold,specifies a "brand name” product; (4)The proposed contract is more than the Simplified Acquisition Threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or (5)A proposed contract modification changes the scope of a contract or increases the contract amount by more than the Simplified Acquisition Threshold. (c)The non-Federal entity is exempt from the pre- procurement review in paragraph (b)of this section if the Federal awarding agency or pass-through entity determines that its procurement systems comply with the standards of this part. (1)The non-Federal entity may request that its procurement system be reviewed by the Federal awarding agency or pass-through entity to determine whether its system meets these standards in order for its system to be certified.Generally,these reviews must occur where there is continuous high-dollar funding,and third party contracts are awarded on a regular basis; (2)The non-Federal entity may self-certify its procurement system.Such self-certification must not limit the Federal awarding agency's right to survey the system.Under a self-certification procedure,the Federal awarding agency may rely on written assurances from the non-Federal entity that it is complying with these standards.The non- Federal entity must cite specific policies,procedures, regulations,or standards as being in compliance with these requirements and have its system available for review. §200.325 Bonding requirements. For construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold,the Federal awarding agency or pass-through entity may accept the bonding policy and requirements of the non-Federal entity provided that the Federal awarding agency or pass-through entity has made a determination that the Federal interest is adequately protected.If such a determination has not been made,the minimum requirements must be as follows: (a)A bid guarantee from each bidder equivalent to five percent of the bid price.The "bid guarantee”must consist of a firm commitment such as a bid bond,certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will,upon acceptance of the bid, execute such contractual documents as may be required within the time specified. (b)A performance bond on the part of the contractor for 100 percent of the contract price.A "performance bond”is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract. (c)A payment bond on the part of the contractor for 100 percent of the contract price.A "payment bond”is one executed in connection with a contract to assure payment 32 as required by law of all persons supplying labor and material in the execution of the work provided for in the contract. §200.326 Contract provisions. The non-Federal entity's contracts must contain the applicable provisions described in Appendix Il to Part 200-Contract Provisions for non-Federal Entity Contracts Under Federal Awards. Subrecipient Monitoring and Management §200.330 Subrecipient and contractor determinations. The non-Federal entity may concurrently receive Federalawardsasarecipient,a subrecipient,and a contractor,depending on the substance of its agreements with Federal awarding agencies and pass-through entities. Therefore,a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.The Federal awarding agency may supply and require recipients to comply with additional guidance to support these determinations provided such guidance does not conflict with this section. (a)Subrecipients.A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient.See §200.92 Subaward.Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1)Determines who is eligible to receive what Federal assistance; (2)Has its performance measured in relation to whether objectives of a Federal program were met; (3)Has responsibility for programmatic decision making; (4)Is responsible for adherence to applicable Federal program requirements specified in the Federal award;and (5)In accordance with its agreement,uses the Federal funds to carry out a program for a public purpose specified in authorizing statute,as opposed to providing goods or services for the benefit of the pass-through entity. (b)Contractors.A contract is for the purpose of obtaining goods and services for the non-Federal entity's own use and creates a procurement relationship with the contractor.See §200.22 Contract.Characteristics indicative of a procurement relationship between the non- Federal entity and a contractor are when the contractor: (1)Provides the goods and services within normal business operations; (2)Provides similar goods or services to many different purchasers; (3)Normally operates in a competitive environment; (4)Provides goods or services that are ancillary to the operation of the Federal program;and (5)Is not subject to compliance requirements of theFederalprogramasaresultoftheagreement,thoughsimilarrequirementsmayapplyforotherreasons. (c)Use ofjudgment in making determination.