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HomeMy WebLinkAbout2022.09.30 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA September 30, 2022 1. CALL TO ORDER Chair Janorschke 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) 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 Rob Montgomery (City of Seward). 3. PUBLIC ROLL CALL (for all others present) Sunny Morrison (Accu-Type Depositions); Jennifer Bertolini, Bryan Carey, Dona Keppers, Bill Price, Mark Ziesmer (AEA); Alan Mitchell (sp) (Analysis Unidentified); Joel Paisner (Ascent Law Partners); Brian Hickey (BPMC); Andrew Laughlin, Will Smith, Russell Thornton, Matt Clarkson (CEA); Dan Bishop, Pete Sarauer, Sarah Villalon (GVEA); Larry Jorgenson, Martin Law, Andrew Patrick (HEA); David Pease, Matt Reisterer, Tony Zellers (MEA); Bill Palooza, and Bernie Smith (Public). 4. AGENDA APPROVAL Chair Janorschke recommended amending the agenda moving Items 9., 10., and 11., after Item 6, moving Item 7. after Item 12., and removing Items 8C., 8D., 8E. from the agenda. He believes these changes will ensure the meeting is completed by 12:00 p.m. MOTION: A motion was made to approve the agenda as amended, moving Items 9., 10., and 11., after Item 6, moving Item 7. after Item 12., and removing Items BC., 8D., 8E. Motion seconded. The motion to approve the amended agenda passed without objection. 5. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES —July 29, 2022 MOTION: A motion was made by Mr. Thayer to approve the Minutes of July 29, 2022. Motion seconded by Mr. Montgomery. The motion to approve the Minutes of July 29, 2022 passed without objection. 9. OLD BUSINESS A. Required Project Work BPMC Minutes 9/30/22 Page 1 of 7 L Special Committee on Required Project Work Chair Janorschke requested Brian Hickey, BPMC, present the information. Mr. Hickey informed that the contractor HDR is working on task orders for the SQ Line. Ongoing project reports and updates will be shared with the BPMC and will show the cumulative costs and work structure. There were no other comments or questions. ii. Bond Financing Update Chair Janorschke asked Dona Keppers, AEA, to give the Bond Financing Update. Ms. Keppers discussed that Jennifer Bertolini, AEA, is providing Committee members with the draft finance schedule of the bond financing package and a copy of the memorandum to Mr. Thayer summarizing the information. The Board packet contains the previous term sheet. One change has been made on the last page of the term sheet in which the governing law is Virginia and the jurisdiction is the Alaska Superior Court located in Anchorage. Ms. Keppers reviewed that the AEA working group consists of bond counsel, Department of Law (DOL) representatives, and AEA staff. The working group has compiled the bond financing documentation necessary for the proposed financing of the required project work. The required letters of intent are being sent to the Alaska Legislature and to other required parties. Ms. Keppers noted that the resolution included in the Board packet was prepared by counsel and will be discussed later in the meeting. The goal is to pass the BPMC resolution and then to present information to the AEA Board for their review on October 26, 2022. Mr. Izzo thanked Ms. Keppers for the information and expressed full support of the timeline. He noted that the next BPMC meeting will likely occur after the closing date. He requested that the BPMC is advised of the fixed rate and the total amount when it is determined. Ms. Keppers agreed. She explained that the current process is being reviewed by bond counsel and the financial advisor. There is a significant list of documents that have been received from bond counsel and staff is working through those. Negotiations on terms and final details for the agreement are ongoing. Staff will provide the information to the Board as soon as it is finalized. Ms. Keppers highlighted that the information within the financing schedule is in draft form in order to accommodate revisions by the Board. She requested that members review the information and provide any modifications to staff. The goal is a close date of December 2, 2022. There were no additional comments or questions. B. Railbelt Regional Coordination Update Chair Janorschke requested Mr. Hickey provide the update. Mr. Hickey informed that he submitted comments on the hydroelectric efficiency RFI for the Railbelt utilities. Evaluation of the most recent Notice of Intent (NOI) is occurring now. The three topic areas of the NOI covers grid resiliency, smart grid, and grid innovation. Mr. Hickey