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HomeMy WebLinkAbout2025.03.21 BPMC Meeting Minutes ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 1 of 8 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) MEETING MINUTES March 21, 2025 1. CALL TO ORDER Chair Million called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:01 a.m. A quorum was established. 2. ROLL CALL (for Committee members) Travis Million (Golden Valley Electric Association [GVEA]); Tony Izzo (Matanuska Electric Association [MEA]); Larry Jorgenson (Homer Electric Association [HEA]); Brian Hickey (City of Seward); Arthur Miller (Chugach Electric Association [CEA]); and Curtis Thayer (Alaska Energy Authority [AEA]). 3. PUBLIC ROLL CALL (for all others present) Jennifer Bertolini, Mark Billingsley, Bryan Carey, Pamela Ellis, Josie Hartley, Ryan McLaughlin, Jim Mendenhall, William Price, Mark Ziesmer (AEA); Joel Paisner (Ascent Law Partners); Sherri Highers, Andrew Laughlin, Mike Miller (CEA); Dan Bishop, Sarah Villalon (GVEA); Andrew Jensen (Governor’s Office); Sarah Lambe, Andrew Patrick (HEA); Josh Crowell, David Pease, Matt Reisterer, Jon Sinclair, Tony Zellers (MEA); Julian Jensen and Bernie Smith (Public). 4. AGENDA APPROVAL MOTION: A motion was made Mr. Izzo to approve the agenda. Motion seconded by Mr. Thayer. The motion to approve the agenda passed without objection. 5. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES – February 14, 2025 MOTION: A motion was made by Mr. Miller to approve the Minutes of February 14, 2025, as presented. Motion seconded by Mr. Hickey. The motion to approve the Minutes of February 14, 2025, passed without objection. 7. NEW BUSINESS A. FY26 BPMC Budget ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 2 of 8 Mr. Thayer noted that Mark Ziesmer, AEA, will provide the information regarding the FY26 BPMC Budget. Mr. Ziesmer noted that page three is the 2026 Proposed Budget Summary that includes three sections of Bradley Lake, Battle Creek, and the SSQ Line. He reviewed the highlighted Column F. and discussed the expenses for Bradley Lake. The Operations and Maintenance (O&M) of Schedule B is $7,711,376. This is an increase of approximately $16,000 from FY25. Mr. Ziesmer directed members to Schedule B, page five, which shows a summary of the expenses by type and the increases and decreases from FY25. The administrative costs have increased approximately $571,615. This is due primarily to an expectation of increased insurance costs and the beginning of the process for the FERC 12 inspection. Another big variance is an increase of $149,487 for contractual expenses. This is mostly related to an increase in air travel to and from Bradley Lake. The two large decreases are related to having a requirement of less budget for the outside consultant. The expectation is that the contract may end fairly soon. Overall, the O&M budget remains flat compared to the prior year. Mr. Ziesmer directed members’ attention back to the summary on page three; Renewals/Replacement Schedule D of $2,490,381. He noted that Schedule D contains the R&C Disbursement and Repayments found on page nine of the report. These projects are typically large capital projects. Mr. Ziesmer explained that the funding amounts are based on the formula which takes ¼ of the total cost from the prior three years plus a ¼ for the current year’s budget to determine the amount. The projected distribution is balanced over the four-year period. Mr. Ziesmer discussed that for FY26, there are four projects with a combined total of $3,492,407. Using the cash requirement method, there is a requirement for FY26 for $2,490,380. Mr. Ziesmer directed members’ attention back to the summary on page three; Non R&C Capital Purchases Schedule A found on page four of the report. These projects tend to be smaller capital projects that generally are completed within one year. The proposed budget amount totals $521,000. Mr. Ziesmer directed members’ attention back to the summary on page three, and noted the two remaining expense lines for Bradley Lake; Transfer To (From) Operating Reserve and Debt Service. There is a requirement to have 20% of the total budgeted O&M set aside in the reserve account. The $12 million listed for Debt Service is for principal and interest for Bond Series 11. This amount comes directly from the amortization schedule. The total expenses for Bradley Lake equal $22,738,295. Mr. Ziesmer directed members’ attention to revenues for Bradley Lake. He explained that revenues are a function of expenses. The interest income listed is an estimation. Mr. Ziesmer noted that the estimation for the prior year was high and did not anticipate the decrease in interest rates from 5.2% to 3.15% that occurred. The interest rate has decreased again since January. Mr. Ziesmer explained that the utilities will contribute slightly more compared to last year to make up for the difference in lower interest earnings and to cover all of the costs. The proposed Utility Contribution Schedule C total of $22,508,995 is delineated on page eight of the report. Mr. Ziesmer explained the tables showing the power purchasers’ percent share of contributions annually and monthly. ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 3 of 8 Mr. Ziesmer directed members’ attention back to the summary on page three, and reviewed the project expenses for Battle Creek. Schedule F Operations & Maintenance increased approximately $130,000. This is related primarily to the requirement to complete a Fish and Habitat Management Plan. Schedule E Capital Purchases is budgeted for $5,000 to complete the current survey project. Mr. Ziesmer explained that the Transfer To (From) Operating Reserve amount is the corresponding set aside of 20% of the O&M Budget. Based on the capital reserve schedule received from the trustee at U.S. Bank, the Transfer To (From) Capital Reserve will be decreased by $58,284. These funds will go back into Battle Creek operations. The Debt Service amount of $2,831,745 is for principal and interest payments of Bond Series 7 and Bond Series 8. This is based on the amortization schedule. The IRS subsidy amount is also based on the amortization schedules for Bond Series 7 and Bond Series 8. The total expenses for Battle Creek are $2,599,660. Mr. Ziesmer directed members’ attention to revenues for Battle Creek. The interest income is anticipated to be less than last year. The Utility Contributions Schedule G is found on page 13 of the report. Mr. Ziesmer explained the tables showing the power purchasers’ percent share of contributions annually and monthly for Battle Creek. He highlighted that the percent shares for Battle Creek are different from the percent shares for Bradley Lake and for the SSQ Line. Mr. Ziesmer directed members’ attention back to the summary on page three, and reviewed the project expenses for the SSQ Line. Schedule I Operations & Maintenance reduced by approximately $70,000. This is related primarily to the overbudgeting in previous years. Mr. Ziesmer explained that the Transfer To (From) Operating Reserve amount is the corresponding set aside of 20% of the O&M Budget. The Debt Service amount for principal and interest payments of Bond Series 10 is based on the amortization schedule. The total expenses for the SSQ Line are $701,897. Mr. Ziesmer directed members’ attention to revenues for the SSQ Line. The interest income is anticipated to be less than last year. The Utility Contributions Schedule J is found on page 16 of the report. Mr. Ziesmer explained the tables showing the power purchasers’ percent share of contributions annually and monthly for the SSQ Line. Mr. Izzo indicated that Matt Reisterer, MEA, has his hand raised. Mr. Reisterer thanked Chair Million, Mr. Izzo, and particularly Mr. Ziesmer for the budget presentation. Mr. Reisterer commented that the Budget Subcommittee conducted its work to move the budget forward and is focused on the recurrent budget underruns, resulting in substantial refunds. The Budget Subcommittee has asked the Operation and Dispatch (O&D) Committee to review the status either monthly or quarterly and to identify any significant cost reductions or deferrals approaching $500,000, such that a budget amendment can be effectuated during the year to reduce the budget, rather than returning a large refund at the end of the year. The intent is for the utilities to be able to better utilize that refund amount throughout the year. Chair Million expressed support for that approach and the benefits it could provide. There were no other comments or questions. ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 4 of 8 MOTION: A motion was made by Mr. Izzo to approve the Fiscal Year 2026 Budget as presented. Motion seconded by Mr. Miller. A roll call was taken, and the motion to approve FY 2026 Budget passed unanimously. 8. OLD BUSINESS A. Grip 3, Phase 1 Update Chair Million requested Jim Mendenhall, AEA, to provide the GRIP 3 update. Mr. Mendenhall formally recognized Josi Hartley, who has been at AEA for five years and is transitioning to the Grid Resilience and Innovation Partnerships (GRIP) team. Mr. Mendenhall discussed that as reported at the last meeting, Department of Energy (DOE) funding was on pause due to the executive orders. As of March 3rd, the DOE is back in conversations with AEA. The official kickoff meeting occurred on March 19th. The current budget period 1A expires on June 30th, 2025. It is $14 million. Mr. Mendenhall indicated that match funding totals approximately $63 million, and the next budget phase will be incorporated. Mr. Mendenhall discussed that the Technical Working Group met on January 23rd, and decided the preference was for 200 MW of transfer capacity and a bi-pole system. The environmental review is being undertaken for the Southern Intertie alternative route, which was approved in an Environmental Impact Statement (EIS) approximately 20 years ago. It will be utilized as an alternative route during the National Environmental Policy Act (NEPA) application process. Mr. Mendenhall advised that both contractors Stantec and EPS have been active. Stantec issued a Request for Information (RFI) for the cable and converter stations. Some responses have been