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SEIRP advisory work meeting Sep 2011
isL/ZI Southeast Alaska Integrated Resource Plan Sixth SE IRP Advisory Work Group Meeting September 14,2011 3:15 p.m. Cape Fox Lodge,Ketchikan,Alaska Dial:1-800-315-6338 Code:3069# Black &Veatch,along with AEA Project Manager Jim Strandberg will be presenting during the Southeast Conference Annual Meeting on September 14,2011 at the Ted Ferry Civic Center during the Energy Program beginning at 1:30 pm.Attendance is encouraged. Agenda 1.Call to Order 2.Approval of Agenda -Rick Harris 3.Public Comment (3 minutes per speaker) 4.Approval of Minutes from August 16,2011 Advisory Work Group Meeting -Rick Harris 5.Opening Remarks -Rick Harris/Jim Strandberg 6.Overview of Project Status -Kevin Harper 7.Review of Preliminary Work Products and Other Issues -Kevin Harper/Myron Rollins a.Load Forecast DSM/EE Transmission Hydro Strategist Runs Other (including space heat and transportation)moans8.Committee Comments and General Discussion -Rick Harris 9.Next Meeting -October 4,2011 in Juneau,AK 10.Adjourn outheast onference oF=ALASKA : @-ENERGY AUTHORITY <2=-_}Southeast Alaska Integrated Resource Plan Advisory Work Group Meeting Minutes 11:00 a.m.-4:40 p.m.August 16,2011 Wrangell,Alaska Advisory Work Group Attendees: Dave Carlson,Jodi Mitchell,Joe Nelson,Tim McLeod,Bob Grimm,Merrill Sanford, Chris Brewton,Robert Venables,Rick Harris,Larry Dunham,Barbara Stanley, Angel Drobnica for Dan Lesh,Russell Dick,Bill Corbus,Steve Henson,Tim McConnell,Ernie Christian for Paul Southland and Jeremy Maxand. Other Attendees: Peter Naoroz,Kootznoowoo (phone);Devany Plentovich,AEA (Phone);John Sandor,ACE Coalition (phone);Chris Spens,Cascade Creek LLC (phone);Myron Rollins,Black &Veatch;Kevin Harper,Black & Veatch;Jim Strandberg,AEA;Rhonda Dawson,ACE Coalition;Andy Donato,Ketchikan Public Utilities; and other Wrangell residents. Call to Order,Introductions and Welcome by Mayor Jeremy Maxand Mayor Maxand thanked everyone for coming and encouraged them to enjoy Wrangell.He said he appreciated the Southeast IRP project visiting so many communities.The IRP needs to reflect the needs of the communities and is critical for the future supply of energy and economic development in the Southeast.The IRP project will provide direction and guidance and will be a living document.Mayor Maxand expressed Wrangell's support for getting Angoon,Kake,and Hoonah off diesel and onto a sustainable energy source with lower costs. 2.Approval of Agenda -Rick Harris a.Motion to approve agenda,seconded. b.Mayor Maxand expressed appreciation for the AK-BC line being included on the agenda. c.Agenda was unanimously approved. 3.Public Comment a.Rick Harris opened up for public comment.No comments from the audience in the room. b.John Sandor reported good news that last Thursday at the Juneau Chamber of Commerce meeting,a presentation was made on the Roadless issue.A number of organizations including First Things First Foundation presented a $5,000 check to aid the state in its appeal of the Roadless Rule,and it was pointed out that a number of other organizations have assisted and will be assisting in intervening in support of the state's appeal of the Roadless Rule. 4.Approval of Minutes from July 26,2011 Advisory Work Group Meeting -Rick Harris a.Amotion was made,seconded,and unanimously approved without discussion to approve the Minutes. AWG Wrangell 8/16/2011 Page 1 -2-1 Southeast Alaska Integrated Resource Plan - 5.Opening Remarks -Rick Harris/Jim Strandberg a.Rick and Jim thanked everyone for coming. b.Jim Strandberg indicated that AEA continues to conduct its work in a transparent manner with all the stakeholders at the table. c.Jim Strandberg had asked Bob Grimm to help define rate goals for the region at the last Advisory Work Group meeting.Bob prepared an E-mail with his response.A copy was circulated to the Advisory Work Group and the E-mail is being posted to the AEA web site. d.Jim Strandberg indicated that he had agreed to have a meeting on the AK-BC line at noon with Bob Grimm,Dave Carlson,and Paul Southland. e.Rick Harris indicated that Bob Grimm had sent him an E-mail regarding goals for the IRP and the topic would be discussed later. 