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HomeMy WebLinkAboutIMC MINUTES DEC 20 2013IMC Meeting Minutes-December 20, 2013 Page 1 of 9 Alaska Intertie Management Committee MEETING MINUTES Friday, December 20, 2013 Anchorage, Alaska 1. CALL TO ORDER Chair Brad Evans called the meeting of the Alaska Intertie Management Committee to order on December 20, 2013 at 9:02 a.m. A quorum was established. 2. ROLL CALL Members present: Bradley Evans - Chugach Electric (CEA); Jim Posey - Anchorage Municipal Light & Power (ML&P); Cory Borgeson - Golden Valley Electric Association (GVEA); Joe Griffith - Matanuska Electric Association (MEA); and Gene Therriault – Alaska Energy Authority (AEA). 3. PUBLIC ROLL CALL Public present in Anchorage: Sara Fisher-Goad , Kirk Warren , Kelli Veech and Sandie Hayes (AEA); Jeff Warner and Louis Agi (ML&P); Brian Bjorkquist (Department of Law); Brian Hickey and Burke Wick (CEA); Ron Woolf (GVEA); Bob Day (Homer Electric); Kirk Gibson (McDowell Rackner & Gibson); Henri Dale (AEA consultant). Bernie Smith (Regulatory Commission of Alaska); Dan Kendall (Municipality of Anchorage); Sunny Morrison (Accu- Type Depositions). 4. PUBLIC COMMENT There were no public comments. 5. AGENDA COMMENTS/MOTION FOR APPROVAL MOTION: Mr. Borgeson made a motion to approve the agenda. Motion seconded by Mr. Posey. The motion was approved unanimously. 6. OLD BUSINESS 6A. Open Access MOTION: Mr. Posey made a motion to approve the open access action item resolution. Motion seconded by Mr. Borgeson. Mr. Hickey explained Chugach has been working diligently to craft open access language specifically for the Alaska Intertie. Language has been included that says the Intertie Management Committee (IMC) may require new participants to pay a fee to access the intertie based on operating expenses and useful life determination. IMC Meeting Minutes-December 20, 2013 Page 2 of 9 Mr. Posey asked how many different ways is the fee split. Mr. Hickey noted the new participants would only pay based on their minimum intertie transfer capability rights (MITCR) allocated share. Mr. Posey asked if the fee would be an economic hurdle for someone who wants to be in the business. Mr. Hickey stated it is absolutely not an economic hurdle. It is a contribution to the assets that have been installed and not capitalized because of the unique nature of the intertie. Mr. Warren commented the development of exactly how that rule works is open to future action. Mr. Hickey stated the language says it is based on the new producer's allocated MITCR rights share in five years and expenses as determined by the IMC. Chair Evans understands that all Committee members actively participated in working with the state. Mr. Hickey agreed. Chair Evans wanted to be clear the Committee had representation in this process. Mr. Hickey informed the working group included himself, Mr. Bjorkquist, Mr. Therriault, Mr. Warren, Mr. Gray, and Mr. Agi. Chair Evans asked how many pages is the actual language in the document. Mr. Hickey stated it is 56 pages. Mr. Posey asked how many pages were modified since the last meeting. Mr. Hickey stated between six and 12 were modified. Mr. Griffith asked if this document refers to the Alaska Intertie only from Douglas to Healy. Mr. Hickey agreed. Mr. Hickey noted there were not a vast number of changes. Chair Evans asked if the changes were mostly around the transition issues to access the intertie. Mr. Hickey agreed. Mr. Hickey reported the state requested the ability for other entities to obtain MITCR rights on the intertie and they crafted language that specifically said that if an entity is selling power to an electric utility certificated with a certificate of public convenience and necessity (CPCN), greater than five megawatts of retail load, then that entity could apply for MITCR and their sales would be allowed to be counted to create the MITCR rights. Mr. Griffith asked if there was no limitation on someone else contributing MITCR. Mr. Hickey stated they can contribute capital and become a priority user and upgrade the intertie. There are priority users and priority participants and so the state included that language. Mr. Griffith asked a hypothetical question, stating if he does not have a lot of MITCR and wants to sell to GVEA, can GVEA use their space on the line for the purchases that he might offer. Mr. Hickey agreed that it would work that way. Northern MITCR is owned by the northern utilities and GVEA has all 75 megawatts. Mr. Hickey stated language was added that said the rules around open access, point-to-point, declaration of when to buy and duration, only applies to non-MITCR rights allocated capacity. If there is capacity on the transmission line and someone is not using it, they are required to post that back to the pool and non-MITCR rights owners can come in and use that access based on the open access language. The MITCR rights users continue to use the line as they have used it in the past. Chair Evans asked what would happen if the reserve pool was congested by new participants on the tie and how that issue