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BPMC Meeting Dec 14, 2016
q:Ss BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE xo // First Second First,Second First ,Second Firgt Seco BPMC 12/14/16 a.+ 'te]O45FA[REY Ze |Fue?1£Li > AncoRollCallAgendaMinutesKeElectio AuditRollcallfromtoptobottomendingwithChair Yes No Yes No Yes No Yes No Yes No Homer Electric Association ”LS,J4.£. Matanuska Electric Association ra f oy 'Y4vvFPCityofSeward”AQ \Y / 4 Alaska Energy Authority ":'\0// Ww Municipal Light &Power YS \als J, Chugach Electric Association a // Golden Valley Electric Association WA a&*ee =a First Second First Second First Second First Second First Second Vv'>.a AST 1]|SF Battle Creek O&M FERC land fees Roll call from top to bottom ending with Chair Yes No Yes No Yes No Yes No Yes No Homer Electric Association WA Y Matanuska Electric Association Y WA City of Seward WA f Y Alaska Energy Authority S yA K 4 iMunicipalLight&Power Y V4 Chugach Electric Association WA / Golden Valley Electric Association "WA i Next Meeting: uk ho Arend7by1a. L mm-lyre (x p cred ct Bro _EMCOQKrcrrcrty,Pacutaypud Loguat aan hetrrcdo_-Slo Oe .(a ul dad te beled Baa)A gossizSeowgan)SeealZObeCory'we aa Bencfnae]Bina,"Toa Cory=Tony Aaerdie.7 Hinde'TH2)py SOW 'me !Pian [Lee Ball Eran 7 |be et 8 {uba” a faSa 'Golda Vallis GVEAE \=ha o MZA Mek 6%CuepSsee |Tw) os a Aes avi.(mic. .Wor?ww Ula Poti |(hayTL|\OX SN Cussnot thee.Esc _1%ita c HEA -emer Cite feo.toe in,AA'[AQ?AOODADADAga Toon He, ALKEua Suite.ArowyeAVAY Galaners gi Ke,(brave,ais 5)Femanaiaen,Aisha aePm Genta1%ciduchon 'afesr Buewds iilu ie ul,D)obliga. Bradley Lake Project Management Committee Wednesday,December 14,2016 @ 9:30 am. **PLEASE WRITE LEGIBLY** NAME ORGANIZATION CARY OLr/Swallirg I F890 cafes Nit FPlinv0)Chethiel po<BOE (Alte CIEEBuontyee|CEA. Da Ad feo WEAHereMeayorxTTZ2P=e MELAYWLL.Trolaston 7 2» ZB.4 Leary REY J Brian Biol Ceuis'T AewouEesab/tyr Ailey?YanK SiRsyp mre! Larry orgensen HEA de (ee Lica.Alaw reer [KEWTate.(Me &ACCT ECMeleephihedCLA Lt Toh.Fete SESowDVterGenACUPYTon!_loa W644 Turi Worbdiec,Melissa St Dens ACA Michel Laws,are Worn RE A eM eee Brawls Whu te BEA Jocelyn =Goamer ATTENDANCE -BPMC REGULAR MEETING,Dec 14,2016 @ 9:30 am COMMITTEE MEMBERS ALTERNATE A Cory Borgeson,Chair GVEA |Lynn Thompson)Ne Thibert,Vice Chair CEA Burke Wick Brad Janorschke HEA Bob Day y,Michael!Lamb,Secretary/Treasurer AEA Bryan Carey | /Tony Izzo |MEA Gary Kuhn oT J,Mark Johnston -|MLP Jeff Warner ; "John Foutz |SEW Jeff Estes . Public Members ||COUNSEL | Kirk Gibson,McDowell Rackner &Gibson PC MaryLynn Macsailka,Dept of Law Crystal Enkvist (APA)_ Mel Hutchinson (APA) Rich Baldwin (HEA) Anna Henderson (MLP) Alan Owens (HEA) Bernie Smith EA Z Moly biwichincon BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REGULAR MEETING AGENDA Wednesday,December 14,2016 Immediately following the IMC meeting @ 8:00 am Alaska Energy Authority's Board Room 813 West Northern Lights Boulevard,Anchorage,AK To participate,dial 1-888-585-9008 and use code 467 050 126. 1.CALL TO ORDER 2.ROLL CALL FOR COMMITTEE MEMBERS 3.PUBLIC ROLL CALL 4.PUBLIC COMMENTS 5.AGENDA APPROVAL 6.APPROVAL OF PRIOR MINUTES --Oct 19 and Oct BY,2016 7.NEW BUSINESS A.Election of officers B.FY16 Audit and Refund Swalling &Assoc C.Battle Creek project update AEA D.Notice for O &M agreement AEA E.FERC Federal Land Fees AEA 8.COMMITTEE REPORTS 9g.OPERATOR REPORT 10.COMMITTEE ASSIGNMENTS 11.MEMBERS COMMENTS 12.NEXT MEETING DATE -TBD 13.ADJOURNMENT Mr.Alan Fetters Project Manager,AEA November 16,2015 Page 4 SCENARIO 1 --ON-SITE CONSTRUCTION BY CONTRACTOR AND AEA 95%DESIGN COST SUMMARY ee Vocal CE /obo;Es 7 Oia) 01 -SITE WORK $165,445 $123,547 $288,992 02 -SUBSTRUCTURE $110,226 -$61,384 $171,610 03 -SUPERSTRUCTURE $17,200 $20,032 $37,232 04 -EXTERIOR CLOSURE $6,908 $4,856 $11,764 05 -ROOF SYSTEMS $9,860 $9,234 $19,094 06 -INTERIOR CONSTRUCTION $0 $0 $0 07 -CONVEYING SYSTEMS $0 $0 $0 08 -MECHANICAL $0 $0 $0 09 -ELECTRICAL $37,170 $43,973 $81,143 10 -EQUIPMENT $0 ;$0 $0 11 -SPECIAL CONSTRUCTION $2,250 $4,901 $7,151 SUBTOTAL:$349,059 $267,927 $616,986 12 -GENERAL REQUIREMENTS $600,703 SUBTOTAL:$1,217,689 13 -CONTINGENCIES $68,329 TOTAL ESTIMATED CONSTRUCTION COST (BID WINTER 2016):$1,286,018 COST PER SQUARE FOOT:$1,350.86 /SF GROSS FLOOR AREA:952 SF CRYSTAL3HENNE3 IIASA EEDAIVEMBEROHEROKEEAGUIKENUPATECORPDRATONELAWMVEOUECDMPANTES Bradley Lake Project Management Committee -Alaska Online Public Notices Page 1 of 1 Bradley Lake Project Management Committee ALASKA ENERGY AUTHORITY (AEA) Bradley Lake Project Management Committee Notice is hereby given that the Bradley Lake Project Management Committee will hold a regular meeting on Wednesday,December 14,2016 immediately following the Intertie Management Committee meeting.Estimated start time is at 10:00 a.m.For additional information contact Teri Webster at 907-771-3074. This meeting will be conducted by electronic media pursuant to AS 44.62.310 at the following location: Alaska Energy Authority Board Conference Room,813 West Northern Lights Boulevard,Anchorage,Alaska; A teleconference line has been set up for those unable to attend in person.Dial 1-888-585-9008,Enter Code 467-050-126#. The public is invited to attend.The State of Alaska (AEA)complies with Title Il of the Americans with Disabilities Act of 1990.Disabled persons requiring special modifications to participate should contact AEA staff at 907- 771-3074 to make arrangements. Attachments,History,Details Attachments Details None Department:Commerce,Community andEconomicDevelopment Revision History Category:Public Notices Created 12/6/2016 11:20:34 AM by jstacruz Sub-Category:Modified 12/6/2016 2:42:36 PM by jstacruz Location(s):Statewide Project/Regulation #: Publish Date:12/6/2016 Archive Date:12/15/2016 Events/Deadlines: https://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=183821 12/8/2016 Mr.Alan Fetters Project Manager,AEA November 16,2015 Page 14 As this Scenario requires all work to be bid at the same time,the schedule requirement for site work is no longer applicable to the bid.The construction and fit out of the module would dictate schedule,and would still require an NTP for construction in time to meet the 9 month minimum for construction and fit out of the module,prior to the fall barge.NOTE:TO MEET THE CURRENT KIPNUK PROJECT SCHEDULE FOR COMPLETION BY JUNE 2017,PROCUREMENT OF THE MODULE AND MANY OF THE FIT OUT ITEMS THAT REQUIRE LONG LEAD HAVE ALREADY BEEN AUTHORIZED AND,NECESSARILY,WILL NOW BE OWNER FURNISHED IN THIS SCENARIO WHEN SPECIFICALLY CONSIDERING KIPNUK. SUMMARY: Scenario 1 allows for a flexible design,design schedule and construction method;however,it takes considerably \nore administration (throughout design,bidding and construction)and oversite in regards to AEA directed work.This Scenario/seems to allow for the shortest overall project schedule (begindesign through completion of Construction),and is shown to have the cheapest construction coSts by a large margin. Scenario 2 also gives flexibility for design schedule/but not the flexibility for design or construction method.This Scenario would fake less administration through design,bidding and construction, although design costs would likely be slightly higher,and Construction Administration(inspections,etc.)would likely ga up.Overall,the drop in administration and oversight wouldprovideapositiveoffsettotheincréaseindesignandConstructionAdministration(approximately10%overall reduction in design and CA costs from Scenario 1).The project schedule may beslightlylongerthanScenario1dueto'\increased design,but not a significant difference. Overall costs for Scenario 2 -Design'+GA +Construction -estimated to be +/-20%higher than Scenario 1. Scenario 3 does not allow for Rexibiity of design,or design schedule,or construction method.Like Scenario 2,this Scena lo would take Ness administration through design,bidding andconstruction,although d gign costs would\likely be slightly higher,and Construction Administration (inspections,etc.)would likely gQ\up.This Scenario would only require one bidpackageandonebidprocess.Overall,the dropih administration and oversight would provide apositiveoffsettothencreaseindesignandConstructionAdministration(approximately 15%overall reduction indesign and CA costs from Scenario 1).The overall project schedule would increase by aVa as the design would have to be started sooner than the other scenarios.Overall costs for Scenario 3 -Design +CA +Construction -estimated to be +/-23%higher thanee+/-3%higher than Scenario 2.UCONCLUSIONS: onstruction and delivery of RPSU projects.The only down side,to this method is a greater level of administrative involvement by AEA and/or its contracted \engineers.This increase in administration is more than compensated for in overall cost savings and project flexibility. Pe current construction method -Scenario 1 -provides a substantially cheaper method forCc STI YSN D 9 CSTD 3AIMEMBEREOraHUKPEAGVIKNUPIALEORPORATIONEUAMILYEOECMEAN]ES! Bradley Lake Operator Report BPMC December 14,2016 Unit Statistics:12/09/2016 Generation Unit 1 (MWhrs)Unit 2 (MWhrs)Total (MWhrs) November 2016 22,528.5 15,726.5 38,255 Hydraulics Avg.Lake Level (ft)Usage (ac ft)Fishwater (ac ft) November 2016 1,166 37,900 778 Lake Level -1,158.8' Operations,Maintenance,and Inspections: 1)Unit #2 Nozzle Oil Seals -Unit #2 nozzle seal oil leakage has not changed since first discovered following the island event in July of 2016.Oil leakage accumulation typically ranges from 2 to 16 ounces per day depending on nozzle range of cycle. As previously demonstrated to the O&D Committee,nozzles #3 and #4 leaked the majority of the total leakage when tested last month (refer to the chart below).As a precaution HEA is sending out a request for updated labor rates and proposals from various contractors in the event the Committee decides to conduct further investigation into the condition of the oil seals during the tie-line outage in March of 2017.The formal RFP will be sent out this week with a duedateofJanuary17". HEA will continue to monitor oil leakage over the next few months and will report any changes to the Committee.It might prove prudent to dismantle nozzles #3 and #4 to evaluate the direct cause of the leakage when the unit is not required for 45 days during the Spring tie-line outage.Emergency repairs at a later date may prove to be more costly if lake levels are high and high water usage is required. Test #1-Oil leakage when each nozzle was tested individually --85%for 8 hours. #1 #2 #3 #4 #5 #6 No oil 2 OZ.6 Oz.5.5 Oz.2.5 OZ..25 OZ. Test #2-Oil leakage when tested together -85%for 8 hours. #1 #2 #3 #4 #5 #6 No oil 1-tbs.2 02.2.5 O72..25 O2..5 02. The unit is not currently de-rated as oil drain leakage has been sustainable.CEA dispatch has been provided the following guidelines to minimize nozzle oil pressures and nozzle transitions. 1.The unit is not derated and can dispatched to full load during system emergency conditions. 2.Donot use Unit #2 for AGC control. Bradley Lake Operator Report Page 1 3.To the extent possible park the unit within one of the following three load ranges. 16 MW or less (this automatically places two nozzles in service} 20-32 MW (this utilizes 4 nozzles in service) 40-48 MW -should only be used when economically required,will place 6 nozzles in service. Spare O-rings and seals are on site if nozzle oil seal leakage increases to the point that repairs are required.HEA is communicating with Fuji reps and the repair contractor as the exact cause of the oil leak has not been determined.The cause may not be determined until an internal inspection and evaluation is completed. An outage of approximately 2 weeks will be required to dismantle,evaluate,and replace the seals in two nozzles.The current plan is to monitor oil leakage and attempt to delay repairs (if needed)until the tentatively scheduled tie line outage in March of 2017. The spare nozzle is currently connected to the hydraulic test skid and has been pressurized for 5 days.No oil leak has been noted yet.Testing will continue through December. 2)Unit #2 Accusonic flow meter update -The water flow meter is demonstrating errors on channels 6 and 7 of the flow meter (channels for Unit #2}.The wiring and transducers were checked and no problem was located.HEA replaced the control card in channel #6 and the failure did not reoccur on that channel.As only had one spare card was in stock,additional cards have been ordered from the factory.There is an 8-10 week lead time,which places delivery in mid January.Water flow calculations are being manually verified until the new cards arrive. 