6.Wrangell Light &Power Community Report -Steve Henson a.Steve Henson indicated that Wrangell's load had grown 45 percent in last 4 years,due to electric heat conversions.Wrangell instituted a declining block tariff four years ago for electric heat conversions to help its citizens with the high cost of diesel for heating. That tariff may not work for Wrangell much longer.Their winter load is now greater than their summer canning load.Wrangell is looking forward to what comes out of the IRP with respect to rate structure and is pleased that biomass heating is being considered.Wrangell is also pleased to see that the AK-BC interconnection is being considered in the IRP so that they can determine if it is good or bad for the region. Wrangell supports helping the communities that are on diesel finding a way to get off diesel and lower their costs.Wrangell is starting to look at adding another diesel unit for backup b.Robert Venables asked Steve to discuss the Sunrise Project.The Sunrise project is located 4 miles from Wrangell adjacent to the Wrangell-Petersburg transmission line. Its capacity is approximately 2 MW with 11 GWh of annual energy.It is a siphon system and serves as a potential back-up to Wrangell's domestic water supply.The project would be dual purpose water supply and electricity.The power house would be constructed adjacent to the transmission lines.Wrangell has had two preliminary permits for the project. c.Wrangell currently has problems with the dam for their existing water supply which are estimated to cost $50 million to fix.The Sunrise project is estimated to cost $5.5 to $6 million with $3.5 million of that being for the electric generation. d.The additional benefits of dual water and electric projects were noted by Rick Harris. Sitka and Juneau have these dual purpose projects. 7.Results of Analysis to Date -Kevin Harper/Myron Rollins a.Kevin Harper distributed a copy of the Railbelt Integrated Resource Plan (RIRP) Executive Summary that is posted on the AEA web site.Kevin walked through the Executive Summary so that the Advisory Work Group would have an idea as to what the Southeast IRP would look like.As he went through the RIRP,he identified the following issues associate with the Southeast IRP. TnEEEEEEO_--_SE __________t AWG Wrangell 8/16/2011 Page 2 -2-|Southeast Alaska Integrated Resource Plan i.The document is directional and will not finally identify specific projects for construction.Most projects will require additional development work to ensure their economic and technical feasibility. ii.If a specific project is not selected,it may still be economically feasible based on specific issues such as investment or production tax credits. iii.The Southeast IRP will be agnostic with respect to ownership and financing. Economic evaluation will be conducted on a common basis utilizing financing rates that will be equivalent to tax exempt financing which in general will be the least cost financing available. iv.The report will provide all the factors and input assumptions are in the analyses. These will include fuel and load forecasts,capital costs,and O&M costs and performance. v.Two types of risk will be evaluated and will be generic to resource type and risks associated with specific projects. vi.The conservation and DSM evaluation will not have the detailed end use information available to provide specific projects.The general expected savings and cost will be provided,but will need to be refined upon completion of AEA's end use study. vii.The report will contain specific near term recommendations for the next one to three years which will identify projects for which funding may be requested. The budgets for funding will contain estimates to move the projects forward to a position that a firm decision can be made for their construction with specific construction estimates and schedules.The projects recommended will have been subjected to the risk analysis and will contain multiple projects as necessary to ensure that adequate capacity and energy can be provided. viii.Ultimately the executive summary is prepared for the legislators and their staff. It is prepared to acknowledge the merits of the IRP process while accepting the fact that not everyone will agree with all the conclusions and recommendations. It will also identify the limitations of the IRP.The IRP will also represent a framework for considering other specific projects that develop which are not explicitly considered in the IRP,but which can be competitive if they are competitive with the projects recommended in the IRP. b.Discussion resulting from Kevin's presentation of the RIRP executive summary included the following comments. i.Jim Strandberg commented that the Railbelt is an interconnected system and asked Kevin to comment on how the Southeast would be addressed since much of it is not interconnected.Bob Grimm responded that we would be looking at what interconnections made sense economically and that would still leave some communities that were not interconnected.Kevin responded that each sub- region that was shown at the last Advisory Work Group meeting would be addressed and to the extent that it was economical,the sub-regions would be interconnected.Joe Nelson commented that there needs to be more than economics considered.Jeremy Maxand commented that the Advisory Work Group will have to make moral decisions and that we should put that issue on a Tn| AWG