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HomeMy WebLinkAboutALCAN Electric Exports intertie 2007AEA:Southeast Alaska Energy Export FY2007 Request:$3,200,000 Reference No:AMD42109 P/AL:Appropriation Project Type:Planning Category:Development Location:Southeast Alaska Contact:Ron Miller House District:Southeast Districts 1-5 Contact Phone:(907)269-3000 Estimated Project Dates:07/01/2006 -06/30/2009 Brief Summary and Statement of Need:Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia.This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid. Funding:FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 Total Gen Fund $3,200,000 $3,200,000 Total:$3,200,000 $0 $0 $0 ,$0 $0 $3,200,000 TZ State Match Required I One-Time Project [2]Phased -new ("i Phased -underway [7 On-Going 0%=Minimum State Match %Required i Amendment T=Mental Health Bill Operating &Maintenance Costs:Amount Staff Project Development:0 0 Ongoing Operating:0 0 One-Time Startup:0 Totals:0 0 Additional Information /Prior Funding History: None. Project Description/Justification:As the nation's domestic energy costsincrease,exporting Alaska hydropower becomes increasingly economically viable. One route (the ALCAN Intertie)was permittedin 1988;the proposed intertie starts at Tyee Lake,traverses northeast up theBradfieldCorridor,then northeast down the Craig River to the British Columbia border.The British Columbia Transmission Corporation gains stability by connecting to Southeast Alaska and provides an opportunity for Southeast Alaska to developelectricityfromlocalhydroelectricresourcesthatcouldeventuallybesoldtoU.S.energy markets. The Alaska Energy Authority (AEA)proposes to request export development proposals from potential developers includingSoutheastAlaskapowerproducerstobeawardedasacompetitivegrant. State of Alaska Capital Project Summary ) Department of Commerce,Community,and Economic DevelopmentFY2007GovernorAmendedReferenceNo:42109 4/28/06 3:26:33 PM Page:1 (4b Pr Page |of 1 Karl Reiche From:James Strandberg Sent:Monday,August 07,2006 9:21 AM To:Ron Miller Cc:Sara Fisher-Goad;Karl Reiche;David Lockard Subject:FW:Alcan Intertie project From:Michael Barton [mailto:Mike_Barton@dot.state.ak.us] Sent:Saturday,August 05,2006 2:18 PM To:Mark Taylor;James Strandberg;Michael J Chambers;Linda J Hay Ce:Teri A Veasey Subject:Alcan Intertie project here is the drill. steering group,etc will meet in ktn on 8/17.time to be determined by mark taylor considering plane schedules,etc. mark taylor should work with jim standberg and/or others at aea to get trvl reimbursement protocols set up. i/we/not gov will have press availability on 8/11 for wrgl,pbrg,ktn media.mike chambers to set this up telephonically.jim strandberg should be available for that.time to be determined nit tues by chambers.msg will be upcoming mtg,moving quickly at direction of gov, structure of the project,work to date and near term up coming work (jim,ur planned trip).work stuff to be handled by jim strandberg.i will do rest.. mark and linda should proceed with phone calls previously discussed. 8/7/2006 ACCLAY + Karl Reiche Eram:James Strandberg it:Monday,August 07,2006 9:18 AMRonMillerCe:Karl Reiche;Sara Fisher-Goad;David Lockard Subject:FW:(no subject) Attachments:Steering group4-1-10.doc Steering p4-1-10.doc (3¢;..;Here is the final make up of the advisory bodies for the AL-CAN intertie.R.Jim -----Original Message----- From:Michael Barton [mailto:Mike Barton@dot.state.ak.us] Sent:Monday,August 07,2006 9:15 AM To:Mark Taylor;Linda J Hay;James Strandberg Cc:Teri A Veasey Subject:(no subject) final ALCAN INTERTIE PROJECT PURPOSE The purpose of this effort is to facilitate the development of the Southeast electrical intertie through the development of the Alcan intertie for energy export.The export of energy though the Alcan intertie will enable the completion of interties throughout Southeast Alaska including completion of the Swan-Tyee connection.Energy export could lead to the development of a number of hydro-electric projects in many locations in Southeast Alaska meeting domestic power needs and providing a surplus for export.The goal is to provide the energy needed for economic development in Southeast Alaska resulting in jobs for Alaskans and providing reliable,less costly alternatives to diesel generated electricity for Alaskan communities. STRUCTURE The Alaska Energy Authority (AEA)will employ contractors to confirm the feasibility, and then competitively contract with private developers of hydropower resources.AEA will also determine the extent of transmission infrastructure needed,establish business models for the development of,ownership,and operation and maintenance of the transmission backbone that will convey Alaska hydro power to Canadian and US markets. In recognition of the various interests in Southeast Alaska,a steering group and two subcommittees comprised of regional representatives are established to advise AEA in its work to confirm the feasibility and contract for development.This will ensure that Southeast Alaska has a direct involvement in this economic development initiative. The participants are asked to serve for the duration of the project undertaken by AEA; approximately 6 months. Steering group This group will provide advice and recommendations to the Administration on the structure and approach for project development,as well as review comments on consultant feasibility reports.The group will specifically 1.Consider the work plan for advancing the Energy Export project to include consultant feasibility contracts and the structure for project development 2.Consider and comment on the draft scopes of work for feasibility consultant contracts. 3.Consider the different types of business structures for the ownership, operation,and maintenance of transmission infrastructure. 4.Monitor progress and suggest adjustments to process. The Steering Group will meet at the call of the Administration but at least bi-monthly. The Steering Group will be chaired by the Commissioner of the Dept.of Transportation and Public facilities. Work Group The Work Group will work routinely with the AEA Project Manager to provide advice and recommendations regarding the conduct and direction of the Intertie project.The Work Group will meet at the call of the Administration or the AEA Project Manager but at least monthly.The Work Group will meet jointly with the Steering Group when the Steering Group meets.The Work Group will be chaired by JC Conley. Technical Group A Technical Group will be comprised of engineering,accounting,economics,and legal support.This group will provide technical advice to the Work Group and the AEAProjectManagerasrequested.At the request of the AEA Project Manager,the Technical Group may work directly with any consultant or contractor. PARTICIPANTS Steering Group Senator Bert Stedman (representing Senate District A) Representative Jim Elkins (representing House District 1) Representative Peggy Wilson (representing House District 2) Ron Miller -AEA Henrich Kadake -Mayor of Kake Joe Williams -Mayor of Ketchikan Borough and Mayor of Saxman Valerie McCandless -Mayor of Wrangell Bob Weinstein -Mayor of Ketchikan Murray Walsh -Executive Director of SE Conference Bill Williams-former legislator Patty Grantham-District Ranger,Forest Service Mike Barton-Commissioner,Dept of Transportation and Public Facilities (Chair) Work Group Dennis Lewis-former Exec.Director,4 Dam Pool Dave Carlson -Executive Director,4 Dam Pool John Bolling -Co-chair SE Conference Energy Committee David Stone -Co-chair SE Conference Energy Committee Jim Strandberg-AEA Project Manager Mark Taylor-Dept of Transportation and Public Facilities JC Conley-SE Conference (Chair) Technical Group Joe Nelson -Petersburg Power and Light Jay Hansen -Electric Division Manager -City of Ketchikan Paul Bryant -Metlakatla Utility Mark Edwards-Dept of Revenue AAG- Others as needed Page 1 of1Aepw Karl Reiche From:James Strandberg Sent:Wednesday,August 02,2006 11:52 AM To:Ron Miller Ce:Karl Reiche Subject:AL-CAN Intertie The first steering committee meeting is scheduled for Ketchikan on August 11".Governor will kick it off,Barton will follow,and |will follow with some comments concerning status and work plan.|would expect to spend some time with the work group ironing out process.I plan to use the web site to get good communication. |am also invited to tour the Swan Tyee intertie with Dave Carlson and George Cannelos and Kathy Prentki,of the Denali Commission,and JC Conley,work group chair,on the 17"of August.Dave would entertain at his house in Petersburg the night of the 16",and fly the route on the 17".|plan meetings in Ketchikan on Friday the 18th. |would hope Dave Lockard could also go. This will entail chartering a separate Cessna 185 on wheels for a day,since access to Tyee is via runway.Float access is only at high tide.Dave and Denali Commission will fill up one airplane. R.Jim 8/2/2006 AicAw Page 1 of 1 Karl Reiche From:James Strandberg Sent:Tuesday,August 01,2006 10:23 AM To:Ron Miller Ce:Karl Reiche;Sara Fisher-Goad;David Lockard Subject:FW:copy of Gov ltr to Premier Campbell,080106,and AEA Attachments:080106 Campbell,AEA.PDF;martha_fischbach.vcf From:Martha Fischbach [mailto:martha_fischbach@gov.state.ak.us] Sent:Tuesday,August 01,2006 10:14 AM To:Katz,John;Mike Barton;Mark L Taylor;James Strandberg;Linda 3 Hay Cc:Teri A Veasey Subject:copy of Gov Itr to Premier Campbell,080106,and AEA Attached is your copy of a letter sent by the Governor,to Premier Campbell,re energy and Alaska Energy Authority (AEA).It was faxed to Campbell this morning. Martha 8/1/2006 Page 1 of 1 Karl Reiche From:James Strandberg Sent:Friday,July 28,2006 2:02 PM To:Linda Hay;james_clark@gov.state.ak.us Ce:Mike Barton;Ron Miller;Karl Reiche;David Lockard Subject:timing for Canadian decisions on transmission; Jim/Linda |had a conversation with Rohan Soulsby of BC Transmission this morning.|asked what the schedule is for decisions on the Forrest Kerr transmission line sizing.Rohan said they were under study now,and one primary issue was the need to upgrade this line from the 138KV size that would serve Galore Creek and Red Chris from the Forrest Kerr hydro project,to a higher 287 KV voltage that would allow Alaskan energy to be exported into Canada.A decision on this is to be made soon. The discussion revealed that we should act quickly to influence the Canadians on this sizing,and Rohan agreed that a meeting between Governor Murkowski and the BC Premier could be helpful as one of our actions.Here is why. The negotiations on who pays for what on the transmission infrastructure in the BC grid are scheduled to be complete by September 15.(The BC government has apparently hired a negotiator to accomplish this.)The concrete will begin to set on what gets built after this date when funding is allocated and decisions on the infrastructure begin to be made.Rohan also said that there is a province level energy plan that is in the final stages of preparation and is due for completion by the end of the year.One important goal the BC government is pushing in this energy plan is energy self sufficiency for BC. Rohan,as director of business development for the transmission entity BCTC seems to be in the know on the Canadian dynamic (he is a grey beard),and said a visit by Governor Murkowski could be helpful to get recognition of the Alaska export potential in BC's grid planning.Rohan had apparently called the governor's office in June on this matter,but did not get a call back. We talked about agenda items that could be before the Governor and Premier during their meeting,and came up with this preliminary list: 1.Explain Alaska's interests in exporting energy -How Alaska's power exports could provide economic development on both sides of the border,and facilitate reduced costs for power on both sides. 2.The need to consider Alaskan SE hydro export energy in conjunction with the long term BC goal of energy self sufficiency in the BC energy plan. 3.Assure Alaska's ability to move energy through Canadian transmission infrastructure should it find customers for its power in the US Pacific Northwest.Access and reasonable charges for the long term are primary and important considerations. 4.Alaska's timetable for completing export feasibility work and beginning project development,and ways to integrate our timetable with the BC timetable. 5.Discussion of a government to government MOU to memorialize understandings. Rohan mentioned that there could be minister level meetings to implement the goals agreed to by the Governor and Premier,and asked who in our government would be the point person for energy policy.He was going to check on that from his side.|indicated Mr.Ron Miller,Executive Director of AIDEA and AEA is our State's energy policy person,and he could meet with the BC energy ministry during or after the Governor/Premier meeting and assist in the deliberations. Feel free to call with questions. Regards,Jim Strandberg 7/28/2006 As discussed:AIDEA is preparing for the technical meeting in China in August and will give Penglai advance notice of certain design changes.Changes proposed include: e Electrical service:An ASD requested upgrade,Penglai agreed in principle to provide at no cost. e Trolley Rail:The TNH/TEA-LU team recommends rails using a hardened steel with reduced cross section. e ASD requests:more paint,an abrasion resistant surface where the hull contacts the grid,and insulation for the safety deck. AIDEA's policy is to conserve remaining funds to either cover unforeseen design and/or deliver issues,and for the R&R fund. AIDEA will request Penglai to price the rail material change,but not ASD's proposed changes. Purpose of RFP Filing Puget Sound Energy's ("PSE"or "the Company")recent Least Cost Resource Plan ("LCP"),published in May of 2005,indicates the Company has a significant need for electrical resources,including energy efficiency,energy,and capacity resources.These resource needs grow substantially over time.In order to help ensure PSE acquires the lowest reasonable cost resources for our customers,the Company filed a Request for Proposals from Ail Generation Sources ("All-Source")and a Request for Proposals for Electric and Gas Demand-Side Resources ("Energy Efficiency")(collectively, "RFPs")with the Washington Utilities and Transportation Commission ("WUTC"). PSE has identified a significant energy and capacity need commencing in the winter of 2006/07 with an energy need of 233 average megawatts and a capacity need of approximately 1000 MW.By 2015,PSE's growing energy need is approximately 1,591 average megawatts and the capacity need is approximately 1,600 megawatts.(PSE's need period for this RFP is defined as winter 2006 up to 2015.) It is anticipated that programmatic conservation will reduce PSE's energy need by approximately 279 average megawatts by 2015 (198 average megawatts from energy efficiency and 81 average megawatts from fuel conversion). PSE's need for energy and capacity resources is largely determined by load growth and the loss of generation resources due to net contract expirations. WUTC Approval At its public meeting on October 26,2005,the WUTC approved PSE's RFPs.PSE issued its RFPs in final form on November 1,2005 which includes the changes that PSE accepted during the public comment period.(Note these changes can be viewed below and reflect changes to the All-Source RFP only.) Schedule Responses for the Energy Efficiency RFP will be due December 15,2005.Responses for the All-Source RFP will be due January 13,2006.(A more complete RFP schedule can be found in each of the RFPs.) Pre-proposal conferences are scheduled for November 14,2005 for the Energy Efficiency RFP and December 2,2005 for the All-Source,(Note that the dates for the pre-proposal conferences have been revised from the dates shown in the draft RFP.)Details on location and time will be forthcoming. Questions regarding the Energy Efficiency RFP may be sent to pseEErfp@hotmail.com.For questions regarding the All-Source RFP please contact Sheri Maynard,Resource Coordinator,at 425/462-3114 or email her directly at sheri.maynard@pse.com.If you are not on our email distribution list but would like to be,please e-mail your contact information to sheri.maynard@pse.com. Thank you for your interest in PSE's RFP process. All Source RFP id lonthlyEnerayNeedExtitt'Evaluation Criteriairy.Data (downloadable Excel file) irements le (downloadable Excel file) plate (downloadable Excel file) reementExhibitVIL.Avo f coat SchedlesExhibitIX.Prototype Power PurchaseAgreement it X.Prototype Ownership Term Sheet <1,PrototypeExchangeAgreement Energy Efficiency Eneray Efficiency REPExhibit.L.Sumrnary.Pata.Tables.(downioadaple Word file) Energy Effiiclency FAQs through Dec 7,2005 2005 RFP Public Meetings Aug.18,2005 REP Public Meeting PresentationAug..18,2005 REP Public Meeting List Nov,14,2005 Energy Efficiency Pre-Bid ConferenceRec..02,.2005 All SourceREPPre-Bid Meeting PresentationDec.02,2005 REP Public Meeting List Current Energy Efficiency Programs Appendix A.-Program DescriptionsAppendixB-Program Targets and BudgetsAppendixC-Program Cost EffectivenessAppendixD-Program Measurement &Evaluation Plan ”Page 1 of2 Karl Reiche | From:John Pearson [jpearson@ptialaska.net] Sent:Wednesday,July 26,2006 1:30 PM To:Commissioner Mike Barton Ce:Gary Benedict -Hyder Board of Trade;Mayor Angela Brand-Danuser Subject:Upcomming S.E.Intertie Study and the Soule River Project Commissioner Barton, |just saw where you have been dispatched to the Southeast Intertie Work Group to address four primary areas surrounding the regional intertie project. The Hyder Board of Trade is very interested in the outcome of study and therefore find it essential for your working group to seriously consider,and be aware of fact,that in September 2005,Alaska Power and Telephone Company placed a Preliminary Permit Application before FERC for construction of a project they call the Soule River Hydroelectric Power Project.The Hyder Board of Trade strongly supports realization of this project near Hyder. In view of the fact that the AP&T Soul River Project has the potential of meeting the Northern British Columbia resource industry needs without the high cost of a Bradfield routing,it would seem important for Soule River project to be on the table of the working group in considering any Northern BC power needs. The Hyder Board of Trade interests in the Soule River Project surrounds the economic potential for Hyder in the natural resources industries surrounding our community as well as that of Stewart BC.Our thoughts, understanding and support for the Soule River project includes: New employment and economic development opportunities for Hyder/StewartTheprojectoutputsizeasa42megawattfacility The line project requires only a short 9.72 mile,35 KV submarine cable to reach the BC Power grid at Hyder Alaska. The project is totally outside of the Misty Fjords designation In comparing the planned Soule River output of 42 megawatt,our understanding is that Swan Lake is 34- megawatt and supplies much of Ketchikan's power needs,while the 20-megawatt Tyee Lake Plant sends its power to Petersburg and Wrangell.Based on these number,the Soule River Project clearly has far more power to supply British Columbia grid than could made available by other options. The bottom line,Soule River Project is better situated to supply the BC resource development needs.'Plus, we would expect to see the community of Stewart BC strongly supporting the Hyder option for origination of Northern British Columbia power needs.The bulk of the Cassiar population is in Stewart and rapidly growing due to the mining activities that need the electrical power. Commissioner,we hope this information will be of assistance.Regional history clearly demonstrates Hyder has often been forgotten in the grand scheme of regional development efforts.|think this has again been the case. If there is any role whatsoever that the Hyder Board of Trade can plan in the study or in your meeting,let me know.Hyder has a vested interest in the subject,particularly as it relates to the Hyder neighborhood along Highway 37 and 37a. John John Pearson 7/27/2006 Page 2 of 2 Project Planner /Coordinator Hyder Board of Trade (907)789-1402 jpearson@ptialaska.net 7/27/2006 Karl Reiche Eenm:James Strandberg it:Thursday,July 27,2006 8:46 AM Ron Miller;Karl Reiche Subject:FW:[Fwd:Upcoming S.E.Intertie Study and the Soule River Project] Attachments:Upcomming S.E.Intertie Study and the Soule River Project Upcomming :,Intertie Study ;.For your information. Also from Dan Woznow of Coast Mountain Power:Shareholder meeting this Friday on the Nova Gold acquisition vote,with yes implementation on August 4th. coor Original Message----- From:Mike Barton [mailto:mike barton@dot.state.ak.us] Sent:Thursday,July 27,2006 8:13 AM To:Mark L Taylor Cc:Linda J Hay;James Strandberg Subject:[Fwd:Upcomming S.E.Intertie Study and the Soule River Project] will respond to john fri Wa JUL-14-08 FRI_O H-ALASKA DOT&PF COMM,FAX NO,9075868365 P,02 wiew.pse.cort &PUGET SOUND ENERGY Puget Saund Enorgy,inc,P.O.Box 97034 Rellavera,WA 98009-9734 May1,2006 ° Steve Manmnon Tolfhousa Energy 3833 Aldarnood Ave. Bellingham,WA 88225 Re;PSE All-Source RFP Phasg |}Evaluation Dear Mr,Marman: Puget Sound Enargy ("PSE”)has complated Phaas |of ite All-Soy P evaluation and has sslatted tha Thomas Bay Project for Inclusion on jts "candidate”et.As euch,yourproposalisoneofalxtaenthathavebeenchosenfarfurtherevaninPhaseIl, Phase II wil conalat of a more in-depth qualitative and quantitative analysis raaulting In theselectionofafinelehortfisturingthisPhageIlevaluationperiodwawouldIiketoinvitayou topresentyourprojectfoPSE's RFP evaluation team.A echedulg will be provided within the nextwookforyoutoselectatimeanddate. PSE anticipates tha fina}ehort list announcemant approximately mid to late July 2008,Pursuantfothisannouncement,final negotlations and further due diligence will enaue. Thank you for providing a compsiltive and thorough proposal,We look forward to working withyouduringPhaseIf.in the meaniime,shauid you have any questions,pleases contact ChristinePhilippsat425/402-3653 or ma at 425/462-3470, Very truly yeurs, Director,Reaource Acquisitions te Page 1 of 1 Karl Reiche From:Brenda Fuglestad Sent:Friday,July 14,2006 3:13 PM To:Sara Fisher-Goad;Christopher Rutz;Karl Reiche;James Strandberg;David Lockard Subject:Alcan Intertie Attachments:admin_aidea_org_20060714_151316.pdf 7/14/2006 Intertie -Talking Points July 24,2006 e I arranged for an appropriation of $3.2 million to AIDEA/AEA in order to do a six month study to determine whether there are sufficient economic reasons to do a prefeasibility study of exporting hydro power from Southeast up the Bradfield Canal. e If this study determines that there is an economic basis for the export of hydropower |will do four things: «Ask the Legislature for a supplemental appropriation to this year's budget to complete the Swan Lake-Tyee Intertie . *Ask the Legislature for a supplemental capitalappropriationtofundtheprefeasibilitystudy \ *Begin discussions with Nova Gold and BC Transmission Corporation (BC/TC)to determine how power from Swan Lake-Tyee could be used to meet their needs. =Negotiate with the Forest Service for a right-of-way for a power line up the Bradfield Canal. e I had held up funding of Swan Lake-Tyee because we needed a plan to make the intertie a paying proposition over time. JFC 7/23/06 Page 1 of 3 Intertie -Talking Points July 24,2006 e I believe sufficient excess power can be generated from the Thomas Bay and other projects to be able to profitably export power to B.C.Hydro. e Thus,I am willing to appropriate funds to complete Swan Lake-Tyee,knowing that it will eventually be able to pay for itself as part of the larger overall intertie project. e I think enough is known about this potential for Thomas Bay and for export that the study can be completed by January. This will be sufficient time for me to ask the Legislature for supplemental funds to begin work on the Swan Lake-Tyee project summer 2007. e I ask that AEA use the following assumptions in preparing the study: «The Thomas Bay Project would be built with private capital «Ifnecessary the State would pay for and own the transmission lines through AEA «Ifthe State owns the transmission lines then net profits from the transmission lines would be used to entice timber and mining operations to come to Southeast Alaska. JFC 7/23/06 Page 2 of 3 '*Intertie -Talking Points July 24,2006 e I also ask that AEA consider my broader vision for a Southeast Alaska Intertie: *I see SE hydro projects and communities tied together by 2030. =I see us being a net exporter of power to Canada and the lower 48 through the Bradfield Canal corridor. =I see the availability of power as a major draw to lower 48 and international timber and mining companies to come to Southeast Alaska. ¢IJ am asking AEA to supervise this important study.I am asking Commissioner Barton to put together a steering group to help guide this study. e I'm looking forward to the day when the electricity is coursing through the lines providing for economic development throughout Southeast Alaska as well as reduced costs for rate payers. JFC 7/23/06 Page 3 of 3 KEle.Cov ler aey 9 _/"OR CREE!=we GOLDENQta*,yN BEA=fevers a of,\a an TeLeonhH creeke:Ee ey &ras s "GREENS:%,,CREEKv, Turene, ey woinGAaLORE,-g.iACREEKLee a CORONATION {SLAND WILDERNESS *oN 'oe *WILDERNESS.oy SWAN LAEAKEiHa:Qo SO aeewe,¢ MILES LEGEND nweetEXISTING500KV,GRITISH COLENBIA 2 cvanemennn EXISTING 287 KV,BRITISH COLUNBIA EXISTING 138 KV,ALASKA =PROPOSED ALASKA EXISTING 338 KV,GRITISH COLUMBIA prizon ENTRARCE om TR!mma PROPOSED 138 KV,BRITISH COLUNBIA ay,poL3ee 74Lan, EXISTING HYDROELECTRIC FACILITY "AP BesheconFreyrefs}langera 1PROPOSEDHYDROELECTRICFACILITY'!foren ee gfWh fone MINERAL DEPOSIT Me AwrecryMorgue)PA ieee OVERALL FUNDING CONCEPT e Hydropower Projects -Private Investment e Transmission System -Publicly Funded (similar to Bonneville Power Administration and the Tennessee Valley Authority) o Ownership -TBPA or new SE Alaska Transmission Authority o Sustainability,through wheeling fees oFalt freer a RECHEATing <rTiMa aos &optsPage 2 of4 Southeast Alaska Intertie Economic Plan The concept of the Southeast Alaska Intertie plan is to provide inexpensive renewable hydropower energy to all SE Alaskan communities.This would reduce the cost of energy and PCE subsidies,strengthen the local economy,and displace dependence on expensive fossil fuel generation.This vision is achievable through a well thought out economic plan of an Intertie grid that not only connects the communities of SE Alaska,but also connects to the North American grid through British Columbia.Once connected to the grid via the ALCAN Segment,future extensions of the SE Intertie to other communities become economic as the extensions would also connect future hydropower projects that could export energy.Excess energy would be sold to utility companies located in British Columbia or Lower 48 states.Revenues generated from transmission wheeling rates would pay for the long-term operation and maintenance of the transmission system thereby creating an additional benefit:sustainability of the entire SE Intertie at the least cost to the communities. This vision would justify the build-out of the Intertie system throughout SE Alaska,and would provide sustainability and lower energy rates to the communities for decades eliminating the risk of reliance on fossil fuels. Renewable hydropower would facilitate the restoration of the economies in small rural towns by bringing in more infrastructure and jobs,new private capital investment,increase the standard of living,decrease PCE subsidies,and an increase in land values all by reducing the major cost of doing business:energy. GOALS e Reduced power costs in Southeast Alaska communities, e Eliminate adverse effects of Fossil Fuel Generation, e Develop and maintain reserve hydropower capacity for future Southeast Alaska needs,including o Timber -Sawmills and value added processing, o Mining -Mine operations and ore processing, o Fishing -Processing,flash-freeze and added value fish products, o New industries such as data storage and electronic systems that demand reliable and sustainable electrical power, e Enhance Economic Development, e Completion of the Transmission System in Southeast Alaska, e Sustain the Transmission System (O &M)through wheeling fees. Page 1 of 4 ower pees5.eGOLDEN *Ronee ZBEAR, ? SvrSmeak freaeay”€ON FORREST KERR "at,\:MEMORIA BED Avie:Dob!Arora:LA LEGEND on om EXISTING 500 kV,GRITISH COLGMBIA weennmennn EXISTING 287 kV,BRITISH COLUMBIA we EXISTING 138 kV,ALASKA - wm we ont om ot PROPOSED ALASKA ole EXISTING 138 KV,BRITISH COLUMBIA bizon nowt seme PROPOSED 138 KY,BRITISH COLUNBIA ENTRARGE hewn a EXISTING HYDROELECTRIC FACILITY amenPROPOSEDHYDROELECTRICFACILINCSMOCSTre,yg -«a MINERAL DEPOSIT tenon oe y, *cry tecrgnal Pt OVERALL FUNDING CONCEPT e Hydropower Projects -Private Investment e Transmission System -Publicly Funded (similar to Bonneville Power Administration and the Tennessee Valley Authority) o Ownership --TBPA or new SE Alaska Transmission Authority o Sustainability,through wheeling fees Page 2 of 4 BENEFITS Alaska/Southeast Alaska Reduced energy costs for Southeast Alaskan communities, Stable and sustainable energy rates for generations, Economic development through lower rates to industry, Reduction or elimination of diesel generation, o Reduction of greenhouse gasses and emissions, o Eliminate air and water pollution, o Eliminate costly tank maintenance and spill liability, Reduce the nations dependence on foreign oil, Access to other energy sources with connection to the North American grid, Provide jobs and revenue to Southeast Alaskan communities, Opportunity to construct more renewable energy projects for energy export and local Southeast Alaska uses. British Columbia Provides voltage and var stability to BCTC system in the NW region of BC, Provides increased reliability to BCTC transmission system, Economic stability to the BCTC line (hydropower project life -50 years), Reduced line losses for BCTC, Provides opportunity to schedule and coordinate SE Alaska and BC Hydro energy resources, Provide further justification for extending the line north on Hwy 37, Provide jobs and revenue to BC communities, Provides energy where BC Hydro needs it in exchange for Downstream Benefit Energy, Opportunity to sell shaping service to utility in lower 48. Other issues that help Southeast Alaska and British Columbia Governments of Alaska and British Columbia work together to change the Renewable Portfolio Standard in California and Washington to increase energy export value of hydropower from this combined region. Share dispatch and shaping of SE Alaska energy projects for the benefit of the BCTC transmission system stability,energy needs for BC Hydro, energy needs in SE Alaska,at the same time maximizing the market price. Provides opportunity for development in Tahltan Nation region. Page 3 of 4 TIMELINE Year 1,2006 e Design and permit ALCAN Intertie (Bradfield Corridor)$1,000,000 e Obtain State funding for the Swan to Tyee Intertie $40,000,000 e Formalize agreements,develop markets,negotiate SE Alaska interests with regard to the Thomas Bay Project $2,000,000 Year 2,2007 e Construction Swan to Tyee e Complete permitting and design of ALCAN Intertie $1,000,000 e Design and permit Thomas Bay to Petersburg Intertie $1,000,000 Year 3,2008 e Complete construction of Swan to Tyee e Obtain funding for the ALCAN Intertie $27,000,000 e Obtain funding for Thomas Bay to Petersburg Intertie $20,000,000 Year 4,2009 e Start clearing and construction of ALCAN Intertie e Start construction Thomas Bay to Petersburg Intertie e Obtain funding Metlakatla to Ketchikan Intertie __ $7,000,000 Year 5,2010 e Complete construction of ALCAN Intertie e Complete construction of Thomas Bay to Petersburg Intertie e Complete construction of Metlakatla to Ketchikan Intertie NOTE:The Juneau to Hoonah and the Kake to Petersburg Intertie Segments were identified by the Energy Committee of the Southeast Conference as a priority. The completion of these two projects should take place concurrent with the development of the Swan to Tyee and ALCAN Intertie Segments. Other Intertie Expansions: e Greens Creek Mine to Hoonah . Petersburg to Kake to Sitka 415 pull)n Thomas Bay to Snettisham Sitka to Angoon POW to Wrangell Juneau to Kensington Mine to Haines Page 4 of 4 Thomas Bay Power Authority Load Control for SE Alaska Schedule and Dispatch generation,loads and lines Control reactive flow for all the busses Maintain voltage support for the system Schedule and control the powerflow for the interconnection with BCTC Spinning and supplemental reserves OASIS website showing where capacity is available,and loads on the system Determine tariffs Provide Metering and Revenue Coordinate system and relay protection Maintenance and operation of the system Engineering support for the system 24 hour load dispatch B47 19-2605 15:34 NO.696 DuB2 ie Request Suomitted:3/2/2006 (12:01 PM)Priority:2 FISCAL YEAR 2007 PROJECT REQUEST FORM (PLEASE FILL OUT ONE REQUEST FORM FOR EACH REQUEST) -REQUESTS ARE DUE BY MARCH .1,2006 - Name of Project:Kake Tribal Corp -KTC/TBPA AL-CAN INTERTIE Where is the project located?Kake Which appropriations bill (if known)?Energy &Water Amount of federal funding requested for this next fiscal year:$28.000.000 Total amount of federal funding needed for the program/project:$28,000,000 Number of years to fund this project:1 Matching Funds (State,local,private crother):none Was it in a prior appropriations bill(s)?No ifso,which bill?ofa How much has been funded?0 ;itin President Bush's Budget for FY 2007?No lf so,how much?n/a contact Information in Alaska: Name:CJ Zane Address:The Watergate 600 New HampshireAve,,NW Washington DC 20037 Organization:Blank Rome Government Relations,LLC Work Number:(202)772-5975 Cell Number:(202)431-2239. E-MaitAddress:2? Contact Information in Washington 0.C.