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HomeMy WebLinkAboutAEA Board Meeting Minutes May 15 2024 813 W Northern Lights Blvd, Anchorage, AK 99503  Phone: (907) 771-3000  Fax: (907) 771-3044  Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Alaska Energy Authority BOARD MEETING MINUTES Wednesday, May 15, 2024 Anchorage, Alaska 1. CALL TO ORDER Chair Pruhs called the meeting of the Alaska Energy Authority to order on May 15, 2024, at 8:30 am. 2. ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Vice-Chair Bill Kendig (Public Member); Albert Fogle (Public Member); Julie Sande (Commissioner DCCED); Adam Crum (Commissioner DOR); Bill Vivlamore (Public Member); and Randy Eledge (Public Member). A quorum was established. 3. AGENDA APPROVAL MOTION: A motion was made by Vice-Chair Kendig to approve the agenda. Motion seconded by Mr. Fogle. The motion to approve the agenda passed without objection. 4. PRIOR MINUTES – April 17, 2024 MOTION: A motion was made by Vice-Chair Kendig to approve the prior minutes of April 17, 2024. Motion seconded by Mr. Fogle. The motion to approve the minutes of April 17, 2024 passed without objection. 5. PUBLIC COMMENTS (2 minutes per person) There were no public comments. 6. NEW BUSINESS A. YTD Financials (March 31) vs actuals Executive Director and Secretary-Treasurer Curtis Thayer discussed the Budget to Actuals as of March 31, 2024. The budget is on track. Mr. Thayer provided information regarding the Governor’s Amend pie chart shown in the packet. Alaska Energy Authority Page 2 of 10 Chair Pruhs asked if the remaining unspent funds are rolled back to the different agencies or if they are reallocated. Mr. Thayer gave the example that if the PCE Program has more funds drawn out than are actually needed, those funds are refunded back to the State, as reflected in the budget. Mr. Thayer indicated that some of the allocations will be spent down to zero. Mr. Fogle expressed appreciation to Mr. Thayer for keeping AEA both on budget and under- budget. He asked if any of the $2.4 million of budget surplus is available to be allocated to the rural power houses for maintenance and upgrades. Mr. Thayer explained that is not possible because the power of the corporation is with the Legislature and AEA has to spend the money based on the Legislature’s allocation. AEA does not have the budget authority to move funds to different functions. Mr. Thayer provided an update on the warehouse. Alaska Housing Finance Corporation (AHFC) is considering the purchase of the warehouse. Permission must be given by the Legislature for AHFC to purchase the warehouse. It is possible that AEA could negotiate a long-term arrangement to move into that warehouse space. Mr. Eledge requested an overview of the budget allocation of the remaining budgeted amount. Mr. Thayer discussed that the allocation is shown on page five, and includes items such as AEA facility assets, federal receipt authority, rural assistance, the PPF loan fund, and CIP receipts. Mr. Thayer requested Pam Ellis, AEA, provide additional information. Ms. Ellis explained that the general administrative costs are shared among all programs, including the cost that the State charges AEA for their shared services. Chair Pruhs asked if any of the remaining budget funds could be used for emergency responses to generator issues in rural Alaska in the winter. Mr. Thayer indicated the remaining funds cannot be used for emergency responses because the Legislature defines the allotted amount for electrical emergencies. Mr. Thayer discussed that AEA will request an increase next year in the amount of funding for electrical emergencies. The current budgeted amount is $200,000, yet the electrical emergencies have cost up to $350,000. Chair Pruhs asked for the source of the extra $150,000 of funding. Mr. Thayer explained that there is also emergency funding through Alaska Department of Military and Veterans Affairs (DMVA). Mr. Thayer noted recent conversations with DMVA regarding the differences between an emergency versus poor maintenance that leads to an emergency. Chair Pruhs asked if his understanding is correct that the Legislature provides the budgeted amounts and AEA cannot overspend the line items. Mr. Thayer agreed. He explained that depending on the type of emergency, there are other sources that can be adjusted and utilized. The Governor does not necessarily have to declare an emergency for emergency funds to be distributed. Mr. Vivlamore commented that the majority of the budget surplus is within the category of AEA Staff and Professional Services. He asked what percentage of the surplus is comprised of staffing vacancies. Mr. Thayer discussed that there are a handful of vacant positions, as well as vacant Alaska Energy Authority Page 3 of 10 positions related to the Infrastructure Investment and Jobs Act (IIJA) funding, and vacant positions due to the limited amount of space. He explained that the building has space for four additional staff members, and there are potentially 20 new staff member positions. The IIJA positions will not be staffed until the grant agreements are signed and the funding is received, which could be within six months to a year. Mr. Thayer explained that discussions need to occur regarding the best way to address the issue that will eventually be presented in the FY26 budget cycle. Additional options to expand the workspace include sharing offices, whereupon each person works remotely for part of the week and comes to the office the other part of the week. Mr. Thayer noted there are current employees who maintain telework agreements. There were no other questions. 