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Home My WebLink AboutTeeland Douglas prelim route selection 2008Dryden golakKue,Tne. CONSULTING ENGINEERS 3305 Arctic Bivd.,Suite 201,Anchorage,Alaska 99503-4575 Phone:(907)349-6653 +Fax (907)522-2534 Email:office@drydenlarue.com PHASE 1 -FINAL ROUTE SELECTION,PRELIMINARY DESIGN,BUDGET, AND DEVELOPMENT SCHEDULE PHASE 1 -Route Selection/Preliminary Design Task 1-1 -Project Administration Task 1-2 -Design Criteria Task 1-3 -Public Involvement Process (PIP) This task will develop and perform the Public Involvement Process.The PIP will be based on our 2004 study and prepare a presentation of the proposed and preferred alternative.The PIP will research and identify stakeholders (impacted property owners), sub-government stakeholder groups (subdivision boards/community councils),involved municipal entities (borough and city governments)and state agencies,and other organizations/personages of potential relevance to the Project.The PIP will also prepare public service announcements for area newspaper and other mass media. We will then schedule,notice and hold,first,our open house community-wide public workshop,to be followed by stakeholder meetings.The broad purpose of the workshop is to present our Project and in turn solicit public comments and concerns.Our present contemplation is to precede the workshop and perhaps even its notice by personal,low key direct meetings with at least the municipal entities involved and some of the other involved entities.It is possible that some modifications to our PIP may result from these informal preliminary contacts. We will evaluate the public comments and concerns,and include these in our routing recommendations and prepare an article for publication in the area newspaper. After final route selection,including initial environmental concerns,identification of existing easements and rights-of-way situations as well as determination of ROW width and conclusion of our preliminary design,we will prepare letters reporting back to stakeholders,other workshop attendees and other known interested persons on the final route,and design concepts.We may then also hold a last round of stakeholder meetings. PIP Subtasks The following list of subtasks identifies the specific individual work to ensure that all aspects of the PIP are completed. |Subtask 1-34:Issues Identification and Preparation of Stakeholder Meetings DnPwHold kickoff meeting with ML&P. Research and identify stakeholders,municipal and sub-municipal entities (including Mat-Su Borough,City of Wasilla,and impacted subdivisions)and other governmental agencies interested parties. Create mailing list for newsletters and meeting announcements. Review mailing list with ML&P. Identify and schedule meeting room for public workshop. Prepare and distribute public service announcement for the Frontiersman newspaper. Hold informational meetings with municipal and other involved entities. Make presentation graphics,handouts,and mailouts. Task 1-3B:Hold Public Workshop Meeting 1.Hold the open house public workshop meeting,with intent of presenting the Project purpose and schedule and reciprocally soliciting and identifying public issues. |Task 1-3C:.Hold Stakeholder Meetings 1.Schedule stakeholder meetings,encouraging as many sub-groups as possible to attend. |Task 1-3D:Post-Public Meeting 1: 2. 3. Prepare meeting summary for ML&P and compile an attendance list. Evaluate meeting results and comments received. Review schedule of stakeholder meetings for changes;prepare revised schedule if appropriate. Task 1-3E:Hold Stakeholder Meetings 1.Hold stakeholder meetings,sharing tentative route preference from workshop meeting as it affects particular stakeholder group and soliciting group's more particular concerns if any. Task 1-3F:Post-Stakeholder Meetings 1.Prepare summary of stakeholder meetings for ML&P and compile attendance lists 2.Evaluate results of meetings and comments received. 3.Select tentative route preference,subject to Task 4 results. Task 1-3G:Summary Newsletter Article 1,Prepare an article for the Frontiersman newspaper summarizing public needs and concerns as emerged from workshop and stakeholder meetings and discussing how selected tentative route preference for Project will address those needs and concerns. 2.Summarize and evaluate responses to article. Work Included Review 2004 study and prepare presentation of alternatives Prepare Public Involvement Process outline Collect addresses for adjacent landowners Hold informational meetings Prepare Public Workshop Prepare stakeholder meetings Invite adjacent landowners to meetings Evaluate and consolidate information from meetings Identify public concerns Prepare final route recommendation subject to Task 4. Determine impacts to Preliminary Design Prepare summary newsletter article Deliverables Public Involvement Process Outline Public and stakeholder meeting presentation graphics and handouts Letters to property owners Conduct public workshop and stakeholder meetings Summaries,lists of public concerns and evaluations of meetings Impacts to preliminary design Final Preferred route recommendation subject to Task 4. Summary newsletter article Task 1-4 -Initial Right-of-Way and Permitting Task 1-5 -Final Route Selection Task 1-6 -Preliminary Design Task 1-7 (Optional)-Final Public Involvement Process (PIP) This task will in part be a report back to the community councils and other sub- governmental unit stakeholder groups and other impacted landowners,on the final route, design concepts,and project development schedule if it is deemed appropriate.ML&P will determine if this additional information dissemination is required. Work Included "Letters as outlined to sub-governmental stakeholder groups from first round meetings,attendees at workshop and first round meetings,and individual landowners adjacent to the route selected if not otherwise on mailing list. e Schedule final round of stakeholder meetings .Evaluation of meetings with ML&P Deliverables 7 Letters to earlier attendees and impacted landowners .Stakeholders presentations 7 Easement options as available Task 1-8 -Line Survey Task 1-9 -Budget Development and Implementation Task 1-10 -Project Schedule . PHASE 2 -PERMITTING Task 2-1 -Project Administration Task 2-2 -Permit Acquisitions PHASE 3 -RIGHTS-OF-WAY ACQUISITION Task 3-1 -Project Administration Task 3-2 -Rights-of-Way and Easement Acquisitions PHASE 4 -FINAL DESIGN,CONSTRUCTION SPECIFICATIONS AND DRAWINGS Task 4-1 -Project Administration Task 4-2 -Final Design Task 4-3 -Construction Specifications and Drawings PHASE 5 --CONSTRUCTION Task 5-1 -Project Administration Task 5-2 -Construction Engineering Support,Project/Construction Management, and Construction Inspection PHASE 6 --SWITCH-OVER,AEA FINAL REVIEW,AND CLOSEOUT Task 6-1 -Project Management Task 6-2 -Switch Over &Final Review Task 6-3 -Record Drawings and Closeout TEELAND-DOUGLAS TRANSMISSION LINE PRELIMINARY ROUTING SELECTION Prepared for DRYDEN &LARUE,INC. 3305 Arctic Blvd.,Suite 201 Anchorage,Ak 99503 Prepared by TRAVIS/PETERSON ENVIRONMENTAL CONSULTING,INC. 3305 Arctic Blvd.,Suite 102 Anchorage,Alaska 99503 329 2"Street Fairbanks,Alaska 99701 Travis/Peterson Environmental Consulting,Inc, Project Number 1088-12 July 2008 Dryden &LaRue,Inc.,1088-12 July 2008 Teeland-Douglas transmission Line Preliminary Routing Study Page 1 PROJECT DISCRIPTION The State of Alaska,through the Alaska Energy Authority (AEA),is preparing to upgrade 25 miles of the Alaska Intertie between the Teeland and Douglas substations.The 170-mile Alaska Intertie,or Intertie,is the only bulk energy transfer infrastructure between Anchorage and Fairbanks.Built in the 1980's with a "view to the future”capacity of 345 kilowatts (kV),the Intertie incorporated 20 miles of Matanuska Electric Association's (MEA)existing power transmission line connecting Knik and Willow.In use today at an operating level of 138 kV,this older segment does not meet the energy transfer needs and capability standards of the other Inertie sections.MEA has also declined to renew the joint use agreement formed in 1984 and desires the return of the current segment for local use.Thus,in response to the increasing demands on our electrical providers,AEA will construct a reliable and efficient alternative for this vital energy link between northern and southern railbelt communities. PRELIMINARY DECISION In 2004,Dryden &LaRue,Inc.(D&L),with the help of Land Field Services (LFS)and Travis/Peterson Environmental Consulting,Inc.(TPECI),completed the analysis of seven possible route alternatives.The reviewed routes were the ARRC Route,Cross Country Route, Highway Route,MEA Parallel Route,and three separate MEA Upgrade Routes.The conclusion of this study was the MEA Parallel Route and one of the MEA Upgrade Routes were recommended for this project.Since this study,the MEA Upgrade routes have become unrealistic due to the cost of an extended outage of the Intertie during construction.Also,MEA has asked that the old line be returned to the MEA constituents.Therefore,while initial data suggested more than one preferred route,the MEA Upgrade Route is no longer practical. Therefore,MEA Parallel is AEA's remaining preferred route,taking advantage of the corridor and easements established by the existing line while returning that line to MEA. METHODOLOGY The routing study was constructed and carried out by the multidisciplinary team of D&L,LFS and TPECI.D&L developed the conceptual design of the line,and construction and right-of- way cost estimates for each route.LFS determined land status of individual parcels along each route and developed right-of-way cost estimates.TPECI identified environmental issues and permits required for each route.All routes,omitting the cross-country route,were formed adjacent to existing linear facilities such as the roadway.Final routes were represented by the side of these facilities that offered the least cost and fewest impacts. Route comparison involved arranging the combined data into qualitative and quantitative data. Qualitative data included criteria that were subjective and rated by personal values.Under this category,the team looked at land use conflicts,terrain obstacles,route distance,amount of land clearing required,environmental impacts,visual impacts,public safety,impacts on existing facilities,and construction impacts.Qualitative criteria were definitive and measurable data. This included construction costs,engineering/owner and contingency costs and the cost to acquire easements and permits. Dryden &LaRue,Inc.,1088-12 July 2008 Teeland-Douglas transmission Line Preliminary Routing Study Page 2 AS 2 ALASKA INTERTIE UPGRADE STUDY {on aes an a -ROUTE ALTERNATIVES -ADCREEEaAN)Ss ,.atacaewee MEA PARALLEL ROUTE (M) Ss Soy sums st seme ROADWAY ROUTE (H) m Some ei ey csssamerssmere ALASKA RAILROAD ROUTE (A)2 yaSU,oS OC}-+8 eo om CROSS COUNTRY ROUTE (C)-«PAN aN as.No = Figure 1.Map of proposed and analyzed routes.(View original figure at www.drydenlarue.com/07-0263) RESULTS MEA Parallel Route has been selected as the preferred route.The MEA Parallel Route places the new 230kV transmission line adjacent to the existing 138kV line for the majority of 25.3 miles between the Teeland and Douglas substations.Placing two lines in the mostly unpopulated and forested one line corridor will require a new right-a-way clearance for the length of the project and provide a low overall impact to public safety,existing facilities and land use conflicts.The visual and construction impacts of the MEA Parallel Route is moderate-low. Compared to the other routes,MEA Parallel was one of the two best options regarding intangible impacts,construction costs and disruption to existing facilities (see graphs 1 and 2).The time required for acquiring the easements on private property is estimated at six months followed by seven months for construction.Based on these findings,the MEA Parallel Route will best fulfill the project purpose and need while minimizing economic and environmental impacts. 