(if any): Name:Duff Mitchell Address:P.O.Box 263 Kake AK 99830 Organization:Kake Tribal Corporation Work Number:(907)586-3333 Cell Number:Unknown E-Mail Address:? 2rinted from Sunkat™Hawk Courter FY2007 Standard™1 6471972085 15:34 NO.698 PEGS 'oject Name:Kake Tribal Corp -KTC/TBPA AL-CAN INTERTIE Description: This is an unprecedented and historic opportunity for renewable energy to be exported from Alaska now and.forever. itis a project Serving the strategic energy needs of America while creating millions of dollars of economic development opportunity in Southeast Alaska now and for decades to come.The opportunity ts an international energy intertie connection that provides needed energy to America while simultaneously reducing our Nation's dependence on foreign oil and governments. The key to this economic devetopment vision ts tne AL-CAN INTERTIE extension of the Southeast Intertie.This link uncorks the vast energy potential by initiating the export conduit of energy that wil bring export dollars into the Southeast Alaska economy.The commitment to build the AL-CAN-INTERTIE of the Southeast Intertie will uncork the 'vast potential hydropower export from Southeast Alaska and create the catalyst to hook up Kake,Angoon,Sitka and: Hoonah.The AL-CAN INTERTIE will connect the excess al the Tyee dam and connect the scheduled Thomas Bay Project which combined will bring in over £25 million annually in energy revenue. The AL-CAN INTERTIE will ideally be owned and operated by Kake Tribal Corporation (KTC)and The Thomas Bay Power Authorily The Thomas Bay Project will be owned and operated by private and potentially public sources that include Tollhouse Energy and Kake Tribal Corporation. The AL-CAN INTERTIE of {ne Southeast Alaska Intertie is a mere $35 million dollars of which it is envisioned thal the State of Alaska would pay 20%and the US Government 80%.The American portion would run to the Canadian border and the Canadian Government with British Columbia Transmission Corporation will connect the intertie fo the North American grid The energy produced in SE Alaska will be made available in the Continental US. The payback period of the $35 million investment is a mere1.4 years based on the immediate and readily availableexportof$25 milion of electricity.Further connections to Ketchikan via the Swan Tyee intertie link will provideMetlaketlaanexportopportunityraisingneededfundsforMetlaketlaaswellasforotherhydropowerpotentialin the stchikan area. $250 million in immediate private investment in SE Alaska for Thomas Bay Project and other projected «ydropower sites. .Over 125 construction jobs and another 75 service related jobs for the Kake,Pelersburg,Wrangell areas. .Approximately $4 million in surplus energy sales for the Tyee dam reducing electrical rates for all four dam rate payers from Kodiak,Valdez,and Glenallen to Southeast Alaska. .Spurs and creates the catalyst to build the intertie to Baranof Island to Sitka through Kake to tap into known hydropower potential .Ensures the economic feasibility of the Swan Tyee intertie link by enabling Metlaketla and Ketchikan hydropower an opporfunity to export excess energy. 'Stabilzes and guarantees low postage stamp rate Wheeling fees on all SE Intertie connections ensuring that lines for Hoonah,Angoon and Kake can be paid for and maintained after construction: Do you need a change inthe law?No: Do you need "intent”language?Yes Language is attached on page 3: This form was-prepared electronically using Sunkat Hawk Courier Standard™2007 rinted from Sunkat™Hawk Courier FY2007 Slandard™9 >>"British Columbia Transmission CORPORATION™| ALASKA BC INTER-TIE STUDY March 3,2006 In July 2005,BCTC completed the planning report SPA 2005-24,which described a potential extension of the BC Hydro transmission system into the area northwest of Terrace.That report made a preliminary observation that a 287 kV line would be required to serve the predicted area loads. Were such a line in place,it would create opportunities for interties to be developed between British Columbia and the Alaska panhandle.This report builds on the recommendation of the earlier study and assumes that an intertie would be constructed as a 287 KV tap from the Bob Quinn station to the BC border.The additional costs for the BC portion of this added scope have not been costed in detail,but would be expected to fall between $30M and $120M. BCTC reiterates that both the planning report SPA 2005-24 and the work done in this study are very preliminary.Before initiating any project to serve loads or undertake an intertie in this area,more robust planning and consultation would need to be completed. DISCLAIMER This report was prepared solely for the purposes described in this report,and is based on information available to BCTC as of the date of this report.Accordingly,this report is suitable only for such purposes,and is subject to any changes arising after the date of this report. Unless otherwise expressly agreed by BCTC,neither BCTC nor any party engaged by BCTC in connection with the preparation of this report makes any representations or warranties regarding the accuracy,completeness or usefulness of this report,or any information contained in this report,for use or consideration by any third party,nor do any of them accept any liability out ofreliancebyathirdpartyonthisreport,or any information contained in this report,or for any errorsoromissionsinthisreport.Any use or reliance by third parties is at their own risk.Without prior written approval of BCTC,no part of this report shall be reproduced or distributed in any manner or form whatsoever. British Columbia Transmission Corporation,,, www.bctransco.com THOMAS BAY POWER AUTHORITY RESOLUTIONNO,O17 0G og A RESOLUTION OF THE THOMAS BAY POWER AUTHORITY, SUPPORTING THE DEVELOPMENT OF THE ALCAN INTERTIE (BRADFIELD/CRAIG RIVER CORRIDOR) WHEREAS,a British Columbia Transmission Corporation study indicates a link to irs grid vhrough the Iskut and Craig River valleys is achievable and would benefit its system; WHEREAS,the ALCAN Intertie will bring an economic basis for the Southeast [ntertic which will benefit SE Alaska communities by providing reliable energy to most SE Alaskan communities; WHEREAS,the Southeas Intertie will be economically justified through bringing the North Amencan market to the Alaska Panhandle through an interconnection via the Bradtield Canal conidor; WHEREAS,the ALCAN Intertie opens a market for energy from Cape Fox's proposed Mahoncy Lake Project,and excess energy from Metlakatla,Ketchikan and Tyee Lake; WHEREAS,many of Wrangell's heretofore planned projecis such as Sunrise Lake and Virginia Lake as well as numerous other similarly situated potential energy sites can be brought into production with such a ramp to the free market the ALCAN corridor provides; WHEREAS,the development of Thomas Buy generation sites near Petersburg further enhances the economic viability and sustainability of the Southeast Intertie; WHEREAS,this interconnect provides the means to finance other portions of the SE Intertie; WHEREAS,smaller communities such as Kake and others will all benefit from interconnections to this grid through marker forces which will drive further interconnections to additional existing and planned hydroelectric facilities; NOW,THEREFORE BE IT RESOLVED BY THE THOMAS BAY POWER AUTHORITY "TBPA”, that the TBPA hereby supports the proposed ALCAN interconnection to the British Columbia border; FURTHER,BE [IT RESOLVED that the THOMAS BAY POWER AUTHORITY desires to evaluate the possibility of ownership and/or operation and maintenance of the planned interconnections to the Four Dam Pool bydroclectric projects located in SE Alaska,and the connection to the hydroelectric projects located in Thomas Bay,including the ALCAN Intentie; 4ADOPTED:LF Mphil.__,2006 Paul Anderson,PresidentsoresLeleBoer'Dick Olsen,Manager Southeast Alaska Energy Export Study er ae arr Lake Tyee powerhouse and switchyard near the head of the Bradfield Canal.eyee3»ASSOCIATES,INC. Engineers and ConsuliauisSenBe,Paty&foneSySUERTE PERACSTIPTE ISI 907)ENT sae March 22,2006 Southeast Alaska Energy Export Study Introduction ¢Study of potential transmission interconnection with BC Hydro (Bradfield Intertie) ¢System configuration and technical characteristics ¢Estimated costs and benefits ¢Regulatory issues ¢Recommendations ¢Discussion,Questions,Answers -Finalizing report -Next steps SOARS ARE rage a anon nbn RE Ta emia ntitoe anite8 March 22,2006 Southeast Alaska Energy Export Study Transmission System Configuration ¢Southeast Alaska system limited -Tyee line connects Petersburg and Wrangell -Swan-Tyee Intertie will add Ketchikan -Potential connections to Kake,Metlakatla ¢BC Hydro system extends north to Meziadin Junction *Coast Mountain Power (CMP)planning line to Forrest Kerr ¢CMP expressed interest in building and operating line to border March 22,2006 Southeast Alaska Energy Export Study Proposed Bradfield Intertie ¢Approximately 26.5 miles from Lake Tyee powerhouse to border ¢138-kV,single wood pole ¢North Fork Bradfield and Craig River drainages ¢About 2,600'maximum elevation ¢Canadian interconnection -110-mile 138-kV from Meziadin Junction to Forrest Kerr -Approximately 35 miles from Forrest Kerr to border March 22,2006 APPRONMATE MISES X 10 -OE rer tay >s.oS aan3*SAERRE Et2SEE%&o* >. PROPOSED FORREST KERR HYDROELECTRIC PROJECT Bradfield Canelon i:\' 7 |y ©138 kV \)MEZIADINYor¥JUNCTION ©Cities and Load Centers Mineral DepositsCPonoeedTranerission Lines FIGURE 1-1 Existing Transmission Line Southeast Alaska Energy Export Study Proposed Bradfield Intertie LocationTransmissionLinesUnderConstruction Goat Lake Cities and Load Centers Major Hydroelectric Projects Proposed Hydroelectric Projects Proposed Transmission Lines Existing Transmission Line Transmission Lines Under Construction FIGURE 1-2 Southeast Alaska Energy Export Study Existing and Proposed Transmission Lines 0 30 60 Y Proposedon"\.pag ee BC HydroFORRESTKERR*,Transmission Grid SBradfieldIntertierf Stewart BC x Southeast Alaska Energy Export Study History ¢Bradfield Energy Inc.had Presidential Permit in 1988 ¢69-kV line to Johnny Mountain mine -Similar route to Bradfield Intertie ¢Road studies -Federal Highway Administration -Southeast Alaska Transportation Plan March 22,2006 SATU oats acescea ee M eee 8 ae eae BaSeeeBa ce arta PRENSA aE RR epeanermn nae SEIOF TASES AC Le amas Torocanstes Southeast Alaska Energy Export Study Estimated Costs ¢Construction cost of $21.4 million to $26.9 million from Tyee powerhouse to border ¢Border to Forrest Kerr cost of $17.4 million ¢$280,000 typical annual O&M -Higher costs periodically March 22,2006 Southeast Alaska Energy Export Study Estimated Benefits Extensive need for power in Western US Price is uncertain -Probably tied to alternative cost of power generation -coal,natural gas,wind,nuclear -Possible sale of power to Powerex Wheeling costs -Southeast system -BCTC system 0.51 cents/kWh -CMP system varies -0.4 cents to 1.4+cents/kWh Transmission losses of 6%in BC,2%in Alaska March 22,2006 Southeast Alaska Energy Export Study 2010 2011 2012 Case 1 -Existing Tyee Surplus Hydro -MWh 57,339 56,768 56,194 Surplus Hydro -Ave MW 6.55 6.48 6.41 Case 1A -Petersburg-Wrangell-Ketchikan (PWkK)Existing Surplus Hydro -MWh 53,913 52,116 50,306 Surplus Hydro -Ave MW 6.15 5.95 5.74 Case 2 -PWK w/Cascade Creek Surplus Hydro -MWh 218,313 216,516 214,706 Surplus Hydro -Ave MW 24.92 24.72 24.51 Case 3 -PWK w/All New Hydro Surplus Hydro -MWh 421,778 419,981 592,171 Surplus Hydro -Ave MW 48.15 47.94 67.60 Surplus Capacity -MW '80.3 79.9 112.7 Case 4 -PWK w/Sitka,Angoon [To come] March 22,2006 Southeast Alaska Energy Export Study Economic Analysis | ¢Forecast revenues from power sales ¢Subtract costs of transmission ¢Resulting "breakeven”cost of power in Southeast Alaska ¢Sensitivity analysis March 22,2006 Southeast Alaska Energy Export Study 2010 2015 2020 2025 Delivered Power Sales Rate ($/MWh)'$72.00 $81.46 $92.17 $104.28 Case 1:Existing Tyee Surplus ” Energy Exported (MWh)57,300 54,400 51,400 48,300 Energy Delivered to PNW (MWh)°52,800 47,900 45,100 42,100 Net Annual Revenues ($000)*$2,170 $2,360 $2,500 $2,620 Breakeven Power Cost (¢/kWh).3.78 4.33 4.86 5.43 Case 2:Existing with Cascade Creek ” Energy Exported (MWh)218,300 209,200 199,700 189,800 Energy Delivered to PNW (MWh)3 201,100 185,700 176,700 167,300 Net Annual Revenues ($000)*$10,320 $11,220 $12,100 $12,980 Breakeven Power Cost (¢/kWh)°4.73 5.36 6.06 6.84 Case 3:Existing with All PWK New Hydro 6 Energy Exported (MWh)421,800 586,700 577,200 967,300 Energy Delivered to PNW (MWh)®388,500 533,500 524,400 515,000 Net Annual Revenues ($000)*$22.360 $35,390 $39,380 $43,790 Breakeven Power Cost (¢/kWh)°5.30 6.03 6.82 7.72 March 22,2006 Southeast Alaska Energy Export Study Environmental and Regulatory Issues ¢Previous Environmental Assessment for Bradfield Electric line in 1988 -Finding of No Significant Impact (FONSI) ¢No significant environmental issues that would preclude transmission line are expected ¢Department of Energy would issue new Presidential Permit ¢US Forest Service permit -Federal Energy Regulatory Commission (FERC)would review interstate energy transfers -FERC may require open transmission in Alaska,regular filings March 22,2006 Southeast Alaska Energy Export Study Recommendations and Next Steps ¢Recommendations ¢Finalization of report ¢Next steps ¢Questions March 22,2006 ACCAA) Karl Reiche »m:Sara Fisher-Goad Sent:Wednesday,May 24,2006 10:32 AM To:Karl Reiche Ce:Ron Miller Subject:FW:Energy export project Attachments:Apr 27 2006 Amd -2 AEA Export DOT DCCED.doc;AEA Energy Export.pdf Apr 27 2006 AEA Energy d -2 AEA Exporkport.pdf (15 KE ;oy ;;;Here is our official submission to the legislature. attain Original Message----- From:Sara Fisher-Goad Sent:Tuesday,May 23,2006 3:17 PM To:'Sally Saddler' Cc:Ron Miller Subject:FW:Energy export project Sally -here is the information that was sent in by the Governor's Office regarding the project. nm -Sue Stancliff in Rep.Kelly's office has asked for the back up for .s project.Do you want to add anything before Sally provides this information to Sue? Sara AEA:Southeast Alaska Energy Export FY2007 Request:$3,200,000 Reference No:AMD42109 AP/AL:Appropriation Project Type:Planning Category:Development Location:Southeast Alaska Contact:Ron Miller House District:Southeast Districts 1-5 Contact Phone:(907)269-3000 Estimated Project Dates:07/01/2006 -06/30/2009 Brief Summary and Statement of Need: Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia.This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid. Funding:FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 Total Gen Fund $3,200,000 $3,200,000 Total:$3,200,000 $0 $0 $0 $0 $0 $3,200,000 I State Match Required I One-Time Project [7 Phased -new Tl”Phased-underway [ On-Going 0%=Minimum State Match %Required lM Amendment [Mental Health Bill Operating &Maintenance Costs:Amount Staff Project Development:0 0 Ongoing Operating:0 0 One-Time Startup:0 Totals:0 0 Additional information /Prior Funding History: None. Project Description/Justification: As the nation's domestic energy costs increase,exporting Alaska hydropower becomes increasingly economically viable. One route (the ALCAN Intertie)was permitted in 1988;the proposed intertie starts at Tyee Lake,traverses northeast up the Bradfield Corridor,then northeast down the Craig River to the British Columbia border.The British Columbia Transmission Corporation gains stability by connecting to Southeast Alaska and provides an opportunity for Southeast Alaska to develop electricity from local hydroelectric resources that could eventually be sold to U.S.energy markets. The Alaska Energy Authority (AEA)proposes to request export development proposals from potential developers including Southeast Alaska power producers to be awarded as a competitive grant. State of Alaska Capital Project Summary Department of Commerce,Community,and Economic Development FY2007 Governor Amended Reference No:42109 4/27/06 3:00:39 PM Page:66 April 27,2006 The Honorable Lyda Green The Honorable Gary Wilken The Honorable Mike Chenault The Honorable Kevin Meyers Alaska State Legislature State Capitol Juneau,AK 99801 Dear Finance Committee Co-Chairs: Please make the following budget amendments.Section references are to CSSB 231 (FIN)version F: Amend sec.1,by adding a new Department of Commerce,Community, and Economic Development FYO7 capital project to read: Appropriation General Other Items Funds Funds AEA:Southeast Alaska Energy 3,200,000 3,200,000 Export (HD 1 -5) Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia. This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid. Amend sec.1,by deleting a Department of Transportation and Public Facilities project on page 45 and replacing it with a new project: Appropriation General Other Allocations Items Funds Funds [PALMER:CHUGACH 3,000,000 STREET PAVING (HD 13 -16)] Statewide:Rural 3,000,000 Airport Safety Improvements (HD 1-40) The Chugach Street Paving project is no longer necessary because funds and legislative authority are in place to allow the project to go forward immediately.The project is being bid using federal authorization.General funds are no longer needed. Finance Co-Chairs April 27,2006 Page 2 The funds are needed to address a backlog of safety improvement projects at rural airports throughout the state. Amend sec.7 by adding a supplemental appropriation for the Department of Commerce,Community and Economic Development to read: Appropriation General Other Allocations Items Funds Funds Community Assistance &50,000 50,000 Economic Development Office of Economic 50,000 Development This funding is needed due to the Office's hosting of the second annual Small Business Conference in Anchorage in June.The U.S.HUD Secretary and other high- ranking federal officials will be attending.Conference costs will be paid for by registrations and donations as statutory designated program receipts (SDPR).The Office expects the total cost to be $50,000. Backup information on the amendments is attached along with updated FYO7 Capital Budget Amendments and FY06 Regular Supplemental Amendments spreadsheets.If you have any questions,please call me at 465-4660 or Joan Brown at 465-4681.Thank you. Sincerely, Cheryl Frasca Director Attachments cc:David Teal Legislative Finance Page 1 of 1 Karl Reiche From:Ron Miller Sent:Tuesday,May 23,2006 4:09 PM To:David Lockard;Karl Reiche;Jim McMillan Subject:FW: FYI. RE:ALCAN Intertie From:Waller,Karina (Stevens)[mailto:Karina_Waller@stevens.senate.gov] Sent:Tuesday,May 23,2006 2:56 PM To:Ron Miller Subject: Ron: It has come to my attention that members of Cascade Creek and/or TollHouse Energy Company have made representations regarding Senator Stevens'support for their hydroelectric project.This concept was brought to the Senator's attention in March of this year.At that time,the Senator expressed severe reservations about the project and did not commit to providing federal funds now or at any time in the future.There are a number of important Alaska projects that are currently under development which require state and federal funds to ensure their completion.In addition,there are other projects already constructed which are carrying heavy debt loads, thereby greatly increasing the costs of power to Alaskans.It is important that our federal and state resources be directed towards those ends rather than a project still at the early stages of development with negligible benefits to Alaskans.If you have any questions,please feel free to contact me.Thank you.Karina Karina M.Waller Legislative Director Senator Ted Stevens (202)224-3004 (office) (202)224-2354 (fax) Oo Reicherom:David Lockard Sent:Friday,May 19,2006 2:23 PM To:Ron Miller;Sara Fisher-Goad;Karl Reiche Subject:FW:Document and backup Attachments:Cap_Proj_Amendment_Form.doc;DOT ThomasBayPowerAuthority.doc;TBP SoutheastIntert#19A4A5.pdf;TBP Thomas Bay suppo#199C 90.pdf;Microsoft Word -PetersburgMunicipalCode.pdf;COWTBPRes's.pdf a ial 3 a .[as [is|fas (a) Cap_Proj_Ame DOT TBP Southeast TBP Thomas Microsoft Word COWTBPRes's. yent_Form.doc BayPowerAuthotert#19A4A5.pcéuppo#199C90.Petersburg Mu.pdf (438 KB)Sara asked me to forward this message and several others that I have received from Thom Fischer on the Alcan Intertie. David ae Original Message----- From:Thom Fischer {mailto:thom@tollhouseenergy.com] Sent:Friday,May 19,2006 10:54 AM To:David Lockard oan FW:Document and backupave,I sent these to Jim McMillan,but I thought it best that you also have a copy so that you are up to speed on the intent of this $3.2 million. I will also forward several other documents previously sent to Jim. The TBPA has agreed to either be the transmission entity,or start another entity.Upon subsequent discussions with members of the SE Alaska community,it may be best to start another entity to be the transmission entity of lower Southeast,that is a LLC or corporation that includes not only public members,but members from private power plants.MTBPA is aware of this.I still think that the money should go to TBPA so that they can influence the direction of the new transmission entity.TBPA has a stake in the area,and is currently operating the existing transmission line.I guess what I am trying to say is that it is possible that a different entity (other than TBPA)will ultimately be the transmission entity.The idea is that the cities of PSB and WRG would not be liable for the transmission line if it is a separate entity.TBPA should lead the charge, with input from AEA and ourselves (private power). Thom ----Original Message----- fom:Thom Fischer [mailto:thom@tollhouseenergy.com] Sent:Monday,May 01,2006 12:31 PM To:Jim McMillan Subject:FW:Document and backup n,attached is an email from Terry Otness (City of Wrangell)requesting 2 $3.2 million,and the associated budget for the money (see DOT Thomas bay...).The intent of this bill is to fund the Thomas Bay Power Authority to become the transmission line company that BCTC deals with.They (Petersburg and Wrangell who own Thomas Bay Power Authority)want to receive certain benefits from the projects in Thomas Bay.They are listed in the same document. Thom Thom A.Fischer,P.E. work 360-738-9999 ext.111 cell 360-739-9777 fax 360-733-3056 thom@tollhouseenergy.com <mailto:thom@tollhouseenergy.com> ae Original Message----- From:Wrangell Alaska [mailto:terryo@mac.com] Sent:Monday,April 24,2006 4:00 PM To:Mark Taylor Cc:Dick Olson;Thom Fischer;Duff Mitchell;Matt Bell bject:Document and backup Here is the backup I'm sending to Mark.I'm certain I've forgotten something.Please let me know. Terry Thomas Bay Power Authority.doc Kake -two resolutions of support Petersburg -TBPC ordinance -municipal code Wrangell -Two support resolutions TPBA -two support resolutions AMENDMENT Offered in:Insert Committee By:Insert Legislator To:Insert Bill ID Agency: Insert Agency Project: Insert Project with House District Reference Amount: Insert Amount Funding Source: Insert Funding Source Explanation: Insert Project Explanation/Justification Thomas Bay Power Authority - a political subdivision of the cities of Wrangell and Petersburg,Alaska SE Alaska Energy Export Project Purpose The purpose of this $3,200,000 appropriation is to develop an electrical Intertie between the State of Alaska and the Province of British Columbia and to foster the development of significant hydropower resources in Southeast Alaska for economic and national security reasons.The ALCAN Intertie and energy export opens up an economic frontier and whole new industry to SE Alaska:the export of renewable energy.This not only spurs economic development in SE Alaska,but also provides much needed renewable energy for our SE Alaskan communities and our Nation's domestic energy security. Benefits e Provides an estimated $4.5 million in annual revenue to utilities from the sale of existing excess hydropower.Absent a connection to the grid,this energy is wasted, e Lowers energy costs to Alaskan utilities and ratepayers from the sale of surplus energy, e Provides over $250 million in initial private hydropower investment,and opens the possibility for millions more in future renewable energy projects, e Encourages and strengthens the economics for expanding the SE Intertie as new renewable energy projects and communities are connected,with this new strategic Energy Export paradigm, e Allows excess energy to be exported,which would reduce wheeling fees and maintenance costs small connected communities pay and will dramatically reduce energy costs to many rural Alaskan rate payers, e Reduces/eliminates PCE subsidy to communities receiving Intertie connections, e Provides Alaskan jobs,with Native and local hire preferences through an agreement with the Thomas Bay Project developer;bringing economic opportunities and diversification to a depressed area of our state, e Provides the ability to export clean,renewable energy from SE Alaska to North America,which displaces expensive fossil fuel generation,reduces national green house gases,and lessens our dependence on foreign energy supplies, e Provides secondary generation needed to remove the existing diesel generating plants in Petersburg and Wrangell,saving them over $1 million annually, e Expands trade and good will with our Canadian neighbors, e Provides energy from the Thomas Bay Energy Project to Thomas Bay Power Authority "TBPA”when Tyee Lake Hydro project is shut down for maintenance, e This project is a catalyst to initiate a chain of events that would help revitalize the economy of SE Alaska, Need Communities in SE Alaska desire connections to hydropower resources to lower their energy costs.Interties to those communities become cost-effective if the ALCAN Intertie also connects to hydropower projects in the region.The hydropower projects can only be constructed if there is a market to purchase all of its energy to make them economically feasible.The ALCAN Intertie connects the SE Intertie to British Columbia Transmission Corporation "BCTC”and the North American grid.This makes many more hydropower projects economically feasible and in time makes further SE Intertie connections to other communities economically feasible.The large amount of energy from hydropower projects,which is wheeled across the transmission line,pays for the operation and maintenance of the SE Intertie.This creates lower transmission rates for our Alaskan communities and their ratepayers. Description The ALCAN Intertie route would start at Tyee Lake,traverse northeast up the Bradfield Corridor,then northeast down the Craig River to the BC border.The route was previously permitted with a Presidential Permit PP-87 specifically to export energy from Alaska.The ALCAN Intertie would connect to the British Columbia Transmission Corporation "BCTC”system.The ALCAN Intertie would have a line transfer capacity of 185 MW with sufficient capacity to spur hydropower development. The Thomas Bay Energy Project consists of three proposed storage hydroelectric projects:Delta Creek,Cascade Creek and Scenery Creek,located in Thomas Bay, northeast of Petersburg,Alaska.The Thomas Bay Energy Project will be privately funded. The Thomas Bay Power Authority "TBPA”!,created decades ago by identical ordinances adopted by the communities of Wrangell and Petersburg,desires to serve as the transmission entity,which would coordinate with the Province of British Columbia's Crown agencies,BC Hydro and BCTC to develop the necessary physical and legal arrangements to permit transactions proceed.It would also serve as the entity to dispatch energy to into the North American energy grid by way of BCTC's energy transmission system. BCTC recently completed a study that shows SE Alaska could export 200 MW of energy across its proposed 287 kV system.Connecting to SE Alaska brings stability to the BCTC grid and adds economic justification to extend their transmission system to the mining opportunities of Northwestern British Columbia.Canada agrees to make our electricity available for US markets. SE Alaska's recent export energy study provides overwhelmingly economic justification for this initial investment.The report states the ALCAN Intertie would cost about $27 million,with a present value of approximately $400 million over a 25-year period.As oil and energy prices continue to increase,the timing is now to get this project started.Every dollar increase in oil further justifies the economic feasibility of the ALCAN Intertie. l Wrangell and Petersburg established TBPA originally to develop the hydroelectric resources at Thomas Bay FERC would not allow TBPA to only partially develop its natural resources.Wrangell and Petersburg subsequently developed the Tyee Lake Hydroelectric project with the State of Alaska. Most importantly,this funding will show the Provincial Government of British Columbia the State of Alaska is serious about connecting to the North American grid.Alaska needs to provide compelling proof to BC,should BC spend hundreds of millions of its taxpayer dollars to connect SE Alaska to its grid,that SE Alaska will be waiting at the border with a transmission line,connecting its current and planned storage hydropower projects,to stabilize the BCTC system.Our partnership must be based on commitments -this proposal confirms and strengthens that commitment. Budget The initial planning and design of the ALCAN transmission line will require a substantial and coordinated effort on both sides of the Alaska-Canada border.The budget for the initial planning and design will involve the following activities: Administration $250,000 Administration for addressing Intertie issues, e Promotion,lodging,transportation,per diem,brochures, e Information sharing, e =Hire full time coordinator that works for TBPA and/or the region,e Secure funding for the completion of the ALCAN Intertie,- Develop Transmission Authority $120,000 «TBPA may become the authority or will create a new sub-entity from the region that is the Transmission Authority for the southern SE Intertie,including the ALCAN Intertie, complete with bylaws,operating structure,and administrative rules, Planning $300,000 e Perform several Load Flow studies,coordinate,and jointly plan with the British Columbia Transmission Corporation "BCTC”, e Perform coordinated engineering studies with BCTC to achieve an optimal and compatible transmission interconnection, Permitting $250,000 e Acquire necessary ROW permits, e Acquire necessary international permits, e Perform the necessary environmental reviews and studies, Initial Design $340,000 Develop the initial design for the ALCAN Intertie, Evaluate the existing Petersburg -Tyee transmission line (including three substations)to determine the amount of work necessary to upgrade the existing Intertie system from 69kV to 138KV, Design the expansion of the existing Tyee switchyard to accommodate the ALCAN Intertie termination, Develop a construction budget, TBPA or new sub-entity from the region would serve as the legally entity to contract with the FERC applicant "Developer”of the proposed Thomas Bay Energy Projects.TBPA would administer $1,940,000 in funds for the continued development of the Thomas Bay Energy Projects,under the following considerations: 1.Developer to provide up to one percent (1%)of its annual energy from the Thomas Bay Energy Project to TBPA at no charge,to back-up the energy requirements for Petersburg and Wrangell during required annual maintenance of the Tyee Lake Hydroelectric project when the Tyee Lake project is inoperable, 2.Developer to provide,in at least two of its three power plants,a generator with the capability to deliver 3.5 MW of energy as back-up for Petersburg in the event of a transmission line failure south of Petersburg,Generator to have ability to govern and provide load control for the now- isolated system, 3.Developer to provide,in at least two of the three power plants,a generator with the capability to deliver 10 MW of energy as back-up for Petersburg and Wrangell in the event of a transmission line failure south of Wrangell,Generator to have ability to govern and provide load control for the now-isolated system, 4.Agreement for Developer to pay a postage stamp wheeling rate to TBPA for access on the SE Intertie.The postage stamp