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HomeMy WebLinkAboutSEIRP advisory meeting Aug 2011--Cae S"e 2-_|Southeast Alaska Integrated Resource Plan Fourth SE IRP Advisory Work Group Meeting August 16,2011 11a.m.--4:30 p.m. James &Elsie Nolan Center Wrangell,Alaska Draft Agenda* 1.Call to Order,Introductions and Welcome by Haines Mayor Jeremy Maxand 2.Approval of Agenda -Rick Harris 3.Public Comment 4.Approval of Minutes from July 26,2011 Advisory Work Group Meeting -Rick Harris 5.Opening Remarks -Rick Harris/Jim Strandberg 6.Wrangell Light &Power Community Report -Steve Henson 7.Results of Analysis to Date -Kevin Harper/Myron Rollins a.Economic Parameters Load Forecasts (Rural &Urban) Fuel Price Projections Transmission Planning Hydroelectric Planningeaos 8.Other Issues -Kevin Harper/Myron Rollins 9.Power Export Concept &Analysis -Jim Strandberg a.British Columbia b.Yukon c.Interconnection to Railbelt 10.Next Meeting -September 14,2011 in Ketchikan (SE Conference Annual Meeting) 11.Committee Comments 12.Adjourn Pattern..(Conference[=AUS Reger =-2--I Southeast Alaska Integrated Resource Plan Fifth SE IRP Advisory Work Group Meeting August 16,2011 11a.m.-4:30 p.m. James &Elsie Nolan Center Wrangell,Alaska Dial:1-800-315-6338 Code:3069#. Draft Agenda* 1.Call to Order,Introductions and Welcome by Mayor Jeremy Maxand 2.Approval of Agenda -Rick Harris 3.Public Comment 4.Approval of Minutes from July 26,2011 Advisory Work Group Meeting -Rick Harris 5.Opening Remarks -Rick Harris/Jim Strandberg 6.Wrangell Light &Power Community Report -Steve Henson wtpSele.7.Results of Analysis to Date -Kevin Harper/Myron Rollins ”)aw anniea.Economic Parameters ' Load Forecasts (Rural &Urban)powFuelPriceProjections Transmission Planning Hydroelectric Planningoaonnms 8.Other Issues -Kevin Harper/Myron Rollins a.Black &Veatch Electric Industry Survey 9.Old Business a.Roadless Rule,Regulatory Issues b.AK/BC Discussions c.GSA Biomass Project Update -Dave Carlson 10.Next Meeting -September 14,2011 in Ketchikan (SE Conference Annual!Meeting) 11.Committee Comments a.Advisory Work Group Statement of Expectations and regional Rate Goals b.Whitman Lake Presentation 12.Adjourn outheast =-ALASKA Biles@-ENERGY AUTHORITY Advisory Workgroup Meeting Minutes 1:00 5:20 July 26,2011 Haines,Alaska Advisory Work Group Attendees: Rick Harris,Robert Venables,Paul Bryant,Steve Henson,Dan Lesh,Jodi Mitchell,Merrill Sanford,Jeremy Maxand (phone),Scott Newlun,Bob Grimm,Bill Corbus,Dick Levitt (phone), John Sandor (for Paul Southland)and Eric Wolfe,SEAPA (by phone for Dave Carlson). Other Stakeholder Attendees: Jim Strandberg,AEA;Myron Rollins,Black &Veatch;Arlin Mire,Black &Veatch (phone);Kevin Harper,Black &Veatch;Nathan Soboleff,Sealaska;Joe Poor (Haines;Stephanie Scott (Haines); Danny Gonce (Haines AP&T);Stan Selmer (Skagway),Jessie Badger (Rep.Thomas);Bill Kurz; Duff Mitchell,Juneau Hydropower (phone);Angel Drobnica,SEACC;Sean Skaling,AEA (phone); Peter Naoroz,Kootznoowoo (phone);Tom Cochran,Mayor of Skagway;and Senator Dennis Egan (by phone). 1)Call to Order,Introductions and Welcome by Haines Mayor Jan Hill Rick Harris called the meeting to order and attendees introduced themselves.Mayor Hill was not available until the public meeting later in the evening. 2) 3) Approval of Agenda -Rick Harris A motion was made,seconded,and approved for the agenda for the meeting. Public Comment a)Bill Kurz He is working on promoting the concept of bringing the Alaska Railroad to Haines.!f successful, the Railroad would need a lot of power for its operations. b)Joe Poor c) He is with the Haines Economic Development Committee.Haines and Skagway are paying twice as much for energy as some other communities in the Southeast. Tom Cochran,Mayor of Skagway Asked how to get the West Creek on the list for consideration by the IRP?The West Creek Hydro project is a priority to the community of Skagway.The project would power cruise ships to reduce pollution in Skagway.It is a9 MW project that would sell powerto Yukon Energy in the winter and the cruise ships in the summer.It would be a municipal project.They have talked with AP&T about the project and have had one meeting with Yukon Energy about the project. Jim Strandberg indicated that funds could be available through the Renewable Energy Fund. 4) d) e) f) g) h) i) The mayor indicated that they had a grant application ready to submit.The chair asked that they submit the information to AEA for inclusion in the project review by Black and Veatch. Stephanie Scott Indicated Haines was running out of hydro from time to time and burned 300,000 gallons of diesel last year.She indicated that wind may be a good alternative.She said they had Rueben Lowe helping them with wind,but need more anemometer data. Floyd Kookesh (phone) Asked why public comment was taken at the beginning of the meeting.Rick Harris replied that having public comment at the beginning of the meeting ensures that they public is heard and does not require that the public wait for long periods to provide their comment.He indicated that they would take additional comment during the remainder of the agenda as time allowed. Patricia Phillips (phone) She indicated she did not see the Pelican hydro project on the potential hydro project list.Black &Veatch indicated that the Pelican hydro project was on the comprehensive list and the screened list is still a work in progress. Ernie Christian (phone) Thanked the Advisory Work Group for considering the AK-BC transmission line again. Duff Mitchell (phone) Duff Mitchell asked if the screened list of projects was all the FERC permitted projects.Black & Veatch replied that it included the FERC permitted projects plus the projects that had undergone development work. Senator Egan (phone) Senator Egan said he appreciates the work the project is doing and likes the screened list of hydro projects.He said that at the Pennwell meeting the previous week,people were impressed that Alaska had appropriated so much to renewable energy. John Sandor John provided two handouts.The first was "Thoughts on Reversing Southeast Alaska's Declining Population”and the second was "The Past and Future of the Tongass”by Dr.Walter Soboleff”. Without objection from the committee,these documents will be posted on AEA's website for public review. Approval of Minutes from May 23,2011 Advisory Work Group Meeting -Rick Harris The minutes were contained in the packet.An amendment was offered to modify a comment made by a member of the public,"(c)Duff Mitchell stated that the SEIRP should include discussion of the California Market Price Referent (their regulated price for renewable energy)since the current price 2 is over 12 cents a kilowatt hour for contracts initiated after 2015.California just enacted legislation that would classify hydropower projects under 30 MW of power as renewable under the California Renewable Portfolio Standard”.The minutes were approved after also being amended to add Bob Grimm to the list of attendees. 5)Opening Remarks -Rick Harris/Jim Strandberg a) b) Rick Harris stressed that we are developing an action plan for all the communities in the Southeast and that we should keep ideas open.The SEIRP report will be the foundation for SE Alaska to compete for financial resources with other regions of the state. Jim Strandberg thanked everyone for coming and said that the Second Technical Conference would be held on November 8th.Black &Veatch will present the draft IRP and identify capital projects for development before the next legislative session.Jim walked through the PowerPoint in the packet summarizing the four task groups included in the contract.The tasks for Group 1 are nearly complete.The Southeast intertie plan is included in Group 2,but Jim cautioned,that price for the complete Southeast intertie plan may be such that the state can't afford it all.Task Group 3 will include evaluation of space heating alternatives.The fourth task group includes reporting.The work product will include an ordered list of the capital projects including demand-side management.The Action Plan will address the highest and best use of energy.The solution set will include coordinated action throughout the business and government sector to obtain new sources of energy and to use them in the right way. 6)Upper Lynn Canal Energy Reports -Robert Venables a) b) Community Reports -Haines &Skagway The mayor of Haines was unable to attend until the evening session.Stephanie Scott made a presentation regarding past sustainability efforts through the Haines Borough Sustainability Commission.The Commission looked at no cost,low cost,and capital cost items for energy savings in public buildings.They found that in every instance,conservation was the first choice. The Commission also addressed wind,net metering ,and biomass heating.After creating a staff guidebook,the Commission dissolved in April 2011 without the Assembly providing further policy or economic support.Stephanie will e-mail the Commission's recommendations;without objection from the committee the materials will be posted on the AEA website. Utility Report -AP&T and IPEC Bob Grimm provided a detailed history of AP&T in the Upper Lynn Canal.AP&T has not committed to their next hydro project in the region.They are looking at Connelly Lake and Schubee Lake.AP&T will start the process to make a decision on the next project ina year.He indicated that there was inequity with respect to grant funding throughout the state.Bob also indicated that the West Creek project could be used to reduce pollution from cruise ships.The existing hydro projects are in Skagway leaving Haines served via submarine cable which has reliability risks (at some point the cable will fail).He views the development risks at Schubee to be visual and at Connelly to be fish.The Connelly project has storage. The following questions ensued.Nathan Soboleff asked if AP&T had talked about West Creek with the cruise ships.AP&T has not discussed the issue with them.Mayor Cochran indicated that there was concern regarding earthquakes and submarine cable.Lake Connelly was on the Haines end and had an advantage relative to submarine cable.The question was asked about the lifetime of submarine cable.Some has lasted 50 years and others have failed quicker.Rick Harris asked the utilities who have just completed permitting of facilities to share with Black and Veatch what they believed were the major constraints to development and to offer suggestions to speed the permitting process.Jim Strandberg brought up the issue as to whether projects should be fully funded.Robert Venables indicated that with partial funding there is a risk that the project does not get built.Merrill Sanford commented that there was a need to be careful about requiring projects to have all the money necessary for completion.Rick Harris concluded that the issue by asking if the Advisory Work Group should in the final report take a position be a recommending full funding before a project can start.The funding question will remain a open item for further discussion. Jodi Mitchell outlined the utility's local status (2 separate but connected service areas at Klukwan and Chilkat Valley)and explained the needs of the IPEC communities.IPEC's 2009 Energy Plan was to be diesel independent by 2015.Jodi requested that the Advisory Work Group elevate the Hoonah Gartina Hydro Project to a higher level to assist with the FERC licensing process.The following questions and comments ensued.Dan Lesh asked if IPEC bought power from AP&T.IPEC buys about half the power in the Valley from AP&T.Scott Newlun commented that declining populations were related to the high cost of fuel.John Sandor commented that Communities should challenge ADL's population projections. 