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HomeMy WebLinkAbout2022.07.29 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA July 29, 2022 CALL TO ORDER Chair Izzo called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 9:56 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]); Arthur Miller (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) Sunny Morrison (phone) (Accu-Type Depositions); Jennifer Bertolini, Bryan Carey, Dona Keppers, Mark Ziesmer (AEA); Joel Paisner (Ascent Law Partners); Brian Hickey (BPMC); Andrew Laughlin, Russell Thornton (CEA); Dan Bishop, Pete Sarauer, Sarah Villalon (GVEA); Larry Jorgenson, Martin Law, Andrew Patrick (HEA); David Pease, Matt Reisterer, Jon Sinclair, Tony Zellers (MEA); Fred Eoff (PFM Financial Advisors); and Bernie Smith (Public). 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Thayer to approve the agenda. Motion seconded by Mr. Montgomery. The motion to approve the agenda passed unanimously. 5. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES — June 24, 2022, July 15, 2022 MOTION: A motion was made by Mr. Thayer to approve the Minutes of June 24, 2022, and July 15, 2022. Motion seconded by Vice -Chair Janorschke. Jennifer Bertolini, AEA, noted that she corrected two typographical errors after the Minutes were included in the packets. The Maker of the Motion and Second accepted the changes. There were no objections. The motion to approve the Minutes of June 24, 2022, and July 15, 2022 passed unanimously. MOTION: A motion was made by Vice -Chair Janorschke to enter into Executive Session to discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or Project. Motion seconded by Mr. Montgomery. BPMC Minutes 7/29/22 Page 1 of 6 The motion to enter into Executive Session passed unanimously. 7. EXECUTIVE SESSION: 10:03 a.m. (Bylaws Section 5.11.4) — To discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or Project. The Committee reconvened its regular meeting at 11:49 a.m. Chair Izzo advised that no action was taken on any matters discussed during Executive Session. 8. NEW BUSINESS A. Annual Meeting and Election of Officers Chair Izzo requested Joel Paisner, BPMC Counsel, to conduct the election of officers. MOTION: A motion was made by Chair Izzo to nominate and elect Vice -Chair Janorschke as Chair and to nominate and elect Mr. Burns as Vice -Chair. Motion seconded by Mr. Miller. There were no other nominations. The motion to elect Mr. Janorschke as Chair and Mr. Burns as Vice -Chair passed unanimously. Mr. Paisner advised that AEA will continue to serve in the role of Secretary. Mr. Thayer agreed, and there were no objections. Mr. Izzo transitioned the meeting to the new Chair, Chair Janorschke. B. FY23 Budget Amendment Chair Janorschke requested Dona Keppers, AEA, present on the next item. Ms. Keppers reviewed the FY23 Proposed Budget Amendment 3. The amendment increases the insurance budget line item to accommodate the revised annual cost from $650,000 to approximately $985,000. Page three highlights the amendment to the Utility Contribution line item of $401,015, consisting of the amendments to the Operations & Maintenance line item of $334,179 and Transfer To Operating Reserve line item of $66,836. Ms. Keppers directed attention to page 13 and reviewed the proposed amendment as shown within the annual budget. The total Bradley Lake budget increases from $6,465,940 to $6,800,119. Ms. Keppers discussed the cash flow impact to the monthly utility contributions shown on page 14 in Column F. The proposed amendment increases the total utility monthly contribution from $1,822,664 to $1,862,765. The new monthly contribution amounts will go into effect on September 1, 2022. MOTION: A motion was made by Vice -Chair Burns to approve the third amendment of the Fiscal Year 2023 Bradley Lake Hydroelectric Project Budget. Motion seconded by Mr. Montgomery. Mr. Thayer clarified that the amendment increases the annual insurance amount by $334,179 to accommodate the revised annual cost increase. BPMC Minutes 7/29/22 Page 2 of 6 Vice -Chair Burns commented that the budget reads that insurance costs have increased from $653,000 in 2020 to $680,000 in 2021, and then to $1.4 million in 2022. Mr. Thayer explained that the insurance increased from about $650,000 to $1.3 million. A new insurance carrier was sought with the intent to decrease the cost within the range of $680,000 and $1.3 million. The decision was made by the group to place the budget line item at the previous level of $650,000 and amend the budget when the cost was known. Mr. Thayer commented that in hindsight, what probably should have occurred was to place a number in the budget between the previous two years' amounts, which would be closer to $1 million and a budget amendment would not have been necessary. The insurance cost amount is an increase from two years ago, and is a decrease of $300,000 from last year. The motion to approve the third amendment of the Fiscal Year 2023 Bradley Lake Hydroelectric Project Budget passed unanimously. 