HomeMy WebLinkAbout2020.12.11.BPMC.ExecutedMinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC)
REGULAR MEETING AGENDA_
December 11, 2020
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 (phone) (Golden Valley Electric
Association [GVEA]); Lee Thibert (phone) (Chugach Electric Association [CEA]); Brad
Janorschke (phone) (Homer Electric Association [HEA]); and Curtis Thayer (Alaska Energy
Authority [AEA]).
3. PUBLIC ROLL CALL (for all others present)
Salina Bearden (phone), Jennifer Bertolini, Debra Caldwell (phone), Bryan Carey (phone), Kirk
Warren (AEA); Amy Fenerty (phone) (Aldrich CPAs & Advisors); Don Maynor (phone) (ARECA
Insurance Exchange); Matt Clarkson (phone), Brian Hickey, Stefan Saldanha (phone)
(Department of Law); Pete Sarauer (phone) (GVEA); Bob Day (phone); Larry Jorgenson
(phone) (HEA); Kirk Gibson (phone) (McDowell Rackner Gibson, PC); David Pease (phone),
Matt Reisterer (phone), Tony Zellers (phone) (MEA); Bernie Smith (phone) (Public); and
Christina Hunter (phone) (RCA).
4. AGENDA COMMENTS / MOTION FOR APPROVAL
MOTION: A motion was made by Mr. Thayer to approve the agenda. Motion seconded by
Mr. Thibert.
Chair Izzo proposed the Operator's Report is included under Item 9. Committee Reports. There
was no objection.
A roll call vote was taken, and the motion to approve the agenda passed.
5. PUBLIC COMMENTS - None.
6. APPROVAL OF MEETING MINUTES - Special Meeting Sept. 11, 2020; September
25, 2020; Special Meeting Oct. 23, 2020
Mr. Thibert requested a correction to the Minutes of September 25, 2020, to verify who
seconded the motion on page two Approval of Meeting Minutes. Jennifer Bertolini, AEA,
informed staff will listen to the recording and will make the correction to the Minutes of
September 25, 2020.
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MOTION: A motion was made by Mr. Thibert to approve the Minutes of Special Meeting
September 11, 2020, September 25, 2020, as corrected, and Special Meeting October 23,
2020. Motion seconded by Mr. Thayer.
A roll call vote was taken, and the motion passed unanimously.
MOTION: A motion was made by Mr. Thayer to enter into Executive Session to discuss:
1) matters the immediate knowledge of which would clearly have an adverse effect upon
the finances of the Authority and/or the Project; and 2) matters with Counsel to the
Committee the immediate knowledge of which could have an adverse effect on the legal
position of the Committee. Motion seconded by Mr. Janorschke.
A roll call vote was taken, and the motion to enter Executive Session passed
unanimously.
7. EXECUTIVE SESSION: 10:17 a.m.
To discuss 1) matters the immediate knowledge of which would clearly have an
adverse effect upon the finances of the Authority and/or the Project; and 2)
matters with Counsel to the Committee the immediate knowledge of which could
have an adverse effect on the legal position of the Committee.
The Committee reconvened its regular meeting at 10:51 a.m.
Chair Izzo advised that the BPMC did not take any formal actions on the matters discussed
while in executive session.
8. NEW BUSINESS
A. BPMC Financial Statements
Mr. Thayer requested Salina Bearden, Acting Comptroller, and Debra Caldwell, Accountant,
present the BPMC Financial Statements. Ms. Bearden introduced Amy Fenerty of Aldrich CPAs
& Advisors, who reviewed the audited financial statements and required communication. There
were no limitations or scope restrictions. There were no changes to the accounting policy or
disagreements with management. There were no difficulties encountered during the
performance of the audit. All adjustments that were discussed and proposed have been
recorded in the general ledger. Aldrich CPAs & Advisors issued a clean, unmodified opinion for
2020. This is the highest form of assurance that can be received. Management is responsible
for the financial statements and the preparation of the financial information in accordance with
accounting requirements.