4Dryden&LaRue,Inc.,1088-12 July 2008 Teeland-Douglas transmission Line Preliminary Routing Study Page 3 Table 1.Qualitative Results:Route Criteria Comparison intangible Criteria Comparison 2 4 ona?,|BARRC <HCross Country gi 2 i Highway Ee MEA Parattel 2 2 14 MEA Upgrade &a.;i 38 328 £8 Se 8822¢@5 28 @8 kB=ou.8 E 8 8 Criteria Table 1 Table 2.Quantitative Results:Estimated Total Cost of Routes in 2004 Options Estimated Total Cost ARRC Route $15,121,000 Cross Country $12,510,000 Highway Route $14,623,000 MEA Parallel Route $13,013,000 MEA Upgrade 1 $14,303,000 MEA Upgrade 2 $16,479,000 SUMMARY OF PUBLIC COMMENTS Pursuant to route analysis,public meetings were held to inform and receive comment from the public on the preferred route.Throughout the public meetings and written comments,there werethreereoccurringtopics:the abilityof the future line to withstand the snow load,who will benefit from the new line,and the number of private easements that will be taken. The structure of the new line was designed to withstand heavy snow loads and the present line from Willow to Talkeetna,that initiated these concerns,has been installed with strain gauges that monitor line tension.Additionally,these lines are visually monitored after heavy snow fall. The benefit of a new transmission line is that as the demand for energy expands,Alaska will have a system in place to support the increasing energy transfer between the northern and southern railbelt communities.FNSB already supplements their electrical supply with energy from Chugach Electric and ML&P.As more energy becomes available,for example the Susitna Hydro Project,the energy will be reliably and efficiently transported,via the Intertie,to where it Dryden &LaRue,Inc.,1088-12 July 2008 Teeland-Douglas transmission Line Preliminary Routing Study Page 5 is needed most.Specifically concerning the Mat-Su Borough,the Intertie increases the dependability of electrical services as it did several times last summer when interference with power distribution from Anchorage shut down transmission from their regular energy providers. The taking of private land easements was a prominent concern among the community.To decrease the number of easements required for the line,many individuals suggested using the double line/single pole design.As a one pole line is dependent on a partnership between MEA and AEA,there were many requests to form an alliance between the two factions. T-line between Teeland and Douglas Substation 1.Regarding the $20.3 million legislative appropriation in 2002 to build the bypass line from Teeland Substation to Douglas Substation,why after 5 years has AIDEA failed to complete,or to even begin construction of the line? The AEA appropriation to upgrade the Intertie to the Teeland substation was effective in FY 2003.The Intertie Operating Committee (IOC)Utilities disagreed amongst themselves regarding prioritizing the use of these appropriated funds.MEA had suggested that these funds should be used for repairs and other purposes such as snow load mitigation.GVEA,ML&P and CEA (the Utilities)have requested that the initial 5 miles of the route be included as part of the upgrade project.The Utilities first claimed that this section needs to be part of the upgrade since it is owned by MEA;however the use of this 5-mile section is not in jeopardy of being lost since AEA has a contract that provides for perpetual use of the line.The Utilities still contend that this section still needs to be part of the upgrade because it is inadequate for 230kv operation. AEA has maintained that the legislature intended for this appropriation to first be used for the Intertie to Teeland upgrade project (the Project)and the original scope did not include this five-mile section. Dryden &LaRue,Inc.was hired to prepare a feasibility level assessment of several route options for the Project.The January 2004 analysis is attached.IOC utilities requested additional analysis to be conducted to help determine the preferred route. The Utilities and AEA agreed that significant cost savings could be achieved if they assumed greater control of the Project.The Utilities committed to fund the other repairs and any cost overruns.Since 2004,AEA has been negotiating contracts to allow the Utilities to assume management control of the Project.AEA maintains the position that the $20.3 million appropriation first be used for the Project. The Utilities objected to AEA's initial September 2004 draft of the Project Management Agreement.The Utilities expressed concern that AEA maintained too much oversight of the Project.This initial approach was abandoned and from early 2005,AEA negotiated directly with ML&P for them to take project management lead.The final August 2006 version of this agreement is attached.AEA continues to wait for ML&P to take the agreement to the Municipal Assembly for approval. 2.When will construction begin?Completion date? The Anchorage Assembly must approve the AEA/ML&P Project Management Agreement and ML&P must appoint a project manager for work to begin. 3.Will AIDEA bear any cost growth due to delays,or are sufficient funds available including accrued interest to complete the line? Interest from the $20.3 million was not appropriated to the Project.Interest remains with the Railbelt Energy Fund.Per the AEA/ML&P Project Management Agreement,ML&P is required to notify AEA of any funding shortfall.Prior to proceeding to the construction phase of the Project,written agreements must be in place to guarantee funding overruns.In order to contain the cost of the project to the appropriated amount, AEA suggests portions of the project (such as the five-mile section)be considered a deductive alternative. (3) 3 1 2 TIMBERLAND crn ny E Sane aq20|19{18 11741611571322 (2853) 7 TRACT 8 |TRACT C1 24 23 12 25 |26|27;28]29]30}31/32/55,3" tp2ps/4fsfe]778 Ofasfa2tt 9, 2 Itie nN 408 ( 22 3 10 SW WELT z 4(5]6}7)a19 TRACT A SETTLERS BAY UNIT 11/12]13]14}15)16]17]18 (4485)TRACT (6611) Correnrt 10¢tyeproved norte fesnyp.TRaCT b TR PR NT SETTLERS BAY UNIT NO.2 REVISED (6612)JOHN R NIC MEP AL P (3914) Att don rettatea -1cbiarn on <eeouvrwredine07,This hive nt this Cirre Alaska Intertie,why would AIDEA propose to publicly fund the line and then transfer ownership to this non-generating local utility? The Alaska Energy Authority (AEA)would manage anyfunds appropriated by the legislature,in concert with the utilities signatory to the Alaska Intertie agreement. Shouldn't AIDEA retain ownership,or better yet transfer construction responsibility,title and risk to a joint action agency comprised of the utilities responsible for electric generation and power system dispatch and operation in the Railbelt? The Alaska Energy Authority (AEA)is currently working with the Railbelt Utilities to consider a Unified System Operator system under a state appropriation xxxxzzzzyyyy. The successful outcome of this investigation will require the cooperation of the Railbelt Utilities and the Legislature. Regarding the September 26,2005 letter signed by AIDEA and three of the six electric utilities in the Railbelt,and specifically referring to the proposed $14 million 115kV transmission line between Douglas and Stevens substations,please provide the following information: 1.The proposed 115Kv line would only serve the remote Stevens Substation owned by the local utility and connected to the Alaska Intertie.Although Stevens is connected to the Railbelt power grid,the substation is idle -perhaps because of slower-than-expected load growth or alternate service being available through local distribution lines.The local utility has waged an expensive television campaign criticizing AIDEA for alleged safety concerns in this area caused by differential snow loading on the Douglas-to-Stevens section of AIDEA's Alaska Intertie which connects Anchorage and Fairbanks.Why would AIDEA consider spending public funds to run a second line from Douglas to Stevens without seizing the one-time opportunity to use the new line,which would parallel the "snow load”portion of the Alaska Intertie,to solve the snow loading problem identified in the utility's advertising campaign? _|Deleted:The Alaska Energy Authoritywhissolutionissupportedbyexpertelectricaltransmissionengineersandcanbe__. ”|(AE4)would manage any funds ... aeae appropriated by the legislature,inaccomplishedatverylittlecost.It would increase the reliability of power concert with the utilities signatory to the Alaska Intertie agreement.4 exchanges between Anchorage and Fairbanks,eliminate the snow loading safety concerns and save AIDEA $millions to rebuild the snow load section as a separate project.Please provide your engineers'assessment justifying building the line to operate at 115kV in isolation from AIDEA's Alaska Intertie,instead of at 138kv USK Zeor230Kbeoperaswasof,and in parallel with AIDEA's Alaska Intertie.4 and.Aha an the the.AIDEA Response:An initial cla ification The Alaska Intertie is owned by the Alaska Energy Authority.This response is therefore from the standpoint of AEA.AEA currently takes no advocacy position in the way the the Railbelt Electrical Network is built out.except that rational planning should be done jointly by all interconnected utilities to arrive at a least life cycle cost to the Railbelt rate payer and least investment of general fund dollars is achieved.Any proposed network transmission project should conform to this fundamental approach to network upgrade. To this end,AEA has sought to facilitate cooperation between affected Railbelt utilities and in fact has an active project it is pursuing to facilitate joint and collective planning for Railbelt generation and transmission infrastructure.This project was funded by the legislature,to study the concept of the Railbelt Electrical Energy Grid.The goal of this project,and AEA's fundamental approach to Railbelt infrastructure is to achieve the most efficient buildout that will yield the highest reliability. Regarding the specific project in the question.This question of whether a separate parallel transmission line from Douglas substation (near Willow)to Stevens substation (near Talkeetna).should be studied in the context of long term build out that provides the best benefit to the Railbelt ratepayer at the least life cycle cost and least amount of general funds investment.To our knowledge this has not been done.While a parallel line certainly by inspection will likely improve reliability,it is not clear how it should be conficured to be a cost effective and most efficient solution. For example,the line voltage for such a line and the manner it is interconnected to the intertie should be evaluated.There are costs for interconnection and for ongoing maintenance and operations that should be considered before the project concept is finalized and funded so that future ratepayers are not burdened with unreasonable costs. The inclusion of and locations of connection taps and transformer substations are also of concern.The costs of such improvements are real,and depending on configuration selected can vary significantly.Since the Railbelt ratepayer must shoulder these costs in conjunction with any state funding,AEA favors careful engineering planning and design borkfortheseinfrastructureprojects.AtoeetaRegardingexistingengineeringanalyses-AEA knows of no engineering analysis of this project concept,nor any assessment of cost to benefit for the expenditure of public funds for the MEA-TL line or the Douglas-Stevens Line.We are therefore unable to comply with the request for our engineer's assessmentjustifying building the line. 2.The local utility recently attempted (until they were halted by RCA)to shut down the Alaska Intertie connecting Anchorage and Fairbanks.Assuming the proposed Douglas-to-Stevens line will be part of,and operated in parallel with AIDEA's DRAFT ALASKA INTERTIE OPERATING COMMITTEE Interim MEETING MINUTES TUESDAY,MAY 18,2004 (AIDEA -BOARD ROOM) Present: John Cooley Chugach Electric Association (CEA). Art Copoulos Alaska Industrial Development and Export Authority (AIDEA) Henri Dale Goiden Valley Electric Association (GVEA) Doug Hall Anchorage Municipal Light &Power (AMLP) Bob Drake Matanuska Electric Association,(MEA) Jim Posey Anchorage Municipal Light &Power (AMLP) Joe Griffith Chugach Electric Association (CEA) Steve Haagenson Golden Valley Electric Association (GVEA) Ron Miller Alaska Industrial Development and Export Authority (AIDEA) Brian Hickey Chugach Electric Association (CEA) Lee Thiebert Chugach Electric Association (CEA) Dora Gropp Chugach Electric Association (CEA). Del LaRue Dryden &LaRue Brian Bjorkquist Alaska Industrial Development and Export Authority (AIDEA) Ed Reubling Anchorage Municipal Light &Power (AMLP) Absent: Don Stead Homer Electric Association (HEA) Bob Day Anchorage Municipal Light &Power (AMLP) The meeting was called to order at 10:30 A.M. I ADOPTION OF PRIOR MEETING MINUTES Minutes of prior meeting to be adopted at next scheduled meeting. li APPROVAL/MODIFICATION OF AGENDA Art added VI-C Teeland SVC Aux transformer. it COMMITTEE CORRESPONDENCE AND REPORTS A.Karl Reiche e-mail of 4/16/04 There were no comments on the e-mail B.Copoulos/Kimmel e-mail of 5/17/04 -Tobe discussed in work session. IV VISITOR'S COMMENTS RELATED TO ITEMS ON AGENDA No comments. Page 1 of3 Vv RECESS Recess deferred -went into Work Session. Vi WORK SESSION The work session began;discussions followed the agenda below. A.Teeland-Douglas