Loading...
HomeMy WebLinkAboutAEA Board Minutes Dec 2023 813 W Northern Lights Blvd, Anchorage, AK 99503  Phone: (907) 771-3000  Fax: (907) 771-3044  Email: info@akenergyauthority.org REDUCING THE COST OF ENERGY IN ALASKA AKENERGYAUTHORITY.ORG RGYAUTHORITY.ORG Alaska Energy Authority BOARD MEETING MINUTES Wednesday, December 6, 2023 Anchorage, Alaska 1. CALL TO ORDER Chair Pruhs called the meeting of the Alaska Energy Authority to order on December 6, 2023, at 8:33 am. A quorum was established. 2. ROLL CALL BOARD MEMBERS Members present: Chair Dana Pruhs (Public Member); Vice-Chair Bill Kendig (Public Member); Albert Fogle (Public Member); Julie Sande (Commissioner DCCED (joined 8:40 a.m.)); Adam Crum (Commissioner DOR (joined 8:49 a.m.)); Bill Vivlamore (Public Member); and Randy Eledge (Public Member). 3. AGENDA APPROVAL Chair Pruhs requested to add an update on the Dixon Diversion under Item 8. Director Comments. There were no objections to approving the agenda as modified. 4. PRIOR MINUTES – October 25, 2023 MOTION: A motion was made by Vice-Chair Kendig to approve the prior minutes of October 25, 2023. Motion seconded by Mr. Fogle. Mr. Eledge asked if the notation on the minutes besides Item 5. Public Comments indicating two minutes per person is based on statute. Chair Pruhs noted the limit is at the discretion of the Board. There were no other comments. The motion to approve the minutes of October 25, 2023 passed without objection. 5. PUBLIC COMMENTS (2 minutes per person) There were no public comments. 6. NEW BUSINESS -None 7. OLD BUSINESS A. Board Governance Alaska Energy Authority Page 2 of 8  Alaska Statutes – Comparison prior vs. current  Alaska Statutes – December 1976 Curtis Thayer discussed the information included in the Board packet is for reference purposes to provide AEA’s current governing statutes and to provide a historical account of the changes that have been made over the years. He noted that the most significant reform occurred in 1993, and those processes have been the primary governance for the last 30 years. Mr. Thayer explained that if AEA wanted to request legislative changes, AEA would present a legislative proposal to the Governor’s Office for review and possible advancement. Mr. Thayer discussed that additional examination is necessary to determine if AEA requires legislative approval to undertake more responsibility with transmission lines. However, there are no specific requests for the Department of Law to evaluate. 8. DIRECTOR COMMENTS A. Responses to Board Questions from October Board Meeting Mr. Thayer reviewed the responses to Board questions included in the packet. The end-to-end losses of an HVDC line are approximately half of what they would be for an HVAC line. The existing losses during low transmission are approximately 2%, and approach 20% losses during high transmission. The HVDC line system is more efficient. Mr. Thayer requested that Bryan Carey, AEA, provide additional information and answer questions. Chair Pruhs asked why AC was initially utilized, rather than DC. Mr. Carey explained that DC typically was used for larger capacity lines, primarily in Europe, and the AC converters were prohibitively expensive. Mr. Carey indicated that the costs for both lines are now more similar. Chair Pruhs asked if the proposed DC line to Cook Inlet is connecting to AC on both ends. Mr. Carey agreed there will be an AC converter on both ends. This is economical because of the savings from potential line loss. Chair Pruhs inquired as to the possibility of converting the backbone to DC. Mr. Carey discussed that many of the AC lines have good capacity. He believes that if the intertie system to Fairbanks were built new at this time, it would likely be constructed as an HVDC system due to technological changes and reasonable pricing. Mr. Fogle asked if the line from Soldotna to Quartz Creek would be DC. Mr. Carey agreed that is a potential for the future. Mr. Carey discussed that the existing transmission line between the Kenai and the central area tends to reach maximum capacity during the day in the winter. He noted that review of a submersible line’s capacity can hold up to about 250 megawatts, which would provide enough capacity to have both solar and wind power on the system. Chair Pruhs inquired as to the difference in safety between the exposed AC and DC lines. Mr. Carey indicated he would have to provide additional information at a different time. Alaska Energy Authority Page 3 of 8 Mr. Eledge asked about the difference between the installed costs for both HVAC and HVDC lines. Mr. Carey explained that the general cost of installation for both HVAC and HVDC long-distance, higher voltage lines are comparable. Installation cost for shorter distances is lower for HVAC lines. Mr. Thayer commented that he would give members the name of an informative television broadcast regarding AC and DC transmission.  