3)Fishwater automation -A formal RFP will be completed this month for issue in January.Due to the various work scopes within the RFP,(I/O hardware,radio links,and software programming},it is yet to be determined if one contractor can provide both the hardware and the Emerson DCS software programming. Various entities noted that EPS performed similar work for Kodiak Electric on a stand-alone system not associated with a DCS.The RPF will go out to EPS and Emerson to determine the capability of each contractor. 4)Invasive plants at Bradley Lake Project -Homer Soil and Water Conservation have conducted ongoing plant evaluations over the past several years.Several areas of invasive plants have been located around the original project construction laydown yard.There is some concern between local and state agencies that equipment traveling between the Barge Dock and Battle Creek may spread the invasive seeds.Negotiation with the various state and local agencies is ongoing to formulate a clean-up effort that may be conducted in the Spring of 2017,prior to any Battle Creek work. Bradley Lake Operator Report Page 2 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT FY 2017 1st QUARTER REPORT REVENUES,EXPENSES &CHANGES IN SURPLUS REVENUES UTILITY CONTRIBUTIONS UTILITY CONTRIBUTIONS-Battle Creek INTEREST INCOME EXPENSES OPERATIONS RENEWAU/REPLACE (R&C REPAYMENTS) R&C INTEREST APPLIED AS REPMT NON R&C CAPITAL PURCHASES-See A1NONR&C CAPITAL PURCHASES-Battle Creek TRANSFER TO OPERATING RESERVE DEBT SERVICE (net of Capital Reserve Reduction) TRANSFER TO ARBITRAGE CURRENT YEAR SURPLUS(DEFICIT) PRIOR YEAR SURPLUS (DEFICIT) BEGINNING SURPLUS (DEFICIT) COMMITTED CY EXP &DEBT SVC ENDING SURPLUS (DEFICIT) BALANCE SHEET ASSETS REVENUE FUND OPERATING FUND DUE FROM R&C RECEIVABLE PREPAID LIABILITIES &SURPLUS CURRENT LIABILITIES DUE TO R&C COMMITTED CY EXP &DEBT SVC PAYABLE TO UTILITIES O&M PAYABLE TO UTILITIES R&C OTHER INFORMATION OPERATING RESERVE MONTHLY CONTRIBUTIONS FY2016 FY2017 FY2017 ACTUALS AMENDED ACTUALS BUDGET 17,828,513 19,543,371 4,885,842 -800,000 - 1,930,547 1,755,000 1,091,301 19,759,060 22,098,371 5,977,143 4,273,633 5,154,110 991,210 2,405,630 3,262,783 815,697 287,081 -199,733 26,444 250,000 - -800,000 - (9,747)(85,531)(85,531) 12,494,600 12,426,200 - 281,419 290,809 334,404 19,759,060 22,098,371 2,255,513 --3,721,630 --(3,721,630) 385,309 -4,490,380 1,403,738 -1,186,743 1,055,961 -1,055,961 85,194 -542,809 2,930,202 ;7,275,893 809,828 -1,433,889 --3,721,630 1,064,413 -1,064,413 1,055,961 -1,055,961 2,930,202 -7,275,893 1,116,353 1,030,822 1,030,822 1,654,119 1,628,614 1,628,614 1of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE HYDROELECTRIC PROJECT Schedule A-1 FY16 FY16 FY17 FY17HANOTFUNDEDBYR&C FUNCAPITALPURCHASESNOTFU&C FUND BUDGET |ACTUALS |BUDGET |ACTUALS'ee me Replace Fish Water Valve Actuators -26,444 250,000 - Weather Stations 15,000 --- DCS Security Interface for Data Access :--- Lube Oil Purification System ---- Replace 1998 Chevrolet Crew Cab Vehicle ---- Replace 1990 Ford Single Cab Vehicle ---- Total Non R&C Capital Purchases paid for by ail utilities 15,000 26,444 250,000 - [Battle Creek Diversion t -|-|800,000]-| Total Non R&C Capital Purchases paid for by HEA,CEA,GVEA,MEA,Seward --800,000 - Total Non R&C Capital Purchases 15,000 26,444 -1,050,000 - 2 of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2016 THROUGH 09/30/2016 FY 17 FY 16 BUDGET % FY17 Approved 07/01/2016 -(Over)Under FY16 Approved Budget 09/30/2016 HEA Actual CEA Actual AEA Actual Total Actual |Budget to Date Budget FY16 Actual y by expense type ; Labor &Benefits 2,005,079 334,183 368,290 31,757 +400,047 (65,864)2,143,222 1,738,336 Travel 132,950 22,158 5,973 -.5,973 16,185 98,600 13,796 Training 49,300 8,217 :-::8,217 38,731 10,819Contractual1,217,518 202,921 188,962 2,969 62,484 254,414 (51,493)1,180,759 813,606 lies &Materials 229,358 38,226 10,881 2,181 :13,062 25,164 275,760 97,508 Other Costs 381,644 63,607 8,924 7,465 78,144 94,533 (30,926)451,846 375,357 Equipment,Furniture and Machinery 11,500 1,917 850 ::850 1,067 33,130 6,051 Maintenance Projects -----7 -37,900 1,900 Administrative Costs 1,126,761 187,794 13,052 -209,279 222,331 (34,537)1,321,817 1,216,2615,154,110 859,023 596,932 44,372 349,907 991,210 (132,187)5,581,765 4,273,634 FERC 535 -Operation Supervision &Engineering Operations Sup/Eng Bradley Lake Operating Labor &Benefits 299,649 49,942 71,050 --71,050 (21,108)304,235 321,664Travel10,450 1,742 5,395 -:5,395 (3,653)9,500 9,281 Training 9,300 1,550 -->-1,550 7,904 2,080 Contractual 1,400 233 ::::233 1,445 - Supplies &Materials 4,100 683 ----683 6,203 346 Bradley Lake Operating Total 324,899 $4,150 76,445 -:76,445 (22,295)329,287 333,371 FERC 535 -Operation Supervision &Engineering Total 324,899 54,150 76,445 --76,445 (22,295)329,287 333,371 FERC 537 -Hydraulic Expenses Hydraulic Expenses Bradley Lake Operating Labor &Benefits 92,745 18,458 14,789 -:14,789 669 95,273 81,677 Contractual 4,000 667 4,993 :E 4,993 (4,326)17,180 - Supplies &Materials 2,900 483 179 ::179 304 2,608 1,277 Bradley Lake Operating Total 99,645 16,608 19,961 --19,961 (3,353)115,061 82,954 FERC 537 -Hydraulic Expenses Total 99,645 16,608 19,961 --19,961 (3,353)115,061 82,954 FERC 538 -Electric Expenses Electric Expenses Bradley Lake Operating Labor &Benefits 242,940 40,490 44,799 :-44,799 (4,309)257,107 215,439 Travel 7,000 1,167 578 -:$78 $89 -- Training 25,000 4,167 ::-:4,167 30,827 8,739 Contractual 2,000 333 1,400 :-1,400 (1,067)3,342 1,400 Supplies &Materials 8,500 1,417 496 -:496 921 12,232 6,241 Bradley Lake Operating Total 285,440 47,574 47,274 -E 47,274 300 303,508 231,820 FERC 538 -Electric Expenses Total 285,440 47,574 47,274 :-47,274 300 303,508 231,820 FERC 539 -Misc.Hydraulic Power Generation Expenses Misc Hydro Power Exp Bradley Lake Operating Labor &Benefits 178,991 29,832 37,560 :-37,560 (7,728)189,473 158,532 Training 15,000 2,500 ----2,500 -a Contractual 297,048 49,508 44,758 ::44,758 4,750 315,249 285,812 Supplies &Materials 17,900 2,983 2,159 :-2,159 824 22,000 19,041 Bradley Lake Operating Total 508,939 84,823 84,477 :-84,477 346 526,722 463,385 BRADLEY CIRCUITS/RADIO TO BERNICE LK Other Costs 35,695 5,949 8,924 ->8,924 {2,975)30,000 31,059 BRADLEY CIRCUITS/RADIO TO BERNICE LK Total 35,695 5,949 8,924 +-8,924 (2,975)30,000 31,059 BRADLEY CIRCUITS BERNICE LK TO ANCH Other Costs 29,773 4,962 +7,385 :7,385 (2,423)28,746 29,864 BRADLEY CIRCUITS BERNICE LK TO ANCH Total 29,773 4,962 -7,385 -7,385 (2,423)28,746 29,864 FERC 539 -Misc.Hydraulic Power i Total 574,407 95,734 93,401 7,385 :100,785 (5,051)$85,468 524,308 FERC 540 -Rents FERC Land Use Fee Bradley Lake Operating Other Costs 312,176 52,029 ::78,044 78,044 (26,015)183,000 279,876 Bradley Lake Operating Total 312,176 52,029 --78,044 78,044 {26,015}183,000 279,876 FERC 540 -Rents Total 312,176 52,029 ::78,044 78,044 (26,015)183,000 279,876 FERC 541 -Maintenance Supervision &Engineering Maint Supervision/Eng Bradley Lake Operating labor &Benefits 224,283 37,381 49,913 -:49,913 (12,532)222,118 239,299 Bradley Lake Operating Total 224,283 37,381 49,913 --49,913 (12,532)222,118 239,299 FERC 541 -Maintenance Supervision &Engineering Total 224,283 37,381 49,913 -:49,913 (12,532)222,118 239,299 3 of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2016 THROUGH 09/30/2016 FY 17 FY 16 BUDGET % FY17 Approved 07/01/2016 -(Over)Under FY16 Approved Budget 09/30/2016 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY16 Actual FERC 542 -Maintenance of Structures Maintenance of Structures Bradley Lake Operating Labor &Benefits 92,746 15,458 14,711 >-14,711 747 95,273 89,890 Contractual 10,000 1,667 -:a -1,667 -- Supplies &Materials $3,713 8,952 87 -:87 8,865 61,273 23,398 Equipment,Furniture and Machinery 11,$00 1,917 850 --850 1,067 11,500 6,051 Maintenance Projects :::-:-:4,000 1,827 Bradley Lake Operating Total 167,959 27,994 18,648 -:15,648 12,346 172,046 121,166 FERC $42 -Maintenance of Structures Total 167,959 27,994 15,648 --15,648 12,346 172,046 121,166 FERC 543 -Maintenance of Reservoirs,Dams &Waterways Maint Res,Dams,WWays Bradley Lake Operating Labor &Benefits 50,409 8,402 49,259 --49,259 (40,857)$1,276 42,849 Contractual 5,200 867 58,200 -:58,200 (57,333)$,200 9,080 Bradley Lake Operating Total $5,609 9,269 107,459 :*107,459 (98,190)56,476 $1,929 BRADLEY NUKA REPAIR Contractual 15,000 2,500 -:--2,500 .. Equipment,Furniture and Machinery ::-::*-21,630 - BRADLEY NUKA REPAIR Total 15,000 2,500 7 :--2,500 21,630 - BRADLEY POWER TUNNEL MAINT (Dam) Contractual 15,000 2,500 ::--2,500 20,000 3,673 BRADLEY POWER TUNNEL MAINT (Dam)Total 15,000 2,500 --:-2,500 20,000 3,673 BRADLEY POWER TUNNEL DRAIN CLN/INSP (P/House) Supplies &Materials -:x -:::-1,557 Maintenance Projects -:-:>.-9,000 - BRADLEY POWER TUNNEL DRAIN CLN/INSP (P/House)Tota ::>*>-:9,000 1,557 FERC 543 -Maintenance of Reservoirs,Dams &Waterways To!85,609 14,269 107,459 --107,459 (93,190)107,106 57,158 FERC 544 -Maintenance of Electric Plant Maintenance of Elec Plant Bradley Lake Operating Labor &Benefits 370,983 61,831 $8,032 ::58,032 3,799 381,093 336,417 Travel 4,500 750 ++:-750 3,500 3,270 Contractual 79,000 13,167 5,422 -:$422 7,745 91,443 69,651 Supplies &Materials 27,245 4,541 3,642 --3,642 899 27,245 10,142 Bradley Lake Operating Total 481,728 80,289 67,096 -:67,096 13,193 503,281 419,480 FERC 544 -Maintenance of Electric Plant Total 481,728 80,289 67,096 *:67,096 13,193 $03,281 419,480 FERC 545 -Maintenance of Misc.Hydraulic Plant Maint of Misc Hydr Piant Bradley Lake Operating Labor &Benefits 92,746 15,458 15,002 -:15,002 456 95,273 94,654 Contractual 3,900 650 -:.-650 3,900 - Supplies &Materials 43,000 7,167 3,082 -E 3,082 4,085 43,000 28,044 Bradley Lake Operating Total 139,646 23,275 18,084 -*18,084 5,191 142,173 122,697 BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Contractual 20,000 3,333 -:-:3,333 -. Maintenance Projects ::---=:24,900 : BRADLEY FISH WATER DSGN/MIDDLE FORK SHACK IMPR Ta 20,000 3,333 :--:3,333 24,900 - FERC 545 -Maintenance of Misc.Hydraulic Plant Total 159,646 26,608 18,084 --18,084 8,524 167,073 122,697 FERC 556 -System Control &Load Dispatching System Cntt &Load Disp Bradley Lake Operating Labor &Benefits 49,502 8,250 13,173 ::13,173 (4,923)49,000 10,479 Contractual 60,500 10,083 1,113 --1,113 8,970 8,500 31 Supplies &Materials 6,000 1,000 1,236 .-1,236 (236)6,199 4,090 Bradley Lake Operating Total 116,002 19,333 15,523 --15,523 3,810 63,699 14,599 BRADLEY POWERHOUSE PC'S Contractual -------50,000 37,261 BRADLEY POWERHOUSE PC'S Total :---:a :$0,000 37,261 Snow Measurement Bradley Lake Operating Contractuat 10,000 1,667 ::2,500 2,500 (833)10,000 10,000 Bradley Lake Operating Total 10,000 1,667 :-2,500 2,500 (833)10,000 10,000 Seismic Service Bradley Lake Operating Contractual 60,370 10,062 -:20,693 20,693 (10,631)62,000 60,370 Bradley Lake Operating Total 60,370 10,062 --20,693 20,693 (10,631)62,000 60,370 Streamguaging Serv Bradley Lake Operating Contractuat 310,000 $1,667 ::39,291 39,291 12,376 296,000 301,338 Bradley Lake Operating Total 310,000 51,667 --39,291 39,291 12,376 296,000 301,338 4of7 ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2016 THROUGH 09/30/2016 FY 17 FY 16 BUDGET % FY17 Approved 07/01/2016 -(Over)Under FY16 Approved Budget 09/30/2016 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY16 Actual Permits Bradley Lake Operating Contractual 100 17 ::--17 -- Other Costs :::-100 100 {100}100 350 Bradley Lake Operating Total 100 17 ::100 100 {83)100 350 FERC 556 -System Control &Load Dispatching Total 496,472 82,746 15,523 :62,584 78,107 4,639 481,799 423,918 FERC S62 -Station Expenses Station Expenses Bradley Lake Operating Labor &Benefits 130,414 21,736 -31,757 :31,757 (10,021)251,852 147,344 Travel 6,000 1,000 :::-1,000 26,000 (31)}} Contractual 4,000 667 id 2,969 -2,969 (2,302)6,500 1,244 Supplies &Materials 16,000 2,667 -2,181 +2,181 486 95,000 2,118 Other Costs 4,000 667 >80 -80 587 :9,208 Maintenance Projects -bd ==id ---73 Bradley Lake Operating Total 160,414 26,737 -36,987 -36,987 (10,250)379,352 159,956 FERC $62 -Station Expenses Total 160,414 26,737 -36,987 -36,987 (10,250)379,352 159,956 FERC 571 -Maintenance of Overhead Lines Maint of OH Lines Bradiey Lake Operating Labor &Benefits 179,672 29,945 °-::29,945 146,320 94 Travel 95,000 15,833 -:-:15,833 54,600 1,276 Contractual 50,000 8,333 ::-:8,333 90,000 33,746 Supplies &Materials $0,000 8,333 ::--8,333 -1,255 Bradley Lake Operating Total 374,671 62,444 :.:-62,444 290,920 36,371 BRADLEY JUNCTION SWITCH REMOVAL Travel 5,000 833 ---5 833 -. Contractual 70,000 11,667 73,076 -bd 73,076 (61,409)>- Other Costs -=i =-::210,000 25,000 BRADLEY JUNCTION SWITCH REMOVAL Total 75,000 12,500 73,076 --73,076 (60,576)210,000 25,000 BRADLEY MARKER BALL REPLACEMENT Labor &Benefits ::x ::-*4,929 - Travel 5,000 833 x :::833 5,000 - Contractual 200,000 33,333 ----33,333 200,000 + BRADLEY MARKER BALL REPLACEMENT Total 205,000 34,166 -:--34,166 209,929 - FERC 571 -Maintenance of Overhead Lines Total 654,671 109,110 73,076 -°73,076 36,034 710,849 61,371 FERC 920 -Administrative Expense AEA Bradley Fixed Admin Fees Bradley Lake Operating Administrative Costs 200,000 33,333 --$0,000 50,000 (16,667)200,000 200,000 Bradley Lake Operating Total 200,000 33,333 --50,000 50,000 (16,667)200,000 200,000 Operating Committee Exp-Audit Bradley Lake Operating Administrative Costs 16,494 2,749 ----2,749 116,250 101,530 Bradley Lake Operating Total 16,494 2,749 :--:2,749 116,250 101,530 Operating Committee Exp-Legat Bradley Lake Operating Administrative Costs 25,000 4,167 --3,811 3,811 356 25,000 77,719 Bradley Lake Operating Total 25,000 4,167 .