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Home My WebLink AboutSoutheast Alaska Intertie Study Phase 1 FINAL REPORT December 12, 2003Southeast Alaska Intertie Study Phase 1 FINAL REPORT December 12,2003 Prepared for The Southeast Conference Juneau,Alaska by Dildel labs7ASSOCIATES,INC. Engineers and Consultants In association with: Commonwealth Associates,Inc. CH2M Hill,Inc. Northstar Power Engineering Poseidon Engineering,Ltd. Southeast Alaska Intertie Study Phase1 FINAL REPORT Prepared for The Southeast Conference Juneau,Alaska ASSOCIATES,INC. Engineers and Consultants December 2003 Southeast Alaska Intertie Study Phase 1 Table of Contents Table of Contents -List of Tables List of Figures Section 1 -Introduction and Conclusions IMtrOMUCLION......c.ccesscesssssssscsesesssssssessseasscscsesesesesecscecssacseaesesestsesenenesesaeasseecseseuesasseasasasaeeaneacunveneeesesas 1-1 Study APProach .......ccsssssssssssecresssseseenesssssenssesessesatsossesssssaseecersuccensseeneeesssensarsssssessasaneasaneneeneceees 1-4 Previous StudieS..........cssssscsessssssesscsssccsesssssscsesssesnsseescsesesssesessesssessenenssusneassnsseaeeceneasqueisasecaeeeceeers 1-5 Status of Transmission Development in Southeast AlaSka.......cccesssscscsssssssesessessseseseseseeeneees 1-7 CONCIUSIONS .......csscsssesecssscsecsscssesscscseseseesaccnenesesenssesesusseuscesesssesescaeenseessseneneseseeestenseeneneseatseeeeesenesatee 1-8 Section 2 -Transmission Line Routes and Technical Characteristics INGrODUCTION......cscsscscsscssssssssccssscesecseseneseseeneneeseseneseasensestenssessensseseensceevessecsenssenecsneaneneeseseseetenetees 2-1 Juneau -Greens Creek -Hoonah Transmission Line (SEI-1)oo...csesesesessssscssssessersnesseeaeeees 2-1 Conceptual Line Route .......ccsscscssscsssscsccsssessssssssressessssesstscssesevessssesenesenessenseresnsasasseans 2-2 Overhead Transmission Line Design Concepts..........csessssscsssssesseesersseesssssesesseetenssneneaans 2-5 Structure TYP@.....cccscscscsessesssecssesesssesesectsessesseessessssessesesseneessseseacasaaseseaeentsnteesesss 2-5 Physical LO@CINg 00.0...cssessecsscsecesesnseeeesescseeeetersesseaeseosaseeensneressseacaseneatsesececenanenes 2-5 Foundations and Structure Support...ccssessessssessseceessesesseseseseseeneneeeeseeseeeees 2-7 Electrical Clearances to Grade...cecsssssssesscssstssesseseeesseesesssetsseeesneneetsnsensneees 2-7 Conductor Selection .........cscsscsssscsssessssesssscsssssecssssssessssssssssessesssasersssseeseesenenseeenss 2-8 Right-of-Way Clearance .......ssssessssessesessesssssseesseneessaecssseneseescsnsatessareatersareneseees 2-8 Raptor (Eagle)Protection vo...cesccsssesecssssestessesscssseeceesesecssseseesesseasseecessaneneaeaes 2-9 Submarine Cables .........cccscssssssssssscsesssssssssscsssesesssesseesecscsssessscasesssesssesecaeseesesssesessseneaes 2-9 Switchyards and Substations...esssecsssessessseesesseetsseessersecseeneceeaeceessensansasenssneaseeseees 2-11 Power Flow AnalySis .......c.scsssscsssssssssecsssssessesssessecessenssersssssnesenesssneusacssensasseensavancnesseneaces 2-11 Kake -Petersburg Transmission Line (SEI-2)......cssssssssessssesssessccsssstssessevessssstessssesaseseeaseneaeaes 2-12 Conceptual Line Route .......eesescsestssesesececsecsssesseseseesseenevenseeeeesenssesseserenssassesesseneeses 2-14 Route Description (Southern Route Alternative)..........csssecsssessesssssssessssseesenes 2-14 SyStEM Voltage ....ccsscssssssccsssssssscresesesesssessseceessesseseasseetsesesesssseneossesessseseseeacssseneavseenseees 2-16 Overhead Transmission Line Design Concets.........scccsssscssesserssesssssescsssssesssesseessens 2-17 Conceptual D@SIQN .........cessseseeestesssssesssrescssssesesssssssesesscsencacssseeesesecssseacateenes 2-17 StrUCtUre TYPO ...cessccesssscnssssecssctsssscecsssesnesssesesssssssessatecasatsucasseaneaeeeessanensanans 2-17 Physical Loading ......cccssccscssscecssssecssscsessssessssscessessssssssensssesssssesssesesesesseesasees 2-18 Foundations and Structure Support....scecsessssssecesseeecsssecesseeseneeassnsateessrennens 2-18 Electrical Clearances to Grade ......csessssesssessssssecssssstsssassestsssensasessessesssnsseees 2-18 Right of Way Clearance....cecsssssecssssseesssssestcsessssensseessnssneessesseecssetencssateneatens 2-19 Raptor (Eagle)Protection...sessssessesssccssesseasstsecssseecesssnecessseeacaeeseeeaeeeacanens 2-20 Submarine Cables ........ccescssscsssscscscsssssssesecscscssscsessesscoesessssecssassssessseeseessessessensseseasases 2-20 Switchyards and Substations...cccsssessscssssssssesesectssesessssessssssssssensseensenssesessseneenees 2-22 Southeast Alaska Intertie Study i Phase 1 -Final Report Table of Contents Section 3 -Permitting Requirements and Environmental Issues Overview IMtrOdUCTION -aasesscesssscssseessseccecscseeeanenstscaeneneateneacaeccaeasansneveserssesedsseseasscdsendensenenssaeasinssasesasenegoey 3-1 Federal Agency INVOIVeMent ........scesessessssssssersstessssnesssssesessessssecsssnsssscsesscessecesssceseseseesseeatensusssnes 3-1 US Forest Service .....ccesssssssssssessssssssssssssesssesscasssseceessscsesscsessssssssserscacssecevaseecassnaeneeteres 3-1 SEI1:Juneau -Greens Creek -HOOMAN ...csesesccsessesssesnsssseensasstsseneseetsensescay 3-1 SEI-2:Kake -Petersburg.....c.csscscsesscsecscsessssssesstsseessssnestsceesseesseensnssneasesareseases 3-3 US Fish and Wildlife Service and National Marine Fisheries Service uo...eee 3-5 US Environmental Protection AQ@ncy........csesssssscsetssesseeseessensesseeererieesesernnenens 3-6 US Coast Guard .......cccsssssssscssstssessescseescstencsessssnessseesesssecsseseeseassnessesessnseseatseeansneasanennens 3-6 Federal Energy Regulatory Commission (FERC)......csssssssseessesssstessesenssseseeseeasaeeeesans 3-6 State of Alaska AQe@ncies........cccsessessssessssesssstssesscsecessseesrersssseesssessensesssessseseeessessesenssssserssensassaces 3-6 Coastal Zone Management Program...ssssessssesessssecresssccssscnsssssissesesesassnessstassnseeseness 3-7 Department of Natural RESOUFCES ........ceessesesessesssseeansseeasesssseesseesensseeabessenssesessnnaneesnsens 3-7 Department of Fish and Game .......ceccsssssssessessecssesececcsssssstessessessesececesssesntenesensseseseeseeneens 3-7 Department of Transportation and Public FacilitieS 0...eessestsssesssseeeecsersersensensessenns 3-7 State Historic Preservation OFfICED........sssssssssseesnerssessssssnessessneessseesseesseessesssnsseessens 3-8 Department of Environmental Conservation 00...scessssesseseseessesseesssscessssereeinassereeen 3-8 Local City REQUIFEMENES.........cee esessestesestssestsesessesecnssecesescssesseeesssssssssseasenmetsessnecensesennseenanneseres 3-8 City and Borough Of JUNGQU .......ee eesessessestesececsecneenesseesssssssssscatenteneeetaeensetenteassnaasnens 3-8 HOOMAN oo .ssesesecsescscsessssssessessesesssesscsescssssscucscsesrsessenenesecuesssuseeneaesecasseateneosseasanenenestaeasaeasies 3-9 POLEFSDULG .....cscsccsssssesesesesessenestessteneseseetsetsteateneecatetenessensesseatineeeseersseasssetseseneensiessensaneasaess 3-9 KAKC -iasesessssecssesesssescssscscacsnscscsescscscncsnccssesesersesssavaaseacseneatavacsuseetensasnseseseneneesesesaeaeaaans 3-9 Other Stakeholders.........cscsecssecsssescsssessccssssssssecssesscsesssessscsesseeseseasensesatseseeesensesesasasacerereneeearasetanes 3-9 Section 4 -Estimated Costs of Construction IMtrOCUCTION -saasecsssseseesesssessesesescsesussesucsssvsscsussncassscaveasavesveneavsuseueaseussneuseteaeeusneensneaeansaeersesseanense 4-4 Juneau -Greens Creek -Hoonah Intertic (SEI-1)oo.cesessestssestesesssseseeesessecessansnenennesneernes 4-1 Kake -Petersburg Intertic (SEI-2).........ccsccsscsssssecesssssesessessesseesteatsnssecnsrisessteensasenescavsevseeensensaes 4.4 Section 5 --Example Project Development Schedule ItrOGUCHION -sa essssssccsececacseseeescesevesenectenensnessateneeasanssensatansesneanensssssesesesesessessersseesscasevaneseasssnsneasnss 5-1 Permitting and Environmental Studies...csesesccssssesssssssessssssessessssssieenesssiessessessseesssesessenerereens 5-1 Engineering Related Activities .......c..cscsssssssecssssessssessessssecsssseseessssssesatecessssneaeessenentesesneareneeneseess 5-1 Selection of Project Team.......cccccccsscsessccessesssssessssssessecsesssseeatssessteatsatsnsseessessseeaeeassenseess 5-2 Alignment Definition...cecsseseetesseessereresessssessseesssssrensessessscrissseuesssniteiessinenens 5-2 Engineering Survey .......ssccccccssccssesssssssescscseseeneensseeseeanesteceestseeentenesaceneatsneeecessascsssneaeeses 5-3 Preliminary EMQin@ering ..........sssssesesssseesssesesesseseseesssessessessssesessesnseesseessesinsuesssesetsannes 5-3 Geotechnical Investigations ..........cccssecsssssesseesesseeessenessessteassessesssesenssnseteneseneennenes 5-4 Final D@SIQN.......c.ssssessssssessscsssescstessctssesuscnsensersaceeeseeeateatsteassesaneneesssseeanseessnssonnentanserennes 5-4 Initiate Construction and Material Procurement Contracts.........c cscs 5-4 Construction ActivitieS ........ceccccsseccssesesesssseseeesssstsesesssseeesecsnesersssssasseensseessocntensantesecsssnresenesesesens 5-5 Total Project Development Schedule...eessesssseesectsesseseesessenteassesnsessrtsntstsetsnestetnnenenseesenes 5-5 Southeast Alaska Intertie Study ii Phase 1 -Final Report Table of Contents Section 6 -Power Supply Evaluation and Economic Analysis Power Supply Evaluation...cssssssseccsscessssecessescesesssscessescessnscsssssnsasseseensacanencaseneneaseeseseeeeeaeeaeaes 6-1 OVEIVICW uo.cecsssesesssescesecsesssssssesecsessscsescsescesscsnsssesesssensacsesessessssscscersenescaessacastosessensansenetens 6-1 Power ReEQuireMentt .......cscccssesssssssssscsssessersssscscsssesseecsssssssssseseesesessessseresnessneasaeeeseneneenes 6-2 Alaska Electric Light &PoWeP oc eseseccsssssecseescsseessessecsssesesssatetessstenenesteesanenaes 6-3 Kennecott Mining Company-Greens Creek Mine@.........ccsesesesseesssesssscseenenernes 6-3 HOOMAN......sessscsesssssesscscscssseseseescscscscseseessssceseessesesescseseecsessscseseseesscaceusceueerenseeasens 6-4 Petersburg and Wrangell ..........sessecssssseesssssesseeessssesssseeesessecsneneceeneasensessesececaes 6-6 Ketchikan .......essscssecssssssssssscsseseccssscatssessceessusceesssessssscseseuscesaescaessaesesersnseseanenseasnsas 6-7 KAKO ....seessssscscescscscseseeencscseeeessersnecscecsesessnsnssesscsessacecsesssevasceccasscaesusessatsesenseneesraes 6-8 Estimated Maximum Transmission Capacity at Hawk Inlet ..........cccssesssesseseseseseeesseees 6-9 Availability of Hydroelectric Energy .......cccsscssssscssesrsscssscesssssvesssssssseeesssssssesessessesenees 6-10 Alaska Electric Light &POWeT.........cccccsssssssssesssesecssesesesescessssessessseeeecsneceatans 6-11 Lake Tyee Project...ee ssssecsesssesecssnsneecesencatsseeeesteeesseeseasseseseareeseseseneasatetenes 6-12 Potential New Hydroelectric Generation FacilitieS .........:..cscsssssssssesssssecsesescsssesssessseees 6-13 Use of Oil-Fired Generating Facilities 0....cessssssesessessscesserstssssestssseessecscssensersesseenens 6-14 Economic Analysis of InterticS ..........cssssssssssscsssesessesscnsscsesecssnescsenssessesesessseseessseasseseesevenseseseats 6-14 Introduction and Assumptions .............esuueseesseseneasscacaeaceessusestseseseneassctesstesscaeacesecnseseees 6-14 Projected Cost of Existing Diesel Generation ............ccccssssecseccsssessssessessesssessseseecscanes 6-15 Intertio Annual Costs .......ccssssssssscesssscsssessssscsssescsessscessssesessseaesesseseseseesesnessacsseneaseneanesey 6-18 Cost of Purchased POWED........csccssssecssssseseessecsssnsesssesssessescarsessseeesesssesenssessetenesesessaeens 6-21 Estimated Savings with the IntertieS ..........sssssseccscssseesssessesssesssecens"saesseseevesenesseseass 6-22 Sensitivity of Results to Alternative ASSUMPTIONS .........ce seesseectssestetesectesestsesseetsteseenene 6-26 Section 7 -Comparison of AC,HVDC and HVDC/VSC Technologies Appendix A Appendix B Appendix C Appendix D Appendix E Power Flow Analysis for Juneau -Greens Creek -Hoonah Intertie Selected Photographs Plan Profile Sheets for Kake -Petersburg Intertie Report on Submarine Cable Considerations prepared by Poseidon Engineering,Ltd. Report of DC Technologies prepared by Northstar Power Engineering and Dr.George Karady Southeast Alaska Intertie Study iii Phase 1 -Final Report Table of Contents List of Tables Table 3-1 Table 3-2 Table 3-3 Table 3-4 Table 3-5 Table 4-1 Table 4-2 Table 6-1 Table 6-2 Table 6-3 Table 6-4 Table 6-5 Table 6-6 Table 6-7 Table 6-8 Table 6-9 Table 6-10 Table 6-11 Table 6-12 Table 6-13 Table 6-14 Table 6-15 Table 6-16 Table 6-17 Table 6-18 Table 6-19 List of Figures Figure 1-1 Figure 2-1 Figure 2-2 Figure 2-3 Figure 2-4 Figure 2-5 Figure 2-6 Figure 2-7 Figure 7-1 Figure 7-2 Figure 7-3 List of Contacts -Juneau-Greens Creek-Hoonah Transmission Line...............3-10 List of Contacts --Kake -Petersburg Transmission Line 0.0...cesses 3-11 Summary of Agency Requirements and Associated Costs......ccsseessseeeseeeen 3-12 Summary of Estimated Costs and Schedule for Permitting -SEI-1 ou...3-14 Summary of Estimated Costs and Schedule for Permitting -SEI-2 0...3-15 Estimated Cost of Project Development and Construction -SEI-1 oc 4-2 Estimated Cost of Project Development and Construction -SEI-2 oes 4-5 2002 Energy Loads ......ccssescssssssssecseescssecssesssesnsseesssesessesssotsneaneseeneeressasenserenes 6-3 KMC-GC -Projected Energy Loads and Capacity Requirements..........:ssseee 6-4 THREA -Hoonah Service Area -Projected Energy Loads ..........cccesenseeeees 6-6 Petersburg and Wrangell -Projected Energy Requirement .........ssc 6-7 Ketchikan Public Utilities -Projected Energy Requirements...scseeeeesens 6-8 THREA -Kake Service Area -Projected Energy Loads..........ccsscssssessseereeees 6-9 Estimated Power Demands at Hawk Inlet «0.0...eeeseeeseetsssestensseseseseseseereens 6-10 AEL&P Hydroelectric Generating Resources and Available Energy..............+6-11 Estimated Hydroelectric Energy Generation from the Lake Tyee Project..........6-12 Projected Variable Cost of Power Production with Diesel Gen.-Hoonah.........6-17 Projected Variable Cost of Power Production with Diesel Gen.-Kake.............6-17 Projected Variable Cost of Power Production with Diesel Gen.-KMC-GC ......6-18 Juneau -Greens Creek -Hoonah Intertie,Estimated Annual O&M Costs.......6-19 Kake -Petersburg Intertie,Estimated Annual O&M Costs...sees 6-19 Estimated Annual Intertie Administrative Costs .......ccesscssestesseeeseteseseereenees 6-20 Projected Cost of Power and Savings with the Intertie -Hoonah........eee 6-22 Projected Cost of Power and Savings with the Intertie -KMC-GC.....ee 6-24 Projected Cost of Power and Savings with the Intertie -Kake oe 6-25 Comparison of Savings using Alternative ASSUMPTIONS...eeeseeeeteteeeeees 6-27 Southeast Alaska Transmission LIN€S ..........c:csecsssssesestessseessesterseensestensecarenenees 1-10 Proposed Route Map -Juneau-Greens Creek-Hoonah Intertie........eee 2-23 69-kV Wood Pole Configuration ........cccsssssssssscsseesersensseetessesesreneeseseeceneasaeens 2-24 Linear Reference Diagram -Juneau-Greens Creek-Hoonah Intertie................2-25 Submarine Cable Cross-section -Single ArMOr .......sscscsssssseecesecetenserseeeeees 2-26 Submarine Cable Cross-section -Double ArMOr.......esesesessesessesseseeneseeses 2-27 Proposed Route Map -Kake-Petersburg Intertie.......cssesesssseeeessseseeeeceees 2-28 Linear Reference Diagram -Kake-Petersburg Intertic.......cesses 2-29 DC System with Voltage Source Converters (VSC)uo...scsssssecessesecseessstsstentseees 7-2 Conceptual DC System for SEI-1 occ cescesessesecsstececestssesessseeseenessesesnseeseersenee 7-2 Concept of Combined AC and DC System with Voltage Source Converters.......7-2 Southeast Alaska Intertie Study iv Phase 1 -Final Report Section 1 Introduction and Conclusions Introduction Southeast Alaska is characterized by numerous islands,marine passages,mountains,and evergreen forests in a wet,relatively temperate climate.The combination of high precipitation levels and the mountainous terrain provides significant opportunity for hydroelectric generation. The mountainous,island environment,however,has limited the development of roads and other infrastructure systems,including electric transmission lines,to relatively confined areas surrounding the region's cities,towns and villages.Consequently,although significant hydroelectric power is available in some locations,the lack of power transmission facilities prevents its distribution to the region as a whole. Electric service in Southeast Alaska is provided by community-based electric utilities that for the most part,are electrically isolated from each other.Essentially all electric power in the region is supplied by either hydroelectric power plants or diesel engine generators.Hydroelectric facilities provide the majority of the power requirement in Juneau,Ketchikan,Sitka,Petersburg, Wrangell,Skagway,Haines,Metlakatla,Craig and Klawock.In communities where hydroelectric power is not available,the reliance upon diesel generation has contributed to very high retail electric rates.Diesel power generation also involves a number of problems including dramatic fluctuations in fuel price,concerns with fuel handling,potential interruption in fuel delivery,air pollution and noise. Economic activity in Southeast Alaska has traditionally been focused on logging,pulp manufacturing,fishing,seafood processing,mining,government and tourism.In recent years, activity in the timber industry has declined significantly with the closure of pulp mills in Ketchikan and Sitka and federal restrictions on logging in the Tongass National Forest.Lower cost electricity throughout the region has long been identified as an important element in - attracting other commercial activities that could expand the economy in the future.As a result, the Southeast Conference has undertaken the evaluation of the'costs and benefits associated with constructing transmission lines between various communities in Southeast Alaska. The immediate purpose of a Southeast Alaska transmission system is to provide lower cost hydroelectric generation to communities where electric power is presently supplied with diesel generators.In the long term,an interconnected electric system in Southeast Alaska would potentially encourage the development of new hydroelectric plants on a regional,rather than a local community basis.With a larger connected load base,the initial cost of power from new hydroelectric plants might also be lower,providing cost savings to all utility customers.Further development and utilization of hydroelectric power in the region would also reduce air pollutant emissions. In late January 2003,the Southeast Conference retained D.Hittle &Associates,Inc.(DHA)to conduct a study of a proposed Southeast Alaska transmission system (the "Intertie Study”). Since several studies of transmission systems in the region have been conducted in the past,the Southeast Alaska Intertie Study 1-1 Phase 1 -Final Report Introduction and Conclusions Intertie Study serves to update the previous work as well as incorporate recent developments and other new information.In order to expedite the evaluation of certain interconnections,the Intertie Study has been separated into two phases as follows: e Phase 1 -Evaluation of transmission interconnections between (a)Kake and Petersburg and,(b)Juneau,the Kennecott Mining Company -Greens Creek Mine (KMC-GC)on Admiralty Island and Hoonah. e Phase 2 -Evaluation of a transmission system that interconnects all of the communities of Southeast Alaska. This report summarizes the findings of Phase 1 of the Intertie Study.The findings of Phase 2 will be presented in a subsequent report.The primary objective of the Intertie Study is to estimate the costs and benefits associated with the proposed transmission interconnections. Benefits are essentially identified as the net savings in power production expenses resulting from the use of transmitted hydroelectric energy to offset diesel generation.Although the costs of operating and maintaining the transmission lines are included,construction costs are assumed to be grant funded and as such,do not factor in to the analysis of costs and benefits.The Southeast Conference has indicated that it,as well as other stakeholders,will pursue State and federal grants to fund the transmission systems.The cost of construction,however,has been reviewed as part of the Intertie Study. The Intertie Study provides a feasibility assessment of the proposed transmission systems.If the Southeast Conference or other entities decide to pursue development of one or more of the transmission lines,additional study work will be needed as will actual design and permitting. There will also need to be various contracts for power purchases,operations,and maintenance and other commercial arrangements to be negotiated. Phase 1 of the Intertie Study focuses solely on transmission lines between Juneau,KMC-GC and Hoonah (referred to as Southeast Intertie 1 or "SEI-1'')and between Kake and Petersburg (referred to as Southeast Intertie 2 or "SEI-2”).SEI-1 will be used to transmit hydroelectric generation from Alaska Electric Light &Power (AEL&P)to KMC-GC and to the electric system of Tlingit-Haida Regional Electric Authority (THREA)in Hoonah.SEI-2 will be used to transmit hydroelectric generation from the Lake Tyee hydroelectric project owned by the Four Dam Pool Power Agency to THREA's service area in Kake.Both SEI-1 and SEI-2 have been studied in fairly significant detail in the recent past. The tasks undertaken for Phase |of the Intertie Study,as they pertain to SEI-1 and SEI-2,are described as follows: e Obtain and review previous studies of the transmission systems; e Review the proposed routes of the transmission lines and provide adjustments as needed to reflect current information; e Review previously developed estimated costs of constructing the transmission lines,and provide adjustments as needed to reflect current information; Southeast Alaska Intertie Study 1-2 Phase 1 -Final Report Introduction and Conclusions e Review and define the necessary permitting requirements for the transmission lines and identify critical environmental and permitting issues; e Estimate the costs and time required to obtain necessary permits to construct the transmission lines; e Review issues and cost estimates associated with proposed submarine cables to be used in the transmission systems; e Evaluate the use of newer direct current (dc)technologies for the transmission systems as compared to more traditional alternating current (ac)technologies; e Estimate the annual costs of operating and maintaining the transmission systems; e Estimate the annual deposit needed to establish a reserve fund for major repairs of the transmission systems; e Forecast the energy requirements for Kake,Hoonah and KMC-GC; e Estimate and compare the cost of power production in Kake,Hoonah and KMC-GC based on (1)the present power production system and (2)the interconnected systems; e Summarize the results and conclusions of Phase 1 in a report. It should be noted that a number of issues related to technical specifications for SEI-1 and SEI-2 have been identified that cannot be fully determined until the Phase 2 study is completed.For example,the size of conductors and cables that comprise the transmission systems may bedifferentifthelinescontinuebeyondKakeandHoonahtoSitka,Angoon and other locations'. Exact specifications for the line components will be determined during final design,however,the assumptions used in the Phase 1 study are considered reasonable for evaluating the feasibility of the systems.Additional information with regard to SEI-1 and SEI-2,as needed,will be provided in the Phase 2 report. Finally,the economic analysis conducted as part of the Intertie Study looked only at the cost of power production in the communities to be served by the proposed transmission systems.The cost of power production is typically the most significant component of an electric utility's revenue requirement;however,there are other costs that figure significantly into the basis for electric rates charged retail customers.Although the cost of power production may be reduced through alternative means of power supply,other costs may continue to keep retail rates at a highlevel.The State's Power Cost Equalization (PCE)*program also affects how much of the benefit 'The Southeast Alaska Intertie System,as proposed in previous studies,includes an interconnection between the northern and southern parts of the system.The previous studies have identified options for the north-south interconnection to be between Hoonah,Angoon,Sitka and Kake or between the Snettisham hydroelectric project and Kake. ?The Power Cost Equalization (PCE)program subsidizes retail electric rates for residential customers and public facilities in qualifying communities.The funding of the PCE program is granted by the State legislature on an Southeast Alaska Intertie Study 1-3 Phase 1 -Final Report Introduction and Conclusions of lower production costs ultimately reach the electric consumer.Aside from the estimation of power production costs,the Intertie Study has not attempted to evaluate retail electric rates in Southeast Alaska. Study Approach Phase |of the Intertie Study relied upon the previous work of others in conjunction with new investigation and analysis.In this manner,prior studies and reports contributed significantly to the current study effort and in conjunction with the present study provide a much larger knowledge base than could be established with the Intertie study alone.The prior work reviewed includes transmission interconnection studies,power supply studies,hydroelectric generation feasibility studies,electric load forecasts and utility transmission design efforts.Because of the time and scope limitations for Phase 1 of the Intertie Study,the previous studies were relied upon most extensively with regard to technical and routing issues related to the proposed transmission systems.Much has changed in recent years with regard to transmission facilities in Southeast Alaska,and as a whole,the Intertie Study reflects a significant update to the previous studies. In conducting Phase 1 of the Intertie Study,previous studies were obtained and reviewed,new information was gathered,and discussions were held with a number of utility,community,and government representatives.A feasibility level technical evaluation was conducted based on a review of previous studies,discussions with utility personnel familiar with the area and consideration of current utility practice.The technical review included consideration of the line route,system configuration,design criteria,and cost. The proposed routes of SEI-1 and SEI-2 were,reviewed but not significantly changed from thoseshowninpreviouspreliminarydesignstudies'.SEI-1,the Juneau-Greens Creek-Hoonah line,has been preliminarily configured by AEL&Pin a manner consistent with AEL&P's existing system.The Intertie Study reviewed AEL&P's proposed plan and for the most part, made only minor adjustments to it.Some new effort was made on the routing and configurationofSEI-2 since it has not been evaluatedin as much detail as SEI-1.Revised cost estimates havebeendevelopedforeachofthetwoInterties. A significant amount of new effort was conducted with regard to power supply analysis and the economic analysis of the Interties.This portion of the Intertie Study involved the projection of power requirements and the estimation of alternative power production costs.As with any analysis of this kind,a number of assumptions were made and it is important to note that the use of alternative assumptions could produce different results.A sensitivity analysis has been prepared,however,to provide a range of possible outcomes resulting from certain adjustments to the base assumptions. In conducting the economic analysis for the Intertie Study,terms and conditions of existing contracts and agreements have been acknowledged to assure that the analysis appropriately annual basis and no guarantees can be provided with regard to its continuation in the future.An endowment was created in 2002 using funds from the divestiture of the Four Dam Pool to fund a portion of the PCE program.3 The proposed routes are generally identified among the "potential power transmission corridors”in the 1997 Revision of the Tongass National Forest Land and Resource Management Plan. Southeast Alaska Intertie Study 14 Phase 1 -Final Report Introduction and Conclusions models the commercial environment in which the Interties will operate.The question then becomes,is the Intertie economically justifiable from the perspective of the specific utilities that will be connected to it?Many transmission and power supply studies in the past have looked at economic viability from a regional or possibly even a "societal”basis. Another significant difference in the Intertie Study compared to previous studies is that the capital costs (i.e.costs of planning,permitting,construction,financing,etc.)of the Intertiesystemsarenotincludedintheevaluationofcostsandbenefits.It has been assumed'that the Interties will be grant funded and will have no capital recovery component associated with their future cost structure. This study has been prepared in association with several other firms.Commonwealth Associates,Inc.was responsible for the review of overhead transmission routes and cost estimates;CH2M-Hill reviewed permitting requirements and prepared an estimate of the cost and time to obtain the necessary permits;Northstar Power Engineering prepared an evaluation of direct current (dc)transmission alternatives;and Poseidon Engineering Ltd.reviewed issues regarding the submarine cables to be used in the Interties.D.Hittle &Associates had primary responsibility for the power supply and economic analyses and for overall coordination of the study effort. It should also be understood that the Intertie Study is a feasibility assessment.The technical information and cost estimates presented in this report are subject to change as more additional studies are conducted and more information is obtained.Actual design of the systems,if pursued in the future,will provide much more detailed specification of the system components,routes and configuration and allow for greater precision on estimating costs.The actual cost of constructing the system,however,will be subject to a number of factors including market conditions at the time bids for material and construction services are requested. Previous Studies Two previous studies have addressed the feasibility of developing an integrated electrical transmission intertie system for Southeast Alaska.Both SEI-1 and SEI-2 were addressed in these studies.The two previous overview studies were: e The "Southeast Alaska Transmission Intertie Study”was prepared for the Alaska Energy Authority by Harza Engineering Company and dated October 1987.This study was an intensive effort that involved a significant amount of survey work in the field and evaluated transmission segments to most communities throughout the region extendingfromSkagwayinthenorthtoKetchikaninthesouth®.The study consolidated much of the knowledge at the time regarding potential transmission routes and concluded:"...that a transmission system interconnecting many of the Southeast Alaska communities is technically and economically feasible”. "This assumption has been provided by the Southeast Conference. >The 1987 Harza Study also included the evaluation of transmission interconnections to Whitehorse,Yukon Territory,Prince Rupert,British Columbia,and the proposed Quartz Hill molybdenum mine in the Misty Fiords National Monument south of Ketchikan. Southeast Alaska Intertie Study 1-5 Phase 1 -Final Report Introduction and Conclusions e The "Southeast Alaska Electrical Intertie System Plan”was prepared for the Southeast Conference by Acres International and dated February 1997.The Acres study compiled information from previous studies and provided estimated costs and a time frame for the development of a Southeast Alaska Intertie system. An Intertie from Juneau to Greens Creek Mine was addressed in the following study: e Greens Creek Transmission Line Planning Capital Cost Estimate,prepared for the Alaska Energy Authority by R.W.Beck and Associates,Inc.,December 1992. An Intertie from Petersburg to Kake has been specifically addressed in three earlier studies starting in the early 1980's with the last being conducted in 1996.These studies were: e Transmission Intertie,Kake-Petersburg,A Reconnaissance Report,prepared for the Alaska Power Authority by Robert W.Retherford Associates,January 1981. e Tyee-Kake Intertie Project,Detailed Feasibility Analysis,Volumes I and II ,prepared for the Alaska Power Authority by Ebasco,Inc.,1984. °OFeasibility Study Kake-Petersburg Intertie,prepared for the State of Alaska,Department of Community and Regional Affairs,Division of Energy by R.W.Beck,Inc.,June 1996. A number of other studies have been conducted in recent years evaluating power supply alternatives in Southeast Alaska.Several of these studies considered transmission interconnections with other communities as potential power supply alternatives to the extent that power could be obtained from generating facilities elsewhere.These studies were reviewed for basic information applicable to the Intertie Study.The studies include: e Thomas Bay Hydroelectric Project,Pre-Feasibility Assessment Report,prepared for the City of Petersburg by Hosey &Associates,December 1985. e Juneau 20-Year Power Supply Plan Update,prepared for Alaska Electric Light &Power, Alaska Energy Authority,Alaska Power Administration and Juneau Energy Advisory Committee by CH2M-Hill,August 1990. e Feasibility Study,Lake Tyee to Swan Lake Transmission Intertie,prepared for the Alaska Energy Authority by R.W.Beck and Associates,Inc.,June 1992. e Power Supply Planning Study,prepared for Ketchikan Public Utilities by R.W.Beck, Inc.,December 1996,updated in 1998. e Final Environmental Impact Statement,Swan Lake -Lake Tyee Intertie,US Department of Agriculture-Alaska Region,Forest Service,August 1997. e Record of Decision,Swan Lake -Lake Tyee Intertie,US Department of Agriculture, Forest Service-Alaska Region,August 1997. e Electric Resource Evaluation and Strategic Plan,1997 Update,prepared for the City and Borough of Sitka by R.W.Beck,Inc.,September 1997. 'Southeast Alaska Intertie Study 1-6 Phase 1 -Final Report Introduction and Conclusions e Sitka-Kake-Petersburg,HVDC Intertie Study,prepared for the City and Borough of Sitka by Dr.George Karady and F.Mike Carson,January 2000. e Four Dam Pool Hydroelectric Projects,Repair,Replacement and Reclamation Plan, prepared for the Four Dam Pool Power Agency by D.Hittle &Associates,Inc.,January 2002. Status of Transmission Development in Southeast Alaska Since completion of the 1987 Harza Study,there have been several follow-on studies of transmission interconnections in the region as indicated above.Further,some transmission interconnections have been constructed and another,the Swan -Tyee Intertie is being developed by Ketchikan Public Utilities (KPU)and is presently under construction.Alaska Power & Telephone Company (AP&T)constructed and began operating a submarine cable connection - between Skagway and Haines in 1998.The State constructed an overhead transmission line between Craig and Klawock in 1988 and more recently,AP&T constructed a transmission interconnection between Craig and Thorne Bay on Prince of Wales Island. The three AP&T interconnections are between AP&T-owned distribution centers and serve the purpose of expanding the load base to be served from AP&T's hydroelectric generating facilities, the Black Bear Lake project near Klawock and the Goat Lake project near Skagway.KPU is developing the Swan -Tyee Intertie to gain access to surplus generation at the Lake Tyee hydroelectric project.AEL&P has also performed preliminary studies and investigations with regard to the Juneau -Greens Creek -Hoonah Intertie in recent years. The City of Ketchikan is serving as the Swan -Tyee Intertie owner,holding the necessary permits and licenses and administering the contracts for design,construction and materialprocurement'.The line is being designed by Washington Infrastructure Services,Inc.of Bellevue,Washington under a contract initially awarded to Raytheon Engineers &Constructors in 1995.Most of the design and permit application effort to date was undertaken and completed between 1995 and 1997.The need to arrange financing for construction and obtain necessary permits halted any further design work at the time.WIS continued to provide KPU with some periodic support of its design,including evaluation of alternative technologies,but did not restart its regular involvement with the design process until August 2002. At the present time,design of the Swan -Tyee Intertie is essentially complete,all necessary permits have been obtained,approximately 18 miles of the right-of-way was cleared in 2002 and the procurement contract for the steel H-frame structures and foundation pile caps was awarded in December 2002.Bids for the primary construction contract are presently being solicited and it is expected that the remaining clearing and foundation survey work will be completed in 2003. Construction of the line is expected to be completed in mid-2005 at a total estimated cost of ©The City of Ketchikan and the Four Dam Pool Power Agency (FDPPA)are negotiating to transfer the Swan - Tyee Intertie project to the FDPPA.It is anticipated that the FDPPA will take ownership of the project upon its - completion,if not sooner. Southeast Alaska Intertie Study 1-7 Phase 1 -Final Report Introduction and Conclusions $76.5 million.The Swan -Tyee line in total will be approximately 57 miles in length and entirely of overhead construction with no submarine crossings.It will be constructed for 138-kV nominal voltage but will be operated initially at 69-kV. AEL&P and others have conducted several evaluations of developing a transmission interconnection with the Kennecott Mining Company's Greens Creek Mine on Admiralty Island. In 1998,AEL&P provided certain power supply availability and costing information to Kennecott as part of an evaluation of power supply alternatives being conducted by Kennecott.Kennecott subsequently decided to expand it's on site generation capability at the mine site' rather than pursue an interconnection to AEL&P at the time.AEL&P has continued to investigate the feasibility of constructing a transmission line to Admiralty Island as part of aneventualinterconnectiontoHoonah®.Since the 1998 proposal to Kennecott,AEL&P has . constructed a significant length of overhead 69-kV transmission line on northern Douglas Island as part of its overall system expansion plan.The transmission line on Douglas Island is a critical component in the interconnection with the Kennecott Greens Creek Mine and Hoonah.The Douglas Island transmission line is complete to within a short distance of the proposed landing site of the submarine cable crossing to Admiralty Island. Conclusions The following conclusions are offered with regard to Phase 1 of the Intertie Study.Although these conclusions are offered at this point in the report,it is important to understand the assumptions and other factors described in subsequent sections of this report that contribute to the conclusions. 1.Both the Juneau -Greens Creek -Hoonah Intertie and the Kake -Petersburg Intertie are technically feasible.Proposed routes for both Interties have been studied before and are generally identified in existing US Forest Service land use plans.Although two primary route alternatives have been identified for the Kake -Petersburg Intertie,the Southern route alternative has been and continues to be the preferred alternative from a cost and constructability perspective. 2.Forest Service roads exist along the majority of the length of the proposed routes. Construction of the Interties adjacent to these roads,to the extent possible,should provide for lower costs of construction and maintenance.Single wood pole structures are preferred for placement along roads. 3.The estimated costs of developing and constructing the Interties are $37.1 million and $23.1 million for the Juneau -Greens Creek -Hoonah line and the Kake -Petersburg line,respectively. 7 Kennecott installed a 5,200 kW diesel-fired combustion turbine at the Greens Creek mine in 2000. 8 AEL&P undertook its most recent investigations of the Juneau -Greens Creek -Hoonah transmission line,which involves two significant submarine cable crossings,as a follow-on to its involvement in 1999 with the replacement of the 138-kV submarine cables across Taku Inlet that are part of the Snettisham transmission line. Southeast Alaska Intertie Study 1-8 Phase 1 -Final Report Introduction and Conclusions 4.AEL&P has undertaken certain efforts to develop the Juneau -Greens Creek -Hoonah Intertie that should contribute to expediting the time required for development of this system.The total time required to develop and construct the Kake -Petersburg line is approximately four years,of which construction is estimated to require about two construction seasons. 5.Energy generation capability is projected to be available from the Four Dam Pool Power Agency's Lake Tyee hydroelectric project to sell to THREA for use in Kake if the Kake - Petersburg Intertie is constructed.A power sales contract will need to be negotiated between THREA and the Four Dam Pool Power Agency. 6.AEL&P will need to construct the Lake Dorothy hydroelectric project to have sufficient energy generation capability to supply KMC-GC and THREA's Hoonah service area over the proposed Intertie.AEL&P is presently in the process of obtaining necessary permits and approvals to develop the Lake Dorothy project. 7.Assuming that construction and development costs of the Interties are grant funded and that reasonable power supply contracts can be arranged,THREA and KMC-GC should be able to realize savings in their respective costs of power supply with the Interties when compared to continued diesel-fueled power generation. 8.The annual costs to operate,maintain and administer the Interties should be relatively minor and can be reasonably recovered through charges for transmission services or, bundled in with the delivered cost of power. 9.With the Interties,THREA may be able to offer economic incentive rates in Kake and Hoonah,with certain limitations,to encourage new commercial activity.The economic incentive rates could be tied to the cost of purchased power with a nominal margin. 