would be addressed. Mr. Hickey gave an example that GVEA has 75 megawatts of Northern MITCR and they are only using 40 megawatts. They are required to post back that 35 megawatts for whatever period of time they choose in either a firm or non-firm capacity. If two participants want to use the same portion and it becomes congested, the participant with the longer-term contract would prevail, but the original contractor would have IMC Meeting Minutes-December 20, 2013 Page 3 of 9 the ability to extend for a week and match that price. Mr. Hickey noted in that sense, congestion is covered in the open access rules. Mr. Hickey stated the avenue for decongestion for the dedicated capacity users is to become a priority user and improve the intertie. Chair Evans does not believe the response addresses the heart of the matter. The pool is already having major problems because there are people who want a free ride in the pool, which is probably the most valuable asset that was created with the intertie. Chair Evans asked what will be done with new participation if there was a disruption in how the pool works on a day-to-day basis. Mr. Griffith agreed it is a legitimate question to answer and provided a real-world example. Alcoa Aluminum builds an aluminum plant in Talkeetna and wants to feed off Stevens substation. Mr. Griffith then requests 75 megawatts to Stevens. He asked what happens next. Mr. Hickey stated Mr. Griffith would be required to improve the intertie from his original location to Stevens and then Mr. Griffith would become the priority user of that capacity he created. Mr. Griffith asked if he would have to improve that segment. Mr. Hickey agreed he would have to improve that segment. Chair Evans asked if that is because it is in excess of five. Mr. Hickey stated it is because it is in excess of the capacity in the existing intertie and he is not a retail customer. Chair Evans asked what happens to GVEA in that circumstance when a new person is on there and the load matches the transaction, which effectively fully utilizes the tie, if a unit is tripped, then they cannot get the reserves. Mr. Hickey explained that scenario falls under the rated path methodology calculation, which is a standard North American Electric Reliability Corporation calculation for transfer capability. One of the components is the capacity benefit margin. Existing utilities that had deferred construction of assets for reserves in favor of using regional reserves have a capacity benefit margin. Mr. Griffith asked who defines the capacity benefit margin. Mr. Hickey stated it is the largest single generator contingency minus the spinning reserve contribution. If there is an event where GVEA needs the 100 megawatts from the south, everybody else gets bumped and they get access to their reserve margin. Chair Evans stated there would have to be some mechanism on an engineering level to recognize the disturbance so the load that is not the priority load has to get off to allow the flow, which would be an interruptible industrial load at that point in time to ensure the pool still works. Mr. Hickey agreed and advised that is protected in the system interconnection agreement. Mr. Griffith asked to go back to the aluminum plant scenario and answer how the issue would be handled if someone else was serving that over the intertie. Mr. Hickey noted the hypothetical could occur if someone created a utility, put a big camp in there that had five megawatts of load, got it certified by the Public Utilities Commission, then they would be able to get MITCR rights for their service. Mr. Griffith asked if that would be at the expense of GVEA. Mr. Hickey agreed it would be at the expense of GVEA and the MITCR rights would be diluted. Mr. Griffith asked what happens if a substation goes in on the north side of the Chulitna river bridge for the South Denali project that is currently underway and they need 10 megawatts. Mr. Hickey advised if it is greater than a retail load of five megawatts, and they can get someone from the south to provide it, then the MITCR rights gets divided up. Mr. Griffith stated GVEA again would lose. IMC Meeting Minutes-December 20, 2013 Page 4 of 9 Chair Evans asked if somebody comes in and improves the capacity of the intertie by 25 megawatts, are they protected from the third guy that comes on wanting a piece of that capacity. Mr. Hickey stated they are protected because they are the undivisible MITCR. Mr. Hickey advised this type of agreement has far-reaching affects that the IMC nor any of the working group really can fore see all possible conditions. Language has been included that says this agreement is organic and will require revisions, which gives the IMC the ability to go back and revise this language at any time based on experience and need. Mr. Therriault commented the language not only gives the IMC the power to go back and make the changes, it suggests that the changes are needed. The IMC will have to continue to work on this document. Mr. Borgeson commented GVEA's senior dispatcher Alan Gray has reviewed this document and they are