7)Energy Efficiency &DSM Update -Sean Skaling,AEA;Kevin Harper,B&V a)Sean Skaling provided a presentation by phone.Energy efficiency needs are a big and diverse effort.State has a 15 percent efficiency goal.Energy efficiency is cost effective and provides immediate resources.AEA is undertaking an end-use study that is state-wide by region,climate zone,sector,building type,and end use.The study has a designed accuracy of plus or minus 7 percent.The incremental cost of surveying additional buildings is relatively low.The study methodology will be complete by August,2011.A GIS map of energy efficiency in Alaska will be part ofthe deliverables. 8)Results of Analysis to Date -Kevin Harper/Myron Rollins a)Contract Tasks Overview Kevin Harper reviewed the Project Approach contained in the meeting packet,which documents the percent complete by task. b)Load Forecasts The reference case load forecasts are nearly complete and almost all have been reviewed with the utilities.Two other scenarios will be developed.The higher scenario will consider more robust economic development in the region and the penetration of electric vehicles.The lower scenario will include reduced loads from energy efficiency and demand-side management, impacts from developing tariffs to discourage the conversion to electric space heating,and the promotion of biomass for space heating. c)Preliminary List of Hydro Projects The preliminary list of hydro projects contained in the packet was discussed.The preliminary list is developed from a more comprehensive list and will be used to select potential projects based on the projected need for the projects based on analysis of run of river and storage needs.The selected projects will then be subject to detailed risk analysis before being placed on the list of capital projects to be provided to the legislature.The process will be somewhat iterative in nature. d)Transmission and Generation Planning The transmission planning methodology was discussed.The initial screening will be to evaluate the regional interconnection plan from the Southeast Interconnection Study as well as other potential interconnection projects.The cost of the interconnection projects will first be compared to the cost of diesel generation on a $/MWh basis with interconnection projects not passing the screening being dropped from further consideration absent significant other public benefits.The Kake and Metlakatla interties will be consider committed projects. Rick Harris stressed the need for the Advisory Work Group members to review and provide input at each step of the process,not just once the draft report is issued. 9)Regulatory Impediments -Rick Harris Significant discuss on this issue was deferred to the Wrangell meeting and some of the key players in the Roadless issue will be invited to discuss the issue. 10)Other Issues -Kevin Harper/Myron Rollins This item was deferred until the next day during the ferry ride from Haines to Juneau. 11)IRP Contract Amendments and AK-BC Evaluation Status -Jim Strandberg Jim Strandberg indicated that a contract amendment had been negotiated which covered increased effort for load forecasting,additional travel expenses,and additional time/effort by Kevin Harper. There has been a suggestion on an increase in scope to cover the AK-BC evaluation.Jim Strandberg had encouraged the ACE Coalition to come forward with a detailed business case with the intention of getting the business case on the table for a meeting between Paul Southland,Dave Carlson,Bob Grimm,and Jim Strandberg.The business case has not yet been provided.SEAPA has also not 5 received a request from the ACE Coalition for interconnection.The AK-BC study will serve as a starting point for the AK-BC evaluation for the IRP.The business case would need to address at least the following elements. e Market to be served. e Economic benefits. e Business deals and contracts. e Interconnection agreement. ©Risk analysis including risk analysis associated with the state's capital contributions. Kevin Harper indicated that studies had been done and the information in those studies indicated that the following were critical assumptions. e Cost of power. e Cost of wheeling. e What upgrades would be required on the SEAPA system and who would pay for them. ¢The allocation of costs between the new project and existing customers. The question was asked,should the AK-BC interconnection be included in the list of capital projects and is there need for additional work for the work product to be complete.Rick Harris indicated that it was a complex issue and that the Advisory Work Group would need to make an informed recommendation.Bob Grimm stated that the IRP was a 50 year study and the issue should be in the long term (25 to 30 years),when does it make sense for the Southeast to be interconnected with the lower 48?John Sander indicated that the ACE Coalition was formed 18 months ago.Mr.Sandor referenced the letter from Governor Parnell to Representative Munoz.Mr.Sandor suggested that the AK-BC project could maximize economies of scale from the project in both directions. Kevin Harper indicated that it would be easier to define what would be required for the project to make sense. e Define what the market would have to be that would be bought or sold into. ¢Define the politics in BC such that they would support buying or selling from the AK-BC interconnection. e Economies of scale dictate that there would be a need to move a lot of power and what would need to be done to beef up the SEAPA system. e How much power could be derived from Southeast. 12)Next Meeting -August 16,2011 in Wrangell 13)Committee Comments Mr.Sandor said there are potential opportunities arising from the AK-BC Intertie over the 50 year period that are not yet identifiable.Mr.Strandberg indicated that he expects Black &Veatch to evaluate whether the AK-BC interconnection should be placed on the preferred resource list within the limits of their contact.Rick Harris said that the evaluation should focus on what conditions are necessary for the AK-BC Intertie to make sense and that the IRP should create a road map and asked if everyone agreed.Bob Grimm and others agreed.John Sandor indicated that a large portion of the Canadian transmission line extension (NTL)is scheduled to be completed by 2013.Dan Lesh stressed that there are different visions with respect to the project.Scott Newlun indicated that the central issue was,should the transmission system be strengthened and would the AK-BC contribute to its strengthening.Duff Mitchell indicated that mediocre projects may become viable with a 100 percent capacity factor and the AK-BC line could open up economies of scale.He felt that it would be improper to not fundamentally consider the AK-BC Intertie.He indicated that Barrons has projected that oil will reach $150 per barrel. Patricia Phillips discussed the following projects. ®Pelican to Hoonah Intertie. ®The Sealaska Geothermal Project. e Haines Gateway Gas Line She will send her notes on these projects for inclusion in the record. 14)Adjourn The meeting adjourned at 5:20 p.m.Discussions resumed the next day on the ferry from Haines to Juneau.The following are the highlights of those discussions. a)Discussion continued on the AK-BC interconnection.Jim Strandberg wants to meet with Paul Southland,Dave Carlson,and Bob Grimm.The IRP is a 50 year plan that is a tool for policy makers and the AK-BC decision is a policy decision. b)Bill Corbus expressed concern that the AK-BC will suck off funds needed to provide electric service to the rest of the state. c)John Sandor indicated that the AK-BC interconnection was approved by 9-1-1 vote during the seed cluster for the Juneau Economic Development Council.SEACC was the dissenting vote. d)Rick Harris indicated that the discussion on the Roadless issue would be deferred to the next meeting.Dan Lesh suggested that Tom Waldo from Earth Justice be invited to speak.Rick Harris agreed. e)Jim Strandberg stressed that there would be emphasis in the IRP between the rural and urban areas and asked Robert Venables to conduct structured interviews. f)Bob Grimm presented the following thoughts: ©He didn't know of any projects that would be served by the AK-BC interconnection that would ask for state funds. e Federal level policy encourages interconnection Presidential Permit Authorization to export Federal level policy encourages interconnection Would like to know where Alaska stood relative to national policy Hydro provides national benefits by displacing coal.00000g)Rick Harris indicated that the IRP would tee up policy discussions. h)Kevin Harper indicated the following. e The IRP is not a policy document.It is an objective document from which policy can be set. e The IRP can include discussions about types of policy,but does not recommend policy. ¢The IRP is a directional document. e The IRP is not a document from which actual projects can be built. e The IRP is agnostic with respect to project ownership. e CO2 costs are included. e ©The IRP will report emissions. e The IRP will assess the following types of risks for generic resource types,as well as for individual project: o Developmental. o Operational. o Reliability. i)Bob Grimm will provide input on a retail rate goal at Jim Strandberg's request. j)Myron Rollins will e-mail request for commercial operation dates for committed projects to Jim Strandberg to get official direction from AEA. k)Rick Harris indicated that the IRP needs to emphasize DSM/energy efficiency. RegulatoryCommissionofAlaska701WestEighthAvenue,Suite300Anchorage,Alaska99501(907)276-6222;TTY(907)276-4533STATE OF ALASKA THE REGULATORY COMMISSION OF ALASKA Before Commissioners:Robert M.Pickett,Chairman Kate Giard Paul F.Lisankie T.W.Patch Janis W.Wilson U-11-69IntheMatteroftheSettingofaBaseAmountfor)Power Cost Equalization Calculations for FY2012 )ORDER NO.1 ) ORDER ISSUING NOTICE OF PROPOSED BASE AMOUNT FOR POWER COST EQUALIZATION CALCULATIONS,ESTABLISHINGHEARINGANDFILINGSCHEDULE,ADDRESSING STATUTORYTIMELINE,DESIGNATING COMMISSION PANEL,AND APPOINTING ADMINISTRATIVE LAW JUDGE BY THE COMMISSION: The purpose of this order is to notify electric utilities and the public of a proposed new base amount,13.42 cents per kilowatt-hour (¢/kWh),for power cost equalization (PCE)calculations in accordance with the provisions 3 AAC 52.610(b)-(c) and AS 42.45.110(c)(2),to establish deadlines for written comments on that calculation and to schedule a public hearing for taking oral comments.Attached to this order are two appendices.Appendix A,incorporated herein,is a calculation showing the weighted average retail residential rate in Anchorage,Fairbanks,and Juneau to be $0.1342/kWh,or 13.42¢/kWh.Appendix B,incorporated herein,is a comparison of the current Fiscal Year (FY)2011 and the proposed FY2012 PCE Base Rate Amount Calculation. Comments on the calculation of the base amount must be submitted to us by June 27,2011.Commenters should reference Docket U-11-069 when submitting comments.Given the generic nature of this proceeding,interested persons submitting U-11-69(1)-(06/07/2011) Page 1 of 4 RegulatoryCommissionofAlaska701WestEighthAvenue,Suite300Anchorage,Alaska99501(907)276-6222;TTY(907)276-4533comments are not required to serve their comments on the other entities listed on the service list of this order unless they elect to do so. Written comments may be submitted through our website at http://rca.alaska.gov/RCAWeb/WhatsNew/PublicNoticesComments.aspx,under Docket U-11-069.Copies of comments may be obtained at the same website or by contacting the commission at (907)276-6222. A public hearing to receive oral comments on the proposed base amount of 13.42¢/kWh is scheduled to convene at 1:30 p.m.,June 28,2011.Persons wishing to present oral comment at that hearing are requested to notify us in writing of that intent by June 27,2011;however,such notification is not mandatory.' Decision Timeline We are required by 3 AAC 52.610(c)to issue an order establishing the base amount no later than sixty days after notice of the proposed base amount is issued.”Therefore,we will issue an order by August 6,2011.