|n determining whether an agreement between a pass- through entity and another non-Federal entity casts the latter as a subrecipient or a contractor,the substance of the relationship is more important than the form of the agreement.All of the characteristics listed above may not be present in all cases,and the pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract. (78 FR 78608,Dec.26,2013,as amended at 80 FR 54409,Sept.10,2015] Appendix Il to Part 200-Contract Provisions for Non- Federal Entity Contracts Under Federal Awards In addition to other provisions required by the Federal agency or non-Federal entity,all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following,as applicable. (A)Contracts for more than the simplified acquisition threshold currently set at $150,000,which is the inflation adjusted amount determined by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils)as authorized by 41 U.S.C. 1908,must address administrative,contractual,or legal remedies in instances where contractors violate or breach contract terms,and provide for such sanctions and penalties as appropriate. (B)All contracts in excess of $10,000 must address termination for cause and for convenience by the non- Federal entity including the manner by which it will be effected and the basis for settlement. (C)Equal Employment Opportunity.Except as otherwise provided under 41 CFR Part 60,all contracts that meet the definition of "federally assisted construction contract”in 41 CFR Part 60-1.3 must include the equal opportunity clause provided under 41 CFR 60-1.4(b),in accordance with Executive Order 11246,"Equal Employment Opportunity” (30 FR 12319,12935,3 CFR Part,1964-1965 Comp.,p. 339),as amended by Executive Order 11375,"Amending Executive Order 11246 Relating to Equal Employment Opportunity,”and implementing regulations at 41 CFR part 60,"Office of Federal Contract Compliance Programs, Equal Employment Opportunity,Department of Labor.” (D)Davis-Bacon Act,as amended (40 U.S.C,3141-3148). When required by Federal program legislation,all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C.3141- 3144,and 3146-3148)as supplemented by Department of Labor regulations (29 CFR Part 5,"Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”).In accordance with the statute,contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor.In addition,contractors must be required to pay wages not less than once a week.The 33 non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation.The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination.The non-Federal entity must report all suspected or reported violations to the Federal awarding agency.The contracts must also include a provision for compliance with the Copeland "Anti-Kickback”Act (40 U.S.C.3145),as supplemented by Department of Labor regulations (29 CFR Part 3, "Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”).The Act provides that each contractor or subrecipient must be prohibited from inducing,by any means,any person employed in the construction,completion,or repair of public work,to give up any part of the compensation to which he or she is otherwise entitled.The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. (E)Contract Work Hours and Safety Standards Act (40 U.S.C.3701-3708).Where applicable,all contracts awarded by the non-Federal entity in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C. 3702 and 3704,as supplemented by Department of Labor regulations (29 CFR Part 5).Under 40 U.S.C.3702 of the Act,each contractor must be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours.Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week.The requirements of 40 U.S.C.3704 are applicable to construction work and provide that no laborer or mechanic must be required to work in surroundings or under working conditions which are unsanitary,hazardous or dangerous.These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market,or contracts for transportation or transmission of intelligence. (F)Rights to Inventions Made Under a Contract or Agreement.If the Federal award meets the definition of "funding agreement”under 37 CFR §401.2 (a)and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties,assignment or performance of experimental,developmental,or research work under that "funding agreement,”the recipient or subrecipient must comply with the requirements of 37 CFR Part 401,"Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants,Contracts and Cooperative Agreements,”and any implementing regulations issued by the awarding agency. (G)Clean Air Act (42 U.S.C.7401-7671q.)and the Federal Water Pollution Control Act (33 U.S.C.1251- 1387),as amended-Contracts and subgrants of amounts in excess of $150,000 must contain a provision that requires the non-Federal award to agree to comply with all applicable standards,orders or regulations issued pursuant to the Clean Air Act (42 U.S.C.7401-7671q)and the Federal Water Pollution Control Act as amended (33 U.S.C.1251-1387).Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA). (H)Debarment and Suspension (Executive Orders 12549 and 12689)-A contract award (see 2 CFR 180.220)must not be made to parties listed on the governmentwide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp.,p.189)and 12689 (3 CFR part 1989 Comp.,p. 235),"Debarment and Suspension.”SAM Exclusions contains the names of parties debarred,suspended,or otherwise excluded by agencies,as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. (!)Byrd Anti-Lobbying Amendment (31 U.S.C.1352)- Contractors that apply or bid for an award exceeding $100,000 must file the required certification.Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency,a member of Congress,officer or employee of Congress,or an employee of a member of Congress in connection with obtaining any Federal contract,grant or any other award covered by 31 U.S.C.1352.Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award.Such disclosures are forwarded from tier to tier up to the non- Federal award. (J)See §200.322 Procurement of recovered materials. (78 FR 78608,Dec.26,2013,as amended at 79 FR 75888,Dec.19,2014] 34 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON,D.C.20503 OFFICE OF FEDERAL FINANCIAL MANAGEMENT June 20.2018 M-18-18 MEMORANDUM FOR CHIEF FINANCIAL OFFICERS AND HEADS OF SMALL EXECUTIVE AGENCIES ¢4 FROM:Tim Soltis «(70 Pn Deputy Controller,Office of Federal Financial Management SUBJECT:Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance In accordance with recent statutory changes set forth in the National Defense Authorization Acts (NDAA) for Fiscal Years 2017 and 2018,this memorandum raises the threshold for micro-purchases under Federal financial assistance awards to $10,000,and raises the threshold for simplified acquisitions to $250,000 for all recipients.Further,it implements an approval process for certain institutions that want to request micro-purchase thresholds higher than $10,000.Agencies are required to implement these changes in the terms and conditions of their awards,and recipients of existing Federal financial assistance awards may implement them in their internal controls. Background This memorandum applies to all Federal agencies,as defined at 5 U.S.C.§551(1),that award grants or cooperative agreements.It implements changes to the micro-purchase and simplified acquisition thresholds for financial assistance under the NDAAs for Fiscal Year (FY)2017 and FY2018.The micro- purchase threshold refers to purchases of supplies or services using simplified acquisition procedures,not to exceed an established amount pursuant to the Office of Management and Budget (OMB) Governmentwide Guidance for Grants and Agreements ("Uniform Guidance”)at 2 C.F.R.§200.67 (Micro-purchase).The simplified acquisition threshold refers to purchases of property or services using small purchase methods not to exceed an established amount pursuant to 2 C.F.R.§200.88 (Simplified acquisition threshold).For Federal financial assistance awards,these purchases are acquired for use by a Federal program.The NDAA for FY2017 increased the micro-purchase threshold from $3,500 to $10,000 for institutions of higher education,or related or affiliated nonprofit entities,nonprofit research organizations or independent research institutes (41 U.S.C.§1908).The NDAA for FY2018 increases the micro-purchase threshold to $10,000 for all recipients and also increases the simplified acquisition threshold from $100,000 to $250,000 for all recipients, Implementing the NDAA for FY2017 Section 217(b)of the NDAA for FY2017 raises the micro-purchase threshold to $10,000 for procurements under grants and cooperative agreements for institutions of higher education,or related oraffiliatednonprofitentities,nonprofit research organizations or independent research institutes.' Pub.L.No.114-328 (codified at 41 U.S.C.§1902(a)(2)). The NDAA for FY2017 also establishes an interim uniform process by which these recipients can request and Federal agencies can approve requests to apply a higher micro-purchase threshold.Specifically,the 2017 NDAA allows a threshold above $10,000 if approved by the head of the relevant executive agency. For purposes of this approval,the institution's cognizant Federal agency for indirect cost rates will be the relevant executive agency as defined in 2 C.F.R.§200.19 (Cognizant agency for indirect costs).To receive a higher threshold,the institution must either have "clean single audit findings”(i.e.,in accordance with 2 C.F.R.§200.520 -Criteria for a low-risk auditee),have an acceptable internal institutional risk assessment,or the higher threshold must be consistent with State law for public institutions. Agencies should reflect this change through policy or terms and conditions in awards for those institutions,The effective date for this change was when the NDAA for FY2017 was signed into law on December 23,2016.OMB intends to revise the Uniform Guidance to conform with the law.? Process for Requesting a Higher Threshold Under the NDAA for FY2017 Requests for approval should be submitted to the institution's cognizant Federal agency for indirect cost rates;however,institutions should contact the agency before sending the request to determine the correct point of contact.The cognizant Federal agency will assign review of the request to the appropriate office within the agency to determine whether to approve,and will maintain records andjustification of all approvals.The request should include the threshold level being requested and the justification(s)for it based on the criteria above per Section 2!7(b)of the NDAA for FY2017. Implementing the NDAA for FY2018 This memorandum also implements provisions of theNDAA for FY 2018,Pub.L.No.115-91,which became law on December 12,2017.Specifically,section 806 raised the micro-purchase threshold from $3,500 to $10,000,and section 805 raised the simplified acquisition threshold from $100,000 to $250,000.Pursuant to 2 C.F.R.§200.67 (Micro-purchase)and 2 C.F.R.