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HomeMy WebLinkAbout2022.12.09 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA December 9, 2022 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 Rob Montgomery (City of Seward). 3. PUBLIC ROLL CALL (for all others present) Sunny Morrison (Accu-Type Depositions); Jennifer Bertolini, Bryan Carey, Rebecca Garrett, Dona Keppers, Bill Price, Mark Ziesmer (AEA); Joel Paisner (Ascent Law Partners); Brian Hickey (BPMC); Andrew Laughlin, Russell Thornton, Matt Clarkson Sherri Highers (CEA); Dan Bishop, Pete Sarauer, Sarah Villalon (GVEA); Larry Jorgenson, Martin Law, Andrew Patrick (HEA); David Pease, Matt Reisterer, Tony Zellers (MEA); and Bernie Smith (Public). 4. AGENDA APPROVAL Mr. Thayer indicated that his agenda does not include the State Energy Security Plan Update. Jennifer Bertolini, AEA, noted that the revised Agenda was distributed to members and contains Item 9D. State Energy Security Plan Update. MOTION: A motion was made by Vice -Chair Burns to approve the agenda. Motion seconded by Mr. Montgomery. Chair Janorschke commented that the agenda in his packet did not contain Item 9D., and that he added 9D. to his agenda. The motion to approve the agenda, including Item 9D., passed without objection. 5. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES — October 24, 2022 and November 21, 2022 Chair Janorschke apologized for appearing virtually and indicated that Vice -Chair Burns could Chair the meeting in -person, if it became necessary. There were no comments. Chair Janorschke noted that the Minutes of October 24, 2022 and November 21, 2022 were previously provided to members. MOTION: A motion was made by Vice -Chair Burns to approve the Minutes of October 24, 2022 and November 21, 2022. Motion seconded by Mr. Montgomery. BPMC Minutes 12/09/22 Page 1 of 7 The motion to approve the Minutes of October 24, 2022 and November 21, 2022 passed without objection. MOTION: A motion was made by Mr. Miller 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. A roll call was taken, and the motion to enter into Executive Session passed unanimously. 7. EXECUTIVE SESSION: 10:06 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 11:15 a.m. S. NEW BUSINESS A. FY22 BPMC Audit Update and Estimated Surplus Chair Janorschke requested Mark Ziesmer, AEA, to present both items; the FY22 BPMC Audit Update and Estimated Surplus. Mr. Ziesmer discussed that the two audits occurring concurrently are the FY22 AEA Audit and the FY22 Bradley Special Audit. The FY22 AEA Audit is expected to be completed around December 19, 2022. The FY22 Bradley Special Audit is expected to be completed in early January. Both audits are expected to be presented at the January BPMC meeting. There were no questions. Mr. Ziesmer reviewed the FY22 Estimated Refund of Surplus included in the packet. The top portion of the data is arranged in sections of Bradley Lake, Battle Creek, and SSQ Line, with the delineated categories of O&M refund and R&C refund. The middle portion of the data indicates the refund amount for each utility for Bradley Lake, Battle Creek, and SSQ Line. The bottom portion of the data shows the total refund amount per utility. The total refunded amount to all utilities is approximately $1.9 million. The refund process is according to the Power Sales Agreement (PSA), that utilities are returned any contributions made during the year that were not utilized. Mr. Ziesmer does not believe the final audits will materially alter the presented amounts. Mr. Miller inquired as to the issue date of the refunds. Mr. Ziesmer discussed that the refunds will be issued in short order after the audits are complete and after the BPMC approves the refund amounts at the January 2023 meeting. There were no additional questions. B. 2023 Proposed BPMC Meeting Dates Chair Janorschke noted the 2023 proposed BPMC meeting dates are contained in the packet. He advised that he has a scheduling conflict for January 27, 2023, and suggested the date be changed to January 20, 2023, or that Vice -Chair Burns Chair the meeting that date. There was no objection to changing the January meeting date to January 20, 2023. Mr. Izzo informed that he has a scheduling conflict for the May 19, 2023 meeting date, and BPMC Minutes 12/09/22 Page 2 of 7 suggested the date be changed to May 5, 2023, or that the MEA alternate appear in his stead. There was no objection to changing the May meeting date to May 5, 2023. Ms. Bertolini advised that Dan Bishop, GVEA, messaged that the Intertie Management Committee (IMC) approved the proposed 2023 meeting date schedule without modifications. There were no questions. C. Approval of Consultant — Kirk Gibson Chair Janorschke requested Joel Paisner, Ascent Law Partners, to present on Item C. Mr. Paisner reminded the Committee that