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Home My WebLink AboutBPMC Jan 29, 2016BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska @January29,2016 (0 1.CALL TO ORDER Chair Borgeson called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:33 a.m. 2.ROLL CALL (for Committee members) Cory Borgeson (Golden Valley Electric Association [GVEA]);Sara Fisher-Goad (Alaska Energy Authority [AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony Izzo (Matanuska Electric Association [MEA]);Mark Johnston (Anchorage Municipal Light &Power [MLP]);John Foutz (City of Seward (phone));and Harvey Ambrose (Homer Electric Association [HEA]). 3.PUBLIC ROLL CALL (for all others present) Jocelyn Garner,Kirk Warren,Teri Webster (AEA);Dave Gillespie (ARCTEC);Brian Bjorkquist (Attorney General's Office [AGO]);Brian Hickey,Burke Wick (CEA);Allen Gray,Ron Woolf (GVEA);Bob Day,Emily Hutchinson,Alan Owens (HEA);Kirk Gibson (McDowell Rackner & Gibson);Gary Kuhn,David Pease (MEA);Mollie Morrison,Jeff Warner (MLP);Stan Hayes (MWH);Bernie Smith (Public);Gary Dixon (Swalling &Associates);and Sydney Hamilton (Accu-Type Depositions). 4.AGENDA COMMENTS/MOTION FOR APPROVAL MOTION:Mr.Thibert made a motion to add Item 7C.Capital Programs to the agenda. Motion seconded by Mr.Johnston. The motion passed to amend the agenda. 5.PUBLIC COMMENTS None. 6.APPROVAL OF PRIOR MEETING MINUTES -November 17,2015 Mr.Ambrose made a correction to Item 10 of the November 17,2015 minutes where it states Mr.Harvey and should read Mr.Ambrose. MOTION:Mr.Thibert made a motion to approve prior meeting minutes of November 17, 2015,as corrected.Motion seconded by Mr.Johnston. The motion passed unanimously to approve the prior meeting minutes of November 17, 2015,as corrected. 7.OLD BUSINESS A.Dynamic Scheduling BPMC Minutes 1/29/16 Page |of 6 Mr.Wick informed a brief memo was provided to members in their packet.Dynamic scheduling has been implemented with ML&P since December.The intent is to bring on one utility a month,with GVEA being next in line. Chair Borgeson expressed his appreciation for the efforts by CEA and ML&P.This is important because of the new standard for avoided cost.Mr.Wick noted most of the effort is from the SCADA representatives of the utilities working very closely together.This is not a simple process. B.Fish Screen Cleaning Mr.Wick reported a chart was emailed to the members showing the draw-down of the lake water is on track with the timing of the project,with a minimal financial impact on lost water to the utilities. Mr.Owens directed the members to the Bradley Lake Fish Water Screen Debris Report included in their packet.He noted additional pictures of debris are contained within the report. The request for proposals (RFP)resulted in four written proposals.GMC Contracting has been awarded the bid.The projected mobilization date is April 5th.The expected finish date is May 5th,but could be extended to June 5th,if necessary.The estimated labor and equipment cost for a May 5th finish date is $241,000.If the project is extended,the additional cost of standby equipment rates will apply.The standby rates are 25%of normal rates,which would add approximately $50,000.Landing craft,fuel deliveries,and fabrication of a backup screen are examples of additional costs of the project.The total project cost is anticipated at $450,000 to $500,000. Mr.Day informed the O&D Committee is committed to this project and passed a resolution that included the lake level should be at 1,070 elevation as of April 15th.Mr.Day is pleased with the status of the project and noted initial cost estimates were above one million dollars. Mr.Owens gave a description of the process for removing the debris from the fish screens. Mr.Thibert asked for the project's biggest risk.Mr.Owens stated the biggest risk is the participants not being able to drain the lake,which leads to postponing the project and not meeting fish water flow requirements. Cc.Capital Project Mr.Thibert explained the SVC replacement project is approximately $7.2 million.He believes recovering this cost through the R&C Fund would impact rates greater than through financing. Mr.Thibert requested reconsideration of longer-term financing based on the May report from AEA regarding the financial considerations related to the replacement of the SVC. Chair Borgeson agreed it is a good idea to reconsider longer-term financing.Chair Borgeson gave an assignment to the Budget Committee to review options and report back at the next meeting.There were no objections from members. Mr.Ambrose noted HEA would not support financing that involves an extension of the bonds for the Bradley Project but would be agreeable to an interim fund that is complete before the other matures. 8.NEW BUSINESS A.FY15 Financial Report BPMC Minutes 1/29/16 Page 2 of 6 Chair Borgeson requested Mr.Dixon provide the FY15 Financial Report.Mr.Dixon explained the annual financial audit of the operating and revenue funds has been completed.Included in the member packets are the Auditor's Report and the Financial Statements.Mr.Dixon informed the audits include the review of bond indenture requirements and Committee requirements.No adjustments to any of the numbers in the AEA statements were requested.No difficulties were encountered in working with the AEA accountants and there were no exception findings.Mr. Dixon reviewed specific line items of the report. Mr.Thibert asked when and if there is an appropriate time to disclose the 2013-06 Change of Project Operator in a report.Mr.Dixon noted this is a discretionary item and would be appropriate to include in the next report to comply with the two-year notice.Mr.Thibert corrected the report to read static var compensation rather than static variance compensation. Chair Borgeson commented on the positive financial performance and noted most budgeted items came in below their budgeted amounts.He expressed his appreciation for the work in staying under budget.Chair Borgeson asked if there were any significant changes in the cost of project operation from year-to-year.Mr.Dixon noted the focus of this report is to validate the actual costs to the budgeted costs and not a year-to-year comparison. Mr.Johnston asked if it would make more sense to transfer the remaining balance refund due to the utilities to the R&C Fund to help fund the SVC project,rather than the utilities receiving a refund and then providing a contribution to the R&C Fund.Ms.Garner indicated after the motion is approved today,refunds will go out to the utilities next week.She informed the bond indenture provision would also have to be reviewed to ensure a transfer of funds would be in compliance.Mr.Gibson commented each utility accounts for power adjustments and SVC costs differently.Mr.Day informed this suggestion was reviewed previously and there were internal accounting issues for individual utilities regarding the separation of the operating funds and R&C funds.Chair Borgeson requested the Budget Committee review this suggestion for next year and see if the accounting issues can be resolved. MOTION:Mr.Ambrose made a motion to adopt the written motion in the packet associated with Item 8A.Motion seconded by Mr.Thibert. The motion passed unanimously. Chair Borgeson expressed his appreciation to Mr.Dixon and Ms.Garner for their efforts. B.Bradley Management Audit Report Chair Borgeson requested Mr.Hayes provide the Audit Report led by MWH.Mr.Hayes expressed his appreciation to AEA and the Committee for the opportunity to perform the audit and provide opinions.Mr.Hayes explained the scope of the audit,to include a condition assessment,review of agreements,staffing,O&M overview and budgets,capital projects and costs,and license compliance.Mr.Hayes provided an overview of the findings and recommendations.Overall the report found everything within reasonable perimeters. Chair Borgeson requested clarification of the description of an unmanned plant.Mr.Hayes stated unmanned means there is no permanent stationed employee at the plant,even if an employee visits daily. Chair Borgeson asked if this audit reviewed HEA's practice of billing a percentage of time to the project,rather than billing by actual hours.He noted the hours billed on each timesheet are BPMC Minutes 1/29/16 Page 3 of 6 exactly the same and the specific hours are not being tracked.Mr.Hayes reported the audit information provided shows HEA is billing by hours.Mr.Ambrose stated hours are billed to the project.The time spent on the project is not recorded by minutes,and is based on the approximation of 24%of Mr.Ambrose's salary and 50%of Mr.Day's salary. Chair Borgeson noted the allocation and tracking of time is necessary so the project has the knowledge and a record of what time is required of management.Chair Borgeson hopes the Budget Committee will instill HEA track their management time comparable to other professionals who track and bill their time. Mr.Hayes suggested utilizing a similar system used by AEA to require timesheets and hours on a weekly basis and the production of a monthly report describing their project activities. Mr.Thibert inquired as to the percentage of third-party contractors conducting maintenance in the Lower 48.Mr.Hayes noted there is a wide variance by project as to what core staff is maintained in-house and what is contracted by a third-party. Chair Borgeson asked for examples of potential contractors for work at the Bradley Project.Mr. Hayes indicated firms like HCMS and AES provide operation and maintenance services.No quotes were received for comparison of the current O&M costs. Mr.|zzo asked what source was used for the benchmark data.Mr.Hayes noted the report contains the five benchmarks applied and consists largely of U.S.facilities,both public and private.Most of the data does not reflect that last two or three years'of operation. Mr.Ambrose asked in Mr.Hayes'experience,if third-party contractors conducting maintenance provide the service at cost or with a margin of profit.Mr.Hayes stated there is always a profit or fee on top of the cost.Mr.Ambrose asked if Mr.Hayes understands HEA provides the maintenance at the cost set by the Committee.Mr.Hayes agreed. Chair Borgeson asked what risks may be increased by changing an operator.Mr.Hayes explained the increase in risk is the lack of familiarity with the plant facility.One of the recommendations is to accelerate the 5-year process of making the plant O&M manuals current. Mr.Ambrose asked for clarification regarding who would be trained under the recommendation for fire brigade training.Mr.Hayes clarified the contract or arrangement for a fire brigade would be made with the City of Homer Fire Department. Chair Borgeson requested recommendations on the continuity of succession management as knowledgeable people retire or move on to other opportunities.Mr.Hayes believes having an apprentice as one of the FTEs is important. Ms.Fisher-Goad requested clarification be provided to AEA as soon as possible regarding the automatic renewal timeline and next steps for renewal or non-renewal of the operator.Chair Borgeson gave an assignment to Mr.Gibson to inform the Committee on making the decision regarding the operator after HEA's five-year contract expires.Mr.Gibson will report at the next meeting and recommends the Committee takes action before July ist.Notice of termination by either party shall be given two years in advance. 9.COMMITTEE REPORTS A.Budget Committee -Budget to Actuals Update BPMC Minutes 1/29/16 Page 4 of 6 Mr.Woolf informed Ms.Garner will present the update.He stated there was nothing unusual inthereport.Legal costs were over budget for justifiable reasons and the year-to-date number forauditexpensesshowsoverbudgetbecausethewholeyear's work has been completed compared to the proportional number listed in the budget. Ms.Garner provided the budget to actuals report.The O&M is under budget by $600,000 to- date.The administration costs that are more than $20,000 over budget are explained in the report. Mr.{Zzo requested clarification regarding where to locate the wheeling payments to HEA.Mr. Wick does not believe wheeling payments are in the Bradley budget.Ms.Fisher-Goad believes Chair Borgeson requested at the last meeting that AEA account for the payments to HEA resulting from the implementation of the resolution.Ms.Fisher-Goad stated she emailed members regarding the issue and has not received any responses.Ms.Fisher-Goad indicated the staff time to provide this information would be outside the current Bradley management fee and an additional fee to provide the service would be necessary. Chair Borgeson stated this item will be on the agenda at the next meeting.He asked Mr. Thibert if CEA is making the wheeling payments to HEA.Mr.Thibert indicated this is a gooditemfordiscussionatthenextmeeting. Chair Borgeson asked the Budget Committee to conduct a three-hour budget workshop for the Budget Committee,O&D Committee,and the BPMC Committee.The workshop will be combined with a BPMC meeting and was scheduled for March 4th,beginning at 8:30 a.m.Mr. Ambrose requested an agenda be provided in advance.Mr.Woolf agreed. 10.OPERATORS REPORT Mr.Owens provided the Committee with a written copy of the Operators Report.The unit two outage for the nozzle rebuild was postponed due to the upcoming fish water debris removal contract.The tentative reschedule date for the nozzle rebuild is May 23rd.Mr.Owens informed a comprehensive post-earthquake inspection was completed on the dam and on the facility.No notable damage was found. Mr.Owens advised a fairly comprehensive budget will be presented to the O&D Committee at their next meeting in February.He stated a foreman at Bradley has submitted his resignation due to retirement and the discussion regarding apprentices at Bradley will be considered. 11.COMMITTEE ASSIGNMENTS Chair Borgeson assigned the capital project financing to the Budget Committee.Chair Borgeson assigned Mr.Gibson the articulation of the process regarding the renewal of the operator contract.Chair Borgeson assigned CEA to report back on the payments to HEA under its agenda item at the next meeting. 12.MEMBERS COMMENTS Ms.Fisher-Goad noted AEA sent out a report of AEA/Bradley Lake activities on January 22nd, 2016.She stated the Cook Inlet Aquiculture Association requested the use of the Martin River borrow ponds for sockeye salmon broodstock.AEA is working with the Association to refine the request before it can be presented to the Committee. Mr.Ambrose expressed appreciation for the mitigation work conducted. BPMC Minutes 1/29/16 Page 5 of 6 Chair Borgeson expressed appreciation to the presenters. Mr.Thibert expressed appreciation for the Audit Report and Operator Report. 13.NEXT MEETING DATE -TBD The next meeting date will occur March 4th after the budget workshop. 14.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 12:03 p.m. Sara Fisher= Alaska Energy Authority,Secretary BPMC Minutes 1/29/16 Page 6 of 6 rmWAARYELVBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Friday,Jan.29,2016 9:30 a.m.-11:30 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by teleconference,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL AGENDA COMMENTS /MOTION FOR APPROVAL PUBLIC COMMENTS APPROVAL OF MEETING MINUTES -Nov.17,2015 OLD BUSINESS A.Dynamic Scheduling CEA/MLP B.Fish Screen Cleaning HEA NEW BUSINESS A.FY15 Financial report AEA /Swalling &Assoc B.Bradley Management audit report AEA /MWH COMMITTEE REPORTS A.Budget Committee -Budget to Actuals update OPERATORS REPORT COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -TBD ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska November 17,2015 1.CALL TO ORDER Chair Borgeson called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:30 a.m. 2.ROLL CALL (for Committee members) Cory Borgeson (Golden Valley Electric Association [GVEA]);Sara Fisher-Goad (Alaska Energy Authority [AEA]);Burke Wick (Chugach Electric Association [CEA]);Joe Griffith (Matanuska Electric Association [MEA](phone));Mark Johnston (Anchorage Municipal Light &Power [MLP]);John Foutz (City of Seward);and Harvey Ambrose (Homer Electric Association [HEA]). 3.PUBLIC ROLL CALL (for all others present) Salina Bearden,Bryan Carey,Kelli Veech,Kirk Warren,Teri Webster (AEA);Crystal Enkvist, Mel Hutchison (Alaska Power Association);Brian Bjorkquist (Attorney General's Office);Rick Baldwin,Bob Day,Alan Owens (HEA);Kirk Gibson (McDowell Rackner &Gibson);Gary Kuhn (MEA);Andy Leman (KNG/MLP);Anna Henderson,Jeff Warner (MLP);Dave Gillespie,Bernie Smith (Public);and Jane Smyth (Accu-Type Depositions). 4.AGENDA COMMENTS/MOTION FOR APPROVAL MOTION:Mr.Foutz made a motion to approve the agenda.Motion seconded by Mr. Wick. Mr.Ambrose objected to agenda Items 7,11.1 and 11.3 and noted these were issues under litigation and outside the jurisdiction of the Committee. MOTION:Mr.Ambrose made a motion to remove Items 7,11.1.and 11.3 from the agenda. The motion by Mr.Ambrose failed due to the lack of a second. Mr.Wick suggested Items 8B.and 8C.are essentially the same item.Chair Borgeson agreed and noted Item 9.will follow Item 8B. The motion passed to approve the agenda as presented,with Mr.Ambrose voting against. 5.PUBLIC COMMENTS None. 6.APPROVAL OF PRIOR MEETING MINUTES -September 25,2015 DRAFT BPMC Minutes 11/17/15 Page 1 of 5 MOTION:Mr.Foutz made a motion to approve prior meeting minutes of September 25, 2015.Motion seconded by Mr.Wick. Mr.Foutz corrected the spelling of Mr.Risse's name on the public roll call. The motion passed unanimously to approve the prior meeting minutes of September 25, 2015,as corrected. 7.OLD BUSINESS A.Resolution 14-11 -Mediation or dispute resolution process Chair Borgeson requested Mr.Gibson provide a brief summary of this agenda item.Mr.Gibson reviewed the nine issues Resolution 14-11 addressed.He advised the BPMC currently holds jurisdiction,until the Supreme Court provides a ruling. Chair Borgeson requested Mr.Wick address the compliance with the payments required under 14-11.Mr.Wick reported the history of events since January 1,2014,when HEA ceased being a wholesale customer of CEA.Based on Resolution 14-11,and as of the end of October 2015, Mr.Wick informed HEA is owed a total of $550,000,minus any payments received. Mr.Ambrose objected to the discussion of these issues in this forum. Chair Borgeson advised the utilities to continue paying HEA pursuant to Resolution 14-11.Mr. Griffith agreed.Mr.Wick noted HEA returned CEA's payment checks unprocessed.Chair Borgeson requested AEA invoice the utilities for their share of the payment,after which AEA will provide the total payment check to HEA.Ms.Fisher-Goad stated she will research this option with accounting and report back to the Committee. 8.NEW BUSINESS A.Access permit request by Troy Jones Ms.Fisher-Goad requested Mr.Carey discuss the correspondence and appropriate actions for this item.Mr.Carey reviewed the access permit request by Mr.Jones and discussed the memorandum provided to the Committee. Mr.Ambrose requested the maintenance and use of the Battle Creek bridge be considered as part of the final disposition.Mr.Owens informed the current estimate of labor and material to repair the top layer of both bridges came in at $166,000. Mr.Johnston asked if the BPMC has liability if anything happens to permittees when they cross the project land.Ms.Fisher-Goad advised the second page of the preliminary permit lists conditions,including indemnification.The bridge concerns and other liability issues could be included under safety conditions of the permit.The preliminary permit does not require the permittee to hold insurance or bonding,and could be added. Chair Borgeson asked how many property holders may want similar access.Mr.Carey indicated Bear Cove has approximately 20 to 30 property owners and access is mostly by boat or plane.Chair Borgeson asked if it would negatively affect the project if all of the property owners requested land access permits.Mr.Carey does not believe the small increase in traffic DRAFT BPMC Minutes 11/17/15 Page 2 of 5 would degrade the project.Chair Borgeson asked if Mr.Jones can access his property without going through the project.Mr.Carey noted Mr.Jones has owned the property for 20 to 30 years,and assumes Mr.Jones has a boat or a plane to access the property without going through the project. Chair Borgeson inquired about the cost of the process to provide a permit.Mr.Carey informed AEA has little to no cost,Department of Law may have a small cost,and the agencies probably will have no cost.He does not foresee a need for publishing costs.Ms.Fisher-Goad indicated a permit fee would be required. Chair Borgeson requested the operator provide comments regarding this issue and any potential problems.Mr.Owens informed HEA's safety and liability concerns were submitted to the state in written form.He believes the proposed permit addresses HEA's concerns and restrictions could be included to address concerns of commercial activity. Mr.Wick asked what research has been conducted regarding the public process during the development of Bradley Lake referencing land owner access.Mr.Carey noted the microfiche records have not been searched.Mr.Bjorkquist reported his research of the FERC license did not show any reference to the project developers assuring traditional access to land owners. MOTION:Mr.Griffith made a motion authorizing AEA to continue work on the permit for the landowner and to bring a final permit to the BPMC for approval.Motion seconded by Mr.Ambrose. Mr.Ambrose commented a good faith effort is appropriate to allow property owners access to their land and requested the operator be given explicit direction regarding access and indemnification. Mr.Johnston noted ML&P would be in favor of the permit only if it includes a liability requirement for the permittee to hold a million-dollar umbrella insurance policy or bond. The motion passed unanimously. B.Dynamic Scheduling Chugach/ML&P C.Update on Dynamic Dispatch Report by Burke Wick (CEA) Mr.Wick provided the update on dynamic scheduling.He noted a revised approach is being developed by ML&P and CEA to run it as a plant vs.individual units.ML&P's SCADA system will send commands to CEA's system which will communicate with the plant.Individual utilities will not communicate with the plant directly.CEA will subsequently address scheduling with HEA,GVEA,and MEA,as needed. Chair Borgeson asked if GVEA buys power from ML&P,will GVEA be able to piggyback on ML&P's scheduling to regulate GVEA's wind.Mr.Wick noted schedules can be changed on an hourly basis.Mr.Warner believes capacity transfers can occur. 9.COMMITTEE REPORTS None. DRAFT BPMC Minutes 11/17/15 Page 3 of 5 10.OPERATORS REPORT Mr.Owens informed there were no actionable items in the provided Operators Report.The long-term R&R final report is expected to be released at the end of November.Mr.Day noted the preparation is on track to pull the lake level down.The project is dependent on weather. Heavy snow could present a problem,and very little snow could present a different problem. Mr.Day advised the BPMC will be informed as to project progress and weather obstacles. Mr.Foutz requested further explanation of the difference between the Water Release Plan and the fishwater flow requirement.Mr.Owens explained the Water Release Plan includes lake drainage and removal of debris,while maintaining fishwater flow requirements. Chair Borgeson asked for additional information on the debris removal plan.Mr.Owens described the five phases of the scope of work and debris removal concept.The comprehensive scope of work was provided to the O&D Committee last week. MOTION:A motion was made by Mr.Foutz to go into Executive Session to discuss confidential legal and financial matters regarding HEA's antitrust claims,MEA's letter to AEA,and the change in AEA position regarding HEA transmission issue and notification of intent to elevate the issue.Motion seconded by Mr.Johnston. Mr.Ambrose restated his objection to Items 1.and 3.under Executive Session. Ms.Fisher-Goad informed a public records request has been submitted for a copy of the correspondence between AEA and MEA under Item 2. Mr.Gibson advised per the bylaws,it is appropriate to discuss information in executive session which the immediate knowledge may have an adverse effect on the finances of the Authority or the Committee.It is also appropriate,per the bylaws,to discuss information in executive session with the attorney which could have an adverse effect from a legal position of the Authority or the Committee. Chair Borgeson informed the utilities can designate staff and/or council to attend executive session. The motion was approved,with Mr.Harvey voting against. 11.EXECUTIVE SESSION:10:50 a.m. 1.HEA's antitrust claims 2.MEA's letter to AEA 3.Change in AEA position regarding HEA transmission issue and notification of intent to elevate the issue The Committee reconvened its regular meeting at 11:34 a.m. 12.COMMITTEE ASSIGNMENTS Chair Borgeson assigned Mr.Gibson to review BPMC enforcement of Resolution 14-11 and to advise on whether or not the BPMC should incorporate as an entity or stay an unincorporated association. DRAFT BPMC Minutes 11/17/15 Page 4 of 5 Chair Borgeson requested Ms.Fisher-Goad research if AEA could invoice the utilities for their share of the Resolution 14-11 payment to HEA,after which AEA would provide the total payment check to HEA. 13.MEMBERS COMMENTS Mr.Ambrose expressed his appreciation to the utilities for working to get the lake level down. Ms.Fisher-Goad expressed her appreciation to Mr.Day and Mr.Owens for their great work in vetting all the issues involved in the debris removal project.The work is important to the license and presents many challenges and complications. Chair Borgeson expressed his appreciation for the reports and updates given today.He thanked Mr.Carey for his work on the permit and believes area property owners should be accommodated,if done safely and with little impact to the project. 14.|NEXT MEETING DATE The next meeting date is to be determined in January. 15.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 11:37 a.m. BY: Cory Borgeson,Chair Attest: Bryan Carey Alaska Energy Authority,Secretary DRAFT BPMC Minutes 11/17/15 Page 5 of 5 TA CHUGACH ELECTRIC ASSOCIATION,INC January 27,2016 To:Bradley Lake Project Management Committee From:Burke Wick,Director,System Control AGC logic is now in place to accept data requests from all parties via ICCP as presented to the O&D committee in May 2014.Testing has been completed with ML&P and Dynamic Scheduling has been in place since December.Chugach SCADA can begin moving forward working with other utilities on the data exchange and coordination.Steps to implement are: °Coordinate ICCP data exchange External utilities complete their AGC changes to send requests Test ICCP data exchanges Test control Chugach has recently provided the ICCP data exchange list to GVEA. Chugach will work with our SCADA consultant,Kevin Parsons,to provide a document on implementation and operating considerations and restrictions.if the O&D would like to provide an implementation schedule we can accommodate.We would like to limit implementation to 1 party per month so that issues that may be unique to each utility can be worked thru. "7B Bradley Lake Fishwater Screen Debris Removal Report BPMC Meeting January 29,2016 Projects: 1)Fishwater screen debris removal -Six contractors contacted HEA regarding the Fisnhwater Debris Removal RFP and four contractors provided proposals. East Road Services CIC Inc. GMC Contracting Gregoire Construction Each proposal was reviewed based on price,proposed equipment to be provided,contractor debris removal techniques,and overall project concept. GMC Contracting provided the best value proposal and will be awarded the project. Anticipated mobilization dates are scheduled during the high tide periodbeginningApril5th.Proposed demobilization dates are May 5"or June 3"¢. Several factors will determine the start date,duration,and cost of the project. 1.Ability of the Bradley Lake Participants to reduce lake level.Current lake level is1114.7'.Target lake level by April 15"is 1070'.Refer to the attached lake level trend demonstrating level reduction over the past 33 days. 2.Accumulation of ice and snow on the dam access road and lake. 3.Duration the contractor equipment is on site pending access and high tide periods. Projected cost of contractor personnel and equipment is as follows: Best case scenario work completed in 35 day window -$241,600 Extended standby time scenario -60 day window -approx.$290,000. Additional contractors will provide the following services: a.Landing craft transportation services,(Alaskan Coastal Freight}-$60,000 b.Fuel delivery and storage tanks (7000 -8000 gallons of diesel $40,000 - $50,000 depending on project duration. c.Fabrication of a backup fishwater intake screen (proposals pending} Bradley Lake Fishwater Screen Debris Removal Project Report Page 1 Lake level drawdown trend over the past 33 days Trend -Live 33.3 days 1725/2016 11-0000 PMOPT-LAK-AVL UNIT1@NET LAKE LEVEL 91460 FT)Scam po ;oo 12/24/2015 -1127.5 ft. ae an :' Ran ON ; - .a 33 days =13 ft.of level drawdown NN 01/26/2016 e me |1114.7 ft.45 feet of drawdown remaining P| bf __oe of gh gh Pgh gh gh at at oh gtPPLAESALPLELE 1426/2016 12 §1 36 PM he Diversion tunnel access road erosion,Lakelevel 11 1%.za----;-- Shore erosion to be rebuilt by contractor, two possible initial section access options. Bradley Lake Fishwater Screen Debris Removal Project Report Page 2 Overview of project access eae ee eee ae fasaseidaicéBradley Lake Fishwater Screen Debris Removal Project Report Page 3 BRADLEY LAKE LEVEL January 25,2016 with target level 1180 4 Spill J -- -™._---MaximoTieOutofService-S DrawdownRate 1080 +r DATE 20-VJun 11-Jul 1-Aug 22-Aug 12-Sep 3Oct 24-Oct 14Nov 5-Dec 26-Dec 16-Jan 6-Feb 27-Feb 20-Mar 10-Apr 1-May 22-May --96-'97 amme Average --Target --Minimum oom 15-16 1190 1180 1170 1160 1150 1140 1130 1120 1110 1100 1090 1080 1070 1060 BRADLEY LAKE LEVEL January 25,2016 with target level Spill CSSLZ Maximunh ry wl Tie Out of Serv mebeteell Rate To"Minimum °aa "BAN were A percent wie DATE 20-Jun 11-Jui 1-Aug 22-Aug 12-Sep 3-Oct 24-Oct 14-Nov 5-Dec 26-Dec 16-Jan 6-Feb 27-Feb 20-Mar 10-Apr 1-May 22-May --96-'97 ome Average --Target =Minimum ome 15-16 Bradley Lake Project Management Committee Meeting Friday,January 29,2016 Agenda Item:8A -Approval of O&M and R&C refund MOTION:Move that the Bradley Lake Project Management Committee accept the fiscal year 2015 Audit Report and approve a refund of $1,414,464 ($1,394,253 O&M and $20,211 R&C)to the utilities. Move: Second: Financial Statements and Supplementary Information BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Years ended June 30,2015 and 2014 (With Independent Auditor's Report)| SWALLING &ASSOCIATESCertifiedPublicAcentants&Business Advisers Bradley Lake Project Management Committee Meeting Friday,January 29,2016 Agenda Item:8A --Approval of O&M and R&C refund MOTION:Move that the Bradley Lake Project Management Committee accept the fiscal year 2015 Audit Report and approve a refund of $1,414,464 ($1,394,253 O&M and $20,211 R&C)to the utilities. Move: Second: BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Financial Statements and Supplementary Information Years ended June 30,2015 and 2014 Contents Page Independent Auditor's Report 1-2 Statements of Assets and Liabilities 3 Statements of Revenues and Expenses 4 Statements of Cash Flows 5 Notes to Financial Statements 6-11 Independent Auditor's Report on Supplementary Information 12 Statements of Expenses 13 SWALLING &ASSOCIATES Certified Pablie Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT Bradley Lake Project Management Committee Anchorage,Alaska We have audited the accompanying special-purpose financial statements of the Bradley Lake Project Management Committee (a project management committee)Operating and Revenue Funds,which comprise the special-purpose statements of assets and liabilities as of June 30, 2015 and 2014,and the related special-purpose statements of revenues and expenses and special- purpose statements of cash flows for the years then ended,and the related notes to the financial statements. Management's Responsibility for the Financial Statements The Bradley Lake Project Management Committee is responsible for the preparation and fair presentation of these special-purpose financial statements in accordance with the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond Resolution as described in Note A.The Bradley Lake Project Management Committee is also responsible for the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special-purpose financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.In making those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3201 C Street.Suite 405 °Anchorage.Alaska 99503aIndependentmemberofDEKbaternational-a worldwide association .of independent oecounting firms and business odvisers Ph 907.563.7977 -Fax 907.561.7683 -www.swallingcpas.com Bradley Lake Project Management Committee Opinion In our opinion,the special-purpose financial statements referred to above present fairly,in all material respects,the assets and liabilities of the Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30,2015 and 2014,and the revenues and expenses,and cash flows for the years then ended,on the basis of accounting described in Note A. Basis of Accounting We draw attention to Note A of the special-purpose financial statements,which describes the basis of accounting.The financial statements are prepared on the basis of the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond resolution,as discussed in Note A,which is a basis of accounting other than accounting principles generally accepted in the United States of America, to comply with accounting requirements of the bond resolution referred to above.Our opinion is not modified with respect to that matter. Restriction on Use This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Funlling f Qeaceuly PC. Anchorage,Alaska December 17,2015 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF ASSETS AND LIABILITIES June 30,2015 and 2014 2015 2014 ASSETS Current assets: Investments (Note B)$2,283,946 $2,277,717 _Due from R &C Fund (Note A)20,211 279,247 Other receivable 520,416 25,865 Prepaid expense 52,258 6,205 Total assets $2,876,831 $2,589,034 LIABILITIES Current liabilities: Due to AEA (Note D)$26,176 $91,502 Accounts payable 934,327 1,083,899 Due to R &C Fund (Note A)69,953 - Payable to utilities -O &M (Note E)1,394,253 1,134,386 Payable to utilities -R &C refund (Note A)20,211 279,247 Unearned revenue (Note A)431,911 - Total liabilities $2,876,831 $2,589,034 See accompanying notes to the financial statements. 3 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUES AND EXPENSES Years ended June 30,2015 and 2014 2015 Variance Favorable 2014 Budget Actual (Unfavorable)Actual Revenues: Utility contributions, net of surplus refund $18,094,728 $16,680,264 $(1,414,464)$16,260,994 Interest receipts 1,859,550 1,856,550 (3,000)1.879.404 Total revenue 19,954,278 18,536,814 (1,417,464)18,140,398 Expenses,fixed asset replacements,transfers and debt service: Operations and maintenance 6,786,358 5,348,243 1,438,115 5,505,175 Debt service 12,475,850 12,475,850 -12,104,950 Arbitrage transfer 292,000 298,316 (6,316)292,694 Fixed asset replacements 281,704 254,039 27,665 193,549 Interfund transfer 118,366 160,366 (42.000)44.030 Total expenses,fixed asset replacements, transfers and debt service 19,954,278 18,536,814 1,417,464 18,140,398 Excess of revenues over expenses,fixed asset replacements,transfers and debt service $-§-§-§$- See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS Years ended June 30,2015 and 2014 2015 2014 Cash flows from operating activities: Excess of revenues over expenses, fixed asset replacements,transfers and debt service $-$- Adjustments to reconcile excess of revenues over expenses,fixed asset replacements, transfers and debt service to net cash provided by (used in)operating activities: (Increase)decrease in receivables (235,515)464,116 Increase in prepaid expense (46,053)(565) Decrease in amounts due to AEA (65,326)(213,615) (Decrease)increase in accounts payable (149,572)178,568 Increase in due to R &C Fund 69,953 - Increase in payable to utilities -O &M 259,867 870,052 Decrease in payable to utilities -R &C refund (259,036)(487,831) Increase in unearned revenue 431,911 - Net cash provided by operating activities 6,229 810,725 Available cash and cash equivalents,beginning of year 2,277,717 1,466,992 Available cash and cash equivalents,end of year $2,283,946 $_2,277,717 Supplemental disclosure of cash flows information: Interest paid $_4.137.900 $4,588,950 See accompanying notes to the financial statements. 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30,2015 and 2014 NOTE A:SIGNIFICANT ACCOUNTING POLICIES Description of Business:The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement)dated December 8,1987.The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the Project),which became operational in September 1991,and the scheduling,production and dispatch of power.The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement -Chugach Electric Association,Inc.; Golden Valley Electric Association,Inc.;the Municipality of Anchorage (Municipal Light & Power);the City of Seward (Seward Electric System);and the Alaska Electric Generation & Transmission Cooperative,Inc.(AEG&T).AEG&T assigned its rights pertaining to Homer Electric Association,Inc.(HEA)under the Power Sales Agreement to Alaska Electric and Energy Cooperative,Inc.