HomeMy WebLinkAbout2024.01.26 BPMC Meeting Minutes - FINALBPMC Minutes 1/26/24 Page 1
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING MINUTES Anchorage, AK 99503 January 26, 2024,
1. CALL TO ORDER Chair Brad Janorschke called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. 2. ROLL CALL (for Committee members) Brad Janorschke, Chair (Homer Electric Association [HEA]); John Burns, Vice-Chair (Golden Valley Electric Association [GVEA]); Curtis Thayer, Secretary-Treasurer (Alaska Energy Authority [AEA]); Tony Izzo (Matanuska Electric Association [MEA]); Arthur Miller (Chugach Electric Association [CEA]). 3. PUBLIC ROLL CALL (for all others present) Joel Paisner, counsel for BPMC; Kent Sullivan, general counsel for AEA; Matt Clarkson, general
counsel for CEA; Andrew Laughlin (CEA); Mike Miller (CEA); Jon Sinclair (CEA); Russell
Thornton (CEA); Dan Bishop (GVEA); Sarah Villalon (GVEA); Larry Jorgensen (HEA); Sarah
Lambe (HEA); Martin Law (HEA); Andy Patrick (HEA); Ed Jenkin (MEA); David Pease (MEA);
Matt Reisterer (MEA); Tony Zellers (MEA); Julie Estey (MEA); Bryan Carey (AEA); Pam Ellis (AEA);
Ryan McLaughlin (AEA); Jim Mendenhall (AEA); Bill Price (AEA); Mark Ziesmer (AEA); Bernie
Smith; Brian Hickey (BPMC); David Grossklaus; Jennifer Bertolini (AEA).
4. AGENDA APPROVAL
Chair Janorschke stated that it was requested to move Agenda Item 7a to after the executive
session. We will keep the item where it is, but we will take any action on this item after the
committee comes out of executive session. MOTION: Mr. Thayer moved to approve the Agenda as amended. Mr. Izzo seconded the motion. The motion to approve the agenda, as amended, passed without objection. 5. PUBLIC COMMENTS - None.
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6. APPROVAL OF MEETING MINUTES - December 7, 2023 and December 8, 2023
Chair Janorschke stated that he has a list of minor edits for the minutes, but nothing substantial.
Are there any other changes to the minutes? Hearing none, he asked for a motion to approve
both sets of minutes.
MOTION: Mr. John Burns moved to approve the minutes subject to the clarification edits. Mr. Miller seconded the motion. The motion passed unanimously. 7. NEW BUSINESS 7a. HVDC Line being “required project work” Chair Janorschke asked Mr. Curtis Thayer to present this item for discussion. MOTION: Mr. Curtis Thayer moved for the Bradley Lake Project Management Committee to go into executive session to discuss confidential matters pertaining to the required project work and financing of this work on the High Voltage Direct Current (HVDC) Line.
Mr. John Burns seconded the motion.
The motion passed unanimously.
The committee returned to the regular meeting. Chair Janorschke stated that no action was
taken on this item during executive session.
Chair Janorschke introduced Resolution 24-01, Required Project Work to the High Voltage
Direct Current (HVDC) Line. He asked for a motion on the existing resolution and said there may
be amendments.
MOTION: Mr. Curtis Thayer moved for the Bradley Lake Project Management Committee to approve Resolution 24-01, Required Project Work to the High Voltage Direct Current (HVDC) Line as presented. Mr. John Burns seconded the motion. MOTION: Mr. John Burns moved for the Bradley Lake Project Management Committee approve proposed Amendment Number 1 to Resolution 24-01, Required Project Work to the High Voltage Direct Current (HVDC) Line to read WHEREAS the BPMC desires to provide for no more than $20 million of the transmission portion only of the series 2022 bond proceeds to be used to fund the underwater HVDC transmission line, based on the legal assurances from AEA that the BPMC has no further obligation under either
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this resolution or the power sales agreement beyond the $20 million authorized here in.
