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HomeMy WebLinkAboutSE IRP Feasibility Report September 2007gt ON EO, " areneWetigiNeesatyepae ®)ACEcoatition 1/10/2011 Chairman and Board of Directors Alaska Energy Authority Dear Vice-Chairman Michael T.Felix; On February 17,2011 the Alaska-Canada Energy Coalition will be hosting an international energy conference in Juneau.The Alaska-Canada Energy Coalition (ACEcoalition)is composed of US and Canadian NGO's,individuals,IPP's,and governmental units.The purpose of this conference is to discuss and confirm the possibilities associated with the Northwest Transmission Line extension of the North American Grid to within 35 miles of the Alaskan border by the year 2013. The Alaska Energy Authority has appropriated to it by the legislature for analysis and construction $653,000.Mr. Strandberg of AEA attended a meeting in Wrangell last year in which he publicly stated that "this money is on warm reserve pending Canada's position on the Northwest Transmission Line”.The Canadian side is fully funded and the EIS process is nearly complete.We have had a conversation with the office of OMB Karen Rehfield confirming that the funds now in your possession can be used for this conferences purpose. While in the short term we are hopeful that you will participate in funding this conference our extended purpose is the use of the funds to complete the feasibility study that has been started on the AK/BC Intertie to state statutory standards. The Southeastern Region of Alaska is in a position to grow economically with the addition of a transmission line to the North American Grid,AEA has stated this in various ways in various forums for years.Mr.Strandberg's comments in Wrangell suggested that our future lay in the hands of Canadian action.They have now acted.We have the funds to complete the study in AEA's budget.The ACEcoalition is prepared to move the project forward. Please,consider supporting economic development within the SE Region by becoming a contributing sponsor of "The Time is Now”in the amount of $10,000. Ernie Christian,President Alaska Industrial DevelopmentWwAsExportAuthorityADEN.=ALASKA AGENDA Alaska Industrial Development and Export Authority Board Meeting 10:30 a.m.Thursday,January 13,2011 Anchorage,Alaska 1.CALL TO ORDER 2.ROLL CALL BOARD MEMBERS 3.AGENDA APPROVAL 4.ROLL CALL STAFF,PUBLIC 5.PUBLIC COMMENTS 6.PRIOR MINUTES -October 20 and November 22,2010 7. OLDBUSINESS _ 8.NEW BUSINESS A.Loan Resolution No.L11-01 Wasilla Development Center,LLC -617 South Knik Goose Bay Road B.Resolution No.G11-01 Making permanent the adopted emergency regulations related to the Loan Participation Program 3 AAC 99.250(d)and 3 AAC 99.350(e) C.Buccaneer Project Update-Jim Hemsath -D.Legislative Update 9.DIRECTOR COMMENTS A.Director's Status Report of AIDEA Programs and Projects e Loan Dashboard Report Loan Activity Loan Delinquencies Projects Updates and Discussion Continuing Education Opportunities B.Work Session for new Board members 10:00 a.m.-5:00 p.m.Thu.February 24,2011 Hotel Captain Cook Quadrant Room Next schéduled board meeting Wed.March 2,2011 10.BOARD COMMENTS 11.ADJOURNMENT 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495www.aidea.org e 907/771-3000 e FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 @ www.akenergyauthority.org W ok. ENERGY AUTHORITYAIDEN/EALASKAx4akgAlaskaIndustrialDevelopmentandExportAuthority NOaFWN>10. ./"0newe AGENDA yAlaskaEnergyAuthority .4p a'.Board Meeting Cine Charatan \0 Thursday,January 13,2011VvimmediatelyfollowingtheAIDEABoard meeting Va ReOu-frepler'Anchorage,Alaska a"4 Ko Rhendn Lawnuba-vma4d net "-Pauk Aart bordCALLTOORDERie/_Poeb-deerctorROLLCALLBOARDMEMBERSYeZeAGENDAAPPROVALyeABuffWilelellROLLCALLSTAFF,PUBLIC we - Bret al PUBLIC COMMENTS (please limit comments to 3 minutes per person)PRIOR MINUTES -November 22,December 3,and December 15,2010"204e.€fhevvard __NEW BUSINESS -Move houtherlarrdl A.Executive Director Recruitment _ Status Report by Commissioner Bell and Mr.Felix ¢lo,000 soe tous./yen DIRECTOR COMMENTS A.Director's Status Report ¢6o-- -@ Renewable Energy Fund Round IV seLargeHydro wll <¢0.068/tut B.e Work Session for new Board members 2M ->FAveP 10:00 a.m.-5:00 p.m.,Wednesday,February 23,2011 ¥gopIe Lot.Hotel Captain Cook -Endeavor Room . |-Pryaniye Ae prt e Next scheduled Board meeting Wednesday,March 2,2011 rtan- BOARD COMMENTS ADJOURNMENT 813 West Northern Lights Boulevard e Anchorage,Alaska 99503-2495www.aidea.org e 907/771-3000 «FAX 907/771-3044 e Toll Free (Alaska Only)888/300-8534 e www.akenergyauthority.org Staff Comments on recent request by ACE Coalition for $12,000 funding for ACE Coalition meeting By Jim Strandberg,AEA,January 10",2010. The ACE Coalition is an advocacy and lobbying group formed to further generation and transmission projects in Southeast Alaska that can be used to export Alaskan electricity into the Canadian transmission grid. The concept has been an issue in Southeast Alaska for decades,and the recent Alaska -British Columbia (AKBC)feasibility study was conducted by the AEA to determine if there is a business case for the export concept.The AKBC concept envisions using State funds to build interconnecting transmission lines into British Columbia,so that private developers can build hydropower projects in Alaska and sell this energy to customers outside of Alaska.The study found that economic viability depends on whether the Canadian Grid is extended to the Alaska border,and whether Alaskan private power developers can deliver power at a rate below market,i.e.,can be competitive with other power suppliers both in British Columbia and the northwest United States.Presently the British Columbia power company,BC Hydro,is pursuing a project that would bring the BC grid to within 90 miles of the Alaska border. There is significant diversity of opinion on whether this is wise for the region.Municipal and trade groups in Southeast Alaska feel that hydro power projects should be developed and the energy consumed within Alaska (An "Alaskans first”concept).Some export proponents feel that channeling state funds into the export projects will create jobs and an economic boost to the region.Export proponents generally support private ownership and contro!of the generation projects,with the State as a partner to build a robust transmission link into British Columbia to allow the private owners to write contracts and sell their energy outside of the state.Others in the region think that the export projects will be needed to satisfy in-state energy needs,and there won't be enough available for an export market. The matter at hand is whether AEA should fund the ACE Coalition for a conference in Juneau in February. The subject matter of the conference appears to be primarily energy related and the proponents are still developing the schedule. We have indicated that,because the ACE Coalition is primarily a lobbying group,it is not appropriate for AEA to write a grant to the organization to lobby a particular point of view. AEA is conducting a legislatively funded SE Regional Energy Plan (called the Southeast Integrated Resource Plan)project this year.We include in that regional planning process consideration of the possibility of export of Southeast electricity through Canada.We also will be conducting a two day public conference in Juneau in late April.We have invited the ACE Coalition people to participate in this conference.One of the primary subjects will be "What is the highest and best use of Southeast Alaska energy”. We recommend that AEA not provide funds to ACE Coalition for its conference.We propose to offer them access and participation in the SEIRP Regional Planning Conference. LAWS OF ALASKA 2010 Source Chapter No. SCS CSHB 306(FIN)am S AN ACT Declaring a state energy policy. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: THE ACT FOLLOWS ON PAGE 1 Enrolled HB 306 ooONDnOnLEWAN ACT Declaring a state energy policy. *Section 1.The uncodified law of the State of Alaska is amended by adding a new section to read: LEGISLATIVE INTENT.It is the intent of the legislature that (1)the state achieve a 15 percent increase in energy efficiency on a per capita basis between 2010 and 2020; (2)the state receive 50 percent of its electric generation from renewable and alternative energy sources by 2025; (3)the state work to ensure a reliable in-state gas supply for residents of the state; (4)the power project fund (AS 42.45.010)serve as the main source of state assistance for energy projects; (5)the state remain a leader in petroleum and natural gas production and become a leader in renewable and alternative energy development. -|-Enrolled HB 306 OoOoNNHDAFFWYNO- 10 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 *Sec.2.AS 44.99 is amended by adding a new section to read: Sec.44.99.115.Declaration of state energy policy.The State of Alaska recognizes that the state's economic prosperity is dependent on available,reliable,and affordable residential,commercial,and industrial energy to supply the state's electric, heating,and transportation needs.The state also recognizes that worldwide supply and demand for fossil fuels and concerns about global climate change will affect the price of fossil fuels consumed by Alaskans and exported from the state to other markets.In establishing a state energy policy,the state further recognizes the immense diversity of the state's geography,cultures,and resource availability.Therefore,it is the policy of the state to (1)institute a comprehensive and coordinated approach to supporting energy efficiency and conservation by (A)encouraging statewide energy efficiency codes for new and renovated residential,commercial,and public buildings; (B)decreasing public building energy consumption through conservation measures and energy-efficient technologies;and (C)initiating and supporting a program to educate state residents on the benefits of energy efficiency and conservation,including dissemination of information on state and federal programs that reward energy efficiency; (2)encourage economic development by (A)promoting the development of renewable and alternative energy resources,including geothermal,wind,solar,hydroelectric, hydrokinetic,tidal,and biomass energy,for use by Alaskans; (B)promoting the development,transport,and efficient use of nonrenewable and alternative energy resources,including natural gas,coal,oil, gas hydrates,heavy oil,and nuclear energy,for use by Alaskans and for export; (C)working to identify and assist with development of the most cost-effective,long-term sources of energy for each community statewide; Enrolled HB 306 -2- OoOnsDBDNnFRWYNO&BONNDROeeeaeaeseaeeWwNyeF§OFOOWHDBWnF&FWNYKSOC(D)creating and maintaining a state fiscal regime and permitting and regulatory processes that encourage private sector development of the state's energy resources;and (E)promoting the efficiency of energy used for transportation; (3)support energy research,education,and workforce development by investing in (A)training and education programs that will help create jobs for Alaskans and that address energy conservation,efficiency,and availability, including programs that address workforce development and workforce transition;and (B)applied energy research and development of alternative and emerging technologies,including university programs,to achieve reductions in state energy costs and stimulate industry investment in the state; (4)coordinate governmental functions : (A)by reviewing and streamlining regulatory processes and balancing the economic costs of review with the level of regulation necessary to protect the public interest; (B)by using one office or agency,as may be specified by law, to serve as a clearinghouse in managing the state's energy-related functions to avold fragmentation and duplication and to increase effectiveness;and (C)by actively collaborating with federal agencies to achieve the state's energy goals and to meet emissions,renewable and alternative energy,and energy production targets. -3-Enrolled HB 306 =ALASKA. @-ENERGY AUTHORITY AK-BC Intertie Feasibility,Study SE Alaska .AORNaSaeeAaeranmerei*Final Report September 2007 Hatch Acres Corporation Dryden and La Rue,Inc. Hardy Energy Consulting WAT ACRES Alaska Energy Authority -AK-BC Intertie Feasibility Study SE Alaska Final Report EXECUTIVE SUMMARY ISSUES SHAPING THE STUDY e If the State of Alaska provides funds to construct new transmission segments in Southeast (SE) Alaska,will development of the segments discussed in this report provide the incentive for the private sector to invest in new generation,including associated infrastructure to connect with the transmission grid? e Will the new generation projects'use of the State-funded transmission,including the proposed Alaska-British Columbia (AK-BC)Intertie,result in revenues sufficient to cover operations and maintenance (O&M)costs to maintain the new transmission systems over the long term? e While markets exist outside Alaska,it is not clear how the sum of generating costs plus delivery costs for Alaska electricity products will compare with existing prices in these markets. e The accuracy of the generation,transmission and market information used in analyses performed during Phase |of this study is,in most cases,below a "pre-feasibility”level and both confidence ratings and more accurate information should be developed during Phase Il. BUSINESS STRUCTURES Business structure options were reviewed and recommended options meriting future consideration were developed with the primary purpose of managing a future interconnected transmission system within SE Alaska with potential to transmit power excess to needs within SE Alaska to BC and other potential export markets in the Lower 48 states.Entities that could be involved include: e Transmission Cooperative -own and operate the proposed AK-BC Intertie. e Unified System Operator -manage interconnected electric transmission system transactions and provide a planning function to define future additions to the system. e Power Marketing Oversight Unit -assist the private sector with making 50-year plus life projects financially viable in the first 15-20 years when debt payments are heavy and manage sales of power for export using the AK-BC Intertie. e State of Alaska Transmission Owner/Operator -fund,own,and operate the proposed AK-BC Intertie with the authority to acquire and