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HomeMy WebLinkAbout2024.12.06 IMC Executed MinutesIMC Meeting Minutes Page 1 of 8 Alaska Intertie Management Committee (IMC) REGULAR MEETING MINUTES Alaska Energy Authority Board Room Friday, December 6, 2024 1. CALL TO ORDER Chair Dan Bishop called the meeting of the Alaska Intertie Management Committee to order on December 6, 2024, at 9:00 a.m. 2. ROLL CALL FOR COMMITTEE MEMBERS Members present: Dan Bishop (Golden Valley Electric Association (GVEA)); Ed Jenkin (Matanuska Electric Association (MEA)); Russell Thornton (Chugach Electric Association (CEA)); and Bill Price (Alaska Energy Authority (AEA)). A quorum was established. 3. PUBLIC ROLL CALL Public present: Jennifer Bertolini (AEA); Bryan Carey (AEA); Patrick Domitrovich (AEA); Pamela Ellis (AEA); Mark Ziesmer (AEA); Joel Paisner (Ascent Law Partners); Mike Miller (CEA); Nathan Minnema (GVEA); Keith Palchikoff (GVEA); Lance McKimson (MEA); Jon Sinclair (MEA); Rob Wilson (MEA); and Julian Jensen (Public). 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Jenkin to approve the agenda. Motion seconded by Mr. Thornton. The agenda was approved without objection. 5. PUBLIC COMMENTS - None 6. APPROVAL OF PRIOR MINUTES – September 27, 2024 MOTION: A motion was made by Mr. Thornton to approve the Meeting Minutes of September 27, 2024, as presented. Motion seconded by Mr. Price. The Minutes of September 27, 2024 were approved unanimously. 7. NEW BUSINESS 7A. FY24 Estimated Surplus IMC Meeting Minutes Page 2 of 8 Mark Ziesmer, AEA Owned Assets Project Controller, reviewed the FY 24 Estimated Surplus.t. The estimated FY24 refund is $2,533,785.99. This is attributed primarily to a surplus in revenues over expenses of $506,080.10, and actual expenses less than budgeted by $1,746,554. Refunds will be distributed according to the Alaska Intertie Agreement. GVEA will receive a refund in the amount of $2,022,729.61, which comprises 91% of the usage share and 33% of the administrative share of the surplus. MEA will receive a refund in the amount of $347,460.97, which comprises 9% of the usage share and 33% of the administrative share. CEA will receive a refund in the amount of $163,595.41, which comprises 33% of the administrative cost share. CEA has no usage share. Mr. Ziesmer continued the presentation and discussed that the FY24 revenues totaled $5,263,432, which is a significant increase from FY23 revenue of $2.6 million. Of the FY24 revenue amount, usage charges contributed $3,665,631 and capacity charges contributed $611,520. Total administrative charges were $766,000. Total investment interest and capital credits equaled $220,281. Mr. Ziesmer discussed the total expenses for FY24 were $2,729,646, which is significantly lower than the FY24 budgeted amount of $4,246,200. This is primarily due to lower than expected costs across most of the Federal Energy Regulatory Commission (FERC) categories. Mr. Ziesmer reviewed the energy usage for FY24 was 297,535 megawatt hours (MWH) and exceeded the projections of 274,337 MWH. The actual energy rate per MWH was $6.95. The budgeted energy rate was $12.32. There were no comments or questions. MOTION: A motion was made by Mr. Jenkin to approve the FY24 Refund of Surplus, as presented. Motion seconded by Mr. Thornton. Mr. Jenkin noted that there were various opportunities to purchase surplus power from GVEA at prices that were marginally non-economic for the power pool to purchase. One of the contributing factors to the prices being non-economic was the $12 wheeling rate. Mr. Jenkin commented that if the cost and usage projections were in line with the actual wheeling rate, the transactions with GVEA would have occurred during the year to reduce the costs for the three Railbelt utilities IMC members. Mr. Jenkin emphasized the impacts to the economics of the Railbelt by not budgeting correctly, as well as limiting transactions based on wheeling rates. He hopes these issues will be resolved after this year by the Railbelt Transmission Organization (RTO) tariffs. Chair Bishop commented on Mr. Jenkin’s excellent point. He encouraged the Intertie Operating Committee (IOC) and subcommittees to focus on minimizing the budget discrepancies in the future. A roll call was taken, and the motion to approve the FY24 Refund of Surplus passed unanimously. 7B. 2025 Proposed IMC Meeting Dates MOTION: A motion was made by Mr. Thornton to approve the proposed FY25 Meeting Dates. Motion seconded by Mr. Jenkin. IMC Meeting Minutes Page 3 of 8 The motion was approved unanimously. 