Ms. Fenerty continued the review and highlighted the significant changes between June 30,
2020, and June 30, 2019. The increase in cash and cash equivalents is related to the timing of
payments made and received. The increase in accounts receivable is related to the IRS interest
subsidy received in July. The current liabilities fluctuate year-to-year based on the timing of
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vendor payments made. The payables to the utilities for the refunds are determined based on
the budget compared to actual results. There were no questions.
Ms. Fenerty gave an overview of the budget to actual comparison of revenues and expenses
listed on page four, resulting in a favorable variance amount of approximately $1.8 million. Ms.
Fenerty explained the notes to the financial statements contain additional detail. An update for
the capital additions related to the Battle Creek Diversion Project was included in Note 1. The
supplemental information provides additional detail on the statement of expenses. The total
general expenses were less than budget, primarily due to the deferred maintenance
components that were unable to occur. The Committee costs were in excess of budget,
primarily related to legal fees incurred. There were no questions.
Chair Izzo expressed appreciation for the comprehensive and succinct audit report, and thanked
AEA staff for their cooperation in delivering the annual audit.
MOTION: A motion was made by Mr. Thayer that the BPMC accept the audit as
presented. Motion seconded by Mr. Thibert.
A roll call vote was taken, and the motion to accept the audit as presented passed
unanimously.
B. Revised Letter (10/6/20) from "pfm" regarding Excess Payments and FY20
Refund of Surplus
Mr. Thayer explained the BPMC had requested AEA to provide the Schedule of Excess
Payments. AEA contracted with PFM to do the work. The revised letter contains the inclusion
of a sentence on page two stating, "Such obligation will end no earlier than the latest of July 1,
2050, or the final maturity date of any outstanding project bonds." This statement was
inadvertently not included initially. There were no questions.
Chair Izzo requested Ms. Bearden speak to the FY20 Refund of Surplus provided in member
packets. Ms. Bearden explained the FY20 Refund of the Surplus to the participants ending
June 30, 2020, was prepared during the BPMC financial audit. The refunds are categorized for
Bradley Lake and Battle Creek.
MOTION: A motion was made by Mr. Burns to approve the refund to the Bradley Lake
utilities in the amount of $1,076,985.55, and to approve the refund for the Battle Creek
participating utilities in the amount of $994,397.76, as presented in the Board packet with
the breakdown between utilities and their percent share. Motion seconded by Mr.
Thayer.
A roll call vote was taken, and the motion to approve the refunded amounts as presented
in the Board packet passed unanimously.
C. Homer Electric Association - Report on efforts to recoup fire damage costs
Chair Izzo requested HEA provide an update on the efforts to recoup fire damage costs. Mr.
Janorschke discussed HEA staff has engaged in a teleconference with the State of Alaska
Division of Homeland Security and Emergency Management regarding the grant fund status.
BPMC Minutes 12/11/20 Page 3 of 7
The application has been turned in. No updates have been provided since August. The State
of Alaska is severely backlogged and it might be months before HEA's documentation is
reviewed. Mr. Janorschke will provide timely updates as they occur. There were no questions.
D. Proposed 2021 Meeting Schedule
Chair Izzo stated he will add meetings in February and April. The dates will be coordinated with
members. Chair Izzo requested clarification from Kirk Gibson, McDowell Rackner Gibson, if the
meeting schedule is an action item or for informational purposes. Mr. Gibson explained the
proposed 2021 meeting schedule is for informational purposes to set expectations and to
manage accordingly. He noted AEA could display an official schedule. Notice will be given as
meetings arise.
Mr. Thayer requested that the May 28th meeting is rescheduled to May 21st, to avoid
interference with the Memorial Day weekend. Chair Izzo agreed. Chair Izzo asked members to
review the proposed 2021 meeting schedule and advise AEA of any potential conflicts. Chair
Izzo would like a confirmed schedule by the January meeting.