(AE&EC)in 2003.HEA and the Matanuska Electric Association,Inc. (MEA)are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T and AE&EC have no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities,including: establishing procedures for each party's water allocation,budgeting for annual Project costs and calculating each party's required contribution to fund annual Project costs.Committee approval of operations and maintenance arrangements for the Project,sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of:1)50 years after commencement of commercial operation or 2)the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction ofall other payment obligations under the Power Sales Agreement.Renewal options for additional terms exist. During the years ended June 30,2015 and 2014,approximately $237,000 and $570,000, respectively,of capital additions occurred relating to the Battle Creek Diversion project to enhance the Bradley Lake Hydroelectric Project.The construction cost estimate for this project is $50 million.To date funding for this project has come from State appropriations and the Bradley Lake R &C Fund.The State funded approximately $193,000 and $99,000 in years ended June 30,2015 and 2014,respectively.Future funding is to be determined.This project will divert the upper part of Battle Creek into Bradley Lake and the increase in water will enable the Project to produce an additional annual average of 37,000 megawatt hours.(nearly a 10% increase in Bradley Lake's annual energy).Diversion engineering is in final design and various environmental studies are ongoing.An amendment to the Bradley Lake Hydroelectric Project Federal Energy Regulatory Commission license is expected in 2016 with construction anticipated to be completed in the fall of 2018. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2015 and 2014 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Establishment of Trust Funds:Article V,Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund,including an Operating Reserve account,to be held by AEA.In actuality these funds,along with the Debt Service,Excess Investment Earnings (arbitrage),and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle,Washington. All deposits,including utility contributions and interest transferred from other funds,are made into the Revenue Fund,which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund;Operating Reserve Fund;Operating Fund;Revenue Fund;Capital Reserve Fund;and the Renewal &Contingency Fund when the fund balance is $5,000,000 or greater. Revenue and Expense Recognition:Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement.Utility contributions of $431,911 for the year ended June 30,2016 were received prior to June 30,2015 and are included in liabilities as unearned revenue.Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received.Operating and maintenance expenses are recognized when incurred,while transfers to Debt Service Fund and Excess Earnings Funds are recognized when the transfer is made.Purchases of fixed asset replacements are expensed when purchased.The Renewal and Contingency Reserve Fund (R &C Fund)is reimbursed for capital costs over a four year period.Transfers to the R &C Fund for repayment of funds withdrawn for capital costs occur monthly based on the budgeted R &C expenditures.At year end the actual Operating Fund and R &C Fund expenses are compared to the actual revenue and a refund is given to the utilities when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed revenues.At June 30,2015,R &C surplus to be refunded was $20,211 and an additional $69,953 was due to the R &C Fund from the Revenue Fund,resulting in a net balance due to the R &C Fund of $1,787,392.The net balance due to the R &C Fund at June 30,2014 was $1,984,283. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2015 and 2014 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates:The preparation of the special-purpose financial statements of the Operating and Revenue Funds requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. Income Taxes:The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a)of the Internal Revenue Code.Therefore,the Committee had no deferred tax liabilities or assets or tax carryforwards as of June 30,2015 and 2014 and no current or deferred tax expense for the years then ended. NOTE B:INVESTMENTS The balance in the Operating Fund is invested in collateralized investment agreements with JP Morgan Chase Bank through the trust department of US Bank.The specified interest rate for monies from the Operating Fund invested in the agreements is 7.38%per annum.The balance in the Revenue Fund is invested in First American Treasury Obligations money market fund at June 30,2015 and collateralized investment agreements with JP Morgan Chase Bank at June 30, 2014.Balances at June 30,2015 and 2014 are as follows: 2015 014 Operating Fund $1,852,035 $1,599,575 Revenue Fund 431,911 678,142 Total investments $_2,283,946 $2,277,717 Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale.Investments are presented at aggregate cost. For purposes of the cash flow statements,management considers the full amount of the investment balance to be cash available for operations. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2015 and 2014 NOTE C:MAJOR CONTRACTS AND AGREEMENTS During May 1994,the Alaska Energy Authority entered into the Master Maintenance and Operating agreement with the Committee.The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement.The term of the Master Agreement is indefinite,remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists.This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project,subject to the approval of the Committee. On behalf of the Committee,the AEA entered into an agreement with Chugach Electric Association,Inc.(CEA)in August 1996,for the provision of all services necessary to dispatch the Project's electric power output.The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996,the Alaska Energy Authority entered into an agreement with CEA on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. An operation and maintenance agreement dated February 11,1994,was executed between Homer Electric Association,Inc.and the Alaska Energy Authority.This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association,Inc.The agreement,as amended effective July 1,2008,is through June 30,2014 and automatically continues in successive five year terms thereafter unless terminated by either party as set forth in the amended agreement.Generally,to avoid an automatic,successive five year term extension,notice of termination by either party must be given two years in advance of the termination date.HEA is to be reimbursed for costs associated with the operation, maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August 1996,the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project.The transmission agreement continues from year to year,except upon written notice to terminate by either party.Notice of termination must be given six months in advance of termination dates.In June 1999,the transmission agreement was again amended to require HEA to provide communication services in addition to the other services. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2015 and 2014 NOTE D:RELATED PARTY TRANSACTIONS During the years ended June 30,2015 and 2014,costs incurred under the various contracts with related parties described in Note C were as follows: 201 2014 Homer Electric Association,Inc.-operation, maintenance,communications and fixed asset replacements $2,798,302 $2,719,792 Chugach Electric Association,Inc.-substation service maintenance $437,140 $344,042 Alaska Energy Authority -administrative fees $200,000 $200,000 For the years ended June 30,2015 and 2014,Chugach Electric Association,Inc.provided dispatch services to the Committee at the agreed upon amount which is zero. Amounts payable to related parties at June 30,2015 and 2014 were as follows: 015 014 Included in accounts payable: Homer Electric Association,Inc.$559,171 $609,243 Chugach Electric Association,Inc.$97,504 $213,204 Due to others: Alaska Energy Authority -short-term borrowings for vendor payments $26,176 $91,502 NOTE E:SURPLUS REFUND AND UTILITY CONTRIBUTIONS RECEIVABLE The $1,134,386 surplus at June 30,2014 was refunded to member utilities in fiscal year 2015 pursuant to the Power Sales Agreement and direction of the Committee. At June 30,2015,a surplus of $1,394,253 will be refunded to member utilities in fiscal year 2016 pursuant to the Power Sales Agreement and direction of the Committee. 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2015 and 2014 NOTE F:SUBSEQUENT EVENTS The Committee”s approved budget for fiscal year 2016 includes funding through the R&C FundforastaticWatianeecompensationprojectwithanestimatedcostof$7.2 million.One half ofthe project cost has been budgetedin fiscal year 2016 with contracting for the project expectedin March 2016. The Committee has evaluated subsequent events through December 17,2015,the date the financial statements were available to be issued,and did not identify anything requiring additional disclosure other than as noted above. 11 SWALLING &ASSOCIATES Certified Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Bradley Lake Project Management Committee Anchorage,Alaska We have audited the special-purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds as of and for the years ended June 30, 2015 and 2014,and our report thereon dated December 17,2015,which expressed an unmodified opinion on those special-purpose financial statements,appears on pages 1 and 2. Our audits were conducted for the purpose of forming an opinion on the special-purpose financial statements as a whole.The supplemental special-purpose Statements of Expenses are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements.Such information is the responsibility of the Bradley Lake Project Management Committee and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements.The information has been subjected to the auditing procedures applied in the audits of the special-purpose financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special- purpose financial statements or to the special-purpose financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America.In our opinion,the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Tealling f Qsaccully PC. Anchorage,Alaska December 17,2015 3201 C Street.Suite 405 °Anchorage.Alaska 995039IndependentmemberofDEKInternational-«worldwide assorintionofindependentcecountingfirmsandbusinessadvisers Ph 907.563.7977 °Fax 907.561.7683 °www.swallingcpas.com BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES Years ended June 30,2015 and 2014 Expenses: Generation expense: Operation supervision and engineering Hydraulic operation Electric plant operation Hydraulic power generation operation FERC land use fees Structure maintenance Reservoir,dam,and waterway maintenance Electric plant maintenance Hydraulic plant maintenance System control and load dispatching Substation operation and maintenance Overhead line maintenance Total generation expense Administrative,general and regulatory expense: Insurance AEA administrative fee PMC costs Regulatory commission: FERC administrative fees FERC licensing and study Total administrative,general and regulatory expense Total operations and maintenance expenses, before capital project reimbursement R &C Fund repayment Total operations and maintenance expenses 2015 Variance Favorable 2014 Budget Actual (Unfavorable)Actual $315,794 $300,134 $15,660 $288,827 117,168 84,200 32,968 86,691 282,401 268,973 13,428 273,191 586,449 339,893 246,556 421,572 180,000 137,230 42,770 179,565 389,203 293,059 96,144 307,418 165,349 99,799 65,550 22,289 496,494 403,331 93,163 342,659 201,761 118,576 83,185 134,596 475,799 396,248 79,551 346,819 488,000 407,140 80,860 344,042 353,697 26,822 326,875 191,080 4,052,115 2,875,405 1,176,710 2,938,749 609,637 $92,920 16,717 519,471 200,000 200,000 -200,000 158,750 53,158 105,592 98,449 250,000 150,519 99,481 204,998 150,000 105,747 44,253 181,272 1,368,387 1,102,344 266,043 1,204,190 5,420,502 3,977,749 1,442,753 4,142,939 1,365,856 1,370,494 (4,638)1,362,236 6,786,358 5,348,243 1,438,115 $5,505,175 13 BRADLEY LAKE MANAGEMENT AUDIT Request for Information Status Prepared by MWH As of October 19,2015 Agreements Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc. and Alaska Energy Authority”dated effective July 1,2008. Received Bradley Lake Hydroelectric Project Static Var Compensation System Operation and Maintenance Agreement Between Chugach Electric Association,Inc.,and Alaska Energy Authority August 1996. Received Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority, Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures,as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher. Received 2/19/92 version,received 1993 allocation/scheduling Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)by and among Alaska Power Authority (now Alaska Energy Authority),Chugach Electric Authority,Inc.,Golden Valley Electric Association,Inc.,Municipality of Anchorage d/b/a Municipal Light and Power, City of Seward d/b/a Seward Electric System,Alaska Electric Generation & Transmission Cooperative,Inc.,Homer Electric Association,Inc.,and Matanuska Electric Cooperative,Inc.(December 1987). Received Consenting and Approving Resolution of the Bradley Lake Hydroelectric Project Management Committee Resolution No.2013-06 Change of Project Operator. Received Other Agreements relevant to Stakeholders.None provided Management Description of overall management structure and reporting /responsibility structure,to the extent not described in above formal Agreements.Provide charts,if available. Not received; partially derived through interviews Project management authority matrix,if available.Not received - discussed in general terms Project documentation management process and controls on-site -electronic and hard copy Not received - discussed briefly Project document management process and controls off-site -electronic and hard copy Not received - discussed briefly Bradley Lake Management Audit RF|Status October 19 2015 Staffing Site staffing.Project staffing chart with listing,head count,and description of |Received roles and responsibilities in the areas of local management',local administration, local operations,and local maintenance. Off-site staffing.Full-time or part-time resources dedicated to the Bradley Lake |Received byprojectbyeachstakeholderintheareasofplanning,management',|HEA for May administration,operations,and maintenance.2015 only;not received from CEA Statistics on staff retention and turnover.Not received Statistics on scheduled hours and overtime hours.Received 2012-present Labor Union agreements and constraints.Received -in general Job classification descriptions and constraints on cross trade work,for example:|Received Can electricians do mechanical maintenance? Can operators conduct maintenance? Can engineers use test equipment and conduct maintenance? Description of training program and employee onboard training.discussed briefly Experience/training requirements for operations and maintenance personnel.discussed briefly *Includes licensing/regulatory Operation &Maintenance Operating /Dispatch Rules or Guidelines,with constraints.discussed Bradley Lake Hydropower Project,Plant Operations and Maintenance,Volume 1,|Received 2,&3,Stone &Webster Engineering,1992. Routine Inspection and Maintenance procedures and schedules (daily,weekly,|General monthly,quarterly,annually,and other periods).description received Third-party inspection or maintenance agreements with scopes.Not received Utility-specific and Project-specific safety standards,policies and practices.Discussed Available condition assessment reports /documentation over the last five to ten |One summaryears.report received Operation records for past 5 years including: ®MWH.Bradley Lake Management Audit RFI Status October 19 2015 Availability %and method for calculating availability Received 2013 -date Forced Outage Rates and Scheduled Outage Rates,Some information;no rates Overall efficiency,generation vs available water for generation Not received Efficiency of turbine/generator -data or graphs Not received Operational efforts to maximize efficiency Forced outage data including length,lost generation,and causes Received -- need details Planned maintenance outages and planned lengths versus actual outage |Not received lengths Capital improvement outages descriptions -scope,schedule (planned and |Summaryactual)overview of projects received -no schedule data Maintenance records for past 5 years including: Completion %of planned preventative maintenance Not received Hours/budget spent on preventative maintenance vs planned Not received Hours/budget spent on corrective maintenance vs planned Not received Hours/budget spent on capital improvement/rehabilitation projects vs planned Not received Project vehicle inventory.Not received Spare parts inventory.Not received Major Capital Projects List of major capital projects since 1991 through 2015,with scopes,implementation |Summary date(s)and cost for each.received -no costs Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs,2009 - August 4,2009,Final Report.Prepared by D.Hittle and Associates.Provide 2015 Received; update,if available.2015 - pending Other major project needs and/or opportunities as documented by other studies,Discussed reports,memos,etc. Procedures for prioritization of capital projects and ROI requirements Discussed ®MWH.Bradley Lake Management Audit RFI Status October 19 2015 Licensing/Requlatory Current (active)FERC license conditions with status of each in terms of Information compliance,reporting,and future actions available through FERC obtained Other active state or local regulatory and permitting requirements with status of |See above each in terms of compliance,reporting,and future actions Documentation of on-site compliance with on-site licensing and regulatory compliance (to the extent not included in the above information)See above Original license and amending orders since 1985.See above Description of current FERC and state regulatory compliance tracking See above system/resources (how compliance activities are planned,managed and reported in timely manner) Status of each in terms of compliance,reporting,and future actions and any See above problems or challenges with gathering appropriate compliance monitoring information or meeting compliance objectives. Other active or ongoing state or local regulatory and permitting requirements See above with status of each in terms of compliance,reporting,and future actions. Another other documentation of on-site compliance with on-site licensing and See above regulatory compliance (to the extent not included in the above information). Planning/Budgeting Description of overall planning/budgeting process,including the process |discussed elements,frequency (annually,biannually,etc.),and planning window(s)-one year,five years,10 years,etc.,(example:the 2015 five year plan). @ mwu.Bradley Lake Management Audit RFI Status October 19 2015 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Assessment of Condition Date:August 25,2015 Attendees:MWH:Stan Hayes,Steve Baughn AEA:Bryan Carey HEA:Bob Day,Alan Owens,Paul Parson General.The condition assessment consisted of the following activities; e Walkdown ,visual inspection,and discussion of powerhouse features, equipment,and system,with a focus on the generating equipment and controls. e In-depth (three-hours total)Interviews with the plant superintendent,foreman, and operator e Reviews of provided inspection and maintenance procedures and checklists e Spot check of data collection and record keeping on-site,as it related to the condition. A total of eight hours was spent on-site.The access road to the dam and the dam itself were not visited.The walkdown included all areas and equipment on every level of the powerhouse,plus the powerhouse exterior and generator step-up transformers on the side of the powerhouse.The fuel storage facility and warehouse/shop building were also visited. In general,all features and equipment were observed to be in good to very good condition.Equipment was well-maintained;no excessive corrosion,leaks or significant deterioration were observed.General housekeeping was good,with clear accessways maintained.Locally,some items and equipment were observed left or stored in such a way as to block ready access to valves and other equipment,so local improvements to housekeeping and clearance around equipment could be made. MWH was provided an Overview of Annual/Monthly/Daily Inspections and Analysis report prepared on August 17,2015,which provided a list and description of the main Bradley Lake 2015 Audit Condition Assessment Notes Page 1 routine inspection activities.MWH also examined representative daily log sheets of data taken by the operators.Those documents indicate that plant staff are generally performing typical inspections consistent with industry practice.One receommendation: to extent not already being done,oil and fluid samples should be taken from each source and analyzed as part of the annual inspections. Hydraulic turbines.The turbines are Fuji vertical-shaft six-jet Pelton turbines.The turbine runners and deflectors were replaced in the mid-200s by Andritz hydro.One of the units was out for maintenance and nozzle work at the time of our visit.Visual examination of the turbine runner indicated it was in good condition,free from cavitation or erosion damage and free from visually-obvious cracks.The turbine pites were clkan and neat,and the equipment and pi[ping was in good condition. Turbine governors.The original governors were Woodward governors.The hydraulic power systems are largely original,but the pressure oil distribution system was modified in 2006 when the speed governing components were replaced by Andritz.The digital governing components were replaced again in 2014 with Emerson equipment.The hydraulic components were in good condition,free from leaks.The electronic components were in good condition and reported to be reliable. Turbine inlet valves.Each turbine is provided with a spherical type inlet valve,oil- pressure actuated to open,and weight-actuated to close.The valve exteriors were in good condition.No operational or maintenance issues were reported. Powerhouse crane.The powerhouse is provided with an overhead crane,160 ton main hook and 25 ton auxiliary hook,for routine maintenance and main unit disassembly/reassembly.The crane was observed and reported to be in good condition, and was recently used for turbine disassembly work. Balance of plant mechanical equipment.The powerhouse is provided with typical balance of plant mechanical equipment and systems,including various machine tools for small maintenance,raw and unit cooling water systems,compressed air systems, station drainage and sump system,station compressed air system,and HVAC systems. Visually,all were observed to be in good physical condition,are were reported to be in good working order;no ongoing or recent operational or maintenance issues were reported. Warehouse/shop.The warehouse/shop was also visited.The facility contains storage of parts and spares,storage for site maintenance equipment,a small machine shop, and a small carpentry shop.The overall size of the facility and items stored appeared Bradley Lake 2015 Audit Condition Assessment Notes Page 2 reasonable,given the remoteness of the site,The building was in need of minor maintenance (weather sealing,window replacement)at the time of our visit. Heavy equipment.The project site ahs several items of heavy equipment for project maintenance,including a grader,dump truck,and front end loader/backhoe.All were observed and reported to be in good condition.But it was noted that some of the heavy equipment was from original construction,and age/condition/lack of service support may drive replacement. Automation.The original Landis &Gyr Telegyr 6800 SCADA based automation system components have been replaced over the years.The governor and excitation electronic controls have also been replaced.The present plant automation system was upgraded in 2014 with a new Emerson Ovation Digital Control System (DCS)based system. e Governor.The original governor was a Woodward 505,which developed stability problems.During runner replacement by VA-Tech (2004 -2006)the governor controls were replaced with a VA-Tech SAT PLC with software logic designed in conjunction with Electric Power Systems (EPS).The SAT PLC system developed intermittent shutdown problems (fiber optic link communication problems),and VA-Tech software support was no longer being guaranteed. During the plant conversion (2014)to the Emerson DCS system,both of the governor controls were replaced with an Emerson Ovation DCS controller.No false tripping has occurred since implementation of the new governor controls. e Exciter.The original Fuji exciter controls were replaced with a Basler DECS-400 excitation controller in 2011.The Fuji system control components were aging, obsolete and difficult to obtain.In order to maintain high plant reliability,a replacement system was required.The new Basler system also included an integral power system stabilizer (PSS). e Plant Control.The original Landis &Gyr SCADA plant control system had many remote terminal units (RTUs)throughout the plant for gathering data and implementing plant control.Over the years components have failed and vendor support has been difficult.Several plants on the Kenai Peninsula and in Anchorage were standardizing on the Emerson Water and Power Solutions, Ovation DCS system for their plant SCADA systems.In 2012 it was decided to replace the existing plant SCADA controls with the Emerson Ovation DCS.The DCS system was completed in 2014 with integration of the governor controls. Protection &Metering.The original electro-mechanical protective relay system was replaced with a new microprocessor based protective relay system in 2013.The Bradley Lake 2015 Audit Condition Assessment Notes Page 3 generator,13.8kV and 480V station service,and standby generator were upgraded with Schweitzer (SEL)protection packages.New SEL protective relay units also include metering that is accessed by the new Ovation DCS.The new protective study and relay settings were provided by Electric Power Constructors (EPC)in Anchorage,AK. Generators.Generator Nameplate: e Fuji,manufactured 1989 e 63,000 kVA,.95 pf,13.8 kV,300 rpm e Class F Insulation,75°C temperature rise,40°C ambient air temperature Generator stator cooling is by air-to-water heat exchangers in a closed loop air and water system.Make-up cooling water is provided by turbine discharge "spray”collected in the turbine pit.The generator stator cooling system is also designed to provide powerhouse heating by directing stator exhaust heat from the generator enclosure into the powerhouse generator bay area. The generator windings were checked and cleaned with COz2 in 2012.Partial Discharge Detectors (PDA)were installed in 2013,and are checked on an annual basis.Typically, the generators operate in the 40 MVA to 50 MVA range and have not been experiencing any unusual operational characteristics,or overheating.The plant doesn't maintain any spare stator winding bars.The generators are very rarely taken off-line and sometimes will operate in condensing mode. Generator Breakers.The generator breakers are the original GE PowerVAC 15 kV, 3000A,vacuum type circuit breakers.The breakers were recently rebuilt.The exact date is not available.The breakers are standard 15 kV industrial grade,and don't have IEEE C37.13a generator breaker rating.No circuit breaker operational problems were reported. GSU Transformers.GSU Transformer Nameplate: e SMIT Nymegen,13.2kV -115 kV,ONAF e 37.5/50/62.5 MVA,65°C rise The GSU transformers are the original equipment and have not experienced any problems.The nitrogen bottles were moved inside the powerhouse because of freezing problems. 115kV GIS Switchgear.The high side of the GSU transformers is connected to the 115 kV gas insulated switchgear (GIS)located inside the powerhouse.No operational problems were reported,other than replacement of one of the gas pressure sensors. AC Station Service.A double ended,480V unit substation with the two 1500/2000 kVA, dry type transformers each fed from one of the generator 13.8 kV buses,is provided for -----------EEEEEEEeEeEE 7 7 yyEEEEEEEE Bradley Lake 2015 Audit Condition Assessment Notes Page 4 the plant service.The substation is the original GE metal clad,Type AKR switchgear. The tie breaker automatically operates to maintain service in the event of failure of one of the 13.8 kV lines.There is also a 350 kVA standby generator service in the event that both 13.8 kV services are lost.The protection relaying was recently replaced (2013)with a SEL microprocessor type relay system. A Project transformer fed from either of the generator buses provides service to the project residences and the dam.Interlocked 15 kV breakers provide service from either Unit #1 or Unit #2.Transformer is rated 750 kVA,13.8 kV -12.47 kV,dry type. Distribution of the 12.47 kV service is underground.A single phase (7200V)feeder is provide to the dam,and has been recently replaced. DC Station Service.The 60-cell,125 VDC battery provides dc service to the plant controls and to the inverter which provides critical 120 VAC power to critical control and communication equipment.Two battery chargers operating in parallel are provided to maintain battery charge.The battery system is all original equipment.The circuit boards and capacitors were recently replaced in the chargers and inverter.No problems with the system were noted. TT Bradley Lake 2015 Audit Condition Assessment Notes Page 5 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Site Visit /Interviews Date:August 25,2015 Attendees:MWH:Stan Hayes,Steve Baughn AEA:Bryan Carey HEA:Bob Day,Alan Owens,Paul Parson General.Arrived on site 0800.Interviews/Discussions 0800-1200.Powerhouse walkdown 1300-1545.Final Discussions 1545-1630.Departed site 1645. Project site staffing.Alan Owens,Superintendent,is on-site Monday -Friday each week.Two shifts of one foreman and one operator are on site 8 days /off 6 days.The shifts overlap for status and information transfer.Site staff are provided 30 days paid vacation annually.O&M staff are union -IBEW.HEA advised they have broad labor classifications,and each operator is cross-trained,providing flexibility between project needs and staff.On a daily basis,the total working crew is four staff;HEA experimented with three-person crews plus a rover,but that was considered unsuccessful (insufficient).HEA is currently developing a staff training program - Bismark training plus TPC apprenticeship program. Access to site -personnel.HEA has a three-year contract with Pathfinder Aviation based in Homer.Pathfinder provides scheduled and on-call aerial transportation via small fixed-wing aircraft plus helicopters.Air transit availability and reliability have been very good;on rare occasions weather conditions have delayed personnel transit for up to one day.HEA noted that personnel must be stationed on-site for snow removal from the airstrip to maintain access to the project during winter months. Access to site -materials and equipment.This is accomplished by water transit via barge.With a large tidal variance and range at site (27 feet),shipments to/from the site require careful planning,scheduling,and coordination.Normal annual shipments include one large barge and 3-4 small barges.When major projects are underway,the shipments increase to approximately 10 shipments total.HEA currently uses Alaska Coastal Freight,LLC,for large shipments. Bradley Lake 2015 Audit Site Visit Notes 8/25/15 Page 1 Reservoir operations.Full pool is El.1080.El.1120 is the minimum elevation to pass bypass flows.El.1070 is the drawdown level to clean the intakes.Normal inflow is typically 1/3 rain,1/3 snowmelt,and 1/3 glacial melt;lately there has been a higher percentage of rain. Dam Inspection/maintenance.The dam is visited weekly and formally inspected monthly.The road to the dam is not cleared in winter,so in winter months (typically December through February)inspections are limited to flyover inspections.A fiber optic cable runs form the powerhouse to the dam (buried adjacent to the roadway with the power cable)and HEA is investigating adding cameras at the dam to improve inspection capabilities when the dam is not accessible.The ferrous materials/equipment at the dam are protected by a passive cathodic protections system. HEA noted that the dam is classified as low hazard;there are no fisheries issues in the reservoir;and there are no recreation issues associated with the reservoir. Operation and dispatch.Average annual plant output is 44 MW.Preference is to have both units available.If a unit's output drops below 5 MW,it is put into synchronous condense operation.HEA normally starts unit(s)locally and loads them to 5 MW,then turns over unit operation to CEA.CEA has the capability to start and stop units remotely.Normally one unit is in synchronous condense mode every evening.On each unit,needles are operated sequentially in pairs:2 needles from 0-19 MW;4 needles from 19-38 MW:and 6 needles above 38 MW.The units are run both reactive and inductive;"normally”they are run slightly underexcited.Operationally,there are three issues with the units: 1)The minimum allowable unit output is 5 MW; 2)The transition between 2 and 4 needle operation is rough,so the units are kept out of that zone operationally;and 3)Above 61 MW output,the generator temperatures climb,and can exceed normal operating limits. The larger tieline to the peninsula has a 75 MW nominal limit (transfer stability issue)so normal plant maximum output is 90 MW.For short periods,the full 120 MW plant capacity can be used;that 30 MW difference is normally treated as spinning reserve. HEA noted that they typically see a significant system frequency excursion once a week.CEA typically has Bradley Lake absorb system load excursions less than 17 MW. eee Bradley Lake 2015 Audit Site Visit Notes 8/25/15 Page 2 Maintenance.Each unit has a one-week maintenance outage annually.The turbine runners exhibit frosting (short of cavitation damage)that is buffed out infrequently and as-needed.The needle piston shaft chrome is wearing and will need rechroming soon. General painting repairs are a routine annual activity.An arc flash analysis was done in 2013.The batteries and inverters had their 5-year maintenance performed in 2014. HEA has machine shop equipment on-site for light machining/repair;a machine shop in Wasila is used to fabricate/machine small custom parts.Access to the dam requires brush removal and general maintenance work four months every year;snow removal on the dam access road is not performed. The new Cascade maintenance management system generates plant maintenance work orders (PMs). The plant hopes to acquire and use tablets and a bar code system for inspection and maintenance date capture and entry. The new DCS (see below)has a historian for historical data capture,and trending analysis software,to facilitate analysis and decisions for maintenance and renewals. Spare parts.HEA maintains a parts and consumables inventory on a spreadsheet (last fully updated in 2012).A spare set of turbine nozzles are on-order.Spare Schweitzer electronic parts are maintained on-site.Critical spares for the excitation systems are on- site.Spare thrust bearing shoes are on-site.No spare generator breaker,generator windings or rotor poles are on-site.Miscellaneous parts for balance of plant equipment are readily available. Renewals &Replacements. e 2002-3 nozzles rebuilt e 2004-6 new runners,deflectors,governors e 2007-8 new buried power line to dam e 2011 new Basler exciters e 2012 diversion tunnel pipe coatings repairs e 2012 new Emerson DCS/SCADA;new turbine bay crane controls e 2012-13 new Cascade plant asset and maintenance management system e 2013 generator partial discharge analysis equipment e 2013 dam work -seals,drains e 2013 new SEL protective relays e 2014 new Emerson governors e 2015 new nozzle tips and seat rings (Unit 1) e 2016 new nozzle tips and seat rings (Unit 2) Bradley Lake 2015 Audit Site Visit Notes 8/25/15 Page 3 Document management.Scanned documents (pdf or TIFF)are maintained electronically in Homer and at the project site.Drawings produced since 2006 are on AutoCAD.Daily plant readings are paper only;unit and other data is stored on the Emerson DCS historian.HEA has public and private ftp sites for large file transfers. Overall budget process.The project fiscal year runs July 1*to June 30.HEA drafts an annual budget which is reviewed by the BPMC budget subcommittee,and must be approved by the BPMC by the end of March.AEA provides oversight over the budget process.HEA then invoices actual costs (at cost)to AEA monthly,and AEA invoices the stakeholder utilities based on their percentage project participation.HEA provides the budget subcommittee intermittent updates on large projects,but no routine budget updates. Capital project process.Projects are developed at the plant level,and then reviewed by the HEA Board,BPMC O&D committee,BPMC budget committee,and then the BPMC board.Projects with budgets greater than $10K are listed as capital projects.The plant superintendent has budget authority up to $5K.Informal bidding is used for budgets up to $50K;projects above $50K require formal bids and also require HEA general manager approval. Governance.Overall governance is by the BPMC,which receives monthly project reports from HEA and meets every two months.The O&D (technical)and budget subcommittees provide review,analyses,and recommendations to the full BPMC. General safety.HEA safety standards are used