Wrangell 8/16/2011 Page 3 Southeast Alaska Integrated Resource Plan ay future agenda.Rick Harris requested that Jeremy's comments be captured in the minutes.Kevin responded that Black &Veatch's scope is limited to engineering and economics and does not include morality.However,Black & Veatch can provide commentary on how to levelize benefits across the region. ii.Jim Strandberg indicated that John Sandor had sent him an E-mail with links to documents relative to a business case for the AK-BC interconnection.The links included references to the Highway 37 study. iii.Jim Strandberg indicated that he had received and E-mail from Tim McLeod that indicated that the cable from Snettisham was not adequate to include the Sweetheart Lake Project and requested that an additional cable be considered in the IRP. iv.Kevin Harper indicated that the Advisory Work Group needed to address the issue of committed projects as listed in the Advisory Work Group's initial Resolution.Committed units would be treated like existing units only witha future commercial operation date.The following commentary occurred. e Blue Lake Hydro -Chris Brewton indicated that they had ordered the turbine and it should be a committed unit. e Kake to Petersburg Intertie -Jodi Mitchell indicated it should be a committed project.Bill Corbus asked whether they had all the permits and the response was not yet but the environmental work was underway as were discussions as to the intertie's ownership.Bill Corbus asked if Roadless was an issue and Jim Strandberg responded that it was.Bill Corbus asked if there was a construction start date and Jim Strandberg responded that there was not since the project still needed an owner. e Metlakatla to Ketchikan Intertie -Jim Strandberg indicated that it should be a committed project and that Metlakatla had asked AEA for help on owners'operation and interconnection issues. e Reynolds Creek Hydro -Jim Strandberg indicated it should be a committed unit saying that $2 million had been released and a Project Management Office had been set up.The project has a $20 million load "application into AEA and negotiations are underway.Bill Corbus asked what was the construction start date and Jim Strandberg responded that construction has started. e Thayer Creek Hydro -Jim Strandberg indicated it should be a committed unit.It has received $1 million from Round 4 of the Renewable Energy Grants.It is owned by Kootznoowoo.It has had a lot of work on it and Jim expects it to move forward with a Project Management Office Approach. e Whitman Lake -Tim McConnell indicted that Whitman is moving forward. v.Jodi Mitchell stated that IPEC needed assistance in increasing the priority of the Gartina Falls project for Hoonah to speed up the licensing process. AWG Wrangell 8/16/2011 Page 4 1EL/Southeast Alaska Integrated Resource Plan vi.Kevin Harper indicated that we need to establish commercial operation dates for the committed projects for the study.Rick Harris indicated that they would take up that issue later. c.Economic Parameters -The economic parameters would be based on tax exempt financing and would be used for all evaluations.This would put the projects ona common basis. d.Load Forecast -Reference case is essentially complete.Black &Veatch is working on the high and low cases.The high case will include greater economic development as well as the impact from electric vehicles.The low case will include conservation and energy efficiency,rate design to discourage electric heat conversion,and incentives to promote biomass space heating.Rick Harris questioned the penetration of electric vehicles.Tim McLeod indicated that EEI was predicting that utilities would lose 70 percent of their lighting loads in the next 20 years,but 70 percent of the vehicles would be electric.Jodi Mitchell commented that the high cost communities were already efficient due to the high electric costs.Kevin Harper indicated the lack of good data makes the conservation evaluation difficult. e.Fuel Price Forecasts -Comments received have been incorporated. f.Transmission Planning -Two parts.One is the interconnections within sub-regions and to interconnect sub-regions.These will be screened based on transmission costs and compared to diesel generation.The other part is the AK-BC line.Black &Veatch has been reviewing studies that have been provided and plans to present the screening results at the September AWG meeting.Bill Corbus stated that the Snettisham transmission line was not adequate to carry the generation from the proposed Sweetheart Lake project.Tim McLeod indicated that AEL&P had received a permit for a new hydro project and he will send Black &Veatch the information.Dave Carlson suggested that generic projects could be included in the long-term plan.Merrill Sanford emphasized that we need to make sure that