believes it is a good opportunity worthy of serious focus. Three concept papers will have to be drafted and submitted to DOE by year-end and three grant applications have to be submitted within the first quarter of 2023. Mr. Hickey advised that he is preparing a budget amendment to engage a grant writer that is in addition to the fee that is currently paid to Brownstein. The budget amendments will also include updated line items for the estimates of the project engineering sheet, as well as the development of a community benefit plan. Mr. Hickey discussed that the Grid Resilience and Innovation Partnerships (GRIP) contain 10 BPMC Minutes 9/30/22 Page 2 of 7 awards, three of which are reserved for small utilities like Alaska's Railbelt to a maximum of $100 million. The award is limited by the three-year spend on grid resiliency. There will be 25 to 40 grants in the $30 million range for smart grids. The coordination of the multiple battery systems are expected to be utilized for the demonstration project for the smart grid in the central region. Mr. Hickey explained there will be 25 to 40 grants in the $50 million to $250 million range for grid innovation. For inter -regional transmission projects, the cap is raised to $1 billion. Mr. Hickey believes that accessing the opportunities will take a concerted effort by the utilities over the next four to six months. Mr. Thayer asked if there is a requirement for a partnership with a particular entity when applying for the three grants. Mr. Hickey noted that staff is working from a draft NOI and comments are due on October 14. He discussed that the reviewers look for and encourage partnering and teaming. Each of the three areas has different partnering requirements and different eligible entities. Mr. Hickey explained that in the third area of grid innovation, the State is the only eligible entity. He believes there may be some opportunities in the Homer region to partner with Tribes and other entities. Mr. Thayer noted that the public outreach piece in the third area requires State participation and AEA has someone under contract that was used for the EV $52 million and the grid resilience. He noted the possibility of utilizing this resource. Mr. Hickey agreed. Vice -Chair Burns complimented Mr. Hickey and staff on their focus and efforts on the extensive NOI. He asked who comprises the utility working group. Mr. Hickey explained that he is working with the tactical team on the policy issues and with the Engineering Subcommittee on the technical issues. Chair Janorschke asked if Mr. Hickey is leading the effort on the three concept papers due by the end of the year. Mr. Hickey agreed. There were no other questions. C. AEA Letter on RFI #DE-FOA-0002762 on Hydroelectric Incentives Program Chair Janorschke requested Mr. Thayer to provide information. Mr. Thayer discussed that included is the AEA letter with comments referencing the Hydroelectric Incentives Program. There were no comments or questions. 10. OPERATORS REPORT Chair Janorschke advised that Martin Law, HEA, provided the written Operator's Report. He asked if there were any questions regarding the written report. Vice -Chair Burns commented that all of the utilities are taking the maximum amount. He asked for the amount of spilling that is occurring. Mr. Law indicated that no water has spilled yet. The level is at 1,175.2 today and is back within the imminent spill protocol. Chair Janorschke expressed appreciation for the report and for the included photos. There were no other comments or questions. 11. COMMITTEE REPORTS A. Budget to Actual Expense Report 6.30.22 (unaudited) Mark Ziesmer, AEA, discussed the included Budget to Actual Expense Report for the period of BPMC Minutes 9/30/22 Page 3 of 7 July 1, 2021 to June 30, 2022. The budgeted capital purchases not funded by R&C Funds totaled $909,000, and the actuals came in at $236,000. Schedule B shows the Operations and Maintenance (O&M) expenses which was under -budget by $784,284. The O&M 4% allocation adjustment to Battle Creek was $190,000, and is shown on Schedule B and on Schedule F. Schedule D shows the R&C Fund capital projects budgeted amount of $1,930,000 and the actual expense of $988,216. Schedule E shows the Battle Creek Capital Purchases budgeted amount of $115,000 and the actual expense of $57,000. Schedule F shows the Battle Creek O&M expenses which was under -budget by $30,000. Schedule H shows the SSQ Line Capital Purchases budgeted amount of $750,000 and the actual expense of $250,000. Schedule I shows the SSQ Line O&M expenses which was