satisfied with the agreement. He understands there is some potential for GVEA being affected adversely, but they believe their rights are protected for the most part. Mr. Borgeson stated they also believe it is an organic document, which will need changing and amending as circumstances arise. Chair Evans stated he would like to go on record as applauding the people who worked on this. This was a very difficult task to undertake and do something new, with all the risks involved. He believes it is a lot better than what is seen out of other people who walk away from the table when they cannot get what they want. Chair Evans gave recognition to the people who worked hard to get the final agreement to move forward, including staff and representation from AEA. He noted it speaks to their integrity to stay at the table when they do not get what they want. Chair Evans commented it is easy to quit, but it is hard to stay at the table and get the job done to work on the tough issues. Chair Evans noted he will be voting in favor of the resolution. Mr. Posey stated ML&P feels the same way. A lot of work has gone into this document by folks and he was probably the harshest critic early on in this process, especially when the military was trying to get on ML&P's line without paying pre or post costs. Mr. Posey believes this agreement addresses most of his concerns. The motion was approved unanimously. Mr. Griffith commented this is a big step forward and requested a press release be submitted. Chair Evans agreed and stated he and Ms. Fisher-Goad will work on a press release. 7. NEW BUSINESS 7A. Adoption to Expand Committee of Intertie Management Committee MOTION: Mr. Posey made a motion to approve the resolution. Motion seconded by Mr. Griffith. Chair Evans explained the proposed organizational structure of the IMC. Mr. Borgeson expressed his appreciation to Chair Evans for creating and providing this information to the Committee. Mr. Borgeson asked if Chair Evans feels this needs to be adopted now or if adoption could be delayed. Chair Evans believes the Committee has discussed this information. Chair Evans apologized for not providing the information to the Committee for IMC Meeting Minutes-December 20, 2013 Page 5 of 9 review and evaluation in advance. Chair Evans noted because the work product is so late, he expected the resolution to be tabled until the next meeting. Mr. Griffith commented he does not have any objection to the resolution, but would like to think about it a little bit. Mr. Griffith stated there are many small errors that need to be corrected. Chair Evans agreed. Mr. Therriault asked if Chair Evans was anticipating more discussion or would he like a motion to table. Chair Evans stated discussion can occur now, especially if somebody has any high concern for the direction being taken from a policy point of view in formalizing the structure of the IMC. Mr. Griffith believes this probably should have been done a long time ago. Ms. Fisher-Goad stated AEA noticed one specific potential error for the usage of the word "negated," where she believes it should read "negotiated." Ms. Fisher-Goad commented she wants to ensure that was not causing confusion. Chair Evans apologized for any mistakes. MOTION: Mr. Borgeson made a motion to table this action item to the next meeting. Motion seconded by Mr. Posey. The motion was approved unanimously. 7B. Reliability Filing Chair Evans requested clarification from Committee members and the secretar y if there was a prior resolution to file the reliability standards with the Commission. Mr. Griffith believes there was a previous motion that has not yet been approved. Chair Evans stated the previous motion has not been approved because the Committee felt it would be better if the open access matter was completed and the language adopted prior to filing with the Regulatory Commission of Alaska. Mr. Posey stated the Committee is now ready. Chair Evans agreed. Chair Evans advised if the entire Committee understands there was a prior resolution directing the reliability standards be filed with the Regulatory Commission of Alaska, Chugach will draft the appropriate filing language and that letter will be circulated for review by Committee members. MOTION: Mr. Griffith made a motion to finalize the filing, circulate it for comment from all Committee members and submit it to the Regulatory Commission of Alaska. Motion seconded by Mr. Posey. Chair Evans proposed to have Chugach's regulatory people work with the Commission on the proper way to file this, including the filing of the brief description of what it is, what kind of life it has and how it fits with regulation dockets. Mr. Therriault commented the document should also highlight the process that it has gone through in its development. Chair Evans agreed and noted there will be a chronology going all the way back to 30 years ago as part of the filing. Mr. Borgeson asked if the document should be filed as a tariff. Chair Evans stated the tariff filing comes after this filing and the process will go forward one step at a time because there are many steps in this process. IMC Meeting Minutes-December 20, 2013 Page 6 of 9 The motion was approved unanimously. 