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HomeMy WebLinkAbout2021.05.21 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA May 21, 2021 1. CALL TO ORDER Chair Izzo called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:06 a.m. A quorum was established. 2. ROLL CALL (for Committee members) Tony Izzo (Matanuska Electric Association [MEA]); Ron Woolf (phone) (Golden Valley Electric Association [GVEA]); Lee Thibert (Chugach Electric Association [CEA]); Brad Janorschke (Homer Electric Association [HEA]); Curtis Thayer (Alaska Energy Authority [AEA]); Cory Borgeson (phone) (City of Seward (Seward)). 3. PUBLIC ROLL CALL (for all others present) Colette Growes (phone) (Accu-Type Depositions); Jennifer Bertolini, Debra Caldwell, Brian Carey, Kirk Warren (AEA); Jeff Warner (CEA); Stefan Saldanha (Department of Law); Bob Day, Emily Hutchinson (phone), Larry Jorgensen (phone), Andrew Patrick (phone) (HEA); Kirk Gibson (phone) (McDowell Rackner Gibson, PC); Emily Hutchison (HEA), 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. Mr. Woolf requested to add Item 7B. FY 21 Budget Amendment 5 update. There was no objection to the friendly amendment. A roll call vote was taken, and the motion to approve the agenda as amended, adding Item 7B. FY 21 Budget Amendment 5 update, passed unanimously. 5: PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES - March 26, 2021 MOTION: A motion was made Mr. Thibert to approve the Minutes of March 26, 2021. Motion seconded by Mr. Thayer. A roll call vote was taken, and the motion to approve the Minutes of March 26, 2021 passed unanimously. 7. NEW BUSINESS A. GVEA Call Back Notice BPMC Minutes 5/21/21 Page 1 of 8 Chair Izzo informed that the Committee has been provided with GVEA's Notice of Intent to exercise its right to become a participating purchaser in the Battle Creek Diversion Project. This is the call back notice. Chair Izzo requested comment from GVEA, AEA, and Counsel Kirk Gibson, McDowell Rackner Gibson, PC. Mr. Woolf commented that the Notice of Intent outlines the request that GVEA seeks determination from the BPMC regarding its equitable portion of the project costs. Mr. Thayer stated that his understanding is that AEA has already submitted the updated amounts to GVEA. Mr. Woolf asked if the draft numbers are adequate to move forward. Mr. Thayer noted that Debra Caldwell, AEA, is present to add clarification. Ms. Caldwell informed that the original draft calculation was provided to GVEA in September of 2020. The most recent updated calculation was prepared by the same third -party who prepared the original draft and was submitted to GVEA last week. Chair Izzo noted that the updated draft needs to be resent to Mr. Woolf at GVEA. Ms. Caldwell ensured that she will resubmit the updated calculations to GVEA. Mr. Woolf commented that he believes the process will continue to move forward once the updated information is reviewed. Mr. Borgeson requested that the members of the Committee are provided with the current updated calculations. Chair Izzo agreed, and requested that AEA provide the information. Ms. Caldwell agreed. Chair Izzo noted that the estimated cost listed on page two of the provided Resolution No. 102-21 is $2.1 million. Ms. Caldwell informed that the new calculation is slightly lower than the original $2.1 million presented. Mr. Borgeson asked if the utilities will be provided with a refund after GVEA submits their project contribution amount. Mr. Gibson explained that this is a new process and it is probably the only time it will occur. He confirmed that GVEA's letter meets the requirements of the request for a call back notice. The actual cost calculation update was provided after notice was given. Mr. Gibson believes that it is proper that refunds should be distributed to the utilities. It is a BPMC decision to approve the contribution amount. Mr. Gibson noted that the BPMC could direct the Finance Committee to review the third -party calculations before the BPMC approves the amount. Mr. Gibson commented that it is appropriate for GVEA to acknowledge that the amount is correct. The remaining procedure is set forth in Resolution 2017-2, whereas GVEA will provide their cost share and then GVEA will participate in the June 2022 water year. Chair Izzo expressed his intent to assign the Finance Committee to review the amount and to make a recommendation to the full Committee. A request will also be made to GVEA to acknowledge that the amount is correct. BPMC will then take action based on the recommendation. There was no objection. B. FY 21 Budget Amendment 5 Mr. Woolf requested Ms. Caldwell present the FY21 Budget Amendment 