9. COMMITTEE REPORTS
A. O&D Committee - Discuss recommendation on the 691kv Line removal
Chair Izzo requested Pete Sarauer, GVEA, to present the O&D Committee Report. Mr. Sarauer
explained that the Bradley O&D Committee was requested by the Permitting Task Force to
provide a recommendation concerning the 69kv Line removal within five years. The O&D
Committee considered the issues and felt that a removal within 10 years was a more prudent
timeframe. Mr. Sarauer explained if the 115kv Line upgrade moves forward, that removal of the
69kv Line would occur in conjunction with the work. If the 115kv Line upgrade does not happen,
the 69kv Line removal would ensue while other maintenance occurs on the 115kv Line.
Mr. Thayer expressed appreciation to Mr. Sarauer. He noted that the Fish and Wildlife Service
and other conversations have encouraged AEA to move forward with the five-year window. Mr.
Thayer stated that AEA would like to keep that schedule. AEA will have to go back to the
agencies if the 115kw upgrade moves forward, and Mr. Thayer would like to be in a position to
have the five-year timeframe already agreed to. Mr. Thayer indicated money has been set
aside in the financing of the SSQ Line to complete the removal of the six miles of the 69kv Line.
Mr. Thayer requested Mr. Sarauer confirm that there are six miles of the 69kv Line that need
restoration work and poles removed. Mr. Sarauer stated that he does not know that information.
He believes the Permitting Task Force would know the answer. Mr. Thayer expressed that his
understanding is the length is roughly six miles and the preference is to remove six miles within
five years, as opposed to within 10 years. Mr. Thayer reiterated that the funding to remove the
line is in place.
Mr. Sarauer agreed the Bradley O&D is aware the funding is in place and was viewing the
situation from an environmental impact perspective. He noted it would be more prudent to go in
once and complete the upgrade and removal work at the same time, rather than mobbing
equipment twice. The intent was to remove the line within the shortest period of time, but during
the upgrade process. That was the reasoning and recommendation of the O&D Committee.
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Mr. Thayer explained AEA took a different approach during the permit negotiating process with
the agency to fulfill the requested five-year timeframe while attaining the 100-foot right-of-way,
so that it is not necessary to obtain a separate right-of-way for the upgrade.
Mr. Thibert suggested the possibility of an alternative compromise to agree to complete five
years after the start of construction on the 115kv Line.
Chair Izzo understands from Mr. Thayer's comments that if the Committee adopts the O&D's
recommendation, that will send a mixed signal in AEA's negotiations. Chair Izzo asked if a
modified time period or 10-year time period creates issues or challenges in AEA's discussions
and negotiations. Mr. Thayer requested Kirk Warren, AEA, respond. Mr. Warren indicated that
it is highly likely that any modification to a five-year time period will pose issues in the
negotiations with the U.S. Fish and Wildlife Service. Mr. Warren believes the current permit
condition states that within 90 days of non-use of the line, a restoration and removal schedule
will be given to U.S. Fish and Wildlife Service. Mr. Warren explained that this point has been an
ongoing discussion with U.S. Fish and Wildlife Service and they would like the line removed
sooner, rather than later. Mr. Warren expressed being thankful the discussions have developed
well and would not want them to go sideways.
Mr. Janorschke informed that HEA has worked with U.S. Fish and Wildlife Service for years.
The line has not been useful since 2012, and verbal discussions with the local agency
representatives resulted in permission to keep the system in place until there was a plan. This
was the understanding. Even though it is outside the terms of the agreement, the agency has
allowed this encumber for about seven years longer than they had to. Mr. Janorschke
explained HEA did not want to lose the right-of-way. He cautioned against going back and
changing any terms that were discussed in negotiations. Mr. Janorschke understands the
O&D's concerns, but believes it would be an error not to seize the opportunity to get and retain
the 100-foot right-of-way. Mr. Janorschke suggested to continue the discussions and make
every effort to abide by the commitments.