8. OLD BUSINESS 8A. Primary Frequency Response Mr. Jenkin noted that the Primary Frequency Response (PFR) policy was approved by the IMC at the prior meeting. The PFR policy calls for activity of the Reliability Coordinator to be performed hourly. At this point, it is not anticipated that the Reliability Coordinator will monitor the system. Therefore, it would seem inappropriate to assign a duty to an organization that will not have the ability to conduct monitoring. The draft standard for the Reliability Coordinator is being discussed by the Railbelt Reliability Council (RRC), and it does not include monitoring the system or making changes to the parameters hourly. Mr. Jenkin suggested that it is probably more appropriate that the functions of monitoring the system and performing changes to the parameters hourly are given to a committee of the load balancing area operators who are monitoring the system hourly and could make changes to the values based on the standard. Mr. Jenkin requested comments from members on this issue and asked if a motion to amend the policy standard is required. He believes there needs to be communication with the utilities regarding how the IMC is implementing the policy. Chair Bishop asked Mr. Jenkin if he would be supportive of asking the IOC to further refine the document and resubmit it, based on input from the subcommittees. Mr. Jenkin had no objection. Mr. Thornton requested clarification that Mr. Jenkin is suggesting a change to monitoring and control of the policy, rather than a change to the policy. Mr. Jenkin explained there is a requirement in the policy that certain parameters be adjusted on an hourly basis by the Reliability Coordinator. At this point in time, there is no Reliability Coordinator to perform that policy requirement, and it is not anticipated that once the Reliability Coordinator is stood up, that they will be able to perform that policy requirement. Mr. Jenkin believes that it would be sufficient for the IMC to note and communicate that issue to those who are implementing and operating at this time. Mr. Thornton agreed, and commented that the RRC is reviewing the policy and may make other changes to the policy. Mr. Jenkin reiterated that the instructions that the policy gives the Reliability Coordinator are being transferred to the load-balancing area operators to coordinate that effort and make those changes to the system as needed. Mr. Price commented that Mr. Jenkin has identified an issue. However, the numbers that were derived from the PFR and the core of the policy have been implemented and are currently in operation. Mr. Thornton noted that CEA is in the process of implementation, and that there will be changes required for SCADA and communication between the utilities. IMC Meeting Minutes Page 4 of 8 Mr. Price inquired if any other problematic issues have been identified with the PFR that might justify a discussion at the IOC level. Mr. Thornton indicated that no other problematic issues have been identified for CEA so far. Mr. Jenkin commented that there may be other minor modifications to recommend, but none of them are significant enough to stop the process moving forward to maintain responsive spin and respond to system disturbances. Mr. Price inquired as to how long it will take to fully implement the policy. He suggested that the policy is reviewed again at a point in time after full implementation. Mr. Jenkin agreed that the IMC should communicate to the utilities that the policy should be reviewed again at a later point. He recognized that Homer Electric Association (HEA) is not a member of the IMC, and therefore, the policy review should occur within a larger body that includes HEA so they can formally input comments. Mr. Price suggested that a formal note could be made that the activity called for under the Reliability Coordinator will instead be conducted through communication amongst the load balancing area operating centers. Mr. Thornton agreed with Mr. Jenkin’s comments. He added that HEA has been part of the development, even though they are not a voting member. HEA has requested that the policy is advanced to a body through which they can have equal control and possible input. Mr. Jenkin requested that the documents sent to the managers of the utilities are sent in a ready to be approved format, rather than sending documents that the managers need to revise before approving. Mr. Jenkin prefers to make changes prior to sending documents to utility managers. MOTION: A motion was made by Mr. Jenkin to adjust the language in Sections R6 and R9, replacing the term “Reliability Coordinator” with “the committee of the load-balancing area system operators.” Motion seconded by Mr. Thornton. The motion was approved unanimously. Chair Bishop asked Mr. Jenkin if he envisions asking the IOC to make that revision. Mr. Jenkin indicated that is fine if Chair Bishop assigns the IOC to make that change. Once the IOC has completed the revision, it can be forwarded to the Railbelt Utility Managers (RUM) without any further action by the IMC. Mr. Price commented that he has no objection to the