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Home My WebLink AboutSE Intertie status report 2003Southeast Conference = Southeast Alaska Intertie Proj ect °STATUS REPORT IO hn,nS St aNI eigeen SyagnyHoinese'\. a ou ..@ dimese. . ne an)Etfin Coveg a "WougrasoeHoonahPelican@,::chalgaat_ere "Terakee *Yeatesee :on oo© a oy . ° tSitkaeae -"hed oe a %,Crabscu @ Petersburg y .Baraat 4's asa i oe @Wangell Oy 4 et ee A fee :HydestPortAlexander_Cottman Coveti] ; o *r J ce a \, KI ; :Row esate +;awa :sngiis£ethorne Bay.: egi!chikanooHydgburgaanSexman ; ,OMetlaxatia 'Linking'the Communities of Southeast together History a"rtPs%aXVaN The concept of interconnecting SE Alaska with a transmission line system CN© has been discussed by SE Conference and others for decades SE Conference commissioned a study,completed by Acres Int'l in late 1997,to evaluate the feasibility of the project Based on the Study's conclusions,SE Conference and the communities/utilities of SE Alaska worked with the Congressional delegation to secure passage of S-964 which authorized the project.This bill,passed and signed into law in 2000,authorizes appropriation of up to $384 million of federal funds. SE Conference received State grant to pursue project and hired an Intertie Coordinator in November,2002. SE Conference Intertie Committee met in Juneau on Nov.20,2002 and unanimously voted to proceed with the Juneau/Hoonah and the Petersburg/Kake Interties as the next segments to be added to the system. The Committee also approved proceeding with an engineering/economic analysis of the entire project USDA -Rural Development attended this meeting and enthusiastically supported the actions of the Intertie Committee and agreed to fund this study ($100,000).D.Hittle &Associates has been retained to complete analysis. Appropriation requests have been submitted to Washington,DC for funding.6/2003 Project Benefits cE ©¢©7©SE Alaska is probably the only place left in the US with a population its size that is not interconnected with a electrical transmission grid SE Alaska has huge hydroelectric potential with many projects currentlyon-line meeting the needs of the major population centers A transmission line system is needed so everyone can benefit from this clean,renewable source of power Hydro power will displace fossil fuel generation and lessen associated problems such as air pollution,bulk fuel storage and fluctuating fuel costs An interconnected system will reduce the requirement to have a 100% back-up diesel generation capability Communities is SE have been devastated by the demise of the timber industry and problems with the salmon fishery.Sustainable economicdevelopmentanddiversificationsimplycannotoccurwithelectricity prices in the 35 cent/kwh range as they are in the rural communities Lake Tyee,south of Wrangell,is only running at around 40%of capacity. Transmission lines would allow this surplus to be utilized by the entire region Southeast Conference Intertie Committee -at Yt Membership: ee B®3,-City of Kake -City of HoonahficeVEE-Alaska Electric Light &Poweriegdfoed-Thomas Bay Power Authority<2 "-City of Ketchikan -City of Sitka -j -Gustavus Community Association--f -Organized Village of Kake-nf -Central Council -Tlingit Haidaaeb*!-Kake Tribal -City of PetersburgdeConferenceIntertieCommitteemeetinginJuneau-January,2003 -Gy oF pas Regional Electric AuthorityeReceivedStategranttocontinueprojecteffortsg >Hired full-time Intertie Coordinator Nov.02 e Prioritized Juneau/Hoonah &Petersburg/Kake as next segments to be added to system e Approved proceeding with engineering/economic analysis of project >$100,000 funding provided by USDA -Rural Development >Phase 1 'Draft'report out for member comment ¢Subcommittee formed to work on 'Legal Entity'peeformation.a re :Photo:Southeast Conference Intertie Chair -J.C.Conley,Southeast Conference Intertie Coordinator -Dave Carlson,USDA Rural Development State Director Bill Allen Juneau/Hoonah Intertie i LZ iS '"4,=s Y a aN ass S2enSpring:a 0.4 iNnePieeyweweud Project Description: @Length:63.5 miles Cost:$41 Million oPhase I:Juneau to N.Douglas Island -11 miles - $6 million-Completed and financed by AEL&P oPhase II:N.Douglas Island to Admiralty Island - $15 million oPhase III:Admiralty Island to Hoonah -$20 Million Project Benefits: @ Displace 5.4 million gallons of diesel at Greens Creek Mine annually @ Displace over 400,000 gallons of diesel at Hoonah annually @ AEL&P will develop and finance Lake Dorothy hydro project ($35 million) @ Reduce costs of power at Greens Creek Mine and Hoonah @ Assist in economic development in Hoonah and assure viability of Green's Creek mine and 275 full- time jobs @ T-line can eventually extend south to Tenakee,Angoon and Sitka JUNEAS>GREENS CREEK- OONAH INTERTIE (JGCH JGCH PHASE III \ x _- CHICHAGOF ISLAND CHATHAMSTRAIT\\---JGCH INTERTIE -COMPLETE -----JGCH INTERTIE -TO BE CONSTRUCTEDNJGCHT--- EXISING OVERHEAD T-LINE & *PHASE I SUBMARINE CABLE ----PROPOSED OVERHEAD T-LINE(COMFLETE)LAKE DOROTHY "Fi ®PROPOSED LAKE DOROTHY q POWERPLANT \go Y +START POINT OF JGCH INTERTIE J a =v™=Bex DOUGLAS . 4 JGCH PHASE IT 7 UCLA \PROPOSED LAKE DOROTHY /POWERPLANT° SP-C BART LAKE DOROTHY LAKE \SNETTISHAMPOWERPLANTSesaCRATERLAKE'§A ADMIRALTY 'eISLANDy, wn -d 3St D%,\%,NORTH \cA$o SCALE----_-+ JUNEAU/ADMIRALTY ISLAND/HOONAH SEGMENT Recently constructed t-line on North Douglas Island OTS sage ewer Phe TEAROMe He ans, Spasski Bay -Submarine Cable Landing SiteYoung's Bay Cable Landing (Hoonah Airport &Town in Background) Project Description ¢Length:46 -59 miles -Two potential routes ¢Cost:$21 -$35 Million -Depending on route & configuration Project Benefits: @ ® Displace over 300,000 gallons of diesel annually Reduce costs of power -Rates now in excess of 35 cents/Kwh Assist in economic development T-line can be extended to Sitka and/or north to Angoon/Tenakee/Hoonah Lake Tyee presently has surplus available Petersburg to Kake \/MTransmissionL ineCorridor.shp/\/TongassShoreline«Towns.shp Roads.shpNon-National Forest Land shpWildernessArea.shp"PorestLand .gf Se,: bh ip"¢Betersburg Kupreanof Island OPN. Bry Potential submarine cable cro: near Petersburg YTD FY 2003 -FEBRUARY 2003 TOTAL GROSS GENERATING CAPACITY USED AND AVAILABLE FOR THE FY YEAR |,[ Tee STASERpKWHAVATABLE Yellow portion indicates Tyee surplus available 'Spill'at Lake Tyee 6/2003 SKAGWAY A WHAINES SCALE 1:2500000 ..* uy .mo 'eon'.ae .HOONAH:.or a a"' J 7 %i AN ar Me re en ss =oe me =Proposed Route Yk p ORE BAY \ omens §=EXisting Transmission Line wt a AWoek ._'KETCHIKAN - .anes 'os i= Toraic ©yee 48 , 3 *'-°\.2 *oo Loo -¥par on . -:eed . 'FIGURE 1-1.Se OM eV3%ey ..';Fe im wd = SOUTHEAST ALASKA TRANSMISSION LINES i Oeasoe : SOUTHEAST ALASKA INTERTIE STUDY oO ee |co a P.O.Box 21989 Juneau Alaska 99802-1989 Tel.(907)463-3445 Fax (907)463-5670 SE Alaska Intertie Project AEA/AIDEA Meeting June 13,2003 10:30AM AGENDA TOPICS 1.Status Report on the Southeast Alaska Intertie Project Project History Project Benefits Recent Progress Southeast Conference Intertie Committee Resolutions of Support for Project Engineering/Economic Analysis oaA90TD2.Juneau -Greens Creek -Hoonah Intertie Segment (Corry Hildenbrand) 3.Petersburg -Kake Intertie Segment (Dave Carlson) 'a.Woedowski Mine Project-Update 4.Federal Appropriation Requests 5.Ownership of Intertie Project a.Ownership status -existing Interties in State/Southeast b.Formation of subcommittee by Southeast Conference to explore options c.Discussion of ownership options i.Existing Utilities/Municipalities ii.Creation of a new 'Legal Entity' iii.State of Alaska (AEA/AIDEA) iv.Other d.Discussion &Explore State (AEA/AIDEA)as potential owner i.Legal impediments ii.Discussion of legislative action required (if any) iii.State requirements as owner 6.Wrap-up:Questions,comments,requests for additional information .»Southeast Conference pas, aAaaatomeBpbIhte,de1fyBNLSeaeLE:23 January 1998 tA REBEIVE RDOCT0 Mr.Berne C.Miller Alaska Inc 2 1999 Executive Director and "UStrial Dey elopmSoutheastConferenceXPortAutthority ent213ThirdStreet,Suite 124 Juneau,Alaska 99801 Dear Berne:Southeast Alaska Electrical Intertie System Transmittal of Final Report #97-01 We are pleased to provide this final report to the Southeast Conference and the Participants in the proposed Southeast Alaska Electrical Intertie SYSTEM.It has been a privilege and an honor to work with you and representatives ofthe participating municipalities and utilities on this assignment.We are grateful for this opportunity and we sincerely wish you and the communities who will benefit from an interconnected electrical system our very best as you take the vision that is presented in this report forward to reality.We would be honored to continue to serve the region and look forward to a continuing relationship with you. Yours very truly, WinA.Wyden Nan A.Nalder Project Manager enc. ACRES INTERNATIONAL CORPORATION 3254 Eleventh Avenue West.Seattle,Washington 98119 Telephone 206-281-7089 Facsimile 206-213-0652 Email sea@acres.com Southeast Conference .Pe tian KsNeSw, January 1998 Southeast Alaska Electrical Intertie System Plan .weg Se)oo :Belew eo Ry,seme <a CHOSE NIUNO PRICAN - o ts ataage?= SSEa: _e. ™e atietonanaed 0 hn *thsBOAR Vee"Be OSoxen&EeFNVOANIEFO Acres international Corporation REPORT #97-01 AUnES Table of Contents List of Tables List of Figures Glossary of Terms and Acronyms Executive Summary 1 "White Paper”Prepared by Participants 2 Purposes and Objectives 3 Approach and Proposed System Development Phasing 4 Need for System 5 Existing Electrical Transmission and _ Generation Facilities 6 Status of New Facilities Development Table of Contents ce cee eee ene eee eee eee eee ee ene een eee eee teen aaes 1-1 2.1 PurpOSe 2.0...0.cece cee ce eet teen nen e ees 2-1 2.2 Objectives 2.0...cece eee teen eee nee enes 2-2 beeen ene eee nee eee eee ee eee eee eee teen ee 3-1 4.1 Demographics and Local Economy ................0esseeens 4-1 4.2 FinancingtheSYSTEM ......ceceeeeeee eee e rete eeee ees 4-5 4,3 Joint Regional Planning and Implementation...................4-5 4.4 Future Electric Generation Resource Development ..............4-6 4.5 Future Growth and Need for Improved Services in Southeast Alaska 4-6 4.6 Electric Rate Equalization and Regional Economic Stability .......4-7 5.1 Existing Electrical Transmission Segments ................0005 5-1 5.2 Existing Hydropower Generation Facilities................-06.5-1 6.1 New Intertie Segments Development ..................000005 6-1 6.1.1 Tyee-Swan Intertie ..........ence cence eee e ene eeees 6-1 6.1.2 Upper Lynn Canal Intertie .............0.20 6-1 6.1.3 Interties on Prince of Wales Island ..................0-.6-1 6.2 Current Status of New Generation Facility Development .........6-2 6.2.1 Goat Lake 2.1...cee cen eee ene eens 6-2 6.2.2 Mahoney Lake .........0...cece cece eee eee eee 6-2 6.2.3 Ketchikan Small Hydro Additions ...................0-.6-2 6.2.4 Metlakatla Small Hydro Upgrades/Additions .............6-2 Acres International Corporation Table of Contents 7 Action Plan 8 References Cited and List of Preparers 7.1 Proposed Phasing of Development ..............0.cee ee eee 7-1 7.2 Regional Electrical Interties ..........0....-2 0.ce eee ee eee ee 7-2 7.2.1 Proposed Intertie Segments and Estimated Cost ...........7-2 7.2.2 Review of Existing Reports ...........0...cece eens 7-7 7.3 Regional Generation ..........00.c cece eee cence eee eneas 7-7 7.3.1 Potential New Hydropower Projects ..............0--0--7-9 7.3.2 Proposed Phasing of New Hydroelectric Projects .........7-12 7.3.3 Review of Existing Reports -Hydropower Projects ........7-14 7.4 Economic and Financial Issues .......eee eee e cece eee eeee 7-15 7.4.1 Economic Parameters .......-..0...-e eee ee ee eee eee 7-15 7.4.2 Electric Load Characteristics and Forecasts .............7-16 7.5 Environmental and Regulatory Procedures ................---7-22 7.5.1 Reconnaissance Level Review -"Fatal Flaw Analysis".....7-23 7.5.2 Formal Licensing and Permitting Requirements...........7-23 7.5.3 Environmental Protection,Enhancement,and Mitigation Requirements .............-20s e eee eens 7-25 7.5.4 Review of Existing Reports -Environmental and Regulatory Procedures 1.......cece cece eee cee ee eee teen eens 7-26 7.6 Recommendations ...........0c cece eee eee ee eee eee 7-28 8.1 References Cited 2.0.0...cc eee eee eee eens 8-1 8.2 List of Preparers .......2.0.cece ee eee eee eee eee eee 83 Acres International Corporation SOFEOTaccOoacea Sa? Table of Contents Table 4.1 Table 4.2 Table 4.3 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 7.1 Table 7.2 Table 7.3 Table 7.4 Table 7.5 Table 7.6 Table 7.7 Table 7.8 Table 7.9 Figure 1 Figure 2 List of Tables Private Sector Industry Trends in Southeast Alaska 1990-1996 ......4-3 Government Employment Trends -Southeast Alaska 1990-1996 .....4-3 Recent Population and Local Employment Trends for Selected Southeast Alaska Communities ..............00.0000 eee 4-4 Existing Transmission Lines and Major Interconnections over 34.5kV ..5-2 Existing Transmission Lines Design and Operating Capabilities .......5-2 Generation Capacity and Net Generation by Section ................5-3 Existing System Hydro Generation Sources .................0005-5-3 Existing Resources...1...0...c eee eee eee ee eee nee seen eaes 5-4 Proposed Sequencing and Cost Estimates for Southeast Alaska Transmission Grid Segments ...........00.ee cence cece et eeeee 7-3 Documents Reviewed -Potential New Transmission ................7-8 Potential New SYSTEM Hydroelectric Projects ................0-.7-9 Documents Reviewed -Potential New Hydroelectric Projects ........7-14 Annual Fixed Carrying Charges -Alaska Power Authority Guidelines Employed in 1987 Southeast Alaska Transmission Intertie Study .....7-15 Load Growth Projections for Participating Communities Average Annual Growth Rate 2.0...cc cece cc eee ee tee eee nneneee 7-17 Typical Licensing and Permitting Requirements for Transmission Lines and Hydropower Projects .........0.ccc eee eee cece nent e eens _7-25 Typical Environmental Protection,Enhancement and Mitigation Requirements Transmission Line Segments and Hydropower Projects ..7-26 Level of Investigation Performed as of November 1997 Proposed Transmission Segments and Hydroelectric Projects................7-27 List of Figures Electrical Intertie System Plan Electrical Intertie System Plan -Loads and Resources Acres International Corporation Acres ADEC ADFG AEL&P or AELP APA AP&T CBJ CBS DCRA emp GW KWH or kWh "lower 48" MP&L mi MW MWH or MWh NA 1996$ OH PCE PMP&L pop SED "take or pay” THREA USFWS USFS WML&P Glossary of Terms and Acronyms | Acres International Corporation /Acres International Limited Alaska Department of Environmental Conservation Alaska Department of Fish and Game Alaska Electric Light &Power Company Alaska Power Administration Alaska Power &Telephone City and Borough of Juneau City and Borough of Sitka Department of Community and Regional Affairs Employment Gigawatt (1000 megawatts) Gigawatt Hours (1000 megawatt hours) Haines Light &Power Internal Combustion Institute of Social and Economic Research,University of Alaska,Anchorage Ketchikan Public Utilities Kilovolt (1000 volts) Kilowatt (1000 watts) Kilowatt hours (1000 watt hours) Phrase commonly used in Alaska to refer to the 48 contiguous states,United States of America. Metlakatla Power &Light Miles Megawatt (1000 kilowatts) Megawatt hours (1000 kilowatt hours) Not applicable Estimate expressed in value of the US dollar in 1996 Overhead -refers to above ground transmission lines Power Cost Equalization Program Petersburg Municipal Power &Light Population Sitka Electric Department Contract provisions that require the purchaser to pay for the amount of power requested regardless whether the purchaser takes delivery and uses the power or not. Tlingit-Haida Regional Electrical Authority United States Fish and Wildlife Service United States Forest Service Wrangell Municipal Light &Power Acres International Corporation MO,AAe,aas_anaeseioeot Executive Summary The purpose of this report is to present technical information in support of a proposed electrical intertie system to interconnect presently remote isolated load centers;increase system reliability;reduce or avoid diesel dependence; encourage economic development;and stabilize and equalize power rates. This report presents a proposed SYSTEM Plan to assess final feasibility, prepare detailed design and construction documents;and construct and operate an integrated electrical intertie system in Southeast Alaska. "The communities of Southeast Alaska support the concept of a southeast electric grid as a means of reducing or avoiding diesel dependence,encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development of a regional intertie system,in accordance with individual communities'power needs.The next step is to seek the necessary funding on a partnership basis with the state and federal governments."("White Paper",July 1997,as revised in December 1997) Southeast Alaska is comprised of thousands of islands known as the Alexander Archipelago.The region offers significant natural resources and a quality of life conducive to attract new clean economic development to the area.With few exceptions,no roads or bridges connect islands.People travel between islands by boat,floatplane,and/or wheeled plane.Current limitations imposed bya lack of infrastructure and related availability of low-cost clean energy restrict development of economic development and related improvement in basic quality of life in the participating Southeast Alaska communities.The participants have determined that an integrated electrical transmission grid will enhance delivery of reliable and low-cost electric service;and support development of an integrated energy,communications, and transportation infrastructure to serve regional needs and attract new economic opportunities to the region. The communities,acting through the Southeast Conference,contracted with Acres International Corporation (Acres)to prepare a Southeast Alaska Electrical Intertie SYSTEM Plan (SYSTEM Plan)that integrates development of proposed intertie segments with new hydroelectric generation capacity designed to serve the needs of the region.The SYSTEM Plan provides a "living"plan that can be updated as the participants proceed through development of the SYSTEM. Participating entities include:Alaska Electric Light and Power Company (AEL&P),Alaska Power &Telephone Co.(AP&T);City and Borough of Acres International Corporation ES-1 Executive Summary Juneau;City of Kake;City of Ketchikan;Ketchikan Public Utilities (KPU); Metlakatla Power &Light (MP&L);City of Petersburg /Petersburg Municipal Power &Light (PMP&L);City and Borough of Sitka;Tlingit & Haida Regional Electrical Authority (THREA);and City of Wrangell.Copies of Resolutions in support of the Intertie System are included at Appendix A. Southeast Alaska electric utilities currently operate isolated systems.The existing electric transmission facilities in Southeast Alaska are a collection of remote communities solely dependent on their own resources to meet load. With the exception of existing connections between Petersburg and Wrangell there are no interconnections to import or export power among Southeast Alaska communities and electric utilities.The planned intertie between Swan Lake and Lake Tyee will add Ketchikan to the Petersburg/Wrangell interconnection.AP&T also plans to interconnect Skagway and Haines in 1998,Lacking transmission interconnections to other electric systems,each utility must plan independently to provide full power requirements to meet customer needs. The opportunity to develop a regional system through joint planning will avoid the need to come in later and try to fix problems similar to those inherent in the interconnected systems in the "lower 48".Joint planning and system operation will facilitate open access to regional SYSTEM facilities at fair and non-discriminatory rates.SYSTEM ownership could be available to all interested parties -utilities,municipalities,independent power project owners, and large industrial customers.Users of the SYSTEM would fund operation and future improvements.Joint ownership and operation would reduce the potential for monopoly control and related potential discrimination,and related costly lengthy litigation regarding alleged abuse of monopoly power,that have restricted efficient use of existing facilities in the "lower 48."Southeast Alaska provides an opportunity to "do it right"the first time by facilitating development that requires joint planning and operation. The challenge of competing in an ever increasing sophisticated marketplace for sales of products demands a more efficient production and delivery system and related infrastructure to support Southeast Alaska products.Increasing dependence on computer based technology demands improved power quality and integrated telecommunications /internet access services. >Traditional and new industries will increase demand for energy production, energy distribution systems,and a better transportation system for the region ES-2 Acres International Corporation aagAa Executive Summary >The ability to attract new industry and to modemize traditional industry is dependent on enhanced telecommunications,fibre optic networks,intemet access,and efficient transportation systems. >Existing hydroelectric projects are inadequate to serve future growth, isolated load centers will site additional diesel generation to meet immediate needs. >»Communities need reliable,cost effective,long-term sources of energy for the future that provide stable electric rates and employment and reduce environmental impacts within the region. One of the critical issues facing the Participants is availability of adequate funds to Completing to support the level of professional engineering and construction services and related physical features to construct the proposed intertie SYSTEM.Participants recognize that a combination of State, Federal,and Community funding will be required.Communities and utilities would finance new generation facilities.Regional electric utilities will operate and maintain SYSTEM transmission facilities.Sources of potential private investment will also be explored. The central policy question regarding future generation in Southeast Alaska is whether it is better to continue to develop many load-specific small hydropower projects and additional diesel generation units,or to develop a long-term collective solution to meet future energy demand with larger regional hydropower plant that develop the generation potential of sites with fewer cumulative environmental impacts.Alaskans are interested in protecting air quality and are therefore reluctant to continue to add fossil-fuel- fired generation in highly scenic areas that draw tourists from around the globe and provide a significant source of revenue to local communities. Developing regional power projects to meet future demand will require a regional grid. Normally,the phasing of hydroelectric projects within a power system grid is based largely on the estimated cost of each respective potential project.By nature,hydroelectric projects are capital cost intensive and are generally very site specific.The selected new projects have very similar characteristics consisting of lake taps at perched lakes with tunnels of reasonable length leading to powerhouses at tidewater.Therefore,development costs can be expected to be comparable and consistent with others recently developed in the region. Accordingly,it is appropriate to phase project development on the basis of projected needs for the intertie itself coupled with due consideration to the load Acres International Corporation ES-3 Executive Summary growth in the region as a whole.Thus,the intertie is the key factor in the phasing of hydro generation projects.A regional intertie will enable full utilization of each project as it would come on-line without the particular needs of the respective nearby communities. We interviewed leaders in a number of municipalities and utilities to identify existing studies and plans,and discussed their vision and expectations for an integrated regional electrical system.Based on our interviews and information provided by the participants,review of existing documents,and our analyses, we present this proposed SYSTEM Plan in five phases as discussed below and as shown on Figures |and 2. Figure 1,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN,presents a map of Southeast Alaska depicting load centers,existing and proposed new interties,and existing and proposed new hydroelectric generation facilities.Figure 2,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN:LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertie SYSTEM is constructed. PhaseI 1995 -2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to Ketchikan Public Utilities'(KPU's)electrical system;and construct an intertie connecting Metlakatla Power &Light to KPU's electrical system. The Swan-Tyee intertie segment is expected to utilize current surplus generation available from Lake Tyee.As shown in Figure 2,the existing generation resources of the respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010.Therefore,no additional hydroelectric resources are required during this period.Preliminary cost estimates for development of intertie segments specified during Phase I are $69,772,000/1996$for the Swan Lake -Lake Tyee Project and $8,785,000/1996$for the Ketchikan Metlakatla intertie. Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Phase II Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Metlakatla.Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015.Preliminary cost estimates for development of intertie segments specified during Phase II are $19,734,600/ 1996$for the Petersburg -Kake Intertie and $45,489,000/1996$for the Kake -Sitka Intertie.Estimated costs were presented in documents prepared by ES-4 Acres International Corporation tmARPRpTPRfe VoyNaw! Meet Executive Summary others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Phase III Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid).At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system.If mining loads develop during the next few years,Lake Dorothy may be brought on-line before 2015.Further,based on the load growth as projected for Juneau,the system loads can also fully utilize the proposed Swan Lake project within the 2015 -2020 time frame.Preliminary cost estimates for development of intertie segments specified during Phase III are $173,788,000/1996$for the Tenakee Springs/Angoon/Hoonah/Greens Creek/Juneau Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Phase IV Construct interties connecting Skagway,Haines,and Kensington to North- South Grid.Construct Takatz Lake Hydropower Project.By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system. Takatz Lake is shown on Figure 2 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects and cost of development.Preliminary cost estimates for development of intertie segments specified during Phase IV are $79,160,000/1996$for the Juneau -Skagway Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Phase V Construct intertie connecting Prince of Wales Island to North-South Grid. With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation.Preliminary cost estimates for development of intertie segments specified during Phase V are $39,089,000/1996$for the Ketchikan -Prince of Wales Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. The general evolution of analyses presented in the 1987 Intertie Study is entirely appropriate for the purpose of progressively narrowing down the options to find the optimal development sequence.However,we identified a Acres International Corporation ES-5 Executive Summary number of specific concerns that should be questioned in further analyses,and the need to elaborate on some of the cost functions used in the comparison of proposed line segments.The main issue in developing an integrated electrical system is optimal timing of transmission extensions,and ultimately the timing of future generation additions.Recommended investigations and analyses to complete this SYSTEM Plan include: >Update information available and relied on in preparing this Report as noted above. >Review basic designs for transmission lines and substations presented in existing reports for adequacy.Develop a level of detail adequate to provide a stronger foundation for developing refined cost estimates. >Develop generic designs for stand-alone diesel generation supply stations and for backup generating stations.Use stand-alone stations in refined Base-Case development plan;assume standby installation as grid is extended to each community. >Conduct a "fatal flaw"environmental assessment for each of the selected line segments concurrent with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented. >Update economic parameters and assumptions used in evaluating alternatives presented in the 1987 Study and apply in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM. >Prepare revised load forecasts for participating systems recognizing phased development identified in this SYSTEM Plan.Identify potential new large loads and determine each potential new large load's energy plan with regard to self-generation and interconnection with local utility to provide backup. Identify conservation program actions to be implemented by potential new large loads. >Investigate economies of scale available through multiple use corridors -electricity transmission -communications and fibre optics -transportation ES-6 Acres Internationa!Corporation oanionceeatesmgmt Executive Summary Proposed Sequencing and Cost Estimates for PHASE NEW LINE SEGMENTS LOAD CENTERS Southeast Alaska I Swan Lake -Lake Tyee (KPU,Jnitial Draft Power Supply Petersburg,Wrangell Transmission Grid Planning Study,1996)&Ketchikan $7 mi 138-KV line connects Swan-Tyee hydrosSegmentsStatus:Final EIS/USFS Record of Decision issued 8/97. Construction bids to be requested in late 1997. Estimated cost:$69,772,000/1996$ I Ketchikan -Metlakatla (Alaska Power Authority,Southeast Petersburg,Wrangell, Alaska Transmission Intertie Study,1987)Ketchikan & 15 mi 34.5 KV line (14 mi OH /1 mi submarine)Connect KPU's Metlakatla Mountain Point Sub /Race Point,MP&L. Status:Final documents to be prepared once Swan-Tyee line is o.under construction. a Estimated cust:$8,785,000/1996$* Il Petersburg -Kake -Sitka Sitka,Kake, I1-A -Petersburg -Kake (DCRA,Division of Energy,Kake-Petersburg,Wrangell, Petersburg Intertie Feasibility Study,1996)Ketchikan & 46.7 mi 69 KV (44.3 mi OH /2.4 mi submarine)capable of Metlakatla \upgrade to 138 KV. :Status:1996 update to 1987 appraisal level engineering / environmental review. Estimated cost:$19,734,600/1996$ II-B -Kake -Sitka (Alaska Power Authority,Southeast Alaska Transmission Intertie Study,1987) $5.4 mi 138 KV (20.2 mi OH /35.2 mi DC submarine)cable Status:Reconnaissance engineering /environmental. 'es Estimated cost:$45,489,000/1996$* il Sitka -Tenakee Springs/Angoon -Hoonah -Greens Creek -Sitka,Angoon, :Juneau (Alaska Power Authority,Southeast Alaska Transmission Tenakee Springs, ue Intertie Study,1987)Hoonah,Greens e 148.6 mi 138 KV (120.8 mi OH /27.8 mi AC submarine)Creek,Juneau to Status:Appraisal level engineering /environmental review.Petersburg,Wrangell, Estimated cost:$173,788,000/$1996*Ketchikan,Metlakatla (North-South Grid) Iv Juneau -Skagway (Alaska Power Authority,Haines-Skagway Connects Skagway, :Region Feasibility Study,1981)Haines,and 70.5 mi (6.5 miles 69 KV OH /64 miles 100 KV DC submarine)Kensington,north of Status:Appraisal level engineering /environmental review.Juneau,to North- Estimated cost:$79,160,000*South Grid Vv Ketchikan -Prince of Wales Island (Alaska Power Authority,Connects Thorne Bay, Black Bear Feasibility Report,1981)Kasaan,Klawock, 19mi69 KV or 115 KV (1 mi OH /18 mi submarine)Hollis,Craig,and Status:Appraisal level engineering /environmental review.Hydaburg to North- Estimated Cost:$39,089,000*South Grid SYSTEM 243.8 mi OH/148.4 mi submarine TOTALS 392.2 total miles Construction Cost Estimate $435,817,000/1996 *Indicates cost prepared using standard cost curves to escalate earlier estimate. Acres International Corporation ES-7 ey 3'4, q a'Fe oy <of &Ea)ry,ay a \ok »Yes 5 RavelPLEINoeersrwEAUvtLake Dorothy (Phase Ill)poss saunp.§FIOQNAH et B=oecuean i .Ox ew,<4;Age es SnettishamTENAKEESPRINGS$5 '\é&t e:PhaseIll saxBS4}stand SQ ARSve"7 _ANGOON .¢& siTka Zl,03 x4,Scenery Lake (Phase V)LSA eee Cb a)Wide i ON.«SS Nh Swan Lake (Phase il) & 4,Ge <a(-eg Tyee Lake"any, VE LOAD CENTER <Existing Intertie a \ V CRAIG s-«it New Intertie 'P Fae7PhaseI, hy¥{METLATAKAaeDIKOKisENTAANCE oS Figure 1 AiSoutheastAlaskaUtilities ELECTRICAL INTERTIE SYSTEM PLAN 1,000MWh°ossesesqbesereneerestsueseetooAverage Annual Load w/Potential New Hydro Average Annual Energy Average Annual Energy _ wi Existing Hydro 1995 2000 2005 ELECTRICAL INTERTIE SYSTEM PLAN :LOADS AND RESOURCES 2010 Southeast Alaska Utilities 2030 Figure 2 AUIS my of ]see oo "White Paper”Prepared by Participants ay sg Section 1 "White Paper”Prepared by Participants Representatives from communities in Southeast Alaska met during 1997 with the purpose of preparing a "white paper"on regional power generation and distribution needs.The white paper focus is on a regional power grid development plan for Southeast Alaska that is responsive to each community's needs and time lines. The Southeast Conference,an Alaska Regional Development Organization and USDA Resource Conservation and Development Council,issued a request for proposals to provide professional engineering services to update and summarize information contained in the Southeast Alaska Electrical Intertie &Transportation Corridors Study and other related documents on June 20,1997.Acres International Corporation (Acres)was awarded a contract on August 5,1997 to undertake this effort.The white paper set the tone for this assignment and one of the requirements in the RFP was to "Review paper and recommend changes needed to make paper agree with results of this effort."(Section Four,Scope of Work,4.2 Approach,item 1, RFP #97-01) The July 1997 White Paper focused on a 20-year regional power grid development plan.An initial draft of the report was presented to participants and discussed at the September 1997 Southeast Conference Annual Meeting in Petersburg.Following that meeting,participants provided additional comments and also discussed the appropriate schedule for phasing development of the regional power grid.During a December 1997 meeting in Sitka,participants determined that the plan should not be limited to a 20-year horizon as full realization of the proposed plan could extend beyond a period of 20 years and participants determined that a flexible timeframe was more appropriate.Acres revised the original draft of the report to address this change in timeframe.The July 1997 White Paper was revised accordingly and following this brief introductory section,readers will find a copy of the December 1997 version of the White Paper with recommended changes as approved by the participants.A list of participating communities is included at the end of the text.Copies of resolutions passed by participating communities are available upon request from the Southeast Conference. Acres International Corporation 1-1 WHITE PAPER SOUTHEAST ALASKA ELECTRICAL INTERTIE SYSTEM July 1997,as Revised December 1997 Major economic and social changes are taking place in Southeast Alaska to minimize adverse impacts of those changes,and to facilitate economic revitalization and diversification,adequate infrastructure is a must. The most basic of infrastructure is electricity,because without adequate generation and transmission capacity,communities will be unable to sustain services,let alone grow.Even other infrastructure,such as water and sewer facilities,is dependent on electricity. Moreover,from an environmental impact standpoint,failure to construct a regional electric grid will result in increased local diesel generation rather than taking advantage of the substantial hydro power potential that exists in Southeast Alaska.Building a generation and intertie grid takes a long time,so a regional construction plan is needed now. In 1987,the then Alaska Power Authority completed a study that identified a Southeast Alaska electrical grid system.The study found that such a grid is both technically and economically feasible,with a twenty year planning horizon.Today,after a decade of growth in demand and numerous studies confirming the need for this network,virtually none of these electrical interties have been constructed.Last month,the communities of Southeast Alaska came together in Sitka to start getting the job done.The group initiated efforts to develop a plan drawing heavily on work in the previous intertie studies. At present,most every community in Southeast Alaska generates its own power ina largely isolated electrical environment.In an area with rich hydroelectric potential,most smaller communities remain entirely diesel dependent.Even in larger communities such as Juneau,Ketchikan and Sitka which currently have hydroelectric power,those facilities are reaching the limit of their capacity and supplemental diesel power is being pursued or contemplated.This,despite the fact there is adequate hydroelectric potential to serve all of Southeast for decades to come if an intertie system existed to transport powerto the load centers. The communities of Southeast Alaska therefore support the concept of a southeast electric grid as a means of reducing or avoiding diesel dependence,encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development of a regional intertie system,in accordance with individual communities'power needs.The next step is _to seek the necessary funding on a partnership basis with the state and federal governments. Participants Supporting a Regional Effort to Promote a 20-Year Power Grid Plan forthe Southeast Alaska Region include: >Alaska Electric Light and Power Company >Metlakatla Power &Light >Alaska Power &Telephone Co.>City of Petersburg >City and Borough of Juneau,Alaska >City and Borough of Sitka >City of Kake >Tlingit &Haida Regional Electrical Authority >City of Ketchikan :>City of Wrangell >Ketchikan Public Utilities 2 Purposes and Objectives Section 2 2.1 Purpose Purposes and Objectives "The communities of Southeast Alaska support the concept of a southeast electric grid as a means of reducing or avoiding diesel dependence, encouraging economic development and stabilizing and equalizing power rates.The communities intend to prioritize the development of a regional intertie system,in accordance with individual communities'power needs.The next step is to seek the necessary funding on a partnership basis with the state and federal governments."("White Paper",July 1997,as revised December 1997). The communities,acting through the Southeast Conference,contracted with Acres International Corporation (Acres)to prepare a Southeast Alaska Electrical Intertie SYSTEM Plan (SYSTEM Plan)that integrates development of proposed intertie segments with new hydroelectric generation capacity designed to serve the needs of the region.The SYSTEM Plan provides a "living"plan that can be updated as the participants proceed through development of the SYSTEM. Participating entities include:Alaska Electric Light and Power Company (AELP),Alaska Power &Telephone Co.(AP&T);City and Borough of Juneau;City of Kake;City of Ketchikan;Ketchikan Public Utilities (APU); Metlakatla Power &Light (MP&L);City of Petersburg /Petersburg Municipal Power &Light (PMP&L);City and Borough of Sitka;Tlingit & Haida Regional Electrical Authority (THREA);and City of Wrangell.Copies of Resolutions in support of the Intertie System are included in Appendix A. This report documents investigations and analyses conducted by Acres under the terms of the August 5,1997 Letter of Agreement with the Southeast Conference pursuant to the Request for Proposals #97-01,Southeast Electrical Intertie,as augmented in January 1998. The purpose of this report is to present technical information in support of a proposed electrical intertie system to interconnect presently remote isolated load centers;increase system reliability;reduce or avoid diesel dependence; encourage economic development;and stabilize and equalize power rates. This report presents a proposed SYSTEM Plan to assess final feasibility; prepare detailed design and construction documents;and construct and operate an integrated electrical intertie system in Southeast Alaska.This report will be used to brief legislators,Members of Congress,and other public officials; and to inform residents in the communities and elicit their support for the proposed Southeast Alaska Electrical Intertie SYSTEM. Acres International Corporation Purposes and Objectives 2.2 Objectives In preparing this report,Acres interviewed federal and state energy officials; community leaders;and electric utilities to elicit their interests and recommendations and identify studies and plans that have been completed. Studies and plans used in preparing this report are identified in the text.A complete bibliography is included at Appendix B,Volume 2 and is available from the Southeast Conference. Develop a 20-year power grid plan for the Southeast Alaska Region responsive to each community's needs and time lines that will enhance opportunities to increase the region's economic base and result in regional economic development opportunities that will provide a basis to achieve: »effective and efficient coordination of the electrical resources and enhanced reliability of electrical service through a regional power grid; >clean renewable hydroelectric regional energy resources,thereby avoiding increased environmental effects associated with additional diesel generation; >an environment that will enhance opportunities to locate new commercial and industrial business; »lower cost hydroelectric power to communities now solely dependent on diesel generation,thereby increasing opportunities to attract new business and provide jobs to communities with high unemployment;and >stable electric rates and cost equalization. 2-2 Acres International Corporation Saa:EPankcoaeneeoeeeaicatceaea 3 Approach and Proposed System Development Phasing Section 3 Approach and Proposed System Development Phasing The State of Alaska and the Federal Government have conducted numerous reconnaissance level investigations and identified potential sites and corridors for the development of hydroelectric power generation facilities and electrical power grids throughout Southeast Alaska.This report draws on the content of existing documents and,where necessary,includes updates to existing data based on Acres'experience with similar projects.Original research and analysis were not part of this assignment.Our purpose in developing this plan was to confirm feasibility of a regional electrical intertie SYSTEM and to identify logical steps to pursue development of grid segments and regional hydroelectric generation facilities. ) We interviewed leaders in a number of municipalities and utilities to identify existing studies and plans,and discussed their vision and expectations for an integrated regional electrical system.Based on these interviews,we understand that the participants seek a flexible plan that presents logical steps to take to get from here --a set of preliminary documents -to an interconnected electrical system that will serve the region's needs from a number of perspectives.Data was requested of each municipality and utility in the region regarding power generation and distribution needs,and plans and load forecasts. Based on our interviews and information provided by the participants,review _of existing documents,and our analyses,we present this proposed SYSTEM Plan in five phases: PhaseI 1995 -2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to KPU's electrical system;and construct an intertie connecting MP&L to KPU's electrical system. Phase II 2011 -2015 Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Meitlakatla. Phase III 2016 -2020 Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid).Construct Lake Dorothy and Swan Lake hydropower projects. Acres International Corporation Approach and Proposed System Development Phasing Phase IV 2021 -2025 Construct interties connecting Skagway,Haines,and Kensington to North- South Grid.Construct Takatz Lake Hydropower Project. Phase V 2026 -2030 Construct intertie connecting Prince of Wales Island to North-South Grid. Construct Scenery Lake Hydropower Project. Section 7 of this report presents further details of the proposed SYSTEM and includes two figures which provide the following graphic representations. Figure 1,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN,presents a map of Southeast Alaska with a schematic diagram superimposed to depict load centers,existing and proposed new interties,and existing and proposed new hydroelectric generation facilities.Figure 2, Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN: LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertie SYSTEM is constructed. Detailed Technical Analyses and Cost Information Appendices are available upon request from the Southeast Conference. 3-2 Acres International Corporation Watiites.%BONOOOme, Need for System Section 4 4.1 Demographics and Local Economy Need for System Southeast Alaska is comprised of thousands of islands known as the Alexander Archipelago.The region offers significant natural resources and a quality of life conducive to attract new clean economic development to the area.With few exceptions,no roads or bridges connect islands.People travel between islands by boat,floatplane,and/or wheeled plane.Current limitations imposed by a lack of infrastructure and related availability of low-cost clean energy restrict development of economic development and related improvement in basic quality of life in the participating Southeast Alaska communities.The participants have determined that an integrated electrical transmission grid will enhance delivery of reliable and low-cost electric service;and support development of an integrated energy,communications, and transportation infrastructure to serve regional needs and attract new economic opportunities to the region. Southeast Alaska electric utilities currently operate isolated systems.Lacking transmission interconnections to other electric systems,each utility must plan independently to provide full power requirements to meet customer needs. Developing hydropower generation and major transmission projects requires a long lead time and significant capital investment. Population growth in Southeast Alaska has increased from approximately 65,000 to 75,000 persons over the ten year period 1986 -1996.Annual average employment increased during the ten year period from 29,000 to 36,000 persons.During this period the real average annual salary declined from $34,000 to $30,000 and total payroll increased from $1 billion to $1.1 billion.Government accounts for over $800 million in annual personal income in Southeast Alaska.(McDowell Group,Inc.,1997) The three main load centers in the region are Juneau,Sitka,and Ketchikan. Expansion of transmission grid legs as presented in the 1997 Report focused on these three load areas.Recent trends for several of the participating utilities are presented in a table following this text section. The Southeast Alaska economy is built on timber,fishing,and tourism.An increase in hardrock mining development is proposed,but as yet is not a major factor.Communities are investigating "value-added"timber and fishery products in order to expand these traditional industries.New industrial development is being actively sought,however absence of an interconnected electric system and improved transportation tends to discourage significant investment in the region.(AEA 1990). Acres International Corporation 4-1 Need for System Tourism is identified as the industry sector exhibiting the most potential for growth in the near term.Cruise passenger capacity is expected to increase another 8%in 1998;total southeast visitor spending is approaching $200 million annually.Traditional timber and fishery industries in Southeast Alaska are undergoing significant change,and in some cases closure. National legislated mandates established the U.S.Congress and the Administration will shape Tongass National Forest management over the near term.Economic effects associated with pulp mill closures have devastated certain communities.The forest products industry has lost 2,200 jobs since 1990,300 jobs in 1996 and another 400 in 1997;over the seven year period, industry payroll has dropped by $100 million.The forest products industry expects 150 to 180 million board feet production annually in the near term,a significant reduction than projected in recent years.The seafood industry experiences mixed success depending on yield and market price.The mining industry projections are mixed.Greens Creek is back in full production and Kensington awaits improved gold prices before moving forward.The Niblack project continues to show promise.Sealaska's project is currently on hold.The proposed AJ project was scrapped.The government sector accounts for one- third of all jobs in Southeast.Little or no growth is projected at the state and federal levels;recent growth has occurred at the local level.The average annual salary in the government sector is $38,000,significantly higher than the private sector average of $26,000.Private sector industry trends during the period 1990 to 1996 and government employment trends over the same period are presented in the Tables 4.1,4.2,and 4.3 following the text in this section of the report.(McDowell Group,Inc.,1997) The challenge of competing in an ever increasing sophisticated marketplace for sales of products demands a more efficient production and delivery system and related infrastructure to support Southeast Alaska products.Increasing dependence on computer based technology demands improved power quality and integrated telecommunications /internet access services. >Traditional and new industries will increase demand for energy production, energy distribution systems,and a better transportation system for the region >The ability to attract new industry and to modernize traditional industry is dependent on enhanced telecommunications,fibre optic networks,internet access,and efficient transportation systems >»Existing hydroelectric projects are inadequate to serve future growth; isolated load centers will site additional diesel generation to meet immediate needs Acres International Corporation easeaeoTsOOOePNBRNERFo#Soge Need for System Table 4.1 Private Sector Industry Trends in Southeast Alaska 1990 -1996 Table 4.2 Government Employment Trends -Southeast Alaska 1990 -1996 Private Industry Sector Change Since 1990 Change 1995 -1996 Construction +_600 +150 Lumber &Wood Products -1,300 +300 Seafood Processing +50 -150 Transportation +200 No Change Retail Trade +1,200 +100 Services (ex.transportation)+3,750 +350 Source:Presentation Materials prepared by McDowell Group,Inc.,for the Southeast Conference Annual Meeting,September 18 -20,1997 Level Change Since 1990 Change 1995 -1996 Federal -100 No Change State -_250 -50 Local +450 +150 Source:Presentation Materials prepared by McDowell Group,Inc.,for the Southeast Conference Annual Meeting,September 18 -20,1997 Acres International Corporation Need for System "Table 4.3 Recent Population and Local Employment Phase /1997 %Change 1990-97 Actual Trends for Selected Community Population Population 96-97.