° Commission Panel The chairman designates Commissioners Kate Giard,Paul F.Lisankie, T.W.Patch,and Janis W.Wilson and himself as the commission panel4 and further designates himself as the commission docket manager. 'Notice of participation must indicate whether a participant will be appearing in person or telephonically and may be filed by mail or by electronic mail to Sharon Kim at sharon.kim@alaska.gov. 2Notice of Proposed Revision to Power Cost Equalization Base Amount,dated June 7,2011. The timeline,August 6,2011,falls on a Saturday.Therefore,we will issue our final decision in this proceeding by Friday,August 5,2011. 'Under AS 42.04.080(a),the chairman designates a commission panel to hear, or,if a hearing is not required,to otherwise consider and decide docketed matters. U-11-69(1)-(06/07/2011) Page 2 of 4 701WestEighthAvenue,Suite300Anchorage,Alaska99501(907)276-6222;TTY(907)276-4533RegulatoryCommissionofAlaskaAdministrative Law Judge Under AS 42.04.070(b),the chairman appoints Administrative Law Judge John P.Wood to facilitate conduct of the docket.The administrative law judge will issue procedural orders in this docket including discovery orders,unless the commission docket manager determines that a particular procedural order should be issued by the commission panel.°Orders issued by the administrative law judge will be considered orders of the commission for purposes of petitions for reconsideration under AS 42.05.171.° ORDER THE COMMISSION FURTHER ORDERS: 1.By 4 p.m.,June 27,2011,interested persons may file written comments on,or suggested revisions to,the proposed base amount of 13.42 cents per kilowatt-hour. *The commission docket manager,after consultation with other members of the panel,may delegate to the administrative law judge whatever authority to issue procedural orders he or she considers necessary or advisable in this docket. SAS 42.05.171 states,in pertinent part: A party may file a petition for reconsideration of,or an administrative appealof,a decision by a hearing examiner,an arbitrator,a mediator,or anadministrativelawjudgethathasbeenapprovedbythecommission,or a decision of a hearing panel. U-11-69(1)-(06/07/2011) Page 3 of 4 701WestEighthAvenue,Suite300Anchorage,Alaska99501(907)276-6222;TTY(907)276-4533RegulatoryCommissionofAlaska2.A public hearing'shall convene at 1:30 p.m.,June 28,2011,in the East Hearing Room of the Regulatory Commission of Alaska,701 West Eighth Avenue, Suite 300,Anchorage,Alaska,for the purpose of taking public comment on the proposed base amount of 13.42 cents per kilowatt-hour for power cost equalization calculations for FY2012. 3.By 4 p.m.,June 27,2011,any person intending to present oral comments at the hearing scheduled herein is requested to file a written notice of such intent with the commission. 4.The commission panel shall consist of Commissioners Kate Giard, Paul F.Lisankie,Robert M.Pickett,T.W.Patch,and Janis W.Wilson. 5.Commissioner Robert M.Pickett is designated as the commission docket manager. 6.John P.Wood is appointed as administrative law judge in this docket. DATED AND EFFECTIVE at Anchorage,Alaska,this 7th day of June,2011. BY DIRECTION OF THE COMMISSION "If you are a person with a disability who may need a special accommodation, auxiliary aid or service,or alternative communication format to participate in the scheduled event,please contact Joyce McGowan at 1-907-276-6222,toll free at 1-800-390-2782,or TTY at 1-907-276-4533,or send your request by electronic mail to rca.mail@alaska.gov at least three business days before the scheduled event to make the necessary arrangements. Any party wishing to appear telephonically at the scheduled event must advise us in advance and provide a telephone number where it may be reached for that appearance. U-11-69(1)-(06/07/2011) Page 4 of 4 APPENDIX A FY2012 Power Cost Equalization Base Rate Calculation TOTAL RESIDENTIAL SALES Total Residential Sales Kilowatt-hour (kWh)($)($/kWh) AEL&P 131,097,000 14,020,383 $0.1069 Chugach 545,123,000 72,355,957 $0.1327 GVEA 303,642,000 62,136,412 $0.2046 MEA 436,707,000 60,689,988 $0.1390 ML&P 143,473,000 18,576,036 $0.1295 Sources:Utilities 2010 Annual Reports to Commission-FERC Form No.'RERKERERHEEK REKKEEKHREKEAAREAERREERK ERIEREKREEEEREREEKR EUREREEEEEKE KKK EREKKKEEKEKEK REREKKENEKKK RESIDENTIAL SALES WITHIN FAIRBANKS,ANCHORAGE,&JUNEAU (%Total Residential Weighted(kWh)($)_($/kWh)kWh)Average AEL&P 131,097,000 14,020,383 $0.1069 13.264%$0.0142 Chugach 537,763,840 71,379,152 $0.1327 54.410%$0.0722 GVEA 63,315,430 12,956,685 $0.2046 6.406%$0.0131 MEA 112,714,077 15,664,086 $0.1390 11.404%$0.0158 ML&P 143,473,000 18,576,036 $0.1295 14.516%$0.0188 Total 988,363,346 132,596,341 100.000%13 0.1342 S/kWh | Percentage of Residential Sales Within Anchorage,Fairbanks,or Juneau UTILITY %CITY AEL&P 100.000%Juneau Chugach*98.650%Anchorage GVEA*™*20.852%Fairbanks MEA***25.810%Anchorage ML&P 100.000%Anchorage *Chugach estimates 98.65%of its residential sales are within Municipality of Anchorage. **GVEA KVUH sales are allocated based on GVEA estimate of services within Fairbanks city limits (20.852%). ***MEA KWH sales are allocated to Municipality of Anchorage based on gross revenues tax report (25.81%). AEL&P is Alaska Electric Light and Power Company Chugach is Chugach Electric Association,Inc. GVEA is Golden Valley Electric Association,Inc. MEA is Matanuska Electric Association,Inc. ML&P is Municipal Light &Power Department,Municipality of Anchorage d/b/a U-11-69(1) Appendix A Page 1 of1 APPENDIX B Comparison of FY2011 and FY2012 PCE Base Rate Calculations CURRENT FY 2011 PCE BASE AMOUNT CALCULATION Total Total Revue tial %Total Weighted Utility Residential Residential Sales Residential |Average per = Sales (kWh)Sales ($)($/kWh)(kWh)kWh AEL&P 130,203,000]$14,829,357 |$0.1139 13.00%]$0.0148 Chugach 545,670,860 |$81,459,319}$0.1493 54.50%]$0.0814 GVEA 64,452,127 1$11,573,109]$0.1796 6.44%1 S$0.0116 MEA 113,226,147 |$18,244,096}$0.1611 11.31%}$0.0182 ML&P 147,643,000 |$17,973,827 |$0.1217 14.75%]$0.0180 Total 1,001,195,134]$144,079,708 100.00%}$0.1439 PROPOSED FY 2012 PCE BASE AMOUNT CALCULATION Total Total Total |»%Total |Weighted Utility Residential Residential oni Residential |Average perSales(kWh)Sales ($)($1kWh)(kWh)kWh AEL&P 131,097,000]$14,020,383 |$0.1069 13.00%]$0.0142 Chugach 537,763,840 |$71,379,152]$0.1327 54.50%]$0.0722 GVEA 63,315,430 13 12,956,685 |$0.2046 6.44%,$0.0131 MEA 112,714,077 |]$15,664,086 |}$0.1390 11.31%]$0.0158 ML&P 143,473,000 |$18,576,036 |$0.1295 14.75%]$0.0188 Total 988,363,346]$132,596,341 100.00%]$0.1342 U-11-69(1)APPENDIXBPage1of1 iy atl Southeast Alaska Integrated Resource Plan Fifth SE IRP Advisory Work Group Meeting August 16,2011 11a.m.--4:30 p.m. James &Elsie Nolan Center Wrangell,Alaska Dial:1-800-315-6338 Code:3069#. Draft Agenda* 1.Call to Order,introductions and Welcome by Mayor Jeremy Maxand 2.Approval of Agenda -Rick Harris 3.Public Comment 4.Approval of Minutes from July 26,2011 Advisory Work Group Meeting -Rick Harris 5.Opening Remarks -Rick Harris/Jim Strandberg6.Wrangell Light &Power Community Report -Steve Henson 7.Results of Analysis to Date -Kevin Harper/Myron Rollins _ a.Economic Parameters Load Forecasts (Rural &Urban) Fuel Price Projections . Transmission Planning "Hydroelectric Planningpans 8.Other Issues -Kevin Harper/Myron Rollins a.Black &Veatch Electric Industry Survey 9.Old Business a.Roadless Rule,Regulatory Issues b.AK/BC Discussions c.GSA Biomass Project Update -Dave Carlson 10.Next Meeting -September 14,2011 in Ketchikan (SE Conference Annual Meeting) 11.Committee Comments a.Advisory Work Group Statement of Expectations and Rate Goals b.Whitman Lake Presentation 12.Adjourn .outheast=ALASKA Regence >ENERGY AUTHORITY Ete [i Resolution No.2011-01 A#¢viery,WerteAdvisoryWorkGroupfortheSoutheastAlaskaIntegratedResourcePlan/ Whereas:The Alaska Energy Authority is conducting a Southeast IntegratedResourcePlanasdirectedbythe26"Alaska State Legislature. Whereas:The Southeast Integrated Resource Plan will not be completed until January 2012. Whereas:Many citizens and businesses in the Southeast are suffering severe economic impact from the high cost of oil contributing to very high electricity and space heating costs. Whereas:The following list of projects will help alleviate the impacts of the high cost of oil on citizens and businesses in the Southeast. Whereas:The following list of projects have been under development for many years,have completed or nearly completed exhaustive FERC licensing or similar process, and have broad public support. NOW THEREFORE BE IT RESOLVED THAT The Advisory Work Group for the Southeast Alaska Integrated Resource Plan unanimously requests that AEA accelerate consideration of the below listed projects and that they not be delayed as AEA conducts the SE Integrated Resource Plan project. NOW THEREFORE BE IT FURTHER RESOLVED THAT The Advisory Work Group for the Southeast Alaska Integrated Resource Plan unanimously requeststhatthe27"Alaska State Legislature provide funding for the continued development of the following projects in alphabetical order to provide relief to the citizens and businesses in Southeast Alaska from the high cost of electricity and space heating. e Blue Lake Hydro e Kake to Petersburg Intertie ©Metlakatla to Ketchikan Intertie e Reynolds Creek Hydro e Thayer Creek Hydro e itman Lake HydroaLoé.A Date:Visecd2.1 aolR&IHarris,Executive Vice President,Sealaska CorporationChairman,Southeast Alaska Integrated Resource Plan Advisory Work Group LY\4,Preliminary List of Hydropower projects for Southeast Alaska yo.ee ae a Capital Cost.|>.on ae _FERC Annual 7 ; Project name Category 'Rank ©|Capacity Head Flow .