§200.88 (Simplified acquisition threshold),these higher thresholds are not effective until implemented in the Federal Acquisition Regulation (FAR)at 48 C.F.R.Subpart 2.1 (Definitions).? In order to allow maximum flexibility for grant recipients in light of the changes to the NDAA for FY2018,OMB is granting an exception aJlowing recipients to use the higher threshold of $10,000 for micro-purchases and $250,000 for simplified acquisitions in advance of revisions to the FAR at 48 C.F.R. Subpart 2.1 and the Uniform Guidance.Pursuant to 2 C.F.R.§200.102 (Exceptions),OMB may allow exceptions to the Uniform Guidance when exceptions are not prohibited by statute.The exception takes effect upon the date of issuance of this memo.Agencies should apply this exception to all recipients. Recipients should document any change based on this exception in accordance with 2 C.F.R.§200.318 (General procurement standards). If you have any questions regarding this memorandum,please contact Mary Tutman at Mary.E.Tutman@omb.eop.gov or Gil Tran at Hai_M._Tran@omb.eop.gov. 2 The American Innovation and Competitiveness Act,Pub.L.No.114-329,§207(b)(2017)states that the Uniform Guidance shall be revised to conform with the requirements concerning the micro-purchase threshold. ?Codified at 41 U.S.C.§1902(f). 36 July 2017 Compliance Requirements L.REPORTING Compliance Requirements For purposes of programs included in Parts 4 and 5 of this Supplement,the designation "Not Applicable”in relation to "Financial Reporting,”"Performance Reporting,”and "Special Reporting”means that the auditor is not expected to audit anything in these categories,whether or not award terms and conditions may require such reporting. Financial Reporting Recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork contro!number on the form) when reporting to the Federal awarding agency.Each recipient must report program outlays and program income on a cash or accrual basis,as prescribed by the Federal awarding agency.Ifthe Federal awarding agency requires reporting of accrual information and the recipient's accounting records are not normally maintained on the accrual basis,the recipient is not required to convert its accounting system to an accrual basis but may develop such accrual information through analysis of available documentation.The Federal awarding agency may accept identical information from the recipient in machine-readable format,computer printouts,or electronic outputs in lieu of closed formats or on paper. Similarly,a pass-through entity must not require a subrecipient to establish an accrual accounting system and must allow the subrecipient to develop accrual data for its reports on the basis of an analysis of available documentation. The financial reporting requirements for subrecipients are as specified by the pass-through entity. In many cases,these will be the same as or similar to those for recipients. The standard financial reporting forms for grants and cooperative agreements are as follows: -Request for Advance or Reimbursement (SF-270)(OMB No.0348-0004)).Recipients are required to use the SF-270 to request reimbursement payments under non-construction programs,and may be required to use it to request advance payments. -Outlay Report and Request for Reimbursement for Construction Programs (SF-271) (OMB No.0348-0002)).Recipients use the SF-271 to request funds for construction projects unless they are paid in advance or the SF-270 is used. -Federal Financial Report (FFR)(SF-425/SF-425A)(OMB No.0348-0061)).Recipients use the FFR as a standardized format to report expenditures under Federal awards,as well as,when applicable,cash status (Lines 10.a,10.b,and 10c).References to this report include its applicability as both an expenditure and a cash status report unless otherwise indicated. Electronic versions of the standard forms are located on OMB's home page (http://www.whitehouse.gov/omb/grants_forms). Compliance Supplement 3.2-L-1 37 July 2017 Compliance Requirements Financial reporting requirements for cost reimbursement contracts subject to the FAR are contained in the terms and conditions of the contract. Performance and Special Reporting Non-Federal entities may be required to submit performance reports at least annually but not more frequently than quarterly,except in unusual circumstances,using a form or format authorized by OMB (2 CFR section 200.328(b)(1)).They also may be required to submit special reports as required by the terms and conditions of the Federal award. Compliance testing of performance and special reporting are only required for data that are quantifiable and meet the following criteria: 1.Have a direct and material effect on the program. 2.Are capable of evaluation against objective criteria stated in the statutes,regulations, contract or grant agreements pertaining to the program. Performance and special reporting data specified in Part 4,"Agency Program Requirements,” and Part 5,"Clusters of Programs,”meet the above criteria. Source of Governing Requirements Reporting requirements are contained in the following: 1,Financial reporting,2 CFR section 200.327. 2.Monitoring and reporting program performance,2 CFR section 200.328. 3.Program legislation. 4.Federal awarding agency regulations. 5.The terms and conditions of the award. Audit Objectives 1.Obtain an understanding of internal control,assess risk,and test internal control as required by 2 CFR section 200.514(c). 