-3,811 3,811 356 25,000 77,719 Operat Committee Exp-Arbitrage Bradley Lake Operating Administrative Costs 3,630 605 ->--605 3,630 7,010 Bradley Lake Operating Total 3,630 605 ----605 3,630 7,010 Trust &Account Fees Bradley Lake Operating Administrative Costs 12,000 2,000 ::$,959 §,959 (3,959)12,300 11,918 Bradley Lake Operating Total 12,000 2,000 -:5,959 5,959 (3,959)12,300 11,918 Bradley-Financing Evaluation Bradley Lake Operating Administrative Costs ::::::::8,375 Bradley Lake Operating Total ::°*::--8,375 FERC 920 -Administrative Expense Totat 257,124 42,854 .°59,770 $9,770 (16,916)357,180 406,552 FERC 924 &925 -Insurance Premiums Insurance Premiums Bradley Lake Operating Administrative Costs 564,637 94,106 13,052 :130,820 143,872 (49,766)574,637 530,522 Bradley Lake Operating Total $64,637 94,106 13,052 7 130,820 143,872 (49,766)574,637 530,522 FERC 924 &925 -Insurance Premiums Total 564,637 94,106 13,052 .130,820 143,872 (49,766)$74,637 530,522 Sof? ALASKA ENERGY AUTHORITY BRADLEY LAKE OPERATIONS &MAINTENANCE SCHEDULE B BUDGET TO ACTUAL EXPENSES FOR THE PERIOD 07/01/2016 THROUGH 09/30/2016 FY 17 FY 16 BUDGET % FY17 Approved 07/01/2016 -(Over)Under FY16 Approved Budget 09/30/2016 HEA Actual CEA Actual AEA Actual Total Actual Budget to Date Budget FY16 Actual FERC 928 -latory C FERC Admin Fees Bradley Lake Operating Administrative Costs 180,000 30,000 :---30,000 210,000 182,885 Bradley Lake Operating Total 180,000 30,000 :-E -30,000 210,000 182,885 FERC Related Prof Services BRADLEY FERC PART 12 INSPECTION Administrative Costs 25,000 4,167 ->:-4,167 55,000 35,663 BRADLEY FERC PART 12 INSPECTION Total 25,000 4,167 :E E :4,167 55,000 35,663 BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES Administrative Costs 100,000 16,667 ::18,689 18,689 (2,022)125,000 60,638 BRADLEY CONTRACTUAL ENGINEER-FERC LICENSE ISSUES T!100,000 16,667 --18,689 18,689 (2,022)125,000 60,638 FERC 928 -Regulatory C ion Exp Total 305,000 50,834 ::18,689 18,689 32,145 390,000 279,187 Tota!Bradley Lake Budget 5,154,110 859,023 596,932 44,372 349,907 991,210 (132,187)5,581,765 4,273,634 6of7 BRADLEY LAKE R&C FUND DISBURSEMENTS AND REPAYMENTS SCHEDULE 0 Actual Actual Actual Actual Budget FY16 TO REPAY @ 9/30/16 TO REPAY FY17 Description Expense 6/30/2016 Expense 6/30/2017 [R&C FUND PROJECTS Govemor 0.00 4,052,070.14 0.00 4,052,070.14 0.00 Replace RFLS 0.00 251,092.69 0.00 251,092.69 0.00 Replace Runners 0.00 1,946,732.79 0.00 1,946 732.79 0,00 Replace cable from dam to power house 0.00 2,321,922.94 0.00 2,321,922.94 0.00 Replace power system stabilizer 0.00 619,205.10 0.00 619,205.10 0.00 Replace two RTUs 0.00 86,905.27 0.00 86,905.27 0.00 Culvert Repairs 0.00 675,966.79 0.00 675,966.79 0.00 Tower Repair for Jack Frost Heaves 0.00 887,596.62 0.00 887,596.62 0.00 Replace Plant and SCADA Controls 0.00 1,344,683.05 0.00 1,344,683.05 0.00 Vibration Monitoring System 0.00 490.00 0.00 490.00 0.00 Fire Alarm System Replacement 0,00 0.00 0.00 0.00 350,000.00 Battle Creek Diversion 149,683.91 1,144,017.74 1,000.00 1,145,017.74 0.00 Bradley Replace Electro-Mechanical Relays 0.00 1,277,197.06 0.00 1,277,197.06 0.00 Fishwater Screen Debris Removal 290,306.98 312,236.43 9.00 312,236.43 0.00 Turbine Nozzel Repair 1,320,234.57 1,416 658.06 6,201.06 1,422,859.12 0.00 SVC replacement Daves Creek |Soldotna 1,570,577.34 1,570,577.34 2,131,731.02 3,702,308.36 §,665,583.97 3,330,802.80 |17,907,352.02 2,138,932.08 |20,046,284.10 6,015,583.97 Current Year R&C Repayment (3,461,591.16 (815,697.00 Adjust to balance to $5million 0.00 0.00 Interest in Fund Applied to Repayment (287,080.93)(199,733.29) Net Transfer from Revenue Fund (3,748,672.09 (1,015,430.29)| Cumulative Prior Years R&C Repayments (12,716,539.31 (15,409,249.92 Due Back to Utilities 1,055,961.48 (585,159.63) Adjust Due to R&C Actual 0.00 0.00 (11,660,577.83 (15,994,409.55 NET DUE TO R&C FUND 2,498,102.10 3,036,444,26 R&C FUND CASH FLOW PROJECTION Beginning Investment Balance 3,212,607.32 §,623,509.49 Disbursements-current year -Accrual (1,265,152.32 0.00 Disbursements-prior year accrued (22,899.86){1,575,973.49)} Utilities'R&C Repayment (20,211.52)0.00 Net other cash inflow(outflow)(29,506.22)0.00 Current year interest earnings 287,080.93 199,733.29 Participants Contributions to R&C Fund 3,461,591.16 815,697.00 Ending Investment Balance §.623,509.49 §,062.966.29 Accrued Due to Utilities (1,055,961.11)(470,801.48) Accrued Due from Revenue fund (debt services transfer) R&C payable back to the revenue fund Accrued R&C vendor Payable at Year End (2,065 650.48)(2,628 609.07) PROJECTED NET DUE +ENDING INVESTMENT BALANCE §,000.000.00 5,000,000.00 REPAYMENT AMOUNT $756,665.11 x 25%all 4 years $1,455,830.05 x 25%all 4 years $1,401,948.53 x 25%all 4 years 4th yr 350,487.13 $1,834,499,.92 x 25%yr 1 |25%yr 2|50%yr 3 final yr 917,249.96 $789,697.09 x 25%yr 1|75%yr 2 final yr §92,272.82 $3,330,802.80 x 25%yr 1 |32%yr 2 |25%yr 3 |18%yr 4 1st yr 832,700.70 |2nd yr 1,065,856.90 1,758,886.75 $2,138,932.08 x 25%all 4 years 1st yr §34,733.02 1,503,895.99 2.692.710.61 1,600.589.92 3,.262,782.74 H:\Accounting\AEA FY17 FS Shared Files\Bradley Lake\FY17 Qtr 1.xIsx Jot? end Subject:FW:Update on FERC Land Fees From:Bjorkquist,Brian D (LAW)[mailto:brian.bjorkquist @alaska.gov]Sent:Monday,December 12,2016 10:24 AMTo:Teri Webster <twebster@aidea.org>;Bryan Carey <bcarey@aidea.org>;Wick,Burke <burke_wick@chugachelectric.com>;Owens,Connie <connie_owens@chugachelectric.com>;Cory Borgeson<cborgeson@gvea.com>;Dawn M.Baham <Dawn.Baham@mea.coop>;Day,Bob <bday@homerelectric.com>;Gary Kuhn <gary.kuhn@mea.coop>;Heather Smith <hsmith@homerelectric.com>;Janorschke,Brad <bjanorschke@homerelectric.com>;Jeff Estes <jestes@cityofseward.net>;Jeff Warner <Warnerja@muni.org>;Foutz,John <jfoutz@cityofseward.net>;KirkGibson<Kirk@mcd-law.com>;Thibert,Lee <lee_thibert@chugachelectric.com>;Davidovics,Linda , <davidovicslr@muni.org>;Lynn Thompson (Inthompson@gvea.com)<Inthompson@gvea.com>;MarkJohnston-MLP <johnstonma@muni.org>;Michael E.Lamb <mlamb@aidea.org>;Susan Redlin <skr@gvea.com>;Tony Izzo <tony.izzo@mea.coop> Subject:RE:Update on FERC Land Fees Greetings, An update to the information from Bryan. A new invoice and one previously overlooked raised the total amount Van Ness Feldman (VNF)has billed BPMC to $15,357.28,or $357.28 over the budgeted amount.If BPMC desires to pursue the petition as VNFrecommends,the budget increase would need to cover the $357.28 over-budget amount plus the approximate$4,000 additional cost estimate. Please let me know if you have any questions,including if you want additional information from VNF. P Lee SUID JonnBrianBjorkquist Senior Assistant Attorney General Ova(907)269-5150 -direct Kiet From:Teri Webster [mailto:twebster@aidea.org] Sent:Thursday,December 08,2016 4:23 PM To:Bjorkquist,Brian D (LAW);Carey,Bryan E (AIDEA);Wick,Burke;Owens,Connie;Cory Borgeson;DawnM.Baham;Day,Bob;Gary Kuhn;Heather Smith;Janorschke,Brad;Jeff Estes;Jeff Warner;Foutz,John;KirkGibson;Thibert,Lee;Davidovics,Linda;Lynn Thompson (mailto:Inthompson@gvea.com);Mark Johnston - MLP;Lamb,Michael E (AIDEA);Susan Redlin;Tony Izzo Subject:Update on FERC Land Fees Sent on behalf of Bryan Carey AEA received the below information from Van Ness Feldman (VNF),attorneys who have represented theBPMCandotherAlaskahydroelectricprojectownersinchallengingFERC's federal land fees.As you will recallthosefederallandfeesincreasedby71%from 2015 to 2016.The increased fees will apply through 2020.TheAlaskaGroupappealedthe2016feesandpetitionedforrulemakingtochangethelandfeerulesforAlaska. In short,VNF reports that FERC (1)denied the appeal of the 2016 fees,but (2)invited the Alaska Group tofurtherpursuethepetition,asking some specific questions regarding the petition.VNF recommends that theAlaskaGroupfurtherpursuethepetition,but not the appeal. The question is whether BPMC desires to further pursue the petition,and not pursue the appeal.As AEAreportedearlier,BPMC can benefit from the federal land fee decision,both for impact on fees charged for 1 Bradley Lake and for fees to be charged on hydro projects developed in the future.As to Bradley Lake,the statecontinuestopursueacquisitionoffederallandusedwithintheproject.It remains uncertain if and when thestatewillobtainthosefederallands.Once acquired,no further federal land fees would be owed for the BradleyLakeproject. VNF estimates pursuing the petition will cost approximately $10,000.The attorney fees have been dividedbaseduponthesizeofeachhydroelectricproject.BPMC has paid 38.70%of all fees,or $3,870 of the estimatedcost.The BPMC previously budgeted $15,000 for this effort.VNF has charged BPMC approximately $12,000 for BPMC's share of VNF's efforts. , Please let us know if you support the recommendation from VNF,and adding $2,000 to the budget to cover theanticipatedexpenses,with a cushion. This will be added to the BPMC agenda for Dec 14. Bryan Carey,P.E. AEA &AIDEA (907)771-3065 Members of the Alaska FERC Land Fees Group: In its monthly public meeting today,FERC ruled on our pending rehearing request that challenged thesignificantincreaseinthe2016federallandfeesbills,as well as our petition that FERC initiate a rulemaking toaddressthestructuralproblemsinitsannualchargescalculationmethodology,to prevent this same problemfromoccurringinfutureyears.The results of FERC's two issuances today,both of which are attached to this email message,are mixed.While FERC rejected our rehearing request,it responded favorably to ourrulemakingpetitionandissuedaNoticeofInquirytolookintothisissueinmoredetail. First,the bad news.In the attached order,FERC denied our rehearing request of FERC staff's decision to reject our appeal of the 2016 federal land fees bills.FERC's order recognizes the steep percent increase offederallandfees,but holds that the fees are reasonable.FERC found that an annual charge of $56.78 per acreisnot"unreasonable on its face,”(Paragraph 15),and it found that the increase in annual charge per kWhgeneratedwasquitesmall(Paragraph 16,footnote 33). Because FERC has now issueda final order that denies our appeal of the 2016 federal land fees bills,groupmembersneedtodecidewhethertocontinuetopursuethisappealofannualchargestotheU.S.court ofappeals.The Federal Power Act requires any challenge to a FERC order to be filed within 60 days,and wewouldbehappytoconveneaconferencecallifgroupmemberswouldliketoconsiderthisopportunity.Candidly,court challenges can be very expensive,and the standard of review is deferential toFERC's decision making.While we certainly disagree with FERC's analysis,we think that our chance of success on appeal would be low,and the cost of pursuing an appeal could exceed the total amount of annual chargespaymentsthatarecontestedinthiscase.So,while we'd certainly welcome a conversation among the groupaboutprosandconsoftakinganappeal,unless the group feels differently we do not recommend