10.A direct current (DC)transmission system is technically feasible for the Interties but is estimated to cost significantly more than a standard alternating current (ac)system. Southeast Alaska Intertie Study 1-9 Phase 1 -Final Report Section 2 Transmission Line Routes and Technical Characteristics Introduction Two separate transmission lines are being evaluated as part of Phase 1 of the Intertie Study.The Juneau -Greens Creek -Hoonah transmission line ("Southeast Intertie Line 1”or "SEI-1”)will interconnect the Kennecott Greens Creek Mine (KMC-GC)on Admiralty Island and the community of Hoonah on Chicagof Island to the electric system of AEL&P.SEI-1 will be used to deliver hydroelectric power from AEL&P to the KMC-GC and to Hoonah,offsetting oil-fired generation in both of these locations. The Petersburg -Kake transmission line ("Southeast Intertie Line 2”or "SEI-2”)will interconnect the community of Kake on Kupreanof Island to the interconnected electric systems of Petersburg and Wrangell.Petersburg and Wrangell are connected to and purchase most of their respective power supplies from the Lake Tyee hydroelectric project owned by the Four Dam Pool Power Agency (FDPPA).SEI-2 will be used to transmit surplus hydroelectric power purchased from the FDPPA to THREA's electric system in Kake,thereby offsetting diesel generation in Kake. Both SEI-1 and SEI-2 have been studied in the past by others and have fairly well identified routes and characteristics.The previously defined routes and design concepts have been reviewed and modified to reflect current information.This section of the report presents the findings of the technical review.The route descriptions,design concepts and general transmission line characteristics were used to prepare the cost estimates shown in Section 4 of the report. Juneau -Greens Creek -Hoonah Transmission Line (SEI-1) The 1992 Alaska Energy Authority study of the transmission interconnection to KMC-GC? addressed the line route and prepared a conceptual design and capital cost estimate for the proposed transmission line to KMC-GC.The proposed line was based on overbuilding the existing distribution facilities along the north end of Douglas Island with a new 69-kV line for a distance of approximately 8 miles.At the end of the existing distribution line,a new 7.8 mile- long,69-kV line (with strength and space provisions for eventual distribution underbuild)was proposed to be constructed to Outer Point.At Outer Point,the proposed line was proposed to cross under Stevens Passage for 5.9 miles to Young Bay on Admiralty Island and then continue overhead to Hawk Inlet and on to the KMC-GC mine,a total overhead distance of 14 miles. Since the 1992 study,AEL&P has completed construction of a 69-kV overhead line to Outer Point and has initiated various studies and preliminary design concepts and layouts for extending the line to Hoonah and KMC-GC. °Greens Creek Transmission Line Planning Capital Cost Estimate,prepared for the Alaska Energy Authority by R. W.Beck and Associates,Inc.,December 1992. Southeast Alaska Intertie Study 2-1 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics The existing AEL&P transmission line on Douglas Island is constructed for and operated at 69- kV.AEL&P has initially specified that SEI-1 will be operated at 69-kV.Submarine cables will be sized to accommodate reasonably expected power flow requirements.The AEL&P plan is based on transmitting a maximum of 60 MW between Juneau and Hawk Inlet and 30 MW between Hawk Inlet and Hoonah.This variance is due to the much higher power demand at KMC-GC,approximately 10 MW,compared to the load at Hoonah of around 2 MW.It is important to note that the section of SEI-1 between Hawk Inlet and the KMC-GC mine site is expected to be removed upon closure of the mine,a date that is uncertain but potentially somewhere between 10 and 15 years in the future. Interconnection facilities will include submarine cable termination yards on Douglas Island,on Admiralty Island at Young Bay and Hawk Inlet,and at Spasski Bay on Chicagof Island approximately 3 miles east of Hoonah.The submarine cable termination yards will serve as the interface between overhead sections of the line and submarine cables.They will generally be located near the shoreline but behind existing treelines to limit visibility from the water.Other facilities include a new substation in Hoonah and a substation at the Greens Creek mine,both of which will connect to the existing electric systems in these locations. Conceptual Line Route The AEL&P proposed route for SEI-1 is shown in Figure 2-1 and described below: Segment 1:Juneau to Hawk Inlet (26.5 miles total,9.5 miles submarine cable,11 miles existing and 6 miles new overhead) The Juneau to Hawk Inlet segment starts at the West Juneau Substation on Douglas Island.An existing 69-kV overhead line interconnects the substation with Outer Point a distance of approximately 11 miles'®,At Outer Point a submarine cable termination yard is planned near the mouth of Peterson Creek.The termination yard will contain 69-kV disconnect switches,breakers,and reactors and risers that connect the overhead system to the submarine cable.The yard will be placed approximately 150 feet inland from the mean high water line. The cable will be buried as it leaves Photo 1 -Young Bay boat dock to north (right)of proposed cable the yard and for approximately 180 landing site. ©It is expected that AEL&P will retain ownership of the existing transmission line between the West Juneau substation and the Outer Point submarine cable termination yard. Southeast Alaska Intertie Study 2-2 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics feet offshore from the mean high water line. The submarine cable will extend 9.5 miles across Stephens Passage to a termination facility in Young Bay on Admiralty Island near,but south of the existing Greens Creek ferry dock.The termination yard at Young Bay will include a cable riser,a ground switch,lightning arrestors, disconnects,a station service transformer and connection to the overhead transmission line on Admiralty Island.The overhead line will essentially follow the existing road across Admiralty Island to a point on Hawk Inlet near the existing ore loading facility,a distance of about 6 miles. AEL&P plans to construct the overhead line using wood,single-pole structures and 336 kcmil ACSR conductor.A submarine cable termination yard on Hawk Inlet will provide the interface between the overhead line and the submarine cable heading to Hoonah.The Hawk Inlet yard. will include breakers,disconnects,lightning arrestors and a 3-phase reactor bank. The Greens Creek tap will be made at this point.In addition,AELP plans to install a 69/4.16-kV transformer at the Hawk Inlet yard to provide electric service to the Hawk Inlet loading dock facility owned and operated by KMC-GC.Except for the relatively minor electric load at the Hawk Inlet loading dock,there are no other electric loads to be served. The overhead portion of the line will be located entirely within the Tongass National Forest to the north of the Admiralty Island National Monument boundary. Segment 2:Greens Creek Tap (9 miles new overhead) The Greens Creek Tap will originate at the Hawk Inlet submarine cable termination yard on Admiralty Island as a tap on the 69-kV overhead line from Juneau.The line will be used to transmit power directly to the KMC-GC mine and will traverse approximately 9 miles generally adjacent to the existing KMC-GC road to a location near the KMC-GC powerhouse.A substation will be needed at this point to provide power for delivery to the mine's local distribution system at 4.16-kV.In addition to a 69/4.16-kV transformer, the substation will also include breakers and voltage regulators to protect the AEL&P and Greens Creek electric systems and maintain adequate delivery voltage at the mine.The mine's generating units will be interconnected with the AEL&P system but will not generally be used at the same time as power is being delivered from Juneau. Photo 2 -Aerial view of road to Greens Creek mine. Southeast Alaska Intertie Study 2-3 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics This line segment is primarily located within the Admiralty Island National Monument.The line is expected to be dismantled and removed at the time the Greens Creek mine is permanently closed down. Segment 3:Hawk Inlet to Hoonah (28.5 miles total,25 miles submarine cable,3.5 miles overhead) The Hawk Inlet to Hoonah segment will originate at the Hawk Inlet submarine cable termination yard on Admiralty Island as a continuation of the 69-kV line from Juneau.The cable termination yard will be located on the eastern shore approximately 2.75 miles up Hawk Inlet.The cable termination yard will be located just inland from the shoreline and the submarine cable will be buried as it leaves the yard and proceeds offshore. The total length of the submarine cable is estimated to be approximately 25 miles. The route identified by AEL&P is similar to the route indicated in the 1987 Southeast Alaska Intertie Study.It should also be noted that preliminary discussions with US Forest Service (USFS) representatives indicated a suggestion on the part of the USFS to bring the submarine cable ashore near Point Augusta on Chicagof Island andPhoto3-Hawk Inlet,looking northeast from near the inlet entrance to the KMC-GC ..horeterminalfacility.Note the large tide flat to the right.continue the line to Hoona overland. In the preliminary route identified by AEL&P,the cable will be brought ashore at Spasski Bay and connected to a submarine cable termination yard similar to the cable termination yard in Young Bay on Admiralty Island.The Spasski Bay cable termination yard will include 69-kV disconnect switches,a 3-phase reactor bank,lightning arrestors and risers to connect the cable to a 69-kV overhead line that proceeds to Hoonah.The overhead portion of the Hawk Inlet to Hoonah segment will connect the Spasski Bay submarine cable termination yard to a new substation to be constructed in Hoonah.The overhead line will be approximately 3.5 miles in length and will use single-pole structures and 336 kemil ACSR conductor. The Hoonah substation is expected to be constructed near the Hoonah powerhouse and will serve as the termination of SEI-1.The substation will include breakers,a disconnect switch and a 69/4.16-kV transformer to interconnect with the local distribution system in Hoonah.The low voltage side of the substation will connect to the 4.16-kV bus at the Hoonah powerhouse. Southeast Alaska Intertie Study 2-4 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics The overhead portion of the line west of Spasski Bay will be located on private lands and will extend cross-country from Spasski Bay for approximately 0.75 miles at which point the line will follow an existing road for 2.75 miles to the Hoonah substation.The last 1.75 miles before the substation will carry the existing distribution line as underbuild. Photo 4 -USFS road heading east from just outside of Hoonah. Overhead Transmission Line Design Concepts Structure Type It is expected that AEL&P's standard single wood pole design will be used for the overhead portion of SEI-1.Figure 2-2 depicts the general framing of this structure type.The line will generally be placed alongside existing roads and spans (the distance between poles)will be relatively short.This configuration will provide future maintenance advantages due to ease of access and smaller structures. Physical Loading Typical physical loading criteria and associated overload capacity factors used for overhead transmission line designs in Southeast Alaska at lower elevations consist of combinations similar to the following criteria.Load cases 1 and 2 are required by the National Electrical Safety Code (NESC)for design of overhead utility lines.Load cases 3,4 and 5 are based on local utility experience.Although these load cases sound quite severe they do not appear to significantly change the design outcome and do not have a significant cost penalty.For structure strength,the Intertie Study has considered load cases 3,4 and 5 in addition to the NESC required load cases for its feasibility assessment. 1.NESC Heavy -Method A. NESC Heavy loading consists of a 4 pounds per square foot (PSF)wind (40 MPH) applied to the structure and supported facilities with the conductors and cables coated by %inch radial ice which is assumed to weigh 57 pounds per cubic foot.For this case, Southeast Alaska Intertie Study 2-5 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics conductor tensions are to be consistent with an ambient temperature of 0°Fahrenheit. Additionally,a constant of 0.3 pounds is to be added to the resultant of the wind and weight related loads (for the purpose of developing conductor design tensions only). Overload Factors which are applicable to the NESC Heavy Method A load case applied to wood structures are 2.5 for wind related loads,1.5 for weight related loads and 1.65 for wire tension related loads.When using these Overload Factors for wood,a strength reduction factor of 0.65 is to be used.Guys shall use a strength reduction factor of 0.9. The applicable Shape Factor is 1.0 for cylindrically shaped components,1.6 for components with flat sides. 2.NESC Extreme Wind For structures which exceed,or support facilities which exceed a height of 60 feet above ground or water level,an extreme wind condition is to be considered. NESC Extreme Wind loading for the Juneau/Hoonah region is generally considered to be 100 MPH nominal design 3-second gust (NESC Figure 250-2b).In accordance with the NESC,conductor tensions are to be consistent with an ambient temperature of 60°F.In Southeast Alaska the temperature criteria has typically been based on 40°F.Overload Factors that are applicable to the NESC Extreme Wind load case are 1.0 for wind,weight and tension related loads.For wood structures evaluated using these Overload Factors,a strength reduction factor of 0.75 is used.Guys are to utilize a strength reduction factor of 0.9.The applicable Shape Factor is 1.0 for cylindrically shaped components and 1.6 for components with flat sides. 3.Extreme Ice The NESC Extreme Ice case is based on 1.5 inches radial ice (57 pounds per cubic foot) at 30°F with no wind.This load case would be applied with a 1.0 Overload Capacity factor for wood structures for wind,weight and tension related loads while usinga strength reduction factor of 0.75 for wood and 0.9 for guys. 4.Extreme Combination ice and Wind This load case is based on 1 inch radial ice (57 pounds per cubic foot)at 0°F in combination with a 4 PSF (40 mph)wind.This load case would be applied with a 1.0 Overload Capacity factor for wood structures for wind,weight and tension related loads while using a strength reduction factor for wood of 0.9 and 1.0 for guys. 5.Combination Snow and Wind This load case assumes 2 inches radial snow (37 pounds per foot)at 30°F in combination with a 2.3 PSF (30 mph)wind.This load case would be applied with a 1.0 Overload Capacity factor for wood structures for wind,weight and tension related loads while using a strength reduction factor for wood of 0.75 and 0.9 for guys. Southeast Alaska Intertie Study 2-46 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics Foundations and Structure Support The soils in Southeast Alaska vary from muskeg to rock and everything in between.However, for most of SEI-1,the line route will follow existing roads and it is anticipated that most of the poles will be located within the roadway fill material.In areas where the poles are in good soils but outside the roadway fill material,many pole foundations will have to be over-embedded due to a layer (3'to 5')of organic material.The feasibility design for this study is based on standard embedment depths plus an additional 4 ft.(10%of pole length +6 ft.)for tangent structures in normal soils.Structures located in rock and guyed structures are assumed to be embedded at standard embedment (10%+2 ft.).Pole structures located in muskeg can be stabilized using a wood raft at ground line with side guys or by construction of a foundation system using either driven H-piles or use of a culvert embedded at a depth required for lateral stability with placement of the pole inside the culvert. Based on discussions with local utility personnel this study has assumed the following soil conditions for the overhead segments of SEI-1: Young Bay to Hawk Inlet (6 miles) e¢80%in good soils or roadway fill e 10%rock e 10%muskeg Greens Creek Tap (9 miles) e 50%in good soils or roadway fill e 50%rock Spasski Bay to Hoonah (6.5 miles) e 70%in good soils or roadway fill e 10%in rock e 20%in muskeg A Linear Reference Diagram showing the type of soils,land ownership,road access and clearing requirements for SEI-1 is provided in Figure 2-3. Electrical Clearances to Grade Minimum clearances above grade for conductors are required by the NESC based on line voltage and land use under the line.The NESC required clearance must be maintained under either of two conditions:1)the conductor sagging at its maximum operating temperature (120°F minimum),and 2)under the NESC Heavy loading district requirement of %inch radial ice at 30° F (without the 4 psf wind).The vertical clearance for 69-kV lines above roads and lands that can be traversed by trucks is 20.2 feet. Engineering judgment should be used to determine if clearances in addition to the minimum required by NESC should be applied.This would apply to any specific area that may have access Southeast Alaska Intertie Study 2-7 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics to unusually large vehicles or special conditions such as extreme snow depths.In addition to the basic clearance requirement,it is generally prudent to add a plotting margin (2 to 4 feet)to compensate for irregular terrain not identified in the survey,side hills,plotting errors, construction variables and other contingencies.For the purpose of the Intertie Study feasibility layout,the basic ground clearance has been assumed to be 25 feet minimum with the conductor temperature at 120°F final sag. Conductor Selection The conductor suggested by earlier studies and used for this feasibility review is a 336.4 kemil 30/7 ACSR/AW (Oriole/AW).Sag/tension charts were developed for this conductor based on the following tension limit criteria: e 15%Ultimate Rated Strength at -5°F initial ¢20%Ultimate Rated Strength at -5°F Final e 50%Ultimate Rated Strength at NESC Heavy Loading Initial e 75%Ultimate Rated Strength at Extreme ice (1.5 inch)Loading Initial e 75%Ultimate Rated Strength at Extreme snow (2 inch)Loading Initial Right-of-Way Clearance Based on discussions with local utility personnel this study has assumed the following: Young Bay to Hawk Inlet (6 miles) Trees are not a major concern along this section of line.Trees have been removed immediately adjacent to the roadway and the remaining trees are not extremely tall.It is anticipated that a clearing width of approximately 50 feet will be required plus the removal of danger trees.It is anticipated that danger trees will need to be determined on a one by one basis based on risk assessment. Greens Creek Tap (9 miles) The steep terrain and the presence of trees along this segment make clearing an important consideration.Historically this segment has experienced considerable blow-down of trees.An overhead line can not withstand the impact of falling trees without considerable damage.It is recommended that trees that can strike the line if they fall be removed.For the feasibility review it has been assumed that the clearing width will be 75 feet along this section of line. Spasski Bay to Hoonah (3.5 miles) The first 0.75 miles from Spasski Bay towards Hoonah will extend through timber on private lands.It is recommended that trees that can strike the line if they fall be removed.This total width is estimated to be an average of 150 feet.At the point where the line starts to parallel the road the clearing width can be reduced to about 50 feet as long as selected danger trees farther from the line are removed also. Southeast Alaska Intertie Study 2-8 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics Raptor (Eagle)Protection Southeast Alaska is home to many eagles and therefore the line design must consider raptor (eagle)protection.The electrical industry standard for raptor protection is currently based on "Suggested Practices for Raptor Protection on Power Lines:The State of the Art in 1996”.This publication suggests that 60 inches between conductor phases as well as 60 inches to all grounded parts will provide a safe design for large raptors such as eagles.The conductor phase spacing of most 69-kV lines exceeds this recommended dimension. The distance from conductor to ground needs to be considered,however.A potential problem could exist in that the typical 69-kV insulator is only 36”to 42”in length and therefore,if the base of the insulator is grounded,a conductor to ground path would exist that does not meet this standard.The design considered in this report assumes that an overhead ground wire will not be required and line hardware will not be grounded or bonded.Although it should be noted that the base of the insulator,while not grounded,is electrically at a different potential and simultaneous contact with the phase conductor and the insulator base would likely be lethal. This having been said,it can be argued that the 69-kV single pole design absent the ground wire meets the spirit of the raptor protection guidelines.It is also important to note that this design has been used by AEL&P at other locations without problems related to raptor fatalities. Historical performance is considered to have more significance,in this case,than the published guidelines. Submarine Cables Two separate submarine cable crossings will be needed for SEI-1.The first,between Douglas Island and Young Bay on Admiralty Island will be about 9.5 miles long and is a relatively straight-forward crossing.The second,between Hawk Inlet on Admiralty Island and Spasski Bay on Chicagof Island is much longer,approximately 25 miles,and involves much more significant depths. AEL&P's preliminary design concept for the Douglas Island -Young Bay crossing provides for the use of a single-armored,3-phase,dielectric submarine cable with bundled fiber optic communication lines.The bundled cable will be about 6 inches in diameter.Figure 2-3 provides a cross-section layout of a cable similar to that presently proposed for the crossing.The submarine cable will extend 9.5 miles across Stephens Passage to a termination facility in Young Bay on Admiralty Island south of the existing KMC-GC dock.From National Oceanic and Atmospheric Administration (NOAA)charts,it appears that the water depth in the vicinity of the crossing increases uniformly from 0 feet at the shoreline to 300 feet near the center of Stephens Passage. A "Limited Topographic Survey”by R&M Engineering dated January 2003 was conducted along a proposed route for the submarine crossing of Stephens Passage.This survey shows a gradual increase in depth over the first 3000 feet to a depth between 200 and 250 feet.The depth remains between 200 and 250 feet until station 335+00 at which point the bottom begins a gradual decrease in depth until the shoreline is reached at station 487+00.The nautical charts Southeast Alaska Intertie Study 2-9 Phase 1 -Final Report Transmission Line Routes and Technical!Characteristics show a bottom that consists of mud and shells with occasional large rocks near Outer Point.The remainder of the route appears to consist of mud,sand and pebbles all the way to Young Bay. No evidence of steep terrain or large rocks,that might cause suspensions in the submarine cables,has been detected.However,a thorough submarine topographical survey and subsurface profile needs to be accomplished to determine the best route for the submarine cable.This will identify areas to be avoided such as shipwrecks,large rocks,rock outcroppings,etc.,that could cause suspensions and damage to the cable.This survey could be conducted utilizing a multi- beam sonar system such as the Reson Seabat 8101.If deleterious conditions are suspected, additional information should be obtained with a side-scan sonar system. Based on the information presently available,no obvious problems are anticipated with the cable installation between Douglas Island and Young Bay.The cable should be buried approximately 1 meter in depth at both shores,out to a depth of at least 10 feet below Mean Lower Low Water. Either direct burial or placement in a duct with a thermal backfill may be utilized.The cable proposed by AEL&P should be entirely adequate for this portion of the project. For the Hawk Inlet -Spasski Bay crossing,AEL&P has initially specified the use of both double armored and single-armored,3-phase dielectric submarine cable.Figure 2-4 provides a cross- section diagram of the double-armored cable.Double-armored cable will be used in areas where more cable strength is needed,such as in areas with significant depth or where danger from ship anchors exists.The total length of the submarine cable is estimated to be approximately 25 miles.The Hawk Inlet submarine cable terminal yard is anticipated to be located immediately south of the KMC-GC docks.This puts the cable entry point midway between two communications cables.The power cable should be installed in a position to avoid crossing either of these existing cables. Due to the ship traffic in Hawk Inlet,it is recommended that consideration be given to burying the cable all the way down Hawk Inlet to a point 600 to 800 feet southwest of Hawk Point. Based on a review of Hawk Inlet nautical charts,a machine such as the Nexan's CapJet should be adequate for trenching and burying of the cable. From Hawk Inlet the cable route proceeds in a westerly direction North of Whitestone Harbor and Pullizzi Point,then into Spasski Bay.In the preliminary route identified by AEL&P,the Hawk Inlet -Spasski Bay submarine cable crosses Chatham Strait and continues reasonably close to the north shore of Chicagof Island to a point in Spasski Bay.At this point,the cable will be brought ashore and connected to a submarine cable termination yard similar to the cable termination yard in Young Bay on Admiralty Island. The route identified by AEL&P is similar to the route indicated in the 1987 Southeast AlaskaIntertieStudy'!for the Hawk Inlet to Hoonah interconnection.It should also be noted that preliminary discussions with USFS representatives indicated a suggestion on the part of the '!The Hawk Inlet to Hoonah connection was labeled Segment 14.1 in the referenced report.Alaska Power Authority,Southeast Alaska Transmission Intertie Study,Harza Engineering Company,October 1987.Note that a survey of this potential crossing location was not conducted as part of the 1987 Harza Study. Southeast Alaska Intertie Study 2-10 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics USFS to bring the submarine cable ashore near Point Augusta on Chicagof Island and continue the line to Hoonah overland. Based on the information presently available,no obvious problems are anticipated with the cable installation.The cable should be buried approximately 1 meter in depth at both shores,out to a depth of 10 feet below Mean Lower Low Water.Either direct burial or placement in a duct with a thermal backfill may be utilized. Water depths of the Hawk Inlet -Spasski Bay crossing approach 2,100 feet (350 fathoms)and double armored cable should be considered for the deeper portions of the crossing.However, this decision normally rests with the cable manufacturer and installer,since knowledge regarding the tensioning equipment and the cable design itself (especially its weight in seawater)are required.The cable specified by AEL&P should be entirely adequate for this portion of the project. Switchyards and Substations Submarine cable termination yards will be needed on Douglas Island,on Admiralty Island at Young Bay and Hawk Inlet,and at Spasski Bay on Chicagof Island approximately 3 miles east of Hoonah.The submarine cable termination yards are expected to require areas of approximately 100 feet by 100 feet and will serve as the interface between overhead sections of the line and submarine cables.They will generally be located near the shoreline but behind existing treelines to limit visibility from the water.The termination yards will contain 69-kV disconnect switches,lightning arrestors and risers that connect the overhead system to the submarine cable.The disconnect switches allow for the electrical isolation of the cable for maintenance and testing.Other equipment,such as breakers and reactors,may also be needed to assure proper operation and protection of the interconnected electric system. Other facilities include a new substation in Hoonah and a substation at the KMC-GC mine,both of which will connect to the existing electric systems in these locations.THREA's and KMC- GC's generating units will be interconnected with the AEL&P system but will not generally be used at the same time that power is being delivered from Juneau.The substation at the KMC-GC mine will include a 69/4.16-kV transformer to connect to the mine's primary distribution system. The cable termination yard at Hawk Inlet will be the location of the tap to the mine.In addition, AEL&P plans to install a 69/4.16-kV transformer at the Hawk Inlet cable termination yard to provide electric service to the Hawk Inlet loading dock facility owned and operated by KMC- GC. The Hoonah substation is expected to be constructed near the Hoonah powerhouse and will serve as the termination of SEI-1.The substation is expected to include breakers,a disconnect switch and a 69/4.16-kV transformer to interconnect with the THREA distribution system in Hoonah. The low voltage side of the substation will connect to the 4.16-kV bus at the Hoonah powerhouse. Southeast Alaska Intertie Study 2-11 Phase 1 Final Report Transmission Line Routes and Technical Characteristics Power Flow Analysis The long submarine cable and transmission line to Hoonah with a relatively small load at the end of the line could require the installation of certain devices and equipment to assure proper system operation.As part of this Intertie Study,a power flow analysis was conducted to determine if the high line charging associated with the submarine cables can cause high voltages at the end of the transmission system in Hoonah.The power flow analysis was also used to determine what would be needed to mitigate any over voltage conditions. The analysis concluded that two 5-MVAr reactors at Hawk Inlet and one at Hoonah will help regulate the loads at Hoonah and Greens Creek under normal operating conditions.Under a single contingency condition (i.e.an outage of the 25 mile submarine cable),the second reactor at Hawk Inlet,located on the Greens Creek side of the circuit breaker,will provide voltage regulation for the loads at the mine.The analysis,conducted by Commonwealth Associates, Inc.,is provided in Appendix A to this report. Kake Petersburg Transmission Line (SEI-2) The Kake -Petersburg transmission line,"Southeast Intertie Segment 2”or "SEI-2”will interconnect the community of Kake on Kupreanof Island to the interconnected electric systems of Petersburg and Wrangell.Petersburg and Wrangell are connected to and purchase most of their respective power supplies from the Lake Tyee hydroelectric project owned by the Four Dam Pool Power Agency (FDPPA).SEI-2 will be used to transmit surplus hydroelectric power purchased from the FDPPA to THREA's electric system in Kake,thereby offsetting diesel generation in Kake. At the present time,the City of Ketchikan is constructing a transmission line to interconnect its electric system with the Tyee-Wrangell-Petersburg (TWP)electric system.This new interconnection will provide Ketchikan with access to the surplus generation capability of the Lake Tyee hydroelectric project.Although Kake's power requirements from the Lake Tyee project will be subordinate to the requirements of Petersburg,Wrangell and Ketchikan,current forecasts indicate that sufficient energy should be available to supply Kake's load for several years in to the future. SEI-2 transmission line has been studied in reasonable detail in the past,most recently in 1996 with a feasibility study prepared by R.W.Beck for the State of Alaska,Department of Community Affairs,Division of Energy (the "1996 Feasibility Study”).The 1996 Feasibility Study was a follow-on to the 1987 Southeast Alaska Transmission Intertie Study prepared for the Alaska Power Authority by the Harza Engineering Company (the "1987 Intertie Study”). Both the 1987 Intertie Study and the 1996 Feasibility Study identified two primary routes for the line.One alternative route goes to the north of the Petersburg Creek -Duncan Salt Chuck Wilderness Area,while the other route goes to the south of the Wilderness Area.In both of the previous studies,the southern route alternative was preferred because of its shorter length,lower Southeast Alaska Intertie Study 2-12 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics estimated construction cost and generally lesser environmental impact.It is important to note, however,that detailed environmental studies will be needed to thoroughly identify the impacts of the alternative routes. A number of US Forest Service roads have been built in the area where SEI-2 would most likely be located.These roads will facilitate construction and maintenance of the line by providing ground access to the area.In more remote regions,construction crews and materials are usually transported by helicopter which contributes to higher overall construction costs. The 1996 Feasibility Study was intended to define the design and routing criteria,estimate costs, provide a brief environmental review and assess the economic and financial feasibility of an Intertie between Petersburg and Kake.It was based on a 3-phase AC overhead system with submarine crossings of major water bodies.The 1996 Feasibility Study included a review and summary of the earlier reports and included consideration of the Kake Coastal Management Program,Public Hearing Draft dated April 1984. The 1996 Feasibility Study did not include any field work or visits to the project area and relied solely on work from previous studies tempered with consultation and input from local utility,and various State,federal and local governmental agency personnel.Earlier reports which includedsitereviewswerethe1984Ebasco'*and 1987 Intertie Study reports.The 1984 Ebasco study included fairly extensive field work and analysis of construction conditions for a Petersburg to Kake Intertie and included a number of drawings highlighting features along suggested routes. The 1984 Ebasco report provides a reasonable description of the terrain and soils along the preferred Southern route., Changes have occurred since the 1984 Ebasco report relative to the number of logging roads and the amount of logging and clearing that will be required along the route.The 1984 Ebasco report suggested a floating camp in the Duncan Canal area with material hauling using helicopters in the roadless section of the route,a distance at the time of approximately 20.5 miles.The roadless section of the route has now been reduced to approximately 13 miles. The 1987 Intertie Study report included bathymetric surveys of the proposed submarine cable crossings and included a compilation of public and agency comments,but the comments addressed the entire Southeast Alaska Intertie system and did not necessarily focus on SEI-2. All of the earlier studies concluded that the southern route was preferred,absent detailed environmental analysis.The 1996 Feasibility Study concluded:"...the southern route is preferred based on public comment,agency comment,previous study findings,and engineering and environmental judgment.”All of the earlier reports emphasized the need to conduct environmental studies prior to selection of a specific route. na §'yee-Kake Intertie Project,Detailed Feasibility Analysis,Volumes I and II,prepared for the Alaska Power Authority by Ebasco,Inc.,1984. Southeast Alaska Intertie Study 2-13 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics The present Intertie Study has focused primarily on the Southern Route Alternative based on the conclusions and recommendations outlined in the 1996 Feasibility Study regarding the preferred routing. Conceptual Line Route The earliest study of SEI-2 conducted in 1981 reviewed four route alternatives which were narrowed to two,the Northern and the Southern.The other two routes,located between the Northern and Southern routes,were abandoned because they passed through the Petersburg Creek Duncan Salt Chuck Wilderness Area and other environmentally sensitive zones.The same reasons for not considering these other routes are still valid today. The 1996 Feasibility Study reviewed the Northern Route (59.9 miles total;59.0 Overhead plus one submarine crossing of 0.9 miles in length)and a Southern Route (46.7 miles total;44.7 miles overhead plus two submarine crossings,0.9 and 1.1 miles in length,respectively). This Intertie Study generally follows the preferred routing outlined in the 1996 Feasibility Study for the Southern Route Alternative with the following routing modifications: e The alignment has been shifted to bring the line closer to existing logging roads.This has introduced more angle structures and has lengthened the line distance,however it will make access easier both during construction and for future maintenance.It should also lessen right-of-way clearing costs. e The tap point near Petersburg is not as close to the proposed Wrangell Narrows submarine cable termination point as indicated in the earlier report and routing of the line is now assumed to follow the Highway for a short distance resulting in an additional 0.5 miles of line length between the tap and the Wrangell Narrows cable termination yard. The routes shown in the 1996 Feasibility Study and in this report are general in nature.A specific alignment will be selected during the preliminary design effort after site field work is conducted to verify and take advantage of the existing road system,clear-cut areas,avoidance of muskeg/rock areas and to mitigate environmental impacts.A map showing the two primary route alternatives for SEI-1 is provided as Figure 2-4.- Route Description (SEI-2 Southern Route Alternative) The proposed route of the Southern Alternative begins at a tap of the 69-kV FDPPA transmission system connecting the Lake Tyee hydroelectric project to Wrangell and Petersburg.The tap point and the east terminal of the Wrangell Narrows submarine crossing is proposed to be in the vicinity of the former Alaska Experimental Fur Farm,about 5 miles south of Petersburg.The Forest Service operates a warehouse at this location.For estimating purposes it has been assumed that the new single wood-pole line will tap the existing Lake Tyee-Petersburg 69-kV line at a new Petersburg Tap 69-kV switchyard,extend east crossing Mitkof Highway and then parallel the highway to the east submarine terminal structure location near the Fur Farm.The overhead line distance between the tap point and the submarine cable termination point is about 1.0 mile based on following the highway. Southeast Alaska Intertie Study 2-14 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics The new Petersburg Tap Switchyard will include two 69-kV disconnect switches toward Lake Tyee and Petersburg,one 69-kV circuit breaker toward the new 69-kV line,and protection control,supervisory communications,and 69-kV metering equipment for power to be purchased from the FDPPA.A submarine cable termination structure,comprised of lightning arresters and a steel-pole riser for the overhead-to-underground transition,will be constructed near the shoreline but sufficiently inland to limit its visibility from the water and to stay above the tidal zone.The cable will be buried for some distance offshore. The submarine cable will extend approximately 0.6 mile across Wrangell Narrows to a proposed point just south of the Tonka log transfer facility on the west side of the Narrows.Another submarine cable termination structure consisting of lightning arresters and a steel-pole riser,will be located a short distance inland from the shoreline.The overhead line leaving the cable termination structure is proposed to use single-wood pole structures and will generally follow the route of Forest Service Road 6350 to Duncan Canal.A 1.1 mile submarine cable crossing of Duncan Canal is proposed between points located about 1.75 miles south of the mouth of Mitchell Slough on the east and about 2.5 miles south of Indian Point on the west side of Duncan Canal. Photo 5 -Looking west across Wrangell Narrows towards the log transfer facility. Submarine cable termination facilities consisting of steel-pole risers will be located on both sides of Duncan Canal.From the submarine cable termination structure on the west side of Duncan Canal,the single-wood pole overhead line will proceed in a northwesterly direction to the drainage basin just south of the Taylor Creek basin.At this point,the line will turn more to the west and generally follow the creek until it reaches Forest Service Road 45808 which could perhaps be extended easterly to support this project.The line is then expected to follow the general route of this road and Forest Service Roads 6328,6314 and 6040 to Kake. A 69/12.47-kV substation will be constructed in Kake to interconnect the new 69-kV line with the local distribution system.The new substation can be located at several locations.For purposes of this study the location has been proposed to be at the Kake power plant site.An alternate location would be about southwest of the Kake airport runway.This location eliminates the need to build the transmission line through Kake itself and could also serve as a Southeast Alaska Intertie Study 2-15 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics point of departure for an eventual submarine cable to Baranof Island and the Sitka electric system.The proposed location is approximately 1.60 miles longer and requires rebuilding the existing distribution along the route. The substation will include a 2500 kVA step-down transformer,a 12-kV recloser,three single- phase voltage regulators,relaying and supervisory communications equipment. The total length of SEI-2 is 51.6 miles of which 49.9 miles is overhead and 1.7 miles is submarine cable.A series of plot profile layouts showing the entire length of SEI-2 with estimated pole placement is provided in Appendix B. System Voltage The 1996 Feasibility Study considered two alternatives for the voltage of the Kake -Petersburg transmission line as follows:(1)a 34.5-kV system initially operated at 24.9-kV,and (2)a 69-kV system that would be upgradeable to 138-kV. 1996 Feasibility Study -24.9/34.5 kV Option The 1996 Feasibility Study concluded that a 24.9-kV transmission line would be the minimum voltage level that could reliably support the Kake forecasted load.A 24.9-kV system,however, would not provide for future flexibility for sudden increases in load growth and it was recommended that the line be constructed at 34.5 kV standards and initially operated at 24.9-kV. The incremental cost to construct an overhead line to 34.5-kV standards versus 24.9-kV standards,using the same basic design concept was estimated to be 2%.The 24.9/34.5-kV line was to have been connected to the 24.9-kV bus in the existing Petersburg substation.If in the future the line was converted to 34.5 kV it would only require transformation in Petersburg and modification of transformation in Kake. 1996 Feasibility Study -69/138 kV Option The 1996 Feasibility Study concluded that the Kake load could be served even under a high growth scenario with a 69-kV line and the only reason for making the line upgradeable to 138- kV would be if the line were to be needed as part of a larger,regional transmission system.The incremental cost to construct an overhead line to 138-kV standards versus 69-kV standards, using the same basic design was estimated at the time of the 1996 Feasibility Study to be 10%- 20%higher.The 69/138-kV option presented in the 1996 Feasibility Study included a new switching station near the Petersburg Tap point.The switching station included a circuit breaker with isolating switches,revenue metering equipment,underground power cable terminations and associated surge arresters.The connection to the Kake system was through a 1,000/1,500 KVA step-down transformer located in a new substation located near the power plant in Kake. Current Study -69 kV Option The current Intertie Study has focused on a 69-kV option although additional confirmation of this specification should be made as part of future study and design efforts.Reasons for the 69- kV specification at the present time are: Southeast Alaska Intertie Study 2-16 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics e The Lake Tyee -Petersburg transmission line is operated at 69-kV so a tap of this line would not require any transformation. e A 69-kV line is more than adequate to support the present and anticipated load in Kake and could also transmit a significant amount of power as a part of a more extensive regional transmission system. e A 69-kV line can be constructed using single-pole structures,saving considerable expense when compared to 138-kV H-frame structures specified in the 1996 Feasibility Study. e There is insufficient space on the existing Lake Tyee -Petersburg poles to attach another transmission line,as was considered for the 24.9/34.5-kV alternative in the 1996 Feasibility Study.The use of the existing poles,rather than install new structures,was one of the expected cost saving provisions of the lower voltage option. Overhead Transmission Line Design Concepts Conceptual Design In the 1996 Feasibility Study,the 24.9/34.5-kV option was proposed to use a single wood pole structure with horizontal line post insulators assumed (the report did not identify)to be applied at spans in the range of 350 to 400 ft.The conductor considered was 266.8 kcmil ACSR.The 69/138-kV option proposed to use a wood H-Frame structure as the basic tangent structure,with average span length estimated at approximately 800 feet,arid 336 kemil ACSR conductor. The conceptual design envisioned for the Intertie Study would use single wood pole,69-kV structures with a vertical post insulator combined with horizontal post insulators.This design will be able to take advantage of existing roads for construction and maintenance and has been used successfully used for other transmission applications elsewhere in Alaska.The average span length is estimated to be 350 to 400 feet.The only segments of SEJ-2 which are considered a candidate for H-frame long span construction are where no roads presently exist,the 12 mile segment west and the 1 mile segment east of Duncan canal.The conductor considered is 336.4 kemil 30/7 ACSR/AW "Oriole/AW”. Structure Type The 1996 Feasibility Study was based on using wood H-frame type structures for the 69/138 kV line.This H-Frame design concept was used successfully on the cross-country portion of the Ketchikan Swan Lake 115-kV line and has the advantage of allowing long span construction which can be used to advantage to avoid poor soil areas and for spanning large ravines. However,many 69-kV lines in Southeast Alaska have been constructed on single wood pole structures,particularly when the lines can follow existing roads. The Petersburg to Kake line route is not as rugged as Ketchikan's Swan Lake line and the opportunity exists to follow logging roads for much of its length (the roadless section is approximately 25%of the line length).Following existing roads will provide access advantages during construction and will minimize the need for clearing.A short span road-side power line Southeast Alaska Intertie Study 2-17 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics will also provide future maintenance advantages due to easy access and smaller structures.For the above reasons this study has selected a single wood pole design,reference Figure 2-2.. Physical Loading Typical physical loading criteria and associated overload capacity factors used for overhead transmission line designs in Southeast Alaska at lower elevations consist of combinations similar to the following criteria.Load cases 1 and 2 are required by the National Electrical Safety Code (NESC)for design of overhead utility lines.Load cases 3,4 and 5 are based on local utility experience.Although these load cases sound quite severe they do not appear to significantly change the design outcome and do not have a significant cost penalty.For structure strength,the Intertie Study has considered load cases 3,4 and 5 in addition to the NESC required load cases for its feasibility assessment.