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HomeMy WebLinkAbout2022.03.25 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA March 25, 2022 1. CALL TO ORDER Chair Izzo called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:03 a.m. A quorum was established. 2. ROLL CALL (for Committee members) Tony Izzo (Matanuska Electric Association [MEA]); John Burns (Golden Valley Electric Association [GVEA]); Lee Thibert (Chugach Electric Association [CEA]); Brad Janorschke (Homer Electric Association [HEA]); Curtis Thayer (Alaska Energy Authority [AEA]); and Rob Montgomery (City of Seward). 3. PUBLIC ROLL CALL (for all others present) Betty Caudle (phone) (Accu-Type Depositions); Jennifer Bertolini, Bryan Carey, Dona Keppers (phone), Linda MacMillan, Beazit Redzepi (phone) (AEA); Joel Paisner (Ascent Law Partners); Sherri Highers, Brian Hickey, Andrew Laughlin (phone), Russell Thornton (CEA); Clay Koplin (phone) (Cordova Electric Cooperative); Stefan Saldanha (phone) (Department of Law); Dan Bishop (phone), Sarah Lambe (phone), Pete Sarauer (phone) (GVEA); Larry Jorgenson, Martin Law (HEA); David Pease (phone), Matt Reisterer (phone), Tony Zellers (MEA); and Bernie Smith (Public). 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Thayer to approve the agenda. Motion seconded by Mr. Thibert. The motion to approve the agenda passed unanimously. 5. PUBLIC COMMENTS Clay Koplin, Cordova Electric Cooperative, stated he was on mute on the phone line and could not hear the audio until now. There were no public comments. Chair Izzo requested to go back to Item 4. Agenda Approval. There was no objection. Chair Izzo requested the Maker of the Motion, Mr. Thayer, and the Second, Mr. Thibert, to amend the agenda, moving Item 8A. New Business, Alaska Transmission Opportunities prior to Item 7. Executive Session. Mr. Thayer had no objection. Mr. Thibert had no objection. There was no objection to amending the Agenda, moving Item 8A. New Business, Alaska Transmission Opportunities prior to Item 7. Executive Session. 6. APPROVAL OF MEETING MINUTES — January 28, 2022, March 3, 2022, March 10, 2022 BPMC Minutes 3/25/22 Page 1 of 10 MOTION: A motion was made by Vice -Chair Janorschke to approve the Minutes of January 28, 2022, March 3, 2022, and March 10, 2022. Motion seconded by Mr. Thibert. The motion to approve the Minutes of January 28, 2022, March 3, 2022, and March 10, 2022 passed unanimously. 8. NEW BUSINESS A. Alaska Transmission Opportunities — Brief on DOE Discussions Chair Izzo informed that Mr. Koplin contacted him a few weeks ago. Chair Izzo noted that Mr. Koplin represents Alaska with the Department of Energy (DOE). Chair Izzo requested Mr. Koplin introduce himself and discuss Alaska transmission opportunities. Mr. Koplin discussed his previous partnerships with DOE on grid modernization projects in Cordova and the installation of a battery energy storage system. Mr. Koplin informed that he serves on DOE's Electricity Advisory Committee. Mr. Koplin discussed that the Infrastructure Act provides opportunities for investments in the State's Railbelt and transmission corridor. He described the typical process whereby Congress funds a program to be administered, implemented, and managed by a specific department, in this case, the DOE. Mr. Koplin explained that the Infrastructure Act provided guidance for DOE to structure the programs to deliver value and to meet Congress' goals. Industry information requests will be issued while structuring the program, followed by funding opportunities announcements. Mr. Koplin commented on the Transmission Development program information provided to members. He noted that the sections are in the formative stages of development, and he is currently advocating for Alaska's needs. Mr. Koplin discussed his upcoming schedule of meetings for the next several weeks in D.C. includes the Electricity Advisory Committee, congressional delegation, FERC, NRECA, and others. Mr. Koplin advised that after the opportunity announcements are released, and in the event that Cordova Electric decided to participate, he would have to declare a conflict of interest and would no longer provide input to DOE. Mr. Koplin highlighted that there are billions of dollars of funding for the programs, and he believes a few of the specific programs are applicable to the Railbelt transmission grid. He noted that some of the programs require a high level of State match. He commented that the increase in oil prices may be beneficial for the State at this time to access funding for the more competitive programs. Mr. Koplin requested feedback from members regarding how he