under -budget by $182,000. There were no comments or questions. B. O&D Report Chair Janorschke invited Russell Thornton, CEA, to present the O&D Report. Mr. Thornton identified the main topic of the September O&D meeting was the pending spill. He identified that an agreement was made at the August O&D meeting to reduce the pending spill level to 1,170 due to increased inflows. That level was exceeded, as expected, and operations were under pending spill from August 21 through September 26. During that period, participants over -doubled their take. He noted that the action resulted in minimal exchange of energy. On September 26, the level had reduced to 1,172 and the levels were trending down, and the O&D Committee made the decision via email to restore the pending spill level back to 1,175. Mr. Thornton informed that since that time, levels have continued to increase, and as of 4:00 a.m. today, Bradley Lake is back in pending spill. He noted that energy will be scheduled to keep the pending spill in control. Chair Janorschke asked if the amount pending spill is approximately five feet. Mr. Thornton agreed. Chair Janorschke asked as to the amount of water level variance per day. Mr. Thornton commented that the lake level increased yesterday by 1.2 feet. The anticipation is that the participants will take action quickly and will increase their take as soon as today. 8. NEW BUSINESS A. FY2023 Budget - Amendment 4 and Resolution 22-07 Battle Creek Diversion - Allocation Revision MOTION: A motion was made by Vice -Chair Burns to approve the 41h Amendment to the FY2023 Budget as presented, making the following changes; the calculation of the Battle Creek share allocation as a result of the GVEA buy -in on May 1, 2022. The recalculation could be found on the Revised Schedule G, page 19. The Battle Creek monthly participating purchaser contributions remain the same in total, but the percentage share will change for all purchasers, except GVEA, which remains at 16.9%. The revised contributions for CEA, HEA, Matanuska and the City of Seward will start November 1, 2022. This is the second revision for Resolution 22-06 Exhibit A. Motion seconded by Mr. Montgomery. Chair Janorschke requested Ms. Keppers discuss the item. Ms. Keppers informed that included in the information is the FY203 Proposed Budget Amendment 4. The only change to the budget is to page 19, which are the contributions from each of the power purchasers. Ms. Keppers reviewed the process involving the GVEA buy -in and the original calculation, which did not use the appropriate base. The proposed allocation corrects the base. Ms. Keppers explained that BPMC Minutes 9/30/22 Page 4 of 7 Resolution 2018-02 Second Amendment allowed the sale of Battle Creek Diversion project shares to a non -participating purchaser. Exhibit A of Resolution 2018-01 authorized the share allocation process in which GVEA paid for their 16.9% share by May 1, 2022. The reallocation that was prepared in Resolution 22-06, Exhibit A, incorrectly distributed the 16.9% to the participating purchasers. Ms. Keppers informed that included in the packet are the tables showing the First Revision Resolution 22-06 Exhibit A, and the Second Revision Resolution 22-06 Exhibit A, with the revised share allocation for Battle Creek. Ms. Keppers stated that for several months, the utility contributions received were not in the right amount. Ms. Keppers expressed that it has taken time to train new staff to be able to walk through this exercise for the Committee and to align the correct share allocation. Ms. Keppers explained that Schedule G of the budget amendment recalculates the monthly contributions beginning November 1. There were no questions. The motion to approve the 4tn Amendment to the FY2023 Budget as presented, making the following changes; the calculation of the Battle Creek share allocation as a result of the GVEA buy -in on May 1, 2022. The recalculation could be found on the Revised Schedule G, page 19. The Battle Creek monthly participating purchaser contributions remain the same in total, but the percentage share will change for all purchasers, except GVEA, which remains at 16.9%. The revised contributions for CEA, HEA, Matanuska and the City of Seward will start November 1, 2022. This is the second revision for Resolution 22-06 Exhibit A passed unanimously. Chair Janorschke noted that Resolution 22-07 regards the Battle Creek Diversion Allocation Revision. MOTION: A motion was made by Mr. Thayer to approve Resolution 22-07 Battle Creek Diversion Allocation Revision, as presented. Motion seconded by