prior Counsel, Kirk Gibson, retired a year ago and will no longer retain his law licenses. Mr. Paisner expressed his request that the BPMC authorize that Mr. Gibson remain as a consultant, on similar terms and conditions as Counsel, without giving legal advice. Mr. Paisner discussed that Mr. Gibson provides key support to him and others, and is a benefit to the Project. Mr. Paisner requested the Committee make a motion to authorize entering into a consulting agreement with Mr. Gibson on similar terms and conditions as his existing fee agreement. MOTION: A motion was made by Vice -Chair Burns to authorize a consulting agreement with Mr. Gibson on similar terms and conditions as his existing fee agreement. Vice -Chair Burns asked Mr. Paisner if he was responsible for managing the consultation relationship. Mr. Paisner agreed, and noted that he contacts Mr. Gibson regarding questions on interpretation of the Power Sales Agreement and related documents. Motion seconded by Mr. Thayer. A question was asked if the agreement will be on an as -needed basis only. Mr. Paisner agreed. The motion to authorize a consulting agreement with Mr. Gibson on similar terms and conditions as his existing fee agreement passed without objection. 9. OLD BUSINESS A. Required Project Work / AEA Power Revenue Bonds Mr. Thayer discussed that the provided information highlights the beneficial changes to the terms that occurred after the most recent AEA Board meeting. The loan amount remained the same. The fixed rate was lowered about 20 basis points to 6.06%. AEA will have the option at any Interest Rate Reset Date of selecting a new rate period with an interest rate negotiated based on such period. Other benefits include that NCSC retains a Make Whole Call feature during the Initial Fixed Rate Term and should unusual circumstances warrant non -economic redemption during this period AEA may do so. However, the negotiation of a 10-year Initial Fixed Rate Term and the ability to redeem bonds with no penalty at that point or negotiate a new fixed rate term and rate provides AEA with the equivalent of a standard 10-year par call feature and a low-cost option for extending the loan term at favorable rates. Mr. Thayer informed that AEA was successful in negotiating away a requirement for loan acceleration in the event of default and AEA was successful in negotiating elimination of certain proposed definitions of debt service and debt service coverage which could have resulted in inclusion of all future AEA debt including project debt not related to the Bradley Lake Project. BPMC Minutes 12/09/22 Page 3 of 7 Mr. Thayer noted that the Debt Service Schedule is attached to the information. Chair Janorschke complimented AEA and Fred Eoff, PFM Financial Advisors, for creating additional benefits to the terms. There were no questions. B. BESS Allocation MOTION: A motion was made by Mr. Miller to approve the allocation of the 35% Battery Energy Storage System proceeds to each Railbelt utility on the basis of ownership share of the Bradley Lake Project. Motion seconded by Mr. Izzo. A roll call vote was taken, and the motion to approve the allocation of the 35% Battery Energy Storage System proceeds to each Railbelt utility on the basis of ownership share of the Bradley Lake Project passed unanimously. C. Railbelt Reliability Coordination Update L Special Committee on Required Project Work ii. Review GRIP Concept Papers 1 & 2 Chair Janorschke requested Brian Hickey, BPMC, to present the information. Mr. Hickey discussed that there are three concept papers related to the recent Grid Resiliency and Innovation Partnership's (GRID) Funding Opportunity Announcement (FOA) by the Department of Energy. Topic 1 relates to grid resiliency. Topic 2 relates to the smart grid. Topic 3 relates to grid innovation. The Special Committee on Required Project Work has been diligently assisting with the Topic 1 and Topic 2 Concept Papers. The papers are complete and have been provided to the Committee. The suggested filing date is December 14. Mr. Hickey explained that the overarching plan that was submitted to the Governor has been divided into three parts correlating to the three topic papers. Mr. Hickey discussed that the rebuild of the existing transmission system from Bradley Lake to Delta Junction falls within Topic 1. The integration of batteries and using them in real-time to optimize transfer capability and reserve sharing falls within Topic 2. Mr. Hickey noted that a team has been assembled to develop the community benefit plan, which is a required component for each of the topic papers. A draft of the community benefit plan was provided to the Committee. Mr. Hickey discussed the Department of Energy (DOE) submittal and selection process for the recent FOA, which encompasses the first two funding cycles of a five -funding