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HomeMy WebLinkAbout2022.05.20 IMC Executed MinutesAlaska Intertie Management Committee (IMC) REGULAR MEETING MINUTES Alaska Energy Authority Board Room Friday, May 20, 2022 1. CALL TO ORDER Chair John Burns called the meeting of the Alaska Intertie Management Committee to order on May 20, 2022, at 9:04 a.m. A quorum was established. 2. ROLL CALL FOR COMMITTEE MEMBERS Members present: John Burns (Golden Valley Electric Association (GVEA)); Andrew Laughlin (Chugach Electric Association (CEA)); Ed Jenkin (Matanuska Electric Association (MEA) ); and David Lockard (Alaska Energy Authority (AEA)). 3. PUBLIC ROLL CALL Public present: Betty Caudle (Accu-Type Depositions); Joel Paisner (Ascent Law Partners); Daniel Aicher (AEA); Jennifer Bertolini (AEA); Bryan Carey (AEA); Dona Keppers (AEA); Beazit Redzepi (AEA); Curtis Thayer (AEA) (arrived late); Luke Sliman (CEA); Stefan Saldanha (Department of Law); Dan Bishop (GVEA); Pete Sarauer (GVEA); David Pease (MEA); and Bernie Smith (Public). 4. PUBLIC COMMENTS — None 5. AGENDA APPROVAL MOTION: Mr. Jenkin made a motion to approve the revised agenda, as presented. Motion seconded by Mr. Lockard. Jennifer Bertolini, AEA, informed that the revisions to the agenda included changing the order of Items 7A. and 7B., and attaching additional electronic links to supporting documents. Chair Burns clarified that the revisions contained no substantive changes. The revised agenda, as presented, was approved without objection. 6. APPROVAL OF PRIOR MINUTES — March 25, 2022 Chair Burns expressed appreciation to Ms. Bertolini for providing the minutes for review. MOTION: A motion was made to approve the Meeting Minutes of March 25, 2022. Motion seconded by Mr. Jenkin. Meeting Minutes - May 20, 2022 Mr. Jenkin identified the second paragraph on page three and requested that Mr. Carey clarify or edit the sentence that states, "Mr. Carey believes that input will be received in previously used processes." Mr. Carey noted that the Minutes would read better if the sentence was replaced with, "Mr. Carey believes that input will be received in using existing processes." Chair Burns asked if the sentence means that AEA will review the input previously submitted. Mr. Carey agreed. Mr. Jenkin, as the second to the motion, accepted Mr. Carey's amendment and clarification. The Minutes of March 25, 2022, as clarified, were approved without objection. Chair Burns expressed appreciation and compliments to the Transcriber for the articulate and coherent preparation of the Minutes. 7. NEW BUSINESS 7A. FY22 IMC Budget Amendment Chair Burns requested Dona Keppers, AEA Chief Operating Officer, to present the information. She directed members to the document under Item 9B. Budget to Actual Expenses for the period ending March 31, 2022. Ms. Keppers reviewed that the total actual revenues were $1,935,170. The detailed operating expenses are listed on page one and page two. The total actual operating expenses were $858,488. The total actual administration costs were $162,363. The approved budgeted amount for FY22 administration costs were $100,000. The deficit is approximately $62,000, and is expected to reach a shortfall of approximately $120,000 by the fiscal year-end of June 30, 2022, if it is not increased at this time. Ms. Keppers explained that the look -back shows that the costs in the third quarter of FY22 are trending similar to the costs in the third quarter of FY21. The annual administrative costs are forecasted to total an average of approximately $216,000. The FY21 administrative costs were budgeted at $90,000 and the actual administrative costs in FY21 were $210,000. Ms. Keppers explained that the proposed FY22 Budget Amendment 1 increases the administrative cost budget by $120,000. If approved, the FY22 budgeted amount for administration costs would be $220,000. Mr. Laughlin noted the administrative deficit in the FY21 and FY22 budget years. He asked if the FY23 Budget will be more reflective of the anticipated costs. Ms. Keppers agreed. Mr. Laughlin asked if there was a specific reason driving the increase in costs. Ms. Keppers indicated that there is not a specific item driving the increase. Staff believes there needs to be a mid -year calibration and review of the budget in order to anticipate any anomalies. The entry was rolled in March 31 st Ms. Keppers believes that this process may have also happened in the fourth quarter of FY21. Mr. Jenkin commented that through FY20, the budgeted administrative costs were approximately $100,000. The increase has occurred over the last two years. Mr. Jenkin noted that he discussed the reasons for the cost increases with Mr. Lockard and he was satisfied with the explanation. Meeting Minutes - May 20, 2022 2 Chair Burns requested Mr. Jenkin provide a brief explanation of the increase to the