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HomeMy WebLinkAboutTuluksak Sustainability Study August 30, 2001aPOWER &CONTROL ENGINEERING P.O.BOX 231929 ANCHORAGE,ALASKA 99523 TELEPHONE 907-345-7117 FAX 907-345-9684 August 30,2001 Alaska Energy Authority Chris Noonan 813 West Northern Lights Boulevard Anchorage,AK 99503 Ref:Tuluksak Sustainability Study On behalf of CE2 Engineers,I enclose four copies of the latest version of this effort.At this point in time there are several known deficiencies based on comments received with regard to the first draft.° 1.An alternate operator's agreement has not been finalized.A representative of McGrath Light and Power has visited the community and has met with staff and board of the utility.He also met with the Denali Comission and with REG to finalize an agreement. We expect a final form to this arrangement very soon. 2.The school district was contacted with regard to the utility furnishing power to the school.The superintendant of the school district was willing to entertain this idea.The school district had no reliable information about the actual electrical demand,electrical energy requirements,fuel use of generators,or even size of those generations related to the existing school or the new school.The new school is not even in a conceptual phase of design and is out at least five years.We are expecting a little more information from the school district,and at that time can re-run the spreadsheet with the additional sales to the school included.This should represent a significant improvement in viability,but realistically,connection to the school would be fairly complicated from the standpoint of fuel storage,if nothing else,and the negotiation with regard to a "fair”rate for both parties is always time consuming. 3.The financial requirements shown in Appendix B have been re-worked to reflect an REA financial planning format.The basic expense calculations have been left in the PCE categories because this is the driving format for the utility's day to day operations.The format for the Financial Forecast,showing accrual and cash status,used a standard REA format,but was changed significantly in the category names because of the large difference between a large distribution-only coop and a small village generation and distribution utility.In particular,decisions must be made about: a.What a reasonable operating margin might be. b.The revenue shown is just a nfultiplier of the actual total expense predicted.This needs to be changed to a per kWH cost assumption with the assumed collection POWER GENERATION DISTRIBUTION BULK FUEL TANK FARMS CONTROL AND METERING losses incorporated.This is a little bit into rate design but it was realized that this is an important part of this analysis,and should show roughly where rate increases are required. c.As noted above a sensitivity case was not run with assumptions about adding the school district,because of a lack of information.We hope to have a little more shortly. Overall,we hope that this document is close to meeting the requirements and look for your comments.The deficiencies noted require some additional information and in some cases require some direction from REG and the Denali Commission.Once that direction is received,we should be able to turn around a final document within a few days. Power &Control Engineering Robert E.Dryden P.E. CC:Chuck Eggener,CE2 Tuluksak Native Community Electric Power Utility Ten Year Business Plan Prepared by CE2 Engineers in association with Power &Control Engineering and CTC Alaska Inc. Second Draft -August 28 ,2001 INDEX 8. 9. .INTRODUCTION BASIC ASSUMPTIONS THE BUSINESS DEFINED OPERATIONAL FUNCTIONS OF THE BUSINESS ADMINISTRATIVE FUNCTIONS TO SUPPORT THE BUSINESS MANAGEMENT STRUCTURE/STAFFING ANNUAL OPERATING EXPENSES AND REVENUES TARIFF ALTERNATIVE OPERATOR 10.MILESTONES FOR UTILITY IMPROVEMENT Appendix A ----10 Year Energy Production Requirements APP-A-1 Energy Production Requirements-Assumptions and Comments APP-A-2 Energy Production Requirements-Spreadsheet - APP-A-3 Energy Analysis Base Year 2000-Assumptions and Comments APP-A-4 Data Analysis of Base Year 2000 -Sales and Consume APP-A-5 Projections for Residential Consumers,Numbers and Usage. Appendix B ----10 Year Financial Requirements APP-B-1 Predicted Expenses-Comments and Notes APP-B-2 Predicted Expenses-Spreadsheet APP-B-3 Financial Forecast APP-B-4 Analysis of Actual Expenses for Base Year 2000 APP-B-5 Engine Generator Maintenance Costs APP-B-6 Annuity Projection -Replacement,Operating Capital ae on Appendix C ----Key Personnel Experience Summaries | APP C-1 Key Personnel Experience Summaries - APP.C-2 Table-Training Costs Appendix D ---Alternate Operator -McGrath Power &Light Letter of Intent Income Statement DRAFT 8-28-2001 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITY DEPARTMENT BUSINESS PLAN,JUNE 2001 1.INTRODUCTION: The Tuluksak Native Community (hereinafter "Tribe”),a federally recognized tribal government (pop.457)is in the process of