filing apetitionforreviewwiththecourtinresponsetoFERC's rehearing order.Unless any group membercommunicatesotherwise,we will assume that the group agrees with our recommendation not to proceed further with this appeal. Second,the good news.While FERC denied rehearing of our appeal for 2016,it signaled its willingness toexplorepossiblechangestoitscurrentannualchargesmethodologythatcouldresolvethegroup's concerns infutureyears'annual charges billings.In the attached Notice of Inquiry,FERC is seeking comment "on anarrowquestion-whether regional per-acre land values based on data published in the NASS Census result inreasonablyaccuratelandvaluationsforhydropowerlandsinAlaska”(Paragraph 2).Specifically,FERC isseekingguidanceonthefollowingquestions(see Paragraph 16): .For the purposes of calculating an adjusted per-acre value for lands in Alaska,should the Commissionuseastatewideaverageper-acre land value rather than a regional per-acre land value? °If a statewide average per-acre valueis preferred,should the statewide value be applied to (i)all projectsinAlaska,or (ii)all projects in Alaska except those locatedin the Aleutian Islands Area? oo Which of the five geographic regions of Alaska (the Aleutian Islands Area,the Anchorage Area,theFairbanksArea,the Juneau Area,and the Kenai Peninsula Area)should be included in the calculation of the adjusted statewide average? en in response to FERC's Notice of Inquiry are due within 60 days (after it is published in the FederalRegister). While we are frustrated that FERC decided against granting our appeal,we are very encouraged by its issuanceofthisNoticeofInquiry.FERC could have ignored our petition for rulemaking filed a few months ago,ordismisseditaltogetheronthesamebasisthatitdeniedourannualchargesappeal.Instead,FERC signaledthatitwantstobesurethatitsannualchargesmethodologyproducesafairresultonanannualbasisandthatitisopentorefinementstoensurethatresultonagoing-forward basis.As FERC Commissioner ColletteHonorablecommentedintoday's meeting: "I know a number of parties are concerned whether our existing method is working as it should in Alaska in particular.I want to thank the power licensees that petitioned for further examination,and I agree that it'salwayshealthyforustoexamineourownworkandimproveitwhereitisneededtorespondtochangesthatareoccurringintheindustry.I certainly realize that Alaska is unique and poses challenges to reasonable feesandIthinkthisNoticeofInquiryacknowledgeswebelievethatonesizedoesnotfitall.We have to take the consumers into account and also the taxpayers who own the land,and I believe we need to arrive at a formula that is not only manageable but consistently produces fair results.So,I encourage anyone with ideas about the best way to go about that to chime in.” So,while we do not recommend pursuing an appeal of FERC's rehearing order,we strongly recommend that the group file comments in response to the Notice of Inquiry.Since our previous rulemaking petition coverstheissuesposedinFERC's Notice of Inquiry (and summarized above),the legal costs for preparing a commentforthegroupwouldbeminimal,and any decision by FERC to change its methods to adopt ourrecommendationswouldresultinlowerannualchargeseachyearonagoing-forward basis. In summary,in response to FERC's issuances today,we recommend that the group: 1.Not pursue the 2016 annual charges appeal to the U.S.court of appeals;and 2.Authorize us to adaptourpriorrulemakingpetitiontoacommenttoFERCinresponsetoitsNoticeofInquiry. We would ask that group members please respond to this email by letting us know whether you agree withtheserecommendations.If group members have any questions with the FERC orders issued today or theserecommendations,we certainly could schedule a conference call to discuss these issues in more detail.But if the group agrees with these recommendations we can quickly begin to move forward with the next steps. Thanks everyone.I apologize for the lengthy email today.As always,please let me know if you have anyquestionsorconcerns. Best regards, Chuck Charles R.Sensiba |Partner Van Ness Feldman LLP &}MRG McDOWELL RACKNER GIBSON PC Memorandum To:Bradley Lake Project Management Committee (BPMC) From:Kirk H.Gibson Date:December 13,2016 Re:AGENDA ITEM 7.D.-O&M Agreement Extension This memorandum concerns Agenda Item 7.D.,of the December 14,2016,meeting of the BPMC. BACKGROUND At its June 15,2016,meeting,the BPMC voted to have Homer Electric Association (HEA) and the Alaska Energy Authority (AEA)enter an amendment extending the provisions governing notice of termination of the O&M Agreement and the current term of the O&M Agreement for a period of six (6)months.This act effectively extended the period of notice of termination until December 30,2016,and extended the current term until January 1, 2019.This action was taken,in part,to provide the utilities with additional time to resolve other outstanding issues that affect Bradley Lake activities. AGENDA ITEM 7.D. This item was placed on the agenda to make the BPMC aware of the upcoming deadline (i.e.,December 30,2016)for which notice of termination must be provided to HEA,as operator of the Bradley Lake Project.There is a two (2)year notice of termination requirement in the current agreement. 419 SW 11"Ave,Suite 400 |Portland,OR 97205-2605 |have provided another amendment to be potentially used by the BPMC review as |am uncertain of the status of the activities involved in resolving the issues between the BPMC utilities.Consequently,an executable version of a Second Amendment to the Second Amended and Restated Operation &Maintenance Agreement For Bradley Lake Hydroelectric Project is being provided to allow for HEA and AEA to efficiently extend the deadline should the BPMC choose to have that done.There are blanks for the BPMC to complete. |will be available at the BPMC meeting to answer any questions. Other Matters It is my understanding that AEA has some concerns with the process involving the selection of the next Operator for the Bradley Lake Project.These concerns stem from AEA's responsibilities under the Bond and Power Sales Agreement.It is also my understanding that AEA representatives will be available to discuss its concerns at the December 14,2016,meeting. 2 -BPMC Memo -AGENDA ITEM 7.D.[December 14,2016] of weonSECOND AMENDMENTTOTHE x SECOND AMENDED AND RESTATEDoOOPERATION&MAINTENANCE AGREEMENTFOR/BRADLEY LAKE HYDROELECTRIC PROJECT is SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT ("SecondAmendment')dated effective as of December 30,2016,is entered into by and between the AlaskaEnergyAuthority("Authority”)and Homer Electric Association,Inc.("HEA”). WITNESSETH WHEREAS,the Authorityis a public corporation of the State of Alaska duly created,organized,and existing pursuant to AS 44,83,and authorized by law to sell electric power generated by theBradleyLakeProject("ProjerhWHEREAS,the Authority is;authorized under AS 44.83.396 to enter agreements for the operation and maintenance of power'projects owned by the Authority with a qualified utility; WHEREAS,the Bradley Lake Project Power Sales Agreement (the "Power Sales Agreement”) provides that the Bradley Lake Project Management Committee ("BPMC”)shall arrange for the operation and maintenance of the Project and Project Related Facilities; WHEREAS,the BPMC is authorized under its Bylaws adopted pursuant to the terms of the Power Sales Agreement/to approve agreements for the operation and maintenance of Project and Project related faciliti WHEREAS,to/provide for the operation and maintenance of the Project and Project Related Facilities,the'BPMC entered the Master Maintenance and Operating Agreement with the Authority under which the Authority shall enter contracts necessary to perform services for,or operation maintenance of,the Project and Project Facilities; WHEREAS,the Authority and HEA entered the Second Amendment and Restated Operation and Maintenance for Bradley Lake Hydroelectric Project effective July 1,2008 (the "O&M Agreement'),to inter alia,provide that HEA would continue as Operator and operate and maintain the Project in accordance with the terms and conditions of the O&M Agreement; WHEREAS,the Authority,before executing a contract or contract amendment for operation or maintenance of the Project or Project related facilities,must submit the contract or amendment to the BPMC for its review and approval under the Master Maintenance and Operation Agreement; WHEREAS,the BPMC authorized the Authority and HEA to enter the FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED OPERATION &MAINTENANCE AGREEMENT FOR BRADLEY LAKE HYDROELECTRIC PROJECT ("First Amendment')on June 15,2016; WHEREAS,the First Amendment extends the provisions of the O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of six (6)months. SECOND AMENDMENT TO 0&M AGREEMENT Page 1 of 2 WHEREAS,the BPMC decided that additional time was required to handle issues by and between BPMC Participating Utilities and authorized the Authority and HEA to enter this Second Amendment on December 14,2016; WHEREAS,the First Amendment extends the provisions of the O&M Agreement governing the current term and notice of termination of the O&M Agreement for a period of months. WHEREAS,the BPMC has reviewed and approved this Second Amendment. NOW,THEREFORE,THE PARTIES AGREE AS FOLLOWS: 1.Section 2(b)of the O&M Agreement shall be amended to read as follows: Except as expressly provided in this section,the term of this Agreement shall be five (5) years from the Effective Date,and shall be automatically renewed for successive five-year terms until terminated as provided herein and subject to the termination rights set forth in Section 2(c)and Section 7(d).Notice of termination by either party shall be given two years in advance of the end of any term;provided,however,that the current,(or second) term of this Agreement shall be extended to ,and the date for which termination notice shall be given'shall be correspondingly extended to 2.Except as amended in this Second Amendment,the terms and conditions of the O&M Agreement remain in full force and effect. IN WITNESS WHEREOF,the Parties have caused this First Amendment to be executed the day and year first above written. Noc'-Jalan HOMER ELECTRIC ASSOCIATION,INC.ee ID eAPEEPtoprolile-\puwest reasonsle.Cost Seotcapctestione tothe purcraowee By Bradley P.J hkOMofhohewinZySGeneralManager ° ALASKA ENERGY AUTHORITYA5UZ,0S Com,AsSignnentNamesJyuhst+0 assist in By weiling REP.Michael Lamb Interim Executive Director SECOND AMENDMENT TO O&M AGREEMENT Page 2 of 2 Mr.Carey requested the members who want to attend the November Battle Creek meeting contact him for further details. 10.NEXT MEETING DATE-Nov.4,2016 The next meeting date is November 4,2016. 11.ADJOURNMENT There being no further business for the committee,the meeting adjourned at 10:51 a.m. BY: Cory Borgeson,Chair Attest: Michael Lamb Alaska Energy Authority,Secretary- DRAFT BPMC Minutes 10/19/16 Page 4 of4 would be any issues with the Master Maintenance Agreement,Dispatch Agreement,O&M Agreements,and Substation Agreements. Chair Borgeson asked if it is functionally possible and acceptable for the benefitting utilities to provide the needed $800,000 to AEA for the continued Battle Creek work without utilizing the R&C funds.Mr.Bjorkquist believes any issue that may arise from that scenario could be successfully addressed within the existing agreements. Mr.Thibert requested Mr.Day of the O&D Committee provide an update on the operation procedures if there were changes in utility shares.Mr.Day explained the bookkeeping is easy when all six participants participate in the project.If there are less participants in Battle Creek, the original commitment for storage capacity remains,and the new source of water is divwvied among the Battle Creek participants according to those participants'determination.Tracking the water,expenses,operations and repair would be Kept on a separate set of books andfundedbytheBattleCreekparticipants. Chair Borgeson stated work sessions will be necessary to address these issues. MOTION:Mr.Janorschke made a motion the Bradley Lake Project Management Committee direct the Alaska Energy Authority to proceed with completing the Battle Creek design,environmental,and bid documents.The estimated cost of this work is $800,000,and will be paid for directly by the utilities out of the 2017 non-R&C capital budget.Motion seconded by Mr.!zzo. Mr.Thibert asked for the procedure for a utility who does not want to participate.Chair Borgeson stated that determination can be made later.The resolution today lets AEA know their continued work will be funded.The funds can be part of the BPMC budget,but it will be direct-funded and will not come out of the R&C fund. A roll call was taken,and the motion passed,with Mr.Warner voting against. B.Update on SVC Replacements Mr.Carey reported the contractor has been finalizing the plans and testing is expected to occur in January.Mr.Thibert promised to provide the last monthly update to the Committee within the week. C.Bradley Lake Budget Amendment MOTION:Mr.Thibert made a motion to amend the non-R&C capital budget for 2017 in the amount of $800,000.Motion seconded by Mr.Izzo. A roll call was taken,and the motion passed unanimously. 