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HomeMy WebLinkAbout2025-05-02_BPMC_Meeting_MinutesBRADLEY LAKE PROJECT MANAGEMENT COMMITTEE (BPMC) MEETING MINUTES May 2, 2025 1. CALL TO ORDER Chair Million called the meeting of the Bradley Lake Hydroelectric Project Management Committee to order at 10:00 a.m. A quorum was established. 2. ROLL CALL (for Committee members) Travis Million (Golden Valley Electric Association [GVEA]); Tony Izzo (Matanuska Electric Association [MEA]); Brad Janorschke (Homer Electric Association [HEA]); Brian Hickey (City of Seward); Arthur Miller (Chugach Electric Association [CEA]); and Curtis Thayer (Alaska Energy Authority [AEA]). 3. PUBLIC ROLL CALL (for all others present) Karen Bell, Jennifer Bertolini, Mark Billingsley, Patrick Domitrovich, Pamela Ellis, Josi Hartley, Ryan McLaughlin, Jim Mendenhall, William Price, Mark Ziesmer (AEA); Joel Paisner (Ascent Law Partners); Matt Clarkson, Sherri Highers, Andrew Laughlin, Paul Millwood, Russell Thronton (CEA); Dan Bishop, Daniel Heckman, Sarah Villalon (GVEA); Larry Jorgensen, Sarah Lambe, Martin Law, Andrew Patrick (HEA); Josh Crowell, David Pease, Matt Reisterer, Jon Sinclair (MEA); Bryan Carey, and Bernie Smith (Public). 4. AGENDA APPROVAL MOTION: A motion was made by Mr. Thayer to approve the agenda. Motion seconded by Mr. Hickey. A roll call was taken, and the motion to approve the agenda passed unanimously. S. PUBLIC COMMENTS - None. 6. APPROVAL OF MEETING MINUTES — March 21, 2025 MOTION: A motion was made by Mr. Miller to approve the Minutes of March 21, 2025, as presented. Motion seconded by Mr. Thayer. A roll call was taken, and the motion to approve the Minutes of March 21, 2025, passed unanimously. 7. NEW BUSINESS A. Dixon Diversion Financing BPMC Minutes 5/02/25 Page 1 of 6 Mr. Thayer reviewed the Dixon Diversion Financing information included in the Committee packet. Mr. Thayer acknowledged that Bryan Carey officially retired from AEA yesterday. Mr. Thayer stated that Mr. Carey is dedicated to the Dixon Diversion and is in attendance today to answer any questions from Committee members. Mr. Thayer directed members' attention to the cash flow analysis as it relates to the timing of the construction and the need for funding. There is currently $6 million in the Governor's Budget. Mr. Thayer advised that he has spoken with both the House and Senate leadership, and the funding is expected to stay in the budget. That funding level extends to the first quarter of 2027. Mr. Thayer urged the BPMC to begin reviewing options for financing the project. Mr. Thayer indicated that several entities who are interested in financing the project have approached AEA staff. AEA has appointed three directors to examine financing opportunities. The ultimate analysis and determination will be made by the BPMC. Mr. Thayer requested that a Memorandum of Understanding (MOU) is created among the BPMC participants that expresses support of the Bradley Lake Project and delineates rights to the water. Mr. Thayer assumes that the rights to the water would be the same as the BPMC allocation. However, he understands that the Battle Creek rights are different. Mr. Thayer believes the MOU would be helpful when discussing loans with the Department of Energy (DOE) or other market vendors. Mr. Thayer discussed that more detailed confidential information regarding the budget and the schedule will be provided by Mr. Carey during the executive session. He asked the Committee if it would be helpful to go into executive session now to review the Dixon Diversion budget numbers. There was no objection. MOTION: A motion was made by Mr. Hickey to enter into executive session to discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or the Project. Motion seconded by Mr. Janorschke. A roll call was taken, and the motion to go into executive session passed unanimously. EXECUTIVE SESSION: 10:13 a.m. - (Bylaws Section 5.11.4) —To discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or Project. The Committee reconvened its regular meeting at 10:25 a.m. Chair Million noted that no action was taken as result of the executive session. 8. OLD BUSINESS A. Grip 3, Phase 1 Update Jim Mendenhall, AEA, provided the GRIP 3 update. Mr. Mendenhall discussed that AEA had an interim budget that was approved with Department of Energy (DOE). The second budget period will begin July 1, 2025 until June 30, 2027. AEA anticipates expenditures of $80 million to $90 million during that period. The State has secured approximately $63 million in matching funds, BPMC Minutes 5/02/25 Page 2 of 6 totaling more than is needed for the project funding. Mr. Mendenhall reported that the DOE is back in conversations with AEA, and things seem to be going well. There are a few things that they still do not have the authority to do. AEA's day-to-day contacts remain the same, even though a couple of the senior people have quit. Mr. Mendenhall noted that the goal of the Technical Working Group was to have 200 megawatts (MW) of transfer capacity on the line using a bi-pole configuration for