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HomeMy WebLinkAboutAEA Board Meeting Minutes Nov 18 2024Alaska Energy Authority BOARD MEETING MINUTES Monday, November 18, 2024 Anchorage, Alaska 1. CALL TO ORDER ALASKA ENERGY AUTHORITY Chair Koplin called the meeting of the Alaska Energy Authority to order on November 18, 2024, at 9:00 am. 2. ROLL CALL BOARD MEMBERS Members present: Clay Koplin (Public Member); Duff Mitchell (Public Member); Tony Izzo (Public Member); Robert Siedman (Public Member); Jenn Miller (Public Member); Llewellyn Smyth (Delegate for Adam Crum (Commissioner DOR)); Julie Sande (Commissioner DCCED). Members absent: Ingemar Mathiasson (Public Member). A quorum was established. 3. AGENDA APPROVAL MOTION: A motion was made by Vice Chair Mitchell to approve the agenda. Motion seconded by Mr. Siedman. A roll call was taken, and the motion to approve the agenda passed unanimously. 4. PRIOR MINUTES — October 22, 2024 Vice Chair Mitchell requested to administratively correct his statements made on Page 11. He noted that the study referenced is a 2024 White Paper, and that the 9.8% number he previously discussed is actually 9.1%. There were no objections. Mr. Siedman corrected a typographical error on page 5 of the minutes: Ms. Siedman should be Mr. Siedman. There were no objections. A roll call was taken, and the minutes of October 22, 2024, including the administrative changes, were approved unanimously. S. PUBLIC COMMENTS (2 minutes per person) There were no members of the public online or in -person who requested to comment. 6. COMMITTEE REPORTS — None • •AKENERGYAUTHORITY.ORG 813 W Northern Lights Blvd, Anchorage, AK 99503 • Phone: (907) 771-3000 • Fax: (907) 771-3044 • Email: info@akenergyauthority.org 7. OLD BUSINESS A. Battery Energy Storage Systems (BESS) Service Agreements i. Resolution 2024-13 — Authorizing Purchase from Alaska Electric & Energy Cooperative of Battery Energy Storage System (BESS) or Related Services ii. Resolution 2024-14 — Authorizing Purchase from Chugach Electric Association of Battery Energy Storage System (BESS) or Related Services iii. Resolution 2024-15 — Authorizing Purchase from Golden Valley Electric Association of Battery Energy Storage System (BESS) or Related Services — (Pending) iv. Resolution 2024-16 — Authorizing Purchase from Matanuska Electric Association of Battery Energy Storage System (BESS) or Related Services MOTION: A motion was made by Mr. Siedman to approve Resolution 2024-13, a Resolution of the Alaska Energy Authority authorizing the purchase from Alaska Electric & Energy Cooperative of priority rights to BESS services. Motion seconded by Vice Chair Mitchell. Vice Chair Mitchell requested to approve all the BESS resolutions within one motion. There was no objection. Chair Koplin requested Executive Director Curtis Thayer to provide an overview of each of the BESS resolutions. There was no objection. Mr. Thayer reported that the BESS resolutions were tabled at the previous meeting, during the ongoing utility negotiations. The language has since been agreed by representatives and counsel. Mr. Thayer explained the background of the resolutions and the pro rata share for each utility. He noted that Alaska Electric & Energy Cooperative is Homer Electric Association (HEA). Mr. Thayer acknowledged that the BESS resolution for Golden Valley Electric Association (GVEA) is not included in today's packet. GVEA has funding for the battery that they are installing, and the resolution will come back before the Board at a later date. Mr. Thayer requested Mark Billingsley, AEA Counsel, to comment. Mr. Billingsley indicated that GVEA intends to execute the term sheet, yet they will wait to execute the contract until they either significantly upgrade their control system or install a new BESS. Vice Chair Mitchell asked for confirmation that the GVEA project would not impact the other utilities' amounts or ability to proceed. Mr. Thayer agreed that there is no effect from the timing of GVEA's BESS. Alaska Energy Authority Page 2 of 6 Mr. Siedman requested to make a friendly amendment to his motion per Vice Chair Mitchell's request. MOTION: A motion was made by Mr. Siedman to approve Resolution 2024-13, Resolution 2024-14, and Resolution 2024-16, as presented. Motion seconded by Vice Chair Mitchell. Vice Chair Mitchell commented that AEA and the utilities should be proud of the efforts and cooperation to strengthen the resiliency of the grid through the integration of BESS and to lower the cost to the Alaskan rate payers. He expressed support for the resolutions. Chair Koplin expressed support for the resolutions. He added to Vice Chair Mitchell's comments and noted that reducing the cost of energy on the Railbelt could, by extension, lower the cost of energy to the Power Cost Equalization (PCE) recipient