Bypass De]LaRue gave a brief presentation on the different routes and discussed the pros and cons of these routes. Discussed possibility of condemnation,EIS,and potential tower conflict of sharing ROW's. As all the routes were feasible,and would accomplish the needed - infrastructure upgrade,it was discussed that the selection of a particular route,does not exclude the others from being pursued if unexpected obstacles were to present themselves. B.AMLP as Project Manager Discussed using AMLP as the project manager.Jim Posey says they are up to the challenge.AMLP and the State need to finish working out the details. Cc.Teeland SVC auxiliary transformer One of the dry pack transformers has failed.This is the second failure (although different modes of failure).CEA would like to replace the dry pack transformer with an oil transformer. IOC recommendation is to have an engineering firm spec out the proper oil transformer and have it replaced. Vil FORMAL OPERATING COMMITTEE ACTIONS/RECOMMENDATIONS Resolution 1: The 1OC accepts and concurs with the Dryden &LaRue study "Alaska Intertie Upgrade Study -230 kV Transmission Line Teeland Substation to Douglas Substation” Vote taken and passed in favor. AEGT -abstain CEA -yes AMLP -yes GVEA -yes AEA -AEA concurs to support the lOC Utilities Recommendation. Resolution 2: The 1OC recommends pursuing the MEA Parallel Route (Route M) Page 2 of 3 Vote taken and passed in favor. AEGT -abstain CEA -yes AMLP_-yes GVEA -yes AEA -AEAconcurs to support the IOC Utilities Recommendation. -Resolution 3: The lOC recommends AMLP to perform the duties of "Project Manager” forthe Alaska Intertie Upgrade Project: Vote taken and passed in favor. AEGT -abstain CEA -yes AMLP -yes GVEA -yes AEA -AEAconcurs to support the lOC Utilities Recommendation. vill SUBCOMMITTEE ASSIGNMENTS No assignments were made. IX DETERMINE AGENDA FOR NEXT MEETING Next meeting to be held at 11:00 AM on Thursday,July 15,2004,hosted by MEA. xX ADJOURNMENT Meeting adjourned at 11:47 AM. Page 3 of 3 February 28,2007 AIDEA AND AEA RESPONSES TO QUESTIONS FROM DCCED FINANCE SUBCOMMITTEE Below are AIDEA and AEA's responses to the February 12,2007 AIDEA Questions from the DCCED Finance Subcommittee. The questions use "AIDEA”to represent both AIDEA and AEA;the responses do not. Ketchikan Shipyard Regarding the Ketchikan Shipyard,Representative Chenault,Co-chair of House Finance, requests answers to the following questions (please copy him with your response): 1.What is the total amount of State funds spent to date?See attached spreadsheet. 2.What is the total amount of Federal funds spent to date?See attached spreadsheet. 3.What is the total revenue that has been received by year?See attached spreadsheet.Please provide a 10 year revenue projection.The shipyard operator is currently working on revenue projections,but considers this to be proprietary information,the disclosure of which could adversely impact their operations. T-line between Teeland and Douglas Substation 1.Regarding the $20.3 million legislative appropriation in 2002 to build the bypass line from Teeland Substation to Douglas Substation,why after 5 years has AIDEA failed to complete,or to even begin construction of the line? The most significant cause for the delays on this project arose as a consequence of AEA attempts to work cooperatively with the IOC Utilities on the project.AEA and the IOC Utilities agreed that significant cost savings could be achieved if the Utilities assumed greater control over this bypass project,particularly in conjunction with Utility commitments to address long neglected major maintenance items,-and address snow-load issues.See,e.g.,April 22,2004 letter from Ron Miller to Senator Therriault. Municipal Light and Power (ML&P),an Anchorage utility,agreed to manage the design and construction of the bypass line.The Alaska Intertie Operating Committee (IOC)supported this approach.See attached copy of the IOC minutes dated May 18,2004,describing three resolutions in which the IOC accepts (1)early route study report,(2)recommendation of the MEA parallel route,and (3) recommendation that ML&P perform the duties of project manager. AEA and ML&P began negotiating a project management agreement.ML&P objected to AEA's initial September 2004 draft of the Project Management Agreement,expressing their belief that AEA under the draft maintained too much oversight of the Project.This initial approach was abandoned in early 2005,and AEA agreed to provide less project oversight.AEA and ML&P continued negotiating a project management agreement,leading to the final August 2006 version of this agreement,a copy of which is attached. Under the agreement,ML&P will determine the schedule for design and construction of this intertie extension.Before the August 2006 agreement can become effective,ML&P must have the agreement approved by the Anchorage Municipal Assembly.AEA continues to wait for ML&P to take the agreement to the Anchorage Municipal Assembly for approval. Another cause for delay on the project arose because IOC Utilities disagreed amongst themselves regarding prioritizing the use of these appropriated funds. MEA suggested that these funds should be used for repairs and other purposes such as snow load mitigation.GVEA,ML&P and CEA (the Utilities)requested that the initial 5-miles of the Alaska Intertie route be included as part of the bypass project. The Utilities suggested that this section needed to be part of the bypass project because it is owned by MEA and used under a contract with a term that ends in 2018.However,the use of this 5-mile section in conjunction with the Alaska Intertie is not in jeopardy of being lost since the contract with MEA provides for perpetual use of the line even after the contract term ends.The Utilities still contend that this section still needs to be part of the bypass project because it is inadequate for 230kv operation. AEA has maintained that the legislature intended for this appropriation to first be used to construct a line to bypass the MEA-TLS -approximately 19 miles of MEA owned line which is no longer used under the Alaska Intertie Agreement,but rather is used by the Utilities and the City of Seward utility under an RCA order.See,e.g., April 22,2004 letter from Ron Miller to Senator Therriault. Despite delays,progress has been achieved.Dryden &LaRue,Inc.was hired to prepare a feasibility level assessment of several route options for the Project.See January 2004 analysis,a copy of which is attached.IOC utilities requested additional analysis be conducted to help determine the preferred route. 2.When will construction begin?Completion date? The Anchorage Municipal Assembly must approve the AEA/ML&P Project Management Agreement and ML&P must appoint a project manager for work to begin. 3.Will AIDEA bear any cost growth due to delays,or are sufficient funds available including accrued interest to complete the line? Interest from the $20.3 million was not appropriated to the Project.Interest remains with the Railbelt Energy Fund.Under the AEA/ML&P Project Management Agreement,ML&P is required to notify AEA of any funding shortfall. Prior to proceeding to the construction phase of the Project,written agreements must be in place to guarantee funding overruns.In order to contain the cost of the project to the appropriated amount,AEA suggests that ML&P at the time of design and upon completion of a detailed construction cost estimate establish viable alternates,either additive or deductive,that will allow the project to be completed within the existing funding.In the alternative,AEA would work with the utilities if they elect to seek financing,or elect to cover shortfalls with internal utility capital funding.AEA expects that ML&P would bring this information back to the IOC prior to construction. T-line between Douglas Substation and Stevens Substation Regarding the September 26,2005 letter signed by AIDEA and three of the six electric utilities in the Railbelt,and specifically referring to the proposed $14 million 115kV transmission line between Douglas and Stevens substations,please provide the following information: 1.The proposed 115Kv line would only serve the remote Stevens Substation owned by the local utility and connected to the Alaska Intertie.Although Stevens is connected to the Railbelt power grid,the substation is idle -perhaps because of slower-than-expected load growth or alternate service being available through local distribution lines.The local utility has waged an expensive television campaign criticizing AIDEA for alleged safety concerns in this area caused by differential snow loading on the Douglas-to-Stevens section of AIDEA's Alaska Intertie which connects Anchorage and Fairbanks.Why would AIDEA consider spending public funds to run a second line from Douglas to Stevens without seizing the one-time opportunity to use the new line,which would parallel the "snow load”portion of the Alaska Intertie,to solve the snow loading problem identified in the utility's advertising campaign? This solution is supported by expert electrical transmission engineers and can be accomplished at very little cost.It would increase the reliability of power exchanges between Anchorage and Fairbanks,eliminate the snow loading safety concerns and save AIDEA millions to rebuild the snow load section as a separate project.Please provide your engineers'assessment justifying building the line to operate at 115kV in isolation from AIDEA's Alaska Intertie,instead of at 138kv or 230kv to be operated as part of,and in parallel with AIDEA's Alaska Intertie. The Alaska Energy Authority understands that this question addresses two different projects,with different goals,and that would serve and benefit two different groups of railbelt ratepayers.The MEA proposed 115kv line would serve ratepayers of the local utility,MEA,and would be integrated into MEA's distribution system.The GVEA proposed 230kv (or 138kv)line purportedly would be integrated into the Alaska Intertie and would primarily serve ratepayers who receive power transmitted over the Alaska Intertie -GVEA customers;and secondarily serve ratepayers of utilities that sell power transmitted over the Alaska Intertie -Chugach and ML&P. Comparison of the two projects is therefore an apples to oranges comparison -any conclusion depends more upon what goals,benefits,or particular railbelt ratepayers interests are intended to be promoted.At this time,AEA does not advocate for either proposed project,and particularly does not advocate for one project over the other. AEA is unaware of any engineering analysis to support either project.AEA is unaware of any cost projection for either project.AEA is uncertain whether MEA's proposal would have provided full or only partial funding for that project. AEA is uncertain,but is skeptical,that a cost projection on MEA's 115kv proposed line would support GVEA's proposed 230kv (or 138kv)proposed project.AEA is unaware of the basis for the statement "[t]his solution is supported by expert electrical transmission engineers and can be accomplished at very little cost.” AEA is uncertain as to why GVEA would propose a 138kv project in any event. One of the stated purposes for the current bypass project is to upgrade the Alaska Intertie to 230kv capability.GVEA's proposal to build a 138kv project would appear to have a limited useful life,and promote a questionable cost-benefit economic value. AEA is unaware of any engineer's study or cost-benefit analysis supporting the construction of a parallel,redundant line to cure snow load issues.While MEA commenced a "television campaign”regarding snow load safety issues a few months after the September 26,2005,letter referenced in the question,AEA is not aware of any other IOC utility that believes an actual snow load safety problem exists,nor any other IOC utility that believes construction of a redundant,parallel line could be justified under any cost-benefit analysis as a solution to snow load issues. AEA has worked cooperatively with the Intertie Operating Committee to find ways of safely operating the Intertie under snow load conditions.A solution has emerged that appears to promote a public interest:cost-benefit analysis.ML&P is the operator of the portion of the Alaska Intertie subject to snow load issues)ML&P has a responsibility to monitor snow load conditions,and de-energize the line if unsafe conditions exist.To assist ML&P,a snow-load monitoring system has been installed.This is an automatic reporting program from conductor-tower mounted snow load monitors that reports any adverse loadings.To further assist ML&P, anytime there are recorded snow events,a ground based snow machine patrol is sent out to confirm the intertie conductors are not sagging. In practice,the monitors appear to have proven reliable,and patrols appear to have been effective in assuring safe operation.There has been no documented serious snow loading on the line segment for the last decade. AEA and the IOC hired engineers with expertise in transmission line safety to review the current intertie operations in order to confirm that this approach to snow-loading is safe and in the public interest.One of the conclusions of the study is that the line is being operated safely.A copy of the report is attached.AEA has not heard any IOC Utility (other than MEA)disagree with,or object to,the conclusionsofthereport. 