on-site.Historically,HEA safety was primarily focused on distribution and transmission.Recently,HEA has created separate generation and transmission programs,organized under separate safety committees established in early 2015.HEA underwent an OSHA audit in 2013 and their safety programs are compliant with the audit results.HEA has an overall safety coordinator based in Homer. Project-Specific safety. e Site superintendent has the lead safety role. e The on-duty foreman writes and hold clearances. e Plant safety meetings are held every Monday. e Each site job has a written job hazard analysis and safety tailboard meeting. e Lockout/tagout and hot work procedures are in place and used as applicable. The lockout/tagout procedures are currently being updated. TF Bradley Lake 2015 Audit Site Visit Notes 8/25/15 Page 4 e The site uses mobile cranes to provide fall protection over the penstocks;OSHA reviewed the site fall protection procedures as part of their 2013 audit. e Arc flash analyses were performed in 2013,but equipment labels haven't been added. e No lead paint,asbestos,or PCBs are present on site. e Paints/solvents are contained and controlled on-site. FERC compliance.All license-condition environmental studies were successfully completed in 2001.A PFMA was performed in 2010.Inspections required by FERC include monthly dam inspections,quarterly penstock drain measurements,periodic annual survey point readings,periodic spillway gallery drain readings (when reservoir levels change in 5-ft increments above El.1155),annual gate testing,and an annual tailrace inspection.No periodic dewatered inspections of the tunnel are mandated by FERC.FERC performs an annual site inspection.Releases from the dam to maintain fish flows downstream of the dam are monitored closely by FERC,and are coming under closer FERC scrutiny.A primitive recreation area was developed adjacent to the project as part of the project development,but maintenance and upkeep is not mandated by FERC. The dam currently has limited ability to bypass flows,particularly at lower reservoir levels.A capital project is under development for 2016 to improve passage of fish flows through the dam and reduce the risk of violations (shortfalls)in mandated fish flows. HEA site areas of interest for audit: e Better communications between the project and the BPMC board e Better communications between the O&D subcommittee and the BPMC board e General suggestions for improvements -----------------EEEBradleyLake2015AuditSiteVisitNotes8/25/15 Page 5 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interviews Date:September 18,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey HEA:Bob Day,Emily Hutchinson General.Emily is HEA's Director of Finance and Regulatory Affairs -relatively newly appointed. Transmission.There are two parallel lines between the project and the Bradley Junction;the two lines are owned by the project.The Bradley Junction is the overall end of the Bradley Lake Project.Bradley Lake power is then transmitted over a single 115 kV line to the Soldatna substation (owned by HEA),and then over another single 115 kV line (owned by HEA)to the Quartz Creek substation.Static VAR Compensators (SVCs),which are considered part of the Bradley Lake project,are located in the Soldatna and Quartz Creek substations;the areas where the SVCs are located within the substations are also considered Bradley Lake property.HEA advised that they do not get any revenue from wheeling Bradley Lake power,per se. HEA budgeting/invoicing of Bradley Lake O&M costs.Annual budgets run on a fiscal year July 1 -June 30.HEA noted that this means the budgeting process takes place at the same time as the plant ts closing out one year's projects and ramping up planning for next year's projects;HEA recommend shifting the budget cycle to the calendar year. Both the BPMC O&D committee (technical focus)and budget committee (financial focus)have budget responsibility to the overall BPMC;HEA noted that this difference in focus sometimes creates tension between the committees.HEA noted that the BPMC budget committee has access to the full,detailed HEA budgets. Site staff labor is budgeted based on the established work schedules and invoiced at actual hours.Administrative staff are budgeted as a %time per person,but invoiced on actual hours charged to the Bradley Lake project.Consumables,materials,equipment, contracts,etc.are invoiced at cost. ba- Bradley Lake 2015 Audit HEA Interview Notes 9/18/15 Page 1 HEA provides AEA a detailed invoice monthly for their work and costs associated with the Bradley lake project.Going forward,HEA will upload their detailed invoices to the budget committee.HEA does not provide a monthly project report to AEA,but noted that that they do provide the O&D committee with a monthly operator's report. AEA reviews the monthly invoices from HEA,and then invoices the individual stakeholder utilities their share of the monthly costs;the stakeholder utilities do not receive copies of the detailed HEA invoices. HEA perspective is that current budgeting/billing process is generally working well;they believe HEA-AEA-budget committee are maintaining good relationships. bn_______________tBradleyLake2015AuditHEAInterviewNotes9/18/15 Page 2 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interview -CEA Date:August 26,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey MEA:Burke Wicke General.Chugach Electric is responsible for forecasting available generation and dispatching generation from the Bradley Lake project. Forecasting.Chugach begins the forecasting process with the NOAA annual inflow forecast which on June 1®*to may 31%.CEA then calculates total forecasted total annual water volume in ac-ft and annual MWhr production and provides each participating utility with a forecast of their forecasted available ac-ft and MWhr based on their portion of Project capacity and energy.Each utility then advises CEA of their preferred monthly MWhr "take”.This process also considers the railbelt maintenance schedule.As each water year progresses,CEA updates their monthly forecasts and calculated allotments for each utility based on the previous month's actual inflow and generation.CEA rarely forecasts spill of water from the dam._To the extent conditions allow,individual utilities can carry over a portion of their annual ac-ft from one water year to the next. Spill.The reservoir storage capacity is 284,000 ac-ft and average annual inflow is 380,000 ac-ft.Project operations and generation are managed to minimize spill (see above);average annual spill is less than 12,000 ac-ft.Spill is very rarely forecasted. An "imminent spill”condition is declared when the reservoir level reached El.1175ft (spill starts at EL.1180).During imminent spill conditions,CEA tries to dispatch Bradley Lake at maximum output to minimize spill.When water is spilled,utilities that have "banked”water lose their banked water first. Dispatch.CEA receives daily look-ahead requests for Bradley Lake energy from each utility,based on their management of their energy and capacity needs recent historical usage and their forecasted allotment of Bradley Lake energy.CEA then dispatches Bradley Lake to meet the requests;each utility can make adjustments to their daily request;these are typically done on a one hour look-ahead basis. Bradley Lake 2015 Audit CEA Interview Notes 8/26/15 Page 1 CEA has two dispatchers on-shift continuously.|The dispatchers typically operate Bradley Lake remotely on AGC.CEA dispatchers also have the ability and do sometimes start/stop the units and operate them in synchronous condenser mode. As part of their project monitoring,CEA also gets an alarm on low fish flows,and notifies AEA. CEA dispatches Bradley Lake at no cost to the project stakeholders.CEA wheels Bradley Lake power at a discounted rate.The original negotiated arrangement with HEA was that they could wheel their share of Bradley Lake over the CEA system at no cost. Under these circumstances,CEA considers that they have the right to use Bradley Lake for regulation. Transmission.Bradley Lake Energy is mostly transmitted through the main transmission line between the Kenai Peninsula and Anchorage.Nominal load on the Kenai Peninsula is 75-80 MW.Nominal capacity of this line is 75 MW;its allowable capacity can be increased to 102 MW short-term.Generally,this 27 MW difference is managed as spinning reserve from Bradley Lake.CEA noted that operating the line with an increased normal limit above 75 MW might be technically possible,but would increase the risk of reduced reliability and service life From CEA's perspective,the most significant impact of the 75 MW line capacity limit is that it constrains HEA's sales across the line,not that it restricts the useable capacity from Bradley Lake. Priorities of transmission on the line in order of highest to lowest priority are: 1.CEA --Cooper Lake project 2.Bradley lake project 3.HEA capacity On rare occasions,when Copper Lake is generating at 20 MW,the available line capacity for Bradley Lake and any other capacity is limited to 55 MW. Context for concern over transmission issues.The generation capacity of HEA and MLP exceed their current usage/needs.CEA capacity is more balanced to need.In terms of projected load growth,MEA is growing,CEA and GVEA are flat,and HEA is declining. Other Project features. The Static Var Compensators (SVCs)are part of the Bradley Lake Project,but the switchyards where they are located are not part of the project. Bradley Lake 2015 Audit CEA Interview Notes 8/26/15 Page 2 The Bradley Lake tieline is owned by HEA but the construction cost was paid by all the project stakeholders.The project stakeholders pay for tieline maintenance. Re the buildup of debris at the dam (which potentially impacts releases at the dam),and how to address it;CEA's recommendation is to draw down the reservoir and mechanically remove the debris Regulatory.Bradley Lake is exempt from regulatory commission (RCA)oversight;AEA currently has regulatory authority.CEA would prefer that regulatory authority for Bradley lake NOT be split between two agencies. CEA areas of interest for audit: 1.Is the project being operated and maintained in a safe,economic,and cost- effective manner? 2.The project needs a long term renewal and replacement plan 3.Overall O&M costs -are they reasonable and appropriate? 4.Project administrative and overhead labor and costs.Are the labor HEA allocates and the costs HEA charges the Project reasonable and appropriate?Are HEA's own internal costs and the administrative and overhead costs associated with Bradley Lake separated and transparent? 5.Succession planning for project staff,and knowledge capture from current staff TTS Bradley Lake 2015 Audit CEA Interview Notes 8/26/15 Page 3 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interview -MEA Date:September 3,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey MEA:Ed Jenkins,senior systems engineer (dispatch) MEA:Jim Brooks,MEA PM and chair,BL Operations and Dispatch (O&D)committee Planning.MEA receives monthly water year projections from CEA,and then develops their monthly projections of energy and capacity.MEA has the right for monthly and annual rollover of their allocation. Dispatch.MEA schedules Bradley Lake capacity,energy,and spinning reserve on a day-ahead schedule.During each day's dispatch,MEA has the ability to change their dispatch request hourly.MEA does not use Bradley Lake for regulation,voltage support,or VAR support.MEA overall operations provide them the flexibility to maximize the availability and use of their Bradley lake allocation.Use of Bradley Lake is significant to MEA in terms of mitigating their overall costs of generation. Transmission.MEA noted that there are transmission line constraints that have the ability to affect Bradley lake operations and dispatch. From MEA perspective,there is one dispatch issue.They believe recent changes to the governors and controls,and several iterations within the software and logic on the current governors and controls,have negatively affected the overall responsiveness of the Bradley Lake project. O&M.MEA has no project staffing level concerns.MEA believes the administration time and general overhead costs HEA charges to Bradley Lake are not transparent enough for review/evaluation. Overall budgeting process.MEA believes the current budgeting process -drafts with backup provided in January,review by O&D and budget subcommittees,approval by BPMC in March-is sufficient for their needs. Bradley Lake 2015 Audit MEA interview Notes 9/3/15 Page 1 Capital projects.Overall,MEA believes that the major capital projects to date have been appropriate.MEA believes that improved communications regarding capital projects is required.From MEA's perspective,major projects have been executed differently than HEA represented they would be executed,and scope changes have not been communicated.MEA would like to receive future projected capital plans from HEA. There is an ongoing investigation to see if Bradley Lake could provide more regulating service.HEA has indicted that this would increase some maintenance costs.MEA's concern is that all participants would pay for improved value and benefits that is needed/desired by other participant utilities but provides no value or benefits to MEA or other utilities. MEA areas of interest for audit: e Better documentation of administrative and general overhead costs e Improved relations and communications between project operations and project dispatch. "=| Bradley Lake 2015 Audit MEA interview Notes 9/3/15 Page 2 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interview -MEA Date:September 15,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey MEA:Joe Griffith,CEO General.The Bradley Lake project is a very valuable asset to MEA.MEA has had no issues getting their capacity and energy from Bradley Lake when they need it.MEA generally base loads Bradley Lake power and load regulates with MEA's diesel generators.MEA has also used Bradley Lake for spinning reserve and short-term sales.MEA believes improvements could be made in dispatch,but is unclear if it is an HEA or CEA issue,or both. Overall management.MEA's perspective is that,under the current arrangement,HEA has sometimes taken actions without an appropriate amount and level of BPMC review and approval;actions that can negatively impact the other stakeholder utilities. AEA relationship to project.MEA thinks AEA's role in oversight,cost administration and regulatory interface-compliance is working well,and their associated cost on Bradley Lake are reasonable. Project staffing costs.MEA's concern is that administrative and overhead staffing and costs are not transparent and it is difficult to ascertain whether those costs charged to the project are reasonable and appropriate. Capital budgeting process.MEA considers the current process generally acceptable, but notes that HEA's Bradley Lake budgets provided to the BPMC are less detailed than MEA's internal budgets.MEA noted that HEA should develop and provide long-term capital budgets (15-20 year annual budgets). O&M issues.MEA expressed concerns about recent/ongoing issues: e Recent oil in tailrace (Note:HEA claimed that no oil actually was discharged into the tailrace) TF Bradley Lake 2015 Audit MEA Interview Notes 9/15/15 Page 1 e Extensive turbine needle/nozzle work e DCS monitoring /interface with other unit and plant controls and control system cost/quality concerns e Efficacy of dispatch from plant to Bradley Lake Junction and Soldatna switchyards,particularly status and condition of Bradley Lake equipment in those facilities Transmission line constraints.From MEA's perspective,the issue (not directly related to Bradley Lake)is that the Anchorage intertie is a single line with a capacity limit (75 MW continuous,102 MW temporary)and reliability and stability issues. MEA areas of interest for audit: Overarching item:Are the participating utilities getting their money's worth from HEA's O&M costs? Is HEA effectively/efficiently using the labor charged to the project? Assessment of condition of equipment,O&M schedules and activities,availability and necessity of project support facilities in Homer Assessment of maintenance activities over the next several years (debris build-up at intake,as one example) a Bradley Lake 2015 Audit MEA interview Notes 9/15/15 Page 2 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interviews Date:September 10,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey ML&P:Jeff Warner,Acting Chief,Dispatch Planning.CEA estimates monthly allocations based on projected water year.ML&P then does their monthly projections of their share of Bradley Lake and the two parties iterate to an agreed ML&P monthly schedule.CEA adjusts the monthly allotments based on the monthly inflows into Bradley Lake. Scheduling/Dispatch.ML&P schedules their use of their Bradley Lake power on a day- ahead basis,in hourly increments.Then,if there are any issues during the day,ML&P and CEA dispatchers communicate and resolve the issue.ML&P is generally satisfied with the current dispatch arrangement.The parties are in the process of moving towards dynamic (near real-time)scheduling,but ML&P noted that tie line limitations may affect true dynamic scheduling. ML&P does not use Bradley Lake for VAR support,but sometimes uses it as spinning reserve,typically in the early mornings. HEA operations/staffing.ML&P had no comments. Railbelt Issue -significant transmission line maintenance outages.The issue is that transmission line maintenance outages are being scheduled without appropriate coordination with other utilities on the railbelt grid.Example:HEA has scheduled a nine-day outage on one of their lines in October at the same time ML&P will have a major baseload unit out on maintenance. Transmission.The current major transmission line from Bradley Lake North has a 75 MW limit (allowing a 27 MW short-term reserve)from Bradley Lake.Based on prior history,ML&P believes the limit to be appropriate,but thinks it should be studied (adjust limit,increase line capacity,etc.). Bradley Lake 2015 Audit ML&P Interview Notes 9/10/15 Page 1 Bradley Lake administration costs.ML&P reviews Bradley Lake cost quarterly.ML&P perspective is that admin costs charged to Bradley Lake look high (particularly the percent of time allocations to admin work in the annual budgets). Budget process.ML&P believes the overall process is transparent.O&D committee meets monthly and has a technical rather than management or economic focus.They see HEA's proposed annual budgets first,and then it goes to the BPMC budget committee,then to the full BPMC.Budget questions at the O&D committee level are sometimes not resolved but passed on.At the overall BPMC level,sometimes all the board members are not in agreement on the overall budget. Technical issues.ML&P noted there have been historical problems with the governing systems,requiring several investigations and investments.While ML&P believes the final outcome was satisfactory overall,they believe early and regular engagement by the O&D committee could have improved the process and outcome. fT Bradley Lake 2015 Audit ML&P Interview Notes 9/10/15 Page 2 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interviews Date:September 10,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey GVEA:Allen Gray,Power Systems Manager General.GVEA noted that the use of HEA to operate and maintain Bradley Lake has ancillary benefits that might be hard to replicate by another party -location, administrative and procurement infrastructure,etc. Planning.CEA does annual water year projections,which are broken down as monthly energy allocations to each stakeholder utility.GVEA reviews and then sends CEA their anticipated monthly usage targets of Bradley Lake.GVEA reviews their monthly usage near the end of each month,then adjusts their next month's projected Bradley Lake usage accordingly. GVEA dispatch.GVEA believes that the main transmission line limitation limits their "take”of Bradley Lake (15 MW of capacity plus 4 MW spinning reserve).GVEA dispatch is complicated by their wind generation and its variability.As a result,they sometimes do significant hourly adjustments of their use of Bradley Lake,down to cancelling any Bradley Lake power.GVEA also sometimes uses more Bradley lake power than planned,then trues it up at the end of the month (see above).GVEA now uses Bradley Lake as a regulation resource,and gets spinning reserve from Bradley Lake "by default”.GVEA does not use Bradley Lake for peak shaving.Overall,GVEA is satisfied with the current Bradley Lake dispatch.GVEA is discussing real-time dispatch with CEA. Plant staffing.GVEA is satisfied with plant staffing levels;surprised at how low they are.Allen considers the plant manager Allen Owens to be knowledgeable,detailed, experienced,and a hands-on manager.Allen considers Bob Day to be knowledgeable on the project and diligent.Allen believes the site staff have an impressive breadth of expertise.HEA is very good with document management and documentation of project history. Bradley Lake 2015 Audit GVEA Interview Notes 9/10/15 Page 1 Project admin/management.GVEA does not have a good feel for how HEA allocates and uses their staff to administer/manage Bradley Lake.Invoices on procurements and contract work do have a clear break out/allocation to Bradley Lake,but similar detail is not provided on Bradley Lake admin.Given that,GVEA does not see any indication that overall admin and management costs invoiced by HEA are excessive. O&D meetings.The O&D committees does discuss long-term project needs and technical issues.The committee does review capital budgets before passing them to the budget committee. a Bradley Lake 2015 Audit GVEA Interview Notes 9/10/15 Page 2 BRADLEY LAKE HYDROELECTRIC PROJECT 2015 MANAGEMENT AUDIT MWH ACTIVITY NOTES Activity:Interviews Date:September 15,2015 Attendees:MWH:Stan Hayes AEA:Bryan Carey GVEA:Ron Woolf,CFO,Vice President,Finance General.Ron is the chairman of the BPMC budget committee.The committee generally formally meets quarterly,but is informally active between meetings.The committee sees/reviews all Bradley Lake project costs. O&M.The budget committee reviews budgets closely;going forward the committee will review monthly invoices more closely.In the O&M budget,HEA allocates admin/management costs as a %of time;GVEA would prefer to see it budgeted as hours.GVEA also suggested that admin and management be budgeted and billed as a fixed management fee or a flat rate for hours and costs,with a not-to-exceed cap. GVEA commented that HEA staff assigned to Bradley Lake are very good - knowledgeable and passionate. Capital costs.GVEA is comfortable with the presentation of projects and costs.GVEA suggested that capital work should be vetted/approved by the BPMC (not just discussed at the O&D level)before being budgeted.Large multi-year projects require look-ahead annual budgets to replenish the R&R fund.GVEA recommended that long-term financial discussions and projections (say 15 to 20 -year projections)-would improve the overall review and approval process. Licensing/regulatory costs.GVEA believes AEA is budgeting and handling these well, but believe timeliness of information to the BPMC could be improved. Communications.Overall,GVEA believes communications between the railbelt utilities could be improved,but believes the current communications issues are being driven by general tensions associated with reduced kWhr sales and the resultant budget pressures across the railbelt. Bradley Lake 2015 Audit GVEA Interview Notes 9/15/15 Page 1 BRADLEY LAKE PROJECT MANAGEMENT AUDIT REPORT COMMENTS DOCUMENTATION FORM Comment |Comment From Number _]Report Reference Comment MWH Response AEA __ Project Background 1st AEA 1 para mid way Change Form to from Concur Project Background 1st [Perhaps change "will”to "would”and have increased annual energy by AEA 2 para last sent.approximately 36,000 megawatt hours.Concur AEA 3 Section 3.1 Draft R&R report will be sent within a week.Receipt acknowledged Dispatch Agreement 2nd =|Mid way through paragraph has "With respect to dispatch costs”Seems AEA 4 para like sentence unfinished.Will correct. Explain clearly if governor work in 2014 was different than 2006 or similar. The work in both 2006 and 2014 has both been called Governor work but they may be unfortunate project names.If work in 2014 appears to be AEA 5 Section 4.2.1 different and prudent please state some way.Will edit/expand as requested Section 4.3.8 First AEA 6 sentence Change "dc”to "DC”Concur |hear about the O&M on hydro projects following bath tub curve or similar AEA 7 Section 5 through time.Could you better relate Bradley to location on curve.WIl add additional text AEA 8 Sect S page 12 Last sentence change form to from Concur O&M noted as perhaps lower than national projects.Could some of that AEA 9 Section §be from the project being relatively younger than other hydro projects?Will add explanatory text; Comparison of annual project costs are $12.55 to $5.9M.Bradley does not have any taxes so $5.46M would be reduced from $12.55M and Bradley Insurance runs about $600K/yr so another $765K difference brings AEA 10 Table 5.2 national number to $6.3M Will review and revise as needed "CEA also gets an alarm on low fish flows,and notifies AEA.”CEA notifies AEA 11 Section 5.4 plant not AEA.Will revise Line Item $40 FERC Land Use Fee.AEA pays this fee based on number of Section 5.5 Table acres of Fed land within project boundaries so would be the same AEA 12 5.5 regardless of operator.Will revise text Section 5.7 2nd Sentence awkward "Historically,HEA the safety program ..”Something is AEA 13 sent missing.Will revise Page 1 of 8 Comment |Comment From Number |Report Reference Comment MWH Response Section S.7 6th bullet.Site uses mobile cranes to perform fall protection over the AEA 14 Bulleted list penstocks,Since penstocks underground does this refer to the valves?This was as captured in MWH notes;will revise t have not found the file but agree with you in that believe microfiche files Section 6 License have change in license capacity.FERC Project Safety and Fees carries AEA 15 Capacity project as 119.7MW.To be discussed and revised as needed AEA 16 Section 7.2 First sentence "benign”Will revise to "being" AEA 17 Section 7.2 Draft report received by HEA.Will be provided to you within a week.Receipt acknowledged Section 7.2 Believe fish water over release could save 5,000-10,000 Mwah/jr if AEA 18 Improvements tidewater compliance point tied by computer to dam releases.Will add to report Spill could be reduced by 5'high wood flashboard dam across spillway (if Section 7.2 Ok with FERC).Reduce spill (some years)plus ability to run lake 5'higher AEA 19 Improvements (increased head}every year should have a good return.Will add to report Section 8.2 2nd The O&D and budget committees are subcommittee of the BPMC.So AEA 20 para maybe insert "sub”before committee.Wii revise Section 3.2 O&M Agreement Any changes in insurance needs to be approved by State Risk Management AEA 21 Insurance since project owned by State.Will edit/expand as requested State Is there anything in the contract making anything confidential?If yes, should identify what is confidential and what is public.If no,should delete State 1 Disclaimer that paragraph.As written,suggests everything is confidential.Will delete confidentiality language as advised by AEA Both MEA and AEEC (for HEA)have become BPMC members under the State 2 Section 1,2nd par.|Bradley Lake PSA,MEA recently and AEEC several years ago.Will revise The highlighted phrase "Review of Safety practices..."should be the first bulleted item,otherwise it looks like the main purpose is only review of State 3 safety practices.Will correct Power Sales Agreement -at page 5 states "It can be renewed for another 40-year term,or less if the remaining useful life of the Project is less.”The PSA can be perpetually renewed,it is not limited to a single 40 year State 4 Section 3.2 extension.Will review Agreement and revise text as needed At page 5 in paragraph that starts "Percentage Shares ...”describes participants as "Alaskan Rural Electric Association Cooperatives and Municipalities”--That rural cooperative description applies to HEA & State 5 Section 3.2 GVEA,but is Chugach a Rural Electric Association Cooperative?MEA??Will revise to be more generic -"electric utilities" first paragraph at page 31 states "It was noted that the BPMC is not a legal entity.”The accuracy of that statement depends upon a number of Section 8.2,1st assumptions defining a "legal entity."Because the statement is State paragraph unnecessary to the report,delete it.Concur;will delete Page 2 of 8 Comment {|Comment From Number |Report Reference Comment MWH Response HEA Executive Summary,please explain the flat or capped concept or shared risk proposal more HEA 1 Agreements fully.Will add additional text Executive Summary,Service providers,last The specific word was carefully chosen;it is possible (although unlikely) sentence of 1st that another provider could propose a scope with selected prices to the HEA 2 par.we suggest leaving out the word "significantly"BPMC below actual costs Executive Summary,Service providers,1st sentence of 2nd_|HEA is dissatisfied with CEA's dispatch of its own Bradley energy,insomuch HEA 3 par.that CEA does not abide by its own schedule for such energy transfers.Will revise the sentence to reflect HEA comment Executive Summary,Service providers,last CEA's costs were not provided separately,but as a line item in in the sentence of annual overall project budgets.Will add recommendation that all BPMC HEA 4 second paragraph |Why was a cost of CEA services not provided?members get project cost tables with an additional level of detail. Executive Summary,Service providers,first Please specify the management services CEA provides.CEA monitors the |The management services relates to the process of forecasting and sentence of last |water usage and forecast as they are required to do as dispatcher of the administering water and generation usage by each participant;text will be HEA 5 paragraph project;what are their Management services?clarified Since considerable effort and expense is required to maintain the 8 miles HEA 6 Section 1,1st par.Jof road at the Project,this should be added to the list of facilities.Concur;will add comment Section 3.2,1st |Amend to reflect that HEA also has discretion as to whether or not it HEA 7 par.renews the contract.Concur;will add comment Section 3.2,An additional reason for moving to the §year period self-renewal was to Overall O&M provide HEA some reasonable assurance that they would continue as Agreement,ist |Operator,to help them attract and maintain staff to support the effort of HEA 8 par.operating and maintaining the Bradley Project.Will review Agreement and revise text as needed Page 3 of 8 Comment |Comment From Number |Report Reference Comment MWH Response The 2009 and 2015 reports Hittle do not provide detail or analysis of Section 3.2,This statement is incorrect.Please review the contract.One of the duties jcapital needs for the generating and power train equipment,which are Overall O&M of the operator is to maintain a 25 year plan (a capital plan);this is the D {typically the components that have the largest capital costs are the most Agreement,3rd __[Hittle study previously mentioned (2009)and in the process of being important to the overall project financials;the report will be revised to HEA 9 par.updated (required every S years)-provided in November 2015 make this clear This is not true.The CEA Transmission system does not and has never Section 3.2,SVC [been connected to the Bradley Lake Transmission system.That system O&M Agreement,|terminates at Bradley Junction,where it connects to the junction of HEA's HEA 10 1st par.Soldotna Segment and Fritz Creek Segment.Will review Agreement and revise text as needed Not true.Within the past year HEA has questioned the cost and necessity Section 3.2,SVC _|of the upcoming SVC rebuilds,and was particularly concerned about the O&M Agreement,|late timing and absence of details in CEA's budget request for those HEA 11 ist par.rebuilds.HEA voted against the Project incurring these costs at this time.[Will revise text to capture this comment Section 3.2, Dispatch Agreement,1st HEA 12 par.HEA has expressed dissatisfaction over CEA's operation.Will revise text to capture this comment HEA is aware of only one utility that uses Bradley for regulating their system;CEA.We understand that CEA has lately performed tests with MLP Section 3.2,that would allow MLP to use Bradley for regulation but are not certain Dispatch whether that has been permanently implemented.HEA considers CEA's Agreement,1st use of Bradley to regulate its system to be in breech of the Bradley Lake |GVEA advised they also use the project for regulation;text will be revised HEA 13 par.Allocation and Scheduling Procedures (1993)currently in force.to reflect this,plus HEA comment Since this Audit mentions CEA's belief concerning an alleged right to use Bradley Lake to regulate their system,it should also mention that that Section 3.2,other Participants disagree with CEA and find no contractual basis for the Dispatch alleged right of regulation.HEA considers CEA's use of Bradley to regulate Agreement,2nd __[its system to be in breech of the Bradley Lake Allocation and Scheduling HEA 14 par.Procedures (1993)currently in force.See previous comment We believe each participant has their opinion as to whether there is a Section 3.2,constraint that negatively impacts their use of Bradley Lake;to the extent Dispatch the transmission line does constrain the dispatch of Bradley power to the |there is a constraint,it occurs beyond the project boundary. Agreement,2nd [northern utilities.tt would be helpful for this audit to provide CEA's basis |Transmission system analyses outside the scope of this audit would be HEA 15 par.for this assertion.required to independently evaluate this issue. Page 4 of 8 Comment |Comment From Number |Report Reference Comment MWH Response HEA doesn't understand what is meant by "potential”in this sentence. Section 3.2,There is a 7S MW transient stability limit on the tine.Bradley is capable of Dispatch 120 MW.This entire paragraph is wrong.Bradley output is curtailed by Agreement,2nd {transmission line constraint.Average output is currently below 90 MW HEA 16 par.even during extreme efforts to reduce lake level for dam maintenance.See previous comment Section 3.2, Resolution Changing Project |This resolution was not based on any data or actual fact of plant operation HEA 17 Operator,1st par.|deficiency.The resolution centered around a transmission dispute.Will capture HEA's concern in revised text. Section 3.2, Resolution The resolution is not self-explanatory,in that it provides no explanation, Changing Project |whatsoever,as to WHY the BPMC "no longer believes it is in the best HEA 18 Operator,1st par.Jinterest ...".Will capture HEA's concern in revised text. It was unfortunate that the dam and road was not visited.This accounts Section 4.1,3rd -_|for approximately 10%of the time and effort to maintain the plant and Concur that driving the access road and visiting the dam and intake area HEA 19 par.dam facilities.would have been beneficial to the overall condition assessment. Section 4.1,4th -_|note that the plant was in major outage overhaul status at the time of visit HEA 20 par.with contractor tools and extra parts on site.Will note in report Turbine hydraulic oil,bearing lubrication oil and transformer oil samples Section 4.1,4th -|are submitted annually for analysis.Periodic oil filtration and management HEA 21 par.is also performed.This sentence should be revised.report will be edited to reflect this comment Section 4.2.1,3rd {also oil actuated to close.Internal spring places the nozzle at 50%with no |Comment applies to turbine needles,but was made on the text discussing HEA 22 par.oil pressure.the inlet valves.Will modify the latter text for clarity Section 4.2.2,Ist |This Audit should mention that the crane controls and drives were updated HEA 23 par.in 2012 to modern VFD drives.report will be edited to reflect this comment This statement gives the wrong impression.New windows were on site Section 4.2.3,1st Jand waiting installation,but only because one window was broken during HEA 24 par.brush removal and facility summer clean-up.report will be edited to reflect this comment It should be noted that an equipment storage shed was proposed by the Operator to the BPMC,but was cut from the budget.Please explain the Section 4.2.3,2nd [statement 'lack of service'.All equipment is serviced and fully functional in|Will add text to address first comment.Re second comment,will revise to HEA 25 par.spite of the age.state potential lack of external service and support HEA 26 Section 4.3.8 The batteries were all replaced in 2009;so not original Project equipment.{report will be edited to reflect this comment the problems didn't develop they were there from initial installation. Suggested revision;"The Woodward 505 was found to have inherent HEA 27 Section 4.4.2 stability problems...”report will be edited to reflect this comment Page 5 of 8 Comment |Comment From Number |Report Reference Comment MWH Response HEA 28 Section 4.4.2 'Not guaranteed!is inaccurate;the support was not available.report will be edited to reflect this comment this should read one director and one manager.The director spends Section 5,about 25%of his time on Bradley and the manager is about 50%dedicated HEA 29 Overview,4th par.