the appropriate projects were in the plan. Joe Nelson suggested that we look at other alternatives such as LNG.Jim Strandberg indicated that there were propane initiatives.Joe indicated that propane had distribution problems.Kevin Harper indicated that we would revisit the other project list at the September AWG meeting. Tim McLeod said he was concerned about Gartina Falls not being on the committed project list.Barb Stanley indicated she was also concerned,but was more concerned that there were other proposed projects that would also want to be added to the committed project list.Russell Dick said he was concerned that Hoonah had been missed.Barb Stanley countered that there were other communities that had been missed like Elfin Cove.Jeremy Maxand made a motion that Gartina Falls be added to the resolution and discussion ensued about the mechanics of such a resolution since the legislative term has ended.Ultimately the motion was approved that a letter or resolution of support by the AWG would be prepared with Jodi Mitchell's approval. g.Hydro Planning -Black &Veatch distributed the draft screened potential hydro project list presented at the previous AWG meeting.Myron Rollins indicated that Black & Veatch had received comments that Orchard Lake and Crooked Creek should be added to the list.Myron Rollins indicated that the screening process started with the comprehensive list that had approximately 280 projects.The screened list resulted from EEOC AWG Wrangell 8/16/2011 Page 5 2}Southeast Alaska Integrated Resource Plan identifying projects that had undergone recent development activity.In parallel,the Southeast will be modeled with Strategist to determine the need for hydro generation to replace diesel generation.Projects will be identified that meet these requirements from the screened list and if an adequate number of projects in the sub-region are not identified,additional projects will be identified from the comprehensive list. 8.Other Issues Kevin Harper distributed copies of Black &Veatch's Electric Industry Survey which surveys industry participants relative to issues they see facing the industry. 9.Old Business a.Roadless -Rick Harris indicated that he had hoped to have Earth Justice at the meeting, but would try to get them at the September meeting.Bob Grimm asked what the Forest Service's position was on Roadiess.Barb Stanley replied that to date,the Secretary has approved all hydro project requests.Merrill Sanford indicated that John Sandor reported that a group of business men has been formed to support the removal of the Roadless Rule.Joe Nelson asked how the Roadless Rule would affect Cascade Creek. Barb Stanley indicated she had asked the USFS lawyers,but had not received an answer. Chris Spens asked about the corridor that Thomas Bay had.Barb Stanley indicated that the lawyers had not responded yet.Rick Harris encouraged people who had identified issues with permitting projects to identify the issues to try to find ways to improve the process.Rick would like these presented in the report. b.AK-BC -Kevin Harper stated that Black &Veatch was evaluating import and export based on previous studies and other information available such as market information. A significant issue will be the necessary improvements to the SEAPA system.The sophistication of the marketers in Pacific Northwest and California must also be considered.. AEA met with the ACE coalition during lunch.Bill Corbus has agreed to assist AEA's efforts in facilitating the ACE coalition's preparation oftheir business case. Paul Southland characterized the power sales as a value added product and not just wholesale power.Paul asked if there had been a contract amendment for the AK-BC evaluation.There has not been an amendment. Rhonda Dawson volunteered to provide additional information on the AK-BC project. c.GSA Biomass Project -Dave Carlson participated in the dedication of the biomass heating system for the GSA building in Ketchikan which was the first GSA building in the nation to be heated by biomass.Jeremy Maxand indicated that a large percentage of the municipal waste was paper products which could be used for space heating. 10.Next Meeting -The next meeting will be September 14,2011 in Ketchikan at the Southeast Conference Annual meeting. 