wheeling rate shall be the TBPA marginal cost of operation and maintenance,including spares and replacement,of the SE Intertie. Developer agrees to provide spinning reserves as required by TBPA for the SE Intertie, 6.Developer agrees to provide governing,and voltage and frequency support for the SE Intertie,as required by TBPA,wsThis proposed agreement would enable the cities of Petersburg and Wrangell,to remove its diesel fired generating plants.This will save both cities in annual operations and maintenance costs,as well as relocation costs for the generating plant in Petersburg. At the completion of this initial planning and design,it is anticipated that an additional $1,000,000 would be required to complete the design of the ALCAN Intertie. Federal Appropriation A federal appropriation has been requested and submitted to match this State appropriation for funding and completion of the ALCAN Intertie in the amount of 28 million dollars. KAKE TRIBAL CORPORATION RESOLUTION NO.06-04 A RESOLUTION OF KAKE TRIBAL CORPORATION SUPPORTING THE DEVELOPMENT OF THE ALCAN INTERTIE (BRADFIELD/CRAIG RIVER CORRIDOR) WHEREAS,the ALCAN Intertie will bring an economic basis for the Southeast Intertie which will benefit SE Alaska communities by providing reliable energy to most SE Alaskan communities; WHEREAS,the Southeast Intertie will be economically justified through bringing the North American market to the Alaska Panhandle through an interconnection via the Bradfield Canal corridor; WHEREAS,the ALCAN Intertie opens a market for energy from Cape Fox's proposed Mahoney Lake Project,and excess energy from Metlaketla,Ketchikan and Tyee Lake; WHEREAS,many heretofore planned projects such as Sunrise Lake,Virginia Lake,Sterling Bolima/Thayer Lake as well as numerous other similarly situated potential energy sites can be brought into production with such a ramp to the free market the ALCAN corridor provides; WHEREAS,the development of Thomas Bay generation sites further enhances the economic viability and sustainability of the Southeast Intertie; WHEREAS,this interconnect provides the means to finance other portions of the SE Intertie; WHEREAS,smaller communities such as Kake and others will all benefit from interconnections to this grid through market forces which will drive further interconnections to additional existing and planned hydroelectric facilities; NOW,THEREFORE BE IT RESOLVED BY THE KAKE TRIBAL CORPORATION hereby supports the proposed ALCAN interconnection to the British Columbia border; FURTHER,BE IT RESOLVED that KAKE TRIBAL CORPORATION supports the adoption of the Thomas Bay Power Authority as the public entity to facilitate,own,operate and maintain the planned interconnections to the Four Dam Pool hydroelectric projects, BE IT FURTHER RESOLVED,that the Thomas Bay Power Authority should consider and adopt a board seat(s)for the community of Kake. Pete Martin,Jr.Chairman ADOPTED:April 15,2006 ATTEST: KAKE TRIBAL CORPORATION RESOLUTION NO.06-05 A RESOLUTION OF KAKE TRIBAL CORPORATION SUPPORTING THE DEVELOPMENT OF THE THOMAS BAY PROJECT WHEREAS,America's energy future is tied to new sources of clean energy production; WHEREAS,Kake and other small rural Native Southeast Alaska towns are experiencing enormous financial hardships as result of high petroleum prices,with no economically viable energy generation or interconnections under the present paradigm; WHEREAS Kake Tribal Corporation has secured an agreement with the private Thomas Bay FERC applicant for three energy sites,known collectively as the Thomas Bay Hydro Project; WHEREAS,the FERC applicant,Tollhouse Energy,has the support of the communities of Wrangell and Petersburg in the proposed project; WHEREAS,the high elevation lakes in Thomas Bay have been recognized sources of low environmental impact hydroelectricity since non-native settlers first came to the region; WHEREAS,heretofore,the potential electrical resources of Southeast Alaska have been stranded from the North American energy grid; WHEREAS,the energy needs of our neighbors in British Columbia,First Nations of Canada and our sister lower forty-eight states are growing,and our energy costs in rural southeast Alaska are exorbitant; WHEREAS,a synergy is developing between the Alaska Panhandle,Northwest British Columbia,and utilities located in Washington State and California; WHEREAS,this project appears have developed a synergy for all communities and regions involved and results in literally a win-win-win circumstance; WHEREAS,the private sector has led the way in developing this plan; WHEREAS,the result of this energy development will result in a dual feed into the communities of Wrangell and Petersburg and eventually into Kake,thereby removing the requirement for expensive fossil fuel backup generation; WHEREAS,Kake Tribal Corporation has secured a written agreement from the developers of the Thomas Bay Hydro project to priority hire qualified Kake Tribal!Corporation shareholders and Native Alaskans to work all construction phases of this 5 year construction project. NOW,THEREFORE BE IT RESOLVED THAT THE KAKE TRIBAL CORPORATION hereby offers its support for the efforts underway for the private and perhaps combined public sector efforts to construct this long sought hydroelectric energy facility FOR THE BENEFIT OF Shareholders,Native Alaskans and other Native Alaskan communities; Further,be it resolved that Kake Tribal Corporation supports the Southeast Electrical Intertie and all activities that will assist the connection of our Native communities so that we can enjoy and economically develop our Native communities with cheap and readily available hydropower that as of this date has failed to materialize with previous SE Electrical development plans. Pete Martin Jr.,Chairman ADOPTED:April 15,2006 ATTEST: Petersburg Municipal Code Preface CHARTER OF THE CITY OF PETERSBURG,ALASKA Title 1 GENERAL PROVISIONS Title 2 ELECTIONS Title 3 ADMINISTRATION AND PERSONNEL Title 4 REVENUE AND FINANCE Title 5 (Reserved) Title 6 BUSINESS TAXES,LICENSES AND REGULATIONS Title 7 ANIMALS Title 8 (Reserved) Title 9 HEALTH AND SAFETY Title 10 CRIMINAL CODE Title 11 TRAFFIC Title 12 (Reserved) Title 13 STREETS,SIDEWALKS AND PUBLIC PLACES Title 14 PUBLIC SERVICES Title 15 (Reserved) Title 16 REAL PROPERTY Title 17 BUILDINGS AND CONSTRUCTION Title 18 SUBDIVISIONS Title 19 ZONING* Title 20 WATERSHED MANAGEMENT Cross-Reference Table Title 3 ADMINISTRATION AND PERSONNEL Chapter 3.68 THOMAS BAY POWER COMMISSION 3.68.010 Established. There is created by the ordinance codified in this chapter,substantially identical to an ordinance introduced by the council of the city of Wrangell, Alaska,a Thomas Bay Power Commission,which shall consist of seven members.(Ord.660 §3 (part),1990:Ord.642 §3 (part),1989:Ord.328 § 5 (part),1974:prior code §9.30.010 (part)) 3.68.020 Appointment of members. Three of the members shall be appointed by the council of the city of Petersburg,three of the members shall be appointed by the council of the city of Wrangell,and one member shall be appointed by the six members heretofore designated.One of the appointments from each of the municipalities shall be the superintendents of the Wrangell and Petersburg Electric Utilities.(Ord.642 §3 (part),1989:Ord.328 §5 (part),1974:prior code §9.30.010 (part)) 3.68.030 Officers. A president,vice president,secretary and treasurer of the Thomas Bay Power Commission shall be selected from and by the members.(Ord.328 §5 (part),1974:prior code §9.30.010 (part)) 3.68.040 Terms of members. The term of a member of the Thomas Bay Power Commission shall be for a period of three years;provided,however,that the terms of the first members shall be as follows:one member from each city for a term of two years,one member from each city for a term of three years,and one member selected by the other members for a term of one year.(Ord.328 § 5 (part),1974:prior code §9.30.020(a)(part)) 3.68.050 Removal of members. A member may be removed for cause upon a majority vote of the members present at a regularly scheduled meeting.(Ord.328 §4 (part), 1974:prior code §9.30.020(b)(part)) 3.68.060 Vacancies. Petersburg vacancies on the Thomas Bay Power Commission,by death, resignation,removal or other cause,shall be filled pursuant to Section 3.04.060.(Ord.526 §3(A)(part),1984:Ord.328 §5 (part),1974:prior code §9.30.020(b)(part)) 3.68.070 Compensation. Members of the Thomas Bay Power Commission shall serve without compensation,except that travel and miscellaneous out-of-pocket expenses previously authorized or subsequently ratified shall be reimbursed.(Ord.328 §5 (part),1974:prior code §9.30.020(c)) 3.68.080 Meetings--Calling. A.Regular.There shall be meetings held monthly at a place and time to be determined by the commission.All meetings shall be open to the public. B.Special.The president,in his discretion,is authorized to call special meetings,or a majority of the members may require a special meeting to be called. C.Notice.Notice of the special meetings must be given twenty-four hours in advance by posting in three public places in each city.Notice of the time and place of regular meetings shall be posted in the same manner as special meetings.Notice shall be given at least five days prior to such meeting date.(Ord.660 §3 (part),1990;Ord.360 §5 (part),1976:prior code §9.30.030(a)(part)) 3.68.090 Meetings--Minutes. Permanent records,or minutes,shall record the vote of every member of the Thomas Bay Power Commission on each question.Every decision or finding shall be promptly filed in the offices of the commission and shall be open to inspection by any person.(Ord.360 §5 (part),1976:prior code § 9.30.030 (a)(part)) 3.68.100 Meetings--Procedural rules. The Thomas Bay Power Commission shall establish rules of procedure and in the absence of any such rules,meetings shall be conducted pursuant to Robert's Rules of Order,Revised 1972 Edition.(Ord.360 §5 (part),1976:prior code §9.30.030(a)(part)) 3.68.110 Meetings--Quorum. A majority of the Thomas Bay Power Commission shall constitute a quorum for the transaction of business,and a minimum majority of four affirmative votes shall be necessary to carry any question,including removal of a member from office for cause.(Ord.660 §3 (part),1990:Ord. 360 §5 (part),1976:prior code §9.30.030(b)) 3.68.120 Powers and duties. The Thomas Bay Power Commission shall have the following powers and duties: A.Generally,to have full and complete supervision,management and control of the study,design,construction,maintenance,operation and improvement of the hydroelectric project known as the "Lake Tyee Hydroelectric Project,”together with any other hydroelectric project proposed by the commission within the area of Petersburg/Wrangell or such area which can reasonably and feasibly serve the hydroelectric power needs of the Petersburg and Wrangell communities; B.To employ consulting engineers,auditors,environmental specialists, financial specialists,attorneys or other special,professional or skilled services; C.To employ a general manager,in the discretion of the commission,who shall serve at the pleasure of the commission,at a salary to be fixed by the commission; D.To act in its own name or in the name of the city in any revenue bond ordinance for the purpose of financing all or part of the construction, acquisition,or improvement of the Lake Tyee Hydroelectric Project,or such other hydroelectric project or transmission facility as is feasible to be operated by the commission from the revenues derived from the consumers of electric power; E.To review and fix from time to time all of the rates and charges for use of services and facilities furnished,the policies for the generation, distribution,transmission and consumption of electric power and,when deemed necessary and proper,to prepare new or adjusted rates,charges and policies such as are fair and nondiscriminatory and sufficient to meet the obligations of the commission.(Ord.660 §3 (part),1990;Ord.332 §5, 1975;Ord.328 §5(part),1974:prior code §9.30.040(a)(1,5,6,7,9)) 3.68.130 Preparation of project budget. A.The Thomas Bay Power Commission shall prepare and file with the city council copies of all budget estimates,including any budget amendment which may subsequently be proposed to be made upon final adoption by the commission,and shall upon request of the council furnish such further details as may be necessary to a reasonable understanding of any such budget estimate or proposed budget amendment. B.The commission shall adopt the annual budget estimate no later than April 1st in each year and shall immediately forward the estimate to the city manager for inclusion in the annual budget estimate of the city. C.The annual budget for operation of the authority shall,if necessary, make provision for payments to become due on account of interest and principal for any bonds,issued by the city to pay the costs of economically sound hydroelectric generation,transmission and distribution improvements.(Ord.328 §5(part),1974:prior code §9.30.040 (a)(2,4)) 3.68.140 Financial accounting by commission. A.The Thomas Bay Power Commission shall file with the city council copies of all audits and all monthly financial and operating reports and such other reports as may come up from time to time and be requested by the city,the state of Alaska,the federal government or such other agencies or institutions that may fund the commission. B.The commission shall account for all of the commission's accounts arising out of operations in the manner and form known as the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission,together with the accounting for all disbursements or expenditures.The commission shall select a depository bank at which the accounts of the Thomas Bay Power Authority shall be maintained,and by resolution designate signatures authorized for disbursements.(Ord.660 § 3 (part),1990;Ord.328 §5 (part),1974:prior code §9.30.040(a)(3,8) 3.68.150 Operation and maintenance of Lake Tyee hydroelectric project. On approval by resolution of the city council,the commission may enter into an agreement as an agent of the city to maintain and operate the Lake Tyee hydroelectric project owned by the state of Alaska.Under said agreement,the commission shail have the following powers and duties: A.Prepare and approve an annual budget for the operation and maintenance of the project and any such other costs that the commission will have.Said budget shall be submitted to the city council for approval in sufficient time to allow council action prior to submittal to the state and the project management committee,as established pursuant to Section 7 of that certain Long-Term Power Sales Agreement Four Dam Pool --Initial Project of the Alaska Power Authority effective October 28,1985. B.There shall be no costs incurred above the budget approved in subsection (A)of this section without prior approval!of the city council and, when appropriate,the project management committee.If,in the opinion of the general manager,an emergency exists that threatens or endangers life or property,costs in excess of the approved budget may be obligated only insofar as is necessary to halt the emergency that exists,provided he notified the city within six hours of commencement of the emergency. C.To employ consulting engineers,environmental specialists,attorneys or other special,professional or skilled services,the costs of which have prior budget approval. D.To employ a general manager who shall have the active management of the project,subject to the supervision and control of the commission; and to delegate to such manager authority to hire and discharge such subordinate employees as it may deem advisable. E.To determine all salaries,wages and benefits to be paid to each classification of labor employed. F.To submit an operating and financial report to the council for each - quarter calendar year,which report will be submitted not later than thirty days after the close of each quarter calendar year. G.To adopt procedures governing purchases of materials,supplies, equipment,improvements and contractual services,including procedures for competitive bidding.Said procedures shall set forth the employee authorized to contract for such purchases and establish an amount which shall require the prior approval of the commission.A copy of the procedures shall be filed with the city.Purchases of supplies,materials, equipment,improvements,or contractual services whose cost does not exceed five thousand dollars,excluding freight or shipping costs,may be made without competitive bidding."Contractual services”means services performed for the project by persons not in the employment of the commission,and may include the use of equipment or the furnishing of commodities in connection with the services under express or implied contract.Contractual services include travel;telephone,telegraph,utilities; rents;printing and binding;improvements,repairs,alterations,and maintenance of buildings,equipment,and other physical facilities of the project;and other services performed for the commission by persons not in the employment of the commission.Contractual services of a professional nature such as legal,engineering,architectural,and placement of insurance coverage are exempt from competitive bidding.The commission may exempt the following purchases from competitive bidding: 1.Supplies,materials,equipment or contractual services which must be purchased from a specific source in order to prevent incompatibility with previously purchased supplies,materials,equipment,or contractual services.For purposes of this subsection the term "incompatibility”is defined as the inability to (a)interconnect,combine,interchange,or join,or (b)that which causes or necessitates maintenance expertise or training where such acquisition would result in substantial duplication.The commission must approve by motion or resolution any purchase where cost exceeds five thousand dollars which is to be excluded from competitive bidding by the authority of this subsection; 2.Supplies,materials,equipment,contractual services,or improvements which the commission declares to be required on an emergency basis or which the commission declares is impractical or impossible; 3.When competitive bidding has been followed,but no bids or quotations are received or the bids or quotations are rejected.In such a case,after commission approval,the general manager may proceed to have the services performed or the supplies purchased without further competitive bidding or quotation. H.To provide for an independent annual audit of the accounts of the commission in accordance with accepted standards and procedures determined by the project management committee. |.To follow such procedures as required by the project management committee as they exercise their duties under that certain Long-Term Power Sales Agreement Four Dam Pool -Initial Project of the Alaska Power Authority effective October 28,1986.(Ord.660 §3 (part),1990; Ord.585 §4,1986) CITY OF WRANGELL RESOLUTION NO.04-06-1046 A RESOLUTION OF THE COUNCIL OF THE CITY OF WRANGELL,ALASKA,SUPPORTING THE DEVELOPMENT OF THE ALCAN INTERTIE (BRADFIELD/CRAIG RIVER CORRIDOR) WHEREAS,a British Columbia Transmission Corporation study indicates a link to its grid through the Iskut and Craig River valleys is achievable and would benefit its system; WHEREAS,the ALCAN Intertie will bring an economic basis for the Southeast Intertie which will benefit SE Alaska communities by providing reliable energy to most SE Alaskan communities; WHEREAS,the Southeast Intertie will be economically justified through bringing the NorthAmericanmarkettotheAlaskaPanhandlethroughaninterconnectionviatheBradfieldCanalcorridor; WHEREAS,the ALCAN Intertie opens a market for energy from Cape Fox's proposed Mahoney Lake Project,and any excess energy from Metlakatla,Ketchikan and Tyee Lake; WHEREAS,many of Wrangell's heretofore planned projects such as Sunrise Lake and Virginia Lake as well as numerous other similarly situated potential energy sites can today,only be brought into production with such a ramp to the free market the ALCAN corridor provides; WHEREAS,the development of Thomas Bay generation sites further enhances the economic viability and sustainability of the Southeast Intertie; WHEREAS,this interconnect provides a "market driven”means to finance other portions of the SE Intertie; WHEREAS,smaller communities such as Kake and others will all benefit from interconnections to this grid through free market forces which will drive further interconnections to additional existing and planned hydroclectric facilities; NOW,THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CITY OF WRANGELL, ALASKA,that the City of Wrangell hereby supports the proposed ALCAN interconnection to the _British Columbia border;' FURTHER,BE IT RESOLVED that Wrangell goes on record as recommending the adoption of the Thomas Bay Power Authority as the public entity to own,operate and maintain the planned interconnections/facilities to the Four Dam Pool hydroelectric projects located in SE Alaska; BE IT FURTHER RESOLVED,that should the Thomas Bay Power Authority be unwilling or unable to accept this responsibility,the City of Wrangell would be the next appropriate political subdivision to do so; FURTHER,that the City of Wrangell would consider this only after Thomas Bay Power Authority was precluded. ADOPTED:April 11 ,2006 Valer . nom ne Bog . .ia '\:ATTEST:Werte xk nueChristieL.Jamieson,City Clerk CITY OF WRANGELL RESOLUTION NO.04-06-1047 A RESOLUTION OF THE COUNCIL OF THE CITY OF WRANGELL,ALASKA,SUPPORTING THE DEVELOPMENT OF THE THOMAS BAY PROJECT WHEREAS,Anierica's energy futureis ticd to new sources of clean energy production; WHEREAS,Kake and other small rural Southeast Alaska towns are experiencing enormous financial hardships as result of high petroleum prices,with no economically viable energy generation or interconnections under the present paradigm; WHEREAS Kake Tribal Corporation has secured an agreement with the private Thomas Bay FERC applicant for three energy sites,known collectively as the Thomas Bay Hydro Project; WHEREAS,the FERC applicant,Tollhouse Energy,has suggested the communities of Wrangell and Petersburg consider an equity position in the proposed project; WHEREAS,the high elevation lakes in Thomas Bay have been recognized sources of low environmental impact hydroelectricity since non-native settlers first came to the region; WHEREAS,heretofore,the potential electrical resources of Southeast Alaska have been stranded from the North American energy grid; WHEREAS,the energy needs of our neighbors in British Columbia,Canada and our sister lower forty-eight states are growing,and our energy costs in rural southeast Alaska are exorbitant; WHEREAS,a synergy of benefits from the proposed Thomas Bay Project is developing between the Alaska Panhandle,Northwest British Columbia,and utilities located in Western States; WHEREAS,this project appears to have developed a synergy for all communities and regions involved and results in literally a win-win-win circumstance; WHEREAS,the private sector has led the way in developing this plan; WHEREAS,the result of this energy development will result in a dual feed into the communities of Wrangell and Petersburg,thereby removing the requirement for expensive fossil fuel backup generation; NOW,THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CITY OF WRANGELL, ALASKA,that the City of Wrangell hereby offers its support for the efforts underway for the private and perhaps combined public sector efforts to construct this long sought hydroelectric energy facility; FURTHER,BE IT RESOLVED that the City of Wrangell may consider an equity investment in the Thomas Bay Project through the Thamas Bay Power Authority or a similar public body to preserve a fulure source of energy for public purposes. ADOPTED:April 11 ,2006 , -ysoa Mayoraw"O)Christie L.Jamieson,City ClerkATTEST:(fc dtr lay Utlegore. Page 1 of 1 Karl Reiche From:David Lockard Sent:Friday,May 19,2006 2:23 PM To:Ron Miller;Karl Reiche;Sara Fisher-Goad Subject:FW:Load Control for SE Alaska Attachments:Load Control for SE Alaska.doc fyi From:Thom A,Fischer [mailto:thom@tollhouseenergy.com] Sent:Friday,May 19,2006 10:57 AM To:David Lockard Subject:FW:Load Control for SE Alaska From:Thom A.Fischer [mailto:thom@tollhouseenergy.com] Sent:Monday,May 01,2006 12:48 PM To:Jim McMillan Subject:Load Control for SE Alaska Jim attached is an example of Load Control that TBPA will have to perform to be the Load Control Center for SE Alaska. Thom Thom A.Fischer,P.E. work 360-738-9999 ext.111 cell 360-739-9777 fax 360-733-3056 Thomas Bay Power Authority Load Control for SE Alaska Schedule and Dispatch generation,loads and lines Control reactive flow for all the busses Maintain voltage support for the system Schedule and control the powerflow for the interconnection with BCTC Spinning and supplemental reserves OASIS website showing where capacity is available,and loads on the system Determine tariffs Provide Metering and Revenue Coordinate system and relay protection Maintenance and operation of the system Engineering support for the system 24 hour load dispatch Page 1 of 2 Karl Reiche From:David Lockard Sent:Friday,May 19,2006 2:23 PM To:Ron Miller;Sara Fisher-Goad;Karl Reiche Subject:FW:BCTC Alaska Interconnect Study and federal appropriation request Attachments:FedAppropRequst.pdf;BCTCAlaskalntertieStudy.pdf fyi From:Thom Fischer [mailto:thom@tollhouseenergy.com] Sent:Friday,May 19,2006 10:57 AM To:David Lockard Subject:FW:BCTC Alaska Interconnect Study and federal appropriation request FYI,|understand that the $28 million for federal grant monies for the ALCAN Intertie has legs and is moving forward. Thom From:Thom Fischer [mailto:thom@tollhouseenergy.com] Sent:Monday,May 01,2006 12:45 PM To:Jim McMillan Subject:FW:BCTC Alaska Interconnect Study and federal appropriation request Jim,attached is the BCTC study that they performed after we informed them of the SE Alaska Export Study that the Governor had requested.Also attached is an appropriation request by Kake,with TBPA put on the receiving end as well should they sign up (TBPA did sign up to be the transmission company per their resolutions). Thom From:Wrangell Alaska [mailto:terryo@mac.com] Sent:Monday,April 24,2006 8:22 PM To:Mark Taylor;Linda Hay Ce:Thom Fischer;Duff Mitchell;Dick Olson Subject:BCTC Alaska Interconnect Study and federal appropriation request Here is the BCTC study,which I inadvertently left out.A vital piece of back up,as is the Southeast Conference's Export Study. I've tried all that I can to shake this loose,but miraculously,it won't be out until after the capital budget - imagine that! Copies seem to be floating all over the place nonetheless. Also attached is the federal appropriation request by Kake Tribal. [EN SO | Page 2 of 2 84719-2085 15:34 NO.896 Date Request Submitted:3/2/2006 (12:01 PM)Priority:2 FISCAL YEAR 2007 PROJECT REQUEST FORM (PLEASE FILL OUT ONE REQUEST FORM FOR EACH REQUEST) REQUESTS ARE DUE BY MARCH 1,2006 - Name of Project:Kake Tribal Corp -KTC/TBPA AL-CAN INTERTIE Where is the project located?Kake Which appropriations bill (if known)?Energy &Water Amount of federal funding requested for this next fiscal year:$28,000,000 Total amount of federal funding needed for the program/project:$28,000,000 Number of years to fund this project:1 Matching Funds (State,local,private orother):none Was it in a prior appropriations bill(s)?No tf so,which bill?n/a How much has been funded?Q is itin President Bush's Budget for FY 2007?No ifso,how much?n/a Contact Information in Alaska: Name:CJ Zane Address:The Watergate 600 New Hampshire Ave,NW Washington DC 20037 Organization:Blank Rome Gavernment Relations,LLC Work Number:(202)772-5975 Cell Number:(202)431-2239 E-Mai!t Address:2? Contact Informationin Washington D.C.(if any): Name:Duff Mitchell Address:P.O.Box 263 Kake AK 99830 Organization:Kake Tnbal Corporation Work Number:(907)586-3333 Cell Number:Unknown E-Mail Address:7? Panted from Sunkat™Hawk Courter FY¥2007 Standara™4 0471972666 15:34 NO.698 Project Name:Kake Tribal Corp -KTC/TBPA AL-CAN INTERTIE Description: This is an unprecedented and historic opportunity for renewable energy to be exported.from Alaska now.and forever. it is a project serving the strategic energy needs of America while creating millions of dollars of economic development opportunity in Southeast Alaska now and for decades to come.The opportunity is an international energy intertie connection that provides needed energy to America while simultaneously reducing our Nation's dependence on foreign oil and governments. The key to this economic development vision is the AL-CAN INTERTIE extension of the Southeast tntertie.This lnk uncorks the vast energy potential by initiating the export conduit of energy that will bring export dollars into the Southeast Alaska economy.The commilment to build the AL-CANNTERTIE of the Southeast Intertie will uncork the vast potential hydropower export from Southeast Alaska and create the catalyst to hook up Kake,Angoon,Sitka and Hoonah.The AL-CAN INTERTIE will connect the excess al the Tyee dam and connect the scheduled Thomas Bay Project which combined wul bring in over $25 million annually in energy revenue. The AL-CAN INTERTIE will ideally be owned and operated by Kake Tribal Corporation (KTC)and The Thomas Bay Power Authority The Thomas Bay Project will be owned and operated by private and potentially public sources that include Tollhouse Energy and Kake Tribal Corporation. The AL-CAN INTERTIE of the Southeast Alaska Intertie 1s a mere $36 million dollars af which if is envisioned thal the State of Alaska would pay 20%and the US Government 60%.The American portion would run to the Canadian border and the Canadian Government with British Columbia Transmission Corporation will connect the intertie to the North American grid The energy produced in SE Alaska will be made available in the Continental US. The payback period of the $35 million investment is a mere1.4 years based on the immediate and readily available export of $25 milion of efectricity.Further connections to Ketchikan via the Swan Tyee intertie link.will provide Metlakella an export opportunity raising needed funds for Metlaketla as well as for other hydropower potential in the Ketchikan area. .