redundancy and reliability. The project will push up against the $413 cap. Cost saving alternatives are being examined. One of the options is to install all three cables, but only construct half of the converter stations on each side. This will give 100 MW of transfer capacity with the capability of future expansion. Additionally, the existing line through the highway will be upgraded during the same time. The report delineating the cost savings options will be reviewed and sent to the Technical Working Group. Discussion will continue regarding these cost savings options. Mr. Mendenhall stated that AEA has distributed a Request for Proposal (RFP) for a term contract for environmental services. Two contractors were selected and notified of the intent to award. One of those contractors will be utilized for the environmental services to begin the process of obtaining permits for marine reviews next summer in the Cook Inlet, as well as determining if the final process will conduct an Environmental Assessment (EA) or an Environmental Impact Statement (EIS). Mr. Mendenhall discussed that the contractor Stantec is reviewing the approved Southern Intertie alternative route. This will be included in the process. Mr. Mendenhall noted that HEA has been providing much information to Stantec regarding the transmission link between Soldotna and Bernice Lake. The plan is to build a converter station at Bernice Lake. Stantec believes that a separate future improvement project could involve upgrading to 230 kV using a compact design within the existing right-of-way. Mr. Mendenhall discussed that Stantec has provided a preliminary design for the subsea cable and converter stations. Stantec has issued Request for Information (RFI) to both converter manufacturers and subsea cable suppliers. Responses have been received, and are within the budget range and the time schedule. This information will be included in the Go / No -Go decision that will be communicated to DOE. Mr. Mendenhall reviewed that approximately $750,000 has been spent to date on personnel and fringes, contracts, and indirect charges. Mr. Mendenhall reiterated that Josi Hartley, AEA, has joined the Grid Resilience and Innovation Partnerships (GRIP) team, which is now called Cook Inlet Power Link. Mr. Miller thanked Mr. Mendenhall for his update. He asked for the cost differential for the initial transfer capacity from 200 MW to 100 MW. Mr. Mendenhall explained that changing from a monopole to a bipole is an approximately 25% upcharge. The considered design of the asymmetrical monopole with all three cables and a 100 MW capacity has a cable cost of approximately $100 million, installation cost of approximately $80 million without burial, and a converter cost for supply and installation is approximately $175 million. Mr. Miller asked for the delta between the 100 MW capacity and the 200 MW capacity. Mr. Mendenhall noted that the technical report numbers have not yet been received and should be available by early next week. He estimated the delta at $75 million to $100 million. BPMC Minutes 5/02/25 Page 3 of 6 Chair Million commented that he is glad to hear the projects are progressing again smoothly considering the disruptions with the change in Administration. There were no other comments or questions. B. Railbelt Regional Coordination Update Mr. Hickey noted that the written Railbelt Regional Coordination Update report is included in the Committee packet. There has been very little activity since the last BPMC meeting. There were no comments or questions. 9. OPERATORS REPORT Martin Law, HEA, provided the Operators Report. Mr. Law noted that the report is included in the Committee packet. He discussed that staff went to the Battle Creek Diversion site yesterday. It is still frozen in with approximately six feet of snow and ice that prevented the gates from operating. There is less than five cubic feet per second (CFS) coming down from the diversion at the MIF gate. Mr. Law estimates that it will be another couple of weeks before that is in service. Chair Million thanked Mr. Law for including the pictures in the report, especially the picture of the snow and ice on the Battle Creek access road. Mr. Law agreed that there is approximately six to eight feet of snow in different shaded locations compared to no snow in sunny locations. There were no other comments or questions. 