operate other segments of the "backbone”for an interconnected electric transmission system. SOUTHEAST ALASKA MARKET The current SE Alaska electricity marketplace includes several geographically constrained sub markets: e Petersburg &Wrangell -interconnected by the Four Dam Pool Power Agency (FDPPA)-owned transmission line that delivers power from Tyee Lake Project. e Ketchikan &Ketchikan Gateway Borough -connected to generation at Swan Lake Project by an FDPPA-owned transmission line. Hatch Acres Corporation PR324582.Rev.0,Page 18 AK-BC Alaska Final Report 18-09-07.Doc HATH ACHES e Southern Prince of Wales Island communities -interconnected by Alaska Power and Telephone (AP&T)-owned transmission segments to AP&T hydro generation. Alaska Energy Authority -AK-BC Intertie Feasibility Study SE Alaska Final Report e Metlakatla on Annett Island and Kake on Kupreanof Island are currently isolated self-contained community systems. Significant disparities in cost of power in SE Alaska exist today,in part related to availability of low- cost hydropower.Many isolated load centers are currently served primarily by diesel generation. SE Alaska communities have experienced slow population growth for decades.The economy is in transition from a resource-based economy to one where the economy is mixed,with increasing development in service-oriented businesses including:government services,recreation and tourism. The electricity load forecast indicates average annual growth rates in electricity sales in the 1.5 - 2%range for the larger communities in SE Alaska. Completion of the Swan-Tyee Intertie (STI)and development of proposed transmission lines to interconnect submarkets,and a future interconnection with BC,will encourage new economic development in currently isolated load centers and improve quality of life for residents currently encumbered with high cost energy from diesel generation. EXTERNAL MARKETS AND MARKET STRUCTURES Power demands in BC and the Pacific Northwest (PNW)are expected to grow substantially over the next 10 -20 years and electricity policy changes related to reduction of greenhouse gas emissions (GHG)represent export opportunity for competitively priced power from SE Alaska projects. Principle Markets for SE Alaska hydro to meet load growth e BC Hydro and/or Powerex (the wholesale marketing arm of BC Hydro). e PNW investor owned and/or publicly owned utilities. Proposed Transmission Interconnections necessary to export SE Alaska hydropower to BC and/or the PNW e AK-BC Intertie System. e British Columbia Transmission Corporation (BCTC)Backbone Extension. Market Opportunities e Tobe competitive,SE Alaska hydro projects need to meet current delivered market price of approximately $70/MWh (which is equivalent to 7 cents per kilowatt/hour).Assuming power delivery costs of $10/MWh,generating costs would need to not exceed the $60/MWh range. e If generating costs exceed $60/MWh,competitiveness depends on GHG restrictions increasing future BC/PNW market prices. Market Oversight e State involvement would enhance the potential that new projects could produce power for 50 years substantially increasing marketability. Hatch Acres Corporation PR324582.Rev.0,Page 19 AK-BC Alaska Final Report 18-09-07.Doc nA ACHES REGULATORY ISSUES Alaska Energy Authority -AK-BC Intertie Feasibility Study SE Alaska Final Report No "fatal flaws”regarding development of proposed AK-BC Intertie to border with Canada. Further consultations required with BC regarding the line segment from the border to the nearest point of interconnection with the BCTC system. New hydropower projects with power that could be exported at Thomas Bay require FERC licenses. Potential cost of power is dependent on operating restrictions that may be imposed in any future issued FERC license terms and conditions.No "fatal flaw”identified with probability of FERC issuing licenses. Regulatoryissues requiring further investigation include:determination of whether power export isdeterminedtobe"interstate commerce”involving FERC regulation. TRANSMISSION LINE COSTS AND ISSUES Swan-Tyee Intertie.Capital costs are assumed to be grant-funded.O&M costs would be recovered through use of the line.No further studies are required. Other SE Alaska Transmission Segment Projects new transmission segments to interconnect isolated communities in Metlakatla and Kake would be grant-funded and O&M costs would be recovered through use of the line.We have not seen studies for the Metlakatla to Ketchikan line.Studies on the Kake-Petersburg line are at the feasibility level. AK-BC Intertie to export surplus power for sale in BC/PNW would encourage development of new projects and provide additional reliability benefits.The outstanding unknowns regarding feasibility of this line segment is whether the Thomas Bay projects would produce power at a market-clearing cost and whether BCTC would construct adequate capacity to transmit power to the BC and PNW markets. POWER GENERATION COSTS AND ISSUES Proposed projects would provide low-cost power to meet load growth in SE Alaskan communities and could generate power surplus to needs in SE Alaska for export to BC and the PNW. e With completion of the STI,near term proposed projects will address load growthin KetchikanandPetersburg e Successful licensing of proposed projects at Thomas Bay in combination with other proposed new projects could provide power for export under certain development scenarios.May require State support through power marketing oversight. POTENTIAL DEVELOPMENT SCENARIOS -WITH/WITHOUT EXPORT Basic Assumptions e SE Alaska requirements met first,surplus was considered for export e The proposed AK-BC Intertie would be grant funded e O&M cost of transmission facilities would be met by users Hatch Acres Corporation PR324582.Rev.0,Page 20 AK-BC Alaska Final Report 18-09-07,Doc HATCH ACRES Without Export Alaska Energy Authority-AK-BC Intertie Feasibility Study SE Alaska Final Report Requirements in Petersburg/Wrangell/Ketchikan can be best met with completion of the STI Intertie and planned new hydro projects.These actions will reduce need for increased diesel generation and provide benefits to SE Alaska ratepayers. Connecting Metlakatla and Kake show positive benefits.Metlakatla has an opportunity to develop its next hydro resource if there is an electrical interconnection that would facilitate transmitting power excess to needs on Metlakatla to other communities in SE Alaska.Kake is currently served by high-cost diesel generation and interconnection would provide consumers with lower cost power and enable conversions from high cost oil-based heating to electric heating. Un-quantified benefits of interconnection include:reduction of GHG,through reduced use of diesel generation,increased conversion from oil to electric heat reducing GHG emissions,gains in energy through coordinated operation of hydro projects,and incentives to encourage new economic development. With Export The ability to export power would encourage early development of new hydro generation which, as well as providing revenue from exports,will help ensure future maintenance of the current overall status of a clean hydro-powered region,offer operating flexibility