$250 million in immediate private investment in SE Alaska for Thomas Bay Project and other projected hydropower sites. .Over 125 construction jobs and another 75 service related jobs for the Kake,Petersburg,Wrangell areas. .Approximately $4 million in surplus energy sales for the Tyee dam reducing electrical rates for all four dam tate payers from Kodiak,Valdez,and Glenallen to Southeast Alaska. .Spurs and creates the catalyst to build the intertie to Baranof Island to Sitka through Kake to fap into known hydropower potential .Ensures the economic feasibility of the Swan Tyee intertie link by enabling Metlaketla and Ketchikan hydropower an opporfunity to export excess energy. .Stabiizes and guarantees low postage stamp rate Wheeling fees on all SE Intertie connections ensuring thal Ines for Hoonah,Angoon and Kake can be part for and maintained after construction: Do you need a change in the law?No Do you need "intent”language?Yes Language is attached on page 3. This form was prepared electronically using Sunkat Hawk Courier Slandard™2007 Printed from Sunkat™Hawk Courier FY2007 Standard™92 DEB3 British Columbia Transmission CORPORATION™ ALASKA BC INTER-TIE STUDY March 3,2006 In July 2005,BCTC completed the planning report SPA 2005-24,which described a potential extension of the BC Hydro transmission system into the area northwest of Terrace.That report made a preliminary observation that a 287 kV line would be required to serve the predicted area loads. Were such a line in place,it would create opportunities for interties to be developed between British Columbia and the Alaska panhandle.This report builds on the recommendation of the earlier study and assumes that an intertie would be constructed as a 287 kV tap from the Bob Quinn station to the BC border.The additional costs for the BC portion of this added scope have not been costed in detail,but would be expected to fall between $30M and $120M. BCTC reiterates that both the planning report SPA 2005-24 and the work done in this study are very preliminary.Before initiating any project to serve loads or undertake an intertie in this area,more robust planning and consultation would need to be completed. DISCLAIMER This report was prepared solely for the purposes described in this report,and is based on information available to BCTC as of the date of this report.Accordingly,this report is suitable only for such purposes,and is subject to any changes arising after the date of this report. Unless otherwise expressly agreed by BCTC,neither BCTC nor any party engaged by BCTC in connection with the preparation of this report makes any representations or warranties regarding the accuracy,completeness or usefulness of this report,or any information contained in this report,for use or consideration by any third party,nor do any of them accept any liability out of reliance by a third party on this report,or any information contained in this report,or for any errors or omissions in this report.Any use or reliance by third parties is at their own risk.Without prior written approval of BCTC,no part of this report shall be reproduced or distributed in any manner or form whatsoever. British Columbia Transmission Corporation,,, www.bctransco.com eveBAS Powertech Labs,Inc. 12388 -88"Avenue Tel:(604)590-7500 Surrey,British Columbia Fax:(604)590-5347 Canada,V3W 7R7 Alaska-BC Inter-tie Study Project 16239-21-00 Report #16239-21-00-3 March 03,2006 Prepared for.BC Transmission Company (BCTC) Vancouver,BC,Canada Prepared by. Saeed Arabi Principal Engineer,Power System Studies Tel:(604)590-7459 Fax:(604)597-6656 E-mail:saeed.arabi@powertechlabs.com Approved by: Kip Morison Director,Power System Studies Tel:(604)590-7470 Fax:(604)590-8192 E-mail:kip.morison@powertechlabs.com Project 16239-21-00,Alaska Inter-tie Study March 03,2006 Contents Page 1 INTRODUCTION...ccsscccccssssessstcccnseccensccesencccescnssscsecnscecessasssaseasesesseesssseeesessnssssesoasenss 1 2 THE STUDIED CASE.cccssesenecencccscsesccesnncccecesccscsonssnesssesssennessssesassscensssaesorenneaees 1 3 -TRANSFER LIMITS...cecsssscccssssesscccssesccsncccsssscccessnsaneesssosscesesensnanaseesssasesesnensanaceessseees 2 4 CONCLUSIONa.eee cstcensccessssccescsccsnenessncccesascncessnsccesssassosessosssenesssssscecsssseacessacessoaseres 3 List of Tables Page TABLE 1:VARIOUS LIMITS OF ALASKA GENERATION TRANSFER TO BC.........ccssssssesteseeeeseeenseateseees 2 List of Figures Page _FIGURE 1:SINGLE LINE DIAGRAM OF THE STUDIED REGION -No LOAD AT BoB QUINN,112 MW POTENTIAL HYDRO GENERATION ConnecTED TO MEZIADIN 138 KV Bus,AND 200 MW ALASKA GENERATION OFFSET BY 200 MW LOAD AT SKEENA.....ccccccccccsssssseccccceaccecstseceeccceccscesceseeseues 4 Powertech Labs Inc.ti Project 16239-21-00,Alaska Inter-tie Study March 03,2006 1 Introduction There are potential benefits for parties in both South-East Alaska and British Columbia of interconnecting various Alaskan loads and generators to the BC grid.These benefits may include: e Improved continuity of service to customers due to redistribution of power flows following a contingency or during a planned maintenance outage; e Improved frequency stability as a result of the increased inertia of the combined power system; e Improved voltage stability as a result of combined short circuit capability;and e Trade opportunities. In order to determine the feasibility of a likely Inter-tie route,and to focus the effort of future more detailed planning efforts,a limited study is carried out in this project to determine the likely transfer capabilities for a range of net area loads and generation.The studied route is from Terrace,BC to Tyee Lake in SE Alaska.This route generally follows Highway 37 to the Iskut River,then west to the Craig River,and then southwest to the Bradfield Canal. 2 The Studied Case The studied case is based on a BCTC's 2009 heavy winter condition modified as follows: e A 287kV line added from Skeena to Bob Quinn with 40%series compensation. ¢A 287 kV line tap added from Bob Quinn to the BC-Alaska border (approximately the same length as that between Meziadin to Bob Quinn). e Potential hydro generation connected to Meziadin 138 kV bus. e Zero to 250 MW load added at Bob Quinn 287 kV bus,in steps of 50 MW,to represent the demand by likely mining developments in northern BC. e A +40 MVAR Static Synchronous Compensator (STATCOM)assumed at Bob Quinn 287 kV bus for voltage support. e Alaska system modeled as a variable source at the BC-Alaska border to be used for determination of the maximum aggregate transfer into BC at this point. e A variable load (i.e.,sink)added at Skeena 500 kV bus to offset the injection by Alaska source. The study is based on static analysis using the Voltage Security Assessment Tool (VSAT)only. It considers voltage stability limits,bus voltage violations of t5%change between pre-and post- contingency situations,and branch thermal overloads against rating A (i.e.,750 MVA for the 287 kV line from Bob Quinn to Meziadin and 584 MVA from Meziadin to Skeena)for the region Powertech Labs Inc.1 Project 16239-21-00,Alaska Inter-tie Study March 03,2006 between the inter-tie and the nearest point on the BC 500 kV network (i.e.,Skeena).It does not consider the ability of the BC system to transmit this power to loads or impacts on power flow beyond the nearest point. The following single contingencies are applied: Outage of the line from SKA287 to MIN287. Outage of the line from SKA287 to RUP287. Outage of one of the two transformers from SKA287 to SKA138. Outage of one of the two transformers from SKA287 to SKA 66. Outage of the transformer from AYH287 to AYH138. Outage of the transformer from MEZ138 to MEZ25VRS. Outage of the line from MEZ138 to STW138.NNYAYYA single line diagram of the region of study is shown in Figure 1,representing the maximum expected generation at BC-Alaska border (bus 90000),which is 200 MW. 3 Transfer Limits Transfer limits are computed for various Bob Quinn loads,with and without potential hydro generation,as shown in Table 1.Voltage stability limits indicate the system collapse for the worst contingency.Voltage decline limits correspond to larger than 5%voltage reduction after the worst contingency.In all cases the worst contingency is the first applied contingency,and the largest voltage change occurs at RUP287 bus.Note that there is no voltage rise problem. Furthermore,the 138:287 kV transformer at Meziadin is the only branch that shows significant overload when potential hydro generation is at 112 MW output,i.e.,up to 113%in various cases. However,this overload exists even without any injection at the BC-Alaska border (the transformer rating of 110.4 MVA needs to be re-examined). Table 1:Various Limits of Alaska Generation Transfer to BC. Bob Quinn Without potential hydro Generation |Potential hydro Generation @ 112 MWLoad(MW)Voltage Stability |Voltage Decline Voltage Stability Voltage Decline Limit (MW)Limit (MW)Limit (MW)Limit (MW) 0 430 410 360 340 50 450 440 380 370 100 460 -390 380 150 470 =400 - 200 470 =410 _ 250 460 400 - Powertech Labs Inc.2? Project 16239-21-00,Alaska Inter-tie Study March 03,2006 4 Conclusion Table 1 indicates that the lowest transfer limit is 340 MW before applying any security margin, which corresponds to having 112 MW potential hydro generation connected to Meziadin 138 kV bus and minimum load at Bob Quinn.Considering the 200 MW maximum expected generation from Alaska,it appears that sufficient voltage security margin exists for the studied configuration. Powertech Labs Inc.3 Project 16239-21-00,Alaska Inter-tie Study March 03,2006 &f{s viboNISTIAN 1.0500 90000 52.5707 ""S7S ALB287 287.fw may<e 0 bat & 1.0506 3254 44.8800 BQN287 287 'Oo :wfPotentialElsaK=r 1o4ay =2 BOSC 287Hydro473716Generationmys32541cisealy 2 0.9333 1.0391 x ™ MEZ138D1__138.46.6702 40.1774 "fs MEZ287 =287.ua i 3149 ala ar 3245 vale ia!ee 2STye nN S bad ir)S =2 .[aa oy3aa a1$S14 10376 1 MEZSC 287.46.6802 =7 44.7622 S73 32269als 3145 TS MEZI38-4138.m at>ot eeops7=|8 re]99370 SER47.8652 =EY _STW138 =138.aenmedChe3139-10204 st3445oot&/8 33.2307 (2 AYH287 =287. MEZ25VRS_25.2 45.6040 Sim ;feo 3227VvN18aN ce] 218 AYHSC 287i)ec en Me : 6.969] 36.9789 ©]32271 25.2884 cai 09349 % AYH138 138.32.8528 mn 1L.OOT9 =427.5873 ES SKA287 287. 2 |e Sats , " #1§Ng ¥ /5 els &--CO}wy3201puSCobrmgae |-0308 3204 elem 10800 0.936] RUP287 287.27.8145 MIN287 287.|29.0092 SKALBB 18.27.5873 <3502 1.0378 5 a SKA500 500.25.8612 Figure 1:Single line Diagram of the Studied Region -No Load at Bob Quinn,112 MW Potential HydroGenerationConnectedtoMeziadin138kVBus,and 200 MW Alaska Generation Offset by 200 MW Load at Skeena. Powertech Labs Inc. Page 1 of 1 Karl Reiche From:David Lockard Sent:Friday,May 19,2006 2:24 PM To:Ron Miller;Sara Fisher-Goad;Karl Reiche Subject:FW:Economic Plan Attachments:Economic Plan for SE Alaska Intertie.doc fyi From:Thom A.Fischer [mailto:thom@tollhouseenergy.com] Sent:Friday,May 19,2006 10:58 AM To:David Lockard Subject:FW:Economic Plan From:Thom A.Fischer [mailto:thom@tollhouseenergy.com] Sent:Monday,May 01,2006 1:01 PM To:Jim McMillan Subject:Economic Plan Jim,attached is an economic plan for SE Alaska that Jim Clark requested. Thom Thom A.Fischer,P.E. work 360-738-9999 ext.111 cell 360-739-9777 fax 360-733-3056 thom@tollhouseenergy.com Southeast Alaska Intertie Economic Plan The concept of the Southeast Alaska Intertie plan is to provide inexpensive renewable hydropower energy to all SE Alaskan communities.This would reduce the cost of energy and PCE subsidies,strengthen the local economy,and displace dependence on expensive fossil fuel generation.This vision is achievable through a well thought out economic plan of an Intertie grid that not only connects the communities of SE Alaska,but also connects to the North American grid through British Columbia.Once connected to the grid via the ALCAN Segment,future extensions of the SE Intertie to other communities become economic as the extensions would also connect future hydropower projects that could export energy.Excess energy would be sold to utility companies located in British Columbia or Lower 48 states.Revenues generated from transmission wheeling rates would pay for the long-term operation and maintenance of the transmission system thereby creating an additional benefit:sustainability of the entire SE Intertie at the least cost to the communities. This vision would justify the build-out of the Intertie system throughout SE Alaska,and would provide sustainability and lower energy rates to the communities for decades eliminating the risk of reliance on fossil fuels. Renewable hydropower would facilitate the restoration of the economies in small rural towns by bringing in more infrastructure and jobs,new private capital investment,increase the standard of living,decrease PCE subsidies,and an increase in land values all by reducing the major cost of doing business:energy. GOALS e Reduced power costs in Southeast Alaska communities, e Eliminate adverse effects of Fossil Fuel Generation, e Develop and maintain reserve hydropower capacity for future Southeast Alaska needs,including o Timber -Sawmills and value added processing, o Mining -Mine operations and ore processing, o Fishing -Processing,flash-freeze and added value fish products, o New industries such as data storage and electronic systems that demand reliable and sustainable electrical power, e Enhance Economic Development, e Completion of the Transmission System in Southeast Alaska, e Sustain the Transmission System (O &M)through wheeling fees. Page 1 of 4 We ly \RN %4 GOLDEN®'%ph N San fRKE DOROTHY 5 aN BEASAE]pyDRO feS\Shernistay : caer <6}nunca ae Neamt An NEmy4 "Y.\xremoré,CREEK '4%ee %aay>: 4ideS aiN'aeFMARYBaa Lore '.aCORONATIONWARRENISLANDISLANDWILDERNESS=WILDERNESS aN 100 2%%50 KM A Shasund ne ee -en ma 3 ;ee i A eb hoes ila 3 !LAVA.DED 30 60 3 ;oo pats,ys oy Aa Z anMILESq4'a LEGEND ay hal -- et EXISTING 500 kV,GRITISH COLIMBIA cidaletatetateiatalEXISTING287k¥,SRITISH COLUMBIA -omemacman EXISTING 38 kV,ALASKA em mmm PROPOSED ALASKA a +4 siEXISTING458kV,BRITISH COLUMBIA bixon ENTRANCE W =aesrseeemePROPOSED158RY,BRITISH COLUNGIASf EXISTING HYDROELECTRIC FACILITY BR eehacaan| PROPOSED HYDROELECTRIC FACIUTYemnigeleuara 1p a (TIMAT&MINERAL DEPOSIT "wrt ay aecitytargansMt21106 OVERALL FUNDING CONCEPT e Hydropower Projects -Private Investment e Transmission System -Publicly Funded (similar to Bonneville Power Administration and the Tennessee Valley Authority) o Ownership --TBPA or new SE Alaska Transmission Authority o Sustainability,through wheeling fees Page 2 of 4 BENEFITS Alaska/Southeast Alaska Reduced energy costs for Southeast Alaskan communities, Stable and sustainable energy rates for generations, Economic development through lower rates to industry, Reduction or elimination of diesel generation, o Reduction of greenhouse gasses and emissions, o Eliminate air and water pollution, o Eliminate costly tank maintenance and spill liability, Reduce the nations dependence on foreign oil, Access to other energy sources with connection to the North American grid, Provide jobs and revenue to Southeast Alaskan communities, Opportunity to construct more renewable energy projects for energy export and local Southeast Alaska uses. British Columbia Provides voltage and var stability to BCTC system in the NW region of BC, Provides increased reliability to BCTC transmission system, Economic stability to the BCTC line (hydropower project life -50 years), Reduced line losses for BCTC, Provides opportunity to schedule and coordinate SE Alaska and BC Hydro energy resources, Provide further justification for extending the line north on Hwy 37, Provide jobs and revenue to BC communities, Provides energy where BC Hydro needs it in exchange for Downstream Benefit Energy, Opportunity to sell shaping service to utility in lower 48. Other issues that help Southeast Alaska and British Columbia Governments of Alaska and British Columbia work together to change the Renewable Portfolio Standard in California and Washington to increase energy export value of hydropower from this combined region. Share dispatch and shaping of SE Alaska energy projects for the benefit of the BCTC transmission system stability,energy needs for BC Hydro, energy needs in SE Alaska,at the same time maximizing the market price. Provides opportunity for development in Tahltan Nation region. Page 3 of 4 TIMELINE Year 1,2006 e Design and permit ALCAN Intertie (Bradfield Corridor)$1,000,000 e Obtain State funding for the Swan to Tyee Intertie $40,000,000 e Formalize agreements,develop markets,negotiate SE Alaska interests with regard to the Thomas Bay Project $2,000,000 Year 2,2007 e Construction Swan to Tyee e Complete permitting and design of ALCAN Intertie $1,000,000 e Design and permit Thomas Bay to Petersburg Intertie $1,000,000 Year 3,2008 e Complete construction of Swan to Tyee e Obtain funding for the ALCAN Intertie $27,000,000 e Obtain funding for Thomas Bay to Petersburg Intertie $20,000,000 Year 4,2009 e Start clearing and construction of ALCAN Intertie e Start construction Thomas Bay to Petersburg Intertie e Obtain funding Metlakatla to Ketchikan Intertie $7,000,000 Year 5,2010 e Complete construction of ALCAN Intertie e Complete construction of Thomas Bay to Petersburg Intertie e Complete construction of Metlakatla to Ketchikan Intertie NOTE:The Juneau to Hoonah and the Kake to Petersburg Intertie Segments were identified by the Energy Committee of the Southeast Conference as a priority. The completion of these two projects should take place concurrent with the development of the Swan to Tyee and ALCAN Intertie Segments. Other Intertie Expansions: e Greens Creek Mine to Hoonah e Petersburg to Kake to Sitka e Thomas Bay to Snettisham Sitka to Angoon POW to Wrangell Juneau to Kensington Mine to Haines Page 4 of 4 GE IHL Gneugs Syed Stele Page 1 of 1 Karl Reiche f)gf,/ From:Rollo [rollo@seconference.org]CASent:_Thursday,May 04,2006 9:21 AM _-eo To:Karl Reiche Subject:Final Report and Final Invoice Attachments:Energy Export Report May 06.pdf;Invoice Energy Export Report May 06.pdf Karle: This is the final submission for this contract -the final report and the final invoice.All work is complete.We had some extra work between the draft and final reports,which took us longer than expected Thanks for your help on this...if you have any questions,fire them at me. --Rollo Southeast Alaska Energy Export Study FINAL REPORT Prepared for The Southeast Conference Juneau,Alaska ASSOCIATES,INC. Engineers and Consultants May 1,2006 Southeast Alaska Energy Export Study FINAL REPORT May 1,2006 Prepared for The Southeast Conference Juneau,Alaska by DP TlelelelAbsBurnINC. Engineers and Consultants In association with: Commonwealth Associates,Inc. Energy Export Study i Draft Report Table of Contents Southeast Alaska Energy Export Study Table of Contents Table of Contents List of Tables List of Figures Section 1-Introduction and Conclusions INtPOGUCTION 0...eee ececcscesccscssccstesecsssscesecsusesssesecssuseesseceevsrseessussnsesecsuessnseseusseseussenscsuvansensesaseuseessesvees 1-1 Study APProach oo.ceceseeeeesessesessesecsecssscsssesecsesssessrscsessecsenseeeesseesesereeerssaseeseeasiaenenecenensneneneas 1-3 COMCIUSIONS .o..eeccsscsesscvsscsecssescesecsecseeceessensecsucneusussesaesseseucnsceessusesseatecsersnessesscauceusverssassnssacanenavensas 1-5 RECOMMENAALIONS ......ccceescssecsscsscsessevsevscsesscssvsesesersscsucsccsesscsesssssussecseecseseessssusssscaussaceresevesesenuens 1-11 Section 2-Transmission Line Route Alternatives and Technical Characteristics IAtrOMUCTION oo .ccesessescsssssscssssssccseesesscsessevscsscsessssvseceuessnsasssessseuevseseesusesesauessuvscssssssssancasveaseseaevseees 2-1 HISCOFY .ecessecsssesececsesscsesesseescssecesenesesneseoenseveaeenssveecseneeneasensnsisaneaneeceesaeneecensesasansesansneusensesatseseeeess 2-1 Transmission Line StudieS......ccccccsccsssssccssssssssscsscsscsscsscsesseccesssessessussusssesceusensasenseasnaves 2-2 Previous and Current Road Studies .......ccccsssssserscessssescsssseresesecsssesecssssssseessssscetseeecsesees 2-3 Recommended Transmission Line Corridor ....c.cccccsscsscssscssssscsssssccsecsecsussessecsscsssssesserssvarsersenes 2-3 Transmission Design Concepts .......cc ccccesseesesecssetsnssssstenssastenseetstevsessasareenseeverersnenessseessesecseneey 2-6 TraANSMISSION VONAGE .......cceesseecessssscessessesesesesesessatscsesessstesesevsnscssseseeessesessesseseeseseeeaseees 2-6 Physical LOadiIngS.......cccsssscssecessesesessesssesssssesessesessencsseesieeeseessasseeseesseeesisesuenseeseesaesenenes 2-8 Section 3 -Environmental Issues IMtFODUCTION -saececcsssscssevesessessesecsesessseseessseeevsssesusuvessevavscsucessessussessssuseuseseuvecsusaussersetsevaensvecnaracans 3-1 Affected RESOUICES .....cccecsescsssscsscssssssscsecsesessessssssussesssseusecssseeseussesesssrcussveseessceuseasseisaasesarensvaes 3-2 National Environmental Policy Act ProCeSs ......ccscccsssssecssssssssssssescscssesssssessesscssessusssesssesesssvesesneenes 3-3 SUMMALY -carecccaeaescsneeseeceecscscncneneneacsnececseevsnsstevseeneesasenesapstavessseeuenenseasedensasacacasanasasanerecanenes 3-5 Section 4 -Estimated Costs of Construction and Operation Costs Of COMSEUCTION oo...cssceesesteesecesestenessscassesescsesesssesensssetstsceressusessssssesesssssesesseaesesessseresesess 4.4 Operation and Maintenance Costs oo...sscsesssssssesssessssesnssssaeessesssesssssusssesesseseetsuseneassetens 4-3 GOMELAl oo.eescsescsecestesesesccsesceceecsescscsesesesecsausesssesesavacsesevesseassesaseesavassssssasesesseeesasessessasarsesess 4-3 Annual Inspection and Maintenance Program ......cccccssssssessssscssssesssssssssssessssisseesesseens 4.4 Visual (ON ground)INSPection occ ccecsssestececsscetensssesssssceescsnsssssssssseeseasssevaenessetenesssees 4-5 Spare Materials .......:cccscssscscscsscsssesesecessessssssseseessseceaesessescssseecsesscssscseasaesseasaeesseeaeavaveeses 4-5 Helicopter SUIVey ....cccsesscsessssssssesssesesssseseessesesssesesessseessseeverstessessevssseeseceeseesseesseessseees 4-5 Thermographic Survey ......c cc ccssssssssscsesssstesesesscsesstevssssssseeesssssessssssevevevessesraseeseeesseress 4-5 Right-of-way Caring ......cccssscssessssstsssesscsssssssssssssessesssssnssessesssusssasssevasessseesusscaeavssentseaes 4-5 Catastrophic Failures...ceccsscsssscssssetstssevscssetsessssscessssesevssessssesssevaretessesecenecatsssessenees 4-6 Estimated O&M Costs oo...ccssssssssesssssssscsssrsvsssseseetssenssssssueseesssssessavesseessecsessssesseesscarsvess 4-7 Energy Export Study ii DRAFT 3/12/06 Table of Contents Section 5 -Power Supply Evaluation and Economic Analysis Power Supply Evaluation...cscsccsessssseessescsessesssssssesseessesseassaeesssassessseassessseessssasseensasseessass 5-1 OVEIVICW oo.eccccsesecesseccssesescsssesesessssesesesssssscassusssesesssaesevacsesecsusesaacsessususecsussesenensesseeusueressns 5-1 ECONOMIC ANALYSIS ......cssesecssseseccestsesesetsessssseseesescesessnssseeesecsesesassesesaseesesacesssaessaeneseeteesesststeavusesuens 5-5 Introduction and ASSUMPTIONS ........ccccssecssesesssetssscsssesessssssecsssscsesessesenecsesesesestsevsvssscensustes 5-5 Outside Power Sales Markets ........cccscssssssssssssessscessssssssssessessscsecessecetscsessseressvssesssvenevacans 5-6 TFANSMISSION CHargQeS......cccsccssserescsssesssssessecssscsseesseesessssessecesseseesseseessseceeessssasersasevenens 5-7 RESUMES ..csscceccsscsessessesscsenceseserscsecstseeesseeesenseseeeenasseneceesssscsesaessenessessesassevevaseavasenseaeereesas 5-8 Section 6 -Other Factors Federal Energy Regulatory Commission (FERC).......ccscscssssssssssssssscssseessesesssssessseesseseseesssssees 6-1 The Columbia Treaty ...c.ccccccsessesesenecessseesssesssasseseevsssccsssseasseseeetscsessessesasasseseesecesssseasssasesessceeess 6-1 Other Interconnection Alternatives .....cssessssseeseescseesesesssssesssseseesasssssesesesssnsseseseseseecssstenes 6-2 List of Tables Table 1-1 Estimated Cost of Construction for Alternative Configurations ...........cccscesee 1-6 Table 1-2 Estimated Energy Exported,Net Revenues and Breakeven Cost of Power......1-10 Table 4-1 Lake Tyee to Border -Estimated Comparable Costs of Construction.............0 4-2 Table 4-2 Border to Forrest Kerr -Estimated Comparable Costs of Construction ..............4-3 Table 4-3 Estimated Costs of Operation and Maintenance .........cccccesscssssssscscssssceresesseass 4-7 Table 5-1 Estimated Surplus Hydroelectric Energy ......cccsssssesssssssscseseeseesesssssvessssvescesessess 5-4 Table 5-2 Estimated Annual Breakeven Power Cost and Net Present Value of Net Revs ..5-9 Table 5-3 Loads,Resources and Surplus Hydroelectric Energy ........ccccsssssesesesssvsssesvens 5-10 Table 5-4 Estimated Revenues and Expenses -Case 1:Existing Tyee Surplus Onlly......5-16 Table 5-5 Estimated Revenues and Expenses -Case 2:Tyee with Cascade Creek........5-20 Table 5-6 Estimated Revenues and Expenses -Case 3:All New PWK Hydro ............00.5-24 Table 5-7 Estimated Revenues and Expenses -Case 4:All New Regional Hydro ..........5-28 List of Figures Figure 1-1 Proposed Bradfield Intertic LOCAtION.......cesecscsssesesesessessessssssssesstssseseessaears 1-12 Figure 1-2 Proposed Southeast Alaska Intertie System....cssssssssessesssessessesseseseessseeseaes 1-13 Figure 2-1 Lake Tyee System Network One Line Diagram..........cceccesesssescecseseseenee 2-9 Figure 2-2 Typical Tangent Structure with Davit APMS.........ccssesseceeeessssseesesasecseessseaseessen 2-10 Figure 2-3 Typical Right Of Way .....cccecscssscsesesssessssessscssscsssescsssssrssssescscscsssecavereesssseasevans 2-11 Figure 2-4 Typical Tangent Structure with Polymer Post Insulators...ccsssc 2-12 Figure 3-1 NEPA Process OVEr°iCW.......ssesecssestsseeestenestesesestecssssessesessssssetsesstessavearesens 3-4 Energy Export Study iti DRAFT 3/12/06 Section 1 Introduction and Conclusions Introduction Over the past few years,the Southeast Conference has conducted several studies with regard to development of an integrated transmission system in Southeast Alaska.For the most part,the electric systems that serve the residents and businessesin the region are community based and isolated from each other.Further,none of the electric utility systems in Southeast Alaska are interconnected with any other utility systems in Alaska,the rest of the country or Canada.Some of the previous transmission studies have evaluated the feasibility of constructing transmission lines primarily among the utilities in Southeast Alaska and to a lesser degree to Canada. As a follow-on to its 2003 Southeast Alaska Intertie Study and 2005 Kake-Petersburg Intertie Study,the Southeast Conference retained D.Hittle &Associates,Inc.6.(DHA)to conduct a study of the feasibility of a transmission interconnection between Southeast Alaska and British Columbia, Canada through the Bradfield Canal region (the "Bradfield Intertie”).In general,the purpose of the Bradfield Intertie would be to provide Southeast Alaska hydroelectric power producers with access to power markets in Canada and the United States.As such,this study (referred to in this report as the "Energy Export Study'')evaluates the feasibility of the Bradfield Intertie based on the revenue that would be produced from power sales over the line as compared to the costs of its operation and maintenance. For the most part,electric energy in Southeast Alaska is produced by hydroelectric generating facilities and diesel generators.The potential for development of hydroelectric resources in Southeast Alaska has always exceeded the regional demand and as a result,the full potential for hydroelectric development has not been realized.The energy generation potential of several regional hydroelectric facilities developed in the past has exceeded the local demand for power creating significant generation surpluses for many years after initial operation.For the LakeTyeehydroelectricprojeétlocatedneartheheadoftheBradfieldCanal,over half of the annual energy generation potential continues fobe surplus to the needs v{,Wrangell and Petersburg,thecommunitiestowhichitisconnecte&2 The Bradfield Intertie would serve as a means to transmit existing regional surplus hydroelectric generation capability to Canadian and US markets as well as encourage the development of new hydroelectric facilities in Southeast Alaska. A critical element related to the Bradfield Intertie is the interconnection with the transmission system located in British Columbia (BC).From the perspective of Alaska,the Bradfield Intertie would only extend as far as the Alaska-Canada border.It will be necessary for Canadian interests to construct the length of transmission line needed between this border crossing location to the interconnection point with the existing BC transmission system.At the present time,the transmission system in BC extends only as far north as Meziadin Junction,approximately 145 'The 22.5-MW Lake Tyee hydroelectric project is owned and operated by the Four Dam Pool Power Agency.It was constructed by the State of Alaska and began operation in 1984.*The Swan-Tyee Intertie,presently under development,will connect the Lake Tyee project to Ketchikanfor thepurposeoftransmittingaportionoftheexistingsurplushydroelectricgeneration. Energy Export Study 1-1 DRAFT 3/12/06 Introduction and Conclusions miles from the proposed Alaska-Canada border crossing of the Bradfield Intertie.BritishColumbiaTransmissionCorporatio&24BCTC)and British Columbia Hydro {BC Hydro)are currently evaluating the feasibility of extending the BC transmission system further north along the Highway 37 corridor to provide power to potential new mining loads in the area near Iskut, BC. A private developer,Coast Mountain Power (CMP)',has obtained the necessary permits and is prepared to begin construction of a 138-kV transmission line between Meziadin Junction and CMP's proposed 115-MW Forrest Kerr hydroelectric project.The CMP transmission line will extend approximately 110 miles to a point approximately 30 miles east of the proposed border crossing of the Bradfield Intertie.CMP has indicated that it would be interested in constructing an extension to its planned transmission line to interconnect with the Bradfield Intertie.No action has been taken by CMP or any other Canadian entity to develop the necessary transmission interconnection at the Alaska border. In the late 1980's,Bradfield Electric,Inc.,a private corporation,in cooperation with the State ofAlaska/Alaska Power Authority®applied for a Presidential Permit to construct and operate a 69- kV transmission line along the North Fork Bradfield and Craig River drainages between the Lake Tyee hydroelectric project and the Johnny Mountain mine area in BC.An Environmental Assessment was prepared by the US Forest Service and a Finding of No Significant Impact (FONSJ)was issued for the project on May 6,1988.A Presidential Permit was issued on May 4,1989';however,the Bradfield Electric transmission project was never constructed.The US Department of Energy indicates that the Presidential Permit has not expired,however,it is not transferable and would only apply to the exact project as originally proposed. As previously indicated,the primary purpose of the Bradfield Intertie will be to provide an opportunity for the export of Southeast Alaska's surplus hydroelectric generation to outside power markets.In the Pacific Northwest and elsewhere on the West Coast there is a significant need for additional electric power supply in the future.Puget Sound Energy (PSE),the largest electric utility in Washington,has projected an energy deficit of 915,000 MWh during 2007.By 2015,PSE's growing annual energy need is projected to be 11,500,000 MWh over the currently projected supply.With the Bradfield Intertie,electric energy from Alaska could potentially be sold to PSE to partially address this projected shortage. The Bradfield Intertie is of interest to BC Hydro in that interconnection with Alaska power generating resources could contribute to more stable operation of the northern portion of BC Hydro's electric system.If constructed,the Bradfield Intertie could also be used to import >British Columbia Transmission Corporation (BCTC)is a provincial Crown corporation that was established in May 2003 to maintain,operate and plan BC Hydro's transmission assets.The core transmission assets are owned by BC Hydro."BC Hydro is a Crown corporation owned by the Province of British Columbia.It is the largest electric utility in BC serving over 90 percent of the province's population. °In April 2006,NovaGold Resources,Inc.indicated that it was pursuing acquisition of CMP.°The Alaska Power Authority was superseded by the Alaska Energy Authority. 'Presidential Permit PP-87 authorizing Bradfield Energy,Inc.and the Alaska Power Authority to Construct, Operate and Maintain Electric Transmission Facilities Across the International Border Between the United States and Canada,dated May 4,1989. Energy Export Study 1-2 Final Report Introduction and Conclusions electricity for new large loads in Southeast Alaska.The construction of the Bradfield Intertie could help stimulate the development of new hydroelectric facilities in Southeast Alaska by providing a market for the power before local loads grow to accommodate additional generation. At the present time,the existing electric transmission system in Southeast Alaska is not extensive.Petersburg and Wrangell are connected by means of the Lake Tyee transmission line. The Four Dam Pool Power Agency (FDPPA)has undertaken construction of a transmission line to interconnect Ketchikan to the Lake Tyee project (the "Swan-Tyee Intertie”)but has halted construction and is seeking funds to complete this project.The Swan -Tyee Intertie could make surplus hydroelectric generation in the Ketchikan area available for export over the Bradfield Intertie.In the future it would be necessary to construct additional transmission lines in Southeast Alaska to make hydroelectric generation in the Sitka and Juneau areas available for export.These additional transmission lines have been studied but are not under development at the present time. In evaluating the Bradfield Intertie,it is important to note that a number of issues outside the scope of this study must be factored into the overall assessment of the project.Principal amongthesearethevariouscommercialandcontractualarrangementsthatwould'be needed to allow for transmission interconnection,transmission access,power sales and power purchases.The terms and conditions associated with these arrangements will need to be negotiated and could significantly affect what benefits and costs actually are to be derived with the Bradfield Intertie. Further,the potential development of new hydroelectric facilities in Southeast Alaska would be dependent on the economic and technical feasibility of each of these projects.No attempt has |been made in this study to determine if any of the new hydroelectric projects could be proven to be feasible or if they could be successfully financed. Finally,one of the elements typically considered in evaluating the economic feasibility of electric transmission and generation projects in Alaska is the projected impact on electric ratepayers.Because of the significant number of uncertainties related to the potential costs and benefits associated with the Bradfield Intertie,an estimate of the impact on electric rates would be highly speculative at this point.The ability to sell surplus energy from regional hydroelectric projects should act to lower the cost of electricity to electric consumers in Southeast Alaska andpotentiallyelsewhereinAlask4'/As work proceeds towards development of the Bradfield Intertie and more facts become known,the impact on electric rates in the region can be better quantified. Study Approach The primary tasks undertaken for the Energy Export Study as defined in the scope of services are as follows: 1.Identify the estimated surplus power from existing,planned and potential hydroelectric resources in Southeast Alaska and estimate the cost of power production from these hydroelectric projects. 