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HomeMy WebLinkAbout2021.10.01 BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) REGULAR MEETING AGENDA October 1, 2021 1. CALL TO ORDER Chair Izzo called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:04 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 (phone) (City of Seward). 3. PUBLIC ROLL CALL (for all others present) Betty Caudle (phone) (Accu-Type Depositions); Jennifer Bertolini, Lindsey Causer, Dona Keppers, David Lockard, Melissa Yang (AEA); Joel Paisner (Ascent Law Partners); Matt Clarkson (phone), Brian Hickey, Sherri Highers (phone), Russell Thornton, Jeff Warner (CEA); Max Garner, Stefan Saldanha (Department of Law); Pete Sarauer (phone) (GVEA); Bob Day, Larry Jorgenson (phone), Sarah Lamb (phone), Andy Patrick (phone) (HEA); Kirk Gibson (McDowell Rackner Gibson, PC); Ed Jenkin (phone), David Pease, Matt Reisterer (phone), Tony Zellers (MEA); and Bernie Smith (Public). 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Burns to approve the agenda. Motion seconded by Mr. Thayer. The motion to approve the agenda passed unanimously. 5. PUBLIC COMMENTS - None 6. APPROVAL OF MEETING MINUTES - July 30, 2021 MOTION: A motion was made by Mr. Janorschke to approve the Minutes of July 30, 2021. Motion seconded by Mr. Thayer. Mr. Burns expressed appreciation to Jennifer Bertolini, AEA, for providing the Minutes to members well in advance of the meeting, allowing members the opportunity to read the Minutes. The motion to approve the Minutes of July 30, 2021 passed unanimously. 7. NEW BUSINESS A. FY 22 Budget Amendment 3 BPMC Minutes 10/1/21 Page 1 of 7 Melissa Yang, AEA, discussed that page three of 22 of the Budget Amendment shows the summary of an increase for SQ Capital by $750,000. This increase is proposed by the O&M Committee for preliminary design and permitting work for the SQ Line rebuild in FY22. The work will span over two calendar years. This is the only change to the budget and will increase the SQ capital and monthly payments to $62,500. MOTION: A motion was made by Mr. Burns to approve the third amendment of the fiscal year 2022 Bradley Lake Hydroelectric Project Budget as presented. The Budget Amendment increases SQ Lines Capital Budget and increases the annual participant contributions by $750,000. Motion seconded by Mr. Thibert. Mr. Burns requested clarification and asked if this amendment is related to the ongoing required work that will be discussed later. Mr. Thayer discussed that his understanding is this work is part of the required project work to get to the next step. Mr. Burns expressed support for the motion and for progressing with required work as rapidly as possible. He believes it is imperative that the Committee endorse that the required project work proceed expeditiously. The motion to approve the third amendment of the fiscal year 2022 Bradley Lake Hydroelectric Project Budget as presented passed unanimously. MOTION: A motion was made by Mr. Burns to enter into Executive Session to discuss matters with the attorney for the committee, which the immediate knowledge of which could have an adverse effect upon the finances of the Committee. Motion seconded by Mr. Thayer. The motion to enter Executive Session passed unanimously. 8. EXECUTIVE SESSION: 10:14 a.m. Discuss matters with attorney for the Committee which the immediate knowledge of which could have an adverse effect upon the finances of the Committee. The Committee reconvened its regular meeting at 11:43 a.m. Chair Izzo advised that no formal action was taken on the matters discussed during Executive Session. MOTION: A motion was made by Mr. Burns to retain Joel Paisner as Counsel for the BPMC, and that he work with Kirk Gibson during the transition period before Mr. Gibson's departure in November. Motion seconded by Mr. Thayer. Kirk Gibson, McDowell Rackner Gibson, PC, offered a friendly thought that the transition might go beyond November. There were no objections. The motion to retain Joel Paisner as Counsel for the BPMC, and that he work with Mr. Gibson during the transition period, passed unanimously. Chair Izzo congratulated Mr. Paisner. 