9. OLD BUSINESS A. Required Project Work i. Special Committee on Required Project Work Chair Janorschke provided the update and indicated that an email was distributed outlining the Special Project Committee work conducted by the Engineering Subcommittee. The list of projects was estimated at $269.5 million. Chair Janorschke expressed his understanding that Brian Hickey, Executive Director BPMC, is going to lead the effort to revise the list of projects and to determine which projects are required project work. There were no comments or questions. ii. Bond Financing Update Chair Janorschke informed that Sherri Highers, CEA, is unavailable for today's meeting. He asked Matt Reisterer, MEA, to provide an update. Mr. Reisterer informed that the Committee selected a lender. A draft term sheet has been presented to AEA and discussion is ongoing. The timeline for closing remains at December 15, 2022. Mr. Reisterer believes the timeline for closing can be accelerated. The lender has previous underwriting history with AEA. The utility approvals are underway. Mr. Reisterer discussed that this process is going well and that the future goals are to pursue government grants, keep the funding through the Project, lower the regulatory risk to zero, and fund through the cost power adjustments. Chair Janorschke requested clarification that the lender has offered up to $270 million and that the resolutions for each participant's board will approve limit amounts up to the excess bond payments. Mr. Reisterer agreed. The proposed transaction in the resolution is obtaining the financing up to an amount that equates to the debt service and the excess payments. At closing, the loan amount will vary based on the interest rate, but cannot exceed the excess payment amount. The utility board resolutions approve obtaining the financing up to the excess payment amount. There were no additional comments or questions. iii. Railbelt Regional Coordination Update Chair Janorschke requested Mr. Hickey provide the update and to discuss a motion approving the recommendation. Mr. Hickey expressed appreciation to those who participated in the strategic planning session last week. He hopes to have a draft of an MOU by the end of BPMC Minutes 7/29/22 Page 3 of 6 August. Mr. Hickey discussed unrelated issues regarding his work last with Alaska Center for Energy and Power (ACEP) regarding modeling for transitions of the Alaskan economy to a low carbon economy. Work is ongoing to educate the team so that the modeling of the Railbelt grid is robust and viewed from an economic and reliability standpoint. Mr. Hickey discussed his meeting with the Carbon Capture Utilization and Storage Work Group. He was approached to be a liaison between the Railbelt Utilities and the Work Group. Mr. Hickey noted his upcoming meeting and explained that the Work Group consists of the State of Alaska, several oil companies, and several service companies, who are reviewing the possibility of a carbon capture hub located on Cook Inlet. Mr. Hickey reported that the third lobbying candidate was interviewed a few days ago and the tactical team was very impressed. He noted that the general consensus recommendation from the group was to accept the Brownstein Hyatt proposal. The recommended motion authorizes Mr. Hickey and Mr. Paisner to negotiate a contract. Mr. Montgomery indicated that all three of the firms were well -qualified. Brownstein was selected because the group was comfortable with the strategic federal approach. Future work may be conducted with the other candidates. There were no other comments or questions. MOTION: A motion was made by Mr. Montgomery to accept the proposal from Brownstein Hyatt to provide government relation services to the BPMC and to direct the Counsel to work with the BPMC Executive Director for Railbelt regional coordination to negotiate a contract agreement consistent with the proposal. Motion seconded by Mr. Miller. The motion passed unanimously. 10. OPERATORS REPORT Chair Janorschke requested Martin Law, HEA, provide the Operator's Report. Mr. Law discussed that the unit statistics are listed on the report. The Bradley Lake duplex work is progressing. Work on the dam access road continues. Battle Creek Diversion work includes repairs on the gabion basket and the addition of the steel plate to improve measurement readings on the MIF outlet. Additional evaluation will continue. Chinook Fire personnel will return in August to complete the punch list for the fire system. RESPEC has begun submitting documents for the project -wide fire alarm system refresh. Progress is being made. There has been no lost time or reportable accidents. The next safety meeting is August 1. A barge trip is scheduled today for the Department of Fish and Game's weir equipment. The new snow machines will be loaded on the same barge. Mr. Law discussed that there was no change to the scheduled annual maintenance outage dates. The scope development continues. The list of contractors and visitors is included in the report. Mr. Law reviewed the pictures shown within the report. He noted that Mr. Carey conducted a visit and tour for AEA Board members and staff. Mr. Law discussed that the Iliamna Volcano can be seen from the Project on a clear day. The Battle Creek Diversion monument plaque placement has been selected. There is still snow near the Battle Creek Diversion. The forebay is full and water is flowing. The turbine deck has been refreshed with new paint. Mr. Law showed the picture of the turbine pit and divider arm linkages of the operating facility. BPMC Minutes 7/29/22 Page 4 of 6 Chair Janorschke commented that he visited the facilities recently and everything looked great. There were no questions. 