8.COMMITTEE ASSIGNMENTS Chair Borgeson assigned Mr.Gibson and Mr.Bjorkquist develop an agreement regarding the $800,000 funding distribution to AEA for Bradley Creek by the November 4th meeting. 9.MEMBERS COMMENTS DRAFT BPMC Minutes 10/19/16 Page 3 of4 Mr.Lamb requested Mr.Carey provide the Battle Creek project update.The Federal Energy Regulatory Commission (FERC)amendment for the Battle Creek project was received on September 6th.Mr.Carey indicated the six or seven FERC required agency plans and permits under review are mostly noncontroversial,with the exception of the Fish and Habitat Plan.Mr. Carey expects additional stream work and sampling of baseline conditions will occur for the Fish and Habitat Plan prior to the diversion.Mr.Carey informed the final design of engineering plans and specs will be completed and submitted to FERC by March 1st,2017.A meeting will occur in November 2016 to ensure plans,specs,cost estimates,and draft documents are on track with the deliverable schedule and project timeline.Utility representatives are welcome to attend.FERC comments are expected to be returned by May 1st,2017,and the project could then go out to bidin mid-May.The contractor could begin brushing and clearing workin AugustandSeptember2017. Mr.Carey provided an overview of the DOWL final design proposal,which includes completion of several of the FERC required plans.The proposal is a time-and-expense contract.The estimated cost of $800,000 is comprised of approximately $700,000 for engineering work and approximately $100,000 for the fish habitat plan.No other costs are expected to occur prior to construction financing.Mr.Carey informed financing discussions and decisions regarding project construction will continue this winter between AEA and utilities. Mr.Thibert commented his engineering department has reviewed the steps of the project and many of the task orders.The engineering department believes the workis consistent from apeerreviewprocessandsupportsoftheproposal. Chair Borgeson requested Mr.Gibson discuss the use of the R&C fund for funding the $800,000,and the effect of a utility opting not to participate at this time.Mr.Gibson explained the R&C fund is for capital improvements and unusual or extraordinary O&M.The challenge is the monies taken out of the R&C fund have to be replaced on an annual basis.This project is considered in the documents under optional work and can be approved by four representatives, 51%,plus AEA's approval. Mr.Gibson cited Section 4D.Optional Project Work of the Power Sales Agreement and explained the Authority shall not make or cause any work to be made optional project work, unless such optional project work is approved by the Committee.Any optional project work shall be at the expense of the benefitted purchasers,as determined in advance by the Committee,in proportion to the value of the benefit conferred upon each purchaser.If such optional project work has an adverse impact upon the operations or finance of a purchaser,as determined by the Committee,the benefitted purchasers shall compensate the adversely affected purchasers for the increased cost and reduced benefits resulting from such impact. Mr.Gibson informed determinations that cannot be made at the Committee level will go through the dispute resolution procedure.Mr.Gibson discussed the challenges of the next steps and the subsequent significant modifications to the Power Sales Agreement,including the annual payment obligations,project costs,percentage share,project description,project capacity, water allocation,required project work on the diversion side,Committee governance,voting allocations,and responsibilities of Committee.Mr.Lamb explained the necessary modifications will have to be completed before project construction financing can be sought. Mr.Gibson stated issues to be addressed in the Bond Agreement include the consideration of maximum aggregate debt and the treatment of revenues.Mr.Gibson does not believe there DRAFT BPMC Minutes 10/19/16 Page 2 of4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING REGULAR MEETING Alaska Energy Authority,Anchorage,Alaska October 19,2016 1.CALL TO ORDER Chair Borgeson called the regular meeting of the Bradley Lake Hydroelectric ProjectManagementCommitteetoorderat9:02 a.m. 2.ROLL CALL FOR COMMITTEE MEMBERS Cory Borgeson (Golden Valley Electric Association [GVEA]);Michael Lamb (Alaska Energy Authority [AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony Izzo (Matanuska Electric Association [MEA]);Jeff Warner (Anchorage Municipal Light &Power [MLP]);Brad Janorschke (Homer Electric Association [HEA]-phone);and John Foutz (Seward -phone). 3.PUBLIC ROLL CALL Bryan Carey,Jocelyn Garner,Janelle St.Cruz,Kelli Veech,Kirk Warren,Teri Webster (AEA); Brian Bjorkquist (Attorney General's Office [AGO]);Crystal Enkvist (Alaska Power Association); Ron Woolf (phone)(GVEA);Bob Day (HEA);Gary Kuhn,David Pease (MEA);Kirk Gibson (Mcdowell Rackner Gibson PC);Bernie Smith (RCA);and Sydney Hamilton (Accu-TypeDepositions). 4.|PUBLIC COMMENTS None. |. 5.AGENDA COMMENTS/MOTION FOR APPROVAL Mr.Izzo requested an agenda amendment adding 7B.Update on SVC Replacements.Mr. Lamb requested an agenda amendment adding 7C.Bradley Lake Budget Amendment.Mr. Warner requested a discussion regarding opting out of Battle Creek during 7A. There were no objections to the agenda amendments and a motion was made by Mr.Izzo and seconded by Mr.Lamb.The motion passed unanimously. 6.APPROVAL OF PRIOR MINUTES -August 26,2016 MOTION:Mr.Lamb made a motion to approve the minutes of August 26,2016.Motion seconded by Mr.Thibert. The motion passed unanimously. 7.OLD BUSINESS A.Battie Creek project update and motion DRAFT BPMC Minutes 10/19/16 Page 1 of4 Instructions to complete the State of Alaska Direct Deposit Form Enter Employee ID,Name,and Department NET PAY DEPOSIT To deposit the all of net dollars from each pay warrant for each pay period.Dollars can be transferred to any ACH participating Financial Banking Institution. Indicate by marking the appropriate box: e Initial Authorization -you do not currently have an existing electronic NET deposit. e Change -you wish to make a change to an existing electronic NET deposit such as a new financial institution,account number or account type. Cancellation -you wish to cance!an existing electronic NET deposit and elect not to have a new set-up started. No Change -you wish to continue your existing electronic NET deposit.Mark this box if you are making an authorization in the flat amount deposit section only. Enter the name of the financial institution,the 9-digit institution transit routing number,and account number. Indicate either Savings or Checking.For Checking please attach a voided check or other bank verification of account number as applicable. Only indicate ONE type of account.Monies may not be divided between savings and checking. When to expect your first deposit:Each new deposit or change will require at least two pay periods processing.The first pay period after set up,a pre-note process is initiated where information regarding your account is sent to the banking =. institution,but no monies are sent.You will receive an actual payroll warrant.The next pay period,your NET monies will be sent electronically and your warrant stub will be available online through Employee Documents Online. See:http://soaemployeedocs.alaska.gov . FLAT AMOUNT DEPOSIT A set flat amount of money can be electronically deposited into any ACH participating financial institution. Indicate by marking the appropriate box: e Initial Authorization -you do not currently have an existing electronic flat amount deposit. e Change -you wish to make a change to an existing electronic flat amount deposit.A new banking institution,account number,account type or dollar amount. Cancellation -you wish to cancel an existing electronic flat amount deposit and elect not to have a new set-up started. No Change -you wish to continue your existing electronic flat amount deposit.Mark this box if you are making an authorization in the NET deposit section only. Enter the name of the financial institution,the 9-digit institution transit routing number,and account number. Enter the dollar amount -Enter the dollar amount to be deducted from the appropriate pay period. Indicate either Savings or Checking.For Checking please attach a voided check or other bank verification of account number as applicable.. Only indicate ONE type of account.Monies may not be divided between savings and checking. Frequency: Indicate how often the flat amount should be deducted and electronically transferred;the first warrant of the month,the second warrant of the month or both warrants. When to expect your first deposit:Each new deposit or change will require at least two pay periods processing.The first pay period after set up,a pre-note process is initiated where information regarding your account is sent to the financial institution,but no monies are sent.The next pay period,the monies will be sent electronically.If you are making a change to the flat dollar amount only,no pre-note will be necessary and no delay in electronic deposits will occur. Sign and date the form.Submit the completed form to your Payroll Services Section or Agency HR Office. -f 00-009 DDP Form Revised 4/25/2012 There being no further business for the committee,the meeting adjourned at 4:28 p.m. BY: Cory Borgeson,Chair Attest: Michael Lamb Alaska Energy Authority,Secretary DRAFT BPMC Minutes 10/31/16 Page 3 of 3 CIVIL ENGINEERING GEOTECHNICAL ENGINEERING TRANSPORTATION ENGINEERING ENVIRONMENTAL SERVICES PLANNING SURVEYING &MAPPING CONSTRUCTION ADMINISTRATION MATERIAL TESTING RIGHT-OF-WAY SERVICES ™HATTENBURG DILLEY &LINNELLEDLEngineeringConsultants October 21,2015 Mr.Alan Fetters Alaska Energy Authority 813 West Northern Lights Boulevard Anchorage,AK 99503 RE:Project Cost and Schedule Impacts Perryville Rural Power Systems Upgrades (RPSU)Project Dear Mr.Fetters: Hattenburg Dilley &Linnell,LLC (HDL)was tasked by the Alaska Energy Authority (AEA)to develop an analysis of project costs and schedule impacts for three different design and construction scenarios for the Perryville Rural Power System Upgrades project in Perryville, Alaska.The three scenarios requested by AEA are as follows: e Scenario 1:Force Account:AEA uses skilled trades/force account labor along with local labor from the Native Village of Perryville (NVP)to complete module work and site construction.A separate contractor will be selected through public bid process to deliver the material and equipment to the site. e Scenario 2:Multiple Contracts:This scenario uses two contractors ("A”and "B”) selected by public bid.Contractor "A”is responsible for the module assembly. Contractor "B”is responsible for site mobilization and site construction. *Scenario 3:Fully Contracted:This scenario uses one prime contractor selected through public bid.The contractor is responsible for the module and assembly, mobilization to site,and site construction. Each scenario considers the cost of construction and any additional costs to HDL's current contract for design and construction administration services,which was established assuming the project would be constructed under Scenario 1.Schedule impacts were also analyzed,assuming the project delivery method would be switched from Scenario 1 to Scenario 2 or Scenario 3 mid project.The cost breakdown for each scenario is included in the attached analysis along with a list of assumptions used to generate the cost and schedule for each scenario.Table 1,below,shows the total cost and schedule completion date for each scenario. Table 1:Cost Analysis and Schedule Summary Scenario Cost Estimated Completion Date 1 $2,158,982 July,2016 2 $2,716,850 September,2016 3 $2,868,196 October,2016 3335 Arctic Boulevard Suite 100 *Anchorage Alaska 99503 *Phone:907.564.2120 «Fax:907.564.2122 202 W.Elmwood Avenue ©Palmer Alaska 99645 «Phone:907.746.5230 «Fax:907.746.5231 MOTION:Mr.Thibert motioned the below statement and the motion was seconded by Mr.Lamb. Move that the motion passed by the Bradley Lake Project Management Committee (BPMC), dated October 19,2016,directing the Alaska Energy Authority (AEA)to proceed with completing the design,environmental,and bid documents for the Battle Creek Diversion Project (Work)shall be paid by the utilities desiring to participate in the further development of the Battle Creek Diversion Project to AEA at the following percentages:Chugach (41.03%);HEA (16.20%);MEA (18.62%);GVEA (22.80%);and Seward (1 35%);hereinafter referred to in this Motion as the "Battle Creek Participating Utilities.” Participating Utilities Wel any;and,provides notice of its wish to fully participate in theBattleCreekDiversionProjectpriortothecommencementofeffortsbyAEAand/or the BPMC to acquire project financing for the Battle Creek Diversion Project. Roll call was taken the amended motion passed unanimously. 