administrative budget. Mr. Lockard discussed that he sent an explanation of the administrative cost increases to Mr. Lockard and to Dan Bishop, GVEA. Mr. Lockard noted that he can send the information to the Committee. He discussed his review of AEA's administrative cost as a percentage of the total budget. The change over time is not dramatic when reviewed this way. Some of the finance costs and costs for processing invoices are related to the size of the budget. In the past, the administrative cost increase was in a range of 5% to 8%. The projection for this year is an increase of 6%. Chair Burns requested that Mr. Lockard forward his additional information to Committee members. Mr. Jenkin clarified that the information from Mr. Lockard was at the request of the Intertie Operating Committee (IOC) and he received the information since he is a member of the IOC. There were no more questions. MOTION: Mr. Jenkin made a motion to approve the first amendment of the FY22 Budget, which increases the AEA Administrative costs by $120,000. Motion seconded by Mr. Laughlin. The motion was approved unanimously. 7B. FY23 IMC Budget Chair Burns explained that this is the Committee's second review of the FY23 Budget. After today's discussion, the Committee will vote to move the proposed budget forward to the public comment period. Chair Burns requested Ms. Keppers to provide an overview. Ms. Keppers discussed that the total revenues in the FY23 Proposed Budget are anticipated at $3,504,985. The total FY23 Intertie operating costs are anticipated at $2,544,100. The total FY23 Intertie administrative costs are anticipated at $766,000. This amount is split between AEA's administrative costs of $200,000 and miscellaneous transmission line costs of $566,000. The proposed total expenses are anticipated at $3,310,100. This results in an expected surplus for FY23 of $194,885. Ms. Keppers reviewed the FY23 Energy Projection found on page three. The projected usage for GVEA is 428,521 Mwh. The projected usage for MEA is 24,476 Mwh. The total projected usage revenue is $2,319,345. The total projected capacity revenue is $419,640. The annual participant administrative contribution is $255,333.33. The monthly contribution is $21,277.78. Ms. Keppers noted that page four shows the FY23 calculation of the energy rate and the usage rate, which is $2.69. Mr. Jenkin commented on behalf of the IOC. He indicated that there were changes based upon the significant review of the information and comments received during the prior IMC meeting. Mr. Jenkin highlighted the Synchrophaser System shown on FERC 566, Miscellaneous Transmission Expense. He noted that the determination was made that this item was more appropriately budgeted in this area to recover the split of administrative costs more equivalently among the utilities, rather than the normal method of usage recovery. This is a Railbelt-wide Meeting Minutes - May 20, 2022 3 project to install synchrophasers throughout the system. Mr. Jenkin informed that the IOC process is ongoing to engage a contractor regarding the Asset Management Plan line item. Mr. Lockard discussed that the Maintenance Subcommittee has been making progress on the Asset Management Plan that was requested late last year. The Vegetation Management Plan has been drafted and is being finalized. In the last meeting, the Maintenance Subcommittee discussed wildfire prevention and made progress on how to proceed. Mr. Laughlin asked Mr. Jenkin if the Unbalanced Snow Load Mitigation Analysis and Recommendations line item is based on suggestions by the IMC. Mr. Jenkin requested that Mr. Bishop provide the response. Mr. Bishop explained that the Intertie had issues with faults. The snow load monitoring system is used to detect conditions, but does not address the root cause of the problem of unbalanced snow loading. This line item is budgeted for a consultant to work with the in-house structural engineer to consider options, such as reducing the insulator string length and other recourses during unbalanced snow loading conditions. Chair Burns informed that during the previous meeting, the IMC directed the IOC to develop a task order contract to an engineering firm to evaluate ways to physically mitigate the unbalanced snow load monitoring. Chair Burns discussed also that the IMC previously requested that the IOC conduct a high-level review and vetting of the proposed budget. Chair Burns asked if the proposed budget under discussion is the result of that high-level review. Mr. Jenkin agreed. Mr. Lockard commented that his understanding was that the snow load mitigation analysis was to be performed by GVEA's experienced structural engineer. He asked for clarification from Mr. Bishop regarding the utilization of a contractor. Mr. Bishop explained that the direction from the IMC was to engage a consultant. He believes the work will be