7C. Reliability Budget Discussion Mr. Borgeson noted he does not anticipate this agenda item to be an action item today because he is not prepared to have the real plan laid out. He would like a discussion to occur regarding the costs the IMC is incurring, particularly with going to open access, the reliability standards and the enforcement of those, that should not be borne by the MITCR mechanism alone. Mr. Borgeson requested the discussion include whether AEA is willing to bear their share of certain costs of the operation of the intertie or if it is a situation where only the participating utilities have to bear the cost. Mr. Borgeson stated at the next meeting, GVEA will present a scope of what types of activities will be considered, including reliability and administrative costs, which should not be borne by the use of the line, rather than operational costs. He noted the scope will also include a system for sharing the cost by participation. Mr. Borgeson advised he will provide this to the Committee before the next meeting and hope to have an action item for the next meeting. Chair Evans commented it is part of the history to have other shared costs which are not apportioned to the MITCR rights. He noted the big example is spending reserve, which has a completely different algorithm. Mr. Posey asked what is the range of cost the state would be asked to bear. Mr. Posey suggested using MITCR rights as a part of the cost formula and utilize equal shares afterwards. Mr. Borgeson stated one of the biggest costs that GVEA incurred was the legal costs over the development of the new intertie agreement. Mr. Borgeson reported AEA is interested in hiring consultants to conduct analysis on the reliability standards and GVEA is going to pay for 96% of that. He noted those kinds of costs perhaps need to be shared by everybody after they have been considered, budgeted and approved. Mr. Griffith stated if the costs are shared, then they ought to have the right to comment on them before they are incurred. Mr. Borgeson agreed. Chair Evans believes the asset management activities are really straight forward and will be easy to separate them from other activities. Chair Evans suggests the Budget Committee begin keeping track of the cost of the IMC, even though it is not budgeted and members may still contribute this as part of their participation, but the cost needs to be known. Chair Evans believes some of the pool management costs are easily identifiable. The state of Alaska is not a generator and does not have a spinning reserve obligation. He noted there is an algorithm for pool management on that side. The hidden work and hidden costs need to be documented because they are not free and other people rely on the members having their planning reserves, stand-by reserves, and spinning reserves. Mr. Agi asked if the Repair & Replacement fund was ever funded. Chair Evans commented he is fully expecting the Budget Committee to start looking at the life of the asset, the R&R, how that is going to get funded and come forward with a proposal on how to manage that process and be incorporated into open access. Mr. Griffith stated the point of the value of unserved energy needs to be considered because there is a definite benefit to the membership of having the additional reliability contributed by the interconnected system and the reserves criteria. Chair Evans commented the Committee will IMC Meeting Minutes-December 20, 2013 Page 7 of 9 have to start documenting costs because there are people who want a free ride. Mr. Griffith agreed. Mr. Borgeson said even though Chair Evans noted the state does not have a spinning reserve requirement, the state does have power generation with AEA. Mr. Griffith noted the state is an IPP. Chair Evans commented the agreement was if the share that the participants were taking from Bradley Lake became their largest unit that would be the spin that had to be contributed. Mr. Therriault commented on the different way to generate money for the budget and noted the state is certainly willing to hear whether it is a blending of the MITCR rights and other mechanism that make the contribution. The state is interested in reviewing and considering what the suggestions would be. Mr. Therriault does not believe AEA would be very successful going to the Legislature and asking for general fund dollars beyond the expense AEA already absorbs with their budget. Chair Evans stated it will be nice to get the figures out in the open and know what the costs are, because AEA is clearly spending money. He requested the state's cost contribution is included in the cost of the pool. Chair Evans believes the Budget Committee and the Tariffs and Regulatory Committee are going to be quite busy over the next 12 months. 