building a new power plant in partnership with the Alaska Industrial Development and Export Authority (AIEDA)to serve the electric generation needs of the community.The new power plant will consist of three diesel engine generators,automated switchgear,fuel handling,and a step-up transformer bank.Construction funding is being provided by a combination of HUD ICDBG funds as well as Denali Commission matching funds passed through AIEDA.Once completed in January of 2002,the Tribe will be solely responsible for operating and maintaining this new facility,as well as the existing 7.2-12.5 kV distribution system totaling approximately five miles of distribution line,and existing fuel storage.The Denali Commission has asked the Tribe to develop a business plan to demonstrate how the facilities will be operated and maintained upon completion of the project. In response to the Denali Commission sustainability requirement,the Tribe undertook a business planning effort in conjunction with its consultants to develop a business plan that addresses the Denali Commission's concerns.This planning effort involved the following: V Defining the Business Identifying the operating functions to be performed Identifying the administrative functions necessary to run the business Determining the management structure and staffing requirements Estimating the annual operating expenses Developing a rate schedule which will meet the projected annual operating expenses NSNNNRONONRSNIdentification of a back-up utility operator Zz.BASIC ASSUMPTIONS: The following underlying assumptions were recognized in preparing the Plan: v The Tribe will own the power plant,distribution system,and bulk fuel storage upon completion of the construction. v The Tribe will operate the electric utility as an enterprise of the Tribe. Y Costs are presented inflated at a 3%annual rate. Y Detail of Assumed Business costs and comments are attached as Appendix B. DRAFT 8-28-2001 |Page 1 of6 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITYDEPARTMENT BUSINESS PLAN,JUNE 2001 3.THE BUSINESS DEFINED: The Tribe will provide the following services under the Tribal Utility Department: ¥Electric power generation at the power plant Y Fuel storage for the power plant ¥Heat Recovery for use at the new water plant and/or school.The cost of installation and operation of a heat recovery system would be negotiated with the prospective user. Y Electric distribution system to the customer's meter (customer is responsible for all wiring from the meter to outlets) 4.OPERATIONAL FUNCTIONS OF THE BUSINESS The Tribe will operate and maintain the power plant,its appurtenances,electrical distribution system,and fuel storage. 5,ADMINISTRATIVE FUNCTIONS TO SUPPORT THE BUSINESS The Tribe will provide the following general administrative services in support of the Tribal Utility Department.The cost for these services will be incorporated into the indirect rate the Tribe negotiates with its federal cognizant agency,the Bureau of Indian Affairs.The indirect rate will be 'applied uniformly to all services,programs,grants and contracts that the Tribe provides. Personnel/human resource services Purchasing Payroll Accounting Billing 4\NOONONRSNRisk Management DRAFT 8-28-2001 Page 2 of 6 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITYDEPARTMENT BUSINESS PLAN,JUNE 2001 6.MANAGEMENT STRUCTURE /STAFFING At completion of construction in January,2002,the Tribal Utility Department will be managed and staffed as shown in the following organizational chart.The Utility has a manager,a lead operator,and a back-up operator.The current Utility Manager,Mr.Willy Phillip,has served in that capacity for over twelve years.Mr.Phillip's back-up operator,Mr.David Phillip,has also worked for the Utility for numerous years.Both have attended training in Seward for power plant systems.The Tribe will contract for the occasional services of a diesel mechanic for periodic inspection of the generators.Further,the Tribe's electrical engineer will provide assistance developing a weekly,monthly,quarterly,and annual preventative maintenance checklist and 'monitoring system.This will ensure that not only minor,but major,preventative maintenance will be scheduled and done. The Tribe will track revenues and expenses of the Utility using MYOB accrual accounting software.Cash deposits are made weekly,and all utility funds are locked in the Tribe's safe prior to being deposited.Daily cash reconciliation is performed by the finance department.Utility billing functions will comprise of a percentage of the Tribe's accountant's and accounting clerk's time. TULUKSAK NATIVE COMMUNITY 'Governing Body Tribal Administrator 1 I |I Finance Other Depts.Tribal UtilityChiefFinancialOfficerTribalUtilityManager H Personnel/Human Resources Purchasing Payroll Accounting | Billing Risk Management DRAFT 8-28-2001 Contracted Diesel Mechanic Contracted Engin.Support Lead Operator Back-up Operator Page 3 of 6 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITYDEPARTMENT BUSINESS PLAN,JUNE 2001 7.ANNUAL OPERATING EXPENSES AND REVENUES Attached are detailed spreadsheets of the projected operating expenses,as well as thebackupanalysisoftheyear2000expenses.Year 2000 was used as a base to project expenses to year 2010.. Added to the historical and existing expenses were: a.Workmens'Compensation Insurance.This is currently being paid but was not reflected in the base year 2000 accounting. Small tool allowance. Amortization of overhaul expense.In previous years engines were run to destruction and then replaced on an emergency basis.This should provide for proper maintenance and promote maxim life of the equipment. Overhead Line Maintenance in normally included in the current accounting but no expenses were incurred during 2000.We have estimated based on prior years. We have added Property,Liability,and Fire Insurance in the amount of $10,000 per year.We are trying to get a quotation. "Replacement Annuity -this would be money collected from rates and put in a savings account for eventual replacement of equipment.Much of the cost of the new power plant is related to the civil work and the building.The only equipment which will wear out and need replacement short of 15 or 20 years are generator sets themselves.The rate of deposit shown would provide $102,000 by 2012. Tribal Indirect Overhead.At this time much of the overhead involved in running the utility is being paid by outside entities,such as the BIA,ina program to develop adequate skills and local government structure. Administration of all the businesses owned by the Tribal Government will eventually share all the overhead costs.It is our preliminary estimate that this will amount to about a 20%indirect adder to all costs other than fuel. There is minimal risk of the loss of any large customers since most public facilities are already owned by the Tribe.The School District,the largest facility in the village,has historically _ generated it's own electrical power,and as such,represents a major opportunity rather than a risk of loss.The Village would benefit by providing part or all the power to the existing school,as well as the new school,and will pursue this option. DRAFT 8-28-2001 Page 4 of 6 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITY DEPARTMENT BUSINESS PLAN,JUNE 2001 8.TARIFF: At the present time the rates are based on a flat charge per kWH,initiated by the Utility Manager and approved by the Tribal Council.The Utility needs to develop a published rate structure,which would include rates for residential and small commercial loads,as well as larger loads,such as the school.At this point it is felt that larger loads would be handled on a special contract basis. There is no formal policy with regard to service connects and disconnects,and no written policy related to related to delinquent bills.The informal policy seems to be acceptable to the community,but needs to be formalized and enforced.This task should be easily completed by the end of year 2001.The current bad debt level may be as high as 20%.Alaska Village Electric Coop.assumes a collections rate of 99%on all billing and actually loses only about 4 percent.For Tuluksak we feel that 97%is a reasonable target for improvement of collections but would hope the utility can do better than this. 9,ALTERNATIVE OPERATOR: As requested by the Denali Commission,the Tribe has identified an alternative operator for the facility in the unlikely event that the Tribe is unable to successfully implement the business plan over a reasonable amount of time: _ McGrath Light &Power Mr.Ernie Baumgartner,General Manager (907)524-3009 At this time Mr.Baumgartner has visited the community and met with the operators and council.He has also met with the Energy Authority and the Denali Commission about the terms of assuming this responsibility. DRAFT 8-28-2001 Page 5 of 6 TULUKSAK NATIVE COMMUNITY TRIBAL UTILITY DEPARTMENT BUSINESS PLAN,JUNE 2001 10.MILESTONES FOR UTILITY IMPROVEMENT a.September 30,2001 Published Disconnect Policy b.September 30,2001 Contact AIDEA and Denali Commission about bulk fuel improvements. .Get village on list for tank farm improvements. c.October 31,2001 Collections Rate improved to 90%.Disconnect policy enforced. -d.December 31,2001 Published Tariff including connect and disconnect policy. e.March 31,2002 Collections Rate improved to 97%. f.April 30,2002 Complete Billing Program and Training related to Billing,PCE paperwork,and general accounting for Utility. g.August 30,2002 Comeplete Training of Operators AVTEC Diesel Maint.Program h.November 30,2002 Complete Operator Training in Bulk Fuel operations &Hazwoper training. i.September 30,2002 New Power Plant Operational j.October 31,2002 Training Complete on New Plant DRAFT 8-28-2001 °Page 6 of 6 APPENDIX A ---ENERGY PRODUCTION REQUIREMENTS APP-A-1 Assumptions and Comments APP-A-2 Table --Energy Production Requirements APP-A-3 Energy Analysis Base Year 2000 --Assumptions and Comment APP-A-4 Analysis of Base Year-2000 Energy Sales APP-A-5 