|to Bradley efforts.report will be edited to reflect this comment It should be noted that a synergy exists under the pathfinder contract.It is unlikely that the flights required to support Bradley alone would be sufficient to justify a contractor staging a plane and crew at the Homer Airport.Since HEA requires air services to support it own operations and maintenance of facilities across the bay HEA is able to combine the two Section 5,requirements (Bradley and South Bay)and gain some economies of scale HEA 30 Overview,7th par.and thereby obtain lower pricing for the Bradley flight support services.report will be edited to reflect this comment Section 5, HEA 31 Overview,7th par.[as well as other barge service providers report will be edited to reflect this comment Can slightly be quantified.It might be better to put in a percentage of what lower really means when it is also compared to higher availability.The challenge is that the plant -to -plant variability on O&M costs is very Section 5.1,last [Lower costs and higher availability should garner more that just a high,so there is no specific cost to quantify against.The sentence as- HEA 32 par.statement of slightly.written conveys our professional opinion on this item Section 5.2,office |it should be noted that descriptions of duties of HEA's Director of Power management and |Fuels and Dispatch and Power Production and Dispatch manager were not HEA 33 support staff requested.report will be edited to reflect this comment It is misleading to utilize one single month for analysis.Time is charged on the basis of when it is committed.For example the data could be distorted by a strong effort from the contracting officer to review a contract (the Section 5.2,activity might easily be a one time event for the year).Please note the Summary Table {disparity between Jon Kleine,Paul Parsons and Andrew Carey (they all labor hours work the same shift but have very different hours for the month.This charged to project |table is misleading,and does not add value without a longer span of time JA note will be added to indicate that one month's data is insufficient to HEA 34 in May 2015 represented.evaluate the level of effort for any individual or labor category Section 5.2, Summary Table labor hours charged to project HEA 35 in May 2015 several numbers in the table appear to be incorrect Will review and revise as needed HEA has a great relation with the IBEW and is able to work under the conditions describes.many railbelt utilities do not take this approach due Section 5.2.2,item |to individual union contracts.Other utilities do not enjoy as much freedom HEA 36 1 of job assignment.Noted;this benefit is captured in the current text Page 6 of 8 Comment |Comment From Number _|Report Reference Comment MWH Response Section 5.2.2,item HEA 37 3 or even days.report will be edited to reflect this comment Section 5.4,4th as well as other alarms so they can call out an operator after hours if HEA 38 par.needed;also,notifies the plant operator on duty not AEA.report will be edited to reflect this comment CEA's costs were not provided separately,but as a line item in in the Section 5.4,7th {better specificity is required.Where is a breakdown of these costs and annual overall project budgets.Will add recommendation that all BPMC HEA 39 par.who billed them;recommend cost breakdowns be provided by CEA.members get project cost tables with an additional level of detail. Section 5.5,Table HEA 40 5.5.b Correct "HEC"typo to HEA report will be edited to reflect this comment This should be corrected to show that the AEA,not HEA,in the past chose not to provide the BPMC budget sub-committee with these invoices.The way this reads,it gives the impression that HEA failed to provide the data in the past,but will begin to provide it in the future;whereas the fact is Section 5.6.2,4th |that HEA has always made the information available to the AEA,in HEA 41 par.accordance with the O&M contract provisions.report will be edited to reflect this comment HEA normally takes each unit down for 1 week a year with a couple of days of overlap to do the common systems.HEA believes that no amount of analysis would prudently justify extending the outage/inspection of the Bradley units and sub-systems to cycles exceeding one year,particularly in light of the fact that the plant's normal utilization is less than the 50% Section $.6.3,2nd |level,so that these inspections rarely if ever result in loss of plant On-site O&M labor is charged hourly.Analysis and optimization could HEA 42 par.utilization.potentially reduce total labor hours charged. Re lump sum contracts,(applies to contracts and contractors).In reality contractors do not know how to deal with the risks that come from doing work at Bradley Lake (distance from supplies,transportation costs weather risk,employee housing,food)and when they see that risk and don't know how to address it they pad their not to exceed or contract price Acknowledged,and the intent was not to imply any deficiency in HEA's excessively.We at Bradley understand and know the risks and are better |current contracting mechanisms.The first line describes potential savings; Section 5.6.3,3rd_Jable to deal with them.Truly time and material has saved Bradley a lot of Jeach of the three approaches suggested has the potential to reduce costs HEA 43 par.contract costs.on specific contracts. Section 5.7,1st Re arc flash study equipment labels,labels are generated and are HEA 44 par.scheduled for installation during upcoming LOTO training in November.report will be edited to reflect this comment Section 5.7,2nd HEA 45 par.form should be from will revise Page 7 of 8 Comment |Comment From Number _|Report Reference Comment MWH Response the Audit team observed an atypical situation in which storage drums were deliberately placed near the nozzle rebuild work area.This was done to . better facilitate work and is not reflective of normal drum storage report will be edited to reflect this comment;but the general comment Section 5.7,4th practices.For these reasons this last sentence of paragraph '3'should be {still applies,even for short-term storage of potentially hazardous HEA 46 par.,item 3 deleted.materials. A draft of the 2015 Long-term Repair and Replacement Cost report is now |Acknowledged and assessment of the 2015 report will be included in the HEA 47 Section 7.2 available revised report. The 2009 and 2015 reports do not provide detail or analysis of capital needs for the generating and power train equipment,which are typically the components that have the largest capital costs are the most important this (a long-term capital budget plan)is already in place and has been for to the overall project financials;the report will be revised to make this HEA 48 Section 7.2 some time clear Section 8.2,last |CEA's failure to provide data and their general lack of transparency is a HEA 49 par.cause of concern to HEA.Noted Section 8.3,O&M,|Hydraulic oil,turbine bearing oil,and transformer oil annual analysis is HEA 50 item 1 already performed.report will be edited to reflect this comment Our understanding from the site visit was that not all project drawings Section 8.3,O&M,{Please clarify what is being suggested here.This (as-builting of drawings)|reflect the current conditions,report text will be qualified per HEA HEA 51 item 4 has already been done for all upgrades at the plant.comment this (updating Project O&M manual)is being done already,work is Section 8.3,O&M,|underway to further automate the system.This is a project that willtake Jreport will be edited to reflect this comment,but with the HEA 52 item 5 about 5 years.recommendation that the timetable for completion be accelerated. Our site visit notes indicate that the spare parts database was last updated HEA has a database of spare parts.If you need to recommend something {in 2012.Our recommendation was that a comprehensive inventory of all Section 8.3,O&M,|in connection with that data base,then it should be that HEA keep it project spare parts,materials,consumables,and miscellaneous equipment HEA 53 item 7 updated.be developed and maintained. CEA Section 3.2,Chugach does not charge for dispatch services and has not invoiced for any Dispatch as the report seems to indicate.We do charge for maintenance activities CEA i Agreement on the SVC's and that may be were the confusion comes from.report will be edited to reflect this comment GVEA Section 3.2, Dispatch GVEA 1 Agreement Dynamic Scheduling -GVEA would like additional information/detail.Will add general descriptive information Section 5,HEA Adm (Management):GVEA has been told they charge by percent and GVEA 2 Overview,4th par.jnot actual.Will clarify in text Page 8 of 8 F aniis,BS3S Bradley Lake Hydroelectric Project Management Audit Final Report December 2015 Disclaimer This report has been prepared in accordance with the terms set out in the contract between the Alaska Energy Authority and MWH.The information,evaluations,and opinions contained herein were based on data and results prepared by or obtained from other parties not under the direct control of MWH.In preparing this report,MWH made use of,and relied upon,data,drawings,analyses,reports,memos, letters,e-mails,phone interviews,conversations,and other information provided by others.MWH did not perform independent investigations or analyses to determine the validity or suitability of such items and information.Therefore,neither MWH nor Alaska Energy Authority,or any person acting on any of their behalf,make any warranty,express or implied,or assume any liability with respect to the use of any information,method,product,process,or statement contained in this report. Any recipient of this report,including Alaska Energy Authority,Chugach Electric Association (CEA), Anchorage Municipal Light &Power (AMLP),Golden Valley Electric Association (GVEA),Matanuska Electric Association,Inc.(MEA),Homer Electric Association (HEA),City of Seward,dba Seward Electric System (SES),or any others,by their receipt and use of this report,hereby releases MWH and Alaska Energy Authority from any liability for direct,indirect,or consequential loss or damage,whether arising in contract,tort (including negligence),strict liability,or otherwise. The content and detail of this report was governed and constrained by the information provided to MWH by others.In that context,MWH was neither requested to perform nor has performed environmental or regulatory site investigations or physical environmental assessments in connection with the facilities described in this report.Also,MWH was neither requested to,nor has performed,any economic analyses or detailed assessment of any permits or licenses,with the exception of the FERC license. THIS PAGE INTENTIONALLY LEFT BLANK Bradley Lake Project Management Audit Report @)mwu. Executive Summary The Authority commissioned MWH to conduct an overall audit of the Project's operation,maintenance, regulatory compliance,capital program and power dispatch functions as a means of providing the BPMC with an independent evaluation of various elements of the Project which have the most effect on near- term and long-term performance and costs.The audit scope included multiple scope items in the broad areas of condition,Project Agreements,O&M,Providers of O&M and dispatch,and recommendations for improvements. MWH's audit activities included requests for,and review and analysis of,information to address each scope item;a site visit by senior mechanical and electrical engineers;interviews with managers of HEA, CEA,GVEA,MEA,and ML&P (eight interviews total),and development and preparation of this report. Detailed discussions and recommendations and conclusions in each of the scope areas are provided in the body of the report.It is noted that the level and detail of review and analysis was constrained by the amount of information received and the overall budget for this audit.A brief summary of the overall conclusions and recommendations is provided immediately below. Condition The Project was observed and reported to be in good to very good condition;overall maintenance is considered reasonable and effective.Major improvements to date are considered reasonable and appropriate,consistent with industry practice. Safety Overall safety standards and practices are consistent with current industry practice.While no serious safety deficiencies were noted,recommendations for improvements in training,electrical equipment maintenance practices and personal protective equipment are provided. Agreements The number and types of agreements are considered to be appropriate.The agreements are written simply and broadly,providing the parties latitude and flexibility.In general,all parties appear to be acting reasonably and appropriately under their agreements.Recommendations for consideration include reviewing the insurance limits on the O&M Agreements,and consideration of changing payment provisions for selected activities from the current time and materials to flat or capped compensation,or a shared risk/reward arrangement.See Section 8.3,Agreements,for additional discussion. O&M Overall,the current O&M arrangement is providing good Project availability and reliability (at over 92% availability for the last 30 months,well above industry averages).Project site staffing is considered to be reasonable and appropriate,considering the site location and importance of the project to the railbelt utilities.Reductions in site staff,or going to unmanned operations,are not recommended.Maintenance standards and practices are consistent with typical utility practice.Maintenance is currently largely schedule-driven.Full implementation of the computerized maintenance management system,followed by analysis focused on optimization of maintenance tasks and timing,is recommended.Recommendations for improvements in project documents in the areas of updating all Project drawings and manuals to the current status,data management and backup,and inventory management are provided. Final Report . Page i December 2015 Bradley Lake Project Management Audit Report @)Mwu. Service Providers HEA is the current service provider for overall Project O&M,under an Agreement that expires in July 2018.In terms of HEA's overall performance,unit and plant availability has been good.Overall annual O&M costs are consistent with current industry costs for similarly-sized projects;perhaps slightly lower than average when considering the project location.Overall annual O&M costs for the last three years have averaged 15%under budget.Overall administration cost as a percentage of total O&M costs appear to be reasonable.Improved communications and increased transparency of O&M costs to the participating utilities is recommended.HEA's location and existing local infrastructure are advantageous to O&M of the Project;another provider would have to duplicate portions of that infrastructure,making it challenging for another provider to provide similar services at significantly lower cost. CEA is the current provider of dispatch services and O&M of the Static Var compensators (SVCs). Based on our discussion with CEA and interviews with other utilities,CEA's current dispatch and O&M duties are performed well and all parties are generally satisfied;it is noted that HEA expressed dissatisfaction with CEA's dispatch of CEA's share of Bradley Lake energy.There is some interest by some utilities to have CEA do dynamic dispatching of the project (current dispatching is typically hourly). MWH was not provided with a detailed breakdown of CEA's costs for their services,and so could not comment on their reasonableness. In addition to dispatch and certain (SVCs)O&M services,CEA also provides management services for overall Project water and generation forecasting,and accounting of each participant's share of water and generation,based on their percentage of the project capacity and energy.On a water management basis,average annual spill has been less than 3%of annual inflows,which is considered to be good management.Again,the participants are satisfied with CEA's water management services. Final Report Page ii December 2015 Bradley Lake Project Management Audit Report - @ mw. Table of Contents Project Background and HiStory...........:ccssccessssssserersssssoceeennssonseesscsannnccseensnssnauesssauecsesees 1 2 Scope of Management Audit ............ccccccssssseeccessssecceeereusececonsesensonsessesssoneansnsnnsnaneeesensnens 2 3 Review of Project Agreements.............s:ssssccessssssereesssscsveessnseccessonsossscenessesecansnsestensenauonens 3 3.1 General Considerations ..........ec eeccccceeneeeeenneeeeeseeeeeeaneeseaaeeceeaueesesatesnsaaeeeesaneeenenees 3 3.2 Review of Individual Agreement...ccccccceeecsessseeeseennseeeaeeneeeeeessereteesveneeeeeseees 3 4 CONAItION ASSESSMENE .......-.cccesessnceceeesesssenceeesenecsnseeeesssonseceeesesssnseeeessssceccsersssseccasnssseonones 7 4.1 GOMOFal nee.enceeeeneeeceseeeetsaceeereneeeeesaneeceanecessenensesneeesensaeecsageseeaeesenigeesenaaeetenas 7 4.2 Mechanical Equipment and Systems ...............cccceececsccecceeetecsaneeeeceesnaaeeceesesaaeseneeseaas 7 4.3 Electrical Equipment and Systems...............ccccccccccccssscceecesessteeeeesssssseeeeesssaeeseseeeenes 8 4.4 Unit and Powerhouse Controls and Protection............cccccceeeceseseeeeneeseeesteeeeaeereneees 11 5 Project Operations and Maintenance ...........ccccssssceccssssscconsessnssensorsssssoonsesesssnanoeeensnsnees 12 5.1 Overall Project and O&M Costs ........ce eeecceseeseeeseneeerseeeceeseeeeteaeeeesseeecesaaeesecareeseneees 13 co)(1100 ce 18 5.3 Evaluation of Unmanned Remote Operation of the Plant.................:ccessssscceeessseeeees 22 5.4 Cost Benefit Analysis of Maintaining the Current Dispatch Services and Static Var Compensation O&M (CEA)............c:ccccccscsssssesscessessneeeeeeessnneeeesesscnsseeeesssesseseressnanees 22 5.5 Cost Benefit Analysis of Maintaining the Current Plant Operator (HEA).................23 5.6 Other Operations and Maintenance Items .................cccsecesccseeeereceeeeeeeeeeeerseeseeeaaaees 25 5.7 Operator Compliance.................ceeeeteeeeeeeeeecnsneeanensnerseeseneearetssecaeeeaeaseresneereraeanenaneteney 27 6 FERC License Compliance...........csssccccssssscessesscessseessssnsesnsscesenssseesessaesessnensensseeensesesssacs 29 6.1 OVErVIOW o.oo...eeeceeeeeteeeeees seeeeeeeeeeeeteceneeuieeeaaaeneneeeeeneeeceserenentessesaaaaaaeeeseeeeseeeenepeeees 29 6.2 Associated Environmental Permits .............cc ceceeecssseecereeeesnneecertesteeeesceseseeeeeeeseaguas 32 6.3 On-Going Compliance Efforts .....0....ccc ccccececseeeeeseeeeeeaeeeeenaeeeeeneeecenaeeeseaneesssneeeeeaas 33 6.4 Conclusion -Licensing /Permitting 0.0.0.0...eee seeee cere eres eceeseeceeeeeeeceeeeeeeaeeaaaeeaeeees 34 7 Project Capital Improvements /InvestMent ...........cccccsssccessessesssscsensssceesensaesersnseesssoes 35 7.1 Historical Improvements/Investment ..............:cc eeeseeeeeetcnecnneeeeeeeeseeeeeeereceereeaaea 35 7.2 Recommended Improvements /INVEStMeNts .................:escccececeeeteceeteeteeeeeeteeeeecaeeees 36 8 COMCIUSIONS ........:scccenseeeseneessnecesesscecussscessoncneuensnnecunsaucuussususessucusessoescensusnecpanseannsernsenecens 39 8.1 Summary of Audit...eect secre eceeneeeeseaeeeceeeeeeeessesessaaeeseaaeeseaeesegaeeseenesenseaees 39 8.2 Assessment of Current Arrangements saseeueueneeseceeeceaaeeeseaeeeeeaeeseeaneeteaeeceseneetenseeeeeaas 39 8.3 ReCOMMENAATIONS.............eecceeceeeeeseeeeteeeecneneeeeeeeeesssaeeeseenaeesepaeeeeseneseneaaeeesnaaeseenees 40 8.5 Review Comments and RESpOnses ...............cccccccceseeneetentneceeeeeececeeeceeeersesenesninaanaess 42 9 REfEFENCES ....ssccccccnssseccssssseneresesssnecncessesssncosoeeensosneceesesonsneaecsenssnaauzensessaunanusseusnscesesenssaee?43 Final Report Page December 2015 Bradley Lake Project Management Audit Report @)mwu. 9.1 References -Agreement...cccceetetcereeeeees Vaaeeeeeees cguaneneeeeeeesceeeeteesaeeeeeeeetenes 43 9.2 References -Organization /Staffing ...........eee ec sceeeeneee cece eeeseeeeseseeesesaeeereaeesenes 43 9.3 References -Operations and Maintenance................ccccccccsesseccereteeneeeeesennaeteeeeeeeee'43 9.4 References -Project Operating Budgets and Costs...cc cccesesseeeeseeeeeeeneeeneeaes 44 9.5 References -Project Capital Investments ..000....eee cece eter eeseeeenteeereeneeseneeneees 44 9.6 References -Project Licensing/Regulatory ......0....ec eee cceeceecseeererreereneeteeeeeen44 REPEFENCES -oes eececcccesnneeceeseeececeseeecteeerseaneeeeenaneceseaeasteaecesessaeesessaeesenssesensnteneenstees 44 9.7 MiSCEHANCOUS.............cccccccccesessseceeeeescnseteeesesecaaeecoreenenneneer teeusedeseesesuseeeeuesseensaseenee 44 10 Report Appendices ...........:ssccccssescesenserseceecneceesensnnsnecasseusessnunausonseenaseusenusesseccerenseorenses 45 Appendices 1.Request for Information (annotated) 2.Site Condition Assessment Report 3.Utility Interview Notes HEA 08-25-15 HEA -_09-18-15 CEA 08-26-15 MEA 09-03-15 MEA 09-15-15 ML&P 09-10-15 GVEA 09-10-15 GVEA 09-15-15zrommooDp>4.BLP Management Audit Report Comments Documentation Form Final Report Page i December 2015 Bradley Lake Project Management Audit Report @)Mwu. 1 Project Background and History The Alaska Energy Authority (Authority)owns Bradley Lake Hydroelectric Project (Project)which was completed and placed into commercial operation on September 1,1991.The Project was developed under terms of a Federal Energy Regulatory Commission (FERC)License,No P-8221,issued to the Authority on December 31,1985.The Project is located at the northeast end of Kachemak Bay about 27 miles from Homer,Alaska.It is the largest hydroelectric facility in the State of Alaska with a nominal rating of 120 MW.Facilities include a concrete faced rockfill dam 125 feet in height and 600 feet in length,an eight mile long access road from the powerhouse to the dam,a three and a half mile long power tunnel,the powerhouse,a barge dock,permanent housing,an airstrip,20 miles of transmission lines and three small diversion systems.It also includes two parallel 115 kV transmission lines from the Project to the Bradley Junction substation.The powerhouse contains two vertical-shaft Pelton turbines direct connected to 60 MW synchronous generators.Each turbine has six needle valves that regulate the flow of water to the turbine and thus the generating output.Average annual energy production of the project over its 24 years of operation is approximately 380,000 MWh.The Battle Creek diversion project is currently in the FERC license amendment process and would increase the annual energy generation from the Bradley Lake Project by an estimated 36,000 megawatt hours (MWh). A Bradley Lake Project Management Committee (BPMC)was formed in early 1988 with representatives from each of the power purchasers and the Authority.Power purchasers originally included Chugach Electric Association (CEA),Golden Valley Electric Association (GVEA),the Municipality of Anchorage through its Municipal Light &Power division (AML&P),the City of Seward through its Seward Electric System (SES),and the Alaska Electric Generation &Transmission Cooperative (AEG&TC).Both Homer Electric Association (HEA)(including its subsidiary Alaska Electric &Energy Cooperative,Inc.(AEEC)) and Matanuska Electric Association (MEA)have been added as additional parties to the Power Sales . Agreement.The BPMC is responsible for the management,operation,maintenance,and improvement of the project,subject to the non-delegable duties of the Authority.The FERC-licensed Project is operated and maintained by HEA for the Authority.Dispatch services are provided by CEA. The project also has a Static Var Compensation system (SVS)in an Authority fenced area adjacent to the HEA owned Soldotna substation.Breakers are within the HEA area.Maintenance of the SVS and the associated breakers at Soldotna is by CEA.The project also has a Static Var Compensation (SVCs) system at Dave's Creek Substation.Maintenance of the SVCs and the associated breakers at Dave's Creek is by CEA. The project capacity and annual project costs are distributed among the BPMC members as follows: e Chugach Electric Association (CEA):30.4% e Anchorage Municipal Light &Power (AMLP):25.9% e Golden Valley Electric Association (GVEA):16.9% e Matanuska Electric Association,Inc.(MEA):13.8% e Homer Electric Association (HEA):12% e City of Seward,dba Seward Electric System (SES):1% Final Report Page 1 December 2015 Bradley Lake Project Management Audit Report @)MWwu. 2 Scope of Management Audit The Authority commissioned MWH to conduct an overall audit of the Project's operation,maintenance, regulatory compliance,capital program and power dispatch functions as a rneans of providing the BPMC with an independent evaluation of various elements of the Project which Fave the most effect on near- term and long-term performance and costs.The main purpose of this audil was to provide the Authority and BPMC with an independent review by a firm and individuals knowledgeable and experienced providing consulting engineering services to hydropower projects and clients,with the ultimate goal of identifying potential improvements that might enhance the long-term value of this vital regional power resource for its participants. The main purposes of this audit are to provide the Authority and BPMC with an independent: Review of safety practices and compliance with utility safety standards; Assessment of the condition of Project equipment and systems and controls; Review of Project operations,maintenance and dispatch; Review of Project compliance with FERC license conditions and other project regulatory and environmental conditions/requirements; Recommendations for improvements in Project business processes -in management,staffing, and planning and execution of capital projects;and, Recommendations for judicious Project capital improvements and operational improvements to improve safety,improve reliability,improve generation,and/or reduce costs. This information and these recommendations will be used by the Authority and the BPMC to support decisions and actions to be taken towards achievement of the following primary Project objectives: Maintain a safe work place in compliance with.industry standards arid practices; Sustain compliance with FERC license terms and conditions and applicable environmental laws, regulations,and conditions,and avoid violations; Maximize energy production,daily peaking capacity,and unit/plant responsiveness within transmission constraints and with consideration of operational characteristics and outage on of other generating units on the system; Perform operations and maintenance and dispatch to maximize the Project's benefits to the BPMC members (and their ratepayers)in accordance with prudent utility practices;and, Plan and implement judicious renewal and replacement work. The management audit did not include a full review of project compliance "or dam safety matters under Part 12 of FERC's regulations;it only included review of license compliance activities under Part 4. Final Report Page 2 December 2015 Bradley Lake Project Management Audit Report @ mwu. 3 Review of Project Agreements 3.1 General Considerations Relevant Project development and operating agreements were provided by the Authority for review at the initiation of this management audit.These included: e Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc.and Alaska Energy Authority” dated effective July 1,2008; e Bradley Lake Hydroelectric Project Static Var Compensation System Operation and Maintenance Agreement Between Chugach Electric Association,Inc.,and Alaska Energy Authority August 1996; e Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority,Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures,as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher; e Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)by and among Alaska Power Authority (now Alaska Energy Authority),Chugach Electric Authority,Inc., Golden Valley Electric Association,Inc.,Municipality of Anchorage d/b/a Municipal Light and Power,City of Seward d/b/a Seward Electric System,Alaska Electric Generation &Transmission Cooperative,Inc.,Homer Electric Association,Inc.,and Matanuska Electric Cooperative,Inc. (December 1987); e Bradley Lake Hydropower Project,Plant Operations and Maintenance,Volume 1,2,&3,Stone & Webster Engineering,1992; e¢Consenting and Approving Resolution of the Bradley Lake Hydroelectric Project Management Committee Resolution No.2013-06 Change of Project Operator;and, e Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs,August 4,2009, Final Report.Prepared by D.Hittle and Associates.[Note:This report is currently being updated and the updated version was not yet available for review prior to completion of this audit report]. 3.2 Review of Individual Agreements 3.2.1 Overall O&M Agreement Agreement Title:Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc.and Alaska Energy Authority”dated effective July 1,2008 Under the Master Maintenance and Operating Agreement (MMOA)with the BPMC dated May 24,1994, the Authority is authorized to enter into agreements with other parties for the maintenance and operation of the Project.The original O&M Agreement was executed with Homer Electric Association (the current "Operator”)on February 11,1994 and it was amended twice -first in June 1999 and then again in July 2008.Under its current terms it is subject to renewal at 5-year intervals,at the mutual discretion of the Authority/BPMC and HEA.This renewal process is intended to provide an avenue for re-consideration of the scope and quality of operations at regular intervals,giving the BPMC an opportunity to further modify terms of the O&M Agreement or change the structure of the O&M function if it was deemed to be in the best interest of participants.Additionally,it affords the Operator a reasonable period of service to attract and maintain project site staff and other project staff. Final Report Page 3 December 2015 Bradley Lake Project Management Audit Report @)mw. Specific comments on the overall O&M agreement are as follows: Section 5.j requires an annual training program developed and implemented by the Operator.HEA does have training materials in place,but they are in the process of being updzited.We did find evidence of training,but a comprehensive rigorous,scheduled annual training program did not appear to be in place. Recommendation:update the training materials and implement standardized scheduled annual training. Section 7 covers the annual O&M budget process.Section 8 covers "extraordinary”costs that were not anticipated.Large capital budgets are being prepared by the Operator,reviewed and approved by the BPMC,and implemented by the Operator,but this is not a specific requirement of the overall O&M agreement.The Agreement requires the Operator to develop and submit annually to a five (5)year schedule of estimated equipment modifications,replacements,additions,and disposals; Recommendation:Add a requirement for the Operator to develop and maintain a long-term capital plan (30 to 40 years forward)and continue the short-term five year annual capital budgets for planning and implementing large capital projects. Section 13,Insurance,has limits of liability that were apparently established in 1994.Recommendation: review and revise the insurance limits to conform to the current limits used by the participating utilities in their contracts. 3.2.2 SVC O&M Agreement Agreement Title Bradley Lake Hydroelectric Project Static Var Compensation System Operation and Maintenance Agreement between Chugach Electric Association,Inc.,and Alaska Energy Authority August 1996. This Agreement relates strictly to the 115-kV Static Var Compensation System (SVS)for the Bradley Lake Hydroelectric Project,and names Chugach Electric Association,Inc.(CEA)as the SVS Operator. The Agreement specifies that since Chugach owns and operates an electric power transmission network (indirectly connected to the Bradley Lake Project transmission system)that is used to wheel Bradley Lake energy Northward,and operates substation equipment at Dave's Creek and Soldotna,that they are best qualified to operate and maintain the Bradley Lake SVS as well.The BPMC has approved this arrangement,and its terms are subject to terms of the above-mentioned MMOA.According to the Authority and most of the participating utilities that we interviewed,Chugacti has been diligent in carrying out their duties under this Agreement,and no concerns were raised about CEA's cost of this service. HEA advised they have questioned and did not approve the cost and necessity of the upcoming SVS equipment rebuilds (see immediately below). We understand plans are underway to implement a significant replacement/upgrade of the SVS.From our interviews with the participant utilities,there seems to be some differerices of opinion as to whether the SVS is primarily required for the Bradley Lake project or primarily required for transmission system elements and operation that are not part of the project.While the existing documents are explicit in this regard (part of the project),we suggest this should be discussed and reconciled by the overall BPMC. 3.2.3 Dispatch Agreement Agreement Title:Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority,Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures, as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher. Under this agreement,CEA is designated as the "dispatcher of energy frori the Project...”,and through separate agreement (Services Agreement)is also the entity providing wheeling and other related services to the other power purchasers.The BPMC specifies operating criteria and guidelines which must be followed by the "Dispatcher”-these are set forth under a separate document entitled "Scope of Final Report Page 4 December 2015 Bradley Lake Project Management Audit Report @ mwu. Dispatch Duties in the Allocation and Scheduling Procedures”.In general,CEA has been diligent in carrying out their duties under this Agreement.All utilities interviewed were,in general,satisfied with CEA's dispatch services -they are able to get Project capacity and energy (within their overall Project allotments)to meet their requirements,as well as to use Project ancillary services such as spinning reserve,and,in some cases (CEA and GVEA),regulation.HEA noted they have expressed dissatisfaction with CEA's dispatch services,in particular how CEA dispatches their allotment from Bradley Lake as compared to CEA's dispatch of the Bradley Lake allotments of other parties. Additionally,HEA advised that they consider CEA's use of Bradley to regulate its system to be in breach of the Bradley Lake Allocation and Scheduling Procedures (1993)currently in force. Several utilities indicated that they are exploring dynamic scheduling of Bradley Lake with CEA,which could be on the order of minute-by-minute scheduling or even shorter time increments;currently, dispatch is generally scheduled on an hourly basis. In interviews,CEA noted they believe the dispatch agreement allows CEA to use Bradley Lake for regulation;that their Cooper Lake project has the highest priority on their 115 kV transmission line (higher than Bradley Lake);that they dispatch Bradley Lake "at no cost”to the Project;and that their transmission line does not currently constrain dispatch and transfer of Bradley Lake power.As noted in the preceding paragraph,HEA believes the current Allocation and Scheduling Procedures do not allow CEA to use Bradley Lake for regulation of its own system.With respect to dispatch costs,the Agreement indicates that CEA provides annual budgets for certain services,and budget information provided appears to indicate CEA invoices and is paid for services;CEA clarified that they do not invoice for dispatch services,only for maintenance activities on the SVCs.Regarding the issue of a transmission line constraint affecting Bradley Lake dispatch,the majority of utilities indicated they did not see this as an issue,but a minority believed it currently is a constraint or could be a constraint.Our opinion is that this should be more appropriately addressed as a regional transmission system issue rather than a Bradley Lake project issue. 3.2.4 Power Sales Agreement Agreement Title:Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)by and among Alaska Power Authority (now Alaska Energy Authority),Chugach Electric Authority,Inc., Golden Valley Electric Association,Inc.,Municipality of Anchorage d/b/a Municipal Light and Power,City of Seward d/b/a Seward Electric System,Alaska Electric Generation &Transmission Cooperative,Inc., Homer Electric Association,Inc.,and Matanuska Electric Cooperative,Inc.(December 1987). The Power Sales Agreement is dated December 8,1987.It was consummated prior to Project commercial operation,and has a term of 50 years from the later date of commercial operation (which was designated as being September 1,1991)or the date when bonds are paid off (anticipated 2021); meaning the current expiration date is September 2041.It can be renewed for additional 40-year terms, or additional terms of less duration if the remaining useful life of the Project is less.Among other things, this Agreement specifies the electric services to be furnished;obligations of the parties under the Bond Resolution which agreed to fund the Project;terms related to Project completion;and payment obligations.It also agreed to the establishment of the BPMC effective January 15,1988,governing operation of the Project on behalf of participants.The Project's delivery point to each Project participant is Bradley Junction. Percentage Shares can also be adjusted at the renewal date as long as the total still adds up to 100%for all of the participants.The Agreement specifies the initial Percentage Shares of each purchaser;the current purchasers and their percentage shares are listed below.All such purchasers are designated as "utilities”under State statutes and authorized to enter into power purchase agreements such as this. Cooperative purchasers include CEA,GVEA,HEA,and AEG&TC.Municipal purchasers include AML&P and SES.The project capacity and annual project costs are distributed as follows: Final Report Page 5 December 2015 Bradley Lake Project Management Audit Report |@emwu. e CEA:30.4% e AMLP:25.9% e GVEA:16.9% e MEA:13.8% e HEA:12% e SES:1% To the extent ascertainable under this limited review,the parties have been conforming to their respective shares of the project in terms of energy,capacity,and cost,and are compliant with their obligations under this agreement. 