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HomeMy WebLinkAboutAEA Board Meeting Minutes June 20 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 Alaska Energy Authority BOARD MEETING MINUTES Thursday, June 20, 2024 Anchorage, Alaska 1. CALL TO ORDER Chair Pruhs called the meeting of the Alaska Energy Authority to order on June 20, 2024, at 8:30 am. 2. ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Albert Fogle (Public Member); Julie Sande (Commissioner DCCED); Adam Crum (Commissioner DOR (Arrived 8:46 am)); Bill Vivlamore (Public Member); and Randy Eledge (Public Member). Members absent: Vice-Chair Bill Kendig (Public Member). A quorum was established. 3. AGENDA APPROVAL Mr. Fogle requested that the topic of personnel matters is added to the executive session on the agenda. There was no objection. MOTION: A motion was made by Mr. Fogle to approve the agenda with the added topic of personnel matters to the executive session. Motion seconded by Mr. Vivlamore. The motion to approve the agenda with the added topic of personnel matters to the executive session passed without objection. 4. PRIOR MINUTES – May 15, 2024 MOTION: A motion was made by Mr. Fogle to approve the prior minutes of May 15, 2024. Motion seconded by Mr. Vivlamore. The motion to approve the minutes of May 15, 2024 passed without objection. 5. PUBLIC COMMENTS (2 minutes per person) There were no members of the public online or in-person who requested to comment. 6. NEW BUSINESS - None Alaska Energy Authority Page 2 of 8 7. OLD BUSINESS - None 8. DIRECTORS COMMENTS A. FY 2025 Budget Executive Director and Secretary-Treasurer Curtis Thayer discussed the FY 2025 Budget update included in the Board packet. He noted that the Governor has not yet signed the operating budget. Mr. Thayer discussed that the Governor’s original requested amount for the Renewable Energy Grant Fund Program (REF) was $5 million, and the Legislature passed the total of $14,310,158 for the REF, providing funding for seven projects. Additionally, the Governor’s original budget did not include funding for Port Electrification, even though last year, funding was provided at $5 million. The Legislature passed funding for Port Electrification this year in the amount of $10 million. The funding source is from the commercial vessel passage head tax on cruise ships. The Legislature wants AEA to continue the port electrification efforts. All other budget items remained the same. Chair Pruhs asked Mr. Thayer when the Governor will sign the budget. Mr. Thayer indicated that the Governor is reviewing the budget. It will need to be signed before the effective date of July 1, 2024. Mr. Eledge asked if the Governor can strike through individual budget line items. Mr. Thayer agreed and reiterated the only two changes were the previously discussed increases passed by the Legislature. There were no other comments or questions. B. IIJA Update i. IIJA Tracker Mr. Thayer discussed the included IIJA/IRA Funding Opportunities tracker sheet that is updated and provided to members on a weekly basis. The $62 million Solar for All award will partner with Alaska Housing Finance Corporation (AHFC). AEA will focus on community solar projects and AHFC will focus on low-income housing projects. There is no match required for the award. Mr. Thayer discussed that the Governor’s budget includes federal receipt authority for many of the IIJA/IRA programs that currently do not have the federal receipt authority box marked on the tracker sheet. Mr. Fogle asked what the GO notation stands for. Mr. Thayer explained that GO stands for Governor’s Office approved. All requests for federal funding go through the Governor’s Office, including programs that AEA partners with other resources like AHFC or Department of Transportation (DOT). Mr. Fogle asked for Mr. Thayer’s opinion as to how likely AEA is to win the award for the Dixon Diversion Measure. Mr. Thayer indicated that this is his favorite project because of its benefits, but he does not have an idea of the likelihood of an award. He noted that the Dixon Diversion project would displace 1.5 billion cubic feet of natural gas, which is 7.5% of the unmet needs in 2030. The geotechnical work on the project has been funded and will begin Alaska Energy Authority Page 3 of 8 today at Bradley Lake. There were no other questions. ii. GRIP 3, Round 1 – HVDC Line Mr. Thayer introduced Jim Mendenhall, Program Manager, and asked him to comment on the GRIP 3, Round 1 update. Mr. Mendenhall discussed that work continues to prepare the submissions for Department of Energy (DOE). They are expected to make their award by August 1, 2024. Mr. Mendenhall reviewed the listed plans and statements that have been submitted. He discussed that the Sample Terms and Conditions were received yesterday and are being reviewed by legal counsel. AEA will continue its efforts regarding the stability analysis of the transmission