Mr. Miller. Chair Janorschke asked Joel Paisner, Ascent Law Partners, to comment. Mr. Paisner advised that this resolution corrects the records for a clear understanding of past activities. The resolution confirms Ms. Kepper's previous explanation. There were no questions. The motion to approve Resolution 22-07 Battle Creek Diversion Allocation Revision, as presented passed unanimously. B. Resolution 22-08 Authorizing the Financing of the Required Project Work Chair Janorschke informed that Resolution 22-08 authorizes the financing of the required project work. Mr. Paisner advised that a revised resolution is available for presentation to the Committee that includes corrections to specific formatting and will replace the resolution within the packet. MOTION: A motion was made by Mr. Montgomery to approve Resolution 22-08, approval of the financing of the proposed transaction, as presented, with the included amendment removing the word "Junction" on page two and correcting typographical errors. Motion seconded by Vice -Chair Burns. Mr. Paisner informed that the resolution includes the last piece of the proposed required project work financing. He explained that the process of evaluating project requirements began about a year -and -a -half ago and the BPMC appointed a special committee to analyze the engineering BPMC Minutes 9/30/22 Page 5 of 7 portion of the proposed projects and the financing of the proposed projects. The result was an approved list. The DOL reviewed each of the Committee requests and provided opinions supporting the determination by the Special Committee and the BPMC of the required project work projects per the Power Sales Agreement. Mr. Paisner informed that the utility Boards and councils approved the process that was modeled after the SSQ Line process, which resulted in a financing by AEA and AIDEA. Mr. Paisner discussed that AEA and Mr. Thayer requested that the BPMC authorize and agree that the excess payment amounts could be pledged to a bond that AEA will ultimately issue. The resolution describes that process and confirms that the BPMC supports the required project work, that the opinions of DOL regarding required project work were used in the determination, and that AEA can use the resolution to move forward in issuing the bonds. Mr. Thayer commented that the resolution provides BPMC support and reassures the AEA's Board and the utilities' Boards. He noted that on page 2, number 2, the word "Junction" should be removed and should read, "2. The Bradley to Soldotna Line upgrade". There was no objection to the friendly amendment. Mr. Thayer requested the BPMC provide support of this resolution. The information will go before AEA Board for approval on October 26, 2022. Vice -Chair Burns commented in support of the resolution. He indicated that this process has been ongoing and each of the respective Boards have reviewed the required project work. The resolution advances the shared goal of improved transmission within the Railbelt and maximize the benefit of renewables and other energy sources. Vice -Chair Burns expressed full support of the resolution. There were no other comments or questions. The motion to approve Resolution 22-08, approval of the financing of the proposed transaction, as presented, with the included amendment removing the word "Junction" on page two and correcting typographical errors in the footnote, passed unanimously. A brief at -ease was taken at 10:45 a.m. The Committee reconvened its regular meeting at 10:56 a.m. MOTION: A motion was made by Mr. Thayer to enter 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 Authority or the Project. Motion seconded by Mr. Montgomery. The motion to enter into Executive Session passed unanimously. 7. EXECUTIVE SESSION: 10:57 a.m. (Bylaws Section 5.11.4) — To discuss confidential financial matters regarding 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 11:51 a.m. Chair Janorschke advised that no action was taken during Executive Session. 12. COMMITTEE ASSIGNMENTS BPMC Minutes 9/30/22 Page 6 of 7 Chair Janorschke indicated that there are no committee assignments today. He advised that he will communicate with the Finance Committee around October 10, 2022. 13. MEMBERS COMMENTS - None. 14. NEXT MEETING DATE - December 9, 2022 Chair Janorschke noted the next meeting is December 9, 2022. He commented on the possibility of calling one or two special meetings prior to that date, as needed. 15. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 11:52 a.m. Brad Janorschke, Chair Curtis Thayer, Secretary BPMC Minutes 9/30/22 Page 7 of 7