for the SE Alaska power system,and provide future benefits to the region under the proposed marketing oversight proposal. Power sales agreements for power generated at projects encouraged by the AK-BC Intertie could be structured to return payment to the state.Power sales agreements could be structured to include a call-back provision when load in SE Alaska grows and power is needed to serve native load. Potential development initiatives with BC are dependent on BCTC cooperation,particularly development of the Northwest Transmission Line (NTL),extension of the grid to the AK/BC border, and favorable market conditions for Alaskan-generated power. CONCLUSIONS Swan-Tyee Intertie (STI) e The STI is economic starting in 2010 and technically feasible and fully permitted e The STI would allow use of surplus energy from the Tyee hydro plant and provides a significant opportunity to support institutional,commercial &residential conversions to electric heating, displacing oil heat with clean,renewable hydropower e The STI as proposed demonstrates strong economic value to ratepayers of SE Alaska e When the STI is completed,coordinated operation of the existing hydro projects in Petersburg and Ketchikan with the combined Swan and Tyee project operations will result in less overall spill and a more uniform distribution of energy through each water year.Coordinated operation will provide more ability to operate units at maximum efficiency and provide more flexibility in timing of planned outages. Hatch Acres Corporation PR324582.Rev.0,Page 21 AK-BC Alaska Final Report 18-09-07,Doc WAT ACHES Alaska Energy Authority -AK-BC Intertie Feasibility Study SE Alaska Final Report Other Line Segments in SE Alaska Transmission segments to interconnect Metlakatla with Ketchikan and Kake with Petersburg are technically feasible and would provide benefits to ratepayers of SE Alaska The Kake-Petersburg Transmission Intertie is economic starting in 2011 and would provide access for Kake ratepayers to low-cost hydropower,displacing diesel generation and facilitating conversion from oil heat to electric heat;and could spur new economic development The Metlakatla to Ketchikan Transmission Intertie is economic starting in 2013 and would provide enhanced reliability and may encourage development of a proposed new hydro project on Annette Island. AK-BC Intertie and Projects Developed for Export The AK-BC Intertie would provide a further opportunity to secure the energy future for SE Alaska Export of energy from 2015 onwards to BC and/or the PNW appears to be economic at discount rates of 6% The technical feasibility and market potential of the proposed future hydro facilities and related transmission features look promising but cannot be definitively determined at this time The regulatory process to approve the proposed AK-BC Intertie segment within SE Alaska is well defined and no fatal flaws were identified.The proposed segment in BC has not been studied and could face environmental and institutional challenges Licensing proposed hydro facilities faces significant,but not necessarily insurmountable, environmental and institutional challenges If the State can be assured that the projects are constructed so they will produce power for 50 years (the term of their FERC license),it may be possible to evaluate their economics over that longer timeframe,substantially increasing their marketability. Hatch Acres Corporation PR324582.Rev.0,Page 22 AK-BC Alaska Final Report 18-09-07.Doc °)A [<'Mee Be.TedAdve f AEA:Southeast Alaska Energy Export FY2007 Request:$3,200,000 Reference No:AMD42109 AP/AL:Appropriation Project Type:Planning Category:Development Location:Southeast Alaska Contact:Ron Miller House District:Southeast Districts 1-5 Contact Phone:(907)269-3000 Estimated Project Dates:07/01/2006 -06/30/2009 Brief Summary and Statement of Need: Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia.This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid. Funding:FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 Total Gen Fund $3,200,000 $3,200,000 Total:$3,200,000 "$0 $0 $0 $0 $0 $3,200,000 Tl”State Match Required IM One-Time Project 7 Phased -new I Phased -underway [7 On-Going 0%=Minimum State Match %Required l¥Amendment T:Mental Health Bill Operating &Maintenance Costs:Amount Staff Project Development:0 0 Ongoing Operating:0 0 One-Time Startup:0 Totals:0 0 Additional information /Prior Funding History: None. Project Description/Justification:As the nation's domestic energy costsincrease,exporting Alaska hydropower becomes increasingly economically viable. One route (the ALCAN Intertie)was permittedin 1988;the proposed intertie starts at Tyee Lake,traverses northeast up the Bradfield Corridor,then northeast down the Craig River to the British Columbia border.The British Columbia Transmission Corporation gains stability by connecting to Southeast Alaska and provides an opportunity for Southeast Alaska to develop electricity from local hydroelectric resources that could eventually be sold to U.S.energy markets. | 'The Alaska Energy Authority (AEA)proposes to request export development proposals from potential developers including Southeast Alaska power producers to be awarded as a competitive grant. \ State of Alaska Capital Project Summary Department of Commerce,Community,and Economic Development FY2007 Governor Amended Reference No:42109 4/28/06 3:26:33 PM Page:1 ALASKA ENERGY AUTHORITY AEA ALCAN INTERTIE (AKBC) € :40937-11 CH82SLA2006 PG117 LN21 S-ALCAN Intertle (TobSetSale Bonds)-10337-14 F M4 ALCAN Intertie -T&D (AKBC) AR:07140001 data as of 06/30/08 (Entry #825184) Project AR Code Name Code Name .,Budget Actuals Encumbrances Commitment Balance 409014 ALCAN Intertie -T&D 07140001 S-Railbelt Electrical Grid Authority-10914-11 *1,200,000.00 544,301.89 0.00 0.00 655,698.11 1,200,000.00 544,301.89 0.00 0.00 655,698.14 Actual Expenditures to date by Account Code 72270 Admin Trave-tn State 17,681.38 72272 Admin Travel-Out of State 1,519.10 72390 Non Employee Travel-In State 6,916.50 72510 Admin Per Diem-In State 5,834.15 72512 Admin Per Diem-Out of State 1,083.54 72520 Non Empkyee Per Diem-In St 6,172.55 73115 Other Professional Services 405,429.66 73140 Legal Services 1,096.71 73150 AIDEA Staff-Prof Services 91,008.06 73301 Telephone Charges 2,084.37 73400 Courier Services 239.34 73502 Advertising/Printing/Binding 3,775.04 73902 Conference Registration &Fees 840.00 73906 Other Fees &Expenses 509.94 74221 Food Supplies 100.55 74910 Other Supplies 12.00 544,301.89 **SB 256 Section 4(c),ch.82,SLA 206,Pg 117,Lines 21-22 amended: reappropriated $2 million for Kak-Petersburg Intertie.Revised AK-BC authority down to $1.2 million : H:\alNshelton\PJ409014-ALCAN AK-BC\Budget Reportxis -06-30-08 Ar tftIeaa.yhdee f AEA:Southeast Alaska Energy Export FY2007 Request:$3,200,000 Reference No:AMD42109 AP/AL:Appropriation Project Type:Planning Category:Development Location:Southeast Alaska Contact:Ron Miller House District:Southeast Districts 1-5 Contact Phone:(907)269-3000 Estimated Project Dates:07/01/2006 -06/30/2009 Brief Summary and Statement of Need: Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia.This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid.Funding:FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 