(A description of the load cases is provided for SEI-1,above.) Foundations and Structure Support The soils in Southeast Alaska vary from muskeg to rock and everything in between.Earlier field work has indicated that much of the Southern route of SEI-2 is glacial till and colluvial, acceptable for standard direct embedment foundations.The 1987 Intertie Study was based on cross-country construction and the report estimated the mix of soils at 75/15/10 percent for normal,rock and muskeg soils,respectively.However,even in the areas considered normal the top 3 feet to 5 feet of material is organic and has essentially no lateral strength capability. The feasibility design for this Intertie Study is based on standard embedment depths plus an additional 4 feet (10%of pole length +6 feet)for tangent structures in normal soils.Structures located in rock and guyed structures are assumed to be embedded at standard embedment depths (10%+2 feet).Pole structures located in muskeg can be stabilized using a wood raft at ground line with side guys or by construction of a foundation system using either driven H-piles or by using a culvert embedded at a depth required for lateral stability and the pole placed inside the culvert. It is anticipated that with short-span construction generally following the roads that SEI-2 will follow,the mix of soils will be about the same as suggested in the 1987 Intertie Study report, 75/15/10 percent for normal,rock and muskeg soils. Most sites will require imported granular backfill hauled to the site.Poles that are located off the road by more than 20 feet will require an access work pad created by extending the road fill to the site.Where the distance from the road makes this impractical,temporary lagging would be used to gain access to the site during construction.If the distance is extreme,helicopter access would be considered.In the roadless sections near Duncan Canal,it is assumed a staging area would be constructed and access to structure sites would be by helicopter. A Linear Reference Diagram showing the type of soils,land ownership,road access and clearing requirements for SEI-2 is provided in Figure 2-5. Electrical Clearances to Grade Southeast Alaska Intertie Study 2-18 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics Minimum clearances above grade for conductors are required by the NESC based on line voltage and land use under the line.The NESC required clearance must be maintained under either of two conditions:1)the conductor sagging at its maximum operating temperature (120°F minimum),and 2)under the NESC Heavy loading district requirement of 2 inch radial ice at 30° F (without the 4 psf wind).The vertical clearance for 69-kV lines above roads and lands that can be traversed by trucks is 20.2 feet. Engineering judgment should be used to determine if clearances in addition to the minimum required by NESC should be applied.This would apply to any specific area that may have access to unusually large vehicles or special conditions such as extreme snow depths.In addition to the basic clearance requirement,it is generally prudent to add a plotting margin (2 to 4 feet)to compensate for irregular terrain not identified in the survey,side hills,plotting errors, construction variables and other contingencies.For the purpose of the Intertie Study feasibility layout,the basic ground clearance has been assumed to be 25 feet minimum with the conductor temperature at 120°F final sag. Conductor Selection The conductor suggested by earlier studies and used for this feasibility review is a 336.4 kcmil 30/7 ACSR/AW (Oriole/AW).Sag/tension charts were developed for this conductor based on the following tension limit criteria: e 15%Ultimate Rated Strength at -5°F initial ¢20%Ultimate Rated Strength at -5°F Final e 50%Ultimate Rated Strength at NESC Heavy Loading Initial e 75%Ultimate Rated Strength at Extreme ice (1.5 inch)Loading Initial e 75%Ultimate Rated Strength at Extreme snow (2 inch)Loading Initial Right-of-Way Clearance Right-of-way width is often established based on conductor blowout.However,essentially the entire line length of SEI-2 is undeveloped and therefore blowout of the conductor is not a consideration.Clearing and maintaining of the right-of-way will be a major cost item during initial construction and for future maintenance.This issue requires a compromise between the initial cost of removing danger trees and the amount of maintenance that will be required on an annual basis and following extreme weather conditions. Reliability of the line will be of major concern to the local utilities.The line will be designed to withstand anticipated extreme weather conditions,however,it will not be designed to withstand the impact of falling trees.In the areas where tall trees exist,reliability of the line is directly related to the extent of clearing.From strictly a reliability standpoint any tree that could potentially strike the line when falling should be removed.Based on the fact that some line sections will be located in areas where there are 100'to 150'tall trees,the width of clearing would calculate to be upwards of 300 feet. Where the line is placed near roads the road itself will provide approximately 50'of cleared width on the roadside.Also,much of the area along the route of SEI-2 has been clear-cut in the Southeast Alaska Intertie Study 2-19 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics recent past.Areas that have been clear-cut,even as long as 35 years ago,have much shorter trees,often less that 40 feet in height. Based on an objective of minimizing future maintenance costs suggested clearing criteria for SEI-2 would be to: e Cut all trees within 50'from centerline.Low growing brush would not be cut. e Cut all brush in the immediate vicinity of structures. e Remove all trees that could strike the line if they fall. Raptor (Eagle)Protection Southeast Alaska is home to many eagles and therefore the line design must consider raptor (eagle)protection.The electrical industry standard for raptor protection is currently based on "Suggested Practices for Raptor Protection on Power Lines:The State of the Art in 1996”.This publication suggests that 60 inches between conductor phases as well as 60 inches to all grounded parts will provide a safe design for large raptors such as eagles.The conductor phase spacing of most 69-kV lines exceeds this recommended dimension. The distance from conductor to ground needs to be considered,however.A potential problem could exist in that the typical 69-kV insulator is only 36”to 42”in length and therefore,if the base of the insulator is grounded,a conductor to ground path would exist that does not meet this standard.The design considered in this report assumes that 'an overhead ground wire will not be required and line hardware will not be grounded or bonded.Although it should be noted that the base of the insulator,while not grounded,is electrically at a different potential and simultaneous contact with the phase conductor and the insulator base would likely be lethal. This having been said,it can be argued that the 69-kV single pole design absent the ground wire meets the spirit of the raptor protection guidelines.It is also important to note that this design has been used by AEL&P at other locations without problems related to raptor fatalities. Historical performance is considered to have more significance,in this case,than the published guidelines. Submarine Cables Two separate submarine cable crossings will be needed for SEI-2.The first,crosses Wrangell Narrows about five miles south of Petersburg and is slightly less than one mile in length.Tide movements are indicated to be very limited at this location and the waters are generally calm. The second crossing is about 1.25 miles in length and crosses Duncan Canal between points about 1.75 miles south of the mouth of Mitchell Slough on the east and about 2.5 miles south of Indian Point on the west side of Duncan Canal. From NOAA charts the water depth at the Wrangell Narrows crossing appears to increase uniformly from 0 feet at the shoreline to 110 feet near the center of Wrangell Narrows.The nautical charts show a bottom that consists of mud and rocks.No evidence of steep terrain or large rocks,that might cause suspensions in the submarine cables,has been detected.However, a thorough submarine topographical survey and subsurface profile needs to be accomplished to Southeast Alaska Intertie Study 2-20 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics determine the best route for the submarine cable.This will identify areas to be avoided such as shipwrecks,large rocks,rock outcroppings,etc.,that could cause suspensions and damage to the cable.This survey may be conducted utilizing a multi-beam sonar system such as the Reson Seabat 8101.If deleterious conditions are suspected,additional information should be obtained with a side-scan sonar system. Based on the information presently available,no obvious problems are anticipated with the cable 'installation at Wrangell Narrows.The cable should be buried approximately 1 meter in depth at both shores,out to a depth of 10 feet below Mean Lower Low Water (MLLW).Either direct burial or placement in a duct with a thermal!backfill may be utilized.Due to the large amount of boat traffic through Wrangell Narrows,burial for the entire length is recommended. The water depth at the location of the Duncan Canal crossing is approximately 100 feet at maximum.No particular problems are anticipated with this crossing except that the timing of placing the cable should be coordinated so as not to interfere with the crabbing season in the Canal. Both of these submarine crossings were surveyed as part of the 1987 Intertie Study'*.Findings related to these surveys are: "The crossing on Plate 5 [Wrangell Narrows]is a bowl-shaped depression as deep as 110 feet.Most of the alignment is soft bottomed except the eastern approach to Mitkof Island.Slopes on the east approach vary between 10:1 (6°)and 2:1 (27°)whereas those in the west approaching the Lindenberg Peninsula of Kupreanof Island are more gentle, varying between 14:1 (4°)and 3:1 (18°).There do not appear to be any obstacles to construction at this crossing.Wrangell Narrows is a busy thoroughfare for ship traffic, both commercial and recreational.Tanner crab fishing occurs from mid-January to mid- February and salmon trolling lasts from May through the first week in June.” "Crossing 6.5 [Duncan Canal],Plate 6,is bowl-shaped in cross section with a fairly gentle west approach to Kupreanof Island,11:1 (5°),and a steeper approach to the Lindenberg Peninsula,6:1 (9°).Echograms indicate the crossing is probably floored by soft sediments and its deepest point is approximately 100 feet.The very near shore parts of the approach sounded with lead line may be hard bottom.There are no submarine cables in Duncan Canal.Construction in Duncan Canal may be delayed if emplacement is planned during the commercial crab fishing season.Dungeness crab fishing season is split with a summer season from May through September,and a winter season from October through January.” Cables to be used for the SEI-2 submarine crossings would be similar to the crossing between Douglas Island and Young Bay as described for SEI]-1,above.The cable would be a single- armored,3-phase,dielectric submarine cable with potentially bundled fiber optic communication '3 Crossings 6.1 and 6.5,Appendix A,Transmission Line Submarine Crossings -Oceanography/Meteorology, Alaska Power Authority,Southeast Alaska Transmission Intertie Study,Harza Engineering Company,October 1987.Note that the eastern landing of the Wrangell Narrows crossing as surveyed for the 1987 study appears to be slightly north of the presently defined location. Southeast Alaska Intertie Study 2-21 Phase 1 -Final Report Transmission Line Routes and Technical Characteristics lines.The bundled cable will be about 6 inches in diameter,however,the exact cable specification will not be known until it is known whether or not further interconnections will be made to SEI-2 to load centers beyond Kake.Additional cable specification will occur during the design of SEI]-2.It is expected that both the Wrangell Narrows and the Duncan Canal crossings would be placed at essentially the same time with the same cable laying equipment. Switchyards and Substations Submarine cable termination yards will be needed on both ends of the Wrangell Narrows and the Duncan Canal crossings.The submarine cable termination yards are expected to require relatively small areas that will serve as the interface between overhead sections of the line and submarine cables.They will generally be located near the shoreline but behind existing treelines to limit visibility from the water.The termination yards will contain lightning arrestors and risers that connect the overhead system to the submarine cable.Disconnect switches would also be installed to allow for the electrical isolation of the cable for maintenance and testing.A switchyard will also be needed at the tap point of the Lake Tyee -Petersburg transmission line. This switchyard will include circuit breakers,disconnect switches,other protective and control equipment and would most likely be the location of revenue metering for the power to be delivered to THREA's Kake system. Other facilities include a new substation which will connect to the existing electric system in Kake.THREA's generating units will be interconnected with the TWP system but will not generally be used at the same time that power is being delivered from Lake Tyee.The Kake substation is expected to be constructed near the Kake powerhouse and will serve as the termination of SEI-2.The substation is expected to include breakers,a disconnect switch and a 69/12.47-kV transformer to interconnect with the THREA distribution system in Kake.The low voltage side of the substation will connect to the 12.47-kV bus at the Hoonah powerhouse. Southeast Alaska Intertie Study 2-22 Phase 1 -Final Report Section 3 Permitting Requirements and Environmental Issues Overview Introduction A review of permitting requirements and environmental issues with regard to the development and construction of SEI-1 and SEI-2 was conducted as part of the Intertie Study.This review produced a summary of environmental documents,studies,and permits needed to implement the Interties and developed a cost estimate and an estimated schedule related to the permitting activities.The information presented in this section was gathered from conversations with federal,state and local agencies and from various web sites. Table 3-1 and Table 3-2,at the end of this section,lists the individuals and agencies contacted as part of this review.Table 3-3 provides a tabularized summary of environmental documents, studies,and permits needed to implement the proposed project.A cost estimate and an estimated schedule that captures these activities is provided in Table 3-4 and Table 3-5 for SEI-1 and SEI- 2,respectively. Federal Agency Involvement US Forest Service Following is a description of the proposed project lands relative to the U.S.Forest Service (USFS)Tongass Forest Land and Resource Management Plan (LRMP)(USFS 1997 and revised map 1999).The required environmental documentation and permitting activities are based on the location and designated land use of the proposed alignment.Separate documents and permits would be required for each different project or segment. SEI-1:Juneau-Greens Creek-Hoonah The maximum length of corridor that would be within the USFS lands is approximately 14 miles or 27 percent of the entire corridor.The 6-mile section from Young Bay to the Greens Creek mine road and on to Hawk Inlet as well as the 8-mile section to the mine itself are located on Admiralty Island within the Tongass National Forest within an existing Transportation and Utility System (TUS)"window”.This "window”is an area potentially available for the location of a utility corridor as identified in the LRMP (USFS 1997).The USFS has identified these windows in areas where effects on other resources are recognized,resource protection can be provided,and the existing resource uses and activities will not conflict with the proposed project. The proposed location along an existing road is also consistent with the USFS directive to accommodate new transportation or utility proposals within existing corridors,to the maximum extent feasible. Southeast Alaska Intertie Study 3-1 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview This corridor "window”is within land designated for use as Semi-remote Recreation.That use designation is based on the following description: "Provide for recreation and tourism in natural-appearing settings where opportunities for solitude and self-reliance are moderate to high."(USFS LRMP Map;1997 Revision, modified April 1999) The Management Prescription associated with Semi-Remote Recreation (SM)requires that the "Partial Retention Visual Quality Objective (VQO Partial Retention)”be applied to developments,facilities,or structures.The standards and guidelines require that design activities shall be subordinate to the landscape characterof the area. The transmission line to the Greens Creek Mine will be in Non-Wilderness Monument Land, also within the corridor window.The standards and guidelines are similar to that of the Semi- Remote Recreations,however,there will need to be provisions to remove the line following closure of mining activities. Environmental Documentation Requirements The USFS will require some National Environmental Policy Act (NEPA)environmental documentation process.The project route within USFS land is within a designated road/utility corridor and will be built following the standards and conditions defined by the LRMP.At this time,it appears that an Environmental Assessment (EA)may be adequate documentation to make a determination of Finding of No Significant Impact (FONSI).However,because the component on Admiralty Island is necessary to provide service to Hoonah,the USFS will require the documentation be inclusive of the entire route.They will only have decision-making authority over the portion on USFS lands.The process would begin with a submittal of an application for a Special-Use Authorization. As with the Swan Lake-Lake Tyee transmission project currently under construction,the project proponent would fund the administration of the EA development and contract out technical analyses and document preparation.Completion of an EA is possible within one year and associated costs could be less than $250,000,excluding marine surveys of submarine cable trenching areas. There are two issues: 1.Does the line need to cross USFS land at all?Providing energy to Greens Creek Mine is one purpose but this will require documentation to justify the need.Cost could also be used to a certain extent.Cost comparison between the proposed route versus a submarine cable from Douglas Island to Hawk Inlet and/or Spasski Bay will likely be required. 2.Scenery impacts from placing overhead transmission lines within the viewshed.The USFS would expect an analysis of the use of a buried cable as an alternative to prevent any change of viewshed.The semi-remote wilderness land use does not preclude overhead lines that are built-to blend into the surrounding scenery. Southeast Alaska Intertie Study 3-2 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview Permitting and Fees Following is a list of permits,fees,and requirements that would be needed following conclusion of the NEPA process: Special Use Authorization -Application information and form can be found at the following web site:http://www.fs.fed.us/recreation/permits/.Prior to submittal of the form,a pre-application is required.During that meeting,USFS staff will discuss the proposed action,potential conflicts, application procedures,probable time frames,fees and bonding requirements,and what other agency coordination may be called for. Construction Permit -This is a 5-year permit with a posted bond in the amount necessary to return the disturbances should the project fail. Timber "disposal”costs -The value of the timber that would be removed would be assessed by the USFS.The removal of timber could be by the USFS or by a third party.The project proponent would be responsible for paying for the value of the timber. Easement Fee -This is a long-term (50 years or what ever is negotiated)lease of the easement. The amount of the one-time fee is 5 percent of the fair market value of the land.The alignment would need to be appraised to determine the fair market value to use in fee calculation. SEI-2:Petersburg-Kake Two alternatives are under consideration,the Northern Route (59.9 miles)and Southern Route - (46.7 miles).These routes are primarily within the Tongass National Forest and both have been identified as corridor "windows”available for roads and utilities.Land designations along these routes are primarily within Intensive Development and Moderate Development categories.The northern route also crosses an "Old-Growth Forest”area. Environmental Documentation Requirements Preliminary discussions with the USFS indicate that an environmental impact statement (EIS) would be required to evaluate the Petersburg to Kake utility corridor.Issues necessary to cover include a defensible Purpose and Need Statement,alternatives under evaluation including the No Action alternative,affected environment,environmental consequences,and secondary and cumulative impacts.The major issues are expected to be similar to those identified in the Swan Lake-Lake Tyee Intertie project such as overhead lines within migratory bird flyways, viewsheds,transmission line right-of-way clearing and maintenance,and construction road. The process would begin with a submittal of an application for a Special-Use Authorization.As with the Swan Lake-Lake Tyee project,the project proponent would fund the administration of the NEPA environmental documentation process and contract out technical analyses and document preparation. The length of time necessary for completion of the NEPA documentation and signing of a Record of Decision (ROD)will depend on the project alignment and proposed type of line Southeast Alaska Intertie Study 3-3 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview (overhead versus submarine)and proposed construction methods.Lessons learned from the Swan Lake-Lake Tyee Intertie project allow the filing for SEI-2 to incorporate appropriate mitigation in the original proposals,lessening the impacts and agency requirements.One of those issues was limiting the need for construction roads by using helicopters to place transmission poles.Additionally,preliminary agency comments regarding the Swan Lake-Lake Tyee project submitted in 1995 also identified issues of concern (e.g.,an overhead line across Duncan Canal)that have been incorporated into the current proposal.Using a trenched submarine cable at that location will address that concern. An optimistic estimate for completion of the NEPA process is 12 to 24 months.Costs associated with impact analyses and document preparation for this sized project can range between $700,000 to $1,000,000 depending on the technical analyses needed and amount of controversy. Permitting and Fees The same permits and fees would be required for SEI-2 as listed above for SEI-1. US Army Corps of Engineers (COE) US Army Corps of Engineers permits would be associated with two components of the project. These components are part of both the Juneau-Hoonah and Petersburg-Kake segments. Component 1 -Submarine Cable:COE has jurisdiction over areas between the high tide line and mean high water (Section 404 -coastal wetlands and tidal zone)and below mean high water within navigable waters (Section 10). Component 2-Freshwater Wetlands:COE has jurisdiction over areas between ordinary high water and the upland edge of wetland (Section 404 if not navigable,shared with Section 10 if navigable). While there is a nationwide permit for Utility Line Activity (NWP #12),our contact at COE,Mr. Leeds was uncertain whether or not this would apply to the Southeast Intertie projects (see Note 1 of NWP #12 attached).He will check in with this and let us know. Nevertheless,the permitting process through the COE will be relatively simple provided the required documentation and drawings are provided.Section 10 (all structures and work in navigable waters)and Section 404 (disposal of dredged or fill material in waters of the U.S. including wetlands)permits will be necessary.Mr.Leeds estimates that it would be a 2 to 4 month process.NEPA would not be required from the COE.See the following web site: www.poa.usace.army.mil/reg/default.htm. Permit applications would be routed to NMFS,USFWS,and EPA as well as appropriate State agencies (DNR,DFG,and DGC)for review.For this project,the COE would include notification of National Oceanic and Atmospheric Administration (NOAA)and National Ocean Service (NOS)for charting the utility line to protect navigation. Southeast Alaska Intertie Study 3-4 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview Costs associated with this permit application are related to preparation of the permit drawings. Most of these drawings would be a part of normal document preparations so additional costs would be minimal. Because construction activities might affect shorelines,rivers or streams through run-off,which may contain pollutants such as sediments,a Short Term Variance from Water Quality Standards (Section 401 Water Quality Certification)may be needed.The COE would process this request to ADEC as part of its Section 10 and Section 404 permit process. U.S.Fish and Wildlife Service (FWS)and National Marine Fisheries Service (NMFS) These agencies are responsible for protection of listed species,critical habitat,and essential fish habitat.They do not have permitting authority,however,federal actions and issued permits must comply with the Endangered Species Act and the Magnuson-Stevens Act Provisions for Essential Fish Habitat (EFH).Based on prior agency correspondence (1995)and recent conversations with NMFS and USFWS staff,there are two primary issues: ¢Potential impacts on bald eagles/raptors and migrating waterfowl from overhead transmission lines e Potential impacts on essential fish habitat if it exists along shorelines where submarine cables would be placed. NMFS review and concurrence of COE Section 10 and 404 permits would allow NMFS to request information about the shoreline affected.Simple marine habitat characterizations at each submarine cable trenching location would be adequate to provide NMFS with the information it needs to determine if EFH is affected. Eelgrass may occur in the shallow subtidal zone at any of the submarine cable locations. Eelgrass is a known important habitat for many fish,including juvenile salmonids,and crab. NMFS indicated that because the cables would be buried,long-term eelgrass loss would not be expected.If eelgrass did occur at the cable site,NMFS would expect that the construction would include careful removal of the eelgrass turions and replanting after filling in the trench.A monitoring program would also be expected to ensure the replanting was successful. The NEPA process carried out by the USFS will include review and comments from FWS and NMFS.For SEI-1,this is expected to be limited to Admiralty Island because of the size of the USFS land involved.Overhead transmission lines from Spasski Bay to Hoonah may not require federal permits or approval. Early communications will be needed with the FWS and NOAA/MMFS to request information regarding protected species present and a list of their concerns.A Biological Assessment may be needed for any such identified species.Early informal discussions indicated that there are no species of special concern within the project area.Therefore,we expect an Informal Consultation to be adequate for both projects. Southeast Alaska Intertie Study 3-5 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview There will be some additional discussions and conditions applied to protect raptors because bald eagles do occur in both areas.However,standard construction and designs are now available to mitigate for potential impacts to raptors. US Environmental Protection Agency (EPA) Construction of both SEI-1 and SEJ-2 could disturb,in total,5 acres or more of natural upland vegetation.If that is the case,a construction storm water pollution prevention plan must be prepared and approval given by the EPA to operate under the Federal Storm Water General Permit.Alaska also requires that site-specific plans be submitted to the Department of Environmental Conservation (ADEC)for approval before the project is started. U.S.Coast Guard The Aids to Navigation and Waterways Management Branch will review final locations of any approved submarine cables.They would be notified by the ACOE through the Section 10 permit process.The Coast Guard would then process the information to be added to NOAA Charts and pass on information to appropriate groups. Federal Energy Regulatory Commission (FERC)-Electric Power Regulation The proposed projects are within the State of Alaska and,therefore,the transmission line is not under the jurisdiction of FERC.FERC approves rates for wholesale electric sales of electricity and transmission in interstate commerce for private utilities,power marketers,power pools, power exchanges and independent system operators.Again,this project is not an "interstate commerce”issue so FERC approval or permitting will not be required. State of Alaska Agencies There are several agencies or departments within the State of Alaska who will have an approval / permitting authority for components of the proposed Interties.Because this project may affect coastal resources and needs both federal and state permits and approvals,the Alaska Coastal Zone Management Program will be involved to ensure that the project is consistent with local coastal zone management programs and policies.The consistency review process is currently initiated and directed through the Department of Governmental Coordination (DGC).The DGC reviews the project and makes sure that all applicable state,federal,and local agencies are included in project or permit reviews. Recent proposed legislation may alter how the DGC and Coastal Zone Management Programs work to review and determine project consistency.While the exact process that will be in place at the time these projects are presented for permits and approvals,the regulations pertaining to and the intent of the CZMP will continue into the foreseeable future. Southeast Alaska Intertie Study 3-6 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview Coastal Zone Management Program Projects in or affecting the coastal areas of Alaska are reviewed by multiple agencies using a system called the "project consistency review”,based on the Alaska Coastal Management Program (ACMP).The DGC implements this review process.The local district coastal zone coordinators,state,and federal agencies are provided project documents for review to determine if the project is consistent with the standards of the ACMP and enforceable policies of approved district coastal management programs.For SEI-1,there are two coastal zone districts,the Juneau District and the Hoonah District.For SEI-2,there are also two districts,the Kake District and the Petersburg District. The DGC offers a pre-application review process that can consist of a meeting format or the proponent can submit project description and related materials for DGC to distribute to the reviewers for their early review.Completion of a Coastal Project Questionnaire and providing adequate project descriptions will begin this coordination.Through this process,the applications can be submitted in a more complete form to speed up the review process.See the web site: http://www.gov.state.ak.us/dge/Projects/pepg.html for more information. Department of Natural Resources The Department of Natural Resources (DNR)will issue easement permits for all State lands. Those lands include the tidal and subtidal waters where submarine cables would be placed.The permit or easement application will require a $100 filing fee per crossing and an annual lease of that public land.The price of the lease will depend on the location.It takes about 6 months to receive the easement permit and it requires survey data. Upon completion of the ACMP and NEPA processes,DNR will issue an early entry permit that will allow the collection of survey data needed for finalization of the permits. Department of Fish and Game The Department of Fish and Game (ADFG)issues underground salmon stream crossing permits only.Based on the information available at this time,no such stream crossings are proposed within either Intertie segment.ADFG will review the process through the ACMP consistency review.The COE permit application will need to include the construction methodologies and areas that would be affected during construction.Through the COE permitting process,ADFG will review and apply conditions on how construction is to be conducted.If there are impacts to salmon streams,ADFG would need to be identified,either prior to the permit process (with mitigation incorporated)or by the agencies who would require mitigation.Mitigation can be in the form of seasonal constraints,construction methods,or actual denial of permits until proper mitigation can be incorporated. Department of Transportation &Public Facilities The Department of Transportation and Public Facilities (DOTPF)will require a utility permit application for those lines that will be within a DOTPF right of way.Separate permits will be needed for each right of way.Accompanying permit applications,the DOTPF will need project Southeast Alaska Intertie Study 3-7 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview plans,profiles and staking sheets.The permit costs are $400 per permit plus $0.25/lineal foot to a maximum of $2,500. At this time,SE]-1 would require two permits,one associated with lines along the Douglas Highway and one for the Hoonah Airport Road.SEI-2 would require permits associated with the Mitkof Highway and local Kake roads. State Historic Preservation Officer (SHPO) Section 106 of the National Historic Preservation Act (NHPA)requires review of any project funded,licensed,permitted,or assisted by the federal government for impact on significant historic properties.The agencies must allow the State Historic Preservation Officer and the Advisory Council on Historic Preservation (ACHP),a federal agency,to comment on a project. The Alaska Historic Preservation Act contains a provision similar to Section 106 which mandates that any project with state involvement be reviewed in a similar manner.See (http://www.dnr.state.ak.us/parks/oha_web/sec106 1.htm). The Intertie alignments and project description (including construction and operation)will need to be submitted to the SHPO to determine if there are known historic or cultural resources within the alignment vicinity that could be affected by the projects.Additionally,a certified historic and cultural resource specialist should evaluate the alignment through a records search and field study specifically in areas that would be affected by transmission pole and submarine cable construction. This type of analysis would take approximately 3 months including fieldwork.During construction,the SHPO might require that a cultural resource specialist be present during groundwork to observe and alert the construction crew if cultural resources are uncovered. Department of Environmental Conservation (ADEC) The ADEC will issue the water quality certificate as part of the COE Section 10 and 404 permit process.This will cover the construction methods to use to avoid/minimize water quality degradation and will permit the temporary water quality exceedences expected. Local City Requirements Four cities would be involved in some transmission line construction or use for both projects: City and Borough of Juneau,Hoonah,Kake,and Petersburg. City and Borough of Juneau Information is coming from Nathan Bishop of Community Development (907-586-5709). Southeast Alaska Intertie Study 3-8 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview Hoonah According to Keith Bettridge,City Administrator and Coastal Zone District Coordinator, Hoonah has no building or structural permitting/review process.They would verify that the transmission line would be appropriate to the zoning once the final alignment was determined. From what he understands now,there would be no zoning issues.As for the Coastal Zone consistency review,the Hoonah district is limited to the city limits and there does not seem to be any problem with this proposed project.There is support for this project in the community. Petersburg The City of Petersburg would require no permit for construction of either alternative transmission line or termination yard.At a minimum,for the northern route,the City would review the plans for the termination yard within the city but no fee would be charged.There is support for this project in the community. Kake Messages were left with the City. Other Stakeholders In addition to Alaska State and US Federal agencies,Native Alaskan tribes and corporations must be consulted on projects that might affect them.Should any tribal property be involved,the proponent will need to negotiate for the purchase or rights to use that property.The following are entities that the proponent must contact for their comments and concerns: e Sealaska Corp. e Kake Tribal Corporation e Goldbelt,Inc. e Shee Atika,Inc. Southeast Alaska Intertie Study 3-9 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-1 List of Contacts -Juneau-Greens Creek-Hoonah Transmission Line Type Last Name First Address 1 City State Zip Title Organization Phone phone Bettridge Keith P.O.Box 360 Hoonah AK 99829 Hoonah Coastal District Alaska Coastal Zone 907-945-3663 Coordinator and City Manager |Management Bittner Judith E.550 W.7th Ave.,Suite 1310 Anchorage JAK 99501-3565 |State Historic Preservation Alaska Department of 269-8721 Officer Natural Resources Enriquez Richard 3000 Vintage Park Bivd,Suite 201 |Juneau AK 99801 U.S.Fish and Wildlife 586-7076 Service phone Jacobson Mike 3000 Vintage Park Bivd,Suite 201 |Juneau AK 99801 Eagle Management Specialist |U.S.Fish and Wildlife 586-7333 Service phone Hanson Shannon P.O.Box 898 Anchorage |AK 99506-0898 }Regulatory Branch U.S.Army District-Alaska [1-800-478-2712 Corps of Engineers phone Rothchild Steve P.O.Box 25517 Juneau AK 99801 Seventeenth Coast Guard U.S.Coast Guard 463-2263 District Heumann Katharine [302 Gold Street,Suite 202 Juneau AK 99801-0030 }District Program Coordinator {Division of Governmental [465-3529 PO Box 110030 Coordination Jen Mark 222 W.7th Ave.#19 Anchorage JAK 99513-7588 jAlaska Operations U.S.Environmental 271-3411 Office/Anchorage Protection Agency phone Leeds John 8800 Glacier Hwy Juneau AK 99801 Field Office U.S.Army District-Alaska |790-4490 "){Corps of Engineers Matter Paul P.O.Box 135 Hoonah AK 99829 Hoonah District Ranger U.S.Forest Service 907.945.3631 phone Grantham Patty P.O.Box 1328 Petersburg |AK 99833 Tongass National Forest,U.S.Forest Service 907-772-5900 Petersburg Ranger phone Baldwin Sara 8461 Old Dairy Road Juneau AK 99801 Tongass National Forest U.S.Forest Service 790-7443 meeting |Thomas Lorraine 8461 Old Dairy Road Juneau AK 99801 Tongass National Forest U.S.Forest Service 586-8800 phone Rogers Dennis 204 Siginaka Way Sitka AK 99835 Tongass National Forest-U.S.Forest Service 907-747-6671 NEPA Coordinator Payne P.Michael /P.O.Box 021668 Juneau AK 99802-1668 National Marine Fisheries phone Powell Jim 410 Willoughby Ave Juneau AK 99801 Water Quality Certification Alaska Department of 465-5321 Environmental Cons. Scott Brady 400 Willoughby Avenue Juneau AK 99801-1724 |Division of Land,Southeast [Alaska Department of 465-3400 Region Natural Resources phone Cohen David 400 Willoughby Avenue Juneau AK 99801-1724 j Division of Land,Southeast [Alaska Department of Region Natural Resources phone/{Shaw Linda P.O.Box 021668 Juneau AK 99802-1668 National Marine Fisheries [586-7510 meeting_Woods Theresa 3000 Vintage Park Bivd,Suite 201 [Juneau AK 99801 Field Supervisor U.S.Fish and Wildlife Service phone Schrader Carl Juneau AK SE Habitat Alaska Fish and Game 907-465-4287 Department phone Gustafson Jack Ketchikan JAK Ketchikan Habitat Alaska Fish and Game 907-225-2027 Department phone Bishop Nathan 155 South Seward Street Juneau AK 99801 Department of Community City and Borough of 907-586-5709 Development Juneau Southeast Alaska Intertie Study 3-10 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-2 List of Contacts -Kake-Petersburg Transmission Line Type Last Name First Address 1 City State Zip Title Organization Phone phone Luczak Leo P.O.Box 329 Petersburg {AK 99833 Community Development City of Petersburg 772-4533 Director/Coastal Zone Bittner Judith E.550 W.7th Ave.,Suite 1310 Anchorage JAK 99501-3565 |State Historic Preservation Alaska Department of Natural 269-8721OfficerResources Enriquez Richard 3000 Vintage Park Bivd,Suite 201 _jJuneau AK 99801 U.S.Fish and Wildlife Service 586-7076 phone Jacobson Mike 3000 Vintage Park Bivd,Suite 201 jJuneau AK 99801 Eagle Management Specialist {U.S.Fish and Wildlife Service 586-7333 phone Hanson Shannon P.O.Box 898 Anchorage |AK 99506-0898 |Regulatory Branch U.S.Army District-Alaska Corps of]1-800-478-2712 Engineers phone Rothchild Steve P.O.Box 25517 Juneau AK 99801 Seventeenth Coast Guard U.S.Coast Guard 463-2263 District phone Heumann Katharine |302 Gold Street,Suite 202 Juneau AK 99801-0030 {District Program Coordinator {Division of Governmental 465-3529 PO Box 110030 Coordination Jen Mark 222 W.7th Ave.#19 Anchorage |AK 99513-7588 [Alaska Operations U.S.Environmental Protection 271-3411 Office/Anchorage Agency phone Leeds John 8800 Giacier Hwy Juneau AK 99801 Field Office U.S.Army District-Alaska Corps |790-4490 .of Engineers phone Grantham Patty P.O.Box 1328 Petersburg [AK 99833 Tongass National Forest,U.S.Forest Service 907-772-5900 Petersburg Ranger phone Baldwin Sara 8461 Old Dairy Road Juneau AK 99801 Tongass National Forest U.S.Forest Service 790-7443 meeting Thomas Lorraine 8461 Old Dairy Road Juneau AK 99801 Tongass National Forest U.S.Forest Service 586-8800 phone Rogers Dennis Sitka AK Tongass National Forest-U.S.Forest Service 907-747-6671 Sitka Ranger district Payne P.Michael |P.O.Box 021668 Juneau AK 99802-1668 National Marine Fisheries phone Powell Jim 410 Willoughby Ave Juneau AK 99801 Water Quality Certification Alaska Department of 465-5321 Environmental Conservation phone Cohen David 400 Willoughby Avenue Juneau AK 99801-1724 |Division of Land,Southeast Alaska Department of Natural Region Resources phone/meet {Shaw Linda P.O.Box 021668 Juneau AK 99802-1668 National Marine Fisheries 586-7510 Woods Theresa 3000 Vintage Park Bivd,Suite 201 |Juneau AK 99801 Field Supervisor U.S.Fish and Wildlife Service phone Cariello Jim P.O.Box 667 Petersburg |AK 99833 Area Habitat Biologist Alaska Department of Fish and Game phone Gustafson Jack Ketchikan JAK Ketchikan Habitat Alaska Department of Fish and 907-225-2027 Game phone P.O.Box 500 Kake AK 99830 City of Kake 907-785-3804 Southeast Alaska Intertie Study”3-11 Phase 1 -Final Report Permitting Requirements and Environmental issues Overview TABLE 3-3 (Page 1 of 2) Summary of Agency Requirements and Associated Costs Agency/Requirement Description Associated Cost Federal Agencies Federal Energy Regulatory Commission Electric Power Regulation Approve interstate wholesale rate for distribution.Not applicable to proposed project NA U.S.Army Corp of Engineers: Section 10 Permit Section 404 Permit Other Authority to regulate work in waters of the U.S. Permit and condition work in navigable waters Permit and condition work in wetlands Notify NOAA and NOS of underwater cables Permitting costs only,no NEPA process required Costs will be associated with meetings with the Corps staff,preparation of and finalization of permit drawings, mitigation measures required by NMFS and/or USFWS U.S.Forest Service Special Use Authorization Construction Permit Easement Fee Timber sales Permission to Work in the Tongass National Forest Through the NEPA process,USFS will evaluate purpose and need of project,evaluate potential impacts,select the alternative,and condition the project. 5-year permit to construct.Bonding required. Long-term lease (50 years) Purchase of timber that would be removed by project The major costs would be: Preparation of needed NEPA documents and funding for USFS administration of those processes Bonding amount equivalent to cost to restore forest. 5 percent of fair market value.USFS would appraise land value USFS or third party would appraise and harvest. U.S.Fish and Wildlife Service Authority to uphold Endangered Species Act Might require Biological Assessment (BA)if deemed needed. Review and condition federal permit applications Costs might be needed to do BA or for mitigation or monitoring,no major issues identified at this time. NOAAI National Marine Fisheries Service Authority to uphold Endangered Species Act and Magnuson-Stevens Act (EFH) Might require BA if deemed needed. Costs might be needed to do BA or for mitigation or monitoring,costs for marine habitat survey and report. U.S.Environmental Protection Agency Clean Water Act-Storm Water Quality Construction Storm Water Pollution Prevention Plan U.S.Coast Guard Update Navigation Charts No additional costs Southeast Alaska Intertie Study 3-12 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-3 (Page 2 of 2) Summary of Agency Requirements and Associated Costs State of Alaska Agencies Coastal Zone Management Program Authorized to review action against local coastal zone management plan.Division of Governmental Coordination distributes documents and consolidates comments and conditions. Costs associated with permit and environmental documentation preparation,pre-submittal meeting,and potential subsequent conditions. Department of Natural Resources Easements across state lands including shorelines and subtidal areas. Early entry permit (valid for 1 year prior to construction) Right-of-Way Permit Costs: $100 filing fee for each easement plus Annual ROW lease based on location. Department of Fish and Game Title 16 Fish Habitat Permits Fishway Act and Anadromous Fish Act Because projects do not propose to work within any catalogued anadromous streams,fish habitat permits would not be needed.Seasonal constraints to construction of submarine cables would be enforced. Department of Transportation &Public Facilities Utility permit Permit application for lines within a DOT right of way. $400 per permit plus $0.25/lineal foot to a maximum of $2,500. State Historic Preservation Officer Section 106 of the National Historic Preservation Act Costs of an analysis of the presence or potential presence of cultural or historic sites including a records search and field investigation.Oversight during construction may be required if high potential is found. Department of Environmental Conservation Clean Water Act;Temporary Water Quality Certification No additional costs except for implementation of BMP during construction Local Governments City and Borough of Juneau Hoonah |Zoning review is the only area that the city of Hoonah None would conduct. Kake Petersburg |Only review if termination yard is within city limits.None Southeast Alaska Intertie Study 3-13 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-4 Summary of Estimated Costs and Schedule for Permitting and Environmental Processes Juneau -Greens Creek -Hoonah Transmission Line Estimated Schedule Agency/Requirement Description Associated Cost Item Estimatedcost [qi jaz jas jad jas jas |a7 fas fag jaro jai ja12 Federal Requirements Federal Energy Regulatory Commission NA NA NA Costs will be associated with imeetings with the Corps staff, ..Preparation of and finalization ofU.S.Army Comp of Engineers:permit drawings,mitigation Tmeasures required by NMFS and/or USFWS|Permitting costs only,no NEPA Section 10 Permit process required $20 -25K Section 404 Permit Permit preparation $5 -7K COE Review period Na 5 Public Review period Na Notify NOAA and NOS off underwater cables None NA Special Use A ization|Apply for Special Use Authorization Preparation of needed NEPA U.S.Forest Service document (EA)and funding for FS of those p $250 -350K Biological Assessment $8 -15K Marine Habitat survey $75 -80K Expenses $30 -SOK [Bonding amount equivaient to cost Construction Permit to restore forest.unknown 5 percent of fair market value.FS E Fee would appraise fand value unk FS or third party would appraise and Timber sales harvest.unknown ,-Consultation if needed,no issuesU.S.Fish and Wildlife Service Endang Species Act |anticip at this time NA 1 see above Costs for marine habitat survey; .-sop:.additional funds might be needed for]NOAA/National Marine Fisheries Service c Species Act |mitigation or itoring,no major &Magnuson-Stevens Act issues identified at this time. Marine Habitat survey see above Mitigation/Monitoring Plan $15 -20K Eelgrass transplanting duringconstruction $60 -80K ] P 25 -30K Monitoring per event (2 in 5 years)15 -20K i Clean Water Act-Storm U.S.Environmental Protection Agency water pollution p i repare C ion Storm Water plan Pollution Prevention Pian $5K ie U.S.Coast Guard Navigation i ts.