communities. Chair Koplin asked Mr. Izzo if he is recusing himself from the vote due to a perceived conflict. Mr. Izzo agreed that he will recuse himself from the vote due to the perceived conflict. Mr. Izzo discussed that he has a different perspective from the Railbelt. He commented that he believes what was done in the prior executive session is contrary to the intent of the legislation that restructured the AEA Board. Mr. Izzo agreed with Vice Chair Mitchell's characterization of the Railbelt and AEA's cooperation, however, he feels the difficulty is that even though he is closest to the issue, he has been muzzled by counsel. Mr. Izzo noted for the record that he is pleased that the process is moving forward, and that it is the right thing to do. He discussed that in his business, the positive nature of performance is viewed as being because of someone or despite someone, and not just because someone was present when something positive happened to the organization. Mr. Izzo believes this issue is an example that had he not pushed beyond the limit that counsel wanted him to remain silent, it would have cost the Railbelt power consumers potentially $14 million because of the tax credits. Mr. Izzo explained that working through the issues took another day of counsel meeting together and adjusting the wording. Mr. Izzo noted that he disagreed with the sentiment, but will recuse himself from voting due to the agreed perception of the conflict. Chair Koplin thanked Mr. Izzo for his comments. Chair Koplin emphasized that it is not the intent that members of AEA are prevented from providing feedback, especially comments regarding impacts on rates. Vice Chair Mitchell expressed appreciation for Mr. Izzo's discussion of support for the resolutions. Vice Chair Mitchell stated for the record that AEA's meetings are public, and that other people can come forward to discuss different viewpoints. He does not believe it is a good characterization that the previous meeting discussion concerned that any money would be lost. Vice Chair Mitchell believes the reason for the special session was to identify the issues and to refine the documents. He believes the fruits of those efforts are the resolutions before the Board today. There were no other comments. Alaska Energy Authority Page 3 of 6 A roll call was taken, and the motion to approve Resolution 2024-13, Resolution 2024-14, and Resolution 2024-16, as presented passed, with Mr. Izzo recused. 8. NEW BUSINESS A. Power Project Fund (PPF) Loan Regulation Change MOTION: A motion was made by Ms. Miller to approve the proposed changes to the Power Project Fund loan regulations, as presented. Motion seconded by Mr. Smyth. Vice Chair Mitchell requested Mr. Thayer or Conner Erickson, AEA, provide an overview of the proposed changes. Mr. Thayer explained that AEA is required to make regulatory changes based on the passage of House Bill (HB) 307, which affected the Power Project Loan Fund. The proposed changes align the AEA regulations with HB 307. Mr. Thayer discussed the administrative process. Staff recommends that the information included in the packet is approved today to go out for the 30-day public comment period, after which time, the Board would review any public comments received, advance any changes to Department of Law (DOL), and ultimately, the final changes would be directed to the Lieutenant Governor's Office for signature and implementation. Mr. Erickson commented that Mr. Thayer provided a succinct summary of the proposed changes to the regulations. He noted that the changes are minor, and are within the bounds of the specific statute. Ms. Miller highlighted for future consideration the language on page 22 under 3AAC 106.120 Terms of Loans under (A) (vii) energy storage. It is not being revised today. She discussed that energy storage degrades every year, but can be augmented through the project life. The useful life of energy storage does not get to zero at year 20. Ms. Miller emphasized that this subject can be considered at a different time. Chair Koplin agreed, and commented that modular systems can also be renewed beyond the 20- year timeframe. There were no other comments or questions. A roll call was taken, and the motion to approve the proposed changes to the Power Project Fund loan regulations passed unanimously. 