11.Committee Comments a.Advisory Work Group Statement of Expectations and Regional Rate Goals -Bob Grimm proposed that the appropriate rate goal should be the PCE rate which is the weighted average of Anchorage,Fairbanks,and Juneau.Dave Carlson said that the low cost utilities had built hydro projects years ago.Tim McLeod presented reservations as to whether the goal could be achieved. b.KPU presented a PowerPoint overview of the Whitman Lake Hydro project. The meeting adjourned at 4:44 p.m. NN| AWG Wrangell 8/16/2011 Page 6 Southeast Alaska Regional Integrated Resource Plan Project Approach and Status -Summary Task %Complete Task Group 1 -Data Collection,Load Forecasts,Technology Review and Regional Action Plan (Tasks 1-5} Task 1 -Understand the Southeast Energy Model:Past,Present and Future Task 2 -Assess Existing and Future Energy Technologies Task 3 -Develop an Energy Conservation and Demand Side Management Program for SE Alaska Task 4 -Financing the Southeast Energy Future Task §-Technical Conference and Proliminary Action Plan Task Group 2 -Region-wide Transmission Planning (Task 6) Task 6 -Develop a Regional Transmission Plan Task Group 3 -Integrated Resource Planning (Tasks 7-9) Task 7 -Develop a Preferred Resource List for Interconnected Electrical Grids Task 8 -Integrated Resource Planning for SEAPA Task 9 -Planning for Insular Communities Task Group 4 -Reporting (Tasks 10-13) Task 10 -Provide Preliminary Capital Budgets for Region-wide IRP Task 11 -Assemble Task Groups 1-3 Components Into a Regional!Plan Task 12 -Present the Plan Task 13 -Complete the Plan Black Veatch September 8.2011 90% 80% 60% 100% 95% 85% 50% 60% 30% 15% 15% 0% 0% Page 1 Task Group 1 -Data Collection,Load Forecasts,Technology Review and Regional Action Plan (Tasks 1-5) Southeast Alaska Regional Integrated Resource Plan Project Approach and Status -Detailed Task 1 -Understand the Southeast Energy Model:Past,Present and Future ' Black &Veatch Project Kick-off Meeting %Complete:100 Participate in Public Meetings %Complete:95 Review Existing IRPs %Complete:100 Research Existing Energy Infrastructure -Confirm project approach -Identify external drivers -Identify key regional issues -Identify electric systems to be included in SEIRP -Adress how potential environmental regulations will be addressed -Identify economic parameters -identify how electric conversions,electric cars and Smart Grid activities will be considered Develop Matrix of Regional Energy Issues %Complete:100 %Complete:100 %Complete:100 Review Existing Reports %Complete:100 Review Existing Load Forecasts Develop Reference Case Load Forecasts Utility/Stakeholder Review of Reference Case Load Forecasts Finalize Reference Case Load Forecasts %Complete:100 %Complete:100 %Complete:100 %Complete:100 Develop Sensitivity Case Load Forecasts Utility/Stakeholder Review of Sensitivity Case Load Forecasts Finalize Sensitivity Case Load Forecasts %Complete:60 %Complete:0 %Complete:0 September 8.2011 Task 2 -Assess Existing and Future Energy Technologies Identify Existing and Future Energy Technologies -Demand side management -Efficient lighting technologies -Smart grid technologies -Electric vehicle transportation -Water heating %Complete:90 Evaluate Application of Technologies to SE Alaska %Complete:70 Task 3 -Develop an Energy Conservation and Demand Side Management Program for SE Alaska Black &Veatch Review Existing State Funded Programs %Complete:100 Review Existing Utility Programs Characterize Programs and impacts, Project Future Savings From Existing Programs Based on Penetration Levels %Complete:70 %Complete:100 Identify Actions That Could be Taken to Encourage Energy Efficiency %Complete:95 Cost-Effectiveness Screening of Potential New Measures -Rate Impact Measure (RIM)Test Develop Programs Based Upon Measures Include Additional Measures/Programs,if Necessary,to Reach 20%Increase in Identify Potential New Measures/Programs -Total Resource Cost (TRC)Test That Pass Cost-Effectiveness Scr *Energy Efficiency Targtet -Participant Test %Complete:50 %Complete:0 %Complete:0 %Complete:100 September 8.2011 Develop Recommended Implementation Plan %Complete:0 Task 4 -Financing the Southeast Energy Future Develop Preliminary Financial Model Structures %Complete:100 Obtain Utility/Stakeholder Comments on Preliminary Financial Model Structures %Complete:100 ask 5 -Technical Conference and Proliminary Action Plan t Black &Veatch Develop Preliminary List of Regional Energy Issues %Complete:100 Participate in Technical Conference No.1 Develop Preliminary Action Plan %Complete:100 %Complete:95 September 8.2011 Page 3 Task Group 2 -Reqion-wide Transmission Planning (Task 6) Task 6 -Develop a Regional Transmission Pian Review Existing Transmission Studies and Obtain Data on Existing Transmission Systems %Complete:100 Consider List of Issues Identified in RFP Identify Location of Potential Hydro,Wind and Tidal Projects Develop Generic Costs for Diesel Generation -Capital costs -O&M costs -Performance (e.g.,heat rate) Identify Potentially Viable Hydro,Wind and Tidal Projects and Associated Interconnections %Complete:100 95 %Complete:100 %Complete:90 | Gather In-house B&V Cost Estimates -Per mile cost for transmission line by voltage level -Per mile cost for underwater cable -Termination and substation costs Identify Total Capacity Requirements for Each System;Apply Existing Generation (Hydro)That