2.The local utility recently attempted (until they were halted by RCA)to shut down the Alaska Intertie connecting Anchorage and Fairbanks.Assuming the proposed Douglas-to-Stevens line will be part of,and operated in parallel with AIDEA's Alaska Intertie,why would AIDEA propose to publicly fund the line and then transfer ownership to this non-generating local utility? Shouldn't AIDEA retain ownership,or better yet transfer construction responsibility,title and risk to a joint action agency comprised of the utilities responsible for electric generation and power system dispatch and operation in the Railbelt? AEA,offering its assistance to RCA in an attempt to help resolve disputes between IOC utilities,participated in RCA-ordered mediation and in the RCA hearings referenced in the question.In the course of that participation,AEA heard MEA represent to other IOC utilities and to the RCA that they did not seek to "shut down”the Alaska Intertie,but rather primarily sought to reduce the operating voltage of the MEA-TLS from 138kv to 115kv. AEA understands that MEA would intend to own its proposed 115kv project,and that it would not be "part of,and operated in parallel with”the Alaska Intertie. AEA has no intention to own MEA's proposed 115kv Project,and,therefore,wouldnot"transfer ownership”to MEA. Has AIDEA given notice to the utilities to "cancel the Alaska Intertie Agreement”?If so,why? AEA's October 16,2006 letter providing notice of intent to terminate the Alaska Intertie Agreement (effective October 16,2010)with the reasons stated therein is attached.The April 22,2004 letter from Ron Miller to Senator Therriault,a copy of which is attached,describe unfulfilled IOC Utility commitments to address neglected major maintenance items,and further reflects reasons why AEA gave notice of termination. Has AIDEA received an offer to purchase the Alaska Intertie,or engaged in discussions regarding potential purchase by any utility or consortium? At the December 1,2006 AEA Board meeting,MEA presented the attached proposal to purchase the Alaska Intertie,"...for approximately $50 million,under terms and conditions mutually agreeable to ...”AEA.At that meeting,MEA presented to AEA a sealed envelope containing what was described as confidential terms of the offer to purchase.The AEA Board directed staff to conduct a public process to consider what should be done with the Intertie,including whether the Intertie should be sold,and if so,to whom.This could entail an RFP or other public disposal process and for that reason,the sealed envelope from MEA was returned unopened to the utility on December 1,2006,since acceptance could have tainted any request for proposal or other public disposal process. AEA is currently working through a public process of considering whether there should be unified systems operation for the management and dispatch of electric power in the Railbelt.This work was funded with an appropriation of $800,000 bythe24"Legislature.A potential disposition of the Alaska Intertie by AEA is one of the items to be addressed during these public meetings. AEA is not engaged in any discussions regarding potential purchase of the Alaska Intertie by any utility or consortium. Regarding the balance of the Railbelt projects identified in the September 26, 2005 letter mentioned above,please provide the individual cost/benefit analyses for the projects and identify any matching funds or utility debt to be joined with public dollars,as was done when funding previous Railbelt projects. AEA does not have a cost benefit analysis of the projects,nor does AEA take any position on the projects that were proposed to be funded during the second sessionofthe24Legislature.The back up that was submitted to the legislature and to OMB is attached. Healy Clean Coal Plant Please provide a report identifying total AIDEA spending on HCCP from all internal and external funds,regardless of source,for all direct and indirect construction,operating,maintenance and other (administration,legal,consulting, etc.)activities from project inception to date.Please identify any debt,including write-downs or write-offs and any revenue generated to date. See attached spreadsheet. Of the AIDEA costs reported in the spreadsheet,AIDEA estimates it incurred more than $15 million of expenses for the benefitofGVEA's Unit 1.It also paid GVEA $1 million for development of HCCP as part of the 2000 Settlement Agreement,and has paid GVEA more than $5 million for custodial duties,heat and electricity since HCCP ceased operations in 1999. Information requests concerning the period between now and 2014 when Homer proposes to buy power from HCCP: 1.HCCP was shut down in 2000 following failed performance tests,funds exhaustion,major component failure and explosion events that rendered the plant unsafe for employees.It has sat idle since.Please provide your engineers'scope, schedule and budget regarding the Agency's intention to accept the risk and to provide the funds to permit,convert,complete,start-up and operate HCCP. Provide fund sources,engineers'reports and cost-benefit estimates. AIDEA disagrees with these characterizations of HCCP.In 2000,HCCP did not suffer from "funds exhaustion,major component failure,and explosion events that rendered the plant unsafe for employees.”Nor did it fail performance tests. AIDEA and nationally recognized engineers who have evaluated HCCP operations, or who have inspected the plant,believe that it is safe,reliable,and capable of operating according to design specifications. The results and the history of HCCP's Date of Commercial Operations test supports AIDEA's views that HCCP did not fail its "performance tests.”The 1991 Power Sales Agreement between GVEA and AIDEA required that by January 1,2000 HCCP meet the performance standards for determining the "Date of Commercial Operations.”Although construction of HCCP was delayed for several years owing to permitting and construction problems,the contractual deadline for HCCP's "Date of Commercial Operations”remained as agreed upon in 1991.Therefore, following completion of construction,AIDEA was required to conduct HCCP operational tests sooner than was contemplated by both GVEA and AIDEA when the Power Sales Agreement was entered into.This required AIDEA to perform the Date of Commercial Operations test well before AIDEA's engineers had the expected opportunities to fine-tune HCCP's systems. After HCCP was placed into operation,AIDEA and GVEA jointly selected Dennis Swann,an engineer with a nationally recognized reputation and experience with coal generation plants,to act as the Independent Engineer for the purpose of determining whether HCCP satisfied the Date of Commercial Operations requirements. The contractual requirements for the Date of Commercial Operations were: (dD "Date of Commercial Operation”means the date,which shall not occur before the end of the Test Period, on which engineers retained for this purpose by the Authority and acceptable to the Purchaser have (i)determined the Project has operated at not less than 50 megawatts,net of station service,at a Capacity Factor of not less than 85 percent, for a period of 90 consecutive days,using coal with characteristics equivalent to those of long-term Usibelli coal,as defined in the Coal Supply Agreement between the Purchaser and Usibelli Coal Mine,Inc.dated January 1991,and (ii) stated that,as the result of their independent observations of the test operations of the Project and tests and inspections required by the engineers,the major systems of the Project are performing in accordance with design specifications and tolerances and that the engineers know of no reason why the Project will not perform on a sustained operating basis as provided under this Agreement if the Project is operated, maintained,and renewed according to standard utility practices. Initially AIDEA and GVEA disagreed about the extent of these requirements,so Swann,as the Independent Engineer,was compelled to resolve the dispute,and determine what was required by these provisions.After the disputes were resolved, and at the conclusion of the test,Swann,as Independent Engineer,found that the "test results were inconclusive regarding the requirements set forth in the [1991] Power Sales Agreement.”He did not find that HCCP failed to function properly or that it did not perform as designed.He concluded that the test results were inconclusive in part because he found that the test was biased due to the fact that the quality of the coal used during the test was greater than was intended when the Power Sales Agreement was signed.He also found the test inconclusive because AIDEA had available a larger maintenance crew,including equipment manufacture representatives,than would normally be utilized during conventional operations. The excessive maintenance crew,Swann thought,was able to respond to equipment problems more rapidly than during normal operations and therefore it reduced HCCP's down-time during test operations. Even though Independent Engineer Swann did not find that HCCP conclusively passed the Date of Commercial Operations tests,AIDEA concluded that during the test period HCCP had demonstrated that with additional time for refining HCCP's various systems,and with some limited modifications to them,it could perform economically on a sustained operating basis with the use of a slightly higher quality of coal.Swann's report supported this view.His report said this about HCCP's performance during the test period: "It is our opinion that the major systems of the project are performing in accordance with design specifications and tolerances. It is our opinion that the plant,as configured and if operated and maintained in accordance with standard utility practice,could be considered as a commercial plant which is of comparable efficiency with similar plants if the coal delivered and burned remains above 7,200 btu/lb.Note that maintenance of the coal delivery system will be much higher than that of other coal burning facilities. If HCCP were operated on ROM coal having a heat content in the range of 7,200 to 7,800+btu/lb,we find no reason that the project will not perform on a sustained operating basis if operated and maintained in accordance with standard utility practices.We do note however,that the maintenance on the coal transport system from the feeder outlet to the combustor inlet will be higher than industry standards,thereby reducing capacity factors.” With respect to the safety of HCCP,during a later deposition Swann expressed this opinion: Q.All right.Well,Mr.Swann [the Independent Engineer],you spent a lot of time at this plant in thepastcoupleyears;have you not? A.Yes,I have. Q.In your view,based upon your observations over the past couple of years,is this plant safe? A.Yes,it's as safe as any coal-fired power plant that I've been in. Following the operational test periods,Swann also made the following observations regarding whether HCCP should be retrofitted to conventional low-NOx combustors,as GVEA has advocated: . "Retrofit Considerations.It is our opinion that conversion of the combustion equipment from the existing TRW precombustor/slagging combustor system to conventional low-NOx burners will not improve the commercial viability of HCCP. Therefore,it seems that retrofitting low NOx burners on HCCP would be a step backward." In light of the Independent Engineer's favorable comments about HCCP performance and his negative comments regarding retrofitting HCCP's combustors, and based upon AIDEA's belief that limited modifications to HCCP would address HCCP's higher than industry standards maintenance costs,AIDEA requested additional time from GVEA to demonstrate HCCP's ability to satisfy the Date of Commercial Operation requirements. GVEA promptly rejected AIDEA's request,and gave notice of termination of the 1991 Power Sales Agreement.After several months of negotiations,AIDEA and GVEA entered into a definitive Settlement Agreement dated March 8,2000 ("Settlement Agreement”). Under the Settlement Agreement,GVEA was given the exclusive right to develop HCCP