outlined course of action. He noted that previous discussions suggested that the policy should be sent to the Bradley Lake Project Management Committee (BPMC), and that the recommendation was made to forward the policy to the Railbelt Reliability Council (RRC). Mr. Price indicated that he does not know if any of those actions were taken. He asked if there are mechanisms in place to ensure follow through on the course of action outlined today. IMC Meeting Minutes Page 5 of 8 Mr. Jenkin discussed that the RRC will be formally developing standards through the Working Group process. Once those are approved, the RRC will submit them to the Regulatory Commission of Alaska (RCA), at which time they will become formally adopted and enforceable standards. The revision must be communicated and submitted to the RRC during the Working Group process. Mr. Price suggested that the policy revision is first reviewed by the BPMC and then forwarded to the RRC. Mr. Thornton commented on the goal of HEA’s involvement. He noted the information can be presented either through the BPMC or through the RUM. Mr. Jenkin suggested that Chair Bishop talk to his general manager and determine the best approach to submit the information either through the BPMC or the RUM. Chair Bishop agreed. There were no other comments or questions. 9. COMMITTEE REPORTS 9A. Budget vs. Actuals Mr. Ziesmer presented the Budget to Actuals report for the period of July 1, 2024 through October 31, 2024. Actual revenues were less than budgeted by $105,843 due to lower than anticipated energy usage. Energy usage reached 65,269 MWH. This amount is less than the budgeted amount of 77,608 MWH. Actual operating expenses were less than budgeted by $1,036,750 primarily due to the timing of invoices versus the annualized budget. Mr. Ziesmer noted that FERC 57100 Maintenance of Overhead Lines was overbudget by approximately $15,000 due to emergency line patrol work. He believes this amount will be mitigated and the variance will be reduced over time. The actual administrative expenses were less than budgeted by $83,000 due primarily to the timing of processing for internal payroll indirects. The revenues and expenses currently show a surplus of $1,531,932. Mr. Ziesmer reviewed the charts showing the budgeted usage and actual usage for the period. Mr. Jenkin commented on the actual budgeted energy rate and the projected energy rate based on the dollars expended, as shown on the last page of the report. He noted the projected energy rate is also based on a partial construction year, since there are two construction seasons during the year. Mr. Jenkin noted that the level of difference between the rates is significant, and if the cost was accurate, then more power would be moving and potentially more transactions between utilities would occur. Mr. Jenkin suggested that during the budget process, the Operating Committees are required to identify the specific construction year and season the work will be completed. This will provide a better understanding of the timing of deferrals and work that will not be completed, and will more accurately reflect the projected actual energy rate. Mr. Jenkin commented that even if the $1.63 rate increases to $6.63, there could be transactions that would happen that are not IMC Meeting Minutes Page 6 of 8 happening at the $13.08 rate. He requested that the Committee that determines the projected actual energy rate can review the budget based upon the current status, confirm that the expenses will be completed, and return to the next meeting with a recommendation to adjust the budget or not adjust the budget. Mr. Jenkin discussed that the information could reflect a better wheeling rate, so that transactions between GVEA and the power pool are not inhibited based upon an artificial wheeling rate. He commented on the importance of knowing if the wheeling rate is going to be lower than expected again by approximately 50%. A reduction of $5.00 in wheeling would make a difference. The RTO is not going to be stood up in time to remove wheeling from this budget cycle. Chair Bishop asked Mr. Jenkin if it would be reasonable to consider the Intertie expenditures as a fixed cost for the purposes of knowing the share that each utility will pay and not include the wheeling charge when making economic dispatch decisions. Mr. Jenkin explained that rate includes the existing wheeling charge, and will be assigned as the power moves. That current rate amount is non-economic and inhibits transactions with GVEA. Mr. Jenkin noted that the RTO will address the transmission costs so that they are removed from wheeling. However, the RTO is not due to file their tariff until June 30, 2025, with potentially another 180 days in the docket before the rates are approved. Mr. Jenkin discussed that the rate listed in the report will