Dixon Diversion Update Chair Pruhs requested Mr. Carey discuss the Dixon Diversion update. Mr. Carey informed that the cost estimate was revised in the fall following the hydrology work that occurred on the Martin River regarding water flows and expected energy amounts. The Martin River below Dixon Glacier is hard to gauge because the bottom is spread out and braided. It is important to have a stable depth of bedrock or other construction to identify the relationship between increased flow and increased depth. Mr. Carey explained the flow measurement activities conducted by DOWL and USGS, and the resulting average flow amounts and energy that would be diverted to Bradley. He noted that the total amount of energy over a 30-year record would be approximately 167,000 megawatt hours (MWh). However, over the standpoint of a 10-year record, the amount of energy is approximately 191,000 MWh. This is due to increased flow from the ice melting. Additional data will be gathered during the next year. Mr. Carey discussed revisions to the cost estimate. The proposed road to Dixon Glacier was removed from the plan. The cost savings are substantial at approximately $50 million. The diversion dam will be built below the Dixon Glacier at a much lower cost. The diameter tunnel is increased from 12 feet in diameter to 14 feet in diameter. This allows for greater flow for flood events and room for ventilation and power cables along the top. The tunnel length is approximately five miles. The revised total project cost estimate decreased from $415 million to $342 million. Mr. Carey discussed the planned construction process and mobilization procedures. Mr. Fogle inquired if there is spawning on the Martin River. Mr. Carey noted that spawning is not likely to occur on the mainstem because the Martin River is very fast, cold, and contains high levels of sediment loads. Sockeye and coho salmon do utilize the sloughs that are off the mainstem. Chair Pruhs asked how much power the Dixon Diversion will add to the Bradley Lake facility. Mr. Carey explained that the increase in MWh will be approximately 50%, from about 400,000 MWh to about 600,000 MWh per year. The dam at Bradley Lake will be raised 14 feet to hold the additional stored water. It is possible that another generator could be added. However, it is not within the current amendments. Additionally, the transmission lines are capacity constrained, and Bradley cannot run at full capacity. Once the transmission upgrades are completed, additional capacity can be utilized, and an additional 50 MWh to 70 MWh generator could be added. This would increase Bradley’s capacity by approximately 200 MWh. Mr. Carey discussed that currently, Bradley produces about 10% of the annual energy for the Railbelt. Chair Pruhs requested that at the next meeting, Mr. Carey show larger pictures of the proposed route of the tunnel and provide information on the cost/benefit analysis in relation to the upgrades of the transmission lines and the additional amount of energy that the Dixon Diversion will produce. Chair Pruhs noted the reference to the current production of approximately 10% of Alaska Energy Authority Page 4 of 8 energy for the Railbelt. He asked for the anticipated percentage increase from these upgrades and the effects on consumer rates. Vice-Chair Kendig added a request for staff to also provide the analysis of the effects of the upgrades on natural gas generation. Mr. Thayer indicated that some of that analysis has been completed and shared in the past. Chugach Electric Association (CEA) has conducted three different cost/benefit evaluations, and the information can be provided again. B. IIJA / IRA Grant Funding Update  Waiting for response from DOE of GRIP 3 Mr. Thayer discussed that AEA is currently in negotiations with Department of Energy (DOE) regarding the GRIP 3 conditional award in the amount of $206.5 million. The next deadline is December 21 regarding cyber security. The report is in draft form. AEA has issued a series of questions to DOE clarifying the process of the $413 million project, including the allocation of match funds. A grant agreement is expected to be in place within 120 days of the November 17 notification date. Mr. Thayer indicated that the required match is not limited to specifically a State match. AEA will own the HVDC line asset and the battery energy storage systems (BESS) in Anchorage and Fairbanks. Chair Pruhs asked how the balance of the funding will be provided. Mr. Thayer noted that work is ongoing with the Administration and with the utilities to determine the best way to obtain the match. DOE indicated that the match can be obtained over multiple years. AEA requested that detail in writing. Chair Pruhs asked if the consumer rates are expected to increase to pay for the necessary match. Mr. Thayer stated that the goal is not to raise consumer rates. However, an increase in consumer costs depends on the source of the match. He explained that the Governor’s Energy Security Task Force has the goal to lower rates to 10-cent power overall. Mr. Thayer discussed the correlation and blended average of cost for the Power Cost Equalization (PCE) program. For every penny that utility rates increase, there is approximately $1.5 million less money available for the PCE program. For every penny that utility rates decrease, there is approximately an increase of $1.5 million available for the PCE program. Mr. Thayer informed that there is a possibility of using a portion of last year’s $166 million of bonding for a share of the match. These types of cash flow questions are outstanding and are being discussed with DOE and Department of Law. If the bonding funds were able to be utilized, there would not be an increase in consumer rates. Chair Pruhs asked Mr. Thayer when he expects the funding proposition to be presented to the Board for review and feedback regarding any affects to the consumer. Mr. Thayer noted that the schedule is based on the Administration. He invited Commissioner Crum and Commissioner Sande to comment. Commissioner Crum highlighted that part of the Governor’s goal with these funds Alaska Energy Authority Page 5 of 8 and any new transmission projects debated during this year’s legislative session is not to affect the rate payer, but to move forward in such a way that contributes to a statewide benefit. The Administration anticipates being in conversation with the Board and with the public during the process of creating a prudent plan during this fantastic and exciting time for the state. Commissioner Sande emphasized that the Governor has been vocal about stabilizing and reducing consumer rates. Commissioner Sande asked Mr. Thayer if the Board needs to act for the State to receive this impressive grant funds award. Mr. Thayer indicated that the Board does not need to take any action. He noted the success that out of 700 applications that were received, 58 applicants were selected, and Alaska was the fifth highest awardee in the country. Mr. Thayer advised that through weekly reports and meetings, the Board has discussed the application 17 different times, and 8 times since the funding letter was received. Vice-Chair Kendig inquired if the Board will have any approval or denial authority regarding the match funding negotiations. Commissioner Crum indicated that the Board does not have to be part of the negotiations, but will be made aware of the negotiations because the Board has the authority and responsibility to be aware of the status of the new funding. Commissioner Crum reiterated that the match arrangements will be a deliberative and planned multi-year process and that no State match is required in the first year. Vice-Chair Kendig expressed his understanding that the intent is not to have an increase to rate payers. He cited the purpose of AEA as indicated in Article Two, Section 44.56.070, and noted that AEA will own the assets. Vice-Chair Kendig asked if the Board will be involved in making the decision after the departments negotiate a plan. Commissioner Crum agreed. Chair Pruhs reiterated the excitement of receiving the grant for $206 million, while at the same time being concerned about the ongoing process of how to fund the match of $206 million. He believes that it would be best to have alignment on the multi-year solution, and the sooner the better.  Waiting for response from DOE on 40101(d) Mr. Thayer advised that the IIJA 40101(d) is a $60 million grant to be passed on to the urban utilities for transmission upgrades. It requires a 15% State match of $1.8 million per year. The Legislature has provided for three years of the match. The current awarded amount is $22 million, and AEA has been working with DOE to release those funds in the first quarter of next year for the transmission upgrades across the state. Mr. Thayer discussed that there is a similar DOE grant program for rural Alaska that AEA is not administering and contains a greater amount of awarded funding. C. Governor’s State Energy Security Task Force Update  Final report to be presented to Governor Dec. 1 Alaska Energy Authority Page 6 of 8 Mr. Thayer noted that about a year ago, the Board asked for an energy plan for the State, and ironically, the Governor asked for the same plan in February. The Governor’s Alaska Energy Security Task Force (AESTF) was created and consists of 20 selected members, who have been meeting since February. Mr. Thayer gave an overview of the AESTF subcommittees. He discussed the partnership that occurred with the University of Alaska to create a series of eight energy symposiums that are available online. Mr. Thayer discussed that the final work product was delivered to the Governor on Friday. The goal was to create a plan to lower the cost of energy to 10 cents per kilowatt-hour (kWh). Key recommendations were region-specific. Some of the recommendations from the Railbelt include moving ahead with the Dixon Diversion project, updating the economic modeling on Susitna- Watana to decide on action, and reviewing the two proposals for gas lines to decide on action. Mr. Thayer noted discussions regarding PCE and issues in King Cove. The suggestion was made that AEA house the energy data and reinstate the Energy Technology Fund. Another AESTF recommendation was the unification of the transmission lines through AEA