in any manner that it might choose,including a retrofit to conventional low- NOx combustors.AIDEA paid GVEA $1 million up-front,and agreed to pay an additional $4 million if GVEA elected to commit to develop HCCP.GVEA pursued development of HCCP until April 2,2003,when it gave AIDEA notice that it was abandoning its efforts and was terminating the 1991 Power Sales Agreement. After GVEA abandoned its efforts,the Settlement Agreement gave AIDEA the right to develop HCCP.AIDEA exercised this right,first by exploring options to develop HCCP with GVEA,including joint AIDEA/GVEA Board level efforts.These efforts,although extensive,were unsuccessful. Subsequently,AIDEA undertook a public solicitation for entities interested in developing HCCP.A technical conference on HCCP conducted as part of the public solicitation was also held in December 2004.These efforts eventually led to a Power Sales Agreement and a Project Development Agreement between AIDEA and Homer Electric Association (HEA). HEA hired engineers Shaw,Stone and Webster to evaluate HCCP's current condition and to propose improvements to bring it into operation.Shaw reported its findings in a March 28,2006,report titled "HCCP Condition Assessment and Restart Study,”a copy of which is provided.This report supported Dennis Swann's favorable conclusions regarding the ability of HCCP to be placed into operation without conversion to conventional low NOx combustors.The executive summary of that report contains the following conclusions: SSW has completed the above referenced study.The primary results of this study as determined by SSW are: e HCCP is in good condition and has incurred since 1999 no significant deterioration during the shutdown e If recommendations for remediation and system separation are implemented,SSW knows of no reason why HCCP cannot be operated separately from Unit 1 in a safe and reliable manner for the duration of its 10 design life provided industry standard operation and maintenance activities are performed e SSW concurs with the HGI coal handling study with minor scope and cost adjustments. The basic provisions of the Power Sales Agreement and a Project Development. Agreement between AIDEA and HEA include: a.HEA agrees to pay AIDEA (a)$65,795,000,plus (b)the net restart and interim operation costs (AIDEA costs less revenues),with interest at 5.25%, amortized over the time HEA purchases power under the Power Sales Agreement (which is anticipated to commence January 1,2014). b.HEA agrees to be responsible for all HCCP generation and transmission operations,maintenance,and related issues when HEA begins purchasing HCCP power.HEA and AIDEA will have shared responsibility for these issues during earlier interim power sales. c.HEA has the right to evaluate HCCP's operational performance for two years after commercial operations commence,at which time HEA may elect either to commit to the long-term power or to terminate the Power Sales Agreement. d.The development of HCCP,and all related contractual obligations between HEA and AIDEA,are contingent upon AIDEA obtaining from GVEA,in the mediation or in the pending litigation,leasehold and other interests at the Healy site to enable HCCP to be placed in operation,consistent with the terms of the Settlement Agreement.In addition to providing for a ground lease,the Settlement Agreement provides: "The parties further agree to execute such agreements as are necessary and appropriate to provide AIDEAa full opportunity to maximize the economic utility of HCCP,recognizing GVEA's desire and necessity to retain the beneficial use of Healy #1.” AIDEA and GVEA are engaged in mediation attempting to negotiate a ground lease and other appropriate agreements. The Shaw,Stone and Webster physical assessment report HEA commissioned also provides information regarding the estimated cost of placing HCCP into operation. AIDEA believes the cost of the restart project ultimately will exceed the approximate $29.8 million reported in this study.The successful resolution of the current mediation between AIDEA and GVEA will require modifications to the HCCP development plans assumed in the Shaw,Stone and Webster report.These modifications are likely to increase the total estimated restart costs.AIDEA will 11 attempt its negotiations with GVEA to minimize modifications to development plans that would require cost increases. 2.What is the estimated power cost,sales price and profit/loss to AIDEA on a per kWh basis by year? Under its agreements with HEA,AIDEA will not recognize any profit or loss during the interim power sales.Any profit or loss on interim power sales will decrease or increase the amount HEA pays AIDEA monthly when HEA begins purchasing the HCCP power. AIDEA believes that the sales price for interim power sales will be a negotiated price,with the upper limit being the cost of the railbelt power that HCCP power would replace.HEA and AIDEA will exert joint efforts to negotiate interim power sales agreements.According to the terms of the agreements HEA,rather than AIDEA,will be the primary beneficiary of all power sales.AIDEA believes that the interim sales of HCCP power could significantly benefit both HEA and the purchasing railbelt utility because HCCP power should be available at a cost lower than the current cost of generating some railbelt power. HEA has developed confidential,proprietary estimates of the power costs for interim power.Disclosure of this confidential,proprietary information would likely disadvantage HEA (the primary beneficiary of interim power sales)in any HEA/AIDEA negotiations with any power purchasers.It would therefore be inappropriate to disclose such confidential,proprietary estimated power costs at this time. 3.Please identify the purchasers of power from the plant,including purchase agreements and annual purchase quantities by year? There are no current agreements for the purchase of interim HCCP power,and therefore no specifically identified power purchasers. Sale of the power from HCCP will require its restart and placing it into operation. No realistic estimate of when that will occur can be made until after AIDEA obtains from GVEA the necessary rights related to the Healy site,consistent with the Settlement Agreement.In addition to uncertainties of when HCCP operations can begin so power sales can commence,the resolution of unresolved issues with GVEA are also likely to affect the cost of power production.The current mediation is anticipated to address certain operational issues,the results of which would either increase or decrease the cost of producing HCCP power.Effective negotiation of power sales agreements first requires a determination of the cost of power and a realistic estimate of when HCCP operations will commence.More progress in mediation with GVEA is necessary before that can occur. 12 4.Please provide a copy of AIDEA's ground lease,air permit and coal purchase agreements for HCCP. 5.Please identify interconnect agreements which address spinning reserves and restitution to interior ratepayers for HCCP outages. AIDEA anticipates that an appropriate ground lease and air permit will be developed in conjunction with the mediation with GVEA. Under the Project Development Agreement,the negotiation of a coal purchase agreement,interconnect and other agreements will be accomplished through the joint efforts of HEA and AIDEA.For many of the same reasons expressed in the response to question 3,it is difficult to negotiate these agreements without first knowing when AIDEA will obtain from GVEA necessary rights related to the Healy site.For example,in order to obtain a better price,a coal purchase contract may require the purchase of a minimum,annual quantity of coal.It would not be prudent for AIDEA or HEA to commit to purchasing specific annual quantities of coal until after a realistic assessment is made of when HCCP operations will begin, and thus when coal will actually be needed.More progress in the mediation with GVEA is necessary before that can occur. 6.When do you plan to file the Power Sales Agreement with the RCA? Under the Project Development Agreement between HEA and AIDEA,HEA and AIDEA will jointly determine when to file the Power Sales Agreement with the RCA.Until substantial progress is made with GVEA in the mediation,it would be premature to file the agreement with RCA. Please provide the following additional information: 1.A copy of the Homer/AEA Project Development Agreement and Power Sales Agreement.If the agreements do not make clear who will bear the conversion and completion,and operating/spinning reserve risks of HCCP,please provide your engineers'assessment of the responsibilities and costs. Copies are attached.Within the Power Sales Agreement,one paragraph has been redacted.This paragraph addresses certain contingencies related to the litigation/mediation between AIDEA and GVEA,and disclosure could harm HEA's and AIDEA's respective interests.. 2.AIDEA built HCCP on GVEA property because AIDEA's engineers determined the plant would be fatally uneconomic if located north of Healy as originally planned.Provide an engineers'assessment of the comparative costs of isolated vs.dual operation of HCCP/Healy I and the associated cost impact to rate payers of each configuration. As a preliminary matter,AIDEA does not recall that any AIDEA engineer determined that HCCP economics would be "fatally uneconomic”if located off the 13 Healy site.However,AIDEA has no plans to operate HCCP at any site other than the Healy site. The economics of HCCP operations in any configuration will change as the cost of alternative power generation changes.As recently as 2000,the cost of alternative Cook Inlet gas-generated power made HCCP power appear economically unattractive,and in AIDEA's view,significantly contributed to GVEA exercising its contractual rights to terminate the 1991 Power Sales Agreement.However,as Cook Inlet gas resources have diminished,the cost of Cook Inlet gas generated power has increased,and the economics of HCCP generated power have improved.The economics of HCCP generated power as contemplated in current plans looks even better when compared to the cost of other,alternative railbelt power generation. With respect to the primary question,there is no valid basis to provide an accurate comparison of "isolated vs.dual operation of HCCP/Healy 1”for several reasons. a.Some of the economic advantages originally contemplated from the dual operation of Healy #1 and HCCP are no longer available.Since 1999,when HCCP and Healy #1 were both in operation,GVEA has altered its Healy #1 operations to improve its economics and to accommodate neighborhood complaints.While GVEA apparently had good business reasons for making these changes,one consequence has been that the existing coal pile and coal handling facility are no longer reliably adequate for both Healy #1 and HCCP.Because the ability to reliably deliver coal into a coal generating plant is essential,the anticipated economic advantages from dual operation of these facilities has been eliminated. b.An accurate comparison of "isolated vs.dual operation”is contingent upon the results obtained in mediation or litigation with GVEA.Nothing in the existing development plan between HEA and AIDEA precludes the adoption of any mutually beneficial advantages that might accrue to Healy #1 and HCCP.For example,AIDEA contemplates that some facilities will be shared between the two power generating plants,providing economic advantages to both plants.The scope of the beneficial advantages is contingent upon successful resolution of issues with GVEA.AIDEA has limited ability to force GVEA to accept operational criteria that might be beneficial to railbelt ratepayers,but not,in GVEA's view,be beneficial to it. 3.An engineers'assessment of the capital costs to separate HCCP and Healy 1,and the sources of such capital.In the alternative,please provide the joint operating agreement. See attached March 28,2006,"HCCP Condition Assessment and Restart Study”by Shaw,Stone and Webster.The sources of capital,as is described in the agreement between AIDEA and HEA:AIDEA will finance the net capital costs (AIDEA costs 14 less interim power sales revenues)and HEA will repay that amount over the life of HEA power purchases with interest at 5.25%.See also answer to question 2 above. 