Total Gen Fund $3,200,000 $3,200,000 Total:$3,200,000 '$0 $0 $0 $0 $0 $3,200,000 IT”State Match Required I One-Time Project 7)Phased -new I Phased-underway J On-Going 0%=Minimum State Match %Required Amendment T-Mental Health Bill Operating &Maintenance Costs:Amount Staff Project Development:0 0 Ongoing Operating:0 0 One-Time Startup:0 Totals:0 0 Additional Information /Prior Funding History: None. Project Description/Justification: As the nation's domestic energy costs increase,exporting Alaska hydropower becomes increasingly economically viable. One route (the ALCAN Intertie)was permitted in 1988;the proposed intertie starts at Tyee Lake,traverses northeast up the Bradfield Corridor,then northeast down the Craig River to the British Columbia border.The British Columbia Transmission Corporation gains stability by connecting to Southeast Alaska and provides an opportunity for Southeast Alaska to develop - electricity from local hydroelectric resources that could eventually be sold to U.S.energy markets. [The Alaska Energy Authority (AEA)proposes to request export development proposals from potential developers including Southeast Alaska power producers to be awarded as a competitive grant. \ State of Alaska Capital Project Summary Department of Commerce,Community,and Economic Development FY2007 Governor Amended Reference No:42109 4/28/06 3:26:33 PM Page:1 ouoNNDNH&WDPFOwmbwWNHNDYhbtw=- SSeSVARRESORBRRBSGCREBERBEop-so*Sec.4.(a)This section takes effect only if SCS CSHB 381(FIN)am S is adopted by the Twenty-Fourth Alaska State Legislature and enacted into Jaw.From the excess proceeds deposited into the capital projects fund established under sec.1(c)of SCS CSHB 381 (FIN) am S,the amount of $169,976,500 or the eitire amount of those excess proceeds,whichever is less,is appropriated for the projects listed in sec.I(d)of SCS CSHB 381(FIN)am S as provided under (c)of this section. (b)If less than $169,976,500 is appropriated under (a)of this section,an amount equal to the difference between $169,976,500 and the amount appropriated under (a)of this section is appropriated from the general fund for the projects listed in.sec.1(d)of SCS CSHB 381(PIN) am S as provided under (c)of this section. , (c)The following appropriation items are for capital projects as set out in sec.1(d)of SCS CSHB 381(FIN)am $to the recipients named for the purposes expressed,and lapse under AS 37.25.020: Appropriation General Other Allocations [tems Funds Funds kk ww *e KE HK *****Department of Commerce,Community and Economic Development ***** *oe fe kk ,_.:, . ok kk Ok Alaska Energy Authority--§=O V{4Ooo\3,200,000 3,200,000 ALCAN Intertie (HD 2) | Alaska Industrial .CyH4007}2,740,000 2,740,000 Development and Export , Authority -Ketchikan Shipyard Improvements (HD 1) Regulatory Commission of . 700,000 700,000 Alaska -Information Technology Upgrade (HD 1-40) Grants to Named Recipients (AS 37.05.316) SB0231e HiCS CSSB 231(FIN)am H(brf sup maj ptld H),See.4 -117- April 27,2006 The Honorable Lyda Green The Honorable Gary Wilken The Honorable Mike Chenault The Honorable Kevin Meyers Alaska State Legislature State Capitol Juneau,AK 99801 Dear Finance Committee Co-Chairs: Please make the following budget amendments.Section references are to CSSB 231 (FIN)version F: Amend sec.1,by adding a new Department of Commerce,Community, and Economic Development FYO7 capital project to read: Appropriation General Other Items Funds Funds AEA:Southeast Alaska Energy 3,200,000 3,200,000 Export (HD 1 -5) Funds are needed for the analysis,design,and potential development of an electrical intertie between the State of Alaska and the Province of British Columbia. This project will provide the groundwork for the possible export of energy from Alaska hydroelectric power resources to British Columbia and the lower 48 electrical power grid. Amend sec.1,by deleting a Department of Transportation and Public Facilities project on page 45 and replacing it with a new project:Appropriation General Other Allocations Items Funds Funds [PALMER:CHUGACH -3,000,000 STREET PAVING (HD 13 -16)] Statewide:Rural 3,000,000 Airport Safety Improvements HD 1-40 The Chugach Street Paving project is no longer necessary because funds and legislative authority are in place to allow the project to go forward immediately.Theprojectisbeingbidusingfederalauthorization.General funds are no longer needed. Finance Co-Chairs April 27,2006 Page 2 The funds are needed to address a backlog of safety improvement projects at rural airports throughout the state. Amend sec.7 by adding a supplemental appropriation for the Department of Commerce,Community and Economic Development to read: Appropriation General Other Allocations Items Funds Funds Community Assistance &50,000 50,000 Economic Development Office of Economic 50,000 Development This funding is needed due to the Office's hosting of the second annual Small Business Conference in Anchorage in June.The U.S.HUD Secretary and other high- ranking federal officials will be attending.Conference costs will be paid for by registrations and donations as statutory designated program receipts (SDPR).The Office expects the total cost to be $50,000. Backup information on the amendments is attached along with updated FY07 Capital Budget Amendments and FY06 Regular Supplemental Amendments spreadsheets.If you have any questions,please call me at 465-4660 or Joan Brown at 465-4681.Thank you. Sincerely, Cheryl Frasca Director Attachments cc:David Teal Legislative Finance ALASKA ENERGY AUTHORITY AEA ALCAN INTERTIE (AKBC) £*"2.40337-41 CH82 SLA2006 PG117 LN21 S-ALCAN Iniertie (TobSetSale Bonds)-10337-11 F 314 ALCAN Intertie -T&D (AKBC} AR:07140001 data as of 06/30/08 (Entry #825184) Project AR Code Name Code 409014 ALCAN Intertie -T&D Name Actual Expenditures to date by Account Code 72270 Admin Travelin State 72272 Admin Travel-Out of State 72390 Non Employee Travel-In State 72510 Admin Per Diem-In State 72512 Admin Per Diem-Out of State 72520 Non Employee Per Diem-In St 73115 Other Professional Services 73140 Legal Services 73150 AIDEA Staff-Prof Services 73301 Telephone Charges 73400 Courier Services 73502 Advertising/Printing/Binding 73902 Conference Registration &Fees 73906 Other Fees &Expenses 74221 Food Supplies 749410 Other Supplies **SB 256 Section 4(c),ch.82,SLA 206,Pg 117,Lines 21-22 amended: reappropriated $2 million for Kak-Petersburg Intertie.Revised AK-BC authority down to $1.2 million . H:\alshelton\PJ409014-ALCAN AK-BC\Budget Reporixis -06-30-08 Budget 07140001 S-Raitbelt Electrical Grid Authority-10914-11 *1,200,000.00 Actuals 544,301.89 Encumbrances Commitment 0.00 0.00 Balance 655,698.11 1,200,000.06 544,301.89 0.00 0.00 655,698.11 17,681.38 1,519.10 6,915.50 5,834.15 1,083.54 6,172.55 405,429.66 1,096.71 91,008.06 2,084.37 239.34 3,775.04 840.00 509.94 100.55 12.00 784,304.89 AGENDA Alaska -British Columbia Intertie Feasibility Work Group and Technical Group Public meeting 9:00 AM City of Craig Council Chambers Craig,Alaska Welcome and Introductions (10 min)Chairman JC Conley Opening Comments (5 min)Jim Strandberg,AEA Project Manager 9:15 AM General Review of the Report