8 Sales of surplus hydroelectric energy from the Lake Tyee project could potentially lower the cost of power to all Four Dam Pool communities. Energy Export Study 1-3 Final Report Introduction and Conclusions 2.Evaluate the conditions associated with a potential sale of power from Southeast Alaska to and through British Columbia to electric utilities or markets in the Lower 48. Determine how power exchanges might be a factor as an option to direct power sales. 3.Identify regulatory and/or political constraints with respect to the proposed interconnection and power transfers/sales between Alaska,Canada and the Lower 48. Determine what options may exist to mitigate or avoid FERC and other jurisdictional problems. 4.Provide preliminary construction and operating cost estimates for the transmission line between Southeast Alaska and British Columbia. 5.Estimate the costs associated with wheeling power through the BC Hydro system to the Lower 48. ”- 6.Evaluate the economic feasibility of the proposed transmission interconnection and exporting of power as it pertains to overall costs and benefits to the State,Canadian interests,Lower 48 interests and in particular to the residents and electric consumers in Southeast Alaska. 7.Provide a "fatal law”review of potential environmental issues.r 8.Provide a report of the findings of the Study which includes identification of the cr recommended next steps necessary to pursue development of the interconnection with BC. For the purpose of the economic analysis included in Item 6,it has been assumed that Bradfield ||Intertie construction costs will be funded with grants,however,it is expected that the annual costs of operating and maintaining the Bradfield Intertie are to be borne by the users of the transmission line. In evaluating the economic feasibility of the Bradfield Intertie,the revenues from power sales to outside markets have been estimated on an annual basis.These revenues were then reduced by the estimated costs of operating and maintaining the Bradfield Intertie and paying the costs oftransmittingtheexportedpowerovertheCanadiansystem.The resulting net revenues are presented as the "breakeven cost of power”that can be incurred to pay for power generated at existing and new power plants in Southeast Alaska.As such,the breakeven power cost would be the amount that could be paid for power so that when combined with the estimated costs associated with transmitting power outside Alaska,the total costs are equal to the estimated revenues from power sales. During the course of the Energy Export Study a number of reports were reviewed and discussions were held with representatives of many agencies,organizations and companies. Energy Export Study 1-4 Final Report Introduction and Conclusions Conclusions The following conclusions are offered with regard to the Energy Export Study.Although these conclusions are offered at this point in the report,it is important to understand the assumptions and other factors described in subsequent sections of this report that contribute to the conclusions. Technical characteristics and construction costs e The construction of the Bradfield Intertie is technically feasible.The recommended corridor for the Bradfield Intertie is very similar to the proposed corridor for theBradfieldRiverRoad?The Bradfield Intertie would originate at the existing Lake TyeehydroelectricprojectlocatedneartheheadoftheBradfieldCanalandthemouthofthe Bradfield River,proceed along the North Fork of the Bradfield River for 22.5 miles, cross into the drainage of the South Fork of the Craig River,and follow the Craig River for four miles to the Alaska -Canada border.At the border,the Bradfield Intertie is proposed to meet a similar transmission line to be built by Canadian interests that would interconnect with the main BC transmission grid.(See Figure 1-1) e Based on the current configuration of the existing Lake Tyee transmission system!°and the plans for new transmission construction on the Canadian side of the border,it is recommended that the Bradfield Intertie be constructed at 138-kV.Depending on the timing of new electric generating facility development in Southeast Alaska,initial operation of the Bradfield Intertie at 69-kV could be apprepriate.It is estimated that at69-kV and 138-kV,up to approximately 105 MW and{185 MW)respectively,could beexportedovertheBradfieldIntertie.Sr e The Bradfield Intertie is proposed to be constructed as a single wood pole,single circuit 138-kV line with A-frame type structures used to support some extremely long spans. The conductor proposed to be used is 556 kcmil aluminum core steel reinforced (ACSR) conductor at lower elevations and 37/8 Alumoweld at higher elevations and for longer spans. e Based on the proposed configuration provided in this study,the estimated cost of the Bradfield Intertie is between $21.4 million and $26.8 million,at present cost levels.This cost estimate assumes that a road is not constructed adjacent to the transmission line route prior to the construction of the line.This cost estimate also does not include any costs for construction of transmission facilities in Canada. \/The Bradfield River Road project is described in the report entitled "Bradfield River Road Final Scoping and Pre- NEPA Engineering Feasibility Study”prepared by the US Department of Transportation Federal Highway Administration,dated January 10,2005. '°The Tyee transmission line interconnects the Lake Tyee hydroelectric project with the electric systems of Petersburg and Wrangell.It was constructed for 138-kV but is operated at 69-kV.There are no current plans to upgrade the operating voltage of the Tyee line,however,it is expected that this could be accomplished without significant expense. Energy Export Study 1-5 Final Report Introduction and Conclusions TABLE 1-1 Bradfield Intertie Estimated Cost of Construction for Alternative Configurations :(2006 Cost Levels) Option 1 Option 2 Option 3-Option 4 138-kV 138-kV 1 38-k\CTunnel 69-kV556KCM954KCM556KCM556KCM Materials Transmission Poles $1,010,880 $1,399,680 $942,840 $748,000 Insulators &Hardware (Polymer Post)523,200 622,080 523,200 374,400 Guys &Anchors 212,000 212,000 202,000 212,000 Conductor w/Accessories 622,567 1,393,206 3,558,161 #622,567 Other 186,888 261,332 186,888 186,888 Subtotal!-Materials $2,555,535 $3,888,298 $5,413,089 $2,143,855 Labor Cost 2,455,555 3,400,000 2,455,555 2,455,555 incidentals 4,479,950 5,455,000 4,479,950 4,479,950 Bond &Insurance 5.0%223,998 272,750 223,998 223,998 Clearing/Access Construction 1,952,000 1,952,000 1,886,000 4,952,000 Tyee Switchyard 1,200,000 1,200,000 1,200,000 850,000 Communications System 200,000 200,000 200,000 200,000 System Cut-Over 160,000 160,000 160,000 -J 9Patrol/Maintenance Repair 120,000 250,000 120,000 - , Subtotal $13,347,038 $16,778,048 $16,138,592 $12,305,358 Contingency 30.0%4,004,111 §,033,414 4,841,578 3,691,607 Indirect Costs (Permitting,Engineering,etc.)30.0%4,004,111 5,033,414 4,841,578 3,691,607 Total Cost $21,355,260 $26,844,876 $25,821,748 $19,688,572 Operation and maintenance costs e Operations and maintenance (O&M)costs for the Bradfield Intertie are estimated to be approximately $281,000 annually for routine inspections,right-of-way clearing and regular repairs.Costs could exceed this amount periodically due to damage from infrequent tree strikes,landslides,avalanches and other events.The Bradfield Intertie will be located in a remote area where access is generally limited to helicopters. Interconnection with Canadian transmission system e Interest in Canada to the Bradfield Intertie appears to be high.BCTC is currently preparing a technical study to evaluate the capability of the existing and proposed BCTC transmission system if it were interconnected to the Southeast Alaska system.The results of the BCTC transmission study are expected to be available in March 2006. e At the present time,Coast Mountain Power (CMP)is planning to construct a 110 mile- long 138-kV transmission line from the northern end of the BC Hydro transmission system in Meziadin Junction to the Forrest Kerr hydroelectric project located on the Iskut River.CMP has the necessary permits to construct this transmission line and is working to secure the final $20 million (Cdn)portion of its funding requirement to begin construction of the transmission line and the Forrest Kerr hydroelectric project.At the present time,CMP is planning to complete construction of the transmission line by the Energy Export Study 1-6 Final Report Introduction and Conclusions end of 2007.The transmission line will be built adjacent to Highway 37 for 84 miles and along the Eskay Creek Mine Access Road for 23 miles.In late April 2006 CMP reported that NovaGold Resources,Inc.,owner of the Galore Creek mine,is pursuing acquisition of CMP and the Forrest Kerr hydroelectric project.NovaGold has expressed an interest in the energy generation capability of the Forrest Kerr project and the project's associated transmission line. e There are currently no plans to construct a transmission line between the Forrest Kerr project and the Alaska -Canada border,a distance of approximately 35 miles,to interconnect with the proposed Bradfield Intertie.CMP had,however,indicated an interest in constructing such a line if it were deemed economically feasible.There have been previous studies of transmission lines and roads along this route and although some protected areas are indicated to exist near the headwaters of the Craig River,CMP does not anticipate that there would be any significant problems in permitting and constructing this transmission line segment. e In March 2006 the Province of BC presented a study evaluating a potential transmissioninterconnectionbetweenSoutheastAlaskaandtheBCHydrotransmissionsystent? This study concluded that with a 287-kV transmission line between Meziadin Junction and the Alaska border,the stable transfer limit at Meziadin Junction would be 340 MW. This study assumes that the transmission connection between Meziadin Junction and the Alaska border would be completely separate from the proposed CMP 138-kV line; however,the two lines would follow essentially the same route. e Other BCTC and BC Hydro studies have evaluated the feasibility of extending the BCTC transmission system north of Meziadin Junction along Highway 37 to as far north as the area around Iskut.Significant mining operations,including Galore Creek and Red Chris, are proposed in this region that will need access to the main BC Hydro power system.If BCTC were to extend its transmission system north,this line extension would parallel the CMP 138-kV transmission line along Highway 37 until the CMP line turns west at the Eskay Creek Mine Access Road. Available hydroelectric surplus power e Surplus hydroelectric generation capability presently exists at the Lake Tyee hydroelectric project.Atcurrent load levels it is estimated that approximately 60,000 MWh (6.8 average MW®of annual energy generation is surplus to the needs of the interconnected Petersburg and Wrangell electric systems.If the Cascade Creekhydroelectricproject,located just north of Petersburg,were to be constructed it is estimated that approximately 263,000 MWh (30.0 average MW)of annual surplus hydroelectric generation capability would be available for export over the Bradfield Intertie. 'l Alaska -BC Intertie Study,Project 16239-21-00,prepared for BCTC,March 3,2006. '2 Average MWs are calculated as MWh divided by 8,760,the number of hours in a year.This value is used to provide a measure of the average capacity of energy deliveries over a period of time. Energy Export Study 1-7 Final Report Introduction and Conclusions ts A number of other hydroelectric projects have been identified in the Petersburg, Wrangell,Ketchikan and Metlakatla areas.If the Tyee-Swan transmission line were to be completed and a transmission line between Ketchikan and Metlakatla were to be constructed as well as the Cascade Creek project and other potential hydroelectric projects,it is estimated that approximately 676,000 MWh (77.2 average MW)of annual surplus hydroelectric energy generation capability would be available for export over the Bradfield Intertie. Pacific Northwest power markets and marketing ofAlaska power Pursuant to the terms of a 1964 treaty between the United States and Canada (the "Treaty”),Canada is entitled to one-half the downstream power benefits resulting from the construction of water storage projects on the Columbia River in British Columbia. Canada's share of the downstream power benefits are provided as power deliveries at the Washington-Canada border.It is not considered likely that the delivery points for theCanadianEntitlementpowercouldbechangedtotheAlaska-Canada border without modification of the Treaty.Such action would require significant effort. Electric utilities in the Pacific Northwest have expressed interest in acquiring hydroelectric power from Alaska.Many large utilities in the Pacific Northwest are projecting the need for significant new power supply resources within the next ten years. The market value of power from Alaska hydroelectric power is highly subjective but will most likely be tied to the alternative cost of power generation with a potential premium because of the generally favorable perception of Alaska hydroelectric power. For the purpose of this analysis,it is estimated that a power sales rate in the range of between 6.0 cents per kWh and 7.2 cents per kWh in Washington State at the present time is a reasonable estimate for evaluating the economic feasibility of power exported from Alaska.In the future,this rate would be expected to change relative to the price of generation fuel and the cost of building new power facilities.Forecasts of future avoided costs and new resource costs in the Pacific Northwest developed by Puget Sound Energy, Avista and PacifiCorp indicate a possible decrease in power prices over the next five years consistent with a projected decrease in the price of natural gas.As such,for purposes of this analysis,it is assumed that the power sales rate would remain constant for five years and then increase annually at the rate of general inflation. Charges for transmission over lines owned by others As presently envisioned,power from Alaska will be transmitted over lines in BC owned by BCTC and potentially CMP.Unless other provisions can be negotiated,both of these entities will require that certain transmission charges be paid for access to their respective transmission systems.BCTC has filed an Open Access Transmission Tariff specifying a transmission rate of $4.35 Cdn per kW-month for point-to-point transmission service. This would correspond to a rate of approximately $5.12 US per MWh (0.512 cents per |kWh)of energy transmitted from Alaska hydroelectric facilities. Energy Export Study 1-8 Final Report Introduction and Conclusions It is further estimated that if CMP were to own and operate the only transmission line between the border and Meziadin Junction,CMP would assess a transmission charge of between $4.00 US and $8.80 US per MWh for wheeling charges over its transmission system.The significant variance in this range is caused by the uncertainty in the quantity of power to be transmitted.Since most of the costs associated with owning and maintaining a transmission line are fixed,as the total energy transmitted goes up,the cost per kWh goes down.If BCTC were to construct a transmission line to the Alaska border, the charges as indicated for CMP would not be applicable. In addition to transmission charges in BC,the Four Dam Pool Power Agency would be expected to charge for the use of its transmission system by other entities to contribute towards the cost of maintenance,renewals and repairs.For purposes of this analysis,it is assumed that a rate of $2.00 US per MWh would be charged for transmitting power over the FDPPA lines.This assumed unit cost of transmission should decrease with higher power flows. Estimated net economic benefits of Bradfield Intertie Based on the estimated energy available,the estimated costs of O&M for the Bradfield Intertie and the estimated transmission charges on BCTC and CMP transmission lines, the net revenues that would be realized in Alaska for power sales in the Pacific Northwest can be estimated.If the construction cost of the Bradfield Intertie were fully grant .funded,the estimated net revenues could be used to pay for the costs of power generated in Southeast Alaska.The net revenues and breakeven power cost are summarized in the following table. Energy Export Study 1-9 Final Report Introduction and Conclusions TABLE 1-2 Estimated Energy Exported,Net Revenues and Breakeven Cost of Power ,(Nominal Cost Levels) 2010 2015 2020 2025 Delivered Power Sales Rate ($/MWh)*$72.00 $8146 $9217 $104.28 Case 1:Existing Tyee Surplus ” Energy Exported (MWh)59,600 59,600 59,600 59,600 Energy Delivered to PNW (MWh)3 54,900 54,900 54,900 54,900 Net Annual Revenues ($000)'$3,160 $3,650 $4,160 $4,740 Breakeven Power Cost (¢/kWh)5 5.31 6.13 6.99 7.96 Case 2:Existing with Cascade Creek ” Energy Exported (MWh)259,100 252,900 246,400 239,700 Energy Delivered to PNW (MWh)?238,700 233,000 227,000 220,800 Net Annual Revenues ($000)*$14,930 $16,650 $18,470 $20,450 Breakeven Power Cost (¢/kWh)5 5.76 6.58 7.50 8.53 Case 3:Existing with All PWK New Hydro ° Energy Exported (MWh)473,600 676,400 669,900 663,200 Energy Delivered to PNW (MWh)3 436,300 623,100 617,100 610,900 Net Annual Revenues ($000)4 $27,600 $45,140 $50,930 $57,410 Breakeven Power Cost (¢/kWh)5 5.83 6.67 7.60 8.66 Case 4:Existing with All Regional New Hydro ? Energy Exported (MWh)600,800 797,900 785,500 772,500 Energy Delivered to PNW (MWh)3 553,500 735,000 723,600 711,600 Net Annual Revenues ($000)4 $35,100 $53,310 $59,790 $66,950 Breakeven Power Cost (¢/kWh)5 5.84 6.68 7.61 8.67 Estimated energy sales rate for power delivered in the Pacific Northwest. Assumes the Swan -Tyee Intertie is not constructed and consequently excludes any sales from Lake Tyee to Ketchikan. Energy Exported less estimated transmission losses through the BCTC system. Revenues from power sales in the Pacific Northwest less transmission charges and O&M costs associated with the Bradfield Intertie. Estimated cost of power production or purchase in Alaska that would breakeven with the estimated net annual revenues. Assumes the Swan-Tyee Intertie is constructed and that all identified potential hydroelectric projects in the interconnected Petersburg-Wrangell-Ketchikan (PWK)are developed. Includes all hydroelectric projects for Case 3 as well as the Takatz Lake,Katlian River and Sterling Bolima hydroelectric projects. e The cumulative present value of the net annual revenues over the 25-year period 2010 through 2034,is estimated to be $41 million,$184 million,$492 million and $580 million for the four hydroelectric development cases shown in Table 1-2,respectively.If interconnection at the border were to CMP and not to the BC Hydro transmission system directly,the cumulative present value is estimated to be between $25 million and $30 million lower due to the costs of transmission over this separately owned system. Energy Export Study 1-10 Final Report Introduction and Conclusions Environmental issues It is not expected that any significant environmental issues would preclude development of the Bradfield Intertie.In 1988,an environmental assessment was conducted and the US Forest Service issued a Finding of No Significant Impact (FONSI)associated with the proposed development of the Bradfield Electric transmission line.Although the Bradfield Intertie is proposed to follow essentially the same route of the Bradfield Electric line,an updated environmental assessment would be expected to be needed for the Bradfield Intertie. Regulatory issues The Federal Energy Regulatory Commission (FERC)generally has jurisdiction over interstate transmission.Ifthe Bradfield Intertie was developed and power was to be sold between Alaska and the Pacific Northwest,it is expected that FERC could require open access transmission in Southeast Alaska and filings of transmission tariffs pursuant to FERC Orders 888 and 889.These requirements are not expected to be onerous and generally do not apply to transmission lines owned by municipalities and other government agencies.FERC could have some involvement in the permitting process if the Bradfield Intertie were considered to modify the Lake Tyee project in any way. Generally though,it is not expected that FERC would have any jurisdiction over the technical,permitting or operational aspects of the Bradfield Intertie. Recommendations 7 Continue to monitor development of transmission facilities on the Canadian side of the border particularly with regard to funding commitments to construct facilities needed for interconnection to the Bradfield Intertie. Conduct preliminary discussions with the FDPPA,CMP,BCTC,BC Hydro and Pacific Northwest electric utilities to establish necessary parameters for future contractual arrangements related to transmission access,new transmission construction,future power purchases and future power sales.If possible,prepare a Memorandum of Understanding among the various parties. Develop a plan of finance for the Bradfield Intertie and conduct initial discussions with wv potential providers of funds. Conduct necessary preliminary engineering and permitting activities related to Vv development of the Bradfield Intertie. Monitor Bradfield Road development plans and activities.Vv Energy Export Study 1-11 Final Report i \ \BOB QUINN LAKEoe-a-APPRONMATE MES 1 GALORE CREEK PROPOSED FORREST KERR HYDROELECTRIC PROJECT Bowser Lake Bradfield C. TYEE LAK YDROELECTRIC P DT PPL IE ae Engineers and ConsultantsAREA e Cities and Load Centers a Mineral Deposits O Hydroelectric Projects FIGURE 1-1waeamProposedTransmissionLines Existing Transmission Line Southeast Alaska Energy Export Study Transmission Lines Under Construction Proposed Bradfield Intertie Location Cities and Load Centers Major Hydroelectric Projects Proposed Hydroelectric Projects =Proposed Transmission Lines Existing Transmission Line muuann Transmission Lines Under Construction|lomeFIGURE 1-2 Southeast Alaska Energy Export Study Existing and Proposed Transmission Lines e"FORREST KERR os Transmission Grid:"BC Hydro Bradfield Intertio .wsWditgig bakakeSs*TTriangle bake § DETielel dar2ASSOCIATES,INC.-eesEnginerrsandConsultants Section 2 Transmission Line Route Alternatives and Technical Characteristics Introduction This section of the report describes the preferred route for an over-land transmission line from Southeast Alaska to Canada within the Bradfield River corridor.The technical characteristics of the line have been determined from a preliminary design concept and cost estimates for the various alternatives have been developed. The Bradfield Intertie would begin approximately25 miles southeast of the city of Wrangell attheLakeTyeehydroelectricprojectpowerouseandswitchysrd,near the head of the BradfieldCanal.From the mouth of the Bradff iver,the proposed transmission alignment is very similar to that proposed for the Bradfield River Road.The power line would follow the North Fork of the Bradfield River for 22.5 miles,crossing into the South Fork of the Craig River drainage for another four miles to the Canadian border.At the Canadian border,the line is proposed to meet a similar transmission line facility to be constructed by BCTC or CMP,the developer of the Forrest Kerr hydroelectric project (Forrest Kerr).The estimated distance from the Canadian border to Forrest Kerr is approximately 35 miles,for a total distance of 61.5 miles between Lake Tyee and Forrest Kerr. At the present time,CMP is planning to construct a 110 mile-long 138-kV transmission line from the northern end of the BC Hydro transmission system in Meziadin Junction to Forrest Kerr located on the Iskut River.CMP has the necessary permits to construct this transmission line and is working to secure the final $20 million (Cdn)portion of its funding requirement to begin construction of the transmission line and the Forrest Kerr hydroelectric project.At the present time,CMP is planning to complete construction of the transmission line by the end of 2007.The CMP transmission line will be built adjacent to Highway 37 for 84 miles and along the Iskut Mine Road for 23 miles. Without making a site visit to view the proposed route alternatives,this report has relied on the documentation of previous studies.The 1988 Southeast Alaska Transmission Intertie Study -Tyee/Johnny Mountain Transmission Line Study'?provides significant detail in transmission line routing,environmental,and construction standards.The US Department of Transportation's Bradfield River Road Final Scoping and Pre-NEPA Engineering Feasibility Study,dated January 10,2005,provided great detail in the proposed alignment of the Bradfield River Road which will follow the approximate alignment of the Bradfield Intertie to the Canadian border. History The Bradfield Canal region has been the subject of numerous transportation and transmission studies over the years.The Bradfield Canal region was originally proposed as a transportation '3 Alaska Power Authority,Southeast Alaska Transmission Intertie Study,Addendum 1,Tyee/Johnny Mountain Transmission Line Study -Draft,prepared by Harza Engineering Company,dated April 1988. Energy Export Study 2-1 Final Report Transmission Line Routes and Technical Characteristics corridor to provide a land-based "road”link between Southeast Alaska and the interior of BC. This transportation link was intended to support mining and faster movement of seafood and timber products to market.In addition,it also was intended to provide access for the export and import of electrical energy from Southeast Alaska through the construction of a transmission line interconnecting the BC hydro power grid with Southeast Alaska. The Bradfield route began to receive serious attention in the late 1980's as the result of mining activity in the Iskut River area.The area of interest was known as the Johnny Mountain mining development.Bradfield Electric,Inc.along with the Alaska Power Authority made studies and prepared feasibility cost and design estimates for a transmission line along the Bradfield Canal and Bradfield River. A Presidential Permit,Number PP-87,was granted to Bradfield Electric,Inc.for the purpose of constructing and maintaining an electric transmission facility that would cross from Alaska into British Columbia.The permitted project was to have had a 60 foot wide right-of-way with hazard trees felled to a distance of 100 feet from the center line.Pursuant to the Presidential Permit,the expected maximum power transmission was to have been 5 MW over this line. The US Forest Service,Tongass National Forest,Wrangell Ranger District provided an Environmental Assessment and a Finding of No Significant Impact for Bradfield Electric transmission line in 1988.Although this transmission line was never constructed,the Presidential Permit was amended in 1999 by the US Department of Energy (DOE)to include the provisions of FERC Order 888 for open access transmission'. Because of the potential economic benefits to Alaska from the proposed export of surplus electrical energy and the interest in a road to the Iskut area,in 1990 the Alaska Legislature passed House Bill 311,authorizing the issuance of revenue bonds for up to $22.3 million for construction of a Bradfield River resource road. Recent studies examining the feasibility of constructing a road and transmission power line through the Bradfield Canal include: Transmission Line Studies e Tyee /Johnny Mountain Transmission Line Study,Draft,prepared by Harza Engineering Company for the Alaska Power Authority,April 1988.The study concluded that the appropriate operating voltage for the exportation of power was 69-kV.If the line was to be utilized in the future for importing power from Canada,the transmission line and required substation facilities should be constructed to the 138-kV standards similar to the Lake Tyee system.It was determined the capacity of the line in an importation role could be as high as 95 MW at 138-kV with 336.4 KCM "Oriole”ACSR conductors.A right- of-way width of 40-foot was recommended with danger trees being selectively cleared. e Proposed Johnny Mountain 69-kV Transmission Line,Project Concept Summary, prepared by R.W.Beck and Associates,Inc.for Bradfield Electric Inc.,August 26,1988. '4 Federal Register Vol.64,No.143,Tuesday,July 27,1999. Energy Export Study 2-2 Final Report Transmission Line Routes and Technical Characteristics The study concluded the appropriate operating voltage for the exportation of power was 69-kV.The transmission line would extend from the Lake Tyee powerhouse at tidewater on Bradfield canal up the Bradfield River Valley in the US and down the Craig River Valley in Canada to the area known as Johnny Mountain,a total distance of 42 miles. The line was proposed as a single wood pole,single circuit 69-kV capable of transmitting up to 10 MW.The conductor selected was 4/0 ACSR.A right-of-way width of 30-foot was recommended with danger trees being selectively cleared. Both of these transmission line studies followed essentially the same route and corridor.The Harza study,dated April 1988 indicates that limited site reconnaissance was conducted for the study."Site Reconnaissance”was indicated to have been a visual inspection of the proposed transmission line route by the Alaska Power Authority's project manager,an electrical engineer,and an environmental specialist from Harza.In addition to the above mentioned team,Harza met with USFS representatives,Alaska Department of Fish and Game,and U.S.Fish and Wildlife Service,and representatives of Bradfield Electric Inc.It is our opinion Harza's study presents important information and is also supported by the companion R.W.Beck study that was performed during the same time frame in 1988. Previous and Current Road Studies e Bradfield River Road Final Scoping and Pre-NEPA Engineering Feasibility Study prepared by Western Federal Lands Highway Division,Federal Highway Administration, January 10,2005.The total length of this transportation route varies between 27.47 miles,29.09 miles,and 32.20 miles dependent on the option used for Segment 1 of alignment.A major component of this conceptual design contains a proposed 8,000 linear foot tunnel.The conceptual cost estimate developed by this study and the Alaska Department of Transportation and Public Facilities (DOT/PF)presents a variance of costs ranging from approximately $175,532,200 up to $353 million.The analysis and recommendations by the various agencies illustrate that many other alignments are feasible and are being analyzed during the NEPA process. e The Southeast Alaska Transportation Plan,prepared by the Alaska Department of $and various related developments.The cost of the road project is estimated at $257 5 million for the 28 miles to the border.Transportation and Public Facilities,dated August 14,2004 includes the Bradfield road lf e In 1998,The US Department of Agriculture Forest Service estimated the cost of a public highway from Ketchikan to the border at $340 million.The USDA Forest Service reviewed a wide range of Southeast Alaska proposed public road and ferry projects. Their estimate for 14 miles of new road and 14 miles of upgrading an existing forest service road from Bradfield to the border was $140 million. Recommended Transmission Line Corridor Based on our preliminary knowledge and a literature search of the project vicinity and,incoordinationwiththeDOT/PF,we recommenda single transmission line corridor for the Energy Energy Export Study 2-3 Final Report Transmission Line Routes and Technical Characteristics Export Study.This selected corridor is very similar to the proposed road alignment considered by DOT/PF in 1986.The corridor,which follows the North Fork of the Bradfield River and South Fork of the Craig River from the head of Bradfield Canal,corresponds to Bradfield Electric's proposed route identified in 1988.