remain in effect this budget year. He reiterated that the rate reflects the way the costs to maintain the facilities are currently recovered. However, if the costs to maintain the facilities are significantly incorrect, so that the rate is incorrect, that should be addressed because it affects the ability to economically dispatch the system in a more prudent manner. Mr. Thornton commented that it may make sense to make changes to the current process, given the situation that the RTO is a year or two away from being stood up. He believes it would be prudent to relay monthly expenditures rather than annual expenditures to determine the actual expenses during the year. Mr. Jenkin commented that the rate depends both on the budget and the amount of energy transferred. He noted that the projection for the amount of energy transfer could be revisited and could reduce the rate. Historically, the actual operation expenses have come in less than 80% of the budgeted amount. Mr. Price believes the root cause of the problem is that the expenses for projects are being estimated in the middle of the project season. He suggested that a quarterly or semiannual budget adjustment occur, at least in the winter, on an ongoing basis to address the surplus issue that could artificially increases the Open Access Transmission Tariff (OATT). Mr. Jenkin discussed that the issue now is that the wheeling rate is an inhibitor to transactions. The process of the RTO eliminates the wheeling rates that affect ability to transfer power by collecting transmission expense through a new mechanism, other than wheeling. Mr. Jenkin suggested that the Budget Committee is asked whether they want to conduct a quarterly or semi-annual budget revision. IMC Meeting Minutes Page 7 of 8 Mr. Thornton agreed it is better to have a more accurate budget, and that the Budget Committee should respond and recommend a modification that they determine as prudent. Chair Bishop assigned the Budget Committee and the IOC to work together to develop a recommendation for a periodic budget revision process, either quarterly or semi-annually. Mr. Jenkin requested that the assignment also include the review of this year’s budget for possible adjustment. There were no other comments or questions. 9B. IOC Committee Jon Sinclair, MEA and Chair of the IOC, presented the IOC Report included in the Committee packet. Mr. Sinclair noted that tie lines were discussed at the previous IOC meeting, and currently, the PFR policy does not include the tie lines. There was discussion on whether there should be a change to that standard to spin for tie lines. The debate is ongoing and will continue. It is likely that in the future, there will be higher tie line flows which will occur more often. Mr. Sinclair communicated a request to the IMC regarding the Douglas Substation control enclosure and its experience of frost jacking that continues to deteriorate. He noted that EPS has evaluated the situation and has provided a couple of recommendations, one of which is to remove the control enclosure from the piles and drive the piles deeper. This work would cost approximately $200,000. The frost jacking has not stabilized, as hoped, but has continued to jack out of the ground and stress the structure. The goal is to complete the work before additional movement occurs in the spring. The IOC is requesting the estimated $200,000 to complete the work. This is not a line item in the current budget. The IOC requests action on this item. Mr. Sinclair discussed the ongoing challenges with the offline trips of the Healy SVC. Work is ongoing with GE to resolve the issues. However, the current funding is not enough. The IOC is requesting additional funding of $70,000 for the GE study. This is not a line item in the current budget. The IOC requests action on this item. Mr. Sinclair noted that the System Studies Subcommittee (SSS) continues to review the possibility of upgrading the Alaska Intertie and the Southern Tie to 230kV. Results of the study are expected in January. Additionally, the IBR study was kicked off with Telos Energy, and is expected to be due in July or August. Mr. Jenkin asked what threshold amount triggers an action of the IMC required for budget amendments. Mr. Price commented that the standard policy is the threshold of $100,000 to $110,000 of additional funding that requires the budget amendment process, including a motion and a 30-day review period. Mr. Price discussed optional mechanisms to fund the requests. There is a contingency line item in the budget of $230,000 that is unallocated which could be utilized to fund the Douglas operation. Mr. Price noted that the SVC engineering item is approximately $70,000 over budget, with a $50,000 placeholder. Discussion occurred as to how to proceed. It was determined that the contract with GE is to be