conducted as a combination of GVEA's in-house expertise, Jeremy Forsting, and the consultant to ensure the resources are available. Mr. Jenkin added that his recollection is that the consultant will be reporting to GVEA's structural engineer. Mr. Lockard informed that he has been asked to work with Russ Thornton at CEA to review the existing equipment on the snow load monitoring system and to analyze the need or opportunity to improve the collection of data. He offered to coordinate this effort with GVEA's effort on the snow load mitigation analysis. Chair Burns requested that Mr. Bishop, Mr. Forsting, and the IOC coordinate with Mr. Lockard. Chair Burns reiterated that strategic planning and preventative maintenance is the backbone of the system and it is imperative to evaluate the system thoroughly. There were no more questions. MOTION: Mr. Lockard made a motion to approve the FY23 Preliminary Operating Budget to be posted for the 30-day public comment period, as presented. Motion seconded by Mr. Jenkin. The motion was approved unanimously. 7C. Federal Funding Opportunities for Railbelt Transmission Upgrades Meeting Minutes - May 20, 2022 4 Chair Burns requested that Mr. Lockard present on this item. Mr. Lockard informed that AEA management asked him to bring forward updates on the efforts related to the Infrastructure Investment and Jobs Act (IIJA) signed into law in November 2021. The opportunities include both formula grants and competitive grants. The proposed annual formula funding for Alaska is $12.1 million, requiring a 15% State match. AEA has worked with the Legislature to identify the match for the first two years. The match is not yet in place for the final three years. The total funding will be in excess of $60 million over five years. Receipt authority for these funds have been requested and is anticipated to be approved. Mr. Lockard discussed the IIJA competitive grants specifically for reducing the risk from wildfires and disruptive events. There is a 30% set -aside under that program for small utilities. Every utility in Alaska qualifies as a small utility. The match requirement for the small utility grants is 33%. Mr. Lockard discussed that Section 40103 is a competitive grant program with a 20% cost -share for statewide energy infrastructure improvements. Mr. Lockard informed that public comments are due in early June on the IIJA funding that has been identified. He requested that utilities provide copies of their public comments to AEA. Chair Burns asked if AEA has received receipt authority. Mr. Lockard explained that his understanding is that receipt authority has been agreed to, and will be finalized upon the Governor's signing of the budget. Chair Burns requested an update on Senator Murkowski's training session and the collaborative effort with AEA, IMC, and Bradley Lake Project Committee (BPMC). Mr. Lockard noted that AEA and the utilities attended the training session and his understanding is the collaborative effort is ongoing. Mr. Jenkin advised that AEA is included in a utility group that was formed to coordinate those collaborative efforts. The group is utilizing consultants to maximize the intentions and to move the goals forward. Chair Burns expressed appreciation to AEA and to Curtis Thayer for taking the lead on these opportunities and for providing communication to the utilities as the IIJA funding evaluations are ongoing. There were no more questions. 8. OLD BUSINESS 8A. Strategic Plan for Intertie Chair Burns complimented the IOC for their comprehensive report. He expressed appreciation to the IOC for reviewing both the immediate needs of the Intertie and long-term planning and preventative maintenance of the Intertie. Chair Burns requested that Mr. Bishop provide a high- level overview of the presentation. Mr. Bishop informed that he worked very closely with Mr. Lockard. He discussed that the document and information is based on work conducted by the Railbelt utilities and the consensus vision regarding an interconnected Railbelt electric system. Mr. Bishop reviewed the background information of the Alaska Intertie, including its commission date, transfer capacity, and tower design. Mr. Bishop discussed a timeline of selected construction, repair, and upgrade events. Ongoing work includes static VAR compensator (SVC) scheduled maintenance, SVC power oscillation dampening (POD) tuning, marker ball replacement, the development of a preventative maintenance plan, asset management plan, and the development of vegetation and wildfire Meeting Minutes - May 20, 2022 5 management plans. Mr. Bishop reported that the total outage rate of the line over 10 years is 1.28%, which compares favorably with the NERC outage rate of 1.84%. The forced outage rate over that same time period was .41 %. Chair Burns asked if forced outages were equivalent to unscheduled outages. Mr. Bishop