can help during this process. Mr. Burns thanked Mr. Koplin for sharing the information and for working with DOE. He asked Mr. Koplin to discuss his views and insights on how best to move forward with the expansion of the Railbelt and ways he can be best utilized. Mr. Koplin explained the difficulties of transmission line planning and building with obstacles including opposition from stakeholder groups and land use issues. He noted that to the extent that Alaska has identified right-of-ways, there is an opportunity for less difficulty and the ability to move more quickly compared to other states. Mr. Koplin believes that organizations are going to be least ready to apply for and engage in opportunities during the first year of the program. Mr. Koplin acknowledged that he has not been following Railbelt issues over the last three or BPMC Minutes 3/25/22 Page 2 of 10 four years as he has engaged at the federal level. However, he feels there are several compelling characteristics of the Railbelt transmission corridor, including stranded assets. Mr. Koplin believes that there will be programs that add resilience to the grid and will better mobilize dispatched assets, which could free up Bradley Lake resources. He indicated that Section 40109 may provide access to funds used for planning for State energy programs, such as Alaska Energy Authority (AEA). Mr. Koplin explained that he wants to obtain a better understanding of Alaska's needs in order to advocate to DOE. Mr. Thayer expressed appreciation to Mr. Koplin for discussing these opportunities. Mr. Thayer noted that AEA has been working on a spreadsheet of the same opportunities that include the Railbelt, rural Alaska, and electric vehicles. He noted the review of the spreadsheet and cross- referencing will occur later in the meeting under Item 8C. Mr. Thayer discussed that the Governor's Office is working with the Legislature regarding federal receipt authority for AEA and other State agencies. They are working to help identify what is competitive and are working with Department of Law to help determine if the proceeds that the utilities pay to Bradley Lake and the IMC could be considered State match by the utilities for federal funding. Mr. Thayer suggested creating a BPMC working group to continue this conversation and to focus on the hundreds of millions of dollars of funding that is potentially available for the Railbelt. Mr. Koplin discussed that he will be in Anchorage April 81h through the 101h to coordinate efforts. He indicated that he is available to advocate in Juneau as well. Mr. Thayer commented there will be a meeting next week during which Governor Mike Dunleavy is collaborating with Senator Natasha Von Imhof to discuss the creation of an Office of Infrastructure based on State coordination for the Infrastructure Bill. Mr. Koplin mentioned his support that Deputy Secretary for the Office of Electricity Patricia Hoffman attend the Alaska Sustainable Energy Conference. Mr. Thayer expressed appreciation to Mr. Koplin for his efforts regarding the conference. Chair Izzo expressed appreciation to Mr. Koplin for his involvement in this critical coordination for Alaska's needs. There were no additional questions. MOTION: A motion was made by Mr. Thayer to enter into Executive Session to discuss 1) confidential matters, attorney -client communications, 2) matters that the immediate knowledge of which may have an adverse effect on the Project or the Authority. Motion seconded by Mr. Burns. The motion to enter into Executive Session passed unanimously. 7. EXECUTIVE SESSION: 10:24 a.m. (Bylaws Section 5.11.4) — To discuss confidential attorney -client communications the immediate knowledge of which may have an adverse effect on the Project or the Authority, and to discuss matters the immediate knowledge of which would clearly have an adverse effect upon the finances of the Authority or the Project. The Committee reconvened its regular meeting at 11:48 a.m. Chair Izzo advised that no formal action was taken on the matters discussed during Executive Session. 