Will be in Operation at End of 50-Year Planning Period -Based on Reference Case Load Forecasts -Apply reserve margin requirements -Use generic transmission costs to develop annual capital carrying costs +Determine transmission costs on a $/MWh basis Compare Transmission Costs ($/MWh)to Threshold (e.g.,70%)Cost of Diesel Generation Include Potentially Viable Hydro,Wind and Tidal Projects in Strategist %Complete:95 %Complete:80 %Complete:50 %Complete:25 September 8,2011 Page 4 Task Group 3 -Integrated Resource Planning (Tasks 7-9} Task 7 -Develop a Preferred Resource List for Interconnected Electrical Grids include Input Assumptions Developed in Prior Tasks Into Strategist %Complete:95 Refine Potentially Viable Renewable Projects %Complete:70 Model Region,Excluding Insular Systems Using Strategist Develop Hourly Load Profiles Including impact of Conservation and Demand Side Management Programs %Complete:50 %Complete:25 Refine Transmission Interconnections from Task 6 %Complete:25 Task 8 -Integrated Resource Planning for SEAPA Black &Veatch Draw Upon Results of Task 7 to Develop SEAPA System-specific Model %Complete:SO Develop SEAPA IRP Benchmark Existing SEAPA System Using Strategist %Complete:60 %Complete:100 September 8.2011 Task 9 -Planning for Insular Communities Update "Current Energy Status”Data From the Alaska Energy Guide and Alaska Energy Pathway Documents %Complete:0 } Task Group 4 -Reporting (Tasks 10-13} Task 10 -Provide Preliminary Capital Budgets for Region-wide IRP Combine Capital Budgets From Previous Tasks -Generation -Transmission -Conservation and demand side management programs %Complete:15 Task 11 -Assemble Task Groups 1-3 Components Into a Regional Plan Develop Draft SEIRP Based Upon Results Develop Community Spcific Actions and Identify Capital Projects to: -Reduce volatility of energy prices Recommend Financial Approaches Provide Specific,Prioritized List of Capital -Reduce energy prices Projects -Provide reliable capacity and energy supply at acceptable energy supply risk %Complete:50 %Complete:20 %Complete:0 of Previous Tasks %Complete:15 »ask 12 -Present the Plan Present SEIRP to: Advisory Working Group Technical Conference No.2 %Complete:0 Black &Veatch Develop Draft SEIRP Report %Complete:15 September 8 2011 Page 6 Task 13 -Complete the Plan Black &Veatch Incorporate,as Appropriate,Comments From Advisory Working Group and Technical Conference No.2 %Complete:0 Develop Final SEIRP Report %Complete:0 September 8.2011 Page 7 Northern Region Juneau Area SEAPA Region Transmission Planning Regions SOUTHEAS TyALASKA INTEGRATED/RESOURGE;PLAN Gan)Folger Advisory,Work Group MeetingKetchikan®Alaska Project ee a:sreport to the WorkBoolGeroup1saeoaBim'Strandberg °wt o%NCSDSeg So..-LBSSSSOSSL”=OnOX KX 'alaska Enerey AAuthorityimeee:projectctmanagers inin Strandberg7acsragAdvisoryWorkkGroup.chairs RickHarris,Seasealaska.i a Conference ¢enersycoordinator"Robert VenVenablesMOOSBlackcandVedtehprojectnanmanager:|Kevin'Harper¥eraPA project managersEric WolfeceeALaestAStaffcereMyClark The SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT ©A Regional Energy Action Plan ®Organized into 4 task groups =Task Group 1 -Data Collection,Load Forecasts, Technology Review,Demand Side Management/Energy Efficiency,Regional Action Plan «Task Group 2 -Region wide transmission planning (update Southeast Transmission Plan) a Task Group 3 -Integrated Resource Planning (economic selection of projects) a Task Group 4 -Reporting (a document defining capital projects,regional joint actions to be taken across the SE economic spectrum),useful for the SE Alaskan,SE utilities,local governments, state agencies and the Alaska Legislature)oaOo:0:@&er\thie.4 BS ' rere as creed :<}SOGOe,22rNWF,S2eeoe0%;Southeast Alaska Integrated Resource Plan 9/14/2011 2 v7:% ThE SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT ®A Regional Energy Action Plan ©Work Products - a A list of power generation projects,transmission line projects,and energy conservation/demand side management projects,with capital costs and implementation recommendations. 2 A regional action plan that defines actions to be taken by SE Alaska businesses,local governments,and the State of Alaska to respond to emerging energy issues. =Focus on long run SE energy security,and minimum reliance on volatile priced petroleum products. Southeast Alaska Integrated Resource Plan 9/14/2011 3 &2):Oo™bok,oBp 'NBOHSSQOeS502,05020,¢.:Vy,S2ve@.