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HomeMy WebLinkAbout2024.05.17 BPMC Meeting Minutes - FINAL_______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 1 of 7 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING MINUTES Alaska Energy Authority Board Room Anchorage, AK 99503 May 17, 2024 1. CALL TO ORDER Chair Janorschke called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. A quorum was established. 2. ROLL CALL (for Committee members) Brad Janorschke (Homer Electric Association [HEA]); John Burns (Golden Valley Electric Association [GVEA]); Tony Izzo (Matanuska Electric Association [MEA]); Arthur Miller (Chugach Electric Association [CEA]); Curtis Thayer (Alaska Energy Authority [AEA]); and Kat Sorenson (City of Seward). 3. PUBLIC ROLL CALL (for all others present) Jennifer Bertolini, Pam Ellis, Ryan McLaughlin; Joel Paisner (Ascent Law Partners); Sherri Highers, Andrew Laughlin, Mike Miller; Dan Bishop, Travis Million; Larry Jorgenson, Sarah Lambe, Martin Law, Andrew Patrick (HEA); Ed Jenkin, David Pease, Matt Reisterer, Tony Zellers; and Jimmy Nelson. 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Thayer to approve the agenda. Motion seconded by Vice-Chair Burns. The motion to approve the agenda, as presented, passed without objection. 5. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES – March 22, 2024 MOTION: A motion was made by Vice-Chair Burns to approve the Minutes of March 22, 2024. Motion seconded by Mr. Thayer. The motion to approve the Minutes of March 22, 2024, passed without objection. 7. NEW BUSINESS – None. 8. OLD BUSINESS A. Railbelt Reliability Coordination Update _______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 2 of 7 i. GRIP 3, Phase 1 Update Chair Janorschke requested Jim Mendenhall, AEA, present the update. Mr. Mendenhall reviewed the memorandum included in the Committee packet. Staff continues to meet weekly with the Department of Energy (DOE) to focus on completing their requirements. The funding match approved by the State is $32.7 million, of which $20 million is from the Bradley Bonds and $12.7 million dedicated from State funds. The first budget period from DOE is expected to have a project award with a limited scope for approval of approximately $14.5 million. DOE recognizes that the first award should be completed prior to the end of the federal fiscal year. Mr. Mendenhall discussed that DOE has forwarded a set of sample terms and conditions, and staff has also requested contract terms and conditions specific to this project. He noted that Mr. Thayer will present the contract terms and conditions to the Alaska Energy Authority (AEA) Board for their approval. Mr. Mendenhall reviewed that AEA has begun the strategic planning process on the Railbelt transmission, which is a critical piece of the project. Mr. Mendenhall reported that on April 9, 2024, Hatch Consulting provided a virtual 101 information session on high-voltage direct current (HVDC). On April 10, 2024, Mr. Mendenhall and Mr. Thayer traveled to Kenai to present an overview of the project to the Kenai and Soldotna Chambers of Commerce, and met with the Borough Mayor and Assistant Mayors. Mr. Mendenhall expressed appreciation to Larry Jorgenson, HEA, for giving them a tour of the potential landing site, the Soldotna substation, and the Battery Energy Storage System (BESS). Vice-Chair Burns inquired as to when a definitive determination will be provided by DOE regarding the delineation of the claw-back provision. He believes the claw-back provision is a concern for many, including the Legislature. Mr. Mendenhall discussed that DOE has been specifically asked about the claw-back provision and the DOE is still working on those specific terms and conditions. Mr. Mendenhall explained that DOE has noted there is no claw-back if the match has been met. However, the terms and conditions are still being developed and the attorneys will review the terms and conditions to ensure understanding. Mr. Thayer informed that the specific terms and conditions will be shared with the BPMC. Vice-Chair Burns requested additional information regarding the heated discussion within the Legislature concerning the $206 million and moving forward through committed tranches. Mr. Thayer discussed the importance of understanding the amount of funding that is available for a match. He believes there is a disconnect between the Legislature and the Administration regarding the $206 million. He noted that an Office of Management and Budget (OMB) presentation to the Legislature reflected the BESS funding being applied to the match. Mr. Thayer disagreed with that representation. The application indicates that $90 million of the bonding will be applied to match. Mr. Thayer believes it is important to collectively develop a plan to identify the match amount and the source of the match. Mr. Thayer discussed that if Round 2 is successful, there will be an additional match of $365 million required to simultaneously commence that project. Mr. Thayer commented that there is full support from the Governor and the Legislature in moving _______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 3 of 7 the GRIP forward. He noted that the matter is from what source the funding will occur and it is necessary for the Finance Committee to continue their work. Mr. Thayer indicated that because of the election in November, some of the people this year may not be in the same role next year. Vice-Chair Burns asked for the scope of AEA’s