5. Ms. Caldwell explained that the amendment includes an increase to the needles capital project from $700,000 to $1.5 million. The $800,000 increase results in a participant contribution increase of $200,000. The needles project is an R&C project. The $800,000 cost will be spread over four years. Ms. Caldwell reviewed the Budget Summary showing the proposed changes on page two, the Monthly Utility Contributions showing the participant increases on page 13, and the needle repair line item on page 14. Ms. Caldwell explained that the increase is due to additional corrosion above what was projected, additional parts, failure of Unit 1 after repair, and other costs associated with Unit 2. More detail will be provided during the Operators Report. No other changes have been made to the FY21 Budget. BPMC Minutes 5/21/21 Page 2 of 8 MOTION: A motion was made to approve the 5tn Amendment to the fiscal year 2021 Bradley Lake Hydroelectric Project Budget. This amendment will make the following changes, Bradley Lake $800,000 increase in the R&C Capital Purchases Schedule D. Motion seconded by Mr. Borgeson. A roll call vote was taken, and the motion to approve the 5tn Amendment to the fiscal year 2021 Bradley Lake Hydroelectric Project Budget passed unanimously. 8. OLD BUSINESS A. FY 22 Budget Chair Izzo requested Ms. Caldwell present of the FY22 Budget. Ms. Caldwell advised that this item is Budget Amendment 1 to the FY22 Budget. The FY22 Budget was approved at the previous meeting. Ms. Caldwell provided a summary of the items reflected in this budget amendment. The first change is an increase in insurance premiums, as shown on page 13. Since the last meeting, the insurance provider gave notification of the projected $200,000 increase in budgeted premiums beginning July 11. The second change is on Schedule D to the spillway raise study, which now includes an increase for a study for the Dixon diversion, as shown on page 15. The total amount of this R&C project is now $500,000, and will be spread over a four-year period. The third change is related to the SSQ Line for an SVC budget increase of $70,000 for the replacement of batteries, as shown on page 21. The proposed increase in utility contributions for Bradley Lake, excluding Battle Creek and SSQ Line, is $456,000, of which $200,000 is related to the needles increase, $200,000 is related to the insurance increase, $50,000 is related to the Dixon diversion increase, and $6,000 is related to the operating reserve increase. The are no proposed changes to Battle Creek project costs. The proposed increase in utility contributions for SSQ Line is $84,000, of which $70,000 is for the replacement of batteries and the remainder is related to the operating reserve increase. Chair Izzo informed that it has come to his attention that part of the discussion regarding this item is a topic for executive session. He asked Mr. Gibson if it is possible to include the action regarding the FY22 Budget Amendment 1 after executive session. Mr. Gibson expressed his understanding that the FY22 Budget is up for approval and subsequently, will be noticed for the public period. He believes Chair Izzo is well within his authority to include an action after executive session. Chair Izzo informed that the continuation of Item 8A. Old Business will follow Item 12. Executive Session. Additional discussion and possible action will occur regarding the FY22 Budget Amendment 1. There was no objection. B. By -Law Work Chair Izzo requested that Mr. Gibson provide the status of the Bylaws. Mr. Gibson informed that the updated Bylaws have been distributed to members and counsel. He has received comments from some of the utilities and is awaiting comments from the remaining utilities. One of the comments regarded the upcoming changes to the bonds and a request to review the Bylaws to ensure that no additional changes need to be addressed as a result. Mr. Gibson expects to present again to the BPMC at the next meeting after July 111. There were no questions. BPMC Minutes 5/21/21 Page 3 of 8 9. OPERATORS REPORT Chair Izzo welcomed Bob Day, HEA, to present the Operator's Report. Mr. Day noted that the needle repairs on Unit 2 were completed. The poles were inspected and the dividers were replaced. Unit 2 went back into service on April 13th. The lake level as of May 13th was 1,095, which is 15 feet above the minimum. Mr. Day believes the snowpack will be released into the lake soon. He reviewed that the statistics for Battle Creek were all zero until this week when staff made a trip to Battle Creek to close the sluice gate. There is water running under the snow. The guardrail that was