Group 10:00 AM Consultant presentation of Development Modeling 11:00 AM Discussion of Modeling Results Group 12:00 to 1:00 PM Lunch -Discussion of Consultant recommendations for further work on the project Group 1:00 PM -2:00 PM Development of Work Group report review comments,and work group recommendations to AEA for any additional development work Group 2:00 PM -2:30 PM Comments by Work/Technical Group members Adjourn meeting for members scheduled to catch the 3:30 pm Promec flight out of Craig for Ketchikan Public comment will be received at the conclusion of each agenda item, beginning with the 9:15 AM General Review Session.Each person limited to 5 minutes. AK BC INTERTIE MEETING MAY 8,2007 CRAIG,ALASKA -CITY OF CRAIG COUNCIL CHAMBERS 10:00 AM -3:00 PM AGENDA Mr.JC Conley convened the meeting at 9:15 AM.He thanked the group for making their way to Craig,for the review meeting. The following people signed on the telephone connection: Mr.Bob Grimm,CEO of Alaska Power and Telephone Phelan Straube,Work group member Nan Nalder,project manager for Hatch Energy Robert Griesbach,project director for Hatch Energy Model demonstrators (Connected by teleconference) Mr.Anabal Carias Clark Smith Bin Lian Others present Greg Mickelson,Alaska Power and Telephone Work Group Members present Chairman John (JC)Conley Robert S.Prunella,City Manager,City of Wrangell Steve Henson,Electrical Superintendent,City of Wrangell Jay Hansen,Electrical Superintendent,Ketchikan Public Utilities Dave Carlson,CEO,The Four Dam Pool Power Agency Dennis Lewis retired Electrical Superintendent,City of Petersburg Joe Nelson,General Manager,Petersburg Municipal Power and Light Paul Bryant,General Manager,Metlakatla Light and Power Jon Bolling,City Manager,City of Craig and Co-chair,Southeast Conference Energy Committee Jim Strandberg,AEA project manager MEETING MINUTES Mr.Conley said the purpose of the meeting was to discuss the draft final report and consider three actions: e Whether to recommend to AEA the report is adequate for the task at hand. e To formulate review comments on the report that should be delivered to AEA for inclusion in the final report. e To recommend further actions AEA should take to further the project. Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 2 of 9 AEA project manager Jim Strandberg then expressed AEA's appreciation for participation by the body.He looked forward to hearing the group's comments and hoped they could provide written recommendations to AEA on the current report and whether additional development work should be done on the project, based on the current report recommendation for the export project of "it looks promising,but can't tell for sure.” Strandberg also noted on the agenda,that the Consultant had not yet delivered the computer spread sheet based model that is the basis for the Hatch analysis of the project alternatives.At AEA's request,Hatch had provided supplementary report text and preliminary copies of the model to AEA.This model was copied onto CDs and distributed to the work group for their review. City of Craig IT people produced CD copies of the model.Mr.Strandberg asked that the copies not be distributed outside of the committee,or used for any other purpose other than the AKBC Export project,because AEA was working out the intellectual property aspects of the computer model with the consultant. At 9:30 AM,the group began a general discussion of the report. Mr.Conley led off the discussion.He said the report is thorough and generally treated the subject adequately.Mr.Conley and several members stated their support of the report conclusion and that the Swan-Tyee Intertie project demonstrates strong economic value to ratepayers in SE Alaska. Mr.Conley also stated,in his opinion,that the business structure analysis should be expanded to consider a State of Alaska ownership option. Ms.Nalder stated the present recommendation centered on a cooperative model,such as QWETICO.Hatch had not considered the State ownership scenario because of perceived statutory restrictions on AEA's ability to take on new projects and associated debt,and from comments made at earlier work group meetings against the concept of State ownership of transmission assets. Mr.Conley stated the work group is configured to give advice to AEA,and the ownership question is subject to a wide range of opinion,and in his opinion state ownership may be a valid approach for intertie development.It was agreed that this would be discussed later in the meeting. Mr.Lewis expressed concern over the potential FERC jurisdiction of the export project and how that could affect the tax status of the four dam pool.Ms. Nalder said that should not be a worry,and spoke briefly on FERC's limits to jurisdiction over municipalities and cooperatives. Mr.Bolling expressed concern,that as we move forward AEA should give preference to local community energy demands and needs. Mr.Grimm,during public comment,suggested that AEA review costs and technologies for DC power transmission as an alternative to high voltage transmission.He pointed out that an AP&T study on high voltage DC is Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 3 of 9 available on the AEA web page. (www.akenergyauthority.org/PDF%2Ofiles /HVDC_in_Southeast_Alaska.pdf) Mr.Hansen said he was concerned with some of the accuracy of transmission line estimates.In particular,the Kake Intertie may be buildable along a public road right-of-way for the majority of its route at a lesser cost than was indicated in the study.Mr.Hansen related his experience in building the Klawock/Thorne Bay transmission line (designed for 69KV and operated at 34.5 KV),and the overall cost of the project which came in at under $100,000 per mile. Others,including Phelan Straube and Dave Carlson,spoke in favor of the report as a viable draft,but in need of some additional treatments of subjects. Model Presentation At 10:00 AM,the consultant group was asked to give a short presentation on 'the draft Intertie feasibility model that is the basis for the report analysis. Hatch employees Nan Nalder,Bob Griesbach,Anabal Carias,Chris Smith,and Bin Lian were connected to the City of Craig computer to allow the model to be _projected on a screen,through WebX internet software.Teleconferencers were given web links to view the model presentation as well. The Consultants first gave a short description that showed how the model inputs can be manipulated to alter development scenarios.The power point visual aid is included as an attachment to these minutes. Mr.Hansen stated that the model may predict too much spill.Mr.Carais stated the model is flexible and it could be changed to accommodate actual conditions.It was agreed there should be further discussions on making sure this predictive model recognizes all system synergies. Detailed Review of report At 11:00 AM,Mr.Conley suggested we begin a detailed review of the draft final report.He distributed copies of section 9.3 Recommendations.The group used this as a framework for its discussions. 