cycle period. If the topic papers are selected, DOE will then request a detailed application to be submitted by April 15, 2023. If the application process is successful, a Grid Partnering Agreement will be developed and negotiated. Mr. Hickey reiterated that the broad concept that was presented to the Governor has been aligned into a series of projects that occur over a 15-year period that, if selected, would be funded through the five funding cycles. Mr. Hickey explained that Topic Paper 1 and Topic Paper 2 have been extensively vetted by the Tactical Team and the Engineering Subcommittee. He expressed appreciation to all the staff who assisted in these endeavors. Mr. Hickey requested that the prepared motion to approve Topic Paper 1 and Topic Paper 2 be presented. If the motion passes, the next step is to complete the project management section of the papers and to file the papers Monday morning. BPMC Minutes 12/09/22 Page 4 of 7 A member expressed appreciation to Mr. Hickey and the team for their efforts. The member noted that he has been involved with both the Tactical Team and the Engineering Subcommittee during the collaboration. He commented on the dynamics of listening to the opinions of five utilities and multiple engineers, which ultimately resulted in a good final product. Vice -Chair Burns echoed the complimentary comments to Mr. Hickey and to the group. Vice - Chair Burns believes the Topic 1 paper captures the vision of the BPMC. He asked for more information regarding the grant funding amounts. Mr. Hickey explained that Topic 1 Grid Resiliency is capped at $100 million, or the three-year average spend on grid resiliency, whichever is lower. Mr. Hickey noted the expected amount is between $70 million and $100 million. Mr. Hickey explained that Topic 2 Smart Grid is capped at $30 million. Topic 3 Grid Innovation is capped at either $300 million or $1 billion, if DOE considers Alaska as interregional. A member inquired if AEA is the lead agency. Mr. Hickey noted that AEA is the lead agency on Topic 3. For Topics 1 and 2, the grant writer in Washington, D.C. will submit the application by MEA on behalf of the Bradley Lake Project Management Committee. Chair Janorschke asked if the tactical team will review the application this weekend. He suggested that the final document is reviewed by a non -technical person for grammatical errors before it is submitted. Mr. Hickey informed that the grant writer will conduct the final edit over the weekend and the final draft will be reviewed again on Monday by the tactical team. Mr. Hickey will send final document to the members after submittal. Mr. Miller requested additional information regarding DOE's preference for the grant to be submitted on December 14, rather than December 16. Mr. Hickey explained that the webinar information implied that the DOE has never undertaken an effort of this scale and they do not know if the server will be able to handle the volume of submittals without shutting down. Submittals can be taken until December 16, but no submittals will be taken after December 16. Mr. Hickey requested the Committee provide a resolution that allows the grant application to be filed on December 14. MOTION: A motion was made by Vice -Chair Burns to authorize the submittal of Topic 1 and Topic 2 Concept Papers to the U.S. DOE Grid Resilience and Innovation Partnerships Program, DE-FOA-0002740. Motion seconded by Mr. Montgomery. A roll call vote was taken, and the motion to authorize the submittal of Topic 1 and Topic 2 Concept Papers to the U.S. DOE Grid Resilience and Innovation Partnerships Program, DE-FOA-0002740 passed unanimously. D. State Energy Security Plan Update Chair Janorschke requested Rebecca Garrett, AEA, provide the update on the State Energy Security Plan (SESP). Ms. Garrett highlighted that this presentation is the State Energy Security Plan, which is different from the State Energy Plan, and could eventually become part of the State Energy Plan. Ms. Garrett explained that under the Infrastructure Investment and Jobs Act (IIJA), the State Energy Program required that every state have a SESP, as an essential part of securing the nation's energy supply. The SESP will provide an assessment of current infrastructure and a plan for response to supply disruption. Each state must file their SESP with DOE by June 30, BPMC Minutes 12/09/22 Page 5 of 7 2023. AEA engaged the global consulting company ICF to complete and design Alaska's SESP to ensure a reliable and resilient supply of energy through identifying, mitigating, and planning for risks to the energy sector. Ms. Garrett discussed the guide provided by DOE for the SESP and noted that AEA is meeting those requirements. She commented on the feedback from utilities and others that this project could be expanded to have a longer -term impact