assets, including a preliminary project budget, schedule, and work plan. Weekly check-in meetings are scheduled. Mr. Mendenhall advised that the Round 2 package was submitted in April and a determination is anticipated to be released in August. Mr. Eledge asked which awardees have requested clarifications and waivers related to the Davis Bacon Act as referenced in paragraph three of the memorandum. Mr. Mendenhall explained that approximately 58 awardees received GRIP projects. Many of those projects are completed by the power companies that pay on a two-week basis, rather than a weekly basis. The reference is not related to AEA project awardees and Mr. Mendenhall does not believe AEA will have such an issue. Mr. Thayer reiterated that after the legal review is concluded, the final Terms and Conditions will be presented to the Board for approval. There were no other questions. iii. Solar for All Update Mr. Thayer introduced Audrey Alstrom, P.E. Director – Renewable Energy and Energy Efficiency, and asked her to provide the Solar for All (SFA) update. Ms. Alstrom discussed that AEA, in partnership with AHFC, submitted a $100 million application last fall to the Environmental Protection Agency (EPA) SFA program. In April, AEA received notification of the selection for a $62.4 million grant of which 50% is for the AHFC residential program and 50% is for the AEA community program. AEA has provided the EPA with additional required paperwork and AEA has completed the EPA required training. Updates to the work plan and budget are ongoing. AEA will have 90 days to finalize the scope of work after EPA provides the conditional award. One of the requirements of the award is for the homeowners’ electricity bill to be reduced by 20%. The details of how to track and report this information is still being determined. Additionally, benefits of the program must impact disadvantaged populations. Ms. Alstrom discussed that funds have been set aside for workforce development and training in collaboration with the Alaska Municipal League, the Alaska Workforce Partnership, and Alaska Center for Energy and Power (ACEP). Mr. Eledge asked if battery storage is included in the residential solar system. Ms. Alstrom agreed, and noted the program includes the solar infrastructure, storage, and any necessary upgrades to facilities to accept and integrate solar into their system. Mr. Eledge asked about the risks involved with battery storage. Ms. Alstrom discussed that ACEP will be addressing those types of technical details during the process. There were no other questions. Alaska Energy Authority Page 4 of 8 iv. Communities Taking Charge Accelerator (CTCA 3214-1810) Concept Paper Ms. Alstrom informed that a preliminary application was submitted, however it was determined that the project goals were already being funded by other sources. Staff will continue to review whether a full application will be submitted. Mr. Eledge discussed the third paragraph of the Empowering Alaska: Planning Innovative EV Charging solutions for All report regarding outside cold weather charging issues. He asked if the Biden Administration or the federal government can impose any penalties on the state if the infrastructure goals are unable to be met due to Alaska’s unique circumstances. Ms. Alstrom responded that no penalties have been communicated and she does not believe anything extra will be imposed on Alaska. The Biden Administration’s goal is for the entire United States. Each state gets to apply for their specific needs. Mr. Eledge discussed the Administration’s decision to utilize unions and union-based training facilities. He asked if the University of Alaska has been contacted to assist in training. Ms. Alstrom agreed that contact with the University is ongoing regarding how the University could support training for the electric vehicles (EV) industry, and particularly EV infrastructure charging stations. Funding is an issue to consider. There were no other questions. v. Defense Community Infrastructure Program – White Paper Mr. Thayer listed staff members who are currently on well-deserved vacations. He will provide their updates today. Mr. Thayer advised that the included Defense Community Infrastructure Program White Paper is based on last year’s application from Golden Valley Electrical Association (GVEA) requesting $10.2 million for a substation upgrade to benefit Eielson Air Force Base (AFB). GVEA would provide the cost match. Funding eligibility is only for state and local governments, and GVEA was directed to reapply this year utilizing a pass-through grant with AEA. The application has been submitted. C. Renewable Energy Grant Fund (REF) update Mr. Thayer indicated that the REF Round 16 approved 24 projects totaling $32 million. The House and Senate increased the original budgeted line item from $5 million to $14.3 million, thus funding the top seven ranked projects. The Governor is