8.NEXT MEETING DATE -December 14,2016 9.ADJOURNMENT DRAFT BPMC Minutes 10/31/16 Page 2 of 3 Kake Bulk Fuel &Rural Power System Upgrades Alaska Kake BFU/RPSU Project Cost &Schedule Impact Scenarios Prepared By: Hattenburg Dilley &Linnell,LLC 3335 Arctic Blvd,Suite 100 Anchorage,Alaska 99503 (907)564-2122 Fax Contact:Adam Bruscher (907)564-2120 abruscher@hdlalaska.com Date:November 12,2015 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE MEETING SPECIAL MEETING Alaska Energy Authority,Anchorage,Alaska October 31,2016 1.CALL TO ORDER Chair Borgeson called the special meeting of the Bradley Lake Hydroelectric ProjectManagementCommitteetoorderat4:02 p.m. 2.ROLL CALL (for Committee members) Preis ;Michael Lamb (AlaskaEnergyAuthority[AEA]);Lee Thibert (Chugach Electric Association [CEA]);Tony IzzoMPTBaElectricAssociation[MEA)]);J eff Warner ee one Municipal Light &Power seconded by Mr.Lam . The agenda passed un 7.NEW BUSINESS - A.Battle Creek Funding Mr.Gibson explained the reason for this special meeting was to finalize an agreement on who the participating utilities were for the Battle Creek project and to amend the Bradley Lake budget with the participating utilities contribution percentages for the Battle Creek project. DRAFT BPMC Minutes 10/31/16 Page 1 of3 into account and also the taxpayers who own the land,and I believe we need to arrive at a formula that is not only manageable but consistently produces fair results.So,I encourage anyone with ideas about the best way to go about that to chime in.” So,while we do not recommend pursuing an appeal of FERC's rehearing order,we strongly recommend that the group file comments in response to the Notice of Inquiry.Since our previous rulemaking petition covers the issues posed in FERC's Notice of Inquiry (and summarized above),the legal costs for preparing a comment for the group would be minimal,and any decision by FERC to change its methods to adopt our recommendations would result in lower annual charges each year on a going-forward basis. In summary,in response to FERC's issuances today,we recommend that the group: 1.Not pursue the 2016 annual charges appeal to the U.S.court of appeals;and 2.Authorize us to adapt our prior rulemaking petition to a comment to FERC in response to its Notice of Inquiry. We would ask that group members please respond to this email by letting us know whether you agree with these recommendations.If group members have any questions with the FERC orders issued today or these recommendations, we certainly could schedule a conference call to discuss these issues in more detail.But if the group agrees with these recommendations we can quickly begin to move forward with the next steps. Thanks everyone.I apologize for the lengthy email today.As always,please let me know if you have any questions or concerns. Best regards, Chuck Charles R.Sensiba |Partner VanNess Feldman ue 1050 Thomas Jefferson Street,NW Washington,DC 20007 (202)298-1801 (0)|(202)361-5636 (c)|crs@vnf.com|vnf.com This communication may contain information and/or metadata that is legally privileged,confidential or exempt from disclosure.If you are not the intended recipient,please do not read or review the content and/or metadata and do not disseminate,distribute or copy this communication.Anyone who receives this message in error should notify the sender immediately by telephone (202-298-1800)or by return e-mail and delete it from his or her computer fe- In its monthly public meeting today,FERC ruled on our pending rehearing request that challenged the significant increase in the 2016 federal land fees bills,as well as our petition that FERC initiate a rulemaking to address the structural problems in its annual charges calculation methodology,to prevent this same problem from occurring in future years.The results of FERC's two issuances today,both of which are attached to this email message,are mixed.While FERC rejected our rehearing request,it responded favorably to our rulemaking petition and issued a Notice of Inquiry to look into this issue in more detail. First,the bad news.In the attached order,FERC denied our rehearing request of FERC staff's decision to reject our appeal of the 2016 federal!land fees bills.FERC's order recognizes the steep percent increase of federal land fees,but holds that the fees are reasonable.FERC found that an annual charge of $56.78 per acre is not "unreasonable on its face,”(Paragraph 15S),and it found that the increase in annual charge per kWh generated was quite small (Paragraph 16,footnote 33). Because FERC has now issued a final order that denies our appeal of the 2016 federal land fees bills,group members need to decide whether to continue to pursue this appeal of annual charges to the U.S.court of appeals.The Federal Power Act requires any challenge to a FERC order to be filed within 60 days,and we would be happy to convene a conference call if group members would like to consider this opportunity.Candidly,court challenges can be very expensive,and the standard of review is deferential to FERC's decision making.While we certainly disagree with FERC's analysis,we think that our chance of success on appeal would be low,and the cost of pursuing an appeal could exceed the total amount of annual charges payments that are contested in this case.So,while we'd certainly welcome a conversation among the group about pros and cons of taking an appeal,unless the group feels differently we do not recommend filing a petition for review with the court in response to FERC's rehearing order.Unless any group member communicates otherwise,we will assume that the group agrees with our recommendation not to proceed further with this appeal. Second,the good news.While FERC denied rehearing of our appeal for 2016,it signaled its willingness to explore possible changes to its current annual charges methodology that could resolve the group's concerns in future years'annual charges billings.In the attached Notice of Inquiry,FERC is seeking comment "on a narrow question -whether regional per-acre land values based on data published in the NASS Census result in reasonably accurate land valuations for hydropower lands in Alaska”(Paragraph 2).Specifically,FERC is seeking guidance on the following questions (see Paragraph 16): e For the purposes of calculating an adjusted per-acre value for lands in Alaska,should the Commission use a statewide average per-acre land value rather than a regional per-acre land value? e If a statewide average per-acre value is preferred,should the statewide value be applied to (i)all projects in Alaska,or (ii)all projects in Alaska except those located in the Aleutian Islands Area? e Which of the five geographic regions of Alaska (the Aleutian Islands Area,the Anchorage Area,the Fairbanks Area,the Juneau Area,and the Kenai Peninsula Area)should be included in the calculation of the adjusted statewide average? Comments in response to FERC's Notice of Inquiry are due within 60 days (after it is published in the Federal Register). While we are frustrated that FERC decided against granting our appeal,we are very encouraged by its issuance of this Notice of Inquiry.FERC could have ignored our petition for rulemaking filed a few months ago,or dismissed it altogether on the same basis that it denied our annual charges appeal.Instead,FERC signaled that it wants to be sure that its annual charges methodology produces a fair result on an annual basis and that it is open to refinements to ensure that result on a going-forward basis.As FERC Commissioner Collette Honorable commented in today's meeting: "I know a number of parties are concerned whether our existing method is working as it should in Alaska in particular.I want to thank the power licensees that petitioned for further examination,and I agree that it's always healthy for us to examine our own work and improve it where it is needed to respond to changes that are occurring in the industry.I certainly realize that Alaska is unique and poses challenges to reasonable fees,and I think this Notice of Inquiry acknowledges we believe that one size does not fit all.We have to take the consumers 2 From:Teri Webster Sent:Thursday,December 08,2016 4:23 PM To:Brian Bjorkquist;'Bryan Carey';'Burke Wick';'Connie Owens';Cory Borgeson;Dawn M. Baham;Day,Bob;Gary Kuhn;Heather Smith;Janorschke,Brad;'Jeff Estes';Jeff Warner; 'John Foutz';'Kirk Gibson';Lee Thibert ;'Linda Davidovics';Lynn Thompson (Inthompson@gvea.com);Mark Johnston -MLP;Michael E.Lamb;'Susan Redlin';Tony Izzo Subject:Update on FERC Land Fees Sent on behalf of Bryan Carey AEA received the below information from Van Ness Feldman (VNF),attorneys who have represented the BPMC and other Alaska hydroelectric project owners in challenging FERC's federal land fees.As you will recall, those federal land fees increased by 71%from 2015 to 2016.The increased fees will apply through 2020.The Alaska Group appealed the 2016 fees and petitioned for rulemaking to change the land fee rules for Alaska. In short,VNF reports that FERC (1)denied the appeal of the 2016 fees,but (2)invited the Alaska Group to further pursue the petition,asking some specific questions regarding the petition.VNF recommends that the Alaska Group further pursue the petition,but not the appeal. The question is whether BPMC desires to further pursue the petition,and not pursue the appeal.As AEA reported earlier,BPMC can benefit from the federal land fee decision,both for impact on fees charged for Bradley Lake and for fees to be charged on hydro projects developed in the future.As to Bradley Lake,the state continues to pursue acquisition of federal land used within the project.It remains uncertain if and when the state will obtain those federal lands.Once acquired,no further federal land fees would be owed for the Bradley Lake project. VNF estimates pursuing the petition will cost approximately $10,000.The attorney fees have been divided based upon the size of each hydroelectric project.BPMC has paid 38.70%of all fees,or $3,870 of the estimated cost.The BPMC previously budgeted $15,000 for this effort.VNF has charged BPMC approximately $12,000 for BPMC's share of VNF's efforts. Please let us know if you support the recommendation from VNF,and adding $2,000 to the budget to cover the anticipated expenses,with a cushion. This will be added to the BPMC agenda for Dec 14. Bryan Carey,P.E. AEA &AIDEA (907)771-3065 Members of the Alaska FERC Land Fees Group: ID [TalTask Name Duration [Start Finish PredeR /N | }4th Quarter.|Ist Quarter.|2nd Quarter__|3rd|Quarter__lath Quarter|1 |92017 WFU Battle Creek 2 #Final Design &Spec 102 days Thu 11/10/1¢€Fri 3/31/17 k .