planning. Mr. Thayer provided a high-level review of the planning. He informed that two years ago, AEA requested funding from the Legislature to examine AEA’s owned assets and to develop a strategic plan for transmission. That development is ongoing and is inclusive of the Railbelt utilities. There is a study that focuses on generation, and this study focuses on transmission needs. Mr. Mendenhall explained that AEA is evaluating the seasonal peaks and valleys of load and generation throughout the year to ensure that the subsea cable is sized correctly. Mr. Izzo believes that there is general agreement regarding the strategic plan. He noted that the numbers provided are from a recent analysis conducted by an expert third-party, based on trends, and continued small organic growth. Mr. Izzo noted that he read an article forecasting a tremendous increase in power demand in the coming decade. He discussed that the cooperative is not going to build a system that is four times greater than the current need due to speculation within an article. Mr. Izzo hopes that the strategic plan includes a pathway for the system to be upgraded at the lowest cost. Ed Jenkin, MEA, responded that the strategic plan is being conducted by AEA and is focused on transmission assets to ensure those assets are effectively used and sized for the future. AEA’s base load and base analysis is similar to the analysis performed by the utilities. Mr. Jenkin stated he believes AEA is doing a complete job trying to identify the reasonable top and bottom on loads and how those might affect the transmission system and the movement of power. Mr. Izzo asked if the most recent National Renewable Energy Laboratory (NREL) generation study suggests spending $2.3 billion to save $100 million a year. Mr. Izzo noted that Mr. Thayer indicated that characterization is correct. Mr. Izzo hopes to strive for a reduction in the current rates. He believes the NREL plan leads to the same rates that are structured today without inflation. Mr. Izzo hopes the aspiration is to reduce the cost of power in the future, including the impact of inflation. Mr. Jenkin explained that AEA examined the various studies and the various loads developed through those studies. Vice-Chair Burns remarked that he shares the comments and concerns expressed by Mr. Izzo. Regarding the AEA study, Vice-Chair Burns requested that utility participants be provided with the defined scope of work, the objectives and expectations, and who is engaged in the AEA study. He noted there are times when members receive studies after they are complete, and the analysis becomes problematic due to concerns regarding the inputs of the study and missing data. Vice-Chair Burns commented that the input on structuring the scope of work needs to be appropriately captured and that the analysis needs to reflect both the long-term and short-term objectives. He asked if all the utilities are participating in the AEA study. Mr. Mendenhall agreed the utilities are _______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 4 of 7 actively involved, including Dan Bishop and Phylicia Cicilio, GVEA. He will provide the requested information to Jennifer Bertolini, AEA, to distribute to BPMC members. Chair Janorschke requested clarification that the cost is estimated at $413 million, of which DOE has committed to $206.5 million, and the State has secured $32.7 million. Mr. Mendenhall agreed and noted that the State has matched the $32.7 million and the $206.5 has been set aside for the project. There were no other comments or questions. ii. GRIP 3, Phase 2 There were no questions or comments regarding the GRIP 3, Phase 2 report included in the Committee packet. B. Amended Consultants Agreement Chair Janorschke requested Joel Paisner, Ascent Law Partners, LLP, review the Amended Consultants Agreement. Mr. Paisner discussed the draft amendment to the existing consulting agreement is included the Committee packet. The agreement is between the BPMC and MEA. The consultant Brian Hickey has been retained by MEA. This agreement accounts for a reduced payment by the BPMC toward the consulting agreement. MEA will absorb 60% and the BPMC will absorb the remaining 40% of the payment. Additional terms and conditions have been included in the amendment. Mr. Paisner expressed his understanding that the agreement between MEA and Mr. Hickey has been revised to end on December 31, 2025. Mr. Paisner assumes that consulting agreement is also for that same term. Mr. Paisner discussed that by authorizing this amendment, the BPMC authorizes the work by MEA and their consultant on behalf of the City of Seward. He explained that any consultant work outside of the BPMC and the City of Seward will have to be disclosed. Mr. Paisner provided Ms. Bertolini with Mr. Hickey’s draft revised scope of services. She noted that she can print out the information and distribute it to members. Chair Janorschke requested a brief at-ease to print the document. There was no objection. The Board resumed its regular meeting, and the information was provided to members. There were no questions regarding the information provided. 