3.2.5 Resolution Changing Project Operator Title:Consenting and Approving Resolution of the Bradley Lake Hydroelectric Project Management Committee Resolution No.2013-06 Change of Project Operator This resolution was passed by the BPMC on December 23,2013.In part,it concluded that the BPMC...”no longer believes it is in the best interests of the Project that HEA be utilized to provide the services of Operator under the Project O&M Agreement”.In December 2013 HEA was informed by the BPMC that its services under the O&M Agreement "will not be automatically renewed unless a cost benefit analysis and management review being performed and therefore ciould conclude July 1,2018”. The resolution is considered to be concise,but it does not include any written basis for the above quoted conclusion.HEA advised that they believe the resolution was driven by aa transmission dispute rather than deficiencies in HEA's services as Operator., As we understand it,this report provides elements of the management review referred to above. Final Report Page 6 December 2015 Bradley Lake Project Management Audit Report @)mwu. 4 Condition Assessment 4.1 General Audit Scope Item: e Review condition of project equipment &controls and determine if they are being properly improved and maintained and that condition is not unreasonably deteriorating. The condition assessment consisted of the following activities: Walkdown,visual inspection,and discussion of powerhouse features,equipment,and system,with a focus on the generating equipment and controls. e In-depth (three-hours total)Interviews with the plant superintendent,foreman,and operator ; e Reviews of provided inspection and maintenance procedures and checklists;and, e Spot check of data collection and record keeping on-site,as it related to the condition. A total of eight hours was spent on-site.The access road to the dam and the dam itself were not visited. The walkdown and physical observations,which took approximately three hours,included all areas and equipment on every level of the powerhouse,plus the powerhouse exterior and generator step-up transformers on the side of the powerhouse.The fuel storage facility and warehouse/shop building were also visited.HEA noted that the dam and access road account for approximately 10%of the time and effort of on-site staff. In general,all features and equipment were observed to be in good to very good condition.Equipment was well-maintained;no excessive corrosion,leaks or significant deterioration were observed.General housekeeping was good,with clear access ways maintained.Locally,some items and equipment were observed left or stored in such a way as to block ready access to valves and other equipment,so local improvements to housekeeping and clearance around equipment could be made.HEA noted that the plant was in a major outage overhaul and the time and that the observed conditions were not indicative of typical long-term practice. MWH was provided an Overview of Annual/Monthly/Daily Inspections and Analysis report prepared on August 17,2015,which provided a list and description of the main routine inspection activities.MWH also examined representative daily log sheets of data taken by the operators.Those documents indicate that plant staff is generally performing typical inspections consistent with industry practice.HEA noted that oil and fluid samples are being taken from each source and analysed as part of the annual inspections. 4.2 Mechanical Equipment and Systems 4.2.1 Hydraulic Turbines,Governors,and Inlet Valves Turbines.The turbines are Fuji vertical-shaft six-jet Pelton turbines.The turbine runners and deflectors were replaced in the mid-2000s by Andritz Hydro.One of the units was out for maintenance and nozzle _work at the time of our visit.Visual examination of the turbine runner indicated it was in good condition, free from cavitation or erosion damage and free from visually-obvious cracks.The turbine pits were clean and neat,and the equipment and piping was in good condition. Turbine governors (mechanical).The original governors were Woodward governors.The original Woodward governors did not provide the response and regulating capability desired by the project.The hydraulic power systems are still largely original,but the pressure oil distribution system was modified in Final Report Page 7 December 2015 Bradley Lake Project Management Audit Report @)mwu. 2006 when the speed governing components were replaced by Andritz to improve response and regulation.The hydraulic components were observed to be in good condition,free from leaks. The digital speed governing components were replaced again in 2014 with Emerson equipment because of communication and control challenges between the Andritz digital governing components and the Emerson digital unit and plant controls installed in 2012,and the fact that Andritz was no longer providing service and support on the digital governing components they supplied in 2006.Having all the control and automation hardware,firmware,and software on one platform eliminated the communication and control challenges.The current electronic components were in good condition and reported to be reliable.See additional information in Section 4.4 below. Turbine inlet valves.Each turbine is provided with a spherical type inlet valve,oil-pressure actuated to open,and weight-actuated to provide fail-safe closure.The valve exteriors were in good condition.No operational or maintenance issues were reported. 4.2.2 Balance of Plant Mechanical Equipment Powerhouse Crane.The powerhouse is provided with an overhead crane,160 ton main hook and 25 ton auxiliary hook,for routine maintenance and main unit disassembly/reassembly.The crane was observed and reported to be in good condition,and was recently used for turbine disassembly work.HEA advised that the carne drives and controls were updated to variable frequency/speed in 2012. Mechanical Systems.The powerhouse is provided with typical balance of plant mechanical equipment and systems,including various machine tools for small maintenance,raw and unit cooling water systems, compressed air systems,station drainage and sump system,station compressed air system,and HVAC systems.Visually,all were observed to be in good physical condition,and were reported to be in good working order;no ongoing or recent operational or maintenance issues were reported. 4.2.3 Miscellaneous Warehouse/shop.The warehouse/shop was also visited.The facility contains storage of parts and spares,storage for site maintenance equipment,a small machine shop,and a small carpentry shop.The overall size of the facility and items stored appeared reasonable,given the remoteness of the site.The building was in need of minor maintenance (weather sealing,window replacement)at the time of our visit.HEA noted that replacement windows were on-site and awaiting installation at the time of the visit. Heavy equipment.The project site has several items of heavy equipment for project maintenance, including a grader,dump truck,and front end loader/backhoe.All were parked outdoors and observed and reported to be in good condition.However,it was noted that some of the heavy equipment was from original construction,and age/condition/lack of availability of supplier and/or third-party service support may drive replacement at some point in the future.HEA noted that a storage shed for heavy equipment was proposed by HEA and included in a draft annual budget but not approved by the BPMC. 4.3 Electrical Equipment and Systems 4.3.1 General The powerhouse electrical and control systems are a mixture of original equipment and new or refurbished equipment.Much of the power distribution equipment is original (early 1990's)while the automation systems have been almost entirely replaced with a new Emerson Ovation DCS based system.The powerhouse and transmission line protection systems have also been recently replaced with modern microprocessor based multifunction protection relays.Upon visual inspection the equipment appears neat,clean and well maintained.Integration of the new Emerson DCS and protective relaying Final Report Page 8 December 2015 Bradley Lake Project Management Audit Report @)mw. systems has been well done.The control room operator stations are well arranged with easy access to plant control and information. 4.3.2 Generators The generators were manufactured by Fuji Electric in 1989 with the following characteristics: e 63,000 kVA ©95pf e 13.8 kV e 300rpm e Class F Insulation e 75°C temperature rise,40°C ambient air temperature Generator stator cooling is by air-to-water heat exchangers in a closed loop air and water system.Make- up cooling water is provided by turbine discharge "spray”collected in the turbine pit.The generator stator cooling system is also designed to provide powerhouse heating by directing stator exhaust heat from the generator stator coolers into the powerhouse generator bay area. The generators presently use a halon fire protection system.Since halon is an ozone-depleting substance (ODS),HEA is presently assessing alternate fire suppression systems., Typically the generators operate in the 40 MVA to 50 MVA range (63%to 80%capacity)and have not experienced any unusual operational characteristics.Above 61 MW output,the generator temperatures climb,and can exceed normal operating limits.If a unit's output drops below 5 MW,it is put into synchronous condense operation.Normally one unit is in synchronous condense mode every evening. Generally the units operate in a slightly under excited (absorbing MVAR)mode.The windings have not been replaced or experienced any major repairs (no spare stator bars are maintained).The generators are very rarely taken off-line.The generator windings were checked and cleaned with CO2 in 2012. Partial Discharge Detectors (PDA)were installed in 2013,and are checked on an annual basis.No problems or unusual operating characteristics for the generator bearings were noted. Based on age of the units,good maintenance and low on-off load cycling,these units should last many more years before needing major refurbishment. 4.3.3 Generator Breakers The generator breakers are the original GE PowerVAC 15 kV,3500A,vacuum type circuit breakers.The breakers were recently rebuilt,exact date not available.The breakers are standard 15 kV industrial grade,and don't have IEEE C37.13a generator breaker rating.No circuit breaker operational problems were reported.Since the generators are rarely taken off line,breaker operations are very low.Assuming continued good maintenance these circuit breakers should provide many more years of reliable service. 4.3.4 Generator Bus Duct A 15 kV,3500 A segregated bus duct is used to connect the generator line terminals to the generator switchgear and from the generator switchgear to the low side of the GSU transformer.No heating or maintenance problems were reported for the bus duct system. Final Report Page 9 December 2015 Bradley Lake Project Management Audit Report @)mwu. 4.3.5 GSU Transformers The GSU Transformers were manufactured by SMIT Nymegen with the following characteristics: ©§13.2kV-115kV ©37.5/50/62.5 MVA e ONAN/ONAF/ONAF e 65°C rise The GSU transformers are the original equipment and have not experienced any problems.The nitrogen bottles were moved inside the powerhouse because of freezing problems.The transformers are protected with blast walls and a water deluge fire suppression system.One spare transformer is located outdoor next to the active transformers. 4.3.6 115kV GIS Switchgear The high side of the GSU transformers are connected to the 115 kV gas insulated switchgear (GIS) located inside the powerhouse.No GIS operational problems were reported,other than replacement of one of the gas pressure sensors. 4.3.7 AC Station Service A double ended,480V unit substation with the two 1500/2000 kVA,dry type transformers each fed from one of the generator 13.8 kV buses,is provided for the powerhouse service.The substation is the original GE metal clad,Type AKR switchgear.The tie breaker automatically operates to maintain service in the event of failure of one of the 13.8 kV lines.There is also a 350 kVA standby generator service in the event that both 13.8 kV services are lost.The protection relaying was recently replaced (2013)with a SEL microprocessor type relay system. A Project transformer fed from either of the generator buses provides service to the project residences and the dam.Interlocked 15 kV breakers provide service from either Unit #1 or Unit #2.Transformer is rated 750 kVA,13.8 kV -12.47 kV,dry type.Distribution of the 12.47 kV service is underground.A single phase (7200V)feeder is provided to the dam,and has been recently replaced. All switchgear is regularly maintained and visually appears to be in good condition.Based on visual inspection and recent protective relay upgrade,this system should provide reliable service for many more years. 4.3.8 DC Station Service The 60-cell,125 VDC station battery provides DC service to the powerhouse controls and to the inverter which provides 120 VAC power to critical control and communication equipment.Two battery chargers operating in parallel are provided normal DC service and maintain battery charge.The battery chargers are original equipment;the batteries were replaced in 2009.The batteries and inverters had their 5-year maintenance performed in 2014.During last maintenance,the circuit boards and capacitors were replaced in the chargers and inverter.No problems with the system were noted. Final Report Page 10 December 2015 Bradley Lake Project Management Audit Report @ mwn. 4.4 Unit and Powerhouse Controls and Protection 4.4.1 General The original Landis &Gyr Telegyr 6800 SCADA based automation system components have been replaced or updated over the years.The governor and excitation electronic controls have also been replaced since original construction.The present powerhouse automation system was fully upgraded in 2014 with a new Emerson Ovation Digital Control System (DCS)based system.In 2013,the powerhouse protective relay system was upgraded with Schweitzer (SEL)protection relays. 4.4.2 Governors (electrical) The original governor used a Woodward 505 electronic governor controller for controlling the turbine nozzles and deflectors.The Woodward 505 controllers as-installed were found to have stability problems at this project and were replaced during the turbine runner replacement by VA-Tech (2004 -2006).The VA Tech governor controls used a VA-Tech SAT PLC with software logic designed in conjunction with Electric Power Systems (EPS).Later on,the SAT PLC system developed intermittent shutdown problems (fiber optic link communication problems).Also,VA-Tech (now Andritz Hydro)software support for the SAT PLC was no longer being provided.During the powerhouse conversion (2014)to the Emerson DCS system,both of the governor SAT PLC controllers were replaced with an Emerson Ovation DCS controller.No false tripping has occurred since implementation of the new governor controls. 4.4.3 Exciter The original Fuji exciter controls were replaced with a Basler DECS-400 excitation controller in 2011. The Fuji system control components were aging,obsolete and replacement parts difficult to obtain.In order to maintain high powerhouse reliability,a replacement system was required.The new Basler system also included an integral power system stabilizer (PSS).No operational problems have been experienced with the new Basler system. 4.4.4 Powerhouse Controls The original Landis &Gyr SCADA powerhouse control system had many remote terminal units (RTUs) throughout the powerhouse for gathering data and implementing powerhouse control.Over the years components have failed and vendor support has been difficult.Several powerhouses on the Kenai Peninsula and in Anchorage were standardizing on the Emerson Water and Power Solutions,Ovation DCS system for their powerhouse SCADA systems.In 2012 it was decided to replace the existing powerhouse SCADA controls with the Emerson Ovation DCS.The DCS system was completed in 2014 with the integration of the governor controls.The new DCS system has a historian feature for storing alarm and other selected plant operations and the ability to easily trend various plant operating parameters,which was not possible with the previous system.The plant has been pleased with the new DCS system,and didn't report any problems. Presently the control room is protected with a halon fire suppression system.Since halon is an ozone- depleting substance (ODS),HEA is presently assessing alternate fire suppression systems. 4.45 Protection and Metering The original electro-mechanical protective relay system was replaced with a new microprocessor based protective relay system in 2013.The generator,13.8kV and 480V station service,and standby generator were upgraded with Schweitzer (SEL)protection packages.New SEL protective relay units also include metering that is accessed by the new Ovation DCS.New protection study and relay settings were provided by Electric Power Constructors (EPC)in Anchorage,AK. 'Final Report Page 11 December 2015 Bradley Lake Project Management Audit Report @)mwu. 5 Project Operations and Maintenance Audit Scope Items: e Review of project operational policies,practices,and procedures;and, «Provide recommendations for management of the project. Overview The project is operated and maintained by HEA under the Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc.and Alaska Energy Authority”dated effective July 1,2008.The project is routinely operated and maintained by full-time staff on site.There are six total site staff -a superintendent,two foremen,two operators,and one apprentice.Staff rotate on/off site;typically,three or four staff are on- site at a time.Supplemental workers or contractors are brought on site as-needed to support extraordinary maintenance and capital projects. The operations availability data provided indicate a very high unit availability with minimal unscheduled outages.For the last 30 months (through June 2015),monthly availability was 90.5 %for Unit 1 and 94.5%for Unit 2.The average availability of all hydroelectric units in North America over the same time period,as reported by the North American Electric Reliability Corporation (NERC)was 83.3%.It appears this was achieved by scheduling maintenance during scheduled outage periods when one unit can be maintained without calling it unavailable. No data was provided on lost generation due to un-necessary spill,but CEA advised that water planning and usage minimizes spill to 3%or less of annual inflow;considering the variability of inflows from the three sources of rainfall,snow melt,and glacial melt,and the variability of the "take”of water by the member utilities to meet their fluctuating daily-weekly-monthly generation needs,this minimal spill reflects good water management.. Project management and administrative work is performed by HEA staff in HEA's Homer office.This work is budgeted in the annual budgets as a percentage of time for categories of staff,but executed and invoiced monthly to AEA based on actual hours charged to the Project by individual HEA staff.In a typical month,this activity includes roughly 25%time for one Director-level person,50%time for one manager-level person,and varying levels of time for administrative staff,based on the administrative needs and activities in a given month. Dispatch and SVC O&M services are provided by CEA under the Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority,Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures,as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher.Specific Project services provided by CEA include water forecasting,generation forecasting,dispatch,management and oversight of participants'allotments and usages,and O&M of the SVCs. Consumables,parts,and equipment are procured and handled using HEA's existing systems and infrastructure (trucks,storage facilities,etc.). Transportation of personnel and small items to/from the site is by aircraft under a multi-year contract currently held by Pathfinder Aviation,Inc.of Homer,AK.HEA advised that combining air transportation needs of Bradley Lake and HEA's South Bay facility improves the overall availability of air transport and also provides economies of scale.Transportation of large items to/from site is by barge;HEA currently contracts with Alaska Coastal Freight,LLC,of Homer,as well as other providers,for those services. Final Report Page 12 December 2015 Bradley Lake Project Management Audit Report @)mwu. HEA invoices AEA for their personnel,services,procured items,and Project contracts at "cost”;that is, no multiplier or fee is added. For the review of project O&M costs,AEA and HEA provided summary annual planned budgets and summary annual actual costs for the fiscal years 2010 through 2014,plus the detailed HEA invoice for May 2015.° 5.1 Overall Project and O&M Costs Overall project costs (combined O&M and capital costs)vary over the life cycle of a project.A significant portion of total cost for established projects are driven be aging,deterioration,obsolescence,and/or and failure of equipment over time.This illustrated by the classic”bathtub curve”(see below)which illustrates the overall effects of those factors on reliability,and consequently project costs,over time: The Bathtub Curve Hypothetical Failure Rate versus Time End of Life Wear-Out Infant Mortality Increasing Failure Rate Decreasing Failure Rate Normal Life (Useful Life) Low "Constant"Failure Rate IncreasedFailureRateTime - Figure 5-1 -The Bathtub Curve Every project is different,and different features of the project progress through the bathtub curve at different rates.The Bradley Lake turbine and governor reached the right-hand side of the curve after about 15 years of operation,and major renewals and replacements have occurred,mainly condition- driven.This is earlier than what would have generally been expected (very roughly,40-years plus).The controls and protection were replaced after roughly 20 years,driven by obsolescence and technology improvements.Upgrading to an integrated digital system is fairly common current practice.The generator is currently in the middle portion of the curve.Prediction of remaining life of a generator is one of the more challenging aspects of hydropower capital planning;see Section 4.3.2 for general discussion of remaining life.Balance of plant equipment is generally considered to be in the middle portion of the curve. An ongoing operation change has impacts on future O&M costs.Given the overall project layout (long penstock,no surge tank),the original design intent of the facility was that it provide mainly baseload generation.The modifications to the turbines and the conversion to digital governors and controls have allowed the facility to provide load following and regulation services.The use of regulating services and more dynamic dispatch is expected to continue to increase.The more service duty will increase general wear and tear on the units,increasing routine maintenance and reducing the time interval between major maintenance outages in the future.The amount of increased maintenance and reduced service life cannot be accurately quantified due to the many variables involved,but should be considered for long- term planning and budgeting. Final Report Page 13 December 2015 Bradley Lake Project Management Audit Report Historical Project summary O&M and Capital Costs (budgets and actuals)were provided for fiscal years 2010-2014.Those are summarized in Table 5-1 and Figure 5-2 below. Table 5-1 -Recent Historical Project Costs Operations R&R +Capital Year Budget Actual Budget Actual 2011 |$4,390,890|$4,174,014]$1,890,636]$1,112,747 2012 {$4,195,189}$3,540,297}S$1,984,074]$843,223 2013 |$4,608,520}$3,928,577}S 2,056,951]$2,174,146 2014 |S 4,828,670|S 4,142,938]S$1,803,574|$1,555,786 @)mw. Annual Costs -Actual vs Budget $6,000,000 $5,000,000 $4,000,000 s-mi $3,000,000 $2,000,000 ga---a=-+ -- $1,000,000 2 5 S. 2011 2012 2013 2014 Operations Budget Operations Actuals te R&R +Capital Budget R&R +Capital Actuals Figure 5-2 -Comparison of Budgeted and Actual Project Costs The above table and figure indicate that recent annual operation and capital costs have consistently been less than the approved budgets.For the past three years,actual operations costs have averaged 15% under budget. As requested in the audit scope,a more focused analysis was performed on operations and maintenance.Historical summary annual Project O&M costs were provided for the fiscal years 2010- 2014.Those are summarized in Figure 5-3 and Table 5-2 below. Final Report Page 14 December 2015 Bradley Lake Project Management Audit Report @ mwu. Actual Budget for Past 5 Years $7,000,000 ) $6,000,000 a - $5,000,000 VA --=Operations $4,000,000 --4 -TRBR F -ee eee -=-=R&C Interest $3,000,000 --Non R&C Capital $2,000,000 Transfers $1,000,000 -_-_-TTotalslt=. 2010 2011 2012 2013 2014 Figure 5-3 -Historical Project O&M Costs The historical averages for the five years of project cost data provided are as follows: ¢O&M:$3.9 million e Capital (including reserves);also called Renewals &Replacements;$1.5 million °Transfers:$0.5 million ) e Total Annual Project Costs:$5.9 million As a first assessment,an analysis and comparison was made on the overall Project O&M costs.There are multiple publications listing benchmark values for estimating annual O&M costs,however a number of these publications refer to a single extensive data set (>2000 data points)prepared for the USDOE and the Energy Information Administration (EIA)by Idaho National Engineering and Environmental Laboratory (INEEL).The information was first published in Estimation of Economic Parameters of U.S. Hydropower Resources,June 2003.More recently,the same estimation method is referenced in the USACE document Hydropower Resource Assessment at Non-Powered USACE Sites,July 2013 as listed in the table below.The following table presents the results of calculated estimates of Bradley Lake O&M costs,using the source formulas and the Bradley Lake values of 120 MW capacity,380 GWh annual generation and $455,000,000 construction cost (escalated from 1990 construction cost to present day 2015 level). Final Report -Page 15 December 2015 Bradley Lake Project Management Audit Report Table 5-2 -Calculated Estimate of Project Costs @)mwu. LC 1Coefficiontamc 2 mmsaoefficient, Fixed O&M C1*MW4C2 34409.24 0.75 INEEL $1,247,559 Variable O&M C1*MW4AC2 34409.24 0.80 INEEL $1,584,966 |FERC Annual |kW+c1*GWh 112.5 USBR $162,750 Charge Insurance C1*total direct |0.003 USBR $1,365,000 construction |Taxes Ci*total direct |0.012 USBR $5,460,000| construction Management Ct*total direct |0.005 'USBR $2,275,000| construction |Major repairs C1*total direct |0.001 USBR $455,000 construction _|Total $12,550,275| Calculating O&M costs as the sum of Fixed O&M,Variable O&M,and Management costs from the above table,the estimated O&M costs for Bradley Lake would be $5.1 million,which is 30 percent more than the $3.9 million actual annual O&M costs for Bradley Lake. Total estimated annual Project costs from table 5.2 are $12.55 million,as compared to $5.9 million actual Bradley Lake project costs. Other equations for estimating/benchmarking hydro project O&M costs include: e $6/MWh +$15/kW-yr as published by NREL in Cost and Performance Data for Power Generation Technologies,2012 e $30/kW-yr as published by WECC in Cost and Performance Review of Generation Technologies, 2012 e 1.5%to 2.5%of project construction costs,ETSAP and IRENA A comparison of actual Bradley lake annual O&M costs with estimates/benchmarks from other sources is provided in Table 5-3 below: Final Report Page 16 December 2015 Bradley Lake Project Management Audit Report @)mwu. Table 5-3 -Comparison of Project O&M Costs Source yoarmuummm Equation, Bradley Lake Actual N/A $3,907,000 1.WECC (E3)2010 $30/kW-yr $4,173,387 2.EIA (SAIC)2012 $14/kW-yr +$3.55/MWh |$3,494,881 (2008) 3.NREL (BV)2010 $15/kW-yr +$6/MWh $4,729,838 4.IRENA 2010 2 -2.5%construction |$10,237,500 average cost : 5.ETSAP 2008 1.5 -2.5%construction |$9,100,000 average cost 6.USBR 2012 11.34 $/MWh $4,708,779 7.USACE 2013 13.62 $/MWh $5,107,505 References for Table 5.3: 1.Capital Cost Review of Power Generation Technologies,Recommendation for WECC's 10-and 20-year Studies,prepared for the Western Electric Coordinating Council,March 2014,by E3. 2.Updated Capital Cost Estimates for Utility Scale Electricity Generating Plants,April 2013,U.S. Energy Information Administration,based on Review of Power Plant Cost and Performance Assumptions for NEMS,SAIC,February 2013. 3.Cost and Performance Data for Power Generation Technologies,National Renewable Energy Laboratory,2012,BV. 4.Renewable Energy Technologies:Cost Analysis Series,Hydropower,June 2012,International Renewable Energy Agency. 5.IEA ETSAP Technology Brief E12,Hydropower,May 2010,Energy Technology Network,Energy Technology Systems analysis Program. 6.Hydropower Resource Assessment at Existing Reclamation Facilities,March 2011,U.S. Department of the Interior,Bureau of Reclamation. 7.Hydropower Resource Assessment at Non-Powered USACE Sites,July 213,U.S.Army Corps of Engineers,Hydropower Analysis Center;Estimation of Economic Parameters of U.S. Hydropower Resources,June 2003,Idaho National Engineering and Environmental Laboratory, prepared for U.S.Department of Energy and Energy Information Administration. The IRENA and ETSAP values were developed for planning-level estimating purposes,and as a result may not be as comparable as the other 5 sources,which are based on actual cost data.The average annual estimated O&M costs from the five most relevant sources is $4.44 million,as compared to the actual recent annual O&M costs of $3.91 million for Bradley Lake.Based on this comparison,the overall annual O&M costs for Bradley Lake are considered to be reasonable.Considering the relative location and remoteness of the Bradley Lake project as compared to the national data set of projects used in the other sources,and the fact that the costs of goods and services are generally higher than in the lower 48 states in the U.S.,the actual Bradley Lake costs are slightly on the low side of what might be expected. Some of this difference is also age-related;the average age of the hydro projects used to develop some Final Report Page 17 December 2015 Bradley Lake Project Management Audit Report @ mwu. of the benchmarks is on the order of 50 years as compared to Bradley Lake at 24 years,and O&M costs are weakly related to age,particularly for projects more than 40 years old. Also,note comments under Section 5.1 above regarding probable increased O&M costs in the future due to changing operation of the project. §.2 Staffing Audit Scope Items: e Evaluate current staffing levels and training procedures considering the work effort at the project; e Provide a recommended list of skill sets that plant O&M employees should possess;and, e Provide recommendations for potential operational cost savings. §.2.1 Bradley Lake O&M Staffing (Homer Electric Association) The project site is primary staffed by six full time employees at Bradley Lake,summarized as follows: e Plant Superintendent o Onsite from Monday through Friday (46 hours per week) o Manages overall Operations and Maintenance Activities o Develops and manages the O&M budget and procurement o Manages and schedules O&M personnel | o Responsible for safety programs,meetings,and inspections ©Maintenance of the CMMS work management system o Prepares reports and maintains project documentation e Plant Operations Foreman (2 positions) o Works 8 days on (Monday through Monday)with 6 days off o The two Foreman alternate shifts with one on site at a time o Assigns daily operation and maintenance work assignments o Responsible to properly operate and maintain the units o Develops work plans ©Leads job hazard analysis and safety briefings o Oversee LOTO for Bradley Lake and Contractor personnel o Issues hot work permits co Develops training manual and apprenticeship program co This position is a working foreman and also conducts Operator duties e Plant Operator/Rover (2 positions) o Works 8 days on (Monday through Monday)with 6 days off o The two Operators alternate shifts with one on site at a time o Daily operation of all plant equipment o Responsible for daily reading and reporting Final Report Page 18 December 2015 Bradley Lake Project Management Audit Report ° Responds to plant alarms and dispatch requests Performs preventative and non-routine maintenance Monitors plant SCADA system and manually operates as required Implements LOTO clearances for Plant and Contractor personnel Operates equipment for maintenance of roads,dam,and project facilities Performs facility and grounds maintenance Maintains plant rolling stock Performs inspections and testing e Plant Operator/Apprentice ° ° On the job training and additional training courses Will complete training in 2016 to become journeyman @)mwu. To support the Bradley Lake personnel Homer Electric provides office management and support staff as follows: e Director of Power Fuels and Dispatch 3° fe) From the May 2015 invoice the director charged approximately 25%of his time to Bradley Lake Of the directors 25%time,half is charged to Bradley Operations Management and half to Bradley Maintenance Management Description of duties was not specifically requested or provided e Power Production and Dispatch Manager ° ° From the May 2015 invoice the Power Manager charged approximately 46%of his time to Bradley Lake The Power Managers time charges are split evenly Bradley Operations Supervision and half to Bradley Maintenance Supervision Description of duties was not specifically requested or provided e Homer Electric Office Staff Support Personnel o From the May 2015 invoice the support staff of eight charged 40 hours to Bradley Lake MWH was provided a single month's (May 2015)detailed HEA labor charges to the Project for review. The following table is a summary of the hours charged to the Project in May 2015,followed by our analysis and discussion of the labor.It should be noted that a single month's labor information may not accurately reflect the long-term average monthly labor. , Final Report :Page 19 December 2015 Bradley Lake Project Management Audit Report @)Mwu. Table 5-4 -Project Labor Breakdown May 2015 | yee UNpar7DIRECTOROFBROSEYPOWER EEIMEN?«J POWERMANAGER 3638 74 TEENS |SUPERINTENDENT 10060 160 LEINE '|OPERATOR 19 38 19 419 7%42619 «15 205 |PAUL PARSON:]Foreman '15 32 «13 16 64 16 10 166 HE!