|Storage Units $M *_Location Owner License Energy'Jan Feb Mar Apr May Jun Jul Blue Lake F Expansion Storage 18.3 425 -3 39.00)Sitka City of Sitka 2230 34,500)3,780 3,326 3,571 3,038 3,038 2,760;2,50 Reynolds Creek {Storage 5 730 90)600 1 22.75]Prince of Wales Halda Corporation 11480 15,100 1,013 924 1,013 981 2,008 1,944)1,01: Kootznoowoo Thayer Creek Run-of-river 1 250 -2 0.00]Angoon Corporation -8,500 Whitman Lake |Storage 4.6 180.2 19.40]Ketchikan Ketchikan Public Utilities [11841 16,000] Ketchikan Electric Mahoney Lake {Storage 3 9.6 1,730)8 3,760 1 37.10]Ketchikan Company 11393 41,700,3,175 1,749 1,311 1,907 3,956 3,647,3,652 Cascade Creek |Storage 4 70 1,471 669 3,474 3 188.50)Petersburg Cascade Creek,LLC P12495 204,600 Connelly Lake {Storage 4 13.7 2,140 90 7,000 2 62.00]Haines AP&aT 48,100!2,303 2,093 1,719 1,107 3,420)6,577 7,13 Gartina Falls Run-of-river 4 0.445 58 110 -1 5.80|Hoonah IPEC P14066 1,770 115 103 110 174 242 164)EG Indian River Run-of-river 14 0.25 -1 0.00|Tenakee Springs City of Tenakee Springs 916 Ruth Lake Storage .4 20)17,000 3 66.00}Petersburg City of Angoon P13366 70,000) Scenery Creek |Storage '4 30 :2 92.00|Petersburg City of Angoon P13365 130,000 Soule River Storage 4 78.4 500 2,000]91,200 3 0.00}Hyder AP&T P13528 281,300}14,554 5,621 5,721 5,273 9,502}41,804 58,874 Sweetheart Lake|Storage 4 30)600 800 93,500 2 0.00/Juneau Juneau Hydropower P13563 136,000 Takatz Lake Storage 4 27.7 1,000 385 82,000 2 146.30)|Sitka City of Sitka P13234 106,900]10,390 9,086 10,113 8,980 7,804 7,480)8,232 Walker Lake Run-of-river 4 1 750 20 :1 7.60]Haines 2,750 Water Supply Creek Run-of-river 4 0.4 369 15 -1 6.50]Hoonah (PEC :1,480 78 69 72,133 202 124 4€ Anita -Kunk Lake Storage S 8 -0.00|Wrangell 28,200 Game Creek Storage 5 -0.00|Hoonah indian River Run-of-river 5 0.1 :1 0.00)Sitka Lace-Lake 3160 |Storage 5 4.995 19,710;2 0.00/}Juneau Green Power,LLC P13599 40,100) Lake Connell Storage 5 1.9 :0.00|Ketchikan 11,640 Lake Dorothy Alaska Electric Light & Expansion Storage 5 28 2,200 225 50,000)2 0.00/Juneau Power 96,000)8,000 8,000 8,000 8,000 8,000 8,000 8,00C lake Shelokum |Storage 5 10 350 210 10,000 2 0.00|Wrangell AP&T P13282 40,000) Schubeetake [Storage S :0.00 Haines AP&T Sunrise Lake Storage 5 4 :0.00;Wrangell 12,200 Swan Lake Expansion -Lake Grace Diversion {Storage 5 :+0.00!Ketchikan 72,200 Thoms Lake Storage 5 7.3 +0.00}Wrangell 25,600 Triangle Lake Storage 5 4 380 150 :1 13.80)Metlakatla Metlakatla Light &Power!}-17,324 Tyee New Dam Construction Storage $14 -0.00]Wrangell 9,100 Tyee New Third Turbine Storage s 10 -0.00|Wrangell 0 -- Virginia Lake Storage 5 12 -0.00]Wrangell 42,700) B/to [1 belt Adurserg,Work Pirenrp James Strandberg From:Bob Grimm <bob.g@aptalaska.com> Sent:Monday,August 08,2011 7:02 AM To:James Strandberg Ce:Rollins,Myron;'Rick Harris' Subject:Goal for Retail Rates for Electric Power for SE Alaska Attachments:u11069 1 PCE base 2011 (3)(2).pdf Jim: Thank you for giving me the opportunity or task of developing a goal of what is the appropriate level of retail rates in SE Alaska.As you know,there is a great disparity in the retail rates in SE Alaska and the rest of Alaska.One reason in SE Alaska is that many of the more populated areas have received the support of public dollars and these dollars were used to develop energy infrastructure that assisted those communities in keeping rates affordable.The inverse is also true in SE Alaska where many of the smaller communities did not benefit from,at least to the same extent,from public dollars invested in energy infrastructure.The end result of this disparity is a large difference in the level of retail rates for electric power between the more populated areas and the less populated areas.They are other reasons for this disparity in retail rates such as economies of scale and the timeframe of energy infrastructure development but the largest reason is the investment of public dollars primarily to build hydropower facilities and transmission lines.Because of this disparity many smaller communities remain dependent upon fossil fuels (Diesel Fuel)to generate electric power to meet the needs and have retail rates much higher than larger communities.This is true not only in SE Alaska but also in the rest of the State as well. |believe the purpose of developing a goal of this type is to factually recognize the disparity in retail rates and use a appropriate goal to direct public dollars,legislation and other assistance to the smaller communities in an attempt to reduce the disparity in retail rates.To the extent this goal,of equalizing retail rates,is achieved it should allow the economic activity in SE Alaska to spread to the smaller communities by eliminating the disparity of electric power costs to business and industry.By expanding the geographic horizon of location choice based upon affordable energy and reducing smaller communities dependence upon diesel it is hoped that the steady population decline in the smaller communities can mitigated by appropriate public policy. With all of this said what is an appropriate goal to correct this social injustice?It did not take long to see that since this disparity exists throughout all of Alaska it has been recognized and steps have been taken to work towards a solution.AS 42.45.100 established the Power Cost Equalization (PCE)and Rural Electric Capitalization Funds with the purpose of equalizing the retail rates for electric power statewide at a cost close to or equal to the mean retail cost in Anchorage, Fairbanks and Juneau.The PCE program is very worthwhile and benefits many residents in rural Alaska.Unfortunately the direct payment portion of this program only benefits residential and municipal customers and does not benefit business and industry that create the jobs we badly need in SE Alaska thus perpetuating the economic advantages enjoyed by the larger communities. However,the program does contain a goal that |believe is appropriate for consideration in conjunction with SEIRP.The legislation that created a mechanism to calculate on an annual basis by the Regulatory Commission of Alaska (RCA)the weighted average retail rates for the Greater Anchorage,Fairbanks and Juneau.The RCA develops the calculation, provides notice of the annual calculation and adjudicates via public hearing if necessary.Thus we already have a mechanism that is updated on a annual basis subject to due process which seems appropriate for this type of goal.On June 29,2011 the RCA issued its Order No.2 in Docket U-11-69 establishing the equalization retail rates as $.1342 per Kilowatt-hour as of July 1,2011.The Order and appendices are attached. Bob Grimm,CEO Alaska Power &Telephone Company P.O.Box 3222 193 Otto Street Port Townsend,WA 98368 800-982-0136 x120 Office 360-385-1733 x120 Office 360-301-3636 cell James Strandberg From:John Sandor <jsandor@ak.net> Sent:Friday,August 12,2011 2:46 PM To:James Strandberg;SEC Energy;Rick.Harris@sealaska.com Cc:John Sandor;Duff Mitchell;ACE Ernie Christian;Paul Southland;Rhonda Dawson;Rep. Cathy Munoz;Senator Dennis Egan;Peter Naoroz;bobloescher@gci.net Subject:Fw:BC electrification environmental and business case documents Rick,Jim and Robert -During our Energy Conference last month in Haines and on the Marine Highway Ferry back to Juneau we discussed the economic and environmental analyses that the Canadian National and BC Provincial governments conducted (with BC First Nation involvement and approval)-to plan,evaluate,fund and approve construction of the electrified Highway #37 Northern Transmission line to central British Columbia.You indicated an interest in these Canadian economic and environmental analyses. Duff Mitchell has located and cited the BC electrification environmental and business case documents -in the e-mail below. During your follow-up meeting in Wrangell next week,it would be worthwhile discussing these analyses and consider what recommendations would be helpful to the Governor and SE Alaska legislators as they consider options for developing more affordable energy for Southeast Alaska communities and an inter-tie to British Columbia and the North American Grid. Developing more affordable energy in Southeast Alaska and linking Southeast Alaska with Canada will also be beneficial in reversing the Department of Labor/s December 2010 projections of a 14 %population decline in Southeast Alaska from 2009 to 2034.This will also be helpful as all of us address the Social Justice issues covered in Dr.Walter Soboleff'sApril2008JuneauEmpireMyTurnEssay-"The Past and Future of the Tongass". Although |will not be able to attend next week's meeting in Wrangell,several Alaska-Canada Energy Coalition Board members will be participating and I will try to link into the conference by telephone. Thanks again for the excellent meeting in Haines. John Sandor o----Original Message ----- From:Duff Mitchell To:John Sandor Sent:Thursday,July 28,2011 10:32 AM Subject:BC electrification environmental and business case documents Highway 37 business reports http://www.highway37.com/s/Reports.asp Highway 37 news articles http://www.highway37.com/s/NewsArticles.asp MABC's independent analysis of the electrification benefits: http://www.highway37.com/i/pdf/MABCReport Electrification of Highway _37.pdf NW powerline in BC worth $15 billion id http://www.sqwalk.com/bc2008/001358.html Environmental study and approval documents http://www.ceaa-acee.gc.ca/050/details-eng.cfm?evaluation=51726 Duff W.Mitchell Office Phone 907-789-2775 Cell Phone 907-723-2481 The information in this email (and any attachments hereto)is confidential.If you are not the intended recipient, you must not use or disseminate the information.If you have received this email in error,please immediately notify me by "Reply"command and permanently delete the original and any copies or printouts thereof. AK-BC Transmission Line Outline of Narrative for SE Alaska IRP Report Scope of Assessment e As part of the SEIRP scope of work,Black &Veatch was tasked to develop a new region-wide transmission plan for interconnecting SE Alaska communities.e The feasibility of constructing an export intertie was to be considered as part of this planning. e To complete this assessment of the AK-BC Intertie,Black &Veatch reviewed previous studies and considered additional information related to the Intertie that was provided during the course ofthe project. Review of Previous Studies e The most comprehensive assessment of the AK-BC Intertie was completed by Hatch Acres in 2007 and the results of this study are provided in the final report,titled "AK-BC Intertie Feasibility Study SE Alaska”(Hatch Acres Study).In the Executive Summary of this report,Hatch Acres identified the following issues that were the primary focus of the study: oO If the State of Alaska provides funds to construct new transmission segments in SE Alaska,will development of the segments provide the incentive for the private sector to invest in new generation,including associated infrastructure to connect with the transmission grid? o Will the new generation projects'use of the State-funded transmission,including the proposed AK-BC Intertie,result in revenues sufficient to cover O&M costs to maintain the new transmission systems over the long term? ©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. oO 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. e The primary conclusions of this study included: ©Completion of the Swan-Tyee Intertie (ST!)and development of proposed transmission lines to interconnect