[No addi costs NA | |Alaska State Requirements I {|| DGC process for SCoastalZoneManagementProgramireviewPre-application meeting $5 -8K Ji | Parallel review of COE +permits Department of Natural Resources Permit Applications $5K Early entry permit (valid for1 year prior to 4 cable crossings;a{construction)$100 /entry filing fee $400 me Annual lease fee dependent on Right-of-Way Permit i 2 -Title 16 Fish HabitatDepartmentofFishandGame|Permits Not needed at this time NA ..ora $400 per permit plus $0.25/inealDepartmentofTransportation&Public Facilities Utility permit foot to a maxi of $2,500,2.5K Certified professional to conduct State Historic Preservation Officer frecords review and field 'Section 106 review investigation on alt project lands $15 -20K --Section 401 Water No extra costs-part of COE permit eeDepartmentofEnvironmentalConservationQualityCertificationlprocessNAos Subtotal $536 -734 K Permitting Activity Contingency at 25%$134 -184 K Total Estimated Costs $770 -918 K Technical study Southeast Alaska Intertie Study 3-14 Phase 1 -Final Report Permitting Requirements and Environmental Issues Overview TABLE 3-5 Summary of Estimated Costs and Schedule for Permitting and Environmental Processes Kake -Petersburg Transmission Line Estimated Schedule Agency!Requirement Description Associated Cost Item Estimated cost Jai Jaz fa3 jaa fas jas Q7_las fag faio jai jai2 Federal Requirements Federal Energy Regulatory Commission NA NA NA Costs will be associated with |meetings with the Corps staff, .preparation of and finalization ofU.S.Army Corp of Engineers:permit drawings,mitigation quired by NMFS and/or USFWS|Fermating costs only,no NEPA es Section 10 Permit process required $20 -25K.ee Section 404 Permit Permit preparation $30 -60K COE Review period Na Public Review period Na Notify NOAA and NOS off underwater cables None NA pecial Use Al Apply for Special Use Authorization Preparation of needed NEPA U.S.Forest Service |document (EA)and funding for FS inistration of those pr $700 -1,000 K Biological A it $30 -50K Marine Habitat survey $70 -80K Expenses $30 -50K Bonding amount equivalent to cost Construction Permit to restore forest.unknown oes 5 percent of fair market value.FS oS Fee 'would appraise land value unknown cS[Fs or third party would appraise andTimbersalesharvest.unknown .ak:.Consultation if needed,no issuesU.S.Fish and Wildlife Service Endangered Species Act _|anticipated at this time NA Biological Assessment see above Costs for marine habitat survey; ,.seheri .additional funds might be needed forNOAA/National Marine Fisheries Service Endangered Species Act jmitigation or monitoring,no major &Magnuson-Stevens Act|issues identified at this time. Marine Habitat survey see above Mitigation/Monitoring Plan $15 -20K Eelgrass transpianting duringconstruction 60 -80K Expenses 50 -75K Monitoring per event (2 in 5 years)15 -20K Clean Water Act--Storm U.S.Environmental Protection Agency water pollution p i repare Ci Storm Water plan Pollution Prevention Plan $5K U.S.Coast Guard Navigation issues/charts.|No additional costs NA |Alaska State Requirements Lf {|||Lo feep feet.[| OGC process forCoastalZoneManagementProgramJeonsistencyreview Pre-application meeting ||. Parallel review of COE +permits : Early entry permit (valid | Department of Natural Resources for 1 year prior to :4 cable crossings;construction)$100 /entry filing fee $400 Annual lease fee dependent o1 By Right-of-Way Permit locations .2 - -Title 16 Fish HabitatDepartmentofFishandGamePermits Not needed at this time NA ..orcas $400 per permit plus $0.25/linealDepartmentofTransportation&Public Facilitieg Utility permit foot to a .of $2,500,$2.5K Certified professional to conduct State Historic Preservation Officer records review and field Section 106 review investigation on all project lands $30 -40K .A Section 401 Water No extra costs--part of COE permitDepartmentofEnvironmentalConservationQualityCertificationprocess NA Subtotal $1.06 -1.51M Permitting Activity Contingency at 25%$264 -377 K .screen .Total Estimated Costs $1.32 -1.89 M |)=Technical study Southeast Alaska Intertie Study 3-15 Phase 1 -Final Report Section 4 Estimated Costs of Construction introduction The costs to develop and construct the Interties have been estimated.The cost estimate for SEI- 1,the Juneau -Greens Creek -Hoonah transmission line is based significantly on the preliminary estimate of this system as previously prepared by AEL&P.The cost estimate for SEI-2,the Kake -Petersburg line,is based on information from previous reports adjusted as appropriate for changed conditions.Although the cost of each line has been estimated separately,the same fundamental costing basis has been used for both systems. The estimated costs of the Interties as provided in this report include all estimated costs of engineering and design,permitting,materials,equipment and construction.Primary components of each line (e.g.overhead lines,submarine cables)are identified separately in the cost estimate. Since the configuration of the Interties used as the basis for the cost estimate is still very preliminary,a contingency factor of 20%has been applied to all costs.As design proceeds and more precision can be used in estimating the costs,the contingency included in the total cost estimate can possibly be lowered.In any major project of this type,however,the actual cost of construction can very significantly from the engineer's estimate due to market conditions for the materials and services needed at the time of procurement.As an example,the cost of submarine cable is potentially on the rise at the present time because of a recent reduction in the number of cable manufacturers. The cost estimates included in this report are based on the routing and technical information described in Section 2.Primary characteristics of the line are 69-kV,single-pole construction alongside existing roads where available.Submarine crossings are to be made with single 3- phase,dielectric cables with armor and potentially with fiber-optic communication lines bundled in.It is expected that the owner of the Interties will contract for all services of permitting, design,construction and construction management related to the Interties.The estimated costs of these services are included in the total cost estimate. Juneau -Greens Creek -Hoonah (SEI-1) AEL&P has recently developed a cost estimate for SEJ-1 based on AEL&P's preliminary design for this system.The cost estimate is based on AEL&P's experience with constructing transmission lines elsewhere in its service area and other information.AEL&P solicited information on the cost of submarine cables shortly after completing the Taku Inlet submarine crossing in 2000.In preparing its cost estimate,AEL&P essentially presumed that it would serve as the project manager on the project. We have reviewed AEL&P's cost estimate and have prepared a revised estimate that incorporates some adjusted costing information.The cost estimate for SEI-1 is shown in Table 4-1.It should be noted that Table 4-1 does not include the cost of removing the overhead line between Hawk Inlet and the Greens Creek mine upon the eventual closure of the mine.AEL&P has estimated that the cost to remove the line would be about $250,000 at today's cost level.It Southeast Alaska Intertie Study 4-1 Phase 1 Final Report Estimated Costs of Construction should also be noted that the cost of the substation that will be needed at the Greens Creek mine to take delivery of power at 69-kV over SEI-1,has not been included in Table 4-1.The new substation at the mine will be constructed and financed by either AEL&P or KMC-GC and as such,is not included as a component of SEI-1. TABLE 4-1 (Page 1 of 2) Estimated Cost of Project Development and Construction Juneau -Greens Creek -Hoonah Transmission Line Estimated Cost Overhead Lines Poles $815,700 Framing 701,500 Guys and Anchors 262,900 Conductor 812,400 Fiber Optic Cable -48 strands 195,400 Foundations and work pads 263,700 Distribution transformer 122,500 Special Transportation and Helicopters 500,000 Staging area ______-«8 5,000. Subtotal $3,739,100 Clearing Heavy Timber,Clearing w/Timber Credit $- Light Clearing 223,010 Subtotal $223,010 Submarine Cable -Outer Pt.-Young Bay Cable -3 bundled,Single Armor,240mm?$3,151,900 Fiber Optic System -48 strands 200,600 Installation 406,400 Mob/Demob 605,000 Subtotal $4,363,900 Submarine Cable -Hawk Inlet -Spasski Bay Cable -3@ bundled,S/D Armor,120mm?$7,817,800 Fiber Optic System -48 strands 549,100 Installation 745,200 Mob/Demob 865,000 Subtotal $9,977,100 Submarine Cable Term.Yards (Four)-Subtotal Site Prep,Foundations $220,000 Ground Grid and Fencing 90,000 Structures,Lightning Arrestors 240,000 Cable Terminations 96,000 Cathodic Protection 240,000 Shunt Reactor,Disconnect 360,000 Circuit Breakers,Relaying 360,000 Revenue Metering 80,000 SCADA,Other 340,000 Subtotal $2,026,000 Southeast Alaska Intertie Study 4-2 Phase 1 -Final Report Estimated Costs of Construction TABLE 4-2 (Page 2 of 2) Estimated Cost of Project Development and Construction Juneau -Greens Creek -Hoonah Transmission Line Hoonah Substation Civil Site Prep &Foundations $120,000 Ground Grid and Fencing 45,000 Bus Works 26,000 Control Cable and Conduit 20,000 SCADA and Control Interface 40,000 Fuses/Switches 40,000 Transformer -69/4.16-kV,5 MVA,Relaying,LA,etc.120,000 Voltage Regulators/Bypass Switches 46,000 Recloser/Disconnect Switch 34,000 Relaying PT 36,000 SS and Battery 40,000 Shunt Reactor 180,000 Installation Labor 80,000 Subtotal $827,000 Total Direct Costs $21,156,110 Indirect Costs Alignment Definition and Prelim.Engineering $100,000 Alignment Survey 220,000 Final Engineering 975,000 Permitting 735,000 Structure Staking 90,000 Geotechnical Surveys -Overhead 50,000 Geotechnical Surveys -Cable 200,000 Material and Equipment Delivery 4,000,000 Mobilization (6%of Direct Costs less Sub.Cable)409,000 Construction Management (7%of Direct Costs)1,481,000 Owners Administration (7%of Direct Costs)1,481,000 Subtotal -Indirect Costs $9,741,000 Contingency -20%6,179,000 Total Project Cost $37,076,110 As shown in Table 4-1,the total estimated cost of SEI-1 is $37.1 million.This is slightly higher than AEL&P's estimated cost of approximately $35 million.A significant cost item in the table above is the estimated cost of material delivery.The amount shown is based on the estimated cost of loading the 25-mile long submarine cable on the cable laying ship and transportation from Europe to the project site.It should be noted,that the estimated permitting cost shown in Table 4-1 is based on the high end estimate provided in Table 3-4. Southeast Alaska Intertie Study 4-3 Phase 1 -Fina!Report Estimated Costs of Construction Kake -Petersburg Intertie (SEI-2) A cost estimate for the Southern Route Alternative of SEI-2 has been prepared.This estimate includes the costs of labor and materials for the design,permitting and construction of the overhead line,estimated to be 49.5 miles in length,and the two submarine crossings of Wrangell Narrows and Duncan Canal which are essentially two miles in combined length.As indicated in Section 2 of this report,SEI-2 is specified at 69-kV with single wood pole structures.To the extent possible,poles are to be located adjacent to existing USFS roads.Road access will be an important consideration in the estimated costs for SEI-2. The total estimated costs for SEI-2 are shown in Table 4-2.As indicated for SEI-1,the estimated cost for permitting activities is midway between the low and high estimates provided in Table 3- 5.A contingency of 20%has been applied to all costs shown in Table 4-2. Southeast Alaska Intertie Study 4-4 Phase 1 -Final Report Estimated Costs of Construction TABLE 4-2 (Page 1 of 2) Estimated Cost of Project Development and Construction Kake -Petersburg Transmission Line Estimated Cost Overhead Line Poles $2,255,600 Framing 1,740,600 Guys and Anchors 547,600 Conductor 2,188,700 Fiber Optic Systems 653,400 Foundations and work pads 1,331,400 Distribution transfer 140,000 Special Helicopter Assistance 976,500 Staging area,Duncan Canal 65,000 Subtotal $9,898,800 Clearing Heavy Timber,Clearing w/Timber Credit $1,668,000 Light Clearing 120,000 Subtotal $1,788,000 Submarine Cable Cable -3®bundled,Single Armor,120mm?$522,100 Fiber Optic System 26,400 Installation 458,400 Cathodic Protection 120,000 Mob/Demob 610,000 Subtotal $1,736,900 Petersburg Tap Switchyard Civil Site Prep &Foundations $80,000 Ground Grid and Fencing 30,000 Bus Works 34,000 Control Cable and Conduit 36,000 SCADA and Control Interface 35,000 Sectionalizing Switch (2)63,000 Breaker &CT 100,000 Relaying,PT 36,000 Revenue Metering 40,000 Shunt Reactor and Disc SW - Subtotal $454,000 Submarine Cable Termination Yards (4) Support Structures,Foundations $160,000 Cable Terminations 96,000 Lightning Arresters 120,000 _Subtotal $376,000 Southeast Alaska Intertie Study 4-5 Phase 1 -Final Report Estimated Costs of Construction TABLE 4-2 (Page 2 of 2) Estimated Cost of Project Development and Construction Kake -Petersburg Transmission Line Kake Substation Civil Site Prep &Foundations Ground Grid and Fencing Bus Works Control Cable and Conduit SCADA and Control Interface Fuses/Switches Transformer -69/12.5-kV,2.5 MVA,Relaying,LA,et: Voltage Regulators/Bypass Switches Recloser/Disconnect Switch Relaying PT Installation Labor SS and Battery Subtotal Total Direct Costs Indirect Costs Alignment Definition and Prelim.Engineering Alignment Survey Final Engineering Permitting Structure Staking Geotechnical Surveys Mobilization (3%of Direct Costs less Sub.Cable) Construction Management (5%of Direct Costs) Owners Administration (5%of Direct Costs) Subtotal -Indirect Costs Contingency -20% Total Project Cost 120,000 45,000 34,000 36,000 40,000 40,000 110,000 34,000 34,000 36,000 80,000 40,000 649,000 14,902,700 200,000 125,000 600,000 1,300,000 125,000 90,000 395,000 745,000 745,000 4,325,000 3,846,000 23,073,700 Southeast Alaska Intertie Study 4-6 Phase 1 -Final Report Section 5 Example Project Development Schedule Introduction The Intertie construction cost estimates provided in Section 4 include the estimated costs of several activities prior to actual construction.Included among these activities are preliminary design,geotechnical surveys,permitting and environmental studies,and final design.The actual time required to perform these activities and when they would be performed will depend on a number of factors.An example development schedule has been prepared to indicate what activities would be performed and what the activity duration would be for development of the Kake -Petersburg Intertie.The Juneau -Greens Creek -Hoonah Intertie would require a similar process,however,its development to date has been directed by AEL&P and would be expected to follow the development process associated with other AEL&P projects. An integral part of the development of any project requiring a significant degree of grant funding is the pursuit and approval of funding sources.The time required for this effort cannot be reliably predicted.In addition,there will be a number of permits and approvals needed to construct the Interties as indicated in Section 3 of this report.The time required to obtain the necessary permits is often influenced by the degree of public support or opposition to the projects.Further,various commercial arrangements will be needed to allow for the effective utilization of the Interties.Such arrangements would include power sales agreements and contracts. Permitting and Environmental Studies The expected time requirement for permitting activities and environmental studies is shown in Section 3 of this report.The estimated duration of these activities is shown in Table 3-4 for SEI- 1 and in Table 3-5 for SEI-2.The preparation of certain information needed in the permitting process,such as route diagrams and technical descriptions,will necessitate that certain engineering work be accomplished fairly early in the process.As shown in Table 3-5,the expected duration of permitting activities for SEI-2 is approximately two years.In order to expedite the development process,it would be recommended that preliminary engineering and route alignment activities be conducted concurrently with early permitting work and environmental studies. Engineering Related Activities The project development approach outlined below is based upon construction being undertaken by a contractor(s)using plans and technical specifications prepared by an engineering firm experienced with overhead transmission line design.Major equipment and materials would be obtained by the Intertie owner with installation performed by a construction contractor.An engineering firm,working as the Owner's Project Engineer would manage and oversee specialty engineering services.Various activities related to the engineering function of project development are described in the following paragraphs. Southeast Alaska Intertie Study 5-1 Phase 1 -Final Report Example Project Development Schedule Selection of Project Team Typically owners select a Project Manager (with appropriate experience)and contract with specialty firms to provide the required services.Engineering and related specialty areas include: e Project Management e Preliminary and Final Engineering e Engineering survey - e Geotechnical Investigations e Easements,Land Rights,property survey e Logging and Clearing Specialist e Construction Specialist . The engineering team would be charged with developing and implementing a detailed work plan, schedule and budget to accomplish the Project on schedule and within budget. Alignment Definition One of the first tasks required to move the Project forward will be to refine the conceptual design and the selected route.Construction,operation and maintenance issues will be discussed in detail with the owner and the owner's operating personnel to identify project requirements. During this phase a transmission line design engineer and other specialists would initiate a detailed review of the route identifying any routing concerns or route improvements.This work will require coordination with the environmental and permitting specialist knowledgeable with the area.Incorporating input from the various specialists,a specific alignment will be selected. Selection of the specific alignment will consider: e Specific site locations of Tap,Substation,Submarine Crossings e Alignment of logging road e Location of clear-cuts,size of trees ¢Location of Muskeg e Terrain elevation differences e Environmental or cultural avoidance areas e Location of eagle trees e Location of good soils for structure stability e Visual Concerns Southeast Alaska Intertie Study 5-2 Phase 1 -Final Report Example Project Development Schedule Engineering Survey An engineering survey will be obtained once a specific alignment is identified in the field and tied down with specific coordinates.The engineering survey will locate physical features in plan and determine elevations along the alignment within the defined corridor.Plan/profile drawings will be developed from the field survey. There are several types of surveying methods which could be utilized on a project such as the Interties.One which may prove economical while also providing great flexibility in allowing adjustments during preliminary design without requiring follow-up visits for additional surveys is LIDAR (Light Detection and Ranging). LIDAR,in summary,uses a laser and receivers mounted generally on a helicopter to scan an area from low altitude and collect survey data.The helicopter has airborne global positioning system (GPS)capability and also ties into ground stations established at about every 25 mile radius.The laser sends out several thousand pulses per second and the returns are collected by the receivers mounted on outriggers. The data is collected as a series of X,Y,Z points tied to a reference grid such as State Plain Coordinates.The huge amount of data collected in the field is filtered and reduced into separate files such as ground,existing structures,existing wires and vegetation.These files can then be imported into design programs such as PLS-Cadd.In PLS-Cadd,the designer can create a surface wire-frame model from which profiles can be cut once the alignment is established. Because of the very dense coverage,(points are separated by a couple of feet within a 200'to 1,000'wide corridor)the surface model will result in very precise profiles.Refinements may be made to enhance the alignment following a review of the plan/profile drawings. Preliminary Engineering The objective of the preliminary design task is to finalize design criteria and to complete sufficient design calculations to determine the general layout and sizing of major facility components.Preliminary engineering will proceed simultaneously with the alignment definition phase.The preliminary design phase will include additional system studies and discussions with the owner's operating personnel to refine and determine:, e System protection plan e -lines of system e Equipment and conductor sizes e Voltage drop and power flow e Appropriate insulation e Need for reactors Preliminary engineering will also determine all of the detail design parameters and will result in issuance of a Basis of Design documenting design requirements such as: e Codes and Standards Southeast Alaska Intertie Study 5-3 Phase 1 -Final Report Example Project Development Schedule e Clearance requirements (horizontal and vertical) e Conductor tension limits e Sag/tension data e Physical loading requirements e Overload capacity factors e Grounding requirements e Clearing requirements e Right-of-way constraints e Framing requirements e Guy and anchor requirements An important element of the preliminary engineering task will be to develop an updated cost estimate for the project based on the information obtained and engineering work performed. Certain issues uncovered during preliminary engineering and the investigations preceding it could alter the approach ultimately determined to be the most viable for eventual implementation.An example of this could be whether or not long aerial crossings of water bodies could be more advantageously undertaken than submarine cable crossings.An updated cost estimate for the project will help decision makers determine more precise funding requirements. Geotechnical Investigations Subsurface soils investigations will be required at the major equipment locations (substation, termination locations and tap points).Experienced geotechnical personnel will review the entire route and observe road cuts and perform excavation of test pits along the route.Using the data collected tempered with experience,a subsurface profile will be developed identifying the subsurface profile and key avoidance areas. Final Design Final design will involve the completion and documentation of design calculations,special analysis,development of construction drawings,development of construction and material specifications,and development of final material lists.During final design,specific pole locations,framing,pole size,guy leads and anchor types will be determined for each structure along the alignment.Locations will be staked and field reviewed.At the major equipment locations,structures,foundations,grounding,and fencing will be sized and designed as appropriate. Initiate Construction and Material Procurement Contracts This function would involve the preparation of bid documents and specifications for vendors and suppliers to base bids for materials and construction services.Much of the material needed for the overhead portions of the Intertie can be obtained relatively quickly.The submarine cables would require a longer lead time and in particular,delivery of the cables and arranging for Southeast Alaska Intertie Study 5-4 Phase 1 -Final Report Example Project Development Schedule installation could require more than a year.Flexibility in the schedule with regard to the cable procurement could significantly affect the delivered and installed cost of the cable. In general,it is expected that the procurement of materials and construction services would be conducted through the solicitation of bids and award of contracts to vendors and contractors early in the year in which construction is expected to commence.The first year of construction activity is not expected to require significant material deliveries so a full year of lead time on material manufacturing and delivery would be allowed for in the schedule. Construction Activities A two-year construction duration is expected for SEI-2.The major activities to be undertaken in each year are as follows: Year 1 e Alignment clearing e Construction of work pads,as required e Construction of other key components,as appropriate Year 2 e Line construction e Installation of submarine cables e Substation and switchyard construction The actual time required to install the submarine cables is quite short,possibly just a few days. As such,they can be installed at anytime in the second year of the construction period, potentially at the very end of the process just before energization of the line. Total Project Development Schedule Assuming that funding were available,or at least reasonably assured,and arrangements neededtoproceedwiththeIntertieswereapproved",it is estimated that a four year development and construction schedule could be accomplished for SEI-2. '4 Tn addition to the formation and approval of an ownership organization to be established by the Southeast Conference,other approvals will be needed from THREA's board and the Four Dam Pool Power Agency related to SEI-2.For SEI-1,approvals will be needed from THREA,AEL&P and the Regulatory Commission of Alaska (RCA).These approvals are in addition to the necessary approvals from local,State and federal agencies and other stakeholders as described in Section 3 of this report. Southeast Alaska Intertie Study 5-5 Phase 1 -Final Report Section 6 Power Supply Evaluation and Economic Analysis Power Supply Evaluation Overview Hydroelectric generating facilities and diesel generators provide nearly all of the electric powergenerationinSoutheastAlaska'*.Elsewhere in Alaska,natural gas and coal are used to provide a significant portion of the electrical power supply;however,these fuels are not commercially available in Southeast Alaska.The State and federal government,as well as certain communities and utilities have developed the existing hydroelectric generating plants in Southeast Alaska. Hydroelectric facilities require specific site conditions and generally have high initial development costs.The effective costs of hydroelectric development can be made even higher by the need to construct projects larger than the present electric loads require.This can create a surplus energy generation capability from hydroelectric plants,sometimes for a significant length of time. The availability of diesel fuel,the ease of installing diesel generators in a wide range of capacities and relatively low initial costs have made diesel engine generators the generator of choice in most remote locations including Southeast Alaska.The operating and maintenance (O&M)expenses associated with diesel generators,however,often make them more costly than hydroelectric generation plants in the long run.Potential interruptions in fuel delivery,the susceptibility of fuel prices to wide variation,noise and air pollution issues are other negative aspects of diesel generation.Where available,hydroelectric generation is typically preferred to diesel generation. The primary purpose of the Southeast transmission system will be to transmit power generated at lower-cost hydroelectric generation facilities to communities where diesel generation is the principal source of power supply.At the present time,some additional hydroelectric energy capability is available at both the Four Dam Pool Power Agency's Lake Tyee project and the State's Snettisham project.With a transmission system that creates a larger electric load base, fuller utilization of the capability of these projects can be accomplished.Further,new hydroelectric generation projects can be more effectively developed in the future. The electric power requirements of all the load centers involved with the Intertie segments are important to the evaluation of Intertie feasibility.Projections of power requirements have been compiled for Kake,Petersburg,Wrangell,and Ketchikan,all of which currently rely upon the output of the Lake Tyee project or will be connected to Lake Tyee through the construction of new transmission facilities.Power requirement projections have also been compiled for 'S AEL&P and KMC-GC use oil-fired combustion turbines for a portion of their power supply requirement.In the past,pulp mills in Ketchikan and Sitka used production waste materials as a boiler fuel to drive steam turbines. Southeast Alaska Intertie Study 6-1 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis AEL&P,the Kennecott Mining Company -Greens Creek Mine (KMC-GC)and Hoonah,all of which will use power from the Snettisham and Lake Dorothy projects. The Intertie segments will be used to transmit hydroelectric energy that is either surplus to the needs of the utility systems currently interconnected with the hydroelectric plants or from new hydro plants.Consequently,it is important to evaluate the availability of the surplus generation and identify potential new hydroelectric resources that can be developed to economically provide additional energy to the interconnected systems,as needed,in the future.Although transmission lines are generally very reliable,power deliveries over the Intertie segments will need to be considered interruptible.As such,Hoonah,Kake and KMC-GC will need to retain local generation sufficient to supply loads if the transmission lines are down due to unplanned outages or maintenance. It is also important to note the commercial and contractual arrangements that are in place that could potentially limit the availability of power resources for sale to other utility systems.For example,the Lake Tyee project is owned and operated by the Four Dam Pool Power Agency and its output is sold to Petersburg and Wrangell pursuant to the Four Dam Pool Power Sales Agreement.Petersburg,Wrangell and eventually Ketchikan when it is interconnected,will always have first priority to the output of the Lake Tyee Project pursuant to the Power Sales Agreement.AEL&P is a regulated investor-owned utility with an obligation to provide a return to its shareholders.Any sale of power from AEL&P's resources will need to acknowledge the rate structure that AEL&P has in place. Power Requirements Electric power requirements have been projected for the load centers for a ten-year projection period.For the THREA served communities,Kake and Hoonah,the power requirement projections are based on assumed growth rates applied to recently experienced loads.Explicit adjustments have been made for new large loads.Power requirements for Ketchikan,Petersburg and Wrangell have been compiled from previously prepared Four Dam Pool planning studies. AEL&P has provided projections of its power requirements.KMC-GC has also provided estimates of its current power requirements and expectations of changes to the present load amount.The existing loads of the communities,utilities and KMC-GC are shown in Table 6-1. Southeast Alaska Intertie Study 6-2 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-1 2002 Energy Loads (MWh) Energy Sales (MWh) Energy Regs.”Peak Firm Non-Firm'Total (MWh)(kW) AEL&P 296,035 14,139 310,174 326,803 - THREA -Hoonah 3,296 865 4,161 4,557 780 Greens Creek °55,845 -55,845 55,845 8,000 Petersburg 36,617 -36,617 41,644 8,880 Wrangell 20,150 5,079 25,229 25,742 -3,070 Ketchikan 147,505 -147,505 153,972 26,300 THREA -Kake 2,594 1,370 3,964 4,291 1,016 'Interruptible or non-firm energy sales that can be curtailed under certain circumstances. 2 Energy requirements are the summation of total generation and total power purchases. 3 Estimated. The basis for and assumptions used in preparing the projected power requirements for each of the load centers are described in the following paragraphs. Alaska Electric Light &Power AEL&P has developed a forecast of its energy sales and total energy requirements for a 20-year period.The forecast includes sales to AEL&P's retail residential,commercial and public facility customers as well as non-firm sales that are dependent on the availability of surplus hydroelectricgeneration'®.Non-firm energy sales are primarily to AEL&P's dual fuel customers and to cruise ships equipped to connect to shore-based power generation.AEL&P is projecting its total energy requirement to increase from 340,000 MWh in 2003 to 403,000 MWh in 2023, representing an average annual growth rate of 0.85%.AEL&P indicates that its forecast reflects a trend towards lower residential electric heating usage in Juneau than had been experienced in the past. Kennecott Mining Company -Greens Creek Mine The KMC-GC mine located on Admiralty Island uses electric power for mining operations and also for electric loads at the Hawk Inlet and Young Bay dock facilities.None of these loads are interconnected with each other and separate generation systems are needed at each location.The mine load averages approximately 6 MW throughout the day and the peak load is about 7.5 MW. The loads at the Hawk Inlet powerhouse average about 370 kW but can increase to 500 kW - when loading a ship.The load at Young Bay is relatively small and insignificant. '®Hydroelectric generation can vary from year to year depending on local precipitation.In dryer years,the amount of hydroelectric generation surplus to the needs of AEL&P's retail customer base is lower than in normal years. Southeast Alaska Intertie Study 6-3 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis KMC-GC does not expect significant changes in its electric power requirements in the future. Ventilation improvements and additional loads at the grinding plant could in total increase the overall power requirement by about 500 kW.The expected remaining operating life of the facility is estimated by KMC-GC to be approximately 10 years,subject to exploration success, metal prices and other factors.The projected power requirements for KMC-GC are summarized in Table 6-2. TABLE 6-2 Kennecott Greens Creek Mine Projected Energy Loads and Capacity Requirements 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh) Mine Load 52,560 52,560 54,662 54,662 56,064 56,064 Hawk Inlet 2,628 2,628 2,628 2,628 2,628 2,628 Total Energy Requirements 55,188 55,188 57,290 57,290 58,692 58,692 Peak Demand (kW)'8,000 8,000 8,300 8,300 8,500 8,500 Loadfactor ”78.8%78.8%78.8%78.8%78.8%78.8% 'Includes estimated present peak demand of 7,500 kW at the mine and 500 kW at Hawk Inlet.Assumes an increase of 500 kW by 2007. 2 Ratio of average demand to peak demand on an annual basis. Hoonah Electric service is provided to the residents and businesses of Hoonah by THREA.In 2002, there were 342 residential customers,69 commercial customers and 22 public facility customers in Hoonah.Average monthly energy consumption of 460 kWh per residential customer is significantly lower than that experienced in the three largest cities in Southeast Alaska,Juneau, Ketchikan and Sitka where average monthly energy consumption is 837 kWh,860 kWh and 966kWh,respectively''.The low residential energy consumption is a reflection of the high retailcostofpower,which averaged 35.4 cents per kWh'®in 2002 to residential customers in Hoonah. Commercial rates are also in this range and undoubtedly function to significantly limit electrical consumption by commercial customers. Over the past three years there has been a significant reduction in energy sales to the three interruptible customers in Hoonah,all of which have the ability of generating some or all of their total power needs on their own.Retail rates are approximately 18 cents per kWh for interruptible sales.THREA indicates that the change in retail sales was primarily a result of the closure of the Whitestone Logging camp in August 2001.The high retail cost of power has contributed to self generation by certain large commercial electric users in Hoonah.THREA 7 Based on 2002 sales data for Juneau and Sitka and 2001 sales data for Ketchikan. '8 The effective electricity rate to THREA's residential customers was lowered by the State's Power Cost Equalization (PCE)program to approximately 22 cents per kWh in 2001 for the first 500 kWh purchased each month.Although the PCE program provides a significant subsidization of residential power costs,it also provides an incentive to limit power consumption.It should also be noted that the funding of the PCE program is granted by the State legislature on an annual!basis and no guarantees can be provided with regard to its continuation in the future. Southeast Alaska Intertie Study 6-4 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis offers an interruptible power sales rate to large customers with self-generating capability that is substantially lower than the regular commercial rate. The number of residential electric customers served by a utility is typically related to the area population,available housing and per capita income,among other factors.The population of Hoonah in 2002 was reported to be approximately 860.Projections made by the Alaska State Department of Labor in 1998 indicate an average annual change in population of -1.34%to0.24%for the Skagway-Hoonah-Angoon census area for the period 2003 through 2008'°.Long- term population change through 2018 provided in the Labor Department's report is in the same general range.Recent sales information from THREA indicates that total residential customers served and average residential energy sales have remained relatively constant the past three years. A new commercial development at Cannery Point near Point Sophia is presently under construction.The Point Sophia development involves the restoration and transformation of an old cannery into a tourist attraction and the installation of a number of other shore-based tourist activities for cruise ship passengers.The development is scheduled to begin operation in May 2004 and when fully developed,will entertain three to four cruise ship visits per week during the tourist season.Passengers will be lightered to shore in 2004;however,a dock facility is presently planned for completion in 2005.The Point Sophia development is estimated to employ upwards of 250 people during the tourist season when fully developed. THREA's distribution lines do not extend to the development at the present time and initially, on-site diesel generation will be used to supply the Point Sophia power supply requirement.The electric power requirement is presently estimated to be approximately 500 kW beginning in 2004 with annual energy requirements estimated to be approximately 2,650 MWh.THREA is in the process of obtaining grant funds to extend its distribution system to Point Sophia and is planning to serve the new load.The Point Sophia development should somewhat stimulate the local economy in Hoonah resulting in higher electric loads anong THREA's residential and commercial rate classes than would be experienced otherwise.A new subdivision with approximately 30 residential lots is presently under development in Hoonah. For the purpose of this analysis,the number of residential,commercial and public facility customers served in Hoonah have been assumed to increase at an average annual rate of 2%per year through 2007 and at 1%per year thereafter.The period of higher growth is during the time when the Point Sophia development will begin operation.Energy use per account is assumed toincreaseat0.5%to 1.0%per year.If the Intertie and other factors”contribute to the lowering of THREA's retail rates,electric consumption could increase even further.In addition,the Point Sophia development is assumed to increase local loads by 500 kW beginning in 2004 for the development itself,with further increases to 1,000 kW by 2008.There may also be opportunities to sell additional energy to customers that may be using their own generators at the present time, however,the amount of energy that this would represent is not known at the present time. '?References to population projections are from Alaska Economic Trends,September 1998.20 ....2 *.THREA is pursuing restructuring of its debt repayment which could contribute to lower retail rates. Southeast Alaska Intertie Study 6-5 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis With the Intertie,THREA may be able to offer an economic incentive power sales rate to new commercial/industrial customers that might encourage economic development in the Hoonah area and increase energy sales.The economic incentive rate would be tied to the incremental cost of purchased power over the Intertie and could be significantly lower than THREA's current interruptible rate.The impact of an economic incentive rate on Hoonah energy sales cannot be predicted and consequently,are not reflected in the analysis at the present time. The projected power requirements for Hoonah are summarized in the following table. TABLE 6-3 THREA -Hoonah Service Area Projected Energy Loads and Capacity Requirements Historical Projected 2000 2001 2002 2003 2004 2005 2006 2007 2012 Energy Sales (MWh) Residential 1,954 1,980 1,876 1,911 1,969 2,029 2,089 2,150 2,369 Commercial 868 881 795 811 827 844 860 877 962 Interruptible *2,379 1,735 865 874 2,207 2,879 3,550 3,559 3,605 Public Facilities 677 667 626 638 657 676 696 717 787 Other ::::::::: Total Sales 5,877 §,264 4,161 4,234 5,661 6,427 7,195 7,303 7,724 Increase %7 "10.4% -20.9%1.7%33.7%13.5%12.0%1.5%1.0% Station Service/Own Use 69 56 46 47 63 72 -80 82 86 Street Lights 63 64 64 64 64 64 64 64 64 Losses 305 300 286 277 369 419 468 475 503 Total Generation (MWh)6,314 §,684 4,557 4,622 6,157 6,982 7,807 7,924 8,377 Loss %of Gen.*4.8%5.3%6.3%6.0%6.0%6.0%6.0%6.0%.6.0% Peak Demand (kW)1,120 1,160 780 879 4,171 1,328 1,485 1,508 1,594 Loadfactor *64.4%55.9%66.7%60.0%60.0%600%600%60.0%60.0% *Assumes the Point Sophia development will begin operation in 2004 and increase electrical consumption to 2,650 MWh per year by 2006. 2 Increase in total sales over previous year. 3 Distribution losses and energy unaccounted for.Projected losses based on recent experience. *Ratio of average demand to peak demand on an annual basis.Projected loadfactor based on recent experience. Petersburg and Wrangell Petersburg and Wrangell are both municipally owned electric utilities interconnected with each other by the Lake Tyee transmission line.Petersburg Municipal Power &Light owns and operates the Blind Slough hydroelectric project and purchases its remaining power supply needs from the Lake Tyee project.Wrangell Municipal Light &Power purchases essentially all of its power supply from Lake Tyee.Electric loads in Petersburg and Wrangell have been projected recently with regard to studies of the Tyee-Swan Intertie.Loads in Petersburg are assumed to increase at average annual rates of 1.0%,0.5%and 2.0%for medium,low and high forecast scenarios,respectively.Loads in Wrangell are assumed to increase at average annual rates of 0.3%,0.0%and 1.0%for medium,low and high forecast scenarios,respectively.In addition,the low forecast scenario for Wrangell assumes that the Wrangell Forest Products mill,a 5,000 MWh per year load,closes its operation. Southeast Alaska Intertie Study 6-6 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis Forecasted loads for Wrangell and Petersburg are summarized in the following Table. TABLE 6-4 Petersburg and Wrangell Projected Energy Requirements --Medium Growth Scenario 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh) Petersburg '41,410 41,824 42,242 42,664 43,091 45,289 Wrangell ?26,045 26,150 26,256 26,362 26,469 27,010 Total 67,455 67,974 68,498 69,026 69,560 72,299 Less:Petersburg Hydro*(11,500)(11,500)(11,500)=(11,500)--(11,500)(11,500) Less:Minimal Diesel *(1,500)(1,500)(1,500)(1,500)(1,500)(1,500) Net Requirement on Tyee 5 54,455 54,974 §5,498 §6,026 56,560 §9,299 Assumes average growth in energy requirements of 1%per year. Assumes average growth in energy requirements of 0.5%per year and continued operation of the Silver Bay sawmill. 3 Estimated average annual generation from PMP&L's Blind Slough hydroelectric project. Estimated diesel generation needed for backup and maintenance purposes. Projected net energy requirement of PMP&L and WML&P on the Lake Tyee hydroelectric project.nNKetchikan Ketchikan Public Utilities (KPU),a municipally owned electric utility,is the second largest electric utility system in Southeast Alaska.KPU obtains the majority of its power supply from KPU-owned hydroelectric projects and the Swan Lake project,a Four Dam Pool Power Agency project.In most years,KPU's electric loads exceed the available hydroelectric generation capability and diesel generators must be used to supply the net power requirement.KPU is presently constructing the Swan-Tyee Intertie to gain access to the surplus generation capabilityoftheLakeTyeeproject”'.The electric requirements of KPU will affect the net generation available to Kake from the Lake Tyee project. Following the closure of the Ketchikan Pulp Company pulp mill power plant in 1997,KPU's total energy sales increased with the sale of power to the Gateway Forest Products sawmill.The sawmill closed at the end of 2001 and KPU sawa decrease in total energy sales.Electric loads are assumed to increase at average annual rates of 1.1%,0.3%and 2.2%for base,low and high forecast scenarios,respectively.KPU's forecasted electric requirements are summarized in the following table. 