received, and several manufacturers have asked for additional time. The range of pricing is broad, with the lower end of pricing closest to the preliminary budget. Mr. Mendenhall stated that he will share the GRIP video that was produced. A member requested that Mr. Mendenhall provide a high-level summary of the status of the GRIP spending, BPMC utility contribution and payment amounts, and the expectations for this year. Mr. Mendenhall explained that three invoices have been submitted since January 1, 2025 to the DOE. All three invoices have been paid, totaling approximately $600,000. Half of that amount was contributed by the federal match. Mr. Mendenhall discussed that DOE has allocated the whole $206.5 million to the project. There is $12.7 million in State funding, and $50 million from the BPMC. The expectation is that $15 million could be spent within the next few months to purchase production schedules. The $62 million is expected to lead until the middle of 2027 calendar year. Mr. Thayer noted that the GRIP video is loading. He presented it yesterday to the House Finance Committee and will present the video to the Senate Finance Committee next week. There is full support for GRIP. However, the amount of available funding continues to be discussed. Mr. Thayer discussed that AEA began the video presentations with Dixon Diversion, Bradley Lake, and the GRIP video wraps up this series for legislators. He noted that many legislators have ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 5 of 8 shared the videos with their constituents. The GRIP video was shown. Mr. Mendenhall highlighted the efforts of Brandy Dixon, AEA, for the video productions. Mr. Thayer noted that he will provide the video link for members to share on their websites. Chair Million agreed the video is an effective way to share the information about the project. There were no other comments or questions. B. Railbelt Regional Coordination Update Chair Million indicated that Mr. Hickey will provide the Railbelt Regional Coordination Update report that is included in the Committee packet. Mr. Hickey discussed that there has been very little activity since the last BPMC meeting. There were no comments or questions. 9. OPERATORS REPORT Chair Million requested Martin Law, HEA, provide the Operators Report. Mr. Law reviewed the report and indicated there were no items out of the ordinary. The road to the dam is open. The snowfall in that area has been light all winter. The remodel of the crew’s quarters kitchen has begun. Mr. Law directed members’ attention to the reference pictures in the report. Mr. Izzo thanked Mr. Law for his report. He referenced the picture at the top of page three titled Bradley Lake Fish Water Screen Debris Removal Project 2016, and asked why the nine-year-old photo was included in the report. Mr. Law believes this is an interesting historical photo of the lake level all the way down, showing the infrastructure and the tunnel inlets. He included it for the members’ viewing enjoyment. Mr. Izzo expressed appreciation for the monthly photos included in the report. Chair Million agreed with Mr. Izzo’s comments of appreciation and that the pictures are very helpful. There were no other comments or questions. 10. COMMITTEE REPORTS A. Budget vs. Actuals Chair Million requested Mr. Ziesmer to discuss the included Budget to Actual Expenses report for the period of July 1, 2024 to February 28, 2025. Mr. Ziesmer noted that the actual costs for capital purchases not funded by R&C Funds shown on Schedule A were $213,565, and exceeded the FY25 approved budget by $63,565. This is due to the FY24 planned purchase of a vehicle that was completed in the current fiscal year, and expenses related to a new circuit breaker for Generator 2. All other items remain within their allocated budget. Schedule B shows the Operations and Maintenance (O&M) actual expenses are under budget by $1,267,423. Most of the FERC categories are close to the year-to-date budget. However, the notable categories include FERC 543 Maintenance of Reservoirs, Dams & Waterways with expenses under budget by $157,935. This is due to lower than anticipated expenditures during the winter and is ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 6 of 8 expected to increase during the spring. Additionally, FERC 544 Maintenance of Electric Plant with expenses under budget by $150,978. The Electric Plant typically undergoes a spring outage. The future expenses are expected to increase. Mr. Ziesmer reported that FERC 920 & 930 Administrative Expenses are under budget by $237,196 primarily due to a net effect of increased internal payroll and indirect costs versus lower than planned costs for professional consultants. The FERC 924 insurance premiums are under budget by $181,971. This is partly due to receipt of an annual cash distribution from the ARECA Insurance Exchange. FERC 923 Outside Services is under budget by $165,720 due to lower than anticipated expenses related for consultants. FERC 928 Regulatory Commission Expenses are under budget by $140,961 due to the timing of the budget versus invoices. Mr. Ziesmer