4.Information on GVEA's 2006 offer to purchase HCCP and to assume all risk for the permitting,conversion,startup and long-term operation of the plant.Provide the engineers'comparative evaluation of the benefits,drawbacks,milestones and risk assessment of the GVEA offer and the Homer/AIDEA agreements. GVEA did not submit an offer to AIDEA in 2006 to purchase HCCP.GVEA,in the course of mediation,said that it had prepared an offer to purchase HCCP and might submit it to AIDEA,but GVEA first requested AIDEA to confirm that AIDEA would seriously consider the offer.AIDEA gave GVEA written and verbal assurances that AIDEA would seriously consider any offer to purchase HCCP that GVEA submitted.GVEA,however,apparently elected not to submit to AIDEA any offer to purchase HCCP in 2006 because AIDEA did not receive any offer from GVEA to purchase HCCP. If you have any questions,please call. 15 A260F- AIDEA QUESTIONS DCCED Finance Subcommittee February 12,2007 This document uses "AIDEA”to represent both AIDEA and AEA Ketchikan Ship Yard: Regarding the Ketchikan Ship Yard,Representative Chenault,Co-chair of House Finance,requests answers to the following questions (please copy him with your response):) 1.What is the total amount of State funds spent to date?Brenda A. 2.What is the total amount of Federal funds spent to date?Brenda A. 3.What is the total revenue that has been received by year?Please provide a 10-° year revenue projection.Ron to ask ASD, T-line between Teeland and Douglas Substation 1.Regarding the $20.3 million legislative appropriation in 2002 to build the bypass line from Teeland Substation to Douglas Substation,why after 5 years has AIDEA failed to complete,or to even begin construction of the line? The AEA appropriation to upgrade the Intertie to the Teeland substation was effective in FY 2003.The Intertie Operating Committee (IOC)Utilities disagreed amongst themselves regarding prioritizing the use'of these appropriated funds.MEA had suggested that these funds should be used for repairs and other purposes such as snow load mitigation.GVEA,ML&P and CEA (the Utilities)have requested that the initial 5 miles of the route be included as part of the upgrade project.The Utilities first claimed that this section needs to be part of the upgrade since it is owned by MEA;however the use of this 5-mile section is not in jeopardy of being lost since AEA has a contract that provides for perpetual use of the line.The Utilities still contend that this section still needs to be part of the upgrade because it is inadequate for 230kv operation. AEA has maintained that the legislature intended for this appropriation to first be used fortheIntertietoTeelandupgradeprojeect(the Project)and the original scope did not includethisfive-mile section. Dryden &LaRue,Inc.was hired to prepare a feasibility level assessment of several route options for the Project.The January 2004 analysis is attached.IOC utilities requested additional analysis to be conducted to help determine the preferred route. The Utilities and AEA agreed that significant cost savings could be achieved if they assumed greater control of the Project.The Utilities committed to fund the other repairs and any cost overruns.Since 2004,AEA has been negotiating contracts to allow theLU-Utilities to assume management control of the Project.AEA maintains the position that\\the $20.3 million appropriation first be used for the Project. The Utilities objected to AEA's initial September 2004 draft of the Project Management Agreement.The Utilities expressed concern that AEA maintained too much oversight of the Project.This initial approach was abandoned and from early 2005,AEA negotiated directly with ML&P for them to take project management lead.The final August 2006 version of this agreement is attached.AEA continues to wait for ML&P to take the -agreement to the Municipal Assembly for approval. 2.When will construction begin?Completion date? The Anchorage Assembly must approve the AEA/ML&P Project Management. Agreement and ML&P must appoint a project manager for work to begin. 3.Will AIDEA bear any cost growth due to delays,or are sufficient funds available including accrued interest to complete the line? Interest from the $20.3 million was not appropriated to the Project.Interest remains with ig e Railbelt Energy Fund.Per the AEA/ML&P Project Management Agreement,ML&PV7isrequiredtonotifyAEAofanyfundingshortfall.Prior to proceeding to theconstructionphaseoftheProject,written agreements must be in place to guarantee funding overruns.In order to contain the cost of the project to the appropriated amount, AEA suggests portions of the project (such as the five-mile section)be considered a deductive alternative. T-line between Douglas Substation and Stevens Substation Regarding the September 26,2005 letter signed by AIDEA and three of the six electric utilities in the Railbelt,and specifically referring to the proposed $14 million 115kV transmission line between Douglas and Stevens substations,please provide the following information: /1.The proposed 115Kv line would only serve the remote Stevens Substation owned by the local utility and connected to the Alaska Intertie.Although Stevens is connected to the Railbelt power grid,the substation is idle -perhaps because of slower-than-expected load growth or alternate service being available through local distribution lines.The local utility has waged an expensive television campaign criticizing AIDEA for alleged safety concerns in this area caused by differential snow loading on the Douglas-to-Stevens section of AIDEA's Alaska 'Intertie which connects Anchorage and Fairbanks.Why would AIDEA consider spending public funds to run a second line from Douglas to Stevens without \seizing the one-time opportunity to use the new line,which would parallel the "snow load”portion of the Alaska Intertie,to solve the snow loading problem identified in the utility's advertising campaign?This solution is supported by expert electrical transmission engineers and can be accomplished at very little cost.It would increase the reliability of power exchanges between Anchorage and Fairbanks,eliminate the snow loading safety concerns and save AIDEA $millions to rebuild the snow load section as a separate project.Please provide your engineers'assessment justifying building the line to operate at 115kV in isolation from AIDEA's Alaska Intertie,instead of at 138kv or 230kv to be operated as part of,and in parallel with AIDEA's Alaska Intertie. 2.The local utility recently attempted (until they were halted by RCA)to shut down the Alaska Intertie connecting Anchorage and Fairbanks.Assuming the proposed Douglas-to-Stevens line will be part of,and operated in parallel with AIDEA's Alaska Intertie,why would AIDEA propose to publicly fund the line and then transfer ownership to this non-generating local utility?Shouldn't AIDEA retain ownership,or better yet transfer construction responsibility,title and risk to a joint action agency comprised of the utilities responsible for electric generation and power system dispatch and operation in the Railbelt? Has_AIDEA given notice to the utilities to "cancel the Alaska Intertie Agreement”?If so, why? AEA's October 16,2006 letter providing notice of termination is attached. Has AIDEA received an offer to purchase the Alaska Intertie,or engaged in discussions .regarding potential purchase by any utility or consortium?RON=HOWDOYOU WANT TO ANSWER THIS ONE?'YO NGA,LEAT 'Regarding the balance of the Railbelt projects identified in the September 26,2005 letter mentioned above,please provide the individual cost/benefit analyses for the projects and identify any matching funds or utility debt to be joined with public dollars,as was done when funding previous Railbelt projects. AEA does not have a cost benefit analysis of the projects,nor does AEA take any. position on the projects that were proposed to be funded during the second session of the 24"Legislature. Healy Clean Coal Plant:BRIAN TO DRAFT Please provide a report identifying total AIDEA spending on HCCP from all internal and external funds,regardless of source,for all direct and indirect construction,operating, maintenance and other (administration,legal,consulting,etc.)activities from project inception to date.Please identify any debt,including write-downs or write-offs and any revenue generated to date. Information requests concerning the period between now and 2014 when Homer proposes to buy power from HCCP: 1.HCCP was shut down in 2000 following failed performance tests,funds -exhaustion,major component failure and explosion events that rendered the plant unsafe for employees.It has sat idle since.Please provide your engineers'scope, schedule-and-budget-regardingtheAgency's intention to-accept the risk-andto provide the funds to permit,convert,complete,start-up and operate HCCP. Provide fund sources,engineers'reports and cost-benefit estimates. 2.What is the estimated power cost,sales price and profit/loss to AIDEA on a per kWh basis by year? . 3.Please identify the purchasers of power from the plant,including purchase agreements and annual purchase quantities by year? 4.Please provide a copy of AIDEA's ground lease,air permit and coal purchase agreements for HCCP. 5.Please identify interconnect agreements which address spinning reserves and restitution to interior ratepayers for HCCP outages. 6.When do you plan to file the Power Sales Agreement with the RCA? Please provide the following additional information: 1.Acopy of the Homer/AEA Project Development Agreement and Power Sales Agreement.If the agreements do not make clear who will bear the conversionandcompletion,and operating/spinning reserve risks of HCCP,please provide your engineers'assessment of the responsibilities and costs. 2.AIDEA built HCCP on GVEA property because AIDEA's engineers determined the plant would be fatally uneconomic if located north of Healy as originally planned.Provide an engineers'assessment of the comparative costs of isolated vs.dual operation of HCCP/Healy I and the associated cost impact to rate payers of each configuration. 3.An engineers'assessment of the capital costs to separate HCCP and Healy 1,and the sources of such capital.In the alternative,please provide the joint operating agreement. 4.Information on GVEA's 2006 offer to purchase HCCP and to assume all risk for the permitting,conversion,startup and long-term operation of the plant.Provide the engineers'comparative evaluation of the benefits,drawbacks,milestones and risk assessment of the GVEA offer and the Homer/AIDEA agreements. If.you_haveanyquestions,please.call STEVENSPofoSABRSTATION ,LoAWw ANC-FAL | TRARSMIS SION]].CURRENT Route FoR.Poven.surreyLidteéAEToTarretiNna-4) poy MEA PisTeiBnutions POUALAS .LINE FROM WasILLA- SuUSsstr-Tionl+1 pts/Witrous WasteA- ExieTinq MEA 115ekV LINe Copepateu@ ItBKV MEA-TL ByPase LINE TEELANDO SUBSTATIOA] AEA -des 2/14/o7 - AIDEA QUESTIONS wher are wnDCCEDFinanceSubcommitteeAu February 12,2007 This document uses "AIDEA”to represent both AIDEA and AEA Ketchikan Ship Yard: Regarding the Ketchikan Ship Yard,Representative Chenault,Co-chair of House Finance,requests answers to the following questions (please copy him with your response): 1.What is the total amount of State funds spent to date? 2.What is the total amount of Federal funds spent to date? 3.What is the total revenue that has been received by year?Please provide a 10- year revenue projection. T-line between Teeland and Douglas Substation 1.Regarding the $20.3 million legislative appropriation in 2002 to build the bypass line from Teeland Substation to Douglas Substation,why after 5 years has AIDEA failed to complete,or to even begin construction of the line? 2.When will construction begin?Completion date? 3.Will AIDEA Sear any cost growth due to delays,or are sufficient funds available includingAccrued interest to complete the line?Z 1/1/07 PL 1e |WMarete Lr4, tar quest tk Ar 106},Me ebyeeleong Jrarceed. Cartier,106 arking apenoved ContKinc€and Aowte T-line between Douglas Substation and Stevens Substation ||hdRegardingtheSeptember26,2005 letter signed by AIDEA and three of the six electric we”4hWwutilitiesintheRailbelt,and specifically referring to the proposed $14 million 115kV jk transmission line between Douglas and Stevens substations,please provide the following information:wey iboA ope)yo" 1. we The proposed 115Kv line would only serve the remote Stevens Substation owned by the local utility and connected to the Alaska Intertie.Although Stevens is connected to the Railbelt power grid,the substationis idle-perhaps because ofslower-than-expected load growth or alternate service being available througlocaldistributionlines.The local utility has waged an expensive television -(3? campaign criticizing AIDEA for alleged safety concerns in this area caused by differential snow loading on the Douglas-to-Stevens section of AIDEA's Alaska Intertie which connects Anchorage and Fairbanks.Why would AIDEA consider spending public funds to run a second line from Douglas to Stevens without seizing the one-time opportunity to use the new line,which would parallel the pom } "snow load”portion of the