|FOREMAN 16 30 15 45 60 15 5 155 OLLACR |MIMOTHY QUIRK,OPERATOR 1300«268 48 13 4 128 APPRENTICE 102 102 204 os 5 5 2 2 1 1 13.5 13.5 5 5 9 9 3 3 1 1 30 30 30 a 30 24 22a "1329 100 60 162 228 60 61 #460 350 63 34 1178 88% OMER Se 3608 635 151 AGEMENT p Support R 12% Final Report Page 20 December 2015 Bradley Lake Project Management Audit Report @)mwu. §.2.2 Evaluation of Current Staffing Levels and Training The current staffing levels were evaluated with the following observations and comments: 1.The Operators provide a variety of duties at the plant.They are cross-trained to perform multiple duties -mechanical,electrical,and general labor.This practice is more cost-effective than having separate operators,mechanical maintenance,electrical maintenance,and general labor, and is consistent with approach other utilities are using -combining and minimizing labor categories/classifications to minimize their labor costs. The facility has atypical features in addition to the powerhouse and maintenance/storage facility that increase the required site work -an airstrip that must be maintained and kept clear of snow, a long access road to the dam,multiple on-site housing facilities,and heavy equipment used to maintain the airstrip and roads.Staff need to be on-site full-time to maintain access to the site year-round. Given the importance of Bradley Lake to the railbelt utilities,it is considered prudent practice to have an operator on-site continuously.HEA advised that weather or other conditions infrequently delay access to the site for up to 24 hours.If a plant forced outage occurs and the plant is unmanned,Bradley Lake could potentially be unavailable to provide capacity,energy, spinning reserve,and regulation for a number of hours,or even days.Qualitatively,from our interviews with participating utilities,our impression is that this would not be acceptable.A detailed system and risk analysis,beyond the scope of this audit,would be required to address this issue quantitatively. The site staffs time is split approximately 50/50 between operations and maintenance cost codes.The current practice of two O&M staff on project at all times and on callout during the off hours provides a good level of staffing.The cost savings for a reduction in the site O&M staff would cause additional risk to operational availability and degradation of maintenance which may have a large cost impact in the future. The on-site project Plant Superintendent fills many roles (overall management,overall planning, staff coordination and scheduling,activity coordination and scheduling,budgeting,etc.)and is essential,in our opinion,to the success of the project.The cost saving of not having a full time Plant Superintendent is not recommended and would have potentially very risky consequences. The Project management and administrative support from the Homer office is approximately 10 to 15%of the labor budget,and was equivalent to 0.9 FTE for the single month's labor breakdown provided;given the additional logistical and administrative activities required to support a remote generation project,this is considered to be reasonable. The decision to have an apprentice is good future succession planning to transfer the specific plant knowledge.If a new Operator is selected the knowledge of the existing staff would likely be lost,unless existing staff transferred to the new Operator. The position descriptions for the operations staff are thorough,identify the skill sets required for the project,and are considered to be reasonable and appropriate for this project.We did not identify any significant gaps in the described skill sets.The ability to utilize the current multi- talented staff to conduct the wide variety of work duties is essential to cost-effective successful operation of the project. The only potentially valuable additional skill set identified related to the generating units would be to have additional specialized experience in the controls and protection hardware and software, but this is a relatively narrow skill set that may be difficult to attract to the Bradley Lake project. However,HEA currently contracts out this specialty work to regionally-available contractors, which they advise have satisfactorily fulfilled this need. Final Report Page 21 December 2015 Bradley Lake Project Management Audit Report @>mw. 10.The 2015 Hittle report noted that site staff are not trained as a "fire brigade”,and as such they have limited ability to fight fires on-site.It is recognized that there are resource and cost considerations associated with this level of training,but it is recommended that this be formally evaluated by the full BPMC due to the potentially major implications on Project revenue and costs if a fire goes unchecked. With respect to other training,we were provided an overview of training activities during our site visit,and training activities/costs were captured in the budget information provided,as further evidence of ongoing training.Training appears to be occurring principally on an as-needed basis,whereas the overall O&M agreement envisioned a scheduled annual training program.Additionally,training materials (including the project O&M manuals)require updating to reflect current condition,operation,maintenance,and safety practices. 5.3 Evaluation of Unmanned Remote Operation of the Plant Audit Scope Item: e Evaluate unmanned or caretaker options for cost savings and risk The plant is dispatch controlled remotely.The option to fully operate the plant remotely (unmanned)was evaluated with the following comments: e Remote operation would only reduce operation labor hours,which is only 50%of the labor charges of the Operators.It may well be that in reality much more than 50%of time is actually spent on maintenance,further reducing the cost savings of converting to remote operations. e The routine maintenance would still be required,so it is assumed one maintainer at an absolute minimum would still be required to be on project at all times.This would also reduce the amount of routine inspection and maintenance,which would have long-term negative effects on unit/plant reliability. e Having one lone person in-plant would be a safety concern and is not recommended. e The risk of increased downtime due to not having operations staff on site could not be evaluated as no data was provided for the number events per year that on site operator intervention was required to keep the plant on line.However,see additional comments under 5.2.2 above. 5.4 Cost Benefit Analysis of Maintaining the Current Dispatch Services and Static Var Compensation O&M (CEA) Audit Scope item: e Review the project current dispatch of project power;and, e Provide a cost benefit analysis of maintaining the current project dispatcher,and SVC maintenance. These services are currently provided by CEA under the Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority, Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures,as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher.Specific Project services provided by CEA include: «Planning.This includes water year forecasting,monthly projections of water and generation for the participating utilities,and monthly adjustment/reconciliation based on inflows and actual usage.To the extent reservoir water levels allow,utilities can carry over their allotments month- to-month and year-to-year.This is included in the monthly and annual planning process. Final Report Page 22 December 2015 Bradley Lake Project Management Audit Report @)mwu. e Dispatch.This includes dispatch and coordination of capacity,energy,spinning reserve,and regulation form Bradley Lake.This is currently done on a day-ahead schedule,plus hourly adjustments per participant each day. e SVC O&M atthe Soldotna and Quartz Creek substations. CEA receives daily look-ahead requests for Bradley Lake capacity and energy from each utility,based on their management of their energy and capacity needs recent historical usage and their forecasted allotment of Bradley Lake energy.CEA then dispatches Bradley Lake to meet the requests;each utility can make adjustments to their daily request;these are typically done on a one hour look-ahead basis. CEA has two dispatchers on-shift continuously.The dispatchers typically operate Bradley Lake remotely - on AGC to dispatch the Project.CEA dispatchers also have the ability and do sometimes start/stop the units and operate them in synchronous condenser mode. As part of their project monitoring,CEA also gets an alarm on low fish flows and other alarms,and notifies the plant operator on duty.. CEA advised that their Cooper Lake project has a higher priority on the main 115kV transmission line than Bradley Lake project,and they dispatch the two projects accordingly. Overall assessment,and feedback from the participants,is that the current dispatch arrangements are generally serving the BPMC member utilities well,but HEA expressed some reservations in this regard. See additional discussion under Section 3.2,Dispatch Agreement,above.There is interest and some level of investigation underway in essentially real-time dynamic dispatching. The staffing and costs of O&M for Chugach Electric Association associated with the SVS (multiple SVCs in two locations)were not evaluated as no detailed information was supplied for analysis.The summary of actual charges for FY15 of $468,000 presumably includes costs associated with dispatch,SVC O&M, and other costs CEA considers chargeable to the Project. With respect to the costs/benefits of maintaining the current Project services by CEA,the current situation offers several advantages to the Project: e Infrastructure and communications are established and functioning well; e Existing staff are trained and diligent in their roles,duties,and responsibilities;and, e CEA facilities and labor are being leveraged to provide value and benefits to the Project. Two alternatives to CEA are potentially available to provide these services:1)another BPMC participant, or 2)an outside third party.Both alternatives would require some level of investment in infrastructure, staffing,and training.Additionally,any outside third-party would charge a management fee in addition to the cost of providing the services.Given the constraints imposed by the location of the necessary facilities and infrastructure,and the relatively limited appropriately skilled and experienced workforce available locally/regionally,it is difficult to envision that changing the current provider of these services would result in significant Project cost savings. 5.5 Cost Benefit Analysis of Maintaining the Current Plant Operator (HEA) Audit Scope item: e Provide a cost benefit analysis of maintaining the current project operator. An evaluation of the FY15 budget and actual costs by the cost type and the cost codes was conducted and summarized in the following table.Each line item was reviewed to assess if the current operator's charges are reasonable and if there would be an increase or decrease that may be occur if an alternate Final Report Page 23 December 2015 Bradley Lake Project Management Audit Report @)mwu. operator were to be used.Our assessments are in the right-hand column,color coded to visually indicate our overall assessment of each item. Table 5-5a -Assessment of O&M Costs by Expense Type FY 15 HEA COMMENTS ON COST BENEFIT OF ALTERNATE Amended|Actual OPERATOR:PLUS IN RED,MINUS IN GREEN, Budget |through |BLUE ARE COSTS NEEDED FOR ANY OPERATOR August .1,986,848 pproximately 15%of labor is for HEA homeLabor&Benefits 1,443,752 rice management which is reasonable Travel 35,410 13,053 vee ae pee : Training 38,731 26,568 Contractual 809,380 {270,704 Supplies and Materials 435,919 {94,964 Other Costs 593,797 {55,562 Equipment and Machinery 8,500 23,710 Maintenance Projects 143,530 : Admin Costs 1,368,387 {52,121 Total 5,420,502 {1,980,435 Table 5-5b -Assessment of O&M Costs by FERC Cost Code Summary by Cost Codes FY 15 HEA COMMENTS Amended|Actual Budget |through August FERC 535 -Operation Supervision &Engineering Operations 315,794 |300,134 [Approximately 60%of this costis for the Plant Sup/Eng Superintendent FERC $37 -Hydraulic Expenses Hydraulic Expenses 117,168 [84,200 Primarily Operators Labor FERC 538 -Electric Expenses Electric Expenses 282,401 {268,973 {Primarily Operators Labor FERC 539 -Misc.Hydraulic Power Generation Expenses Misc.586,449 /308,408 ore than half is transportation to the projec Hydro Power Exp ite,may increase if operator is more distant han.Homer. FERC 540 -Rents FERC Land Use Fee 180,000 OjThis cost is same regardless of the Operator FERC $41 -Maintenance Supervision &Engineering Maint 214,230 1197,018 Approximately half this costis for HEASupervision/Eng [Management with the other half being the Plant Manager FERC $42 -Maintenance of Structures Maintenance of Structures {174973 96041 Primarily Operators Labor,plus 30,000 in HEA Radio Circuits.CEA also has 30,000 charge for Radio Circuits FERC 543 -Maintenance of Reservoirs,Dams &Waterways Maint /165349 99799 Primarily Labor Res,Dams,Ways FERC 544 -Maintenance of Electric Plant Maintenance of Elec 496494 |403331 [Primarily Operators Labor Plant FERC 545 -Maintenance of Misc.Hydraulic Plant Maintof Misc.|201761 [118576 [Primarily Operators Labor Hydro Plant FERC 556 -System Control!&Load Dispatching System Cnrt!&Load]475799 125012 Primarily AEA Costs Disp FERC 562 -Station Expenses Station Expenses 488000 {0 ICEA Costs FERC 571 -Maintenanceof Overhead Lines Maintof OH Lines 353697 [26822 } FERC 920 -Administrative Expense AEA Bradley Fixed Admin Fees [358750 _|O AEA Costs FERC 924 &925 -Insurance Premiums Insurance Premiums 609637 152121 Primarily AEA Costs,also includes 30,000 for 'CEA risk management FERC 928 -Regulatory Commission Expenses FERC Admin Fees 400000 _(|0 AEA Costs Total 5,420,502 {1,980,435 As can be seen by the color coding,our overall assessment is that,at the summary levels,costs for a party other than HEA to provide O&M services for the Project would most likely be the same or potentially somewhat higher,in some cases. Final Report Page 24 December 2015 Bradley Lake Project Management Audit Report ®MWH. According to a majority of the interview comments,the current Plant Operator (HEA)is providing good O&M services to Bradley Lake.Given the project location and the current situation (high avaitability/reliability),the primary reason to seek a new operator would be for cost savings.The following are comments and recommendations for future cost savings: e Several interview comments were made concerning the HEA management charges -that they may be excessive.This may be deceiving as approximately 55%of the management labor charges are for the Plant Superintendent on site.The Plant Superintendent has extensive duties and would be needed with any operator.The HEA home office management charges are approximately 15%of the overall labor budget,which is not unreasonable,although more detailed reporting of time spent on Bradly Lake would better justify these charges. e By all accounts the Operations staff are highly versatile and their union labor rates are reasonable.An alternate Operator would have a difficult time finding personnel with the specific experience needed to replace the current staff.[t may be if an alternate Operator is selected they may have to offer the current staff those same positions to maintain the required skill sets. e Overtime charges are reasonable,particularly since the 1.5 and 2 times rates only increase the billing rate slightly as the overhead charges are fixed.Adding staff to reduce overtime could not be economically justified. e Reducing staff or having unmanned operation would result in minimal cost savings and reduced maintenance would increase the risk to plant reliability and availability e If an alternate operator outside the Homer area is selected they would need facilities established in Homer which would be an increase in costs. e lf an alternate operator outside the Homer area is selected there could be increased transportation costs for personnel. 5.6 Other Operations and Maintenance Items Audit Scope Items: e Review Bradley Lake Hydropower Project,Plant Operations and Maintenance,Volume 1, 2,&3,Stone &Webster Engineering,1992; «Review documentation procedures;and, e Provide recommendations for potential operational cost savings. 5.6.1 Operation and Maintenance Manuals The three-volume O&M manual set provided for review is the original Project O&M manual provided by Stone &Webster in 1992.The manual was reviewed and assessed,and generally provides typical content expected from such a manual: e Project description; e Description of overall operations: e¢Descriptions of major systems and equipment;and, e Inspection instructions and checklists for major equipment. In our review,we observed that the manual was written with the assumption that the reader would be generally familiar with hydroelectric facilities and equipment,and have a basic general understanding of required operation and maintenance.As such,it is generally fit for its original intended purpose,but could not be used as a primary training tool for new,inexperienced staff. Final Report Page 25 December 2015 Bradley Lake Project Management Audit Report @ mwu. We note the following deficiencies and opportunities for improvements with respect to the Project O&M manuals: 1.From a technical perspective,the primary deficiency is that the manual has not been updated to reflect the renewals and replacements that have occurred;unit and plant controls,protective relays,turbines and governors are examples where the manual needs updating. 2.The manual should include more reference drawings to illustrate the facilities,systems,and equipment.These should include physical drawings and mechanical and electrical system schematics. 3.A section defining overall project safety considerations (ingress/egress,confined spaces,safety muster locations,location of extinguishers and protective and safety equipment,required personal protective equipment of work activities and location,etc.)should be added to the manual. 4.Detailed O&M manuals were provided for specific pieces of major equipment.Those should be cross-referencedin the overall Project O&M manual and numbered for ready access. Our overall recommendation is to update and expand the Project O&M manual as outlined above.The revised manual would improve safety,efficiency,and training.HEA advised that the updating process is underway,and will take five years to complete.It is recommended that this process be accelerated,with a completion date of not more than one year. 5.6.2 Review of Documentation Procedures General.Scanned documents (pdf or TIFF)are maintained electronically in Homer and at the project site.Drawings produced since 2006 are on AutoCAD.Daily plant readings are paper only;unit and other data is stored on the Plant control system (Emerson DCS)historian.HEA has public and private ftp sites for large file transfers. As is very common,the project is not 100%up to date in terms of editing/updating al project drawings and updating other Project documentation to reflect renewals and replacements and changes in procedures/practices since original design and construction. The Project's current Cascade computerized maintenance management system (CMMS)is not fully implemented and utilized;again,this is common. HEA provides a monthly written report to the BPMC O&D committee;this is largely technically-based. HEA provides monthly invoices to AEA,with backup data.Historically,the detailed monthly invoices have not been provided by AEA to the BPMC budget subcommittee;as an improvement going forward, the monthly invoices and associated backup data will be made available to the budget subcommittee. Recommendations for improvements: e Daily plant readings should be recorded electronically (as excel or database files,for example) and stored electronically at the site and in Homer. e The DCS historian data should be backed up locally on-site and in Homer. e The CMMS should be fully implemented and all maintenance activities logged in the CMMS. e §=Anediting/revising project for drawings and other project documents to reflect current status and conditions should be developed and implemented.Typically,this effort includes bringing in an outside consultant/contractor. Final Report Page 26 December 2015 Bradley Lake Project Management Audit Report @)MWH. 5.6.3 Recommendations for Potential Cost Savings. As previously discussed,O&M staff reductions in an attempt to save significant costs are not recommended.Also as previously discussed,it is believed that replacing HEA as the project O&M provider and/or CEA as the Project dispatcher/SVC O&M provider would probably not result in a significant reduction of the overall Project annual costs. One area of potential cost savings could be in analysis and optimization of inspection and maintenance activities.Currently inspection and maintenance activities are schedule-driven,based on original Project assumptions,with some qualitative adjustments based on experience.Other than hours charged to maintenance cost codes there were very little data on routine and non-routine maintenance activities.If the Cascade CMMS was fully functional more data may be available to indicate the routine vs non- routine maintenance activities and the need/value of specific activities.That data could then be used to move from scheduled maintenance;first to predictive maintenance (adjusting maintenance schedules based on historical service needs),and ultimately to reliability-centered maintenance (reducing maintenance on items that do not affect reliability and ultimately generation).Each step would not necessarily reduce the overall inspection and maintenance intervals,but would reduce the overall labor hours required for inspection and maintenance,and thereby reduce the associated total labor costs Another area of potential savings could be to change the approach towards compensation of operations and maintenance.Currently,O&M activities,and to a certain extent large capital projects,are largely performed on a time &materials (T&M)basis.HEA noted that,due to the project location,T&M contracts have proven to be most cost-effective,rather than having contractors excessively pad their prices to cover their risk.Nevertheless,for specific work and scopes,other contracting/compensation approaches could be used that could incentivize the provider and reduce Project costs;those alternatives include: 1.Changing certain activities (such as routine admin work or routine maintenance work)to a negotiated flat monthly fee; 2.Executing large projects on a not-to-exceed basis;and, 3.Executing large projects on a basis where the provider and Project split the difference between budgeted costs and actual costs (both upside cost and downside costs). 5.7 Operator Compliance Audit Scope items: e Review operator compliance with utility safety standards for maintaining a safe workplace;and, e Review operator compliance with environmental requirements. General safety.HEA safety standards are used on-site.Historically,HEA safety programs were primarily focused on distribution and transmission and not generation plants.Recently,HEA has created separate generation and transmission safety programs,organized under separate safety committees established in early 2015.HEA underwent an OSHA audit in 2013 and their safety programs are reportedly compliant with the audit results.HEA has an overall safety coordinator based in Homer. Project-Specific safety. e Site superintendent has the lead safety role. e The on-duty foreman writes and holds clearances. e Plant safety meetings are held every Monday. e Each site job has a written job hazard analysis and safety tailboard meeting. Final Report Page 27 December 2015 Bradley Lake Project Management Audit Report @)mwu. e Lockout/tagout and hot work procedures are in place and used as applicable.The lockout/tagout procedures are currently being updated. e The site uses mobile cranes to provide fall protection over the valves at the dam;OSHA reviewed the site fall protection procedures as part of their 2013 audit. e Arc flash analyses were performed in 2013,but equipment labels haven't been added. e No lead paint,asbestos,or PCBs are present on site. e Paints/solvents are contained and controlled on-site. From our site visit we noted that,overall,a reasonable and appropriate safety culture.As one illustrative example,drawings identifying "you are here”locations with safe egress paths are posted at stairwells and other appropriate locations.No specific safety statistics were provided,but from an anecdotal standpoint no significant safety issues were identified.Specific safety actions are summarized above. Safety recommendations: 1.Caution/safety labels derived from the arc flash studies should be applied to applicable electrical equipment as soon as possible;those labels identify the required personal protective equipment (PPE)to safely work on specific electrical equipment.HEA noted that those labels were scheduled to be applied in November 2015. 2.Common standard PPE requirements for personnel in-plant include hard hats,protective eyewear,hearing protection,and high-visibility vests.It is recommended that all these PPE elements except high-visibility vests be required at Bradley Lake at all times,and when outside contractors or personnel are on-site,high-visibility vests be required for all persons. 3.Several recent injury incidents at hydroplants have been traced to insufficient attention to grounding prior to maintenance work.As a general recommendation,grounding should be part of every job hazard analysis,and scrupulously checked prior to and during maintenance work. 4.Storage of potentially hazardous materials should be reviewed,and weekly or monthly audits performed to make sure such materials are stored safety.During our site visit,we noted oil drums stored next to large electrical breakers,which would exacerbate the hazard if a breaker faulted.HEA noted that those were atypical,temporary storage locations during a major unit outage.However,the recommendation is that such materials be stored at locations and in ways to minimize potential hazards and risks,regardless of the duration of such storage. 5.Evaluate improvements in training of site staff for confined spaces and firefighting. Overall,the project operators understand and comply with the typical environmental aspects associated with day-to-day hydroplant operations -handling and storage of fluids,solvents,and other environmentally-sensitive material as one example.The station sump design provides for capture of oil or other spills in the sump.Annual training is provided on spill containment and cleanup. With respect to project-specific environmental compliance,discussion of the operator and AEA compliance with the FERC license conditions and other environmental permits is provided in Section 6 below. Final Report Page 28 December 2015 Bradley Lake Project Management Audit Report @)mwu. 6 FERC License Compliance Audit Scope item: e Review compliance with the Federal Energy Regulatory Commission (FERC)license. 6.1 Overview MWAH reviewed the status of the requirements in the Federal Energy Regulatory Commission (FERC) license for FERC Project P-8221 and reviewed the associated environmental permits.For the review of the FERC license and associated permits,MWH gathered information from the following sources: 1.FERC E-Library Docket P-8221 (query dated October 13,2015); 2.Email and attached files from Mr.Bryan Carey of AEA dated October 6,2015,responding to MWH's request for FERC compliance information (each of the attached files was also found on the FERC E-Library Docket); Interview with Project staff (August 25,2015);and, 4.Exhibit B -Bradley Lake Project Specific Federal and State Agency Requirements,included as an attachment to the Second Amended and Restated O&M Agreement,dated July 1,2008. The FERC Docket P-8221 contained 982 items at the time of the query.The oldest items in the docket were posted in 1983.Most of the older items in the docket,from 1983 through the early 1990s,were not available on-line (available in microfilm format only).The review of the docket entries was limited to files available on the FERC E-Library website.Docket files of interest were downloaded and briefly reviewed for content and conclusions. FERC issued a license for the Bradley Lake Hydroelectric Project on December 31,1985.The license was issued for a period of 50 years and has been amended several times (Table 6-1).Construction of the Project was completed in 1991.The license included the standard Articles 1-32 on Form L-2,in addition to 18 project-specific articles (Articles 33 -50).MWH reviewed each of the Article requirements, in addition to license amendments (Table 6-1),and attempted to link submittals,issuances,letters, orders,and other files to the appropriate license requirements to determine if the license requirements have been fulfilled (Table 6-2). It is noted that the FERC E-Library shows an authorized installed capacity of 119.7 MW,which is greater than the original licensed capacity of 90 MW.MWH assumes that there was a capacity amendment to the FERC License authorizing operation at 119.7 MW,but the document was not found on the FERC E- Library docket. In addition,the Licensee has proposed to amend the license to include the Battle Creek Diversion.This amendment proposal is currently on-going. Final Report Page 29 December 2015 Bradley Lake Project Management Audit Report @)mwu. Table 6-1 -License and Amendments Ea = License 12/31/1985 |Order Issuing License Paragraphs (A)-(E) Articles 1-32 (Form L-2) Articles 33-50 (project-specific requirements) Amendment 3/16/1987 |Order approving Revised Exhibit F &G drawings,and amending license (only available in microfilm) _Amendment 8/11/1989 Extension of construction schedule to January 1,1992 Amendment 9/19/1991 Order amending license paragraph to construct and operate the Upper Battle Creek DiversionAmendment12/06/1991 |Order amending minimum flow regime (paragraph (B)of order issuing license) Amendment 4/26/1996 __|Re-activate Martin River AirstripAmendment__12/9/1999 _|Replace small craft boat dock with boat ramp.|Amendment__|1/27/2004 _|Exempt Licensee from filing future Form 80sAmendment3/23/2004 __|De-activate Martin River AirstripAmendment9/15/2010 |Amend minimum flow requirements for 5-year trial period Amendment 9/9/2015 Extend amended minimum flow requirements for an additional 5-year trial period Table 6-2 -License Requirements Paragraph (D)Undetermined In accordance with ordering paragraph (D)of the license,the (Mitigation Plan).mitigation plan submitted on November 25,1985 isa condition of the license.A copy of the mitigation plan was not : available on-line (available on microfilm only). Article 5 Fulfilled Time extension granted (1/15/1991).Land acquisition report |(Land Titles)submitted (12/31/1991). Article 8 Fulfilled Install and maintain stream gages.Documentation confirming (Gages)proper installation of gages was not found.However, numerous minimum flow documents are present in the docket that rely on stream gage data,including one dated very recently (9/9/2015). Article 20 Fulfilled Clearing plan submitted (3/28/1986)and approved by FERC (Clearing Plan)(4/29/1986).Clearing plan modified by FERC order (4/17/1990). Article 21 Fulfilled FERC order granting authority to proceed with timber cut |(Timber Sales)(4/28/1998). Article 33 Fulfilled Ten years of annual water quality reports were submitted, (Water Quality)reportedly in accordance with mitigation plan.FERC order (9/11/1997)states that Article 33 requirements are fulfilled and no additional water quality studies or reports are required. Article 34 Fulfilled Annual salmon study reports were required to be submitted (Fish)through 1995.The Licensee completed three additional years of salmon studies and submitted the final report in 1998.FERC acknowledged receipt ofthe final report (1/20/1999). Article 35 (&19)Fulfilled Erosion control plan was submitted (3/28/1986).Erosion |(Erosion Control)control design documents were submitted (8/31/1998). Final Report Page 30 December 2015 Bradley Lake Project Management Audit Report @ mwu. Submitted recreation maps (4/4/1984)and recreational resources mitigation plan (12/22/1987).Submitted Public Use report (1/8/1997).FERC order amended recreational!access plan (see Table 6-1).Revised recreation facility map (6/29/00). Submitted revised public safety report (7/12/2001)and recreational report (12/17/2003).FERC determined that the Licensee was exempt from further Form 80 submissions (1/27/2004). Submitted transmission line assessment (8/15/1986).FERC order approved the assessment (9/19/1986). (Cuttural/Historic) Article36 Fulfilled (Recreation) Article 37 Fulfilled |(Assess T-Line) Article 38 Fulfilled Article 38 requires Licensee to implement its cultural resources management plan (CRMP),avoid impacts to historic fox farms, and follow a protocol for undiscovered archaeological or historic sites.MWH was not able to find a copy of the CRMP, but some related text is available in the project Environmental Impact Statement,dated September 1995.Submitted historical and cultural resources report (1/3/1985),Alaska State Historic Preservation Officer letter (4/3/1986),and archaeologicalsurveyreport (9/18/1986).Submitted visual resources mitigation plan (3/28/1986).MWH did not find FERCacknowledgement of the visual plan. (Visual Corridors) Article 39 Undetermined (Visual) Article 40 Undetermined MWH did not find a submittal for analyzing visual impacts of the transmission line from air traffic,discussing nearby linear utility corridors,and discussing potential visual resource mitigation. (Pay Fees to US) Article 41 Undetermined Exhibit F Plate 19 shows the waterfowl mitigation area.MWH (Waterfowl/Wetlands)was not able to find a report containing monitoring results of mitigation projects for the waterfowl nesting area and the establishment of wetland plantings. Article 42 Undetermined MWAH did not find a copy of the wildlife mitigation plan. (Wildlife)However,results from bald eagle and mountain goat studies were posted on the docket,which presumably were requirements of the approved wildlife mitigation plan. Article 43 Undetermined MWH did not find evidence in the docket that the (Start Construction)requirements of this article were fulfilled.FERC order granted an extension to complete the project (8/11/1989). Article 44 Fulfilled Submitted several revisions of Exhibit F drawings (various |(Exhibit F)dates). Article 45 Fulfilled Submitted final drawings and specifications (4/28/1988). {Drawings/Specs)|Article 46 Undetermined Article 46 requires the Licensee to review and approve (Cofferdams)contractor-designed cofferdams and deep excavations.MWH did not find evidence of such a review in the docket files. However,since project construction is complete,the requirements of this article have likely been fulfilled._| Article 47 Fulfilled Submitted several revisions of Exhibits A,E,and G (various _(Exhibits A,E,6)dates). Article 48 Fulfilled An independent Board was created and approved.Several! |(Independent Board)replacement Board members were subsequentlyapproved.Article 49 Ongoing The Licensee is required to pay annual fees to the U.S. government.MWH could not find evidence that any payments are currently delinquent. Final Report Page 31 December 2015 Bradley Lake Project Management Audit Report @)mwu. SummaryandNotessag Article 50 Undetermined The Licensee is required to file annual reports summarizing (Conveyances)conveyances (e.g.,easement,right-of-way,or lease agreements).Some conveyance filings were identified in the docket,but it is not clear if conveyance filings are up to date. MWH did not find posting for annual reports for each year that the projecthasbeen under license. Emergency Action Plan |Ongoing Due to the isolated and undeveloped nature of the land (EAP)surrounding the project area,the Licensee annually requests that it be exempted from the EAP requirements.To date, Safety Inspections and |Not Applicable There are numerous documents in the FERC docket that deal Reports with dam safety,inspection reports,and related filings.This FERC compliance section does not address these types of filings.Rather,they are addressed elsewhere in this report. *For items listed as "Undetermined”,MWH was not able to find documentation in the FERC docket confirming that the conditions of the associated requirements in the project License had been met to the satisfaction of FERC.However,MWH also did not find evidence in the docket that FERC considers the Licensee to be deficient for this License requirement.For the purpose of this analysis,given the age of the license,"undetermined”status for a License requirement is assumed to have been fulfilled unless stated otherwise in the Summary and Notes column. **Dates are "document dates”in the FERC docket. 6.2 Associated Environmental Permits The information that MWH found regarding associated environmental permits was limited.Exhibit B of the 2008 O&M agreement lists 32 documents (Table 6-3),but MWH was not able to obtain copies of any of the 32 documents,and therefore cannot comment on regulatory requirements.The Clean Water Act Section 401 Water Quality Certification was waived for this project (as stated in the license). MWH did not identify any additional environmental permits associated with this project.In an interview with AEA staff on August 25,2015,AEA indicated that almost all license and associated regulatory requirements were completed and closed out as of 2001.The few ongoing requirements are summarized in the Conclusions section below. Final Report Page 32 December 2015 Bradley Lake Project Management Audit Report @)mwu. Table 6-3 -Exhibit B,Bradley Lake Project Specific Federal and State Agency Requirements Alaska Department of Approval to Operate Class "C”Water System Permit (11/4/1988) Conservation Approval to Operate permanent facilities -Powerhouse Creek Source (4/3/1988) Waiver approval for Class "C”Well (5/23/1991) Certificate to Construct Class "C'Water System at powerhouse Land Use License DACW85-3-91-88 Land Use License DACW85-2-90-24 Dredge and Fill Permit 071-QYD-2-850502 Land Use License DACW85-3-86-55 Land Use License DACW85-3-86-73 Land Use License DACW85-3-86-101 United .States Army Corps of Engineers Critical Habitat Area FG 88-11-0077 Critical Habitat Area FG 86-11-0824 Critical Habitat Area FG 86-11-0416 plus amendment IV Critical Habitat Area FG 86-11-0115 Critical Habitat Area FG 86-11-0114 plus amendment I Critical Habitat Area FG 86-11-0113 plus two amendments Critical Habitat Area FG 86-11-0112 plus amendment II! Anadromous Fish Stream FG 86-11-0110 plus amendment II Anadromous Fish Stream FG 86-11-0108 Anadromous Fish Stream FG 86-11-0107 plus amendment | Anadromous Fish Stream FG 86-11-0106 plus amendment II Critical Habitat Area FG 85-11-0824 Alaska Department of Fish and Game Alaska Department of Natural Resources Waters Rights LAS 13370 Permanent Water Rights LAS 6998 Waters Rights Application LAS 14316 Permanent Water Rights LAS 2837 Public and Charitable Lease ADL 225142 Permanent Water Rights LAS 2836 Right-of-Way ADL 223192 Uplands Lease ADL Tidelands Lease United States Department of Interior Contract (for water from Nuka Glacier Pool) 6.3 On-Going Compliance Efforts Project staff indicated in the August 25,2015 interview that there are currently no on-going environmental studies at the project site associated with the FERC license.On an annual basis,project staff submits the following items: e Documentation regarding compliance with minimum flow requirements (submitted to FERC)and e Annual water use report (submitted to Alaska Department of Natural Resources). MWH only found evidence of one minimum flow violation in the last ten years (May 2011).AEA has reported numerous other potential minimum flow violations,but in each case FERC has determined that there was not a violation of the license conditions.On September 5,2010,the Licensee was granted a 5-year trial period for studying and amending the minimum flow requirements.This 5-year period was extended for an additional 5 years by a FERC order dated September 9,2015. Final Report Page 33 December 2015 Bradley Lake Project Management Audit Report @)mw. During interviews with project staff,the following items were also mentioned as topics related to FERC license compliance: e Duck pond and moose habitat mitigation; e Camp site operation and maintenance;and, e Alaska Department of Natural Resources inspections (every 5 years). MWH did not find files in the FERC docket related to these three topics. 