(See Figure 1-1) We have independently investigated the reports discussing the Bradfield region,made literature searches of previous development proposals and activity in the area and concluded the previously proposed Bradfield Electric transmission corridor will support the construction of a 138-kV transmission line. The area in which the Bradfield Intertie will be located is typical of Southeast Alaska with rugged,forested terrain crossed by numerous creek or river drainages.To be consistent with previous transmission and highway studies,the route identified for the Bradfield Intertie follows two major river valleys for a large portion of the route.The route description is divided into five segments based upon terrain and construction access.A route map is included at the end of this section. Definitions -Low altitude -below 600'elevation High altitude -above 600'elevation Segment A This segment is approximately 2.2 miles in length generally paralleling an existing road and extends from the Lake Tyee switchyard to the Bradfield River East Fork.The entire segment is below 100 feet elevation,with soils anticipated to be mostly alluvial or glacial till deposits.The area crossed by Segment A has been clear cut logged in the past,and the majority of existing vegetation is alder with some interspersed cottonwood. Attributes: =Parallels an existing road from the Lake Tyee switchyard to East Fork Bradfield River =Clearing requirements 100'with removal of danger trees This area has been previously cleared.Mostly alder. =Low altitude construction Segment B This segment is approximately 11.6 miles in length and extends from the crossing of the East Fork Bradfield River to a crossing of the North Fork Bradfield River.The segment is generally located in the river valley bottom paralleling the river.The majority of the segment is at the foot of the valley's eastern slope.A few short sections,however,may cross individual ridge fingers. An old network of logging roads exists in the area of the river and could be utilized with minor brush clearing.This segment is below 500 feet elevation with soils anticipated to be alluvial or glacial till deposits,although some areas of muskeg or shallow rock are expected.The area crossed has been clear cut logged in the past,and the majority of existing vegetation is Alder, with some interspersed Cottonwood and a few stands of Hemlock forest. Energy Export Study 2-4 Final Report Transmission Line Routes and Technical Characteristics =Crosses East Fork Bradfield to North Fork Bradfield =Located near river bottom (above flood stage).Line would parallel river. =There appear to be a number of old logging roads,which are overgrown and would need to be re-established with gravel and culverts where washed out.Area appears to have been "clean cut”in years past.New growth of Alder and some Hemlock. «Hill sides may pose some risk -will need to selectively remove all danger trees from this area =Low altitude construction Segment C This segment is approximately 4.7 miles in length and extends from the crossing of the North Fork Bradfield River to the confluence of the east and west branches of the headwaters for the river.The segment is generally located in the river valley bottom paralleling the river,however, for a portion of this segment the valley bottom has significant slope,resulting in the line advancing upslope with an elevation gain from 300 to 1,000 feet.In addition,the terrain is more rugged due to the presence of more closely spaced ridge lines.Roads do not exist along this segment and access by helicopter is anticipated.This segment is at elevations ranging from 400 to 1,000 feet,with soils anticipated to be shallow rock with some areas of deeper stands of Hemlock forest. «High Altitude Construction «There is no evidence of previous logging nor are there old logging roads. «Anticipate steep side slopes and rock with some shallow glacial till. «Trees are dense Spruce. "Helicopter access required -no roads "Classify this segment as moderate rugged. «This segment contains many challenges for construction of the transmission line.Steep valley slopes and granitic rock will make mobility and construction work difficult. Segment D This segment is approximately 3.3 miles in length and extends along the eastern branch of the Bradfield River headwaters and climbs from 800 feet elevation to 2,600 feet in order to cross the pass between the Bradfield and Craig River Valleys.The segment advances up a steep slope, paralleling the drainage over rolling terrain which is very rugged in the immediate vicinity of the pass.Roads do not exist along this segment,and access by helicopter is anticipated.This segment is generally at elevations from 1,000 to 2,400 feet,with soils anticipated to be shallow rock with some areas of deeper glacial till and numerous areas of muskeg.In the immediate pass area much of the terrain is comprised of surface rock.The vegetation along this segment is sparse Hemlock stands. =This area has exposed slopes vulnerable to possible avalanche,granitic rock,and some shallow glacial till. «This will be a helicopter access area. Energy Export Study 2-5 Final Report Transmission Line Routes and Technical Characteristics ="There are no roads. «Sparsely forested with some Spruce and Hemlock. Segment E This segment is approximately 4.7 miles in length and extends from the pass between the Bradfield and Craig River Valleys,along the Craig River to the U.S.-Canada border.This segment generally follows along the valley floor above flood level.The majority of the segment is at the foot of the valley side slope.However,a few shot sections may cross individual ridge fingers.Roads do not exist along this segment,and access by helicopter is anticipated.This segment is generally at elevations from 700 to 1,000 feet,with soils anticipated to be alluvial or glacial till deposits with some areas of muskeg or shallow rock.The vegetation along this segment is sparse Hemlock stands on the valley bottom with denser Hemlock forests on the side slopes. ®This will be a helicopter access area unless it can be accessed from the British Columbia (Forrest Kerr)area.There is an abandoned air strip and some buildings that were apparently used in the exploration of the Johnny Mountain mine. *It can be expected that a portion of this line would be built on side slopes and extend over ridges or small areas of land jutting into the river bottom. =Some high altitude construction "Helicopter construction required «Sparse to dense Spruce Transmission Design Concepts Transmission Voltage The Lake Tyee project supplies the load demand of Wrangell and Petersburg.The power flow from Tyee to these communities is via an existing 69-kV /138-kV overhead transmission line with 138-kV submarine cable crossings.It should be noted this existing transmission line is operated at 69-kV.The step-down transformers at Petersburg and Wrangell are dual rated on the high side for 69-kV /138 kV.There are no current plans to upgrade this existing line from 69- kV to 138-kV operation. Figures 2-1 shows a "one-line”sketch of the existing Lake Tyee system network and the study to interconnect Lake Tyee to the Bradfield Intertie.In addition,the proposed interconnection of the Tyee system and Swan-Tyee Intertie systems is shown. A previous load flow study made in support of the feasibility study for the Kake/Petersburg Transmission Line,indicated that the existing operation of the Tyee -Wrangell -Petersburg transmission line can remain at 69-kV.The possible upgrade of this line to 138-kV will come about due to load growth or the need to move or export power from a future energy source.One such source of interest is the proposed 95-MW Thomas Bay hydroelectric project located across Energy Export Study 2-6 Final Report Transmission Line Routes and Technical Characteristics Frederick Sound from Petersburg which would require a submarine cable,substation,and terminals to link into the existing Tyee /Petersburg grid. The export of energy via the Bradfield Intertie was studied as a 69-kV and 138-kV line.A 230- kV line was discounted early in this study as there is no plan for a grid on either side of the border in the near future to support such a consideration.However,BCTC has recently completed a study evaluating system power transfer capabilities on the Canadian side of the border if a 287-kV transmission line were constructed.If such a voltage were to be a serious consideration in BC,it would be necessary to reconsider the voltage on the Alaska side of the border. CMP has solicited bids for construction of a 138-kV transmission line from Meziadin Junction to the Forrest Kerr hydroelectric station transmission facility and announced plans to have the line completed by 2008.Both CMP and BC Hydro feel there is merit to interconnect the Southeast Alaska electric system to the Canadian grid.To verify this,BCTC has commissioned a mini- study to review the issues of stability.It should be noted that the transmission system proposed by CMP for the Forrest Kerr project will have a design capacity of 240 MW.The estimated generation capacity of the Forrest Kerr project is 115 MW. If the Bradfield Intertie were designed and constructed for future operation at 138-kV,it could additionally be used to bring power from the Forrest Kerr hydroelectric project to the Lake Tyee substation and into the Tyee grid.Further,138-kV is the proposed for the Southeast Intertie System. Voltage and conductor options considered for the Bradfield Intertie are: e Option 1 -69-kV transmission line,26.4 miles long -556.5 ACSR (Dove),single wood pole,with post insulators,estimated line capacity 82 MW e Option 2 -138-kV transmission line,26.4 miles long -336.4 ACSR (Oriole),single wood pole,with Davit arm,estimated line capacity 165 MW e Option 3 -138-kV transmission line,26.4 miles long -954 ACSR (Cardinal),single wood pole,with polymer post,estimated line capacity 249 MW It is recommended that the Bradfield Intertie be constructed at 138-kV and operated at 69-kV until such time the system loads will place demands to upgrade the Tyee Grid to 138-kV.The cost estimate for this option includes the cost to place a "step-up”substation at the Forrest Kerr project area since the CMP system will be operating at 138-kV.It is estimated that this 69- kV/138-kV voltage level will allow the export of approximately 105 MW.The final selection of the conductor for the line would be dependent on the expected power flow requirement of the line. Energy Export Study 2-7 Final Report Transmission Line Routes and Technical Characteristics Physical Loadings The basic design criteria for this line are considerably more stringent than standard code requirements.This is appropriate due to the severe Southeast Alaska conditions,remoteness of the line and history of lines in the immediate area.The conceptual design criteria have been developed with the intent of having a slightly conservative design based on a 50-year recurrence period for wind and ice loading.A potential transmission line in the Bradfield region has had the benefit of being considered by several engineering firms in the past. The Bradfield Intertie is proposed as a single wood pole,single circuit 69-kV/138-kV line.It is to be located in a sub-artic environment that experiences relatively mild weather during spring,summer, and fall,marked with extended rainy periods.The severity of winter weather is directly affected by elevation,with much of the proposed route commonly experiencing snow accumulations up to 6-8 feet for a portion of the winter.A short section,approximately 7,000 feet,of the route is in a pass area at elevations over 2,000 feet,where snow accumulations of 8-10 feet are anticipated to last for several months.For this study,the following loading criteria were assumed: a.National Electrical Safety Code (NESC)Heavy Load 4 psf wind (40 mph) ¥inch radial ice O degrees F with NESC specified overload capacity factors b.Extreme Wind Loading:NESC 2002 34 psf wind (120 mph) no ice 60 degrees F with overload capacity factor of 1.3 C.Extreme Ice Loading: Pass area no wind l-inch radial ice 30 degrees F with overload capacity factor of 1.3 Non-pass area no wind ¥%s-inch radial ice 30 degrees F with overload capacity factor of 1.3 d.Extreme Combined Ice &Wind: 4 psf wind (40 mph) 31/4-inch radial ice 10 degrees F The structure concepts used in our estimate(s)and design consideration are shown in Figures 2- 2,2-3 and 2-4. Energy Export Study 2-8 Final Report PETERSBURY 69kV/138kV SWAN LAKE WARAY KETCHIKAN 115kV LEGEND )SYSTEM GENERATION XY”Load BUS -p-casie &TERMINATION te AUTO TRANSFORMER 69kV/138kV jeans 38kV WRANGELL Sw.YD. 69KV/138kV Oniisix3fCa%|BRADFIELDaA°ANAXSaCANAL aa”\69kV/138kVRe)%¢69kV/138kV «we a” a".ZA |pRoPoseo 7 oeHy?py oo » 7 'oOa>yywe) SOUTHEAST CONFERENCE "PROPOSED BRADFIELD CANAL” SYSTEM ONE-LINE DRAWN |CHECKED JENGINEER PROJECT ENGINEERJTRTssTSS PREPARED AT THE OFFICES OF Cay COMMONWEALTH ASSOCIATES INC JACKSON,MICHIGAN LA CONNER,WASHINGTO ..\CAIWORK\SOUTHE 1\ONELIN 1.DWG 2/28/2006 4:24:51 PM [STEEL DAVIT CROSSARMSri,I ! N 3 ohoO l Te) \ (es)Dg Va) CONDUCTORS "ORIOLE”336.4 KCM ACSR HORIZONTAL SPAN 500 FT. \. q N |° \in i N\LL” \zh =N\a uw N or N\=iY \a N i \va \GROUND LINE yy \.WOON V0 TE EE GRYROLE LORNA OIE RS LA SSTCORNS OF REO | 50°(NTS)-50°(NTS) MINIMUM CLEARED WIDTH OF 100 FT.SOUTHEAST CONFERENCE "PROPOSED BRADFIELD CANAL 138kV WOOD POLE TANGENT STRUCTURE)TE:DRAWN |CHECKED ENGINEER PROJECT ENGINEERJTRDKSTSSTSS 1.RIGHT OF WAY WIDTH,100 FT.PREPARED AT THE OFFICES OF 2.ROW ACREAGE,12.1 AC/MI.(®ANT COMMONWEALTH ASSOCIATES INC JACKSON,MICHIGAN LA CONNER,WASHINGTO .\CAIWORK\SOUTHE 1\69KVBR 1.DWG 2/28/2006 4:21:03 PM CONDUCTOR 336 KCM ACSR HORIZONTIAL SPAN:400' ABEDMENT:SMX38'-0"TYPICALLOGGINGROAD¢30'-0"CSu80'-0" 60'-0" 4.8 ACRES/MILE -ROCK 10%POLE PLUS 2' -MUSKEG 10%POLE PLUS 4' ADDITIONAL CLEARING ON EXISTING LOG ROAD TYPICAL CLEARING LIMITS FOR USFS LOG ROAD SOUTHEAST CONFERENCE "PROPOSED BRADFIELD CANAL' 138kV WOOD POLE TANGENT STRUCTURE DRAWN JTR CHECKED OKS ENGINEER TSS PROJECT ENGINEER TSS Cay PREPARED AT THE OFFICES OF COMMONWEALTH ASSOCIATES IN JACKSON,MICHIGAN LA CONNER,WASHINGT: AR ANWAINDUCAIITUC UAV AQ AAINA DVAID DIDRIQDNNKR A592-:AQ DNA re ueLO WIRE --ih - mud N mee -dani ° ro)<lNn7h",K- | | CONDUCTORS 336 KCM ACSR HORIZONTAL SPAN 400 FT. | ( .z |°- N 2 ©L n De) N"L \=)rar2|as N 3 SL N =e N =YY \LY \L- |GROUND LINE L- SEE (TROY PR GR PRN 4 WIRE TRS OPY ERY OLYOE LAE RRNOEL RS "a 8°EMBEDMENT _|50'-50' TOTAL ROW WIDTH 100' 12 (ACRES/MILE)SOUTHEAST CONFERENCE TYPICAL "PROPOSED BRADFIELD CANAL' 138kV WOOD POLE TANGENT STRUCTURE DRAWN |CHECKED jENGINEER PROJECT ENGINEERJTROKSTSsTSS TYPE T1-TANGENT PREPARED AT THE OFFICES OF TYPE T2-TANGENT W/SHEILD Cay COMMONWEALTH ASSOCIATES INC JACKSON,MICHIGAN LA CONNER,WASHINGTOI .\CAIWORK\SOUTHE 1\TANGEN 1.DWG 2/28/2006 4:29:41 PM ma aT __/SSSSESEOE)NATIVE BACKFILL (TYP) ./JfZé,RGFILLW/POLESET OR X <CRUSH ROCK AND SAND CULVERT SOUTHEAST CONFERENCE "PROPOSED BRADFIELD CANAL” TRANSMISSION LINE STRUCTURE SETTINGS CONCEPT a WOOD POLE CHECKED JENGINEER PROJECT ENGINEER TSS TSS - PREPARED AT THE OFFICES OF COMMONWEALTH ASSOCIATES IN¢ JACKSON,MICHIGAN LA CONNER,WASHINGTC \CAIWORK\SOUTHF 1\STRUCT 1 DWG 9/28/2006 4:°28°43 PM POLYMER HORIZONTAL LINE POST (TYP) SEE DETAIL FOR "STRUCTURE SETTINGS CONCEPT” NATIVE /BACKFILL CULVERT (TYP) SOUTHEAST CONFERENCE TYPE At "PROPOSED BRADFIELD CANAL”LIGHT ANGLE .STRUCTURE TYPE Atl(0-157)DRAWN |CHECKEDIENGINEER]PROJECT ENGINEER PREPARED AT THE OFFICES OF Cay COMMONWEALTH ASSOCIATES INC JACKSON,MICHIGAN LA CONNER,WASHINGTOS .ACAIWORK\SOUTHE 1\TYPEA1 1.DWG 2/28/2006 4:30:36 PM TO TYEE LAKE SUBSTATION 69kV/138kV ALASKA BRITISH COLUMBIA t-COUP.CAP.OC -1-LINE 1 TO COMM.EQUIP.TRAP @ C T }-_-y, pe oI S.A. __)» wha,3-19 TRANSF. 69-138kV ___) 3-VT ) -e e--f]1 S.A.BUS 138kV B.C.HYDRO FORREST KERR SOUTHEAST CONFERENCE "PROPOSED BRADFIELD CANAL' SUBSTATION ONE-LINE DIAGRAM DRAWN JTR CHECKED JENGINEER PROJECT ENGINEER TSS TSS "7 PREPARED AT THE OFFICES OF COMMONWEALTH ASSOCIATES IN JACKSON,MICHIGAN LA CONNER,WASHINGT( ..\CAIWORK\SOUTHE 1\ONELIN 2.DWG 2/28/2006 4:25:56 PM Section 3 Environmental Issues Introduction A limited review of environmental issues associated with the Bradfield Intertie has been conducted as part of this study.The connection of the Bradfield Intertie to the BC Hydro transmission grid will require the construction of new transmission facilities in BC.Close coordination with the Ministry of Forests and Lands in Canada will need to be conducted to assure that the overall Southeast Alaska --BC Hydro transmission line complies with all environmental requirements. As indicated earlier in this report,an Environmental Assessment (EA)was prepared in 1988 with regard to the previously proposed Bradfield Electric,Inc.69-kV transmission line to Johnny Mountain.The Bradfield Intertie is proposed to follow essentially the same route as the Bradfield Electric transmission line.In the EA,it was noted that approximately 13 miles of the transmission route would pass through Land Use Designation (LUD)area designated as LUD IV whereas the remainder of the route would pass through LUD II designated area.The Tongass Land Management Plan (TLMP)allows power developments within both LUDs. The scope of the 1988 EA,prepared by the US Forest Service (USFS),addressed the impact of the project on the environment and National Forest resources including: e Potential disruption of goats during spring kidding by increased noise levels from construction activities and helicopter use. e Potential raptor electrocution and other bird strikes with power transmission lines. e Abandonment and cleanup requirements and reclamation bonding. e Potential bear/human conflicts during construction and maintenance. e Potential for right-of-way slash to inhibit wildlife movement. e Potential for landslides caused by blasting for power transmission pole holes on unstable slopes. e Locating power transmission poles within the active river floodplains. In its Finding of No Significant Impact (FONSD),the USFS adopted the proposed "Short Span Power Line”alternative.This alternative provided for a transmission line with pole supported short spans,with construction similar to the Tyee transmission line along the Mitkof Highway into Petersburg.The transmission line was to be built on the valley bottom and/or along the toe slopes and could have single or multiple pole wood structures or similar appearing steel structures as required by location. Energy Export Study 3-1 Final Report Environmental Issues Affected Resources The proposed Bradfield Intertie will follow the Bradfield River drainage,a glacial river valley, which would cross into the Craig River drainage.The most obvious environmental impacts will be related to wetlands,fish and their habit,and water quality.Due to the remote location and the pristine condition of the area (beyond the end of the abandoned USFS logging road and clear cuts),wildlife habitat,riparian zones and aesthetics resources will receive more attention from the resource management agencies than they would in more highly disturbed and populated areas. The Bradfield River Valley supports a wide variety of wildlife.Big game animals include brown and black bears,mountain goat,and wolf,moose,and Sitka black -tailed deer. e Furbearers -beaver,wolverine,marten and land otter.ADFG maps indicate that marten are the most frequently trapped of the furbearers.Moose and Sitka black-tailed deer are also shown throughout the valley. e Bear -The Bradfield River drainage supports a large number of both black and brown bear,with black outnumbering browns roughly 2:1 (Low,1988).The mouth of the Bradfield River is a spring feeding area for both blacks and browns during the salmon spawning season.This area extends up the river approximately 15 miles to a point just north of the location where the North Fork turns to the east. e Waterfowl -The mouth of the Bradfield River is designated as a spring /fall waterfowl concentration area.Trumpeter swans use this area as a wintering location (ADFG 1983). Up the river valley,beaver ponds create off-channel habitat that is also used by waterfowl. e Eagle Nest Sites -No surveys has been done for the river drainage and there are no eagle nest sites known to exist above the head of the Bradfield Canal (Lowe 1988). The Alaska Department of Fish and Game (ADF&G)have reported that the Bradfield River contains all five species of salmon (Chinook,Coho,Chum,Sockeye,and Pink),Steelhead, Cutthroat trout,and Dolly Varden char.The presence of salmon,trout and char designate this river as an anadromous stream.There are relatively narrow mid-summer in-water work windowsinsuchstiSamsThatCouldhaveasignificanteffectonthetimingofconstructionforstructuresin the water.”(Bradfield River Road Scoping and Pre-NEPA Engineering Feasibility Study, November 2004).The Craig River is also considered an important anadromous fish stream. It is known that there is a natural barrier (waterfall)to fish migration at approximately river mile 14 on the Bradfield River.Upstream of that waterfall,there are no anadromous fish and as a result,there will be fewer fish related restrictions on construction related activities. The primary land owner in the vicinity of the Bradfield Intertie,the U.S.Department of Agriculture,is responsible for the management of the Tongass National Forest,within which lies Energy Export Study 3-2 Final Report Environmental Issues the land for the proposed corridor under consideration.For an overhead utility corridor with an adjacent maintenance road,important management prescriptions include: e Construction of the transmission lines (poles)per the USFS design criteria to minimize avian resource loss and minimize impacts to scenic viewsheds e Maintenance of culverts and bridges associated with roadways to minimize aquatic resource impacts e Avoidance of heritage resources e¢Avoiding,minimizing,and possible mitigation of wildlife habitat fragmentation from construction of new roads. Other general issues along the proposed route of the Bradfield Intertie include: Stream crossings -Anadromous streams crossed would require a permit from DNR-OHMP. The utility pole placement is expected to avoid streams but the maintenance roadway would likely be culverted or bridged.These roads and their associated culverts and drainages would be required to be placed and constructed per the TLMP transportation prescriptions. Avoidance of stream crossings where possible and minimization of impacts would be expected as part of the NEPA process.For those unavoidable locations,some sort of mitigation is generally required.Upgrading existing failing culverts,drainages,and other stream structures that would occur during project implementation could be counted as mitigation. Eagle nests -Eagles and their nests are under the protection of the US Fish and Wildlife service. Nest trees may not be removed and if construction would occur within a certain distance of a nest tree,construction windows may be applied as a permit condition or observers could be required during construction. National Environmental Policy Act Process Figure 3-1 diagrams the National Environmental Policy Act (NEPA)process as implemented by the U.S.Department of Agriculture/U.S.Forest Service (Forest Service Handbook,1909.15, page 13 of 15;Approved:June 29,2004). Energy Export Study 3-3 Final Report Environmental Issues FIGURE 3-1 NEPA Process Overview |Proposed Action | "a EIS Required May Fit in a Category (Chapter 20)for Exclusion Notice ofIntent Does Not Fit USDA or Forest Fits USDA or Forest Service Service Category or There Are Category and There AreNno Extraordinary Circumstances Extraordinary Circumstances .(Chapter 30)(Chapter 30)Scoping ||Scoping andEnvironmentalEnvironmentalAnalysisAnalysis/N\ Draft EIS Significant Effects Need for EIS May Occur Uncertain .v Categorically ExcludFinalEISxeluded Environmental Assessment hapter 4RecordofDecision(Chapter 40) (Chapter 20) v Finding of No Significant Decision Memo Impact &Decision Notice If Required (Chapter 40)(Chapter 30) Implementation | |Monitoring | Under NEPA,if a project is not allowable under a categorical exclusion and there is uncertainty regarding the potential impacts,the project proponent can conduct an Environmental Assessment (EA).In some cases,if a corridor is a designated utility corridor,an EA could be considered adequate to verify that a proposed transmission line project is compatible with that designation. Energy Export Study 3-4 Final Report Environmental Issues However,under the current NEPA implementation protocols of the U.S.Forest Service,the EA and Environmental Impact Statement (EJS)processes are becoming more similar and thethresholdforwhatcouldbesignificantisdropping'®.The U.S.Forest Service recommends that a proponent expect their project be analyzed under the EIS process,thus removing the uncertainty of the overall process. Summary Assuming proper construction procedures and appropriate mitigation measures are followed, construction of the proposed Bradfield Intertie should not present significant impacts to fish and wildlife resources.Extensive changes in habitat types are not anticipated and most impacts will be short-term as they are associated with construction.CMP,potential developer of the transmission line in BC that will connect the Bradfield Intertie to the BC Hydro grid,has indicated that it does not foresee any significant environmental constraints associated with construction of the transmission line between the Forrest Kerr hydroelectric project and the Bradfield Intertie connection point at the border. 'S Personal communication D.Rogers,U.S.Forest Service with J.Gendron,CH2M Hill;July 20,2005. Energy Export Study 3-5 Final Report Section 4 Estimated Costs of Construction and Operation Costs of Construction The costs to develop and construct the Bradfield Intertie have been estimated for each of four configuration alternatives.The cost estimate is based on an estimate of the required material quantities as determined from a conceptual design of the overhead sections of the line and substation and switchyard requirements.Labor costs have been estimated based on recent experience on similar projects as well as discussions with individuals familiar with transmission line construction in Southeast Alaska.The estimated unit costs of materials are based on quotes from vendors and recent experience with similar construction projects. The estimated costs of the Bradfield Intertie alternatives as provided in this section of the report include all estimated costs of engineering and design,permitting,materials,equipment and construction.Primary components of each line are identified separately in the cost estimate. Since the design of the Bradfield Intertie is still conceptual,a contingency factor of 30%has been applied to all costs.As design proceeds and more precision can be used in estimating the costs,the contingency included in the total cost estimate can possibly be lowered.In any major project of this type,however,the actual cost of construction can very significantly from the engineer's estimate due to market conditions for the materials and services needed at the time of procurement. The cost estimates included in this report are based on the routing and technical information described in Section 2.Primary characteristics of the line are 138-kV single-pole construction. It is expected that the owner of the transmission lines,will contract for all services of permitting,design,construction and construction management.An allowance for the costs of these nice |is included in the total cost estimate. The four configuration alternatives are differentiated primarily be line voltage and conductor size.The larger conductor would allow a greater power transfer but would require more structural strength in the support system.The tunnel option assumes that a permanent road isbuilteitherfirstorconcurrentlywiththetransmissionlineandatunnelfortheroadisconstructed between the Bradfield and Craig River valleys.As proposed by the US Department of Transportation in its Bradfield River Road Final Scoping and Pre-NEPA Engineering Feasibility Study,the tunnel is estimated to be about 8,000 feet in length. With the road and tunnel in place,the transmission line would be placed in the tunnel,most likely as a cable buried in the road bed.With the tunnel,the transmission line would not be constructed as an overhead line crossing the pass between the Bradfield and Craig River valleys, thereby avoiding a potentially vulnerable overhead location for the line.The cost of the buried 138-kV cable,however,is higher than overhead construction and the additional construction costs would need to be weighed against the benefits of potentially lower long-term maintenance costs.The design configuration options included in the study are as follows: ¢Option 1 -138-kV -556 ACSR (Dove),single wood pole,with Davit arm Energy Export Study 4-1 Final Report Estimated Costs of Construction,Operation and Maintenance e Option 2 -138-kV -954 ACSR (Cardinal),single wood pole,with polymer post insulators e Option 3 -138-kV -556 ACSR (Dove),single wood pole with underground cable in the 8,000 foot long road tunnel e Option 4 -69-kV -556 ACSR (Dove),single wood pole with polymer post insulators The estimated total costs for each alternative are summarized in the following table.For the purpose of the cost estimates,a 30%contingency has been applied.Also,a 30%factor for indirect costs,including permitting,engineering,construction management,and owner's costs, has been included. TABLE 4-1 Bradfield Intertie -Lake Tyee to Border Estimated Comparable Costs of Development and Construction Sootont Option 2 Option 3 Option 4 138-kV 138-kV 138-kV Tunnel 69-kV 556 KCM 954 KCM 556 KCM 556 KCM Materials Sr Transmission Poles $1,010,880 $1,399,680 $942,840 $748,000 Insulators &Hardware (Polymer Post)523,200 622,080 523,200 374,400 Guys &Anchors 212,000 212,000 202,000 212,000 Conductor w/Accessories 622,567 1,393,206 3,558,161 622,567 Other 186,888 261,332 186,888 186,888 Subtotal -Materials $2,555,535 $3,888,298 $5,413,089 $2,143,855 Labor Cost 2,455,555 3,400,000 2,455,555 2,455,555 _Incidentals 79,950 5,455,000 4,479,950 4,479,95 Bond &Ins ce 5.0%223,998 272,750 23,998 223,998 Clearing/Access Construction 1,952,000 1,952,000 1,886,000 41,952,000 Tyee Switchyard 4,200,000 4,200,000 1,200,000 850,000 Communications System 200,000 200,000 200,000 200,000 System Cut-Over 160,000 160,000 160,000 - Patrol/Maintenance Repair 120,000 250,000 120,000 - Subtotal $13,347,038 $16,778,048 $16,138,592 $12,305,358 Contingency 30.0%4,004,111 §,033,414 4,841,578 3,691,607 Indirect Costs (Permitting,Engineering,etc.)30.0%4,004,111 5,033,414 4,841,578 3,691,607 Total Cost $21,355,260 $26,844,876 $25,821,748 $19,688,572 As shown in Table 4-1,the estimated cost of Option 1,138-kV and 556 KCM conductor,is $21.4 million.Option 1 is the preferred alternative.Based on information provided by Canadian contractors and CMP,it is estimated that the cost of the transmission line between the border and the Forrest Kerr hydroelectric project is $17.4 million.The estimated cost of the line on the Canadian side of the border to the Forrest Kerr hydroelectric project is shown in the following table. Energy Export Study 4-2 Final Report Estimated Costs of Construction,Operation and Maintenance TABLE 4-2 Canadian Interconnection -Border to Forrest Kerr Hydro Project Estimated Comparable Costs of Development and Construction (US Dollars) 138-kV 795 KCM Materials Transmission Poles $1,032,500 Insulators &Hardware (Polymer Post) Guys &Anchors 11,240 Conductor w/Accessories 1,400,000 Other ____529,400 Subtotal -Materials $2,973,140 Labor Cost 4,139,200 Incidentals 1,784,400 Bond &Insurance - Clearing/Access Construction 1,335,000 Tyee Switchyard - Communications System - System Cut-Over - Patrol/Maintenance Repair - Subtotal $10,231,740 Contingency 40%4,092,696 Indirect Costs (Permitting,Engineering,etc.)30%3,069,522 Total Cost $17,393,958 Operation and Maintenance Costs General The following proposed operation and maintenance (O&M)program for the Bradfield Intertie is similar in scope to what is now being implemented on the Swan and Lake Tyee transmission lines.The following cost estimates assume a standalone O&M contract for the Bradfield Intertie, however,some savings may be realized if a single O&M contract is let for all three lines as a group.The primary O&M activities are: e Right-of-way maintenance and clearing e Thermographic survey e Facility inspection and maintenance Energy Export Study 4-3 Final Report Estimated Costs of Construction,Operation and Maintenance Access to the line is a major cost item and is generally limited to helicopters.It has been assumed for this study that permanent helicopter landing sites will be developed during the construction phase and that these landing sites will be located along the line route and will provide access to all structures with no more that one-half mile required travel between a landing site and line structure.If permanent sites are not established during the construction phase, future O&M contractors will be required to build temporary sites,the cost of which is not included in the annual O&M cost in this study.If permanent sites are constructed,it is important that they be adequately maintained,preventing them from becoming either not usable or a safety hazard if they are used. Portions of the line that are located near existing logging roads or water have a large access cost advantage since a barge can be located for fueling and staging of work that is in close proximity to the work site.The remoteness of the Bradfield and distance from water was considered in the cost estimates. Annual Inspection and Maintenance Program The proposed O&M program is based on providing a climbing inspection of ten structure sites each year.The sites would be selected to generally include a minimum of one from each structure type on the line.The site rotation would result in all structure types undergoing a climbing inspection every year and all structures on the line being climbed once every 20 