2.Determine whether required reports for Federal awards include all activity of the reporting period,are supported by applicable accounting or performance records,and are fairly presented in accordance with governing requirements. Compliance Supplement 3.2-L-2 38 July 2017 Compliance Requirements Suggested Audit Procedures -Internal Control 1.Perform procedures to obtain an understanding of internal control sufficient to plan the audit to support a low assessed level of control risk for the program. 2.Plan the testing of internal control to support a low assessed level of control risk for reporting and perform the testing of internal control as planned.If internal control over some or all of the compliance requirements is likely to be ineffective,see the alternative procedures in 2 CFR section 200.514(c)(4),including assessing the control risk at the maximum and considering whether additional compliance tests and reporting are required because of ineffective internal control. 3.Consider the results of the testing of internal control in assessing the remaining risk of noncompliance.Use this as the basis for determining the nature,timing,and extent (e.g., number of transactions to be selected)of substantive tests of compliance. Suggested Audit Procedures -Compliance Note:For recipients using HHS'Payment Management System (PMS)to draw Federal funds, the auditor should consider the following steps numbered 1 through 4 as they pertain to the cash reporting portion of the SF-425A,regardless of the source of the data included in the PMS reports.(During FY 2016,HHS is completing the transition from pooled payment to use of subaccounts).Although certain data is supplied by the Federal awarding agency (e.g.,award authorization amounts)and certain amounts are provided by HHS'Payment Management Services,the auditor should ensure that such amounts are in agreement with the recipient's records and are otherwise accurate. 1.Review applicable statutes,regulations,and the terms and conditions of the Federal award pertaining to reporting requirements.Determine the types and frequency of required reports.Obtain and review Federal awarding agency or pass-through entity,in the case of a subrecipient,instructions for completing the reports. a.For financial reports,ascertain the accounting basis used in reporting the data (e.g.,cash or accrual). b.For performance and special reports,determine the criteria and methodology used in compiling and reporting the data. 2.Select a sample of reports and perform appropriate analytical procedures and ascertain the reason for any unexpected differences.Examples of analytical procedures include: a.Comparing current period reports to prior period reports. b.Comparing anticipated results to the data included in the reports. c.Comparing information obtained during the audit of the financial statements to the reports. Compliance Supplement 3.2-L-3 39 July 2017 Compliance Requirements 3.Select a sample of each of the following report types,and test for accuracy and completeness: a.Financial reports (1) (2) (3) (4) Ascertain if the financial reports were prepared in accordance with the required accounting basis. Review accounting records and ascertain if all applicable accounts were included in the sampled reports (e.g.,program income,expenditure credits,loans,interest earned on Federal funds,and reserve funds). Trace the amounts reported to accounting records that support the audited financial statements and the Schedule of Expenditures of Federal Awards and verify agreement or perform alternative procedures to verify the accuracy and completeness of the reports and that they agree with the accounting records.If reports require information on an accrual basis and the entity does not prepare its accounting records on an accrual basis, determine whether the reported information is supported by available documentation. For any discrepancies noted in SF-425 reports concerning cash status when the advance payment method is used,review subsequent SF-425 reports to ascertain if the discrepancies were appropriately resolved with the applicable payment system. b.Performance and special reports (1) (2) Review the supporting records and ascertain if all applicable data elements were included in the sampled reports.Trace the reported data to records that accumulate and summarize data. Perform tests of the underlying data to verify that the data were accumulated and summarized in accordance with the required or stated criteria and methodology,including the accuracy and completeness of the reports. c.For each type of report (1) (2) When intervening computations or calculations are required between the records and the reports,trace reported data elements to supporting worksheets or other documentation that link reports to the data. Test mathematical accuracy of reports and supporting worksheets. Compliance Supplement 3.2-L-4 40 July 2017 Compliance Requirements 4.Obtain written representation from management that the reports provided to the auditor are true copies of the reports submitted or electronically transmitted to the Federal awarding agency,the applicable payment system,or pass-through entity in the case of a subrecipient. Compliance Supplement 3.2-L-5 41