11. COMMITTEE REPORTS A. O&D Report Chair Janorschke invited Russ Thornton, CEA, to present the O&D Report. Mr. Thornton indicated the O&D meeting occurred telephonically on July 8. Discussion included the current activities and projects. The water level has continued to increase and is above the forecast by a significant amount. Last year at this time, the water level was below the forecast. The projection in June was at the level of 1,120 feet. The level at the time of the water report was 1,126 feet. This is a substantial amount of water for the month of June. Mr. Thornton answered questions from the previous BPMC meeting. The first question regarded that the Battle Creek percentages reflected in the water tracking report were different than the percentages in the call-back resolution. Mr. Thornton informed that analysis was conducted on the issue and a better understanding has been reached. He indicated that there are continuing discussions with accounting personnel regarding the source of the map difference and how to move forward. Mr. Thornton expects to report back at the next meeting. Mr. Thornton discussed the question regarding Bradley dynamic scheduling software and whether or not there was enforcement of capacity limits for participant shares. He confirmed that part of the documentation that was distributed contains the enforcement of capacity limits. Mr. Thornton indicated that a test was conducted in coordination with GVEA to confirm that the system does limit capacity. The question was in relations to the Capacity Transfer Study that showed some of the members above their share. Mr. Thornton researched that issue and found two root causes. One was a period of two days where the capacity was limited to 80 MWh at the CEA plant. When the CEA dispatchers allocated CEA overtaking during that period, they used the 90 MWh limit as the basis of the calculations, which was an error. Mr. Thornton indicated the other issue regarded HEA overtaking their share during an islanding period. He explained that everyone is aware that HEA can exceed their share during an islanding period. Mr. Thornton noted that there is a slide in the presentation regarding the capacity limit tests conducted. He discussed that the last question regarded Bradley BDS regulation status and who has the capability and who has implemented it. MEA has the capability and has programmed it into their SCADA system. The tests have worked. GVEA and HEA make the changes manually, even though they have the capability in the BDS system. CEA does regulate with Bradley Lake. Mr. Thornton discussed the question about the capacity factor of the tie. He showed a histogram on the 2020 and 2021 tie flows to provide the average, maximum, minimum, and standard deviation. Mr. Thornton believes the 2020 histogram is more typical of the tie flow performance. Chair Janorschke expressed appreciation for the work by the O&D. He found the tie flow histograms interesting. The line is being used about 50% to 60% of the time. He recommended staff to be prepared to answer the question regarding the upgrades, since there is not full utilization currently. There were no questions. 12. COMMITTEE ASSIGNMENTS BPMC Minutes 7/29/22 Page 5 of 6 Chair Janorschke asked past -Chair Izzo if he recalls any outstanding assignments. Mr. Izzo indicated that there may be some outstanding assignments. He suggested that the Committees provide an update on any open matters. Chair Janorschke assigned Mr. Paisner to work with the O&D Committee's recommendations from the Battle Creek allocation and to provide an explanation of the delta. The expectation is to have the information at the next meeting. There were no questions. 13. MEMBERS COMMENTS Mr. Miller expressed appreciation for Mr. Hickey's efforts. Mr. Thayer expressed appreciation for the good meeting. He introduced Mark Ziesmer, AEA, and welcomed him as the new Project Controller. Mr. Thayer thanked Ms. Keppers for her work on the term sheets moving forward. A member expressed appreciation to AEA for their efforts. He congratulated Mr. Miller, and looks forward to continued progress this next fiscal year and going into the next legislative session. A member expressed congratulations to the incoming and outgoing Chairs. He thanked AEA for their work. He congratulated Mr. Miller. Mr. Burns expressed appreciation for the great meeting and for the reports presented by the Committees. He is excited about the BPMC required project work. Chair Janorschke thanked everyone who helped prepare and plan for the meeting. He expressed appreciation to Mr. Hickey for his efforts in working with all of the participants. Chair Janorschke commented that he expects his role as head of the Required Project Committee will be transitioned to Mr. Hickey's leadership. Chair Janorschke believes Mr. Hickey will facilitate the communication between the engineering group and the finance group. 14. NEXT MEETING DATE - September 30, 2022 Chair Janorschke noted the next meeting is September 30, 2022, and reminded members that date is the day after the close of the NRECA Regions 7 and 9 Conference in Portland. 15. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 12:23 p.m. r� T ny lzzo, Curtis Thayer, Secretary BPMC Minutes 7/29/22 Page 6 of 6