9. BOARD COMMENTS Vice Chair Mitchell commented on the well -run meeting, and is pleased that the special meeting afforded additional time to clarify issues. He hopes that additional progress can be made on the issues raised by Mr. Izzo. Mr. Izzo expressed appreciation to Mr. Thayer and to the AEA team for their work and efforts regarding the approved resolutions. Mr. Izzo clarified his previous comments and expressed his Alaska Energy Authority Page 4 of 6 frustration with what he sees as a systemic issue regarding the unwillingness to discuss and address conflicts of interest. He believes that any member of the Board may find themselves in a similar situation. Mr. Izzo noted that Mr. Billingsley negotiated the agreements, and that Mr. Billingsley likely has a conflict of interest due to the ownership he represents, and yet he was resistant to hearing the facts that there were a couple of words that needed to be changed to ensure that the utilities did not lose investment tax credits that relate to savings for the Railbelt consumers. Mr. Izzo noted that one option for addressing the systemic issue is that he step down and attend as a member of the public. Another option is that the Attorney General's Office provide an opinion. The hope is that an open discussion regarding conflicts can occur, either in public or in executive session, as appropriate. Mr. Izzo believes that the current structure of the Board creates another hurdle to reducing the rates and the cost of energy for Alaskans. Mr. Thayer requested to comment. There was no objection. Mr. Thayer noted for the record that Mr. Billingsley worked with the Department of Law, and that everyone attended the ethics training. Mr. Thayer added that staff will seek clarification from the DOL on this matter and point of conflict. Mr. Thayer emphasized that Mr. Billingsley is a member of the team and should not be singled out by a Board member at a public meeting on a difference of a legal opinion. Mr. Thayer reiterated for the record that he does not wish to have employees named during the meeting. If there is an issue with an employee or with a decision that they make, the issue needs to be brought to Mr. Thayer or Chair Koplin directly, rather than singled out or ridiculed during a public meeting. Chair Koplin commented that he believes Mr. Izzo identified that Mr. Billingsley is the attorney for AEA, and that AEA was also party to the contract at issue, rather than the intention to single him out an employee. Mr. Siedman commented that he believes the right decision was made, but the situation neared going into an unintended direction. He agreed that the Board will have to address the conflicts of interest issues and the circumstances underwhich recusal occurs. Mr. Siedman expressed his belief that a conflict of interest is an issue if it is directly specific to one entity or one person. Mr. Izzo clarified for the record that his comments were not meant to ridicule an employee. Mr. Izzo stated that the nature of his conflict of interest was not discussed, which is part of the issue. Mr. Izzo clarified that he was calling attention to the fact that if he had a conflict of interest, then the attorney who negotiated the agreements was likely closer to the issue than Mr. Izzo. Mr. Izzo expressed appreciation to Mr. Billingsley for his efforts, and believes he is a great member of the team. Chair Koplin commented that is unfortunate that a large magnitude contract came before the AEA Board at its first Board meeting, and that the Railbelt managers did not have much time to absorb and consider the items on the agenda. Chair Koplin believes the appropriate process was followed regarding conflicts of interest. If there is a conflict of interest, the Board member recuses themselves from the vote, but can testify as a public member. Chair Koplin expressed firm opposition to Mr. Izzo's consideration to step down from the Board. Chair Koplin emphasized the Alaska Energy Authority Page 5 of 6 importance of public and stakeholder testimony to the Board regarding contracts and agreements. Chair Koplin indicated that the process can be refined and clarified, as necessary. Mr. Izzo expressed appreciation for the latitude. He summarized for the public that the contract was for BESS services, and that Matanuska Electric Association (MEA) absolutely needed to recuse itself from the vote. That recusal was never in question. The contention was the sense that as a Board member, Mr. Izzo could not raise the issue that the utilities were concerned about language changes that the tax advisors had indicated would prohibit the eligibility for the investment tax credits. Mr. Izzo noted the concerns were finally able to be communicated. He does not agree that the information represented any competitive advantage to any single member of the Board. Mr. Izzo commented that he wants to avoid direct conflicts of interest and perceived conflicts of interestwhile maintaining the latitude to provide information before an absolute decision is made. Vice Chair Mitchell wished members and staff happy holidays. There were no other comments. 10. ADJOURNMENT There being no further business of the Board, the AEA meeting adjourned at 9:41 am. Z14� Curtis W. Thayer, Executive Director ``��t�i�rirrrr \1ERG y� 'OOR POgq�''•,y� Q �. F 7 . Alaska Energy Authority Page 6of6