Method of Arriving at Projections for Residential Consumer Numbers and Usage DRAFT 8-28-2001 ENERGY PRODUCTION REQUIREMENTS--ASSUMPTIONS &COMMENTS Residential -assume the existing group of consumers continues to use an average of 276 kWH per month.The new homes as assumed to use 600 kWH per month. Community Facilities --it is assumed that this group will remain at a constant use.The existing Tribal Office will be torn down and replaced with a new multi-purpose building in 2002.It is assumed that this new building will use 1000 kWH more than the old building. A new water plant and water distribution system is planned to go into service about 2004.Estimates of energy use were taken fromacompleteddesignforAkiachak.The energy use for the whole system is projected at 108,300 kWH per year and we estimate impact oncoincidentsystemdemandtobeabout25kW. Commercial Consumers -It is assumed that commercial energy use will rise at 2%per annum with population. Federal and State Consumers-no change over time is assumed with this group. Unbilled is the Community Church and Mission House.I have assumed this po licy will not change. Street Lighting-Itis assumed that some street lighting will be added to cover new housing and so this number was escalated according topopulationincreaseat2%per annum. The System Loss -This was assumed to be directly related to transformer no load loss,and we felt that this should not increase substantiallyoverthisperiodoftime. Demand was calculated by assuming an annual load factor of 53%which is the value for the year 2000.None of the additional loads should alter this overall system parameter. APP-A-1 DRAFT 8-28-2001 TULUKSAK POWER UTILI Energy Production-Power U Residential Consumers Number Average annual kWH/mc Annual KWH Community Facilities Number Average annual kWH/mc Annual kWH New Water System Commercial Number Average annual kWH/me Annual KWH Federal State Facilities Number Average annual kWH/mc Annual kWH -Unbilled/Donated KWH Number Average annual kKWH/mc Annual kWH Street Lighting kWH/mo Total Number of Consumer: Total KWH Soild Total kWH Generated Loss Percent Loss Plant Annual Load Facto! Plant Ann Peak Demand kV ENERGY PRODUCTION REQUIREMENTS Draft 8-28-01 <<--Projected -->> 108,300 108,300 108,300 108,300 99,755 101,750 601,230 617,887 633,848 650,134 654,020 656,022 ENERGY ANALYSIS BASE YEAR 2000 --ASSUMPTIONS AND COMMENT Related to the demand readings,January looks too high relative to any other readings for three years.1998 and 1999 filing information related to demand makes no sense.The last six months of information in 2000 looks real,the load factors are reasonable,and peak 15 minute demand looks like about 96 kW. . The system losses bounce around badly from month to month.There must be some problem in reading the power plant meter consistently with the consumer meters.The long-term average loss of 12%is reasonable,although it could probably be improved. APP-A-3 DRAFT 8-28-2001 TULUKSAK BUSINESS PLAN ----ANALYSIS OF BASE YEAR -20 ENERGY SALES Jan -Feb Mar Apr May Jun July Aug Sept Residential Consume: Number 72 72 72 72 72 72 72 72 72 Total KWH 22,187 24096 16637 19200 19002 17112 16233 19525 20470 Average kWH 308 335 231 267 264 238 225 271 284 Community Facilities Number 4 4 4 4 4 4 4 4 4 Total kWH 4667 5643 3696 4517 3934 3084 2728 3920 4458 Average kWH 1,167 1,411 924 1,129 984 771 682 980 1,115 Commercial Number 5 5 5 5 5 5 5 5 5 Total KWH 7636 9123 5731 7474 7451 6346 5574 7017 6735 Average kWH/mo 1,527 1825 1,146 1495 1,490 1,269 1,115 1,403 1,347 Federal State Facilities : , Number 2 2 2 2 2 2 2 2 2 Total kWH 913 809 297 370 317 295 149 162 153 Average kWH/mo 457 405 149 185 159 148 75 81 77 Unbilled/Donated kWH Number 2 2 2 2 2 2 2 2 2 Total KWH 1450 1070 370 1400 190 170 170 310 310 Average kWH/mo 725 535 185 700 95 85 85 165 155 Street Lighting KWH/r 274 274 274 274 274 274 274 274 274 Total KWH Sold 37,127 41,015 27,005 33,235 31,168 27,281 25,128 31,208 32,400TotalKWHGeneratec44,960.39,520 36,640 33,840 33,920 29,680 30,400 34,480 43,600 Loss 7,833 -1,495 9,635 605 2,752 2,399 5,272 3,272 11,200 Percent Loss 17%4%.26%2%8%8%17%9%26% Plant Dmd Reading 1.58 1.2 12 12 1.2 1.2 0.85 1.03 1 Multiplier 80 80”80 80 80 80 80 80 80 Plant Demand 126 96.6 96 96 96 68 82 80 Days in month 31 29 31 30 31 30 31 31 30 load factor 48%59%51%49%47%43%60%56%76% Oct 72 20058 279 33,568 39,729 6,161 16% 4 80 89 31 60% Draft 8-28-01 Nov Dec 75 75 20590 24,761 275 330 4 4 3813 5956 953 1,489 5 5 6898 7475 1,380 1,495 2 2 411 578 206 289 2 2 520 1390 260 695 274 274 32,506 40,434 36,560 42,400 4,054 1,966 11%5% 1.21 1.19 80 80 97 95 30 31 52% 73 19989 276 48 51,247 1,068 60 85,166 1,419 24 4,738 197 24 7,765 324 274 392,075 445,729 -53,654 12% APP-A-4 Method of Arriving at Projections for Residential Consumer Numbers and Usage Number of Residential Consumer 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Assume existing houses use 276 kWH/mo average at 2% growth 75 77 78 81 83 84 86 88 90 91 80 Use in Plan 75 79 81 83 