&wooo: TRE SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT ®Schedule a Interim 3 year projects list a Draft Report November 8,2011 a Final Report January 16,2012 ©Advisory Work Group meetings a August 16,2011 meeting was held in Wrangell x Expect one additional full day meeting prior to production of draft plan to preview draft plan. ©Planning started for 2"¢technical conference,tentatively in Juneau,B&V to present results,and start public comment process. October 5,2011 Southeast Alaska Integrated Resource Plan 9/14/2011 4 aS Ny K)x SSBOG©rS TRE SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT ®Overall Project Status a Major early tasks such as Load Forecasting nearing completion. a Project is presently on schedule. a Project Manager's discussions with B&V and SEC o Emphasis on rural communities o Interviews by SEC on energy situations in rural communities o Review of analysis methodology for transmission segments,screening process. o Coordination between B&V and AEA's EE/DSM end user Study o Discussion on the output of "preferred resource list” for Capital projects. Southeast Alaska Integrated Resource Plan 9/14/2011 5 THE SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT ©Important Topics for this meeting ®This will be update meeting on tasks ©B&V in the middle of analysis work ©Some limited project output (preliminary) will be presented. ®Critical issues can be brought up »Electric Resistance Cross over heating,status of biomass alternative fuels a Discussion of how to implement the plan beginning in 2012 -who should take up the cause....? Southeast Alaska Integrated Resource Plan 9/14/2011 6 Crees24 Ceara Gian”.Sy q it st < éeeynya .F ay iw!»a as ed °aad ")v (|-a 7.war J «pa»v -4 ofSSar THE SOUTHEAST ALASKA INTEGRATED RESOURCE PLAN (SEIRP)PROJECT @Contract tasks -B&V will report on oLoad Forecasts o DSM/EE o Transmission o Renewable Energy Projects oB&V's analysis of power projects oSpace heat and transportation Southeast Alaska Integrated Resource Plan 9/14/2011 7 :ayy a 'i,0.0:9SOS4 a e'tl+o@:tatae®%ersat Southeast Alaska IntegratedResourcePlan(SEIRP) Kevin Harper -Black &Veatch Agenda e Integrated Resource Planning ¢Project Objectives and Scope ¢Project Team Overview ¢Approach to Specific Issues ¢Final Report Content ¢Questions and Answers 9/12/2011 Integrated Resource Planning e Plan that economically schedules what,when,and where to build,based on available energy supplies *Long-term time horizon ¢Competes generation,transmission,fuel supply and DSM/energy efficiency options ¢Includes renewable energy projects (including hydro) ¢Arrives at a plan to build future infrastructure for minimum long-run cost to ratepayers ¢Considers risks ¢Considers of financing options 9/12/2011 Integrated Resource Planning Objective Function: 2012 Cumulative Present Value Costs With consideration of: ¢Regional issues and differences e Energy security e Environmental impacts e Risks Integrated Resource Planning -Limitations ¢Does not set State energy policy _Directional ¢Identified/generic/actual projects e Agnostic to owner/developer of projects 9/12/2011 Public Participation Process goo eet aea,EE eae,BO a . .. . i wa "athe we sem etn win 'Ran Sa thant ws _ Situational E ici Load Fuel and Existing G Reliability A -Fit ial F All Price and Transmission Criteria Drivers and Issues Parameters Forecasts Resources T Potential Resource Screening Process *Project viabilityHydroProjects[-)»Storage characteristics ia +Status of FERC license *Factor in transmission costs § Cc jal statu teaist™ Resources-*Commercial status rs Conventional |tgs Hy:Factor in transmission costs M lin 'aod nities Leastcost Renewables Screening +Ratepayer Impact Measure Refine Input assessmentofAssumptions(RIM)Test applied to all en OO econ . ,measures Assumptions ission, Conservation/Useof previous +Measures thatpass RIMTest =LJ for and ; DSM R grouped into programs Resources ||conservation/characteristics -*Additional programs added,if ThatPass DSM capacity,energy,required,to meet 20%load Screening resources and storage reduction by 2020 target Process +Capital and operating costs »Location of potential generation*Qualityof resources *D ine required g ti T issi inf |»,tomeetcapacity requirements |,«Determine transmission coston$/MWH basis «Compare transmission costs tothresholdcostofdiesel(e.g., 70%) 9/12/2011 9/12/2011 Strategist™Modeling Detailed Results =>)Least cost assessmentof %*Economic generation,transmission,and *Environmental conservation/DSM resources ¥v Risk Assessment «Resource potential *Project development and operational (e.g.,"dry year') «Fuel supply *Environmental ¢Transmission constraints *Financing *Regulatory/egisiative ¢Price stability Generationand Transmission:|Prioritized Listof Capital Projects 4 Analysis of Financing Alternatives3 a Public Participation Process | 9/12/2011 Project Team Overview ¢Alaska Energy Authority -Sponsoring Agency e Black &Veatch -Primary Contractor ¢HDR,Inc.