manufactured has been bent by the heavy amount of snow. The spillway and forebay were completely covered and filled with snow. The fish water releases are being met. Mr. Day discussed that one of the big costs of the needle repairs is the $12,000 end cone. Investigations are underway to determine the ability to rebuild and reuse the needle cones. He informed that the new building construction is moving forward. The increase in the cost of wood is four times what is was one year ago and other material costs have also increased. Some materials are unavailable. This is a multi -year project. Mr. Day reported that the decking on the bridges has been removed. A structural engineer has visited the site and is in the process of looking into alternatives to make the bridges safely useable for smaller vehicles and foot traffic. Mr. Day believes that placards should be placed on the bridges to identify the danger. Mr. Day informed that IRIS will install the generator monitoring equipment at the end of May. The project was delayed due to Covid-19. Mr. Day discussed that there was an oil release on April 22"d. The loss was calculated at about a quart of oil. The included report provides details of a portion of the activities. The operator saw a sheen in the tailrace. The unit was shut down and a stop log was placed as a barrier. The drain plug was not completely sealed and was leaking about one drop every five minutes. The Coast Guard, the NRC, and the DEC were satisfied with the reports and notifications. They have all issued indications that the matter is considered closed. Mr. Day informed that Committee members are designated within the Spill Prevention Countermeasure Plan. He suggested that they maintain ready access to the phone numbers necessary for reporting. Mr. Day discussed the Soldotna SVC batteries mentioned in the budget update. The last inspection revealed a number of broken terminals and the batteries will need to be replaced. A flyover was conducted over the Battle Creek dam and there is a lot of snow. The road remains impassible after mile 4.5 due to snow. Mr. Day conveyed that there was a recent staffing change of one of the trainee operators who took another job. A new replacement trainee has since been hired. Mr. Day described the photos included in the report. Mr. Janorschke requested an update regarding the water metering issues at Battle Creek. Mr. Day identified that he believes the issue regards the fish water flow from Battle Creek, which has variable regulatory requirements depending on the season. The flow meter is installed. The water comes out so violently that it is half water and half air and the meter does not provide reliable information. The back-up calculation is made using the height of the forebay and the opening of the minimum inlet flow (MIF) gate. During the last visit, it was identified that the sensor was bent and inoperable. Repairs were made to return it to a horizontal position. The measurements are inferred. He does not believe the process is optimal to reflect measurements of fiscal importance. Mr. Day informed that discussions have occurred regarding the possibility of installing a flow meter at the outflow of Battle Creek. BPMC Minutes 5/21/21 Page 4 of 8 Mr. Janorschke asked if a solution to the problem is being addressed. Mr. Day expressed that discussions have occurred, but a satisfactory conclusion has not been reached. The MIF flow drops into the canyon and the technology to measure the flow accurately has not been identified. Chair Izzo requested Mr. Thayer and Brian Carey, AEA, provide comments. Mr. Carey explained that there are two releases of water from the diversion dam; the regulatory in -stream flow down the canyon and the flow heading to the lake. The in -stream flow has a problem with the turbulent water and the air bubbles which cause the ultrasonic sensor to respond erratically. The requirement now is five cfs and if the gate is kept open at 15%, there will be an over - release of approximately one -to -two cfs. The agencies have accepted the gate opening at 15% as part of the release plan. For the pipe flow that goes to Bradley Lake, the gauge is located about 80 feet in and it does not have the big air bubbles. Last year's numbers were accurate. The forebay elevation numbers were used as backup numbers. Another backup location that could be used is at the low point drain. The HDPE pipe is three-inch thick, which means the gauge has to be placed inside the pipe. The option is available to place another sensor at the exit point. Mr. Thibert asked if the O&D is reviewing these issues to determine a solution. Mr. Carey noted that he has been