%Change Population Southeast Alaska Employment 95-96 Population Growth Communities I/Ketchikan 14,599 pop 0.9%0.8%771 ;emp -1.1% 'I/Petersburg 3,432 pop 2.3%pop 1.0%225 emp 2.3% I/Wrangell 2,543 pop -2.0%0.3%64 emp -2.3% I/Metlakatla 1,595 pop 0.5%NA NA emp NA II /Kake 767 pop 7.7%NA NA emp NA II/Sitka 8,733 pop 12%0.2%145 emp 1.2% TI /Juneau 29,813 pop 1.0%1.6%3,062 emp 2.2% I /Angoon 571 pop -5.6%NA NA emp -5.7% Il /Hoonah 906 pop 0.7%NA NA emp 5.7% IV/Skagway 816 pop 6.4%NA NA ,emp -5.7% IV /Haines 2,421 pop 2.0%1.9%304 emp 9.6% V/Craig 2,043 pop -3.1%7.0%783 emp -0.3% V /Klawock 704 pop -3.0%NA NA emp 2.3% V /Thome Bay 625 pop -3.1%NA NA emp - 0.3% Source:Presentation Materials prepared by McDowell Group,Inc.,for the Southeast Conference Annual Meeting,September 18 -20,1997 4-4 Acres International Corporation a,NETENRNPRO,FoaidiaeoNmo Need for System 4.2 Financing the SYSTEM 4.3 Joint Regional Planning and Implementation »Communities need reliable,cost effective,long-term sources of energy for the future that provide stable electric rates and employment and reduce environmental impacts within the region. One of the critical issues facing the Participants is availability of adequate funds to Completing to support the level of professional engineering and construction services and related physical features to construct the proposed intertie SYSTEM.Participants recognize that a combination of State, Federal,and Community funding will be required.Communities and utilities would finance new generation facilities.Regional electric utilities will operate and maintain SYSTEM transmission facilities.Sources of potential private investment will also be explored. In support of its proposed request for federal support,the Participants state that Southeast Alaska and its residents have borne a significant burden due to federally imposed limitations on development of the State's natural resources pursuant to Federal Legislation.These limitations have resulted in significant reductions in traditional timber and fishing industries and related reductions in local employment as discussed in the above section 4.1,Demographics and Local Economy. The existing electric transmission facilities in Southeast Alaska are a collection of remote communities solely dependent on their own resources to meet load.With the exception of existing connections between Petersburg and Wrangell there are no interconnections to import or export power among Southeast Alaska communities and electric utilities.The planned intertie between Swan Lake and Lake Tyee will add Ketchikan to the Petersburg/Wrangell interconnection.AP &T also plans to interconnect Skagway and Haines in 1998. The opportunity to develop a regional system through joint planning will avoid the need to come in later and try to fix problems similar to those inherent in the interconnected systems in the "lower 48".Joint planning and system operation will facilitate open access to regional SYSTEM facilities at fair and non-discriminatory rates.SYSTEM ownership could be available to all interested parties -utilities,municipalities,independent power project owners, and large industrial customers.Users of the SYSTEM would fund operation and future improvements.Joint ownership and operation would reduce the potential for monopoly control and related potential discrimination,and related costly lengthy litigation regarding alleged abuse of monopoly power,that have restricted efficient use of existing facilities in the "lower 48."Southeast Alaska provides an opportunity to "do it right"the first time by facilitating development that requires joint planning and operation. Acres International Corporation 4-5 Need for System 4.4 Future Electric Generation Resource Development 4.5 Future Growth and Need for Improved Services in Southeast Alaska The central policy question regarding future generation in Southeast Alaska is whether it is better to continue to develop many load-specific small hydropower projects and additional diesel generation units,or to develop a long-term collective solution to meet future energy demand with larger regional hydropower plant that develop the generation potential of sites with fewer cumulative environmental impacts.Alaskans are interested in protecting air quality and are therefore reluctant to continue to add fossil-fuel- fired generation in highly scenic areas that draw tourists from around the globe and provide a significant source of revenue to local communities. Developing regional power projects to meet future demand will require a regional grid. Communities need to improve services to attract new commercial and industrial development to expand employment opportunities in an area where the traditional logging,pulp,and fishing industries are in decline.A key element is stabilizing electric rates so that communities are not disadvantaged due to lack of access to hydropower generation.Competitive electric rates are essential to local regional development. The transmission infrastructure needs to be linked with development of improved transportation to and within Southeast Alaska.Improved access will attract new product-oriented industry,improve tourism opportunities, enhance interaction between communities in Southeast Alaska,and generally improve the lifestyle of residents by enabling them to travel for business and personal needs on a reliable and timely basis. A regional dedicated utility corridor could accommodate regional and energy transmission/transportation (electricity,fibre optics,and natural gas)and multi-modal transportation.This report addresses electricity transmission and notes the community preference to expand corridor use to provide transportation opportunities.We understand that the Southeast Conference is exploring opportunities to perform a similar review regarding transmission in Southeast Alaska.We also note that the State of Alaska Department of Transportation has embarked on an examination of multi-modal transportation needs in Southeast. The potential to serve new large mining and related industrial loads in the region and across the border in Canada will also require expanded transportation and electric transmission infrastructure and additional generating capacity.Proposals to open the Kensington and Jualin mines north of Juneau are currently being considered.Greens Creek Mines has already installed its own diesel generation sources.The direct energy requirements for mining are assumed to be 60 million KWH/year for the Kensington mine,and 4-6 Acres International Corporation 4 \ }SONPPmmen.os.eMpyCPFPNES Need for System 4.6 Electric Rate Equalization and Regional Economic Stability 20 million KWH/year for the Jualin mine."Take-or-pay"provisions in power contracts with the mines will mitigate the economic risk of developing major new resources associated with mining operations. From a public policy perspective,the need to enhance local communities' ability to maintain an appropriate level of economic well-being is a primary interest.During the interviews with local communities,the high unemployment and lack of potential to maintain existing and attract new industry and related employment opportunities,were identified as motivating factors to construct an interconnected system so that lower cost power could be provided to these communities.The Alaska Electric Power Statistics - 1960-1995 at page 85 presented cost comparisons for 1995 typical monthly electric bills at varying levels for residential customers.Figure 3 and Table 4.1,based on statistics from the above noted document,depict the range from high to low for communities included in this analysis. Acres International Corporation 5 Existing Electrical Transmission ° and Generation Facilities ay Section 5 5.1 Existing Electrical Transmission Segments 5.2 Existing Hydropower Generation Facilities Existing Electrical Transmission and Generation Facilities Existing transmission facilities in Southeast Alaska were constructed to deliver power from generation to specific load centers.Due to the remote locations,many communities are situated on islands,and lack of electrical interconnections among locations,electrical utilities in Southeast Alaska operate their systems to deliver power to their customers and do not have opportunity to import power from other systems to meet electric customer needs.Ability to construct an interconnected system is exacerbated by these remote locations and rough terrain.The one current exception is the interconnection between Lake Tyee and municipally owned and operated electric utilities in Petersburg and Wrangell who share output from the Lake Tyee Project.Nearterm planned interconnections include the intertie between Swan Lake and Lake Tyee that would connect KPU to Petersburg and Wrangell and a planned submarine interconnection between Skagway and Haines to share output of the planned Goat Lake Hydroelectric Project. In 1995 there were approximately 320 total transmission circuit miles in major load centers in Southeast Alaska:20 miles @ 25 KV;25.0 miles @ 34.5 KV; 80 miles energized @ 69 KV,built @ 138 KV;120.5 miles @ 120.5 KV;30 miles @ 115 KV;44 miles at 138 KV.Areas covered by these statistics include Snettisham/Crater Lake,AELP,Sitka Electric System,KPU,and Swan Lake /Tyee Lake.Tables 5.1 and 5.2 provide detailed information regarding these existing facilities. Existing hydro projects in Southeast Alaska are identified in two categories: (1)developed by local utilities to serve local load,and (2)system hydroelectric projects developed by the State of Alaska or the Federal Alaska Power Administration to serve shared interconnected load centers.Existing hydro projects constructed by utilities to meet specific loads are located in Skagway,Juneau,Sitka,Petersburg,Ketchikan, Metlakatla,and Prince of Wales Island.Existing system hydro electric projects include:Snettisham/Crater Lake,Lake Tyee,and Swan Lake. Figure 1 shows existing system hydropower units and transmission segments;and proposed new system hydropower units and transmission segments.Table 5.3 presents generation capacity and net generation by sector;Table 5.4 lists federal and state-owned hydro generation sources; and Table 5.5 lists all existing generation facilities by utility. Acres International Corporation 5-1 Existing Electrical Transmission and Generation Facilities Areas served by system hydro projects currently maintain backup diesel co capacity equal to 100%peak demand.Diesel units cover emergency operation,peaking requirements,voltage regulation,or meet remaining load requirements not available from the hydro projects.Areas not interconnected to a system hydro project currently maintain diesel capacity equal to 125%-130%of the peak load depending on the ratio. Table 5.1 Existing Transmission Lines and Major Interconnections Area Circuit Voltage Circuit . over 34.5 kV (ky)Miles '4 Juneau (APA &AEL&P) Snettisham/Crater Lake -Thane (Federally owned)_138 44.0 - Thane -Capital Avenue Sub 69 5.0 . Thane Loop Sub (Mendenhall Valley)69 17.0 Upper Mendenhall Bridge -Auke Bay -69 t Brotherhood Bridge € Sitka Electric Department C Blue Lake -Sitka and through City 69 5.0 ¢ Green Lake -Blue Lake 69 9.0 € Ketchikan Public Utilities ' Silvis Lake -Beaver Falls -Ketchikan and ' through City to North Point Higgins Sub 34.5 25.0 % Swan Lake -Ketchikan (State owned)115 30.0 . Petersburg -Wrangell . Tyee -Wrangell 69*39.0 . Wrangell -Petersburg 69*42.0 € € *Line is builtto 138 kv standards.t € XN Table 5.2 €Existing Transmission Line € Design and Operating Area Designed Operated (Capabilities Juneau -Snettisham/Crater Lake to Thane 138 KV 138KV ; Juneau -Annex Creek to Thane 23 KV 23 KV - Juneau -Thane to Juneau 69 KV 69 KV Sitka 69 KV 69 KV Tyee to Petersburg/Wrangell 138 KV 69KV Petersburg 25 and 138 KV 25 and 69 KV Petersburg to Wrangell 138 KV 69 KV Wrangell 25 and [38 KV 25 and 69 KV Ketchikan -Swan Lake to Bailey 11ISKV 115KV Ketchikan -Higgins to Silvis 34.5 KV 34.5KV 5-2 Acres International Corporation Sa Existing Electrical Transmission and Generation Facilities Table 5.3 Generation Capacity and Net Generation by Sector Sector Installed Capacity Net Generation Net Growth (KW)(MWh)1994 -1995 Utility 344,093 714,950 4.0% U.S.Coast Guard 1,500 0 0.0% Industry 90,184 202,481 -14.1% TOTAL 435,777 917,431 0.6% Table 5.4 Existing System Hydro Generation Sources Plant Installed Capacity Average Annual (MW)Generation (Mwh) Snettisham 46.0 216,000 Crater Lake 27.0 118,000 Tyee Lake 20.0 114,100 Swan Lake 22.5 85,400 Total 115.5 533,500 Acres International Corporation 5-3 Existing Electrical Transmission and Generation Facilities Table 5.5 Existing Resources Project Name /Location Fuel Type Installed Capacity Alaska Electric Light &Power Company Annex Creek Hydroelectric 3,600 KW Auke Bay Diesel 2,500 KW Gas Turbine 24,800 KW Gold Creek Hydroelectric 1,800 KW 'Diesel 7,300 KW Lemon Creek Diesel 22,500 KW Gas Turbine 35,000 KW Salmon Creek No.1 Hydroelectric 5,000 KW Alaska Power Administraton Snettisham /Crater Lake Hydroelectric 78,210 kW Alaska Power &Telephone Company Dewey Lake /Skagway Hydroelectric 975 KW Goat Lake /Skagway Hydroelectric 4,000 KW Diesel /Skagway (proposed)3,865 KW Diesel Black Bear/Craig Hydroelectric 4,500 KW Diesel /Craig Diesel .3,820 KW Haines Diesel 5,770 KW Hydaburg Diesel 1,001 KW Hollis Diesel 150 KW Ketchikan Public Utilities S.W.Bailey Diesel 13,450 KW Beaver Falls Hydroelectric 7,300 KW Ketchikan Lakes Hydroelectric 4,200 KW Swan Lake /Revillagigedo Hydroelectric 22,500 KW Island (State-Owned) Totem Bight /Ketchikan Diesel 2,000 KW 5-4 Acres International Corporation oNaahicisNUN naeAloaeSnFoFekUeOR2eePortgtExisting Electrical Traiisinission and Generation Facilities Project Name /Location Fuel Type Installed Capacity Metlakatla Power &Light Purple Lake Hydroelectric 3,900 KW Centennial .Diesel 3,300 KW Chester Lake Hydroelectric 1,000 KW Petersburg Municipal Power &Light Blind Slough Hydroelectric 2,200 KW Petersburg Generation Plant Diesel 7,650 KW Tyee (State Owned)Hydroelectric 20,000 KW City and Borough of Sitka Blue Lake Hydroelectric 6,000 KW Green Lake 'Hydroelectric 18,000 KW Indian River Diesel 7,500 KW Thorne Bay Thorne Bay Plant Diesel 1,235 kW Tlingit-Haida Regional Electric Authority 5 Small Plants (17 units)Diesel 6,067 kW |Wrangell Electric Department Wrangell Municipal Plant Diesel 8,350 kW Acres International Corporation 5-5 6 Status of New Facilities Development Section 6 oO | 6.1 ”New Intertie Segments Development 6.1.1 Tyee-Swan Intertie '6.1.2 Upper Lynn Canal Intertie 6.1.3 Interties on Prince of Wales Island Status of New Facilities Development The planned 57-mile-long 138-Kv Tyee-Swan Intertie is a key element in the proposed interconnected electric transmission SYSTEM.KPU's system is connected electrically to the Swan Lake project.Wrangell and Petersburg are connected to the Lake Tyee project.We include the proposed Tyee-Swan Intertie in Phase I of the SYSTEM Plan.The line will intertie the electrical systems of KPU,PMP&L,and WML&P,thereby increasing reliability and operating efficiency for all three systems.Once the Tyee-Swan Intertie is in place,a grid leg connecting Metlakatla will be feasible. In 1994,KPU received a grant from the State of Alaska to hire consultants to design the transmission line and prepare the EIS for the Forest Service, August 1997 Swan Lake-Lake Tyee Intertie Final Environmental Impact Statement Summary (Swan-Tyee EIS).The USDA Forest Service issued its decision on the proposed Intertie in August 1997 Swan Lake-Lake Tyee Intertie Record ofDecision (Swan-Tyee ROD).Formal bids were solicited during November -December 1997;and $76 million in State and Federal funds has been obligated to construct the Tyee-Swan Intertie. Alaska Power &Telephone Co.(AP&T)plans to construct a 14-mile 33 KV submarine cable transmission interconnection between Skagway and Haines Light &Power (HLP)to provide energy from the new Goat Lake Hydroelectric Project to both locations during 1988.AP&T estimated cost for the intertie is $5,400,000/1997$.Annual operating expense for the connection is expected to be $15,000.AP&T also proposes to construct a 20 mile overhead and underground line between Haines and Klukwan at an estimated cost of $1,600,000/1996$.Annual O&M expense is expected to be $10,000.(Upper Lynn Canal Regional Power Supply Review,April 1997). These proposed intertie segments are included in Phase IV of the SYSTEM Plan as existing infrastructure. AP&T is developing transmission lines to deliver energy from AP&T's Black Bear Lake Hydropower Plant to several communities on Prince of Wales Island.(Correspondence from Bob Grimm,AP&T,to Randy Cornelius,Sitka, June 20,1997).These proposed intertie segments are included in Phase V of the SYSTEM Plan as existing infrastructure. Acres International Corporation 6-1 Status of New Facilities Development 6.2 Current Status of New Generation Facility Development 6.2.1 Goat Lake 6.2.2 Mahoney Lake 6.2.3 Ketchikan Small Hydro Additions 6.2.4 Metlakatla Small Hydro Upgrades/Additions New hydropower generation currently being investigated by utilities in Skagway,Ketchikan,and Metlakatla are designed to serve specific remote load centers and is not included in the proposed SYSTEM Plan.We note that a number of communities,including Ketchikan and Sitka,are also planning to install additional diesel generation facilities to meet expected shortfall in the near future.We identified the following active hydropower project proposals. The Alaska Power &Telephone Co.has received a FERC license and other necessary approvals for the 4.0 MW Goat Lake Project.The project is currently under construction and the expected on-line date is 1998.AP&T is constructing a submarine cable to connect Haines to Skagway which will allow full utilization of the project output. The Cape Fox Corporation (Cape Fox),permittee for the proposed Mahoney Lake Hydroelectric Project,submitted a draft license application to the FERC in May 1996.That application is currently under evaluation by the FERC. The proposed 9.6 MW run-of-river Mahoney Lake Hydroelectric Project site is located approximately 5 miles northeast of Ketchikan.KPU and Cape Fox are currently discussing development options that might be beneficial to both parties. KPU is investigating the potential to install hydropower generation at three existing dams located in close proximity to Ketchikan:Lake Whitman (2.7 MW),Carlanna Lake (0.5 MW),and Lake Connell (1.7 MW);and potential upgrades to its Beaver Falls and Ketchikan Lakes hydropower projects.A preliminary review of these potential future additions is discussed in the KPU Power Supply Planning Study,December 20,1996. In March 1997,MP&L issued a report,Energy Generation Feasibility Study Report,regarding the quantity of energy available from MP&L's system to export to KPU on a monthly basis.MP&L is currently pursuing proposed improvements at its existing hydropower projects,which are not jurisdictional to the FERC.MP&L will add a 3 MW Pelton-type turbine and generator to augment the existing 1.0 MW unit at its Chester Lake Project;construct a tunnel between Edgecombe and Chester Lakes and new 2800-foot-long 24- inch penstock;and related revisions.At Tamgas Lake MP&L will add a 550 KW Francis-type turbine and generator;modify the existing rock-fill dam to raise lake elevation 10 feet;and will include related revisions.MP&L also proposes to construct a new project at Triangle Lake (commence construction June 2000;complete June 2002)including a new dam,penstock,powerhouse with one 4 MW machine or two 2.0 MW machines,anda tie line. Acres International Corporation FomkTOREPERPR °7 Action Plan Section 7 7.1 Proposed Phasing of Development Action Plan Communities in Southeast Alaska strongly support development of an integrated electrical system.Copies of Resolutions adopted in participant communities are included in Appendix A;copies of appendices are available from the Southeast Conference.Participants'expectations expressed during interviews include: >identify appropriate sequencing for development -present basic assumptions regarding timing; »determine the optimum electric grid to interconnect major load centers in Southeast Alaska,reduce need for redundant diesel generation,and enhance reliability;and >determine optimum locations for new hydro generation to provide for future needs for the collective communities. We present this proposed SYSTEM Plan in five phases based on assumptions regarding projected load growth and engineering feasibility: PhaseI 1995-2010 Construct interties connecting Swan Lake and Tyee Lake hydroelectric projects to Ketchikan Public Utilities'(KPU's)electrical system;and construct an intertie connecting Metlakatla Power &Light to KPU's electrical system. Phase II 2011 -2015 Construct interties connecting Sitka and Kake to Petersburg,Ketchikan and Metlakatla. Phase III 2016 -2020 Construct interties connecting Angoon,Tenakee Springs,Hoonah,Green's Creek and Juneau to Sitka,Kake,Petersburg,Ketchikan and Metlakatla (North-South Grid).Construct Lake Dorothy and Swan Lake hydropower projects. Phase IV 2021 -2025 Construct interties connecting Skagway,Haines,and Kensington to North- South Grid.Construct Takatz Lake Hydropower Project. Phase V 2026 -2030 Construct intertie connecting Prince of Wales Island to North-South Grid. Construct Scenery Lake Hydropower Project. Acres International Corporation Action Plan 7.2 Regional Electrical Interties 7.2.1 Proposed Intertie _Segments and Estimated Cost Figure 1,Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN,presents a map of Southeast Alaska with a schematic diagram superimposed to depict load centers,existing and proposed new interties,and existing and proposed new hydroelectric generation facilities.Figure 2, Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN: LOADS AND RESOURCES presents a schematic diagram showing phasing of new generation as loads grow and the transmission intertie SYSTEM is constructed. Existing transmission facilities in Southeast Alaska were constructed to deliver power from generation to specific load centers.Due to remote islands and rough terrain,electrical utilities in Southeast Alaska currently operate their systems to deliver power to local customers and do not have opportunity to import power from other systems to meet customer needs.The line segments proposed in this SYSTEM Plan are designed to provide equal opportunities for all participating systems to access hydropower generation, thereby lowering power costs in communities currently dependent solely on diesel generation and also providing enhanced reliability of service throughout the region.The integrated electrical SYSTEM will also reduce the level of backup power currently maintained in communities and enhance the opportunity to develop cost-effective and environmentally preferred regional hydropower generation facilities as opposed to proliferation of additional diesel generation and development of numerous dispersed smaller hydropower Sites. The primary source of information regarding proposed intertie segments was the 1987 Southeast Alaska Transmission Intertie Study (1987 Intertie Study) prepared by Harza for the Alaska Energy Authority.The 1987 Intertie Study presented recommended configurations based on the fundamental objective of sharing then surplus hydro generation at the Snettisham and Lake Tyee projects with hydro-deficient supply centers,recognizing technical constraintsandpracticallimitationsimposedbyterrainandconstructioncosts.SurplushydrogenerationatLakeTyeeis'expected to be fully utilized as a result of constructing the intertie with Ketchikan during Phase I.Snettisham is close to full energy utilization.During critical water years,such as 1997,it was necessary to run AELP diesels to cover hydro energy deficits.For average water years there could be as much as 60 million KWH of surplus energy during the summer and early fall months. A brief discussion of each of the transmission intertie phases as shown on Figure 1 follows.Table 7.1 presents estimated costs,based on existing reports and escalated to 1996 dollars,for the proposed five phased development.Sources of estimated costs are identified below. 7-2 Acres International Corporation lsRkaoirePOaenlacekeccioe Action Plan Proposed Sequencing and In-Service Phase New Line Segments Load Centers Cost Estimates for Date Southeast Alaska 2001 PHASE I:Swan Lake -Lake Tyee (KPU,Initial Draft Petersburg,Wrangell & Transmission Grid Power Supply Planning Study,1996)Ketchikan Segments 57 mi 138-KV line connects Swan-Tyee hydros . Status:Final EIS/USFS Record of Decision issued 8/97. Construction bids to be requested in late 1997. c Estimated cost:$69,772,000/1996$ 2002 PHASE I:Ketchikan -Metlakatla (Alaska Power Authority,|Petersburg,Wrangell, Southeast Alaska Transmission Intertie Study,1987)Ketchikan &Metlakatla 15 mi 34.5 KV line (14 mi OH/1 mi submarine)Connect KPU's Mountain Point Sub/Race Point,MP&L. Status:Final documents to be prepared once Swan-Tyee line is . under construction. Estimated cost:$8,785,000/1996$* PHASE Il:Petersburg -Kake -Sitka Sitka,Kake,Petersburg, a 2002 II-A -Petersburg -Kake (DCRA,Division of Energy,Kake-|Wrangell,Ketchikan & aa Petersburg Intertie Feasibility Study,1996)Metlakatla os 46.7 mi 69 KV (44.3 mi OH /2.4 mi submarine)capable of a upgrade to 138 KV. -Status:1996 update to 1987 appraisal level engineering / environmental review. Estimated cost:$19,734,600/1996$ 2008 II-B -Kake -Sitka (Alaska Power Authority,Southeast Alaska Transmission Intertie Study,1987) .55.4 mi 138 KV (20.2 mi OH /35.2 mi DC submarine)cable a Status:Reconnaissance engineering /environmental. Estimated cost:$45,489,000/1996$* 2012 PHASE III:Sitka -Tenakee Springs/Angoon -Hoonah -Sitka,Angoon,Tenakee s)Greens Creek -Juneau (Alaska Power Authority,Southeast Springs,Hoonah, on Alaska Transmission Intertie Study,1987)Greens Creek,Juneau to of 148.6 mi 138 KV (120.8 mi OH /27.8 mi AC submarine)Petersburg,Wrangell, :.Status:Appraisal level engineering /environmental review.Ketchikan,Metlakatla Se Estimated cost:$173,788,000/$1996*(North-South Grid) .2020 PHASE IV:Juneau -Skagway (Alaska Power Authority,Connects Skagway, .,Haines-Skagway Region Feasibility Study,1981)Haines,and Kensington, 70.5 mi (6.5 miles 69 KV OH /64 miles 100 KV DC north of Juneau,to a submarine)North-South Grid Status:Appraisal level engineering /environmental review. Estimated cost:$79,160,000* 2025 PHASE V:Ketchikan -Prince of Wales Island (Alaska Connects Thome Bay, Power Authority,Black Bear Feasibility Report,1981)Kasaan,Klawock, 19 mi 69 KV or 115 KV (1 mi OH /18 mi submarine)Hollis,Craig,and Status:Appraisal level engineering /environmental review.Hydaburg to North- Estimated Cost:$39,089,000*South Grid System 243.8 mi OH /148.4 mi submarine Totals 392.2 total miles ' Construction Cost Estimate -$435,817,000/1996 *Indicates cost prepared using standard cost curves to escalate earlier estimate. Acres International Corporation 7-3 Action Plan 7.2.1.1 Phase | 7.2.1.2 Phase Il The Swan-Tyee and KPU-Metlakatla transmission intertie components would interconnect electric systems in Ketchikan,Wrangell,Petersburg,and Metlakatla resulting in the first increment of the Southeast Alaska Electrical Intertie SYSTEM (SYSTEM).This intertie segment is expected to utilize current surplus generation available from Lake Tyee.As shown in Figure 2, the existing generation resources of the respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010.Therefore,no additional hydroelectric resources are required during this period. >Lake Tyee-Swan Lake Transmission -138 KV,37 miles,to connect the two State-owned hydropower projects.Estimated total cost includes management,engineering,construction management,licensing and permitting,right-of-way costs,a contingency and owners administration; excludes maintenance costs (Project Estimate Update,Lake Tyee-Swan Lake Intertie,Raytheon Infrastructure Services,Inc.,July 25,1996). >Ketchikan-Metlakatla -34.5 KV,15 miles,three-phased (14 miles overhead and 1 mile submarine)from KPU's Mountain Point Substation to Race Point on Annette Island.Estimated cost includes management,engineering, _construction management,land acquisition,and owners administration; excludes maintenance costs.