-Subcontractor ¢Southeast Conference ¢Sealaska e Advisory Working Group ¢Regional Utilities ¢Regional Communities Extensive public participation is key element of joe |project.Fe eek 9/12/2011 Situational Assessment -Outside Drivers e Energy policy legislation ¢Federal *State ¢House Bill 306 ¢House Bill 220 ¢Fossil fuel price and availability ¢Environmental and land use regulations ¢Roadless Rule ¢CI RICE ¢Natural resources Situational Assessment -Issues ¢Conversion to electric space heating *Declining populations in communities ¢Declining economies in communities ¢High cost of space heating e Rapidly declining excess hydro *Difficulty in developing new hydro and transmission interconnection projects ¢High cost of electricity e Low levels of weatherization and energy efficiency ¢Availability and cost of cost Approach to Specific Issues -Load Forecast ¢Sources of information include: ¢Historical loads/existing load forecasts from utilities ¢Department of Labor population forecast e Census ¢Information from utilities ¢B&V analysis and development of load forecast ¢Reference Load Forecast -continuing existing trends e Scenarios ¢High Load Forecast -economic development and EVs ¢Low Load Forecast -DSM/EE and policies to discourage heating conversion ' Approach to Specific Issues -Regional Transmission *Review previous studies *Identify sub-regions ¢Identify potential transmission segments *Develop cost estimates and operating parameters *Economic screening based on: ¢Energy requirements of each sub-region,including reserve ¢Determine transmission costs on a $/MWh basis ¢Compare to threshold cost of diesel generation ¢Detailed evaluation ¢Identify potentially viable generation projects and associated interconnections ¢Strategist™will select economic combination of generation projects and regional transmission segments 9/12/2011 Approach to Specific Issues -Regional Transmission OOH/OOCCHIOO}0}Approach to Specific Issues -AK-BC Intertie ¢Review existing studies and other documentation ¢Complete economic screening of import and export scenarios to determine if Intertie should be included in detailed modeling,including: ¢Export market demand and wheeling charges e SE Alaska factors that affect project feasibility ¢Other external factors (outside Alaska)that affect project feasibility 9/12/2011 Approach to Specific Issues -Hydro ¢Develop comprehensive list of potential hydro projects ¢Develop screened list based upon specific criteria ¢Identify 2061 energy requirements by sub-region ¢Identify desired profile of local hydro projects by sub-region e Identify potential hydro projects that match desired profile and prioritize by tiers Approach to Specific Issues -AlternativeTechnologies e Consider alternative technologies,including biomass,wind,solar,and tidal ¢Fuel switching options ¢Consider commercial status ¢Modeling ¢Identify specific projects,and develop cost and operating assumptions ¢Include generic resources where appropriate 9/12/2011 10 Approach to Specific Issues -Conservation/Demand-Side Management (DSM) °Analysis done at community level -strategies to reduce energy use *Existing conservation/DSM programs included in Reference Load Forecast ¢Additional conservation/DSM programs -include in Low Load Forecast ¢Screen using standard cost-effectiveness tests for each of three groups of communities (high,intermediate and low cost) *Develop potential programs based upon screened measures e Add enough conservation/DSM programs that pass the Total Resource Cost (TRC)Test to achieve 20%load reduction target by 2020 ¢Implementation Issues ¢Potential resource -need to gather baseline information ¢Funding alternatives -State,system benefit charge,participants, etc. *Delivery mechanisms -AHFC,AEA,regional entity,individual utilities Analytical approach consistent with other states. Approach to Specific Issues -FinancialModel ¢Selection of preferred resources (Strategist™) e Include project costs and annual energy ¢Calculate 50-year fixed charge rate ¢Develop list of preferred resources ¢Key issues -ability to finance the future and rate impacts ¢Evaluate various financing alternatives to levelize/lower costs to Ratepayers,including: e State financial assistance (e.g.,Bradley Lake model) ¢Repayment flexibility ¢Credit support/risk mitigation ¢Potential interest cost benefit 9/12/2011 11 9/12/2011 Approach to Specific Issues -Financial Model Comparison of Capital Rates for Base Case Scenario and Alternative*Scenario 0.14 Example -for discussion 0.12 purposes only. 0.10£ =0.08 &0.06as0.04 0.02 ssass8sgegesesg@gsgsssNNNnNNNNNNnNNNNnNN --Base Case -Alternative Case ed Source:Railbelt Integrated Resource Plan,February 2010.;R,ff F238) 12 Final Report ¢Content ¢Summary of Results ¢Implementation Risks and Issues ¢Conclusions and Recommendations e¢Near-term Implementation Plan ¢Important Dates ¢Draft Report --November 2 ¢Final Report -January 16 FY esa Bwicingaworld dich. logetwhermeenhesenerRCIOOTERTESOCSISENGDeID&sicene ila oo BULUACK SO MtCMMG 2 aL Ge hbo eatDG rand OF Myron nolan lack &estchen Ls ra54-0713 aemOlbrisMA®DiLCOy iANTEM INS 9/12/2011 13