| : 3 |FERC Call 1day Tue 12/13/1€Tue 12/13/1€] 4 |9 FERC Meeting 1day Wed 1/18/17Wed 1/18/17 I : 5 |Final Cost Estimate lday ='Fri2/10/17 Fri 2/10/17 ] 6 #Agreement modifications signed 4Sdays Suni/1/17 Thu 3/2/17 ==)7 @ Financing 7Sdays Fri3/3/17 Thu6/15/17 6 -_-_I 8 #Final Plans &Specs to FERC 1 day Fri 3/31/17 Fri 3/31/17 h | 9 |FERC Review of Plans &Specs 4Sdays Mon4/3/17 Fri6/2/17_8 ey10|#Final Plans &Specs 10days Fri6/2/17 Thu 6/15/17 |rm | 11 |®Project RFP Advertised 1day _'Fri6/16/17__Fri6/16/17 7 h 12 |™%Proposals Due 17 days Mon 6/19/17 Tue 7/11/17 11 iy | 13 |&Proposals Evalauted 10days Wed 7/12/17 Tue 7/25/17 12 'eal14|®&Short list Announced 1 day Wed 7/26/17 Wed 7/26/1713 { 15 #Surveying &Brush Clearing 20 days S$un7/16/17 Thu 8/10/17 ;|wane| |(Participants pay outside contract)16 |#Short List Site Visit 1day Tue 8/22/17 Tue 8/22/17 t, 17.|#Short list bids due 25days Tue 8/22/17 Mon 9/25/1716 = 18 |Award Contract Aday _Fri 10/20/17 Fri 10/20/17 1 Task SE Inactive Summary ''External Tasks ore Split serene Manual Task SSI External Milestone * Project:2017 BC Schedule.mpp Milestone .Duration-only --F Deadline + Date:Wed 11/30/16 Summary eet Manual Summary Rollup a,Progress Project Summary "1 =Ss Manual Summary "1 =Manual Progress Inactive Task Start-only C Inactive Milestone Finish-only Page 1 (exead Battle Creek Update December 14,2016 Battle Creek Permitting: Alaska DNR published the Notice of Water Rights Application in the Alaska Dispatch November 3,2016.No comments have been received.Expect water rights January 2017. Revised information and figures submitted to Alaska DNR for the requested land lease amendment. AEA and environmental contractor ASRC Energy Services had meetings with regulatory agencies on the FERC required Fish Habitat Plan. Schedule: Design team meeting (in-person &teleconference)November 7-8 in Seattle. Scheduled call with FERC Dam Safety December 13 to discuss project,FERC areas of emphasis,& schedule. Final cost estimate scheduled February 10,2017. Final plans &specs to FERC Dam Safety in March 2017. Financing discussions need to be occurring in March 2017 for a summer bid. Full 2017 schedule attached. Procurement: Current plan for procurement would be to advertise for contractors and score them on qualifications. The "short list”of contractors would receive detailed plans and would participate in the site visit.Prior to the site visit the route will be surveyed and brush cleared.Clearing would need to be paid for separately from the main construction contract.Clearing will enable contractor to better see the terrain,provide more accurate bids,and enable an early 2018 start of construction.Estimated cost of surveying &clearing is about $125,000 -$150,000.Following site visit the short list contractors will have several more weeks to develop and submit bids. nd Soe Frcencing”is REA or wd Whikes 7Zas\y Sen Meekng BC Financial Statements and Supplementary Information BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Years ended June 30,2016 and 2015 (With Independent Auditor's Report) SWALLING &ASSOCIATES Certified Public Accountants &Business Advisers BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS Financial Statements and Supplementary Information Years ended June 30,2016 and 2015 Contents Independent Auditor's Report Statements of Assets and Liabilities Statements of Revenues and Expenses Statements of Cash Flows Notes to Financial Statements Independent Auditor's Report on Supplementary Information Statements of Expenses 12 13 SWALLING &ASSOCIATES Certified Public Accountants &Busitaess Advisers INDEPENDENT AUDITOR'S REPORT Bradley Lake Project Management Committee Anchorage,Alaska We have audited the accompanying special-purpose financial statements of the Bradley Lake Project Management Committee (a project management committee)Operating and Revenue Funds,which comprise the special-purpose statements of assets and liabilities as of June 30, 2016 and 2015,and the related special-purpose statements of revenues and expenses and special- purpose statements of cash flows for the years then ended,and the related notes to the financial statements. Management's Responsibility for the Financial Statements The Bradley Lake Project Management Committee is responsible for the preparation and fair presentation of these special-purpose financial statements in accordance with the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond Resolution as described in Note A.The Bradley Lake Project Management Committee is also responsible for the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special-purpose financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.In making those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3201 C Street.Suite (05 :Anchorage.Alaska 995033IndependentmemberofDEKInternational-a workdwidt asses iation .. . of independent:aecounting firms and business advisers Ph 907.563.7977 .Fax 907.561.7683 .www.swallingcpas.com Bradley Lake Project Management Committee Opinion In our opinion,the special-purpose financial statements referred to above present fairly,in all material respects,the assets and liabilities ofthe Bradley Lake Project Management Committee Operating and Revenue Funds as of June 30,2016 and 2015,and the revenues and expenses,and cash flows for the years then ended,on the basis of accounting described in Note A. Basis of Accounting We draw attention to Note A of the special-purpose financial statements,which describes the basis of accounting.The financial statements are prepared on the basis of the accounting requirements of the Operating and Revenue Funds established under the Alaska Energy Authority Power Revenue Bond resolution,as discussed in Note A,which is a basis of accounting other than accounting principles generally accepted in the United States of America, to comply with accounting requirements of the bond resolution referred to above.Our opinion is not modified with respect to that matter. Restriction on Use This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Tuatling Ceseculy FC. Anchorage,Alaska December 8,2016 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF ASSETS AND LIABILITIES June 30,2016 and 2015 ASSETS Current assets: Investments (Note B) Due from R &C Fund (Note A) Other receivable Prepaid expense Total assets LIABILITIES Current liabilities: Due to AEA (Note D) Accounts payable Due to R &C Fund (Note A) Payable to utilities -O &M refund (Note E) Payable to utilities -R &C refund (Note A) Unearned revenue (Note A) Total liabilities See accompanying notes to the financial statements. 3 2016 2015 $1,789,047 $2,283,946 1,055,961 20,211 -520,416 85.194 52,258 $_2,930,202 $_2,876,831 $15,048 $26,176 778,494 934,327 -69,953 1,064,413 1,394,253 1,055,961 20,211 16,286 431,911 $2,930,202 $2,876,831 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF REVENUES AND EXPENSES Years ended June 30,2016 and 2015 2016 Variance Favorable 2015 Budget Actual (Unfavorable)Actual Revenues: Utility contributions, net of surplus refund $19,849,423 $17,828,513 $(2,020,910)$16,680,264 Interest receipts 1,770,000 1,930,547 160,547 1,856,550 Total revenue 21,619,423 19,759,060 (1,860,363)18,536,814 Expenses,fixed asset replacements,transfers and debt service: Operations and maintenance 8,823,630 6,966,344 1,857,286 5,348,243 Debt service 12,494,600 12,494,600 -12,475,850 Arbitrage transfer 295,940 281,419 14,521 298,316 Fixed asset replacements 15,000 26,444 (11,444)254,039 Interfund transfer (9,747)(9,747)-160,366 Total expenses,fixed asset replacements, transfers and debt service 21,619,423 19,759,060 1,860,363 18,536,814 Excess of revenues over expenses,fixed asset replacements,transfers and debt service $: See accompanying notes to the financial statements. 4 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF CASH FLOWS Years ended June 30,2016 and 2015 2016 2015 Cash flows from operating activities: Excess of revenues over expenses, fixed asset replacements,transfers and debt service $-$- Adjustments to reconcile excess of revenues over expenses,fixed asset replacements, transfers and debt service to net cash provided by (used in)operating activities: Increase in receivables (515,334)(235,515) Increase in prepaid expense (32,936)(46,053) Decrease in amounts due to AEA (11,128)(65,326) Decrease in accounts payable (155,833)(149,572) Increase (decrease)in due to R &C Fund (69,953)69,953 Increase (decrease)in payable to utilities -O &M refund (329,840)259,867 Increase (decrease)in payable to utilities -R &C refund 1,035,750 (259,036) Increase (decrease)in unearned revenue (415,625)431,911 Net cash (used in)provided by operating activities (494,899)6,229 Available cash and cash equivalents,beginning of year 2,283,946 2,277,717 Available cash and cash equivalents,end of year $1,789,047 $2,283,946 Supplemental disclosure of cash flows information: Interest paid $3,655,225 $_4,137,900 See accompanying notes to the financial statements. 5 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS June 30,2016 and 2015 NOTE A:SIGNIFICANT ACCOUNTING POLICIES Description of Business:The Bradley Lake Project Management Committee (the Committee) was established pursuant to Section 13 of the Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement)dated December 8,1987.The purpose of the Committee is to arrange for the operation and maintenance of the Bradley Lake Hydroelectric Project (the Project),which became operational in September 1991,and the scheduling,production and dispatch of power.The members of the Committee include the Alaska Energy Authority (AEA) and the five purchasers under the Power Sales Agreement -Chugach Electric Association,Inc.; Golden Valley Electric Association,Inc.;the Municipality of Anchorage (Municipal Light & Power);the City of Seward (Seward Electric System);and the Alaska Electric Generation & Transmission Cooperative,Inc.(AEG&T).AEG&T assigned its rights pertaining to Homer Electric Association,Inc.(HEA)under the Power Sales Agreement to Alaska Electric and Energy Cooperative,Inc.(AE&EC)in 2003.HEA and the Matanuska Electric Association,Inc. (MEA)are additional parties to the Power Sales Agreement but are included as power purchasers for purposes of representation while AEG&T and AE&EC have no direct vote as a consequence of the individual representation of HEA and MEA. Section 13 of the Power Sales Agreement delineates other Committee responsibilities,including: establishing procedures for each party's water allocation,budgeting for annual Project costs and calculating each party's required contribution to fund annual Project costs.Committee approval of operations and maintenance arrangements for the Project,sufficiency of the annual budgets and wholesale power rates and the undertaking of optional Project work requires a majority affirmative vote and the affirmative vote of AEA. The Power Sales Agreement extends until the later of:1)50 years after commencement of commercial operation or 2)the complete retirement of bonds outstanding under the AEA Power Revenue Bond Resolution along with the satisfaction of all other payment obligations under the Power Sales Agreement.Renewal options for additional terms exist. During the years ended June 30,2016 and 2015,approximately $190,000 and $237,000, respectively,of capital additions occurred relating to the Battle Creek Diversion project to enhance the Bradley Lake Hydroelectric Project.The construction cost estimate for this project is $44 million.To date funding for this project has come from State appropriations and the Bradley Lake R &C Fund.The State funded approximately $41,000 and $193,000 in years ended June 30,2016 and 2015,respectively.Future funding is to be determined.This project will divert the upper part of Battle Creek into Bradley Lake and the increase in water will enable the Project to produce an additional annua!average of 37,000 megawatt hours (nearly a 10% increase in Bradley Lake's annual energy).Diversion engineering is in final design and various environmental studies are ongoing.An amendment to the Bradley Lake Hydroelectric Project Federal Energy Regulatory Commission license was received in September 2016.Construction could begin in 2017 and be completed in the fall of 2019. 