submarkets,and a future interconnection with British Columbia (BC),will encourage new economic development in currently isolated load centers and improve the quality of life for residents currently encumbered with high cost energy from diesel generation. BLACK &VEATCH August 11,2001 Draft ,Building a world of difference: ©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 Pacific Northwest (PNW). o Successful licensing of proposed projects at Thomas Bay in combination with other proposed new projects could provide power for export under certain development scenarios.This may require State support through power marketing oversight. oO Power demands in BC and the 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. oO Principle markets for SE Alaska hydro to meet load growth,include BC Hydro and/or Powerex (the wholesale marketing arm of BC Hydro),and PNW investor owned and/or publicly owned utilities. ©Proposed transmission interconnections necessary to export SE Alaska hydropower to BC and or the PNW,include the AK-BC Intertie System and British Columbia Transmission Corporation (BCTC,now part of BC Hydro)Backbone Extension. o 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. o If generating costs exceed $60/MWh,competitiveness depends on GHG restrictions increasing future BC and or PNW market prices. o State involvement would enhance the potential that new projects could produce power for 50 years substantially increasing marketability. o There are no "fatal flaws”regarding development of proposed AK-BC Intertie to the border with Canada.However,further consultations with BC are required regarding the line segment from the border to the nearest point of interconnection with the BCTC (now BC Hydro)system. ©The potential cost of power is dependent on operating restrictions that may be imposed in any future issued FERC license terms and conditions.No "fatal flaws”were identified with regard to the probability of FERC issuing licenses. o Regulatory issues requiring further investigation include determination of whether power export is determined to be "interstate commerce”involving FERC regulation. o The development of the AK-BC Intertie to export surplus power for sale in BC and or 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 (now BC Hydro)would construct adequate capacity to transmit power to the BC and PNW markets. BLACK &VEATCH August 11 2001 Draft ;.Building aworld of difference: ©ff 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. Results of Current Assessment e Black &Veatch conducted a high-level screening assessment of the AK-BC Intertie based upon information available at the time of this study,including the results of previous studies for both exporting and importing scenarios. e For the export scenario,the screening was based upon California wholesale power market prices and the results are shown in the table below. Price ($/MWh)Sources and Notes California Wholesale Market Price $105 California Public Utilities Commission, 2009 Market Price Referent Values for 2009 Renewables Portfolio Standard Solicitations,assuming a 25-year power purchase contract. Wheeling Cost From AK-BC Intertie Terminus to PNW $10 Hatch Acre Study. Wheeling costs to California would be somewhat higher. Annual AK-BC Intertie Costs $58 Black &Veatch analysis.includes annualized capital-related costs (using 30- year fixed charge rate),equal to $49.9/MWh,and annual O&M costs,equal to $8.2/MWh). Hatch Acres did not include annualized capital-related costs in its analysis because it assumed that the State would provide a grant to cover all capital costs. Net Back Price $37 It should be noted that the above analysis does not include:1)any costs associated with the interconnection of hydroelectric projects to the AK-BC Intertie,2)the costs associated with any required SEAPA system improvements,or 3)any costs related to the Canadian transmission segment between the Canadian border and BC Hydro's transmission system,some of which may need to borne by the AK-BC Intertie developer. August 11,2001 Draft Fs BLACK &VEATCHPads,Building a world of difference: It should also be noted that all of the candidate hydroelectric projects considered in the Hatch Acres Study had generation costs higher than $37/MWh,with the lowest cost project (Whitman Lake)estimated at $55/MWh (in 2007 dollars). Based on these screening results,the export scenario for the AK-BC Intertie will not considered further in the detailed Strategist™modeling. e For the import scenario,the screening was based upon the power purchase cost and transmission-related costs associated with buying power in the PNW and moving that power to the AK-BC Intertie terminus with the SEAPA system (PNW purchase power cost,plus annual AK- BC Intertie costs plus wheeling charges from the PNW to the AK-BC Intertie),relative to the cost of potential SE Alaska hydroelectric generation.The following table shows the calculation of the estimated cost of power from the PNW delivered to the SEAPA transmission system. Price ($/MWh)Sources and Notes Delivered PNW Market Price $70 Hatch Acres Study. Wheeling Cost From PNW to $10 Hatch Acre Study. AK-BC Intertie Terminus Annual AK-BC Intertie Costs $58 See above. Price of Power Delivered to $138 the SEAPA System It should be noted that the above analysis does not include:1)any costs related to the Canadian transmission segment between the Canadian border and BC Hydro's transmission system,some of which may need to borne by the AK-BC Intertie developer,2)the costs associated with any required SEAPA transmission system improvements,or 3)the costs associated with additional transmission segments that would need to be constructed to move power from the SEAPA system to a local load center.Additionally,this screening analysis does not include consideration of the transmission-related reliability issues associated with the AK-BC Intertie. Based on the Hatch Acres Study,there are several potential local hydroelectric generation facilities (e.g.,Mahoney Lake,Scenery Lake,Delta Creek [Ruth Lake],Cascade Creek to name a few)with estimated generation costs below $138/MWh.Black &Veatch is currently reviewing the generation costs of potential SE Alaska hydroelectric facilities but we believe that the Hatch Acre Study estimates are adequate for this screening analysis. Based on these screening results,the import scenario for the AK-BC Intertie will not considered further in the detailed Strategist™modeling unless one of the potential transmission segments 4 BLACK&VEATCHAugust11,2001 Draft ,Building a world of difference: connecting a load center to the SEAPA transmission system passes the economic screening that Black &Veatch is applying to all potential SE Alaska transmission segments (based on 70%of local diesel generation costs).Even in this situation,Black &Veatch believes that it is unlikely that the AK-BC Intertie will be selected as a preferred resource because the total delivered price of PNW power to a local load center (PNW purchase power cost,plus wheeling charges,plus AK- BC Intertie costs,plus transmission interconnection cost from SEAPA to the load center)would need to be lower than the cost of local hydroelectric generation delivered to the load center (local hydroelectric generation cost,plus transmission interconnection cost to the local load center,either from the SEAPA system or a shorter distance depending upon the location of the local hydroelectric facility).Furthermore,as noted above,the costs associated with any required improvements,if any,to the SEAPA system (either to move power from the PNW or from a local hydroelectric facility that requires use of the SEAPA system to move power to the load center)has not been included in this screening analysis and it is likely that the SEAPA system-related improvements related to the AK-BC Intertie would be equal to or greater than any required improvements related to a SE Alaska hydroelectric facility. Future Consideration August 11,2001 Draft Given the 50-year time horizon of the SE Alaska IRP,it is appropriate to ask the question whether the AK-BC Intertie might become a preferred resource option during this period,should conditions change. Given the volatility that exists related to North American power market dynamics and other factors that affect the economic viability of the AK-BC Intertie,it is impossible to conclude with absolute certainty that the AK-BC Intertie would not,under any set of conditions,become a viable project. Therefore,it is appropriate to consider the various set of conditions under which the AK-BC Intertie might become economical.The following is a list of such conditions: o Clear definition of whether the primary purpose of the AK-BC Intertie is to export or import power.Note:based upon the information available,it is expected that the primary purpose would be the export of power. oO Prices in potential export markets in North America (principally BC,PNW and or the Southwestern region of the U.S.)increase significantly due to capacity and energy shortages,continued increases in applicable renewable portfolio standards and or increased environmental regulations that cause existing generation facilities to be retired or prohibit planned facilities from being built. o State energy policy decisions lead to the consideration of the Intertie as a "public good” investment,whereby justification of the project is made on public good grounds,as opposed to fundamental economics. BLACK &VEATCH ,Building a world of difference: Required Actions A detailed business plan needs to be developed in order for the AK-BC Intertie to be considered a viable project in the future.In order to develop this business plan in sufficient detail to justify public or attract private financing,the following actions are required: e Technical Studies The following studies need to be completed to address important technical issues: °Detailed engineering studies of potential development alternatives for the AK-BC Intertie,including:1)detailed transmission system load flow and stability analyses; 2)detailed capital and operating cost estimates;and 3)a more defined route option selection assessment. Detailed engineering studies of a defined set of potentially viable hydro projects in SE Alaska,and related transmission interconnections to the SEAPA transmission system, including:1)detailed capital and operating cost estimates for the hydroelectric facilities; and 2)detailed interconnection-related capital and operating costs. Detailed engineering studies to identify the improvements that will need to be made to the existing SEAPA transmission system to move AK-BC Intertie-related power throughout the interconnected region of SE Alaska,including:1)detailed transmission system load flow and stability analyses;2)detailed capital and operating cost estimates; and 3)associated cost allocation protocols (note:FERC has established procedures for the allocation of capital and operating costs incurred to improve existing transmission systems as a result of the impact of other projects that impact the existing transmission system;subject to a more definitive legal opinion,these FERC cost allocation procedures should be assumed to apply here). e Market Assessment The following should be completed