agreed. Mr. Bishop reviewed the ongoing challenges; effects of unbalanced snow loading and the cost barrier of physically modifying the structures, aging equipment, melting permafrost, erosion, wildfire risk, clearing vegetation, and access. Mr. Bishop explained that the development of the strategic plan will be a combination of both bottom -up and top -down approaches, and includes the utilization of information such as structural analysis, maintenance plans, and cost -benefit analysis. The resource evaluations could include wind, hydro, and potentially nuclear power. Mr. Bishop noted that a decision regarding a possible transmission line voltage upgrade to 230 kV will also be considered. The proposed components of the strategic plan include actions such as the periodic update of the vision and objectives to ensure consistency with IMC's expectations, consideration of the use of a reserve fund or other financing options, a recurring study of long-term repair and replacement costs, and real-time data sharing. Mr. Jenkin expressed appreciation to Mr. Bishop for the report. Mr. Lockard expressed appreciation to Mr. Bishop. He believes this level of detail and documentation is timely and appropriate. Chair Burns echoed the comments of appreciation and highlighted the importance of planned coordination and collaboration on the Railbelt. 9. COMMITTEE REPORTS 9A. Operators Report / OC Report Chair Burns requested that Mr. Bishop provide an overview of the Operators Report. Mr. Bishop thanked Mr. Thornton for providing portions of the information within the report. Mr. Bishop discussed that the energy use summary is consistent with the budgeted amounts. He reviewed the Intertie trips that occurred between January 191h and May 1 Oth, 2022. MEA has conducted selective clearing in certain areas. Mr. Bishop indicated that an IOC report of recent activities is also included for review. Chair Burns asked for additional information related to the intention of follow-up for the IOC or for the IMC regarding the significant items listed as i. through vi. on the report. Mr. Bishop commented that he believes the IOC can pursue those items further and then will present a complete background information document to the IMC. Chair Burns requested that the information is presented as quickly and as thoroughly as possible. He thanked Mr. Bishop for his report and for his leadership. There were no other questions. 9B. Budget to Actuals Chair Burns invited Ms. Keppers to present the Budget to Actual Report. Ms. Keppers indicated that she presented a high-level synopsis earlier. She restated the total amounts. Meeting Minutes - May 20, 2022 6 Chair Burns asked if the surplus of $914,322 is due to project timing. Mr. Lockard commented that he believes a significant amount of the surplus is the change in the schedule for the $640,000 marker ball project. Supply chain issues have affected timing. Mr. Jenkin noted that the marker balls were ordered months ago, and delivery has been delayed. Delivery is expected either in June, within this year's budget, or in July, within next year's budget. The clearing contractor that was budgeted for this year will begin work at the end of the month. As discussed at the IOC, the intent is to conduct additional clearing work this year in an amount less than $100,000. This will help reduce the FY23 budget because of the variances and changes in the budget due to the marker ball project activity delays. There were no additional questions. 10. MEMBER COMMENTS Mr. Laughlin expressed appreciation to the subcommittees for their reports and work. He thanked Mr. Bishop for the strategic plan review. Mr. Lockard welcomed to Mr. Laughlin to his first meeting. He thanked Mr. Bishop for his excellent presentation. He expressed appreciation to Ms. Keppers and Beazit Redzepi, AEA, for their extraordinary work on this year's challenging budget. Mr. Jenkin added appreciation for AEA's work in coordinating with the utilities to supply information concerning access to the federal funding opportunities. Chair Burns welcomed Mr. Laughlin and reiterated the comments of appreciation, especially for the Intertie's strategic plan and for the coordination with AEA and all of the utilities on the IIJA. He believes these collaborative efforts are poised to generate transformational changes on the Railbelt. Chair Burns thanked Ms. Keppers for her leadership. He noted that the cost per kWh increased 22% from last year to $2.69. Chair Burns expressed his understanding is the increase is due to necessary and preventative maintenance on the Intertie. 11. NEXT MEETING DATE — June 24, 2022 Chair Burns informed that the next meeting is June 24, 2022. 12. ADJOURNMENT There being no further business of the AIMC, the meeting adjourned at 10:03 a.m. John Burns, hair David Lockard, AEA S cretary IMC Meeting Minutes - May 20, 2022 7