85 87 89 91 91 91 91 Add Hud Houses add 4 add 6 add 2 add 2 add 2 add 2 Assume new homes use 600 kWH/mo kwh use of exist 75 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 kwh use new hud 0 28,800 43,200 57,600 72,000 86,400 100,800 115,200 115,200 115,200 115,200 Draft 8-28-01 Average Total kWH/mo 248,400 277,200 291,600 306,000 320,400 334,800 349,200 363,600 363,600 363,600 363,600 276 292 300 307 314 321 327 333 333 333 333 APP-A-5 APPENDIX B---10 YEAR FINANCIAL REQUIREMENTS > APP-B-1 _-_Projected Expenses ---Comments and Notes APP-B-2 Table --Expenses APP-B-3 Table -Financial Forecast APP-B-4 Table -Analysis of Base Year 2000 APP-B-5 ,_ Engine/Generator Maintenance Costs APP-B-6:Replacement Annuity DRAFT 8-28-2001 PROJECTED EXPENSES ---COMMENTS &NOTES Personnel Costs--The number of man-hours required to operate the utility would not increase.The cost of those man-hours would increase by the rate of inflation. Workmen's Compensation Insurance-This was not shown in the financial information provided through the end of year 2000 because it was not being paid.We understand that it is being paid now but do not have the current amount.$4 per $100 of payroll was used as a guess. Small Tool Expense -This is an important item to assure that adequate tools are on hand to do normal service.Small tool numbers can range from $0.30/man hour to $0.75/manhour for tradesmen,but these employees do not spend a large percentage of their time working on the equipment.We used $0.10 per man hour in this case.This money should be used to build up a reasonable stock of appropriate tools,the very first item being a strong locked tool box to keep the tools where they belong. Parts and Supplies --Costs for filters and lubricating oil wouldincrease proportional to kWH generated and inflation.Small tool costs andotherexpenseinthiscategorywouldincreaseonlywithinflation. Small Tool Expense -This is an important item to assure that adequate tools are on hand to do normal service.Small tool numbers can range from $0.30/man hour to $0.75/manhour for tradesmen,but these employees do not spend a large percentage of their time working on the equipment.We used $0.10 per man hourin this case.This money should be used to build up a reasonable stock of appropriate tools,the veryfirstitembeingastronglockedtoolboxtokeepthetoolswheretheybelong. Repairs and Maintenance--All expenses in this category would increase proportional to kWH generated and inflation. General Administration -All expenses in this category would increase proportional to inflation only and no increase in man-hours has been added. Insurance would cover general business liability and fire. APP-B-1 Page 1 of 2 DRAFT 8-28-2001 PROJECTED EXPENSES ---COMMENTS &NOTES---CONTINUED Indirect Cost --The overhead associated with tribal administration of the utility would begin in 2002.The actual expense of administration would be shared by all the activities under Tribal administration.Fuel cost would be a pass through without this administrative burden.Atthistimethisoverheadisestimatedtobe20%. Fuel Use ---The records indicate a generator efficiency of 9.1 kWH per gallon.I have assumed that the new plant with better control andmoreappropriategeneratorsizingwouldbeabletoachieve10kWH/gallon.It probably will do better than that. APP-B-2 Page 2 of 2. DRAFT 8-28-2001 TULUKSAK POWER UTILITY EXPENSES Draft 8-28-01 <<Base >>||/<<--Projected -->> Expense-Power Utility 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 a.Salary (F $31,461 $32,433 $33,406 $34,408 $35,440 $36,503 $37,599 $38,727 $39,888 $41,085 $42,317 b.Employer Portion o (F $2,926 $3,017 $3,107 $3,200 $3,296 $3,395 $3,497 $3,602 $3,710 $3,821 $3,936 c.Workmen's Comp @ $1,258 $1,297 $1,336 $1,376 $1,418 $1,460 $1,504 $1,549 $1,596 $1,643 $1,693 |Personnel Costs $35,645 $36,747 $37,849 $38,985 $40,154 $41,359 $42,600 $43,878 $45,194 $46,550 $47,946] d.Lube Oil (E $841 $921 $1,004 $1,066 $1,356 $1,432 $1,510 $1,592 $1,644 $1,698 $1,754 e.Filters,oil and fuel (E $1,511 $1,654 $1,804 $1,915 $2,436 $2,573 $2,714 $2,861 $2,955 $3,052 $3,153 f.Small Tools (F)$312 $321 $331 $341 $351 $362 $373 $384 $395 g.Others (F) |Parts &Supplies-PF $2,352 $2,575 $3,120 $3,303 $4,123 $4,346 $4,575 $4,815 $4,972 $5,134 $5,302] h.Amortization of Ove (E)$5,626 $5,974 $7,599 $8,026 $8,463 $8,923 $9,216 $9,519 $9,832 I.Emergency Repairs (E $2,800 $3,066 $3,343 $3,550 $4,515 $4,769 $5,029 $5,302 $5,476 $5,656 $5,843 j.Routine Maintenani (E $1,974 $2,162 $2,357 $2,503 $3,184 $3,363 $3,546 $3,739 $3,862 $3,989 $4,120 k.Overhead Line Maintenance $3,000 $3,090 $3,183 $3,278 $3,377 $3,478 $3,582 $3,690 $3,800 I.Replacement Annuity $6,000 $6,180 $6,365 $6,556 $6,753 $6,956 $7,164 $7,379 $7,601 |Repairs &Maintenar $4,774 $5,228 $20,326 $21,297 $24,845 $25,992 $27,167 $28,398 $29,300 $30,232 $31,196] m Outside Prof.Servi:(F $0 $0 $0 -$0 $0 $0 $0 $0 $0 $0 $0 n Insurance-Liab,Prce(F $0 $0 $10,000 $10,300 $10,609 $10,927 $11,255 $11,593 $11,941 $12,299 $12,668 o Office Supplies (F $619 $639 $658 $677 $698 $719 $740 $762 $785 $809 $833 p.Bank Charges (F $193 $199 $205 $211 $217 $223 $230 $237 $244 $252 $259 q.Travel (F .