6.4 Conclusion -Licensing /Permitting There appear to be very few on-going FERC license requirements and/or environmental permit issues that need to be addressed by the Licensee.The Licensee is currently addressing the following license requirements on an annual or periodic basis: e Minimum flow reports; e Annual water usage report; e Annual EAP evaluation and request for exemption; e Pay fees to US Government; e Annual DSSMR inspection;and, e FERC Part 12 Dam Safety inspection (every five years). MWH was not able to review all of the relevant items listed in the docket (such as the mitigation plan,the recreational resources mitigation plan,and the cultural resources mitigation plan).It is possible that there are additional ongoing activities and requirements listed in those documents.However,given the age of the license (30 years old)and the input from AEA staff indicating that other license requirements were fulfilled by 2001,MWH finds it reasonable to assume that most of the License requirements have been fulfilled. Final Report Page 34 December 2015 Bradley Lake Project Management Audit Report @)mwu. 7 Project Capital Improvements /Investments 714 Historical Improvements /Investments Audit Scope item: e Review major projects from start of commercial operations in 1991 with a focus on the last five years of operation,and recommend changes to planning,procurement,and execution of project. From information provided verbally by HEA,and /or as documented in the Bradley Lake Capital Projects and Maintenance Overview report,major capital improvements/investments since original project construction include: e 1995 new fishwater screens installed e 2002-3 turbine nozzles rebuilt e 2003 Civil repairs/restoration at Nuka and Battle Creek diversions and dam left abutment e 2004-6 new turbine runners,deflectors,governors e 2006 New microwave tower installed e 2007-8 new buried power line to dam e 2010 Site housing improvements e 2010 Waterfowl area culvert re-engineering/replacement e 2011 new Basler generator excitation systems e 2012 diversion tunnel pipe coatings repairs . e 2012 new Emerson unit/plant DCS/SCADA control system;new turbine bay crane controls e 2012-13 new Cascade plant asset and maintenance management system e 2013 generator partial discharge analysis equipment installed e 2013 dam work -seals,drains e 2013 new SEL protective relays e New diesel generator installed for backup power to shop and lining quarters e 2014 new Emerson turbine governors e 2015 new turbine nozzle tips and seat rings (Unit 1) Although every Project's specific needs are unique,the number and types of major capital work listed above are considered to be reasonable,considering the age of the project.The turbine runner replacements were driven by cracking on the original runners.Deflector and governor replacements were made to improve the regulating capabilities of the units and address governor-related outages. Periodic Pelton turbine nozzle repairs are typical,particularly where glacial melt or runoff can introduce silts into the water fed to the turbines;the suspended solids erode the turbine nozzles and needles.The units have not yet reached an age/condition where generator rewinds are indicated;installation of partial discharge monitoring on the generators should help better define when rewinds are needed.One observation,albeit hindsight,is that the governors were replaced twice,the generator exciters were replaced,and the unit/plant controls were replaced,all in different years.Because this type of equipment is now digital,and must cross-communicate,it is somewhat more typical to replace all this equipment as one large project,which provides the opportunity for better integration.However,annual budget limitations and or limitations on total outage time may have influenced or dictated the multi-year,multi- project approach that was used. Final Report ;Page 35 December 2015 Bradley Lake Project Management Audit Report @)mwu. 7.2 Recommended Improvements /Investments Audit Scope items: e Review Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs, August 4,2009,Final Report.Prepared by D.Hittle and Associates.This report is currently being updated;if complete the contractor shall review the updated version which is expected to be available by fall of 2015.Review and comment on a 2015 five year plan being prepared for the project. e Recommend prudent facility improvements to increase reliability,security,energy or decrease operating cost taking into account the facility and transmission system uniqueness. Both the 2009 final Hittle report and the draft 2015 Hittle report were provided for review.HEA provided Hittle a list of items that constituted their scope of each report,which did not include the generating equipment or unit auxiliary systems.Consequently,both the 2009 and 2015 Hittle reports focus on ancillary facilities at the project,not the features directly related to power generation.The report assessed the current condition of each ancillary facility item in the scope,provided recommendations and associated costs to implement each recommendation,developed a schedule for individual projects/improvements,and then provided an estimated levelized 35-year annual Renewal & replacement (R&R)budget.Overall,in both reports Hittle found the project facilities they assessed to be in "very good condition'. The estimated levelized 35-year R&R budgets were $581,000 in the 2009 report and $739,000 in the 2015 report,a 27%increase.Comparing the 2009 and 2015 R&R cost estimates,the increases appear to be distributed among all the major facility categories,rather than concentrated in one or two areas. Both estimates do include a few placeholder items for the generating equipment and unit auxiliary systems,but these are not based on any evaluation or other information.The reports note that Hittle did not have sufficient information to estimate all costs,so actual costs would be higher.Further,the reports note (as stated in the 2015 report)that Hittle's goal was "was to create a template for further work by HEA and/or others to be able to complete an inclusive summary of projected future costs for budgeting purposes”.Thus,the estimated levelized R&R costs in the Hittle reports are not intended to provide the Project long-term R&R budget,only to provide estimates of a portion of the overall project R&R budgets. In general,the report is considered to be suitable for its intended purpose.The specific evaluations and recommendations in the reports were not independently assessed,but overall,the evaluations and recommendations appear to be reasonable.We do have the following observations: 1.The evaluations and recommendation in the reports are limited to ancillary facilities,whereas the largest R&R costs are typically related to the power generating equipment.Thus,as noted above the total estimated annual R&R budget reflects only a portion of the total project R&R costs. 2.The report notes that all costs were not estimated.The overall impact is that the recommended levelized annual budget is insufficient to accomplish the recommended work.We would have expected Hittle to add contingency percentages to their estimated costs,so that the levelized totals would better represent "all-in”costs,and as such be useable by HEA and the BPMC for preliminary budgeting. 3.The report is configured as a bottoms-up listing of all assessed needs,and the costs and timing to address each need.This is acceptable as a first step,but would need to be analyzed by HEA and the BPMC and refined/adjusted as part of the budgeting process. 4.The 2015 report makes an observation that current staffing levels appear to be insufficient to perform sufficient routine maintenance work to maintain all the facilities in very good condition. Presumably,this is reflected in the recommended increase in the levelized R&R budget from Final Report Page 36 December 2015 Bradley Lake Project Management Audit Report @)mwu. 2009 to 2015.MWH's condition assessment and recommendation focused:more on the generating equipment and other items that directly affect project revenues,so this observation is considered to be complementary to MWH's observations and recommendations regarding staffing. 5.The 2015 report recommends full implementation of the Cascade maintenance management system (as does this report). 6.The 2015 report observes that HEA as Operator has elected to provide only limited staff training related to confined spaces and firefighting.As noted elsewhere,this decision has risk and potential revenue implications;MWH recommends that this be evaluated by the full BPMC. Recommended Improvements /Investments Overall,the plant and project features visited are well laid out,and suitable for their intended purpose. Overall generating unit /plant availability has been high.The major replacements and improvements to date (turbine runners &deflectors,turbine governors,generator excitation systems,unit and plant controls,protective relays)are considered to be prudent,and those major investments have improved Project efficiency,responsiveness,and reliability.The integrated Emerson DCS/SCADA system, combined with the new multifunction microprocessor-based protective relays,provides information that improves troubleshooting and offers the opportunity to improve overall availability.Those major investments to date are typical of the investments hydroplant owners make to maintain and improve overall project economics over time. As previously noted,changing the current arrangements for providers of operation,maintenance,and dispatch would not be expected to result in significant cost savings to the Project.Significant reductions in O&M staff are not considered to be prudent,in the context of the project location and significance to the railbelt.Hittle has observed that additional on-site labor is needed to improve the completion of all necessary routine minor maintenance work. Small incremental cost reductions are potentially available.An energy audit of the project facilities could drive improvements such as energy-efficient lighting,improved insulation and weather sealing,etc.to reduce on-site energy usage.An electronic inventory of all equipment,materials,parts,and consumables,combined with usage histories,could optimize maintenance and purchases,reducing overall annual maintenance costs. It is recommended that additional training in the areas of confined spaces and firefighting be evaluated. A structural improvement that has been identified is to add five foot high flashboards to the dam to increase storage,reduce spill,and increase generation.That would require studies to evaluate dam stability and other structural concerns,and would require environmental studies and in all likelihood a major amendment to the FERC license.If not already performed,a cost/benefit analysis is recommended assess the economic viability.A risk analysis is also recommended;a major amendment to a FERC license effectively opens up the existing license conditions to re-evaluation and provides an opportunity for additional license conditions to be required. An operational improvement that could be considered would be to add logic and calculations in the plant controls to monitor and automatically adjust the dam releases in comparison with the tidewater compliance point;AEA believes this improvement in regulating dam releases could result in an additional 5,000 to 10,000 MWh generation per year. There are two system/process recommendations that could significantly improve future Project operations and economics: 1.Fully implement the Cascade maintenance management system,and use it to capture maintenance data for analysis of maintenance activities.That analysis should result in a reduction in routine maintenance without impacting plant reliability or availability. Final Report Page 37 December 2015 Bradley Lake Project Management Audit Report @)mw. 2.In addition to the existing required rolling five-year capital plan,and the current 2015 35-year facilities capital plan developed by Hittle,develop and implement a long-term capital budgeting process (suggested 30 to 40-year projection)that more fully integrates the powerhouse and generating equipment future capital costs.Typically,the plan would then be reviewed/updated annually or at least bi-annually.This would provide better long-term planning,which would allow better integration/coordination of all capital work,reducing scheduled outages and reducing the risk of long-term forced outages. Final Report Page 38 December 2015 Bradley Lake Project Management Audit Report @ mwu. 8 Conclusions 8.1 Summary of Audit The audit scope included 17 scope items in the following broad areas: 1.Condition Assessment: 2.Review of Project Agreements; 3.Review of Project O&M; 4.Assessment of Performance of Current O&M and Dispatch Providers;and, 5.Recommendations for Improvements. Items 1 through 4 above are generally addressed in specific sections of this report;recommendations are provided within the body of each section,and are summarized below. The audit activities included: e Development and transmittal of a comprehensive Request for Information to provide information necessary to address all the scope items; e =Site visit; e Interviews with managers of HEA,CEA,GVEA,MEA,and ML&P -eight interviews total; e Review and analysis of information provided;and, o Development and Preparation of this Report. Most,but not all of the requested information was provided;a list of what was requested and provided is provided in the Appendices.The combination of activities provided sufficient information to address each of the scope items;the depth of analysis and comments depended upon the information provided. 8.2 Assessment of Current Arrangements Overall governance and management of the Project is by the Bradley Lake Project Management Committee (BPMC).Various formal Agreements regarding Project operations,maintenance,capital investments,and management are in place.These are written simply and broadly,which provides flexibility at the lowest cost to the Project.Both on a day-to-day basis,and in terms of overall management and budgeting,this approach appears to have generally worked well,and could be expected to continue to work well in the future. The BPMC O8&D (technical)and budget sub-committees oversee technical and financial issues, respectively.Those subcommittees are serving their intended purposes,but improved frequency and detail of communications between the providers (HEA and CEA)and the committees would be beneficial. The Project is owned by AEA,who provides overall licensing and regulatory management and support. AEA also manages the Project budgets -receiving monthly invoices from providers,and invoicing each Project participating utility based on their Project percentage as defined in the Power Sales Agreement. Based on feedback from the utilities,and our evaluation,this arrangement is working well. Overall Project O&M is currently being performed by HEA,under a multi-year arrangement that expires in 2018.At site,HEA has six staff total -a superintendent,two foremen,two operators,and a trainee/apprentice.Staff are experienced and cross-trained,which provides effectiveness and efficiency. Given the nature and location of the project,we believe reductions in on-site staff would result in reduced/deferred maintenance and long-term erosion of availability,and so is not recommended.Hittle, in their 2015 report,suggests additional site labor be considered to improve routine minor maintenance Final Report Page 39 December 2015 Bradley Lake Project Management Audit Report @ mwu. execution.Administration and management is performed by HEA staff in HEA offices in Homer;those staff are budgeted as a %time per person,but are invoiced to the project based on actual time spent on the Project. Several years of overall unit/plant availability/reliability data were provided,which indicates that recent overall Project unit availability (last 30 months,through June 2015)was 92.5%,which is over 9%more than the average of all hydro units in north America in the same time period (as reported by NERC).This is indicative of good operation and maintenance practices. Overall O&M costs were compared and benchmarked against several national and international sources. That comparison indicates that Project annual O&M costs are consistent with those of other similarly- sized hydropower projects;when the Project location is taken into account,annual O&M costs could be considered slightly lower than average/expected.Actual O&M costs for the last 3 years have averaged 15%less than budget. Overall,in terms of staffing,project operational reliability,and costs,HEA is considered to be performing satisfactorily to well.Specific recommendations for improvements are summarized below.Given HEA's proximity relative to the Project and HEA's infrastructure and organization that are currently being utilized for the project,it would be difficult for another provider to provide these services at significantly lower cost. Project dispatch and SVC O&M are provided by CEA.Additionally,CEA provides annual water and generation forecasting and monthly planning/scheduling services.All utilities contacted advised that they are generally satisfied with CEA's current services in this area (HEA has raised specific concerns regarding CEA's dispatch of Project Power for themselves as compared to other participants).In terms of water management,average annual spill is less than 3%of total inflow;considering the variables affecting inflow rates,this is considered good management.No dispatch-related problems or issues were reported by most participants;HEA voiced some concerns in this area as noted above.It was noted there is some level of interest in dynamic (close to real-time)dispatching.No cost breakdown of CEA's costs to the project were provided,so we could not evaluate those costs.See recommendations for improvement under the Project Costs subsection below.\ 8.3 Recommendations Recommendations are provided at the conclusion of analysis and discussion in each of the areas evaluated in the body of the report.The major recommendations are summarized below,organized by category.Please refer to the body of the report for details. 8.3.1 Safety 1.Label electrical equipment with arc flash levels and required Personal protective equipment (PPE); 2.Require steel-toed shoes as standard PPE,and high-visibility vests for all personnel when contractors are on-site; 3.Review storage of potentially hazardous materials; 4.Institute rigorous grounding procedures for electrical maintenance work;and, 5.Evaluate improvements in training of site staff in confined spaces and firefighting. 8.3.2 Agreements 1.Review and revise the insurance limits in the O&M Agreement to conform to the current limits used by the participating utilities in their contracts.This would require approval of State Risk Management. Final Report Page 40 December 2015 Bradley Lake Project Management Audit Report @)mwu. 8.3.3 8.3.4 Evaluate changes in the (largely time and materials)approach towards compensation of operations and maintenance and large capital projects.Suggested alternatives for consideration: a)Changing certain activities (such as routine admin work or routine maintenance work)to a negotiated flat monthly fee; b)Changing suggested labor charges from separate rates for each individual to fixed rates for classifications of personnel; c)Executing selected large projects on a not-to-exceed basis;and, d)Executing selected large projects on a basis where the provider and Project split the difference between budgeted costs and actual costs (both upside cost and downside costs). Require a long-term annual capital budget program (between 15 and 30 years). O&M Skill Sets.Add additional specialized experience in the controls and protection hardware and software. Training.Periodic and as-needed training should be consolidated into an overall comprehensive schedule-driven training program.See also item 5 under safety above. As-builts.Implement an edit/update program and records management program for all project drawings and documents,focusing initially on those that do not reflect the current conditions (HEA as advised that the drawings specifically associated with plant upgrades have been as- builted). O&M manual.Update project O&M manual to reflect current equipment and operations;cross- reference all specific equipment manuals,and add reference drawings.HEA advised that the updating process is underway,and will take five years to complete.It is recommended that this process be accelerated,incorporating these specific suggestions,with a completion date of not more than one year. Documents /data management.Record daily plant readings electronically;backup DCS historian data. Develop and maintain a database of all spare parts,materials,consumables,and miscellaneous equipment on site (the current list is primarily of spare parts only,and was last updated in 2012). Computerized Maintenance Management System (CMMS).The Cascade CMMS should be fully implemented and all maintenance activities logged in the CMMS;then analyze that data to reduce/optimize routine maintenance., Energy Audit.Perform an energy audit of Project facilities,to look for energy usage reductions. Project Costs To increase transparency,it is recommended that the detailed AEA,CEA,and HEA annual Project budgets (draft and approved),and the detailed monthly AEA,CEA,and HEA invoices to the Project,be provided to each member of the BPMC. Develop and maintain an overall long-term (30 -40 year)ove4rall Project R&R budget that is reviewed and updated at least bi-annually. Final Report Page 41 December 2015 Bradley Lake Project Management Audit Report @ mwu. 8.5 Review Comments and Responses The draft report was submitted to AEA for review and comment on October 20,2015.AEA transmitted copies to members of the BPMC.Several sets of review comments were received by AEA;those sets of comments,plus comments by AEA,were transmitted to MWH.MWH addressed each comment in this revised,final report.A table of each comment and the MWH response to each comment (as incorporated into this final report)is appended to this report. Final Report Page 42 December 2015 Bradley Lake Project Management Audit Report @ mw. 9 References The following documents were provided to,or obtained by MWH,and reviewed in preparation of this Report: 9.1 References -Agreements e Second Amended and Restated Operation and Maintenance Agreement for Bradley Lake Hydroelectric Project Between Homer Electric Association,Inc.and Alaska Energy Authority” dated effective July 1,2008; e Bradley Lake Hydroelectric Project Static Var Compensation System Operation and Maintenance Agreement Between Chugach Electric Association,Inc.,and Alaska Energy Authority August 1996; e Bradley Lake Hydroelectric Project Agreement For the Dispatch of Electric Power and for Related Services by and among Chugach Electric Authority,Inc.and The Alaska Energy Authority August 1996,along with the Bradley Lake Hydroelectric Project Allocation and Scheduling Procedures,as revised by the BPMC on March 3,1993,which iterate and establish the Duties of the Dispatcher; e Agreement for the Sale and Purchase of Electric Power ("Power Sales Agreement”)by and among Alaska Power Authority (now Alaska Energy Authority),Chugach Electric Authority,Inc., Golden Valley Electric Association,Inc.,Municipality of Anchorage d/b/a Municipal Light and Power,City of Seward d/b/a Seward Electric System,Alaska Electric Generation &Transmission Cooperative,Inc.,Homer Electric Association,Inc.,and Matanuska Electric Cooperative,Inc. (December 1987);, e Bradley Lake Hydropower Project,Plant Operations and Maintenance,Volume 1,2,&3,Stone & Webster Engineering,1992; e Consenting and Approving Resolution of the Bradley Lake Hydroelectric Project Management Committee Resolution No.2013-06 Change of Project Operator;and, e Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs,August 4,2009, Final Report.Prepared by D.Hittle and Associates. 9.2 References -Organization /Staffing e Overview of Staffing (Full time and Occasional)(8/17/2015) e Project Work Site Rules,December 2007 e Scope of the Project dispatch Duties,May 2007 e Position Descriptions:Superintendent,Foreman,Operator Rover (2007-2008) e Generation Agreement between HEA and Local No.1547 IBEW (through April 2018) 9.3 References -Operations and Maintenance e Project O&M Manual (original),Vols.1,11,and II! e Overview of Annual/Monthly/Daily Inspections and Analysis e Bradley Lake Fuji Units 001 and 002 inspection report,Turbodyne Electric,2008 e Bradley Lake Capital Projects and Maintenance Overview,2015 e Bradley Lake Site Staff time charges 2012-21-5 and unit Availability 2013-2015 Final Report Page 43 ) December 2015 Bradley Lake Project Management Audit Report @)mwu. 9.4 9.5 9.6 9.7 Incident report,Lost Oil,March 2014 References -Project Operating Budgets and Costs FY 2011 -2015 Bradley Lake Budget Summaries Actual vs Budget HEA Bradley Lake project Invoice Amy 2013 (with backup) References -Project Capital Investments Bradley Lake Capital Projects and Maintenance Overview,2015 Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs,August 4,2009, Final Report.Prepared by D.Hittle and Associates Bradley Lake Power Plant Estimated Long term Repair and Replacement Costs,September 25, 2015 Draft Report,Prepared by D.Hittle and Associates References -Project Licensing/Regulatory FERC E-Library Docket P-8221 (query dated October 13,2015) Email and attached files from Mr.Bryan Carey of AEA dated October 6,2015,responding to MWH's request for FERC compliance information (each of the attached files was also found on the FERC E-Library Docket) Interview with Project staff (August 25,2015) Exhibit B -Bradley Lake Project Specific Federal and State Agency Requirements,included as an attachment to the Second Amended and Restated O&M Agreement,dated July 1,2008 References -Miscellaneous NERC GADS Data (hydro unit availability,2011-2014) Capital Cost Review of Power Generation Technologies,Recommendation for WECC's 10-and 20-year Studies,prepared for the Western Electric Coordinating Council,March 2014,by E3. Updated Capital Cost Estimates for Utility Scale Electricity Generating Plants,April 2013,U.S. Energy Information Administration,based on Review of Power Plant Cost and Performance Assumptions for NEMS,SAIC,February 2013 Cost and Performance Data for Power Generation Technologies,National Renewable Energy Laboratory,2012,BV Renewable Energy Technologies:Cost Analysis Series,Hydropower,June 2012,International Renewable Energy Agency {EA ETSAP Technology Brief E12,Hydropower,May 2010,Energy Technology Network,Energy Technology Systems analysis Program Hydropower Resource Assessment at Existing Reclamation Facilities,March 2011,U.S. Department of the Interior,Bureau of Reclamation : Hydropower Resource Assessment at Non-Powered USACE Sites,July 213,U.S.Army Corps of Engineers,Hydropower Analysis Center;Estimation of Economic Parameters of U.S. Hydropower Resources,June 2003,Idaho National Engineering and Environmental Laboratory, prepared for U.S.Department of Energy and Energy Information Administration Final Report . Page 44 December 2015 Bradley Lake Project Management Audit Report 10 Report Appendices 1.Request for Information (annotated) 2.Site Condition Assessment Report 3.Utility Interview Notes A.HEA 08-25-15 B.HEA 09-18-15 C.CEA 08-26-15 D.MEA 09-03-15 E.MEA 09-15-15 F.ML&P 09-10-15 G.GVEA 09-10-15 H.GVEA 09-15-15 4.BLP Management Audit Report Comments Documentation Form Final Report Page 45 @)mw. December 2015 perience' 38 years Hydropower consulting engineering experience Performed services that included work at site for over 100 hydro projects Performed management-level audits domestically:examples include BPA/FCRPS,11 projects;SCL,five projects;LCRA,six projects Performed numerous due diligence audits:over 20 projects domestically, plus projects in Columbia,Brazil,Argentina Prior Alaska work for AEA,CEC,City of Sitka @ 1/29/2016 *Sam Nott -managed 5 hydro projects in re rural Michigan,set up and managed new two-unit plant in Nepal 53 ¢Ron Krohn -S&W EE on project,spentakalmost2yearsonsite *Kirby Gilbert -30 years licensing/regulatory experience (incl. Cooper Lake and Susitna-Watana),pOmember of NHA Board @ *Condition Assessment ¢Agreements *Staffing mew @ O&M Overview &BudgetsjaePrPils¢Capital Projects &Costsa:apy!ie «License Complianceae7|°QuestionsaTe @ - 1/29/2016 *Project is 24 years old *Observed condition good to very good *Equipment and facilities well maintained *Availability very good - 92%vs NERC Average of 83% Operator 2018-Onward *Type and Number of Agreements reasonable and appropriate *Agreement language simple and broad *In general,Agreements are serving their intended purpose or Lump Sum *Overall O&M;SVS O&M;Dispatch;Power Sales;Resolution re +Modify Select scope items in O&M agreements from T&M to NTE @ 1/29/2016 *Six FTEs on site:Superintendent ,two foreman,two operator/rovers,one laborer/apprentice *Two part-time managers in Homer (roughly 0.7 FTE) ¢Admin support in Homer (roughly 0.25 FTE) *On-site and other project labor considered reasonable *Changing to unmanned plant not recommended Semcore wsiet day d-Yyhaws - Project O&M by HEA;Dispatch and SVS O&M by CEA Extraordinary maintenance and large capital work by third-party contractors Average Annual O&M cost $3.9 million vs benchmarks of $3.5 to$5.1 million ($4.4 million average) HEA labor costs budgeted as %,but billed as hours wie) Changing Operator and/or Dispatcher would likely not reducecosts,and may increase risk -Location! Potential to hone O&M activities Increase training -annual program,add confined space and firefighting(agreement with Homer?)®EH OF Leg. __ 1/29/2016 Major projects to date: 2004-6 new turbine runners and governors -2011 new Basler excitation systems -2012 new Emerson unit/plant controls -2013 new SEL protective relays -2014 new Emerson turbine governors -2015 new turbine nozzle tips/seat rings *Existing:5-year project capital plan and 35-year ancillary facilities capitalplan(Hittle) *Recommend overall 35-year plan,with in-plant equipment/systems to samelevelofdetailasancillaryfacilities *Additional capital projects -Add five-foot flashboards to dam -increase storage &reduce spill -potential foradditional5,000 MWh (AEA suggestion) -Program to optimize dam releases at dam with tidewater compliancerequirements-potential for additional 10,000 MWh @ 2 Compliance) _--- *License issued 1985,project operation commenced 1991 *Most licensing/regulatory requirements closed out by 2001 *Current annual/periodic license requirements: Minimum flow reports Annual water use report Annual EAP evaluation and request for exemption Pay project fees to U.S.government Annual DSSMR report Annual FERC inspection FERC Part 12 dam safety independent inspection (every 5 years) 1/29/2016 a 1/29/2016 .EME eain.deb.Zo.AB @)mwu. BUILDING A BETTER WORLD 38 years Hydropower consulting engineering experience Performed services that included work at site for over 100 hydro projects Performed management-level audits domestically:examples include BPA/FCRPS,11 projects;SCL,five projects;LCRA,six projects Performed numerous due diligence audits:over 20 projects domestically, plus projects in Columbia,Brazil,Argentina Prior Alaska work for AEA,CEC,City of Sitka @ Other Kay IH Contiiauters a ¢Sam Nott -managed 5 hydro projects in rural Michigan,set up and managed new two-unit plant in Nepal a ¢Ron Krohn -S&W EE on project,spentwealmost2yearsonsite e ¢Kirby Gilbert -30 yearsf-licensing/regulatory experience (incl.MAY Cooper Lake and Susitna-Watana), member of NHA Board oo ¢Condition Assessment ¢Agreements ¢Staffing ¢O&M Overview &Budgets ¢Capital Projects &Costsam¢License Compliance ¢QuestionsaesSy *fehsg7cenSseenSse(Crompolition ¢Project is 24 years old ¢Observed condition good to very good (¢p)®_ 'O aS O2Ooo¢&o.&=OoagesoLlse ¢Availability very good - 92%vs NERC Average of 83% Overall O&M;SVS O&M;Dispatch;Power Sales;Resolution re Operator 2018-Onward Type and Number of Agreements reasonable and appropriate Agreement language simple and broad In general,Agreements are serving their intended purpose Modify Select scope items in O&M agreements from T&M to NTE or Lump Sum a ¢Six FTEs on site:Superintendent ,two foreman,two operator/rovers,one laborer/apprentice Two part-time managers in Homer (roughly 0.7 FTE) Admin support in Homer (roughly 0.25 FTE) On-site and other project labor considered reasonable Changing to unmanned plant not recommended OLA,» [a LA¢Project O&M by HEA;Dispatch and SVS O&M by CEA ¢Extraordinary maintenance and large capital work by third-party contractors ¢Average Annual O&M cost $3.9 million vs benchmarks of $3.5 to$5.1 million ($4.4 million average) ¢HEA labor costs budgeted as %,but billed as hours ¢Changing Operator and/or Dispatcher would likely not reducecosts,and may increase risk -Location! ¢Potential to hone O&M activities ¢Increase training -annual program,add confined space and firefighting(agreement with Homer?)4) Ceyotitel (Arojjactis a i Ns » : *Major projects to date: -2004-6 new turbine runners and governors -2011 new Basler excitation systems -2012 new Emerson unit/plant controls -2013 new SEL protective relays -2014 new Emerson turbine governors -2015 new turbine nozzle tips/seat rings *Existing:5-year project capital plan and 35-year ancillary facilities capitalplan(Hittle) *Recommend overall 35-year plan,with in-plant equipment/systems to samelevelofdetailasancillaryfacilities ¢Additional capital projects -Add five-foot flashboards to dam -increase storage &reduce spill -potential foradditional5,000 MWh (AEA suggestion) -Program to optimize dam releases at dam with tidewater compliancerequirements-potential for additional 10,000 MWh @ ¢License issued 1985,project operation commenced 1991 ¢Most licensing/regulatory requirements closed out by 2001 ¢Current annual/periodic license requirements: -Minimum flow reports -Annual water use report -Annual EAP evaluation and request for exemption -Pay project fees to U.S.government -Annual DSSMR report -Annual FERC inspection -FERC Part 12 dam safety independent inspection (every 5 years) Bradley Lake Budget to Actual Expense Report 7/1/2015 through 11/30/2015 Page 1 of 7 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Schedule A-1 Expenses for the period 7/1/15 through 11/30/15 FY15 FY15 FY16 FY16CAPITALPURCHASESNOTFUNDEDBYR&C FUND BUDGET |ACTUALS |BUDGET |ACTUALS Replace Fish Water Valve Actuators 20,000 --- Weather Stations --15,000 - DCS Security Interface for Data Access -141,703 -- Lube Oil Purification System 46,000 47,723 -- Replace 1998 Chevrolet Crew Cab Vehicle 37,000 32,306 -- Replace 1990 Ford Single Cab Vehicle 37,000 32,306 -- Total Non R&C Capital Purchases 140,000 254,039 15,000 - Page 2 of 7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2015 THROUGH 11/30/2015 FY 16 Fy 15 BUDGET % FY16 Approved 07/01/2015 -(Over)Under FY15 Approved Budget 11/30/2015 HEA Actual |CEA Actual |AEA Actual Total Actual Budget to Date Budget FY1S Actual Summary by expense type Labor &Benefits 2,143,222 893,010 715,167 115,399 :830,566 62,444 1,986,848 1,713,440 Travel 98,600 41,082 5,913 (31).5,882 35,200 35,410 15,529 Training 38,731 16,138 7,925 ::7,925 8,213 38,731 26,568 Contractual 1,180,759 491,982 195,722 230 92,626 288,578 203,404 809,380 643,735 Supplies &Materials 275,760 114,901 48,486 2,519 :51,005 63,896 435,919 224,297 Other Costs 451,846 188,270 36,975 19,440 45,743 102,158 86,112 593,797 225,712 Equi &Machinery 33,130 13,805 491 .-491 13,314 8,500 23,710 Maintenance Projects 37,900 15,792 1,827 .-1,827 13,965 143,530 2,414 Administrative Costs 1,321,817 550,758 22,031 -414,821 436,852 113,906 1,368,387 1,102,344 5,581,765 2,325,738 1,034,536 137,557 553,191 1,725,284 600,454 5,420,502 3,977,749 FERC 535 -Operation Supervision &Engineering Operations Sup/Eng Bradley Lake Operating Labor &Benefits 304,235 126,765 136,277 +°136,277 (9,512)291,632 282,780 Travet 9,500 3,958 2,472 -°2,472 1,486 8,610 12,894 Training 7,904 3,293 2,080 -2 2,080 1,213 7,904 4,116 Contractual 1,445 602 :<2 :602 1,445 Supplies &Materials 6,203 2,585 113 -:113 2,472 6,203 344 Bradley Lake Operating Total 329,287 137,203 140,941 --140,941 {3,738)|315,794 300,134 FERC 535 -Operation Supervision &Engineering Total 329,287 137,203 140,941 :.140,941 (3,738)315,794 300,134 FERC 537 -Hydraulic Expenses Hydraulic Expenses Bradley Lake Operating Labor &Benefits 95,273 39,697 35,448 +:35,448 4,249 95,056 76,200 Contractual 17,180 7,158 ----7,158 19,504 8,000 Supplies &Materials 2,608 1,087 1,166 :>1,166 (79}2,608 - Bradley Lake Operating Total 115,061 47,942 36,613 .-36,613 11,329 117,168 84,200 FERC 537 -Hydraulic Expenses Total 115,061 47,942 36,613 --36,613 11,329 117,168 84,200 FERC 538 -Electric Expenses Electric Expenses Bradley Lake Operating Labor &Benefits 257,107 107,128 97,849 --97,849 9,279 224,000 234,351 Training 30,827 12,845 5,845 :-5,845 7,000 30,827 18,383 Contractual 3,342 1,393 1,400 °-1,400 (7)21,342 14,055 Supplies &Materials 12,232 5,097 1,636 ::1,636 3,461 6,232 2,184 Bradley Lake Operating Total 303,508 126,463 106,731 --106,731 19,732 282,401 268,973 FERC 538 -Electric Expenses Total 303,508 126,463 106,731 :.106,731 19,732 282,401 268,973 FERC 539 -Misc.Hydraulic Power Generation Expenses Misc Hydro Power Exp Bradiey Lake Operating Labor &Benefits 189,473 78,947 68,224 -.68,224 10,723 192,000 114,373 Training :a -a a =-.4,070 Contractual 315,249 131,354 94,569 ::94,569 36,785 239,571 142,752 Supplies &Materials 22,000 9,167 11,345 -a 11,345 {2,278}94,878 18,473 Bradiey Lake Operating Total 526,722 219,468 174,138 .