expected to sign the legislative appropriation. The funded projects are listed on Attachment A above the orange line. The Renewable Energy Fund Advisory Committee (REFAC) recommended that the unfunded projects be resubmitted to the Legislature as a Round 17 for potential funding. There were no questions. D. Power Project Fund Update Mr. Thayer reviewed the Loan Dashboard Report for the Power Project Fund included in the packet. There are 15 outstanding loans and no loan delinquencies. The loan program totals $40.6 million. The outstanding loan amount is $31.5 million, with loan commitments at $5.4 million, and the uncommitted cash balance at $3.6 million. There were no questions. Alaska Energy Authority Page 5 of 8 E. Owned Assets Update Mr. Thayer reviewed the Owned Assets Update. There are no significant changes to the Intertie update. GVEA applied for and has been tentatively selected for $22 million of 40101(d) funding to augment work to the Intertie. The funding is awaiting DOE approval. The Intertie Operating Committee (IOC) made the recommendation for the funding and has a forefront role in the process. Mr. Thayer discussed the Bradley Lake Hydroelectric Project required project work with Chugach Electric Association (CEA) continues to focus on design and permitting for the Soldotna to Sterling section. He explained the planned phase approach for the upgrade work. Mr. Thayer reported that the Dixon Diversion Project studies have begun, including focus on fisheries, drilling, hydrology, and raising the height of Bradley Lake dam. Workers are currently housed at the Bradley Lake facility and the consultant provides their food. Mr. Thayer will submit the details and particulars of the housing contract to members. Mr. Thayer discussed the recent government and legislative visitors who toured Bradley Lake. Mr. Thayer reviewed the update on the AEA-owned rural transmission lines built previously by Alaska Power Association (APA). The Shungnak-Kobuk Tieline Transfer Agreement has been submitted to Alaska Village Electric Cooperative (AVEC) and NANA Regional Corporation for their review. The Craig-Klawaok Tieline Transfer Agreement with Alaska Power & Telephone (AP&T) has been signed by AEA. AEA legal is drafting additional documents. The Bethel-Oscarville Tieline is expected to be transferred to GCI contingent on resolving Native Allotment easement issues. Mr. Eledge asked if the statement in the report is accurate that Oscarville is completely dependent on the tieline for power. Mr. Thayer explained that Oscarville has back-up generation. Chair Pruhs inquired as to the decision-making process for AEA to transfer the State ownership tieline assets to both non-profit and for-profit entities. He compared this to AEA’s ownership of urban assets that are not being transferred to the co-ops that utilize the asset. Mr. Thayer explained that the particular lines are fully depreciated, and AEA recently found out that AEA owns the lines. There is no value to AEA for owning the lines. The value of the lines is for the communities and were supposed to be transferred to the communities 30 years ago. However, Mr. Thayer is unaware of any documents from 30 years ago indicating this. He noted that staff will conduct additional research to determine if there are historical hard copy documents referencing when the transfer should have occurred or why the transfer did not occur. Chair Pruhs commented that there must be historical documents or directives to transfer the lines, otherwise the process would not be underway. Chair Pruhs requested additional information regarding the rationale and benefit to the State of transferring the rural lines, but not transferring the urban line. Mr. Thayer requested Kent Sullivan, General Counsel AEA, to comment. Mr. Sullivan explained his understanding is that in the communities where the transfers are occurring, there is only one entity that can accept the transfer. He noted it would be difficult for AEA to maintain the lines. Chair Pruhs noted that AEA is not currently maintaining any of the lines and that the utilities are maintaining the lines. Chair Pruhs asked if AEA is setting a dividing precedence between urban and rural Alaska regarding the Alaska Energy Authority Page 6 of 8 transfer of State owned assets. Mr. Sullivan indicated that he does not have an answer to Chair Pruhs’ question, as it is likely connected to a policy issue. Chair Pruhs requested that prior to any transfers occurring in rural Alaska, that an analysis is conducted indicating that there are no ramifications to the transfers and whether the same rationale of transferring assets in rural Alaska applies to transferring assets in urban Alaska. Chair Pruhs reiterated the importance of creating a documented audit for reference that outlines the policy decision and delineates the rationale for transferring the assets. Commissioner Crum supported Chair Pruhs’ request for