Alaska Intertie,to solve the snow loading problem of spe ;%identified in the utility's advertising campaign?This solution is supported by Vy expert electrical transmission engineers and can be accomplished at very little \ a cost.It would increase the reliability of power exchanges between Anchorage ie and Fairbanks,eliminate the snow loading safety concerns and save AIDEA ys vaqe ....Ge$millions to rebuild the snow load section as a separate project.Please provide Qv yeyourengineers'assessment justifying building the line to operate at 115kV in pe Yr isolation from AIDEA's Alaska Intertie,instead of at 138kv or 230kv to be had operated as part of,and in parallel with AIDEA's Alaska Intertie.v ofyrThelocalutilityrecentlyattempted(until they were halted by RCA)to shut down prA the Alaska Intertie connecting Anchorage and Fairbanks.Assuming the proposed gt'we /Douglas-to-Stevens line will be part of,and operated in parallel with AIDEA's 'ueAlaskaIntertie,why would AIDEA propose to publicly fund the line and then \ transfer ownership to this non-generating local utility?Shouldn't AIDEA retain ownership,or better yet transfer construction responsibility,title and risk to a joint action agency comprised of the utilities responsible for electric generation and power system dispatch and operation in the Railbelt? Has AIDEA given notice to the utilities to "cancel the Alaska Intertie Agreement”?If so, why? Has AIDEA received an offer to purchase the Alaska Intertie,or engaged in discussions regarding potential purchase by any utility or consortium? Regarding the balance of the Railbelt projects identified in the September 26,2005 letter mentioned above,please provide the individual cost/benefit analyses for the projects and identify any matching funds or utility debt to be joined with public dollars,as was done when funding previous Railbelt projects. Healy Clean Coal Plant: Please provide a report identifying total AIDEA spending on HCCP from all internal and external funds,regardless of source,for all direct and indirect construction,operating, maintenance and other (administration,legal,consulting,etc.)activities from project inception to date.Please identify any debt,including write-downs or write-offs and any revenue generated to date.: Information requests conceming the period between now and 2014 when Homer proposes to buy power from HCCP: ped1.HCCP was shut down in 2000 following failed performance tests,funds he oeaustion,major component failure and explosion events that rendered the plant .pr"14ytgyunsafeforemployees.It has sat idle since.Please provide your engineers'scope,rae schedule and budget regarding the Agency's intention to accept the risk and toprovidethefundstopermit,convert,complete,start-up and operate HCCP.Pe Provide fund sources,engineers'reports and cost-benefit estimates.HE wreie 2.What is the estimated power cost,sales price and profit/loss to AIDEA on a per kWh basis by year? | 3.Please identify the purchasers of power from the plant,including purchase agreements and annual purchase quantities by year? 4.Please provide a copy of AIDEA's ground lease,air permit and coal purchase agreements for HCCP. 5.Please identify interconnect agreements which address spinning reserves and restitution to interior ratepayers for HCCP outages. 6.When do you plan to file the Power Sales Agreement with the RCA? Please provide the following additional information: 1.Acopy of the Homer/AEA Project Development Agreement and Power Sales Agreement.If the agreements do not make clear who will bear the conversion and completion,and operating/spinning reserve risks of HCCP,please provide your engineers'assessment of the responsibilities and costs. 2.AIDEA built HCCP on GVEA property because AIDEA's engineers determined the plant would be fatally uneconomic if located north of Healy as originally _planned.Provide an engineers'assessment of the comparative costs of isolated vs.dual operation of HCCP/Healy I and the associated cost impact to rate payers of each configuration. 3.An engineers'assessment of the capital costs to separate HCCP and Healy 1,and the sources of such capital.In the alternative,please provide the joint operating agreement., 4.Information on GVEA's 2006 offer to purchase HCCP and to assume all risk for the permitting,conversion,startup and long-term operation of the plant.Provide the engineers'comparative evaluation of the benefits,drawbacks,milestones and risk assessment of the GVEA offer and the Homer/AIDEA agreements. If you have any questions,please call. KNIK to WILLOW (Tfeeland to Douglas)TRANSMISION LINE UPGKADE PROJECT Summary Statement PURPOSE: This Project will replace the 25 mile segment of the Alaska Intertie transmission system that extends between Knik and Willow and will improve reliability,efficiency and bulk energy - transfer capability throughout the railbelt electrical system. NEED: Electric energy is presently transferred over this segment on a transmission line primarily owned _by Matanuska Electric Association (MEA),which desires the return of this segment for local use: The Project will return the line segment to MEA for its use as well as accommodate projected population and load growth in the railbelt.The Alaska legislature funded replacement of this segment of the Intertie and has directed the Alaska Energy Authority (AEA)to construct the line.DESCRIPTION: The AEAis undertaking this necessary and significant task to enhance the transfer capacity andreliabilityoftheAEAownedAlaskaIntertie.The Intertie provides the vital transmission infrastructure that links the power resources serving the Northern and Southern portions of therailbelf.The new 25 mile long segment of transmission line will extend between the TeelandsubstationlocatedontheKnikroadnearSettler's Bay to Douglas substation located near Willow(see attached map).The new segment will become part of the Intertie and will be owned by the .AEA.The transmission line design will accommodate 230 kilovolts (kV)but the line will initially be energized at 138-kV-the present Intertie operating voltage.The remainder of the Intertieis built at 230 kV or higher construction standards andiis dedicated exclusively to bulkenergytransfers,as will be this new segment. The project will be built with a $20.3 million legislative appropriation.AEA has contracted withtheAtchorageMunicipalLight&Power (ML&P),the utility responsible for operating thesouthernportionoftheIntertie,to serve as project manager. No final decision has been made on the new line's routing or line configuration.The Alaska Energy Authority reviewed possible routes and ranked them in a 2004 study (see attached map). Other routings may be possible.The first phase of the Project wilt be to solicit and evaluate agency and public input. CONTACTS:Dryden &LaRue,|Del LaRue,_|Project 349-dlarue@drydenlarue.com Inc.PE.Engineer 6653 Travis/Peterson Michael Public 522-mtravis@tpeci.com Environmental Travis,P.E.Involvement 4337 Consulting,Inc.Coordinator Comments: Potd Here From: Travis/Peterson Environmental Consulting,Inc..oO 3305 Arctic Boulevard,Suite 102 Anchorage,Alaska 99503 tot y oBoldblery OUTLINE OF PUBLIC INVOLVEMENT PLAN TEELAND-DOUGLAS TRANSMISION LINE UPGRADE PROJECT I.Scoping A.Mat-Su Borough Introduction 1.Seek advice on how to proceed. B.City of Houston Introduction 1.Seek advice on how to proceed Il.Community Council Coordination A.Inform Community Council Presidents of Project B.Meet at Affected Community Councils III.Public Workshop/Poster Session A.Advertise event 1.Post Flyers 2.Advertise in Newspapers i.Frontiersman il.Anchorage Daily News 3,Radio Announcements 4.Web site B.Hold a short presentation with displays and interacting stations IV._-_Evaluate Public Comments V.Select a Preferred Alternative and Refine Route A.Route and alternative selected by reviewing impacts and cost-effectiveness. B.Develop Project Typical Drawings. VI.Hold a Second Public Workshop A.Inform Public of Decision. VII.Develop a Decisional Document A.Post on Web VIII.Submit Documentation of Public Involvement Process to the Mat-Su Borough Public Involvement Contacts Del LaRue,Dryden &LaRue,349-6653,dlarue@drydenlarue.com Michael Travis,Travis/Peterson Environmental Consulting,Inc.,522-4337, mtravis@tpeci.com Construction Cost Construction Equipment Ground disturbance Splicing System Conductors Damage Potential Typical Repair Time Typical Repair Cost Typical Service Life Reliability OVERHEAD $X Crane,Pile driver,augger Driven or auggered foundation at approx.800'to 1000'intervals Crimp on conductor no impact No new substations Overhead (visible)1”diameter Wind,Earthquake,snow, 2 days $100,000 100 years Typical 99%availability UNDERGROUND 4 to 6 times $X Excavators,Cats,Trenchers Continuous trenching -varying width approx.3'to 10' 5'to 8'deep -Concrete cap Vaults (10'x 25')at 1,800'intervals 220 required over 25 miles 2 or 3 additional substations approx.200'x200'along the route.Fairbanks cannot provide backup supply from the north in case of local outage 4 cables in separate 8”conduits Earthquake,Ground settlement,frost heaving,dig-ins 30 to 60 dayss TRV ESaNUnknownwith400manmadeq SOME POSSIBLE MEA QUESTIONS AND ANSWERS 7/22/08 1.REGA-suggests different plan than teeland to douglas line -Jim Strandberg 2.No Integrated Resource Plan-Part of REGA and on their schedule 3.Not needed at this time,no technical justification to build at this time -the Anchorage/Fairbanks Intertie was constructed in 1985 with the goal of connecting the entire railbelt from the Kenai Peninsula to Fairbanks.At the time of construction the new line stopped at Healy (where GVEA has an existing line)and Willow (where MEA had an existing line).The intent of the new line was to make the connection and utilize to the extent possible the existing lines.In 2004 the state funded a new line from Healy to Fairbanks to create a more robust line similar to the Anchorage/Fairbanks Intertie that it connected to.That left the last 25 miles from Willow to Knik as the remaining reduced capacity section.In 2004 the legislature appropriated $20 million to do what was similarly done on the north end -replace the existing lines with more robust similar to the Anchorage/Fairbanks Intertie. 4.When line operated at 230kv it will be expensive to build distribution subs and upgrade existing -transformers for 230kV operation cost more than 138kV.There are no definitive plans by any utility or the state to operate this line at 230kV.If a voltage change is required then many substations in addition to MEA will need to be modified.AEA owns equipment at Cantwell Sub and some at Healy Sub.GVEA owns equipment at Healy and Wilson Subs and CEA owns equipment at Teeland Sub.All of these will require modifications if the line is converted to 230kV. 5.Not enough money to build -the present appropriation is $10 million.The schedule for the project is to complete the public involvement process and preliminary engineering in 2008. Final design and material orders will not happen until 2009.It is understood from the Owner, AEA,that they and the Utilities will go back to the legislature to restore funding for completion of this project in the appropriate level in 2009 to fit with the project requirements. 6.MEA will not share row -joint use ROW and corridors are common practice and work well to reduce the impacts to the adjacent land owners (who are all MEA consumers).That is one of the reasons for our visit today. 