2!The City of Ketchikan and the Four Dam Pool Power Agency (FDPPA)are presently negotiating to transfer the Swan Tyee Intertie project to the FDPPA. Southeast Alaska Intertie Study 6-7 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-5 Ketchikan Public Utilities Projected Energy Requirements -Medium Growth Scenario 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh)'153,972 155,666 157,378 159,109 160,859 169,903 Less:KPU Hydro ”(68,460)(68,460)(68,460)(68,460)(68,460)(68,460) Less:Swan Lake °(68,108)(68,585)(69,065)(69,401)(69,725)(70,668) Net Requirement *17,404 18,624 19,853 21,248 22,674 30,775 Assumes average growth in energy requirements of 1.1%per year. Estimated annual energy generation from KPU-owned hydroelectric projects assuming average precipitation levels. Estimated annual generation from the Swan Lake hydroelectric project assuming average precipitation levels. Average energy usage is expected to increase somewhat as the KPU load increases. Projected net energy requirement to be provided from diesel generation,new hydro project generation or the Lake Tyee hydroelectric project,assuming the Swan-Tyee Intertie is constructed. Kake Electric service is provided to the residents and businesses of Hoonah by THREA.In 2002, there were 280 residential customers,60 commercial customers and 12 public facility customers in Kake.Average monthly energy consumption of 450 kWh per residential customer is significantly lower than that experienced in the three largest cities in Southeast Alaska,Juneau, Ketchikan and Sitka where average monthly energy consumption is 837 kWh,860 kWh and 966kWh,respectively”.The low residential energy consumption is a reflection of the high retailcostofpower,which averaged 35.5 cents per kWh”in 2002 to residential customers in Hoonah. Commercial rates are also in this range and undoubtedly function to significantly limit electrical consumption by commercial customers. Although the number of residential customers served in Kake has decreased somewhat the past two years,total energy sales have increased each year mostly due to increased sales of interruptible energy.The interruptible energy sales rate in Kake is approximately 17 cents per kWh.THREA indicates that the increase in interruptible sales is due to increasing power requirements at Kake Foods. For the purpose of this analysis,the number of residential,commercial and public facility customers served in Kake has been assumed to increase at an average annual rate of 1%per year. Energy use per account is assumed to increase at 0.5%to 1.0%per year.If the Intertie and otherfactors”contribute to the lowering of THREA's retail rates,electric consumption could increase 22 Based on 2002 sales data for Juneau and Sitka and 2001 sales data for Ketchikan. 3 The effective rate to residential customers was lowered by the State's Power Cost Equalization (PCE)program to approximately 22 cents per kWh in 2001 for the first 500 kWh purchased each month.Although the PCE program provides a significant subsidization of residential power costs,it also provides an incentive to limit power consumption to 500 kWh per month or less.It should also be noted that the funding of the PCE program is granted by the State legislature on an annual basis and no guarantees can be provided with regard to its continuation in the future.4 THREA is pursuing restructuring of its debt repayment which could contribute to lower retail rates. Southeast Alaska Intertie Study 6-8 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis even further.There may also be opportunities to sell additional energy to customers that may be using their own generators at the present time,however,the amount of energy that this would represent is not known at the present time. With the Intertie,THREA may be able to offer an economic incentive power sales rate to new commercial/industrial customers that might encourage economic development in the Kake area and increase energy sales.The economic incentive rate would be tied to the incremental cost of purchased power over the Intertie and could be significantly lower than THREA's current interruptible rate.The impact of an economic incentive rate on Kake energy sales cannot be predicted and consequently,are not reflected in the analysis at the present time. The projected power requirements for Kake are summarized in the following table. TABLE 6-6 THREA -Kake Service Area Projected Energy Loads and Capacity Requirements Historical Projected 2000 2001 2002 2003 2004 2005 2006 2007 2012 Energy Sales (MWh) Residential 1,600 1,588 1,498 1,529 1,561 1,593 1,626 1,659 4,823 Commercial 924 931 886 891 895 899 904 908 932 Interruptible '697 934 1,370 1,397 1,425 1,454 1,483 1,498 1,574 Public Facilities 384 343 210 214 221 229 237 245 268 Other ::-:::-:: Total Sales 3,605 3,796 3,964 4,031 4,102 4,175 4,249 4,309 4,597 Increase %”5.3%4.4%1.7%4.8%1.8%1.8%1.4%1.1% Station Service/Own Use 44 58 62 58 59 60 61 62 66 Street Lights 77 80 80 80 80 80 80 80 80 Losses 194 244 185 219 223 227 231 234 250 Total Generation (MWh)3,920 4,178 |4,291 4,388 4,464 4,542 4,621 4,685 4,993 Loss %of Gen.®.4.9%5.8%4.3%5.0%5.0%5.0%5.0%5.0%5.0% Peak Demand (kW):1,036 1,000 1,016 1,044 1,062 1,080 1,099 1,114 1,187 Loadfactor 4 43.2%47.7%48.2%480%480%48.0%48.0%48.0%48.0% 1 Assumes interruptible sales will increase at 2%per year through 2007 and at 1%per year thereafter. 2 Increase in total sales over previous year. 3 Distribution losses and energy unaccounted for.Projected losses based on recent experience. *Ratio of average demand to peak demand on an annual basis.Projected loadfactor based on recent experience. Estimated Maximum Transmission Capacity at Hawk Inlet For the purpose of defining the capacity of the first segment of SEI-1 between Juneau and Hawk Inlet,the future energy and capacity loads at Hawk Inlet have been estimated using information presented in this report as well as in the Phase 2 report.As the plan presently exists,Hawk Inlet will serve as the termination point for submarine cables that would eventually extend to Hoonah, Gustavus,Excursion Inlet,Angoon,Tenakee Springs and Sitka.The cable to Hoonah would potentially serve Gustavus and Excursion Inlet and also serve Sitka in the event that an overland transmission route to Sitka were to be developed.The preferred route to Sitka is presently a separate submarine cable from Hawk Inlet to Warm Springs Bay on Baranof Island with an intermediate landing in Angoon. Southeast Alaska Intertie Study _6-9 'Phase 1 -Final Report Power Supply Evaluation and Economic Analysis The hydroelectric capacity in Sitka currently exceeds the forecasted demand for the next 25 years,however,energy requirements are such that energy generation beyond the capability of the existing hydroelectric system will be needed in around 15 years.Except for Sitka,power deliveries over the Intertie system out of Hawk Inlet will be expected to regularly supply the full power requirement of each load center.Beyond Sitka,the Intertie system will interconnect with Kake and the Tyee-Swan region.It is not expected that the power flows out of Hawk Inlet will be used to regularly supply power to load centers beyond Sitka. Based on the foregoing,the following table summarizes the estimated capacity requirements of the Intertie system at Hawk Inlet,excluding loads at the KMC-GC mine.The forecasted loads are assumed to increase over time at approximately 1%per year.For planning purposes,the demand shown for Sitka assumes that the 18,000-kW Green Lake hydroelectric project is offline. Since the exact timing of Intertie development is not known at the present time,the forecasted loads in the following table are shown for several example years. TABLE 6-7 Estimated Power Demands at Hawk Inlet With SEI-1 and Eventual Connection to Sitka 2010 2020 2030 Maximum Demand at Hawk Inlet (kW) Hoonah 1,700 1,870 2,060 Gustavus/Excursion 2,390 2,790 3,200 Angoon 490 590 690 Tenakee Springs 91 101 111 Sitka (w/o Green Lake)18,000 18,000 18,220 Total 22,671 23,351 24,281 As shown,the maximum load is estimated to be approximately 25 MW.Allowing for a new mining load or other large load,the demand could increase to an estimated 35 MW.This demand allows for significant transmission capacity to Sitka which under normal operating conditions,would not be needed.It is also important to acknowledge that if Sitka were to develop the 20-MW Takatz Lake hydroelectric project,the Intertie capacity could be needed for transmission north to Juneau.Combined with an estimated future demand of 17 MW at KMC- GC,the capacity of the Juneau -Hawk Inlet segment of SEI-1 should be no less than 52 MW,or about 58 MVa at a 0.9 power factor. Availability of Hydroelectric Generation Based on the foregoing projections of power requirements and the generating capabilities of the existing hydroelectric facilities,the net hydroelectric generation available for sale to Kake, Hoonah and KMC-GC can be determined.It is important to note that hydroelectric generation capability is shown as an annual average.Actual generation can vary significantly from year to year based on local precipitation and other factors. Southeast Alaska Intertie Study 6-10 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis AEL&P AEL&P owns and operates several hydroelectric projects and purchases the full output of the State-owned Snettisham hydroelectric project.Generally,hydroelectric generation is sufficient to meet the full power supply requirement of AEL&P's customers.Oil-fired combustion turbines and diesel generators are used to supplement hydroelectric generation when needed. AEL&P has indicated that hydroelectric generation at the present time is limited and is insufficient to supply KMC-GC and Hoonah.Consequently,it will be necessary to construct the Lake Dorothy hydroelectric project before contractual commitments can be made to either KMC- GC or THREA.AEL&P is in the process of permitting and designing the Lake Dorothy project. Construction could begin as early as 2004 and will require about three years to complete the project.Phase 1 of the Lake Dorothy project,also called Bart Lake,is estimated to provide75,000 MWh”on an average annual basis.Phase 2,which is not currently scheduled for construction,would provide total energy generation of 169,000 MWh annually for Phase 1 and Phase 2 combined.The following table summarizes AEL&P's hydroelectric energy resources and the estimated energy available. TABLE 6-8 AEL&P Hydroelectric Generating Resources And Available Energy (MWh) 2003 2004 2005 2006 2007 2012 Hydroelectric Resources * AEL&P Hydro 59,000 59,000 59,000 59,000 59,000 59,000 Snettisham 294,000 294,000 294,000 294,000 294,000 294,000 Lake Dorothy 7 ----75,000 75,000 Total Resources 353,000 353,000 353,000 353,000 428,000 428,000 Energy Requirements 8 Firm Sales 298,167 300,438 302,620 305,538 308,619 327,246 Non-firm Sales *22,568 23,657 24,657 24,657 24,657 24,657 Losses and Own Use 19,197 19,405 19,564 19,710 19,864 20,795 Total Energy Requirements 339,932 343,500 346,841 349,905 353,140 372,698 Net Hydro Energy Available 5 13,068 9,500 6,159 3,095 74,860 55,302 As provided by AEL&P based on average water conditions.Net of transmission losses and station service. Phase 1,Bart Lake estimated average annual energy generation capability. As provided by AEL&P. Estimated energy sales to "dual-fuel”customers and cruise ships supplied with shore-based power,contingent upon availability of hydroelectric generation. Estimated average annual energy generation available to KMC-GC and Hoonah.hpWwWN=As shown in the previous table,under average water conditions,AEL&P has relatively limited amounts of surplus hydroelectric energy available without the Lake Dorothy project if AEL&P is 25 Firm annual energy output is estimated at 68,000 MWh. Southeast Alaska Intertie Study -6-11 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis to supply its own retail loads and committed non-firm loads.Without the Lake Dorothy project, the total hydroelectric energy generation capability available to AEL&P is 353,000 MWh under average water conditions.The annual energy generation capability would only be 295,000 MWh under low water conditions.As a result,under low water conditions,AEL&P would not be able to supply all of its loads with hydroelectric generation and would need to use oil-fired generation to fully supply its power requirement. Lake Tyee Project The generating capability of the 20-MW Lake Tyee project is presently committed to Petersburg and Wrangell.The Swan-Tyee transmission Intertie,currently under construction,will provide Ketchikan with access to generation from the Lake Tyee project that is surplus to the needs of Petersburg and Wrangell.Several estimates of the annual energy capability of the Lake Tyee project have been developed in the past;however,the loads connected to the project have never been large enough to evaluate how well the estimates compare with actual performance. Generally,it has been estimated that under average water conditions,the annual energy generation capability of the project is about 129,000 MWh.Based on actual experience and the knowledge of individuals familiar with the operation of the project,the average annual energy generation could be as low as 110,000 MWh per year. Hydroelectric generation is highly variable from year to year depending on local!precipitation and other environmental conditions.As previously indicated,the average annual estimated energy generation capability of the Lake Tyee project is 129,000 MWh.Under dry,low waterconditions”,the energy generation is estimated to be 112,700 MWh whereas it could be as high as 154,800 MWh. The following table summarizes the energy generation available from the Lake Tyee project assuming average annual energy generation of 120,000 MWh from the project. TABLE 6-9 Estimated Hydroelectric Energy Generation From the Lake Tyee Project -Medium Growth,Average Water (MWh) 2003 2004 2005 2006 2007 2012 Lake Tyee Generation '120,000 120,000 120,000 120,000 120,000 120,000 Energy Requirements Petersburg/Wrangell 54,455 54,974 55,498 56,026 56,560 59,299 Ketchikan 17,404 18,621 19,853 21,248 22,674 30,775 Net Energy Available *48,141 46,405 44,649 42,726 40,766 29,926 *Assumed generation for purpose of this analysis.Actual generation will vary from year to year. 2 Based on medium growth scenario,see Tables 6-4 and 6-5. 3 Estimated annual generation from the Lake Tyee project available to Kake. 26 Alternative energy generation estimates are typically derived using the lowest and highest measured streamflow data of record at the project location. Southeast Alaska Intertie Study 6-12 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis As shown in the previous table,the net energy generation available from the Lake Tyee project in 2007 is 40,766 MWh assuming average water conditions and medium load growth in Petersburg,Wrangell and Ketchikan.This is more than enough needed to meet the energy requirement of 4,685 MWh in Kake in the same year.By 2012,available energy from Lake Tyee is 29,926 MWh and,as loads continue to increase in Petersburg,Wrangell and Ketchikan, the available energy from Lake Tyee will continue to decline.Further,in dryer than average conditions,the available energy from Lake Tyee will be less than shown in Table 6-8,potentially by as much as 20,000 MWh in any particular year.If energy generation is not available from Lake Tyee,THREA will need to use its diesel generators in Kake to supply the necessary power requirement.As loads continue to grow in the interconnected region,however,new hydroelectric generation facilities could be constructed.The cost of power from these new facilities will potentially be higher than the cost of power from the Lake Tyee project. Potential New Hydroelectric Generation Facilities A number of new hydroelectric projects have been studied that could serve the Petersburg, Wrangell,Ketchikan,Kake,Hoonah and Juneau areas.Costs of these projects,as well as other factors including location,generating capacity,interconnected loads and the availability of better alternatives have precluded development of these projects.The development of a transmission interconnection system could make development of some of these projects economically and technically feasible at some later date.Hydroelectric projects that have been identified,the community they are closest to,and their estimated capacity and annual energy generation, include the following: e Whitman Lake -Ketchikan;4.6 MW,19,600 MWh annually e Connell Lake -Ketchikan;1.9 MW,11,640 MWh e Lake Grace -Ketchikan;diversion to Swan Lake project,72,200 MWh annually e Mahoney Lake -Ketchikan;9.6 MW,45,600 MWh annually e Lake Tyee Third Turbine -Petersburg/Wrangell;10 MW,1,000 MWh annually e Thomas Bay Project (Swan Lake,Ruth Lake)-Petersburg;40 MW,274,000 MWh e Sunrise Lake -Wrangell;4 MW;12,200 MWh e Anita -Kunk Lake -Wrangell;8 MW,28,200 MWh annually e Virginia Lake -Wrangell;12 MW,42,700 MWh annually e Thoms Lake -Wrangell;7.3 MW,25,600 MWh annually e Lake Dorothy,Phase 1 (Bart Lake)-Juneau,15 MW,75,000 MWh annually e Lake Dorothy,Phase 2 -Juneau;32 MW,94,000 MWh annually In addition to the Lake Dorothy Project,AEL&P has evaluated rehabilitation and expansion of existing hydroelectric facilities in the Juneau area. Recently,the City of Hoonah has investigated the feasibility of two small hydroelectric projects. A report in June 2002 by Hydro West,Inc.provided basic information on the Gartina Falls project and the Water Supply Creek project,both of which would have a generating capacity of .600 kW each.The Gartina Falls project would provide an estimated 1,900 MWh per year and Southeast Alaska Intertie Study 6-13 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis the Water Supply Creek project would provide an estimated 1,800 MWh per year.The estimated cost of the Gartina Falls project is $3.75 million while the Water Supply Creek project would cost an estimated $3.1 million.Based on assumed 50%grant funding and 50%funding with 0%interest rate loans',the estimated cost of energy from the two projects is 6.0 cents per kWh and 5.6 cents per kWh for the Gartina Falls and Water Supply Creek projects,respectively.The cost of power from these projects would be significantly higher if grant funding were not available. Neither the Gartina Falls nor Water Supply Creek projects are preliminarily considered to have significant fish habitat impacts.The Water Supply Creek project site is above the anadromous fish barrier,which is Gartina Falls.There are deep pools at the base of Gartina Falls that are considered important for fish holding.The costs,above,include estimated amounts for mitigation of this issue,however,Hydro West indicates that additional study will be needed to fully identify all environmental issues with the projects. Use of Oil-Fired Generating Facilities Although it has been indicated that only hydroelectric generation would be transmitted over the Interties,power generated at diesel power plants could be transmitted just as well.The use of diesel generators from outside the local community,however,would need to acknowledge the additional cost associated with transmission losses as well as the cost differential between surplus hydroelectric power and diesel generation.In some cases,it could be less costly to purchase out-of-area diesel generation than run local generators.This will need to be factored in to the contracts for power supply services. Economic Analysis of Interties Introduction and Assumptions An economic analysis has been conducted to determine if the benefits to be realized with the Intertie segments are greater than the costs of operating the Interties and purchasing power from hydroelectric resources.Benefits will be achieved through the offset of diesel generation costs at Kake,Hoonah and KMC-GC.Costs related to the Interties are direct costs of operations and maintenance (O&M),certain incremental administrative costs of the Intertie owner and the costs of purchasing power from AEL&P and the Four Dam Pool to serve the Kake,Hoonah and KMC- GC loads. In preparing this analysis,several assumptions have been made.The most significant of these assumptions are: e Capital costs of the Intertie systems are to be grant funded meaning that there will be no capital recovery component associated with the Interties.Note that the cost of a new ?7 These favorable financing assumptions were made by Hydro West in its evaluation of the projects for the City of Hoonah based on recent grant activity observed by Hydro West in Southeast Alaska.If grant funding is not available,the annua!cost of power from the projects would most likely be significantly higher. Southeast Alaska Intertie Study 6-14 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis substation at KMC-GC is not included in the costs of the Intertie.It is presumed,per AEL&P,that the substation would be funded by either AEL&P or KMC-GC. e Base year delivered fuel prices are $1.20 per gallon in Kake,$1.10 at KMC-GC and$1.35 per gallon in Hoonah”®.It must be acknowledged that fuel prices are highly variable and subject to radical changes. e Fuel costs,O&M and A&G costs will escalate at the assumed annual inflation rate of 2.5%per year. e Existing generation capacity will be maintained for emergency backup in Kake,Hoonah and KMC-GC.Resulting net O&M costs will be significantly lower than if the generating units were operated to supply full load. e The agency serving as owner of the Interties”will contract with others to provide maintenance on the Intertie systems.Administrative costs associated with ownership and operation of the Interties will be minimal. e A reserve fund will be established to collect monies for major maintenance and repairs in the future.The reserve fund will also serve as a self-insurance fund since transmission lines are generally not insurable. e The cost of purchased power from AEL&P will be inclusive of all transmission and delivery charges to the point of delivery,expected to be either at the submarine termination yard on Douglas Island or at KMC-GC and Hoonah. e Energy losses over the Interties will be 2%of the transmitted power to KMC-GC and 4% to Kake and Hoonah. The economic analysis estimates the power production costs for each service area that will be offset if the Interties are constructed.These "benefits”are then compared to the costs of power purchases and Intertie operation to determine if the benefits of the Interties exceed the costs.It is expected that each Intertie will need to show positive benefits.To protect the interests of electric consumers,the total costs incurred by the local utility systems,on a case-by-case basis,must be lower with the Interties than without to show economic justification for the Interties. It should be noted that costs of operation that are the same with or without the Interties are not included in the analysis.Examples of these costs are capital recovery on existing generation plant and fixed O&M charges. Projected Cost of Existing Diesel Generation THREA owns and operates diesel generators in Kake and Hoonah to supply the full power supply requirement of these communities.Total installed generation capacity is 2,585 kW in Kake and 2,455 kW in Hoonah.Each community has three generating units.The principal cost 28 THREA's actual cost of generation fuel for its entire system averaged approximately $1.23 per gallon in 2001 and $1.00 per gallon in 2002.Fuel costs have increased substantially in early 2003 over costs experienced in 2002. ?°The Southeast Conference has indicated that it will not serve as owner of the Interties.More investigation of potential ownership structures will be included in the Phase 2 Intertie Study. Southeast Alaska Intertie Study 6-15 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis in operating the diesel generators is the cost of fuel,which represented approximately 55%of the total power production costs in THREA's system over the past three years. KMC-GC operates a 5,200-kW oil-fired Solar turbine along with three 2,200-kW Ruston diesel generators and two Caterpillar 3516 1,825-kW diesel generators at the mine.Four Caterpillar 3406 diesel generators with a total capacity of 836 kW are operated at the Hawk Inlet ore loading facility and a 30-kW generator is located at the Young Bay dock. Without the need to operate their diesel generators except in emergency situations,THREA and KMC-GC should be able to reduce the O&M costs of the units.The need for maintenance activities,lubricants and other consumables will be substantially reduced and maintenance and operating personnel can be assigned to other activities.Based on a review of THREA'sproductioncosts,it is estimated that the variable O&M cost''is about 3.0 cents per kWh.The variable O&M cost for the operation of KMC-GC's power generation system is estimated to be about 1.5 cents per kWh.KMC-GC presently has a staff of four to operate its powerplant and also pays a monthly fee for a maintenance contract on the Solar turbine.Further,KMC-GC also incurs costs to transport fuel from storage tanks at Hawk Inlet to the powerplant at the mine. Since it will be necessary to maintain backup generation in Hoonah,Kake and KMC-GC with the Interties,some power production O&M costs will continue to be incurred. In addition to the offset of fuel and O&M costs,with the Interties both THREA and KMC-GC will benefit from the extension in operating life of their existing generators.Without the Interties,continued regular operation of the existing generators would require their eventual replacement or major overhaul.For the purpose of this analysis,it is assumed that without the Intertie,KMC-GC will replace one of its 2,200-kW diesel generators in five years (2008)and one in 2010 at a cost of $500 per kW.With the Intertie,the cost of these new generators would be avoided.THREA has indicated that if the Intertie to Hoonah is not constructed,it will likely need to install a 1,000-KW generator in Hoonah as a replacement for an older unit.The estimated cost of the new generator is $400,000. The cost of generation fuel is a critical factor in the cost of power production for THREA and KMC-GC.Fuel prices in Kake in early March 2003 were reported at $1.59 per gallon, significantly higher than the average fuel price of $0.90 per gallon incurred in 2002 and $1.07 per gallon in 2001.Fuel prices in Hoonah typically average 20-30 cents more per gallon than inKake*!.KMC-GC is estimated to incur fuel prices based on a negotiated margin over a standard fuel price index.This should result in fuel prices at KMC-GC somewhat lower than those in Kake.It is not expected that diesel fuel prices will stay at the current high level,however,it is not expected that they will necessarily decrease to price levels experienced in 2002. Consequently,for the purpose of this analysis,the price of diesel fuel has been assumed to be $1.20 per gallon in Kake,$1.10 at KMC-GC and $1.35 per gallon in Hoonah.Fuel prices are further assumed to increase over time at the assumed rate of general inflation,2.5%per year. ©Dower production costs are often characterized as variable,those costs that are directly associated with each unit of operation,and fixed,costs that are not avoidable.The costs of operations personnel are considered fixed for THREA's Kake and Hoonah service areas. 3!THREA operates fuel storage tanks in Kake and Angoon that allow for barge deliveries of fuel in large enough quantities to obtain lower prices.Near daily truck deliveries of fuel are needed in Hoonah causing higher prices. Southeast Alaska Intertie Study 6-16 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis The following tables show the projected variable cost of power production over the next ten years at Hoonah,KMC-GC and Kake,based on continued use of oil-fired generation.It is important to note that the variable cost of production is not the full cost of power production,but rather is the cost that could be directly avoided if the Interties were constructed. TABLE 6-10 Projected Variable Cost of Power Production with Diese!Generation THREA -Hoonah Service Area 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh)*4,622 6,157 6,982 7,807 7,924 8,377 Fuel Price ($/gallon)2 $135 $138 $142 $145 $1.49 $1.69 Power Production Cost ($000) Fuel Cost ®$430 $588 $683 §$783 $814 §$974 Variable O&M "139 189 220 252 262 314 Subtotal $569 $777 §$903 $1,035 $1,076 $1,288 Replacement Cost °--32 32 32 32 Total Production Cost $569 $777:§$935 $1,067 $1,108 $1,320 (¢/kWh)12.3 12.6 13.4 13.7 14.0 15.8 See Table 6-3.-8NH=Assumes increase in fuel price at the assumed annual rate of general inflation Based on average fuel usage of 14.5 kWh per gallon. Estimated variable O&M cost of 3.0 cents per kWh based on THREA identified production cost items of miscellaneous power generation expenses,generator overhaul and maintenance expenses,maintenance supervision and maintenance salaries and miscellaneous.Does not include generation salaries and costs associated with maintenance of structures.Assumed to increase annually at the assumed rate of general inflation. assumes a $400,000 loan at a 5%interest rate and a 20-year repayment period. TABLE 6-11 Based on estimated cost of new 1,000 kW diesel generator to replace older generating unit.Annual payment Projected Variable Cost of Power Production with Diesel Generation THREA -Kake Service Area 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh)1 4,388 4,464 4,542 4,621 4,685 4,993 Fuel Price ($/gallon)2 $120 $123 $126 $41.29 $1.32 $1.50 Power Production Cost ($000) Fuel Cost ®$384 $401 $418 $436 $453 $546 Variable O&M *132 137 143 149 155 187 Subtotal $516 $538 $561 $585 $608 $733 Replacement Cost °------ Total Production Cost $516 $538 $561 $585 $608 $733 (cents/kWh)11.8 12.1 12.4 12.7 13.0 14.7 'See Table 6-6. ?Assumes increase in fuel price at the assumed annual rate of general inflation Southeast Alaska Intertie Study 6-17 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis a&WwWKH=Based on average fuel usage of 13.7 kWh per gallon. Estimated variable O&M cost of 3.0 cents per kWh based on THREA identified production cost items of miscellaneous power generation expenses,generator overhaul and maintenance expenses,maintenance supervision and maintenance salaries and miscellaneous.Does not include generation salaries and costs associated with maintenance of structures.Assumed to increase annually at the assumed rate of general inflation. No replacement of generation plant is expected in Kake for the foreseeable future. TABLE 6-12 Projected Variable Cost of Power Production with Oil-Fired Generation Kennecott Greens Creek Mine 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh)'55,188 55,188 57,290 57,290 58,692 58,692 Fuel Price ($/gallon)*$110 $113 $1.16 $118 $1.21 §$1.37 Power Production Cost ($000) Fuel Cost *$5059 $5,185 $5517 $5655 $5939 $6,719 Variable O&M *828 849 903 925 972 1,099 Subtotal $5887 $6034 $6420 $6580 $6911 $7,818 Replacement Cost ®-----224 Total Production Cost $5887 $6034 $6420 $6580 $6,911 $8,042 (¢/kWh)10.7 10.9 11.2 11.5 11.8 13.7 See Table 6-2. Assumes increase in fuel price at the assumed annual rate of general inflation. Based on average fuel usage of 12.0 kWh per gallon. Estimated variable O&M cost of 1.5 cents per kWh,increased annually at the assumed rate of general inflation. Assumes replacement of 2,200 kW diesel generators in 2008 and 2010 at a cost of $500 per kW.Annual cost based on levelized capital recovery at a 7%interest rate and a 20-year repayment period. Intertie Annual Costs The transmission systems to be constructed will require regular efforts to inspect the system condition and make necessary repairs.Generally,these activities will be relatively minor, particularly for a new system.Structures,guys,insulators,conductors and submarine cable terminations will need to be inspected visually and a program to regularly clear trees and brush from the right of way will need to be established.It is expected that the Southeast Conference, as owner of the Interties,will contract out the regular inspection and maintenance activities to local utilities or other providers of this kind of service.The estimated annual O&M costs for the Interties are as follows: Southeast Alaska Intertie Study 6-18 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-13 Juneau-Greens Creek-Hoonah Intertie Estimated Annual O&M Costs Tree Trimming $20,000 Overhead Line Inspections 15,000 Regular Repairs/Replacements 50,000 Submarine Terminal Inspections 15,000 Switchyard Maintenance 25,000 Miscellaneous 15,000 Subtotal $140,000 Contractor Fee '25,000 Total $165,000 Unit Cost (¢/kWh)2 0.25 'Administrative and other overhead costs of contractor expected to be retained to provide O&M services for the Intertie and related facilities. 2 Unit cost of O&M assuming combined energy sales of 66,600 MWh to KMC-GC and Hoonah. TABLE 6-14 Kake-Petersburg Intertie Estimated Annual O&M Costs Tree Trimming $45,000 Overhead Line Inspections 20,000 Regular Repairs/Replacements 35,000 Submarine Terminal Inspections 15,000 Switchyard Maintenance 10,000 Miscellaneous 20,000 Subtotal $145,000 Contractor Fee '25,000 Total $170,000 Unit Cost (¢/kWh)”3.6 'Administrative and other overhead costs of contractor expected to be retained to provide O&M services for the Intertie and related facilities. 2 Unit cost of O&M assuming energy sales of 4,685 MWh to Kake. The agency or organization that owns the Interties,will incur certain expenses related to policy oversight,accounting,general administration and management.Some of these costs would not necessarily be incurred to the same extent if the Interties were owned and administered by a utility or other entity presently in an electric service type business.The following table provides Southeast Alaska Intertie Study 6-19 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis the estimated Intertie related administrative costs assuming both the Kake -Petersburg and the Juneau -Greens Creek -Hoonah Interties are constructed and administered by the same agency. TABLE 6-15 Estimated Annual Intertie Administrative Costs ' Management ?$60,000 Legal Fees 15,000 Permit Overview 10,000 Insurance °30,000 Accounting/Billing 30,000 Legislative Affairs 10,000 Travel Expenses 15,000 Miscellaneous 20,000 Total.$190,000 Unit Cost (¢/kWh)*0.27 *Assumes a common agency or organization owns and administers the two Interties. ?Based on allocated cost of part-time manager. 3 Assumed cost of insurance on switchyards and related facilities. *Unit cost assuming combined energy sales of 71,300 MWh to Kake,KMC-GC and Hoonah. Intertie O&M and administrative costs are expected to be recovered through charges to each of the Intertie users that are directly proportional to the power transmitted.The charges could be included as part of the wholesale cost of power.For the purpose of this study,the O&M costs for each Intertie are assumed to be charged only to the users of that Intertie.For example,the O&M costs of the Kake -Petersburg Intertie are allocated solely to THREA's operation in Kake. The O&M costs for the Juneau -Greens Creek -Hoonah Intertie are allocated to both KMC-GC and Hoonah based on the percentage of total energy estimated to be transmitted to each load . -center.The unit O&M cost shown in Table 6-13 for the Kake -Petersburg Intertie is much higher than the unit O&M cost shown in Table 6-14 because estimated energy sales to KMC-GC and Hoonah are significantly greater than to Kake.The administrative costs are allocated to KMC-GC,Kake and Hoonah in proportion to the energy estimated to be delivered to each of these load centers. In addition to O&M and administrative costs,a charge related to the accrual of reserve funds to pay for major repairs to the Interties should be included in the costs charged to the Intertie users. These costs are not expected to be significant in the early years of Intertie operation and are in lieu of a depreciation charge.The reserve fund charge is also a means for "self-insuring”the Interties since transmission lines are generally not insurable. As a basis for the amount of this repair and replacement (R&R)reserve that should be established,the estimated cost of a major repair or replacement of a significant system component can be used.It can also be reasonably assumed that with a new system,the timing of Southeast Alaska Intertie Study 6-20 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis such a major repair or replacement would be several years in the future.For the Kake - Petersburg line,a reserve requirement of $1.0 million has been estimated while a $2.5 million reserve is estimated for the Juneau -Greens Creek -Hoonah line.Since these reserve amounts are based on the cost of a major submarine cable repair,a larger reserve is estimated to be - needed on the Juneau -Greens Creek -Hoonah line because of the longer cables involved in this system.Annual deposits of $46,000 and $116,000 per year for the two Interties,respectively, would be needed to build up the reserve fund balance to these amounts within 15 years with accrued interest at 5%per year. Cost of Purchased Power With the Interties,power will be purchased from AEL&P and purchased directly by KMC-GCandTHREAforuseinHoonah**.Power will be purchased from the Four Dam Pool Power Agency and purchased by THREA for use in Kake.Power to be purchased from AEL&P will be priced at a rate that includes delivery charges to Outer Point on Douglas Island,the origin of the Juneau-Greens Creek-Hoonah Intertie.It is not expected that AEL&P will dedicate any particular generating resource to KMC-GC or THREA but rather,will guarantee a quantity of energy at a price that recovers AEL&P's cost of production and assures that AEL&P's existing customers are not negatively impacted.Power purchases from AEL&P are expected to be tied to hydroelectric generation surplus to the needs of AEL&P's retail customers and existing non-firm commitments.With the development of the Lake Dorothy project,power deliveries to KMC-GC and Hoonah will essentially be firm. In the event that hydroelectric generation is insufficient to supply AEL&P's full retail and interruptible load at any point in time,all or a portion of the deliveries to KMC-GC and Hoonah could be temporarily curtailed.On-site generation in KMC-GC and Hoonah would be needed to supply the local power requirement under this circumstance or alternatively,energy generated at AEL&P's oil-fueled generators could be used.If AEL&P needs to operate diesel generators to supply Hoonah or KMC-GC,there would need to be a surcharge applied to the base price for energy purchases. AEL&P has indicated that it will need to develop the Lake Dorothy hydroelectric project in order to supply the power requirement of KMC-GC and Hoonah.Consequently,the cost of power to be purchased by KMC-GC and Hoonah from AEL&P will be tied to the cost of power from the Lake Dorothy project.Discussions with AEL&P indicate that an exact price for the power to be sold to KMC-GC and THREA is not available.A price range has been determined,however, and for purposes of this analysis a rate of 8.5 cents per kWh is considered a reasonable estimate. AEL&P is presently pursuing development of the Lake Dorothy project and has filed a permit application with the Federal Energy Regulatory Commission (FERC).Construction of the project could begin in 2004 at the earliest and would require about three years to complete. *It is expected that AEL&P will contract directly with KMC-GC and THREA and that there will be no intermediate purchase by the Intertie owner/administrator.In this circumstance,AEL&P would most likely collect an additional amount over the cost of power supply to pay for the incremental Intertie costs.This additional amount could be bundled in to the power sales rate or could be an explicit transmission charge or "wheeling”fee. Southeast Alaska Intertie Study 6-21 Phase 1 -Final Report Power Supply Evaluation andEconomicAnalysis Power to be purchased from the Four Dam Pool Power Agency (FDPPA)by THREA for delivery to Kake will also be interruptible.At the present time,the Four Dam Pool firm power rate is 6.8 cents per kWh.This rate could increase somewhat in the future but is expected to remain relatively constant for the next few years.Discussions with FDPPA management indicate that power could be sold to THREA at a rate thatis potentially lower than the firmpowersalesratebecauseofthepossibilityofinterruptioninavailability.For purposes of this study,it has been assumed that power can be purchased from the Four Dam Pool at 4.0 cents per kWh through 2011,increasing by 0.5 cents per kWhin 2012 and every five years thereafter.This cost would include delivery charges to Petersburg™. Estimated Savings with the Intertie Based on the foregoing,the cost of power to THREA and KMC-GC with the Interties has been projected.This cost includes the cost of purchased power and the allocated costs of Intertie O&M and administration to each line.The costs with the Intertie have then been compared to the costs without the Intertie to determine the net savings to THREA and KMC-GC associated with the Intertie.The cost of power with the Intertie and the estimated savings in each load center are shown on an annual basis in the following tables assuming that the Interties are constructed and begin operation in 2007.In Table 6-15 and Table 6-16,the KMC-GC mine is assumed to remain in operation through 2016.With the closure of the mine,THREA will need to cover the full operating cost of the Intertie. TABLE 6-16 Projected Cost of Power and Savings with the Intertie THREA -Hoonah Service Area 2007 2008 2009 2010 2011 2012 2017 Energy Requirements (MWh)\7,924 8,015 8,106 8,199 8,293 8,377 8,783 Energy Purchased (MWh)8,241 8,336 8,431 8,527 8,625 8,712 9,134 Purchased Power Price (¢/kWh)8 8.5 8.5 8.5 8.5 8.5 8.5 8.5 Annual Costs with Intertie ($000) Purchased Power '$700 $709 $717 $725 $733 $740 $776 intertie O&M °23 23 24 25 26 27 242 intertie A&G °24 25 26 27 28 29 174 intertie R&R'14 14 14 14 14 14 116 Total Annual Costs with Intertie $761 $771 $781 $791 $801 $810 $1,308 Unit Cost (¢/kWh)8 9.6 9.6 9.6 9.6 9.7 9.7 14.9 Savings with Intertie ($000)8 $347 $377 $408 $440 $475 $510 $251 Savings (¢/kWh)°°4.2 4.5 48 5.2 5.5 5.9 27 Breakeven Cost of Power (¢/kWh)"12.7 13.0 13.3 13.7 14.0 14.3 11.2 1 See Table 6-3. 3 As indicated previously and shown in Table 3-8,it is expected that the full power requirement of Kake can regularly be supplied from the Lake Tyee project for several years to come,but cannot be fully guaranteed.*Energy losses from Lake Tyee to the Kake Intertie tap point near Petersburg are also expected to be effectively included in the power sales rate.Since the metering point for power sales to Kake is to be at the tap point,energy losses between the tap point and Kake will need to be included as a cost to THREA. Southeast Alaska Intertie Study 6-22 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis Includes estimated transmission losses of 4%between Juneau and Hoonah. Estimated price of power purchased from AEL&P. Estimated cost of power purchased from AEL&P. Intertie O&M cost as shown in Table 6-12 allocated to THREA based on percentage of total sales over the Intertie. Assumes O&M costs increase annually at the assumed rate of general inflation. Intertie A&G cost as shown in Table 6-14 allocated to THREA based on percentage of total sales over both Interties.Assumes A&G costs increase annually at the assumed rate of general inflation. Annual deposit to Intertie R&R fund to establish a $2.5 million balance in 15 years with accrued interest at an assumed 5%interest rate.Cost allocated to THREA based on percentage of sales over the Juneau -Greens Creek -Hoonah Intertie. Total Annual Costs divided by Total Energy Requirement.°Total Production Cost for the diesel generation case (see Table 6-9)less Total Annual Costs with Intertie.10 Savings with Intertie divided by Total Energy Requirements."t Estimated price for purchased power over the Intertie,exclusive of transmission related charges,that could be paid and produce no annual savings.onaWOND8 As shown in Table 6-15,the estimated savings to THREA in 2007,the first year of Intertie operation is $347,000.Table 6-15 also shows that the average charge for electric service inHoonahcouldpotentiallybereducedby4.2 cents per kWh with the Intertie*>.Annual savings with the Intertie are expected to increase each year primarily due to assumed increases in the cost of diesel fuel that the Intertie will offset.In 2017,the first year after the assumed closure of the KMC-GC mine,the revenue recovery obligations of THREA increase and the savings decrease. The cumulative present value to mid-2003 of the estimated annual savings to THREA with the Intertie for the 20-year period,2007 through 2026 is $4.67 million,assuming a 5%discountrate'. A significant benefit to THREA with the Intertie will be the ability to establish economic incentive rates for new large commercial/industrial electric consumers.As long as regular retail energy sales remain relatively stable in Hoonah,the fixed costs of THREA's distribution system and the Intertie will be recovered through normal rates.Consequently,an economic incentive rate based on the incremental cost of purchased power (8.5 cents per kWh in the above table) plus a nominal margin could be established.This rate would need to be negotiated on a case by case basis and should have a time limit to it (e.g.5-10 years),but could be used to attract new commercial activity to the Hoonah area. 35 Due to the effects of the State Power Cost Equalization program,any savings in THREA's cost of power due to the Intertie would not necessarily show up in reductions in the effective charges for residential electric service. Rather,the amount of subsidy from PCE provided to THREA would be reduced. 3°The discount rate for THREA is based on THREA's cost of capital,which is generally a relatively low interest rate of 5%. Southeast Alaska Intertie Study 6-23 ,Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-17 Projected Cost of Power and Savings with the Intertie Kennecott Greens Creek Mine 2007 2008 2009 2010 2011 2012 2017 Energy Requirements (MWh)1 58,692 58,692 58,692 58,692 58,692 58,692 - Energy Purchased (MWh)2 59,866 §9,866 59,866 59,866 59,866 59,866 - Purchased Power Price (¢/kWh)3 8.5 8.5 8.5 8.5 8.5 8.5 - Annual Costs with Intertie ($000) Purchased Power $5,089 $5,089 $5,089 $5089 $5089 $5,089 §$- Intertie O&M °164 168 171 176 180 184 - Intertie A&G °176 180 184 188 193 197 - Intertie R&R”102 102 102 102 102 104 - Total Annual Costs with Intertie $§5,531 $5,539 $5546 $5555 $5564 $5,571 $- Unit Cost (¢/kWh)®9.4 9.4 9.4 9.5 9.5 9.5 - Savings with Intertie ($000)8 $1,380 $1656 $1,826 $2,110 $2,288 $2,471 §$- Savings (¢/kWh)'°2.3 2.8 3.4 3.5 3.8 44 - Breakeven Cost of Power (¢/kWh)*"10.8 11.3 16 -12.0 12.3 12.6 - 1 See Table 6-2. 2 Includes estimated transmission losses of 2%between Juneau and the KMC-GC mine. 3 Estimated price of power purchased from AEL&P.;Estimated cost of power purchased from AEL&P.intertie O&M cost as shown in Table 6-12 allocated to KMC-GC based on percentage of total sales over the Intertie.Assumes O&M costs increase annually at the assumed rate of general inflation. Intertie A&G cost as shown in Table 6-14 allocated to KMC-GC based on percentage of total sales over both Interties.Assumes A&G costs increase annually at the assumed rate of general inflation. Annual deposit to Intertie R&R fund to establish a $2.5 million balance in 15 years with accrued interest at an assumed 5%interest rate.Cost allocated to KMC-GC based on percentage of sales over the Juneau -Greens Creek -Hoonah Intertie. 8 Total Annual Costs divided by Total Energy Requirement.3 Total Production Cost for the diesel generation case (see Table 6-11)less Total Annual Costs with Intertie.1 Savings with Intertie divided by Total Energy Requirements."'Estimated price for purchased power over the Intertie,exclusive of transmission related charges,that could be paid and produce no annual savings. As shown in Table 6-16,the estimated savings to KMC-GC in 2007,the first year of Intertie operation is $1,380,000.Annual savings with the Intertie are expected to increase each year primarily due to assumed increases in the cost of fuel that the Intertie will offset.The cumulative present value to mid-2003 of the estimated annual savings to KMC-GC with the Intertie for the ten-year period,2007 through 2016 is $11.0 million,assuming an 8%annual discount rate. Southeast Alaska Intertie Study 6-24 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-18 Projected Cost of Power and Savings with the Intertie THREA --Kake Service Area . 