years. Climbing inspections will include a thorough visual inspection of the structure and all appurtenances.The climbing inspection team will also be required to perform routine maintenance.The inspection will require observing and recording the condition of the structure including foundation,guys,anchors,poles,arms,attachments,insulators,insulator hardware, conductor attachment hardware and dampers.The observations will include checking the condition of all bolts,nuts and cotter keys. Based on the maintenance history of the Swan Lake and Lake Tyee lines,the dampers begin to fail at 10 to 12 years of service.Therefore,the proposed O&M program has assumed that dampers will be replaced on all structures undergoing a climbing inspection after the first 7 years.By year 15,over 40 percent of the dampers will have been replaced and the dampers that are being replaced can be inspected to determine if the damper replacement program needs to be maintained or accelerated.The cost estimate considers damper replacement starting in the eighth year. The inspection program will need to carefully select the structures to be climbed based on the previous year's findings and consideration that more attention should be given to the high altitude and long-span structures.Failures in these areas can result in extended outage time and costly repairs. Energy Export Study 4-4 Final Report Estimated Costs of Construction,Operation and Maintenance Visual (on ground)Inspection Visual inspections include correcting minor items that can be accessed form the ground,such as loose guys and missing or loose nuts and bolts.Binoculars will be used to inspect the tower and appurtenances not accessible from the ground. The proposed O&M program is based on providing a visual (on ground)inspection of 20 structure sites each year.The 20 sites would be selected to generally include a minimum of one from each structure type on the line.The 20-site rotation combined with the proposed climbing inspection (of 10 sites each year)would result in all structure types undergoing a detailed inspection (climbing or visual)every 5 years. Spare Materials Most materials used on the Bradfield Intertie are long-delivery items.It has been assumed that, as part of the construction contract,sufficient spare materials for routine maintenance and any catastrophic failures that may occur will be purchased and stockpiled.These materials will include spare towers (all types),conductor,hardware,insulators,foundation materials, compression dead-end,guy wire,guy materials,dampers,armor rods,anchor rods and other minor materials. Helicopter Survey A helicopter review of all structure sites should be completed a minimum of once each year.The survey should be completed by an experienced lineman and should include a review of the conductor,insulators,structures,structure sites,helicopter landing sites,and right-of-way conditions. Thermographic Survey After the line is energized and placed under load,a thermographic survey of all connections on the line needs to be performed.The aluminum bolts connecting the jumper paddles on the dead- end structures can be "over torqued,”leading to a bad connection and ultimate line failure. Ideally,this survey should be done just prior to the climbing inspections and every 5 years thereafter. Right-of-way Clearing A clearing and logging contract generally requires a width of 100 feet of clear-cut following the proposed transmission centerline.The clear-cut will be offset toward the uphill side to maximize its effectiveness.The clearing specification requires that,in addition to the clear-cut,all danger trees (any tree that could rotate about its base and strike the line)be removed. Energy Export Study 4-5 Final Report Estimated Costs of Construction,Operation and Maintenance Following a clear-cut,the first severe storm often takes out additional trees that were protected by the other trees prior to the clear-cut.These pre-construction storms will have eliminated many of the trees that were exposed by the clear-cut and thus should reduce the number of potential strikes in the early years of the line. The very low-altitude sections of this line will require frequent clearing,as often as every 3 to 5 years.The alders,prevalent in this area,have been known to grow 5 feet or more per year. Above 500 feet,the conifers will grow at a much slower rate and require clearing on a less frequent cycle,approximately every 10 years.Clearing around helipads will be required every 3 years. Catastrophic Failures In addition to routine maintenance,certain catastrophic failures can occur periodically.Based on the experience of other transmission lines in the area,these failures could include long-span conductor drop,landslides,avalanches and tree strikes.The costs of repairing damage caused by these events can vary greatly depending on a number of factors. Long-span conductor drop occurred on the Lake Tyee line when a compression dead-end failed. It is assumed there is a probability of this happening on the Bradfield Intertie at least once in the line's 30-year life. Landslides and avalanches occur frequently in Southeast Alaska.Support structures (pole line) are not designed to withstand forces caused by these events.The routing of this line provides the primary avoidance mechanism for landslides and avalanche.Attempts were made to route the line away from known slide areas;however,outside factors do not allow complete free wheeling of the line route.The majority of the Bradfield Intertie is not in an area prone to landslides and avalanche. Where the Bradfield Intertie is routed on steep slopes,the probability of a tree strike is high. Trees that roll downhill and hit towers,foundations,or guy wires could do severe damage.Mid- span conductor hits would do much less damage.A tree strike should be expected every 3 to 5 years. Energy Export Study 4-6 Final Report Estimated Costs of Construction,Operation and Maintenance Estimated O&M Costs The estimated costs of O&M are shown in the following table. TABLE 4-3 Bradfield Intertie Estimated Costs of Operation and Maintenance (2006 Cost Levels) 084Fe, OSZ'1S1$} 000'01$ 000'81$| 000'071$ 000'OLLS 0S2'6 bs 6%[OSZ' LOLS 000'0z1$ OSZ'18z$ az|OSz'191$ 000'0Z1$ ose" 18zs 2%|OS2'191 000'0z+$ Osz' 87s 9%J0SZ'L9L$ 000071$ OSz'1ez$ $24 ; ; ; P94 Os7'191$} 000'01$ 000'8t$| 000'0Z1$ 000'S22$ |000'011$ osz'p69s v%|OSz' LOLS 000'0z1$ Osz'18z$ €%|OS2'Lols 000'021$ Osz'1ezs 22| 0S2'191$ 000'021$ osz'1ezs 1% Posz'Lo1s 000'0z1$ osz'ecs 024 : [eas OSZ'I91$] 000'01$ 000'8+$| COO'oz1$ 000°SZ1$ 000'0!1S OS2'rySs 6b|OS2'La1$ o00'oz 1s osz'Lezs Bb|oSe'L91s 000'0Z1$ OSz'LEz$ 2bJOS2'L91$ 000'0Z1$ Osz'18z 9bJ0S7' LOLS 000'021$ osz'Lezs St 784 OSZ'L91$] 000'O1$ 000'81$| 000'0z1$ 000'S2Z$|000'0LL$ osz'pegs vb|oSz'19Lg 000'0Z1$ 0S2'18z7$ €L|ose'loLs 000'0Z1$ OSZ'18Z$ Zt| os2'soLs 000'0z1$ 0gz'L8z$ LL|oS2'L9Ls 000'021$ osz'lezs Oo - - [em OSZ'91$] 000'0L$ 000'81$|000'02L$ 000'SZ1$ 000'011$ OSZ'brss 6 Josz'ros 000'0Z1$ osz'Lezs 8 Josz'Los 000'0z1S OSz'1ez7$ 2 |osz'tois 000'021$ osz'1ez$ 9 10SZ'L9IS 000'0Z4$ OSz'Lez$ Ls 0S2'L91$] COO'OLs 000'81$| 000'071$ 000'S22$|COOOLLS OS2'p69$ by 4OSZ7'LOLs 000'021$ Osz'18z$ € f0sz' rors 000'0Z+$ ose Lezs Z [osz'rais 000'0z1$ Osz'Lezs L : ' #04 osz' ols 009'61$|O00's1$| 000'0Z1$ ose'ales oe= Qa 55 > g =;3 $ fe.) wo5 © =ga & 4 = »§g ia] 5 )6CUS o ° g 35 4& csoO a8 2 & 53 a a an 2 3 §2£ © 32 co oS ad5 9 So a es o o > S oO > Pas) € 6 13 fy i us c < © _ oN = ws 5 oO = oNX G 8 P34 i] gcSo = ge ° s ES a Zz = 3 a = ° >= E2 an & a a e £8§8a5 s ef Pe z8 z 28$6af «€ z g385F 2 2¢« aiSBFaui&e«ai3 & Final Report4-7EnergyExportStudy Section 5 Power Supply Evaluation and Economic Analysis Power Supply Evaluation Overview The Bradfield Intertie is expected to be used primarily to transmit power generated in Southeast Alaska to power markets in the Pacific Northwest.In order to evaluate the costs and benefits associated with this intended use of the project,it is necessary to determine the quantity of power available for export.Hydroelectric generation provides most of the electric power in Southeast Alaska.At the present time,there is some hydroelectric generation capability surplus to the needs of the electric consumers interconnected with these resources.The largest single source of existing surplus bydroclecitic-generation in the repion is the Lake Tyee byhydroelectric project.Inthefuture,new hydroelectric projects can be constructed earlier than they would otherwise if the generation output can be sold outside the region. The power supply evaluation conducted for the Energy Export Study has three primary elements: (1)identify the existing hydroelectric generation capability in Southeast Alaska;(2)estimate the future energy requirements of the residents and businesses connected to these projects;(3) determine the surplus generation capability;and (4)identify the energy generation capability of hydroelectric projects that could be developed in the region if a market existed for their output. In the future it is expected that electric loads will increase in the region and the available surplus hydroelectric energy generation would decrease over time if no other generation plants were constructed.Further,new transmission lines are planned that would bring hydroelectric power to communities currently served by diesel generation.Greater utilization of hydroelectric energy in Southeast Alaska will also reduce the energy available for export. There are a number of factors that will affect the available power for export.Principal among these factors is the development of new transmission and generation resources in the region.At the present time,if the Bradfield Intertie were to be constructed,the only power available for export would be the surplus generation from the Lake Tyee hydroelectric project.Completion of the Swan-Tyee Intertie would initially reduce the Lake Tyee surplus available for export since Ketchikan is forecasted to use some of this power.In the long run,however,new hydroelectric generation facilities could be constructed in the Ketchikan and Metlakatla areas that could increase the available surplus with the Swan-Tyee Intertie in place.It should also be noted that the FDPPA indicates that it is beginning a program to displace heating oil with electric }heat inWrangellandPetersburg'®.This may reduce the amount of power available for export. The Bradfield Intertie will be used to transmit hydroelectric energy that is either surplus to the needs of the interconnected electric utilities of Petersburg,Wrangell and potentially Ketchikan orfrominterconnectedhydroelectricplantstobebuiltinthefuture!'.Although it is assumed for '6 The FDPPA fuel displacement program will initially be applied to government buildings.''Other existing hydroelectric facilities used to supply power to Petersburg and Ketchikan are fully utilized. Energy Export Study 5-1 Final Report Power Supply Evaluation and Economic Analysis the purpose of this analysis that surplus Lake Tyee power would be available for export,it is important to note the commercial and contractual arrangements that are in place that could potentially limit the availability of power resources for sale to other utility systems.For example,the Lake Tyee project is owned and operated by the FDPPA and its output is sold to Petersburg and Wrangell pursuant to the Four Dam Pool Power Sales Agreement.Petersburg, Wrangell and eventually Ketchikan when it is interconnected,will always have first priority to the output of the Lake Tyee Project pursuant to the Four Dam Pool Power Sales Agreement. For the purpose of this analysis,four resource availability scenarios have been considered.Each of these scenarios provides for a progressively larger interconnected electric system in Southeast Alaska and as a result,a larger quantity of electric power for export.The four scenarios are as follows: Case 1:Petersburg-Wrangell-Lake Tyee electric system as it currently exists.The energy available for export is the forecasted surplus from the Lake Tyee hydroelectric project. No new interconnected hydroelectric facilities are projected to be constructed. Case 1A:Same as Case |with the assumed completion of the Swan -Tyee Intertie that would interconnect the electric system of Ketchikan with Petersburg and Wrangell.In this case,Ketchikan is forecasted on average to use some of the output of the Lake Tyee project thereby reducing the amount of energy available for export.No new hydroelectric facilities are projected to be constructed in the Petersburg-Wrangell- Ketchikan (PWK)interconnected system. Case 2:Same as Case 1A with the assumed construction of the Cascade Creek hydroelectric project and interconnection with the PWK system. Case 3:Same as Case 2 with the addition of all potential hydroelectric projects currently identified in the PWK area.This case assumes the construction of a transmission line between Metlakatla and Ketchikan. Case 4:Same as Case 3 with the addition of a transmission interconnection between Petersburg, Kake,Sitka and Angoon.Additional potential hydroelectric facilities are assumed to be built in the Sitka area and in Angoon. For each of these cases a projection of surplus hydroelectric energy generation has been made for each year of a 30-year projection period.The annual projections are based on assumed load growth for the interconnected electric utilities and the average energy generation capability of the existing and potential hydroelectric projects.Specific assumptions used in the analysis, subject to the provisions of each of the previously defined cases,are as follows: 1.Electric loads in Petersburg and Wrangell will increase at 0.0%per year and will increaseinKetchikanat0.8%per year'®. "®Electric loads in all of these communities could increase at higher rates if potential programs are established to encourage conversions to electric heat and provide shore based electricity sales to docked cruise ships,among others.Source of assumed load increases is the report entitled "Swan-Tyee Economic Analysis”prepared for the FDPPA by Commonwealth Associates,Inc.(CAI)dated March 2006. Energy Export Study 5-2 Final Report Power Supply Evaluation and Economic Analysis 2.The average annual energy generation capability of the 22.5 MW Lake Tyeehydroelectricprojectis116,820 MWh”. 3.The Swan -Tyee Intertie will become operational in 20087". 4.The Bradfield Intertie will become operational in 2010. 5.For the cases that include new hydroelectric projects,the new facilities will become operational in 2010,with the exception of the Ruth Lake and Scenery Lake projects which become operational in 2012.Note that the assumed availability dates of these new projects are provided only for the purpose of estimating the potential hydroelectric energy available in the region.The actual time required to develop and construct these projects could be much greater than assumed,particularly if all of the projects were being jointly developed. 6.The potential new hydroelectric facilities that have been identified for the Petersburg- Wrangell-Ketchikan (PWK)region that are considered in this analysis are as follows: e Lake Tyee Third Turbine”!-Petersburg/Wrangell;10 MW,12,000 MWh annually e Thomas Bay Project -Cascade Creek”-Petersburg;45 MW;203,000 estimated MWh annually e Thomas Bay Project”®(Ruth Lake,Scenery Lake)-Petersburg;50 MW,209,000 MWh e Sunrise Lake --Wrangell;4 MW;12,200 MWh annually e Anita -Kunk Lake -Wrangell;8 MW,28,200 MWh annually e Virginia Lake -Wrangell;12 MW,42,700 MWh annually e Thoms Lake -Wrangell;7.3 MW,25,600 MWh annually e Whitman Lake -Ketchikan;4.6 MW,19,600 MWh annually e Connell Lake -Ketchikan;1.9 MW,11,640 MWh e Mahoney Lake -Ketchikan;9.6 MW,45,600 MWh annually e Triangle Lake'*-Metlakatla;3.9 MW,16,900 MWh annually '?As projected for the Four Dam Pool Power Agency by Commonwealth Associates,Inc.assuming average inflows without drawdown of the reservoir.Additional energy would be available in years with high inflows.?°Construction of the Swan -Tyee Intertie began in 2004 but was halted later in the year pending acquisition of additional funding to complete the project.Neither the FDPPA nor the interconnected municipal utility systems can predict when or if construction will begin again.Approximately one more year of construction is needed to complete the project.7!As estimated by Commonwealth Associates assuming average inflows without drawdown of the reservoir.With maximum inflows,the third turbine is estimated to provide up to 78,000 MWh of additional energy.The turbine would also allow greater operational flexibility and greater capacity output at certain times.2 The Cascade Creek project,as proposed by Tollhouse Energy,is one component of the larger Thomas Bay hydroelectric project identified by Hosey &Associates in a study for the City of Petersburg dated December 1985. The Cascade Creek project is the Swan Lake portion of the overall Thomas Bay potential development.3 The Scenery Lake and Ruth Lake projects are two additional projects in the Thomas Bay Project as proposed by Tollhouse Energy. Energy Export Study 5-3 Final Report Power Supply Evaluation and Economic Analysis 7.Other Southeast Alaska hydroelectric projects included in Case 4 of the analysis include: e Takatz Lake -Sitka;20 MW,82,800 MWh annually e Katlian River-Sitka;7.0MW,29,800 MWh annually e Sterling Bolima -Angoon;1.0 MW,8,500 MWh annually In addition to the projects listed above,Coast Mountain Hydro Corporation,a Canadian company and subsidiary of CMP,has proposed to develop the 115-MW Forrest Kerr hydroelectric project at the confluence of Forrest Kerr Creek and the Iskut River approximately 30 miles northeast of the Alaska-Canada border.The project will be run-of-river and the power output is to be sold to BC Hydro.A 110-mile long 138-kV transmission line is proposed to be constructed from Meziadin Junction to the Forrest Kerr Project.Several mines in the general vicinity of the Forrest Kerr Project are looking to purchase power from BC Hydro so the new transmission line could have multiple uses.In April 2006,NovaGold Resources,Inc.indicated that it is pursuing acquisition of CMP. The estimated surplus hydroelectric energy available for the six year period 2010 through 2015 for the four cases is summarized in Table 5-1.A more detailed presentation of the estimated loads and resources is shown in Table 5-3 at the end of this section. TABLE 5-1 Estimated Surplus Hydroelectric Energy (MWh)' 2010 2011 2012 2013 2014 2015 Case 1 -Existing Tyee Surplus Hydro -MWh 59,574 59,574 59,574 59,574 59,574 59,574 Surplus Hydro -Ave MW 6.80 6.80 6.80 6.80 6.80 6.80 Case 1A -Petersburg-Wrangell-Ketchikan (PWK)Existing Surplus Hydro -MWh 56,148 54,922 53,686 52,440 51,184 49,918 Surplus Hydro -Ave MW 6.41 6.27 6.13 5.99 5.84 5.70 Case 2 -PWK wi Cascade Creek Surplus Hydro -MWh 259,148 257,922 256,686 255440 254,184 252,918 Surplus Hydro -Ave MW 29.58 29.44 29.30 29.16 29.02 28.87 Case 3 -PWK w/All New Hydro Surplus Hydro -MWh 473,613 472,387 680,151 678,905 677,649 676,383 Surplus Hydro -Ave MW 54.07 53.93 77.64 77.50 77.36 77.21 Surplus Capacity -MW '90.1 89.9 129.4 129.2 128.9 128.7 Case 4 -PWK w/Sitka,Angoon Surplus Hydro -MWh 600,794 598,460 805,106 802,730 800,333 797,914 Surplus Hydro -Ave MW 68.58 68.32 91.91 91.64 91.36 91.09 Surplus Capacity-MW '114.3 113.9 153.2 152.7 152.3 151.8 'Based on assumed 60%capacity factor. *4 A relatively short overhead and submarine transmission system would be needed to interconnect the electric systems of Ketchikan and Metlakatla Power &Light. Energy Export Study 5-4 Final Report Power Supply Evaluation and Economic Analysis Economic Analysis Introduction and Assumptions An economic analysis has been conducted to determine the net benefits to be realized in Southeast Alaska with the Bradfield Intertie.These net benefits are defined as the revenues estimated to be received from the sale of power to outside markets less the costs of transmitting power to these markets.The costs of transmission include O&M expenses for the Bradfield Intertie as well as wheeling charges assessed by owners of transmission lines in BC.There is a cost associated with power generation in Southeast Alaska and the net benefit determined in this analysis would represent the amount that could be used to pay for power purchases and/or the costs of constructing new hydroelectric generation facilities in the region. Although the amount available to pay for power purchases and new powerplant development has been estimated,no attempt has been made to determine if this amount is sufficient to pay the costs associated with purchasing power or developing new projects in Southeast Alaska.This is an important economic factor that is outside the scope of this study.As development of the Bradfield Intertie proceeds,it will be necessary to conduct discussions with the owners of existing and proposed generating facilities to determine if the net revenues available from sales of power to outside markets would make the sale of power or development of new powerplants economically viable. In conducting the economic analysis,it has been assumed that the cost of constructing the Bradfield Intertie will be funded with federal or State grants.This assumption is consistent with the funding assumptions used in previous Southeast Alaska transmission studies and is based on federal legislation in 2000 authorizing federal expenditures of $384 million for construction of the Southeast Alaska Electrical Intertie System. The economic analysis presents the estimated annual revenues from the sales of power to outside electrical markets,presumably in the Pacific Northwest,on an annual basis for each year of a 25- year projection period.The power sales revenues are estimated separately for each of the four power supply scenarios defined previously.The estimated annual costs of transmission over BCTC transmission lines have been subtracted from the estimated annual power sales revenues to determine the estimated net revenues for each year.The net revenues are then divided by the total estimated energy sales to determine the "breakeven”power cost which represents the amount that can be paid for power in Southeast Alaska on a cost per kWh basis. In preparing the economic analysis,several assumptions have been made.The most significant of these assumptions are: 1.Capital costs of the Bradfield Intertie are to be grant funded. 2.The annual rate of inflation is 2.5%. 3.O&M costs for the Bradfield Intertie will escalate at the assumed annual inflation rate. Energy Export Study 5-5 Final Report Power Supply Evaluation and Economic Analysis 4.Estimated wheeling charges will increase annually at one-half the assumed annual inflation rate. 5.In general,the power sales rate for sales to outside markets will increase at the assumed rate of inflation. 6.Wheeling charges over the existing transmission system in Southeast Alaska will be $2.00 per MWh in 2010. 7.Transmission losses between Southeast Alaska power generators and the Alaska-Canada border are 2%and from the border to the Pacific Northwest are an additional 6%,based on assumed contractual arrangements. 8.The exchange rate for the purpose of establishing comparable costs is $0.88 US per $1.00 Canadian.-OO 9.The discount rate for present value calculations is 6.0%. 10.New transmission lines needed to interconnect the Bradfield Intertie to other generating resources in Southeast Alaska will either be grant funded or included in the cost of new generating projects.For example,the transmission line to interconnect the Cascade Creek project to Petersburg will be funded as part of that project. Additional assumptions related to the base amounts for power sales rates and wheeling charges are defined in the following subsections. Outside Power Sales Markets Many large utilities in the Pacific Northwest are projecting the need for significant new powersupplyresourceswithinthenexttenyears.In a recent solicitation'®for power supply resources,Puget Sound Energy”°(PSE)indicated a need in 2010 for 1,277 MW of peak capacity and approximately 2,000,000 MWh of electric energy over the amount currently estimated to be available from existing resources.By 2015,the PSE annual energy deficit increases to 11,500,000 MWh.In similar planning studies,Avista Corporation and PacifiCorp indicated needs for significant additional power supply in the relatively near future.California utilities have also identified the need for power supply in the future. In particular,the need for "green”and "renewable”power resources is continuing to expand. These resources typically are power generators that use non-fossil,naturally renewable or waste materials as a fuel source,such as wind energy generation systems,geothermal or landfill gases. Although hydroelectric resources are not generally considered green or renewable at the present time,it could be that in certain circumstances Alaska hydroelectric power might be receive some sort of renewable classification.There is usually a premium paid for green and renewable energy resources as compared to power generated at natural gas,coal,oil and nuclear fueled power plants. 5 Puget Sound Energy,All Source RFP,Exhibit 1,November 1,2005.6 Puget Sound Energy is the largest electric utility in Washington State serving much of the region surrounding Puget Sound,with the most noticeable exceptions being Seattle,Tacoma and Snohomish County. Energy Export Study 5-6 Final Report Power Supply Evaluation and Economic Analysis It should also be noted that power generation from Alaska could be used to partially supply the needs of new mining interests in Northern BC.From a load flow perspective,power generation from Alaska would actually be used to supply loads in this area.As an alternative to selling power directly to Western US utilities,the Southeast Alaska energy producers may sell power at the border to Powerex,the energy marketing subsidiary of BC Hydro.Powerex would either arrange to use the power in BC or market it externally.The power sales rate received from Powerex could potentially be lower than what would be received from selling power to US utilities,but transmission charges through BC would be avoided. The price to be paid for power sales outside Southeast Alaska is highly speculative.In the future it will be dependent primarily on the need for power and the alternative cost of power supply.In the Pacific Northwest,a significant need for new power generating resources has been identified in the relatively near future.The cost of producing power in the future will most likely be tied in some manner to the price of natural gas and coal. For the purpose of this analysis,it is estimated that a power sales rate in the range of between 6.0 cents per kWh and 7.2 cents per kWh in Washington State at the present time is a reasonable estimate for evaluating the economic feasibility of power exported from Alaska.In the future, this rate would be expected to change relative to the price of generation fuel and the cost of building new power facilities.Forecasts of future avoided costs and new resource costs in the Pacific Northwest developed by Puget Sound Energy,Avista and PacifiCorp indicate a possible decrease in power prices over the next five years consistent with a projected decrease in the price of natural gas.For purposes of this analysis,it is assumed that the power sales rate would remain constant for five years and then increase annually at the rate of general inflation. It should be noted that in its April 2005 Least Cost Plan,PSE provided a projection of Pacific Northwest annual power prices for the 20 year period,2006 through 2025.This projection was also filed as PSE's avoided cost pursuant to the requirements of the Washington Administrative Code.In the PSE projection,the power price for 2010 is forecasted to be 3.1 cents per kWh, down from 4.2 cents per kWh in 2007.In 2015,the forecasted power price is 4.9 cents per kWh. The PSA avoided cost filing also indicates that the levelized cost of power from a recently acquired wind energy project is 4.6 cents per kWh over the 20-year projected life of the project. The avoided cost filing does not necessarily reflect the cost of power resources today.Fuel prices have increased significantly over the past year which should have an upward impact on the forecasted price of power.If evaluation of the Bradfield Intertie continues,it will be necessary to conduct discussions with the potential buyers of Southeast Alaska power to determine the actual rate that would be paid for the power. Transmission Charges In order to deliver power to the Pacific Northwest from Alaska,it will be necessary to transmit power over transmission lines in BC.BCTC has an Open Access Transmission Tariff (OATT) that would conceivably define the cost to transmit over the BCTC system.At the present time,it is not known what entity would construct the transmission line needed on the Canadian side of the border to connect the Alaska system to the BCTC grid.Potentially,if CMP or its potential successor,NovaGold,constructs the proposed 138-kV line between Forrest Kerr and Meziadin Energy Export Study 5-7 Final Report Power Supply Evaluation and Economic Analysis Junction,an extension of this line could be constructed to the border.CMP would be expected to charge a transmission wheeling rate sufficient to cover the O&M and capital recovery costs of the CMP transmission system.Alternatively,if BCTC were to build the transmission line to the border and interconnect directly with the Alaska system,the BCTC OATT would be expected to be the only charge to be paid for transmission in Canada. As provided in the BCTC OATT for Point to Point Transmission,Schedule 01,dated April 1, 2005,the transmission service rate is $4.25 Cdn per kW-month.Based on an assumed average kW level for power transmission from Southeast Alaska,this rate is estimated to convert to $5.12 US per MWh transmitted.For purpose of this analysis,it is assumed that this charge would increase annually at the assumed rate of inflation. For purpose of the base case analytical results as presented in the following tables,it is assumed that the Bradfield Intertie would be connected directly to the BCTC grid and consequently only BCTC transmission charges would be applied.If however,BCTC does not build the transmission line to the border and CMP does,the charge for use of the proposed CMP transmission line between the Alaska -Canada border and Meziadin Junction is assumed to be based on the estimated revenue requirement associated with this line.CMP,as owner of this line,will want to receive revenues sufficient to pay the costs of O&M as well as capital recovery. Assuming that the line between the border and the Forrest Kerr project is used exclusively for Alaska power exports and that the line between Forrest Kerr and Meziadin Junction is used for Alaska power and Forrest Kerr power,the unit cost of transmission has been estimated.Since the costs associated with CMP transmission line are essentially fixed,the rate per MWh is different for each of the power supply scenarios to reflect the varying amount of energy projected to be transmitted.The costs are estimated to increase annually at the assumed rate of inflation. Although the projected annual O&M costs for the Bradfield Intertie are explicitly included as an expense,there may also be charges for the use of existing transmission lines in Southeast Alaska. A $2.00 US per MWh charge has been included in the analysis to reflect the cost of using the existing transmission system. Results The results of the economic analysis are summarized in Table 5-2 and shown in more detail in Tables 5-4,5-5 and 5-6 for the alternative power supply scenarios.In these tables,the "Breakeven Power Cost”is defined as the amount that can be paid for power in Southeast Alaska so that power sales revenues will equal power production and transmission costs.It is calculated as the estimated revenues from the sale of power less the costs of transmission and less the O&M costs on the Bradfield Intertie.The net present value shown in Table 5-2 is the cumulative present value of the annual Breakeven Power Cost amounts. It is important to note that the results of the economic analysis are highly dependent on the assumptions and estimates previously discussed.Alternative assumptions would produce different results. Energy Export Study 5-8 Final Report Power Supply Evaluation and Economic Analysis TABLE 5-2 Estimated Annual Breakeven Power Cost and Net Present Value of Net Revenues 2010 2015 2020 2025 Delivered Power Sales Rate ($/MWh)*$72.000 $81.46 $92.17 $104.28 Case 1:Existing Tyee Surplus 2 Breakeven Power Cost (¢/kWh)3 5.31 6.13 6.99 7.96 Present Value of Net Revenues (2006$000)'$40,880 Case 2:Existing with Cascade Creek 5 Breakeven Power Cost (¢/kWh)3 5.76 6.58 7.50 8.53 Present Value of Net Revenues (2006$000)4 $184,024 Case 3:Existing with All PWK New Hydro $ Breakeven Power Cost (¢/kWh)3 5.83 6.67 7.60 8.66 Present Value of Net Revenues (2006$000)4"$491 847 Case 4:Existing with All Regional New Hydro 7 Breakeven Power Cost (¢/kWh)3 5.84 6.68 7.61 8.67 Present Value of Net Revenues (2006$000)4 ¢580,222 Estimated energy sales rate for power delivered in the Pacific Northwest. Assumes the Swan -Tyee Intertie is not constructed and consequently excludes any sales from Lake Tyee to Ketchikan. Estimated cost of power production or purchase in Alaska that would breakeven with the estimated net annual revenues received from sales of power. Net present value of net annual revenues from sales of power over the 25-year period,2010 through 2034,at assumed discount rate of 6.0%to January 2006. Assumes the Swan-Tyee Intertie is constructed and that the Cascade Creek hydroelectric project is constructed. Assumes the Swan-Tyee Intertie is constructed and that all identified potential hydroelectric projects in the interconnected Petersburg-Wrangell-Ketchikan (PWK)are developed. Includes all hydroelectric projects for Case 3 as well as the Takatz Lake,Katlian River and Sterling Bolima hydroelectric projects. 