anticipates the budget will be fully utilized by the end of the fiscal year. Mr. Ziesmer noted that Schedule D shows the actual R&C purchases at a total of $2,135,306. The expenses were primarily related to the needle rebuild project. The Dixon Diversion project costs totaled $6,339,938, of which $1,940,591 was paid by Bradley Lake R&C Fund, $684,360 was paid by the Renewable Energy Fund (REF) Grant, and $3,714,987 was paid by State allocations. Mr. Ziesmer indicated that the remaining budget for the R&C, the REF Grant, and the $5 million State appropriation has been fully obligated, and should be fully expended over the next several months. Mr. Ziesmer discussed that Schedule E shows the Battle Creek Non-R&C Capital Purchases totaling $2,621, related to the one project. Schedule F shows the Battle Creek O&M expenses were under budget by $220,811, primarily due to the 4% allocation cost from Bradley Lake. There continues to be no planned fiscal year activity or budget for Schedule H. Mr. Ziesmer discussed Schedule I shows that the SSQ Line O&M expenses were under budget by $151,413 due to less than anticipated expenses to-date. Mr. Ziesmer reviewed Appendix A, Capital Projects Funded by Bond Proceeds for Bond Series 11. The cumulative spending was $1,968,900, of which $1,819,647 directly pertains to the two SSQ Line upgrade projects. Mr. Miller requested a status update regarding the battery energy storage system (BESS) payments. Mr. Thayer explained there is a signed agreement, and a check has been administered to CEA. He noted that a signed agreement is forthcoming with MEA, and is expected shortly. Mr. Thayer discussed that work continues with Chair Million on GVEA’s batteries, and that work is ongoing with HEA regarding their agreement. Mr. Miller asked if the funding that would be for GVEA will stay in the account and the interest earned will stay with GVEA. Mr. Thayer agreed. He stated an agreement is being drafted now regarding the work on their battery. Mr. Thayer indicated that AEA would like to begin all the agreements at the same time so that the bookkeeping is consistent for the utilities. There were no other comments or questions. B. O&D Report Chair Million requested Josh Crowell, MEA, review the Operation and Dispatch (O&D) Committee Report. Mr. Crowell, O&D Chair, noted that HEA is working on reporting on the ___________________________________________________________________________ BPMC Minutes 3/21/25 Page 7 of 8 budget reviews requested by the Budget Subcommittee. There were no questions for Mr. Crowell. Mr. Thayer asked if this is an appropriate time in the meeting to discuss publicly the BPMC’s plans regarding a possible Mount Spur eruption. Chair Million agreed, and there was no objection. Mr. Jorgensen indicated that the contingencies are part of the emergency action plans. The Alaska Volcanic Observatory website is monitored. The website is updated daily, and includes ash dispersion maps based on elevation and wind direction. The broad focus includes Bradley Lake facilities, transmission lines, the Static VAR Compensators (SVC), and generating units. The preparedness considers adequate stock of filters. However, since ash is conductive and corrosive, in the event of ashfall in the area, the SVCs would be shut down. This would restrict the Bradley Lake output. The facilities at Bradley Lake do not have the capability of filtering ashfall if it reaches Bradley Lake. In that instance, the building would be shut down and the HVAC entrances would be covered. The intent is to reduce the amount of air movement in and out of the building to prevent the potential amount of ash. The historical amounts of ash, generally, have not been significant. Additionally, staff has reviewed studies completed after the eruption of Mount Saint Helens regarding taking lines out of service and cleaning the insulators. The response will be reflective of the impacts of the quantity of ashfall after an event. There were no other comments or questions. 11. EXECUTIVE SESSION: No Executive Session. 12. MEMBERS COMMENTS Mr. Miller commented on the good meeting. He expressed appreciation for the reports and the additional information on the GRIP and budget. He is pleased with the continued positive trend of the budget variance. Mr. Thayer thanked everybody. He commented that if any members find themselves in Juneau, there are many positive questions regarding the GRIP being discussed, including funding possibilities. He encouraged positive communication in Juneau. He will share the videos so that the same information is provided to everybody. Mr. Hickey expressed appreciation for the reports and for the efforts in preparing the budget and the budget-to-actual report. Mr. Izzo echoed the previous comments. Mr. Jorgenson expressed appreciation for the meeting and all of the information. He noted that Brad Janorschke, HEA, will be in attendance at next meeting. Chair Million thanked AEA staff for the budget presentation. He thanked Jennifer Bertolini, AEA, for keeping the Committee on track and for providing the information to the members in a