2007 2008 2009 2010 2011 2012 2017 Energy Requirements (MWh)'4,685 4,747 4,811 4,874 4,938 4,993 5,278. Energy Purchased (MWh)?4,873 4,937 5,003 5,069 5,135 5,192 5,489 Purchased Power Price (¢/kWh)3 4.0 4.0 4.0 4.0 4.0 4.5 5.0 Annual Costs with Intertie ($000) Purchased Power '$195 $197 $200 $203 $205 $234 $274 Intertie O&M °195 200 205 210 215 221 250 Intertie A&G°14 15 15 16 17 17 105 Intertie R&R'46 46 46 46 46 46 46 Total Annual Costs with Inteitie $450 $458 $466 $475 $483 $518 $675 Unit Cost (¢/kWh)°9.6 9.6 9.7 9.7 9.8 10.4 12.8 Savings with Intertie ($000)8 $158 $173 $190 $206 $224 $215 $204 Savings (¢/kWh)"°3.2 3.5 3.8 4.1 4.4 44 3.7 Breakeven Cost of Power (¢/kWh)"7.2 7.5 7.8 8.1 8.4 8.6 8.7 See Table 6-6. Includes estimated transmission losses of 4%between Petersburg and Kake. Estimated price of power purchased from the Four Dam Pool Power Agency. Estimated cost of power purchased from the Four Dam Pool Power Agency. Intertie O&M cost as shown in Table 6-13 fully allocated to THREA.Assumes O&M costs increase annually at the assumed rate of general inflation.. Intertie A&G cost as shown in Table 6-14 allocated to THREA based on percentage of total sales over both Interties.Assumes A&G costs increase annually at the assumed rate of general inflation. Annual deposit to Intertie R&R fund to establish a $1.5 million balance in 15 years with accrued interest at an assumed 5%interest rate.Cost is fully allocated to THREA. Total Annual Costs divided by Total Energy Requirement.®Total Production Cost for the diesel generation case (see Table 6-10)less Total Annual Costs with Intertie."°Savings with Intertie divided by Total Energy Requirements."t Estimated price for purchased power over the Intertie that could be paid and produce no annual savings.aQbhWNa8 As shown in Table 6-17,the estimated savings to THREA in 2007,the first year of Intertie operation is $158,000.Annual savings with the Intertie are expected to increase each year primarily due to assumed increases in the cost of fuel that the Intertie will offset.The cumulative present value to mid-2003 of the estimated annual savings to KMC-GC with the Intertie for the 20-year period,2007 through 2026 is $2.49 million,assuming a 5%annual discount rate. Compared to the savings shown related to the Juneau -Greens Creek -Hoonah Intertie,the annual savings shown for the Kake -Petersburg Intertie are much less due to the need to allocate the operating costs of this Intertie over a much smaller load base in Kake than the combined Greens Creek -Hoonah load. A significant benefit to THREA with the Intertie will be the ability to establish economic incentive rates for new large commercial/industrial electric consumers.As long as regular retail energy sales remain relatively stable in Kake,the fixed costs of THREA's distribution system and the Intertie will be recovered through normal rates.Consequently,an economic incentive rate based on the incremental cost of purchased power (4.0 cents per kWh in the above table) Southeast Alaska Intertie Study 6-25 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis plus a nominal margin could be established*'.This rate would need to be negotiated on a case by case basis and should have a time limit to it (e.g.5-10 years),but could be used to attract new commercial activity to the Kake area. The savings estimated for THREA's Hoonah and Kake service areas could,but would not necessarily be transferred directly through to a reduction in rates for electric service in Kake andHoonah.THREA presently charges the same rates for all of its service areas*®based on the combined costs of the entire system.The estimation of THREA's power rates is beyond the scope of this study.The State's Power Cost Equalization program would also affect how much of the Intertie provided savings would be realized by residential consumers in Kake andHoonah?'.The PCE program is funded each year by the State legislature and its funding magnitude as well as its continuation is uncertain. Sensitivity of Results to Alternative Assumptions As previously indicated,a number of assumptions have been made in preparing the comparative economic analysis used to determine the benefits of the Interties.Principal among the variables with significant impact on the results are load growth in Kake and Hoonah,future diesel fuel prices and future inflation.Alternative assumptions for these variables could potentially produce significantly different results.The following table provides a comparison of the estimated savings with the Interties using alternative assumptions.For each of the alternative cases in Table 6-18,it is important to note that only the specifically identified assumption is changed.All other assumptions remain the same as provided in the base case. 37 The Four Dam Pool Power Agency would also need to be involved in any discussions of additional energy purchases for economic incentive purposes. 8 THREA has indicated that it may need to establish rates in each service area based on the cost of service in the respective areas,at the request of the Regulatory Commission of Alaska (RCA).3°Essentially,the PCE program provides a subsidy to residential electric consumers.The amount of the subsidy is based on the local cost of power production.According to the program formula,if the cost of power production decreases,as it does when fuel prices drop,the magnitude of the subsidy would also decrease.The amount of the subsidy is also a function of the legislatively approved contribution to the program each year. Southeast Alaska Intertie Study 6-26 Phase 1 -Final Report Power Supply Evaluation and Economic Analysis TABLE 6-19 Comparison of Savings using Alternative AssumptionsCumulativePresentValueofIntertieSavings' ($000) THREA -THREA - Hoonah Kake Service Case Service Area KGCM Area Base Case ”$4,669 $10,974 $2,491 No Load Growth °$1,665 $10,837 $1,424 Low Fuel Cost *$3,424 $5,100 $1,435 High Fuel Cost °$6,202 $13,622 $3,361 High Inflation ©$6,439 $14,210 $3,089 2 Based on assumptions used in Tables 6-15,6-16 and 6-17.3 Assumes loads in Hoonah and Kake do not increase beyond current,2003 levels.4 Assumes 2003 fuel cost of $1.20,$0.90 and $1.00 for Hoonah,KMC-GC and Kake,respectively, escalated at the assumed annual rate of general inflation. Estimated cumulative present value savings of Intertie benefits between 2007 and 2026 to July 2003. Assumes discount rates of 5%for THREA and 8%for KMC-GC. Assumes 2003 fuel cost of $1.35,$1.10 and $1.20 for Hoonah,KMC-GC and Kake,respectively, escalated at 3.5%per year (i.e.1%above the assumed annual rate of general inflation.)Note that the 2003 fuel costs assumed in this case are the same as used in the Base Case. Assumes 4.5%annual inflation applied to all O&M and A&G costs.Fuel costs are assumed to increase at 3.5%annually,(i.e.1%below the assumed annual rate of general inflation). Southeast Alaska Intertie Study 6-27 Phase 1 -Final Report Section 7 Comparison of AC,HVDC and HVDC/VSC Technologies Introduction A study was conducted by Northstar Power Engineering and George Karady,Phd.of Arizona State University to evaluate the use of alternative energy transmission technologies for the Interties.Their complete report on the subject is included as Appendix E to this report. Following is an excerpted summary of the report and its findings. The objective of the present study is the identification of the most advantageous transmission system for the Intertie.The technical problem is that the interconnection is between islands and requires submarine cables.In an alternating current (AC)system,the capacitive current limits the length of a submarine cable to about 40-50 miles.This problem can be eliminated by using direct current (DC)energy transmission.A DC system eliminates the capacitive charging current of the cable and permits long submarine cable routes. Another advantage is that the DC system capacity is significantly larger than an AC system when cables are used.However,a DC system requires converters at both ends,which increases the initial investment.Another problem is that most operating HVDC systems are designed for point-to-point transmission.Recent development of new high power transistors (IGBTs)and the advancement of voltage source converter (VSC)technology have produced the HVDC with VSC transmission system.This has opened new areas for the use of DC transmission.These developments suggest that DC transmission or the combination of AC and DC transmission could be considered for the Southeast Alaska Intertie. The available energy transmission methods are: 1)AC transmission using 69 kV transmission line 2)Combination of AC and traditional DC transmission 3)DC transmission with VSCs 4)Combination of AC and DC transmission with VSCs HVDC and HVDC/VSC Options A HVDC station requires considerable land because the transformers,filters and phase correction capacitors are placed outdoors.The valves and control equipment are placed in a closed air-conditioned/heated building.The completely enclosed system requires a large building and is prohibitively expensive. A HVDC system with VSCs contains two converters.It can transfer energy in both directions. One of the converters operates as a PWM rectifier the other as an inverter.The rectifier can be controlled to operate close to unity power factor.The inverter can produce AC power with the required power factor.Typical losses claimed by ABB for two converters are 5%.Figure 7-1 shows the concept of a point-to-point energy transmission system. Southeast Alaska Intertie Study 7-1 Phase 1 -Final Report Comparison of AC,HVDC and HVDC/VSC Technologies FIGURE 7-1 DC System with Voltage Source Converters (VSC) |iitte |”"|AAR |=ee a333a333 The system is very simple and requires only a few components.The major components are the AC filters,DC capacitance,AC reactors,converters and the DC line or cable.The converter can be controlled remotely via a dial up telephone line.The system at the AC side is protected by standard circuit breakers.The converters can be energized separately. The total DC system with voltage source converters is a viable option.This system requires 3 converters as shown in Figure 7-2. FIGURE 7-2 Conceptual DC System for SEI-1 Greens Creek Mine Juneau HoonahAVv| =>a z --|69kV Aa =}ooKv69kv|DC Submarine Cable |=DCline |AC .The combined AC and DC system is built with standard AC 69-kV transmission lines and point- to-point DC transmission at a long submarine (30 miles or more)crossing.The concept of this system is shown in Figure 7-3. FIGURE 7-3 Concept of Combined AC and DC System with Voltage Source Converters (VSC) Submarine Cable . 69kV AC line ES 40 miles or more 69kV AC line -_ -_69kV AC 4 Local load Local generation vYSoutheast Alaska Intertie Study 7-2 Phase 1 -Final Report Comparison of AC,HVDC and HVDC/VSC Technologies The preliminary cost estimates show that minimization of the number of converters will reduce the cost of the system.Because of the low level of load,the most advantageous system is the combined AC and DC system.Utilities have extensive operating experience with the existing 69 kV AC system,which suggests the use of a DC system with VSCs only at the long submarine crossing as a point-to-point transmission system. Cost Issues The combined AC and DC system uses 69-kV AC transmission and a dedicated DC link between Hawk Point and Hoonah.The DC cable system would require two separate cables or a bipolar system.The cost of the DC cable would be less than the cost of the bundled 3-phase AC cable on a cost per unit basis.The need for two cables,however,would increase the cost of the DC system.In addition,the DC system would need VSCs at each end of the system.Each VSC for the Hawk Inlet -Hoonah system,one in Hawk Inlet and one at Hoonah,is estimated to cost $3.2 million.The cost of the VSCs would not be required for a standard AC system.The combined AC-DC system for SEI-1 is a feasible but expensive solution. A cost estimate has also been prepared for an HVDC system for the Kake -Petersburg line.The cost estimate is based on a system using submarine and underground cables for the entire length of the line.Where USFS roads exist,the underground cable would be plowed in to roads.As with the DC system described for SEI-1,VSCs would be needed at both ends of the system at an estimated cost of approximately $3.2 million each. The total estimated direct cost of the HVDC system between Kake and Petersburg is $29.9 million.This compares to the estimated direct costs for the AC system of $23.1 million as shown in Table 4-2. Southeast Alaska Intertie Study 7-3 Phase 1 -Final Report Southeast Conference Southeast Alaska Electrical Intertie System Plan eins REPORT #97-01 oe aes a Lake Dorothy oeae,mt Snetiisham gOS .oe ae ua)Soenery Lake , ps ges TakateLake 9°2 Ste Te es. Sep ivan take ME TLATAKA ... : January 1998 Acres International Corporation ACHES 23 January 1998 AUS Mr.Berne C Miller Executive Director Southeast Conference 213 Third Street,Suite 124 Juneau,Alaska 99801 Dear Berne:Southeast Alaska Electrical Intertie System Transmittal of Final Report #97-01 We are pleased to provide this final report to the Southeast Conference and the Participants in the proposed Southeast Alaska Electrical Intertie SYSTEM It has been a privilege andanhonortoworkwithyouandrepresentativesoftheparticipatingmunicipalitiesandutilities on this assignment.We are grateful for this opportunity and we sincerely wish you and the communities who will benefit from an interconnected electrical system our very best as you take the vision that is presented in this report forward to reality.We would be honored to continue to serve the region and look forward to a continuing relationship with you. Yours very truly, WunA.Wyldoy Nan A.Nalder Project Manager enc. ACRES INTERNATIONAL CORPORATION 3254 Eleventh Avenue West.Seattle,Washington 98119 ; Telephone 206-281-7089 Facsimile 206-213-0652 Email sea@acres com Southeast Conference Southeast Alaska Electrical Intertie System Plan =REPORT #97-01 Le <A 3 "aRradiaadnendsNgeeiy"a.™s\.SL teneat et iSompal==A re&Snet ighamNAKEE-\tcrm,3 Fe meen TNHENSye.ge Bey pp ONG»™z° 4,,Scenety Lake4SoodaC7IRAE"ana Laike a:sisBe on ftl s ge on ee os,"v-ke January 1998 Acres International Corporation ARES Table of Contents List of Tables List of Figures Glossary of Terms and Acronyms Executive Summary 1 "White Paper”Prepared by Participants 2 Purposes and Objectives 3 Approach and Proposed System Development Phasing 4 Need for System 5 Existing Electrical Transmission and Generation Facilities 6 Status of New Facilities Development Table of Contents 21 Purpose .... 22 Objectives 4.1 Demographics and Local Economy ... 42 Financing the SYSTEM43JointRegionalPlanning and Implementation | 44 Future Electric Generation Resource Development45FutureGrowthandNeedforImprovedServicesin Southeast Alaska. 4 6 Electric Rate Equalization and Regional Economic Stability . 5.1 Existing Electrical Transmission Segments . 5 2 Existing Hydropower Generation Facilities 6.1 New Intertie Segments Development 6.1 1 Tyee-Swan Intertie 61.2 Upper Lynn Canal Intertie ... 6 1.3 Interties on Prince of Wales Island.6 2 Current Status of New Generation Facility Development 62.1 Goat Lake . 6.22 Mahoney Lake ......coe.623 Ketchikan Small Hydro Additions we wee.6.24 Metlakatla Small Hydro Upgrades/Additions a 1-1 Acres International Corporation Table of Contents 7 Action Plan 7.1 Proposed Phasing of Development ...co Le.7-1 72 Regional Electrical Interties ©2.0...00 ww we ee 7-272.1 Proposed Intertie Segments and Estimated Cost Se 7-2 722 Review of Existing Reports ee ek -...77 7.3 Regional Generation .........Cee -....7-7731PotentialNewHydropowerProjectsa._7-9 73.2 Proposed Phasing ofNew Hydroelectric Projects..7-12 73.3 Review of Existing Reports -Hydropower Projects ........7-14 7 4 Economic and Financial Issues a Soa net Lb) 741 Economic Parameters rans (2)bs)742 Electric Load Characteristics and Forecasts ;a 7-16 75 Environmental and Regulatory Procedures.....7-2275.1 Reconnaissance Level Review-"Fatal Flaw Analysis”...7-23 752 Formal Licensing and Permittmg Requirements.........7-23 753 Environmental Protection,Enhancement,and Mitigation Requirements ..7-2575.4 Review of Existing Reports-Environmental and Regulatory Procedures re tees e426 7.6 Recommendations rs .7-28 8 References Cited and 81 ReferencesCited .....«ss -;co,...8 List of Preparers 82 Listof Preparers ...............a 8-3 ii Acres international Corporation Table of Contents List of Tables Table 4.1 Private Sector Industry Trends in Southeast Alaska 1990-1996 ......43 Table 4.2 Government Employment Trends -Southeast Alaska 1990-1996 ...4-3 Table 4 3 Recent Population and Local Employment Trends for Selected Southeast Alaska Communities .....ee .44 Table 5.1 Existing Transmission Lines and Major Interconnections over 34.5kV =5-2 Table 5.2 Existing Transmission Lines Design and Operating Capabilities .....5-2 Table53 Generation Capacity and Net Generation by Section.©...1...5-3 Table 5 4 Existing System Hydro Generation Sources a 5-3 Table 5 5 Existing Resources.....--.......-a 2.54 Table 7.1 Proposed Sequencing and Cost Estimates for Southeast Alaska Transmission Grid Segments .......cee eee 7-3 Table 7 2 Documents Reviewed-Potential New Iransmission.....2..78 - Table 7 3 Potential New SYSTEM Hydroelectric Projects .....Leen TY Table 7.4 Documents Reviewed-Potential New Hydroelectric Projects .vee Fe14 Table 7 5 Annual Fixed Carrying Charges-Alaska Power Authority Guidelines Employed in 1987 Southeast Alaska Transmission Intertie Study ..7-15 Table 7 6 Load Growth Projections for Participating Communities Average Annual Growth Rate oe ;7-17 Table 7.7 Typical Licensing and Permitting Requirementsfor Transmission Lines and Hydropower Projects.ti.......74-25 Table 7 3 Typical Environmental Protection,Enhancement and Mitigation Requirements Transmission Line Segments and Hydropower Projects ..7-26 Table 7 9 Level of Investigation Performed as of November 1997 Proposed Transmission Segments and Hydroelectric Projects :.a 7-27 List of Figures Figure 1 Electrical Intertie System Plan Figure 2 Electrical Intertie System Plan -Loads and Resources Acres International Corporation iti Acres ADEC ADFG AEL&P or AELP APA AP&T CBI CBS KWH or kWh "lower 48" MP&L Glossary of Terms and Acronyms Acres International Corporation /Acres International Limited Alaska Department of Environmental Conservation Alaska Department of Fish and Game Alaska Electric Light &Power Company Alaska Power Administration Alaska Power &Telephone City and Borough of Juneau City and Borough of Sitka Department of Community and Regional Affairs Employment Gigawatt (1000 megawatts) Gigawatt Hours (1000 megawatt hours) Haines Light &Power Internal Combustion Institute of Social and Economic Research,University of Alaska,Anchorage Ketchikan Public Utilities Kilovolt (1000 volts) Kilowatt (1000 watts) Kilowatt hours (1000 watt hours) Phrase commonly used in Alaska to refer to the 48 contiguous states,United States of America Metlakatla Power &Light Miles Megawatt (1000 kilowatts) Megawatt hours (1000 kilowatt hours) Not applicable Estimate expressed in value of the US dollar m 1996 Overhead -refers to above ground transmission lines Power Cost Equalization Program Petersburg Municipal Power &Light Population Sitka Electric Department Contract provisions that require the purchaser to pay for the amount ofpower requested regardless whether the purchaser takes delivery and uses the power or not. Tlingit-Haida Regional Electrical Authority United States Fish and Wildlife Service United States Forest Service Wrangell Municipal Light &Power Acres International Corporation Executive Summary The purpose ofthis report is to present technical information in support of a proposed electrical intertie system to interconnect presently remote isolated load centers;increase system reliability;reduce or avoid diesel dependence; encourage economic development;and stabilize and equalize power rates This report presents a proposed SYSTEM Plan to assess final feasibility; prepare detailed design and construction documents;and construct and operate an integrated electrical intertie system in Southeast Alaska. "The communities ofSoutheast Alaska support the concept ofa southeast electric grid as a means of reducing or avoiding diesel dependence,encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development of a regional intertie system,in accordance with individual communities'power needs.The next step is to seek the necessary funding on a partnership basis with the state and federal governments.”("White Paper",July 1997,as revised in December 1997) Southeast Alaska is comprised of thousands of islands known as the Alexander Archipelago.The region offers significant natural resources and a quality of life conducive to attract new clean economic development to the area.With few exceptions,no roads or bridges connect islands People travel between islands by boat,floatplane,and/or wheeled plane Current limitations imposed by a lack of infrastructure and related availability of low-cost clean energy restrict development of economic development and elated improvement in basic quality of life in the participating Southeast Alaska communities The participants have determined that an integrated electrical transmission grid will enhance delivery of reliable and low-cost electric service;and support development of an integrated energy,communications, and transportation infrastructure to serve regional needs and attract new economic opportunities to the region The communities,acting through the Southeast Conference,contracted with Acres International Corporation (Acres)to prepare a Southeast Alaska Electrical Intertie SYSTEM Plan (SYSTEM Plan)that integrates development of proposed intertie segments with new hydroelectric generation capacity designed to serve the needs of the region.The SYSTEM Plan provides a "living"plan that can be updated as the participants proceed through development of the SYSTEM. Participating entities include:Alaska Electric Light and Power Company (AEL&P),Alaska Power &Telephone Co.(AP&T);City and Borough of Acres International Corporation ES-1 Executive Summary Juneau;City of Kake;City of Ketchikan;Ketchikan Public Utilities (KPU); Metlakatla Power &Light (MP&L);City of Petersburg /Petersburg Municipal Power &Light (PMP&L);City and Borough of Sitka;Tlingit & Haida Regional Electrical Authority (THREA);and City of Wrangell.Copies of Resolutions in support of the Intertie System are included at Appendix A Southeast Alaska electric utilities currently operate isolated systems The existing electric transmission facilities in Southeast Alaska are a collection of remote communities solely dependent on their own resources to meet load With the exception of existing connections between Petersburg and Wrangell there are no interconnections to import or export power among Southeast Alaska communities and electric utilities The planned intertie between Swan Lake and Lake Tyee will add Ketchikan to the Petersburg/Wrangell interconnection AP&T also plans to interconnect Skagway and Haines in 1998.Lacking transmission interconnections to other electric systems,each utility must plan independently to provide full power requirements to meet customer needs. The opportunity to develop a regional system through joint planning will avoid the need to come in later and try to fix problems similar to those inherent in the interconnected systems in the "lower 48"Joint planning and system operation will facilitate open access to regional SYSTEM facilities at fair and non-discriminatory rates.SYSTEM ownership could be available to all interested parties -utilities,municipalities,independent power project owners, and large industrial customers.Users of the SYSTEM would fund operation and future improvements.Joint ownership and operation would reduce the potential for monopoly control and related potential discrimination,and related costly lengthy litigation regarding alleged abuse of monopoly power,that have restricted efficient use of existing facilities in the "lower 48."Southeast Alaska provides an opportunity to "do it right"the first time by facilitating development that requires joint planning and operation. The challenge of competing in an ever increasing sophisticated marketplace for sales of products demands a more efficient production and delivery system and related infrastructure to support Southeast Alaska products.Increasing dependence on computer based technology demands improved power quality and integrated telecommunications /internet access services >Traditional and new industries will increase demand for energy production, energy distribution systems,and a better transportation system for the region ES-2 Acres International Corporation Executive Summary >The ability to attract new industry and to modernize traditional industry is dependent on enhanced telecommunications,fibre optic networks,internet access,and efficient transportation systems »Existing hydroelectric projects are inadequate to serve future growth; isolated load centers will site additional diesel generation to meet immediate needs. »Communities need reliable,cost effective,long-term sources of energy for the future that provide stable electric rates and employment and reduce environmental impacts within the region. Oneofthe critical issues facing the Participants is availability of adequate funds to Completing to support the level of professional engineering and construction services and related physical features to construct the proposed intertie SYSTEM Participants recognize that a combination of State, Federal,and Community funding will be required Communities and utilities would finance new generation facilities.Regional electric utilities will operate and maintain SYSTEM transmission facilities.Sources of potential private investment will also be explored The central policy question regarding future generation in Southeast Alaska is whether it is better to continue to develop many load-specific small hydropower projects and additional diesel generation units,or to develop a long-term collective solution to meet future energy demand with larger regional hydropower plant that develop the generation potential of sites with fewer cumulative environmental impacts.Alaskans are interested in protecting air quality and are therefore reluctant to continue to add fossil-fuel- fired generation in highly scenic areas that draw tourists from around the globe and provide a significant source of revenue to local communities Developing regional power projects to meet future demand will require a regional grid. Normally,the phasing of hydroelectric projects within a power system grid is based largely on the estimated cost of each respective potential project.By nature,hydroelectric projects are capital cost intensive and are generally very site specific.The selected new projects have very similar characteristics consisting of lake taps at perched lakes with tunnels of reasonable length leading to powerhouses at tidewater.Therefore,development costs can be expected to be comparable and consistent with others recently developed in the region. Accordingly,it is appropriate to phase project development on the basis of projected needs for the intertie itself coupled with due consideration to the load Acres International Corporation ES-3 Executive Summary growth in the region as a whole.Thus,the intertie is the key factor in the phasing of hydro generation projects A regional intertie will enable full utilization of each project as it would come on-line without the particular needs of the respective nearby communities We interviewed leaders in a number of municipalities and utilities to identify existing studies and plans,and discussed their vision and expectations for an integrated regional electrical system.Based on our interviews and information provided by the participants,review of existing documents,and our analyses, we present this proposed SYSTEM Plan in five phases as discussed below and as shown on Figures |and 2. Figure 1,Southeast Alaska Utilities ELECTRICAL INIERTIE SYSTEM PLAN,presents a map of Southeast Alaska depicting load centers,existing and proposed new interties,and existing and proposed new hydroelectric -generation facilities Figure 2,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN:LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertic SYSTEM is constructed. Phase]1995 -2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to Ketchikan Public Utilities'KPU's)electrical system;and construct an intertie connecting Metlakatla Power &Light to KPU's electrical system The Swan-Tyee intertie segment is expected to utilize current surplus generation available fiom Lake Tyee As shown in Figure 2,the existing generation resources ofthe respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010 Therefore,no additional hydroelectric resources are required during this period.Preliminary cost estimates for development of intertie segments specified during Phase I are $69,772,000/1996$for the Swan Lake -Lake Tyee Project and $8,785,000/1996$for the Ketchikan Metlakatla intertie Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course ofthis assignment and do not represent an independent assessment Phase II Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Metlakatla Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015 Preliminary cost estimates for development of intertie segments specified during Phase I are $19,734,600/ 1996$for the Petersburg -Kake Intertie and $45,489,000/1996$for the Kake -Sitka Intertie Estimated costs were presented in documents prepared by ES-4 Acres International Corporation Executive Summary others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Phase III Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid)At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system.Ifmining loads develop during the next few years,Lake Dorothy may be brought on-line before 2015 Further,based on the load growth as projected for Juneau,the system loads can also fully utilize the proposed Swan Lake project within the 2015 -2020 time frame Preliminary cost estimates for development of intertie segments specified during Phase III are $173,788,000/1996$for the Tenakee Springs/Angoon/Hoonah/Greens Creek/Juneau Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment Phase IV Construct interties connecting Skagway,Haines,and Kensington to North- South Grid.Construct Takatz Lake Hydropower Project.By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system Takatz Lake is shown on Figure 2 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects and cost of development Preliminary cost estimates for development of intertie segments specified during Phase IV are $79,160,000/1996$for the Juneau -Skagway Intertie Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment Phase V Construct intertie connecting Prince of Wales Island to North-South Grid With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation.Preliminary cost estimates for development of intertie segments specified during Phase V are $39,089,000/1996$for the Ketchikan -Prince of Wales Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. The general evolution of analyses presented in the 1987 Intertie Study is entirely appropriate for the purpose of progressively narrowing down the options to find the optimal development sequence.However,we identified a Acres International Corporation ES-5 Executive Summary number of specific concerns that should be questioned in further analyses,and the need to elaborate on some of the cost functions used in the comparison of proposed line segments The main issue in developing an integrated electrical system is optimal timing of transmission extensions,and ultimately the timing of future generation additions Recommended investigations and analyses to complete this SYSTEM Plan include: » >¥vUpdate information available and relied on in preparing this Report as noted above Review basic designs for transmission lines and substations presented in existing reports for adequacy.Develop a level of detail adequate to provide a stronger foundation for developing refined cost estimates. Develop generic designs for stand-alone diesel generation supply stations and for backup generating stations Use stand-alone stations in refined Base-Case development plan;assume standby installation as grid is extended to each community . Conduct a "fatal flaw"environmental assessment for each of the selected line segments concurrent with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented. Update economic parameters and assumptions used inevaluating =, alternatives presented in the 1987 Study and apply in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM Prepare revised load forecasts for participating systems recognizing phased development identified in this SYSTEM Plan Identify potential new large loads and determine each potential new large load's energy plan with regard to self-generation and interconnection with local utility to provide backup Identify conser vation program actions to be implemented by potential new large loads. Investigate economies of scale available through multiple use corridors -electricity transmission -communications and fibre optics -transportation ES-6 Acres International Corporation Executive Summary Proposed Sequencing and Cost Estimates for PHASE NEW LINE SEGMENIS LOAD CENTERS Southeast Alaska i Swan Lake -Lake Fyee (KPU,/nitial Draft Power Supply Petersburg,Wrangell Transmission Grid Planning Study,1996)&Ketchikan Segments 57 mi 138-KV line connects Swan-T yee hydros Status:Final EIS/USFS Record of Decision issued 8/97. Construction bids to be requested in late 1997 : Estimated cost:$69,772,000/1996$i I Ketchikan -Metlakatla (Alaska Power Authority.Southeast Petersburg,Wrangell, Alaska Transmission Intertie Study,1987)Ketchikan & 15 mi 34 5 KV line (14mi OH/1 mi submarine)Connect KPU's Metlakatla Mountain Poiat Sub /Race Point,MP&L. Status:Final documents to be prepared once Swan-Tyee line is under construction Estimated cust:$8,785,000/1996$* 0 Petersburg -Kake -Sitka Sitka,Kake, IIA -Petersburg -Kake (DCRA,Division of Energy,Kake-Petersburg.Wrangell Petersburg Intertie Feasibility Study,1996)Ketchikan & 46 7 mi 69 KV (44.3 mi OH /2.4 mi submarine)capable of Metlakatla upgradeto 138 KVStatus:1996 update to 1987 appraisal level engineering/ environmental review Estimated cost:$19.734 600/1996$ II-B -Kake -Sitka (Alaska Power Authority,Sourheast Alaska Transmission Intertie Study,1987) 55 4 mi 138 KY (20.2 mi OH /35 2 mi DC submarine)cable Status:Reconnaissance engineering /environmental Estimated cost:$45,489,000/1996$* pat Sitka -Tenakee Springs/Angoon -Hoonah -Greens Creek -Sitka,Angoon, Juneau (Alaska Power Authority,Southeast Alaska Transmission _,Tenakee Springs, Intertie Study,1987)Hoonah,Greens 148.6 mi 138 KV (120.8 mi OH /27.8 mi AC submarine)Creek,Juneau to Status:Appraisal level engineering/environmental review Petersburg,Wrangell, Estimated cost:$173,788,000/$1996*Ketchikan,Metlakafla (North-South Grid) Iv Juneau -Skagway (Alaska Power Authority,Haines-Skagway Connects Skagway, Region Feasibility Study,1981)Haines,and 70.5 mi (6 5 miles 69 KV OH /64 miles 100 KV DC submarine)Kensington,north of Status:Appraisal level engineering /environmental review.Juneau,to North- Estimated cost:$79,160,000*South Grid v Ketchikan -Prince of Wales Island (Alaska Power Authority,Connects Thome Bay, Black Bear Feasibility Report,1981)Kasaan,Klawock, 19 mi 69 KV or 115 KV (1 mi OH /18 mi submarine)Hollis,Craig,and Status:Appraisal level engineering /environmental review.Hydaburg to North- Estimated Cost.$39,089,000*South Grid SYSIEM 2438 miOH/1484 mi submarine TOTALS 392.2 total miles Construction Cost Estimate $435,817,000/1996 *Indicates cost prepared using standard cost curves to escalate earlier estimate. Acres International Corporation ES-7 pts Lake Dorothy (Phase lil) alaay, i LSSnettisham >Phase iil : nsse ae :¥\;ANPhas,ANGOON Seenery Lake (Phase4)TL asa came"s -WRANGELL Tyee Lakews, of ' 6 end LOAD CENTER Existing Intertie| New intertle Figure 1 Southeast Alaska Utilities ARESELECTRICALINTERTIESYSTEMPLAN 1,000MWhAverage Annual Loads w/Potential New Hydro _Average Annual Energy i :::|t :.A 2 :: ::: Average Annual Energy wi Existing Hydro 2005 2010 2015 2020 2025 Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN :LOADS AND RESOURCES 2030 Figure 2 tit I "White Paper”Prepared by Participants Section 1 "White Paper'Prepared by Participants Representatives from communities in Southeast Alaska met during 1997 with the purpose of preparing a "white paper"on regional power generation and distribution needs.The white paper focus is on a regional power grid development plan for Southeast Alaska that is responsive to each community's needs and time lines The Southeast Conference,an Alaska Regional Development Organization and USDA Resource Conservation and Development Council,issued a request for proposals to provide professional engineering services to update and summarize information contained in the Southeast Alaska Electrical Intertie &Transportation Corridors Study and other related documents on June 20,1997.Acres International Corporation (Acres)was awarded a contract on August 5,1997 to undertake this effort.The white paper set the tone for this assignment and one of the requirements in the RFP was to "Review paper and recommend changes needed to make paper agree with results of this effort "(Section Four,Scope of Work,4 2 Approach,item 1, RFP #97-01) The July 1997 White Paper focused on a 20-year regional power grid development plan An initial draft of the report was presented to participants and discussed at the September 1997 Southeast Conference Annual Meeting in Petersburg.Following that meeting,participants provided additional comments and also discussed the appropriate schedule for phasing development of the regional power grid.During a December 1997 meeting in Sitka,participants determined that the plan should not be limited to a 20-year horizon as full realization of the proposed plan could extend beyond a period of 20 years and participants determined that a flexible timeframe was more appropriate.Acres revised the original draft of the report to address this change in timeframe The July 1997 White Paper was revised accordingly and following this brief introductory section,readers will find a copy ofthe December 1997 version of the White Paper with recommended changes as approved by the participants A list of participating communities is included at the end of the text.Copies of resolutions passed by participating communities are available upon request from the Southeast Conference Acres International Corporation 4-4 WHITE PAPER SOUTHEAST ALASKA ELECTRICAL INTERTIE SYSTEM July 1997,as Revised December 1997 Major economic and social changes are taking place in Southeast Alaska to minimize adverse impacts of those changes,and to facilitate economic revitalization and diversification,adequate infrastructure is a must. The most basic of infrastructure is electricity,because without adequate generation and transmission capacity,communities will be unable to sustain services,let alone grow.Even other infrastructure,such as water and sewer facilities,is dependent on electricity. Moreover,from an environmental impact standpoint,failure to construct a regional electric grid will result in increased local diesel generation rather than taking advantage of the substantial hydro power potential that exists in Southeast Alaska.Building a generation and intertie grid takes a long time,so a regional construction plan is needed now. In 1987,the then Alaska Power Authority completed a study that identified a Southeast Alaska electrical grid system.The study found that such a grid is both technically and economically feasible,with a twenty year planning horizon.Today,after a decade of growth in demand and numerous studies confirming the need for this network,virtually none of these electrical interties have been constructed.Last month,the communities of Southeast Alaska came together in Sitka to start getting the job done.The group initiated efforts to develop a plan drawing heavily on work in the previous intertie studies. At present,most every community in Southeast Alaska generates its own power in a largely isolated electrical environment.In an area with rich hydroelectric potential,most smaller communities remain entirely diesel dependent.Even in larger communities such as Juneau,Ketchikan and Sitka which currently have hydroelectric power,those facilities are reaching the limit of their capacity and supplemental diesel power is being pursued or contemplated.This,despite the fact there is adequate hydroelectric potential to serve all of Southeast for decades to come if an intertie system existed to transport power to the load centers. The communities of Southeast Alaska therefore support the concept of a southeast electric grid as a means of reducing or avoiding diesel dependence,encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development of a regional intertie system,in accordance with individual communities'power needs.The next step is to seek the necessary funding on a partnership basis with the state and federal governments. Participants Supporting a Regional Effort to Promote a 20-Year Power Grid Plan for the Southeast Alaska Region include: »Alaska Electric Light and Power Company >Metlakatla Power &Light >Alaska Power &Telephone Co.>City of Petersburg >City and Borough of Juneau,Alaska >City and Borough of Sitka >City of Kake >Tlingit &Haida Regional Electrical Authority >City of Ketchikan >(ity of Wrangell >Ketchikan Public Utilities 2 Purposes and Objectives Section 2 2.1 Purpose Purposes and Objectives "The communities of Southeast Alaska support the concept ofa southeast electric grid as a means of reducing or avoiding diesel dependence, encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development ofa regional intertie system,in accordance with individual communities'power needs.The next step is to seek the necessary funding on a partnership basis with the state and federal governments."("White Paper",July 1997,as revised December 1997) The communities,acting through the Southeast Conference,contracted with Acres International Corporation (Acres)to prepare a Southeast Alaska Electrical Intertie SYSTEM Plan (SYSTEM Plan)that integrates development of proposed intertie segments with new hydroelectric generation capacity designed to serve the needs of the region The SYSTEM Plan provides a "living"plan that can be updated as the participants proceed through development of theSYSTEM Participating entities include:Alaska Electric Light and Power Company (AELP),Alaska Power &Telephone Co (AP&T);City and Borough of Juneau;City of Kake;City of Ketchikan;Ketchikan Public Utilities (KPU);Metlakatla Power &Light (MP&L);City of Petersburg /Petersburg Municipal Power &Light (PMP&L);City and Borough of Sitka;Tlingit & Haida Regional Electrica]Authority (THREA);and City of Wrangell Copies of Resolutions in support of the Intertie System are included in Appendix A This report documents investigations and analyses conducted by Acres under the terms of the August 5,1997 Letter of Agreement with the Southeast Conference pursuant to the Request for Proposals #97-01,Southeast Electrical Intertie,as augmented in January 1998 The purpose ofthis report is to present technical information in support ofa proposed electrical intertie system to interconnect presently remote isolated load centers;increase system reliability;reduce or avoid diese!dependence; encourage economic development;and stabilize and equalize power rates This report presents a proposed SYSTEM Plar to assess final feasibility; prepare detailed design and construction documents;and construct and operate an integrated electrical intertie system in Southeast Alaska This report will be used to brief legislators,Members of Congress,and other public officials; and to inform residents in the communities and elicit their support for the proposed Southeast Alaska Electrical Intertie SYSTEM Acres International Corporation Purposes and Objectives 2.2 Objectives In preparing this report,Acres interviewed federal and state energy officials; community leaders;and electric utilities to elicit their interests and recommendations and identify studies and plans that have been completed. Studies and plans used in preparing this report are identified in the text A complete bibliography is included at Appendix B,Volume 2 and is available from the Southeast Conference. Develop a 20-year power grid plan for the Southeast Alaska Region responsive to each community's needs and time lines that will enhance opportunities to increase the region's economic base and result in regional economic development opportunities that will provide a basis to achieve: »effective and efficient coordination of the electrical resources and enhanced reliability of electrical service through a regional power grid; >clean renewable hydroelectric regional energy resources,thereby avoiding increased environmental effects associated with additional diesel generation; >an environment that will enhance opportunities to locate new commercial and industrial business; »lower cost hydroelectric power to communities now solely dependent on diesel generation,thereby increasing opportunities to attract new business and provide jobs to communities with high unemployment;and »stable electric rates and cost equalization 2-2 Acres International Corporation 3 Approach and Proposed System Development Phasing Section 3 Approach and Proposed System Development Phasing The State of Alaska and the Federal Government have conducted numerous reconnaissance level investigations and identified potential sites and corridors for the development of hydroelectric power generation facilities and electrical power grids throughout Southeast Alaska.This report draws on the content of existing documents and,where necessary,includes updates to existing data based on Acres'experience with similar projects.Original research and analysis were not part of this assignment Our purpose in developing this plan was to confirm feasibility ofa regional electrical intertie SYSTEM and to identify logical steps to pursue development of grid segments and regionalhydroelectricgenerationfacilities. We interviewed leaders in a number of municipalities and utilities to identify existing studies and plans,and discussed their vision and expectations for an integrated regional electrical system.Based on these interviews,we understand that the participants seek a flexible plan that presents logical steps to take to get from here --a set of preliminary documents --to an interconnected electrical system that will serve the region's needs from a number of perspectives Data was requested of each municipality and utility in the region regarding power generation and distribution needs,and plans and load forecasts. Based on our interviews and information provided by the participants,review of existing documents,and our analyses,we present this proposed SSYSTEMPlaninfivephases: PhaseI 1995 -2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to KPU's electrical system;and construct an intertie connecting MP&L to KPU's electrical system Phase II 2011 -2015 Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Metlakatla Phase III 2016 -2020 Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid).Construct Lake Dorothy and Swan Lake hydropower projects. Acres International Corporation 4 Approach and Proposed System Development Phasing Phase IV 2021 -2025 Construct interties connecting Skagway,Haines,and Kensington to North- South Grid Construct Takatz Lake Hydropower Project. Phase V 2026 -2030 Construct intertie connecting Prince of Wales Island to North-South Grid. Construct Scenery Lake Hydropower Project. Section 7 ofthis report presents further details of the proposed SYSTEM and includes two figures which provide the following graphic representations Figure 1,Southeast Alaska Utilities ELECTRICAL INIERTIE SYSTEM PLAN,presents a map ofSoutheast Alaska with a schematic diagram superimposed to depict load centers,existing and proposed new interties,and existing and proposed new hydroelectric generation facilities.Figure 2, Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN: LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertie SYSTEM is constructed. Detailed Technical Analyses and Cost Information Appendices are available upon request from the Southeast Conference Acres International Corporation scenemangeree 4 Need for System Section 4 4.1 Demographics and Local Economy Need for System Southeast Alaska is comprised of thousands of islands known as the Alexander Archipelago The region offers significant natural resources and a quality of life conducive to attract new clean economic development to the area With few exceptions,no roads or bridges connect islands.People travel between islands by boat,floatplane,and/or wheeled plane.Current limitations imposed bya lack ofinfrastructure and related availability of low-cost clean energy restrict development of economic development and related improvement in basic quality of life in the participating Southeast Alaska communities.The participants have determined that an integrated electrical transmission grid will enhance delivery of reliable and low-cost electric service;and support development ofan integrated energy,communications, and transportation infrastructure to serve regional needs and attract new economic opportunities to the region Southeast Alaska electric utilities currently operate isolated systems Lacking transmission interconnections to other electric systems,each utility must plan independently to provide full power requirements to meet customer needs Developing hydropower generation and major transmission projects requires a long lead time and significant capital investment. Population growth in Southeast Alaska has increased from approximately 65,000 to 75,000 persons over the ten year period 1986 -1996.Annual average employment increased during the ten year period from 29,000 to 36,000 persons During this period the real average annual salary declined from $34,000 to $30,000 and total payroll increased from $1 billion to $1.1 billion.Government accounts for over $800 million in annual personal mcome in Southeast Alaska.