8. NEW BUSINESS B. FY23 BPMC Budget BPMC Minutes 3/25/22 Page 3 of 10 Beazit Redzepi, AEA, reviewed the FY23 Draft Budget included in the packet. The Budget Summary page lists the revenues and expenses for Bradley Lake, Battle Creek, and the SSQ Line. Bradley Lake's FY23 Draft Budget amount is approximately $23 million. Mr. Redzepi noted that approximately $10.7 million in the budget is for Operations & Maintenance (O&M) and capital projects. The remaining amount is to fund the excess payment agreement. He reviewed the expenses listed in the draft budget. Mr. Redzepi discussed Battle Creek revenues of approximately $3.58 million and he reviewed the Battle Creek expenses. Mr. Redzepi outlined that the SSQ Line contributions are approximately $725,000, and he reviewed the SSQ Line expenses. Mr. Redzepi discussed Schedule A, Capital Purchases that are not funded by the R&C Fund, in the amount of $3.5 million. This is a significant increase from last year. One of the major factors is the SSQ Design line item of $2 million. Mr. Redzepi summarized Schedule B, the O&M Budget found on page five. The total amount is approximately $818,000 less than last year's budget. The total O&M Budget is approximately $5.7 million. He reviewed the expense line items listed. Mr. Redzepi reviewed Schedule C, detailing the monthly utility contributions, with the approximate contributions of CEA at $503,000, HEA at $107,000, MEA at $123,000, GVEA at $151,000, and Seward at $9,000. Mr. Redzepi discussed Schedule D. R&C Fund Disbursement and Repayments, found on page 15. The two disbursements are the Fire Alarm System Replacement for $1.5 million and the Spillway Raise & Expansion project for $1.5 million. The total repayments are projected at $2.8 million. Mr. Redzepi continued the presentation reviewing Schedule E, Battle Creek Capital Purchases. The three items in the draft budget total $90,000. Schedule F is the Battle Creek O&M budget totaling approximately $427,000. Schedule G is the Battle Creek monthly payments, with the approximate contributions of CEA at $118,000, HEA at $124,000, MEA at 53,000, and Seward at $4,000. There were no questions. Mr. Redzepi discussed Schedule H, Capital Purchases for SSQ Line, and noted that there are no capital purchases in FY23 Draft Budget. Schedule I is the SSQ Line O&M budget totaling approximately $337,000. Schedule J is the SSQ Line monthly payments, with the approximate contributions of CEA at $34,000, HEA at $7,300, MEA at $8,300, GVEA at $10,200, and Seward at $600. Mr. Burns requested additional information on the line item entitled Install New Bradley Microwave System on Schedule A, page four. Larry Jorgensen, HEA, informed that the existing microwave system is on an unlicensed frequency and AT&T has bought the spectrum and are constructing a tower on the Homer Spit. Bradley Lake has to change to a licensed frequency which requires new equipment. This will bring Bradley Lake into Critical Infrastructure Protection (CIP) compliance because the microwave frequency will now be encrypted. Chair Izzo expressed appreciation for the work conducted by the Budget and Audit Subcommittee (BAS) on the Draft Budget. Matt Reisterer, MEA, commented that the Draft Budget will require routine amendments as the year progresses. He noted that the Draft Budget accounts for the excess payment and will be replaced with actual debt service at a later point. Mr. Reisterer discussed that the pay -down of the SSQ debt is not final and that amount will be updated. Other matters that the Committee is aware of include labor issues that will require typical amendment processes. BPMC Minutes 3/25/22 Page 4 of 10 Mr. Reisterer informed that the Budget Committee requested AEA to research the $5 million annual payment limit to the R&C fund, which allows the more significant costs to be amortized over four years. He discussed that since the bonds are paid, AEA determined that there is no longer a $5 million limit. Mr. Reisterer indicated that the Budget Committee was comfortable with exceeding the $5 million payment if it was useful to utilize the R&C fund. He wanted to make BPMC aware that this is a new availability and any recommendations from the BAS would come before the Board. Mr. Reisterer expressed appreciation to Sherri Highers, CEA CFO, for her efforts on the Special Committee and the information provided in executive session. He thanked the new personnel with AEA for creating the budget and noted that Bob Day, HEA, worked directly to transfer the information. Mr. Reisterer thanked Dona Keppers, AEA CFO, Mr. Redzepi, and the representatives from GVEA and HEA for their efforts. There were no further questions. MOTION: A motion was made by Vice -Chair Janorschke to approve the FY23 BPMC Budget, as presented. Motion seconded by Mr. Thayer. The motion to approve the FY23 BPMC Budget passed unanimously. C. Infrastructure Investment Act Funding (IIJA) Mr. Thayer informed that AEA has been working with the Administration on identifying potentially available funding for AEA through the Infrastructure Investment and Jobs Act (IIJA). The information provided is a living document. Mr. Thayer requested that members review the document with their staff and advise Mr. Thayer if there are any misidentifications or missed opportunities. He noted that the utilities and the new Railbelt Regional Coordinator will be called upon to work on developing competitive grants offered within IIJA. Mr. Thayer commented that AEA has requested the Administration to get receipt authority for the funding that will definitely be received. AEA will also ask for future receipt authority as applications of competitive grants become successful. There were no questions. 