HomeMy WebLinkAbout2020.01.24.BPMC.Executed.Minutes
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BPMC Minutes January 24, 2020 Page 1 of 7
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC)
REGULAR MEETING
Alaska Energy Authority Boardroom, Anchorage, Alaska
January 24, 2020
1. CALL TO ORDER
Chair Izzo called the special meeting of the Bradley Lake Hydroelectric Project
Management Committee to order at 9:54 am. A quorum was established.
2. ROLL CALL FOR COMMITTEE MEMBERS
Tony Izzo (Matanuska Electric Association [MEA]); Cory Borgeson (Golden Valley Electric
Association [GVEA]); Anna Henderson (Matanuska Light and Power [ML&P]); Lee Thibert
(Chugach Electric Association [CEA]); Bradley Janorschke (Homer Electric Association
[HEA]); Curtis Thayer (AEA); and John Foutz (City of Seward).
3. PUBLIC ROLL CALL
Bryan Carey, Ashton Doyle, Jocelyn Garner, Ryan Garner, Beazit Redzepi, Kirk Warren
(AEA); Max Garner (AG’s Office); Amy Fenerty (Aldrich CPAs & Advisors); Don Maynor
(phone) (ARECA Insurance Exchange); Brian Hickey, 9Russell Thornton (CEA); Stephan
Saldanha (Department of Law); Ron Rebenitsch (phone) (Energy Engineering, Inc.) ; Bob
Day (Bradley Lake - HEA), Emily Hutchison, Larry Jorgenson (phone) (HEA); Kirk Gibson
(McDowell Rackner Gibson, PC); Ed Jenkin; David Pease; Tony Zellers (MEA); Jeff Warner
(ML&P); Bernie Smith (Public); Christina Hunter (phone) (RCA); and Ladonna Lindley
(Accu-Type Depositions).
4. PUBLIC COMMENTS - None.
5. AGENDA APPROVAL
MOTION: A motion was made by Mr. Janorschke to approve the agenda. Motion
seconded by Mr. Foutz.
Mr. Janorschke asked if Operator’s Report could be added under Item 9. There was no
objection to the friendly amendment.
The motion to approve the agenda with the amendment to include Operator’s Report
under Item 9B. passed unanimously.
6. APPROVAL OF PRIOR MINUTES
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MOTION: A motion was made by Mr. Janorschke to approve the Minutes of October
11, 2019 and November 22, 2019. Motion seconded by Mr. Thibert.
The motion to approve the Minutes of October 11, 2019 and November 22, 2019,
passed unanimously.
7. NEW BUSINESS
A. FY19 Audited Financial Statements (Refund Approval)
Amy Fenerty, Aldrich CPAs, reviewed the two documents given to members; the Board
communication letter and the financial statements for the years ended June 30, 2019 and
2018. Aldrich CPAs rendered an unmodified opinion on the financial statements. This is the
highest form of assurance that can be received. Based on the audit procedures performed,
the information in the financial statements is reliable. No material weaknesses conditions
in internal control were identified. No instances of material noncompliance were identified.
Full cooperation of management was received and no restrictions were placed on the work.
No significant changes to the accounting policies of the BPMC occurred during the year.
Ms. Fenerty highlighted the more significant changes on the balance sheet. The cash and
cash equivalents incurred a slight fluctuation related to the timing of AEA payments. The
line item Due from R&C fund fluctuates annually and corresponds to the payable amount
for the surplus. There were no significant changes to the assets. Ms. Fenerty explained the
line item Due to AEA under liabilities fluctuates each year based on timing of payments
made. The line items Payable to Utilities are based on the budget-to-actual amounts related
to the refundable surpluses. The Unearned Revenue amounts received in 2019 will be
recognized in 2020.
Ms. Fenerty reviewed the budget to actual amounts for the statements of revenues and
expenses. Additional detail is contained in the supplemental schedule. Certain financial
statement disclosures are included in Note 1 of the report related to updates for the Battle
Creek project and progress on the capital investment. Note 2 highlights the cash and cash
equivalents information. Note 3 contains the changes to the major contracts and
agreements, including the Operating Agreement with HEA. Note 4 outlines the related
party transactions. Note 5 provides detail for the surplus refunds.
MOTION: A motion was made by Mr. Thayer that the Bradley Lake Project
Management Committee accept the fiscal year 2019 audited financial statements and
approve a refund of $874,315 ($785,931 O&M and $88,384 R&C) to the utilities and a
refund of $964,826 to the Battle Creek Participating Utilities. Motion seconded by
Mr. Thibert.
Ms. Henderson inquired if the refund amount was calculated and approved by the Budget
Subcommittee. An affirmative answer was provided.
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The motion passed unanimously.
B. FY 21 Draft Budget
Beazit Redzepi, AEA, delivered the FY21 Draft Budget presentation for review and edits.