9. OLD BUSINESS A. GVEA Call Back Recommendation BPMC Minutes 10/1/21 Page 2 of 7 Chair Izzo requested that O&D and Budget Subcommittee representatives discuss the GVEA call back recommendation. Russell Thornton, CEA, discussed that it would take a month's notice to incorporate the GVEA call back into the reporting. Mr. Burns asked if the effective date is the beginning of the following month or 30 days. He asked that if the call back recommendation were given tomorrow, it would be effective in November. Mr. Thornton agreed. Mr. Janorschke asked Bob Day, HEA, if Battle Creek was shut off for the year, because he was going to motion that GVEA is brought back December 1st, but if there is no water coming from the project, a January 1 st date could be equally as appropriate. Chair Izzo welcomed Mr. Day to respond. Mr. Day informed that Battle Creek has diminished in its flows. Last year, Battle Creek was shut down around October 17th. He informed that the 30- day notice from the technical aspect is a straight forward accounting operation. Mr. Day believes that Battle Creek will begin to shut down by the end of the month. He will discuss the flows in more detail during the Operator's Report. Additional discussion occurred that a 30-day notice for GVEA call back would work well and is the preference. There were no objections. Mr. Gibson suggested that a motion is made to accept GVEA's call back request and ask that the appropriate process take place after a 30-day or more notice by GVEA. MOTION: A motion was made by Mr. Janorschke to accept GVEA's call back notice, contingent upon the 30-day notice and payment. Motion seconded by Mr. Thibert. The motion to accept GVEA's call back notice, contingent upon the 30-day notice and payment, passed unanimously. B. By -Law Amendment Mr. Gibson discussed that progress was made this week and there is only one remaining issue regarding voting. Once that issue is resolved, the By -Law amendments will be ready for approval. Mr. Burns requested that Mr. Gibson provide additional information describing the remaining issue so that discussion can occur. Mr. Gibson explained that there were two issues; quorum and voting. The current quorum Section 5.9 notes that the presence of any five members shall constitute a quorum. The By -Law changes were initiated by the transaction between ML&P and Chugach, which reduced the number of members by one. Mr. Gibson believed that there was agreement to changing the quorum requirement to four members. Mr. Gibson discussed the remaining voting issue refers generally to Section 5.10. Most of the Committee's substantive decisions require at least four representatives of the purchasers, whose percentage shares of the capacity are greater than 51 %. The current percentages are HEA at 16.2%, MEA at 18.6%, GVEA at 22.8%, CEA at 41 %, and Seward at 1.4%. There are now five purchasers. The proposal was to decrease the required number to three representatives. Mr. Gibson commented that GVEA previously expressed concerns regarding reducing the number of representatives to three, relative to the project percentage shares. He gave an example of a potential scenario that Anchorage -centric issues could be presented at BPMC Minutes 10/1/21 Page 3 of 7 the Committee and could be swayed by CEA, MEA, and Seward. Mr. Gibson requested the Committee discuss the issue and provide him with the decision to create the document to present at the next meeting for approval. Chair Izzo commented that he anticipates follow-up discussion among the utilities with a goal for action at the next BPMC meeting. There were no additional questions. C. Required Project Work Letter to LAW Mr. Gibson advised that the letter requesting the Department of Law's determination was sent on August 20th. The exchange of follow-up information has been occurring and work is ongoing with the O&D Committee. A response is expected within the next two weeks, with respect to all matters that have received a determination. Department of Law has acceded to the request for accommodation of component determinations within the letter. He noted that all things are moving forward and looking good. There were no questions. 10. OPERATORS REPORT Chair Izzo requested that Mr. Day present the Operator's Report. Mr. Day discussed that generation has been steady at about 40,000 MWhrs a month. The lake level ended at 1141 in August. As of September 20th, the lake level was 1147, but it has decreased during the last week and is now 1146. Mr. Day noted that the weather patterns this year have been anomalous. The fall storms that normally occur have not occurred. The activities are ongoing and the new building is progressing well. The bridges will be fully complete after the guardrails are installed. The fire system is an ongoing problem. Mr. Day previously reported on the corrosion in the pipes and the repairs that are being made. An annual inspection and sprinkler inspection will occur this month. The annual fire system inspection did not occur last year during COVID-19, and