9. OLD BUSINESS A. Required Project Work i. Resolution 22-02 — Scope of Services for Consultant to BPMC Mr. Thayer requested to withdraw the resolution from today's agenda. Chair Izzo asked Joel Paisner, Ascent Law Partners, for guidance on procedure. Mr. Paisner indicated that a voice vote withdrawing the resolution would be helpful and would be reflected in the minutes. MOTION: A motion was made by Mr. Thayer to withdraw Resolution 22-02 from today's agenda. Motion seconded by Mr. Thibert. The motion to withdraw Resolution 22-02 from today's agenda passed unanimously. ii. Resolution 22-03 — Providing for Advance Payment for Required Project Work Mr. Paisner explained that Resolution 22-03 provides for the advance payment for required BPMC Minutes 3/25/22 Page 5 of 10 project work prior to the end of FY22. He believes that this is at the request of AEA. MOTION: A motion was made by Mr. Thibert to approve Resolution 22-03 providing advance payment for required project work, as presented. Motion seconded by Vice - Chair Janorschke. The motion to approve Resolution 22-03 providing advance payment for required project work passed unanimously. iii. Resolution 22-04 — Financing and Development of Required Project Work Mr. Paisner recommended that Resolution 22-04 is withdrawn for consideration from today's agenda. He noted that this resolution is related to required project work review and requires additional guidance from DOL. Mr. Paisner advised that a special meeting may be necessary to address this resolution. MOTION: A motion was made by Vice -Chair Janorschke to withdraw Resolution 22-04. Motion seconded by Mr. Thayer. The motion to withdraw Resolution 22-04 passed unanimously. Chair Izzo asked if there were any other matters to discuss under Old Business. Discussion occurred regarding the consultant retained by BPMC. The proposal is that the title for the consultant will be Executive Director of Railbelt Regional Coordination. The second portion of the proposal is to direct Counsel to develop a policy to describe the duties and the scope of authority for the consultant. MOTION: A motion was made by Mr. Burns to give the title of Executive Director of Railbelt Regional Coordination to the consultant retained by the BPMC, and to direct Counsel to develop a policy to describe the duties and the scope of authority of the consultant. Motion seconded by Mr. Thayer. Chair Izzo clarified that the consultant, Brian Hickey, was approved in a prior motion under a Memorandum of Understanding (MOU). The motion to give the title of Executive Director of Railbelt Regional Coordination to the consultant retained by the BPMC, and to direct Counsel to develop a policy to describe the duties and the scope of authority of the consultant passed unanimously. 10. OPERATORS REPORT Chair Izzo requested that Vice -Chair Janorschke introduce the presenters of the Operator's Report. Vice -Chair Janorschke invited Mr. Jorgensen and Martin Law, HEA, to provide the update. He noted that there was a recent scheduled outage at Bradley Lake and Mr. Jorgensen has been filling in for Mr. Day since he retired in February. Mr. Jorgensen discussed that the annual outage had not been completed in its normal way in a couple of years. There was additional work that required attention. Some of the larger items included the successful replacement of the failing UPF system, the successful replacement of the old HVR system, and work on redundancy to some of the computer systems. BPMC Minutes 3/25/22 Page 6 of 10 Mr. Jorgenson introduced Mr. Law, who replaced Mr. Day as superintendent. Mr. Law has significant hydro experience and prior Alaska experience living in North Pole and working at Eielson Air Force Base for six years. Mr. Law comes from the Ice Harbor Dam, which is the last dam on the Snake River before it dumps into the Columbia River. Mr. Law discussed his personal and professional background. Mr. Law continued the review of the Operator's Report and noted that a new operator was hired, and the project is now fully staffed. The two trainees will be dispatched to the combined cycle plant for