The intent is to have the budget passed by the March 27 meeting. The budget is due on
April 1. Mr. Redzepi informed the O&D and the Budget Subcommittees met and discussed
the draft budget. Decreases are shown in utility contributions and renewable R&C fund
capital projects. Mr. Redzepi indicated Schedule A-1, capital purchases not funded by R&C
Fund, may include $10,000 for an estimate of plans for additional housing at HEA. This item
has yet to be discussed by the O&D Committee.
Mr. Redzepi explained the new line item Bradley Lake O&M 4% Charge to Battle Creek has
been added to Schedule B because the Battle Creek construction will be completed in FY21.
This was approved per the 2017 resolution attached to the budget. The labor costs on page
eight of $270,000 include indirect costs and will be split out on the final budget. This
budget also includes a GIS inspection that is performed every 10 years. It will be placed
under FERC 544. The Administrative Expense line item will increase to $241,000, and will
include personnel administration, travel, transcription, and legal fees.
Mr. Thayer explained AEA has received a $200,000 annual flat fee for managing the Bradley
Lake project for the previous 20-plus years. The process included AEA giving the $200,000
flat fee to AIDEA, who would then pay all bills. Any amount incurred beyond the $200,000
was paid out of AIDEA’s budget. Last year, AIDEA requested BPMC costs beyond $200,000
are no longer paid from AIDEA’s budget, but rather AEA pay the actual expenses. AEA is
using the actual costs in this proposed budget. Legal expenses for last year were budgeted
at $30,000 and the actual expenses came in at $140,000.
Mr. Borgeson asked Kirk Gibson, McDowell Rackner Gibson, PC, if there is a contractual
agreement of the payment of the $200,000 flat fee. Mr. Gibson stated he is unaware of an
agreement, and noted the annual flat fee has been $200,000 for over 20 years. He cannot
articulate the reason for the specific amount. It is possible indication to the amount is
contained within one of the agreements. Mr. Thayer explained internal research shows
there is no documented agreement.
Mr. Borgeson requested AEA provide a budget for the BPMC to conduct a review to ensure
the administrative expenses are reasonable and necessary. He feels the Committee would
want additional oversight of the budget if the arrangement is to change.
Mr. Thayer agreed with Mr. Borgeson’s comments and noted the budget could be reviewed
by the Budget Subcommittee. Mr. Thayer indicated he has the budget with him today. He
provided copies of the Battle Creek and Bradley Lake budget to members. Mr. Thayer
explained the Battle Creek administrative cost methodology was approved by the BPMC.
The Bradley Lake proposal uses the same methodology. The costs for travel, transcription,
and legal, comprised of both BPMC counsel and Department of Law, would be at-expense.
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Mr. Borgeson commented the provided budget seems reasonable. He requested the Chair
make a committee assignment to come back with a resolution during the March meeting
when the budget is approved.
Mr. Foutz asked a clarifying question regarding the separation of AEA employees and
AIDEA employees. Mr. Thayer explained there are no AEA employees. All 82 personnel are
AIDEA employees by statute. AEA reimburses AIDEA for AEA’s direct personnel costs.
Mr. Gibson suggested this discussion and decision be memorialized within a motion at the
March 27 meeting.
Chair Izzo commented on the importance of a complete record and documentation of any
action.
Mr. Redzepi continued his presentation and noted the additional $75,000 on Schedule B for
a five-year FERC Part 12 Inspection. Schedule C delineates the monthly utility
contributions, which are expected to decrease after the edits have been made for the
capital purchases. The R&C funded capital projects include $150,000 for the fire alarm
system replacement and $370,000 for the road grader. These have been reviewed by the
O&D and Finance Subcommittees. The only line item included with the capital construction
purchases is for the claims consultants. Mr. Redzepi noted an adjustment will be made after
discussion with Mr. Gibson. Mr. Redzepi reviewed the Battle Creek administrative costs
budget on Schedule F and the Battle Creek monthly participating purchaser contributions
shown on Schedule G.
8. OLD BUSINESS
A. Battle Creek Project Update
Bryan Carey, AEA, informed the Battle Creek construction is ongoing. The next concrete
pour is expected to occur in February and the Stage 3 diversion portion is near completion.
Mr. Carey explained the cold weather concrete pour process. The pours have been
exceeding specifications. Mr. Carey gave an overview of the project schedule. In April, snow
will be cleared and the laying of the HDPE pipe will begin. It is expected the project will be
substantially completed by July 22. The final completion is on schedule for August 30. The
budget is within 1% of the original amount. No change-orders are expected.