to address market issues: ° August 11,2001 Draft Detailed electric market price projections for all areas where power may be sold (or bought)over a sufficiently long enough period (at least 30 years). Alternative scenarios need to be considered given the likely variability of electric market prices over this extended period of time. Clear understanding on evolving Canadian policies regarding the import of power. Detailed assessment of the available capacity on all transmission lines from the AK-BC Intertie connection point in Canada to the ultimate market(s)for the sale (or purchase) of power,and associated transmission wheeling costs. Clear understanding of which states consider hydroelectric power to be "renewable” under the provisions of their renewable portfolio standards,where applicable (e.g.,the State of Washington does not include hydroelectric power as a renewable resource). BLACK &VEATCH ,Building a world of difference: e)Understanding of standard power purchase agreement terms and conditions as they will largely determine the terms and conditions under which power will be sold (or bought) over the Intertie. e Risk Assessment A thorough project risk assessment needs to be completed to evaluate potential risks,identify any "fatal flaws,”and include a risk mitigation or avoidance plan (with associated capital and operating costs).This risk assessment needs to consider,at a minimum,the following risks: le)Transmission reliability risks given the lack of redundant transmission lines (this directly impacts whether the power moved over the AK-BC Intertie could be sold or bought as firm power or would have to be considered non-firm). Resource potential risks associated with related hydroelectric facilities,including the total energy and capacity that could be economically developed for each resource option. Impact of potential developments regarding the Roadless Rule in terms ofthe ability to construct the AK-BC Intertie and related hydroelectric plants. Variability of electric market conditions and prices and the resulting impact on the underlying economics of the Intertie and associated hydroelectric projects. Project development and operational risks associated with the development of the Intertie and related hydroelectric facilities,including regulatory and permitting issues, the potential for construction costs overruns,actual operational performance relative to planned performance,and so forth.This also includes non-completion risks once a project gets started,the risk that adverse operating conditions will severely damage the facilities resulting ina shorter useful life than expected,and project delay risks. The risks of environmental-related operational concerns and the potential for future changes in environmental regulations. The risk that the Intertie and hydroelectric facility developers will not be able to obtain the required financing under reasonable and affordable terms and conditions. The risk that regulatory and legislative issues could affect the economic feasibility of specific resource options. e Organizational Assessment A number of organizational issues need to be considered,including: [e) August 11,2001 Draft Scope of responsibilities (e.g.,independent operation of the Intertie,regional planning, and project development). Formation issues,such as legal structure (e.g.,public or private),location,transfer of existing assets (if any),and so forth. BLACK&VEATCH,Building a world of difference: ©Operational issues,such as O&M responsibility and associated staffing or outsourcing plans,creation of control center capability,development of operational rules and procedures,required SCADA/telecommunications investments,and so forth. o Staffing plan to ensure adequate staffing and skill sets,including the development of a power trading and scheduling capability (note:it is important to understand that the utilities "on the other end of the line”are sophisticated utilities and have been trading in competitive wholesale power markets for years;consequently,a similar level of trading capability needs to be developed or outsourced to protect regional interests). ©Tax and legal issues,such as the ability to issue tax-exempt debt,transfer of existing assets (if any),and governance structure. o Regulatory oversight issues and required legislative actions,potentially including the development of a FERC-compliant Open Access Transmission Tariff (OATT). o Rules,regulations and rate schedules for transmission service over the Intertie. o Detailed organizational start-up plan with estimates of associated one-time and annual costs. o The AK-BC Intertie is not a viable project unless there is close involvement of,and coordination with,SEAPA.The existing SEAPA transmission system,with the necessary improvements,is an integral element of any proposal to move power to or from Canada and the lower-48 states.Consequently,SEAPA representatives need to be "at the table” and SEAPA must be,as a practical matter given the inability of the State or any other party to force SEAPA to move AK-BC Intertie-related power over its system,an ultimate supporter of any proposed AK-BC Intertie. oO It needs to be determined whether the development of the AK-BC Intertie would be a regional "public good”infrastructure investment.If viewed in this context,this could affect how a number of issues are resolved,such as the appropriate legal form of the entity that would develop and operate the Intertie.Additionally,it might lead to the consideration of additional transmission system investments (e.g.,the SE Alaska Intertie proposal)to develop a truly regional transmission system.Under such a vision,it may also be appropriate to consider alternatives for allocating the benefits of this regional "electric highway”to all citizens and businesses in the region (i.e.,a SE Alaska PCE-type benefit allocation methodology). Conclusion The AK-BC Intertie could potentially,under certain circumstances,be a "game changer”for SE Alaska,spurring economic development,population and job growth,and so forth.However,for this to occur,there are a wide variety of detailed technical,market,risk,organizational,and other issues that need to be thoroughly evaluated,as discussed above. BLACK &VEATCH August 11,2001 Draft ,Building a world of difference: The history of the proposed AK-BC Intertie,including the expenditures incurred related to previous studies and the continued discussions among regional stakeholders,suggests that an effort be undertaken to complete the detailed assessments required to develop a definitive business case to determine under what conditions,if any,the AK-BC Intertie would becomea viable project. Without such an approach,there is a risk that the AK-BC Intertie will simply become a distraction impeding the ability of the region as it tries to move forward in addressing the energy challenges facing it. BLACK &VEATCH August 11,2001 Draft ,Building a world of difference: AK-BC Transmission Line Outline of Narrative for SE Alaska IRP Report Scope of Assessment e As part of the SEIRP scope of work,Black &Veatch was tasked to develop a new region-wide transmission plan for interconnecting SE Alaska communities. e The feasibility of constructing an export intertie was to be considered as part of this planning. e Tocomplete this assessment of the AK-BC Intertie,Black &Veatch reviewed previous studies and considered additional information related to the Intertie that was provided during the course of the project. Review of Previous Studies e The most comprehensive assessment of the AK-BC Intertie was completed by Hatch Acres in 2007 and the results of this study are provided in the final report,titled "AK-BC Intertie Feasibility Study SE Alaska”(Hatch Acres Study).In the Executive Summary of this report,Hatch Acres identified the following issues that were the primary focus of the study: oO If the State of Alaska provides funds to construct new transmission segments in SE Alaska,will development of the segments provide the incentive for the private sector to invest in new generation,including associated infrastructure to connect with the transmission grid? o Will the new generation projects'use of the State-funded transmission,including the proposed AK-BC Intertie,result in revenues sufficient to cover O&M costs to maintain the new transmission systems over the long term? o 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. o 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. e The primary conclusions of this study included: o Completion of the Swan-Tyee Intertie (ST!)and development of proposed transmission lines to interconnect submarkets,and a future interconnection with British Columbia (BC),will encourage new economic development in currently isolated load centers and improve the quality of life for residents currently encumbered with high cost energy from diesel generation. BLACK &VEATCH August 11,2001 Draft ,Building a world of difference- ©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 Pacific Northwest (PNW). o Successful licensing of proposed projects at Thomas Bay in combination with other proposed new projects could provide power for export under certain development scenarios.This may require State support through power marketing oversight. ©Power demands in BC and the 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. oO Principle markets for SE Alaska hydro to meet load growth,include BC Hydro and/or Powerex (the wholesale marketing arm of BC Hydro),and PNW investor owned and/or publicly owned utilities. . o Proposed transmission interconnections necessary to export SE Alaska hydropower to BC and or the PNW,include the AK-BC Intertie System and British Columbia Transmission Corporation (BCTC,now part of BC Hydro)Backbone Extension. o To be 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. o If generating costs exceed $60/MWh,competitiveness depends on GHG restrictions increasing future BC and or PNW market prices. o State involvement would enhance the potential that new projects could produce power for 50 years substantially increasing marketability. o There are no "fatal flaws”regarding development of proposed AK-BC Intertie to the border with Canada.However,further consultations with BC are required regarding the line segment from the border to the nearest point of interconnection with the BCTC (now BC Hydro)system. o The potential cost of power is dependent on operating restrictions that may be imposed in any future issued FERC license terms and conditions.No "fatal flaws”were identified with regard to the probability of FERC issuing licenses. o Regulatory issues requiring further investigation include determination of whether power export is determined to be "interstate commerce”involving FERC regulation. o The development of the AK-BC Intertie to export surplus power for sale in BC and or 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 (now BC Hydro)would construct adequate capacity to transmit power to the BC and PNW markets. BLACK &VEATCH August 11,2001 Draft .Buildingaworld of difference: o 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. Results of Current Assessment e Black &Veatch conducted a high-level screening assessment of the AK-BC Intertie based upon information available at