7. OLD BUSINESS A. IIJA-IRA Funding Opportunities MEMO Revised Mr. Thayer discussed the included revised memorandum regarding his recommendation that the AEA Board shall review and approve by resolution all IIJA and IRA award agreement terms and conditions that exceed $10 million. There is currently no policy as such for Board approval. Presently, there are four agreements greater than $10 million that are expected within the next six to eight months and an additional four outstanding applications greater than $10 million whose determinations are due late this summer. Mr. Thayer noted that staff will continue to provide the Board with weekly status updates of any potential IIJA and IRA award applications. He discussed that the funding opportunities are decreasing as a result of the upcoming election and Congress’ focus on current funding and current projects. Mr. Thayer reminded the Board that after the Board’s approval, all federal awards require federal receipt authority by OMB, the Legislature, and the Governor. Chair Pruhs suggested that the memorandum and recommendation discussion continue at a later point, possibly during executive session. There were no other comments or questions. 8. DIRECTORS COMMENTS A. Response to Public Testimony Mr. Thayer indicated that the public testimony of Ben Hopkins and the response to Mr. Hopkins’ public testimony is included in the Board packet. Chair Pruhs requested that the response discussion be conducted for the record. Mr. Thayer invited Tim Sandstrom, Chief Procurement Officer, to provide additional information. Mr. Sandstrom discussed that Mr. Hopkins gave public testimony at the previous Board meeting and has submitted prior requests for information regarding the exchange of engines during an electrical emergency in Mertarvik. This was a not a state of emergency declaration, rather it was a situation whereby rolling brown-outs were occurring. The community’s private contractor’s genset replacement was several weeks away from delivery, and AEA had a competitively procured genset in stock for emergency responses. AEA made the decision to transfer that genset to the community and the contractor then replaced AEA’s generator with the backordered generator. Alaska Energy Authority Page 4 of 10 Vice-Chair Kendig noted that the public testimony objection was that this transaction was outside of AEA’s statutes and regulations. He commented that staff’s review concluded that AEA’s actions were within its statutes and regulations. Mr. Sandstrom agreed, and informed that AEA regularly transfers or grants assets to communities at no cost. In this instance, AEA was able to secure a replacement engine from the contractor. Vice-Chair Kendig commented that it is possible the confusion began with Mr. Hopkin’s incorrect citation of AIDEA’s procurement code rather than AEA’s procurement code. Mr. Sandstrom explained that is a small error, as AIDEA’s procurement code and AEA’s procurement code are very similar. The main point is that there was no procurement for the transfer of the generator to the community. The competitive procurement occurred when the original emergency genset was purchased. Chair Pruhs commented that the perception issue is with AEA’s act of receiving a genset from a private party, rather than going out for the generator replacement through the vendors in Alaska. Chair Pruhs noted that Mr. Hopkins is one of the generator vendors in Alaska. Additionally, Chair Pruhs indicated that criticism could be given that the generator AEA gave to the community is more valuable than the generator AEA received in return. Mr. Sandstrom explained that the two generators are materially the same. They are the same size with the same capacity. However, the replacement generator is not new and has low hours. Mr. Sandstrom emphasized that the usual course is for AEA to transfer the generator to the community. In this case, AEA was offered a replacement generator and AEA took the replacement. Mr. Sandstrom believes Mr. Hopkins’ concerns are founded and an explanation was needed. Chair Pruhs believes the issue is with perception and that the community, rather than the contractor, should have given the generator to AEA. Vice-Chair Kendig expressed the importance of providing the public response to clarify any misconceptions or misunderstandings. Mr. Eledge expressed appreciation for the response. He agreed that public perception is important and that the response to public perception must be precise. There were no other comments or questions. B. IIJA Update i. IIJA Tracker Mr. Thayer discussed the included IIJA/IRA Funding Opportunities tracker sheet. All items listed are in the current budget. The items have been submitted by the Office of Management and Budget (OMB) and the Governor’s Office to receive the federal receipt authority. Mr. Thayer identified that the $20 million in federal receipt authority for the Solar for All program is enough to begin the program. The full amount of the program is $62 million. The remainder of the award will receive federal receipt authority after the first year. Vice-Chair Kendig requested explanation regarding the definitions of the status column, Alaska Energy Authority Page 5 of 10 particularly “Pending” status and “Considering” status. Mr. Thayer explained that pending status relate to applications that are outstanding. Their determinations and outcome have yet to be released. The considering status relates to programs that are being reviewed, but no applications have been submitted. There were no other questions. ii. GRIP 3, Round 1 – HVDC Line Mr. Thayer informed that the binder has been updated for the Board members, which includes the status update and the revised statement of project objectives. Jim Mendenhall, Program Manager, was introduced and was asked to comment on the process. Mr. Mendenhall discussed that ongoing work continues to focus on the development of the community benefit plans for the IIJA projects. The State has provided $20 million from Bradley bonds and another $12.7 million from State funds toward the $206 million match. Mr. Mendenhall explained that Department of Energy (DOE) recognizes that an award needs to be made prior to the end of the fiscal year. The approximate spend within the first year of budget period one is about $14 million. Mr. Mendenhall discussed that DOE’s intent is to provide a project award for the first-round funding amount of $14 million. Chair Pruhs inquired as to a risk analysis of the possibility of the $206 million match to disappear. Mr. Thayer explained that the $206 million match is in the bank and is set aside for the project. It would take an act of Commerce to claw back the funding. Mr. Mendenhall noted that a sample set of terms and conditions have been received and are included in the Board packet. The hope is to have the formal terms and conditions for the contracts by next month’s meeting. Another concern for review and discussion within the terms and conditions is understanding the State’s ability to claw back funds in the event the project is not finished. The focus for the initial funding of $14 million is on system studies, design, permitting, and project site issues. AEA is conducting strategic plan analysis of the Railbelt transmission. Mr. Mendenhall highlighted recent activities by staff and discussed the weekly meetings with DOE. Mr. Eledge asked Mr. Mendenhall how many additional personnel members will be necessary for this project. Mr. Mendenhall discussed that there will be approximately 12 new positions for IIJA within the next year. The positions will be filled after State authority is provided and the award is granted. Mr. Eledge inquired if any difficulty is anticipated in sourcing qualified individuals to fill those roles. Mr. Mendenhall agreed. Mr. Eledge commented that the schedule may be impacted if the roles cannot be filled. Mr. Thayer discussed that staffing will be a challenge because of the increased amount of economic development of three major projects occurring within the next 18 months. Chair Pruhs inquired as to the possibility of hiring a third-party to handle one or more of the projects completely, including staffing and contractors. Mr. Thayer indicated that is a possibility and it is similar to the process that was conducted for the Battle Creek Diversion project. Chair Pruhs reiterated to Mr. Thayer that the Board is available to assist in any way possible. Mr. Thayer agreed and expressed appreciation. There were no other questions. Alaska Energy Authority Page 6 of 10 iii. Solar for All Grant Mr. Thayer noted that a binder for Solar for All grant has been created. The draft of the grant agreement has not yet been received. The request is to have the completed grant agreement by September 1, 2024. Mr. Thayer outlined the process of creating the memorandum, obtaining the legal opinion on the awards, and the Board making the decision and passing the resolution on the grant agreement. Vice-Chair Kendig asked if the Solar for All grant applicants will apply through Alaska Housing Finance Corporation (AHFC) or through AEA. Mr. Thayer explained that the low-income residential solar program will be processed by AHFC and the community solar program for disadvantaged communities, primarily in rural Alaska, will be processed by AEA. The community solar program will not replace diesel, but it will displace it for certain times of the year. The application structure will be similar to the Renewable Energy Fund (REF) in which a community applies, and an analysis is conducted based on certain criteria. There were no other questions. iv. MARAD Port Infrastructure Development Program Grant Mr. Thayer advised that AEA has been in discussion with Department of Transportation (DOT) regarding applying for a grant through the Maritime Administration (MARAD) Port Infrastructure Development Program (PIDP) for barge landing improvements at Scammon Bay, Hooper Bay, and Chevak. The total amount of this grant application is less than $10 million and would not come before the Board for ultimate approval. Mr. Eledge asked if