(McDowell Group,Inc ,1997) The three main load centers in the region are Juneau,Sitka,and Ketchikan. Expansion of transmission grid legs as presented in the 1997 Reporzt focused on these three load areas.Recent trends for several of the participating utilities are presented in a table following this text section. The Southeast Alaska economy is built on timber,fishing,and tourism An increase in hardrock mining development is proposed,but as yet is not a major factor Communities are investigating "value-added"timber and fishery products in order to expand these traditional industries.New industrial development is being actively sought,however absence of an interconnected electric system and improved transportation tends to discourage significant investment in the region (AEA 1990) Acres International Corporation Need for System Tourism is identified as the industry sector exhibiting the most potential for growth in the near term.Cruise passenger capacity is expected to increase another 8%in 1998;total southeast visitor spending is approaching $200 million annually Traditional timber and fishery industries in Southeast Alaska are undergoing significant change,and in some cases closure. National legislated mandates established the U.S Congress and the Administration will shape Tongass National Forest management over the near term Economic effects associated with pulp mill closures have devastated certain communities.The forest products industry has lost 2,200 jobs since 1990,300 jobs in 1996 and another 400 in 1997;over the seven year period, industry payroll has dropped by $100 million.The forest products industry expects 150 to 180 million board feet production annually in the near term,a significant reduction than projected in recent years The seafood industry experiences mixed success depending on yield and market price.The mining industry projections are mixed.Greens Creek is back in full production and Kensington awaits improved gold prices before moving forward.The Niblack project continues to show promise.Sealaska's project is currently on hold The proposed AJ project was scrapped The government sector accounts for one- third of all jobs in Southeast.Little or no growth is projected at the state and federal levels;recent growth has occurred at the local level.The average annual salary in the government sector is $38,000,significantly higher than the private sector average of $26,000.Private sector industry trends during the period 1990 to 1996 and government employment trends over the same period are presented in the Tables 4.1,4.2,and 4.3 following the text in this section of the report.(McDowell Group,Inc ,1997) The challenge of competing in an ever increasing sophisticated marketplace for sales of products demands a more efficient production and delivery system and related infrastructure to support Southeast Alaska products.Increasing dependence on computer based technology demands improved power quality and integrated telecommunications /internet access services >Traditional and new industries will increase demand for energy production, energy distribution systems,and a better transportation system for the region »The ability to attract new industry and to modernize traditional!industry is dependent on enhanced telecommunications,fibre optic networks,internet access,and efficient transportation systems »Existing hydroelectric projects are inadequate to serve future growth; isolated load centers will site additional diesel generation to meet immediate needs Acres International Corporation Need for System Table 4.1 Private Sector Industry Trends in Southeast Alaska 1980 -1996 Table 4.2 Government Employment Trends -Southeast Alaska 1990 -1996 Private Industry Sector Change Since 1990 Change 1995 -1996 Construction +600 +150 Lumber &Wood Products -1,300 +300 Seafood Processing +50 -_150 Transportation +200 No Change Retail Trade +1,200 +100 +3,750 _+350Services(ex.transportation) Source:Presentation Materials prepared by McDowell Group,Inc.for the Southeast Conference Annual Meeting,September 18 -20,1997 Level Change Since 1990 Change 1995 -1996 Federal -100 No Change_ State -250 -50 Local :+450 +150 Source:Presentation Materials prepared by McDowell Group,Inc ..for the Southeast Conference Annual Meeting,September 18 -20.1997 Acres International Corporation Need for System Table 4.3 Recent Population and Local Employment Phase /1997 %Change 1990-97 >Actual Trends for Selected Community Population Population 96-97 %Change Population Southeast Alaska Employment 95-96 _Population Growth Communities 1/Ketchikan 14,599 pop 09%08%m1 emp -L1% I/Petersburg 3,432 pop 23%pop 10%225 emp -2.3% I/Wrangell 2,543 pop 2.0%03%64 emp -2.3% I/Metlakatla 1,595 pop 05%NA NA emp NA Il/Kake 767 pop 77%NA NA emp NA I/Sitka 8,733 pop 12%02%145 emp 1.2% I /Juneau 29,813 pop 10%16%3,062 emp 2.2% Il /Angoon 571 pop -5 6%NA NA emp -5.7% I /Hoonah 906 pop 0.7%NA NA emp -5.7% IV /Skagway 816 pop 64%NA NA emp -5.7%; TV/Haines 2,421 pop 20%19%304 emp 5.6% V/Craig 2,043 pop -3.1%70%783 emp 03% V /Kiawock 704 pop -3.0%NA NA emp -0.3% V /Thome Bay 625 pop 31%NA NA emp 03% Source:Presentation Materials prepared by McDowell Group.Inc ,for the Southeast Conference Annual Meeting,September 18 -20,1997 4-4 Acres International Corporation Need for System 4.2 Financing the SYSTEM 4.3 Joint Regional Planning and Implementation »Communities need reliable,cost effective,long-term sources of energy for the future that provide stable electric rates and employment and reduce environmental impacts within the region One ofthe critical issues facing the Participants is availability of adequate funds to Completing to support the level of professional engineering and construction services and related physical features to construct the proposed interttie SYSTEM Participants recognize that a combination of State, Federal,and Community funding will be required Communities and utilities would finance new generation facilities.Regional electric utilities will operate and maintain SYSTEM transmission facilities.Sources of potential private investment will also be explored In support of its proposed request for federal support,the Participants state that Southeast Alaska and its residents have borne a significant burden due to federally imposed limitations on development of the State's natural resources pursuant to Federal Legislation These limitations have resulted in significant reductions in traditional timber and fishing industries and related reductions in local employment as discussed in the above section 4 1,Demographics and Local Economy. The existing electric transmission facilities in Southeast Alaska are a collection of remote communities solely dependent on their own resources to meet load With the exception of existing connections between Petersburg and Wrangell there are no interconnections to import or export power among Southeast Alaska communities and electric utilities.The planned intertie between Swan Lake and Lake Tyee will add Ketchikan to the Petersburg/Wrangell interconnection.AP&TI also plans to interconnect Skagway and Haines in 1998. The opportunity to develop a regional system through joint planning will avoid the need to come in later and try to fix problems similar to those inherent in the interconnected systems in the "lower 48".Joint planning and system operation will facilitate open access to regional SYSTEM facilities at fair and non-discriminatory rates SYSTEM ownership could be available to all interested patties -utilities,municipalities,independent power project owners, and large industrial customers.Users of theSYSTEM would fund operation and future improvements.Joint ownership and operation would reduce the potential for monopoly control and related potential discrimination,and related costly lengthy litigation regarding alleged abuse of monopoly power,that have restricted efficient use of existing facilities in the "lower 48."Southeast Alaska provides an opportunity to "do it right"the first time by facilitating development that requires joint planning and operation. Acres International Corporation Need for System 4.4 Future Electric Generation Resource Development 4.5 Future Growth and Need for Improved Services in Southeast Alaska The central policy question regarding future generation in Southeast Alaska is whether it is better to continue to develop many load-specific small hydropower projects and additional diesel generation units,or to develop a long-term collective solution to meet future energy demand with larger regional hydropower plant that develop the generation potential of sites with fewer cumulative environmental impacts.Alaskans are interested in protecting air quality and are therefore reluctant to continue to add fossil-fuel- fired generation in highly scenic areas that draw tourists from around the globe and provide a significant source of revenue to local communities Developing regional power projects to meet future demand will require a regional grid Communities need to improve services to attract new commercial and industrial development to expand employment opportunities in an area where the traditional logging,pulp,and fishing industries are in decline A key element is stabilizing electric rates so that communities are not disadvantaged due to lack of access to hydropower generation.Competitive electric rates are essential to local regional development. The transmission infrastructure needs to be linked with development of improved transportation to and within Southeast Alaska.Improved access will attract new product-oriented industry,improve tourism opportunities, enhance interaction between communities in Southeast Alaska,and generally improve the lifestyle of residents by enabling them to travel for business and personal needs on a reliable and timely basis A regional dedicated utility corridor could accommodate regional and energy transmission/transportation (electricity,fibre optics,and natural gas)and multi-modal transportation This report addresses electricity transmission and notes the community preference to expand corridor use to provide transportation opportunities We understand that the Southeast Conference is exploring opportunities to perform a similar review regarding transmission in Southeast Alaska.We also note that the State of Alaska Department of Transportation has embarked on an examination of multi-modal transportation needs in Southeast The potential to serve new large mining and related industrial loads in the region and across the border in Canada will also require expanded transportation and electric transmission infrastructure and additional generating capacity.Proposals to open the Kensington and Jualin mines north of Juneau are currently being considered Greens Creek Mines has already imstalled its own diesel generation sources The direct energy requirements for mining are assumed to be 60 million KWH/year for the Kensington mine,and 4-6 Acres International Corporation Need for System 4.6 Electric Rate Equalization and Regional Economic Stability | 20 million KWH/year for the Jualin mine."Take-or-pay"provisions in power contracts with the mines will mitigate the economic risk of developing major new resources associated with mining operations. From a public policy perspective,the need to enhance local communities' ability to maintain an appropriate level of economic well-being is a primary interest.During the interviews with local communities,the high unemployment and lack of potential to maintain existing and attract new industry and related employment opportunities,were identified as motivating factors to construct an interconnected system so that lower cost power could be provided to these communities The Alaska Electric Power Statistics - 1960-1995 at page 85 presented cost comparisons for 1995 typical monthly electric bills at varying levels for residential customers Figure 3 and Table 4.1,based on statistics from the above noted document,depict the range from high to low for communities included in this analysis. Acres International Corporation 4-7 S) Existing Electrical Transmission and Generation Facilities Section 5 §.1 Existing Electrical Transmission Segments 5.2 Existing Hydropower Generation Facilities Existing Electrical Transmission and Generation Facilities Existing transmission facilities in Southeast Alaska were constructed to deliver power from generation to specific load centers Due to the remote locations,many communities are situated on islands,and lack of electrical interconnections among locations,electrical utilities in Southeast Alaska operate their systems to deliver power to their customers and do not have opportunity to import power from other systems to meet electric customer needs.Ability to construct an interconnected system is exacerbated by these remote locations and rough terrain The one current exception is the interconnection between Lake Tyee and municipally owned and operated electric utilities in Petersburg and Wrangell who share output from the Lake Tyee Project.Nearterm planned interconnections include the intertie between Swan Lake and Lake Tyee that would connect KPU to Petersburg and Wrangell and a planned submarine interconnection between Skagway and Haines to share output of the planned Goat Lake Hydroelectric Project. In 1995 there were approximately 320 total transmission circuit miles in major load centers in Southeast Alaska:20 miles @ 25 KV;25.0 miles @ 34.5 KV;. 80 miles energized @ 69 KV,built @ 138 KV;120 5 miles @ 120 5 KV;30 miles @ 115 KV;44 miles at 138 KV Areas covered by these statistics include Snettisham/Crater Lake,AELP,Sitka Electric System,KPU,and Swan Lake /Tyee Lake.Tables 5.1 and 5.2 provide detailed information regarding these existing facilities Existing hydro projects in Southeast Alaska are identified in two categories: (1)developed by local utilities to serve local load,and (2)system hydroelectric projects developed by the State of Alaska or the Federal Alaska Power Administration to serve shared interconnected load centers Existing hydro projects constructed by utilities to meet specific loads are located in Skagway,Juneau,Sitka,Petersburg,Ketchikan, Metlakatla,and Prince of Wales Island Existing system hydro electric projects include:Snettisham/Crater Lake,Lake Tyee,and Swan Lake Figure 1 shows existing system hydropower units and transmission segments;and proposed new system hydropower units and transmission segments.Table 5.3 presents generation capacity and net generation by sector;Table 5.4 lists federal and state-owned hydro generation sources; and Table 5.5 lists all existing generation facilities by utility Acres International Corporation 5-1 Existing Electrical Transmission and Generation Facilities Table 5.1 Existing Transmission Lines Areas served by system hydro projects currently maintain backup diesel capacity equal to 100%peak demand.Diesel units cover emergency operation,peaking requirements,voltage regulation,or meet remaining load requirements not available from the hydro projects.Areas not interconnected to a system hydro project currently maintain diesel capacity equal to 125%- 130%of the peak load depending on the ratio and Major Interconnections Area Circuit Voltage =Circuit over 34.5 kV (ky)Miles Juneau (APA &AEL&P) Snettisham/Crater Lake -Thane (Federally owned)138 440 Thane -Capital Avenue Sub 69 50 Thane Loop Sub (Mendenhall Valley)69 17.0 Upper Mendenhall Bridge -Auke Bay -69 Brotherhood Bridge Sitka Electric Department Blue Lake -Sitka and through City 69 $0 Green Lake -Blue Lake 69 9.0 Ketchikan Public Utilities Silvis Lake -Beaver Falls -Ketchikan and through City to North Point Higgins Sub 34.5 25.0 Swan Lake -Ketchikan (State owned)115 30.0 Petersburg -Wrangell Tyee -Wrangell 69*390 Wrangell -Petersburg 69*420 *Line ts builtto 138 kv standards. Table 5.2 Existing Transmission Line Design and Operating Area Designed Operated Capabilities Juneau -Snettisham/Crater Lake to Thane 138 KV 138 KV Juneau -Annex Creek to Thane 23 KV 23 KV Juneau -Thane to Juneau 69 KV 69KV Sitka 69 KV 69 KV Tyee to Petersburg/Wrangell 138 KV 69KV Petersburg 25 and 138 KV 25 and 69 KV Petersburg to Wrangell 138 KV 69 KV Wrangell 25 and 138 KV 25 and 69 KV Ketchikan -Swan Lake to Bailey 115KV 115 KV Ketchikan -Higgins to Silvis 345KV 345KV §-2 Acres International Corporation Existing Electrical Transmission and Generation Facilities Table 5 3 Generation Capacity and Net Generation by Sector Sector Installed Capacity Net Generation Net Growth (KW)(MWh)1994 -1995 Utility 344,093 714,950 40% Uz.S.Coast Guard 1,500 0 00% Industry 90,184 202,481 -141% TOTAL 435,777 917,431 0.6% Table 5.4 Existing System Hydro Generation Sources Plant Installed Capacity Average Annual (MW)Generation (Mwh) Snettisham 460 216,000 Crater Lake 270°118,000 Tyee Lake 20.0 114,100 Swan Lake 22.5 85,400 Total 115.5 533,500 5-3AcresInternationalCorporation Existing Electrical Transmission and Generation Facilities Table 5.5 Existing Resources Project Name /Location Fuel Type Installed Capacity Alaska Electric Light &Power Company Annex Creek Hydroelectric 3,600 KW Auke Bay Diesel 2,500 KW Gas Turbine 24,800 KW Gold Creek Hydroelectric 1,800 KW Diesel 7,300 KW Lemon Creek Diesel 22,500 KW Gas Turbine 35,000 KW Salmon Creek No.1 Hydroelectric 5,000 KW Alaska Power Administraton Snettisham /Crater Lake Hydroelectric 78,210 kW Alaska Power &Telephone Company Dewey Lake /Skagway Hydroelectric 975 KW Goat Lake /Skagway Hydroelectric 4,000 KW Diesel /Skagway (proposed)3,865 KW Diesel Black Bear/Craig Hydroelectric 4,500 KW Diesel /Craig Diesel 3,820 KW Haines Diesel 5,770 KW Hydaburg Diesel 1,001 KW Hollis Diesel 150 KW Ketchikan Public Utilities S.W.Bailey Diesel 13,450 KW Beaver Falls Hydroelectric 7,300 KW Ketchikan Lakes Hydroelectric 4,200 KW Swan Lake /Revillagigedo Hydroelectric 22,500 KW Island (State-Owned) Totem Bight /Ketchikan Diesel 2,000 KW Acres International Corporation Existing Electrical Transmission and Generation Facilities Acres International Corporation Project Name /Location Fuel Type Installed Capacity Metlakatla Power &Light_ Purple Lake Hydroelectric 3,900 KW Centennial Diesel 3,300 KW Chester Lake Hydroelectric 1,000 KW Petersburg Municipal Power &Light Blind Slough Hydroelectric 2,200 KW Petersburg Generation Plant Diesel 7,650 KW Tyee (State Owned)Hydroelectric 20,000 KW City and Borough of Sitka Blue Lake Hydroelectric 6,000 KW Green Lake Hydroelectric 18,000 KW Indian River Diesel 7,500 KW Thorne Bay Thorne Bay Plant Diesel 1,235 kW ; Tlingit-Haida Regional Electric Authority 5 Small Plants (17 units)Diesel 6,067 kW Wrangell Electric Department 2 Wrangell Municipal Plant Diesel 8,350 kW §-5 6 Status of New Facilities. Development Section 6 6.1 New Intertie Segments Development 6.1.1 Tyee-Swan Intertie 6.1.2 Upper Lynn Canal Intertie 6.1.3 Interties on Prince of Wales Island Status of New Facilities Development The planned 57-mile-long 138-Kv Tyee-Swan Intertie is a key element in the proposed interconnected electric transmission SYSTEM.KPU's system is connected electrically to the Swan Lake project.Wrangell and Petersburg are connected to the Lake Tyee project We include the proposed Tyee-Swan Intertie in Phase I of theSYSTEM Plan.The line will intertie the electrical systems of KPU,PMP&L,and WML&P,thereby increasing reliability and operating efficiency for all three systems Once the Tyee-Swan Intertie is in place,a grid leg connecting Metlakatla will be feasible. In 1994,KPU received a grant from the State of Alaska to hire consultants to design the transmission line and prepare the EIS for the Forest Service, August 1997 Swan Lake-Lake Tyee Intertie Final Environmental Impact Statement Summary (Swan-Tyee EIS).The USDA Forest Service issued its decision on the proposed Intertie in August 1997 Swan Lake-Lake Tyee Inter tie Record of Decision (Swan-Tyee ROD)Formal bids were solicited during November -December 1997;and $76 million in State and Federal funds has been obligated to construct the Tyee-Swan Intertie Alaska Power &Telephone Co (AP&T)plans to construct a 14-mile 33 KV submarine cable transmission interconnection between Skagway and Haines Light &Power (HLP)to provide energy from the new Goat Lake Hydroelectric Project to both locations during 1988.AP&T estimated cost for the intertie is $5,400,000/1997$Annual operating expense for the connection is expected to be $15,000.AP&T also proposes to construct a 20 mile overhead and underground line between Haines and Klukwan at an estimated cost of $1,600,000/1996$.Annual O&M expense is expected to be $10,000.(Upper Lynn Canal Regional Power Supply Review,April 1997) These proposed intertie segments are included in Phase IV of the SYSTEM Plan as existing infrastructure. AP&T is developing transmission lines to deliver energy from AP&T's Black Bear Lake Hydropower Plant to several communities on Prince of Wales Island (Correspondence from Bob Grimm,AP&T,to Randy Cornelius,Sitka, June 20,1997)These proposed intertie segments are included in Phase V of the SYSTEM Plan as existing infrastructure. Acres International Corporation Status of New Facilities Development. 6.2 Current Status of New Generation Facility Development 6.2.1 Goat Lake 6.2.2 Mahoney Lake 6.2.3 Ketchikan Small Hydro Additions 6.2.4 Metlakatla Small Hydro - Upgrades/Additions New hydropower generation currently being investigated by utilities in Skagway,Ketchikan,and Metlakatla are designed to serve specific remote load centers and is not included in the proposed SYSTEM Plan.We note that a number of communities,including Ketchikan and Sitka,are also planning to install additional diesel generation facilities to meet expected shortfall in the near future We identified the following active hydropower project proposals The Alaska Power &Telephone Co.has received a FERC license and other necessary approvals for the 4 0 MW Goat Lake Project.The project is currently under construction and the expected on-line date is 1998.AP&T is constructing a submarine cable to connect Haines to Skagway which will allow full utilization of the project output The Cape Fox Corporation (Cape Fox),permittee for the proposed Mahoney Lake Hydroelectric Project,submitted a draft license application to the FERC in May 1996.That application is currently under evaluation by the FERC The proposed 9.6 MW run-of-river Mahoney Lake Hydroelectric Project site is located approximately 5 miles northeast of Ketchikan KPU and Cape Fox are currently discussing development options that might be beneficial to both parties. KPU is investigating the potential to install hydropower generation at three existing dams located in close proximity to Ketchikan:Lake Whitman (2.7 MW),Carlanna Lake (0 5 MW),and Lake Connell (1.7 MW);and potential upgrades to its Beaver Falls and Ketchikan Lakes hydropower projects.A preliminary reviewofthese potential future additions is discussed in the KPU Power Supply Planning Study,December 20,1996. In March 1997,MP&L issued a report,Energy Generation Feasibility Study Report,regarding the quantity of energy available from MP&L's system to export to KPU on a monthly basis MP&L is currently pursuing proposed + improvements at its existing hydropower projects,which are not jurisdictional to the FERC.MP&L will add a 3 MW Pelton-type turbine and generator to augment the existing 1.0 MW unit at its Chester Lake Project;construct a tunnel between Edgecombe and Chester Lakes and new 2800-foot-long 24- inch penstock;and related revisions.At Tamgas Lake MP&L will add a 550 KW Francis-type turbine and generator;modify the existing rock-fill dam to raise lake elevation 10 feet;and will include related revisions.MP&L also proposes to construct a new project at Triangle Lake (commence construction June 2000;complete June 2002)including a new dam,penstock,powerhouse with one 4 MW machine or two 2.0 MW machines,anda tie line. 6-2 Acres International Corporation 0 Action Plan Section 7 7.1 Proposed Phasing of Development Action Plan Communities in Southeast Alaska strongly support development of an integrated electrical system Copies of Resolutions adopted in participant communities are included in Appendix A;copies of appendices are available from the Southeast Conference Participants'expectations expressed during interviews include: »identify appropriate sequencing for development -present basic assumptions regarding timing; >determine the optimum electric grid to interconnect major load centers in Southeast Alaska,reduce need for redundant diesel generation,and enhance reliability;and >»determine optimum locations for new hydro generation to provide for future needs for the collective communities We present this proposed SYSTEM Plan in five phases based on assumptions regarding projected load growth and engineering feasibility: PhaseI 1995-2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to Ketchikan Public Utilities'(KPU's)electrical system;and construct an intertie connecting Metlakatla Power &Light to KPU's electrical system. Phase II 2011 -2015 Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Metlakatla Phase HII 2016 -2020" Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid)Construct Lake Dorothy and Swan Lake hydropower projects Phase IV 2021 -2025 Construct interties connecting Skagway,Haines,and Kensington to North- South Grid Construct Takatz Lake Hydropower Project. Phase V 2026 -2030 Construct intertie connecting Prince of Wales Island to North-South Grid Construct Scenery Lake Hydropower Project Acres International Corporation Action Plan 7.2 Regional Electrical Iinterties 7.2.1 Proposed Intertie Segments and Estimated Cost Figure 1,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN,presents a map of Southeast Alaska with a schematic diagram superimposed to depict load centers,existing and proposed new interties,and existing and proposed new hydroelectric generation facilities.Figure 2, Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN: LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertie SYSTEM is constructed. Existing transmission facilities in Southeast Alaska were constructed to deliver power from generation to specific load centers.Due to remote islands and rough terrain,electrical utilities in Southeast Alaska currently operate their systems to deliver power to local customers and do not have opportunity to import power from other systems to meet customer needs The line segments proposed in this SYSTEM Plan are designed to provide equal opportunities for all participating systems to access hydropower generation, thereby lowering power costs in communities currently dependent solely on diesel generation and also providing enhanced reliability of service throughout the region.The integrated electrical SYSTEM will also reduce the level of backup power currently maintained in communities and enhance the opportunity to develop cost-effective and environmentally preferred regional hydropower generation facilities as opposed to proliferation of additional diesel generation and development of numerous dispersed smaller hydropower sites The primary source of information regarding proposed intertie segments was the 1987 Southeast Alaska Transmission Intertie Study (1987 Intertie Study) prepared by Harza for the Alaska Energy Authority -The 1987 Intertie Study presented recommended configurations based on the fundamental objective of sharing then surplus hydro generation at the Snettisham and Lake Tyee projects with hydro-deficient supply centers,recognizing technical constraints and practical limitations imposed by terrain and construction costs.Surplus hydro generation at Lake Tyee is expected to be fully utilized as a result of constructing the intertie with Ketchikan during Phase I.Snettisham is close to full energy utilization During critical water years,such as 1997,it was necessary to run AELP diesels to cover hydro energy deficits.For average water years there could be as much as 60 million KWH of surplus energy during the summer and early fall months A brief'discussion of each of the transmission intertie phases as shown on Figure 1 follows.Table 7.1 presents estimated costs,based on existing reports and escalated to 1996 dollars,for the proposed five phased development.Sources of estimated costs are identified below Acres Intemational Corporation Action Plan Table 7.1 Proposed Sequencing and In-Service Phase New Line Segments Load Centers Cost Estimates for Date Southeast Alaska 2001 PHASE I:Swan Lake -Lake Tyee (KPU,Initial Draft Petersburg,Wrangell & Transmission Grid Power Supply Planning Study,1996)Ketchikan Segments 57 mi 138-KV line connects Swan-Tyee hydros Status:Final EIS/USFS Record of Decision issued 8/97 Construction bids to be requested in late 1997 Estimated cost:$69,772,000/1996$ 2002 PHASE I:Ketchikan -Metlakatla (Alaska Power Authority,Petersburg,Wrangell, Southeast Alaska Transmission Intertie Study,1987)Ketchikan &Metlakatla 15 mi 34.5 KV line (14 mi OH /1 mi submarine)Connect KPU's Mountain Point Sub /Race Point.MP&L. Status:Final documents to be prepared once Swan-Tyee line is under construction Estimated cost:$8,785,000/1996$* PHASE II:Petersburg -Kake -Sitka Sitka,Kake.Petersburg, 2002 II-A -Petersburg -Kake (DCRA,Division of Energy,Kake-|Wrangell,Ketchikan & Petersburg Intertie Feasibility Study,1996)Metlakatla 46 7 mi 69 KV (44 3 mi OH /2 4 mi submarine)capable of upgrade to 138 KV Status:1996 update to 1987 appraisal level engineering/ environmental review : Estimated cost:$19,734,600/1996$ 2008 II-B -Kake -Sitka (Alaska Power Authority,Southeast Alaska Transmission Intertie Study,1987) 55 4 mi 138 KV (20 2 mi OH /35 2 mi DC submarine)cable Status:Reconnaissance engineering /environmental Estimated cost:$45,489,000/1996$* 2012 PHASE IIl:Sitka -Tenakee Springs/Angoon -Hoonah -Sitka,Angoon,Tenakee Greens Creek -Juneau (Alaska Power Authority,Southeast Springs,Hoonah, Alaska Transmission Intertle Study,1987)Greens Creek,Juneau to 148.6 mi 138 KV (120.8 mi OH /27.8 mi AC submarine)Petersburg,Wrangell, Status:Appraisal level engineering /environmental review Ketchikan.Metlakatla Estimated cost:$173,788,000/$1996*(North-South Grid) 2020 PHASE IV:Juneau -Skagway (Alaska Power Authority,Connects Skagway, Haines-Skagway Region Feasibility Study,1981)Haines,and Kensington. 70.5 mi (6 5 miles 69 KV OH /64 miles 100 KV DC north of Juneau,to submarine)North-South Grid Status:Appraisal level engineering /environmental review - Estimated cost:$79,160,000* 2025 PHASE V:Ketchikan -Prince of Wales Island (Alaska Connects Thome Bay, Power Authority,Black Bear Feasibility Report,1981)Kasaan,Klawock. 19 mi 69 KV or 115 KV C1 mi OH 18 mi submarine)Hollis,Craig,and Status:Appraisal level engineering /environmental review Hydaburg to North- Estimated Cost:$39,089,000*South Grid System 243 8 mi OH/148 4 mi submarine Totals 392.2 total miles Construction Cost Estimate $435,817,000/1996 *Indicates cost prepared using standard cost curves to escalate earlier estimate Acres International Corporation 7-3 Action Plan 72.1.1 Phase| 7.2.1.2 Phase Ill The Swan-Tyee and KPU-Metlakatla transmission intertie components would interconnect electric systems in Ketchikan,Wrangell,Petersburg,and Metlakatla resulting in the first increment of the Southeast Alaska Electrical Intertie SYSTEM (SYSTEM).This intertie segment is expected to utilize current surplus generation available from Lake Tyee As shown in Figure 2, the existing generation resources of the respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010.Therefore,no additional hydroelectric resources are required during this period »Lake Tyee-Swan Lake Transmission -138 KV,37 miles,to connect the two State-owned hydropower projects.Estimated total cost includes management,engineering,construction management,licensing and permitting,right-of-way costs,a contingency and owners administration; excludes maintenance costs (Project Estimate Update,Lake Tyee-Swan Lake Intertie,Raytheon Infrastructure Services,Inc.,July 25,1996) >Ketchikan-Metlakatla -34.5 KV,15 miles,three-phased (14 miles overhead and |mile submarine)from KPU's Mountain Point Substation to Race Point on Annette Island Estimated cost includes management,engineering, construction management,land acquisition,and owners administration; excludes maintenance costs.(Alaska Power Authority,10/1/87,Southeast Alaska Transmission Intertie Study)A 1996 DCRA,Division of Energy, study,Power Intertie Analysis,prepared by Jaight and McLaughlin Consulting Engineers,Anchorage,confirmed the proposed route as presented in 1987.No update to estimated cost was provided (Rural Alaska Electric Utility Interties,March 1997) Preliminary cost estimates for development of intertie segments specified during Phase I are $69,772,000/1996$for the Swan Lake -Lake Tyee Project and $8,785,000/1996$for the Ketchikan Metlakatla intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Kake and Sitka would be connected to the SYSTEM Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015. »Petersburg-Kake -69 KV,46 7 miles (44 3 miles overhead and 2 4 miles submarine cable),capable of future upgrade to 138 KV Estimated cost includes construction,engineering,construction management,right-of-way acquisition,permitting,and owners administration Proposal does not 7-4 Acres International Corporation Action Plan 7.2.1.3 Phase Ill include previously proposed underground sections A number of studies have been performed for this line segment.In 1996 DCRA,Division of Eneigy,commissioned an update:Feasibility Study:Kake-Petersburg Intertie,prepared by R.W Beck,that incorporated and updated information presented in earlier reports. >»Kake-Sitka -138 KV,55.4 miles (35 2 miles DC submarine cable and 20.2 miles overhead wood pole design)Estimated cost includes management, engineering,construction management,land acquisition,and owners administration;excludes maintenance costs.Most of route follows existing road at anadromous fish stream crossings.(Alaska Power Authority, 10/1/87,Southeast Alaska Transmission Intertie Study). Preliminary cost estimates for development of intertie segments specified during Phase II are $19,734,600/1996$for the Petersburg -Kake Intertie and $45,489,000/1996$for the Kake -Sitka Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Angoon,Tenakee Springs,Hoonah and Juneau would be connected to the SYSTEM.At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system.If mining loads develop during the next few years,Lake Dorothy may be brought on-line before 2015 Further,based on the load growth as projected for Juneau,the system loads can also fully utilize the proposed Swan Lake project within the 2015 -2020 time frame. »Sitka-Juneau -138 KV,148.6 miles (120.8 miles OH,27.8 miles submarine AC cable)$130,775,000/1987$This preferred routing would need further study as it was not proposed as part of the system in the APA 1987 Southeast Alaska Transmission Intertie Study.Total length of the West Route alternative considered in the 1987 study was 204 miles,including the Juneau-Green's Creek and Sitka-Kake segments.Alternative preferred in 1987 study was the Kake-Snettisham connection (Alaska Power Authority, 10/87,Southeast Alaska Transmission Intertie Study)Descriptions of segments of the preferred routing are discussed below: »Tenakee Springs-Sitka -138 KV follows existing logging roads past Sitkoh Lake to Point Lindenburg,crosses Peril Strait via submarine cable,exits at Point Moses on Baranof Island to finally connect with Sitka's transmission system Routing envisioned would go to Warm Springs and Takatz Lake Hydro crossing to Sitka along a proposed transmission/transportation corridor. Acres international Corporation 7-5 Action Plan >Tenakee Springs-Angoon -138 KV (submarine AC cable)crossing Tenakee Inlet to east of Kadashan Bay along existing logging roads to point NW of head of Sitkoh Bay,remote substation to facilitate 69 KV spur to Angoon >Tenakee Springs-Hoonah -138 KV 35-mile utility corridor is designated in the Tongass Land Management Plan.The communities are almost connected by logging roads now (Rural Alaska Electric Utility Interties, March 1997) »Hoonah-Juneau -69 KV,504 miles 32.3 miles OH,18 1 miles submarine cable)to connect Hoonah to Snettisham Hydro Plant (includes connection @ Greens Creek noted below)Estimated cost includes 20%for engineering and overhead plus 25%for contingencies.Feasibility depends upon hookup to Noranda mine.3 substations,2 separate segments of submarine cables (6.1 mile and 12 mile)(US.Department of Energy,Alaska Power Administration,12/1/81,Juneau-Hoonah Transmission Line Reconnaissance Evaluation)(Rural Alaska Electric Utility Interties,March 1997) »Juneau -Green's Creek -69 KV,29.4 miles (24.2 OH,5.2 submarine cable) Douglas Island substation to Middle Point -cross Stephens Passage - Youngs Bay near Hawk Inlet on Admiralty Island USFS recommended buried cable through portion of non-wilderness Admiralty Island National Monument (Alaska Power Authority,10/87,Southeast Alaska Transmission Intertie Study) Preliminary cost estimates for development of intertie segments specified during Phase III are $173,788,000/1996$for the Tenakee Springs/Angoon/Hoonah/Greens Creeck/Juneau Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. 72.14 Phase IV Skagway and Haines would be connected to the SYSTEM through a 70 5+ mile (64 miles 100 KV DC submarine cable,6 5+miles OH 69 KV)line segment from Juneau to Skagway Estimate based on 1982 Teshmont study excludes escalation during construction but includes 25%contingencies and 15%engineering (Rural Alaska Electric Utility Interties,March 1997)By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system.Takatz Lake is shown on Figure 2 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects _and cost of development. 7-6 Acres International Corporation Action Plan 72.15 Phase V 7.2.2 Review of Existing Reports 7.3 Regional Generation Preliminary cost estimates for development of intertie segments specified during Phase IV are $79,160,000/1996$for the Juneau -Skagway Intertie Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Communities on Prince ofWales Island would be connected to the SYSTEM With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation.Connection is assumed to be between Ketchikan and Hollis -69 or 115 KV,19 miles (18 miles submarine cable and 1 mile overhead line).(Alaska Power Authority,10/1/81,Black Bear Lake Project: Feasibility Report,Harza). Preliminary cost estimates for development of intertie segments specified during Phase V are $39,089,000/1996$for the Ketchikan -Prince of Wales Intertie Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course ofthis assignment and do not represent an independent assessment The primary source of information used in preparing this Report was the 1987 Southeast Alaska Transmission Intertie Study prepared by Harza for the Alaska Energy Authority (1987 Intettie Study}The 1987 Intertie Study presented a comprehensive assessment ofa large number of prospective interconnection projects,including route selection and preliminary design of many submarine cable links and overhead lines,and integrated these designs into an overall system expansion plan The 1987 Intertie Study constitutes an important step towards an integrated system development plan,but the investigations must be expanded and updated to ensure the continued validity of several key conclusions Table 7.2 identifies sources of information relied on in preparing this Report and as requested in the RFP identifies the level of investigation and project development accomplished to date Hydro generation is a major element in the existing power supply of the tegion.However,the water power potential of Southeast Alaska is still largely an undeveloped resource.A report entitled "Water Powers of Southeast Alaska”was prepared in 1947 by the Federal Power Commission (currently known as the Federal Energy Regulatory Commission)and the U S Forest Service (FPC/USFS Report)which identified 200 sites for potential hydropower development A following statement as contained in the Forward Acres International Corporation Action Plan Table 7.2 Documents Reviewed - Potential New Transmission by the Chairman of the Commission is as true today as it was some 50 years aga: Date Report Level of Development October 1987 Alaska Power Authority Reconnaissance Southeast Alaska Transmission Intertie Study August 1997 USDA Forest Service Final Route Swan Lake -Lake Tyee Intertie Selection Final Environmental Impact Assessment Final Record ofDecision April 1996 Alaska Department of Community and Regional Affairs Draft Kake-Petersburg Intertie Feasibility Study Reconnaissance April 1997 Alaska Power &Telephone Co Draft Upper Lynn Canal Regional Power Supply Review Reconnaissance March 1997 Alaska Department of Community and Regional Affairs Preliminary Draft Rural Alaska Electric Utility Interties Survey "There are over 200 potential projects which it is estimated could develop 1,008,370 average horsepower Of these,27 range in size from 10,000 to 51,000 average horsepower each,or a total potential of534,000 average horsepower In developing a power system many of these projects would logically be interconnected with high voltage transmission.The remaining projects and some of less capacity,but susceptible to automatic control and operation,could be interconnected through the principal stations at lower voltage transmission ” Over the intervening years,slow but steady progress has been made in this direction The current SYSTEM Development Action Plan,then,simply represents a continuation ofthis process.In more recent times,many of the projects identified in the FPC/USFS Report have either been developed as listed above or have been studied in further detail as summarized in Section 7.3 5 that follows.Ofthese,project that have been identified as having the highest potential for inclusion into the SYSTEM Development Action Plan include: >10 MW proposed 3rd unit at the existing Lake Tyee Project »26 MW proposed Lake Dorothy Project,Taku Inlet »48.5 MW proposed Swan Lake Project,Thomas Bay >20 MW proposed Takatz Lake Project,Baranof Island >45 MW proposed Scenery Lake Project,Thomas Bay 7-8 Acres International Corporation Action Plan Table 7.3 Potential New SYSTEM Hydroelectric Projects 7.3.1 Potential New Hydropower Projects 73.1.1 Third Unit at Tyee Lake 7.3.1.2 Lake Dorothy A general description of each of the above listed projects and a discussion of the respective studies performed to-date follows Table 7.3 presents potential average annual generation Plant Installed Capacity Average Annual (MW)Generation (MWh) Tyee Lake (3rd unit)10.0 1,000 Lake Dorothy 26.0 127,000 Swan Lake 48.5 170,000 Takatz Lake 12.0 86,000 Scenery Lake 450 150,000 Total 141.5 534,000 A third unit bay was installed during original construction of the Tyee Lake project in anticipation of future growth in the region.A 10 MW turbine- generator would provide an additional 1,000 Mwh of peaking energy annually; an additional benefit of the third unit is to recover 1,050 Mwh of energy during maintenance on either ofthe two existing 10 MW units. The third unit would support future growth in Wrangell and Petersburg,the two communities that have priority rights to power generated at Lake Tyee. With construction of additional interties,energy could be available to Ketchikan,Metlakatla,and Kake Lake Dorothy is located east of Juneau above Taku Inlet at elevation 2422. Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to an 11 foot diameter,2%mile long tunnel leading to a powerhouse at tidewater containing two 13 MW units. A4¥mile long submarine cable would be interconnected with the existing 138 KV Snettishham transmission line to provide 26 MW of capacity and 127,000 Mwhof firm and average annual energy to the Juneau area. The Alaska Electric Light &Power Company (AELP)currently holds a Preliminary Permit from the FERC for study of the site The Permit was applied for in anticipation of the re-opening of the A J Mine in Juneau Since Acres International Corporation 7-9 Action Plan 7.3.1.3 Thomas Bay -Swan Lake the time of the permit application,however,Echo Bay Alaska has dropped plans for proceeding with AJ Mine development A recent inspection of the Snettisham underwater cable crossing Taku Inlet indicates a redundant set of cables will have to be installed to insure the reliability of Juneau's Snettisham energy supply The new cables will be sized to have the capacity to carry both Snettisham and Lake Dorothy generation and will substantially reduce Lake Dorothy's construction costs.AELP is also investigating other scenarios for reducing the scope and cost of Lake Dorothy so that it could be sized to serve the proposed Kensington Mine The Kensington Mine is close to being fully permitted These additional considerations may require AELP to apply fora subsequent Permit. Swan Lake is located approximately 15 miles northeast of Petersburg above Thomas Bay at elevation 1520 Hydroelectric power could potentially be developed at the site by the construction ofa lake tap to supply water to a 7 foot diameter,2%mile long tunnel leading to a powerhouse at tidewater containing two 24 25 MW units.A combination of overhead transmission and submarine cable would interconnect the project with the grid at Petersburg to provide 46.5 MW of capacity and 170,000 Mwhoffirm and average annual energy to the region The Swan Lake site was initially proposed in an application for a license to the Federal Power Commission in 1922 The license was issued but later terminated.Subsequently,the US Bureau of Reclamation completed an Interim Report on the potential of the Thomas Bay area dated,June 1965. The hydroelectric project was under consideration to meet the urgent power needs at that time in Petersburg,Wrangell,Kake,Ketchikan and Metlakatla. A geology report on the project had been developed earlier in January 1962 Petersburg retained R W Beck and Associates to analyze electrical power requirements for the City which culminated in a report,"Analysis of Electrical System Requirements”,dated March 1974,presenting the site as a potential power resource Beck also prepared an Appraisal Report for the Thomas Bay Power Commission for review as a resource for the communities of Petersburg and Wrangell However,the project was later dropped from consideration in favor of the Lake Tyee Project which was subsequently constructed. Currently,the project's capability far exceeds the needs of the Petersburg / Wrangell area for the foreseeable future and would accordingly be available .aS a regional resource 7-10 Acres International Corporation Action Plan 7.3.14 Takatz Lake 7315 Thomas Bay -Scenery Lake Takatz Lake is located approximately 15 miles directly east of Sitka above Takatz Bay at elevation 920.Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to a 8 foot diameter,1%mile long tunnel leading to a powerhouse at tidewater containing two units Studies conducted have proposed installations ranging from 12 MW to 20 MW Previous studies have consistently identified Takatz Lake as the next hydro project for development by the City and Borough of Sitka In fact,the US Department of the Interior,Alaska Power Administration/Bureau of Reclamation made a fairly detailed evaluation of the Takatz Lake site m the 1960s,and it was considered a serious alternative to the existing Green Lake Project.Green Lake was ultimately developed due to the relative cost of transmission for the two sites Previous evaluations of the Takatz Lake site have a included an overhead transmission line for the 25 mile distance between the powerhouse site and the existing Sitka distribution system The resulting routing involved traversing some extremely rugged terrain,including two mountain passes --one between the Takatz Lake diainage and the Baranof Lake drainage at about elevation 2100,and one between the upper Baranof drainage and the upper Sawmill Creek drainage at about elevation 2900.The resulting construction cost of this transmission connection is the primary reason why this site remains undeveloped. Serious consideration is now being given to the construction ofa road between the Baronof/Warm Springs area and Sitka as a means to improve ferry service along the Alaska Marine Highway as well as tourism from cruise ships The proposed road would include a 1 mile long tunnel through the most rugged part of the terrain as referenced above.Clearly,the incremental cost of a transmission line constructed along the right-of-way of the proposed road would be significantly less than previously considered thereby greatly increasing the economic viability of Takatz Lake site for hydropower development. Currently,the project's capability exceeds the needs of the Sitka area and would accordingly be available as a regional resource The City anticipates, however,that at some point in time all of the output of the project will be needed within their system Scenery Lake is located approximately 7 miles north of the Swan Lake site as discussed above or 22 miles northeast ofPetersburg It is situated above Thomas Bay at elevation 1,080 Hydroelectric power could potentially be developed at the site by the construction ofa lake tap to supply water to a 7 Acres International Corporation 7-11 Action Plan 73.1.6 Lake Grace Diversion to Swan Lake Hydroelectric Project 7.3.2 Proposed Phasing of New Hydroelectric Projects foot diameter,3%mile long tunnel leading to a powerhouse at tidewater containing two 22.5 MW units.An overhead transmission line would interconnect the project with the grid at the Swan Lake site to provide 45 MW of capacity and 150,000 MWHoffirm and average annual energy to the region Unlike the other above listed projects,the Scenery Lake site has not been studied in any detail The only identifiable reason for this lack of interest is that to-date no need for the project has occurred in the surrounding area beyond the potential provided by the Swan Lake site.A description of the features and the potential of the site was included in the FPC/USFS Report which has served as the basis of the data included herein Lake Grace is located 28 miles from Ketchikan on the east side of Revillagigedo Island.A Power Project Withdrawal application was filed with the Federal Power Commission on November 21,1926 but was vacated by the FERC on October 31,1985.KPU is currently reviewing the long-term feasibility of diverting water from Lake Grace through a tunnel to Swan Lake Water would be used to increase water storage capacity,thereby increasing generation at Swan Lake KPU is considering installing a new turbine at Swan Lake A major regulatory barrier to developing Lake Grace is its location within the Misty Fjords National Monument in a designated Wilderness Area Development of Lake Grace would require approval by the President of the United States with concurrence of the U S Congress.Language in Section 1105 2 of ANILCA further limits development by requiring that such authorization may be obtained only if"..there is no economically feasible and prudent alternative " Normally,the phasing of hydroelectric projects within a power system grid is based largely on the estimated cost of each respective potential project By nature,hydroelectric projects are capital cost intensive and are generally very site specific In the present case,no consistent set of cost estimates are available as a means of comparison for the above identified projects.What is known,however,is the above listed projects have very similar characteristics consisting of lake taps at perched lakes with tunnels ofreasonable length leading to powerhouses at tidewater Therefore,development costs can be expected to be comparable and consistent with others recently developed in the region Accordingly,it is appropriate to phase project development on the basis of projected needs for the intertie itself coupled with due consideration to the load growth in the region as a whole Thus,the intertie is the key factor in the phasing of hydro generation projects.A regional intertie will enable full 7-12 Acres International Corporation Action Plan 7.3.2.1 Phase | 7.3.2.2 Phase I! 7.3.2.3 Phase Iil 7.3.2.4 Phase IV 7.325 Phase V utilization of each project as it would come on-line without the particular needs of the respective nearby communities.Shown on Figure 2 is a potential phasing ofthe five candidate projects listed above based on meeting the regional loads in step with the development of each component of'a regional transmission grid A brief discussion of each of the transmission intertie phases describing correlation to future hydropower project development follows The proposed Phase I transmission intertie component would interconnect Metlakatla with Ketchikan,Wrangell and Petersburg.As shown on Figure 2, the existing resources of the respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010 Therefore,no additional hydroelectric resources are required dunng this period The proposed Phase II would add Sitka and Kake to the transmission system Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015 The proposed Phase III would add Angoon,Tenakee Springs,Hoonah and Juneau to the transmission system At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system It indeed is possible that Lake Dorothy may have been brought on- line before 2015 Further,based on the load growth as projected for Funeau, the system loads can also fully utilize the Swan Lake project within the 2015 - 2020 time frame The proposed Phase IV would add Skagway and Haines to the transmission system.By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system.Takatz Lake has been shown on Figure 3 1 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects and cost of development. The proposed Phase V would add the communities on Prince of Wales Island to the transmission system With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation Acres International Corporation 7-13 Action Plan 7.3.3 Review of Existing Reports -Hydropower Reports relied on in preparing this section are identified in the above narrative sections Table 7.4 identifies the level of development of each of the relevant Projects reports. Table 7.4 Documents Reviewed - Potential New Hydroelectric Date Report Level of Projects Development 10/1987 |Alaska Power Authority Reconnaissance Southeast Alaska Transmission Intertie Study 8/1997 USDA Forest Service Identifies constraints on Land and Resource Management Plan.Tongass National new development,lists Forest ,,projects consistent with Tongass Land Management Plan Revision plan Final Environmental Impact Assessment 12/1996 |Ketchikan Public Utilities Identifies potential KPU Power Planning Study projects;Feasibility study underway. 3/1997 Metlakatla Power &Light Describes proposed Energy Generation Feasibility Study Report upgrades and potential new project No details provided. 1947 Federal Power Commission and Forest Service -U.S DA Identifies 200 sites for Water Powers -Southeast Alaska potential hydropower development 1992 Ketchikan Public Utilities Update to existing Lake Tyee to Swan Lake Transmission Intertie Feasibility reports and review of Study feasibility 4/1974 Electric Utility System -City and Borough of Sitka Project feasibility Analysis of Electric System Requiremenis investigation 3/1974 Petersburg Municipal Power &Light Appraisal Analysis ofElectrical System Requirements 11/1975 |Thomas Bay Power Commission.Petersburg -Wrangell Appraisal Appraisal Report 1960 U.S Department of the Interior Detailed evaluation Alaska Power Administration/Bureau of Reclamation Takatz Creek Project -Alaska 10/1985 |Alaska Electric Light and Power Company Operating Projects and Application for New License -Annex Creek and Salmon Creek |discussion of Altematives 10/1991 |City and Borough of Sitka,Alaska Feasibility analysis Electric Resource Evaluation and Strategic Plan 8/1990 Alaska Electric Light and Power Company Reconnaissance review :Juneau 20-Year Power Supply Plan Update 6/1991 Alaska Power &Telephone Company Project feasibility and Application for License -Black Bear Lake Project design 7-14 Acres International Corporation Action Plan 7.4 Economic and Financial Issues 7.4.1 Economic Parameters Table 7 5 Annual Fixed -Carrying Charges -Alaska Power Authority Guidelines Employed in 1987 Southeast Alaska Transmission Intertie Study Economic parameters and assumptions used in evaluating alternatives presented in the 1987 Study were based on guidelines supplied by the Alaska Power Authority and local utilities These criteria are generally accepted in performing economic analysis and should be updated and applied in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM Annual fixed carrying charges employed in the 1987 Intertie Study are listed on Table 7.5 20-Year 30-Year §0-Year Life Life Life Cost of Money (%)3 50 3 50 3.50 Amortization (%)3.54 1.94 0.76 Insurance (*>)0.25 0.20 0.20 Total (%)729 5.64 4.46 Criteria include the following: >Costs are expressed in dollars >»Present Worth Analysis covers a 30-year economic life / transmission >Planning Horizon/Period of Study is 20 years »Discount Rates used are as appropriate for participants »Inflation Rate is the current rate »Economic Life of Projects -Diesel Generators -20 years -Transmission Lines -30 years -Hydroelectric Plant -50 years The Economic Analysis presented in the 1987 Study was performed in two steps.The first step,an economic screening,compared the construction cost of each intertie link to the value of the potential displaced diesel fuel.The screening was performed by comparing Acres International Corporation 7-15 Action Plan 7.42 Electric Load Characteristics and Forecasts the net present worth life cycle costs of the intended transmission link with that of the existing diesel system The sunk cost of existing hydroelectric developments and transmission and distribution systems were assumed to be the same for all economic cases considered and were excluded from further analysis Analyses were conducted using Alaska Power Authority criteria for discount rates, energy demand,and fuel costs.The planning horizon for the study spanned 20 years. An important goal of the 1987 Study was to determine the most practical way to utilize surplus energy available from the Snettisham/Crater Lake and Swan Lake-Lake Tyee hydroelectric projects.Transmission interties between Juneau and Sitka and Lake Tyee and Swan Lake were preferred new transmission segments Completion of those segments was predicted to use nearly all (96%) of the surplus generation from the two hydro projects by 2006 The Swan Lake-Lake Tyee Intertie is proposed to be developed in Phase I;the intertie between Sitka and Juneau is proposed in Phase III Power over the intertie will supply near-term Ketchikan,Petersburg, and Wrangell needs;any remaining surplus would be provided to Metlakatla and Kake.Based on predicted load growth in the Juneau area,surplus power cited in the 1987 report at Snettisham/Crater Lake would be fully utilized during Phase I The scope and budget for this assignment did not include a rigorous update to load forecasts to accurately model the load distribution for evaluation of proposed transmission grid legs All information regarding utility loads and resources is compiled from existing sources of information and included in this SYSTEM Plan as background information supporting the phased development of the SYSTEM Discussions of predicted future load growth for municipalities and utilities in Southeast Alaska are based on existing documents and interviews with municipalities and utilities Table 7.6 presents predicted loads. Reports reviewed in preparing information in this section are identified below Electric Load Forecast for Ketchikan,Metlakatla,Petersburg, and Wrangell,Alaska:1990-2010 -ISER 1990 Forecast 7-16 Acres International Corporation Action Plan Table 7.6 Load Growth Projections for Participating Communities UTILITY /LOCATION/PHASE 1990 2000 2010 2020 mee Annual Growth KPU /Ketchikan /PHASE 1(1)2.0 2.0 2.0 20 PMP&L /Petersburg /PHASE I (1)1.3 13 1.6 "1.6 WMP&L /Wrangell /PHASE I (1)13 13 16 16 MP&L /Metlakatla /PHASE 1 (1)1.7 1.7 1.5 1.5 THREA /Kake /PHASE I (2)12 12 12 12 SED /Sitka /PHASE 8 (3)1.6 1.0 1.0 16 AELP /Juneau /PHASE II (4)2.5 2.5 2.5 2.5 THREA /Angoon /PHASE III (2)12 1.2 1.2 12 THREA /Hoonah /PHASE I (2)12 12 1.2 1.2 AP&I /Skagway /PHASE IV (5)1.4 14 1.4 14 AP&I-HLP /Haines /PHASE IV (5)2.0 20 20 20 THREA /Chilkat Valley /PHASE IV (2}12 1.2 1.2 12 COCO /Coffman Cove /PHASE V (7)12 1.2 12 12 AP&I /Craig _/PHASE V (6)2.5 2.5 25 2.5 AP&I /Hollis /PHASE V (6)25 25 25 2.5 AP&I /Hydaburg/PHASE V (6)25 25 2.5 2.5 THREA /Klawock /PHASE V (2)1.2 12 1.2 12 THREA /Kasaan /PHASE V (2)1.2 12 12 12 IB /Thorne Bay /PHASE V (7)12 12 12 12 (1)Electric Load Forecast for Ketchikan,Metlakatla,Petersburg and Wrangell, AEA/ISER,1990 (2)1997 -1999 Three-Year Construction Work Plan,IHREA,1996 (3)1996 Electric System Load Forecast,SED,1996 (4)Juneau 20-Year Power Supply Plan,AELP,1990 (5)Upper L yon Canal Regional Power Supply Review.AP&T.1997 (6)Environmental Assessment,Black Bear Hydroelectric Project,FERC,1992 (7)Alaska Electric Power Statistics -1960-1995,DCRA/DE &ASCC,1996 Acres International Corporation 7-17 Action Plan 742.1 Alaska Electric Light and Power Company This report was prepared for the Alaska Energy Authority by the Institute of Social and Economic Research,University of Alaska Anchorage,dated June 25,1990 SER 1990 Forecast).Utility electric energy requirements in these communities were projected to grow at an average annual rate of between -3 and +4 percent per year between 1990 and 2010 from the 1988 level.Growth rates considered economic effects of the Quartz Hill mine and the Bradfield intertie,but did not include mine loads themselves.The Quartz Hill mine development did not begin operation in 1995 as predicted in the high and medium scenarios,therefore for purposes of this presentation the low growth scenario has been used. Southeast Alaska Transmission Intertie Study -1987 Study The 1987 Southeast Alaska Transmission Intertie Study (1987 Study)presented three load forecasts,high,medium,and low Load growth during the past 10 years has deviated from the predictions. Planning criteria used to guide the 1987 Study projected the most economic development would include new transmission Lnks between (1)Snettisham and Sitka via Juneau,Green's Creek Mine, Hoenah and Tenakee Springs;(2)Petersburg,Wrangell and Ketchikan via a Tyee Lake-Swan Lake intertie;and (3)the Quartz Hill Mine and B C.Hydro at Kitsault,British Columbia Total estimated construction cost of these three interconnections was projected to be $153 million at the January 1987 price level. AELPa private utility,serves the City and Borough of Juneau (CBJ)The most recent information regarding AELP's system and projected future scenarios is presented in the 1990 Juneau 20-Year Power Supply Plan Update (1990 Juneau Plan)Existing resources in 1990 totalled 152 MW.Primary sources of power are small hydroelectric projects owned and operated by AELP and the federal Snettisham/Crater Lake hydroelectric projects.Legislation was enacted to transfer Snettisham/Crater Lake to the State of Alaska; transfer proceedings are continuing as of October 1997.AELP operates and maintains Snettisham/Crater Lake Snettisham is close to full energy utilization.During critical water years,such as 1997, it was necessary to run AELP diesels to cover hydro energy deficits. For average water years there could be as much as 60 million KWH of surplus energy during the summer and early fall months. The Kensington Mine's annual energy requirement is 68,400,000 KWH (pg 2-26 Environmental Impact Statement dated August 7-18 Acres International Corporation Action Plan 742.2 Alaska Power & Telephone Co. 74.2.3 City of Kake 7424 City of Ketchikan - Ketchikan Public Uiilities (KPU) -1997)The annual energy requirement for the Jualin Mine is unknown The 1990 Juneau Plan identified demand side management (DSM)as having the greatest potential to reduce need for new capital investment in generation.Results of implementing DSM measures to date have been mixed.Projections in the 1990 Juneau Plan, including a projected 2.0%load growth rate over the period 1998 - 2018 were employed in preparing this SYSTEM Plan.However,if the state oil revenues continue to decline and potential mining activity does not materialize,AELP may not need future sources of generation. Alaska Power &Telephone Co (AP&T)currently provides energy to the following communities of Craig,Klawock,Hollis,Hydaburg, Coffman Cove,and Whale Pass,on Prince of Wales Island;and the communities of Haines and Skagway in the Upper Lynn Canal Region.AP&T recently acquired Haines Light &Power (HLP) AP&T has developed future plans to serve Thorne Bay and Naukati on Prince of Wales Island and Klukwan and Chilkat Valley in the Upper Lynn Canal Region.Detailed information on AP&T's system was not made available to Acres The City of Kake is located on the northwestern tip of Kupreanof Island in Southeast Alaska Electric service is currently provided to the 700 residents by the Tlingit-Haida Regional Electrical Authority (THREA)using 2,230 KWofinstalled diesel generation.THREA's electrical system is isolated from other communities and alternative sources of supply.Peak demand in 1994 was 1,020 KW and total energy generation was 4,248 MWH_Ratepayers in Kake pay the highest rate for electric service identified in this study.The proposed SYSTEM interconnections would significantly reduce power costs and would be expected to enhance potential for future economic development and related load growth. Ketchikan,located on Revilligegado Island,is Alaska's fourth largest city Electric power is generated by hydroelectric plants at Swan Lake,Ketchikan Lakes and Lake Silvis/Beaver Falls with occasional back-up provided by the Bailey diesel plant.Ketchikan has experienced significant growth in electrical demand over the past decade Residential use per KPU customer increased at an average annual rate of 4%between 1969 and 1987.Commercial use increased at a higher rate. Acres International Corporation 7-19 Action Plan In recent years KPU has not been able to meet demand with hydroelectricity and has been forced to rely on the more expensive and less dependable power provided by aging diesel plant and surplus power from the Ketchikan Pulp Company (KPC).In October 1996,KPC announced that it would close its pulp mill and related electric generating facility in March 1997.(Initial Draft -Power Supply Planning Study -Foreword)Loss of the pulp mill will affect 465 employees and eliminate a power source;if KPC continues to operate its sawmill about 150 jobs would be retained and a new electric load would occur. 7425 'Metlakatla Power &Light |Metlakatla is located on Annette Island approximately 15 miles southwest of Ketchikan within the Annette Islands Indian Reservation.Metlakatla's economy is fairly stable and is primarily supported by timber and fishing industries Royalty payments for timber harvest through 1987 were $5 million;an additional $3 million is projected if the entire resource is harvested Fisheries activities provide approximately 93 jobs.A community-owned sawmill operated by KPC under a long term lease provides 110 full- time,year-round jobs,and an additional 30 jobs are associated with longshoreing activities KPC has recently opened a second sawmill at Ward Cove near Ketchikan The KPC-Annette Island sawmill lease ends in 2004 The sawmill consumes about 6,000 MWH/year (1989 data),or about 40%ofMetlakatla's total sales.MP&L's hydroelectric plant cannot respond quickly enough to the second-by- second fluctuation and resulting load variation.MP&L is forced to run a 3,500 KW diesel generator loaded to 1,000 KW in order to respond to the sawmill load and maintain system reliability. Residential electricity use averages 17,250 KWH due to use of electricity for space and water heating and poorly insulated homes 7.4.2.6 City of Petersburg -Petersburg Municipal Power &Light (PMP&L)serves Petersburg Municipal approximately 1,860 consumers within the city limits and Mitkof Power &Light (PMP&L)Island POWER Engineers,Inc prepared a draft 20-Year Plan to define additions and modifications for PMP&L's system in April 1997.PMP&L has three sources of generation:Tyee Hydro Project, Crystal Lake Hydro Project,and downtown Diesel Plant.Crystal is base loaded with the remaining generation provided by Tyee;backup power is provided by the Downtown Diesel Plant. Petersburg has historically relied on the ocean fishery and logging for its economic activity.Petersburg's system peaks in summer from fish plants'demands,but are starting to level out between winter and 7-20 Actes international Corporation Action Plan 7427 City and Borough of Sitka -Sitka Electric Department 74.2.8 Tlingit-Haida Regional Electric Authority summer.PMP&L energy requirements in 1995 were 37,400 MWH and peak demand was 9.2 MW.Current peak load for the PMP&L system is approximately 8.7 MW and available backup capability is 72MW Total PMP&L load growth has averaged 4 7%per year between 1984 and 1995 Petersburg states that it is preparing a new load forecast.Load curtailment occurs during peak demand hours if the Tyee source is lost.Tyee power is delivered to Petersburg at the 69-25 KV Petersburg Substation owned by the State of Alaska and operated by Thomas Bay Authority PMP&L's 20 Year Plan evaluates five diesel scenarios for added generation on Mitkof Island The Sitka Electric Department (SED)serves consumers on Baranof Island and Japonski Island.Past and projected future rate of population growth is 0 5%and employment growth is 0.55%Major industries include:fish processing currently growing at an annual rate of1 3 %;and tourism projected to increase at 5.0 %through 2001 and 2 5 %thereafter The APC pulp mill,once a major source of employment,is no longer in operation.Plant closure and site redevelopment are expected to occur The former APC site is attractive for commercial or industrial development as it enjoys direct access to open water and municipal utility infrastructure is in place In the medium ISER forecast,power requirements in Sitka are assumed to remain at the current level through 2000 and increase at 0 55 per year through 2010 Future energy system losses are assumed to equal 7%.System peak demand levels are based on assumed future system annual foad factor of 56.6%System peak demand is projected to increase to 23.8 MW in 2010.Electric rates are projected at the current level through 2000 and to increase at a 3 0%ate of inflation through 2010.The percentage ofall-electric homes is projected to increase at a 40%rate in the medium scenario Thompson Harbor facility is projected to double in size and fill up by 2003.Sitka is currently proposing to add a new diesel generation station this year The THREA is a generation and distribution electric utility incorporated in 1977 to provide electric generation and distribution service to five Tlingit and Haida villages located in Southeast Alaska:Angoon,Hoonah,Kake,Kasaan,and Klawock,located on islands in the Alexander Archipelago Chilkat Valley,THREA's sixth village,was added in 1994 A seventh village,Klukwan,pait of the original study in 1976,has elected to join THREA. Acres International Corporation 7-21 Action Plan Load growth is attributed to one-time events such as new housing and adding new communities to the system.Predicting new load growth has always been difficult.THREA serves no large power (1,000 KW or larger)loads Village economies are primarily dependent on timber,fishing,government and service industries. Villages receive assistance through the Power Cost Equalization (PCE)program and are concerned that the State of Alaska address the potential demise of PCE in 1999 The timber industry has been most responsible for economic growth in the communities over the past ten years Village and regional corporations will soon exhaust their private timber reserves and there is grave concern among community leaders that this will result in a loss of jobs The fishing industry is cyclical with prices fluctuating considerable during the fishing season.It is difficult to justify the economics of a fish processing plant in rural village communities where energy costs are higher that other locations in Southeast Alaska Construction of the planned 8-mile intertie from Chilkat to Haines will allow THREA to access lower cost power from AP&T's Goat Lake Project for the Chilkat Valley and Klukwan Southern Energy, an independent power producer,has started construction ofa 500 KW run-of-river hydro plant with the goal of serving property owned by Southern Energy and selling excess power to THREA and HLP. 7.4.2.9 Wrangell Municipal Light |Wrangell Municipal Light &Power (WML&P)is dependent on &Power fishing and tourism for much ofits economic base Wrangell also benefits from a sawmill and is enjoying a new life as a staging area for mining activity just across the Canadian border,largely as a demand for airport and logistical services Wrangell's recent loads were not significantly different than forecasted in the 1990 ISER Base Case. 7.5 Environmental and The environmental and regulatory review and related issuance of Regulatory Procedures '2pprovals in the form of licenses and permits often requires a long lead time in order to commence with construction and complete facilities on a timely and cost-effective basis.Issuance of a federal license or permit triggers environmental review requirements under a number of statutes,including the National Environmental Policy Act Facilities envisioned in this SYSTEM Plan involve actions that will require federal licenses and permits including: >permits to cross navigable waterways and wetlands,or to allow dredge and fill activities; 7-22 Acres Intemational Corporation Action Plan 75.1 Reconnaissance Level Review -"Fatal Flaw Analysis" 7.5.2 Formal Licensing and Permitting Requirements »preparation ofa Special Use Authorization to occupy Tongass National Forest lands;and »Hydropower projects and primary transmission lines jurisdictional under the Federal Power Act are required to be licensed by the Federal Energy Regulatory Commission (FERC) Based on prior experience,time periods to complete regulatory approvals involving NEPA review are: >Hydropower licenses for major unconstructed projects:5 -12 years;and +Approvals for transmission line segments located on federal lands: 2-5 years. A "fatal flaw"environmental assessment for each of the selected line segment is typically performed concurrently with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented Tasks involved in this assessment include: >Reconnaissance review of the proposed project area to identify any critical habitat for aquatic and terrestrial species;fish and wildlife populations;navigable waterways;wetlands;listed cultural, archaeological,or historic properties;recreational use areas;and scenic vistas. »Literature search to identify any resources and areas that will require significant enhancement or mitigation measures. >Review of licensing,permitting and other approvals that will be required to design,construct,and operate facilities. >Preliminary consultations with federal and state resource management agencies with authority over use and occupancy of lands,waters,and resources in the proposed project area. Once project feasibility is confirmed,the formal permitting and licensing procedures are accomplished.These include: Acres International Corporation 7-23 Action Plan »formal consultations with state,federal,and local agencies and other governmental authorities;non-governmental organizations; and other interested parties; »environmental data gathering and studies; >applications for approval by regulatory authorities;and >environmental protection and enhancement plans - The Swan Lake -Lake Tyee Intertie development process provides insight into the potential environmental investigations that will be required to receive permits and other regulatory approvals in order to construct additional segments of an interconnected SYSTEM.The environmental and regulatory review follow in tandem with route selection and engineering feasibility and design.The recent FERC licensing of the proposed Goat Lake Project provides insight into environmental,engineering,and economic/financial investigations associated with applying for and receiving a FERC license. Typical licensing and permitting requirements for transmission lines (T)and hydropower facilities (H)are listed in the Table 7.7 7-24 Acres International Corporation Action Plan Table 7.7 Typical Licensing and Permitting Requirements for Transmission Lines and Hydropower Projects 753 Environmental Protection, Enhancement,and Mitigation Requirements Column "T"identifies transmission requirements;Column "H" identifies hydropower facilities requirements. T H PERMITS AND APPROVALS X Corps of Engineers Individual Section 10 Permit for each crossing of navigable waters xX Xx Corps of Engineers Section 404 Permit where facilities affect wetlands or involve dredge and fill X X USFS Special Use Permit to construct and operate facilities on National Forest lands Xx FERC License to construct and operate hydropower facilities jurisdictional under the Federal Power Act X Xx Alaska Coastal Management Program Certificate of Consistency issued by Division of Governmental Coordination x Xx Certification that proposed facilities can be constructed and operated in compliance with State Water Quality Standards and the Federal Clean Water Act (401 Certificate)issued by Alaska Department of Environmental Conservation xX Xx Spill Prevention Containment and Counter Measure (SPCC) Design/Plan required by EPA to comply with the Federal Clean Water Act x x Local government building permits and zoning requirements X x Lease agreements with Native Corporations to cross corporation lands A significant element of the environmental approval process is determining environmental protection measures and enhancements, and any potential environmental mitigation measures,that may be required and assessing their effects on project feasibility.These requirements may significantly affect project costs during construction and through the life of the project.Under current federal law,a number of federal agencies and state agencies with delegated authority from federal statutes may prescribe mandatory terms and conditions State and federal agencies can also impose terms and conditions through issuance of permits Local Jurisdictions may require certain measures through zoning and other local requirements Table 7.8 presents typical environmental requirements associated with transmission and hydroelectric projects Acres International Corporation 7-25 Action Plan Table 7.8 Typical Environmental Protection,Enhancement and Mitigation Requirements Transmission Line Segments and Hydropower Projects 7.5.4 Review of Existing Reports -Environmental and Regulatory Procedures Typical environmental protection,enhancement,and mitigation are listed in Table 7 8 Column "T"identifies transmission requirements; Column "H"identifies hydropower facilities requirements ENVIRONMENTAL PROTECTION,ENHANCEMENI &MITIGATION MEASURES Water quality monitoring Fish and wildlife Scheduling construction activities to avoid adverse impacts Habitat protection and enhancement Avoid direct effects on anadromous fish streams Soil and erosion control measures Measures to avoid adverse project-related effects on threatened and endangered species Raptor protection measures Cultural,Historic,and Archaeologic Resources Surveys Avoid adverse impacts Management plans where eligible or listed resources are present Scenic and Aesthetic Resource Protection Avoid areas of primary concern Revegetation and landscaping Treatment of facilities Recreational Resources Surveys Avoid areas of primary concern Develop,operate,and maintain new facilities Assess project-related effects on local services and facilities -schools, hospitals,police,etc ,during construction and operation May require payment for services or development of new facilities We reviewed a number of reports and interviewed utilities,state government officials,and consultants to identify sources of available information regarding proposed transmission line segments and hydroelectric projects in Southeast Alaska Reports relied on in preparing this report include the following: >Alaska Power Authority,Southeast Alaska Transmission Intertie Study,October 1997; »Department of Community and Regional Affairs,Division of Energy,Kake-Petersburg Intertie Feasibility Study,January 1996; 7-26 Acres International Corporation Action Plan Table 7.9 Level of Investigation Performed as of November 1997 Proposed Transmission Segments and Hydroelectric Projects >USDA Forest Service,Land and Resource Management Plan, Tongass National Forest,1997; >USDA Forest Service,Swan Lake -Lake Tyee Intertie,Final Environmental Impact Statement Summary,August 1997; >USDA Forest Service,Swan Lake -Lake Tyee Intertie,Record of Decision,August 1997;and »USDA Forest Service,Tongass Land Management Plan Revision, Final Environmental Impact Statement,January 1997 Table 7.1,Level of Assessment for Proposed Transmission Segments,lists primary environmental issues identified and states the existing level of review performed to date.Table 7.9 presents for each phase,the level of investigation performed on the proposed transmission segments and hydroelectric projects A complete list of reports reviewed is included in Appendix B and is available from the Southeast Conference Proposed Status Phase Intertie Segments &Environmental Review Hydro Projects Approvals I Swan Lake -Lake Tyee Intertie EIS and USFS Record of Decision Issued -8/97 Ketchikan -Metlakatla Intertie Reconnaissance level -1987 Ir Petersburg -Kake Intertie "Fatal flaw"review -1996 Kake -Sitka Intertie Reconnaissance level -1987 I Juneau-Sitka Intertie Appraisal level -1987 Lake Dorothy Hydro Project FERC Preliminary Permit - Preliminary review -1996 Swan Lake Hydro Project Appraisal level -1965 IV Juneau -Skagway Intertie Reconnaissance level -1987 Takatz Lake Hydro Project Reconnaissance level -1965 Vv Ketchikan -Prince of Wales Reconnaissance level -1987 Scenery Lake Hydro Project Appraisal level -1965 Acres International Corporation 7-27 Action Plan 7.6 Recommendations.The general evolution of analyses presented in the 1987 Intertie Study is entirely appropriate for the purpose of progressively narrowing down the options to find the optimal development sequence However,we identified a number of specific concerns that should be questioned in further analyses,and identified the need to elaborate on some of the cost functions used in the comparison of proposed line segments.The main issue in developing an integrated electrical system is optimal timing of transmission extensions,and ultimately the timing of future generation additions.Specific concerns identified include: »suitability of assumed generation dispatch assumptions; >appropriateness of adopted reserve margins; >»improved reliability of supply could not be quantified based on the 1987 analysis;and , >stated "Benefit-Cost"ratios are really the ratio between the Net Present Value of the cost of the Base Case Diesel development and the Net Present Value of the costs of the subject expansion plan General recommendations include: >update relevant study results to a consistent basis; >prepare a least-cost planning analysis;and >evaluate cost-effective demand-side management programs options on a sub-regional basis Due to the passage of time since the release of the 1987 Intertie Study,we identified a range of concerns regarding the study findings: >different base year; >different base loads and growth rates,and later terminal year leads to changes in forecast of replaceable diesel consumption at each community,and more demanding load conditions for designed transmission elements; »different diesel fuel price projections >different transmission and substation costs; »different system losses due to different system load conditions;and >recent commitments to selected grid extensions Recommended investigations and analyses to complete this SYSTEM Plan include: >update information available and relied on in preparing this Report as noted above; 7-28 Acres International Corporation Action Plan »review basic designs for transmission lines and substations presented in existing reports for adequacy Develop a level of detail adequate to provide a stronger foundation for developing refined cost estimates; »develop generic designs for stand-alone diesel generation supply Stations and for backup generating stations.Use stand-alone stations in refined Base-Case development plan;assume standby installation as grid is extended to each community;Vvconduct a "fatal flaw"environmental assessment for each of'the selected line segments concurrent with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented; >update economic parameters and assumptions used in evaluating alternatives presented in the 1987 Study and apply in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM ; >prepare revised load forecasts for participating systems recognizing phased development identified in this SYSTEM Plan. Identify potential new large loads and determine each potential new large load's energy plan with regard to self-generation and interconnection with local utility to provide backup.Identify conservation program actions to be implemented by potential new large loads >investigate economies of scale available through multiple use corridors: -electricity transmission -communications and fibre optics -transportation Acres International Corporation 7-29 8 References and List of Preparers Section 8 8.1 References Cited References Cited and List of Preparers The following documents were used in preparing this report.A full list of literature pertaining to topics covered in this report is located in Appendix B Copies of Appendices are available upon request from the Southeast Conference Alaska Department of Community and Regional Affairs,Division of Energy, Kake-Petersburg Intertie Feasibility Study.Prepared by R.W.Beck, Inc ,1996. Alaska Department of Community and Regional Affairs,Rural Alaska Electric Utility Interties Preliminary Draft Survey.Prepared by Foster Wheeler Environmental,Bellevue,WA,March 1987. Alaska Electric Light and Power Company,Application for New License - Annex Creek and Salmon Creek.Prepared by R W Beck,Inc.,October 1985 Alaska Electric Light and Power Company,Juneau 20-Year Power Supply Plan Update.Prepared by CH2M Hill,Bellevue,WA.,August 1990 Alaska Power &Telephone Company,Application for License -Black Bear Lake Project Prepared by HDR Engineering,June 1994 Alaska Power Authority,Black Bear Feasibility Report 1981 Alaska Power Authority,Haines-Skagway Region Feasibility Study Prepared by R.W.Beck,Inc ,1981 Alaska Power Authority,Southeast Alaska Transmission Intertie Study. Prepared by Harza Engineering,October 1987 Alaska Power &Telephone,Upper Lynn Canal Regional Power Supply Review Prepared by R W Beck,Inc,Seattle,WA ,April 1997 Alaska Systems Coordinating Council and State of Alaska Department of Community and Regional Affairs,Division of Energy,Alaska Electric Power Statistics 1960-1995.Anchorage,Alaska,September 1996. Acres International Corporation 8-1 References Cited and List of Preparers Electric Utility System,City and Borough ofSitka,Analysis of Electric System Requirements Prepared by R W Beck,Inc.,Seattle,WA,April 1974., Federal Power Commission and Forest Service -US D.A.Water Powers - Southeast Alaska.Washington,D C.,1947 Ketchikan Public Utilities,Initial Draft Power Supply Planning Study Prepared by RW.Beck,Inc ,Seattle,WA,December 20,1996 Metlakatla Power &Light,Energy Generation Feasibility Study Report Prepared by Atlas Engineering Group,Baton Rouge,LA,March 31,1997 McDowell Group,Inc ,Trends in Southeast Alaska's Economy.Handout prepared for Southeast Conference Annual Meeting,September 1997. Petersburg Municipal Power &Light,Analysis of Electrical System Requirements.Prepared by R.W Beck,Seattle,WA,March 1974 City and Borough ofSitka,Alaska,Electric Resource Evaluation and _ Strategic Plan Prepared by R.W.Beck,Inc ,Seattle,WA,October 1991 Thomas Bay Power Commission,Petersburg -Wrangell,Appraisal Report. Prepared by R.W.Beck,Seattle,WA ,November 1975. USDA Forest Service,Land and Resource Management Plan,Tongass National Forest Tongass Land Management Plan Revision Final Environmental Impact Assessment,August 1997 USDA Forest Service,Swan Lake-Lake Tyee Inter tie Final Environmental Impact Statement Summary.Prepared by Foster Wheeler Environmental, August 1997. USDA Forest Service,Swan Lake-Lake Tyee Intertie Record ofDecision. August 1997 U.S Department of the Interior,Alaska Power Administration/Bureau of Reclamation,Takatz Creek Project -Alaska Washington,D.C ,1960 8-2 Acres International Corporation References Cited and List of Preparers 8.2 List of Preparers Nan A.Nalder,MPA,Project Manager.Project Descriptions,Economics and Demographics,Environmental,Geography,Policy,Regulatory,Research, and Report Editor Acres International Corporation,Seattle,Washington Myles Godfrey,P.Eng,Transmission Line Segments and Systems Operations Acres International Limited,Toronto,Canada A.Richard Griffith,PE,Hydroelectric Projects.Acres International Corporation,Seattle,Washington. Kenneth Salmon,P.Eng,Electrical Equipment and Systems.Actes International Limited,Vancouver,B C. Jeffrey Spencer,PE,Electrical Distribution and Transmission Review Elektron,Bend,Oregon Acres Intemational Corporation 8-3 &AN7TENAKEESPRINGSO. Scenery Lake(Phase YY)\¥vywil'iSwanLake'(Phase ui) LOAD CENTER Existing Intertie New intertie ¥ SiR Existing Hydro New Hydro Southeast Alaska Utilities aRELECTRICALINTERTIESYSTEMPLAN 1,000MWhi :§ H : |Average Annual Loads |Average Annual Energy |wi Potential New Hydro £ i t A <os _Average Annual Energy wi Existing Hydro i :i 1995 2000 2005 2010 .Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN :LOADS AND RESOURCES 2030 Figure 2