training. Chair Izzo welcomed Mr. Law. Mr. Jorgensen continued the report and informed that work on the fire system is ongoing and progressing well with the contractor. He reviewed that ABB conducted testing analysis of the GIS substation. An outage is scheduled for July 5t" through 8th to complete the testing and to develop a plan to replace the old actuators. ABB anticipates having a technician certified to work in Alaska. After the work is completed, the substation will be up to specifications. Mr. Jorgenson noted that the architect submitted the 95% review on the new residential duplex building. The review is being examined and comments will be provided to the architect. The hope is that the RFP can be developed and posted soon. Vice -Chair Janorschke welcomed Mr. Law and expressed appreciation to Mr. Jorgensen for his efforts. Vice -Chair Janorschke asked if the duplex building is expected to be constructed before the end of this construction season. Mr. Law indicated that the duplex building is expected to take two years to construct. Vice -Chair Janorschke commented that the lake levels are below their historical average. He asked how the snowpack compares this year to previous years. Mr. Law indicated that the sites are showing above average for this time of year. He noted the observation of wet and heavy snow at the site. Mr. Law believes there will be good water coming in. The forecast from National Oceanic and Atmospheric Administration (NOAA) does not come until later in the year. The water use has been based on an above -average forecast. The forecast reduced toward the end of the year. Mr. Burns welcomed Mr. Law to the position. He expressed appreciation for the regular emails containing the water level information. Mr. Thibert welcomed Mr. Law to the position. There were no additional questions. 11. O&D REPORT Chair Izzo invited Russ Thornton, CEA, to give an overview of the O&D Report included in the packet. Chair Izzo expressed appreciation for the update on the capacity transfer analysis. Mr. Thornton noted that the O&D meeting occurred on March 4, 2022. No actions were taken, but several issues were discussed. The current usage and a plot of the lake levels are included in the report. The usage has been reducing over the last several months. This is expected to continue until the inflows increase. There were no questions. 12. COMMITTEE REPORTS A. Budget to Actual Chair Izzo noted that the Budget to Actual Expense Report provided in the packet contains comprehensive information. He requested Ms. Keppers provide a brief summary and highlight BPMC Minutes 3/25/22 Page 7 of 10 the important content. Ms. Keppers noted that the report is for the period of July 1, 2021, through December 31, 2021. She reviewed the summary page of the period with revenues at about $6.5 million and expenses at about $3 million. The current year surplus is about $3.4 million. The current year surplus for the period was amended in January. Ms. Keppers discussed the capital purchases shown on Schedule A-1. The budgeted amount is $909,000. There was a short -spend of about $150,000. Work is anticipated to resume in the spring. Ms. Keppers reviewed the summary by expense type shown on Schedule B. She noted that most of the areas are underbudget because of the current season. Ms. Keppers brought the Committee's attention to Schedule D, R&C Fund Disbursements and Repayments. She noted that the substantial work on the residence project and the spillway raise and expansion project had not begun as of December 31st Ms. Keppers reviewed the Battle Creek revenues of approximately $1.8 million and expenses of approximately $1.6 million. The current year surplus is approximately $122,000. Ms. Keppers discussed capital projects as shown on Schedule E and the detailed costs on Schedule F. Ms. Keppers reviewed the SQ Line revenues of approximately $1.9 million and expenses of approximately $1.2 million. The current year surplus is approximately $717,000. Ms. Keppers discussed capital projects as shown on Schedule H and the detailed costs on Schedule I. There were no questions. B. Special Committee on Required Project Work Vice -Chair Janorschke indicated that most of the information has been reviewed previously during today's meeting in the updates provided by Ms. Highers and Mr. Bishop. Vice -Chair Janorschke noted a suggestion provided by Mr. Bishop MOTION: A motion was made by Vice -Chair Janorschke authorizing CEA to bill AEA for work on SSQ Line design and procurement. Motion seconded by Mr. Thibert. Mr. Paisner commented that Resolution 21-02 anticipated that one of the utilities would handle