the improvement to the barge landings includes electric power. Mr. Thayer introduced the writer of the grant, Rebecca Garrett, AEA. Ms. Garrett discussed that the application is for barge landing and fuel headers for bulk fuel tank farms. The application does not include power electrification. Chair Pruhs asked if electric power could be included in the application so that the tugs and landing crafts at the landings can plug in, rather than burning diesel during their entire stay. This would improve the air quality for the community. Ms. Garrett commented that is a good suggestion for a different application. This particular application is specific to the planning partnership with DOT for the barge landings. There were no other questions. C. Rural emergencies – Communities with minimal generation Mr. Thayer indicated that further discussion regarding the provided AEA Watch List of the 15 communities in rural Alaska with minimal generation needs to occur with the Legislature so that they understand the immediate concerns. None of the IIJA and IRA federal funds addresses powerhouses or bulk fuel because of the use of fossil fuels. The minimum generation issues will be addressed through State funding and the partnerships with the Denali Commission. The list provided is in alphabetical order by community. Chair Pruhs requested that the list include an approximate dollar amount or economic impact to Alaska Energy Authority Page 7 of 10 repair the generation issues per community. Mr. Thayer agreed. He indicated that most of the repairs per community are in the range of $4 million to $6 million. Mr. Fogle requested staff reorganize the list of communities by order of the most critical circumstances to the least critical of circumstances so that the top listed communities are identified as ones who could face an emergency the soonest. Mr. Thayer indicated that possibility can be discussed further. There is a list shared with the Legislature of the top 25 communities, which is in rank order of critical circumstances. This AEA watch list is specific to communities with minimal generation. Mr. Eledge commented that the description for the community of Manokotak indicates that repairs were expected to be completed in April. He asked if those repairs were completed. Ms. Garrett responded that the repairs to the cooling system in Manokotak have been completed. The community is maintaining the emergency generator. The emergency generator will be returned to AEA when their Rural Power System Upgrade (RPSU) project is complete. Mr. Eledge asked who pays the transportation costs to return the generator to AEA. Ms. Garrett responded that it depends on the community’s finances. AEA entreats the communities to pay for as much of the costs as possible. Chair Pruhs commented on the importance that this information is available and provided to the Legislature. He believes that the communities should be advocating to their legislators to appropriate sufficient funds to respond. Ultimately, AEA must react to emergencies. He expressed his concern of the Legislature’s possible inaction to provide sufficient funds for AEA to react to emergencies, and the subsequent possibility that AEA would be unduly blamed for not reacting, even though the Legislature has not provided funding. Mr. Thayer agreed. There were no other questions. D. Renewables Update Mr. Thayer discussed the included quarterly report regards the Renewable Energy and Energy efficiency (REEE) Program update. It includes biomass, electric vehicles, hydroelectric, solar, wind, and others. He noted that Audrey Alstrom, AEA, is available to answer any questions from Board members. There were no questions. E. Denali Commission Update Mr. Thayer reviewed the update on the Denali Commission (DC) awards. Total funding for active DC awards is $47 million. Chair Pruhs inquired as to the leadership status of the Denali Commission. Mr. Thayer indicated there is currently an Acting Director who can sign on behalf of Denali Commission. Mr. Eledge asked if the Award No. 01515-10 Circuit Rider Program with funding of $1.4 million in 2017 is equivalent to approximately $200,000 per year for the program. Mr. Thayer agreed. Mr. Eledge asked if there is also $200,000 in the State budget for the Circuit Rider Program. Mr. Thayer Alaska Energy Authority Page 8 of 10 agreed there is funding through various projects within the State budget for the Circuit Rider Program. There is not a single designated funding line item for the Circuit Rider Program. He noted that the DC is reducing the amount of funding to the Circuit Rider Program and additional discussions need to occur with the Legislature to increase and offset those reductions from DC. There were no other questions. F. AEA Library Update Mr. Thayer provided the update on AEA’s digital library. Currently, the library is host to over 10,000 searchable documents. Mr. Eledge asked what the anticipated percentage completion is on existing documents. Mr. Thayer asked Connor Erickson, Director of Planning, to respond. Mr. Erickson believes approximately 80% of the hard copies have been uploaded and another 4,000 documents remain to be uploaded. Some of the documents are historical information and date back to the 