10. COMMITTEE REPORTS A. Budget vs. Actuals Mark Ziesmer, AEA, presented the Budget to Actual Expenses report for the period of July 1, 2024 to March 31, 2025. Mr. Ziesmer noted that the actual costs for capital purchases not funded by R&C Funds shown on Schedule A were $337,063, and exceeded the FY25 approved budget by $187,063. This overage mainly stems from the completion of planned FY24 purchases, including a truck, a brush hog for the front-end loader, and a new circuit breaker for Generator 2. Additionally, a color scanner was purchased that was originally reported on Schedule B, but has been moved to Schedule A to align with AEA's capital assets policy. Despite these adjustments, all budgeted items remain within their designated allocations. Schedule B shows the Operations and Maintenance (O&M) actual expenses are under budget by $1,035,354. Most of the FERC categories are either within budget or close to the year-to-date budget. However, the key highlights include FERC 543 Maintenance of Reservoirs, Dams & Waterways with expenses under budget by $177,671. This is due to lower than anticipated expenditures during the winter months and is expected to increase during the spring months. Additionally, FERC 544 Maintenance of Electric Plant with expenses under budget by $127,892. The Electric Plant typically has an increased level of activity in the spring. The costs are expected to rise in the remaining months of the year. Mr. Ziesmer reported that FERC 920 & 930 Administrative Expenses are under budget by BPMC Minutes 5/02/25 Page 4 of 6 $178,698 largely due to a combination of higher indirect costs versus lower -than -expected spending for professional consultants. The FERC 924 insurance premiums are under budget by $184,038. This is partly due to receipt of an annual cash distribution from the ARECA Insurance Exchange and lower than expected insurance expenses for the year. FERC 923 Outside Services is under budget by $191,970 due to less than anticipated costs to date. FERC 928 Regulatory Commission Expenses are under budget by $165,961 due to the timing difference of the budget versus invoices. Mr. Ziesmer expects that the budget will be fully utilized by the end of the fiscal year. Mr. Ziesmer noted that Schedule D shows the actual R&C purchases at a total of $2,247,324. The expenses were primarily related to the needle rebuild project, totaling $1,504,127, and the Dixon Diversion project, totaling $667,787. Since the Dixon Diversion project began, the total actual costs have reached $6,690,793. The actual costs within the grey box and highlighted yellow do not include any commitments or encumbrances. Mr. Ziesmer discussed that Schedule E details the Battle Creek Non-R&C Capital Purchases totaling $2,621, specifically for expenses related to the Survey and Monument DNR Lease effort. Schedule F shows the Battle Creek O&M expenses were under budget by $150,631. The main expense in this category is the 4% allocation cost for Bradley Lake. There is no planned fiscal year activity for Schedule H. Mr. Ziesmer discussed Schedule I shows that the SSQ Line O&M expenses were under budget by $158,051 due to less than anticipated costs to date. Mr. Ziesmer reviewed Appendix A, Capital Projects Funded by Bond Proceeds for Bond Series 11. The majority of spending is tied to the two SSQ Line upgrade projects with cumulative costs reaching was $6,802,843, of which $6,031,239 is directly connected to the two SSQ Line upgrade projects. Chair Million thanked Mr. Ziesmer for the thorough report. There were no other comments or questions. B. O&D Report Josh Crowell, MEA, reviewed the Operation and Dispatch (O&D) Committee Report. Mr. Crowell noted that the written report is included in the Committee packet. He highlighted the retirement of longstanding O&D member, Mr. Carey, and soon -to -retire O&D member Russell Thronton, CEA. There were no questions for Mr. Crowell. Chair Million indicated the need for a short executive session to discuss items with counsel. MOTION: A motion was made by Mr. Hickey to enter into executive session to discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or the Project. Motion seconded by Mr. Thayer. A roll call was taken, and the motion to go into executive session passed unanimously. BPMC Minutes 5/02/25 Page 5 of 6 11. EXECUTIVE SESSION: 10:51 a.m. - (Bylaws Section 5.11.4) —To discuss confidential financial matters the immediate knowledge of which may have an adverse effect on the Authority or Project. The Committee reconvened its regular meeting at 11:12 a.m. Chair Million noted that action will be taken now regarding the discussion during executive session. MOTION: A motion was made by Mr. Izzo that the wheeling utilities engage in good faith negotiations regarding any transmission disputes and report back to the BPMC by the September 2025 meeting. Motion seconded by Mr. Miller. A roll call was taken, and the motion passed unanimously. 12. MEMBERS COMMENTS Mr. Janorschke commented that HEA held a good annual meeting last night, and things are going well and really busy. Mr. Miller commented on the good meeting. He congratulated Mr. Carey on his retirement, and the upcoming retirement of Mr. Thornton. Mr. Thayer echoed the congratulations to Mr. Carey on his retirement. He expressed appreciation on moving forward with the Dixon Diversion project. Mr. Hickey echoed the previous comments, and thanked Mr. Ziesmer for his detailed financial report. Mr. Izzo echoed the previous comments. Chair Million echoed the comments of appreciation for the thorough reports. 13. NEXT MEETING DATE — June 20, 2025 14. ADJOURNMENT There being no further business for the committee, the meeting adjourned at 11:16 a.m. Travis Million, Chair Curtis Thayer, Secretary BPMC Minutes 5/02/25 Page 6 of 6