$1,185 $1,222 $1,258 $1,296 $1,335 $1,375 $1,416 $1,459 $1,502 $1,548 .$1,594 r.Indirect Tribal Overhead 20%$14,683 $15,214 $16,396 $16,988 $17,597 $18,228 $18,788 $19,365 $19,960 |General &Administr $1,997 $2,059 $26,804 $27,698 $29,255 $30,233 $31,238 $32,279 $33,260 $34,271 $35,313] kWH Generated 457,476 485,892 514,384 530,299 654,884 671,541 687,502 703,788 705,712 707,674 709,676 Gallons of Fuel Used 50,247 53,395 51,438 §3,030 65,488 67,154 68,750 70,379 70,571 70,767 70,968 Average Cost perCG(F $1.89 $1.95 $2.01 $2.07 $2.13 $2.19 $2.26 $2.33 $2.40 $2.47 $2.54 Fuel Cost $94,967||$104,034 $103,229 $109,616 $139,429 $147,265 $155,288 $163,736 $169,109 $174,666 $180,415| Total Expense $139,736]|$150,642 $191,328 $200,898 $237,807 $249,194 $260,868 $273,106 $281,835 $290,854 $300,173 kWH Delivered 403,822 432,238 460,730 476,645 601,230 617,887 633,848 650,134 652,058 654,020 656,022 Cost per kWH deliver:$0.35 $0.35 $0.42 $0.42 $0.40 $0.40 $0.41 $0.42 $0.43 $0.44 $0.46 (F)Fixed Cost--inflati -1|(C)Dependent on #of consumers &inflation (E)Dependent on energy sold &inflation Inflation Rate 3.0%1.0309 1.0618 1.0937 1.1265 1.1603 1.1951 1.2309 1.2679 1.3059 1.3451 Number of Consumer 89 93 95 97 99 101 103 105 105 105 105 APP-B-2 TULUKSAK POWER UTILITY FINANCIAL FORECAST Draft 8-28-01 <<--Projected -->> 2001 2002 2003 2004 2005 -2006 2007 2008 2009 2010 |1.ACCRUAL BASIS a.|Operating Revenue $165,707 $210,460 $220,987 $261,588 $274,114 $286,955 $300,417 $310,019 $319,940 $330,190] Personnel Costs $36,747 =$37,849 $38,985 $40,154 $41,359 $42,600 $43,878 $45,194 $46,550 $47,946PartsandSupplies-PP $2,575 $3,120 $3,303 $4,123 $4,346 $4,575 $4,815 $4,972 $5,134 $5,302 Repairs and Maint $5,228 $20,326 $21,297 $24,845 $25,992 $27,167 $28,398 $29,300 $30,232 $31,196 Fuel Cost ; $104,034 $103,229 $109,616 $139,429 $147,265 $155,288 $163,736 $169,109 $174,666 $180,415 General and Administrative $2,059 $26,804 $27,698 $29,255 $30,233 $31,238 $32,279 $33,260 $34,271 $35,313 b.|Total Cost of Electric Service $150,642 $191,328 $200,898 $237,807 $249,194 $260,868 $273,106 $281,835 $290,854 $300,173 c.[Operating Margin (Total Accrual Margin)$15,064 $19,133 $20,090 $23,781 $24,919 $26,087 $27,311 $28,184 $29,085 $30,017} |2.CASH BASIS Cash from Operations before Debt Service $15,064 $19,133 $20,090 $23,781 $24,919 $26,087 $27,311 $28,184 $29,085 $30,017 Debt Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash Margins after Debt Service Operating Capital-(Sum of Margins)$15,064 $34,197 $54,287 $78,067 $102,987 $129,074 $156,384 $184,568 $213,653 $243,671 Value of Replacement Annuity .$6,300 $13,104 $20,443 $28,349 $36,857 $46,004 $55,826 $66,366 $77,665 APP-B-3 TULUKSAK BUSINESS PLAN ----ANALYSIS OF BASE YEAR -2000 Costs Recorded in Year 2000 Expense-Power Utility EXPENSES Draft 8-28-01 Expense-Power Utility-With Adjustments 1 Salary Power Utillties $29,885.08 1 Salary $29,885.08 2 Fringe Power Utilities $2,926.17 2 Labor Fringe Benefits $2,926.17 3 Bank Charges $192.60 3 Contract Labor $2,800.00 4 Dues/Fees Utilities $619.41 _4 Bank Charges $192.60 5 Contract Labor Power |$2,800.00 5 Dues/Fees Utilities $619.41 6 Supplies Power/Utilities $4,326.05 6 Postage Power/Utilities $218.47 7 Postage Power/Utilities $218.47 7 Travel $1,185.00 8 Travel Power &Utility '$1,185.00 8 Supplies Power/Utilities $4,326.05 9 Utilities TNC Power Utility $77,753.23 9 Utilities TNC Fuel $97,753.23 Total Expense $119,906.01 Total Expense $139,906.01 Operator's Paid $12.50/hr +15%OHD Superintendent Paid $15.00/hr +15%OHD Item 9 is primarily fuel.There was an additional $20,000 which was not booked during year 2000. APP-B-4 . TULUKSAK BUSINESS PLAN ;Draft 8-28-01 ENGINE/GENERATOR MAINTENANCE COSTS Assume all engines are John Deere Top end overhaul is required every 18000 hrs. This includes new injectors,grinding and lapping the valves,3 days including travel The magnitude of this work is not dependent on the engine-Estimate $6000 total Major overhaul/replacement is required every 36000 hrs. Replacement is normally lowest cost option and core is worth $2500 Assuming the automatic load sequencing works properly, we assume a 70%load factor on each engine. Top end and major overhaul costs per 36000 hrs of operations would be Replacement Major Top End kWH Cost/ Engine Freight Labor}/|Overhaul Overhaul Generated kWH 150 kW $12,000 $3,000 $7,000 $22,000 $6,000 3,780,000 $0.0074 100 kW $11,000 $2,800 $7,000 $20,800 $6,000 2,520,000 $0.0106 80 kW $10,000 $2,800 $7,000 $19,800 $6,000 2,016,000 $0.0128 Overall Cost per kWH $0.0103 APP-B-5 TULUKSAK BUSINESS PLAN.Oo Draft 8-28-01 REPLACEMENT ANNUITY Investment Each Year.-5000 Interest Rate Ce 5% Inflation Rate -3% Annual Annual Year Investment Interest'-Balance Year Investment Interest Balance 2002 $6,000 $300 $6,300 2017 $9,348 $8,673 $182,123 2003 $6,180 $624 $13,104 2018 $9,628 $9,588 $201,339 2004 $6,365 $973 .