Chair Izzo discussed the Committee has a few choices and he is open to thoughts from
members to discuss next steps. Chair Izzo stated that his recommendation is to take action in
support of AEA's efforts to -date.
MOTION: A motion was made by Mr. Thibert that the BPMC support Alaska Energy
Authority's permitting efforts and determination of the timeline for the removal of the
69kv Line. Motion seconded by Mr. Janorschke.
Mr. Sarauer commented that he believes that the O&D Committee would concur with the
motion.
Chair Izzo noted the Committee appreciates the feedback and input from the O&D, as well as
their recommendation.
A roll call vote was taken, and the motion passed unanimously.
Mr. Sarauer informed that the O&D Committee held elections for a new Chair, and Russell
Thornton with CEA will begin as new Chair in January. Mr. Sarauer believes that Andy Patrick
with HEA will be the new Vice -Chair. Chair Izzo expressed appreciation for the update and to
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Mr. Sarauer for his service to the O&D Committee and hopes he will continue to be a member of
the O&D Committee.
B. Operator's Report
Chair Izzo requested Bob Day, HEA, present the Operator's Report. Mr. Day showed pictures
on a slide presentation to those in -person. Mr. Day explained the outage on the needles on Unit
1 began on November 2"d, with the anticipation to replace the rubber seals and the O rings.
Unfortunately, the outage has been extended considerably due to additional complications. Mr.
Day explained that an expert from Austria analyzed the equipment and mechanism of failure.
Mr. Day stated that the report and analysis from the expert is due soon. There was corrosion
found internally in the needle, but it is unknown which occurred first; the failure of the seals or
the corrosion.
Mr. Day explained that because of the corrosion, the main piston shafts had to be removed and
remachined. The entire repair had been even more complicated in the midst of COVID-19,
because of travel and a machine shop outbreak. The equipment will be reassembled after the
holiday break and Unit 1 is expected to be back in service by the middle of January. He
apologized for the delay and noted he wants to ensure this expensive repair is done correctly.
Mr. Day informed that the lake level is down to about 1,150. There were no questions.
Chair Izzo expressed appreciation to Mr. Day for his report.
10. COMMITTEE ASSIGNMENTS - None.
11. MEMBERS COMMENTS
Mr. Burns expressed that it is wonderful to have the SQ purchase poised to close. He thanked
Mr. Warren for his efforts and for the informative presentations. Mr. Burns wished everyone a
joyous Christmas and New Year. He urged everybody to be safe.
Mr. Thibert congratulated Mr. Thayer on the clean audit and thanked him for leading those
efforts. Mr. Thibert expressed appreciation to Mr. Sarauer for his service this past year on the
O&D Committee. He thanked Mr. Day for his Operator's Report. He wished a safe and happy
holidays to all.
Mr. Janorschke expressed appreciation for everyone's effort in today's meeting, including AEA,
and Mr. Gibson for his fantastic job in facilitating all of the documents. He wished everyone a
Merry Christmas.
Mr. Thayer expressed appreciation to all, especially regarding the SSQ Line transaction. He
thanked the AEA staff and the utilities for entrusting the completion of the transaction. Mr.
Thayer informed that he will be signing a bond at noon and will be ready and poised for the
closing on the 17cn
Chair Izzo noted that he will deviate and ask Mr. Gibson if he has any comments. Mr. Gibson
expressed appreciation for the kind words. He noted that there is still work to be completed
together, and then movement can proceed to much more fun and bigger adventures.
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Chair Izzo echoed the comments. He wished everyone a safe and Merry Christmas. He
thanked Ms. Bertolini for the leap forward in technology. Chair Izzo indicated the possibility of
seeing each other again in 2021.
12. NEXT MEETING DATE - January 29, 2021
13. ADJOURNMENT
There being no further t usiness for the committee, the meeting adjourned at 11:46 a.m.
BY:
Tony Izzo, Chair
Attest:
Alaska Energy Authority, Secretary
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