(Alaska Power Authority,10/1/87,Southeast Alaska Transmission Intertie Study)A 1996 DCRA,Division of Energy, study,Power Intertie Analysis,prepared by Jaight and McLaughlin Consulting Engineers,Anchorage,confirmed the proposed route as presented in 1987.No update to estimated cost was provided.(Rural Alaska Electric Utility Interties,March 1997). Preliminary cost estimates for development of intertie segments specified during Phase I are $69,772,000/1996$for the Swan Lake -Lake Tyee Project and $8,785,000/1996$for the Ketchikan Metlakatla intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Kake and Sitka would be connected to the SYSTEM.Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015. »Petersburg-Kake -69 KV,46.7 miles (44.3 miles overhead and 2.4 miles submarine cable),capable of future upgrade to 138 KV.Estimated cost includes construction,engineering,construction management,right-of-way acquisition,permitting,and owners administration.Proposal does not 7-4 Acres International Corporation ely,PENAPRFTPPRaoefatSeiee Action Plan include previously proposed underground sections.A number of studies have been performed for this line segment.In 1996 DCRA,Division of Energy,commissioned an update:Feasibility Study:Kake-Petersburg Intertie,prepared by R.W.Beck,that incorporated and updated information presented in earlier reports. >Kake-Sitka -138 KV,55.4 miles (35.2 miles DC submarine cable and 20.2 miles overhead wood pole design).Estimated cost includes management, engineering,construction management,land acquisition,and owners administration;excludes maintenance costs.Most of route follows existing road at anadromous fish stream crossings.(Alaska Power Authority, 10/1/87,Southeast Alaska Transmission Intertie Study). Preliminary cost estimates for development of intertie segments specified during Phase II are $19,734,600/1996$for the Petersburg -Kake Intertie and $45,489,000/1996$for the Kake -Sitka Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. . 7.2.1.3 Phase Ill Angoon,Tenakee Springs,Hoonah and Juneau would be connected to the SYSTEM.At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system.If mining loads develop during the next few years,Lake Dorothy may be brought on-line before 2015. Further,based on the load growth as projected for Juneau,the system loads can also fully utilize the proposed Swan Lake project within the 2015 -2020 time frame. >»Sitka-Juneau -138 KV,148.6 miles (120.8 miles OH,27.8 miles submarine AC cable)$130,775,000/1987$This preferred routing would need further study as it was not proposed as part of the system in the APA 1987 Southeast Alaska Transmission Intertie Study.Total length of the West Route alternative considered in the 1987 study was 204 miles,including the Juneau-Green's Creek and Sitka-Kake segments.Alternative preferred in 1987 study was the Kake-Snettisham connection.(Alaska Power Authority, 10/87,Southeast Alaska Transmission Intertie Study)Descriptions of segments of the preferred routing are discussed below: >Tenakee Springs-Sitka -138 KV follows existing logging roads past Sitkoh Lake to Point Lindenburg,crosses Peril Strait via submarine cable,exits at Point Moses on Baranof Island to finally connect with Sitka's transmission system.Routing envisioned would go to Warm Springs and Takatz Lake Hydro crossing to Sitka along a proposed transmission/transportation corridor, Acres International Corporation 7-5 Action Plan 7.2.1.4 Phase IV >Tenakee Springs-Angoon -138 KV (submarine AC cable)crossing Tenakee Inlet to east of Kadashan Bay along existing logging roads to point NW of head of Sitkoh Bay,remote substation to facilitate 69 KV spur to Angoon. >Tenakee Springs-Hoonah -138 KV 35-mile utility corridor is designated in the Tongass Land Management Plan.The communities are almost connected by logging roads now.(Rural Alaska Electric Utility Interties, March 1997) >Hoonah-Juneau -69 KV,50.4 miles (32.3 miles OH,18.1 miles submarine cable)to connect Hoonah to Snettisham Hydro Plant (includes connection @ Greens Creek noted below).Estimated cost includes 20%for engineering and overhead plus 25%for contingencies.Feasibility depends upon hookup to Noranda mine.3 substations,2 separate segments of submarine cables (6.1 mile and 12 mile)(U.S.Department of Energy,Alaska Power Administration,12/1/81,Juneau-Hoonah Transmission Line Reconnaissance Evaluation)(Rural Alaska Electric Utility Interties,March 1997). >Juneau -Green's Creek -69 KV,29.4 miles (24.2 OH,5.2 submarine cable) Douglas Island substation to Middle Point -cross Stephens Passage - Youngs Bay near Hawk Inlet on Admiralty Island.USFS recommended buried cable through portion of non-wilderness Admiralty Island National Monument.(Alaska Power Authority,10/87,Southeast Alaska Transmission Intertie Study). Preliminary cost estimates for development of intertie segments specified during Phase III are $173,788,000/1996$for the Tenakee Springs/Angoon/Hoonah/Greens Creek/Juneau Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Skagway and Haines would be connected to the SYSTEM through a 70.5+ mile (64 miles 100 KV DC submarine cable,6.5+miles OH 69 KV)line segment from Juneau to Skagway.Estimate based on 1982 Teshmont study excludes escalation during construction but includes 25%contingencies and 15%engineering.(Rural Alaska Electric Utility Interties,March 1997)By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system.Takatz Lake is shown on Figure 2 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects and cost of development.RNNa7-4 Acres International Corporation EOAORfl2CNPereem,acia PNReteteAction Plan 7.2.1.5 Phase V 7.2.2 Review of Existing Reports 7.3 Regional Generation Preliminary cost estimates for development of intertie segments specified during Phase IV are $79,160,000/1996$for the Juneau -Skagway Intertie. Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. Communities on Prince of Wales Island would be connected to the SYSTEM. With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation.Connection is assumed to be between Ketchikan and Hollis -69 or 115 KV,19 miles (18 miles submarine cable and |mile overhead line).(Alaska Power Authority,10/1/81,Black Bear Lake Project: Feasibility Report,Harza). Preliminary cost estimates for development of intertie segments specified during Phase V are $39,089,000/1996$for the Ketchikan -Prince of Wales Intertie.Estimated costs were presented in documents prepared by others and reviewed by the Acres team during the course of this assignment and do not represent an independent assessment. The primary source of information used in preparing this Report was the 1987 Southeast Alaska Transmission Intertie Study prepared by Harza for the Alaska Energy Authority (1987 Intertie Study).The 1987 Intertie Study presented a comprehensive assessment of a large number of prospective interconnection projects,including route selection and preliminary design of many submarine cable links and overhead lines,and integrated these designs into an overall system expansion plan.The 1987 Intertie Study constitutes an important step towards an integrated system development plan,but the © investigations must be expanded and updated to ensure the continued validity of several key conclusions. Table 7.2 identifies sources of information relied on in preparing this Report and as requested in the RFP identifies the level of investigation and project development accomplished to date. Hydro generation is a major element in the existing power supply of the region.However,the water power potential of Southeast Alaska is still largely an undeveloped resource.A report entitled "Water Powers of Southeast Alaska”was prepared in 1947 by the Federal Power Commission (currently known as the Federal Energy Regulatory Commission)and the U.S. Forest Service (FPC/USFS Report)which identified 200 sites for potential hydropower development.A following statement as contained in the Forward Acres International Corporation 7-7 Action Plan by the Chairman of the Commission is as true today as it was some 50 years ago: Table 7.2 Documents Reviewed - Potential New Transmission Date Report Level of Development October 1987 Alaska Power Authority Reconnaissance Southeast Alaska Transmission Intertie Study August 1997 USDA Forest Service Final Route Swan Lake -Lake Tyee Intertie Selection Final Environmental Impact Assessment Final Record of Decision April 1996 Alaska Department of Community and Regional Affairs Draft Kake-Petersburg Intertie Feasibility Study Reconnaissance April 1997 Alaska Power &Telephone Co.Draft Upper Lynn Canal Regional Power Supply Review Reconnaissance March 1997 Alaska Department of Community and Regional Affairs Preliminary Draft Rural Alaska Electric Utility Interties Survey "There are over 200 potential projects which it is estimated could develop 1,008,370 average horsepower.Of these,27 range in size from 10,000 to 51,000 average horsepower each,or a total potential of 534,000 average horsepower.In developing a power system many ofthese projects would logically be interconnected with high voltage transmission.The remaining projects and some of less capacity,but susceptible to automatic control and operation,could be interconnected through the principal stations at lower voltage transmission...” Over the intervening years,slow but steady progress has been made in this direction.The current SYSTEM Development Action Plan,then,simply represents a continuation of this process.In more recent times,many of the projects identified in the FPC/USFS Report have either been developed as listed above or have been studied in further detail as summarized in Section 7.3.5 that follows.Of these,project that have been identified as having the highest potential for inclusion into the SYSTEM Development Action Plan include: >10 MW proposed 3rd unit at the existing Lake Tyee Project >26 MW proposed Lake Dorothy Project,Taku Inlet >48.5 MW proposed Swan Lake Project,Thomas Bay >20 MW proposed Takatz Lake Project,Baranof Island >45 MW proposed Scenery Lake Project,Thomas Bay Acres International Corporation Action Plan Table 7.3 Potential New SYSTEM Hydroelectric Projects 7.3.1 Potential New Hydropower Projects 7.3.1.1 Third Unit at Tyee Lake 7.3.1.2 Lake Dorothy A general description of each of the above listed projects and a discussion of the respective studies performed to-date follows.Table 7.3 presents potential average annual generation. Plant Installed Capacity Average Annual (MW)Generation (MWh) Tyee Lake (3rd unit)10.0 1,000 Lake Dorothy 26.0 127,000 Swan Lake 48.5 170,000 Takatz Lake 12.0 86,000 Scenery Lake 45.0 150,000 Total 141.5 534,000 A third unit bay was installed during original construction of the Tyee Lake project in anticipation of future growth in the region.A 10 MW turbine- generator would provide an additional 1,000 Mwh of peaking energy annually; an additional benefit of the third unit is to recover 1,050 Mwh of energy during maintenance on either of the two existing 10 MW units. The third unit would support future growth in Wrangell and Petersburg,the two communities that have priority rights to power generated at Lake Tyee. With construction of additional interties,energy could be available to Ketchikan,Metlakatla,and Kake. Lake Dorothy is located east of Juneau above Taku Inlet at elevation 2422. Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to an 11 foot diameter,2%mile long tunnel leading to a powerhouse at tidewater containing two 13 MW units. A 4%mile long submarine cable would be interconnected with the existing 138 KV Snettishham transmission line to provide 26 MW of capacity and 127,000 Mwh of firm and average annual energy to the Juneau area. The Alaska Electric Light &Power Company (AELP)currently holds a Preliminary Permit from the FERC for study of the site.The Permit was applied for in anticipation of the re-opening of the A.J.Mine in Juneau.Since Acres International Corporation 7-9 Action Plan 7.3.1.3 Thomas Bay -Swan Lake the time of the permit application,however,Echo Bay Alaska has dropped plans for proceeding with AJ Mine development.A recent inspection of the Snettisham underwater cable crossing Taku Inlet indicates a redundant set of cables will have to be installed to insure the reliability of Juneau's Snettisham energy supply.The new cables will be sized to have the capacity to carry both Snettisham and Lake Dorothy generation and will substantially reduce Lake Dorothy's construction costs.AELP is also investigating other scenarios for reducing the scope and cost of Lake Dorothy so that it could be sized to serve the proposed Kensington Mine.The Kensington Mine is close to being fully permitted.These additional considerations may require AELP to apply for a subsequent Permit. Swan Lake is located approximately 15 miles northeast of Petersburg above Thomas Bay at elevation 1520.Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to a 7 foot diameter,2!mile long tunnel leading to a powerhouse at tidewater containing two 24.25 MW units.A combination of overhead transmission and submarine cable would interconnect the project with the grid at Petersburg to provide 46.5 MW of capacity and 170,000 Mwh of firm and average annual energy to the region. The Swan Lake site was initially proposed in an application for a license to the Federal Power Commission in 1922.The license was issued but later terminated.Subsequently,the US Bureau of Reclamation completed an Interim Report on the potential of the Thomas Bay area dated,June 1965. The hydroelectric project was under consideration to meet the urgent power needs at that time in Petersburg,Wrangell,Kake,Ketchikan and Metlakatla. A geology report on the project had been developed earlier in January 1962. Petersburg retained R.W.Beck and Associates to analyze electrical power requirements for the City which culminated in a report,"Analysis of Electrical System Requirements”,dated March 1974,presenting the site as a potential power resource.Beck also prepared an Appraisal Report for the Thomas Bay Power Commission for review as a resource for the communities of Petersburg and Wrangell.However,the project was later dropped from consideration in favor of the Lake Tyee Project which was subsequently constructed. Currently,the project's capability far exceeds the needs of the Petersburg / Wrangell area for the foreseeable future and would accordingly be available as a regional resource. 7-10 Acres International Corporation wmamonatte*.3onoo,sOBmPLgePRFMEyINR"es Action Plan 7.3.1.4 Takatz Lake 7.3.1.5 Thomas Bay -Scenery Lake Takatz Lake is located approximately 15 miles directly east of Sitka above Takatz Bay at elevation 920.Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to a 8 foot diameter,1%mile long tunnel leading to a powerhouse at tidewater containing two units.Studies conducted have proposed installations ranging from 12 MW to 20 MW. Previous studies have consistently identified Takatz Lake as the next hydro project for development by the City and Borough of Sitka.In fact,the US Department of the Interior,Alaska Power Administration/Bureau of Reclamation made a fairly detailed evaluation of the Takatz Lake site in the 1960s,and it was considered a serious alternative to the existing Green Lake Project.Green Lake was ultimately developed due to the relative cost of transmission for the two sites. Previous evaluations of the Takatz Lake site have a included an overhead transmission line for the 25 mile distance between the powerhouse site and the existing Sitka distribution system.The resulting routing involved traversing some extremely rugged terrain,including two mountain passes --one between the Takatz Lake drainage and the Baranof Lake drainage at about elevation 2100,and one between the upper Baranof drainage and the upper Sawmill Creek drainage at about elevation 2900.The resulting construction cost of this transmission connection is the primary reason why this site remains undeveloped. Serious consideration is now being given to the construction of a road between the Baronof /Warm Springs area and Sitka as a means to improve ferry service along the Alaska Marine Highway as well as tourism from cruise ships.The proposed road would include a 1 mile long tunnel through the most rugged part of the terrain as referenced above.Clearly,the incremental cost of a transmission line constructed along the right-of-way of the proposed road would be significantly less than previously considered thereby greatly increasing the economic viability of Takatz Lake site for hydropower development. Currently,the project's capability exceeds the needs of the Sitka area and would accordingly be available as a regional resource.The City anticipates, however,that at some point in time all of the output of the project will be needed within their system. Scenery Lake is located approximately 7 miles north of the Swan Lake site as discussed above or 22 miles northeast of Petersburg.It is situated above Thomas Bay at elevation 1,080.Hydroelectric power could potentially be developed at the site by the construction of a lake tap to supply water to a 7 Acres Internationa!Corporation 7-14 Action Plan 7.3.1.6 Lake Grace Diversion to Swan Lake Hydroelectric Project 7.3.2 Proposed Phasing of New Hydroelectric Projects foot diameter,32 mile long tunnel leading to a powerhouse at tidewater containing two 22.5 MW units.An overhead transmission line would interconnect the project with the grid at the Swan Lake site to provide 45 MW of capacity and 150,000 MWH of firm and average annual energy to the -region.Unlike the other above listed projects,the Scenery Lake site has not been studied in any detail.The only identifiable reason for this lack of interest is that to-date no need for the project has occurred in the surrounding area beyond the potential provided by the Swan Lake site.A description of the features and the potential of the site was included in the FPC/USFS Report which has served as the basis of the data included herein. Lake Grace is located 28 miles from Ketchikan on the east side of Revillagigedo Island.A Power Project Withdrawal application was filed with the Federal Power Commission on November 21,1926 but was vacated by the FERC on October 31,1985.KPU is currently reviewing the long-term feasibility of diverting water from Lake Grace through a tunnel to Swan Lake. Water would be used to increase water storage capacity,thereby increasing generation at Swan Lake.KPU is considering installing a new turbine at Swan Lake. | A major regulatory barrier to developing Lake Grace is its location within the Misty Fjords National Monument in a designated Wilderness Area. Development of Lake Grace would require approval by the President of the United States with concurrence of the U.S.Congress.Language in Section 1105.2 of ANILCA further limits development by requiring that such authorization may be obtained only if "...there is no economically feasible and prudent alternative..." Normally,the phasing of hydroelectric projects within a power system grid is based largely on the estimated cost of each respective potential project.By nature,hydroelectric projects are capital cost intensive and are generally very site specific.In the present case,no consistent set of cost estimates are available as a means of comparison for the above identified projects.What is known,however,is the above listed projects have very similar characteristics consisting of lake taps at perched lakes with tunnels of reasonable length leading to powerhouses at tidewater.Therefore,development costs can be expected to be comparable and consistent with others recently developed in the region. Accordingly,it is appropriate to phase project development on the basis of projected needs for the intertie itself coupled with due consideration to the load __ growth in the region as a whole.Thus,the intertie is the key factor in the phasing of hydro generation projects.A regional intertie will enable full 7-12 Acres International Corporation tA,atateONole234,oOieeTNTN Action Plan 7.3.2.1 Phase | 7.3.2.2 Phase Il 7.3.2.3 Phase Ill 7.3.2.4 Phase IV 7.3.2.5 Phase V utilization of each project as it would come on-line without the particular needs of the respective nearby communities.Shown on Figure 2 is a potential phasing of the five candidate projects listed above based on meeting the regional loads in step with the development of each component of a regional transmission grid.A brief discussion of each of the transmission intertie phases describing correlation to future hydropower project development follows. The proposed Phase I transmission intertie component would interconnect Metlakatla with Ketchikan,Wrangell and Petersburg.As shown on Figure 2, the existing resources of the respective utilities in an interconnected grid will be adequate to supply the gross annual loads of the system through the year 2010.Therefore,no additional hydroelectric resources are required during this period. The proposed Phase II would add Sitka and Kake to the transmission system. Again the existing resources match reasonable well the overall loads of the interconnected system,thereby requiring no further hydropower development through the year 2015. The proposed Phase III would add Angoon,Tenakee Springs,Hoonah and Juneau to the transmission system.At this point the load growth for Juneau becomes the major factor in determining the needs of the interconnected system.It indeed is possible that Lake Dorothy may have been brought on- line before 2015.Further,based on the load growth as projected for Juneau, the system loads can also fully utilize the Swan Lake project within the 2015 - 2020 time frame. The proposed Phase IV would add Skagway and Haines to the transmission system.By 2020,either the Takatz Lake project or the Scenery Lake project could be added to the system.Takatz Lake has been shown on Figure 3.1 as a part of Phase IV on the basis of the proposed road interconnection from Warm Springs and the transmission system to Sitka as factors in reducing the environmental effects and cost of development. The proposed Phase V would add the communities on Prince of Wales Island to the transmission system.With this addition in 2025,the cumulative load projections of the respective communities indicate that the output of Scenery Lake would be fully utilized in its first year of operation. Acres International Corporation 7-13 Action Plan 7.3.3 Review of Existing Reports -Hydropower Projects Table 7.4 Documents Reviewed - Potential New Hydroelectric Projects Reports relied on in preparing this section are identified in the above narrative 9" sections.Table 7.4 identifies the level of development of each of the relevant reports. Date Report Level of :Development 10/1987 |Alaska Power Authority Reconnaissance Southeast Alaska Transmission Intertie Study 8/1997 USDA Forest Service Identifies constraints on Land and Resource Management Plan,Tongass National new development,lists Forest projects consistent with Tongass Land Management Plan Revision plan Final Environmental Impact Assessment 12/1996 |Ketchikan Public Utilities Identifies potential KPU Power Planning Study projects;Feasibility study underway. 3/1997 Metlakatla Power &Light Describes proposed Energy Generation Feasibility Study Report upgrades and potential new project.No details provided. 