the annual insurance inspector has noted the non -inspection. Mr. Day informed that Battle Creek has had fairly good returns this year, at 32,503 ACRE -FT. He noted that there were discrepancies in utility data allocations and the discrepancies have been revised and corrected. The year-to-date numbers occur on both the water allocation sheet and on the data at Bradley. He discussed that data is kept daily on Battle Creek, but he believes it would be beneficial to make the callback occur at the first of the month for the monthly totals. The inspection on the gas insulated substation is scheduled for November 8tn The process of hiring a full operator continues and so far, the applicants have not met the requirements. Mr. Day discussed that a solar, wind generator and battery system has been assembled for the ADF&G Battle Creek fish survey. He informed that D. Hittle was on -site to complete the 25-year look -ahead report that would amortize the big capital repairs costs. A cost of money analysis was conducted on the report, which resulted in an expenditure amount of approximately $3.6 million per year. He noted that the D. Hittle Report could be used as a supporting document for required project work. Mr. Day reported that the annual gate testing was performed on September 26t', and all issues have been resolved. He informed that there was an hour outage on September 27th due to a sensor module that had failed. The repair was successful. Mr. Day extended the invitation to Mr. Montgomery to conduct a site visit. Mr. Montgomery expressed appreciation for the invitation and will visit. 11. O&D REPORT - Capital / required project work BPMC Minutes 10/1/21 Page 4 of 7 Chair Izzo welcomed Mr. Thornton to present the O&D Report. Mr. Thornton informed that the O&D met via teleconference and in -person on September 17th. All of the utility participants attended. A wide range of discussion topics occurred. Mr. Day presented on the D. Hittle Report, which was forwarded to the BPMC on September 22"d. The Battle Creek Bridge Project only has the guardrail work to be completed. The SVC POD tuning for the oscillation study was completed in the previous period by ABB. This was supported cooperatively by HEA and CEA. There was an issue confirmed with POD, and it remains out of service at Dave's Creek pending corrective action by ABB. In October, DOWL will install the backup flow measurement in the MIF pipe. Mr. Thornton reviewed the assignments that have been made to O&D members. HEA has released an RFP for implementing the Oscillation Study results. Three responses have been received and evaluation is underway. CEA is investigating a modification to the BDS system to automate HEA wheeling of power to Bradley participants. Work is ongoing, but there was not an update during the meeting. CEA is also taking the lead of conducting an audit of the Bradley usage per the request from the BPMC. There was not an update during the meeting. HEA is working with DOWL to resolve the flowmeter issue per the request of the BPMC. CEA has forwarded the recommendation on the SO Line to the Finance Committee. HEA is investigating the options to automate Battle Creek measurements and ICCP reporting. Mr. Burns thanked Mr. Thornton for the comprehensive report. He asked for the implications regarding the disabled POD on the SVC with respects to the project. Mr. Thornton explained that because the issue is with Dave's Creek, the impact is much smaller on the operation of the system. Mr. Thibert asked if there is an update on the audit. Mr. Thornton informed that CEA has completed the review of water year 20/21. CEA is preparing to forward that information to the O&D members, who will need to provide data to facilitate the process. Conclusions related to the analysis are progressing and will be forthcoming. There were no additional questions. 12. COMMITTEE REPORTS A. Budget to Actual Chair Izzo requested that Ms. Yang present the Budget to Actual Report. Ms. Yang began the presentation reviewing Schedule A-1, noting that capital projects for Bradley Lake were under budget by $112,000. She noted that some projects were under budget, some projects were over budget, and some projects did not occur during the year. The Bradley Lake O&M expenditures on Schedule B were under budget by $1.2 million. The total O&M expenses were $4.6 million. The actuals were down in almost every category, as discussed at the previous BPMC meeting, due to the conditions of impact from COVID-19. The impacts ranged from accessibility and availability for employees to start and complete jobs, as well as