9. OPERATORS REPORT Chair Janorschke requested Martin Law, HEA, to discuss the included Operator’s Report. Mr. Law reviewed that there is not enough water running through the diversion in the day to change over. The diversion thaws during the day and freezes during the night. Staff will observe the diversion again on May 21, 2024, and it will be in service as soon as it is possible. Mr. Law highlighted the May 5, 2024 picture included in his report of the Battle Creek Diversion Road that is completely snowed in. There were no questions. _______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 5 of 7 10. COMMITTEE REPORTS A. Budget to Actuals Report Chair Janorschke requested Pam Ellis, AEA, to discuss the included Budget to Actual Expense Report for the period of July 1, 2022, to February 29, 2024. Ms. Ellis discussed that the actuals for capital purchases not funded by R&C Funds shown on Schedule A came in at $354,187. The budget remaining to be expended is $593,813. The majority of the spending is related to equipment purchases and the upgrade to crew quarters. Schedule B shows the Operations and Maintenance (O&M) actual expenses are underbudget by $889,090, primarily due the O&M expense sections that came in underbudget; FERC 542 Maintenance of Structures, FERC 543 Maintenance of Reservoirs, Dams and Waterways, FERC 544 Maintenance of Electric Plant, FERC 545 Maintenance of Miscellaneous Hydraulic Plant, FERC 56 System Control and Load Dispatching, and FERC 928 Regulatory Commission Expenses. Year-end billing is expected to reduce the FERC 928 variance. Ms. Ellis noted that Schedule D shows the actual expenses at a total of $924,172. The Dixon Diversion projects costs total $1,959,995, of which $1,387,958 was paid by Bradley Lake R&C Fund and $572,037, was paid by the Renewable Energy Fund (REF) Grant. Schedule E shows the Battle Creek Non-R&C Capital Purchases at a total of $64,936. Schedule F shows the Battle Creek O&M expenses were underbudget by $56,343, primarily due to the 4% allocation from Bradley Lake. There was no fiscal year activity for Schedule H. Ms. Ellis discussed Schedule SSQ Line O&M expenses were underbudget by $156,593. The majority of this less than budgeted variance is from FERC 571 Maintenance of Overhead Lines. Ms. Ellis reviewed Appendix A, Capital Projects Funded by Bond Proceeds for Bond Series 10, and Bond Series 11. Vice-Chair Burns asked for an explanation of the savings in Schedule B. Ms. Ellis believes the savings are primarily due to timing. She noted that the project manager would be able to provide a more complete answer. Vice-Chair Burns asked Mr. Thayer to explain the source of the $1.3 million funding for the spillway raise and expansion project for the Dixon Diversion shown on Schedule D. Mr. Thayer explained that CEA, on behalf of the BPMC, applied for the REF Grant for $1 million. It has a match requirement. Part of the line item is the match from the utilities. Additionally, the State contributed $5 million to the project during the previous budget cycle. Another State contribution of $1.2 million is included in this budget cycle. Vice-Chair Burns asked if any portion of the Dixon Diversion will be paid by the BPMC. Mr. Thayer explained that the match is being paid for by the utilities through the BPMC. Mr. Miller requested a high-level summary document that includes all funding, and shows the State contribution of $6.2 million. Ms. Ellis agreed. Chair Janorschke requested that information is included in the update at the June 21, 2024 meeting. There were no other questions. B. O&D Report Chair Janorschke requested Andrew Patrick, HEA, and Chair of the O&D Committee, to provide _______________________________________________________________________________________________________________________________________ BPMC Minutes 5/17/24 Page 6 of 7 the report. Mr. Patrick noted that the inflow forecast for the year is slightly above normal. The lake levels continue to drop and are below historical norms. The next O&D meeting is on May 24, 2024. Chair Janorschke noted the report included discussion regarding up to four months of islanding. He asked for the O&D Committee to discuss how many years the islanding was expected. Mr. Patrick agreed to provide a response at the next meeting. Chair Janorschke believes that there will be relay settings study completed. He asked Mr. Patrick for an update. Mr. Patrick indicated that the development of the scope is still being refined by CEA and HEA. Additional information will be provided at the next BPMC meeting. There were no other comments or questions. MOTION: A motion was made by Vice-Chair Burns to enter into Executive Session to discuss financial information, including the E-3 planning, and personnel matters. Motion seconded by Mr. Thayer. A roll call was taken, and the motion to enter into Executive Session passed unanimously. 11. EXECUTIVE SESSION: 11:00 a.m. (Bylaws Section 5.11.4) – To discuss confidential financial matters and required Project Work and financing, the immediate knowledge of which may have an adverse effect on the Authority or Project. The Committee reconvened its regular meeting at 12:04 p.m. Chair Janorschke stated that no action was taken during executive session. 12. MEMBERS’ COMMENTS Mr. Miller thanked the presenters for their reports, discussions, and information. Mr. Thayer expressed appreciation to Vice-Chair Burns for his service. Mr. Izzo echoed the previous comments. Vice-Chair Burns expressed appreciation to Ms. Bertolini for the effective meeting. He conveyed his sincere pleasure for his years of service on the Committee. Vice-Chair Burns expressed his full confidence in Travis Million, GVEA. Ms. Sorenson thanked everyone for the great meeting. Mr. Paisner wished Vice-Chair Burns the best in his retirement. Chair Janorschke expressed appreciation to all. 13. NEXT MEETING DATE – June 21, 2024