an investment thesis documenting defensible reasons for moving forward in such a manner. Mr. Eledge asked if the information regarding AEA’s fully depreciated assets is updated to the digital library. Mr. Thayer agreed. Mr. Eledge requested that staff generate a list of AEA’s fully depreciated list and provide it to the Board members to ensure necessary compliance. Mr. Thayer agreed. Mr. Thayer explained that staff is following through with the Board’s directives at the time the line ownership was revealed last year and the year before. This information was previously presented to the Board and is not new. One of the reasons for the GCI transfer is to assist with broadband access in Bethel and Oscarville. Mr. Thayer highlighted that when APA became AEA, by statute, the lines should not have been owned. However, the lines are still on the books today. Mr. Thayer noted that Mr. Mendenhall previously discussed the Strategic Asset Plan and its development. The plan will include suggested upgrades to generation, transmission, and the size of the line. The plan should be completed within 18 months. This is a collaborative effort with the utilities. Additionally, when the new Board is established in July, regular legislative updates are anticipated to be presented to work on different budget requests and possible bonds. There were no other questions. F. Legislative Update Mr. Thayer noted that he provided a recent legislative update to Board members outlining House Bill (HB) 307. The bill must go through legal review. There are 27 sections in the bill, of which 11 of the sections apply to AEA. Mr. Thayer gave an overview of the sections. He noted that AEA employees are classified exempt service on par with AIDEA. AEA is subject to Regulatory Commission of Alaska (RCA) jurisdiction for the purposes of open access transmission tariffs. A new AEA Board will be created and the transition for the new AEA Board is delineated. The Commissioners of Revenue & Commerce may designate a deputy to attend AEA Board meetings. The AEA Board process will be defined. AEA employees are exempt. The Railbelt Transmission Organization (RTO) will be added to AEA’s powers and duties. AEA will be allowed to acquire battery or energy storage systems. For the purposes of the RTO, AEA is subject to RCA authority. Mr. Thayer commented that many of the 27 sections are recommendations from the Governor’s Energy Task Force from December. G. Community Outreach Alaska Energy Authority Page 7 of 8 Mr. Thayer discussed the extensive and ongoing community outreach. H. Articles of Interest The articles of interest are included in the packet. Mr. Fogle inquired as to the results of the Sustainable Energy Conference. Mr. Thayer indicated that the Sustainable Energy Conference was effective with over 1,000 attendees over the four days. AEA and AIDEA participated on various panels. Mr. Fogle believes the Alaska focus was successful and he believes the Governor was pleased with the outcome of the 3rd annual conference. Next year’s 4th annual conference is in the planning stages. There were no other questions. I. Next Regularly Schedule AEA Board Meeting - TBD Mr. Thayer noted that the next AEA Board meeting date is to be determined. MOTION: A motion was made by Mr. Fogle to enter into executive session to discuss confidential information related to Battery Energy Storage Systems, the HVDC Line, potential legislation, and personnel matters. 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 these are subjects which would have an adverse effect on the finances of AEA or are protected by law, due to the rules protecting personal privacy and certain business information. Motion seconded by Mr. Vivlamore. A roll call was taken, and the motion to go into executive session passed unanimously. 9. EXECUTIVE SESSION: 9:33 am – Discuss confidential information related to Battery Energy Storage Systems, the HVDC Line, and personnel matters. The Board reconvened its regular meeting at 11:16 am. Chair Pruhs advised that the Board did not take any formal action on matters discussed while in Executive Session. 10. BOARD COMMENTS Mr. Fogle expressed appreciation to Mr. Thayer and staff for their efforts in providing today’s information. He acknowledged that HB307 passed, which splits the AEA and AIDEA Boards. Mr. Fogle believes it is a good policy to develop a transition plan for the new AEA Board and the dissolution from the AIDEA Board. Mr. Thayer agreed and noted a transition plan is underway. Mr. Eledge expressed appreciation to Mr. Thayer and staff for working diligently and for successfully meeting the short-fused deadlines imposed. Commissioner Crum acknowledged the ongoing work of staff in managing the different federal program funding sources and providing information over the last couple of years. He is excited about the strategic asset planning and expressed appreciation to the staff for leading the effort.