1947 Federal Power Commission and Forest Service -U.S.D.A.Identifies 200 sites fo" Water Powers -Southeast Alaska potential hydropower *-. development 1992 Ketchikan Public Utilities Update to existing Lake Tyee to Swan Lake Transmission Intertie Feasibility reports and review of Study feasibility 4/1974 Electric Utility System -City and Borough of Sitka Project feasibility Analysis ofElectric System Requirements investigation 3/1974 Petersburg Municipal Power &Light Appraisal Analysis ofElectrical System Requirements 11/1975 |Thomas Bay Power Commission,Petersburg -Wrangell Appraisal Appraisal Report 1960 U.S.Department of the Interior Detailed evaluation Alaska Power Administration/Bureau of Reclamation Takatz Creek Project -Alaska _10/1985 |Alaska Electric Light and Power Company Operating Projects and Application for New License -Annex Creek and Salmon Creek |discussion of Alternatives 10/1991 |City and Borough of Sitka,Alaska Feasibility analysis Electric Resource Evaluation and Strategic Plan 8/1990 Alaska Electric Light and Power Company Reconnaissance review Juneau 20-Year Power Supply Plan Update 6/1991 Alaska Power &Telephone Company Project feasibility ana,: Application for License -Black Bear Lake Project design Acres International Corporation oearOMFEMAOFmBED,SON,(PaFPREmFPmMenomatte Action Plan 7.4 Economic and Financial Issues 7.4.1 Economic Parameters Economic parameters and assumptions used in evaluating alternatives presented in the 1987 Study were based on guidelines suppliedby the Alaska Power Authority and local utilities.These criteria are generally accepted in performing economic analysis and should be updated and applied in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM.Annual fixed carrying charges employed in the 1987 Intertie Study are listed on Table 7.5. Table 7.5 Annual Fixed Carrying Charges -Alaska Power 20-Year 30-Year 50-Year Authority Guidelines Life Life Life Employed in 1987 Cost of Money (%)3.50 3.50 3.50 Southeast Alaska Transmission Intertie Study Amortization (%)3.54 1.94 0.76 Insurance (%)0.25 0.20 0.20 Total (%)7.29 5.64 4.46 Criteria include the following: >Costs are expressed in dollars >Present Worth Analysis covers a 30-year economic life / transmission >Planning Horizon/Period of Study is 20 years »Discount Rates used are as appropriate for participants >Inflation Rate is the current rate >Economic Life of Projects Diesel Generators -20 years -Transmission Lines -30 years -Hydroelectric Plant -50 years The Economic Analysis presented in the 1987 Study was performed in two steps.The first step,an economic screening,compared the construction cost of each intertie link to the value of the potential displaced diesel fuel.The screening was performed by comparing Acres International Corporation 7-15 Action Plan 7.4.2 Electric Load Characteristics and Forecasts the net present worth life cycle costs of the intended transmission link with that of the existing diesel system.The sunk cost of existing hydroelectric developments and transmission and distribution systems were assumed to be the same for all economic cases considered and were excluded from further analysis.Analyses were conducted using Alaska Power Authority criteria for discount rates, energy demand,and fuel costs.The planning horizon for the study spanned 20 years. An important goal of the 1987 Study was to determine the most practical way to utilize surplus energy available from the Snettisham/Crater Lake and Swan Lake-Lake Tyee hydroelectric projects.Transmission interties between Juneau and Sitka and Lake Tyee and Swan Lake were preferred new transmission segments. Completion of those segments was predicted to use nearly all (96%) of the surplus generation from the two hydro projects by 2006.The Swan Lake-Lake Tyee Intertie is proposed to be developed in Phase I;the intertie between Sitka and Juneau is proposed in Phase III. Power over the intertie will supply near-term Ketchikan,Petersburg, and Wrangell needs;any remaining surplus would be provided to Metlakatla and Kake.Based on predicted load growth in the Juneau area,surplus power cited in the 1987 report at Snettisham/Crater Lake would be fully utilized during Phase II. The scope and budget for this assignment did not include a rigorous update to load forecasts to accurately model the load distribution for evaluation of proposed transmission grid legs.All information regarding utility loads and resources is compiled from existing sources of information and included in this SYSTEM Plan as background information supporting the phased development of the SYSTEM.Discussions of predicted future load growth for municipalities and utilities in Southeast Alaska are based on existing documents and interviews with municipalities and utilities.Table 7.6 presents predicted loads. Reports reviewed in preparing information in this section are identified below. Electric Load Forecast for Ketchikan,Metlakatla,Petersburg, and Wrangell,Alaska:1990 -2010 -ISER 1990 Forecast 7-16 Acres International Corporation FRABetFiriisaNoNFN Action Plan Table 7.6 Load Growth Projections for Participating Communities UTILITY /LOCATION /PHASE 1990 2000 2010 2020 Average Annual Growth KPU /Ketchikan /PHASE I(1)20 20 20 20 rate PMP&L /Petersburg/PHASE I (1)13 13 1.6 1.6 WMP&L /Wrangell/PHASE I (1)1.3 1.3 1.6 1.6 MP&L /Metlakatla /PHASE I (1)1.7 1.7 15 1.5 THREA /Kake /PHASE TI (2)12 1.2 1.2 1.2 SED /Sitka /PHASE II (3)1.0 1.0 1.0 1.0 AELP /Juneau /PHASE Il (4)2.5 2.5 2.5 2.5 THREA /Angoon /PHASE III (2)12 1.2 1.2 1.2 THREA /Hoonah /PHASE Ill (2)12 12 1.2 12 AP&T /Skagway /PHASE IV (5)1.4 14 14 1.4 AP&T-HLP /Haines /PHASE IV (5)2.0 2.0 2.0 2.0 THREA/Chilkat Valley /PHASE IV (2)1.2 1.2 1.2 1.2 COCO /Coffman Cove /PHASE V (7)1.2 1.2 12 12 AP&T /Craig /PHASE V (6)2.5 2.5 2.5 2.5 AP&T /Hollis /PHASE V (6)2.5 2.5 2.5 2.5 AP&T /Hydaburg /PHASEV (6)2.5 2.5 2.5 2.5 THREA /Klawock /PHASE V (2)1.2 1.2 1.2 1.2 THREA /Kasaan /PHASE V (2)1.2 12 12 1.2 TB /Thorne Bay /PHASEV (7)12 1.2 12 1.2 (1)Electric Load Forecast for Ketchikan,Metlakatla,Petersburg and Wrangell, AEA/ISER,1990 (2)1997 -1999 Three-Year Construction Work Plan,THREA,1996 (3)1996 Electric System Load Forecast,SED,1996 (4)Juneau 20-Year Power Supply Plan,AELP,1990 (5)Upper Lynn Canal Regional Power Supply Review,AP&T,1997 (6)Environmental Assessment,Black Bear Hydroelectric Project,FERC,1992 (7)Alaska Electric Power Statistics -1960-1995,DCRA/DE &ASCC,1996 Acres International Corporation 7-17 Action Plan 7.4.2.1 Alaska Electric Light and Power Company This report was prepared for the Alaska Energy Authority by the Institute of Social and Economic Research,University of Alaska Anchorage,dated June 25,1990 (SER 1990 Forecast).Utility electric energy requirements in these communities were projected to grow at an average annual rate of between -3 and +4 percent per year between 1990 and 2010 from the 1988 level.Growth rates considered economic effects of the Quartz Hill mine and the Bradfield intertie,but did not include mine loads themselves.The Quartz Hill mine development did not begin operation in 1995 as predicted in the high and medium scenarios,therefore for purposes of this presentation the low growth scenario has been used. Southeast Alaska Transmission Intertie Study -1987 Study The 1987 Southeast Alaska Transmission Intertie Study (1987 Study)presented three load forecasts,high,medium,and low.Load growth during the past 10 years has deviated from the predictions. Planning criteria used to guide the 1987 Study projected the most economic development would include new transmission links between (1)Snettisham and Sitka via Juneau,Green's Creek Mine, Hoonah and Tenakee Springs;(2)Petersburg,Wrangell and Ketchikan via a Tyee Lake-Swan Lake intertie;and (3)the Quartz Hill Mine and B.C.Hydro at Kitsault,British Columbia.Total estimated construction cost of these three interconnections was projected to be $153 million at the January 1987 price level. AELPa private utility,serves the City and Borough of Juneau (CBJ).The most recent information regarding AELP's system and projected future scenarios is presented in the 1990 Juneau 20-Year Power Supply Plan Update (1990 Juneau Plan).Existing resources in 1990 totalled 152 MW.Primary sources of power are small hydroelectric projects owned and operated by AELP and the federal Snettisham/Crater Lake hydroelectric projects.Legislation was enacted to transfer Snettisham/Crater Lake to the State of Alaska; transfer proceedings are continuing as of October 1997.AELP operates and maintains Snettisham/Crater Lake.Snettisham is close to full energy utilization.During critical water years,such as 1997, it was necessary to run AELP diesels to cover hydro energy deficits. For average water years there could be as much as 60 million KWH of surplus energy during the summer and early fall months. The Kensington Mine's annual energy requirement is 68,400,000 KWH (pg.2-26 Environmental Impact Statement dated August 7-18 Acres International Corporation ascaokaoeenieaaLan Action Plan 7.4.2.2 Alaska Power & Telephone Co. 7.4.2.3 City of Kake 7.4.2.4 City of Ketchikan - Ketchikan Public Utilities (KPU) 1997).The annual energy requirement for the Jualin Mine is unknown. The 1990 Juneau Plan identified demand side management (DSM)as having the greatest potential to reduce need for new capital investment in generation.Results of implementing DSM measures to date have been mixed.Projections in the 1990 Juneau Plan, including a projected 2.0%load growth rate over the period 1998 - 2018 were employed in preparing this SYSTEM Plan.However,if the state oil revenues continue to decline and potential mining activity does not materialize,AELP may not need future sources ofgeneration. Alaska Power &Telephone Co.(AP&T)currently provides energy to the following communities of Craig,Klawock,Hollis,Hydaburg, Coffman Cove,and Whale Pass,on Prince of Wales Island;and the communities of Haines and Skagway in the Upper Lynn Canal Region.AP&T recently acquired Haines Light &Power (HLP). AP&T has developed future plans to serve Thorne Bay and Naukati on Prince of Wales Island and Klukwan and Chilkat Valley in the Upper Lynn Canal Region.Detailed information on AP&T's system was not made available to Acres. The City of Kake is located on the northwestern tip of Kupreanof Island in Southeast Alaska.Electric service is currently provided to the 700 residents by the Tlingit-Haida Regional Electrical Authority (THREA)using 2,230 KW of installed diesel generation.THREA's electrical system is isolated from other communities and alternative sources of supply.Peak demand in 1994 was 1,020 KW and total energy generation was 4,248 MWH.Ratepayers in Kake pay the highest rate for electric service identified in this study.The proposed SYSTEM interconnections would significantly reduce power costs and would be expected to enhance potential for future economic development and related load growth. Ketchikan,located on Revilligegado Island,is Alaska's fourth largest city.Electric power is generated by hydroelectric plants at Swan Lake,Ketchikan Lakes and Lake Silvis/Beaver Falls with occasional back-up provided by the Bailey diesel plant.Ketchikan has experienced significant growth in electrical demand over the past decade.Residential use per KPU customer increased at an average annual rate of .4%between 1969 and 1987.Commercial use increased at a higher rate. Acres International Corporation 7-19 Action Plan 7.4.2.5 Metlakatla Power &Light 7.4.2.6 City of Petersburg - Petersburg Municipal Power &Light (PMP&L) In recent years KPU has not been able to meet demand with hydroelectricity and has been forced to rely on the more expensive and less dependable power provided by aging diesel plant and surplus power from the Ketchikan Pulp Company (KPC).In October 1996,KPC announced that it would close its pulp mill and related electric generating facility in March 1997.(Initial Draft Power Supply Planning Study -Foreword)Loss of the pulp mill will affect 465 employees and eliminate a power source;if KPC continues to operate its sawmill about 150 jobs would be retained and a new electric load would occur. Metlakatla is located on Annette Island approximately 15 miles southwest of Ketchikan within the Annette Islands Indian Reservation.Metlakatla's economy is fairly stable and is primarily supported by timber and fishing industries.Royalty payments for timber harvest through 1987 were $5 million;an additional $3 million is projected if the entire resource is harvested.Fisheries activities provide approximately 93 jobs.A community-owned sawmill operated by KPC under a long term lease provides 110 full- time,year-round jobs,and an additional 30 jobs are associated with longshoreing activities.KPC has recently opened a second sawmill at Ward Cove near Ketchikan.The KPC-Annette Island sawmill lease ends in 2004.The sawmill consumes about 6,000 MWH/year (1989 data),or about 40%of Metlakatla's total sales.MP&L's hydroelectric plant cannot respond quickly enough to the second-by- second fluctuation and resulting load variation.MP&L is forced to run a 3,500 KW diesel generator loaded to 1,000 KW in order to respond to the sawmill load and maintain system reliability. Residential electricity use averages 17,250 KWH due to use of electricity for space and water heating and poorly insulated homes. Petersburg Municipal Power &Light (PMP&L)serves approximately 1,860 consumers within the city limits and Mitkof Island.POWER Engineers,Inc.prepared a draft 20-Year Plan to define additions and modifications for PMP &L's system in April 1997,PMP&L has three sources of generation:Tyee Hydro Project, Crystal Lake Hydro Project,and downtown Diesel Plant.Crystal is base loaded with the remaining generation provided by Tyee;backup power is provided by the Downtown Diesel Plant. Petersburg has historically relied on the ocean fishery and logging for its economic activity.Petersburg's system peaks in summer from fish plants'demands,but are starting to level out between winter and 7-20 Acres International Corporation orolsTNPeTOTgt, Action Plan 7.4.2.7 City and Borough of Sitka -Sitka Electric Department 7.4.2.8 Tlingit-Haida Regional Electric Authority summer.PMP&L energy requirements in 1995 were 37,400 MWH and peak demand was 9.2 MW.Current peak load for the PMP&L system is approximately 8.7 MW and available backup capability is 7.2 MW.Total PMP&L load growth has averaged 4.7%per year between 1984 and 1995.Petersburg states that it is preparing a new load forecast.Load curtailment occurs during peak demand hours if the Tyee source is lost.Tyee power is delivered to Petersburg at the 69-25 KV Petersburg Substation owned by the State of Alaska and operated by Thomas Bay Authority.PMP&L's 20 Year Plan evaluates five diesel scenarios for added generation on Mitkof Island. The Sitka Electric Department (SED)serves consumers on Baranof Island and Japonski Island.Past and projected future rate of population growth is 0.5%and employment growth is 0.55%.Major industries include:fish processing currently growing at an annual rate of 1.3 %;and tourism projected to increase at 5.0 %through 2001 and 2.5 %thereafter.The APC pulp mill,once a major source of employment,is no longer in operation.Plant closure and site redevelopment are expected to occur.The former APC site is attractive for commercial or industrial development as it enjoys direct access to open water and municipal utility infrastructure is in place. In the medium ISER forecast,power requirements in Sitka are assumed to remain at the current level through 2000 and increase at 0.55 per year through 2010.Future energy system losses are assumed to equal 7%.System peak demand levels are based on assumed future system annual load factor of 56.6%.System peak demand is projected to increase to 23.8 MW in 2010.Electric rates are projected at the current level through 2000 and to increase at a 3.0%rate of inflation through 2010,The percentage of all-electric homes is projected to increase at a 40%rate in the medium scenario. Thompson Harbor facility is projected to double in size and fill up by 2003.Sitka is currently proposing to add a new diesel generation station this year. The THREA is a generation and distribution electric utility incorporated in 1977 to provide electric generation and distribution service to five Tlingit and Haida villages located in Southeast Alaska:Angoon,Hoonah,Kake,Kasaan,and Klawock,located on islands in the Alexander Archipelago.Chilkat Valley,THREA's sixth village,was added in 1994.A seventh village,Klukwan,part of the original study in 1976,has elected to join THREA. Acres International Corporation 7-21 Action Plan 7.4.2.9 Wrangell Municipal Light &Power 7.5 Environmental and Regulatory Procedures Load growth is attributed to one-time events such as new housing and adding new communities to the system.Predicting new load growth has always been difficult.THREA serves no large power (1,000 KW or larger)loads.Village economies are primarily dependent on timber,fishing,government and service industries. Villages receive assistance through the Power Cost Equalization (PCE)program and are concerned that the State of Alaska address the potential demise of PCE in 1999.The timber industry has been most responsible for economic growth in the communities over the past ten years.Village and regional corporations will soon exhaust their private timber reserves and there is grave concern among community leaders that this will result in a loss ofjobs.The fishing industry is cyclical with prices fluctuating considerable during the fishing season.It is difficult to justify the economics of a fish processing plant in rural village communities where energy costs are higher that other locations in Southeast Alaska. Construction of the planned 8-mile intertie from Chilkat to Haines will allow THREA to access lower cost power from AP&T's Goat Lake Project for the Chilkat Valley and Klukwan.Southern Energy, an independent power producer,has started construction of a 500 KW run-of-river hydro plant with the goal of serving property owned by Southern Energy and selling excess power to THREA and HLP. Wrangell Municipal Light &Power (WML&P)is dependent on fishing and tourism for much of its economic base.Wrangell also benefits from a sawmill and is enjoying a new life as a staging area for mining activity just across the Canadian border,largely as a demand for airport and logistical services.Wrangell's recent loads were not significantly different than forecasted in the 1990 ISER Base Case. The environmental and regulatory review and related issuance of approvals in the form of licenses and permits often requires a long lead time in order to commence with construction and complete facilities on a timely and cost-effective basis.Issuance of a federal license or permit triggers environmental review requirements under a number of statutes,including the National Environmental Policy Act. Facilities envisioned in this SYSTEM Plan involve actions that will require federal licenses and permits including: >permits to cross navigable waterways and wetlands,or to allow dredge and fill activities; 7-22 Acres International Corporation myPeFyPNR Action Plan 7.5.1 Reconnaissance Level Review -"Fatal Flaw Analysis" 7.5.2 Formal Licensing and Permitting Requirements »preparation of a Special Use Authorization to occupy Tongass National Forest lands;and >»Hydropower projects and primary transmission lines jurisdictional under the Federal Power Act are required to be licensed by the Federal Energy Regulatory Commission (FERC). Based on prior experience,time periods to complete regulatory approvals involving NEPA review are: »Hydropower licenses for major unconstructed projects:5 -12 years;and »Approvals for transmission line segments located on federal lands: 2-5 years. A "fatal flaw"environmental assessment for each of the selected line segment is typically performed concurrently with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented.Tasks involved in this assessment include: >Reconnaissance review of the proposed project area to identify any critical habitat for aquatic and terrestrial species;fish and wildlife populations;navigable waterways;wetlands;listed cultural, archaeological,or historic properties;recreational use areas;and scenic vistas. >Literature search to identify any resources and areas that will require significant enhancement or mitigation measures. >Review of licensing,permitting and other approvals that will be required to design,construct,and operate facilities. >Preliminary consultations with federal and state resource management agencies with authority over use and occupancy of lands,waters,and resources in the proposed project area. Once project feasibility is confirmed,the formal permitting and licensing procedures are accomplished.These include: Acres International Corporation 7-23 Action Plan >formal consultations with state,federal,and local agencies and other governmental authorities;non-governmental organizations; and other interested parties; >environmental data gathering and studies; >»applications for approval by regulatory authorities;and >environmental protection and enhancement plans. The Swan Lake -Lake Tyee Intertie development process provides insight into the potential environmental investigations that will be required to receive permits and other regulatory approvals in order to construct additional segments of an interconnected SYSTEM.The environmental and regulatory review follow in tandem with route selection and engineering feasibility and design.The recent FERC licensing of the proposed Goat Lake Project provides insight into environmental,engineering,and economic/financial investigations associated with applymg for and receiving a FERC license. Typical licensing and permitting requirements for transmission lines (T)and hydropower facilities (H)are listed in the Table 7.7. 7-24 Acres International Corporation Feoeancgieaaoaeo,oeonSTRem Action Plan Table 7.7 Typical Licensing and Permitting Requirements for Transmission Lines and Hydropower Projects 7.5.3 Environmental Protection, Enhancement,and Mitigation Requirements Column "T"identifies transmission requirements;Column "H" identifies hydropower facilities requirements. T H PERMITS AND APPROVALS Corps of Engineers Individual Section 10 Permit for each crossing of navigable waters X X Corps of Engineers Section 404 Permit where facilities affect wetlands or involve dredge and fill xX X USFS Special Use Permit to construct and operate facilities on National Forest lands X FERC License to construct and operate hydropower facilities jurisdictional under the Federal Power Act Xx X Alaska Coastal Management Program Certificate of Consistency issued by Division of Governmental Coordination X X Certification that proposed facilities can be constructed and operated in compliance with State Water Quality Standards and the Federal Clean Water Act (401 Certificate)issued by Alaska Department of Environmental Conservation X X -Spill Prevention Containment and Counter Measure (SPCC) Design/Plan required by EPA to comply with the Federal Clean Water Act x X Local government building permits and zoning requirements X xX Lease agreements with Native Corporations to cross corporation lands A significant element of the environmental approval process is determining environmental protection measures and enhancements, and any potential environmental mitigation measures,that may be required and assessing their effects on project feasibility.These requirements may significantly affect project costs during construction and through the life of the project.Under current federal law,a number of federal agencies and state agencies with delegated authority from federal statutes may prescribe mandatory terms and conditions.State and federal agencies can also impose terms and conditions through issuance of permits.Local jurisdictions may require certain measures through zoning and other local requirements.Table 7.8 presents typical environmental requirements associated with transmission and hydroelectric projects. Acres International Corporation 7-25 Action Plan Table 7.8 Typical Environmental Protection,Enhancement and Mitigation Requirements Transmission Line Segments and Hydropower Projects 7.5.4 Review of Existing Reports -Environmental and Regulatory Procedures Typical environmental protection,enhancement,and mitigation are listed in Table 7.8 Column "T"identifies transmission requirements; Column "H"identifies hydropower facilities requirements. ENVIRONMENTAL PROTECTION,ENHANCEMENT &MITIGATION MEASURES Water quality monitoring Fish and wildlife Scheduling construction activities to avoid adverse impacts Habitat protection and enhancement Avoid direct effects on anadromous fish streams Soil and erosion control measures Measures to avoid adverse project-related effects on threatened and endangered species Raptor protection measures Cultural,Historic,and Archaeologic Resources Surveys Avoid adverse impacts Management plans where eligible or listed resources are present Scenic and Aesthetic Resource Protection Avoid areas of primary concern Revegetation and landscaping Treatment of facilities Recreational Resources Surveys Avoid areas of primary concern Develop,operate,and maintain new facilities Assess project-related effects on local services and facilities -schools, hospitals,police,etc.,during construction and operation May require payment for services or development of new facilities We reviewed a number of reports and interviewed utilities,state government officials,and consultants to identify sources of available information regarding proposed transmission line segments and hydroelectric projects in Southeast Alaska.Reports relied on in preparing this report include the following: >Alaska Power Authority,Southeast Alaska Transmission Intertie Study,October 1997; >»Department of Community and Regional Affairs,Division of Energy,Kake-Petersburg Intertie Feasibility Study,January 1996, 7-26 Acres International Corporation aONRyaieaaiceteaeiietet Action Plan Table 7.9 Level of Investigation -Performed as of November 1997 Proposed Transmission Segments and Hydroelectric Projects »USDA Forest Service,Land and Resource Management Plan, Tongass National Forest,1997; »USDA Forest Service,Swan Lake -Lake Tyee Intertie,Final Environmental Impact Statement Summary,August 1997; »USDA Forest Service,Swan Lake -Lake Tyee Intertie,Record of Decision,August 1997;and >USDA Forest Service,Tongass Land Management Plan Revision, Final Environmental Impact Statement,January 1997. Table 7.1,Level of Assessment for Proposed Transmission Segments,lists primary environmental issues identified and states the existing level of review performed to date.:Table 7.9 presents for each phase,the level of investigation performed on the proposed transmission segments and hydroelectric projects.A complete list of reports reviewed is included in Appendix B and is available from the Southeast Conference. Proposed Status Phase Intertie Segments &Environmental Review Hydro Projects Approvals I Swan Lake -Lake Tyee Intertie Issued -8/97 Ketchikan -Metlakatla Intertie Reconnaissance level -1987 EIS and USFS Record of Decision 0 Petersburg -Kake Intertie "Fatal flaw"review -1996 Kake -Sitka Intertie Reconnaissance level -1987 be Juneau -Sitka Intertie Appraisal level -1987 Lake Dorothy Hydro Project FERC Preliminary Permit - Preliminary review -1996 Swan Lake Hydro Project Appraisal level -1965 IV Juneau -Skagway Intertie Takatz Lake Hydro Project Reconnaissance level -1987 Vv Ketchikan -Prince of Wales Scenery Lake Hydro Project Appraisal level -1965 Reconnaissance level -1965 Reconnaissance level -1987 Acres International Corporation 7-27 Action Plan 7.6 Recommendations The general evolution of analyses presented in the 1987 Intertie Study is entirely appropriate for the purpose of progressively narrowing down the options to find the optimal development sequence.However,we identified a number of specific concerns that should be questioned in further analyses,and identified the need to elaborate on some of the cost functions used in the comparison of proposed line segments.The main issue in developing an integrated electrical system is optimal timing of transmission extensions,and ultimately the timing of future generation additions.Specific concerns identified include: >suitability of assumed generation dispatch assumptions; >appropriateness of adopted reserve margins; >improved reliability of supply could not be quantified based on the 1987 analysis;and >stated "Benefit-Cost"ratios are really the ratio between the Net Present Value of the cost of the Base Case Diesel development and the Net Present Value of the costs of the subject expansion plan. General recommendations include: >update relevant study results to a consistent basis; >prepare a least-cost planning analysis;and >evaluate cost-effective demand-side management programs options on a sub-regional basis. Due to the passage of time since the release of the 1987 Intertie Study,we identified a range of concerns regarding the study findings: >different base year; >different base loads and growth rates,and later terminal year leads to changes in forecast of replaceable diesel consumption at each community,and more demanding load conditions for designed transmission elements; >different diesel fuel price projections >different transmission and substation costs; >different system losses due to different system load conditions;and >recent commitments to selected grid extensions. Recommended investigations and analyses to complete this SYSTEM Plan include: >update information available and relied on in preparing this Report as noted above; 7-28 Acres International Corporation ciliaOC6,aFanOPONMPEEERpeeLome, Action Plan »Vvreview basic designs for transmission lines and substations presented in existing reports for adequacy.Develop a level ofdetailadequatetoprovideastrongerfoundationfordeveloping refined cost estimates; develop generic designs for stand-alone diesel generation supply stations and for backup generating stations.Use stand-alone stations in refined Base-Case development plan;assume standby installation as grid is extended to each community; conduct a "fatal flaw"environmental assessment for each of the selected line segmerits concurrent with engineering feasibility investigations to determine whether an environmental issue of significant magnitude would preclude construction and operation of a line segment,even though reasonable mitigation measures could be implemented; update economic parameters and assumptions used in evaluating alternatives presented in the 1987 Study and apply in future analyses regarding the proposed Southeast Alaska Electrical Intertie SYSTEM.; prepare revised load forecasts for participating systems recognizing phased development identified in this SYSTEM Plan. Identify potential new large loads and determine each potential new large load's energy plan with regard to self-generation and interconnection with local utility to provide backup.Identify conservation program actions to be implemented by potential new large loads. investigate economies of scale available through multiple use corridors: -electricity transmission -communications and fibre optics -transportation Acres International Corporation 7-29 %Ea et" NEAUL \6*Lake Dorothy (Phase Ill)CROSS SOUND a!QONAH ,SOX,\wn ;Ox On SnettishamTENAKEESPRINGSSEePhaSeanMeVSé&(Adis S38WNLVA2\u,ANGOON "Nv AM Se CN+Scenery Lake (Phase V)fetid oh )Wah ff N\Avr,ir "ous te,Swan Lake (Phase YDTakatzLakPha"ye?