1950’s. There were no other questions. G. Legislative Update Mr. Thayer discussed that the budget is being proposed in the Legislature. An additional $19 million has been included for AEA, of which $10 million will go toward dock electrification. Last year, AEA received $5 million for a dock electrification project in Whittier. That project began and is going well. The project is partnered with Holland America, Princess, and Chugach Electric Association (CEA). The Legislature is requesting a similar program for Southeast Alaska. The funding would be garnered from cruise ship passenger head taxes. Mr. Thayer advised that the Governor included a placeholder of $5 million in the budget for the REF program and the Legislature has increased that amount to $14.5 million. The original request was for $33 million, which would have funded all the previous year’s applications. Mr. Thayer gave an overview of the Governor’s bills, Senate Bill (SB) 217 and House Bill (HB) 307, entitled Integrated Transmission Systems, that focus on leveling the independent power producers (IPP) property tax, similar to the benefits afforded to electric co-ops, and eliminating the wheeling rates. Additionally, SB 257, entitled Electric Utility Regulations, was introduced by Senate Resources. This bill includes reviews such as qualifications for the Regulatory Commission of Alaska (RCA), salaries for the RCA, and the Governor’s administrative order (AO) for the separation of the AIDEA and AEA Boards, with one addition that the new AEA Board would be comprised of eight members, rather that seven, six of whom would be public members. A quorum of five members would be required, and term limits for Chair and Vice-Chair would be imposed. Mr. Thayer informed that the House version of the bill passed and was sent to the Senate for concurrence today before midnight. It includes a provision that bans the import of natural gas. Mr. Thayer indicated that he is currently on-call to answer any questions the Senate may have. Mr. Eledge asked if SB 252 includes the transfer of some of AEA’s assets. Mr. Thayer discussed that is related to a Railbelt Transmission Organization (RTO). In the current version of the bill, the RTO would be housed in AEA, and AEA would be responsible for filing a united tariff to assist in the elimination of the wheeling rates. There is not a financial impact to AEA. Alaska Energy Authority Page 9 of 10 Mr. Thayer continued the discussion and reviewed that the original bonding in 2022 for $166 million was divided into $20 million for the GRIP funding, $90 million for the SQ upgrade, and the remainder of approximately $58 million for the battery energy storage systems (BESS). CEA and Matanuska Electric Association (MEA) are inquiring as to how the $58 million should be applied to the utilities. Mr. Thayer discussed the possibility of distribution based on the pro-rata share and tax credits that could be utilized. Staff will continue to discuss these issues with the Board to determine a final solution. Additionally, a portion of the $58 million could be used for the GRIP match for the Anchorage and Fairbanks batteries. Mr. Eledge commented on the excellent presentation included in the packet to the Senate Finance Committee on April 30, 2024. He asked if a net kW increase has been identified on the delivery of power from Kenai to Beluga. Mr. Thayer indicated that analysis will be conducted once the funding is received. Mr. Eledge believes the information would be valuable to include in the presentation. There were no other questions. H. Community Outreach Mr. Thayer reported that AEA’s community outreach has increased recently. I. Articles of Interest Mr. Thayer commented on the 68 pages of articles of interest included in the packet. J. Next Regularly Schedule AEA Board Meeting Thursday, June 20, 2024 Mr. Thayer noted that the next regularly scheduled AEA Board meeting is on June 20, 2024. Chair Pruhs advised that Commissioner Sande requested to make a few comments. Commissioner Sande acknowledged the monumental year for AEA and recognized Mr. Thayer for 10 years of service to the State of Alaska. She expressed appreciation to Mr. Thayer for his dedication, guidance, and leadership. Chair Pruhs expressed appreciation to Mr. Thayer and reminded him that the Board is willing and available to advocate for AEA in any way the staff believes will be successful. Mr. Thayer complimented the dynamic staff, and is thankful for being able to lead and empower the staff to make decisions to move forward. He noted there has been very little turnover among the management staff in the last five years. Mr. Thayer expressed appreciation to the staff, the Board, the Commissioner’s office, and the Governor for providing him the necessary support. There were no other comments or questions. MOTION: A motion was made by Vice-Chair Kendig to enter into executive session to discuss confidential personnel issues and the IIJA and IRA funding opportunities and Board approval. This is supported by the Open Meetings Act, AS 44.62.310, which allows a board to consider confidential matters in executive session. In this case, the Board believes that personnel issues and the IIJA and IRA funding opportunities and Board approval are