some of the procurement and engineering for the line. Mr. Burns asked Mr. Paisner if the proposed motion is unnecessary because it is subsumed in an earlier resolution. Mr. Paisner disagreed. He noted that the Committee already contemplated this subject and that it is proper to move forward by motion. Vice -Chair Janorschke requested Ms. Highers to provide additional comments. Ms. Highers stated for the benefit of an open session, the Railbelt CFOs are meeting during the first week of April to review the lenders' proposals. A financing package will be proposed to the BPMC this year. Mr. Thayer asked if Ms. Keppers is involved in that process. Ms. Highers noted that she will have to check the appointment. Mr. Paisner asked if the Committee wanted to confirm an assignment to the Engineering Subcommittee to gather materials to provide to the engineering consultant. Chair Izzo agreed to the suggestion under the Committee Assignments agenda item. Mr. Thibert asked if the amount of the charge is known. Vice -Chair Janorschke indicated he does not know the amount. BPMC Minutes 3/25/22 Page 8 of 10 Mr. Thayer commented that it would be nice to have an amount. Discussion regarding the amount occurred. Mr. Bishop indicated that he does not have the amount and that the work includes design and procurement. Mr. Thayer suggested to bring this motion forward at the next meeting. He believes it is important to have an amount. Bryan Carey, AEA, commented that the BPMC authorized an amendment at the October meeting for $750,000 for CEA to begin design. The work began within the last month or so and the current amount is probably within the order of tens of thousands of dollars. Chair Izzo suggested that an amount should be finalized. He anticipates that there will be a special meeting called before the regular May meeting. Vice -Chair Janorschke withdrew the motion. Mr. Thibert withdrew the second. Vice -Chair Janorschke indicated that concludes his update. There were no additional questions. 13. COMMITTEE ASSIGNMENTS Chair Izzo assigned Mr. Carey and David Lockard, AEA, to work with the Special Committee's Engineering Subcommittee to provide the necessary documents to the AEA contractor regarding project required work. Chair Izzo assigned Mr. Paisner to draft a motion regarding BPMC Committee member authority relating to the discussion in executive session. 14. MEMBERS COMMENTS Vice -Chair Janorschke expressed well wishes to Mr. Thibert during his retirement. Mr. Burns expressed appreciation to Mr. Koplin for sharing his information today. Mr. Burns reiterated the importance of being focused and coordinated regarding the infrastructure funding. He thanked staff for the materials provided for today's meeting. Mr. Burns welcomed Mr. Law. Mr. Thayer thanked everyone. He believes today's meeting has given a path forward on several points. He expressed appreciation for the efforts of the Board in completing approvals in a timely fashion. He thanked Ms. Highers and Mr. Paisner for their work. Mr. Thayer congratulated Mr. Thibert on his retirement and expressed appreciation for his work, especially over the last three years with AEA. Chair Izzo welcomed Mr. Law and thanked Mr. Jorgensen for his efforts. Chair Izzo commented that Bradley Lake is well -managed and well -run. He expressed appreciation to Vice -Chair Janorschke and HEA. Chair Izzo congratulated Mr. Hickey on his new role. Chair Izzo wished the best to Mr. Thibert during retirement and noted that he will leave behind a chasm, which will be difficult to fill. Mr. Thibert expressed appreciation to everyone at the BPMC and stated it has been an honor to work in the esteemed organization. He thanked Mr. Thayer for his efforts with AEA. Mr. Thibert commented on the fantastic efforts by Ms. Highers regarding the financing. He wished Mr. Hickey good luck on the great opportunity. Mr. Thibert complimented the outstanding work of BPMC Minutes 3/25/22 Page 9 of 10 r the subcommittees. He extended the invitation to all to visit him during retirement. Mr. Montgomery commented that he would have preferred to be in -person at the meeting. He agrees that engaging over the phone is difficult. Mr. Montgomery wished Mr. Thibert the best during retirement. Mr. Thayer added a comment of appreciation to Mr. Carey for delaying his retirement plans to serve in the role as Director of Owned Assets. 15. NEXT MEETING DATE - May 20, 2022 Chair Izzo indicated that it is likely he will call a special meeting prior to May 20, 2022. 16. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 12:44 p.m. t;urtis i nayer, secretary BPMC Minutes 3/25/22 Page 10 of 10