corresponding with both HEA and DOWL regarding possible solutions and the O&D has been kept apprised of the discussions regarding measurements. Mr. Carey reported that the participant amount of water going to the lake is accurate and the in -stream flow over - release is a small magnitude. Mr. Day believes it is concerning that there is a possibility of a single point of information failure in the processes of the forebay sensor. The result affects both financial and regulatory processes. He agreed that HEA is working with Mr. Carey and DOWL to determine solutions, but the available equipment is unable to withstand the severe conditions. Chair Izzo expressed support for the O&D Committee to continue to monitor the situation. He commented that the over -release of the in -stream flow is 20% to 40% more than is required to be released. Chair Izzo noted that prudent operation needs to be defined. He believes the operator is communicating that it is prudent to have the sensor issue corrected. Chair Izzo agreed that the revenue class -like metering should be accurate. Chair Izzo requested feedback from members. Mr. Borgeson believes this issue would be best addressed as a committee assignment to ensure all parties are working together on a solution. He feels it important to focus effort and resources on this issue. Chair Izzo and Mr. Thibert agreed with the comments. 10. O&D REPORT Chair Izzo invited Andrew Patrick, HEA, to present the O&D Report. Mr. Patrick informed that he is the Vice -Chair of the O&D Committee and is filling in for Russ Thornton today. He discussed the report that was provided to members. The O&D met on May 7th. The SVC Maintenance Agreements were reviewed and the various utility substation groups were tasked to work together on a solution to update the agreements. The battery failure at Soldotna SVC was discussed. HEA is providing a temporary battery connection until the new replacement is installed. The budget modification earlier in today's meeting addressed this issue. The second battery is being closely monitored and does not show indication of imminent failure, but the issue could arise in future budget discussions. BPMC Minutes 5/21/21 Page 5 of 8 The O&D conducted a procedural process to develop the Bradley Statement of Values for the assets for insurance processing purposes. Historically, the assets have been approved at a 2% escalation, which is the amount the Committee moved to approve during the meeting. Within a year or two, the O&D Committee expects to conduct a full estimate of Bradley assets to provide a more accurate update. The final item discussed regarded the consolidation of the Bradley dam and spillway rise project and the work that will occur in the upcoming season. Mr. Patrick noted that he understood the anticipated assignment regarding metering and agreed that discussions have occurred, but no obvious solutions have been determined. There were no questions. 11. COMMITTEE REPORTS - Budget to Actual Chair Izzo requested that Ms. Caldwell present the Budget to Actual Report. Ms. Caldwell informed that the document is included in packets for the period of July 1, 2020 through March 31, 2021. Schedule A relates to capital purchases not funded by the RNC fund. The Battle Creek bridge repair is a carryover from the FY20 budget. The dump truck and sander have been replaced under budget. The Emerson cybersecurity project has been completed slightly over budget. The remaining projects are ongoing and under budget year-to-date by a total of $800,000. The Schedule B expenses year-to-date are under budget in almost all categories. Much of the work cannot be completed over the winter, so increased expenses are anticipated as maintenance is performed in a number of areas during the last quarter of the year. Ms. Caldwell highlighted that Schedule D are capital projects funded through the R&C Fund. Expenses have been recorded for the needles repair through March at approximately $1.3 million. The budget amendment to capture the final costs of the project has been brought before the Committee. Ms. Caldwell noted that the contingent funds for capital purchases on Schedule E are under budget. Schedule F shows the O&M budget specific to Battle Creek is under budget. The 4% allocation of the Bradley Lake O&M to Battle Creek has not yet been completed. Ms. Caldwell projects that the budget to actual expenses will remain under budget concluding with a surplus at year-end. Mr. Borgeson commented that the additional cost of the needle repair will approximately equal the under budgeted amount. He expressed appreciation to Ms. Caldwell for the information. Mr. Borgeson suggested that the Finance Committee review the payment to the State for the coming year. There were no questions. MOTION: A motion was made by Mr. Thayer to enter into Executive Session to discuss potential required project work, the immediate knowledge of which would have an adverse effect on the finances of the Authority or the Project; and to discuss matters with Committee Counsel, the immediate knowledge of which could have an adverse effect on the legal position of the Committee. Motion seconded by Mr. Thibert. A roll call vote was taken, and the motion to enter Executive Session passed unanimously. 