And, also approve proposed Amendment Number 2 to delete the final resolve.
Mr. Burns said the two proposed amendments can be taken separately or together. Chair Janorschke stated that he would like to take them up together. He said there is a motion to amend Resolution 24-01, as Mr. Burns read them. Is there a second? Mr. Curtis Thayer seconded the motion to amend Resolution 24-01 as proposed. Chair Janorschke asked if there is any discussion. There was none. The motion passed unanimously. Joel Paisner asked if Resolution 24-01 should include language about an independent analysis because this required work is financed by bonds and matching funds. Mr. Thayer answered no. He explained the Department of Law’s opinion requires:
(1) Action by the AEA Board to approve an amendment to Tenth Series Bond Resolution
and amendment to the loan agreement;
(2) Consent of the BPMC;
(3) Consent of the holder of the 2022 Bonds with all of the required work and matching
funds; and
(4) Requires a third party review - an independent analysis.
The Committee agreed the language is not necessary in this Resolution 24-01.
8. OLD BUSINESS
8a. Railbelt Reliability Coordination Update i. Grid Resilience and Innovation Partnerships (GRIP) 3, Phase 1 Update Jim Mendenhall provided a brief overview of what AEA has been to work on this project. He said some of that work has been in conjunction with the technical team from each of the utilities. The application was submitted, and AEA received approval to continue negotiations with the Department of Energy (DOE) for the $206,500,000 for the HVDC cable, and if feasible, the two Tesla batteries that were applied for in the application. AEA has been working with EPS to update the estimates. The original estimate in 2017 was 150 megawatts and it is now 250 megawatts. He explained there has been a lot of volatility in prices, but EPS updated the estimate in January, and it appears that it is within the budget. There are four major suppliers,
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Hitachi/ABB, GE, Siemens, and Mitsubishi power products. Mitsubishi has returned some pricing for converters and cable.
In November, as part of the process, all the utilities participated in submitting questions to the DOE. We received some preliminary answers in late December, which were distributed to the technical team on January 4. There are questions on what counts as a match, and on financial arrangements. He said the last information from DOE was they were waiting for contract specialists to answer those questions. Curtis has reached out to our congressional delegation to see if we can get some answers. We will keep everybody informed on that issue.
Mr. Mendenhall said Curtis has been working with the governor's office on funding issues, cash flow, and how much is required to get this going. He explained the way this project is structured, AEA spends the money and then is reimbursed by the federal government. AEA has worked with the state HR process for the new positions so we are ready to hire when this kicks off.
He said there are still a number of issues we are trying to resolve about Build America, Buy America. We can still get waivers, but there is a lot of discussion in Congress about those items.
AEA has also talked to the DOE whether there is a way to do advance purchases for cable and converters that have long lead times for production. For example, Hitachi has said if you give us
some money now, we will deliver them by the time they are needed to finish this project.
He said AEA has been working on the schedule and with this endangered species out in the Inlet; it could take two and a half years to go through the NEPA process to get that approved.
Mr. Burns asked for clarification on the statement regarding HVDC and the batteries, and “if feasible, the two BESS.”
Mr. Mendenhall responded that the letter from DOE states “made if feasible” regarding Jim responded that the letter from DOE states, “DOE may also consider the reduction in scope
that eliminates two overhead transmission lines, but prioritizes (1st) Underwater HVDC, (2nd) if equal one or both BESS at a funding amount no greater than $206.5 million.” There is priority.
Mr. Burns asked about the budget.
Mr. Mendenhall stated that converters are close to $200 million, and the cable is another $115 million. There is project management costs, the NEPA process, and the design. He said the cost
estimate does need more refining. Another challenge is that the contract does not allow significant purchases until we have the NEPA approval, which can take up to three or four years. If you figure 5% inflation at four years, that is a 25% bump in costs right there.
ii. Railbelt Reliability Coordination Update and GRIP 3, Phase 2 Concept Paper Mr. Brian Hickey directed committee member’s attention to the meeting packet where his report provides details of what has transpired since the last report. He said the tactical team and the
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combined regulatory team has been working on the transmission service organization, which was agreed to at both the December 7 and the January 5 coordination meetings between
utilities and AEA. Kirk Gibson has been asked to provide the foundational documents for that
organization. He said they have also been working on the wheeling issue and securing a
consultant who will help define that.