6 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2016 and 2015 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Establishment of Trust Funds:Article V,Section 502 of the Alaska Energy Authority's Power Revenue Bond Resolution established a Revenue Fund and an Operating Fund,including an Operating Reserve account,to be held by AEA.In actuality these funds,along with the Debt Service,Excess Investment Earnings (arbitrage),and various construction funds related to the Bradley Lake Hydroelectric Project are all held by the Corporate Trust Department of US Bank in Seattle,Washington. All deposits,including utility contributions and interest transferred from other funds,are made into the Revenue Fund,which transfers amounts approximately equal to one-twelfth of the annual operating and maintenance budget into the Operating Fund on a monthly basis. Additional transfers are made from the Revenue Fund to the Debt Service Fund in order to satisfy semiannual interest payments and annual principal payments on the Project's outstanding bonds payable. Interest earnings available for operations and maintenance are derived from the following funds: Debt Service Fund;Operating Reserve Fund;Operating Fund;Revenue Fund;Capital Reserve Fund;and the Renewal &Contingency Fund when the fund balance is $5,000,000 or greater. Revenue and Expense Recognition:Utility contributions are recognized as revenue when due to be received under the terms of the Power Sales Agreement.Utility contributions of $16,286 and $431,911 for the years ended June 30,2017 and 2016,respectively,were received prior to June 30,2016 and 2015,respectively,and are included in liabilities as unearned revenue.Transfers from other funds are recognized when the transfer is made and interest earnings are recognized when received.Operating and maintenance expenses are recognized when incurred,while transfers to Debt Service Fund and Excess Earnings Funds are recognized when the transfer is made.Purchases of fixed asset replacements are expensed when purchased.The Renewal and Contingency Reserve Fund (R &C Fund)is reimbursed for capital costs over a four year period. Transfers to the R &C Fund for repayment of funds withdrawn for capital costs occur monthly based on the budgeted R &C expenditures.At year end,the actual Operating Fund expenses and R &C Fund repayments are compared to the actual revenue and a refund is given to the utilities when a surplus of revenues occurs or invoices are issued to the utilities if expenses exceed revenues.At June 30,2016 and 2015,the surplus to be refunded to the utilities from the R&C Fund was $1,055,961 and $20,211,respectively.The surplus will be refunded to the utilities in fiscal year 2017 and was refunded in fiscal year 2016,respectively.At June 30,2015, an additional $69,953 was due to the R&C Fund from the Revenue Fund. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2016 and 2015 NOTE A:SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates:The preparation of the special-purpose financial statements of the Operating and Revenue Funds requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. Income Taxes:The Bradley Lake Project Management Committee is exempt from income taxation under Section 501 (a)of the Internal Revenue Code.Therefore,the Committee had no deferred tax liabilities or assets or tax carryforwards as of June 30,2016 and 2015 and no current or deferred tax expense for the years then ended. Reclassifications: Certain amounts from the prior year have been reclassified to conform to the current year's presentation. NOTE B:INVESTMENTS The balance in the Operating Fund is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank through the trust department of US Bank.At June 30,2016, $16,286 of the balance in the Revenue Fund is invested in First American Treasury Obligations money market fund and $369,023 of the balance is invested in collateralized guaranteed investment contracts with JP Morgan Chase Bank.At June 30,2015,the balance in the Revenue Fund was invested in First American Treasury Obligations money market fund.The specified interest rate for monies from the Operating and Revenue Funds invested in the contracts with JP Morgan Chase is 7.38%per annum.Balances at June 30,2016 and 2015 are as follows: 201 201 Operating Fund $1,403,738 $1,852,035 Revenue Fund 385,309 431,911 Total investments $1,789,047 $_2,283 946 Investments are sold as needed to cover operating requisitions submitted to the trustee and are therefore considered to be short-term and available for sale.Investments are presented at aggregate cost,which is equal to fair value. For purposes of the cash flow statements,management considers the full amount of the investment balance to be cash available for operations. 8 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2016 and 2015 NOTE C:MAJOR CONTRACTS AND AGREEMENTS During May 1994,the Alaska Energy Authority (AEA)entered into the Master Maintenance and Operating agreement with the Committee.The purpose of the agreement is to establish contract administration and budgeting procedures for maintenance and operation contracts of the Bradley Lake Hydroelectric Project and to provide for the lease or other use of facilities and equipment in a manner consistent with the requirements of the Power Sales Agreement.The term of the Master Agreement is indefinite,remaining in effect until termination of the Power Sales Agreement or until AEA no longer legally exists.This agreement authorizes AEA to enter into any contracts necessary to perform operating or maintenance-type services to the Project,subject to the approval of the Committee. On behalf of the Committee,the AEA entered into an agreement with Chugach Electric Association,Inc.(CEA)in August 1996,for the provision of all services necessary to dispatch the Project's electric power output.The dispatch agreement runs concurrently with the wheeling and related services contract entered into by and among the parties to the Power Sales Agreement in December 1987 and remains in effect for the term of the wheeling agreement unless CEA ceases to be the output dispatcher. In August 1996,the Alaska Energy Authority entered into an agreement with CEA on behalf of the Committee for the provision of maintenance services for the Daves Creek and Soldotna SVC Substations. An operation and maintenance agreement dated February 11,1994,was executed between Homer Electric Association,Inc.and the Alaska Energy Authority.This agreement provides for the operation and maintenance of the Bradley Lake Hydroelectric Project by Homer Electric Association,Inc.The agreement,as amended effective July 1,2008,is through June 30,2013 and automatically continues in successive five year terms thereafter (currently ending June 30, 2018)unless terminated by either party as set forth in the amended agreement.Generally,to avoid an automatic,successive five year term extension,notice of termination by either party must be given two years in advance of the termination date.HEA is to be reimbursed for costs associated with the operation,maintenance and repair of the Project as determined in advance through the submission of an annual budget based upon prudent estimates and anticipated operation and maintenance costs. In August 1996,the agreement was amended to separate the maintenance of the transmission facilities from the hydroelectric project.The transmission agreement continues from year to year,except upon written notice to terminate by either party.Notice of termination must be given six months in advance of termination dates.In June 1999,the transmission agreement was again amended to require HEA to provide communication services in addition to the other services. BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2016 and 2015 NOTE D:RELATED PARTY TRANSACTIONS During the years ended June 30,2016 and 2015,costs incurred under the various contracts with related parties described in Note C were as follows: 2016 2015 Homer Electric Association,Inc.-operation, maintenance,communications and fixed asset replacements $2,324,468 $2,265,959 Chugach Electric Association,Inc.-substation service maintenance and fixed asset replacements $159,956 $437,140 Alaska Energy Authority -administrative fees $200,000 $200,000 For the years ended June 30,2016 and 2015,Chugach Electric Association,Inc.provided dispatch services to the Committee at the agreed upon amount which is zero. Amounts payable to related parties at June 30,2016 and 2015 were as follows: 2016 201 Included in accounts payable: Homer Electric Association,Inc.$445,115 $557,170 Chugach Electric Association,Inc.$10,117 $97,504 Due to others: Alaska Energy Authority -short-term borrowings for vendor payments $15,048 $26,176 10 BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS NOTES TO FINANCIAL STATEMENTS (Continued) June 30,2016 and 2015 NOTE E:SURPLUS REFUND -OPERATIONS AND MAINTENANCE The $1,394,253 surplus at June 30,2015 was refunded to member utilities in fiscal year 2016 pursuant to the Power Sales Agreement and direction of the Committee. The $1,064,413 surplus at June 30,2016 will be refunded to member utilities in fiscal year 2017 pursuant to the Power Sales Agreement and direction of the Committee. NOTE F:SUBSEQUENT EVENTS The Committee has evaluated subsequent events through December 8,2016,the date the financial statements were available to be issued,and did not identify anything requiring additional disclosure. 1] SWALLING @&ASSOCIATES Certified Public Accountants &Business Advisers INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION Bradley Lake Project Management Committee Anchorage,Alaska We have audited the special-purpose financial statements of the Bradley Lake Project Management Committee Operating and Revenue Funds as of and for the years ended June 30, 2016 and 2015,and our report thereon dated December 8,2016,which expressed an unmodified opinion on those special-purpose financial statements,appears on pages 1 and 2.Our audits were conducted for the purpose of forming an opinion on the special-purpose financial statements as a whole.The supplemental special-purpose Statements of Expenses are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements.Such information is the responsibility of the Bradley Lake Project Management Committee and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements.The information has been subjected to the auditing procedures applied in the audits of the special-purpose financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special- purpose financial statements or to the special-purpose financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America.In our opinion,the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Bradley Lake Project Management Committee and is not intended to be and should not be used by anyone other than this specified party. Koollug fF Qecoculy PC. Anchorage,Alaska December 8,2016 3201 C Street.Suile 405 :Anchorage.Alaska 995033IndependentmemberafDEKIntecaationgdlawortdwideassociation.of independent aecounting firms aed business advisers Ph 907.563.7977 .Fax YOTAGOLI683 +www.swallingepas.com BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS STATEMENTS OF EXPENSES Years ended June 30,2016 and 2015 2016 Variance Favorable 2015 Budget Actual (Unfavorable)Actual Expenses: Generation expense: Operation supervision and engineering $329,287 §§$333,371 $(4,084)$300,134 Hydraulic operation 115,061 82,954 32,107 84,200 Electric plant operation 303,508 231,820 71,688 268,973 Hydraulic power generation operation 585,468 524,308 61,160 339,893 FERC land use fees 183,000 279,876 (96,876)137,230 Structure maintenance 394,165 360,464 33,701 293,059 Reservoir,dam,and waterway maintenance 107,106 57,158 49,948 99,799 Electric plant maintenance $03,281 419,480 83,801 403,331 Hydraulic plant maintenance 167,073 122,697 44,376 118,576 System control and Joad dispatching 481,799 423,918 57,881 396,248 Substation operation and maintenance 379,352 159,956 219,396 407,140 Overhead line maintenance 710,849 61,371 649.478 26,822 Total generation expense 4,259,949 3,057,373 1,202,576 2,875,405 Administrative,general and regulatory expense: Insurance $74,637 $30,522 44,115 592,920 AEA administrative fee 200,000 200,000 -200,000 PMC costs 157,180 206,552 (49,372)53,158 Regulatory commission: FERC administrative fees 210,000 182,885 27,115 150,519 FERC licensing and study 180.000 96.301 83.699 105,747 Total administrative,general and regulatory expense 1,321,817 1,216,260 105,557 1,102,344 Total operations and maintenance expenses, before capital project reimbursement 5,581,766 4,273,633 1,308,133 3,977,749 R &C Fund repayment 3,241,864 2.692.711 549,153 1,370,494 Total operations and maintenance expenses $8.823.630 $6.966344 $1,857,286 $5,348,243 13