or through a nonprofit utility-like entity. Mr. Thayer acknowledged Jennifer Bertolini, AEA, for her efforts and for providing notice for all the meetings. He commented that a budget was provided by the federal government that was allocated to AEA staff to conduct the work and to Michael Baker consultants to keep the process on track over 160 hours of 50 to 60 meetings. Mr. Thayer noted that the behind-the-scenes work was probably two to three times the number of hours spent in meetings. He emphasized that the AESTF was 100% committed to the Governor’s goal. Mr. Eledge expressed appreciation for the herculean effort and the great job of presenting the extensive information. He asked if any feedback has been provided by the Governor’s Office or commissioners. Mr. Thayer discussed that since it was presented to the Governor on Friday, there has not been time for a roll-out with the public or with the Legislature as a whole. Mr. Thayer indicated that individual legislators who have requested the report have received it. Commissioner Sande requested Mr. Thayer to clarify for the public if the GRIP 3 project aligns with the AESTF recommendations. Mr. Thayer agreed, and indicated that the AESTF recommendations are 100% aligned with the grants that AEA has applied. Chair Pruhs asked that the format of the funding opportunities include a column that lists the match dollars related to the specific grant. Mr. Thayer agreed. Mr. Fogle expressed appreciation to Mr. Thayer for compiling the AESTF report. He asked what the next steps will be to move the priorities in the plan forward. Mr. Thayer discussed that the Governor will identify the Administration’s priorities, the Legislature will identify their priorities, and AEA should review and identify their priorities and recommendations. He explained that the report is a living document, and it is likely that an implementation committee will be formed after this legislative session to implement the selected priority recommendations. Mr. Fogle suggested that AEA, in conjunction with the Governor’s Office, maintain connection with a committee to Alaska Energy Authority Page 7 of 8 continue to update the report and to ensure that the recommendations were fulfilled. Mr. Thayer agreed. D. Community Outreach Mr. Thayer discussed that the community outreach has increased substantially post the Covid pandemic. The extensive community outreach listing is provided in the packet. E. Articles of Interest Mr. Thayer noted that the Articles of Interest are also included within the Board packet. F. Next Regularly Scheduled AEA Board Meeting Wednesday, January 24, 2024 Mr. Thayer informed that the Governor’s budget will be announced December 15, and the corresponding resolution is listed as an agenda item on the January meeting under New Business. MOTION: A motion was made by Vice-Chair Kendig to enter into executive session to discuss confidential financial matters related to owned assets, the immediate disclosure of which would have an adverse impact on the Authority. This is supported by the Open Meetings Act, AS 44.62.310, which allows a board to consider confidential matters in executive session. In this case, the board believes that these are subjects, which would have an adverse effect upon the finances of AEA and are protected by law, due to the rules protecting personal privacy and certain business information. Motion seconded by Mr. Fogle. A roll call was taken, and the motion to go into executive session passed unanimously. 9. EXECUTIVE SESSION: 9:46 a.m. – Discuss confidential matters regarding Owned Assets the immediate knowledge of which would have an adverse effect on Alaska Energy Authority. The Board reconvened its regular meeting at 11:20 am. Chair Pruhs advised that the Board did not take any formal action on matters discussed while in Executive Session. 10. BOARD COMMENTS Mr. Vivlamore commented that he recently had the pleasure of meeting with Mr. Thayer and John Burns, CEO of Golden Valley Electric Association (GVEA). He noted that Mr. Burns was very complimentary of AEA staff and their efforts, and was disappointed that the first GRIP map did not include GVEA. Mr. Vivlamore will provide Mr. Burns with the current and updated information. Mr. Fogle commended Mr. Thayer’s team for the impressive and unprecedented amount of work they have accomplished. He is proud of AEA. Alaska Energy Authority Page 8 of 8 Vice-Chair Kendig expressed appreciation to staff for the herculean task of the GRIP 3 application process while concurrently working on the tremendous efforts of the AESTF. Chair Pruhs commented on the importance that the Board promotes affordable and reliable energy, as well as supports the staff’s focus on opportunities and challenges. He expressed appreciation to staff for the impressive report and believes that AEA and the State will be in a better position because of these efforts. 11. ADJOURNMENT There being no further business of the Board, the AEA meeting adjourned at 11:28 am. ________________________________________________ Curtis W. Thayer, Secretary