7.New tower will reduce reliability of existing line as it may fall into existing line -transmission towers very,very rarely fall over. 8.AEA will not agree one circuit of a double circuit line can be operate at 115kv in perpetuity -Jim Strandberg 9.Noor minimal benefit to MEA consumers especially those along tline -creation of a stable and sharing electrical grid benefits everyone.Consequence of an Intertie allowing power movement throughout Railbelt is of course to enhance reliability for all interconnected systems, including MEA.But more important as a continuing benefit to all systems,and one which we sometimes forget to stress,is that the Intertie allows our spinning reserve system which decreases our capital generation requirements by millions of dollars as compared to stand-alone systems -and this substantial savings is realized for MEA whether it engages in the future in providing its own generation or if or to extent it remains a wholesale purchaser from one or 10. more other entities that also enjoy reduced reserve requirements through Intertie.MEA's average annual benefit over the last 3 years from Economy Energy sales are in excess of $780,000. Decrease reliability to MEA,no feed from GVEA,Douglas on radial feed -final connection of Douglas and Stevens substation to the Intertie is a question of how MEA wants to run their system.They have loop feed capabilities today and if they choose to energize their substations at 115kV will loose the loop capability. trtarceal PAPA Gor T-line between Teeland and Douglas Substation me¢gP 1.Regarding the $20.3 million legislative appropriation in 2002 to build the bypass line from Teeland Substation to Douglas Substation,why after 5 years has AIDEA failed to complete,or to even begin construction of the line? The AEA appropriation to upgrade the Intertie to the Teeland substation was effective in FY 2003.The Intertie Operating Committee (IOC)Utilities disagreed amongst themselves regarding prioritizing the use of these appropriated funds.MEA had suggested that these funds should be used for repairs and other purposes such as snow load mitigation.GVEA,ML&P and CEA (the Utilities)have requested that the initial 5 miles of the route be included as part of the upgrade project.The Utilities first claimed that this section needs to be part of the upgrade since it is owned by MEA;however the use of this 5-mile section is not in jeopardy of being lost since AEA has a contract that provides for perpetual use of the line.The Utilities still contend that this section still needs to be part of the upgrade because it is inadequate for 230kv operation. AEA has maintained that the legislature intended for this appropriation to first be used for the Intertie to Teeland upgrade project (the Project)and the original scope did not include this five-mile section. Dryden &LaRue,Inc.was hired to prepare a feasibility level assessment of several route options for the Project.The January 2004 analysis is attached.IOC utilities requested additional analysis to be conducted to help determine the preferred route. The Utilities and AEA agreed that significant cost savings could be achieved if they assumed greater control of the Project.AEA worked with the utilities in the current primary governance group,the Alaska Intertie Operating Committee (IOC).A copy of the minutes from the Alaska Intertie Operating Committee are attached,showing 3 resolutions,accepting early route study report,recommending the MEA parallel route, and recommending that AMLP perform the duties of project manager.In subsequent cooperative discussions,Fthe Utilities committed to fund_and or sponsor the ether-repairs and-any cost overruns. Since 2004,AEA has been negotiating-eentraets to allow the Utilities to assume management control of the Project.AEA-maintains-the-pesitionthatthe$203 mitten appropriationfirstbe+used for the Project. The Utilities objected to AEA's initial September 2004 draft of the Project Management Agreement.The Utilities expressed concern that AEA maintained too much oversight of|the Project.This initial approach was abandoned and with the support of the IOC from early 2005,AEA negotiated directly with ML&P for them to take project management lead.The final August 2006 version of this agreement is attached.AEA continues to wait for ML&P to take the agreement to the Municipal Assembly for approval. 2.When will construction begin?Completion date? The Anchorage Assembly must approve the AEA/ML&P Project Management Agreement and ML&P must appoint a project manager for work to begin. 3.Will AIDEA bear any cost growth due to delays,or are sufficient funds available including accrued interest to complete the line? Interest from the $20.3 million was not appropriated to the Project.Interest remains with the Railbelt Energy Fund.Per the AEA/ML&P Project Management Agreement,ML&P is required to notify AEA of any funding shortfall.Prior to proceeding to the construction phase of the Project,written agreements must be in place to guarantee funding overruns.In order to contain the cost of the project to the appropriated amount, AEA suggests pertiens-ef the project (suchas thefive-mile-seetion)be considered a deductive-alternative-that ML&P at the time of design and upon completion of a detailed construction cost estimate,establish viable alternates,either additive or deductive,that will allow the project to be completed within the existing funding.In the alternative, AEA would work with the utilities if they elect to seek additional funding,or elect to cover shortfalls with internal utility capital funding.AEA expects that AMLP would bring this information back to the IOC prior to construction. Mat-Su Borough April 8,2008 Knik-Willow Transmission Line Upgrade Proposed Public Involvement Program Page § Delbert S.LaRue,P.E. Project Engineer Dryden &LaRue,Inc. 3305 Arctic Boulevard,Suite 201 Anchorage,Alaska 99503 Phone:(907)349-6653 Fax:(907)522-2534 E-mail:dlarue@drydenlarue.com 6.MSB Code 17.05.040(B)(2)(b).A minimum of one formal public hearing will be held by the utility later in the process to allow for formal public testimony.The public hearing will be heldin an area central to the area impacted by proposed action. After the conclusion of the public meetings described in Item 5,the Project team will evaluate comments and concerns.The Project team will then make a preliminaryselectionoftheproposedroute.At least fifteen days prior to Oetheformalpublichearing,the Project team will circulate a notice setting forth the preliminary decision,the basis for that decision,describe the methodology used to reach it,and summarize the public comments received through the public involvement program. The Project team will then hold a formal public hearing to take formal public testimony regarding the proposed route.Prior to taking testimony,there will be a brief presentation of the preliminary decision.Project team members will be available to answer questions if they arise in the course of testimony.The formal public hearing location will be selected with the Borough's concurrence. 7.MSB Code 17.05.040(B)(2)(c).Notice of the public meeting and public hearing to occur a minimum of 15 days in advance ofthe public meeting or public hearing. The public notice will include: (i)three notices in a newspaper ofgeneral circulation within the borough; (ii)public postings in local areas such as libraries,public buildings,schools,stores, laundromats,lodges,on the utility's website,and on the Matanuska-Susitna Borough's website,etc.; (iii)public service announcements on local radio station starting 15 days before the public meeting;and (iv)mailings,as appropriate,including notification of all affected community Travis/Peterson Environmental Consulting,Inc. Ae Mat-Su Borough Knik-Willow Transmission Line Upgrade Proposed Public Involvement Program councils, (i)Notice announcing the Knik,Houston and Willow public meetings and the formal public hearing will be published in both the Anchorage Daily News and the Frontiersman newspapers three different days,with the last notice published at least 15 days before the events. (ii)©ML&P will post a public notice announcing the Knik,Houston and Willow public meetings and the formal public hearing at least 15 days before each event.All notices will also be published on the project website.Public notices will be posted in the following locations: COMMUNITY POSTING LOCATION .Big Lake LibraryBigLakeBigLakeElementary School Houston Houston City Hall Houston Post Office Willow Community CenterWillowWhite's Crossing Knik Hollywood Mart at Hollywood &Vine Settler's Bay Post Office Meadow Lakes Elementary School Meadow Lakes Laundromat at B&J Center Holiday Fuel,Mi.49 Parks Hwy. (iit)|Radio announcements will be broadcast during the 15-day period before each meeting on radio stations KENI 650 AM and KMBQ 99.7 FM. (iv)<A meeting notice will be included in the project newsletter distributed separately to the project mailing list.These notices will be mailed to a list of those who have asked to be placed on the Project mailing list as well as project stakeholders (including local,state,and federal government entities,community councils,businesses,and non-governmental organizations identified by Travis/Peterson).ML&P will also forward public notices to .the Borough via email.In addition to local,state and federal entities,the following persons and organizations have been identified as potential project stakeholders who will receive these notices: Kathy Wells,Executive Director,Friends of Mat-Su Steve Cleary,Executive Director,Alaska Public Interest Research Group Travis/Peterson Environmental Consulting,Inc. April 8,2008 Page 6 tl MEA BOARD MEETING ON JULY 2817"AT 6:30 PM Introduce yourself Thank the Board for inviting us up. Introduce the ML&P General Manager,Marketing Director and Commission: EXECUTIVES OF ML&P NSS,AtA 1.James M.Posey,General Manager,ML&P MaryAnn Hanson,Marketing Director |©Veclauk Aeunlat Rrtertee2. ML&P COMMISSION Ata recertd o-Aegeilatine3.Stephen Pratt,ML&P Commissioner antioerratec,te Coneplete the4.Mark Fryer,ML&P Commissioner Chart.bdekee 5.Spence Hochstein,ML&P Commissioner ,A bulle Bee Arann Aplin6.Andrea Stancliff,ML&P Commissioner Ahrounlr MGA Atrvtee area7.Johnny O.Gibbons,ML&P Commissioner,At Ls L te att trLlbelee 8.Raj Bhargava,ML&P Commissioner Jale ,ard wrth cooperctiom PROJECT TEAM Mea at wel, 9.Lou Agi,ML&P Staff 10.Doug Hall,ML&P Staff 11.Kim Robinson,ML&P Staff 12.Del LaRue,Dryden &LaRue 13.Mike Travis,Travis/Petersen The purpose and objectives of the meeting The team will describe the project The team will answer questions and address MEA concerns The team (or AEA)is asking for MEA cooperation to accomplish the project and minimize impact on MEA and its owner-members by: o Sharing right-of-way (to keep small footprint as requested by public comments) o Shared facility (single-pole,double circuit)for first one-half mile out of Teeland in area of small-lot,high density development o To inform MEA of public comments asking for a single-pole double- circuit the entire length of the project o To ask for future meetings with MEA to work out details of whether MEA wants to be integrated or separate from the facility LAWS OF ALASKA 2008 Source Ch r No. HCS CSSB 221(FIN)am H AN ACT Making and amending appropriations,including capital appropriations,supplemental appropriations,and appropriations to capitalize funds;making appropriations under art.IX, sec.17(c),Constitution of the State of Alaska,from the constitutional budget reserve fund; and providing for an effective date. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 Enrolled SB 221 OomeanNnAFfWNY-WwWNNYNYNHNONNONONOHNOeR!RBESEREEOOEEOeS-oOooOFNDnFPWN-|&§ODOOFenKDKHFFWDNY-COabundance of natural resources for the fiscal year ending June 30,2009. (b)The unexpended and unobligated general fund balances on June 30,2008,of the appropriations made in sec.1,ch.28,SLA 2007,page 16,line 22 (Office of the Governor, commissions/special offices -$1,848,400);sec.1,ch.28,SLA 2007,page 16,line 26 (Office of the Governor,executive operations -$10,795,200);sec.1,ch.28,SLA 2007,page 16,lines 31 -32 (Office of the Governor,state facilities rent -$815,600);sec.1,ch.28,SLA 2007, page 17,lines 5 -6 (Office of the Governor,office of management and budget -$2,043,600); and sec.1,ch.28,SLA 2007,page 17,line 9 (Office of the Governor,elections -$3,005,500) are reappropriated to the Office of the Governor for operating costs for the fiscal year ending June 30,2009. (c)The sum of $25,000 is appropriated from the general fund to the Office of the Governor to facilitate educating the public regarding current state regulation of mining and mining activities in the state,including providing information that may influence the outcome of an election on initiatives affecting those mining activities,for the fiscal years ending June 30,2008,and June 30,2009. (d)It is the intent of the legislature that the appropriation made by (c)of this section meet the requirements of AS 15.13.145. *Sec.68.RETIREMENT SYSTEMS.(a)The sum of $49,000,000 is appropriated from the general fund to the judicial retirement trust fund (AS 22.25.048)for payment of the judicial retirement system unfunded liability. (b)The sum of $10,000,000 is appropriated from the general fund to the military retirement trust fund (AS 26.05.228)for payment of the National Guard retirement system liability. *Sec.69.ALASKA ENERGY AUTHORITY.The unexpended and unobligated balance, not to exceed $10,000,000,of the appropriation made in sec.78(c),ch.1,SSSLA 2002 (Alaska Energy Authority,upgrade and extend the Anchorage to Fairbanks power transmission intertie to Teeland substation -$20,300,000)is reappropriated to the Department of Commerce,Community,and Economic Development,Alaska Energy Authority,for Alaska intertie static VAR compensators and tower upgrade and repair. *Sec.70.REAPPROPRIATION OF LEGISLATIVE APPROPRIATIONS.(a)The unexpended and unobligated balances,not to exceed $6,000,000,of the appropriations made -225-Enrolled SB 221