the time of this study,including the results of previous studies for both exporting and importing scenarios. e For the export scenario,the screening was based upon California wholesale power market prices and the results are shown in the table below. Price ($/MWh)Sources and Notes California Wholesale Market Price $105 California Public Utilities Commission, 2009 Market Price Referent Values for 2009 Renewables Portfolio Standard Solicitations,assuming a 25-year power purchase contract. Wheeling Cost From AK-BC Intertie Terminus to PNW $10 Hatch Acre Study. Wheeling costs to California would be somewhat higher. Annual AK-BC Intertie Costs $58 Black &Veatch analysis.Includes annualized capital-related costs (using 30- year fixed charge rate),equal to $49.9/MWh,and annual O&M costs,equal to $8.2/MWh). Hatch Acres did not include annualized capital-related costs in its analysis because it assumed that the State would provide a grant to cover all capital costs. Net Back Price $37 It should be noted that the above analysis does not include:1)any costs associated with the interconnection of hydroelectric projects to the AK-BC Intertie,2)the costs associated with any required SEAPA system improvements,or 3)any costs related to the Canadian transmission segment between the Canadian border and BC Hydro's transmission system,some of which may need to borne by the AK-BC Intertie developer. August 11,2001 Draft BLACK &VEATCH ,Buildinga world of difference: It should also be noted that all of the candidate hydroelectric projects considered in the Hatch Acres Study had generation costs higher than $37/MWh,with the lowest cost project (Whitman Lake)estimated at $55/MWh (in 2007 dollars). Based on these screening results,the export scenario for the AK-BC Intertie will not considered further in the detailed Strategist™modeling. e For the import scenario,the screening was based upon the power purchase cost and transmission-related costs associated with buying power in the PNW and moving that power to the AK-BC Intertie terminus with the SEAPA system (PNW purchase power cost,plus annual AK- BC Intertie costs plus wheeling charges from the PNW to the AK-BC intertie),relative to the cost of potential SE Alaska hydroelectric generation.The following table shows the calculation of the estimated cost of power from the PNW delivered to the SEAPA transmission system. Price (S/MWh)Sources and Notes Delivered PNW Market Price $70 Hatch Acres Study. Wheeling Cost From PNW to $10 Hatch Acre Study. AK-BC Intertie Terminus Annual AK-BC Intertie Costs $58 See above. Price of Power Delivered to $138 the SEAPA System It should be noted that the above analysis does not include:1)any costs related to the Canadian transmission segment between the Canadian border and BC Hydro's transmission system,some of which may need to borne by the AK-BC Intertie developer,2)the costs associated with any required SEAPA transmission system improvements,or 3)the costs associated with additional transmission segments that would need to be constructed to move power from the SEAPA system to a local load center.Additionally,this screening analysis does not include consideration of the transmission-related reliability issues associated with the AK-BC Intertie. Based on the Hatch Acres Study,there are several potential local hydroelectric generation facilities (e.g.,Mahoney Lake,Scenery Lake,Delta Creek [Ruth Lake],Cascade Creek to name a few)with estimated generation costs below $138/MWh.Black &Veatch is currently reviewing the generation costs of potential SE Alaska hydroelectric facilities but we believe that the Hatch Acre Study estimates are adequate for this screening analysis. Based on these screening results,the import scenario for the AK-BC Intertie will not considered further in the detailed Strategist™modeling unless one of the potential transmission segments 4 BLACK &VEATCH August 11,2001 Draft ,Building a world of difference: connecting a load center to the SEAPA transmission system passes the economic screening that Black &Veatch is applying to all potential SE Alaska transmission segments (based on 70%of local diesel generation costs).Even in this situation,Black &Veatch believes that it is unlikely that the AK-BC Intertie will be selected as a preferred resource because the total delivered price of PNW power to a local load center (PNW purchase power cost,plus wheeling charges,plus AK- BC Intertie costs,plus transmission interconnection cost from SEAPA to the load center)would need to be lower than the cost of local hydroelectric generation delivered to the load center (local hydroelectric generation cost,plus transmission interconnection cost to the local load center,either from the SEAPA system or a shorter distance depending upon the location of the local hydroelectric facility).Furthermore,as noted above,the costs associated with any required improvements,if any,to the SEAPA system (either to move power from the PNW or from a local hydroelectric facility that requires use of the SEAPA system to move power to the load center)has not been included in this screening analysis and it is likely that the SEAPA system-related improvements related to the AK-BC Intertie would be equal to or greater than any required improvements related to a SE Alaska hydroelectric facility. Future Consideration August 11,2001 Draft Given the 50-year time horizon of the SE Alaska IRP,it is appropriate to ask the question whether the AK-BC Intertie might become a preferred resource option during this period,should conditions change. Given the volatility that exists related to North American power market dynamics and other factors that affect the economic viability of the AK-BC Intertie,it is impossible to conclude with absolute certainty that the AK-BC Intertie would not,under any set of conditions,become a viable project. Therefore,it is appropriate to consider the various set of conditions under which the AK-BC Intertie might become economical.The following is a list of such conditions: o Clear definition of whether the primary purpose of the AK-BC Intertie is to export or import power.Note:based upon the information available,it is expected that the primary purpose would be the export of power. o Prices in potential export markets in North America (principally BC,PNW and or the Southwestern region of the U.S.)increase significantly due to capacity and energy shortages,continued increases in applicable renewable portfolio standards and or increased environmental regulations that cause existing generation facilities to be retired or prohibit planned facilities from being built. ©State energy policy decisions lead to the consideration of the Intertie as a "public good” investment,whereby justification of the project is made on public good grounds,as opposed to fundamental economics. BLACK &VEATCH _Building a world of difference: Required Actions A detailed business plan needs to be developed in order for the AK-BC Intertie to be considered a viable project in the future.In order to develop this business plan in sufficient detail to justify public or attract private financing,the following actions are required: e Technical Studies The following studies need to be completed to address important technical issues: [e)Detailed engineering studies of potential development alternatives for the AK-BC Intertie,including:1)detailed transmission system load flow and stability analyses; 2)detailed capital and operating cost estimates;and 3)a more defined route option selection assessment. Detailed engineering studies of a defined set of potentially viable hydro projects in SE Alaska,and related transmission interconnections to the SEAPA transmission system, including:1)detailed capital and operating cost estimates for the hydroelectric facilities; and 2)detailed interconnection-related capital and operating costs. Detailed engineering studies to identify the improvements that will need to be made to the existing SEAPA transmission system to move AK-BC Intertie-related power throughout the interconnected region of SE Alaska,including:1)detailed transmission system load flow and stability analyses;2)detailed capital and operating cost estimates; and 3)associated cost allocation protocols (note:FERC has established procedures for the allocation of capital and operating costs incurred to improve existing transmission systems as a result of the impact of other projects that impact the existing transmission system;subject to a more definitive legal opinion,these FERC cost allocation procedures should be assumed to apply here). e Market Assessment The following should be completed to address market issues: °o August 11,2001 Draft Detailed electric market price projections for all areas where power may be sold (or bought)over a sufficiently long enough period (at least 30 years). Alternative scenarios need to be considered given the likely variability of electric market prices over this extended period of time. Clear understanding on evolving Canadian policies regarding the import of power. Detailed assessment of the available capacity on all transmission lines from the AK-BC Intertie connection point in Canada to the ultimate market(s)for the sale (or purchase) of power,and associated transmission wheeling costs. Clear understanding of which states consider hydroelectric power to be "renewable” under the provisions of their renewable portfolio standards,where applicable (e.g.,the State of Washington does not include hydroelectric power as a renewable resource). BLACK &VEATCH ,Building a world of difference: o Understanding of standard power purchase agreement terms and conditions as they will largely determine the terms and conditions under which power will be sold (or bought) over the Intertie. e Risk Assessment A thorough project risk assessment needs to be completed to evaluate potential risks,identify any "fatal flaws,”and include a risk mitigation or avoidance plan (with associated capital and Operating costs).This risk assessment needs to consider,at a minimum,the following risks: ©Transmission reliability risks given the lack of redundant transmission lines (this directly impacts whether the power moved over the AK-BC Intertie could be sold or bought as firm power or would have to be considered non-firm). o Resource potential risks associated with related hydroelectric facilities,including the total energy and capacity that could be economically developed for each resource option. o Impact of potential developments regarding the Roadless Rule in terms of the ability to construct the AK-BC Intertie and related hydroelectric plants. o Variability of electric market conditions and prices and the resulting impact on the underlying economics of the Intertie and associated hydroelectric projects. ©Project development and operational risks associated with the development of the Intertie and related hydroelectric facilities,including regulatory and permitting issues, the potential for construction costs overruns,actual operational performance relative to planned performance,and so forth.This also includes non-completion risks once a project gets started,the risk that adverse operating conditions will severely damage the facilities resulting in a shorter useful life than expected,and project