9.3.1.1 Overarching Issues and Tasks ©Assist AEA and SEC in developing a request for proposals for a SE Alaska Energy Policy. e Assist State of Alaska in consultations with BC government and utilities in BC and PNW. e Assist AEA in developing and negotiating agreements between Governments,utilities,and private sector developers. The group suggests AEA undertake these tasks.(As a general matter,the group did not comment on whether or not AEA should ask the consultant to perform the tasks.It merely recommended whether the task should be completed.)As a part of this discussion,Messrs.Carlson and Conley stated the State needs to Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 4 of 9 develop an energy policy that recognizes regional differences,so that funding decisions can be made rationally.Specifically there is a need to recognize the special conditions that exist in Southeast Alaska. Messrs.Conley and Bolling suggested that the contact with the Governor's office be to educate and then to offer to assist in the development. Mr.Straube spoke of legislative methods to secure funding for different intertie segments,and spoke of a State School Maintenance funding process that is founded on real need as opposed to raw political power. Mr.Lewis questioned what is meant by "Southeast Alaska.”The group decided it should mean everything south of Yakatat,including Yakatat.Mr.Carlson asserted that renewable energy sources combined with new transmission infrastructure is especially important for SE Alaska.He said it is important that the State of Alaska play a role in this infrastructure development. Mr.Conley then spoke of the need to link this export project with the overall Southeast Energy Plan.Further,he indicated it is important that AEA maintain relationships with Canadian counterparts.The group generally agreed with this. Mr.Prunella stated it would be important not to lose touch with the contacts in BC that were made during the last administration. e Assist AEA in obtaining additional expertise or resources as needed by AEA to aversee the project. e Provide Project Management for a steering committee as may be requested by AEA. The group suggested no action on these items now. 9.3.1.2 Business Structure e Consult with AEA and AK-BC Work Group regarding implementation of the proposed Business Structure and refine proposal as stated in Final Repart. e Assist AEA and AK-BC Work Group in preparing detailed recommendations for adoption of the proposed Business Structures Mr.Conley began the discussion by suggesting that additional work be done to consider state ownership of the transmission lines.Ms.Nalder asked whether this should include state ownership of the present four dam pool infrastructure. Mr.Conley said he was not suggesting that;rather,the concept of State ownership should be considered generally and system-wide. Ms.Nalder asked to what extent Hatch Energy should develop a state ownership scenario,and queried whether this could include bringing the four dam pool back into state ownership.Mr.Strandberg suggested Hatch should consider all reasonable ownership scenarios,irrespective of statutory or regulatory constraints and bring forth rational development scenarios that could result in viable export commerce that is sustainable and in the public interest.He further suggested that Hatch could then identify any statutory or Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 5 of 9 regulatory barriers to the best fit ownership scenario.Finally he posited this approach could provide a valuable tool to policy makers in deciding the correct structure for the potential export scenario. Mr.Carlson stated whether or not the State should own new assets are part of a policy question that the Administration and AEA must wrestle with. 9.3.1.3 Southeast Alaska Market e Refine load forecast for SE Alaska utilities with focus on the potential for conversions from oil-based heating to electric heat.Customer surveys could be considered in order to obtain better information on the current heating infrastructure and custamer intentions for the future. 9.3.1.4 External Markets ¢Monitor implementation of policies set forth in BC Energy Plan to identify potential for projects in SE Alaska to provide energy to BC and the PNW.(See Section 3.6 of Report) e Monitor emerging market opportunities in BC &PNW and advise AEA &AK-BC Wark Group,e.g.future BC Hydro &PNW utility RFPs for power. No AEA action was suggested on these items. 9.3.1.5 Regulatory Issues ¢Consult with RCA and FERC regarding regulatory structure for AK-BC tntertie.Note that legal counsel will be required to file the request for Declaratory Order with the FERC to determine interstate commerce jurisdiction. e Monitor progress of RCA rulemaking to implement a State Small Hydro Licensing Program (5 MW or less) No AEA action was suggested.Mr.Carlson commented that this is premature. If and when the project is better formulated and a decision is made to go-ahead with development,then AEA should begin the regulatory determinations and filings. 9.3.1.6 Transmission Line Costs and Issues e Extend studies to develop more accurate capital and O&M cost estimates for planned transmission segments. e Continue to monitor progress and consult with BCTC regarding the proposed NTL line and the segment from the NTL to the AK/BC border ¢Consult with BCTC regarding contractual terms and related costs to achieve interconnection e Monitor developments in SE Alaska and BC and propose a critical path for development of the transmission segments required to export power generated in Alaska to BC/PNW:AK- BC Intertie from Tyee Lake to AK/BC border:segment from border to interconnection with BCTC;and proposed line to connect potential new hydro projects at Thomas Bay to the FDPPA line segment from Petersburg to Tyee Lake. ¢Develop and/or manage a process for choosing developers of state-sponsored transmission segments. The group supports AEA going forward with these tasks. Advisory Work Group --AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 6 of 9 9.3.1.7 Power Generation Costs and Issues e The decision to proceed with a transmission system and institutional mechanism to enable the export of power from SE Alaska is heavily dependent upon the development costs for the three Thomas Bay projects including Scenery Lake,Delta Creek,and Cascade Creek projects.Accordingly,it is recommended that an independent evaluation of the energy potential and development cost of these projects be performed in a manner similar to a "Due Diligence Review”as generally required by banking institutions prior to approval of financing construction or acquisition of a major project. e¢Monitor development of renewable resource projects including tidal energy,geathermal, and offshore wind energy.As proposals come forward,consider the "fit”of these projects to an overall energy portfolio for SE Alaska., e Conduct studies to coordinate operation of the Swan Lake and Tyee Projects with existing and planned hydro projects in Petersburg and Ketchikan to maximize power operation and related reservoir operations. e Develop more accurate cost estimates for candidate generation projects. e Develop more accurate calculation of monthly generation from existing and candidate hydro projects The group supports AEA going forward with these tasks as well. There were a number of comments