6 The present value amounts shown in the previous table assume that interconnection at the border would be directly to the BC Hydro transmission system.If CMP,or its successor entity,were to own and operate the transmission connection between the Alaska border and the BC Hydro system,additional transmission charges could be assessed on power wheeled over this independent system.It is estimated that the cumulative net present value amounts shown in Table 5-2 would be between $25 million and $35 million lower if these additional transmission charges were to be applied.It is further estimated that the breakeven power cost would be approximately 0.4 cents per kWh lower than shown in Table 5-2 for Case 3,as an example. Energy Export Study 5-9 Final Report TABLE Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tyee Region Energy Requirements (MWh) Petersburg '42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 Wrangell 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 Total 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 Resources Available (MWh) Blind Slough 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 Lake Tyee 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 Diesel 800 800 800 800 800 800 800 800 800 Total 128,600 128,600 128,600 128,600 128,600 128,600 128,600 128,600 128,600 Surplus Existing Hydro (MWh)59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 Surplus Existing Hydro (Ave MW)6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 Potential New Hydro (MWh) Cascade Creek 203,000 203,000 203,000 203,000 203,000 Surplus w/Cascade Creek (MWh)262,574 262,574 262,574 262,574 262,574 Surplus w/Cascade Creek (Ave MW)29.97 29.97 29.97 29.97 29.97 Other Potential Projects Lake Tyee Third Turbine 12,000 12,000 12,000 12,000 12,000 Sunrise Lake 12,200 12,200 12,200 12,200 12,200 Anita -Kunk Lake 28,200 28,200 28,200 28,200 28,200 Virginia Lake 42,700 42,700 42,700 42,700 42,700 Thoms Lake 25,600 25,600 25,600 25,600 25,600 Thomas Bay (Ruth Lake,Scenery Lake)--209,000 209,000 209,000 Subtotal -Other Potential 120,700 120,700 329,700 329,700 329,700 Surplus w/Csd Crk &Other (MWh)383,274 383,274 592,274 592,274 592,274 Surplus w/Csd Crk &Other (Ave MW)43.75 43.75 67.61 67.61 67.61 D.Hittle &Associates,Inc.Page 1 of 6 5/2/2006 TABLE Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ketchikan Energy Requirements (MWh)148,477 149,665 150,862 152,069 153,286 154512 155,748 156,994 158,250 Existing Resources Available (MWh) Municipal Hydro 67,900 67,900 67,900 67,900 67,900 67,900 67,900 67,900 67,900 Swan Lake 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 Subtotal -Existing 149,860 149,860 149,860 149,860 149,860 149.860 149,860 149,860 149,860 Net Requirement (1,383)(195)1,002 2,209 3,426 4,652 5,888 7,134 8,390 Surplus Existing Hydro (MWh)1,383 195 ------- Surplus Existing Hydro (Ave MW)0 0 ------- Ketchikan Area Potential New Hydro Whitman Lake 19,640 19,640 19,640 19,640 19,640 Connell Lake 11,640 11,640 11,640 11,640 11,640 Mahoney Lake 45,600 45,600 45,600 45,600 45,600 Triangle Lake -Metlakatia 16,885 16,885 16,885 16,885 16,885 Subtotal -New Hydro 93,765 93,765 93,765 93,765 93,765 Surplus w/New Hydro (MWh)90,339 89,113 87,877 86,631 85,375 Surplus w/New Hydro (Ave MW)10.31 10.17 10.03 9.89 9.75 Integrated Petersburg-Wrangell-Ketchikan (PWK)System Surplus Existing Hydro w/STI (MWh)59,574 59,574 58,572 57,365 56,148 54,922 53,686 52,440 51,184 Surplus Existing Hydro (Ave MW)6.80 6.80 6.69 6.55 6.41 6.27 6.13 5.99 5.84 Surplus w/Cascade Creek (MWh)59,574 59,574 58,572 57,365 259,148 257,922 256,686 255,440 254,184 Surplus w/Cascade Creek (Ave MW)6.80 6.80 6.69 6.55 29.58 29.44 29.30 29.16 29.02 Surplus w/All New Hydro (MWh)59,574 59,574 58,572 57,365 473,613 472,387 680,151 678,905 677,649 Surplus w/All New Hydro (Ave MW)6.80 6.80 6.69 6.55 54.07 53.93 77.64 77.50 77.36 D.Hittle &Associates,Inc.Page 2 of 6 5/2/2006 Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy TABLE 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tyee Region Energy Requirements (MWh) Petersburg '42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 Wrangell 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 Total 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 Resources Available (MWh) Blind Slough 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 Lake Tyee 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 Diesel 800 800 800 800 800 800 800 800 800 800 Total 128,600 128600 128600 128600 128,600 128,600 128600 128,600 128,600 128,600 Surplus Existing Hydro (MWh)59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 Surplus Existing Hydro (Ave MW)6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 Potential New Hydro (MWh) Cascade Creek 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 Surplus w/Cascade Creek (MWh)262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 Surplus w/Cascade Creek (Ave MV 29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 Other Potential Projects Lake Tyee Third Turbine 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Sunrise Lake 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 Anita -Kunk Lake 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 Virginia Lake 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 Thoms Lake 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 Thomas Bay (Ruth Lake,Scenery L 209,000 209,000 209,000 209,000 209,000 209000 209,000 209,000 209,000 209,000 Subtotal -Other Potential 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 Surplus w/Csd Crk &Other (MWh)592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 Surplus w/Csd Crk &Other (Ave |67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 Page 3 of 6 5/2/2006D.Hittle &Associates,Inc. TABLE Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Ketchikan Energy Requirements (MWh)159,516 160,792 162,078 163,375 164682 165,999 167,327 168666 170,015 171,375 Existing Resources Available (MWh) Municipal Hydro 67,900 67,901 67,902 67,903 67,904 67,905 67,906 67,907 67,908 67,909 Swan Lake 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 Subtotal -Existing 149,860 149,861 149,862 149,863 149,864 149,865 149,866 149,867 149,868 149,869 Net Requirement 9,656 10,931 12,216 13,512 14,818 16,134 17,461 18,799 20,147 21,506 Surplus Existing Hydro (MWh)---------- Surplus Existing Hydro (Ave MW)---------- Ketchikan Area Potential New Hydro Whitman Lake 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 Connell Lake 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 Mahoney Lake 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 Triangle Lake -Metlakatla 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 Subtotal -New Hydro 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 Surplus w/New Hydro (MWh)84,109 82,834 81,549 80,253 78,947 77,631 76,304 74,966 73,618 72,259 Surplus w/New Hydro (Ave MW)9.60 9.46 9.31 9.16 9.01 8.86 8.71 8.56 8.40 8.25 Integrated Petersburg-Wrangell-Ketc Surplus Existing Hydro w/STI (MWh)49,918 48,643 47,358 46,062 44,756 43,440 42,113 40,775 39,427 38,068 Surplus Existing Hydro (Ave MW)5.70 5.55 5.41 5.26 5.11 4.96 4.81 4.65 4.50 4.35 Surplus w/Cascade Creek (MWh)252,918 251,643 250,358 249,062 247,756 246440 245,113 243,775 242,427 241,068 Surplus w/Cascade Creek (Ave MW)28.87 28.73 28.58 28.43 28.28 28.13 27.98 27.83 27.67 27.52 Surplus w/All New Hydro (MWh)676,383 675,108 673,823 672,527 671,221 669,905 668,578 667,240 665,892 664,533 Surplus w/All New Hydro (Ave MW)77.21 77.07 76.92 76.77 76.62 76.47 76.32 76.17 76.02 75.86 Page 4 of 6 5/2/2006D.Hittle &Associates,Inc. Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy TABLE 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Tyee Region Energy Requirements (MWh) Petersburg '42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 42,664 Wrangell ?26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 26,362 Total 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 69,026 Resources Available (MWh) Blind Slough 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 Lake Tyee 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 116,800 Diesel 800 800 800 800 800 800 800 800 800 800 Total 128,600 128,600 128,600 128600 128,600 128,600 128600 128,600 128,600 128,600 Surplus Existing Hydro (MWh)59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 59,574 Surplus Existing Hydro (Ave MW)6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 Potential New Hydro (MWh) Cascade Creek 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 203,000 Surplus w/Cascade Creek (MWh)262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 262,574 Surplus w/Cascade Creek (Ave MV.29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 29.97 Other Potential Projects Lake Tyee Third Turbine 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Sunrise Lake 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 12,200 Anita -Kunk Lake 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 28,200 Virginia Lake 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 42,700 Thoms Lake 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 Thomas Bay (Ruth Lake,SceneryL 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 209,000 Subtotal -Other Potential 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 329,700 Surplus w/Csd Crk &Other (MWh)592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 592,274 Surplus w/Csd Crk &Other (Ave |67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 67.61 Page 5 of 6 5/2/2006D.Hittle &Associates,Inc. TABLE Southeast Alaska Energy Export Study Loads,Resources and Surplus Hydroelectric Energy 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Ketchikan Energy Requirements (MWh)172,746 174128 175,521 176,925 178,340 179,767 181,205 182,655 184,116 185,589 Existing Resources Available (MWh) Municipal Hydro 67,910 67,911 67,912 67,913 67,914 67,915 67,916 67,917 67,918 67,919 Swan Lake 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 81,960 Subtotal -Existing 149,870 149871 149,872 149.873 149,874 149.875 149876 149,877 149,878 149,879 Net Requirement 22,876 24,257 25,649 27,052 28,466 29,892 31,329 32,778 34,238 35,710 Surplus Existing Hydro (MWh)---------- Surplus Existing Hydro (Ave MW)---------- Ketchikan Area Potential New Hydro Whitman Lake 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 19,640 Connell Lake 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 11,640 Mahoney Lake 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 45,600 Triangle Lake -Metlakatla 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 16,885 Subtotal -New Hydro 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 93,765 Surplus w/New Hydro (MWh)70,889 69,508 68,116 66,713 65,299 63,873 62,436 60,987 59,527 58,055 Surplus w/New Hydro (Ave MW)8.09 7.93 7.78 7.62 7.45 7.29 7.13 6.96 6.80 6.63 Integrated Petersburg-Wrangell-Ketc Surplus Existing Hydro w/STI (MWh)36,698 35,317 33,925 32,522 31,108 29,682 28,245 26,796 25,336 23,864 Surplus Existing Hydro (Ave MW)4.19 4.03 3.87 3.71 3.55 3.39 3.22 3.06 2.89 2.72 Surplus w/Cascade Creek (MWh)239,698 238,317 236,925 235,522 234,108 232,682 231,245 229,796 228336 226,864 Surplus w/Cascade Creek (Ave MW)27.36 27.21 27.05 26.89 26.72 26.56 26.40 26.23 26.07 25.90 Surplus w/All New Hydro (MWh)663,163 661,782 660,390 658,987 657,573 656,147 654,710 653,261 651,801 650,329 Surplus w/All New Hydro (Ave MW)75.70 75.55 75.39 75.23 75.07 74.90 74.74 74.57 74.41 74,24 Page 6 of 6 5/2/2006D.Hittle &Associates,Inc. Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charges ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues -PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES ($000) Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-4 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 1:Existing Tyee Surplus Only 2010 2011 2012 2013 20714 2015 2016 59,574 59,574 59,574 59,574 59,574 59,574 59,574 2.0%2.0%2.0%2.0%2.0%2.0%2.0% 58,383 58,383 58,383 58,383 58,383 58,383 58,383 $62.00 $203 $205 $208 $210 $213 $215 5.46 5.53 5.60 5.67 5.74 5.82 5.89 1.25%1.25%1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0%6.0%6.0%6.0% 54,880 54,880 54,880 54,880 54,880 54,880 54,880 $72.00 $73.80 $7565 $77.54 $79.47 $8146 $83.50 2.5%2.5%2.5%2.5%2.5%2.5% $3,951 $4050 $4,151 $4255 $4,362 $4471 $4,582 $3,951 $4,050 $4,151 $4,255 $4,362 $4,471 3 4,582 $-$-$-G$-$F$-S$-$F$- 119 {21 122 124 125 127 128 319 323 327 331 335 340 344 $438 $444 $449 $455 $461 $466 $472 352 318 326 334 846 351 360 $352 $318 $326 $334 $846 $351 $360 $790 $762 $775 $789 $1,306 $818 $832 $3,161 $3,288 $3376 $3,466 §$3,055 $3653 $3,750 $3,161 $3,288 $3,376 $3466 $3,055 $3,653 $3,750 $53.06 $55.20 $5667 $58.18 $51.28 $61.32 $62.95 $40,880 Page 1 of 4 DRAFT -5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charges ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues 'PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES ($000) Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-4 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 1:Existing Tyee Surplus Only 2017 2018 2019 2020 2021 2022 2023 59,574 59,574 59,574 59,574 59,574 59,574 59,574 2.0%2.0%2.0%2.0%2.0%2.0%2.0% 58,383 58,383 58,383 58,383 58,383 58,383 58,383 $218 $221 $224 $226 $2.29 $232 $2.35 5.96 6.04 6.11 6.19 6.27 6.34 6.42 1.25%1.25%1.25%1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0%6.0%6.0%6.0% 54,880 54,880 54,880 54,880 54,880 54,880 54,880 $85.59 $87.73 $89.92 $9217 $9447 $9683 $99.25 2.5%2.5%2.5%2.5%2.5%2.5%2.5% $4,697 $4814 $4935 $5058 $5,184 $5,314 $5,447 $4697 $4814 $4,935 $5,058 $5184 $5314 $5,447 $-$-$$-$$-$C $-$$- 130 132 133 135 137 138 140 348 352 357 361 366 370 375 $478 $484 $490 $496 $502 $509 $515 369 378 750 397 407 418 428 $369 $378 $750 $397 $407 $418 $428 $847 $862 $1,240 $894 $911 $928 $946 $3,850 $3,952 $3694 $4,164 $4274 $4,386 $4,501 $3,850 $3,952 $3694 $4164 $4274 $3 4,386 $4,501 $6462 $66.34 $6201 $6990 $71.74 $73.62 $75.55 Page 2 of 4 DRAFT -5/2/2006 TABLE 5-4 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 1:Existing Tyee Surplus Only 2024 2025 2026 2027 2028 2029 2030 Surplus Energy Available (MWh)59,574 59,574 59,574 59,574 59,574 59,574 59,574 Losses to AK/BC Border (%)2.0%2.0%2.0%2.0%2.0%2.0%2.0% Energy at Border (MWh)58,383 58,383 58,383 58,383 58,383 58,383 58,383 Wheeling Charges ($/MWh) Alaska Grid $238 $241 $244 $247 $250 $253 $2.56 CMP System ------- BC Hydro System 6.50 6.58 6.67 6.75 6.83 6.92 7.01 Charge Escalation 1.25%1.25%1.25%1.25%1.25%1.25%1.25% Losses in BC (%)6.0%6.0%6.0%6.0%6.0%6.0%6.0% Energy at BC/WA Border (MWh)54,880 54,880 54,880 54,880 54,880 54,880 54,880 Price at BC/WA Border ($/MWh)$101.73 $104.28 $106.88 $109.56 $112.30 $115.10 $117.98 Price Escalation 2.5%2.5%2.5%2.5%2.5%2.5%2.5% REVENUES ($000) Power Sales $5,583 $5,723 $5866 $6012 $6163 $6317 $6,475 Other :------ Total Revenues $5,583 $5,723 $3 5866 $6012 $6,163 $6317 $6,475 PENSES ($000) Power Purchases $-$$e $C $C $e $C Wheeling Expense Alaska 142 144 145 147 149 151 153 CMP System ------- BC Hydro System 380 384 389 394 399 404 409 Other ------- Subtotal $521 $6528 $535 $541 $548 $555 $562 Transmission O&M Bradfield Intertie 1,083 450 461 472 484 740 509 Other ------- Subtotal $1,083 $450 $461 $472 $484 $740 $509 Other :-:---- Total Expenses $1,608 $983 $1,001 $1,024 $1,040 $1,304 $1,080 NET REVENUES ($000)$3,975 $4,740 $4,864 $4992 $5123 $5013 $5,394 Breakeven Power Cost $3,975 $4,740 $4,864 $4992 $5123 $5013 $5,394 Breakeven Pwr Cost ($/MWh)$66.72 $79.57 $81.65 $83.79 $8599 $8415 $90.55 Net Present Value (2006$000) D.Hittle &Associates,Inc.Page 3 of 4 DRAFT -5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charges ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES ($000) Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-4 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 1:Existing Tyee Surplus Only 2031 2032 2033 2034 59,574 59,574 59,574 59,574 2.0%2.0%2.0%2.0% 58,383 58,383 58,383 58,383 $260 $263 $266 $2.69 7.09 7.18 7.27 7.36 1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0% 54,880 54,880 54,880 54,880 $120.93 $123.95 $127.05 $130.23 2.5%2.5%2.5%2.5% $6,637 $6802 $6,973 $7,147 $6,637 $6,802 $6973 $7,147 $-$-$-$- 155 157 159 161 414 419 425 430 $569 $576 $583 $590 521 534 548 1,386 $521 $534 $548 $1,386 $1,101 $1,122 $1,144 $1,990 $5,535 $5680 $5,829 $5,156 $5,535 $5680 $5,829 $5,156 $92.92 $95.35 $97.84 $86.55 Page 4 of4 DRAFT -5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues '(PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. 2010 TABLE 5-5 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 2:Tyee Surplus with Cascade Creek 2011 2012 2013 2014 2015 2016 259,148 2.0% 253,965 2.00 5.46 6.0% 238,727 72.00 17,188 257,922 2.0% 252,764 $62.03 5.53 1.25% 6.0% 237,598 $73.80 2.5% $17,535 256,686 2.0% 251,552 $2.05 5.60 1.25% 6.0% 236,459 $75.65 2.5% $17,887 255,440 2.0% 250,331 $2.08 5.67 1.25% 6.0% 235,311 $77.54 2.5% 3 18,245 254,184 2.0% 249,100 $2.10 5.74 1.25% 6.0% 234,154 $79.47 2.5% $18,609 252,918 2.0% 247,860 $2.13 5.82 1.25% 6.0% 232,988 $81.46 2.5% $18,980 251,643 2.0% 246,610 $2.15 5.89 1.25% 6.0% 231,814 $83.50 2.5% $19,356 17,188 $17,535 $17,887 $18,245 $18,609 $18,980 $19,356 $846 PHFFFfHF2,258 14,930 14,930 57.61 184,024 $2,262 $15,625 $15,625 $60.87 Page 1 of4 $2,285 $15,961 $15,961 $62.48 $2,811 $15,798 $15,798 $62.15 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues XPENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. 2017 TABLE 5-5 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 2:Tyee Surplus with Cascade Creek 2018 2019 2020 2021 2022 2023 250,358 2.0% 245,351 $2.18 5.96 1.25% 6.0% 230,630 $85.59 2.5% $19,739 249,062 2.0% 244,081 $2.21 6.04 1.25% 6.0% 229,436 $87.73 2.5% $20,127 247,756 246,440 2.0%2.0% 242,801 241,514 $2.24 $2.26 6.11 6.19 1.25%1.25% 6.0%6.0% 228,233 227,021 $89.92 $92.17 2.5%2.5% $20,522 $20,924 245,113 2.0% 240,211 $2.29 6.27 1.25% 6.0% 225,798 $94.47 2.5% $21,331 243,775 2.0% 238,900 $2.32 6.34 1.25% 6.0% 224,566 3 96.83 2.5% $21,745 242,427 2.0% 237,578 $2.35 6.42 1.25% 6.0% 223,324 $99.25 2.5% $22,166 $19,739 $20,127 $20,522 $20,924 $21,331 $21,745 $22,166 $2,378 $17,361 $17,361 $69.34 $2,402 $17,726 $17,726 $71.17 $2,788 $2,450 $17,734 $18,474 $17,734 $18,474 $71.58 3 74.96 Page 2 of 4 $2,475 3 18,856 $18,856 $76.93 $2,501 $19,244 $19,244 $78.94 $2,527 3 19,639 $19,639 $81.01 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MVWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. .TABLE 5-5 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 2:Tyee Surplus with Cascade Creek 2024 2025 2026 2027 2028 2029 2030 241,068 239,698 238,317 236,925 2.0%2.0%2.0%2.0% 236,247 234,904 233,551 232,187 $238 $241 $244 $2.47 6.50 6.58 6.67 6.75 1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0% 222,072 220,810 219,538 218,255 $101.73 $104.28 $106.88 $109.56 2.5%2.5%2.5%2.5% $22,592 $23,025 $23,465 $23,911 235,522 2.0% 230,812 $2.50 6.83 1.25% 6.0% 216,963 $112.30 2.5% $24,364 234,108 2.0% 229,426 $2.53 6.92 1.25% 6.0% 215,660 $115.10 2.5% $24,823 232,682 2.0% 228,028 $2.56 7.01 1.25% 6.0% 214,347 $117.98 2.5% $25,289 $22,592 $23,025 $23,465 $23,911 $24,364 $24,823 $25,289 $3,197 $2,579 $2,605 $2,632 $19,395 $20,447 $20,860 $21,279 $19,395 $20,447 $20,860 $21,279 $8046 $8530 $87.53 $89.81 Page 3 of 4 $2,659 $21,705 $21,705 $92.16 $2,929 $21,894 $21,894 $93.52 $2,713 $22,576 $22,576 $97.02 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy at Border (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues KPENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other © Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-5 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 2:Tyee Surplus with Cascade Creek 2031 2032 2033 2034 231,245 229,796 228,336 226,864 2.0%2.0%2.0%2.0% 226,620 225,200 223,769 222,327 $260 $263 $266 $2.69 7.09 7.18 7.27 7.36 1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0% 213,023 211,688 210,343 208,987 $120.93 $123.95 $127.05 $130.23 2.5%2.5%2.5%2.5% $25,761 $26,239 $26,725 $27,216 $25,761 $26,239 $26,725 $27,216 600 604 608 611 1,608 1,617 1,627 1,637 $2,208 $2,222 $2,235 $2,248 521 534 548 1,386 $521 $534 $548 $1,386 $2,740 $2,768 $2,796 $3,648 $23,020 $23,471 $23,929 $23,568 $23,020 $23,471 $23,929 $23,568 $99.55 $102.14 $104.80 $103.88 Page 4 of4 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues KPENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-6 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2010 2011 2012 2013 2014 2015 2016 $ 473,613 2.0% 464,141 2.00 5.46 6.0% 436,292 72.00 31,413 472,387 2.0% 462,939 680,151 2.0% 666,548 678,905 2.0% 665,327 677,649 2.0% 664,096 $2.03 $2.05 5.53 5.60 1.25%1.25% 6.0%6.0% 435,163 626,555 $73.80 $75.65 2.9%2.5% $32,115 $47,396 $62.08 $2.10 5.67 9.74 1.25% 6.0% 625,407 624,250 $77.54 $79.47 2.5% $48,492 $49,612 1.25% 6.0% 2.5% 676,383 2.0% 662,855 $2.13 5.82 1.25% 6.0% 623,084 $81.46 2.5% $50,757 675,108 2.0% 661,606 $2.15 5.89 1.25% 6.0% 621,909 3 83.50 2.5% $51,928 31,413 $32,115 $47,396 $48,492 $49,612 $50,757 $51,928 fFFf#Ff&3,817 27,596 27,596 58.27 491,847 $3,817 $5,427 $28,298 $41,969 $28,298 $41,969 $59.90 $61.70 Page 1 of4 $5,490 $6,056 $43,002 $43,556 $43,002 $43,556 $63.34 $64.28 $5,616 $45,141 $45,141 $66.74 $5,681 $46,247 $46,247 $68.50 5/2/2006 TABLE 5-6 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2017 2018 2019 2020 2021 2022 2023 Surplus Energy Available (MWh)673,823 672,527 671,221 669,905 668,578 667,240 665,892 Losses to AK/BC Border (%)2.0%2.0%2.0%2.0%2.0%2.0%2.0% Energy Sales (MWh)660,347 659,076 657,797 656,507 655,206 653,895 652,574 Wheeling Charge ($/MWh) Alaska Grid $6 2.18 $2.21 $#224 $226 $229 $232 $2.35 CMP System ------- BC Hydro System 5.96 6.04 6.11 6.19 6.27 6.34 6.42 Charge Escalation 1.25%1.25%1.25%1.25%1.25%1.25%1.25% Losses in BC (%)6.0%6.0%6.0%6.0%6.0%6.0%6.0% Energy at BC/WA Border (MWh)620,726 619,532 618,329 617,116 615,894 614661 613,420 Price at BC/WA Border ($/MWh)$8559 $87.73 $8992 $92.17 $9447 $96.83 $99.25 Price Escalation 2.5%2.5%2.5%2.5%2.5%2.5%2.5% REVENUES ($000) Power Sales $53,125 $54,348 $55,599 $56,877 $58,184 $59,519 $60,884 Other ------ Total Revenues $53,125 $54,348 $55,599 $56,877 $58,184 $59519 $60,884 XPENSES ($000) Power Purchases $-$-$-$-$-$-$- Wheeling Expense Alaska 1,441 1,456 1,471 1,487 1,502 4,518 1,534 CMP System ------- BC Hydro System 3,937 3,978 4,020 4,062 4,105 4,148 4,191 Other ------- Subtotal $5,377 $5434 $5491 $5549 $5,607 $5666 $5,725 Transmission O&M Bradfield Intertie 369 378 750 397 407 418 428 Other ------- Subtotal $369 $378 $750 $397 $407 $418 $428 Other ------- Total Expenses $5,746 $5812 $6242 $5946 $6015 $6083 $6,153 NET REVENUES $47,379 $48,536 $49,357 $50,931 $52,169 $53435 $54,730 Breakeven Power Cost $47,379 $48,536 $49,357 $50,931 $52,169 $53,435 $54,730 Breakeven Pwr Cost ($/MWh)$7031 $72.17 $7353 $76.03 $78.03 $80.08 $82.19 Net Present Value (2006$000) D.Hittle &Associates,Inc.Page 2 of 4 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-6 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2024 2025 2026 2027 2028 2029 2030 664,533 2.0% 651,242 $2.38 6.50 1.25% 6.0% 612,168 $101.73 2.5% $62,278 663,163 2.0% 649,900 661,782 2.0% 648,546 $6 6241 $2.44 6.67 1.25% 6.0% 609,634 $106.88 2.5% 6.58 1.25% 6.0% 610,906 $104.28 2.5% $63,704 $65,160 660,390 2.0% 647,182 658,987 645,807 $2.47 $2.50 6.75 6.83 1.25% 6.0% 608,351 $109.56 2.5% 607,059 $112.30 $66,649 $68,170 2.0% 1.25% 6.0% 2.5% 657,573 2.0% 644,422 656,147 2.0% 643,024 $253 $2.56 7.01 1.25% 6.0%6.0% 605,756 604,443 $115.10 $117.98 2.5%2.5% 6.92 1.25% $69,724 $71,312 $62,278 1,550 4,235 $63,704 $65,160 3 66,649 $68,170 $69,724 $71,312 $5,785 1,083 $1,083 $6,868 $55,411 $55,411 $83.38 $6,295 $6,367 $57,409 $58,794 $57,409 $58,794 $86.57 $88.84 Page 3 of4 $6,513 $61,657 $61,657 $93.56 $6,831 $6,663 $62,893 $64,650 $62,893 $64,650 $95.64 $98.53 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-6 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2031 2032 2033 2034 654,710 2.0% 641,616 $2.60 7.09 1.25% 6.0% 603,119 653,261 651,801 2.0%2.0% 640,196 638,765 $263 $2.66 7.18 7.27 1.25%1.25% 6.0%6.0% 601,784 600,439 650,329 2.0% 637,322 $3 2.69 7.36 1.25% 6.0% 599,083 $120.93 $123.95 $127.05 $130.23 2.5% $72,935 2.5%2.5% $74,593 $76,287 2.5% $78,018 $72,935 $74,593 $76,287 $78,018 1,717 4,693 $6,410 1,386 $1,386 $6,739 $66,196 $66,196 $101.11 $.6,815 $6,893 $67,778 $3 69,394 $67,778 $69,394 $103.75 $106.46 Page 4 of 4 $7,796 $70,221 $70,221 $107.98 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. 2010 TABLE 5-7 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2011 2012 2013 2014 2015 2016 600,794 2.0% 588,778 6.0% 553,451 72.00 598,460 2.0% 586,491 $2.03 5.53 4.25% 6.0% 551,302 $73.80 2.5% $40,686 805,106 2.0% 789,004 802,730 2.0% 786,675 $2.05 $2.08 5.67 1.25% 6.0% 739,475 $77.54 2.5% 5.60 1.25% 6.0% 741,664 $75.65 2.5% $56,103 $57,336 800,333 2.0% 784,326 797,914 2.0% 781,955 $210 $2.13 5.74 5.82 1.25%1.25% 6.0%6.0% 737,266 735,038 $79.47 $81.46 2.5%2.5% $58,594 $59,877 795,474 2.0% 779,564 $2.15 5.89 1.25% 6.0% 732,791 $83.50 2.5% $61,186 $40,686 $56,103 $57,336 $58,594 $59,877 $61,186 FfFfFf&$ 4,747 35,101 35,101 58.42 580,222 $4,751 $35,935 $35,935 $60.05 $6,364 $6,430 $49,739 $50,906 $49,739 $50,906 $61.78 $63.42 Page 1 of4 $6,999 $6,563 $51,595 $53,315 $51,595 $53,315 $6447 $66.82 $6,630 $54,557 $54,557 $68.58 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other -Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-7 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2017 2018 2019 2020 2021 2022 2023 793,012 2.0% 177,152 790,528 2.0% 774,717 788,021 2.0% 772,261 $2.18 $2.21 $2.24 5.96 6.04 6.11 1.25%1.25%1.25% 6.0%6.0%6.0% 730,523 728,234 725,925 $85.59 $87.73 $89.92 2.5%2.5%2.5% $62,522 $63,884 $65,274 785,493 2.0% 769,783 $2.26 6.19 1.25% 6.0% 723,596 $92.17 2.5% $66,691 $68,136 $69,610 782,941 2.0% 767,282 $2.29 6.27 1.25% 6.0% 721,245 $94.47 2.5% 780,365 2.0% 764,758 777,767 2.0% 762,212 $232 $2.35 6.42 1.25% 6.0% 716,479 $99.25 2.5% 6.34 1.25% 6.0% 718,872 $96.83 2.5% $71,113 $62,522 $63,884 $65,274 $66,691 $68,136 $69,610 $71,113 $6,697 $6,766 $55,825 $57,119 $55,825 $57,119 $3 7040 $72.25 $7,197 $58,077 $58,077 $73.70 Page 2 of 4 $6,904 $59,787 $59,787 $76.11 $6,974 $61,162 $61,162 $78.12 $7,044 $7,115 $62,566 $63,998 $62,566 $63,998 $80.17 $82.28 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-7 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2024 2025 2026 2027 2028 2029 2030 775,145 2.0% 759,642 772,500 2.0% 757,050 $2.38 $2.41 6.50 6.58 1.25%1.25% 6.0%6.0% 714,064 711,627 $101.73 $104.28 2.5%2.5% $72,645 $74,207 769,830 2.0% 754,433 767,136 2.0% 751,794 764,418 2.0% 749,130 761,676 2.0% 746,443 $244 $247 $250 $2.53 6.67 6.75 6.83 6.92 1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0% 709,167 706,686 704,182 701,656 $106.88 $109.56 $112.30 $115.10 2.5%2.5%2.5%2.5% $75,799 $77,422 $79,076 $80,763 758,908 2.0% 743,730 $2.56 7.01 1.25% 6.0% 699,106 $117.98 2.5% $82,481 $72,645 $74,207 1,808 4,940 $75,799 $77,422 $79,076 $80,763 $82,481 $6,748 1,083 $1,083 $ $7,831 $7,258 $64,814 $66,948 $64,814 $66,948 $8362 $86.66 $7,331 $7,404 $7,478 $7,795 $68,468 $70,018 $71,599 $72,967 $68,468 $70,018 $71,599 $72,967 $88.94 $91.27 $93.66 $95.80 Page 3 of 4 5/2/2006 Surplus Energy Available (MWh) Losses to AK/BC Border (%) Energy Sales (MWh) Wheeling Charge ($/MWh) Alaska Grid CMP System BC Hydro System Charge Escalation Losses in BC (%) Energy at BC/(WA Border (MWh) Price at BC/WA Border ($/MWh) Price Escalation REVENUES ($000) Power Sales Other Total Revenues (PENSES ($000) Power Purchases Wheeling Expense Alaska CMP System BC Hydro System Other Subtotal Transmission O&M Bradfield Intertie Other Subtotal Other Total Expenses NET REVENUES Breakeven Power Cost Breakeven Pwr Cost ($/MWh) Net Present Value (2006$000) D.Hittle &Associates,Inc. TABLE 5-7 Southeast Alaska Energy Export Study Estimated Revenues and Expenses Case 3:All New PWK Hydro 2031 2032 2033 2034 756,116 753,298 750,455 747,586 2.0%2.0%2.0%2.0% 740,994 738,232 735,446 732,634 $260 $263 $266 $2.69 7.09 7.18 7.27 7.36 1.25%1.25%1.25%1.25% 6.0%6.0%6.0%6.0% 696,534 693,938 691,319 688,676 $120.93 $123.95 $127.05 $130.23 2.5%2.5%2.5%2.5% $84,232 $86,016 $87,833 $89,685 $84,232 $86,016 $87,833 $89,685 1,924 1,940 1,957 1,974 5,206 5,302 5,348 5,395 $7,180 $7,243 $7,306 $7,369 521 534 548 1,386 $521 $534 $548 $1,386 $7,702 $7,777 $7,854 $8,755 $76,530 $78,239 $79,980 $80,930 $76,530 $78,239 $79,980 $80,930 $101.21 $103.86 $106.58 $108.26 Page 4 of 4 5/2/2006 Section 6 Other Factors Federal Energy Regulatory Commission (FERC) The Federal Energy Regulatory Commission (FERC)has very little involvement with international power transactions but through the Federal Power Act has jurisdiction over interstate power transmission.If power were to be sold between Alaska and electric utilities in the US Pacific Northwest,FERC would require certain regulations related to interstate transmission be followed.Principal among these are open access transmission pursuant to FERC Order 888 and the filing of transmission rates.With the Bradfield Intertie and the proposed sale of power to utilities in other states,FERC could potentially seek jurisdiction over transmission within Alaska.Most likely,however,FERC would only be interested in transmission arrangements as they relate to Southeast Alaska and the Bradfield Intertie. In general,FERC would want to see information related to transmission access and sales and resales of transmission services in Southeast Alaska.Rates charged for transmission services would need to be filed and made available to other potential users of the transmission system. Certain exceptions in filing and open access requirements exist for transmission lines owned by government agencies and municipal utilities.It is not expected that FERC requirements imposed as a result of the Bradfield Intertie would be necessarily onerous.These requirements,however, could change certain exclusive transmission operating arrangements that may exist in Southeast Alaska by mandating open transmission access.It is important to note that the FERC involvement in transmission issues is different than FERC approval and monitoring of hydroelectric projects. The Columbia Treaty On January 17,1961,the "Treaty between the United States of America and Canada Relating to the Cooperative Development of the Water Resources of the Columbia River Basin”(the "Treaty”)was signed by the United States and Canada.The Treaty provides for regulation of the Canadian portion of the Columbia River to produce flood control,power and other incidental benefits to the United States as well as benefits in Canada.Pursuant to the terms of the Treaty, Canada is entitled to one-half the downstream power benefits resulting from the construction of water storage projects on the Columbia River in British Columbia.Canada's share of the downstream power benefits are provided as power deliveries at the Washington -Canada border. As part of this study,the possibility of potentially aiding in compliance with the terms of the Treaty by delivering power at the Alaska -Canada border was investigated.The Bonneville Power Administration and BC Hydro serve as the United States Entity and the Canadian Entity, respectively,in administering the provisions of the Treaty.According to representatives of the Bonneville Power Administration,it is not considered likely that the delivery points for the Canadian Entitlement power could be changed to the Alaska-Canada border without Energy Export Study 6-1 Final Report Other Factors modification of the Treaty.Such action would require significant effort and has not been evaluated further. Other Interconnection Alternatives During the course of this study we became aware of two alternative Southeast Alaska --BC transmission interconnection concepts.These include a transmission line between Ketchikan and Prince Rupert using high voltage direct current (HVDC)technology and a possible overland transmission route between the Swan Lake transmission line and a connection point on the BC Hydro grid near Hyder.Neither of these alternatives was evaluated as part of this Export Study however,it may be useful to consider them in subsequent studies. Kake -Petersburg Intertie Study 6-2 Final Report