delay risks. o The risks of environmental-related operational concerns and the potential for future changes in environmental regulations. o The risk that the Intertie and hydroelectric facility developers will not be able to obtain the required financing under reasonable and affordable terms and conditions. ©The risk that regulatory and legislative issues could affect the economic feasibility of specific resource options. e Organizational Assessment A number of organizational issues need to be considered,including: o Scope of responsibilities (e.g.,independent operation of the Intertie,regional planning, and project development). o Formation issues,such as legal structure (e.g.,public or private),location,transfer of existing assets (if any),and so forth. BLACK &VEATCH August 11,2001 Draft ,Building a world of difference: ©Operational issues,such as O&M responsibility and associated staffing or outsourcing plans,creation of control center capability,development of operational rules and procedures,required SCADA/telecommunications investments,and so forth. ©Staffing plan to ensure adequate staffing and skill sets,including the development of a power trading and scheduling capability (note:it is important to understand that the utilities "on the other end of the line”are sophisticated utilities and have been trading in competitive wholesale power markets for years;consequently,a similar level of trading capability needs to be developed or outsourced to protect regional interests). ©Tax and legal issues,such as the ability to issue tax-exempt debt,transfer of existing assets (if any),and governance structure. o Regulatory oversight issues and required legislative actions,potentially including the development of a FERC-compliant Open Access Transmission Tariff (OATT). o Rules,regulations and rate schedules for transmission service over the Intertie. o Detailed organizational start-up plan with estimates of associated one-time and annual costs. ©The AK-BC Intertie is not a viable project unless there is close involvement of,and coordination with,SEAPA.The existing SEAPA transmission system,with the necessary improvements,is an integral element of any proposal to move power to or from Canada and the lower-48 states.Consequently,SEAPA representatives need to be "at the table” and SEAPA must be,as a practical matter given the inability of the State or any other party to force SEAPA to move AK-BC Intertie-related power over its system,an ultimate supporter of any proposed AK-BC Intertie. o Itneeds to be determined whether the development of the AK-BC Intertie would be a regional "public good”infrastructure investment.If viewed in this context,this could affect how a number of issues are resolved,such as the appropriate legal form of the entity that would develop and operate the Intertie.Additionally,it might lead to the consideration of additional transmission system investments (e.g.,the SE Alaska Intertie proposal)to develop a truly regional transmission system.Under such a vision,it may also be appropriate to consider alternatives for allocating the benefits of this regional "electric highway”to all citizens and businesses in the region (i.e.,a SE Alaska PCE-type benefit allocation methodology). Conclusion The AK-BC Intertie could potentially,under certain circumstances,be a "game changer”for SE Alaska,spurring economic development,population and job growth,and so forth.However,for this to occur,there are a wide variety of detailed technical,market,risk,organizational,and other issues that need to be thoroughly evaluated,as discussed above. BLACK &VEATCH August 11,2001 Draft ,Buildingaworld of difference: The history of the proposed AK-BC Intertie,including the expenditures incurred related to previous studies and the continued discussions among regional stakeholders,suggests that an effort be undertaken to complete the detailed assessments required to develop a definitive business case to determine under what conditions,if any,the AK-BC Intertie would become a viable project. Without such an approach,there is a risk that the AK-BC Intertie will simply become a distraction impeding the ability of the region as it tries to move forward in addressing the energy challenges facing it. BLACK &VEATCH August 11,2001 Draft ,Buildingawor!d of difference: Southeast Alaska Integrated Resource Plan mn Fifth SE IRP Advisory Work Group Meeting August 16,2011 11a.m.-4:30 p.m. James &Elsie Nolan Center Wrangell,Alaska Draft Agenda* l= 1.Call to Order,Introductions and Welcome by Haines Mayor Jeremy Maxand 2.Approval of Agenda -Rick Harris Public Comment Approval of Minutes from July 26,2011 Advisory Work Group Meeting -Rick Harris Opening Remarks -Rick Harris/Jim Strandberg Wrangell Light &Power Community Report -Steve Henson Results of Analysis to Date -Kevin Harper/Myron Rollins a.paosEconomic Parameters Load Forecasts (Rural &Urban) Fuel Price Projections Transmission Planning Hydroelectric Planning Other Issues -Kevin Harper/Myron Rollins a.Black &Veatch Electric Industry Survey Power Export Concept &Analysis -Jim Strandberg Beh Gore a. b. C. British Columbia ;Rardlect-Yukon Interconnection to Railbelt -AFD Wnterkee 10.Next Meeting -September 14,2011 in Ketchikan (SE Conference Annual Meeting) 11.Committee Comments 12.Adjourn ,Bellen<_-ALASKA ..Conference <<ENERGY AUTHORITY a Ne James Strandberg From:Bob Grimm <bob.g@aptalaska.com> Sent:Thursday,August 11,2011 9:59 AM To:"Rick Harris' Ce:James Strandberg;'SEC Energy' Subject:FW:What does the AWG want from the SEIRP? Attachments:IRP AWG agenda Wrangell August 2011 pdf Rick: Did not see this item on the draft agenda?Overall Goal or at least one deliverable of the AWG: Draft Written Statementby AWG in regards to the list to be developed as part of the SEIRP. "AWG is expecting alist of demand side management actions and those energy generation and transmissionprojectsthatappeartobemostfeasiblefordevelopmentfromatechnical,economic,environmental,and social perspective within the next 20+years.We expect there will begeneral consensus that the listed projects areappropriateandworthwhile,and that they will contribute to future economic development,energy independence and reduce air emissions from carbon based fossil fuels for Southeast Alaska and perhaps the lower 48.” Agenda Item #9 should reflect both export and IMPORT of energy into the region. No Agenda Item for Old Business.|was assigned a task to develop a draft goal for "Goal for Retail Rates for Electric Power for SE Alaska”which |did complete in draft form and think it would be appropriate that be discussed by the AWG and a decision made to reject,adopt or revise by the AWG. Thanks See you in Wrangell. Bob Grimm,CEO Alaska Power &Telephone Company P.O.Box 3222 193 Otto Street Port Townsend,WA 98368 800-982-0136 x120 Office 360-385-1733 x120 Office 360-301-3636 cell From:Bob Grimm [mailto:bob.g@aptalaska.com] Sent:Thursday,July 28,2011 4:21 PM To:'Rick Harris' Cc:'James Strandberg' Subject:What does the AWG want from the SEIRP? Rick: After politely listening to me for a couple of days,|should refrain but cannot help myself. 1 Ld |have a suggestion for the Advisory Working Group for the SEIRP.|think one thing we can do to assist the project manager and the contractor is to develop a clear written statement from the Group's perspective as to what we wish achieve with this study. The general outputs of the study have been outlined by the contractor based upon similar studies in other regions.However,|have two observations.The makeup of the AWG|think was developed to make sure that a wide range ofopinionwasavailabletoprovideadviceandguidanceperiodicallyastheIRPprocessproceedstowarditscompletion with the intent to insure that the end result of the study is something that will be useful,practical and well worth the time andexpenseofallinvolvedinsuringitdoesnotjustendupontheshelflikenumerousotherstudies.The second observationisthatAlaskaisuniqueasitsdevelopmentinmanywaysisimmaturelackingpopulation,infrastructure,economies of scale and land ownership patterns typically present in other areas of the nation.Since Alaska is unique we cannot simply rely upon the IRP template to produce the study outputs and hope they are what we wish to achieve.Some of the participants on the group are more vocal (myself included)than others.!fear that the limited input will adversely impact the usefulness of the completed study as some members simply wait until the results are known and then object to the findings of the study because they choose to refrain from actively participating. As Chairman,you have a leadership role to insist that all the AWG members participate so that clarity in the advice and guidance offered the project manager and the contractor exists and insuring that all opinions are considered.One way of achieving this would be to have the group as a whole develop and approve a written statement(s)providing guidance and setting expectations as to the output of the study. |did not want to just leave you hanging without a example.There was discussion about the "list”and how if it had a priority listing it could be used by others somehow to disrupt or somehow be improperly used.The example given was the City of Angoon and City of Petersburg.As far as |know both Cities filed with in accordance regulations and federal laws with FERC to study Ruth Lake.Both filing were accepted by FERC,considered and in the end FERC awarded the permit to Angoon.|do agree that the list need not be prioritized with definitive rankings and or comparisons because the detailed information to make that detailed of a finding does not exist.|will need to wait until |see the minutes but I did not come to that conclusion because of the (Angoon)example given.|will object if that is what is portrayed by agreeing with the project manager that priority and defined ranking is not necessary. One way of avoiding these types of situations in the future is to come up with written statement of what (AWG)expect the "list”to represent.In talking with others within the group |came up with a DRAFT written statement as a place to start. Hopefully this will result in all members of the AWG participating under your leadership in discussion and debate and subsequent changes and modifications,if necessary.All resulting in general consensus and adoption of the final agreed upon written statement providing clarity and defining the advise provided to the project manager and contractor. Draft Written Statement by AWG in regards to the list to be developed as part of the SEIRP. "AWG is expecting a list of demand side management actions and those energy generation and transmission projects that appear to be most feasible for development from a technical,economic,environmental,and social perspective within the next 20+years.We expect there will be qeneral consensus that the listed projects are appropriate and worthwhile,and that they will contribute to future economic development,energy independence and reduce air emissions from carbon based fossil fuels for Southeast Alaska and perhaps the lower 48.” Thanks for your consideration. Bob Grimm,CEO Alaska Power &Telephone Company P.O.Box 3222 193 Otto Street Port Townsend,WA 98368 800-982-0136 x120 Office 360-385-1733 x120 Office 360-301-3636 cell