Mr. Carey described the pictures of Stage 2 and Stage 3 shown in the presentation. He
showed pictures of the spillway and the left and right abutments. He described the process
in which the aggregate is kept heated. Mr. Carey showed a cut sheet picture of the Talon
fusion machine. It has not yet been assembled. The last picture was of the HDPE staging
area. The fusing plan has not been released by the contractor. All material is expected to be
on time with no delays.
Mr. Thibert asked for the reason the concrete work is being completed in the winter. Mr.
Carey noted the low flows in the winter makes the work easier in some ways, but the
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intention was for the concrete pours to have been completed earlier. It is important to
complete the pours so the rebar and structures do not sustain damage.
Mr. Janorschke requested Ron Rebenitsch, Energy Engineering, Inc., provide additional
comments. Mr. Rebenitsch stated the progress has been slow due to the winter weather.
He advised further comments are reserved for executive session.
Chair Izzo asked about the significance of the orange color pipe. Mr. Carey explained the
pipe is high density and was specifically requested to be a color other than black. A camera
survey can pick up irregularities more efficiently with orange colored pipe versus black
colored pipe.
B. Swan Lake Fire Update
Mr. Janorschke indicated the line is back in service as of December 20 and seems to be
working well. All permanent repairs have been completed.
Mr. Borgeson inquired about the process and progress regarding the claim to FEMA. Mr.
Janorschke noted additional information will be discussed in executive session.
9. COMMITTEE REPORTS
A. Budget to Actual
Mr. Redzepi reviewed each of the schedules within the provided Bradley Lake Budget to
Actual Expense Report through November 30, 2019. Schedule B is under budget $604,871
for this period. Schedule D shows the work on the Generator #2 replacement and the fire
alarm system replacement. Schedule E lists the consulting costs.
Ms. Henderson noted the consulting budget has approximately $12,000 remaining. She
asked if the consulting costs are expected to come in on budget or over budget. Mr. Redzepi
explained the consulting expenses were initially added for the first six months of the
budget year. If the expense exceeds the budget by a significant amount, another
amendment would be necessary. Currently, the costs have reduced substantially.
Chair Izzo recalled previous discussion to ensure continuity with consulting. He requested
Mr. Gibson review the actions taken. Mr. Gibson advised action was taken to ensure Mr.
Rebenitsch continued on behalf of the BPMC at the site. Mr. Gibson is actively working on
collecting a proposed schedule of Interface Consulting’s schedule of use. Mr. Borgeson
believes further discussion should occur during executive session.
B. Operator’s Report
Bob Day, Bradley Lake, HEA, reviewed the Bradley Lake Operator Report included in the
packet. The lake level was in spill conditions until the Swan Lake line returned to service on
December 20. The lake remains relatively high at 1165 feet and is approximately 22 feet
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higher than the average level for this time of year. Mr. Day encouraged the utilities to
prepare for the spring inflows. The mechanical dividers are not complete and the delay in
the manufacturing process has extended the delivery to late February. The repairs have
been inspected and are lasting with no issues.
Mr. Day advised gasoline supplies were decreasing due to support of DOWL and their
Battle Creek work. This created a good opportunity to conduct fuel tank inspections. The
inspector seemed please with the tanks’ conditions. A report is forthcoming. Mr. Day
informed the O&D Committee met and reviewed the draft budget. Afterwards, the Budget
Subcommittee met and reviewed the draft budget. He commented the draft budget
presented today is approximately 95% complete. Minor modifications to the budget may
still occur as efforts are ongoing to bid down some pricing.
Mr. Day stated the unit availability has been running well since coming back on line
December 20. The capacity factor in December for Unit 1 was 26% and Unit 2 was 72%.
The capacity factor in January for Unit 1 was 60% and Unit 2 was 55%. The water leak on
Unit 1 from needles 3 and 4 has decreased since the unit was at rest for November and
December. The oil leaks on Unit 2 remain consistent at about a cup a day. Monitoring will
continue.
Mr. Day announced the sixth operator trainee has been hired and began his second week
shift. Mr. Day expressed appreciation for the ability to have the extra operator.
Mr. Janorschke asked for the current snowpack depth compared to the annual average. Mr.
Day believes the snowpack is currently low. This is due to lack of precipitation. Mr. Day
believes the snows will hit in February, March and April.
MOTION: A motion was made by Ms. Henderson to enter into Executive Session to
discuss confidential and financial information related to Battle Creek and the SQ
Line. Motion seconded by Mr. Foutz.
The motion passed without objection.
10. EXECUTIVE SESSION: 11:04 am
Discuss confidential matters related to Battle Creek and the SQ Line
The Committee reconvened its regular meeting at 12:23 pm.
Chair Izzo advised the Board did not take any formal action on matters discussed while in
executive session.
11. COMMITTEE ASSIGNMENTS
Chair Izzo noted the Budget Subcommittee is to review and amend, if necessary, the
current year budget for Interface Consulting.
12. MEMBERS COMMENTS