for Alaskans. The legislation includes the requirement to consult with 1) the public utility or service commission of the State; 2) energy providers from private and public sectors; 3) and other entities responsible for a) maintaining fuel or electric reliability; and b) securing energy infrastructure. The meeting scheduled for next Tuesday with the Advisory Group serves Requirement 1. Ms. Garrett noted that the Regulatory Commission of Alaska (RCA) participated in the selection of ICF and sits on the Review Committee. Ms. Garrett reviewed that BPMC can be helpful by attending the Advisory Group meetings held every six weeks. She asked for feedback regarding the best way to interview the utilities around the state, including the possibility of a group interview. Ms. Garrett requested the names of utility contacts for in-depth interviews. She informed that a secured filing process and non- disclosure agreements will be used for sensitive information. Sample questions are included in the packet. A Committee member asked for the number of staff assisting in the process. Ms. Garrett noted there are three staff from AEA and three staff from ICF. The Committee member provided a suggestion regarding GVEA's involvement. A Committee member commented on the vulnerability of fuel supply and asked if the producers and gas utilities are included in the process. Ms. Garrett agreed. Mr. Montgomery asked if the Advisory Group meetings can be attended remotely. Ms. Garrett agreed and noted there is a Teams link for attendance. There were no additional questions. 10. OPERATORS REPORT Martin Law, HEA, discussed the included Operator's Report. Bradley Lake is performing well. There is approximately six inches of snow at the dam and up to 30 inches of snow on the road to the dam. Battle Creek has been snowed -in since the report was prepared. The Battle Creek assignment has been completed to transfer the data into the SCADA system. The new pickup truck, the sander for the dump truck, and other equipment was received during the last barge delivery. He discussed that normal housekeeping and maintenance of the project continues. Chair Janorschke agreed that the project looks great and noted that he will be onsite Monday. He expressed appreciation for the report and for the pictures. 11. COMMITTEE REPORTS A. Budget to Actuals Report Mark Ziesmer, AEA, discussed the included Budget to Actual Expense Report for the period of July 1, 2021 to September 30, 2022. He highlighted that the actuals for capital purchases not funded by R&C Funds shown on page two came in at $291,308. Schedule B shows the Operations and Maintenance (O&M) actual expenses which were under -budget by $433,000, BPMC Minutes 12/09/22 Page 6 of 7 primarily due to the time lag between the budget increase and the payment of expenses. Mr. Ziesmer anticipates the variance to continue to decrease. Schedule D shows the R&C Fund Disbursements and Repayments. Actual expenses were $185,473. Schedule E shows the Battle Creek Non-R&C Capital Purchases FY23 budgeted amount of $90,000 and the actual expense of $7,000. Schedule F shows the Battle Creek O&M expenses which were under - budget by $42,000. Schedule H shows the SSQ Line Capital Purchases and the hold -over expenses from FY22 that are listed. Schedule I shows the minimal expenses for the SSQ Line O&M as of September 30. There were no questions. B. O&D Report Chair Janorschke invited Russell Thornton, CEA, to present the O&D Report. Mr. Thornton discussed that the O&D Committee met on November 7th. He highlighted that the water energy report showing that water levels were 7,000 acre feet below the estimated forecasts even though the usage was down from 50,000 MWh in October to 29,000 MWh delivered. There were no questions. 12. MEMBERS COMMENTS Mr. Thayer requested that the in -person Committee members take a photo at the end of the meeting to be included in the annual report. Mr. Miller commented on the good meeting. Mr. Montgomery expressed that this is an exciting time for the Railbelt and he is looking forward to next year. Mr. Izzo echoed the previous comments. He thanked AEA and staff for their efforts. Vice -Chair Burns thanked Mr. Paisner for his communication, dialog, and concerted focus on the Railbelt opportunities under the BPMC. He emphasized the importance of maintaining that focus through collaboration and coordination. Mr. Paisner expressed appreciation to AEA and staff. Chair Janorschke expressed appreciation to staff for the reports, and thanked Ms. Bertolini for her efforts. He extended well wishes during the upcoming holidays. 13. NEXT MEETING DATE - January 27, 2023 - See Item 8B. for updates. 14. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 12:06 p.m. IJ Y J� ��r�adanorsch hair k., 7 Curtis W. Thayer, Secretary BPMC Minutes 12/09/22 Page 7 of 7