7D. Status Updates Operator Report Mr. Warner gave a brief update and advised the intertie has been loaded up near the 60/70- megawatt level incurring no problems. Mr. Warner noted Electric Power Systems is continuing their battery replacement effort for the snow load monitoring. Chair Evans asked if that is currently functional. Mr. Warner advised there are some voltage alarms, but the Douglas switch is not communicating right now. Chair Evans asked if there were any compliance issues and if everybody met their spinning reserve obligation. Mr. Warner reported the four utilities at the table are currently meeting their spinning reserve requirements. Information is exchanged hourly. Chair Evans asked if there were any energy accounting issues or custody of transfer issues. Mr. Warner had no issues to report. Mr. Therriault commented on the snow load monitoring and advised AEA oversee the two contracts conducting the work. Paperwork is circulating now to allow a contract extension to get through the winter season, then a new request for proposal will go out to initiate a new contract. Mr. Warner noted as soon as that occurs, the safety patrol will go out and inspect. Mr. Warner commented there was an issue four weeks ago where the tie, without the Teeland Static VAR Compensator (SVC), was loaded up to the 70-megawatt range and the system became unstable. Healy was swinging about eight megawatts and Douglas was swinging about four megawatts. When the operators discovered this, they immediately backed the system down and a limit of 60 megawatts was placed on the tie when the Teeland SVC is out of service. Chair Evans believes the original study does not have a restriction on the intertie when the Teeland SVC is out. Mr. Warner noted that is part of the problem. Chair Evans stated there is an Engineering Subcommittee who can take a closer look at this problem. Mr. Warner believes GVEA has $180,000 in the budget to study the transfer limits on the intertie and will move forward with that study. Budget Report IMC Meeting Minutes-December 20, 2013 Page 8 of 9 Mr. Woolf gave a brief report on the budget. Mr. Borgeson stated the revenues are ahead of where they were anticipated based on the first quarter results and expenses are under their anticipated values. Chair Evans asked if the forecast forward is to be $380,000 over in revenue. Mr. Woolf is assuming the maintenance will be conducted in the springtime. He believes the positive variance is due to the maintenance not being expensed yet. If no maintenance is scheduled, then Mr. Woolf would expect to see a positive variance on the bottom line at the end of the year. He noted the operation people would be able to answer the maintenance schedule question. Chair Evans requested Mr. Woolf get together with operations after December to get a forward forecast for maintenance. Mr. Borgeson agreed and noted they will provide another budget report after six months of results for the fiscal year. Mr. Griffith asked if the state's fiscal year is used for this budget. Chair Evans stated yes. Static VAR Compensator (SVC) Project Status Report Chair Evans invited Mr. Warner to provide his report. Mr. Warner reported the Teeland SVC was put online December 13th and has been in service since then. There were some communication issues and a patch was installed to solve the problem. Mr. Warner expressed his appreciation to the Chugach folks who worked many, many hours to resolve the issue. Chair Evans asked if everything is functional today. Mr. Warner stated it is online and functioning well. The operators are very happy with it. Chair Evans asked if training and testing have been completed. Mr. Warner agreed and noted the training has occurred for the operators and the techs. Chair Evans asked if the plan is to go to Healy or Gold Hill. Mr. Warner advised Gold Hill will be next and is tentatively scheduled for April. Healy is tentatively scheduled for July. Chair Evans commented this is a monumental moment because this is one of the oldest control systems in the railbelt. Mr. Griffith noted it may be one of the oldest in the world. Mr. Warner advised the ownership of the SVC has not been released to the state yet. A negotiating meeting will occur in January. Municipal Light & Power currently has full control over the SVC. Mr. Griffith asked who is gathering the logic, interconnection and wiring diagrams for the SVC. Mr. Warner advised EPS is gathering that data and will provide that data to the IMC. Mr. Warner stated a review process has already occurred. Mr. Warner noted the changing of the hardware at Teeland went very well and ahead of schedule. The delays and problems came from the programming of the system. He is hopeful those problems will not exist for the next two systems, since they are similar systems. Under Frequency Load Shed Study Mr. Warner advised there have been no changes since the last report. The System Study Subcommittee met the first week of December. The individual utilities are gathering data. Chugach is conducting the request for proposal for the project. How to pay for the project has not yet been decided. Mr. Warner stated there is concern the estimate for the cost of the study at $100,000 is too low. The estimate will be reviewed and updates on the cost will be provided.