12. EXECUTIVE SESSION: 11:18 a.m. Discuss potential Required Work which the immediate knowledge of which would clearly have an adverse effect upon the finances of the Authority or the Project. And to discuss matters with Committee Counsel the immediate knowledge of which could have an adverse effect on the legal position of the Committee. BPMC Minutes 5/21/21 Page 6 of 8 The Committee reconvened its regular meeting at 12:02 p.m. Chair Izzo advised that no formal action was taken on the matters discussed during Executive Session. 13. COMMITTEE ASSIGNMENTS Chair Izzo assigned the O&D Committee to work with the operator and AEA on the Battle Creek diversion metering issue that was discussed earlier during Item 9. Operators Report. Chair Izzo assigned the Budget Subcommittee to work with GVEA to review, refine, and provide recommendations to the full Committee regarding an updated or estimated cost for GVEA to become a participating purchaser in the Battle Creek diversion project. The BPMC will then seek to take action to approve moving forward. Chair Izzo requested that all committees include a list of outstanding assignments in each BPMC Committee report. Mr. Gibson asked if the assignment was going to be given to the Budget Subcommittee to review the use of the potential refund to pay for needle repairs. Chair Izzo agreed and included it as a Committee assignment. Chair Izzo returned the meeting to the continuation of Item 8A. Old Business, FY22 Budget. There were no questions regarding the amendment. MOTION: A motion was made by Mr. Borgeson that the Bradley Lake Project Management Committee approve the 1s' Amendment of the fiscal year 2022 Bradley Lake Hydroelectric Project Budget. This amendment will make the following changes; for Bradley Lake, a $200,000 increase in the O&M Budget Schedule B, a $200,000 increase in the R&C Capital Purchases Schedule D, a $70,000 increase for the SSQ Line in the O&M Budget Schedule I. Motion seconded by Mr. Janorschke. Chair Izzo requested that Mr. Thibert summarize the motion. Mr. Thibert noted the motion is that the Bradley Lake Project Management Committee approves the 1st Amendment of the fiscal year 2022 Bradley Lake Hydroelectric Project Budget. This amendment will make the following changes; for Bradley Lake, a $200,000 increase in the O&M Budget Schedule B, a $200,000 increase in the R&C Capital Purchases Schedule D, a $70,000 increase for the SSQ Line in the O&M Budget Schedule I. A roll call vote was taken, and the motion to approve the 15' Amendment of the fiscal year 2022 Bradley Lake Hydroelectric Project Budget, with the following changes; for Bradley Lake, a $200,000 increase in the O&M Budget Schedule B, a $200,000 increase in the R&C Capital Purchases Schedule D, a $70,000 increase for the SSQ Line in the O&M Budget Schedule I, passed unanimously. 14. MEMBERS COMMENTS Mr. Borgeson expressed his pleasure in being part of the Committee. He announced that Seward has a new Operations Supervisor, Pat Domitrovich, who he will ensure becomes part of the O&D Committee. Mr. Borgeson advised that his time may be limited at Seward. He believes the new Manager at Seward, Rob Montgomery, is ready to step up and assume BPMC Minutes 5/21/21 Page 7 of 8 greater responsibilities. Mr. Borgeson thanked members and staff, especially Mr. Thayer for the direction of AEA. Mr. Janorschke commented on the good meeting. He is excited about learning more about opportunities discussed. Mr. Thibert expressed appreciation for the great meeting. He thanked the Committee Chairs for their efforts and excellent presentations. Mr. Thayer stated it is good to see Mr. Thibert, and he hopes he can see more people in the next couple of months. Chair Izzo echoed the comments of appreciation to all, especially to AEA, Ms. Caldwell, Ms. Bertolini, Mr. Carey, and others who assisted in providing the thorough information. 15. NEXT MEETING DATE - June 25, 2021 16. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 12:10 p.m. 9 � Curtis Thayer, Secretary BPMC Minutes 5/21/21 Page 8 of 8