\aSakatzLake(Phase WF 801 Reei}STINE gf5anaviefAWRANGELLam.*GS KeenOD NKyogSSaioe ONS,Tyee Lake{->y ."3 PSF NMPMasaith f |sé LoapCenter |aad Balk -, Existing Intertiea CRAIG eeaNewIntertieARNweor"spe Swan Lake SY V $f Existing Hydro New Hydro Phase!Be"KETCHIKANcal¥:WyCenee, .'rawr zbyFah.METLATAKA wityxaxonFSomsntaanceMoM5q5iaioe y Figure 1 Southeast Alaska Utilities ACHEELECTRICALINTERTIESYSTEMPLAN 1,000MWh3°400 300 200 fo]Oe :coe i ae 7 Op.RD i 'Cy 3 i ]H Y ''7 |i |i i i i i i i i|i !i H i pe pop py Average Annual Loads Average Annual Energy w/Potential New Hydro i i i i i i Average Annual Energy w/Existing Hydro tublbhtebe1995 2005 2010 Southeast Alaska Utilities ELECTRICAL INTERTIE SYSTEM PLAN :LOADS AND RESOURCES 8 References and List of Preparers ote aati foc3 i5 fg "eo? od SN RB EME I IPR ION NR OR EO BRE OR BO ORR NTN TNT ON NN "yt Section 8 8.1 References Cited References Cited and List of Preparers The following documents were used in preparing this report.A full list of literature pertaining to topics covered in this report is located in Appendix B. Copies of Appendices are available upon request from the Southeast Conference. Alaska Department of Community and Regional Affairs,Division of Energy, Kake-Petersburg Intertie Feasibility Study.Prepared by R.W.Beck, Inc.,1996. Alaska Department of Community and Regional Affairs,Rural Alaska Electric Utility Interties Preliminary Draft Survey.Prepared by Foster Wheeler Environmental,Bellevue,WA.,March 1987. Alaska Electric Light and Power Company,Application for New License - Annex Creek and Salmon Creek.Prepared by R.W.Beck,Inc.,October 1985. Alaska Electric Light and Power Company,Juneau 20-Year Power Supply Plan Update.Prepared by CH2M Hill,Bellevue,WA.,August 1990. Alaska Power &Telephone Company,Application for License -Black Bear Lake Project.Prepared by HDR Engineering,June 1994 Alaska Power Authority,Black Bear Feasibility Report.1981. Alaska Power Authority,Haines-Skagway Region Feasibility Study.Prepared by R.W.Beck,Inc.,1981. Alaska Power Authority,Southeast Alaska Transmission Intertie Study. Prepared by Harza Engineering,October 1987. Alaska Power &Telephone,Upper Lynn Canal Regional Power Supply Review.Prepared by R.W.Beck,Inc.,Seattle,WA.,April 1997 Alaska Systems Coordinating Council and State of Alaska Department of Community and Regional Affairs,Division of Energy,Alaska Electric Power Statistics 1960-1995,Anchorage,Alaska,September 1996. Acres International Corporation References Cited and cist of Preparers Electric Utility System,City and Borough of Sitka,Analysis ofElectric System Requirements.Prepared by R.W.Beck,Inc.,Seattle,WA,April 1974, Federal Power Commission and Forest Service -U.S.D.A.Water Powers - Southeast Alaska.Washington,D.C.,1947 Ketchikan Public Utilities,Jnitial Draft Power Supply Planning Study. Prepared by R.W.Beck,Inc.,Seattle,WA,December 20,1996. Metlakatla Power &Light,Energy Generation Feasibility Study Report. Prepared by Atlas Engineering Group,Baton Rouge,LA,March 31,1997 McDowell Group,Inc.,Trends in Southeast Alaska's Economy.Handout prepared for Southeast Conference Annual Meeting,September 1997. Petersburg Municipal Power &Light,Analysis ofElectrical System Requirements.Prepared by R.W.Beck,Seattle,WA,March 1974. City and Borough of Sitka,Alaska,Electric Resource Evaluation and Strategic Plan.Prepared by R.W.Beck,Inc.,Seattle,WA,October 1991 Thomas Bay Power Commission,Petersburg -Wrangell,Appraisal Report. Prepared by R.W.Beck,Seattle,WA.,November 1975. USDA Forest Service,Land and Resource Management Plan,Tongass National Forest Tongass Land Management Plan Revision Final Environmental Impact Assessment,August 1997. USDA Forest Service,Swan Lake-Lake Tyee Intertie Final Environmental Impact Statement Summary.Prepared by Foster Wheeler Environmental, August 1997, USDA Forest Service,Swan Lake-Lake Tyee Intertie Record of Decision. August 1997 U.S.Department of the Interior,Alaska Power Administration/Bureau of Reclamation,Takatz Creek Project -Alaska.Washington,D.C.,1960 8-2 Acres International Corporation NTATAEimPOTsNARENee. References Cited and List of Preparers 8.2 List of Preparers Nan A.Nalder,MPA,Project Manager.Project Descriptions,Economics and Demographics,Environmental,Geography,Policy,Regulatory,Research, and Report Editor.Acres International Corporation,Seattle,Washington. Myles Godfrey,P.Eng,Transmission Line Segments and Systems Operations.Acres International Limited,Toronto,Canada. A.Richard Griffith,PE,Hydroelectric Projects.Acres International Corporation,Seattle,Washington. Kenneth Salmon,P.Eng,Electrical Equipment and Systems.Acres International Limited,Vancouver,B.C. Jeffrey Spencer,PE,Electrical Distribution and Transmission Review. Elektron,Bend,Oregon. Acres International Corporation Swann-Tyee Intertie Update DRAFT 57 mile 138 Kv Intertie Chronological Project History In 1987,the Alaska Energy Authority commissioned a study by Harza Engineering to look at Intertie alternatives in the Southeast.The Swan-Tyee and Juneau to Green-Creek were identified as the ones with the best "economic rational."The Swann-Tyee was considered to have promise because it would make surplus Tyee energy available to Ketchikan,but it was noted that if Ketchikan load growth did not materialize that the Intertie would have "little benefit." In 1990,an ISER concluded that full output of Swan Lake would be consumed by 1992 and that supplemental diesel would be needed at that time. In 1991,RW Beck issued a market and financial assessment report.In 1991 dollars the cost was estimated at 39 million.The analysis indicated that if KPU paid 5.6 cents/kwh in 1996 for power over the Intertie,then revenue from the project could support 10 million in bonds and the state would have to contribute the remaining portion of the cost. The study indicated approximately 40 million in economic benefit associated with building the Intertie compared with using diesel to meet excess power needs in Ketchikan. In 1992,the project was discussed at a Ketchikan City Council Public Hearing.It was noted then that the project was justified based on 80,000 MWH annual excess energy available from the Lake Tyee Project and projected load growth in Kethikan.At the time it was noted that Ketchikan was using 10,000 MWH less energy than what was available from the Swan Lake Project,but it was expected that their demand would grow so that they would be using all their available hydro energy in a short time.There was a presumption that the excess from Tyee would be used in lieu of diesel in Ketchikan, which would be needed to meet future load growth.The Alaska Energy Authority was working on a feasibility study to "build the project"and at that time estimated a cost of "about 40 million."The concept of the state funding 50%and AEA issuing revenue bonds for the remaining 50%was discussed. In 1992,the cost was updated to 55 million. In 1993,the legislature appropriated 20 million for payment as a loan under the Power Project Fund Statute.Later in 1993,the legislature provide a grant of 4.5 million to KPU for design and construction of the Intertie and 4 million in 1994,and enacted legislation to provide similar grants on an annual basis. In 1994,HDR Engineering completed an economic and financial assessment of 3 KPU power supply options -the Intertie,Mahoney Lake,and diesel.The study identified Mahoney Lake as the preferred resource for 6 different base case assumptions.The Intertie was preferable in the case where "a state grant is available each year of the project and the Intertie energy is either no cost or the Four Dam Pool variable rate (2.6 cents/kwh in 1994)." In 1995,KPU began designing and engineering using state grant funds. In 1996,by this time 11.2 million in state grant funds had been committed to the project to cover all pre-construction costs. In 1997,KPU decided to use the 20 million dollar loan and a resolution accepting the loan was passed by the city council.KPU also moved forward on permitting,power sales with the Four Dam Pool,analysis,and efforts to obtain federal funding for the project. In 1997,a letter from KPU to Commissioner Tom Irwin indicates that the Department of Community and Regional Affairs concluded that an important test for the Intertie would be for Ketchikan voters to approve 20 million in debt service.The letter indicates that the Department of Community and Regional Affairs also questioned the cost effectiveness of the Intertie based on KPU's estimated 70 million dollar construction cost. KPU notes that Ketchikan voters passed a 13.7 million bond issue for back-up diesel generators and the Intertie is defended as the best alternative to diesel.KPU notes that "it is not only cost-effective,it is imperative to our economic recovery that the state facilitate the development of the Swann-Tyee Intertie."KPU notes that commitment to diesel will adversely impact electric rates.KPU further notes that they agree the project relies on "speculative economics"but expresses concern that this outlook could be self-fulfilling without the project. In 1997,the Forest Service completed key aspects of the permitting. In 1998,KPU's dependence on diesel generation had grown to 27,000 MWH. In 1998,Cape Fox Corporation and AP&T formed a joint venture (Ketchikan Electric)to develop the Mahoney Lake Project for which a FERC license was recently granted. Ketchikan Electric offered to sell power to KPU at 6.5 cents/kwh and indicated that both the Intertie and Mahoney Lake projects should be pursued. Financial status as of 1998 based on information documented in the files: 11.2 million -state grants (5 million unspent in 1998) 2.4 million -state grants (Southeast Energy Fund) 20 million -state loan from Power Project Fund (requires public vote that had not occurred) 10 million -federal funds Total -43.6 million Current Diesel Usage in Ketchikan A DH Hittle Intertie study provided the most recent update of diesel usage in Ketchikan. The following is from page 28 of the phase II study: Ketchikan Public Utilities (KPU),a municipally owned electric utility,is the second largest electric utility system in Southeast Alaska.KPU obtains the majority of its power supply from KPU-owned hydroelectric projects and the Swan Lake project,a Four Dam Pool Power Agency project.In most years,KPU's electric loads exceed the available hydroelectric generation capability and diesel generators must be used to supply the net power requirement.KPU is presently constructing the Swan-Tyee Intertie to gain access to the surplus generation capability of the Lake Tyee project.The electric requirements of KPU will affect the net generation available to Kake from the Lake Tyee project. Following the closure of the Ketchikan Pulp Company pulp mill power plant in 1997,KPU's total energy sales increased with the sale of power to the Gateway Forest Products sawmill.The sawmill closed at the end of 2001 and KPU saw a decrease in total energy sales.Electric loads are assumed to increase at average annual rates of 1.1%,0.3%and 2.2%for base,low and high forecast scenarios,respectively. KPU's forecasted electric requirements are summarized in the following table. TABLE 2-4 Ketchikan Public Utilities Projected Energy Requirements -Medium Growth Scenario 2003 2004 2005 2006 2007 2012 Energy Requirements (MWh)'153,972 155,666 157,378 159,109 160,859 169,903 Less:KPU Hydro 2 (68,460)(68,460)(68,460)(68,460)(68,460)(68,460) Less:Swan Lake *(68,108)(68,585)(69,065)(69,401)(69,725)(70,668) Net Requirement *17,404 18,621 19,853 21,248 22,674 30,775 Assumes average growth in energy requirements of 1.1%per year. Estimated annual energy generation from KPU-owned hydroelectric projects assuming average precipitation levels. Estimated annual generation from the Swan Lake hydroelectric project assuming average precipitation levels.Average energy usage is expected to increase somewhat as the KPU load increases. Projected net energy requirement to be provided from diesel generation,new hydro project generation or the Lake Tyee hydroelectric project,assuming the Swan-Tyee Intertie is constructed. The study indicates that KPU currently needs 17,404 MWH in diesel generation (or presumably from the Intertie when it is completed)to meet current needs based on a normal water year and the need grows 1.1%annually. Currently,however,it is my understanding that high water levels in 2003 at Swan Lake and other KPU hydros combined with reduced demand associated with the Gateway closure have negated a recent need for diesel generation to date in 2003. Ketchikan's current energy needs are on the low-side of what was predicted in earlier studies.Future load growth projections have also been requested from KPU to confirm this data. Economic Benefit of using Excess Lake Tyee Energy The DH Hittle study listed that the cost of diesel generated power in Ketchikan as follows: TABLE 3-4 'Projected Variable Cost of Power Production with Diesel Generation (nominal cents per kWh) 2003 2004 2005 2006 2007 2012 2017 2022 Skagway-Haines (AP&T)9.2 9.3 9.6 9.8 10.1 11.3 12.9 14.5 Chilkat Valley (THREA)?----10.0 11.7 13.4 15.1 Hoonah (THREA)12.3 12.6 12.9 13.3 13.6 15.4 17.4 19.7 Kake (THREA)11.8 12.0 12.4 12.7 13.0 14.7 16.6 18.8 KMC-GC (Greens Creek)9.2 9.4 9.6 9.9 10.1 11.4 -- Excursion Inlet 9.9 10.1 10.3 10.6 10.9 12.3 13.9 15.8 Gustavus 13.4 13.7 14.1 14.4 14.8 16.7 19.0 21.4 Angoon (THREA)12.2 12.4 12.8 13.1 13.4 15.2 17.2 19.4 Sitka 10.9 11.2 11.5 11.7 12.0 13.5 15.3 17.4 Ketchikan 8.7 8.9 9.1 9.4 9.6 10.8 12.3 13.9 Prince of Wales (AP&T)9.1 9.3 9.5 9.8 10.0 11.3 12.8 14.5 The Four Dam Pool Annual report indicates the wholesale power cost to communities it serves as 6.4 cents/kwh,resulting in a 2.3 cents/kwh energy savings associated with using excess energy from the Lake Tyee Project.Using the Hittle estimate of the Ketchikan diesel requirement in 2003 (17,404 MWH),the gross savings in 2003 using Lake Tyee power over diesel would have been approximately $400,000.00.Actual conditions however in 2003,would have resulted in negligible economic benefit as the KPU diesel's were not used much in 2003. Available Excess Generation from the Lake Tyee Project The following is from pages 2-20 and 2-21 of the DH Hittle phase II Intertie study: The generating capability of the 20-MW Lake Tyee project is presently committed to Petersburg and Wrangell.The Swan-Tyee transmission Intertie,currently under construction,will provide Ketchikan with access to generation from the Lake Tyee project that is surplus to the needs of Petersburg and Wrangell. Several estimates of the annual energy capability of the Lake Tyee project have been developed in the past; however,the loads connected to the project have never been large enough to evaluate how well the estimates compare with actual performance.Generally,it has been estimated that under average water conditions,the annual energy generation capability of the project is about 129,000 MWh.Based on actual experience and the knowledge of individuals familiar with the operation of the project,the average annual energy generation could be as low as 110,000 MWh per year. Hydroelectric generation is highly variable from year to year depending on local precipitation and other environmental conditions.As previously indicated,the average annual estimated energy generation capability of the Lake Tyee project is 129,000 MWh.Under dry,low water conditions,the energy generation is estimated to be 112,700 MWh whereas it could be as high as 154,800 MWh. The following table summarizes the energy generation available from the Lake Tyee project assuming average annual energy generation of 120,000 MWh from the project. TABLE 2-12 Estimated Hydroelectric Energy Generation From the Lake Tyee Project -Medium Growth,Average Water (MWh) 2003 2004 2005 2006 2007 2012 Lake Tyee Generation '120,000 120,000 120,000 120,000 120,000 120,000 Energy Requirements ” Petersburg/Wrangell 54,455 54,974 55,498 56,026 56,560 59,299 Ketchikan 17,404 18,621 19,853 21,248 22,674 30,775 Net Energy Available 3 48,141 46,405 44,649 42,726 40,766 29,926 'Assumed generation for purpose of this analysis.Actual generation will vary from year to year. ?Based on medium growth scenario,see Tables 6-4 and 6-5. 3 Estimated annual generation from the Lake Tyee project available to Kake. This estimate by DH Hittle is consistent with past studies,however,private conversations indicate that past studies of annual generation capability at the Lake Tyee Project were based on data from an adjacent drainage basin and that resulted in estimates that may be higher than actual and the Hittle study indicates it could be as low as 110,000 MWH.An update of the projects energy capability using actual lake level data from the project may be helpful to better define the projects capability. Regardless,there is excess energy that can be allocated regionally as opportunities develop.Allocating that excess energy requires hypothetical assumptions about future energy demand,which is a function of the economy,and project capability,which is a function of the weather.Here are some hypothetical considerations: Using the Hittle estimates for 2003,if Wrangell/Petersburg usage and Ketchikan assumed usage to displace diesel are backed out,the net annual excess energy available is 48,141 MWH.Assuming the Kake Petersburg Intertie is built,and the Kake energy requirement of 4,685 MWh is also backed out the potential excess energy for potential mining activity on Woewodski Island is limited 43456 MWH annually.The power needs for the mine are not known,but the DH Hittle study noted that "if a new mining operation similar in size to the KMC-GC mine were to be developed,additional energy requirements in the range of 50,000 MWh per year could be realized."A mine of this size would create a capacity shortfall from Lake Tyee of -6544 MWH.If capacity estimates are 10,000 MWh lower,the shortfall in excess energy could be as much as -16544 MWH from Lake Tyee.Future load growths could exacerbate the shortage.The point being there may not be enough excess to go around to meet all possible needs.Conversely however,if the need in Ketchikan is lower,consistent with today's demand,an additional 17404 MWH becomes available annually that significantly mitigates the potential shortfall at the mine. Also if there was a shortfall,there is surplus hydro in Metlakatla and other generation resources that could be developed although they require Intertie links,overcoming economic and regulatory barriers,etc.According to the DH Hittle study: Three hydroelectric projects have been identified for potential development in the Ketchikan area: Whitman Lake,Connell Lake and Mahoney Lake.In addition,surplus hydroelectric generation presently exists in Metlakatla.The interconnection between Ketchikan and Metlakatla (SEI-3)has been studied in the past and would allow for transmission of MP&L's surplus hydro energy within the Tyee-Swan region.Although the energy requirements and existing resources in the region would imply that the Metlakatla Intertie would not be needed until around 2020,it can be reasonably expected that this interconnection would be beneficial prior to that time,particularly if an interconnection with the Prince of Wales electric system is constructed. Other Generation Options There are other hydro generation options in the region that have been detailed as follows in the recent DH Hittle report: A number of new hydroelectric projects have been studied that could serve the Southeast Alaska area. Costs of these projects,as well as other factors including location,generating capacity,interconnected loads and the availability of better alternatives have precluded development of these projects.The development of a transmission interconnection system could make development of some of these projects economically and technically feasible at some later date.Hydroelectric projects that have been identified, the community they are closest to,and their estimated capacity and annual energy generation are provided in Table 2-13. Several of the projects shown in Table 2-13 were only studied on a reconnaissance basis while others have been studied in more detail.Further,the timing of the most recent studies conducted for these projects varies significantly.In total,the combined capacity of all the projects shown in Table 2-13 is 195,300 kW, essentially the same as the current amount of installed hydroelectric capacity in Southeast Alaska.The estimated total average annual energy generation of the potential hydroelectric projects is 701,000 MWh.It should be noted that other projects have been identified for the region in the past,such as the Lake Grace project near Ketchikan,that are not included in Table 2-13 because of problems that have been identified with their potential development. TABLE 2-13 Potential New Southeast Alaska Hydroelectric Projects Upper Lynn Canal Region Kasidaya Creek Connelly Lake Subtotal North Region Lake Dorothy -Phase 14 Lake Dorothy -Phase 2 Gartina Falls Water Supply Creek Falls Creek Subtotal West Central Region Takatz Lake Katlian River Thayer Creek Subtotal Tyee-Swan Region Thomas Bay (Swan Lake) Lake Tyee Third Turbine Sunrise Lake Anita -Kunk Lake Virginia Lake Thoms Lake Whitman Lake Connell Lake Mahoney Lake Triangle Lake Subtotal Prince of Wales Region South Fork Lake Mellon/Reynolds Creek Subtotal Totals Annual Energy Estimated Generation Capital Capacity Capability *Cost ? Cummunity /Utility (kW)(MWh)(Smillions) Haines-Skagway/AP&T 3,000 12,000 7.0 Haines-Skagway/AP&T 5,000 30,000 14.0 5,000 30,000 Juneau/AEL&P 15,000 75,000 Juneau/AEL&P 32,000 94,000 Hoonah 600 1,900 3.8 Hoonah 600 1,800 3.1 Gustavus/GEC 800 2,900 4.1 49,000 175,200 Sitka 20,000 82,800 82.0 Sitka 7,000 29,800 70.5 Angoon 1,000 8,500 NA 28,000 121,100 Petersburg 40,000 164,400 193.0 Petersburg -Wrangell 10,000 1,000 NA Wrangell 4,000 12,200 NA Wrangell 8,000 28,200 NA Wrangell 12,000 42,700 NA Wrangell 7,300 25,600 NA Ketchikan/KPU 4,600 19,640 7.6 Ketchikan/KPU 1,900 11,640 5.5 Ketchikan/KEC 9,600 45,600 NA Metlakatla/MP&L 3,900 16,885 12.9 101,300 367,865 Craig-Klawock/AP&T 2,000 7,000 3.5 Craig-Klawock/AP&T 10,000 -NA 12,000 7,000 195,300 701,165 'Estimated average annual energy generation. ?Estimated costs as derived from previous studies,adjusted to 2003 cost levels. Various legal actions have prioritized usage of excess generation from Lake Tyee,via the Intertie,in Ketchikan ahead of possible Mahoney Lake Development.The status of other new generation in the Lake Tyee region is unknown but may face similar legal consequences. Current Status Engineering design and fabrication work is proceeding.A 13 million dollar contract to complete ROW clearing and some geo-technical evaluations was let and the work has been substantially completed. The project is scheduled to be transferred to 4-Dam Pool and negotiations are underway. On October 15th the Ketchikan City Council approved transfer of grants and assets to 4 Dam Pool.Transfer has not been not signed and approved by 4-Dam pool members yet. Tom Lovas,CEO of Four Dam Pool,is working on finalization of asset transfer and has it on the agenda for his next board meeting on Nov 20th. Per phone conversation with Tom Lovas,the 4-Dam Pool Board accepted an updated completion cost estimate of 90 million and the 4-Dam Pool is working on design modifications to try to get the cost down.They are targeting construction next summer providing they can get remaining funds in place.Tom Lovas said something about needing a line of credit from AIDEA. In terms of Intertie priorities,currently the Southeast Conference is treating the Swann- Tyee line as a done and fully funded priority and is focusing current efforts on Juneau- Hoonah and Petersburg-Kake.One of the Petersburg-Kake routes includes routing near a mine prospect currently being investigated.If that is a feasible development,it could be an opportunity for 4-Dam Pool Power Sales using excess power from Lake Tyee also. A related issue is that SE Conference has hired a DC lobbyist to try to capture the non- federal match accumulated in the Swann-Tyee Project and private AEL&P match to be invested in Lake Dorothy,etc.If this can be accomplished,the federal match requirement would be solved for a large portion of the overall Intertie projects needs. A