-174,138 45,330 526,449 279,668 BRADLEY CIRCUITS/RADIOTO BERNICE LK Other Costs 30,000 12,500 11,975 :>11,975 528 30,000 28,740 BRADLEY CIRCUITS/RADIO TO BERNICE LK Total 30,000 12,500 11,975 -11,975 $25 30,000 28,740 BRADLEY CIRCUITS BERNICE LK TO ANCH Other Costs 28,746 11,978 +12,405 -12,405 (427)30,000 31,485 BRADLEY CIRCUITS BERNICE LK TO ANCH Total 28,746 11,978 -12,405 =12,405 {427}30,000 31,485 FERC 539 -Misc.Hydraulic Power Generation Expenses Total 585,468 243,946 186,113 12,405 .198,518 45,428 586,449 339,893 FERC 540 -Rents FERC Land Use Fee Bradley Lake Operating Other Costs 183,000 76,250 :-45,743 45,743 30,507 180,000 137,230 Bradley Lake Operating Total 183,000 76,250 :a 45,743 45,743 30,507 180,000 137,230 FERC 540 -Rents Total 183,000 76,250 ::45,743 45,743 30,507 180,000 137,230 FERC $41 -Maintenance Supervision &Engineering Maint Supervision/Eng Bradley Lake Operating Labor &Benefits 222,118 92,549 95,032 ::95,032 (2,483)214,230 197,018 Bradley Lake Operating Total 222,118 92,549 95,032 :-95,032 (2,483)]214,230 197,018 FERC 541 -Maintenance Supervision &Engineesing Total 222,118 92,549 95,032 ::95,032 (2,483)214,230 197,018 3 of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2015 THROUGH 11/30/2015 FY 16 Fy1s BUDGET % FY16 Approved 07/01/2015 -(Over)Under FY15 Approved Budget 11/30/2015 HEA Actual |CEA Actual Total Actual Budget to Date Budget FY15 Actuat FERC 542 -Maintenance of Structures Maintenance of Structures Bradley Lake Operating Labor &Benefits 95,273 39,697 42,426 2 42,426 (2,729)96,200 75,264 Supplies &Materials 61,273 25,530 5,374 =5,374 20,156 64,273 10,009 Equipment &Machinery 11,500 4,792 491 491 4,301 8,500 10,769 Maintenance Projects 4,000 1,667 1,827 :1,827 (160)6,000 - Bradley Lake Operating Total 172,046 71,686 50,117 .$0,117 21,569 174,973 96,041 FERC 542 -Maintenance of Structures Total 172,046 71,686 50,117 :$0,117 21,569 174,973 96,041 FERC 543 -Maintenance of Reservoirs,Dams &Waterways Maint Res,Dams,WWays Bradley Lake Operating Labor &Benefits $1,276 21,365 42,790 -42,790 (21,425)49,950 42,309 Contractual 5,200 2,167 ::-2,167 28,769 630 Bradley Lake Operating Total 56,476 23,532 42,790 :42,790 (19,258)78,719 42,939 BRADLEY NUKA REPAIR Supplies &Materials °-5 ---787 Equipment &Machinery 21,630 9,013 =>-9,013 .12,942 Maintenance Projects a :°-=a 21,630 2 BRADLEY NUKA REPAIR Total 21,630 9,013 i ::9,013 21,630 13,729 BRADLEY POWER TUNNEL MAINT (Dam) Contractual 20,000 8,333 -a =8,333 =43,131 Maintenance Projects .a --2 -$6,000 > BRADLEY POWER TUNNEL MAINT (Dam)Totat 20,000 8,333 --2 8,333 $6,000 43,131 BRADLEY POWER TUNNEL DRAIN CLN/INSP (P/House) Supplies &Materials .1,067 :1,067 (1,067)|-: Maintenance Projects 9,000 3,750 -a .3,750 9,000 = BRADLEY POWER TUNNEL ORAIN CLN/INSP (P/House)Total 9,000 3,750 1,067 +1,067 2,684 9,000 2 FERC 543 -Maintenance of Reservoirs,Dams &Waterways Total 107,106 44,628 43,856 -43,856 772 165,349 99,799 FERC 544 -Maintenance of Electric Plant Maintenance of Elec Plant Bradley Lake Operating Labor &Benefits 381,093 158,789 148,545 -148,545 10,244 379,600 323,757 Travel 3,500 1,458 2,747 =2,747 {1,289)]2,800 158 Contractual 91,443 38,101 62,478 >62,478 (24,377)61,849 33,765 Supplies &Materials 27,245 11,352 6,179 id 6,179 $,173 27,245 20,650 Bradley Lake Operating Total $03,281 209,700 219,949 :219,949 {10,249)}471,494 378,331 BRADLEY GOVERNOR PSSE MODEL Contractual .°..a -25,000 25,000 BRADLEY GOVERNOR PSSE MODEL Total ==-:=2 25,000 25,000 FERC 544 -Maintenance of Electric Plant Total 503,281 209,700 219,949 -219,949 {10,249)496,494 403,331 FERC 545 -Maintenance of Misc.Hydraulic Plant Maint of Mise Hydr Plant Sradley Lake Operating Labor &Benefits 98,273 39,697 45,585 45,585 (5,888)|95,680 78,186 Contractual 3,900 1,625 +::1,625 3,900 170 Supplies &Materials 43,000 17,917 19,417 19,417 (1,500)71,281 40,220 Bradley Lake Operating Total 142,173 59,239 65,002 -65,002 (5,763)]170,861 118,576 BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Maintenance Projects 24,900 10,375 ::10,375 30,900 2 BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Total 24,900 10,375 ---10,375 30,900 - FERC 545 -Maintenance of Misc.Hydraulic Plant Total 167,073 69,614 65,002 .65,002 4,612 201,761 118,576 FERC 556 -System Control &Load Dispatching System Cntl &Load Disp Bradley Lake Operating Labor &Benefits 49,000 20,417 2,899 -2,899 17,518 48,000 19,514 Contractual 8,500 3,542 37,275 +37,275 (33,733)$,000 - Supplies &Materials 6,199 2,583 935 -935 1,648 6,199 2,297 Bradley Lake Operating Total 63,699 26,542 41,109 :41,109 (14,567)$9,199 21,811 BRADLEY POWERHOUSE PC'S Contractual 50,000 20,833 :-:20,833 30,500 3,201 BRADLEY POWERHOUSE PC'S Total $0,000 20,833 ---20,833 30,500 3,201 BRADLEY DISPATCH REGULATIONS Maintenance Projects ->a .::20,000 = BRADLEY DISPATCH REGULATIONS Total :+-+--20,000 - 4o0f7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE 8 BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2015 THROUGH 11/30/2015 FY 16 FY 15 BUDGET % FY16 Approved 07/01/2015 -(Over)Under FY1S Approved Budget 11/30/2015 HEA Actual |CEA Actual |AEA Actual Total Actua!Budget to Date Budget FY15 Actual Snow Measurement Bradley Lake Operating Contractual 10,000 4,167 ::10,000 10,000 (5,833)|11,000 10,000 Bradiey Lake Operating Total 10,000 4,167 .=10,000 10,000 {5,833}11,000 10,000 Seismic Service Bradley Lake Operating Contractual 62,000 25,833 +.7,192 7,192 18,641 60,000 64,477 Bradley Lake Operating Total 62,000 25,833 --7,192 7,192 18,641 60,000 64,477 Streamguaging Serv Bradley Lake Operating Contractual 296,000 123,333 --75,335 75,335 47,999 295,000 296,409 Bradley Lake Operating Total 296,000 123,333 --75,335 75,335 47,999 295,000 296,409 Permits Bradley Lake Operating Other Costs 100 42 -100 100 {S8)100 350 Bradley Lake Operating Total 100 42 --100 100 (58)100 350 FERC 556 -System Control &Load Dispatching Total 481,799 200,750 41,109 :92,626 133,735 67,015 475,799 396,248 FERC 562 -Station Expenses Station Expenses Bradley Lake Operating Labor &Benefits 251,852 104,938 -115,399 +115,399 {10,461)300,500 269,688 Travel 26,000 10,833 .(31)=(31)10,864 24,000 2,476 Contractual 6,500 2,708 .230 :230 2,478 6,500 2,145 Supplies &Materials 95,000 39,583 +2,519 .2,519 37,064 157,000 129,332 Other Costs E --7,034 -7,034 (7,034)-1,085 Maintenance Projects ---°--.-2,414 Bradley Lake Operating Total 379,352 158,062 :125,151 +125,151 32,911 488,000 407,140 FERC 562 -Station Expenses Total 379,352 158,062 :125,151 :125,151 32,911 488,000 407,140 FERC 571 -Maintenance of Overhead Lines Maint of OH Lines Bradley Lake Operating Labor &Benefits 146,320 60,967 94 a -94 60,873 .- Travel 54,600 22,750 694 *-694 22,056 -2 Contractual 90,000 37,500 --a -37,500 - Supplies &Materials .-1,255 :.1,255 {1,255)|-- Other Costs :-:--::353,697 26,822 Bradley Lake Operating Total 290,920 121,217 2,043 --2,043 119,174 353,697 26,822 BRADLEY JUNCTION SWITCH REMOVAL Other Costs 210,000 87,500 25,000 2 .25,000 62,500 -- BRADLEY JUNCTION SWITCH REMOVAL Total 210,000 87,500 25,000 --25,000 62,500 =- BRADLEY MARKER BALL REPLACEMENT Labor &Benefits 4,929 2,054 +-::2,054 -- Travel 5,000 2,083 --5 -2,083 .- Contractual 200,000 83,333 .:--83,333 2 : BRADLEY MARKER BALL REPLACEMENT Total 209,929 87,470 :.--87,470 :: FERC 571 -Maintenance of Overhead Lines Total 710,849 296,187 27,043 a -27,043 269,144 353,697 26,822 FERC 920 -Administrative Expense AEA Bradley Fixed Admin Fees Bradley Lake Operating Administrative Costs 200,000 83,333 --83,333 83,333 (0)200,000 200,000 Bradley Lake Operating Total 200,000 83,333 --83,333 83,333 (0}200,000 200,000 Operating Committee Exp-Audit Bradley Lake Operating Administrative Costs 116,250 48,438 --72,488 72,488 (24,050)116,250 15,500 Bradley Lake Operating Total 116,250 48,438 *<72,488 72,488 (24,050)116,250 15,500 Operating Committee Exp-Legal Bradley Lake Operating Administrative Costs 25,000 10,417 +-39,879 39,879 (29,462)25,000 22,110 Bradley Lake Operating Total 25,000 10,417 --39,879 39,879 (29,462)25,000 22,110 Operat Committee Exp-Arbitrage Bradley Lake Operating Administrative Costs 3,630 1,513 ::1,513 1,513 :$,200 3,630 Bradley Lake Operating Total 3,630 1,513 :°1,513 1,523 -5,200 3,630 Trust &Account Fees Bradley Lake Operating Administrative Costs 12,300 5,125 ::4,966 4,966 159 12,300 11,918 Bradley Lake Operating Total 12,300 5,125 --4,966 4,966 159 12,300 11,918 FERC 920 -Administrative Expense Total 357,180 148,826 :-202,179 202,179 (53,353)358,750 253,158 5 of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2015 THROUGH 11/30/2015 FY 16 FY1S BUDGET % FY16 Approved 07/01/2015 -{Over)Under FY15 Approved Budget 11/30/2015 HEA Actual |CEA Actual }AEA Actual Total Actual Budget to Date Budget FY15 Actual FERC 924 &925 -Insurance Premiums Insurance Premiums Bradley Lake Operating Administrative Costs 574,637 239,432 22,031 -184,546 206,577 32,855 574,637 562,920 Bradley Lake Operating Total 574,637 239,432 22,031 -184,546 206,577 32,855 574,637 562,920 Risk Management Bradley Lake Operating Administrative Costs ..°..>>35,000 30,000 Bradley Lake Operating Total -..-°>-35,000 30,000 FERC 924 &925 -Insurance Premiums Total 574,637 239,432 22,031 .184,546 206,577 32,855 609,637 $92,920 FERC 928 -latory C issi p FERC Admin Fees Bradley Lake Operating Administrative Costs 210,000 87,500 --->87,500 250,000 150,519 Bradley Lake Operating Total 210,000 87,500 ----87,500 250,000 150,519 FERC Related Prof Services Bradley Lake Operating Administrative Costs --.<>--150,000 105,747 Bradley Lake Operating Total >-----:150,000 105,747 BRADLEY FERC PART 12 INSPECTION Administrative Costs 55,000 22,917 .---22,917 .- BRADLEY FERC PART 12 INSPECTION Total 55,000 22,917 ---22,917 *- BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES Administrative Costs 125,000 52,083 °7 28,096 28,096 23,987 -° BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES Total 125,000 52,083 -=28,096 28,096 23,987 -- FERC 928 -I y Cl i Total 390,000 162,500 °-28,096 28,096 134,404 400,000 256,266 Total Bradley Lake Budget 5,581,765 2,325,738 1,034,536 137,557 553,191 1,725,284 600,454 5,420,502 3,977,749 6o0f7 BRADLEY LAKE R&C FUND DISBURSEMENTS AND REPAYMENTS SCHEDULE D Expenses for the period 7/1/15 through 11/30/15 Page 1 of 2 Actual Actual Actual Actual Actual Actual Actual Actual BudgetFY13TOREPAYFY14TOREPAYFY15TOREPAYasof11/3045 TO REPAY FYI6 Description Disburse 6130/2013 Disburse 6/30/2014 Disburse 6/30/2015 Disburse 6/30/2016 R&C FUND PROJECTS Governor $8,252.20 2,838,205.71 586,125.63 3,424,331.34 627,738.80 4,052,070,14 0,00 4,052.070.14 9,00 Replace RFLS 0.00 251,092.69 0.00 251,082.69 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 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 2,321,922.34 0.00 2.321,922,94 0.00 2,321,922.94 0.00 Replace power system stabilizer 27,760.70 619,205.10 0.00 619,205.10 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 86,905.27 0.00 86,905.27 0.00 Culvert Repairs 0.00 675,966.79 0.00 675,966.79 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 9.00 887,596.62 0.00 887,596.62 0.00 Replace Plant and SCADA Controls 336,384.38 1,344,683.05 0.00 1,344,683.05 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 0.00 490.00 0.00 490.00 0.00 Fire Alarm System Replacement 9.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 150,000.00 Battle Creek Diversion 479,657.87 479,657.87 471,070.61 950,728.48 43,605.35 994 333.83 68,714.81 1,063.048.64 0.00 Bradley Replace Electro-Mechanical Relays 499.893.38 499,893.38 777,303.68 1,277,197.06 0.00 1,277,197.06 0.00 1,277.197.06 0.00 Fishwater Screen Debris Removal 9.00 0,00 0.00 0.00 21,929.45 21,929.45 0.00 21,929.45 703,070.55 Turbine Nozzel Repair 0.00 0,00 0.00 0.00 96,423.49 96,423.49 749,851.37 846,274.86 1,130,000.00 SVC replacement Daves Creek |Soldotna 9.00 0.00 0.00 0,00 0.00 9,00 9,00 0,00 3,600,000.00 |1,401,948.53 I 11,952,352.21 1,834,499,92 l 13,786,852.13 789,697.09 I 14,576,549.22 818,566.18 I 15,395,115.40 5.583,070.55 Current Year R&C Repayment {1,536,319.06)(1,328,076.00)(1,146,123.00) FY15 R&C repayment received in FY 16 0.00 0.00 (219,731.00), Interest in Fund Applied to Repayment 372,914.96)(313,407.18)(244,582.41)| Net Transfer from Revenue Fund 1,909,233.96)|1.641,483.18)1,610,436.41)| Cumulative Prior Years R&C Repayments (8,742,193.90}(9,884,350,26)|(11,346,045.42) Que Back to Utilities 767,077.60 179,788.03 239,942.51 Adjust Due to R&C Actuat (99,459.25:9.00 0.00 8,074,575.55 9,704,562.23 11,106,102.91 INET DUE TO R&C FUND 1,968,542.70 2,440,806.72 4,860,009,91 R&C FUND CASH FLOW PROJECTION Beginning Investment Batance 4,671,504.45 4,627,751.16 3,015,716.76 Disbursements-current year -Accruat (572,732.26)(1,657,223.72)(766,797.23) Disbursements-prior year accrued (606,357.25)(829,216.26)|(177,276.20) Utilities'R&C Repayment (773,897.74)(767,077.60)(179,788.03) Current year interest earnings 372,914.96 313,407.18 {69,953.03} Participants Contributions to R&C Fund 1,536,319.00 1,328,076,00 244,582.41 Ending investment Balance 4.627.751.16 3,015.746.76 3.212,607.68 Accrued Due to Utilities (767,077.60)(179,788.03)(239,942.51) Accrued Due from Revenue fund (debt services transfer}69,953.03 Accrued Due from Revenue fund (debt services transfer)104,193.00 Accrued Due from Revenue fund (FY15 budget amend)115,537.99 R&C payable back to the revenue fund revised {99,459,25)(99,459.25) Accrued R&C Payable at Year End {829,216.26 revised 177,276.20)(22,899.64) less R&C excess cash at 7/1/05 PROJECTED NET DUE +ENDING INVESTMENT BALANCE 5.000,000.00 §,000.000.00 §,000.000.00 REPAYMENT AMOUNT $954,181.79 x 25%4th yr 238,545.45 $756,665.11 x 25%3rd yr 189,166.28 }4th yr 189,166.28 $1,455,830.05 x 25%2nd yr 363,957.51 [3rd yr 363,957.51 [4th yr 363,957.51 $1,401,948.53 x 25%Ast yr 350,487.13 |2nd yr 350,487.13 [3rd yr 350,487.13 [4th yr 350,487.13 $1,834,499.92 x 25%yr 14 25%yr 2 |50%yr 3 ist yr 458,624.98 [2nd yr 458,624.98 [final yr 917,249.96 $789,697.09 x 25%yr 1,75%yr 2,3&4 'ist yc 197,424.27 }final yr 592,272.82 ist yr 204,641.55 1.142.156.38 1,362.235.94 Bradley Lake Operator Report BPMC Meeting January 29,2016 Unit Statistics:01/26/2016 Generation Unit 1 (MWhrs)Unit 2 (MWhrs)Total (MWhrs) December 2015 30,260 26,405 56,665 Hydraulics Avg.Lake Level (ft).Usage (ac ft)Fishwater (ac ft) December 2015 1,132.78 57,677 2,630 Lake Level -1,114.7' Projects: 1)Eishwater screen debris removal -Project review submitted separately. 2)Fire system evaluation and replacement -This project is ongoing,the current schedule is provides for a site visit by a local fire system inspector to evaluate the fire systems.We will then identify systems that are obsolete and those that may not meet current fire codes.This evaluation along with known issues will be used to draft an RFP to first install a fire system in the engineering room and replace the control room Halon system.Other panel and system upgrades will follow depending on evaluations and proposals. 3)Unit #2 Nozzle Rebuild -NAES Power Contractors are planning to mobilizeapprox.May 20"".The tentative unit outage schedule is May 23°through June26".The same contract terms and conditions will apply with the exception of the revised labor rates as authorized by the BPMC in 2015. Operations and Maintenance: 1)Bradley unit operation -Unit availability and capacity for December are detailed below.There were no plant related trips or equipment failures. Availability Unit #1 =100% Unit #2 =100% 2)Inspections - Capacity Unit #1 =64.56% Unit #2 =56.34% 12/21/2015 -Flyover inspection of the dam and spillway was conducted. Nothing notable was observed. 12/30/2015 -The fourth quarter power tunnel drain flow measurement readings were taken and sent to AEA and the consulting engineer. 1/1/2016 -Monthly spill prevention and fuel tank inspection was performed.No equipment issues were noted. 1/7-8/2016 -A ground dam safety and support facilities inspection was conducted.All systems are functional. 1/24/2015 -A facility and dam post-earthquake inspection was performed.No notable damage or issue was identified.AEA was notified. Bradley Lake Operator Report Page 1 3)Northern tie line trip -The attached trend illustrates Bradley Lake Unit governorresponseonthemorningofDecember30"during the system load shed.The Bradley units shed load from 56.6 MW to 11.5 MW. 4)FY2017 Preliminary Budget -FY2017 Bradley O&M and Capital Budget is in the preliminary formulation stages.A draft budget will be provided to the O&DCommitteeonFebruary12". 5)Personnel changes -Steve Pollack,Bradley Lake Foreman submitted a letter ofresignationMonday,January 25".Steve has been employed at BLPP since 2001 and has provided many years of service filling the duties of Operator,Master Electrician and Crew Foreman.Andrew Carey,the Bradley Lake apprentice will complete his training in March which will provide for a staffing level of two operators per shift with a total of four full time operators. 6)Long Term Repair and Replacement Cost Update Report --A draft copy of the report was submitted to AEA on 10/22/2015 to be included in the documentation for the MWH audit.The second revised report was submitted on 12/17/2015.D.Hittle will release the final report and hard copies in early February.The report will be distributed to AEA and the O&D Committee for review. Bradley Unit Governor response to Northern tie trip -December 30,2015 1PHGEN MONT SUUNIT Scale-SM UNIT @NE Ut M WATTS SMOOTH2PH-GEN-MWT-SM UNIT 1@NE U2 M WATTS SMOOTH $300 iw ScateDRG-XLN-FRO UNITI@NETO DIAM RDG LN FREQ 60.260 Hz ScaleSON-XLN-FRO UNITI@NETO SOLDOTNA LN FREQ 60.280 He =Scale1GOV_00_A-007 UNITIGINETO U1 Needis Control from FUS 32.993 %Scale 100 0.000 Actua!ValveGOV0_A-O07 UNITI@ONETO U2 Needis Control from EUS 26.613 %Scate 100 C009 Actua Vaive1DV-POS-FDBK UNITIG@NETO U1 DIVIDER POSITION FEEDS 43.474 *Scoie:100 0.000 Actual Value20V-POS-FDBK UNITI@NETO U2 DIVIDER POSITION FEEDB 36.920 %Scale 100 0.000 Actual Vaiue Div1=89%Div2=86%Freq -60.6 Gov1=63% MW1232.6).00000 Freq =59.96 |}...2 odGov2=47%__oo MW2224 |ii;¢Lneeeeeeaeeseeeefy an I MW22 1.8 Ve ey oY oe oFoofofoeoFoFoFoe-ca -*oe F&F fFSEEKEOEEEEOEESESF Bradley Lake Operator Report Page 2 ICCP Data Exchange Remote owners will receive via ICCP from CEA these data points: e MW Allocation of Bradley.This is the external owners allocated MW output of Bradley and can generally be expected to match the prior requested MW.This MW amount is applied to ACE at CEA and the remote owner in Tie-line Bias ACE mode. ICCP ID =BradleyGVEAActualMWMW (04022029) ®Bradley high limit for this owner. ICCP ID =BradleyGVEAHighLimitMW (04022034) e Bradley net plant breaker status.This is a simple logical OR of the two Bradley unit breakers. ICCP !D =BradleyPlantNetBkr (02022040) e Bradley local/remote for remote Dynamic Scheduling.This status indicates that Bradley is accepting remote requests from this owner.For remote control the BDS Request Mode at CEA for the owner must be "Telemetered.” ICCP ID =BradleyGVEABDSLocalRemote (02022036) e Bradley Remote Request Block.When CEA AGC is either Off or in CF mode remote requests are blocked. ICCP ID =BradleyRemoteControlBlock (02022041) Remote owners will provide to CEA via ICCP: e MW Request.This request will be granted in the next MW allocation subject to the high limit constraint. In the event that ICCP communication is lost BDS will continue with the last received request MW.If the ICCP outage is prolonged dispatch will need to arrange with the remote owner to change the owner's share to Composite or Manual mode.The remote owner will need to detect the ICCP failure or data non-update and stop active control of Bradley. sped Crh9bap -a oF aesTOJO NY fonp OTIS ad Bradley Lake Project Management Committee -Alaska Online Public Notices Page |of 1 STATUS:Active Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY (AEA) Regular Meeting of the Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting on Friday,January 29,2016 at 9:30 a.m.For additional information contact Teri Webster at 907-771-3074. This meeting will be conducted by electronic media pursuant to AS44.62.310 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 inperson.Dial 1-888-585-9008,Enter Code 467-050-126#. The public is invited to attend.The State of Alaska (AEA)complies with Title I!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. Attachments,History,Details Attachments Details None Department:Commerce,Community andP:Economic Development Revision History Category:Public Notices Created 1/20/2016 3:00:43 PM by eee Acvisory Committee Meetingtawebster: Modified 1/20/2016 3:01:33 PM by [Details]Project/Regulation #: tawebster Modified 1/20/2016 3:02:03 PM by [Details]Publish Date:1/20/2016 tawebster etal's Archive Date:1/30/2016 Events/Deadlines: https://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=179865 1/20/2016 rNXPYDBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING Ay AGENDA w Friday,Jan.29,2016 9:30 a.m,-11:30 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by teleconference,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL AGENDA COMMENTS /MOTION FOR APPROVAL PUBLIC COMMENTS APPROVAL OF MEETING MINUTES -Nov.17,2015 OLD BUSINESS A.Dynamic Scheduling CEA/MLP B.Fish Screen Cleaning HEA NEW BUSINESS A.FY15 Financial report AEA/Swalling &Assoc B.Bradley Management audit report AEA /MWH COMMITTEE REPORTS A.Budget Committee -Budget to Actuals update OPERATORS REPORT COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -TBD ADJOURNMENT BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska November 17,2015 1.CALL TO ORDER Chair Borgeson called the regular meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:30 a.m. 2.ROLL wa (for Committee members)y Cory Borgeson (Golden Valley Electric Association [GVEA]);Sara Fisher-Goad (Alaska Energy Authority [AEA]);Burke Wick"(Chugach Electric mane ee [CEA]);Joe Griffith (MatanuskaElectricAssociation[MEA]- pheré});Mark Johnston "Ancherage Municipal Light &Power [MLP]);John Foutz(Zity of Seward);and Harvey Ambros omer Electric Association [HEA]). 3.PUBLIC ROLL CALL (for all others present) Salina Bearden/bryan CareyKelli Veech'Kirk Warren'eri Webster (AEA):Crystal Enkvist Mel Hutchison"Alaska Power Association);Brian Bjorkquist Attorney General's Office [AGO]);Rick Baldwin'Bob Day/Alan Owens-(HEA);Kirk Gibson-cDowell Rackner &Gibson);GaryKuhnthfdae),Necoe Borie oni oubie,Anna HendersortAndy Leman {epy;Jeff Warner (MLP);Dave Gillespie,Bernie Smith{Public);and Jane SmythAccu-Type Depositions). A,AGENDA COMMENTS/MOTION FOR APPROVAL . MOTION:Mr.Foutz made a motion to approve the agenda.Motion seconded by Mr. Wick. Mr.Ambrose objected to agenda Items 7,11.1 and 11.3 and noted these were issues under litigation and outside the jurisdiction of the Committee. MOTION:Mr.Ambrose made a motion to remove Items 7,11.1.and 11.3 from the agenda. The motion by Mr.Ambrose failed due to the lack of a second. Mr.Wick suggested Items 8B.and 8C.are essentially the same item.Chair Borgeson agreed and noted Item 9.will follow Item 8B. The motion passed to approve the agenda as presented,with Mr.Ambrose voting against. 5.PUBLIC COMMENTS None. 6.APPROVAL OF PRIOR MEETING MINUTES -September 25,2015 DRAFT BPMC Minutes 11/17/15 Page |of 5 MOTION:Mr.Foutz made a motion to approve prior meeting minutes of September 25, 2015.Motion seconded by Mr.Wick. Mr.Foutz corrected the spelling of Mr.Risse's name on the public roll call. The motion passed unanimously to approve the prior meeting minutes of September 25, 2015,as corrected. 7.OLD BUSINESS A.Resolution 14-11 -Mediation or dispute resolution process Chair Borgeson requested Mr.Gibson provide a brief summary of this agenda item.Mr.Gibson reviewed the nine issues Resolution 14-11 addressed.He advised the BPMC currently holds jurisdiction,until the Supreme Court provides a ruling. Chair Borgeson requested Mr.Wick address the compliance with the payments required under 14-11.Mr.Wick reported the history of events since January 1,2014,when HEA ceased being a wholesale customer of CEA.Based on Resolution 14-11,and as of the end of October 2015, Mr.Wick informed HEA is oweda total of $550,000,minus any payments received. Mr.Ambrose objected to the discussion of these issues in this forum. Chair Borgeson advised the utilities to continue paying HEA pursuant to Resolution 14-11.Mr. Griffith agreed.Mr.Wick noted HEA returned CEA's payment checks unprocessed.Chair Borgeson requested AEA invoice the utilities for their share of the payment,after which AEA will provide the total payment check to HEA.Ms.Fisher-Goad stated she will research this option with accounting and report back to the Committee. 8.NEW BUSINESS A.Access permit request by Troy Jones Ms.Fisher-Goad requested Mr.Carey discuss the correspondence and appropriate actions for this item.Mr.Carey reviewed the access permit request by Mr.Jones and discussed the memorandum provided to the Committee. Mr.Ambrose requested the maintenance and use of the Battle Creek bridge be considered as part of the final disposition.Mr.Owens informed the current estimate of labor and material to repair the top layer of both bridges came in at $166,000. Mr.Johnston asked if the BPMC has liability if anything happens to permittees when they cross the project land.Ms.Fisher-Goad advised the second page of the preliminary permit lists conditions,including indemnification.The bridge concerns and other liability issues could be included under safety conditions of the permit.The preliminary permit does not require the permittee to hold insurance or bonding,and could be added. Chair Borgeson asked how many property holders may want similar access.Mr.Carey indicated Bear Cove has approximately 20 to 30 property owners and access is mostly by boat or plane.Chair Borgeson asked if it would negatively affect the project if all of the property owners requested land access permits.Mr.Carey does not believe the small increase in traffic DRAFT BPMC Minutes 11/17/15 Page 2 of 5 would degrade the project.Chair Borgeson asked if Mr.Jones can access his property without going through the project.Mr.Carey noted Mr.Jones has owned the property for 20 to 30 years,and assumes Mr.Jones has a boat or a plane to access the property without going through the project. Chair Borgeson inquired about the cost of the process to provide a permit.Mr.Carey informed AEA has little to no cost,Department of Law may have a small cost,and the agencies probably will have no cost.He does not foresee a need for publishing costs.Ms.Fisher-Goad indicated a permit fee would be required. 'Chair Borgeson requested the operator provide comments regarding this issue and any potential problems.Mr.Owens informed HEA's safety and liability concerns were submitted to the state in written form.He believes the proposed permit addresses HEA's concerns and restrictions could be included to address concerns of commercial activity. Mr.Wick asked what research has been conducted regarding the public process during the development of Bradley Lake referencing land owner access.Mr.Carey noted the microfiche records have not been searched.Mr.Bjorkquist reported his research of the FERC license did not show any reference to the project developers assuring traditional access to land owners. MOTION:Mr.Griffith made a motion authorizing AEA to continue work on the permit for the landowner and to bring a final permit to the BPMC for approval.Motion seconded by Mr.Ambrose. Mr.Ambrose commented a good faith effort is appropriate to allow property owners access to their land and requested the operator be given explicit direction regarding access and indemnification. Mr.Johnston noted ML&P would be in favor of the permit only if it includes a liability requirement for the permittee to hold a million-dollar umbrella insurance policy or bond. The motion passed unanimously. B.Dynamic Scheduling Chugach/ML&P C.Update on Dynamic Dispatch Report by Burke Wick (CEA) Mr.Wick provided the update on dynamic scheduling.He noted a revised approach is being developed by ML&P and CEA.Positive results are expected and will be emailed to members next week.CEA will subsequently address scheduling with HEA,GVEA,and MEA,as needed. Chair Borgeson asked if GVEA buys power from ML&P,will GVEA be able to piggyback on ML&P's scheduling to regulate GVEA's wind.Mr.Wick noted schedules can be changed on an hourly basis.Mr.Warner believes capacity transfers can occur.HK \ 9.COMMITTEE REPORTS None. 10.OPERATORS REPORT DRAFT BPMC Minutes 11/17/15 Page 3 of 5 Mr.Owens informed there were no actionable items in the provided Operators Report.The long-term R&R final report is expected to be released at the end of November.Mr.Day noted the preparation is on track to pull the lake level down.The project is dependent on weather. Heavy snow could present a problem,and very little snow could present a different problem. Mr.Day advised the BPMC will be informed as to project progress and weather obstacles. Mr.Foutz requested further explanation of the difference between the Water Release Plan and the fishwater flow requirement.Mr.Owens explained the Water Release Plan includes lake drainage and removal of debris,while maintaining fishwater flow requirements. Chair Borgeson asked for additional information on the debris removal plan.Mr.Owens described the five phases of the scope of work and debris removal concept.The comprehensive scope of work was provided to the O&D Committee last week. MOTION:A motion was made by Mr.Foutz to go into Executive Session to discuss confidential legal and financial matters regarding HEA's antitrust claims,MEA's letter to AEA,and the change in AEA position regarding HEA transmission issue and notification of intent to elevate the issue.Motion seconded by Mr.Johnston. Mr.Ambrose restated his objection to Items 1.and 3.under Executive Session. Ms.Fisher-Goad informed a public records request has been submitted for a copy of the correspondence between AEA and MEA under Item 2. Mr.Gibson advised per the bylaws,it is appropriate to discuss information in executive session which the immediate knowledge may have an adverse effect on the finances of the Authority or the Committee.It is also appropriate,per the bylaws,to discuss information in executive session with the attorney which could have an adverse effect from a legal position of the Authority or the Committee. Chair Borgeson informed the utilities can designate staff and/or council to attend executive session. The motion was approved,with Mr.Harvey voting against. 11.EXECUTIVE SESSION:10:50 a.m. 1.HEA's antitrust claims 2.MEA's letter to AEA 3.Change in AEA position regarding HEA transmission issue and notification of intent to elevate the issue The Committee reconvened its regular meeting at 11:34 a.m. 12.COMMITTEE ASSIGNMENTS Chair Borgeson assigned Mr.Gibson to review BPMC enforcement of Resolution 14-11 and to advise on whether or not the BPMC should incorporate as an entity or stay an unincorporated association. DRAFT BPMC Minutes 11/17/15 Page 4 of 5 Chair Borgeson requested Ms.Fisher-Goad research if AEA could invoice the utilities for their share of the Resolution 14-11 payment to HEA,after which AEA would provide the total payment check to HEA. 13.MEMBERS COMMENTS Mr.Ambrose expressed his appreciation to the utilities for working to get the lake level down. Ms.Fisher-Goad expressed her appreciation to Mr.Day and Mr.Owens for their great work in vetting all the issues involved in the debris removal project.The work is important to the license and presents many challenges and complications. Chair Borgeson expressed his appreciation for the reports and updates given today.He thanked Mr.Carey for his work on the permit and believes area property owners should be accommodated,if done safely and with little impact to the project. 14.NEXT MEETING DATE The next meeting date is to be determined in January. 15.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 11:37 a.m. BY: Cory Borgeson,Chair Attest: Bryan Carey Alaska Energy Authority,Secretary DRAFT BPMC Minutes 11/17/15 Page 5 of 5 A yr ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY BOARD MEETING Next Meeting:TBD _ BPMC 1/29/16 First Second First Second First,Second,\First J Second First Second Aa Selws Val Roll Call Agenda Minutes Budget Roll call from top to bottom ending with Chair Yes No Yes No Yes No Yes No Yes No Homer Electric Association bor Veu /,\Wy Matanuska Electric Association To Pate /ap A " City of Seward TN nC dngncd ”.yi cn'"; Alaska Energy Authority Saw.v"yi C nd " Municipal Light &Power War -Yo WA Chugach Electric Association Lee uv WA Golden Valley Electric Association Cory "/ / is Favela a sete ca aE naeFac oes hes oman wei a dita hanced Sete a Ae toe ancemn ll de RACE te WA and el na a hia ati oma eon otal seater cae a Secwnsinendtshha Salias wad 9 Wand acest ep beajs wosad First Second First Second First Second First Second First Second Roll call from top to bottom ending with Chair Yes No Yes No Yes No Yes No Yes No Homer Electric Association Matanuska Electric Association City of Seward Alaska Energy Authority Municipal Light &Power Chugach Electric Association Golden Valley Electric Association Bradley Lake Project Management Committee Friday,January 29,2016 @ 9:30 A.M. **PLEASE WRITE LEGIBLY* | NAME ORGANIZATION OCR AQAA ACUI PL DeposronsAne(slleentc ROEKIRKCiRLonMAvadei\Roca |GRA) i Bepwté Smirk CUBLIC. oa Chen tyes hy wi4bviKp tertte CHOCOkil[ently ALA-eff Van WILD y GaRyY D/Xor/ Poly Daygd Swallng 2 AS80C1a #5 Leh "Dean OW2END Wied a Wn Poce,Airbrose UE Cony "Rorg@xov AAS b Dastfeae ©WEAZagaryhnVd |Joy Lo L2zo LEE THBT CAUGACTL a Mollie Merri sar ML4e 1 Dara Fisher-Goab dt Torn Webster Mare Sehnetm mLUP Cary Kuhn,HED va Jocelyn Gor ner rep "a Bran Voudiey COA prove.Byuly Rukchinsortaed Ron Wool SF Aan Grey5S (GVENY:5 Sha Fodz (sSaad) Fshindo lo RFY .4 vevhen.Bd Cond 250,00,GMC crtrictien pri 5LrstuKeepocund-ontine S20 Kath May 25 Watt Needle Work ,bite esr Owlts+p get back td read level PAE C-Caprtal proect tinanemwa.SVE 12M thu REE find ve Francs >AurelComM+o Coed bac ne Meehing AEA sheet tere Fin,SVCWTA JorhnP'S Geter get langn bord.Sa Moy,Bock Mi A extend bond owt Sx wl interim Fund thet3ore before othar Matunca, BA PAS of Noes Wat optrofar IS not atorckeady renewed dig.Nt aude5\e hae uf Dye Foptiating ecpansesNEehLindBordMechnics,"option oh 7 .-*FPIyto Se Rdcts .Fy,cpashiy Vo capdah Db #PY-Todi vbbhesbyQAuwtoMeateSPanEtaDa>Penewond,WEG,bsomnryetMig.wheeling?CEA New ta Monch 49:30 serve Lunch +Aanish Sr break RotDdhedalkeotenanchWeckrateapprivebudge aNADPYPDLlee To ny BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING ) AGENDA Friday,Jan.29,2016 9:30 a.m.-11:30 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by teleconference,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL AGENDA COMMENTS /'MOTION FOR APPROVAL PUBLIC COMMENTS APPROVAL OF MEETING MINUTES --Nov.17,2015 OLD BUSINESS A.Dynamic Scheduling CEA/MLP B.Fish Screen Cleaning HEA NEW BUSINESS vA.FY15 Financial report AEA/Swalling &Assoc vB.Bradley Management audit report AEA/MWH_Stan Mayes COMMITTEE REPORTS A.Budget Committee -Budget to Actuals update OPERATORS REPORT COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -TBD ADJOURNMENT eo ocograns s\t R&R firds Siean saaniineenan"ATTENDANCE --BPMC REGULAR MEETING,Jan 229,,2016 @9:30 amCOMMITTEEMEMBERSALTERNATE|oarBorgeson,Chair GVEA *Lynn|Thompson oo OO tee Thibert,Vice Chair CEA _ABurke Wick_parvey Ambrose HEA va Day:__#ara Fisher-Goad,'Secretary/T reasurer |AEA _Bryan CareyiAony12IzzoMEAGaryKuhn i / |Mark Johnston |MLP elt Warner-_John Foutz prone SEW |Jeff Estes oe PublicMembers_COUNSEL _-docelyn Garner Ae Webster_OrySTaTEMkvist (APA)|MaLHutchiasor(APA) "Rich Batdwir (HEP Alan Owens (HEA)Bernie Smith -.wong fonWoolf. i --Kirk Gibson,|McDowell Rackner &Gibson PCBrianBjorkquist,Dept of Law oe ®"here Gary Dron _aonosPadRootprimxAS@sMwu oe,Nolty Yorison |Y Alan Grey Vea a NEA. MLS_ t : M.;|vi onan || oe OOO ..ee 1 }13 es heen .-_oe . is ;i ivob :"yom:Bryan Carey Sent:Tuesday,March 25,2014 2:31 PM To:Teri Webster Subject:RE:BPMC O&D committee -/,hore Disp CEA -Burke Wick GVEA-Allen Gray HEA -Bob Day &Alan Owens ML&P-Jeff Warner MEA-Jim Brooks Seward John Foutz AEA -Bryan Carey Send assignments to the Chair Jim Brooks QO?-Ilol-4355 Bryan Carey,P.E. AEA &AIDEA (907)771-3065 Subject:FW:Bradley budget subcommittee ) From:Kelli L.Veech Sent:Monday,November 02,2015 3:03 PM To:Teri Webster <twebster @aidea.org> Subject:RE:Bradley budget subcommittee That looks correct and Jocelyn represents AEA. From:Teri Webster Sent:Friday,October 30,2015 4:53 PM To:Kelli L.Veech <Kveech@aidea.org> Subject:Bradley budget subcommittee Kelli, Back in March Jocelyn sent me a list of who was on the finance sub-committee for Bradley.I received a letterfromML&P stating Mollie Morrison is now representing ML&P.Can you verify who is on this committee for me?This is what I have. Emily Hutchinson HEA Matt Reisterer MEA Mollie Morrison ML&P Ron Woolf GVEA Sherri Mckay-Higher CEA Thank you, Teri 771-3074 NnYDBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA ws Friday,Jan.29,2016 9:30 a.m.-11:30 a.m. Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate by teleconference,dial 1-888-585-9008 and use code 467 050 126. CALL TO ORDER ROLL CALL FOR COMMITTEE MEMBERS PUBLIC ROLL CALL AGENDA COMMENTS /MOTION FOR APPROVAL PUBLIC COMMENTS APPROVAL OF MEETING MINUTES -Nov.17,2015 NEW BUSINESS A.FY15 Financial report AEA /Swalling &Assoc B.Bradley Management audit report AEA /MWH C. COMMITTEE REPORTS OPERATORS REPORT COMMITTEE ASSIGNMENTS MEMBERS COMMENTS NEXT MEETING DATE -TBD ADJOURNMENT i Waite tote:"ath,Ye