$20,443 2019 $9,917 $10,563 $221,819 2005 $6,556 $1,350 $28,349 2020 $10,215 $11,602 $243,635 2006 $6,753 $1,755 $36,857 2021 $10,521 $12,708 $266,864 2007 $6,956 $2,191 .$46,004 2022 $10,837 $13,885 $291,585 2008 $7,164 $2,658 $55,826 2023 $11,162 $15,137 $317,885 2009 $7,379 $3,160 ©$66,366 2024 $11,497 $16,469 $345,850 2010 $7,601 $3,698 $77,665 2025 $11,842 $17,885 $375,576 2011 $7,829 $4,275 ..$89,768 2026 $12,197 $19,389 $407,162 2012 $8,063 $4,892 .$102,723 2027 $12,563 $20,986 $440,711 2013 $8,305 $5,551 $116,580 2028 $12,940 $22,683 $476,333 2014 $8,555 $6,257 $131,391 2029 $13,328 $24,483 $514,143 2015 $8,811 $7,010 .$147,213 2030 $13,728 $26,394 $554,265 2016 $9,076 $7,814 $164,103 2031 $14,139 $28,420 $596,824 APP-B-6 Cc APPENDIX J -KEY PERSONNEL EXPERIENCE SUMMARIES APP-C-1 __Key Personnel Experience Summaries APP-C-2.-Table -Training Costs DRAFT 8-28-2001 TULUKSAK SUSTAINABILITY-KEY PERSONNEL EXPERIENCE SUMMARIES Mr.Willie Philip,Utility Manager Mr.W.Philip has served as Utility Manager for the Tuluksak Native Community Traditional Electric Utility for over ten years.His first experience with electrical systems began with the local IBEW 1547,where he received three months of electrical training.He subsequently worked with the local IBEW 1547 for nearly six years as electrician installing wiring primarily inside buildings.Mr.W.Philip has expressed a desire to attend additional training in the following areas:utility management,diesel engine maintenance and repair,and hazardous material training. Mr.David Philip,Lead Power Plant Operator Mr.D.Philip has worked as a Lead Power Plant Operator since 1997.He attended the AVTEC power plant training,which lasted approximately two months.Prior to taking over as Lead Power Plant Operator,Mr.D.Philip served full time in the military for over nine years,and attended NCO Training.He currently holds a Hazardous Materials Certificate.Mr,D.Philip has also expressed an interest in attending additional training in diesel engine maintenance and repair,as well as additional training in electrical installation. Mr.Charlie Atseriak,Chief Financial Officer,Tuluksak Native Community Mr.Atseriak,CFO,served in the Alaska National Guard from 1994 through 1997,and served active duty from 1997 through 2000.He also served as the accountant for the City of Quinhagak.Mr.Atseriak has been receiving hands-on training by Alaska Accounting Solutions,however,he has expressed an interest in attending more formal instruction in accounting practice and theory to assist himin his Job of'maintaining the financial records,as well as billing,for Tuluksak Native Community. Suggested Training: Diesel Engine Maintenance and Repair Hazardous Materials Training Accounting Electrical Systems Utility ManagementVVVVV APP-C-1 1of2_ DRAFT 8-28-2001 There are various options for training: McGrath Power &Light has expressed interest in helping and training the personnel from the village,mostly at their facility in McGrath. McGrath Power &Light is also willing to assume the role of backup operator as long as they can become sufficiently familiar with the village people and operation though such assistance and training.MP&L would expect to be compensated for expense related to such training and the village would need to provide transportation,housing and food for the time the people are in McGrath,as well as their pay. The Alaska Energy Authority provides courses for : Powerplant Operators courses are provided by the Alaska Vocational and Technical Center (AVTEC)in Seward.Two operators should attend this class. Utility Clerk Training is a three day course offered in Anchorage.At this time we feel that the training function would best be handled by Alaska Accounting Solutions who have been working with the village to establish their accounting and billing programs. Bulk Fuel Operator Training provides general information,as well as the standard 40 hour hazardous materials training (HAZWOPER).Allthreeoperatorsfromtheelectricutilityshouldattendthiscourse.. Alaska Accounting Solutions has been working with the Village for about a year to raise their accounting and billing programs up to standards and it is felt that training money should be spent to allow for a continuation of that program and the further training that goes with it. A spreadsheet is provided outlining the costs related to this training. APP-C-1 2 of 2 DRAFT 8-28-2001 TULUKSAK BUSINESS PLAN TRAINING BUDGET Draft 8-28-01 Two Operators to attend the AVTEC Diesel Maintenance School in Seward Tuition at School $2000 Each 2 month school . Wages while at schoo]$12.50/hr +15%overhead 8 weeks=$4600 ea Air Fare and Misc.Expense @ $1,000 ea. Two Operators to attend the AEA/AVTEC Operator's School in Seward Tuition at School 2 week school AEA provides Wages while at school $12.50/hr +15%overhead 2 weeks=$920 ea Air Fare and Misc.Expense @ $800 ea., -Bulk Fuel Operator Training,AEA,(Includes 40 hr Hazwoper Class) Tuition at School $2000 Each 2 month school Wages while at school $12.50/hr +15%overhead 8 weeks=$4600 ea Air Fare and Misc.Expense @ $1,000 ea. Alaska Accounting Solutions Complete development of accounting programs and training McGrath Power &Light Training over next two years Lump Sum--transportation,housing,food,Mc Grath Power personnel costs. Total Training Budget $4,000 $9,200 $2,000 $0 $1,840 $1,600 $0 $1,840 $1,600 $7,500 $15,000 $15,200 $3,440 $3,440 $7,500 $15,000 $44,580 APPENDIX D -McGrath Power &Light Letter of Interest and Financial Information Letter of Interest Income Statement DRAFT 8-28-2001 Bruce Tiedeman AIEDA /AEA August 27,2001 RE:Tuluksak Native Community -McGrath Light &Power,Inc.agreement. McGrath Light &Power,Inc.is interested in standing behind the community of Tuluksak in it's efforts to become sustainable in the producing and selling of electrical power.We will enter into an agreement with Tuluksak Native Community to this effect.We do this in the spirit of a sister community and have as our main goal the supply of a continuous supply of power to the people of Tuluksak and secondly the success of the community in operating their own power company successfully.We see we can be of the most value by collaborating and mentoring Tuluksak Electric Company,supplying assistance and training while they are building a sustainable enterprise.There are,however,some points that need to be addressed first. "*Funds must be available for the purpose of obtaining this assistance. "*What is the duration of this arrangement? "+Who determines when McGrath Light &Power,Inc.must step in and take control of the operation of Tuluksak Electric? "*What are the "bench marks”that would be used for this? I have already offered to give training to two of their people in power generation operations and billing collections.They expect to join us at McGrath in mid-September. This will serve as an opportunity for those that will be operating together to get to know each other,it will,also give us an opportunity to share our operating and business standards with them. Ernie Baumgartner,General Manager McGrath Light &Power,Inc. Aug 21,2001 McGrath Light &Power,Inc 10:00 am Income Statement 1 Month Ended 9 Months Ended June 30,2001 June 30,2001 Income Residential oper.rev.$24,105.93 29.6%$260,778.62 30.1% Residential fuel S.C.(1,163.96)-1.4%(11,758.42)-1.4% Commercial oper.rev.45,619.83 56.0%$13,904.94 59.2% Commercial fuel S.C.(2,476.74)-3.0%(25,843.12)-3.0% Waste heat revenue 5,279.00 6.5%47,511.00 5.5% Lime Village Revenue 4,061.75 5.0%33,791.49 3.9% Miscellaneous income 1,901.26 2.3%3,564.35 0.4% Rental income 241.87 0.3%2,176.83 0.3% ISP Income 3,846.00 4.7%41,175.12 4.7% Intercompany income 0.00 0.0%2,207.70 0.3% TOTAL Income 81,414.94 100.0%867,508.51 100.0% Cost of Goods Sold Plant labor 13,489.01 16.6%105,851.16 12.2% Seasonal distribution labor 0.00 0.0%75.00 0.0% Payroll taxes 1,273.89 1.6%10,342.94 1.2% 'Employee benefits 668.96 0.8%8,862.74 1.0% Worker comp insurance 389.00 0.5%3,418.88 0.4% Plant fuel 18,688.95 23.0%252,010.63 29.0% Plant supplies 89.70 0.1%2,510.96 0.3% Plant R &M 0.00 0.0%1,139.65 0.1% Equipment R &M 0.00 0.0%14,260.24 1.6% Distribution R &M 2,696.94 3.3%6,303.81 0.7% Land maintenance 0.00 0.0%400.25 0.0% ISP Access 2,565.78 3.2%18,115.64 2.1% Waste heat R &M 0.00 0.0%1,067.26 0.1% Cost of ISP equip sold 315.00 0.4%11,846.58 1.4% TOTAL Cost of Goods Sold 40,177.23 49.3%436,205.74 50.3% GROSS PROFIT 41,237.71 50.7%431,302.77 49.7% Expenses Salaries &wages 5,315.31 6.5%54,782.85 6.3% Payroll tax expense 441.34 0.5%4,716.29 0.5% Employee benefits 880.63 1.1%6,503.28 0.7% Seminars and training 0.00 0.0%768.00 0.1% Promotion 0.00 0.0%525.00 0.1% Worker's comp.insurance 33.00 0.0%357.12 0.0% Insurance exp.(PL&PD)1,136.00 1.4%10,218.37 1.2% Safety 0.00 0.0%1,542.32 0.2% Legal expense 0.00 0.0%63.00 0.0% Other professional expense 315.80 0.4%1,916.57 0.2% Office supplies &postage 513.47 -0.6%4,868.87 0.6% Rental expense Telephone Depreciation Travel expense Per diem Meal expense Lodging Car rental &taxis Bank service charges Late fee Board &committee fees Meeting expense Dues/fees/subscriptions Repairs &maintenance Auto expense Intercompany G&A TOTAL Expenses OPERATING PROFIT Other Income &Expenses Interest income Service charge income Interest expense Interco.interest expense TOTAL Other Income &Expenses PROFIT BEFORE TAXES NET PROFIT 0.00 323.11 11,905.00 295.00 0.00 0.00 0.00 0.00 33.85 25.00 0.00 0.00 19.90 0.00 308.64 8,977.00 30,523.05 10,714.66 746.72 152.55 (2,486.80) (2,033.00) (3,620.53) 7,094.13 $7,094.13 0.0% 0.4% 14.6% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.4% 11.0% 37.5% 13.2% 0.9% 0.2% -3.1% -2.5% -44% 8.7% 8.7% 1,849.40 3,561.93 107,145.00 4,377.00 1,050.00 334.30 1,146.50 1,347.53 221.38 63.95 750.00 50.00 1,437.60 476.01 3,080.53 80,793.00 293,945.80 -137,356.97 6,095.10 1,543.54 (24,278.26) (19,951.80) (36,591.42) 100,765.55 $100,765.55 0.2% 0.4% 12.4% 0.5% 0.1% 0.0% 0.1% 0.2% 0.0% 0.0% 0.1% 0.0% 0.2% 0.1% 0.4% 9.3% 33.9% 15.8% 0.7% 0.2% -2.8% -2.3% 42%| 11.6% 11.6%