budget update has been requested from KPU but nothing has been received to date. The exact status of the budget now and in the past is unknown as indicated by AEA credit staff.Based on latest KPU reporting (note this is KPU characterization of the budget and available funds and is unverified by AEA),that is unverified by AEA,available funds include: 11.2 million -State grants from 94/95 44 million -State grant from AEA in '99 5.0 million -"Payment by 4-Dam Pool" 14 million -"Bonds issued by Four Dam Pool upon issuance of debt"(HB 528) 39.6 million -Federal Funds (including 7.6 million recently reported) 79.2 million available -as characterized by KPU.The accuracy of this characterization is in question and unverified by AEA. The amount spent to date is unknown,but last reporting by KPU in June 2002,indicates that 9.8 million had been spent.Since then it's estimated that at least another approximately 13 million had been spent on line clearing. In 1999,AIDEA hired several consultants to review the project need.It indicated that the Intertie was not the best economic option,but under high growth projections it is comparable.The analysis noted other factors make the project attractive. Recommendations were made to ensure the state had no ongoing state responsibility. In 2000,Ketchikan Electric argued to the 4 Dam Pool and KPU that Mahoney Lake should have preference for power purchases over the Swann-Tyee Intertie since it was licensed as a PURPA project.The 4 -Dam Pool noted that energy sales from Lake Tyee are needed to generate revenue to justify project purchase from state.KPU petitioned FERC to grant a waiver from PURPA and FERC complied,placing Lake Tyee power ahead of Mahoney Lake.In 2001,Ketchikan Electric filed suit contending FERC's waiver.KPU countered the suit by saying the 4-Dam Pool sale was contingent on selling Lake Tyee Power to 4-Dam Pool.The DC circuit court of appeals upheld FERC's PURPA waiver.Ketchikan Electric did not petition for a rehearing. In 2001,Ketchikan Electric filed a suit against KPU,alleging KPU acted in bad faith in negotiating a PSA and sought the court to impose a PSA on KPU.The 4-Dam Pool joined KPU and the case was dismissed. In late 2001 and 2002,preliminary design work was completed.Also,KPU obtained permits and legal OK for right-of-way clearance contingent on completing certain permit conditions. In 2001/2002,HB 528 provided authorization to grant 20 million subject to legislative appropriation.That amount includes principle and interest and the 4-Dam Pool is valuing it at 14 million in their latest budget.The 4-Dam Pool has not borrowed against that authorization and is currently trying to meet with and get a commitment from the governor to appropriate the money since other HB 528 money was vetoed. In 2002,ROW clearing completed on the first 18 miles. In 2002,the budget was updated to 85 million assuming no timber sales from clearing. In early,2002,a KPU budget indicated they had secured 45 million in state (16)and federal (29)grants,leaving an unfunded balance of approximately 40 million.The 20 million dollar loan referenced earlier was not included in the budget.As of 1*quarter 2002,about 8.5 million had been spent to date by KPU. In 2002,as a condition of the 4-Dam Pool sale,money held for the 20 million dollar loan was returned to the railbelt energy fund,and in its place a 5 million dollar credit available as a loan was provided for the Intertie Project.AEA made no commitment in the 4-Dam Pool Sale to fund over the value of the 5 million dollar loan. Cascade Creek Hydroelectric Project (FERC P-12495) PG&E 2005 RPS Response BACKGROUND INFORMATION Cascade Creek is located about 17 miles northeast of the town of Petersburg, Alaska on the mainland of Southeast Alaska.The Cascade Creek drainage area is approximately 23 square miles.Cascade Creek starts in a mountainous region with peaks up to 6,000'in elevation,then flows into Swan Lake.Swan Lake is approximately 1.8 miles long,and at an elevation of 1515'.The intake for the hydroelectric project would be at Swan Lake,with the powerhouse near sea level. This site has been investigated several times for use as a power production facility. The hydropower project has not yet been constructed since it is too large a project in comparison to the local demand for energy.In 1923 the Federal Power Commission issued a project license No.275,for the development of a project on Cascade Creek designed to serve a proposed mill.The mill proposal fell through, and the FPC terminated the license in 1926.The Cascade Creek site was studied in 1962 by the U.S.Geological Survey and separately by the U.S.Bureau of Reclamation.In 1974 the city of Petersburg and Thomas Bay Power Commission studied the project and opted to construct the smaller Tyee Lake project instead. CASCADE CREEK DATA Dam height 30 ft Hydraulic height 1500 ft Spillway elevation 1530 ft (full lake) Dam crest elevation 1533 ft Reservoir area @ 1530 ft.585 Acres (full lake) Drainage area 23 sq.miles Spillway type Concrete Spillway discharge capacity 9,000 cfs Penstock 96 inch diameter Tail water elevation 30 ft Average flow 252 cfs Annual precipitation 148.7 inches Annual runoff 182,400 acre-feet PROJECT DESCRIPTION A dam would be constructed at the outflow of Swan Lake.The dam would raise the water level 15'to elevation 1530'.A 96”penstock 15,000 feet long would transport water to the powerhouse. A powerhouse would be constructed at tidewater,south of the mouth of Cascade Creek. Two pelton turbines would be installed,driving synchronous generators,each rated at 15 MW.The generators will operate at 13.8 kV. A substation would be located outside the powerhouse.The main step-up transformer, disconnect switches and line breaker would be accommodated in the substation,with associated metering and protection equipment.The transformer will increase the voltage from 13.8 kV to 138 kV.The transmission line would be constructed overhead from the powerhouse 11 miles to Frederick Sound.The line will change to a submarine line for 7 miles across Frederick Sound.The line would then change back to overhead for 3 miles to the Petersburg substation. OTHER PROJECTS There are two other projects in this vicinity that could be developed that are similar in nature to Cascade Creek.Scenery Lake and Ruth Lake are two high head storage projects as well.Both projects are located in Thomas Bay within a few miles of Cascade Creek.Scenery Lake would have an installed capacity of 22 MW,and generate about 104 GWh per year.Ruth Lake would have an installed capacity of 15 MW and generate about 70 GWh per year. Tyee Lake has an installed capacity of 20 MW,and is currently utilized to 8 MW.There is 12 MW of excess capacity and 70 GWh of excess energy not being utilized by the local utilities,as water runs over the dam daily.When Cascade Creek is added to Tyee, Scenery and Ruth lakes,the combined capacity would be 79 MW and combined energy would be 410 GWh annually.All four projects are storage projects. WHEELING PLAN The federal government has authorized the spending of $384,000,000 to be spent on the Southeast Intertie.About $50,000,000 of that money has been spent to date.The communities all would like to be connected to the Southeast Intertie to get on the inexpensive hydropower.Otherwise,most of the smaller communities rely on diesel fuel for energy.The problem is that there is not any way to maintain the lines,once constructed (since there is so little demand for energy). The plan is to interconnect the Southeast Intertie with the BCTC grid in Canada.Once connected,then Southeast Alaska is connected to the North American grid. We are working on a plan to trade BC Hydro's downstream benefit that it has with BPAwithAlaskaenergy.In other words,Southeast Alaska will provide some of the capacity and energy that BPA owes BC Hydro,and deliver it to the northwest corner of BC to Mezziadin Junction.BPA would allow Southeast Alaska projects to take delivery of the equivalent capacity and energy at Mid C.BC Hydro benefits because this will strengthen its system at its northwest end.BPA and its customers benefit because this area is short on energy,and this will offset new requirements in the Pacific Northwest.Southeast Alaska benefits because it now has the ability to sell energy to the grid,and stabilize rates for the local towns. The point of interconnection with PG&E is at the California -Oregon Border in vicinity of Round Mountain Substation.This offer is subject to securing available transmission capacity needed to deliver the project's output. An interconnection application has not been submitted to BCTC,however the rates used are from discussions with BPA and BCTC,using published 2006 transmission rates. Cascade Creek Hydro has not contemplated the sharing of gen-tie costs with PG&E.All gen-tie costs are included in the "all in”offer. The "all in”offer is based upon $52.00/MWH,first year,at the point of integration (Petersburg,AK).This forms the basis for the project being economically feasible. Wheeling was added to this amount.Wheeling from Petersburg to COB is estimated at $36.00/MWH,first year,which includes $5.00 for Southeast Intertie,$8.00 for BCTC and $23.00 for BPA. The project is in the FERC consultation stage of the license process.All of the usual permits and approvals associated with a hydroelectric project are required.To date,there is no known public opposition to this project.We expect a few individuals to oppose the project. There are no known consumables of this project that require advanced procurement. This project displaces the air emissions of an equivalent sized thermal power project. The project will provide tax revenue and a full time maintenance job and a part time administrative job in a rural,economically disadvantaged region. Attachments Not Submitted The Cascade Creek Hydroelectric Project is in the early stages of development. Due to the project immaturity,Cascade Creek Hydro,LLC (CCH)has not prepared,nor is ready to prepare much of the information requested in the attachments.Below are comments relating to specific attachments: Attachment E CCH may consider additional investors/partners.While CCH has portions of the required financial information in sections A -C,CCH is not prepared to provide a detailed disclosure. CCH has similar information to that required in sections D,E,&F from the Cascade Creek Feasibility Study;however,this information is subject to change as the project proceeds through the FERC licensing process.CCH will obtain more accurate cost information within the next 6-month licensing period.As the project proceeds towards license issuance,CCH will have performed sufficient detailed design to provide detailed and accurate capital cost projections as well as a financing plan.The "all in”price will not change as the above-mentioned contingencies have been factored in. Attachment B A form letter of credit has not been submitted for the reasons stated in the paragraphs above. Attachment F CCH has not yet entered into transmission discussions with PG&E's transmission planning group. Interconnecting -Southeast Intertie -with en.a North American Grid Cascade Creek Hydroelectric Company | 3633 Alderwood Avenue Bellingham,WA 98225 thom@tollhouseenergy.com Interconnection of Southeast Alaska with the North American Grid Overview According to the Department of Energy,approximately 44,428 average MW of developable hydroelectric potential exists in the State of Alaska.To date,only 171 average MW of hydroelectric energy has been developed.A large part of this hydroelectric potential exists in Southeast Alaska,a mountainous area of about 400 miles x 120 miles.Southeast Alaska experiences rainfalls of 50 to over 200 inches per year. The mountains and rainfall make Southeast Alaska unmatched in the U.S.for new hydroelectric power development. With only 75,000 residents in Southeast Alaska,there isn't a market for bulk energy sales.To utilize this tremendous hydropower potential,Southeast Alaska will need to connect to the NW power grid through British Columbia Transmission Corporation "BCTC”,a Crown Corporation,formerly part of BC Hydro.The connection would be made from the Tyee Hydroelectric project south of Wrangell and extend 30 miles up the Bradfield Canal to a location where the Craig River crosses the Canadian border. There are significant conditions that affect the export of power from SE Alaska: 1)Southeast Alaska Intertie.Congress has authorized the expenditure of $384,000,000 toward the construction of an electrical Intertie for Southeast Alaska communities. However,many of the communities are small,and cannot afford to maintain a large Intertie system.Wheeling revenues from large hydropower projects would be the engine to maintain the Southeast Alaska Intertie. 2)Canadian Entitlement.The Columbia River Treaty of 1961 provided for the construction of three large storage projects in Canada.The treaty required the return of half the increased energy production from the downstream dams located in the U.S.(as a consequence of the release from these storage projects).The U.S.based Columbia Storage Power Exchange "CSPE”purchased this return "entitlement”for a period of 30 years.Beginning in 1998 the entitlement purchase started to expire. The entitlement purchase fully expired in 2003.Bonneville Power Administration "BPA”is now required to return 500 aMW and 1000 MW capacity to BC Hydro over its Northern Intertie.This load,coupled with increased energy demands in the Pacific northwest,leaves BPA short on energy.BPA has notified all the energy co- ops east of the Rocky Mountains that as of 2007,they must find other sources of energy.In addition,nine of the aluminum smelters in the northwest have been shut down due to lack of affordable energy.The remaining two smelters are operating on reduced outputs. 3)Forest Kerr hydropower project.Coast Mountain Hydro is planning on constructing the Forest Kerr project on the Iskut River in Canada.Forest Kerr will extend the transmission line from the project site to Meziadin Junction if BC Hydro does not construct the line first.The Forest Kerr project is located about 20 miles from the Craig River crossing where interconnection to Southeast Alaska would occur. 4)New Mining in BC.Nova Gold and BC Minerals are both planning new mining activities in the northern coastal region of British Columbia just north of Forest Kerr, and will require substantial power flow from interior BC to the North Coast.BC Hydro currently imports 13%of its energy annually. 5)BCTC Line Reliability.BCTC has three 500 kV transmission lines running from the lower mainland (Vancouver area)to Prince George area (location near their large dams).There is only one 500 kV line from Prince George to the west coast near Prince Rupert.Should this line fail,then the north coast will have a lack of generation to sustain itself.The Southeast Alaska connection both reinforces BCTC's North Coast system,and an alternate feed for North Coast loads. 6)Rising Cost of Energy.The cost of energy is rising.As dual energy cars become more popular,the demand for clean electrical energy will further increase. 7)Renewable Energy.Energy that is environmentally friendly is in demand to displace gas fired combustion turbines and coal. Approximately 200 MW of Southeast Alaska hydropower can be delivered via the Craig River transmission crossing to serve BC Hydro or the new mining loads. Alternatively,the same 200 MW could be exchanged for a portion of the Canadian Entitlement.BPA is interested in delivering part of the 500 aMW of Canadian Entitlement from Southeast Alaska,freeing up energy in the pacific northwest.The exchanged portion (in Washington/Oregon)can be transmitted relatively short distances to Washington/Oregon/California utilities. By cooperation,there are several benefits and natural incentives to the various entities: a.The Southeast Alaska economy is weak and is in need of both jobs and long term revenue sources. b.Southeast Alaska would have the justification for the construction,and the revenue to maintain a large Intertie grid.The Intertie will provide reliable energy to the communities in Southeast Alaska. c.Northern BC is also in need ofjobs and revenue.. d.Strengthening the BCTC transmission grid by adding generation to the extreme northwest corner of the grid. e.Increasing demand in the western U.S.has exceeded the supply of available Columbia River energy.This plan will give either BPA or other northwest energy companies 200 MW of additional energy,as if the hydropower resources were constructed in the Pacific northwest. f.Western U.S.utilities are increasingly in need of renewable and environmentally friendly energy.This plan provides that. The first proposed project is a storage project,60 MW installed capacity,1,500'head, near Petersburg,AK.There is an additional 40 MW installed capacity in the same vicinity,some of which is already constructed.There is approximately another 50 MW that could be developed with the completion of the Swan-Tyee transmission line. Refer any questions or comments to: Thom A.Fischer,P.E.thom@whitewatereng.com Dick Rosenberg,P.E.drosenberg@whitewatereng.com Whitewater Engineering Corporation (360)738-9999 Information from BC Hydro and IPPBC In the just-completedfiscal year,BC Hydro had to import 13.5 per cent of the power it needs to supply B.C.customers.That's up from 10 per cent in the prior year.Put another way,now one in eight B.C.homes runs on imported electricity. Friday July 8,2005 BC Hydro issued a call for at least 1,800 gigawatts of new generation to be in production within five years.That would supply about 180,000 homes,and marks thefirst time since 1995 that the Crown Corporation has undertaken a large-scale,broad-based request for tenders.In the pastfive years,domestic electricity consumption increased by more than 3,000 GWh,or enough to supply 300,000 homes. WI:2.2%MN:Xcel 1125 by 2011Miby2010 ME:30%by 2000 ¥T:equal to load growth S 2005 -2012 #MA:4%New by 2009 "5,RI:16%by 2009LsCT:10%by 2010 "NJ:6.5.9 by 2008 CA:20% HI:20%by 2020 Renewable Portfolio Standards Twenty-one states and the District of Columbia have set standards specifying that electric utilitles generate a certain amount of electricity fromrenewablesources.Most of these requirements take the form of "renewable portfollo standards,”or RPS's,which require a certain percentage of autility's power plant capacity or generation to come from renewable sources by a given date.The standards range from modest to ambitious,anddefinitionsofrenewableenergyvary.Though climate change may not be the prime motivation behind some of these standards,the use ofrenewableenergydoesdeliversignificantGHGreductions.For instance,Texas Is expected to avoid 3.3 million tons of CO2 emissions annually withitsRPS,which requires 2000 MW of new renewable generation by 2009.Increasing a state's use of renewable energy brings other benefits as well,Including job creation,energy security,and cleaner air.. : Some of these efforts have been particularly successful.For example,Connecticut Increased its RPS In 2003,extending the standard to all utilitiesInthestate;Iowa met its standard In 1999.Many states allow utilities to comply with the RPS through tradeable renewable energy credits.WhilethesuccessofstateeffortstoIncreaserenewableenergyproductionwilldependinpartonfederalpoliciessuchasproductiontaxcredits,stateshaveshowntheirconsiderableefficacyinencouragingcleanenergygeneration,. Updated August 2005 canada.com News Mines ask Victoria to plug into northwest Megawatts needed to tap wealth Paul Luke The Province Sunday,September 18,2005 Metal czar Carl Zuber has a high-tension problem that keeps him from being the happiest man in B.C.'s mining industry. The company Zuber chairs,bcMetals Corp.,has just received environmental approval from the province to build the Red Chris mine,a copper-gold project 450 kilometres north of Smithers. Zuber is finding customers for the concentrates Red Chris will produce and nailing down financing for the $228-million project. But Zuber's financial and regulatory successes will come to nothing unless the province strings a transmission line as far as 335 km into the northwest. Without 37.5 megawatts of juice from that line,Red Chris,which would employ 250,won't see the light of day --no matter how many bankers want to finance it. "We just need the power,"Zuber says."The rest is business." Goaded by decent metal prices,bcMetals and other companies are puncturing northwest B.C.like a Swiss cheese in a rush to unearth ore bodies.And when they do find something,electricity- hungry miners are queuing up to press the B.C.government to build a transmission line along Highway 37 to Iskut or Dease Lake. Some $2.1 billion of potential mining investment in the area hinges on the line being extended from Meziadin Junction,where it currently stops,according to the newly formed Northwest Powerline Coalition., Dan Jepson,executive director of the B.C.&Yukon Chamber of Mines,says the northwest region's mineral wealth could go untapped because the largest projects can't generate enough power with diesel generators. "Our members feel the most important thing the government can look at right now is providing power up the Highway 37 corridor,"Jepson said. Bill Bennett,provincial minister of state for mining,sympathizes with the industry's plea.The province has yet to decide whether to extend power to the northwest.. But it is considering issues such as line size and projected demand,Bennett says.Also to beresolvedistheissueofwhetherindustryshouldshareincosts. "We're not going to see new mines up there,I don't think,without power being taken up," Bennett says. First Nations in the area are less sympathetic. Curtis Rattray,chairman of the Tahltan Central Council in Dease Lake,says the Tahltan expect to be directly engaged in determining the shape of any power line. The Tahitan,wary of the social and economic impact of a line,argue a land-use plan for the area is essential. "A power line would determine the pace and feasibility of resource development in our traditionalterritoryinlieuofaland-use plan,"Rattray said. "There's a requirement for a land-use plan prior to a transmission line being put in place." The pricetag of a line will depend on how much power it packs. Studies done for B.C.Transmission Corp.estimate a 138 kilovolt (kV)line would cost $185 million,a 230 kV line $375 million and a 287 kV version $368 million. A RED-HOT ZONE FOR MINERAL EXPLORATION -The northwest accounted for $55 million of the $130 million spent on exploration in B.C.last year,according to B.C.ministry of energy and mines. -Forty-one firms were seeking minerals in the area last year. -Vancouver-based NovaGold Resources alone is spending a whopping $40 million on exploring its copper-gold-silver property at Galore Creek --dwarfing the $29 million spent on exploration across the entire province in 2001. -Other active sites in the region are Fortune Minerals'Mount Klappan coal project,Hard Creek Nickel's Turnagain nickel project and Copper Fox Metals'Schaft Creek project. -Mining is a $4.5-billion industry in B.C.that supports 6,442 direct jobs. Preparation for a line would eat up two years and construction,depending on the option,three or four years. A fourth option would reduce the four-year requirement by building the infrastructure for a 287-kV line,firing it up at 138-kV and later boosting it to 287 kV. Vancouver-based NovaGold Resources is by far the largest player in the northwest region.Carl Gagnier,executive vice-president at NovaGold Canada,says his company is spending about $40 million this year to explore its Galore Creek gold-silver-copper property 150 km northeast of Stewart. That investment,which is fuelling an army of 10 drilling rigs and 170 people at the camp,is said to make Galore Creek North America's biggest exploration program this year.A mine at Galore Creek would cost an estimated $1 billion US to build and employ about 500 people once it's operating,possibly by 2010. A mine of Galore Creek's scale would consume an enormous 80 megawatts of electricity,making diesel-generated power out of the question,Gagnier says. "We have to connect to the B.C.grid in order to make the project viable,"Gagnier says."If the grid is extended up Highway 37 to Iskut it makes it much easier to connect.” Donald McInnes,head of Vancouver-based Western Keltic Mines,says a power line makes sense for the northwest and the rest of B.C.Northern mines buy goods and services from around the province and employ people from all regions,McInnes says. Western Keltic,which owns the Kutcho Creek project 100 km east of Dease Lake,could generate its own power --though a provincial line to Dease Lake would trim its operating costs,McInnes says. "If a power line is built now,the mines that might be built in that area may not happen in this copper cycle,"he says. "But it will happen in the next one." pluke@png.canwest.com ©The Vancouver Province 2005 Copyright ©2005 CanWest Interactive,a division of CanWest Global Communications Corp.All rights reserved. Optimized for browser versions 4.0 and higher. canada.com Capacity Deficit Projected in 2010 Avista Power Power NWE PacifiCorp PGE PSE 0 ''oo Pe Phe [ee 1000 : =-1500 a =-2000 - -2500 J Projected _ -3000 'MO w/o Contract Expirations - -3500 , Capacity Deficit (%of Peak)-A%=6-=-168%==-57%-93%)-10%43% -29% ¢Combination of current capacity position,load growth,retirements (few),and contract expirations ¢Application of operating and/or planning reserves adds to thesedeficits |tere rceer iEnergyAnalysisDepartmentiN aMw4500 esource Ba (Puget Sound Energy) 4000 3500 30004 December Average Load before reduction due to new Energy Efficiency programs,and December Average Resource Energy for each year 739 aMW 1471 aMw 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Southeast Conference Energy Committee 2004 Annual Report FIGURE 1-2 Southeast Alaska Existing and Proposed Transmission Lines Southeast Alaska Intertie Study Southeast Alaska Intertie Project with existing &planned segments Prepared by Dave Carlson Southeast Conference Intertie Coordinator wn id ff PRED"ANR'GALORE =o f PRpCREEK7|i 2 PonRest7AsupKERRHYDRO MESTbbeABA ZATMAT Atpanpnttacon Qo pesLsNetwhetwRerance CHARLOTTEnas Resolution No.11 Sponsor:John Bowlen A RESOLUTION SUPPORTING DEVELOPMENT OF THE BRADFIELD INTERTIE SEGMENT,WHICH WILL INTERCONNECT SOUTHEAST ALASKA WITH THE NORTH AMERICAN ENERGY GRID WHEREAS,the electrical interconnection of large and small southeast Alaska communities has been authorized by Congress through the Southeast Intertie project; WHEREAS,the Hawk Inlet -Hoonah Intertie,the Kake -Petersburg Intertie,and the Swan-Tyee Intertie,respectively are all equally crucial components of the planned Southeast Alaska Intertie Project; WHEREAS,the proposed Bradfield Segment is an important electric transmission link connecting Southeast Alaska with the British Columbia and North American grid; WHEREAS,the proposed Bradfield Segment would encourage development of new hydroelectric generating facilities,many of which are catalogued and awaiting market demand,thereby bringing further employment opportunities to Southeast communities and provide revenue to maintain an expanded Southeast Alaska Intertie System; WHEREAS,the proposed Bradfield Segment would permit energy exports of excess production from existing and proposed hydroelectric generating facilities in Southeast Alaska,bringing economic benefit to Southeast Alaskan communities; NOW,THEREFORE BE IT RESOLVED THAT the Southeast Conference supports development of the Bradfield Segment as this intertie will compliment and enhance the Swan -Tyee,Hawk Inlet -Hoonah and Kake -Petersburg Intertie segments which are fcurrently under development as well as other future intertie segments comprising the Southeast Alaska Intertie project; Copies of this resolution are to be sent to the Honorable Frank Murkowski,Governor of Alaska,the Honorable Gordon Campbell,Premier,Government of British Columbia,the Honorable Mike Barton,Commissioner,Alaska DOTPF,the Honorable Bill Noll, Alaska,DC&ED,the Honorable Kevin Falcon,BC Ministry of Transportation and Highways,the Honorable Richard Neufeld,BC Ministry of Energy and Mines,the Honorable Ted Stevens,United States Senate,the Honorable Lisa Murkowski,United States Senate,the Honorable Donald E.Young,Congressman for Alaska,Nathan Cullen, Member of Parliament -Skeena,Jim Ko,British Columbia Transmission Corporation, Mary Hemmingsen,British Columbia Hydro Corporation,Shelly Murphy,Director of BC Ministry of Energy and Mines,Brian Mogadan,Powerex,Director and Larry Kitchen,Bonneville Power Administration. *Sep 30-05 09:31A p Interconnecting Southeast Intertie with -North American Grid Cascade Creek Hydroelectric Company 3633 Alderwood Avenue Bellingham,WA 98225 September 28,2005 -O1 *Sep-30-05 09:32A p Interconnection of Southeast Alaska with the North American Grid Overview According to the Department of Energy,approximately 44,428 average MW of developable hydroclectric potential cxists in the State of Alaska.To date,only 171 average MW of hydroelectric energy has been developed.A large part of this hydroclectric potential exists in Southeast Alaska,a mountainous area of about 400 miles x 120 miles.Southeast Alaska experiences rainfalls of 50 to over 200 inches per year. The mountains and rainfall make Southeast Alaska unmatched in the U.S.for new hydroclectric power development. With only 75,000 residents in Southeast Alaska,there isn't a market for bulk energy sales.To utilize this tremendous hydropower potential,Southeast Alaska will nced to connect to the NW power grid through British Columbia Transmission Corporation "BCTC”,a Crown Corporation,formerly part of BC Hydro.The connection would be made trom the Tyee Hydroelectric project south of Wrangell and extend 30 miles up the Bradfield Canal to a location where the Craig River crosses the Canadian border. There are significant conditions that affect the export of power from SE Alaska: 1)Southeast Alaska Intertie.Congress has authorized the expenditure of $384,000,000 toward the construction of an electrical Intertie for Southcast Alaska communitics. However,many of the communitics are small,and cannot afford to maintain a large Intertic system.Wheeling revenues from large hydropower projects would be the engine to maintain the Southeast Alaska Intertic. 