on the need to better define the projects and to get better cost estimate and schedules for both the transmission lines and the hydroelectric power projects. Mr.Griffith of Hatch Energy who dealt with the hydro power project costs indicated that Hatch had amassed as much existing information as possible on the Thomas Bay projects,and that these had come from the present development permit holder.These estimates were not at a level to allow for a determination of feasibility.The group agreed that the hydro/transmission projects should be further developed by accomplishing preliminary design for the hydro projects and route analysis and preliminary design for the transmission lines. Mr.Carlson spoke of the intertie line between Thomas Bay and Petersburg. That link is presently budgeted at approximately $60M,because of a very long submarine cable connect.This routing should be reviewed. Mr.Lewis stated that the third bullet under 9.3.1.7 should be corrected so that Tyee projects are defined as the third turbine installation. There was also concern that the interconnections with Metlakatla and Kake be an integral part of the development.Mr.Bolling said a policy goal of export commerce must be directly linked with a financial benefit to the people of SE Alaska.Ms.Nalder noted that the Power Marketing function the team suggests be a State of Alaska function is designed to assure the flow of benefit back to the public. Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 7 of 9 Mr.Griffith warned that a public benefit charge applied directly to all export power that flows out of the state could dramatically affect the feasibility of export. e Advise State of Alaska in opportunities to shape future hydro projects by active involvement in FERC license proceedings The group discussed the status of the FERC development permits that are presently being held by a private entity.Hatch Energy stated that in order to give stability to the project going forward,development permits might best be in the hands of AEA,or with the communities of Wrangell and Petersburg. The group suggested that this be a subject between AEA and the work group that should be thoroughly discussed at a separate setting. e Assist the FOPPA and municipal utilities in identifying the benefits of integrated operation of existing hydro projects with the STI in place The group discussed the interconnection that would be necessary between the new export intertie,and The Four Dam Pool Power Agency owned transmission/ generation system.It was agreed this would be involved,and would generally provide additional benefits in system reliability,and better dispatch of generation resources.Mr.Strandberg stated that,if the project moves ahead into development,this would be a subject of discussion between the State of Alaska and The Four Dam Pool Power Agency,and the future owner and operator of the transmission backbone.The group suggested no further work at this time. e Assist AEA and the AK-BC Work Group in participating in proceedings before the FERC for proposed Applications for License proposed to use the state-sponsored transmission segments (e.g.current proceedings for Thomas Bay Projects under FERC Preliminary Permit) to ensure that State interests are addressed and measures included in the license to ensure that projects will be constructed and operated to deliver power over a 50-year period. No action by AEA was suggested for this task. 9.3.1.8 Computer Model e Enhance the Regional Resource Planning Model (RRPM)developed during Phase |to include constraints of transmission line capacity. ©Develop and provide detailed user manual and conduct training seminars on the use of the planning tool developed during Phase I. e Develop a method to quantify other benefits not included in the present analysis. e Rerun the RRPM as updated energy and cost data becomes available from project proponents. ¢Investigate additional scenarios and update the economic analysis performed on the scenarios developed in Phase II. Advisory Work Group --AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 8 of 9 The work group was generally satisfied with the computer model,and suggested there was no need for training seminars.They suggest additional scenarios be considered that involve State ownership of the transmission and hydro-electric projects.Also they suggested further discussion on the model's ability to embrace synergies and yield accurate prediction of spill quantities from hydro power generators. After completion of this detailed review process,the group developed the following recommendations: 1.First,with regard to the AEA administration of the project: There is need for discussion of the project with the Governor's office and key legislators,to seek administration buy in to long term commerce between Alaska and British Columbia.(This is being accomplished by the Southeast Conference and other SE interests.AEA is not involved) The AEA project manager should continue coordination with Canadian power utility officials on status of British Columbia plans for transmission line construction near the Alaska border. The report should be accepted with the following review comments: 1.Develop additional scenarios for State ownership of the export transmission lines and the Thomas Bay Hydro Electric Projects. 2.Additional discussion and model tuning for spill predictions. 3.Complete the computer model and deliver final version,complete with user documentation. The work group recommended to AEA that additional work should be accomplished after this final report is issued: 1.Further project definition work,including conceptual design and cost estimates for the Thomas Bay projects,and transmission line routes. 2.Establish project schedules for the export development,to harmonize the time line for hydro projects with timelines for the transmission lines. 3.Develop concept designs for the Kake transmission line,which likely can be constructed along a public road right of way.Develop the design of submarine cables more fully,and develop a route map,complete with ownership,terrain mapping. Finally,Chairman Conley discussed the make-up of the Advisory Work Group and its continued role in the AKBC Export Project.He stated that the work group should continue to provide advice to AEA on the project,both in assuring that project data input is correct and in providing input to AEA on the way the development should continue.Mr.Carlson spoke in support of this. Advisory Work Group -AKBC Export Intertie Project May 8,2007 Work Group Meeting Page 9 of 9 Mr.Conley also suggested that the members of the technical group should be brought into the work group.Mr.Strandberg suggested that several new members could be added,to represent Kake interests and southern area private power interests.Ms.Jodie Mitchell,incoming general manager of Inside Passage Electric Cooperative (IPEC),and Mr.Robert Grimm,CEO,Alaska Power and Telephone (AP&T)were nominated and without opposition,Mr.Conley was asked to invite the two onto the Advisory Work Group. With that,it was agreed the work of the committee on the agenda was complete and the meeting was adjourned. Advisory Work Group --AKBC Export Intertie Project