retirements. With higher paid employees retiring, costs for training and salary dropped. Ms. Yang discussed the 4% allocation for FY22 from Bradley Lake O&M to Battle Creek O&M was $192,000. This year's administrative fees for Bradley Lake were at $262,000, compared to last year, which was a fixed $200,000 amount. Ms. Yang reviewed the projects funded by the R&C on Schedule D, which were under budget by $399,000 for Bradley Lake and Battle Creek combined. Ms. Yang reviewed the capital projects for Battle Creek on Schedule E were under budget by $312,000. Battle Creek's O&M Schedule F was under budget by $87,000, with total BPMC Minutes 10/1/21 Page 5 of 7 expenses of $461,000. The overall budget for Bradley Lake, including Battle Creek and SQ, was under budget approximately $1.2 million. Mr. Burns commented that he understands the stated reasons for the under budgeted amount. He asked Mr. Day if he is concerned about the impact to Bradley due to the under budget amount. Mr. Day responded that he is confident that Bradley is in good shape. There are budget items that provide savings in the short-term, such as the recent retirements, and those numbers will change. Mr. Day noted the road grader was purchased a year -and -a -half ago and because of delays due to COVID-19, it is expected to be delivered in December, at which point the payment of $370,000 will occur. Another budget item that was not completed last year due to COVID-19 issues was the fire inspection. Chair Izzo asked Ms. Yang if there are any fiscal year accounting considerations that need to be addressed regarding the action taken today welcoming GVEA to Battle Creek Project participation. Ms. Yang noted that the timing of the action is the Committee's decision and staff is able to accommodate the action at any time. Chair Izzo thanked Ms. Yang. Mr. Thayer requested that Ms. Yang provide additional information regarding the audit. Ms. Yang advised that the surplus amount for FY21 will not be finalized until the audit is complete. The AEA audit is underway and the BPMC audit began recently. Mr. Thayer introduced Dona Keppers, AEA CFO. Ms. Keppers informed that the BPMC audit kickoff occurred this week and can be presented in December or January, as requested. The anticipated completion date is December 1s'. There were no additional questions. 13. COMMITTEE ASSIGNMENTS Chair Izzo advised of the formation of a special committee focused on the project required work. The special committee team will be led by Vice -Chair Janorschke. The team will include representatives from utilities, AEA, and Mr. Gibson. The special committee team will have access to utility O&D Committee members, Finance, Budget Subcommittee, and Legal. The target date for the completion of the efforts is November 15' 14. MEMBERS COMMENTS Mr. Montgomery commented that he is looking forward to serving on the Committee. Mr. Thibert welcomed Lindsey Causer, AEA, and welcomed Mr. Paisner, Counsel. Mr. Thibert noted that he took additional time for comments during executive session today. Mr. Thayer welcomed Mr. Paisner. He hopes to see Mr. Gibson at the next meeting. Mr. Thayer expressed appreciation for everyone's work today. He added that he has taken Mr. Thibert's comments during executive session and will work to help rectify the ongoing situation. Mr. Burns commented on the great meeting. He expressed appreciation for the dialog and the healthy discussion on topics. Mr. Burns thanked Committee members for the reports. He welcomed the new BPMC participants. Vice -Chair Janorschke echoed previous comments. He agreed that these are crazy and wild times. BPMC Minutes 10/1/21 Page 6 of 7 Chair Izzo echoed previous comments. He expressed sincere gratitude for Mr. Gibson's guidance and wisdom for approximately 25 years. Chair Izzo congratulated Mr. Paisner and welcomed Ms. Causer to the team. He appreciates the time during Mr. Gibson's transition. Mr. Gibson commented that he has enjoyed his tenure. He metaphorically described the Committee like a rose bush that needs trimming, fertilizer, and tender loving care, with the goal of making more roses. He believes he has contributed to that goal. Mr. Gibson noted that members have many competing interests and he sincerely urged members to always consider the whole when interacting as the Committee. He stated that all boats rise together. 15. NEXT MEETING DATE - December 10, 2021 Chair Izzo advised that the next meeting date is December 10, 2021. 16. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 12:30 p.m. Curtis Thayer, Secretary BPMC Minutes 10/1/21 Page 7 of 7