2)Canadian Entitlement.The Columbia River Treaty of 1961 provided for the construction of three large storage projects in Canada.'lhe treaty required the retum of half the increased energy production from the downstream dams located in the U.S.(as a consequence of the release from these storage projects).The U.S.based Columbia Storage Power Lixchange "CSPE”purchased this return "entitlement”for a period of 30 years.Beginning in 1998 the entitlement purchase started to expire. The entitlement purchase fully expired in 2003.Bonneville Power Administration "BPA”is now required to rettun 500 aMW and 1000 MW capacity to BC Hydro over its Northern Intertic.'his load,coupled with increased energy demands in the Pacific northwest,leaves BPA short on energy.BPA has notified all the energy co- ops cast of the Rocky Mountains that as of 2007,they must find other sources of energy.In addition,nine of the aluminum smelters in the northwest have been shut down due to lack of affordable energy.The remaining two smelters are operating on reduced outputs. 3)Forest Kerr hydropower project.Coast Mountain Hydro is planning on constructing the Forest Kerr project on the Iskut River in Canada.Forest Kerr will extend the transmission line from the project site to Meziadin Junction if BC Hydro does not construct the line first.The Forest Kerr project is located about 20 miles from the Craig River crossing where interconnection to Southeast Alaska would occur. 4)New Mining in BC,Nova Gold and BC Minerals are both planning new mining activities in the northern coastal region of British Columbia just north of Forest Kerr, and will require substantial power flow [rom interior BC to the North Coast.BC Hydro currently imports 13%of its energy annually. "Sep-3G-05 09:32A p 5)BCTC Line Reliability.BCTC has three 500 kV transmission lines running from the lower mainland (Vancouver area)to Prince George area (location near their large dams).There is only one 500 kV line from Prince George to the west coast ncar Prince Rupert.Should this line fail,then the north coast will have a lack of generation lo sustain itself.The Southeast Alaska connection both reinforces BCTC's North Coast system,and an alternate feed for North Coast loads. 6)Rising Cost of nergy.The cost of energy is rising.As dual energy cars become more popular,the demand for clean electrical energy will further increase. 7)Renewable Energy.Energy that is environmentally friendly is in demand to displace gas fired combustion turbines and coal. Approximatcly 200 MW of Southeast Alaska hydropower can be delivered via the Craig River transmission crossing to serve BC Hydro or the new mining loads. Alternatively,the same 200 MW could be exchanged for a portion of the Canadian Entitlement.BPA is interested in delivering part of the 500 aMW of Canadian Entitlement from Southeast Alaska,freeing up energy in the pacific northwest.The exchanged portion (in Washington/Orcgon)can be transmitted relatively short distances to Washington/Oregon/Califomia utilities. By cooperation,there arc several bencfits and natural incentives lo the various entities: a.'Ihe Southeast Alaska economy is weak and is in need of both jobs and long term TeVvenue SOLIICES. b.Southcast Alaska would have thejustification for the construction,and the revenue to maintain a large Intertie prid.{he Intertie will provide reliable energy to the communities in Southeast Alaska. c.Northern BC is also in necd of jobs and revenue. d.Strengthening the BCTC transmission grid by adding generation to the extreme northwest comer of the grid. e.Increasing demand in the western U.S.has exceeded the supply of available Columbia River energy.This plan will give either BPA or other northwest energy companies 200 MW of additional cnergy,as if the hydropower resources were constructed in the Pacifle northwest. f.Western U.S.utilities are increasingly in need of renewable and environmentally lriendly energy.This plan provides that. 'The first proposed project is a storage project,60 MW installed capacity,1,500'head, near Petersburg,AK.There is an additional 40 MW installed capacity in the same vicinity,some of which is already constructed.There is approximately another 50 MW that could be developed with the completion of the Swan-Tyec transmission line. Refer any questions or comments to: Thom A.Fischer,P.£.thom@whitewatereng.com Dick Rosenberg,P.E.drosenberg(ajwhitewatereng.com Whitewater Ungineering Corporation (360)738-9999 'Sep-3G-05 09:32A p Information from BC Hydro and TPPBC In the just-completedfiscal year,BC Hydro had to import 13.5 per cent of the power itneedstosupplyB.C.customers.That's up from 10 per cent in the prior year.Put another way,now one in eight B.C.homes runs on imported electricity. Friday July 8,2005 BC Hydro issued a call for at least 1,800 gigawatts of new generation to be in production within five years.That would supply abour 180,000 homes,and marks the first time since 1995 that the Crown Corporation hay undertaken a large-scale,broad-based request for tenders.In the past five years,domestic electricity consumption increased by more than 3,000 GWh,or enough to supply 300,000 homes. .WI:2.2%MN:Xcel 1125 by 2011MWby7020 rarer ME:30%by 2000 VT:equal to load grovrth 2005 -2012 MA:4%New by 2009 RI:16%by 2009 ie CT:10%by 2010Ga”NJ:6.5.30 by 2003 2)PA:18%by 2020\MD:7%by 2008 "SY DC:11%by 2022 a HI;20%by 2020 Renewable Portfolio Standards Twenty-one states and the District of Calumbla have set standards specifying that electric utllitles ganerate a certain amount of electricity fromrenewablesources.Most of tnese requirements take the form of "renewable portfollo standards,”or RPS's,which require a certain percentage of a utility's power plant capacity or generation to come from renewable sources by a given date.The standards range from modest to ambitious,and definitions of renewable energy vary.Though climate change may not be the prime motivation behind some of these standards,the use ofrenewableenergydoesdeliversignificantGHGreductions.For instance,Texas Is expected to avold 3.3 milion tons of CO2 emissions annually withftsRPS,which requires 2000 MW of new renewable generation by 2009,Increasing a state's use of renewable energy brings other benefits as well,including Job creallen,energy security,and cleaner air. Some of these effarts have heen particularly successful.For example,Connecticut Increased its RPS In 2003,extending tha standard to all utilitiesInthestate;Iowa met Its standard In 1999.Many states allow utilities to comply with the RPS through tradeable renewable energy credits.Whilethesuccess.of state efforts ta Increase renewable energy production will depend In part on federal pallcies such as production tax credits,stateshaveshowntheirconsiderableefficacyinencouragingcleanenergygeneration., Updated August 2005 "Sep-30-05 09:33A p canada.com News Mines ask Victoria to plug into northwest Megawatts needed to tap wealth Paul Luke The Province Sunday,September 18,2005 Metal czar Carl Zuber has a high-tension problem that keeps him from being the happiest man in B.C.'s mining industry. The company Zuber chairs,bcMetals Corp.,has just received environmental approval from the province to build the Red Chris mine,a copper-gold project 450 kilometres north of Smithers. Zuber is finding customers for the concentrates Red Chris will produce and nailing down financing for the $228-million project. But Zuber's financial and regulatory successes will come to nothing unless the province strings a transmission line as far as 335 km into the northwest. Without 37.5 megawatts of juice fram that line,Red Chris,which would employ 250,won't see the light of day --no matter how many bankers want to finance it. "We just need the power,"Zuber says."The rest is business." Goaded by decent metal prices,bcMetals and other companies are puncturing northwest B.C.like a Swiss cheese in a rush to unearth ore bodies.And when they da find something,electricity- hungry miners are queuing up to press the B.C.government to build a transmission line along Highway 37 to Iskut or Dease Lake. Some $2.1 billion of patential mining investment In the area hinges on the line being extended from Meziadin Junction,where it currently stops,according to the newly formed Northwest Powerline Coalition. Dan Jepson,executive director of the B.C.&Yukon Chamber of Mines,says the northwest region's mineral wealth could go untapped because the largest projects can't generate enough power with diese]generators. "Our members feel the most important thing the government can look at right now is providing power up the Highway 37 corridor,"Jepson said. Bill Bennett,provincial minister of state for mining,sympathizes with the industry's plea.The province has yet to decide whether to extend power to the northwest. But it is considering issues such as line size and projected demand,Bennett says.Also to be resolved is the issue of whether industry should share in costs. "We're not going to see new mines up there,I don't think,without power being taken up," Bennett says., 'Sep-30-05 09:33A p First Nations in the area are less sympathetic. Curtis Rattray,chairman of the Tahitan Central Council in Dease Lake,says the Tahitan expect to be directly engaged in determining the shape of any power line. The Tahitan,wary of the social and economic impact of a line,argue a land-use plan for the area is essential. "A power line would determine the pace and feasibility of resource development in our traditional territory in lieu of a land-use plan,"Rattray said. "There's a requirement for a land-use plan prior to a transmission line being put in place.” The pricetag of a line will depend on how much power it packs. Studies done for B.C.Transmission Corp.estimate a 138 kilovolt (kV)line would cost $185 million,a 230 kV line $375 million and a 287 kV version $368 million. A RED-HOT ZONE FOR MINERAL EXPLORATION -The northwest accounted for $55 milllon of the $130 million spent on exploration in B.C.last year,according to B.C.ministry of energy and mines. Forty-one firms were seeking minerals in the area last year. -Vancouver-based NovaGold Resources alone is spending a whopping $40 million on exploring its copper-gold-silver property at Galore Creek --dwarfing the $29 million spent on exploration across the entire province in 2001. -Other active sites in the region are Fortune Minerals'Mount Klappan coal project,Hard Creek Nickel's Turnagain nickel project and Copper Fox Metals'Schaft Creek project. -Mining is a $4.5-billion industry in B.C.that supports 6,442 direct jobs. Preparation for a line would eat up two years and construction,depending on the option,three or four years. A fourth aption would reduce the four-year requirement by building the infrastructure for a 287-kV line,firing it up at 138-kV and tater boosting it to 287 kV. Vancouver-based NovaGold Resources is by far the largest player in the northwest region.Car! Gagnier,executive vice-president at NovaGold Canada,says his company Is spending about $40 million this year to explore Its Galore Creek gold-silver-copper property 150 km northeast of Stewart. That investment,which is fuelling an army of 10 drilling rigs and 170 people at the camp,is said to make Galore Creek North America's biggest exploration program this year.A mine at Galore Creek would cost an estimated $1 billion US to build and employ about 500 people once it's operating,possibly by 2010. A mine of Galore Creek's scale would consume an enormous 80 megawatts of electricity,making diesel-generated power out of the question,Gaqnier says. "We have to connect to the B.C.grid in order to make the project viable,"Gagnier says."If the grid is extended up Highway 37 to Iskut it makes it much easier to connect.” Donald McInnes,head of Vancouver-based Western Keltic Mines,says a power line makes sense for the northwest and the rest of B.C.Northern mines buy goods and services from around the 'Sep-30-05 09:33A p province and employ people from all regions,McInnes says. Western Keltic,which owns the Kutcho Creek project 100 km east of Dease Lake,could generate its own power --thaugh a provincial line to Dease Lake would trim its operating casts,McInnes says. "If a power line is built now,the mines that might be built in that area may not happen in this copper cycle,”he says. "But it will happen in the next one." pluke@png.canwest.com ©The Vancouver Province 2005 Copyright ©2005 CanWest Interactive,a division of CanWest Glaba]l Cammunications Corp.All rights reserved. Optimized for browser versions 4.0 and higher. canada.com -1,27/05 Brean, Plenrie mabe rewrvalerrni ine onDravekAeVocone,BC er Alheler 1a fA;heave Qreb@ticopn grrcve Vy at 9-/0:00pm.Return on the nrprning ofZEAatirdan,lofer fos 4-loamt te Anchorage. of Be Low pewter development -BC Hydro -Info -History Page 1 of 3 NN -cd elsBGhUdroeu September 30,2005 About Us _Our CommitmentinfoDURES.aie a ek A Communitya EnvironmentQe Safoty' Home >Info >History i History>oo Sea For a more detailed history of BC Hydro and its predecessorstoldbythepeoplewholivedit,take a look at GaslightstoGigawattsAHumanHistoryofBCHydroanditsPredecessors As told by the Power Pioneers.All proceeds from the sales of the book go to BC's Children's Hospital. Beginnings The founding of the Victoria Gas Company in 1860 began the BC Hydro legacy.23 years later,inventor and entrepreneur Robert McMicking turned on the first commercial electric lights in Canada.Along with a group of local investors,McMicking incorporated the Victoria Electric Iluminating Company and electric lights lit up the streets.The age of electricity had arrived. Vision BC Electric was the brainchild of financier Robert Horne-Payne and future Lieutenant-Governor Frank Barnard.With money raised from investors in England,they set out to build the coast's first hydroelectric plant near Victoria in 1898.After several years of prosperity and growth the company was taken under control by the Montreal-based Power Corporation in 1928. Progress In 1945,the provincial government created the BC Power Commission.This public sector enterprise began acquiring small utilities,extending electrification in rural or isolated areas, and building or modernizing both generating plants and transmission systems.By 1961,it served over 200 communities all over the province,many with small diesel generating units. Growth To enable the development of Peace and Columbia River projects,the provincial government stepped in and bought BC Electric in 1961.A year later the government amalgamated BC Electric with the Power Commission to create a new Crown corporation:the British Columbia Hydro and Power Authority, known more familiarly as BC Hydro.The '60s and '70s saw BC Hydro take on some of the most ambitious hydroelectric construction projects in the world. Change Restructuring during the 1980s saw new BC Hydro subsidiaries to take over its testing and research services (Powertech Labs), computer services (Westech Information Systems)and electricity trade activities (Powerex).Hydro began turning its focus from building new generating facilities to getting the most out of its existing ones.In 1989 several innovative programs announced a change of direction for Hydro,including the high profile Power Smart. http://www.bchydro.com/info/history/history 1027.htm]l 9/30/2005 -BC Hydro-Info -History Page 2 of 3 Consistent with industry trends and best practices,BC Hydromanagementmadeadecisionduringthe2002fiscalyeartomovetoa"Lines of Business"structure within the company as the best way to become more competitive,focus resources on distinct customer groups and more effectively meet those customers'needs.Generation,Transmission and Distribution Lines of Business were created,along with two service groups - Field Services and Engineering Services.Together with the existing Corporate Operations,Shared Services and Subsidiaries,the company began operating this way for the 2003 fiscal year (April 1,2002 -March 31,2003). In November 2002 the provincial government's energy plan, "Energy for our Future:A Plan for BC,"announced the creation of an independent,government-owned transmission corporation beginning in 2003.The new BC Transmission Corporation (BCTC)will operate and manage BC Hydro's transmission assets,will ensure the province has continued access to electricity trade revenues and will facilitate transmission access for all users,including BC-based independent power producers and industrial customers. On April 1,2003,a number of back-office functions,representing approximately 1500 employees,became the responsibility of BC Hydro's joint venture partner,Accenture Business Services of British Columbia.These functions include Business Support Services,Customer Services,Human Resource Services, Building and Office Services,Payroll and Accounts Payable Services,Financial Systems Services,and Purchasing Services. Gaslights to Gigawatts A Human History of BC Hydro and its Predecessors as told by the Power Pioneers,was published in 1998. All proceeds from the sales of this book go to BC''s Children'sHospital. Gaslights to Gigawatts is a human history that tells the story of BC Hydro and its predecessors through the memories and memoirs of the people who lived it.That story begins in -the1860s when gas lamps first -.._,llluminated the muddy streetsia4ofVictoria,and runs till theaabeApresenteraofbillion-watt=i"«m (gigawatt)power projects and energy conservation. Through hundreds of interviews and written submissions,the book includes the stories of line workers,dam builders,sales reps,bus drivers and streetcar motormen,dietitians (someone had to teach customers how to cook with electric ovens),clerical staff,meter readers, labourers,managers and trade unionists.These are the countless people who dedicated their working lives to BC Hydro and,before it,to the BC Electric Company and the British Columbia Power Commission. Gaslights to Gigawatts includes over 250 photographs and http://www.bchydro.com/info/history/history 1027.html 9/30/2005 "BC Hydro -Info -History Page 3 of 3 wl , illustrations (many never before published)and a detailed historical chronology. Bits from the Book What kind of whiskey did it take to thaw a frozen gas meter in the 1890s?Scotch.Did Boris Karloff really dig ditches for BC Electric before becoming Frankenstein?Yes,but badly.How did it feel to be one of the company's first Chinese-Canadian employees in the late 1940s?Extremely proud.Can you walk away after getting "zapped"by 8,000 volts? Sometimes. And what does a plant engineer do when the Mercedes Benz diesel engine that powers a small town "takes the Sputnik course back to Germany”?Light a candle. About the Authors . The Hydro Power Pioneers is BC Hydro's retiree organization made up of thousands of former employees from around the province.Writer-editors Hugh and Andrew Wilson most recently produced Fire in the Blood,the story of Western Canada's foundry industry. Gaslights to Gigawatts includes over 250 fascinating photographs and illustrations,many never before published.This 240 page hardcover book is available from the BC Hydro Power Pioneers at a cost of $35.00 including all taxes,plus $5.00 for shipping,by telephoning:(604)623-3768 or toll free 1-800-992- 5616 or via email:power.pioneers@bchydro.com Proceeds from sales of the book will benefit the B.C.'s Children's Hospital. PowerPioneers BChydro oe,Fe hente D remeteg ==Children's Hospital |_PRINTER-FRIENOLY VERSION | Last Modified:February 15,2005 Copyright ©2005 BC Hydro,All rights reserved.Legal |Privacy Statement |ContactUs http://www.bchydro.com/info/history/history 1027.html 9/30/2005 -Interconnecting”a'Southeast Intertiewith|ee="Northth Ameriean GGr xe aseade Creek Hydroelectric roromp any a J a .2 :-3633 Alderwood Avenue -or=Palinenam WA 98225 Peg ie ee eee we "Nay$erdek Naweme MY .7:ASCADE©__\.Y CREEK HYDRO #% oposep ORRESTAsvipKERRHYDRO Wéthe Coopaada MEMORMALAigorienLAMABED BC Government esa ee o Canadian Entitlement Columbia River Treaty1961,sss eS laveeee Tee a : Renewable Portfolio Standards WI:2.290MN:Xcel 1125 by 2011 ME:309b by 2000MWby2010 NY:2506 VT:equalto by 2012 load growth¥2005 -2012 MA:490 New by 2009 RI:1690 by 2009 ca es Zo :CT:1090 by 2010 TA:Vt eS NJ:6.5.90 by 2008 :105 MVE PA:1850 by 2020 Sa |MD:790 by 2008 :DC:1156 by 2022by2015| faze 1.109 by 2011by2020, "TX:10,000 MW-Co by 2025 HI:2090 by 2020 21 states have set standards specifying certain amounts of electricity from renewable sources. RPS require %of capacity or generation to come from renewable sources by a certain date. Benefits include job creation,energy security and cleaner air. Example:Texas avoids 3.3Mtons CO2 annually w/2000 MW new renewable generation by 2009. Hydropower Inventory -Middle Region Project Loc.Capacity Energy e 20. ¢Tyee 3rd Turbine wre 10 1 ¢Cascade Creek|psb 50 ----:166 em neers 4 »soopsbs 22 ee 104 |oa FeRuth Lake epsb 15°70 2 VIW Tyee Lake wre 12 Mw 74 GWH nei Mahoney Lake |tn 10 LATINaeHydropower Inventory -Southern Region Project |Loc.Capacity Energy ¢22.5 MW Swan Lake ktn |unknown when lake kept full 8 Al VMIW Purple Lake met 3 mw 15 GwH - V Chester Lake met 1ey 3 a e _Whitman Lakeieeae7ahsaclLake.oe Direct Benefits Petersburg and WrangellLowerelectricityratesfrom sale of excessTyee energy90%reductionin transmission maintenance costs-lower rates_Eliminate diesel generating plant,costsavings -lower rates.: :KetchikanaoeReduced transmission 'maintenance costs''on 'Swan-Tyee Intertie -4PEooMoreenergyfromSwanLakeduetolakebeingkeptfull_- bs :Lower electricity rates from saleofexcess hydropower energyshennneee Metlakatla | Other Benefits Provides jobs &long term revenue to Southeast's weak economy Provides justification for constructing SE Intertie 7. a 'Provides reliable energy to Southeast communities” 'Provides jobs andr evenuetonorthern BC SivaSAGAStrengthensBCTCgridin northwest corner western utilities ae2 ahSeceeeay:138 kV Trans mis sion Improvement Projec ne aehnteMsPayok5.£weed " é s :, 4 ES °'wyPSEaeaSohEEA,do:actReeseeGSREERGsahshedSaad as essate ,a to Decaturto Lo}a seomgt atsores \Goat Lake. MESpec oesBE De Ceeeee|0RiaREO:ees:feed eeeelas &=eyy a es es d +tt:POM ay AsiBeadeletyoeveiSER &rete 3 .uni ben tals ent zt 5 OeheetiaLoeeadee ia AG afiE £ Aa MRA a: Ts eseeAgee . eees ok Roane a PEScle Fase#* Sa. eh stareMRA:aetsoySAS, Southeast Intertie Vision Southeast Intertie funded by the federal/state KWETICO maint ee4:es Next Steps 1.Supportlocal communities. SE Conference State of Alaska 2.Funding | State of Alaska:'Federal Government BC Government/State of AlaskaBara Thisis Southeast Alaska's eeeSESEoan:ae= See ee ee Contact Information ThomA.Fischer,PE. 3633 Alderwood Uy ae ee Be :S a ee ae