He said Joel and the tactical team have been looking at the match: how it applies to (1) investment tax credits, (2) batteries - applying the 35% of the $166.5, and (3) the state match. He speculated that in a couple of weeks, the team would have a recommendation for the BPMC of capital stack that maximizes federal investment in the Railbelt. Mr. Hickey said the concept papers: Topic 3, which is a second line from Beluga to Healy and Topic 1, which is rebuilding the existing Railbelt through a series of agreed upon projects to reconstruct existing facilities to match capacity of the new line, have been filed. The grid innovation paper was filed by AEA and the grid reservancy paper was filed by MEA on behalf of the project team. He expects hear back by mid- to late-February as to whether the projects are chosen to go forward with applications. He stated the consulting portion of the work was not funded in the applications and he will be coming back to the committee later for funding, if the applications are chosen to move forward on applications.
Chair Janorschke stated that the next BPMC meeting is March 22, 2024. Will that work for the
schedule.
Mr. Hickey responded that it might be necessary to call a special meeting to get the funding as
the papers are due April 17 for Topics 1 and 3.
Committee members thanked Brian and his team for all the effort they put in over the holidays
to get this done.
9. OPERATOR’S REPORT
Mr. Martin Law directed Committee Members to the report in their meeting packet. There is nothing significant to report. The project is running well. We are busy prepping for the spring outage, which is open it up, look at it and then close it back up. Chair Janorschke asked if there were any questions for Martin. There were none. No news is good news. He expressed his appreciation in keeping that plant running. 10. COMMITTEE REPORTS 10a. Budget to Actual Report
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Mark Ziesmer with AEA presented the budget to actual expense report for December 31, 2023, to committee members and walked them through the various schedules and appendices for
Bradley Lake, Dixon Diversion, Battle Creek and SSQ projects.
Chair Janorschke asked for clarification on the Bond Series 11 funds. He recalled $166 million
principal and the interest earned. Mr. Ziesmer said the approved funding was $166 million. He explained as soon as the bonds closed, there was investment expenses of $157,000 for closing costs. Then the next step is for $12 million to be set aside into the capital reserve fund. Since November 30, 2022, there has been $6,861,915 earned in interest. He said $557,196 has been released. As that is paid down, once a year a portion of that capital reserve is released and goes back into the construction fund, which was just done in December and that amount is shown in the schedule. The total funding available at that point is $160,820,649, which is split up into 35/ 65. Chair Janorschke asked if there were any other questions on the budget to actuals report. There were none. He thanked Mr. Ziesmer for his report. 10b. O&D Report
Andy Patrick directed committee members to his report, which contains routine updates and
elements that relate to this committee. The next O&D meeting will be next week where the
committee will start reviewing and discussing the budget.
Chair Janorschke asked if there were any questions. There were none.
11. EXECUTIVE SESSION - 10:39 a.m. to 11:42 a.m.
MOTION: Arthur Miller moved that the Bradley Lake Project Management Committee go
into executive session to discuss confidential financial matters regarding required project
work and financing, the immediate knowledge of which may have an adverse effect on
the Committee or Project. Tony Izzo seconded the motion. The motion passed unanimously. The committee went into executive session. After committee members returned to their regular meeting, Chair Janorschke stated that no action was taken by committee members during executive session. MOTION: Mr. Izzo moved that the Bradley Lake Project Management Committee (BPMC) approve the proposal to revise the consulting agreement between BPMC and MEA to allow BPMC to pay 40% of the costs of the consultant and MEA will absorb 60% of the